Altria Group, Inc.
Altria Group, Inc. Reports 2006 Fourth-Quarter and Full-Year Results
FOURTH-QUARTER 2006
-- Reported diluted earnings per share up 28.4% to $1.40 vs. $1.09 in year-ago
quarter, including the items detailed on Schedule 7
-- Adjusted for items detailed in table below, diluted earnings per share up
8.5% to $1.27 versus $1.17 in year-ago quarter
FULL-YEAR 2006
-- Reported diluted earnings per share from continuing operations up 12.0% to
$5.71 versus $5.10 in 2005, including the items detailed on Schedule 8
-- Adjusted for items detailed in table below, diluted earnings per share from
continuing operations up 4.9% to $5.35 versus $5.10 in 2005
2007 OUTLOOK
-- Reported 2007 full-year diluted earnings per share from continuing operations
are forecast in a range of $4.15 to $4.20 at current exchange rates. This
forecast includes charges of approximately $0.08 per share and excludes Kraft,
which will be accounted for as a discontinued operation for the full-year 2007,
reflecting the distribution of Kraft shares.
-- Adjusted for the $.08 per share of charges, Altria projects that the growth
rate of diluted earnings per share from continuing operations will be in the
mid-single-digit range for the full-year 2007, from an adjusted base of $4.05
per share for 2006.
Altria Group, Inc. (NYSE: MO) today announced fourth-quarter 2006 reported
diluted earnings per share were up 28.4% to $1.40, including items detailed on
the attached Schedule 7, versus $1.09 in the year-ago period. Adjusted for items
detailed in the table below, diluted earnings per share were up 8.5% to $1.27,
versus $1.17 in the year-earlier period.
For the full year 2006, reported diluted earnings per share from continuing
operations were up 12.0% to $5.71, including items detailed on Schedule 8,
versus $5.10 for the full year 2005. Adjusted for items detailed in the table
below, diluted earnings per share were up 4.9% to $5.35, versus $5.10 for 2005.
"We finished 2006 with a strong fourth quarter and enter 2007 on an exciting
note with today's announcement of the spin-off of Kraft Foods to Altria
shareholders," said Louis C. Camilleri, chairman and chief executive officer of
Altria Group, Inc.
"For the full year 2006, our tobacco businesses achieved strong results,
benefiting from improving trends in Western Europe at Philip Morris
International and from an increase in total retail share, to 50.3%, at Philip
Morris USA," Mr. Camilleri said. "Looking ahead, I believe that Kraft has a
bright future as a fully-independent company, and that our tobacco businesses
will continue to create enduring shareholder value."
Kraft Spin-Off
As announced in a separate news release, the Board of Directors of Altria Group,
Inc. voted earlier today to authorize the spin-off of all shares of Kraft Foods
Inc. owned by Altria to Altria's shareholders. The distribution of the
approximately 89% of Kraft's outstanding shares owned by Altria will be made on
March 30, 2007, to Altria shareholders of record as of the close of business on
March 16, 2007.
Altria will distribute approximately 0.7 of a share of Kraft for every share of
Altria common stock outstanding as of the record date, based on the number of
Altria shares outstanding at 5:00 p.m. Eastern Time on that date. The exact
distribution ratio will be determined on the record date. On or about March 20,
2007, Altria will mail an Information Statement to all shareholders of Altria
common stock as of the record date. The Information Statement will include
information regarding the procedures by which the distribution will be effected
and other details of the transaction.
2006 Results Excluding Items
After adjusting for the items shown in the table below, the 8.5% increase in
diluted earnings per share to $1.27 for the fourth quarter of 2006 reflected
strong tobacco operating results and positive currency of $0.01 per share,
partially offset by the negative impact of the inclusion of an extra week of
results at Kraft in the fourth quarter of 2005. For the full year 2006, the 4.9%
increase in diluted earnings per share from continuing operations to $5.35 after
adjusting for the items shown in the table was primarily driven by the same
factors, partially offset by unfavorable currency of $0.05 per share.
Fourth Quarter Full Year
-----------------------------====================-====================
2006 2005 Change 2006 2005 Change
----------------------------------------------------------------------
Reported diluted EPS (from
continuing operations for
full year) $1.40 $1.09 28.4% $5.71 $5.10 12.0%
----------------------------------------------------------------------
(Gain) on redemption of
United Biscuits investment,
net of minority interest
impact -- -- (0.06) --
----------------------------------------------------------------------
(Gain) on sales of
businesses, net of minority
interest impact (0.19) -- (0.17) (0.03)
----------------------------------------------------------------------
Asset impairment and exit
costs, net of minority
interest impact 0.16 0.10 0.36 0.21
----------------------------------------------------------------------
Net charges for loss on U.S.
tobacco pool and tobacco
quota buy-out -- -- -- 0.01
----------------------------------------------------------------------
Provision for airline
industry exposure -- -- 0.03 0.06
----------------------------------------------------------------------
Italian antitrust charge -- -- 0.03 --
----------------------------------------------------------------------
Tax items, net of minority
interest impact (0.10) (0.02) (0.55) (0.25)
----------------------------------------------------------------------
Diluted EPS, excluding above
items $1.27 $1.17 8.5% $5.35 $5.10 4.9%
----------------------------------------------------------------------
Asset impairment and exit costs recorded during the fourth quarter of 2006
included the non-cash pre-tax charge of $245 million or $0.07 per diluted share
related to Kraft's Tassimo single-serve hot beverage system. The diluted
earnings per share figures shown in the table above include the impact of
acquisitions and divestitures in 2006 and 2005, as well as the extra week of
shipments at Kraft in 2005.
Acquisitions and Divestitures
In July 2006, Kraft agreed to acquire the Spanish and Portuguese operations of
United Biscuits (UB), and rights to all Nabisco trademarks in the European
Union, Eastern Europe, the Middle East and Africa, for a total cost of $1.1
billion. The non-cash acquisition was financed by Kraft's assumption of $541
million of debt issued by the acquired business immediately prior to the
acquisition, as well as $530 million of value for the redemption of Kraft's
outstanding investment in UB. The redemption of Kraft's investment in UB
resulted in a $251 million pre-tax gain on closing, benefiting Altria Group,
Inc. by $0.06 per diluted share, after taxes and minority interest.
Kraft also completed the sale of its Milk-Bone pet snacks brand and assets in
July 2006 for approximately $580 million and recorded additional taxes of
approximately $60 million related to the sale. This sale and the additional
taxes were recorded in the third quarter of 2006 and resulted in a negative
impact of $0.03 per share to Altria Group, Inc., after taxes and minority
interest.
In addition, Kraft agreed to sell its Minute Rice brand and related assets for
approximately $280 million during 2006. The transaction closed in the fourth
quarter and resulted in a pre-tax gain to Altria Group, Inc. of approximately
$226 million or $0.07 per diluted share, after taxes and minority interest.
