Statement Of Financial Position
Statement Of Financial Position Classified (USD $) | ||
In Millions | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Dec. 31, 2008 |
Consumer products | ||
Cash and cash equivalents | $1,030 | $7,916 |
Receivables (less allowances of $3 in 2009 and 2008) | 92 | 44 |
Inventories: | ||
Leaf tobacco | 875 | 727 |
Other raw materials | 182 | 145 |
Work in process | 231 | 9 |
Finished product | 474 | 188 |
Inventory, Net, Total | 1,762 | 1,069 |
Deferred income taxes | 1,501 | 1,690 |
Other current assets | 623 | 357 |
Total current assets | 5,008 | 11,076 |
Property, plant and equipment, at cost | 6,127 | 5,344 |
Less accumulated depreciation | 3,353 | 3,145 |
Property, Plant and Equipment, Net, Total | 2,774 | 2,199 |
Goodwill | 4,998 | 77 |
Other intangible assets, net | 12,142 | 3,039 |
Investment in SABMiller | 4,962 | 4,261 |
Other assets | 1,131 | 1,080 |
Total consumer products assets | 31,015 | 21,732 |
Financial services | ||
Finance assets, net | 4,836 | 5,451 |
Other assets | 29 | 32 |
Total financial services assets | 4,865 | 5,483 |
TOTAL ASSETS | 35,880 | 27,215 |
Consumer products | ||
Current portion of long-term debt | 775 | 135 |
Accounts payable | 312 | 510 |
Accrued liabilities: | ||
Marketing | 378 | 374 |
Taxes, except income taxes | 180 | 98 |
Employment costs | 184 | 248 |
Settlement charges | 3,274 | 3,984 |
Other | 1,358 | 1,128 |
Dividends payable | 709 | 665 |
Total current liabilities | 7,170 | 7,142 |
Long-term debt | 11,184 | 6,839 |
Deferred income taxes | 4,164 | 351 |
Accrued pension costs | 1,602 | 1,393 |
Accrued postretirement health care costs | 2,368 | 2,208 |
Other liabilities | 1,149 | 1,208 |
Total consumer products liabilities | 27,637 | 19,141 |
Financial services | ||
Debt | 0 | 500 |
Deferred income taxes | 4,142 | 4,644 |
Other liabilities | 346 | 102 |
Total financial services liabilities | 4,488 | 5,246 |
Total liabilities | 32,125 | 24,387 |
Contingencies (Note 14) | - | - |
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 | 6,081 | 6,350 |
Earnings reinvested in the business | 22,581 | 22,131 |
Accumulated other comprehensive losses | (1,834) | (2,181) |
Stockholders Equity Subtotal Before Treasury Stock, Total | 27,763 | 27,235 |
Less cost of repurchased stock (734,131,943 shares in 2009 and 744,589,733 shares in 2008) | (24,042) | (24,407) |
Total stockholders' equity attributable to Altria Group, Inc. | 3,721 | 2,828 |
Noncontrolling interests | 2 | 0 |
Total stockholders' equity | 3,723 | 2,828 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $35,880 | $27,215 |
1_Statement Of Financial Positi
Statement Of Financial Position Classified (Parenthetical) (USD $) | ||
In Millions, except Share data | Sep. 30, 2009
| Dec. 31, 2008
|
Receivables, allowances | $3 | $3 |
Common stock, par value | 0.3333 | 0.3333 |
Common stock, shares issued | 2,805,961,317 | 2,805,961,317 |
Repurchased stock, shares | 734,131,943 | 744,589,733 |
Statement Of Income
Statement Of Income (USD $) | ||||
In Millions, except Per Share data | 3 Months Ended
Sep. 30, 2009 | 3 Months Ended
Sep. 30, 2008 | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 |
Net revenues | $6,300 | $5,238 | $17,542 | $14,702 |
Cost of sales | 2,033 | 2,230 | 5,941 | 6,285 |
Excise taxes on products | 1,982 | 897 | 4,818 | 2,578 |
Gross profit | 2,285 | 2,111 | 6,783 | 5,839 |
Marketing, administration and research costs | 751 | 763 | 2,206 | 2,060 |
Exit costs | 133 | 17 | 299 | 294 |
Gain on sale of corporate headquarters building | 0 | (404) | ||
Amortization of intangibles | 7 | 2 | 16 | 5 |
Operating income | 1,394 | 1,329 | 4,262 | 3,884 |
Interest and other debt expense, net | 279 | 25 | 902 | 27 |
Loss on early extinguishment of debt | 0 | 393 | ||
Earnings from equity investment in SABMiller | (119) | (54) | (442) | (344) |
Earnings from continuing operations before income taxes | 1,234 | 1,358 | 3,802 | 3,808 |
Provision for income taxes | 352 | 491 | 1,320 | 1,397 |
Earnings from continuing operations | 2,482 | 2,411 | ||
Earnings from discontinued operations, net of income taxes | 0 | 1,901 | ||
Net earnings | 2,482 | 4,312 | ||
Net earnings attributable to noncontrolling interests | (1) | (61) | ||
Net earnings attributable to Altria Group, Inc. | 882 | 867 | 2,481 | 4,251 |
Amounts attributable to Altria Group, Inc. stockholders: | ||||
Earnings from continuing operations | 2,481 | 2,411 | ||
Earnings from discontinued operations | 0 | 1,840 | ||
