-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MGEFHxgW1Mlda5TbwreqG3iT82DY2IoljVnGBXTgtT61Ri1wYQINQCfs6yGlb8LP 7fB75Hs/W6iF7whYJqjZ+g== 0001157523-05-000614.txt : 20050126 0001157523-05-000614.hdr.sgml : 20050126 20050126111709 ACCESSION NUMBER: 0001157523-05-000614 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050126 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050126 DATE AS OF CHANGE: 20050126 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALTRIA GROUP INC CENTRAL INDEX KEY: 0000764180 STANDARD INDUSTRIAL CLASSIFICATION: FOOD & KINDRED PRODUCTS [2000] IRS NUMBER: 133260245 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08940 FILM NUMBER: 05548937 BUSINESS ADDRESS: STREET 1: 120 PARK AVE CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 9176634000 MAIL ADDRESS: STREET 1: 120 PARK AVE CITY: NEW YORK STATE: NY ZIP: 10017 FORMER COMPANY: FORMER CONFORMED NAME: PHILIP MORRIS COMPANIES INC DATE OF NAME CHANGE: 19920703 8-K 1 a4807637.txt ALTRIA GROUP 8-K ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): January 26, 2005 ALTRIA GROUP, INC. (Exact name of registrant as specified in its charter) Virginia 1-8940 13-3260245 (State or other jurisdiction (Commission (I.R.S. Employer of incorporation) File Number) Identification No.) 120 Park Avenue, New York, New York 10017-5592 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (917) 663-4000 (Former name or former address, if changed since last report.) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] 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)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ================================================================================ Item 2.02. Results of Operations and Financial Condition. On January 26, 2005, Altria Group, Inc. issued an earnings press release announcing its financial results for the quarter ended December 31, 2004 and the fiscal year ended December 31, 2004. A copy of the earnings press release is attached as Exhibit 99.1 to this Current Report on Form 8-K. In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information in this Current Report shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document. Item 9.01. Financial Statements and Exhibits. (c) Exhibits 99.1 Altria Group, Inc. Earnings Press Release dated January 26, 2005 (furnished pursuant to Item 2.02). SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. ALTRIA GROUP, INC. By: /s/ G. Penn Holsenbeck ----------------------------------------- Name: G. Penn Holsenbeck Title: Vice President, Associate General Counsel and Corporate Secretary DATE: January 26, 2005 EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 99.1 Altria Group, Inc. Earnings Press Release dated January 26, 2005. EX-99.1 2 a4807637ex991.txt EXHIBIT 99.1 Exhibit 99.1 CONTACT: Nicholas M. Rolli 917-663-3460 Timothy R. Kellogg 917-663-2759 ALTRIA GROUP, INC. REPORTS 2004 FOURTH-QUARTER AND FULL-YEAR RESULTS FOURTH-QUARTER 2004 ------------------- -- Diluted earnings per share from continuing operations down 5.9% to $0.96, including $0.12 in fourth-quarter 2004 charges as detailed on Schedule 7 -- Earnings from continuing operations down 4.2% to $2.0 billion FULL-YEAR 2004 -------------- -- Diluted earnings per share from continuing operations up 2.0% to $4.57, including $0.10 in full-year 2004 net charges as detailed on Schedule 8 -- Earnings from continuing operations up 3.3% to $9.4 billion 2005 OUTLOOK ------------ -- Full-year 2005 diluted earnings per share from continuing operations projected in a range of $4.95 to $5.05 based on current exchange rates; includes $0.12 per share in charges and excludes $0.03 per share for discontinued operations NEW YORK, January 26, 2005--Altria Group, Inc. (NYSE:MO) today announced fourth-quarter 2004 diluted earnings per share from continuing operations of $0.96, including $0.12 in fourth-quarter 2004 charges as detailed on Schedule 7, versus $1.02 in the same quarter a year ago. The decline resulted largely from $0.08 per share in asset impairment, exit and implementation costs, primarily related to the Kraft restructuring, and $0.04 per share from an increase in the provision for airline industry exposure at Philip Morris Capital Corporation (PMCC). For the full year 2004, diluted earnings per share from continuing operations were up 2.0% to $4.57, including $0.10 in full-year 2004 net charges as detailed on Schedule 8, versus $4.48 for the same period a year ago. "On balance, our business fundamentals were solid in 2004. I am particularly pleased that our momentum improved as the year unfolded, proof that we have begun to reap the benefits of our investments in marketing," said Louis C. Camilleri, chairman and chief executive officer of Altria Group, Inc. "Both our domestic and international tobacco businesses performed strongly, and Kraft executed well against its Sustainable Growth Plan." "We enter 2005 in a strong competitive, financial and strategic position," Mr. Camilleri said. "This is not to say that we do not continue to face challenges across all our businesses, but I believe that we are better armed to deal with them than we have been for several years." Altria Group, Inc. is projecting 2005 full-year diluted earnings per share from continuing operations (which excludes a $0.03 impact for Kraft's discontinued operations) in a range of $4.95 to $5.05, representing growth of 8.3% to 10.5%, compared with $4.57 in 2004. This projection assumes current foreign exchange rates, a base income tax rate of 34.7% and approximately $0.12 per share in charges associated with the continuing Kraft restructuring. However, it does not include any tax benefits that could arise from the repatriation of funds from its international businesses under provisions of the American Jobs Creation Act, nor does it include any benefit from prior year accrued contributions to the National Tobacco Growers Settlement Trust. The factors described in the Forward-Looking and Cautionary Statements section of this release represent continuing risks to this projection. A conference call with members of the investment community will be Webcast at 2:00 p.m. Eastern Time on January 26, 2005. Access is available at www.altria.com. ALTRIA GROUP, INC. Results for Altria Group, Inc. have been restated to reflect the impact of discontinued operations, following Kraft's agreement on November 15, 2004, to sell its sugar confectionery business. As such, net revenues and operating companies income for the sugar confectionery business are excluded from the company's results, while the net earnings impact is included as a single line item. All references in this news release are to continuing operations, unless otherwise noted. Schedules with restated results for the years 2003 and 2004 are attached. As described in "Note 14. Segment Reporting" of Altria Group, Inc.'s 2003 Annual Report, management reviews operating companies income, which is defined as operating income before corporate expenses and amortization of intangibles, to evaluate segment performance and allocate resources. Management believes it is appropriate to disclose this measure to help investors analyze business performance and trends. For a reconciliation of operating companies income to operating income, see the Condensed Statements of Earnings contained in this release. 