Altria Group, Inc. Reports 2002 Full-Year and Fourth-Quarter Results.Business Editors NEW YORK--(BUSINESS WIRE)--Jan. 29, 2003 Altria Group “Philip Morris” redirects here. For the racecar driver, see Philip Morris (autoracer). Altria Group, Inc. (NYSE: MO) (previously named Philip Morris Companies Inc. , Inc. (NYSE NYSE See: New York Stock Exchange : MO): Full-Year 2002 Highlights: -- Diluted earnings per share up 34.6% to $5.21, including a $1.7 billion after-tax Miller gain, a $290 million provision for airline industry exposure and other applicable items in "Factors Affecting Comparisons to 2001" -- Diluted earnings per share up 3.4% to $4.57, excluding Miller gain, provision for airline industry exposure and other applicable items in "Factors Affecting Comparisons to 2001" -- Net earnings up 29.7% to $11.1 billion, including Miller gain, provision for airline industry exposure and other applicable items in "Factors Affecting Comparisons to 2001" -- Net earnings down 0.3% to $9.7 billion, excluding Miller gain, provision for airline industry exposure and other applicable items in "Factors Affecting Comparisons to 2001" -- Kraft Foods Inc. and Philip Morris International Inc. deliver strong results -- Philip Morris USA Inc.'s volume down 7.5% for full year; new promotional strategy drives sequential retail share improvement in second half of year -- Dividend raised 10.3% to annualized rate of $2.56 in August 2002 -- 134 million shares repurchased at a total cost of $6.3 billion for full-year 2002 -- Altria Group, Inc., the new name of the parent company of Kraft Foods, Philip Morris International and Philip Morris USA, is effective January 27, 2003 Fourth-Quarter 2002 Highlights: -- Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of down 14.1% to $0.85, including applicable items in "Factors Affecting Comparisons to 2001" -- Diluted earnings per share down 15.5% to $0.93, excluding applicable items in "Factors Affecting Comparisons to 2001" -- Net earnings down 18.3% to $1.8 billion, including applicable items in "Factors Affecting Comparisons to 2001" -- Net earnings down 19.9% to $1.9 billion, excluding applicable items in section titled "Factors Affecting Comparisons to 2001" Audio Webcast: A conference call with members of the investment community will be Webcast at 2:00 p.m. ET on January January: see month. 29, 2003. Access is available at www.altria.com. Full-Year 2002: Diluted earnings per share up 34.6% to $5.21, including Miller gain, provision for airline industry exposure and other applicable items in "Factors Affecting Comparisons to 2001" Diluted earnings per share up 3.4% to $4.57, excluding Miller gain, provision for airline industry exposure and other applicable items in "Factors Affecting Comparisons to 2001" Fourth-Quarter 2002: Diluted earnings per share down 14.1% to $0.85, including applicable items in "Factors Affecting Comparisons to 2001" Diluted earnings per share down 15.5% to $0.93, excluding applicable items in "Factors Affecting Comparisons to 2001" Effective January 27, 2003, Altria Group, Inc., is the new name of the parent company of Kraft Foods Kraft Foods Inc. (NYSE: KFT) is the largest food and beverage company headquartered in North America and the second largest in the world after Nestlé SA. The Philip Morris Company (now known as Altria Group), a company that produces tobacco products, acquired Kraft for Inc., Philip Morris International Philip Morris International, (PMI) based in Lausanne, Switzerland, held a 15.5% share of the international cigarette market in 2005. Its brands, led by Marlboro and L&M, are sold in over 160 countries around the world. Inc. and Philip Morris USA Philip Morris USA is the United States tobacco division of Altria Group, Inc. General information On January 27, 2003, Philip Morris Companies Inc. changed its name to Altria Group, Inc. Even under this new name, Altria continues to own 100% of Philip Morris USA. Inc. For clarity, this news release refers to Altria Group, Inc. even when historical events took place under the parent company's former name of Philip Philip, tetrarch of Ituraea Philip, d. A.D. 34, tetrarch of Ituraea, son of Herod the Great. He was perhaps the ablest of the Herod dynasty. He is mentioned in the Gospel of St. Luke. Morris Companies Inc. Beginning with this news release, in view of recently adopted SEC rules, Altria Group, Inc. is no longer reporting its financial results on an underlying basis. Altria Group, Inc. (NYSE: MO) announced today that full-year 2002 diluted earnings per share rose 34.6% to $5.21 while net earnings increased 29.7% to $11.1 billion, including the gain on the Miller transaction, the cessation cessation Vox populi The stopping of a thing. See Smoking cessation. of goodwill amortization, a provision for airline industry exposure, a tobacco litigation-related charge in 2001, gains on sales of businesses and other applicable items listed in the section of this news release titled "Factors Affecting Comparisons to 2001." Excluding the effects of these items, diluted earnings per share increased 3.4% to $4.57 and net earnings decreased 0.3% to $9.7 billion. This performance was in line with Altria Group, Inc.'s previously announced earnings per share guidance range. Fourth quarter 2002 diluted earnings per share decreased 14.1% to $0.85 and net earnings decreased 18.3% to $1.8 billion. Excluding the provision for airline industry exposure and other applicable items as listed in "Factors Affecting Comparisons to 2001," fourth quarter diluted earnings per share decreased 15.5% to $0.93 and net earnings decreased 19.9% to $1.9 billion. "Altria Group, Inc. had a mixed performance in 2002. Philip Morris International and Kraft Foods delivered strong results in a difficult global economic environment," said Louis C. Camilleri Louis C. Camilleri (b. 1955, Alexandria, Egypt) is the Chairman and CEO of Altria Group, the parent company of Philip Morris. Camilleri received a degree in economics and business administration from HEC Lausanne, the prestigious business school of the University of Lausanne , chairman and chief executive officer. "However, solid results in those businesses were largely offset by lower income at Philip Morris USA, which faced a particularly challenging period, and Philip Morris Capital Corporation, reflecting a provision for exposure related to the troubled airline industry." "Although shipment volume and income for Philip Morris USA were down significantly in the fourth quarter versus a year ago, Philip Morris USA's total retail share was up 0.9 points sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen from the third quarter of 2002 to the fourth quarter of 2002 and Marlboro retail share was up 1.1 points to 38.8% during the same period," Mr. Camilleri Camilleri is a surname. People with Camilleri as a surname
