EXHIBIT 99.1
Contact: Nicholas M. Rolli
(917) 663-3460
Timothy R. Kellogg
(917) 663-2759
ALTRIA GROUP, INC. REPORTS 2004 THIRD-QUARTER RESULTS
Diluted Earnings Per Share Up 5.7% to $1.29
Net Earnings Up 6.3% to $2.6 Billion
Comparisons Affected by Items Detailed in Attached Reconciliation on Schedule 7
Projects Diluted Earnings Per Share for the Full Year 2004
In a Range of $4.55 to $4.60
NEW YORK--(BUSINESS WIRE)--Oct. 19, 2004-Altria Group, Inc.
(NYSE: MO) today announced that third-quarter 2004 diluted earnings per
share were up 5.7% to $1.29, reflecting items as detailed in the attached
reconciliation on Schedule 7, including higher equity income from SABMiller
(which is included in minority interest in earnings and other, net) as a result
of one-time gains from the sale of investments.
"Our businesses continued to exhibit solid improvement in the
third quarter," said Louis C. Camilleri, chairman and chief executive
officer of Altria Group, Inc. "Our domestic tobacco business achieved
robust retail share gains, driven by Marlboro. Our international
tobacco business delivered strong volume growth of 5.1%, driven by
gains in most regions, and Marlboro's total international volume
increased, with widespread share gains in many key markets."
"Kraft reported strong top-line growth," Mr. Camilleri said. "Its
Sustainable Growth Plan is on track, and we are witnessing solid
revenue momentum, particularly in North America."
On October 11, 2004, the U.S. Senate followed the U.S. House in
approving a bill that eliminated the federal tobacco program, but at
the same time failed to provide the Food and Drug Administration (FDA)
with any authority to regulate tobacco products. Commenting on that
action, Mr. Camilleri said, "While we are very disappointed that the
legislation does not include FDA regulation of tobacco products, the
elimination of the current federal tobacco program will enhance the
long-term viability of U.S. tobacco growing by removing the non-value
added cost of the federal quota and price support program that burdens
the current system. With the price of U.S. tobacco becoming more
competitive in the world market and Philip Morris USA's quota buyout
payments being partially offset by already scheduled payments to the
National Tobacco Grower Settlement Trust, we do not anticipate that
the legislation will have a material impact on Altria's consolidated
results in 2005 and beyond."
Altria Group narrowed its target for diluted earnings per share
for the full year 2004 to a range of $4.55 to $4.60, and believes it
will achieve the high end of that range should current exchange rates
hold. This includes charges for the Kraft restructuring, charges for
the agreement that Philip Morris International signed on July 9 with
the European Community and the one-time tax benefits reported in the
second and third quarters. It excludes the impact of any Kraft
divestitures and any potential short-term impact of the recently
passed tobacco buyout legislation, as the final regulations have yet
to be issued by the U.S. Department of Agriculture. 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 October 19, 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 Third-Quarter Results
Net revenues for the third quarter of 2004, as detailed in the
attached reconciliation on Schedule 2, increased 8.5% versus the third
quarter 2003 to $22.7 billion, due to increases from Altria's tobacco
and food businesses, and favorable currency of $417 million.
Operating income decreased 1.5% to $4.2 billion, due primarily to
charges for asset impairment, exit and implementation costs related to
the business restructuring component of Kraft's Sustainable Growth
Plan. Also affecting operating income comparisons were higher results
at Philip Morris International, favorable currency of $74 million and
other items described in the attached reconciliation of operating
companies income on Schedule 3.
Net earnings increased 6.3% to $2.6 billion, due primarily to
higher equity income from SABMiller, 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 34.5% in the third quarter of 2003 to 33.5% in the
third quarter of 2004, reflecting the favorable resolution of an
outstanding tax item at Kraft. During the quarter, Altria recorded
income of $14 million related to the new Medicare prescription drug
act.
