Altria Group Inc
Nicholas M. Rolli, 917-663-3460
Timothy R. Kellogg, 917-663-2759
Altria Group, Inc. Reports 2003 Third-Quarter Results
2003 Third-Quarter Diluted Earnings Per Share of $1.22
Versus $2.06 in Year-Ago Quarter, Which Included
$0.81 Gain on Miller Transaction
2003 Full-Year Diluted Earnings Per Share Projection Reaffirmed
In a Range of $4.50 to $4.60 Including $0.08 in Charges
Altria Group, Inc. (NYSE: MO) today announced third-quarter 2003
diluted earnings per share of $1.22, versus $2.06 for the same period
a year ago, which included a gain of $0.81 per share for the Miller
Brewing Co. transaction.
"We had a solid quarter that met our earnings target," said Louis C.
Camilleri, chairman and chief executive officer of Altria Group, Inc.
"Our domestic tobacco business sustained its recovery with stable
volumes and improved retail market share. Our international tobacco
business recorded strong income growth despite volume issues in Italy,
France and Germany. Actions are in place to address our performance in
these important markets. Finally, our worldwide food business results
reflected a particularly challenging quarter and the impact of our
previously announced reinvestment program to narrow price gaps and
enhance brand equity in several key categories."
"We remain confident that our investments across all our businesses
will bear fruit in the years to come," Mr. Camilleri said. Altria
Group, Inc. reaffirmed its projection of 2003 full-year diluted
earnings per share in a range of $4.50 to $4.60, including $0.08 of
incurred and projected charges for the tobacco growers settlement and
relocation of Philip Morris USA's headquarters. The factors described
in the Forward-Looking and Cautionary Statements section of this
release represent continuing risks to these projections.
A conference call with members of the investment community will be
Webcast at 9:30 a.m. Eastern Time on October 16, 2003. Access is
available at www.altria.com.
ALTRIA GROUP, INC.
As described in "Note 14. Segment Reporting" of Altria Group, Inc.'s
2002 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.
2003 Third-Quarter Results
Net revenues for the third quarter of 2003, as detailed in the
attached schedule entitled "Selected Financial Data by Business
Segment," increased 4.7% versus 2002 to $20.9 billion, due primarily
to favorable currency of $940 million and to increases from the
international tobacco and food businesses, partially offset by lower
net revenues from the domestic tobacco business.
Operating income decreased 7.3% to $4.2 billion, due primarily to
lower operating income of $344 million from the domestic tobacco
business and $180 million from food, partially offset by higher
operating results from international tobacco. Also affecting operating
income comparisons were favorable currency of $177 million; a $23
million gain due to the divestiture of an international food business;
charges related to Philip Morris USA's headquarters relocation of $27
million; and asset impairment and exit costs in the international
tobacco and food segments in both periods.
Net earnings decreased 42.9% to $2.5 billion, due primarily to the
after-tax impact of the Miller transaction of $1.7 billion, or $0.81
per share, that was recorded during the third quarter of 2002. The
effective tax rate decreased from the first-half rate of 35.2% to
34.5% in the third quarter, due primarily to favorable rulings
affecting Altria's state taxes.
During the third quarter, Altria Group, Inc. raised its dividend 6.3%
to an annualized rate of $2.72 per common share, marking the 36th time
in 34 years that the dividend has been increased.
DOMESTIC TOBACCO
2003 Third-Quarter Results
Philip Morris USA Inc., Altria Group, Inc.'s domestic tobacco
business, continued to show solid retail share performance in the
third quarter, as its enhanced sales and promotional programs drove
sequential gains again. Philip Morris USA's shipment volume was down
1.0% to 48.9 billion units for the third quarter; however, premium
volume for Philip Morris USA was essentially flat while its premium
mix improved by nearly 1%, to approximately 91%.
Operating companies income decreased 24.4% to $1.1 billion, due to
higher spending in support of Philip Morris USA's ongoing promotional
programs and to lower volume, as well as charges related to the
previously announced move of Philip Morris USA's headquarters to
Richmond, VA.
Philip Morris USA's total retail share continued to improve in the
third quarter of 2003 versus the three previous quarters, driven by
steady gains in Marlboro and the continued growth of Parliament.
