Statement Of Financial Position
Statement Of Financial Position Classified (USD $) | ||
In Millions | Jun. 30, 2009
| Dec. 31, 2008
|
Consumer products | ||
Cash and cash equivalents | $544 | $7,916 |
Receivables (less allowances of $2 in 2009 and $3 in 2008) | 101 | 44 |
Inventories: | ||
Leaf tobacco | 908 | 727 |
Other raw materials | 183 | 145 |
Work in process | 250 | 9 |
Finished product | 540 | 188 |
Inventory, Net, Total | 1,881 | 1,069 |
Deferred income taxes | 1,561 | 1,690 |
Other current assets | 795 | 357 |
Total current assets | 4,882 | 11,076 |
Property, plant and equipment, at cost | 6,081 | 5,344 |
Less accumulated depreciation | 3,257 | 3,145 |
Property, Plant and Equipment, Net, Total | 2,824 | 2,199 |
Goodwill | 4,998 | 77 |
Other intangible assets, net | 12,149 | 3,039 |
Investment in SABMiller | 4,780 | 4,261 |
Other assets | 1,138 | 1,080 |
Total consumer products assets | 30,771 | 21,732 |
Financial services | ||
Finance assets, net | 5,031 | 5,451 |
Other assets | 27 | 32 |
Total financial services assets | 5,058 | 5,483 |
TOTAL ASSETS | 35,829 | 27,215 |
Consumer products | ||
Short-term borrowings | 393 | 0 |
Current portion of long-term debt | 775 | 135 |
Accounts payable | 293 | 510 |
Accrued liabilities: | ||
Marketing | 465 | 374 |
Taxes, except income taxes | 686 | 98 |
Employment costs | 150 | 248 |
Settlement charges | 2,208 | 3,984 |
Other | 1,340 | 1,128 |
Dividends payable | 667 | 665 |
Total current liabilities | 6,977 | 7,142 |
Long-term debt | 11,184 | 6,839 |
Deferred income taxes | 3,971 | 351 |
Accrued pension costs | 1,592 | 1,393 |
Accrued postretirement health care costs | 2,352 | 2,208 |
Other liabilities | 1,246 | 1,208 |
Total consumer products liabilities | 27,322 | 19,141 |
Financial services | ||
Debt | 500 | 500 |
Deferred income taxes | 4,220 | 4,644 |
Other liabilities | 410 | 102 |
Total financial services liabilities | 5,130 | 5,246 |
Total liabilities | 32,452 | 24,387 |
Contingencies (Note 14) | 0 | 0 |
Redeemable noncontrolling interest | 32 | 0 |
STOCKHOLDERS' EQUITY | ||
Common stock, par value $0.33 1/3 per share (2,805,961,317 shares issued) | 935 | 935 |
Additional paid-in capital | 6,082 | 6,350 |
Earnings reinvested in the business | 22,404 | 22,131 |
Accumulated other comprehensive losses | (2,015) | (2,181) |
Stockholders Equity Subtotal Before Treasury Stock, Total | 27,406 | 27,235 |
Less cost of repurchased stock (734,700,625 shares in 2009 and 744,589,733 shares in 2008) | (24,063) | (24,407) |
Total stockholders' equity attributable to Altria Group, Inc. | 3,343 | 2,828 |
Noncontrolling interests | 2 | 0 |
Total stockholders' equity | 3,345 | 2,828 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $35,829 | $27,215 |
1_Statement Of Financial Positi
Statement Of Financial Position Classified (Parenthetical) (USD $) | ||
In Millions, except Share data | Jun. 30, 2009
| Dec. 31, 2008
|
Receivables, allowances | $2 | $3 |
Common stock, par value | 0.3333 | 0.3333 |
Common stock, shares issued | 2,805,961,317 | 2,805,961,317 |
Repurchased stock, shares | 734,700,625 | 744,589,733 |
Statement Of Income
Statement Of Income (USD $) | ||||
In Millions, except Per Share data | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
Net revenues | $6,719 | $5,054 | $11,242 | $9,464 |
Cost of sales | 2,138 | 2,168 | 3,908 | 4,055 |
Excise taxes on products | 2,125 | 875 | 2,836 | 1,681 |
Gross profit | 2,456 | 2,011 | 4,498 | 3,728 |
Marketing, administration and research costs | 738 | 649 | 1,455 | 1,297 |
Exit costs | 38 | 19 | 166 | 277 |
Gain on sale of corporate headquarters building | 0 | (404) | ||
Amortization of intangibles | 3 | 1 | 9 | 3 |
Operating income | 1,677 | 1,342 | 2,868 | 2,555 |
Interest and other debt expense, net | 287 | 18 | 623 | 2 |
Loss on early extinguishment of debt | 0 | 393 | ||
Earnings from equity investment in SABMiller | (217) | (147) | (323) | (290) |
Earnings from continuing operations before income taxes | 1,607 | 1,471 | 2,568 | 2,450 |
Provision for income taxes | 596 | 541 | 968 | 906 |
Earnings from continuing operations | 1,600 | 1,544 | ||
Earnings from discontinued operations, net of income taxes | 0 | 1,901 | ||
Net earnings | 1,011 | 930 | 1,600 | 3,445 |
Net earnings attributable to noncontrolling interests | (1) | 0 | (1) | (61) |
Net earnings attributable to Altria Group, Inc. | 1,010 | 930 | 1,599 | 3,384 |
Amounts attributable to Altria Group, Inc. stockholders: | ||||
Earnings from continuing operations | 1,599 | 1,544 | ||
Earnings from discontinued operations | 0 | 1,840 | ||
Net earnings attributable to Altria Group, Inc. | $1,010 | $930 | $1,599 | $3,384 |
Basic earnings per share: | ||||
Continuing operations | 0.77 | 0.74 | ||
Discontinued operations | $0 | 0.88 | ||
Net earnings attributable to Altria Group, Inc. | 0.49 | 0.45 | 0.77 | 1.62 |
Diluted earnings per share: | ||||
Continuing operations | 0.77 | 0.73 | ||
Discontinued operations | $0 | 0.88 | ||
Net earnings attributable to Altria Group, Inc. | 0.49 | 0.45 | 0.77 | 1.61 |
Dividends declared | 0.32 | 0.29 | 0.64 | 1.04 |
Statement Of Shareholders Equit
Statement Of Shareholders Equity And Other Comprehensive Income (USD $) | |||||||||||||||||||
In Millions | Common Stock
| Additional Paid-in Capital
| Attributable to Altria Group, Inc. Earnings Reinvested in the Business
| Attributable to Altria Group, Inc. Accumulated Other Comprehensive Earnings (Losses)
| Cost of Repurchased Stock
| Noncontrolling Interests
| Total
| ||||||||||||
Beginning Balances at Dec. 31, 2007 | $935 | $6,884 | $34,426 | $111 | ($23,454) | $418 | $19,320 | ||||||||||||
Other comprehensive earnings (losses), net of income taxes: | |||||||||||||||||||
Beginning Balances at Dec. 31, 2007 | 935 | 6,884 | 34,426 | 111 | (23,454) | 418 | 19,320 | ||||||||||||