In November 2006, Philip Morris International Inc. (PMI) announced that it was
reorganizing its tobacco and beer equity holdings in the Dominican Republic. The
transaction was completed before the end of the year, and PMI now owns 100% of
the cigarette business and no longer holds an interest in the beer business of
E. Leon Jimenes, C. por. A. The transaction increased Altria's 2006 pre-tax
income by $488 million or $0.15 per diluted share.
On January 19, 2007, PMI announced that it had entered into an agreement to
acquire an additional 50.21% stake in Pakistan cigarette manufacturer, Lakson
Tobacco Company Limited from a number of Lakson Tobacco's principal shareholders
for approximately $339 million. PMI currently holds a 40% stake in Lakson
Tobacco and the transaction will bring PMI's stake to approximately 90%. On
January 24, 2007, PMI notified the Securities and Exchange Commission of
Pakistan and local stock exchanges of its intention to publicly announce and
commence a public tender offer on February 15, 2007, for the remaining shares.
Lakson Tobacco is Pakistan's second-largest tobacco company, with cigarette
volume of approximately 30 billion units in the fiscal year ending June 30,
2006. Based on a price per share of $10.96, the company is valued at
approximately $675 million.
2007 Full-Year Forecast
Altria forecasts reported 2007 full-year diluted earnings per share from
continuing operations in a range of $4.15 to $4.20 at current exchange rates and
excluding Kraft, which will be accounted for as a discontinued operation for the
full-year 2007, reflecting the distribution of Kraft shares. The company's
projection includes a higher tax rate in 2007 versus 2006, and charges of
approximately $0.08 per share.
Diluted earnings per share from continuing operations are forecast to grow in
the mid-single-digit range for the full-year 2007, versus $4.05 per share for
2006 including certain net charges shown below.
The company's forecast excludes the impact of any potential future acquisitions
or divestitures. The factors described in the Forward-Looking and Cautionary
Statements section of this release represent continuing risks to this
projection.
Reconciliation of 2006 Reported Diluted EPS to 2006 Adjusted EPS
----------------------------------------------------------------
$5.71 2006 Reported Diluted EPS
------
(1.28) 2006 Total Kraft continuing earnings impact
(0.36) 2006 Tax items
0.03 2006 Italian Antitrust charge
(0.15) 2006 PMI Gain on Dominican Republic restructuring
0.03 2006 PMCC airline reserve
0.07 2006 Restructuring charges (PMI, PM USA and Altria)
------
$4.05 2006 Adjusted EPS, Excluding Kraft
Conference Call
A conference call with members of the investment community and news media will
be Webcast at 1:00 p.m. Eastern Time on January 31, 2007. Access is available at
www.altria.com.
ALTRIA GROUP, INC.
As described in "Note 15. Segment Reporting" of Altria Group, Inc.'s 2005 Annual
Report, management reviews operating companies income, which is defined as
operating income before corporate expenses and amortization of intangibles, to
evaluate segment performance and allocate resources. Management believes it is
appropriate to disclose this measure to help investors analyze business
performance and trends. For a reconciliation of operating companies income to
operating income, see the Condensed Statements of Earnings contained in this
release.
Altria Group, Inc.'s consolidated statement of earnings for the year ended
December 31, 2005 included a 53rd week for Kraft. Kraft's subsidiaries generally
end their fiscal years on the last Saturday of the year. Accordingly, most years
contain 52 weeks of operating results, while every fifth or sixth year includes
53 weeks. The extra week at Kraft added an estimated $625 million in net
revenues and $100 million in operating companies income to Altria's results for
the full year and fourth quarter of 2005.
References to international tobacco market share are PMI estimates based on a
number of industry sources. All references in this news release are to
continuing operations, unless otherwise noted.
2006 Fourth-Quarter Results
Net revenues for the fourth quarter of 2006 increased 3.7% versus the year-ago
quarter to $25.4 billion, including acquisitions, favorable currency of $413
million and the positive impact of pricing, primarily at PMI. Comparison with
the year-ago period was adversely impacted by the extra week at Kraft in the
fourth quarter of 2005.
Operating income increased 16.2% to $4.2 billion, reflecting the items described
in the attached reconciliation on Schedule 3, including the $488 million gain
from PMI's reorganization of its tobacco and beer equity holdings in the
Dominican Republic, the gain on the sale of Minute Rice, acquisitions, favorable
currency of $45 million and higher results from operations of $87 million,
driven by international and domestic tobacco. These increases were partially
offset by charges for asset impairment, exit and implementation costs, which
were $204 million higher in the fourth quarter of 2006 versus the year-earlier
period, and the impact of the extra week at Kraft in 2005.
Net earnings increased 29.3% to $3.0 billion, primarily reflecting the factors
mentioned above and a lower effective tax rate in the fourth quarter of 2006.
The company's effective tax rate was 26.6% in the fourth quarter of 2006
compared to 30.7% for the same period in 2005. The decrease in the effective tax
rate was due primarily to a change in the mix of foreign earnings and taxes,
reversals of tax accruals no longer required and the favorable resolution of
foreign tax audits.
Diluted earnings per share, as detailed on Schedule 1, increased 28.4% to $1.40.
2006 Full-Year Results
Net revenues for the full year 2006 increased 3.6% versus 2005 to $101.4
billion. The comparison with 2005 includes the favorable impact from
acquisitions of $1.3 billion and an increase in net revenues from tobacco and
international food, partially offset by unfavorable currency of $506 million,
divestitures and the additional week at Kraft in 2005.
Operating income increased 4.9% to $17.4 billion, reflecting the items described
in the attached reconciliation on Schedule 6, including PMI's gain on the
Dominican Republic transaction, Kraft's $251 million gain on the redemption of
its interest in UB, Kraft's gain on the sale of Minute Rice, acquisitions and
higher results from operations of $511 million, driven by increases in all
businesses. These were partially offset by unfavorable currency of $154 million,
charges for asset impairment, exit and implementation costs, which were $570
million higher in 2006 including the Tassimo asset impairment charge, and the
extra shipping week at Kraft in 2005. The operating income comparison also
benefited from charges recorded for airline industry exposure at Philip Morris
Capital Corporation (PMCC) of $200 million in 2005 versus $103 million in 2006,
and net charges at Philip Morris USA (PM USA) related to tobacco quota buy-out
legislation.
Earnings from continuing operations increased 12.7% to $12.0 billion, primarily
reflecting the items mentioned above and a lower effective tax rate in 2006. The
company's effective tax rate was 26.3% for the full year 2006. The 2006 tax rate
includes the benefit from the reversal of tax reserves following the conclusion
of an IRS examination of Altria's consolidated tax returns for the years 1996
through 1999, as announced in the first quarter of 2006, and the other tax
benefits mentioned above. By comparison, the company's effective tax rate for
the full year 2005 was 29.9%.
Net earnings, including discontinued operations, increased 15.2% to $12.0
billion, reflecting the factors mentioned above. Diluted earnings per share,
including discontinued operations as detailed on Schedule 4, increased 14.4% to
$5.71.
