altria group Quarter Results 2007 3rd

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1 Altria Group, Inc. 120 Park Avenue New York, NY 10017 NEWS RELEASE Contact: Nicholas M. Rolli (917) 663-3460 Timothy R. Kellogg (917) 663-2759 ALTRIA GROUP, INC. REPORTS 2007 THIRD-QUARTER RESULTS Diluted earnings per share from continuing operations up 18.1% to $1.24, including favorable tax items of $0.05 per share and charges of $0.02 per share for asset impairment, exit and implementation costs, as well as other items detailed on Schedule 7 Adjusted diluted earnings per share from continuing operations up 13.1% to $1.21 versus $1.07 in 2006 Forecast raised for full-year 2007 diluted earnings per share from continuing operations to a range of $4.20 to $4.25, versus a previously announced range of $4.05 to $4.10 NEW YORK, October 17, 2007 – Altria Group, Inc. (NYSE: MO) today announced third-quarter diluted earnings per share from continuing operations of $1.24, up $0.19 or 18.1% versus the prior year, including favorable tax items of $0.05 per share and charges of $0.02 per share for asset impairment, exit and implementation costs, as well as other items detailed on the attached Schedule 7. “In the third quarter, we continued to witness improvement in our business fundamentals, which generated robust earnings growth,” said Louis C. Camilleri, chairman and chief executive officer of Altria Group, Inc. “In addition, we took numerous steps to accelerate our growth by investing behind product innovation and announcing our intention to pursue a further restructuring of our company.”

Transcript of altria group Quarter Results 2007 3rd

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    Altria Group, Inc. 120 Park Avenue New York, NY 10017 NEWS RELEASE

    Contact: Nicholas M. Rolli (917) 663-3460 Timothy R. Kellogg (917) 663-2759

    ALTRIA GROUP, INC. REPORTS

    2007 THIRD-QUARTER RESULTS

    Diluted earnings per share from continuing operations up 18.1% to $1.24,

    including favorable tax items of $0.05 per share and charges of $0.02 per share

    for asset impairment, exit and implementation costs, as well as other items

    detailed on Schedule 7

    Adjusted diluted earnings per share from continuing operations up 13.1% to $1.21

    versus $1.07 in 2006

    Forecast raised for full-year 2007 diluted earnings per share from continuing

    operations to a range of $4.20 to $4.25, versus a previously announced range of

    $4.05 to $4.10

    NEW YORK, October 17, 2007 Altria Group, Inc. (NYSE: MO) today announced

    third-quarter diluted earnings per share from continuing operations of $1.24, up $0.19 or 18.1%

    versus the prior year, including favorable tax items of $0.05 per share and charges of $0.02 per

    share for asset impairment, exit and implementation costs, as well as other items detailed on the

    attached Schedule 7.

    In the third quarter, we continued to witness improvement in our business fundamentals,

    which generated robust earnings growth, said Louis C. Camilleri, chairman and chief executive

    officer of Altria Group, Inc. In addition, we took numerous steps to accelerate our growth by

    investing behind product innovation and announcing our intention to pursue a further

    restructuring of our company.

  • Conference Call

    A conference call with members of the investment community and news media will be

    Webcast at 9:00 a.m. Eastern Time on October 17, 2007. Access is available at www.altria.com.

    2007 Third-Quarter Results Excluding Items

    After adjusting for the items shown in the table below, diluted earnings per share from

    continuing operations increased 13.1% to $1.21 for the third quarter of 2007, versus $1.07 in the

    corresponding prior-year period.

    Third quarter 2007 2006 Change

    Diluted EPS from continuing operations $1.24 $1.05 18.1%

    Asset impairment, exit and implementation costs 0.02 0.02 Tax items Diluted EPS, excluding above items

    (0.05)

    $1.21

    --

    $1.07

    13.1%

    2007 Full-Year Forecast

    Altria raised its forecast to a range of $4.20 to $4.25 for 2007 full-year diluted earnings

    per share from continuing operations, reflecting a lower tax rate ($0.08 per share), favorable

    currency ($0.04 per share) and improved results ($0.03 per share) at Philip Morris International

    (PMI). The companys previously announced range for 2007 full-year diluted earnings per share

    from continuing operations was $4.05 to $4.10.

    The revised projection includes charges of $0.17 per share, which are $0.07 per share

    lower due mainly to the above-mentioned one-time favorable tax items, versus $0.24 per share in

    charges in the previous forecast. Both the revised and previous projections include $0.06 per

    share for cash recoveries at Philip Morris Capital Corporation (PMCC), which were recorded in

    the first half of 2007.

    The factors described in the Forward-Looking and Cautionary Statements section of this

    release represent continuing risks to this projection.

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    http://www.altria.com/

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    Intention to Pursue the Spin-Off of Philip Morris International

    On August 29, the Board of Directors of Altria Group, Inc. announced its intention to

    pursue the spin-off of PMI to Altrias shareholders. The Board anticipates that it will be in a

    position to finalize its decision and announce the precise timing of the spin-off at its regularly

    scheduled meeting on January 30, 2008.

    In addition to a final determination by the Board, the spin-off of PMI will be subject to

    the receipt of a favorable ruling from the Internal Revenue Service, the receipt of an opinion of

    tax counsel, the effectiveness of a registration statement with the U.S. Securities and Exchange

    Commission (SEC), as well as the execution of several inter-company agreements and the

    finalization of other matters.

    On September 27, PMI filed with the SEC a preliminary registration statement on Form

    10 in preparation for its potential spin-off from Altria. In addition, Altria submitted a private

    letter ruling request to the Internal Revenue Service.

    PMI Agreement to Acquire Additional 30% Stake in Mexican Tobacco Business

    On July 18, PMI announced that it had reached an agreement in principle to acquire an

    additional 30% stake in its Mexican tobacco business from its joint venture partner, Grupo

    Carso, S.A.B. de C.V.

    PMI currently holds a 50% stake in its Mexican tobacco business and this transaction

    would bring PMIs stake to 80%. Grupo Carso would retain a 20% stake in the business.

    The transaction has a value of approximately $1.1 billion and is expected to close shortly.

    When completed, the transaction is expected to increase Altrias annualized net earnings by

    approximately $0.03 per share.

    Dividend Increased

    During the third quarter of 2007 Altria Group, Inc. increased its regular quarterly

    dividend by 8.7% to $0.75 per common share, which represents an annualized rate of $3.00 per

    common share.

    ALTRIA GROUP, INC.

    As described in Note 15. Segment Reporting of Altria Group, Inc.s 2006 Annual

    Report, management reviews operating companies income, which is defined as operating income

    before corporate expenses and amortization of intangibles, to evaluate segment performance and

    allocate resources. Management believes it is appropriate to disclose this measure to help

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    investors analyze business performance and trends. For a reconciliation of operating companies

    income to operating income, see the Condensed Statements of Earnings contained in this release.

    Altria Group, Inc.s 2007 reported results and previous-year results reflect Kraft as a

    discontinued operation. As such, net revenues and operating companies income for Kraft are

    excluded from the companys results, while the net earnings impact is included as a single line

    item.

    The products of Altrias subsidiaries include cigarettes and other tobacco products

    manufactured and sold by Philip Morris USA (PM USA) in the United States and by Philip

    Morris International (PMI) outside the United States. PMIs operations are organized and

    managed by geographic region. Beginning with the second quarter of 2007, Altrias reportable

    segments are U.S. Tobacco; European Union (EU); Eastern Europe, Middle East & Africa

    (EEMA); Asia; Latin America; and Financial Services.

    All references in this news release are to continuing operations, unless otherwise noted.

    References to international tobacco market shares are PMI estimates based on a number of

    sources.

