Altria Group, Inc.
-- Diluted earnings per share from continuing operations up 18.1% to $1.24,
including favorable tax items of $0.05 per share and charges of $0.02
per share for asset impairment, exit and implementation costs, as well
as other items detailed on Schedule 7
-- Adjusted diluted earnings per share from continuing operations up 13.1%
to $1.21 versus $1.07 in 2006
-- Forecast raised for full-year 2007 diluted earnings per share from
continuing operations to a range of $4.20 to $4.25, versus a previously
announced range of $4.05 to $4.10
Altria Group, Inc. (NYSE: MO) today announced third-quarter diluted earnings per
share from continuing operations of $1.24, up $0.19 or 18.1% versus the prior
year, including favorable tax items of $0.05 per share and charges of $0.02 per
share for asset impairment, exit and implementation costs, as well as other
items detailed on the attached Schedule 7.
"In the third quarter, we continued to witness improvement in our business
fundamentals, which generated robust earnings growth," said Louis C. Camilleri,
chairman and chief executive officer of Altria Group, Inc. "In addition, we took
numerous steps to accelerate our growth by investing behind product innovation
and announcing our intention to pursue a further restructuring of our company."
Conference Call
A conference call with members of the investment community and news media will
be Webcast at 9:00 a.m. Eastern Time on October 17, 2007. Access is available at
www.altria.com.
2007 Third-Quarter Results Excluding Items
After adjusting for the items shown in the table below, diluted earnings per
share from continuing operations increased 13.1% to $1.21 for the third quarter
of 2007, versus $1.07 in the corresponding prior-year period.
Third quarter
-------------------
2007 2006 Change
------ ----- ------
Diluted EPS from continuing operations $1.24 $1.05 18.1%
Asset impairment, exit and implementation costs 0.02 0.02
Tax items (0.05) --
Diluted EPS, excluding above items $1.21 $1.07 13.1%
------ -----
2007 Full-Year Forecast
Altria raised its forecast to a range of $4.20 to $4.25 for 2007 full-year
diluted earnings per share from continuing operations, reflecting a lower tax
rate ($0.08 per share), favorable currency ($0.04 per share) and improved
results ($0.03 per share) at Philip Morris International (PMI). The company's
previously announced range for 2007 full-year diluted earnings per share from
continuing operations was $4.05 to $4.10.
The revised projection includes charges of $0.17 per share, which are $0.07 per
share lower due mainly to the above-mentioned one-time favorable tax items,
versus $0.24 per share in charges in the previous forecast. Both the revised and
previous projections include $0.06 per share for cash recoveries at Philip
Morris Capital Corporation (PMCC), which were recorded in the first half of
2007.
The factors described in the Forward-Looking and Cautionary Statements section
of this release represent continuing risks to this projection.
Intention to Pursue the Spin-Off of Philip Morris International
On August 29, the Board of Directors of Altria Group, Inc. announced its
intention to pursue the spin-off of PMI to Altria's shareholders. The Board
anticipates that it will be in a position to finalize its decision and announce
the precise timing of the spin-off at its regularly scheduled meeting on January
30, 2008.
In addition to a final determination by the Board, the spin-off of PMI will be
subject to the receipt of a favorable ruling from the Internal Revenue Service,
the receipt of an opinion of tax counsel, the effectiveness of a registration
statement with the U.S. Securities and Exchange Commission (SEC), as well as the
execution of several inter-company agreements and the finalization of other
matters.
On September 27, PMI filed with the SEC a preliminary registration statement on
Form 10 in preparation for its potential spin-off from Altria. In addition,
Altria submitted a private letter ruling request to the Internal Revenue
Service.
PMI Agreement to Acquire Additional 30% Stake in Mexican Tobacco Business
On July 18, PMI announced that it had reached an agreement in principle to
acquire an additional 30% stake in its Mexican tobacco business from its joint
venture partner, Grupo Carso, S.A.B. de C.V.
PMI currently holds a 50% stake in its Mexican tobacco business and this
transaction would bring PMI's stake to 80%. Grupo Carso would retain a 20% stake
in the business.
The transaction has a value of approximately $1.1 billion and is expected to
close shortly. When completed, the transaction is expected to increase Altria's
annualized net earnings by approximately $0.03 per share.
Dividend Increased
During the third quarter of 2007 Altria Group, Inc. increased its regular
quarterly dividend by 8.7% to $0.75 per common share, which represents an
annualized rate of $3.00 per common share.
ALTRIA GROUP, INC.
As described in "Note 15. Segment Reporting" of Altria Group, Inc.'s 2006 Annual
Report, management reviews operating companies income, which is defined as
operating income before corporate expenses and amortization of intangibles, to
evaluate segment performance and allocate resources. Management believes it is
appropriate to disclose this measure to help investors analyze business
performance and trends. For a reconciliation of operating companies income to
operating income, see the Condensed Statements of Earnings contained in this
release.
Altria Group, Inc.'s 2007 reported results and previous-year results reflect
Kraft as a discontinued operation. As such, net revenues and operating companies
income for Kraft are excluded from the company's results, while the net earnings
impact is included as a single line item.
The products of Altria's subsidiaries include cigarettes and other tobacco
products manufactured and sold by Philip Morris USA (PM USA) in the United
States and by Philip Morris International (PMI) outside the United States. PMI's
operations are organized and managed by geographic region. Beginning with the
second quarter of 2007, Altria's reportable segments are U.S. Tobacco; European
Union (EU); Eastern Europe, Middle East & Africa (EEMA); Asia; Latin America;
and Financial Services.
