Altria Group, Inc. Reports 2003 Fourth-Quarter and Full-Year Results |
NEW YORK--(BUSINESS WIRE)--Jan. 28, 2004--Altria Group, Inc.
(NYSE: MO)
- 2003 Fourth-Quarter Diluted Earnings Per Share of $1.02 vs.
$0.85 in Year-Ago Quarter; Comparison Affected by Charges of
$0.04 in 2003 and $0.08 in 2002, As Detailed in Attached
Reconciliation
- 2003 Full-Year Diluted Earnings Per Share of $4.52 vs. $5.21
in 2002; Comparison Affected by Charges of $0.10 in 2003 and
Gains of $0.64 in 2002, Including an $0.81 Gain for Miller
Transaction in 2002, As Detailed in Attached Reconciliation
- 2004 Full-Year Diluted Earnings Per Share Projected In a Range
of $4.57 to $4.67, Which Includes a $0.23 Reduction for Kraft
Restructuring Program and Other Charges
Altria Group, Inc. (NYSE: MO) today announced fourth-quarter 2003
diluted earnings per share of $1.02, including $0.04 in charges for
other items as described in the attached reconciliation of
fourth-quarter 2003 to fourth-quarter 2002 results, an increase of 20%
versus $0.85 in the same quarter a year ago, which included $0.08 in
charges for other items described in the attached reconciliation.
For the full-year 2003, diluted earnings per share were $4.52,
including $0.10 in charges for other items as described in the
attached reconciliation of full-year 2003 to 2002 results, versus
$5.21 for the same period a year ago, which included a gain of $0.81
per share for the Miller Brewing Co. transaction, as well as $0.17 in
charges for other items described in the attached reconciliation.
"Although 2003 was a challenging year, the investments we have
made in our businesses are gradually beginning to pay off and we
produced solid results in the fourth quarter of 2003, which were
somewhat flattered by a rather weak corresponding prior-year period,"
said Louis C. Camilleri, chairman and chief executive officer of
Altria Group, Inc. "The turnaround in our domestic tobacco business
has been particularly impressive, with fourth quarter 2003 volume,
retail share and profitability all ahead of the same period in 2002.
Our international tobacco business delivered strong income growth,
aided by favorable currency, although volume growth was adversely
impacted by declines in France, Germany and Italy."
"In our worldwide food business, 2003 was a difficult year, but
actions were taken in the second half to address challenges faced by
Kraft Foods. Kraft is positioning itself for sustainable growth with a
new global organization structure and recently announced plans to
address key growth opportunities and to realign its cost structure
beginning in 2004. I am confident that the leadership team at Kraft is
moving quickly to improve long-term performance in a business and
consumer environment that remains challenging."
Altria Group, Inc. is projecting 2004 full-year diluted earnings
per share in a range of $4.57 to $4.67, which includes a $0.23
reduction for anticipated charges related to Kraft's recently
announced restructuring program and other charges. The factors
described in the Forward-Looking and Cautionary Statements section of
this release represent continuing risks to this projection.
A conference call with members of the investment community will be
Webcast at 2:00 p.m. Eastern Time on January 28, 2004. Access is
available at www.altria.com.
ALTRIA GROUP, INC.
As described in "Note 14. Segment Reporting" of Altria Group,
Inc.'s 2002 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.
2003 Full-Year Results
Net revenues for the full year 2003, as detailed in the attached
schedule entitled "Selected Financial Data by Business Segment,"
increased 1.8% versus 2003 to $81.8 billion, due primarily to
favorable currency of $3.4 billion and to increases from Altria's food
business and international tobacco business, partially offset by the
impact of the Miller transaction and lower net revenues from the
domestic tobacco business.
Operating income decreased 4.2% to $15.9 billion, due primarily to
reductions in operating companies income of $838 million from the
domestic tobacco business and $368 million from food, partially offset
by higher operating results from international tobacco. Also affecting
operating income comparisons were favorable currency of $563 million
and the other items described in the attached reconciliation of 2002
operating companies income to 2003 operating companies income. During
2003, Altria Group, Inc. streamlined several corporate functions and,
more recently, announced that it intends to sell an office building in
Rye Brook, NY. These actions resulted in corporate pre-tax asset
impairment and exit costs of $67 million in the fourth quarter of
2003.
Net earnings decreased 17.1% to $9.2 billion, due primarily to the
after-tax impact of the Miller transaction of $1.7 billion, or $0.81
per share, that was recorded during the third quarter of 2002. The
effective tax rate decreased from the 2002 rate of 35.5% to 34.9% in
2003, due primarily to favorable tax rulings, as well as the mix of
foreign versus domestic pre-tax earnings.
During 2003, Altria Group, Inc. raised its dividend 6.3% to an
annualized rate of $2.72 per common share, marking the 36th time in 34
years that the dividend has been increased.