Comprehensive earnings: | |||||||||||||||||||
Net earnings | 4,930 | 61 | 4,991 | ||||||||||||||||
Other comprehensive earnings (losses), net of income taxes: | |||||||||||||||||||
Currency translation adjustments | 233 | 7 | 240 | ||||||||||||||||
Change in net loss and prior service cost | (1,385) | (1,385) | |||||||||||||||||
Change in fair value of derivatives accounted for as hedges | (177) | (177) | |||||||||||||||||
Ownership share of SABMiller other comprehensive earnings | (308) | (308) | |||||||||||||||||
Total other comprehensive (losses) earnings | 7 | (1,630) | |||||||||||||||||
Total comprehensive earnings | 68 | [1] | 3,361 | [1] | |||||||||||||||
Exercise of stock options and other stock award activity | (534) | 213 | (321) | ||||||||||||||||
Cash dividends declared ($0.64 in 2009 and $1.68 in 2008 per share) | (3,505) | (3,505) | |||||||||||||||||
Stock repurchased | (1,166) | (1,166) | |||||||||||||||||
Payments/other related to noncontrolling interests | (130) | (130) | |||||||||||||||||
Spin-off of Philip Morris International Inc. | (13,720) | (655) | (356) | (14,731) | |||||||||||||||
Ending Balances at Dec. 31, 2008 | 935 | 6,350 | 22,131 | (2,181) | (24,407) | 0 | 2,828 | ||||||||||||
Other comprehensive earnings (losses), net of income taxes: | |||||||||||||||||||
Beginning Balances at Dec. 31, 2008 | 935 | ||||||||||||||||||
Comprehensive earnings: | |||||||||||||||||||
Net earnings | 1,599 | 1 | 1,600 | ||||||||||||||||
Other comprehensive earnings (losses), net of income taxes: | |||||||||||||||||||
Currency translation adjustments | 1 | 1 | |||||||||||||||||
Change in net loss and prior service cost | 39 | 39 | |||||||||||||||||
Ownership share of SABMiller other comprehensive earnings | 126 | 126 | |||||||||||||||||
Total other comprehensive (losses) earnings | 0 | 166 | |||||||||||||||||
Total comprehensive earnings | 1 | [1] | 1,766 | [1] | |||||||||||||||
Exercise of stock options and other stock award activity | (268) | 344 | 76 | ||||||||||||||||
Cash dividends declared ($0.64 in 2009 and $1.68 in 2008 per share) | (1,326) | (1,326) | |||||||||||||||||
Other | 1 | 1 | |||||||||||||||||
Ending Balances at Jun. 30, 2009 | 935 | 6,082 | 22,404 | (2,015) | (24,063) | 2 | 3,345 | ||||||||||||
Beginning Balances at Mar. 31, 2009 | 935 | ||||||||||||||||||
Other comprehensive earnings (losses), net of income taxes: | |||||||||||||||||||
Ending Balances at Jun. 30, 2009 | $935 | ||||||||||||||||||
[1]Total comprehensive earnings were $1,167 million for the quarter ended June 30, 2009, which consisted of total comprehensive earnings attributable to Altria Group, Inc. and noncontrolling interests of $1,166 million and $1 million, respectively. Total comprehensive earnings were $846 million for the quarter ended June 30, 2008, all of which was comprehensive earnings attributable to Altria Group, Inc. Total comprehensive earnings were $3,646 million for the six months ended June 30, 2008, which consisted of total comprehensive earnings attributable to Altria Group, Inc. and noncontrolling interests of $3,578 million and $68 million, respectively. |
2_Statement Of Shareholders Equ
Statement Of Shareholders Equity And Other Comprehensive Income (Parenthetical) (USD $) | ||
Attributable to Altria Group, Inc. Earnings Reinvested in the Business
| Total
| |
Cash dividends declared, per share | 1.68 | 1.68 |
Cash dividends declared, per share | 0.64 | 0.64 |
Statement Of Cash Flows Indirec
Statement Of Cash Flows Indirect (USD $) | ||
In Millions | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | ||
Earnings from continuing operations - Consumer products | $1,481 | $1,488 |
- Financial services | 119 | 56 |
Earnings from discontinued operations | 0 | 1,901 |
Net earnings | 1,600 | 3,445 |
Impact of earnings from discontinued operations | 0 | (1,901) |
Consumer products | ||
Depreciation and amortization | 147 | 110 |
Deferred income tax provision | 336 | 91 |
Earnings from equity investment in SABMiller | (323) | (290) |
Exit costs, net of cash paid | (12) | 145 |
Gain on sale of corporate headquarters building | 0 | (404) |
Loss on early extinguishment of debt | 0 | 393 |
Cash effects of changes, net of the effects from acquired and divested companies: | ||
Receivables, net | (11) | (69) |
Inventories | (16) | 115 |
Accounts payable | (58) | (156) |
Income taxes | (103) | (163) |
Accrued liabilities and other current assets | 337 | (184) |
Accrued settlement charges | (1,780) | (1,577) |
Pension plan contributions | (30) | (17) |
Pension provisions and postretirement, net | 135 | 78 |
Other | 147 | (10) |
Financial services | ||
Deferred income tax benefit | (424) | (119) |
Other | 190 | 67 |
Net cash provided by (used in) operating activities, continuing operations | 135 | (446) |
Net cash provided by operating activities, discontinued operations | 0 | 1,666 |
Net cash provided by operating activities | 135 | 1,220 |
Consumer products | ||
Capital expenditures | (112) | (85) |
Acquisition of UST LLC, net of acquired cash | (10,244) | 0 |
Proceeds from sale of corporate headquarters building | 0 | 525 |
Other | (48) | 110 |
Financial services | ||
Investments in finance assets | (9) | 0 |
Proceeds from finance assets | 553 | 148 |
Net cash (used in) provided by investing activities, continuing operations | (9,860) | 698 |
Net cash used in investing activities, discontinued operations | 0 | (317) |
Net cash (used in) provided by investing activities | (9,860) | 381 |
Consumer products | ||
Net issuance of short-term borrowings | 188 | 1,711 |
Long-term debt issued | 4,221 | 0 |
Long-term debt repaid | (375) | (3,814) |
Repurchase of Altria Group, Inc. common stock | 0 | (1,166) |
Dividends paid on Altria Group, Inc. common stock | (1,324) | (3,168) |
