Altria Group, Inc. Reports 2007 Second-Quarter Results |
-- Reported diluted earnings per share from continuing operations up 5.0% to $1.05, including charges of $0.12 per share for asset impairment and exit costs, as well as other items detailed on Schedule 7 -- Adjusted diluted earnings per share from continuing operations up 9.5% to $1.15 versus $1.05 in 2006 -- Full-year 2007 reported diluted earnings per share from continuing operations revised to a range of $4.05 to $4.10, reflecting $0.15 in additional charges for asset impairment and exit costs, versus a previously announced range of $4.20 to $4.25NEW YORK, Jul 18, 2007 (BUSINESS WIRE) -- Regulatory News:
Altria Group, Inc. (NYSE: MO) today announced second-quarter
reported diluted earnings per share from continuing operations of
$1.05, up 5.0% versus the prior year, including charges of $0.12 per
share for asset impairment and exit costs, primarily related to the
previously announced closing of Philip Morris USA's (PM USA) cigarette
manufacturing facility in Cabarrus, NC as well as other items detailed
on the attached Schedule 7. After adjusting results as detailed in the
table below, diluted earnings per share from continuing operations
were up 9.5% to $1.15, versus $1.05 in the corresponding prior-year
period.
"Altria had a solid quarter. The underlying fundamentals in our
tobacco businesses remained strong, with operating companies income
well ahead of the prior-year period when adjusted for the impact of
asset impairment and exit costs," said Louis C. Camilleri, chairman
and chief executive officer of Altria Group, Inc. "In our U.S. tobacco
business, Marlboro achieved a record retail share of 41.0%. In our
international tobacco business, operating companies income adjusted
for asset impairment and exit costs grew 7.2%, and Philip Morris
International (PMI) continued to introduce innovative products
including Marlboro Filter Plus in Korea, Ukraine and Russia, L&M
Essence in a number of key markets and Marlboro kretek in Indonesia in
early July."
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 July 18, 2007.
Access is available at www.altria.com.
2007 Second-Quarter Results Excluding Items
After adjusting for the items shown in the table below, diluted
earnings per share from continuing operations increased 9.5% to $1.15
for the second quarter of 2007.
Second Quarter
---------------
2007 2006 Change
------- ------- ------
Reported diluted EPS from continuing operations $1.05 $1.00 5.0%
Asset impairment and exit costs 0.12 0.02
(Recoveries) provision for airline industry
exposure (0.02) 0.03
Diluted EPS, excluding above items $1.15 $1.05 9.5%
2007 Full-Year Forecast
Altria revised its forecast to a range of $4.05 to $4.10 for
reported 2007 full-year diluted earnings per share from continuing
operations, reflecting $0.15 in additional charges for asset
impairment and exit costs, versus its previously announced range of
$4.20 to $4.25. The revised projection includes charges of $0.24 per
share, which are $0.15 per share higher ($0.12 for PM USA and $0.03
for PMI) than the $0.09 in previously forecasted charges. The
projection also includes $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.
Manufacturing Optimization Program
On June 26, 2007 Altria announced plans by its tobacco operating
subsidiaries to optimize worldwide cigarette production by moving
U.S.-based cigarette production for non-U.S. markets to PMI facilities
in Europe. PMI is expected to shift sourcing of approximately 57
billion cigarettes to facilities in Europe by the third quarter of
2008, while PM USA will close its Cabarrus, NC manufacturing facility
by the end of 2010 and consolidate manufacturing for the U.S. market
at its Richmond, VA Manufacturing Center.
PM USA recorded an initial pre-tax charge of $318 million or $0.10
per share in the second quarter of 2007 for costs related to the
program, primarily for employee separation, with additional estimated
pre-tax charges of approximately $55 million or $0.02 per share for
the remainder of 2007. The program is expected to generate cost
savings beginning in 2008, with total estimated annual cost savings of
approximately $335 million by 2011, of which $179 million will be
realized by PMI and $156 million by PM USA. Cumulative total expenses
through 2011 are estimated at approximately $670 million, all of which
will be at PM USA.
PMI Announces Agreement in Principle 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 be completed later this year, subject to execution of
definitive agreements and customary regulatory approvals. When
completed, the transaction is expected to increase Altria's annualized
net earnings by approximately $0.03 per 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.
Schedules with restated results by reportable segments for the
years 2006 and 2007 are attached.
2007 Second-Quarter Results
Revenues net of excise taxes and currency increased 2.9% to $9.5
billion for the second quarter of 2007, driven by all segments except
PMCC.
Operating income increased 0.6% to $3.2 billion, reflecting the
items described in the attached reconciliation on Schedule 3,
including higher results from operations of $126 million, favorable
currency of $87 million and the net impact of a cash recovery of $78
million at PMCC from assets which had been previously written down,
compared to a provision of $103 million at PMCC in the second quarter
of 2006. Largely offsetting those factors were asset impairment and
exit costs of $394 million, primarily at PM USA.
Earnings from continuing operations increased 4.9% to $2.2
billion, reflecting the items above as well as a decrease in interest
expense due to lower debt outstanding. The company's effective tax
rate at 33.5% was unchanged for the second quarter of 2007 versus the
year-earlier period.
