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Condensed Consolidating Financial Information
3 Months Ended
Mar. 31, 2014
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Condensed Consolidating Financial Information
Condensed Consolidating Financial Information:

PM USA, which is a wholly-owned subsidiary of Altria Group, Inc., has guaranteed Altria Group, Inc.’s obligations under its outstanding debt securities, borrowings under the 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 March 31, 2014, 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 March 31, 2014 and December 31, 2013, condensed consolidating statements of earnings and comprehensive earnings for the three months ended March 31, 2014 and 2013, and condensed consolidating statements of cash flows for the three months ended March 31, 2014 and 2013 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.


Condensed Consolidating Balance Sheets
March 31, 2014
(in millions of dollars)
 
 
 
Altria
Group, Inc.
 
PM USA
 
Non-
Guarantor
Subsidiaries
 
Total
Consolidating
Adjustments
 
Consolidated
Assets
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
3,579

 
$
1

 
$
40

 
$
—

 
$
3,620

Receivables
 
—

 
11

 
102

 
—

 
113

Inventories:
 
 
 
 
 
 
 
 
 
 
Leaf tobacco
 
—

 
600

 
376

 
—

 
976

Other raw materials
 
—

 
124

 
64

 
—

 
188

Work in process
 
—

 
9

 
370

 
—

 
379

Finished product
 
—

 
186

 
241

 
—

 
427

 
 
—

 
919

 
1,051

 
—

 
1,970

Due from Altria Group, Inc. and subsidiaries
 
735

 
4,628

 
1,844

 
(7,207
)
 
—

Deferred income taxes
 
2

 
1,133

 
26

 
(61
)
 
1,100

Other current assets
 
244

 
76

 
93

 
(239
)
 
174

Total current assets
 
4,560

 
6,768

 
3,156

 
(7,507
)
 
6,977

Property, plant and equipment, at cost
 
2

 
3,265

 
1,561

 
—

 
4,828

Less accumulated depreciation
 
2

 
2,188

 
635

 
—

 
2,825

 
 
—

 
1,077

 
926

 
—

 
2,003

Goodwill
 
—

 
—

 
5,174

 
—

 
5,174

Other intangible assets, net
 
—

 
2

 
12,051

 
—

 
12,053

Investment in SABMiller
 
6,734

 
—

 
—

 
—

 
6,734

Investment in consolidated subsidiaries
 
11,259

 
2,993

 
—

 
(14,252
)
 
—

Finance assets, net
 
—

 
—

 
1,874

 
—

 
1,874

Due from Altria Group, Inc. and subsidiaries
 
4,790

 
—

 
—

 
(4,790
)
 
—

Other assets
 
156

 
463

 
244

 
(272
)
 
591

Total Assets
 
$
27,499

 
$
11,303

 
$
23,425

 
$
(26,821
)
 
$
35,406





 
 


Condensed Consolidating Balance Sheets (Continued)
March 31, 2014
(in millions of dollars)
 
 
 
Altria
Group, Inc.
 
PM USA
 
Non-
Guarantor
Subsidiaries
 
Total
Consolidating
Adjustments
 
Consolidated
Liabilities
 
 
 
 
 
 
 
 
 
 
Accounts payable
 
$
26

 
$
146

 
$
149

 
$
—

 
$
321

Accrued liabilities:
 
 
 
 
 
 
 
 
 

Marketing
 
—

 
418

 
25

 
—

 
443

Employment costs
 
11

 
9

 
45

 
—

 
65

Settlement charges
 
—

 
4,303

 
7

 
—

 
4,310

Other
 
333

 
476

 
222

 
(61
)
 
970

Income taxes
 
—

 
559

 
198

 
(239
)
 
518

Dividends payable
 
957

 
—

 
—

 
—

 
957

Due to Altria Group, Inc. and subsidiaries
 
6,016

 
457

 
734

 
(7,207
)
 
—

Total current liabilities
 
7,343

 
6,368

 
1,380

 
(7,507
)
 
