UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2003
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the transition period from to |
Commission file number 1-8940
Altria Group, Inc.
(Exact name of registrant as specified in its charter)
| Virginia |
13-3260245 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
| 120 Park Avenue, New York, New York |
10017 | |
| (Address of principal executive offices) |
(Zip Code) |
(917) 663-4000
Registrant’s telephone number, including area code
Former name, former address and former fiscal year, if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes x No ¨
At April 30, 2003, there were 2,024,843,316 shares outstanding of the registrant’s common stock, par value $0.33 1/3 per share.
ALTRIA GROUP, INC.
TABLE OF CONTENTS
| Page No. | ||||
| PART I—FINANCIAL INFORMATION |
||||
| Item 1. |
Financial Statements (Unaudited) |
|||
| Condensed Consolidated Balance Sheets at March 31, 2003 and December 31, 2002 |
3-4 | |||
| Condensed Consolidated Statements of Earnings for the Three Months Ended March 31, 2003 and 2002 |
5 | |||
| 6 | ||||
| Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2003 and 2002 |
7-8 | |||
| 9-29 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
30-53 | ||
| Item 4. |
54 | |||
| PART II—OTHER INFORMATION |
||||
| Item 1. |
55 | |||
| Item 4. |
55-56 | |||
| Item 6. |
56 | |||
| 57 | ||||
| 58-59 | ||||
-2-
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
Altria Group, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in millions of dollars)
(Unaudited)
| March 31, 2003 |
December 31, 2002 | |||||||
| ASSETS |
||||||||
| Consumer products |
||||||||
| Cash and cash equivalents |
$ |
1,391 |
$ |
565 | ||||
| Receivables (less allowances of $140 and $142) |
|
5,465 |
|
5,139 | ||||
| Inventories: |
||||||||
| Leaf tobacco |
|
3,421 |
|
3,605 | ||||
| Other raw materials |
|
2,109 |
|
1,935 | ||||
| Finished product |
|
3,917 |
|
3,587 | ||||
|
|
9,447 |
|
9,127 | |||||
| Other current assets |
|
2,888 |
|
2,610 | ||||
| Total current assets |
|
19,191 |
|
17,441 | ||||
| Property, plant and equipment, at cost |
|
25,338 |
|
24,553 | ||||
| Less accumulated depreciation |
|
10,237 |
|
9,707 | ||||
|
|
15,101 |
|
14,846 | |||||
| Goodwill and other intangible assets, net |
|
38,109 |
|
37,871 | ||||
| Other assets |
|
8,606 |
|
8,151 | ||||
| Total consumer products assets |
|
81,007 |
|
78,309 | ||||
| Financial services |
||||||||
| Finance assets, net |
|
8,751 |
|
9,075 | ||||
| Other assets |
|
142 |
|
156 | ||||
| Total financial services assets |
|
8,893 |
|
9,231 | ||||
| TOTAL ASSETS |
$ |
89,900 |
$ |
87,540 | ||||
See notes to condensed consolidated financial statements.
Continued
-3-
Altria Group, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Continued)
(in millions of dollars, except per share data)
(Unaudited)
| March 31, 2003 |
December 31, 2002 |
|||||||||||
| LIABILITIES |
||||||||||||
| Consumer products |
||||||||||||
| Short-term borrowings |
$ |
1,026 |
|
$ |
407 |
|
||||||
| Current portion of long-term debt |
|
905 |
|
|
1,558 |
|
||||||
| Accounts payable |
|
2,726 |
|
|
3,088 |
|
||||||
| Accrued liabilities: |
||||||||||||
| Marketing |
|
2,622 |
|
|
3,192 |
|
||||||
| Taxes, except income taxes |
|
2,075 |
|
|
1,735 |
|
||||||
| Employment costs |
|
779 |
|
|
1,099 |
|
||||||
| Settlement charges |
|
3,883 |
|
|
3,027 |
|
||||||
| Other |
|
2,462 |
|
|
2,563 |
|
||||||
| Income taxes |
|
2,075 |
|
|
1,103 |
|
||||||
| Dividends payable |
|
1,300 |
|
|
1,310 |
|
||||||
| Total current liabilities |
|
19,853 |
|
|
19,082 |
|
||||||
| Long-term debt |
|
20,782 |
|
|
19,189 |
|
||||||
| Deferred income taxes |
|
6,092 |
|
|
6,112 |
|
||||||
| Accrued postretirement health care costs |
|
3,136 |
|
|
3,128 |
|
||||||
| Minority interest |
|
4,445 |
|
|
4,366 |
|
||||||
| Other liabilities |
|
7,574 |
|
|
8,004 |
|
||||||
| Total consumer products liabilities |
|
61,882 |
|
|
59,881 |
|
||||||
| Financial services |
||||||||||||
| Long-term debt |
|
2,126 |
|
|
2,166 |
|
||||||
| Deferred income taxes |
|
5,516 |
|
|
5,521 |
|
||||||
| Other liabilities |
|
227 |
|
|
494 |
|
||||||
| Total financial services liabilities |
|
7,869 |
|
|
8,181 |
|
||||||
| Total liabilities |
|
69,751 |
|
|
68,062 |
|
||||||
| Contingencies (Note 10) |
||||||||||||
| STOCKHOLDERS’ EQUITY |
||||||||||||
| Common stock, par value $0.33 1/3 per share (2,805,961,317 shares issued) |
|
935 |
|
|
935 |
|
||||||
| Additional paid-in capital |
|
4,776 |
|
|
4,642 |
|
||||||
| Earnings reinvested in the business |
|
44,016 |
|
|
43,259 |
|
||||||
| Accumulated other comprehensive losses (including currency translation of $2,636 and $2,951) |
|
(3,614 |
) |
|
(3,956 |
) |
||||||
|
|
46,113 |
|
|
44,880 |
|
|||||||
| Less cost of repurchased stock (781,410,558 and 766,701,765 shares) |
|
(25,964 |
) |
|
(25,402 |
) |
||||||
| Total stockholders’ equity |
|
20,149 |
|
|
19,478 |
|
||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ |
89,900 |
|
$ |
87,540 |
|
||||||
See notes to condensed consolidated financial statements.
-4-
Altria Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings
(in millions of dollars, except per share data)
(Unaudited)
| For the Three Months Ended March 31, | ||||||||
| 2003 |
2002 | |||||||
| Net revenues |
$ |
19,371 |
$ |
20,535 | ||||
| Cost of sales |
|
7,565 |
|
8,532 | ||||
| Excise taxes on products |
|
4,887 |
|
4,575 | ||||
| Gross profit |
|
6,919 |
|
7,428 | ||||
| Marketing, administration and research costs |
|
3,053 |
|
3,063 | ||||
| Integration costs |
|
27 | ||||||
| Separation programs and asset impairment |
|
165 | ||||||
| Amortization of intangibles |
|
2 |
|
2 | ||||
| Operating income |
|
3,864 |
|
4,171 | ||||
| Interest and other debt expense, net |
|
283 |
|
293 | ||||