Exhibit 99.1
Contact: Nicholas M. Rolli
(917) 663-3460
Timothy R. Kellogg
(917) 663-2759
ALTRIA GROUP, INC. REPORTS
--------------------------
2005 THIRD-QUARTER RESULTS
--------------------------
Diluted Earnings Per Share from Continuing Operations
-----------------------------------------------------
Up 7.8% to $1.38 vs. $1.28 in Year-Ago Quarter,
-----------------------------------------------
Including the Items Detailed on Schedule 7
------------------------------------------
Earnings from Continuing Operations Up 9.3% to $2.9 Billion
-----------------------------------------------------------
Projects Diluted Earnings Per Share From Continuing Operations
--------------------------------------------------------------
To Be At High End of Range of $5.05 to $5.10 For Full-Year 2005
---------------------------------------------------------------
Versus Prior Forecast of $5.00 to $5.10
---------------------------------------
NEW YORK, October 19, 2005 - Altria Group, Inc. (NYSE:MO) today announced
third-quarter 2005 diluted earnings per share from continuing operations of
$1.38, including the items detailed on Schedule 7, versus $1.28 in the same
quarter a year ago.
"Overall, 2005 is shaping up to be a year of robust progress for Altria,"
said Louis C. Camilleri, chairman and chief executive officer of Altria Group,
Inc. "During the third quarter, particularly strong results in our tobacco
businesses were partially offset by continuing challenges at Kraft.
Additionally, Philip Morris Capital Corporation increased its allowance for
losses, triggered by recent developments in the troubled airline industry."
"Philip Morris USA achieved a retail share of more than 50%, driven by
Marlboro's record share, and strong income growth. Philip Morris International
increased its share in many key markets and also posted strong income gains,
supplemented by the Sampoerna acquisition," Mr. Camilleri said.
"Kraft continues to face a difficult operating environment, with higher
than anticipated commodity costs negatively impacting income," Mr. Camilleri
said. "Nonetheless, Kraft continues to appropriately manage price gaps to
position its brands for long-term growth, and achieved revenue and volume growth
in line with expectations in the third quarter."
2005 Full-Year Forecast
- -----------------------
Altria Group narrowed its target for diluted earnings per share from
continuing operations for the full year 2005 to a range of $5.05 to $5.10,
versus its prior forecast of $5.00 to $5.10. The company believes it will
achieve the high end of the new range.
The revised forecast includes an additional $0.10 per share of tax benefit
related to the repatriation of $6.0 billion of earnings under provisions of the
American Jobs Creation Act, which together with the $0.10 per share benefit
announced in the second quarter of 2005, totals $0.20 per share from this
one-time dividend repatriation; $0.04 per share resulting from lower ongoing
income tax rates at PMI due principally to its changing geographic mix of
earnings and lower repatriation costs; $0.05 per share favorable impact from the
acquisition of PT HM Sampoerna Tbk (Sampoerna); and $0.03 per share favorable
impact from the reversal of a 2004 accrual related to tobacco quota buyout
legislation.
Partially offsetting those items in the revised forecast are Kraft
restructuring charges of $0.12 per share and lower earnings at Kraft of $0.03 to
$0.05 per share; $0.06 per share for an increase in the provision for credit
exposure related to the troubled airline industry; $0.04 per share for the cost
of the U.S. pool tobacco buyout; and $0.03 per share for the charge related to
the Boeken case (with $0.02 impacting PM USA's operating companies income and
$0.01 impacting interest expense). The factors described in the Forward-Looking
and Cautionary Statements section of this release represent continuing risks to
this projection.
Conference Call
- ---------------
A conference call with members of the investment community and news media
will be Webcast at 9:00 a.m. Eastern Time on October 19, 2005. Access is
available at www.altria.com.
ALTRIA GROUP, INC.
------------------
Prior-period results for Altria Group, Inc. have been restated to reflect the
impact of discontinued operations, following Kraft's agreement on November 15,
2004, to sell its sugar confectionery business. As such, net revenues and
operating companies income for the sugar confectionery business are excluded
from the company's results, while the net earnings impact is included as a
single line item. All references in this news release are to continuing
operations, unless otherwise noted.
As described in "Note 15. Segment Reporting" of Altria Group, Inc.'s 2004 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.
2005 Third-Quarter Results
- --------------------------
Net revenues for the third quarter of 2005 increased 10.4% versus 2004 to
$25.0 billion, including favorable currency of $376 million.
