Altria Reports 2008 Third-Quarter Results |
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- Adjusted diluted earnings per share from continuing operations up 15% to $0.46 versus $0.40 in the third quarter of 2007
- Altria reaffirms its 2008 guidance for adjusted diluted earnings per share from continuing operations in the range of $1.63 to $1.67, representing a growth rate of approximately 9% to 11%, from a base of $1.50 per share in 2007
- Reported diluted earnings per share from continuing operations of $0.42 versus $0.43 in the third quarter of 2007
- Altria's proposed acquisition of UST passes federal antitrust review
- Philip Morris USA's adjusted operating companies income up 6.3% versus the third quarter of 2007
- Marlboro delivers strong retail share gains, up 0.5 share points versus the third quarter of 2007 to 41.6%
RICHMOND, Va.--(BUSINESS WIRE)--Altria Group, Inc. (Altria) (NYSE: MO) today announced
third-quarter reported diluted earnings per share (EPS) from
continuing operations of $0.42 versus $0.43 in the third quarter of
2007, down 2.3% versus the prior-year period. This quarter's reported
results reflect lower SABMiller equity earnings due to a charge
resulting from intangible asset impairments, a higher income tax rate,
and an increased allowance for losses at Philip Morris Capital
Corporation (PMCC). These factors were partially offset by strong
operating companies income (OCI) performance by Philip Morris USA (PM
USA) and John Middleton Co. (Middleton), and lower general corporate
expenses. Adjusted diluted EPS from continuing operations increased
15.0% to $0.46 versus $0.40 in the prior-year period.
"In the third quarter, Altria's cigarette business delivered
strong financial results," said Michael E. Szymanczyk, Chairman and
Chief Executive Officer of Altria. "PM USA's adjusted operating
companies income increased 6.3% and its operating margins continued to
expand."
"In September, Altria announced that it had agreed to acquire UST,
the world's leading moist smokeless tobacco manufacturer," Mr.
Szymanczyk said. "This acquisition is both strategically compelling
and financially attractive as it enhances Altria's ability to deliver
superior shareholder value. UST provides Altria with the leading
premium brands, Copenhagen and Skoal, in the highly profitable moist
smokeless tobacco category. We are very pleased that the transaction
has passed federal antitrust review."
Conference Call
A conference call with members of the investment community and
news media will be webcast on October 23, 2008 at 9:00 a.m. Eastern
Time. Access to the webcast is available at www.altria.com.
2008 Full-Year Forecast
Altria reaffirms its 2008 EPS guidance. Altria forecasts that 2008
adjusted full-year diluted EPS from continuing operations is expected
to be in the range of $1.63 to $1.67. This range represents a 9% to
11% growth rate in EPS from an adjusted base of $1.50 per share in
2007. Altria continues to expect full-year operating companies income
growth from continuing operations in the mid-single digits on both a
reported and adjusted basis. The factors described in the
Forward-Looking and Cautionary Statements section of this release
represent continuing risks to these projections.
2008 Third-Quarter Results Excluding Special Items
Adjusted for the items shown in Table 1 below, third-quarter
adjusted diluted EPS from continuing operations increased 15.0% versus
the prior-year period to $0.46.
Table 1 - Adjusted Third Quarter Results
Q3 2008 Q3 2007 Change
-----------------------
Reported diluted EPS from continuing operations $ 0.42 $ 0.43 -2.3%
Tax Items - (0.03)
SABMiller intangible asset impairments 0.03 -
Asset impairment, exit, integration and
implementation costs 0.01 -
------- -------
Adjusted diluted EPS from continuing operations $ 0.46 $ 0.40 15.0%
----------------------------------------------------------------------
Adjusted for the items shown in Table 2 below, adjusted diluted
EPS from continuing operations increased 11.3% in the first nine
months of 2008 versus the prior-year period to $1.28.
