Updated from 7:30 a.m. EDTAltria's ( MO) second-quarter net rose 1.6% from a year ago, but fell on a continuing-operations basis due to a higher tax rate. Adjusted for two charges, earnings were better than Wall Street expected. The cigarette maker earned $2.71 billion, or $1.29 a share, in the quarter, compared with $2.67 billion, or $1.28 a share, a year ago. Stripping out discontinued operations from the year-ago quarter, earnings fell 6.9% as Altria's tax rate rose 16.4% to $1.39 billion from a gain-aided year-ago period. Backing out asset-impairment charges and a provision for airline-industry exposure, Altria made $1.41 a share in the latest quarter, 4 cents better than expected. Sales rose 4% to $25.8 billion. Altria's shares finished the session up 56 cents, or 0.7%, to $80.05. For all of 2006, Altria pegged earnings at $5.40 to $5.50 a share, up from a previous forecast of $5.25 to $5.35 a share, primarily reflecting adjustments to expected special items at its 86%-owned subsidiary Kraft ( KFT). Analysts were forecasting $5.30 a share in 2006 for Altria. In domestic tobacco, Altria's income rose 3.2% to $1.3 billion, driven by lower wholesale and retail promotional allowances, partially offset by a 4.3% decline in shipment volume that reflected changes in retailer inventory levels and the timing of the July 4 holiday. In international tobacco, income rose 5.7% to $2.1 billion on higher pricing and the contribution of acquired assets. Cigarette shipment volume also rose 5.7%, reflecting acquisitions in Indonesia and Colombia and other factors. "Our second-quarter results were solid in all respects, and we are witnessing an improvement in underlying fundamentals across all our businesses," Altria said. "While the global economic outlook continues to be a source of concern, we look forward to continued momentum in the second half of the year." "Our domestic tobacco business continued to increase its market share, driven by gains for both Marlboro and Parliament," the company said. "Our international tobacco business achieved strong share gains in France, Germany and Italy, and benefited from acquisitions. Our food business made continued progress, with good top-line growth and solid income performance."