Questions at the 1999 PM Shareholders' Meeting

Question from Edward Sweda:

Good morning, Mr. Bible. I am Edward Sweda, a shareholder from Massachusetts. In the past two months, there have been two multi-million-dollar verdicts against our Company: $51 million in a case in California and $80 million in a case in Oregon. Most of this money has been in the form of punitive damages. Although the punitive damages award in Henley was reduced from $50 million to $25 million, California Superior Court judge John E. Munter denied our Company's motion for a new trial and issued a ruling. He said, under the heading: "Reprehensibility," the following:

"The jury found that Philip Morris engaged in widespread wrongdoing, violating the rights of Patricia Henley, a lung cancer victim, as to each of the nine causes of action asserted by her. Thus, the jury found violations in each of the following respects:

1. defective product in violation of the expectations of the ordinary consumer
2. defective product by failing to warn before July 1, 1969
3. negligence
4. breach of express warranty
5. fraud by intentional misrepresentation
6. fraud by concealment before July 1, 1969
7. fraud by false promise
8. fraud by negligent mispresentation; and
9. conspiracy to defraud.

The jury further found that plaintiff had proved by clear and convincing evidence that Philip Morris was "guilty of oppression, malice, or fraud in violating plaintiff's rights..." The judge went on to say: "The evidence was fully sufficient to support the jury's findings in every respect."

Let me repeat that: "The evidence was sufficient to support the jury's findings in every respect."

My question is: What changes in our Company's conduct will be adopted in light of these multi-million-dollar jury verdicts and in light of this powerful ruling, which can be found at www.callaw.com?

Question from Anne Morrow Donley:

My name is Anne Morrow Donley, a shareholder from Virginia. Mr. Bible, Judge John E. Munter, in supporting the California jury's verdict against Philip Morris wrote that Philip Morris acted "reprehensibly". His decision is peppered with discussions of fraud and negligence by Philip Morris.

Our company's tobacco advertising does not indicate that tobacco smoke makes a toxic waste dump of the air for nonsmoking children, babies, and adults to breathe. Secondhand smoke kills 53,000 Americans each year. Our company's most recent nicotine delivery device, ACCORD, is advertised as "Accord makes you feel right at home smoking at home." Yet the ACCORD brochure photographed a steady stream of smoke exhaled by the smoker, which would be harmful to children, babies, and adults nearby.

Our company's ads do not indicate that cigarettes are the leading cause of fatal fires in the U.S., and that although Philip Morris has created experimental fire-safe cigarettes, they have refused to produce fire-safe cigarettes even though this would save the lives of countless children.

Judge Munter cited the 1954 "Frank Statement to Cigarette Smokers" made by Philip Morris in which our company said that they "accept people's health as a basic responsibility, paramount to every other consideration in the business."

Now that our company is beginning to be held accountable by multimillion dollar jury verdicts, WHEN is our company finally going to adhere to that pledge to protect public health made to the public in 1954?

Question from David O. Lewis, M.D.

Question directed to Mr. Geoffrey Bible about Self-service Displays and Shoplifting at the Annual Philip Morris Shareholders' Meeting [April 29, 1999] by Dr. David O. Lewis.

Mr. Bible, the Food Marketing Institute in Washington D.C., a nonprofit group that represents
approximately 1,000 grocery stores nationwide, has reported that each year for the past 10 hears cigarettes have been the most commonly shoplifted item in the country. In 1997 cigarettes accounted for 42% of all items shoplifted from food stores.

Why do Philip Morris and cigarette retailers permit this to occur?

Two weeks ago a CBS Evening News Special Report entitled "Tempting Teens with Tobacco" explained the reasons. In food stores tobacco products are often sold from Self-service Displays that contain single packs of cigarettes. Self-service Displays are typically positioned at the front of store counters amidst candy and gum. In these locations theft of cigarettes becomes very tempting to children and very easy to accomplish.

Philip Morris wants children to shoplift cigarettes. Many retailers don't care if their cigarettes are stolen because the large placement fees that they receive from Philip Morris greatly exceed the revenue lost from theft.

According to John Garrison, the President of the American Lung Association, "The Tobacco Companies pay large fees to retailers to get them to put cigarettes out front, frequently out of sight of the clerk, and in places very easy to pick up. In that way tobacco companies can still get their cigarettes to children, many of whom will become addicted."

Mr. Bible, on April 13th the CBS Evening News revealed the truth about Self-service Displays. In order to protect public health, would you instruct your retailers to place cigarettes out of the reach of America's children?

Please remember that on March 2, 1998 you testified under oath in the Minnesota Medicaid Trial that you are just as concerned about public health as you are about Philip Morris profits.