Table 2 - Adjusted Nine Months Ended September 30
Nine Months Ended
Sept. 30
2008 2007 Change
----------------------
Reported diluted EPS from continuing operations $ 1.15 $ 1.09 5.5%
Asset impairment, exit, integration and
implementation costs 0.10 0.13
Recoveries from airline industry exposure - (0.06)
Gain on sale of corporate headquarters (0.12) -
Loss on early extinguishment of debt 0.12 -
SABMiller intangible asset impairments 0.03 -
Tax Items - (0.03)
Interest on tax reserve transfers to Kraft - 0.02
------- -------
Adjusted diluted EPS from continuing operations $ 1.28 $ 1.15 11.3%
----------------------------------------------------------------------
Dividend Increase
On August 28, 2008, Altria announced that it had increased its
regular quarterly dividend by 10.3% to $0.32 per common share,
representing an annualized rate of $1.28 per common share.
Altria Agrees to Acquire UST
On September 8, 2008, Altria and UST Inc. (UST) announced that the
companies had entered into a definitive agreement for Altria to
acquire all outstanding shares of UST, the world's leading moist
smokeless tobacco manufacturer. Under the terms of the agreement,
UST's shareholders will receive $69.50 in cash for each share of
common stock held. The transaction is valued at approximately $11.7
billion, which includes the assumption of approximately $1.3 billion
in debt.
On October 2, 2008, the companies agreed to extend, at Altria's
option, the closing date of the transaction in the event conditions
for closing are met prior to the end of 2008. On October 16, 2008, the
companies announced that Altria's proposed acquisition of UST passed
federal antitrust review. Completion of the transaction remains
subject to UST shareholder approval and certain other customary
closing conditions. If approved and all other conditions to closing
are satisfied, Altria expects the transaction to close during the
first full week of January 2009 and no later than January 7th.
Altria has fully committed financing to complete the transaction.
Once the transaction closes, Altria plans to focus on integrating UST
and its subsidiaries into the Altria family of companies to deliver
the shareholder and consumer value it expects from this financially
and strategically compelling acquisition. However, given the
conditions in the public debt markets until Altria completes its
long-term financing for the transaction, it will be difficult to
predict if the UST acquisition will be accretive to Altria's adjusted
diluted earnings per share within twelve months of closing as was
initially anticipated.
ALTRIA GROUP, INC.
As described in "Note 15. Segment Reporting" of Altria's 2007
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 Consolidated Statements of Earnings contained in
this release. Altria's reporting segments are Cigarettes and other
tobacco products; Cigars; and Financial services. All references in
this news release are to continuing operations, unless otherwise
noted.
2008 Third-Quarter Results
Net revenues increased 5.0% to $5.2 billion. Operating income
increased 8.8% to $1.3 billion, primarily driven by higher operating
companies income and lower general corporate expenses. Earnings from
continuing operations decreased 3.7% to $867 million due primarily to
lower SABMiller equity earnings resulting from a charge of $85 million
for intangible asset impairments required under accounting principles
generally accepted in the United States of America (U.S. GAAP), and a
higher income tax rate versus the prior-year period which included a
benefit from the reversal of tax reserves no longer required.
CIGARETTES and OTHER TOBACCO PRODUCTS
2008 Third-Quarter Results
PM USA's net revenues increased 2.8% to $5.1 billion. Revenues net
of excise taxes increased 4.6% to $4.2 billion, primarily driven by
lower wholesale promotional allowance rates, partially offset by lower
volume. Following the Philip Morris International Inc. (PMI) spin-off
in March 2008, PM USA began reporting revenues and costs of sales for
contract volume manufactured for PMI consistent with all other sales
to third parties. PM USA's third-quarter revenues included $97 million
from contract volume manufactured for PMI under an agreement that is
expected to terminate before the end of 2008. As shown in Table 3
below, PM USA's adjusted revenues net of excise taxes and contract
volume manufactured for PMI increased 2.2% to $4.1 billion.
