Exhibit 99.1
Contact: Nicholas M. Rolli
(917)663-3460
Timothy R. Kellogg
(917)663-2759
Altria Group, Inc. Reports 2004 Second-Quarter Results
Diluted Earnings Per Share up 5.8% to $1.27
Net Earnings up 7.8% to $2.6 Billion
Comparisons Affected by Items Detailed in Attached Reconciliation
on Schedule 7
Reaffirms Previously Disclosed Earnings Guidance
of $4.50 to $4.60 Per Share for the Full Year 2004
NEW YORK, July 20, 2004 -- Altria Group, Inc. (NYSE: MO) today
announced second-quarter 2004 diluted earnings per share were up 5.8%
to $1.27, including $0.13 in charges for the previously announced food
restructuring at Kraft and for an agreement that Philip Morris
International (PMI) signed on July 9 with the European Community and
10 member states. It also reflects the positive impact of $0.15
resulting from a lower overall effective tax rate due to the reversal
of tax provisions, $0.05 due to favorable currency, and other items as
detailed in the attached reconciliation on Schedule 7. Altria's
reported diluted earnings per share of $1.20 in the second quarter a
year ago included $0.06 in charges related to a Philip Morris USA
settlement with tobacco growers and initial charges for moving Philip
Morris USA's headquarters to Richmond, VA.
"Second-quarter results were solid overall and were aided by
strong currency and a favorable tax rate," said Louis C. Camilleri,
chairman and chief executive officer of Altria Group, Inc. "Our
domestic and international tobacco businesses performed well and
continued to implement effective strategies for long-term growth. Our
domestic tobacco business continued its momentum, with a particularly
strong increase in Marlboro's retail share. Our international tobacco
business performed well, but continues to face challenges in France,
Germany and Italy. Outside those difficult markets, PMI's performance
is strong and growing, and I am confident that PMI can achieve its
long-term growth targets."
"Kraft's quarterly results reflect ongoing challenges, including
high commodity costs," Mr. Camilleri said. "However, I remain
optimistic that Kraft will achieve better results in the second half
and over the long term as it executes against its Sustainable Growth
Plan."
"Altria Group continues to project diluted earnings per share of
$4.50 to $4.60 for the full year 2004," Mr. Camilleri said, "as the
positive impact of the tax benefit in the second quarter will
essentially offset the combined impact of revised earnings per share
targets for Kraft and charges related to the international tobacco
agreement with the European Community." The factors described in the
Forward-Looking and Cautionary Statements section of this release
represent continuing risks to this projection.
A conference call with members of the investment community will be
Webcast at 9:00 a.m. Eastern Time on July 20, 2004. Access is
available at www.altria.com.
ALTRIA GROUP, INC.
As described in "Note 14. Segment Reporting" of Altria Group,
Inc.'s 2003 Annual Report, management reviews operating companies
income, which is defined as operating income before corporate expenses
and amortization of intangibles, to evaluate segment performance and
allocate resources. Management believes it is appropriate to disclose
this measure to help investors analyze business performance and
trends. For a reconciliation of operating companies income to
operating income, see the Condensed Statements of Earnings contained
in this release.
2004 Second-Quarter Results
Net revenues for the second quarter 2004, as detailed in the
attached reconciliation on Schedule 2, increased 10.5% versus the
second quarter 2003 to $23.0 billion, due to increases from Altria's
domestic and international tobacco businesses and North American food
business, and favorable currency of $946 million.
Operating income decreased 6.6% to $3.9 billion, due primarily to
the $250 million impact of the international tobacco agreement with
the European Community and charges for asset impairment, exit and
implementation costs related to the food business restructuring and
the announced closure of PMI's Eger, Hungary facility, and lower
results from operations. Also affecting operating income comparisons
were favorable currency of $144 million, the tobacco growers
settlement in 2003 and other items described in the attached
reconciliation of operating companies income on Schedule 3.
Net earnings increased 7.8% to $2.6 billion, due primarily to
favorable currency and a lower effective tax rate, partially offset by
the previously mentioned charges and lower results from operations.
The effective tax rate decreased from 35.2% in the second quarter of
2003 to 26.6% in the second quarter of 2004, reflecting the reversal
of tax provisions that are no longer required due to tax events that
occurred during the second quarter of 2004.
On July 9, 2004, PMI entered into an agreement with the European
Community and 10 member states of the European Union (EU) that
provides for broad cooperation with European law enforcement agencies
on anti-contraband and anti-counterfeit efforts. The agreement
resolves all disputes between the parties relating to these issues.
