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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Altria Group Inc | NYSE:MO | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.1993 | 0.45% | 44.0193 | 44.21 | 43.825 | 44.00 | 9,054,915 | 01:00:00 |
ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Virginia
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13-3260245
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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6601 West Broad Street, Richmond, Virginia
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23230
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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þ
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Accelerated filer
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¨
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Page No.
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PART I -
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FINANCIAL INFORMATION
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Item 1.
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Financial Statements (Unaudited)
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Item 2.
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Item 3.
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Item 4.
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PART II -
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OTHER INFORMATION
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Item 1.
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Item 1A.
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Item 2.
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Item 5.
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Item 6.
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Signature
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September 30, 2016
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December 31, 2015
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Assets
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||||
Cash and cash equivalents
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$
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2,298
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$
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2,369
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Receivables
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146
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124
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Inventories:
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Leaf tobacco
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844
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957
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Other raw materials
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174
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181
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Work in process
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410
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444
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Finished product
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552
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449
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1,980
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2,031
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Deferred income taxes
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1,188
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1,175
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Other current assets
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791
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387
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Total current assets
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6,403
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6,086
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Property, plant and equipment, at cost
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4,820
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4,877
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Less accumulated depreciation
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2,851
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2,895
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1,969
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1,982
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Goodwill
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5,285
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5,285
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|
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Other intangible assets, net
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12,042
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|
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12,028
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|
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Investment in SABMiller
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5,826
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5,483
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Finance assets, net
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1,046
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|
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1,239
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Other assets
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363
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|
|
360
|
|
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Total Assets
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$
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32,934
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|
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$
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32,463
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September 30, 2016
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December 31, 2015
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||||
Liabilities
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||||
Current portion of long-term debt
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$
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—
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$
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4
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Accounts payable
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296
|
|
|
400
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Accrued liabilities:
|
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|
|
|
||||
Marketing
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797
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|
|
695
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Employment costs
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216
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|
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198
|
|
||
Settlement charges
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3,429
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3,590
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Other
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964
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1,081
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Dividends payable
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1,193
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1,110
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Total current liabilities
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6,895
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7,078
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Long-term debt
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13,878
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12,843
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Deferred income taxes
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5,607
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5,663
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Accrued pension costs
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863
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1,277
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Accrued postretirement health care costs
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2,296
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2,245
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Other liabilities
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412
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447
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Total liabilities
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29,951
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29,553
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Contingencies (Note 11)
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||||
Redeemable noncontrolling interest
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36
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37
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Stockholders’ Equity
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Common stock, par value $0.33 1/3 per share
(2,805,961,317 shares issued)
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935
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935
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Additional paid-in capital
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5,864
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5,813
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Earnings reinvested in the business
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27,816
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27,257
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Accumulated other comprehensive losses
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(3,278
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)
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(3,280
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)
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Cost of repurchased stock
(854,558,381 shares at September 30, 2016 and
845,901,836 shares at December 31, 2015)
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(28,393
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)
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(27,845
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)
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Total stockholders’ equity attributable to Altria Group, Inc.
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2,944
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2,880
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Noncontrolling interests
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3
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(7
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)
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Total stockholders’ equity
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2,947
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2,873
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Total Liabilities and Stockholders’ Equity
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$
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32,934
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$
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32,463
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For the Nine Months Ended September 30,
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||||||
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2016
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2015
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Net revenues
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$
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19,492
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$
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19,116
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Cost of sales
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5,841
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5,733
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Excise taxes on products
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4,888
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4,991
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Gross profit
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8,763
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8,392
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Marketing, administration and research costs
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1,871
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1,951
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Reduction of PMI tax-related receivable
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—
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41
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Asset impairment and exit costs
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123
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4
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Operating income
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6,769
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6,396
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Interest and other debt expense, net
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571
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609
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Loss on early extinguishment of debt
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823
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228
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Earnings from equity investment in SABMiller
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(564
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)
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(546
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)
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Gain on derivative financial instruments
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(205
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)
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—
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Earnings before income taxes
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6,144
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6,105
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Provision for income taxes
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2,178
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2,110
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Net earnings
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3,966
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3,995
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Net earnings attributable to noncontrolling interests
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(3
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)
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(1
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)
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Net earnings attributable to Altria Group, Inc.
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$
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3,963
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$
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3,994
|
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Per share data:
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|
||||
Basic and diluted earnings per share attributable to Altria Group, Inc.
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$
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2.02
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$
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2.03
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Dividends declared
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$
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1.74
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$
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1.605
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For the Three Months Ended September 30,
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||||||
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2016
|
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2015
|
||||
Net revenues
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$
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6,905
|
|
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$
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6,699
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Cost of sales
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2,043
|
|
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1,932
|
|
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Excise taxes on products
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1,712
|
|
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1,721
|
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Gross profit
|
|
3,150
|
|
|
3,046
|
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||
Marketing, administration and research costs
|
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766
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|
|
698
|
|
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Reduction of PMI tax-related receivable
|
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—
|
|
|
41
|
|
||
Asset impairment and exit costs
|
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2
|
|
|
—
|
|
||
Operating income
|
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2,382
|
|
|
2,307
|
|
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Interest and other debt expense, net
|
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179
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|
|
205
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|
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Loss on early extinguishment of debt
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823
|
|
|
—
|
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||
Earnings from equity investment in SABMiller
|
|
(299
|
)
|
|
(187
|
)
|
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Gain on derivative financial instruments
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(48
|
)
|
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—
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||
Earnings before income taxes
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1,727
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|
|
2,289
|
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||
Provision for income taxes
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|
633
|
|
|
761
|
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||
Net earnings
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1,094
|
|
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1,528
|
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Net earnings attributable to noncontrolling interests
|
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(1
|
)
|
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—
|
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||
Net earnings attributable to Altria Group, Inc.
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$
|
1,093
|
|
|
$
|
1,528
|
|
Per share data:
|
|
|
|
|
||||
Basic and diluted earnings per share attributable to Altria Group, Inc.
|
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$
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0.56
|
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$
|
0.78
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|
Dividends declared
|
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$
|
0.61
|
|
|
$
|
0.565
|
|
|
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For the Nine Months Ended September 30,
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||||||
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2016
|
|
2015
|
||||
Net earnings
|
|
$
|
3,966
|
|
|
$
|
3,995
|
|
Other comprehensive earnings (losses), net of deferred income taxes:
|
|
|
|
|
||||
Currency translation adjustments
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|
1
|
|
|
(3
|
)
|
||
Benefit plans
|
|
(116
|
)
|
|
121
|
|
||
SABMiller
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117
|
|
|
(593
|
)
|
||
Other comprehensive earnings (losses), net of deferred income taxes
|
|
2
|
|
|
(475
|
)
|
||
|
|
|
|
|
||||
Comprehensive earnings
|
|
3,968
|
|
|
3,520
|
|
||
Comprehensive earnings attributable to noncontrolling interests
|
|
(3
|
)
|
|
(1
|
)
|
||
Comprehensive earnings attributable to Altria Group, Inc.
|
|
$
|
3,965
|
|
|
$
|
3,519
|
|
|
|
For the Three Months Ended September 30,
|
||||||
|
|
2016
|
|
2015
|
||||
Net earnings
|
|
$
|
1,094
|
|
|
$
|
1,528
|
|
Other comprehensive earnings (losses), net of deferred income taxes:
|
|
|
|
|
||||
Currency translation adjustments
|
|
—
|
|
|
(2
|
)
|
||
Benefit plans
|
|
28
|
|
|
40
|
|
||
SABMiller
|
|
34
|
|
|
(317
|
)
|
||
Other comprehensive earnings (losses), net of deferred income taxes
|
|
62
|
|
|
(279
|
)
|
||
|
|
|
|
|
||||
Comprehensive earnings
|
|
1,156
|
|
|
1,249
|
|
||
Comprehensive earnings attributable to noncontrolling interests
|
|
(1
|
)
|
|
—
|
|
||
Comprehensive earnings attributable to Altria Group, Inc.
|
|
$
|
1,155
|
|
|
$
|
1,249
|
|
|
|
Attributable to Altria Group, Inc.
|
|
|
|
|
||||||||||||||||||||||
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Common
Stock
|
|
Additional
Paid-in
Capital
|
|
Earnings
Reinvested
in the
Business
|
|
Accumulated
Other
Comprehensive
Losses
|
|
Cost of
Repurchased
Stock
|
|
Non-controlling
Interests
|
|
Total
Stockholders’
Equity
|
||||||||||||||
Balances, December 31, 2014
|
|
$
|
935
|
|
|
$
|
5,735
|
|
|
$
|
26,277
|
|
|
$
|
(2,682
|
)
|
|
$
|
(27,251
|
)
|
|
$
|
(4
|
)
|
|
$
|
3,010
|
|
Net earnings (losses)
(1)
|
|
—
|
|
|
—
|
|
|
5,241
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
5,238
|
|
|||||||
Other comprehensive losses, net of deferred income taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(598
|
)
|
|
—
|
|
|
—
|
|
|
(598
|
)
|
|||||||
Stock award activity
|
|
—
|
|
|
78
|
|
|
—
|
|
|
—
|
|
|
(40
|
)
|
|
—
|
|
|
38
|
|
|||||||
Cash dividends declared ($2.17 per share)
|
|
—
|
|
|
—
|
|
|
(4,261
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,261
|
)
|
|||||||
Repurchases of common stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(554
|
)
|
|
—
|
|
|
(554
|
)
|
|||||||
Balances, December 31, 2015
|
|
935
|
|
|
5,813
|
|
|
27,257
|
|
|
(3,280
|
)
|
|
(27,845
|
)
|
|
(7
|
)
|
|
2,873
|
|
|||||||
Net earnings
(1)
|
|
—
|
|
|
—
|
|
|
3,963
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,963
|
|
|||||||
Other comprehensive earnings, net of deferred income taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|||||||
Stock award activity
|
|
—
|
|
|
61
|
|
|
—
|
|
|
—
|
|
|
(36
|
)
|
|
—
|
|
|
25
|
|
|||||||
Cash dividends declared ($1.74 per share)
|
|
—
|
|
|
—
|
|
|
(3,404
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,404
|
)
|
|||||||
Repurchases of common stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(512
|
)
|
|
—
|
|
|
(512
|
)
|
|||||||
Other
|
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|||||||
Balances, September 30, 2016
|
|
$
|
935
|
|
|
$
|
5,864
|
|
|
$
|
27,816
|
|
|
$
|
(3,278
|
)
|
|
$
|
(28,393
|
)
|
|
$
|
3
|
|
|
$
|
2,947
|
|
(1)
|
Amounts attributable to noncontrolling interests
for the nine months ended September 30, 2016
and for the year ended
December 31, 2015
exclude net earnings of
$3 million
and
$5 million
, respectively, due to the redeemable noncontrolling interest related to Stag’s Leap Wine Cellars
,
which is reported in the mezzanine equity section in the condensed consolidated balance sheets at
September 30, 2016
and
December 31, 2015
.