In the third quarter of 2004, Altria Group, Inc. increased its
quarterly dividend 7.4% to $0.73 per common share. The new dividend
represents an annualized rate of $2.92 per common share and marks the
37th time in 35 years that the dividend has been increased.
DOMESTIC TOBACCO
2004 Third-Quarter Results
Philip Morris USA Inc., Altria Group, Inc.'s domestic tobacco
business, delivered strong market share performance, with total retail
share growing 1.1 share points to 49.9%, driven by Marlboro. Philip
Morris USA's cigarette shipment volume decreased 1.0% to 48.3 billion
units, while its premium mix improved by 0.1 percentage point to
91.4%.
Operating companies income was stable at $1.1 billion, primarily
reflecting lower volume and a provision for an individual smoking case
in California, offset by lower charges in 2004 related to moving PM
USA's headquarters to Richmond, Virginia.
The increase in Philip Morris USA's total retail share in the
third quarter of 2004 was driven by a 1.5 share point gain in
Marlboro. Retail share for Parliament was down slightly, while share
for Virginia Slims and Basic was flat, as shown in the following
table:
Philip Morris USA Quarterly Retail Share*
-----------------------------------------
Q3 2004 Q3 2003 Change
---------- ---------- ----------
Marlboro 39.6% 38.1% 1.5 pp
Parliament 1.7% 1.8% - 0.1 pp
Virginia Slims 2.4% 2.4% 0.0 pp
Basic 4.2% 4.2% 0.0 pp
---------- ---------- ----------
Focus Brands 47.9% 46.5% 1.4 pp
Other Philip Morris USA 2.0% 2.3% -0.3 pp
---------- ---------- ----------
Total Philip Morris USA 49.9% 48.8% 1.1 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
1.0 share point to 62.3% in the third quarter of 2004. Its share of
the discount segment increased 0.2 share points to 16.0%.
Recent product introductions met PM USA's initial expectations,
including a new line extension, Virginia Slims Ultra Lights 120mm box,
which was launched nationally at retail during the third quarter, and
Parliament Lights 100mm round corner box, which was expanded to
national distribution in the third quarter. Marlboro Menthol 72mm, a
premium-priced cigarette launched in the first quarter of 2004,
continued to perform well.
On October 5, 2004, PM USA announced that it will invest about
$200 million over the next three years to modernize and improve the
efficiency of its Cabarrus County, North Carolina, cigarette
manufacturing facility.
INTERNATIONAL TOBACCO
2004 Third-Quarter Results
Cigarette shipment volume for Philip Morris International Inc.
(PMI), Altria Group, Inc.'s international tobacco business, was 199.1
billion units in the third quarter of 2004, an increase of 5.1%.
Excluding the impact of acquisitions, shipments were up 2.9%. Solid
gains in most key markets were partially offset by continued weakness
in the high-margin markets of France and Germany, where cigarette
industry volumes declined and volume for other tobacco products
increased versus the third quarter of last year.
Operating companies income for PMI increased 7.0% to $1.8 billion
for the third quarter, due primarily to favorable currency of $64
million, the impact of acquisitions and higher volume and pricing,
partially offset by unfavorable mix, higher marketing costs and
expenses related to the cooperation agreement with the EC.
During the third quarter of 2004, PMI achieved widespread market
share gains, including increases in the top income markets of Austria,
Belgium, Egypt, France, Greece, Japan, Malaysia, the Netherlands,
Poland, Russia, Saudi Arabia, Spain, Turkey and the Ukraine.
Total Marlboro shipments grew 1.1% to 81.8 billion units in the
third quarter of 2004 due to gains in most regions, partially offset
by France and Germany. Gains for Marlboro were widespread, with share
up in Belgium, the Czech Republic, Egypt, Korea, Malaysia, Mexico,
Netherlands, the Philippines, Poland, Portugal, Russia, Spain, Turkey,
the Ukraine and the United Kingdom.
In Western Europe, shipments declined 7.5% due mainly to France
and Germany. However, PMI's market share in Western Europe was up 0.1
share point to 38.9%.