"In 2003, we look forward to another year of solid fundamental performance for Philip Morris International and Kraft Foods, driven by new products and organic volume growth. We project that the strategies Philip Morris USA has adopted will result in lower income, but moderate share growth in its focus brands in 2003. The dynamics of the U.S. cigarette cigarette Paper-wrapped roll of finely cut tobacco for smoking. Cigarette tobacco is usually milder than cigar tobacco. The Aztecs and other New World peoples smoked tobacco in hollow reeds, in canes, or wrapped in leaves, but it was in pipes and as cigars (cut tobacco market are such today that these strategies are not only appropriate, but key to the long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. strength of Philip Morris USA's brand portfolio," Mr. Camilleri said. "For the full-year 2003, we are projecting diluted earnings per share for Altria Group, Inc. to be in the range of $4.60 to $4.70, compared with $4.57 for 2002," Mr. Camilleri said. "The factors described in the Forward-Looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. and Cautionary Statements section of this release represent continuing risks to these projections, including the effects of cigarette retail price increases as a result of excise tax Excise Tax 1. An indirect tax charged on the sale of a particular good. 2. A penalty tax applied to ineligible transactions in retirement accounts. This penalty is assessed by and paid to the IRS. Notes: 1. increases, consumer preferences within cigarette price segments and further deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. of the airline industry." During 2002, Altria Group, Inc. raised its dividend 10.3% to an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. rate of $2.56 per common share. It also spent $6.3 billion to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. 134 million shares of its common stock, representing 6.2% of its shares outstanding at December December: see month. 31, 2001. On January 27, 2003, Altria Group, Inc. announced that it had filed a name change in the Commonwealth of Virginia Virginia, state, United States Virginia, state of the south-central United States. It is bordered by the Atlantic Ocean (E), North Carolina and Tennessee (S), Kentucky and West Virginia (W), and Maryland and the District of Columbia (N and NE). , effective that date, making official the renaming proposal approved overwhelmingly by shareholders in April 2002. Its stock began trading under the Altria Group, Inc. name on January 27, 2003. Altria Group, Inc. introduced a new logo, a square mosaic of colors not of the white race; - commonly meaning, esp. in the United States, of negro blood, pure or mixed. See also: Color adopted from the most popular brands of its operating companies operating company A business that engages in transactions with outsiders. , but is retaining the NYSE stock symbol MO. DOMESTIC TOBACCO Full-Year 2002 Results Operating companies income for Philip Morris USA Inc., Altria Group, Inc.'s domestic tobacco business, decreased 4.8% to $5.0 billion in 2002 versus 2001. However, excluding a $500 million litigation-related charge in 2001, operating companies income decreased 13.1% as lower volume, higher promotional spending in a highly competitive environment and a provision for an individual smoking and health case in Oregon Oregon, city, United States Oregon, city (1990 pop. 18,334), Lucas co., NW Ohio, a suburb adjacent to Toledo, on Lake Erie; inc. 1958. It is a port with railroad-owned and -operated docks. The city has industries producing oil, chemicals, and metal products. were partially offset by higher pricing. Philip Morris USA's shipment volume decreased 7.5% to 191.6 billion units for the full year, versus a decline in industry shipments of 3.7% to 391.4 billion units in 2002, as reported by Management Science Associates (see Note 1 at end of text). As a result, Philip Morris USA's shipment share decreased by 2.1 points to 48.9%. Among the factors contributing to Philip Morris USA's decline in shipment share and volume were a weak economic environment and resulting consumer frugality, sharp increases in state excise taxes excise taxes, governmental levies on specific goods produced and consumed inside a country. They differ from tariffs, which usually apply only to foreign-made goods, and from sales taxes, which typically apply to all commodities other than those specifically exempted. and heightened competition. Philip Morris USA was disproportionately dis·pro·por·tion·ate adj. Out of proportion, as in size, shape, or amount. dis  pro·por affected by price
competition during 2002 because of its large share of the premium
segment.During the first nine months of 2002, the deep-discount segment grew rapidly as price gaps widened between deep-discount and premium cigarettes. Consequently, in July July: see month. of 2002, Philip Morris USA announced plans to increase its promotional spending and to cover more retail outlets retail outlet n → punto de venta retail outlet n → point m de vente retail outlet retail n → with an expanded sales force. As a result of the increased promotional spending, which was stepped up in the fourth quarter, combined retail share for Philip Morris USA's four focus brands, Marlboro, Parliament, Virginia Slims Virginia Slims cigarette trademark marketed to “independent women.” “You’ve come a long way, baby,” as slogan. [Trademarks: Crowley Trade, 630] See : Feminism and Basic, increased 1.0 share point to 47.5% from the third quarter of 2002 to the fourth quarter of 2002, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. data from Information Resources (1) The data and information assets of an organization, department or unit. See data administration. (2) Another name for the Information Systems (IS) or Information Technology (IT) department. See IT. Inc./Capstone (see Note 2 at end of text). During the same time period, Marlboro retail share increased 1.1 points to 38.8%. The table below summarizes 2002 quarterly retail share performance from Information Resources Inc./Capstone for Philip Morris USA's key brands:
Q1 2002 Q2 2002 Q3 2002 Q4 2002
------- ------- ------- -------
Marlboro 38.5% 38.3% 37.7% 38.8%
Parliament 1.3% 1.5% 1.4% 1.4%
Virginia Slims 2.7% 2.6% 2.6% 2.6%
Basic 5.1% 4.9% 4.8% 4.7%
------- ------- -------- -------
Subtotal for
Focus Brands 47.6% 47.3% 46.5% 47.5%
Other PM USA 3.1% 2.9% 2.7% 2.6%
------- ------- -------- -------
Total PM USA 50.7% 50.2% 49.2% 50.1%
For the full-year 2002 versus 2001, combined retail share for Philip Morris USA's four focus brands was marginally up. The table below summarizes retail share performance from Information Resources Inc./Capstone for the full-year 2002 versus 2001 for Philip Morris USA's key brands:
2002 2001 Change
---- ---- ------
Marlboro 38.3% 38.2% + 0.1pp
Parliament 1.4% 1.2% + 0.2pp
Virginia Slims 2.6% 2.7% - 0.1pp
Basic 4.9% 5.1% - 0.2pp
----- ----- ------
Subtotal for
Focus Brands 47.2% 47.2% -- (a)
Other PM USA 2.9% 3.6% - 0.7pp
----- ----- ------
Total PM USA 50.1% 50.8% - 0.7pp
(a) On an unrounded basis, retail share for PM USA's focus brands was
up 0.15 share points.
