Altria Group, Inc. Reports 2007 First-Quarter Results |
-- Reported diluted earnings per share from continuing operations of $1.01, including the items detailed on Schedule 3, versus $1.24 in 2006, which included a $0.30 per share tax benefit -- Adjusted for items, diluted earnings per share from continuing operations up 5.1% to $1.03 versus $0.98 in 2006 -- Altria raises forecast for 2007 full-year diluted earnings per share from continuing operations to a range of $4.20 to $4.25, up from its previous projection of $4.15 to $4.20 -- Strong operating companies income growth of 9.5% at Philip Morris InternationalNEW YORK, Apr 19, 2007 (BUSINESS WIRE) -- Altria Group, Inc. (NYSE: MO) today announced reported diluted
earnings per share from continuing operations of $1.01 in the first
quarter of 2007, including items detailed on the attached Schedule 3,
versus $1.24 in the first quarter of 2006. The year-ago period
included a $0.30 per share tax benefit from the reversal of tax
reserves following the conclusion of an IRS examination of Altria's
consolidated tax returns for the years 1996 through 1999. Adjusted for
that and other items, as detailed in the table below, diluted earnings
per share from continuing operations were up 5.1% to $1.03, versus
$0.98 in the year-earlier period.
"Strategically, the key event of the first quarter was the
successful spin-off of Kraft. We now are focused on growing our
tobacco businesses, while continuing to take measures to further
enhance shareholder value," said Louis C. Camilleri, chairman and
chief executive officer of Altria Group, Inc.
"Philip Morris International had a strong first quarter with
robust income growth, driven by higher pricing and aided by favorable
currency, but faced challenges in certain markets, most notably Japan
and Germany," Mr. Camilleri said. "Philip Morris USA had a relatively
weak quarter, but its retail share and volume performance improved as
the quarter unfolded."
Kraft Spin-Off Completed
On March 30, 2007, the 88.9% of Kraft's outstanding shares
previously owned by Altria were distributed to Altria shareholders of
record on March 16, 2007 (the "record date"). Altria shareholders
received 0.692024 of a share of Kraft for each share of Altria common
stock held as of the record date. Altria shareholders received cash in
lieu of fractional shares for amounts of less than one Kraft share.
Additional details of the spin-off are available in the Information
Statement mailed to all shareholders of Altria common stock as of the
record date or at www.altria.com/kraftspinoff.
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 April 19,
2007. Access is available at www.altria.com.
2007 First-Quarter Results Excluding Items
After adjusting for the items shown in the table below, diluted
earnings per share from continuing operations increased 5.1% to $1.03
for the first quarter of 2007.
First Quarter
----------------------------------------------------------------------
2007 2006 Change
----------------------------------------------------------------------
Reported diluted EPS from continuing operations $1.01 $1.24 (18.5)%
----------------------------------------------------------------------
Asset impairment and exit costs 0.04 --
----------------------------------------------------------------------
Recoveries for airline industry exposure (0.04) --
----------------------------------------------------------------------
Italian antitrust charge -- 0.03
----------------------------------------------------------------------
Interest on tax reserve transfers to Kraft 0.02 0.01
----------------------------------------------------------------------
Tax items -- (0.30)
----------------------------------------------------------------------
Diluted EPS, excluding above items $1.03 $0.98 5.1%
----------------------------------------------------------------------
Acquisitions and Divestitures
During the first quarter of 2007, Philip Morris International
(PMI) acquired control of Lakson Tobacco Company Limited, increasing
its shareholding to over 97%. Lakson Tobacco is Pakistan's
second-largest tobacco company, with cigarette volume of approximately
30 billion units in the fiscal year ending June 30, 2006. In the first
quarter, PMI recorded one month of volume of 2.9 billion units and
equity earnings of $2.1 million for Lakson Tobacco.
2007 Full-Year Forecast
Altria raised its forecast for reported 2007 full-year diluted
earnings per share from continuing operations to a range of $4.20 to
$4.25, reflecting an improved outlook at PMI, due partially to
favorable currency. The company's previously disclosed forecast was
$4.15 to $4.20. The revised projection reflects a higher tax rate in
2007 versus 2006, and includes charges of approximately $0.09 per
share, of which $0.06 per share were recorded in the first quarter of
2007. The original guidance included $0.04 of cash recoveries at PMCC
and the company now estimates cash recoveries will be approximately
$0.06 per share, of which $0.04 per share were recorded in the first
quarter of 2007. The projection excludes Kraft, which is accounted for
as a discontinued operation in 2007, reflecting the distribution of
Kraft shares.