Net earnings, including discontinued operations, decreased 18.3%
to $2.2 billion, primarily due to the Kraft spin-off and the factors
mentioned above. Diluted earnings per share, including discontinued
operations as detailed on Schedule 1, decreased 18.6% to $1.05.
U.S. TOBACCO
2007 Second-Quarter Results
Philip Morris USA (PM USA), Altria Group, Inc.'s U.S. tobacco
business, reported that its second-quarter revenues net of excise
taxes increased 1.5% to $3.9 billion. Operating companies income
decreased 22.8% to $1.0 billion compared to the year-earlier period.
The decline was largely a result of the $318 million pre-tax charge
for asset impairment and exit costs related to the previously
announced closure of the Cabarrus, NC cigarette manufacturing
facility, as well as lower volume and increased resolution expenses,
partially offset by lower wholesale promotional allowance rates and
lower expenses for marketing, administrative and research costs.
Adjusted for the $318 million in asset impairment and exit costs, PM
USA's operating companies income would have increased by 1.6% to $1.3
billion.
PM USA's cigarette shipment volume of 45.6 billion units was 3.3%
or 1.6 billion units lower than that recorded in the prior-year
period. In the first half of 2007, PM USA estimates that total
cigarette industry volume declined between 4% and 5%, 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)
----------------------------------------------------------------------
Q2 2007 Q2 2006 Change**
------- ------- --------
Marlboro 37.7 38.6 - 2.3%
Parliament 1.5 1.5 - 2.1%
Virginia Slims 1.8 2.0 - 6.3%
Basic 3.5 3.8 - 8.1%
------- -------
Focus Brands 44.5 45.9 - 2.9%
Other PM USA 1.1 1.3 -15.2%
------- -------
Total PM USA 45.6 47.2 - 3.3%
* 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.
PM USA's total retail share was unchanged at 50.5% in the second
quarter of 2007 versus the prior-year period. However, Marlboro had a
strong gain of 0.4 retail share points. Marlboro Smooth performed well
in the second quarter of 2007, contributing to Marlboro's overall
performance. Marlboro Smooth was introduced nationally in March and
offers adult smokers a uniquely rich and smooth menthol taste.
Parliament's retail share was unchanged, while Virginia Slims and
Basic declined by 0.1 and 0.2 share points, respectively.
PM USA's cigarette retail share performance by brand is summarized
in the table below:
Philip Morris USA Cigarette Retail Share* by Brand
----------------------------------------------------------------------
Q2 2007 Q2 2006 Change
------- ------- -------
Marlboro 41.0% 40.6% +0.4 pp
Parliament 1.9% 1.9% --
Virginia Slims 2.2% 2.3% -0.1 pp
Basic 4.0% 4.2% -0.2 pp
------- -------
Focus Brands 49.1% 49.0% +0.1 pp
Other PM USA 1.4% 1.5% -0.1 pp
------- -------
Total PM USA 50.5% 50.5% --
* 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.
PM USA is announcing today that it will introduce Marlboro Smooth
100's Box and Marlboro Virginia Blend King Box and 100's Box at retail
in September. Based on the success of Marlboro Smooth, PM USA is
expanding the brand with Marlboro Smooth 100's Box, which will offer
the same uniquely rich and smooth taste to the more than 40% of
menthol adult smokers that choose the 100's format. Marlboro's newest
offering is Marlboro Virginia Blend, a single-leaf blend crafted from
U.S.-grown Virginia (Bright) tobaccos, which has a distinctive crisp
and mellow taste and is intended for adult smokers looking for a new
flavor experience. Both products reinforce the Marlboro tradition of
flavor and its position as the leader in the premium category.
As part of its tobacco category adjacency strategy to develop new
revenue and income sources for the future, PM USA announced that it
will test market Marlboro Snus in the Dallas/Fort Worth, Texas, area
beginning in August 2007. Marlboro Snus is a spit-free tobacco pouch
product that utilizes a unique flavor strip and dried tobacco.
INTERNATIONAL TOBACCO
2007 Second-Quarter Results
Philip Morris International (PMI), Altria Group, Inc.'s
international tobacco business, reported that its revenues net of
excise taxes and currency increased 4.0% to $5.6 billion. Operating
companies income grew 4.7% to $2.2 billion, due primarily to higher
pricing and favorable currency of $87 million, partially offset by
asset impairment and exit costs of $76 million.
Cigarette shipment volume increased 3.3% or 7.1 billion units to
221.0 billion units, due largely to acquisition volume from Lakson
Tobacco in Pakistan. Gains in Argentina, Egypt, Indonesia, Korea, the
Philippines and Ukraine, as well as the favorable timing of shipments
in certain markets, were offset by shipment declines in Russia,
Germany and the Czech Republic, as well as Japan, where comparisons to
the second quarter of 2006 were distorted by heavy trade purchases in
anticipation of the July 2006 excise tax increase. Excluding the
impact of acquisitions, PMI's cigarette shipment volume was down 0.5%.
PMI's volume performance by segment is summarized in the table
below:
Philip Morris International Cigarette Volume by Segment (Billion
Units)
----------------------------------------------------------------------
Q2 2007 Q2 2006 Change*
------- ------- -------
European Union 67.8 68.4 - 0.9%
Eastern Europe, Middle East & Africa 75.9 75.3 + 0.8%
Asia 55.8 48.1 +15.9%
Latin America 21.5 22.1 - 2.6%
------- -------
Total PMI 221.0 213.9 3.3%
*Calculation based on millions of units.