Retail share was stable for Virginia Slims and Basic.
The following table summarizes sequential retail share performance for
Philip Morris USA's key brands since implementing enhanced promotional
programs in 2002, based on data from the IRI/Capstone Total Retail
Panel:
Q3 Q2 Q1 Q4
2003 2003 2003 2002
----- ----- ----- -----
Marlboro 38.1% 37.8% 37.5% 37.4%
Parliament 1.8% 1.7% 1.5% 1.3%
Virginia Slims 2.4% 2.4% 2.5% 2.5%
Basic 4.2% 4.2% 4.3% 4.3%
----- ----- ----- -----
Focus Brands 46.5% 46.1% 45.8% 45.5%
Other PM USA 2.3% 2.4% 2.5% 2.6%
----- ----- ----- -----
Total PM USA 48.8% 48.5% 48.3% 48.1%
On a sequential basis, Philip Morris USA's retail share of the premium
segment for the third quarter of 2003 increased 0.2 share points from
the second quarter of 2003 to 61.3%, while its share of the discount
segment increased 0.2 share points to 15.8%. Retail share for the
discount segment of the industry declined by 0.2 share points to 27.4%
compared to the second quarter of 2003 and retail share for the
industry's deep discount segment was essentially flat, down 0.1 share
point to 9.9%, as measured by the IRI/Capstone Total Retail Panel.
Parliament Ultra Lights and Marlboro Blend No. 27, introduced in the
second quarter, both met distribution and share objectives during the
third quarter. Philip Morris USA continued test marketing premium
Chesterfield and announced that it will begin test marketing an
addition to the Marlboro Menthol family in the fourth quarter.
INTERNATIONAL TOBACCO
2003 Third-Quarter Results
Operating companies income for Philip Morris International Inc. (PMI),
Altria Group, Inc.'s international tobacco business, rose 12.9% versus
the same period a year ago to $1.7 billion, due to favorable currency
of $150 million, volume gains, higher pricing and 2002 charges of $33
million for asset impairment and exit costs.
Shipment volume increased 0.8% to 189.4 billion units, as declines in
Germany, Italy and France largely offset gains in other markets and
volume of approximately one billion units from an acquisition in
Serbia. Volume comparisons benefited from a double-digit decline in
Japan for the third quarter of 2002, due to the timing of shipments to
that market caused by the shutdown of U.S. West Coast shipping ports,
which was partially offset by a trade inventory reduction following
the July 2003 price increase.
PMI achieved widespread market share gains, including increases in the
key markets of Argentina, Austria, France, Japan, Korea, Mexico,
Russia, Saudi Arabia, Spain, Turkey, the Ukraine and the United
Kingdom.
Total Marlboro shipments were down 3% in the third quarter, due
primarily to declines in France, Germany and Italy. However, Marlboro
share increased in Japan and other key income markets, including
Austria, the Czech Republic, Mexico, the Slovak Republic, Spain,
Poland, Portugal, the Ukraine and the United Kingdom.
In Western Europe, shipment volume declined 7.5%, due to a confluence
of adverse industry dynamics in Germany, Italy and France, partially
offset by increases in Spain and the United Kingdom. In Germany,
volume declined 7.3%, reflecting a total market decline and consumer
down trading to low-priced tobacco portions, which are benefiting from
a discriminatory excise tax structure. PMI has filed unfair
competition claims against the principal manufacturers of these
products and, in addition, the European Union has challenged the
legality of such excise tax treatment. PMI's share in Germany was down
0.2 points to 36.7%, reflecting increased trade inventories by
competitors. In Italy, volume was down 19.3% while share fell 8.1
points to 53.1%, as Marlboro and Diana remained under pressure from
low-priced competitive brands. As a result of the growth of this
segment, the Italian government has suffered a significant loss in
revenue and can be expected to take appropriate action. In France,
shipment volume was down 6.7%, due to a lower total market as a result
of tax-driven price increases. However, PMI's share was up 0.5 points
to 39.1% in the quarter. Excise tax increases effective this month
will continue impacting total market size going forward. However, the
percent price gap between Marlboro and low-priced brands is likely to
be further decreased, to approximately 13%. In Spain, volume was up a
strong 14.2% as Marlboro and Chesterfield grew rapidly. Overall, PMI's
share in Western Europe was down 1.1 points to 38.9%, but excluding
Italy was up 0.3 points to 35.6%.
