Philip Morris USA's global sister company will officially break off on its own in late March. But the Henrico County-based cigarette maker is already seeing some impact from the pending separation.

About 30 billion cigarettes once manufactured by Philip Morris USA already are being made offshore as Altria Group Inc., its New York-based parent company, prepares to spin off its international cigarette subsidiary, Philip Morris International, into a separate, publicly traded company.

Altria's board of directors voted yesterday to authorize the split for March 28, separating the growing international business from its smaller domestic unit, Philip Morris USA, which employs nearly 6,000 people in the Richmond area.

The spinoff means changes for Philip Morris USA, the nation's largest cigarette company, including consolidating its U.S. manufacturing in Richmond and new leadership on the parent company's board of directors.

Although it will continue to produce billions of cigarettes in Richmond for the domestic market, production of some 57 billion cigarettes to supply international markets will move overseas.

While Philip Morris International shipped about 850 billion cigarettes in 2007, a 2.2 percent increase over the previous year, Philip Morris USA shipped about 175 billion cigarettes, down about 3.6 percent from 2006.

Altria Group plans to move its corporate offices from New York to Richmond in the "near term" after the spinoff of its international cigarette unit on March 28, a corporate spokeswoman said yesterday.

The "vast majority" of Altria's employees in New York are not relocating and will leave the company, she said.

The company will see some changes on its board of directors, as well. Altria announced yesterday that four new directors will be appointed, including Thomas F. Farrell II, chairman, president and chief executive officer of Dominion Resources Inc., and former Virginia Gov. Gerald L. Baliles, director of the Miller Center of Public Affairs at the University of Virginia.

"The company will continue to play a vital role in Virginia's economy going forward, and if I can be helpful to the company in thinking about its strategic direction, I'd be pleased to give it my best judgment," Baliles said yesterday. Farrell could not be reached for comment.

Other new directors are Dinyar S. Devitre, who will step down as chief financial officer of Altria; and Michael E. Szymanczyk, the current chief executive of Philip Morris USA, who will serve as board chairman and Altria CEO

For Philip Morris International, the spinoff opens the doors to more aggressively pursue sales in international markets, free of regulatory and lawsuit risks that have plagued the industry in the U.S.

Tobacco-control groups fear that Philip Morris International's global push will mean higher smoking rates in developing countries.

"It is a dangerous situation, from our perspective," said Kathy Mulvey, international policy director for Corporate Accountability International, a corporate watchdog group. "They are a far-ranging and powerful global corporation, and having them not subject to U.S. litigation or regulation is a big shift."

The restructuring also means Altria Group's annual shareholders' meeting will return to Richmond for the first time since 2003. In 2004, Altria moved the annual meeting to a Kraft Foods Inc. site in East Hanover, N.J.

Altria said yesterday it has scheduled the meeting for May 28 in Richmond, but it did not say where.

Altria shares rose $0.38 to close at $76.50.
Contact John Reid Blackwell at (804) 775-8123 or jblackwell@timesdispatch.com.