Boca Raton, Florida February 22, 2012 For Investor Relations - - PowerPoint PPT Presentation

For Investor Relations Purposes Only

2012 CAGNY Investor Presentation Boca Raton, Florida

February 22, 2012

For Investor Relations Purposes Only

Mike Szymanczyk Chairman and Chief Executive Officer Altria Group, Inc.

For Investor Relations Purposes Only

Statements, including earnings guidance, in this presentation that are not reported financial results or other historical information are “forward-looking statements” within the meaning of Private Securities Litigation Reform Act of 1995. Such forward- looking statements are based on current plans, estimates and expectations, and are not guarantees of future performance. They are based on management’s expectations that involve a number of business risks and uncertainties, any of which could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. Altria undertakes no obligation to publicly update or revise any forward-looking statement other than in the normal course of its public disclosure obligations. The risks and uncertainties relating to the forward-looking statements in this presentation include those described under the caption “Cautionary Factors that May Affect Future Results” in its Annual Report on Form 10-K for the year ended December 31, 2011. Reconciliations of non-GAAP Financial measures included in this presentation to the most comparable GAAP measures are available on Altria’s website at altria.com.

Safe Harbor Statement

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Altria’s Executive Management

• Mike Szymanczyk

Chairman and Chief Executive Officer, Altria

• Marty Barrington

Vice Chairman, Innovation, Public Affairs, HR and Compliance, Altria

• Dave Beran

Vice Chairman, Business Operations, Altria

• Murray Garnick

SVP Litigation, ALCS

• Howard Willard

EVP and Chief Financial Officer, Altria

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Today’s Remarks

• Strengths of Altria’s business model
• Altria’s plans to increase shareholder value over the long-term

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External Environment Since 2008

• Slow economic growth
• High unemployment
• Low consumer confidence
• Concerns about Europe
• Largest FET increase on U.S. tobacco products
• Tobacco regulation by the FDA

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Altria’s Adjusted Diluted EPS*

Source: Altria company reports

+7.9%

(CAGR)

* As redefined; for reconciliation of non-GAAP to GAAP measures visit www.altria.com.

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Note: Assumes quarterly reinvestment of dividends as of ex-dividend date.

Total Shareholder Return

2008 – 2011

Source: Bloomberg Yearly Return (Dec 31, 2007 – Dec 31, 2011)

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Altria’s Dividend Increases Since PMI Spin-off

Source: Altria company reports

+41%

* Annualized rate Note: 2008 annualized dividend rate is based on $0.29 per common share, declared May 28, 2008 2011 annualized dividend rate is based on $0.41per common share, declared Aug 26, 2011

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Dividend Payout Ratio

Source: Bloomberg and Thomson Reuters

80.0% 79.7% 78.7% 63.1% 61.2% 55.5% 53.9% 51.7% 50.9% 50.9%

MO RAI LO PM HNZ CAG HSY SLE K KFT

Dividend Payout Ratio – Food, Beverage and Tobacco Index

NOTE: Altria’s Dividend Payout Ratio is based on the current annualized dividend (Last increased August 2011) of $1.64 / $2.05 2011 Actual Adjusted EPS. In addition, Altria’s announced Payout Ratio Target is ~80% of Underlying EPS. All Payout Ratios have been calculated using the companies current annualized dividend rate / 2011 Actual Adjusted EPS, except Kraft Foods Inc. which has not yet released FY 2011 financials. Payout ratio ranks companies in the Food, Beverage and Tobacco Index in these respective categories as of Feb 16, 2012

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Dividend Yield

5.6% 5.5% 4.9% 3.9% 3.8% 3.7% 3.6% 3.4% 3.3% 3.3%

MO RAI LO CPB PM HNZ CAG DPS PEP K

Dividend Yield – Food, Beverage and Tobacco Index

Note: Dividend yield ranks companies in the Food, Beverage and Tobacco Index in these respective categories as of Feb 16, 2012 Source: Bloomberg

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Altria’s Dividend

• Expects to raise its dividend in line with adjusted diluted EPS growth
• All dividend payments remain subject to the discretion of Altria’s

Board of Directors

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Altria’s Results

• Driven by strong performance of our companies’ premium tobacco

brands

• Growing alcohol assets
• Strong balance sheet
• Successfully managing risks
• Evolving public policy
• Litigation
• Knowledge of adult tobacco consumers
• Focus on innovation