In France, the total cigarette market declined 24.5%, although
tobacco consumption, including fine-cut, was down an estimated 20.5%.
Despite PMI's cigarette shipment volume decline of 24.5% versus the
third quarter of 2003, its market share increased 0.9 points to 40.0%
due to the success of Basic and the Philip Morris brand. In September,
PMI entered the growing and profitable fine-cut segment with the
launch of roll-your-own Chesterfield.
In Germany, the combined consumption of cigarettes, fine-cut,
tobacco portions and cigarillos declined 8.1% versus the third quarter
of last year. Total industry cigarette volume declined 18.1%, as
consumers continued to switch to low-price tobacco products,
particularly tobacco portions. PMI's cigarette shipment volume was
down 18.7% and total market share declined 0.2 percentage points to
36.5%. Marlboro, the industry leader in Germany with a share of 29.4%,
was down 0.3 points. This month, PMI is introducing a new line
extension, Marlboro Blend 29, to further strengthen the franchise. PMI
also recently entered the rapidly growing tobacco portions segment
with the Marlboro and Next brands, and combined share reached 8.3% of
the tobacco portions segment. Volume and share were constrained by a
temporary capacity shortfall.
In Italy, shipments were down 1.3% and PMI's share declined 2.1
points to 51.0%, mainly due to low-price Diana and, to a lesser
extent, Marlboro. However, PMI's market share since April has been
relatively stable on a sequential basis. PMI launched L&M in May to
establish a presence in the low-price international brands segment in
Italy, and the brand achieved a market share of 0.7% in September.
In Spain, volume rose 7.5% and share increased 0.8 share points to
36.9%, due to the strong performance of Marlboro.
In Central Europe, volume rose 22.5%, due mainly to Greece and
Serbia, which benefited from the impact of acquisitions, and gains in
Poland, the Slovak Republic and Romania. Absent the impact of
acquisitions, volume was up 9.8%. Region-wide, Marlboro shipments grew
8.7% in the third quarter. Bond Street also grew strongly, aided by
its introduction earlier this year in Hungary. In worldwide duty-free,
volume increased 1.6%, reflecting improving trends in the travel
industry.
In Eastern Europe, the Middle East and Africa, volume grew 10.2%,
due primarily to gains in Russia, Turkey and the Ukraine. In Russia,
volume rose 6.7% and PMI's market share continued to advance, with
share up 1.2 points to 26.6%, due to Parliament, Marlboro, L&M, Next
and Chesterfield. In Turkey, volume was up 17.2% and PMI's market
share grew 4.8 points to 37.8%, due to the continued strong
performance of L&M and the success of Muratti, which was launched last
year, as well as the renewed growth of Marlboro, which was up a full
share point to 10.0%. In the Ukraine, volume increased 21.6%, aided by
higher sales of Marlboro, L&M and Next.
In Asia, shipments were up 9.9%, due to gains in Japan, Korea,
Malaysia, the Philippines and Thailand. In Korea, volume rose 13.7%,
benefiting from the growth of Marlboro Ultra Lights and the success of
Elan, a premium-price slim cigarette launched in early 2004. In the
Philippines, volume rose due to Marlboro's strong growth and the
impact of acquired volume. In Thailand, shipments advanced 48.0% due
to the continued growth of both Marlboro and L&M.
In Japan, PMI's volume was higher by 2.7%, reflecting the timing
of shipments. PMI's share continued to grow, increasing 0.4 points to
24.6%, driven by the Philip Morris brand and Virginia Slims,
benefiting from packaging upgrades and new line extensions.
In Latin America, volume declined 3.6%, due mainly to Argentina
and Mexico. In Mexico, shipments in the third quarter declined 2.2%,
due to higher trade purchasing in June 2004 in advance of a price
increase in early July. However, Marlboro continued to advance, with
the brand's share in Mexico up 0.6 points to 44.8% in the third
quarter. In Brazil, PMI recently launched Next in the low-price
segment. In September, PMI announced its intention to acquire
Coltabaco, the largest tobacco company in Colombia with a 48% market
share, and expects to close the transaction by year-end.
