Altria Offers to Buy Back $2B Worth of Debt, Lowers Guidance

Cigarette manufacturer Altria (NYSE:MO) lowered its reported fiscal 2012 earnings forecast on Monday citing one-time charges related to a plan to buy back as much as $2 billion of its long-term debt.

The Richmond, Va.-based tobacco company said it will record a one-time pre-tax charge of $1 billion, or 33 cents a share, in the third quarter related to the early extinguishment of debt.

The parent of the Marlboro brand plans to repurchase four series of notes with a total principal outstanding of about $8.3 billion. The earliest series are set to mature in 2018 and 2019 and are valued at $5.3 billion, while the latter valued at $3 billion are set to come due in 2038 and 2039.

While lowering its reported EPS on the special charges to $1.96 to $2.00 from an earlier $2.29 to $2.33, Altria reaffirmed its non-GAAP fiscal guidance in the range of $2.19 to $2.23. Analysts in a Thomson Reuters poll are looking for adjusted earnings of $2.21.

Altria last month said its second-quarter earnings more than doubled as demand for smokeless tobacco ramped up and cigarette prices increased.

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The company anticipates adjusted EPS growth to moderate in the second half of 2012 compared with the first half as earnings are negatively impacted by charges related to the tender offer.

However, Altria believes earnings will start to rebound in the fourth quarter.