UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
  CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 27, 2015

  ALTRIA GROUP, INC.
(Exact name of registrant as specified in its charter)
 
 
 
 
 
 
Virginia
  
1-08940
  
13-3260245
(State or other jurisdiction
of incorporation)
  
(Commission File Number)
  
(I.R.S. Employer
Identification No.)
 
 
6601 West Broad Street, Richmond, Virginia        
23230
(Address of principal executive offices)        
(Zip Code)
Registrant’s telephone number, including area code: (804) 274-2200
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:  
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))






Item 2.02.    Results of Operations and Financial Condition.
On January 30, 2015, Altria Group, Inc. issued an earnings press release announcing its financial results for the year ended December 31, 2014. A copy of the earnings press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.
In accordance with General Instruction B.2 of Form 8-K, the information in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information in Item 2.02 of this Current Report on Form 8-K shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.

Item 5.02.
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On January 30, 2015, Altria Group, Inc. (the “Company”) announced that David R. Beran, after 38 years of distinguished service to the Company and its subsidiaries, informed the Company’s Board of Directors (the “Board”) on January 27, 2015 of his intention to retire as President and Chief Operating Officer of the Company effective March 1, 2015. The Company further announced that the Board, on January 29, 2015, elected Howard A. Willard III to become Executive Vice President and Chief Operating Officer of the Company and William F. Gifford, Jr. to become Executive Vice President and Chief Financial Officer of the Company, both appointments to become effective immediately upon Mr. Beran’s retirement. The Board also elected Martin J. Barrington to become President of the Company in addition to being its Chairman and Chief Executive Officer, also effective immediately upon Mr. Beran’s retirement.
Mr. Willard, age 51, currently serves as Executive Vice President and Chief Financial Officer of the Company and has been continuously employed by the Company or its subsidiaries in various positions since 1992.
Mr. Gifford, age 44, currently serves as Senior Vice President, Strategy and Business Development of the Company and has been continuously employed by the Company or its subsidiaries in various positions since 1994.
Mr. Barrington, age 61, currently serves as the Company’s Chairman and Chief Executive Officer and has been continuously employed by the Company or its subsidiaries in various positions since 1993.
The Company issued a press release attached as Exhibit 99.1 to this Current Report on Form 8-K. The section of this press release entitled “Chief Operating Officer and Chief Financial Officer Transitions” is incorporated into this Item 5.02 by reference.
Compensation of Messrs. Willard and Gifford
In connection with his appointment as Executive Vice President and Chief Operating Officer of the Company effective March 1, 2015, Mr. Willard’s annual salary will be $800,000. Mr. Willard also received a special grant of 27,500 restricted stock units. Because Mr. Willard will remain in Salary Band B, his annual incentive, long-term incentive plan (“LTIP”) and annual equity award targets remain unchanged from his previous targets as follows: Mr. Willard’s annual incentive award target for 2015 will be 95% of salary; his LTIP award target will be 200% of the sum of each year-end salary for the three years of the 2014-2016 performance cycle; and his annual equity award target for 2016 will be $1,275,000.
In connection with his appointment as Executive Vice President and Chief Financial Officer of the Company effective March 1, 2015, Mr. Gifford’s annual salary will be $610,000. Mr. Gifford also received a special grant of 27,500 restricted stock units. Mr. Gifford will move to Salary Band B, which will result in increased annual incentive, LTIP and annual equity award targets as follows: Mr. Gifford’s annual incentive award target for 2015 will be 95% of salary; his LTIP award target will be the sum of 125% of his year-end salary for 2014 and 200% of his year-end salary for the remainder of the 2014-2016 performance cycle; and his annual equity award target for 2016 will be $1,275,000.
Each of Mr. Willard’s and Mr. Gifford’s special restricted stock unit awards will vest five years from the grant date. Each restricted stock unit represents the right to receive one share of the Company’s common stock upon vesting and dividend equivalent payments during the vesting period. Individual award amounts were subject to and comply with the limits prescribed by the Company’s shareholder-approved 2010 Performance Incentive Plan (the “2010 Performance Incentive Plan”). A copy of the form of restricted stock unit agreement is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated into this Item 5.02 by reference.

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Compensation of Mr. Beran
In connection with his retirement, Mr. Beran will remain eligible for pro-rated cash payments for his service through February 28, 2015 under the (i) annual incentive award program based on Company and individual performance ratings at target and (ii) LTIP based on an individual performance rating at target and a Company performance rating determined at the conclusion of the three-year performance cycle in accordance with the LTIP. The pro-rated payments will be made shortly following the effective date of Mr. Beran’s retirement for the 2015 annual incentive award program and in February 2017 for the LTIP. There is no guarantee of any payment under the LTIP. Mr. Beran’s award target for the annual incentive award program is 95% of salary for the portion of 2015 during which he is employed, and his award target for the LTIP is 200% of his year-end 2014 salary over the portion of the three-year performance cycle during which he is employed. These targets are consistent with the pre-existing targets for Salary Band B. Mr. Beran will also receive, upon his retirement, a lump sum cash payment in an aggregate amount equal to the sum of one-third the value of his unvested 2014 restricted stock award (46,290 shares before applying the one-third proration) and two-thirds the value of his unvested 2013 restricted stock award (56,310 shares before applying the two-thirds proration). Values will be determined using the average closing price on the New York Stock Exchange Composite Index for a share of the Company’s common stock on each of the 20 trading days immediately precedi ng and including Februar y 28, 2015.
The Company’s annual incentive award program, LTIP and other executive compensation programs are more fully described in the “Compensation Discussion and Analysis” section of the Company’s proxy statement for its 2014 Annual Meeting of Shareholders (filed with the Securities and Exchange Commission on April 3, 2014), which discussion is incorporated into this Item 5.02 by reference.
Annual Compensation Committee Decisions
On January 28, 2015, in addition to the compensation decisions described above, the Compensation Committee of the Board (the “Compensation Committee”) made the following compensation decisions for the following executive officers:
Restricted Stock Unit Awards. The Compensation Committee approved the grant of restricted stock units under the 2010 Performance Incentive Plan to the following executive officers in the amounts indicated below:
 
Name
 
Number of
Restricted Stock Units
Martin J. Barrington
 
102,650
David R. Beran 1
 
—
Craig A. Johnson
 
23,380
Denise F. Keane
 
30,250
Howard A. Willard III 2
 
30,250
(1) In light of his retirement, the Compensation Committee did not grant an equity award to Mr. Beran in 2015.
(2) In addition to the number of restricted stock units in the table above, the Compensation Committee also approved the special award of 27,500 restricted stock units for Mr. Willard described under “Compensation of Messrs. Willard and Gifford” above.
The restricted stock unit awards vest three years from the grant date. Each restricted stock unit represents the right to receive one share of the Company’s common stock upon vesting as well as dividend equivalent payments during the vesting period. Individual award amounts were subject to and comply with the limits prescribed by the 2010 Performance Incentive Plan. The form of restricted stock unit agreement is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated into this Item 5.02 by reference.

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Salaries. The Compensation Committee approved the following salaries, effective March 1, 2015, for the following executive officers in the amounts indicated below:
Name
 
Salary
Amount
Martin J. Barrington
 
$
1,350,000

David R. Beran 1
 
$
—

Craig A. Johnson
 
$
875,000

Denise F. Keane
 
$
916,000

Howard A. Willard III 2
 
$
800,000

(1) In light of his March 1, 2015 retirement, the Compensation Committee did not approve a salary for Mr. Beran.
(2) Reflects the salary increase for Mr. Willard described under “Compensation of Messrs. Willard and Gifford” above.
Annual Incentive Awards . The Compensation Committee approved annual incentive awards for 2014, payable in cash, to the following executive officers in the amounts indicated below:
Name
 
Annual Incentive
Award
Martin J. Barrington
 
$
2,950,000

David R. Beran
 
$
1,300,000

Craig A. Johnson
 
$
960,000

Denise F. Keane
 
$
1,137,000

Howard A. Willard III
 
$
908,000

Individual award amounts were subject to and comply with the limits prescribed by the 2010 Performance Incentive Plan.
Aircraft Allowance . Currently, the Company provides an aggregate allowance for personal use of Company aircraft of $300,000 per year. The allowance is allocated to Messrs. Barrington and Beran in the amounts of $200,000 and $100,000, respectively. Upon Mr. Beran’s retirement, the aggregate allowance will be reduced to $250,000, all of which will be allocated to Mr. Barrington. The Company requires Mr. Barrington to use Company aircraft for all travel for reasons of security and safety.

