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Condensed Consolidating Financial Information
3 Months Ended
Mar. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Condensed Consolidating Financial Information
Condensed Consolidating Financial Information:

PM USA, which is a 100% owned subsidiary of Altria Group, Inc., has guaranteed 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 not result in PM USA’s obligations under the Guarantees constituting a fraudulent transfer or conveyance, 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. 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, 2016, the respective principal 100% 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 equity interests.
The following sets forth the condensed consolidating balance sheets as of March 31, 2016 and December 31, 2015, condensed consolidating statements of earnings and comprehensive earnings for the three months ended March 31, 2016 and 2015, and condensed consolidating statements of cash flows for the three months ended March 31, 2016 and 2015 for Altria Group, Inc., PM USA and, collectively, 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, 2016
(in millions of dollars)
 
 
 
Altria
Group, Inc.

 
PM USA

 
Non-
Guarantor
Subsidiaries

 
Total
Consolidating
Adjustments

 
Consolidated

Assets
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
3,749

 
$
—

 
$
66

 
$
—

 
$
3,815

Receivables
 
—

 
6

 
98

 
—

 
104

Inventories:
 
 
 
 
 
 
 
 
 
 
Leaf tobacco
 
—

 
594

 
400

 
—

 
994

Other raw materials
 
—

 
118

 
60

 
—

 
178

Work in process
 
—

 
8

 
428

 
—

 
436

Finished product
 
—

 
157

 
343

 
—

 
500

 
 
—

 
877

 
1,231

 
—

 
2,108

Due from Altria Group, Inc. and subsidiaries
 
16

 
5,129

 
1,820

 
(6,965
)
 
—

Deferred income taxes
 
—

 
1,268

 
7

 
(100
)
 
1,175

Other current assets
 
301

 
21

 
80

 
(106
)
 
296

Total current assets
 
4,066

 
7,301

 
3,302

 
(7,171
)
 
7,498

Property, plant and equipment, at cost
 
—

 
3,069

 
1,780

 
—

 
4,849

Less accumulated depreciation
 
—

 
2,141

 
753

 
—

 
2,894

 
 
—

 
928

 
1,027

 
—

 
1,955

Goodwill
 
—

 
—

 
5,285

 
—

 
5,285

Other intangible assets, net
 
—

 
2

 
12,021

 
—

 
12,023

Investment in SABMiller
 
5,743

 
—

 
—

 
—

 
5,743

Investment in consolidated subsidiaries
 
11,131

 
2,709

 
—

 
(13,840
)
 
—

Finance assets, net
 
—

 
—

 
1,165

 
—

 
1,165

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

 
—

 
—

 
(4,790
)
 
—

Other assets
 
19

 
571

 
141

 
(337
)
 
394

Total Assets
 
$
25,749

 
$
11,511

 
$
22,941

 
$
(26,138
)
 
$
34,063




Condensed Consolidating Balance Sheets (Continued)
March 31, 2016
(in millions of dollars)
 
 
 
Altria
Group, Inc.

 
PM USA

 
Non-
Guarantor
Subsidiaries

 
Total
Consolidating
Adjustments

 
Consolidated

Liabilities
 
 
 
 
 
 
 
 
 
 
Current portion of long-term debt
 
$
—

 
$
—

 
$
4

 
$
—

 
$
4

Accounts payable
 
—

 
107

 
101

 
—

 
208

Accrued liabilities:
 
 
 
 
 
 
 
 
 
 
Marketing
 
—

 
578

 
109

 
—

 
687

Employment costs
 
66

 
5

 
66

 
—

 
137

Settlement charges
 
—

 
4,753

 
7

 
—

 
4,760

Other
 
323

 
569

 
329

 
(100
)
 
1,121

Income taxes
 
—

 
522

 
174

 
(106
)
 
590

Dividends payable
 
1,109

 
—

 
—

 
—

 
1,109

Due to Altria Group, Inc. and subsidiaries
 
6,720

 
220

 
25

 
(6,965
)
 
—

Total current liabilities
 
8,218

 
6,754

 
815

 
(7,171
)
 
8,616

Long-term debt
 
12,834

 
—

 
12

 
—

 
12,846

Deferred income taxes
 
1,638

 
—

 
4,305

 
(337
)
 
5,606

Accrued pension costs
 
204

 
—

 
1,275

 
—

 
1,479

Accrued postretirement health care costs
 
—

 
1,483

 
831

 
—

 
2,314

Due to Altria Group, Inc. and subsidiaries
 
—

 
—

 
4,790

 
(4,790
)
 
—

Other liabilities
 
110

 
130

 
177

 
—

 
417

Total liabilities
 
23,004

 
8,367

 
12,205

 
(12,298
)
 
31,278

Contingencies
 


 


 


 


 


Redeemable noncontrolling interest
 
—

 
—

 
37

 
—

 
37

Stockholders’ Equity
 
 
 
 
 
 
 
 
 
 
Common stock
 
935

 
—

 
9

 
(9
)
 
935

Additional paid-in capital
 
5,818

 
3,310

 
11,446

 
(14,756
)
 
5,818

Earnings reinvested in the business
 
27,367

 
106

 
1,089

 
(1,195
)
 
27,367

Accumulated other comprehensive losses
 
(3,327
)
 
(272
)
 
(1,848
)
 
2,120

 
(3,327
)
Cost of repurchased stock
 
(28,048
)
 
—

 
—

 
—

 
(28,048
)
Total stockholders’ equity attributable to Altria Group, Inc.
 
