Altria Group, Inc. Reports 2005 First-Quarter Results.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- 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): --Diluted Earnings Per Share from Continuing Operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the Up 17.0% to $1.24 vs. $1.06 in Year-Ago Quarter, Including the Items Detailed on Schedule 4 --Earnings from Continuing Operations Up 18.3% to $2.6 billion Altria Group, Inc. (NYSE: MO) today announced first-quarter 2005 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 from continuing operations of $1.24, including the charges and gains detailed on Schedule 4, versus $1.06 in the same quarter a year ago. "Solid overall results for the first quarter were in line with our expectations," 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. "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. delivered another quarterly increase in retail share, driven by Marlboro, and strong income growth. In another difficult quarter for the entire cigarette industry 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). , 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. posted widespread share gains and a 13.1% increase in income, which was enhanced by favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. currency and a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. inventory sale to its new distributor 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. ." "In our food business, Kraft is making sound progress on its Sustainable Growth Plan. While commodity costs continue to affect earnings, we are pleased with Kraft's revenue momentum and strong share growth in numerous key categories and markets," Mr. Camilleri Camilleri is a surname. People with Camilleri as a surname
Altria Group, Inc. reaffirmed its projection for 2005 full-year diluted earnings per share from continuing operations of $4.95 to $5.05, compared with $4.57 in 2004. This projection assumes current foreign exchange rates and approximately $0.12 per share in charges associated with the continuing Kraft restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). . However, it does not include any tax impact that could arise consequent con·se·quent adj. 1. a. Following as a natural effect, result, or conclusion: tried to prevent an oil spill and the consequent damage to wildlife. b. to the repatriation Repatriation The process of converting a foreign currency into the currency of one's own country. Notes: If you are American, converting British Pounds back to U.S. dollars is an example of repatriation. of funds from our international businesses under provisions of the American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Jobs Creation Act, nor does it include any benefit from the prior year accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. for contributions to the National Tobacco Grower Settlement Trust. In addition, forecasted results do not include the impact of the previously announced transaction for PT HM Sampoerna Sampoerna (PT Hanjaya Mandala Sampoerna Tbk) is an Indonesian tobacco company whose cigarette brands are smoked by millions of Indonesians. It is reportedly the largest Indonesian tobacco company, ahead of Gudang Garam and Djarum. Tbk TBK - Tool Builder Kit (Sampoerna) or any future acquisitions or divestitures. 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 this projection. On March 12, 2005, a subsidiary of Philip Morris International Inc. (PMI See Private Mortgage Insurance. ) entered into agreements to acquire 40% of the outstanding shares of Sampoerna, an Indonesian tobacco company, from a number of Sampoerna's principal shareholders, and commenced a public tender offer for all of the remaining shares on April 18, 2005. The tender period closes on May 18, 2005. Assuming all shares are acquired, the transaction will have a total cost of approximately $5.2 billion, including Sampoerna's net debt of approximately $160 million, and is projected to be modestly accretive to 2005 diluted earnings per share. A conference call with members of the investment community will be Webcast at 9:00 a.m. Eastern Time on April 20, 2005. Access is available at www.altria.com. ALTRIA GROUP, INC. Prior-period results for Altria Group, Inc. have been restated to reflect the impact of discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. , following Kraft's agreement on November November: see month. 