Item 9.01.      Financial Statements and Exhibits.
(d)
Exhibits
 
 
 
 
 
10.1
Form of Restricted Stock Unit Agreement, dated as of January 28, 2015 (filed pursuant to Item 5.02).
 
99.1
Altria Group, Inc. Earnings Press Release, dated January 30, 2015 (furnished pursuant to Item 2.02, except for the section entitled “Chief Operating Officer and Chief Financial Officer Transitions,” which is also filed pursuant to Item 5.02).




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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
                    
 
ALTRIA GROUP, INC.
 
 
 
 
By:
/s/ W. HILDEBRANDT SURGNER, JR.
 
Name:
W. Hildebrandt Surgner, Jr.
 
Title:
Corporate Secretary and
 
 
Senior Assistant General Counsel
                        

DATE:    January 30, 2015


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EXHIBIT INDEX
 
 
 
Exhibit No.
 
Description
10.1
 
Form of Restricted Stock Unit Agreement, dated as of January 28, 2015 (filed pursuant to Item 5.02).

99.1
 
Altria Group, Inc. Earnings Press Release, dated January 30, 2015 (furnished pursuant to Item 2.02, except for the section entitled “Chief Operating Officer and Chief Financial Officer Transitions,” which is also filed pursuant to Item 5.02).




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Exhibit 10.1
THE ALTRIA GROUP, INC.
2010 PERFORMANCE INCENTIVE PLAN

RESTRICTED STOCK UNIT AGREEMENT FOR ALTRIA GROUP, INC. COMMON STOCK
(January 28, 2015)

ALTRIA GROUP, INC. (the "Company"), a Virginia corporation, hereby grants to the employee identified in the 2015 Stock Award section of the Award Statement (the "Employee") under the Altria Group, Inc. 2010 Performance Incentive Plan (the "Plan") a Restricted Stock Unit Award (the "Award") dated January 28, 2015 (the “Award Date”), with respect to the number of shares of the Common Stock of the Company (the "Common Stock") set forth in the 2015 Stock Award section of the Award Statement (the "RSUs"), all in accordance with and subject to the following terms and conditions of this Restricted Stock Unit Agreement (the “Agreement”):

1. Condition to Award . As applicable and in the sole discretion of the Company or its delegate, this Award may be contingent on, and in consideration of, the execution of a Confidentiality and Non- Competition Agreement by the Employee. In the event the Employee is required to execute a Confidentiality and Non-Competition Agreement, the Company or its delegate will so notify the Employee prior to issuance of the Award. If the Employee does not execute the Confidentiality and Non- Competition Agreement within a reasonable time frame established by the Company or its delegate, but no later than 90 days after the Award Date, this Agreement will be null and void with respect to the Employee and the Employee will forfeit any and all rights to the Award.

2. Restrictions . Subject to Section 1 above and Section 3 below, the restrictions on the RSUs shall lapse and the RSUs shall vest on the vesting date set forth in the 2015 Stock Award section of the Award Statement (the "Vesting Date"), provided that the Employee remains an employee of the Company (or a subsidiary or affiliate) during the entire period commencing on the Award Date and ending on the Vesting Date.

3. Termination of Employment Before Vesting Date . In the event of the termination of the Employee's employment with the Company (and with all subsidiaries and affiliates of the Company) prior to the Vesting Date due to death, Disability or Normal Retirement, the restrictions on the RSUs shall lapse and the RSUs shall become fully vested on the date of such termination of employment.

If the Employee's employment with the Company (and with all subsidiaries and affiliates of the Company) is terminated for any reason other than death, Disability, or Normal Retirement prior to the Vesting Date, the Employee shall forfeit all rights to the RSUs immediately after termination of employment. Notwithstanding the foregoing, the Compensation Committee of the Board of Directors of the Company (the “Compensation Committee”) may, in its sole discretion, waive the restrictions on, and the vesting requirements for, the RSUs.

4. Voting and Dividend Rights . The Employee does not have the right to vote the RSUs or receive dividends prior to the date, if any, that the shares of Common Stock underlying the RSUs are paid to the Employee pursuant to the terms hereof. However, unless otherwise determined by the Compensation Committee, the Employee shall receive cash payments (less applicable withholding taxes) in lieu of dividends otherwise payable with respect to shares of Common Stock equal in number to the RSUs that have not been forfeited, as such dividends are paid.

5. Transfer Restrictions . This Award and the RSUs are non-transferable and may not be assigned, hypothecated or otherwise pledged and shall not be subject to execution, attachment or similar process. Upon any attempt to effect any such disposition, or upon the levy of any such process, the Award shall immediately become null and void and the RSUs shall be forfeited. These restrictions shall not apply, however, to any payments received pursuant to Section 8 below. If the Employee is a resident of Canada, the Employee acknowledges that the shares of Common Stock that the Employee receives on the Vesting Date are subject to a restriction on the first trade under Canadian securities laws. As a result, the



Employee acknowledges that any first trade of such shares of Common Stock must be made (i) through an exchange, or a market, outside of Canada, (ii) to a person or company outside of Canada or (iii) otherwise in compliance with applicable Canadian securities laws.

6. Withholding Taxes . The Company is authorized to satisfy the actual minimum statutory withholding taxes arising from the granting, vesting, or payment of this Award, as the case may be, by deducting the number of RSUs having an aggregate value equal to the amount of withholding taxes due from the total number of RSUs awarded, vested, paid, or otherwise becoming subject to current taxation. The Company is also authorized to satisfy the actual withholding taxes arising from the granting or vesting of this Award, or hypothetical withholding tax amounts if the Employee is covered under a Company tax equalization policy, as the case may be, by the remittance of the required amounts from any proceeds realized upon the open-market sale of the Common Stock received in payment of vested RSUs by the Employee. RSUs deducted from this Award in satisfaction of actual minimum statutory withholding tax requirements shall be valued at the Fair Market Value of the Common Stock received in payment of vested RSUs on the date as of which the amount giving rise to the withholding requirement first became includible in the gross income of the Employee under applicable tax laws.

7. Death of Employee . If any of the RSUs shall vest upon the death of the Employee, any Common Stock received in payment of the vested RSUs shall be registered in the name of the estate of the Employee except that, to the extent permitted by the Compensation Committee, if the Company shall have received in writing a beneficiary designation, the Common Stock shall be registered in the name of the designated beneficiary.

8. Payment of RSUs . The RSUs granted pursuant to this Award represent an unfunded and unsecured promise of the Company to issue to the Employee, on or as soon as practicable after the date the RSUs become fully vested pursuant to Section 2 or 3 and otherwise subject to the terms of this Agreement, the value of the number of shares of the Common Stock underlying the RSUs. Except as otherwise expressly provided in the 2015 Stock Award section of the Award Statement and subject to the terms of this Agreement, such issuance shall be made to the Employee (or, in the event of his or her death to the Employee’s estate or beneficiary as provided above) in the form of Common Stock as soon as practicable following the full vesting of the RSUs pursuant to Section 2 or 3.

9. Special Payment Provisions . Notwithstanding anything in this Agreement to the contrary, if the Employee will become eligible for Normal Retirement (a) for RSUs with a Vesting Date between January 1 and March 15, before the calendar year preceding the Vesting Date and (b) for RSUs with a Vesting Date after March 15, before the calendar year in which such Vesting Date occurs, then the RSUs will be subject to the following provisions. If the Employee is a “specified employee” within the meaning of section 409A of the Internal Revenue Code and the regulations thereunder (“Code section 409A”), any payment of RSUs under Section 8 that is on account of his separation from service shall be delayed until six months following such separation from service. In the event of a “Change in Control” under section 6(b) of the Plan that is not also a “change in control event” with the meaning of Treas. Reg. §1.409A- 3(i)(5)(i), the RSUs shall become fully vested pursuant to section 6(a) of the Plan, but shall not be paid upon such Change in Control as provided by section 6(a) of the Plan, and shall instead be paid at the time the RSUs would otherwise be paid pursuant to this Agreement. References to termination of employment and separation from service in this Agreement shall be interpreted as references to a separation from service, within the meaning of Code section 409A, with the Company and all of its subsidiaries and affiliates treated as a single employer under Code section 409A. This Agreement shall be construed in a manner consistent with Code section 409A.