The factors described in the Forward-Looking and Cautionary
Statements section of this release represent continuing risks to this
projection.
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 for the first
quarter of 2007. 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. All references in
this news release are to continuing operations, unless otherwise
noted. Schedules with restated results for the years 2005 and 2006 are
attached.
References to international tobacco market shares are PMI
estimates based on a number of sources.
2007 First-Quarter Results
Net revenues for the first quarter of 2007 increased 8.2% to $17.6
billion, driven by international tobacco, as well as favorable
currency of $722 million, partially offset by lower revenues from
domestic tobacco and Philip Morris Capital Corporation (PMCC).
Operating income increased 6.2% to $3.3 billion, reflecting the
items described in the attached reconciliation on Schedule 2,
including higher results from operations of $49 million, driven by
increases in domestic and international tobacco of $114 million, as
well as favorable currency of $96 million and a cash recovery of $129
million at PMCC from assets which had been previously written down.
Earnings from continuing operations decreased 18.2% to $2.1
billion, primarily reflecting a significantly lower effective tax rate
in 2006. The company's effective tax rate was 33.5% for the first
quarter of 2007 versus 12.8% for the year-earlier period. The 2006
first-quarter tax rate included a benefit from the reversal of tax
reserves following the conclusion of an IRS examination of Altria's
consolidated tax returns for the years 1996 through 1999.
Net earnings, including discontinued operations, decreased 20.9%
to $2.8 billion, due to the factors mentioned above and lower results
at Kraft for the first quarter of 2007, primarily reflecting the tax
benefit from the closure of the IRS audit in the year-ago quarter.
Diluted earnings per share, including discontinued operations as
detailed on Schedule 1, decreased 21.2% to $1.30.
DOMESTIC TOBACCO
2007 First-Quarter Results
Philip Morris USA (PM USA), Altria Group, Inc.'s domestic tobacco
business, achieved retail share gains for its premium brands Marlboro
and Parliament, offset by share losses concentrated in PM USA's
non-support brands.
Operating companies income increased 1.3% to $1.1 billion, driven
by lower wholesale promotional allowance rates, decreased promotional
spending and lower general and administrative costs, largely offset by
lower volume, increased resolution expenses and higher spending on new
products.
PM USA's shipment volume of 40.6 billion units was down 6.2% or
2.7 billion units versus the previous year. PM USA estimates that
overall industry weakness accounted for about 2.0 billion units of
this shipment decline. The balance was primarily due to higher
wholesaler inventory depletions of PM USA brands versus the prior
year, timing of promotions and consumer pantry purchases in advance of
the January 1, 2007 excise tax increase in Texas. Adjusting for these
factors, PM USA estimates its volume decline would have been
approximately 5%.
As shown in the following table, share gains for Marlboro and
Parliament of 0.4 points and 0.1 point, respectively, were offset by
losses of 0.3 share points in non-support brands and 0.1 share point
each for Virginia Slims and Basic.
Philip Morris USA Quarterly Retail Share*
----------------------------------------------------------------------
Q1 2007 Q1 2006 Change
------- ------- --------
Marlboro 40.8% 40.4% 0.4 pp
Parliament 1.9% 1.8% 0.1 pp
Virginia Slims 2.2% 2.3% -0.1 pp
Basic 4.1% 4.2% -0.1 pp
------- ------- --------
Focus Brands 49.0% 48.7% 0.3 pp
Other PM USA 1.4% 1.7% -0.3 pp
------- ------- --------
Total PM USA 50.4% 50.4% 0.0 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.
Marlboro Smooth was introduced nationally in March 2007 and is
meeting PM USA's expectations. Marlboro Smooth is a new, full-flavor
menthol product that reinforces Marlboro's flavor heritage and its
position as the leader in the premium category.
Although PM USA's share was unchanged in the first quarter of 2007
versus the prior-year period, share trends improved in March,
following weaker share trends in January and February 2007 due to
lower promotional spending than the previous year. PM USA's underlying
shipment performance improved strongly in March.
