[Virginia GASP]STOCKHOLDER PROPOSALS, 1999 PHILIP MORRIS

PROPOSAL 1: PROTECTING YOUTH FROM SMOKING IN DEVELOPING COUNTRIES

Mr. Bible:
My name is Dr. David Lewis and I am an Emergency Physician in Martinsville VA. I have 24 years of experience in treating patients with tobacco-related diseases.

I am here today as the Primary Presenter of Proposal 1, which asks Philip Morris to adopt the same rules about advertising in developing countries that it has adopted in the U.S.

Mr. Bible, on March 2, 1998 you testified under oath in the Minnesota Medicaid Case that in your opinion no one dies from using Philip Morris Tobacco Products. But this is confusing, Sir, because Philip Morris attorneys are telling juries across the country that is "common knowledge" that cigarettes can cause death. Your attorneys are saying that since this is common knowledge, tobacco companies can't be held liable when smokers die. I suggest that "The Assumption of Risk" defense is not applicable to tobacco liability cases because even you, Mr. Bible, the CEO of Philip Morris, Inc., remain unaware that cigarettes
can kill.

The truth is, Mr. Bible, that there is a worldwide tobacco epidemic that causes the premature death of 3.5 million people every year [which is 10,000 every day and 10 every second].

The World Health Organization predicts that the global tobacco epidemic will prematurely claim the lives of 250 million of today's children.

International epidemiologist Richard Peto of Oxford University estimates that in 30 years the annual number of deaths caused by tobacco products will be 20 million, with most of these deaths occurring in developing countries.

One half of these deaths will be in people who are "middle-aged".

In the mid-1980's American tobacco companies began to invade the markets of developing countries.

In November , 1996, Glen Frankel, a columnist for this Washington Post, explained the reasons
for this invasion "At home--where the American tobacco industry is besieged by anti-smoking activists, whistle-blowers, government regulators, grand juries and plaintiffs' lawyers--cigarette --> --consumption has undergone a 15-year decline. Thanks to foreign sales, however, the companies are making larger profits than ever."

Greg Connolly, who is the director of the Massachusetts Tobacco Control Program and an authority on international tobacco marketing, describes the effects of the American tobacco invasion as
follows: "When the Multinational Companies penetrate a new country, they not only sell U.S. cigarettes but they transform the entire market. They transform how tobacco is presented, how it's advertised, and how it is promoted. And the result is the creation of new demand, especially among women and young people."

Various advertising practices that have been banned in the United States are used with impunity by Philip Morris in developing countries.

It is for this reason that I present Proposal 1. We simply ask that Philip Morris implement the same programs in developing countries as it has adopted in the United States.

Last year Miss Mary Asssunta, a Malaysian Health Care Worker, traveled 10,000 miles to request that Philip Morris stop saturating her country with tobacco advertisements. She stated the primary effect of the Philip Morris marketing campaign in her country has been to cause Malay children to start smoking. She continues to work with 15 year-olds who are trying to overcome their addiction to nicotine.

Last week Miss Assunta sent me this fax with a message for Philip Morris. It says, "Please, please tell Philip Morris to stop pushing cigarettes, disease, and death to developing countries."

On behalf of the children of the world, I ask the Shareholders to vote in favor of Proposal 1.


        SECOND IN SUPPORT OF PROPOSAL 1:

I am Edward Sweda, a stockholder from Massachusetts. In management's argument against this proposal, it says on page 21 of the proxy materials that "As we entered 1999, Philip Morris International, our international tobacco company, had 73 youth smoking prevention programs underway in 51 countries, up from 60 programs in 36 countries in March 1998." Management's opposition to this proposal, however, is lacking ANY EVIDENCE WHATSOEVER to show that Our Company's so-called "prevention" programs are, in fact, preventing anything at all.

There's no evidence of any country's youth smoking rate declining after the introduction of Our Company's so-called "prevention" programs.

When it comes to youth smoking, whether in developing countries or in developed countries, our Company's actions continue to belie our Company's words.