2004 Full-Year Results Net revenues for the full year 2004 increased 10.2% versus 2003 to $89.6 billion, due primarily to favorable currency of $3.3 billion and to increases from Altria's tobacco and North American food businesses. Operating income decreased 3.7% to $15.2 billion, due primarily to charges for asset impairment, exit and implementation costs primarily related to the business restructuring component of Kraft's Sustainable Growth Plan, which more than offset increases at Philip Morris USA (PM USA) and Philip Morris International (PMI). Also affecting operating income comparisons were favorable currency of $638 million and the other items described in the attached reconciliation. Earnings from continuing operations increased 3.3% to $9.4 billion, including $210 million or $0.10 per share in full-year 2004 net charges, due primarily to better results at PM USA and PMI, higher equity income from SABMiller (which is included in minority interest in earnings from continuing operations, and equity earnings, net) and a lower effective tax rate of 32.4% in 2004 compared to 34.9% in 2003, due to the reversal of tax provisions that are no longer required and the favorable resolution of an outstanding tax item. During 2004, Altria Group, Inc. raised its dividend 7.4% to an annualized rate of $2.92 per common share, marking the 37th time in 35 years that the dividend has been increased. 2004 Fourth-Quarter Results Net revenues for the fourth quarter of 2004 increased 8.8% versus 2003 to $22.4 billion, due primarily to favorable currency of $679 million and to increases in domestic tobacco, international tobacco and North American food. Operating income decreased 4.4% to $3.4 billion, due primarily to the Kraft restructuring and an increase in the provision for airline industry exposure at Philip Morris Capital Corporation (PMCC). Also affecting operating income comparisons were favorable currency of $142 million and other items as described in the attached reconciliation. Earnings from continuing operations decreased 4.2% to $2.0 billion, including $249 million or $0.12 per share in fourth-quarter 2004 charges, due primarily to the Kraft restructuring and the increased provision for airline industry exposure at PMCC. DOMESTIC TOBACCO 2004 Full-Year Results Philip Morris USA Inc. (PM USA), Altria Group, Inc.'s domestic tobacco business, achieved robust retail share growth, driven by Marlboro, and a strong increase in operating companies income. In a declining cigarette market, its shipment volume of 187.1 billion units was down 0.1% from the previous year. Operating companies income increased 13.3%, to $4.4 billion, primarily driven by savings resulting from changes to the 2004 trade programs, including PM USA's returned goods policy and lower Wholesale Leaders program discounts, as well as the absence of a one-time inventory buy-down in 2003 and $202 million in charges related to the 2003 tobacco growers settlement, partially offset by increased costs under state settlement agreements. PM USA's total retail share improved significantly in 2004, driven by Marlboro, while retail share remained stable for Parliament, Virginia Slims and Basic, as shown in the following table: Philip Morris USA Annual Retail Share* -------------------------------------- 2004 2003 Change ----- ----- ------- Marlboro 39.5% 38.0% 1.5 pp Parliament 1.7% 1.7% 0.0 pp Virginia Slims 2.4% 2.4% 0.0 pp Basic 4.2% 4.2% 0.0 pp ----- ----- ------- Focus Brands 47.8% 46.3% 1.5 pp Other Philip Morris USA 2.0% 2.4% -0.4 pp ----- ----- ------- Total Philip Morris USA 49.8% 48.7% 1.1 pp * IRI/Capstone Total Retail Panel was developed to measure market share in retail stores selling cigarettes. It is not designed to capture Internet or direct mail sales. PM USA grew retail share in both the premium and discount segments, with its share of the premium segment increasing 0.9 share points to 62.1% and discount segment share increasing 0.4 share points to 16.1% in 2004. During the year, PM USA successfully introduced Marlboro Menthol 72mm, a premium-priced menthol cigarette and Virginia Slims Ultra Lights 120mm box, while Parliament Lights 100mm round corner box was expanded to national distribution. In January 2005, PM USA began shipping Marlboro Red and Lights 72mm in commemorative 50th Anniversary packs. During the first quarter, it also will begin test marketing Marlboro UltraSmooth in several test markets to evaluate consumer acceptance of its taste. 2004 Fourth-Quarter Results PM USA's retail share increased 0.8 share points to 49.9% in the fourth quarter of 2004, driven primarily by Marlboro. Total shipment volume increased 1.5% to 47.1 billion units in the fourth quarter, but was estimated to be essentially flat when adjusted for the timing of promotions and wholesaler inventory changes. Operating companies income increased 9.0% to $1.1 billion, driven primarily by higher volume, savings resulting from changes to 2004 trade programs and absence of charges related to the 2003 tobacco growers settlement, partially offset by increased costs under state settlement agreements. During the quarter, PM USA recorded charges related to its obligation under the recently enacted Fair and Equitable Tobacco Reform Act, but these charges had no material impact when compared to the prior-year period, as they were offset by the absence of 2004 National Tobacco Growers Settlement Trust costs. PM USA announced a reduction in the wholesale promotional allowance on its Focus on Four brands of $1.00 per carton, from $6.50 to $5.50, effective December 12, 2004. In addition, effective January 16, 2005, the price of its other brands was increased by $5.00 per thousand cigarettes or $1.00 per carton. PM USA's improved retail share in the quarter was driven by a 1.2 share point gain in Marlboro, while retail share was essentially stable for Parliament, Virginia Slims and Basic combined, as shown in the following table: Philip Morris USA Quarterly Retail Share* ----------------------------------------- Q4 2004 Q4 2003 Change ------- ------- ------- Marlboro 39.7% 38.5% 1.2 pp Parliament 1.7% 1.7% 0.0 pp Virginia Slims 2.3% 2.4% -0.1 pp Basic 4.3% 4.2% 0.1 pp ------- ------- ------- Focus Brands 48.0% 46.8% 1.2 pp Other Philip Morris USA 1.9% 2.3% -0.4 pp ------- ------- ------- Total Philip Morris USA 49.9% 49.1% 0.8 pp * See note in table above In line with the full-year trend, PM USA's fourth quarter retail share of the premium segment increased 0.6 share points to 62.1%, while its share of the discount segment increased 0.5 share points to 16.3%. INTERNATIONAL TOBACCO 2004 Full-Year Results Cigarette shipment volume for Philip Morris International Inc. (PMI), Altria Group, Inc.'s international tobacco business, increased 3.5% to 761.4 billion units, reflecting the impact of acquired volume in Greece, Serbia and the Philippines, and widespread growth around the world. Overall growth was impacted by lower PMI volume in France, Germany and Italy, reflecting significant declines in industry volume in those markets. Operating companies income for PMI rose 4.5% to $6.6 billion, due primarily to pricing, favorable currency of $540 million, the impact of acquisitions and higher volume, partially offset by higher overhead expenses and marketing costs, unfavorable mix, the initial $250 million charge and ongoing annual charges for the cooperation agreement with the E.C. PMI achieved widespread market share gains, including in its top income markets of Austria, Belgium, Egypt, France, Greece, Japan, Mexico, Netherlands, Poland, Russia, Saudi Arabia, Spain, Turkey and the Ukraine. Total Marlboro shipments declined 1.3% in 2004, as solid gains in Central Europe, Eastern Europe and Asia, including Japan, were more