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-
Altria's 2017 third-quarter reported diluted earnings per share
(EPS) increased 73.2% to $0.97, as comparisons were affected by
special items.
-
Altria's 2017 third-quarter adjusted diluted EPS, which excludes
the impact of special items, increased 9.8% to $0.90.
-
Altria's 2017 nine-month reported diluted EPS increased 34.7% to
$2.72, as comparisons were affected by special items.
-
Altria's 2017 nine-month adjusted diluted EPS, which excludes the
impact of special items, increased 5.5% to $2.48.
RICHMOND, Va.--(BUSINESS WIRE)--Oct. 26, 2017--
Altria Group, Inc. (Altria) (NYSE:MO) today announced its 2017
third-quarter and nine-month business results and reaffirmed its
guidance for 2017 full-year adjusted diluted EPS.
"Altria delivered outstanding performance in the third quarter and for
the first nine months of 2017 as our core tobacco operating companies
generated strong income growth," said Marty Barrington, Altria's
Chairman, Chief Executive Officer and President. "Our financial
performance continues to strengthen in the second half, as we expected."
"And we continued to focus on rewarding shareholders through the first
nine months, paying out more than $3.5 billion in dividends and
repurchasing nearly $2.4 billion in shares. In August, Altria's Board of
Directors voted to increase our quarterly dividend per share by 8.2%."
"The business is performing well in a competitive environment, and we
continue to expect full-year adjusted diluted EPS growth of 7.5% to
9.5%."
Conference Call
As previously announced, a conference call with the investment community
and news media will be webcast on October 26, 2017 at 9:00 a.m. Eastern
Time. Access to the webcast is available at www.altria.com/webcasts
and via the Altria Investor app.
Cash Returns to Shareholders - Dividends and
Share Repurchase Program
In August 2017, Altria's Board of Directors (Board) increased the
regular quarterly dividend by 8.2% to $0.66 per share. Altria's current
annualized dividend rate is $2.64 per share. As of October 20, 2017,
Altria's annualized dividend yield was 4.1%. Altria paid approximately
$1.2 billion in dividends in the third quarter and $3.5 billion for the
first nine months of 2017. Altria expects to continue to return a large
amount of cash to shareholders in the form of dividends by maintaining a
dividend payout ratio target of approximately 80% of its adjusted
diluted EPS. Future dividend payments remain subject to the discretion
of the Board.
During the third quarter, Altria repurchased 11.1 million shares under
its share repurchase program at an average price of $67.99, for a total
cost of approximately $759 million. As of September 30, 2017, Altria had
$576 million remaining in the $4 billion program, which Altria expects
to complete by the end of the second quarter of 2018. The timing of
share repurchases depends upon marketplace conditions and other factors.
This program remains subject to the discretion of the Board.
Product Innovation
In e-vapor, Nu Mark LLC (Nu Mark) grew MarkTen's third-quarter volume
by more than 50% primarily through expanded distribution and category
growth. MarkTen has a third-quarter national retail share of
approximately 13.5% in mainstream retail channels. MarkTen is
present in stores representing approximately 65% of e-vapor category
volume in those channels. Nu Mark has announced plans to expand its
distribution of MarkTen Bold to approximately 15,000 additional
retail stores in the fourth quarter.
In heated tobacco, in August the U.S. Food and Drug Administration (FDA)
began its substantive science review of Philip Morris International
Inc.'s (PMI) IQOS premarket tobacco product application (PMTA).
PMI submitted its PMTA to the FDA in March 2017. Philip Morris USA Inc.
(PM USA) continues to build its commercialization plans for IQOS,
which it will have the exclusive right to sell in the U.S. upon FDA
authorization.
FDA's Comprehensive Regulatory Plan for Tobacco
and Nicotine Regulation
In July, the FDA announced a new comprehensive plan for tobacco and
nicotine regulation that will serve as the FDA's multi-year regulatory
road map. The FDA has stated its belief that this approach will strike
an appropriate balance between regulation and encouraging development of
innovative tobacco products that may be less risky than cigarettes.
Federal Government's Lawsuit
Earlier this month, Altria and PM USA announced that they and other
companies have agreed on the timing of court-ordered communications
about cigarettes and smoking on television and in newspapers. The
communications, which will begin on November 26, 2017, stem from a 1999
lawsuit the federal government brought against the major domestic
cigarette companies that focused on industry conduct dating back to the
1950s.
Facilities Consolidation
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 completed by 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 expects to record
total pre-tax charges of approximately $150 million, or $0.05 per share.
Of this amount, Altria recorded pre-tax charges of $71 million in 2016
and $71 million for the first nine months of 2017 (including $15 million
in the third quarter).
2017 Full-Year Guidance
Altria reaffirms its guidance for 2017 full-year adjusted diluted EPS to
be in a range of $3.26 to $3.32. This range represents a growth rate of
7.5% to 9.5% from an adjusted diluted EPS base of $3.03 in 2016 as shown
in Table 1. This range excludes the special items for the first nine
months of 2017 shown in Table 2.
Altria expects that its 2017 full-year effective tax rate on operations
will be approximately 35.5%.
Altria's full-year adjusted diluted EPS guidance and full-year
forecast for its effective tax rate on operations exclude the impact of
certain income and expense items that management believes are not part
of underlying operations. These items may include, for example,
loss on early extinguishment of debt, restructuring charges, gain on AB
InBev/SABMiller business combination, AB InBev/SABMiller special items,
certain tax items, charges associated with tobacco and health litigation
items, and settlements of, and determinations made in connection with,
certain non-participating manufacturer (NPM) adjustment disputes under
the Master Settlement Agreement (such settlements and determinations are
referred to collectively as NPM Adjustment Items).
Altria's management cannot estimate on a forward-looking basis the
impact of certain income and expense items, including those items noted
in the preceding paragraph, on its reported diluted EPS and its reported
effective tax rate because these items, which could be significant, may
be infrequent, are difficult to predict and may be highly variable. As
a result, Altria does not provide a corresponding U.S. generally
accepted accounting principles (GAAP) measure for, or reconciliation to,
its adjusted diluted EPS guidance or its effective tax rate on
operations forecast.
The factors described in the Forward-Looking and Cautionary Statements
section of this release represent continuing risks to Altria's forecast.
Table 1 - Altria's 2016 Adjusted Results
|
|
|
Full Year
|
|
2016
|
Reported diluted EPS
|
$
|
7.28
|
|
NPM Adjustment Items
|
0.01
|
|
Tobacco and health litigation items
|
0.04
|
|
SABMiller special items
|
(0.03
|
)
|
Loss on early extinguishment of debt
|
0.28
|
|
Asset impairment, exit and implementation costs
|
0.07
|
|
Patent litigation settlement
|
0.01
|
|
Gain on AB InBev/SABMiller business combination
|
(4.61
|
)
|
Tax items
|
(0.02
|
)
|
Adjusted diluted EPS
|
$
|
3.03
|
|
Note: For details of pre-tax, tax and after-tax amounts, see Schedule
10.
ALTRIA GROUP, INC.
Altria reports its financial results in accordance with GAAP. Altria's
management reviews OCI, which is defined as operating income before
general corporate expenses and amortization of intangibles, to evaluate
the performance of, and allocate resources to, the segments. Altria's
management also reviews OCI, operating margins and diluted EPS on an
adjusted basis, which excludes certain income and expense items,
including those items noted under "2017 Full-Year Guidance" above. Altria's
management does not view any of these special items to be part of
Altria's underlying results as they may be highly variable, may be
infrequent, are difficult to predict and can distort underlying business
trends and results. Altria's management also reviews income tax
rates on an adjusted basis. Altria's effective tax rate on
operations may exclude certain tax items from its reported effective tax
rate. Altria's management believes that adjusted financial
measures provide useful additional insight into underlying business
trends and results and provide a more meaningful comparison of
year-over-year results. Altria's management uses adjusted
financial measures for planning, forecasting and evaluating business and
financial performance, including allocating resources and evaluating
results relative to employee compensation targets. These adjusted
financial measures are not consistent with GAAP and may not be
calculated the same as similarly titled measures used by other companies.
These adjusted financial measures should thus be considered as
supplemental in nature and not considered in isolation or as a
substitute for the related financial information prepared in accordance
with GAAP. Reconciliations of historical adjusted financial
measures to corresponding GAAP measures are provided in this release.