In Central Europe, volume decreased 1.3%, as declines from intense
price competition in Lithuania, Poland and the Slovak Republic were
partially offset by gains in other Baltic countries, Greece and
Serbia, with the latter also benefiting from acquisition volume.
During the third quarter, PMI acquired a controlling interest in
Duvanska Industrija Nis (DIN), a formerly state-owned cigarette
company in Serbia. In early October, PMI announced that it had been
given clearance by the European Commission for the acquisition of the
Greek cigarette company Papastratos, and that it is proceeding with
the purchase.
In Eastern Europe, the Middle East and Africa, volume grew a strong
9.4%, driven by continued robust gains in Russia, Turkey and the
Ukraine. In Russia, L&M, Marlboro, Parliament and Chesterfield
continued to perform well. In Turkey, L&M and the recent launch of
Muratti Ambassador fueled double-digit volume growth and a 6.8 point
share gain to 33.1%. In the Ukraine, volume was up 26.5%, driven by
the strong performance of Marlboro, L&M and Bond Street.
In Asia, volume increased 3.3%, driven by increases in Japan, Korea,
Malaysia, Taiwan and Vietnam, partially offset by declines in
Indonesia and the Philippines. In Korea, volume and share improved
significantly, driven by the successful introduction of Lark in the
premium segment in November 2002 and the launch of Virginia Slims
Ultra Lights in July 2003. In Japan, volume increased, and share
advanced 0.5 points to 24.2% driven by Marlboro and Lark. During the
third quarter of 2003, Japan Tobacco Inc. (JT) and PMI announced that
they had mutually agreed that JT's license to manufacture and sell
Marlboro brand cigarettes in Japan would not be renewed when the term
of the agreement expires in April 2005.
In Latin America, volume rose 3.3%, due mainly to a strong gain in
Argentina, where Marlboro and L&M continued to perform well, and to
gains in Mexico and Central America. PMI's share increased in
Argentina and Mexico. During the third quarter, PMI increased its
ownership interest in an affiliate in Ecuador.
FOOD
Yesterday, Kraft Foods Inc. (Kraft) reported third-quarter 2003
results. Kraft's worldwide volume decreased 0.2%, partially reflecting
the impact of divestitures. Volume growth from ongoing businesses,
which excludes the impact of businesses sold, was 1.0%, driven by tack
on acquisitions, which accounted for 0.6 percentage points of growth,
solid growth in several North American businesses, and broad strength
across the Asia Pacific region. Volume was lower in U.S. cookies, and
European coffee and chocolate, due to significant softness in these
categories. Operating income decreased $150 million, or 9.6%, to $1.4
billion, driven by higher commodity and benefit costs, the previously
announced investment spending in focus categories (cheese, coffee,
cold cuts and biscuits) and unfavorable mix, marginally offset by a
gain on sale of the European rice business and the effects of
favorable currency.
NORTH AMERICAN FOOD
2003 Third-Quarter Results
Volume for Kraft Foods North America, Inc. (KFNA) increased 0.9%.
Excluding the impact of a small, divested confectionery business,
volume grew 1.0%, driven by strength in ready-to-drink beverages,
foodservice, enhancers and meats, partially offset by consumption
weakness in select categories, particularly cookies. Operating
companies income decreased 11.6% to $1.2 billion, driven by higher
commodity and benefit costs, investment spending in North American
focus categories and unfavorable mix.
INTERNATIONAL FOOD
2003 Third-Quarter Results
Volume for Kraft Foods International, Inc. (KFI) decreased 3.2%,
driven by the impact of divestitures. Volume from ongoing businesses
increased 0.8%, as a 2.5 percentage point impact from acquisitions was
largely offset by the adverse impact of the summer heat wave across
Europe on the chocolate and coffee categories, and price competition.
Operating companies income increased 2.3% to $307 million, as the
effects of currency favorability of $18 million, a gain on sale of the
European rice business of $23 million and higher pricing were partly
offset by unfavorable mix, higher benefit costs and infrastructure
investment in developing markets.