Other factors affecting Philip Morris USA's results in 2002 include increased sales of some manufacturers, both domestic and foreign, that are not complying with either the Master Settlement Agreement (MSA (Metropolitan Service Area) An urban area with at least 50,000 people plus surrounding counties. There are 306 MSAs and 428 RSAs (rural service areas) in the U.S. MSAs and RSAs are used to allocate cellular licenses. ) or related state escrow escrow Instrument, such as a deed, money, or property, that constitutes evidence of obligations between two or more parties and is held by a third party. It is delivered by the third party only upon fulfillment of some condition. legislation, and an increase in illegally sold cigarettes, including counterfeit To falsify, deceive, or defraud. A copy or imitation of something that is intended to be taken as authentic and genuine in order to deceive another. A counterfeit coin is one that may pass for a genuine coin and may include a lower denomination coin altered so that it may cigarettes. Philip Morris USA is continuing to take aggressive action to address these issues and believes that progress is being made to address MSA and related state escrow compliance and counterfeit enforcement. In early 2003, Philip Morris USA announced to the wholesale and retail trade an off-invoice promotional allowance on its four focus brands through March 30, 2003, extending the reach of its price promotions to a greater number of retail stores. Fourth-Quarter 2002 Results In the fourth quarter, operating companies income for Philip Morris USA Inc. decreased 50.7% to $789 million, due to lower volume, higher promotional spending and a provision for an individual smoking and health case in Oregon. Philip Morris USA's shipment volume decreased 11.5% to 43.7 billion units versus the fourth quarter of 2001, due to the same factors mentioned above for full-year results and the timing of promotional shipments. Industry shipments as reported by Management Science Associates (see Note 1 at end of text) decreased 7.3% to 90.4 billion units in the fourth quarter. Philip Morris USA's shipment share decreased by 2.3 points to 48.3% in the fourth quarter of 2002. On a sequential One after the other in some consecutive order such as by name or number. basis, Philip Morris USA's shipment share decreased by 0.4 points to 48.3% from the third quarter to the fourth quarter of 2002, primarily reflecting promotional distortions. According to data from Information Resources Inc./Capstone (see Note 2 at end of text), combined retail share for PM USA's four focus brands, Marlboro, Parliament, Virginia Slims and Basic, increased 0.3 points to 47.5% during the fourth quarter of 2002 versus the fourth quarter of 2001, due mainly to Marlboro's strong increase. The table below summarizes retail share performance from Information Resources Inc./Capstone for the fourth-quarter 2002 versus the fourth-quarter 2001 for Philip Morris USA's key brands:
Q4 2002 Q4 2001 Change
------- ------- ------
Marlboro 38.8% 38.1% + 0.7pp
Parliament 1.4% 1.3% + 0.1pp
Virginia Slims 2.6% 2.7% - 0.1pp
Basic 4.7% 5.1% - 0.4pp
------- ------- ------
Subtotal for
Focus Brands 47.5% 47.2% + 0.3pp
Other PM USA 2.6% 3.4% - 0.8pp
------- ------- ------
Total PM USA 50.1% 50.6% - 0.5pp
INTERNATIONAL TOBACCO Full-Year 2002 Results For the full year, operating companies income for Philip Morris International Inc. (PMI See Private Mortgage Insurance. ), Altria Group, Inc.'s international tobacco business, rose 4.8% to $5.7 billion. Excluding $58 million of charges taken during the year for separation programs and asset impairments, PMI's operating companies income increased 5.9% to $5.7 billion, driven by higher pricing, higher volume/mix and lower costs, partially offset by unfavorable currency exchange rates of $231 million. Shipment volume increased 3.5% to 723.1 billion units, led by strong gains in Japan, Russia Russia, officially the Russian Federation, Rus. Rossiya, republic (2005 est. pop. 143,420,000), 6,591,100 sq mi (17,070,949 sq km). , Turkey and an improved performance in Germany Germany (jûr`mənē), Ger. Deutschland, officially Federal Republic of Germany, republic (2005 est. pop. 82,431,000), 137,699 sq mi (356,733 sq km). . PMI achieved market share gains in the key income markets of Austria Austria (ô`strēə), Ger. Österreich [eastern march], officially Republic of Austria, federal republic (2005 est. pop. 8,185,000), 32,374 sq mi (83,849 sq km), central Europe. , Belgium Belgium (bĕl`jəm), Du. België, Fr. La Belgique, officially Kingdom of Belgium, constitutional kingdom (2005 est. pop. 10,364,000), 11,781 sq mi (30,513 sq km), NW Europe. , the Canary Islands Canary Islands, Span. Islas Canarias, group of seven islands (1990 pop. 1,589,403), 2,808 sq mi (7,273 sq km), autonomous region of Spain, in the Atlantic Ocean off Western Sahara. They constitute two provinces of Spain. Santa Cruz de Tenerife (1990 pop. , the Czech Republic Czech Republic, Czech Česká Republika (2005 est. pop. 10,241,000), republic, 29,677 sq mi (78,864 sq km), central Europe. It is bordered by Slovakia on the east, Austria on the south, Germany on the west, and Poland on the north. , France, Germany, Greece Greece, Gr. Hellas or Ellas, republic (2005 est. pop. 10,668,000), 50,944 sq mi (131,945 sq km), SE Europe. It occupies the southernmost part of the Balkan Peninsula and borders on the Ionian Sea in the west, on the Mediterranean Sea in the south, on , Japan, Malaysia Malaysia (məlā`zhə), independent federation (2005 est. pop. 23,953,000), 128,430 sq mi (332,633 sq km), Southeast Asia. The official capital and by far the largest city is Kuala Lumpur; Putrajaya is the adminstrative capital. , Mexico Mexico, city, Mexico Mexico or Mexico City, Span. Ciudad de México (Méjico), city (1990 pop. 8,236,960; 1991 met. area est. 20,899,000), central Mexico, capital and largest city of Mexico. , the Netherlands Netherlands (nĕth`ərləndz), Du. Nederland or Koninkrijk der Nederlanden, officially Kingdom of the Netherlands, constitutional monarchy (2005 est. pop. 16,407,000), 15,963 sq mi (41,344 sq km), NW Europe. , Russia, Spain Spain, Span. España (āspä`nyä), officially Kingdom of Spain, constitutional monarchy (2005 est. pop. 40,341,000), 194,884 sq mi (504,750 sq km), including the Balearic and Canary islands, SW Europe. , Switzerland Switzerland (swĭt`sərlənd), Fr. Suisse, Ger. Schweiz, Ital. Svizzera, officially Swiss Confederation, federal republic (2005 est. pop. 7,489,000), 15,941 sq mi (41,287 sq km), central Europe. , Turkey, the Ukraine Ukraine (y  `krān, ykrān`), Ukr. Ukraina, republic (2005 est. pop. and the United Kingdom.In Western Europe Western Europe The countries of western Europe, especially those that are allied with the United States and Canada in the North Atlantic Treaty Organization (established 1949 and usually known as NATO). , shipment volume rose 0.7%, due mainly to gains in Germany, the Benelux Be·ne·lux An economic union of Belgium, the Netherlands, and Luxembourg, originally established as a customs union in 1948. Noun 1. countries, Greece, Austria and Spain, partially offset by lower volume in France and Italy Italy (ĭt`əlē), Ital. Italia, officially Italian Republic, republic (2005 est. pop. 58,103,000), 116,303 sq mi (301,225 sq km), S Europe. . In France, volume was lower due to a decline in the total industry, and in Italy, volume and share declined as a result of increased competition in the low-price segment. In Germany, following four years of volume and share declines, volume rose 1.3% and share grew 0.1 points versus the prior year to 36.9%. PMI's total market share in Western Europe advanced 0.3 points to 39.0%, driven primarily by Marlboro, which gained share in all key markets in the region. In Central Europe Central Europe is the region lying between the variously and vaguely defined areas of Eastern and Western Europe. In addition, Northern, Southern and Southeastern Europe may variously delimit or overlap into Central Europe. , the Middle East and Africa (CEMA CEMA Conveyor