Condensed Consolidating Financial Information

12 Months Ended

Dec. 31, 2012

Condensed Consolidating Financial Information [Abstract]

Condensed Consolidating Financial Information

Condensed Consolidating Financial Information

PM USA, which is a wholly-owned subsidiary of Altria Group, Inc., has issued guarantees relating to Altria Group, Inc.'s obligations under its outstanding debt securities, borrowings under its Credit Agreement and amounts outstanding under its commercial paper program (the "Guarantees"). Pursuant to the Guarantees, PM USA fully and unconditionally guarantees, as primary obligor, the payment and performance of Altria Group, Inc.'s obligations under the guaranteed debt instruments (the "Obligations"), subject to release under certain customary circumstances as noted below.

The Guarantees provide that PM USA guarantees the punctual payment when due, whether at stated maturity, by acceleration or otherwise, of the Obligations. The liability of PM USA under the Guarantees is absolute and unconditional irrespective of: any lack of validity, enforceability or genuineness of any provision of any agreement or instrument relating thereto; any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to departure from any agreement or instrument relating thereto; any exchange, release or non-perfection of any collateral, or any release or amendment or waiver of or consent to departure from any other guarantee, for all or any of the Obligations; or any other circumstance that might otherwise constitute a defense available to, or a discharge of, Altria Group, Inc. or PM USA.

The obligations of PM USA under the Guarantees are limited to the maximum amount as will, after giving effect to such maximum amount and all other contingent and fixed liabilities of PM USA that are relevant under Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to the Guarantees, result in PM USA's obligations under the Guarantees not constituting a fraudulent transfer or conveyance. For this purpose, "Bankruptcy Law" means Title 11, U.S. Code, or any similar federal or state law for the relief of debtors.

PM USA will be unconditionally released and discharged from the Obligations upon the earliest to occur of:

▪the date, if any, on which PM USA consolidates with or merges into Altria Group, Inc. or any successor;

▪the date, if any, on which Altria Group, Inc. or any successor consolidates with or merges into PM USA;

▪the payment in full of the Obligations pertaining to such Guarantees; and

▪the rating of Altria Group, Inc.'s long-term senior unsecured debt by Standard & Poor's of A or higher.

At December 31, 2012, the respective principal wholly-owned subsidiaries of Altria Group, Inc. and PM USA were not limited by long-term debt or other agreements in their ability to pay cash dividends or make other distributions with respect to their common stock.

The following sets forth the condensed consolidating balance sheets as of December 31, 2012 and 2011, condensed consolidating statements of earnings and comprehensive earnings for the years ended December 31, 2012, 2011 and 2010, and condensed consolidating statements of cash flows for the years ended December 31, 2012, 2011 and 2010 for Altria Group, Inc., PM USA and Altria Group, Inc.'s other subsidiaries that are not guarantors of Altria Group, Inc.'s debt instruments (the "Non-Guarantor Subsidiaries"). The financial information is based on Altria Group, Inc.'s understanding of the Securities and Exchange Commission ("SEC") interpretation and application of Rule 3-10 of SEC Regulation S-X.

The financial information may not necessarily be indicative of results of operations or financial position had PM USA and the Non-Guarantor Subsidiaries operated as independent entities. Altria Group, Inc. and PM USA account for investments in their subsidiaries under the equity method of accounting.

Certain prior-period amounts have been recast to conform with the current-period presentation, due to Middleton becoming a wholly-owned subsidiary of PM USA effective January 1, 2012.

Beginning in the second quarter of 2012, Altria Group, Inc. revised the classification of cash dividends received from subsidiaries on its condensed consolidating statements of cash flows to present them as cash flows from operating activities. These amounts were previously classified as cash flows from financing activities. As other prior period financial information is presented, Altria Group, Inc. will similarly revise the condensed consolidating statements of cash flows in its future filings. The impact of this revision, which Altria Group, Inc. determined is not material to the related financial statements, is to increase cash inflows from operating activities (and decrease cash inflows from financing activities) for Altria Group, Inc. and PM USA as follows:

(in millions)	Altria Group, Inc.		PM USA
For the years ended:
December 31, 2011	$	3,666	$	213
December 31, 2010	$	3,438	$	179
For the three months ended:
March 31, 2012	$	923	$	59
March 31, 2011	$	890	$	26

This revision had no impact on Altria Group, Inc.'s consolidated statements of cash flows.

