Altria Group Inc
Altria Group, Inc. Reports 2003 Fourth-Quarter and Full-Year Results
-- 2003 Fourth-Quarter Diluted Earnings Per Share of $1.02 vs. $0.85 in
Year-Ago Quarter; Comparison Affected by Charges of $0.04 in 2003 and
$0.08 in 2002, As Detailed in Attached Reconciliation
-- 2003 Full-Year Diluted Earnings Per Share of $4.52 vs. $5.21 in 2002;
Comparison Affected by Charges of $0.10 in 2003 and Gains of $0.64 in
2002, Including an $0.81 Gain for Miller Transaction in 2002, As
Detailed in Attached Reconciliation
-- 2004 Full-Year Diluted Earnings Per Share Projected In a Range of $4.57
to $4.67, Which Includes a $0.23 Reduction for Kraft Restructuring
Program and Other Charges
Altria Group, Inc. (NYSE: MO) today announced fourth-quarter 2003 diluted
earnings per share of $1.02, including $0.04 in charges for other items as
described in the attached reconciliation of fourth-quarter 2003 to
fourth-quarter 2002 results, an increase of 20% versus $0.85 in the same quarter
a year ago, which included $0.08 in charges for other items described in the
attached reconciliation.
For the full-year 2003, diluted earnings per share were $4.52, including $0.10
in charges for other items as described in the attached reconciliation of
full-year 2003 to 2002 results, versus $5.21 for the same period a year ago,
which included a gain of $0.81 per share for the Miller Brewing Co. transaction,
as well as $0.17 in charges for other items described in the attached
reconciliation.
"Although 2003 was a challenging year, the investments we have made in our
businesses are gradually beginning to pay off and we produced solid results in
the fourth quarter of 2003, which were somewhat flattered by a rather weak
corresponding prior-year period," said Louis C. Camilleri, chairman and chief
executive officer of Altria Group, Inc. "The turnaround in our domestic tobacco
business has been particularly impressive, with fourth quarter 2003 volume,
retail share and profitability all ahead of the same period in 2002. Our
international tobacco business delivered strong income growth, aided by
favorable currency, although volume growth was adversely impacted by declines in
France, Germany and Italy."
"In our worldwide food business, 2003 was a difficult year, but actions were
taken in the second half to address challenges faced by Kraft Foods. Kraft is
positioning itself for sustainable growth with a new global organization
structure and recently announced plans to address key growth opportunities and
to realign its cost structure beginning in 2004. I am confident that the
leadership team at Kraft is moving quickly to improve long-term performance in a
business and consumer environment that remains challenging."
Altria Group, Inc. is projecting 2004 full-year diluted earnings per share in a
range of $4.57 to $4.67, which includes a $0.23 reduction for anticipated
charges related to Kraft's recently announced restructuring program and other
charges. The factors described in the Forward-Looking and Cautionary Statements
section of this release represent continuing risks to this projection.
A conference call with members of the investment community will be Webcast at
2:00 p.m. Eastern Time on January 28, 2004. Access is available at
www.altria.com.
ALTRIA GROUP, INC.
As described in "Note 14. Segment Reporting" of Altria Group, Inc.'s 2002 Annual
Report, management reviews operating companies income, which is defined as
operating income before corporate expenses and amortization of intangibles, to
evaluate segment performance and allocate resources. Management believes it is
appropriate to disclose this measure to help investors analyze business
performance and trends. For a reconciliation of operating companies income to
operating income, see the Condensed Statements of Earnings contained in this
release.
2003 Full-Year Results
Net revenues for the full year 2003, as detailed in the attached schedule
entitled "Selected Financial Data by Business Segment," increased 1.8% versus
2003 to $81.8 billion, due primarily to favorable currency of $3.4 billion and
to increases from Altria's food business and international tobacco business,
partially offset by the impact of the Miller transaction and lower net revenues
from the domestic tobacco business.
Operating income decreased 4.2% to $15.9 billion, due primarily to reductions in
operating companies income of $838 million from the domestic tobacco business
and $368 million from food, partially offset by higher operating results from
international tobacco. Also affecting operating income comparisons were
favorable currency of $563 million and the other items described in the attached
reconciliation of 2002 operating companies income to 2003 operating companies
income. During 2003, Altria Group, Inc. streamlined several corporate functions
and, more recently, announced that it intends to sell an office building in Rye
Brook, NY. These actions resulted in corporate pre-tax asset impairment and exit
costs of $67 million in the fourth quarter of 2003.
Net earnings decreased 17.1% to $9.2 billion, due primarily to the after-tax
impact of the Miller transaction of $1.7 billion, or $0.81 per share, that was
recorded during the third quarter of 2002. The effective tax rate decreased from
the 2002 rate of 35.5% to 34.9% in 2003, due primarily to favorable tax rulings,
as well as the mix of foreign versus domestic pre-tax earnings.
During 2003, Altria Group, Inc. raised its dividend 6.3% to an annualized rate
of $2.72 per common share, marking the 36th time in 34 years that the dividend
has been increased.