10.     Board Authorization in the Event of Restatement . Notwithstanding anything in this Agreement to the contrary, if the Board of Directors of the Company or an appropriate Committee of the Board determines that, as a result of a restatement of the Company’s financial statements, an Employee has received greater compensation in connection with the Award than would been received absent the incorrect financial statements, the Board or Committee, in its discretion, may take such action with respect to this Award as it deems necessary or appropriate to address the events that gave rise to the restatement and to prevent its recurrence. Such action may include, to the extent permitted by applicable law, causing


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the full or partial cancellation of this Award and, with respect to RSUs that have vested, requiring the Employee to repay to the Company the full or partial Fair Market Value of the Award determined at the time of vesting, and the Employee agrees by accepting this Award that the Board or Committee may make such a cancellation, impose such a repayment obligation, or take other necessary or appropriate actions in such circumstances.

11.     Other Terms and Definitions . The terms and provisions of the Plan (a copy of which will be furnished to the Employee upon written request to the Office of the Corporate Secretary, Altria Group, Inc., 6601 West Broad Street, Richmond, Virginia 23230) are incorporated herein by reference. To the extent any provision of this Award is inconsistent or in conflict with any term or provision of the Plan, the Plan shall govern. Capitalized terms not otherwise defined herein have the meaning set forth in the Plan. Subject to the provisions of section 6(a) of the Plan, in the event of any merger, share exchange, reorganization, consolidation, recapitalization, reclassification, distribution, stock dividend, stock split, reverse stock split, split-up, spin-off, issuance of rights or warrants or other similar transaction or event affecting the Common Stock after the date of this Award, the Board of Directors of the Company is authorized, to the extent it deems appropriate, to make adjustments to the number and kind of shares of stock subject to this Award, including the substitution of equity interests in other entities involved in such transactions, to provide for cash payments in lieu of payment in Common Stock, and to determine whether continued employment with any entity resulting from such a transaction will or will not be treated as continued employment with the Company or any subsidiary or affiliate, in each case subject to any Board or Compensation Committee action specifically addressing any such adjustments, cash payments, or continued employment treatment.

For purposes of this Agreement, (a) the term “Disability” means a disability that entitles the Employee to benefits under the applicable long-term disability insurance program of the Company or any subsidiary or affiliate of the Company, and (b) the term “Normal Retirement” means retirement from active employment with the Company and any subsidiary or affiliate of the Company following attainment of both age 65 and completion of five years of service with the Company, its subsidiaries, and its affiliates. Generally, for purposes of this Agreement, (x) a “subsidiary” includes only any company in which the Company, directly or indirectly, has a beneficial ownership interest of greater than 50 percent and (y) an “affiliate” includes only any company that (A) has a beneficial ownership interest, directly or indirectly, in the Company of greater than 50 percent or (B) is under common control with the Company through a parent company that, directly or indirectly, has a beneficial ownership interest of greater than 50 percent in both the Company and the affiliate.

IN WITNESS WHEREOF, this Restricted Stock Unit Agreement has been duly executed as of January 28, 2015.


 
ALTRIA GROUP, INC.
 



 
 
By:
W. Hildebrandt Surgner, Jr.
Corporate Secretary


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Exhibit 99.1



ALTRIA REPORTS 2014 FOURTH-QUARTER AND FULL-YEAR RESULTS;
DELIVERS FULL-YEAR ADJUSTED DILUTED EPS GROWTH OF 8.0%

▪
Altria’s 2014 fourth-quarter reported diluted earnings per share (EPS) increased over 100% to $0.63, as comparisons were affected by special items.
▪
Altria’s 2014 fourth-quarter adjusted diluted EPS, which excludes the impact of special items, increased 15.8% to $0.66.
▪
Altria’s 2014 full-year reported diluted EPS increased 13.3% to $2.56, as comparisons were affected by special items.
▪
Altria’s 2014 full-year adjusted diluted EPS, which excludes the impact of special items, increased 8.0% to $2.57.
▪
Altria forecasts its 2015 full-year adjusted diluted EPS to be in the range of $2.75 to $2.80, representing a growth rate of 7% to 9% from an adjusted diluted EPS base of $2.57 in 2014.
▪
Altria’s President and Chief Operating Officer, Dave Beran, has decided to retire on March 1, 2015, after 38 years with the company. Howard Willard, currently Altria’s Chief Financial Officer, will become Chief Operating Officer. William Gifford, currently Altria’s Senior Vice President, Strategy & Business Development, will become Chief Financial Officer. These changes are also effective March 1, 2015.
RICHMOND, Va. - January 30, 2015 - Altria Group, Inc. (Altria) (NYSE: MO) today announced its 2014 fourth-quarter and full-year business results and provided guidance for 2015 full-year adjusted diluted EPS.
“In 2014, Altria delivered another year of strong business results and excellent returns for shareholders,” said Marty Barrington, Chairman and Chief Executive Officer of Altria. “We grew adjusted diluted EPS by almost 16% in the fourth quarter and by 8.0% for the full year, in line with our long-term EPS goal. We increased the dividend for the 48 th time in 45 years. Altria also produced total shareholder return of 34.5%, well above returns for the S&P 500 and the Food, Beverage and Tobacco Index.”
“Our business results were anchored by a very strong performance in the smokeable products segment, complemented by contributions from our diverse business model,” said Mr. Barrington. “We’re also pleased with the steady progress Nu Mark is making as it builds e-vapor category leadership; Nu Mark successfully executed its national launch of MarkTen , which is now available in over 130,000 retail stores.”


6601 West Broad Street, Richmond VA 23230



Conference Call
As previously announced, a conference call with the investment community and news media will be webcast on January 30, 2015 at 9:00 a.m. Eastern Time. Access to the webcast is available at altria.com and via the Altria Investor app.
Cash Returns to Shareholders - Dividends and Share Repurchase Program
In December 2014, Altria’s Board of Directors (Board) declared a regular quarterly dividend of $0.52 per share. The current annualized dividend rate is $2.08 per share. As of January 23, 2015, Altria’s annualized dividend yield was 3.8%. Altria paid more than $1 billion in dividends in the fourth quarter and $3.9 billion in the full year of 2014. Altria expects to continue to return a large amount of cash to shareholders in the form of dividends by maintaining a dividend payout ratio target of approximately 80% of its adjusted diluted EPS. Future dividend payments remain subject to the discretion of the Board.
During the fourth quarter of 2014, Altria repurchased approximately 5.3 million shares of its common stock at an average price of $49.51 for a total cost of $260 million. During the full year, Altria repurchased approximately 22.5 million shares of its common stock at an average price of $41.79 for a total cost of $939 million. Altria has $518 million remaining in the current $1 billion program, which it expects to complete by the end of 2015. The timing of share repurchases depends upon marketplace conditions and other factors. This program remains subject to the discretion of the Board.
Capital Markets Activities - Fourth Quarter of 2014
During the fourth quarter of 2014, Altria issued $1 billion principal amount of 2.625% senior unsecured, long-term notes due in 2020. Altria’s weighted average coupon interest rate at year-end 2014 was 5.7%.
Innovative Tobacco Products
In the fourth quarter, Nu Mark LLC (Nu Mark) began shipping its latest MarkTen e-vapor product, with 2.5% nicotine-by-weight, in classic and menthol varieties and completed its national expansion of MarkTen e-vapor products, achieving distribution in over 130,000 retail stores. As of December 31, 2014, MarkTen was ranked among the top e-vapor brands nationally based on retail market share.
Updated Mortality Assumptions
In December 2014, Altria updated its mortality assumptions to reflect longer life expectancy for its defined benefit pension plan and post-retirement health-care plan participants. Altria expects the updated assumptions to increase 2015 pre-tax pension and post-retirement health-care costs by approximately $70 million.

