Geoffrey C. Bible, chairman of the board and chief executive officer of Philip Morris Companies Inc. (NYSE: MO), told an audience of approximately 1,100 shareholders at the company’s annual meeting today that Philip Morris “came through the year in very good shape” in a “litigation environment that has improved in significant ways.” He also reaffirmed the company’s commitment to “engage in a constructive dialogue” with the company’s critics as well as the general public.
Mr. Bible opened the meeting by noting that “while 1999 was a year of transition,” the company performed well during the year and “we are beginning 2000 with strong momentum across all of our operating companies.” He acknowledged that “unfortunately, the performance of our stock has not reflected this strength.”
Mr. Bible attributed the company’s low stock price primarily to “investor concern about the legal challenges and societal perceptions surrounding the domestic tobacco industry.” Highlighting improvements in the litigation environment, he cited a number of favorable legal developments during the year, as well as the 1998 Tobacco Settlement Agreement with the State Attorneys General, which removed a significant source of litigation risk to the company.
Despite these successes, Mr. Bible said that two lawsuits, the Engle class-action case in Florida and the Department of Justice suit to recover health care costs, have “added to investor concerns.” He noted that the Engle case is now proceeding to the next phase, and that the Department of Justice suit is one in which “we believe we have a good chance of prevailing” if the case proceeds to trial.
Mr. Bible emphasized that Philip Morris is “ready and eager to engage in a constructive dialogue about strong, meaningful and reasonable regulation of cigarettes.” He said that the company wants to be “at the table and part of the process of creating a regulatory framework that is fair for smokers, the general public and for the industry.”
Mr. Bible said that the company “has made fundamental changes in the way we relate to the public and our critics.” He noted that the company launched a nationwide advertising campaign and communications program designed to highlight the good work of Philip Morris. He also said the company remains committed to Youth Smoking Prevention programs worldwide, responsible drinking and “to the letter and spirit of the Tobacco Settlement with the State Attorneys General.”
Turning to the company’s business performance, Mr. Bible said, “ultimately, we believe our stock value will be driven by our strong earnings growth and superb business fundamentals.” Bible noted that “the excellent momentum established in 1999 was evidenced in our good first-quarter 2000 performance.” Looking ahead, he said that the company’s “businesses are robust, our infrastructure is sound, our employees are first rate and we have the best brands anywhere.”
With approximately 81% of the shares entitled to vote represented at the meeting in person or by proxy, the 13 nominees named in the proxy statement were elected directors, the selection of PricewaterhouseCoopers LLP as independent accountants was approved, two management resolutions were approved and the six stockholder proposals were defeated.
With 1999 operating revenues of more than $78 billion, the Philip Morris family of companies is the world’s largest producer and marketer of consumer packaged goods. Philip Morris Companies Inc. has five principal operating companies: Kraft Foods, Inc. (comprising Kraft Foods North America and Kraft Foods International), Miller Brewing Company, Philip Morris International Inc., Philip Morris Incorporated (PM USA) and Philip Morris Capital Corporation.
For more information about Philip Morris Companies Inc., please visit the company’s Web site at www.philipmorris.com.