During 2006, Altria Group, Inc. increased its regular quarterly dividend by 7.5%
to $0.86 per common share, which represents an annualized rate of $3.44 per
common share.
DOMESTIC TOBACCO
2006 Fourth-Quarter Results
For the fourth quarter of 2006, Philip Morris USA (PM USA), Altria Group, Inc.'s
domestic tobacco business, achieved a market share increase of 0.1 point to
50.1%, driven by Marlboro and Parliament.
Operating companies income increased 4.2% to $1.1 billion, primarily driven by
lower wholesale promotional allowance rates, partially offset by lower volume.
During the fourth quarter of 2006, PM USA announced a further reduction in the
wholesale promotional allowance on its Focus on Four brands of $1.00 per carton,
from $5.00 to $4.00, effective December 18, 2006. In addition, the price of its
non-focus brands was increased by $1.00 per carton.
Shipment volume of 45.3 billion units was down 0.4% versus the previous year,
but was estimated to be down approximately 2.0% when adjusted for trade
inventory changes and the timing of promotional shipments versus the fourth
quarter of 2005. Premium mix for PM USA increased by 0.7 percentage points to
92.3% in the fourth quarter of 2006.
As shown in the following table, PM USA's total retail share increased to 50.1%
in the fourth quarter of 2006, driven by Marlboro and Parliament.
Philip Morris USA Quarterly Retail Share*
----------------------------------------------------------------------
Q4 2006 Q4 2005 Change
---------- --------- --------
Marlboro 40.4% 40.1% 0.3 pp
Parliament 1.9% 1.7% 0.2 pp
Virginia Slims 2.3% 2.3% 0.0 pp
Basic 4.1% 4.2% -0.1 pp
---------- --------- --------
Focus Brands 48.7% 48.3% 0.4 pp
Other PM USA 1.4% 1.7% -0.3 pp
---------- --------- --------
Total PM USA 50.1% 50.0% 0.1 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's share of the premium category was down 0.1 share point versus the
year-earlier period to 61.9%, as gains by Marlboro and Parliament were more than
offset by segment share losses incurred by other PM USA non-focus premium
brands. PM USA's share of the discount category declined 0.2 share point to
16.0%. The total industry's premium category share increased 0.5 share points to
74.3% in the fourth quarter of 2006, while the discount category share
correspondingly declined to 25.7%. Within the discount category, industry share
for the deep discount segment (which includes both major manufacturers' private
label brands and all other manufacturers' discount brands) was flat at 11.8%
versus the year-ago period.
In late 2006, PM USA announced that it will introduce Marlboro Smooth at retail
in March 2007. Marlboro Smooth is a new menthol product in the Marlboro brand
family. This line extension reinforces Marlboro's flavor heritage and its
position as the leader in the premium category by offering adult smokers a
uniquely rich and smooth taste.
2006 Full-Year Results
For the full year 2006, PM USA's domestic tobacco business, achieved solid
retail share and income growth.
Operating companies income increased 5.0% to $4.8 billion, primarily driven by
lower wholesale promotional allowance rates, partially offset by lower volume.
Results for 2005 included charges for the disposition of pool tobacco stock and
a $56 million accrual for the Boeken case, partially offset by the reversal of a
2004 accrual related to tobacco quota buyout legislation.
Shipment volume of 183.4 billion units was down 1.1% versus 2005 but was
estimated to be down approximately 1.5% when adjusted for trade inventory
changes and the timing of promotional shipments. Premium mix for PM USA
increased by 0.5 percentage points to 92.1% in 2006.
As shown in the following table, PM USA's total retail share increased to 50.3%
in 2006, driven by Marlboro and Parliament.
Philip Morris USA Annual Retail Share*
----------------------------------------------------------------------
2006 2005 Change
-------- -------- --------
Marlboro 40.5% 40.0% 0.5 pp
Parliament 1.8% 1.7% 0.1 pp
Virginia Slims 2.3% 2.3% 0.0 pp
Basic 4.2% 4.3% -0.1 pp
-------- -------- --------
Focus Brands 48.8% 48.3% 0.5 pp
Other PM USA 1.5% 1.7% -0.2 pp
-------- -------- --------
Total PM USA 50.3% 50.0% 0.3 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's share of the premium category declined 0.1 share point versus the prior
year to 62.0%, as gains by Marlboro and Parliament were more than offset by
category share losses incurred by other PM USA non-focus premium brands. PM
USA's share of the discount category grew 0.1 share point to 16.4%, reflecting
the performance of Basic. The total industry's premium category share increased
0.8 points to 74.4% in 2006, while the discount category share correspondingly
declined to 25.6%. Within the discount category, industry share of the deep
discount segment (which includes both major manufacturers' private label brands
and all other manufacturers' discount brands) declined 0.2 share points to
11.6%.
INTERNATIONAL TOBACCO
2006 Fourth-Quarter Results
In the fourth quarter of 2006, cigarette shipment volume for Philip Morris
International (PMI), Altria Group, Inc.'s international tobacco business,
increased 3.9% to 191.4 billion units, driven by improved results in all
geographic regions and worldwide duty-free.
Operating companies income increased 46.5% to $2.2 billion, due primarily to
higher pricing and volume, the impact of the $488 million gain from the
Dominican Republic transaction and favorable currency of $30 million. Adjusted
for the gain from the Dominican Republic transaction, PMI's operating companies
income was up approximately 14.4%.
PMI's market share in the fourth quarter of 2006 advanced in many countries,
with gains in Argentina, Australia, Austria, Belgium, Egypt, France, Greece,
Hong Kong, Hungary, Indonesia, Ireland, Italy, Korea, Lithuania, Mexico, Norway,
the Philippines, Poland, Serbia, Singapore, Spain, Sweden, Thailand and Ukraine.
Total Marlboro cigarette shipments of 73.5 billion units were up 4.1%, due
mainly to France, Korea, the Philippines, Russia, Turkey and Ukraine, and
favorable timing of shipments in the Middle East, Japan and Mexico, partially
offset by declines in Argentina, Germany and Spain. Marlboro market share was up
in Belgium, Egypt, France, Greece, Hong Kong, Italy, Korea, Mexico, the
Philippines, Poland, Romania, Russia, Saudi Arabia, Singapore, Spain,
Switzerland, Taiwan, Thailand and Ukraine.
In the European Union (EU) region, PMI's cigarette shipments were up 2.3% or 1.3
billion units, representing the strongest volume performance in this region in
three years. Improving trends in the key markets of Germany, Italy, France and
Poland contributed to the shipment increase. PMI's cigarette market share in the
EU region was up 0.7 share points to 39.5% and PMI's share of total tobacco
consumption (cigarettes and other tobacco products) in the EU was also up 0.5
share points to 35.4%.
In Germany, despite a higher total cigarette market of 4.5% or one billion
units, total tobacco consumption declined 5.8%, reflecting the elimination of
tobacco portions. PMI's total tobacco in-market sales were down 2.4%, resulting
in total tobacco consumption share increasing 1.0 point to 30.0%. PMI's
in-market cigarette sales grew 3.1%, but PMI's cigarette market share declined
0.5 points to 36.1%, reflecting lower share for Marlboro, partially offset by
gains of low-price offerings L&M and Next.