Condensed Consolidating Balance Sheets

(in millions of dollars)

____________________________

at December 31, 2012	Altria Group, Inc.		PM USA		Non- Guarantor Subsidiaries		Total Consolidating Adjustments			Consolidated
Assets
Consumer products
Cash and cash equivalents	$	2,862	$	—	$	38	$	—		$	2,900
Receivables	101		7		85		—			193
Inventories:
Leaf tobacco	—		512		364		—			876
Other raw materials	—		127		46		—			173
Work in process	—		3		346		—			349
Finished product	—		117		231		—			348
	—		759		987		—			1,746
Due from Altria Group, Inc. and subsidiaries	834		3,424		1,157		(5,415		)	—
Deferred income taxes	—		1,246		16		(46		)	1,216
Other current assets	—		193		175		(108		)	260
Total current assets	3,797		5,629		2,458		(5,569		)	6,315
Property, plant and equipment, at cost	2		3,253		1,495		—			4,750
Less accumulated depreciation	2		2,073		573		—			2,648
	—		1,180		922		—			2,102
Goodwill	—		—		5,174		—			5,174
Other intangible assets, net	—		2		12,076		—			12,078
Investment in SABMiller	6,637		—		—		—			6,637
Investment in consolidated subsidiaries	9,521		3,018		—		(12,539		)	—
Due from Altria Group, Inc. and subsidiaries	4,500		—		—		(4,500		)	—
Other assets	136		530		124		(365		)	425
Total consumer products assets	24,591		10,359		20,754		(22,973		)	32,731
Financial services
Finance assets, net	—		—		2,581		—			2,581
Due from Altria Group, Inc. and subsidiaries	—		—		14		(14		)	—
Other assets	—		—		17		—			17
Total financial services assets	—		—		2,612		(14		)	2,598
Total Assets	$	24,591	$	10,359	$	23,366	$	(22,987	)	$	35,329

Condensed Consolidating Balance Sheets (Continued)

(in millions of dollars)

____________________________

at December 31, 2012	Altria Group, Inc.			PM USA			Non- Guarantor Subsidiaries			Total Consolidating Adjustments			Consolidated
Liabilities
Consumer products
Current portion of long-term debt	$	1,459		$	—		$	—		$	—		$	1,459
Accounts payable	4			155			292			—			451
Accrued liabilities:
Marketing	—			526			42			—			568
Employment costs	27			10			147			—			184
Settlement charges	—			3,610			6			—			3,616
Other	469			506			264			(154		)	1,085
Dividends payable	888			—			—			—			888
Due to Altria Group, Inc. and subsidiaries	3,965			409			1,055			(5,429		)	—
Total current liabilities	6,812			5,216			1,806			(5,583		)	8,251
Long-term debt	12,120			—			299			—			12,419
Deferred income taxes	2,034			—			3,284			(365		)	4,953
Accrued pension costs	235			—			1,500			—			1,735
Accrued postretirement health care costs	—			1,759			745			—			2,504
Due to Altria Group, Inc. and subsidiaries	—			—			4,500			(4,500		)	—
Other liabilities	222			178			156			—			556
Total consumer products liabilities	21,423			7,153			12,290			(10,448		)	30,418
Financial services
Deferred income taxes	—			—			1,699			—			1,699
Other liabilities	—			—			8			—			8
Total financial services liabilities	—			—			1,707			—			1,707
Total liabilities	21,423			7,153			13,997			(10,448		)	32,125
Contingencies
Redeemable noncontrolling interest	—			—			34			—			34
Stockholders' Equity
Common stock	935			—			9			(9		)	935
Additional paid-in capital	5,688			3,321			10,272			(13,593		)	5,688
Earnings reinvested in the business	24,316			314			943			(1,257		)	24,316
Accumulated other comprehensive losses	(2,040		)	(429		)	(1,891		)	2,320			(2,040		)
Cost of repurchased stock	(25,731		)	—			—			—			(25,731		)
Total stockholders' equity attributable to Altria Group, Inc.	3,168			3,206			9,333			(12,539		)	3,168
Noncontrolling interests	—			—			2			—			2
Total stockholders' equity	3,168			3,206			9,335			(12,539		)	3,170
Total Liabilities and Stockholders' Equity	$	24,591		$	10,359		$	23,366		$	(22,987	)	$	35,329