Altria uses the equity method of accounting for its investment in AB
InBev and reports its share of AB InBev's results using a one-quarter
lag because AB InBev's results are not available in time to record them
in the concurrent period. The one-quarter reporting lag does not
affect Altria's cash flows, but does impact the year-over-year
comparability of Altria's equity earnings from its beer investment and
reported and adjusted diluted EPS in the short term.
Altria's reportable segments are smokeable products, manufactured and
sold by PM USA, John Middleton Co. (Middleton) and Sherman Group
Holdings, LLC and its subsidiaries (Nat Sherman); smokeless products,
manufactured and sold by U.S. Smokeless Tobacco Company LLC (USSTC); and
wine, produced and/or distributed by Ste. Michelle Wine Estates Ltd.
(Ste. Michelle).
Comparisons are to the corresponding prior-year period unless
otherwise stated.
Altria's net revenues decreased 2.5% to $6.7 billion in the third
quarter primarily driven by lower net revenues in the smokeable products
segment. Altria's revenues net of excise taxes decreased 1.3% to $5.1
billion. For the first nine months of 2017, net revenues decreased 0.1%
to $19.5 billion, and revenues net of excise taxes increased 1.2% to
$14.8 billion.
Altria's 2017 third-quarter reported diluted EPS increased 73.2% to
$0.97, primarily driven by the 2016 loss on early extinguishment of
debt, favorable tax items, higher reported OCI in the smokeable products
segment and fewer shares outstanding, partially offset by lower equity
earnings from Altria's beer investment. Altria's third-quarter adjusted
diluted EPS, which excludes the special items shown in Table 2, grew
9.8% to $0.90, primarily driven by higher adjusted OCI in the smokeable
and smokeless products segments and fewer shares outstanding, partially
offset by lower equity earnings from Altria's beer investment.
Altria's 2017 nine-months reported diluted EPS increased 34.7% to $2.72,
primarily driven by the 2016 loss on early extinguishment of debt,
higher reported OCI in the smokeable products segment, which included
lower restructuring charges in 2017, favorable tax items, a higher gain
on the AB InBev/SABMiller business combination and fewer shares
outstanding, partially offset by lower equity earnings from Altria's
beer investment. Altria's nine-months adjusted diluted EPS, which
excludes the special items shown in Table 2, increased 5.5% to $2.48,
primarily driven by higher adjusted OCI in the smokeable and smokeless
products segments and fewer shares outstanding, partially offset by
lower equity earnings from Altria's beer investment.
Table 2 - Altria's Adjusted Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
Nine Months Ended September 30,
|
|
2017
|
2016
|
Change
|
|
2017
|
2016
|
Change
|
Reported diluted EPS
|
$
|
0.97
|
|
$
|
0.56
|
|
73.2%
|
|
$
|
2.72
|
|
$
|
2.02
|
|
34.7%
|
NPM Adjustment Items
|
—
|
|
—
|
|
|
|
—
|
|
0.01
|
|
|
Tobacco and health litigation items
|
—
|
|
0.01
|
|
|
|
0.01
|
|
0.03
|
|
|
AB InBev/SABMiller special items
|
0.01
|
|
(0.01
|
)
|
|
|
0.04
|
|
0.05
|
|
|
Loss on early extinguishment of debt
|
—
|
|
0.28
|
|
|
|
—
|
|
0.28
|
|
|
Asset impairment, exit and implementation costs
|
0.01
|
|
—
|
|
|
|
0.02
|
|
0.04
|
|
|
Gain on AB InBev/SABMiller business combination
|
(0.01
|
)
|
(0.02
|
)
|
|
|
(0.15
|
)
|
(0.07
|
)
|
|
Tax items
|
(0.08
|
)
|
—
|
|
|
|
(0.16
|
)
|
(0.01
|
)
|
|
Adjusted diluted EPS
|
$
|
0.90
|
|
$
|
0.82
|
|
9.8%
|
|
$
|
2.48
|
|
$
|
2.35
|
|
5.5%
|
Note: For details of pre-tax, tax and after-tax amounts, see
Schedules 7 and 9.
AB InBev/SABMiller Special Items
In the first nine months of 2017, earnings from Altria's equity
investment in AB InBev included net pre-tax charges of $109 million,
consisting primarily of Altria's share of mark-to-market losses on AB
InBev's derivative financial instruments used to hedge certain share
commitments.
In the first nine months of 2016, earnings from Altria's equity
investment in SABMiller included pre-tax charges of $147 million
consisting primarily of Altria's share of SABMiller's asset impairment
charges and costs related to its business combination with AB InBev.
The EPS impact of these items is shown in Table 2 and Schedule 9.
Loss on Early Extinguishment of Debt
In the third quarter of 2016, Altria completed a cash tender offer in
which it purchased approximately $933 million aggregate principal amount
of its senior unsecured 9.95% and 10.20% notes due in 2038 and 2039,
respectively. The transaction resulted in a one-time, pre-tax charge
against reported earnings in the third quarter of 2016 of $823 million,
reflecting the loss on early extinguishment of debt.
The EPS impact of this charge is shown in Table 2 and Schedules 7 and 9.
Asset Impairment, Exit and Implementation Costs
In the third quarter and first nine months of 2017, Altria recorded
pre-tax Facilities Consolidation charges of $15 million and $71 million,
respectively.
In the first nine months of 2016, Altria recorded a pre-tax charge of
$130 million in connection with the productivity initiative announced in
January 2016.
The EPS impact of these costs is shown in Table 2 and Schedules 7 and 9.
Gain on AB InBev/SABMiller Business Combination
In the third quarter and first nine months of 2017, Altria recorded
pre-tax gains of $37 million and $445 million, respectively, related to
AB InBev's divestitures of certain SABMiller assets and businesses in
connection with the AB InBev/SABMiller business combination.
In the third quarter and first nine months of 2016, Altria recorded
pre-tax, unrealized gains of $48 million and $205 million, respectively,
for the change in the fair value of the currency derivatives that Altria
entered into to hedge its British pound exposure on the cash
consideration received from the AB InBev/SABMiller business combination.
The EPS impact of these items is shown in Table 2 and Schedules 7 and 9.
Tax Items
In the third quarter, Altria recorded $155 million in income tax
benefits primarily related to the release of a valuation allowance for
foreign tax credit carryforwards.
For the first nine months, Altria recorded $321 million in income tax
benefits primarily due to settlement of the 2010-2013 Internal Revenue
Service audit and the valuation allowance release described above.
The EPS impact of these items is shown in Table 2 and Schedules 7 and 9.
SMOKEABLE PRODUCTS
The smokeable products segment delivered strong income growth in the
third quarter and for the first nine months of 2017.
Smokeable products segment net revenues declined by 2.8% in the third
quarter as lower volume was partially offset by higher pricing. For the
first nine months of 2017, smokeable products segment net revenues were
essentially unchanged as higher pricing offset lower volume and higher
promotional investments. Revenues net of excise taxes declined 1.5% in
the quarter and increased 1.1% for the first nine months.
In the third quarter, reported OCI increased 9.8%, primarily driven by
higher pricing, lower costs (selling, general and administrative (SG&A)
and resolution) and lower tobacco and health litigation items, partially
offset by lower volume. Adjusted OCI, which is calculated excluding the
special items identified in Table 3, grew 7.7%, and adjusted OCI margins
expanded 4.5 percentage points to 52.2%.
For the first nine months of 2017, reported OCI increased 10.2%,
primarily driven by higher pricing, lower SG&A spending, lower
restructuring charges and lower tobacco and health litigation items.
These factors were partially offset by lower volume and higher
promotional investments. Adjusted OCI, which is calculated excluding the
special items identified in Table 3, grew 7.4%, and adjusted OCI margins
expanded 3.0 percentage points to 51.6%.