|
|
|
For the Nine Months Ended September 30,
|
||||||
|
|
2016
|
|
2015
|
||||
Cash Provided by (Used in) Operating Activities
|
|
|
|
|
||||
Net earnings
|
|
$
|
3,966
|
|
|
$
|
3,995
|
|
Adjustments to reconcile net earnings to operating cash flows:
|
|
|
|
|
||||
Depreciation and amortization
|
|
149
|
|
|
150
|
|
||
Deferred income tax benefit
|
|
(69
|
)
|
|
(1
|
)
|
||
Earnings from equity investment in SABMiller
|
|
(564
|
)
|
|
(546
|
)
|
||
Dividends from SABMiller
|
|
403
|
|
|
374
|
|
||
Gain on derivative financial instruments
|
|
(205
|
)
|
|
—
|
|
||
Asset impairment and exit costs, net of cash paid
|
|
71
|
|
|
2
|
|
||
Loss on early extinguishment of debt
|
|
823
|
|
|
228
|
|
||
Cash effects of changes:
|
|
|
|
|
||||
Receivables
|
|
(21
|
)
|
|
9
|
|
||
Inventories
|
|
54
|
|
|
59
|
|
||
Accounts payable
|
|
(132
|
)
|
|
(102
|
)
|
||
Income taxes
|
|
(122
|
)
|
|
(6
|
)
|
||
Accrued liabilities and other current assets
|
|
(257
|
)
|
|
22
|
|
||
Accrued settlement charges
|
|
(161
|
)
|
|
(284
|
)
|
||
Pension plan contributions
|
|
(520
|
)
|
|
(23
|
)
|
||
Pension provisions and postretirement, net
|
|
(56
|
)
|
|
78
|
|
||
Other
|
|
141
|
|
|
135
|
|
||
Net cash provided by operating activities
|
|
3,500
|
|
|
4,090
|
|
||
Cash Provided by (Used in) Investing Activities
|
|
|
|
|
||||
Capital expenditures
|
|
(128
|
)
|
|
(162
|
)
|
||
Proceeds from finance assets
|
|
207
|
|
|
255
|
|
||
Other
|
|
(44
|
)
|
|
2
|
|
||
Net cash provided by investing activities
|
|
35
|
|
|
95
|
|
||
Cash Provided by (Used in) Financing Activities
|
|
|
|
|
||||
Long-term debt issued
|
|
1,976
|
|
|
—
|
|
||
Long-term debt repaid
|
|
(933
|
)
|
|
(1,793
|
)
|
||
Repurchases of common stock
|
|
(512
|
)
|
|
(518
|
)
|
||
Dividends paid on common stock
|
|
(3,321
|
)
|
|
(3,071
|
)
|
||
Premiums and fees related to early extinguishment of debt
|
|
(809
|
)
|
|
(226
|
)
|
||
Other
|
|
(7
|
)
|
|
9
|
|
||
Net cash used in financing activities
|
|
(3,606
|
)
|
|
(5,599
|
)
|
||
Cash and cash equivalents:
|
|
|
|
|
||||
Decrease
|
|
(71
|
)
|
|
(1,414
|
)
|
||
Balance at beginning of period
|
|
2,369
|
|
|
3,321
|
|
||
Balance at end of period
|
|
$
|
2,298
|
|
|
$
|
1,907
|
|
|
|
For the Nine Months Ended September 30,
|
|
For the Three Months Ended September 30,
|
||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
|
(in millions, except per share data)
|
||||||||||||||
Total number of shares repurchased
|
|
8.1
|
|
|
10.0
|
|
|
2.6
|
|
|
1.2
|
|
||||
Aggregate cost of shares repurchased
|
|
$
|
512
|
|
|
$
|
518
|
|
|
$
|
171
|
|
|
$
|
63
|
|
Average price per share of shares repurchased
|
|
$
|
63.28
|
|
|
$
|
51.47
|
|
|
$
|
66.23
|
|
|
$
|
50.39
|
|
|
For the Nine Months Ended September 30, 2016
|
|
For the Three Months Ended September 30, 2016
|
||||||||||||||||||||
|
Asset Impairment and Exit Costs
(1)
|
|
Implementation Costs
|
|
Total
|
|
Asset Impairment and Exit Costs
|
|
Implementation Costs
|
|
Total
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Smokeable products
|
$
|
99
|
|
|
$
|
6
|
|
|
$
|
105
|
|
|
$
|
1
|
|
|
$
|
3
|
|
|
$
|
4
|
|
Smokeless products
|
13
|
|
|
1
|
|
|
14
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||||
All other
|
6
|
|
|
—
|
|
|
6
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||||
General corporate
|
5
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
$
|
123
|
|
|
$
|
7
|
|
|
$
|
130
|
|
|
$
|
2
|
|
|
$
|
4
|
|
|
$
|
6
|
|
|
For the Nine Months Ended September 30, 2016
|
||
|
(in millions)
|
||
Charges
|
$
|
103
|
|
Cash spent
|
(52
|
)
|
|
Balances at September 30, 2016
|
$
|
51
|
|
|
For the Nine Months Ended September 30,
|
|
For the Three Months Ended September 30,
|
||||||||||||||||||||||||||||
|
Pension
|
|
Postretirement
|
|
Pension
|
|
Postretirement
|
||||||||||||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||||||
Service cost
|
$
|
55
|
|
|
$
|
65
|
|
|
$
|
12
|
|
|
$
|
13
|
|
|
$
|
18
|
|
|
$
|
22
|
|
|
$
|
4
|
|
|
$
|
4
|
|
Interest cost
|
211
|
|
|
252
|
|
|
58
|
|
|
75
|
|
|
70
|
|
|
84
|
|
|
18
|
|
|
24
|
|
||||||||
Expected return on plan assets
|
(416
|
)
|
|
(405
|
)
|
|
—
|
|
|
—
|
|
|
(139
|
)
|
|
(135
|
)
|
|
—
|
|
|
—
|
|
||||||||
Amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net loss
|
130
|
|
|
175
|
|
|
19
|
|
|
33
|
|
|
43
|
|
|
58
|
|
|
3
|
|
|
10
|
|
||||||||
Prior service cost (credit)
|
4
|
|
|
6
|
|
|
(29
|
)
|
|
(30
|
)
|
|
2
|
|
|
2
|
|
|
(10
|
)
|
|
(10
|
)
|
||||||||
Termination and curtailment
|
20
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Net periodic benefit cost (income)
|
$
|
4
|
|
|
$
|
93
|
|
|
$
|
60
|
|
|
$
|
91
|
|
|
$
|
(6
|
)
|
|
$
|
31
|
|
|
$
|
15
|
|
|
$
|
28
|
|
▪
|
are unlisted and not admitted to trading on any stock exchange;
|
▪
|
are subject to a
five
-year lock-up (subject to limited exceptions) ending October 10, 2021;
|
▪
|
are convertible into ordinary shares of
AB InBev
on a one-for-one basis after the end of this
five
-year lock-up period;
|
▪
|
rank equally with ordinary shares of
AB InBev
with regards to dividends and voting rights; and
|
▪
|
have director nomination rights with respect to
AB InBev
.
|
▪
|
the Legacy AB InBev share price and GBP-to-United States dollar (“USD”) exchange rate as of
October 10, 2016
;
|
▪
|
the book value of Altria Group, Inc.’s investment in SABMiller at September 30, 2016; and
|
▪
|
the impact of
AB InBev
’s expected divestitures of certain SABMiller assets and businesses in connection with Legacy AB InBev obtaining necessary regulatory clearances for the Transaction.
|
|
|
For the Nine Months Ended September 30,
|
|
For the Three Months Ended September 30,
|
||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
|
(in millions)
|
||||||||||||||
Net earnings attributable to Altria Group, Inc.
|
|
$
|
3,963
|
|
|
$
|
3,994
|
|
|
$
|
1,093
|
|
|
$
|
1,528
|
|
Less: Distributed and undistributed earnings attributable to unvested restricted shares and restricted stock units
|
|
(6
|
)
|
|
(8
|
)
|
|
(1
|
)
|
|
(3
|
)
|
||||
Earnings for basic and diluted EPS
|
|
$
|
3,957
|
|
|
$
|
3,986
|
|
|
$
|
1,092
|
|
|
$
|
1,525
|
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares for basic and diluted EPS
|
|
1,954
|
|
|
1,962
|
|
|
1,952
|
|
|
1,958
|
|
|
|
For the Nine Months Ended September 30, 2016
|
||||||||||||||
|
|
Currency
Translation
Adjustments
|
|
Benefit Plans
|
|
SABMiller
|
|
Accumulated
Other
Comprehensive
Losses
|
||||||||
|
|
(in millions)
|
||||||||||||||
Balances, December 31, 2015
|
|
$
|
(5
|
)
|
|
$
|
(2,010
|
)
|
|
$
|
(1,265
|
)
|
|
$
|
(3,280
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive earnings (losses) before reclassifications
|
|
1
|
|
|
(318
|
)
|
|
158
|
|
|
(159
|
)
|
||||
Deferred income taxes
|
|
—
|
|
|
122
|
|
|
(56
|
)
|
|
66
|
|
||||
Other comprehensive earnings (losses) before reclassifications, net of deferred income taxes
|
|
1
|
|
|
(196
|
)
|
|
102
|
|
|
(93
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Amounts reclassified to net earnings
|
|
—
|
|
|
127
|
|
|
24
|
|
|
151
|
|
||||
Deferred income taxes
|
|
—
|
|
|
(47
|
)
|
|
(9
|
)
|
|
(56
|
)
|
||||
Amounts reclassified to net earnings, net of deferred income taxes
|
|
—
|
|
|
80
|
|
|
15
|
|
|
95
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive earnings (losses), net of deferred income taxes
|
|
1
|
|
|
(116
|
)
|
|
117
|
|
(1)
|
2
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Balances, September 30, 2016
|
|
$
|
(4
|
)
|
|
$
|
(2,126
|
)
|
|
$
|
(1,148
|
)
|
|
$
|
(3,278
|
)
|
|
|
For the Three Months Ended September 30, 2016
|
||||||||||||||
|
|
Currency
Translation
Adjustments
|
|
Benefit Plans
|
|
SABMiller
|
|
Accumulated
Other
Comprehensive
Losses
|
||||||||
|
|
(in millions)
|
||||||||||||||
Balances, June 30, 2016
|
|
$
|
(4
|
)
|
|
$
|
(2,154
|
)
|
|
$
|
(1,182
|
)
|
|
$
|
(3,340
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive earnings before reclassifications
|
|
—
|
|
|
—
|
|
|
48
|
|
|
48
|
|
||||
Deferred income taxes
|
|
—
|
|
|
—
|
|
|
(17
|
)
|
|
(17
|
)
|
||||
Other comprehensive earnings before reclassifications, net of deferred income taxes
|
|
—
|
|
|
—
|
|
|
31
|
|
|
31
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Amounts reclassified to net earnings
|
|
—
|
|
|
42
|
|
|
5
|
|
|
47
|
|
||||
Deferred income taxes
|
|
—
|
|
|
(14
|
)
|
|
(2
|
)
|
|
(16
|
)
|
||||
Amounts reclassified to net earnings, net of deferred income taxes
|
|
—
|
|
|
28
|
|
|
3
|
|
|
31
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive earnings, net of deferred income taxes
|
|
—
|
|
|
28
|
|
|
34
|
|
(1)
|
62
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Balances, September 30, 2016
|
|
$
|
(4
|
)
|
|
$
|
(2,126
|
)
|
|
$
|
(1,148
|
)
|
|
$
|
(3,278
|
)
|
|
|
For the Nine Months Ended September 30, 2015
|
||||||||||||||
|
|
Currency
Translation
Adjustments
|
|
Benefit Plans
|
|
SABMiller
|
|
Accumulated
Other
Comprehensive
Losses
|
||||||||
|
|
(in millions)
|
||||||||||||||
Balances, December 31, 2014
|
|
$
|
(2
|
)
|
|
$
|
(2,040
|
)
|
|
$
|
(640
|
)
|
|
$
|
(2,682
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive losses before reclassifications
|
|
(4
|
)
|
|
—
|
|
|
(927
|
)
|
|
(931
|
)
|
||||
Deferred income taxes
|
|
1
|
|
|
—
|
|
|
324
|
|
|
325
|
|
||||
Other comprehensive losses before reclassifications, net of deferred income taxes
|
|
(3
|
)
|
|
—
|
|
|
(603
|
)
|
|
(606
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Amounts reclassified to net earnings
|
|
—
|
|
|
198
|
|
|
14
|
|
|
212
|
|
||||
Deferred income taxes
|
|
—
|
|
|
(77
|
)
|
|
(4
|
)
|
|
(81
|
)
|
||||
Amounts reclassified to net earnings, net of deferred income taxes
|
|
—
|
|
|
121
|
|
|
10
|
|
|
131
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive (losses) earnings, net of deferred income taxes
|
|
(3
|
)
|
|
121
|
|
|
(593
|
)
|
(1)
|
(475
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Balances, September 30, 2015
|
|
$
|
(5
|
)
|
|
$
|
(1,919
|
)
|
|
$
|
(1,233
|
)
|
|
$
|
(3,157
|
)
|
|
|
For the Three Months Ended September 30, 2015
|
||||||||||||||
|
|
Currency
Translation
Adjustments
|
|
Benefit Plans
|
|
SABMiller
|
|
Accumulated
Other
Comprehensive
Losses
|
||||||||
|
|
(in millions)
|
||||||||||||||
Balances, June 30, 2015
|
|
$
|
(3
|
)
|
|
$
|
(1,959
|
)
|
|
$
|
(916
|
)
|
|
$
|
(2,878
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive losses before reclassifications
|
|
(3
|
)
|
|
—
|
|
|
(493
|
)
|
|
(496
|
)
|
||||
Deferred income taxes
|
|
1
|
|
|
—
|
|
|
173
|
|
|
174
|
|
||||
Other comprehensive losses before reclassifications, net of deferred income taxes
|
|
(2
|
)
|
|
—
|
|
|
(320
|
)
|
|
(322
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Amounts reclassified to net earnings
|
|
—
|
|
|
64
|
|
|
5
|
|
|
69
|
|
||||
Deferred income taxes
|
|
—
|
|
|
(24
|
)
|
|
(2
|
)
|
|
(26
|
)
|
||||
Amounts reclassified to net earnings, net of deferred income taxes
|
|
—
|
|
|
40
|
|
|
3
|
|
|
43
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive (losses) earnings, net of deferred income taxes
|
|
(2
|
)
|
|
40
|
|
|
(317
|
)
|
(1)
|
(279
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Balances, September 30, 2015
|
|
$
|
(5
|
)
|
|
$
|
(1,919
|
)
|
|
$
|
(1,233
|
)
|
|
$
|
(3,157
|
)
|
|
|
For the Nine Months Ended September 30,
|
|
For the Three Months Ended September 30,
|
||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
|
(in millions)
|
||||||||||||||
Benefit Plans:
(1)
|
|
|
|
|
|
|
|
|
||||||||
Net loss
|
|
$
|
162
|
|
|
$
|
222
|
|
|
$
|
50
|
|
|
$
|
72
|
|
Prior service cost/credit
|
|
(35
|
)
|
|
(24
|
)
|
|
(8
|
)
|
|
(8
|
)
|
||||
|
|
127
|
|
|
198
|
|
|
42
|
|
|
64
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
SABMiller
(2)
|
|
24
|
|
|
14
|
|
|
5
|
|
|
5
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Pre-tax amounts reclassified from accumulated other comprehensive losses to net earnings
|
|
$
|
151
|
|
|
$
|
212
|
|
|
$
|
47
|
|
|
$
|
69
|
|
|
|
For the Nine Months Ended September 30,
|
|