Under the terms of the agreement, PMI will make 13 payments over 12
years, including $250 million for the initial payment recorded as a
pre-tax charge against its earnings in the second quarter of 2004. The
agreement calls for additional payments of $150 million on the first
anniversary of the agreement, $100 million on the second anniversary
and $75 million each year thereafter for 10 years, each of which is to
be adjusted based on certain variables, including PMI's market share
in the EU in the year preceding payment. Because future additional
payments are subject to these variables, PMI will record charges for
them as an expense in cost of sales when product is shipped. During
the third quarter of 2004, PMI will begin accruing for payments due on
the first anniversary of the agreement.
In the second quarter of 2004, Altria Group, Inc. declared a
regular quarterly dividend of $0.68 per common share, which represents
an annualized rate of $2.72 per common share.
DOMESTIC TOBACCO
2004 Second-Quarter Results
Philip Morris USA Inc., Altria Group, Inc.'s domestic tobacco
business, delivered strong market share performance, with total retail
share growing 1.3 share points to 49.8%, due to Marlboro's continued
growth. Philip Morris USA's shipment volume increased 0.9% to 48.6
billion units, but remained essentially flat when adjusted for the
timing of trade purchases surrounding the July 4th holiday. Premium
mix for Philip Morris USA improved by 0.3 percentage points to 91.5%.
Operating companies income was up 19.6% to $1.2 billion, primarily
reflecting the impact of pre-tax charges of $182 million in the second
quarter of 2003 for the tobacco growers settlement, as well as higher
volume and improved mix in the second quarter of 2004.
The increase in Philip Morris USA's total retail share in the
second quarter of 2004 was driven by a 1.8 share point gain in
Marlboro. Retail share for both Parliament and Virginia Slims declined
slightly, while share for Basic remained stable, as shown in the
following table:
Philip Morris USA Quarterly Retail Share(*)
----------------------------------------------
Q2 2004 Q2 2003 Change
---------- ---------- ----------
Marlboro 39.6% 37.8% + 1.8 pp
Parliament 1.6% 1.7% - 0.1 pp
Virginia Slims 2.3% 2.4% - 0.1 pp
Basic 4.2% 4.2% 0.0 pp
---------- ---------- ----------
Focus Brands 47.7% 46.1% + 1.6 pp
Other Philip Morris USA 2.1% 2.4% - 0.3 pp
---------- ---------- ----------
Total Philip Morris USA 49.8% 48.5% + 1.3 pp
(*)IRI/Capstone Total Retail Panel was developed to measure market
share in retail stores selling cigarettes. It is not designed to
capture Internet or direct mail sales.
Philip Morris USA's retail share of the premium segment increased
0.9 share points to 62% in the second quarter of 2004. Its share of
the discount segment increased 0.4 share points to 16%, as Basic held
share in this declining segment.
During the second quarter, Philip Morris USA began shipping a new
line extension, Virginia Slims Ultra Lights 120mm box, for national
launch at retail in the third quarter and expanded Parliament Lights
100mm round corner box to national distribution. Marlboro Menthol
72mm, a new premium-priced cigarette launched in the first quarter,
contributed to incremental share growth for the Marlboro Menthol
family in the second quarter.
INTERNATIONAL TOBACCO
2004 Second-Quarter Results
Shipment volume for Philip Morris International Inc. (PMI), Altria
Group, Inc.'s international tobacco business, increased 2.8% to 192.7
billion units in the second quarter of 2004, but excluding the impact
of acquisitions was essentially flat. Gains in many markets were
offset by double-digit volume declines in France, Germany and Japan,
reflecting overall market declines, as well as the prior year timing
of shipments in Japan ahead of a tax-driven price increase in July
2003.
Operating companies income for PMI decreased 8.4% to $1.5 billion
for the second quarter, due primarily to a $250 million pre-tax charge
for the international tobacco cooperation agreement that PMI entered
into with the European Community, as well as charges for asset
impairment and exit costs related to the announced closure of PMI's
Eger, Hungary facility, partially offset by favorable currency of $118
million, the impact of acquisitions and higher pricing.
During the second quarter of 2004, PMI achieved widespread market
share gains, including increases in the top income markets of Austria,
Argentina, Belgium, France, Greece, Japan, Mexico, Poland, Russia,
Saudi Arabia, Spain, Thailand, Turkey, the Ukraine and the United
Kingdom.