Net earnings attributable to Altria Group, Inc. | $882 | $867 | $2,481 | $4,251 |
Basic earnings per share: | ||||
Continuing operations | 1.2 | 1.16 | ||
Discontinued operations | $0 | 0.88 | ||
Net earnings attributable to Altria Group, Inc. | 0.43 | 0.42 | 1.2 | 2.04 |
Diluted earnings per share: | ||||
Continuing operations | 1.19 | 1.15 | ||
Discontinued operations | $0 | 0.88 | ||
Net earnings attributable to Altria Group, Inc. | 0.42 | 0.42 | 1.19 | 2.03 |
Dividends declared | 0.34 | 0.32 | 0.98 | 1.36 |
Statement Of Shareholders Equit
Statement Of Shareholders Equity And Other Comprehensive Income (USD $) | |||||||||||||||||||
In Millions | Common Stock
| Additional Paid-in Capital
| Earnings Reinvested in the Business
| Accumulated Other Comprehensive Earnings (Losses)
| Cost of Repurchased Stock
| Non-controlling 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 (losses) | (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 ($0.98 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 | ||||||||||||
Comprehensive earnings: | |||||||||||||||||||
Net earnings | 2,481 | 1 | 2,482 | ||||||||||||||||
Other comprehensive earnings (losses), net of income taxes: | |||||||||||||||||||
Currency translation adjustments | 3 | 3 | |||||||||||||||||
Change in net loss and prior service cost | 60 | 60 | |||||||||||||||||
Ownership share of SABMiller other comprehensive earnings (losses) | 284 | 284 | |||||||||||||||||
Total other comprehensive (losses) earnings | 0 | 347 | |||||||||||||||||
Total comprehensive earnings | 1 | [1] | 2,829 | [1] | |||||||||||||||
Exercise of stock options and other stock award activity | (269) | 365 | 96 | ||||||||||||||||
Cash dividends declared ($0.98 in 2009 and $1.68 in 2008 per share) | (2,031) | (2,031) | |||||||||||||||||
Other | 1 | 1 | |||||||||||||||||
Ending Balances at Sep. 30, 2009 | $935 | $6,081 | $22,581 | ($1,834) | ($24,042) | $2 | $3,723 | ||||||||||||
[1]Total comprehensive earnings were $1,063 million for the quarter ended September 30, 2009, all of which were comprehensive earnings attributable to Altria Group, Inc. Total comprehensive earnings were $681 million for the quarter ended September 30, 2008, all of which were comprehensive earnings attributable to Altria Group, Inc. Total comprehensive earnings were $4,327 million for the nine months ended September 30, 2008, which consisted of total comprehensive earnings attributable to Altria Group, Inc. and noncontrolling interests of $4,259 million and $68 million, respectively. |
2_Statement Of Shareholders Equ
Statement Of Shareholders Equity And Other Comprehensive Income (Parenthetical) (USD $) | |||||
3 Months Ended
Sep. 30, 2009 | 3 Months Ended
Sep. 30, 2008 | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 | 12 Months Ended
Dec. 31, 2008 | |
Cash dividends declared, per share | 0.34 | 0.32 | 0.98 | 1.36 | 1.68 |
Statement Of Cash Flows Indirec
Statement Of Cash Flows Indirect (USD $) | ||
In Millions | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 |
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | ||
Earnings from continuing operations - Consumer products | $2,325 | $2,363 |
- Financial services | 157 | 48 |
Earnings from discontinued operations, net of income taxes | 0 | 1,901 |
Net earnings | 2,482 | 4,312 |
Impact of earnings from discontinued operations, net of income taxes | 0 | (1,901) |
Consumer products | ||
Depreciation and amortization | 218 | 162 |
Deferred income tax provision | 486 | 128 |
Earnings from equity investment in SABMiller | (442) | (344) |
Dividends from SABMiller | 181 | 181 |
Exit costs, net of cash paid | 1 | 84 |
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 | 1 | (102) |
Inventories | 99 | 194 |
Accounts payable | (40) | (157) |
Income taxes | 16 | 19 |
Accrued liabilities and other current assets | (16) | (114) |
Accrued settlement charges | (714) | (290) |
Pension plan contributions | (46) | (37) |
Pension provisions and postretirement, net | 65 | 92 |
Other | 114 | 78 |
Financial services | ||
Deferred income tax benefit | (502) | (276) |
Other | 104 | 224 |
Net cash provided by operating activities, continuing operations | 2,007 | 2,242 |
Net cash provided by operating activities, discontinued operations | 0 | 1,666 |
Net cash provided by operating activities | 2,007 | 3,908 |
Consumer products | ||
Capital expenditures | (172) | (131) |
Acquisition of UST LLC, net of acquired cash | (10,244) | 0 |
Proceeds from sale of corporate headquarters building | 0 | 525 |
