Bible's Prepared Remarks Opening the 2001 Meeting
2001 Shareholder Proposals, Wording
Setting the Scene
Presenting and Seconding Proposals:
    In order to provide the information as quickly as possible, this
    section is still under construction, and will be amended until it is
    as complete as possible.
News Reactions

Proposal One:  Environmental Tobacco Smoke
    Wording of the ETS Resolution
    Move the Proposal
    Second the Proposal

Proposal Two:  Ensure that Tobacco Ads are Not Youth-Friendly
    Wording of the Not Youth-Friendly Resolution
    Move the Proposal
    Second the Proposal

Proposal Five:  Inform Smokers of hazards of Smoking
    Wording of the Hazards of Smoking to Smokers Resolution
    Move
    Second [under construction]

Question and Answer Session:  Excerpts [under construction]

NOTE:  Philip Morris does not permit shareholders to carry in recording devices, nor does it provide video tapes, recordings, or printed records of the meeting to the public.

Therefore, all statements given here are to the best recollection of those involved.  This is, as far as we know, the only historical record of these meetings, open for public view.

The wording of the actual written proposals may be read in this web site.

Indeed, there is a severe metal detection area and a search of all papers that are brought to the meeting, with the guards confiscating any materials the Company does not wish to have inside the building.  No briefcases are allowed in, and women's purses are thoroughly searched.  If the Company considers it necessary, a hand held metal detector search is made of the individual.  This has been experienced by the "Dissidents."

This extreme paranoia permeates the meeting.  "Dissidents" are accompanied at every step, even to the rest room, by guards, or "hosts," as the Company terms them.  Seats are designated in various parts of the auditorium for the "dissidents" at Philip Morris.

By contrast, at the RJR meeting, all shareholders are permitted to sit wherever they wish, there is no metal detector scheme, although no one is permitted to carry in a briefcase, nor any recording device, and they reserve the right to search belongings as needed.

The report on the 2000 Philip Morris and RJR meetings gives a sense of the atmosphere there.

In order for a shareholder proposal to be presented, it must be considered by the federal government's Securities and Exchange Commission [SEC], which listens to the attorneys from the shareholders making the proposal, and to the attorneys for Philip Morris.  The SEC decides whether the proposal can be considered at the meeting or not.

There were six shareholder proposals.  Three of these dealt with tobacco and health.  The speeches given to move the resolution and to second the resolution are given here for those three tobacco and health proposals.  The "presenter" or the one "moving" the proposal has no more than four minutes to speak.  The person "seconding" the proposal has no more than two minutes to speak.  The Company rigidly times the speeches.

This was the first Philip Morris shareholders meeting to have a no-smoking section.  Following a letter from GASP, Philip Morris responded by making one of the two auxiliary auditoriums a no-smoking auditorium.  Smoking was permitted in the other two.  Anne Morrow Donley, who had written the letter from GASP, sat in the no-smoking auditorium.  Speaking to the shareholders from that auditorium, one had to enter an alcove which contained a camera, a bank of blinding lights, and a person holding a microphone.  One could not hear or see Mr. Bible nor any audience.

I am Edward L. Sweda, a shareholder from Massachusetts. On behalf of the Sisters of Charity of St. Elizabeth, I move Shareholder Resolution #1, regarding developing educational programs for youth and for smokers regarding the hazards of exposure to environmental tobacco smoke (ETS).

This resolution cites just a few instances of recent medical evidence showing how dangerous exposure to ETS can be for nonsmokers. In addition to triggering painful ear infections, headaches, eye irritation and constricted breathing, exposure to ETS can be deadly, causing respiratory disease, stroke and other forms of heart disease, as well as cancer.

The resolution also references instances of the tobacco industry’s attack on scientists whose work has documented these hazards. Indeed, a report from the U.S. Centers for Disease Control and Prevention was issued just last month revealing that cotinine from tobacco smoke is still found in the body fluids of nonsmokers, and that “ ... environmental tobacco smoke remains a major public health concern since more than half of American youth continue to be exposed to this known human carcinogen.”

