8-KMaterial AgreementsOther EventsExhibits & Filings

ALTRIA GROUP, INC. 8-K Report, Material Agreement (Mar 30, 2007)

Filed March 30, 2007For Securities:MO

Summary

This 8-K filing from Altria Group, Inc. (MO) announces the completion of the separation of Kraft Foods Inc. (Kraft) from Altria, effective March 30, 2007. Altria distributed approximately 88.9% of its Kraft shares to Altria shareholders. This strategic move is intended to be tax-free for U.S. federal income tax purposes for Altria shareholders, except for any cash received in lieu of fractional shares. In conjunction with the distribution, Altria and Kraft have entered into several key agreements. These include a Transition Services Agreement for administrative support, an Employee Matters Agreement to define responsibilities regarding employees and benefits, and a Tax Sharing Agreement to outline post-distribution tax obligations, including potential liabilities if the distribution fails to qualify for tax-free treatment. These agreements are crucial for ensuring an orderly separation and continued operational clarity.

Key Highlights

  • 1Completion of the spin-off of Kraft Foods Inc. from Altria Group, Inc. on March 30, 2007.
  • 2Altria distributed approximately 88.9% of its Kraft shares to Altria shareholders.
  • 3The distribution was structured to be tax-free to Altria shareholders for U.S. federal income tax purposes, excluding cash for fractional shares.
  • 4Entry into a Transition Services Agreement where Altria Corporate Services, Inc. will provide administrative support to Kraft post-separation.
  • 5Execution of an Employee Matters Agreement detailing responsibilities for employee transfers, equity compensation, and benefits.
  • 6Signing of a Tax Sharing Agreement to define tax rights and responsibilities between Altria and Kraft.
  • 7These agreements aim to delineate obligations and ensure a smooth operational transition between the two companies.

Frequently Asked Questions

The main event reported is the completion of the separation and distribution of Kraft Foods Inc. (Kraft) from Altria Group, Inc. (Altria). This means Altria shareholders received shares of Kraft as a dividend.

For Altria shareholders, the distribution was intended to be tax-free for U.S. federal income tax purposes. The only potential taxable event would be if shareholders received cash instead of fractional shares of Kraft.

Altria and Kraft entered into three primary agreements: a Transition Services Agreement for ongoing administrative support from Altria to Kraft, an Employee Matters Agreement covering employee-related obligations, and a Tax Sharing Agreement to define their respective tax responsibilities post-distribution.

The Transition Services Agreement allows Altria Corporate Services, Inc. to provide essential administrative services (such as IT, finance, legal, and corporate affairs) to Kraft for a specified period after the separation, ensuring continuity of operations during the transition.