Other | (47) | 110 |
Financial services | ||
Investments in finance assets | (9) | 0 |
Proceeds from finance assets | 767 | 389 |
Net cash (used in) provided by investing activities, continuing operations | (9,705) | 893 |
Net cash used in investing activities, discontinued operations | 0 | (317) |
Net cash (used in) provided by investing activities | (9,705) | 576 |
Consumer products | ||
Net repayment of short-term borrowings | (205) | 0 |
Long-term debt issued | 4,221 | 0 |
Long-term debt repaid | (375) | (3,908) |
Financial services | ||
Long-term debt repaid | (500) | 0 |
Repurchase of Altria Group, Inc. common stock | 0 | (1,166) |
Dividends paid on Altria Group, Inc. common stock | (1,987) | (3,767) |
Issuance of Altria Group, Inc. common stock | 57 | 79 |
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 | (267) | (227) |
Net cash provided by (used in) financing activities, continuing operations | 812 | (7,062) |
Net cash used in financing activities, discontinued operations | 0 | (1,648) |
Net cash provided by (used in) financing activities | 812 | (8,710) |
Effect of exchange rate changes on cash and cash equivalents: | ||
Discontinued operations | 0 | (126) |
Cash and cash equivalents, continuing operations: | ||
Decrease | (6,886) | (3,927) |
Balance at beginning of period | 7,916 | 4,842 |
Balance at end of period | $1,030 | $915 |
Note 1. Background and Basis o
Note 1. Background and Basis of Presentation: | |
9 Months Ended
Sep. 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 September30, 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 27.3% economic and voting interest in SABMiller plc (SABMiller) at September30, 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. During the third quarter of 2009, Altria Group, Inc.s Board of Directors approved a 6.3% increase in the quarterly dividend to $0.34 per common share. The present annualized dividend rate is $1.36 per Altria Group, Inc. common share. Future dividend payments remain subject to the discretion of Altria Group, Inc.s Board of Directors. 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 September 2009, Altria Group, Inc. suspended indefinitely its $4.0 billion (2008 to 2010) share repurchase program, which is at the discretion of its Board of Directors. 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. 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. p |
Note 2. UST Acquisition:
Note 2. UST Acquisition: | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
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. Pro Forma NineMonthsEnded September 30, 2008 Pro Forma ThreeMonthsEnded September 30, 2008 (in millions, except per share data) Net revenues $ 16,166 $ 5,723 Earnings from continuing operations $ 2,079 $ 809 Net earnings $ 3,980 $ 809 Net earnings attributable to Altria Group, Inc. $ 3,918 $ 809 Per share data: Basic earnings per share: Continuing operations $ 1.00 $ 0.39 Discontinued operations 0.88 Net earnings attributable to Altria Group, Inc. $ 1.88 $ 0.39 Diluted earnings per share: Continuing operations $ 0.99 $ 0.39 Discontinued operations 0.88 Net earnings attributable to Altria Group, Inc. $ 1.87 $ 0.39 Pro forma results of Altria Group, Inc., for the nine months ended September30, 2009 assuming the acquisition had occurred on January1, 2009, would not be materially differe |
Note 3. Exit, Implementation a
Note 3. Exit, Implementation and Integration Costs: | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Note 3. Exit, Implementation and Integration Costs: | Note 3.Exit, Implementation and Integration Costs: Pre-tax exit, implementation and integration costs for the nine months and three months ended September30, 2009 and 2008 consisted of the following (in millions): For the Nine Months Ended September30, 2009 ExitCosts Implementation Costs Integration Costs Total Cigarettes $ 86 $ 94 $ - $ 180 Smokeless products 146 33 179 Cigars 7 7 Wine 3 3 6 Financial services 3 3 General corporate 61 61 Total $ 299 $ 94 $ 43 $ 436 For the Nine Months Ended September30, 2008 Exit Costs Implementation Costs Integration Costs Total Cigarettes $ 44 $ 48 $ - $ 92 Cigars 12 12 General corporate 250 250 Total $ 294 $ 48 $ 12 $ 354 For the Three Months Ended September30, 2009 Exit Costs Implementation Costs Integration Costs Total Cigarettes $ 52 $ 44 $ - $ 96 Smokeless products 23 5 28 Wine 1 1 2 Financial services 3 3 General corporate 54 54 Total $ 133 $ 44 $ 6 $ 183 For the Three