EXHIBIT 99.1

                   TO THE R.J. REYNOLDS TOBACCO HOLDINGS, INC.
                                  ANNUAL REPORT
                                       ON
                                    FORM 10-K
    AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 28, 2002

                         EXPANDED LITIGATION DISCLOSURE
                           TOBACCO-RELATED LITIGATION



                                    OVERVIEW

         Various tobacco-related legal actions and proceedings are pending or
may be instituted against RJR or its affiliates, including RJR Tobacco, or
indemnitees. These actions and proceedings raise a variety of claims, including
product liability, health-care cost recovery, consumer protection, smuggling,
RICO, tax, antitrust and trade regulation claims. During 2001, 129 new
tobacco-related actions were served against RJR Tobacco and/or its affiliates or
indemnitees, and 154 actions were dismissed or otherwise resolved in favor of
RJR Tobacco and/or its affiliates or indemnitees without trial. On December 31,
2001, there were 1,639 active cases pending, including approximately 1,237
individual smoker cases pending in West Virginia state court as a consolidated
action, as compared with 1,664 on December 31, 2000, and 541 on December 31,
1999. As of February 7, 2002, 1,657 active cases were pending against RJR
Tobacco and/or its affiliates or indemnitees: 1,652 in the United States; two in
Puerto Rico and one in each of Canada, Israel and the Marshall Islands. The U.S.
case number does not include the 2,852 Broin II cases pending as of February 7,
2002, discussed below.

         The U.S. cases, exclusive of the Broin II cases, are pending in 35
states and the District of Columbia. The breakdown is as follows: 1,237 in West
Virginia; 77 in New York; 58 in Florida; 52 in California; 29 in Maryland; 28 in
the District of Columbia; 27 in Louisiana; 23 in Mississippi; 12 in Iowa; 11 in
Massachusetts; 10 in each of Missouri and New Jersey; 9 in Alabama; 8 in Texas;
7 in Georgia; 6 in each of Illinois and Tennessee; 4 in each of New Hampshire,
Nevada and Pennsylvania; 3 in each of Arizona, Connecticut, Michigan, New Mexico
and Ohio; 2 in each of Kansas, North Carolina, North Dakota and South Dakota;
and 1 in each of Indiana, Maine, Minnesota, Oklahoma, Utah, Washington and
Wisconsin. Of the 1,652 active U.S. cases, 130 are pending in federal court,
1,518 in state court and 4 in tribal court. Most of these cases were brought by
individual plaintiffs, but many of these cases seek recovery on behalf of third
parties or large classes of claimants.

                              THEORIES OF RECOVERY

         The plaintiffs seek recovery on a variety of legal theories, including
strict liability in tort, design defect, negligence, special duty, voluntary
undertaking, breach of warranty, failure to warn, fraud, misrepresentation,
unfair trade practices, conspiracy, aiding and abetting, unjust enrichment,
indemnity, medical monitoring, public nuisance and violations of state and
federal antitrust and RICO laws. Punitive damages, often in amounts ranging into
the hundreds of millions or even billions of dollars, are specifically pleaded
in a number of cases, in addition to compensatory and other damages. Of the
1,652 active cases in the United States, eight cases, plus the 2,852 Broin II
cases, involve alleged nonsmokers claiming injuries resulting from exposure to
environmental tobacco smoke. Twenty-nine cases purport to be class actions on
behalf of thousands of individuals. Purported classes include individuals
claiming to be addicted to cigarettes, individuals and their estates claiming
illness and death from cigarette smoking, persons making claims based on alleged
exposure to environmental tobacco smoke, African-American smokers claiming their
civil rights have been violated by the sale of menthol cigarettes, current
smokers who have no tobacco-related disease but are seeking to recover the costs
of medical monitoring, purchasers of "light" and "ultra light" cigarettes
claiming to have been defrauded and seeking to recover the costs of their
cigarette purchases, and Blue Cross and Blue Shield subscribers seeking
reimbursement for premiums paid. Approximately 59 cases seek recovery of the
cost of Medicaid/Medicare payments or other health-related costs paid for
treatment of

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individuals suffering from diseases or conditions allegedly related to tobacco
use. Eleven cases, brought by entities administering asbestos liability, seek
contribution for the costs of settlements and judgments.

                                    DEFENSES

         The defenses raised by RJR Tobacco and/or its affiliates, including
RJR, include, where applicable, preemption by the Federal Cigarette Labeling and
Advertising Act of some or all such claims arising after 1969, the lack of any
defect in the product, assumption of the risk, contributory or comparative
fault, lack of proximate cause and statutes of limitations or repose. RJR has
asserted additional defenses, including jurisdictional defenses, in many of the
cases in which it is named.

                                  TRIAL RESULTS
                           IN INDIVIDUAL SMOKER CASES

         The tobacco industry in general, and RJR Tobacco in particular,
continue to win most individual smoking and health cases. In Anderson v. Fortune
Brands, Inc., a Brooklyn, New York jury found in favor of the industry,
including RJR Tobacco, on June 27, 2000. Plaintiff failed to perfect his appeal
by submitting his brief and record by June 22, 2001. The Appellate Division
dismissed the appeal on September 18, 2001. In Nunnally v. R. J. Reynolds
Tobacco Co., a Mississippi state court jury found RJR Tobacco not liable on July
12, 2000. Plaintiff's motion for judgment notwithstanding the verdict, or in the
alternative, for a new trial, was denied, and plaintiff's appeal to the
Mississippi Supreme Court is pending. On January 16, 2001, a Brooklyn, New York
state court jury returned a verdict in favor of RJR Tobacco and other cigarette
manufacturers in Apostolou v. American Tobacco Co. On September 7, 2001, the
plaintiff noticed an appeal to the Appellate Division of the New York Supreme
Court. In Little v. Brown & Williamson Tobacco Corp., a South Carolina federal
district court judge granted a directed verdict in favor of RJR Tobacco on
January 30, 2001. The jury rendered a verdict in favor of the remaining
defendant, Brown & Williamson, on February 6, 2001. The plaintiff voluntarily
dismissed her appeal to the United States Court of Appeals for the Fourth
Circuit on April 19, 2001. On May 16, 2001, a state court jury in New Jersey
returned a verdict in favor of RJR Tobacco and Philip Morris in Mehlman v.
Philip Morris, Inc.

         RJR Tobacco has prevailed in virtually all individual smoker cases that
have gone to trial. However, in Whiteley v. Raybestos-Manhattan, Inc., a
tobacco-asbestos synergy case brought in San Francisco Superior Court, the jury
found against RJR Tobacco and Philip Morris on March 20, 2000, and awarded $1.7
million in compensatory damages. On March 27, 2000, the same jury awarded $20
million in punitive damages, $10 million against RJR Tobacco and $10 million
against Philip Morris. RJR Tobacco and Philip Morris have appealed. In Jones v.
R. J. Reynolds Tobacco Co., a wrongful death case, a Tampa state court jury
found against RJR Tobacco on October 12, 2000. Although the jury found that RJR
Tobacco was negligent and liable, it refused to find that RJR Tobacco was part
of a conspiracy to defraud. The jury awarded approximately $200,000 in
compensatory damages, but refused to award punitive damages. On December 28,
2000, the trial judge granted RJR Tobacco's motion for a new trial. The
plaintiff has appealed the new trial ruling to the Florida Second District Court
of Appeal. Most recently, in Kenyon v. R. J. Reynolds Tobacco Co., on December
12, 2001, a Tampa jury determined that Floyd Kenyon had been adequately warned
about the risks of smoking and that RJR Tobacco was not negligent in designing
its products. The jury did find that some of RJR Tobacco's products were
defective and awarded the plaintiff $165,000 in compensatory damages. RJR
Tobacco believes that the jury's findings were not supported by the evidence in
the case. Accordingly, on December 26, 2001, RJR Tobacco asked the court to set
aside the verdict or to grant a new trial. A hearing on RJR Tobacco's motion has
been scheduled for February 27, 2002.

                                 BROIN II CASES

         As of February 7, 2002, approximately 2852 lawsuits brought by
individual flight attendants for personal injury as a result of illness
allegedly caused by exposure to secondhand tobacco smoke in airplane cabins,
referred to as the Broin II cases, are pending in Florida. In these lawsuits,
filed pursuant to the terms of the settlement of the Broin v. Philip Morris,
Inc. class action, discussed separately, each individual flight attendant will
be required to prove that he or she has a disease caused by exposure to
secondhand smoke in airplane cabins.

         On October 5, 2000, Judge Robert Kaye entered an order applicable to
all Broin II cases that the terms of the Broin settlement agreement do not
require the individual Broin II plaintiffs to prove the elements of strict

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liability, breach of warranty or negligence. Under this order, there is a
rebuttable presumption in plaintiffs' favor on those elements, and plaintiffs
bear the burden of proving that their alleged adverse health effects were
actually caused by environmental tobacco smoke exposure. Although defendants
still may prevail on causation and other theories, RJR Tobacco does not believe
that the order is correct under Florida law or that it accurately reflects the
intent of the Broin settlement agreement. Accordingly, defendants appealed Judge
Kaye's ruling to the Third District Court of Appeal on November 3, 2000.
Plaintiffs moved to dismiss the appeal on November 28, 2000. On January 12,
2001, the Third District Court of Appeal denied plaintiffs' motion and ordered
oral argument. On October 10, 2001, a different panel of the Third District
Court of Appeal dismissed the appeal, finding that Judge Kaye's order is not an
appealable order at this time, but noted that the ruling is without prejudice to
the defendants' ability to appeal the issue at the appropriate time. On January
16, 2002, defendants filed a writ to invoke the discretionary jurisdiction of
the Florida Supreme Court.

         On April 5, 2001, in the first Broin II flight attendant case to go to
trial, Fontana v. Philip Morris, Inc., a Florida state court jury returned a
verdict in favor of the defendants, including RJR Tobacco. On April 16, 2001,
plaintiff filed motions for a mistrial, judgment notwithstanding the verdict, or
for a new trial. On October 1, 2001, the trial judge denied plaintiff's
post-trial motions. Plaintiff appealed to the Florida Third District Court of
Appeal. Defendants cross-appealed on November 8, 2001.

                               CLASS ACTION CASES

         Lawsuits have been brought by individuals purporting to act as
representatives of classes of plaintiffs against cigarette manufacturers,
including RJR Tobacco, and in some cases, parent companies of United States
cigarette manufacturers, including RJR, in state and federal courts across the
country. Plaintiffs request that the lawsuits be certified as class actions,
allowing them to prosecute claims on behalf of a specified class, usually for
personal injury or death allegedly resulting from diseases associated with
cigarette smoking. In the first of these cases, Castano v. American Tobacco Co.,
the United States Court of Appeals for the Fifth Circuit, on May 23, 1997,
overturned the certification of a nationwide class of persons whose claims
related to alleged addiction to tobacco. Since this ruling by the Fifth Circuit,
most class-action suits have sought certification of statewide, rather than
nationwide, classes.

         Class action suits based on claims similar to those asserted in Castano
have been brought against RJR Tobacco, and in some cases RJR, in state or
federal courts in Alabama, Arkansas, California, the District of Columbia,
Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Kansas, Louisiana, Maryland,
Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Jersey, New Mexico,
New York, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina,
Tennessee, Texas, Utah, Virginia, West Virginia and Wisconsin. In addition, a
class action filed in Tennessee seeks reimbursement of Blue Cross and Blue
Shield premiums paid by subscribers throughout the United States, and
class-action suits against RJR Tobacco in Illinois, Missouri and New Jersey
claim that the marketing of "light" and "ultralight" cigarettes is deceptive.
Plaintiffs have made similar claims in other lawsuits elsewhere. Other types of
class-action suits also have been filed in additional jurisdictions. Most of
these suits assert claims on behalf of classes of individuals who claim to be
addicted, injured or at greater risk of injury by the use of tobacco or exposure
to environmental tobacco smoke, or who are the legal survivors of such persons.
A number of unions and other third-party payors have filed health-care cost
recovery actions in the form of class actions. These cases are discussed
separately below. Class certification motions are pending in several state and
federal courts.

         Trial began in July 1998 in Florida state court in Engle v. R. J.
Reynolds Tobacco Co., in which a class consisting of Florida residents, or their
survivors on their behalf, claim to have diseases or medical conditions caused
by their alleged "addiction" to cigarettes. On July 7, 1999, the jury found
against RJR Tobacco and the other cigarette manufacturer defendants in the
initial phase, which included common issues related to certain elements of
liability, general causation and a potential award of or entitlement to punitive
damages.

         The second phase of the trial, which consisted of the claims of three
of the named class representatives, began on November 1, 1999. On April 7, 2000,
the jury returned a verdict against all defendants. They awarded plaintiff Mary
Farnan $2.85 million, the estate of plaintiff Angie Della Vecchia $4.023 million
and plaintiff Frank Amodeo $5.831 million. The jury also found, however, that
Frank Amodeo knew or should have known of his claim prior to May 5, 1990. The
legal effect of that finding should be to bar his claim based on the applicable
statute

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of limitations. In the second phase, the trial court also ordered the jury to
determine punitive damages, if any, on a class-wide basis.

         On July 14, 2000, the jury returned a punitive damages verdict in favor
of the "Florida class" of approximately $145 billion against all the defendants,
with approximately $36.3 billion being assigned to RJR Tobacco.

         On July 24, 2000, the defendants, including RJR Tobacco, filed numerous
post-verdict motions in Engle, including motions for a new trial and to reduce
the amount of the punitive damages verdict. On November 6, 2000, the trial judge
denied the post-trial motions and entered judgment. On November 7, 2000, RJR
Tobacco posted an appeal bond in the amount of $100 million, pursuant to a
Florida statute enacted on May 9, 2000 and intended to apply to the Engle case,
and initiated the appeals process. The opening brief of certain defendants,
including RJR Tobacco, has been filed. RJR Tobacco believes it has numerous
bases for a successful appeal, although it cannot predict the outcome of the
appellate process.

         On May 7, 2001, three of the defendants entered into agreements with
the Engle class to deposit an additional $1.86 billion into separate escrow
accounts to ensure that the stay of execution that is in effect pursuant to the
Florida bond statute will remain in effect as to these three defendants
throughout the appellate process, regardless of the results of a challenge, if
any, to the Florida bond statute. Approximately $700 million of the total amount
deposited by these three defendants is non-refundable and will go to the trial
court to be distributed, regardless of the result of the appeal. RJR Tobacco has
not entered into a similar agreement with the Engle class. Although RJR Tobacco
cannot predict the outcome of any possible challenges to the Florida bond
statute, RJR Tobacco remains confident of the applicability and validity of the
statute in the Engle case. In addition, nine other states, Georgia, Kentucky,
Louisiana, Nevada, North Carolina, Oklahoma, South Carolina, Virginia and West
Virginia, have enacted legislation similar to the Florida bond statute. In a
tenth state, the Mississippi Supreme Court also placed limits on appeal bonds by
court rule.

         A nicotine-dependence class action was filed in May 1996, in Indiana
state court against United States cigarette manufacturers, including RJR
Tobacco, and parent companies of United States cigarette manufacturers,
including RJR. Norton v. RJR Nabisco Holdings Corp., Superior Court, Madison
County, No.48D01-9605-CP-271. In June 1996 defendants removed the case to
federal court. The case was remanded to state court on March 24, 1997. On May
17, 1997, plaintiffs filed a petition for class certification. On November 17,
2000, the court granted the parties joint motion to stay the case until April
15, 2001. On November 16, 2001, the court granted defendants' motion to maintain
the stay until June 1, 2002.

         In May 1996, a physical injury and nicotine-dependence class action was
filed in Maryland state court against United States cigarette manufacturers,
including RJR Tobacco, and parent companies of United States cigarette
manufacturers, including RJR. Richardson v. Philip Morris, Inc., Circuit Court,
Baltimore City, No. 96145050. The case was removed by defendants to federal
court and was subsequently remanded to state court. On January 28, 1998, the
Circuit Court for Baltimore City granted plaintiffs' motion for class
certification. The Maryland Court of Appeals (the highest state court in
Maryland) overturned the class certification ruling and decertified the class on
May 16, 2000. On March 13, 2001, the parties agreed to dismiss the case.

         In May 1996, a nicotine-dependence/medical monitoring class action was
filed in Louisiana state court against United States cigarette manufacturers,
including RJR Tobacco, and parent companies of United States cigarette
manufacturers, including RJR. Scott v. American Tobacco Co., Inc., District
Court, Parish of Orleans, Docket No. 96-8461. On April 16, 1997, the trial court
granted plaintiffs' motion for class certification on behalf of Louisiana
residents who desire smoking cessation assistance and medical monitoring. In the
class certification ruling, the court dismissed the wholesaler defendants. The
remaining defendants removed the case to federal court on April 16, 1997. On
December 2, 1997, plaintiffs' motion to remand the case to the Civil District
Court of Orleans Parish was granted. In November 1998, an intermediate appellate
court affirmed the trial court's certification of the class. On February 26,
1999, the Louisiana Supreme Court declined to hear defendants' interlocutory
appeal of the class certification ruling. Trial began on June 18, 2001.
Defendants appealed the jury selection process to the Louisiana Fourth Circuit
Court of Appeal on July 18, 2001. On September 4, 2001, the Court of Appeal
dismissed two jurors because of bias, but declined to dismiss jurors with
immediate family members who were members of the class. On September 5, 2001,
defendants sought review by the Louisiana State

                                      -4-


Supreme Court. On September 25, 2001, the Louisiana State Supreme Court
dismissed seven additional jurors because they have immediate family members who
are members of the class, and the seven jurors expressed a desire that those
family members receive medical monitoring or smoking cessation assistance. On
October 9, 2001, the defendants asked the Louisiana Supreme Court to declare a
mistrial because of the irregularities in the jury selection process. That
petition was denied on October 15, 2001. Jury selection resumed again on October
22, 2001, and a full complement of 12 jurors and 10 alternates was selected. On
December 26, 2001, defendants' filed an application for supervisory writ to the
Fourth District of the Louisiana Court of Appeals challenging certain aspects of
the second round of jury selection. Opening statements will not occur until that
application is decided.

         In June 1996, a physical injury and nicotine-dependence class action
was filed in the District of Columbia against United States cigarette
manufacturers, including RJR Tobacco, and parent companies of United States
cigarette manufacturers, including RJR. RJR was voluntarily dismissed from the
case. Reed v. Philip Morris, Inc, Superior Court, Case No. CA-5070-96.
Plaintiffs' motion for class certification was denied on August 18, 1997.
Plaintiffs filed an amended complaint on July 17, 1998, and renewed their motion
for class certification. The trial court again denied class certification on
July 23, 1999. On July 20, 2001, the parties agreed to dismiss the action
without prejudice.

         In August 1996, a class action was filed in Alabama state court against
four United States cigarette manufacturers, including RJR Tobacco, on behalf of
all Alabama residents who suffer from nicotine addiction and who seek medical
monitoring. Lyons v. American Tobacco Co., Inc., United States District Court
for the Southern District of Alabama, Case No. 96-0881-BH-S. Defendants removed
the case to the United States District Court for the Southern District of
Alabama in September 1996. On January 2, 2001, the court granted plaintiffs'
motion to dismiss.

         In September 1996, a class action was filed in Tennessee state court
against four United States cigarette manufacturers, including RJR Tobacco, on
behalf of all individuals and entities in the United States who have paid
premiums to a Blue Cross or Blue Shield organization for medical insurance. The
complaint alleges that defendants' actions have resulted in increased medical
insurance premiums for all class members and seeks recovery under various
consumer protection statutes as well as under theories of breach of special duty
and unjust enrichment. Perry v. Philip Morris, Inc., United States District
Court for the Eastern District of Tennessee, Case No. 4:00-CV-97. Defendants
removed the case to federal court on November 19, 1996. On May 12, 1997, the
case was remanded to the Circuit Court of Coffee County for further proceedings.
On November 1, 2000, plaintiffs filed a motion for leave to file a second
amended class action complaint. Defendants once again removed the case on
December 1, 2000. Certain defendants, including RJR Tobacco, filed a motion to
dismiss the second amended complaint on December 19, 2000. Plaintiffs, in turn,
filed a motion to remand on January 2, 2001, which was denied by the court on
February 6, 2001. On April 12, 2001, the federal district court granted
defendants' motion to dismiss. Plaintiffs appealed the dismissal to the United
States Court of Appeals for the Sixth Circuit on May 3, 2001. Briefing on the
appeal has been completed; however, oral argument has not been scheduled.

         In October 1996, a nicotine-dependence class action was filed in New
Mexico state court against four United States cigarette manufacturers, including
RJR Tobacco, and parent companies of United States cigarette manufacturers,
including RJR. RJR has been dismissed from this case. Connor v. American Tobacco
Co., Inc., District Court, Bernalillo County, Case No. CV-96-9422. On April 7,
2000, the court granted defendants' motion to consolidate this case with the
Jimenez case, also pending in this court, for class certification discovery and
decision. The order further allowed plaintiffs until April 17, 2000, to move to
strike the judge from the consolidated proceedings. Plaintiffs never filed such
a motion, and the cases remained dormant. The court, on its own motion on
December 13, 2001, deemed that no significant activity had been taken in over
180 days in connection with any and all pending claims. The court, therefore,
ordered all pending claims were to be dismissed without prejudice. The court
further instructed that, within 30 days after service of its order, any party
could move for reinstatement. Plaintiff moved for reinstatement on December 28,
2001. Argument on the motion was heard on February 12, 2002, and the court took
the matter under advisement.

         In January 1997, a nicotine-dependence class action was filed in West
Virginia state court against United States cigarette manufacturers, including
RJR Tobacco, and parent companies of United States cigarette manufacturers,
including RJR. Despite the fact that RJR Tobacco and RJR had not been served,
they joined with other defendants in removing the case to federal court in
February 1997. Blankenship (formerly McCune) v.