2003 Fourth-Quarter Results
Net revenues for the fourth quarter of 2003, as detailed in the attached
schedule entitled "Selected Financial Data by Business Segment," increased 10.2%
versus 2002 to $20.7 billion, due primarily to favorable currency of $926
million and to increases in domestic tobacco, international tobacco and food.
Operating income increased 11.9% to $3.6 billion, due primarily to higher
operating companies income from Philip Morris USA. Also affecting operating
income comparisons were favorable currency of $155 million and other items,
including a charge in 2002 of $290 million related to airline industry exposure,
as described in the attached reconciliation of fourth-quarter 2002 operating
companies income to fourth-quarter 2003 operating companies income.
Net earnings increased 18.3% to $2.1 billion, due primarily to higher operating
results at Philip Morris USA, the after-tax impact of the $290 million provision
in the fourth quarter of 2002 and a lower effective tax rate.
DOMESTIC TOBACCO
2003 Full-Year Results
Philip Morris USA Inc., Altria Group, Inc.'s domestic tobacco business,
continued to generate solid retail share performance, as its enhanced sales and
promotional programs drove quarterly sequential share gains throughout 2003.
Philip Morris USA's shipment volume was down 2.3% to 187.2 billion units for the
year. Premium mix for Philip Morris USA improved by approximately 1.1 share
points to 91.3%.
Operating companies income decreased 22.4%, to $3.9 billion, due to higher
spending in support of Philip Morris USA's programs to narrow price gaps, as
well as lower volume and $202 million in pre-tax charges related to the tobacco
growers settlement and pre-tax charges of $82 million for the move of Philip
Morris USA's headquarters to Richmond, VA, and other exit costs.
Philip Morris USA's total retail share improved significantly in 2003, driven by
steady gains in Marlboro and the growth of Parliament, while retail share
remained relatively stable for Virginia Slims and Basic.
Parliament Ultra Lights and Marlboro Blend No. 27 both met distribution and
share objectives following their introduction in 2003. In the fourth quarter,
Philip Morris USA began test marketing Marlboro Menthol 72mm, a premium-priced
addition to the Marlboro Menthol family that is shorter than king-size
cigarettes.
The following table summarizes sequential retail share performance for Philip
Morris USA's key brands from the first quarter through the fourth quarter of
2003, based on data from the IRI/Capstone Total Retail Panel:
Philip Morris USA 2003 Quarterly Retail Share(a)
Q1 Q2 Q3 Q4
2003 2003 2003 2003
------ ------ ------ -------
Marlboro 37.5% 37.8% 38.1% 38.5%
Parliament 1.5% 1.7% 1.8% 1.7%
Virginia Slims 2.5% 2.4% 2.4% 2.4%
Basic 4.3% 4.2% 4.2% 4.2%
----- ------ ----- -----
Focus Brands 45.8% 46.1% 46.5% 46.8%
Other Philip Morris USA 2.5% 2.4% 2.3% 2.3%
----- ------ ----- -----
Total Philip Morris USA 48.3% 48.5% 48.8% 49.1%
(a) Effective with the first quarter of 2003, Philip Morris USA began
reporting retail share results based on a retail tracking service,
with data beginning in fourth quarter 2002. This service, IRI/Capstone
Total Retail Panel, was developed to provide a more comprehensive
measure of market share in retail stores selling cigarettes. It is not
designed to capture Internet or direct mail sales. Effective with the
fourth quarter of 2003, Philip Morris USA has resumed reporting
comparisons versus the previous year.
2003 Fourth-Quarter Results
Philip Morris USA shipment volume increased 6.2% to 46.3 billion units in the
fourth quarter of 2003, due primarily to the timing of promotional shipments,
which resulted in lower volume in the fourth quarter of 2002. Premium volume for
Philip Morris USA grew 7.6% while its premium mix improved by 1.2 share points
to 91.5% during the quarter.
Operating companies income increased 25.1% to $987 million, driven by higher
volume, partially offset by charges related to the tobacco growers settlement
and the move of Philip Morris USA's headquarters to Richmond, VA.
Philip Morris USA's total retail share was up 1.0 share point to 49.1% in the
fourth quarter of 2003 compared to the same period a year earlier, driven by a
strong 1.1 share point gain in Marlboro and a solid 0.4 share point gain in
Parliament, while retail share was essentially stable for Virginia Slims and
Basic, as shown in the following table:
Philip Morris USA Quarterly Retail Share(a)
Q4 Q4
2003 2002 Change
------ ------ --------
Marlboro 38.5% 37.4% + 1.1 pp
Parliament 1.7% 1.3% + 0.4 pp
Virginia Slims 2.4% 2.5% - 0.1 pp
Basic 4.2% 4.3% - 0.1 pp
------ ------ --------
Focus Brands 46.8% 45.5% + 1.3 pp
Other Philip Morris USA 2.3% 2.6% - 0.3 pp
------ ------ --------
Total Philip Morris USA 49.1% 48.1% + 1.0 pp
(a) See note in table above
In the fourth quarter, Philip Morris USA's retail share of the premium segment
increased 0.4 share points to 61.5%, while its share of the discount segment
increased 0.2 share points to 15.8%.
