Altria Group, Inc. Reports 2007 Third-Quarter Results |
NEW YORK--(BUSINESS WIRE)--Oct. 17, 2007--Regulatory News:
Diluted earnings per share from continuing operations up 18.1%
to $1.24, including favorable tax items of $0.05 per share and
charges of $0.02 per share for asset impairment, exit and
implementation costs, as well as other items detailed on
Schedule 7
Adjusted diluted earnings per share from continuing operations
up 13.1% to $1.21 versus $1.07 in 2006
Forecast raised for full-year 2007 diluted earnings per share
from continuing operations to a range of $4.20 to $4.25,
versus a previously announced range of $4.05 to $4.10
Altria Group, Inc. (NYSE: MO) today announced third-quarter
diluted earnings per share from continuing operations of $1.24, up
$0.19 or 18.1% versus the prior year, including favorable tax items of
$0.05 per share and charges of $0.02 per share for asset impairment,
exit and implementation costs, as well as other items detailed on the
attached Schedule 7.
"In the third quarter, we continued to witness improvement in our
business fundamentals, which generated robust earnings growth," said
Louis C. Camilleri, chairman and chief executive officer of Altria
Group, Inc. "In addition, we took numerous steps to accelerate our
growth by investing behind product innovation and announcing our
intention to pursue a further restructuring of our company."
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 October 17,
2007. Access is available at www.altria.com.
2007 Third-Quarter Results Excluding Items
After adjusting for the items shown in the table below, diluted
earnings per share from continuing operations increased 13.1% to $1.21
for the third quarter of 2007, versus $1.07 in the corresponding
prior-year period.
Third quarter
-------------------
2007 2006 Change
------ ----- ------
Diluted EPS from continuing operations $1.24 $1.05 18.1%
Asset impairment, exit and implementation costs 0.02 0.02
Tax items (0.05) --
Diluted EPS, excluding above items $1.21 $1.07 13.1%
------ -----
2007 Full-Year Forecast
Altria raised its forecast to a range of $4.20 to $4.25 for 2007
full-year diluted earnings per share from continuing operations,
reflecting a lower tax rate ($0.08 per share), favorable currency
($0.04 per share) and improved results ($0.03 per share) at Philip
Morris International (PMI). The company's previously announced range
for 2007 full-year diluted earnings per share from continuing
operations was $4.05 to $4.10.
The revised projection includes charges of $0.17 per share, which
are $0.07 per share lower due mainly to the above-mentioned one-time
favorable tax items, versus $0.24 per share in charges in the previous
forecast. Both the revised and previous projections include $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.
Intention to Pursue the Spin-Off of Philip Morris International
On August 29, the Board of Directors of Altria Group, Inc.
announced its intention to pursue the spin-off of PMI to Altria's
shareholders. The Board anticipates that it will be in a position to
finalize its decision and announce the precise timing of the spin-off
at its regularly scheduled meeting on January 30, 2008.
In addition to a final determination by the Board, the spin-off of
PMI will be subject to the receipt of a favorable ruling from the
Internal Revenue Service, the receipt of an opinion of tax counsel,
the effectiveness of a registration statement with the U.S. Securities
and Exchange Commission (SEC), as well as the execution of several
inter-company agreements and the finalization of other matters.
On September 27, PMI filed with the SEC a preliminary registration
statement on Form 10 in preparation for its potential spin-off from
Altria. In addition, Altria submitted a private letter ruling request
to the Internal Revenue Service.
PMI Agreement 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 close shortly. When completed, the transaction is expected
to increase Altria's annualized net earnings by approximately $0.03
per share.
Dividend Increased
During the third quarter of 2007 Altria Group, Inc. increased its
regular quarterly dividend by 8.7% to $0.75 per common share, which
represents an annualized rate of $3.00 per common 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.
2007 Third-Quarter Results
Revenues net of excise taxes increased 5.9% to $10.0 billion for
the third quarter of 2007, driven by increases in both U.S. tobacco
and international tobacco.
Operating income increased 10.4% to $3.7 billion, reflecting the
items described in the attached reconciliation on Schedule 3,
including higher results from operations of $194 million and favorable
currency of $138 million.
Earnings from continuing operations increased 18.9% to $2.6
billion, reflecting the items above as well as a decrease in interest
expense due to lower debt outstanding. The company's effective tax
rate was 30.2% in the third quarter of 2007 versus 34.1% for the
year-earlier period. Third-quarter 2007 results include favorable tax
adjustments of $97 million or $0.05 per share, primarily due to the
reversal of tax reserves no longer required and reduction of the
German corporate tax rate.