Issuance of Altria Group, Inc. common stock | 51 | 72 |
Philip Morris International Inc. dividends paid to Altria Group, Inc. | 0 | 3,019 |
Financing fees and debt issuance costs | (132) | 0 |
Tender and consent fees related to the early extinguishment of debt | 0 | (371) |
Changes in amounts due to/from Philip Morris International Inc. | 0 | (721) |
Other | (276) | (241) |
Net cash provided by (used in) financing activities, continuing operations | 2,353 | (4,679) |
Net cash used in financing activities, discontinued operations | 0 | (1,648) |
Net cash provided by (used in) financing activities | 2,353 | (6,327) |
Effect of exchange rate changes on cash and cash equivalents: | ||
Discontinued operations | 0 | (126) |
Cash and cash equivalents, continuing operations: | ||
Decrease | (7,372) | (4,427) |
Balance at beginning of period | 7,916 | 4,842 |
Balance at end of period | $544 | $415 |
Notes to Financial Statements
Notes to Financial Statements | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Note 1. Background and Basis of Presentation: | Note 1.Background and Basis of Presentation: Background At June30, 2009, Altria Group, Inc.s wholly-owned subsidiaries included Philip Morris USA Inc. (PM USA), which is engaged in the manufacture and sale of cigarettes and certain smokeless products in the United States; UST LLC (UST), which through its subsidiaries is engaged in the manufacture and sale of smokeless products and wine; and John Middleton Co. (Middleton), which is engaged in the manufacture and sale of machine-made large cigars and pipe tobacco. Philip Morris Capital Corporation (PMCC), another wholly-owned subsidiary, maintains a portfolio of leveraged and direct finance leases. In addition, Altria Group, Inc. held a 27.4% economic and voting interest in SABMiller plc (SABMiller) at June30, 2009. Altria Group, Inc.s access to the operating cash flows of its subsidiaries consists principally of cash received from the payment of dividends by its subsidiaries. As discussed in Note 2. UST Acquisition, on January6, 2009, Altria Group, Inc. acquired all of the outstanding common stock of UST, whose direct and indirect wholly-owned subsidiaries include U.S. Smokeless Tobacco Company LLC (USSTC) and Ste. Michelle Wine Estates (Ste. Michelle). As a result of the acquisition, UST has become an indirect wholly-owned subsidiary of Altria Group, Inc. On March28, 2008, Altria Group, Inc. distributed all of its interest in Philip Morris International Inc. (PMI) to Altria Group, Inc.s stockholders in a tax-free distribution. Altria Group, Inc. has reflected the results of PMI prior to the distribution date as discontinued operations on the condensed consolidated statements of earnings and the condensed consolidated statements of cash flows. In March 2008, Altria Group, Inc. sold its corporate headquarters building in New York City for $525 million and recorded a pre-tax gain of $404 million. During the second quarter of 2008, Altria Group, Inc. repurchased 53.5million shares of its common stock at an aggregate cost of approximately $1.2 billion, or an average price of $21.81 per share. In January 2009, Altria Group, Inc. suspended its $4.0 billion (2008 to 2010) share repurchase program, which is at the discretion of its Board of Directors. Basis of Presentation The interim condensed consolidated financial statements of Altria Group, Inc. are unaudited. It is the opinion of Altria Group, Inc.s management that all adjustments necessary for a fair statement of the interim results presented have been reflected therein. All such adjustments were of a normal recurring nature. Net revenues and net earnings for any interim period are not necessarily indicative of results that may be expected for the entire year. As part of the preparation of the interim condensed consolidated financial statements, Altria Group, Inc. performed an evaluation of subsequent events occurring after the condensed consolidated balance sheet date of June30, 2009, through July31, 2009, the date the interim condensed consolidated financial statements were issued. These statements should be read in conjunction with the consolidated financial statements and related notes, which appear in Altria Group |
Note 2. UST Acquisition: | Note 2.UST Acquisition: On January6, 2009, Altria Group, Inc. acquired all of the outstanding common stock of UST, in exchange for $69.50 in cash for each share of UST common stock. Additionally, each employee stock option of UST that was outstanding and unexercised was cancelled in exchange for the right to receive the difference between the exercise price for such option and $69.50. The transaction was valued at approximately $11.7 billion, which represented a purchase price of $10.4 billion and included the assumption of approximately $1.3 billion of debt, which together with acquisition-related costs and payments of approximately $0.6 billion (consisting primarily of financing fees, the funding of USTs non-qualified pension plans, investment banking fees and the early retirement of USTs revolving credit facility), represent a total cash outlay of approximately $11 billion. In connection with the acquisition of UST, Altria Group, Inc. had in place a 364-day term bridge loan facility (the Bridge Facility). On January6, 2009, Altria Group, Inc. borrowed the entire available amount of $4.3 billion under the Bridge Facility, which was used along with available cash of $6.7 billion, representing the net proceeds from the issuances of senior unsecured long-term notes in November and December 2008, to fund the acquisition of UST. As discussed in Note 8. Debt, in February 2009, Altria Group, Inc. issued $4.2 billion of senior unsecured long-term notes. The net proceeds from the issuance of these