Condensed Consolidating Balance Sheets

(in millions of dollars)

____________________________

at December 31, 2011	Altria Group, Inc.		PM USA		Non- Guarantor Subsidiaries		Total Consolidating Adjustments			Consolidated
Assets
Consumer products
Cash and cash equivalents	$	3,245	$	—	$	25	$	—		$	3,270
Receivables	174		16		78		—			268
Inventories:
Leaf tobacco	—		565		369		—			934
Other raw materials	—		128		42		—			170
Work in process	—		4		312		—			316
Finished product	—		126		233		—			359
	—		823		956		—			1,779
Due from Altria Group, Inc. and subsidiaries	403		3,007		1,765		(5,175		)	—
Deferred income taxes	9		1,157		41		—			1,207
Other current assets	6		224		242		(76		)	396
Total current assets	3,837		5,227		3,107		(5,251		)	6,920
Property, plant and equipment, at cost	2		3,280		1,446		—			4,728
Less accumulated depreciation	2		2,005		505		—			2,512
	—		1,275		941		—			2,216
Goodwill	—		—		5,174		—			5,174
Other intangible assets, net	—		2		12,096		—			12,098
Investment in SABMiller	5,509		—		—		—			5,509
Investment in consolidated subsidiaries	7,009		3,035		—		(10,044		)	—
Due from Altria Group, Inc. and subsidiaries	6,500		—		—		(6,500		)	—
Other assets	941		586		111		(381		)	1,257
Total consumer products assets	23,796		10,125		21,429		(22,176		)	33,174
Financial services
Finance assets, net	—		—		3,559		—			3,559
Due from Altria Group, Inc. and subsidiaries	—		—		292		(292		)	—
Other assets	—		—		18		—			18
Total financial services assets	—		—		3,869		(292		)	3,577
Total Assets	$	23,796	$	10,125	$	25,298	$	(22,468	)	$	36,751

Condensed Consolidating Balance Sheets (Continued)

(in millions of dollars)

____________________________

at December 31, 2011	Altria Group, Inc.			PM USA			Non- Guarantor Subsidiaries			Total Consolidating Adjustments			Consolidated
Liabilities
Consumer products
Current portion of long-term debt	$	—		$	—		$	600		$	—		$	600
Accounts payable	69			159			275			—			503
Accrued liabilities:
Marketing	—			390			40			—			430
Employment costs	29			12			184			—			225
Settlement charges	—			3,508			5			—			3,513
Other	384			623			389			(76		)	1,320
Dividends payable	841			—			—			—			841
Due to Altria Group, Inc. and subsidiaries	3,792			474			1,201			(5,467		)	—
Total current liabilities	5,115			5,166			2,694			(5,543		)	7,432
Long-term debt	12,790			—			299			—			13,089
Deferred income taxes	1,787			—			3,345			(381		)	4,751
Accrued pension costs	236			—			1,426			—			1,662
Accrued postretirement health care costs	—			1,562			797			—			2,359
Due to Altria Group, Inc. and subsidiaries	—			—			6,500			(6,500		)	—
Other liabilities	188			216			198			—			602
Total consumer products liabilities	20,116			6,944			15,259			(12,424		)	29,895
Financial services
Deferred income taxes	—			—			2,811			—			2,811
Other liabilities	—			—			330			—			330
Total financial services liabilities	—			—			3,141			—			3,141
Total liabilities	20,116			6,944			18,400			(12,424		)	33,036
Contingencies
Redeemable noncontrolling interest	—			—			32			—			32
Stockholders' Equity
Common stock	935			—			9			(9		)	935
Additional paid-in capital	5,674			3,283			8,238			(11,521		)	5,674
Earnings reinvested in the business	23,583			210			265			(475		)	23,583
Accumulated other comprehensive losses	(1,887		)	(312		)	(1,649		)	1,961			(1,887		)
Cost of repurchased stock	(24,625		)	—			—			—			(24,625		)
Total stockholders' equity attributable to Altria Group, Inc.	3,680			3,181			6,863			(10,044		)	3,680
Noncontrolling interests	—			—			3			—			3
Total stockholders' equity	3,680			3,181			6,866			(10,044		)	3,683
Total Liabilities and Stockholders' Equity	$	23,796		$	10,125		$	25,298		$	(22,468	)	$	36,751