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American Tobacco Co., Inc., Circuit Court, Ohio County, Case No. 2:97-204.
Plaintiffs' motion to remand the case was granted on January 30, 1998. The West
Virginia Supreme Court transferred all tobacco cases, including Blankenship, to
Judge Recht in Wheeling, West Virginia. On August 16, 2000, the court
conditionally certified (only to the extent of medical monitoring) a class of
West Virginia residents who: (1) on or after January 31, 1995, purchased and
smoked cigarettes manufactured, marketed and/or sold by defendants; (2) have a
minimum five pack year smoking history; (3) have not been diagnosed with cancer
of the lip, oral cavity or pharynx, esophagus, stomach, pancreas, larynx,
trachea, bronchus or lung, cervix, uterus, bladder, kidney or other urinary
organs, coronary heart or cerebrovascular diseases, bronchitis or emphysema or
chronic airways obstruction; and (4) have not received health care paid or
reimbursed directly or indirectly by the State of West Virginia. Trial began on
January 4, 2001 in Blankenship v. Philip Morris, Inc., a West Virginia state
court medical monitoring class action. The trial of this case ended on January
25, 2001, when the judge declared a mistrial. Argument on decertification of the
class, among other things, was held on February 19, 2001. On March 23, 2001, the
judge denied the defendants' motion to decertify the class. The retrial of this
case began on September 5, 2001, and ended on November 14, 2001, when the jury
returned a verdict in favor of RJR Tobacco and other cigarette manufacturers.

         In February 1997, a nicotine-dependence class action was filed in
Hawaii state court against United States cigarette manufacturers, including RJR
Tobacco, and parent companies of United States cigarette manufacturers,
including RJR. Peterson v. American Tobacco Co., Inc., Circuit Court, Case No.
97-490-2. Defendants removed this case in March 1997. Plaintiffs' motion to
remand this action to state court was granted on October 6, 1999. On December
29, 1999, the court granted a motion to designate the case as complex. On August
29, 2001, the parties agreed to dismiss the case.

         In February 1997, a physical injury class action was filed in federal
court in Oklahoma against United States cigarette manufacturers, including RJR
Tobacco. Walls v. American Tobacco Co., Inc., United States District Court for
the Northern District of Oklahoma, Case No. 97-CV-218-H. On December 9, 1998,
the federal court refused to certify for class treatment a number of claims, but
certified five questions of Oklahoma state law to the Oklahoma Supreme Court. On
September 19, 2000, the Oklahoma Supreme Court answered the certified state law
questions in such a way that led the parties to stipulate that the case should
not be certified as a class action in federal court and that the individual
plaintiffs would dismiss their federal court cases without prejudice. The
federal court issued an order on October 19, 2000, refusing to certify the case
as a class action, and dismissed the individual plaintiffs' cases. On October
19, 2000, the court granted the parties' stipulated dismissal.

         In March 1997, a physical injury class action was filed in state court
in West Virginia against United States cigarette manufacturers, including RJR
Tobacco. Defendants removed this case to federal court in April 1997. Plaintiff
filed a First Amended Complaint on September 26 1997, dropping plaintiff Ima
Jean Ingle. On March 2, 1998, the case was remanded to state court. Muncy
(formerly Ingle and formerly Woods) v. Philip Morris, Inc., Circuit Court, Ohio
County, Case No. 97-C-21-5. The West Virginia Supreme Court transferred all
tobacco cases, including Muncy, to Judge Recht in Wheeling, West Virginia. Trial
has been scheduled for September 4, 2002.

         In March 1997, a nicotine-dependence/medical monitoring class action
was filed in state court in Nevada against United States cigarette
manufacturers, including RJR Tobacco, and parent companies of United States
cigarette manufacturers, including RJR (added via amended complaint). Defendants
removed the case to federal court on March 21, 1997. Selcer v. R. J. Reynolds
Tobacco Co., United States District Court for the District of Nevada, Case No.
CVS-97-334 PMP. Selcer is one of four class action cases pending certification
decisions in Nevada. On June 1, 1999, the court entered an order certifying
certain issues to the Nevada Supreme Court and staying all motions for class
certification pending a ruling by the Supreme Court on the issues certified. On
January 30, 2001, in Badillo v. American Tobacco Co., Inc., the Nevada Supreme
Court held that Nevada law does not recognize medical monitoring as a cause of
action. The federal district court will consider this opinion in determining
whether or not to certify the Selcer case, as well as the other class action
cases pending in Nevada. On June 29, 2001, the United States District Court for
the District of Nevada denied class certification. Plaintiffs have sought leave
to pursue an interlocutory appeal of the denial of class certification to the
United States Court of Appeals for the Ninth Circuit, which has not yet ruled.

         In April 1997, a physical injury class action was filed in Wisconsin
state court against United States cigarette manufacturers, including RJR
Tobacco. Defendants removed the case to federal court in May 1997. Plaintiffs'
motion to remand the case to the Circuit Court for Rock County was granted
August 27, 1997.

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Defendants removed the case on diversity grounds on April 17, 1998, and
plaintiffs' motion for remand was denied on June 10, 1998. Insolia v. Philip
Morris, Inc., United States District Court for the Western District of
Wisconsin, Case No. 97-C-347-C. In December 1998, the court denied plaintiffs'
motion for class certification, and summary judgment was granted on all claims
but one. Plaintiffs dismissed the sole remaining claim and appealed to the
United States Court of Appeals for the Seventh Circuit. On June 16, 2000, the
Seventh Circuit affirmed the federal district court's granting of summary
judgment on the claims of strict liability, fraud and intentional exposure to a
hazardous substance, as well as the judge's decision not to certify any issues
to the Wisconsin Supreme Court. The Seventh Circuit reversed the granting of
summary judgment on the negligence claim, and remanded that portion of the case
to the district court for further proceedings. The defendants-appellees filed a
petition for rehearing with the Seventh Circuit which was denied. On October 2,
2000, defendants filed a motion for judgment on the pleadings which was granted
on December 20, 2000. On January 24, 2001, the court granted the parties'
stipulation of dismissal without prejudice.

         In May 1997, a physical injury class action was filed in federal court
in Texas against United States cigarette manufacturers, including RJR Tobacco
and others. Cole v. Tobacco Institute, United States District Court for the
Eastern District of Texas, Case No. 1:97-CV-256. On May 5, 2000, the court
granted defendants' motion for judgment on the pleadings, and the case was
dismissed with prejudice. Plaintiffs appealed the ruling to the United States
Court of Appeals for the Fifth Circuit. On August 1, 2000, the Fifth Circuit
consolidated the appeals of this case and Hughes v. Tobacco Institute, United
States District Court for the Eastern District of Texas, Case No. 1:99-CV-163.
On November 3, 2000, appellants filed a motion to certify questions to the Texas
Supreme Court. Defendants-Appellees are opposing the motion. Oral argument on
the appeal was heard on December 3, 2001. No ruling has been issued.

         In May 1997, a physical injury class action was filed in the state
court in New York against United States cigarette manufacturers, including RJR
Tobacco, and parent companies of United States cigarette manufacturers,
including RJR. Geiger v. American Tobacco Co., Inc., Supreme Court, Queens
County, Case No. 10229/99. In July 1997, the court certified an interim class of
all New York smokers with lung and/or throat cancer and their survivors. On July
6, 1998, the New York Appellate Division (Second Department) reversed the trial
court's class certification order and remanded the case for discovery and a
hearing on class certification. On June 23, 1999, the trial court denied class
certification. On October 15, 1999, plaintiffs appealed the court's decision
denying class certification to the New York Appellate Division (Second
Department), which affirmed the trial court's denial on November 27, 2000. On
December 21, 2000, plaintiffs filed a motion for leave to appeal to the New York
Court of Appeals. The New York Court of Appeals (the highest court in the state)
dismissed plaintiffs' appeal on February 13, 2001.

         In May 1997, a nicotine-dependence class action was filed in state
court in Tennessee against United States cigarette manufacturers, including RJR
Tobacco, and parent companies of United States cigarette manufacturers,
including RJR. Defendants removed this case to the federal court in June 1997.
Anderson v. American Tobacco Co., Inc., United States District Court for the
Eastern District of Tennessee, Case No. 3:97-CV-1441. Plaintiffs' motion to
remand was denied on October 31, 1997. The case has been stayed since January
29, 1998. A similar case, Temple v. State of Tennessee (discussed separately),
was filed in February 2000 in the United States District Court in Nashville.
This purported class claims to be a sub-class of the Anderson action.

         In June 1997, a physical injury/addiction class action was filed in
state court in Iowa against United States cigarette manufacturers, including RJR
Tobacco, and parent companies of United States cigarette manufacturers,
including RJR. The case was removed to federal court. Fitz (f/k/a Brammer) v. R.
J. Reynolds Tobacco Co., United States District Court for the Southern District
of Iowa, Case No. 4-97-CV-10461. There was very little activity in this case in
1999, other than parent companies, including RJR, being dismissed from the
lawsuit. In 2000, plaintiffs amended their complaint to pursue a
lung-cancer-only theory, rather than the former injury/addiction theory. On
October 15, 2001, the United States District Court for the Southern District of
Iowa, Central Division, denied class certification. The ruling was without
prejudice so plaintiffs could proceed individually, if desired.

         In June 1997, a physical injury class action including those who desire
to participate in smoking cessation programs was filed in state court in
California against United States cigarette manufacturers, including RJR Tobacco,
and parent companies of United States cigarette manufacturers, including RJR.
Brown v. American Tobacco Co., Inc., Superior Court, San Diego County, Case No.
711400. On April 10, 2000, a California state court judge denied certification
of the class. On February 2, 2001, plaintiffs filed an amended motion for class

                                      -7-


certification, which sought certification based on alleged violations of
sections 17200 and 17500 of the California Civil Code and alleged violations of
the California Consumer Legal Remedies Act. On April 11, 2001, a San Diego
Superior Court judge granted in part plaintiffs' motion for class certification.
The class is composed of adult residents of California who smoked at least one
of defendants' cigarettes "during the applicable time period," and who were
exposed to defendants' marketing and advertising activities in California.
Certification was granted as to plaintiffs' claims that defendants violated
ss.17200 of the California Business and Professions Code. The court, however,
refused to certify the class under the California Legal Remedies Act. Class
certification on plaintiffs' common law claims was denied on April 10, 2000.
Defendants petitioned the California Supreme Court to review the trial court's
class certification ruling, but the Supreme Court denied the petition on January
16, 2002. The trial has been scheduled for October 11, 2002.

         In July 1997, a physical injury class action was filed in state court
in Illinois against United States cigarette manufacturers, including RJR
Tobacco, and parent companies of United States cigarette manufacturers,
including RJR. Defendants removed the case to federal court in December 1997.
Guillory (formerly Daley and Denberg) v. American Brands, Inc., United States
District Court for the Northern District of Illinois, Case No. 97C8641.
Plaintiffs filed their motion for class certification on August 28, 2000. On
March 19, 2001, the United States District Court for the Northern District of
Illinois refused to certify a class defined as "[A]ll Illinois residents who
smoke or smoked cigarettes manufactured by Defendants, who started smoking while
a minor, who purchase or purchased cigarettes in Illinois and who desire to
participate in a program designed to assist them in the cessation of smoking
and/or monitor their medical condition to promote early detection of disease
caused by, contributed, or exacerbated by cigarette smoking."

         In October 1997, an environmental tobacco smoke ("ETS") class action on
behalf of casino workers was filed in federal court in Nevada against United
States cigarette manufacturers, including RJR Tobacco, and parent companies of
United States cigarette manufacturers, including RJR. Badillo v. American
Tobacco Co., Inc., United States District Court for the District of Nevada, Case
No. CV-S-98-1764 PMP (PAL). Badillo is one of four class action cases pending
certification decisions in Nevada. On June 1, 1999, the court entered an order
certifying certain issues to the Nevada Supreme Court and staying all motions
for class certification pending a ruling by the Supreme Court on the issues
certified. On January 30, 2001, in Badillo v. American Tobacco Co., Inc., the
Nevada Supreme Court held that Nevada law does not recognize medical monitoring
as a cause of action. The federal district court will consider this opinion in
determining whether or not to certify the Badillo case, as well as the other
class action cases pending in Nevada. On June 29, 2001, the United States
District Court for the District of Nevada denied class certification. Plaintiffs
have sought leave to pursue an interlocutory appeal of the class certification
ruling to the United States Court of Appeals for the Ninth Circuit.

         In November 1997, a physical injury class action was filed in federal
court in South Carolina against United States cigarette manufacturers, including
RJR Tobacco, and parent companies of United States cigarette manufacturers,
including RJR. Aksamit v. Brown & Williamson Tobacco Corp., United States
District Court for the District of South Carolina, Case No. 6-97-3636-21. On
December 29, 2000, the trial court denied class certification. On February 7,
2001, the court granted plaintiffs' motion for a stay until March 7, 2001. On
March 14, 2001, and at the request of the named plaintiffs, the court dismissed
this action without prejudice for a period of one year after the date of entry
of this order. Thereafter, the dismissal would be with prejudice as to the named
plaintiffs. Defendants' right to assert a statute of limitations defense is
preserved during this refiling period. Plaintiffs have not refiled a complaint.

         In November 1997, an ETS class action was filed in state court in
Louisiana. Defendants removed this case to the United States District Court for
the Eastern District of Louisiana on December 12, 1997. The case was remanded to
state court on February 3, 1998. Young v. American Tobacco Co., Inc., Circuit
Court, Orleans Parish, Louisiana, Case No. 97-19984. Plaintiffs filed a first
supplemental and amending petition on October 13, 2000. On November 15, 2000,
plaintiffs filed an amended motion for class certification. Argument on class
certification was heard on September 25, 2001. No ruling has been issued.

         In December 1997, a medicare payment recoupment class action was filed
in federal court in Texas against United States cigarette manufacturers,
including RJR Tobacco. Mason v. American Tobacco Co., Inc., United States
District Court for the Eastern District of New York, Case No. 00-CV-4442. On
July 19, 2000, Chief Judge Buchmeyer transferred this case to the United States
District Court for the Eastern District of New York for possible

                                      -8-


consolidation with Simon II (discussed separately). On September 12, 2000,
defendants filed a motion to transfer this case to the United States District
Court for the District of Columbia. Judge Weinstein, however, denied defendants'
motion on October 5, 2000. This case is part of the Simon II consolidated class
action complaint for declaratory relief which was filed on September 6, 2000.
The cases underlying the consolidated Simon II complaint are (1) Simon, Case No.
99-CV-1988; (2) Decie v. American Tobacco Co., Inc., Case No. 00-CV-2340; (3)
Ebert v. Philip Morris, Inc., Case No. 00-CV-4632; (4) Mason v. American Tobacco
Co., Inc., Case No. 00-CV-4442; (5) Bergeron v. Philip Morris, Inc., Case No.
99-CV-6142; (6) National Asbestos Workers Medical Fund v. Philip Morris, Inc.,
Case No. 98-CV-1492; (7) Blue Cross and Blue Shield of New Jersey v. Philip
Morris, Inc., Case No. 98-CV-3287; (8) H.K. Porter Co., Inc. v. American Tobacco
Co., Inc., Case No. 97-CV-7658; (9) Raymark Industries, Inc. v. American Tobacco
Co., Inc., Case No. 98-CV-675; and (10) Falise v. American Tobacco Co., Inc.,
Case No. 99-CV-7392. These cases are discussed separately.

         In December 1997, an ETS class action was filed in federal court in
Nevada against cigarette manufacturers, including RJR Tobacco. Dienno v. Liggett
Group, Inc., United States District Court for the District of Nevada, Case No.
CV-S-98-489 PMP (PAL). Dienno is one of four class actions pending certification
decisions in Nevada. In December 1998, this case was consolidated with the
Badillo case. On June 1, 1999, the court entered an order certifying certain
issues to the Nevada Supreme Court and staying all motions for class
certification pending a ruling by the Supreme Court on the issues certified. On
January 30, 2001, in Badillo v. American Tobacco Co., Inc., the Nevada Supreme
Court held that Nevada law does not recognize medical monitoring as a cause of
action. The federal district court will consider this opinion in determining
whether or not to certify the Dienno case, as well as the other class action
cases pending in Nevada. On June 29, 2001, the United States District Court for
the District of Nevada denied class certification. Plaintiffs have sought leave
to pursue an interlocutory appeal of the denial of class certification, to the
United States Court of Appeals for the Ninth Circuit, which has not yet ruled.

         In February 1998, a class action was filed in federal court in Utah
against United States cigarette manufacturers, including RJR Tobacco, and parent
companies of United States cigarette manufacturers, including RJR. Jackson v.
Philip Morris, Inc., United States District Court for the District of Utah, Case
No. 2:98CV00178B. This case has been dormant since the first quarter of 2000,
although plaintiffs' counsel indicated they were going to file an amended
complaint.

         In February 1998, a physical injury class action was filed against
asbestos manufacturers, cigarette manufacturers, including RJR Tobacco, and
parent companies of United States cigarette manufacturers, including RJR, in
state court in West Virginia. Parsons v. A C & S, Inc., Circuit Court, Ohio
County, Case No. 98-C-388. This case has been stayed pending a final resolution
of the motion to refer tobacco litigation to the Mass Litigation Panel. On
December 6, 2000, three defendants (Nitram Liquidators, Inc., Desseaux
Corporation of North America and Armstrong World Industries) filed bankruptcy
petitions in the United States Bankruptcy Court for the District of Delaware, In
re Armstrong World Industries, Inc. Pursuant to section 362(a) of the Bankruptcy
Code, Parsons is automatically stayed.

         In March 1998, an unfair trade practices class action was filed against
RJR Tobacco, and parent companies of United States cigarette manufacturers,
including RJR, in state court in Pennsylvania, alleging that the descriptors
"light" and "ultralight" on certain of RJR Tobacco's cigarettes are misleading.
Oliver v. R. J. Reynolds Tobacco Co., Court of Common Pleas, Philadelphia
County, Case No. 000268. The trial court denied plaintiffs' motion for class
certification on December 19, 2000. On April 24, 2001, the parties agreed to
dismiss the case with prejudice.

         In April 1998, an ETS class action on behalf of casino workers was
filed in state court in New Jersey against United States cigarette
manufacturers, including RJR Tobacco, and parent companies of United States
cigarette manufacturers, including RJR. Avallone v. American Tobacco Co., Inc.,
Superior Court, Middlesex County, Case No. MID-L-488398. On April 13, 2000, the
trial court denied plaintiffs' motion for class certification. Plaintiffs filed
a motion for reconsideration of the court's class certification decision on May
10, 1999. On December 3, 1999, the court denied plaintiffs' motion for
reconsideration. On April 27, 2000, plaintiffs' motion for leave to file an
interlocutory appeal was granted, nunc pro tunc, but denied in all other aspects
of the motion. On September 8, 2000, the court denied plaintiffs' motion for
leave to appeal. On March 13, 2001, the case was dismissed with prejudice.

                                      -9-



         In April 1998, a nicotine-dependence class action was filed in state
court in California against United States cigarette manufacturers, including RJR
Tobacco, and parent companies of United States cigarette manufacturers,
including RJR. Daniels v. Philip Morris Cos., Inc., Superior Court, San Diego
County, Case No. 719446. On November 30, 2000, a San Diego Superior Court,
relying on a California statute, certified a class consisting of all persons
who, as California resident minors, smoked one or more cigarettes in California
between April 2, 1994 and December 1, 1999. On November 30, 2000, a San Diego
Superior Court judge reversed a prior ruling and, based on a California unfair
business practices statute, certified a class consisting of all persons who, as
California resident minors, smoked one or more cigarettes in California between
April 2, 1994 and December 1, 1999. Trial has been scheduled for July 1, 2002.

         In April 1998, an ETS class action was filed in state court in Nevada
against United States cigarette manufacturers, including RJR Tobacco, and parent
companies of United States cigarette manufacturers, including RJR. Defendants
removed the case to federal court on May 20, 1998. Christensen v. Philip Morris
Cos., Inc., United States District Court for the District of Nevada, Case No.
CV-S-98-717-LDG (RLH). Christensen is one of four class action cases pending
certification decisions in Nevada. On June 1, 1999, the court entered an order
certifying certain issues to the Nevada Supreme Court and staying all motions
for class certification pending a ruling by the Supreme Court on the issues
certified. On January 30, 2001, in Badillo v. American Tobacco Co., Inc., the
Nevada Supreme Court held that Nevada law does not recognize medical monitoring
as a cause of action. The federal district court will consider this opinion in
determining whether or not to certify the Christensen case, as well as the other
class action cases pending in Nevada. On June 29, 2001, the United States
District Court for the District of Nevada denied class certification. Plaintiffs
have sought leave to pursue an interlocutory appeal, regarding the denial of
class certification, to the United States Court of Appeals for the Ninth
Circuit, which has not yet ruled.

         In June 1998, a class action claiming fraud was filed against United
States cigarette manufacturers, including RJR Tobacco and others. Cleary v.
Philip Morris, Inc., Circuit Court, Cook County, Case No. 00L 4952. On February
3, 1999, the court denied defendants' motion to dismiss. On January 19, 2000,
plaintiffs filed an amended complaint. On March 22, 2000, defendants moved to
stay the case in light of Guillory (see separate discussion) which was denied on
December 18, 2000. Plaintiffs moved to transfer the case to the Chancery
Division on October 16, 2000. This motion was denied on October 25, 2000.
Plaintiffs filed their motion for class certification on December 21, 2001. A
status conference was held on February 5, 2002.

         In July 1998, a nicotine-dependence and physical injury class action
was filed in state court in North Carolina against United States cigarette
manufacturers, including RJR Tobacco, and parent companies of United States
cigarette manufacturers, including RJR. Creekmore v. Brown & Williamson Tobacco
Corp., Superior Court, Buncombe County, Case No. 98 CV 03403. On April 22, 1999,
plaintiffs filed an amended complaint. On May 11, 1999, plaintiffs voluntarily
dismissed RJR and several others. An order designating the case as exceptional
and assigning it to Judge Payne was issued on July 11, 2000. A hearing on the
voluntary dismissal of the parent companies, including RJR, is scheduled for
March 18, 2002. The hearing on all matters relating to plaintiffs' motion for
class certification is set for June 10, 2002. Discovery is proceeding.