INTERNATIONAL TOBACCO
2003 Full-Year Results
Shipment volume for Philip Morris International Inc. (PMI), Altria Group, Inc.'s
international tobacco business, increased 1.8% to 735.8 billion units in 2003,
as gains in key markets and additional volume from acquisitions during 2003 were
partially offset by declines primarily in France, Germany and Italy.
Operating companies income for PMI rose 10.9% to $6.3 billion for the full-year
2003, due to favorable currency of $469 million, volume gains, higher pricing
and 2002 pre-tax charges for asset impairment and exit costs, partially offset
by lower volume in the higher margin markets of France, Germany and Italy.
PMI achieved widespread market share gains, including increases in the top
income markets of Argentina, Austria, France, Germany, Greece, Japan, Poland,
Russia, Singapore, the Slovak Republic, Spain, Turkey, the Ukraine and the
United Kingdom.
Total Marlboro shipments were down 1.9% for 2003 versus 2002, due primarily to
declines in France, Germany and Italy, as well as Egypt, Indonesia and Turkey.
However, Marlboro share increased in Japan and other key markets, including
Argentina, Austria, Brazil, the Czech Republic, Greece, Mexico, Poland,
Portugal, the Slovak Republic, Singapore, Spain, Switzerland, the Ukraine and
the United Kingdom.
In Western Europe, shipment volume was down 6.5% for the full-year 2003, due to
declines in France, Germany and Italy, partially offset by increases in Spain
and Austria. In France, shipment volume was down 13.0%, as tax-driven price
increases over the past two years have led to an overall market decline.
However, PMI's share was up 0.3 points to 39.2%. In Germany, volume declined
6.1%, primarily reflecting a lower total market affected by the tax-driven price
increases in January 2003 and subsequent down trading to low priced tobacco
portions. PMI's share in Germany increased 0.3 points to 37.2% in 2003. In
Italy, volume was down 14.3% while share declined 7.1 points to 54.1%, as
Marlboro and Diana were adversely impacted by low-priced competitive brands. In
Spain, volume was up 7.1%, driven by the improved performance of Marlboro,
Chesterfield and the Philip Morris brand. Overall, PMI's share in Western Europe
was down 0.8 points to 38.8%, but excluding Italy was up 0.5 points to 35.3%.
In Central Europe, volume advanced 5.9% in 2003, due mainly to gains in Romania,
and in Greece and Serbia, which benefited from acquisition volume, partially
offset by declines in Hungary and Poland due to intense price competition, and
declines in Lithuania and the Slovak Republic due to lower markets as a result
of tax-driven price increases. In Romania, gains by Marlboro and L&M fueled a
27.2% increase in volume. In the second half of 2003, PMI acquired the Greek
cigarette company Papastratos and a controlling interest in Duvanska Industrija
Nis (DIN), a formerly state-owned cigarette company in Serbia.
In Eastern Europe, the Middle East and Africa, volume grew 11.5%, driven by
strong performances in Russia, Turkey and the Ukraine. In Russia, Marlboro, L&M,
Bond Street, Chesterfield, Optima, Parliament, Next and Virginia Slims continued
to perform well. In Turkey, L&M and the successful launch of Muratti Ambassador
fueled double-digit volume growth and a 4.8 point share gain to 32.3%. In the
Ukraine, volume was up 21.6%, driven by the continued strong performance of
Marlboro, L&M, Bond Street, Optima and Next.
In Asia, volume was down 0.5% in 2003, as declines in the Philippines and
Indonesia more than offset increases in Korea, Taiwan, Thailand and Japan. In
Korea, volume and share improved significantly, driven by the successful
introduction of Lark in the premium segment in November 2002 and the launch of
Virginia Slims Ultra Lights in July 2003. In Japan, share advanced 0.4 points to
24.0% driven by Marlboro and Lark.
In Latin America, volume rose 2.9% for 2003, due mainly to a strong gain in
Argentina, driven by Marlboro and L&M, and to Mexico, where Marlboro and B&H
continued to grow. PMI's share increased 1.0 point to 66.2% in Argentina.
2003 Fourth-Quarter Results
Shipment volume for PMI increased 1.6% to 168.3 billion units in the fourth
quarter of 2003, as gains in many top markets including Argentina, Austria,
Korea, Mexico, Russia, Spain, Taiwan, Thailand, Turkey, and the Ukraine, a
return to growth in PMI's worldwide duty free business and additional volume
from acquisitions in Greece and Serbia were partially offset by declines
primarily in France, Germany and Italy. PMI's volume comparison also reflects
higher shipments to Japan in the fourth quarter of 2002 as a result of the
shutdown of U.S. West Coast shipping ports during the third quarter of 2002.
Operating companies income for PMI rose 8.2% to $1.3 billion in the fourth
quarter of 2003, due to favorable currency of $109 million, acquisition volume
and higher pricing, partially offset by lower volume in the higher margin
markets of France, Germany and Italy.