All references in this news release are to continuing operations, unless
otherwise noted. References to international tobacco market shares are PMI
estimates based on a number of sources.
2007 Third-Quarter Results
Revenues net of excise taxes increased 5.9% to $10.0 billion for the third
quarter of 2007, driven by increases in both U.S. tobacco and international
tobacco.
Operating income increased 10.4% to $3.7 billion, reflecting the items described
in the attached reconciliation on Schedule 3, including higher results from
operations of $194 million and favorable currency of $138 million.
Earnings from continuing operations increased 18.9% to $2.6 billion, reflecting
the items above as well as a decrease in interest expense due to lower debt
outstanding. The company's effective tax rate was 30.2% in the third quarter of
2007 versus 34.1% for the year-earlier period. Third-quarter 2007 results
include favorable tax adjustments of $97 million or $0.05 per share, primarily
due to the reversal of tax reserves no longer required and reduction of the
German corporate tax rate.
Net earnings, including discontinued operations, decreased 8.4% to $2.6 billion,
reflecting the Kraft spin-off. Diluted earnings per share, including
discontinued operations as detailed on Schedule 1, decreased 8.8% to $1.24.
U.S. TOBACCO
2007 Third-Quarter Results
Philip Morris USA (PM USA), Altria Group, Inc.'s U.S. tobacco business, achieved
a record 50.6% retail market share, up 0.2 points, driven primarily by Marlboro,
which increased its retail market share 0.5 points to a record 41.1%.
Third-quarter revenues net of excise taxes increased 3.2% to $4.0 billion.
Operating companies income increased 2.0% to $1.3 billion compared to the
year-earlier period. The increase was driven by lower wholesale promotional
allowance rates and lower selling, general and administrative costs. Those
factors were partially offset by increased resolution expenses, lower volume,
investments in support of PM USA's adjacency strategy and a $22 million pre-tax
charge related to asset impairment, exit and implementation costs for the
previously announced closure of the Cabarrus, NC cigarette manufacturing
facility. Adjusted for the $22 million pre-tax charge, PM USA's operating
companies income would have increased by 3.7%.
During the quarter, PM USA announced a reduction in the wholesale promotional
allowance on its Focus on Four brands effective September 10, 2007. The
allowances for Marlboro, Parliament and Basic were reduced by $0.50 per carton,
from $4.00 to $3.50, and for Virginia Slims by $2.00 per carton, from $4.00 to
$2.00. In addition, the price of PM USA's non-focus brands was increased by
$0.50 per carton.
PM USA's cigarette shipment volume of 47.1 billion units was 1.0% lower than the
prior-year period, but was estimated to be down approximately 3% when adjusted
for changes in trade inventories and calendar differences. During the third
quarter of 2007, PM USA estimates that total cigarette industry volume declined
between 3% and 4%, and for the full year 2007 PM USA is maintaining its prior
estimate of a 3% to 4% decline in total cigarette industry volume.
Cigarette volume performance by brand for PM USA is summarized in the table
below:
Philip Morris USA Cigarette Volume* by Brand (Billion Units)
----------------------------------------------------------------------
Q3 2007 Q3 2006 % Change**
------- ------- ----------
Marlboro 39.1 39.0 + 0.2%
Parliament 1.5 1.5 + 0.6%
Virginia Slims 1.9 2.0 - 5.4%
Basic 3.5 3.8 - 8.4%
------- -------
Focus Brands 46.0 46.3 - 0.8%
Other PM USA 1.1 1.3 - 11.3%
------- -------
Total PM USA 47.1 47.6 - 1.0%
* U.S. unit volume includes units sold as well as promotional units, and
excludes Puerto Rico and U.S. Territories.
** Calculation based on millions of units.
As shown in the following table, in the third quarter of 2007, share gains for
Marlboro and Parliament of 0.5 points and 0.1 point, respectively, were
partially offset by losses of 0.2 share points for Basic and of 0.1 share points
each for Virginia Slims and non-focus brands.
PM USA's cigarette retail share performance by brand is summarized in the table
below:
Philip Morris USA Cigarette Retail Share* by Brand
----------------------------------------------------------------------
Q3 2007 Q3 2006 Change
------- ------- --------
Marlboro 41.1% 40.6% + 0.5 pp
Parliament 1.9% 1.8% + 0.1 pp
Virginia Slims 2.2% 2.3% - 0.1 pp
Basic 4.0% 4.2% - 0.2 pp
------- -------
Focus Brands 49.2% 48.9% + 0.3 pp
Other PM USA 1.4% 1.5% - 0.1 pp
------- -------
Total PM USA 50.6% 50.4% + 0.2 pp
* Retail share performance is based on data from the IRI/Capstone
Total Retail Panel, which is a tracking service that uses a sample of
stores to project market share performance in retail stores selling
cigarettes. The panel was not designed to capture sales through other
channels, including Internet and direct mail.
As part of its adjacency growth strategy to develop new revenue and income
sources for the future, PM USA initiated a test market of Marlboro Snus in the
Dallas/Fort Worth, TX area beginning in August 2007. Additionally, PM USA
announced that it will test market Marlboro Moist Smokeless Tobacco in the
Atlanta, GA area, with shipments to wholesalers beginning this week. Marlboro
Moist Smokeless Tobacco is designed to provide a premium quality product at an
attractive price for adult moist smokeless tobacco consumers.