Equipment Manufacturers Association CEMA Chef d'Etat-Major des Armees CEMA Consumer Electronics Manufacturers Association CEMA Canadian Egg Marketing Agency CEMA Council for the Encouragement of Music and the Arts ), volume increased 2.4%, driven by the robust growth of L&M in Turkey and Romania Romania (rōmān`ēə, –yə) or Rumania (r –), republic (v), 91,699 sq mi (237,500 sq km), SE Europe. , partially offset by declines in Poland Poland, Pol. Polska, officially Republic of Poland, republic (2005 est. pop. 38,635,000), 120,725 sq mi (312,677 sq km), central Europe. It borders on Germany in the west, on the Baltic Sea and the Kaliningrad region of Russia in the north, on Lithuania, , Egypt Egypt (ē`jĭpt), Arab. Misr, biblical Mizraim, officially Arab Republic of Egypt, republic (2005 est. pop. 77,506,000), 386,659 sq mi (1,001,449 sq km), NE Africa and SW Asia. and Lebanon Lebanon, country, AsiaLebanon (lĕb`ənən, –nŏn'), officially Republic of Lebanon, republic (2005 est. pop. 3,826,000), 4,015 sq mi (10,400 sq km), SW Asia. , reflecting weak economic conditions. In Eastern Europe Eastern Europe The countries of eastern Europe, especially those that were allied with the USSR in the Warsaw Pact, which was established in 1955 and dissolved in 1991. , PMI volume advanced 12.6%, due to continued strong growth in Russia, driven by the robust performances of L&M, Chesterfield Chesterfield, city (1991 pop. 73,352) and district, Derbyshire, central England. An important industrial center, Chesterfield produces mining equipment, railroad cars, metal products, glass, and pottery. , Parliament, Virginia Slims and local brand Optima, and solid growth in the Ukraine. In Asia, volume increased 3.3%, due mainly to gains in Indonesia Indonesia (ĭn'dənē`zhə), officially Republic of Indonesia, republic (2005 est. pop. 241,974,000), c.735,000 sq mi (1,903,650 sq km), SE Asia, in the Malay Archipelago. , Japan, Malaysia, the Philippines Philippines officially Republic of the Philippines Island country, western Pacific Ocean, on an archipelago off the southeast coast of Asia. Area: 122,121 sq mi (316,294 sq km). Population (2005 est.): 84,191,000. , Taiwan Taiwan (tī`wän`), Portuguese Formosa, officially Republic of China, island nation (2005 est. pop. 22,894,000), 13,885 sq mi (35,961 sq km), in the Pacific Ocean, separated from the mainland of S China by the 100-mi-wide (161-km) Taiwan and Thailand Thailand (tī`lănd, –lənd), Thai Prathet Thai [land of the free], officially Kingdom of Thailand, constitutional monarchy (2005 est. pop. 65,444,000), 198,455 sq mi (514,000 sq km), Southeast Asia. , partially offset by declines in Hong Kong Hong Kong (hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong prov. , Korea Korea (kôrē`ə, kə–), Korean Hanguk or Choson, region and historic country (85,049 sq mi/220,277 sq km), E Asia. and Singapore Singapore (sĭng`gəpôr, sĭng`ə–, sĭng'gəpôr`), officially Republic of Singapore, republic (2005 est. pop. 4,426,000), 240 sq mi (625 sq km). , reflecting lower industry sales and heightened competition. In Japan, share increased 1.2 points to a record 23.6%, driven by the strong performances of both Lark and Marlboro. In Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. , volume increased 2.4%, due mainly to Argentina Argentina (ärjəntē`nə, Span. ärhāntē`nä), officially Argentine Republic, republic (2005 est. pop. 39,538,000), 1,072,157 sq mi (2,776,889 sq km), S South America. , Brazil Brazil (brəzĭl`), Port. Brasil, officially Federative Republic of Brazil, republic (2005 est. pop. 186,113,000), 3,286,470 sq mi (8,511,965 sq km), E South America. and Mexico, partially offset by declines in Paraguay Paraguay, river, Brazil and Paraguay Paraguay, river, c.1,300 mi (2,090 km) long, rising in the highlands of central Mato Grosso state, Brazil. Flowing generally southward, it forms the border between Brazil and Paraguay in the pantanal, then crosses the and Venezuela Venezuela (vĕnəzwā`lə, Span. vānāswā`lä), officially the Bolivarian Republic of Venezuela, republic (2005 est. pop. 25,375,000), 352,143 sq mi (912,050 sq km), N South America. . In Argentina, PMI's share advanced 0.9 points to a record 65.2%, due to the continued strength of the Philip Morris brand. Fourth-Quarter 2002 Results In the fourth quarter, operating companies income for PMI rose 11.0% to $1.2 billion, driven by higher pricing and volume gains, partially offset by higher costs and unfavorable currency exchange rates of $6 million. Shipment volume increased 6.4% to 165.8 billion units, driven by gains in the key regions of Western Europe, Central Europe, Eastern Europe, Asia and Latin America, partially offset by a decline in the Middle East due to weak economic conditions, mainly in Egypt and Lebanon. Volume also benefited in the fourth quarter from the timing of shipments to Japan as a result of the shutdown shut·down n. A cessation of operations or activity, as at a factory. shutdown Noun the closing of a factory, shop, or other business Verb shut down of U.S. West Coast shipping ports during the third quarter of 2002. Absent this distortion distortion, in electronics, undesired change in an electric signal waveform as it passes from the input to the output of some system or device. In an audio system, distortion results in poor reproduction of recorded or transmitted sound. , PMI volume would have been up 5.1%. During the quarter, PMI achieved particularly strong market share gains in these top income markets: Austria, Belgium, the Canary Islands, Germany, Greece, Japan, Malaysia, Mexico, the Netherlands, Poland, Russia, Singapore, Spain, Turkey, the Ukraine and the United Kingdom. Marlboro volume, following six quarters of declines, rose 2.6% versus the prior year. FOOD Yesterday, Kraft Foods Inc. (Kraft) reported 2002 full-year and fourth-quarter results. For the full-year 2002, Kraft worldwide volume increased 6.7%. Excluding the volume impact of divested businesses and the inclusion of businesses previously held for sale, worldwide volume increased 3.1%. Worldwide operating companies income increased 4.1% to $6.3 billion. However, operating companies income comparisons are affected by charges in each year, primarily related to separation programs and the integration of the Nabisco businesses, as well as gains on sales of businesses. Excluding these items and the effect of divested businesses and the inclusion of businesses previously held for sale, worldwide operating companies income increased 5.5% to $6.4 billion. For the fourth quarter, Kraft worldwide volume increased 8.5%, or 4.3% excluding the previously listed items. Operating companies income increased 7.8% to $1.7 billion, due in part to gains on sales of businesses of $77 million. Excluding the previously listed items, operating companies income grew 1.5% to $1.6 billion during the quarter. NORTH AMERICAN North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. FOOD Full-Year 2002 Results For the full-year, volume for Kraft Foods North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , Inc. (KFNA KFNA Kraft Foods North America ) increased 8.2%, due in part to the reconsolidation Re`con`sol`i`da´tion n. 1. The act or process of reconsolidating; the state of being reconsolidated. in 2002 of a former Nabisco business that had been held for sale. Excluding this item and the impact of divested businesses, KFNA volume increased 2.8%, behind strong marketing programs and new products. Operating companies income improved by 3.3% to $5.0 billion. However, operating companies income comparisons are affected by separation programs and Nabisco integration charges. Excluding those charges, as well as divestitures, gains on sales of businesses and the impact of the inclusion of businesses previously held for sale, operating companies income increased 5.6% to $5.2 billion, driven by volume growth and productivity and synergy The enhanced result of two or more people, groups or organizations working together. In other words, one and one equals three! It comes from the Greek "synergia," which means joint work and cooperative