Total Marlboro shipments were down 0.9% in the second quarter of
2004 versus the second quarter of 2003, due primarily to declines in
France and Germany. In Japan, Marlboro volume was also down,
reflecting a difficult comparison with the second quarter of 2003 when
volume benefited from trade buying in advance of the July 2003 tax
increase. However, Marlboro volume was higher in many markets, most
notably in Korea, Mexico, Poland, the Philippines, Romania, Russia,
Saudi Arabia, Serbia, Spain, the Ukraine and the United Kingdom. Share
gains for Marlboro were achieved in the key markets of Argentina,
Belgium, the Czech Republic, Japan, Mexico, Poland, Portugal, Russia,
Spain, the Ukraine and the United Kingdom.
In Western Europe, shipment volume decreased 7.3% for the second
quarter of 2004, due mainly to continued total industry declines in
France and Germany. Total market share in Western Europe was down 0.3
share points to 38.4%.
In France, the total market declined 26.4%, due mainly to
tax-driven price increases, and PMI's volume was down 19.8%. However,
PMI's market share was up 0.5 points to 39.9%, driven by Basic and the
Philip Morris brand and benefiting from the resilience of Marlboro.
In Germany, the total cigarette market declined 20% in the second
quarter due to the March tax-driven price increase and consumer down
trading to low-priced tobacco products, particularly tobacco portions.
PMI's volume in Germany was down 20.7%. At the end of April, PMI
entered the tobacco portions segment in Germany under the Marlboro and
Next brands and both are performing well, with an 8.1% total share of
the tobacco portions segment in the second quarter. PMI's cigarette
market share in Germany was down slightly to 37.2%, due to the growth
of low-price trade brands.
In Italy, shipments were up 2.6%, reflecting a low base in April
2003 due to trade purchases in advance of the March 2003 price
increase and two additional selling days in the second quarter of
2004. PMI's share was down 3.3 points to 51.2% as Marlboro and Diana
remained under pressure from low-price competitive brands. However,
PMI's market share has been stable on a sequential basis since March
2004. PMI launched L&M in Italy in May to establish a presence in the
low-price segment and the brand is performing in line with
expectations.
In Spain, volume rose 6.2% and share increased 1.6 share points to
35.7%, driven by the strong performance of Marlboro and Chesterfield,
and the launch of Next.
In Central Europe, volume increased 13.9%, due mainly to gains in
Greece and Serbia, which benefited from the impact of acquisitions,
and an increase in Romania. These gains were partially offset by lower
volume in Hungary and Poland, as well as declines in the Czech and
Slovak Republics. Volume excluding acquisitions was down 4.4%, due
primarily to the declines in the Czech and Slovak Republics. In the
Czech Republic, PMI's brands Petra and Sparta lost share to very
low-price competitive brands. In the Slovak Republic, comparisons were
affected by the timing of shipments in advance of the 2003 excise tax
increase and a lower total market due to an increase in illegal
cigarette sales.
In Eastern Europe, the Middle East and Africa, volume grew 8.1%,
due primarily to strength in Saudi Arabia, Turkey and the Ukraine,
partially offset by lower volume in Russia. In Turkey, volume rose
22.0% and share grew 7.6 points to 39.3% due to the continued strong
performance of L&M and Muratti. In the Ukraine, aided by higher sales
of Marlboro, volume increased 26.7%. In Russia, although shipments
were down 3.3% due to a reduction in distributor inventories during
the quarter, retail sales were up and PMI's market share rose 1.5
share points to 26.1%, reflecting higher sales of Parliament,
Marlboro, L&M, Next and Chesterfield.
In Asia, volume advanced 1.5%, driven by strong performances in
Korea, Malaysia, the Philippines and Thailand, partially offset by
Japan. In Korea, volume increased 37.9%, benefiting from the growth of
Lark One, Marlboro Ultra Lights and the recent launch of Elan, a
premium-price slim cigarette. In the Philippines, volume was higher
due to Marlboro's strong growth and the impact of acquired volume.
In Japan, the total market declined 17.4% and PMI's volume was
down 11.3%, due to the continued adverse impact of the July 2003
tax-driven price increases and a difficult comparison with last year
when shipments benefited from trade buying in advance of the tax
increase. PMI's share in Japan was up 0.7 share points to 24.4%,
driven by Marlboro.
In Latin America, volume rose 0.7%, driven primarily by Mexico,
partially offset by Argentina. In Mexico, shipments in the quarter
benefited from higher trade purchasing in advance of a price increase
in early July 2004. PMI's growth of 2.8 share points to 61.6% in
Mexico reflects Marlboro's strong performance and the success of a
recently launched B&H Lights Menthol line extension. In Argentina, the
overall market was down 7.5% following the accumulated 44% price
increases during the last 12 months. PMI's volume declined 6.8% in
Argentina, while share was up 0.5 share points to 66.8% in the second
quarter of 2004.
