In Focus

Do We Care? Should We?

If I were to tell you that the world's largest producer and marketer of consumer packaged goods, and the nation's largest food producer, was Philip Morris Companies, Inc. (NYSE: MO), would you be surprised? A cigarette company producing food? Stranger mergers have happened. The more important questions is, would you care? Would the ethical decisions Philip Morris made regarding nicotine levels in its cigarettes cause you to not invest in its companies? Should they?

When Chick Karin asked me to write about a food company, I did what I normally do - looked for Chick Kristin's proof of purchase - proof that I've purchased! One glance in our panty and I discovered loads of products manufactured by Kraft and Nabisco.

Now, you may be asking yourself, what do Kraft and Nabisco have to do with MO (aka Philip Morris)? Simple - MO owns both of them, as of Dec. 11, 2000, which brings us full circle to my dilemma: should Chicks research and invest in companies whose ethics are questionable?

On Dec. 11, 2000, Philip Morris closed its acquisition of Nabisco Holdings, Corp. (NYSE: NA). The Federal Trade Commission (FTC) approved the merger Dec. 7, 2000, provided R J Reynolds Tobacco (NYSE: RJR) would acquire by merger the outstanding Nabisco Group Holdings, Inc. (NYSE: NGH) share of NA. Nabisco produces such household favorites as Ritz, Snack Well's, Life Savers candies, Milk-Bone dog biscuits and the famous peanut himself, Planters.

Prior to the Nabisco merger, MO also owned Kraft Foods. That acquisition, which took place in 1988, added the following products to MO's already impressive consumer goods list; Velveeta, Philadelphia Cream Cheese, Maxwell House coffee, Post cereals, Jell-O, Kool-AID, Kraft Cheese, Miracle Whip, Minute Rice and Tang. Trust me, this list goes on and on (and would definitely exceed my 1,000 word limit if I were to include all goods!)

So, now that you know MO's products are more than just cigarettes, review the Chicks' Dozen. Are you ready to invest? Not so fast, Chick! How did you rate strong management and operating history? Did you consider the recent and infamous States' litigation regarding the nicotine decisions made? Or, did you focus on the balance sheets alone?

The Chicks considered investing in MO back in August 2000. Chick Karin researched Philip Morris Companies, Inc. and had the same question. "It's a great company with a great history," she said. "It's been around forever and has done a great job at making money. The question is, are we 'morally responsible investors'? Do we believe in a company that has 40% of its Revenue coming from the sales of tobacco? Two thirds of its profits are from cigarettes, and one third from its beer and food. As for the lawsuits pending against Philip Morris, these don't seem to bother the company too much. It's like a black fly in your chardonnay. Just a little nuisance, but the whole big picture remains untarnished."

This is a question for you, the investor, to decide. But (you knew there would be a "but," right?) before you say yea or nay, know this: "The Philip Morris Companies have been making grants to nonprofit organizations -- local, national and international -- since 1956, making it one of the nation's oldest corporate giving programs. Today, we are also one of the largest corporate grant makers in the United States. In the past decade, we have contributed more than $875 million in cash and food donations -- $115 million in 1999 alone -- to help feed the body, ease suffering, and nourish the spirit." (www.philipmorris.com)

MO is the largest corporate US hunger relief programs funder, according to www.hoovers.com. Have you ever seen the commercial with the elderly Italian woman having lunch delivered to her by her serenading MO employee? That's just an example where MO works to combat hunger and lighten the elderly spirit too. MO also contributes grants to HIV/AIDS related organizations. Moreover, MO created its own hunger-fighting program, "Positive Helpings," to provide nutritious meals for people living with AIDS. Finally, if you read about MO's contributions to the environment, education and to organizations such as American Red Cross and the Salvation Army, perhaps you'll ascertain that MO, and its employees, donated both monetarily and unselfishly, their time and dedication, to improving the lives and spirits of people worldwide. Or, you might wonder why MO makes a point of paying for television ads that toot its proverbial horn - perhaps knowing all of the good will take away from the poor historical decisions made?

Knowing this, I'll let you, the reader, be the judge. Investing in Kraft Foods, Nabisco or Miller is investing Philip Morris Companies, Inc. Whether you smoke or not, or whether you care about MO's role in misleading its consumers or not, MO does appear to care and is working its darndest to show you so.

For more information, please see these websites:

www.philipmorris.com
www.kraftfoods.com
www.millerbrewing.com