Table 3 - PM USA Adjusted Revenues ($ Millions)
Q3 2008 Q3 2007 Change
------------------------
PM USA net revenues $ 5,084 $ 4,944 2.8%
Excise taxes on cigarettes and other tobacco
products (883) (927)
------- -------
PM USA revenues net of excise taxes 4,201 4,017 4.6%
Revenues for contract volume manufactured for
PMI (97) -
------- -------
Adjusted PM USA revenues net of excise taxes
and
contract volume manufactured for PMI $ 4,104 $ 4,017 2.2%
----------------------------------------------------------------------
PM USA's reported operating companies income increased 5.7% versus
the prior-year period to approximately $1.4 billion, due to lower
wholesale promotional allowance rates and lower selling, general and
administrative (SG&A) spending, partially offset by lower volume,
increased resolution expenses, higher leaf costs, costs related to the
reduction of contract volume manufactured for PMI and higher charges
for the previously announced closure of the Cabarrus, North Carolina
manufacturing facility. Adjusted for costs related to the Cabarrus
facility closure, PM USA's third-quarter 2008 operating companies
income increased by 6.3% versus the prior-year period to $1.4 billion
as shown in Table 4 below.
Table 4 - PM USA Adjusted OCI ($ Millions)
Q3 2008 Q3 2007 Change
------------------------
PM USA reported operating companies income $ 1,369 $ 1,295 5.7%
Asset impairment, exit and implementation
costs 31 22
-------- --------
Adjusted PM USA operating companies income $ 1,400 $ 1,317 6.3%
------- -------
Adjusted OCI margin* 34.1% 32.8% 1.3pp
----------------------------------------------------------------------
* Adjusted OCI margins are calculated as adjusted operating
companies income, divided by adjusted PM USA revenues net of excise
taxes and contract volume manufactured for PMI.
PM USA's domestic cigarette shipment volume of 44.9 billion units
was 4.8% lower than the prior-year period, but was estimated to be
down approximately 4% when adjusted for changes in trade inventories
and calendar differences. For the first nine months of 2008, PM USA's
domestic cigarette volume of 128.6 billion units was 3.6% lower than
the prior-year period, but was estimated to be down approximately 3.5%
to 4% when adjusted for changes in trade inventories and calendar
differences. As the cigarette industry environment continues to
evolve, PM USA believes that it can no longer accurately predict
estimated future cigarette industry decline rates and PM USA is no
longer providing this guidance.
PM USA's cigarette volume performance by brand is summarized in
Table 5 below.
Table 5 - PM USA Cigarette Volume* by Brand (Billion Units)
Q3 2008 Q3 2007 Change**
----------------------------------------------------------------------
Marlboro 37.5 39.1 (3.9)%
Parliament 1.5 1.5 (8.6)%
Virginia Slims 1.6 1.9 (12.9)%
Basic 3.2 3.5 (8.0)%
------- -------
Focus Brands 43.8 46.0 (4.7)%
Other PM USA 1.1 1.1 (7.8)%
------- -------
Total PM USA 44.9 47.1 (4.8)%
* Unit volume includes units sold as well as promotional units,
and excludes Puerto Rico, U.S. Territories Overseas Military, Philip
Morris Duty Free Inc. and contract manufacturing for PMI.
** Calculation based on millions of units.
Marlboro achieved strong quarterly retail cigarette share results,
gaining 0.5 share points versus the prior-year period to 41.6% as
shown in Table 6 below. PM USA's retail cigarette share declined 0.1
point in the third-quarter versus the prior-year period. For the first
nine months of 2008, PM USA's and Marlboro's retail cigarette share
increased 0.3 points and 0.6 points, respectively, versus the
prior-year period.
Table 6 - PM USA Quarterly Retail Share*
Q3 2008 Q3 2007 Change
----------------------------------------------------------------------
Marlboro 41.6 41.1 0.5 pp
Parliament 1.7 1.9 -0.2 pp
Virginia Slims 2.0 2.2 -0.2 pp
Basic 3.9 4.0 -0.1 pp
------- -------
Focus Brands 49.2 49.2 0.0 pp
Other PM USA 1.3 1.4 -0.1 pp
------- -------
Total PM USA 50.5 50.6 -0.1 pp
* Retail share performance is based on data from the Information
Resources, Inc. (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 the
Internet and direct mail.
PM USA continues to test market Marlboro Snus, which is a
spit-free, smokeless tobacco pouch product designed especially for
adult smokers, in Dallas, Texas and Indianapolis, Indiana. In
addition, PM USA continues to test market Marlboro Moist Smokeless
Tobacco in the greater Atlanta, Georgia area.
