What I Learned From Reading Altria Group Inc (MO)’s Annual Report

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4. Litigation results mostly favor Altria.
Altria Group Inc (NYSE:MO)’s annual report is 81,000 words long, 25,000 of which is devoted to explaining various lawsuits waged against the company, past and present. Litigation has been a likely factor in the company’s consistently below-average valuation. But the results stand:

Trial Results: Since January 1999 … verdicts have been returned in 52 smoking and health, “Lights/Ultra Lights” and health care cost recovery cases in which PM USA was a defendant. Verdicts in favor of PM USA and other defendants were returned in 35 of the 52 cases.

The biggest winners in this situation are the lawyers.

5. Regulation isn’t only getting tougher, but more creative.
Altria writes:

The Village Board of Haverstraw, New York, enacted a tobacco product display ban in April 2012. It would have barred tobacco retailers from displaying any tobacco product in a manner that a consumer could view the product prior to purchase. Retailers could maintain a “tobacco menu,” listing the types and prices of tobacco products available for sale, but the menu could only be given to a consumer, over the legal age to purchase tobacco products, who requested it.

The ban was eventually overturned, but this is a good example of regulators and municipalities becoming more creative in their push to lower smoking rates. Given the declining number of citizens who smoke, my guess is regulators will eventually win this battle.

The article 5 Things I Learned From Reading Altria’s Annual Report originally appeared on Fool.com and is written by Morgan Housel.

Fool contributor Morgan Housel owns shares of Altria Group Inc (NYSE:MO). The Motley Fool has no position in any of the stocks mentioned.

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