Table 3 - Smokeable Products: Revenues and OCI ($ in millions)
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
Nine Months Ended September 30,
|
|
2017
|
2016
|
Change
|
|
2017
|
2016
|
Change
|
Net revenues
|
$
|
5,975
|
|
$
|
6,147
|
|
(2.8)%
|
|
$
|
17,355
|
|
$
|
17,398
|
|
(0.2)%
|
Excise taxes
|
(1,565
|
)
|
(1,671
|
)
|
|
|
(4,581
|
)
|
(4,769
|
)
|
|
Revenues net of excise taxes
|
$
|
4,410
|
|
$
|
4,476
|
|
(1.5)%
|
|
$
|
12,774
|
|
$
|
12,629
|
|
1.1%
|
|
|
|
|
|
|
|
|
Reported OCI
|
$
|
2,290
|
|
$
|
2,086
|
|
9.8%
|
|
$
|
6,564
|
|
$
|
5,955
|
|
10.2%
|
NPM Adjustment Items
|
3
|
|
—
|
|
|
|
(5
|
)
|
12
|
|
|
Asset impairment, exit, implementation and acquisition-related costs
|
7
|
|
4
|
|
|
|
22
|
|
105
|
|
|
Tobacco and health litigation items
|
—
|
|
45
|
|
|
|
16
|
|
72
|
|
|
Adjusted OCI
|
$
|
2,300
|
|
$
|
2,135
|
|
7.7%
|
|
$
|
6,597
|
|
$
|
6,144
|
|
7.4%
|
Adjusted OCI margins 1
|
52.2
|
%
|
47.7
|
%
|
4.5 pp
|
|
51.6
|
%
|
48.6
|
%
|
3.0 pp
|
1 Adjusted OCI margins are calculated as adjusted
OCI divided by revenues net of excise taxes.
In the third quarter, total cigarette industry volumes declined by an
estimated 3.5%. The smokeable products segment's reported domestic
cigarettes shipment volume declined by 6.2% in the third quarter,
primarily driven by the industry's rate of decline, trade inventory
movements, retail share declines and one fewer shipping day. After
adjusting for trade inventory movements and calendar differences, PM
USA's domestic cigarettes shipment volume decreased by an estimated 4.5%.
For the first nine months of 2017, total cigarette industry volumes
declined by an estimated 3.5%. The smokeable products segment's reported
domestic cigarettes shipment volume decreased by 4.0%, primarily driven
by the industry's rate of decline, retail share declines and one fewer
shipping day, partially offset by trade inventory movements. When
adjusted for trade inventory movements and calendar differences, PM
USA's domestic cigarettes shipment volume decreased by an estimated 4%.
The smokeable products segment's reported cigars shipment volume
increased by 6.6% in the third quarter and 10.6% for the first nine
months of 2017. Table 4 summarizes smokeable products segment shipment
volume performance.
Table 4 - Smokeable Products: Shipment Volume (sticks in millions)
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
Nine Months Ended September 30,
|
|
|
2017
|
2016
|
Change
|
|
2017
|
2016
|
Change
|
Cigarettes:
|
|
|
|
|
|
|
|
|
Marlboro
|
|
26,455
|
|
28,152
|
|
(6.0)%
|
|
77,307
|
|
80,446
|
|
(3.9)%
|
Other premium
|
|
1,567
|
|
1,684
|
|
(6.9)%
|
|
4,567
|
|
4,858
|
|
(6.0)%
|
Discount
|
|
2,806
|
|
3,028
|
|
(7.3)%
|
|
8,250
|
|
8,569
|
|
(3.7)%
|
Total cigarettes
|
|
30,828
|
|
32,864
|
|
(6.2)%
|
|
90,124
|
|
93,873
|
|
(4.0)%
|
|
|
|
|
|
|
|
|
|
Cigars:
|
|
|
|
|
|
|
|
|
Black & Mild
|
|
381
|
|
357
|
|
6.7%
|
|
1,146
|
|
1,028
|
|
11.5%
|
Other
|
|
4
|
|
4
|
|
—%
|
|
12
|
|
19
|
|
(36.8)%
|
Total cigars
|
|
385
|
|
361
|
|
6.6%
|
|
1,158
|
|
1,047
|
|
10.6%
|
|
|
|
|
|
|
|
|
|
Total smokeable products
|
|
31,213
|
|
33,225
|
|
(6.1)%
|
|
91,282
|
|
94,920
|
|
(3.8)%
|
Note:
Cigarettes volume includes units sold as well as
promotional units, but excludes units sold for distribution to Puerto
Rico, and units sold in U.S. Territories, to overseas military and by
Philip Morris Duty Free Inc., none of which, individually or in the
aggregate, is material to the smokeable products segment.
In the third quarter of 2017, Marlboro's retail share declined by
0.5 share points to 43.2%, primarily driven by the cigarette excise tax
increase in California and increased competitive activity. Marlboro's
retail share declined by 0.3 share points to 43.4% for the first nine
months. PM USA's total retail share was 50.5% in the quarter and 50.8%
for the first nine months, down 0.6 and 0.3 share points, respectively.
Table 5 summarizes cigarette retail share results.
Table 5 - Smokeable Products: Cigarettes Retail Share (percent)
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
Nine Months Ended September 30,
|
|
2017
|
2016
|
Percentage point change
|
|
2017
|
2016
|
Percentage point change
|
Cigarettes:
|
|
|
|
|
|
|
|
Marlboro
|
43.2
|
%
|
43.7
|
%
|
(0.5
|
)
|
|
43.4
|
%
|
43.7
|
%
|
(0.3
|
)
|
Other premium
|
2.7
|
|
2.8
|
|
(0.1
|
)
|
|
2.7
|
|
2.8
|
|
(0.1
|
)
|
Discount
|
4.6
|
|
4.6
|
|
—
|
|
|
4.7
|
|
4.6
|
|
0.1
|
|
Total cigarettes
|
50.5
|
%
|
51.1
|
%
|
(0.6
|
)
|
|
50.8
|
%
|
51.1
|
%
|
(0.3
|
)
|
Note: Retail share results for cigarettes are based on data
from IRI/MSAi, a tracking service that uses a sample of stores and
certain wholesale shipments to project market share and depict share
trends. This service tracks sales in the food, drug, mass merchandisers,
convenience, military, dollar store and club trade classes. For
other trade classes selling cigarettes, retail share is based on
shipments from wholesalers to retailers (STARS). This service is
not designed to capture sales through other channels, including the
internet, direct mail and some illicitly tax-advantaged outlets. It
is IRI's standard practice to periodically refresh its services, which
could restate retail share results that were previously released in this
service.
SMOKELESS PRODUCTS
The smokeless products segment delivered strong results in the third
quarter. Smokeless products segment net revenues increased 4.2% in the
quarter, primarily driven by higher pricing and lower promotional
investments, partially offset by lower volume and unfavorable mix. For
the first nine months of 2017, smokeless product segment net revenues
increased 3.3%, primarily driven by higher pricing, partially offset by
unfavorable mix and lower volume. Revenues net of excise taxes increased
4.5% in the quarter and 3.7% for the first nine months of 2017.
In the third quarter, reported OCI increased 12.8%, primarily driven by
higher pricing, lower costs and lower promotional investments, partially
offset by lower volume, unfavorable mix and Facilities Consolidation
charges. Adjusted OCI, which is calculated excluding the special items
identified in Table 6, increased 15.7% and adjusted OCI margins
increased 6.8 percentage points to 70.3%.
For the first nine months of 2017, reported OCI increased 2.3%,
primarily driven by higher pricing, partially offset by Facilities
Consolidation charges, unfavorable mix and lower volume. Adjusted OCI,
which is calculated excluding the special items identified in Table 6,
increased 6.3% and adjusted OCI margins increased 1.6 percentage points
to 67.7%.
Table 6 - Smokeless Products: Revenues and OCI ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
Nine Months Ended September 30,
|
|
|
2017
|
2016
|
Change
|
|
2017
|
2016
|
Change
|
Net revenues
|
|
$
|
550
|
|
$
|
528
|
|
4.2
|
%
|
|
$
|
1,580
|
|
$
|
1,530
|
|
3.3
|
%
|
Excise taxes
|
|
(35
|
)
|
(35
|
)
|
|
|
(99
|
)
|
(102
|
)
|
|
Revenues net of excise taxes
|
|
$
|
515
|
|
$
|
493
|
|
4.5
|
%
|
|
$
|
1,481
|
|
$
|
1,428
|
|
3.7
|
%
|
|
|
|
|
|
|
|
|
|
Reported OCI
|
|
$
|
352
|
|
$
|
312
|
|
12.8
|
%
|
|
$
|
951
|
|
$
|
930
|
|
2.3
|
%
|
Asset impairment, exit and implementation costs
|
|
10
|
|
1
|
|
|
|
52
|
|
14
|
|
|
Adjusted OCI
|
|
$
|
362
|
|
$
|
313
|
|
15.7
|
%
|
|
$
|
1,003
|
|
$
|
944
|
|
6.3
|
%
|
Adjusted OCI margins 1
|
|
70.3
|
%
|
63.5
|
%
|
6.8 pp
|
|
67.7
|
%
|
66.1
|
%
|
1.6 pp
|
1 Adjusted OCI margins are calculated as adjusted
OCI divided by revenues net of excise taxes.