7,584

Long-term debt
 
13,692

 
—

 
300

 
—

 
13,992

Deferred income taxes
 
1,999

 
—

 
5,181

 
(272
)
 
6,908

Accrued pension costs
 
197

 
—

 
16

 
—

 
213

Accrued postretirement health care costs
 
—

 
1,425

 
731

 
—

 
2,156

Due to Altria Group, Inc. and subsidiaries
 
—

 
—

 
4,790

 
(4,790
)
 
—

Other liabilities
 
153

 
129

 
124

 
—

 
406

Total liabilities
 
23,384

 
7,922

 
12,522

 
(12,569
)
 
31,259

Contingencies
 


 


 


 


 


Redeemable noncontrolling interest
 
—

 
—

 
34

 
—

 
34

Stockholders’ Equity
 
 
 
 
 
 
 
 
 
 
Common stock
 
935

 
—

 
9

 
(9
)
 
935

Additional paid-in capital
 
5,678

 
3,310

 
10,568

 
(13,878
)
 
5,678

Earnings reinvested in the business
 
25,388

 
300

 
1,253

 
(1,553
)
 
25,388

Accumulated other comprehensive losses
 
(1,318
)
 
(229
)
 
(959
)
 
1,188

 
(1,318
)
Cost of repurchased stock
 
(26,568
)
 
—

 
—

 
—

 
(26,568
)
Total stockholders’ equity attributable to Altria Group, Inc.
 
4,115

 
3,381

 
10,871

 
(14,252
)
 
4,115

Noncontrolling interests
 
—

 
—

 
(2
)
 
—

 
(2
)
Total stockholders’ equity
 
4,115

 
3,381

 
10,869

 
(14,252
)
 
4,113

Total Liabilities and Stockholders’ Equity
 
$
27,499

 
$
11,303

 
$
23,425

 
$
(26,821
)
 
$
35,406


Condensed Consolidating Balance Sheets
December 31, 2013
(in millions of dollars)
 
 
 
Altria
Group, Inc.
 
PM USA
 
Non-
Guarantor
Subsidiaries
 
Total
Consolidating
Adjustments
 
Consolidated
Assets
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
3,114

 
$
1

 
$
60

 
$
—

 
$
3,175

Receivables
 
—

 
11

 
104

 
—

 
115

Inventories:
 
 
 
 
 
 
 
 
 
 
Leaf tobacco
 
—

 
564

 
369

 
—

 
933

Other raw materials
 
—

 
121

 
59

 
—

 
180

Work in process
 
—

 
3

 
391

 
—

 
394

Finished product
 
—

 
141

 
231

 
—

 
372

 
 
—

 
829

 
1,050

 
—

 
1,879

Due from Altria Group, Inc. and subsidiaries
 
590

 
3,253

 
1,706

 
(5,549
)
 
—

Deferred income taxes
 
2

 
1,133

 
26

 
(61
)
 
1,100

Other current assets
 
109

 
125

 
105

 
(18
)
 
321

Total current assets
 
3,815

 
5,352

 
3,051

 
(5,628
)
 
6,590

Property, plant and equipment, at cost
 
2

 
3,269

 
1,546

 
—

 
4,817

Less accumulated depreciation
 
2

 
2,168

 
619

 
—

 
2,789

 
 
—

 
1,101

 
927

 
—

 
2,028

Goodwill
 
—

 
—

 
5,174

 
—

 
5,174

Other intangible assets, net
 
—

 
2

 
12,056

 
—

 
12,058

Investment in SABMiller
 
6,455

 
—

 
—

 
—

 
6,455

Investment in consolidated subsidiaries
 
11,227

 
2,988

 
—

 
(14,215
)
 
—

Finance assets, net
 
—

 
—

 
1,997

 
—

 
1,997

Due from Altria Group, Inc. and subsidiaries
 
4,790

 
—

 
—

 
(4,790
)
 
—

Other assets
 
157

 
455

 
218

 
(273
)
 
557

Total Assets
 
$
26,444

 
$
9,898

 
$
23,423

 
$
(24,906
)
 
$
34,859





Condensed Consolidating Balance Sheets (Continued)
December 31, 2013
(in millions of dollars)
 
 
 
Altria
Group, Inc.
 
