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|ALTRIA GROUP, INC. filed this Form 8-K on 02/01/2018|
U.S. Corporate Tax Reform
On December 22, 2017, the U.S. Government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (Tax Reform Act) which, among other things, reduced the U.S. federal statutory corporate income tax rate to 21%, effective January 1, 2018.
The Tax Reform Act affected both Altria’s 2017 full-year reported effective tax rate and its 2017 full-year adjusted effective tax rate.
For the reported effective tax rate, Altria revalued its existing net deferred tax liabilities to reflect the lower rate. The Tax Reform Act also imposed a one-time deemed repatriation tax, substantially all of which is related to Altria’s share of accumulated earnings from its beer investment (Deemed Repatriation Tax). The effect of these items (Tax Reform Items) reduced Altria’s fourth-quarter and full-year reported effective tax rates, as detailed in Schedule 10.
For the adjusted effective tax rate, the Deemed Repatriation Tax covered historical earnings from Altria’s beer investment through 2017. As a result, no tax was due on the dividends Altria received from AB InBev during 2017, and Altria’s 2017 full-year adjusted effective tax rate decreased to 33.4% from Altria’s previous estimate of approximately 35.5%. This decrease provided an approximate $0.10 per share benefit to 2017 full-year adjusted diluted EPS. Altria expects to continue to receive favorable tax treatment on dividends it receives from AB InBev.
A reconciliation of Altria’s 2017 full-year reported effective tax rate to its 2017 full-year adjusted effective tax rate is shown on Schedule 10.
For Altria’s expected 2018 full-year adjusted effective tax rate, refer to “2018 Full-Year Guidance” below.
In October 2016, Altria announced the consolidation of certain of its operating companies’ manufacturing facilities to streamline operations and achieve greater efficiencies (Facilities Consolidation). The Facilities Consolidation is expected to be substantially completed by the end of the first quarter of 2018 and deliver approximately $50 million in annualized cost savings by the end of 2018.
As a result of the Facilities Consolidation, Altria recorded total pre-tax charges of approximately $150 million, including $71 million in 2016 and $78 million for the full year 2017, including $7 million in the fourth quarter.
2018 Full-Year Guidance
Altria forecasts 2018 full-year adjusted diluted EPS to be in a range of $3.90 to $4.03, which excludes a $0.09 tax expense for a tax basis adjustment related to the Deemed Repatriation Tax. This