    2007 Third-Quarter Results

    Revenues net of excise taxes increased 5.9% to $10.0 billion for the third quarter of 2007,

    driven by increases in both U.S. tobacco and international tobacco.

    Operating income increased 10.4% to $3.7 billion, reflecting the items described in the

    attached reconciliation on Schedule 3, including higher results from operations of $194 million

    and favorable currency of $138 million.

    Earnings from continuing operations increased 18.9% to $2.6 billion, reflecting the items

    above as well as a decrease in interest expense due to lower debt outstanding. The companys

    effective tax rate was 30.2% in the third quarter of 2007 versus 34.1% for the year-earlier period.

    Third-quarter 2007 results include favorable tax adjustments of $97 million or $0.05 per share,

    primarily due to the reversal of tax reserves no longer required and reduction of the German

    corporate tax rate.

    Net earnings, including discontinued operations, decreased 8.4% to $2.6 billion,

    reflecting the Kraft spin-off. Diluted earnings per share, including discontinued operations as

    detailed on Schedule 1, decreased 8.8% to $1.24.

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    U.S. TOBACCO

    2007 Third-Quarter Results

    Philip Morris USA (PM USA), Altria Group, Inc.s U.S. tobacco business, achieved a

    record 50.6% retail market share, up 0.2 points, driven primarily by Marlboro, which increased

    its retail market share 0.5 points to a record 41.1%.

    Third-quarter revenues net of excise taxes increased 3.2% to $4.0 billion. Operating

    companies income increased 2.0% to $1.3 billion compared to the year-earlier period. The

    increase was driven by lower wholesale promotional allowance rates and lower selling, general

    and administrative costs. Those factors were partially offset by increased resolution expenses,

    lower volume, investments in support of PM USAs adjacency strategy and a $22 million pre-tax

    charge related to asset impairment, exit and implementation costs for the previously announced

    closure of the Cabarrus, NC cigarette manufacturing facility. Adjusted for the $22 million pre-

    tax charge, PM USAs operating companies income would have increased by 3.7%.

    During the quarter, PM USA announced a reduction in the wholesale promotional

    allowance on its Focus on Four brands effective September 10, 2007. The allowances for

    Marlboro, Parliament and Basic were reduced by $0.50 per carton, from $4.00 to $3.50, and

    for Virginia Slims by $2.00 per carton, from $4.00 to $2.00. In addition, the price of PM USAs

    non-focus brands was increased by $0.50 per carton.

    PM USAs cigarette shipment volume of 47.1 billion units was 1.0% lower than the

    prior-year period, but was estimated to be down approximately 3% when adjusted for changes in

    trade inventories and calendar differences. During the third quarter of 2007, PM USA estimates

    that total cigarette industry volume declined between 3% and 4%, and for the full year 2007 PM

    USA is maintaining its prior estimate of a 3% to 4% decline in total cigarette industry volume.

    Cigarette volume performance by brand for PM USA is summarized in the table below:

    Philip Morris USA Cigarette Volume* by Brand (Billion Units)

    Q3 2007 Q3 2006 % Change**Marlboro 39.1 39.0 + 0.2% Parliament 1.5 1.5 + 0.6% Virginia Slims 1.9 2.0 - 5.4% Basic 3.5 3.8 - 8.4% Focus Brands 46.0 46.3 - 0.8% Other PM USA 1.1 1.3 - 11.3% Total PM USA 47.1 47.6 - 1.0%

    * U.S. unit volume includes units sold as well as promotional units, and excludes Puerto

    Rico and U.S. Territories. ** Calculation based on millions of units.

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    As shown in the following table, in the third quarter of 2007, share gains for Marlboro

    and Parliament of 0.5 points and 0.1 point, respectively, were partially offset by losses of 0.2

    share points for Basic and of 0.1 share points each for Virginia Slims and non-focus brands.

    PM USAs cigarette retail share performance by brand is summarized in the table below:

    Philip Morris USA Cigarette Retail Share* by Brand

    Q3 2007 Q3 2006 ChangeMarlboro 41.1% 40.6% + 0.5 pp Parliament 1.9% 1.8% + 0.1 pp Virginia Slims 2.2% 2.3% - 0.1 pp Basic 4.0% 4.2% - 0.2 pp Focus Brands 49.2% 48.9% + 0.3 pp Other PM USA 1.4% 1.5% - 0.1 pp Total PM USA 50.6% 50.4% + 0.2 pp * Retail share performance is based on data from the IRI/Capstone Total Retail Panel, which is a tracking service that uses a sample of stores to project market share performance in retail stores selling cigarettes. The panel was not designed to capture sales through other channels, including Internet and direct mail.

    As part of its adjacency growth strategy to develop new revenue and income sources for

    the future, PM USA initiated a test market of Marlboro Snus in the Dallas/Fort Worth, TX area

    beginning in August 2007. Additionally, PM USA announced that it will test market Marlboro

    Moist Smokeless Tobacco in the Atlanta, GA area, with shipments to wholesalers beginning this

    week. Marlboro Moist Smokeless Tobacco is designed to provide a premium quality product at

    an attractive price for adult moist smokeless tobacco consumers.

    INTERNATIONAL TOBACCO

    2007 Third-Quarter Results

    Philip Morris International (PMI), Altria Group, Inc.s international tobacco business,

    reported that its revenues net of excise taxes were up 9.3% to $5.9 billion. Operating companies

    income grew 18.8% to $2.5 billion, due primarily to higher pricing, favorable currency of $138

    million and productivity and cost savings. Excluding the impact of asset impairment and exit

    costs, acquisitions and currency, operating companies income grew 10.2%.

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    PMIs operating companies income performance by segment is summarized in the table

    below:

    Philip Morris International Operating Companies Income by Segment ($ Millions)

    Q3 2007 Q3 2006 % Change

    European Union $1,151 $ 955 + 20.5% Eastern Europe, Middle East & Africa 710 582 + 22.0% Asia 514 449 + 14.5% Latin America 143 133 + 7.5% Total PMI $2,518 $2,119 + 18.8%

    Cigarette shipment volume increased 0.6% or 1.3 billion units, to 217.2 billion units, due

    to acquisition volume from Lakson Tobacco in Pakistan. Excluding the impact of the Pakistan

    acquisition, cigarette shipment volume was down 1.9% or 4.0 billion units, due mainly to lower

    shipments in the Czech Republic, Germany and Poland, partially offset by gains in Algeria,

    Argentina, Bulgaria, Egypt, Korea, Lebanon, Slovak Republic, Slovenia, Spain and Ukraine.

    PMIs volume performance by segment is summarized in the table below:

    Philip Morris International Cigarette Volume by Segment (Billion Units)

    Q3 2007 Q3 2006 % Change*

    European Union 65.4 68.7 - 4.8% Eastern Europe, Middle East & Africa 77.5 77.3 + 0.3% Asia 53.0 48.3 + 9.6% Latin America 21.3 21.6 - 1.5% Total PMI 217.2 215.9 + 0.6% *Calculation based on millions of units.

    PMIs third-quarter 2007 market share performance improved versus the year-ago period

    in Argentina, Australia, Egypt, Greece, Hungary, Israel, Italy, Korea, Mexico, Russia, Singapore,

    Spain, Sweden, Taiwan and Ukraine.

    PMI has a superior portfolio of premium brands, comprised of Marlboro, Parliament

    and Virginia Slims. In the third quarter, the combined worldwide volume of this premium

    portfolio grew by 0.7% or 653 million units.