INTERNATIONAL TOBACCO
2007 Third-Quarter Results
Philip Morris International (PMI), Altria Group, Inc.'s international tobacco
business, reported that its revenues net of excise taxes were up 9.3% to $5.9
billion. Operating companies income grew 18.8% to $2.5 billion, due primarily to
higher pricing, favorable currency of $138 million and productivity and cost
savings. Excluding the impact of asset impairment and exit costs, acquisitions
and currency, operating companies income grew 10.2%.
PMI's operating companies income performance by segment is summarized in the
table below:
Philip Morris International Operating Companies Income by Segment ($
Millions)
----------------------------------------------------------------------
Q3 2007 Q3 2006 % Change
------- ------- --------
European Union $1,151 $955 + 20.5%
Eastern Europe, Middle East & Africa 710 582 + 22.0%
Asia 514 449 + 14.5%
Latin America 143 133 + 7.5%
------- -------
Total PMI $2,518 $2,119 + 18.8%
Cigarette shipment volume increased 0.6% or 1.3 billion units, to 217.2 billion
units, due to acquisition volume from Lakson Tobacco in Pakistan. Excluding the
impact of the Pakistan acquisition, cigarette shipment volume was down 1.9% or
4.0 billion units, due mainly to lower shipments in the Czech Republic, Germany
and Poland, partially offset by gains in Algeria, Argentina, Bulgaria, Egypt,
Korea, Lebanon, Slovak Republic, Slovenia, Spain and Ukraine.
PMI's volume performance by segment is summarized in the table below:
Philip Morris International Cigarette Volume by Segment (Billion
Units)
----------------------------------------------------------------------
Q3 2007 Q3 2006 % Change*
------- ------- ---------
European Union 65.4 68.7 - 4.8%
Eastern Europe, Middle East & Africa 77.5 77.3 + 0.3%
Asia 53.0 48.3 + 9.6%
Latin America 21.3 21.6 - 1.5%
------- -------
Total PMI 217.2 215.9 + 0.6%
*Calculation based on millions of units.
PMI's third-quarter 2007 market share performance improved versus the year-ago
period in Argentina, Australia, Egypt, Greece, Hungary, Israel, Italy, Korea,
Mexico, Russia, Singapore, Spain, Sweden, Taiwan and Ukraine.
PMI has a superior portfolio of premium brands, comprised of Marlboro,
Parliament and Virginia Slims. In the third quarter, the combined worldwide
volume of this premium portfolio grew by 0.7% or 653 million units.
Total Marlboro cigarette shipment volume of 79.4 billion units was down 1.3%.
Lower shipments in the European Union and Japan were partially offset by gains
in Argentina, Indonesia and Russia. Marlboro market share was up in many
markets, including Argentina, Brazil, Egypt, Greece, Hungary, Indonesia, Israel,
Korea, Mexico, Philippines, Russia, Singapore and Ukraine.
EUROPEAN UNION
2007 Third-Quarter Results
In the European Union (EU), operating companies income grew 20.5% to $1.2
billion, driven by higher pricing and favorable currency of $100 million. The
total market declined 3.8%, due largely to the impact of tax-driven price
increases, particularly in the Czech Republic, Germany, Poland and the United
Kingdom. PMI's cigarette shipment volume of 65.4 billion units declined 4.8% and
cigarette market share was down 0.6 points to 39.1%. For the year-to-date
through September, PMI's share in the EU at 39.4% was unchanged from the
comparative period in 2006.
In the Czech Republic, the total cigarette market was down 9.2%, due to the
timing of trade purchases, although year-to-date volume through September was up
1.6%. Shipment volume for PMI in the Czech Republic decreased 22.6% in the third
quarter and market share of 49.3% was down 8.5 points. PMI implemented
tax-driven price increases in the second quarter, while most competitive brands,
particularly at the low end, followed in the third quarter. This placed PMI's
brands at a temporary price disadvantage and was the main cause of the
significant market share loss. PMI expects to recover a large part of this loss
in the fourth quarter of 2007.
In France, the total market declined 3.9%, due to the impact of higher pricing.
PMI's market share of 42.0% declined 0.5 points and shipments were down 5.5%.
In Germany, the cigarette market declined 5.7%, due to a tax-driven price
increase in the fourth quarter of 2006. PMI's cigarette shipments in Germany
were down 9.0%, and its cigarette market share declined 1.3 points to 35.2%,
driven by consumer downtrading to the low price segment and an increase in a key
competitor's trade inventory. Marlboro declined 3.1 points to 24.1%, due to the
decline of the vending segment and the previously mentioned trade inventory
increase. L&M grew 2.4 share points to reach 5.3%.
In Italy, the total market was down 0.9%. PMI's shipments were up 0.6% and its
share increased 0.6 points to 54.7%, with Merit, Chesterfield and Philip Morris
contributing to the growth.
In Poland, consumer price sensitivity following significant tax-driven price
increases resulted in a total market decline of 10.5% and PMI's market share was
down 2.6 points to 38.0%, due primarily to declines of its low price brands, as
well as its local 70mm brands. Importantly, profitability in Poland virtually
tripled due to higher pricing.