PM USA estimates that total cigarette industry volume declined
between 4% and 5% during the first quarter of 2007, a rate
significantly higher than the long-term underlying trend. The
accelerated rate of decline was driven by a number of price-related
factors, including reductions in manufacturers' off-invoice allowances
and increases in manufacturers' list prices related to stepped-up
resolution payments, as well as increased state excise taxes,
primarily in Texas. PM USA estimates that as the year unfolds, the
industry decline will moderate, and that for the full year, the total
industry volume decline will be about 3% to 4%.
INTERNATIONAL TOBACCO
2007 First-Quarter Results
Cigarette shipment volume for Philip Morris International (PMI),
Altria Group, Inc.'s international tobacco business, increased 1.5% to
213.3 billion units, driven by the inclusion of all Lakson volume in
Pakistan beginning in March and solid gains in Argentina, Egypt,
Indonesia, Italy, Korea, North Africa, Poland and Ukraine. Partially
offsetting the volume increase were declines in Japan and Russia.
Excluding acquisitions, PMI's cigarette shipment volume was
essentially flat. PMI's total tobacco volume, which included 1.9
billion cigarette equivalent units of other tobacco products (OTPs),
grew 1.3% to 215.2 billion units versus the same period last year.
Operating companies income increased 9.5% to $2.2 billion, due
primarily to higher pricing and favorable currency of $96 million.
PMI's market share in the first quarter of 2007 advanced in many
countries, including gains in Austria, Argentina, Australia, Egypt,
Finland, France, Greece, Hong Kong, Hungary, Indonesia, Italy, Korea,
Mexico, Philippines, Poland, Portugal, Singapore, Serbia, Sweden,
Ukraine and the United Kingdom.
Total Marlboro cigarette shipments of 78.2 billion units were down
2.8%, due mainly to inventory depletions in Japan and erosion in
vending in Germany, partially offset by higher volume in Italy,
Russia, North Africa, worldwide duty-free and the successful launch of
Marlboro Filter Plus in Korea. Marlboro market share was up in Brazil,
France, Greece, Hong Kong, Hungary, Italy, Kazakhstan, Korea, Kuwait,
Philippines, Poland, Portugal, Romania, Russia, Singapore, Saudi
Arabia, Serbia, the United Kingdom and Ukraine.
In the European Union (EU) region, PMI's cigarette shipments were
up 3.4% or 2.2 billion units, driven by the Czech Republic, Hungary,
Italy and Poland. Cigarette market share in the EU region rose 0.2
points to 39.5%, with strong share performances in France, Hungary,
Italy and Poland, largely offset by declines in the Czech Republic,
Germany and Spain.
In Italy, the total cigarette market was down 0.5% versus the
year-ago period and PMI's in-market sales rose 1.1%, driven by
Marlboro, Chesterfield and Diana. This fueled a 0.9 point increase in
market share to 54.2%.
In Germany, total tobacco volume declined 6.8% versus the year-ago
quarter, due mainly to lower other tobacco products volume. PMI's
total tobacco share at 29.1% was unchanged versus the first quarter of
2006.
The total cigarette market in Germany grew slightly, due to the
growth of the low-price segment. However, PMI's in-market sales
declined 2.1% and market share was down 0.9 points to 36.2%, largely
attributable to the contraction of industry sales through the vending
channel. Total industry sales through the vending channel declined 38%
in the first quarter of 2007, due to a reduction in the number of
vending machines as a result of regulations that require electronic
age verification. Compliance with the new regulations resulted in the
elimination of many older-generation vending machines, and access to
the remaining machines has become more complex and less convenient. As
a consequence, even though PMI's total cigarette share in vending and
in other trade channels grew 0.2 share points and 0.6 share points,
respectively, its overall share declined.
In Germany, Marlboro declined 3.5 share points, partially offset
by a gain of 2.6 points for L&M. Marlboro's share declined to 25.9%,
reflecting consumer down-trading to low-price brands and losses in the
vending machine channel. With a 42.1% share of the vending channel,
Marlboro was disproportionately impacted by the decline in industry
sales through this channel.
In Spain, the total cigarette market was flat versus the same
quarter last year. PMI's in-market sales were down 3.3% and market
share declined 1.0 point to 31.7%, due mainly to Marlboro, which
suffered from a difficult comparison to the prior-year period.