In worldwide duty-free, volume increased 16.6%, reflecting the
global recovery in travel and a favorable comparison with last year's
second quarter, which was depressed by the effects of SARS and the
Iraq war.
FOOD
Yesterday, Kraft Foods Inc. (Kraft) reported 2004 second-quarter
results. Kraft's worldwide net revenues were up 4.6%, due to favorable
currency of $237 million, volume/mix and net pricing. Kraft's
worldwide total volume was up 3.6%, as ongoing volume growth of 3.9%
(including 3.1 percentage points of growth from acquisitions) was
partially offset by the impact of divestitures. Volume strength across
many businesses was partially offset by challenges in categories
impacted by low-carbohydrate diet trends, and softness in some Western
European markets, particularly France and the Nordic region. Operating
income declined 23.7% to $1.2 billion, as higher commodity costs,
increased marketing investment, asset impairment, exit and
implementation costs for the previously announced restructuring
program of $138 million, and increased benefit costs and restricted
stock expense were partially offset by restructuring savings,
favorable currency of $26 million and all other operations.
During the quarter, Kraft began successfully integrating the
acquisition of Veryfine Products Inc., the manufacturer of Fruit2O
flavored water and Veryfine juices and juice drinks. It also announced
an agreement with Tazo Tea Company, a wholly-owned subsidiary of
Starbucks Corporation, to license the Tazo line of tea products,
including hot tea and bottled ready-to-drink iced and juice flavored
teas, for sale in multiple channels across the United States. In
addition, Kraft announced an alliance with Dr. Arthur Agatston to use
the South Beach Diet trademark to promote certain Kraft products.
NORTH AMERICAN FOOD
2004 Second-Quarter Results
For the second quarter of 2004, Kraft North America Commercial net
revenues grew 3.7%, as higher volumes including acquisitions,
commodity-driven pricing on cheese, meats and foodservice, and
favorable currency of $40 million were partially offset by increased
promotional spending. Volume was up 4.9% (including 3.8 percentage
points of growth from acquisitions). Solid growth in categories with
increased marketing investment including cheese, coffee, cold cuts and
salted snacks was partially offset by declines in categories facing
challenges from low-carbohydrate diet trends, including cereals and
confections. Operating companies income declined 20.7% to $1.1 billion
due to higher commodity costs net of pricing, increased marketing
investment, higher benefit costs and exit and implementation costs for
the restructuring program of $48 million, partially offset by the
contribution from volume growth and favorable currency of $7 million.
INTERNATIONAL FOOD
2004 Second-Quarter Results
For the second quarter of 2004, net revenues for Kraft
International Commercial grew 6.8% as favorable currency of $197
million and volume gains from acquisitions were partially offset by
the impact of divestitures and increased promotional spending in
Europe. Volume was down 0.2% due to divestitures, while volume from
ongoing businesses was up 1.1%, benefiting from tack-on acquisitions,
which accounted for 1.3 percentage points of growth. Overall
developing market growth was solid, with gains in Argentina, Brazil,
China and Puerto Rico, partially offset by a double-digit decline in
beverages in Mexico and weakness in Russia. Operating companies income
decreased 33.6% to $225 million, as exit costs for the restructuring
program of $90 million, higher marketing investment, increased product
costs, unfavorable mix and the impact of divestitures were partially
offset by favorable currency of $19 million.
FINANCIAL SERVICES
2004 Second-Quarter Results
Operating companies income for Philip Morris Capital Corporation
(PMCC) increased 52.4% to $125 million for the second quarter of 2004,
due primarily to $84 million of gains on the sale of assets, partially
offset by lower lease portfolio revenues as a result of PMCC's shift
in strategic direction announced in 2003.
Altria Group, Inc. Profile
Altria Group, Inc. is the parent company of Kraft Foods Inc., with
84.9% ownership of outstanding Kraft common shares, Philip Morris
International Inc., Philip Morris USA Inc. and Philip Morris Capital
Corporation. In addition, Altria Group, Inc. has a 36% economic
interest in SABMiller plc. The brand portfolio of Altria Group, Inc.'s
consumer packaged goods companies includes such well-known names as
Kraft, Jacobs, L&M, Marlboro, Maxwell House, Nabisco, Oreo, Oscar
Mayer, Parliament, Philadelphia, Post and Virginia Slims. Altria
Group, Inc. recorded 2003 net revenues of $81.8 billion.