CIGARS
2008 Third-Quarter Results
Middleton's third-quarter net revenues were $98 million and
revenues net of excise taxes were $84 million. Reported operating
companies income in the third quarter was $37 million, which includes
a $9 million charge for integration costs. Middleton's third-quarter
cigar shipment volume grew 2.3% versus the prior-year period to 329
million units. In the third quarter, cigar shipment volume was
impacted by the timing of promotional shipments. For the first nine
months of 2008, Middleton's cigar shipment volume increased 7.1%
versus the prior-year period.
Middleton's third-quarter retail share increased 1.9 share points
versus the prior-year period to 30.0% of the machine-made large cigar
segment, driven by Black & Mild(1). Third-quarter retail share for
Black & Mild increased 2.2 share points versus the prior-year period
to 29.2% of the machine-made large cigar segment.
Earlier this year, PM USA's sales force began representing
Middleton's brands at retail. PM USA's sales force efforts continue to
increase Black & Mild's retail distribution and visibility, which have
contributed to Middleton's strong retail share gains.
(1) Retail share performance is based on the 12-week periods
ending August 31, 2008 and September 2, 2007 from the IRI Cigar
Database for Food, Drug, Mass Merchandise and Convenience trade
classes, which was created to specifically track cigar market share
performance.
FINANCIAL SERVICES
2008 Third-Quarter Results
PMCC's reported operating companies income declined $52 million
versus the prior-year period for a loss of $7 million. PMCC's third
quarter of 2008 results reflect an increase in the allowance for
losses of $50 million. In the third quarter of 2007, PMCC reported
operating companies income of $45 million.
PMCC remains focused on managing its portfolio of leased assets to
maximize gains and cash flows from income generating assets, as well
as asset sales and related activities. PMCC is not making new
investments and expects that its operating companies income will vary
over time as investments mature or are sold.
Altria Profile
As of September 30, 2008, Altria owned 100% of each of PM USA,
Middleton and PMCC. In addition, Altria held a 28.5% economic and
voting interest in SABMiller plc.
The brand portfolio of Altria's tobacco operating companies
includes such well-known names as Marlboro, Parliament, Virginia
Slims, Basic and Black & Mild. Trademarks and service marks referenced
in this release are the property of, or licensed by, Altria Group,
Inc. or its subsidiaries. More information is available about Altria
at www.altria.com.
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 forward-looking statements in this press release include,
without limitation, expectations with respect to the proposed
acquisition of UST. Important factors that may cause actual results
and outcomes to differ materially from those contained in such
forward-looking statements include, without limitation, the parties'
ability to consummate the transaction as expected; the possibility
that one or more of the conditions to the consummation of the
transaction may not be satisfied; the possibility that regulatory
and/or shareholder approvals required for the transaction may not be
obtained in a timely manner, if at all; the parties' ability to meet
expectations regarding the timing, completion, and other matters
relating to the transaction; and any event that could give rise to the
termination of the merger agreement. Other important factors include
the possibility that the expected synergies will not be realized or
will not be realized within the expected time period and the risk that
the integration of UST will not be successful, in each case due to,
among other things, changes in the tobacco industry; prevailing
economic, market, and business conditions affecting the parties; risks
that the transaction disrupts the parties' current plans and
operations; and the other factors detailed in the publicly filed
documents, including the Annual Report on Form 10-K for the year ended
December 31, 2007 and the Quarterly Report on Form 10-Q for the period
ended June 30, 2008.
Other factors as well could cause actual results and outcomes to
differ materially from those contained in the projections and
forward-looking statements included in this press release. By way of
example, Altria's tobacco subsidiaries (PM USA and Middleton) are
subject to intense price competition; changes in consumer preferences
and demand for their products; fluctuations in raw material
availability, quality and cost; fluctuations in levels of customer
inventories; the effects of global, national and local economic and
market conditions; changes to income tax laws; legislation, including
actual and potential excise tax increases; 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. 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; and
to improve productivity.