In Italy, the total cigarette market rose 1.8% and PMI's market share grew 2.0
points to 54.3%, driven by Marlboro, which was up 0.9 points to 23.1%, and
Diana.
In France, the total market was essentially unchanged versus the prior-year
quarter. PMI shipments were up 7.4% and market share grew 0.9 points to 42.9% on
the continued strength of Marlboro and the Philip Morris brand.
In Spain, the total cigarette market increased 5.4%. PMI cigarette shipments
were down 4.6%. However, in-market retail sales were up 7.8%, resulting in share
growth of 0.7 points to 32.3%, driven by Marlboro, which added 1.5 points to
17.0%. On November 10, 2006, the Spanish government announced an increase in the
minimum excise tax to 70 euros per thousand. Effective December 30, 2006, PMI
raised prices on all its brands, with Marlboro's price increasing from 2.75
euros per pack to 2.95 euros per pack. As a result, PMI believes that its
overall profitability should improve in Spain in 2007.
In Eastern Europe, the Middle East and Africa, PMI's shipments increased 1.8%,
due mainly to gains in Egypt and Ukraine, and favorable timing in Russia and
Saudi Arabia, which were partially offset by a decline in Romania. In Russia,
share was down 0.3 points to 26.7%, as declines of low-price brands and L&M were
partially offset by the continued growth of Marlboro, Muratti, Parliament and
Chesterfield. Combined share for these brands rose 0.9 share points in Russia in
the fourth quarter of 2006. In Ukraine, shipments grew strongly and share
advanced 0.7 points to 33.0% as consumers continued to trade up to higher-priced
Marlboro and Chesterfield.
Total Asia volume rose 4.2%, due primarily to favorable timing in Japan and
gains in Indonesia and the Philippines, partially offset by lower shipments in
Thailand.
In Japan, the total market declined 6.4%, due mainly to the July 1, 2006,
tax-driven price increase. PMI shipments were up 2.4%, reflecting inventory
reductions in the fourth quarter of 2005 and higher inventory in the fourth
quarter of 2006 related to new product launches. PMI in-market sales were down
6.8% and market share was down 0.1 points to 24.7%. Marlboro share in Japan was
down 0.1 points to 9.7%.
In Indonesia, PMI shipment volume rose 12.7% and market share increased 0.6
points to 28.2%, driven by A Hijau and A Mild. In Thailand, PMI shipments were
down 20.8%, reflecting a lower total market as a result of the tax-driven price
increase in December 2005. However, PMI's share in Thailand increased 0.1 point
to 19.1%.
During the fourth quarter, PMI successfully launched Marlboro Filter Plus in
Korea, which helped to drive a 0.9 share point increase for Marlboro to 3.7%.
Marlboro Filter Plus is an innovative new product in terms of packaging and
cigarette and filter construction that delivers excellent taste for a
one-milligram product.
PMI shipment volume in Latin America advanced 10.7%, due mainly to gains in
Argentina and favorable timing in Mexico. The total market in Argentina was up
approximately 5.0%, while PMI shipments grew 17.7% and share was up 7.5 points
to 67.6%, due primarily to the continued growth of the Philip Morris brand. In
Mexico, the total market rose 5.7%, due to trade purchasing in December 2006
ahead of the January 2007 excise tax increase. PMI shipments advanced 12.6%, due
to favorable timing, and market share rose 2.8 points to 65.5%, mainly driven by
higher volume for Marlboro, which benefited from the successful launch of
Marlboro Wides.
2006 Full-Year Results
Cigarette shipment volume for PMI increased 3.4% versus 2005 to 831.4 billion
units, driven mainly by higher volume in Argentina, Colombia, Egypt, France,
Indonesia, Mexico, Poland, Russia and Ukraine. Partially offsetting these
increases was lower volume in Belarus, Czech Republic, Italy, Japan, Portugal,
Romania, Spain, Thailand and Turkey. Excluding acquisitions, and adjusting for
the one-time inventory benefit in Italy in 2005, PMI's cigarette shipment volume
was up 0.4%. PMI's total tobacco volume, which included 8.3 billion cigarette
equivalent units of other tobacco products (OTPs), increased 3.5% to 839.7
billion units. Total tobacco volume increased 0.6% excluding acquisitions and
the one-time inventory benefit in Italy in 2005.
Operating companies income increased 8.1% to $8.5 billion, due primarily to
pricing, the Dominican Republic transaction and a $232 million benefit from
acquisitions. These were partially offset by negative currency of $183 million,
a $61 million charge in the first quarter of 2006 related to an Italian
antitrust action and higher asset impairment and exit costs.
PMI market share advanced in many countries in 2006, with gains in Argentina,
Austria, Belgium, Egypt, Finland, France, Germany, Hong Kong, Hungary,
Indonesia, Italy, Korea, Mexico, Poland, Singapore, Sweden, Thailand, Turkey and
Ukraine.
Total Marlboro cigarette shipments of 316.0 billion units were down 1.9%, due
mainly to declines in Argentina, Germany, Japan and Spain. Share performance for
Marlboro was strong, most notably in France, Greece, Hong Kong, Italy, Japan,
Korea, Kuwait, Mexico, Poland, Romania, Russia, Saudi Arabia, Singapore, Spain,
Thailand and Ukraine.
In the European Union (EU) region, PMI cigarette shipments were down 2.8% for
the full year 2006, although adjusted for the 2005 one-time distribution change
in Italy of 3.0 billion units, EU volume declined a more moderate 1.7% in 2006.
Declines in Czech Republic, Germany, Portugal and Spain were partially offset by
gains in France, Hungary and Poland. PMI cigarette market share in the EU region
was essentially unchanged at 39.4% and share of total tobacco consumption
(cigarettes and OTPs) in the EU was up 0.2 share points to 35.3%.
In Spain, the total cigarette market declined 2.8%, due to excise tax-driven
price increases. PMI cigarette shipments were down 12.8% and market share
declined 2.4 points to 32.2%, mainly reflecting Chesterfield and L&M, which
suffered from consumers switching to the lowest-price segment and to brands that
were previously in the premium segment, but were repositioned to lower-price
segments. Share for Marlboro advanced 0.1 points to 17.1% in 2006 versus 2005,
underscoring the brand's resilience in a highly competitive environment.
In Germany, total tobacco consumption was down 5.9% in 2006, reflecting the
decline and ultimate exit of tobacco portions from the market. PMI's total
tobacco in-market sales declined 0.2%, while its share of total tobacco
consumption increased 1.7 points to 30.4%. The total cigarette market declined
3.9%, due to lower consumption as a result of tax-driven price increases. PMI's
in-market cigarette volume declined 3.4%. However, cigarette market share rose
0.2 points to 36.8%, driven by the price repositioning of L&M. Cigarette share
for Marlboro declined 1.6 points in 2006 to 28.0%.
