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Altria Reports 2012 Third-Quarter And Nine-Month Results; Reaffirms 2012 EPS Guidance; Expands Share Repurchase Program By $500 Million

Stocks in this article: MO

The financial services segment's 2012 third-quarter reported and adjusted OCI decreased $4 million to $79 million primarily due to a $35 million decrease in the allowance for losses in the third quarter of 2011 that favorably impacted OCI in that year, partially offset by $33 million in recoveries during the third quarter of 2012 related to PMCC's lease investment with American Airlines, Inc. (American), which filed for bankruptcy in November 2011.

For the first nine months of 2012, the financial services segment's reported OCI increased $525 million to $166 million primarily due to lower charges related to the tax treatment of PMCC's LILO and SILO transactions, higher gains on asset sales, recoveries related to American and a $10 million decrease in the allowance for losses that favorably impacted OCI earlier this year. These favorable factors were partially offset by lower lease revenues in 2012 and a $35 million decrease in the allowance for losses in 2011 that favorably impacted OCI in that year. Adjusted OCI, which is calculated excluding the PMCC leveraged lease charges identified in Table 12, increased $42 million to $173 million for the first nine months of 2012. OCI for the financial services segment is summarized in Table 12.

Table 12 - Financial Services: Operating Companies Income (Loss) ($ in millions)
Third Quarter

Nine Months Ended September 30,

  2012     2011     Change     2012    


Reported Operating Companies Income (Loss) $     79 $     83 (4.8)% $   166 $   (359 ) 100%+
PMCC leveraged lease charges               7       490    
Adjusted OCI   $     79       $     83     (4.8)%   $   173       $   131     32.1%

PMCC's allowance for losses at the end of the third quarter of 2012 was $99 million versus $188 million at the end of the second quarter of 2012, due to write-offs related to PMCC's lease investment with American.

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