         In August 1998, a physical injury class action was filed in state court
in New Mexico against United States cigarette manufacturers, including RJR
Tobacco. Jimenez v. Brown & Williamson Tobacco Corp., District Court, Bernalillo
County, Case No. CV-98 08035. On April 7, 2000, the court granted defendants'
motion to consolidate this case with the Connor case, also pending in this
court, for class certification discovery and decision. The order further allowed
plaintiffs until April 17, 2000, to move to strike the judge from the
consolidated proceedings. Plaintiffs never filed such a motion, and the cases
remained dormant. The court, on its own motion on December 13, 2001, deemed that
no significant activity had been taken in over 180 days in connection with any
and all pending claims. The court, therefore, ordered all pending claims were to
be dismissed without prejudice. The court further instructed that, within 30
days after service of its order, any party could move for reinstatement.
Plaintiff moved for reinstatement on December 28, 2001. Argument on the motion
was heard on February 12, 2002, and the court took the matter under advisement.

         In October 1998, a civil rights class action was filed in federal court
in Pennsylvania alleging that United States cigarette manufacturers, including
RJR Tobacco, and parent companies of United States cigarette manufacturers,
including RJR, engaged in "discriminatory targeting of tobacco products sales to
Black Americans." Brown v. Philip Morris, Inc., United States District Court for
the Eastern District of Pennsylvania, Case No. 98-

                                      -10-



5518. On September 21, 1999, the court granted defendants' motion to dismiss.
This case is currently on appeal to the United States Court of Appeals for the
Third Circuit. The Third Circuit heard oral argument on January 19, 2001. On May
17, 2001, the Third Circuit affirmed the federal district court's dismissal.

         In October 1998, a class action was filed in state court in New Jersey
against RJR Tobacco and RJR on behalf of New Jersey residents who purchased and
smoked RJR Tobacco's light or ultralight cigarettes on or after March 3, 1992.
Trombino v. R. J. Reynolds Tobacco Co., Superior Court, Middlesex County, Case
No. L-11263-98. The court heard oral argument on plaintiffs' motion for class
certification on May 26, 2000. A rehearing on the class certification issue was
held on January 24, 2002. No ruling has been issued on the class certification
motion.

         In April 1999, a class action was filed in New York against United
States cigarette manufacturers, including RJR Tobacco. Simon (formerly Sturgeon)
v. Philip Morris, Inc., United States District Court for the Eastern District of
New York, Case No. CV 99 1988. On November 6, 2000, the trial court denied
certification of this purported class defined as all persons residing in the
United States, or who were residents at the time of their death, who had a
20-pack-per-year history of smoking, and who had a timely claim as of April 9,
1999, for personal injury or wrongful death arising from lung cancer. This case
is now part of the Simon II consolidated class action complaint for declaratory
relief which was filed on September 6, 2000. The cases underlying the
consolidated Simon II complaint are (1) Simon, Case No. 99-CV-1988; (2) Decie v.
American Tobacco Co., Inc., Case No. 00-CV-2340; (3) Ebert v. Philip Morris,
Inc., Case No. 00-CV-4632; (4) Mason v. American Tobacco Co., Inc., Case No.
00-CV-4442; (5) Bergeron v. Philip Morris, Inc., Case No. 99-CV-6142; (6)
National Asbestos Workers Medical Fund v. Philip Morris, Inc., Case No.
98-CV-1492; (7) Blue Cross and Blue Shield of New Jersey v. Philip Morris, Inc.,
Case No. 98-CV-3287; (8) H.K. Porter Co., Inc. v. American Tobacco Co., Inc.,
Case No. 97-CV-7658; (9) Raymark Industries, Inc. v. American Tobacco Co., Inc.,
Case No. 98-CV-675; and (10) Falise v. American Tobacco Co., Inc., Case No.
99-CV-7392. These cases are discussed separately.

         In April 1999, a class action was filed in Alabama on behalf of all
minors in the States of Alabama who smoke, against United States cigarette
manufacturers, including RJR Tobacco, and parent companies of United States
cigarette manufacturers, including RJR. Julian v. Philip Morris Cos., Inc.,
Circuit Court, Montgomery County, Case No. CV-1999-1245-GR. Defendants removed
this case to federal court on May 19, 1999. Plaintiffs filed their motion to
remand the case on June 17, 1999, which the court granted on August 26, 1999.
The case has been inactive since the court's remand ruling in August 26, 1999.

         In July 1999, a class action was filed in Tel Aviv, Israel, on behalf
of "[A]ll `Israeli Cigarette Consumers' who purchased and/or owned cigarettes
marketed and/or manufactured and/or distributed by the defendants at any time
until filing of the claim or until rendering of judgment." Defendants named in
the complaint are United States cigarette manufacturers, including RJR Tobacco,
and parent companies of United States cigarette manufacturers, including RJR.
This case was not served until August 2001. There has been no activity since
service.

         In February 2000, a class action was filed in Illinois on behalf of all
Illinois residents who purchased and consumed Doral Lights, but who do not have
a claim for personal injury, against RJR Tobacco and RJR. Turner (f/k/a Wallace)
v. R. J. Reynolds Tobacco Co., Circuit Court, Madison County, Case No. 00-L-113.
RJR Tobacco filed its answer to plaintiffs' complaint on April 11, 2000.
Discovery is proceeding. On November 14, 2001, an Illinois circuit court judge
certified a class defined as "[a]ll persons who purchased defendants' Doral
Lights, Winston Lights, Salem Lights and Camel Lights, in Illinois, for personal
consumption, between the first date that defendants sold Doral Lights, Winston
Lights, Salem Lights and Camel Lights through the date the court certifies this
suit as a class action . . . ." Trial is scheduled for March 27, 2003.

         In February 2000, a class action was filed in Tennessee on behalf of
residents of Tennessee who suffer from nicotine addiction, against United States
cigarette manufacturers, including RJR Tobacco, and parent companies of United
States cigarette manufacturers, including RJR. Temple v. State of Tennessee,
United States District Court for the Middle District of Tennessee, Case No.
3-00-126. On October 17, 2001, certain defendants, including RJR Tobacco and
RJR, filed a motion to dismiss. Plaintiffs filed a motion to amend complaint on
October 18, 2001. No rulings have been issued on the several pending motions.

         In March 2000, a class action was filed in Missouri on behalf of all
Missouri residents who smoked Winston Lights, Salem Lights, or Camel Lights, but
have no claim for personal injury, against RJR Tobacco and

                                      -11-



RJR. Collora v. R. J. Reynolds Tobacco Co., Circuit Court, St. Louis County,
Case No. 002-732. Discovery is proceeding.

         In March 2000, a class action was filed in Illinois on behalf of all
U.S. citizens who have suffered from tobacco-related disease, illness or injury,
against United States cigarette manufacturers, including RJR Tobacco, and parent
companies of United States cigarette manufacturers, including RJR. Force v.
American Tobacco Co., Inc., United States District Court for the Southern
District of Illinois, Case No. 00-215-GPM. Plaintiffs filed a motion to transfer
this case to the United States District Court for the Eastern District of New
York, before Judge Weinstein, on December 5, 2000. On December 18, 2000, the
motion to transfer was denied. On January 8, 2001, plaintiffs voluntarily
dismissed their complaint.

         In April 2000, a class action was filed in New York on behalf of all
smokers who have claims for personal injury, medical monitoring, higher
insurance premiums or less insurance coverage, against United States cigarette
manufacturers, including RJR Tobacco, and parent companies of United States
cigarette manufacturers, including RJR. Decie v. American Tobacco Co., Inc.,
United States District Court for the Eastern District of New York, Case No. 00
CV 2340. The parties have stipulated that defendants have up to and including
April 22, 2002 to answer plaintiffs' complaint. This case is part of the Simon
II consolidated class action complaint for declaratory relief which was filed on
September 6, 2000. The cases underlying the consolidated Simon II complaint are
(1) Simon, Case No. 99-CV-1988; (2) Decie v. American Tobacco Co., Inc., Case
No. 00-CV-2340; (3) Ebert v. Philip Morris, Inc., Case No. 00-CV-4632; (4) Mason
v. American Tobacco Co., Inc., Case No. 00-CV-4442; (5) Bergeron v. Philip
Morris, Inc., Case No. 99-CV-6142; (6) National Asbestos Workers Medical Fund v.
Philip Morris, Inc., Case No. 98-CV-1492; (7) Blue Cross and Blue Shield of New
Jersey v. Philip Morris, Inc., Case No. 98-CV-3287; (8) H.K. Porter Co., Inc. v.
American Tobacco Co., Inc., Case No. 97-CV-7658; (9) Raymark Industries, Inc. v.
American Tobacco Co., Inc., Case No. 98-CV-675; and (10) Falise v. American
Tobacco Co., Inc., Case No. 99-CV-7392. These cases are discussed separately.

         In June 2000, a class action was filed in Florida on behalf of all
persons who were diagnosed after July 15, 1997 with lung cancer, throat cancer,
or cancer of the oral cavity, against United States cigarette manufacturers,
including RJR Tobacco. Arntiz v. Philip Morris, Inc., Circuit Court,
Hillsborough County, Case No. 00-4208-DIV. H. Plaintiffs filed a motion for
class certification on July 3, 2000. Defendants filed an answer to plaintiffs'
complaint on November 30, 2000. Plaintiff filed a motion to transfer this matter
to Division "D" (Trial Division) on January 10, 2000, which the court granted on
January 25, 2001. On February 5, 2001, plaintiff filed a motion to sever and
abate.

         In July 2000, a class action was filed in Massachusetts against United
States cigarette manufacturers, including RJR Tobacco. The purported class was
defined as all persons who smoked cigarettes while a minor and a resident of
Massachusetts between 1970 and the date of the complaint, and who now wish to
quit smoking. Lewis v. Philip Morris, Inc., United States District Court for the
District of Massachusetts, Case No. 00-12089-RWZ. Defendants' filed a motion to
dismiss on November 15, 2000. On January 18, 2001, the court granted plaintiffs'
motion for voluntary dismissal without prejudice.

         In July 2000, a class action was filed in Massachusetts against United
States cigarette manufacturers, including RJR Tobacco, on behalf of a purported
class of persons who purchased cigarettes in the United States, who developed an
addiction to nicotine prior to January 1, 1964, and who have been diagnosed with
lung cancer within three years of the filing of this action (July 18, 2000).
National Tobacco Consumers' Group Number 2 v. R. J. Reynolds Tobacco Co., United
States District Court for the District of Massachusetts, Case No. 00CV11408RGS.
Plaintiffs filed a motion with the court on November 6, 2000, to transfer this
case to the United States District Court for the Eastern District of New York,
before Judge Weinstein, which the court denied on November 27, 2000. On March
20, 2001, plaintiffs agreed to voluntarily dismiss the case without prejudice.
The federal district court granted plaintiffs' motion to dismiss on March 26,
2001.

         In August 2000, a class action was filed in New York on behalf of all
smokers diagnosed with certain diseases alleged to be linked to smoking, against
United States cigarette manufacturers, including RJR Tobacco, and parent
companies of United States cigarette manufacturers, including RJR. Ebert v.
Philip Morris, Inc., United States District Court for the Eastern District of
New York, Case No. 00 CV 4632. Neither RJR Tobacco nor RJR have been served with
plaintiffs' complaint. This case is part of the Simon II consolidated class
action complaint for

                                      -12-



declaratory relief which was filed on September 6, 2000. The cases underlying
the consolidated Simon II complaint are (1) Simon, Case No. 99-CV-1988; (2)
Decie v. American Tobacco Co., Inc., Case No. 00-CV-2340; (3) Ebert v. Philip
Morris, Inc., Case No. 00-CV-4632; (4) Mason v. American Tobacco Co., Inc., Case
No. 00-CV-4442; (5) Bergeron v. Philip Morris, Inc., Case No. 99-CV-6142; (6)
National Asbestos Workers Medical Fund v. Philip Morris, Inc., Case No.
98-CV-1492; (7) Blue Cross and Blue Shield of New Jersey v. Philip Morris, Inc.,
Case No. 98-CV-3287; (8) H.K. Porter Co., Inc. v. American Tobacco Co., Inc.,
Case No. 97-CV-7658; (9) Raymark Industries, Inc. v. American Tobacco Co., Inc.,
Case No. 98-CV-675; and (10) Falise v. American Tobacco Co., Inc., Case No.
99-CV-7392. These cases are discussed separately.

         In September 2000, a consolidated class action complaint was filed in
New York on behalf of all tobacco litigation before Judge Weinstein, focusing on
punitive damages, against United States cigarette manufacturers, including RJR
Tobacco, and various parent companies of United States cigarette manufacturers,
including RJR. In re Simon II Litigation, United States District Court for the
Eastern District of New York, Case No. CV 00-5332. On December 22, 2000,
plaintiffs amended their complaint and filed their motion for class
certification. No ruling has been issued. The Court has stated that it believes
test-case trials of individual smokers are necessary before it can determine the
plaintiffs' pending certification motion. Following the Court's directive, Simon
II plaintiffs' counsel filed a new complaint in January 2002, Browne v. Philip
Morris USA, Case No. CV-02-599, in the United States District Court for the
Eastern District of New York. The complaint names individual smokers alleging
various smoking related injuries as plaintiffs. Counsel for all parties have
proposed to the trial court a briefing schedule for an intended venue transfer
motion by defendants (each plaintiff is alleged to be a Florida resident) and a
motion for consolidation by plaintiffs. The proposed schedule, which the Court
has not yet approved, would have these motions fully briefed by April 26, 2002.
The cases underlying the consolidated Simon II complaint are (1) Simon, Case No.
99-CV-1988; (2) Decie v. American Tobacco Co., Inc., Case No. 00-CV-2340; (3)
Ebert v. Philip Morris, Inc., Case No. 00-CV-4632; (4) Mason v. American Tobacco
Co., Inc., Case No. 00-CV-4442; (5) Bergeron v. Philip Morris, Inc., Case No.
99-CV-6142; (6) National Asbestos Workers Medical Fund v. Philip Morris, Inc.,
Case No. 98-CV-1492; (7) Blue Cross and Blue Shield of New Jersey v. Philip
Morris, Inc., Case No. 98-CV-3287; (8) H.K. Porter Co., Inc. v. American Tobacco
Co., Inc., Case No. 97-CV-7658; (9) Raymark Industries, Inc. v. American Tobacco
Co., Inc., Case No. 98-CV-675; and (10) Falise v. American Tobacco Co., Inc.,
Case No. 99-CV-7392. These cases are discussed separately.

         In September 2000, a class action was filed in Michigan against United
States cigarette manufacturers, including RJR Tobacco, on behalf of persons in
the State of Michigan (excluding federal, state and local governmental entities
and political subdivisions) who purchase cigarettes manufactured by the
defendants. Vandermeulen v. Philip Morris, Inc., Circuit Court, Wayne County,
Case No. 00-74582. Defendants removed this action to the United States District
Court for the Eastern District of Michigan on October 13, 2000. On December 13,
2000, plaintiffs filed a motion to remand the case to the Circuit Court of Wayne
County. Plaintiff filed a motion for class certification on September 25, 2000.
The motion to remand the case to the Wayne County Circuit Court was granted on
May 10, 2001. On February 7, 2002, the court entered a scheduling order that
provides for class certification discovery to be completed by August 24, 2002.
Argument on class certification is scheduled for December 12, 2002. All
discovery is stayed, except discovery relating to class certification, pending
the ruling on class certification.

         In May 2001, a class action was filed in the District of Columbia
against United States cigarette manufacturers, including RJR Tobacco, on behalf
of "[a]ll natural persons under 22 years of age (i.e. persons who have not
reached their 22nd birthday) as of the filing of this action who purchased
cigarettes or other tobacco products manufactured by any of the defendants for
their own use while under age and residing within the United States. (For
purposes of this action, "under age" means below the legal age for the sale of
such products.) The class does not include defendants, their employees,
directors, officers or agents." Sims v. Philip Morris, Inc., United States
District Court for the District of Columbia, Case No. 1:01CV01107. On November
19, 2001, plaintiffs filed a motion for class certification.

         In May 2001, a class action was filed in Pennsylvania against United
States cigarette manufacturers, including RJR Tobacco, on behalf of residents of
the State of Pennsylvania who desire to recover unreimbursed costs for health
care provided in the past, health care currently being provided, and future
health care to be provided to Medicaid, medically indigent and non-paying
patients suffering from tobacco related illnesses. The case was voluntarily
dismissed on October 30, 2001.

                                      -13-



                           WHOLESALER ANTITRUST CASES

         Plaintiffs in these lawsuits are tobacco wholesalers who are suing
United States cigarette manufacturers, including RJR Tobacco, and in some cases,
parent companies of United States cigarette manufacturers, including RJR,
alleging that cigarette manufacturers combined and conspired to set the price of
cigarettes, in violation of antitrust statutes and various state unfair business
practices statutes, as a result of which plaintiffs suffered economic injury. In
all cases, plaintiffs are asking the court to certify the lawsuits as class
actions, and to allow the respective plaintiffs to pursue the lawsuits as
representatives of other persons in the United States, and throughout the world,
that purchased cigarettes directly from one or more of the defendants.

         A.D. Bedell Wholesale Co., Inc. v. Philip Morris, Inc., 3rd Circuit
Court of Appeals, Pittsburgh, Pennsylvania, Case No. 00-3410, was filed in April
1999. On March 22, 2000 the court granted defendants' motion to dismiss. On
April 11, 2000, plaintiff and the remaining defendant consented to the dismissal
of the remaining claim. Plaintiff filed an appeal in the United States Court of
Appeals for the Third Circuit on April 18, 2000. The Third Circuit affirmed the
district court's dismissal on June 19, 2001. On July 2, 2001, plaintiff filed a
petition for rehearing, which was denied on July 24, 2001. On October 19, 2001,
plaintiff filed a petition for writ of certiorari in the United States Supreme
Court. This writ was denied on January 7, 2002.

         Smith v. Philip Morris Cos., Inc., District Court, Seward County,
Kansas, Case No. 00-CV-26, was filed on February 7, 2000. Defendants filed
motions to dismiss in May 2000, which were denied in November 2000. Plaintiff's
motion for class certification was granted on November 15, 2001. A case
management conference is scheduled for February 2002.

         Buffalo Tobacco Products, Inc. v. Philip Morris Cos., Inc., United
States District Court for the Northern District of Georgia, Case No.
1:00cv001445, was filed in February 2000. The case was transferred to Judge
Forrester on June 7, 2000, to be consolidated into the MDL 1342 proceeding. On
July 28, 2000, plaintiff filed a consolidated amended class action complaint
which consolidated this case with other cases pending in the MDL 1342
proceeding.

         Serrone v. Philip Morris Cos., Inc., Circuit Court, Wayne County,
Michigan, Case No. 00-4035 CZ, was filed in February 2000. Defendants filed
motions to dismiss in June 2000, which were granted in part and denied in part
by the court in July 2001. RJR Tobacco filed answer to the complaint on August
3, 2001. Plaintiff filed a motion for class certification in August 2001, which
remains pending. A status conference is scheduled for February 25, 2002.

         Brownstein v. Philip Morris Cos., Inc., Circuit Court, Broward County,
Florida, Case No. 00002212 03, was filed in February 2000. Defendants filed
motions to dismiss in June 2000, which remain pending.

         Greer v. R. J. Reynolds Tobacco Co., Superior Court, Alameda County,
California, Case No. 309826, was filed in February 2000. On May 31, 2000, the
court consolidated this case with 14 other antitrust cases pending in California
state court into Judicial Council Coordination Proceeding 4114. Plaintiff filed
an amended complaint on September 1, 2000, and a second amended complaint on
March 21, 2001. RJR Tobacco filed answer to the second amended complaint on
April 10, 2001. The parties have asked the court to schedule a status conference
in May 2002.

         Withers v. R. J. Reynolds Tobacco Co., Circuit Court, Jefferson County,
Tennessee, Case No. 17-194-I, was filed in February 2000. Defendants filed
motions to dismiss in June 2000. On July 17, 2001, plaintiff filed a motion for
an order of voluntary dismissal, requesting that the court dismiss this action
due to the death of the class representative. An order was entered dismissing
this action on July 31, 2001.

         Lennon v. Philip Morris Cos., Inc., Superior Court, New York County,
New York, Case No. 102396, was filed on February 9, 2000. Defendants filed
motions to dismiss in June 2000, which were granted by the court on October 9,
2001.

                                      -14-



         Munoz v. R. J. Reynolds Tobacco Co., Superior Court, Alameda County,
California, Case No. 309834, was filed in February 2000. On May 31, 2000, the
court consolidated this case with 14 other antitrust cases pending in California
state court into Judicial Council Coordination Proceeding 4114. Plaintiff filed
an amended complaint on September 1, 2000, and a second amended complaint on
March 21, 2001. RJR Tobacco filed answer to the second amended complaint on
April 10, 2001. The parties have asked the court to schedule a status conference
in May 2002.

         Gray v. Philip Morris Cos., Inc., Superior Court, Pima County, Arizona,
Case No. C20000781, was filed in February 2000. On February 28, 2001, the court
granted defendants' motion to dismiss. On May 31, 2001, plaintiff filed a notice
of appeal to the Arizona Court of Appeals (Division 2). Briefing was completed
on January 28, 2002.

         Morse v. R. J. Reynolds Tobacco Co., Superior Court, Alameda County,
California, Case No. 822825-9, was filed in February 2000. On May 31, 2000, the
court consolidated this case with 14 other antitrust cases pending in California
state court into Judicial Council Coordination Proceeding 4114. Plaintiff filed
an amended complaint on September 1, 2000, and a second amended complaint on
March 21, 2001. RJR Tobacco filed answer to the second amended complaint on
April 10, 2001. The parties have asked the court to schedule a status conference
in May 2002.

         Ludke v. Philip Morris Inc., District Court, Hennepin County,
Minnesota, Case No. MC001954, was filed in February 2000. Defendants filed
motions to dismiss in June 2000, which were granted in part and denied in part
by the court in December 2000. Plaintiff filed a second amended complaint on
January 30, 2001. Plaintiff filed a motion for class certification on February
15, 2001, which was denied on November 21, 2001. Defendants filed answers to the
second amended complaint in December 2001.