than offset by lower volume in Western Europe, mainly France and Germany. Marlboro share increased in many top income markets, including Argentina, Belgium, Japan, Mexico, Poland, Portugal, Russia, Spain, Turkey, the United Kingdom and the Ukraine. In Western Europe, cigarette volume declined 8.7%, due primarily to declines in France, Germany and Italy. PMI's cigarette market share for 2004 was 38.6%, slightly lower than the previous year. In France, the total cigarette market declined 21.1%. PMI's cigarette volume declined 19.5%, but market share grew by 0.7 share points to 39.9%, due to the success of Basic and the Philip Morris brand and the resilience of Marlboro. In the fourth quarter, PMI's French business regained both volume and share momentum, with volume advancing 5.9% and share up a robust 1.4 points to 40.3%, with Marlboro contributing 0.8 points to the share gain. In Germany, the combined consumption of cigarettes and other tobacco products declined 7.0% for the year, while total cigarette volume declined 15.5%, as consumers switched to low-priced tobacco portions, which grew from 5.4 billion units in 2003 to 13.5 billion units in 2004. PMI's cigarette market share was down 0.4 points to 36.8%. In addition, it recorded a 7.8% share of the tobacco portions segment since the April 2004 launch of Marlboro and Next tobacco portions. With increasing tobacco portions manufacturing capacity being installed, PMI's share of this segment grew to 10.3% in the fourth quarter and 13.2% in December. In addition, PMI successfully launched Marlboro Blend 29 in selected channels in October. PMI's German business announced a tax-driven price increase of euro 0.40 per pack effective December 1, 2004. The industry-wide price increase has resulted in a significant decline in the total cigarette market in December. PMI's volume declined 18.6% in the fourth quarter and market share declined 1.2 share points to 36.2%, reflecting the timing of PMI's shipments of new-priced stock versus its competitors. In Italy, PMI's annual volume was down 6.4% and market share declined 2.6 points to 51.5%, due mainly to losses in low-price Diana and, to a lesser extent, Marlboro. However, on a sequential basis, PMI's market share has been relatively stable since April 2004, and grew to 52.0% in the fourth quarter from 51% in the third quarter, reflecting the recovery of Marlboro, new product initiatives and significant investments in sales force expansion. On December 14, 2004, PMI announced a tax-driven price increase of euro 0.20 per pack for all of its brands. The industry-wide price increase led to a decline in total market volume in the fourth quarter, with PMI's volume declining 10.9%. Marlboro's share at 22.5% in the fourth quarter of 2004 was flat with the same quarter a year ago. During the quarter, Italy passed a minimum reference price law, similar to France, and implementation regulations are expected in the first quarter of 2005. In Central Europe, PMI's volume rose 15.2% in 2004, due mainly to Poland and Romania and the favorable impact of acquired volume in Greece and Serbia, partially offset by declines in Lithuania and Hungary. However, share improved to a record 32.6% in Hungary. In Poland, volume increased 5.0% and market share advanced 2.8 points to 38.5%, driven by gains in Marlboro, Bond Street and the July 2004 launch of Red & White. In Romania, volume rose 8.7%, mainly reflecting higher volume for Marlboro. In worldwide duty-free, volume rose 7.2% as a result of the global recovery in travel and a favorable comparison to 2003, which was depressed by the effects of SARS and the war in Iraq. In Eastern Europe, the Middle East and Africa, volume grew 9.6%, reflecting widespread gains in most markets, including Russia, Kazakhstan, Saudi Arabia, Turkey and the Ukraine. In Russia, volume was up 3.5% and market share rose 1.4 share points to a record 26.4%, driven by Marlboro, Parliament, L&M, Next and Chesterfield. In Turkey, volume rose 20.3% and market share was up 4.7 points to a record 37.0% on the continued strength of L&M and the renewed growth of Marlboro and Parliament. Strong volume and share gains were also achieved in the Ukraine, with volume up 26.7% and market share advancing 1.8 points to a record 31.0%, driven by Marlboro, Chesterfield, L&M, Bond Street, Next and the national launch of Optima. In Asia, volume was up 7.6% in 2004, due mainly to robust gains in Korea, Malaysia, the Philippines and Thailand. In Korea, PMI's volume was up 23.1% and market share rose 0.8 points to 7.4%, driven by new products including Marlboro Ultra Lights, Lark One, Elan Super Slim Lights and L&M. In Japan, PMI's volume was up slightly, while the total market declined 2.5%. PMI's market share rose 0.4 points to a record 24.4% in Japan, driven by the strength of Marlboro and new products Virginia Slims Rose and Lark Pacific Green. In Latin America, PMI volume was down 2.0% in 2004. Lower PMI shipments in Argentina of 5.7%, reflecting a total industry decline and consumer down trading, were partially offset by gains in Mexico. PMI achieved a record market share of 60.2% in Mexico in 2004, up 0.8 points, driven mainly by Marlboro, which benefited from two new line extensions, Marlboro Milds and Marlboro Medium. 2004 Fourth-Quarter Results Cigarette shipment volume for PMI increased 2.6% to 172.7 billion units in the fourth quarter of 2004, reflecting increases in many markets, partially offset by lower volume in Germany and Italy. Excluding those two markets, PMI's volume was up 5.3% in the quarter. Operating companies income rose 11.7% to $1.4 billion in the fourth quarter, due primarily to favorable currency of $115 million and higher volume and pricing, partially offset by increased marketing costs and ongoing costs related to the cooperation agreement with the E.C. PMI achieved widespread market share gains in the fourth quarter, including increases in the top income markets of Argentina, Australia, Austria, Egypt, France, Greece, Japan, Poland, Russia, Spain, Turkey, the Ukraine and the United Kingdom. Marlboro volume declined 2.3% in the fourth quarter, due primarily to a decline in Germany. However, its share improved in many of its top income markets. In Western Europe, cigarette volume declined 9.4% in the fourth quarter, due primarily to declines in Germany and Italy. PMI's cigarette market share for the fourth quarter was down 0.1 point to 38.5%. In Central Europe, PMI's volume rose 5.7% in the fourth quarter, due mainly to Poland and acquisition volume in Greece. In worldwide duty-free, volume declined 1.9%. In Eastern Europe, the Middle East and Africa, volume increased 10.9% in the fourth quarter, reflecting widespread gains in most markets, including Russia, Saudi Arabia, Turkey and the Ukraine. In Asia, volume was up 14.2% in the fourth quarter, due to strong gains in Japan, the Philippines and Thailand. In Japan, PMI's volume was up 14.0% due to timing of shipments. PMI's market share in Japan rose 0.4 points to 24.5%, driven by the strength of Marlboro. In Latin America, PMI volume was down 6.8% in the fourth quarter, reflecting lower shipments in Argentina, Brazil and Mexico. FOOD Yesterday, Kraft Foods Inc. (Kraft) reported 2004 full-year and fourth-quarter results. For the full year 2004, Kraft's net revenues were up 5.5% to $32.2 billion, driven by new products, the impact of increased marketing spending, favorable currency of $838 million and commodity-driven pricing. Kraft's volume was up 2.8%, as ongoing volume growth of 3.0% (including 