notes, along with available cash, were used to prepay all of the outstanding borrowings under the Bridge Facility. Upon such prepayment, the Bridge Facility was terminated. USTs financial position and results of operations have been consolidated with Altria Group, Inc. as of January6, 2009. The following unaudited supplemental pro forma data present consolidated information of Altria Group, Inc. as if the acquisition of UST had been consummated on January1, 2008. The pro forma results are not necessarily indicative of what actually would have occurred if the acquisition and related borrowings had been consummated on January1, 2008. ProForma SixMonthsEnded June 30, 2008 ProForma ThreeMonthsEnded June 30, 2008 (in millions, except per share data) Net revenues $ 10,443 $ 5,560 Earnings from continuing operations $ 1,270 $ 864 Net earnings $ 3,171 $ 864 Net earnings attributable to Altria Group, Inc. $ 3,109 $ 863 Per share data: Basic earnings per share: Continuing operations $ 0.60 $ 0.41 Discontinued operations 0.88 Net earnings attributable to Altria Group, Inc. $ 1.48 $ 0.41 Diluted earnings per share: Continuing operations $ 0.60 $ 0.41 Discontinued operations 0.88 Net earnings attributable to Altria Group, Inc. $ 1.48 $ 0.41 Pro forma results of Altria Group, Inc., for the six months ended June30, 2009 assuming the acquisition had occurred on January1, 2009, would not be materially different from the actual |
Note 3. Exit, Implementation and Integration Costs: | Note 3.Exit, Implementation and Integration Costs: Pre-tax exit, implementation and integration costs for the six months and three months ended June30, 2009 and 2008 consisted of the following (in millions): For the Six Months Ended June30, 2009 Implementation Integration ExitCosts Costs Costs Total Cigarettes $ 34 $ 50 $ - $ 84 Smokeless products 123 28 151 Cigars 7 7 Wine 2 2 4 General corporate 7 7 Total $ 166 $ 50 $ 37 $ 253 For the Six Months Ended June 30, 2008 Implementation Integration ExitCosts Costs Costs Total Cigarettes $ 29 $ 32 $ - $ 61 Cigars 3 3 General corporate 248 248 Total $ 277 $ 32 $ 3 $ 312 For the Three Months Ended June 30, 2009 Implementation Integration Exit Costs Costs Costs Total Cigarettes $ 15 $ 32 $ - $ 47 Smokeless products 22 13 35 Cigars 4 4 Wine 1 1 General corporate 1 1 Total $ 38 $ 32 $ 18 $ 88 For the Three Months Ended June 30, 2008 Implementation Integration ExitCosts Costs Costs Total Cigarettes $ 18 $ 17 $ - $ 35 Cigars 1 1 General corporate 1 1 Total $ 19 $ 17 $ 1 $ 37 The movement in the severance liability and details of exit costs for Altria Group, Inc. for the six months ended June30, 2009 was as follows: Severance Other Total (in millions) Severance liability balance, January1, 2009 $ 348 $ - $ 348 Charges 112 54 166 Cash spent (133 ) (45 ) (178 ) Liability recorded in pension and postretirement plans, and other (1 ) (9 ) (10 ) Severance liability balance, June30, 2009 $ 326 $ - $ 326 Other charges in the table above primarily represent other employee termination benefits including pension and postretirement. Integration and Restructuring Program: In December 2008, Altria Group, Inc. initiated a company-wide integration and restructuring program, pursuant to which, over the next two years, Altria Group, Inc. will restructure its corporate, manufacturing, and sales and marketing functions as it completes the integration of UST into its operations and continues to focus on optimizing company-wide cost structures in light of ongoing declines in U.S. cigarette volumes, including the projected impact of the federal excise tax (FET) increase enacted in the first quarter of 2009. As a result of this program, Altria Group, Inc. expects to incur total pre-tax charges of |
Note 4. Benefit Plans: | Note 4.Benefit Plans: Altria Group, Inc. sponsors noncontributory defined benefit pension plans covering substantially all employees, except that as of January1, 2008, new employees (excluding participants in UST plans) are not eligible to participate in the defined benefit plans, but instead are eligible for a company match in a defined contribution plan. In addition, Altria Group, Inc. and its subsidiaries provide health care and other benefits to substantially all retired employees. In connection with the acquisition of UST, Altria Group, Inc. recorded net liabilities for USTs defined benefit pension plans and liabilities for USTs postretirement healthcare plans of $351 million and $85 million, respectively, at January6, 2009. Pension Plans Components of Net Periodic Benefit Cost Net periodic pension cost consisted of the following: FortheSixMonthsEnded June30, FortheThreeMonthsEnded June30, 2009 2008 2009 2008 (in millions) Service cost $ 50 $ 50 $ 25 $ 25 Interest cost 173 153 86 76 Expected return on plan assets (212 ) (210 ) (106 ) (105 ) Amortization: Net loss 55 34 28 17 Prior service cost 6 4 3 2 Other (9 ) 38 3 2 Net periodic pension cost $ 63 $ 69 $ 39 $ 17 Other pension (gain)/cost of $(9) million and $38 million for the six months ended June30, 2009 and 2008, respectively, primarily reflects termination benefits related to restructuring programs, which in 2009 were more than offset by curtailment gains related to the restructuring of USTs operations subsequent to the acquisition (see Note 3. Exit, Implementation and Integration Costs). The curtailment of USTs pension plans resulted in a decrease of $34 million to accrued pension costs, which is reflected in the June30, 2009 condensed consolidated balance sheet. Employer Contributions Altria Group, Inc. presently makes, and plans to make, contributions, to the extent that they are tax deductible and to pay benefits that relate to plans for salaried employees that cannot be funded under Internal Revenue Service regulations. Employer contributions of $30 million were made to Altria Group, Inc.s pension plans during the six months ended June30, 2009. Currently, Altria Group, Inc. anticipates additional employer contributions during the remainder of 2009 of approximately $22 million to its pension plans, which includes approximately $9 million related to UST plans, based on current tax law. However, these estimates are subject to change as a result of changes in tax and other benefit laws, as well as asset performance significantly above or below the assumed long-term rate of return on pension assets, or changes in interest rates. Postretirement Benefit Plans Net postretirement health care costs consisted of the following: FortheSixMonthsEnded June30, FortheThreeMonthsEnded June30, 2009 2008 2009 2 |