Net earnings, including discontinued operations, decreased 8.4% to
$2.6 billion, reflecting the Kraft spin-off. Diluted earnings per
share, including discontinued operations as detailed on Schedule 1,
decreased 8.8% to $1.24.
U.S. TOBACCO
2007 Third-Quarter Results
Philip Morris USA (PM USA), Altria Group, Inc.'s U.S. tobacco
business, achieved a record 50.6% retail market share, up 0.2 points,
driven primarily by Marlboro, which increased its retail market share
0.5 points to a record 41.1%.
Third-quarter revenues net of excise taxes increased 3.2% to $4.0
billion. Operating companies income increased 2.0% to $1.3 billion
compared to the year-earlier period. The increase was driven by lower
wholesale promotional allowance rates and lower selling, general and
administrative costs. Those factors were partially offset by increased
resolution expenses, lower volume, investments in support of PM USA's
adjacency strategy and a $22 million pre-tax charge related to asset
impairment, exit and implementation costs for the previously announced
closure of the Cabarrus, NC cigarette manufacturing facility. Adjusted
for the $22 million pre-tax charge, PM USA's operating companies
income would have increased by 3.7%.
During the quarter, PM USA announced a reduction in the wholesale
promotional allowance on its Focus on Four brands effective September
10, 2007. The allowances for Marlboro, Parliament and Basic were
reduced by $0.50 per carton, from $4.00 to $3.50, and for Virginia
Slims by $2.00 per carton, from $4.00 to $2.00. In addition, the price
of PM USA's non-focus brands was increased by $0.50 per carton.
PM USA's cigarette shipment volume of 47.1 billion units was 1.0%
lower than the prior-year period, but was estimated to be down
approximately 3% when adjusted for changes in trade inventories and
calendar differences. During the third quarter of 2007, PM USA
estimates that total cigarette industry volume declined between 3% and
4%, 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)
----------------------------------------------------------------------
Q3 2007 Q3 2006 % Change**
------- ------- ----------
Marlboro 39.1 39.0 + 0.2%
Parliament 1.5 1.5 + 0.6%
Virginia Slims 1.9 2.0 - 5.4%
Basic 3.5 3.8 - 8.4%
------- -------
Focus Brands 46.0 46.3 - 0.8%
Other PM USA 1.1 1.3 - 11.3%
------- -------
Total PM USA 47.1 47.6 - 1.0%
* 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.
As shown in the following table, in the third quarter of 2007,
share gains for Marlboro and Parliament of 0.5 points and 0.1 point,
respectively, were partially offset by losses of 0.2 share points for
Basic and of 0.1 share points each for Virginia Slims and non-focus
brands.
PM USA's cigarette retail share performance by brand is summarized
in the table below:
Philip Morris USA Cigarette Retail Share* by Brand
----------------------------------------------------------------------
Q3 2007 Q3 2006 Change
------- ------- --------
Marlboro 41.1% 40.6% + 0.5 pp
Parliament 1.9% 1.8% + 0.1 pp
Virginia Slims 2.2% 2.3% - 0.1 pp
Basic 4.0% 4.2% - 0.2 pp
------- -------
Focus Brands 49.2% 48.9% + 0.3 pp
Other PM USA 1.4% 1.5% - 0.1 pp
------- -------
Total PM USA 50.6% 50.4% + 0.2 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.
As part of its adjacency growth strategy to develop new revenue
and income sources for the future, PM USA initiated a test market of
Marlboro Snus in the Dallas/Fort Worth, TX area beginning in August
2007. Additionally, PM USA announced that it will test market Marlboro
Moist Smokeless Tobacco in the Atlanta, GA area, with shipments to
wholesalers beginning this week. Marlboro Moist Smokeless Tobacco is
designed to provide a premium quality product at an attractive price
for adult moist smokeless tobacco consumers.
INTERNATIONAL TOBACCO
2007 Third-Quarter Results
Philip Morris International (PMI), Altria Group, Inc.'s
international tobacco business, reported that its revenues net of
excise taxes were up 9.3% to $5.9 billion. Operating companies income
grew 18.8% to $2.5 billion, due primarily to higher pricing, favorable
currency of $138 million and productivity and cost savings. Excluding
the impact of asset impairment and exit costs, acquisitions and
currency, operating companies income grew 10.2%.