However, PMI experienced solid improvement in its profitability in
Spain during the first quarter.
In France, continued moderate price gaps and PMI's strong brand
equity generated a market share gain of 0.7 points to a record 43.3%.
Share for Marlboro and the Philip Morris brand were up 0.4 points
each, to 31.3% and 6.2%, respectively.
In Poland, the total market was up and PMI's shipments grew 8.3%.
Market share advanced 2.3 points to 40.8%, mainly driven by Marlboro
and L&M, partially offset by the continuing decline of the low-price
70mm segment.
In the Eastern Europe, Middle East and Africa region, PMI's
shipments were down 0.5%, driven primarily by declines in Russia and
Turkey, partially offset by gains in Algeria, Egypt and Ukraine. In
Russia, shipments were down 6.6% and share declined 0.2 points to
26.6%, due largely to L&M and local low-price brands, partially offset
by higher sales and market share of higher-margin international
brands, Marlboro, Parliament and Chesterfield. In Turkey, shipments
were down 3.5% and market share declined 2.1 points to 41.4%, due to
the February 2007 tax-driven retail price increase. In Ukraine,
shipments grew 6.4% and share rose 0.5 points to 33.2%, driven by
continued consumer up-trading to premium brands, particularly Marlboro
and Chesterfield. In Egypt, improved economic conditions and increased
tourism continued to fuel the growth of the total cigarette industry
and premium brands. PMI's shipments rose 28.2% and share advanced 1.0
point to 11.4%, driven by Marlboro and L&M.
In Asia, PMI's volume rose 0.4% including all Lakson volume in
Pakistan beginning in March. Excluding the additional volume from
Lakson, volume was down 5.2%, due primarily to Japan, partially offset
by gains in Indonesia and Korea.
In Japan, the total market declined 5.7% as a result of the July
2006 tax-driven price increase. PMI's in-market sales were down 5.8%,
resulting in PMI's market share remaining unchanged at 24.7%. PMI
shipments were down 17.5% versus the year-ago quarter, due to the
effects of the 2006 price increase and an unfavorable comparison with
the prior-year quarter, which included distributor purchases in
advance of the 2006 price increase and higher inventories at year-end
2006.
In Indonesia, PMI shipment volume rose 5.8% and market share
increased 0.5 points to 28.4%, led by the continued strong performance
of A Hijau. In Korea, shipments increased 25.8%, reflecting the timing
of shipments and the successful launch of Marlboro Filter Plus in the
fourth quarter of 2006. Marlboro Filter Plus is a new one-milligram
cigarette with a highly innovative cigarette and filter construction.
In Latin America, cigarette shipments were up 0.3%, due mainly to
gains in Argentina, partially offset by the timing of shipments in
Mexico. The total market in Argentina was up 2.3%, while PMI shipments
grew 9.8% and share was up 4.7 points to 68.5%, driven by the
continued growth of the Philip Morris brand. In Mexico, PMI's
shipments were down 6.3%, reflecting increased trade purchases in the
fourth quarter of 2006 ahead of the 2007 tax increase. However, market
share grew 0.7 points to 62.3%, driven by the launch of Delicados
Supremos in January 2007 and the continued growth of Benson & Hedges.
FINANCIAL SERVICES
2007 First-Quarter Results
Philip Morris Capital Corporation (PMCC) reported operating
companies income of $160 million for the first quarter of 2007 versus
$96 million for the year-earlier period. First-quarter 2007 results
reflected a cash recovery of $129 million at PMCC from assets which
had been previously written down, partially offset by lower asset
management gains and lower revenues, primarily as a result of lower
investment balances.
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 March 31, 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 Annual Report on Form 10-K for the period ended December 31, 2006.
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.