Trademarks and service marks mentioned in this release are the
registered property of, or licensed by, the subsidiaries of Altria
Group, Inc.
Forward-Looking and Cautionary Statements
This press release contains projections of future results and
other forward-looking statements that involve a number of risks and
uncertainties and are made pursuant to the Safe Harbor Provisions of
the Private Securities Litigation Reform Act of 1995. The following
important factors could cause actual results and outcomes to differ
materially from those contained in such forward-looking statements.
Altria Group, Inc.'s consumer products subsidiaries are subject to
changing prices for raw materials; intense price competition; changes
in consumer preferences and demand for their products; fluctuations in
levels of customer inventories; the effects of foreign economies and
local economic and market conditions; and unfavorable currency
movements. Their results are dependent upon their continued ability to
promote brand equity successfully; to anticipate and respond to new
consumer trends; to develop new products and markets and to broaden
brand portfolios in order to compete effectively with lower-priced
products; to improve productivity; and to respond effectively to
changing prices for their raw materials.
Altria Group, Inc.'s tobacco subsidiaries (Philip Morris USA and
Philip Morris International) continue to be subject to litigation,
including risks associated with adverse jury and judicial
determinations, courts reaching conclusions at variance with the
company's understanding of applicable law, bonding requirements and
the absence of adequate appellate remedies to get timely relief from
any of the foregoing; price disparities and changes in price
disparities between premium and lowest-price brands; legislation,
including actual and potential excise tax increases; increasing
marketing and regulatory restrictions; the effects of price increases
related to excise tax increases and concluded tobacco litigation
settlements on consumption rates and consumer preferences within price
segments; health concerns relating to the use of tobacco products and
exposure to environmental tobacco smoke; governmental regulation;
privately imposed smoking restrictions; and governmental and grand
jury investigations.
Altria Group, Inc.'s consumer products subsidiaries are subject to
other risks detailed from time to time in its publicly filed
documents, including its Quarterly Report on Form 10-Q for the period
ended March 31, 2004. Altria Group, Inc. cautions that the foregoing
list of important factors is not complete and does not undertake to
update any forward-looking statements that it may make.
ALTRIA GROUP, INC. Schedule 1
and Subsidiaries
Condensed Statements of Earnings
For the Quarters Ended June 30,
(in millions, except per share data)
2004 2003 % Change
---------------------------
Net revenues $ 23,008 $20,831 10.5 %
Cost of sales 8,636 7,991 8.1 %
Excise taxes on products (*) 6,563 5,344 22.8 %
-----------------
Gross profit 7,809 7,496 4.2 %
Marketing, administration and research
costs 3,304 2,928
Domestic tobacco legal settlement - 182
Domestic tobacco headquarters relocation
charges 10 9
International tobacco EC agreement 250 -
Asset impairment and exit costs 152 -
-----------------
Operating companies income 4,093 4,377 (6.5)%
Amortization of intangibles 5 3
General corporate expenses 164 183
Asset impairment and exit costs 8 -
-----------------
Operating income 3,916 4,191 (6.6)%
Interest and other debt expense, net 297 263
-----------------
Earnings before income taxes and minority
interest 3,619 3,928 (7.9)%
Provision for income taxes 963 1,382 (30.3)%
-----------------
Earnings before minority interest 2,656 2,546 4.3 %
Minority interest in earnings and other,
net 29 109
-----------------
Net earnings $ 2,627 $ 2,437 7.8 %
=================
Basic earnings per share (**) $ 1.28 $ 1.20 6.7 %
=================
Diluted earnings per share (**) $ 1.27 $ 1.20 5.8 %
=================
Weighted average number of
shares outstanding - Basic 2,047 2,023 1.2 %
- - Diluted 2,062 2,029 1.6 %
(*) The detail of excise taxes on products sold is as follows:
2004 2003
-----------------
Domestic tobacco $ 958 $ 951
International tobacco 5,605 4,393
-------- -------
Total excise taxes $ 6,563 $ 5,344
======== =======
(**) Basic and diluted earnings per share are computed for each of the
periods presented. Accordingly, the sum of the quarterly earnings per
share amounts may not agree to the year-to-date amounts.