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U.S. Tobacco Space

• Attractive place to do business with a growing profit pool
• Stable number of adult consumers
• Total tobacco volume declined at modest rate

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Total Profit Pool

($ in Billions) ~+20 %

Source: Altria company reports; ALCS SB&D estimates; other public company reports

Tobacco Manufacturer’s Profit Pool

(1)

(1) Includes a combination of public company reports and ALCS S&BD estimates for cigarettes, cigars, smokeless, and other tobacco products. Reflects adjusted operating companies income. (2) Does not include USSTC in 2007, but does reflect adjusted OCI financial results from Middleton after its acquisition in December 2007 as well as PM USA. (3) Includes PM USA, USSTC and Middleton Adjusted OCI financial results. Note: Altria’s Profit Pool share is calculated by combining the Adjusted OCI for PM USA, USSTC & Middleton divided by Total Profit Pool

+8pp

(2)

Altria’s Share of Tobacco Profit Pool

(Percent)

(3)

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Number of Adult Tobacco Consumers

Source: National Health Interview Survey (NHIS) and National Survey on Drug Use and Health (NSDUH); ALCS MICR estimates

(in millions)

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Adult Tobacco Consumers

• Types of tobacco products used by them continued to evolve
• Number of adult cigarette and cigar consumers has remained

relatively constant

• Number of adult smokeless tobacco consumers has increased

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Total Tobacco Volume Estimate

Pounds in Millions

Source: ALCS MICR estimates based on TTB data through November 2011; cigarettes, small cigars based on 0.0325 oz./stick ; 5 year CAGR 2003 to 2008

5 year CAGR (~1%) 2011 Chg. (~1%)

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Tobacco Categories’ 2011 Volume Change

• Estimated cigarette price elasticity and rate of secular decline have

been stable for several years

Source: ALCS MICR estimates * Based on estimated total tobacco pounds

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Tobacco Categories’ 2011 Volume Change

Source: ALCS MICR estimates * Based on estimated total tobacco pounds

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Machine-made Large Cigar Volume

• Increases in imported machine-made large cigars made trade

inventory volume difficult to determine

• Middleton believes category volume continued to grow in 2011

Source: ALCS MICR estimates

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Altria’s Tobacco Companies

Cigarettes and Snus Machine-made Large Cigars Smokeless Tobacco

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Cigarettes

• PM USA’s goal is to maximize income
• Maintain modest share momentum on Marlboro over time

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Cigarettes Segment’s Financial Results

Source: Altria company reports

Adjusted OCI*

($ in Billions) 4.5%

CAGR

* For reconciliations of non-GAAP to GAAP measures visit www.altria.com

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Marlboro’s Retail Share

Source: 2007: ALCS - MICR estimate based on IRI/Capstone Projected Retail Panel, 2008 - 2011: IRP SymphonyIRI Group/Capstone Projected Retail Panel Database

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Machine-made Large Cigars

• Middleton focuses on building its

position in the machine-made large cigars segment with Black & Mild

• Middleton enhanced Black & Mild’s

marketplace position through: – New products – Brand-building initiatives – Changes to manufacturing infrastructure

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Cigar Segment’s Results

Adjusted OCI*

($ in Millions)

+42%

Adjusted OCI Margins*

(Percent)

+6.3pp

* For reconciliations of non-GAAP to GAAP measures visit www.altria.com Source: SymphonyIRI Group InfoScan Cigar Database; Altria company reports

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Black & Mild’s Retail Share

Source: SymphonyIRI Group InfoScan Cigar Database; 2008 adjusted for level differences in restated database.

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Smokeless Products

• Increases income through volume growth, by focusing on

Copenhagen and Skoal

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Smokeless Products Segment’s Profitability

Adjusted OCI*

($ in Millions)

+19.1%

CAGR

Source: Altria company reports * For reconciliations of non-GAAP to GAAP measures visit www.altria.com; includes USSTC and PM USA’s smokeless products

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Copenhagen and Skoal’s Combined Performance

Volume

(Cans in Millions) +8.4%

CAGR

Source: SymphonyIRI Group InfoScan Smokeless Tobacco Database

Retail Share

(Percent) +1.6pp

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Altria’s Alcohol Assets

Note: Trademarks used for discussion purposes only. All third party trademarks remain the property of the respective owners.