ALTRIA GROUP, INC. Schedule 1
and Subsidiaries
Condensed Statements of Earnings
For the Quarters Ended March 31,
(in millions, except per share data)
(Unaudited)
2007 2006 % Change
---------------------------
Net revenues $17,556 $16,232 8.2 %
Cost of sales 3,909 3,724 5.0 %
Excise taxes on products (*) 8,519 7,546 12.9 %
-----------------
Gross profit 5,128 4,962 3.3 %
Marketing, administration and research
costs 1,751 1,720
Italian antitrust charge - 61
Asset impairment and exit costs 62 2
Recoveries for airline industry exposure (129) -
-----------------
Operating companies income 3,444 3,179 8.3 %
Amortization of intangibles 6 5
General corporate expenses 127 113
Asset impairment and exit costs 61 -
-----------------
Operating income 3,250 3,061 6.2 %
Interest and other debt expense, net 114 147
-----------------
Earnings from continuing operations before
income taxes, and equity earnings and
minority interest, net 3,136 2,914 7.6 %
Provision for income taxes 1,051 374 +100%%
-----------------
Earnings from continuing operations before
equity earnings and minority interest,
net 2,085 2,540 (17.9)%
Equity earnings and minority interest, net 40 57
-----------------
Earnings from continuing operations 2,125 2,597 (18.2)%
Earnings from discontinued operations, net
of income taxes and minority interest 625 880
-----------------
Net earnings $ 2,750 $ 3,477 (20.9)%
======== ========
Per share data:
Basic earnings per share from continuing
operations $ 1.01 $ 1.25 (19.2)%
Basic earnings per share from discontinued
operations $ 0.30 $ 0.42
-----------------
Basic earnings per share $ 1.31 $ 1.67 (21.6)%
=================
Diluted earnings per share from continuing
operations $ 1.01 $ 1.24 (18.5)%
Diluted earnings per share from
discontinued operations $ 0.29 $ 0.41
-----------------
Diluted earnings per share $ 1.30 $ 1.65 (21.2)%
=================
Weighted average number of
shares outstanding - Basic 2,097 2,082 0.7 %
- Diluted 2,112 2,101 0.5 %
(*) The detail of excise taxes on products
sold is as follows:
2007 2006
-----------------
Domestic tobacco $ 800 $ 855
International tobacco 7,719 6,691
-----------------
Total excise taxes $ 8,519 $ 7,546
=================
Schedule 2
ALTRIA GROUP, INC.
and Subsidiaries
Selected Financial Data by Business Segment
For the Quarters Ended March 31,
(in millions)
(Unaudited)
-----------------------------------------
Net Revenues
-----------------------------------------
Domestic International Financial
tobacco tobacco services Total
-----------------------------------------
2007 $4,245 $13,268 $43 $17,556
2006 4,323 11,801 108 16,232
% Change (1.8)% 12.4% (60.2)% 8.2%
Reconciliation:
----------------------------
For the quarter ended March
31, 2006 $4,323 $11,801 $108 $16,232
Divested businesses - 2006 - - - -
Italian antitrust charge -
2006 - - - -
Asset impairment and exit
costs - 2006 - - - -
-----------------------------------------
- - - -
-----------------------------------------
Divested businesses - 2007 - - - -
Asset impairment and exit
costs - 2007 - - - -
Recoveries for airline
industry exposure - 2007 - - - -
-----------------------------------------
- - - -
-----------------------------------------
Acquired businesses - 32 - 32
Currency - 722 - 722
Operations (78) 713 (65) 570
-----------------------------------------
For the quarter ended March
31, 2007 $4,245 $13,268 $43 $17,556
=========================================
-----------------------------------------
Operating Companies Income
-----------------------------------------
Domestic International Financial
tobacco tobacco services Total
-----------------------------------------
2007 $1,130 $2,154 $160 $3,444
2006 1,116 1,967 96 3,179
% Change 1.3% 9.5% 66.7% 8.3%
Reconciliation:
----------------------------
For the quarter ended March
31, 2006 $1,116 $1,967 $96 $3,179
Divested businesses - 2006 - (14) - (14)
Italian antitrust charge -
2006 - 61 - 61
Asset impairment and exit
costs - 2006 - 2 - 2
-----------------------------------------
- 49 - 49
-----------------------------------------
Divested businesses - 2007 - - - -
Asset impairment and exit
costs - 2007 - (62) - (62)
Recoveries for airline
industry exposure - 2007 - - 129 129
-----------------------------------------
- (62) 129 67
-----------------------------------------
Acquired businesses - 4 - 4
Currency - 96 - 96
Operations 14 100 (65) 49
-----------------------------------------
For the quarter ended March
31, 2007 $1,130 $2,154 $160 $3,444
=========================================
(*) The detail of excise taxes on products sold is as follows:
2007 2006
----------------------
Domestic tobacco $800 $855
International tobacco 7,719 6,691
----------------------
Total excise taxes $8,519 $7,546
======================
Currency increased international tobacco excise taxes by $448 million.
