Altria's 2012 third-quarter and nine-month reported effective tax rate and effective tax rate on operations both increased from the first half of 2012 primarily due to a reduction in certain consolidated tax benefits resulting from the debt tender offer. Excluding the impact of special tax items shown in Table 3, Altria's 2012 third-quarter and nine-month effective tax rates on operations were both 36.7%. Altria anticipates that its 2012 full-year effective tax rate on operations will be approximately 36.7%.
|Table 3 - Altria's 2012 Tax Rates|
Nine Months Ended September 30,
|Reported effective tax rate*||37.0%||34.8%|
|Closure of IRS audit of 2004 - 2006 tax years||5.1||1.1|
|Mondelēz and PMI tax matters||(4.6)||(1.0)|
|Interest benefit on tax underpayments associated with PMCC leveraged lease transactions||—||1.6|
|Other tax items||(0.8)||0.2|
|Effective tax rate on operations||36.7%||36.7%|
* Reported effective tax rate is calculated as "Provision for income taxes" divided by "Earnings before income taxes" from Schedules 1 and 3.
The smokeable products segment delivered solid adjusted OCI and adjusted OCI margin growth for the third quarter and first nine months of 2012 through higher list prices and effective cost management. PM USA continued to support Marlboro's new brand architecture with brand-building initiatives, which contributed to Marlboro's third-quarter and nine-month retail share performance.The smokeable products segment's 2012 third-quarter net revenues increased 2.1% primarily due to higher list prices and higher reported shipment volume, partially offset by higher promotional investments to support Marlboro's new brand architecture and unfavorable mix due to L&M's volume growth in Discount. For the first nine months of 2012, the smokeable products segment's net revenues increased 0.7% primarily due to higher list prices, partially offset by higher promotional investments behind Marlboro's new brand architecture, lower reported shipment volume and unfavorable mix. 2012 third-quarter and nine-month revenues net of excise taxes increased 3.2% and 1.6%, respectively. The smokeable products segment's 2012 third-quarter reported OCI increased 3.9% primarily due to higher list prices, effective cost management and higher reported shipment volume, partially offset by higher promotional investments behind Marlboro's new brand architecture, increased resolution expense and unfavorable mix due to L&M's volume growth. The smokeable products segment's 2012 nine-month reported OCI increased 4.2% primarily due to higher list prices, effective cost management and lower charges related to tobacco and health judgments, partially offset by higher promotional investments behind Marlboro's new brand architecture, increased resolution expense, unfavorable mix due to L&M's volume growth and lower reported shipment volume. Adjusted OCI, which is calculated excluding the special items identified in Table 4, grew 4.3% for the third quarter of 2012 and increased 3.7% for the first nine months of 2012. Adjusted OCI margins for the smokeable products segment grew 0.4 percentage points to 42.4% for the third quarter of 2012 and increased 0.8 percentage points to 41.6% for the first nine months of 2012, driven by Marlboro. Revenues and OCI for the smokeable products segment are summarized in Table 4.
|Table 4 - Smokeable Products: Revenues and OCI ($ in millions)|
Nine Months Ended September 30,
|Revenues net of excise taxes||$||3,871||$||3,752||3.2||%||$||11,377||$||11,196||1.6||%|
|Asset impairment, exit and implementation costs, net||2||—||13||3|
|Tobacco and health judgments||3||—||4||36|
|Adjusted OCI margins*||42.4||%||42.0||%||0.4 pp||41.6||%||40.8||%||0.8 pp|
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