FINANCIAL SERVICES
2003 Third-Quarter Results
Operating companies income for Philip Morris Capital Corporation
(PMCC) decreased 7.3% to $76 million, driven by lower lease portfolio
revenues, partially offset by higher asset management gains due
primarily to the sale of six single-investor leases. Earlier in 2003,
PMCC announced that it was shifting its strategic focus from an
emphasis on the growth of its portfolio of finance leases through new
lease investments to one of maximizing investment gains and generating
cash flow from its diversified portfolio of leased assets.
Altria Group, Inc. Profile
Altria Group, Inc. is the parent company of Kraft Foods Inc., with
approximately 84% 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 world's second-largest brewer.
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
2002 net revenues of $80.4 billion.
Trademarks and service marks mentioned in this release are the
registered property of, or licensed by, the subsidiaries of Altria
Group, Inc.
Prior to January 27, 2003, Altria Group, Inc. was named Philip Morris
Companies Inc. This news release refers to Altria Group, Inc. even
when historical events took place under the company's former name.
On May 30, 2002, Altria Group, Inc. announced an agreement with South
African Breweries plc (SAB) to merge Miller Brewing Co. into SAB. The
transaction closed on July 9, 2002 and SAB changed its name to
SABMiller plc (SABMiller). The transaction resulted in a pre-tax gain
of $2.6 billion or $1.7 billion after-tax in the third quarter of
2002. Altria records its share of SABMiller's net earnings based on
its economic ownership percentage in minority interest in earnings,
net, on the condensed consolidated statement of earnings.
You may learn more by listening to a live audio webcast of the Altria
Group, Inc. conference call with members of the investment community
at 9:30 a.m. Eastern Time on October 16, 2003. Access is available at
www.altria.com.
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
unfavorable currency movements; intense price competition, changes in
consumer preferences and demand for their products; changing prices
for raw materials, fluctuations in levels of customer inventories and
the effects of foreign economies and local economic and market
conditions. 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 in a consolidating environment at the retail and
manufacturing levels; 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.
As a result of recent actions by credit rating agencies, Altria Group,
Inc. is currently unable to access the commercial paper market and
must rely on its revolving credit facilities instead.
Altria Group, Inc.'s financial services subsidiary (Philip Morris
Capital Corporation) is subject to the effects of a weak economy,
particularly with respect to aircraft leases to the troubled airline
industry.
Altria Group, Inc.'s consumer products subsidiaries are subject to
other risks detailed from time to time in its publicly filed
documents, including its Annual Report on Form 10-K for the period
ended December 31, 2002 and its Quarterly Report on Form 10-Q for the
period ended June 30, 2003. 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.
and Subsidiaries
Condensed Statements of Earnings
For the Quarters Ended September 30,
(in millions, except per share data)
2003 2002 % Change
-------------------------
Net revenues $20,939 $19,996 4.7 %
Cost of sales 7,900 7,674 2.9 %
Excise taxes on products (a) 5,637 4,758 18.5 %
----------------
Gross profit 7,402 7,564 (2.1)%
Marketing, administration and research costs 2,991 2,806
Domestic tobacco headquarters relocation
charges 27 -
Gains on sales of businesses (23) -
Food asset impairment and exit costs 6 -
International tobacco asset impairment
and exit costs - 33
----------------
Operating companies income 4,401 4,725 (6.9)%
Amortization of intangibles 2 1
General corporate expenses 176 166
----------------
Operating income 4,223 4,558 (7.3)%
Gain on Miller transaction - (2,653)
Interest and other debt expense, net 301 279
----------------
Earnings before income taxes and minority
interest 3,922 6,932 (43.4)%
Provision for income taxes 1,353 2,461 (45.0)%
----------------
Earnings before minority interest 2,569 4,471 (42.5)%
Minority interest in earnings, net 79 112
----------------
Net earnings $ 2,490 $ 4,359 (42.9)%
================
Basic earnings per share (b) $ 1.23 $ 2.07 (40.6)%
================
Diluted earnings per share (b) $ 1.22 $ 2.06 (40.8)%
================
Weighted average number of
shares outstanding - Basic 2,027 2,104 (3.7)%
- Diluted 2,036 2,119 (3.9)%
(a) The detail of excise taxes on products sold is as follows:
2003 2002
----------------
Domestic tobacco $ 964 $ 974
International tobacco 4,673 3,784
Beer - -
----------------
Total excise taxes $ 5,637 $ 4,758
================
(b) 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.