Schedule 3
ALTRIA GROUP, INC.
and Subsidiaries
Net Earnings and Diluted Earnings Per Share
For the Quarters Ended March 31,
($ in millions, except per share data)
(Unaudited)
Diluted
Net Earnings E.P.S.
------------ ------------
2007 Continuing Earnings $ 2,125 $ 1.01
2006 Continuing Earnings $ 2,597 $ 1.24
% Change (18.2)% (18.5)%
Reconciliation:
------------------------------------------
2006 Continuing Earnings $ 2,597 $ 1.24
2006 Italian antitrust charge 61 0.03
2006 Asset impairment and exit costs 1 -
2006 Interest on tax reserve transfers to
Kraft 29 0.01
2006 Tax items (631) (0.30)
------------ ------------
(540) (0.26)
------------ ------------
2007 Asset impairment and exit costs (81) (0.04)
2007 Recoveries for airline industry
exposure 83 0.04
2007 Interest on tax reserves transfer to
Kraft (50) (0.02)
------------ ------------
(48) (0.02)
------------ ------------
Currency 62 0.03
Change in shares - -
Change in tax rate 10 -
Operations 44 0.02
------------ ------------
2007 Continuing Earnings $ 2,125 $ 1.01
2007 Discontinued Earnings $ 625 $ 0.29
------------ ------------
2007 Net Earnings $ 2,750 $ 1.30
============ ============
2007 Continuing Earnings Excluding Special
Items $ 2,173 $ 1.03
2006 Continuing Earnings Excluding Special
Items $ 2,057 $ 0.98
% Change 5.6 % 5.1 %
Schedule 4
ALTRIA GROUP, INC.
and Subsidiaries
Condensed Statement of Earnings
Restated for Discontinued Operations
For the Quarters Ended March 31, June 30, September 30, December 31,
2006
(in millions, except per share data)
(Unaudited)
Q1 2006 Q2 2006 Q3 2006 Q4 2006
Adjusted Adjusted Adjusted Adjusted
--------- --------- --------- ---------
Net revenues $ 16,232 $ 17,150 $ 17,642 $ 16,027
Cost of sales 3,724 3,958 4,022 3,836
Excise taxes on products 7,546 7,895 8,229 7,413
--------- --------- --------- ---------
Gross profit 4,962 5,297 5,391 4,778
Marketing, administration and
research costs 1,720 1,792 1,836 1,822
Italian antitrust charge 61 - - -
Asset impairment and exit
costs 2 21 65 48
Losses (gains) on sale of
business - - - (488)
Provision for airline industry
exposure - 103 - -
--------- --------- --------- ---------
Operating companies income 3,179 3,381 3,490 3,396
Amortization of intangibles 5 6 6 6
General corporate expenses 113 117 125 139
Asset impairment and exit
costs - 32 3 7
--------- --------- --------- ---------
Operating income 3,061 3,226 3,356 3,244
Interest and other debt
expense, net 147 119 59 42
--------- --------- --------- ---------
Earnings from continuing
operations before income
taxes, and equity earnings
and minority interest, net 2,914 3,107 3,297 3,202
Provision for income taxes 374 1,041 1,125 860
--------- --------- --------- ---------
Earnings from continuing
operations before equity
earnings and minority
interest, net 2,540 2,066 2,172 2,342
Equity earnings and minority
interest, net 57 46 42 64
--------- --------- --------- ---------
Earnings from continuing
operations 2,597 2,112 2,214 2,406
Earnings from discontinued
operations, net of income
taxes and minority interest 880 599 661 553
--------- --------- --------- ---------
Net earnings $ 3,477 $ 2,711 $ 2,875 $ 2,959
========= ========= ========= =========
Per share data: (*)
Basic earnings per share from
continuing operations $ 1.25 $ 1.01 $ 1.06 $ 1.15
--------- --------- --------- ---------
Basic earnings per share from
discontinued operations $ 0.42 $ 0.29 $ 0.32 $ 0.26
--------- --------- --------- ---------
Basic earnings per share $ 1.67 $ 1.30 $ 1.38 $ 1.41
========= ========= ========= =========
Diluted earnings per share
from continuing operations $ 1.24 $ 1.00 $ 1.05 $ 1.14
--------- --------- --------- ---------
Diluted earnings per share
from discontinued operations $ 0.41 $ 0.29 $ 0.31 $ 0.26
--------- --------- --------- ---------
Diluted earnings per share $ 1.65 $ 1.29 $ 1.36 $ 1.40
--------- --------- --------- ---------
Weighted average number of
shares outstanding - Basic 2,082 2,085 2,090 2,092
- Diluted 2,101 2,102 2,107 2,110
2006 Full
Year
Adjusted
---------
Net revenues $ 67,051
Cost of sales 15,540
Excise taxes on products 31,083
---------
Gross profit 20,428
Marketing, administration and
research costs 7,170
Italian antitrust charge 61
Asset impairment and exit
costs 136
Losses (gains) on sale of
business (488)
Provision for airline industry
