Altria Group, Inc. Reports 2003 Second-Quarter Results.Business Editors NEW YORK--(BUSINESS WIRE)--July 17, 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): -- 2003 Second-Quarter 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 0.8% to $1.20 Including $0.06 in Charges for Tobacco Growers Growers are the people, animals, plants, and various living creatures that assist in the growing of plants and other living creatures. More specifically, the term "growers" refers to individual people who put forth effort to grow plants for food and medicinal use, including the Settlement and Relocation RELOCATION, Scotch law, contracts. To let again to renew a lease, is called a relocation. 2. When a tenant holds over after the expiration of his lease, with the consent of his landlord, this will amount to a relocation. -- 2003 Full-Year Diluted Earnings Per Share Projected To Be In a Range of $4.50 to $4.60 Including $0.08 in Charges Altria Group, Inc. (NYSE: MO) announced today that second-quarter 2003 diluted earnings per share fell 0.8% or $0.01 to $1.20, including $0.06 per share in charges related to the tobacco growers settlement announced on May 15, 2003 and initial charges for moving 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 USA's headquarters to Richmond Richmond, cities, United States Richmond. 1 City (1990 pop. 87,425), Contra Costa co., W Calif., on San Pablo Bay, an inlet of San Francisco Bay; inc. 1905. , VA. "In a global economic environment that continued to be difficult, results for our tobacco operating companies operating company A business that engages in transactions with outsiders. were fundamentally robust," 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 of Altria Group, Inc. "Our domestic tobacco business demonstrated continued resilience resilience (r  ·zilˑ·yens),n in both volume and share. Our international tobacco business delivered strong operating companies income growth, aided by favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. currency and widespread share gains, although volume growth was mitigated mit·i·gate v. mit·i·gat·ed, mit·i·gat·ing, mit·i·gates v.tr. To moderate (a quality or condition) in force or intensity; alleviate. See Synonyms at relieve. v.intr. To become milder. by difficult conditions affecting performance in 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. and worldwide duty free." "Kraft's performance lagged our internal expectations, due to increased trade inventory reductions, as well as the combined adverse effect of global economic weakness and intense price competition," Mr. Camilleri Camilleri is a surname. People with Camilleri as a surname
Altria Group, Inc. is projecting 2003 full-year diluted earnings per share of $4.50 to $4.60, including $0.08 of incurred and projected charges in 2003 for the tobacco growers settlement and relocation of Philip Morris USA's headquarters. 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. A conference call with members of the investment community will be Webcast at 9:00 a.m. Eastern Time on July July: see month. 17, 2003. Access is available at www.altria.com. ALTRIA GROUP, INC. As described in "Note 14, Segment Reporting segment reporting A type of financial reporting in which the firm discloses information by identifiable industry segments. For example, Union Pacific Corporation reports revenues, income, assets, depreciation, and capital expenditures for each of four " of Altria Group, Inc.'s 2002 Annual Report, management reviews operating companies income, which is defined as operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. before corporate expenses and amortization of intangibles, to evaluate segment performance and allocate To reserve a resource such as memory or disk. See memory allocation. 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 con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. Statements of Earnings contained in this release. 2003 Second-Quarter Results Net revenues for the second quarter of 2003, as detailed in the attached schedule entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: "Selected Financial Data by Business Segment," decreased 1.3% versus 2002 to $20.8 billion, due primarily to the impact of the 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 (Miller) transaction, which resulted in no beer revenues in 2003 compared with $1.4 billion in net revenues in the second quarter of 2002, and to a $383 million decrease in net revenues from the domestic tobacco business, partially offset by higher net revenues from the food and international tobacco businesses. Favorable currency increased net revenues by $926 million. Operating income decreased 9.4% to $4.2 billion, due primarily to lower operating income of $250 million from the domestic tobacco business, $91 million from food and $169 million from the Miller transaction, partially offset by higher operating results from international tobacco. Also affecting operating income comparisons were favorable currency of $143 million, 2003 charges of $191 million related to the domestic tobacco growers settlement 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. headquarters