PMI achieved widespread market share gains in the fourth quarter of 2003,
including increases in the top income markets of Argentina, France, Germany,
Greece, Japan, Mexico, the Netherlands, Russia, the Slovak Republic, Spain,
Turkey, the Ukraine and the United Kingdom.
FOOD
Yesterday, Kraft Foods Inc. (Kraft) reported 2003 full-year and fourth-quarter
results. For the full-year 2003, Kraft's worldwide volume was up 0.7%, as volume
growth from ongoing businesses of 1.6% was partially offset by the impact of
divestitures. Ongoing volume growth reflected broad gains across Kraft's
businesses and tack-on acquisitions, which accounted for 0.4 points of growth,
partially offset by a decline in the Biscuits, Snacks and Confectionery business
and the impact of trade inventory reductions. Operating income declined 1.7% to
$6.0 billion, as higher commodity and benefit costs, unfavorable product mix,
the previously announced reinvestment program in U.S. focus categories and the
impact of prior year gains on the sales of businesses were partially offset by
the absence of $253 million in integration-related and separation charges
incurred in 2002, favorable currency of $94 million and volume growth.
For the fourth quarter, Kraft's worldwide volume was up 1.1%, as volume growth
from ongoing businesses of 1.9% was partially offset by the impact of
divestitures. Tack-on acquisitions contributed 0.6 points of the increase.
Ongoing business volume was up in five of Kraft's six businesses, as consumption
growth was partially offset by continued trade inventory reductions. A decline
in the Biscuits, Snacks and Confectionery business was driven primarily by a
decrease in biscuit volumes. In the fourth quarter, Kraft invested $147 million
of a previously announced reinvestment program primarily in its U.S. focus
categories. During the investment period, cheese, cold cuts, coffee and crackers
showed solid sequential improvement in consumption and share trends, while
results in the cookie category remained weak. The previously reported factors
impacting the cookie category performance, including consumers' increased health
and wellness focus and lower contributions from new products, continued to
affect results in the fourth quarter. Operating income declined 9.0% to $1.5
billion, as higher commodity and benefit costs, the previously announced
investment spending in focus categories, adverse product mix and the absence of
a prior year gain on the sale of a business were partially offset by higher
volume and by favorable currency of $46 million.
NORTH AMERICAN FOOD
2003 Full-Year Results
For the full year, volume for Kraft Foods North America, Inc. (KFNA) was up
1.6%, due to contributions from new products and gains in Beverages,
Foodservice, Canada, Mexico and Cheese, partially offset by lower Biscuits
volume and a reduction in trade inventories. Operating companies income declined
0.7% to $4.9 billion, as higher commodity and benefit costs, unfavorable mix and
increased promotional spending were partially offset by the absence of $229
million in integration-related and separation charges incurred in 2002, volume
growth and pricing actions taken early in the year in response to higher
commodity costs.
2003 Fourth-Quarter Results
For the fourth quarter, volume for Kraft Foods North America, Inc. (KFNA) grew
1.5%, led by contributions from new products and solid gains in Beverages,
Cheese, Foodservice and Canada, partially offset by a decline in Biscuits and
the impact of a strike by grocery workers, particularly on the West Coast.
Operating companies income declined 8.0% to $1.1 billion, as increased commodity
and benefit costs, unfavorable product mix and the investment in focus
categories were partially offset by the contribution from volume growth.
INTERNATIONAL FOOD
2003 Full-Year Results
For the full year, volume for Kraft Foods International, Inc. (KFI) decreased
1.6%, as the impact of divestitures more than offset volume growth from ongoing
businesses of 1.4%. Ongoing business volume was up due to tack-on acquisitions,
which accounted for 1.5 points of growth, and growth in several key developing
markets, including Russia, Brazil and China, moderated by the impact of price
competition, particularly in Germany and France, and the impact of the summer
heat wave in Europe on the coffee and confectionery businesses.
Operating companies income decreased 3.6% to $1.3 billion, as the absence of
gains on sales of businesses in 2002, unfavorable mix, higher benefit costs and
infrastructure investment in developing markets were partially offset by the
absence of $24 million in integration-related and separation charges incurred in
2002, pricing actions and favorable currency of $72 million.
2003 Fourth-Quarter Results
For the fourth quarter, volume for Kraft Foods International, Inc. (KFI) was up
0.3%, as volume growth from ongoing businesses of 2.6% was offset by
divestitures. Ongoing business volume was up due to tack-on acquisitions, which
accounted for 1.9 points of the increase, and growth in Latin America and Asia
Pacific. Operating companies income decreased 7.7% to $442 million, as the
absence of a gain on sale of a business in 2002 and higher costs were partially
offset by pricing actions and favorable currency of $34 million, reflecting the
stronger euro.
FINANCIAL SERVICES
2003 Full-Year and Fourth-Quarter Results
Philip Morris Capital Corporation (PMCC) reported operating companies income of
$313 million for the full-year 2003 and $72 million for the fourth quarter of
2003, significantly above results for comparable periods in 2002, reflecting a
$290 million provision for exposure related to the airline industry in the
fourth quarter of 2002, partially offset by the impact of lower investment
balances as a result of PMCC's change in strategic direction.