Altria's subsidiaries continue to be subject to litigation,
including risks associated with adverse jury and judicial
determinations, courts reaching conclusions at variance with the
companies' understanding of applicable law and bonding requirements in
the limited number of jurisdictions that do not limit the dollar
amount of appeal bonds.
Altria 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. All subsequent written and oral
forward-looking statements concerning the proposed transaction or
other matters and attributable to Altria or any person acting on its
behalf are expressly qualified in their entirety by the cautionary
statements referenced above.
Other Information
This communication may be deemed to be solicitation material in
respect of the proposed acquisition of UST by Altria. In connection
with the proposed acquisition, UST filed a preliminary proxy statement
and intends to file relevant materials with the SEC, including a
definitive proxy statement on Schedule 14A.
INVESTORS AND SHAREHOLDERS ARE URGED TO READ UST'S PROXY STATEMENT
AND ALL RELEVANT DOCUMENTS FILED WITH THE SEC (AS THEY BECOME
AVAILABLE) BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
PROPOSED TRANSACTION.
Investors and shareholders will be able to obtain the documents
free of charge through the website maintained by the SEC at
www.sec.gov. A free copy of the definitive proxy statement and other
relevant documents, when they become available, also may be obtained
from UST Inc., 6 High Ridge Park, Building A, Stamford, Connecticut
06905-1323, Attn: Investor Relations. Investors and security holders
may access copies of the documents filed with the U.S. Securities and
Exchange Commission by UST on its website at www.ustinc.com. Such
documents are not currently available.
Altria and UST and their respective directors and executive
officers may be deemed to be participants in the solicitation of
proxies from UST's shareholders in connection with the merger.
Information about Altria's directors and executive officers is set
forth in Altria's proxy statement on Schedule 14A filed with the SEC
on April 24, 2008 and Altria's Annual Report on Form 10-K filed on
February 28, 2008. Information about UST's directors and executive
officers is set forth in UST's proxy statement on Schedule 14A filed
with the SEC on March 24, 2008 and UST's Annual Report on Form 10-K
filed on February 22, 2008. Additional information regarding the
interests of participants in the solicitation of proxies in connection
with the merger will be included in the definitive proxy statement
that UST intends to file with the SEC.
Schedule 1
ALTRIA GROUP, INC.
and Subsidiaries
Condensed Consolidated Statements of Earnings
For the Quarters Ended September 30,
(in millions of dollars, except per share data)
(Unaudited)
2008 2007 % Change
------------------------
Net revenues $5,238 $4,987 5.0 %
Cost of sales 2,230 2,096 6.4 %
Excise taxes on products (*) 897 927 (3.2)%
---------------
Gross profit 2,111 1,964 7.5 %
Marketing, administration and research costs 697 621
Asset impairment and exit costs 15 10
Recoveries from airline industry exposure - (7)
---------------
Operating companies income 1,399 1,340 4.4 %
Amortization of intangibles 2 -
General corporate expenses 66 115
Corporate asset impairment and exit costs 2 3
---------------
Operating income 1,329 1,222 8.8 %
Interest and other debt expense, net 25 27
Equity earnings in SABMiller (54) (132)
---------------
Earnings from continuing operations before
income taxes 1,358 1,327 2.3 %
Provision for income taxes 491 427 15.0 %
---------------
Earnings from continuing operations 867 900 (3.7)%
Earnings from discontinued operations,
net of income taxes and minority interest - 1,733
---------------
Net earnings $ 867 $2,633 (67.1)%
===============
Per share data:
Basic earnings per share:
Continuing operations $ 0.42 $ 0.43 (2.3)%
Discontinued operations $ - $ 0.82
---------------
Net earnings $ 0.42 $ 1.25 (66.4)%
===============
Diluted earnings per share:
Continuing operations $ 0.42 $ 0.43 (2.3)%
Discontinued operations $ - $ 0.81
---------------
Net earnings $ 0.42 $ 1.24 (66.1)%
===============
Weighted average number of shares
outstanding:
Basic 2,058 2,103 (2.1)%
Diluted 2,070 2,117 (2.2)%
(*) The segment detail of excise taxes on products sold is shown in
Schedule 2.