USSTC's reported domestic shipment volume declined 1.8% and 1.7% in the
third quarter and first nine months of 2017, respectively, driven
primarily by declines in Skoal.
After adjusting for trade inventory movements and other factors, USSTC
estimates that its domestic smokeless products shipment volume declined
approximately 3% in the third quarter and 1.5% for the first nine
months. USSTC estimates that the smokeless products category volume grew
approximately 0.5% over the past six months.
Table 7 summarizes shipment volume performance for the smokeless
products segment.
Table 7 - Smokeless Products: Shipment Volume (cans
and packs in millions)
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
Nine Months Ended September 30,
|
|
|
2017
|
2016
|
Change
|
|
2017
|
2016
|
Change
|
Copenhagen
|
|
134.1
|
|
133.5
|
|
0.4%
|
|
396.1
|
|
392.3
|
|
1.0%
|
Skoal
|
|
61.6
|
|
66.2
|
|
(6.9)%
|
|
183.0
|
|
197.3
|
|
(7.2)%
|
Copenhagen and Skoal
|
|
195.7
|
|
199.7
|
|
(2.0)%
|
|
579.1
|
|
589.6
|
|
(1.8)%
|
Other
|
|
16.9
|
|
16.7
|
|
1.2%
|
|
50.3
|
|
50.8
|
|
(1.0)%
|
Total smokeless products
|
|
212.6
|
|
216.4
|
|
(1.8)%
|
|
629.4
|
|
640.4
|
|
(1.7)%
|
Note: Volume includes cans and packs sold, as well as
promotional units, but excludes international volume, which is not
material to the smokeless products segment. New types of
smokeless products, as well as new packaging configurations of existing
smokeless products, may or may not be equivalent to existing moist
smokeless tobacco (MST) products on a can-for-can basis. To
calculate volumes of cans and packs shipped, one pack of snus,
irrespective of the number of pouches in the pack, is assumed to be
equivalent to one can of MST.
Copenhagen grew 0.2 retail share points in the third quarter to
33.9%. Copenhagen and Skoal's combined retail share
decreased 1.2 share points in the quarter to 50.4% driven by Skoal's
1.4 retail share point decline.
For the first nine months of 2017, Copenhagen grew 0.6 share
points offset by Skoal's 1.5 share point loss, contributing to a
combined share decline of 0.9 share points. Table 8 summarizes retail
share results for the smokeless products segment.
Table 8 - Smokeless Products: Retail Share (percent)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
Nine Months Ended September 30,
|
|
|
2017
|
|
2016
|
|
Percentage point change
|
|
2017
|
2016
|
Percentage point change
|
Copenhagen
|
|
33.9
|
%
|
|
33.7
|
%
|
|
0.2
|
|
|
33.6
|
%
|
33.0
|
%
|
0.6
|
|
Skoal
|
|
16.5
|
|
|
17.9
|
|
|
(1.4
|
)
|
|
16.8
|
|
18.3
|
|
(1.5
|
)
|
Copenhagen and Skoal
|
|
50.4
|
|
|
51.6
|
|
|
(1.2
|
)
|
|
50.4
|
|
51.3
|
|
(0.9
|
)
|
Other
|
|
3.4
|
|
|
3.3
|
|
|
0.1
|
|
|
3.4
|
|
3.4
|
|
—
|
|
Total smokeless products
|
|
53.8
|
%
|
|
54.9
|
%
|
|
(1.1
|
)
|
|
53.8
|
%
|
54.7
|
%
|
(0.9
|
)
|
Note: Retail share results for smokeless products are based on data
from IRI InfoScan, a tracking service that uses a sample of stores to
project market share and depict share trends. This service tracks
sales in the food, drug, mass merchandisers, convenience, military,
dollar store and club trade classes on the number of cans and packs sold.
Smokeless products is defined by IRI as moist smokeless and spit-free
tobacco products. New types of smokeless products, as well as new
packaging configurations of existing smokeless products, may or may not
be equivalent to existing MST products on a can-for-can basis. For
example, one pack of snus, irrespective of the number of pouches in the
pack, is assumed to be equivalent to one can of MST. Because this
service represents retail share performance only in key trade channels,
it should not be considered a precise measurement of actual retail share.
It is IRI's standard practice to periodically refresh its InfoScan
services, which could restate retail share results that were previously
released in this service.
WINE
In the wine segment, Ste. Michelle's third-quarter and first-nine-month
results were negatively impacted by increased competitive activity,
continued trade inventory reductions and slower premium wine category
growth.
In the third quarter of 2017, Ste. Michelle's net revenues were
essentially unchanged. Reported and adjusted OCI declined 5.3%,
primarily due to higher costs. Reported wine shipment volume for the
third quarter was essentially unchanged at approximately 2.2 million
cases.
For the first nine months of 2017, Ste. Michelle's net revenues declined
5.4%. Reported OCI declined 18.0% and adjusted OCI declined 20.4%,
primarily due to lower volume and higher costs. Reported shipment volume
for the first nine months declined 8.1% to approximately 5.7 million
cases.
Table 9 summarizes revenues, OCI and OCI margins for the wine segment.
Table 9 - Wine: Revenues and OCI ($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
Nine Months Ended September 30,
|
|
|
2017
|
2016
|
Change
|
|
2017
|
2016
|
Change
|
Net revenues
|
|
$
|
181
|
|
$
|
182
|
|
(0.5)%
|
|
$
|
471
|
|
$
|
498
|
|
(5.4)%
|
Excise taxes
|
|
(6
|
)
|
(6
|
)
|
|
|
(15
|
)
|
(17
|
)
|
|
Revenues net of excise taxes
|
|
$
|
175
|
|
$
|
176
|
|
(0.6)%
|
|
$
|
456
|
|
$
|
481
|
|
(5.2)%
|
|
|
|
|
|
|
|
|
|
Reported OCI
|
|
$
|
36
|
|
$
|
38
|
|
(5.3)%
|
|
$
|
82
|
|
$
|
100
|
|
(18.0)%
|
Acquisition-related costs
|
|
—
|
|
—
|
|
|
|
—
|
|
3
|
|
|
Adjusted OCI
|
|
$
|
36
|
|
$
|
38
|
|
(5.3)%
|
|
$
|
82
|
|
$
|
103
|
|
(20.4)%
|
Adjusted OCI margins 1
|
|
20.6
|
%
|
21.6
|
%
|
(1.0) pp
|
|
18.0
|
%
|
21.4
|
%
|
(3.4) pp
|
1 Adjusted OCI margins are calculated as adjusted
OCI divided by revenues net of excise taxes.
Altria's Profile
Altria's wholly-owned subsidiaries include Philip Morris USA Inc., U.S.
Smokeless Tobacco Company LLC, John Middleton Co., Sherman Group
Holdings, LLC and its subsidiaries, Nu Mark LLC, Ste. Michelle Wine
Estates Ltd. and Philip Morris Capital Corporation. Altria holds an
equity investment in Anheuser-Busch InBev SA/NV.
The brand portfolios of Altria's tobacco operating companies include Marlboro®,
Black & Mild®, Copenhagen®,
Skoal®, MarkTen® and
Green Smoke®. Ste. Michelle produces and
markets premium wines sold under various labels, including Chateau
Ste. Michelle®, Columbia Crest®,
14 Hands® and Stag's Leap Wine Cellars™,
and it imports and markets Antinori®, Champagne
Nicolas Feuillatte™, Torres® and
Villa Maria Estate™ products in the United
States. Trademarks and service marks related to Altria referenced in
this release are the property of Altria or its subsidiaries or are used
with permission. More information about Altria is available at
altria.com and on the Altria Investor app.
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.
Important factors that may cause actual results and outcomes to differ
materially from those contained in the projections and forward-looking
statements included in this press release are described in Altria's
publicly filed reports, including its Annual Report on Form 10-K for the
year ended December 31, 2016 and its Quarterly Report on Form 10-Q for
the period ended June 30, 2017.