PMI's market share in the second quarter of 2007 advanced in many
countries, including Argentina, Australia, Austria, Belgium, the Czech
Republic, Egypt, France, Italy, Korea, Mexico, Netherlands, Russia,
Serbia, the Philippines, Portugal and Ukraine.
Total Marlboro cigarette shipment volume of 81.1 billion units was
down 0.5%. Lower Marlboro volume in Germany, Japan and Turkey was
partially offset by gains in Argentina, Korea, Poland, Romania and
Russia. Marlboro market share was up in many markets, including
Argentina, Brazil, the Czech Republic, Egypt, France, Hungary,
Indonesia, Kazakhstan, Korea, Kuwait, Mexico, Netherlands, Poland,
Russia, Saudi Arabia, Serbia and Ukraine.
EUROPEAN UNION
2007 Second-Quarter Results
In the European Union (EU), PMI's cigarette shipment volume of
67.8 billion units was down 0.9%, due mainly to declines in the Czech
Republic and Germany and unfavorable distributor inventory movements
in France and Italy. However, cigarette market share in the EU rose
0.4 points to 39.7%, representing quarter-over-quarter market share
growth for three consecutive periods. Operating companies income
increased 12.3% to $1.1 billion, due primarily to higher pricing and
favorable currency of $85 million.
In the Czech Republic, the total cigarette market was down 26.6%
due to trade purchases prior to the March 2007 excise tax increase.
PMI's shipment volume declined 22.7%, but market share increased 3.1
points to 60.4%.
In France, PMI's market share continued its forward momentum,
reaching 43.4% in the second quarter, up 0.6 points versus the same
period last year. Both Marlboro and the Philip Morris brand drove this
growth. PMI's shipment volume was down 2.6%, reflecting unfavorable
distributor inventory movements compared to last year.
In the German market, total tobacco consumption was down 4.7% and
PMI's share of total tobacco consumption declined 0.7 points to 30.1%.
The cigarette market decreased 2.5%, mainly driven by the effects of
higher prices and PMI's cigarette volume decreased 4.0%. PMI's
cigarette market share declined 0.6 points to 37.0%, reflecting a
38.4% volume decline in the vending channel. The vending channel
accounted for 15% of total industry volume in the quarter, compared to
23.7% in the comparative period last year due to the reduction in
vending machines resulting from new regulations that require
electronic age verification. PMI's share of the vending channel at 51%
is over-indexed relative to its overall market share, and as a
consequence PMI has been adversely impacted by this development. PMI
expects the volume share of the vending channel to gradually improve.
Marlboro share was down 2.8 points to 26.1%, with most of this decline
being driven by shrinkage in the vending channel. L&M continued to
grow strongly, adding 2.5 share points to reach 4.7%.
In Italy, PMI's powerful and broad brand portfolio drove share up
1.0 point to 54.6%. Merit, Chesterfield, Philip Morris and Muratti all
contributed to the growth. Marlboro remains resilient and its share at
22.8% was unchanged versus last year. The total industry in Italy
declined moderately by 1.4%, and although PMI's shipment volume
declined 4.7%, this was wholly due to unfavorable distributor
inventory movements and the timing of shipments.
The Spanish market has achieved stability and declined less than
1% in the second quarter of 2007. PMI's market share at 31.5% was down
0.1 point from last year, as share gains for Chesterfield and L&M
offset a 0.6 point decline for Marlboro. PMI's shipment volume rose
2.8%, but was essentially flat when adjusted for favorable trade
inventory movements.
EASTERN EUROPE, MIDDLE EAST & AFRICA
2007 Second-Quarter Results
In Eastern Europe, Middle East & Africa, PMI's cigarette shipment
volume of 75.9 billion units was up 0.8%, due to gains in Ukraine and
Egypt and the timing of shipments in Saudi Arabia and Israel,
partially offset by the continued decline of L&M in Turkey and Russia,
and lower worldwide duty-free volume. Operating companies income
increased 12.4% to $634 million, due mainly to improved pricing,
volume/mix and favorable currency of $21 million.
In Egypt, shipment volume rose 23.3%, driven mainly by L&M, while
market share grew 1.4 points to 11.4%.
In Russia, shipment volume was down 2.6%, but share rose 0.2
points to 26.7%, as several brands in PMI's strong portfolio,
including Marlboro, Parliament, Virginia Slims and Chesterfield
increased share, helping to more than offset a 0.6 point loss for L&M.
PMI's brand portfolio in Russia was also strengthened by new brand
initiatives, including Muratti Slims, Virginia Slims Uno in an
innovative package and Marlboro Filter Plus. In addition,
profitability in Russia continued to grow strongly, driven by an
improving brand mix and better pricing.
In Turkey, shipment volume was down 4.4% and market share declined
2.7 points to 40.2%, due mainly to the decline of L&M and Lark, which
face intense competition at the low-price end of the market.
Marlboro's share was down slightly, but Parliament was up 0.8 points
to 5.8%, further cementing PMI's commanding share in the premium
segment.