Earlier in 2003, PMCC announced that it was shifting its strategic focus from an
emphasis on the growth of its portfolio of finance leases through new lease
investments to one of maximizing investment gains and generating cash flows from
its existing portfolio of assets through an orderly and systematic disposition
of assets over an extended period of time.
Altria Group, Inc. Profile
Altria Group, Inc. is the parent company of Kraft Foods Inc., with 84.6%
ownership of outstanding Kraft common shares, Philip Morris International Inc.,
Philip Morris USA Inc. and Philip Morris Capital Corporation. In addition,
Altria Group, Inc. has a 36% economic interest in SABMiller plc, the world's
second-largest brewer. The brand portfolio of Altria Group, Inc.'s consumer
packaged goods companies includes such well-known names as Kraft, Jacobs, L&M,
Marlboro, Maxwell House, Nabisco, Oreo, Oscar Mayer, Parliament, Philadelphia,
Post and Virginia Slims. Altria Group, Inc. recorded 2003 net revenues of $81.8
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 2003 financial statements will
be available through Altria Group, Inc.'s Web site after they are filed with the
Securities and Exchange Commission on or about January 28, 2004. If you do not
have Internet access but would like to receive a copy of the 2003 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 unfavorable
currency movements; intense price competition, changes in consumer preferences
and demand for their products; changing prices for raw materials, fluctuations
in levels of customer inventories and the effects of foreign economies and local
economic and market conditions. Their results are dependent upon their continued
ability to promote brand equity successfully; to anticipate and respond to new
consumer trends; to develop new products and markets and to broaden brand
portfolios in order to compete effectively with lower-priced products; to
improve productivity; and to respond effectively to changing prices for their
raw materials.
Altria Group, Inc.'s tobacco subsidiaries (Philip Morris USA and Philip Morris
International) continue to be subject to litigation, including risks associated
with adverse jury and judicial determinations, courts reaching conclusions at
variance with the company's understanding of applicable law, bonding
requirements and the absence of adequate appellate remedies to get timely relief
from any of the foregoing; price disparities and changes in price disparities
between premium and lowest-price brands; legislation, including actual and
potential excise tax increases; increasing marketing and regulatory
restrictions; the effects of price increases related to excise tax increases and
concluded tobacco litigation settlements on consumption rates and consumer
preferences within price segments; health concerns relating to the use of
tobacco products and exposure to environmental tobacco smoke; governmental
regulation; privately imposed smoking restrictions; and governmental and grand
jury investigations.
As a result of actions taken by credit rating agencies during 2003, Altria
Group, Inc.'s access to the commercial paper market is limited, and Altria
Group, Inc. may have to rely on its revolving credit facilities instead.
Altria Group, Inc.'s financial services subsidiary (Philip Morris Capital
Corporation) is subject to the effects of a weak economy, particularly with
respect to aircraft leases in the troubled airline industry.
Altria Group, Inc.'s consumer products subsidiaries are subject to other risks
detailed from time to time in its publicly filed documents, including its Annual
Report on Form 10-K for the period ended December 31, 2002 and its Quarterly
Report on Form 10-Q for the period ended September 30, 2003. Altria Group, Inc.
cautions that the foregoing list of important factors is not complete and does
not undertake to update any forward-looking statements that it may make.
ALTRIA GROUP, INC.
and Subsidiaries
Condensed Statements of Earnings
For the Quarters Ended December 31,
(in millions, except per share data)
2003 2002 % Change
-------------------------
Net revenues $20,691 $18,774 10.2 %
Cost of sales 8,414 8,041 4.6 %
Excise taxes on products (a) 5,260 4,310 22.0 %
----------------
Gross profit 7,017 6,423 9.2 %
Marketing, administration and research costs 3,109 2,792
Domestic tobacco legal settlement 20 -
Domestic tobacco headquarters relocation charges 33 -
Gains on sales of businesses (8) (77)
Integration costs and a loss on sale of a
food factory (13) (8)
Asset impairment and exit costs 13 -
Provision for airline industry exposure - 290
----------------
Operating companies income 3,863 3,426 12.8 %
Amortization of intangibles 2 2
General corporate expenses 162 179
Asset impairment and exit costs 67 -
----------------
Operating income 3,632 3,245 11.9 %
Miller Brewing Company transaction - 22
Interest and other debt expense, net 303 253
----------------
Earnings before income taxes and minority
interest 3,329 2,970 12.1 %
Provision for income taxes 1,155 1,054 9.6 %
----------------
Earnings before minority interest 2,174 1,916 13.5 %
Minority interest in earnings and other, net 83 148
----------------
Net earnings $ 2,091 $ 1,768 18.3 %
================
Basic earnings per share (b) $ 1.03 $ 0.86 19.8 %
================
Diluted earnings per share (b) $ 1.02 $ 0.85 20.0 %
================
Weighted average number of
shares outstanding - Basic 2,030 2,060 (1.5)%
- Diluted 2,046 2,069 (1.1)%
(a) The detail of excise taxes on products sold is as follows:
2003 2002
----------------
Domestic tobacco $ 917 $ 863
International tobacco 4,343 3,447
----------------
Total excise taxes $ 5,260 $ 4,310
================
(b) Basic and diluted earnings per share are computed for each of the
periods presented. Accordingly, the sum of the quarterly earnings per
share amounts may not agree to the year-to-date amounts.