PM USA
 
Non-
Guarantor
Subsidiaries
 
Total
Consolidating
Adjustments
 
Consolidated
Liabilities
 
 
 
 
 
 
 
 
 
 
Current portion of long-term debt
 
$
525

 
$
—

 
$
—

 
$
—

 
$
525

Accounts payable
 
26

 
106

 
277

 
—

 
409

Accrued liabilities:
 
 
 
 
 
 
 
 
 

Marketing
 
—

 
464

 
48

 
—

 
512

Employment costs
 
94

 
10

 
151

 
—

 
255

Settlement charges
 
—

 
3,386

 
5

 
—

 
3,391

Other
 
302

 
531

 
253

 
(79
)
 
1,007

Dividends payable
 
959

 
—

 
—

 
—

 
959

Due to Altria Group, Inc. and subsidiaries
 
4,487

 
473

 
589

 
(5,549
)
 
—

Total current liabilities
 
6,393

 
4,970

 
1,323

 
(5,628
)
 
7,058

Long-term debt
 
13,692

 
—

 
300

 
—

 
13,992

Deferred income taxes
 
1,867

 
—

 
5,260

 
(273
)
 
6,854

Accrued pension costs
 
197

 
—

 
15

 
—

 
212

Accrued postretirement health care costs
 
—

 
1,437

 
718

 
—

 
2,155

Due to Altria Group, Inc. and subsidiaries
 
—

 
—

 
4,790

 
(4,790
)
 
—

Other liabilities
 
176

 
130

 
129

 
—

 
435

Total liabilities
 
22,325

 
6,537

 
12,535

 
(10,691
)
 
30,706

Contingencies
 


 


 


 


 


Redeemable noncontrolling interest
 
—

 
—

 
35

 
—

 
35

Stockholders’ Equity
 
 
 
 
 
 
 
 
 
 
Common stock
 
935

 
—

 
9

 
(9
)
 
935

Additional paid-in capital
 
5,714

 
3,310

 
10,328

 
(13,638
)
 
5,714

Earnings reinvested in the business
 
25,168

 
282

 
1,498

 
(1,780
)
 
25,168

Accumulated other comprehensive losses
 
(1,378
)
 
(231
)
 
(981
)
 
1,212

 
(1,378
)
Cost of repurchased stock
 
(26,320
)
 
—

 
—

 
—

 
(26,320
)
Total stockholders’ equity attributable to Altria Group, Inc.
 
4,119

 
3,361

 
10,854

 
(14,215
)
 
4,119

Noncontrolling interests
 
—

 
—

 
(1
)
 
—

 
(1
)
Total stockholders’ equity
 
4,119

 
3,361

 
10,853

 
(14,215
)
 
4,118

Total Liabilities and Stockholders’ Equity
 
$
26,444

 
$
9,898

 
$
23,423

 
$
(24,906
)
 
$
34,859



Condensed Consolidating Statements of Earnings and Comprehensive Earnings
For the Three Months Ended March 31, 2014
(in millions of dollars)

 
 
Altria
Group, Inc.
 