For the Three Months Ended September 30,
|
||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
|
(in millions)
|
||||||||||||||
Net revenues:
|
|
|
|
|
|
|
|
|
||||||||
Smokeable products
|
|
$
|
17,398
|
|
|
$
|
17,235
|
|
|
$
|
6,147
|
|
|
$
|
6,040
|
|
Smokeless products
|
|
1,530
|
|
|
1,393
|
|
|
528
|
|
|
482
|
|
||||
Wine
|
|
498
|
|
|
461
|
|
|
182
|
|
|
166
|
|
||||
All other
|
|
66
|
|
|
27
|
|
|
48
|
|
|
11
|
|
||||
Net revenues
|
|
$
|
19,492
|
|
|
$
|
19,116
|
|
|
$
|
6,905
|
|
|
$
|
6,699
|
|
Earnings before income taxes:
|
|
|
|
|
|
|
|
|
||||||||
Operating companies income (loss):
|
|
|
|
|
|
|
|
|
||||||||
Smokeable products
|
|
$
|
5,955
|
|
|
$
|
5,831
|
|
|
$
|
2,086
|
|
|
$
|
2,121
|
|
Smokeless products
|
|
930
|
|
|
830
|
|
|
312
|
|
|
286
|
|
||||
Wine
|
|
100
|
|
|
97
|
|
|
38
|
|
|
35
|
|
||||
All other
|
|
(46
|
)
|
|
(139
|
)
|
|
8
|
|
|
(35
|
)
|
||||
Amortization of intangibles
|
|
(15
|
)
|
|
(16
|
)
|
|
(5
|
)
|
|
(6
|
)
|
||||
General corporate expenses
|
|
(150
|
)
|
|
(166
|
)
|
|
(57
|
)
|
|
(53
|
)
|
||||
Reduction of PMI tax-related receivable
|
|
—
|
|
|
(41
|
)
|
|
—
|
|
|
(41
|
)
|
||||
Corporate asset impairment and exit costs
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Operating income
|
|
6,769
|
|
|
6,396
|
|
|
2,382
|
|
|
2,307
|
|
||||
Interest and other debt expense, net
|
|
(571
|
)
|
|
(609
|
)
|
|
(179
|
)
|
|
(205
|
)
|
||||
Loss on early extinguishment of debt
|
|
(823
|
)
|
|
(228
|
)
|
|
(823
|
)
|
|
—
|
|
||||
Earnings from equity investment in SABMiller
|
|
564
|
|
|
546
|
|
|
299
|
|
|
187
|
|
||||
Gain on derivative financial instruments
|
|
205
|
|
|
—
|
|
|
48
|
|
|
—
|
|
||||
Earnings before income taxes
|
|
$
|
6,144
|
|
|
$
|
6,105
|
|
|
$
|
1,727
|
|
|
$
|
2,289
|
|
|
|
For the Nine Months Ended September 30,
|
|
For the Three Months Ended September 30,
|
||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
|
(in millions)
|
||||||||||||||
Smokeable products segment
|
|
$
|
12
|
|
|
$
|
(126
|
)
|
|
$
|
—
|
|
|
$
|
(126
|
)
|
Interest and other debt expense, net
|
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total
|
|
$
|
18
|
|
|
$
|
(126
|
)
|
|
$
|
—
|
|
|
$
|
(126
|
)
|
|
|
For the Nine Months Ended September 30,
|
|
For the Three Months Ended September 30,
|
||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
|
(in millions)
|
||||||||||||||
Smokeable products segment
|
|
$
|
72
|
|
|
$
|
102
|
|
|
$
|
45
|
|
|
$
|
54
|
|
Interest and other debt expense, net
|
|
16
|
|
|
13
|
|
|
—
|
|
|
13
|
|
||||
Total
|
|
$
|
88
|
|
|
$
|
115
|
|
|
$
|
45
|
|
|
$
|
67
|
|
|
|
For the Nine Months Ended September 30,
|
||||||
|
|
2016
|
|
2015
|
||||
|
|
(in millions)
|
||||||
Balance at beginning of the year
|
|
$
|
42
|
|
|
$
|
42
|
|
Decrease to allowance
|
|
(9
|
)
|
|
—
|
|
||
Balance at September 30
|
|
$
|
33
|
|
|
$
|
42
|
|
|
|
September 30, 2016
|
|
December 31, 2015
|
||||
|
|
(in millions)
|
||||||
Credit Rating by Standard & Poor’s/Moody’s:
|
|
|
|
|
||||
“AAA/Aaa” to “A-/A3”
|
|
$
|
217
|
|
|
$
|
212
|
|
“BBB+/Baa1” to “BBB-/Baa3”
|
|
528
|
|
|
702
|
|
||
“BB+/Ba1” and Lower
|
|
334
|
|
|
367
|
|
||
Total
|
|
$
|
1,079
|
|
|
$
|
1,281
|
|
|
|
2016
|
|
2015
|
|
||||
|
|
(in millions)
|
|||||||
Notes Purchased
|
|
|
|
|
|
||||
9.95% Notes due 2038
|
|
$
|
441
|
|
|
$
|
—
|
|
|
10.20% Notes due 2039
|
|
492
|
|
|
—
|
|
|
||
9.70% Notes due 2018
|
|
—
|
|
|
793
|
|
|
||
Total
|
|
$
|
933
|
|
|
$
|
793
|
|
|
|
For the Nine Months Ended September 30,
|
|
For the Three Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
(in millions)
|
||||||||||||||
Premiums and fees
|
$
|
809
|
|
|
$
|
226
|
|
|
$
|
809
|
|
|
$
|
—
|
|
Write-off of unamortized debt discounts and debt issuance costs
|
14
|
|
|
2
|
|
|
14
|
|
|
—
|
|
||||
Total
|
$
|
823
|
|
|
$
|
228
|
|
|
$
|
823
|
|
|
$
|
—
|
|
▪
|
the reversal of
$59 million
of tax reserves and associated interest due primarily to the closure in August 2015 of the Internal Revenue Service audit of Altria Group, Inc. and its consolidated subsidiaries’ 2007-2009 tax years (“IRS 2007-2009 Audit”) that was recorded during the third quarter of 2015; and
|
▪
|
the resolution of various Philip Morris International Inc. (“PMI”) tax matters in the third quarter of 2015;
|
▪
|
a
$41 million
reversal of foreign tax credits primarily associated with SABMiller dividends that was recorded during the third quarter of 2015.
|
|
October 24, 2016
|
|
October 26, 2015
|
|
October 27, 2014
|
Individual Smoking and Health Cases
(2)
|
66
|
|
65
|
|
67
|
Smoking and Health Class Actions and Aggregated Claims Litigation
(3)
|
5
|
|
5
|
|
5
|
Health Care Cost Recovery Actions
(4)
|
1
|
|
1
|
|
1
|
“Lights/Ultra Lights” Class Actions
|
9
|
|
12
|
|
13
|
|
For the Nine Months Ended September 30,
|
|
For the Three Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
(in millions)
|
||||||||||||||
Accrued liability for tobacco and health litigation items at beginning of period
|
$
|
132
|
|
|
$
|
39
|
|
|
$
|
30
|
|
|
$
|
77
|
|
Pre-tax charges for:
|
|
|
|
|
|
|
|
||||||||
Tobacco and health judgments
|
5
|
|
|
59
|
|
|
—
|
|
|
54
|
|
||||
Related interest costs
|
6
|
|
|
13
|
|
|
—
|
|
|
13
|
|
||||
Agreement to resolve federal
Engle
progeny cases
|
—
|
|
|
43
|
|
|
—
|
|
|
—
|
|
||||
Agreement to resolve
Aspinall
including related interest costs
|
32
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Agreement to resolve
Miner
|
45
|
|
|
—
|
|
|
45
|
|
|
—
|
|
||||
Payments
|
(145
|
)
|
|
(13
|
)
|
|
—
|
|
|
(3
|
)
|
||||
Accrued liability for tobacco and health litigation items at end of period
|
$
|
75
|
|
|
$
|
141
|
|
|
$
|
75
|
|
|
$
|
141
|
|
▪
|
2003 NPM Adjustment
. With one exception (Montana), the courts have ruled that the states’ claims of diligent enforcement are to be submitted to arbitration. PM USA and other PMs entered into an agreement with most of the MSA states and territories concerning the 2003 NPM Adjustment, under which such states and territories would receive a partial liability reduction of
20%
for the 2003 NPM Adjustment in the event the arbitration panel determined
|
▪
|
2004 and Subsequent NPM Adjustments
. PM USA believes that the MSA requires the states’ diligent enforcement claims for 2004 and thereafter to be determined in multi-state arbitrations, although a number of non-signatory states filed motions in their state courts contending that the claims are to be determined in separate arbitrations for individual states or that there is no arbitrable dispute for 2004. In September 2015, a Missouri intermediate appellate court ruled that Missouri was entitled to a single-state arbitration to determine whether Missouri diligently enforced for 2004. PM USA appealed this ruling, and the Supreme Court of Missouri granted review. No assurance can be given that the outcome of such appeal will be favorable to PM USA. In December 2015, a Wisconsin trial court ruled that Wisconsin must arbitrate its claim of diligent enforcement for 2004, and Wisconsin has since agreed to join the 2004 diligent enforcement arbitration.
|
▪
|
defendants falsely denied, distorted and minimized the significant adverse health consequences of smoking;
|
▪
|
defendants hid from the public that cigarette smoking and nicotine are addictive;
|
▪
|
defendants falsely denied that they control the level of nicotine delivered to create and sustain addiction;
|
▪
|
defendants falsely marketed and promoted “low tar/light” cigarettes as less harmful than full-flavor cigarettes;
|
▪
|
defendants falsely denied that they intentionally marketed to youth;
|
▪
|
defendants publicly and falsely denied that ETS is hazardous to non-smokers; and
|
▪
|
defendants suppressed scientific research.
|
▪
|
its application to defendants’ subsidiaries;
|
▪
|
the prohibition on the use of express or implied health messages or health descriptors, but only to the extent of extraterritorial application;
|
▪
|
its point-of-sale display provisions; and
|
▪
|
its application to Brown & Williamson Holdings.
|
▪
|
Aspinall
: In August 2004, the Massachusetts Supreme Judicial Court affirmed the class certification order. In August 2006, the trial court denied PM USA’s motion for summary judgment and granted plaintiffs’ cross-motion for summary judgment on the defenses of federal preemption and a state law exemption to Massachusetts’ consumer protection statute. On motion of the parties, the trial court subsequently reported its decision to deny summary judgment to the appeals court for review and stayed further proceedings pending completion of the appellate review. In March 2009, the Massachusetts Supreme Judicial Court affirmed the order denying summary judgment to PM USA and granting the plaintiffs’ cross-motion. In January 2010, plaintiffs moved for partial summary judgment as to liability claiming collateral estoppel from the findings in the case brought by the Department of Justice (see
Health Care Cost Recovery Litigation - Federal Government’s Lawsuit
described above). In March 2012, the trial court denied plaintiffs’ motion. In February 2013, the trial court, upon agreement of the parties, dismissed without prejudice plaintiffs’ claims against Altria Group, Inc. PM USA is now the sole defendant in the case. In September 2013, the case was transferred to the Business Litigation Session of the Massachusetts Superior Court. Also in September 2013, plaintiffs filed a motion for partial summary judgment on the scope of remedies available in the case, which the Massachusetts Superior Court denied in February 2014, concluding that plaintiffs cannot obtain disgorgement of profits as an equitable remedy and that their recovery is limited to actual damages or
$25
per class member if they cannot prove actual damages greater than
$25
. Plaintiffs filed a motion asking the trial court to report its February 2014 ruling to the Massachusetts Appeals Court for review, which the trial court denied. In March 2014, plaintiffs petitioned the Massachusetts Appeals Court for review of the ruling, which the appellate court denied. In August
|
▪
|
Larsen
: In August 2005, a Missouri Court of Appeals affirmed the class certification order. In December 2009, the trial court denied plaintiffs’ motion for reconsideration of the period during which potential class members can qualify to become part of the class. The class period remains 1995-2003. In June 2010, PM USA’s motion for partial summary judgment regarding plaintiffs’ request for punitive damages was denied. In April 2010, plaintiffs moved for partial summary judgment as to an element of liability in the case, claiming collateral estoppel from the findings in the case brought by the Department of Justice (see
Health Care Cost Recovery Litigation - Federal Government’s Lawsuit
described above). The plaintiffs’ motion was denied in December 2010. In June 2011, PM USA filed various summary judgment motions challenging the plaintiffs’ claims. In August 2011, the trial court granted PM USA’s motion for partial summary judgment, ruling that plaintiffs could not present a damages claim based on allegations that
Marlboro
Lights are more dangerous than
Marlboro
Reds. The trial court denied PM USA’s remaining summary judgment motions. Trial in the case began in September 2011 and, in October 2011, the court declared a mistrial after the jury failed to reach a verdict. In January 2014, the trial court reversed its prior ruling granting partial summary judgment against plaintiffs’ “more dangerous” claim and allowed plaintiffs to pursue that claim. In October 2014, PM USA filed motions to decertify the class and for partial summary judgment on plaintiffs’ “more dangerous” claim, which the court denied in June 2015. Upon retrial, in April 2016, the jury returned a verdict in favor of PM USA. In May 2016, plaintiffs filed a motion for a new trial, which PM USA opposed in June 2016. In August 2016, the trial court denied plaintiffs’ motion for a new trial, plaintiffs filed a notice of appeal and PM USA cross-appealed.