         Sullivan v. R. J. Reynolds Tobacco Co., Superior Court, Alameda County,
California, Case No. 823162-8, was filed in February 2000. On May 31, 2000, the
court consolidated this case with 14 other antitrust cases pending in California
state court into Judicial Council Coordination Proceeding 4114. Plaintiff filed
an amended complaint on September 1, 2000, and a second amended complaint on
March 21, 2001. RJR Tobacco answered the second amended complaint on April 10,
2001. The parties have asked the court to schedule a status conference in May
2002.

         Ulan v. R. J. Reynolds Tobacco Co., Superior Court, Alameda County,
California, Case No. 823160-0, was filed in February 2000. On May 31, 2000, the
court consolidated this case with 14 other antitrust cases pending in California
state court into Judicial Council Coordination Proceeding 4114. Plaintiff filed
an amended complaint on September 1, 2000, and a second amended complaint on
March 21, 2001. RJR Tobacco answered the second amended complaint on April 10,
2001. The parties have asked the court to schedule a status conference in May
2002.

         Teitler v. R. J. Reynolds Tobacco Co., Superior Court, Alameda County,
California, Case No. 823161-9, was filed in February 2000. On May 31, 2000, the
court consolidated this case with 14 other antitrust cases pending in California
state court into Judicial Council Coordination Proceeding 4114. Plaintiff filed
an amended complaint on September 1, 2000, and a second amended complaint on
March 21, 2001. RJR Tobacco answered the second amended complaint on April 10,
2001. The parties have asked the court to schedule a status conference in May
2002.

         Williamson Oil Co. v. Philip Morris Cos., Inc., United States District
Court for the Northern District of Georgia, Case No. 1:00cv00447, was filed in
February 2000. The case was transferred to Judge Forrester on June 7, 2000, to
be consolidated into the MDL 1342 proceeding. On July 28, 2000, plaintiff filed
a consolidated amended class action complaint which consolidated this case with
other cases pending in the MDL 1342 proceeding.

         Sand v. Philip Morris Cos., Inc., Superior Court, Alameda County,
California, Case No. BC225580, was filed in February 2000. On May 31, 2000, the
court consolidated this case with 14 other antitrust cases pending in California
state court into Judicial Council Coordination Proceeding 4114. Plaintiff filed
an amended complaint on September 1, 2000, and a second amended complaint on
March 21, 2001. RJR Tobacco answered the second amended complaint on April 10,
2001. The parties have asked the court to schedule a status conference in May
2002.

                                      -15-



         Peirona vs. Philip Morris Cos., Inc., Superior Court, Alameda County,
California, Case No. 310283, was filed in February 2000. On May 31, 2000, the
court consolidated this case with 14 other antitrust cases pending in California
state court into Judicial Council Coordination Proceeding 4114. Plaintiff filed
an amended complaint on September 1, 2000, and a second amended complaint on
March 21, 2001. RJR Tobacco answered the second amended complaint on April 10,
2001. The parties have asked the court to schedule a status conference in May
2002.

         Amsterdam Tobacco Corp. v. Philip Morris Cos., Inc., United States
District Court for the Northern District of Georgia, Case No. 1:00cv001446, was
filed in March 2000. The case was transferred to Judge Forrester on June 7,
2000, to be consolidated into the MDL 1342 proceeding. On July 28, 2000,
plaintiff filed a consolidated amended class action complaint which consolidated
this case with other cases pending in the MDL 1342 proceeding.

         Sylvester v. Philip Morris Cos., Inc., Superior Court, New York County,
New York, Case No. 60100, was filed n March 2000. On October 9, 2001 the court
granted defendants' motions to dismiss.

         I. Goldshlack Co. v. Philip Morris Cos., Inc., United States District
Court for the Northern District of Georgia, Case No. 1:00cv01448, was filed in
March 2000. The case was transferred to Judge Forrester on June 7, 2000, to be
consolidated into the MDL 1342 proceeding. On July 28, 2000, plaintiff filed a
consolidated amended class action complaint which consolidated this case with
other cases pending in the MDL 1342 proceeding.

         Suwannee Swifty Stores v. Philip Morris Cos., Inc., United States
District Court for the Northern District of Georgia, Case No. 1:00-CV-667, was
filed in March 2000. The case was transferred to Judge Forrester on June 7,
2000, to be consolidated into the MDL 1342 proceeding. On July 28, 2000,
plaintiff filed a consolidated amended class action complaint which consolidated
this case with other cases pending in the MDL 1342 proceeding.

         Holiday Markets v. Philip Morris Cos., Inc., United States District
Court for the Northern District of Georgia, Case No. 1:00cv00707, was filed in
March 2000. The case was transferred to Judge Forrester on June 7, 2000, to be
consolidated into the MDL 1342 proceeding. On July 28, 2000, plaintiff filed a
consolidated amended class action complaint which consolidated this case with
other cases pending in the MDL 1342 proceeding.

         Taylor v. Philip Morris Cos., Inc., Superior Court, Cumberland County,
Maine, Case No. CV-00-203, was filed in March 2000. Defendants filed motions to
dismiss in June 2000, which the court granted in part and denied in part in May
2001. Defendants filed answers to the complaint in June 2001. The court has
ordered that the case will remain inactive until the next status conference in
March 2002.

         Romero v. Philip Morris Cos., Inc., District Court, Rio Arriba County,
New Mexico, Case No. 0-117-CV-2000-972, was filed in April 2000. Defendants
filed motions to dismiss in June 2000, which the court granted in part and
denied in part in January 2001. The parties have agreed that this case will
remain inactive, and the deadline for defendants to answer the complaint has
been postponed indefinitely.

         Belmonte v. R. J. Reynolds Tobacco Co., Superior Court, Alameda County,
California, Case No. 825112-1, was filed in April 2000. On May 31, 2000, the
court consolidated this case with 14 other antitrust cases pending in California
state court into Judicial Council Coordination Proceeding 4114. Plaintiff filed
an amended complaint on September 1, 2000, and a second amended complaint on
March 21, 2001. RJR Tobacco answered the second amended complaint on April 10,
2001. The parties have asked the court to schedule a status conference in May
2002.

         Belch v. R. J. Reynolds Tobacco Co., Superior Court, Alameda County,
California, Case No. 825115-8, was filed in April 2000. On May 31, 2000, the
court consolidated this case with 14 other antitrust cases pending in California
state court into Judicial Council Coordination Proceeding 4114. Plaintiff filed
an amended complaint on September 1, 2000, and a second amended complaint on
March 21, 2001. RJR Tobacco answered the second amended complaint on April 10,
2001. The parties have asked the court to schedule a status conference in May
2002.

                                      -16-



         Shafer v. Philip Morris Cos., Inc., District Court, Morton County,
North Dakota, Case No. 00-C-1231, was filed in April 2000. Defendants filed
motions to dismiss in June 2000. This case was dismissed on December 4, 2001,
upon the court's own motion. Plaintiff filed a motion to reopen the case on
December 5, 2001.

         Swanson v. Philip Morris Cos., Inc., Circuit Court, Hughes County,
South Dakota, Case No. 00-144, was filed in April 2000. Defendants filed motions
to dismiss in June 2000, which the court took under advisement.

         Marcus Distributors v. Philip Morris Cos., Inc., United States District
Court for the Southern District of Illinois, Case No. 00-319-GPM, was filed in
April 2000. On June 14, 2000, plaintiff's motion for voluntarily dismissal was
granted. The case was transferred to Judge Forrester on June 7, 2000, to be
consolidated into the MDL 1342 proceeding. On July 28, 2000, plaintiff filed a
consolidated amended class action complaint which consolidated this case with
other cases pending in the MDL 1342 proceeding.

         Kissel v. Philip Morris Cos., Inc., Circuit Court, Brooke County, West
Virginia, Case No. 00-C-82-RI, was filed in April 2000. Defendants filed motions
to dismiss in June 2000, which the court denied on September 4, 2001. Defendants
answered the complaint in October 2001.

         Cusatis v. Philip Morris Cos., Inc., Circuit Court, Milwaukee County,
Wisconsin, Case No. 00CV003676, was filed in May 2000. RJR Tobacco answered the
complaint on July 24, 2000. A status conference is set for February 2002.

         Customer Co. v. R. J. Reynolds Tobacco Co., United States District
Court for the Northern District of California, Case No. C-00-1673, was filed in
May 2000. RJR Tobacco answered the complaint on June 5, 2000. The parties agreed
to settle the matter in January 2002.

         Barnes v. Philip Morris Cos., Inc., Superior Court, District of
Columbia, Case No. 3678-00, was filed in May 2000. Defendants filed motions to
dismiss in June 2000, which were granted by the court on April 6, 2001.
Plaintiff filed a second amended complaint in May 2001, and defendants filed
motions to dismiss the complaint in June 2001. The motions to dismiss are under
submission, and defendants' answers to the second amended complaint will not be
due until the court rules on the motions to dismiss.

         Campe v. R. J. Reynolds Tobacco Co, Superior Court, Alameda County,
California, Case No. 826425-9, was filed in May 2000. On May 31, 2000, the court
consolidated this case with 14 other antitrust cases pending in California state
court into Judicial Council Coordination Proceeding 4114. Plaintiff filed an
amended complaint on September 1, 2000, and a second amended complaint on March
21, 2001. RJR Tobacco answered the second amended complaint on April 10, 2001.
The parties have asked the court to schedule a status conference in May 2002.

         Aguayo v. R. J. Reynolds Tobacco Co., Superior Court, Alameda County,
California, Case No. 826420-8, was filed in May 2000. On May 31, 2000, the court
consolidated this case with 14 other antitrust cases pending in California state
court into Judicial Council Coordination Proceeding 4114. Plaintiff filed an
amended complaint on September 1, 2000, and a second amended complaint on March
21, 2001. RJR Tobacco answered the second amended complaint on April 10, 2001.
The parties have asked the court to schedule a status conference in May 2002.

         Phillips v. R. J. Reynolds Tobacco Co., Superior Court, Alameda County,
California, Case No. 826421-7, was filed in May 2000. On May 31, 2000, the court
consolidated this case with 14 other antitrust cases pending in California state
court into Judicial Council Coordination Proceeding 4114. Plaintiff filed an
amended complaint on September 1, 2000, and a second amended complaint on March
21, 2001. RJR Tobacco answered the second amended complaint on April 10, 2001.
The parties have asked the court to schedule a status conference in May 2002.

         Lau v. R. J. Reynolds Tobacco Co., Superior Court, Alameda County,
California, Case No. 826852-9, was filed in May 2000. On May 31, 2000, the court
consolidated this case with 14 other antitrust cases pending in California state
court into Judicial Council Coordination Proceeding 4114. Plaintiff filed an
amended complaint on September 1, 2000, and a second amended complaint on March
21, 2001. RJR Tobacco answered the second

                                      -17-



amended complaint on April 10, 2001. The parties have asked the court to
schedule a status conference in May 2002.

         Pooler v. R. J. Reynolds Tobacco Co., District Court, Washoe County,
Nevada, Case No. CV00-2674, was filed in June 2000. Plaintiff filed an amended
complaint in August 2000, and a second amended complaint in October 2000.
Defendants filed motions to dismiss in November 2000, which were denied by the
court on April 4, 2001. RJR Tobacco answered the complaint on May 15, 2001.

         Baker v. R. J. Reynolds Tobacco Co., Superior Court, Alameda County,
California, Case No. 827675-3, was filed in June 2000. On May 31, 2000, the
court consolidated this case with 14 other antitrust cases pending in California
state court into Judicial Council Coordination Proceeding 4114. Plaintiff filed
an amended complaint on September 1, 2000, and a second amended complaint on
March 21, 2001. RJR Tobacco answered the second amended complaint on April 10,
2001. The parties have asked the court to schedule a status conference in May
2002.

                              TOBACCO GROWERS' CASE

         DeLoach v. Philip Morris Cos., Inc., United States District Court for
the District of Columbia, Case No. 1:00CV00294, was filed on February 16, 2000.
The class action complaint was filed on behalf of a putative class of all
tobacco growers and tobacco allotment holders (some 5,930 of which are actually
named in the first amended complaint). Plaintiffs' current theory, as reflected
in their second amended complaint (which was filed on September 2, 2000), is
that the defendants (Philip Morris, Inc., RJR Tobacco, Brown & Williamson
Tobacco Corp. and Lorillard Tobacco Co.) engaged in bid-rigging of American
tobacco auctions (both burley and flue-cured) beginning at least by 1996 and
continuing to present. Defendants' actions are alleged to have held the auction
prices of tobacco at artificially low prices resulting in damage to tobacco
growers and allotment holders. In addition, plaintiffs allege that defendants
have engaged in a conspiracy to force the elimination or destruction of the
federal government's tobacco quota and price support program through an alleged
illegal group boycott. On October 9, 2000, defendants filed a motion to dismiss
the second amended complaint and a motion to transfer venue to the United States
District Court for the Middle District of North Carolina. On November 30, 2000,
the court granted the motion to transfer the case. On December 20, 2000,
plaintiffs moved to amend the complaint to add leaf-buying companies as
defendants. Plaintiffs' motion to certify the class remains pending.

                      HEALTH-CARE COST RECOVERY LITIGATION

         In certain of the pending proceedings, various local government
entities and others seek reimbursement for health-care expenditures allegedly
caused by tobacco products. The claims asserted in these health-care cost
recovery actions vary. Generally, plaintiffs assert the equitable claim that the
tobacco industry was "unjustly enriched" by plaintiffs' payment of health-care
costs allegedly attributable to smoking and seek reimbursement of those costs.
The plaintiffs also assert one or more of the following additional claims: the
equitable claim of indemnity, common law claims of negligence, strict liability,
breach of express and implied warranty, violation of a voluntary undertaking or
special duty, fraud, negligent misrepresentation, conspiracy, public nuisance,
claims under state and federal statutes governing consumer fraud, antitrust,
deceptive trade practices and false advertising, and claims under federal or
state RICO statutes.

         Each plaintiff seeks reimbursement of health-care costs. Other relief
sought by some, but not all, plaintiffs includes punitive damages, treble
damages for alleged antitrust law violations, injunctions prohibiting alleged
marketing and sales to minors, disclosure of research, disgorgement of profits,
funding of anti-smoking programs, disclosure of nicotine yields and payment of
attorney and expert witness fees.

         The defendants, including RJR Tobacco, raise a variety of defenses,
including: failure to state a valid claim, lack of benefit; adequate remedy at
law; "unclean hands" (namely, that plaintiffs cannot recover because they
participated in, and benefited from, the sale of cigarettes); lack of antitrust
injury; federal preemption; and lack of proximate cause and statute of
limitations. In addition, defendants argue that they should be entitled to
"set-off" any alleged damages to the extent a governmental entity benefits
economically from the sale of cigarettes through the receipt of excise taxes or
otherwise.

                                      -18-



         Defendants also argue that these cases are improper because plaintiffs
must proceed under principles of subrogation and assignment. Under traditional
theories of recovery, a payor of medical costs (such as an insurer) can seek
recovery of health-care costs from a third party solely by "standing in the
shoes" of the injured party. Defendants argue that plaintiffs should be required
to bring an action on behalf of each individual health-care recipient and should
be subject to all defenses available against the allegedly injured party.

         The following cases are health-care cost recovery suits filed against
RJR Tobacco and, in some cases, parent companies of United States cigarette
manufacturers, including RJR, that were active in 2001. These cases have been
further broken down as to the type of plaintiff involved.

                          STATE ATTORNEYS GENERAL CASES
                            HEALTH-CARE COST RECOVERY

         In June 1994, the Mississippi attorney general brought an action, Moore
v. American Tobacco Co., against various industry members, including RJR
Tobacco. This case was brought on behalf of the state to recover state funds
paid for health-care and medical and other assistance to state citizens
suffering from diseases and conditions allegedly related to tobacco use. By
making the state the plaintiff in the case and basing its claims on economic
loss rather than personal injury, the state sought to avoid the defenses
otherwise available against an individual plaintiff. Most other states, through
their attorneys general or other state agencies, sued RJR Tobacco and other U.S.
cigarette manufacturers based on similar theories. The cigarette manufacturer
defendants, including RJR Tobacco, settled the first four of these cases
scheduled to come to trial, those of Mississippi, Florida, Texas and Minnesota,
by separate agreements between each state and those manufacturers in each case.

         On November 23, 1998, the major U.S. cigarette manufacturers, including
RJR Tobacco, entered into the Master Settlement Agreement with attorneys general
representing the remaining 46 states, the District of Columbia, Puerto Rico,
Guam, the Virgin Islands, American Samoa and the Northern Marianas. The MSA
became effective on November 12, 1999, when final approval of the settlement was
achieved in 80% of the settling jurisdictions. As of October 17, 2000, final
approval had been achieved in all 50 settling jurisdictions. The MSA settled all
the health-care cost recovery actions brought by, or on behalf of, the settling
jurisdictions and contains releases of various additional present and future
claims.

                                CITY/COUNTY CASES
                            HEALTH-CARE COST RECOVERY

         Claims similar to those advanced in the state attorneys general actions
have also been asserted by cities and/or counties in separate actions. In
addition to the variety of substantive defenses described above, it is the
industry's position that recovery in any such actions (if any) should be subject
to the offset provisions of the MSA, and therefore, beyond the potential cost of
defending these actions through trial, there should be no additional financial
exposure as a result of these cases.

         Certain of the city/county cases have been dismissed in light of the
approval of the MSA in the relevant jurisdictions. Others, however, were active
during 2001, and remain pending to date.

         Los Angeles v. R. J. Reynolds Tobacco Co., superior Court, Los Angeles
County, California, Case No. 707651, was filed in August 1996. On June 25, 2001,
the parties stipulated to a dismissal which was approved by the court on June
27, 2001.

         California v. Philip Morris, Inc., Superior Court , San Francisco
County, California, Case No. 980864, was filed in September 1996. On June 27,
2001, the court issued an order of dismissal.

         County of Cook v. Philip Morris, Inc., Circuit Court, Cook County,
Illinois, Case No. 97-L-4550, was filed in April 1997. On December 10, 1999,
certain defendants, including RJR Tobacco, filed a motion for summary judgment,
which was denied on February 10, 2000. On December 20, 2000, certain defendants,
including RJR Tobacco, filed a motion for judgment on the pleadings which was
granted on August 8, 2001. Plaintiffs appealed the dismissal to the Illinois
Appellate Court, First District, on September 5, 2001. Defendants noticed a
cross-appeal

                                      -19-



to the appellate court on September 17, 2001, from the trial court's adverse
rulings on defendants' motions to dismiss on the grounds of MSA release and lack
of standing. The appellate court has not yet ruled.

         City of St. Louis v. American Tobacco Co., Inc., Circuit Court, St.
Louis County, Missouri, Case No. 982-9652, was filed in November 1998.
Defendants removed this case to the United States District Court for the Eastern
District of Missouri on December 17, 1998. Plaintiffs filed a motion to remand,
which was granted on July 2, 1999. On December 16, 1999, certain defendants
filed a motion to dismiss the first amended petition. This motion was granted in
part and denied in part on November 8, 2001. Defendants filed a writ of
prohibition to the Missouri Court of Appeals, Eastern District, which sought
review of the court's November 7, 2001, order. On December 19, 2001, the
appellate court denied the petition for writ of prohibition. On January 11,
2002, the circuit court granted a stipulated motion to stay until 30 days after
the final disposition by the Supreme Court of Missouri on defendants' petition
for writ of prohibition (at this point, defendants' petition had not been filed
with the Supreme Court). On January 23, 2002, defendants filed a petition for
writ of prohibition with the Missouri Supreme Court.

         St. Louis County v. American Tobacco Co., Inc., Circuit Court, St.
Louis County, Missouri, Case No. 982-9705, was filed in November 1998. On
February 15, 2000, the court stayed this case. On January 9, 2001, the court
extended the stay for a period of 30 days after the later of: (1) the date on
which the Supreme Court of Missouri renders its decision on
defendants-respondents' motion for rehearing in State ex rel. Nixon v. American
Tobacco Co. (Case No. SC82992), or (2) the date in which the Circuit Court of
the City of St. Louis renders its decision on defendants' motion to dismiss in
City of St. Louis v. American Tobacco Co., Inc. (Case No. 982-9652) (discussed
separately). The parties stipulated on January 3, 2002 that this action and all
proceedings be stayed until 30 days after the Missouri Supreme Court renders its
decision in City of St. Louis v. American Tobacco Co., Inc. (Case No. 982-9652)
(discussed separately).

         County of Wayne v. Philip Morris, Inc., United States District Court
for the Eastern District of Michigan, Case No. 99-76097, was filed in December
1999. Defendants removed the case to federal court on December 22, 1999. RJR
Tobacco filed its answer to the complaint on December 23, 1999. On August 25,
2000, the federal court certified the following question of law to the Michigan
Supreme Court: "Does the Michigan attorney general have the authority to
bind/release claims of a Michigan county as part of a settlement agreement in an
action that the attorney general brought on behalf of the State of Michigan?" On
January 31, 2002, the Michigan Supreme Court ruled that the attorney general
does have that authority. This case has been returned to the federal district
court for further proceedings.

         County of McHenry v. Philip Morris, Inc., Circuit Court, Cook County,
Illinois, Case No. 00L 7949, was filed in July 2000. Defendants removed the case
to the United States District Court for the Northern District of Michigan on
August 18, 2000. Plaintiffs moved to remand on August 30, 2000. On February 6,
2001, the federal court granted plaintiffs' motion to remand. Certain
Defendants, including RJR Tobacco, filed a Motion for Judgment on the Pleadings
on April 5, 2001. The State of Illinois filed a petition for leave to intervene
on April 19, 2001. On April 22, 2001, the court stayed this action until further
notice.

                                   UNION CASES
                            HEALTH-CARE COST RECOVERY

         Lawsuits have been brought by union trust funds against cigarette
manufacturers, including RJR Tobacco and others (RJR in some cases), in state
and federal courts across the country in the past four years. The funds seek
recovery on an aggregate basis for their payment of medical expenses of their
"participants" - union employees and their dependents -- allegedly injured by
cigarettes. The complaints in these cases are substantially identical, and more
than 20 of the cases purport to be class actions on behalf of all union funds in
a particular state.

