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Altria Reports 2012 Fourth-Quarter And Full-Year Results; Delivers 2012 Full-Year Adjusted EPS Growth Of 7.8%

The wine segment's 2012 fourth-quarter and full-year net revenues increased 7.8% and 8.7%, respectively, primarily due to higher shipment volume, higher pricing and improved premium mix. Revenues net of excise taxes for the fourth quarter and full year of 2012 grew 8.1% and 8.9%, respectively.

The wine segment's 2012 fourth-quarter and full-year reported OCI increased 10.8% and 14.3%, respectively, primarily due to higher pricing, improved premium mix and higher shipment volume, partially offset by costs related to Ste. Michelle's sales force expansion. Comparisons of full-year reported OCI results were also impacted by higher costs for select vintages incurred in 2012, partially offset by UST acquisition-related costs incurred in 2011. Adjusted OCI, which is calculated excluding UST acquisition-related costs, increased 10.8% for the fourth quarter of 2012 and 9.5% for the full year.

Adjusted OCI margins increased 0.6 percentage points to 23.7% for the fourth quarter of 2012 and increased 0.1 percentage point to 19.3% for the full year of 2012. Revenues and OCI for the wine segment are summarized in Table 10.

 
   
Table 10 -Wine: Revenues and OCI ($ in millions)
                                                                                   
Fourth Quarter   Full Year
2012             2011             Change 2012             2011             Change
Net revenues $   180             $   167             7.8 % $   561             $   516             8.7 %
Excise taxes (7 )             (7 ) (21 )             (20 )
Revenues net of excise taxes $   173               $   160   8.1 % $   540               $   496   8.9 %
 
Reported OCI $ 41 $ 37 10.8 % $ 104 $ 91 14.3 %
UST acquisition-related costs                               4  
Adjusted OCI $   41               $   37   10.8 % $   104               $   95   9.5 %
Adjusted OCI margins* 23.7 %             23.1 % 0.6 pp 19.3 %             19.2 % 0.1 pp
                                                                                             

*Adjusted OCI margins are calculated as adjusted OCI divided by revenues net of excise taxes.

Ste. Michelle's 2012 fourth-quarter and full-year reported wine shipment volume increased 2.9% and 3.7%, respectively, primarily due to the national expansion of select wines into off-premise channels. Ste. Michelle's reported shipment volume performance for wine is summarized in Table 11.

 
   
Table 11 - Wine: Shipment Volume (cases in thousands)
                                                                       
                                                           
Fourth Quarter   Full Year
2012             2011             Change 2012             2011             Change
 
Chateau Ste. Michelle 920 804 14.5 % 2,780 2,522 10.3 %
Columbia Crest 523 699 (25.2 )% 1,716 2,055 (16.5 )%
Other 980               852   15.1 % 3,093               2,744   12.7 %
Total Wine 2,423               2,355   2.9 % 7,589               7,321   3.7 %
                                                                                                 

Note: Percent volume change calculation is based on units to the nearest hundred.

FINANCIAL SERVICES

The financial services segment's reported and adjusted OCI for the fourth quarter of 2012 was $10 million, unchanged from 2011, as comparisons were impacted by an increase in allowance for losses in 2011 related to the American Airlines, Inc. (American) bankruptcy and lower gains on asset sales in 2012.

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