relocation, and 2002 charges of $117 million for separation programs and integration costs. Net earnings decreased 6.6% to $2.4 billion. During the quarter, the three major credit rating agencies Credit Rating Agencies Firms that compile information on and issue public credit ratings for a large number of companies. lowered Altria Group, Inc.'s short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. and long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. ratings following the $10.1 billion judgment on March 21, 2003 against Philip Morris USA in the Price 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. . Consequently, Altria Group, Inc.'s access to the commercial paper market was eliminated, which resulted in unplanned borrowings against a portion of its revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facilities. In early July, Altria Group, Inc. successfully negotiated a new 364-day revolving credit facility, to replace its 364-day facility that was due to expire expire /ex·pire/ (ek-spi´er) 1. to exhale. 2. to die. ex·pire v. 1. To breathe one's last breath; die. 2. To exhale. on July 14, 2003. The new facility is for $2.0 billion, and was oversubscribed Refers to connecting more users to a system than can be fully supported if all of them were using it at the same time. Networks and servers are almost always designed with some amount of oversubscription, counting on the fact that everybody does not need the service simultaneously. . Altria Group, Inc. declared a regular quarterly dividend of $0.64 during the second quarter of 2003, which represents 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. DOMESTIC TOBACCO 2003 Second-Quarter Results Philip Morris USA Inc., Altria Group, Inc.'s domestic tobacco business, continued to show solid volume and retail share performance in the second quarter, as its enhanced sales and promotional programs had their intended effect. Operating companies income decreased 30.3% to $1.0 billion. The decrease was due to higher spending to support Philip Morris USA's ongoing promotional programs, as well as charges in the current quarter of $182 million resulting from the tobacco growers settlement and $9 million related to moving Philip Morris USA's headquarters to Richmond, VA, partially offset by higher volume. Philip Morris USA's shipment volume increased 4.1% to 48.2 billion units for the second quarter, as a result of the timing of trade purchases and promotional programs since last year. Philip Morris USA's total retail share continued to improve in the second quarter of 2003 versus the two previous quarters, driven by the resilience of Marlboro and the continued momentum of Parliament. The following table summarizes sequential retail share performance for its key brands since implementing enhanced promotional programs in 2002, based on data from the IRI/Capstone Total Retail Panel:
Q2 2003 Q1 2003 Q4 2002
---------------- ---------------- ----------------
Marlboro 37.8% 37.5% 37.4%
Parliament 1.7% 1.5% 1.3%
Virginia Slims 2.4% 2.5% 2.5%
Basic 4.2% 4.3% 4.3%
---------------- ---------------- ----------------
Focus Brands 46.1% 45.8% 45.5%
Other PM USA 2.4% 2.5% 2.6%
---------------- ---------------- ----------------
Total PM USA 48.5% 48.3% 48.1%
On a sequential basis, Philip Morris USA's retail share of the premium segment increased 0.1 share point, to 61.1% in the second quarter of 2003 versus the first quarter of 2003, while its share of the discount segment decreased 0.1 share point to 15.6%. Retail share for the discount segment of the industry declined by 0.5 points to 27.6% compared to the first quarter of 2003 and retail share for the industry's deep discount segment was essentially flat, up 0.1 share point to 10.0%. During the second quarter of 2003, Philip Morris USA's Marlboro Blend No. 27 met the company's initial expectations for market share and distribution. Philip Morris USA also launched Parliament Ultra Lights and began test marketing 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. in the premium segment. Numerous initiatives were pursued during the quarter on programs to address contraband contraband, in international law, goods necessary or useful in the prosecution of war that a belligerent may lawfully seize from a neutral who is attempting to deliver them to the enemy. and 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 issues and industry-wide compliance with the Master Settlement Agreement and 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. requirements. Philip Morris USA has filed lawsuits against more than 2,300 retailers and is working with law enforcement agencies A law enforcement agency (LEA) is a term used to describe any agency which enforces the law. This may be a local or state police, federal agencies such as the Federal Bureau of Investigation (FBI) or the Drug Enforcement Administration (DEA). to reduce illegal cigarette sales. It also filed 18 lawsuits against more than 50 Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the sites for violation of trademark laws. In addition, 31 states have enacted or are in the process of