8-KRegulation FDOther EventsExhibits & Filings

ALTRIA GROUP, INC. 8-K Report, Regulation FD Disclosure (Dec 2, 2011)

Filed December 2, 2011For Securities:MO

Summary

Altria Group, Inc. (MO) filed an 8-K on December 2, 2011, primarily to disclose a revised earnings per share (EPS) guidance for the full year 2011 and to announce a change in how the company reports its "adjusted diluted EPS." The company announced it will record a pre-tax charge of $62 million and approximately $57 million in interest costs in the fourth quarter related to tobacco and health judgments in the Williams and Bullock cases. This charge will reduce reported diluted EPS by $0.04 per share. Consequently, Altria revised its 2011 full-year reported diluted EPS guidance to a range of $1.58 to $1.64, down from $1.60 to $1.66. The company also announced a change in its definition of adjusted diluted EPS, which will now exclude tobacco and health judgment charges, along with other previously excluded items like PMCC leveraged lease charges and SABMiller special items. This redefinition aims to provide a more consistent view of underlying business trends. The company also noted a potential negative impact from the American Airlines bankruptcy filing on its PMCC segment.

Key Highlights

  • 1Altria revised its 2011 full-year reported diluted EPS guidance downwards to $1.58-$1.64 from $1.60-$1.66.
  • 2A pre-tax charge of $62 million and $57 million in related interest costs will be recorded in Q4 2011 due to tobacco and health judgments in the Williams and Bullock cases.
  • 3These judgment charges are expected to reduce reported diluted EPS by $0.04 per share in Q4 2011.
  • 4The company is redefining its 'adjusted diluted EPS' to exclude tobacco and health judgment charges going forward.
  • 5The redefinition of adjusted diluted EPS is intended to better reflect sustainable business results and allow for more meaningful year-over-year comparisons.
  • 6Altria anticipates a negative impact on PMCC's fourth-quarter financial results due to the American Airlines bankruptcy filing.

Frequently Asked Questions

The primary reason for the downward revision in Altria's 2011 full-year reported diluted EPS guidance is a significant pre-tax charge of $62 million and approximately $57 million in related interest costs. These charges stem from tobacco and health judgments in the Williams and Bullock cases, expected to be recorded in the fourth quarter of 2011.

Beginning in the fourth quarter of 2011, Altria will redefine its 'adjusted diluted EPS' to exclude charges related to tobacco and health judgments. This is in addition to previously excluded items like PMCC leveraged lease charges and SABMiller special items. The company's management believes this redefinition will offer a clearer view of underlying business performance and trends.

Yes, Altria also noted that it expects the recent American Airlines bankruptcy filing to have a negative impact on the fourth-quarter financial results of its Philip Morris Capital Corporation (PMCC) segment. The preliminary estimate of this impact has been incorporated into the company's revised 2011 EPS guidance.

For the full year 2011, the tobacco and health judgments (Williams, Scott, and Bullock cases) are projected to contribute $0.05 per share to net charges. This adds to other charges like asset impairment, exit, integration, and implementation costs, SABMiller special items, and PMCC leveraged lease charges, resulting in an updated total net charge guidance of $0.43 per share for the full year 2011.