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Chief Operating Officer and Chief Financial Officer Transitions
David R. Beran, 60, has decided to retire effective March 1, 2015, after 38 years of distinguished service to the company, including the past three years as President and Chief Operating Officer. Mr. Beran also previously served as Altria’s Chief Financial Officer.
“Dave’s strong expertise, knowledge, financial acumen and leadership have contributed immeasurably to Altria’s success,” said Marty Barrington, Altria’s Chairman and CEO. “During Dave’s tenure,  Marlboro achieved remarkable and consistent share growth, Altria acquired John Middleton and USSTC, and we entered the e-vapor category by creating and building Nu Mark.”
Upon Mr. Beran’s retirement, Howard A. Willard, 51, will become Chief Operating Officer. Mr. Willard currently serves as Chief Financial Officer. Since joining the Altria companies in 1992, he has held leadership positions in numerous business functions of the Altria companies, including Finance, Strategy & Business Development, Sales, Information Services and Corporate Responsibility.
William F. (Billy) Gifford, Jr., 44, has been appointed Altria’s Chief Financial Officer, effective March 1, 2015. Mr. Gifford previously served as President and CEO of Philip Morris USA Inc. (PM USA) and currently is Altria’s Senior Vice President, Strategy & Business Development. Since joining the Altria companies in 1994, he has held numerous leadership roles in the Finance and Market Information and Consumer Research business functions.
In conjunction with Mr. Beran’s retirement, Altria’s Board of Directors has expanded Mr. Barrington’s Chairman and CEO responsibilities to include the role of President, Altria Group, Inc., effective March 1, 2015.
2015 Full-Year Guidance
Altria forecasts that 2015 full-year adjusted diluted EPS will be in the range of $2.75 to $2.80, representing a growth rate of 7% to 9% from an adjusted diluted EPS base of $2.57 in 2014, which excludes the special items shown in Table 1.
Altria expects that its 2015 full-year effective tax rate on operations will be approximately 35%.    
Altria also expects capital expenditures for 2015 will be in the range of $200 million to $250 million and that depreciation and amortization will be approximately $200 million.
The factors described in the Forward-Looking and Cautionary Statements section of this release represent continuing risks to Altria’s forecast.

ALTRIA GROUP, INC.
Altria reports its financial results, including diluted EPS, in accordance with U.S. generally accepted accounting principles (GAAP). Altria’s management reviews operating companies income (OCI), which is defined as operating income before corporate expenses and amortization of intangibles,

3



to evaluate the performance of, and allocate resources to, the segments. Altria’s management also reviews OCI, operating margins and diluted EPS on an adjusted basis, which exclude certain income and expense items that management believes are not part of underlying operations. These items may include, for example, loss on early extinguishment of debt, restructuring charges, SABMiller plc (SABMiller) special items, certain tax items, charges associated with tobacco and health litigation items, and settlements of, and determinations made in connection with, certain non-participating manufacturer (NPM) adjustment disputes (such settlements and determinations are referred to collectively as NPM Adjustment Items). Altria’s management does not view any of these special items to be part of Altria’s sustainable results as they may be highly variable, are difficult to predict and can distort underlying business trends and results. Altria’s management also reviews income tax rates on an adjusted basis. Altria’s effective tax rate on operations may exclude certain tax items from its reported effective tax rate. Altria’s management believes that these adjusted measures provide useful insight into underlying business trends and results and provide a more meaningful comparison of year-over-year results. Altria’s management uses adjusted measures for planning, forecasting and evaluating business and financial performance, including allocating resources and evaluating results relative to employee compensation targets. These adjusted financial measures are not consistent with GAAP, and should thus be considered as supplemental in nature and not considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP. Reconciliations of historical adjusted measures to corresponding GAAP measures are provided in the release. Comparisons are to the corresponding prior-year period unless otherwise stated.
Altria’s full-year adjusted diluted EPS guidance and full-year forecast for its effective tax rate on operations exclude the impact of certain income and expense items, including those items noted in the preceding paragraph. Altria’s management cannot estimate on a forward-looking basis the impact of these items on its reported diluted EPS and its reported tax rate because these items, which could be significant, are difficult to predict and may be highly variable. As a result, Altria does not provide a corresponding GAAP measure for, or reconciliation to, its adjusted diluted EPS guidance or its forecast for its effective tax rate on operations.
Altria’s reportable segments are smokeable products, manufactured and sold by PM USA and John Middleton Co. (Middleton); smokeless products, substantially all of which are manufactured and sold by U.S. Smokeless Tobacco Company LLC (USSTC); and wine, produced and/or distributed by Ste. Michelle Wine Estates Ltd. (Ste. Michelle).
Altria’s 2014 fourth-quarter net revenues increased 2.9% to $6.3 billion, primarily due to higher net revenues in all reportable segments and higher gains on asset sales at Philip Morris Capital Corporation (PMCC). For the full year, net revenues were essentially unchanged at $24.5 billion,

4



primarily due to higher net revenues in all reportable segments, offset by lower gains on asset sales at PMCC. Altria’s revenues net of excise taxes increased 4.7% to $4.6 billion for the fourth quarter and increased 1.6% to $17.9 billion for the full year of 2014.
Altria’s 2014 fourth-quarter reported diluted EPS increased over 100% to $0.63, primarily driven by higher 2013 losses on early extinguishment of debt and higher reported OCI in the smokeable products segment. Altria’s fourth-quarter adjusted diluted EPS, which excludes the special items shown in Table 1, grew 15.8% to $0.66 primarily driven by higher adjusted OCI in the smokeable products segment, a lower tax rate resulting from the 2013 debt tender offer, and lower interest and other debt expense. Higher earnings from Altria’s equity investment in SABMiller, fewer shares outstanding and higher gains on asset sales at PMCC also contributed to higher adjusted diluted EPS for the quarter. These factors were partially offset by higher investment in innovative tobacco products.
For the full year of 2014, Altria’s reported diluted EPS increased 13.3% to $2.56, primarily due to higher 2013 losses on early extinguishment of debt, lower interest and other debt expense and fewer shares outstanding. These factors were partially offset by lower reported OCI in the smokeable products segment resulting from higher 2013 NPM Adjustment Items, higher investment in innovative tobacco products, and lower gains on asset sales at PMCC. Altria’s full-year adjusted diluted EPS, which excludes the special items shown in Table 1, grew 8.0% to $2.57 primarily due to higher adjusted OCI in the smokeable products segment, lower interest and other debt expense, a lower tax rate, and fewer shares outstanding. These factors were partially offset by higher investment in innovative tobacco products and lower gains on asset sales at PMCC.
Table 1 - Altria’s Adjusted Results
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fourth Quarter
 
Full Year
 
2014
2013
Change
 
2014
2013
Change
Reported diluted EPS
$
0.63

$
0.24

100%+
 
$
2.56

$
2.26

13.3%
NPM Adjustment Items
—

—

 
 
(0.03
)
(0.21
)
 
Asset impairment, exit, integration and
acquisition-related costs
—

0.01

 
 
0.01

—

 
Tobacco and health litigation items
—

—

 
 
0.01

0.01

 
SABMiller special items
0.01

—

 
 
0.01

0.01

 
Loss on early extinguishment of debt
0.02

0.34

 
 
0.02

0.34

 
Tax items
—

(0.02
)
 
 
(0.01
)
(0.03
)
 
Adjusted diluted EPS
$
0.66

$
0.57

15.8%
 
$
2.57

$
2.38

8.0%

SMOKEABLE PRODUCTS
The smokeable products segment delivered strong adjusted OCI and adjusted OCI margin growth in both the fourth quarter and full year of 2014, primarily through higher pricing. PM USA grew Marlboro ’s and its total cigarette category retail share for the full year.

5



The smokeable products segment’s net revenues for the fourth quarter and full year grew 1.7% and 0.3%, respectively, primarily driven by higher pricing, partially offset by lower volume. Revenues net of excise taxes increased 3.3% in the fourth quarter and 2.0% in the full year.
The smokeable products segment’s 2014 fourth-quarter reported OCI increased 7.6%, primarily due to higher pricing and the end of the federal tobacco quota buy-out payments. These factors were partially offset by higher selling, general and administrative expenses and lower reported shipment volume. Adjusted OCI, which is calculated excluding the special items identified in Table 2, grew 7.8% and adjusted OCI margins expanded 1.8 percentage points to 43.9%.
For the full year of 2014, the smokeable products segment’s reported OCI decreased 2.7%, primarily driven by higher 2013 NPM Adjustment Items and lower reported shipment volume, partially offset by higher pricing. Adjusted OCI, which excludes the special items shown in Table 2, grew 6.7%, primarily due to higher pricing, partially offset by lower reported shipment volume and higher selling, general and administrative expenses. Adjusted OCI margins expanded 1.9 percentage points to 44.1%. Table 2 summarizes revenues and OCI for the smokeable products segment.
Table 2 - Smokeable Products: Revenues and OCI ($ in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fourth Quarter
 