Schedule 2
ALTRIA GROUP, INC.
and Subsidiaries
Selected Financial Data by Business Segment
For the Quarters Ended September 30,
(in millions of dollars)
(Unaudited)
-----------------------------------
Net Revenues
-----------------------------------
Cigarettes
and other
tobacco Financial
products Cigars services Total
-------------------------------------
2008 $5,084 $98 $ 56 $5,238
2007 4,944 - 43 4,987
% Change 2.8% - 30.2% 5.0%
Reconciliation:
---------------------------------
For the quarter ended September
30, 2007 $4,944 $ - $ 43 $4,987
Asset impairment and exit costs -
2007 - - - -
Implementation costs - 2007 - - - -
Recoveries from airline industry
exposure - 2007 - - - -
-------------------------------------
- - - -
-------------------------------------
Asset impairment and exit costs -
2008 - - - -
Integration costs - 2008 - - - -
Implementation costs - 2008 - - - -
------------------------------------
- - - -
------------------------------------
Acquired business - 98 - 98
Operations 140 - 13 153
-------------------------------------
For the quarter ended September
30, 2008 $5,084 $98 $ 56 $5,238
=====================================
(*) The detail of excise taxes on
products sold is as follows:
2008 $ 883 $14 $ - $ 897
2007 $ 927 $ - $ - $ 927
-------------------------------------
Operating Companies Income
-------------------------------------
Cigarettes
and other
tobacco Financial
products Cigars services Total
-------------------------------------
2008 $1,369 $37 $ (7) $1,399
2007 1,295 - 45 1,340
% Change 5.7% - (100%) + 4.4%
Reconciliation:
---------------------------------
For the quarter ended September
30, 2007 $1,295 $ - $ 45 $1,340
Asset impairment and exit costs -
2007 10 - - 10
Implementation costs - 2007 12 - - 12
Recoveries from airline industry
exposure - 2007 - - (7) (7)
-------------------------------------
22 - (7) 15
-------------------------------------
Asset impairment and exit costs -
2008 (15) - - (15)
Integration costs - 2008 - (9) - (9)
Implementation costs - 2008 (16) - - (16)
-------------------------------------
(31) (9) - (40)
-------------------------------------
Acquired business - 46 - 46
Operations 83 - (45) 38
-------------------------------------
For the quarter ended September
30, 2008 $1,369 $37 $ (7) $1,399
=====================================
(*) The detail of excise taxes on
products sold is as follows:
2008
2007
Schedule 3
ALTRIA GROUP, INC.
and Subsidiaries
Condensed Consolidated Statements of Earnings
For the Nine Months Ended September 30,
(in millions of dollars, except per share data)
(Unaudited)
2008 2007 % Change
--------------------------
Net revenues $14,702 $14,136 4.0 %
Cost of sales 6,285 5,905 6.4 %
Excise taxes on products (*) 2,578 2,626 (1.8)%
-----------------
Gross profit 5,839 5,605 4.2 %
Marketing, administration and research costs 1,824 1,718
Asset impairment and exit costs 44 328
Recoveries from airline industry exposure - (214)
-----------------
Operating companies income 3,971 3,773 5.2 %
Amortization of intangibles 5 -
General corporate expenses 236 341
Gain on sale of corporate headquarters
building (404) -
Corporate asset impairment and exit costs 250 64
-----------------
Operating income 3,884 3,368 15.3 %
Interest and other debt expense, net 27 190
Loss on early extinguishment of debt 393 -
Equity earnings in SABMiller (344) (392)
-----------------
Earnings from continuing operations before
income taxes 3,808 3,570 6.7 %
Provision for income taxes 1,397 1,259 11.0 %
-----------------
Earnings from continuing operations 2,411 2,311 4.3 %
Earnings from discontinued operations,
net of income taxes and minority interest 1,840 5,287
-----------------
Net earnings $ 4,251 $ 7,598 (44.1)%
=================
Per share data (**):
Basic earnings per share:
Continuing operations $ 1.16 $ 1.10 5.5 %
Discontinued operations $ 0.88 $ 2.52
-----------------
Net earnings $ 2.04 $ 3.62 (43.6)%
=================
Diluted earnings per share:
Continuing operations $ 1.15 $ 1.09 5.5 %
Discontinued operations $ 0.88 $ 2.50
-----------------
Net earnings $ 2.03 $ 3.59 (43.5)%
=================
Weighted average number of shares
outstanding:
Basic 2,080 2,100 (1.0)%
Diluted 2,093 2,115 (1.0)%
(*) The segment detail of excise taxes on products sold is shown in
Schedule 4.