2003 Fourth-Quarter Results
Net revenues for the fourth quarter of 2003, as detailed in the
attached schedule entitled "Selected Financial Data by Business
Segment," increased 10.2% versus 2002 to $20.7 billion, due primarily
to favorable currency of $926 million and to increases in domestic
tobacco, international tobacco and food.
Operating income increased 11.9% to $3.6 billion, due primarily to
higher operating companies income from Philip Morris USA. Also
affecting operating income comparisons were favorable currency of $155
million and other items, including a charge in 2002 of $290 million
related to airline industry exposure, as described in the attached
reconciliation of fourth-quarter 2002 operating companies income to
fourth-quarter 2003 operating companies income.
Net earnings increased 18.3% to $2.1 billion, due primarily to
higher operating results at Philip Morris USA, the after-tax impact of
the $290 million provision in the fourth quarter of 2002 and a lower
effective tax rate.
DOMESTIC TOBACCO
2003 Full-Year Results
Philip Morris USA Inc., Altria Group, Inc.'s domestic tobacco
business, continued to generate solid retail share performance, as its
enhanced sales and promotional programs drove quarterly sequential
share gains throughout 2003. Philip Morris USA's shipment volume was
down 2.3% to 187.2 billion units for the year. Premium mix for Philip
Morris USA improved by approximately 1.1 share points to 91.3%.
Operating companies income decreased 22.4%, to $3.9 billion, due
to higher spending in support of Philip Morris USA's programs to
narrow price gaps, as well as lower volume and $202 million in pre-tax
charges related to the tobacco growers settlement and pre-tax charges
of $82 million for the move of Philip Morris USA's headquarters to
Richmond, VA, and other exit costs.
Philip Morris USA's total retail share improved significantly in
2003, driven by steady gains in Marlboro and the growth of Parliament,
while retail share remained relatively stable for Virginia Slims and
Basic.
Parliament Ultra Lights and Marlboro Blend No. 27 both met
distribution and share objectives following their introduction in
2003. In the fourth quarter, Philip Morris USA began test marketing
Marlboro Menthol 72mm, a premium-priced addition to the Marlboro
Menthol family that is shorter than king-size cigarettes.
The following table summarizes sequential retail share performance
for Philip Morris USA's key brands from the first quarter through the
fourth quarter of 2003, based on data from the IRI/Capstone Total
Retail Panel:
Philip Morris USA 2003 Quarterly Retail Share(a)
Q1 Q2 Q3 Q4
2003 2003 2003 2003
------ ------ ------ -------
Marlboro 37.5% 37.8% 38.1% 38.5%
Parliament 1.5% 1.7% 1.8% 1.7%
Virginia Slims 2.5% 2.4% 2.4% 2.4%
Basic 4.3% 4.2% 4.2% 4.2%
----- ------ ----- -----
Focus Brands 45.8% 46.1% 46.5% 46.8%
Other Philip Morris USA 2.5% 2.4% 2.3% 2.3%
----- ------ ----- -----
Total Philip Morris USA 48.3% 48.5% 48.8% 49.1%
(a) Effective with the first quarter of 2003, Philip Morris USA began
reporting retail share results based on a retail tracking service,
with data beginning in fourth quarter 2002. This service, IRI/Capstone
Total Retail Panel, was developed to provide a more comprehensive
measure of market share in retail stores selling cigarettes. It is not
designed to capture Internet or direct mail sales. Effective with the
fourth quarter of 2003, Philip Morris USA has resumed reporting
comparisons versus the previous year.
2003 Fourth-Quarter Results
Philip Morris USA shipment volume increased 6.2% to 46.3 billion
units in the fourth quarter of 2003, due primarily to the timing of
promotional shipments, which resulted in lower volume in the fourth
quarter of 2002. Premium volume for Philip Morris USA grew 7.6% while
its premium mix improved by 1.2 share points to 91.5% during the
quarter.
Operating companies income increased 25.1% to $987 million, driven
by higher volume, partially offset by charges related to the tobacco
growers settlement and the move of Philip Morris USA's headquarters to
Richmond, VA.
Philip Morris USA's total retail share was up 1.0 share point to
49.1% in the fourth quarter of 2003 compared to the same period a year
earlier, driven by a strong 1.1 share point gain in Marlboro and a
solid 0.4 share point gain in Parliament, while retail share was
essentially stable for Virginia Slims and Basic, as shown in the
following table:
Philip Morris USA Quarterly Retail Share(a)
Q4 Q4
2003 2002 Change
------ ------ --------
Marlboro 38.5% 37.4% + 1.1 pp
Parliament 1.7% 1.3% + 0.4 pp
Virginia Slims 2.4% 2.5% - 0.1 pp
Basic 4.2% 4.3% - 0.1 pp
------ ------ --------
Focus Brands 46.8% 45.5% + 1.3 pp
Other Philip Morris USA 2.3% 2.6% - 0.3 pp
------ ------ --------
Total Philip Morris USA 49.1% 48.1% + 1.0 pp
(a) See note in table above
In the fourth quarter, Philip Morris USA's retail share of the
premium segment increased 0.4 share points to 61.5%, while its share
of the discount segment increased 0.2 share points to 15.8%.