Condensed Consolidating Statements of Earnings and Comprehensive Earnings

(in millions of dollars)

_____________________________

for the year ended December 31, 2012	Altria Group, Inc.			PM USA			Non- Guarantor Subsidiaries			Total Consolidating Adjustments			Consolidated
Net revenues	$	—		$	21,531		$	3,110		$	(23	)	$	24,618
Cost of sales	—			7,067			893			(23		)	7,937
Excise taxes on products	—			6,831			287			—			7,118
Gross profit	—			7,633			1,930			—			9,563
Marketing, administration and research costs	210			1,867			204			—			2,281
Changes to Mondelēz & PMI tax-related receivables	(52		)	—			—			—			(52		)
Asset impairment and exit costs	1			59			1			—			61
Amortization of intangibles	—			—			20			—			20
Operating (expense) income	(159		)	5,707			1,705			—			7,253
Interest and other debt expense (income), net	705			(3		)	424			—			1,126
Loss on early extinguishment of debt	874			—			—			—			874
Earnings from equity investment in SABMiller	(1,224		)	—			—			—			(1,224		)
(Loss) earnings before income taxes and equity earnings of subsidiaries	(514		)	5,710			1,281			—			6,477
(Benefit) provision for income taxes	(196		)	2,100			390			—			2,294
Equity earnings of subsidiaries	4,498			218			—			(4,716		)	—
Net earnings	4,180			3,828			891			(4,716		)	4,183
Net earnings attributable to noncontrolling interests	—			—			(3		)	—			(3		)
Net earnings attributable to Altria Group, Inc.	$	4,180		$	3,828		$	888		$	(4,716	)	$	4,180
Net earnings	$	4,180		$	3,828		$	891		$	(4,716	)	$	4,183
Other comprehensive losses, net of deferred income tax benefit	(153		)	(117		)	(242		)	359			(153		)
Comprehensive earnings	4,027			3,711			649			(4,357		)	4,030
Comprehensive earnings attributable to noncontrolling interests	—			—			(3		)	—			(3		)
Comprehensive earnings attributable to Altria Group, Inc.	$	4,027		$	3,711		$	646		$	(4,357	)	$	4,027

Condensed Consolidating Statements of Earnings and Comprehensive Earnings

(in millions of dollars)

_____________________________

for the year ended December 31, 2011	Altria Group, Inc.			PM USA			Non- Guarantor Subsidiaries			Total Consolidating Adjustments			Consolidated
Net revenues	$	—		$	21,330		$	2,496		$	(26	)	$	23,800
Cost of sales	—			6,883			823			(26		)	7,680
Excise taxes on products	—			6,846			335			—			7,181
Gross profit	—			7,601			1,338			—			8,939
Marketing, administration and research costs	186			2,164			293			—			2,643
Changes to Mondelēz and PMI tax-related receivables	(14		)	—			—			—			(14		)
Asset impairment and exit costs	8			200			14			—			222
Amortization of intangibles	—			—			20			—			20
Operating (expense) income	(180		)	5,237			1,011			—			6,068
Interest and other debt expense, net	698			61			457			—			1,216
Earnings from equity investment in SABMiller	(730		)	—			—			—			(730		)
(Loss) earnings before income taxes and equity earnings of subsidiaries	(148		)	5,176			554			—			5,582
(Benefit) provision for income taxes	(199		)	1,930			458			—			2,189
Equity earnings of subsidiaries	3,339			153			—			(3,492		)	—
Net earnings	3,390			3,399			96			(3,492		)	3,393
Net earnings attributable to noncontrolling interests	—			—			(3		)	—			(3		)
Net earnings attributable to Altria Group, Inc.	$	3,390		$	3,399		$	93		$	(3,492	)	$	3,390
Net earnings	$	3,390		$	3,399		$	96		$	(3,492	)	$	3,393
Other comprehensive losses, net of deferred income tax benefit	(403		)	(36		)	(209		)	245			(403		)
Comprehensive earnings (losses)	2,987			3,363			(113		)	(3,247		)	2,990
Comprehensive earnings attributable to noncontrolling interests	—			—			(3		)	—			(3		)
Comprehensive earnings attributable to Altria Group, Inc.	$	2,987		$	3,363		$	(116	)	$	(3,247	)	$	2,987