(**) Basic and diluted earnings per share are computed independently
for each period. Accordingly, the sum of the quarterly earnings per
share amounts may not agree to the year-to-date amounts.
Schedule 4
ALTRIA GROUP, INC.
and Subsidiaries
Selected Financial Data by Business Segment
For the Nine Months Ended September 30,
(in millions of dollars)
(Unaudited)
--------------------------------------
Net Revenues
--------------------------------------
Cigarettes
and other
tobacco Financial
products Cigars services Total
---------- -------- --------- --------
2008 $14,233 $290 $ 179 $14,702
2007 13,998 - 138 14,136
% Change 1.7% - 29.7% 4.0%
Reconciliation:
--------------------------------
For the nine months ended
September 30, 2007 $13,998 $ - $ 138 $14,136
Asset impairment and exit costs
- 2007 - - - -
Implementation costs - 2007 - - - -
Recoveries from airline industry
exposure - 2007 - - - -
--------------------------------------
- - - -
--------------------------------------
Asset impairment and exit costs
- 2008 - - - -
Integration costs - 2008 - - - -
Implementation costs - 2008 - - - -
--------------------------------------
- - - -
--------------------------------------
Acquired business - 290 - 290
Operations 235 - 41 276
--------------------------------------
For the nine months ended
September 30, 2008 $14,233 $290 $ 179 $14,702
======================================
(*) The detail of excise taxes
on products sold is as follows:
2008 $ 2,533 $ 45 $ - $ 2,578
2007 $ 2,626 $ - $ - $ 2,626
-------------------------------------
Operating Companies Income
-------------------------------------
Cigarettes
and other
tobacco Financial
products Cigars services Total
-------------------------------------
2008 $3,746 $128 $ 97 $3,971
2007 3,429 - 344 3,773
% Change 9.2% - (71.8)% 5.2%
Reconciliation:
--------------------------------
For the nine months ended
September 30, 2007 $3,429 $ - $ 344 $3,773
Asset impairment and exit costs
- 2007 328 - - 328
Implementation costs - 2007 12 - - 12
Recoveries from airline industry
exposure - 2007 - - (214) (214)
-------------------------------------
340 - (214) 126
-------------------------------------
Asset impairment and exit costs
- 2008 (44) - - (44)
Integration costs - 2008 - (12) - (12)
Implementation costs - 2008 (48) - - (48)
-------------------------------------
(92) (12) - (104)
-------------------------------------
Acquired business - 140 - 140
Operations 69 - (33) 36
-------------------------------------
For the nine months ended
September 30, 2008 $3,746 $128 $ 97 $3,971
=====================================
(*) The detail of excise taxes
on products sold is as follows:
2008
2007
Schedule 5
ALTRIA GROUP, INC.
and Subsidiaries
Net Earnings and Diluted Earnings Per Share
For the Quarters Ended September 30,
(in millions of dollars, except per share data)
(Unaudited)
Diluted
Net Earnings E.P.S.