ALTRIA GROUP, INC.
and Subsidiaries
Selected Financial Data by Business Segment
For the Quarters Ended December 31,
(in millions)
North
Domestic International American International
tobacco tobacco food food
----------------------------------------------
2003 Net Revenues $4,246 $ 8,010 $5,557 $2,773
2002 Net Revenues 3,956 6,855 5,398 2,449
% Change 7.3% 16.8% 2.9% 13.2%
Reconciliation:
--------------------------
2002 Net Revenues $3,956 $ 6,855 $5,398 $2,449
Divested businesses - 2003 - - - 24
Divested businesses - 2002 - - (4) (40)
Currency - 623 62 241
Operations 290 532 101 99
--------------------------------------------
2003 Net Revenues $4,246 $ 8,010 $5,557 $2,773
============================================
Financial
services Total
----------------------
2003 Net Revenues $ 105 $20,691
2002 Net Revenues 116 18,774
% Change (9.5)% 10.2%
Reconciliation:
--------------------------
2002 Net Revenues $ 116 $18,774
Divested businesses - 2003 - 24
Divested businesses - 2002 - (44)
Currency - 926
Operations (11) 1,011
----------------------
2003 Net Revenues $ 105 $20,691
======================
Note: The detail of excise taxes on products sold is as follows:
2003 2002
----------------------
Domestic tobacco $ 917 $ 863
International tobacco 4,343 3,447
----------------------
Total excise taxes $5,260 $ 4,310
======================
Currency increased international tobacco excise taxes by $385 million.
ALTRIA GROUP, INC.
and Subsidiaries
Selected Financial Data by Business Segment
For the Quarters Ended December 31,
(in millions) North
Domestic International American International
tobacco tobacco food food
---------------------------------------------
2003 Operating Companies
Income $ 987 $1,274 $1,088 $442
2002 Operating Companies
Income 789 1,177 1,183 479
% Change 25.1% 8.2% (8.0)% (7.7)%
Reconciliation:
--------------------------
2002 Operating Companies
Income $ 789 $1,177 $1,183 $479
Divested businesses - 2003 - - - 2
Divested businesses - 2002 - - (1) (7)
Domestic tobacco legal
settlement - 2003 (20) - - -
Domestic tobacco
headquarters relocation
charges - 2003 (33) - - -
Gains on sales of
businesses - 2003 - - - 8
Gains on sales of
businesses - 2002 - - (8) (69)
Integration costs - 2003 - - 13 -
Integration costs and a
loss on sale of a food
factory - 2002 - - (8) -
Asset impairment and exit
costs - 2003 (13) - - -
Provision for airline
industry exposure - 2002 - - - -
Currency - 109 12 34
Operations 264 (12) (103) (5)
--------------------------------------------
2003 Operating Companies
Income $ 987 $1,274 $1,088 $442
============================================
Financial
services Total
----------------------
2003 Operating Companies
Income $ 72 $3,863
2002 Operating Companies
Income (202) 3,426
% Change 100+% 12.8%
Reconciliation:
-------------------
2002 Operating Companies
Income $(202) $3,426
Divested businesses - 2003 - 2
Divested businesses - 2002 - (8)
Domestic tobacco legal
settlement - 2003 - (20)
Domestic tobacco
headquarters relocation
charges - 2003 - (33)
Gains on sales of
businesses - 2003 - 8
Gains on sales of
businesses - 2002 - (77)
Integration costs - 2003 - 13
Integration costs and a
loss on sale of a food
factory - 2002 - (8)
Asset impairment and exit
costs - 2003 - (13)
Provision for airline
industry exposure - 2002 290 290
Currency - 155
Operations (16) 128
----------------------
2003 Operating Companies
Income $ 72 $3,863
======================
ALTRIA GROUP, INC.