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Wine Segment’s Business Results

Adjusted OCI*

($ in Millions)

Source: Altria company reports

+14.1%

CAGR

* For reconciliation of non-GAAP to GAAP numbers visit www.altria.com

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Source: Altria company reports; ALCS SB&D estimates, other public company reports

Altria’s Economic Interest in SABMiller

Reported Equity Earnings

($ in Millions) 9.4% CAGR

Total Global Beer Profit Pool

(~$29.0 Billion) SABMiller

Source: Altria company reports; Bloomberg closing stock price in GBP converted to USD as of Jan 31, 2012

Altria’s Economic Interest in SABMiller

$12.1 $16.3

2007 Jan-12

Market Value

($ in Billions)

Note: Trademarks used for discussion purposes only. All third party trademarks remain the property of the respective owners.

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Altria’s Economic Interest in SABMiller

• Strengthens Altria’s balance

sheet by providing: – Equity earnings – Cash flow – Potential source of liquidity

Note: Trademarks used for discussion purposes only. All third party trademarks remain the property of the respective owners.

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Altria’s Balance Sheet

• Altria’s strategies to maintain a strong balance sheet helps to:

– Secure the cash flow generated by its operating companies – Protect Altria’s investment grade credit rating – Support Altria’s ability to return cash to shareholders

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External Challenges

• Financial results have historically created value
• Ability to successfully manage external challenges equally important
• These challenges continue to present risks

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Altria’s Strong Performance

Altria’s Adjusted Diluted EPS*

+7.9%

CAGR

Source: Altria company reports; Bloomberg Yearly Return (Dec 31, 2007 – Dec 31, 2011). Assumes quarterly reinvestment of dividends as of ex-dividend date.

Total Shareholder Return

(2008 – 2011)

* As redefined; for reconciliation of non-GAAP to GAAP measures visit www.altria.com.

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Altria’s Business Model

• Foundation to increase shareholder value into the future

– Growing current businesses – Creating new revenue and profit streams

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Innovative New Products

• Altria’s companies have a strong track record of developing products

that meet adult consumer preferences – Product development efforts will build on deep understanding of adult cigarette consumers and smokeless tobacco expertise

• External partnerships enhance our development, manufacturing and

distribution capabilities

• Ability to navigate regulatory environment in U.S. that provides

pathways to innovation, including modified risk tobacco products

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Dave Beran Vice Chairman Business Operations Altria Group, Inc.

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Altria’s Tobacco Companies’ Leading Brands

• Superior brand equity
• Strong adult demographics
• These help support:

– Premium pricing – Higher margins Provide the foundation for future income growth

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42.0%

Source: Maxwell; MSAi Shipments; IRI/Capstone – Total Retail Panel; IRP SymphonyIRI Group/Capstone Projected Retail Panel

Marlboro’s Retail Share

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Marlboro #1 in Every State

Source: ALCS MICR, STARS Geo Agg

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Evaluating Brand Strength

• Brand equity
• Adult consumer loyalty
• Adult demographics
• Pricing
• Income
• Ability to grow and sustain high margins

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Brand Equity Study

Note: Trademarks used for discussion purposes only. All third party trademarks remain the property of the respective owners.

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Brand Equity Score Comparisons

Source: 2011 TNS Brand Equity Study (Ages: 21 – 54)

Competitive Brands

Age Group: 21 to 54

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Brand Equity Score Comparisons

Source: 2011 TNS Brand Equity Study (Ages: 21 – 29)

Age Group: 21 to 29

Competitive Brands

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Marlboro’s Brand Equity Score Comparison

Source: 2011 TNS Brand Equity Study (Age: 21 – 54 Marlboro Adult Smokers)

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Marlboro’s Adult Smoker Loyalty

• Have higher loyalty to their brand
• ~90% of Marlboro adult smokers purchase the brand 100% of the time

Source: CATTS Database Adult Cigarette Smokers 21+

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Adult Smoker Demographics

Source: CATTS Database (6mm ending Sep 2011); Adult Cigarette Smokers 21+

Age group: 21 to 29

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Marlboro’s Adult Smoker Demographics

Source: CATTS Database (6mm ending Sep 2011); Adult Cigarette Smokers 21+

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Net Price Gaps vs. Lowest Effective

Note: Marlboro Excludes 72mm Source: IRP SymphonyIRI Group/Capstone Projected Pricing Database

Marlboro

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Effective Price Gaps vs. Lowest Effective

(1) Newport (East) % price gap reflects data primarily from: AL, DC, FL, GA, KY, ME, MA, MD, NH, NJ, NY, NC, PA, RI, SC TN, VT, VA and WV.