Full Year
 
 
2014
2013
Change
 
2014
2013
Change
Net revenues
 
$
5,511

$
5,420

1.7
%
 
$
21,939

$
21,868

0.3
 %
Excise taxes
 
(1,601
)
(1,635
)
 
 
(6,416
)
(6,651
)
 
Revenues net of excise taxes
 
$
3,910

$
3,785

3.3
%
 
$
15,523

$
15,217

2.0
 %
 
 
 
 
 
 
 
 
 
Reported OCI
 
$
1,713

$
1,592

7.6
%
 
$
6,873

$
7,063

(2.7
)%
NPM Adjustment Items
 
—

—

 
 
(43
)
(664
)
 
Asset impairment, exit and
implementation costs
 
—

2

 
 
(6
)
4

 
Tobacco and health litigation items
 
5

—

 
 
27

18

 
Adjusted OCI
 
$
1,718

$
1,594

7.8
%
 
$
6,851

$
6,421

6.7
 %
Adjusted OCI margins 1
 
43.9
%
42.1
%
1.8 pp

 
44.1
%
42.2
%
1.9 pp

1 Adjusted OCI margins are calculated as adjusted OCI divided by revenues net of excise taxes.
PM USA’s 2014 fourth-quarter reported domestic cigarettes shipment volume decreased 1.7%, driven by the industry’s decline, partially offset by retail share gains. For the full year, PM USA’s reported domestic cigarettes shipment volume decreased 3.0% primarily due to the same factors. When adjusted for trade inventory changes and other factors, PM USA estimates that its fourth-quarter and full-year domestic cigarettes shipment volume decreased approximately 2% and 3%, respectively, and that total industry cigarette volumes declined approximately 2.5% in the fourth quarter and 3.5% for the full year of 2014.
Middleton’s reported cigars shipment volume increased 3.9% for the fourth quarter and 6.1% for

6



the full year of 2014, driven primarily by Black & Mild ’s strong performance in the tipped cigars segment, including Black & Mild Jazz. Table 3 summarizes smokeable products segment volume performance.
Table 3 - Smokeable Products: Shipment Volume (sticks in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fourth Quarter
 
Full Year
 
 
2014
2013
Change
 
2014
2013
Change
Cigarettes:
 
 
 
 
 
 
 
 
Marlboro
 
26,947

27,468

(1.9
)%
 
108,023

111,421

(3.0
)%
Other premium
 
1,741

1,883

(7.5
)%
 
7,047

7,721

(8.7
)%
Discount
 
2,654

2,524

5.2
 %
 
10,320

10,170

1.5
 %
Total cigarettes
 
31,342

31,875

(1.7
)%
 
125,390

129,312

(3.0
)%
 
 
 
 
 
 
 
 
 
Cigars:
 
 
 
 
 
 
 
 
Black & Mild
 
315

303

4.0
 %
 
1,246

1,177

5.9
 %
Other
 
4

4

—
 %
 
25

21

19.0
 %
Total cigars
 
319

307

3.9
 %
 
1,271

1,198

6.1
 %
 
 
 
 
 
 
 
 
 
Total smokeable products
 
31,661

32,182

(1.6
)%
 
126,661

130,510

(2.9
)%
Note: Cigarettes volume includes units sold as well as promotional units, but excludes units sold in Puerto Rico and U.S. Territories, to overseas military and by Philip Morris Duty Free Inc., none of which, individually or in the aggregate, is material to the smokeable products segment.
Marlboro ’s retail share was unchanged in the fourth quarter and grew 0.1 share point for the full year of 2014. PM USA grew its total retail share in the fourth quarter by 0.1 point due to gains by L&M in Discount and grew its full-year total retail share by 0.2 points driven by Marlboro and L&M. In both periods, PM USA’s retail share gains were partially offset by share losses on other portfolio brands. In the fourth quarter, PM USA expanded distribution of Marlboro Menthol Rich Blue to 28 states, primarily in the eastern U.S., to enhance Marlboro ’s position in the menthol segment.
In the machine-made large cigars category, Black & Mild ’s retail share declined 0.4 points in the fourth quarter and 0.3 points for the full year of 2014. In December 2014, Middleton announced the national expansion of Black & Mild Casino, a dark tobacco blend, in the tipped segment.
Table 4 summarizes retail share performance by PM USA in cigarettes and Middleton in machine-made large cigars.

7



Table 4 - Smokeable Products: Retail Share (percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fourth Quarter
 
Full Year
 
 
2014
2013
Percentage point change
 
2014
2013
Percentage point change
Cigarettes:
 
 
 
 
 
 
 
 
Marlboro
 
43.8
%
43.8
%
—
 
43.8
%
43.7
%
0.1
Other premium
 
2.9

3.0

(0.1)
 
2.9

3.1

(0.2)
Discount
 
4.2

4.0

0.2
 
4.2

3.9

0.3
Total cigarettes
 
50.9
%
50.8
%
0.1
 
50.9
%
50.7
%
0.2
 
 
 
 
 
 
 
 
 
Cigars:
 
 
 
 
 
 
 
 
Black & Mild
 
28.4
%
28.8
%
(0.4)
 
28.6
%
28.9
%
(0.3)
Other
 
0.4

0.4

—
 
0.4

0.2

0.2
Total cigars
 
28.8
%
29.2
%
(0.4)
 
29.0
%
29.1
%
(0.1)
Note: Retail share results for cigarettes are based on data from IRI/MSAi, a tracking service that uses a sample of stores and certain wholesale shipments to project market share and depict share trends. Retail share results for cigars are based on data from IRI InfoScan, a tracking service that uses a sample of stores to project market share and depict share trends. Both services track sales in the Food, Drug and Mass Merchandisers (including Wal-Mart), Convenience, Military, Dollar Store and Club trade classes. For other trade classes selling cigarettes, retail share is based on shipments from wholesalers to retailers (STARS). These services are not designed to capture sales through other channels, including the Internet, direct mail and some illicitly tax-advantaged outlets. Retail share results for cigars are based on data for machine-made large cigars. Middleton defines machine-made large cigars as cigars, made by machine, that weigh greater than three pounds per thousand, except cigars sold at retail in packages of 20 cigars. Because the cigars service represents retail share performance only in key trade channels, it should not be considered a precise measurement of actual retail share. It is IRI’s standard practice to periodically refresh its services, which could restate retail share results that were previously released in these services.

SMOKELESS PRODUCTS
The smokeless products segment grew adjusted OCI and expanded adjusted OCI margins for the full year of 2014. USSTC also increased Copenhagen and Skoal ’s combined retail share in the fourth quarter and full year.
The smokeless products segment’s 2014 fourth-quarter net revenues increased 4.3%, primarily driven by higher pricing and higher volume, partially offset by higher promotional investments. For the full year of 2014, the segment’s net revenues increased 1.7%, driven by the factors described above and mix due to growth in popular priced products. The smokeless products segment’s revenues net of excise taxes increased 4.1% in the fourth quarter and 1.4% for the full year.
The smokeless products segment’s 2014 fourth-quarter reported OCI increased 1.2% due to higher pricing and higher volume, partially offset by higher promotional investments and the timing of selling, general and administrative expenses. For the full year, reported OCI grew 3.7%, primarily driven by higher pricing and higher volume, partially offset by higher promotional investments and product mix. Adjusted OCI for the smokeless products segment, which excludes the special items shown in Table 5, was unchanged in the fourth quarter and increased 3.3% for the full year of 2014. Adjusted OCI margins for the smokeless products segment decreased 2.5 percentage points to 60.0% in the fourth quarter and increased 1.1 percentage points to 63.4% for the full year of 2014. Table 5 summarizes revenues and OCI for the smokeless products segment.

8



Table 5 - Smokeless Products: Revenues and OCI ($ in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fourth Quarter
 
Full Year
 
 
2014
2013
Change
 
2014
2013
Change
Net revenues
 
$
464

$
445

4.3
%
 
$
1,809

$
1,778

1.7
%
Excise taxes
 
(36
)
(34
)
 
 
(138
)
(130
)
 
Revenues net of excise taxes
 
$
428

$
411

4.1
%
 
$
1,671

$
1,648

1.4
%
 
 
 
 
 
 
 
 
 
Reported OCI
 
$
257

$
254

1.2
%
 
$
1,061

$
1,023

3.7
%
Asset impairment and exit costs
 
—

3

 
 
(1
)
3

 
Adjusted OCI
 
$
257

$
257

—
%
 
$
1,060

$
1,026

3.3
%
Adjusted OCI margins 1
 
60.0
%
62.5
%
(2.5) pp

 
63.4
%
62.3
%
1.1 pp

1 Adjusted OCI margins are calculated as adjusted OCI divided by revenues net of excise taxes.
Reported domestic smokeless products shipment volume increased 1.0% in the fourth quarter of 2014, primarily driven by the timing of inventory movements. Reported domestic smokeless products shipment volume increased 0.7% for the full year, as volume growth in Copenhagen was mostly offset by declines in Skoal and Other portfolio brands. Copenhagen and Skoal ’s combined reported shipment volume increased 1.3% in the fourth quarter and 1.2% for the full year of 2014.
After adjusting for trade inventory changes and other factors, USSTC estimates that domestic smokeless products shipment volume grew approximately 2.5% in both the fourth quarter and full year of 2014. USSTC estimates that the smokeless products category volume grew approximately 2% over the last 12 months.
Table 6 summarizes volume performance for the smokeless products segment.
Table 6 - Smokeless Products: Shipment Volume (cans and packs in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
Fourth Quarter
 
Full Year
 
 
2014
2013
Change
 
2014
2013
Change
 
 
 
 
 
 
 
 
 
Copenhagen
 
113.9

109.5

4.0
 %
 
448.6

426.1

5.3
 %
Skoal
 
68.0

70.0

(2.9
)%
 
269.6

283.8

(5.0
)%
Copenhagen  and Skoal
 
181.9

179.5

1.3
 %
 
718.2

709.9

1.2
 %
Other
 
18.5

19.0

(2.6
)%
 
75.1

77.6

(3.2
)%
Total smokeless products
 
200.4

198.5

1.0
 %
 
793.3

787.5

0.7
 %
Note: Other includes certain USSTC and PM USA smokeless products. Volume includes cans and packs sold, as well as promotional units, but excludes international volume, which is not material to the smokeless products segment. New types of smokeless products, as well as new packaging configurations of existing smokeless products, may or may not be equivalent to existing moist smokeless tobacco (MST) products on a can-for-can basis. To calculate volumes of cans and packs shipped, USSTC and PM USA have assumed that one pack of snus, irrespective of the number of pouches in the pack, is equivalent to one can of MST.
Copenhagen and Skoal ’s combined retail share increased 0.4 share points to 51.3% in the fourth quarter of 2014 and grew 0.5 share points to 51.2% for the full year. Copenhagen ’s retail share grew 1.1 share points in the fourth quarter and 1.5 share points for the full year. Skoal ’s retail share declined 0.7 share points in the fourth quarter and 1.0 share point for the full year of 2014.

9



Total smokeless products retail share for the fourth quarter of 2014 increased 0.3 share points to 55.3%, as retail share gains for Copenhagen were partially offset by share losses for Skoal and Other portfolio brands. For the full year, total smokeless products retail share was up 0.2 share points to 55.2%. Table 7 summarizes smokeless products retail share performance.
Table 7 - Smokeless Products: Retail Share (percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fourth Quarter
 
Full Year
 
 
2014
2013
Percentage point change
 
2014
2013
Percentage point change
 
 
 
 
 
 
 
 
 
Copenhagen
 
31.1
%
30.0
%
1.1
 
30.8
%
29.3
%
1.5
Skoal
 
20.2

20.9

(0.7)
 
20.4

21.4

(1.0)
Copenhagen  and Skoal
 
51.3

50.9

0.4
 
51.2

50.7

0.5
Other
 
4.0

4.1

(0.1)
 
4.0

4.3

(0.3)
Total smokeless products
 
55.3
%
55.0
%
0.3
 
55.2
%
55.0
%
0.2
Note: Retail share results for smokeless products are based on data from IRI InfoScan, a tracking service that uses a sample of stores to project market share and depict share trends. The service tracks sales in the Food, Drug and Mass Merchandisers (including Wal-Mart), Convenience, Military, Dollar Store and Club trade classes on the number of cans and packs sold. Smokeless products is defined by IRI as moist smokeless and spit-free tobacco products. Other includes certain USSTC and PM USA smokeless products. New types of smokeless products, as well as new packaging configurations of existing smokeless products, may or may not be equivalent to existing MST products on a can-for-can basis. USSTC and PM USA have assumed that one pack of snus, irrespective of the number of pouches in the pack, is equivalent to one can of MST. All other products are considered to be equivalent on a can-for-can basis. Because this service represents retail share performance only in key trade channels, it should not be considered a precise measurement of actual retail share. It is IRI’s standard practice to periodically refresh its InfoScan services, which could restate retail share results that were previously released in this service.

WINE
In the wine segment, Ste. Michelle grew 2014 fourth-quarter and full-year net revenues 8.6% and 5.6%, respectively, primarily due to increased shipments. Revenues net of excise taxes increased 8.4% in the fourth quarter and 5.6% for the full year. Fourth-quarter and full-year OCI grew 17.8% and 13.6%, respectively, primarily due to higher shipment volume. Ste. Michelle’s OCI margins expanded 2.0 percentage points in the fourth quarter to 25.6% and 1.5 percentage points for the full year to 21.6%. Table 8 summarizes revenues and OCI for the wine segment.
Table 8 - Wine: Revenues and OCI ($ in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fourth Quarter
 
Full Year
 
 
2014
2013
Change
 
2014
2013
Change
Net revenues
 
$
215

$
198

8.6
%
 
$
643

$
609

5.6
%
Excise taxes
 
(8
)
(7
)
 
 
(23
)
(22
)
 
Revenues net of excise taxes
 
$
207

$
191

8.4
%
 
$
620

$
587

5.6
%
 
 
 
 
 
 
 
 
 
Reported and Adjusted OCI
 
$
53

$
45

17.8
%
 
$
134

$
118

13.6
%
OCI margins 1
 
25.6
%
23.6
%
2.0 pp

 
21.6
%
20.1
%
1.5 pp

1 OCI margins are calculated as OCI divided by revenues net of excise taxes.
Ste. Michelle grew wine shipment volume 9.6% for the fourth quarter, as increased volume of Chateau Ste. Michelle , 14 Hands and Columbia Crest were partially offset by declines in Other brands . For the full year, wine shipment volume grew 4.8% driven by increased volume of 14 Hands and Chateau

10



Ste. Michelle , partially offset by declines in Other brands. Table 9 summarizes Ste. Michelle’s reported shipment volume performance.
Table 9 - Wine: Shipment Volume (cases in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fourth Quarter
 
Full Year
 
 
2014
2013
Change
 
2014
2013
Change
 
 
 
 
 
 
 
 
 
Chateau Ste. Michelle
 
1,027

889

15.5
 %
 
3,035

2,753

10.2
 %
Columbia Crest  1
 
424

330

28.5
 %
 
1,032

1,031

0.1
 %
14 Hands
 
536

425

26.1
 %
 
1,662

1,374

21.0
 %
Other 1
 
823

920

(10.5
)%
 
2,622

2,814

(6.8
)%
Total Wine
 
2,810

2,564

9.6
 %
 
8,351

7,972

4.8
 %
1 Two Vines is no longer sold under the Columbia Crest brand. Effective January 1, 2014, shipment volume for Two Vines is included in Other. Prior-period shipment volume for Columbia Crest and Other have been adjusted to reflect this change.


11



Altria’s Profile
Altria’s wholly-owned subsidiaries include PM USA, USSTC, Middleton, Nu Mark, Ste. Michelle and PMCC. Altria holds a continuing economic and voting interest in SABMiller.
The brand portfolios of Altria’s tobacco operating companies include Marlboro ® , Black & Mild ® , Copenhagen ® , Skoal ® , MarkTen ™ and Green Smoke ® . Ste. Michelle produces and markets premium wines sold under various labels, including Chateau Ste. Michelle ® , Columbia Crest ® , 14 Hands ® and Stag’s Leap Wine Cellars ™ , and it imports and markets Antinori ® , Champagne Nicolas Feuillatte ™ , Torres ® and Villa Maria Estate ™ products in the United States. Trademarks and service marks related to Altria referenced in this release are the property of Altria or its subsidiaries or are used with permission. More information about Altria is available at altria.com and on the Altria Investor app.