In Ukraine, shipment volume grew 4.3% and market share rose 0.5
points to 33.7%. Marlboro share advanced 0.5 points to 5.1%, as
consumers continued to trade up to international brands at the expense
of local brands. Parliament and Chesterfield also grew strongly.
During the second quarter of 2007, PMI launched a new line-up of
cigarette products for L&M and initial results are encouraging.
ASIA
2007 Second-Quarter Results
In Asia, PMI's cigarette shipment volume of 55.8 billion units
rose 15.9%, due to acquisition volume in Pakistan and gains in Korea,
Indonesia and the Philippines, partially offset by a volume decline in
Japan. Excluding acquired volume, shipment volume in Asia declined
1.2%. Operating companies income decreased 12.1% to $429 million, due
to unfavorable currency of $22 million and unfavorable volume/mix,
primarily in Japan.
In Indonesia, PMI shipment volume rose 1.3%. Market share of 28.0%
was down slightly, reflecting the impact of the tax-driven price
increase that took effect in May, following the March 2007 excise tax
increase. A Hijau's share rose 0.8 points to 6.0%, but A Mild and Dji
Sam Soe lost 0.6 and 0.3 share points, respectively, due to low-price
competition and temporarily widened price gaps with competitive
brands. Marlboro share grew 0.1 point to 4.1%. In early July 2007, a
kretek version of Marlboro was launched to expand Marlboro's strong
consumer appeal.
In Japan, the total cigarette market was down 16.7 billion units
or 20.3% versus the same quarter last year, reflecting heavy trade
purchases in June 2006 ahead of the July 2006 excise tax increase.
PMI's in-market sales were down 20.7% and overall market share
declined 0.1 point to 24.3%. Marlboro share of 9.8% was unchanged.
Cigarette shipment volume was down 8.7% as favorable distributor
inventory movements were more than offset by the lower in-market
sales. PMI estimates that the underlying industry decline after the
July 2006 price increase has been approximately 6%, but anticipates
that by the fourth quarter of this year the market contraction will
return to a more normalized 2.5% to 3.0% decline.
In Korea, shipment volume increased 19.1%, due mainly to recent
new line extensions, including Marlboro Filter Plus and Virginia Slims
One. Market share increased 1.3 points to 9.5%, with Marlboro up 0.9
points to 4.2%.
LATIN AMERICA
2007 Second-Quarter Results
In Latin America, cigarette shipment volume of 21.5 billion units
was down 2.6%, due mainly to declines in the Dominican Republic and
Mexico, partially offset by gains in Argentina. Operating companies
income decreased 21.5% to $102 million, primarily as a result of asset
impairment and exit costs, and the 2006 divestiture of PMI's interest
in the beer business in the Dominican Republic.
In Argentina, the total cigarette market was stable and PMI's
shipment volume increased 2.2%. Market share increased 1.7 points to a
record 68.0%, driven by the strong growth of the Philip Morris brand,
which gained 2.0 share points to 31.6%, and Marlboro, which rose 1.9
share points to 21.2%.
In the Dominican Republic, shipment volume declined 35.8%,
reflecting a lower total market following January and February 2007
price increases to partially compensate for a very significant excise
tax increase on cigarettes that was imposed in January of this year.
Market share in the second quarter was 77.6%, down 0.5 points, as
Marlboro declined 2.6 share points to 24.3%, partially offset by gains
for other PMI brands.
In Mexico, the total cigarette market declined 8.5%, due primarily
to the timing of the Easter holiday in March 2007 versus April 2006,
as well as tax-driven price increases and unfavorable inventory
movements. However, PMI market share reached a new record of 64.2%, up
1.4 points on the strength of Marlboro, which grew 1.0 share point to
47.8%, aided by the national introduction of Marlboro Wides in May
2007, and continued strong performances of Benson & Hedges and
Delicados. In the second quarter of 2007, PMI shipment volume was down
5.9%, due to the lower total market.
FINANCIAL SERVICES
2007 Second-Quarter Results
Philip Morris Capital Corporation (PMCC) reported operating
companies income of $139 million for the second quarter of 2007 versus
an operating companies loss of $59 million for the year-earlier
period. Second-quarter 2007 results reflected cash recoveries of $78
million from the sale of bankruptcy claims related to certain airline
leases that had been previously written down and higher asset
management gains versus the prior year, partially offset by lower
lease revenues, primarily as a result of lower investment balances.
The prior-year results reflected a charge of $103 million to the
provision for losses related to the airline industry.
