EXHIBIT 99
FOR IMMEDIATE RELEASE CONTACT: Scott Williams
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January 16, 1998 202-739-0225
Steve Duchesne
202-739-0245
Bozell Sawyer Miller Group
WASHINGTON, D.C. -- THE FOLLOWING STATEMENT REGARDING THE SETTLEMENT OF PENDING
LITIGATION IN TEXAS WAS ISSUED TODAY BY PHILIP MORRIS INCORPORATED; R.J.
REYNOLDS TOBACCO COMPANY; BROWN & WILLIAMSON TOBACCO CORPORATION; THE LORILLARD
TOBACCO COMPANY; AND UNITED STATES TOBACCO COMPANY:
Today's settlement with the State of Texas again demonstrates that the industry
is prepared to cooperate with government and the public health authorities to
discourage underage tobacco use.
While today's agreement is important, we continue to believe the best course of
action is adoption of the proposed national resolution now pending before
Congress. Individual state settlements cannot incorporate nor implement the
comprehensive array of public health provisions contained in the proposed
national settlement, which addresses all of the issues involving the regulation
and sale of, and liability for, tobacco.
This settlement represents another step in a process to end the climate of
confrontation and litigation that has marked the national debate on tobacco-
related issues for decades. While this case dealt with specific concerns of the
State of Texas, the national resolution represents the best opportunity to
achieve immediate and meaningful resolution of outstanding issues regarding
tobacco, including what many believe will be a reduction in the use of tobacco
products by minors while preserving the rights of adults to use tobacco.
The settlement provides Texas with an up-front payment of $725 million. The
industry will also provide $264 million to fund state pilot programs, including
research and anti-youth smoking initiatives. Commencing in November 1998, the
companies will pay Texas a 7.25 percent share of the annual ongoing payments
that are contemplated to be paid to the states. Without giving effect to
adjustments for inflation and changes in sales volume, this would result in
payments to Texas of $290 million in 1998 and $326 million in 1999. These
payments would increase to $580 million by the sixth year and continue at that
level thereafter. Giving effect to other adjustments, Texas will receive $1.27
billion from the settlement in 1998. Over the next 25 years, Texas will receive
$14.5 billion for health care costs, subject to adjustment for inflation and
changes in sales volume.
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The industry has agreed to pay reasonable attorneys fees to private counsel for
their representation of the state of Texas, and to reimburse the state and
private counsel for reasonable costs and expenses associated with this
litigation. In the event that federal legislation implementing the June 20th
proposed resolution (or a substantially equivalent federal program) is enacted,
these payment obligations will be superseded by those in the federal
legislation, except as expressly stated otherwise in the settlement agreement.
The industry will also be taking down all public billboards, transit and stadium
advertising in Texas as part of this agreement. It is important to note that
only through adoption of a comprehensive national settlement can the full array
of marketing restrictions be achieved.
The settlement has been taken under advisement by the judge in Texarkana, who
will not rule on the agreement before Tuesday (1/20/98).
The Texas agreement, like the Mississippi and Florida settlements, will be
largely superseded by the June 20th, 1997, comprehensive resolution, if enacted
by the Congress and signed by the President.
Today's action highlights the significant provisions of the proposed national
resolution now before Congress. The industry remains committed to the agreement
it reached with the state attorneys general, representatives of the public
health community and the plaintiffs' attorneys.
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