PM USA
 
Non-
Guarantor
Subsidiaries
 
Total
Consolidating
Adjustments
 
Consolidated
Net revenues
 
$
—

 
$
4,818

 
$
703

 
$
(4
)
 
$
5,517

Cost of sales
 
—

 
1,541

 
215

 
(4
)
 
1,752

Excise taxes on products
 
—

 
1,460

 
49

 
—

 
1,509

Gross profit
 
—

 
1,817

 
439

 
—

 
2,256

Marketing, administration and research costs
 
39

 
402

 
79

 
—

 
520

Asset impairment and exit costs
 
—

 
2

 
—

 
—

 
2

Operating (expense) income
 
(39
)
 
1,413

 
360

 
—

 
1,734

Interest and other debt expense (income), net
 
156

 
(64
)
 
61

 
—

 
153

Earnings from equity investment in SABMiller
 
(225
)
 
—

 
—

 
—

 
(225
)
Earnings before income taxes and equity earnings of subsidiaries
 
30

 
1,477

 
299

 
—

 
1,806

(Benefit) provision for income taxes
 
(23
)
 
547

 
107

 
—

 
631

Equity earnings of subsidiaries
 
1,122

 
53

 
—

 
(1,175
)
 
—

Net earnings
 
1,175

 
983

 
192

 
(1,175
)
 
1,175

Net earnings attributable to noncontrolling interests
 
—

 
—

 
—

 
—

 
—

Net earnings attributable to Altria Group, Inc.
 
$
1,175

 
$
983

 
$
192

 
$
(1,175
)
 
$
1,175

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings
 
$
1,175

 
$
983

 
$
192

 
$
(1,175
)
 
$
1,175

Other comprehensive earnings, net of deferred income taxes
 
60

 
2

 
22

 
(24
)
 
60

Comprehensive earnings
 
1,235

 
985

 
214

 
(1,199
)
 
1,235

Comprehensive earnings attributable to noncontrolling interests
 
—

 
—

 
—

 
—

 
—

Comprehensive earnings attributable to
Altria Group, Inc.
 
$
1,235

 
$
985

 
$
214

 
$
(1,199
)
 
$
1,235


Condensed Consolidating Statements of Earnings and Comprehensive Earnings
For the Three Months Ended March 31, 2013
(in millions of dollars)

 
 
Altria
Group, Inc.
 
PM USA
 
Non-
Guarantor
Subsidiaries
 
Total
Consolidating
Adjustments
 
Consolidated
Net revenues
 
$
—

 
$
4,822

 
$
711

 
$
(5
)
 
$
5,528

Cost of sales
 
—

 
1,099

 
205

 
(5
)
 
1,299

Excise taxes on products
 
—

 
1,495

 
60

 
—

 
1,555

Gross profit
 
—

 
2,228

 
446

 
—

 
2,674

Marketing, administration and research costs
 
46

 
419

 
57

 
—

 
522

Operating (expense) income
 
(46
)
 
1,809

 
389

 
—

 
2,152

Interest and other debt expense, net
 
161

 
—

 
100

 
—

 
261

Earnings from equity investment in SABMiller
 
(256
)
 
—

 
—

 
—

 
(256
)
Earnings before income taxes and equity earnings of subsidiaries
 
49

 
1,809

 
289

 
—

 
2,147

(Benefit) provision for income taxes
 
(9
)
 
667

 
104

 
—

 
762

Equity earnings of subsidiaries
 
1,327

 
44

 
—

 
(1,371
)
 
—

Net earnings
 
1,385

 
1,186

 
185

 
(1,371
)
 
1,385

Net earnings attributable to noncontrolling interests
 
—

 
—

 
—

 
—

 
—

Net earnings attributable to Altria Group, Inc.
 
$
1,385

 
$
1,186

 
$
185

 
$
(1,371
)
 
$
1,385

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings
 
$
1,385

 
$
1,186

 
$
185

 
$
(1,371
)
 
$
1,385

Other comprehensive (losses) earnings, net of deferred income taxes
 
(28
)
 
8

 
59

 
(67
)
 
(28
)
Comprehensive earnings
 
1,357

 
1,194

 
244

 
(1,438
)
 
1,357

Comprehensive earnings attributable to noncontrolling interests
 
—

 
—

 
—

 
—

 
—

Comprehensive earnings attributable to
Altria Group, Inc.
 
$
1,357

 
$
1,194

 
$
244

 
$
(1,438
)
 
$
1,357




 




 
Condensed Consolidating Statements of Cash Flows
For the Three Months Ended March 31, 2014
(in millions of dollars)
 
 
 
Altria
Group, Inc.
 