2.1 percentage points of growth from acquisitions) was partially offset by the impact of divestitures. Operating income declined 21.3% to $4.6 billion, driven by restructuring and impairment charges, higher commodity costs and increased marketing spending, partially offset by volume growth, pricing, cost reduction initiatives and favorable currency of $98 million. For the fourth quarter, Kraft's net revenues were up 7.0% to $8.8 billion, with increased volume, positive mix, pricing, acquisitions and favorable currency of $213 million all contributing to growth. Kraft's volume was up 3.4%, as ongoing volume growth of 3.6% (including 2.2 percentage points of growth from acquisitions) was partially offset by the impact of divestitures. Operating income declined 18.0% to $1.2 billion, driven by the same factors described above for the full year, including favorable currency of $27 million. Kraft reached agreements to divest its sugar confectionery, U.K. desserts and U.S. yogurt businesses during the fourth quarter. All of the transactions are expected to be completed by mid-2005. In accordance with relevant accounting rules, the sugar confectionery business has been reflected as discontinued operations. NORTH AMERICAN FOOD 2004 Full-Year Results For the full year 2004, Kraft North America Commercial (KNAC) net revenues grew 5.4% to $22.1 billion, driven by increased volume, positive mix, net pricing, the Veryfine beverages acquisition and favorable currency of $164 million. Volume was up 4.3% (including 2.6 percentage points of growth from acquisitions) with growth across much of the portfolio including cheese, convenient meals and snacks. Operating companies income declined 16.9% to $3.9 billion, due to restructuring and impairment charges of $431 million, higher commodity costs, increased marketing spending and higher post-employment benefit costs, partially offset by the contributions from revenue growth and productivity. 2004 Fourth-Quarter Results For the fourth quarter of 2004, KNAC net revenues increased a strong 8.8% to $5.8 billion, with higher volume from new product launches and increased marketing spending, positive mix and pricing in certain businesses, including cheese and foodservice, and favorable currency of $39 million. Volume was up 6.2% (including 3.1 percentage points of growth from acquisitions) with growth across much of the portfolio including cheese, convenient meals and snacks. Operating companies income declined 8.9% to $947 million, due to restructuring and impairment charges of $129 million, higher commodity costs, increased marketing spending and higher post-employment benefit costs, partially offset by the contributions from revenue growth and productivity. INTERNATIONAL FOOD 2004 Full-Year Results For the full year 2004, net revenues for Kraft International Commercial (KIC) grew 5.7% to $10.1 billion, driven by favorable currency of $674 million and positive mix, partially offset by the impact of divestitures, lower volume and net price reductions. Volume was down 1.1%, due primarily to the impact of divestitures. Operating companies income decreased 33.0% to $933 million, as restructuring and impairment charges of $269 million in 2004, a gain on the sale of businesses in 2003, higher marketing spending and increased commodity costs were partially offset by favorable currency of $69 million. 2004 Fourth-Quarter Results For the fourth quarter of 2004, net revenues for KIC increased 3.8% to $3.0 billion, driven by favorable currency of $174 million and positive mix, partially offset by lower volume and the impact of divestitures. Volume was down 2.8%, due to declines in Europe, Middle East & Africa and Latin America & Asia Pacific, and the impact of divestitures. Operating companies income decreased 35.8% to $300 million, as restructuring and impairment charges of $90 million, increased commodity costs and higher marketing spending were partially offset by favorable currency of $19 million. FINANCIAL SERVICES 2004 Full-Year and Fourth-Quarter Results Philip Morris Capital Corporation (PMCC) reported operating companies income of $144 million for the full year 2004 and an operating companies loss of $106 million for the fourth quarter of 2004, significantly below results for comparable periods in 2003, reflecting an increase of $140 million in the provision for credit exposure related to the troubled airline industry in the fourth quarter of 2004 and lower lease portfolio revenues. Altria Group, Inc. Profile Altria Group, Inc. is the parent company of Kraft Foods Inc., with approximately 85% ownership of outstanding Kraft common shares, Philip Morris International Inc., Philip Morris USA Inc. and Philip Morris Capital Corporation. In addition, Altria Group, Inc. has a 33.9% economic interest in SABMiller plc. The brand portfolio of Altria Group, Inc.'s consumer packaged goods companies includes such well-known names as Kraft, Jacobs, L&M, Marlboro, Maxwell House, Nabisco, Oreo, Oscar Mayer, Parliament, Philadelphia, Post and Virginia Slims. Altria Group, Inc. recorded 2004 net revenues of $89.6 billion. Trademarks and service marks mentioned in this release are the registered property of, or licensed by, the subsidiaries of Altria Group, Inc. A complete copy of Altria Group, Inc.'s audited 2004 financial statements will be available through Altria Group, Inc.'s Web site after they are filed with the Securities and Exchange Commission on or about February 2, 2005. If you do not have Internet access but would like to receive a copy of the 2004 audited financial statements for Altria Group, Inc., please call toll free (800) 367-5415 in the U.S. and Canada to request a copy. Forward-Looking and Cautionary Statements This press release contains projections of future results and other forward-looking statements that involve a number of risks and uncertainties and are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. The following important factors could cause actual results and outcomes to differ materially from those contained in such forward-looking statements. Altria Group, Inc.'s consumer products subsidiaries are subject to changing prices for raw materials; intense price competition; changes in consumer preferences and demand for their products; fluctuations in levels of customer inventories; the effects of foreign economies and local economic and market conditions; and unfavorable currency movements. Their results are dependent upon their continued ability to promote brand equity successfully; to anticipate and respond to new consumer trends; to develop new products and markets and to broaden brand portfolios in order to compete effectively with lower-priced products; to improve productivity; and to respond effectively to changing prices for their raw materials. Altria Group, Inc.'s tobacco subsidiaries (Philip Morris USA and Philip Morris International) continue to be subject to litigation, including risks associated with adverse jury and judicial determinations, courts reaching conclusions at variance with the company's understanding of applicable law, bonding requirements and the absence of adequate appellate remedies to get timely relief from any of the foregoing; price disparities and changes in price disparities between premium and lowest-price brands; legislation, including actual and potential excise tax increases; increasing marketing and regulatory restrictions; the effects of price increases related to excise tax increases and concluded tobacco litigation settlements on consumption rates and consumer