enacting complementary legislation to ensure compliance with Master Settlement Agreement related legislation by non-participating manufacturers. INTERNATIONAL TOBACCO 2003 Second-Quarter Results Operating companies income for 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. (PMI See Private Mortgage Insurance. ), Altria Group, Inc.'s international tobacco business, rose a strong 14.3% versus the same period a year ago to $1.6 billion, due to favorable currency of $125 million, volume gains, higher pricing and separation charges of $25 million in the second quarter of 2002, partially offset by unfavorable mix. Shipment volume increased 1.0% to 187.4 billion units, as declines in Italy and worldwide duty free partially offset a 3.5% increase in all other markets. Volume for worldwide duty free declined 10.6%, due to reduced international travel, reflecting the effects of the war in Iraq Iraq or Irak (both: ēräk`, ĭrăk`), officially Republic of Iraq, republic (2005 est. pop. 26,075,000), 167,924 sq mi (434,924 sq km), SW Asia. and the SARS epidemic epidemic, outbreak of disease that affects a much greater number of people than is usual for the locality or that spreads to regions where it is ordinarily not present. . PMI achieved widespread market share gains, including increases in the key income markets of 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. , 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 Middle East, France, 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). , 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, Korea Korea (kôrē`ə, kə–), Korean Hanguk or Choson, region and historic country (85,049 sq mi/220,277 sq km), E Asia. , 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 Russia, officially the Russian Federation, Rus. Rossiya, republic (2005 est. pop. 143,420,000), 6,591,100 sq mi (17,070,949 sq km). , 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). , 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.Total Marlboro shipments declined 0.6% in the second quarter, as decreases in Italy and worldwide duty free more than offset a 2.1% increase from all other markets. Marlboro share increased in most key income markets, as PMI continued to build its brand equity and maintain its vitality vi·tal·i·ty n. 1. The capacity to live, grow, or develop. 2. Physical or intellectual vigor; energy. through superior marketing programs. 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 declined 6.7%, driven primarily by decreases in Italy and France. In Italy, volume was down 20.2%, while share fell 7.8 share points to 54.5%, due to Marlboro and Diana Diana, in Roman religion Diana (dīăn`ə), in Roman religion, goddess of the moon, forests, animals, and women in childbirth. She was probably originally a forest goddess and a special patroness of women. , which remain under pressure from intense price competition. In France, shipment volume was down 6.9%, due to a lower total market following consecutive tax-driven price increases in January January: see month. 2002 and 2003. However, PMI's share in France increased during the quarter. Reflecting the resilience and power of its brand portfolio, PMI increased its share of the total industry in all major Western European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. markets with the exception of Italy. 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. , volume increased 3.1% as gains in 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. , Romania Romania (rōmān`ēə, –yə) or Rumania (r –), republic (v), 91,699 sq mi (237,500 sq km), SE Europe. , the Slovak Slo·vak also Slo·va·ki·ann. 1. a. A native or inhabitant of Slovakia. b. A person of Slovak descent. 2. The Slavic language of the Slovaks. adj. Republic and Switzerland were partially offset by decreases in the Baltics and Hungary Hungary, Hung. Magyarország, officially Republic of Hungary, republic (2005 est. pop. 10,007,000), 35,919 sq mi (93,030 sq km), central Europe. . During the second quarter, PMI signed an agreement to acquire shares equal to approximately 76% of the Greek cigarette company Papastratos and announced that a public tender offer will be made for the remaining outstanding shares. PMI expects to complete the transaction in the second half of 2003, subject to receipt of regulatory approval. 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. , the Middle East and Africa, volume grew a very strong 15.4%, driven by continued double-digit gains in Russia, as well as strong increases in the Middle East, Turkey and the Ukraine. In Russia, L&M, Bond Street, Parliament, Marlboro, Chesterfield, 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 local brand Optima, each contributed to the robust volume gain versus prior year. In Turkey, L&M continued its outstanding performance. In Asia, volume decreased 4.7%, due to shortfalls in Indonesia, Japan and the Philippines, partially offset by strong gains in Korea, Taiwan, Thailand and Singapore. Volume was strong in Korea, driven by the success of Lark. In Japan, volume decreased due primarily to the timing of shipments in the second quarter of 2002 versus 2003. Share in Japan advanced 0.1 share point to 23.7%, driven by Marlboro and Lark. Industry shipments in advance of the July tax-driven retail price increase adversely distorted PMI's market share trends in Japan. 