|
▪
|
Miner
:
In June 2007, the United States Supreme Court reversed the lower court rulings in
Miner
(formerly known as
Watson
) that denied plaintiffs’ motion to have the case heard in a state, as opposed to federal, trial court. The Supreme Court rejected defendants’ contention that the case must be tried in federal court under the “federal officer” statute. Following remand, the case was removed again to federal court in Arkansas and transferred to the MDL proceeding discussed above. In November 2010, the district court in the MDL proceeding remanded the case to Arkansas state court. In December 2011, plaintiffs voluntarily dismissed their claims against Altria Group, Inc. without prejudice. In March 2013, plaintiffs filed a class certification motion. In November 2013, the trial court granted class certification. The certified class includes those individuals who, from November 1, 1971 through June 22, 2010, purchased
Marlbor
o Lights and
Marlboro
Ultra Lights for personal consumption in Arkansas. PM USA filed a notice of appeal of the class certification ruling to the Arkansas Supreme Court in December 2013. In February 2015, the Arkansas Supreme Court affirmed the trial court’s class certification order. In May 2015, PM USA filed a motion for partial summary judgment seeking to foreclose any recovery for cigarette purchases prior to 1999, when a private right of action was added to the consumer protection statute under which plaintiffs are suing. The trial court denied the motion in July 2015. In June 2016, the trial court granted PM USA’s motion for partial summary judgment to limit any damages claimed by the plaintiffs’ class to purchases made prior to May 2003. In July 2016, the parties agreed to settle all claims for
$45 million
. The settlement was preliminarily approved by the trial court in August 2016 and is subject to final approval by the court. In the third quarter of 2016, PM USA recorded a provision on its condensed consolidated balance sheet of
$45 million
.
|
▪
|
the date, if any, on which PM USA consolidates with or merges into Altria Group, Inc. or any successor;
|
▪
|
the date, if any, on which Altria Group, Inc. or any successor consolidates with or merges into PM USA;
|
▪
|
the payment in full of the Obligations pertaining to such Guarantees; and
|
▪
|
the rating of Altria Group, Inc.’s long-term senior unsecured debt by Standard & Poor’s of A or higher.
|
|
|
Altria
Group, Inc.
|
|
|
PM USA
|
|
|
Non-
Guarantor
Subsidiaries
|
|
|
Total
Consolidating
Adjustments
|
|
|
Consolidated
|
|
|||||
Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
2,239
|
|
|
$
|
1
|
|
|
$
|
58
|
|
|
$
|
—
|
|
|
$
|
2,298
|
|
Receivables
|
|
—
|
|
|
7
|
|
|
139
|
|
|
—
|
|
|
146
|
|
|||||
Inventories:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Leaf tobacco
|
|
—
|
|
|
510
|
|
|
334
|
|
|
—
|
|
|
844
|
|
|||||
Other raw materials
|
|
—
|
|
|
114
|
|
|
60
|
|
|
—
|
|
|
174
|
|
|||||
Work in process
|
|
—
|
|
|
6
|
|
|
404
|
|
|
—
|
|
|
410
|
|
|||||
Finished product
|
|
—
|
|
|
133
|
|
|
419
|
|
|
—
|
|
|
552
|
|
|||||
|
|
—
|
|
|
763
|
|
|
1,217
|
|
|
—
|
|
|
1,980
|
|
|||||
Due from Altria Group, Inc. and subsidiaries
|
|
—
|
|
|
3,673
|
|
|
1,453
|
|
|
(5,126
|
)
|
|
—
|
|
|||||
Deferred income taxes
|
|
—
|
|
|
1,277
|
|
|
9
|
|
|
(98
|
)
|
|
1,188
|
|
|||||
Other current assets
|
|
573
|
|
|
238
|
|
|
50
|
|
|
(70
|
)
|
|
791
|
|
|||||
Total current assets
|
|
2,812
|
|
|
5,959
|
|
|
2,926
|
|
|
(5,294
|
)
|
|
6,403
|
|
|||||
Property, plant and equipment, at cost
|
|
—
|
|
|
2,983
|
|
|
1,837
|
|
|
—
|
|
|
4,820
|
|
|||||
Less accumulated depreciation
|
|
—
|
|
|
2,082
|
|
|
769
|
|
|
—
|
|
|
2,851
|
|
|||||
|
|
—
|
|
|
901
|
|
|
1,068
|
|
|
—
|
|
|
1,969
|
|
|||||
Goodwill
|
|
—
|
|
|
—
|
|
|
5,285
|
|
|
—
|
|
|
5,285
|
|
|||||
Other intangible assets, net
|
|
—
|
|
|
2
|
|
|
12,040
|
|
|
—
|
|
|
12,042
|
|
|||||
Investment in SABMiller
|
|
5,826
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,826
|
|
|||||
Investment in consolidated subsidiaries
|
|
11,805
|
|
|
2,714
|
|
|
—
|
|
|
(14,519
|
)
|
|
—
|
|
|||||
Finance assets, net
|
|
—
|
|
|
—
|
|
|
1,046
|
|
|
—
|
|
|
1,046
|
|
|||||
Due from Altria Group, Inc. and subsidiaries
|
|
4,790
|
|
|
—
|
|
|
—
|
|
|
(4,790
|
)
|
|
—
|
|
|||||
Other assets
|
|
18
|
|
|
537
|
|
|
144
|
|
|
(336
|
)
|
|
363
|
|
|||||
Total Assets
|
|
$
|
25,251
|
|
|
$
|
10,113
|
|
|
$
|
22,509
|
|
|
$
|
(24,939
|
)
|
|
$
|
32,934
|
|
|
|
Altria
Group, Inc.
|
|
|
PM USA
|
|
|
Non-
Guarantor
Subsidiaries
|
|
|
Total
Consolidating
Adjustments
|
|
|
Consolidated
|
|
|||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable
|
|
$
|
3
|
|
|
$
|
86
|
|
|
$
|
207
|
|
|
$
|
—
|
|
|
$
|
296
|
|
Accrued liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Marketing
|
|
—
|
|
|
681
|
|
|
116
|
|
|
—
|
|
|
797
|
|
|||||
Employment costs
|
|
80
|
|
|
7
|
|
|
129
|
|
|
—
|
|
|
216
|
|
|||||
Settlement charges
|
|
—
|
|
|
3,422
|
|
|
7
|
|
|
—
|
|
|
3,429
|
|
|||||
Other
|
|
301
|
|
|
517
|
|
|
314
|
|
|
(168
|
)
|
|
964
|
|
|||||
Dividends payable
|
|
1,193
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,193
|
|
|||||
Due to Altria Group, Inc. and subsidiaries
|
|
4,850
|
|
|
266
|
|
|
10
|
|
|
(5,126
|
)
|
|
—
|
|
|||||
Total current liabilities
|
|
6,427
|
|
|
4,979
|
|
|
783
|
|
|
(5,294
|
)
|
|
6,895
|
|
|||||
Long-term debt
|
|
13,878
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,878
|
|
|||||
Deferred income taxes
|
|
1,694
|
|
|
—
|
|
|
4,249
|
|
|
(336
|
)
|
|
5,607
|
|
|||||
Accrued pension costs
|
|
193
|
|
|
—
|
|
|
670
|
|
|
—
|
|
|
863
|
|
|||||
Accrued postretirement health care costs
|
|
—
|
|
|
1,459
|
|
|
837
|
|
|
—
|
|
|
2,296
|
|
|||||
Due to Altria Group, Inc. and subsidiaries
|
|
—
|
|
|
—
|
|
|
4,790
|
|
|
(4,790
|
)
|
|
—
|
|
|||||
Other liabilities
|
|
115
|
|
|
164
|
|
|
133
|
|
|
—
|
|
|
412
|
|
|||||
Total liabilities
|
|
22,307
|
|
|
6,602
|
|
|
11,462
|
|
|
(10,420
|
)
|
|
29,951
|
|
|||||
Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Redeemable noncontrolling interest
|
|
—
|
|
|
—
|
|
|
36
|
|
|
—
|
|
|
36
|
|
|||||
Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Common stock
|
|
935
|
|
|
—
|
|
|
9
|
|
|
(9
|
)
|
|
935
|
|
|||||
Additional paid-in capital
|
|
5,864
|
|
|
3,310
|
|
|
11,585
|
|
|
(14,895
|
)
|
|
5,864
|
|
|||||
Earnings reinvested in the business
|
|
27,816
|
|
|
467
|
|
|
1,213
|
|
|
(1,680
|
)
|
|
27,816
|
|
|||||
Accumulated other comprehensive losses
|
|
(3,278
|
)
|
|
(266
|
)
|
|
(1,799
|
)
|
|
2,065
|
|
|
(3,278
|
)
|
|||||
Cost of repurchased stock
|
|
(28,393
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(28,393
|
)
|
|||||
Total stockholders’ equity attributable to Altria Group, Inc.
|
|
2,944
|
|
|
3,511
|
|
|
11,008
|
|
|
(14,519
|
)
|
|
2,944
|
|
|||||
Noncontrolling interests
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
|||||
Total stockholders’ equity
|
|
2,944
|
|
|
3,511
|
|
|
11,011
|
|
|
(14,519
|
)
|
|
2,947
|
|
|||||
Total Liabilities and Stockholders’ Equity
|
|
$
|
25,251
|
|
|
$
|
10,113
|
|
|
$
|
22,509
|
|
|
$
|
(24,939
|
)
|
|
$
|
32,934
|
|
|
|
Altria
Group, Inc. |
|
|
PM USA
|
|
|
Non-
Guarantor Subsidiaries |
|
|
Total
Consolidating Adjustments |
|
|
Consolidated
|
|
|||||
Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
2,313
|
|
|
$
|
—
|
|
|
$
|
56
|
|
|
$
|
—
|
|
|
$
|
2,369
|
|
Receivables
|
|
—
|
|
|
7
|
|
|
117
|
|
|
—
|
|
|
124
|
|
|||||
Inventories:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Leaf tobacco
|
|
—
|
|
|
562
|
|
|
395
|
|
|
—
|
|
|
957
|
|
|||||
Other raw materials
|
|
—
|
|
|
123
|
|
|
58
|
|
|
—
|
|
|
181
|
|
|||||
Work in process
|
|
—
|
|
|
5
|
|
|
439
|
|
|
—
|
|
|
444
|
|
|||||
Finished product
|
|
—
|
|
|
121
|
|
|
328
|
|
|
—
|
|
|
449
|
|
|||||
|
|
—
|
|
|
811
|
|
|
1,220
|
|
|
—
|
|
|
2,031
|
|
|||||
Due from Altria Group, Inc. and subsidiaries
|
|
—
|
|
|
3,821
|
|
|
1,807
|
|
|
(5,628
|
)
|
|
—
|
|
|||||
Deferred income taxes
|
|
—
|
|
|
1,268
|
|
|
7
|
|
|
(100
|
)
|
|
1,175
|
|
|||||
Other current assets
|
|
284
|
|
|
65
|
|
|
112
|
|
|
(74
|
)
|
|
387
|
|
|||||
Total current assets
|
|
2,597
|
|
|
5,972
|
|
|
3,319
|
|
|
(5,802
|
)
|
|
6,086
|
|
|||||
Property, plant and equipment, at cost
|
|
—
|
|
|
3,102
|
|
|
1,775
|
|
|
—
|
|
|
4,877
|
|
|||||
Less accumulated depreciation
|
|
—
|
|
|
2,157
|
|
|
738
|
|
|
—
|
|
|
2,895
|
|
|||||
|
|
—
|
|
|
945
|
|
|
1,037
|
|
|
—
|
|
|
1,982
|
|
|||||
Goodwill
|
|
—
|
|
|
—
|
|
|
5,285
|
|
|
—
|
|
|
5,285
|
|
|||||
Other intangible assets, net
|
|
—
|
|
|
2
|
|
|
12,026
|
|
|
—
|
|
|
12,028
|
|
|||||
Investment in SABMiller
|
|
5,483
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,483
|
|
|||||
Investment in consolidated subsidiaries
|
|
11,648
|
|
|
2,715
|
|
|
—
|
|
|
(14,363
|
)
|
|
—
|
|
|||||
Finance assets, net
|
|
—
|
|
|
—
|
|
|
1,239
|
|
|
—
|
|
|
1,239
|
|
|||||
Due from Altria Group, Inc. and subsidiaries
|
|
4,790
|
|
|
—
|
|
|
—
|
|
|
(4,790
|
)
|
|
—
|
|
|||||
Other assets
|
|
20
|
|
|
536
|
|
|
131
|
|
|
(327
|
)
|
|
360
|
|
|||||
Total Assets
|
|
$
|
24,538
|
|
|
$
|
10,170
|
|
|
$
|
23,037
|
|
|
$
|
(25,282
|
)
|
|
$
|
32,463
|
|
|
|
Altria
Group, Inc. |
|
|
PM USA
|
|
|
Non-
Guarantor Subsidiaries |
|
|
Total
Consolidating Adjustments |
|
|
Consolidated
|
|
|||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Current portion of long-term debt
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
4
|
|
Accounts payable
|
|
3
|
|
|
104
|
|
|
293
|
|
|
—
|
|
|
400
|
|
|||||
Accrued liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Marketing
|
|
—
|
|
|
586
|
|
|
109
|
|
|
—
|
|
|
695
|
|
|||||
Employment costs
|
|
18
|
|
|
11
|
|
|
169
|
|
|
—
|
|
|
198
|
|
|||||
Settlement charges
|
|
—
|
|
|
3,585
|
|
|
5
|
|
|
—
|
|
|
3,590
|
|
|||||
Other
|
|
354
|
|
|
616
|
|
|
285
|
|
|
(174
|
)
|
|
1,081
|
|
|||||
Dividends payable
|
|
1,110
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,110
|
|
|||||
Due to Altria Group, Inc. and subsidiaries
|
|
5,427
|
|
|
191
|
|
|
10
|
|
|
(5,628
|
)
|
|
—
|
|
|||||
Total current liabilities
|
|
6,912
|
|
|
5,093
|
|
|
875
|
|
|
(5,802
|
)
|
|
7,078
|
|
|||||
Long-term debt
|
|
12,831
|
|
|
—
|
|
|
12
|
|
|
—
|
|
|
12,843
|
|
|||||
Deferred income taxes
|
|
1,547
|
|
|
—
|
|
|
4,443
|
|
|
(327
|
)
|
|
5,663
|
|
|||||
Accrued pension costs
|
|
215
|
|
|
—
|
|
|
1,062
|
|
|
—
|
|
|
1,277
|
|
|||||
Accrued postretirement health care costs
|
|
—
|
|
|
1,460
|
|
|
785
|
|
|
—
|
|
|
2,245
|
|
|||||
Due to Altria Group, Inc. and subsidiaries
|
|
—
|
|
|
—
|
|
|
4,790
|
|
|
(4,790
|
)
|
|
—
|
|
|||||
Other liabilities
|
|
153
|
|
|
126
|
|
|
168
|
|
|
—
|
|
|
447
|
|
|||||
Total liabilities
|
|
21,658
|
|
|
6,679
|
|
|
12,135
|
|
|
(10,919
|
)
|
|
29,553
|
|
|||||
Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Redeemable noncontrolling interest
|
|
—
|
|
|
—
|
|
|
37
|
|
|
—
|
|
|
37
|
|
|||||
Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Common stock
|
|
935
|
|
|
—
|
|
|
9
|
|
|
(9
|
)
|
|
935
|
|
|||||
Additional paid-in capital
|
|
5,813
|
|
|
3,310
|
|
|
11,456
|
|
|
(14,766
|
)
|
|
5,813
|
|
|||||
Earnings reinvested in the business
|
|
27,257
|
|
|
436
|
|
|
1,099
|
|
|
(1,535
|
)
|
|
27,257
|
|
|||||
Accumulated other comprehensive losses
|
|
(3,280
|
)
|
|
(255
|
)
|
|
(1,692
|
)
|
|
1,947
|
|
|
(3,280
|
)
|
|||||
Cost of repurchased stock
|
|
(27,845
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27,845
|
)
|
|||||
Total stockholders’ equity attributable to Altria Group, Inc.