The resolution simply calls on Philip Morris to “develop and implement a continuing program” to warn people that smoke is hazardous to nonsmokers and to specify the nature of those hazards.

Moreover, in this year’s 10-K report to the Securities and Exchange Commission, Philip Morris states, on page 6, that, with respect to the health effects of exposure to ETS, Philip Morris is “prepared to defer to the judgment of public health authorities as to what health warning messages that will best serve the public interest.”

YET, Our Company OPPOSES Resolution #1.

In its response, the Company would have us believe that links from the Philip Morris website to the websites of certain governmental public health authorities suffices both to warn the public and to relieve Philip Morris of its obligation to do anything further.

This response overlooks the fact that there are still millions of people -- both adults and children -- who do not have access to the Internet in the first place. When it comes to bragging about Our Company’s donations to charitable organizations, Philip Morris does not limit itself to communication via the Internet. No. For that purpose, Philip Morris is running a multi-million-dollar, multi-media campaign to try to inform the public about these charitable works. And, Mr. Bible, in your March 27th speech to investors, you note that the Company has “launched a print advertising campaign that is running in magazines nationwide to remind parents and other adults to keep their cigarettes away from kids.”

Yet, when it comes to the deadly hazards of ETS, Philip Morris wants to limit itself to links via the Internet and a toll-free number where one can get brochures that cite quotes from the website. Even when one visits the Philip Morris website, reads the 10-K report, or reads management’s response to this resolution, there is STILL NO STATEMENT ACKNOWLEDGING THE DEADLY HAZARDS OF ETS TO NONSMOKERS.

Ironically, one of the links cited in the Company’s response is to the Environmental Protection Agency, which Philip Morris sued over this very issue in 1993. That case is still in litigation in federal court.

Therefore, the Company’s opposition to this modest resolution is to say that Philip Morris “is prepared to defer to the judgment” of the same public health authorities that Philip Morris has chosen to sue. How absurd is that!

On ETS, Philip Morris can’t have it both ways.

I urge shareholders to support resolution #1.

SECOND to PROPOSAL ONE:

I’m Anne Morrow Donley, a Virginia shareholder. On behalf of the Sisters of Charity of Saint Elizabeth, I second Proposal One.

My father learned to smoke when you gave him cigarettes during World War II. Much later, my Dad learned to his sorrow that tobacco is addictive, and Philip Morris had lied to him. Those lies touched his family, by not telling him the smoke was hurting his beloved wife and children, as well as himself. For example, I had pneumonia twice as a child, and painful ear infections, probably due to secondhand smoking, and my mother suffered from several secondhand smoke related illnesses.

I remember once when my son was little, my Dad started to light up, and I said I’d be going outside, because the smoke would hurt my son and me. I still remember my Dad shaking his head slowly and deliberately. “No,” he said. “If my smoking will hurt anyone, then I’ll smoke outside.” And from that day forward, he never smoked inside the house, nor any business, again.

My father died of smoking related illnesses. But he refused to let you hurt his family and others through him. He fought in a war so his family and his country could be free. But out of that raging conflict, he understood, and taught his children, that with freedom comes a responsibility to respect others, to have a deep reverence for the sanctity of life, and to accept accountability for your actions.

I’ve known other smokers who tried to quit smoking when they learned it was harming family and friends. Is it possible the Board of Directors opposes this resolution because they fear cigarette sales would drop due to the compassion of smokers who don’t wish to injure the health of nonsmokers?

Steve Parrish responded to my letter requesting no smoking at this meeting, saying one auditorium would be a no-smoking zone, and

[Interruption from Geoffrey Bible: “Ms. Donley, your time is up."
Donley: I was just thanking you for providing the no-smoking auditorium.”
Bible: “Oh.”]

And thank you for providing the no-smoking auditorium. Mr. Parrish said that “many people believe that it [ETS] presents a health risk to nonsmokers.” But the Company has still not said that ETS is harmful to health.

