Philip Morris USA Joins 37 State Attorneys General to Establish Protocols Aimed at Reducing Illegal Internet and Other Remote Cigarette Sales

Richmond, VA (January 26, 2006) – Philip Morris USA (PM USA) has joined with 37 state attorneys general to establish protocols aimed at combating illegal sales of the company’s cigarettes over the Internet or by mail, telephone or fax. The protocols are established for responding to state-provided information related to illegal remote sales of the company’s cigarettes.

Under the agreement, PM USA has voluntarily agreed to suspend cigarette shipments to direct customers that a state determines have engaged in illegal remote sales of PM USA cigarettes; reduce the volume of PM USA cigarettes available to direct customers that a state determines have indirectly engaged in illegal remote sales of PM USA cigarettes, and to suspend retailers participating in PM USA trade programs if the state determines that the retailer has engaged in illegal remote sales of PM USA cigarettes.

PM USA has independently supported compliance with state and federal laws that regulate remote sales, and the actions to be taken by PM USA will be consistent with those previously undertaken by the company in response to illicit trade in its products.

“Our voluntary agreement with the state attorneys general builds on Philip Morris USA’s existing trade programs and policies intended to preserve the integrity of our brands and the legitimate trade channels through which they are sold,” said Denise Keane, Philip Morris USA executive vice president and general counsel. “It sets a framework for continued information sharing with law enforcement and support of their efforts to eliminate illegal sales of Philip Morris USA products.”

PM USA wholesale and retail program participants are obligated to comply with all applicable laws, as well as PM USA trade policies. The company supports the efforts of law enforcement and regulatory authorities to eliminate illegal sales of PM USA cigarettes. The company pursues litigation against Internet sellers that infringe on the company’s intellectual property rights. To date, the company has been awarded 16 federal court judgments and permanent injunctions against operators of infringing Internet websites. The company also supports the passage of legislation at the federal and state levels designed to enhance the tools available to enforcement authorities seeking to eliminate illegal trade in the company’s products.

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