These factors include the following: significant competition; changes in
adult consumer preferences and demand for Altria's operating companies'
products; fluctuations in raw material availability, quality and price;
reliance on key facilities and suppliers; reliance on critical
information systems, many of which are managed by third-party service
providers; fluctuations in levels of customer inventories; the effects
of global, national and local economic and market conditions; changes to
income tax laws; federal, state and local legislative activity,
including actual and potential federal and state excise tax increases;
increasing marketing and regulatory restrictions; the effects of price
increases related to excise tax increases and concluded tobacco
litigation settlements, consumption rates and consumer preferences
within price segments; health concerns relating to the use of tobacco
products and exposure to environmental tobacco smoke; privately imposed
smoking restrictions; and, from time to time, governmental
investigations.
Furthermore, the results of Altria's tobacco businesses are dependent
upon their continued ability to promote brand equity successfully; to
anticipate and respond to evolving adult consumer preferences; to
develop, manufacture, market and distribute products that appeal to
adult tobacco consumers (including, where appropriate, through
arrangements with, and investments in, third parties); to improve
productivity; and to protect or enhance margins through cost savings and
price increases.
Altria and its tobacco businesses are also subject to federal, state and
local government regulation, including by the FDA. Altria and its
subsidiaries continue to be subject to litigation, including risks
associated with adverse jury and judicial determinations, courts
reaching conclusions at variance with the companies' understanding of
applicable law, bonding requirements in the limited number of
jurisdictions that do not limit the dollar amount of appeal bonds and
certain challenges to bond cap statutes.
In addition, the factors related to Altria's investment in AB InBev
include the following: AB InBev's inability to achieve the contemplated
synergies and value creation from its business combination with
SABMiller; that Altria's equity securities in AB InBev are subject to
restrictions on transfer until October 10, 2021; the risk that Altria's
reported earnings from and carrying value of its equity investment in AB
InBev may be adversely affected by unfavorable foreign currency exchange
rates and other factors, including the risks encountered by AB InBev in
its business; the risk that the tax treatment of Altria's transaction
consideration from the AB InBev/SABMiller business combination and the
accounting treatment of its equity investment are not guaranteed; and
the risk that the tax treatment of the dividends Altria expects to
receive from AB InBev may not be as favorable as Altria anticipates.
Altria 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 except as required by applicable law. All subsequent
written and oral forward-looking statements attributable to Altria or
any person acting on its behalf are expressly qualified in their
entirety by the cautionary statements referenced above.
|
|
|
|
|
Schedule 1
|
ALTRIA GROUP, INC. and Subsidiaries Consolidated
Statements of Earnings For the Quarters Ended September 30, (dollars
in millions, except per share data) (Unaudited)
|
|
|
2017
|
|
2016
|
|
% Change
|
|
|
|
|
|
|
Net revenues
|
$
|
6,729
|
|
|
$
|
6,905
|
|
|
(2.5)%
|
Cost of sales 1
|
1,940
|
|
|
2,043
|
|
|
|
Excise taxes on products 1
|
1,606
|
|
|
1,712
|
|
|
|
Gross profit
|
3,183
|
|
|
3,150
|
|
|
1.0%
|
Marketing, administration and research costs
|
507
|
|
|
704
|
|
|
|
Asset impairment and exit costs
|
8
|
|
|
2
|
|
|
|
Operating companies income
|
2,668
|
|
|
2,444
|
|
|
9.2%
|
Amortization of intangibles
|
5
|
|
|
5
|
|
|
|
General corporate expenses
|
56
|
|
|
57
|
|
|
|
Operating income
|
2,607
|
|
|
2,382
|
|
|
9.4%
|
Interest and other debt expense, net
|
169
|
|
|
179
|
|
|
|
Loss on early extinguishment of debt
|
—
|
|
|
823
|
|
|
|
Earnings from equity investment in AB InBev/SABMiller
|
(169
|
)
|
|
(299
|
)
|
|
|
Gain on AB InBev/SABMiller business combination
|
(37
|
)
|
|
(48
|
)
|
|
|
Earnings before income taxes
|
2,644
|
|
|
1,727
|
|
|
53.1%
|
Provision for income taxes
|
777
|
|
|
633
|
|
|
|
Net earnings
|
1,867
|
|
|
1,094
|
|
|
70.7%
|
Net earnings attributable to noncontrolling interests
|
(1
|
)
|
|
(1
|
)
|
|
|
Net earnings attributable to Altria Group, Inc.
|
$
|
1,866
|
|
|
$
|
1,093
|
|
|
70.7%
|
|
|
|
|
|
|
Per share data:
|
|
|
|
|
|
Basic and diluted earnings per share attributable to
Altria Group, Inc.
|
$
|
0.97
|
|
|
$
|
0.56
|
|
|
73.2%
|
|
|
|
|
|
|
Weighted-average diluted shares outstanding
|
1,915
|
|
|
1,952
|
|
|
(1.9)%
|
|
|
|
|
|
|
1 Cost of sales includes charges for resolution expenses
related to state settlement agreements and FDA user fees. Supplemental
information concerning those items and excise taxes on products sold is
shown in Schedule 5.
|
|
|
|
|
|
|
|
|
Schedule 2
|
ALTRIA GROUP, INC. and Subsidiaries Selected Financial Data For
the Quarters Ended September 30, (dollars in millions) (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenues
|
|
|
Smokeable Products
|
|
Smokeless Products
|
|
Wine
|
|
All Other
|
|
Total
|
2017
|
$
|
5,975
|
|
|
$
|
550
|
|
|
$
|
181
|
|
|
$
|
23
|
|
|
$
|
6,729
|
|
2016
|
6,147
|
|
|
528
|
|
|
182
|
|
|
48
|
|
|
6,905
|
|
% Change
|
(2.8
|
)%
|
|
4.2
|
%
|
|
(0.5
|
)%
|
|
(52.1
|
)%
|
|
(2.5
|
)%
|
|
|
|
|
|
|
|
|
|
|
Reconciliation:
|
|
|
|
|
|
|
|
|
|
For the quarter ended September 30, 2016
|
$
|
6,147
|
|
|
$
|
528
|
|
|
$
|
182
|
|
|
$
|
48
|
|
|
$
|
6,905
|
|
Operations
|
(172
|
)
|
|
22
|
|
|
(1
|
)
|
|
(25
|
)
|
|
(176
|
)
|
For the quarter ended September 30, 2017
|
$
|
5,975
|
|
|
$
|
550
|
|
|
$
|
181
|
|
|
$
|
23
|
|
|
$
|
6,729
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Companies Income (Loss)
|
|
|
Smokeable Products
|
|
Smokeless Products
|
|
Wine
|
|
All Other
|
|
Total
|
2017
|
$
|
2,290
|
|
|
$
|
352
|
|
|
$
|
36
|
|
|
$
|
(10
|
)
|
|
$
|
2,668
|
|
2016
|
2,086
|
|
|
312
|
|
|
38
|
|
|
8
|
|
|
2,444
|
|
% Change
|
9.8
|
%
|
|
12.8
|
%
|
|
(5.3
|
)%
|
|
(100.0%
|
)+
|
9.2
|
%
|
|
|
|
|
|
|
|
|
|
|
Reconciliation:
|
|
|
|
|
|
|
|
|
|
For the quarter ended September 30, 2016
|
$
|
2,086
|
|
|
$
|
312
|
|
|
$
|
38
|
|
|
$
|
8
|
|
|
$
|
2,444
|
|
|
|
|
|
|
|
|
|
|
|
Asset impairment, exit and implementation
costs - 2016
|
4
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
6
|
|
Tobacco and health litigation items - 2016
|
45
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
45
|
|
|
49
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
51
|
|
|
|
|
|
|
|
|
|
|
|
NPM Adjustment Items - 2017
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
Asset impairment, exit, implementation and acquisition-related costs
- 2017
|
(7
|
)
|
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
(17
|
)
|
|
(10
|
)
|
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
(20
|
)
|
Operations
|
165
|
|
|
49
|
|
|
(2
|
)
|
|
(19
|
)
|
|
193
|
|
For the quarter ended September 30, 2017
|
$
|
2,290
|
|
|
$
|
352
|
|
|
$
|
36
|
|
|
$
|
(10
|
)
|
|
$
|
2,668
|
|
|
|
|
|
|
Schedule 3
|
ALTRIA GROUP, INC. and Subsidiaries Consolidated
Statements of Earnings For the Nine Months Ended September 30, (dollars
in millions, except per share data) (Unaudited)
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
% Change
|
|
|
|
|
|
|
Net revenues
|
$
|
19,475
|
|
|
$
|
19,492
|
|
|
(0.1)%
|
Cost of sales 1
|
5,699
|
|
|
5,841
|
|
|
|
Excise taxes on products 1
|
4,695
|
|
|
4,888
|
|
|
|
Gross profit
|
9,081
|
|
|
8,763
|
|
|
3.6%
|
Marketing, administration and research costs
|
1,491
|
|
|
1,706
|
|
|
|
Asset impairment and exit costs
|
24
|
|
|
118
|
|
|
|
Operating companies income
|
7,566
|
|
|
6,939
|
|
|
9.0%
|
Amortization of intangibles
|
15
|
|
|
15
|
|
|
|
General corporate expenses
|
158
|
|
|
150
|
|
|
|
Corporate asset impairment and exit costs
|
—
|
|
|
5
|
|
|
|
Operating income
|
7,393
|
|
|
6,769
|
|
|
9.2%
|
Interest and other debt expense, net
|
525
|
|
|
571
|
|
|
|
Loss on early extinguishment of debt
|
—
|
|
|
823
|
|
|
|
Earnings from equity investment in AB InBev/SABMiller
|
(332
|
)
|
|
(564
|
)
|
|
|
Gain on AB InBev/SABMiller business combination
|
(445
|
)
|
|
(205
|
)
|
|
|
Earnings before income taxes
|
7,645
|
|
|
6,144
|
|
|
24.4%
|
Provision for income taxes
|
2,386
|
|
|
2,178
|
|
|
|
Net earnings
|
5,259
|
|
|
3,966
|
|
|
32.6%
|
Net earnings attributable to noncontrolling interests
|
(3
|
)
|
|
(3
|
)
|
|
|
Net earnings attributable to Altria Group, Inc.