15, 2004, to sell its sugar confectionery confectionery, delicacies or sweetmeats that have sugar as a principal ingredient, combined with coloring matter and flavoring and often with fruit or nuts. In the United States it is usually called candy, in Great Britain, sweets or boiled sweets. business. As such, net revenues and operating companies operating company A business that engages in transactions with outsiders. income for the sugar confectionery business are excluded from the company's results, while the net earnings impact is included as a single line item. All references in this news release are to continuing operations, unless otherwise noted. As described in "Note 15. Segment Reporting 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 2004 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. 2005 First-Quarter Results Net revenues for the first quarter of 2005 increased 8.7% versus 2004 to $23.6 billion, including favorable currency of $741 million. Operating income increased 12.5% to $4.2 billion, due primarily to increases at Philip Morris USA (PM USA) and Philip Morris International (PMI). Also affecting operating income comparisons were favorable currency of $148 million and the other items described in the attached reconciliation. Earnings from continuing operations increased 18.3% to $2.6 billion, due primarily to increases at PM USA and PMI, lower restructuring and 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. costs at Kraft, higher equity income from 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. (which is included in minority interest in earnings from continuing operations, and equity earnings, net), gains on sales of businesses and a lower effective tax rate of 33.1% in the first quarter of 2005 compared to 34.6% in 2004. The decrease in the effective tax rate was driven by the reversal of tax accruals Accruals Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. no longer required at Kraft, as well as other full-year benefits including the impact of the domestic manufacturers' deduction deduction, in logic, form of inference such that the conclusion must be true if the premises are true. For example, if we know that all men have two legs and that John is a man, it is then logical to deduce that John has two legs. under the American Jobs Creation Act. During the first quarter of 2005, Altria Group, Inc. declared a regular quarterly dividend of $0.73 per common share, 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 $2.92 per common share. DOMESTIC TOBACCO 2005 First-Quarter Results Philip Morris USA Inc. (PM USA), Altria Group, Inc.'s domestic tobacco business, achieved solid retail share and income growth, driven by Marlboro's strong performance. Shipment volume of 42.8 billion units was down 0.7% from the previous year, but was essentially flat when adjusted for an extra shipping day in the first quarter of 2004 and the timing of promotional shipments. Operating companies income increased 7.0%, to $1.0 billion, primarily driven by lower wholesale promotional allowances, partially offset by expenses related to the quota quota In international trade, a government-imposed limit on the quantity of goods and services that may be exported or imported over a specified period of time. Quotas are more effective than tariffs in restricting trade, since they limit the availability of goods rather buyout Buyout The purchase of a company or a controlling interest of a corporation's shares. Notes: A leveraged buyout is accomplished with borrowed money or by issuing more stock. legislation and lower volume. PM USA reduced the wholesale promotional allowance on its Focus on Four brands by $1.00 per carton, from $6.50 to $5.50, effective December December: see month. 12, 2004. In addition, effective January January: see month. 16, 2005, PM USA increased the price of its other brands by $5.00 per thousand cigarettes or $1.00 per carton. As shown in the following table, PM USA's total retail share improved in the first quarter of 2005, driven by Marlboro. In a highly competitive environment, retail share remained stable for Parliament and Basic, while retail share for 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 declined 0.1 percentage point.
Philip Morris USA Quarterly Retail Share*
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Q1 2005 Q1 2004 Change
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Marlboro 39.8% 39.0% 0.8 pp
Parliament 1.7% 1.7% 0.0 pp
Virginia Slims 2.3% 2.4% -0.1 pp
Basic 4.3% 4.3% 0.0 pp
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Focus Brands 48.1% 47.4% 0.7 pp
Other Philip Morris USA 1.9% 2.2% -0.3 pp
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Total Philip Morris USA 50.0% 49.6% 0.4 pp
*IRI/Capstone Total Retail Panel was developed to measure market share
in retail stores selling cigarettes. It is not designed to capture
Internet or direct mail sales.