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
----------------------------------------------
2003 Net Revenues $ 4,440 $ 8,912 $ 5,326 $ 2,154
2002 Net Revenues 5,022 7,644 5,225 1,991
% Change (11.6)% 16.6% 1.9% 8.2%
Reconciliation:
---------------
2002 Net Revenues $ 5,022 $ 7,644 $ 5,225 $ 1,991
Divested businesses -
2003 - - - (2)
Divested businesses -
2002 - - (7) (23)
Currency - 727 46 167
Operations (582) 541 62 21
----------------------------------------------
2003 Net Revenues $ 4,440 $ 8,912 $ 5,326 $ 2,154
==============================================
Financial
Beer services Total
---------------------------------
2003 Net Revenues $ - $ 107 $20,939
2002 Net Revenues - 114 19,996
% Change (6.1)% 4.7%
Reconciliation:
-----------------------
2002 Net Revenues $ - $ 114 $19,996
Divested businesses -
2003 - - (2)
Divested businesses -
2002 - - (30)
Currency - - 940
Operations - (7) 35
---------------------------------
2003 Net Revenues $ - $ 107 $20,939
=================================
Note: The detail of excise taxes on products sold is as follows:
2003 2002
-------------------
Domestic tobacco $ 964 $ 974
International tobacco 4,673 3,784
Beer - -
-------------------
Total excise taxes $ 5,637 $ 4,758
===================
Currency increased international tobacco excise taxes by $433
million.
ALTRIA GROUP, INC.
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
----------------------------------------------
2003 Operating Companies
Income $ 1,147 $ 1,719 $ 1,152 $ 307
2002 Operating Companies
Income 1,518 1,522 1,303 300
% Change (24.4)% 12.9% (11.6)% 2.3%
Reconciliation:
---------------
2002 Operating Companies
Income $ 1,518 $ 1,522 $ 1,303 $ 300
Divested businesses -
2003 - - - (1)
Divested businesses -
2002 - - (2) (5)
Domestic tobacco
headquarters
relocation charges -
2003 (27) - - -
Gains on sales of
businesses -
2003 - - - 23
Asset impairment and exit
costs - 2003 - - - (6)
Asset impairment and exit
costs - 2002 - 33 - -
Currency - 150 9 18
Operations (344) 14 (158) (22)
----------------------------------------------
2003 Operating Companies
Income $ 1,147 $ 1,719 $ 1,152 $ 307
==============================================
Financial
Beer services Total
--------------------------------
2003 Operating Companies
Income $ - $ 76 $ 4,401
2002 Operating Companies
Income - 82 4,725
% Change (7.3)% (6.9)%
Reconciliation:
---------------
2002 Operating Companies
Income $ - $ 82 $ 4,725
Divested businesses -
2003 - - (1)
Divested businesses -
2002 - - (7)
Domestic tobacco
headquarters relocation
charges - 2003 - - (27)
Gains on sales of
businesses - 2003 - - 23
Asset impairment and exit
costs - 2003 - - (6)
Asset impairment and exit
costs - 2002 - - 33
Currency - - 177
Operations - (6) (516)
--------------------------------
2003 Operating Companies
Income $ - $ 76 $ 4,401
================================
ALTRIA GROUP, INC.