Condensed Consolidating Statements of Earnings and Comprehensive Earnings

(in millions of dollars)

_____________________________

for the year ended December 31, 2010	Altria Group, Inc.			PM USA		Non- Guarantor Subsidiaries			Total Consolidating Adjustments			Consolidated
Net revenues	$	—		$	21,580	$	2,809		$	(26	)	$	24,363
Cost of sales	—			6,990		740			(26		)	7,704
Excise taxes on products	—			7,136		335			—			7,471
Gross profit	—			7,454		1,734			—			9,188
Marketing, administration and research costs	147			2,280		308			—			2,735
Changes to Mondelēz and PMI tax-related receivables	169			—		—			—			169
Asset impairment and exit costs	—			24		12			—			36
Amortization of intangibles	—			—		20			—			20
Operating (expense) income	(316		)	5,150		1,394			—			6,228
Interest and other debt expense, net	549			2		582			—			1,133
Earnings from equity investment in SABMiller	(628		)	—		—			—			(628		)
(Loss) earnings before income taxes and equity earnings of subsidiaries	(237		)	5,148		812			—			5,723
(Benefit) provision for income taxes	(329		)	1,864		281			—			1,816
Equity earnings of subsidiaries	3,813			143		—			(3,956		)	—
Net earnings	3,905			3,427		531			(3,956		)	3,907
Net earnings attributable to noncontrolling interests	—			—		(2		)	—			(2		)
Net earnings attributable to Altria Group, Inc.	$	3,905		$	3,427	$	529		$	(3,956	)	$	3,905
Net earnings	$	3,905		$	3,427	$	531		$	(3,956	)	$	3,907
Other comprehensive earnings, net of deferred income taxes	77			15		25			(40		)	77
Comprehensive earnings	3,982			3,442		556			(3,996		)	3,984
Comprehensive earnings attributable to noncontrolling interests	—			—		(2		)	—			(2		)
Comprehensive earnings attributable to Altria Group, Inc.	$	3,982		$	3,442	$	554		$	(3,996	)	$	3,982

Condensed Consolidating Statements of Cash Flows

(in millions of dollars)

_____________________________

for the year ended December 31, 2012	Altria Group, Inc.			PM USA			Non- Guarantor Subsidiaries			Total Consolidating Adjustments			Consolidated
Cash Provided by Operating Activities
Net cash provided by operating activities	$	3,059		$	4,206		$	565		$	(3,927	)	$	3,903
Cash Provided by (Used in) Investing Activities
Consumer products
Capital expenditures	—			(35		)	(89		)	—			(124		)
Other	—			—			(5		)	—			(5		)
Financial services
Proceeds from finance assets	—			—			1,049			—			1,049
Net cash (used in) provided by investing activities	—			(35		)	955			—			920
Cash Provided by (Used in) Financing Activities
Consumer products
Long-term debt issued	2,787			—			—			—			2,787
Long-term debt repaid	(2,000		)	—			(600		)	—			(2,600		)
Repurchases of common stock	(1,082		)	—			—			—			(1,082		)
Dividends paid on common stock	(3,400		)	—			—			—			(3,400		)
Changes in amounts due to/from Altria Group, Inc. and subsidiaries	1,128			(475		)	(653		)	—			—
Financing fees and debt issuance costs	(22		)	—			—			—			(22		)
Tender premiums and fees related to early extinguishment  of debt	(864		)	—			—			—			(864		)
Cash dividends paid to parent	—			(3,690		)	(237		)	3,927			—
Other	11			(6		)	(17		)	—			(12		)
Net cash used in financing activities	(3,442		)	(4,171		)	(1,507		)	3,927			(5,193		)
Cash and cash equivalents:
(Decrease) increase	(383		)	—			13			—			(370		)
Balance at beginning of year	3,245			—			25			—			3,270
Balance at end of year	$	2,862		$	—		$	38		$	—		$	2,900