         Central Laborers Welfare Fund v. Philip Morris, Inc., Circuit Court,
Madison County, Illinois, Case No. 97-L-516, was filed in June 1997. In October
1999, plaintiffs' counsel indicated that they were unsure as to whether to
continue this case. To date, no decision has been made, and the case remains
pending.

         Eastern States Health & Welfare Fund v. Philip Morris, Inc., Supreme
Court, New York County, New York, Case No. 97/603869, was filed in July 1997. On
January 6, 1998, the judge issued an order stating that the group of similar
union cases pending before the court (Eastern States, Puerto Rican ILGWU, IBEW
Local 363,

                                      -20-



IBEW Local 25, Local 840, Local 138, 138A and 138B, Long Island Regional Council
of Carpenters, Day Care Council-Local 205, Local 1199 National Benefit Fund, and
Local 1199 Home Care Industry) were related for the purposes of pretrial
discovery and would be assigned the same judge. On August 28, 1998, defendants
filed a motion to dismiss. The court granted the motion in part, and denied it
in part. On August 18, 1999, defendants filed a supplemental notice of motion to
dismiss on statute of limitation grounds. On August 23, 1999, defendants filed a
request for judicial intervention to dismiss this action because of delinquent
discovery and inactivity. On March 3, 2000, the court granted defendants'
motions to dismiss in the 10 union cases before it (referenced above).
Plaintiffs appealed to the New York Supreme Court Appellate Division, First
Department. The appellate court has not yet issued its ruling.

         Connecticut Pipe Trades Health Fund v. Philip Morris, Inc., United
States District Court for the District of Connecticut, Case No. 397CV01305
(JBA), was filed in July 1997. On November 24, 1999, the parties' joint
stipulation of dismissal was approved by the court. On July 10, 2000, the judge
reopened this case and authorized the filing of plaintiffs' second amended
complaint (April 10, 2000). Defendants filed a motion to dismiss on August 11,
2000, which was granted on March 21, 2001.

         Puerto Rican ILGWU Health & Welfare Fund v. Philip Morris, Inc.,
Supreme Court, New York County, New York, Case No. 97/604785, was filed in
September 1997. On January 6, 1998, the judge issued an order stating that the
group of similar union cases pending before the court (Eastern States, Puerto
Rican ILGWU, IBEW Local 363, IBEW Local 25, Local 840, Local 138, 138A and 138B,
Long Island Regional Council of Carpenters, Day Care Council-Local 205, Local
1199 National Benefit Fund, and Local 1199 Home Care Industry) were related for
the purposes of pretrial discovery and would be assigned the same judge. On
August 28, 1998, defendants filed a motion to dismiss. The court granted the
motion in part, and denied it in part. On August 18, 1999, defendants filed a
supplemental notice of motion to dismiss on statute of limitation grounds. On
August 23, 1999, defendants filed a request for judicial intervention to dismiss
this action because of delinquent discovery and inactivity. On March 3, 2000,
the court granted defendants' motions to dismiss in the 10 union cases before it
(referenced above). Plaintiffs appealed to the New York Supreme Court Appellate
Division, First Department. The appellate court has not yet issued its ruling.

         IBEW Local 25 Health & Welfare Benefit Fund v. Philip Morris, Inc.,
Supreme Court, New York County, New York, Case No. 97/122255, was filed in
November 1997. On January 6, 1998, the judge issued an order stating that the
group of similar union cases pending before the court (Eastern States, Puerto
Rican ILGWU, IBEW Local 363, IBEW Local 25, Local 840, Local 138, 138A and 138B,
Long Island Regional Council of Carpenters, Day Care Council-Local 205, Local
1199 National Benefit Fund, and Local 1199 Home Care Industry) were related for
the purposes of pretrial discovery and would be assigned the same judge. On
August 28, 1998, defendants filed a motion to dismiss. The court granted the
motion in part, and denied it in part. On August 18, 1999, defendants filed a
supplemental notice of motion to dismiss on statute of limitation grounds. On
August 23, 1999, defendants filed a request for judicial intervention to dismiss
this action because of delinquent discovery and inactivity. On March 3, 2000,
the court granted defendants' motions to dismiss in the 10 union cases before it
(referenced above). Plaintiffs appealed to the New York Supreme Court Appellate
Division, First Department. The appellate court has not yet issued its ruling.

         IBEW Local 363 Welfare Fund v. Philip Morris, Inc., Supreme Court, New
York County, New York, Case No. 97/122254, was filed in November 1997. On
January 6, 1998, the judge issued an order stating that the group of similar
union cases pending before the court (Eastern States, Puerto Rican ILGWU, IBEW
Local 363, IBEW Local 25, Local 840, Local 138, 138A and 138B, Long Island
Regional Council of Carpenters, Day Care Council-Local 205, Local 1199 National
Benefit Fund, and Local 1199 Home Care Industry) were related for the purposes
of pretrial discovery and would be assigned the same judge. On August 28, 1998,
defendants filed a motion to dismiss. The court granted the motion in part, and
denied it in part. On August 18, 1999, defendants filed a supplemental notice of
motion to dismiss on statute of limitation grounds. On August 23, 1999,
defendants filed a request for judicial intervention to dismiss this action
because of delinquent discovery and inactivity. On March 3, 2000, the court
granted defendants' motions to dismiss in the 10 union cases before it
(referenced above). Plaintiffs appealed to the New York Supreme Court Appellate
Division, First Department. The appellate court has not yet issued its ruling.

                                      -21-



         Long Island Regional Council of Carpenters Welfare Fund v. Philip
Morris, Inc., Supreme Court, New York County, New York, Case No. 97/122258, was
filed in November 1997. On January 6, 1998, the judge issued an order stating
that the group of similar union cases pending before the court (Eastern States,
Puerto Rican ILGWU, IBEW Local 363, IBEW Local 25, Local 840, Local 138, 138A
and 138B, Long Island Regional Council of Carpenters, Day Care Council-Local
205, Local 1199 National Benefit Fund, and Local 1199 Home Care Industry) were
related for the purposes of pretrial discovery and would be assigned the same
judge. On August 28, 1998, defendants filed a motion to dismiss. The court
granted the motion in part, and denied it in part. On August 18, 1999,
defendants filed a supplemental notice of motion to dismiss on statute of
limitation grounds. On August 23, 1999, defendants filed a request for judicial
intervention to dismiss this action because of delinquent discovery and
inactivity. On March 3, 2000, the court granted defendants' motions to dismiss
in the 10 union cases before it (referenced above). Plaintiffs appealed to the
New York Supreme Court Appellate Division, First Department. The appellate court
has not yet issued its ruling.

         Local 840, International Brotherhood of Teamsters Health & Insurance
Fund v. Philip Morris, Inc., Supreme Court, New York County, New York, Case No.
97/122256, was filed in November 1997. On January 6, 1998, the judge issued an
order stating that the group of similar union cases pending before the court
(Eastern States, Puerto Rican ILGWU, IBEW Local 363, IBEW Local 25, Local 840,
Local 138, 138A and 138B, Long Island Regional Council of Carpenters, Day Care
Council-Local 205, Local 1199 National Benefit Fund, and Local 1199 Home Care
Industry) were related for the purposes of pretrial discovery and would be
assigned the same judge. On August 28, 1998, defendants filed a motion to
dismiss. The court granted in part, and denied in part, their motion. On August
18, 1999, defendants filed a supplemental notice of motion to dismiss on statute
of limitation grounds. On August 23, 1999, defendants filed a request for
judicial intervention to dismiss this action because of delinquent discovery and
inactivity. On March 3, 2000, the court granted defendants' motions to dismiss
in the 10 union cases before it (referenced above). Plaintiffs appealed to the
New York Supreme Court Appellate Division, First Department. The appellate court
has not yet issued its ruling.

         Local 138, 138A, and 138B International Union of Operating Engineers
Welfare Fund v. Philip Morris, Inc., Supreme Court, New York County, New York,
Case No. 97/122257, was filed in November 1997. On January 6, 1998, the judge
issued an order stating that the group of similar union cases pending before the
court (Eastern States, Puerto Rican ILGWU, IBEW Local 363, IBEW Local 25, Local
840, Local 138, 138A and 138B, Long Island Regional Council of Carpenters, Day
Care Council-Local 205, Local 1199 National Benefit Fund, and Local 1199 Home
Care Industry) were related for the purposes of pretrial discovery and would be
assigned the same judge. On August 28, 1998, defendants filed a motion to
dismiss. The court granted in part, and denied in part, their motion. On August
18, 1999, defendants filed a supplemental notice of motion to dismiss on statute
of limitation grounds. On August 23, 1999, defendants filed a request for
judicial intervention to dismiss this action because of delinquent discovery and
inactivity. On March 3, 2000, the court granted defendants' motions to dismiss
in the 10 union cases before it (referenced above). Plaintiffs appealed to the
New York Supreme Court Appellate Division, First Department. The appellate court
has not yet issued its ruling.

         Day Care Council Local 205 D.C. 1717 Welfare Fund v. Philip Morris,
Inc., Supreme Court, New York County, New York, Case No. 97/606240, was filed in
December 1997. On January 6, 1998, the judge issued an order stating that the
group of similar union cases pending before the court (Eastern States, Puerto
Rican ILGWU, IBEW Local 363, IBEW Local 25, Local 840, Local 138, 138A and 138B,
Long Island Regional Council of Carpenters, Day Care Council-Local 205, Local
1199 National Benefit Fund, and Local 1199 Home Care Industry) were related for
the purposes of pretrial discovery and would be assigned the same judge. On
August 28, 1998, defendants filed a motion to dismiss. The court granted the
motion in part, and denied it in part. On August 18, 1999, defendants filed a
supplemental notice of motion to dismiss on statute of limitation grounds. On
August 23, 1999, defendants filed a request for judicial intervention to dismiss
this action because of delinquent discovery and inactivity. On March 3, 2000,
the court granted defendants' motions to dismiss in the 10 union cases before it
(referenced above). Plaintiffs appealed to the New York Supreme Court Appellate
Division, First Department. The appellate court has not yet issued its ruling.

         Local 1199 National Benefit Fund for Health and Human Services
Employees v. Philip Morris, Inc., Supreme Court, New York County, New York, Case
No. 97/606241, was filed in December 1997. On January 6, 1998, the judge issued
an order stating that the group of similar union cases pending before the court
(Eastern States, Puerto Rican ILGWU, IBEW Local 363, IBEW Local 25, Local 840,
Local 138, 138A and 138B, Long Island

                                      -22-


Regional Council of Carpenters, Day Care Council-Local 205, Local 1199 National
Benefit Fund, and Local 1199 Home Care Industry) were related for the purposes
of pretrial discovery and would be assigned the same judge. On August 28, 1998,
defendants filed a motion to dismiss. The court granted the motion in part, and
denied it in part. On August 18, 1999, defendants filed a supplemental notice of
motion to dismiss on statute of limitation grounds. On August 23, 1999,
defendants filed a request for judicial intervention to dismiss this action
because of delinquent discovery and inactivity. On March 3, 2000, the court
granted defendants' motions to dismiss in the 10 union cases before it
(referenced above). Plaintiffs appealed to the New York Supreme Court Appellate
Division, First Department. The appellate court has not yet issued its ruling.

         Local 1199 Home Care Industry Benefit Fund v. Philip Morris, Inc.,
Supreme Court, New York County, New York, Case No. 97/606249, was filed in
December 1997. On January 6, 1998, the judge issued an order stating that the
group of similar union cases pending before the court (Eastern States, Puerto
Rican ILGWU, IBEW Local 363, IBEW Local 25, Local 840, Local 138, 138A and 138B,
Long Island Regional Council of Carpenters, Day Care Council-Local 205, Local
1199 National Benefit Fund, and Local 1199 Home Care Industry) were related for
the purposes of pretrial discovery and would be assigned the same judge. On
August 28, 1998, defendants filed a motion to dismiss. The court granted the
motion in part, and denied it in part. On August 18, 1999, defendants filed a
supplemental notice of motion to dismiss on statute of limitation grounds. On
August 23, 1999, defendants filed a request for judicial intervention to dismiss
this action because of delinquent discovery and inactivity. On March 3, 2000,
the court granted defendants' motions to dismiss in the 10 union cases before it
(referenced above). Plaintiffs appealed to the New York Supreme Court Appellate
Division, First Department. The appellate court has not yet issued its ruling.

         Operating Engineers Local 12 Health & Welfare Fund v. American Tobacco
Co., Inc., Superior Court, Los Angeles County, California, Case No. BC 177968,
was filed in December 1997. On July 26, 1999, the court granted plaintiffs'
motion to consolidate several similar cases, pending before the same judge, with
this case designated as the lead and controlling case. On February 26, 1999, the
court ruled that the California immunity statute barred claims of fraudulent
concealment. On March 10, 2000, the trial court determined that, to the extent
plaintiffs' complaint sought monetary relief, such relief was beyond the scope
of the statute that authorized their remaining claims, although injunctive
relief was still available. Plaintiffs chose not to pursue injunctive relief,
and, on April 4, 2000, filed an ex parte motion for dismissal of all claims with
prejudice as to all defendants, which the court granted on April 10, 2000. On
April 11, 2000, plaintiff appealed various rulings of the trial court to the
Court of Appeals of the State of California, Fourth Appellate District. On
October 25, 2001, the California Court of Appeals affirmed the dismissal. On
January 25, 2002, the California Supreme Court accepted plaintiffs' petition for
review on a "grant and hold" basis.

         Operating Engineers Local 324 Health Care Fund v. Philip Morris, Inc.,
United States District Court for the Eastern District of Michigan, Southern
Division, Case No. 5:98-CV-60020, was filed in December 1997. On February 26,
1999, the court granted defendants' motion to dismiss plaintiffs' first amended
complaint. Plaintiffs appealed the dismissal to the Michigan Court of Appeals.
On June 13, 2001, the parties agreed to dismiss plaintiffs' appeal.

         Steamfitters Local Union No. 614 Health and Welfare Fund v. Philip
Morris, Inc., Circuit Court, Shelby County, Tennessee, Case No. 92260-2, was
filed in January 1998. On January 29, 1999, the trial court granted in part and
denied in part defendants' motion to dismiss. On September 26, 2000, the
Tennessee Court of Appeals (1) affirmed the trial court's dismissal of the
antitrust claim, (2) reversed the trial court's denial of the motion to dismiss
the remaining claims, finding the plaintiffs' alleged injuries are too remote,
as a matter of law, to permit recovery, and (3) remanded the case to the trial
court for dismissal of plaintiffs' complaint.

         National Asbestos Workers Medical Fund v. Philip Morris, Inc., United
States District Court for the Eastern District of New York, Case No. CV 98 1492,
was filed in February 1998. On October 19, 1998, the court denied defendants'
motion to dismiss. This case is part of the Simon II consolidated class action
complaint for declaratory relief which was filed on September 6, 2000. The cases
underlying the consolidated Simon II complaint are (1) Simon, Case No.
99-CV-1988; (2) Decie v. American Tobacco Co., Inc., Case No. 00-CV-2340; (3)
Ebert v. Philip Morris, Inc., Case No. 00-CV-4632; (4) Mason v. American Tobacco
Co., Inc., Case No. 00-CV-4442; (5) Bergeron v. Philip Morris, Inc., Case No.
99-CV-6142; (6) National Asbestos Workers Medical Fund v. Philip Morris, Inc.,
Case No. 98-CV-1492; (7) Blue Cross and Blue Shield of New Jersey v. Philip
Morris, Inc., Case No.

                                      -23-


98-CV-3287; (8) H.K. Porter Co., Inc. v. American Tobacco Co., Inc., Case No.
97-CV-7658; (9) Raymark Industries, Inc. v. American Tobacco Co., Inc., Case No.
98-CV-675; and (10) Falise v. American Tobacco Co., Inc., Case No. 99-CV-7392.
These cases are discussed separately.

         Service Employees International Union Health & Welfare Fund v. Philip
Morris, Inc., United States District Court for the District of Columbia, Case
No. 1:98CV00704-GK, was filed in March 1998. On December 21, 1999, the federal
district court in the District of Columbia denied defendants' motions to dismiss
in three Washington, D.C. union cases consolidated for pretrial purposes -- (1)
Michael H. Holland; (2) Service Employees International Union; and (3) S.E.I.U.
Local 74. Defendants appealed the decision to the United States Court of Appeals
for the District of Columbia. On May 22, 2001, the D.C. Court of Appeals
reversed the federal district court's ruling that denied in part defendants'
motion to dismiss, and affirmed the portion of the ruling that dismissed the
bulk of plaintiffs' claims in these cases. In the same opinion, the court
reversed the district court's ruling that denied defendants' motion to dismiss
the RICO and fraud claims in Sheet Metal Workers Trust Fund v. Philip Morris,
Inc., which had been consolidated with the first three cases for purposes of
pretrial discovery. The result of the D.C. Circuit's ruling is that all claims
in these four cases, as well as several additional union trust fund cases that
had also been consolidated for purposes of the appeal, were dismissed. On June
21, 2001, plaintiffs filed a petition for rehearing en banc which was denied on
July 13, 2001. On August 20, 2001, plaintiffs filed a petition for writ of
certiorari with the U.S. Supreme Court, which was denied on October 29, 2001.

         S.E.I.U. Local 74 Welfare Fund v. Philip Morris, Inc., United States
District Court for the District of Columbia, Case No. 1:98CV01569, was filed in
June 1998. On December 21, 1999, the federal district court in the District of
Columbia denied defendants' motions to dismiss in three Washington, D.C. union
cases consolidated for pretrial purposes -- (1) Michael H. Holland; (2) Service
Employees International Union; and (3) S.E.I.U. Local 74. Defendants appealed
the decision to the United States Court of Appeals for the District of Columbia.
On May 22, 2001, the D.C. Court of Appeals reversed the federal district court's
ruling that denied in part defendants' motion to dismiss, and affirmed the
portion of the ruling that dismissed the bulk of plaintiffs' claims in these
cases. In the same opinion, the court reversed the district court's ruling that
denied defendants' motion to dismiss the RICO and fraud claims in Sheet Metal
Workers Trust Fund v. Philip Morris, Inc., which had been consolidated with the
first three cases for purposes of pretrial discovery. The result of the D.C.
Circuit's ruling is that all claims in these four cases, as well as several
additional union trust fund cases that had also been consolidated for purposes
of the appeal, were dismissed. On June 21, 2001, plaintiffs filed a petition for
rehearing en banc which was denied on July 13, 2001. On August 20, 2001,
plaintiffs filed a petition for writ of certiorari with the U.S. Supreme Court,
which was denied on October 29, 2001.

         Holland v. Philip Morris, Inc., United States District Court for the
District of Columbia, Case No. 1:98CV01716, was filed in August 1998 On December
21, 1999, the federal district court in the District of Columbia denied
defendants' motions to dismiss in three Washington, D.C. union cases
consolidated for pretrial purposes -- (1) Michael H. Holland; (2) Service
Employees International Union; and (3) S.E.I.U. Local 74. Defendants appealed
the decision to the United States Court of Appeals for the District of Columbia.
On May 22, 2001, the D.C. Court of Appeals reversed the federal district court's
ruling that denied in part defendants' motion to dismiss, and affirmed the
portion of the ruling that dismissed the bulk of plaintiffs' claims in these
cases. In the same opinion, the court reversed the district court's ruling that
denied defendants' motion to dismiss the RICO and fraud claims in Sheet Metal
Workers Trust Fund v. Philip Morris, Inc., which had been consolidated with the
first three cases for purposes of pretrial discovery. The result of the D.C.
Circuit's ruling is that all claims in these four cases, as well as several
additional union trust fund cases that had also been consolidated for purposes
of the appeal, were dismissed. On June 21, 2001, plaintiffs filed a petition for
rehearing en banc which was denied on July 13, 2001. On August 20, 2001,
plaintiffs filed a petition for writ of certiorari with the U.S. Supreme Court,
which was denied on October 29, 2001.

         Sheet Metal Workers Trust Fund v. Philip Morris, Inc., United States
District Court for the District of Columbia, Case No. 1:99CV02326, was filed in
August 1999. On December 21, 1999, the federal district court in the District of
Columbia denied defendants' motions to dismiss in three Washington, D.C. union
cases (each discussed separately) consolidated for pretrial purposes -- (1)
Holland v. Philip Morris, Inc.; (2) Service Employees International Union Health
& Welfare Fund v. Philip Morris, Inc.; and (3) S.E.I.U. Local 74 Welfare Fund v.
Philip Morris, Inc. Defendants appealed the decision to the United States Court
of Appeals for the District of Columbia. On May 22, 2001, the D.C. Court of
Appeals reversed the federal district court's ruling that denied in part

                                      -24-


defendants' motion to dismiss, and affirmed the portion of the ruling that
dismissed the bulk of plaintiffs' claims in these cases. In the same opinion,
the court reversed the district court's ruling that denied defendants' motion to
dismiss the RICO and fraud claims in Sheet Metal Workers which had been
consolidated with the first three cases for purposes of pretrial discovery. The
result of the D.C. Circuit's ruling is that all claims in these four cases, as
well as several additional union trust fund cases that had also been
consolidated for purposes of the appeal, were dismissed. On June 21, 2001,
plaintiffs filed a petition for rehearing en banc which was denied on July 13,
2001. On August 20, 2001, plaintiffs filed a petition for writ of certiorari
with the U.S. Supreme Court, which was denied on October 29, 2001.