and Subsidiaries
Condensed Statements of Earnings
For the Nine Months Ended September 30,
(in millions, except per share data)
2003 2002 % Change
-------------------------
Net revenues $61,141 $61,634 (0.8)%
Cost of sales 23,456 24,707 (5.1)%
Excise taxes on products (a) 15,868 13,916 14.0 %
----------------
Gross profit 21,817 23,011 (5.2)%
Marketing, administration and research costs 8,789 8,807
Domestic tobacco legal settlement 182 -
Domestic tobacco headquarters relocation
charges 36 -
Gains on sales of businesses (23) (3)
Food integration costs - 119
Food asset impairment and exit costs 6 142
International tobacco asset impairment
and exit costs - 58
Beer asset impairment and exit costs - 23
----------------
Operating companies income 12,827 13,865 (7.5)%
Amortization of intangibles 7 5
General corporate expenses 542 504
----------------
Operating income 12,278 13,356 (8.1)%
Gain on Miller transaction - (2,653)
Interest and other debt expense, net 847 881
----------------
Earnings before income taxes and minority
interest 11,431 15,128 (24.4)%
Provision for income taxes 3,996 5,370 (25.6)%
----------------
Earnings before minority interest 7,435 9,758 (23.8)%
Minority interest in earnings, net 322 424
----------------
Net earnings $ 7,113 $ 9,334 (23.8)%
================
Basic earnings per share (b) $ 3.51 $ 4.39 (20.0)%
================
Diluted earnings per share (b) $ 3.50 $ 4.34 (19.4)%
================
Weighted average number of
shares outstanding - Basic 2,027 2,128 (4.7)%
- Diluted 2,035 2,150 (5.3)%
(a) The detail of excise taxes on products sold is as follows:
2003 2002
----------------
Domestic tobacco $ 2,781 $ 2,913
International tobacco 13,087 10,550
Beer - 453
----------------
Total excise taxes $15,868 $13,916
================
(b) 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.
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
----------------------------------------------
2003 Net Revenues $12,755 $25,379 $16,350 $ 6,330
2002 Net Revenues 14,921 21,817 16,087 5,789
% Change (14.5)% 16.3% 1.6% 9.3%
Reconciliation:
---------------
2002 Net Revenues $14,921 $21,817 $16,087 $ 5,789
Divested businesses -
2003 - - - 6
Divested businesses -
2002 - - (17) (70)
Currency - 2,044 58 382
Operations (2,166) 1,518 222 223
----------------------------------------------
2003 Net Revenues $12,755 $25,379 $16,350 $ 6,330
==============================================
Financial
Beer services Total
--------------------------------
2003 Net Revenues $ - $ 327 $61,141
2002 Net Revenues 2,641 379 61,634
% Change (13.7)% (0.8)%
Reconciliation:
---------------
2002 Net Revenues $ 2,641 $ 379 $61,634
Divested businesses -
2003 - - 6
Divested businesses -
2002 (2,641) - (2,728)
Currency - - 2,484
Operations - (52) (255)
--------------------------------
2003 Net Revenues $ - $ 327 $61,141
================================
Note: The detail of excise taxes on products sold is as follows:
2003 2002
-------------------
Domestic tobacco $ 2,781 $ 2,913
International tobacco 13,087 10,550
Beer - 453
-------------------
Total excise taxes $15,868 $13,916
===================
Currency increased international tobacco excise taxes by $1,217
million.
ALTRIA GROUP, INC.
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
----------------------------------------------
2003 Operating Companies
Income $ 2,902 $ 5,012 $ 3,832 $ 840
2002 Operating Companies
Income 4,222 4,489 3,770 851
% Change (31.3)% 11.7% 1.6% (1.3)%
Reconciliation:
---------------
2002 Operating Companies
Income $ 4,222 $ 4,489 $ 3,770 $ 851
Divested businesses -
2003 - - - 3
Divested businesses -
2002 - - (4) (15)
Domestic tobacco legal
settlement -
2003 (182) - - -
Domestic tobacco
headquarters relocation
charges - 2003 (36) - - -
Gains on sales of
businesses - 2003 - - - 23
Gains on sales of
businesses - 2002 - - - (3)
Asset impairment and exit
costs - 2003 - - - (6)
Asset impairment and exit
costs - 2002 - 58 135 7
Integration costs - 2002 - - 102 17
Currency - 360 10 40
Operations (1,102) 105 (181) (77)
----------------------------------------------
2003 Operating Companies
Income $ 2,902 $ 5,012 $ 3,832 $ 840
==============================================
Financial
Beer services Total
--------------------------------
2003 Operating Companies
Income $ - $ 241 $12,827
2002 Operating Companies
Income 276 257 13,865
% Change (6.2)% (7.5)%
Reconciliation:
---------------
2002 Operating Companies
Income $ 276 $ 257 $13,865
Divested businesses -
2003 - - 3
Divested businesses -
2002 (299) - (318)
Domestic tobacco legal
settlement - 2003 - - (182)
Domestic tobacco
headquarters relocation
charges - 2003 - - (36)
Gains on sales of
businesses - 2003 - - 23
Gains on sales of
businesses - 2002 - - (3)
Asset impairment and exit
costs - 2003 - - (6)
Asset impairment and exit
costs - 2002 23 - 223
Integration costs - 2002 - - 119
Currency - - 410
Operations - (16) (1,271)
--------------------------------
2003 Operating Companies
Income $ - $ 241 $12,827
================================
ALTRIA GROUP, INC.