|
|
2,880
|
|
|
3,491
|
|
|
10,872
|
|
|
(14,363
|
)
|
|
2,880
|
|
|||||
Noncontrolling interests
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
(7
|
)
|
|||||
Total stockholders’ equity
|
|
2,880
|
|
|
3,491
|
|
|
10,865
|
|
|
(14,363
|
)
|
|
2,873
|
|
|||||
Total Liabilities and Stockholders’ Equity
|
|
$
|
24,538
|
|
|
$
|
10,170
|
|
|
$
|
23,037
|
|
|
$
|
(25,282
|
)
|
|
$
|
32,463
|
|
|
|
Altria
Group, Inc. |
|
|
PM USA
|
|
|
Non-
Guarantor Subsidiaries |
|
|
Total
Consolidating Adjustments |
|
|
Consolidated
|
|
|||||
Net revenues
|
|
$
|
—
|
|
|
$
|
16,874
|
|
|
$
|
2,646
|
|
|
$
|
(28
|
)
|
|
$
|
19,492
|
|
Cost of sales
|
|
—
|
|
|
5,084
|
|
|
785
|
|
|
(28
|
)
|
|
5,841
|
|
|||||
Excise taxes on products
|
|
—
|
|
|
4,723
|
|
|
165
|
|
|
—
|
|
|
4,888
|
|
|||||
Gross profit
|
|
—
|
|
|
7,067
|
|
|
1,696
|
|
|
—
|
|
|
8,763
|
|
|||||
Marketing, administration and research costs
|
|
113
|
|
|
1,435
|
|
|
323
|
|
|
—
|
|
|
1,871
|
|
|||||
Asset impairment and exit costs
|
|
5
|
|
|
96
|
|
|
22
|
|
|
—
|
|
|
123
|
|
|||||
Operating (expense) income
|
|
(118
|
)
|
|
5,536
|
|
|
1,351
|
|
|
—
|
|
|
6,769
|
|
|||||
Interest and other debt expense, net
|
|
393
|
|
|
13
|
|
|
165
|
|
|
—
|
|
|
571
|
|
|||||
Loss on early extinguishment of debt
|
|
823
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
823
|
|
|||||
Earnings from equity investment in SABMiller
|
|
(564
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(564
|
)
|
|||||
Gain on derivative financial instruments
|
|
(205
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(205
|
)
|
|||||
(Loss) earnings before income taxes and equity earnings of subsidiaries
|
|
(565
|
)
|
|
5,523
|
|
|
1,186
|
|
|
—
|
|
|
6,144
|
|
|||||
(Benefit) provision for income taxes
|
|
(269
|
)
|
|
2,023
|
|
|
424
|
|
|
—
|
|
|
2,178
|
|
|||||
Equity earnings of subsidiaries
|
|
4,259
|
|
|
217
|
|
|
—
|
|
|
(4,476
|
)
|
|
—
|
|
|||||
Net earnings
|
|
3,963
|
|
|
3,717
|
|
|
762
|
|
|
(4,476
|
)
|
|
3,966
|
|
|||||
Net earnings attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|||||
Net earnings attributable to Altria Group, Inc.
|
|
$
|
3,963
|
|
|
$
|
3,717
|
|
|
$
|
759
|
|
|
$
|
(4,476
|
)
|
|
$
|
3,963
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net earnings
|
|
$
|
3,963
|
|
|
$
|
3,717
|
|
|
$
|
762
|
|
|
$
|
(4,476
|
)
|
|
$
|
3,966
|
|
Other comprehensive earnings (losses), net of deferred income taxes
|
|
2
|
|
|
(11
|
)
|
|
(107
|
)
|
|
118
|
|
|
2
|
|
|||||
Comprehensive earnings
|
|
3,965
|
|
|
3,706
|
|
|
655
|
|
|
(4,358
|
)
|
|
3,968
|
|
|||||
Comprehensive earnings attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|||||
Comprehensive earnings attributable to
Altria Group, Inc.
|
|
$
|
3,965
|
|
|
$
|
3,706
|
|
|
$
|
652
|
|
|
$
|
(4,358
|
)
|
|
$
|
3,965
|
|
|
|
Altria
Group, Inc.
|
|
|
PM USA
|
|
|
Non-
Guarantor
Subsidiaries
|
|
|
Total
Consolidating
Adjustments
|
|
|
Consolidated
|
|
|||||
Net revenues
|
|
$
|
—
|
|
|
$
|
16,743
|
|
|
$
|
2,405
|
|
|
$
|
(32
|
)
|
|
$
|
19,116
|
|
Cost of sales
|
|
—
|
|
|
4,983
|
|
|
782
|
|
|
(32
|
)
|
|
5,733
|
|
|||||
Excise taxes on products
|
|
—
|
|
|
4,834
|
|
|
157
|
|
|
—
|
|
|
4,991
|
|
|||||
Gross profit
|
|
—
|
|
|
6,926
|
|
|
1,466
|
|
|
—
|
|
|
8,392
|
|
|||||
Marketing, administration and research costs
|
|
135
|
|
|
1,511
|
|
|
305
|
|
|
—
|
|
|
1,951
|
|
|||||
Reduction of PMI tax-related receivable
|
|
41
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
41
|
|
|||||
Asset impairment and exit costs
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
|||||
Operating (expense) income
|
|
(176
|
)
|
|
5,415
|
|
|
1,157
|
|
|
—
|
|
|
6,396
|
|
|||||
Interest and other debt expense, net
|
|
430
|
|
|
11
|
|
|
168
|
|
|
—
|
|
|
609
|
|
|||||
Loss on early extinguishment of debt
|
|
228
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
228
|
|
|||||
Earnings from equity investment in SABMiller
|
|
(546
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(546
|
)
|
|||||
(Loss) earnings before income taxes and equity earnings of subsidiaries
|
|
(288
|
)
|
|
5,404
|
|
|
989
|
|
|
—
|
|
|
6,105
|
|
|||||
(Benefit) provision for income taxes
|
|
(200
|
)
|
|
1,959
|
|
|
351
|
|
|
—
|
|
|
2,110
|
|
|||||
Equity earnings of subsidiaries
|
|
4,082
|
|
|
197
|
|
|
—
|
|
|
(4,279
|
)
|
|
—
|
|
|||||
Net earnings
|
|
3,994
|
|
|
3,642
|
|
|
638
|
|
|
(4,279
|
)
|
|
3,995
|
|
|||||
Net earnings attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Net earnings attributable to Altria Group, Inc.
|
|
$
|
3,994
|
|
|
$
|
3,642
|
|
|
$
|
637
|
|
|
$
|
(4,279
|
)
|
|
$
|
3,994
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net earnings
|
|
$
|
3,994
|
|
|
$
|
3,642
|
|
|
$
|
638
|
|
|
$
|
(4,279
|
)
|
|
$
|
3,995
|
|
Other comprehensive (losses) earnings, net of deferred income taxes
|
|
(475
|
)
|
|
11
|
|
|
102
|
|
|
(113
|
)
|
|
(475
|
)
|
|||||
Comprehensive earnings
|
|
3,519
|
|
|
3,653
|
|
|
740
|
|
|
(4,392
|
)
|
|
3,520
|
|
|||||
Comprehensive earnings attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Comprehensive earnings attributable to
Altria Group, Inc.
|
|
$
|
3,519
|
|
|
$
|
3,653
|
|
|
$
|
739
|
|
|
$
|
(4,392
|
)
|
|
$
|
3,519
|
|
|
|
Altria
Group, Inc. |
|
|
PM USA
|
|
|
Non-
Guarantor Subsidiaries |
|
|
Total
Consolidating Adjustments |
|
|
Consolidated
|
|
|||||
Net revenues
|
|
$
|
—
|
|
|
$
|
5,964
|
|
|
$
|
950
|
|
|
$
|
(9
|
)
|
|
$
|
6,905
|
|
Cost of sales
|
|
—
|
|
|
1,767
|
|
|
285
|
|
|
(9
|
)
|
|
2,043
|
|
|||||
Excise taxes on products
|
|
—
|
|
|
1,654
|
|
|
58
|
|
|
—
|
|
|
1,712
|
|
|||||
Gross profit
|
|
—
|
|
|
2,543
|
|
|
607
|
|
|
—
|
|
|
3,150
|
|
|||||
Marketing, administration and research costs
|
|
40
|
|
|
607
|
|
|
119
|
|
|
—
|
|
|
766
|
|
|||||
Asset impairment and exit costs
|
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
2
|
|
|||||
Operating (expense) income
|
|
(40
|
)
|
|
1,935
|
|
|
487
|
|
|
—
|
|
|
2,382
|
|
|||||
Interest and other debt expense (income), net
|
|
129
|
|
|
(4
|
)
|
|
54
|
|
|
—
|
|
|
179
|
|
|||||
Loss on early extinguishment of debt
|
|
823
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
823
|
|
|||||
Earnings from equity investment in SABMiller
|
|
(299
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(299
|
)
|
|||||
Gain on derivative financial instruments
|
|
(48
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(48
|
)
|
|||||
(Loss) earnings before income taxes and equity earnings of subsidiaries
|
|
(645
|
)
|
|
1,939
|
|
|
433
|
|
|
—
|
|
|
1,727
|
|
|||||
(Benefit) provision for income taxes
|
|
(232
|
)
|
|
707
|
|
|
158
|
|
|
—
|
|
|
633
|
|
|||||
Equity earnings of subsidiaries
|
|
1,506
|
|
|
77
|
|
|
—
|
|
|
(1,583
|
)
|
|
—
|
|
|||||
Net earnings
|
|
1,093
|
|
|
1,309
|
|
|
275
|
|
|
(1,583
|
)
|
|
1,094
|
|
|||||
Net earnings attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Net earnings attributable to Altria Group, Inc.
|
|
$
|
1,093
|
|
|
$
|
1,309
|
|
|
$
|
274
|
|
|
$
|
(1,583
|
)
|
|
$
|
1,093
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net earnings
|
|
$
|
1,093
|
|
|
$
|
1,309
|
|
|
$
|
275
|
|
|
$
|
(1,583
|
)
|
|
$
|
1,094
|
|
Other comprehensive earnings, net of deferred income taxes
|
|
62
|
|
|
4
|
|
|
22
|
|
|
(26
|
)
|
|
62
|
|
|||||
Comprehensive earnings
|
|
1,155
|
|
|
1,313
|
|
|
297
|
|
|
(1,609
|
)
|
|
1,156
|
|
|||||
Comprehensive earnings attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Comprehensive earnings attributable to
Altria Group, Inc. |
|
$
|
1,155
|
|
|
$
|
1,313
|
|
|
$
|
296
|
|
|
$
|
(1,609
|
)
|
|
$
|
1,155
|
|
|
|
Altria
Group, Inc. |
|
|
PM USA
|
|
|
Non-
Guarantor Subsidiaries |
|
|
Total
Consolidating Adjustments |
|
|
Consolidated
|
|
|||||
Net revenues
|
|
$
|
—
|
|
|
$
|
5,865
|
|
|
$
|
845
|
|
|
$
|
(11
|
)
|
|
$
|
6,699
|
|
Cost of sales
|
|
—
|
|
|
1,671
|
|
|
272
|
|
|
(11
|
)
|
|
1,932
|
|
|||||
Excise taxes on products
|
|
—
|
|
|
1,670
|
|
|
51
|
|
|
—
|
|
|
1,721
|
|
|||||
Gross profit
|
|
—
|
|
|
2,524
|
|
|
522
|
|
|
—
|
|
|
3,046
|
|
|||||
Marketing, administration and research costs
|
|
46
|
|
|
552
|
|
|
100
|
|
|
—
|
|
|
698
|
|
|||||
Reduction of PMI tax-related receivable
|
|
41
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
41
|
|
|||||
Operating (expense) income
|
|
(87
|
)
|
|
1,972
|
|
|
422
|
|
|
—
|
|
|
2,307
|
|
|||||
Interest and other debt expense, net
|
|
138
|
|
|
11
|
|
|
56
|
|
|
—
|
|
|
205
|
|
|||||
Earnings from equity investment in SABMiller
|
|
(187
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(187
|
)
|
|||||
(Loss) earnings before income taxes and equity earnings of subsidiaries
|
|
(38
|
)
|
|
1,961
|
|
|
366
|
|
|
—
|
|
|
2,289
|
|
|||||
(Benefit) provision for income taxes
|
|
(55
|
)
|
|
685
|
|
|
131
|
|
|
—
|
|
|
761
|
|
|||||
Equity earnings of subsidiaries
|
|
1,511
|
|
|
71
|
|
|
—
|
|
|
(1,582
|
)
|
|
—
|
|
|||||
Net earnings
|
|
1,528
|
|
|
1,347
|
|
|
235
|
|
|
(1,582
|
)
|
|
1,528
|
|
|||||
Net earnings attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net earnings attributable to Altria Group, Inc.