INTERNATIONAL TOBACCO
2003 Full-Year Results
Shipment volume for Philip Morris International Inc. (PMI), Altria
Group, Inc.'s international tobacco business, increased 1.8% to 735.8
billion units in 2003, as gains in key markets and additional volume
from acquisitions during 2003 were partially offset by declines
primarily in France, Germany and Italy.
Operating companies income for PMI rose 10.9% to $6.3 billion for
the full-year 2003, due to favorable currency of $469 million, volume
gains, higher pricing and 2002 pre-tax charges for asset impairment
and exit costs, partially offset by lower volume in the higher margin
markets of France, Germany and Italy.
PMI achieved widespread market share gains, including increases in
the top income markets of Argentina, Austria, France, Germany, Greece,
Japan, Poland, Russia, Singapore, the Slovak Republic, Spain, Turkey,
the Ukraine and the United Kingdom.
Total Marlboro shipments were down 1.9% for 2003 versus 2002, due
primarily to declines in France, Germany and Italy, as well as Egypt,
Indonesia and Turkey. However, Marlboro share increased in Japan and
other key markets, including Argentina, Austria, Brazil, the Czech
Republic, Greece, Mexico, Poland, Portugal, the Slovak Republic,
Singapore, Spain, Switzerland, the Ukraine and the United Kingdom.
In Western Europe, shipment volume was down 6.5% for the full-year
2003, due to declines in France, Germany and Italy, partially offset
by increases in Spain and Austria. In France, shipment volume was down
13.0%, as tax-driven price increases over the past two years have led
to an overall market decline. However, PMI's share was up 0.3 points
to 39.2%. In Germany, volume declined 6.1%, primarily reflecting a
lower total market affected by the tax-driven price increases in
January 2003 and subsequent down trading to low priced tobacco
portions. PMI's share in Germany increased 0.3 points to 37.2% in
2003. In Italy, volume was down 14.3% while share declined 7.1 points
to 54.1%, as Marlboro and Diana were adversely impacted by low-priced
competitive brands. In Spain, volume was up 7.1%, driven by the
improved performance of Marlboro, Chesterfield and the Philip Morris
brand. Overall, PMI's share in Western Europe was down 0.8 points to
38.8%, but excluding Italy was up 0.5 points to 35.3%.
In Central Europe, volume advanced 5.9% in 2003, due mainly to
gains in Romania, and in Greece and Serbia, which benefited from
acquisition volume, partially offset by declines in Hungary and Poland
due to intense price competition, and declines in Lithuania and the
Slovak Republic due to lower markets as a result of tax-driven price
increases. In Romania, gains by Marlboro and L&M fueled a 27.2%
increase in volume. In the second half of 2003, PMI acquired the Greek
cigarette company Papastratos and a controlling interest in Duvanska
Industrija Nis (DIN), a formerly state-owned cigarette company in
Serbia.
In Eastern Europe, the Middle East and Africa, volume grew 11.5%,
driven by strong performances in Russia, Turkey and the Ukraine. In
Russia, Marlboro, L&M, Bond Street, Chesterfield, Optima, Parliament,
Next and Virginia Slims continued to perform well. In Turkey, L&M and
the successful launch of Muratti Ambassador fueled double-digit volume
growth and a 4.8 point share gain to 32.3%. In the Ukraine, volume was
up 21.6%, driven by the continued strong performance of Marlboro, L&M,
Bond Street, Optima and Next.
In Asia, volume was down 0.5% in 2003, as declines in the
Philippines and Indonesia more than offset increases in Korea, Taiwan,
Thailand and Japan. In Korea, volume and share improved significantly,
driven by the successful introduction of Lark in the premium segment
in November 2002 and the launch of Virginia Slims Ultra Lights in July
2003. In Japan, share advanced 0.4 points to 24.0% driven by Marlboro
and Lark.
In Latin America, volume rose 2.9% for 2003, due mainly to a
strong gain in Argentina, driven by Marlboro and L&M, and to Mexico,
where Marlboro and B&H continued to grow. PMI's share increased 1.0
point to 66.2% in Argentina.
2003 Fourth-Quarter Results
Shipment volume for PMI increased 1.6% to 168.3 billion units in
the fourth quarter of 2003, as gains in many top markets including
Argentina, Austria, Korea, Mexico, Russia, Spain, Taiwan, Thailand,
Turkey, and the Ukraine, a return to growth in PMI's worldwide duty
free business and additional volume from acquisitions in Greece and
Serbia were partially offset by declines primarily in France, Germany
and Italy. PMI's volume comparison also reflects higher shipments to
Japan in the fourth quarter of 2002 as a result of the shutdown of
U.S. West Coast shipping ports during the third quarter of 2002.
Operating companies income for PMI rose 8.2% to $1.3 billion in
the fourth quarter of 2003, due to favorable currency of $109 million,
acquisition volume and higher pricing, partially offset by lower
volume in the higher margin markets of France, Germany and Italy.
