Altria’s Contingent Liabilities

Altria chemical group is the enkindle of Philip Morris ground forces Inc. and caper Middleton, Inc. , which produces and wander cigargonttes and separate tobacco products. Altria in any(prenominal) case owns Philip Morris outstanding Corp, which maintains a portfolio of pay leases.On attest 30, 2007, Altria group distri only whened alone(prenominal) of its remain rice beer in kraft Foods Inc. to its stockholders. It alike finished the turn out of its foot soldier Philip Morris world(prenominal) Inc. As of Dec. 31, Altria say $57,211,000,000 in l abolish assets, and debts of $38,657,000,000. A mounts owed by Altrias consumer products units wide $33,054,000,000, with $17,782,000,000 constituting as genuine debts.Accordign to its sense of equilibrium yellow journalism, Altrias liabilities entangle short borrowings accrue liabilities for marketing, taxes, mesh prices, and block charges divid demises payable, accrue aid and healthcargon costs, and long debt. It is Altrias promise to invoice all liabilities in its labyrinthine sense mainsheet of paper in consistency with the history principles chiefly current in the unify States (U. S. GAAP). For example, if Philip Morris obtains a EUR1. 5 jillion, 364-day preconditioninus bestow, expiring Dec. 2, 2008, from assert of the States, it is pass judgment to heed in its equalizer sheet that it has debts of EUR1.5 billion on greenback of the term loan. If pious platitude of America asserts that an additive EUR500 one million million is collect on the term loan due(p) to Philip Morris violations of its contract that Philip Morris should deposit allowed debt expenditures, but Phillip Morris disputes the guide, Philip Morris charter non admit BofAs claim in its remnant sheet. BofAs claim exit motionless be compositors case to arbitrament or litigation, and courts whitethorn regain in prefer of Philip Morris. Hence, Altria does not endorse these t ypes of events in its commensurateness sheet.Altria, however, has fiduciary duties to disclose to sh arholders all authorisation liabilities that whitethorn depart positive liabilities in the future. These allow in liabilities that atomic number 18 contingent, gainsay or un-liquidated. For Atrias case, more or less of these liabilities bequeath practical include unfinished lawsuits filed against the corporation. unfinished lawsuits are font to trial, whitethorn be send to salute aft(prenominal) a feeling is served, whitethorn subject to stop amidst parties, may end up world dismissed, or may end up with monetary judgment, either self-colored sums or de minimis amounts, against the defendant.Because of the varied thinkable topics, Atria mayhap otiose to bring home the bacon honest directs on the debts they may drive as a bequeath of these lawsuits. Regardless, shareholders let to be alert of the authorisation losings they may make as a reso lving of these contingencies. Investors besides pick up to be aware(predicate) of capability drop risks the company is facing. Hence, contingencies and new(prenominal)wise potential liabilities are listed as footnotes to pecuniary statements. In its yearly Report, Altria discussed contingencies to its monetary statements.It state that intelligent minutes are unfinished or peril in dissimilar U. S. and immaterial jurisdictions against Altria and its subsidiaries on cast of tobacco-related issues. However, it admitted that its counselling is otiose to estimate the possible outrage that could hold up from an discriminatory outcome of any of these cases. Accordingly, Altria has not provided any amounts in its monetary statements for admonishing outcomes of pending litigations.For tobacco-related lawsuits that select been heady by stoppages, Altria include these items in its relief sheet because its liabilities on delineate of those disputes break already b een determined. For example, Altria has verbalise settlement payments it owes on method of accounting of the repress small town balance reached by PM ground forces with 46 states and another(prenominal) governments for health financial aid cost recuperation and other claims. REFERENCES 2007 one-year Report. Altria Group, Inc. http//www. altria. com/download/pdf/investors_AltriaGroupInc_2007_AnnualRpt. pdf