Note 5. Goodwill and Other Intangible Assets, net: | Note 5.Goodwill and Other Intangible Assets, net: Goodwill and other intangible assets, net, by segment were as follows (in millions): Goodwill OtherIntangibleAssets,net June 30, 2009 December31, 2008 June 30, 2009 December31, 2008 Cigarettes $ - $ - $ 278 $ 283 Smokeless products 4,859 8,846 Cigars 77 77 2,753 2,756 Wine 62 272 Total $ 4,998 $ 77 $ 12,149 $ 3,039 Intangible assets were as follows (in millions): June30, 2009 December31, 2008 Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Non-amortizable intangible assets $ 11,701 $ 2,642 Amortizable intangible assets 464 $ 16 404 $ 7 Total intangible assets $ 12,165 $ 16 $ 3,046 $ 7 Non-amortizable intangible assets substantially consist of trademarks from the January 2009 acquisition of UST ($9.1 billion) and the December 2007 acquisition of Middleton ($2.6 billion). Amortizable intangible assets consist primarily of customer relationships and certain cigarette trademarks. Pre-tax amortization expense for intangible assets during the six months ended June30, 2009 and 2008, was $9 million and $3 million, respectively, and during the three months ended June30, 2009 and 2008, was $3 million and $1 million, respectively. Annual amortization expense for each of the next five years is estimated to be approximately $20 million, assuming no additional transactions occur that require the amortization of intangible assets. Goodwill relates to the January 2009 acquisition of UST and the December 2007 acquisition of Middleton. The change in goodwill and gross carrying amount of other intangible assets from December31, 2008 to June30, 2009, is as follows (in millions): Goodwill Other Intangible Assets Balance at December31, 2008 $ 77 $ 3,046 Changes due to: Acquisition of UST 4,921 9,119 Balance at June30, 2009 $ 4,998 $ 12,165 |
Note 6. Earnings from Equity Investment in SABMiller: | Note 6.Earnings from Equity Investment in SABMiller: Earnings from Altria Group, Inc.s equity investment in SABMiller consisted of the following: FortheSixMonthsEnded June 30, FortheThreeMonthsEnded June 30, 2009 2008 2009 2008 (in millions) Equity earnings $ 148 $ 290 $ 42 $ 147 Gains on issuances of common stock by SABMiller 175 175 $ 323 $ 290 $ 217 $ 147 Altria Group, Inc.s equity earnings for the six months and three months ended June30, 2009 from its equity investment in SABMiller included pre-tax intangible asset impairment charges of $112 million. In addition, in accordance with Emerging Issues Task Force Issue No.08-6, Equity Method Investment Accounting Considerations, Altria Group, Inc.s second quarter 2009 earnings from its equity investment in SABMiller included pre-tax gains of $175 million due primarily to the issuance of 60million shares of common stock by SABMiller in connection with its acquisition of the remaining noncontrolling interest in its Polish subsidiary. |
Note 7. Divestitures: | Note 7.Divestitures: As discussed in Note 1. Background and Basis of Presentation, on March28, 2008, Altria Group, Inc. distributed all of its interest in PMI to Altria Group, Inc. stockholders in a tax-free distribution. Summarized financial information for discontinued operations for the six months ended June30, 2008 was as follows (in millions): FortheSixMonthsEnded June30,2008 Net revenues $ 15,376 Earnings before income taxes $ 2,701 Provision for income taxes (800 ) Earnings from discontinued operations, net of income taxes 1,901 Earnings attributable to noncontrolling interests (61 ) Earnings from discontinued operations $ 1,840 |
Note 8. Debt: | Note 8.Debt: At June30, 2009, Altria Group, Inc. had in place a multi-year revolving credit facility (the Revolving Facility) in the amount of $3.4 billion, which expires April15, 2010. The Revolving Facility is used to support the issuance of commercial paper to fund short-term cash needs. In June 2009, Altria Group, Inc. amended its Revolving Facility in order to terminate the $108 million commitment of Aurora Bank FSB (formerly known as Lehman Brothers Bank, FSB) (Aurora). Auroras commitment was terminated without a ratable termination or reduction of the commitments of the other lenders. At June30, 2009, Altria Group, Inc. had $393 million of consumer products commercial paper outstanding, thereby effectively reducing the amount available under the Revolving Facility to approximately $3.0 billion. The commercial paper of Altria Group, Inc. and borrowings under the Revolving Facility are fully and unconditionally guaranteed by PM USA (see Note 16. Condensed Consolidating Financial Information). Altria Group, Inc. expects to replace its Revolving Facility prior to its expiration in amounts and maturities based on market conditions at the time. Altria Group, Inc. believes it has adequate liquidity and access to financial resources to meet its anticipated obligations in the foreseeable future. A subsidiary of PM USA repaid a $135 million term loan that matured in May 2009. At June30, 2009 and