PM USA grew retail share in both the premium and discount segments, with its share of the premium segment increasing 0.3 share points to 62.1% and its discount segment share increasing 0.2 share points to 16.3% in the first quarter. For the total industry, the premium category increased 0.4 points to 73.5% in the first quarter of 2005 versus the year-ago period, while the discount category declined to 26.5%. The deep discount category of the industry, which includes both major manufacturers' private label brands and all other manufacturers' discount brands, was down 0.1 point during the first quarter to 11.8%. In January 2005, PM USA began shipping Marlboro Red and Lights 72mm in commemorative com·mem·o·ra·tive adj. Honoring or preserving the memory of another. n. Something that honors or preserves the memory of another. com·mem 50th anniversary packs. Also, at the end of the first quarter, it began shipping Marlboro UltraSmooth in several test markets to evaluate consumer acceptance of its taste. On April 5, PM USA announced the construction of a $300 million research and technology center in Richmond, Virginia Richmond IPA: [ɹɯʒmɐnɖ] is the capital of the Commonwealth of Virginia, in the United States. . When completed in 2007, the facility will nearly double PM USA's research space and will house more than 500 scientists, engineers and support staff. INTERNATIONAL TOBACCO 2005 First-Quarter Results Cigarette shipment volume for Philip Morris International Inc. (PMI), Altria Group, Inc.'s international tobacco business, increased 2.1% to 200.9 billion units, reflecting higher volume in Italy as a result of a one-time inventory sale to PMI's new distributor, continued strong recovery in France and gains in many other markets 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. , 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. and Asia, partially offset by lower shipments 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). . Excluding the inventory sale in Italy, PMI's volume at 196.9 billion units was essentially flat versus the same period a year ago. PMI achieved widespread market share gains, with increases in 18 of its top 25 income markets including 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. , France, 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 , 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. , Italy, Japan, Korea Korea (kôrē`ə, kə–), Korean Hanguk or Choson, region and historic country (85,049 sq mi/220,277 sq km), E Asia. , 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. , Poland, Russia, Saudi Arabia Saudi Arabia (sä  `dē ərā`bēə, sou`–, sô–), officially Kingdom of Saudi Arabia, kingdom (2005 est. pop. , Spain, Thailand, Turkey, Ukraine and the United Kingdom.Operating companies income rose 13.1% to $2.1 billion, due to higher pricing, favorable currency of $126 million and a $96 million benefit from the inventory sale in Italy, partially offset by unfavorable mix and expenses of $39 million related to the EC agreement. Total Marlboro cigarette shipments increased 5.1% in the first quarter, due to the timing of shipments to Japan in preparation for the expiration EXPIRATION. Cessation; end. As, the expiration of, a lease, of a contract, or statute. 2. In general, the expiration of a contract puts an end to all the engagements of the parties, except to those which arise from the non- fulfillment of obligations created of Japan Tobacco Inc.'s license for Marlboro and the return of full control of the brand to PMI in May, the inventory sale in Italy and gains in the Philippines and France, partially offset by lower volumes in Germany and worldwide duty-free. Excluding the timing of shipments to Japan and the inventory sale in Italy, Marlboro cigarette volume was down 1.1%. However, Marlboro had one of its best quarters in terms of relative performance as share increased in many top income markets, including Argentina, Australia, France, Japan, Korea, Mexico, the Netherlands, Poland, Portugal, Russia, Spain, Switzerland, Thailand, Turkey, Ukraine and the United Kingdom. In Western Europe, cigarette volume increased 0.6%, due mainly to France and the inventory sale in Italy, mostly offset by a decline in Germany. Excluding the inventory sale in Italy, PMI's volume was down 7.2% in Western Europe, due primarily to Germany and the timing of shipments in Spain. However, PMI's overall market share grew 0.2 share points to 38.9%, reflecting gains in all major markets except Germany. In France, PMI's business achieved very strong volume and share results. Volume grew 6.0% and PMI's share was up 2.3 points to 41.5%, driven by Marlboro and the Philip Morris brand. In Germany, the combined industry consumption of cigarettes and other tobacco products declined 7.9% in the first quarter, while cigarette volume declined 20.1%. The consumption decline was due to one less selling day in the first quarter of 2005, and