preferences within price segments; health concerns relating to the use of tobacco products and exposure to environmental tobacco smoke; governmental regulation; privately imposed smoking restrictions; and governmental and grand jury investigations. Altria Group, Inc.'s consumer products subsidiaries are subject to other risks detailed from time to time in its publicly filed documents, including its Annual Report on Form 10-K for the period ended December 31, 2003 and its Quarterly Report on Form 10-Q for the period ended September 30, 2004. Altria Group, Inc. cautions that the foregoing list of important factors is not complete and does not undertake to update any forward-looking statements that it may make. ALTRIA GROUP, INC. Schedule 1 and Subsidiaries Condensed Statements of Earnings For the Quarters Ended December 31,(*) (in millions, except per share data) 2004 2003 % Change ------------------------------ Net revenues $ 22,380 $ 20,568 8.8 % Cost of sales 9,030 8,338 8.3 % Excise taxes on products (**) 6,016 5,260 14.4 % --------------------- Gross profit 7,334 6,970 5.2 % Marketing, administration and research costs 3,394 3,086 Domestic tobacco headquarters relocation charges 6 33 Domestic tobacco legal settlement - 20 Asset impairment and exit costs 159 13 Losses (gains) on sales of businesses (5) (8) Integration costs - (13) Provision for airline industry exposure 140 - --------------------- Operating companies income 3,640 3,839 (5.2)% Amortization of intangibles 5 2 General corporate expenses 158 162 Asset impairment and exit costs 29 67 --------------------- Operating income 3,448 3,608 (4.4)% Interest and other debt expense, net 291 303 --------------------- Earnings from continuing operations before income taxes and minority interest 3,157 3,305 (4.5)% Provision for income taxes 1,121 1,147 (2.3)% --------------------- Earnings from continuing operations before minority interest 2,036 2,158 (5.7)% Minority interest in earnings from continuing operations, and equity earnings, net 46 81 --------------------- Earnings from continuing operations $ 1,990 $ 2,077 (4.2)% --------------------- (Loss) earnings from discontinued operations, net of income taxes and minority interest(****) $ (43) $ 14 --------------------- Net earnings $ 1,947 $ 2,091 (6.9)% ===================== Per share data(***): Basic earnings per share from continuing operations $ 0.97 $ 1.02 (4.9)% --------------------- Basic earnings per share from discontinued operations $ (0.02) $ 0.01 --------------------- Basic earnings per share $ 0.95 $ 1.03 (7.8)% ===================== Diluted earnings per share from continuing operations $ 0.96 $ 1.02 (5.9)% --------------------- Diluted earnings per share from discontinued operations $ (0.02) $ - --------------------- Diluted earnings per share $ 0.94 $ 1.02 (7.8)% ===================== Weighted average number of shares outstanding - - Basic 2,052 2,030 1.1 % - - Diluted 2,068 2,046 1.1 % (*) Due to a change for Discontinued Operations, prior period results have been restated. (**) The detail of excise taxes on products sold is as follows: 2004 2003 --------------------- Domestic tobacco $ 930 $ 917 International tobacco 5,086 4,343 --------------------- Total excise taxes $ 6,016 $ 5,260 ===================== (***) Basic and diluted earnings per share are computed for each of the periods presented. Accordingly, the sum of the quarterly earnings per share amounts may not agree to the year-to-date amounts. (****) Discontinued operations 2004 includes $(59) from impairment loss, and $16 of earnings, net of minority interest impact. In 2003 income from discontinued operations was $14 of earnings, net of minority interest impact. ALTRIA GROUP, INC. Schedule 2 and Subsidiaries Selected Financial Data by Business Segment For the Quarters Ended December 31,(*) (in millions) North Domestic International American International tobacco tobacco food food -------------------------------------------------- 2004 Net Revenues $ 4,420 $ 9,113 $ 5,801 $ 2,983 2003 Net Revenues $ 4,246 $ 8,010 $ 5,333 $ 2,874 % Change 4.1% 13.8% 8.8% 3.8% Reconciliation: - --------------- 2003 Net Revenues $ 4,246 $ 8,010 $ 5,333 $ 2,874 Divested businesses - 2004 - - - - Divested businesses - 2003 - - - (34) Implementation - 2004 - - (2) - Currency - 466 39 174 Operations 174 637 431 (31) -------------------------------------------------- 2004 Net Revenues $ 4,420 $ 9,113 $ 5,801 $ 2,983 ================================================== Financial services Total ----------------------- 2004 Net Revenues $ 63 $ 22,380 2003 Net Revenues $ 105 20,568 % Change (40.0)% 8.8% Reconciliation: - --------------- 2003 Net Revenues $ 105 $ 20,568 Divested businesses - 2004 - - Divested businesses - 2003 - (34) Implementation - 2004 - (2) Currency - 679 Operations (42) 1,169 ----------------------- 2004 Net Revenues $ 63 $ 22,380 ======================= Note: The detail of excise taxes on products sold is as follows: 2004 2003 ----------------------- Domestic tobacco $ 930 $ 917 International tobacco 5,086 4,343 ----------------------- Total excise taxes $ 6,016 $ 5,260 ======================= Currency increased international tobacco excise taxes by $282 million. (*) Due to a change for Discontinued Operations, prior period results have been restated. ALTRIA GROUP, INC. Schedule 3 and Subsidiaries Selected Financial Data by Business Segment For the Quarters Ended December 31,(*) (in millions) North Domestic International American International tobacco tobacco food food --------------------------------------------------- 2004 Operating Companies Income $ 1,076 $ 1,423 $ 947 $ 300 2003 Operating Companies Income $ 987 $ 1,274 $ 1,039 $ 467 % Change 9.0% 11.7% (8.9)% (35.8)% Reconciliation: - --------------- 2003 Operating Companies Income $ 987 $ 1,274 $ 1,039 $ 467 Divested businesses - 2003 - - - (2) Domestic tobacco headquarters relocation charges - 2003 33 - - - Domestic tobacco legal settlement - 2003 20 - - - Asset impairment and exit costs - 2003 13 - - - Gains on sales of businesses - 2003 - - - (8) Integration costs - 2003 - - (13) - --------------------------------------------------- 66 - (13) (10) --------------------------------------------------- Divested businesses - 2004 - - - - Domestic tobacco headquarters relocation charges - 2004 (6) - - - Asset impairment and exit costs - 2004 - (20) (102) (37) Gains on sales of businesses - 2004 - - - 5 Investment impairment - 2004 - - - (47) Implementation costs - 2004 - - (27) (6) Provision for airline industry exposure - 2004 - - - - --------------------------------------------------- (6) (20) (129) (85) --------------------------------------------------- Currency - 115 8 19 Operations 29 54 42 (91) --------------------------------------------------- 2004 Operating Companies Income $ 1,076 $ 1,423 $ 947 $ 300 =================================================== Financial services Total ----------------------- 2004 Operating Companies Income $ (106) $ 3,640 2003 Operating Companies Income $ 72 3,839 % Change (100.0+)% (5.2)% Reconciliation: - --------------- 2003 Operating Companies Income $ 72 $ 3,839 Divested businesses - 2003 - (2) Domestic tobacco headquarters relocation charges - 2003 - 33 Domestic tobacco legal settlement - 2003 - 20 Asset impairment and exit costs - 2003 - 13 Gains on sales of businesses - 2003 (8) Integration costs - 2003 - (13) ----------------------- - 43 ----------------------- Divested businesses - 2004 - - Domestic tobacco headquarters relocation charges - 2004 - (6) Asset impairment and exit