|
$
|
5,256
|
|
|
$
|
3,963
|
|
|
32.6%
|
|
|
|
|
|
|
Per share data:
|
|
|
|
|
|
Basic and diluted earnings per share attributable to Altria
Group, Inc.
|
$
|
2.72
|
|
|
$
|
2.02
|
|
|
34.7%
|
|
|
|
|
|
|
Weighted-average diluted shares outstanding
|
1,927
|
|
|
1,954
|
|
|
(1.4)%
|
1 Cost of sales includes charges for resolution expenses
related to state settlement agreements and FDA user fees. Supplemental
information concerning those items and excise taxes on products sold is
shown in Schedule 5.
|
|
|
|
|
|
|
|
Schedule 4
|
ALTRIA GROUP, INC. and Subsidiaries Selected Financial Data For
the Nine Months Ended September 30, (dollars in millions) (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenues
|
|
|
Smokeable Products
|
|
Smokeless Products
|
|
Wine
|
All Other
|
Total
|
2017
|
|
$
|
17,355
|
|
|
$
|
1,580
|
|
|
$
|
471
|
|
$
|
69
|
|
$
|
19,475
|
2016
|
|
17,398
|
|
|
1,530
|
|
|
498
|
|
66
|
|
19,492
|
% Change
|
|
(0.2
|
)%
|
|
3.3
|
%
|
|
(5.4
|
)%
|
4.5
|
%
|
(0.1)%
|
|
|
|
|
|
|
|
|
|
Reconciliation:
|
|
|
|
|
|
|
|
|
For the nine months ended September 30, 2016
|
|
$
|
17,398
|
|
|
$
|
1,530
|
|
|
$
|
498
|
|
$
|
66
|
|
$
|
19,492
|
Operations
|
|
(43
|
)
|
|
50
|
|
|
(27
|
)
|
3
|
|
(17)
|
For the nine months ended September 30, 2017
|
|
$
|
17,355
|
|
|
$
|
1,580
|
|
|
$
|
471
|
|
$
|
69
|
|
$
|
19,475
|
|
|
|
|
|
|
|
|
|
|
|
Operating Companies Income (Loss)
|
|
|
Smokeable Products
|
|
Smokeless Products
|
|
Wine
|
All Other
|
Total
|
2017
|
|
$
|
6,564
|
|
|
$
|
951
|
|
|
$
|
82
|
|
$
|
(31
|
)
|
$
|
7,566
|
2016
|
|
5,955
|
|
|
930
|
|
|
100
|
|
(46
|
)
|
6,939
|
% Change
|
|
10.2
|
%
|
|
2.3
|
%
|
|
(18.0
|
)%
|
32.6
|
%
|
9.0%
|
|
|
|
|
|
|
|
|
|
Reconciliation:
|
|
|
|
|
|
|
|
|
For the nine months ended September 30, 2016
|
|
$
|
5,955
|
|
|
$
|
930
|
|
|
$
|
100
|
|
$
|
(46
|
)
|
$
|
6,939
|
|
|
|
|
|
|
|
|
|
NPM Adjustment Items - 2016
|
|
12
|
|
|
—
|
|
|
—
|
|
—
|
|
12
|
Asset impairment, exit, implementation and acquisition-related costs
- 2016
|
|
105
|
|
|
14
|
|
|
3
|
|
6
|
|
128
|
Tobacco and health litigation items - 2016
|
|
72
|
|
|
—
|
|
|
—
|
|
—
|
|
72
|
|
|
189
|
|
|
14
|
|
|
3
|
|
6
|
|
212
|
|
|
|
|
|
|
|
|
|
NPM Adjustment Items - 2017
|
|
5
|
|
|
—
|
|
|
—
|
|
—
|
|
5
|
Asset impairment, exit, implementation and acquisition-related costs
- 2017
|
|
(22
|
)
|
|
(52
|
)
|
|
—
|
|
—
|
|
(74)
|
Tobacco and health litigation items - 2017
|
|
(16
|
)
|
|
—
|
|
|
—
|
|
—
|
|
(16)
|
|
|
(33
|
)
|
|
(52
|
)
|
|
—
|
|
—
|
|
(85)
|
Operations
|
|
453
|
|
|
59
|
|
|
(21
|
)
|
9
|
|
500
|
For the nine months ended September 30, 2017
|
|
$
|
6,564
|
|
|
$
|
951
|
|
|
$
|
82
|
|
$
|
(31
|
)
|
$
|
7,566
|
|
|
|
|
|
|
Schedule 5
|
ALTRIA GROUP, INC. and Subsidiaries Supplemental Financial
Data (dollars in millions) (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarters Ended September 30,
|
|
For the Nine Months Ended September 30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
The segment detail of excise taxes on products sold is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Smokeable products
|
|
$
|
1,565
|
|
|
$
|
1,671
|
|
|
$
|
4,581
|
|
|
$
|
4,769
|
Smokeless products
|
|
35
|
|
|
35
|
|
|
99
|
|
|
102
|
Wine
|
|
6
|
|
|
6
|
|
|
15
|
|
|
17
|
|
|
$
|
1,606
|
|
|
$
|
1,712
|
|
|
$
|
4,695
|
|
|
$
|
4,888
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The segment detail of charges for resolution expenses related to
state settlement agreements included in cost of sales is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Smokeable products
|
|
$
|
1,152
|
|
|
$
|
1,237
|
|
|
$
|
3,416
|
|
|
$
|
3,565
|
Smokeless products
|
|
2
|
|
|
2
|
|
|
6
|
|
|
6
|
|
|
$
|
1,154
|
|
|
$
|
1,239
|
|
|
$
|
3,422
|
|
|
$
|
3,571
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The segment detail of FDA user fees included in cost of sales is
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Smokeable products
|
|
$
|
70
|
|
|
$
|
72
|
|
|
$
|
206
|
|
|
$
|
211
|
Smokeless products
|
|
1
|
|
|
1
|
|
|
3
|
|
|
3
|
|
|
$
|
71
|
|
|
$
|
73
|
|
|
$
|
209
|
|
|
$
|
214
|
|
|
|
Schedule 6
|
ALTRIA GROUP, INC. and Subsidiaries Net Earnings and
Diluted Earnings Per Share - Attributable to Altria Group, Inc. For
the Quarters Ended September 30, (dollars in millions, except
per share data) (Unaudited)
|
|
|
|
|
|
|
|
|
|
Net Earnings
|
|
Diluted EPS
|
2017 Net Earnings
|
$
|
1,866
|
|
|
$
|
0.97
|
|
2016 Net Earnings
|
$
|
1,093
|
|
|
$
|
0.56
|
|
% Change
|
70.7
|
%
|
|
73.2
|
%
|
|
|
|
|
Reconciliation:
|
|
|
|
2016 Net Earnings
|
$
|
1,093
|
|
|
$
|
0.56
|
|
|
|
|
|
2016 Tobacco and health litigation items
|
29
|
|
|
0.01
|
|
2016 SABMiller special items
|
(26
|
)
|
|
(0.01
|
)
|
2016 Loss on early extinguishment of debt
|
541
|
|
|
0.28
|
|
2016 Asset impairment, exit and implementation costs
|
2
|
|
|
—
|
|
2016 Gain on AB InBev/SABMiller business combination
|
(29
|
)
|
|
(0.02
|
)
|
2016 Tax items
|
(1
|
)
|
|
—
|
|
Subtotal 2016 special items
|
516
|
|
|
0.26
|
|
|
|
|
|
2017 NPM Adjustment Items
|
(3
|
)
|
|
—
|
|
2017 AB InBev special items
|
(22
|
)
|
|
(0.01
|
)
|
2017 Asset impairment, exit, implementation and acquisition-related
costs
|
(11
|
)
|
|
(0.01
|
)
|
2017 Gain on AB InBev/SABMiller business combination
|
24
|
|
|
0.01
|
|
2017 Tax items
|
155
|
|
|
0.08
|
|
Subtotal 2017 special items
|
143
|
|
|
0.07
|
|
|
|
|
|
Fewer shares outstanding
|
—
|
|
|
0.02
|
|
Change in tax rate
|
17
|
|
|
0.01
|
|
Operations
|
97
|
|
|
0.05
|
|
2017 Net Earnings
|
$
|
1,866
|
|
|
$
|
0.97
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule 7
|
ALTRIA GROUP, INC. and Subsidiaries Reconciliation of GAAP
and non-GAAP Measures For the Quarters Ended September 30, (dollars
in millions, except per share data) (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before Income Taxes
|
|
Provision for Income Taxes
|
|
Net Earnings
|
|
|
|
|
Net Earnings Attributable to Altria
Group, Inc.
|
|
Diluted EPS
|
2017 Reported
|
|
$
|
|
2,644
|
|
|
$
|
|
777
|
|
|
$
|
|
1,867
|
|
|
|
|
|
$
|
|
1,866
|
|
|
$
|
|
0.97
|
|
NPM Adjustment Items
|
|
5
|
|
|
2
|
|
|
3
|
|
|
|
|
|
3
|
|
|
—
|
|
AB InBev special items
|
|
34
|
|
|
12
|
|
|
22
|
|
|
|
|
|
22
|
|
|
0.01
|
|
Asset impairment, exit, implementation and
acquisition-related costs
|
|
17
|
|
|
6
|
|
|
11
|
|
|
|
|
|
11
|
|
|
0.01
|
|
Gain on AB InBev/SABMiller business
combination
|
|
(37
|
)
|
|
(13
|
)
|
|
(24
|
)
|
|
|
|
|
(24
|
)
|
|
(0.01
|
)
|
Tax items
|
|
—
|
|
|
155
|
|
|
(155
|
)
|
|
|
|
|
(155
|
)
|
|
(0.08
|
)
|
2017 Adjusted for Special Items
|
|
$
|
|
2,663
|
|
|
$
|
|
939
|
|
|
$
|
|
1,724
|
|
|
|
|
|
$
|
|
1,723
|
|
|
$
|
|
0.90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016 Reported
|
|
$
|
|
1,727
|
|
|
$
|
|
633
|
|
|
$
|
|
1,094
|
|
|
|
|
|
$
|
|
1,093
|
|
|
$
|
|
0.56
|
|
Tobacco and health litigation items
|
|
45
|
|
|
16
|
|
|
29
|
|
|
|
|
|
29
|
|
|
0.01
|
|
SABMiller special items
|
|
(40
|
)
|
|
(14
|
)
|
|
(26
|
)
|
|
|
|
|
(26
|
)
|
|
(0.01
|
)
|
Loss on early extinguishment of debt
|
|
823
|
|
|
282
|
|
|
541
|
|
|
|
|
|
541
|
|
|
0.28
|
|
Asset impairment, exit and implementation costs
|
|
6
|
|
|
4
|
|
|
2
|
|
|
|
|
|
2
|
|
|
—
|
|
Gain on AB InBev/SABMiller business
combination
|
|
(48
|
)
|
|
(19
|
)
|
|
(29
|
)
|
|
|
|
|
(29
|
)
|
|
(0.02
|
)
|
Tax items
|
|
—
|
|
|
1
|
|
|
(1
|
)
|
|
|
|
|
(1
|
)
|
|
—
|
|
2016 Adjusted for Special Items
|
|
$
|
|
2,513
|
|
|
$
|
|
903
|
|
|
$
|
|
1,610
|
|
|
|
|
|
$
|
|
1,609
|
|
|
$
|
|
0.82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 Reported Net Earnings
|
|
|
|
|
|
|
|
|
|
|
$
|
|
1,866
|
|
|
$
|
|
0.97
|
|
2016 Reported Net Earnings
|
|
|
|
|
|
|
|
|
|
|
$
|
|
1,093
|
|
|
$
|
|
0.56
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
70.7
|
%
|
|
73.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 Net Earnings Adjusted for Special Items
|
|
|
|
|
|
|
|
|
$
|
|
1,723
|
|
|
$
|
|
0.90
|
|
2016 Net Earnings Adjusted for Special Items
|
|
|
|
|
|
|
|
|
$
|
|
1,609
|
|
|
$
|
|
0.82
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
7.1
|
%
|
|
9.8
|
%
|
|
|
|
Schedule 8
|
ALTRIA GROUP, INC. and Subsidiaries Net Earnings and
Diluted Earnings Per Share - Attributable to Altria Group, Inc. For
the Nine Months Ended September 30, (dollars in millions,
except per share data) (Unaudited)
|
|
|
|
|
|
|
|
|
|
Net Earnings
|
|
Diluted EPS
|
2017 Net Earnings
|
$
|
5,256
|
|
|
$
|
2.72
|
|
2016 Net Earnings
|
$
|
3,963
|
|
|
$
|
2.02
|
|
% Change
|
32.6
|
%
|
|
34.7
|
%
|
|
|
|
|
Reconciliation:
|
|
|
|
2016 Net Earnings
|
$
|
3,963
|
|
|
$
|
2.02
|
|
|
|
|
|
2016 NPM Adjustment Items
|
11
|
|
|
0.01
|
|
2016 Tobacco and health litigation items
|
56
|
|
|
0.03
|
|
2016 SABMiller special items
|
96
|
|
|
0.05
|
|
2016 Loss on early extinguishment of debt
|
541
|
|
|
0.28
|
|
2016 Asset impairment, exit, implementation and acquisition-related
costs
|
84
|
|
|
0.04
|
|
2016 Gain on AB InBev/SABMiller business combination
|
(129
|
)
|
|
(0.07
|
)
|
2016 Tax items
|
(17
|
)
|
|
(0.01
|
)
|
Subtotal 2016 special items
|
642
|
|
|
0.33
|
|
|
|
|
|
2017 NPM Adjustment Items
|
(2
|
)
|
|
—
|
|
2017 Tobacco and health litigation items
|
(12
|
)
|
|
(0.01
|
)
|
2017 AB InBev special items
|
(71
|
)
|
|
(0.04
|
)
|
2017 Asset impairment, exit, implementation and acquisition-related
costs
|
(47
|
)
|
|
(0.02
|
)
|
2017 Gain on AB InBev/SABMiller business combination
|
289
|
|
|
0.15
|
|
2017 Tax items
|
321
|
|
|
0.16
|
|
Subtotal 2017 special items
|
478
|
|
|
0.24
|
|
|
|
|
|
Fewer shares outstanding
|
—
|
|
|
0.04
|
|
Change in tax rate
|
5
|
|
|
—
|
|
Operations
|
168
|
|
|
0.09
|
|
2017 Net Earnings
|
$
|
5,256
|
|
|
$
|
2.72
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule 9
|
ALTRIA GROUP, INC. and Subsidiaries Reconciliation of GAAP
and non-GAAP Measures For the Nine Months Ended September 30, (dollars
in millions, except per share data) (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before Income Taxes
|
|
Provision for Income Taxes
|
|
Net Earnings
|
|
|
|
|
Net Earnings Attributable to Altria
Group, Inc.
