8-KRegulation FDOther EventsExhibits & Filings

ALTRIA GROUP, INC. 8-K Report, Regulation FD Disclosure (Sep 17, 2013)

Filed September 17, 2013For Securities:MO

Summary

This 8-K filing from Altria Group, Inc. (MO) primarily announces a revision to its 2013 full-year reported diluted Earnings Per Share (EPS) guidance. The revision is a direct consequence of a September 11, 2013 decision by an arbitration panel concerning the non-participating manufacturer (NPM) adjustment dispute for 2003. This decision is expected to result in a credit for Philip Morris USA Inc. (PM USA), positively impacting its future Master Settlement Agreement payments and third-quarter earnings. Investors should note that while the reported EPS guidance has been narrowed upwards, Altria has reaffirmed its guidance for adjusted diluted EPS, which excludes certain non-recurring or volatile items. The company acknowledges potential legal challenges from states regarding the arbitration decision, indicating ongoing uncertainty that could affect future outcomes. The filing also provides detail on specific income/expense items impacting reported EPS for both 2013 and 2012, highlighting the NPM adjustment's influence.

Key Highlights

  • 1Altria revised its 2013 full-year reported diluted EPS guidance upwards to a range of $2.57 to $2.62, from $2.51 to $2.56.
  • 2The EPS revision is primarily due to a September 11, 2013 arbitration panel decision on the 2003 non-participating manufacturer (NPM) adjustment dispute.
  • 3Philip Morris USA Inc. (PM USA) expects to receive a credit of approximately $145 million, plus interest, against its 2014 Master Settlement Agreement payments.
  • 4PM USA will record an increase of approximately $145 million in reported pre-tax earnings for the third quarter of 2013 due to the arbitration decision.
  • 5Altria reaffirmed its 2013 full-year adjusted diluted EPS guidance, projecting 7% to 9% growth over 2012 adjusted diluted EPS.
  • 6The company acknowledges that some states may challenge the arbitration decision in court, creating potential future uncertainty.
  • 7The filing details specific expenses and income items affecting reported EPS for 2013 and 2012, including NPM Adjustment Items and tax impacts.

Frequently Asked Questions

Altria revised its 2013 EPS guidance primarily due to a September 11, 2013 decision by an arbitration panel concerning the 2003 non-participating manufacturer (NPM) adjustment dispute. This decision has a positive impact on Philip Morris USA's future payments and current earnings.

The arbitration panel's decision means Philip Morris USA Inc. (PM USA) will receive a credit of approximately $145 million, plus interest, against its 2014 Master Settlement Agreement payment obligations. Additionally, PM USA will record a $145 million increase in its reported pre-tax earnings for the third quarter of 2013.

Altria's reported diluted EPS guidance reflects all income and expenses, including certain items that can be volatile or non-recurring, such as the impact of NPM adjustments or debt extinguishment. The adjusted diluted EPS guidance excludes these items, providing a view of the underlying operational performance, which Altria has reaffirmed for 2013 with projected growth of 7% to 9%.

Yes, the filing states that some states may challenge the arbitration panel's decision in court. There is no assurance that these challenges will be resolved favorably for PM USA, indicating potential future uncertainty despite the current positive outcome.