In Italy, the total cigarette market rose 1.1%. PMI shipment volume decreased
3.9%, but adjusted for the 2005 one-time distribution change, volume rose 1.9%.
Market share advanced 1.3 points to 53.8%, driven by Marlboro, Diana and
Chesterfield.
In France, the total market grew 1.8% and PMI shipments were up 7.0%, driven by
price stability, moderate price gaps and favorable timing of shipments. Market
share continued to grow, rising 1.0 point to a record high 42.7% behind the
solid performance of Marlboro and the Philip Morris brand.
In Poland, the total market declined 1.9%, but PMI shipments were up 6.3%, due
mainly to higher L&M and Next. Market share advanced 2.8 points to 40.0%.
In Eastern Europe, the Middle East and Africa, PMI shipments were up 1.7%,
driven by gains in Russia, Ukraine and Egypt, partially offset by declines in
Romania and Turkey. In Romania, shipments declined 15.1% and share was down 2.1
points to 31.4%, as L&M came under intense competition from the low-price
segment. However, Marlboro share in Romania grew 2.2 points to 12.0%. In Turkey,
shipments declined 3.5%, reflecting the continued decline of low-price Bond
Street. However, PMI market share in Turkey rose 1.4 points to 42.5% as
consumers traded up to its higher-margin brands, Parliament and Muratti. In
Russia, shipments rose 3.4%, driven by Marlboro, Muratti, Parliament and
Chesterfield. Market share, however, declined 0.4 points to 26.6% in Russia, but
this primarily reflected declines of low-price brands and L&M. Combined market
share in Russia for higher-margin brands, Marlboro and Parliament, was up 0.4
share points versus 2005. In Ukraine, shipments increased and share advanced 0.8
points to 33.0% as consumers continued to trade up to higher-priced Marlboro and
Chesterfield.
Total Asia volume was up 12.3%, due primarily to gains in Indonesia, partially
offset by lower volume in Japan and Thailand.
In Japan, the total market declined 4.4%, or 12.5 billion units, driven by the
July 1, 2006, price increase. PMI in-market sales were down 4.8% and market
share declined 0.1 points to 24.7%. Marlboro share rose 0.2 points to 9.9%.
Shipment volume for PMI in 2006 declined 5.4%, mainly reflecting lower in-market
sales.
In Indonesia, PMI shipment volume rose 69.6%, aided by the acquisition of
Sampoerna in 2005. Market share grew 1.5 points to 27.7% on the strength of its
brand portfolio, led by A Hijau and A Mild.
PMI volume in Latin America increased 10.8%, driven by strong gains in Argentina
and Mexico, as well as higher volume in Colombia due to the 2005 acquisition of
Coltabaco. In Argentina, the total market advanced 7.5%, while PMI shipments
grew 15.9% and share was up 4.9 points to a new record of 66.3%, due mainly to
the Philip Morris brand. In Mexico, the total market was up 2.1% and PMI
shipments grew 6.0%. Market share rose 1.4 points to a record high of 63.5%,
reflecting the continued strong performance of Marlboro, which rose 1.4 share
points to 47.7%, and Benson & Hedges.
FOOD
2006 Fourth-Quarter Results
Kraft Foods Inc. (Kraft) also reported 2006 fourth-quarter and full-year results
today. Kraft's net revenues decreased 3.0% to $9.4 billion in the fourth
quarter, reflecting one less shipping week in 2006 compared to 2005, which
negatively impacted reported net revenues by approximately 7.0 percentage
points.
Total ongoing volume declined 4.4%, reflecting the estimated 7.0 percentage
point impact of one less week in 2006. However, there were strong performances
from a number of products, including Oscar Mayer meats and Nabisco cookies and
snack crackers in North America, Milka chocolate in the EU, Jacobs soluble
coffee in Russia and Ukraine, and Lacta chocolate in Brazil. These gains were
partially offset by product item pruning and the discontinuation of select
product lines, primarily in North America Foodservice and in the Canadian
ready-to-drink beverage business, as well as share declines in Maxwell House
coffee, Kraft salad dressings and Planters snacks nuts.
Operating income decreased 18.6% to $974 million. Excluding asset impairment,
exit and implementation costs and gains/losses on the sale of businesses,
operating income decreased 11.3% and operating income margin decreased to 14.2%
in 2006 from 15.6% in 2005. The decline was primarily due to higher investments
in marketing and in research and development.
2006 Full-Year Results
For the full year 2006, Kraft's net revenues were up 0.7% to $34.4 billion,
primarily reflecting the factors mentioned above, including one less shipping
week, which negatively impacted net revenues by approximately 2.0 percentage
points.
Ongoing volume declined 1.7%, due primarily to the impact of product item
pruning and the discontinuation of select product lines, primarily in the North
American Foodservice and Canadian ready-to-drink beverage businesses, as well as
one less shipping week in 2006. Partially offsetting those factors were strong
gains achieved across numerous products, including those mentioned for the
fourth quarter.
Operating income decreased 4.8% to $4.5 billion for 2006 versus 2005, due
primarily to higher asset impairment, exit and implementation costs, including
the Tassimo charge, and one less shipping week in 2006, partially offset by the
gain on the redemption of Kraft's investment in UB in the third quarter of 2006.
Additional information concerning Kraft's results is available at www.Kraft.com.
FINANCIAL SERVICES
2006 Fourth-Quarter and Full-Year Results
Philip Morris Capital Corporation (PMCC) reported operating companies income of
$38 million for the fourth quarter of 2006 and $176 million for the full year
2006, versus $41 million for the fourth quarter of 2005 and $31 million for the
full year 2005. Results for the fourth quarter of 2006 reflect lower revenues,
primarily as a result of lower investment balances. Results for the full year
2006 include higher gains from asset sales and an increase of $103 million in
the provision for losses related to the airline industry during the second
quarter of 2006, versus a $200 million increase in the third quarter of 2005.
Consistent with its strategic shift in 2003, PMCC is focused on managing its
existing portfolio of finance assets in order to maximize gains and generate
cash flow from asset sales and related activities. PMCC is no longer making new
investments and expects that its operating companies income will fluctuate over
time as investments mature or are sold.
Altria Group, Inc. Profile
As of December 31, 2006, Altria Group, Inc. owned approximately 89.0% 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. owned approximately
28.6% of SABMiller plc. The brand portfolio of Altria Group, Inc.'s consumer
packaged goods companies includes such well-known names as Kraft, Jacobs, L&M,
Marlboro, Maxwell House, Nabisco, Oreo, Oscar Mayer, Parliament, Philadelphia,
Post and Virginia Slims. Altria Group, Inc. recorded 2006 net revenues of $101.4
billion.
Trademarks and service marks mentioned in this release are the registered
property of, or licensed by, the subsidiaries of Altria Group, Inc.