Operating income increased 4.3% to $4.3 billion, reflecting the items
described in the attached reconciliation on Schedule 3, including higher results
from operations at Philip Morris USA (PM USA) and Philip Morris International
(PMI), $137 million from the impact of acquisitions, primarily Sampoerna, $115
million from the reversal of a 2004 accrual related to tobacco quota buyout
legislation and favorable currency of $107 million, largely offset by an
increase of $200 million in the provision for airline industry exposure at
Philip Morris Capital Corporation (PMCC) and a $138 million charge for PM USA's
portion of the losses incurred by the federal government on disposition of its
pool tobacco stock.
Earnings from continuing operations increased 9.3% to $2.9 billion,
reflecting increases at PM USA and PMI, favorable currency and an additional
$204 million tax benefit, which resulted from a favorable foreign tax law
interpretation that was received in the third quarter related to the
repatriation of earnings under the American Jobs Creation Act. The comparison
with the year-earlier period was negatively impacted by higher one-time income
from SABMiller in the third quarter of 2004 related to gains from investments.
The Company's effective tax rate was 27.4% in the third quarter of 2005 compared
to 33.4% in 2004. The effective tax rate comparison reflects the one-time impact
of the previously mentioned tax benefit related to the American Jobs Creation
Act and the lower ongoing PMI tax rate.
Net earnings increased 8.9% to $2.9 billion. Diluted earnings per share,
including discontinued operations as detailed on Schedule 1, increased 7.0% to
$1.38.
During the third quarter of 2005, Altria Group, Inc. increased its regular
quarterly dividend by 9.6% to $0.80 per common share, which represents an
annualized rate of $3.20 per common share.
On October 12, 2005, SABMiller plc completed its acquisition of Bavaria SA,
the second-largest brewer in South America. As a result, Altria's economic
interest has been reduced from 33.9% to 28.7% of the enlarged SABMiller plc.
DOMESTIC TOBACCO
----------------
2005 Third-Quarter Results
- --------------------------
Philip Morris USA Inc. (PM USA), Altria Group, Inc.'s domestic tobacco
business, achieved strong income growth and solid share performance, driven by
Marlboro. Shipment volume of 47.9 billion units was down 0.9% from the previous
year, but was estimated to be essentially flat when adjusted for the timing of
promotional shipments and trade purchases related to the July 4th holiday
period. Premium mix for PM USA increased by 0.3 percentage points to 91.7%.
Operating companies income increased 4.8%, to $1.2 billion, primarily driven by
lower wholesale promotional allowance rates and the reversal of the 2004 accrual
related to tobacco quota buyout legislation, partially offset by lower volume,
and charges for disposition of pool tobacco stock and a pre-tax provision of $56
million for the Boeken individual smoking case.
As shown in the following table, PM USA's total retail share improved in
the third quarter of 2005 to 50.1%, driven by Marlboro and Parliament in the
premium category. Marlboro's share grew 0.5 share points to a record high of
40.1% in the third quarter. In the declining discount segment, retail share for
Basic remained stable.
Philip Morris USA Quarterly Retail Share*
----------------------------------------
Q3 2005 Q3 2004 Change
------- ------- ------
Marlboro 40.1% 39.6% 0.5 pp
Parliament 1.8% 1.7% 0.1 pp
Virginia Slims 2.3% 2.4% -0.1 pp
Basic 4.2% 4.2% 0.0 pp
------- ------- ------
Focus Brands 48.4% 47.9% 0.5 pp
Other PM USA 1.7% 2.0% -0.3 pp
------- ------- ------
Total PM USA 50.1% 49.9% 0.2 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.
For the total industry, premium category share increased 0.5 points to
73.6% in the third quarter of 2005, while the discount category share
correspondingly declined to 26.4%. Within the discount category, share was flat
at 11.9% for the deep discount segment of the industry, which includes both
major manufacturers' private label brands and all other manufacturers' discount
brands. In the growing premium category, PM USA's share declined 0.1 point to
62.2% in the third quarter, while PM USA's share in the discount category
increased 0.2 share points to 16.2%, driven by Basic.
INTERNATIONAL TOBACCO
---------------------
2005 Third-Quarter Results
- --------------------------
Cigarette shipment volume for Philip Morris International Inc. (PMI),
Altria Group, Inc.'s international tobacco business, increased by 9.0% to 217.0
billion units, driven by gains in Eastern Europe, Turkey and the Middle East,
and recent acquisitions including Sampoerna in Indonesia and Coltabaco in
Colombia, partially offset by lower shipments in the European Union. Excluding
acquisitions, PMI's cigarette shipment volume increased 0.8% versus the same
period a year ago. PMI's total tobacco volume, which includes 2.0 billion
cigarette equivalent units of other tobacco products (OTPs), grew 9.4% versus
the prior year quarter, and 1.2% excluding acquisitions.
Operating companies income rose 19.7% to $2.2 billion, driven by higher
pricing, the impact of acquisitions and favorable currency of $80 million,
partially offset by unfavorable mix, higher R&D, marketing and selling expenses,
and impairment charges.