PMI's operating companies income performance by segment is
summarized in the table below:
Philip Morris International Operating Companies Income by Segment ($
Millions)
----------------------------------------------------------------------
Q3 2007 Q3 2006 % Change
------- ------- --------
European Union $1,151 $955 + 20.5%
Eastern Europe, Middle East & Africa 710 582 + 22.0%
Asia 514 449 + 14.5%
Latin America 143 133 + 7.5%
------- -------
Total PMI $2,518 $2,119 + 18.8%
Cigarette shipment volume increased 0.6% or 1.3 billion units, to
217.2 billion units, due to acquisition volume from Lakson Tobacco in
Pakistan. Excluding the impact of the Pakistan acquisition, cigarette
shipment volume was down 1.9% or 4.0 billion units, due mainly to
lower shipments in the Czech Republic, Germany and Poland, partially
offset by gains in Algeria, Argentina, Bulgaria, Egypt, Korea,
Lebanon, Slovak Republic, Slovenia, Spain and Ukraine.
PMI's volume performance by segment is summarized in the table
below:
Philip Morris International Cigarette Volume by Segment (Billion
Units)
----------------------------------------------------------------------
Q3 2007 Q3 2006 % Change*
------- ------- ---------
European Union 65.4 68.7 - 4.8%
Eastern Europe, Middle East & Africa 77.5 77.3 + 0.3%
Asia 53.0 48.3 + 9.6%
Latin America 21.3 21.6 - 1.5%
------- -------
Total PMI 217.2 215.9 + 0.6%
*Calculation based on millions of units.
PMI's third-quarter 2007 market share performance improved versus
the year-ago period in Argentina, Australia, Egypt, Greece, Hungary,
Israel, Italy, Korea, Mexico, Russia, Singapore, Spain, Sweden, Taiwan
and Ukraine.
PMI has a superior portfolio of premium brands, comprised of
Marlboro, Parliament and Virginia Slims. In the third quarter, the
combined worldwide volume of this premium portfolio grew by 0.7% or
653 million units.
Total Marlboro cigarette shipment volume of 79.4 billion units was
down 1.3%. Lower shipments in the European Union and Japan were
partially offset by gains in Argentina, Indonesia and Russia. Marlboro
market share was up in many markets, including Argentina, Brazil,
Egypt, Greece, Hungary, Indonesia, Israel, Korea, Mexico, Philippines,
Russia, Singapore and Ukraine.
EUROPEAN UNION
2007 Third-Quarter Results
In the European Union (EU), operating companies income grew 20.5%
to $1.2 billion, driven by higher pricing and favorable currency of
$100 million. The total market declined 3.8%, due largely to the
impact of tax-driven price increases, particularly in the Czech
Republic, Germany, Poland and the United Kingdom. PMI's cigarette
shipment volume of 65.4 billion units declined 4.8% and cigarette
market share was down 0.6 points to 39.1%. For the year-to-date
through September, PMI's share in the EU at 39.4% was unchanged from
the comparative period in 2006.
In the Czech Republic, the total cigarette market was down 9.2%,
due to the timing of trade purchases, although year-to-date volume
through September was up 1.6%. Shipment volume for PMI in the Czech
Republic decreased 22.6% in the third quarter and market share of
49.3% was down 8.5 points. PMI implemented tax-driven price increases
in the second quarter, while most competitive brands, particularly at
the low end, followed in the third quarter. This placed PMI's brands
at a temporary price disadvantage and was the main cause of the
significant market share loss. PMI expects to recover a large part of
this loss in the fourth quarter of 2007.
In France, the total market declined 3.9%, due to the impact of
higher pricing. PMI's market share of 42.0% declined 0.5 points and
shipments were down 5.5%.
In Germany, the cigarette market declined 5.7%, due to a
tax-driven price increase in the fourth quarter of 2006. PMI's
cigarette shipments in Germany were down 9.0%, and its cigarette
market share declined 1.3 points to 35.2%, driven by consumer
downtrading to the low price segment and an increase in a key
competitor's trade inventory. Marlboro declined 3.1 points to 24.1%,
due to the decline of the vending segment and the previously mentioned
trade inventory increase. L&M grew 2.4 share points to reach 5.3%.
In Italy, the total market was down 0.9%. PMI's shipments were up
0.6% and its share increased 0.6 points to 54.7%, with Merit,
Chesterfield and Philip Morris contributing to the growth.
In Poland, consumer price sensitivity following significant
tax-driven price increases resulted in a total market decline of 10.5%
and PMI's market share was down 2.6 points to 38.0%, due primarily to
declines of its low price brands, as well as its local 70mm brands.
Importantly, profitability in Poland virtually tripled due to higher
pricing.
In Spain, the total cigarette market was down 0.6%, while PMI's
market share of 32.7% rose 0.4 points, driven by Chesterfield and L&M.
Cigarette shipments in Spain grew 1.8% and income rose by more than
30% in the quarter.
EASTERN EUROPE, MIDDLE EAST & AFRICA
2007 Third-Quarter Results
In Eastern Europe, Middle East & Africa, PMI's operating companies
income increased 22.0% to $710 million, due mainly to higher pricing,
improved volume/mix and favorable currency of $44 million. Cigarette
shipment volume of 77.5 billion units was up 0.3%. Higher volume in
Algeria, Bulgaria, Egypt, Lebanon and Ukraine more than offset
unfavorable timing of shipments in Kuwait and lower volume in Serbia
and worldwide duty-free.
In Egypt, the total market rose 6.4%, while PMI's market share
grew 2.6 points to 14.2%, due to the continued strength of L&M.
Shipment volume in Egypt grew 21.1%.
In Russia, shipment volume declined 1.0% due to unfavorable
distributor inventory movements following consolidation to a single
distributor. Market share rose 0.2 points to 26.6% as its premium
portfolio including Marlboro, Parliament and Virginia Slims continued
to grow strongly, more than offsetting the decline of L&M. In
September, PMI replaced the entire L&M brand family with a completely
new offering to improve its vibrancy and adult consumer appeal.
Initial results are encouraging. Improved brand mix and better pricing
resulted in strong income growth in Russia.
In Serbia, PMI's shipments were down 10.6%, due to the continued
decline of local brands, and market share was down 1.9 points to
52.0%. However, PMI's market share increased for its international
brands, driven by Marlboro and Bond Street. Market share for Marlboro
rose slightly and its share of the premium segment increased.
In Ukraine, shipments grew 3.5% and market share rose 0.6 points
to 34.0%, driven by consumer uptrading to Marlboro, Parliament and
Chesterfield.
ASIA
2007 Third-Quarter Results
In Asia, operating companies income grew 14.5% to $514 million,
primarily due to favorable pricing and lower costs, partially offset
by unfavorable volume/mix and unfavorable currency of $9 million.
PMI's cigarette shipment volume of 53.0 billion units rose 9.6%, due
to acquisition volume in Pakistan and gains in Korea, partially offset
by declines in Indonesia, Malaysia and Thailand.
In Indonesia, the total cigarette market was essentially flat. PMI
market share was down 0.6 points to 28.0%, reflecting the decline of A
Mild and Dji Sam Soe due to a temporary stick-price disadvantage
versus low price competition, partially offset by the growth of
Marlboro, which gained 0.5 points to 4.3%. PMI's cigarette shipments
declined 1.9%, although Marlboro shipments rose 20.7%, driven by
improved marketing and distribution and the July 2007 Marlboro kretek
launch. Profits rose significantly in Indonesia.
In Japan, the total cigarette market was up 16.4% or 9.4 billion
units, due to a favorable comparison with the third quarter of 2006,
which was depressed by trade inventory depletions following the July
2006 excise tax-driven price increase. Consequently, PMI's in-market
sales were up 13.4%, but market share declined 0.6 points to 24.3%,
due mainly to Lark. Marlboro share of 10.1% was essentially flat.
Cigarette shipment volume was flat, as higher in-market sales were
offset by unfavorable inventory movements.
In Korea, the total market was down 3.2%, while PMI's shipments
rose 10.0% and market share increased 1.3 points to 9.9%. Parliament
and Marlboro continued to gain share, driven by recent new line
extensions, including Marlboro Filter Plus.
LATIN AMERICA
2007 Third-Quarter Results
In Latin America, operating companies income increased 7.5% to
$143 million, due mainly to higher pricing. Cigarette shipment volume
of 21.3 billion units was down 1.5%, as declines in Brazil and
Colombia were partially offset by growth in Argentina.
In Argentina, the total cigarette market grew 1.7%. PMI's volume
grew 5.0% and market share increased 2.2 points to a record 69.7%.
Both Marlboro and the Philip Morris brand gained share.
In Brazil, the total market was down 0.9% and PMI's market share
declined 0.2 points to 12.0%. However, Marlboro share grew 0.2 points
to 5.9%. PMI shipments were down 2.8%.
In Colombia, PMI shipment volume declined 17.6%, due primarily to
distributor inventory distortions. However, PMI expects volume to
recover in the fourth quarter of 2007.
In Mexico, the total market declined 1.7%, due to lower
consumption following the January 2007 tax-driven price increase. PMI
market share reached a new record of 65.5%, up 1.6 points on the
continued strength of Marlboro and Benson & Hedges.
FINANCIAL SERVICES
2007 Third-Quarter Results
Philip Morris Capital Corporation (PMCC) reported operating
companies income of $33 million for the third quarter of 2007 versus
operating companies income of $101 million for the year-earlier
period. Third-quarter 2007 results primarily reflect lower asset
management gains and lower lease revenues versus the prior year.
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 September 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 June 30, 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 September 30,
(in millions, except per share data)
(Unaudited)
2007 2006 % Change
--------------------------
Net revenues $19,207 $17,642 8.9%
Cost of sales 4,325 4,022 7.5%
Excise taxes on products (*) 9,243 8,229 12.3%
----------------
Gross profit 5,639 5,391 4.6%
Marketing, administration and research
costs 1,775 1,836
Asset impairment and exit costs 25 65
(Recoveries) from airline industry exposure (7) -
----------------
Operating companies income 3,846 3,490 10.2%
Amortization of intangibles 6 6
General corporate expenses 132 125
Asset impairment and exit costs 3 3
----------------
Operating income 3,705 3,356 10.4%
Interest and other debt expense, net 11 59
----------------
Earnings from continuing operations before
income taxes, and equity earnings and
minority interest, net 3,694 3,297 12.0%
Provision for income taxes 1,117 1,125 (0.7)%
----------------
Earnings from continuing operations before
equity earnings and minority interest, net 2,577 2,172 18.6%
Equity earnings and minority interest, net 56 42
----------------
Earnings from continuing operations 2,633 2,214 18.9%
Earnings from discontinued operations, net
of income taxes and minority interest - 661
----------------
Net earnings $ 2,633 $ 2,875 (8.4)%
================
Per share data:
Basic earnings per share from continuing
operations $ 1.25 $ 1.06 17.9%
Basic earnings per share from discontinued
operations $ - $ 0.32
----------------
Basic earnings per share $ 1.25 $ 1.38 (9.4)%
================
Diluted earnings per share from continuing
operations $ 1.24 $ 1.05 18.1%
Diluted earnings per share from
discontinued operations $ - $ 0.31
----------------
Diluted earnings per share $ 1.24 $ 1.36 (8.8)%
================
Weighted average number of
shares outstanding - Basic 2,103 2,090 0.6%
- Diluted 2,117 2,107 0.5%
(*) 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 September 30,
(in millions)
(Unaudited)
Net Revenues
US
tobacco European Union EEMA Asia
-----------------------------------------
2007 $ 4,944 $ 6,832 $ 3,312 $ 2,814
2006 4,830 6,458 2,607 2,586
% Change 2.4% 5.8% 27.0% 8.8%
Reconciliation:
----------------------------
For the quarter ended
September 30, 2006 $ 4,830 $ 6,458 $ 2,607 $ 2,586
Divested businesses - 2006 - - - -
Divested businesses - 2007 - - - -
Acquired businesses - - - 61
Currency - 444 297 78
Operations 114 (70) 408 89
-----------------------------------------
For the quarter ended
September 30, 2007 $ 4,944 $ 6,832 $ 3,312 $ 2,814
=========================================
(*) The detail of excise
taxes on products sold is
as follows:
2007 $ 927 $ 4,554 $ 1,606 $ 1,372
2006 $ 938 $ 4,324 $ 1,114 $ 1,219
2007 Currency increased
international tobacco
excise taxes $ - $ 300 $ 198 $ 81
Total
Latin International Financial
America tobacco services Total
-----------------------------------------
2007 $ 1,274 $ 14,232 $ 31 $19,207
2006 1,052 12,703 109 17,642
% Change 21.1% 12.0% (71.6)% 8.9%
Reconciliation:
----------------------------
For the quarter ended
September 30, 2006 $ 1,052 $ 12,703 $ 109 $17,642
Divested businesses - 2006 - - - -
Divested businesses - 2007 - - - -
Acquired businesses 45 106 - 106
Currency 42 861 - 861
Operations 135 562 (78) 598
-----------------------------------------
For the quarter ended
September 30, 2007 $ 1,274 $ 14,232 $ 31 $19,207
=========================================
(*) The detail of excise
taxes on products sold is
as follows:
2007 $ 784 $ 8,316 $ 9,243
2006 $ 634 $ 7,291 $ 8,229
2007 Currency increased
international tobacco
excise taxes $ 24 $ 603 $ 603
Schedule 3
ALTRIA GROUP, INC.
and Subsidiaries
Selected Financial Data by Business Segment
For the Quarters Ended September 30,
(in millions)
(Unaudited)
Operating Companies Income
US
tobacco European Union EEMA Asia
-----------------------------------------
2007 $ 1,295 $ 1,151 $ 710 $ 514
2006 1,270 955 582 449
% Change 2.0% 20.5% 22.0% 14.5%
Reconciliation:
----------------------------
For the quarter ended
September 30, 2006 $ 1,270 $ 955 $ 582 $ 449
Divested businesses - 2006 - - - -
Italian antitrust charge -
2006 - - - -
Asset impairment and exit
costs - 2006 - 59 - 6
Provision for airline
industry exposure - 2006 - - - -
-----------------------------------------
- 59 - 6
-----------------------------------------
Divested businesses - 2007 - - - -
Asset impairment and exit
costs - 2007 (10) (13) - (2)
Implementation costs - 2007 (12) - - -
Recoveries from airline
industry exposure - 2007 - - - -
-----------------------------------------
(22) (13) - (2)
-----------------------------------------
Acquired businesses - (1) - (1)
Currency - 100 44 (9)
Operations 47 51 84 71
-----------------------------------------
For the quarter ended
September 30, 2007 $ 1,295 $ 1,151 $ 710 $ 514
=========================================
Total
Latin International Financial
America tobacco services Total
-----------------------------------------
2007 $ 143 $ 2,518 $ 33 $3,846
2006 133 2,119 101 3,490
% Change 7.5% 18.8% (67.3)% 10.2%
Reconciliation:
----------------------------
For the quarter ended
September 30, 2006 $ 133 $ 2,119 $ 101 $3,490
Divested businesses - 2006 (14) (14) - (14)
Italian antitrust charge -
2006 - - - -
Asset impairment and exit
costs - 2006 - 65 - 65
Provision for airline
industry exposure - 2006 - - - -
-----------------------------------------
(14) 51 - 51
-----------------------------------------
Divested businesses - 2007 - - - -
Asset impairment and exit
costs - 2007 - (15) - (25)
Implementation costs - 2007 - - - (12)
Recoveries from airline
industry exposure - 2007 - - 7 7
-----------------------------------------
- (15) 7 (30)
-----------------------------------------
Acquired businesses 5 3 - 3
Currency 3 138 - 138
Operations 16 222 (75) 194
-----------------------------------------
For the quarter ended
September 30, 2007 $ 143 $ 2,518 $ 33 $3,846
=========================================
ALTRIA GROUP, INC. Schedule 4
and Subsidiaries
Condensed Statements of Earnings
For the Nine Months Ended September 30,
(in millions, except per share data)
(Unaudited)
2007 2006 % Change
--------------------------
Net revenues $55,572 $51,024 8.9%
Cost of sales 12,499 11,704 6.8%
Excise taxes on products (*) 26,774 23,670 13.1%
----------------
Gross profit 16,299 15,650 4.1%
Marketing, administration and research
costs 5,359 5,348
Italian antitrust charge - 61
Asset impairment and exit costs 481 88
(Recoveries) Provision for airline industry
exposure (214) 103
----------------
Operating companies income 10,673 10,050 6.2%
Amortization of intangibles 18 17
General corporate expenses 392 355
Asset impairment and exit costs 64 35
----------------
Operating income 10,199 9,643 5.8%
Interest and other debt expense, net 187 325
----------------
Earnings from continuing operations before
income taxes, equity earnings and minority
interest, net 10,012 9,318 7.4%
Provision for income taxes 3,234 2,540 27.3%
----------------
Earnings from continuing operations before
equity earnings and minority interest, net 6,778 6,778 -%
Equity earnings and minority interest, net 195 145
----------------
Earnings from continuing operations 6,973 6,923 0.7%
Earnings from discontinued operations, net
of income taxes and minority interest 625 2,140
----------------
Net earnings $ 7,598 $ 9,063 (16.2)%
================
Per share data (**):
Basic earnings per share from continuing
operations $ 3.32 $ 3.32 -%
Basic earnings per share from discontinued
operations $ 0.30 $ 1.02
----------------
Basic earnings per share $ 3.62 $ 4.34 (16.6)%
================
Diluted earnings per share from continuing
operations $ 3.30 $ 3.29 0.3%
Diluted earnings per share from
discontinued operations $ 0.29 $ 1.02
----------------
Diluted earnings per share $ 3.59 $ 4.31 (16.7)%
================
Weighted average number of
shares outstanding - Basic 2,100 2,086 0.7%
- Diluted 2,115 2,104 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 Nine Months Ended
September 30,
(in millions)
(Unaudited)
Net Revenues
US European Union EEMA Asia
tobacco
-----------------------------------------
2007 $ 13,998 $ 20,253 $ 9,205 $ 8,351
2006 13,938 18,248 7,716 7,667
% Change 0.4% 11.0% 19.3% 8.9%
Reconciliation:
----------------------------
For the nine months ended
September 30, 2006 $ 13,938 $ 18,248 $ 7,716 $ 7,667
Divested businesses - 2006 - - - -
Divested businesses - 2007 - - - -
Acquired businesses - - - 151
Currency - 1,620 453 263
Operations 60 385 1,036 270
-----------------------------------------
For the nine months ended
September 30, 2007 $ 13,998 $ 20,253 $ 9,205 $ 8,351
=========================================
(*) The detail of excise
taxes on products sold is
as follows:
2007 $ 2,626 $ 13,511 $ 4,356 $ 4,061
2006 $ 2,724 $ 12,149 $ 3,412 $ 3,471
2007 Currency increased
international tobacco
excise taxes $ - $ 1,086 $ 243 $ 218
Total
Latin International Financial
America tobacco services Total
-----------------------------------------
2007 $ 3,639 $ 41,448 $ 126 $55,572
2006 3,183 36,814 272 51,024
% Change 14.3% 12.6% (53.7)% 8.9%
Reconciliation:
----------------------------
For the nine months ended
September 30, 2006 $ 3,183 $ 36,814 $ 272 $51,024
Divested businesses - 2006 - - - -
Divested businesses - 2007 - - - -
Acquired businesses 111 262 - 262
Currency 33 2,369 - 2,369
Operations 312 2,003 (146) 1,917
-----------------------------------------
For the nine months ended
September 30, 2007 $ 3,639 $ 41,448 $ 126 $55,572
=========================================
(*) The detail of excise
taxes on products sold is
as follows:
2007 $ 2,220 $ 24,148 $26,774
2006 $ 1,914 $ 20,946 $23,670
2007 Currency increased
international tobacco
excise taxes $ 16 $ 1,563 $ 1,563
Schedule 6
ALTRIA GROUP, INC.
and Subsidiaries
Selected Financial Data by Business Segment
For the Nine Months Ended September 30,
(in millions)
(Unaudited)
Operating Companies Income
US
tobacco European Union EEMA Asia
-----------------------------------------
2007 $ 3,429 $3,256 $1,911 $ 1,412
2006 3,687 2,735 1,639 1,456
% Change (7.0)% 19.0% 16.6% (3.0)%
Reconciliation:
----------------------------
For the nine months ended
September 30, 2006 $ 3,687 $2,735 $1,639 $ 1,456
Divested businesses - 2006 - - - -
Italian antitrust charge -
2006 - 61 - -
Asset impairment and exit
costs - 2006 - 81 - 7
Provision for airline
industry exposure - 2006 - - - -
-----------------------------------------
- 142 - 7
-----------------------------------------
Divested businesses - 2007 - - - -
Asset impairment and exit
costs - 2007 (328) (101) (12) (22)
Implementation costs - 2007 (12) - - -
Recoveries from airline
industry exposure - 2007 - - - -
-----------------------------------------
(340) (101) (12) (22)
-----------------------------------------
Acquired businesses - (2) - 9
Currency - 294 65 (36)
Operations 82 188 219 (2)
-----------------------------------------
For the nine months ended
September 30, 2007 $ 3,429 $3,256 $1,911 $ 1,412
=========================================
Total
Latin International Financial
America tobacco services Total
-----------------------------------------
2007 $ 333 $6,912 $ 332 $10,673
2006 395 6,225 138 10,050
% Change (15.7)% 11.0% +100% 6.2%
Reconciliation:
----------------------------
For the nine months ended
September 30, 2006 $ 395 $6,225 $ 138 $10,050
Divested businesses - 2006 (45) (45) - (45)
Italian antitrust charge -
2006 - 61 - 61
Asset impairment and exit
costs - 2006 - 88 - 88
Provision for airline
industry exposure - 2006 - - 103 103
-----------------------------------------
(45) 104 103 207
-----------------------------------------
Divested businesses - 2007 - - - -
Asset impairment and exit
costs - 2007 (18) (153) - (481)
Implementation costs - 2007 - - - (12)
Recoveries from airline
industry exposure - 2007 - - 214 214
-----------------------------------------
(18) (153) 214 (279)
-----------------------------------------
Acquired businesses (2) 5 - 5
Currency (2) 321 - 321
Operations 5 410 (123) 369
-----------------------------------------
For the nine months ended
September 30, 2007 $ 333 $6,912 $ 332 $10,673
=========================================
Schedule 7
ALTRIA GROUP, INC.
and Subsidiaries
Net Earnings and Diluted Earnings Per Share
For the Quarters Ended September 30,
($ in millions, except per share data)
(Unaudited)
Diluted
Net Earnings E.P.S.
------------ ----------
2007 Continuing Earnings $2,633 $ 1.24
2006 Continuing Earnings $2,214 $ 1.05
% Change 18.9% 18.1%
Reconciliation:
----------------------------------------------
2006 Continuing Earnings $2,214 $ 1.05
2006 Asset impairment and exit costs 43 0.02
2006 Provision for airline industry exposure - -
------------ ----------
43 0.02
------------ ----------
2007 Asset impairment, exit and implementation
costs (26) (0.02)
2007 Recoveries from airline industry exposure 4 -
2007 Tax items 97 0.05
------------ ----------
75 0.03
------------ ----------
Currency 91 0.04
Change in shares - -
Change in tax rate 50 0.02
Operations 160 0.08
------------ ----------
2007 Continuing Earnings $2,633 $ 1.24
2007 Discontinued Earnings $ - $ -
------------ ----------
2007 Net Earnings $2,633 $ 1.24
============ ==========
2007 Continuing Earnings Excluding Special
Items $2,558 $ 1.21
2006 Continuing Earnings Excluding Special
Items $2,257 $ 1.07
% Change 13.3% 13.1%
Schedule 8
ALTRIA GROUP, INC.
and Subsidiaries
Net Earnings and Diluted Earnings Per Share
For the Nine Months Ended September 30,
($ in millions, except per share data)
(Unaudited)
Diluted
Net Earnings E.P.S. (*)
------------ ----------
2007 Continuing Earnings $ 6,973 $ 3.30
2006 Continuing Earnings $ 6,923 $ 3.29
% Change 0.7% 0.3%
Reconciliation:
-------------------------------------------
2006 Continuing Earnings $ 6,923 $ 3.29
2006 Italian antitrust charge 61 0.03
2006 Asset impairment and exit costs 80 0.04
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)
------------ ----------
(395) (0.19)
------------ ----------
2007 Asset impairment, exit and
implementation costs (367) (0.17)
2007 Recoveries from airline industry
exposure 137 0.06
2007 Interest on tax reserve transfers to
Kraft (50) (0.02)
2007 Tax items 97 0.05
------------ ----------
(183) (0.08)
------------ ----------
Currency 212 0.10
Change in shares - (0.02)
Change in tax rate 63 0.03
Operations 353 0.17
------------ ----------
2007 Continuing Earnings $ 6,973 3.30
2007 Discontinued Earnings $ 625 $ 0.29
------------ ----------
2007 Net Earnings $ 7,598 $ 3.59
------------ ----------
2007 Continuing Earnings Excluding Special
Items $ 7,156 3.38
2006 Continuing Earnings Excluding Special
Items $ 6,528 3.10
% Change 9.6% 9.0%
(*) 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)
September 30, December 31,
2007 2006
------------- ------------
Assets
-------------------------------------------
Cash and cash equivalents $ 7,309 $ 4,781
All other current assets 13,438 13,724
Property, plant and equipment, net 8,074 7,581
Goodwill 6,700 6,197
Other intangible assets, net 1,874 1,908
Other assets 7,891 6,837
Assets of discontinued operations - 56,452
------------- ------------
Total consumer products assets 45,286 97,480
Total financial services assets 6,442 6,790
------------- ------------
Total assets $ 51,728 $ 104,270
============= ============
Liabilities and Stockholders' Equity
-------------------------------------------
Short-term borrowings $ 512 $ 420
Current portion of long-term debt 3,973 648
Accrued settlement charges 3,681 3,552
All other current liabilities 11,018 10,941
Long-term debt 3,040 6,298
Deferred income taxes 1,649 1,391
Other long-term liabilities 4,676 5,208
Liabilities of discontinued operations - 29,495
------------- ------------
Total consumer products liabilities 28,549 57,953
Total financial services liabilities 5,940 6,698
------------- ------------
Total liabilities 34,489 64,651
Total stockholders' equity 17,239 39,619
------------- ------------
Total liabilities and stockholders' equity $ 51,728 $ 104,270
============= ============
Total consumer products debt $ 7,525 $ 7,366
Debt/equity ratio - consumer products 0.44 0.19
Total debt $ 8,025 $ 8,485
Total debt/equity ratio 0.47 0.21
CONTACT: Altria Group, Inc.
Nicholas M. Rolli, 917-663-3460
or
Timothy R. Kellogg, 917-663-2759
SOURCE: Altria Group, Inc.
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