A complete copy of Altria Group, Inc.'s audited 2006 financial statements will
be available through Altria Group, Inc.'s website after they are filed with the
Securities and Exchange Commission on or about February 6, 2007. If you do not
have Internet access but would like to receive a copy of the 2006 audited
financial statements for Altria Group, Inc. please call toll-free (800) 367-5415
in the U.S. and Canada to request a copy.
Forward-Looking and Cautionary Statements
This press release contains projections of future results and other
forward-looking statements that involve a number of risks and uncertainties and
are made pursuant to the Safe Harbor Provisions of the Private Securities
Litigation Reform Act of 1995. The following important factors could cause
actual results and outcomes to differ materially from those contained in such
forward-looking statements.
Altria Group, Inc.'s consumer products subsidiaries are subject to changing
prices for raw materials; intense price competition; changes in consumer
preferences and demand for their products; fluctuations in levels of customer
inventories; the effects of foreign economies and local economic and market
conditions; unfavorable currency movements and changes to income tax laws. Their
results are dependent upon their continued ability to promote brand equity
successfully; to anticipate and respond to new consumer trends; to develop new
products and markets and to broaden brand portfolios in order to compete
effectively with lower-priced products; to improve productivity; and to respond
effectively to changing prices for 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, and courts reaching conclusions
at variance with the company's understanding of applicable law and bonding
requirements in the limited number of jurisdictions that do not limit the dollar
amount of appeal bonds; legislation, including actual and potential excise tax
increases; discriminatory excise tax structures; increasing marketing and
regulatory restrictions; the effects of price increases related to excise tax
increases and concluded tobacco litigation settlements on consumption rates and
consumer preferences within price segments; health concerns relating to the use
of tobacco products and exposure to environmental tobacco smoke; governmental
regulation; privately imposed smoking restrictions; and governmental and grand
jury investigations.
Altria Group, Inc. and its subsidiaries are subject to other risks detailed from
time to time in its publicly filed documents, including its Annual Report on
Form 10-K for the period ended December 31, 2005 and its Quarterly Report on
Form 10-Q for the period ended September 30, 2006. 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 December 31,
(in millions, except per share data)
(Unaudited)
2006 2005 % Change
---------------------------
Net revenues $25,398 $24,490 3.7%
Cost of sales 9,907 9,877 0.3%
Excise taxes on products (*) 7,413 6,663 11.3%
-----------------
Gross profit 8,078 7,950 1.6%
Marketing, administration and research
costs 3,772 3,745
Domestic tobacco headquarters relocation
charges - 1
Asset impairment and exit costs 497 307
(Gains) losses on sales of businesses, net (619) 7
-----------------
Operating companies income 4,428 3,890 13.8%
Amortization of intangibles 7 14
General corporate expenses 196 237
Asset impairment and exit costs 7 9
-----------------
Operating income 4,218 3,630 16.2%
Interest and other debt expense, net 175 250
-----------------
Earnings before income taxes, minority
interest, and equity
earnings, net 4,043 3,380 19.6%
Provision for income taxes 1,076 1,037 3.8%
-----------------
Earnings before minority interest, and
equity earnings, net 2,967 2,343 26.6%
Minority interest in earnings, and equity
earnings, net 8 54
-----------------
Net earnings $ 2,959 $ 2,289 29.3%
=================
Per share data(**):
Basic earnings per share $ 1.41 $ 1.10 28.2%
=================
Diluted earnings per share $ 1.40 $ 1.09 28.4%
=================
Weighted average number of
shares outstanding - Basic 2,092 2,078 0.7%
- Diluted 2,110 2,098 0.6%
(*) The detail of excise taxes on products sold is as follows:
2006 2005
-----------------
Domestic tobacco $ 893 $ 898
International tobacco 6,520 5,765
-----------------
Total excise taxes $ 7,413 $ 6,663
=================
(**) 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 December 31,
(in millions)
(Unaudited)
North
Domestic International American International
tobacco tobacco food food
----------------------------------------------
2006 Net Revenues $ 4,536 $ 11,446 $ 5,939 $ 3,432
2005 Net Revenues 4,467 10,303 6,438 3,225
% Change 1.5% 11.1% (7.8)% 6.4%
Reconciliation:
-----------------------
2005 Net Revenues $ 4,467 $ 10,303 $ 6,438 $ 3,225
Divested businesses -
2005 - - (172) (4)
Divested businesses -
2006 - - 8 -
Implementation - 2005 - - 1 -
Acquired businesses - 16 - 111
Currency - 265 30 118
Operations 69 862 (366) (18)
----------------------------------------------
2006 Net Revenues $ 4,536 $ 11,446 $ 5,939 $ 3,432
==============================================
Financial
services Total
-----------------------
2006 Net Revenues $ 45 $ 25,398
2005 Net Revenues 57 24,490
% Change (21.1)% 3.7%
Reconciliation:
-----------------------
2005 Net Revenues $ 57 $ 24,490
Divested businesses -
2005 - (176)
Divested businesses -
2006 - 8
Implementation - 2005 - 1
Acquired businesses - 127
Currency - 413
Operations (12) 535
-----------------------
2006 Net Revenues $ 45 $ 25,398
=======================
Note: The detail of excise taxes on products sold is as follows:
2006 2005
-----------------------
Domestic tobacco $ 893 $ 898
International tobacco 6,520 5,765
-----------------------
Total excise taxes $ 7,413 $ 6,663
=======================
Currency increased international tobacco excise taxes by $182 million.