During the quarter, PMI refined its organizational structure, prompted by
the recent enlargement of the European Union (EU). Accordingly, in place of the
Western Europe and Central Europe regions, PMI will now report results for an EU
region, which includes the original EU countries and the Baltic States, Cyprus,
Czech Republic, Hungary, Malta, Norway, Poland, Slovak Republic and Switzerland.
Other regions remain essentially unchanged. The region commentary in this press
release reflects the revised organizational structure, with prior year results
restated for comparability.
PMI achieved widespread market share gains in the third quarter,
particularly in Egypt, France, Germany, Indonesia, Italy, Japan, Korea, Mexico,
Philippines, Russia, Saudi Arabia, Turkey, Ukraine and the United Kingdom.
Total Marlboro cigarette shipments increased 0.4% in the third quarter,
principally resulting from higher volume in the Eastern Europe, Middle East &
Africa region, largely offset by declines in Germany and Italy. Marlboro share
increased in many markets, including Egypt, France, Germany, Greece, Italy,
Japan, Korea, Mexico, Philippines, Portugal, Russia, Turkey, Ukraine and the
United Kingdom.
In the EU region, PMI's cigarette volume declined 4.2%, reflecting total
market declines, mainly in Germany and Italy.
In Germany, the total cigarette market declined 13.1% or 3.8 billion units
versus the prior-year quarter. However, this was partially offset by an increase
of 2.5 billion units of OTPs, principally tobacco portions, which are taxed at a
significantly lower rate than cigarettes. PMI's share of total tobacco shipments
declined 0.1 points to 28.7% compared to the third quarter of 2004, reflecting
PMI's under-representation in the OTP segment. However, PMI's cigarette industry
share of 36.7% increased 0.2 points versus the prior-year quarter, driven by
Marlboro and Next. In addition, PMI's share of OTPs increased 6.3 points to
12.9%, with its share of tobacco portions increasing 10.2 points to 18.7%.
Later this year, the European Court of Justice is expected to issue its
final binding judgment on the taxation of tobacco portions in Germany. The
tobacco portions category in Germany is expected to decline sharply, should
favored tax treatment be eliminated.
In Italy, the total cigarette market was down 8.4%, reflecting lower
smoking incidence due to higher cigarette prices and increased smoking
restrictions, adverse trade inventory movements and one less selling day. PMI's
cigarette shipment volume was down 6.2%; however, market share grew 1.9 points
to 52.9%, driven mainly by the continued strong recovery of Diana, the good
performance of Chesterfield and the resilience of Marlboro.
The total cigarette market in France was down 0.9% compared to the prior
year quarter. PMI's shipments were up a strong 9.8% and market share rose 1.7
points to a record 41.7%, driven by the continued success of Marlboro, which
added 1.1 points to 30.4%, and the Philip Morris brand, which achieved a share
of 5.5%, up 0.5 share points.
PMI's shipments in Spain were essentially flat and market share declined
0.7 points to 35.2%, reflecting increased competition in the lowest price
segment, which grew from 11.5% to 19.8% share of the market. Marlboro's share in
Spain was down 0.4 points to 17.5%.
In Poland, where low-price competition continues to be intense, cigarette
industry volume rose 1.7% but shipments for PMI were down 2.1%. Market share
declined 1.4 points to 37.1%, due to consumer down trading to the super
low-price segment. In the Czech Republic, PMI's shipments were up 0.2% versus
the prior-year quarter; however, market share was down, reflecting the rapid
growth of the low-price segment.
In Eastern Europe, the Middle East and Africa, PMI's shipments increased
5.7%, due mainly to Ukraine, Turkey, Egypt and Saudi Arabia. Shipments were flat
in Russia versus the same period a year ago, reflecting adverse trade inventory
movements. Excluding those inventory changes, volume was up 3.7%. Market share
in Russia rose 0.6 points to 27.0%, driven by growth in Muratti, Marlboro,
Parliament and Chesterfield. Volume growth of 16.4% in Ukraine and a market
share increase of 1.4 points to 32.2% were driven by consumer up-trading
stimulated by narrowing price gaps with low-price filter brands, which benefited
Marlboro and Chesterfield. Shipment volume was up 12.7% in Turkey and market
share increased 5.3 points to 43.0%, fueled by the growth of Lark and the recent
launch of Bond Street.
In Asia, volume increased 40.4%, primarily because of the acquisition of
Sampoerna in Indonesia, as well as gains in the Philippines. Excluding
Sampoerna, volume was up 0.8%. PMI achieved a 26.7% share in Indonesia in the
third quarter, driven by Dji Sam Soe, A Hijau and A Mild. Shipments increased
0.8% in Japan despite a 2.5% decline in the total cigarette market, and market
share rose 0.3 points to 24.9%, driven by Parliament and Virginia Slims and the
recent launch of Marlboro Ultra Lights Menthol. In Korea, the total cigarette
market declined 4.2%, while PMI's shipments were up 2.8%. PMI's market share in
Korea grew 0.5 points to 8.2%, driven by Marlboro and aided by the recent launch
of Parliament One.
