Here are the answers to many questions regarding the upcoming Altria (MO) spin of PMI.
Q: I own Altria shares. What will I receive as a result of the Spin-off?
A: Altria will distribute one share of PMI common stock for each share of Altria common stock outstanding as of the Record Date for the Distribution.
Q: What is the Record Date for the Distribution, and when will the Distribution occur?
A: The Record Date is March 19, 2008, and ownership is determined as of 5:00 p.m. New
York City Time on that date. Shares of PMI common stock will be distributed on March 28, 2008. We refer to this date as the Distribution Date.
Q: What do I have to do to participate in the Distribution?
A: Nothing. You will receive one share of PMI common stock for each share of Altria common stock held as of the Record Date and retained through the Distribution Date. You may also participate in the Distribution if you purchase Altria common stock in the “regular way” market and retain your Altria shares through the Distribution Date. See “Summary—Trading Prior to or on the Distribution Date.”
Q: If I sell my shares of Altria common stock before or on the Distribution Date, will I still be entitled to receive PMI shares in the Distribution?
A: If you sell your shares of Altria common stock prior to or on the Distribution Date, you may also be selling your right to receive shares of PMI common stock. See “Summary—Trading Prior to or on the Distribution Date.” You are encouraged to consult with your financial advisor regarding the specific implications of selling your Altria common stock prior to or on the Distribution Date.
Q: Will the Spin-off affect the number of shares of Altria I currently hold?
A: The number of shares of Altria common stock held by a stockholder will be unchanged. The market value of each Altria share, however, will decline to reflect the impact of the Distribution
Q: What are the U.S. federal income taxconsequences of the Distribution to U.S.
stockholders?
A: Altria has received a private letter ruling from the Internal Revenue Service and an opinion of counsel that the Distribution of PMI common stock to Altria stockholders will qualify as a tax-free distribution for United States federal income tax purposes. You should, of course, consult your own tax advisor as to the particular consequences of the Distribution to you, including the applicability and effect of any U.S. federal, state and local and foreign tax laws, which may result in the distribution being taxable to you. Altria will provide its U.S. stockholders
with information to enable them to compute their tax basis in both Altria and PMI shares. This information will be posted on Altria’s website, www.altria.com/PMIspinoff, promptly following the Distribution Date. Certain United States federal income tax consequences of the Spin-off are described in more detail under “The Distribution—U.S. Federal Income Tax Consequences of the Distribution.”
Q: Is the Distribution tax free to Non-U.S. stockholders?
A: Non-U.S. stockholders may be subject to tax on the Distribution in jurisdictions other than the U.S. It is expected that the Distribution will be tax free in Canada and Sweden, but subject to tax in Denmark, France, Germany, Ireland, Japan, the Netherlands, Norway and Switzerland. We will post the results (if any) of foreign tax authority determinations on our website, including the Canada Revenue Agency’s conclusion whether the Distribution is tax free. See “The Distribution—Tax Consequences of the Distribution to Non-U.S. Stockholders.” The foregoing is for general information purposes and does not constitute tax advice. Stockholders should consult their own tax advisors regarding the particular consequences of the Distribution to them.
Q: When will I receive my PMI shares? Will I receive a stock certificate for PMI shares distributed as a result of the Spin-off?
A: Registered holders of Altria common stock who are entitled to participate in the Distribution will receive a book-entry account statement reflecting their ownership of PMI common stock. For additional information, registered stockholders in the U.S. or Canada should contact Altria’s transfer agent, Computershare Trust Company, at 1-866-538-5172 or by e-mail at altria@computershare.com. Stockholders from outside the U.S. and Canada may call 1-781-575- 3572. If you would like to receive physical certificates evidencing your PMI shares, please contact PMI’s transfer agent. See “Description of Capital Stock—Transfer Agent and Registrar.”
Q: What if I hold my shares through a broker, bank or other nominee?
A: Altria stockholders who hold their shares through a broker, bank or other nominee will have their brokerage account credited with PMI common stock. For additional information, those stockholders should contact their broker or bank directly. Questions regarding the Distribution can also be directed to our information agent, D.F. King & Co., Inc., at 1-800-290-6431.
Q: What if I have stock certificates reflecting my shares of Altria common stock? Should I send them to the transfer agent or to Altria?
A: No, you should not send your stock certificates to the transfer agent or to Altria. You should retain your Altria stock certificates. No certificates representing your shares of PMI common stock will be mailed to you. PMI common stock will be issued as uncertificated shares registered in book-entry form through the direct registration system.
Q: If I was enrolled in an Altria dividend reinvestment plan, will I automatically be
enrolled in the PMI dividend reinvestment plan?
A: Yes. If you elected to have your Altria cash dividends applied toward the purchase of additional Altria shares, the PMI shares you receive in the Distribution will be automatically enrolled in the PMI Direct Stock Purchase and Dividend Reinvestment Plan sponsored by Computershare Trust Company (PMI’s transferagent and registrar), unless you notify Computershare that you do not want to reinvest any PMI cash dividends in additional PMI shares. For contact information for the PMI plan sponsor (Computershare), see “Description of Capital Stock—Transfer Agent and Registrar.”
Q: Why is Altria separating PMI from its business?
A: Altria’s Board of Directors and management believe the separation will provide the benefits set forth below under the caption “The Distribution—Reasons for the Distribution” and that achieving those benefits will result in greater aggregate value to stockholders who retain their Altria and PMI shares than would be obtained under the current structure.
Q: Why is the separation of the two companies structured as a spin-off?
A: A U.S. tax-free distribution of shares in PMI is the most tax efficient way to separate the companies.
Q: Are there risks to owning PMI common stock?
A: Yes. PMI’s business is subject both to general and specific business risks relating to its operations. In addition, the Spin-off presents risks relating to PMI’s being a separately-traded public company. See “Risk Factors.”
Q: Does PMI plan to pay dividends?
A: Yes. PMI plans to pay a dividend at the initial rate of $0.46 per share per quarter, or $1.84 per year. Dividends are subject to the discretion of PMI’s Board of Directors in accordance with applicable law. See “Dividend and Share Repurchase Policy.”
Q: What will the relationship between Altria and PMI be following the Distribution?
A: After the Distribution, Altria will not own any shares of PMI common stock. However, in connection with the Distribution, we are entering into a number of agreements with Altria that will govern the Spin-off and our future relationship with Altria. See “Relationship with Altria.”
Q: What will Altria own following the Distribution?
A: Altria will own 100% of PM USA, Philip Morris Capital Corporation and John Middleton, Inc., as well as its 28.6% economic interest in SABMiller plc.
Disclosure (“none” means no position):Long Both Companies
