Hertz Corporation

ALTRIA GROUP, INC. (MO) 10-Q Quarterly report pursuant to sections 13 or 15(d) Filed on 07/26/2012 Filed geological issue 06/30/2012 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q (Mark One) y QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the passly period end June 30, 2012 OR ? TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from o kick File Number 1-08940 Altria Group, Inc. (Exact name of registrant as specified in its charter) Virginia 13-3260245 (State or other jurisdiction of incorporation or organization) (I. R. S. Employer Identification No. ) 6601 West resistant Street, Richmond, Virginia 23230 (Address of mavin executive offices) (Zip Code) Registrants telephone number, including bea code (804) 274-2200 Former name, former address and former fiscal year, if changed since last reportIndicate by check tell apart whether t he registrant (1) has commitd all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ? No ? Indicate by check mark whether the registrant has submitted electronically and posted on its bodied Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232. 05 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ? No ? Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller describe company. down the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. life-sized accelerated filer ? Accelerated filer ? Non-accelerated filer ? (Do not check if a smaller reporting company) Smaller reporting company ?Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ? No ? At July 16, 2012 , there were 2,032,833,474 voices outstanding of the registrants jet deport, par value $0. 33 1/3 per package. Table of confine ALTRIA GROUP, INC. TABLE OF CONTENTS Page No. PART I FINANCIAL development decimal point 1. mo meshworkary Statements (Unaudited) Condensed merge Balance Sheets at June 30, 2012 and December 31, 2011 3 Condensed merge Statements of Earnings for the Six Months stop June 30, 2012 and 2011 5 Three Months Ended June 30, 2012 and 2011 Condensed Consolidated Statements of universal Earnings for the Six Months Ended June 30, 2012 and 2011 7 Three Months Ended June 30, 2012 and 2011 8 Condensed Consolidated Statements of Stockholders candor for the Year Ended Decemb er 31, 2011 and the Six Months Ended June 30, 2012 9 Condensed Consolidated Statements of hard cash Flows for the Six Months Ended June 30, 2012 and 2011 10 flavours to Condensed Consolidated mo crystallizeary Statements 12 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations 61 Item 4. Controls and Procedures 99 PART II OTHER INFORMATIONItem 1. Legal Proceedings 100 Item 1A. Risk Factors 100 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 100 Item 5. Other Information 101 Item 6. Exhibits 102 Signature Signature 103 2- Table of Contents PART I FINANCIAL INFORMATION Item 1. Financial Statements. Altria Group, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (in megs of dollars) (Unaudited) June 30, 2012 December 31, 2011 Assets Consumer products hard currency and cash equivalents $ Receivables 1,528 $ 3,270 256 268 Leaf tobacco 799 934 Other stark naked materials 184 170 Work in process 269 316 Inventori esFinished product 432 Other current assets 1,779 1,207 Deferred income taxes 359 1,684 1,207 468 Property, plant and equipment, at cost 607 5,143 chalk up current assets 7,131 4,750 2,512 2,131 Goodwill 4,728 2,619 little accumulated depreciation 2,216 5,174 Other assets 12,098 6,486 Investment in SABMiller 5,174 12,088 Other intangible assets, net 5,509 472 1,257 31,494 33,385 3,012 Total consumer products assets 3,559 Financial services Finance assets, net Other assets 41 Total Assets $ 18 3,053 Total financial services assets 3,577 34,547 $ depend notes to condensed consolidated financial statements.Continued 3- 36,962 Table of Contents Altria Group, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Continued) (in millions of dollars, turn out grapple and per share data) (Unaudited) June 30, 2012 December 31, 2011 Liabilities Consumer products Current portion of long-term debt $ Accounts payable 600 $ 600 335 503 Marketing 581 430 Taxes, except income taxes 218 220 Accrued liabilities Employment be 110 225 Settlement charges 2,184 3,513 Other 1,217 1,311 Dividends payable 836 7,643 13,089 long-term debt 841 6,081 Total current liabilities 13,089 Deferred income taxes 5,074 4,751Accrued pension be 1,139 1,662 Accrued postretirement health care cost 2,367 2,359 Other liabilities 606 602 28,356 30,106 1,764 Total consumer products liabilities 2,811 Financial services Deferred income taxes Other liabilities 119 3,141 30,239 33,247 33 32 935 Total liabilities 330 1,883 Total financial services liabilities 935 Contingencies (Note 11) Redeemable noncontrolling interest Stockholders Equity Common stock, par value $0. 33 1/3 per share (2,805,961,317 shares issued) additive paid-in capital 5,647 Accumulated other comprehensive losses 5,674 24,334 Earnings reinvested in the business 3,583 (1,674) (1,887) Cost of repurchased stock (773,116,613 shares in 2012 and 761,542,032 shares in 2011) (24,969) (24,625) Total stockholders loveliness ascribab le to Altria Group, Inc. 4,273 3,680 2 3 Noncontrolling interests Total stockholders equity 4,275 Total Liabilities and Stockholders Equity $ 34,547 See notes to condensed consolidated financial statements. 4- 3,683 $ 36,962 Table of Contents Altria Group, Inc. and Subsidiaries Condensed Consolidated Statements of Earnings (in millions of dollars, except per share data) (Unaudited) For the Six Months Ended June 30, 2012 straighten out revenues $ 2011 12,134 $ 11,563 Cost of sales 3,878 3,825 Excise taxes on products 3,560 3,618 Gross profit 4,696 4,120 1,130 1,272 Marketing, administration and question costs Asset impairment and exit costs 37 3 Amortization of intangibles 10 11 3,519 2,834 Operating income Interest and other debt expense, net 586 Earnings in the beginning income taxes 572 (743) Earnings from equity enthronisation funds in SABMiller (344) 3,676 Net earnings attributable to noncontrolling interests 1,224 2,421 Net earnings 2,606 1,255 Provision for income taxes 1,3 82 (1 ) Net earnings attributable to Altria Group, Inc. (1) $ ,420 $ 1,381 Basic earnings per share attributable to Altria Group, Inc. $ 1. 19 $ 0. 66 Diluted earnings per share attributable to Altria Group, Inc. $ 1. 19 $ 0. 66 $ 0. 82 $ 0. 76 Per share data Dividends declared See notes to condensed consolidated financial statements. 5- Altria Group, Inc. and Subsidiaries Condensed Consolidated Statements of Earnings (in millions of dollars, except per share data) (Unaudited) For the Three Months Ended June 30, 2012 Net revenues $ 2011 6,487 $ 5,920 Cost of sales 2,086 2,030 Excise taxes on products 1,907 1,918 Gross profit 2,494 1,972 596 671 16 1Marketing, administration and research costs Asset impairment and exit costs Amortization of intangibles 5 Earnings from equity investment in SABMiller 1,295 293 Interest and other debt expense, net 5 1,877 Operating income 294 (223) Earnings before income taxes (155) 1,807 581 Net earnings 712 1,226 Provision for income taxes 1,156 444 Net earnings attributable to noncontrolling interests (1 ) Net earnings attributable to Altria Group, Inc. $ 1,225 $ 444 Basic earnings per share attributable to Altria Group, Inc. $ 0. 60 $ 0. 21 Diluted earnings per share attributable to Altria Group, Inc. $ 0. 60 $ 0. 21 0. 41 $ 0. 38 Per share data Dividends declared See notes to condensed consolidated financial statements. 6- Table of Contents Altria Group, Inc. and Subsidiaries Condensed Consolidated Statements of Comprehensive Earnings (in millions of dollars) (Unaudited) For the Six Months Ended June 30, 2012 Net earnings $ 2,421 2011 $ 1,382 Other comprehensive earnings, net of deferred income taxes property translation adjustments 1 61 64 154 135 Benefit plans Amounts reclassified to net earnings SABMiller Ownership share of SABMillers other comprehensive earnings before reclassifications to net earningsAmounts reclassified to net earnings (2 ) 5 152 205 2,634 Comprehensive earnings Comprehensive earnings attributable to noncontrolling interests 140 213 Other comprehensive earnings, net of deferred income taxes 1,587 (1) Comprehensive earnings attributable to Altria Group, Inc. See notes to condensed consolidated financial statements. 7- $ 2,633 (1) $ 1,586 Table of Contents Altria Group, Inc. and Subsidiaries Condensed Consolidated Statements of Comprehensive Earnings (in millions of dollars) (Unaudited) For the Three Months Ended June 30, 2012 Net earnings $ 2011 1,226 $ 444Other comprehensive earnings, net of deferred income taxes cash translation adjustments 1 39 32 (23) 78 (5) 1 Benefit plans Amounts reclassified to net earnings SABMiller Ownership share of SABMillers other comprehensive (losses) earnings before reclassifications to net earnings Amounts reclassified to net earnings (28) 112 1,237 Comprehensive earnings Comprehensive earnings attributable to noncontrolling interests 79 11 Other comprehensive earnings, net of deferred income taxes 556 (1) Comprehensive earnings attributable to Altria Group, Inc. See notes to condensed consolidated financial statements. 8- $ 1,236 $ 556 Table of Contents Altria Group, Inc. and Subsidiaries Condensed Consolidated Statements of Stockholders Equity for the Year Ended December 31, 2011 and the Six Months Ended June 30, 2012 (in millions of dollars, except per share data) (Unaudited) Attributable to Altria Group, Inc. Common Stock (1) Earnings Reinvested in the Business Accumulated Other Comprehensive Losses Cost of Repurchased Stock Non-controlling Interests Total Stockholders Equity $ 935 Balances, December 31, 2010 Additional Paid-in Capital $ 5,751 $ 23,459 $ $ (23,469) $ $ (1,484) 3 5,195 3,390 1Other comprehensive losses, net of deferred income tax benefit (403) (403) Exercise of stock options and other stock award activity (77) 171 94 Cash dividends declared ($1. 58 per share) (3,266) Repurchases of parking area stock (1,327) Other Net earnings Balances, December 31, 2011 (3,266) (1) 935 5,674 23,583 3 3,683 2,420 2,420 Other comprehensive earnings, net of deferred income taxes 213 213 Exercise of stock options and other stock award activity (27) 16 (11) Cash dividends declared ($0. 82 per share) (1,669) Repurchases of common stock (360) (360) Balances, June 30, 2012 (1) (1,669) $ 935 $ 5,647 $ 24,334 $ (1,674) (24,625) (1) Net earnings (1) Other (1,887) (1,327) 3,391 $ (24,969) (1) $ 2 (1) $ 4,275 Net earnings attributable to noncontrolling interests for the six months terminate June 30, 2012 and for the year ended December 31, 2011 exclude $1 million and $2 million, respectively, due to the redeemable noncontrolling interest think to Stags Leap Wine Cellars, which is reported in the mezzanine equity section in the condensed consolidated balance sheets at June 30, 2012 and December 31, 2011 , respectively.See Note 11. See notes to condensed consolidated financial statements. 9- Table of Contents Altria Group, Inc. and Subsidiaries Co ndensed Consolidated Statements of Cash Flows (in millions of dollars) (Unaudited) For the Six Months Ended June 30, 2012 2011 Cash Provided by (Used In) Operating Activities Net earnings (loss) Consumer products $ 2,311 Financial services 110 Net earnings $ 1,962 (580) 2,421 1,382 Depreciation and amortization 113 121 Deferred income tax provision 299 132 (743) (344) (34) (24) (456) Adjustments to reconcile net earnings to operating cash flows Consumer productsEarnings from equity investment in SABMiller Asset impairment and exit costs, net of cash paid IRS payment related to LILO and SILO transactions Cash effects of changes Receivables, net 2 Inventories (12) 95 Accrued liabilities and other current assets (94) (251) Income taxes 130 (64) Accounts payable 5 58 Accrued settlement charges 58 (1,329) (1,398) Pension plan contributions (514) (209) Pension provisions and postretirement, net 85 122 Other 90 121 Financial services Deferred income tax benefit (1,270) PMCC leveraged le ase charges 7 Decrease to allowance for losses 10) Other liabilities (income taxes) 1,437 Other (529) 490 505 (21) See notes to condensed consolidated financial statements. Continued 10- 23 (85) Net cash (used in) provided by operating activities 479 Table of Contents