PMI's volume in Latin America increased 12.6%, reflecting the acquisition
of Coltabaco in Colombia and higher shipments in Mexico, partially offset by
declines in Argentina and Brazil. Excluding Coltabaco, volume was down 1.4%. The
total market increased 4.5% in Argentina, but PMI's shipments were down 2.6% and
share declined 4.5 points to 60.3%, due to a surge in the low-price segment. The
cigarette industry in Mexico was essentially flat and PMI's shipments increased
3.7%, while market share rose 2.3 points to 61.9%, due mainly to Marlboro's
continued momentum.
Worldwide Duty Free cigarette shipments grew a strong 11.3% compared to the
same period last year, driven by gains in Turkey, Romania and the Middle East.
FOOD
----
2005 Third-Quarter Results
- --------------------------
Yesterday, Kraft Foods Inc. (Kraft) reported 2005 third-quarter results.
Kraft's net revenues were up 4.4% to $8.1 billion, due to volume growth,
positive mix and net pricing, together with favorable currency of $118 million.
Ongoing volume was up 1.3%, resulting from growth in the U.S., Eastern Europe
and Latin America, partially offset by a decline in Central and Western Europe,
especially Germany, where pricing impacted category consumption. Operating
income declined 6.8% to $1.1 billion, due to higher commodity costs net of
pricing and higher pension and post-retirement costs, partially offset by volume
growth, positive mix, cost reductions and favorable currency of $27 million.
NORTH AMERICAN FOOD
-------------------
2005 Third-Quarter Results
- --------------------------
For the third quarter of 2005, Kraft North America Commercial (KNAC) net
revenues grew 3.4% to $5.6 billion, reflecting volume gains in several
businesses, positive mix and favorable currency of $45 million. Ongoing volume
increased 1.9%, reflecting growth in the beverages, meats, desserts and cereals
categories, partially offset by declines in frozen pizza, snack nuts and
foodservice. Operating companies income declined 10.2% to $948 million, as
higher costs were partially offset by the contributions from volume growth and
currency of $8 million.
INTERNATIONAL FOOD
------------------
2005 Third-Quarter Results
- --------------------------
For the third quarter of 2005, net revenues for Kraft International
Commercial (KIC) increased 6.8% to $2.5 billion, due primarily to favorable
currency of $73 million, net pricing and positive mix, partially offset by the
impact of divestitures. Revenues were up 10% in developing markets overall.
Ongoing volume was down 0.2%, as declines due to the impact of pricing in
Central and Western Europe, particularly Germany, were largely offset by growth
in Latin America, Eastern Europe and Southeast Asia. Operating companies income
increased 12.5% to $252 million, reflecting the positive impact of lower
restructuring and impairment charges, the absence of a loss on sale of a
business in the prior year, positive mix and favorable currency of $19 million,
partially offset by higher commodity costs net of pricing and the negative
impact of lost income from divested businesses.
FINANCIAL SERVICES
------------------
2005 Third-Quarter Results
- --------------------------
Philip Morris Capital Corporation (PMCC) reported an operating companies
loss of $121 million for the third quarter of 2005 versus operating companies
income of $55 million for the same period in 2004. Results reflect an increase
of $200 million in the allowance for losses related to the troubled airline
industry, partially offset by the impact of gains from asset sales and lower
interest expense.
Consistent with its strategic shift in 2003, PMCC is focused on managing
its existing portfolio of finance assets in order to maximize gains and generate
cash flow from asset sales and related activities. PMCC is no longer making new
investments and expects that its operating companies income will fluctuate over
time as investments mature or are sold.
Altria Group, Inc. Profile
- --------------------------
Altria Group, Inc. owns approximately 86.5% of the outstanding common
shares of Kraft Foods Inc. and 100% of the outstanding common shares of Philip
Morris International Inc., Philip Morris USA Inc. and Philip Morris Capital
Corporation. In addition, Altria Group, Inc. has a 28.7% 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 2004 net revenues of $89.6 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 or changes to income tax laws.