exposure 103
---------
Operating companies income 13,446
Amortization of intangibles 23
General corporate expenses 494
Asset impairment and exit
costs 42
---------
Operating income 12,887
Interest and other debt
expense, net 367
---------
Earnings from continuing
operations before income
taxes, and equity earnings
and minority interest, net 12,520
Provision for income taxes 3,400
---------
Earnings from continuing
operations before equity
earnings and minority
interest, net 9,120
Equity earnings and minority
interest, net 209
---------
Earnings from continuing
operations 9,329
Earnings from discontinued
operations, net of income
taxes and minority interest 2,693
---------
Net earnings $ 12,022
=========
Per share data: (*)
Basic earnings per share from
continuing operations $ 4.47
---------
Basic earnings per share from
discontinued operations $ 1.29
---------
Basic earnings per share $ 5.76
=========
Diluted earnings per share
from continuing operations $ 4.43
---------
Diluted earnings per share
from discontinued operations $ 1.28
---------
Diluted earnings per share $ 5.71
---------
Weighted average number of
shares outstanding - Basic 2,087
- Diluted 2,105
(*) 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 5
ALTRIA GROUP, INC.
and Subsidiaries
Condensed Statement of Earnings
Restated for Discontinued Operations
For the Quarters Ended March 31, June 30, September 30, December 31,
2005
(in millions, except per share data)
(Unaudited)
Q1 2005 Q2 2005 Q3 2005 Q4 2005
Adjusted Adjusted Adjusted Adjusted
--------- --------- --------- ---------
Net revenues $ 15,559 $ 16,450 $ 16,905 $ 14,827
Cost of sales 3,567 3,859 3,881 3,612
Excise taxes on products 7,156 7,459 7,656 6,663
--------- --------- --------- ---------
Gross profit 4,836 5,132 5,368 4,552
Marketing, administration and
research costs 1,678 1,754 1,829 1,873
Domestic tobacco headquarters
relocation charges 1 2 - 1
Domestic tobacco loss on U.S.
tobacco pool - - 138 -
Domestic tobacco quota buy-out - - (115) -
Asset impairment and exit
costs 3 21 33 33
Losses (gains) on sale of
business - - - -
Provision for airline industry
exposure - - 200 -
--------- --------- --------- ---------
Operating companies income 3,154 3,355 3,283 2,645
Amortization of intangibles 1 2 2 13
General corporate expenses 116 112 112 190
Asset impairment and exit
costs 18 20 2 9
--------- --------- --------- ---------
Operating income 3,019 3,221 3,167 2,433
Interest and other debt
expense, net 105 146 167 103
--------- --------- --------- ---------
Earnings from continuing
operations before income
taxes, and equity earnings
and minority interest, net 2,914 3,075 3,000 2,330
Provision for income taxes 1,009 876 764 760
--------- --------- --------- ---------
Earnings from continuing
operations before equity
earnings and minority
interest, net 1,905 2,199 2,236 1,570
Equity earnings and minority
interest, net 82 65 66 47
--------- --------- --------- ---------
Earnings from continuing
operations 1,987 2,264 2,302 1,617
Earnings from discontinued
operations, net of income
taxes and minority interest 609 403 581 672
--------- --------- --------- ---------
Net earnings $ 2,596 $ 2,667 $ 2,883 $ 2,289
========= ========= ========= =========
Per share data: (*)
Basic earnings per share from
continuing operations $ 0.96 $ 1.10 $ 1.11 $ 0.78
--------- --------- --------- ---------
Basic earnings per share from
discontinued operations $ 0.30 $ 0.19 $ 0.28 $ 0.32
--------- --------- --------- ---------
Basic earnings per share $ 1.26 $ 1.29 $ 1.39 $ 1.10
========= ========= ========= =========
Diluted earnings per share
from continuing operations $ 0.95 $ 1.08 $ 1.10 $ 0.77
--------- --------- --------- ---------
Diluted earnings per share
from discontinued operations $ 0.30 $ 0.20 $ 0.28 $ 0.32
--------- --------- --------- ---------
Diluted earnings per share $ 1.25 $ 1.28 $ 1.38 $ 1.09
========= ========= ========= =========
Weighted average number of
shares outstanding - Basic 2,061 2,067 2,072 2,078
- Diluted 2,081 2,087 2,092 2,098
2005 Full
Year
Adjusted
---------
Net revenues $ 63,741
Cost of sales 14,919
Excise taxes on products 28,934
---------
Gross profit 19,888
Marketing, administration and
research costs 7,134
Domestic tobacco headquarters
relocation charges 4
Domestic tobacco loss on U.S.