tax-driven price increases in March and December 2004 with subsequent down trading to low-priced tobacco portions, which grew from 2.0 billion units in the first quarter of 2004 to 5.1 billion units in 2005. In addition, the timing of trade inventory purchases in advance of the respective price increases resulted in the favorable timing of shipments in the first quarter of 2004 versus unfavorable timing of shipments in the first quarter of 2005. PMI's cigarette volume in Germany declined 22.3% and market share was down 0.9 points to 36.4%, reflecting the impact of higher prices and the growth of the tobacco portions segment, where Marlboro has a 6.6% share. Including other tobacco products, PMI's volume was down 16.3%, reflecting a nearly three-fold increase in other tobacco products volume. Although limited by capacity constraints CONSTRAINTS - A language for solving constraints using value inference. ["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. , in total PMI captured a 13.0% share of the tobacco portions segment on the combined strength of Marlboro and Next tobacco portions, which were launched in the second quarter of 2004. In Italy, industry shipments of cigarettes declined 9.6%, due to price sensitivity following December 2004 tax-driven price increases and recently enacted smoking restrictions. PMI's cigarette volume was up 28.3% in the first quarter, reflecting the one-time inventory sale of four billion units to its new distributor, Logista, and the favorable timing of shipments. PMI's market share was up 0.4 points to 52.2%, due to the performance of Diana and 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 Central Europe, PMI's volume rose 5.2% in the first quarter of 2005, due mainly to Greece, Poland and Romania, partially offset by declines 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. , Switzerland and inventory adjustments due to the transition of PMI's distribution system from wholesale to direct retail sales in Serbia. In Poland, volume was up significantly and market share advanced 5.0 points to 40.2%, driven by the strong performance of PMI's brand portfolio, including Marlboro, Bond Street and Red & White. In Romania, the volume increase reflects new brand launches and trade purchases in advance of an April price increase. In worldwide duty-free, volume declined 8.7%, mainly reflecting the timing of shipments to Asia and lower volume in Europe as a result of the accession Coming into possession of a right or office; increase; augmentation; addition. The right to all that one's own property produces, whether that property be movable or immovable; and the right to that which is united to it by accession, either naturally or artificially. of new members to the European Union European Union (EU), name given since the ratification (Nov., 1993) of the Treaty of European Union, or Maastricht Treaty, to the European Community in May 2004. In Eastern Europe, the Middle East and Africa, volume grew 7.8%, driven by gains in Egypt, Kazakhstan, Turkey and Ukraine. In Russia, volume was down slightly due to trade inventory reductions in the first quarter. However, market share in Russia rose 1.2 share points to 27.2%. In Ukraine, volume grew 32.8% partly aided by timing, but also due to increased consumer demand for PMI's international brands Marlboro, L&M, Bond Street and Chesterfield, resulting in its market share rising 1.2 points to a record 32.0%. In Asia, volume was down 1.1% as declines in Korea and Japan were partially offset by growth in the Philippines and Thailand. In the Philippines, volume was up 13.3% and share increased significantly due to stronger consumer demand for Marlboro. In Korea, the overall market was down significantly, due mainly to the December 2004 tax-driven price increase, and PMI's volume declined 20.8%. However, PMI's market share increased 2.8 points to a record 10.6%. In Japan, PMI's volume was down 6.5% due to the timing of shipments, primarily related to the impending im·pend intr.v. im·pend·ed, im·pend·ing, im·pends 1. To be about to occur: Her retirement is impending. 2. change in health warnings, which become effective July 1, 2005, partially offset by a significant ramp-up of Marlboro inventories in preparation for the Marlboro license take back in May. PMI's market share increased 0.5 points to 24.8% in Japan, as a result of the continued success of Marlboro, Lark and Virginia Slims Rose. 