2,745

 
3,144

 
10,696

 
(13,840
)
 
2,745

Noncontrolling interests
 
—

 
—

 
3

 
—

 
3

Total stockholders’ equity
 
2,745

 
3,144

 
10,699

 
(13,840
)
 
2,748

Total Liabilities and Stockholders’ Equity
 
$
25,749

 
$
11,511

 
$
22,941

 
$
(26,138
)
 
$
34,063





Condensed Consolidating Balance Sheets
December 31, 2015
(in millions of dollars)
 
 
 
Altria
Group, Inc.

 
PM USA

 
Non-
Guarantor
Subsidiaries

 
Total
Consolidating
Adjustments

 
Consolidated

Assets
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
2,313

 
$
—

 
$
56

 
$
—

 
$
2,369

Receivables
 
—

 
7

 
117

 
—

 
124

Inventories:
 
 
 
 
 
 
 
 
 
 
Leaf tobacco
 
—

 
562

 
395

 
—

 
957

Other raw materials
 
—

 
123

 
58

 
—

 
181

Work in process
 
—

 
5

 
439

 
—

 
444

Finished product
 
—

 
121

 
328

 
—

 
449

 
 
—

 
811

 
1,220

 
—

 
2,031

Due from Altria Group, Inc. and subsidiaries
 
—

 
3,821

 
1,807

 
(5,628
)
 
—

Deferred income taxes
 
—

 
1,268

 
7

 
(100
)
 
1,175

Other current assets
 
284

 
65

 
112

 
(74
)
 
387

Total current assets
 
2,597

 
5,972

 
3,319

 
(5,802
)
 
6,086

Property, plant and equipment, at cost
 
—

 
3,102

 
1,775

 
—

 
4,877

Less accumulated depreciation
 
—

 
2,157

 
738

 
—

 
2,895

 
 
—

 
945

 
1,037

 
—

 
1,982

Goodwill
 
—

 
—

 
5,285

 
—

 
5,285

Other intangible assets, net
 
—

 
2

 
12,026

 
—

 
12,028

Investment in SABMiller
 
5,483

 
—

 
—

 
—

 
5,483

Investment in consolidated subsidiaries
 
11,648

 
2,715

 
—

 
(14,363
)
 
—

Finance assets, net
 
—

 
—

 
1,239

 
—

 
1,239

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

 
—

 
—

 
(4,790
)
 
—

Other assets
 
20

 
536

 
131

 
(327
)
 
360

Total Assets
 
$
24,538

 
$
10,170

 
$
23,037

 
$
(25,282
)
 
$
32,463





Condensed Consolidating Balance Sheets (Continued)
December 31, 2015
(in millions of dollars)

 
 
Altria
Group, Inc.

 
PM USA

 
Non-
Guarantor
Subsidiaries

 
Total
Consolidating
Adjustments

 
Consolidated

Liabilities
 
 
 
 
 
 
 
 
 
 
Current portion of long-term debt
 
$
—

 
$
—

 
$
4

 
$
—

 
$
4

Accounts payable
 
3

 
104

 
293

 
—

 
400

Accrued liabilities:
 
 
 
 
 
 
 
 
 
 
Marketing
 
—

 
586

 
109

 
—

 
695

Employment costs
 
18

 
11

 
169

 
—

 
198

Settlement charges
 
—

 
3,585

 
5

 
—

 
3,590

Other
 
354

 
616

 
285

 
(174
)
 
1,081

Dividends payable
 
1,110

 
—

 
—

 
—

 
1,110

Due to Altria Group, Inc. and subsidiaries
 
5,427

 
191

 
10

 
(5,628
)
 
—

Total current liabilities
 
6,912

 
5,093

 
875

 
(5,802
)
 
7,078

Long-term debt
 
12,831

 
—

 
12

 
—

 
12,843

Deferred income taxes
 
1,547

 
—

 
4,443

 
(327
)
 
5,663

Accrued pension costs
 
215

 
—

 
1,062

 
—

 
1,277

Accrued postretirement health care costs
 
—

 
1,460

 
785

 
—

 
2,245

Due to Altria Group, Inc. and subsidiaries
 
—

 
—

 
4,790

 
(4,790
)
 
—

Other liabilities
 
153

 
126

 
168

 
—

 
447

Total liabilities
 
21,658

 
6,679

 
12,135

 
(10,919
)
 
29,553

Contingencies
 


 


 


 


 


Redeemable noncontrolling interest
 
—

 
—

 
37

 
—

 
37

Stockholders’ Equity
 
 
 
 
 
 
 
 
 
 
Common stock
 
935

 
—

 
9

 
(9
)
 
935

Additional paid-in capital
 
5,813

 
3,310

 
11,456

 
(14,766
)
 
5,813

Earnings reinvested in the business
 
27,257

 
436

 
1,099

 
(1,535
)
 
27,257

Accumulated other comprehensive losses
 
(3,280
)
 
(255
)
 
(1,692
)
 
1,947

 
(3,280
)
Cost of repurchased stock
 
(27,845
)
 
—

 
—

 
—

 
(27,845
)
Total stockholders’ equity attributable to Altria Group, Inc.
 
