Dear Shareholder
For Altria Group, Inc., 2003 was a year of significant business and legal challenges. We met most of the goals we had set at the beginning of the year and surpassed a number of strategic objectives, especially on the litigation and legislative fronts. We ended the year with solid results and witnessed a string of encouraging legal developments. Indeed, I believe that 2003 was a significant year for U.S. tobacco litigation, with positive implications for the future. Throughout 2003, our operating companies implemented long-standing strategies to grow their brands and, as an enterprise, we remain steadfast in pursuing our overriding objective to deliver superior returns to shareholders over the long term. The Altria family of companies has many growth opportunities, and our future success will be driven by the powerful brands, global infrastructure and product innovation of our operating companies, as well as our dedication to meeting or exceeding societal expectations and to maintaining the highest standards of compliance and integrity. A more comprehensive review of our commitment to responsibility appears in the section immediately following this letter.
2003: A Year of Investment
As the year unfolded, we witnessed consistent progress in our domestic tobacco business. Kraft had a difficult year, but actions are now in place to restore sustainable growth. Our international tobacco business performed solidly, with currency benefits masking difficulties encountered in France, Germany and Italy. In each instance, we invested behind these businesses to secure a stronger competitive position for the future. I believe that in the fourth quarter of 2003 we began to reap the rewards of those investments, especially at Philip Morris USA, and that we will see additional benefits in the years to come in all our businesses. For the full year 2003, Altria recorded net earnings of $9.2 billion. Diluted earnings per share of $4.52 met our expectations and compare favorably with 2002 when adjustments are made for gains and charges in both years. Also affecting the comparison was Altria’s repurchase of $6.3 billion of shares in 2002 and the suspension of our share repurchase program in 2003 following the adverse impact of the Price case in Illinois on our credit ratings. In the fourth quarter of 2003, diluted earnings per share increased a very strong 20% and are indicative of renewed positive momentum, particularly at Philip Morris USA. In 2003, total shareholder return for our stock was 42.7%, assuming dividend reinvestment, compared with a 28.7% rise in the Standard & Poor’s 500 Index. We raised the dividend 6.3% to an annual rate of $2.72 per common share, marking the 36th time in 34 years that the dividend has been increased, and during 2003 we returned $6 billion to shareholders through dividends and share repurchases. |  |
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Seated (left to right): Louis C. Camilleri
Chairman of the Board and
Chief Executive Officer Dinyar S. Devitre
Senior Vice President and
Chief Financial Officer Standing (left to right): Kenneth F. Murphy
Senior Vice President,
Human Resources and
Administration Steven C. Parrish
Senior Vice President,
Corporate Affairs Nancy J. De Lisi
Senior Vice President,
Mergers and Acquisitions Charles R. Wall
Senior Vice President
and General Counsel Senior Management Team
Members Pictured in Business
Review: Michael E. Szymanczyk
Chairman and
Chief Executive Officer
Philip Morris USA Inc. André Calantzopoulos
President and
Chief Executive Officer
Philip Morris International Inc. Roger K. Deromedi
Chief Executive Officer
Kraft Foods Inc. |
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