December31, 2008, Altria Group, Inc.s long-term debt consisted of the following: June30, 2009 December31, 2008 (in millions) Consumer products: Notes, 5.75% to 10.20% (average interest rate 9.1%), due through 2039 $ 11,917 $ 6,797 Debenture, 7.75% due 2027 42 42 Other 135 11,959 6,974 Less current portion of long-term debt (775 ) (135 ) $ 11,184 $ 6,839 Financial services: Eurodollar bonds, 7.50%, due 2009 $ 500 $ 500 Altria Group, Inc. Senior Notes: Altria Group, Inc. issued the following notes in February 2009: $525 million at 7.75%, due 2014, interest payable semi-annually; $2.2 billion at 9.25%, due 2019, interest payable semi-annually; and $1.5 billion at 10.20%, due 2039, interest payable semi-annually. The net proceeds from the issuance of these notes, along with available cash, were used to prepay all of the outstanding borrowings under the Bridge Facility (see Note 2. UST Acquisition). Upon such prepayment, the Bridge Facility was terminated. During the first quarter of 2009, Altria Group, Inc. incurred structuring and arrangement fees of $87 million related to the Bridge Facility. This amount is included in interest and other debt expense, net, in Altria Group, Inc.s condensed consolidated statements of earnings. The notes are Altria Group, Inc.s senior unsecured obligations and rank equally in right of payment with all of Altria Group, Inc.s existing and future senior unsecured indebtedness. The interest rate payable on each series of notes is subject to adjustment f |
Note 9. Financial Instruments: | Note 9.Financial Instruments: At June30, 2009, UST had various forward foreign exchange contracts, primarily in connection with anticipated oak barrel purchases for Ste. Michelles wine operations. These contracts, which are not material and will expire in 2009, were designated as effective cash flow hedges. During the second quarter of 2009, USTs interest rate swap contract which was designated as an effective cash flow hedge expired in conjunction with the maturity of USTs $40 million senior notes. During the first quarter of 2008, Altria Group, Inc. purchased forward foreign exchange contracts to mitigate its exposure to changes in exchange rates from its euro-denominated debt. While these forward exchange contracts were effective as economic hedges, they did not qualify for hedge accounting treatment and, therefore, $21 million of gains for the six months ended June30, 2008 and $15 million of losses for the three months ended June30, 2008 relating to these contracts were reported in interest and other debt expense, net, in Altria Group, Inc.s condensed consolidated statement of earnings. These contracts and the related debt matured in the second quarter of 2008. Within currency translation adjustments during the six months ended June30, 2008, Altria Group, Inc. recorded losses, net of income taxes, of $85 million, which represented effective hedges of net investments. The accumulated losses recorded as net investment hedges of foreign operations were recognized and recorded in connection with the PMI distribution. Hedging activity affected accumulated other comprehensive earnings (losses), net of income taxes, as follows: FortheSixMonthsEnded June 30, FortheThreeMonthsEnded June 30, 2009 2008 2009 2008 (in millions) Loss at beginning of period $ - $ (5 ) $ - $ (4 ) Derivative losses transferred to earnings 93 4 Change in fair value (270 ) PMI spin-off 182 At end of period $ - $ - $ - $ - |
Note 10. Earnings Per Share: | Note 10.Earnings Per Share: Effective January1, 2009, Altria Group, Inc. adopted FASB Staff Position Emerging Issues Task Force 03-6-1 Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities, (FSP EITF 03-6-1). FSP EITF 03-6-1 states that unvested share-based payment awards that contain nonforfeitable rights to dividends are participating securities and therefore are included in the earnings per share (EPS) calculation pursuant to the two class method. The calculations of basic and diluted EPS reflect the adoption of this method and accordingly, prior period calculations have been adjusted retrospectively. Basic and diluted EPS from continuing and discontinued operations were calculated using the following: FortheSixMonthsEnded June 30, FortheThreeMonthsEnded June 30, 2009 2008 2009 2008 (in millions) Earnings from continuing operations $ 1,599 $ 1,544 $ 1,010 $ 930 Earnings from discontinued operations 1,840 Net earnings attributable to Altria Group, Inc. 1,599 3,384 1,010 930 Less: Distributed and undistributed earnings attributable to unvested restricted and deferred shares (6 ) (9 ) (4 ) (2 ) Earnings for basic EPS 1,593 3,375 1,006 928 Add: Undistributed earnings attributable to unvested restricted and deferred shares 1 4 1 1 Less: Undistributed earnings reallocated to unvested restricted and deferred shares (1 ) (4 ) (1 ) (1 ) Earnings for diluted EPS $ 1,593 $ 3,375 $ 1,006 $ 928 Weighted average shares for basic EPS 2,062 2,091 2,064 2,075 Add: Incremental shares from stock options 6 10 5 10 Weighted average shares for diluted EPS 2,068 2,101 2,069 2,085 For the six months and three months ended June30, 2009 computations, 1.0million and 0.7million stock options, respectively, were excluded from the calculation of weighted average shares for diluted EPS because their effects were antidilutive. For the six months and three months ended June30, 2008 computations, there were no antidilutive stock options. |