costs - 2004 - (159) Gains on sales of businesses - 2004 - 5 Investment impairment - 2004 - (47) Implementation costs - 2004 - (33) Provision for airline industry exposure - 2004 (140) (140) ----------------------- (140) (380) ----------------------- Currency - 142 Operations (38) (4) ----------------------- 2004 Operating Companies Income $ (106) $ 3,640 ======================= (*) Due to a change for Discontinued Operations, prior period results have been restated. ALTRIA GROUP, INC. Schedule 4 and Subsidiaries Condensed Statements of Earnings For the Twelve Months Ended December 31,(*) (in millions, except per share data) 2004 2003 % Change ------------------------------- Net revenues $ 89,610 $ 81,320 10.2 % Cost of sales 33,959 31,573 7.6 % Excise taxes on products (**) 25,647 21,128 21.4 % --------------------- Gross profit 30,004 28,619 4.8 % Marketing, administration and research costs 13,014 11,834 Domestic tobacco headquarters relocation charges 31 69 Domestic tobacco legal settlement - 202 International tobacco E.C. agreement 250 - Asset impairment and exit costs 648 19 Losses (gains) on sales of businesses 3 (31) Integration costs - (13) Provision for airline industry exposure 140 - --------------------- Operating companies income 15,918 16,539 (3.8)% Amortization of intangibles 17 9 General corporate expenses 651 704 Asset impairment and exit costs 70 67 --------------------- Operating income 15,180 15,759 (3.7)% Interest and other debt expense, net 1,176 1,150 --------------------- Earnings from continuing operations before income taxes and minority interest 14,004 14,609 (4.1)% Provision for income taxes 4,540 5,097 (10.9)% --------------------- Earnings from continuing operations before minority interest 9,464 9,512 (0.5)% Minority interest in earnings from continuing operations, and equity earnings, net 44 391 --------------------- Earnings from continuing operations $ 9,420 $ 9,121 3.3 % --------------------- (Loss) earnings from discontinued operations, net of income taxes and minority interest(****) $ (4) $ 83 --------------------- Net earnings $ 9,416 $ 9,204 2.3 % ===================== Per share data (***): Basic earnings per share from continuing operations $ 4.60 $ 4.50 2.2 % --------------------- Basic earnings per share from discontinued operations $ - $ 0.04 --------------------- Basic earnings per share $ 4.60 $ 4.54 1.3 % ===================== Diluted earnings per share from continuing operations $ 4.57 $ 4.48 2.0 % --------------------- Diluted earnings per share from discontinued operations $ (0.01) $ 0.04 --------------------- Diluted earnings per share $ 4.56 $ 4.52 0.9 % ===================== Weighted average number of shares outstanding - - Basic 2,047 2,028 0.9 % - - Diluted 2,063 2,038 1.2 % (*) Due to a change for Discontinued Operations, prior period results have been restated. (**) The detail of excise taxes on products sold is as follows: 2004 2003 --------------------- Domestic tobacco $ 3,694 $ 3,698 International tobacco 21,953 17,430 --------------------- Total excise taxes $ 25,647 $ 21,128 ===================== (***) Basic and diluted earnings per share are computed for each of the periods presented. Accordingly, the sum of the quarterly earnings per share amounts may not agree to the year-to-date amounts. (****) Discontinued operations 2004 includes $(59) from impairment loss, and $55 of earnings, net of minority interest impact. In 2003 income from discontinued operations was $83 of earnings, net of minority interest impact. ALTRIA GROUP, INC. Schedule 5 and Subsidiaries Selected Financial Data by Business Segment For the Twelve Months Ended December 31,(*) (in millions) North Domestic International American International tobacco tobacco food food --------------------------------------------------- 2004 Net Revenues $ 17,511 $ 39,536 $ 22,060 $ 10,108 2003 Net Revenues 17,001 33,389 20,937 9,561 % Change 3.0% 18.4% 5.4% 5.7% Reconciliation: - --------------- 2003 Net Revenues $ 17,001 $ 33,389 $ 20,937 $ 9,561 Divested businesses - 2004 - - - 19 Divested businesses - 2003 - - - (145) Implementation - 2004 - - (7) - Currency - 2,499 164 674 Operations 510 3,648 966 (1) --------------------------------------------------- 2004 Net Revenues $ 17,511 $ 39,536 $ 22,060 $ 10,108 =================================================== Financial services Total ------------------------ 2004 Net Revenues $ 395 $ 89,610 2003 Net Revenues 432 81,320 % Change (8.6)% 10.2% Reconciliation: - --------------- 2003 Net Revenues $ 432 $ 81,320 Divested businesses - 2004 - 19 Divested businesses - 2003 - (145) Implementation - 2004 - (7) Currency - 3,337 Operations (37) 5,086 ------------------------ 2004 Net Revenues $ 395 $ 89,610 ======================== Note: The detail of excise taxes on products sold is as follows: 2004 2003 ------------------------ Domestic tobacco $ 3,694 $ 3,698 International tobacco 21,953 17,430 ------------------------ Total excise taxes $ 25,647 $ 21,128 ======================== Currency increased international tobacco excise taxes by $1,461 million. (*) Due to a change for Discontinued Operations, prior period results have been restated. ALTRIA GROUP, INC. Schedule 6 and Subsidiaries Selected Financial Data by Business Segment For the Twelve Months Ended December 31,(*) (in millions) North Domestic International American International tobacco tobacco food food --------------------------------------------------- 2004 Operating Companies Income $ 4,405 $ 6,566 $ 3,870 $ 933 2003 Operating Companies Income 3,889 6,286 4,658 1,393 % Change 13.3% 4.5% (16.9)% (33.0)% Reconciliation: - --------------- 2003 Operating Companies Income $ 3,889 $ 6,286 $ 4,658 $ 1,393 Divested businesses - 2003 - - - (19) Domestic tobacco headquarters relocation charges - 2003 69 - - - Domestic tobacco legal settlement - 2003 202 - - - Asset impairment and exit costs - 2003 13 - - 6 Gains on sales of businesses - 2003 - - - (31) Integration costs - 2003 - - (13) - --------------------------------------------------- 284 - (13) (44) --------------------------------------------------- Divested businesses - 2004 - - - 1 Domestic tobacco headquarters relocation charges - 2004 (31) - - - International tobacco E.C. agreement - 2004 - (250) - - Asset impairment and exit costs - 2004 (1) (44) (391) (212) Loss on sales of businesses - 2004 - - - (3) Investment impairment - 2004 - - - (47) Implementation costs - 2004 - - (40) (10) Provision for airline industry exposure - 2004 - - - - --------------------------------------------------- (32) (294) (431) (271) --------------------------------------------------- Currency - 540 29 69 Operations 264 34 (373) (214) --------------------------------------------------- 2004 Operating Companies Income $ 4,405 $ 6,566 $ 3,870 $ 933 =================================================== Financial services Total ------------------------ 2004 Operating Companies Income $ 144 $ 15,918 2003 Operating Companies Income 313 16,539 % Change (54.0)% (3.8)% Reconciliation: - --------------- 2003 Operating Companies Income $ 313 $ 16,539 Divested businesses - 2003 - (19) Domestic tobacco headquarters relocation charges - 2003 - 69 Domestic tobacco legal settlement - 2003 - 202 Asset impairment and exit costs - 2003 - 19 Gains on sales of businesses - 2003 - (31) Integration costs - 2003 - (13) ------------------------ - 227 ------------------------ Divested businesses - 2004 - 1 Domestic tobacco headquarters relocation charges - 2004 - (31) International tobacco E.C. agreement - 2004 - (250) Asset impairment