Source: IRP SymphonyIRI Group/Capstone Projected Pricing Database

Newport (East) Marlboro Camel Pall Mall Newport

For Investor Relations Purposes Only

Source: Altria company reports. Lorillard and Reynolds American Inc. company reports, and ALCS estimates. Net revenues excludes excise tax only. * For reconciliation of non-GAAP to GAAP measures visit www.altria.com.

Cigarette Manufacturers’ Metrics

Per Pack Revenues Net of Excise Taxes

(2007 – 2011 CAGR)

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Marlboro’s Retail Share Performance

Source: 2007: IRI/Capstone Projected Retail Panel Database; 2008-2011: IRP SymphonyIRI Group/Capstone Projected Retail Panel

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Cigarettes Segment’s Financial Results

Source: Altria company reports

Adjusted OCI*

($ in Billions) 4.5%

CAGR

Adjusted OCI* Margins

(Percent) +7.5pp

* For reconciliations of non-GAAP to GAAP measures visit www.altria.com

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images which appeared in the original presentation have been removed.

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Price Packaging Promotion Product Positioning

The Value Equation

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PM USA’s Retail Programs

• In 2011, introduced Marlboro Leadership Pricing (MLP) option
• In 2012, enhanced program with MLP option and a Marlboro flexible
• ption

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Brand Equity Score and Adult Demographics

Black & Mild’s Adult Tobacco Demographic Share

Source: CATTS OTP (6mm Sep 2011) Adult Cigar Smokers 21; +2011 TNS Brand Equity Study (Ages: 21 – 54)

Competitive Brands

Overall Equity Score Comparison

(Ages: 21 – 54)

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Machine-made Large Cigar Segments

Source: SymphonyIRI Group InfoScan FMDC Cigar database 2011

Untipped Cigarillo Non-Cigarillo Tipped Cigarillo

Note: Percent contribution to total machine-made large cigar category

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Copenhagen and Skoal

• Unique positions with complementary product portfolio strategies

designed to maximize USSTC’s performance

• USSTC #1 position:

Flavors:

• Natural
• Mint
• Straight
• Blend

Forms:

• Fine-cut
• Long-cut
• Pouches

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Brand Equity Score Comparisons

Source: 2011 TNS Brand Equity Study

Overall Equity Score Comparison

(Ages: 21 – 54) Competitive Brands

Overall Equity Score Comparison

(Ages: 21 – 29) Competitive Brands

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Copenhagen’s Adult Tobacco Demographics

Source: CATTS OTP (6mm Sep 2011) Adult MST Consumers 21+

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Copenhagen’s Performance

Source: Altria company reports

Volume

(Cans in Millions) +26%

Retail Share

(Percent) +3.4pp

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Skoal Adult Dippers’ Perceptions of Their Brand

• Modern
• Innovative
• Products deliver great taste
• Forms are easy to manage

Source: ALCS MICR

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Skoal’s Equity Score and Adult Demographics

Overall Equity Score Comparison

(Ages: 21 – 54) Competitive Brands

Base = Adult MST Consumers 21+ Source: 2011 TNS Brand Equity Study (Ages: 21 – 54)

Overall Equity Score Comparison

(Ages: 21 – 29) Competitive Brands

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• Skoal traditionally offered adult dippers tobacco-forward products
• Today, adult dippers want more flavor-forward tobacco products

Skoal’s Product Portfolio

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Mint Segment

(Flavor)

Pouch Segment

(Form)

Smokeless Tobacco Segments

Source: Symphony IRI Group InfoScan FDC Smokeless 2011

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Mint Segment

(Flavor)

Pouch Segment

(Form)

Smokeless Tobacco Segments

Source: Symphony IRI Group InfoScan FDC Smokeless 2011

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Skoal’s Retail Share Performance

Source: SymphonyIRI Group InfoScan Smokeless Tobacco Database

Delisted SKUs

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Smokeless Products Growth Opportunities

• Adult smokers continued to be interested in smokeless alternatives

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Smokeless Products Growth Opportunities