ALTRIA GROUP, INC. Schedule 3
and Subsidiaries
Selected Financial Data by Business Segment
For the Quarters Ended December 31,
(in millions)
(Unaudited)
North
Domestic International American International
tobacco tobacco food food
----------------------------------------------
2006 Operating
Companies Income $ 1,125 $ 2,233 $ 885 $ 147
2005 Operating
Companies Income 1,080 1,524 915 330
% Change 4.2% 46.5% (3.3)% (55.5)%
Reconciliation:
-----------------------
2005 Operating
Companies Income $ 1,080 $ 1,524 $ 915 $ 330
Divested businesses -
2005 - (4) (43) (1)
Domestic tobacco
headquarters
relocation charges -
2005 1 - - -
Asset impairment and
exit costs - 2005 - 33 211 63
Losses on sales of
businesses - 2005 - 7
Implementation costs -
2005 - - 12 14
----------------------------------------------
1 29 180 83
----------------------------------------------
Divested businesses -
2006 - 6 4 -
Asset impairment and
exit costs - 2006 (10) (38) (201) (248)
Gains on sales of
businesses - 2006 - 488 131 -
Implementation costs -
2006 - - (26) (16)
----------------------------------------------
(10) 456 (92) (264)
----------------------------------------------
Acquired businesses - 5 - 18
Currency - 30 2 13
Operations 54 189 (120) (33)
----------------------------------------------
2006 Operating
Companies Income $ 1,125 $ 2,233 $ 885 $ 147
==============================================
Financial
services Total
-----------------------
2006 Operating
Companies Income $ 38 $ 4,428
2005 Operating
Companies Income 41 3,890
% Change (7.3)% 13.8%
Reconciliation:
-----------------------
2005 Operating
Companies Income $ 41 $ 3,890
Divested businesses -
2005 - (48)
Domestic tobacco
headquarters
relocation charges -
2005 - 1
Asset impairment and
exit costs - 2005 - 307
Losses on sales of
businesses - 2005 7
Implementation costs -
2005 - 26
-----------------------
- 293
-----------------------
Divested businesses -
2006 - 10
Asset impairment and
exit costs - 2006 - (497)
Gains on sales of
businesses - 2006 - 619
Implementation costs -
2006 - (42)
-----------------------
- 90
-----------------------
Acquired businesses - 23
Currency - 45
Operations (3) 87
-----------------------
2006 Operating
Companies Income $ 38 $ 4,428
=======================
ALTRIA GROUP, INC. Schedule 4
and Subsidiaries
Condensed Statements of Earnings
For the Twelve Months Ended December 31,
(in millions, except per share data)
(Unaudited)
2006 2005 % Change
----------------------------
Net revenues $101,407 $97,854 3.6%
Cost of sales 37,480 36,764 1.9%
Excise taxes on products (*) 31,083 28,934 7.4%
------------------
Gross profit 32,844 32,156 2.1%
Marketing, administration and research
costs 14,235 14,078
Domestic tobacco headquarters relocation
charges - 4
Domestic tobacco loss on U.S. tobacco
pool - 138
Domestic tobacco quota buy-out - (115)
Italian antitrust charge 61 -
Asset impairment and exit costs 1,138 569
Gain on redemption of United Biscuits
investment (251) -
(Gains) on sales of businesses, net (605) (108)
Provision for airline industry exposure 103 200
------------------
Operating companies income 18,163 17,390 4.4%
Amortization of intangibles 30 28
General corporate expenses 678 721
Asset impairment and exit costs 42 49
------------------
Operating income 17,413 16,592 4.9%
Interest and other debt expense, net 877 1,157
------------------
Earnings from continuing operations
before income taxes,
minority interest, and equity earnings,
net 16,536 15,435 7.1%
Provision for income taxes 4,351 4,618 (5.8)%
------------------
Earnings from continuing operations
before minority interest,
and equity earnings, net 12,185 10,817 12.6%
Minority interest in earnings from
continuing operations, and
equity earnings, net 163 149
------------------
Earnings from continuing operations 12,022 10,668 12.7%
Loss from discontinued operations, net of
income taxes and minority interest(**) - (233)
------------------
Net earnings $ 12,022 $10,435 15.2%
==================
Per share data (***):
Basic earnings per share from continuing
operations $ 5.76 $ 5.15 11.8%
Basic earnings per share from
discontinued operations $ - $ (0.11)
------------------
Basic earnings per share $ 5.76 $ 5.04 14.3%
==================
Diluted earnings per share from
continuing operations $ 5.71 $ 5.10 12.0%
Diluted earnings per share from
discontinued operations $ - $ (0.11)
------------------
Diluted earnings per share $ 5.71 $ 4.99 14.4%
==================
Weighted average number of
shares outstanding - Basic 2,087 2,070 0.8%
- Diluted 2,105 2,090 0.7%
(*) The detail of excise taxes on products sold is as follows:
2006 2005
------------------
Domestic tobacco $ 3,617 $ 3,659
International tobacco 27,466 25,275
------------------
Total excise taxes $ 31,083 $28,934
==================
(**) Discontinued operations in 2005 includes $(255) from loss on sale
and $22 of earnings, net of minority interest impact
(***) 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
Selected Financial Data by Business Segment
For the Twelve Months Ended December 31,
(in millions)
(Unaudited)
North
Domestic International American International
tobacco tobacco food food
----------------------------------------------
2006 Net Revenues $18,474 $ 48,260 $23,118 $11,238
2005 Net Revenues 18,134 45,288 23,293 10,820
% Change 1.9% 6.6% (0.8)% 3.9%
Reconciliation:
-----------------------
2005 Net Revenues $18,134 $ 45,288 $23,293 $10,820
Divested businesses -
2005 - - (637) (31)
Divested businesses -
2006 - - 180 -
Implementation - 2005 - - 2 -
Acquired businesses - 1,208 - 111
Currency - (651) 153 (8)
Operations 340 2,415 127 346
----------------------------------------------
2006 Net Revenues $18,474 $ 48,260 $23,118 $11,238
==============================================
Financial
services Total
-----------------------
2006 Net Revenues $ 317 $ 101,407
2005 Net Revenues 319 97,854
% Change (0.6)% 3.6%
Reconciliation:
-----------------------
2005 Net Revenues $ 319 $ 97,854
Divested businesses -
2005 - (668)
Divested businesses -
2006 - 180
Implementation - 2005 - 2
Acquired businesses - 1,319
Currency - (506)
Operations (2) 3,226
-----------------------
2006 Net Revenues $ 317 $ 101,407
=======================
Note: The detail of excise taxes on products sold is as follows:
2006 2005
-----------------------
Domestic tobacco $ 3,617 $ 3,659
International tobacco 27,466 25,275
-----------------------
Total excise taxes $31,083 $ 28,934
=======================
Currency decreased international tobacco excise taxes by $311 million.
