 |
|
|
Notes to Consolidated Financial Statements
(Continued)
Note 14.
Segment Reporting:
The products of ALG’s subsidiaries include cigarettes, food (consisting principally of a wide variety of snacks, beverages, cheese, grocery products and convenient meals) and beer, prior to the merger of Miller into SAB on July 9, 2002. Another subsidiary of ALG, PMCC, is primarily engaged in leasing activities. The products and services of these subsidiaries constitute Altria Group, Inc.’s reportable segments of domestic tobacco, international tobacco, North American food, international food, beer (prior to July 9, 2002) and financial services. Altria Group, Inc.’s management reviews operating companies income to evaluate segment performance and allocate resources. Operating companies income for the segments excludes general corporate expenses and amortization of intangibles. Interest and other debt expense, net (consumer products), and provision for income taxes are centrally managed at the ALG level and, accordingly, such items are not presented by segment since they are excluded from the measure of segment profitability reviewed by Altria Group, Inc.’s management. Altria Group, Inc.’s assets are managed on a worldwide basis by major products and, accordingly, asset information is reported for the tobacco, food and financial services segments, and for 2001, the beer segment. Intangible assets and related amortization are principally attributable to the food businesses. Other assets consist primarily of cash and cash equivalents and the investment in SABMiller. The accounting policies of the segments are the same as those described in Note 2. Summary of Significant Accounting Policies. Segment data were as follows: |  | |
|
 |
|
| (in millions) |
|
2003 |
|
|
2002 |
|
2001 |
|
|
|
|
Net revenues: |
|
|
|
|
|
|
|
|
|
|
Domestic tobacco |
|
$17,001 |
|
|
18,877 |
|
$19,902 |
|
|
|
International tobacco |
|
33,389 |
|
|
28,672 |
|
26,517 |
|
|
|
North American food |
|
21,907 |
|
|
21,485 |
|
20,970 |
|
|
|
International food |
|
9,103 |
|
|
8,238 |
|
8,264 |
|
|
|
Beer |
|
|
|
|
2,641 |
|
4,791 |
|
|
|
Financial services |
|
432 |
|
|
495 |
|
435 |
|
|
|
|
Net revenues |
|
$81,832 |
|
|
$80,408 |
|
$80,879 |
|
|
|
|
Earnings before income taxes, |
|
|
|
|
|
|
|
|
|
|
minority interest and cumulative |
|
|
|
|
|
|
|
|
|
|
effect of accounting change: |
|
|
|
|
|
|
|
|
|
|
Operating companies income: |
|
|
|
|
|
|
|
|
|
|
Domestic tobacco |
|
$ 3,889 |
|
|
$ 5,011 |
|
$ 5,264 |
|
|
|
International tobacco |
|
6,286 |
|
|
5,666 |
|
5,406 |
|
|
|
North American food |
|
4,920 |
|
|
4,953 |
|
4,796 |
|
|
|
International food |
|
1,282 |
|
|
1,330 |
|
1,239 |
|
|
|
Beer |
|
|
|
|
276 |
|
481 |
|
|
|
Financial services |
|
313 |
|
|
55 |
|
296 |
|
|
|
Amortization of intangibles |
|
(9) |
|
|
(7) |
|
(1,014) |
|
|
|
General corporate expenses |
|
(771) |
|
|
(683) |
|
(766) |
|
|
|
|
Operating income |
|
15,910 |
|
|
16,601 |
|
15,702 |
|
|
|
Gain on Miller transaction |
|
|
|
|
2,631 |
|
|
|
|
|
Interest and other debt |
|
|
|
|
|
|
|
|
|
|
expense, net |
|
(1,150) |
|
|
(1,134) |
|
(1,418) |
|
|
|
|
Earnings before income |
|
|
|
|
|
|
|
|
|
|
taxes, minority interest |
|
|
|
|
|
|
|
|
|
|
and cumulative effect of |
|
|
|
|
|
|
|
|
|
|
accounting change |
|
$14,760 |
|
|
$18,098 |
|
$14,284 |
|
|
|
| | |
Items affecting comparability of results were as follows:  Domestic Tobacco Legal Settlement—As discussed in Note 18. Contingencies, on May 16, 2003, PM USA and certain other defendants reached an agreement with a class of U.S. tobacco growers and quota-holders to resolve a lawsuit related to tobacco leaf purchases. During 2003, PM USA recorded pre-tax charges of $202 million for its obligations under the agreement. The pre-tax charges are included in the operating companies income of the domestic tobacco segment.
Domestic Tobacco Headquarters Relocation Charges—During the first quarter of 2003, PM USA announced that it will be moving its corporate headquarters from New York City to Richmond, Virginia, by June 2004. PM USA estimates that the total cost of the relocation will be approximately $120 million, including compensation to those employees who do not relocate. Approximately 270 or 40% of the eligible employees elected to relocate. In accordance with SFAS No. 146, pre-tax charges of $69 million were recorded in operating companies income of the domestic tobacco segment in 2003 for relocation charges. The relocation will require total cash payments of approximately $70 million in 2004 and $20 million in 2005 and beyond. Cash payments of approximately $30 million have been made through December 31, 2003. | | |
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