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. , PMI volume was down 3.7%, due primarily to lower volume in Argentina and Brazil, partially offset by continued growth in Mexico. In Argentina, PMI's volume was down 9.3%, reflecting a lower total market due to the impact of several tax-driven price increases in 2004. However, Marlboro share in Argentina was up 0.5 points to 28.7%. In Brazil, volume declined 8.9%, due to intense competition from low-priced brands. In Mexico, volume rose 4.4% and PMI's market share rose 2.5 points to a record 61.6%, aided by last year's introduction of Marlboro Mild Flavor. FOOD 2005 First-Quarter Results 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 2005 first-quarter results. Kraft's net revenues were up 6.4% to $8.1 billion, reflecting positive mix, strong new product and developing market results, the impact of higher marketing spending, commodity-driven price increases, the shift in Easter timing from mid-April last year to late March this year and favorable currency of $164 million. Ongoing volume was up 2.5% in total, but was down 0.3% excluding acquisitions. This volume decline reflects Kraft's continuing efforts to improve its mix by focusing on higher profit items, the elimination of slower moving products and the impact of higher prices on category growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. . Operating income increased 18.9% to $1.2 billion, due to lower asset impairment and exit costs, gains on sales of businesses, positive mix, cost reduction efforts and favorable currency of $22 million, partially offset by higher commodity costs (net of pricing), increased benefit costs and increased consumer marketing spending. Kraft completed the sales of its U.S. yogurt yogurt: see fermented milk. yogurt Semisolid, fermented, often flavoured milk food. Yogurt is known and consumed in almost all parts of the world. and United Kingdom desserts businesses during the first quarter of 2005, and expects to complete the sale of its sugar confectionery business by the end of the second quarter. 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 relevant accounting rules, the sugar confectionery business has been reflected as a discontinued operation discontinued operation A segment of a business that has been abandoned or sold or for which plans for one or another of these actions have been approved. See also continuing operations. . In addition, Kraft announced on April 12 an agreement to sell its fruit snacks Fruit snack is a processed snack food made from fruit, sugar, and/or other natural and artificial flavors and colors. Many fruit snacks are high in vitamin C. They tend to be more healthy than candy but less healthy than actual fruit. business and recorded a pre-tax asset impairment charge of $93 million related to it in the first quarter. Kraft expects that this sale will be completed during the second quarter. NORTH AMERICAN North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. FOOD 2005 First-Quarter Results For the first quarter of 2005, Kraft 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. Commercial (KNAC) net revenues grew 4.9% to $5.6 billion, driven by positive mix, strong new product results, particularly in pizza and biscuits, higher prices, the impact of increased marketing spending, the shift in Easter timing and favorable currency of $34 million. Ongoing volume was up 3.3%, driven by acquisitions. Excluding acquisitions, volume declined 0.4%, reflecting Kraft's efforts to improve product mix, the elimination of slower moving products and retail inventory reductions in ready-to-drink beverages. These impacts were partially offset by solid consumption growth across much of the portfolio. Operating companies income increased 9.2% to $910 million, due to lower asset impairment and exit costs, positive mix and cost reduction efforts, partially offset by higher commodity costs (net of pricing), increased benefit costs and increased consumer marketing spending. INTERNATIONAL FOOD 2005 First-Quarter Results For the first quarter of 2005, net revenues for Kraft International Commercial (KIC KIC Kuwait Investment Company KIC Keep in Contact (alumni programme of Deutsche Post World Net) KIC Ketchikan Indian Community (Ketchikan, Alaska) KIC Keep It Coming ) grew 9.8% to $2.5 billion, driven by strong results in developing markets including Russia, Ukraine, Brazil, Venezuela and Southeast Asia Southeast Asia, region of Asia (1990 est. pop. 442,500,000), c.1,740,000 sq mi (4,506,600 sq km), bounded roughly by the Indian subcontinent on the west, China on the north, and the Pacific Ocean on the east. , solid results in the United Kingdom and the Nordic region and favorable currency of $130 million. While revenues were up in most markets, revenues in Germany declined on lower volume following a price increase on coffee. Ongoing volume was up 0.4% and was below revenue growth due to the impact of higher prices on consumption growth and the elimination of slower moving products. Operating companies income increased 55.9% to $293 million, benefiting from a $115 million pre-tax gain on the sale of the desserts business in the United Kingdom, lower asset impairment and exit costs, positive mix, cost reduction efforts and favorable currency of $17 million, partially offset by higher commodity costs (net of pricing), increased marketing spending and higher infrastructure investment in developing markets. 