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 rose 2.8%, driven by gains in Argentina, Brazil and Central America Central America, narrow, southernmost region (c.202,200 sq mi/523,698 sq km) of North America, linked to South America at Colombia. It separates the Caribbean from the Pacific. . In Argentina, share increased for both Marlboro and L&M in a total market that was up significantly. FOOD Yesterday, 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. (Kraft) reported second-quarter 2003 results. Kraft's worldwide volume increased 1.7%, driven by new products, the shift in Easter timing, strong shipments in Beverages, Desserts and Cereals, and higher growth in developing markets, partially offset by divestitures. Volume was negatively impacted by trade inventory reductions and soft consumption in certain categories and countries. The weakness in consumption was driven by the prolonged pro·long tr.v. pro·longed, pro·long·ing, pro·longs 1. To lengthen in duration; protract. 2. To lengthen in extent. economic weakness in many parts of the world, combined with higher price gaps in some key categories and countries, which caused overall category softness and consumer down trading to lower priced alternative products. Operating income increased $9 million, or 0.6%, to $1.6 billion, reflecting integration costs in 2002, volume growth, pricing and currency, which were partially offset by higher commodity and benefit costs, increased promotional spending in certain categories to narrow price gaps and the adverse impact of product returns from new biscuit biscuit, n the firing bakes, or stages (referred to as low, medium, and high), during the fusing of dental porcelain preceding the final, or glaze, bake. biscuit in dogs, a grayish-yellow coat color. product launches that fell short of expectations. As reported yesterday, Kraft anticipates lower operating income in the second half of 2003 as a result of increased marketing spending behind certain businesses, with full-year 2003 diluted earnings per share projected to be in a range of $2.00 to $2.05. NORTH AMERICAN North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. FOOD 2003 Second-Quarter Results 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 2.5%, driven by ready-to-drink beverages, new products and the shift in Easter timing, partially offset by trade inventory reductions and consumption weakness in certain categories. Operating companies income increased 1.0% to $1.4 billion, reflecting charges of $75 million in pre-tax integration charges incurred in 2002, 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, and volume growth, partially offset by higher commodity and benefit costs, increased promotional spending in certain categories to narrow price gaps, biscuit product returns and adverse product mix. INTERNATIONAL FOOD 2003 Second-Quarter Results 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 ) decreased 0.9%, due to the divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). of KFI's Latin America bakery ingredients business in 2002 and the impact of consumer down trading to competitors' lower priced products, partially offset by new products, acquisitions and the shift in Easter timing. Operating companies income decreased 1.0% to $296 million, as higher benefit costs and devaluation-driven cost increases in Latin America and the absence of earnings from a business divested in 2002 were only partially offset by currency favorability of $16 million and 2002 integration charges of $17 million. 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 ) decreased 21.2% to $82 million, due to a significant gain from the early termination of a lease in the second quarter of 2002, which was only partially offset by higher income from leasing related activities in the second quarter of 2003. During the second quarter of 2003, PMCC announced that it is 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 flows from its existing 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 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 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, 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 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 (SAB SAB Spontaneous abortion. See Abortion. ) to merge Miller into SAB. The transaction closed on July 9, 2002 and SAB changed its name to SABMiller plc (SABMiller) and resulted in a pre-tax gain of approximately $2.6 billion or approximately $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 9:00 a.m. Eastern Time on July 17, 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 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 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 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 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; 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 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 ; governmental regulation; privately imposed smoking restrictions; and governmental and grand jury investigations. Altria Group, Inc.'s financial flexibility may be affected by its current inability to access credit markets for short-term and 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. borrowings on terms as favorable as those that existed prior to recent actions by credit rating agencies. 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 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, 2002 and its Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for the period ended March 31, 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 June 30,