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. and its 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, 2005. 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)
2005 2004 % Change
-----------------------------
Net revenues $ 24,962 $ 22,615 10.4 %
Cost of sales 9,082 8,347 8.8 %
Excise taxes on products (**) 7,656 6,751 13.4 %
------------------
Gross profit 8,224 7,517 9.4 %
Marketing, administration and research
costs 3,459 3,137
Domestic tobacco headquarters
relocation charges - 5
Domestic tobacco loss on U.S. tobacco
pool 138 -
Domestic tobacco quota buy-out (115) -
Asset impairment and exit costs 59 45
Losses on sales of businesses - 8
Provision for airline industry exposure 200 -
------------------
Operating companies income 4,483 4,322 3.7 %
Amortization of intangibles 6 3
General corporate expenses 160 165
Asset impairment and exit costs 2 17
------------------
Operating income 4,315 4,137 4.3 %
Interest and other debt expense, net 306 288
------------------
Earnings from continuing operations
before income taxes and minority
interest 4,009 3,849 4.2 %
Provision for income taxes 1,098 1,287 (14.7)%
------------------
Earnings from continuing operations
before minority interest 2,911 2,562 13.6 %
Minority interest in earnings from
continuing operations, and
equity earnings, net 28 (75)
------------------
Earnings from continuing operations 2,883 2,637 9.3 %
(Loss) earnings from discontinued
operations, net of income taxes
and minority interest - 11
------------------
Net earnings $ 2,883 $ 2,648 8.9 %
==================
Per share data(***):
Basic earnings per share from
continuing operations $ 1.39 $ 1.29 7.8 %
Basic earnings per share from
discontinued operations $ - $ -
------------------
Basic earnings per share $ 1.39 $ 1.29 7.8 %
==================
Diluted earnings per share from
continuing operations $ 1.38 $ 1.28 7.8 %
Diluted earnings per share from
discontinued operations $ - $ 0.01
------------------
Diluted earnings per share $ 1.38 $ 1.29 7.0 %
==================
Weighted average number of
shares outstanding - Basic 2,072 2,048 1.2 %
- Diluted 2,092 2,060 1.6 %
(*) Due to a change for Discontinued Operations, prior period results
have been restated.
(**) The detail of excise taxes on products sold is as follows:
2005 2004
------------------
Domestic tobacco $ 945 $ 954
International tobacco 6,711 5,797
------------------
Total excise taxes $ 7,656 $ 6,751
==================
(***) 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
-----------------------------------------------
2005 Net Revenues $4,731 $12,075 $5,551 $2,506
2004 Net Revenues 4,505 10,316 5,371 2,347
% Change 5.0% 17.1% 3.4% 6.8%
Reconciliation:
- ---------------
2004 Net Revenues $4,505 $10,316 $5,371 $2,347
Divested businesses -
2004 - - (39) (19)
Divested businesses -
2005 - - - -
Implementation - 2004 - - 5 -
Implementation - 2005 - - - -
Acquired businesses - 665 - -
Currency - 258 45 73
Operations 226 836 169 105
-----------------------------------------------
2005 Net Revenues $4,731 $12,075 $5,551 $2,506
===============================================
Financial
services Total
-----------------------
2005 Net Revenues $99 $24,962
2004 Net Revenues 76 22,615
% Change 30.3% 10.4%
Reconciliation:
- ---------------
2004 Net Revenues $76 $22,615
Divested businesses -
2004 - (58)
Divested businesses -
2005 - -
Implementation - 2004 - 5
Implementation - 2005 - -
Acquired businesses - 665
Currency - 376
Operations 23 1,359
-----------------------
2005 Net Revenues $99 $24,962
=======================
Note: The detail of excise taxes on products sold is as follows:
2005 2004
-------------------
Domestic tobacco $ 945 $ 954
International tobacco 6,711 5,797
-------------------
Total excise taxes $7,656 $6,751
===================
Currency increased international tobacco excise taxes by $161 million.
Acquisitions increased excise taxes by $308 million.
(*) Due to a change for Discontinued Operations, prior period results
have been restated.