PMI achieved widespread market share gains in the fourth quarter
of 2003, including increases in the top income markets of Argentina,
France, Germany, Greece, Japan, Mexico, the Netherlands, Russia, the
Slovak Republic, Spain, Turkey, the Ukraine and the United Kingdom.
FOOD
Yesterday, Kraft Foods Inc. (Kraft) reported 2003 full-year and
fourth-quarter results. For the full-year 2003, Kraft's worldwide
volume was up 0.7%, as volume growth from ongoing businesses of 1.6%
was partially offset by the impact of divestitures. Ongoing volume
growth reflected broad gains across Kraft's businesses and tack-on
acquisitions, which accounted for 0.4 points of growth, partially
offset by a decline in the Biscuits, Snacks and Confectionery business
and the impact of trade inventory reductions. Operating income
declined 1.7% to $6.0 billion, as higher commodity and benefit costs,
unfavorable product mix, the previously announced reinvestment program
in U.S. focus categories and the impact of prior year gains on the
sales of businesses were partially offset by the absence of $253
million in integration-related and separation charges incurred in
2002, favorable currency of $94 million and volume growth.
For the fourth quarter, Kraft's worldwide volume was up 1.1%, as
volume growth from ongoing businesses of 1.9% was partially offset by
the impact of divestitures. Tack-on acquisitions contributed 0.6
points of the increase. Ongoing business volume was up in five of
Kraft's six businesses, as consumption growth was partially offset by
continued trade inventory reductions. A decline in the Biscuits,
Snacks and Confectionery business was driven primarily by a decrease
in biscuit volumes. In the fourth quarter, Kraft invested $147 million
of a previously announced reinvestment program primarily in its U.S.
focus categories. During the investment period, cheese, cold cuts,
coffee and crackers showed solid sequential improvement in consumption
and share trends, while results in the cookie category remained weak.
The previously reported factors impacting the cookie category
performance, including consumers' increased health and wellness focus
and lower contributions from new products, continued to affect results
in the fourth quarter. Operating income declined 9.0% to $1.5 billion,
as higher commodity and benefit costs, the previously announced
investment spending in focus categories, adverse product mix and the
absence of a prior year gain on the sale of a business were partially
offset by higher volume and by favorable currency of $46 million.
NORTH AMERICAN FOOD
2003 Full-Year Results
For the full year, volume for Kraft Foods North America, Inc.
(KFNA) was up 1.6%, due to contributions from new products and gains
in Beverages, Foodservice, Canada, Mexico and Cheese, partially offset
by lower Biscuits volume and a reduction in trade inventories.
Operating companies income declined 0.7% to $4.9 billion, as higher
commodity and benefit costs, unfavorable mix and increased promotional
spending were partially offset by the absence of $229 million in
integration-related and separation charges incurred in 2002, volume
growth and pricing actions taken early in the year in response to
higher commodity costs.
2003 Fourth-Quarter Results
For the fourth quarter, volume for Kraft Foods North America, Inc.
(KFNA) grew 1.5%, led by contributions from new products and solid
gains in Beverages, Cheese, Foodservice and Canada, partially offset
by a decline in Biscuits and the impact of a strike by grocery
workers, particularly on the West Coast. Operating companies income
declined 8.0% to $1.1 billion, as increased commodity and benefit
costs, unfavorable product mix and the investment in focus categories
were partially offset by the contribution from volume growth.
INTERNATIONAL FOOD
2003 Full-Year Results
For the full year, volume for Kraft Foods International, Inc.
(KFI) decreased 1.6%, as the impact of divestitures more than offset
volume growth from ongoing businesses of 1.4%. Ongoing business volume
was up due to tack-on acquisitions, which accounted for 1.5 points of
growth, and growth in several key developing markets, including
Russia, Brazil and China, moderated by the impact of price
competition, particularly in Germany and France, and the impact of the
summer heat wave in Europe on the coffee and confectionery businesses.
Operating companies income decreased 3.6% to $1.3 billion, as the
absence of gains on sales of businesses in 2002, unfavorable mix,
higher benefit costs and infrastructure investment in developing
markets were partially offset by the absence of $24 million in
integration-related and separation charges incurred in 2002, pricing
actions and favorable currency of $72 million.
2003 Fourth-Quarter Results
For the fourth quarter, volume for Kraft Foods International, Inc.
(KFI) was up 0.3%, as volume growth from ongoing businesses of 2.6%
was offset by divestitures. Ongoing business volume was up due to
tack-on acquisitions, which accounted for 1.9 points of the increase,
and growth in Latin America and Asia Pacific. Operating companies
income decreased 7.7% to $442 million, as the absence of a gain on
sale of a business in 2002 and higher costs were partially offset by
pricing actions and favorable currency of $34 million, reflecting the
stronger euro.