    Total Marlboro cigarette shipment volume of 79.4 billion units was down 1.3%. Lower

    shipments in the European Union and Japan were partially offset by gains in Argentina,

    Indonesia and Russia. Marlboro market share was up in many markets, including Argentina,

    Brazil, Egypt, Greece, Hungary, Indonesia, Israel, Korea, Mexico, Philippines, Russia, Singapore

    and Ukraine.

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    EUROPEAN UNION

    2007 Third-Quarter Results

    In the European Union (EU), operating companies income grew 20.5% to $1.2 billion,

    driven by higher pricing and favorable currency of $100 million. The total market declined

    3.8%, due largely to the impact of tax-driven price increases, particularly in the Czech Republic,

    Germany, Poland and the United Kingdom. PMIs cigarette shipment volume of 65.4 billion

    units declined 4.8% and cigarette market share was down 0.6 points to 39.1%. For the year-to-

    date through September, PMIs share in the EU at 39.4% was unchanged from the comparative

    period in 2006.

    In the Czech Republic, the total cigarette market was down 9.2%, due to the timing of

    trade purchases, although year-to-date volume through September was up 1.6%. Shipment

    volume for PMI in the Czech Republic decreased 22.6% in the third quarter and market share of

    49.3% was down 8.5 points. PMI implemented tax-driven price increases in the second quarter,

    while most competitive brands, particularly at the low end, followed in the third quarter. This

    placed PMIs brands at a temporary price disadvantage and was the main cause of the significant

    market share loss. PMI expects to recover a large part of this loss in the fourth quarter of 2007.

    In France, the total market declined 3.9%, due to the impact of higher pricing. PMIs

    market share of 42.0% declined 0.5 points and shipments were down 5.5%.

    In Germany, the cigarette market declined 5.7%, due to a tax-driven price increase in the

    fourth quarter of 2006. PMIs cigarette shipments in Germany were down 9.0%, and its cigarette

    market share declined 1.3 points to 35.2%, driven by consumer downtrading to the low price

    segment and an increase in a key competitors trade inventory. Marlboro declined 3.1 points to

    24.1%, due to the decline of the vending segment and the previously mentioned trade inventory

    increase. L&M grew 2.4 share points to reach 5.3%.

    In Italy, the total market was down 0.9%. PMIs shipments were up 0.6% and its share

    increased 0.6 points to 54.7%, with Merit, Chesterfield and Philip Morris contributing to the

    growth.

    In Poland, consumer price sensitivity following significant tax-driven price increases

    resulted in a total market decline of 10.5% and PMIs market share was down 2.6 points to

    38.0%, due primarily to declines of its low price brands, as well as its local 70mm brands.

    Importantly, profitability in Poland virtually tripled due to higher pricing.

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    In Spain, the total cigarette market was down 0.6%, while PMIs market share of 32.7%

    rose 0.4 points, driven by Chesterfield and L&M. Cigarette shipments in Spain grew 1.8% and

    income rose by more than 30% in the quarter.

    EASTERN EUROPE, MIDDLE EAST & AFRICA

    2007 Third-Quarter Results

    In Eastern Europe, Middle East & Africa, PMIs operating companies income increased

    22.0% to $710 million, due mainly to higher pricing, improved volume/mix and favorable

    currency of $44 million. Cigarette shipment volume of 77.5 billion units was up 0.3%. Higher

    volume in Algeria, Bulgaria, Egypt, Lebanon and Ukraine more than offset unfavorable timing

    of shipments in Kuwait and lower volume in Serbia and worldwide duty-free.

    In Egypt, the total market rose 6.4%, while PMIs market share grew 2.6 points to 14.2%,

    due to the continued strength of L&M. Shipment volume in Egypt grew 21.1%.

    In Russia, shipment volume declined 1.0% due to unfavorable distributor inventory

    movements following consolidation to a single distributor. Market share rose 0.2 points to

    26.6% as its premium portfolio including Marlboro, Parliament and Virginia Slims continued

    to grow strongly, more than offsetting the decline of L&M. In September, PMI replaced the

    entire L&M brand family with a completely new offering to improve its vibrancy and adult

    consumer appeal. Initial results are encouraging. Improved brand mix and better pricing

    resulted in strong income growth in Russia.

    In Serbia, PMIs shipments were down 10.6%, due to the continued decline of local

    brands, and market share was down 1.9 points to 52.0%. However, PMIs market share

    increased for its international brands, driven by Marlboro and Bond Street. Market share for

    Marlboro rose slightly and its share of the premium segment increased.

    In Ukraine, shipments grew 3.5% and market share rose 0.6 points to 34.0%, driven by

    consumer uptrading to Marlboro, Parliament and Chesterfield.

    ASIA

    2007 Third-Quarter Results

    In Asia, operating companies income grew 14.5% to $514 million, primarily due to

    favorable pricing and lower costs, partially offset by unfavorable volume/mix and unfavorable

    currency of $9 million. PMIs cigarette shipment volume of 53.0 billion units rose 9.6%, due to

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    acquisition volume in Pakistan and gains in Korea, partially offset by declines in Indonesia,

    Malaysia and Thailand.

    In Indonesia, the total cigarette market was essentially flat. PMI market share was down

    0.6 points to 28.0%, reflecting the decline of A Mild and Dji Sam Soe due to a temporary stick-

    price disadvantage versus low price competition, partially offset by the growth of Marlboro,

    which gained 0.5 points to 4.3%. PMIs cigarette shipments declined 1.9%, although Marlboro

    shipments rose 20.7%, driven by improved marketing and distribution and the July 2007

    Marlboro kretek launch. Profits rose significantly in Indonesia.

    In Japan, the total cigarette market was up 16.4% or 9.4 billion units, due to a favorable

    comparison with the third quarter of 2006, which was depressed by trade inventory depletions

    following the July 2006 excise tax-driven price increase. Consequently, PMIs in-market sales

    were up 13.4%, but market share declined 0.6 points to 24.3%, due mainly to Lark. Marlboro

    share of 10.1% was essentially flat. Cigarette shipment volume was flat, as higher in-market

    sales were offset by unfavorable inventory movements.

    In Korea, the total market was down 3.2%, while PMIs shipments rose 10.0% and

    market share increased 1.3 points to 9.9%. Parliament and Marlboro continued to gain share,

    driven by recent new line extensions, including Marlboro Filter Plus.

    LATIN AMERICA

    2007 Third-Quarter Results

    In Latin America, operating companies income increased 7.5% to $143 million, due

    mainly to higher pricing. Cigarette shipment volume of 21.3 billion units was down 1.5%, as

    declines in Brazil and Colombia were partially offset by growth in Argentina.

    In Argentina, the total cigarette market grew 1.7%. PMIs volume grew 5.0% and market

    share increased 2.2 points to a record 69.7%. Both Marlboro and the Philip Morris brand

    gained share.

    In Brazil, the total market was down 0.9% and PMIs market share declined 0.2 points to

    12.0%. However, Marlboro share grew 0.2 points to 5.9%. PMI shipments were down 2.8%.

    In Colombia, PMI shipment volume declined 17.6%, due primarily to distributor

    inventory distortions. However, PMI expects volume to recover in the fourth quarter of 2007.

    In Mexico, the total market declined 1.7%, due to lower consumption following the

    January 2007 tax-driven price increase. PMI market share reached a new record of 65.5%, up

    1.6 points on the continued strength of Marlboro and Benson & Hedges.

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    FINANCIAL SERVICES

    2007 Third-Quarter Results

    Philip Morris Capital Corporation (PMCC) reported operating companies income of $33

    million for the third quarter of 2007 versus operating companies income of $101 million for the

    year-earlier period. Third-quarter 2007 results primarily reflect lower asset management gains

    and lower lease revenues versus the prior year.

    Consistent with its strategic shift in 2003, PMCC is focused on managing its existing

    portfolio of finance assets in order to maximize gains and generate cash flow from asset sales

    and related activities. PMCC is no longer making new investments and expects that its operating

    companies income will fluctuate over time as investments mature or are sold.

    Altria Group, Inc. Profile

    As of September 30, 2007, Altria Group, Inc. owned 100% of Philip Morris International

    Inc., Philip Morris USA Inc. and Philip Morris Capital Corporation, and approximately 28.6% of

    SABMiller plc. The brand portfolio of Altria Group, Inc.s tobacco operating companies

    includes such well-known names as Marlboro, L&M, Parliament and Virginia Slims. Altria

    Group, Inc. recorded 2006 net revenues from continuing operations of $67.1 billion.

    Trademarks and service marks mentioned in this release are the registered property of, or

    licensed by, the subsidiaries of Altria Group, Inc.

    Forward-Looking and Cautionary Statements

    This press release contains projections of future results and other forward-looking

    statements that involve a number of risks and uncertainties and are made pursuant to the Safe

    Harbor Provisions of the Private Securities Litigation Reform Act of 1995. The following

    important factors could cause actual results and outcomes to differ materially from those

    contained in such forward-looking statements.

    Altria Group, Inc.s tobacco subsidiaries (Philip Morris USA and Philip Morris

    International) are subject to intense price competition; changes in consumer preferences and

    demand for their products; fluctuations in levels of customer inventories; the effects of foreign

    economies and local economic and market conditions; unfavorable currency movements and

    changes to income tax laws. Their results are dependent upon their continued ability to promote

    brand equity successfully; to anticipate and respond to new consumer trends; to develop new

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    products and markets and to broaden brand portfolios in order to compete effectively with lower-

    priced products; and to improve productivity.

    Altria Group, Inc.s tobacco subsidiaries continue to be subject to litigation, including

    risks associated with adverse jury and judicial determinations, and courts reaching conclusions at

    variance with the companys understanding of applicable law and bonding requirements in the

    limited number of jurisdictions that do not limit the dollar amount of appeal bonds; legislation,

    including actual and potential excise tax increases; discriminatory excise tax structures;

    increasing marketing and regulatory restrictions; the effects of price increases related to excise

    tax increases and concluded tobacco litigation settlements on consumption rates and consumer

    preferences within price segments; health concerns relating to the use of tobacco products and

    exposure to environmental tobacco smoke; governmental regulation; privately imposed smoking

    restrictions; and governmental and grand jury investigations.

    Altria Group, Inc. and its subsidiaries are subject to other risks detailed from time to time

    in its publicly filed documents, including its Quarterly Report on Form 10-Q for the period ended

    June 30, 2007. Altria Group, Inc. cautions that the foregoing list of important factors is not

    complete and does not undertake to update any forward-looking statements that it may make.

    # # #

  • ALTRIA GROUP, INC. Schedule 1and Subsidiaries

    Condensed Statements of EarningsFor the Quarters Ended September 30,

    (in millions, except per share data)(Unaudited)

    2007 2006 % ChangeNet revenues 19,207$ 17,642$ 8.9 %Cost of sales 4,325 4,022 7.5 %Excise taxes on products (*) 9,243 8,229 12.3 %Gross profit 5,639 5,391 4.6 %Marketing, administration and research costs 1,775 1,836Asset impairment and exit costs 25 65(Recoveries) from airline industry exposure (7) -Operating companies income 3,846 3,490 10.2 %Amortization of intangibles 6 6General corporate expenses 132 125Asset impairment and exit costs 3 3Operating income 3,705 3,356 10.4 %Interest and other debt expense, net 11 59Earnings from continuing operations before income taxes, and equity earnings andminority interest, net 3,694 3,297 12.0 %Provision for income taxes 1,117 1,125 (0.7)%Earnings from continuing operations before equity earningsand minority interest, net 2,577 2,172 18.6 %Equity earnings and minority interest, net 56 42Earnings from continuing operations 2,633 2,214 18.9 %Earnings from discontinued operations, net ofincome taxes and minority interest - 661Net earnings 2,633$ 2,875$ (8.4)%

    Per share data:Basic earnings per share from continuing operations 1.25$ 1.06$ 17.9 %Basic earnings per share from discontinued operations -$ 0.32$Basic earnings per share 1.25$ 1.38$ (9.4)%

    Diluted earnings per share from continuing operations 1.24$ 1.05$ 18.1 %Diluted earnings per share from discontinued operations -$ 0.31$Diluted earnings per share 1.24$ 1.36$ (8.8)%Weighted average number ofshares outstanding - Basic 2,103 2,090 0.6 %- Diluted 2,117 2,107 0.5 %

    (*) The segment detail of excise taxes on products sold is shown in the Net Revenues page.

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  • ALTRIA GROUP, INC. Schedule 2and Subsidiaries

    Selected Financial Data by Business SegmentFor the Quarters Ended September 30,

    (in millions)(Unaudited)

    Net RevenuesUS tobacco European Union EEMA Asia

    2007 4,944$ 6,832$ 3,312$ 2,814$2006 4,830 6,458 2,607 2,586% Change 2.4% 5.8% 27.0% 8.8%

    Reconciliation:For the quarter ended September 30, 2006 4,830$ 6,458$ 2,607$ 2,586$

    Divested businesses - 2006 - - - -Divested businesses - 2007 - - - -Acquired businesses - - - 61Currency - 444 297 78Operations 114 (70) 408 89For the quarter ended September 30, 2007 4,944$ 6,832$ 3,312$ 2,814$

    (*) The detail of excise taxes on products sold is as follows:2007 927$ 4,554$ 1,606$ 1,372$2006 938$ 4,324$ 1,114$ 1,219$

    2007 Currency increased international tobacco excise taxes -$ 300$ 198$ 81$

    Latin America Total International tobacco Financial services Total2007 1,274$ 14,232$ 31$ 19,207$2006 1,052 12,703 109 17,642% Change 21.1% 12.0% (71.6)% 8.9%

    Reconciliation:For the quarter ended September 30, 2006 1,052$ 12,703$ 109$ 17,642$

    Divested businesses - 2006 - - - -Divested businesses - 2007 - - - -Acquired businesses 45 106 - 106Currency 42 861 - 861Operations 135 562 (78) 598For the quarter ended September 30, 2007 1,274$ 14,232$ 31$ 19,207$

    (*) The detail of excise taxes on products sold is as follows:2007 784$ 8,316$ 9,243$2006 634$ 7,291$ 8,229$

    2007 Currency increased international tobacco excise taxes 24$ 603$ 603$

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  • ALTRIA GROUP, INC. Schedule 3and Subsidiaries

    Selected Financial Data by Business SegmentFor the Quarters Ended September 30,

    (in millions)(Unaudited)

    Operating Companies IncomeUS tobacco European Union EEMA Asia

    2007 1,295$ 1,151$ 710$ 514$2006 1,270 955 582 449% Change 2.0% 20.5% 22.0% 14.5%

    Reconciliation:For the quarter ended September 30, 2006 1,270$ 955$ 582$ 449$

    Divested businesses - 2006 - - - -Italian antitrust charge - 2006 - - - -Asset impairment and exit costs - 2006 - 59 - 6Provision for airline industry exposure - 2006 - - - -

    - 59 - 6

    Divested businesses - 2007 - - - -Asset impairment and exit costs - 2007 (10) (13) - (2)Implementation costs - 2007 (12) - - -Recoveries from airline industry exposure - 2007 - - - -

    (22) (13) - (2)

    Acquired businesses - (1) - (1)Currency - 100 44 (9)Operations 47 51 84 71For the quarter ended September 30, 2007 1,295$ 1,151$ 710$ 514$

    Latin America Total International tobacco Financial services Total2007 143$ 2,518$ 33$ 3,846$2006 133 2,119 101 3,490% Change 7.5% 18.8% (67.3)% 10.2%

    Reconciliation:For the quarter ended September 30, 2006 133$ 2,119$ 101$ 3,490$

    Divested businesses - 2006 (14) (14) - (14)Italian antitrust charge - 2006 - - - -Asset impairment and exit costs - 2006 - 65 - 65Provision for airline industry exposure - 2006 - - - -

    (14) 51 - 51

    Divested businesses - 2007 - - - -Asset impairment and exit costs - 2007 - (15) - (25)Implementation costs - 2007 - - - (12)Recoveries from airline industry exposure - 2007 - - 7 7

    - (15) 7 (30)

    Acquired businesses 5 3 - 3Currency 3 138 - 138Operations 16 222 (75) 194For the quarter ended September 30, 2007 143$ 2,518$ 33$ 3,846$

    15

  • ALTRIA GROUP, INC. Schedule 4and Subsidiaries

    Condensed Statements of EarningsFor the Nine Months Ended September 30,

    (in millions, except per share data)(Unaudited)

    2007 2006 % Change

    Net revenues 55,572$ 51,024$ 8.9 %Cost of sales 12,499 11,704 6.8 %Excise taxes on products (*) 26,774 23,670 13.1 %Gross profit 16,299 15,650 4.1 %Marketing, administration and research costs 5,359 5,348Italian antitrust charge - 61Asset impairment and exit costs 481 88(Recoveries) Provision for airline industry exposure (214) 103Operating companies income 10,673 10,050 6.2 %Amortization of intangibles 18 17General corporate expenses 392 355Asset impairment and exit costs 64 35Operating income 10,199 9,643 5.8 %Interest and other debt expense, net 187 325Earnings from continuing operations before income taxes,equity earnings and minority interest, net 10,012 9,318 7.4 %Provision for income taxes 3,234 2,540 27.3 %Earnings from continuing operations before equity earningsand minority interest, net 6,778 6,778 - %Equity earnings and minority interest, net 195 145Earnings from continuing operations 6,973 6,923 0.7 %Earnings from discontinued operations, net ofincome taxes and minority interest 625 2,140Net earnings 7,598$ 9,063$ (16.2)%

    Per share data (**):Basic earnings per share from continuing operations 3.32$ 3.32$ - %Basic earnings per share from discontinued operations 0.30$ 1.02$Basic earnings per share 3.62$ 4.34$ (16.6)%

    Diluted earnings per share from continuing operations 3.30$ 3.29$ 0.3 %Diluted earnings per share from discontinued operations 0.29$ 1.02$Diluted earnings per share 3.59$ 4.31$ (16.7)%Weighted average number ofshares outstanding - Basic 2,100 2,086 0.7 %- Diluted 2,115 2,104 0.5 %

    (*) The segment detail of excise taxes on products sold is shown in the Net Revenues page.(**) Basic and diluted earnings per share are computed for each of the periods presented. Accordingly,the sum of the quarterly earnings per share amounts may not agree to the year-to-date amounts.

    16

  • ALTRIA GROUP, INC. Schedule 5and Subsidiaries

    Selected Financial Data by Business SegmentFor the Nine Months Ended September 30,

    (in millions)(Unaudited)

    Net RevenuesUS tobacco European Union EEMA Asia

    2007 13,998$ 20,253$ 9,205$ 8,351$2006 13,938 18,248 7,716 7,667% Change 0.4% 11.0% 19.3% 8.9%

    Reconciliation:For the nine months ended September 30, 2006 13,938$ 18,248$ 7,716$ 7,667$

    Divested businesses - 2006 - - - -Divested businesses - 2007 - - - -Acquired businesses - - - 151Currency - 1,620 453 263Operations 60 385 1,036 270For the nine months ended September 30, 2007 13,998$ 20,253$ 9,205$ 8,351$

    (*) The detail of excise taxes on products sold is as follows:

    2007 2,626$ 13,511$ 4,356$ 4,061$2006 2,724$ 12,149$ 3,412$ 3,471$

    2007 Currency increased international tobacco excise taxes -$ 1,086$ 243$ 218$

    Latin America Total International tobacco Financial services Total2007 3,639$ 41,448$ 126$ 55,572$2006 3,183 36,814 272 51,024% Change 14.3% 12.6% (53.7)% 8.9%

    Reconciliation:For the nine months ended September 30, 2006 3,183$ 36,814$ 272$ 51,024$

    Divested businesses - 2006 - - - -Divested businesses - 2007 - - - -Acquired businesses 111 262 - 262Currency 33 2,369 - 2,369Operations 312 2,003 (146) 1,917For the nine months ended September 30, 2007 3,639$ 41,448$ 126$ 55,572$

    (*) The detail of excise taxes on products sold is as follows:

    2007 2,220$ 24,148$ 26,774$2006 1,914$ 20,946$ 23,670$

    2007 Currency increased international tobacco excise taxes 16$ 1,563$ 1,563$

    17

  • ALTRIA GROUP, INC. Schedule 6and Subsidiaries

    Selected Financial Data by Business SegmentFor the Nine Months Ended September 30,

    (in millions)(Unaudited)

    Operating Companies IncomeUS tobacco European Union EEMA Asia

    2007 3,429$ 3,256$ 1,911$ 1,412$2006 3,687 2,735 1,639 1,456% Change (7.0)% 19.0% 16.6% (3.0)%

    Reconciliation:For the nine months ended September 30, 2006 3,687$ 2,735$ 1,639$ 1,456$

    Divested businesses - 2006 - - - -Italian antitrust charge - 2006 - 61 - -Asset impairment and exit costs - 2006 - 81 - 7Provision for airline industry exposure - 2006 - - - -

    - 142 - 7

    Divested businesses - 2007 - - - -Asset impairment and exit costs - 2007 (328) (101) (12) (22)Implementation costs - 2007 (12) - - -Recoveries from airline industry exposure - 2007 - - - -

    (340) (101) (12) (22)

    Acquired businesses - (2) - 9Currency - 294 65 (36)Operations 82 188 219 (2)For the nine months ended September 30, 2007 3,429$ 3,256$ 1,911$ 1,412$

    Latin America Total International tobacco Financial services Total2007 333$ 6,912$ 332$ 10,673$2006 395 6,225 138 10,050% Change (15.7)% 11.0% +100% 6.2%

    Reconciliation:For the nine months ended September 30, 2006 395$ 6,225$ 138$ 10,050$

    Divested businesses - 2006 (45) (45) - (45)Italian antitrust charge - 2006 - 61 - 61Asset impairment and exit costs - 2006 - 88 - 88Provision for airline industry exposure - 2006 - - 103 103

    (45) 104 103 207

    Divested businesses - 2007 - - - -Asset impairment and exit costs - 2007 (18) (153) - (481)Implementation costs - 2007 - - - (12)Recoveries from airline industry exposure - 2007 - - 214 214

    (18) (153) 214 (279)

    Acquired businesses (2) 5 - 5Currency (2) 321 - 321Operations 5 410 (123) 369For the nine months ended September 30, 2007 333$ 6,912$ 332$ 10,673$

    18

  • ALTRIA GROUP, INC. Schedule 7and Subsidiaries

    Net Earnings and Diluted Earnings Per ShareFor the Quarters Ended September 30,($ in millions, except per share data)

    (Unaudited)Diluted

    Net Earnings E.P.S.

    2007 Continuing Earnings 2,633$ 1.24$2006 Continuing Earnings 2,214$ 1.05$% Change 18.9 % 18.1 %

    Reconciliation:2006 Continuing Earnings 2,214$ 1.05$

    2006 Asset impairment and exit costs 43 0.022006 Provision for airline industry exposure - -

    43 0.02

    2007 Asset impairment, exit and implementation costs (26) (0.02)2007 Recoveries from airline industry exposure 4 -2007 Tax items 97 0.05

    75 0.03

    Currency 91 0.04Change in shares - -Change in tax rate 50 0.02Operations 160 0.082007 Continuing Earnings 2,633$ 1.24$2007 Discontinued Earnings -$ -$2007 Net Earnings 2,633$ 1.24$

    2007 Continuing Earnings Excluding Special Items 2,558$ 1.21$2006 Continuing Earnings Excluding Special Items 2,257$ 1.07$% Change 13.3% 13.1%

    19

  • ALTRIA GROUP, INC. Schedule 8and Subsidiaries

    Net Earnings and Diluted Earnings Per ShareFor the Nine Months Ended September 30,

    ($ in millions, except per share data)(Unaudited)

    DilutedNet Earnings E.P.S. (*)

    2007 Continuing Earnings 6,973$ 3.30$2006 Continuing Earnings 6,923$ 3.29$% Change 0.7 % 0.3 %

    Reconciliation:2006 Continuing Earnings 6,923$ 3.29$

    2006 Italian antitrust charge 61 0.032006 Asset impairment and exit costs 80 0.042006 Interest on tax reserve transfers to Kraft 29 0.012006 Provision for airline industry exposure 66 0.032006 Tax items (631) (0.30)

    (395) (0.19)

    2007 Asset impairment, exit and implementation costs (367) (0.17)2007 Recoveries from airline industry exposure 137 0.062007 Interest on tax reserve transfers to Kraft (50) (0.02)2007 Tax items 97 0.05

    (183) (0.08)

    Currency 212 0.10Change in shares - (0.02)Change in tax rate 63 0.03Operations 353 0.172007 Continuing Earnings 6,973$ 3.30$2007 Discontinued Earnings 625$ 0.29$2007 Net Earnings 7,598$ 3.59$

    2007 Continuing Earnings Excluding Special Items 7,156$ 3.382006 Continuing Earnings Excluding Special Items 6,528$ 3.10% Change 9.6 % 9.0 %

    (*) Basic and diluted earnings per share are computed for each of the periodspresented. Accordingly, the sum of the quarterly earnings per share amountsmay not agree to the year-to-date amounts.

    20

  • ALTRIA GROUP, INC. Schedule 9and Subsidiaries

    Condensed Balance Sheets(in millions, except ratios)

    (Unaudited)

    September 30, December 31,2007 2006

    AssetsCash and cash equivalents 7,309$ 4,781$All other current assets 13,438 13,724Property, plant and equipment, net 8,074 7,581Goodwill 6,700 6,197Other intangible assets, net 1,874 1,908Other assets 7,891 6,837Assets of discontinued operations - 56,452Total consumer products assets 45,286 97,480Total financial services assets 6,442 6,790Total assets 51,728$ 104,270$

    Liabilities and Stockholders' EquityShort-term borrowings 512$ 420$Current portion of long-term debt 3,973 648Accrued settlement charges 3,681 3,552All other current liabilities 11,018 10,941Long-term debt 3,040 6,298Deferred income taxes 1,649 1,391Other long-term liabilities 4,676 5,208Liabilities of discontinued operations - 29,495Total consumer products liabilities 28,549 57,953Total financial services liabilities 5,940 6,698Total liabilities 34,489 64,651Total stockholders' equity 17,239 39,619Total liabilities and stockholders' equity 51,728$ 104,270$

    Total consumer products debt 7,525$ 7,366$Debt/equity ratio - consumer products 0.44 0.19Total debt 8,025$ 8,485$Total debt/equity ratio 0.47 0.21

    21

  • This is an Intelligent Financial Statement by CoreFiling. The Intelligent Financial Statement embeds XBRL financial data in a viewable and printable document. Bymoving your mouse over the displayed data, pop-up CoreFiling TagTips will show you how the data is internally expressed as XBRL. (Please note that TagTipsrequire Adobe Reader 7.0 or later.) To obtain the embedded XBRL report and any XBRL extension taxonomies, double-click or right-click the paperclip icon or icons below. For more information on the Intelligent Financial Statement or XBRL, please see http://www.corefiling.com.

    XBRL report mo-20070930.xml

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    XBRL taxonomy linkbase mo-20070930_pre.xml

    XBRL taxonomy linkbase mo-20070930_cal.xml

    XBRL taxonomy linkbase mo-20070930_lab.xml

    22

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    The XBRL 2.1 instance document.Double click to open, or right click for menu.

    Condensed Statement Earnings link:presentationLink link:calculationLink Revenue By Business Segment link:presentationLink Operating Companies Income By Business Segment link:presentationLink Balance Sheets link:presentationLink link:calculationLink Net Earnings link:presentationLink Diluted Earnings Per Share link:presentationLink

    An extension taxonomy schema.Double click to open, or right click for menu.

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    Accrued Settlement Charges Acquired Businesses, Operating Companies Income Acquired Businesses, Net Revenues Acquired Businesses, Operating Revenue Asset Impairment, Exit and Implementation Costs, Net Minority Interest Impact Balance Sheet Basic Earnings Per Share, Continuing Operations Change in Shares, Continuing Earnings Change in Tax Rate, Continuing Earnings Asset Impairment and Exit Costs, Operating Companies Income Operating Expenses, Companies Operating Companies Income Companies Operating Profit Reconciliation Consumer Products Assets, Total Consumer Products Liabilities, Total Continuing Earnings Reconciliation Asset Impairment and Exit Costs, Corporate Asset Impairment and Exit Costs, Companies Asset Impairment and Exit Costs, Continuing Earnings General Expenses, Corporate Operating Expenses, Corporate Currency, Operating Companies Income Currency, Continuing Earnings Currency, Net Revenues Diluted Earnings Per Share, Continuing Operations Diluted Earnings Per Share, Discontinued Operations Divested Businesses, Net Revenues Divested Businesses, Operating Companies Income Excise Taxes on Products Financial Services Assets, Total Financial Services Liabilities, Total Domestic Tobacco Headquarters Relocation Charges Domestic Tobacco Headquarters Relocation Charges, Continuing Earnings Implementation Costs, Operating Companies Income Implementation, Net Revenues Income/(Loss) from Continuing Operations After Minority Interest Income (Loss) Continuing Operations After Minority Interest Reconciliation, Total Earnings from continuing operations before income taxes, equity earnings and minority interest, net International Agreements International Agreements Income (Loss) Continuing Operations After Minority Interest Investment Impairment, Net Minority Interest Impact Investment Impairment, Operating Companies Income Italian Antitrust Charge Italian Antitrust Charge, Operating Companies Income Long Term Deferred Income Taxes Liability (Gains) Losses on Sales of Businesses, Net Losses on Sales of Businesses, Operating Companies Income Losses on Sales of Businesses, Net of Minority Interest Impact Loss on Sales of Businesses, Net of Minority Interest Impact, Diluted EPS Gains on Sales of Businesses, Operating Companies Income Gains on Sales of Businesses, Net of Minority Interest Impact Gain on Sales of Businesses, Net of Minority Interest Impact, Diluted EPS Marketing, Administration and Research Costs Equity earnings and minority interest, net Operations, Operating Companies Income Operations, Continuing Earnings Operations, Net Revenues Other Intangible Assets Excluding Goodwill, Net (Recoveries) from airline industry exposure Provision Airline Industry Exposure, Continuing Earnings Domestic Tobacco Quota Buy-Out Revenue Reconciliation Tax Items, Net Minority Interest Impact Tobacco Pool Operating Companies Income Reconciliation, Total Basic Earnings Per Share, Discontinued Operations Asset Impairment, Exit and Implementation Costs, Net Minority Interest Impact, Diluted EPS Change in Shares, Continuing Earnings, Diluted EPS Change in Tax rate, Continuing Earnings, Diluted EPS Total consumer products debt Asset Impairment and Exit Costs, Continuing Earnings, Diluted EPS Currency, Continuing Earnings, Diluted EPS Debt/equity ratio - consumer products Total debt/equity ratio Total debt Domestic Tobacco Headquarters Relocation Charges, Continuing Earnings, Diluted EPS Income/ (Loss) from Continuing Operations After Minority Interest, Diluted EPS Income/ (Loss) Continuing Operations After Minority Interest, Reconciliation Total, Diluted EPS Income/ (Loss) Discontinued Operations, Net Tax Effect, Diluted EPS Italian Antitrust Charge, Diluted EPS Net Income, Diluted EPS Operations, Continuing Earnings, Diluted EPS Tax Items, Net Minority Interest Impact, Diluted EPS Currency Increased International Tobacco Excise Taxes Domestic Tobacco Headquarters Relocation Charges, Operating Companies Income Italian Antitrust Charge, Continuing Earnings Provision for Airline Industry Exposure, Operating Companies Income Provision for airline industry exposure, Diluted EPS Domestic Tobacco Loss on U.S. Tobacco Pool Domestic Tobacco Loss on U.S Tobacco Pool, Operating Companies Income Domestic Tobacco Quota Buy-Out, Operating Companies Income