|
|
$
|
1,528
|
|
|
$
|
1,347
|
|
|
$
|
235
|
|
|
$
|
(1,582
|
)
|
|
$
|
1,528
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net earnings
|
|
$
|
1,528
|
|
|
$
|
1,347
|
|
|
$
|
235
|
|
|
$
|
(1,582
|
)
|
|
$
|
1,528
|
|
Other comprehensive (losses) earnings, net of deferred income taxes
|
|
(279
|
)
|
|
4
|
|
|
32
|
|
|
(36
|
)
|
|
(279
|
)
|
|||||
Comprehensive earnings
|
|
1,249
|
|
|
1,351
|
|
|
267
|
|
|
(1,618
|
)
|
|
1,249
|
|
|||||
Comprehensive earnings attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Comprehensive earnings attributable to
Altria Group, Inc. |
|
$
|
1,249
|
|
|
$
|
1,351
|
|
|
$
|
267
|
|
|
$
|
(1,618
|
)
|
|
$
|
1,249
|
|
|
|
Altria
Group, Inc.
|
|
|
PM USA
|
|
|
Non-
Guarantor
Subsidiaries
|
|
|
Total
Consolidating
Adjustments
|
|
|
Consolidated
|
|
|||||
Cash Provided by Operating Activities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by operating activities
|
|
$
|
4,241
|
|
|
$
|
3,582
|
|
|
$
|
8
|
|
|
$
|
(4,331
|
)
|
|
$
|
3,500
|
|
Cash Provided by (Used in) Investing Activities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital expenditures
|
|
—
|
|
|
(23
|
)
|
|
(105
|
)
|
|
—
|
|
|
(128
|
)
|
|||||
Proceeds from finance assets
|
|
—
|
|
|
—
|
|
|
207
|
|
|
—
|
|
|
207
|
|
|||||
Other
|
|
(3
|
)
|
|
—
|
|
|
(41
|
)
|
|
—
|
|
|
(44
|
)
|
|||||
Net cash (used in) provided by investing activities
|
|
(3
|
)
|
|
(23
|
)
|
|
61
|
|
|
—
|
|
|
35
|
|
|||||
Cash Provided by (Used in) Financing Activities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-term debt issued
|
|
1,976
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,976
|
|
|||||
Long-term debt repaid
|
|
(933
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(933
|
)
|
|||||
Repurchases of common stock
|
|
(512
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(512
|
)
|
|||||
Dividends paid on common stock
|
|
(3,321
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,321
|
)
|
|||||
Changes in amounts due to/from Altria Group, Inc. and subsidiaries
|
|
(715
|
)
|
|
128
|
|
|
587
|
|
|
—
|
|
|
—
|
|
|||||
Premiums and fees related to early extinguishment
of debt
|
|
(809
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(809
|
)
|
|||||
Cash dividends paid to parent
|
|
—
|
|
|
(3,686
|
)
|
|
(645
|
)
|
|
4,331
|
|
|
—
|
|
|||||
Other
|
|
2
|
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
|
(7
|
)
|
|||||
Net cash used in financing activities
|
|
(4,312
|
)
|
|
(3,558
|
)
|
|
(67
|
)
|
|
4,331
|
|
|
(3,606
|
)
|
|||||
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
(Decrease) increase
|
|
(74
|
)
|
|
1
|
|
|
2
|
|
|
—
|
|
|
(71
|
)
|
|||||
Balance at beginning of period
|
|
2,313
|
|
|
—
|
|
|
56
|
|
|
—
|
|
|
2,369
|
|
|||||
Balance at end of period
|
|
$
|
2,239
|
|
|
$
|
1
|
|
|
$
|
58
|
|
|
$
|
—
|
|
|
$
|
2,298
|
|
|
|
Altria
Group, Inc.
|
|
|
PM USA
|
|
|
Non-
Guarantor
Subsidiaries
|
|
|
Total
Consolidating
Adjustments
|
|
|
Consolidated
|
|
|||||
Cash Provided by Operating Activities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by operating activities
|
|
$
|
3,557
|
|
|
$
|
3,767
|
|
|
$
|
655
|
|
|
$
|
(3,889
|
)
|
|
$
|
4,090
|
|
Cash Provided by (Used in) Investing Activities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital expenditures
|
|
—
|
|
|
(37
|
)
|
|
(125
|
)
|
|
—
|
|
|
(162
|
)
|
|||||
Proceeds from finance assets
|
|
—
|
|
|
—
|
|
|
255
|
|
|
—
|
|
|
255
|
|
|||||
Other
|
|
—
|
|
|
10
|
|
|
(8
|
)
|
|
—
|
|
|
2
|
|
|||||
Net cash (used in) provided by investing activities
|
|
—
|
|
|
(27
|
)
|
|
122
|
|
|
—
|
|
|
95
|
|
|||||
Cash Provided by (Used in) Financing Activities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-term debt repaid
|
|
(1,793
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,793
|
)
|
|||||
Repurchases of common stock
|
|
(518
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(518
|
)
|
|||||
Dividends paid on common stock
|
|
(3,071
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,071
|
)
|
|||||
Changes in amounts due to/from Altria Group, Inc. and subsidiaries
|
|
611
|
|
|
(492
|
)
|
|
(119
|
)
|
|
—
|
|
|
—
|
|
|||||
Premiums and fees related to early extinguishment of debt
|
|
(226
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(226
|
)
|
|||||
Cash dividends paid to parent
|
|
—
|
|
|
(3,249
|
)
|
|
(640
|
)
|
|
3,889
|
|
|
—
|
|
|||||
Other
|
|
17
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
9
|
|
|||||
Net cash used in financing activities
|
|
(4,980
|
)
|
|
(3,741
|
)
|
|
(767
|
)
|
|
3,889
|
|
|
(5,599
|
)
|
|||||
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
(Decrease) increase
|
|
(1,423
|
)
|
|
(1
|
)
|
|
10
|
|
|
—
|
|
|
(1,414
|
)
|
|||||
Balance at beginning of period
|
|
3,281
|
|
|
3
|
|
|
37
|
|
|
—
|
|
|
3,321
|
|
|||||
Balance at end of period
|
|
$
|
1,858
|
|
|
$
|
2
|
|
|
$
|
47
|
|
|
$
|
—
|
|
|
$
|
1,907
|
|
Standards
|
Description
|
Effective Date for Public Entity
|
Effect on financial statements and other significant matters
|
ASU Nos. 2014-09; 2015-14; 2016-08; 2016-10; 2016-12
Revenue from Contracts with Customers (Topic 606)
|
The guidance establishes principles for reporting information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from an entity’s contracts with customers.
|
The guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period.
|
Altria Group, Inc. is in the process of evaluating the impact of this guidance on its consolidated financial statements and related disclosures.
|
ASU No. 2015-17
Balance Sheet Classification of Deferred Taxes (Topic 740)
|
The guidance simplifies the presentation of deferred income taxes by requiring that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. This guidance does not change the current requirement that deferred tax liabilities and assets for each tax-paying jurisdiction be offset and presented as a single amount. The guidance may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented.
|
The guidance is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is permitted.
|
Under the new guidance, at September 30, 2016, current deferred income tax assets of approximately $1.2 billion would have been reclassified to noncurrent deferred income tax liabilities ($1.0 billion) and noncurrent deferred income tax assets ($0.2 billion). Altria Group, Inc. will adopt the new guidance by the first quarter of 2017.
|
ASU No. 2016-01
Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825-10)
|
The guidance addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments.
|
The guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption of the guidance is not permitted, except for a certain provision of the guidance.
|
Altria Group, Inc. is in the process of evaluating the impact of this guidance on its consolidated financial statements and related disclosures.
|
ASU No. 2016-02
Leases (Topic 842)
|
The guidance increases transparency and comparability among organizations by requiring entities to recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements.
|
The guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. Early adoption is permitted.
|
Altria Group, Inc. is in the process of evaluating the impact of this guidance on its consolidated financial statements and related disclosures.
|
ASU No. 2016-09
Improvements to Employee Share-Based Payment Accounting (Topic 718)
|
The guidance simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows.
|
The guidance is effective for annual reporting periods beginning after December 15, 2016, and interim periods within that reporting period. Early adoption is permitted in any interim or annual period.
|
The adoption of this guidance is not expected to have a material impact on Altria Group, Inc.’s consolidated financial statements. Altria Group, Inc. expects to adopt this guidance effective January 1, 2017.
|
Standards
|
Description
|
Effective Date for Public Entity
|
Effect on financial statements and other significant matters
|
ASU No. 2016-13
Measurement of Credit Losses on Financial Instruments
(Topic 326)
|
The guidance replaces the current incurred loss impairment methodology for recognizing credit losses for financial assets with a methodology that reflects the entity’s current estimate of all expected credit losses and requires consideration of a broader range of reasonable and supportable information for estimating credit losses.
|
The guidance is effective for annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period.
|
Altria Group, Inc. is in the process of evaluating the impact of this guidance on its consolidated financial statements and related disclosures.
|
ASU No. 2016-15
Classification of Certain Cash Receipts and Cash Payments (Topic 230)
|
The guidance addresses how eight specific cash flow issues are to be presented and classified in the statement of cash flows.
|
The guidance is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period.
|
Altria Group, Inc. is in the process of evaluating the impact of this guidance on its consolidated financial statements and related disclosures.
|
|
Net Earnings
|
|
Diluted EPS
|
||||
|
(in millions, except per share data)
|
||||||
For the nine months ended September 30, 2015
|
$
|
3,994
|
|
|
$
|
2.03
|
|
|
|
|
|
||||
2015 NPM Adjustment Items
|
(80
|
)
|
|
(0.04
|
)
|
||
2015 Tobacco and health litigation items
|
73
|
|
|
0.04
|
|
||
2015 SABMiller special items
|
62
|
|
|
0.03
|
|
||
2015 Loss on early extinguishment of debt
|
143
|
|
|
0.07
|
|
||
2015 Asset impairment, exit and integration costs
|
6
|
|
|
—
|
|
||
2015 Tax items
|
(17
|
)
|
|
—
|
|
||
Subtotal 2015 special items
|
187
|
|
|
0.10
|
|
||
|
|
|
|
||||
2016 NPM Adjustment Items
|
(11
|
)
|
|
(0.01
|
)
|
||
2016 Asset impairment, exit, implementation and acquisition-related costs
|
(84
|
)
|
|
(0.04
|
)
|
||
2016 Tobacco and health litigation items
|
(56
|
)
|
|
(0.03
|
)
|
||
2016 SABMiller special items
|
(96
|
)
|
|
(0.05
|
)
|
||
2016 Gain on derivative financial instruments
|
129
|
|
|
0.07
|
|
||
2016 Loss on early extinguishment of debt
|
(541
|
)
|
|
(0.28
|
)
|
||
2016 Tax items
|
17
|
|
|
0.01
|
|
||
Subtotal 2016 special items
|
(642
|
)
|
|
(0.33
|
)
|
||
|
|
|
|
||||
Fewer shares outstanding
|
—
|
|
|
0.01
|
|
||
Change in tax rate
|
(14
|
)
|
|
(0.01
|
)
|
||
Operations
|
438
|
|
|
0.22
|
|
||
For the nine months ended September 30, 2016
|
$
|
3,963
|
|
|
$
|
2.02
|
|
|
|
|
|
▪
|
higher income from the smokeable products and smokeless products segments;
|
▪
|
higher earnings from Altria Group, Inc.’s equity investment in SABMiller;
|
▪
|
higher operating results from the financial services business;
|
▪
|
lower interest and other debt expense, net; and
|
▪
|
lower investment spending in the innovative tobacco products businesses.
