8-KRegulation FDOther EventsExhibits & Filings

ALTRIA GROUP, INC. 8-K Report, Regulation FD Disclosure (Jun 9, 2011)

Filed June 9, 2011For Securities:MO

Summary

This 8-K filing from Altria Group, Inc., dated June 9, 2011, announces a significant one-time charge of approximately $630 million impacting its reported earnings for the second quarter of 2011. This charge is related to the tax treatment of certain leveraged lease transactions previously entered into by its subsidiary, Philip Morris Capital Corporation (PMCC). While this charge will reduce reported diluted Earnings Per Share (EPS), Altria explicitly states it is not expected to affect its dividend payments or its previously announced $1.0 billion share repurchase program, though these remain subject to the Board of Directors' discretion. As a direct consequence of this charge, Altria has revised its full-year 2011 guidance for reported diluted EPS downwards to a range of $1.70 to $1.76, a decrease from the previously communicated $2.00 to $2.06. However, the company reaffirmed its full-year guidance for adjusted diluted EPS, which excludes these non-operational charges, projecting a growth rate of 6% to 9% over 2010. This adjusted EPS measure is intended to provide investors with a clearer view of the underlying business performance.

Key Highlights

  • 1Altria is recording a one-time charge of approximately $630 million in Q2 2011 due to tax treatment of leveraged lease transactions by subsidiary PMCC.
  • 2This charge will reduce reported diluted EPS but is not expected to impact dividend payments or the $1.0 billion share repurchase program.
  • 3Full-year 2011 reported diluted EPS guidance has been lowered to $1.70 - $1.76 from $2.00 - $2.06.
  • 4Full-year 2011 adjusted diluted EPS guidance is reaffirmed, projecting 6%-9% growth over 2010.
  • 5The PMCC leveraged lease charge accounts for $0.30 per share of the 2011 reported EPS net charges.
  • 6The company anticipates uneven quarterly growth in adjusted diluted EPS due to potential trade inventory depletion impacting future results.

Frequently Asked Questions

The one-time charge of approximately $630 million is due to the tax treatment of certain leveraged lease transactions that Altria's subsidiary, Philip Morris Capital Corporation (PMCC), had entered into. This charge impacts reported earnings for the second quarter of 2011.

Altria explicitly stated that this one-time charge is not expected to impact its dividend payments or its previously announced $1.0 billion share repurchase program. However, all future dividend payments and share repurchases remain subject to the discretion of Altria's Board of Directors.

Altria has revised its full-year 2011 guidance for *reported* diluted EPS downwards to a range of $1.70 to $1.76, reflecting the significant $0.31 per share impact of the PMCC leveraged lease charge. However, the guidance for *adjusted* diluted EPS, which excludes such one-time charges and reflects underlying business performance, has been reaffirmed.

Reported diluted EPS is calculated according to Generally Accepted Accounting Principles (GAAP) and includes all charges and gains. Adjusted diluted EPS is a non-GAAP measure that excludes certain items management believes are not part of underlying operations, such as the PMCC charge in this case. Altria provides adjusted EPS to help investors analyze underlying business performance and trends, as these excluded items can sometimes obscure the core business results.