and exit costs - 2004 - (648) Loss on sales of businesses - 2004 - (3) Investment impairment - 2004 - (47) Implementation costs - 2004 - (50) Provision for airline industry exposure - 2004 (140) (140) ------------------------ (140) (1,168) ------------------------ Currency - 638 Operations (29) (318) ------------------------ 2004 Operating Companies Income $ 144 $ 15,918 ======================== (*) Due to a change for Discontinued Operations, prior period results have been restated. ALTRIA GROUP, INC. Schedule 7 and Subsidiaries Net Earnings and Diluted Earnings Per Share For the Quarters Ended December 31,(*) ($ in millions, except per share data) Net Diluted Earnings E.P.S. (**) ---------- ---------- 2004 Continuing $ 1,990 $ 0.96 2003 Continuing $ 2,077 $ 1.02 % Change (4.2)% (5.9)% Reconciliation: - --------------- 2003 Continuing $ 2,077 $ 1.02 2003 Domestic tobacco headquarters relocation charges 22 0.01 2003 Domestic tobacco legal settlement 14 - 2003 Asset impairment, and exit costs, net of minority interest impact 52 0.02 2003 Gains on sales of businesses, net of minority interest impact (4) - 2003 Integration costs, net of minority interest impact (7) - ---------- ---------- 77 0.03 ---------- ---------- 2004 Domestic tobacco headquarters relocation charges (4) - 2004 Asset impairment, exit and implementation costs, net of minority interest impact (122) (0.06) 2004 Gain on sales of business, net of minority interest impact 3 - 2004 Corporate asset impairment and exit costs (19) (0.01) 2004 Investment impairment, net of minority interest impact (26) (0.01) 2004 Provision for airline industry exposure (85) (0.04) 2004 Special one-time tax items, net of minority interest impact 4 - ---------- ---------- (249) (0.12) ---------- ---------- Currency 93 0.05 Change in shares - (0.01) Change in tax rate (26) (0.01) Operations 18 - ---------- ---------- 2004 Continuing $ 1,990 $ 0.96 ---------- ---------- 2004 Discontinued $ (43) $ (0.02) ---------- ---------- 2004 Net Earnings $ 1,947 $ 0.94 ========== ========== (*) Due to a change for Discontinued Operations, prior period results have been restated. (**) Basic and diluted earnings per share are computed for each of the periods presented. Accordingly, the sum of the quarterly earnings per share amounts may not agree to the year-to-date amounts. ALTRIA GROUP, INC. Schedule 8 and Subsidiaries Net Earnings and Diluted Earnings Per Share For the Twelve Months Ended December 31,(*) ($ in millions, except per share data) Net Diluted Earnings E.P.S. (**) ---------- ---------- 2004 Continuing $ 9,420 $ 4.57 2003 Continuing $ 9,121 $ 4.48 % Change 3.3 % 2.0 % Reconciliation: - --------------- 2003 Continuing $ 9,121 $ 4.48 2003 Domestic tobacco headquarters relocation charges 45 0.02 2003 Domestic tobacco legal settlement 132 0.06 2003 Asset impairment and exit costs, net of minority interest impact 55 0.03 2003 Gains on sales of businesses, net of minority interest impact (17) (0.01) 2003 Integration costs, net of minority interest impact (7) - ---------- ---------- 208 0.10 ---------- ---------- 2004 Domestic tobacco headquarters relocation charges (20) (0.01) 2004 International tobacco E.C. agreement (161) (0.08) 2004 Asset impairment, exit and implementation costs, net of minority interest impact (401) (0.19) 2004 Loss on sales of businesses, net of minority interest impact (2) - 2004 Corporate asset impairment and exit costs (45) (0.02) 2004 Investment impairment, net of minority interest impact (26) (0.01) 2004 Provision for airline industry exposure (85) (0.04) 2004 Special one-time tax items, net of minority interest impact 419 0.20 2004 One-time gains from investments at SABMiller 111 0.05 ---------- ---------- (210) (0.10) ---------- ---------- Currency 415 0.20 Change in shares - (0.06) Change in tax rate (89) (0.04) Operations*** (25) (0.01) ---------- ---------- 2004 Continuing $ 9,420 $ 4.57 ---------- ---------- 2004 Discontinued $ (4) $ (0.01) ---------- ---------- 2004 Net Earnings $ 9,416 $ 4.56 ========= ========== (*) Due to a change for Discontinued Operations, prior period results have been restated. (**) Basic and diluted earnings per share are computed for each of the periods presented. Accordingly, the sum of the quarterly earnings per share amounts may not agree to the year-to-date amounts. (***) includes $0.09 per share related to lower minority interest in earnings and other, net, reflecting lower net earnings at Kraft and higher equity earnings for SABMiller. ALTRIA GROUP, INC. Schedule 9 and Subsidiaries Condensed Statements of Earnings Restated for Discontinued Operations For the Quarters Ended March 31, June 30, September 30, December 31, 2004 (in millions, except per share data) Q1 2004 Q2 2004 Q3 2004 Q4 2004 Adjusted Adjusted Adjusted Adjusted --------------------------------------- Net revenues $ 21,721 $ 22,894 $ 22,615 $ 22,380 Cost of sales 8,012 8,570 8,347 9,030 Excise taxes on products 6,317 6,563 6,751 6,016 --------------------------------------- Gross profit 7,392 7,761 7,517 7,334 Marketing, administration and research costs 3,194 3,289 3,137 3,394 Domestic tobacco headquarters relocation charges 10 10 5 6 International tobacco E.C. agreement - 250 - - Asset impairment and exit costs 292 152 45 159 Losses (gains) on sales of businesses - - 8 (5) Provision for airline industry exposure - - - 140 --------------------------------------- Operating companies income 3,896 4,060 4,322 3,640 Amortization of intangibles 4 5 3 5 General corporate expenses 164 164 165 158 Asset impairment and exit costs 16 8 17 29 --------------------------------------- Operating income 3,712 3,883 4,137 3,448 Interest and other debt expense, net 300 297 288 291 --------------------------------------- Earnings from continuing operations before income taxes and minority interest 3,412 3,586 3,849 3,157 Provision for income taxes 1,180 952 1,287 1,121 --------------------------------------- Earnings from continuing operations before minority interest 2,232 2,634 2,562 2,036 Minority interest in earnings from continuing operations, and equity earnings, net 47 26 (75) 46 --------------------------------------- Earnings from continuing operations $ 2,185 $ 2,608 $ 2,637 $ 1,990 --------------------------------------- (Loss) earnings from discontinued operations, net of income taxes and minority interest $ 9 $ 19 $ 11 $ (43) --------------------------------------- Net earnings $ 2,194 $ 2,627 $ 2,648 $ 1,947 ======================================= Per share data (*): Basic earnings per share from continuing operations $ 1.07 $ 1.27 $ 1.29 $ 0.97 --------------------------------------- Basic earnings per share from discontinued operations $ - $ 0.01 $ - $ (0.02) --------------------------------------- Basic earnings per share $ 1.07 $ 1.28 $ 1.29 $ 0.95 ======================================= Diluted earnings per share from continuing operations $ 1.06 $ 1.26 $ 1.28 $ 0.96 --------------------------------------- Diluted earnings per share from discontinued operations $ 0.01 $ 0.01 $ 0.01 $ (0.02) --------------------------------------- Diluted earnings per share $ 1.07 $ 1.27 $ 1.29 $ 0.94 ======================================= Weighted average number of shares outstanding - - Basic 2,041 2,047 2,048 2,052 - - Diluted 2,059 2,062 2,060 2,068 2004 YTD Adjusted -------- Net revenues $ 89,610 Cost of sales 33,959 Excise taxes on products 25,647 -------- Gross profit 30,004 Marketing, administration and research costs 13,014 Domestic tobacco headquarters relocation charges 31 International