Excluding the impact of the special tax items discussed above, Altria's effective tax rate on operations was 37.8% for the fourth quarter and 37.0% for the full year, as shown below in Table 3. Altria anticipates that its 2013 full-year reported effective tax rate and effective tax rate on operations will be approximately 35.5%. The decrease in the projected 2013 full-year effective tax rate on operations is principally due to the reduction in certain consolidated tax benefits resulting from the 2012 debt tender offer that impacted the 2012 full-year effective tax rate on operations.
|Table 3 - Altria's 2012 Tax Rates|
|Fourth Quarter||Full Year|
|Reported effective tax rate*||37.1||%||35.4||%|
|Closure of IRS audit of 2004 - 2006 tax years||—||0.8|
|Mondelēz and PMI tax matters||(0.2||)||(0.8||)|
|Interest benefit on tax underpayments associated with certain PMCC leveraged lease transactions||—||1.1|
|Other tax items||0.9||0.5|
|Effective tax rate on operations||37.8||%||37.0||%|
* 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 adjusted OCI and adjusted OCI margin growth for the full year of 2012 primarily through higher pricing and effective cost management. PM USA continued to support Marlboro's new brand architecture with brand-building initiatives, which contributed to Marlboro's fourth-quarter and full-year retail share gains.For the fourth quarter of 2012, the smokeable products segment's net revenues increased 2.4% primarily due to higher list prices, partially offset by higher promotional investments to support Marlboro's new brand architecture. For the full year of 2012, the smokeable products segment's net revenues increased 1.1% primarily due to higher list prices, partially offset by higher promotional investments behind Marlboro's new brand architecture, unfavorable mix due to L&M's volume growth in Discount and lower reported shipment volume. 2012 fourth-quarter and full-year revenues net of excise taxes increased 3.6% and 2.1%, respectively. The smokeable products segment's 2012 fourth-quarter reported OCI increased 25.9% primarily due to higher list prices, lower restructuring charges and lower charges related to tobacco and health judgments, partially offset by higher promotional investments behind Marlboro's new brand architecture and increased resolution expense. The smokeable products segment's 2012 full-year reported OCI increased 8.8% primarily due to higher list prices, lower restructuring charges, lower charges related to tobacco and health judgments and effective cost management, partially offset by higher promotional investments behind Marlboro's new brand architecture, increased resolution expense, unfavorable mix and lower reported shipment volume. Adjusted OCI, which is calculated excluding the special items identified in Table 4, grew 5.9% for the fourth quarter of 2012 and increased 4.2% for the full year of 2012. Adjusted OCI margins for the smokeable products segment grew 0.9 percentage points to 39.9% for the fourth quarter of 2012 and increased 0.9 percentage points to 41.2% for the full year 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)|
|Fourth Quarter||Full Year|
|Revenues net of excise taxes||$||3,855||$||3,721||3.6||%||$||15,232||$||14,917||2.1||%|
|Asset impairment, exit and implementation costs, net||15||180||28||183|
|Tobacco and health judgments||—||62||4||98|
|Adjusted OCI margins*||39.9||%||39.0||%||0.9 pp||41.2||%||40.3||%||0.9 pp|
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