ALTRIA GROUP, INC. Schedule 2
and Subsidiaries
Selected Financial Data by Business Segment
For the Quarters Ended June 30,
(in millions)
North
Domestic International American International
tobacco tobacco food food
---------------------------------------------------
2004 Net Revenues $ 4,582 $ 10,064 $ 5,697 $ 2,508
2003 Net Revenues 4,498 8,388 5,493 2,348
% Change 1.9% 20.0% 3.7% 6.8%
Reconciliation:
- ---------------
2003 Net Revenues $ 4,498 $ 8,388 $ 5,493 $ 2,348
Divested businesses
- 2004 - - - -
Divested businesses
- 2003 - - - (33)
Currency - 709 40 197
Operations 84 967 164 (4)
---------------------------------------------------
2004 Net Revenues $ 4,582 $ 10,064 $ 5,697 $ 2,508
===================================================
Financial
services Total
--------------------------
2004 Net Revenues $ 157 $ 23,008
2003 Net Revenues 104 20,831
% Change 51.0% 10.5%
Reconciliation:
- ---------------
2003 Net Revenues $ 104 $ 20,831
Divested businesses -
2004 - -
Divested businesses -
2003 - (33)
Currency - 946
Operations 53 1,264
--------------------------
2004 Net Revenues $ 157 $ 23,008
==========================
Note: The detail of excise taxes on products sold is as follows:
2004 2003
--------------------------
Domestic tobacco $ 958 $ 951
International
tobacco 5,605 4,393
--------------------------
Total excise taxes $ 6,563 $ 5,344
==========================
Currency increased international tobacco excise taxes by $412 million.
ALTRIA GROUP, INC. Schedule 3
and Subsidiaries
Selected Financial Data by Business Segment
For the Quarters Ended June 30,
(in millions)
North
Domestic International American International
tobacco tobacco food food
---------------------------------------------------
2004 Operating
Companies Income $ 1,212 $ 1,468 $ 1,063 $ 225
2003 Operating
Companies Income 1,013 1,603 1,340 339
% Change 19.6% (8.4)% (20.7)% (33.6)%
Reconciliation:
- ---------------
2003 Operating
Companies Income $ 1,013 $ 1,603 $ 1,340 $ 339
Divested businesses
- 2004 - - - -
Divested businesses
- 2003 - - - (7)
Domestic tobacco
legal settlement
- 2003 182 - - -
Domestic tobacco
headquarters
relocation charges
- 2004 (10) - - -
Domestic tobacco
headquarters
relocation charges
- 2003 9 - - -
International
tobacco EC
agreement - 2004 - (250) - -
Asset impairment
and exit costs
- 2004 - (23) (39) (90)
Implementation
costs - 2004 - - (9) -
Currency - 118 7 19
Operations 18 20 (236) (36)
---------------------------------------------------
2004 Operating
Companies Income $ 1,212 $ 1,468 $ 1,063 $ 225
===================================================
Financial
services Total
--------------------------
2004 Operating
Companies Income $ 125 $ 4,093
2003 Operating
Companies Income 82 4,377
% Change 52.4% (6.5)%
Reconciliation:
- ---------------
2003 Operating
Companies Income $ 82 $ 4,377
Divested businesses
- 2004 - -
Divested businesses
- 2003 - (7)
Domestic tobacco
legal settlement
- 2003 - 182
Domestic tobacco
headquarters
relocation charges
- 2004 - (10)
Domestic tobacco
headquarters
relocation charges
- 2003 - 9
International
tobacco EC
agreement
- 2004 - (250)
Asset impairment
and exit costs
- 2004 - (152)
Implementation
costs - 2004 - (9)
Currency - 144
Operations 43 (191)
--------------------------
2004 Operating
Companies Income $ 125 $ 4,093
==========================
ALTRIA GROUP, INC. Schedule 4
and Subsidiaries
Condensed Statements of Earnings
For the Six Months Ended June 30,
(in millions, except per share data)
2004 2003 % Change
--------------------------------
Net revenues $ 44,847 $ 40,202 11.6 %
Cost of sales 16,720 15,556 7.5 %
Excise taxes on products (*) 12,880 10,231 25.9 %
---------------------
Gross profit 15,247 14,415 5.8 %
Marketing, administration and research
costs 6,511 5,798
Domestic tobacco legal settlement - 182
Domestic tobacco headquarters
relocation charges 20 9
International tobacco EC agreement 250 -
Asset impairment and exit costs 461 -
---------------------
Operating companies income 8,005 8,426 (5.0)%
Amortization of intangibles 9 5
General corporate expenses 328 366
Asset impairment and exit costs 24 -
---------------------
Operating income 7,644 8,055 (5.1)%
Interest and other debt expense, net 597 546
---------------------
Earnings before income taxes and
minority interest 7,047 7,509 (6.2)%
Provision for income taxes 2,149 2,643 (18.7)%
---------------------
Earnings before minority interest 4,898 4,866 0.7 %
Minority interest in earnings, net 77 243
---------------------
Net earnings $ 4,821 $ 4,623 4.3 %
=====================
Basic earnings per share (**) $ 2.36 $ 2.28 3.5 %
=====================
Diluted earnings per share (**) $ 2.34 $ 2.27 3.1 %
=====================
Weighted average number of
shares outstanding - Basic 2,044 2,027 0.8 %
- Diluted 2,061 2,035 1.3 %
(*) The detail of excise taxes on products sold is as follows:
2004 2003
---------------------
Domestic tobacco $ 1,810 $ 1,817
International tobacco 11,070 8,414
---------------------
Total excise taxes $ 12,880 $ 10,231
=====================
(**) Basic and diluted earnings per share are computed for each of the
periods presented. Accordingly, the sum of the quarterly earnings per
share amounts may not agree to the year-to-date amounts.