FOOD
Yesterday, Kraft Foods Inc. (Kraft) reported 2004 third-quarter
results. Kraft's net revenues were up 4.7%, driven by new products,
the impact of increased marketing spending, favorable currency of $85
million and commodity-driven pricing. Kraft's volume was up 3.0%, as
ongoing volume growth of 3.2% (including 2.4 percentage points of
growth from acquisitions) was partially offset by the impact of
divestitures. Volume strength across key North American businesses and
gains in Germany and Brazil were partially offset by competitive
challenges in the U.S. confectionery category and weakness in several
international markets, particularly in France and Venezuela. Operating
income decreased 11.1% to $1.3 billion, as higher commodity costs,
increased in-market spending, asset impairment charges and exit and
implementation costs for the previously announced restructuring
program, unfavorable net impact related to the sale of businesses, and
increased post-employment benefit costs and restricted stock expense
were partially offset by favorable volume/mix, pricing, restructuring
savings and favorable currency of $10 million.
NORTH AMERICAN FOOD
2004 Third-Quarter Results
For the third quarter of 2004, Kraft North America Commercial net
revenues grew 5.2%, as higher volumes including acquisitions,
commodity-driven pricing on cheese and foodservice, and favorable
currency of $13 million were partially offset by increased promotional
spending. Volume was up 4.5% (including 3.5 percentage points of
growth from acquisitions) with growth across much of the portfolio
including cheese, biscuits, snack nuts, meat and pizza, driven by
increased marketing spending and new products, partially offset by the
impact of trade inventory reductions in ready-to-drink beverages and
challenges in confections. Operating companies income declined 4.4% to
$1.1 billion, due to increased commodity costs, higher marketing
spending, increased post-employment benefit costs, and asset
impairment charges and exit and implementation costs of $19 million
for the restructuring program, partially offset by the contributions
from volume growth and pricing.
INTERNATIONAL FOOD
2004 Third-Quarter Results
For the third quarter of 2004, net revenues for Kraft
International Commercial grew 3.6%, driven by favorable currency of
$72 million, higher ongoing volume and positive mix, partially offset
by the impact of divestitures and net price reductions. Volume was
down slightly, due to the impact of divestitures and a decrease in a
few key Latin American markets, where volume declined due to trade
inventory reductions and price competition, partially offset by solid
overall growth in Europe, Middle East and Africa despite softness in
France. Operating companies income decreased 32.2% to $227 million, as
asset impairment charges and exit and implementation costs of $42
million for the restructuring program in 2004, unfavorable net impact
related to the sale of businesses of $31 million, higher marketing
spending, increased product costs and the impact of divestitures were
partially offset by favorable mix and favorable currency of $7
million.