action. savings, partially offset by increased marketing spending and higher benefit costs, primarily related to pensions. Fourth-Quarter 2002 Results In the fourth quarter, volume for KFNA increased 10.6%, or 4.0%, excluding the impact of divestitures and businesses held for sale, as all four of its business segments recorded higher shipments. Operating companies income improved by 5.9% to $1.2 billion. Excluding the impact of the previously listed items, as well as gains on sales of businesses, operating companies income increased 3.0% to $1.2 billion, driven by volume growth and productivity and synergy savings, partially offset by higher marketing spending and higher benefit costs. INTERNATIONAL FOOD Full-Year 2002 Results For the full-year, volume for Kraft Foods International, Inc. (KFI KFI Key from Image KFI Key Facts Illustration (UK financial services) KFI Kraft Foods International KFI Korea Fire Equipment Inspection Corporation KFI Key Frame Interval KFI Kernel Function Instrumentation ) increased 2.8%, or 3.7% excluding the impact of divested businesses, due to acquisitions, successful new product introductions, geographic geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. expansion and strengthened marketing programs partially offset by a significant adverse impact from the Latin America economic crisis. Operating companies income improved by 7.3% to $1.3 billion, including the impact of gains on sales of businesses. Excluding the impact of these gains, as well as income from divested businesses and charges for separation and integration programs, operating companies income increased 4.9% to $1.3 billion, driven by volume growth and continued productivity and synergy savings. Fourth-Quarter 2002 Results In the fourth quarter, volume for KFI increased 4.0%, or 5.1% excluding the impact of divested businesses and businesses held for sale, with growth from both the Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , Middle East and Africa (EMEA (Europe, Middle East, Africa) Refers to that region of the world. For example, one might see products packaged differently for the UK, EMEA and Asia Pacific markets. )
region and the Latin America and Asia Pacific (LAAP LAAP Louisiana Army Ammunition PlantLAAP Longhorn Army Ammunition Plant ) region benefiting from acquisitions. Operating companies income increased 12.7% to $479 million, including gains on sales of businesses. Excluding the impact of these gains, as well as income from divested businesses, operating companies income decreased 2.4% to $409 million, with growth in the EMEA region more than offset by a shortfall Shortfall The amount by which the capital required to fulfill a financial obligation exceeds available capital. Notes: Shortfall risk is often combated with an efficient hedging strategy created by a fund, group, institution, or individual. in the LAAP region, which was adversely impacted by the economic crisis in Latin America. FINANCIAL SERVICES The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. Operating companies income for Philip Morris Capital Corporation (PMCC PMCC Product Moment Correlation Coefficient PMCC Postmark Collectors Club PMCC Professional Military Comptroller Course PMCC Packet Mode Channel Connect PMCC Project Management Core Competency PMCC Pensky-Martens Closed Cup test ) of $55 million for the full year 2002 was down 81.4% versus the prior year and down more than 100% for the fourth quarter. These results reflect the recording of a $290 million provision for exposure related to the troubled airline industry. Excluding the impact of this provision, PMCC operating companies income increased 16.6% for the full year and 8.6% for the fourth quarter, as a result of the growth of its leasing portfolio and gains delivered from its asset management activities, including a significant gain during the second quarter of 2002 from the early termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. of a lease. Factors Affecting Comparisons to 2001 Management uses net earnings, diluted earnings per share and operating companies income measures, excluding factors affecting comparisons to 2001, to manage and to evaluate the performance of Altria Group, Inc. and its operating subsidiaries An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. . Management believes it is appropriate to disclose these measures to assist investors with analyzing business performance and trends. These measures should not be considered in isolation or as a substitute for net earnings, diluted earnings per share or operating companies income prepared in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with accounting principles generally accepted in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . Miller transaction. On July 9, 2002, Altria Group, Inc. closed on an agreement to merge See mail merge and concatenate. Miller Brewing Company Miller Brewing Company is the second largest American beermaker and is based in Milwaukee. It is owned by SABMiller. Miller owns breweries in Albany, Georgia; Chippewa Falls, Wisconsin; Eden, North Carolina; Fort Worth, Texas; Irwindale, California; Milwaukee, Wisconsin and into South African Breweries South African Breweries was founded in 1895 by Jacob Letterstedt specifically to serve a new market of miners and prospectors in and around Johannesburg. Two years later, it became the first industrial company to list on the Johannesburg Stock Exchange (JSE). plc, forming the world's second-largest brewer, SABMiller SABMiller (South African Breweries - Miller) (LSE: SAB, JSE: SAB,Official site) is one of the world’s largest brewers, with brewing interests and distribution agreements in over 60 countries across six continents. plc. At closing, Altria Group, Inc. received 430 million shares in SABMiller valued at approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $3.4 billion, based upon a share price of 5.12 British pounds per share, in exchange for Miller, which had $2.0 billion of existing debt. The shares in SABMiller owned by Altria Group, Inc. resulted in a 36% economic interest in SABMiller and a 24.9% voting interest Voting interest in business and accounting is a percentage of voting stock owned. This notion is different from economic interest that refers to a percentage of all the equity issued, including preferred stock, warrants, and so on. . The transaction resulted in a pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta gain of approximately $2.6 billion or approximately $1.7 billion after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. in the third quarter of 2002. Beginning with the third quarter of 2002, Altria Group, Inc.'s ownership interest in SABMiller is being accounted for under the equity method. Accordingly, Altria Group, Inc. is recording its share of SABMiller's net earnings based on its ownership percentage. Cessation of goodwill amortization. In accordance with new accounting standards, Altria Group, Inc. ceased amortizing goodwill as of January 1, 2002. Since the majority of goodwill in the Altria Group, Inc. consolidated balance sheet consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. relates to Kraft, the elimination of goodwill amortization results in a corresponding charge to minority interest expense. The net impact of the application of this standard was an increase to diluted earnings per share of $0.38 for the full year and $0.11 for the fourth quarter. Provision for airline industry exposure. During the fourth quarter of 2002, PMCC increased its allowance for exposure by $290 million pre-tax related to the troubled airline industry. 2001 litigation-related charge. During the first quarter of 2001, Philip Morris USA recorded a pre-tax charge of $500 million related to a class action suit in Florida Florida, state, United States Florida (flôr`ĭdə, flŏr`–), state in the extreme SE United States. A long, low peninsula between the Atlantic Ocean (E) and the Gulf of Mexico (W), Florida is bordered by Georgia and . Gains on sales of businesses. During the fourth quarter of 2002, Kraft sold a bakery ingredients company in South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. at a pre-tax gain of $69 million. This transaction and other smaller sales of businesses resulted in total pre-tax gains of $80 million in 2002, compared with $8 million in 2001. Divested businesses and businesses held for sale. Comparisons of revenues and operating companies income are affected by the businesses sold during 2002 and 2001. In addition, during 2001 certain small Nabisco businesses were classified as businesses held for sale. These businesses have subsequently been sold, except for one business, which has been included in the operating results of the North American food segment during 2002. The full-year and fourth-quarter impact of these items was as follows: (in millions):
Full Year Fourth Quarter
--------- --------------
2002 2001 2002 2001
---- ---- ---- ----
Revenues
North American food $ (21) $221 $ (4) $ 84
International food (68) (90) (10) (29)
----- ---- ------ ------
$ (89) $131 $(14) $ 55
===== ==== ====== ======
Operating companies income
North American food $ (5) $ 17 $ (1) $ (1)
International food (10) (18) (1) (6)
----- ----- ----- ------
$ (15) $ (1) $ (2) $ (7)
===== ===== ===== ======
In addition, the Miller transaction resulted in lower revenues from the beer segment of $2.2 billion for the full year and $1.1 billion for the fourth quarter. Decreases in operating companies income resulting from the Miller transaction were $201 million for the year and $77 million for the fourth quarter. Separation programs, asset impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. and Nabisco integration charges. During 2002 and 2001, several of Altria Group, Inc.'s subsidiaries offered early retirement and separation programs to employees and recorded asset impairment charges. Separation charges at Kraft were part of an overall program related to the integration of Nabisco. Total charges for these actions were as follows (in millions):
Full Year Fourth Quarter
--------- --------------
2002 2001 2002 2001
---- ---- ---- ----
International tobacco $ 58
North American food 229 $ 82 $ (8) $ 16
International food 24
Beer 23 19
----- ---- ----- -----
$334 $101 $ (8) $ 16
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 Capital Corporation, Philip Morris International Inc. and Philip Morris USA Inc. 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 Noun 1. packaged goods - groceries that are packaged for sale foodstuff, grocery - (usually plural) consumer goods sold by a grocer plural, plural form - the form of a word that is used to denote more than one companies includes such well-known well-known adj. 1. Widely known; familiar or famous: a well-known performer. 2. Fully known: well-known facts. names as Kraft, Jacobs, L&M, Marlboro, Maxwell House Maxwell House is a brand of coffee manufactured by a like-named division of Kraft Foods. It is named in honor of the Maxwell House Hotel in Nashville, Tennessee. For many years until the late 1980s it was the largest-selling coffee in the U.S. and is currently (ca. , Nabisco, Oreo, Oscar Mayer Oscar Mayer is an American meat and cold cut production company, now owned by Kraft Foods, known for its hot dogs, bologna, bacon and Lunchables products. German immigrant Oscar Ferdinand Mayer , Parliament, Philadelphia Philadelphia, ancient cities Philadelphia, name of several ancient cities. One was in Lydia, W Asia Minor (now W Turkey). At the foot of Mt. Tmolus and near the location of modern Alaşehir, it was founded in the 2d cent. B.C. , Post and Virginia Slims. Altria Group, Inc. recorded 2002 net revenues of approximately $80 billion. Trademarks and service marks mentioned in this release are the registered property of, or licensed by, the subsidiaries of Altria Group, Inc. 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 2:00 p.m. eastern time on January 29, 2003. Access is available at www.altria.com. A complete copy of Altria Group, Inc.'s audited 2002 financial statements will be available through Altria Group, Inc.'s Web site after it is filed with the SEC on or about January 29, 2003. If you do not have Internet access See how to access the Internet. but would like to receive a copy of 2002 audited financial statements for Altria Group, Inc. please call toll free (800) 367-5415 in the U.S. and Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of to request a copy. Forward-Looking and Cautionary Statements This press release contains projections of future results and other forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve a number of risks and uncertainties and are made pursuant to the Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 health concerns relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the use of tobacco products and exposure to environmental tobacco smoke environmental tobacco smoke (ETS/passive smoke), n the gaseous by-product of burning tobacco products, including but not limited to commercially manufactured cigarettes and cigars; contains toxic elements harmful to the health of adults and children ; legislation, including actual and potential excise tax increases; increasing marketing and regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. restrictions; governmental regulation; privately imposed smoking restrictions; governmental and grand jury investigations; litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. , including risks associated with adverse jury and judicial determinations, courts reaching conclusions at variance var·i·ance n. 1. a. The act of varying. b. The state or quality of being variant or variable; a variation. c. A difference between what is expected and what actually occurs. 2. with the company's understanding of applicable law, bonding requirements and the absence of adequate appellate Relating to appeals; reviews by superior courts of decisions of inferior courts or administrative agencies and other proceedings. remedies rem·e·dy n. pl. rem·e·dies 1. Something, such as medicine or therapy, that relieves pain, cures disease, or corrects a disorder. 2. Something that corrects an evil, fault, or error. 3. to get timely relief from any of the foregoing; price disparities and changes in price disparities between premium and lowest-price brands; and the effects of price increases related to excise tax increases and concluded tobacco litigation settlements on consumption rates and consumer preferences within price segments. 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 the company's publicly filed documents, including its Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the period ended December 31, 2001 and its Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for the quarter ended September September: see month. 30, 2002. 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. Notes to Domestic Tobacco section Note 1: It should be noted that Management Science Associates' current measurements of the domestic cigarette industry's total shipments and related share data do not include all shipments of some manufacturers that Management Science Associates is presently unable to monitor effectively. Accordingly, it should also be noted that the discussion of Philip Morris USA's performance within the industry is based upon Management Science Associates' estimates of total industry volume. Note 2: Information Resources Inc./Capstone is a proprietary retail tracking service that uses a sample of stores to project market share performance in the universe of stores Philip Morris USA's sales representatives regularly visit. Philip Morris USA estimates that this universe (which does not include stores added during a recent retail coverage expansion) represents approximately 87% of industry volume. Philip Morris USA believes that the share of deep-discount cigarettes sold at retail in those stores not regularly visited by its sales representatives may be higher than in those stores whose sales are reflected in the Information Resources Inc./Capstone data. Philip Morris USA is working to develop a new approach to more comprehensively track retail performance.
ALTRIA GROUP, INC.
------------------
and Subsidiaries
----------------
Condensed Statements of Earnings
--------------------------------
For the Quarters Ended December 31,
(in millions, except per share data)
2002 2001 % Change
-------------------------
Net revenues (a) $18,774 $19,882 (5.6)%
Cost of sales 8,041 8,470 (5.1)%
Excise taxes on products (b) 4,310 4,049 6.4 %
----------------
Gross profit 6,423 7,363 (12.8)%
Marketing, administration and research costs 2,792 2,985
Food integration costs and loss on sale of a
food factory (8) 16
Gains on sales of businesses (77) -
Provision for airline industry exposure 290 -
----------------
Operating companies income 3,426 4,362 (21.5)%
Miller transaction 22 -
Amortization of intangibles 2 256
General corporate expenses 179 182
Interest and other debt expense, net 253 253
----------------
Earnings before income taxes and minority
interest 2,970 3,671 (19.1)%
Provision for income taxes 1,054 1,389 (24.1)%
----------------
Earnings before minority interest 1,916 2,282 (16.0)%
Minority interest in earnings, net 148 118
----------------
Net earnings $1,768 $2,164 (18.3)%
================
Basic earnings per share (c) $0.86 $1.00 (14.0)%
================
Diluted earnings per share (c) $0.85 $0.99 (14.1)%
================
Weighted average number of
shares outstanding - Basic 2,060 2,157 (4.5)%
- Diluted 2,069 2,185 (5.3)%
(a) The Company has adopted Emerging Issues Task Force ("EITF")
statements relating to the classification of vendor consideration
and certain sales incentives. Prior period data has been restated.
The adoption of the EITF statements has no impact on operating
companies income, net earnings, or basic or diluted earnings per
share.
(b) The detail of excise taxes on products sold is as follows:
2002 2001
----------------
Domestic tobacco $863 $847
International tobacco 3,447 3,003
Beer - 199
----------------
Total excise taxes $4,310 $4,049
================
(c) 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 December 31,
(in millions)
NET REVENUES(a)
--------------------------------------------
2002 2001 % Change
--------------------------
Domestic tobacco $3,956 $5,076 (22.1)%
International tobacco 6,855 6,054 13.2 %
North American food 5,394 5,241 2.9 %
Divested businesses/businesses held for sale 4 (84)
----------------
North American food, net 5,398 5,157 4.7 %
International food 2,439 2,360 3.3 %
Divested businesses/businesses held for sale 10 29
----------------
International food, net 2,449 2,389 2.5 %
Beer - 1,092
Financial services 116 114 1.8 %
----------------
Total net revenues $18,774 $19,882 (5.6)%
================
OPERATING COMPANIES INCOME
--------------------------------------------
2002 2001 % Change
--------------------------
Domestic tobacco $789 $1,602 (50.7)%
International tobacco 1,177 1,060 11.0 %
International tobacco separation
programs and asset impairment - -
----------------
International tobacco, net 1,177 1,060 11.0 %
North American food 1,166 1,132 3.0 %
Food integration costs and
loss on sale of a food factory 8 (16)
Gains on sales of businesses 8 -
Divested businesses/businesses held for sale 1 1
----------------
North American food, net 1,183 1,117 5.9 %
International food 409 419 (2.4)%
Gains on sales of businesses 69 -
Divested businesses/businesses held for sale 1 6
----------------
International food, net 479 425 12.7 %
Beer - 77
Beer contract brewing charge - -
----------------
Beer, net - 77
Financial services 88 81 8.6 %
Provision for airline industry exposure (290) -
----------------
Financial services, net (202) 81 (100.0)+ %
----------------
Total operating companies income $3,426 $4,362 (21.5)%
================
(a) The Company has adopted Emerging Issues Task Force ("EITF")
statements relating to the classification of vendor consideration
and certain sales incentives. Prior period data has been restated.
The adoption of the EITF statements has no impact on operating
companies income, net earnings, or basic or diluted earnings per
share.
ALTRIA GROUP, INC.
------------------
and Subsidiaries
----------------
Condensed Statements of Earnings
--------------------------------
For the Years Ended December 31,
(in millions, except per share data)
2002 2001 % Change
-------------------------
Net revenues (a) $80,408 $80,879 (0.6)%
Cost of sales 32,748 33,900 (3.4)%
Excise taxes on products (b) 18,226 17,209 5.9 %
----------------
Gross profit 29,434 29,770 (1.1)%
Marketing, administration and research costs 11,599 11,695
Litigation related expense - 500
Food integration costs and loss on sale of a
food factory 111 82
Food separation programs 142 -
Gains on sales of businesses (80) (8)
Beer separation programs and asset impairment in
2002 and contract brewing charge in 2001 23 19
International tobacco separation programs and
asset impairment 58 -
Provision for airline industry exposure 290 -
----------------
Operating companies income 17,291 17,482 (1.1)%
Gain on Miller transaction (2,631) -
Amortization of intangibles 7 1,014
General corporate expenses 683 766
Interest and other debt expense, net 1,134 1,418
----------------
Earnings before income taxes, minority interest and
cumulative effect of accounting change 18,098 14,284 26.7 %
Provision for income taxes 6,424 5,407 18.8 %
----------------
Earnings before minority interest and cumulative
effect of accounting change 11,674 8,877 31.5 %
Minority interest in earnings, net 572 311
----------------
Earnings before cumulative effect of
accounting change 11,102 8,566 29.6 %
Cumulative effect of change in accounting for
derivatives and hedging activities - (6)
----------------
Net earnings $11,102 $8,560 29.7 %
================
Basic EPS before cumulative effect of
accounting change (c) $5.26 $3.93 33.8 %
================
Diluted EPS before cumulative effect of
accounting change (c) $5.21 $3.88 34.3 %
================
Basic EPS after cumulative effect of
accounting change (c) $5.26 $3.92 34.2 %
================
Diluted EPS after cumulative effect of
accounting change (c) $5.21 $3.87 34.6 %
================
Weighted average number of shares outstanding:
- Basic 2,111 2,181 (3.2)%
- Diluted 2,129 2,210 (3.7)%
(a) The Company has adopted Emerging Issues Task Force ("EITF")
statements relating to the classification of vendor consideration
and certain sales incentives. Prior period data has been restated.
The adoption of the EITF statements has no impact on operating
companies income, net earnings, or basic or diluted earnings per
share.