ALTRIA GROUP, INC. Schedule 5
and Subsidiaries
Selected Financial Data by Business Segment
For the Six Months Ended June 30,
(in millions)
North
Domestic International American International
tobacco tobacco food food
---------------------------------------------------
2004 Net Revenues $ 8,586 $ 20,107 $ 11,096 $ 4,802
2003 Net Revenues 8,315 16,467 10,759 4,441
% Change 3.3% 22.1% 3.1% 8.1%
Reconciliation:
- ---------------
2003 Net Revenues $ 8,315 $ 16,467 $ 10,759 $ 4,441
Divested businesses
- 2004 - - - -
Divested businesses
- 2003 - - - (64)
Currency - 1,701 112 431
Operations 271 1,939 225 (6)
---------------------------------------------------
2004 Net Revenues $ 8,586 $ 20,107 $ 11,096 $ 4,802
===================================================
Financial
services Total
--------------------------
2004 Net Revenues $ 256 $ 44,847
2003 Net Revenues 220 40,202
% Change 16.4% 11.6%
Reconciliation:
- ---------------
2003 Net Revenues $ 220 $ 40,202
Divested businesses
- 2004 - -
Divested businesses
- 2003 - (64)
Currency - 2,244
Operations 36 2,465
--------- -----------
2004 Net Revenues $ 256 $ 44,847
========= ===========
Note: The detail of excise taxes on products sold is as follows:
2004 2003
--------------------------
Domestic tobacco $ 1,810 $ 1,817
International
tobacco 11,070 8,414
--------------------------
Total excise taxes $ 12,880 $ 10,231
==========================
Currency increased international tobacco excise taxes by $998 million.
ALTRIA GROUP, INC. Schedule 6
and Subsidiaries
Selected Financial Data by Business Segment
For the Six Months Ended June 30,
(in millions)
North
Domestic International American International
tobacco tobacco food food
---------------------------------------------------
2004 Operating
Companies Income $ 2,182 $ 3,303 $ 1,909 $ 416
2003 Operating
Companies Income 1,755 3,293 2,613 600
% Change 24.3% 0.3% (26.9)% (30.7)%
Reconciliation:
- -------------------
2003 Operating
Companies Income $ 1,755 $ 3,293 $ 2,613 $ 600
Divested businesses
- 2004 - - - -
Divested businesses
- 2003 - - - (12)
Domestic tobacco
legal settlement
- 2003 182 - - -
Domestic tobacco
headquarters
relocation charges
- 2004 (20) - - -
Domestic tobacco
headquarters
relocation charges
- 2003 9 - - -
International
tobacco EC
agreement - 2004 - (250) - -
Asset impairment
and exit costs
- 2004 (1) (23) (301) (136)
Implementation
costs - 2004 - - (9) (1)
Currency - 361 18 43
Operations 257 (78) (412) (78)
---------------------------------------------------
2004 Operating
Companies Income $ 2,182 $ 3,303 $ 1,909 $ 416
===================================================
Financial
services Total
--------------------------
2004 Operating
Companies Income $ 195 $ 8,005
2003 Operating
Companies Income 165 8,426
% Change 18.2% (5.0)%
Reconciliation:
- ---------------
2003 Operating
Companies Income $ 165 $ 8,426
Divested businesses
- 2004 - -
Divested businesses
- 2003 - (12)
Domestic tobacco
legal settlement
- 2003 - 182
Domestic tobacco
headquarters
relocation charges
- 2004 - (20)
Domestic tobacco
headquarters
relocation charges
- 2003 - 9
International
tobacco EC
agreement - 2004 - (250)
Asset impairment
and exit costs
- 2004 - (461)
Implementation
costs - 2004 - (10)
Currency - 422
Operations 30 (281)
--------------------------
2004 Operating
Companies Income $ 195 $ 8,005
==========================
ALTRIA GROUP, INC. Schedule 7
and Subsidiaries
Net Earnings and Diluted Earnings Per Share
For the Quarters Ended June 30,
($ in millions, except per share data)
Net Diluted
Earnings E.P.S. (*)
------------ ------------
2004 $ 2,627 $ 1.27
2003 $ 2,437 $ 1.20