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 June 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 March 31, 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 June 30,
(in millions, except per share data)
(Unaudited)
2007 2006 % Change
----------------------------
Net revenues $ 18,809 $ 17,150 9.7%
Cost of sales 4,265 3,958 7.8%
Excise taxes on products (*) 9,012 7,895 14.1%
-------------------
Gross profit 5,532 5,297 4.4%
Marketing, administration and research
costs 1,833 1,792
Asset impairment and exit costs 394 21
(Recoveries) Provision for airline
industry exposure (78) 103
-------------------
Operating companies income 3,383 3,381 0.1%
Amortization of intangibles 6 6
General corporate expenses 133 117
Asset impairment and exit costs - 32
-------------------
Operating income 3,244 3,226 0.6%
Interest and other debt expense, net 62 119
-------------------
Earnings from continuing operations
before income taxes, and equity earnings
and minority interest, net 3,182 3,107 2.4%
Provision for income taxes 1,066 1,041 2.4%
-------------------
Earnings from continuing operations
before equity earnings and minority
interest, net 2,116 2,066 2.4%
Equity earnings and minority interest,
net 99 46
-------------------
Earnings from continuing operations 2,215 2,112 4.9%
Earnings from discontinued operations,
net of
income taxes and minority interest - 599
-------------------
Net earnings $ 2,215 $ 2,711 (18.3)%
===================
Per share data:
Basic earnings per share from continuing
operations $ 1.05 $ 1.01 4.0%
Basic earnings per share from
discontinued operations $ - $ 0.29
-------------------
Basic earnings per share $ 1.05 $ 1.30 (19.2)%
===================
Diluted earnings per share from
continuing operations $ 1.05 $ 1.00 5.0%
Diluted earnings per share from
discontinued operations $ - $ 0.29
-------------------
Diluted earnings per share $ 1.05 $ 1.29 (18.6)%
===================
Weighted average number of shares
outstanding - Basic 2,101 2,085 0.8%
- Diluted 2,116 2,102 0.7%
(*) 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 June 30,
(in millions)
(Unaudited)
Net Revenues
US tobacco European Union EEMA Asia
------------------------------------------------
2007 $ 4,809 $ 6,867 $ 3,103 $ 2,787
2006 4,785 6,064 2,655 2,528
% Change 0.5% 13.2% 16.9% 10.2%
Reconciliation:
For the quarter ended
June 30, 2006 $ 4,785 $ 6,064 $ 2,655 $ 2,528
Divested businesses -
2006 - - - -
Divested businesses -
2007 - - - -
Acquired businesses - - - 90
Currency - 608 107 66
Operations 24 195 341 103
------------------------------------------------
For the quarter ended
June 30, 2007 $ 4,809 $ 6,867 $ 3,103 $ 2,787
================================================
(*) The detail of excise taxes on products sold is as follows:
2007 $ 899 $ 4,568 $ 1,472 $ 1,346
2006 $ 931 $ 4,023 $ 1,180 $ 1,129
2007 Currency
increased
international
tobacco excise taxes $ 405 $ 47 $ 59
Net Revenues
Latin Total International Financial
America tobacco services Total
------------------------------------------------
2007 $ 1,191 $ 13,948 $ 52 $18,809
2006 1,063 12,310 55 17,150
% Change 12.0% 13.3% (5.5)% 9.7%
Reconciliation:
For the quarter ended
June 30, 2006 $ 1,063 $ 12,310 $ 55 $17,150
Divested businesses -
2006 - - - -
Divested businesses -
2007 - - - -
Acquired businesses 34 124 - 124
Currency 5 786 - 786
Operations 89 728 (3) 749
------------------------------------------------
For the quarter ended
June 30, 2007 $ 1,191 $ 13,948 $ 52 $18,809
================================================
(*) The detail of excise taxes on products sold is as follows:
2007 $ 727 $ 8,113 $ 9,012
2006 $ 632 $ 6,964 $ 7,895
2007 Currency
increased
international
tobacco excise taxes $ 1 $ 512
Schedule 3
ALTRIA GROUP, INC.
and Subsidiaries
Selected Financial Data by Business Segment
For the Quarters Ended June 30,
(in millions)
(Unaudited)
Operating Companies
Income
US tobacco European Union EEMA Asia
------------------------------------------------
2007 $1,004 $1,075 $634 $429
2006 1,301 957 564 488
% Change (22.8)% 12.3% 12.4% (12.1)%
Reconciliation:
For the quarter ended
June 30, 2006 $1,301 $957 $564 $488
Divested businesses -
2006 - - - -
Italian antitrust
charge - 2006 - - - -
Asset impairment and
exit costs - 2006 - 20 - 1
Provision for airline
industry exposure -
2006 - - - -
------------------------------------------------
- 20 - 1
------------------------------------------------
Divested businesses -
2007 - - - -
Asset impairment and
exit costs - 2007 (318) (59) - (6)
Recoveries from
airline industry
exposure - 2007 - - - -
------------------------------------------------
(318) (59) - (6)
------------------------------------------------
Acquired businesses - (1) - 8
Currency - 85 21 (22)
Operations 21 73 49 (40)
------------------------------------------------
For the quarter ended
June 30, 2007 $1,004 $1,075 $634 $429
================================================