and Subsidiaries
Condensed Statements of Earnings
For the Twelve Months Ended December 31,
(in millions, except per share data)
2003 2002 % Change
-------------------------
Net revenues $81,832 $80,408 1.8 %
Cost of sales 31,870 32,748 (2.7)%
Excise taxes on products (a) 21,128 18,226 15.9 %
-----------------
Gross profit 28,834 29,434 (2.0)%
Marketing, administration and research costs 11,898 11,599
Domestic tobacco legal settlement 202 -
Domestic tobacco headquarters relocation charges 69 -
Gains on sales of businesses (31) (80)
Integration costs and a loss on sale of a
food factory (13) 111
Asset impairment and exit costs 19 223
Provision for airline industry exposure - 290
-----------------
Operating companies income 16,690 17,291 (3.5)%
Amortization of intangibles 9 7
General corporate expenses 704 683
Asset impairment and exit costs 67 -
-----------------
Operating income 15,910 16,601 (4.2)%
Gain on Miller Brewing Company transaction - (2,631)
Interest and other debt expense, net 1,150 1,134
-----------------
Earnings before income taxes and minority
interest 14,760 18,098 (18.4)%
Provision for income taxes 5,151 6,424 (19.8)%
-----------------
Earnings before minority interest 9,609 11,674 (17.7)%
Minority interest in earnings, net 405 572
-----------------
Net earnings $ 9,204 $11,102 (17.1)%
=================
Basic earnings per share (b) $ 4.54 $ 5.26 (13.7)%
=================
Diluted earnings per share (b) $ 4.52 $ 5.21 (13.2)%
=================
Weighted average number of
shares outstanding - Basic 2,028 2,111 (3.9)%
- Diluted 2,038 2,129 (4.3)%
(a) The detail of excise taxes on products sold is as follows:
2003 2002
----------------
Domestic tobacco $ 3,698 $ 3,776
International tobacco 17,430 13,997
Beer - 453
----------------
Total excise taxes $21,128 $18,226
================
(b) Basic and diluted earnings per share are computed for each of the
periods presented. Accordingly, the sum of the quarterly earnings per
share amounts may not agree to the year-to-date amounts.
ALTRIA GROUP, INC.
and Subsidiaries
Selected Financial Data by Business Segment
For the Twelve Months Ended December 31,
(in millions) North
Domestic International American International
tobacco tobacco food food
--------------------------------------------
2003 Net Revenues $17,001 $33,389 $21,907 $ 9,103
2002 Net Revenues 18,877 28,672 21,485 8,238
% Change (9.9)% 16.5% 2.0% 10.5%
Reconciliation:
---------------------------
2002 Net Revenues $18,877 $28,672 $21,485 $ 8,238
Divested businesses - 2003 - - - 115
Divested businesses - 2002 - - (21) (181)
Currency - 2,667 120 610
Operations (1,876) 2,050 323 321
-------------------------------------------
2003 Net Revenues $17,001 $33,389 $21,907 $ 9,103
===========================================
Financial
Beer services Total
------------------------------
2003 Net Revenues $ - $ 432 $81,832
2002 Net Revenues 2,641 495 80,408
% Change (12.7)% 1.8%
Reconciliation:
----------------
2002 Net Revenues $ 2,641 $ 495 $80,408
Divested businesses - 2003 - - 115
Divested businesses - 2002 (2,641) - (2,843)
Currency - - 3,397
Operations - (63) 755
------------------------------
2003 Net Revenues $ - $ 432 $81,832
==============================
Note: The detail of excise taxes on products sold is as follows:
2003 2002
---------------------
Domestic tobacco $ 3,698 $ 3,776
International tobacco 17,430 13,997
Beer - 453
---------------------
Total excise taxes $21,128 $18,226
=====================
Currency increased international tobacco excise taxes by $1,602
million.
ALTRIA GROUP, INC.
and Subsidiaries
Selected Financial Data by Business Segment
For the Twelve Months Ended December 31,
(in millions) North
Domestic International American International
tobacco tobacco food food
---------------------------------------------
2003 Operating Companies
Income $3,889 $6,286 $ 4,920 $1,282
2002 Operating Companies
Income 5,011 5,666 4,953 1,330
% Change (22.4)% 10.9% (0.7)% (3.6)%
Reconciliation:
----------------------
2002 Operating Companies
Income $5,011 $5,666 $ 4,953 $1,330
Divested businesses - 2003 - - - 17
Divested businesses - 2002 - - (5) (30)
Domestic tobacco legal
settlement - 2003 (202) - - -
Domestic tobacco
headquarters relocation
charges - 2003 (69) - - -
Gains on sales of
businesses - 2003 - - - 31
Gains on sales of
businesses - 2002 - - (8) (72)
Integration costs - 2003 - - 13 -
Integration costs and a
loss on sale of a food
factory - 2002 - - 94 17
Asset impairment and exit
costs - 2003 (13) - - (6)
Asset impairment and exit
costs - 2002 - 58 135 7
Provision for airline
industry exposure - 2002 - - - -
Currency - 469 22 72
Operations (838) 93 (284) (84)
-------------------------------------------
2003 Operating Companies
Income $3,889 $6,286 $ 4,920 $1,282
===========================================
Financial Total
Beer services
------------------------------
2003 Operating Companies
Income $ - $ 313 $16,690
2002 Operating Companies
Income 276 55 17,291
% Change 100+% (3.5)%
Reconciliation:
-------------------
2002 Operating Companies
Income $ 276 $ 55 $17,291
Divested businesses - 2003 - - 17
Divested businesses - 2002 (299) - (334)
Domestic tobacco legal
settlement - 2003 - - (202)
Domestic tobacco
headquarters relocation
charges - 2003 - - (69)
Gains on sales of
businesses - 2003 - - 31
Gains on sales of
businesses - 2002 - - (80)
Integration costs - 2003 - - 13
Integration costs and a
loss on sale of a food
factory - 2002 - - 111
Asset impairment and exit
costs - 2003 - - (19)
Asset impairment and exit
costs - 2002 23 - 223
Provision for airline
industry exposure - 2002 - 290 290
Currency - - 563
Operations - (32) (1,145)
------------------------------
2003 Operating Companies
Income $ - $ 313 $16,690
==============================
ALTRIA GROUP, INC.