The "Action Against Access" program which was introduced in 1995 in the US was created to try to blunt the impending regulatory action by the Food and Drug Administration. This past Monday, the U.S. Supreme Court announced it will consider the government's appeal of the 4th Circuit Court of Appeal's ruling re. FDA authority to regulate tobacco. The 4th Circuit's ruling will be reversed next year.

I urge the shareholders to support Proposal #1.

PROPOSAL 2: SMUGGLING

Corporate Responsibility Office
Province of St. Joseph of the Capuchin Order

WRITTEN COMMENTS OF MICHAEL H. CROSBY, OFMCap. ON SHAREHOLDER PROPOSAL 2: SMUGGLING

Mr. Bible, members of the Board and Philip Morris shareholders: My name is Michael Crosby. I am from Milwaukee, Wisconsin. I belong to the Midwest Province of the Capuchin Franciscan Order. In this capacity I'd like to move adoption of our shareholder proposal that can be found on pages 22
-23 of the proxy materials.

This is the second year I have been here asking you shareholders to support our proposal. But again management is urging you to vote against it. Rather than repeat what we've written in the proxy materials, I'd like to explain how smuggling works.

Let's say you are the government of Columbia, well-known to us for its involvement in trafficking in drugs. Well, in Columbia in the first nine months of 1997, 5.5 million Marlboros entered the
Columbian market through our company's local affiliate. However this represented only 20% of the Marlboros marketed there. Where did the rest come from? The rest came from so-called "free trade zones" in nearby places like Aruba. According to export figures provided by the United States government,
every single person in Aruba would have to smoke 10 packs of Marlboros to match our exports there. So, where does the rest go? Critics content that most of our exports to Aruba's "free trade zone" end up being smuggled into Columbia. But, you might ask, how does this involve Philip Morris?

Until very recently the principal buyer and distributor of Marlboro cigarettes in Aruba has been the Mansur family. It was only after we filed our resolution on Philip Morris' involvement in smuggling that this company cut off its association with the Mansur family. Meanwhile, two members of the family were put on trial last year in Puerto Rico for money laundering charges.

In the United States we are concerned about drugs smuggled from Columbia; in Columbia the government is concerned about our cigarettes smuggled in from Aruba. We believe Columbia's government is complicit in drug trafficking; it believes our company is complicit in cigarette smuggling. This makes us question whether the Board truly has or has had sufficient mechanisms in place to keep us from being exposed as part of smuggling operations not only in the United States but throughout the world.

What's happened since shareholders accepted management's words that it was on top of this smuggling issue? Let me just give you a few items.

In May the City of New York's Department of Finance announced that it was investigating whether Philip Morris knowingly supplied smugglers who trucked in cigarettes from this State of Virginia to avoid paying high excise taxes in New York. The General Accounting Office estimates that the cigarette
smuggling trade deprived New York of almost $100 million in tax revenue in 1996 alone.

The Washington Post reported in August about the widespread cigarette smuggling in Columbia that I noted above.

Documents released in Venezuela in 1998 suggest that we Philip Morris International and BAT smuggled cigarettes into that country when our affiliate there got into a price war with BAT's affiliate.

In January of this year, the Vancouver Sun reported that Philip Morris is under investigation by U.S. and Canadian customs to determine if it smuggled cigarettes along the Washington-British Columbia border. It was reported that Philip Morris responded by saying "It's an old story."

Yes, it's an old story. Smuggling is an old story. And stories of this company's complicity in it are not going way; in fact, they are increasing.

To make sure that this company will really be free of any kind of
taint by smuggling, I urge you to vote for our resolution.

PROPOSAL 3: TOBACCO EXECUTIVES' COMPENSATION AND REDUCTION OF TEEN TOBACCO.


SECOND OF PROPOSAL 3:

I am Edward Sweda, a shareholder from Massachusetts. This proposal is one that is trying to achieve a small measure of corporate accountability. It is based on the idea of putting your money where your mouth is.