Note 11. Accumulated Other Comprehensive Earnings (Losses): | Note 11.Accumulated Other Comprehensive Earnings (Losses): The following table sets forth the changes in each component of accumulated other comprehensive earnings (losses) (in millions): Currency Translation Adjustments ChangesinNet Loss and Prior Service Cost Changes in FairValueof Derivatives Accountedfor as Hedges Ownership of SABMillers Other Comprehensive Earnings (Losses) Accumulated Other Comprehensive Earnings (Losses) Balances, January1,2008 $ 728 $ (960 ) $ (5 ) $ 348 $ 111 Period Change 233 (1,385 ) (177 ) (308 ) (1,637 ) Spin-off of Philip Morris International Inc. (961 ) 124 182 (655 ) Balances,December31,2008 - (2,221 ) - 40 (2,181 ) Period Change 1 39 126 166 Balances, June30, 2009 $ 1 $ (2,182 ) $ - $ 166 $ (2,015 ) |
Note 12. Segment Reporting: | Note 12.Segment Reporting: As discussed in Note 1. Background and Basis of Presentation, beginning with the first quarter of 2009, Altria Group, Inc. revised its reportable segments. Altria Group, Inc.s reportable segments are cigarettes, smokeless products, cigars, wine, and financial services. Altria Group, Inc.s management reviews operating companies income to evaluate segment performance and allocate resources. Operating companies income for the segments excludes corporate expenses and amortization of intangibles. Interest and other debt expense, net (consumer products), and provision for income taxes are centrally managed at the corporate level and, accordingly, such items are not presented by segment since they are excluded from the measure of segment profitability reviewed by Altria Group, Inc.s management. Information about total assets by segment is not disclosed because such information is not reported to or used by Altria Group, Inc.s chief operating decision maker. Segment goodwill and other intangibles, net are disclosed in Note 5. Goodwill and Other Intangible Assets, net. Segment data were as follows: FortheSixMonthsEnded June 30, FortheThreeMonthsEnded June 30, 2009 2008 2009 2008 (in millions) Net revenues: Cigarettes $ 9,920 $ 9,149 $ 6,024 $ 4,916 Smokeless products 671 373 Cigars 233 192 118 101 Wine 169 94 Financial services 249 123 110 37 Net revenues $ 11,242 $ 9,464 $ 6,719 $ 5,054 Earnings from continuing operations before income taxes: Operating companies income: Cigarettes $ 2,569 $ 2,377 $ 1,426 $ 1,337 Smokeless products 175 177 Cigars 90 91 36 50 Wine 10 9 Financial services 203 104 83 30 Amortization of intangibles (9 ) (3 ) (3 ) (1 ) Gain on sale of corporate headquarters building 404 General corporate expenses (103 ) (170 ) (50 ) (73 ) UST transaction costs (60 ) Corporate exit costs (7 ) (248 ) (1 ) (1 ) Operating income 2,868 2,555 1,677 1,342 Interest and other debt expense, net (623 ) (2 ) (287 ) (18 ) Loss on early extinguishment of debt (393 ) Earnings from equity investment in SABMiller 323 290 217 147 Earnings from continuing operations before income taxes $ 2,568 $ 2,450 $ 1,607 $ 1,471 Items affecting the comparability of net revenues and operating companies income for the segments were as follows: Acquisition of UST In January 2009, Altria Group, Inc. acquired UST, the resul |
Note 13. Income Taxes: | Note 13.Income Taxes: The income tax rate of 37.7% for the six months ended June30, 2009 increased 0.7 percentage points from 37.0% for the six months ended June30, 2008, due primarily to certain costs incurred in 2009 related to the acquisition of UST that are not deductible for tax purposes. |
Note 14. Contingencies: | Note 14.Contingencies: Legal proceedings covering a wide range of matters are pending or threatened in various United States and foreign jurisdictions against Altria Group, Inc. and its subsidiaries, including PM USA and UST and its subsidiaries, as well as their respective indemnitees. Various types of claims are raised in these proceedings, including product liability, consumer protection, antitrust, tax, contraband shipments, patent infringement, employment matters, claims for contribution and claims of distributors. Litigation is subject to uncertainty and it is possible that there could be adverse developments in pending or future cases. An unfavorable outcome or settlement of pending tobacco-related or other litigation could encourage the commencement of additional litigation. Damages claimed in some tobacco-related and other litigation are or can be significant and, in certain cases, range in the billions of dollars. The variability in pleadings in multiple jurisdictions, together with the actual experience of management in litigating claims demonstrate that the monetary relief that may be specified in a lawsuit bears little relevance to the ultimate outcome. Although PM USA has historically been able to obtain required bonds or relief from bonding requirements in order to prevent plaintiffs from seeking to collect judgments while adverse verdicts have been appealed, there remains a risk that such relief may not be obtainable in all cases. This risk has been substantially reduced given that 43 states now limit the dollar amount of bonds or require no bond at all. Altria Group, Inc. and its subsidiaries record provisions in the consolidated financial statements for pending litigation when they determine that an unfavorable outcome is probable and the amount of the loss can be reasonably estimated. At the present time, while it is reasonably possible that an unfavorable outcome in a case may occur, except as discussed elsewhere in this Report on Form 10-Q: (i)management has concluded that it is not probable that a loss has been incurred in any of the pending tobacco-related cases; (ii)management is unable to estimate the possible loss or range of loss that could result from an unfavorable outcome of any of the pending tobacco-related cases; and (iii)accordingly, management has not provided any amounts in the consolidated financial statements for unfavorable outcomes, if any. Legal defense costs are expensed as incurred. Altria Group, Inc. and its subsidiaries have achieved substantial success in managing litigation. Nevertheless, litigation is subject to uncertainty and significant challenges remain. It is possible that the consolidated results of operations, cash flows or financial position of Altria Group, Inc., or one or more of its subsidiaries, could be materially affected in a particular fiscal quarter or fiscal year by an unfavorable outcome or settlement of certain pending litigation. Altria Group, Inc. and each of its subsidiaries named as a defendant believe, and each has been so advised by counsel handling the respective cases, that it has valid defenses to the litigation pending against it, as well as valid b |