    Domestic Tobacco Loss on U.S. Tobacco Pool , Continuing Earnings Domestic Tobacco Quota Buy-Out, Continuing Earnings Gains (Losses) on Sales of Businesses, Net of Minority Interest Impact Domestic Tobacco Loss on U.S. Tobacco Pool, Diluted EPS

    Domestic Tobacco Quota Buy-Out, Diluted EPS

    Gain on Redemption of United Biscuits Investment, Net of Minority Interest Impact, Diluted EPS

    Gain on redemption of United Biscuits Investment, Operating Companies Income Gain on redemption of United Biscuits investment Italian antitrust charge, Net Revenues Italian antitrust charge, Net Revenues Asset impairment and exit costs, Net Revenues Asset impairment and exit costs, Net Revenues Recoveries for airline industry exposure, Net Revenues Recoveries for airline industry exposure, Net Revenues Recoveries from airline industry exposure, Operating Companies Income Net Revenues Reconciliation, Total Interest on tax reserve transfers to Kraft, Continuing Earnings Recoveries from airline industry exposure, Continuing Earnings Discontinued Earnings Discontinued Earnings Interest on tax reserve transfers to Kraft, Diluted EPS Recoveries from airline industry exposure, Diluted EPS Continuing Earnings Excluding Special Items Continuing Earnings Excluding Special Items, Diluted EPS Recoveries for airline industry exposure Earnings from continuing operations before equity earnings, and minority interest, net

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    mo-20070930.pdfNet revenuesCost of salesExcise taxes on products (*)Gross profitMarketing, administration and research costsAsset impairment and exit costs(Recoveries) from airline industry exposureOperating companies incomeAmortization of intangiblesGeneral corporate expensesAsset impairment and exit costsOperating incomeInterest and other debt expense, netEarnings from continuing operations before income taxes, and equity earnings andminority interest, netProvision for income taxesEarnings from continuing operations before equity earningsand minority interest, netEquity earnings and minority interest, netEarnings from continuing operationsEarnings from discontinued operations, net ofincome taxes and minority interestNet earningsPer share data:Basic earnings per share from continuing operationsBasic earnings per share from discontinued operationsBasic earnings per shareDiluted earnings per share from continuing operationsDiluted earnings per share from discontinued operationsDiluted earnings per shareWeighted average number ofshares outstanding - Basic- Diluted(*) The segment detail of excise taxes on products sold is shown in the Net Revenues page.

    20072006% ChangeReconciliation:For the quarter ended September 30, 2006Divested businesses - 2006Divested businesses - 2007Acquired businessesCurrencyOperationsFor the quarter ended September 30, 2007(*) The detail of excise taxes on products sold is as follows:2007.02006.02007 Currency increased international tobacco excise taxes20072006% ChangeReconciliation:For the quarter ended September 30, 2006Divested businesses - 2006Divested businesses - 2007Acquired businessesCurrencyOperationsFor the quarter ended September 30, 2007(*) The detail of excise taxes on products sold is as follows:2007.02006.02007 Currency increased international tobacco excise taxes

    20072006% ChangeReconciliation:For the quarter ended September 30, 2006Divested businesses - 2006Italian antitrust charge - 2006Asset impairment and exit costs - 2006Provision for airline industry exposure - 2006Divested businesses - 2007Asset impairment and exit costs - 2007Implementation costs - 2007Recoveries from airline industry exposure - 2007Acquired businessesCurrencyOperationsFor the quarter ended September 30, 200720072006% ChangeReconciliation:For the quarter ended September 30, 2006Divested businesses - 2006Italian antitrust charge - 2006Asset impairment and exit costs - 2006Provision for airline industry exposure - 2006Divested businesses - 2007Asset impairment and exit costs - 2007Implementation costs - 2007Recoveries from airline industry exposure - 2007Acquired businessesCurrencyOperationsFor the quarter ended September 30, 2007

    Net revenuesCost of salesExcise taxes on products (*)Gross profitMarketing, administration and research costsItalian antitrust chargeAsset impairment and exit costs(Recoveries) Provision for airline industry exposureOperating companies incomeAmortization of intangiblesGeneral corporate expensesAsset impairment and exit costsOperating incomeInterest and other debt expense, netEarnings from continuing operations before income taxes,equity earnings and minority interest, netProvision for income taxesEarnings from continuing operations before equity earningsand minority interest, netEquity earnings and minority interest, netEarnings from continuing operationsEarnings from discontinued operations, net ofincome taxes and minority interestNet earningsPer share data (**):Basic earnings per share from continuing operationsBasic earnings per share from discontinued operationsBasic earnings per shareDiluted earnings per share from continuing operationsDiluted earnings per share from discontinued operationsDiluted earnings per shareWeighted average number ofshares outstanding - Basic- Diluted(*) The segment detail of excise taxes on products sold is shown in the Net Revenues page.(**) Basic and diluted earnings per share are computed for each of the periods presented. Accordingly,the sum of the quarterly earnings per share amounts may not agree to the year-to-date amounts.