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
-----------------------------------------------
2005 Operating
Companies Income $1,202 $2,202 $948 $252
2004 Operating
Companies Income 1,147 1,840 1,056 224
% Change 4.8% 19.7% (10.2)% 12.5%
Reconciliation:
- ---------------
2004 Operating
Companies Income $1,147 $1,840 $1,056 $224
Divested businesses -
2004 - - (2) (5)
Domestic tobacco
headquarters
relocation charges -
2004 5 - - -
Asset impairment and
exit costs - 2004 - 1 5 39
Loss on sales of
businesses - 2004 - - - 8
Implementation costs -
2004 - - 4 3
-----------------------------------------------
5 1 7 45
-----------------------------------------------
Divested businesses -
2005 - - - -
Domestic tobacco
headquarters
relocation charges -
2005 - - - -
Domestic tobacco loss
on U.S. tobacco pool
- 2005 (138) - - -
Domestic tobacco quota
buy-out - 2005 115 - - -
Asset impairment and
exit costs - 2005 - (33) (2) (24)
Implementation costs -
2005 - - (11) (5)
Provision for airline
industry exposure - - - -
-----------------------------------------------
(23) (33) (13) (29)
-----------------------------------------------
Acquired businesses - 137 - -
Currency - 80 8 19
Operations 73 177 (110) (7)
-----------------------------------------------
2005 Operating
Companies Income $1,202 $2,202 $948 $252
===============================================
Financial
services Total
-----------------------
2005 Operating
Companies Income $(121) $4,483
2004 Operating
Companies Income 55 4,322
% Change NA 3.7%
Reconciliation:
- ---------------
2004 Operating
Companies Income $55 $4,322
Divested businesses -
2004 - (7)
Domestic tobacco
headquarters
relocation charges -
2004 - 5
Asset impairment and
exit costs - 2004 - 45
Loss on sales of
businesses - 2004 - 8
Implementation costs -
2004 - 7
-----------------------
- 58
-----------------------
Divested businesses -
2005 - -
Domestic tobacco
headquarters
relocation charges -
2005 - -
Domestic tobacco loss
on U.S. tobacco pool
- 2005 - (138)
Domestic tobacco quota
buy-out - 2005 - 115
Asset impairment and
exit costs - 2005 - (59)
Implementation costs -
2005 - (16)
Provision for airline
industry exposure (200) (200)
-----------------------
(200) (298)
-----------------------
Acquired businesses - 137
Currency - 107
Operations 24 157
-----------------------
2005 Operating
Companies Income $(121) $4,483
=======================
(*) Due to a change for Discontinued Operations, prior period results
have been restated.
ALTRIA GROUP, INC. Schedule 4
and Subsidiaries
Condensed Statements of Earnings
For the Nine Months Ended September 30,(*)
(in millions, except per share data)
2005 2004 % Change
--------------------------
Net revenues $73,364 $67,230 9.1 %
Cost of sales 26,887 24,929 7.9 %
Excise taxes on products (**) 22,271 19,631 13.4 %
----------------
Gross profit 24,206 22,670 6.8 %
Marketing, administration and research
costs 10,333 9,620
Domestic tobacco headquarters relocation
charges 3 25
Domestic tobacco loss on U.S. tobacco pool 138 -
Domestic tobacco quota buy-out (115) -
International tobacco EC agreement - 250
Asset impairment and exit costs 262 489
(Gains) / Losses on sales of businesses (115) 8
Provision for airline industry exposure 200 -
----------------
Operating companies income 13,500 12,278 10.0 %
Amortization of intangibles 14 12
General corporate expenses 484 493
Asset impairment and exit costs 40 41
----------------
Operating income 12,962 11,732 10.5 %
Interest and other debt expense, net 907 885
----------------
Earnings from continuing operations before
income taxes and minority interest 12,055 10,847 11.1 %
Provision for income taxes 3,581 3,419 4.7 %
----------------
Earnings from continuing operations before
minority interest 8,474 7,428 14.1 %
Minority interest in earnings from
continuing operations, and
equity earnings, net 95 (2)
----------------
Earnings from continuing operations 8,379 7,430 12.8 %
(Loss) earnings from discontinued
operations, net of income taxes and
minority interest(****) (233) 39
----------------
Net earnings $ 8,146 $ 7,469 9.1 %
================
Per share data (***):
Basic earnings per share from continuing
operations $ 4.05 $ 3.63 11.6 %
Basic earnings per share from discontinued
operations $ (0.11) $ 0.02
----------------
Basic earnings per share $ 3.94 $ 3.65 7.9 %
================
Diluted earnings per share from continuing
operations $ 4.01 $ 3.61 11.1 %
Diluted earnings per share from
discontinued operations $ (0.11) $ 0.01
----------------
Diluted earnings per share $ 3.90 $ 3.62 7.7 %
================
Weighted average number of
shares outstanding - Basic 2,067 2,045 1.1 %
- Diluted 2,087 2,061 1.3 %
(*) Due to a change for Discontinued Operations, prior period results
have been restated.
(**) The detail of excise taxes on products sold is as follows:
2005 2004
----------------
Domestic tobacco $ 2,761 $ 2,764
International tobacco 19,510 16,867
----------------
Total excise taxes $22,271 $19,631
================
(***) 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.
(****) Discontinued operations 2005 includes $(255) from loss on sale,
and $22 of earnings, net of minority interest impact. In 2004 income
from discontinued operations was $39 of earnings, net of minority
interest impact.