FINANCIAL SERVICES
2004 Third-Quarter Results
Operating companies income for Philip Morris Capital Corporation
(PMCC) decreased 27.6% to $55 million for the third quarter of 2004,
reflecting 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
approximately 85% 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 June 30, 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 September 30,
(in millions, except per share data)
2004 2003 % Change
-----------------------------
Net revenues $ 22,728 $ 20,939 8.5 %
Cost of sales 8,421 7,900 6.6 %
Excise taxes on products (*) 6,751 5,637 19.8 %
-------------------
Gross profit 7,556 7,402 2.1 %
Marketing, administration and research
costs 3,154 2,991
Domestic tobacco headquarters relocation
charges 5 27
Asset impairment and exit costs 46 6
Losses (gains) on sales of businesses 8 (23)
-------------------
Operating companies income 4,343 4,401 (1.3)%
Amortization of intangibles 3 2
General corporate expenses 165 176
Asset impairment and exit costs 17 -
-------------------
Operating income 4,158 4,223 (1.5)%
Interest and other debt expense, net 288 301
-------------------
Earnings before income taxes and
minority interest 3,870 3,922 (1.3)%
Provision for income taxes 1,295 1,353 (4.3)%
-------------------
Earnings before minority interest 2,575 2,569 0.2 %
Minority interest in earnings and other,
net (73) 79
-------------------
Net earnings $ 2,648 $ 2,490 6.3 %
===================
Per share data:
Basic earnings per share (**) $ 1.29 $ 1.23 4.9 %
===================
Diluted earnings per share (**) $ 1.29 $ 1.22 5.7 %
===================
Weighted average number of
shares outstanding - Basic 2,048 2,027 1.0 %
- - Diluted 2,060 2,036 1.2 %
(*) The detail of excise taxes on products sold is as follows:
2004 2003
-------------------
Domestic tobacco $ 954 $ 964
International tobacco 5,797 4,673
-------------------
Total excise taxes $ 6,751 $ 5,637
===================
(**) 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 September 30,
(in millions)
North
Domestic International American International
tobacco tobacco food food
----------------------------------------------------
2004 Net Revenues $ 4,505 $ 10,316 $ 5,471 $ 2,360
2003 Net Revenues 4,440 8,912 5,203 2,277
% Change 1.5% 15.8% 5.2% 3.6%
Reconciliation:
- ---------------
2003 Net Revenues $ 4,440 $ 8,912 $ 5,203 $ 2,277
Divested
businesses - 2004 - - - 4
Divested
businesses - 2003 - - - (30)
Implementation -
2004 - - (9) -
Currency - 332 13 72
Operations 65 1,072 264 37
----------------------------------------------------
2004 Net Revenues $ 4,505 $ 10,316 $ 5,471 $ 2,360
====================================================
Financial
services Total
--------------------------
2004 Net Revenues $ 76 $ 22,728
2003 Net Revenues 107 20,939
% Change (29.0)% 8.5%
Reconciliation:
- ---------------
2003 Net Revenues $ 107 $ 20,939
Divested
businesses - 2004 - 4
Divested
businesses - 2003 - (30)
Implementation -
2004 - (9)
Currency - 417
Operations (31) 1,407
--------------------------
2004 Net Revenues $ 76 $ 22,728
==========================
Note: The detail of excise taxes on products sold is as follows:
2004 2003
--------------------------
Domestic tobacco $ 954 $ 964
International
tobacco 5,797 4,673
--------------------------
Total excise taxes $ 6,751 $ 5,637
==========================
Currency increased international tobacco excise taxes by $181 million.
ALTRIA GROUP, INC. Schedule 3
and Subsidiaries
Selected Financial Data by Business Segment
For the Quarters Ended September 30,
(in millions)
North
Domestic International American International
tobacco tobacco food food
----------------------------------------------------
2004 Operating
Companies Income $ 1,147 $ 1,840 $ 1,074 $ 227
2003 Operating
Companies Income 1,147 1,719 1,124 335
% Change - 7.0% (4.4)% (32.2)%
Reconciliation:
- ---------------
2003 Operating
Companies Income $ 1,147 $ 1,719 $ 1,124 $ 335
Divested
businesses - 2004 - - - (1)
Divested
businesses - 2003 - - - (3)
Domestic tobacco
headquarters
relocation
charges - 2004 (5) - - -
Domestic tobacco
headquarters
relocation
charges - 2003 27 - - -
Asset impairment
and exit costs -
2004 - (1) (6) (39)
Asset impairment
and exit costs -
2003 - - - 6
Loss on sales of
businesses - 2004 - - - (8)
Gains on sales of
businesses - 2003 - - - (23)
Implementation
costs - 2004 - - (13) (3)
Currency - 64 3 7
Operations (22) 58 (34) (44)
----------------------------------------------------
2004 Operating
Companies Income $ 1,147 $ 1,840 $ 1,074 $ 227
====================================================
Financial
services Total
--------------------------
2004 Operating
Companies Income $ 55 $ 4,343
2003 Operating
Companies Income 76 4,401
% Change (27.6)% (1.3)%
Reconciliation:
- ---------------
2003 Operating
Companies Income $ 76 $ 4,401
Divested
businesses - 2004 - (1)
Divested
businesses - 2003 - (3)
Domestic tobacco
headquarters
relocation
charges - 2004 - (5)
Domestic tobacco
headquarters
relocation
charges - 2003 - 27
Asset impairment
and exit costs -
2004 - (46)
Asset impairment
and exit costs -
2003 - 6
Loss on sales of
businesses - 2004 - (8)
Gains on sales of
businesses - 2003 - (23)
Implementation
costs - 2004 - (16)
Currency - 74
Operations (21) (63)
--------------------------
2004 Operating
Companies Income $ 55 $ 4,343
==========================
ALTRIA GROUP, INC. Schedule 4
and Subsidiaries
Condensed Statements of Earnings
For the Nine Months Ended September 30,
(in millions, except per share data)
2004 2003 % Change
-------------------------------------
Net revenues $ 67,575 $ 61,141 10.5 %
Cost of sales 25,141 23,456 7.2 %
Excise taxes on products (*) 19,631 15,868 23.7 %
--------------------------
Gross profit 22,803 21,817 4.5 %
Marketing, administration and
research costs 9,665 8,789
Domestic tobacco headquarters
relocation charges 25 36
Domestic tobacco legal settlement - 182
International tobacco E.C.
agreement 250 -
Asset impairment and exit costs 507 6
Losses (gains) on sales of
businesses 8 (23)
--------------------------
Operating companies income 12,348 12,827 (3.7)%
Amortization of intangibles 12 7
General corporate expenses 493 542
Asset impairment and exit costs 41 -
--------------------------
Operating income 11,802 12,278 (3.9)%
Interest and other debt expense,
net 885 847
--------------------------
Earnings before income taxes and
minority interest 10,917 11,431 (4.5)%
Provision for income taxes 3,444 3,996 (13.8)%
--------------------------
Earnings before minority interest 7,473 7,435 0.5 %
Minority interest in earnings,
net 4 322
--------------------------
Net earnings $ 7,469 $ 7,113 5.0 %
==========================
Per share data:
Basic earnings per share (**) $ 3.65 $ 3.51 4.0 %
==========================
Diluted earnings per share (**) $ 3.62 $ 3.50 3.4 %
==========================
Weighted average number of
shares outstanding - Basic 2,045 2,027 0.9 %
- - Diluted 2,061 2,035 1.3 %
(*) The detail of excise taxes on products sold is as follows:
2004 2003
--------------------------
Domestic tobacco $ 2,764 $ 2,781
International tobacco 16,867 13,087
--------------------------
Total excise taxes $ 19,631 $ 15,868
==========================
(**) Basic and diluted earnings per share are computed for each of the
periods presented. Accordingly, the sum of the quarterly earnings
per share amounts may not agree to the year-to-date amounts.
ALTRIA GROUP, INC. Schedule 5
and Subsidiaries
Selected Financial Data by Business Segment
For the Nine Months Ended September 30,
(in millions)
North
Domestic International American International
tobacco tobacco food food
----------------------------------------------------
2004 Net Revenues $ 13,091 $ 30,423 $ 16,567 $ 7,162
2003 Net Revenues 12,755 25,379 15,962 6,718
% Change 2.6% 19.9% 3.8% 6.6%
Reconciliation:
- ---------------
2003 Net Revenues $ 12,755 $ 25,379 $ 15,962 $ 6,718
Divested
businesses - 2004 - - - 19
Divested
businesses - 2003 - - - (111)
Implementation -
2004 - - (9) -
Currency - 2,033 125 503
Operations 336 3,011 489 33
----------------------------------------------------
2004 Net Revenues $ 13,091 $ 30,423 $ 16,567 $ 7,162
====================================================
Financial
services Total
--------------------------
2004 Net Revenues $ 332 $ 67,575
2003 Net Revenues 327 61,141
% Change 1.5% 10.5%
Reconciliation:
- ---------------
2003 Net Revenues 327 61,141
Divested
businesses - 2004 - 19
Divested
businesses - 2003 - (111)
Implementation -
2004 - (9)
Currency - 2,661
Operations 5 3,874
--------------------------
2004 Net Revenues $ 332 $ 67,575
==========================
Note: The detail of excise taxes on products sold is as follows:
2004 2003
--------------------------
Domestic tobacco $ 2,764 $ 2,781
International
tobacco 16,867 13,087
--------------------------
Total excise taxes $ 19,631 $ 15,868
==========================
Currency increased international tobacco excise taxes by $1,179
million.
ALTRIA GROUP, INC. Schedule 6
and Subsidiaries
Selected Financial Data by Business Segment
For the Nine Months Ended September 30,
(in millions)
North
Domestic International American International
tobacco tobacco food food
----------------------------------------------------
2004 Operating
Companies Income $ 3,329 $ 5,143 $ 2,983 $ 643
2003 Operating
Companies Income 2,902 5,012 3,737 935
% Change 14.7% 2.6% (20.2)% (31.2)%
Reconciliation:
- ---------------
2003 Operating
Companies Income $ 2,902 $ 5,012 $ 3,737 $ 935
Divested
businesses - 2004 - - - 1
Divested
businesses - 2003 - - - (17)
Domestic tobacco
headquarters
relocation
charges - 2004 (25) - - -
Domestic tobacco
headquarters
relocation
charges - 2003 36 - - -
Domestic tobacco
legal settlement
- 2003 182 - - -
International
tobacco EC
agreement - 2004 - (250) - -
Asset impairment
and exit costs -
2004 (1) (24) (307) (175)
Asset impairment
and exit costs -
2003 - - - 6
Loss on sales of
businesses - 2004 - - - (8)
Gains on sales of
businesses - 2003 - - - (23)
Implementation
costs - 2004 - - (22) (4)
Currency - 425 21 51
Operations 235 (20) (446) (123)
----------------------------------------------------
2004 Operating
Companies Income $ 3,329 $ 5,143 $ 2,983 $ 643
====================================================
Financial
services Total
--------------------------
2004 Operating
Companies Income $ 250 $ 12,348
2003 Operating
Companies Income 241 12,827
% Change 3.7% (3.7)%
Reconciliation:
- ---------------
2003 Operating
Companies Income $ 241 $ 12,827
Divested
businesses - 2004 - 1
Divested
businesses - 2003 - (17)
Domestic tobacco
headquarters
relocation
charges - 2004 - (25)
Domestic tobacco
headquarters
relocation
charges - 2003 - 36
Domestic tobacco
legal settlement
- 2003 - 182
International
tobacco EC
agreement - 2004 - (250)
Asset impairment
and exit costs -
2004 - (507)
Asset impairment
and exit costs -
2003 - 6
Loss on sales of
businesses - 2004 - (8)
Gains on sales of
businesses - 2003 - (23)
Implementation
costs - 2004 - (26)
Currency - 497
Operations 9 (345)
--------------------------
2004 Operating
Companies Income $ 250 $ 12,348
==========================
ALTRIA GROUP, INC. Schedule 7
and Subsidiaries
Net Earnings and Diluted Earnings Per Share
For the Quarters Ended September 30,
($ in millions, except per share data)
Diluted
Net Earnings E.P.S. (*)
------------ ------------
2004 $ 2,648 $ 1.29
2003 $ 2,490 $ 1.22
% Change 6.3 % 5.7 %
Reconciliation:
- ---------------
2003 Reported $ 2,490 $ 1.22
2003 Domestic tobacco headquarters
relocation charges 17 0.01
2003 Gains on sales of businesses, net of
minority interest impact (13) -
2003 Asset impairment, and exit costs,
net of minority interest impact 3 -
------------ ------------
7 0.01
------------ ------------
2004 Domestic tobacco headquarters
relocation charges (3) -
2004 Loss on sales of businesses, net of
minority interest impact (4) -
2004 Corporate asset impairment and exit
costs (11) -
2004 Asset impairment, exit and
implementation costs, net of minority
interest impact (38) (0.02)
------------ ------------
(56) (0.02)
------------ ------------
Currency 48 0.02
Change in shares - (0.02)
Change in tax rate 41 0.02
Operations (**) 118 0.06
------------ ------------
2004 Reported $ 2,648 $ 1.29
============ ============
(*) 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.
(**) includes $0.07 per share related to lower minority interest in
earnings and other, net, reflecting lower net earnings at Kraft,
and $0.05 of one-time gains from sales of investments at
SABMiller.
ALTRIA GROUP, INC. Schedule 8
and Subsidiaries
Net Earnings and Diluted Earnings Per Share
For the Nine Months Ended September 30,
($ in millions, except per share data)
Diluted
Net Earnings E.P.S. (*)
------------ ------------
2004 $ 7,469 $ 3.62
2003 $ 7,113 $ 3.50
% Change 5.0 % 3.4 %
Reconciliation:
- ---------------
2003 Reported $ 7,113 $ 3.50
2003 Domestic tobacco legal settlement 118 0.06
2003 Domestic tobacco headquarters
relocation charges 23 0.01
2003 Gains on sales of businesses, net of
minority interest impact (13) (0.01)
2003 Asset impairment and exit costs, net
of minority interest impact 3 -
------------ ------------
131 0.06
------------ ------------
2004 Domestic tobacco headquarters
relocation charges (16) (0.01)
2004 International tobacco EC agreement (161) (0.08)
2004 Loss on sales of businesses, net of
minority interest impact (4) -
2004 Corporate asset impairment and exit
costs (26) (0.01)
2004 Asset impairment, exit and
implementation costs, net of minority
interest impact (297) (0.15)
------------ ------------
(504) (0.25)
------------ ------------
Currency 321 0.16
Change in shares - (0.05)
Change in tax rate 372 0.18
Operations** 36 0.02
------------ ------------
2004 Reported $ 7,469 $ 3.62
============ ============
(*) 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.
(**) includes $0.13 per share related to lower minority interest in
earnings and other, net, reflecting lower net earnings at Kraft,
and $0.05 of one-time gains from sales of investments at
SABMiller.
ALTRIA GROUP, INC. Schedule 9
and Subsidiaries
Condensed Balance Sheets
(in millions, except ratios)
September 30, December 31,
2004 2003
------------- -------------
Assets
- ------
Cash and cash equivalents $ 6,669 $ 3,777
All other current assets 17,629 17,605
Property, plant and equipment, net 15,832 16,067
Goodwill 28,378 27,742
Other intangible assets, net 11,535 11,803
Other assets 12,198 10,641
------------- -------------
Total consumer products assets 92,241 87,635
Total financial services assets 8,003 8,540
------------- -------------
Total assets $ 100,244 $ 96,175
============= =============
Liabilities and Stockholders' Equity
- ------------------------------------
Short-term borrowings $ 1,553 $ 1,715
Current portion of long-term debt 2,750 1,661
Accrued settlement charges 3,402 3,530
All other current liabilities 15,288 14,487
Long-term debt 17,508 18,953
Deferred income taxes 7,623 7,295
Other long-term liabilities 14,765 15,137
------------- -------------
Total consumer products liabilities 62,889 62,778
Total financial services liabilities 8,272 8,320
------------- -------------
Total liabilities 71,161 71,098
Total stockholders' equity 29,083 25,077
------------- -------------
Total liabilities and
stockholders' equity $ 100,244 $ 96,175
============= =============
Total consumer products debt $ 21,811 $ 22,329
Debt/equity ratio - consumer products 0.75 0.89
Total debt $ 23,883 $ 24,539
Total debt/equity ratio 0.82 0.98