We look to the shareholders to show their compassion for life and children by voting in favor of Proposal Number 1. Thank you.

Proposal Two: Ensure that Tobacco Ads are Not Youth-Friendly

Michael H. Crosby, OFMCap.

Mr. Bible, I move adoption of the shareholder proposal submitted by the Province of St. Joseph of the Capuchin Order and others which can be found on pages 22-23 of the proxy book.

We simply ask, for the second year in a row, for this company to put its money where is mouth is or, better to investigate why so many minors are putting their money on this company’s products that they put in their mouths in ways that violate the law and what we say we are trying to avoid. We are asking this company, against its opposition that “within six months of this annual meeting, before any promotional, marketing, and/or advertising campaign presently running is allowed to continue or is inaugurated in the future, it must be submitted to independent and certifiable testing to ensure that it is not equally or more appealing to the 12- to - 17 age group than groups 18 and over.”

I am absolutely convinced that management’s effort to get you shareholders to vote against our resolution is evidence in itself that this leopard is not going to change its spots, despite millions of dollars in advertising that tries to convince the public differently and millions of dollars going to lawyers to convince juries of the same.

Mr. Bible, in your “Remarks” given to the Council of Institutional Investors last month, you spent more time trying to show how this company is supposedly trying “to help reduce tobacco use among minors” than any other single topic. You stated that Philip Morris’ USA’s youth smoking prevention efforts involve four key strategies: communication, education, community action, and access prevention.

In commenting on your communications efforts, you said you have been “airing TV commercials since 1998 to discourage kids from smoking by changing their perceptions about smoking.” I’d like to know how you measure success on this. Other entities have tested your ads and shown they are not effective. How can you expect the shareholders to believe that this is just more manage control?

Our resolution is simple. Take that ad campaign which purportedly is aimed to keep minors from smoking. And take all the other ad campaigns, not just here in the USA, but throughout the world. Submit them to one simple test. Have independent groups take focus groups 17 and below and others 18 and above. Let them see the campaigns and listen to the words and respond to the images. If it can be shown that the campaigns are more appealing and persuasive in terms of desire to purchase our tobacco products for those 17 and under, cut out the campaign. Don’t run it. It’s that simple.

Despite a three-year campaign to reduce teen smoking, this company does not have the trust of the American people. Last year this company was last among those who have respect from Americans. In February of this year, The Wall Street Journal and U.S. News and World Report, hardly left-wing media, showed Philip Morris actually was replaced at the actual bottom of the list by Firestone.

Like the Humpty Dumpty story, all the lawyers and all of Wall Street’s PR firms cannot put together a positive image for this company when it continues to say one thing but does another. A step in the right direction would be for management to support our common sense resolution. If, after millions of dollars spent “wanting the public to know” all the good this company is doing - which has only received more negative publicity, we ask you to make the first step by supporting our resolution and immediately submit for review and critique your ad campaign to independent agencies that will certify to us that, indeed, on this issue of reducing teen smoking here and around the world, Philip Morris is “delivering on our promise.”

Statement of Edward L. Sweda
I urge the shareholders to read carefully management's opposition to this modest resolution. In its opposition to Resolution #2, Philip Morris cites -- on the bottom of page 23 of the proxy material -- a so-called Youth Smoking Prevention Department with a budget of over $100 million, a large sum of money by anyone's standards. On page 24, there is data on over $11 million on Life Skills Training for over 300,000 students in 18 states. Philip Morris International has "130 youth-smoking prevention programs" in nearly
70 countries. And, there is mention of more than 50 youth anti-smoking programs... and over 80 countries that have adopted the Cigarette Marketing Code.

But, what is missing from pages 23 to 25? I will tell you. There is NO DATA showing a drop in rates of youth smoking! There is NO DATA showing a drop in illegal tobacco sales to minors.

Earlier this morning, I mentioned the article from the Boston Globe that documented the sharp drop in youth smoking rates in Massachusetts. Florida has seen similar reductions as well. It seems that Philip Morris cannot demonstrate that its efforts have reduced youth smoking.