FINANCIAL SERVICES
2003 Full-Year and Fourth-Quarter Results
Philip Morris Capital Corporation (PMCC) reported operating
companies income of $313 million for the full-year 2003 and $72
million for the fourth quarter of 2003, significantly above results
for comparable periods in 2002, reflecting a $290 million provision
for exposure related to the airline industry in the fourth quarter of
2002, partially offset by the impact of lower investment balances as a
result of PMCC's change in strategic direction.
Earlier in 2003, PMCC announced that it was shifting its strategic
focus from an emphasis on the growth of its portfolio of finance
leases through new lease investments to one of maximizing investment
gains and generating cash flows from its existing portfolio of assets
through an orderly and systematic disposition of assets over an
extended period of time.
Altria Group, Inc. Profile
Altria Group, Inc. is the parent company of Kraft Foods Inc., with
84.6% ownership of outstanding Kraft common shares, Philip Morris
International Inc., Philip Morris USA Inc. and Philip Morris Capital
Corporation. In addition, Altria Group, Inc. has a 36% economic
interest in SABMiller plc, the world's second-largest brewer. The
brand portfolio of Altria Group, Inc.'s consumer packaged goods
companies includes such well-known names as Kraft, Jacobs, L&M,
Marlboro, Maxwell House, Nabisco, Oreo, Oscar Mayer, Parliament,
Philadelphia, Post and Virginia Slims. Altria Group, Inc. recorded
2003 net revenues of $81.8 billion.
Trademarks and service marks mentioned in this release are the
registered property of, or licensed by, the subsidiaries of Altria
Group, Inc.
A complete copy of Altria Group, Inc.'s audited 2003 financial
statements will be available through Altria Group, Inc.'s Web site
after they are filed with the Securities and Exchange Commission on or
about January 28, 2004. If you do not have Internet access but would
like to receive a copy of the 2003 audited financial statements for
Altria Group, Inc., please call toll free (800) 367-5415 in the U.S.
and Canada to request a copy.
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 consumer products subsidiaries are subject to
unfavorable currency movements; intense price competition, changes in
consumer preferences and demand for their products; changing prices
for raw materials, fluctuations in levels of customer inventories and
the effects of foreign economies and local economic and market
conditions. 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; to improve productivity; and to respond effectively to
changing prices for their raw materials.
Altria Group, Inc.'s tobacco subsidiaries (Philip Morris USA and
Philip Morris International) continue to be subject to litigation,
including risks associated with adverse jury and judicial
determinations, courts reaching conclusions at variance with the
company's understanding of applicable law, bonding requirements and
the absence of adequate appellate remedies to get timely relief from
any of the foregoing; price disparities and changes in price
disparities between premium and lowest-price brands; 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.
As a result of actions taken by credit rating agencies during
2003, Altria Group, Inc.'s access to the commercial paper market is
limited, and Altria Group, Inc. may have to rely on its revolving
credit facilities instead.
Altria Group, Inc.'s financial services subsidiary (Philip Morris
Capital Corporation) is subject to the effects of a weak economy,
particularly with respect to aircraft leases in the troubled airline
industry.
Altria Group, Inc.'s consumer products subsidiaries are subject to
other risks detailed from time to time in its publicly filed
documents, including its Annual Report on Form 10-K for the period
ended December 31, 2002 and its Quarterly Report on Form 10-Q for the
period ended September 30, 2003. Altria Group, Inc. cautions that the
foregoing list of important factors is not complete and does not
undertake to update any forward-looking statements that it may make.
ALTRIA GROUP, INC.
and Subsidiaries
Condensed Statements of Earnings
For the Quarters Ended December 31,
(in millions, except per share data)
2003 2002 % Change
-------------------------
Net revenues $20,691 $18,774 10.2 %
Cost of sales 8,414 8,041 4.6 %
Excise taxes on products (a) 5,260 4,310 22.0 %
----------------
Gross profit 7,017 6,423 9.2 %
Marketing, administration and research costs 3,109 2,792
Domestic tobacco legal settlement 20 -
Domestic tobacco headquarters relocation charges 33 -
Gains on sales of businesses (8) (77)
Integration costs and a loss on sale of a
food factory (13) (8)
Asset impairment and exit costs 13 -
Provision for airline industry exposure - 290
----------------
Operating companies income 3,863 3,426 12.8 %
Amortization of intangibles 2 2
General corporate expenses 162 179
Asset impairment and exit costs 67 -
----------------
Operating income 3,632 3,245 11.9 %
Miller Brewing Company transaction - 22
Interest and other debt expense, net 303 253
----------------
Earnings before income taxes and minority
interest 3,329 2,970 12.1 %
Provision for income taxes 1,155 1,054 9.6 %
----------------
Earnings before minority interest 2,174 1,916 13.5 %
Minority interest in earnings and other, net 83 148
----------------
Net earnings $ 2,091 $ 1,768 18.3 %
================
Basic earnings per share (b) $ 1.03 $ 0.86 19.8 %
================
Diluted earnings per share (b) $ 1.02 $ 0.85 20.0 %
================
Weighted average number of
shares outstanding - Basic 2,030 2,060 (1.5)%
- Diluted 2,046 2,069 (1.1)%
(a) The detail of excise taxes on products sold is as follows:
2003 2002
----------------
Domestic tobacco $ 917 $ 863
International tobacco 4,343 3,447
----------------
Total excise taxes $ 5,260 $ 4,310
================
(b) 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.