Condensed Consolidating Statements of Cash Flows

(in millions of dollars)

_____________________________

for the year ended December 31, 2011	Altria Group, Inc.			PM USA			Non- Guarantor Subsidiaries			Total Consolidating Adjustments			Consolidated
Cash Provided by Operating Activities
Net cash provided by operating activities	$	3,515		$	3,775		$	202		$	(3,879	)	$	3,613
Cash Provided by (Used in) Investing Activities
Consumer products
Capital expenditures	—			(26		)	(79		)	—			(105		)
Other	—			1			1			—			2
Financial services
Proceeds from finance assets	—			—			490			—			490
Net cash (used in) provided by investing activities	—			(25		)	412			—			387
Cash Provided by (Used in) Financing Activities
Consumer products
Long-term debt issued	1,494			—			—			—			1,494
Repurchases of stock	(1,327		)	—			—			—			(1,327		)
Dividends paid on common stock	(3,222		)	—			—			—			(3,222		)
Issuances of common stock	29			—			—			—			29
Changes in amounts due to/from Altria Group, Inc. and subsidiaries	441			(28		)	(413		)	—			—
Financing fees and debt issuance costs	(24		)	—			—			—			(24		)
Cash dividends paid to parent	—			(3,666		)	(213		)	3,879			—
Other	41			(56		)	21			—			6
Net cash used in financing activities	(2,568		)	(3,750		)	(605		)	3,879			(3,044		)
Cash and cash equivalents:
Increase	947			—			9			—			956
Balance at beginning of year	2,298			—			16			—			2,314
Balance at end of year	$	3,245		$	—		$	25		$	—		$	3,270

Condensed Consolidating Statements of Cash Flows

(in millions of dollars)

_____________________________

for the year ended December 31, 2010	Altria Group, Inc.			PM USA			Non- Guarantor Subsidiaries			Total Consolidating Adjustments			Consolidated
Cash Provided by Operating Activities
Net cash provided by operating activities	$	2,726		$	3,172		$	486		$	(3,617	)	$	2,767
Cash Provided by (Used in) Investing Activities
Consumer products
Capital expenditures	—			(54		)	(114		)	—			(168		)
Other	—			3			112			—			115
Financial services
Proceeds from finance assets	—			—			312			—			312
Net cash (used in) provided by investing activities	—			(51		)	310			—			259
Cash Provided by (Used in) Financing Activities
Consumer products
Long-term debt issued	1,007			—			—			—			1,007
Long-term debt repaid	(775		)	—			—			—			(775		)
Dividends paid on common stock	(2,958		)	—			—			—			(2,958		)
Issuances of common stock	104			—			—			—			104
Changes in amounts due to/from Altria Group, Inc. and subsidiaries	279			325			(604		)	—			—
Financing fees and debt insurance costs	(6		)	—			—			—			(6		)
Cash dividends paid to parent	—			(3,438		)	(179		)	3,617			—
Other	59			(8		)	(6		)	—			45
Net cash used in financing activities	(2,290		)	(3,121		)	(789		)	3,617			(2,583		)
Cash and cash equivalents:
Increase	436			—			7			—			443
Balance at beginning of year	1,862			—			9			—			1,871
Balance at end of year	$	2,298		$	—		$	16		$	—		$	2,314