(b) The detail of excise taxes on products sold is as follows:
2002 2001
----------------
Domestic tobacco $3,776 $3,556
International tobacco 13,997 12,791
Beer 453 862
----------------
Total excise taxes $18,226 $17,209
================
(c) 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 Years Ended December 31,
(in millions)
NET REVENUES(a)
---------------------------------------------
2002 2001 % Change
-------------------------
Domestic tobacco $18,877 $19,902 (5.2)%
International tobacco 28,672 26,517 8.1 %
North American food 21,464 21,191 1.3 %
Divested businesses/businesses held for sale 21 (221)
----------------
North American food, net 21,485 20,970 2.5 %
International food 8,170 8,174 - %
Divested businesses/businesses held for sale 68 90
----------------
International food, net 8,238 8,264 (0.3)%
Beer 2,641 4,791
Financial services 495 435 13.8 %
----------------
Total net revenues $80,408 $80,879 (0.6)%
================
OPERATING COMPANIES INCOME
---------------------------------------------
2002 2001 % Change
-------------------------
Domestic tobacco $5,011 $5,764 (13.1)%
Litigation related expense - (500)
----------------
Domestic tobacco, net 5,011 5,264 (4.8)%
International tobacco 5,724 5,406 5.9 %
International tobacco separation
programs and asset impairment (58) -
----------------
International tobacco, net 5,666 5,406 4.8 %
North American food 5,169 4,895 5.6 %
Food integration costs and
loss on sale of a food factory (94) (82)
Separation programs (135) -
Divested businesses/businesses held for sale 5 (17)
Gains on sales of businesses 8 -
----------------
North American food, net 4,953 4,796 3.3 %
International food 1,272 1,213 4.9 %
International food integration costs (17) -
Separation programs (7) -
Divested businesses/businesses held for sale 10 18
Gains on sales of businesses 72 8
----------------
International food, net 1,330 1,239 7.3 %
Beer 299 500
Beer separation programs and asset impairment
in 2002 and contract brewing charge in 2001 (23) (19)
----------------
Beer, net 276 481
Financial services 345 296 16.6 %
Provision for airline industry exposure (290) -
----------------
Financial services, net 55 296 (81.4)%
----------------
Total operating companies income $17,291 $17,482 (1.1)%
================
(a) The Company has adopted Emerging Issues Task Force ("EITF")
statements relating to the classification of vendor consideration
and certain sales incentives. Prior period data has been restated.
The adoption of the EITF statements has no impact on operating
companies income, net earnings, or basic or diluted earnings per
share.
ALTRIA GROUP, INC.
------------------
and Subsidiaries
----------------
Items Affecting EPS Comparisons
-------------------------------
For the Quarters Ended December 31,
2002 2001 % Change
----------------------
Diluted earnings per share (a) $0.85 $0.99 (14.1)%
Gains on sales of businesses, net of minority
interest impact (0.01) -
Cessation of goodwill amortization, net of
minority interest impact - 0.11
Provision for airline industry exposure 0.09 -
------------
Diluted earnings per share, excluding items
above $0.93 $1.10 (15.5)%
============
For the Years Ended December 31,
2002 2001 % Change
----------------------
Diluted earnings per share (a) $5.21 $3.87 34.6 %
Cumulative effect of accounting change - 0.01
Litigation related expense - Domestic tobacco - 0.14
Food integration costs and loss on sale of a
food factory, net of minority interest impact 0.03 0.02
Food separation programs, net of minority
interest impact 0.04 -
Gains on sales of businesses, net of minority
interest impact (0.02) -
Beer separation programs and asset impairment 0.01 -
Gain on Miller transaction (0.81) -
International tobacco separation programs and
asset impairment 0.02 -
Provision for airline industry exposure 0.09 -
Cessation of goodwill amortization, net of
minority interest impact - 0.38
------------
Diluted earnings per share, excluding items
above $4.57 $4.42 3.4 %
============
(a) 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)
December 31, December 31,
2002 2001
--------------------------
Assets
------
Cash and cash equivalents $ 565 $ 453
All other current assets 16,876 16,822
Property, plant and equipment, net 14,846 15,137
Goodwill and other intangible assets, net 37,871 37,548
Other assets 8,151 6,144
-------------------------
Total consumer products assets 78,309 76,104
Total financial services assets 9,231 8,864
-------------------------
Total assets $ 87,540 $ 84,968
=========================
Liabilities and Stockholders' Equity
------------------------------------
Accrued settlement charges $ 3,027 $ 3,210
All other current liabilities 16,055 16,931
Long-term debt 19,189 17,159
Deferred income taxes 6,112 5,238
Other long-term liabilities 15,498 15,124
-------------------------
Total consumer products liabilities 59,881 57,662
Total financial services liabilities 8,181 7,686
-------------------------
Total liabilities 68,062 65,348
Total stockholders' equity 19,478 19,620
-------------------------
Total liabilities and
stockholders' equity $ 87,540 $ 84,968
=========================
Total consumer products debt $ 21,154 $ 20,098
Debt/equity ratio - consumer products 1.09 1.02
Total debt $ 23,320 $ 22,102
Total debt/equity ratio 1.20 1.13
ALTRIA GROUP, INC.
------------------
and Subsidiaries
------------------------------------
(in millions, except per share data)
Summary of Fourth-Quarter 2002 Comparisons to 2001:
---------------------------------------------------
Reported diluted earnings per share down 14.1%,
or $0.14, to $0.85 due to:
Diluted earnings per share fourth-quarter 2001 $ 0.99
Operations (0.17)
Provision for airline industry exposure (0.09)
Cessation of goodwill amortization, net
of minority interest impact 0.11
Gains on sales of businesses 0.01
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Diluted earnings per share fourth-quarter 2002 $0.85
=========
Reported operating companies income down 21.5%,
or $936 million, to $3.4 billion due to:
Operating companies income fourth-quarter 2001 $ 4,362
Operations (665)
Provision for airline industry exposure (290)
Gains on sales of businesses 77
Separation programs, asset impairments
and Nabisco integration charges 24
Impact of divested businesses and businesses held for sale (82)
---------
Operating companies income fourth-quarter 2002 $ 3,426
=========
Summary of Full-Year 2002 Comparisons to 2001:
----------------------------------------------
Reported diluted earnings per share up 34.6%,
or $1.34, to $5.21 due to:
Diluted earnings per share full-year 2001 $ 3.87
Operations 0.15
Miller transaction gain 0.81
Provision for airline industry exposure (0.09)
Cessation of goodwill amortization, net of minority interest
impact 0.38
2001 litigation-related expense 0.14
Gains on sales of businesses 0.02
2001 cumulative effect of accounting change 0.01
Separation programs, asset impairment
and Nabisco integration charges (0.08)
---------
Diluted earnings per share full-year 2002 $ 5.21
=========
Reported operating companies income down 1.1%,
or $191 million, to $17.3 billion due to:
Operating companies income full-year 2001 $ 17,482
Operations (53)
Provision for airline industry exposure (290)
Litigation-related expense in 2001 500
Gains on sales of businesses 72
Separation programs, asset impairments
and Nabisco integration charges (233)
Impact of divested businesses and businesses held for sale (187)
---------
Operating companies income full-year 2002 $ 17,291
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