and Subsidiaries
Selected Financial Data by Business Segment
For the Quarters Ended December 31,
(in millions)
North
Domestic International American International
tobacco tobacco food food
----------------------------------------------
2003 Net Revenues $4,246 $ 8,010 $5,557 $2,773
2002 Net Revenues 3,956 6,855 5,398 2,449
% Change 7.3% 16.8% 2.9% 13.2%
Reconciliation:
--------------------------
2002 Net Revenues $3,956 $ 6,855 $5,398 $2,449
Divested businesses - 2003 - - - 24
Divested businesses - 2002 - - (4) (40)
Currency - 623 62 241
Operations 290 532 101 99
--------------------------------------------
2003 Net Revenues $4,246 $ 8,010 $5,557 $2,773
============================================
Financial
services Total
----------------------
2003 Net Revenues $ 105 $20,691
2002 Net Revenues 116 18,774
% Change (9.5)% 10.2%
Reconciliation:
--------------------------
2002 Net Revenues $ 116 $18,774
Divested businesses - 2003 - 24
Divested businesses - 2002 - (44)
Currency - 926
Operations (11) 1,011
----------------------
2003 Net Revenues $ 105 $20,691
======================
Note: The detail of excise taxes on products sold is as follows:
2003 2002
----------------------
Domestic tobacco $ 917 $ 863
International tobacco 4,343 3,447
----------------------
Total excise taxes $5,260 $ 4,310
======================
Currency increased international tobacco excise taxes by $385 million.
ALTRIA GROUP, INC.
and Subsidiaries
Selected Financial Data by Business Segment
For the Quarters Ended December 31,
(in millions) North
Domestic International American International
tobacco tobacco food food
---------------------------------------------
2003 Operating Companies
Income $ 987 $1,274 $1,088 $442
2002 Operating Companies
Income 789 1,177 1,183 479
% Change 25.1% 8.2% (8.0)% (7.7)%
Reconciliation:
--------------------------
2002 Operating Companies
Income $ 789 $1,177 $1,183 $479
Divested businesses - 2003 - - - 2
Divested businesses - 2002 - - (1) (7)
Domestic tobacco legal
settlement - 2003 (20) - - -
Domestic tobacco
headquarters relocation
charges - 2003 (33) - - -
Gains on sales of
businesses - 2003 - - - 8
Gains on sales of
businesses - 2002 - - (8) (69)
Integration costs - 2003 - - 13 -
Integration costs and a
loss on sale of a food
factory - 2002 - - (8) -
Asset impairment and exit
costs - 2003 (13) - - -
Provision for airline
industry exposure - 2002 - - - -
Currency - 109 12 34
Operations 264 (12) (103) (5)
--------------------------------------------
2003 Operating Companies
Income $ 987 $1,274 $1,088 $442
============================================
Financial
services Total
----------------------
2003 Operating Companies
Income $ 72 $3,863
2002 Operating Companies
Income (202) 3,426
% Change 100+% 12.8%
Reconciliation:
-------------------
2002 Operating Companies
Income $(202) $3,426
Divested businesses - 2003 - 2
Divested businesses - 2002 - (8)
Domestic tobacco legal
settlement - 2003 - (20)
Domestic tobacco
headquarters relocation
charges - 2003 - (33)
Gains on sales of
businesses - 2003 - 8
Gains on sales of
businesses - 2002 - (77)
Integration costs - 2003 - 13
Integration costs and a
loss on sale of a food
factory - 2002 - (8)
Asset impairment and exit
costs - 2003 - (13)
Provision for airline
industry exposure - 2002 290 290
Currency - 155
Operations (16) 128
----------------------
2003 Operating Companies
Income $ 72 $3,863
======================
ALTRIA GROUP, INC.