Operating Companies
Income
Latin Total International Financial Total
America tobacco services
------------------------------------------------
2007 $102 $2,240 $139 $3,383
2006 130 2,139 (59) 3,381
% Change (21.5)% 4.7% +100% 0.1%
Reconciliation:
For the quarter ended
June 30, 2006 $130 $2,139 $(59) $3,381
Divested businesses -
2006 (17) (17) - (17)
Italian antitrust
charge - 2006 - - - -
Asset impairment and
exit costs - 2006 - 21 - 21
Provision for airline
industry exposure -
2006 - - 103 103
------------------------------------------------
(17) 4 103 107
------------------------------------------------
Divested businesses -
2007 - - - -
Asset impairment and
exit costs - 2007 (11) (76) - (394)
Recoveries from
airline industry
exposure - 2007 - - 78 78
------------------------------------------------
(11) (76) 78 (316)
------------------------------------------------
Acquired businesses (9) (2) - (2)
Currency 3 87 - 87
Operations 6 88 17 126
------------------------------------------------
For the quarter ended
June 30, 2007 $102 $2,240 $139 $3,383
================================================
ALTRIA GROUP, INC. Schedule 4
and Subsidiaries
Condensed Statements of Earnings
For the Six Months Ended June 30,
(in millions, except per share data)
(Unaudited)
2007 2006 % Change
-----------------------------
Net revenues $ 36,365 $ 33,382 8.9%
Cost of sales 8,174 7,682 6.4%
Excise taxes on products (*) 17,531 15,441 13.5%
-------------------
Gross profit 10,660 10,259 3.9%
Marketing, administration and research
costs 3,584 3,512
Italian antitrust charge - 61
Asset impairment and exit costs 456 23
(Recoveries) Provision for airline
industry exposure (207) 103
-------------------
Operating companies income 6,827 6,560 4.1%
Amortization of intangibles 12 11
General corporate expenses 260 230
Asset impairment and exit costs 61 32
-------------------
Operating income 6,494 6,287 3.3%
Interest and other debt expense, net 176 266
-------------------
Earnings from continuing operations
before income taxes, equity earnings
and minority interest, net 6,318 6,021 4.9%
Provision for income taxes 2,117 1,415 49.6%
-------------------
Earnings from continuing operations
before equity earnings and minority
interest, net 4,201 4,606 (8.8)%
Equity earnings and minority interest,
net 139 103
-------------------
Earnings from continuing operations 4,340 4,709 (7.8)%
Earnings from discontinued operations,
net of income taxes and minority
interest 625 1,479
-------------------
Net earnings $ 4,965 $ 6,188 (19.8)%
===================
Per share data (**):
Basic earnings per share from continuing
operations $ 2.07 $ 2.26 (8.4)%
Basic earnings per share from
discontinued operations $ 0.30 $ 0.71
-------------------
Basic earnings per share $ 2.37 $ 2.97 (20.2)%
===================
Diluted earnings per share from
continuing operations $ 2.05 $ 2.24 (8.5)%
Diluted earnings per share from
discontinued operations $ 0.30 $ 0.70
-------------------
Diluted earnings per share $ 2.35 $ 2.94 (20.1)%
===================
Weighted average number of
shares outstanding - Basic 2,099 2,083 0.8%
- Diluted 2,113 2,102 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 Six Months Ended June 30,
(in millions)
(Unaudited)
Net Revenues
US tobacco European Union EEMA Asia
------------------------------------------------
2007 $ 9,054 $ 13,421 $ 5,893 $ 5,537
2006 9,108 11,790 5,109 5,081
% Change (0.6)% 13.8% 15.3% 9.0%
Reconciliation:
For the six months
ended June 30, 2006 $ 9,108 $ 11,790 $ 5,109 $ 5,081
Divested businesses -
2006 - - - -
Divested businesses -
2007 - - - -
Acquired businesses - - - 90
Currency - 1,176 156 185
Operations (54) 455 628 181
------------------------------------------------
For the six months
ended June 30, 2007 $ 9,054 $ 13,421 $ 5,893 $ 5,537
================================================
(*) The detail of excise taxes on products sold is as follows:
2007 $ 1,699 $ 8,957 $ 2,750 $ 2,689
2006 $ 1,786 $ 7,825 $ 2,298 $ 2,252
2007 Currency
increased
(decreased)
international
tobacco excise taxes $ 786 $ 45 $ 137
Net Revenues
Latin Total International Financial
America tobacco services Total
------------------------------------------------
2007 $ 2,365 $ 27,216 $ 95 $36,365
2006 2,131 24,111 163 33,382
% Change 11.0% 12.9% (41.7)% 8.9%
Reconciliation:
For the six months
ended June 30, 2006 $ 2,131 $ 24,111 $ 163 $33,382
Divested businesses -
2006 - - - -
Divested businesses -
2007 - - - -
Acquired businesses 66 156 - 156
Currency (9) 1,508 - 1,508
Operations 177 1,441 (68) 1,319
------------------------------------------------
For the six months
ended June 30, 2007 $ 2,365 $ 27,216 $ 95 $36,365
================================================
(*) The detail of excise taxes on products sold is as follows:
2007 $ 1,436 $ 15,832 $17,531
2006 $ 1,280 $ 13,655 $15,441
2007 Currency
increased
(decreased)
international
tobacco excise taxes $ (8) $ 960
Schedule 6
ALTRIA GROUP, INC.