tobacco E.C. agreement 250 Asset impairment and exit costs 648 Losses (gains) on sales of businesses 3 Provision for airline industry exposure 140 -------- Operating companies income 15,918 Amortization of intangibles 17 General corporate expenses 651 Asset impairment and exit costs 70 -------- Operating income 15,180 Interest and other debt expense, net 1,176 -------- Earnings from continuing operations before income taxes and minority interest 14,004 Provision for income taxes 4,540 -------- Earnings from continuing operations before minority interest 9,464 Minority interest in earnings from continuing operations, and equity earnings, net 44 -------- Earnings from continuing operations $ 9,420 -------- (Loss) earnings from discontinued operations, net of income taxes and minority interest $ (4) -------- Net earnings $ 9,416 ======== Per share data (*): Basic earnings per share from continuing operations $ 4.60 -------- Basic earnings per share from discontinued operations $ - -------- Basic earnings per share $ 4.60 ======== Diluted earnings per share from continuing operations $ 4.57 -------- Diluted earnings per share from discontinued operations $ (0.01) -------- Diluted earnings per share $ 4.56 ======== Weighted average number of shares outstanding - - Basic 2,047 - - Diluted 2,063 (*) Basic and diluted earnings per share are computed for each of the periods presented. Accordingly, the sum of the quarterly earnings per share amounts may not agree to the year-to-date amounts. ALTRIA GROUP, INC. Schedule 10 and Subsidiaries Condensed Statements of Earnings Restated for Discontinued Operations For the Quarters Ended March 31, June 30, September 30, December 31, 2003 (in millions, except per share data) Q1 2003 Q2 2003 Q3 2003 Q4 2003 Adjusted Adjusted Adjusted Adjusted --------------------------------------- Net revenues $ 19,247 $ 20,696 $ 20,809 $ 20,568 Cost of sales 7,493 7,919 7,823 8,338 Excise taxes on products 4,887 5,344 5,637 5,260 --------------------------------------- Gross profit 6,867 7,433 7,349 6,970 Marketing, administration and research costs 2,855 2,913 2,980 3,086 Domestic tobacco headquarters relocation charges - 9 27 33 Domestic tobacco legal settlement - 182 - 20 Asset impairment and exit costs - - 6 13 Losses (gains) on sales of businesses - - (23) (8) Food Integration Cost - - - (13) --------------------------------------- Operating companies income 4,012 4,329 4,359 3,839 Amortization of intangibles 2 3 2 2 General corporate expenses 183 183 176 162 Asset impairment and exit costs - - - 67 --------------------------------------- Operating income 3,827 4,143 4,181 3,608 Interest and other debt expense, net 283 263 301 303 --------------------------------------- Earnings from continuing operations before income taxes and minority interest 3,544 3,880 3,880 3,305 Provision for income taxes 1,248 1,365 1,337 1,147 --------------------------------------- Earnings from continuing operations before minority interest 2,296 2,515 2,543 2,158 Minority interest in earnings from continuing operations, and equity earnings, net 130 105 75 81 --------------------------------------- Earnings from continuing operations $ 2,166 $ 2,410 $ 2,468 $ 2,077 --------------------------------------- (Loss) earnings from discontinued operations, net of income taxes and minority interest $ 20 $ 27 $ 22 $ 14 --------------------------------------- Net earnings $ 2,186 $ 2,437 $ 2,490 $ 2,091 ======================================= Per share data (*): Basic earnings per share from continuing operations $ 1.07 $ 1.19 $ 1.22 $ 1.02 --------------------------------------- Basic earnings per share from discontinued operations $ 0.01 $ 0.01 $ 0.01 $ 0.01 --------------------------------------- Basic earnings per share $ 1.08 $ 1.20 $ 1.23 $ 1.03 ======================================= Diluted earnings per share from continuing operations $ 1.06 $ 1.19 $ 1.21 $ 1.02 --------------------------------------- Diluted earnings per share from discontinued operations $ 0.01 $ 0.01 $ 0.01 $ - --------------------------------------- Diluted earnings per share $ 1.07 $ 1.20 $ 1.22 $ 1.02 ======== ======== ======== ======== Weighted average number of shares outstanding - - Basic 2,032 2,023 2,027 2,030 - - Diluted 2,040 2,029 2,036 2,046 2003 YTD Adjusted -------- Net revenues $ 81,320 Cost of sales 31,573 Excise taxes on products 21,128 -------- Gross profit 28,619 Marketing, administration and research costs 11,834 Domestic tobacco headquarters relocation charges 69 Domestic tobacco legal settlement 202 Asset impairment and exit costs 19 Losses (gains) on sales of businesses (31) Food Integration Cost (13) -------- Operating companies income 16,539 Amortization of intangibles 9 General corporate expenses 704 Asset impairment and exit costs 67 -------- Operating income 15,759 Interest and other debt expense, net 1,150 -------- Earnings from continuing operations before income taxes and minority interest 14,609 Provision for income taxes 5,097 -------- Earnings from continuing operations before minority interest 9,512 Minority interest in earnings from continuing operations, and equity earnings, net 391 -------- Earnings from continuing operations $ 9,121 -------- (Loss) earnings from discontinued operations, net of income taxes and minority interest $ 83 -------- Net earnings $ 9,204 ======== Per share data (*): Basic earnings per share from continuing operations $ 4.50 -------- Basic earnings per share from discontinued operations $ 0.04 -------- Basic earnings per share $ 4.54 ======== Diluted earnings per share from continuing operations $ 4.48 -------- Diluted earnings per share from discontinued operations $ 0.04 -------- Diluted earnings per share $ 4.52 ======== Weighted average number of shares outstanding - - Basic 2,028 - - Diluted 2,038 (*) Basic and diluted earnings per share are computed for each of the periods presented. Accordingly, the sum of the quarterly earnings per share amounts may not agree to the year-to-date amounts. ALTRIA GROUP, INC. Schedule 11 and Subsidiaries Condensed Balance Sheets (in millions, except ratios) December 31, December 31, 2004 2003 ------------ ------------ Assets - ------ Cash and cash equivalents $ 5,744 $ 3,777 Current assets of discontinued operations held for sale 1,458 - All other current assets 18,699 17,605 Property, plant and equipment, net 16,305 16,067 Goodwill 28,056 27,742 Other intangible assets, net 11,056 11,803 Other assets 12,485 10,641 ------------ ------------ Total consumer products assets 93,803 87,635 Total financial services assets 7,845 8,540 ------------ ------------ Total assets $ 101,648 $ 96,175 ============ ============ Liabilities and Stockholders' Equity - ------------------------------------ Short-term borrowings $ 2,546 $ 1,715 Current portion of long-term debt 1,751 1,661 Accrued settlement charges 3,501 3,530 All other current liabilities 15,776 14,487 Long-term debt 16,462 18,953 Deferred income taxes 7,677 7,295 Other long-term liabilities 14,905 15,137 ------------ ------------ Total consumer products liabilities 62,618 62,778 Total financial services liabilities 8,316 8,320 ------------ ------------ Total liabilities 70,934 71,098 Total stockholders' equity 30,714 25,077 ------------ ------------ Total liabilities and stockholders' equity $ 101,648 $ 96,175 ============ ============ Total consumer products debt $ 20,759 $ 22,329 Debt/equity ratio - consumer products 0.68 0.89 Total debt $ 22,980 $ 24,539 Total debt/equity ratio 0.75 0.98 -----END PRIVACY-ENHANCED MESSAGE-----