In Spain, the total cigarette market was down 0.6%, while PMI's market share of
32.7% rose 0.4 points, driven by Chesterfield and L&M. Cigarette shipments in
Spain grew 1.8% and income rose by more than 30% in the quarter.
EASTERN EUROPE, MIDDLE EAST & AFRICA
2007 Third-Quarter Results
In Eastern Europe, Middle East & Africa, PMI's operating companies income
increased 22.0% to $710 million, due mainly to higher pricing, improved
volume/mix and favorable currency of $44 million. Cigarette shipment volume of
77.5 billion units was up 0.3%. Higher volume in Algeria, Bulgaria, Egypt,
Lebanon and Ukraine more than offset unfavorable timing of shipments in Kuwait
and lower volume in Serbia and worldwide duty-free.
In Egypt, the total market rose 6.4%, while PMI's market share grew 2.6 points
to 14.2%, due to the continued strength of L&M. Shipment volume in Egypt grew
21.1%.
In Russia, shipment volume declined 1.0% due to unfavorable distributor
inventory movements following consolidation to a single distributor. Market
share rose 0.2 points to 26.6% as its premium portfolio including Marlboro,
Parliament and Virginia Slims continued to grow strongly, more than offsetting
the decline of L&M. In September, PMI replaced the entire L&M brand family with
a completely new offering to improve its vibrancy and adult consumer appeal.
Initial results are encouraging. Improved brand mix and better pricing resulted
in strong income growth in Russia.
In Serbia, PMI's shipments were down 10.6%, due to the continued decline of
local brands, and market share was down 1.9 points to 52.0%. However, PMI's
market share increased for its international brands, driven by Marlboro and Bond
Street. Market share for Marlboro rose slightly and its share of the premium
segment increased.
In Ukraine, shipments grew 3.5% and market share rose 0.6 points to 34.0%,
driven by consumer uptrading to Marlboro, Parliament and Chesterfield.
ASIA
2007 Third-Quarter Results
In Asia, operating companies income grew 14.5% to $514 million, primarily due to
favorable pricing and lower costs, partially offset by unfavorable volume/mix
and unfavorable currency of $9 million. PMI's cigarette shipment volume of 53.0
billion units rose 9.6%, due to acquisition volume in Pakistan and gains in
Korea, partially offset by declines in Indonesia, Malaysia and Thailand.
In Indonesia, the total cigarette market was essentially flat. PMI market share
was down 0.6 points to 28.0%, reflecting the decline of A Mild and Dji Sam Soe
due to a temporary stick-price disadvantage versus low price competition,
partially offset by the growth of Marlboro, which gained 0.5 points to 4.3%.
PMI's cigarette shipments declined 1.9%, although Marlboro shipments rose 20.7%,
driven by improved marketing and distribution and the July 2007 Marlboro kretek
launch. Profits rose significantly in Indonesia.
In Japan, the total cigarette market was up 16.4% or 9.4 billion units, due to a
favorable comparison with the third quarter of 2006, which was depressed by
trade inventory depletions following the July 2006 excise tax-driven price
increase. Consequently, PMI's in-market sales were up 13.4%, but market share
declined 0.6 points to 24.3%, due mainly to Lark. Marlboro share of 10.1% was
essentially flat. Cigarette shipment volume was flat, as higher in-market sales
were offset by unfavorable inventory movements.
In Korea, the total market was down 3.2%, while PMI's shipments rose 10.0% and
market share increased 1.3 points to 9.9%. Parliament and Marlboro continued to
gain share, driven by recent new line extensions, including Marlboro Filter
Plus.
LATIN AMERICA
2007 Third-Quarter Results
In Latin America, operating companies income increased 7.5% to $143 million, due
mainly to higher pricing. Cigarette shipment volume of 21.3 billion units was
down 1.5%, as declines in Brazil and Colombia were partially offset by growth in
Argentina.
In Argentina, the total cigarette market grew 1.7%. PMI's volume grew 5.0% and
market share increased 2.2 points to a record 69.7%. Both Marlboro and the
Philip Morris brand gained share.
In Brazil, the total market was down 0.9% and PMI's market share declined 0.2
points to 12.0%. However, Marlboro share grew 0.2 points to 5.9%. PMI shipments
were down 2.8%.
In Colombia, PMI shipment volume declined 17.6%, due primarily to distributor
inventory distortions. However, PMI expects volume to recover in the fourth
quarter of 2007.
In Mexico, the total market declined 1.7%, due to lower consumption following
the January 2007 tax-driven price increase. PMI market share reached a new
record of 65.5%, up 1.6 points on the continued strength of Marlboro and Benson
& Hedges.
FINANCIAL SERVICES
2007 Third-Quarter Results
Philip Morris Capital Corporation (PMCC) reported operating companies income of
$33 million for the third quarter of 2007 versus operating companies income of
$101 million for the year-earlier period. Third-quarter 2007 results primarily
reflect lower asset management gains and lower lease revenues versus the prior
year.
Consistent with its strategic shift in 2003, PMCC is focused on managing its
existing portfolio of finance assets in order to maximize gains and generate
cash flow from asset sales and related activities. PMCC is no longer making new
investments and expects that its operating companies income will fluctuate over
time as investments mature or are sold.