% Change 7.8 % 5.8 %
Reconciliation:
- ---------------
2003 Reported $ 2,437 $ 1.20
2003 Domestic tobacco legal settlement 118 0.06
2003 Domestic tobacco headquarters
relocation charges 6 -
------------ ------------
124 0.06
------------ ------------
2004 Domestic tobacco headquarters
relocation charges (6) -
2004 International tobacco EC agreement (161) (0.08)
2004 Corporate asset impairment and
exit costs (5) -
2004 Asset impairment, exit and
implementation costs, net of
minority interest impact (89) (0.05)
------------ ------------
(261) (0.13)
------------ ------------
Currency 93 0.05
Change in shares - (0.02)
Change in tax rate 308 0.15
Operations (74) (0.04)
------------ ------------
2004 Reported $ 2,627 $ 1.27
============ ============
(*) Basic and diluted earnings per share are computed for each of the
periods presented. Accordingly, the sum of the quarterly earnings per
share amounts may not agree to the year-to-date amounts.
ALTRIA GROUP, INC. Schedule 8
and Subsidiaries
Net Earnings and Diluted Earnings Per Share
For the Six Months Ended June 30,
($ in millions, except per share data)
Net Diluted
Earnings E.P.S. (*)
------------ ------------
2004 $ 4,821 $ 2.34
2003 $ 4,623 $ 2.27
% Change 4.3 % 3.1 %
Reconciliation:
- ---------------
2003 Reported $ 4,623 $ 2.27
2003 Domestic tobacco legal settlement 118 0.06
2003 Domestic tobacco headquarters
relocation charges 6 -
------------ ------------
124 0.06
------------ ------------
2004 Domestic tobacco headquarters
relocation charges (13) (0.01)
2004 International tobacco EC agreement (161) (0.08)
2004 Corporate asset impairment and exit
costs (15) (0.01)
2004 Asset impairment, exit and
implementation costs, net of
minority interest impact (259) (0.12)
------------ ------------
(448) (0.22)
------------ ------------
Currency 273 0.13
Change in shares - (0.03)
Change in tax rate 331 0.16
Operations (82) (0.03)
------------ ------------
2004 Reported $ 4,821 $ 2.34
============ ============
(*) Basic and diluted earnings per share are computed for each of the
periods presented. Accordingly, the sum of the quarterly earnings per
share amounts may not agree to the year-to-date amounts.
ALTRIA GROUP, INC. Schedule 9
and Subsidiaries
Condensed Balance Sheets
(in millions, except ratios)
June 30, December 31,
2004 2003
-------------- --------------
Assets
- ------
Cash and cash equivalents $ 5,031 $ 3,777
All other current assets 17,116 17,605
Property, plant and equipment, net 15,773 16,067
Goodwill 28,316 27,742
Other intangible assets, net 11,442 11,803
Other assets 12,047 10,641
-------------- --------------
Total consumer products assets 89,725 87,635
Total financial services assets 8,196 8,540
-------------- --------------
Total assets $ 97,921 $ 96,175
============== ==============
Liabilities and Stockholders' Equity
- ------------------------------------
Short-term borrowings $ 2,576 $ 1,715
Current portion of long-term debt 1,749 1,661
Accrued settlement charges 2,338 3,530
All other current liabilities 14,391 14,487
Long-term debt 18,488 18,953
Deferred income taxes 7,479 7,295
Other long-term liabilities 14,830 15,137
-------------- --------------
Total consumer products liabilities 61,851 62,778
Total financial services liabilities 8,295 8,320
-------------- --------------
Total liabilities 70,146 71,098
Total stockholders' equity 27,775 25,077
-------------- --------------
Total liabilities and
stockholders' equity $ 97,921 $ 96,175
============== ==============
Total consumer products debt $ 22,813 $ 22,329
Debt/equity ratio - consumer products 0.82 0.89
Total debt $ 24,884 $ 24,539
Total debt/equity ratio 0.90 0.98