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. 2005 First-Quarter Results 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 ) reported operating companies income of $41 million for the first quarter of 2005, significantly below results for the comparable period in 2004 as a result of lower lease portfolio revenues, reflecting PMCC's progress as it shifts its strategic focus from an emphasis on the growth of its portfolio of finance leases through new investments to one of maximizing investment gains and generating cash flows from its existing portfolio of finance assets. Accordingly, PMCC expects that its operating companies income will decrease over time, although there may be fluctuations year to year, as lease investments mature or are sold. Altria Group, Inc. Profile Altria Group, Inc. owns approximately 85% of the outstanding common shares of Kraft Foods Inc. and 100% of the outstanding common shares of Philip Morris International Inc., Philip Morris USA Inc. and Philip Morris Capital Corporation. In addition, Altria Group, Inc. has a 33.9% economic interest in SABMiller plc. 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 2004 net revenues of $89.6 billion. Trademarks and service marks mentioned in this release are the registered property of, or licensed by, the subsidiaries of Altria Group, Inc. Forward-Looking and Cautionary Statements This press release contains projections of future results and other forward-looking statements 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 changing prices for raw materials; intense price competition; changes in consumer preferences and demand for their products; fluctuations in levels of customer inventories; the effects of foreign economies and local economic and market conditions; and unfavorable currency movements. Their results are dependent upon their continued ability to promote brand equity successfully; to anticipate and respond to new consumer trends; to develop new products and markets and to broaden brand portfolios in order to compete effectively with lower-priced products; to improve productivity; and to respond effectively to changing prices for their raw materials. Altria Group, Inc.'s tobacco subsidiaries (Philip Morris USA and Philip Morris International) continue to be subject to litigation 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 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. and its 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 year ended December 31, 2004. Altria Group, Inc. cautions that the foregoing list of important factors is not complete and does not undertake to update any forward-looking statements that it may make.
ALTRIA GROUP, INC. Schedule 1
and Subsidiaries
Condensed Statements of Earnings
For the Quarters Ended March 31,(*)
(in millions, except per share data)
2005 2004 % Change
---------------------------------
Net revenues $ 23,618 $ 21,721 8.7 %
Cost of sales 8,671 8,012 8.2 %
Excise taxes on products (**) 7,156 6,317 13.3 %
-----------------------
Gross profit 7,791 7,392 5.4 %
Marketing, administration and
research costs 3,396 3,194
Domestic tobacco headquarters
relocation charges 1 10
Asset impairment and exit costs 153 292
Gains on sales of businesses (116) -
-----------------------
Operating companies income 4,357 3,896 11.8 %
Amortization of intangibles 4 4
General corporate expenses 159 164
Asset impairment and exit costs 18 16
-----------------------
Operating income 4,176 3,712 12.5 %
Interest and other debt expense, net 281 300
-----------------------
Earnings from continuing operations
before income taxes and minority
interest 3,895 3,412 14.2 %
Provision for income taxes 1,291 1,180 9.4 %
-----------------------
Earnings from continuing operations
before minority interest 2,604 2,232 16.7 %
Minority interest in earnings from
continuing operations, and equity
earnings, net 20 47
-----------------------
Earnings from continuing operations $ 2,584 $ 2,185 18.3 %
-----------------------
Earnings from discontinued
operations, net of income taxes
and minority interest $ 12 $ 9
-----------------------
Net earnings $ 2,596 $ 2,194 18.3 %
=======================
Per share data(***):
Basic earnings per share from
continuing operations $ 1.25 $ 1.07 16.8 %
-----------------------
Basic earnings per share from
discontinued operations $ 0.01 $ -
-----------------------
Basic earnings per share $ 1.26 $ 1.07 17.8 %
=======================
Diluted earnings per share from
continuing operations $ 1.24 $ 1.06 17.0 %
-----------------------
Diluted earnings per share from
discontinued operations $ 0.01 $ 0.01
-----------------------
Diluted earnings per share $ 1.25 $ 1.07 16.8 %
=======================
Weighted average number of
shares outstanding - Basic 2,061 2,041 1.0 %
Diluted 2,081 2,059 1.1 %
(*) Due to a change for Discontinued Operations, prior period results
have been restated.
