'Altria’s Contingent Liabilities\r'

'Altria Group is the p arent of Philip Morris ground forces Inc. and John Middleton, Inc. , which produces and sell cigarettes and other tobacco products. Altria in any case owns Philip Morris Capital Corp, which maintains a portfolio of finance leases.\r\nOn establish 30, 2007, Altria Group distributed all of its remaining interest in Kraft Foods Inc. to its stockholders. It also completed the spin-off of its adjuvant Philip Morris International Inc. As of Dec. 31, Altria declared $57,211,000,000 in score assets, and debts of $38,657,000,000. A mounts owed by Altrias consumer products units total $33,054,000,000, with $17,782,000,000 constituting as contemporary debts.\r\nAccordign to its equipoise sheet, Altrias liabilities include short-term borrowings; accrued liabilities for marketing, taxes, exercise costs, and stoppage charges; dividends payable, accrued pension and wellnesscare costs, and long debt. It is Altrias obligation to report all liabilities in its relaxat ion sheet in accordance with the handbilling principles in general accepted in the United States (U. S. GAAP). For example, if Philip Morris obtains a EUR1. 5 billion, 364-day term impart, expiring Dec. 2, 2008, from Bank of America, it is expected to list in its respite sheet that it has debts of EUR1.\r\n5 billion on account of the term loan. If Bank of America asserts that an redundant EUR500 million is due on the term loan due to Philip Morris violations of its covenant that Philip Morris should limit allowed debt expenditures, but Phillip Morris disputes the claim, Philip Morris requisite not include BofAs claim in its balance sheet. BofAs claim will still be capacity to arbitration or litigation, and courts whitethorn rule in favour of Philip Morris. Hence, Altria does not disclose these types of events in its balance sheet.\r\nAltria, however, has fiduciary duties to disclose to shareholders all electromotive force liabilities that may become actual liabilities in the future. These include liabilities that are contingent, disputed or un-liquidated. For Atrias case, some of these liabilities will in all likelihood include pending lawsuits filed against the company. Pending lawsuits are sphere to trial, may be sent to appeal subsequently a ruling is served, may event to settlement between parties, may end up creation dismissed, or may end up with fiscal judgment, either substantial sums or de minimis amounts, against the defendant.\r\nBecause of the varied executable outcomes, Atria maybe unable to provide reasonable estimates on the debts they may incur as a expiration of these lawsuits. Regardless, shareholders have to be aware of the potential losses they may incur as a result of these contingencies. Investors also have to be aware of potential risks the company is facing. Hence, contingencies and other  potential liabilities are listed as footnotes to financial statements. In its yearbook Report, Altria discussed contingencies to its financial statements.\r\nIt verbalize that legal proceedings are pending or threatened in various U. S. and foreign jurisdictions against Altria and its subsidiaries on account of tobacco-related issues. However, it admitted that its management is unable to estimate the mathematical loss that could arise from an unfavorable outcome of any of these cases. Accordingly, Altria has not provided any amounts in its financial statements for bad outcomes of pending litigations.\r\nFor tobacco-related lawsuits that have been resolved through settlements, Altria include these items in its balance sheet because its liabilities on account of those disputes have already been determined. For example, Altria has stated settlement payments it owes on account of the Master Settlement Agreement reached by PM USA with 46 states and other governments for health care cost recovery and other claims. REFERENCES â€Å"2007 Annual Report. ” Altria Group, Inc. http://www. altria. com/download/p df/investors_AltriaGroupInc_2007_AnnualRpt. pdf\r\n'