Pricing of Tender Offer
On September 19, 2016, Altria issued a press release announcing the reference yield and total consideration for its previously announced cash tender offer (the
Tender Offer) for any and all of its senior unsecured 9.95% Notes due 2038 (the 2038 Notes) and any and all of its senior unsecured 10.20% Notes due 2039 (the 2039 Notes and, together with the 2038 Notes, the
Notes). A copy of the press release is attached as Exhibit 99.1 and incorporated by reference in this Current Report on Form 8-K.
Expiration of Tender Offer
On September 20, 2016, Altria
issued a press release announcing that the Tender Offer expired at 5:00 p.m., New York City time, on Monday, September 19, 2016. A copy of the press release is attached as Exhibit 99.2 and incorporated by reference in this Current Report on
Form 8-K, except for the section 2016 Third Quarter Charge and 2016 Full-Year Earnings and Tax Rate Guidance.
This Current Report on Form 8-K
is neither an offer to sell nor a solicitation of offers to buy any securities. The Tender Offer was made only pursuant to the Offer to Purchase, the related Letter of Transmittal and the Notice of Guaranteed Delivery.
2016 Third Quarter Charge and 2016 Full-Year Earnings and Tax Rate Guidance
Altria will record a one-time, pre-tax charge against reported earnings in the third quarter of 2016 of approximately $825 million, or $0.28 per share,
reflecting the loss on early extinguishment of debt related to the Tender Offer (the Charge).
Altria reaffirms its previously announced
guidance that its 2016 full-year adjusted diluted earnings per share (EPS) growth rate is expected to be in the range of 7.5% to 9.5% over 2015 full-year adjusted diluted EPS. This forecasted growth rate excludes the Charge and the
net expenses in the table below. Altria expects that its 2016 full-year effective tax rate on operations will increase from approximately 35.3% to 35.4% due to a reduction in certain consolidated tax benefits resulting from the Tender
Offer. These forecasts do not include any impact from the
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proposed Anheuser-Busch InBev SA/NV (AB InBev) and SABMiller plc (SABMiller) business combination, including effects of Altrias expected one-quarter lag in reporting
its share of the combined businesses results, as the transaction remains subject to certain approvals.
Altrias 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 that management believes are not part of underlying operations. These items may include, for example, loss on
early extinguishment of debt, restructuring charges, 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).
Altrias management cannot estimate on a forward-looking basis the impact of certain income and expense items, including those items noted in the
preceding paragraph, on its reported diluted EPS and its reported effective 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 (as
defined below) measure for, or reconciliation to, its adjusted diluted EPS guidance or its effective tax rate on operations forecast.
The factors
described in the Forward-Looking and Cautionary Statements section of the press release attached as Exhibit 99.2 represent continuing risks to this forecast.
Expense (Income), Net Excluded from Adjusted Diluted EPS
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First Six Months
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Full Year
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2016
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2015
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NPM Adjustment Items
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$
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0.01
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$
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(0.03
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)
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Asset impairment, exit and implementation costs
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0.04
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Tobacco and health litigation items
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0.01
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0.05
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SABMiller special items
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0.06
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0.04
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Loss on early extinguishment of debt
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0.07
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Gain on derivative financial instrument
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(0.05
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)
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Tax items
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(0.01
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)
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$
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0.06
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$
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0.13
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Altria reports its financial results in accordance with U.S. generally accepted accounting principles
(GAAP). Altrias management reviews certain financial results, including diluted EPS, on an adjusted basis, which excludes certain income and expense items, including those items noted above. Altrias management does
not view any of these special items to be part of Altrias sustainable results as they may be highly variable, are difficult to predict and can distort underlying business trends and results. Altrias management also reviews income
tax rates on an adjusted basis. Altrias effective tax rate on operations may exclude certain tax items from its reported effective tax rate. Altrias management believes that adjusted financial measures provide useful insight
into underlying business trends and results and provide a more meaningful
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comparison of year-over-year results. Altrias management uses adjusted financial 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 may not be calculated the same as similarly titled measures used by other
companies. These adjusted financial measures 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.