Note 15. Recent Accounting Standards Not Yet Adopted: | Note 15. Recent Accounting Standards Not Yet Adopted: In December 2008, the FASB issued FASB Staff Position No. FAS 132(R)-1, Employers Disclosures about Postretirement Benefit Plan Assets (FSP FAS 132(R)-1). FSP FAS 132(R)-1 will expand the disclosures regarding investments held by employer defined benefit pension plans and other postretirement plans, with the purpose of providing additional information related to the valuation methodologies for these assets similar to SFAS 157. Additionally, FSP FAS 132(R)-1 will require disclosures on how investment allocation decisions are made as well as significant concentrations of risk within plan assets. FSP FAS 132(R)-1 is effective for financial statements issued for fiscal years ending after December15, 2009. Altria Group, Inc. will amend its annual disclosures accordingly. In June 2009, the FASB issued SFAS No.168, The FASB Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principles; a replacement of FASB Statement No.162 (SFAS 168). SFAS 168 establishes the FASB Accounting Standards CodificationTM as the source of authoritative generally accepted accounting principles (GAAP) recognized by the FASB to be applied by non-governmental entities. Rules and interpretative releases of the Securities and Exchange Commission (SEC) under the authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. SFAS 168 is effective for interim and annual periods ending after September15, 2009. SFAS 168 will not have a material impact on Altria Group, Inc.s consolidated financial statements when adopted. |
Note 16. Condensed Consolidating Financial Information: | Note 16. Condensed Consolidating Financial Information: PM USA has issued guarantees relating to Altria Group, Inc.s obligations under its outstanding debt securities, borrowings under the Revolving Facility and amounts outstanding under its commercial paper program (the Guarantees). Pursuant to the Guarantees, PM USA fully and unconditionally guarantees, as primary obligor, the payment and performance of Altria Group, Inc.s obligations under the guaranteed debt instruments (the Obligations). The Guarantees provide that PM USA fully and unconditionally guarantees the punctual payment when due, whether at stated maturity, by acceleration or otherwise, of the Obligations. The liability of PM USA under the Guarantees is absolute and unconditional irrespective of: any lack of validity, enforceability or genuineness of any provision of any agreement or instrument relating thereto; any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to departure from any agreement or instrument relating thereto; any exchange, release or non-perfection of any collateral, or any release or amendment or waiver of or consent to departure from any other guarantee, for all or any of the Obligations; or any other circumstance that might otherwise constitute a defense available to, or a discharge of, Altria Group, Inc. or PM USA. The obligations of PM USA under the Guarantees are limited to the maximum amount as will, after giving effect to such maximum amount and all other contingent and fixed liabilities of PM USA that are relevant under Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to the Guarantees, result in PM USAs obligations under the Guarantees not constituting a fraudulent transfer or conveyance. For this purpose, Bankruptcy Law means Title 11, U.S. Code, or any similar federal or state law for the relief of debtors. PM USA will be unconditionally released and discharged from its obligations under each of the Guarantees upon the earliest to occur of: the date, if any, on which PM USA consolidates with or merges into Altria Group, Inc. or any successor; the date, if any, on which Altria Group, Inc. or any successor consolidates with or merges into PM USA; the payment in full of the Obligations pertaining to such Guarantee; or the rating of Altria Group, Inc.s long-term senior unsecured debt by Standard Poors of A or higher. At June30, 2009, the respective principal wholly-owned subsidiaries of Altria Group, Inc. and PM USA were not limited by long-term debt or other agreements in their ability to pay cash dividends or make other distributions with respect to their common stock. The following sets forth the condensed consolidating balance sheets as of June30, 2009 and December31, 2008, condensed consolidating statements of earnings for the six months and three months ended June30, 2009 and 2008, and condensed consolidating statements of cash flows for the six months ended June30, 2 |
Document Information
Document Information | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Document Information [Text Block] | |
Document Type | 10-Q |
Amendment Flag | false |
Amendment Description | N.A. |
Document Period End Date | 2009-06-30 |
Entity Information
Entity Information (USD $) | |||
6 Months Ended
Jun. 30, 2009 | Jul. 20, 2009
| Jun. 30, 2008
| |
Entity [Text Block] | |||
Trading Symbol | MO | ||
Entity Registrant Name | ALTRIA GROUP, INC. | ||
Entity Central Index Key | 0000764180 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 2,071,359,145 | ||
Entity Public Float | $42,000,000,000 |