• Adult smokers continued to be interested in smokeless alternatives
• USSTC and PM USA see growth opportunities for their premium

smokeless brands

• New forms and flavors present opportunities to develop new revenue

and profit streams

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Altria’s Tobacco Businesses

Machine-made Large Cigars Smokeless Tobacco Cigarettes and Snus

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Tobacco Profit Pools

Source: Altria company reports; ALCS BS&D estimates; other public company reports

Altria’s Share of Profit

(Percent) +8pp

(1) Does not include USSTC in 2007, but does reflect adjusted OCI financial results from JMC after its acquisition in December 2007 as well as PM USA. (2) Includes PM USA, USSTC and JMC Adjusted OCI financial results. Note: Altria’s Profit Pool share is calculated by combining the Adjusted OCI for PM USA, USSTC & Middleton divided by Total Profit Pool

(1) (2)

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Revenue and Profit Pools

• We believe revenue and profit pools derived from adult tobacco

consumers can continue to expand

• We believe our tobacco companies are well-positioned to increase

share of these revenue and profit pools over time – Leading premium brands – Innovative new products

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Altria’s Tobacco Businesses and Products

• Continue to evolve to meet future preferences of adult tobacco

consumers

• Adult consumers are:

– Increasingly switching between multiple forms of tobacco – Expressing interest in non-combustible alternatives

• Dynamics provide opportunity for new product growth in the long-term
• Metrics to evaluate our performance will evolve or be complemented

with new metrics

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Cost Management Strategy

• Completed a multi-year $1.5 billion cost reduction program in Q3 2011
• Launched a new initiative that is expected to deliver $400 million in

savings against previously planned spending by end of 2013

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Cost Reduction Program

• New program primarily focused on reducing cigarette-related

infrastructure

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• To improve efficiencies
• Middleton is a subsidiary of PM USA
• More efficient resource allocation

across smokeable products businesses

Realigned Corporate Structure

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Cost Management Strategy

• Completed a multi-year $1.5 billion cost reduction program in Q3

2011

• Launched a new initiative that is expected to deliver $400 million in

savings against previously planned spending by end of 2013

• Contributed to margin expansion while supporting investments in

premium brands

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Marty Barrington Vice Chairman

Innovation, Public Affairs, Human Resources and Compliance

Altria Group, Inc.

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Note: Trademarks used for discussion purposes only. All third party trademarks remain the property of the respective owners.

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Drivers of Growth

• Product Innovation
• Filling gaps in product portfolios
• Developing innovative new smokeless product alternatives
• Equally important, will be:

– Compliance with FDA regulations – Engagement with FDA and others

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New Products - Retail Share 2011 Comparisons

Source: Altria company reports, ALCS MICR estimates. 2011 retail share of new products introduced in 2009 – 2011.

Smokeless Products Machine-made Large Cigars Cigarettes

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Our Approach To Smokeless Product Development

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Smokeless Alternatives for Adult Smokers

• Traditional forms of MST
• Pouches
• Still looking for the right product
• ~30% of adult smokers are interested in a spit-free smokeless alternative

Source: ALCS MICR

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• Develop and commercialize new products for adult consumers

Working With Third Parties

• Agreement to form a joint venture to market and sell these products
• utside of the United States

Note: Trademarks used for discussion purposes only. All third party trademarks remain the property of the respective owners.

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Working With Third Parties

• Okono and its affiliates

– Product development – Manufacturing capabilities

Note: Trademarks used for discussion purposes only. All third party trademarks remain the property of the respective owners.

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Drives innovation and new product development

Partnerships Intellectual Property Acquired Product Development, Manufacturing & Distribution Intellectual Property Jointly Owned

Note: Trademarks used for discussion purposes only. All third party trademarks remain the property of the respective owners.

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Smokeless and Cigarettes Regulation

Note: Trademarks used for discussion purposes only. All third party trademarks remain the property of the respective owners.

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Pathways for Regulated Tobacco Products

• Substantially equivalent (SE) products
• Products exempt from SE requirements
• New tobacco products
• Modified risk tobacco products

Note: Trademarks used for discussion purposes only. All third party trademarks remain the property of the respective owners.

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• Substantially equivalent (SE) products

Final guidance

• Products exempt from SE requirements

Final regulation

• New tobacco products

Draft guidance

• Modified risk tobacco products

In process

Pathways for Regulated Tobacco Products

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Engagement With FDA

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Altria Supported FDA Regulation

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Continuum of Risk Concept

Most Harmful Least Harmful

Risk continuum of tobacco products

(directional only – not to scale; adapted from Hatsukami et al.)

Conventional Cigarettes Medicinal Nicotine Smoking Cessation Smokeless Tobacco Products

Source: D.K. Hatsukami et al., Developing the science base for reducing tobacco harm, Nic. & Tob. Res.; vol. 9: S537-S553 (2007)

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Strategies To Reduce Tobacco-related Harm

• Discouraging initiation and promoting cessation are and should

remain core public policy strategies

• Additional approach is needed that focuses on reducing harm by

making available and providing accurate information about: – Tobacco products that are acceptable to adult consumers, and – Offer less risk than conventional cigarettes

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Continuum of Risk Concept

Most Harmful Least Harmful

Risk continuum of tobacco products

(directional only – not to scale; adapted from Hatsukami et al.)

Conventional Cigarettes Medicinal Nicotine Smoking Cessation Smokeless Tobacco Products

Source: D.K. Hatsukami et al., Developing the science base for reducing tobacco harm, Nic. & Tob. Res.; vol. 9: S537-S553 (2007)

For Investor Relations Purposes Only For Investor Relations Purposes Only

Note: Trademarks used for discussion purposes only. All third party trademarks remain the property of the respective owners.

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Modified Risk Tobacco Products

Note: Trademarks used for discussion purposes only. All third party trademarks remain the property of the respective owners.

Mohamadi Sarkar, M. Pharm., PhD., FCCP – Altria Client Services

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Modified Risk Tobacco Products

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Note: Trademarks used for discussion purposes only. All third party trademarks remain the property of the respective owners.

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Note: Trademarks used for discussion purposes only. All third party trademarks remain the property of the respective owners.

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Dissolvable Tobacco Products

• PM USA and USSTC encouraged FDA to:

– Consider dissolvable tobacco products as a potential harm reduction alternative for adult smokers – Apply existing regulatory controls to tobacco marketing and sales to youth

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TPSAC - Dissolvable Tobacco Products (DTPs)

• Additional research and

surveillance is needed

• “The TPSAC members

concurred that available evidence supports a conclusion that DTPs are likely to be associated with far lower disease risks than cigarettes.”

Source: TPSAC draft report on Dissolvable Tobacco Products, January 31, 2012 (http://www.fda.gov/advisorycommittees/calendar/ucm153468.htm1)

DRAFT Report

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Summary

• Innovation and new product development are key contributors to

long-term success

• Remain focused on product innovation as important driver of growth
• Regulation of tobacco industry created new opportunities for dialogue

and progress

• FDA has opportunity to lead discussion on tobacco harm reduction

and involve all stakeholders

• We will continue to engage with FDA and scientific and public health

communities on these and other important issues affecting innovation

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Murray Garnick Senior Vice President Litigation

Altria Client Services Inc.

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Tobacco and Health Litigation Environment

• In 2011, we once again achieved substantial success in managing

litigation, notwithstanding significant challenges and the payment of some judgments

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Today’s Litigation Discussion

• Individual cases, including Engle progeny cases
• “Lights” class actions

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Litigation Trend for Individual Cases Served

173 2

200 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Source: PM USA Litigation Records, excludes Engle progeny and Broin cases

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Engle Progeny

• PM USA is aggressive in defending

itself and continues to have strong legal and factual challenges to these suits

• Engle was a class action brought

by Florida smokers who developed certain smoking-related injuries before November 21,1996

• Trial court certified the case as

class action and jury returned punitive damages award in 2000

Source: PM USA Litigation Records

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Engle Progeny – Florida Supreme Court Decision

• Decertified the class
• Vacated punitive damages award
• Allowed class members to file

individual suits by January 2008

Source: PM USA Litigation Records

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Engle Progeny – Florida Supreme Court Decision

• For the individual suits, the court held that certain general findings

would be preserved

• Exactly how these findings could be used in the suits is subject to

substantial dispute both under state law and federal due process

• Role of findings is a critical legal issue of constitutional magnitude to

be ultimately decided by – Florida Supreme Court – U.S. Supreme Court

Source: PM USA Litigation Records

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Cases Won by PM USA*

(Percent)

Engle Progeny – State Cases

* Wins includes accepted offer of judgment in J. Cohen in the amount of $1,000 and $4,500 additur in Weingart as well as mistrials.

• About 4,800 claims pending

Source: PM USA Litigation Records

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Engle Progeny – State Cases

• PM USA will appeal any loss
• Possible PM USA will pay some judgments in 2012 depending on if

and when the Florida Supreme Court or U.S. Supreme Court accepts review

Source: PM USA Litigation Records

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Engle Progeny – Federal Cases

• ~3,200 claims pending
• Tried first case in federal court

and won

• Expect additional trials in 2012
• Our due process challenge to use
• f the findings has resulted in

inconsistent rulings

• Look forward to bringing this issue

to the U.S. Eleventh Circuit Court

• f Appeals

Source: PM USA Litigation Records

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“Lights” Class Action Litigation – Federal Cases

• 17 cases consolidated before a U.S. district court in Maine in 2010
• In 2010, the court denied certification in four sample cases selected

by the parties

• After the ruling denying class certification:

– Plaintiffs dismissed 13 of the cases

• Court suggested that four remaining cases be transferred to their
• riginal federal jurisdiction, we are opposing the transfers

Source: PM USA Litigation Records

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“Lights” Class Action Litigation – Federal Cases

• No “lights” case is currently certified as a class action in federal court
• No class certification in federal court has ever withstood appeal

Source: PM USA Litigation Records

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“Lights” Class Action Litigation – State Cases

• Most state courts have refused to certify “lights” class actions
• A small number of “lights” cases has been certified

Source: PM USA Litigation Records

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Larsen

• ”Lights” class action
• Jury hung and court declared

mistrial in 2011

Source: PM USA Litigation Records

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City of St. Louis

• A third party payer case by 37

hospitals seeking reimbursement for smoking- related health care costs

• Jury returned defense verdict,

and the case has now come to an end

Source: PM USA Litigation Records

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“Lights” Class Action Litigation – State Cases

• Class certification of Curtis in Minnesota and Lawrence in New

Hampshire are pending on appeal in their respective state supreme courts

• Aspinall in Massachusetts is in pretrial proceedings and no trial date

Source: PM USA Litigation Records

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Brown

• Certified class action under

California’s Unfair Competition Law including “lights” allegations

• Trial date set for October 2012
• Defendants have filed substantial

motions challenging: – Standing of the class representatives – Certification of the class

Source: PM USA Litigation Records

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Miles / Price Case

• Plaintiffs seeking to reopen the

judgment

• Plaintiffs seeking to put into the

record supposedly new evidence

• We oppose the petition on

numerous grounds

Source: PM USA Litigation Records

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Tobacco and Health Litigation Environment

• We have had significant successes in managing litigation, although

we continue to face challenges

• Our goal is to continue protecting the interests of our shareholders
• Our approach to litigation:

– Vigorously defended claims for decades – Intend to continue doing so in the future

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Mike Szymanczyk Chairman and Chief Executive Officer Altria Group, Inc.

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This space is blank because brand images which appeared in the original presentation have been removed.

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Altria’s Business Model

• Consistency of our business results generated strong total returns
• Altria has outperformed the S&P 500 Index’s total result each year for

12 consecutive years

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Altria’s EPS Guidance

• We remain committed to our objective of delivering average annual

adjusted diluted EPS growth of 7% to 9% over time – With a dividend that grows in line with our adjusted EPS

• Altria reaffirms that it expects 2012 adjusted diluted EPS to grow

6% to 9% to a range of $2.17 to $2.23

• Altria reaffirms that it expects to achieve 2012 reported diluted EPS

in the range of $2.14 to $2.20

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Altria is a Compelling Investment

• Forecasted adjusted diluted EPS growth and strong dividend
• Tobacco operating companies remain focused on growing share and

size of revenue and profit pools

• Premium tobacco brands:

– Strong equity – Higher margins – Well-positioned to drive future growth from existing products

• Knowledge of adult tobacco consumers together with access to

technology supports our companies’ ability to pursue new revenue and profit streams

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Altria is a Compelling Investment

• Talented organization
• Cost management that supports strategic investment and margin

expansion

• Robust cash flows and strong balance sheet

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Regulation G Disclosure

• For reconciliations and further explanations of non-GAAP financial

measures, visit: altria.com

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