[Bible interrupts to say that there is data from the University of Michigan report. Sweda notes that "you have two full pages of text to oppose this resolution and there is no mention of that printed in the proxy material."]

If Philip Morris is sincere about not having kids smoke, it would make more sense to give the $100 million to Massachusetts, Florida or any other entity that has a proven track record of demonstrated success in actually reducing youth smoking.

I urge the shareholders to support Resolution #2.

Proposal Five: Informing Smokers of the Hazards of Smoking
Moved by Alan Blum, M.D.

Good morning, Mr. Bible, I’m Dr. Alan Blum, a family physician and a longtime shareholder, and I wish to move Proposal 5 for Dr. Gregory Connolly on ways the company can and should better inform its consumers about the risks of smoking.

I recognize Philip Morris is second to none when it comes to charitable giving in such humanitarian areas as disaster relief, hunger, domestic violence, employee volunteerism, and the arts.

I also appreciate that the company has taken the lead within the tobacco industry, especially during the past year, in modifying certain aggressive marketing strategies.

Nonetheless, Mr. Chairman, unlike the situation in which countries may differ on age restrictions for the purchase of cigarettes, there is no gray area when it comes to informing each and every consumer of Marlboro around the world with the exact same message. Now that we are informing our consumers of Marlboro in Australia, Thailand, Poland, and Canada with warning labels that the use of this product causes lung cancer, I think it is a humanitarian obligation of the company to extend that message to every consumer of every pack of cigarettes our company produces.

This is a minimal action and baseline ethical standard when one considers the pledge made through the years by at least two of this company’s top officials, first George Weissman in 1954, who in several speeches that year stated, “Believe me, if any one of us believed that this product we were making and selling was in any way harmful to our customers’ health – and our own as well – we would voluntarily go out of business.”

The pledge was repeated to the Wall Street Journal in 1972 by James Bowling: “If our product is harmful, we’ll stop making it.”

This resolution is intended to ensure a minimum standard of consistency with our company’s acknowledgments over the past several years, such as your own deposition in the State of Florida’s lawsuit that cigarette smoking “might have killed 100,000 Americans” or that of Philip Morris International Vice President David Davies last month on BBC Radio that our company “has a responsibility to ensure that the message of the public health communities, that smoking causes disease, that smoking is addictive, is a clear loud and consistent message that is understood by everyone making decisions about smoking.”

The Board’s response is to defer to the judgment of the public health communities and cites its former nemeses the US Food and Drug Administration (FDA) and the World Health Organization (WHO) as responsible arbiters of health warning messages. But surely the Board is aware that neither the FDA nor the WHO has either the funds or the logistical wherewithal to disseminate and perpetually publicize such messages. And although the Board cites the company’s new website as a key vehicle for consumer health education, the Board’s response is most noteworthy for its lack of reference to the very educational media that nearly all consumers most rely on for information, namely television, radio, magazines, and newspapers.

This resolution specifically calls upon the company to actually do what it has only talked about, namely to conduct a paid televised remedial advertising campaign along the lines of Firestone Tires and Tylenol to reinforce in adult smokers about the dangers of smoking and lung cancer and addiction. And in glaring contrast to the hundreds of millions of dollars the company spends on television ads publicizing the company’s humanitarian endeavors – indeed an amount that is more than double the charitable donations themselves, the Board says if you want to know what we think about smoking, check out the website and read the fine print.

Mr. Chairman, since last year’s annual meeting, a jury that had sat for more than two years considering literally decades of evidence about how we did or did not help inform our customers about smoking, found that our company and other tobacco companies “committed fraud, lied to the American public, and devastated millions of lives.”

This cutting criticism will be difficult to overturn on appeal in the court of public opinion unless we step up to the plate, put our money where our mouth is, implement this resolution, and buy the ad space that will truly inform our consumers about the real concerns that need to be reinforced.

Seconded by Michael H. Crosby, OFMCap.