ALTRIA GROUP, INC. Schedule 6
and Subsidiaries
Selected Financial Data by Business Segment
For the Twelve Months Ended December 31,
(in millions)
(Unaudited)
North
Domestic International American International
tobacco tobacco food food
----------------------------------------------
2006 Operating
Companies Income $ 4,812 $ 8,458 $ 3,753 $ 964
2005 Operating
Companies Income 4,581 7,825 3,831 1,122
% Change 5.0% 8.1% (2.0)% (14.1)%
Reconciliation:
-----------------------
2005 Operating
Companies Income $ 4,581 $ 7,825 $ 3,831 $ 1,122
Divested businesses -
2005 - (48) (136) (4)
Domestic tobacco
headquarters
relocation charges -
2005 4 - - -
Domestic tobacco loss
on U.S. tobacco pool -
2005 138 - - -
Domestic tobacco quota
buy-out - 2005 (115) - - -
Asset impairment and
exit costs - 2005 - 90 335 144
Losses (gains) on sales
of businesses - 2005 - - 1 (109)
Implementation costs -
2005 - - 55 32
Provision for airline
industry exposure -
2005 - - - -
----------------------------------------------
27 42 255 63
----------------------------------------------
Divested businesses -
2006 - 51 69 -
Italian antitrust
charge - 2006 - (61) - -
Asset impairment and
exit costs - 2006 (10) (126) (517) (485)
Gain on redemption of
United Biscuits
investment - 2006 - - - 251
Gains on sales of
businesses - 2006 - 488 117 -
Implementation costs -
2006 - - (64) (31)
Provision for airline
industry exposure -
2006 - - - -
----------------------------------------------
(10) 352 (395) (265)
----------------------------------------------
Acquired businesses - 232 - 18
Currency - (183) 27 2
Operations 214 190 35 24
----------------------------------------------
2006 Operating
Companies Income $ 4,812 $ 8,458 $ 3,753 $ 964
==============================================
Financial
services Total
-----------------------
2006 Operating
Companies Income $ 176 $ 18,163
2005 Operating
Companies Income 31 17,390
% Change 100+% 4.4%
Reconciliation:
-----------------------
2005 Operating
Companies Income $ 31 $ 17,390
Divested businesses -
2005 - (188)
Domestic tobacco
headquarters
relocation charges -
2005 - 4
Domestic tobacco loss
on U.S. tobacco pool -
2005 - 138
Domestic tobacco quota
buy-out - 2005 - (115)
Asset impairment and
exit costs - 2005 - 569
Losses (gains) on sales
of businesses - 2005 - (108)
Implementation costs -
2005 - 87
Provision for airline
industry exposure -
2005 200 200
-----------------------
200 587
-----------------------
Divested businesses -
2006 - 120
Italian antitrust
charge - 2006 - (61)
Asset impairment and
exit costs - 2006 - (1,138)
Gain on redemption of
United Biscuits
investment - 2006 - 251
Gains on sales of
businesses - 2006 - 605
Implementation costs -
2006 - (95)
Provision for airline
industry exposure -
2006 (103) (103)
-----------------------
(103) (421)
-----------------------
Acquired businesses - 250
Currency - (154)
Operations 48 511
-----------------------
2006 Operating
Companies Income $ 176 $ 18,163
=======================
ALTRIA GROUP, INC. Schedule 7
and Subsidiaries
Net Earnings and Diluted Earnings Per Share
For the Quarters Ended December 31,
($ in millions, except per share data)
(Unaudited)
Diluted
Net Earnings E.P.S.(*)
------------ ------------
2006 Net Earnings $ 2,959 $ 1.40
2005 Net Earnings $ 2,289 $ 1.09
% Change 29.3% 28.4%
Reconciliation:
---------------------------------------------
2005 Net Earnings $ 2,289 $ 1.09
2005 Asset impairment, exit and
implementation costs,
net of minority interest impact 198 0.10
2005 Losses on sales of businesses, net of
minority interest impact 4 -
2005 Corporate asset impairment and exit
costs 6 -
2005 Tax items, net of minority interest
impact (51) (0.02)
------------ ------------
157 0.08
------------ ------------
2006 Asset impairment, exit and
implementation costs,
net of minority interest impact (328) (0.16)
2006 Gains on sales of businesses, net of
minority interest impact 408 0.19
2006 Corporate asset impairment and exit
costs (5) -
2006 Tax items, net of minority interest
impact 212 0.10
------------ ------------
287 0.13
------------ ------------
Currency 31 0.01
Change in shares - -
Change in tax rate 7 0.01
Operations 188 0.08
------------ ------------
2006 Net Earnings $ 2,959 $ 1.40
============ ============
(*) Basic and diluted earnings per share are computed for each of the
periods presented. Accordingly, the sum of the quarterly earnings per
share amounts may not agree to the year-to-date amounts.
ALTRIA GROUP, INC. Schedule 8
and Subsidiaries
Net Earnings and Diluted Earnings Per Share
For the Twelve Months Ended December 31,
($ in millions, except per share data)
(Unaudited)
Diluted
Net Earnings E.P.S.(*)
------------ ------------
2006 Continuing Earnings $ 12,022 $ 5.71
2005 Continuing Earnings $ 10,668 $ 5.10
% Change 12.7% 12.0%
Reconciliation:
--------------------------------------------
2005 Continuing Earnings $ 10,668 $ 5.10
2005 Domestic tobacco headquarters
relocation charges 2 -
2005 Domestic tobacco loss on U.S. tobacco
pool 87 0.04
2005 Domestic tobacco quota buy-out (72) (0.03)
2005 Asset impairment, exit and
implementation costs,
net of minority interest impact 393 0.19
2005 Gains on sales of businesses, net of
minority interest impact (60) (0.03)
2005 Corporate asset impairment and exit
costs 33 0.02
2005 Provision for airline industry exposure 129 0.06
2005 Tax items, net of minority interest
impact (521) (0.25)
------------ ------------
(9) -
------------ ------------
2006 Italian antitrust charge (61) (0.03)
2006 Asset impairment, exit and
implementation costs,
net of minority interest impact (737) (0.35)
2006 Gain on redemption of United Biscuits
investment,
net of minority interest impact 131 0.06
2006 Gains on sales of businesses, net of
minority interest impact 349 0.17
2006 Corporate asset impairment and exit
costs (28) (0.01)
2006 Provision for airline industry exposure (66) (0.03)
2006 Tax items, net of minority interest
impact 1,166 0.55
------------ ------------
754 0.36
------------ ------------
Currency (103) (0.05)
Change in shares - (0.04)
Change in tax rate 34 0.02
Operations 678 0.32
------------ ------------
2006 Continuing Earnings $ 12,022 $ 5.71
------------ ------------
2006 Net Earnings $ 12,022 $ 5.71
============ ============
(*) Basic and diluted earnings per share are computed for each of the
periods presented. Accordingly, the sum of the quarterly earnings per
share amounts may not agree to the year-to-date amounts.
ALTRIA GROUP, INC. Schedule 9
and Subsidiaries
Condensed Balance Sheets
(in millions, except ratios)
(Unaudited)
December 31, December 31,
2006 2005
------------ ------------
Assets
--------------------------------------------
Cash and cash equivalents $ 5,020 $ 6,258
All other current assets 21,132 19,523
Property, plant and equipment, net 17,274 16,678
Goodwill 33,235 31,219
Other intangible assets, net 12,085 12,196
Other assets 8,734 14,667
------------ ------------
Total consumer products assets 97,480 100,541
Total financial services assets 6,790 7,408
-------------------------
Total assets $ 104,270 $ 107,949
=========================
Liabilities and Stockholders' Equity
--------------------------------------------
Short-term borrowings $ 2,135 $ 2,836
Current portion of long-term debt 2,066 3,430
Accrued settlement charges 3,552 3,503
All other current liabilities 17,674 16,389
Long-term debt 13,379 15,653
Deferred income taxes 5,321 8,492
Other long-term liabilities 13,826 13,813
------------ ------------
Total consumer products liabilities 57,953 64,116
Total financial services liabilities 6,698 8,126
------------ ------------
Total liabilities 64,651 72,242
Total stockholders' equity 39,619 35,707
------------ ------------
Total liabilities and
stockholders' equity $ 104,270 $ 107,949
============ ============
Total consumer products debt $ 17,580 $ 21,919
Debt/equity ratio - consumer products 0.44 0.61
Total debt $ 18,699 $ 23,933
Total debt/equity ratio 0.47 0.67
Altria Group, Inc.
Nicholas M. Rolli, 917-663-3460
or
Timothy R. Kellogg, 917-663-2759
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