(**) The detail of excise taxes on products sold is as follows:
2005 2004
-----------------------
Domestic tobacco $ 845 $ 852
International tobacco 6,311 5,465
-----------------------
Total excise taxes $ 7,156 $ 6,317
=======================
(***) Basic and diluted earnings per share are computed for each of
the periods presented. Accordingly, the sum of the quarterly earnings
per share amounts may not agree to the year-to-date amounts.
ALTRIA GROUP, INC. Schedule 2
and Subsidiaries
Selected Financial Data by Business Segment
For the Quarters Ended March 31,(*)
(in millions)
North
Domestic International American International
tobacco tobacco food food
---------------------------------------------------
2005 Net Revenues $ 4,146 $ 11,345 $ 5,553 $ 2,506
2004 Net Revenues $ 4,004 $ 10,043 $ 5,292 $ 2,283
% Change 3.5% 13.0% 4.9% 9.8%
Reconciliation:
---------------
2004 Net Revenues $ 4,004 $ 10,043 $ 5,292 $ 2,283
Divested
businesses - 2004 (25) (24)
Divested
businesses - 2005 - - 22 12
Currency - 577 34 130
Operations 142 725 230 105
---------------------------------------------------
2005 Net Revenues $ 4,146 $ 11,345 $ 5,553 $ 2,506
===================================================
Financial
services Total
-------------------------
2005 Net Revenues $ 68 $ 23,618
2004 Net Revenues $ 99 21,721
% Change (31.3)% 8.7%
Reconciliation:
---------------
2004 Net Revenues $ 99 $ 21,721
Divested
businesses - 2004 (49)
Divested
businesses - 2005 - 34
Currency - 741
Operations (31) 1,171
-------------------------
2005 Net Revenues $ 68 $ 23,618
=========================
Note: The detail
of excise taxes
on products sold
is as follows:
2005 2004
-------------------------
Domestic tobacco $ 845 $ 852
International
tobacco 6,311 5,465
-------------------------
Total excise taxes $ 7,156 $ 6,317
=========================
Currency increased international tobacco excise taxes by $352 million.
(*) Due to a change for Discontinued Operations, prior period results
have been restated.
ALTRIA GROUP, INC. Schedule 3
and Subsidiaries
Selected Financial Data by Business Segment
For the Quarters Ended March 31,(*)
(in millions)
North
Domestic International American International
tobacco tobacco food food
---------------------------------------------------
2005 Operating
Companies Income $ 1,038 $ 2,075 $ 910 $ 293
2004 Operating
Companies Income $ 970 $ 1,835 $ 833 $ 188
% Change 7.0% 13.1% 9.2% 55.9%
Reconciliation:
---------------
2004 Operating
Companies Income $ 970 $ 1,835 $ 833 $ 188
Divested
businesses - 2004 - - (3) (6)
Domestic tobacco
headquarters
relocation
charges - 2004 10 - - -
Asset impairment
and exit costs -
2004 1 - 245 46
Implementation
costs - 2004 - - - 1
---------------------------------------------------
11 - 242 41
---------------------------------------------------
Divested
businesses - 2005 - - 2 3
Domestic tobacco
headquarters
relocation
charges - 2005 (1) - - -
Asset impairment
and exit costs -
2005 - (3) (117) (33)
Gains on sales of
businesses - 2005 - - - 116
Implementation
costs - 2005 - - (14) (5)
---------------------------------------------------
(1) (3) (129) 81
---------------------------------------------------
Currency - 126 5 17
Operations 58 117 (41) (34)
---------------------------------------------------
2005 Operating
Companies Income $ 1,038 $ 2,075 $ 910 $ 293
===================================================
Financial
services Total
-------------------------
2005 Operating
Companies Income $ 41 $ 4,357
2004 Operating
Companies Income $ 70 3,896
% Change (41.4)% 11.8%
Reconciliation:
---------------
2004 Operating
Companies Income $ 70 $ 3,896
Divested
businesses - 2004 - (9)
Domestic tobacco
headquarters
relocation
charges - 2004 - 10
Asset impairment
and exit costs -
2004 - 292
Implementation
costs - 2004 - 1
-------------------------
- 294
-------------------------
Divested
businesses - 2005 - 5
Domestic tobacco
headquarters
relocation
charges - 2005 - (1)
Asset impairment
and exit costs -
2005 - (153)
Gains on sales of
businesses - 2005 - 116
Implementation
costs - 2005 - (19)
-------------------------
- (52)
-------------------------
Currency - 148
Operations (29) 71
-------------------------
2005 Operating
Companies Income $ 41 $ 4,357
=========================
(*) Due to a change for Discontinued Operations, prior period results
have been restated.