(in millions, except per share data)
2003 2002 % Change
------- ----------------
Net revenues $20,831 $21,103 (1.3)%
Cost of sales 7,991 8,501 (6.0)%
Excise taxes on products (*) 5,344 4,583 16.6 %
------- -------
Gross profit 7,496 8,019 (6.5)%
Marketing, administration and research costs 2,928 3,107
Domestic tobacco legal settlement 182 -
Domestic tobacco headquarters relocation
charges 9 -
Gains on sales of businesses - (3)
Food integration costs - 92
International tobacco separation programs - 25
------- -------
Operating companies income 4,377 4,798 (8.8)%
Amortization of intangibles 3 2
General corporate expenses 183 169
------- -------
Operating income 4,191 4,627 (9.4)%
Interest and other debt expense, net 263 309
------- -------
Earnings before income taxes and minority
interest 3,928 4,318 (9.0)%
Provision for income taxes 1,382 1,533 (9.8)%
------- -------
Earnings before minority interest 2,546 2,785 (8.6)%
Minority interest in earnings, net 109 175
------- -------
Net earnings $ 2,437 $ 2,610 (6.6)%
======= =======
Basic earnings per share (**) $ 1.20 $ 1.22 (1.6)%
======= =======
Diluted earnings per share (**) $ 1.20 $ 1.21 (0.8)%
======= =======
Weighted average number of
shares outstanding - Basic 2,023 2,135 (5.2)%
- Diluted 2,029 2,159 (6.0)%
(*) The detail of excise taxes on products sold is as follows:
2003 2002
------- -------
Domestic tobacco $ 951 $ 911
International tobacco 4,393 3,432
Beer - 240
------- -------
Total excise taxes $ 5,344 $ 4,583
======= =======
(**) 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 June 30,
(in millions)
Domestic International North International
tobacco tobacco American food
food
-------------------------------------------
2003 Net Revenues $ 4,498 $ 8,388 $ 5,644 $2,197
2002 Net Revenues 4,881 7,139 5,568 1,945
% Change (7.8)% 17.5% 1.4% 13.0%
Reconciliation:
---------------
2002 Net Revenues $ 4,881 $ 7,139 $ 5,568 $1,945
Divested businesses - 2002 - - (6) (21)
Currency - 779 18 129
Operations (383) 470 64 144
------- ------- ------- ------
2003 Net Revenues $ 4,498 $ 8,388 $ 5,644 $2,197
======= ======= ======= ======
Beer Financial Total
services
------------------------------
2003 Net Revenues $ - $ 104 $20,831
2002 Net Revenues 1,422 148 21,103
% Change (29.7)% (1.3)%
Reconciliation:
---------------
2002 Net Revenues $ 1,422 $ 148 $21,103
Divested businesses - 2002 (1,422) - (1,449)
Currency - - 926
Operations - (44) 251
------- ------- -------
2003 Net Revenues $ - $ 104 $20,831
======= ======= =======
Note: The detail of excise taxes on products sold is as follows:
2003 2002
------- -------
Domestic tobacco $ 951 $ 911
International tobacco 4,393 3,432
Beer - 240
------- -------
Total excise taxes $ 5,344 $ 4,583
======= =======
Currency increased international tobacco excise taxes by $472 million.
ALTRIA GROUP, INC.
and Subsidiaries
Selected Financial Data by Business Segment
For the Quarters Ended June 30,
(in millions)
Domestic International North International
tobacco tobacco American food
food
-------------------------------------------
2003 Operating Companies
Income $ 1,013 $ 1,603 $1,383 $ 296
2002 Operating Companies
Income 1,454 1,403 1,369 299
% Change (30.3)% 14.3% 1.0% (1.0)%
Reconciliation:
---------------
2002 Operating Companies
Income $ 1,454 $ 1,403 $1,369 $ 299
Divested businesses - 2002 - - (1) (4)
Gains on sales of
businesses - 2002 - - - (3)
Integration costs - 2002 - - 75 17
Separation programs - 2002 - 25 - -
Asset impairment - 2002 - - - -
Domestic tobacco legal
settlement - 2003 (182) - - -
Domestic tobacco
headquarters
relocation charges - 2003 (9) - - -
Currency - 125 2 16
Operations (250) 50 (62) (29)
------- ------- ------ ------
2003 Operating Companies
Income $ 1,013 $ 1,603 $1,383 $ 296
======= ======= ====== ======
Beer Financial Total
services
---------------------------------
2003 Operating Companies
Income $ - $ 82 $4,377
2002 Operating Companies
Income 169 104 4,798
% Change (21.2)% (8.8)%
Reconciliation:
---------------
2002 Operating Companies
Income $ 169 $ 104 $4,798
Divested businesses - 2002 (169) - (174)
Gains on sales of
businesses - 2002 - - (3)
Integration costs - 2002 - - 92
Separation programs - 2002 - - 25
Asset impairment - 2002 - - -
Domestic tobacco legal
settlement - 2003 - - (182)
Domestic tobacco
headquarters
relocation charges - 2003 - - (9)
Currency - - 143
Operations - (22) (313)
------- ------- ------
2003 Operating Companies
Income $ - $ 82 $4,377
======= ======= ======
ALTRIA GROUP, INC.