         HELP Bergeron v. Philip Morris, Inc., United States District Court for
the Eastern District of New York, Case No. CV 99 6142, was filed in September
1999. This case is part of the Simon II consolidated class action complaint for
declaratory relief which was filed on September 6, 2000. The cases underlying
the consolidated Simon II complaint are (1) Simon, Case No. 99-CV-1988; (2)
Decie v. American Tobacco Co., Inc., Case No. 00-CV-2340; (3) Ebert v. Philip
Morris, Inc., Case No. 00-CV-4632; (4) Mason v. American Tobacco Co., Inc., Case
No. 00-CV-4442; (5) Bergeron v. Philip Morris, Inc., Case No. 99-CV-6142; (6)
National Asbestos Workers Medical Fund v. Philip Morris, Inc., Case No.
98-CV-1492; (7) Blue Cross and Blue Shield of New Jersey v. Philip Morris, Inc.,
Case No. 98-CV-3287; (8) H.K. Porter Co., Inc. v. American Tobacco Co., Inc.,
Case No. 97-CV-7658; (9) Raymark Industries, Inc. v. American Tobacco Co., Inc.,
Case No. 98-CV-675; and (10) Falise v. American Tobacco Co., Inc., Case No.
99-CV-7392. These cases are discussed separately.

                          INSURERS/SELF-INSURERS CASES
                            HEALTH-CARE COST RECOVERY

         Claims for recovery of health care costs also have been filed by four
groups of health-care insurers, as well as a private entity that operates its
employee health-care programs on a self-insured basis. The claims advanced in
these cases are comparable to those advanced in the union health-care cost
recovery actions.

         Group Health Plan v. Philip Morris, Inc., United States District Court
for the District of Minnesota, Case No. 98-CV-1036, was filed in March 1998. On
January 25, 2000, a federal district judge in Minnesota dismissed all claims,
except a state antitrust claim and a conspiracy claim. Oral argument on
questions certified to the Supreme Court of the State of Minnesota was heard on
June 1, 2000. On January 11, 2001, the Supreme Court of Minnesota ruled that
these claims can go forward. On January 31, 2002, defendants' motion for summary
judgment was granted and the case dismissed.

         Regence Blueshield v. Philip Morris, Inc., United States District Court
for the Western District of Washington, Case No. C98-559R, was filed in April
1998. In January 6, 1999, the court granted certain defendants' motion to
dismiss. On February 4, 1999, plaintiffs appealed this ruling to the United
States Court of Appeals for the Ninth Circuit, which affirmed the district
court's dismissal on February 28, 2001. Plaintiff petitioned the Ninth Circuit
for a panel rehearing, which was denied on April 16, 2001.

         Blue Cross and Blue Shield of New Jersey, Inc. v. Philip Morris, Inc.,
United States District Court for the Eastern District of New York, Case No. CV
98 3287, was filed in April 1998. On February 25, 1999, the trial court denied
certain defendants' motions to dismiss for failure to state a claim and failure
to join necessary parties. Trial with respect to the claims of Empire Blue Cross
and Blue Shield began on March 19, 2001. On June 6, 2001, a federal court jury
in Brooklyn returned a verdict in favor of RJR Tobacco and other tobacco
defendants on common law fraud and civil RICO claims, but found for the
plaintiff, Empire Blue Cross and Blue Shield, on a claim under a New York state
deceptive business practices statute. Empire pursued its claims against the
defendants on behalf of itself directly, as well as on the behalf of its
insureds, under a theory of subrogation. The jury verdict on the direct claim
was less than $17.8 million, and the verdict on the subrogated claim was
slightly more than $11.8 million. RJR Tobacco's portion of these amounts is $6.6
million and $4.4 million, respectively. Empire is not entitled to recover under
both direct and subrogated claims; thus, Empire must elect one claim (and thus
one jury verdict) or the other. The New York statute under which Empire
recovered does not provide for punitive damages, but does allow for recovery of
reasonable attorneys' fees. Plaintiff filed a motion for attorneys' fees on
which a hearing is scheduled for December 10, 2001. On October 4, 2001, the
court denied defendants' post-trial motions, entered final judgment in favor of
Empire, yet retained jurisdiction to decide the attorneys' fees issue. RJR
Tobacco and the other tobacco defendants appealed the final judgment to the
United States Court of Appeals for the Second Circuit. All

                                      -25-


remaining claims of Blue Cross Blue Shield plans pending before the court are
stayed during the appeals process.. This case is part of the Simon II
consolidated class action complaint for declaratory relief which was filed on
September 6, 2000. The cases underlying the consolidated Simon II complaint are
(1) Simon, Case No. 99-CV-1988; (2) Decie v. American Tobacco Co., Inc., Case
No. 00-CV-2340; (3) Ebert v. Philip Morris, Inc., Case No. 00-CV-4632; (4) Mason
v. American Tobacco Co., Inc., Case No. 00-CV-4442; (5) Bergeron v. Philip
Morris, Inc., Case No. 99-CV-6142; (6) National Asbestos Workers Medical Fund v.
Philip Morris, Inc., Case No. 98-CV-1492; (7) Blue Cross and Blue Shield of New
Jersey v. Philip Morris, Inc., Case No. 98-CV-3287; (8) H.K. Porter Co., Inc. v.
American Tobacco Co., Inc., Case No. 97-CV-7658; (9) Raymark Industries, Inc. v.
American Tobacco Co., Inc., Case No. 98-CV-675; and (10) Falise v. American
Tobacco Co., Inc., Case No. 99-CV-7392. These cases are discussed separately.

         Medica v. Philip Morris, Inc., United States District Court for the
District of Minnesota, Case No. 99-1739 PAM/JGL, was filed in November 1999. On
January 25, 2000, a federal district judge in Minnesota dismissed all claims,
except a state antitrust claim and a conspiracy claim. Oral argument on
questions certified to the Supreme Court of the State of Minnesota was heard on
June 1, 2000. On January 11, 2001, the Supreme Court of Minnesota ruled that
these claims can go forward. On January 31, 2002, defendants' motion for summary
judgment was granted, and the case was dismissed.

                          NATIVE AMERICAN TRIBAL CASES
                            HEALTH-CARE COST RECOVERY

         Crow Creek Sioux Tribe v. American Tobacco Co., Inc., Tribal Court of
the Crow Creek Sioux, South Dakota, Case No. CV 97-9-82, was filed in September
1997. On January 29, 2000, the tribal court entered an order staying this case
in its entirety for 540 days. Although the stay has expired, there has been no
further activity in the case.

         Standing Rock Sioux Tribe v. American Tobacco Co., Inc., Standing Rock
Sioux Tribal Court, North Dakota, was filed in May 1998. On March 1, 1999,
defendants' motion to dismiss was denied. On January 21, 2000, the tribal court
entered an order staying all proceedings until July 1, 2000. On May 1, 2000, the
Standing Rock Sioux Supreme Court issued an order remanding the case to the
tribal court. On May 24, 2000, the tribal court entered another stay order
effective through November 30, 2000. There has been no further activity. On
February 4, 2002, the court ordered the case to be dismissed without prejudice.

         Sisseton-Wahpeton Sioux Tribe v. American Tobacco Co., Inc.,
Sisseton-Wahpeton Sioux Tribal Court, North Dakota, Case No. C-98-89-54, was
filed in May 1998. On November 2, 1999, the court granted in part and denied in
part defendants' motion to dismiss plaintiffs' first amended complaint. On
November 12, 1999, defendants filed a petition for intermediate appeal to the
Northern Plains Intertribal Court of Appeals, which was granted on December 1,
1999. The appeals court issued a stay of these proceedings through March 31,
2001. Based on the ruling in the Acoma Pueblo case (discussed separately),
defendants have asked plaintiff to dismiss this action. Defendants anticipate
the Tribe will authorize its counsel to sign a stipulation/order of voluntary
dismissal.

         Pechanga Band of Luiseno Mission Indians v. Philip Morris, Inc.,
Superior Court, San Diego County, California, Case No. 725419, was filed in
October 1998. On January 7, 2000, plaintiffs filed a second amended complaint.
On February 7, 2000, RJR Tobacco filed its answer. On September 25, 2000,
plaintiffs filed their motion for class certification, which was denied by the
court on December 8, 2000. On January 10, 2001, plaintiffs filed requests for
dismissal, which were entered as to all defendants.

         Acoma Pueblo v. American Tobacco Co., United States District Court for
the District of New Mexico, Case No. CIV 991049 WWD, was filed in June 1999. On
September 27, 1999, certain defendants filed a motion to dismiss. On November
18, 1999, the court entered an order staying this case until July 1, 2000. On
December 14, 2000, plaintiffs filed a motion to remand which was denied on
February 20, 2001. Plaintiffs filed an amended complaint on June 8, 2001. On
July 30, 2001, all claims were dismissed without prejudice. On November 1, 2001,
an amended order was filed, which dismissed all claims with prejudice and denied
plaintiff's motion for reconsideration.

                                      -26-



         Navajo Nation v. Philip Morris, Inc., Navajo Nation District Court,
Arizona, Case No. WR-CV:449-99, was filed in August 1999. This case was filed on
August 11, 1999. On October 20, 1999, defendants filed a motion to dismiss
plaintiffs' complaint, to which plaintiffs have filed their opposition.
Defendants filed a reply brief on January 21, 2000. On January 25, 2002, the
court granted defendants' motion to dismiss all claims, except the product
liability claim.

         Alabama Coushatta Tribe of Texas v. American Tobacco Co., United States
District Court for the Eastern District of Texas, Case No. 1:00CV-596, was filed
in August 2000. Defendants, including RJR Tobacco, filed a motion to dismiss on
October 10, 2000. On August 30, 2001, the court granted, with prejudice,
defendants' motion to dismiss. On September 25, 2001, plaintiff noticed an
appeal to the United States Court of Appeals for the Fifth Circuit. On January
28, 2002, plaintiffs-appellants filed their opening brief.

                               INTERNATIONAL CASES
                            HEALTH-CARE COST RECOVERY

         A number of foreign countries have filed suit in state and federal
courts in the United States against RJR Tobacco and other tobacco industry
defendants to recover funds for health-care and medical and other assistance
paid by those foreign governments to their citizens suffering from diseases and
conditions allegedly related to tobacco use. Of the 30 cases currently pending,
4 are pending in state court and 26 are pending in federal court. 24 federal
court cases have been transferred by the Panel on Multi-District Litigation
(referred to in this Exhibit 99.1 as the MDL Panel) to the District Court of the
District of Columbia. Other foreign governments and entities have stated that
they are considering filing such actions in the United States. In addition, the
Republic of the Marshall Islands has brought a health-care cost recovery lawsuit
in the Marshall Islands against RJR Tobacco and other cigarette manufacturers.
Pursuant to the terms of the 1999 sale of RJR's international tobacco business,
Japan Tobacco Inc. assumed RJR Tobacco's liability, if any, in these cases.

         Republic of the Marshall Islands v. American Tobacco Co., Inc., High
Court, Marshall Islands, Case No. 1997-261, was filed in October 1997. On
January 7, 2000, plaintiff filed a second amended complaint. On February 22,
2001 the High Court of the Marshall Islands granted defendants' motion for
summary judgment in part, dismissing all plaintiff's claims except for those
pertaining to the Consumer Protection Act. On May 18, 2001, the parties agreed
to dismiss the remaining cause of action. On June 4, 2001, the High Court of the
Marshall Islands entered final judgment. On June 27, 2001, plaintiff noticed an
appeal to the Supreme Court of the Republic of the Marshall Islands. On July 3,
2001, defendants filed a notice of cross appeal. Oral argument on the appeal is
scheduled for April 17-19, 2002.

         Panama v. American Tobacco Co., Inc., United States District Court for
the District of Columbia, Case No. 00-2681, was filed in October 1998. This case
was removed by defendants to the United States District Court for the Eastern
District of Louisiana on November 5, 1998. On December 4, 1998, plaintiffs filed
a motion to remand the case to state court, which was granted on May 28, 1999
(before the cases in federal court were consolidated under the Multi-District
Litigation rules). Defendants appealed this ruling to the United States Court of
Appeals for the Fifth Circuit on June 25, 1999, and further moved the federal
district court, on August 30, 1999, for a stay pending the appeal. On July 17,
2000, the Fifth Circuit reversed the federal court's remand decision, and the
case was returned to federal court. On August 21, 2000, a conditional MDL
transfer order was issued, moving the case to the United States District Court
for the District of Columbia for inclusion in the MDL consolidation. On December
20, 2000, Judge Friedman stayed all proceedings in this case, pending the D.C.
Court of Appeals' rulings on the appeals and mandamus petitions in other cases.

         Bolivia v. Philip Morris, Cos., Inc., United States District Court for
the District of Columbia, Case No. 1:99-0586-PLF, was filed in January 1999. On
February 19, 1999, defendants removed this case to the United States District
Court for the Southern District of Texas, Galveston Division. On March 1, 1999,
the Texas federal court transferred this case to Judge Friedman in the United
States District Court for the District of Columbia. On March 18, 1999, plaintiff
filed a motion to remand the case to the Texas state court. On June 10, 1999,
this case was consolidated with the other foreign government cases pending in
federal courts under the MDL procedures. RJR Tobacco filed its answer to
plaintiff's complaint on September 3, 1999. On June 12, 2000, Judge Friedman
ruled that diversity exists in this case, and ordered limited discovery on
whether Liggett's failure to consent to removal should be disregarded. On
January 3, 2001, Judge Friedman denied plaintiff's motion to add British
American

                                      -27-


Tobacco Company as a defendant. He further ordered additional deposition
discovery of Bolivia's and Liggett's counsel concerning Liggett's failure to
consent to removal. These depositions have been taken. Defendants filed a
supplemental opposition to the motion to remand on August 22, 2001.

         Venezuela v. Philip Morris Cos., Inc., Circuit Court, Dade County,
Miami Division, Case No. 99-1943CA25, was filed in January 1999. Defendants
(except Liggett) removed the case to the United States District Court for the
Southern District of Florida on February 26, 1999. A conditional transfer order
to the MDL Panel before Judge Friedman of the United States District Court for
the District of Columbia was filed on June 10, 1999. Defendants answered
plaintiff's complaint on January 3, 2000. Plaintiff moved to remand the case,
which Judge Friedman granted on June 12, 2000. Defendants appealed the ruling to
the United States Court of Appeals for the District of Columbia on July 12,
2000. On October 11, 2000, the D.C. Court of Appeals ordered that defendants'
appeal be treated as a petition for a writ of mandamus. Identical orders were
entered in the pending appeals of remand orders in the Espirito Santo, Goias and
Venezuela cases. Defendants filed their memorandum on October 30, 2000.
Defendants also petitioned for advisory mandamus in both the Russia and Mato
Grosso do Sul cases, asking for appellate guidance from the D.C. Circuit with
respect to federal jurisdiction, and requested consolidation of the mandamus
petitions in the six pertinent cases: (1) Russia, (2) Mato Grosso do Sul, (3)
Ecuador, (4) Venezuela, (5) Goias, and (6) Espirito Santo. On January 24, 2001,
the D.C. Circuit reconverted the mandamus petitions in Ecuador, Espirito Santo,
Goias and Venezuela into appeals and consolidated all six cases. Appellate
briefing is complete, and oral argument was heard on October 16, 2001. The D.C.
Circuit has not yet ruled on this appeal. On November 20, 2001, Dade County
Circuit Judge Shapiro granted defendants' motion to dismiss and dismissed this
action with prejudice, ruling that plaintiff's claims were too remote, indirect
and derivative to survive. Plaintiff appealed Judge Shapiro's order to the
District Court of Appeal of Florida, Third District, on December 19, 2001.

         Rio de Janeiro v. Philip Morris Cos., Inc., District Court, Angelina
County, Texas, Case No. 32198-99-7, was filed in July 1999. Defendants removed
this case to federal district court on August 11, 1999. Plaintiffs filed a
motion to remand on August 16, 1999. A conditional transfer order to the MDL
Panel was filed on August 30, 1999. Defendants also filed a motion to stay the
proceedings pending transfer of this case to the MDL Panel on August 30. On
September 14, 1999, this case was remanded back to Angelina County District
Court. On September 15, 1999, the conditional transfer order was vacated. On
September 24, 1999, defendants appealed the remand ruling to the United States
Court of Appeals for the Fifth Circuit, which, on January 22, 2001, dismissed
defendants' appeal. In May 2001, defendants filed motions to dismiss for lack of
jurisdiction, which are set for hearing in March 2002. On December 3, 2001, the
parties stipulated to the dismissal of the parent companies.

         Goias v. Philip Morris Cos., Inc., Circuit Court, Dade County, Florida,
Case No. 99-24202 CA 02, was filed in October 1999. Defendants (except Liggett)
removed this case to federal court, moved for a stay of the proceedings and
initiated the process for MDL consolidation before Judge Friedman of the United
States District Court for the District of Columbia, on November 10, 1999. On
December 6, 1999, the federal court stayed the case, pending a ruling on the MDL
consolidation. Defendants filed answers to the complaint on December 8, 1999. On
December 10, 1999, the federal court stayed the case, pending a ruling on the
MDL consolidation. The case was conditionally transferred to be consolidated
into the MDL proceedings on December 22, 1999. Judge Friedman remanded the case
to the Circuit Court of Dade County on July 10, 2000. Defendants appealed the
remand decision to the United States Court of Appeals for the District of
Columbia on July 20, 2000. On October 11, 2000, the D.C. Court of Appeals
ordered that defendants' appeal be treated as a petition for a writ of mandamus.
Identical orders were entered in the pending appeals of remand orders in the
Espirito Santo, Goias and Venezuela cases. Defendants filed their memorandum on
October 30, 2000. Defendants also petitioned for advisory mandamus in both the
Russia and Mato Grosso do Sul cases, asking for appellate guidance from the D.C.
Circuit with respect to federal jurisdiction, and requested consolidation of the
mandamus petitions in the six pertinent cases: (1) Russia, (2) Mato Grosso do
Sul, (3) Ecuador, (4) Venezuela, (5) Goias, and (6) Espirito Santo. On January
24, 2001, the D.C. Circuit reconverted the mandamus petitions in Ecuador,
Espirito Santo, Goias and Venezuela into appeals and consolidated all six cases.
Appellate briefing is complete, and oral argument was heard on October 16, 2001.
The D.C. Circuit has not yet ruled on this appeal. Defendants have filed
dispositive motions in Dade County Circuit Court which remain pending.

         Ukraine v. American Brands, Inc., United States District Court for the
District of Columbia, Case No. 99cv03080 PLF, was filed in November 1999.
Defendants filed answers to the complaint on December 17, 1999.

                                      -28-


On December 23, 1999, this case was transferred to the United States District
Court for the District of Columbia for inclusion in the consolidated MDL
proceedings before Judge Friedman. Judge Friedman dismissed plaintiff's case on
March 31, 2000. Ukraine appealed to the United States Court of Appeals for the
District of Columbia on April 20, 2000, and this appeal was consolidated with
the appeals in the Guatemala v. Philip Morris, Inc. (a case in which RJR Tobacco
is not a defendant) and Nicaragua v. Philip Morris, Inc. (also a case in which
RJR Tobacco is not a defendant) cases on May 8, 2000. The Court of Appeals for
the District of Columbia Circuit affirmed Judge Friedman's dismissal on May 22,
2001. Plaintiff filed a petition for writ of certiorari in the United States
Supreme Court on August 20, 2001, which was denied on October 29, 2001.

         Ecuador v. Philip Morris Cos., Inc., Circuit Court, Dade County,
Florida, Case No. 00-1951 CA 27, was filed in January 2000. RJR Tobacco answered
the complaint on May 17, 2000. Defendants removed this case to federal court on
May 25, 2000. The case was conditionally transferred to Judge Friedman in the
United States District Court for the District of Columbia, to be consolidated
into the MDL proceedings. Judge Friedman remanded the case to the Circuit Court
of Dade County on July 10, 2000. On July 20, 2000, defendants appealed the
remand decision to the United States Court of Appeals for the District of
Columbia. On October 11, 2000, the D.C. Court of Appeals ordered that
defendants' appeal be treated as a petition for a writ of mandamus. Identical
orders were entered in the pending appeals of remand orders in the Espirito
Santo, Goias and Venezuela cases. Defendants filed their memorandum on October
30, 2000. Defendants also petitioned for advisory mandamus in both the Russia
and Mato Grosso do Sul cases, asking for appellate guidance from the D.C.
Circuit with respect to federal jurisdiction, and requested consolidation of the
mandamus petitions in the six pertinent cases: (1) Russia, (2) Mato Grosso do
Sul, (3) Ecuador, (4) Venezuela, (5) Goias, and (6) Espirito Santo. On January
24, 2001, the D.C. Circuit reconverted the mandamus petitions in Ecuador,
Espirito Santo, Goias and Venezuela into appeals and consolidated all six cases.
Appellate briefing is complete, and oral argument was heard on October 16, 2001.
The D.C. Circuit has not yet ruled on this appeal. Meanwhile, in Florida state
court, defendants filed motions for judgment on the pleadings and jurisdictional
motions. On April 16, 2001, Dade County Circuit Judge Siegel orally granted
defendants' motions to dismiss, and suggested that plaintiff may wish to
consider refiling this action in another state. Plaintiff filed a notice of
voluntary dismissal on April 16, 2001.

         Sao Paulo v. American Tobacco Co., Inc., District Court, Parish of
Orleans, Louisiana, Case No. 2000-2058, was filed in February 2000. On March 24,
2000, defendants removed the case to the United States District Court for the
Eastern District of Louisiana, moved for a stay of the proceedings, moved to
recuse the judge, and requested MDL consolidation. On April 7, 2000, the case
was conditionally transferred to Judge Friedman in the United States District
Court for the District of Columbia, to be consolidated into the MDL proceedings.
Plaintiffs moved to remand the case to Louisiana state court on April 10, 2000.
Defendants' motion for a stay, as well as their motion to recuse the judge, was
denied on May 26, 2000. On May 30, 2000, defendants appealed the May 26 ruling
to the United States Court of Appeals for the Fifth Circuit. The MDL Panel
vacated its conditional transfer on June 1, 2000. On May 14, 2001, the Fifth
Circuit reversed the May 26 ruling and remanded the case to the Eastern District
of Louisiana. Plaintiff filed a petition for rehearing en banc in the Fifth
Circuit on May 25, 2001, which was denied on September 5, 2001. RJR Tobacco
answered the complaint on October 12, 2001. On October 29, 2001, the case was
conditionally transferred to Judge Friedman in the United States District Court
for the District of Columbia, to be consolidated into the MDL proceedings. On
December 13, 2001, Judge Friedman stayed all proceedings in this case, pending
the District of Columbia Circuit's ruling on the appeals and mandamus petitions
in other cases. Plaintiff filed a petition for writ of certiorari to the United
States Supreme Court on December 4, 2001, appealing the September 5, 2001 denial
of their petition for rehearing en banc. Defendants filed their opposition brief
on January 31, 2001.

         Obra Social de Empleados de la Marina Mercante v. American Tobacco Co.,
Inc., Superior Court, Washington, D.C., Case No. 00-1790, was filed in March
2000. On May 19, 2000, defendants filed a motion to dismiss, which was granted
by the court on January 13, 2001. Plaintiff filed an appeal in the District of
Columbia Circuit Court of Appeal on February 16, 2001. Pursuant to stipulation
by the parties, this appeal was dismissed on October 22, 2001.

         Ontario v. Imperial Tobacco Ltd., United States District Court for the
District of Columbia, Case No. 00-0872, was filed in March 2000. On March 3,
2000, defendants requested MDL consolidation. On April 17, 2000, the case was
conditionally transferred to Judge Friedman in the United States District Court
for the District of Columbia, to be consolidated into the MDL proceedings. The
principal defendants, including RJR Tobacco, filed

                                      -29-


answer to the complaint on April 25, 2000. On August 7, 2000, Judge Friedman
dismissed this case. Plaintiff appealed this decision to the United States Court
of Appeals for the District of Columbia on September 6, 2000. On February 28,
2001, the Court of Appeals held the case in abeyance pending further order of
the court. Defendants filed a motion for summary affirmance on June 21, 2001,
based on the recent appellate decision in the Guatemala v. Philip Morris, Inc.
(a case in which RJR Tobacco is not a defendant) case. Plaintiff filed a
response on November 27, 2001, requesting that their appeal be dismissed. The
appeal was dismissed by the District of Columbia Circuit on November 29, 2001.

         Espirito Santo v. Brooke Group Ltd., Circuit Court, Dade County,
Florida, Case No. 00-07472 CA 03, was filed in March 2000. On April 19, 2000,
defendants removed this case to the United States District Court for the
Southern District of Florida, requested MDL status and moved for a stay.
Plaintiff moved to remand the case on April 24, 2000. The MDL Panel issued a
conditional transfer order on May 3, 2000, and the Florida state court granted
defendants' motion for a stay pending the MDL transfer and consolidation. RJR
Tobacco answered plaintiff's complaint on May 15, 2000. Judge Friedman remanded
the case to the Circuit Court of Florida on August 10, 2000. Defendants appealed
to the United States Court of Appeals for the District of Columbia on August 18,
2000. On October 11, 2000, the D.C. Court of Appeals ordered that defendants'
appeal be treated as a petition for a writ of mandamus. Identical orders were
entered in the pending appeals of remand orders in the Espirito Santo, Goias and
Venezuela cases. Defendants filed their memorandum on October 30, 2000.
Defendants also petitioned for advisory mandamus in both the Russia and Mato
Grosso do Sul cases, asking for appellate guidance from the D.C. Circuit with
respect to federal jurisdiction, and requested consolidation of the mandamus
petitions in the six pertinent cases: (1) Russia, (2) Mato Grosso do Sul, (3)
Ecuador, (4) Venezuela, (5) Goias, and (6) Espirito Santo. On January 24, 2001,
the D.C. Circuit reconverted the mandamus petitions in Ecuador, Espirito Santo,
Goias and Venezuela into appeals and consolidated all six cases. Appellate
briefing is complete, and oral argument was heard on October 16, 2001. The D.C.
Circuit has not yet ruled on this appeal. In state court, Dade County Circuit
Judge Shapiro granted defendants' motion to dismiss on November 20, 2001, ruling
that plaintiff's claims were too remote, indirect and derivative to survive.

         Mato Grosso do Sul Do Sul v. Philip Morris Cos., Inc., United States
District Court for the District of Columbia, Case No. 00-2654, was filed in July
2000. Defendants removed the case to the United States District Court for the
Southern District of Florida on August 16, 2000. Plaintiff filed a motion to
remand on September 14, 2000. The MDL transfer order to Judge Friedman of the
United States District Court for the District of Columbia was effective as of
October 27, 2000. On October 30, 2000, defendants petitioned for advisory
mandamus in both the Russia and Mato Grosso do Sul cases, asking for appellate
guidance from the D.C. Circuit with respect to federal jurisdiction, and
requested consolidation of the mandamus petitions in the six pertinent cases:
(1) Russia, (2) Mato Grosso do Sul, (3) Ecuador, (4) Venezuela, (5) Goias, and
(6) Espirito Santo. On January 24, 2001, the D.C. Circuit reconverted the
mandamus petitions in Ecuador, Espirito Santo, Goias and into appeals and
consolidated all six cases. Defendants answered the complaint on December 4,
2000. Judge Friedman stayed all proceedings in this case on December 20, 2000,
pending the District of Columbia Circuit's ruling on the mandamus petitions.
Appellate briefing is complete, and oral argument was heard on October 16, 2001.
The D.C. Circuit has not yet ruled on this appeal.

         Russian Federation v. Philip Morris Cos., Inc., United States District
Court for the District of Columbia, Case No 00-2655, was filed in August 2000.
On September 1, 2000, defendants removed the case to the United States District
Court for the Southern District of Florida and sought MDL transfer. The MDL
transfer order to Judge Friedman of the United States District Court for the
District of Columbia became effective as of October 27, 2000. Plaintiff filed a
motion to remand on September 28, 2000. On October 30, 2000, defendants
petitioned for advisory mandamus in both the Russia and Mato Grosso do Sul
cases, asking for appellate guidance from the D.C. Circuit with respect to
federal jurisdiction, and requested consolidation of the mandamus petitions in
the six pertinent cases: (1) Russia, (2) Mato Grosso do Sul, (3) Ecuador, (4)
Venezuela, (5) Goias, and (6) Espirito Santo. Defendants also moved for a stay,
which was granted on December 20, 2000. Defendants' answers will not be due
before the stay is lifted. On January 24, 2001, the D.C. Circuit reconverted the
mandamus petitions in Ecuador, Espirito Santo, Goias and Venezuela into into
appeals and consolidated all six cases. Appellate briefing is complete, and oral
argument was heard on October 16, 2001. The D.C. Circuit has not yet ruled on
this appeal.

         Betriebskrankenkasse aktiv v. Philip Morris, Inc., United States
District Court for the Eastern District of New York, Case No. 1:00cv05413, was
filed in September 2000. RJR Tobacco filed its answer on January 5, 2001.

                                      -30-


Defendants have two pending motions before the court: (1) to transfer the case
to another judge in the Eastern District of New York (which motion is before the
chief judge of the Eastern District); or (2) to transfer the case to the
Southern District of New York. On April 18, 2001, Judge Weinstein stayed the
case until further order of the court. On November 7, 2001, Judge Weinstein
ordered that, because this case presents many similar factual and legal
questions raised on appeal in the Blue Cross case (discussed separately), trial
of this case will await the decision in the Blue Cross appeal.

         Honduras v. Philip Morris Cos., Inc., United States District Court for
the District of Columbia, Case No. 00-2901, was filed in October 2000.
Defendants removed this case to the United States District Court for the
Southern District of Florida, and sought transfer to the MDL Panel on October
12, 2000. Plaintiff moved to remand the case to Florida state court on October
16, 2000. The MDL transfer order to Judge Friedman of the United States District
Court for the District of Columbia became effective November 24, 2000. RJR
Tobacco answered the complaint on November 28, 2000. Judge Friedman stayed all
proceedings in this case on December 28, 2001, pending the District of Columbia
Circuit's ruling on the appeals and mandamus petitions in other cases.

         Tocantins v. Brooke Group, Ltd., Inc., United States District Court for
the District of Columbia, Case No. 00-4462, was filed in October 2000.
Defendants removed this case to the United States District Court for the
Southern District of Florida on November 22, 2000, and sought transfer to the
MDL Panel on December 5, 2000. RJR Tobacco answered the complaint on December
27, 2000. The MDL transfer order to Judge Friedman of the United States District
Court for the District of Columbia became effective January 17, 2001. On January
23, 2001, Judge Friedman stayed the case pending the District of Columbia
Circuit's ruling on the appeals and mandamus petitions filed in other cases.

         Piaui v. Philip Morris Cos., Inc., United States District Court for the
District of Columbia, Case No. 01-0114, was filed in December 2000. Defendants
removed this case to the United States District Court for the Southern District
of Florida, and sought transfer to the MDL Panel on January 9, 2001. Plaintiff
moved to remand the case to Florida state court on January 22, 2001. The MDL
transfer order to Judge Friedman of the United States District Court for the
District of Columbia became effective February 14, 2001. On March 9, 2001, Judge
Friedman stayed the case pending the District of Columbia Circuit's ruling on
the appeals and mandamus petitions in other cases.

         Kyrgyz v. Brooke Group Ltd. Inc., United States District Court for the
Southern District of Florida, Case No. 01-cv-605, was filed in January 2001. On
February 13, 2001, defendants removed the case to the United States District
Court for the Southern District of Florida. The MDL transfer order to Judge
Friedman of the United States District Court for the District of Columbia became
effective as of March 14, 2001. On March 30, 2001, the parties filed a
stipulation of dismissal, which was approved and entered by Judge Friedman on
April 20, 2001.

         Tajikistan v. Brooke Group Ltd. Inc., United States District Court for
the Southern District of Florida, Case No. 01-cv-607, was filed in January 2001.
On February 13, 2001, defendants removed the case to the United States District
Court for the Southern District of Florida. The MDL transfer order to Judge
Friedman of the United States District Court for the District of Columbia became
effective as of March 30, 2001. On April 6, 2001, Judge Friedman stayed the case
pending the District of Columbia Circuit's ruling on the appeals and mandamus
petitions in other cases.

         British Columbia v. Imperial Tobacco Canada Limited, Supreme Court,
British Columbia, Vancouver Registry, Case No. S010421, was filed in January
2001. On September 24, 2001, RJR Tobacco filed Notice of Motion for an order
that ex juris service be set aside for lack of jurisdiction and because the
Tobacco Damages and Health Care Cost Recovery Act is of no force or effect. A
trial is likely to occur in October 2002.

         Obra Social Del Personal De Le Industria Del Vestido v. American
Tobacco Co., Inc., Superior Court, Washington, D.C., Case No. 01-0002279, was
filed in March 2001. On May 2, 2001, the parties filed a Consent Motion for
Extension of Proceedings, requesting an extension of one year for all
proceedings and deadlines, which the court granted. Plaintiff filed a Notice of
Dismissal of this case on August 30, 2001.

         Republic of Belize v. Philip Morris Companies, Inc., United States
District Court for the District of Columbia, Case No. 01-1234, was filed in
April 2001. Defendants removed the case to the United States District

                                      -31-


Court for the Southern District of Florida on May 3, 2001. Plaintiff moved to
remand the case to Florida state court on May 14, 2001. RJR Tobacco answered the
complaint on May 16, 2001. On May 17, 2001, the case was conditionally
transferred to Judge Friedman in the United States District Court for the
District of Columbia, to be consolidated into the MDL proceedings. Judge
Friedman stayed the case on June 27, 2001, pending the District of Columbia
Circuit's ruling on the appeals and mandamus petitions in other cases.

         State of Rondonia, Brazil v. Philip Morris Companies, Inc., United
States District Court for the District of Columbia, Case No. 01-1494, was filed
in May 2001. Defendants removed the case to the United States District Court for
the Southern District of Florida on May 14, 2001. Plaintiff moved to remand the
case to Florida state court on May 25, 2001. RJR Tobacco answered the complaint
on June 19, 2001. On July 5, 2001, the case was transferred to Judge Friedman in
the United States District Court for the District of Columbia, to be
consolidated into the MDL proceedings. Judge Friedman stayed the case on
September 5, 2001, pending the District of Columbia Circuit's ruling on the
appeals and mandamus petitions in other cases.

         State of Parana, Brazil v. Philip Morris Companies, Inc., United States
District Court for the District of Columbia, Case No. 01-1636, was filed in May
2001. Defendants removed the case to the United States District Court for the
Southern District of Florida on May 14, 2001. Plaintiff moved to remand the case
to Florida state court on May 25, 2001. RJR Tobacco answered the complaint on
June 5, 2001. On July 23, 2001, the case was transferred to Judge Friedman in
the United States District Court for the District of Columbia, to be
consolidated into the MDL proceedings. Judge Friedman stayed the case on
September 5, 2001, pending the District of Columbia Circuit's ruling on the
appeals and mandamus petitions in other cases.

         State of Para, Brazil v. Philip Morris Companies, Inc., United States
District Court for the District of Columbia, Case No. 01-1630, was filed in May
2001. Defendants removed the case to the United States District Court for the
Southern District of Florida on May 14, 2001. Plaintiff moved to remand the case
to Florida state court on May 25, 2001. RJR Tobacco answered the complaint on
June 19, 2001. On July 23, 2001, the case was transferred to Judge Friedman in
the United States District Court for the District of Columbia, to be
consolidated into the MDL proceedings. Judge Friedman stayed the case on
September 5, 2001, pending the District of Columbia Circuit's ruling on the
appeals and mandamus petitions in other cases.

         City of Nova Iguacu, Brazil v. Philip Morris Companies, Inc., United
States District Court for the District of Columbia, Case No. 01-1635, was filed
in May 2001. Defendants removed the case to the United States District Court for
the Southern District of Florida on May 14, 2001. Plaintiff moved to remand the
case to Florida state court on May 25, 2001. RJR Tobacco answered the complaint
on June 19, 2001. On July 23, 2001, the case was transferred to Judge Friedman
in the United States District Court for the District of Columbia, to be
consolidated into the MDL proceedings. Judge Friedman stayed the case on
September 5, 2001, pending the District of Columbia Circuit's ruling on the
appeals and mandamus petitions in other cases.

         City of Carapicuiba, Brazil v. Philip Morris Companies, Inc., United
States District Court for the District of Columbia, Case No. 01-1633, was filed
in May 2001. Defendants removed the case to the United States District Court for
the Southern District of Florida on May 14, 2001. Plaintiff moved to remand the
case to Florida state court on May 25, 2001. RJR Tobacco answered the complaint
on June 19, 2001. On July 23, 2001, the case was transferred to Judge Friedman
in the United States District Court for the District of Columbia, to be
consolidated into the MDL proceedings. Judge Friedman stayed the case on
September 5, 2001, pending the District of Columbia Circuit's ruling on the
appeals and mandamus petitions in other cases.

         City of Rio de Janeiro, Brazil v. Philip Morris Companies, Inc., United
States District Court for the District of Columbia, Case No. 01-1637, was filed
in May 2001. Defendants removed the case to the United States District Court for
the Southern District of Florida on May 14, 2001. Plaintiff moved to remand the
case to Florida state court on May 25, 2001. RJR Tobacco answered the complaint
on June 19, 2001. On July 23, 2001, the case was transferred to Judge Friedman
in the United States District Court for the District of Columbia, to be
consolidated into the MDL proceedings. Judge Friedman stayed the case on
September 5, 2001, pending the District of Columbia Circuit's ruling on the
appeals and mandamus petitions in other cases.

         City of Mage, Brazil v. Philip Morris Companies, Inc., United States
District Court for the District of Columbia, Case No. 01-1639, was filed in May
2001. Defendants removed the case to the United States District

                                      -32-


Court for the Southern District of Florida on May 14, 2001. Plaintiff moved to
remand the case to Florida state court on May 25, 2001. RJR Tobacco answered the
complaint on June 19, 2001. On July 23, 2001, the case was transferred to Judge
Friedman in the United States District Court for the District of Columbia, to be
consolidated into the MDL proceedings. Judge Friedman stayed the case on
September 5, 2001, pending the District of Columbia Circuit's ruling on the
appeals and mandamus petitions in other cases.

         City of Nilopolis-RJ, Brazil v. Philip Morris Companies, Inc., United
States District Court for the District of Columbia, Case No. 01-1641, was filed
in May 2001. Defendants removed the case to the United States District Court for
the Southern District of Florida on May 14, 2001. Plaintiff moved to remand the
case to Florida state court on May 25, 2001. RJR Tobacco answered the complaint
on June 19, 2001. On July 23, 2001, the case was transferred to Judge Friedman
in the United States District Court for the District of Columbia, to be
consolidated into the MDL proceedings. Judge Friedman stayed the case on
September 5, 2001, pending the District of Columbia Circuit's ruling on the
appeals and mandamus petitions in other cases.

         City of Duque de Caxias, Brazil v. Philip Morris Companies, Inc.,
United States District Court for the District of Columbia, Case No. 01-1631, was
filed in May 2001. Defendants removed the case to the United States District
Court for the Southern District of Florida on May 14, 2001. Plaintiff moved to
remand the case to Florida state court on May 25, 2001. RJR Tobacco answered the
complaint on June 19, 2001. On July 23, 2001, the case was transferred to Judge
Friedman in the United States District Court for the District of Columbia, to be
consolidated into the MDL proceedings. Judge Friedman stayed the case on
September 5, 2001, pending the District of Columbia Circuit's ruling on the
appeals and mandamus petitions in other cases.

         City of Joao Pessoa, Brazil v. Philip Morris Companies, Inc., United
States District Court for the District of Columbia, Case No. 01-1634, was filed
in May 2001. Defendants removed the case to the United States District Court for
the Southern District of Florida on May 14, 2001. Plaintiff moved to remand the
case to Florida state court on May 25, 2001. RJR Tobacco answered the complaint
on June 19, 2001. On July 23, 2001, the case was transferred to Judge Friedman
in the United States District Court for the District of Columbia, to be
consolidated into the MDL proceedings. Judge Friedman stayed the case on
September 5, 2001, pending the District of Columbia Circuit's ruling on the
appeals and mandamus petitions in other cases.

         City of Belo Horizonte, Brazil v. Philip Morris Companies, Inc., United
States District Court for the District of Columbia, Case No. 01-1642, was filed
in May 2001. Defendants removed the case to the United States District Court for
the Southern District of Florida on May 14, 2001. Plaintiff moved to remand the
case to Florida state court on May 25, 2001. RJR Tobacco answered the complaint
on June 19, 2001. On July 23, 2001, the case was transferred to Judge Friedman
in the United States District Court for the District of Columbia, to be
consolidated into the MDL proceedings. Judge Friedman stayed the case on
September 5, 2001, pending the District of Columbia Circuit's ruling on the
appeals and mandamus petitions in other cases.

         City of Belford Roxo, Brazil v. Philip Morris Companies, Inc., United
States District Court for the District of Columbia, Case No. 01-1632, was filed
in May 2001. Defendants removed the case to the United States District Court for
the Southern District of Florida on May 14, 2001. Plaintiff moved to remand the
case to Florida state court on May 25, 2001. RJR Tobacco answered the complaint
on June 19, 2001. On July 23, 2001, the case was transferred to Judge Friedman
in the United States District Court for the District of Columbia, to be
consolidated into the MDL proceedings. Judge Friedman stayed the case on
September 5, 2001, pending the District of Columbia Circuit's ruling on the
appeals and mandamus petitions in other cases.

         City of Jundiai, Brazil v. Philip Morris Companies, Inc., United States
District Court for the District of Columbia, Case No. 01-1638, was filed in May
2001. Defendants removed the case to the United States District Court for the
Southern District of Florida on May 14, 2001. Plaintiff moved to remand the case
to Florida state court on May 25, 2001. RJR Tobacco answered the complaint on
June 19, 2001. On July 23, 2001, the case was transferred to Judge Friedman in
the United States District Court for the District of Columbia, to be
consolidated into the MDL proceedings. Judge Friedman stayed the case on
September 5, 2001, pending the District of Columbia Circuit's ruling on the
appeals and mandamus petitions in other cases.

         City of Sao Bernardo do Carmpo, Brazil v. Philip Morris Companies,
Inc., United States District Court for the District of Columbia, Case No.
01-1640, was filed in May 2001. Defendants removed the case to the United

                                      -33-


States District Court for the Southern District of Florida on May 14, 2001.
Plaintiff moved to remand the case to Florida state court on May 25, 2001. RJR
Tobacco answered the complaint on June 19, 2001. On July 23, 2001, the case was
transferred to Judge Friedman in the United States District Court for the
District of Columbia, to be consolidated into the MDL proceedings. Judge
Friedman stayed the case on September 5, 2001, pending the District of Columbia
Circuit's ruling on the appeals and mandamus petitions in other cases.

         State of Pernambuco, Brazil v. Philip Morris Companies, Inc., United
States District Court for the Southern District of Florida, Case No. 02-20276,
was filed in December 2001. Defendants removed the case to the United States
District Court for the Southern District of Florida on January 25, 2002.
Defendants intend to request MDL consolidation.

                                 TAXPAYER CASES
                            HEALTH-CARE COST RECOVERY

         Coyne v. American Tobacco Co., Inc., Court of Common Pleas, Cuyahoga
County, Ohio, Case No. 315249, was filed in September 1996. On October 16, 1996,
defendants removed this case to the United States District Court for the
Northern District of Ohio, Eastern Division. On February 12, 1998, the district
court granted defendants' motion to dismiss. On March 20, 1998, plaintiffs
appealed to the United States Court of Appeals for the Sixth Circuit. On July
12, 1999, the Sixth Circuit remanded this case to the federal district court
with instructions to remand the matter to the state court from which it came. --
Common Pleas Court of Cuyahoga County, Ohio. On February 22, 2000, RJR Tobacco
filed a motion to dismiss in state court, which was granted on November 22,
2000. Plaintiffs appealed the ruling to the Ohio Court of Appeals. On March 5,
2001, the parties agreed to dismiss the case.