ALTRIA GROUP, INC. Schedule 4
and Subsidiaries
Net Earnings and Diluted Earnings Per Share
For the Quarters Ended March 31,(*)
($ in millions, except per share data)
Diluted
Net Earnings E.P.S. (**)
------------ ------------
2005 Continuing Earnings $ 2,584 $ 1.24
2004 Continuing Earnings $ 2,185 $ 1.06
% Change 18.3 % 17.0 %
Reconciliation:
---------------
2004 Continuing Earnings $ 2,185 $ 1.06
2004 Domestic tobacco headquarters
relocation charges 7 -
2004 Asset impairment, and exit costs,
net of minority interest impact 159 0.08
2004 Corporate asset impairment and exit
costs 10 -
2004 Special one-time tax items, net of
minority interest impact (30) (0.01)
------------ ------------
146 0.07
------------ ------------
2005 Domestic tobacco headquarters
relocation charges (1) -
2005 Asset impairment, exit and
implementation costs, net of minority
interest impact (97) (0.04)
2005 Gains on sales of business, net of
minority interest impact 65 0.03
2005 Corporate asset impairment and exit
costs (12) (0.01)
2005 Special one-time tax items, net of
minority interest impact 39 0.02
------------ ------------
(6) -
------------ ------------
Currency 95 0.05
Change in shares - (0.02)
Change in tax rate 49 0.02
Operations 115 0.06
------------ ------------
2005 Continuing Earnings $ 2,584 $ 1.24
------------ ------------
2005 Discontinued Earnings $ 12 $ 0.01
------------ ------------
2005 Net Earnings $ 2,596 $ 1.25
============ ============
(*) Due to a change for Discontinued Operations, prior period results
have been restated.
(**) Basic and diluted earnings per share are computed for each of the
periods presented. Accordingly, the sum of the quarterly earnings per
share amounts may not agree to the year-to-date amounts.
ALTRIA GROUP, INC. Schedule 5
and Subsidiaries
Condensed Balance Sheets
(in millions, except ratios)
March 31, December 31,
2005 2004
------------ ------------
Assets
------
Cash and cash equivalents $ 4,208 $ 5,744
Current assets of discontinued operations
held for sale 1,453 1,458
All other current assets 18,315 18,699
Property, plant and equipment, net 16,187 16,305
Goodwill 28,063 28,056
Other intangible assets, net 11,017 11,056
Other assets 15,260 12,485
------------ ------------
Total consumer products assets 94,503 93,803
Total financial services assets 7,777 7,845
------------ ------------
Total assets $ 102,280 $ 101,648
============ ============
Liabilities and Stockholders' Equity
------------------------------------
Short-term borrowings $ 5,149 $ 2,546
Current portion of long-term debt 1,820 1,751
Accrued settlement charges 1,125 3,501
All other current liabilities 14,851 15,776
Long-term debt 16,043 16,462
Deferred income taxes 7,751 7,677
Other long-term liabilities 14,820 14,905
------------ ------------
Total consumer products liabilities 61,559 62,618
Total financial services liabilities 8,312 8,316
------------ ------------
Total liabilities 69,871 70,934
Total stockholders' equity 32,409 30,714
------------ ------------
Total liabilities and
stockholders' equity $ 102,280 $ 101,648
============ ============
Total consumer products debt $ 23,012 $ 20,759
Debt/equity ratio - consumer products 0.71 0.68
Total debt $ 25,193 $ 22,980
Total debt/equity ratio 0.78 0.75
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