------------ --------
2008 Continuing Earnings $ 867 $ 0.42
2007 Continuing Earnings $ 900 $ 0.43
% Change (3.7)% (2.3)%
Reconciliation:
-------------------------------------------------
2007 Continuing Earnings $ 900 $ 0.43
2007 Asset impairment, exit and implementation
costs 15 -
2007 Recoveries from airline industry exposure (4) -
2007 Tax items (55) (0.03)
------------ --------
(44) (0.03)
------------ --------
2008 Asset impairment, exit, integration and
implementation costs (27) (0.01)
2008 SABMiller intangible asset impairments (54) (0.03)
2008 Financing fees (3) -
------------ --------
(84) (0.04)
------------ --------
Change in shares - 0.01
Change in tax rate 4 -
Operations 91 0.05
------------ --------
2008 Continuing Earnings $ 867 $ 0.42
2008 Discontinued Earnings $ - $ -
------------ --------
2008 Net Earnings $ 867 $ 0.42
============ ========
2008 Continuing Earnings Adjusted For Special
Items $ 951 $ 0.46
2007 Continuing Earnings Adjusted For Special
Items $ 856 $ 0.40
% Change 11.1% 15.0%
Schedule 6
ALTRIA GROUP, INC.
and Subsidiaries
Net Earnings and Diluted Earnings Per Share
For the Nine Months Ended September 30,
(in millions of dollars, except per share data)
(Unaudited)
Diluted
Net Earnings E.P.S. (*)
------------ ----------
2008 Continuing Earnings $ 2,411 $ 1.15
2007 Continuing Earnings $ 2,311 $ 1.09
% Change 4.3% 5.5%
Reconciliation:
-----------------------------------------------
2007 Continuing Earnings $ 2,311 $ 1.09
2007 Asset impairment, exit and implementation
costs 256 0.13
2007 Interest on tax reserve transfers to Kraft 50 0.02
2007 Recoveries from airline industry exposure (137) (0.06)
2007 Tax items (55) (0.03)
------------ ----------
114 0.06
------------ ----------
2008 Asset impairment, exit, integration and
implementation costs (223) (0.10)
2008 Gain on sale of corporate headquarters
building 263 0.12
2008 Loss on early extinguishment of debt (256) (0.12)
2008 SABMiller intangible asset impairments (54) (0.03)
2008 Financing fees (3) -
------------ ----------
(273) (0.13)
------------ ----------
Change in shares - 0.01
Change in tax rate 4 -
Operations 255 0.12
------------ ----------
2008 Continuing Earnings $ 2,411 $ 1.15
2008 Discontinued Earnings $ 1,840 $ 0.88
------------ ----------
2008 Net Earnings $ 4,251 $ 2.03
============ ==========
2008 Continuing Earnings Adjusted For Special
Items $ 2,684 $ 1.28
2007 Continuing Earnings Adjusted For Special
Items $ 2,425 $ 1.15
% Change 10.7% 11.3%
(*) Diluted earnings per share is computed independently for each
period. Accordingly, the sum of the quarterly earnings per share
amounts may not agree to the year-to-date amounts.
Schedule 7
ALTRIA GROUP, INC.
and Subsidiaries
Condensed Consolidated Balance Sheets
(in millions of dollars)
(Unaudited)
September 30, December 31,
2008 2007
------------- ------------
Assets
--------------------------------------------
Cash and cash equivalents $ 915 $ 4,842
Other current assets 2,930 3,281
Property, plant and equipment, net 2,162 2,422
Goodwill and other intangible assets, net 3,122 3,125
Investment in SABMiller 4,146 3,960
Other long-term assets 1,836 1,782
Total assets of discontinued operations - 31,736
------------- ------------
Total consumer products assets 15,111 51,148
Total financial services assets 5,559 6,063
------------- ------------
Total assets $ 20,670 $ 57,211
============= ============
Liabilities and Stockholders' Equity
--------------------------------------------
Current portion of long-term debt 284 2,354
Accrued settlement charges 3,696 3,986
Other current liabilities 2,493 4,169
Long-term debt 101 1,885
Accrued postretirement health care costs 1,894 1,916
Other long-term liabilities 2,588 2,406
Total liabilities of discontinued operations - 16,338
------------- ------------
Total consumer products liabilities 11,056 33,054
Total financial services liabilities 5,436 5,603
------------- ------------
Total liabilities 16,492 38,657
Total stockholders' equity 4,178 18,554
------------- ------------
Total liabilities and stockholders' equity $ 20,670 $ 57,211
============= ============
Total consumer products debt $ 385 $ 4,239
Total debt $ 885 $ 4,739
Source: Altria Group, Inc.
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