|
|
Net Earnings
|
|
Diluted EPS
|
||||
|
(in millions, except per share data)
|
||||||
For the three months ended September 30, 2015
|
$
|
1,528
|
|
|
$
|
0.78
|
|
|
|
|
|
||||
2015 NPM Adjustment Items
|
(80
|
)
|
|
(0.04
|
)
|
||
2015 Tobacco and health litigation items
|
43
|
|
|
0.02
|
|
||
2015 SABMiller special items
|
4
|
|
|
—
|
|
||
2015 Integration costs
|
1
|
|
|
—
|
|
||
2015 Tax items
|
(21
|
)
|
|
(0.01
|
)
|
||
Subtotal 2015 special items
|
(53
|
)
|
|
(0.03
|
)
|
||
|
|
|
|
||||
2016 Asset impairment, exit and implementation costs
|
(2
|
)
|
|
—
|
|
||
2016 Tobacco and health litigation items
|
(29
|
)
|
|
(0.01
|
)
|
||
2016 SABMiller special items
|
26
|
|
|
0.01
|
|
||
2016 Gain on derivative financial instruments
|
29
|
|
|
0.02
|
|
||
2016 Loss on early extinguishment of debt
|
(541
|
)
|
|
(0.28
|
)
|
||
2016 Tax items
|
1
|
|
|
—
|
|
||
Subtotal 2016 special items
|
(516
|
)
|
|
(0.26
|
)
|
||
|
|
|
|
||||
Change in tax rate
|
(15
|
)
|
|
(0.01
|
)
|
||
Operations
|
149
|
|
|
0.08
|
|
||
For the three months ended September 30, 2016
|
$
|
1,093
|
|
|
$
|
0.56
|
|
|
|
|
|
▪
|
higher income from the smokeable products and smokeless products segments;
|
▪
|
higher earnings from Altria Group, Inc.’s equity investment in SABMiller; and
|
▪
|
higher operating results from the financial services business.
|
|
|
For the Nine Months Ended September 30,
|
|
For the Three Months Ended September 30,
|
||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
|
(in millions)
|
||||||||||||||
Net revenues:
|
|
|
|
|
|
|
|
|
||||||||
Smokeable products
|
|
$
|
17,398
|
|
|
$
|
17,235
|
|
|
$
|
6,147
|
|
|
$
|
6,040
|
|
Smokeless products
|
|
1,530
|
|
|
1,393
|
|
|
528
|
|
|
482
|
|
||||
Wine
|
|
498
|
|
|
461
|
|
|
182
|
|
|
166
|
|
||||
All other
|
|
66
|
|
|
27
|
|
|
48
|
|
|
11
|
|
||||
Net revenues
|
|
$
|
19,492
|
|
|
$
|
19,116
|
|
|
$
|
6,905
|
|
|
$
|
6,699
|
|
|
|
|
|
|
|
|
|
|
||||||||
Excise taxes on products:
|
|
|
|
|
|
|
|
|
||||||||
Smokeable products
|
|
$
|
4,769
|
|
|
$
|
4,876
|
|
|
$
|
1,671
|
|
|
$
|
1,682
|
|
Smokeless products
|
|
102
|
|
|
100
|
|
|
35
|
|
|
34
|
|
||||
Wine
|
|
17
|
|
|
15
|
|
|
6
|
|
|
5
|
|
||||
Excise taxes on products
|
|
$
|
4,888
|
|
|
$
|
4,991
|
|
|
$
|
1,712
|
|
|
$
|
1,721
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating income:
|
|
|
|
|
|
|
|
|
||||||||
Operating companies income (loss):
|
|
|
|
|
|
|
|
|
||||||||
Smokeable products
|
|
$
|
5,955
|
|
|
$
|
5,831
|
|
|
$
|
2,086
|
|
|
$
|
2,121
|
|
Smokeless products
|
|
930
|
|
|
830
|
|
|
312
|
|
|
286
|
|
||||
Wine
|
|
100
|
|
|
97
|
|
|
38
|
|
|
35
|
|
||||
All other
|
|
(46
|
)
|
|
(139
|
)
|
|
8
|
|
|
(35
|
)
|
||||
Amortization of intangibles
|
|
(15
|
)
|
|
(16
|
)
|
|
(5
|
)
|
|
(6
|
)
|
||||
General corporate expenses
|
|
(150
|
)
|
|
(166
|
)
|
|
(57
|
)
|
|
(53
|
)
|
||||
Reduction of PMI tax-related receivable
|
|
—
|
|
|
(41
|
)
|
|
—
|
|
|
(41
|
)
|
||||
Corporate asset impairment and exit costs
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Operating income
|
|
$
|
6,769
|
|
|
$
|
6,396
|
|
|
$
|
2,382
|
|
|
$
|
2,307
|
|
▪
|
NPM Adjustment Items:
P
re-tax expense (income) for NPM Adjustment Items was recorded in Altria Group, Inc.’s condensed consolidated statements of earnings as follows:
|
▪
|
Tobacco and Health Litigation Items:
Pre-tax charges related to certain tobacco and health litigation items were recorded in Altria Group, Inc.’s condensed consolidated statements of earnings as follows:
|
|
|
For the Nine Months Ended September 30,
|
|
For the Three Months Ended September 30,
|
||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
|
(in millions)
|
||||||||||||||
Smokeable products segment
|
|
$
|
72
|
|
|
$
|
102
|
|
|
$
|
45
|
|
|
$
|
54
|
|
Interest and other debt expense, net
|
|
16
|
|
|
13
|
|
|
—
|
|
|
13
|
|
||||
Total
|
|
$
|
88
|
|
|
$
|
115
|
|
|
$
|
45
|
|
|
$
|
67
|
|
▪
|
Asset Impairment, Exit and Implementation Costs:
In January 2016, Altria Group, Inc. announced a productivity initiative designed to maintain its operating companies’ leadership and cost competitiveness. The initiative, which reduces spending on certain selling, general and administrative infrastructure and implements a leaner organizational structure, is expected to deliver approximately $300 million in annualized productivity savings by the end of 2017. As a result of this initiative, Altria Group, Inc. expects to incur total pre-tax restructuring charges of approximately
$140 million
, substantially all of which are expected to be recorded in 2016 and result in cash expenditures.
|
|
For the Nine Months Ended September 30, 2016
|
|
For the Three Months Ended September 30, 2016
|
||||||||||||||||||||
|
Asset Impairment and Exit Costs
|
|
Implementation Costs
|
|
Total
|
|
Asset Impairment and Exit Costs
|
|
Implementation Costs
|
|
Total
|
||||||||||||
|
(in millions)
|
|
(in millions)
|
||||||||||||||||||||
Smokeable products
|
$
|
99
|
|
|
$
|
6
|
|
|
$
|
105
|
|
|
$
|
1
|
|
|
$
|
3
|
|
|
$
|
4
|
|
Smokeless products
|
13
|
|
|
1
|
|
|
14
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||||
All other
|
6
|
|
|
—
|
|
|
6
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||||
General corporate
|
5
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
$
|
123
|
|
|
$
|
7
|
|
|
$
|
130
|
|
|
$
|
2
|
|
|
$
|
4
|
|
|
$
|
6
|
|
▪
|
Loss on Early Extinguishment of Debt:
During the third quarter of 2016 and the first quarter of 2015, Altria Group, Inc. completed debt tender offers to purchase for cash certain of its senior unsecured notes in aggregate principal amounts of
$933 million
and
$793 million
, respectively. As a result of the debt tender offers, Altria Group, Inc. recorded pre-tax losses on early extinguishment of debt in its condensed consolidated statements of earnings as follows:
|
|
For the Nine Months Ended September 30,
|
|
For the Three Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
(in millions)
|
||||||||||||||
Premiums and fees
|
$
|
809
|
|
|
$
|
226
|
|
|
$
|
809
|
|
|
$
|
—
|
|
Write-off of unamortized debt discounts and debt
issuance costs
|
14
|
|
|
2
|
|
|
14
|
|
|
—
|
|
||||
Total
|
$
|
823
|
|
|
$
|
228
|
|
|
$
|
823
|
|
|
$
|
—
|
|
▪
|
Gain on Derivative Financial Instruments:
For the nine and three months ended September 30, 2016, Altria Group, Inc. recorded pre-tax gains of
$205 million
and
$48 million
, respectively, for the changes in the fair value of its derivative financial instruments entered into in connection with the Transaction. For further discussion, see
Note 4
.
Investment in SABMiller/AB InBev
to the condensed consolidated financial statements in Item 1 (“
Note 4
”).
|
▪
|
SABMiller Special Items:
Altria Group, Inc.’s earnings from its equity investment in SABMiller for the
nine months ended
September 30, 2016
included net pre-tax charges of $147 million, consisting primarily of Altria Group, Inc.’s share of SABMiller’s asset impairment charges and costs related to the Transaction, partially offset by gains on asset disposals. Altria Group, Inc.’s earnings from its equity investment in SABMiller for the
three months ended
September 30, 2016
included net pre-tax gains of $40 million, consisting primarily of Altria Group, Inc.’s share of SABMiller’s gains on asset disposals, partially offset by costs related to the Transaction. For further discussion, see Note 4. Altria Group, Inc.’s earnings from its equity investment in SABMiller for the nine months ended September 30, 2015 included net pre-tax charges of $96 million, consisting primarily of Altria Group, Inc.’s share of SABMiller’s asset impairment charges.
|
▪
|
Tax Items:
Tax items for the nine and three months ended September 30, 2016 relate primarily to the reversal of tax accruals no longer required. Tax items for the nine and three months ended September 30, 2015 primarily included the reversal in 2015 of tax reserves and associated interest due primarily to the closure in August 2015 of the Internal Revenue Service (“IRS”) audit of Altria Group, Inc. and its consolidated subsidiaries’ 2007-2009 tax years (“IRS 2007-2009 Audit”), partially offset by a reversal of foreign tax credits primarily associated with SABMiller dividends. For further discussion, see Note 10.
Income Taxes
to the condensed consolidated financial statements in Item 1 (“Note 10”).
|
▪
|
pending and threatened litigation and bonding requirements;
|
▪
|
the requirement to issue “corrective statements” in various media in connection with the federal government’s lawsuit;
|
▪
|
restrictions and requirements imposed by the Family Smoking Prevention and Tobacco Control Act (“FSPTCA”), and restrictions and requirements (and related enforcement actions) that have been, and in the future will be, imposed by the U.S. Food and Drug Administration (“FDA”);
|
▪
|
actual and proposed excise tax increases, as well as changes in tax structures and tax stamping requirements;
|
▪
|
bans and restrictions on tobacco use imposed by governmental entities and private establishments and employers;
|
▪
|
other federal, state and local government actions, including:
|
▪
|
increases in the minimum age to purchase tobacco products above the current federal minimum age of 18;
|
▪
|
restrictions on the sale of tobacco products by certain retail establishments, the sale of certain tobacco products with certain characterizing flavors and the sale of tobacco products in certain package sizes;
|
▪
|
additional restrictions on the advertising and promotion of tobacco products;
|
▪
|
other actual and proposed tobacco product legislation and regulation; and
|
▪
|
governmental investigations;
|
▪
|
the diminishing prevalence of cigarette smoking and increased efforts by tobacco control advocates and others (including employers and retail establishments) to further restrict tobacco use;
|
▪
|
changes in adult tobacco consumer purchase behavior, which is influenced by various factors such as economic conditions, excise taxes and price gap relationships, may result in adult tobacco consumers switching to discount products or other lower priced tobacco products;
|
▪
|
the highly competitive nature of the tobacco categories in which our tobacco subsidiaries operate, including competitive disadvantages related to cigarette price increases attributable to the settlement of certain litigation;
|
▪
|
illicit trade in tobacco products; and
|
▪
|
potential adverse changes in tobacco leaf price, availability and quality.
|
▪
|
FSPTCA and FDA Regulation;
|
▪
|
Excise Taxes;
|
▪
|
International Treaty on Tobacco Control;
|
▪
|
State Settlement Agreements;
|
▪
|
Other Federal, State and Local Regulation and Activity;
|
▪
|
Illicit Trade in Tobacco Products;
|
▪
|
Price, Availability and Quality of Agricultural Products; and
|
▪
|
Timing of Sales.
|
▪
|
imposes restrictions on the advertising, promotion, sale and distribution of tobacco products, including at retail;
|
▪
|
bans descriptors such as “light,” “mild” or “low” or similar descriptors when used as descriptors of modified risk unless expressly authorized by the FDA;
|
▪
|
requires extensive product disclosures to the FDA and may require public disclosures;
|
▪
|
prohibits any express or implied claims that a tobacco product is or may be less harmful than other tobacco products without FDA authorization;
|
▪
|
imposes reporting obligations relating to contraband activity and grants the FDA authority to impose recordkeeping and other obligations to address illicit trade in tobacco products;
|
▪
|
changes the language of the cigarette and smokeless tobacco product health warnings, enlarges their size and requires the development by the FDA of graphic warnings for cigarettes, establishes warning requirements for Other Tobacco Products, and gives the FDA the authority to require new warnings for any type of tobacco products;
|
▪
|
authorizes the FDA to adopt product regulations and related actions, including imposing tobacco product standards that are appropriate for the protection of the public health (
e.g.