Altria Group, Inc. Profile
As of September 30, 2007, Altria Group, Inc. owned 100% of Philip Morris
International Inc., Philip Morris USA Inc. and Philip Morris Capital
Corporation, and approximately 28.6% of SABMiller plc. The brand portfolio of
Altria Group, Inc.'s tobacco operating companies includes such well-known names
as Marlboro, L&M, Parliament and Virginia Slims. Altria Group, Inc. recorded
2006 net revenues from continuing operations of $67.1 billion.
Trademarks and service marks mentioned in this release are the registered
property of, or licensed by, the subsidiaries of Altria Group, Inc.
Forward-Looking and Cautionary Statements
This press release contains projections of future results and other
forward-looking statements that involve a number of risks and uncertainties and
are made pursuant to the Safe Harbor Provisions of the Private Securities
Litigation Reform Act of 1995. The following important factors could cause
actual results and outcomes to differ materially from those contained in such
forward-looking statements.
Altria Group, Inc.'s tobacco subsidiaries (Philip Morris USA and Philip Morris
International) are subject to intense price competition; changes in consumer
preferences and demand for their products; fluctuations in levels of customer
inventories; the effects of foreign economies and local economic and market
conditions; unfavorable currency movements and changes to income tax laws. Their
results are dependent upon their continued ability to promote brand equity
successfully; to anticipate and respond to new consumer trends; to develop new
products and markets and to broaden brand portfolios in order to compete
effectively with lower-priced products; and to improve productivity.
Altria Group, Inc.'s tobacco subsidiaries continue to be subject to litigation,
including risks associated with adverse jury and judicial determinations, and
courts reaching conclusions at variance with the company's understanding of
applicable law and bonding requirements in the limited number of jurisdictions
that do not limit the dollar amount of appeal bonds; legislation, including
actual and potential excise tax increases; discriminatory excise tax structures;
increasing marketing and regulatory restrictions; the effects of price increases
related to excise tax increases and concluded tobacco litigation settlements on
consumption rates and consumer preferences within price segments; health
concerns relating to the use of tobacco products and exposure to environmental
tobacco smoke; governmental regulation; privately imposed smoking restrictions;
and governmental and grand jury investigations.
Altria Group, Inc. and its subsidiaries are subject to other risks detailed from
time to time in its publicly filed documents, including its Quarterly Report on
Form 10-Q for the period ended June 30, 2007. Altria Group, Inc. cautions that
the foregoing list of important factors is not complete and does not undertake
to update any forward-looking statements that it may make.
Schedule 1
ALTRIA GROUP, INC.
and Subsidiaries
Condensed Statements of Earnings
For the Quarters Ended September 30,
(in millions, except per share data)
(Unaudited)
2007 2006 % Change
--------------------------
Net revenues $19,207 $17,642 8.9%
Cost of sales 4,325 4,022 7.5%
Excise taxes on products (*) 9,243 8,229 12.3%
----------------
Gross profit 5,639 5,391 4.6%
Marketing, administration and research
costs 1,775 1,836
Asset impairment and exit costs 25 65
(Recoveries) from airline industry exposure (7) -
----------------
Operating companies income 3,846 3,490 10.2%
Amortization of intangibles 6 6
General corporate expenses 132 125
Asset impairment and exit costs 3 3
----------------
Operating income 3,705 3,356 10.4%
Interest and other debt expense, net 11 59
----------------
Earnings from continuing operations before
income taxes, and equity earnings and
minority interest, net 3,694 3,297 12.0%
Provision for income taxes 1,117 1,125 (0.7)%
----------------
Earnings from continuing operations before
equity earnings and minority interest, net 2,577 2,172 18.6%
Equity earnings and minority interest, net 56 42
----------------
Earnings from continuing operations 2,633 2,214 18.9%
Earnings from discontinued operations, net
of income taxes and minority interest - 661
----------------
Net earnings $ 2,633 $ 2,875 (8.4)%
================
Per share data:
Basic earnings per share from continuing
operations $ 1.25 $ 1.06 17.9%
Basic earnings per share from discontinued
operations $ - $ 0.32
----------------
Basic earnings per share $ 1.25 $ 1.38 (9.4)%
================
Diluted earnings per share from continuing
operations $ 1.24 $ 1.05 18.1%
Diluted earnings per share from
discontinued operations $ - $ 0.31
----------------
Diluted earnings per share $ 1.24 $ 1.36 (8.8)%
================
Weighted average number of
shares outstanding - Basic 2,103 2,090 0.6%
- Diluted 2,117 2,107 0.5%
(*) The segment detail of excise taxes on products sold is shown in
the Net Revenues page.
Schedule 2
ALTRIA GROUP, INC.
and Subsidiaries
Selected Financial Data by Business Segment
For the Quarters Ended September 30,
(in millions)
(Unaudited)
Net Revenues
US
tobacco European Union EEMA Asia
-----------------------------------------
2007 $ 4,944 $ 6,832 $ 3,312 $ 2,814
2006 4,830 6,458 2,607 2,586
% Change 2.4% 5.8% 27.0% 8.8%
Reconciliation:
----------------------------
For the quarter ended
September 30, 2006 $ 4,830 $ 6,458 $ 2,607 $ 2,586
Divested businesses - 2006 - - - -
Divested businesses - 2007 - - - -
Acquired businesses - - - 61
Currency - 444 297 78
Operations 114 (70) 408 89
-----------------------------------------
For the quarter ended
September 30, 2007 $ 4,944 $ 6,832 $ 3,312 $ 2,814
=========================================
(*) The detail of excise
taxes on products sold is
as follows:
2007 $ 927 $ 4,554 $ 1,606 $ 1,372
2006 $ 938 $ 4,324 $ 1,114 $ 1,219
2007 Currency increased
international tobacco
excise taxes $ - $ 300 $ 198 $ 81
Total
Latin International Financial
America tobacco services Total
-----------------------------------------
2007 $ 1,274 $ 14,232 $ 31 $19,207
2006 1,052 12,703 109 17,642
% Change 21.1% 12.0% (71.6)% 8.9%
Reconciliation:
----------------------------
For the quarter ended
September 30, 2006 $ 1,052 $ 12,703 $ 109 $17,642
Divested businesses - 2006 - - - -
Divested businesses - 2007 - - - -
Acquired businesses 45 106 - 106
Currency 42 861 - 861
Operations 135 562 (78) 598
-----------------------------------------
For the quarter ended
September 30, 2007 $ 1,274 $ 14,232 $ 31 $19,207
=========================================
(*) The detail of excise
taxes on products sold is
as follows:
2007 $ 784 $ 8,316 $ 9,243
2006 $ 634 $ 7,291 $ 8,229
2007 Currency increased
international tobacco
excise taxes $ 24 $ 603 $ 603
Schedule 3
ALTRIA GROUP, INC.
and Subsidiaries
Selected Financial Data by Business Segment
For the Quarters Ended September 30,
(in millions)
(Unaudited)
Operating Companies Income
US
tobacco European Union EEMA Asia
-----------------------------------------
2007 $ 1,295 $ 1,151 $ 710 $ 514
2006 1,270 955 582 449
% Change 2.0% 20.5% 22.0% 14.5%
Reconciliation:
----------------------------
For the quarter ended
September 30, 2006 $ 1,270 $ 955 $ 582 $ 449
Divested businesses - 2006 - - - -
Italian antitrust charge -
2006 - - - -
Asset impairment and exit
costs - 2006 - 59 - 6
Provision for airline
industry exposure - 2006 - - - -
-----------------------------------------
- 59 - 6
-----------------------------------------
Divested businesses - 2007 - - - -
Asset impairment and exit
costs - 2007 (10) (13) - (2)
Implementation costs - 2007 (12) - - -
Recoveries from airline
industry exposure - 2007 - - - -
-----------------------------------------
(22) (13) - (2)
-----------------------------------------
Acquired businesses - (1) - (1)
Currency - 100 44 (9)
Operations 47 51 84 71
-----------------------------------------
For the quarter ended
September 30, 2007 $ 1,295 $ 1,151 $ 710 $ 514
=========================================
Total
Latin International Financial
America tobacco services Total
-----------------------------------------
2007 $ 143 $ 2,518 $ 33 $3,846
2006 133 2,119 101 3,490
% Change 7.5% 18.8% (67.3)% 10.2%
Reconciliation:
----------------------------
For the quarter ended
September 30, 2006 $ 133 $ 2,119 $ 101 $3,490
Divested businesses - 2006 (14) (14) - (14)
Italian antitrust charge -
2006 - - - -
Asset impairment and exit
costs - 2006 - 65 - 65
Provision for airline
industry exposure - 2006 - - - -
-----------------------------------------
(14) 51 - 51
-----------------------------------------
Divested businesses - 2007 - - - -
Asset impairment and exit
costs - 2007 - (15) - (25)
Implementation costs - 2007 - - - (12)
Recoveries from airline
industry exposure - 2007 - - 7 7
-----------------------------------------
- (15) 7 (30)
-----------------------------------------
Acquired businesses 5 3 - 3
Currency 3 138 - 138
Operations 16 222 (75) 194
-----------------------------------------
For the quarter ended
September 30, 2007 $ 143 $ 2,518 $ 33 $3,846
=========================================
ALTRIA GROUP, INC. Schedule 4
and Subsidiaries
Condensed Statements of Earnings
For the Nine Months Ended September 30,
(in millions, except per share data)
(Unaudited)
2007 2006 % Change
--------------------------
Net revenues $55,572 $51,024 8.9%
Cost of sales 12,499 11,704 6.8%
Excise taxes on products (*) 26,774 23,670 13.1%
----------------
Gross profit 16,299 15,650 4.1%
Marketing, administration and research
costs 5,359 5,348
Italian antitrust charge - 61
Asset impairment and exit costs 481 88
(Recoveries) Provision for airline industry
exposure (214) 103
----------------
Operating companies income 10,673 10,050 6.2%
Amortization of intangibles 18 17
General corporate expenses 392 355
Asset impairment and exit costs 64 35
----------------
Operating income 10,199 9,643 5.8%
Interest and other debt expense, net 187 325
----------------
Earnings from continuing operations before
income taxes, equity earnings and minority
interest, net 10,012 9,318 7.4%
Provision for income taxes 3,234 2,540 27.3%
----------------
Earnings from continuing operations before
equity earnings and minority interest, net 6,778 6,778 -%
Equity earnings and minority interest, net 195 145
----------------
Earnings from continuing operations 6,973 6,923 0.7%
Earnings from discontinued operations, net
of income taxes and minority interest 625 2,140
----------------
Net earnings $ 7,598 $ 9,063 (16.2)%
================
Per share data (**):
Basic earnings per share from continuing
operations $ 3.32 $ 3.32 -%
Basic earnings per share from discontinued
operations $ 0.30 $ 1.02
----------------
Basic earnings per share $ 3.62 $ 4.34 (16.6)%
================
Diluted earnings per share from continuing
operations $ 3.30 $ 3.29 0.3%
Diluted earnings per share from
discontinued operations $ 0.29 $ 1.02
----------------
Diluted earnings per share $ 3.59 $ 4.31 (16.7)%
================
Weighted average number of
shares outstanding - Basic 2,100 2,086 0.7%
- Diluted 2,115 2,104 0.5%
(*) The segment detail of excise taxes on products sold is shown in
the Net Revenues page.