Forward-Looking and Cautionary Statements
This press release contains projections of future results and other forward-looking statements that involve a number of risks and uncertainties and are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995.
Important factors that may cause actual results and outcomes to differ materially from those contained in the projections and forward-looking statements included in this press release are described in Altria’s publicly filed reports, including its Annual Report on Form 10-K for the year ended December 31, 2013, and its Quarterly Report on Form 10-Q for the period ended September 30, 2014.
These factors include the following: significant competition; changes in adult consumer preferences and demand for Altria’s operating companies’ products; fluctuations in raw material availability, quality and price; reliance on key facilities and suppliers; reliance on critical information systems, many of which are managed by third-party service providers; fluctuations in levels of customer inventories; the effects of global, national and local economic and market conditions; changes to income tax laws; federal, state and local legislative activity, including actual and potential federal and state excise tax increases; increasing marketing and regulatory restrictions; the effects of price increases related to excise tax increases and concluded tobacco litigation settlements on trade inventories, consumption rates and consumer preferences within price segments; health concerns relating to the use of tobacco products and exposure to environmental tobacco smoke; privately imposed smoking restrictions; and, from time to time, governmental investigations.
Furthermore, the results of Altria’s tobacco businesses are dependent upon their continued ability to promote brand equity successfully; to anticipate and respond to evolving adult consumer preferences; to develop, manufacture, market and distribute products that appeal to adult tobacco consumers (including,

12



where appropriate, through arrangements with, and investments in, third parties); to improve productivity; and to protect or enhance margins through cost savings and price increases.
Altria and its tobacco businesses are also subject to federal, state and local government regulation, including broad-based regulation of PM USA and USSTC by the U.S. Food and Drug Administration (FDA). Altria and its subsidiaries continue to be subject to litigation, including risks associated with adverse jury and judicial determinations, courts reaching conclusions at variance with the companies’ understanding of applicable law, bonding requirements in the limited number of jurisdictions that do not limit the dollar amount of appeal bonds and certain challenges to bond cap statutes.
Altria cautions that the foregoing list of important factors is not complete and does not undertake to update any forward-looking statements that it may make except as required by applicable law. All subsequent written and oral forward-looking statements attributable to Altria or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements referenced above.

Source: Altria Group, Inc.
Altria Client Services
 
Altria Client Services
 
Investor Relations
 
Media Relations
 
804-484-8222     
 
804-484-8897
 


13

 
 
Schedule 1
ALTRIA GROUP, INC.
and Subsidiaries
Consolidated Statements of Earnings
For the Quarters Ended December 31,
(dollars in millions, except per share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
2013
 
% Change
 
 
 
 
 
 
Net revenues
$
6,258

 
$
6,080

 
2.9
 %
Cost of sales 1
1,986

 
1,996

 
 
Excise taxes on products 1
1,645

 
1,676

 
 
Gross profit
2,627

 
2,408

 
9.1
 %
Marketing, administration and research costs
646

 
535

 
 
Asset impairment and exit costs
—

 
10

 
 
Operating companies income
1,981

 
1,863

 
6.3
 %
Amortization of intangibles
5

 
5

 
 
General corporate expenses
67

 
62

 
 
Changes to Mondelēz and PMI tax-related receivables/payables
(3
)
 
(3
)
 
 
Operating income
1,912

 
1,799

 
6.3
 %
Interest and other debt expense, net
212

 
255

 
 
Loss on early extinguishment of debt
44

 
1,084

 
 
Earnings from equity investment in SABMiller
(253
)
 
(253
)
 
 
Earnings before income taxes
1,909

 
713

 
100%+

Provision for income taxes
673

 
225

 
 
Net earnings attributable to Altria Group, Inc.
$
1,236

 
$
488

 
100%+

 
 
 
 
 
 
Per share data:
 
 
 
 
 
Basic and diluted earnings per share attributable to
Altria Group, Inc.
$
0.63

 
$
0.24

 
100%+

 
 
 
 
 
 
Weighted-average diluted shares outstanding
1,970

 
1,992

 
(1.1
)%
 
 
 
 
 
 
1   Cost of sales includes charges for resolution expenses related to state settlement and other tobacco agreements, and FDA user fees. Supplemental information concerning those items and excise taxes on products sold is shown in Schedule 5.



 
 
 
 
 
Schedule 2
ALTRIA GROUP, INC.
and Subsidiaries
Selected Financial Data
For the Quarters Ended December 31,
(dollars in millions)
(Unaudited)
 
 
 
 
 
 
 
Net Revenues
 
Smokeable Products
Smokeless Products
Wine
All Other
Total
2014
$
5,511

$
464

$
215

$
68

$
6,258

2013
5,420

445

198

17

6,080

% Change
1.7
%
4.3
%
8.6
%
100%+

2.9
%
 
 
 
 
 
 
Reconciliation:
 
 
 
 
 
For the quarter ended December 31, 2013
$
5,420

$
445

$
198

$
17

$
6,080

Operations
91

19

17

51

178

For the quarter ended December 31, 2014
$
5,511

$
464

$
215

$
68

$
6,258

 
 
 
 
 
 
 
Operating Companies Income (Loss)
 
Smokeable Products
Smokeless Products
Wine
All Other
Total
2014
$
1,713

$
257

$
53

$
(42
)
$
1,981

2013
1,592

254

45

(28
)
1,863

% Change
7.6
%
1.2
%
17.8
%
(50.0
)%
6.3
%
 
 
 
 
 
 
Reconciliation:
 
 
 
 
 
For the quarter ended December 31, 2013
$
1,592

$
254

$
45

$
(28
)
$
1,863

Asset impairment and exit costs - 2013
2

3

—

5

10

 
 
 
 
 
 
Asset impairment, exit, integration and
acquisition-related costs - 2014
—

—

—

(5
)
(5
)
Tobacco and health litigation items - 2014
(5
)
—

—

—

(5
)
 
(5
)
—

—

(5
)
(10
)
Operations
124

—

8

(14
)
118

For the quarter ended December 31, 2014
$
1,713

$
257

$
53

$
(42
)
$
1,981

 
 
 
 
 
 


 
 
 
 
 
Schedule 3
ALTRIA GROUP, INC.
and Subsidiaries
Consolidated Statements of Earnings
For the Years Ended December 31,
(dollars in millions, except per share data)
(Unaudited)
 
 
 
 
 
 
 
2014
 
2013
 
% Change
 
 
 
 
 
 
Net revenues
$
24,522

 
$
24,466

 
0.2
 %
Cost of sales 1
7,785

 
7,206

 
 
Excise taxes on products  1
6,577

 
6,803

 
 
Gross profit
10,160

 
10,457

 
(2.8
)%
Marketing, administration and research costs
2,278

 
2,085

 
 
Asset impairment and exit costs
(1
)
 
11

 
 
Operating companies income
7,883

 
8,361

 
(5.7
)%
Amortization of intangibles
20

 
20

 
 
General corporate expenses
241

 
235

 
 
Changes to Mondelēz and PMI tax-related receivables/payables
2

 
22

 
 
Operating income
7,620

 
8,084

 
(5.7
)%
Interest and other debt expense, net
808

 
1,049

 
 
Loss on early extinguishment of debt
44

 
1,084

 
 
Earnings from equity investment in SABMiller
(1,006
)
 
(991
)
 
 
Earnings before income taxes
7,774

 
6,942

 
12.0
 %
Provision for income taxes
2,704

 
2,407

 
 
Net earnings attributable to Altria Group, Inc.
$
5,070

 
$
4,535

 
11.8
 %
 
 
 
 
 
 
Per share data 2 :
 
 
 
 
 
Basic and diluted earnings per share attributable to
Altria Group, Inc.
$
2.56

 
$
2.26

 
13.3
 %
 
 
 
 
 
 
Weighted-average diluted shares outstanding
1,978

 
1,999

 
(1.1
)%
 
 
 
 
 
 
1   Cost of sales includes charges for resolution expenses related to state settlement and other tobacco agreements, and FDA user fees. Supplemental information concerning those items and excise taxes on products sold is shown in Schedule 5.
 
 
 
 
 
 
2   Basic and diluted earnings per share attributable to Altria Group, Inc. are computed independently for each period. Accordingly, the sum of the quarterly earnings per share amounts may not agree to the year-to-date amounts.