and Subsidiaries
Condensed Statements of Earnings
For the Six Months Ended June 30,
(in millions, except per share data)
2003 2002 % Change
------- ----------------
Net revenues $40,202 $41,638 (3.4)%
Cost of sales 15,556 17,033 (8.7)%
Excise taxes on products (*) 10,231 9,158 11.7 %
------- -------
Gross profit 14,415 15,447 (6.7)%
Marketing, administration and research costs 5,798 6,001
Domestic tobacco legal settlement 182 -
Domestic tobacco headquarters relocation
charges 9 -
Gains on sales of businesses - (3)
Food integration costs - 119
Food separation programs - 142
International tobacco separation programs - 25
Beer separation programs and asset impairment - 23
------- -------
Operating companies income 8,426 9,140 (7.8)%
Amortization of intangibles 5 4
General corporate expenses 366 338
------- -------
Operating income 8,055 8,798 (8.4)%
Interest and other debt expense, net 546 602
------- -------
Earnings before income taxes and minority
interest 7,509 8,196 (8.4)%
Provision for income taxes 2,643 2,909 (9.1)%
------- -------
Earnings before minority interest 4,866 5,287 (8.0)%
Minority interest in earnings, net 243 312
------- -------
Net earnings $ 4,623 $ 4,975 (7.1)%
======= =======
Basic earnings per share (**) $ 2.28 $ 2.32 (1.7)%
======= =======
Diluted earnings per share (**) $ 2.27 $ 2.30 (1.3)%
======= =======
Weighted average number of
shares outstanding - Basic 2,027 2,140 (5.3)%
- Diluted 2,035 2,165 (6.0)%
(*) The detail of excise taxes on products sold is as follows:
2003 2002
------- -------
Domestic tobacco $ 1,817 $ 1,939
International tobacco 8,414 6,766
Beer - 453
------- -------
Total excise taxes $10,231 $ 9,158
======= =======
(**) 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 Six Months Ended June 30,
(in millions)
Domestic International North International
tobacco tobacco American food
food
-------------------------------------------
2003 Net Revenues $ 8,315 $16,467 $11,024 $4,176
2002 Net Revenues 9,899 14,173 10,862 3,798
% Change (16.0)% 16.2% 1.5% 10.0%
Reconciliation:
---------------
2002 Net Revenues $ 9,899 $14,173 $10,862 $3,798
Divested businesses - 2002 - - (10) (39)
Currency - 1,317 12 216
Operations (1,584) 977 160 201
------- ------- ------- ------
2003 Net Revenues $ 8,315 $16,467 $11,024 $4,176
======= ======= ======= ======
Beer Financial Total
services
------------------------------
2003 Net Revenues $ - $ 220 $40,202
2002 Net Revenues 2,641 265 41,638
% Change (17.0)% (3.4)%
Reconciliation:
---------------
2002 Net Revenues $ 2,641 $ 265 $41,638
Divested businesses - 2002 (2,641) - (2,690)
Currency - - 1,545
Operations - (45) (291)
------- ------- -------
2003 Net Revenues $ - $ 220 $40,202
======= ======= =======
Note: The detail of excise taxes on products sold is as follows:
2003 2002
------- -------
Domestic tobacco $ 1,817 $ 1,939
International tobacco 8,414 6,766
Beer - 453
------- -------
Total excise taxes $10,231 $ 9,158
======= =======
Currency increased international tobacco excise taxes by $784 million.
ALTRIA GROUP, INC.
and Subsidiaries
Selected Financial Data by Business Segment
For the Six Months Ended June 30,
(in millions)
Domestic International North International
tobacco tobacco American food
food
-------------------------------------------
2003 Operating Companies
Income $ 1,755 $3,293 $2,680 $ 533
2002 Operating Companies
Income 2,704 2,967 2,467 551
% Change (35.1)% 11.0% 8.6% (3.3)%
Reconciliation:
---------------
2002 Operating Companies
Income $ 2,704 $2,967 $2,467 $ 551
Divested businesses - 2002 - - (2) (6)
Gains on sales of
businesses - 2002 - - - (3)
Integration costs - 2002 - - 102 17
Separation programs - 2002 - 25 135 7
Asset impairment - 2002 - - - -
Domestic tobacco legal
settlement - 2003 (182) - - -
Domestic tobacco
headquarters
relocation charges - 2003 (9) - - -
Currency - 210 1 23
Operations (758) 91 (23) (56)
------- ------ ------ ------
2003 Operating Companies
Income $ 1,755 $3,293 $2,680 $ 533
======= ====== ====== ======
Beer Financial Total
services
------------------------------
2003 Operating Companies
Income $ - $ 165 $8,426
2002 Operating Companies
Income 276 175 9,140
% Change (5.7)% (7.8)%
Reconciliation:
---------------
2002 Operating Companies
Income $ 276 $ 175 $9,140
Divested businesses - 2002 (299) - (307)
Gains on sales of
businesses - 2002 - - (3)
Integration costs - 2002 - - 119
Separation programs - 2002 8 - 175
Asset impairment - 2002 15 - 15
Domestic tobacco legal
settlement - 2003 - - (182)
Domestic tobacco
headquarters
relocation charges - 2003 - - (9)
Currency - - 234
Operations - (10) (756)
------- ------ ------
2003 Operating Companies
Income $ - $ 165 $8,426
======= ====== ======
ALTRIA GROUP, INC.