Months Ended September30, 2008 Exit Costs Implementation Costs Integration Costs Total Cigarettes $ 15 $ 16 $ - $ 31 Cigars 9 9 General corporate 2 2 Total $ 17 $ 16 $ 9 $ 42 The movement in the severance liability and details of exit costs for Altria Group, Inc. for the nine months ended September30, 2009 was as follows: Severance Other Total (inmillions) Severance liability balance, January1, 2009 $ 348 $ - $ 348 Charges 182 117 299 Cash spent (222 ) (74 ) (296 ) Liability recorded in pension and postretirement plans, and other (43 ) (43 ) Severance liability balance, September30, 2009 $ 308 $ - $ 308 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, during 2009 and 2010, 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. In August 2009, Altria Group, Inc. expanded this program. |
Note 4. Benefit Plans:
Note 4. Benefit Plans: | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
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: FortheNineMonthsEnded September30, FortheThreeMonthsEnded September30, 2009 2008 2009 2008 (in millions) Service cost $ 74 $ 73 $ 24 $ 23 Interest cost 261 228 88 75 Expected return on plan assets (319 ) (319 ) (107 ) (109 ) Amortization: Net loss 87 46 32 12 Prior service cost 9 7 3 3 Other 3 40 12 2 Net periodic pension cost $ 115 $ 75 $ 52 $ 6 Other pension cost shown in the table above primarily reflects termination benefits related to restructuring programs, which in 2009 were partially 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 $37 million to accrued pension costs, which is reflected in the September30, 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 (IRS) regulations. Employer contributions of $46 million were made to Altria Group, Inc.s pension plans during the nine months ended September30, 2009, which included $8 million related to UST plans. Currently, Altria Group, Inc. anticipates additional employer contributions during the remainder of 2009 of approximately $7 million to its pension 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: FortheNineMonthsEnded September30, FortheThreeMonthsEnded September30, 2009 2008 2009 2008 (in millions) Service cost $ 28 |
Note 5. Goodwill and Other Int
Note 5. Goodwill and Other Intangible Assets, net: | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
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 Other Intangible Assets, net September30, 2009 December31, 2008 September30, 2009 December31, 2008 Cigarettes $ - $ - $ 275 $ 283 Smokeless products 4,859 8,845 Cigars 77 77 2,751 2,756 Wine 62 271 Total $ 4,998 $ 77 $ 12,142 $ 3,039 Intangible assets were as follows (in millions): September30, 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 $ 23 404 $ 7 Total intangible assets $ 12,165 $ 23 $ 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 nine months ended September30, 2009 and 2008, was $16 million and $5 million, respectively, and during the three months ended September30, 2009 and 2008, was $7 million and $2 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 September30, 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 September30, 2009 $ 4,998 $ 12,165 |
Note 6. Earnings from Equity I
Note 6. Earnings from Equity Investment in SABMiller: | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
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: FortheNineMonthsEnded September 30, FortheThreeMonthsEnded September 30, 2009 2008 2009 2008 (in millions) Equity earnings $ 259 $ 344 $ 111 $ 54 Gains on issuances of common stock by SABMiller 183 8 $ 442 $ 344 $ 119 $ 54 Altria Group, Inc.s earnings from its equity investment in SABMiller for the nine months ended September30, 2009 included pre-tax gains of $183 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: | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
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 nine months ended September30, 2008 was as follows (in millions): FortheNineMonthsEnded September30, 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: | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Note 8. Debt: | Note 8.Debt: At September30, 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 September30, 2009, Altria Group, Inc. had no borrowings under the Revolving Facility nor was any commercial paper outstanding. Any 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 the Revolving Facility prior to its expiration in amounts and maturities based on market conditions at that time. Altria Group, Inc. believes it has adequate liquidity and access to financial resources to meet its anticipated obligations in the foreseeable future. At September30, 2009 and December31, 2008, Altria Group, Inc.s long-term debt consisted of the following: September30, 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 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 from time to time if the rating assigned to the notes of such series by Moodys Investors Service, Inc. (Moodys) or Standard Poors Ratings Services (Stan |
Note 9. Financial Instruments:
Note 9. Financial Instruments: | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Note 9. Financial Instruments: | Note 9.Financial Instruments: At September30, 2009, a subsidiary of Altria Group, Inc. had a forward foreign exchange contract in connection with anticipated oak barrel purchases for Ste. Michelles wine operations. This contract, which is not material and will expire in 2009, was designated as an effective cash flow hedge. 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 nine months ended September30, 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 nine months ended September30, 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: FortheNineMonthsEnded September 30, 2009 2008 (in millions) Loss at beginning of period $ - $ (5 ) Derivative losses transferred to earnings 93 Change in fair value (270 ) PMI spin-off 182 At end of period $ - $ - |
Note 10. Earnings Per Share:
Note 10. Earnings Per Share: | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Note 10. Earnings Per Share: | Note 10.Earnings Per Share: Effective January1, 2009, Altria Group, Inc. adopted FASB authoritative guidance that requires that unvested share-based payment awards containing nonforfeitable rights to dividends be included as participating securities 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 guidance and accordingly, prior period calculations have been adjusted retrospectively. Basic and diluted EPS from continuing and discontinued operations were calculated using the following: FortheNineMonthsEnded September30, FortheThreeMonthsEnded September30, 2009 2008 2009 2008 (in millions) Earnings from continuing operations $ 2,481 $ 2,411 $ 882 $ 867 Earnings from discontinued operations 1,840 Net earnings attributable to Altria Group, Inc. 2,481 4,251 882 867 Less: Distributed and undistributed earnings attributable to unvested restricted and deferred shares (9 ) (12 ) (3 ) (3 ) Earnings for basic EPS 2,472 4,239 879 864 Add: Undistributed earnings attributable to unvested restricted and deferred shares 2 4 1 - Less: Undistributed earnings reallocated to unvested restricted and deferred shares (2 ) (4 ) (1 ) - Earnings for diluted EPS $ 2,472 $ 4,239 $ 879 $ 864 Weighted average shares for basic EPS 2,064 2,080 2,067 2,058 Add: Incremental shares from stock options 6 10 5 9 Weighted average shares for diluted EPS 2,070 2,090 2,072 2,067 For the nine months and three months ended September30, 2009 computations, 0.9million and 0.6million stock options, respectively, were excluded from the calculation of weighted average shares for diluted EPS because their effects were antidilutive. For the nine months and three months ended September30, 2008 computations, there were no antidilutive stock options. |
Note 11. Accumulated Other Com
Note 11. Accumulated Other Comprehensive Earnings (Losses): | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
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 3 60 284 347 Balances, September30, 2009 $ 3 $ (2,161 ) $ - $ 324 $ (1,834 ) |
Note 12. Segment Reporting:
Note 12. Segment Reporting: | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
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: FortheNineMonthsEnded September30, FortheThreeMonthsEnded September30, 2009 2008 2009 2008 (in millions) Net revenues: Cigarettes $ 15,546 $ 14,233 $ 5,626 $ 5,084 Smokeless products 1,023 352 Cigars 386 290 153 98 Wine 271 102 Financial services 316 179 67 56 Net revenues $ 17,542 $ 14,702 $ 6,300 $ 5,238 Earnings from continuing operations before income taxes: Operating companies income: Cigarettes $ 3,902 $ 3,746 $ 1,333 $ 1,369 Smokeless products 302 127 Cigars 139 128 49 37 Wine 22 12 Financial services 260 97 57 (7 ) Amortization of intangibles (16 ) (5 ) (7 ) (2 ) Gain on sale of corporate headquarters building 404 General corporate expenses (138 ) (236 ) (35 ) (66 ) Reduction of Kraft Foods Inc. receivable (88 ) (88 ) UST transaction costs (60 ) Corporate exit costs (61 ) (250 ) (54 ) (2 ) Operating income 4,262 3,884 1,394 1,329 Interest and other debt expense, net (902 ) (27 ) (279 ) (25 ) Loss on early extinguishment of debt (393 ) Earnings from equity investment in SABMiller 442 344 119 54 Earnings from continuing operations before income taxes $ 3,802 $ 3,808 $ 1,234 $ 1,358 Items affecting the comparability of net revenues and operating companies income for the segments wer |
