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Altria Reports 2013 Third-Quarter And Nine-Month Results; Reaffirms 2013 Full-Year EPS Guidance

Stocks in this article: MO

2012 Restructuring Charges

The comparison of Altria’s nine-month reported diluted EPS was impacted by restructuring charges. Altria’s operating companies recorded 2012 nine-month net pre-tax charges totaling $40 million related to the current cost reduction program. These charges are reflected in Schedule 4, and the EPS impacts are shown in Table 2 and Schedule 7.

2012 PMCC Leveraged Lease Benefit

The comparison of Altria’s nine-month reported diluted EPS was impacted by a closing agreement (Closing Agreement) that Altria entered into with the Internal Revenue Service (IRS) in the second quarter of 2012 that conclusively resolved the federal income tax treatment for all prior and future tax years of certain leveraged lease transactions entered into by PMCC. As a result of the Closing Agreement, Altria recorded a one-time net earnings benefit of $68 million during the second quarter of 2012 due primarily to lower than estimated interest on tax underpayments. The net benefit was recorded as a decrease of $75 million to the provision for income taxes and was partially offset by a reduction to cumulative lease earnings of $7 million against net revenues. The EPS impact of this one-time benefit is shown in Table 2 and Schedule 7.

Tax Items

Altria’s reported diluted EPS comparisons for the third quarter and first nine months of 2013 were impacted by tax items. For the third quarter and first nine months of 2013, Altria recorded tax items primarily due to the reversal of tax accruals no longer required. For the third quarter and first nine months of 2012, Altria recorded tax items primarily related to the reversal of tax reserves and associated interest following the closure of the 2004-2006 IRS tax audit of Altria and its consolidated subsidiaries. The 2013 and 2012 tax items are reflected in Schedules 1 and 3, “Provision for income taxes,” and the EPS impacts are shown in Table 2 and Schedules 6 and 7.

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