    20072006% ChangeReconciliation:For the nine months ended September 30, 2006Divested businesses - 2006Divested businesses - 2007Acquired businessesCurrencyOperationsFor the nine months ended September 30, 2007(*) The detail of excise taxes on products sold is as follows:200720062007 Currency increased international tobacco excise taxes20072006% ChangeReconciliation:For the nine months ended September 30, 2006Divested businesses - 2006Divested businesses - 2007Acquired businessesCurrencyOperationsFor the nine months ended September 30, 2007(*) The detail of excise taxes on products sold is as follows:200720062007 Currency increased international tobacco excise taxes

    20072006% ChangeReconciliation:For the nine months ended September 30, 2006Divested businesses - 2006Italian antitrust charge - 2006Asset impairment and exit costs - 2006Provision for airline industry exposure - 2006Divested businesses - 2007Asset impairment and exit costs - 2007Implementation costs - 2007Recoveries from airline industry exposure - 2007Acquired businessesCurrencyOperationsFor the nine months ended September 30, 200720072006% ChangeReconciliation:For the nine months ended September 30, 2006Divested businesses - 2006Italian antitrust charge - 2006Asset impairment and exit costs - 2006Provision for airline industry exposure - 2006Divested businesses - 2007Asset impairment and exit costs - 2007Implementation costs - 2007Recoveries from airline industry exposure - 2007Acquired businessesCurrencyOperationsFor the nine months ended September 30, 2007

    2007 Continuing Earnings2006 Continuing Earnings% ChangeReconciliation:2006 Continuing Earnings2006 Asset impairment and exit costs2006 Provision for airline industry exposure2007 Asset impairment, exit and implementation costs2007 Recoveries from airline industry exposure2007 Tax itemsCurrencyChange in sharesChange in tax rateOperations2007 Continuing Earnings2007 Discontinued Earnings2007 Net Earnings2007 Continuing Earnings Excluding Special Items2006 Continuing Earnings Excluding Special Items% Change

    2007 Continuing Earnings2006 Continuing Earnings% ChangeReconciliation:2006 Continuing Earnings2006 Italian antitrust charge2006 Asset impairment and exit costs2006 Interest on tax reserve transfers to Kraft2006 Provision for airline industry exposure2006 Tax items2007 Asset impairment, exit and implementation costs2007 Recoveries from airline industry exposure2007 Interest on tax reserve transfers to Kraft2007 Tax itemsCurrencyChange in sharesChange in tax rateOperations2007 Continuing Earnings2007 Discontinued Earnings2007 Net Earnings2007 Continuing Earnings Excluding Special Items2006 Continuing Earnings Excluding Special Items% Change(*) Basic and diluted earnings per share are computed for each of the periodspresented. Accordingly, the sum of the quarterly earnings per share amountsmay not agree to the year-to-date amounts.

    AssetsCash and cash equivalentsAll other current assetsProperty, plant and equipment, netGoodwillOther intangible assets, netOther assetsAssets of discontinued operationsTotal consumer products assetsTotal financial services assetsTotal assetsLiabilities and Stockholders' EquityShort-term borrowingsCurrent portion of long-term debtAccrued settlement chargesAll other current liabilitiesLong-term debtDeferred income taxesOther long-term liabilitiesLiabilities of discontinued operationsTotal consumer products liabilitiesTotal financial services liabilitiesTotal liabilitiesTotal stockholders' equityTotal liabilities and stockholders' equityTotal consumer products debtDebt/equity ratio - consumer productsTotal debtTotal debt/equity ratio

    Items not shown:

    button1: button2: button3: button4: button5: button6: button7: button8: button9: button10: button11: button12: button13: button14: button15: button16: button17: button18: button19: button20: button21: button22: button23: button24: button25: button26: button27: button28: button29: button30: button31: button32: button33: button34: button35: button36: button37: button38: button39: button40: button41: button42: button43: button44: button45: button46: button47: button48: button49: button50: button51: button52: button53: button54: button55: button56: button57: button58: button59: button60: button61: button62: button63: button64: button65: button66: button67: button68: button69: button70: button71: button72: button73: button74: button75: button76: button77: button78: button79: button80: button81: button82: button83: button84: button85: button86: button87: button88: button89: button90: button91: button92: button93: button94: button95: button96: button97: button98: button99: button100: button101: button102: button103: button104: button105: button106: button107: button108: button109: button110: button111: button112: button113: button114: button115: button116: button117: button118: button119: button120: button121: button122: button123: button124: button125: button126: button127: button128: button129: button130: button131: button132: button133: button134: button135: button136: button137: button138: button139: button140: button141: button142: button143: button144: button145: button146: button147: button148: button149: button150: button151: button152: button153: button154: button155: button156: button157: button158: button159: button160: button161: button162: button163: button164: button165: button166: button167: button168: button169: button170: button171: button172: button173: button174: button175: button176: button177: button178: button179: button180: button181: button182: button183: button184: button185: button186: button187: button188: button189: button190: button191: button192: button193: button194: button195: button196: button197: button198: button199: button200: button201: button202: button203: button204: button205: button206: button207: button208: button209: button210: button211: button212: button213: button214: button215: button216: button217: button218: button219: button220: button221: button222: button223: button224: button225: button226: button227: button228: button229: button230: button231: button232: button233: button234: button235: button236: button237: button238: button239: button240: button241: button242: button243: button244: button245: button246: button247: button248: button249: button250: button251: button252: button253: button254: button255: button256: button257: button258: button259: button260: button261: button262: button263: button264: button265: button266: button267: button268: button269: button270: button271: button272: button273: button274: button275: button276: button277: button278: button279: button280: button281: button282: button283: button284: button285: button286: button287: button288: button289: button290: button291: button292: button293: button294: button295: button296: button297: button298: button299: button300: button301: button302: button303: button304: button305: button306: button307: button308: button309: button310: button311: button312: button313: button314: button315: button316: button317: button318: button319: button320: button321: button322: button323: button324: button325: button326: button327: button328: button329: button330: button331: button332: button333: button334: button335: button336: button337: button338: button339: button340: button341: button342: button343: button344: button345: button346: button347: button348: button349: button350: button351: button352: button353: button354: button355: button356: button357: button358: button359: button360: button361: button362: button363: button364: button365: button366: button367: button368: button369: button370: button371: button372: button373: button374: button375: button376: button377: button378: button379: button380: button381: button382: button383: button384: button385: button386: button387: button388: button389: button390: button391: button392: button393: button394: button395: button396: button397: button398: button399: button400: button401: button402: button403: button404: button405: button406: button407: button408: button409: button410: button411: button412: button413: button414: button415: button416: button417: button418: button419: button420: button421: button422: button423: button424: button425: button426: button427: button428: button429: button430: button431: button432: button433: button434: button435: button436: button437: button438: button439: button440: button441: button442: button443: button444: button445: button446: button447: button448: button449: button450: button451: button452: button453: button454: button455: button456: button457: button458: button459: button460: button461: button462: button463: button464: button465: button466: button467: button468: button469: button470: button471: button472: button473: button474: button475: button476: button477: button478: button479: button480: button481: button482: button483: button484: button485: button486: button487: button488: button489: button490: button491: button492: button493: button494: button495: button496: button497: button498: button499: button500: button501: button502: button503: button504: button505: button506: button507: button508: button509: button510: button511: button512: button513: button514: button515: button516: button517: button518: button519: button520: button521: button522: button523: button524: button525: button526: button527: button528: button529: button530: button531: button532: button533: button534: button535: button536: button537: button538: button539: button540: button541: button542: button543: button544: button545: button546: button547: button548: button549: button550: button551: button552: button553: button554: button555: button556: button557: button558: button559: button560: button561: button562: button563: button564: button565: button566: button567: button568: button569: button570: button571: button572: button573: button574: button575: button576: button577: button578: button579: button580: button581: button582: button583: button584: button585: button586: button587: button588: button589: button590: button591: button592: button593: button594: button595: button596: button597: button598: button599: button600: button601: button602: button603: button604: button605: button606: button607: button608: button609: button610: button611: button612: button613: button614: button615: button616: button617: button618: button619: button620: button621: button622: button623: button624: button625: button626: button627: button628: button629: button630: button631: button632: button633: button634: button635: button636: button637: button638: button639: button640: button641: button642: button643: button644: button645: button646: button647: button648: button649: button650: button651: button652: button653: button654: button655: button656: button657: button658: button659: button660: button661: button662: button663: button664: button665: button666: button667: button668: button669: button670: button671: button672: button673: button674: button675: button676: button677: button678: button679: button680: button681: button682: button683: button684: button685: button686: button687: button688: button689: button690: button691: button692: button693: button694: button695: button696: button697: button698: button699: button700: button701: button702: button703: button704: button705: button706: button707: button708: button709: button710: