Contingencies (Tables)

6 Months Ended

Jun. 30, 2011

Contingencies

Schedule of Pending Cases

Type of Case	Number of Cases Pending as of July 25, 2011		Number of Cases Pending as of July 26, 2010		Number of Cases Pending as of July 27, 2009
Individual Smoking and Health Cases (1)		81		83		96
Smoking and Health Class Actions and Aggregated Claims Litigation (2)		8		9		7
Health Care Cost Recovery Actions		2		3		3
"Lights/Ultra Lights" Class Actions (3)		19		29		29
Tobacco Price Cases		1		2		2

(1) Does not include 2,588 cases brought by flight attendants seeking compensatory damages for personal injuries allegedly caused by exposure to environmental tobacco smoke ("ETS"). The flight attendants allege that they are members of an ETS smoking and health class action, which was settled in 1997 (Broin). The terms of the court-approved settlement in that case allow class members to file individual lawsuits seeking compensatory damages, but prohibit them from seeking punitive damages. Certain Broin plaintiffs have filed a motion seeking approximately $50 million in sanctions for alleged interference by R.J. Reynolds Tobacco Company ("R.J. Reynolds") and PM USA with Lorillard, Inc.'s acceptance of offers of settlement in the Broin progeny cases. On May 23, 2011, the trial court denied this motion. Plaintiffs have appealed.

Also, does not include approximately 6,613 individual smoking and health cases (3,327 state court cases and 3,286 federal court cases) brought by or on behalf of approximately 8,213 plaintiffs in Florida (4,928 state court plaintiffs and 3,285 federal court plaintiffs) following the decertification of the Engle case discussed below. It is possible that some of these cases are duplicates and that additional cases have been filed but not yet recorded on the courts' dockets.

(2) Includes as one case the 638 civil actions (of which 366 are actions against PM USA) that are proposed to be tried in a single proceeding in West Virginia (In re: Tobacco Litigation). Middleton and USSTC were named as defendants in this action but they, along with other non-cigarette manufacturers, have been severed from this case. The West Virginia Supreme Court of Appeals has ruled that the United States Constitution does not preclude a trial in two phases in this case. Under the current trial plan, issues related to defendants' conduct and plaintiffs' entitlement to punitive damages would be determined in the first phase. The second phase would consist of individual trials to determine liability, if any, as well as compensatory and punitive damages, if any. The case is currently scheduled for trial on October 17, 2011.

(3) Includes the Cabbat case, a "Lights" case filed in federal district court that was never served on PM USA. See "Lights/Ultra Lights" Cases – Federal Multidistrict Proceeding below for a discussion of this case.

Approximate Maximum Principal Amounts of PM USA's Share of the Disputed NPM Adjustment for the Years 2003 through 2009, as Currently Calculated by the MSA's Independent Auditor

Year for which NPM Adjustment calculated		2003		2004		2005		2006		2007		2008		2009
Year in which deduction for NPM Adjustment may be taken		2006		2007		2008		2009		2010		2011		2012
PM USA's Approximate Share of Disputed NPM Adjustment (in millions)	$	337	$	388	$	181	$	154	$	207	$	267	$	211