Note 13. Income Taxes:
Note 13. Income Taxes: | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Note 13. Income Taxes: | Note 13.Income Taxes: The income tax rate of 34.7% for the nine months ended September30, 2009 decreased 2.0 percentage points from 36.7% for the nine months ended September30, 2008. The income tax rate of 28.5% for the three months ended September30, 2009 decreased 7.7 percentage points from 36.2% for the three months ended September30, 2008. The decreases were due primarily to lower state taxes and the reversal of tax reserves and associated interest resulting from the execution of a closing agreement with the IRS discussed below. The income tax rate for the nine months ended September30, 2009 was further impacted by certain costs incurred in the first quarter of 2009 related to the acquisition of UST that are not deductible for tax purposes. In the third quarter of 2009, the IRS, Kraft Foods Inc. (Kraft), and Altria Group, Inc. (as the parent of, and as agent for, Kraft) executed a closing agreement that resolved certain Kraft tax matters arising out of the 2000 to 2003 IRS audit of Altria Group, Inc. As a result of the closing agreement, income tax expense for the third quarter of 2009 included the benefit from the reversal of tax reserves and associated interest that are no longer required. This benefit was offset by a reduction in a corresponding receivable from Kraft that arose in connection with potential tax liabilities for which Kraft was responsible under a tax sharing agreement between Altria Group, Inc. and Kraft executed in connection with the 2007 spin-off of Kraft. The reduction in this receivable was recorded as an increase to marketing, administration and research costs on Altria Group, Inc.s condensed consolidated statements of earnings for the nine months and three months ended September30, 2009. As a result, there was no impact on Altria Group, Inc.s net earnings. |
Note 14. Contingencies:
Note 14. Contingencies: | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
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 in 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 |
Note 15. Recent Accounting Guid
Note 15. Recent Accounting Guidance Not Yet Adopted: | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Note 15. Recent Accounting Guidance Not Yet Adopted: | Note 15. Recent Accounting Guidance Not Yet Adopted: Effective for financial statements issued for fiscal years ending after December15, 2009, FASB authoritative guidance will require Altria Group, Inc. to expand its disclosures for investments held by its employer defined benefit pension plans and other postretirement plans, with the purpose of providing additional information related to the inputs and valuation techniques used to develop the fair value measurements of plan assets. Additionally, this guidance will require disclosures on how investment allocation decisions are made, as well as significant concentrations of risk within plan assets. Altria Group, Inc. will amend its annual disclosures accordingly. |
Note 16. Condensed Consolidatin
Note 16. Condensed Consolidating Financial Information: | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
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 September30, 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 September30, 2009 and December31, 2008, condensed consolidating statements of earnings for the nine months and three months ended September30, 2009 and 2008, and condensed consolidating statements of cash flows for the nine months en |
Document Information
Document Information | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Document Information [Text Block] | |
Document Type | 10-Q |
Amendment Flag | false |
Document Period End Date | 2009-09-30 |
Entity Information
Entity Information (USD $) | ||
9 Months Ended
Sep. 30, 2009 | Oct. 20, 2009
| |
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 Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 2,072,211,321 |