and Subsidiaries
Selected Financial Data by Business Segment
For the Six Months Ended June 30,
(in millions)
(Unaudited)
Operating Companies
Income
US tobacco European Union EEMA Asia
-------------------------------------------------
2007 $ 2,134 $ 2,105 $ 1,201 $ 898
2006 2,417 1,780 1,057 1,007
% Change (11.7)% 18.3% 13.6% (10.8)%
Reconciliation:
For the six months
ended June 30, 2006 $ 2,417 $ 1,780 $ 1,057 $ 1,007
Divested businesses
- 2006 - - - -
Italian antitrust
charge - 2006 - 61 - -
Asset impairment and
exit costs - 2006 - 22 - 1
Provision for
airline industry
exposure - 2006 - - - -
-------------------------------------------------
- 83 - 1
-------------------------------------------------
Divested businesses
- 2007 - - - -
Asset impairment and
exit costs - 2007 (318) (88) (12) (20)
Recoveries from
airline industry
exposure - 2007 - - - -
-------------------------------------------------
(318) (88) (12) (20)
-------------------------------------------------
Acquired businesses - (1) - 10
Currency - 194 21 (27)
Operations 35 137 135 (73)
-------------------------------------------------
For the six months
ended June 30, 2007 $ 2,134 $ 2,105 $ 1,201 $ 898
=================================================
Operating Companies
Income
Latin Total International Financial
America tobacco services Total
-------------------------------------------------
2007 $ 190 $ 4,394 $ 299 $ 6,827
2006 262 4,106 37 6,560
% Change (27.5)% 7.0% +100% 4.1%
Reconciliation:
For the six months
ended June 30, 2006 $ 262 $ 4,106 $ 37 $ 6,560
Divested businesses
- 2006 (31) (31) - (31)
Italian antitrust
charge - 2006 - 61 - 61
Asset impairment and
exit costs - 2006 - 23 - 23
Provision for
airline industry
exposure - 2006 - - 103 103
-------------------------------------------------
(31) 53 103 156
-------------------------------------------------
Divested businesses
- 2007 - - - -
Asset impairment and
exit costs - 2007 (18) (138) - (456)
Recoveries from
airline industry
exposure - 2007 - - 207 207
-------------------------------------------------
(18) (138) 207 (249)
-------------------------------------------------
Acquired businesses (7) 2 - 2
Currency (5) 183 - 183
Operations (11) 188 (48) 175
-------------------------------------------------
For the six months
ended June 30, 2007 $ 190 $ 4,394 $ 299 $ 6,827
=================================================
Schedule 7
ALTRIA GROUP, INC.
and Subsidiaries
Net Earnings and Diluted Earnings Per Share
For the Quarters Ended June 30,
($ in millions, except per share data)
(Unaudited)
Diluted
Net Earnings E.P.S.
------------ ------------
2007 Continuing Earnings $ 2,215 $ 1.05
2006 Continuing Earnings $ 2,112 $ 1.00
% Change 4.9% 5.0%
Reconciliation:
2006 Continuing Earnings $ 2,112 $ 1.00
2006 Asset impairment and exit costs 36 0.02
2006 Provision for airline industry exposure 66 0.03
------------ ------------
102 0.05
------------ ------------
2007 Asset impairment and exit costs (260) (0.12)
2007 Recoveries from airline industry
exposure 50 0.02
------------ ------------
(210) (0.10)
------------ ------------
Currency 59 0.03
Change in shares - -
Change in tax rate 3 -
Operations 149 0.07
------------ ------------
2007 Continuing Earnings $ 2,215 $ 1.05
2007 Discontinued Earnings $ - $ -
------------ ------------
2007 Net Earnings $ 2,215 $ 1.05
============ ============
2007 Continuing Earnings Excluding Special
Items $ 2,425 $ 1.15
2006 Continuing Earnings Excluding Special
Items $ 2,214 $ 1.05
% Change 9.5% 9.5%
ALTRIA GROUP, INC. Schedule 8
and Subsidiaries
Net Earnings and Diluted Earnings Per Share
For the Six Months Ended June 30,
($ in millions, except per share data)
(Unaudited)
Diluted
Net Earnings E.P.S. (*)
------------ ------------
2007 Continuing Earnings $ 4,340 $ 2.05
2006 Continuing Earnings $ 4,709 $ 2.24
% Change (7.8)% (8.5)%
Reconciliation:
2006 Continuing Earnings $ 4,709 $ 2.24
2006 Italian antitrust charge 61 0.03
2006 Asset impairment and exit costs 37 0.02
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)
------------ ------------
(438) (0.21)
------------ ------------
2007 Asset impairment and exit costs (341) (0.17)
2007 Recoveries from airline industry
exposure 133 0.06
2007 Interest on tax reserve transfers to
Kraft (50) (0.02)
------------ ------------
(258) (0.13)
------------ ------------
Currency 121 0.06
Change in shares - (0.01)
Change in tax rate 13 0.01
Operations 193 0.09
------------ ------------
2007 Continuing Earnings $ 4,340 $ 2.05
2007 Discontinued Earnings $ 625 $ 0.30
------------ ------------
2007 Net Earnings $ 4,965 $ 2.35
============ ============
2007 Continuing Earnings Excluding
Special Items $ 4,598 2.18
2006 Continuing Earnings Excluding
Special Items $ 4,271 2.03
% Change 7.7% 7.4%
(*) 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)
June 30, December 31,
2007 2006
------------ ------------
Assets
Cash and cash equivalents $ 6,156 $ 4,781
All other current assets 12,340 13,724
Property, plant and equipment, net 7,880 7,581
Goodwill 6,794 6,197
Other intangible assets, net 1,938 1,908
Other assets 7,920 6,837
Assets of discontinued operations - 56,452
------------ ------------
Total consumer products assets 43,028 97,480
Total financial services assets 6,467 6,790
------------ ------------
Total assets $ 49,495 $ 104,270
============ ============
Liabilities and Stockholders' Equity
Short-term borrowings $ 483 $ 420
Current portion of long-term debt 3,521 648
Accrued settlement charges 2,408 3,552
All other current liabilities 10,668 10,941
Long-term debt 3,195 6,298
Deferred income taxes 1,679 1,391
Other long-term liabilities 4,671 5,208
Liabilities of discontinued operations - 29,495
------------ ------------
Total consumer products liabilities 26,625 57,953
Total financial services liabilities 6,681 6,698
------------ ------------
Total liabilities 33,306 64,651
Total stockholders' equity 16,189 39,619
------------ ------------
Total liabilities and stockholders' equity $ 49,495 $ 104,270
============ ============
Total consumer products debt $ 7,199 $ 7,366
Debt/equity ratio - consumer products 0.44 0.19
Total debt $ 8,308 $ 8,485
Total debt/equity ratio 0.51 0.21
Schedule 10
ALTRIA GROUP, INC.
