[Intl-tobacco] Altria chief again hints at a restructuring

[robert weissman]

Altria chief again hints at a restructuring
Friday, April 29, 2005
BY JEFFREY GOLD
Associated Press

Altria, the giant tobacco company that also controls Kraft Foods, is
"making detailed preparations for restructuring," its chairman told
shareholders in East Hanover yesterday.

Chairman and Chief Executive Louis Camilleri, speaking at the company's
annual meeting, said "the precise timing and chronology are uncertain,
and continuing improvement in the entire litigation environment is a
prerequisite to such action by the board of directors."

He said he was commenting on the possibility of "separating Altria into
two, or potentially three, strong and independent entities." He gave no
further details.

Camilleri made similar remarks to investors in 2003 and 2004.

"It underlines and underscores their commitment to do this as soon as
the litigation environment allows it to be feasible," David Adelman, an
analyst at Morgan Stanley, said.

A breakup, perhaps into domestic and international units, could provide
greater returns from overseas operations, which are growing faster.

Shareholders of Altria were again greeted by anti-tobacco protesters as
they arrived for their annual meeting at Nabisco, a unit of Kraft.

About 80 adults and teens from various states waved black balloons and
chanted, "Hey hey, ho ho, big tobacco's gotta go." Behind them was a
15-foot tall inflated cigarette pack in the Marlboro design, but instead
of the brand name it read, "50 years of death."

"We're just trying to spread the word that the tobacco companies are
marketing toward youth," said Kaylee Walker, 15, a ninth-grader at
Livonia Central High School in Livonia, N.Y. Her voice was hoarse from
shouting at cars entering the corporate campus.

An hour later, Camilleri told about 300 stockholders the company
supports youth anti-smoking programs in 70 countries, and "responsibly
markets its products to adult smokers."

Some demonstrators accused Altria, the maker of Marlboro and other
cigarettes, of attempting to subvert a global treaty aimed at reducing
smoking.

Others urged shareholders to approve several resolutions, all opposed by
management, including one that would create a program to keep pregnant
women from being sold cigarettes.

That resolution, offered by a religious order, the Sisters of Mercy,
suggested that since the fetus can be harmed by smoking, merchants
should be trained to ask women if they are pregnant, much as they now
ask customers their age to determine if they can purchase cigarettes.

The board of New York-based Altria, in its statement to shareholders,
said such a program "may improperly impinge upon consumers' privacy
rights and place retailers in the untenable position of attempting to
intrude upon the individual rights of adult purchasers without legal or
regulatory authority to do so."

Altria is the parent of Richmond, Va.-based Philip Morris USA, which
dominates the tobacco market worldwide with about 20 brands, including
Marlboro and Parliament.

Another resolution, proposed by another order, Sisters of Mercy of the
Americas, would have the company stop selling so-called light, mild and
ultralight brands.

The board responded that the company has advised smokers since 2003 that
"there is no such thing as a safe cigarette, that smoking is addictive
and dangerous, that smokers should not assume that lower tar cigarettes
are safer or better for them or will help them quit, and that the tar
and nicotine numbers will not necessarily reflect the amount of tar and
nicotine they inhale because people do not smoke like the machines used
in the test methods."

A resolution offered by another religious group, the Province of St.
Joseph of the Capuchin Order, urged the company to adopt the New York
state law requiring "fire-safe" products. That law, meant to reduce
smoking-related fires with cigarettes that go out if they are not puffed
on regularly, took effect in June.

In response, the board said it supports federal legislation that would
apply to all cigarettes sold in the country to avoid a "patchwork of
inconsistent and conflicting state regulations."

The U.N.-based World Health Organization says tobacco is the second
leading cause of death, responsible for the deaths of one in 10 adults
worldwide, about 5 million each year. It estimates half of the 650
million people who now smoke will eventually be killed by tobacco.

Altria owns about 85 percent of Kraft Foods, the nation's largest food
manufacturer.