and Subsidiaries
Net Earnings and Diluted Earnings Per Share
For the Quarters Ended June 30,
($ in millions, except per share data)
Diluted
Net E.P.S. (*)
Earnings
-----------------
2003 $2,437 $ 1.20
2002 $2,610 $ 1.21
% Change (6.6)% (0.8)%
Reconciliation:
---------------
2002 Reported $2,610 $ 1.21
Gains on sales of businesses - 2002 (2) -
Food integration costs - 2002,
net of minority interest impact 49 0.02
Food separation programs - 2002,
net of minority interest impact - -
Beer separation programs and
asset impairment - 2002 - -
International tobacco separation programs - 2002 16 0.01
Domestic tobacco legal settlement - 2003 (118) (0.06)
Domestic tobacco headquarters relocation charges -
2003 (6) -
Currency 92 0.05
Shares outstanding - 0.07
Operations (204) (0.10)
------ ------
2003 Reported $2,437 $ 1.20
====== ======
(*) 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 Six Months Ended June 30,
($ in millions, except per share data)
Diluted
Net E.P.S. (*)
Earnings
-----------------
2003 $4,623 $ 2.27
2002 $4,975 $ 2.30
% Change (7.1)% (1.3)%
Reconciliation:
---------------
2002 Reported $4,975 $ 2.30
Gains on sales of businesses - 2002 (2) -
Food integration costs - 2002,
net of minority interest impact 64 0.03
Food separation programs - 2002,
net of minority interest impact 77 0.03
Beer separation programs and
asset impairment - 2002 15 0.01
International tobacco separation programs - 2002 16 0.01
Domestic tobacco legal settlement - 2003 (118) (0.06)
Domestic tobacco headquarters relocation charges -
2003 (6) -
Currency 151 0.08
Shares outstanding - 0.14
Operations (549) (0.27)
------ ------
2003 Reported $4,623 $ 2.27
====== ======
(*) Basic and diluted earnings per share are computed for each of the
periods presented. Accordingly, the sum of the quarterly earnings per
share amounts may not agree to the year-to-date amounts.
ALTRIA GROUP, INC.
and Subsidiaries
Condensed Balance Sheets
(in millions, except ratios)
June 30, December
31,
2003 2002
------- -------
Assets
------
Cash and cash equivalents $ 4,832 $ 565
All other current assets 17,397 16,876
Property, plant and equipment, net 15,621 14,846
Goodwill and other intangible assets, net 38,440 37,871
Other assets 8,725 8,151
------- -------
Total consumer products assets 85,015 78,309
Total financial services assets 9,137 9,231
------- -------
Total assets $94,152 $87,540
======= =======
Liabilities and Stockholders' Equity
------------------------------------
Short-term borrowings $ 5,485 $ 407
Current portion of long-term debt 1,612 1,558
Accrued settlement charges 2,309 3,027
All other current liabilities 13,689 14,090
Long-term debt 18,890 19,189
Deferred income taxes 6,195 6,112
Other long-term liabilities 15,331 15,498
------- -------
Total consumer products liabilities 63,511 59,881
Total financial services liabilities 8,403 8,181
------- -------
Total liabilities 71,914 68,062
Total stockholders' equity 22,238 19,478
------- -------
Total liabilities and
stockholders' equity $94,152 $87,540
======= =======
Total consumer products debt $25,987 $21,154
Debt/equity ratio - consumer products 1.17 1.09
Total debt $28,501 $23,320
Total debt/equity ratio 1.28 1.20
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion