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(Address of principal executive offices) | (Zip Code) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Title of each class | Trading Symbols | Name of each exchange on which registered |
Emerging growth company |
(d) | Exhibits | |||
99.1 | ||||
104 | The cover page from this Current Report on Form 8-K, formatted in Inline XBRL (included as Exhibit 101) |
ALTRIA GROUP, INC. | ||
By: | /s/ W. HILDEBRANDT SURGNER, JR. | |
Name: | W. Hildebrandt Surgner, Jr. | |
Title: | Vice President, Corporate Secretary and | |
Associate General Counsel |
Altria Headline Financials1 |
($ in millions, except per share data) | Q1 2020 | Change vs. Q1 2019 |
Net revenues | $6,359 | 13.0% |
Revenues net of excise taxes | $5,046 | 15.0% |
Reported tax rate | 26.5% | 0.4 pp |
Adjusted tax rate2 | 24.0% | 0.1 pp |
Reported diluted EPS | $0.83 | 38.3% |
Adjusted diluted EPS2 | $1.09 | 18.5% |
Altria Leadership and Governance Changes |
• | On April 17, 2020, Altria announced Howard Willard’s retirement as Chairman of the Board (Chairman) and Chief Executive Officer (CEO) of Altria. |
• | Following Mr. Willard’s retirement, Altria’s Board of Directors (Board) elected Billy Gifford, formerly Altria’s Vice Chairman and Chief Financial Officer (CFO), to serve as Altria’s CEO. |
• | Altria also announced the Board’s decision to separate the roles of Chairman and CEO. The Board elected Thomas Farrell, formerly the Board’s independent Presiding Director, to serve as independent Chairman. |
• | In connection with Mr. Gifford’s appointment as CEO, the Board elected Salvatore Mancuso to serve as Altria’s CFO. |
Impact of COVID-19 Pandemic |
• | Altria has implemented remote working for many employees and aligned our practices with the recommended social distancing protocols from public health authorities. To date, Altria has experienced minimal impact to productivity due to remote working and its critical information technology systems have remained operational. |
• | Altria has reopened the Richmond Manufacturing Center under enhanced safety protocols and all of Altria’s manufacturing facilities are currently operational. Altria is continuing to monitor the risks associated with facility disruptions and workforce availability as a result of COVID-19 uncertainty. |
• | To date, Altria’s companies have not experienced any material disruptions to their supply chains or distribution systems, but continue to monitor these risks and are executing against business continuity plans. |
• | In March, PM USA closed its Atlanta and Richmond IQOS stores temporarily and paused its IQOS in-person marketing efforts. PM USA will consider guidance from public health authorities in deciding when to reopen the stores and resume its interactive marketing approach. HeatSticks remain available for sale in over 500 retail stores across Atlanta and Richmond, and PM USA believes it currently has sufficient on-hand inventories. PM USA has also delayed the launch of IQOS in Charlotte due to COVID-19 concerns. |
• | To date, Altria’s companies have not experienced any material adverse effects associated with governmental actions to restrict consumer movement or business operations, but continue to monitor these factors. The majority of retail stores in which their products are sold, including convenience stores, have been deemed to be essential businesses by authorities and remain open. |
• | Altria is monitoring the macro-economic risks of COVID-19 and its effect on adult tobacco consumers, including impacts to unemployment rates, consumer confidence levels, number of housing starts and gasoline prices. Altria expects an increase in consumer down-trading in the cigarette and moist smokeless tobacco (MST) categories, and believes the degree of down-trading will depend on several factors, including the depth and duration of higher unemployment and the severity of COVID-19 impacts, with potential offsetting factors of lower gasoline prices, increased unemployment benefits and government stimulus payments. Altria is also monitoring adult tobacco consumers’ purchasing behavior, including overall tobacco product expenditures and interest in noncombustible products. |
• | Helix is continuing to build domestic manufacturing capacity for on! in the Richmond Manufacturing Center. Current installed annualized capacity is approximately 25 million cans. However, due to the impacts of COVID-19, Helix expects potential delays in its ability to achieve annualized production capacity of 50 million cans by mid-year and 75 million cans by the end of 2020. |
• | Ste. Michelle’s on-premise wine sales in restaurants, bars, hospitality venues and cruise lines have been negatively affected by COVID-19 disruptions. Due to product volume demand uncertainty, which has been further negatively impacted in the first quarter by factors related to the COVID-19 pandemic, Ste. Michelle recorded inventory-related charges, including a write-off and an estimated loss on non-cancelable future grape purchase commitments. Ste. Michelle will continue to monitor the impact of COVID-19 associated risks on its earnings. |
• | ABI has made several public disclosures regarding the impact of COVID-19 on its business, including withdrawing its financial forecast and a proposal to halve the final 2019 dividend payment. In addition, the extreme market disruption and volatility associated with the COVID-19 pandemic has resulted in a steep decline in ABI’s stock price, and the fair value of our investment in ABI is now well below the carrying value of our investment in ABI. While Altria believes that this decline is temporary, we will continue to monitor our investment in ABI and the impact of the COVID-19 pandemic on ABI’s business and market valuation and the associated risks to Altria. |
• | Altria has considered the impact of COVID-19 on the businesses of JUUL and Cronos, including their sales, distribution, operations, supply chain and liquidity. At this time, Altria believes the impact of COVID-19 to these businesses is not material, and Altria’s assessment, which included the consideration of potential impacts of COVID-19 on the businesses, did not result in impairment at March 31, 2020. |
• | In the first quarter, Altria did not repurchase any shares of its common stock and borrowed the full $3 billion capacity available under its revolving credit facility as a precautionary measure. |
• | To further strengthen Altria’s liquidity position, the Board rescinded Altria’s $1 billion share repurchase program that had a $500 million balance. |
• | For the coming quarters, Altria expects to maintain a higher cash balance than normal to preserve its financial flexibility. |
• | Altria’s objective remains a dividend payout ratio target of approximately 80% of adjusted diluted EPS. Since Altria has withdrawn its full-year 2020 adjusted diluted EPS guidance due to the impacts of COVID-19, it expects to approach the 2020 dividend by recommending a quarterly dividend rate to the Board that reflects, among other things, its strong cash generation and the strength of its balance sheet. |
• | Altria has donated supplies and committed an initial $1 million to support COVID-19 relief efforts. |
• | Altria is providing additional flexibility to its valued non-profit partners with the use of grant and sponsorship dollars to support general operating needs. Altria is also accelerating some payments and relaxing reporting requirements. |
JUUL Investment |
• | On April 1, 2020, the U.S. Federal Trade Commission announced its decision to file an administrative complaint against Altria and JUUL to challenge Altria’s minority investment in JUUL. |
• | Altria intends to vigorously defend the transaction. |
Graphic Health Warnings for Cigarettes |
• | On March 17, 2020, the U.S. Food and Drug Administration (“FDA”) issued a final rule requiring graphic health warnings on cigarettes and advertisements. |
• | Altria believes the final rule goes beyond what is permitted under the First Amendment and that FDA’s cited research provides inadequate support for the warnings. |
• | Altria is evaluating its options for further action. |
2020 Full-Year Guidance and 2020 - 2022 Adjusted Diluted EPS Growth Objective |
• | Due to the uncertainties related to the impact of the COVID-19 pandemic and economic recovery scenarios, Altria withdraws its full-year 2020 adjusted diluted EPS guidance of $4.39 to $4.51 and, as a result, Altria also withdraws its 2020 to 2022 compounded annual adjusted diluted EPS growth objective of 4% to 7%. In making the decision, Altria considered various factors, including uncertain contributions from its equity investment in ABI and the potential impacts of COVID-19 on the macro-economic environment and adult tobacco consumers. |
Financial Performance |
• | Net revenues increased 13.0% to $6.4 billion, primarily due to higher net revenues in the smokeable and oral tobacco products segments. Revenues net of excise taxes increased 15.0% to $5.0 billion. |
• | Reported diluted EPS increased 38.3% to $0.83, primarily driven by higher reported operating companies income (OCI) in the smokeable and oral tobacco products segments, lower charges for Cronos-related special items, 2019 acquisition-related costs associated with the JUUL and Cronos transactions, higher reported earnings from Altria’s equity investment in ABI and fewer shares outstanding, partially offset by higher asset, exit, implementation and acquisition-related costs. |
• | Adjusted diluted EPS increased 18.5% to $1.09, primarily driven by higher adjusted OCI in the smokeable and oral tobacco products segments and fewer shares outstanding, partially offset by lower adjusted earnings from Altria’s equity investment in ABI. |
Table 1 - Altria’s Adjusted Results | ||||||||
First Quarter | ||||||||
2020 | 2019 | Change | ||||||
Reported diluted EPS | $ | 0.83 | $ | 0.60 | 38.3 | % | ||
Asset impairment, exit, implementation and acquisition-related costs | 0.16 | 0.06 | ||||||
Tobacco and health litigation items | 0.01 | 0.01 | ||||||
ABI-related special items 1 | 0.03 | 0.07 | ||||||
Cronos-related special items | 0.05 | 0.17 | ||||||
Tax items | 0.01 | 0.01 | ||||||
Adjusted diluted EPS | $ | 1.09 | $ | 0.92 | 18.5 | % |
Special Items |
• | In the first quarter of 2020, Altria recorded pre-tax charges of $392 million (or $0.16 per share) consisting of $292 million for a wine inventory write-off and $100 million for estimated losses on future non-cancelable grape purchase commitments that Ste. Michelle believes no longer have a future economic benefit. |
• | In the first quarter of 2019, Altria recorded pre-tax charges of $159 million (or $0.06 per share) for acquisition-related costs associated with the Cronos and JUUL transactions and Altria’s cost reduction program announced in December 2018. |
• | In the first quarter of 2020, equity earnings from ABI included pre-tax charges of $56 million (or $0.03 per share), consisting primarily of Altria’s share of ABI’s net mark-to-market losses on certain ABI financial instruments associated with its share commitments, partially offset by an additional net gain related to ABI’s completion of its initial public offering of a minority stake of its Asia Pacific subsidiary. |
• | In the first quarter of 2019, equity earnings from ABI included pre-tax charges of $163 million (or $0.07 per share), consisting primarily of Altria’s share of ABI’s net mark-to-market losses on certain ABI financial instruments associated with its share commitments. |
• | In the first quarter of 2020, Altria recorded net pre-tax charges of $89 million (or $0.05 per share), consisting of the following: pre-tax charges of $137 million due to the non-cash change during the quarter in the fair value of Cronos-related derivative financial instruments to acquire additional shares of Cronos, partially offset by net gains of $48 million (included in earnings from equity investments), substantially all of which related to Altria’s share of Cronos’s non-cash change in the fair value of Cronos’s derivative financial instruments associated with the issuance of additional shares. |
• | In the first quarter of 2019, Altria recorded pre-tax charges of $425 million (or $0.17 per share) primarily resulting from the non-cash change during the quarter in the fair value of Cronos-related derivative financial instruments to acquire additional shares of Cronos. |
Revenues and OCI |
• | Net revenues increased 13.6%, primarily driven by higher shipment volume and higher pricing. Revenues net of excise taxes increased 16.0%. |
• | Reported OCI increased 22.7%, primarily driven by higher pricing, higher shipment volume and 2019 asset impairment, exit and implementation costs, partially offset by higher resolution expenses. |
• | Adjusted OCI increased 20.1%, primarily driven by higher pricing and higher shipment volume, partially offset by higher resolution expenses. Adjusted OCI margins increased 2.0 percentage points to 55.3%. |
Table 2 - Smokeable Products: Revenues and OCI ($ in millions) | ||||||||
First Quarter | ||||||||
2020 | 2019 | Change | ||||||
Net revenues | $ | 5,606 | $ | 4,935 | 13.6 | % | ||
Excise taxes | (1,278 | ) | (1,203 | ) | ||||
Revenues net of excise taxes | $ | 4,328 | $ | 3,732 | 16.0 | % | ||
Reported OCI | $ | 2,370 | $ | 1,932 | 22.7 | % | ||
Asset impairment, exit and implementation costs | — | 44 | ||||||
Tobacco and health litigation items | 22 | 15 | ||||||
Adjusted OCI | $ | 2,392 | $ | 1,991 | 20.1 | % | ||
Adjusted OCI margins 1 | 55.3 | % | 53.3 | % | 2.0 pp |
Shipment Volume |
• | Smokeable products segment reported domestic cigarette shipment volume increased 6.1%, primarily driven by trade inventory movements, calendar differences and consumer pantry loading due to COVID-19, partially offset by the industry’s rate of decline, retail share losses and other factors. |
• | When adjusted for the traditional factors of trade inventory movements, calendar differences, and other factors, smokeable products segment domestic cigarette shipment volume decreased by an estimated 3.5%. However, Altria believes that its preliminary estimates of consumer pantry loading due to COVID-19 should be an adjusting factor to reported volumes due to its high likelihood of near-term volume payback. When adjusted for trade inventory movements, calendar differences, Altria’s preliminary estimates of consumer pantry loading due to COVID-19 and other factors, smokeable products segment domestic cigarette shipment volume decreased by an estimated 5%. |
• | When adjusted for the traditional factors of trade inventory movements, calendar differences, and other factors, total domestic cigarette industry volumes declined by an estimated 2%. When adjusted for trade inventory movements, calendar differences, Altria’s’ preliminary estimate of consumer pantry loading due to COVID-19 and other factors, total domestic cigarette industry volumes decreased by an estimated 3.5%. |
• | Reported cigar shipment volume increased 13.1%. |
Table 3 - Smokeable Products: Shipment Volume (sticks in millions) | ||||||
First Quarter | ||||||
2020 | 2019 | Change | ||||
Cigarettes: | ||||||
Marlboro | 21,842 | 20,467 | 6.7 | % | ||
Other premium | 1,137 | 1,165 | (2.4 | )% | ||
Discount | 2,045 | 1,962 | 4.2 | % | ||
Total cigarettes | 25,024 | 23,594 | 6.1 | % | ||
Cigars: | ||||||
Black & Mild | 430 | 380 | 13.2 | % | ||
Other | 2 | 2 | — | % | ||
Total cigars | 432 | 382 | 13.1 | % | ||
Total smokeable products | 25,456 | 23,976 | 6.2 | % |
Retail Share and Brand Activity |
• | Marlboro retail share of the total cigarette category declined 0.5 share points to 42.8% due to adult smoker movement across tobacco categories and dynamics within the discount cigarette segment. |
• | Marlboro retail share of the premium cigarette segment was unchanged at 56.9%. |
• | PM USA expanded Marlboro Bold Ice nationally. |
• | The retail share for the total discount cigarette segment increased 0.8 share points to 24.8%, primarily driven by the deep discount segment. |
Table 4 - Smokeable Products: Cigarettes Retail Share (percent) | |||||
First Quarter | |||||
2020 | 2019 | Percentage point change | |||
Cigarettes: | |||||
Marlboro | 42.8 | % | 43.3 | % | (0.5) |
Other premium | 2.4 | 2.5 | (0.1) | ||
Discount | 4.0 | 4.1 | (0.1) | ||
Total cigarettes | 49.2 | % | 49.9 | % | (0.7) |
Revenues and OCI |
• | Net revenues increased 11.3%, primarily driven by higher pricing and higher shipment volume. Revenues net of excise taxes increased 12.0%. |
• | Reported and adjusted OCI increased 15.6% and 13.4%, respectively, primarily driven by higher pricing and higher shipment volume, partially offset by increased costs associated with the expansion of on!. Adjusted OCI margins increased 0.9 percentage points to 73.0%. |
Table 5 - Oral Tobacco Products: Revenues and OCI ($ in millions) | ||||||||
First Quarter | ||||||||
2020 | 2019 | Change | ||||||
Net revenues | $ | 601 | $ | 540 | 11.3 | % | ||
Excise taxes | (31 | ) | (31 | ) | ||||
Revenues net of excise taxes | $ | 570 | $ | 509 | 12.0 | % | ||
Reported OCI | $ | 414 | $ | 358 | 15.6 | % | ||
Asset impairment, exit, implementation and acquisition-related costs | 2 | 9 | ||||||
Adjusted OCI | $ | 416 | $ | 367 | 13.4 | % | ||
Adjusted OCI margins 1 | 73.0 | % | 72.1 | % | 0.9 pp |
Shipment Volume |
• | Oral tobacco products segment reported domestic shipment volume increased 2.8%, primarily driven by the industry’s growth rate, calendar differences and retail and consumer pantry loading due to COVID-19, partially offset by retail share losses (primarily due to the rapid growth of oral nicotine pouches) and wholesale trade inventory movements. When adjusted for the traditional factors of wholesale trade inventory movements, calendar differences and other factors, oral tobacco products segment shipment volume increased by an estimated 1%. However, Altria believes that its preliminary estimates of retail and consumer pantry loading due to COVID-19 should be an adjusting factor to reported volumes due to its high likelihood of near-term volume payback. When adjusted for wholesale trade inventory movements, Altria’s preliminary estimates of retail and consumer pantry loading due to COVID-19, calendar differences and other factors, oral tobacco products segment shipment volume decreased by an estimated 0.5%. |
• | Total oral tobacco industry volume increased by an estimated 6% over the past six months, as the growth in oral nicotine pouches more than offset the volume decline in MST and snus. When adjusted for Altria’s preliminary estimates of retail and consumer pantry loading due to COVID-19, total oral tobacco industry volume increased by an estimated 5% over the past six months. |
Table 6 - Oral Tobacco Products: Shipment Volume (cans and packs in millions) | ||||||
First Quarter | ||||||
2020 | 2019 | Change | ||||
Copenhagen | 125.0 | 125.2 | (0.2 | )% | ||
Skoal | 51.3 | 50.3 | 2.0 | % | ||
Other | 20.4 | 15.9 | 28.3 | % | ||
Total oral tobacco products | 196.7 | 191.4 | 2.8 | % |
Retail Share & Brand Activity |
• | Oral tobacco products segment retail share was 50.4%. Segment share declined versus the prior year due to the rapid growth of oral nicotine pouches and the associated volume declines in MST and snus. |
• | Copenhagen continued to be the leading oral tobacco brand with a retail share of 32.4%. |
• | on! was sold in over 28,000 stores at the end of the first quarter, including the top five convenience store chains by oral tobacco volume. |
• | Helix expects to submit its PMTA for the on! portfolio in May. |
Table 7 - Oral Tobacco Products: Retail Share (percent) | |||||
First Quarter | |||||
2020 | 2019 | Percentage point change | |||
Copenhagen | 32.4 | % | 34.6 | % | (2.2) |
Skoal | 14.3 | 15.1 | (0.8) | ||
Other | 3.7 | 3.5 | 0.2 | ||
Total oral tobacco products | 50.4 | % | 53.2 | % | (2.8) |
Revenues, OCI and Shipment Volume |
• | Net revenues decreased 3.3%, driven by lower shipment volume, partially offset by higher pricing and favorable mix. |
• | Reported OCI decreased 100%+ to ($379) million, driven by inventory-related charges (included in implementation costs below), lower shipment volume and higher selling, general and administrative costs, partially offset by higher pricing and favorable mix. |
• | Adjusted OCI decreased 13.3% to $13 million, primarily driven by lower shipment volume and higher selling, general and administrative costs, partially offset by higher pricing and favorable mix. |
• | Reported wine shipment volume decreased 10.2% to approximately 1.7 million cases. |
• | Ste. Michelle has implemented a strategic reset in order to maximize its profitability and achieve improved long-term cash flow generation. |
Table 8 - Wine: Revenues and OCI (Loss) ($ in millions) | ||||||||
First Quarter | ||||||||
2020 | 2019 | Change | ||||||
Net revenues | $ | 146 | $ | 151 | (3.3 | )% | ||
Excise taxes | (4 | ) | (5 | ) | ||||
Revenues net of excise taxes | $ | 142 | $ | 146 | (2.7 | )% | ||
Reported OCI | $ | (379 | ) | $ | 15 | (100.0)%+ | ||
Implementation costs | 392 | — | ||||||
Adjusted OCI | $ | 13 | $ | 15 | (13.3 | )% | ||
Adjusted OCI margins 1 | 9.2 | % | 10.3 | % | (1.1) pp |
Altria’s Profile |
Basis of Presentation |
Forward-Looking and Cautionary Statements |
• | the risks associated with health epidemics and pandemics, including the COVID-19 pandemic and similar outbreaks, such as their impact on our financial performance and financial condition and on our subsidiaries’ and investees’ ability to continue manufacturing and distributing products, and the impact of health epidemics and pandemics on general economic conditions, including any resulting recession; |
• | unfavorable litigation outcomes, including risks associated with adverse jury and judicial determinations, courts and arbitrators reaching conclusions at variance with our, our subsidiaries’ or our investees’ understanding of applicable law, bonding requirements in the jurisdictions that do not limit the dollar amount of appeal bonds, and certain challenges to bond cap statutes; |
• | government (including FDA) and private sector actions that impact adult tobacco consumer acceptability of, or access to, tobacco products; |
• | the growth of the e-vapor category and other innovative tobacco products contributing to reductions in cigarette and MST consumption levels and sales volume; |
• | tobacco product taxation, including lower tobacco product consumption levels and potential shifts in adult consumer purchases as a result of federal, state and local excise tax increases; |
• | the failure by our tobacco and wine subsidiaries to compete effectively in their respective markets; |
• | our tobacco and wine subsidiaries’ 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 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; |
• | changes, including in economic conditions, that result in adult consumers choosing lower-priced brands including discount brands; |
• | the unsuccessful commercialization of adjacent products or processes by our tobacco subsidiaries and investees, including innovative tobacco products that may reduce the health risks associated with cigarettes and other traditional tobacco products, and that appeal to adult tobacco consumers; |
• | significant changes in price, availability or quality of tobacco, other raw materials or component parts, including as a result of the COVID-19 pandemic; |
• | the risks related to the reliance by our tobacco and wine subsidiaries on a few significant facilities and a small number of key suppliers, and the risk of an extended disruption at a facility or of service by a supplier of our tobacco or wine subsidiaries or investees including as a result of the COVID-19 pandemic; |
• | required or voluntary product recalls as a result of various circumstances such as product contamination or FDA or other regulatory action; |
• | the failure of our information systems or service providers’ information systems to function as intended, or cyber-attacks or security breaches; |
• | unfavorable outcomes of any government investigations of Altria, our subsidiaries or investees; |
• | a successful challenge to our tax positions; |
• | the risks related to our and our investees’ international business operations, including failure to prevent violations of various U.S. and foreign laws and regulations such as laws prohibiting bribery and corruption; |
• | our inability to attract and retain the best talent due to the impact of decreasing social acceptance of tobacco usage and tobacco control actions; |
• | the adverse effect of acquisitions, investments, dispositions or other events on our credit rating; |
• | our inability to acquire attractive businesses or make attractive investments on favorable terms, or at all, or to realize the anticipated benefits from an acquisition or investment and our inability to dispose of businesses or investments on favorable terms or at all; |
• | the risks related to disruption and uncertainty in the credit and capital markets, including risk of access to these markets both generally and at current prevailing rates which may adversely affect our earnings or dividend rate or both; |
• | impairment losses as a result of the write down of intangible assets, including goodwill; |
• | the risks related to Ste. Michelle’s wine business, including competition, unfavorable changes in grape supply, and changes in adult consumer preferences that have resulted and may continue to result in increased inventory levels and inventory write offs, and governmental regulations; |
• | the risk that any challenge to our investment in JUUL, if successful, could result in a broad range of resolutions such as divestiture of the investment or rescission of the transaction; |
• | the risks generally related to our investments in JUUL and Cronos, including our inability to realize the expected benefits of our investments in the expected time frames, or at all, due to the risks encountered by our investees in their businesses, such as operational, compliance and regulatory risks at the international, federal, state and local levels, including actions by the FDA, and adverse publicity; potential disruptions to our investees’ management or current or future plans and operations; domestic or international litigation developments, government investigations, tax disputes or otherwise; and impairment of our investments; |
• | the risks related to our inability to acquire a controlling interest in JUUL as a result of standstill restrictions or to control the material decisions of JUUL, restrictions on our ability to sell or otherwise transfer our shares of JUUL until December 20, 2024, and non-competition restrictions for the same time period subject to certain exceptions; |
• | the adverse effects of risks encountered by ABI in its business, including effects of the COVID-19 pandemic, foreign currency exchange rates and the impact of movements in ABI’s stock price on our equity investment in ABI, including on our reported earnings from and carrying value of our investment in ABI, which could result in impairment of our investment, and the dividends paid by ABI on the shares we own; |
• | the risks related to our inability to transfer our equity securities in ABI until October 10, 2021, and, if our ownership percentage decreases below certain levels, the adverse effects of additional tax liabilities, a reduction in the number of directors that we have the right to have appointed to the ABI board of directors, and our potential inability to use the equity method of accounting for our investment in ABI; |
• | the risk of challenges to the tax treatment of the consideration we received in the ABI/SABMiller business combination and the tax treatment of our equity investment; and |
• | the risks, including criminal, civil or tax liability for Altria, related to Cronos’s or Altria’s failure to comply with applicable laws, including cannabis laws. |
Schedule 1 | ||
ALTRIA GROUP, INC. | ||
and Subsidiaries | ||
Consolidated Statements of Earnings | ||
For the Quarters Ended March 31, | ||
(dollars in millions, except per share data) | ||
(Unaudited) |
2020 | 2019 | % Change | ||||||||
Net revenues | $ | 6,359 | $ | 5,628 | 13.0 | % | ||||
Cost of sales 1 | 2,173 | 1,578 | ||||||||
Excise taxes on products 1 | 1,313 | 1,239 | ||||||||
Gross profit | 2,873 | 2,811 | 2.2 | % | ||||||
Marketing, administration and research costs | 473 | 479 | ||||||||
Asset impairment and exit costs | — | 39 | ||||||||
Operating companies income | 2,400 | 2,293 | 4.7 | % | ||||||
Amortization of intangibles | 19 | 8 | ||||||||
General corporate expenses | 45 | 46 | ||||||||
Corporate asset impairment and exit costs | — | 1 | ||||||||
Operating income | 2,336 | 2,238 | 4.4 | % | ||||||
Interest and other debt expense, net | 275 | 384 | ||||||||
Net periodic benefit income, excluding service cost | (27 | ) | (1 | ) | ||||||
Earnings from equity investments 1 | (157 | ) | (86 | ) | ||||||
Loss on Cronos-related financial instruments | 137 | 425 | ||||||||
Earnings before income taxes | 2,108 | 1,516 | 39.1 | % | ||||||
Provision for income taxes | 558 | 395 | ||||||||
Net earnings | 1,550 | 1,121 | 38.3 | % | ||||||
Net (earnings) losses attributable to noncontrolling interests | 2 | (1 | ) | |||||||
Net earnings attributable to Altria | $ | 1,552 | $ | 1,120 | 38.6 | % | ||||
Per share data: | ||||||||||
Diluted earnings per share attributable to Altria | $ | 0.83 | $ | 0.60 | 38.3 | % | ||||
Weighted-average diluted shares outstanding | 1,858 | 1,874 | (0.9 | )% | ||||||
1 Cost of sales includes charges for resolution expenses related to state settlement agreements and FDA user fees. Supplemental information concerning those items, excise taxes on products sold and earnings from equity investments is shown in Schedule 3. | ||||||||||
Schedule 2 | |||||||||||||||
ALTRIA GROUP, INC. | |||||||||||||||
and Subsidiaries | |||||||||||||||
Selected Financial Data | |||||||||||||||
For the Quarters Ended March 31, | |||||||||||||||
(dollars in millions) | |||||||||||||||
(Unaudited) | |||||||||||||||
Net Revenues | |||||||||||||||
Smokeable Products | Oral Tobacco Products | Wine | All Other | Total | |||||||||||
2020 | $ | 5,606 | $ | 601 | $ | 146 | $ | 6 | $ | 6,359 | |||||
2019 | 4,935 | 540 | 151 | 2 | 5,628 | ||||||||||
% Change | 13.6 | % | 11.3 | % | (3.3 | )% | 100%+ | 13.0 | % | ||||||
Reconciliation: | |||||||||||||||
For the quarter ended March 31, 2019 | $ | 4,935 | $ | 540 | $ | 151 | $ | 2 | $ | 5,628 | |||||
Operations | 671 | 61 | (5 | ) | 4 | 731 | |||||||||
For the quarter ended March 31, 2020 | $ | 5,606 | $ | 601 | $ | 146 | $ | 6 | $ | 6,359 | |||||
Operating Companies Income (Loss) | |||||||||||||||
Smokeable Products | Oral Tobacco Products | Wine | All Other | Total | |||||||||||
2020 | $ | 2,370 | $ | 414 | $ | (379 | ) | $ | (5 | ) | $ | 2,400 | |||
2019 | 1,932 | 358 | 15 | (12 | ) | 2,293 | |||||||||
% Change | 22.7 | % | 15.6 | % | (100)%+ | 58.3 | % | 4.7 | % | ||||||
Reconciliation: | |||||||||||||||
For the quarter ended March 31, 2019 | $ | 1,932 | $ | 358 | $ | 15 | $ | (12 | ) | $ | 2,293 | ||||
Asset impairment, exit and implementation costs - 2019 | 44 | 9 | — | (5 | ) | 48 | |||||||||
Tobacco and health litigation items - 2019 | 15 | — | — | — | 15 | ||||||||||
59 | 9 | — | (5 | ) | 63 | ||||||||||
Implementation and acquisition-related costs - 2020 | — | (2 | ) | (392 | ) | — | (394 | ) | |||||||
Tobacco and health litigation items - 2020 | (22 | ) | — | — | — | (22 | ) | ||||||||
(22 | ) | (2 | ) | (392 | ) | — | (416 | ) | |||||||
Operations | 401 | 49 | (2 | ) | 12 | 460 | |||||||||
For the quarter ended March 31, 2020 | $ | 2,370 | $ | 414 | $ | (379 | ) | $ | (5 | ) | $ | 2,400 | |||
Schedule 3 | |||||||
ALTRIA GROUP, INC. | |||||||
and Subsidiaries | |||||||
Supplemental Financial Data | |||||||
(dollars in millions) | |||||||
(Unaudited) | |||||||
For the Quarters Ended March 31, | |||||||
2020 | 2019 | ||||||
The segment detail of excise taxes on products sold is as follows: | |||||||
Smokeable products | $ | 1,278 | $ | 1,203 | |||
Oral tobacco products | 31 | 31 | |||||
Wine | 4 | 5 | |||||
$ | 1,313 | $ | 1,239 | ||||
The segment detail of charges for resolution expenses related to state settlement agreements included in cost of sales is as follows: | |||||||
Smokeable products | $ | 1,073 | $ | 911 | |||
Oral tobacco products | 2 | 2 | |||||
$ | 1,075 | $ | 913 | ||||
The segment detail of FDA user fees included in cost of sales is as follows: | |||||||
Smokeable products | $ | 71 | $ | 72 | |||
Oral tobacco products | 1 | 1 | |||||
$ | 72 | $ | 73 | ||||
The detail of earnings from equity investments is as follows: | |||||||
ABI | $ | 134 | $ | 86 | |||
Cronos | 23 | — | |||||
$ | 157 | $ | 86 |
Schedule 4 | |||||||
ALTRIA GROUP, INC. | |||||||
and Subsidiaries | |||||||
Net Earnings and Diluted Earnings Per Share - Attributable to Altria Group, Inc. | |||||||
For the Quarters Ended March 31, | |||||||
(dollars in millions, except per share data) | |||||||
(Unaudited) | |||||||
Net Earnings | Diluted EPS | ||||||
2020 Net Earnings | $ | 1,552 | $ | 0.83 | |||
2019 Net Earnings | $ | 1,120 | $ | 0.60 | |||
% Change | 38.6 | % | 38.3 | % | |||
Reconciliation: | |||||||
2019 Net Earnings | $ | 1,120 | $ | 0.60 | |||
2019 ABI-related special items 1 | 129 | 0.07 | |||||
2019 Asset impairment, exit, implementation and acquisition-related costs | 125 | 0.06 | |||||
2019 Tobacco and health litigation items | 13 | 0.01 | |||||
2019 Cronos-related special items | 328 | 0.17 | |||||
2019 Tax items | 19 | 0.01 | |||||
Subtotal 2019 special items | 614 | 0.32 | |||||
2020 ABI-related special items | (44 | ) | (0.03 | ) | |||
2020 Implementation and acquisition-related costs | (300 | ) | (0.16 | ) | |||
2020 Tobacco and health litigation items | (19 | ) | (0.01 | ) | |||
2020 Cronos-related special items | (95 | ) | (0.05 | ) | |||
2020 Tax items | (24 | ) | (0.01 | ) | |||
Subtotal 2020 special items | (482 | ) | (0.26 | ) | |||
Fewer shares outstanding | — | 0.01 | |||||
Change in tax rate | (1 | ) | — | ||||
Operations | 301 | 0.16 | |||||
2020 Net Earnings | $ | 1,552 | $ | 0.83 |
Schedule 5 | |||||||||||||||
ALTRIA GROUP, INC. | |||||||||||||||
and Subsidiaries | |||||||||||||||
Reconciliation of GAAP and non-GAAP Measures | |||||||||||||||
For the Quarters Ended March 31, | |||||||||||||||
(dollars in millions, except per share data) | |||||||||||||||
(Unaudited) | |||||||||||||||
Earnings before Income Taxes | Provision for Income Taxes | Net Earnings | Net Earnings Attributable to Altria | Diluted EPS | |||||||||||
2020 Reported | $ | 2,108 | $ | 558 | $ | 1,550 | $ | 1,552 | $ | 0.83 | |||||
ABI-related special items | 56 | 12 | 44 | 44 | 0.03 | ||||||||||
Implementation and acquisition-related costs | 395 | 95 | 300 | 300 | 0.16 | ||||||||||
Tobacco and health litigation items | 24 | 5 | 19 | 19 | 0.01 | ||||||||||
Cronos-related special items | 89 | (6 | ) | 95 | 95 | 0.05 | |||||||||
Tax items | — | (24 | ) | 24 | 24 | 0.01 | |||||||||
2020 Adjusted for Special Items | $ | 2,672 | $ | 640 | $ | 2,032 | $ | 2,034 | $ | 1.09 | |||||
2019 Reported | $ | 1,516 | $ | 395 | $ | 1,121 | $ | 1,120 | $ | 0.60 | |||||
ABI-related special items 1 | 163 | 34 | 129 | 129 | 0.07 | ||||||||||
Asset impairment, exit, implementation and acquisition-related costs | 159 | 34 | 125 | 125 | 0.06 | ||||||||||
Tobacco and health litigation items | 17 | 4 | 13 | 13 | 0.01 | ||||||||||
Cronos-related special items | 425 | 97 | 328 | 328 | 0.17 | ||||||||||
Tax items | — | (19 | ) | 19 | 19 | 0.01 | |||||||||
2019 Adjusted for Special Items | $ | 2,280 | $ | 545 | $ | 1,735 | $ | 1,734 | $ | 0.92 | |||||
2020 Reported Net Earnings | $ | 1,552 | $ | 0.83 | |||||||||||
2019 Reported Net Earnings | $ | 1,120 | $ | 0.60 | |||||||||||
% Change | 38.6 | % | 38.3 | % | |||||||||||
2020 Net Earnings Adjusted for Special Items | $ | 2,034 | $ | 1.09 | |||||||||||
2019 Net Earnings Adjusted for Special Items | $ | 1,734 | $ | 0.92 | |||||||||||
% Change | 17.3 | % | 18.5 | % |
Schedule 6 | |||||||||||||||
ALTRIA GROUP, INC. | |||||||||||||||
and Subsidiaries | |||||||||||||||
Reconciliation of GAAP and non-GAAP Measures | |||||||||||||||
For the Year Ended December 31, 2019 | |||||||||||||||
(dollars in millions, except per share data) | |||||||||||||||
(Unaudited) | |||||||||||||||
Earnings (losses) before Income Taxes | Provision for Income Taxes | Net Earnings (Losses) | Net Earnings (Losses) Attributable to Altria | Diluted EPS | |||||||||||
2019 Reported | $ | 766 | $ | 2,064 | $ | (1,298 | ) | $ | (1,293 | ) | $ | (0.70 | ) | ||
ABI-related special items 1 | (383 | ) | (80 | ) | (303 | ) | (303 | ) | (0.16 | ) | |||||
Tobacco and health litigation items | 77 | 19 | 58 | 58 | 0.03 | ||||||||||
Asset impairment, exit, implementation and acquisition-related costs | 331 | 62 | 269 | 269 | 0.15 | ||||||||||
Impairment in JUUL equity securities | 8,600 | — | 8,600 | 8,600 | 4.60 | ||||||||||
Cronos-related special items | 928 | 288 | 640 | 640 | 0.34 | ||||||||||
Tax items | — | 99 | (99 | ) | (99 | ) | (0.05 | ) | |||||||
2019 Adjusted for Special Items | $ | 10,319 | $ | 2,452 | $ | 7,867 | $ | 7,872 | $ | 4.21 |
Schedule 7 | |||||||
ALTRIA GROUP, INC. | |||||||
and Subsidiaries | |||||||
Condensed Consolidated Balance Sheets | |||||||
(dollars in millions) | |||||||
(Unaudited) | |||||||
March 31, 2020 | December 31, 2019 | ||||||
Assets | |||||||
Cash and cash equivalents | $ | 5,616 | $ | 2,117 | |||
Inventories | 2,006 | 2,293 | |||||
Other current assets | 313 | 414 | |||||
Property, plant and equipment, net | 1,997 | 1,999 | |||||
Goodwill and other intangible assets, net | 17,845 | 17,864 | |||||
Investments in equity securities | 23,861 | 23,581 | |||||
Other long-term assets | 980 | 1,003 | |||||
Total assets | $ | 52,618 | $ | 49,271 | |||
Liabilities and Stockholders’ Equity | |||||||
Short-term borrowings | $ | 3,000 | $ | — | |||
Current portion of long-term debt | — | 1,000 | |||||
Accrued settlement charges | 4,419 | 3,346 | |||||
Other current liabilities | 3,735 | 3,828 | |||||
Long-term debt | 26,971 | 27,042 | |||||
Deferred income taxes | 5,191 | 5,083 | |||||
Accrued postretirement health care costs | 1,798 | 1,797 | |||||
Accrued pension costs | 427 | 473 | |||||
Other long-term liabilities | 402 | 345 | |||||
Total liabilities | 45,943 | 42,914 | |||||
Redeemable noncontrolling interest | 38 | 38 | |||||
Total stockholders’ equity | 6,637 | 6,319 | |||||
Total liabilities and stockholders’ equity | $ | 52,618 | $ | 49,271 | |||
Total debt | $ | 29,971 | $ | 28,042 | |||
Schedule 8 | ||||
ALTRIA GROUP, INC. | ||||
and Subsidiaries | ||||
Calculation of Total Debt to Adjusted EBITDA and Net Debt to Adjusted EBITDA Ratios | ||||
For the Twelve Months Ended March 31, 2020 | ||||
(dollars in millions) | ||||
(Unaudited) | ||||
Twelve Months Ended March 31, 2020 | ||||
Consolidated Net Earnings (Losses) | $ | (869 | ) | |
Equity earnings and noncontrolling interests, net | (1,789 | ) | ||
Impairment of JUUL equity securities | 8,600 | |||
Loss on Cronos-related financial instruments | 1,154 | |||
Dividends from less than 50% owned affiliates | 395 | |||
Provision for income taxes | 2,227 | |||
Depreciation and amortization | 238 | |||
Asset impairment and exit costs | 119 | |||
Interest and other debt expense, net | 1,171 | |||
Consolidated EBITDA 1 | $ | 11,246 | ||
Short-term borrowings | $ | 3,000 | ||
Long-term debt | 26,971 | |||
Total Debt 2 | 29,971 | |||
Cash and cash equivalents3 | 5,616 | |||
Net Debt 4 | $ | 24,355 | ||
Ratios: | ||||
Total Debt / Consolidated EBITDA | 2.7 | |||
Net Debt / Consolidated EBITDA | 2.2 | |||
1 Reflects the term “Consolidated EBITDA” as defined in Altria’s senior unsecured revolving credit agreement. | ||||
2 Reflects total debt as presented on Altria’s Condensed Consolidated Balance Sheet at March 31, 2020. See Schedule 7. | ||||
3Reflects cash and cash equivalents as presented on Altria’s Condensed Consolidated Balance Sheet at March 31, 2020. See Schedule 7. | ||||
4 Reflects total debt, less cash and cash equivalents at March 31, 2020. |
Schedule 9 | |||||||||||||||||||||||||||
ALTRIA GROUP, INC. | |||||||||||||||||||||||||||
and Subsidiaries | |||||||||||||||||||||||||||
Supplemental Financial Data for Special Items | |||||||||||||||||||||||||||
For the Quarters Ended March 31, | |||||||||||||||||||||||||||
(dollars in millions) | |||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||
Cost of Sales | Marketing, administration and research costs | Asset impairment and exit costs | General corporate expenses | Corporate asset impairment and exit costs | Interest and other debt expense, net | Net periodic benefit income, excluding service cost | Earnings from equity investments | Loss on Cronos-related financial instruments | |||||||||||||||||||
2020 Special Items - (Income) Expense | |||||||||||||||||||||||||||
ABI-related special items | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 56 | $ | — | |||||||||
Implementation and acquisition-related costs | 392 | 2 | — | 1 | — | — | — | — | — | ||||||||||||||||||
Tobacco and health litigation items | — | 22 | — | — | — | 2 | — | — | — | ||||||||||||||||||
Cronos-related special items | — | — | — | — | — | — | — | (48 | ) | 137 | |||||||||||||||||
2019 Special Items - (Income) Expense | |||||||||||||||||||||||||||
ABI-related special items 1 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 163 | $ | — | |||||||||
Asset impairment, exit, implementation and acquisition-related costs | — | 9 | 39 | 2 | 1 | 96 | 12 | — | — | ||||||||||||||||||
Tobacco and health litigation items | — | 15 | — | — | — | 2 | — | — | — | ||||||||||||||||||
Cronos-related special items | — | — | — | — | — | — | — | — | 425 |
Schedule 10 | |||
ALTRIA GROUP, INC. | |||
and Subsidiaries | |||
Supplemental Retail Share Data | |||
(Unaudited) |
Oral Tobacco Products: Restated Retail Share (percent) | |||||||||||
For the Three Months Ended | |||||||||||
12/31/19 | 9/30/19 | 6/30/19 | 3/31/19 | ||||||||
Copenhagen | 33.2 | % | 33.8 | % | 34.1 | % | 34.6 | % | |||
Skoal | 14.6 | 15.0 | 15.4 | 15.1 | |||||||
Other | 3.6 | 3.5 | 3.5 | 3.5 | |||||||
Total oral tobacco products | 51.4 | % | 52.3 | % | 53.0 | % | 53.2 | % |
Oral Tobacco Products: Restated Retail Share (percent) | |||||||||||
For the Year Ended | For the Nine Months Ended | For the Six Months Ended | For the Year Ended | ||||||||
12/31/19 | 9/30/19 | 6/30/19 | 12/31/18 | ||||||||
Copenhagen | 33.9 | % | 34.2 | % | 34.4 | % | 34.4 | % | |||
Skoal | 15.0 | 15.2 | 15.2 | 15.9 | |||||||
Other | 3.6 | 3.4 | 3.5 | 3.4 | |||||||
Total oral tobacco products | 52.5 | % | 52.8 | % | 53.1 | % | 53.7 | % |
Schedule 11 | ||||||||||||||||||||
ALTRIA GROUP, INC. | ||||||||||||||||||||
and Subsidiaries | ||||||||||||||||||||
Recast of Adjusted Net Earnings Attributable to Altria and Adjusted Diluted EPS for ABI Special Items | ||||||||||||||||||||
For the Years Ended December 31, 2019, 2018 and 2017 | ||||||||||||||||||||
(dollars in millions, except per share data) | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
For the Years Ended December 31, | ||||||||||||||||||||
2019 | 2018 | 2017 | ||||||||||||||||||
Adjusted Net Earnings/EPS Prior to Recast | $ | 7,895 | $ | 4.22 | $ | 7,539 | $ | 3.99 | $ | 6,520 | $ | 3.39 | ||||||||
Adjustment to ABI-related special items | (23 | ) | (0.01 | ) | 55 | 0.03 | 20 | 0.01 | ||||||||||||
Adjusted Net Earnings/EPS after Recast | $ | 7,872 | $ | 4.21 | $ | 7,594 | $ | 4.02 | $ | 6,540 | $ | 3.40 | ||||||||
Growth Rate vs. Prior Year | 5.8% | 17.7% | 11.9% | |||||||||||||||||
Recast Growth Rate vs. Prior Year | 4.7% | 18.2% | 12.2% |
Earnings before Income Taxes | Provision for Income Taxes | Net Earnings | Net Earnings Attributable to Altria | Diluted EPS | |||||||||||
2017 ABI-related Special Items Prior to Recast | $ | 160 | $ | 55 | $ | 105 | $ | 105 | $ | 0.05 | |||||
Adjustment to ABI-related special items | 31 | 11 | 20 | 20 | 0.01 | ||||||||||
2017 ABI-related Special Items after Recast | $ | 191 | $ | 66 | $ | 125 | $ | 125 | $ | 0.06 | |||||
2018 ABI-related Special Items Prior to Recast | $ | (85 | ) | $ | (17 | ) | $ | (68 | ) | $ | (68 | ) | $ | (0.03 | ) |
Adjustment to ABI-related special items | 69 | 14 | 55 | 55 | 0.03 | ||||||||||
2018 ABI-related Special Items after Recast | $ | (16 | ) | $ | (3 | ) | $ | (13 | ) | $ | (13 | ) | $ | — | |
2019 ABI-related Special Items Prior to Recast | $ | (354 | ) | $ | (74 | ) | $ | (280 | ) | $ | (280 | ) | $ | (0.15 | ) |
Adjustment to ABI-related special items | (29 | ) | (6 | ) | (23 | ) | (23 | ) | (0.01 | ) | |||||
2019 ABI-related Special Items after Recast | $ | (383 | ) | $ | (80 | ) | $ | (303 | ) | $ | (303 | ) | $ | (0.16 | ) |
Schedule 12 | |||||||||||||||||||||||||||
ALTRIA GROUP, INC. | |||||||||||||||||||||||||||
and Subsidiaries | |||||||||||||||||||||||||||
Recast of Adjusted Net Earnings Attributable to Altria and Adjusted Diluted EPS for ABI Special Items | |||||||||||||||||||||||||||
By Quarter for the Year Ended December 31, 2019 | |||||||||||||||||||||||||||
(dollars in millions, except per share data) | |||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||
For the Three Months Ended | |||||||||||||||||||||||||||
December 31, 2019 | September 30, 2019 | June 30, 2019 | March 31, 2019 | ||||||||||||||||||||||||
Adjusted Net Earnings/EPS Prior to Recast | $ | 1,912 | $ | 1.02 | $ | 2,231 | $ | 1.19 | $ | 2,057 | $ | 1.10 | $ | 1,695 | $ | 0.90 | |||||||||||
Adjustment to ABI-related special items | (24 | ) | (0.01 | ) | (7 | ) | — | (31 | ) | (0.02 | ) | 39 | 0.02 | ||||||||||||||
Adjusted Net Earnings/EPS After Recast | $ | 1,888 | $ | 1.01 | $ | 2,224 | $ | 1.19 | $ | 2,026 | $ | 1.08 | $ | 1,734 | $ | 0.92 | |||||||||||
Growth Rate vs. Prior Year | 7.4% | 10.2% | 8.9% | (5.3)% | |||||||||||||||||||||||
Recast Growth Rate vs. Prior Year | 5.2% | 10.2% | 5.9% | (4.2)% | |||||||||||||||||||||||
For the YTD Period Ended | |||||||||||||||||||||||||||
December 31, 2019 | September 30, 2019 | June 30, 2019 | |||||||||||||||||||||||||
Adjusted Net Earnings/EPS Prior to Recast | $ | 7,895 | $ | 4.22 | $ | 5,983 | $ | 3.19 | $ | 3,752 | $ | 2.00 | |||||||||||||||
Adjustment to ABI-related special items | (23 | ) | (0.01 | ) | 1 | — | 8 | 0.01 | |||||||||||||||||||
Adjusted Net Earnings/EPS After Recast | $ | 7,872 | $ | 4.21 | $ | 5,984 | $ | 3.19 | $ | 3,760 | $ | 2.01 | |||||||||||||||
Growth Rate vs. Prior Year | 5.8% | 4.9% | 2.0% | ||||||||||||||||||||||||
Recast Growth Rate vs. Prior Year | 4.7% | 4.6% | 2.0% |
Earnings before Income Taxes | Provision for Income Taxes | Net Earnings | Net Earnings Attributable to Altria | Diluted EPS | |||||||||||
2019 Q1 ABI-related Special Items Prior to Recast | $ | 114 | $ | 24 | $ | 90 | $ | 90 | $ | 0.05 | |||||
Adjustment to ABI-related special items | 49 | 10 | 39 | 39 | 0.02 | ||||||||||
2019 Q1 ABI-related Special Items after Recast | $ | 163 | $ | 34 | $ | 129 | $ | 129 | $ | 0.07 | |||||
2019 Q2 ABI-related Special Items Prior to Recast | $ | (90 | ) | $ | (19 | ) | $ | (71 | ) | $ | (71 | ) | $ | (0.04 | ) |
Adjustment to ABI-related special items | (39 | ) | (8 | ) | (31 | ) | (31 | ) | (0.02 | ) | |||||
2019 Q2 ABI-related Special Items after Recast | $ | (129 | ) | $ | (27 | ) | $ | (102 | ) | $ | (102 | ) | $ | (0.06 | ) |
2019 Q3 ABI-related Special Items Prior to Recast | $ | (14 | ) | $ | (3 | ) | $ | (11 | ) | $ | (11 | ) | $ | (0.01 | ) |
Adjustment to ABI-related special items | (9 | ) | (2 | ) | (7 | ) | (7 | ) | — | ||||||
2019 Q3 ABI-related Special Items after Recast | $ | (23 | ) | $ | (5 | ) | $ | (18 | ) | $ | (18 | ) | $ | (0.01 | ) |
2019 Q4 ABI-related Special Items Prior to Recast | $ | (364 | ) | $ | (76 | ) | $ | (288 | ) | $ | (288 | ) | $ | (0.15 | ) |
Adjustment to ABI-related special items | (30 | ) | (6 | ) | (24 | ) | (24 | ) | (0.01 | ) | |||||
2019 Q4 ABI-related Special Items after Recast | $ | (394 | ) | $ | (82 | ) | $ | (312 | ) | $ | (312 | ) | $ | (0.16 | ) |
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