tobacco pool 138
Domestic tobacco quota buy-out (115)
Asset impairment and exit
costs 90
Losses (gains) on sale of
business -
Provision for airline industry
exposure 200
---------
Operating companies income 12,437
Amortization of intangibles 18
General corporate expenses 530
Asset impairment and exit
costs 49
---------
Operating income 11,840
Interest and other debt
expense, net 521
---------
Earnings from continuing
operations before income
taxes, and equity earnings
and minority interest, net 11,319
Provision for income taxes 3,409
---------
Earnings from continuing
operations before equity
earnings and minority
interest, net 7,910
Equity earnings and minority
interest, net 260
---------
Earnings from continuing
operations 8,170
Earnings from discontinued
operations, net of income
taxes and minority interest 2,265
---------
Net earnings $ 10,435
=========
Per share data: (*)
Basic earnings per share from
continuing operations $ 3.95
---------
Basic earnings per share from
discontinued operations $ 1.09
---------
Basic earnings per share $ 5.04
=========
Diluted earnings per share
from continuing operations $ 3.91
---------
Diluted earnings per share
from discontinued operations $ 1.08
---------
Diluted earnings per share $ 4.99
=========
Weighted average number of
shares outstanding - Basic 2,070
- Diluted 2,090
(*) 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 6
ALTRIA GROUP, INC.
and Subsidiaries
Condensed Balance Sheets
(in millions, except ratios)
(Unaudited)
March 31, December 31,
2007 2006
------------ ------------
Assets
--------------------------------------------
Cash and cash equivalents $ 2,189 $ 4,781
All other current assets 12,468 13,724
Property, plant and equipment, net 7,719 7,581
Goodwill 6,597 6,197
Other intangible assets, net 1,903 1,908
Other assets 7,230 6,837
Assets of discontinued operations - 56,452
------------ ------------
Total consumer products assets 38,106 97,480
Total financial services assets 6,503 6,790
------------ ------------
Total assets $ 44,609 $ 104,270
============ ============
Liabilities and Stockholders' Equity
--------------------------------------------
Short-term borrowings $ 435 $ 420
Current portion of long-term debt 144 648
Accrued settlement charges 1,195 3,552
All other current liabilities 8,848 10,941
Long-term debt 6,843 6,298
Deferred income taxes 1,466 1,391
Other long-term liabilities 4,453 5,208
Liabilities of discontinued operations - 29,495
------------ ------------
Total consumer products liabilities 23,384 57,953
Total financial services liabilities 6,715 6,698
------------ ------------
Total liabilities 30,099 64,651
Total stockholders' equity 14,510 39,619
------------ ------------
Total liabilities and stockholders' equity $ 44,609 $ 104,270
============ ============
Total consumer products debt $ 7,422 $ 7,366
Debt/equity ratio - consumer products 0.51 0.19
Total debt $ 8,531 $ 8,485
Total debt/equity ratio 0.59 0.21
SOURCE: Altria Group, Inc.
Altria Group, Inc.
Nicholas M. Rolli, 917-663-3460
or
Timothy R. Kellogg, 917-663-2759
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