          State of Tenneessee, ex. rel. Beckom v. American Tobacco Co., Inc.,
Chancery Court, Monroe County, Tennessee, Case No. 12,263, was filed in May
1997. On June 6, 1997, defendants removed this case to the United States
District Court for the Middle District of Tennessee. On May 9, 2000, the federal
court remanded this action to the Chancery Court of Monroe County, pursuant to
the mandate of the United States Court of Appeals for the Sixth Circuit. On
August 17, 2000, the state court ordered that all claims in this case brought on
the relation of the State of Tennessee, and all plaintiffs' claims brought on
behalf of Tennessee taxpayers, be dismissed with prejudice and that venue would
not be proper as to the State of Tennessee if the first amended complaint after
remand were properly before the Chancery Court. Certain defendants, including
RJR Tobacco, filed a motion for judgment on the pleadings on August 17, 2000,
stating that (1) the prior orders entered by the United States District Court
for the Eastern District of Tennessee, and the United States Court of Appeals
for the Sixth Circuit, together with the Order entered by this Court on August
17, 2000, establish that there are no remaining claims by these Plaintiffs
before the Court in this case; and (2) Plaintiffs' "First Amended Complaint
After Remand" has not been properly filed and is not before the court at this
time. On August 21, 2001, the court ruled that the August 17, 2000 order
dismissed all remaining claims and, therefore, the court lacks jurisdiction to
consider plaintiffs' motion to file a second amended complaint after remand.

                                 HOSPITAL CASES
                            HEALTH-CARE COST RECOVERY

         Association of Washington Public Hospital Districts v. Philip Morris,
Inc., United States District Court for the Western District of Washington, Case
No. C98-1675, was filed in November 1998. On December 14, 1999, the trial court
granted defendants' motion to dismiss plaintiffs' complaint. On January 15,
2000, plaintiffs appealed this ruling to the United States Court of Appeal for
the Ninth Circuit, which affirmed the judgment on February 22, 2001. On October
10, 2001, the United States Supreme Court denied plaintiffs' petition for writ
of certiorari.

         A.O. Fox Memorial v. American Tobacco Co., Inc., Supreme Court, Nassau
County, New York, Case No. 005193/00, was filed in May 2000. On November 13,
2000, defendants filed a motion to dismiss. On December 14, 2001, the court
granted defendants' motion to dismiss. Plaintiffs filed a notice of appeal on
January 17, 2002 to the New York Supreme Court, Appellate Division, Second
Department.

                                      -34-


                                  FEDERAL CASE
                            HEALTH-CARE COST RECOVERY

         United States v. Philip Morris, Inc., United States District Court for
the District of Columbia, Case No. 99-CV-2496 (GK), was filed in September 1999.
The U.S. Department of Justice brought an action in the United States District
Court for the District of Columbia against various industry members, including
RJR Tobacco. The government sought to recover federal funds expended in
providing health care to smokers who have developed diseases and injuries
alleged to be smoking-related, and, in addition, seeks, pursuant to the federal
RICO statute, disgorgement of profits the government contends were earned as a
consequence of a RICO racketeering "enterprise." On December 27, 1999,
defendants filed a motion to dismiss challenging all counts included in the
action brought by the DOJ. On June 6, 2000, the trial court heard oral argument
on the motion. On September 28, 2000, federal court Judge Gladys Kessler of the
United States District Court for the District of Columbia granted the
non-Liggett defendants' motion to dismiss the following counts of plaintiff's
complaint: (1) Medical Care Recovery Act claim, and (2) Medicare Secondary Payer
claim. The court, however, denied the motion with respect to the RICO claims. On
October 13, 2000, the United States filed a motion to limit Judge Kessler's
September 28, 2000 order to claims for payments under Medicare and the Federal
Employee Health Benefits Act.

         Discovery in the DOJ lawsuit is ongoing, and trial has been scheduled
for July 15, 2003. RJR Tobacco believes it has meritorious factual and legal
defenses to that lawsuit. In June 2001, the United States Attorney General
assembled a team of three DOJ lawyers to work on a possible settlement of the
federal lawsuit. The DOJ lawyers met with representatives of the tobacco
industry, including RJR Tobacco, on July 18, 2001. No settlement was reached,
and no further meetings are planned.

                           ASBESTOS CONTRIBUTION CASES

         Eleven lawsuits are pending against RJR Tobacco in which asbestos
companies and/or related asbestos-related trust funds assert claims for unjust
enrichment, restitution, contribution, indemnity and unfair contribution. These
theories are based on the assertion that the asbestos entities have "overpaid"
claims brought against them to the extent that tobacco use, not asbestos
exposure, was the cause of the alleged personal injuries with respect to which
they have paid compensation. As with the other health-care cost recovery
actions, the complaints typically seek to aggregate the alleged damages
associated with tens of thousands of underlying claims, without specifically
identifying a single individual who claims injury by virtue of tobacco use.

         Thomas and Owens-Corning v. R. J. Reynolds Tobacco Co. and Amchem
Products, Inc., Circuit Court, Jefferson County, Mississippi, Case No. 96-65,
was filed in August 1996. The claims of plaintiff Owens-Corning were severed
from those of the individual plaintiffs. On July 17, 2001, the Jefferson County
Circuit Court adopted the special master's report and recommendation that
defendants' motion for summary judgment be granted as to the claims of
Owens-Corning, and the case be dismissed. Final judgment reflecting the
dismissal was entered July 19, 2001. On August 15, 2001, Owens-Corning noticed
its appeal to the Mississippi Supreme Court from the order granting defendants'
motion for summary judgment.

         The trial of four individual plaintiffs was scheduled for February 11,
2002. However, on January 18, 2002, the special master issued a report and
recommendation that the trial date be continued to June 11, 2002. The presiding
judge adopted the special master's recommendation.

         Raymark Industries, Inc. v. R. J. Reynolds Tobacco Co., Circuit Court,
Duval County, Florida, Case No. 97-5254 CA-F, was filed in September 1997. The
case remains effectively stayed following Raymark's March 1998 bankruptcy
filing.

         Raymark Industries, Inc. v. American Tobacco Co., Inc., United States
District Court for the Northern District of Georgia, Case No. 1 97-CV-2711, was
filed in September 1997. On August 7, 1998, the judge entered an order staying
this case pending further order of the court. The clerk was directed to
administratively close the case pending completion of the bankruptcy
proceedings. There has been no other activity since the August 7, 1998 order.

         Falise v. American Tobacco Co., Inc., United States District Court for
the Eastern District of New York, Case No. 97 CV 7640, was originally filed in
November 1997. However, on November 2, 1999, the court entered

                                      -35-


an order dismissing this case due to jurisdictional grounds. On November 11,
1999, plaintiffs filed a new complaint in the same court -- Falise v. American
Tobacco Co., Inc., United States District Court for the Eastern District of New
York, Case No. CV 99-7392 -- and amended it on December 17, 1999. Trial began on
November 27, 2000. On January 22, 2001, the judge declared a mistrial. The case
was dismissed with prejudice on June 29, 2001, after the plaintiff announced
that it would not retry the case.

         Fibreboard Corp. v. R. J. Reynolds Tobacco Co., Superior Court, Alameda
County, California, Case No. 791919-8, was filed in November 1997. In this case,
Owens-Corning and Fibreboard assert the same claims as those asserted in Thomas
v. R. J. Reynolds Tobacco Co. (discussed separately). Motions to dismiss these
claims have been held in abeyance pending the final determination of the
Owens-Corning appeal in the Thomas case (discussed separately).

         Keene Creditors Trust v. Brown & Williamson Tobacco Corp., Supreme
Court, New York County, New York, Case No. 606479/97, was filed in December
1997. Defendants have not yet filed an answer to plaintiffs' complaint.

         Raymark Industries, Inc. v. American Tobacco Co., Inc., United States
District Court for the Eastern District of New York, Case No. 98-CV-675, was
filed in May 1998. Raymark had been assigned to the MDL Panel, but the Panel
ordered that the case be remanded to the Eastern District of New York. At a
status conference on December 17, 2001, the court stayed this case until the
United States Court of Appeals for the Second Circuit makes its ruling in the
Blue Cross and Blue Shield of New Jersey v. Philip Morris, Inc. (discussed
separately). This case is part of the Simon II consolidated class action
complaint for declaratory relief which was filed on September 6, 2000. The cases
underlying the consolidated Simon II complaint are (1) Simon, Case No.
99-CV-1988; (2) Decie v. American Tobacco Co., Inc., Case No. 00-CV-2340; (3)
Ebert v. Philip Morris, Inc., Case No. 00-CV-4632; (4) Mason v. American Tobacco
Co., Inc., Case No. 00-CV-4442; (5) Bergeron v. Philip Morris, Inc., Case No.
99-CV-6142; (6) National Asbestos Workers Medical Fund v. Philip Morris, Inc.,
Case No. 98-CV-1492; (7) Blue Cross and Blue Shield of New Jersey v. Philip
Morris, Inc., Case No. 98-CV-3287; (8) H.K. Porter Co., Inc. v. American Tobacco
Co., Inc., Case No. 97-CV-7658; (9) Raymark Industries, Inc. v. American Tobacco
Co., Inc., Case No. 98-CV-675; and (10) Falise v. American Tobacco Co., Inc.,
Case No. 99-CV-7392. These cases are discussed separately.

         H.K. Porter Co., Inc. v. American Tobacco Co., Inc., United States
District Court for the Eastern District of New York, Case No. CV 97-7658 (JBW),
was filed in June 1998. On July 26, 2001, the parties filed a stipulation of
dismissal with prejudice. This case was part of the Simon II consolidated class
action complaint for declaratory relief which was filed on September 6, 2000.
The cases underlying the consolidated Simon II complaint are (1) Simon, Case No.
99-CV-1988; (2) Decie v. American Tobacco Co., Inc., Case No. 00-CV-2340; (3)
Ebert v. Philip Morris, Inc., Case No. 00-CV-4632; (4) Mason v. American Tobacco
Co., Inc., Case No. 00-CV-4442; (5) Bergeron v. Philip Morris, Inc., Case No.
99-CV-6142; (6) National Asbestos Workers Medical Fund v. Philip Morris, Inc.,
Case No. 98-CV-1492; (7) Blue Cross and Blue Shield of New Jersey v. Philip
Morris, Inc., Case No. 98-CV-3287; (8) H.K. Porter Co., Inc. v. American Tobacco
Co., Inc., Case No. 97-CV-7658; (9) Raymark Industries, Inc. v. American Tobacco
Co., Inc., Case No. 98-CV-675; and (10) Falise v. American Tobacco Co., Inc.,
Case No. 99-CV-7392. These cases are discussed separately.

         UNR Asbestos-Disease Claims Trust v. Brown & Williamson Tobacco Corp.,
Supreme Court, New York County, New York, Case No. 105152/99, was filed in March
1999. Defendants have not yet filed an answer to plaintiffs' complaint.

         Kaiser Aluminum & Chemical Corp. v. RJR Nabisco, Inc., Circuit Court,
Jefferson County, Mississippi, Case No. 2000-615, was filed in December 2000. On
November 28, 2001, the court stayed this matter pending resolution by the
Mississippi Supreme Court of the Owens-Corning appeal in Thomas v. R. J.
Reynolds Tobacco Co. (discussed separately).

         A.P. Green Industries, Inc. v. R. J. Reynolds Tobacco Co., Circuit
Court, Jefferson County, Mississippi, Case No. 2000-628, was filed in December
2000. On October 19, 2001, the court granted plaintiffs' motion for a voluntary
dismissal, although the actual final judgment was not entered until December 10,
2001.

                                      -36-



         A.P. Green Services, Inc. v. R. J. Reynolds Tobacco Co., United States
District Court for the Southern District of Mississippi, Case No. 5:01CV91BN,
was filed in December 2000. On November 15, 2001, the court entered a judgment
of dismissal without prejudice as to plaintiffs David Massey and Samuel Blackmon
only. On December 6, 2001, the court entered a corrected agreed conditional
order of voluntary dismissal without prejudice, which dismissed action in its
entirety.

         Asbestos Claims Management Corp., f/k/a National Gypsum Co. v. R. J.
Reynolds Tobacco Co., Circuit Court, Jefferson County, Mississippi, Case No.
2000-616, was filed in December 2000. On October 19, 2001, the court granted
plaintiffs' motion for a voluntary dismissal. Final judgment was entered
December 18, 2001.

         Gasket Holdings, f/k/a Flexitallic, Inc. v. RJR Nabisco, Inc., Circuit
Court, Jefferson County, Mississippi, Case No. 2000-225, was filed in December
2000. On July 24, 2001, RJR Tobacco answered plaintiffs' amended complaint. RJR
and the other parent companies filed a motion to dismiss the first amended
complaint on July 27, 2001. Plaintiffs have indicated they plan to file a motion
to stay pending resolution by the Mississippi Supreme Court of the Owens-Corning
appeal in Thomas v. R. J. Reynolds Tobacco Co. (discussed separately).

         Owens-Illinois, Inc. v. R. J. Reynolds Tobacco Co., Circuit Court,
Sharkey County, Mississippi, Case No. 00-0077, was filed in December 2000. On
November 6, 2001, the court entered an order of dismissal without prejudice.

         T&N, Ltd., f/k/a T&N, P.L.C. v. R. J. Reynolds Tobacco Co., Circuit
Court, Jefferson County, Mississippi, Case No. 2000-618, was filed in December
2000. On July 24, 2001, RJR Tobacco answered plaintiffs' amended complaint. RJR
and the other parent companies filed a motion to dismiss the first amended
complaint on July 27, 2001. Plaintiffs have indicated they plan to file a motion
to stay pending resolution by the Mississippi Supreme Court of the Owens-Corning
appeal in Thomas v. R. J. Reynolds Tobacco Co. (discussed separately).

         Asbestos Claims Management Corp., f/k/a National Gypsum Co. v. R. J.
Reynolds Tobacco Co., Circuit Court, Jefferson County, Mississippi, Case No.
2001-85, was filed in April 2001. On October 19, 2001, the court granted
plaintiffs' motion for a voluntary dismissal, although the actual final judgment
was not entered until December 18, 2001.

         Combustion Engineering, Inc. v. R. J. Reynolds Tobacco Co., Circuit
Court, Jefferson County, Mississippi, Case No. 2000-617, was filed in April
2001. On December 21, 2001, the court entered an order staying this case pending
resolution by the Mississippi Supreme Court of the Owens-Corning appeal in
Thomas v. R. J. Reynolds Tobacco Co. (discussed separately).

         Combustion Engineering, Inc. v. R. J. Reynolds Tobacco Co., Circuit
Court, Jefferson County, Mississippi, Case No. 2001-86, was filed in April 2001.
On January 7, 2002, the court dismissed this action without prejudice.

         Gasket Holdings, f/k/a Flexitallic, Inc. v. R. J. Reynolds Tobacco Co.,
Circuit Court, Claiborne County, Mississippi, Case No. 2001-0065, was filed in
April 2001. On July 24, 2001, RJR Tobacco answered plaintiffs' amended
complaint. RJR and the other parent companies filed a motion to dismiss the
first amended complaint on July 27, 2001. Plaintiffs have indicated they plan to
file a motion to stay pending resolution by the Mississippi Supreme Court of the
Owens-Corning appeal in Thomas v. R. J. Reynolds Tobacco Co. (discussed
separately).

         Uniroyal Holdings, Inc. v. R. J. Reynolds Tobacco Co., Circuit Court,
Jefferson County, Mississippi, Case No. 2000-627, was filed in December 2000. On
October 19, 2001, the court granted plaintiffs' motion for a voluntary
dismissal, although the actual final judgment was not entered until December 18,
2001.

         T&N, Ltd., f/k/a T&N, P.L.C. v. R. J. Reynolds Tobacco Co., Circuit
Court, Claiborne County, Mississippi, Case No. 2001-87, was filed in April 2001.
On January 7, 2002, the court dismissed this action without prejudice.

         W.R. Grace & Co.-Conn. v. R. J. Reynolds Tobacco Co., Circuit Court,
Jefferson County, Mississippi, Case No. 2001-58, was filed in April 2001. On
July 24, 2001, RJR Tobacco answered plaintiffs' amended complaint. RJR and the
other parent companies filed a motion to dismiss the first amended complaint on
July 27, 2001.

                                      -37-


Plaintiffs have indicated they plan to file a motion to stay pending resolution
by the Mississippi Supreme Court of the Owens-Corning appeal in Thomas v. R. J.
Reynolds Tobacco Co. (discussed separately).

                       CERTAIN OTHER NON-INDIVIDUAL CASES
                                MSA-RELATED CASES

         Forces Action Project v. California, United States District Court for
the Northern District of California, Case No. C 99-607 EDL, was filed in
February 1999. On January 5, 2000, the trial court granted defendants' motion to
dismiss. Plaintiffs appealed this ruling to the United States Court of Appeals
for the Ninth Circuit. The appeal has been briefed; however, the appellate court
has not set a date for oral argument.

         Table Bluff Reservation v. Philip Morris, Inc., United States District
Court for the Northern District of California, Case No. C 99-2621, was filed in
June 1999. On November 12, 1999, the trial court granted defendants' motion to
dismiss the complaint. On November 18, 1999, plaintiffs appealed to the United
States Court of Appeals for the Ninth Circuit, which affirmed the district
court's dismissal on July 16, 2001.

         Ament v. Thompson, Circuit Court, Dane County, Wisconsin, Case No.
00CV1159, was filed in April 2000. On December 28, 2000, the court granted the
parties' stipulation staying all discovery pending the court's ruling on the
defendants' motions to dismiss plaintiffs' amended complaint. Certain
defendants, including RJR Tobacco, filed their motion to dismiss plaintiffs'
amended complaint on January 12, 2001. The court granted defendants' motions to
dismiss on September 27, 2001. The plaintiffs noticed an appeal on November 9,
2001, to the Wisconsin Court of Appeals, District IV. On December 21, 2001, the
Wisconsin Court of Appeals granted the parties' motion to consolidate this
action with Lapean v. Thompson (discussed separately). Plaintiffs filed a motion
for voluntarily dismissal on January 15, 2002. On January 18, 2002, the
Wisconsin Court of Appeals granted the dismissal.

         Lapean v. Thompson, Circuit Court, Dane County, Wisconsin, Case No.
00CV1162, was filed in April 2000. On December 28, 2000, the court granted the
parties' stipulation staying all discovery pending the court's ruling on the
defendants' motions to dismiss plaintiffs' amended complaint. Certain
defendants, including RJR Tobacco, filed their motion to dismiss plaintiffs'
amended complaint on January 12, 2001. The court granted defendants' motions to
dismiss on September 27, 2001. The plaintiffs noticed an appeal on November 9,
2001, to the Wisconsin Court of Appeals, District IV. On December 21, 2001, the
Wisconsin Court of Appeals granted the parties' motion to consolidate this
action with Ament v. Thompson (discussed separately). Plaintiffs filed a motion
for voluntarily dismissal on January 15, 2002. On January 18, 2002, the
Wisconsin Court of Appeals granted the dismissal.

         Myers v. Hayes, Circuit Court, Davidson County, Tennessee, Case No.
00C-1773, was filed in June 2000. A hearing on plaintiffs' notice of voluntary
nonsuit is scheduled for March 22, 2002.

                                 SMUGGLING CASES

         The Attorney General of Canada v. R.J. Reynolds Tobacco Holdings, Inc.,
United States District Court for the Northern District of New York, Case No.
99-CV-2194, was filed in December 1999. On June 29, 2000, the court granted
defendants' motion to dismiss. Plaintiff appealed to the United States Court of
Appeals for the Second Circuit on July 28, 2000. The Second Circuit affirmed the
trial court's decision on October 12, 2001.

         Republic of Ecuador v. Philip Morris International, Inc., United States
District Court for the Southern District of Florida, Case No. 01-1936, was filed
in June 2000. Defendants removed the case to the United States District Court
for the Southern District of Florida on May 11, 2001. Plaintiff moved to remand
the case to Florida state court on June 11, 2001. Defendants filed motions to
dismiss in July 2001, which remain pending.

         Republic of Belize v. Philip Morris International, United States
District Court for the Southern District of Florida, Case No. 01-2846, was filed
in May 2001. Defendants removed the case to the United States District Court for
the Southern District of Florida on June 29, 2001. Defendants filed motions to
dismiss in September 2001. Plaintiff filed an amended complaint on December 20,
2001. Defendants filed supplements to their motions to dismiss in January 2002.

                                      -38-



         Republic of Honduras v. Philip Morris International, United States
District Court for the Southern District of Florida, Case No. 01-2847, was filed
in May 2001. Defendants removed the case to the United States District Court for
the Southern District of Florida on June 29, 2001. Defendants filed motions to
dismiss in September 2001. Plaintiff filed an amended complaint on December 20,
2001. Defendants filed supplements to their motions to dismiss in January 2002.

         European Community v. RJR Nabisco, Inc., United States District Court
for the Eastern District of New York, Case No. CV 01 5188 was filed in August
2001. This suit contends that RJR Tobacco and other tobacco companies in the
United States may be held responsible for damages caused by cigarette smugglers
under the common law of U.S. states and under the federal RICO statute. On July
17, 2001, the first action brought by the European Community was dismissed by
the United States District Court for the Eastern District of New York. However,
the European Community and 10 Member States ( Belgium, Finland, France, Greece,
Germany, Italy, Luxembourg, the Netherlands, Portugal and Spain ) filed a
similar complaint in the same jurisdiction on August 6, 2001. On October 25,
2001, the court denied the European Community's request of August 10, 2001, to
reinstate its original complaint. RJR Tobacco and the other defendants filed
motions to dismiss on November 14, 2001. On February 19, 2002, defendants'
motions to dismiss were granted.

         Republic of Ecuador v. Philip Morris International, United States
District Court for the Southern District of Florida, Case No. 01CV5113, was
filed in December 2001. On January 25, 2002, defendants filed a motion to
dismiss newly filed complaint.

         Republic of Honduras v. Philip Morris International, United States
District Court for the Southern District of Florida, Case No. 01CV5117, was
filed in December 2001. On January 25, 2002, defendants filed a motion to
dismiss newly filed complaint.

         Republic of Belize v. Philip Morris International, United States
District Court for the Southern District of Florida, Case No. 01CV5115, was
filed in December 2001. On January 25, 2002, defendants filed a motion to
dismiss newly filed complaint.


                                       -39