Altria Group, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Continued) (in millions of dollars) (Unaudited) For the Six Months Ended June 30, 2012 2011 Cash Provided by (Used In) Investing Activities Consumer products Capital expenditures $ Other (39) $ (3) (40) 1 Financial services Proceeds from finance assets 552 129 510 0 Net cash provided by investment activities 1,494 Cash Provided by (Used In) Financing Activities Consumer products Long-term debt issued Repurchases of common stock (360) (575) (1,674) Dividends paid on common stock (1,589) Issuances of common stock 29 Financing fees and debt issuance costs (23) (133) (155) (2,167) (819) Other Net cash used in financing activities Cas h and cash equivalents Decrease (1,742) Balance at beginning of period (250) 3,270 Balance at end of period $ 1,528 See notes to condensed consolidated financial statements. 11 2,314 $ 2,064Table of Contents Note 1. Background and origination of Presentation Background At June 30, 2012, Altria Group, Inc. s pack and indirect wholly-owned subsidiaries included Philip Morris USA Inc. (PM USA), which is in use(p) in the manufacture and sale of cigarettes and certain smokeless products in the United States John Middleton Co. (Middleton), which is engaged in the manufacture and sale of machine-made large cigars and pipe tobacco, and is a wholly-owned subsidiary of PM USA and UST LLC (UST), which through its direct and indirect wholly-owned subsidiaries including U.S. Smokeless tobacco Company LLC (USSTC) and Ste. Michelle Wine Estates Ltd. (Ste. Michelle), is engaged in the manufacture and sale of smokeless products and wine. Philip Morris Capital Corporation (PMCC), another wholly- owned subsidiary of Altria Group, Inc. , maintains a portfolio of leveraged and direct finance leases. In addition, Altria Group, Inc. held an approximate 27. 0% economic and voting interest in SABMiller plc (SABMiller) at June 30, 2012, which is accounted for under the equity method of accounting. Altria Group, Inc. s access to the operating cash flows of its wholly-owned subsidiaries consists of cash received from the payment of dividends and distributions, and the payment of interest on intercompany loans by its subsidiaries. In addition, Altria Group, Inc. receives cash dividends on its interest in SABMiller if and when SABMiller pays such dividends. At June 30, 2012, Altria Group, Inc. s principal wholly-owned subsidiaries were not limited by long-term debt or other agreements in their ability to pay cash dividends or make other distributions with respect to their common stock.Share Repurchases In October 2011, Altria Group, Inc. s Board of Directors authorized a $1. 0 billion share repurchase program, which Altria Group, Inc. intends to complete by the end of 2012 . During the six and three months ended June 30, 2012, Altria Group, Inc. repurchased 11. 9 million shares (aggregate cost of approximately $360 million , and $30. 16 average price per share) and 2. 0 million shares (aggregate cost of approximately $66 million , and $32. 37 average price per share), respectively. As of June 30, 2012 , Altria Group, Inc. had repurchased a total of 23. million shares of its common stock under this program at an aggregate cost of approximately $688 million , and an average price of $29. 01 per share. The timing of share repurchases under this program depends upon marketplace conditions and other factors, and the program remains subject to the discretion of Altria Group, Inc. s Board of Directors. Basis of Presentation The interim condensed consolidated financial statements of Altria Group, Inc. are unaudited. It is the opinion of Altria Group, Inc. s management th at all adjustments necessary for a fair statement of the interim results presented slang been reflected therein.All such adjustments were of a normal recurring nature. Net revenues and net earnings for any interim period are not necessarily indicative of results that may be expected for the entire year. These statements should be read in conjunction with the consolidated financial statements and related notes, which appear in Altria Group, Inc. s Annual base to Shareholders and which are incorporated by reference into Altria Group, Inc. s Annual Report on Form 10-K for the year ended December 31, 2011. Balance sheet accounts are segregated by two broad types of businesses.Consumer products assets and liabilities are classified as either current or noncurrent, whereas financial services assets and liabilities are unclassified, in uniformity with respective industry practices. During the second quarter of 2012, Altria Group, Inc. determined that it had not recorded in its financia l statements for the three months ended blemish 31, 2012, its share of non-cash gains from its equity investment in SABMiller, relating to SABMillers strategic alliance transactions with Anadolu Efes and Castel that were closed during the first quarter of 2012.Because Altria Group, Inc. did not record these gains, it understated by $342 million, $222 million and $0. 11 earnings from equity investment in SABMiller, net earnings/comprehensive earnings, and diluted earnings per share attributable to Altria Group, Inc. , respectively, for the three months ended March 31, 2012. Additionally, Altria Group, Inc. understated its investment in SABMiller, long-term liability for deferred income taxes and total stockholders equity by $342 million, $120 million and $222 million, respectively, at March 31, 2012.There was no impact on net cash flows from operating, investing or financing activities for the three months ended March 31, 2012. Altria Group, Inc. assessed the materiality of 12- Tab le of Contents Altria Group, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (Unaudited) these understatements in accordance with the Securities and Exchange Commissions (SEC) rung Accounting Bulletin No. 99 Materiality and determined that the impact was not material to Altria Group, Inc. s financial statements as of and for the three months ended March 31, 2012.Accordingly, Altria Group, Inc. has determined that it is appropriate to revise its first quarter 2012 financial statements and has reflected this revision in the financial statements as of and for the six months ended June 30, 2012. Financial results for the three months ended March 31, 2012 reported in future filings will reflect this revision. Altria Group, Inc. s chief operating decision maker has been evaluating the operating results of the former cigarettes and cigars segments as a single smokeable products segment since January 1, 2012.The combination of these two formerly separate segments is related to the restructuring associated with the cost reduction program announced in October 2011 (the 2011 Cost Reduction course of study). Also, in connection with the 2011 Cost Reduction Program, effective January 1, 2012, Middleton became a wholly-owned subsidiary of PM USA, reflecting managements goal to achieve efficiencies in the management of these businesses. Effective with the first quarter of 2012, Altria Group, Inc. s reportable segments are smokeable products, smokeless products, wine and financial services.For further discussion on the 2011 Cost Reduction Program, see Note 2. Asset Impairment, Exit, murder and Integration Costs. Effective January 1, 2012, Altria Group, Inc. adopted new authoritative guidance that eliminated the option of presenting components of other comprehensive earnings as part of the statement of stockholders equity. With the adoption of this guidance, Altria Group, Inc. is reporting other comprehensive earnings in separate statements immedi ately following the statements of earnings. Note 2.Asset Impairment, Exit, Implementation and Integration Costs Pre-tax asset impairment, exit and implementation costs for the six and three months ended June 30, 2012 consisted of the following For The Six Months Ended June 30, 2012 Asset Impairment and Exit Costs For The Three Months Ended June 30, 2012 Implementation (Gain) Costs Total Asset Impairment and Exit Costs Implementation Costs Total (in millions) Smokeable products $ 23 $ (12) $ 11 $ 16 $ 9 $ 25 Smokeless products 14 5 19 General corporate (1) (1 ) Total $ 37