(**) Basic and diluted earnings per share are computed for each of the
periods presented.
Accordingly, the sum of the quarterly earnings per share amounts may
not agree to the year-to-date amounts.
ALTRIA GROUP, INC. Schedule 5
and Subsidiaries
Selected Financial Data by
Business Segment
For the Nine Months Ended
September 30,
(in millions)
(Unaudited)
Net Revenues
US European Union EEMA Asia
tobacco
-----------------------------------------
2007 $ 13,998 $ 20,253 $ 9,205 $ 8,351
2006 13,938 18,248 7,716 7,667
% Change 0.4% 11.0% 19.3% 8.9%
Reconciliation:
----------------------------
For the nine months ended
September 30, 2006 $ 13,938 $ 18,248 $ 7,716 $ 7,667
Divested businesses - 2006 - - - -
Divested businesses - 2007 - - - -
Acquired businesses - - - 151
Currency - 1,620 453 263
Operations 60 385 1,036 270
-----------------------------------------
For the nine months ended
September 30, 2007 $ 13,998 $ 20,253 $ 9,205 $ 8,351
=========================================
(*) The detail of excise
taxes on products sold is
as follows:
2007 $ 2,626 $ 13,511 $ 4,356 $ 4,061
2006 $ 2,724 $ 12,149 $ 3,412 $ 3,471
2007 Currency increased
international tobacco
excise taxes $ - $ 1,086 $ 243 $ 218
Total
Latin International Financial
America tobacco services Total
-----------------------------------------
2007 $ 3,639 $ 41,448 $ 126 $55,572
2006 3,183 36,814 272 51,024
% Change 14.3% 12.6% (53.7)% 8.9%
Reconciliation:
----------------------------
For the nine months ended
September 30, 2006 $ 3,183 $ 36,814 $ 272 $51,024
Divested businesses - 2006 - - - -
Divested businesses - 2007 - - - -
Acquired businesses 111 262 - 262
Currency 33 2,369 - 2,369
Operations 312 2,003 (146) 1,917
-----------------------------------------
For the nine months ended
September 30, 2007 $ 3,639 $ 41,448 $ 126 $55,572
=========================================
(*) The detail of excise
taxes on products sold is
as follows:
2007 $ 2,220 $ 24,148 $26,774
2006 $ 1,914 $ 20,946 $23,670
2007 Currency increased
international tobacco
excise taxes $ 16 $ 1,563 $ 1,563
Schedule 6
ALTRIA GROUP, INC.
and Subsidiaries
Selected Financial Data by Business Segment
For the Nine Months Ended September 30,
(in millions)
(Unaudited)
Operating Companies Income
US
tobacco European Union EEMA Asia
-----------------------------------------
2007 $ 3,429 $3,256 $1,911 $ 1,412
2006 3,687 2,735 1,639 1,456
% Change (7.0)% 19.0% 16.6% (3.0)%
Reconciliation:
----------------------------
For the nine months ended
September 30, 2006 $ 3,687 $2,735 $1,639 $ 1,456
Divested businesses - 2006 - - - -
Italian antitrust charge -
2006 - 61 - -
Asset impairment and exit
costs - 2006 - 81 - 7
Provision for airline
industry exposure - 2006 - - - -
-----------------------------------------
- 142 - 7
-----------------------------------------
Divested businesses - 2007 - - - -
Asset impairment and exit
costs - 2007 (328) (101) (12) (22)
Implementation costs - 2007 (12) - - -
Recoveries from airline
industry exposure - 2007 - - - -
-----------------------------------------
(340) (101) (12) (22)
-----------------------------------------
Acquired businesses - (2) - 9
Currency - 294 65 (36)
Operations 82 188 219 (2)
-----------------------------------------
For the nine months ended
September 30, 2007 $ 3,429 $3,256 $1,911 $ 1,412
=========================================
Total
Latin International Financial
America tobacco services Total
-----------------------------------------
2007 $ 333 $6,912 $ 332 $10,673
2006 395 6,225 138 10,050
% Change (15.7)% 11.0% +100% 6.2%
Reconciliation:
----------------------------
For the nine months ended
September 30, 2006 $ 395 $6,225 $ 138 $10,050
Divested businesses - 2006 (45) (45) - (45)
Italian antitrust charge -
2006 - 61 - 61
Asset impairment and exit
costs - 2006 - 88 - 88
Provision for airline
industry exposure - 2006 - - 103 103
-----------------------------------------
(45) 104 103 207
-----------------------------------------
Divested businesses - 2007 - - - -
Asset impairment and exit
costs - 2007 (18) (153) - (481)
Implementation costs - 2007 - - - (12)
Recoveries from airline
industry exposure - 2007 - - 214 214
-----------------------------------------
(18) (153) 214 (279)
-----------------------------------------
Acquired businesses (2) 5 - 5
Currency (2) 321 - 321
Operations 5 410 (123) 369
-----------------------------------------
For the nine months ended
September 30, 2007 $ 333 $6,912 $ 332 $10,673
=========================================
Schedule 7
ALTRIA GROUP, INC.
and Subsidiaries
Net Earnings and Diluted Earnings Per Share
For the Quarters Ended September 30,
($ in millions, except per share data)
(Unaudited)
Diluted
Net Earnings E.P.S.