and Subsidiaries
Condensed Statements of Earnings
For the Twelve Months Ended December 31,
(in millions, except per share data)
2003 2002 % Change
-------------------------
Net revenues $81,832 $80,408 1.8 %
Cost of sales 31,870 32,748 (2.7)%
Excise taxes on products (a) 21,128 18,226 15.9 %
-----------------
Gross profit 28,834 29,434 (2.0)%
Marketing, administration and research costs 11,898 11,599
Domestic tobacco legal settlement 202 -
Domestic tobacco headquarters relocation charges 69 -
Gains on sales of businesses (31) (80)
Integration costs and a loss on sale of a
food factory (13) 111
Asset impairment and exit costs 19 223
Provision for airline industry exposure - 290
-----------------
Operating companies income 16,690 17,291 (3.5)%
Amortization of intangibles 9 7
General corporate expenses 704 683
Asset impairment and exit costs 67 -
-----------------
Operating income 15,910 16,601 (4.2)%
Gain on Miller Brewing Company transaction - (2,631)
Interest and other debt expense, net 1,150 1,134
-----------------
Earnings before income taxes and minority
interest 14,760 18,098 (18.4)%
Provision for income taxes 5,151 6,424 (19.8)%
-----------------
Earnings before minority interest 9,609 11,674 (17.7)%
Minority interest in earnings, net 405 572
-----------------
Net earnings $ 9,204 $11,102 (17.1)%
=================
Basic earnings per share (b) $ 4.54 $ 5.26 (13.7)%
=================
Diluted earnings per share (b) $ 4.52 $ 5.21 (13.2)%
=================
Weighted average number of
shares outstanding - Basic 2,028 2,111 (3.9)%
- Diluted 2,038 2,129 (4.3)%
(a) The detail of excise taxes on products sold is as follows:
2003 2002
----------------
Domestic tobacco $ 3,698 $ 3,776
International tobacco 17,430 13,997
Beer - 453
----------------
Total excise taxes $21,128 $18,226
================
(b) 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.
and Subsidiaries
Selected Financial Data by Business Segment
For the Twelve Months Ended December 31,
(in millions) North
Domestic International American International
tobacco tobacco food food
--------------------------------------------
2003 Net Revenues $17,001 $33,389 $21,907 $ 9,103
2002 Net Revenues 18,877 28,672 21,485 8,238
% Change (9.9)% 16.5% 2.0% 10.5%
Reconciliation:
---------------------------
2002 Net Revenues $18,877 $28,672 $21,485 $ 8,238
Divested businesses - 2003 - - - 115
Divested businesses - 2002 - - (21) (181)
Currency - 2,667 120 610
Operations (1,876) 2,050 323 321
-------------------------------------------
2003 Net Revenues $17,001 $33,389 $21,907 $ 9,103
===========================================
Financial
Beer services Total
------------------------------
2003 Net Revenues $ - $ 432 $81,832
2002 Net Revenues 2,641 495 80,408
% Change (12.7)% 1.8%
Reconciliation:
----------------
2002 Net Revenues $ 2,641 $ 495 $80,408
Divested businesses - 2003 - - 115
Divested businesses - 2002 (2,641) - (2,843)
Currency - - 3,397
Operations - (63) 755
------------------------------
2003 Net Revenues $ - $ 432 $81,832
==============================
Note: The detail of excise taxes on products sold is as follows:
2003 2002
---------------------
Domestic tobacco $ 3,698 $ 3,776
International tobacco 17,430 13,997
Beer - 453
---------------------
Total excise taxes $21,128 $18,226
=====================
Currency increased international tobacco excise taxes by $1,602
million.
ALTRIA GROUP, INC.
and Subsidiaries
Selected Financial Data by Business Segment
For the Twelve Months Ended December 31,
(in millions) North
Domestic International American International
tobacco tobacco food food
---------------------------------------------
2003 Operating Companies
Income $3,889 $6,286 $ 4,920 $1,282
2002 Operating Companies
Income 5,011 5,666 4,953 1,330
% Change (22.4)% 10.9% (0.7)% (3.6)%
Reconciliation:
----------------------
2002 Operating Companies
Income $5,011 $5,666 $ 4,953 $1,330
Divested businesses - 2003 - - - 17
Divested businesses - 2002 - - (5) (30)
Domestic tobacco legal
settlement - 2003 (202) - - -
Domestic tobacco
headquarters relocation
charges - 2003 (69) - - -
Gains on sales of
businesses - 2003 - - - 31
Gains on sales of
businesses - 2002 - - (8) (72)
Integration costs - 2003 - - 13 -
Integration costs and a
loss on sale of a food
factory - 2002 - - 94 17
Asset impairment and exit
costs - 2003 (13) - - (6)
Asset impairment and exit
costs - 2002 - 58 135 7
Provision for airline
industry exposure - 2002 - - - -
Currency - 469 22 72
Operations (838) 93 (284) (84)
-------------------------------------------
2003 Operating Companies
Income $3,889 $6,286 $ 4,920 $1,282
===========================================
Financial Total
Beer services
------------------------------
2003 Operating Companies
Income $ - $ 313 $16,690
2002 Operating Companies
Income 276 55 17,291
% Change 100+% (3.5)%
Reconciliation:
-------------------
2002 Operating Companies
Income $ 276 $ 55 $17,291
Divested businesses - 2003 - - 17
Divested businesses - 2002 (299) - (334)
Domestic tobacco legal
settlement - 2003 - - (202)
Domestic tobacco
headquarters relocation
charges - 2003 - - (69)
Gains on sales of
businesses - 2003 - - 31
Gains on sales of
businesses - 2002 - - (80)
Integration costs - 2003 - - 13
Integration costs and a
loss on sale of a food
factory - 2002 - - 111
Asset impairment and exit
costs - 2003 - - (19)
Asset impairment and exit
costs - 2002 23 - 223
Provision for airline
industry exposure - 2002 - 290 290
Currency - - 563
Operations - (32) (1,145)
------------------------------
2003 Operating Companies
Income $ - $ 313 $16,690
==============================
ALTRIA GROUP, INC.