PM USA
 
Non-
Guarantor
Subsidiaries
 
Total
Consolidating
Adjustments
 
Consolidated
Cash Provided by Operating Activities
 
 
 
 
 
 
 
 
 
 
Net cash provided by operating activities
 
$
1,076

 
$
2,360

 
$
91

 
$
(1,402
)
 
$
2,125

Cash Provided by (Used in) Investing Activities
 
 
 
 
 
 
 
 
 
 
Capital expenditures
 
—

 
(8
)
 
(19
)
 
—

 
(27
)
Proceeds from finance assets
 
—

 
—

 
98

 
—

 
98

Other
 
—

 
4

 
1

 
—

 
5

Net cash (used in) provided by investing activities
 
—

 
(4
)
 
80

 
—

 
76

Cash Provided by (Used in) Financing Activities
 
 
 
 
 
 
 
 
 
 
Long-term debt repaid
 
(525
)
 
—

 
—

 
—

 
(525
)
Repurchases of common stock
 
(272
)
 
—

 
—

 
—

 
(272
)
Dividends paid on common stock
 
(957
)
 
—

 
—

 
—

 
(957
)
Changes in amounts due to/from Altria Group, Inc. and subsidiaries
 
1,143

 
(1,391
)
 
248

 
—

 
—

Cash dividends paid to parent
 
—

 
(965
)
 
(437
)
 
1,402

 
—

Other
 
—

 
—

 
(2
)
 
—

 
(2
)
Net cash used in financing activities
 
(611
)
 
(2,356
)
 
(191
)
 
1,402

 
(1,756
)
Cash and cash equivalents:
 
 
 
 
 
 
 
 
 
 
Increase (decrease)
 
465

 
—

 
(20
)
 
—

 
445

Balance at beginning of period
 
3,114

 
1

 
60

 
—

 
3,175

Balance at end of period
 
$
3,579

 
$
1

 
$
40

 
$
—

 
$
3,620



 



Condensed Consolidating Statements of Cash Flows
For the Three Months Ended March 31, 2013
(in millions of dollars)

 
 
Altria
Group, Inc.
 
PM USA
 
Non-
Guarantor
Subsidiaries
 
Total
Consolidating
Adjustments
 
Consolidated
Cash Provided by (Used in) Operating Activities
 
 
 
 
 
 
 
 
 
 
Net cash provided by (used in) operating activities
 
$
899

 
$
2,301

 
$
(222
)
 
$
(1,314
)
 
$
1,664

Cash Provided by (Used in) Investing Activities
 
 
 
 
 
 
 
 
 
 
Capital expenditures
 
—

 
(4
)
 
(11
)
 
—

 
(15
)
Proceeds from finance assets
 
—

 
—

 
203

 
—

 
203

Net cash (used in) provided by investing activities
 
—

 
(4
)
 
192

 
—

 
188

Cash Provided by (Used in) Financing Activities
 
 
 
 
 
 
 
 
 
 
Repurchases of common stock
 
(91
)
 
—

 
—

 
—

 
(91
)
Dividends paid on common stock
 
(886
)
 
—

 
—

 
—

 
(886
)
Changes in amounts due to/from Altria Group, Inc. and subsidiaries
 
961

 
(1,052
)
 
91

 
—

 
—

Cash dividends paid to parent
 
—

 
(1,245
)
 
(69
)
 
1,314

 
—

Net cash (used in) provided by financing activities
 
(16
)
 
(2,297
)
 
22

 
1,314

 
(977
)
Cash and cash equivalents:
 
 
 
 
 
 
 
 
 
 
Increase (decrease)
 
883

 
—

 
(8
)
 
—

 
875

Balance at beginning of period
 
2,862

 
—

 
38

 
—

 
2,900

Balance at end of period
 
$
3,745

 
$
—

 
$
30

 
$
—

 
$
3,775