and Subsidiaries
Condensed Statement of Earnings
Restated for new Segment Presentation
For the Quarters Ended March 31, June 30, 2007
(in millions)
(Unaudited)
Q1 2007 Q2 2007
Adjusted
---------- ----------
Net Revenues
US Tobacco $ 4,245 $ 4,809
European Union 6,554 6,867
Eastern Europe, Middle East and Africa 2,790 3,103
Asia 2,750 2,787
Latin America 1,174 1,191
---------- ----------
Total International Tobacco 13,268 13,948
Financial Services 43 52
---------- ----------
Total $ 17,556 $ 18,809
========== ==========
Excise taxes on products
US Tobacco $ 800 $ 899
European Union 4,389 4,568
Eastern Europe, Middle East and Africa 1,278 1,472
Asia 1,343 1,346
Latin America 709 727
---------- ----------
Total International Tobacco 7,719 8,113
---------- ----------
Total $ 8,519 $ 9,012
========== ==========
Operating companies income
US Tobacco $ 1,130 $ 1,004
European Union 1,030 1,075
Eastern Europe, Middle East and Africa 567 634
Asia 469 429
Latin America 88 102
---------- ----------
Total International Tobacco 2,154 2,240
Financial Services 160 139
---------- ----------
Total $ 3,444 $ 3,383
========== ==========
Schedule 11
ALTRIA GROUP, INC.
and Subsidiaries
Condensed Statement of Earnings
Restated for new Segment Presentation
For the Quarters Ended March 31, June 30, September 30, December 31,
2006
(in millions)
(Unaudited)
Q1 2006 Q2 2006 Q3 2006 Q4 2006
Adjusted Adjusted Adjusted Adjusted
---------------------------------------
Net Revenues
US Tobacco $ 4,323 $ 4,785 $ 4,830 $ 4,536
European Union 5,726 6,064 6,458 5,504
Eastern Europe, Middle East
and Africa 2,454 2,655 2,607 2,256
Asia 2,553 2,528 2,586 2,475
Latin America 1,068 1,063 1,052 1,211
---------------------------------------
Total International Tobacco 11,801 12,310 12,703 11,446
Financial Services 108 55 109 45
---------------------------------------
Total $ 16,232 $ 17,150 $ 17,642 $ 16,027
=======================================
Excise taxes on products
US Tobacco $ 855 $ 931 $ 938 $ 893
European Union 3,802 4,023 4,324 3,710
Eastern Europe, Middle East
and Africa 1,118 1,180 1,114 953
Asia 1,123 1,129 1,219 1,132
Latin America 648 632 634 725
---------------------------------------
Total International Tobacco 6,691 6,964 7,291 6,520
---------------------------------------
Total $ 7,546 $ 7,895 $ 8,229 $ 7,413
=======================================
Operating companies income
US Tobacco $ 1,116 $ 1,301 $ 1,270 $ 1,125
European Union 823 957 955 781
Eastern Europe, Middle East
and Africa 493 564 582 426
Asia 519 488 449 413
Latin America 132 130 133 613
---------------------------------------
Total International Tobacco 1,967 2,139 2,119 2,233
Financial Services 96 (59) 101 38
---------------------------------------
Total $ 3,179 $ 3,381 $ 3,490 $ 3,396
=======================================
2006 Full
Year
Adjusted
Net Revenues
US Tobacco $ 18,474
European Union 23,752
Eastern Europe, Middle East
and Africa 9,972
Asia 10,142
Latin America 4,394
---------
Total International Tobacco 48,260
Financial Services 317
---------
Total $ 67,051
=========
Excise taxes on products
US Tobacco $ 3,617
European Union 15,859
Eastern Europe, Middle East
and Africa 4,365
Asia 4,603
Latin America 2,639
---------
Total International Tobacco 27,466
---------
Total $ 31,083
=========
Operating companies income
US Tobacco $ 4,812
European Union 3,516
Eastern Europe, Middle East
and Africa 2,065
Asia 1,869
Latin America 1,008
---------
Total International Tobacco 8,458
Financial Services 176
---------
Total $ 13,446
=========
SOURCE: Altria Group, Inc.
Altria Group, Inc.
Nicholas M. Rolli, 917-663-3460
or
Timothy R. Kellogg, 917-663-2759
|