and Subsidiaries
Net Earnings and Diluted Earnings Per Share
For the Quarters Ended September 30,
($ in millions, except per share data)
Net Diluted
Earnings E.P.S.(a)
-------- --------
2003 $ 2,490 $ 1.22
2002 $ 4,359 $ 2.06
% Change (42.9)% (40.8)%
Reconciliation:
---------------
2002 Reported $ 4,359 $ 2.06
International tobacco asset impairment and
exit costs - 2002 21 0.01
Gain on Miller transaction - 2002 (1,711) (0.81)
Domestic tobacco headquarters relocation
charges - 2003 (17) (0.01)
Gains on sales of businesses - 2003, net of
minority interest impact 13 -
Food asset impairment and exit costs - 2003,
net of minority interest impact (3) -
Currency 114 0.05
Effect of change in shares outstanding - 0.05
Effect of change in tax rate 39 0.02
Operations (325) (0.15)
-------- --------
2003 Reported $ 2,490 $ 1.22
======== ========
(a) 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.
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.(a)
-------- --------
2003 $ 7,113 $ 3.50
2002 $ 9,334 $ 4.34
% Change (23.8)% (19.4)%
Reconciliation:
---------------
2002 Reported $ 9,334 $ 4.34
Gains on sales of businesses - 2002, net of
minority interest impact (2) -
Food integration costs - 2002, net of minority
interest impact 64 0.03
Food exit costs - 2002, net of minority
interest impact 77 0.03
International tobacco asset impairment and exit
costs - 2002 37 0.02
Beer asset impairment and exit costs - 2002 15 0.01
Gain on Miller transaction - 2002 (1,711) (0.80)
Domestic tobacco legal settlement - 2003 (118) (0.06)
Domestic tobacco headquarters relocation
charges - 2003 (23) (0.01)
Gains on sales of businesses - 2003, net of
minority interest impact 13 0.01
Food asset impairment and exit costs - 2003,
net of minority interest impact (3) -
Currency 265 0.12
Effect of change in shares outstanding - 0.19
Effect of change in tax rate 58 0.03
Operations (893) (0.41)
-------- --------
2003 Reported $ 7,113 $ 3.50
======== ========
(a) 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.
and Subsidiaries
Condensed Balance Sheets
(in millions, except ratios)
September December
30, 31,
2003 2002
-------- --------
Assets
------
Cash and cash equivalents $ 6,048 $ 565
All other current assets 16,811 16,876
Property, plant and equipment, net 15,377 14,846
Goodwill 26,751 26,037
Other intangible assets, net 11,807 11,834
Other assets 9,029 8,151
------- -------
Total consumer products assets 85,823 78,309
Total financial services assets 8,603 9,231
------- -------
Total assets $94,426 $87,540
======= =======
Liabilities and Stockholders' Equity
------------------------------------
Short-term borrowings $ 4,427 $ 407
Current portion of long-term debt 1,510 1,558
Accrued settlement charges 3,287 3,027
All other current liabilities 13,898 14,090
Long-term debt 18,548 19,189
Deferred income taxes 6,487 6,112
Other long-term liabilities 15,303 15,498
------- -------
Total consumer products liabilities 63,460 59,881
Total financial services liabilities 8,137 8,181
------- -------
Total liabilities 71,597 68,062
Total stockholders' equity 22,829 19,478
------- -------
Total liabilities and stockholders' equity $94,426 $87,540
======= =======
Total consumer products debt $24,485 $21,154
Debt/equity ratio - consumer products 1.07 1.09
Total debt $26,568 $23,320
Total debt/equity ratio 1.16 1.20