------------ ----------
2007 Continuing Earnings $2,633 $ 1.24
2006 Continuing Earnings $2,214 $ 1.05
% Change 18.9% 18.1%
Reconciliation:
----------------------------------------------
2006 Continuing Earnings $2,214 $ 1.05
2006 Asset impairment and exit costs 43 0.02
2006 Provision for airline industry exposure - -
------------ ----------
43 0.02
------------ ----------
2007 Asset impairment, exit and implementation
costs (26) (0.02)
2007 Recoveries from airline industry exposure 4 -
2007 Tax items 97 0.05
------------ ----------
75 0.03
------------ ----------
Currency 91 0.04
Change in shares - -
Change in tax rate 50 0.02
Operations 160 0.08
------------ ----------
2007 Continuing Earnings $2,633 $ 1.24
2007 Discontinued Earnings $ - $ -
------------ ----------
2007 Net Earnings $2,633 $ 1.24
============ ==========
2007 Continuing Earnings Excluding Special
Items $2,558 $ 1.21
2006 Continuing Earnings Excluding Special
Items $2,257 $ 1.07
% Change 13.3% 13.1%
Schedule 8
ALTRIA GROUP, INC.
and Subsidiaries
Net Earnings and Diluted Earnings Per Share
For the Nine Months Ended September 30,
($ in millions, except per share data)
(Unaudited)
Diluted
Net Earnings E.P.S. (*)
------------ ----------
2007 Continuing Earnings $ 6,973 $ 3.30
2006 Continuing Earnings $ 6,923 $ 3.29
% Change 0.7% 0.3%
Reconciliation:
-------------------------------------------
2006 Continuing Earnings $ 6,923 $ 3.29
2006 Italian antitrust charge 61 0.03
2006 Asset impairment and exit costs 80 0.04
2006 Interest on tax reserve transfers to
Kraft 29 0.01
2006 Provision for airline industry
exposure 66 0.03
2006 Tax items (631) (0.30)
------------ ----------
(395) (0.19)
------------ ----------
2007 Asset impairment, exit and
implementation costs (367) (0.17)
2007 Recoveries from airline industry
exposure 137 0.06
2007 Interest on tax reserve transfers to
Kraft (50) (0.02)
2007 Tax items 97 0.05
------------ ----------
(183) (0.08)
------------ ----------
Currency 212 0.10
Change in shares - (0.02)
Change in tax rate 63 0.03
Operations 353 0.17
------------ ----------
2007 Continuing Earnings $ 6,973 3.30
2007 Discontinued Earnings $ 625 $ 0.29
------------ ----------
2007 Net Earnings $ 7,598 $ 3.59
------------ ----------
2007 Continuing Earnings Excluding Special
Items $ 7,156 3.38
2006 Continuing Earnings Excluding Special
Items $ 6,528 3.10
% Change 9.6% 9.0%
(*) Basic and diluted earnings per share are computed for each of the
periods presented. Accordingly, the sum of the quarterly earnings per
share amounts may not agree to the year-to-date amounts.
Schedule 9
ALTRIA GROUP, INC.
and Subsidiaries
Condensed Balance Sheets
(in millions, except ratios)
(Unaudited)
September 30, December 31,
2007 2006
------------- ------------
Assets
-------------------------------------------
Cash and cash equivalents $ 7,309 $ 4,781
All other current assets 13,438 13,724
Property, plant and equipment, net 8,074 7,581
Goodwill 6,700 6,197
Other intangible assets, net 1,874 1,908
Other assets 7,891 6,837
Assets of discontinued operations - 56,452
------------- ------------
Total consumer products assets 45,286 97,480
Total financial services assets 6,442 6,790
------------- ------------
Total assets $ 51,728 $ 104,270
============= ============
Liabilities and Stockholders' Equity
-------------------------------------------
Short-term borrowings $ 512 $ 420
Current portion of long-term debt 3,973 648
Accrued settlement charges 3,681 3,552
All other current liabilities 11,018 10,941
Long-term debt 3,040 6,298
Deferred income taxes 1,649 1,391
Other long-term liabilities 4,676 5,208
Liabilities of discontinued operations - 29,495
------------- ------------
Total consumer products liabilities 28,549 57,953
Total financial services liabilities 5,940 6,698
------------- ------------
Total liabilities 34,489 64,651
Total stockholders' equity 17,239 39,619
------------- ------------
Total liabilities and stockholders' equity $ 51,728 $ 104,270
============= ============
Total consumer products debt $ 7,525 $ 7,366
Debt/equity ratio - consumer products 0.44 0.19
Total debt $ 8,025 $ 8,485
Total debt/equity ratio 0.47 0.21
Altria Group, Inc.
Nicholas M. Rolli, 917-663-3460
or
Timothy R. Kellogg, 917-663-2759
Altria Group (LSE:ALA)
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