 
 
 
 
 
Schedule 4
ALTRIA GROUP, INC.
and Subsidiaries
Selected Financial Data
For the Years Ended December 31,
(dollars in millions)
(Unaudited)
 
 
 
 
 
 
 
Net Revenues
 
Smokeable Products
Smokeless Products
Wine
All Other
Total
2014
$
21,939

$
1,809

$
643

$
131

$
24,522

2013
21,868

1,778

609

211

24,466

% Change
0.3
 %
1.7
%
5.6
%
(37.9
)%
0.2
 %
 
 
 
 
 
 
Reconciliation:
 
 
 
 
 
For the year ended December 31, 2013
$
21,868

$
1,778

$
609

$
211

$
24,466

Operations
71

31

34

(80
)
56

For the year ended December 31, 2014
$
21,939

$
1,809

$
643

$
131

$
24,522

 
 
 
 
 
 
 
Operating Companies Income (Loss)
 
Smokeable Products
Smokeless Products
Wine
All Other
Total
2014
$
6,873

$
1,061

$
134

$
(185
)
$
7,883

2013
7,063

1,023

118

157

8,361

% Change
(2.7
)%
3.7
%
13.6
%
(100)%+

(5.7
)%
 
 
 
 
 
 
Reconciliation:
 
 
 
 
 
For the year ended December 31, 2013
$
7,063

$
1,023

$
118

$
157

$
8,361

NPM Adjustment Items - 2013
(664
)
—

—

—

(664
)
Asset impairment, exit and
implementation costs - 2013
4

3

—

5

12

Tobacco and health litigation items - 2013
18

—

—

—

18

 
(642
)
3

—

5

(634
)
 
 
 
 
 
 
NPM Adjustment Items - 2014
43

—

—

—

43

Asset impairment, exit, integration and
acquisition-related costs - 2014
6

1

—

(28
)
(21
)
Tobacco and health litigation items - 2014
(27
)
—

—

—

(27
)
 
22

1

—

(28
)
(5
)
Operations
430

34

16

(319
)
161

For the year ended December 31, 2014
$
6,873

$
1,061

$
134

$
(185
)
$
7,883




 
 
 
 
 
Schedule 5
 
ALTRIA GROUP, INC.
and Subsidiaries
Supplemental Financial Data
(dollars in millions)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Quarters Ended
December 31,
 
For the Years Ended December 31,
 
2014
 
2013
 
2014
 
2013
The segment detail of excise taxes on products sold is as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Smokeable products
$
1,601

 
$
1,635

 
$
6,416

 
$
6,651

Smokeless products
36

 
34

 
138

 
130

Wine
8

 
7

 
23

 
22

 
$
1,645

 
$
1,676

 
$
6,577

 
$
6,803

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The segment detail of charges for resolution expenses related to state
     settlement and other tobacco agreements included in cost of sales
     is as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Smokeable products 1
$
1,103

 
$
1,181

 
$
4,631

 
$
4,150

Smokeless products
2

 
4

 
12

 
13

 
$
1,105

 
$
1,185

 
$
4,643

 
$
4,163

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The segment detail of FDA user fees included in cost of sales is
     as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Smokeable products
$
65

 
$
62

 
$
253

 
$
238

Smokeless products
1

 
1

 
3

 
3

 
$
66

 
$
63

 
$
256

 
$
241

 
 
 
 
 
 
 
 
1  Amounts include a pre-tax credit of $43 million and $664 million for the years ended December 31, 2014 and 2013, respectively, related to the NPM Adjustment Items.




 
 
 
Schedule 6
ALTRIA GROUP, INC.
and Subsidiaries
Net Earnings and Diluted Earnings Per Share - Attributable to Altria Group, Inc.
For the Quarters Ended December 31,
(dollars in millions, except per share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
Net Earnings
 
 Diluted EPS
2014 Net Earnings
$
1,236

 
$
0.63

2013 Net Earnings
$
488

 
$
0.24

% Change
100%+

 
100%+

 
 
 
 
Reconciliation:
 
 
 
2013 Net Earnings
$
488

 
$
0.24

 
 
 
 
2013 Asset impairment and exit costs
6

 
0.01

2013 SABMiller special items
4

 
—

2013 Loss on early extinguishment of debt
678

 
0.34

2013 Tax items
(39
)
 
(0.02
)
     Subtotal 2013 special items
649

 
0.33

 
 
 
 
2014 Asset impairment, exit, integration and acquisition-related costs
(3
)
 
—

2014 Tobacco and health litigation items
(3
)
 
—

2014 SABMiller special items
(24
)
 
(0.01
)
2014 Loss on early extinguishment of debt
(28
)
 
(0.02
)
2014 Tax items
(5
)
 
—

     Subtotal 2014 special items
(63
)
 
(0.03
)
 
 
 
 
Fewer shares outstanding
—

 
0.01

Change in tax rate
44

 
0.02

Operations
118

 
0.06

2014 Net Earnings
$
1,236

 
$
0.63

 
 
 
 
2014 Net Earnings Adjusted For Special Items
$
1,299

 
$
0.66

2013 Net Earnings Adjusted For Special Items
$
1,137

 
$
0.57

% Change
14.2
%
 
15.8
%



 
 
 
Schedule 7
ALTRIA GROUP, INC.
and Subsidiaries
Net Earnings and Diluted Earnings Per Share - Attributable to Altria Group, Inc.
For the Years Ended December 31,
(dollars in millions, except per share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
Net Earnings
 
  Diluted EPS   1
2014 Net Earnings
$
5,070

 
$
2.56

2013 Net Earnings
$
4,535

 
$
2.26

% Change
11.8
%

13.3
%
 
 
 
 
Reconciliation:
 
 
 
2013 Net Earnings
$
4,535

 
$
2.26

 
 
 
 
2013 NPM Adjustment Items
(427
)
 
(0.21
)
2013 Asset impairment, exit and implementation costs
7

 
—

2013 Tobacco and health litigation items
14

 
0.01

2013 SABMiller special items
20

 
0.01

2013 Loss on early extinguishment of debt
678

 
0.34

2013 Tax items
(64
)
 
(0.03
)
     Subtotal 2013 special items
228

 
0.12

 
 
 
 
2014 NPM Adjustment Items
56

 
0.03

2014 Asset impairment, exit, integration and acquisition-related costs
(14
)
 
(0.01
)
2014 Tobacco and health litigation items
(28
)
 
(0.01
)
2014 SABMiller special items
(17
)
 
(0.01
)
2014 Loss on early extinguishment of debt
(28
)
 
(0.02
)
2014 Tax items
14

 
0.01

     Subtotal 2014 special items
(17
)
 
(0.01
)
 
 
 
 
Fewer shares outstanding
—

 
0.03

Change in tax rate
86

 
0.04

Operations
238

 
0.12

2014 Net Earnings
$
5,070


$
2.56

 
 
 
 
2014 Net Earnings Adjusted For Special Items
$
5,087


$
2.57

2013 Net Earnings Adjusted For Special Items
$
4,763


$
2.38

% Change
6.8
%

8.0
%
 
 
 
 
1  Diluted earnings per share attributable to Altria Group, Inc. is computed independently for each period. Accordingly, the sum of the quarterly earnings per share amounts may not agree to the year-to-date amounts.



 
 
 
Schedule 8
ALTRIA GROUP, INC.
and Subsidiaries
Condensed Consolidated Balance Sheets
(dollars in millions)
(Unaudited)
 
 
 
 
 
December 31, 2014
 
December 31, 2013
Assets
 
 
 
Cash and cash equivalents
$
3,321

 
$
3,175

Inventories
2,040

 
1,879

Deferred income taxes
1,143

 
1,100

Other current assets
374

 
436

Property, plant and equipment, net
1,983

 
2,028

Goodwill and other intangible assets, net
17,334

 
17,232

Investment in SABMiller
6,183

 
6,455

Finance assets, net
1,614

 
1,997

Other long-term assets
483

 
557

Total assets
$
34,475

 
$
34,859

 
 
 
 
Liabilities and Stockholders’ Equity
 
 
 
Current portion of long-term debt
$
1,000

 
$
525

Accrued settlement charges
3,500

 
3,391

Other current liabilities
3,173

 
3,142

Long-term debt
13,693

 
13,992

Deferred income taxes
6,088

 
6,854

Accrued postretirement health care costs
2,461

 
2,155

Accrued pension costs
1,012

 
212

Other long-term liabilities
503

 
435

      Total liabilities
31,430

 
30,706

      Redeemable noncontrolling interest
35

 
35

      Total stockholders’ equity
3,010

 
4,118

Total liabilities and stockholders’ equity
$
34,475

 
$
34,859

 
 
 
 
Total debt
$
14,693

 
$
14,517