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
-----------------------------------------------
2005 Net Revenues $13,667 $34,985 $16,855 $7,595
2004 Net Revenues 13,091 30,423 16,259 7,125
% Change 4.4% 15.0% 3.7% 6.6%
Reconciliation:
- ---------------
2004 Net Revenues $13,091 $30,423 $16,259 $7,125
Divested businesses -
2004 - - (128) (65)
Divested businesses -
2005 - - 69 12
Implementation - 2004 - - 5 -
Implementation - 2005 - - (1) -
Acquired businesses - 1,022 41 1
Currency - 1,447 128 339
Operations 576 2,093 482 183
-----------------------------------------------
2005 Net Revenues $13,667 $34,985 $16,855 $7,595
===============================================
Financial
services Total
-----------------------
2005 Net Revenues $262 $73,364
2004 Net Revenues 332 67,230
% Change (21.1)% 9.1%
Reconciliation:
- ---------------
2004 Net Revenues $332 $67,230
Divested businesses -
2004 - (193)
Divested businesses -
2005 - 81
Implementation - 2004 - 5
Implementation - 2005 - (1)
Acquired businesses - 1,064
Currency - 1,914
Operations (70) 3,264
-----------------------
2005 Net Revenues $262 $73,364
=======================
Note: The detail of excise taxes on products sold is as follows:
2005 2004
-----------------------
Domestic tobacco $ 2,761 $ 2,764
International tobacco 19,510 16,867
-----------------------
Total excise taxes $22,271 $19,631
=======================
Currency increased international tobacco excise taxes by $893 million.
Acquisitions increased excise taxes by $529 million.
(*) Due to a change for Discontinued Operations, prior period results
have been restated.
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
-----------------------------------------------
2005 Operating
Companies Income $3,501 $6,301 $2,916 $792
2004 Operating
Companies Income 3,329 5,143 2,923 633
% Change 5.2% 22.5% (0.2)% 25.1%
Reconciliation:
- ---------------
2004 Operating
Companies Income $3,329 $5,143 $2,923 $633
Divested businesses -
2004 - - (4) (19)
Domestic tobacco
headquarters
relocation charges -
2004 25 - - -
International tobacco
EC agreement - 2004 - 250 - -
Asset impairment and
exit costs - 2004 1 24 289 175
Loss on sales of
businesses - 2004 - - - 8
Implementation costs -
2004 - - 13 4
-----------------------------------------------
26 274 298 168
-----------------------------------------------
Divested businesses -
2005 - - 2 3
Domestic tobacco
headquarters
relocation charges -
2005 (3) - - -
Domestic tobacco loss
on U.S. tobacco pool
- 2005 (138) - - -
Domestic tobacco quota
buy-out - 2005 115 - - -
Asset impairment and
exit costs - 2005 - (57) (124) (81)
(Losses) / Gains on
sales of businesses -
2005 - - (1) 116
Implementation costs -
2005 - - (43) (18)
Provision for airline
industry exposure - - - -
-----------------------------------------------
(26) (57) (166) 20
-----------------------------------------------
Acquired businesses - 220 - -
Currency - 342 22 50
Operations 172 379 (161) (79)
-----------------------------------------------
2005 Operating
Companies Income $3,501 $6,301 $2,916 $792
===============================================
Financial
services Total
-----------------------
2005 Operating
Companies Income $(10) $13,500
2004 Operating
Companies Income 250 12,278
% Change NA 10.0%
Reconciliation:
- ---------------
2004 Operating
Companies Income $250 $12,278
Divested businesses -
2004 - (23)
Domestic tobacco
headquarters
relocation charges -
2004 - 25
International tobacco
EC agreement - 2004 - 250
Asset impairment and
exit costs - 2004 - 489
Loss on sales of
businesses - 2004 - 8
Implementation costs -
2004 - 17
-----------------------
- 766
-----------------------
Divested businesses -
2005 - 5
Domestic tobacco
headquarters
relocation charges -
2005 - (3)
Domestic tobacco loss
on U.S. tobacco pool
- 2005 - (138)
Domestic tobacco quota
buy-out - 2005 - 115
Asset impairment and
exit costs - 2005 - (262)
(Losses) / Gains on
sales of businesses -
2005 - 115
Implementation costs -
2005 - (61)
Provision for airline
industry exposure (200) (200)
-----------------------
(200) (429)
-----------------------
Acquired businesses - 220
Currency - 414
Operations (60) 251
-----------------------
2005 Operating
Companies Income $(10) $13,500
=======================
(*) Due to a change for Discontinued Operations, prior period results
have been restated.
ALTRIA GROUP, INC. Schedule 7
and Subsidiaries
Net Earnings and Diluted Earnings Per Share
For the Quarters Ended September 30,(*)
($ in millions, except per share data)
Net Diluted
Earnings E.P.S. (**)
--------- ---------
2005 Continuing Earnings $ 2,883 $ 1.38
2004 Continuing Earnings $ 2,637 $ 1.28
% Change 9.3 % 7.8 %
Reconciliation:
- ---------------
2004 Continuing Earnings $ 2,637 $ 1.28
2004 Domestic tobacco headquarters relocation
charges 3 -
2004 Asset impairment, exit and
implementation costs, net of minority
interest impact 31 0.02
2004 Loss on sales of business, net of
minority interest impact 4 -
2004 Corporate asset impairment and exit
costs 11 -
2004 Tax items, net of minority interest
impact (64) (0.03)
2004 Gains from investments at SABMiller (111) (0.05)
-------- --------
(126) (0.06)
-------- --------
2005 Domestic tobacco headquarters relocation
charges - -
2005 Domestic tobacco loss on U.S. tobacco
pool (87) (0.04)
2005 Domestic tobacco quota buy-out 72 0.03
2005 Asset impairment, exit and
implementation costs, net of minority
interest impact (51) (0.02)
2005 Corporate asset impairment and exit
costs (2) -
2005 Provision for airline industry exposure (129) (0.06)
2005 Tax items, net of minority interest
impact 204 0.10
-------- --------
7 0.01
-------- --------
Currency 69 0.03
Change in shares - (0.02)
Change in tax rate 125 0.06
Operations 171 0.08
-------- --------
2005 Continuing Earnings $ 2,883 $ 1.38
-------- --------
2005 Discontinued Earnings $ - $ -
-------- --------
2005 Net Earnings $ 2,883 $ 1.38
======== ========
(*) Due to a change for Discontinued Operations, prior period results
have been restated.
(**) 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 Nine Months Ended September 30,(*)
($ in millions, except per share data)
Net Diluted
Earnings E.P.S. (**)
--------- ---------
2005 Continuing Earnings $ 8,379 $ 4.01
2004 Continuing Earnings $ 7,430 $ 3.61
% Change 12.8 % 11.1 %
Reconciliation:
- ---------------
2004 Continuing Earnings $ 7,430 $ 3.61
2004 Domestic tobacco headquarters relocation
charges 16 0.01
2004 Asset impairment and exit costs, net of
minority interest impact 279 0.13
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 Tax items, net of minority interest
impact (414) (0.20)
2004 Gains from investments at SABMiller (111) (0.05)
-------- --------
(39) (0.02)
-------- --------
2005 Domestic tobacco headquarters relocation
charges (2) -
2005 Domestic tobacco loss on U.S. tobacco
pool (87) (0.04)
2005 Domestic tobacco quota buy-out 72 0.03
2005 Asset impairment, exit and
implementation costs, net of minority
interest impact (195) (0.11)
2005 Gains on sales of businesses, net of
minority interest impact 64 0.03
2005 Corporate asset impairment and exit
costs (27) (0.01)
2005 Provision for airline industry exposure (129) (0.06)
2005 Tax items, net of minority interest
impact 470 0.23
-------- --------
166 0.07
-------- --------
Currency 267 0.13
Change in shares - (0.05)
Change in tax rate 226 0.11
Operations 329 0.16
-------- --------
2005 Continuing Earnings $ 8,379 $ 4.01
-------- --------
2005 Discontinued Earnings $ (233) $ (0.11)
-------- --------
2005 Net Earnings $ 8,146 $ 3.90
======== ========
(*) Due to a change for Discontinued Operations, prior period results
have been restated.
(**) 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)
September 30, December 31,
2005 2004
------------- -------------
Assets
- ------
Cash and cash equivalents $ 6,195 $ 5,744
Assets of discontinued operations held for
sale - 1,458
All other current assets 19,327 18,699
Property, plant and equipment, net 16,318 16,305
Goodwill 32,191 28,056
Other intangible assets, net 11,006 11,056
Other assets 13,826 12,485
------------ ------------
Total consumer products assets 98,863 93,803
Total financial services assets 7,227 7,845
------------ ------------
Total assets $ 106,090 $ 101,648
============ ============
Liabilities and Stockholders' Equity
- ------------------------------------
Short-term borrowings $ 3,412 $ 2,546
Current portion of long-term debt 2,155 1,751
Accrued settlement charges 3,336 3,501
All other current liabilities 16,088 15,776
Long-term debt 17,067 16,462
Deferred income taxes 7,070 7,677
Other long-term liabilities 14,480 14,905
------------ ------------
Total consumer products liabilities 63,608 62,618
Total financial services liabilities 7,976 8,316
------------ ------------
Total liabilities 71,584 70,934
Total stockholders' equity 34,506 30,714
------------ ------------
Total liabilities and
stockholders' equity $ 106,090 $ 101,648
============ ============
Total consumer products debt $ 22,634 $ 20,759
Debt/equity ratio - consumer products 0.66 0.68
Total debt $ 24,720 $ 22,980
Total debt/equity ratio 0.72 0.75