, related to the use of menthol in cigarettes, nicotine yields and other constituents or ingredients) and imposing manufacturing standards for tobacco products;
|
▪
|
establishes pre-market review pathways for new and modified tobacco products for the FDA to follow, including:
|
▪
|
subjecting cigarettes, cigarette tobacco and smokeless tobacco products modified or first introduced into the market after March 22, 2011, and Other Tobacco Products modified or first introduced into the market after August 8,
|
▪
|
determining that cigarettes, cigarette tobacco and smokeless tobacco products modified or introduced into the market for the first time between February 15, 2007 and March 22, 2011 for which a manufacturer submitted a substantial equivalence report are not “substantially equivalent” to products commercially marketed as of February 15, 2007, in which case the FDA could require the removal of such products from the marketplace (see
FDA Regulatory Actions
-
Substantial Equivalence and Other New Product Processes/Pathways
below);
|
▪
|
determining that Other Tobacco Products modified or introduced into the market for the first time between February 15, 2007 and August 8, 2016 for which a manufacturer submits a substantial equivalence report by February 8, 2018 are not “substantially equivalent” to products commercially marketed as of February 15, 2007, or to reject a new tobacco product application submitted by a manufacturer by August 8, 2018, both of which could require the removal of such products from the marketplace (see
FDA Regulatory Actions
-
Substantial Equivalence and Other New Product Processes/Pathways
below); and
|
▪
|
equips the FDA with a variety of investigatory and enforcement tools, including the authority to inspect tobacco product manufacturing and other facilities.
|
▪
|
impact the consumer acceptability of tobacco products;
|
▪
|
delay, discontinue or prevent the sale or distribution of existing, new or modified tobacco products;
|
▪
|
limit adult tobacco consumer choices;
|
▪
|
impose restrictions on communications with adult tobacco consumers;
|
▪
|
create a competitive advantage or disadvantage for certain tobacco companies;
|
▪
|
impose additional manufacturing, labeling or packaging requirements;
|
▪
|
impose additional restrictions at retail;
|
▪
|
result in increased illicit trade in tobacco products; or
|
▪
|
otherwise significantly increase the cost of doing business.
|
▪
|
bans the use of color and graphics in cigarette and smokeless tobacco product labeling and advertising;
|
▪
|
prohibits the sale of cigarettes, smokeless tobacco and covered tobacco products to persons under the age of 18;
|
▪
|
restricts the use of non-tobacco trade and brand names on cigarettes and smokeless tobacco products;
|
▪
|
requires the sale of cigarettes and smokeless tobacco in direct, face-to-face transactions;
|
▪
|
prohibits sampling of cigarettes and covered tobacco products and prohibits sampling of smokeless tobacco products except in qualified adult-only facilities;
|
▪
|
prohibits gifts or other items in exchange for buying cigarettes or smokeless tobacco products;
|
▪
|
prohibits the sale or distribution of items such as hats and tee shirts with cigarette or smokeless tobacco brands or logos; and
|
▪
|
prohibits cigarettes and smokeless tobacco brand name sponsorship of any athletic, musical, artistic or other social or cultural event, or any entry or team in any event.
|
|
|
For the Nine Months Ended September 30,
|
||||||||||||||
|
|
Net Revenues
|
|
Operating Companies Income
|
||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
|
(in millions)
|
||||||||||||||
Smokeable products
|
|
$
|
17,398
|
|
|
$
|
17,235
|
|
|
$
|
5,955
|
|
|
$
|
5,831
|
|
Smokeless products
|
|
1,530
|
|
|
1,393
|
|
|
930
|
|
|
830
|
|
||||
Total smokeable and smokeless products
|
|
$
|
18,928
|
|
|
$
|
18,628
|
|
|
$
|
6,885
|
|
|
$
|
6,661
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
For the Three Months Ended September 30,
|
||||||||||||||
|
|
Net Revenues
|
|
Operating Companies Income
|
||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
|
(in millions)
|
||||||||||||||
Smokeable products
|
|
$
|
6,147
|
|
|
$
|
6,040
|
|
|
$
|
2,086
|
|
|
$
|
2,121
|
|
Smokeless products
|
|
528
|
|
|
482
|
|
|
312
|
|
|
286
|
|
||||
Total smokeable and smokeless products
|
|
$
|
6,675
|
|
|
$
|
6,522
|
|
|
$
|
2,398
|
|
|
$
|
2,407
|
|
|
Shipment Volume
|
||||||||||||||||
|
For the Nine Months Ended September 30,
|
|
For the Three Months Ended September 30,
|
||||||||||||||
|
2016
|
|
2015
|
|
Change
|
|
2016
|
|
2015
|
|
Change
|
||||||
|
(sticks in millions)
|
||||||||||||||||
Cigarettes:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Marlboro
|
80,446
|
|
|
82,007
|
|
|
(1.9
|
)%
|
|
28,152
|
|
|
28,392
|
|
|
(0.8
|
)%
|
Other premium
|
4,858
|
|
|
5,114
|
|
|
(5.0
|
)%
|
|
1,684
|
|
|
1,769
|
|
|
(4.8
|
)%
|
Discount
|
8,569
|
|
|
8,383
|
|
|
2.2
|
%
|
|
3,028
|
|
|
3,021
|
|
|
0.2
|
%
|
Total cigarettes
|
93,873
|
|
|
95,504
|
|
|
(1.7
|
)%
|
|
32,864
|
|
|
33,182
|
|
|
(1.0
|
)%
|
Cigars:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Black & Mild
|
1,028
|
|
|
963
|
|
|
6.7
|
%
|
|
357
|
|
|
340
|
|
|
5.0
|
%
|
Other
|
19
|
|
|
24
|
|
|
(20.8
|
)%
|
|
4
|
|
|
11
|
|
|
(63.6
|
)%
|
Total cigars
|
1,047
|
|
|
987
|
|
|
6.1
|
%
|
|
361
|
|
|
351
|
|
|
2.8
|
%
|
Total smokeable products
|
94,920
|
|
|
96,491
|
|
|
(1.6
|
)%
|
|
33,225
|
|
|
33,533
|
|
|
(0.9
|
)%
|
|
Retail Share
|
||||||||||||||||
|
For the Nine Months Ended September 30,
|
|
For the Three Months Ended September 30,
|
||||||||||||||
|
2016
|
|
2015
|
|
Percentage Point Change
|
|
2016
|
|
2015
|
|
Percentage Point Change
|
||||||
Cigarettes:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Marlboro
|
44.0
|
%
|
|
44.0
|
%
|
|
—
|
|
|
44.0
|
%
|
|
43.9
|
%
|
|
0.1
|
|
Other premium
|
2.7
|
|
|
2.9
|
|
|
(0.2
|
)
|
|
2.7
|
|
|
2.8
|
|
|
(0.1
|
)
|
Discount
|
4.7
|
|
|
4.4
|
|
|
0.3
|
|
|
4.7
|
|
|
4.6
|
|
|
0.1
|
|
Total cigarettes
|
51.4
|
%
|
|
51.3
|
%
|
|
0.1
|
|
|
51.4
|
%
|
|
51.3
|
%
|
|
0.1
|
|
Cigars:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Black & Mild
|
26.3
|
%
|
|
27.4
|
%
|
|
(1.1
|
)
|
|
26.8
|
%
|
|
27.9
|
%
|
|
(1.1
|
)
|
Other
|
0.4
|
|
|
0.4
|
|
|
—
|
|
|
0.3
|
|
|
0.5
|
|
|
(0.2
|
)
|
Total cigars
|
26.7
|
%
|
|
27.8
|
%
|
|
(1.1
|
)
|
|
27.1
|
%
|
|
28.4
|
%
|
|
(1.3
|
)
|
▪
|
Effective May 15, 2016, PM USA increased the list price on all of its cigarette brands by $0.07 per pack.
|
▪
|
Effective November 15, 2015, PM USA increased the list price on all of its cigarette brands by $0.07 per pack.
|
▪
|
Effective May 17, 2015, PM USA increased the list price on all of its cigarette brands by $0.07 per pack.
|
|
|
Shipment Volume
|
||||||||||||||||
|
|
For the Nine Months Ended September 30,
|
|
For the Three Months Ended September 30,
|
||||||||||||||
|
|
2016
|
|
2015
|
|
Change
|
|
2016
|
|
2015
|
|
Change
|
||||||
|
|
(cans and packs in millions)
|
||||||||||||||||
Copenhagen
|
|
392.3
|
|
|
351.5
|
|
|
11.6
|
%
|
|
133.5
|
|
|
120.2
|
|
|
11.1
|
%
|
Skoal
|
|
197.3
|
|
|
200.5
|
|
|
(1.6
|
)%
|
|
66.2
|
|
|
67.1
|
|
|
(1.3
|
)%
|
Copenhagen
and
Skoal
|
|
589.6
|
|
|
552.0
|
|
|
6.8
|
%
|
|
199.7
|
|
|
187.3
|
|
|
6.6
|
%
|
Other
|
|
50.8
|
|
|
53.0
|
|
|
(4.2
|
)%
|
|
16.7
|
|
|
17.6
|
|
|
(5.1
|
)%
|
Total smokeless products
|
|
640.4
|
|
|
605.0
|
|
|
5.9
|
%
|
|
216.4
|
|
|
204.9
|
|
|
5.6
|
%
|
|
|
Retail Share
|
||||||||||||||||
|
|
For the Nine Months Ended September 30,
|
|
For the Three Months Ended September 30,
|
||||||||||||||
|
|
2016
|
|
2015
|
|
Percentage Point Change
|
|
2016
|
|
2015
|
|
Percentage Point Change
|
||||||
Copenhagen
|
|
33.6
|
%
|
|
31.4
|
%
|
|
2.2
|
|
|
34.4
|
%
|
|
31.7
|
%
|
|
2.7
|
|
Skoal
|
|
18.6
|
|
|
19.8
|
|
|
(1.2
|
)
|
|
18.2
|
|
|
19.7
|
|
|
(1.5
|
)
|
Copenhagen
and
Skoal
|
|
52.2
|
|
|
51.2
|
|
|
1.0
|
|
|
52.6
|
|
|
51.4
|
|
|
1.2
|
|
Other
|
|
3.4
|
|
|
3.7
|
|
|
(0.3
|
)
|
|
3.3
|
|
|
3.6
|
|
|
(0.3
|
)
|
Total smokeless products
|
|
55.6
|
%
|
|
54.9
|
%
|
|
0.7
|
|
|
55.9
|
%
|
|
55.0
|
%
|
|
0.9
|
|
▪
|
Effective May 10, 2016, USSTC increased the list price on all its brands by $0.07 per can.
|
▪
|
Effective December 8, 2015, USSTC increased the list price on
Copenhagen
and
Skoal
popular price products by $0.12 per can. In addition, USSTC increased the list price on all its brands, except for
Copenhagen
and
Skoal
popular price products, by $0.07 per can.
|
▪
|
Effective May 5, 2015, USSTC increased the list price on all its brands by $0.07 per can.
|
|
|
For the Nine Months Ended September 30,
|
|
For the Three Months Ended September 30,
|
||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
|
(in millions)
|
||||||||||||||
Net revenues
|
|
$
|
498
|
|
|
$
|
461
|
|
|
$
|
182
|
|
|
$
|
166
|
|
Operating companies income
|
|
$
|
100
|
|
|
$
|
97
|
|
|
$
|
38
|
|
|
$
|
35
|
|
▪
|
debt issuances of $2.0 billion used in part to repurchase senior unsecured notes in connection with the 2016 debt tender offer, as more fully described in Note 9; and
|
▪
|
$1.0 billion repayment of Altria Group, Inc. senior unsecured notes at scheduled maturity during the third quarter of 2015;
|
▪
|
higher premiums and fees in connection with debt tender offers during the first nine months of 2016;
|
▪
|
higher dividends paid during the first nine months of 2016; and
|
▪
|
higher repayments of debt in connection with debt tender offers during the first nine months of 2016.
|
|
Short-term Debt
|
|
Long-term Debt
|
|
Outlook
|
|
|
|
|
|
|
Moody’s
1
|
P-2
|
|
A3
|
|
Stable
|
Standard & Poor’s
2
|
A-1
|
|
A-
|
|
Stable
|
Fitch Ratings Ltd.
|
F2
|
|
BBB+
|
|
Stable
|
|
|
|
|
|
|
▪
|
promote brand equity successfully;
|
▪
|
anticipate and respond to new and evolving adult consumer preferences;
|
▪
|
develop, manufacture, market and distribute products that appeal to adult consumers (including, where appropriate, through arrangements with, or investments in, third parties);
|
▪
|
improve productivity; and
|
▪
|
protect or enhance margins through cost savings and price increases.
|
Period
|
|
Total Number of Shares Purchased
(1)
|
|
Average Price Paid Per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs
(2)
|
||||||
|
|
|
|
|
|
|
|
|
||||||
July 1 - 31, 2016
|
|
153,227
|
|
|
$
|
68.00
|
|
|
150,000
|
|
|
$
|
613,593,252
|
|
August 1 - 31, 2016
|
|
1,171,433
|
|
|
$
|
66.63
|
|
|
1,170,000
|
|
|
$
|
535,634,540
|
|
September 1- 30, 2016
|
|
1,272,294
|
|
|
$
|
65.65
|
|
|
1,266,200
|
|
|
$
|
452,500,410
|
|
For the Quarter Ended September 30, 2016
|
|
2,596,954
|
|
|
$
|
66.23
|
|
|
2,586,200
|
|
|
|
(1)
|
The total number of shares purchased include (a) shares purchased under this program (which totaled 150,000 shares in July, 1,170,000 shares in August and 1,266,200 shares in September) and (b) shares withheld by Altria Group, Inc. in an amount equal to the statutory withholding taxes for holders who vested in restricted stock units, and forfeitures of restricted stock for which consideration was paid in connection with termination of employment of certain employees (which totaled 3,227 shares in July, 1,433 shares in August and 6,094 shares in September).
|
(2)
|
This chart provides information for each of the three months in the period ended September 30, 2016; therefore, it does not reflect the October 2016 expansion of Altria Group, Inc.’s share repurchase program discussed above.
|
12
|
Statements regarding computation of ratios of earnings to fixed charges.
|
31.1
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.2
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
99.1
|
Certain Litigation Matters.
|
99.2
|
Trial Schedule for Certain Cases.
|
99.3
|
Definitions of Terms Related to Financial Covenants included in Altria Group, Inc.’s Amended and Restated 5-Year Revolving Credit Agreement, dated as of August 19, 2013. Incorporated by reference to Altria Group, Inc.’s Quarterly Report on Form 10-Q for the period ended September 30, 2013 (File No. 1-08940).
|
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