|
|
Diluted EPS
|
2017 Reported
|
|
$
|
|
7,645
|
|
|
$
|
|
2,386
|
|
|
$
|
|
5,259
|
|
|
|
|
|
$
|
|
5,256
|
|
|
$
|
|
2.72
|
|
NPM Adjustment Items
|
|
4
|
|
|
2
|
|
|
2
|
|
|
|
|
|
2
|
|
|
—
|
|
Tobacco and health litigation items
|
|
18
|
|
|
6
|
|
|
12
|
|
|
|
|
|
12
|
|
|
0.01
|
|
AB InBev special items
|
|
109
|
|
|
38
|
|
|
71
|
|
|
|
|
|
71
|
|
|
0.04
|
|
Asset impairment, exit, implementation and
acquisition-related costs
|
|
77
|
|
|
30
|
|
|
47
|
|
|
|
|
|
47
|
|
|
0.02
|
|
Gain on AB InBev/SABMiller business
combination
|
|
(445
|
)
|
|
(156
|
)
|
|
(289
|
)
|
|
|
|
|
(289
|
)
|
|
(0.15
|
)
|
Tax items
|
|
—
|
|
|
321
|
|
|
(321
|
)
|
|
|
|
|
(321
|
)
|
|
(0.16
|
)
|
2017 Adjusted for Special Items
|
|
$
|
|
7,408
|
|
|
$
|
|
2,627
|
|
|
$
|
|
4,781
|
|
|
|
|
|
$
|
|
4,778
|
|
|
$
|
|
2.48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016 Reported
|
|
$
|
|
6,144
|
|
|
$
|
|
2,178
|
|
|
$
|
|
3,966
|
|
|
|
|
|
$
|
|
3,963
|
|
|
$
|
|
2.02
|
|
NPM Adjustment Items
|
|
18
|
|
|
7
|
|
|
11
|
|
|
|
|
|
11
|
|
|
0.01
|
|
Tobacco and health litigation items
|
|
88
|
|
|
32
|
|
|
56
|
|
|
|
|
|
56
|
|
|
0.03
|
|
SABMiller special items
|
|
147
|
|
|
51
|
|
|
96
|
|
|
|
|
|
96
|
|
|
0.05
|
|
Loss on early extinguishment of debt
|
|
823
|
|
|
282
|
|
|
541
|
|
|
|
|
|
541
|
|
|
0.28
|
|
Asset impairment, exit, implementation and
acquisition-related costs
|
|
133
|
|
|
49
|
|
|
84
|
|
|
|
|
|
84
|
|
|
0.04
|
|
Gain on AB InBev/SABMiller business
combination
|
|
(205
|
)
|
|
(76
|
)
|
|
(129
|
)
|
|
|
|
|
(129
|
)
|
|
(0.07
|
)
|
Tax items
|
|
—
|
|
|
17
|
|
|
(17
|
)
|
|
|
|
|
(17
|
)
|
|
(0.01
|
)
|
2016 Adjusted for Special Items
|
|
$
|
|
7,148
|
|
|
$
|
|
2,540
|
|
|
$
|
|
4,608
|
|
|
|
|
|
$
|
|
4,605
|
|
|
$
|
|
2.35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 Reported Net Earnings
|
|
|
|
|
|
|
|
|
|
|
$
|
|
5,256
|
|
|
$
|
|
2.72
|
|
2016 Reported Net Earnings
|
|
|
|
|
|
|
|
|
|
|
$
|
|
3,963
|
|
|
$
|
|
2.02
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
32.6
|
%
|
|
34.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 Net Earnings Adjusted for Special Items
|
|
|
|
|
|
|
|
|
$
|
|
4,778
|
|
|
$
|
|
2.48
|
|
2016 Net Earnings Adjusted for Special Items
|
|
|
|
|
|
|
|
|
$
|
|
4,605
|
|
|
$
|
|
2.35
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
3.8
|
%
|
|
5.5
|
%
|
|
|
|
|
|
|
|
|
Schedule 10
|
ALTRIA GROUP, INC. and Subsidiaries Reconciliation of GAAP
and non-GAAP Measures For the Year Ended December 31, (dollars
in millions, except per share data) (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before Income Taxes
|
|
Provision for Income Taxes
|
|
Net Earnings
|
|
|
Net Earnings Attributable to Altria
Group, Inc.
|
|
Diluted EPS
|
2016 Reported
|
$
|
21,852
|
|
|
$
|
|
7,608
|
|
|
$
|
|
14,244
|
|
|
|
$
|
|
14,239
|
|
|
$
|
|
7.28
|
|
NPM Adjustment Items
|
18
|
|
|
7
|
|
|
11
|
|
|
|
11
|
|
|
0.01
|
|
Tobacco and health litigation items
|
105
|
|
|
34
|
|
|
71
|
|
|
|
71
|
|
|
0.04
|
|
SABMiller special items
|
(89
|
)
|
|
(32
|
)
|
|
(57
|
)
|
|
|
(57
|
)
|
|
(0.03
|
)
|
Loss on early extinguishment of debt
|
823
|
|
|
282
|
|
|
541
|
|
|
|
541
|
|
|
0.28
|
|
Asset impairment, exit, implementation and
acquisition-related costs
|
206
|
|
|
71
|
|
|
135
|
|
|
|
135
|
|
|
0.07
|
|
Patent litigation settlement
|
21
|
|
|
8
|
|
|
13
|
|
|
|
13
|
|
|
0.01
|
|
Gain on AB InBev/SABMiller business
combination
|
(13,865
|
)
|
|
(4,864
|
)
|
|
(9,001
|
)
|
|
|
(9,001
|
)
|
|
(4.61
|
)
|
Tax items
|
—
|
|
|
30
|
|
|
(30
|
)
|
|
|
(30
|
)
|
|
(0.02
|
)
|
2016 Adjusted for Special Items
|
$
|
9,071
|
|
|
$
|
|
3,144
|
|
|
$
|
|
5,927
|
|
|
|
$
|
|
5,922
|
|
|
$
|
|
3.03
|
|
|
|
|
|
Schedule 11
|
ALTRIA GROUP, INC. and Subsidiaries Condensed Consolidated
Balance Sheets (dollars in millions) (Unaudited)
|
|
|
|
|
|
|
|
September 30, 2017
|
|
December 31, 2016
|
Assets
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
2,582
|
|
|
$
|
4,569
|
Inventories
|
|
1,987
|
|
|
2,051
|
Other current assets
|
|
587
|
|
|
640
|
Property, plant and equipment, net
|
|
1,907
|
|
|
1,958
|
Goodwill and other intangible assets, net
|
|
17,503
|
|
|
17,321
|
Investment in AB InBev
|
|
18,213
|
|
|
17,852
|
Finance assets, net
|
|
901
|
|
|
1,028
|
Other long-term assets
|
|
480
|
|
|
513
|
Total assets
|
|
$
|
44,160
|
|
|
$
|
45,932
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
Accrued settlement charges
|
|
3,383
|
|
|
3,701
|
Other current liabilities
|
|
3,279
|
|
|
3,674
|
Long-term debt
|
|
13,890
|
|
|
13,881
|
Deferred income taxes
|
|
8,234
|
|
|
8,416
|
Accrued postretirement health care costs
|
|
2,185
|
|
|
2,217
|
Accrued pension costs
|
|
611
|
|
|
805
|
Other long-term liabilities
|
|
372
|
|
|
427
|
Total liabilities
|
|
31,954
|
|
|
33,121
|
Redeemable noncontrolling interest
|
|
37
|
|
|
38
|
Total stockholders' equity
|
|
12,169
|
|
|
12,773
|
Total liabilities and stockholders' equity
|
|
$
|
44,160
|
|
|
$
|
45,932
|
|
|
|
|
|
Total debt
|
|
$
|
13,890
|
|
|
$
|
13,881
|

View source version on businesswire.com: http://www.businesswire.com/news/home/20171026005725/en/
Source: Altria Group, Inc.
Altria Client Services
Investor Relations
804-484-8222
Altria
Client Services
Media Relations
804-484-8897