Altria Group, Inc. (ALG)

Altria Group, Inc. (ALG)

 

Altria Group, Inc. (ALG) is primarily a holding company. The Company, through its wholly owned subsidiaries, Philip Morris USA Inc. (PM USA) and Philip Morris International Inc. (PMI) are engaged in the manufacture and sale of cigarettes and other tobacco products. ALG's 89% owned subsidiary Kraft Foods Inc. (Kraft) is engaged in the manufacture and sale of packaged foods and beverages. Philip Morris Capital Corporation (PMCC), another wholly owned subsidiary, maintains a portfolio of leveraged and direct finance leases. As of December 31, 2006, ALG had a 28.6% economic and voting interest in SABMiller plc (SABMiller), which is engaged in the manufacture and sale of various beer products. The Company operates in five segments: domestic tobacco, international tobacco, North American food, international food and financial services. On March 30, 2007, the Company completed the spin-off of Kraft to ALG's shareholders.

 

Tobacco Products

PM USA manufactures, markets and sells cigarettes in the United States, and contract manufactures cigarettes for PMI. Subsidiaries and affiliates of PMI and their licensees manufactures, markets and sells tobacco products outside the United States. PM USA's cigarette brands include Marlboro, Virginia Slims and Parliament. Its principal discount brand is Basic. All of its brands are marketed to take into account differing preferences of adult smokers.

 

In November 2006, a subsidiary of PMI exchanged its 47.5% interest in E. Leon Jimenes, C. por. A. (ELJ), which included a 40% indirect interest in ELJ's beer subsidiary, Cerveceria Nacional Dominicana, C. por. A., for 100% ownership of ELJ's cigarette subsidiary, Industria de Tabaco Leon Jimenes, S.A. (ITLJ). As of December 31, 2006, PMI owns 100% of the cigarette business and no longer holds an interest in ELJ's beer business.

 

PMI's cigarette brands, including Marlboro, L&M, Philip Morris, Bond Street, Chesterfield, Parliament, Lark, Merit and Virginia Slims, collectively accounted for approximately 10.9% of the international cigarette market in 2006. PM USA sells its tobacco products principally to wholesalers (including distributors), large retail organizations, including chain stores, and the armed services. Subsidiaries and affiliates of PMI and their licensees sell their tobacco products worldwide to distributors, wholesalers, retailers, state-owned enterprises and other customers.

 

Food Products

 

In September 2006, Kraft acquired the Spanish and Portuguese operations of United Biscuits (UB), and rights to all Nabisco trademarks in the European Union, Eastern Europe, the Middle East and Africa. The Spanish and Portuguese operations of UB include its biscuits, dry desserts, canned meats, tomato and fruit juice businesses. During 2006, Kraft sold its pet snacks brand, rice brand industrial coconut assets, a small biscuit brand and the United States coffee plant. In January 2007, Kraft announced the sale of its hot cereal assets and trademarks.

 

KNAC's principal brands in North American food span five consumer sectors and include snacks, beverages, cheese and dairy, grocery and convenient meals. Snacks include Oreo, Chips Ahoy!, Newtons, Peek Freans, Nilla, Nutter Butter, and SnackWell's cookies; Ritz, Premium, Triscuit, Wheat Thins, Cheese Nips, Honey Maid Grahams and Teddy Grahams crackers; South Beach Diet (under license) crackers, cookies and bars; Planters nuts and salted snacks; Terry's and Toblerone chocolate confectionery products; Handi-Snacks two-compartment snacks, and Balance nutrition and energy snacks. Beverages include Maxwell House, General Foods International, Starbucks (under license), Yuban, Seattle's Best (under license), Sanka, Nabob, Gevalia and Tassimo coffees; Capri Sun (under license), Kool-Aid and Crystal Light aseptic juice drinks; Kool-Aid, Tang, Crystal Light and Country Time powdered beverages; Veryfine juices; Tazo teas (under license), and Fruit2O water. Cheese and daily products include Kraft and Cracker Barrel natural cheeses; Philadelphia cream cheese; Kraft and Velveeta process cheeses; Kraft grated cheeses; Cheez Whiz process cheese sauce; Easy Cheese aerosol cheese spread; Polly-O cheese; Deli Deluxe process cheese slices, and Knudsen and Breakstone's cottage cheese and sour cream.

 

KNAC's grocery products include Cool Whip frozen whipped topping; Back to Nature crackers, cookies, cereals and macaroni & cheese dinners; Post ready-to-eat cereals; Kraft and Miracle Whip spoonable dressings; Kraft and Good Seasons salad dressings; A.1. steak sauce; Kraft and Bull's-Eye barbecue sauces; Grey Poupon premium mustards; Shake æN Bake coatings; Jell-O dry packaged desserts, refrigerated gelatin and pudding snacks, and Handi-Snacks shelf-stable pudding snacks. Convenient meals include DiGiorno, Tombstone, Jack's and California Pizza Kitchen (under license) and Delissio frozen pizzas; Kraft macaroni & cheese dinners; South Beach Diet (under license) pizzas and meals; Taco Bell Home Originals (under license) meal kits; Lunchables lunch combinations; Oscar Mayer and Louis Rich cold cuts, hot dogs and bacon; Boca soy-based meat alternatives, and Stove Top stuffing mix.

 

KIC's principal brands in the international food span five consumer sectors and include snacks, beverages, cheese and dairy, grocery and convenient meals. Snacks include Milka, Suchard, C(te d'Or, Marabou, Toblerone, Freia, Terry's, Daim / Dime, Figaro, Karuna, Korona, Poiana, Meurisse, Prince Polo / Siesta, Alpen Gold, Pavlides, Twist, Merenda, Mirabell, Pyros, Mogyoros, Sport / Smash / Jazz, 3-Bit, Belvita, Shot, Terrabusi, Svoge, Ukraina, Vozdushny, Chudny Vecher, Lacta and Gallito chocolate confectionery products; Estrella, Maarud, Kar, Lux and Planters nuts and salted snacks, and Oreo, Chips Ahoy!, Ritz, Club Social, Digestive, Chiquilin, Express, Kraker, Honey, Aveny, Marbu, Dorada, Pepitos, Variedad, Pacific, Belvita, Cerealitas, Trakinas and Lucky biscuits. Beverages include Jacobs, Gevalia, Carte Noire, Jacques Vabre, Kaffee HAG, Grand' MFre, Kenco, Saimaza, Meisterroestung, Maxim, Maxwell House, Onko, Splendid, Karat, Tassimo and Nova Brasilia coffees; Suchard Express, O'Boy, and Kaba chocolate drinks; Tang, Clight, Kool-Aid, Royal, Verao, Fresh, Frisco and Q-Refres-Ko powdered beverages; Maguary juice concentrate and ready-to-drink beverages, and Capri Sun (under license) aseptic juice drinks.

 

KIC's cheese and dairy products include Kraft and Philadelphia cream cheese; Kraft, Sottilette, Dairylea, Osella, Mama Luise and El Caserfo cheeses; Kraft, Velveeta and Eden process cheeses; Kraft natural cheese, and Cheez Whiz process cheese spread. Grocery products include Kraft spoonable and pourable salad dressings; Miracel Whip spoonable dressings; Royal dry packaged desserts; Jell-O dessert toppings; Post ready-to-eat cereals; Kraft peanut butter; Mirßcoli sauces, and Vegemite yeast spread. Convenient meals include Lunchables lunch combinations; Kraft macaroni & cheese dinners; Kraft and Mirßcoli pasta dinners and sauces, and Simmenthal canned meats.

 

Financial Services

 

PMCC holds investments in finance leases, principally in transportation (including aircraft), power generation, and manufacturing equipment and facilities. PMCC's finance asset portfolio includes leases in the investment categories, such as electric power, aircraft, rail and surface transport, manufacturing and real estate industries.

PMCC leases a number of aircrafts, predominantly to the United States passenger carriers. As of December 31, 2006, $1.9 billion of PMCC's finance asset balance related to aircraft. Two of PMCC's aircraft lessees, Delta Air Lines, Inc. (Delta) and Northwest Airlines, Inc. (Northwest), are under bankruptcy protection. PMCC also leases one natural gas-fired power plant to an indirect subsidiary of Calpine Corporation (Calpine). Calpine, which has guaranteed the lease, is operating under bankruptcy protection. PMCC's leases with Delta for six Boeing 757, nine Boeing 767, and four McDonnell Douglas (MD-88) aircraft. PMCC has leveraged leases for three Airbus A-320 aircraft. In 2006, PMCC sold ten Airbus A-319 aircraft financed under leveraged leases. During 2006, five regional jets leases were also foreclosed upon. PMCC's leases one 750 megawatt (MW)natural gas-fired power plant (located in Pasadena, Texas). In addition, leases of two 265 MW natural gas-fired power plants (located in Tiverton, Rhode Island, and Rumford, Maine), which were part of the bankruptcy filing, were rejected during 2006.