and Subsidiaries
Net Earnings and Diluted Earnings Per Share
For the Quarters Ended December 31,
($ in millions, except per share data)
Net Diluted
Earnings E.P.S.(a)
-------- ---------
2003 $2,091 $1.02
2002 $1,768 $0.85
% Change 18.3% 20.0%
Reconciliation:
------------------
2002 Reported $1,768 $0.85
2002 Gains on sales of businesses, net of minority
interest impact (42) (0.02)
2002 Integration costs and a loss on sale of a
food factory, net of minority interest impact (4) -
2002 Asset impairment and exit costs, net of
minority interest impact - -
2002 Provision for airline industry exposure 187 0.09
2002 Gain on Miller Brewing Company transaction 14 0.01
-------- ------
155 0.08
-------- ------
2003 Domestic tobacco legal settlement (14) (0.01)
2003 Domestic tobacco headquarters relocation charges (22) (0.01)
2003 Gains on sales of businesses, net of minority
interest impact 4 -
2003 Integration costs, net of minority interest impact 7 -
2003 Asset impairment and exit costs, net of
minority interest impact (52) (0.02)
-------- ------
(77) (0.04)
-------- ------
Currency 100 0.05
Change in shares - 0.01
Change in tax rate 32 0.01
Operations 113 0.06
-------- ------
2003 Reported $2,091 $1.02
======== ======
(a) Basic and diluted earnings per share are computed for each of the
periods presented. Accordingly, the sum of the quarterly earnings per
share amounts may not agree to the year-to-date amounts.
ALTRIA GROUP, INC.
and Subsidiaries
Net Earnings and Diluted Earnings Per Share
For the Twelve Months Ended December 31,
($ in millions, except per share data)
Net Diluted
Earnings E.P.S. (a)
--------- ----------
2003 $ 9,204 $ 4.52
2002 $11,102 $ 5.21
% Change (17.1)% (13.2)%
Reconciliation:
------------------
2002 Reported $11,102 $ 5.21
2002 Gains on sales of businesses, net of minority
interest impact (44) (0.02)
2002 Integration costs and a loss on sale of a
food factory, net of minority interest impact 60 0.03
2002 Asset impairment and exit costs, net of
minority interest impact 129 0.07
2002 Provision for airline industry exposure 187 0.09
2002 Gain on Miller Brewing Company transaction (1,697) (0.81)
-------- -------
(1,365) (0.64)
-------- -------
2003 Domestic tobacco legal settlement (132) (0.06)
2003 Domestic tobacco headquarters relocation
charges (45) (0.02)
2003 Gains on sales of businesses, net of minority
interest impact 17 0.01
2003 Integration costs, net of minority interest impact 7 -
2003 Asset impairment and exit costs, net of
minority interest impact (55) (0.03)
-------- -------
(208) (0.10)
-------- -------
Currency 363 0.17
Change in shares - 0.20
Change in tax rate 90 0.04
Operations (778) (0.36)
-------- -------
2003 Reported $ 9,204 $ 4.52
======== =======
(a) 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.
and Subsidiaries
Condensed Balance Sheets
(in millions, except ratios)
December 31, December 31,
2003 2002
------------ ------------
Assets
-------
Cash and cash equivalents $ 3,777 $ 565
All other current assets 17,605 16,876
Property, plant and equipment, net 16,067 14,846
Goodwill 27,742 26,037
Other intangible assets, net 11,803 11,834
Other assets 10,641 8,151
-------- --------
Total consumer products assets 87,635 78,309
Total financial services assets 8,540 9,231
-------- --------
Total assets $96,175 $87,540
======== ========
Liabilities and Stockholders' Equity
------------------------------------
Short-term borrowings $ 1,715 $ 407
Current portion of long-term debt 1,661 1,558
Accrued settlement charges 3,530 3,027
All other current liabilities 14,487 14,090
Long-term debt 18,953 19,189
Deferred income taxes 7,295 6,112
Other long-term liabilities 15,137 15,498
-------- --------
Total consumer products liabilities 62,778 59,881
Total financial services liabilities 8,320 8,181
-------- --------
Total liabilities 71,098 68,062
Total stockholders' equity 25,077 19,478
-------- --------
Total liabilities and
stockholders' equity $96,175 $87,540
======== ========
Total consumer products debt $22,329 $21,154
Debt/equity ratio - consumer products 0.89 1.09
Total debt $24,539 $23,320
Total debt/equity ratio 0.98 1.20
CONTACT: Altria Group, Inc.
Nicholas M. Rolli, 917-663-3460
Timothy R. Kellogg, 917-663-2759
SOURCE: Altria Group, Inc.
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