Since our Company opposes even this modest resolution which simply says that "shareholders request that the Board voluntarily create a formula linking future executive compensation packages with achievement of specific decreases in teen consumption of our company's brands," then corporate accountability will have to be imposed on our Company.

We've already begun to see that American juries, angered by what they have learned during these trials regarding our Company's history of what Judge Munter called a "high degree of reprehensibility," are delivering huge awards that -- far from defying logic -- are, in fact, adhering to the principle of corporate accountability. Judge Munter in the Henley case found that our Company's conduct "was not isolated, sporadic, occasional or temporary. Rather, it spanned many decades, and the effect was injury to a very large number of persons annually and in the most serious of ways, including death from lung cancer." Judge Munter also noted that "the signal which the jury's award likely has given to past and present smokers, that is, the encouragement to sue Philip Morris. The evidence in this case suggests the probability, if not the certainty, that countless persons have been impacted in ways identical or similar to plaintiff Patricia Henley."

Let me remind everyone that these are the words of a judge, not an anti-tobacco activist.

I urge the shareholders to support this proposal.

 

PROPOSAL 4: ENSURING THAT TOBACCO ADS ARE NOT YOUTH-FRIENDLY

Mr. Bible, I, Anne Morrow Donley, on behalf of the Sisters of Charity of the Incarnate Word Health Care System, move Proposal 4. This Proposal would request the Board to submit tobacco ad campaigns, current and future, to independent and certifiable testing, to be certain it does not attract teens under 18.

This independent testing would apply to all the tobacco ads, including the current $100 million dollar ad campaign which the company calls a "youth smoking prevention effort". If the company sincerely wants to prevent teens from smoking, they should not be afraid of having their ads scientifically measured by an independent group.

This independent testing is especially important in light of two court decisions against Philip Morris. In Judge John E. Munter's decision supporting the jury in the case Philip Morris lost to Patricia Henley, Judge Munter wrote that the jury found Philip Morris had committed nine violations including
"fraud by intentional misrepresentation."

The judge noted that the evidence revealed it had been important for "Philip Morris to secure teenagers as customers," and that "Philip Morris has willfully and consciously marketed its cigarettes to teenagers. In fact, such efforts are important, if not necessary, to commercial success in this business."

Evidence in the trial included internal memos revealing "that Philip Morris hired an outside organization to gather information on smokers, including teenage smokers," who were 12-17 years of age.

Philip Morris memos noted that Marlboro is the leading brand for those under 18.

Philip Morris documents state that cigarettes are addictive and harmful to health.

Judge Munter noted that, "the company did derive substantial profits from the conduct here in issue with a high level of conscious disregard for public health and safety. The jury undoubtedly concluded based on the evidence that the legitimate goal of profits was not tempered by considerations of public health and safety."

Judge Munter noted that the promotions portray cigarette smoking as "safe."

Certainly the $100 million dollar ad campaign aimed at youth portrays smoking as safe. Teens at risk for using tobacco who were interviewed by an independent research firm, Teenage Research Unlimited, stated that the ads which motivated them NOT to smoke were ones that pointed out:

The teens said the ads which pointed out the negative consequences of smoking were the most effective in making them stop and think about not using tobacco, such as a film of a woman who started smoking when she was a teenager, and became so addicted she was still smoking even though she had to do it through her voice box.

But the Philip Morris ads were rated very low by the teens, because, the teens said, they did not portray "real kids", they did not show what tobacco can do to a person, and they sounded like parents telling a kid they must not smoke without telling them why. Some teens said that Philip Morris appeared to be trying to put the blame on kids, and not on the tobacco companies.

We need independent testing of ad campaigns because of the court cases our company has lost, and because:

A company policy to welcome and require tobacco ad campaigns to be examined by an independent firm would give credibility to the company's statements that it wants to discourage youth smoking.

We urge the shareholders to support Proposal 4.



[Virginia GASP]Updated 9 Jul 1998