and Subsidiaries
Net Earnings and Diluted Earnings Per Share
For the Quarters Ended December 31,
($ in millions, except per share data)
Net Diluted
Earnings E.P.S.(a)
-------- ---------
2003 $2,091 $1.02
2002 $1,768 $0.85
% Change 18.3% 20.0%
Reconciliation:
------------------
2002 Reported $1,768 $0.85
2002 Gains on sales of businesses, net of minority
interest impact (42) (0.02)
2002 Integration costs and a loss on sale of a
food factory, net of minority interest impact (4) -
2002 Asset impairment and exit costs, net of
minority interest impact - -
2002 Provision for airline industry exposure 187 0.09
2002 Gain on Miller Brewing Company transaction 14 0.01
-------- ------
155 0.08
-------- ------
2003 Domestic tobacco legal settlement (14) (0.01)
2003 Domestic tobacco headquarters relocation charges (22) (0.01)
2003 Gains on sales of businesses, net of minority
interest impact 4 -
2003 Integration costs, net of minority interest impact 7 -
2003 Asset impairment and exit costs, net of
minority interest impact (52) (0.02)
-------- ------
(77) (0.04)
-------- ------
Currency 100 0.05
Change in shares - 0.01
Change in tax rate 32 0.01
Operations 113 0.06
-------- ------
2003 Reported $2,091 $1.02
======== ======
(a) Basic and diluted earnings per share are computed for each of the
periods presented. Accordingly, the sum of the quarterly earnings per
share amounts may not agree to the year-to-date amounts.
ALTRIA GROUP, INC.
and Subsidiaries
Net Earnings and Diluted Earnings Per Share
For the Twelve Months Ended December 31,
($ in millions, except per share data)
Net Diluted
Earnings E.P.S. (a)
--------- ----------
2003 $ 9,204 $ 4.52
2002 $11,102 $ 5.21
% Change (17.1)% (13.2)%
Reconciliation:
------------------
2002 Reported $11,102 $ 5.21
2002 Gains on sales of businesses, net of minority
interest impact (44) (0.02)
2002 Integration costs and a loss on sale of a
food factory, net of minority interest impact 60 0.03
2002 Asset impairment and exit costs, net of
minority interest impact 129 0.07
2002 Provision for airline industry exposure 187 0.09
2002 Gain on Miller Brewing Company transaction (1,697) (0.81)
-------- -------
(1,365) (0.64)
-------- -------
2003 Domestic tobacco legal settlement (132) (0.06)
2003 Domestic tobacco headquarters relocation
charges (45) (0.02)
2003 Gains on sales of businesses, net of minority
interest impact 17 0.01
2003 Integration costs, net of minority interest impact 7 -
2003 Asset impairment and exit costs, net of
minority interest impact (55) (0.03)
-------- -------
(208) (0.10)
-------- -------
Currency 363 0.17
Change in shares - 0.20
Change in tax rate 90 0.04
Operations (778) (0.36)
-------- -------
2003 Reported $ 9,204 $ 4.52
======== =======
(a) Basic and diluted earnings per share are computed for each of the
periods presented. Accordingly, the sum of the quarterly earnings per
share amounts may not agree to the year-to-date amounts.
ALTRIA GROUP, INC.
and Subsidiaries
Condensed Balance Sheets
(in millions, except ratios)
December 31, December 31,
2003 2002
------------ ------------
Assets
-------
Cash and cash equivalents $ 3,777 $ 565
All other current assets 17,605 16,876
Property, plant and equipment, net 16,067 14,846
Goodwill 27,742 26,037
Other intangible assets, net 11,803 11,834
Other assets 10,641 8,151
-------- --------
Total consumer products assets 87,635 78,309
Total financial services assets 8,540 9,231
-------- --------
Total assets $96,175 $87,540
======== ========
Liabilities and Stockholders' Equity
------------------------------------
Short-term borrowings $ 1,715 $ 407
Current portion of long-term debt 1,661 1,558
Accrued settlement charges 3,530 3,027
All other current liabilities 14,487 14,090
Long-term debt 18,953 19,189
Deferred income taxes 7,295 6,112
Other long-term liabilities 15,137 15,498
-------- --------
Total consumer products liabilities 62,778 59,881
Total financial services liabilities 8,320 8,181
-------- --------
Total liabilities 71,098 68,062
Total stockholders' equity 25,077 19,478
-------- --------
Total liabilities and
stockholders' equity $96,175 $87,540
======== ========
Total consumer products debt $22,329 $21,154
Debt/equity ratio - consumer products 0.89 1.09
Total debt $24,539 $23,320
Total debt/equity ratio 0.98 1.20
CONTACT: Altria Group, Inc.
Nicholas M. Rolli, 917-663-3460
Timothy R. Kellogg, 917-663-2759