Philip Morris USA and Other Manufacturers Prevail in Decade-Long Settlement Payment Dispute

An arbitration panel has determined that 6 out of 15 states failed in 2003 to diligently enforce laws that require escrow payments from the cigarette manufacturers that have not signed the Master Settlement Agreement (MSA). The states enacted these Non-Participating Manufacturer (NPM) escrow laws after the MSA was signed in 1998. Manufacturers that participate in the MSA, such as Philip Morris USA (PM USA), receive downward adjustments in their MSA payments if, among other things, states fail to diligently enforce NPM escrow laws. As a result, Philip Morris USA expects to receive a credit of approximately $145 million, plus interest, against next year's MSA payment. This was the full remaining amount available to PM USA in the 2003 arbitration.