2,880

 
3,491

 
10,872

 
(14,363
)
 
2,880

Noncontrolling interests
 
—

 
—

 
(7
)
 
—

 
(7
)
Total stockholders’ equity
 
2,880

 
3,491

 
10,865

 
(14,363
)
 
2,873

Total Liabilities and Stockholders’ Equity
 
$
24,538

 
$
10,170

 
$
23,037

 
$
(25,282
)
 
$
32,463

Condensed Consolidating Statements of Earnings and Comprehensive Earnings
For the Three Months Ended March 31, 2016
(in millions of dollars)

 
 
Altria
Group, Inc.

 
PM USA

 
Non-
Guarantor
Subsidiaries

 
Total
Consolidating
Adjustments

 
Consolidated

Net revenues
 
$
—

 
$
5,265

 
$
810

 
$
(9
)
 
$
6,066

Cost of sales
 
—

 
1,642

 
241

 
(9
)
 
1,874

Excise taxes on products
 
—

 
1,487

 
49

 
—

 
1,536

Gross profit
 
—

 
2,136

 
520

 
—

 
2,656

Marketing, administration and research costs
 
36

 
415

 
108

 
—

 
559

Asset impairment and exit costs
 
5

 
94

 
21

 
—

 
120

Operating (expense) income
 
(41
)
 
1,627

 
391

 
—

 
1,977

Interest and other debt expense, net
 
129

 
15

 
56

 
—

 
200

Earnings from equity investment in SABMiller
 
(66
)
 
—

 
—

 
—

 
(66
)
Gain on derivative financial instrument
 
(40
)
 
—

 
—

 
—

 
(40
)
(Loss) earnings before income taxes and equity earnings of subsidiaries
 
(64
)
 
1,612

 
335

 
—

 
1,883

(Benefit) provision for income taxes
 
(49
)
 
603

 
111

 
—

 
665

Equity earnings of subsidiaries
 
1,232

 
60

 
—

 
(1,292
)
 
—

Net earnings
 
1,217

 
1,069

 
224

 
(1,292
)
 
1,218

Net earnings attributable to noncontrolling interests
 
—

 
—

 
(1
)
 
—

 
(1
)
Net earnings attributable to Altria Group, Inc.
 
$
1,217

 
$
1,069

 
$
223

 
$
(1,292
)
 
$
1,217

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings
 
$
1,217

 
$
1,069

 
$
224

 
$
(1,292
)
 
$
1,218

Other comprehensive losses, net of deferred income taxes
 
(47
)
 
(17
)
 
(156
)
 
173

 
(47
)
Comprehensive earnings
 
1,170

 
1,052

 
68

 
(1,119
)
 
1,171

Comprehensive earnings attributable to noncontrolling interests
 
—

 
—

 
(1
)
 
—

 
(1
)
Comprehensive earnings attributable to
Altria Group, Inc.
 
$
1,170

 
$
1,052

 
$
67

 
$
(1,119
)
 
$
1,170


Condensed Consolidating Statements of Earnings and Comprehensive Earnings
For the Three Months Ended March 31, 2015
(in millions of dollars)

 
 
Altria
Group, Inc.

 
PM USA

 
Non-
Guarantor
Subsidiaries

 
Total
Consolidating
Adjustments

 
Consolidated

Net revenues
 
$
—

 
$
5,068

 
$
745

 
$
(9
)
 
$
5,804

Cost of sales
 
—

 
1,566

 
240

 
(9
)
 
1,797

Excise taxes on products
 
—

 
1,480

 
52

 
—

 
1,532

Gross profit
 
—

 
2,022

 
453

 
—

 
2,475

Marketing, administration and research costs
 
42

 
465

 
103

 
—

 
610

Operating (expense) income
 
(42
)
 
1,557

 
350

 
—

 
1,865

Interest and other debt expense (income), net
 
154

 
(1
)
 
56

 
—

 
209

Loss on early extinguishment of debt
 
228

 
—

 
—

 
—

 
228

Earnings from equity investment in SABMiller
 
(134
)
 
—

 
—

 
—

 
(134
)
(Loss) earnings before income taxes and equity earnings of subsidiaries
 
(290
)
 
1,558

 
294

 
—

 
1,562

(Benefit) provision for income taxes
 
(143
)
 
584

 
103

 
—

 
544

Equity earnings of subsidiaries
 
1,165

 
61

 
—

 
(1,226
)
 
—

Net earnings
 
1,018

 
1,035

 
191

 
(1,226
)
 
1,018

Net earnings attributable to noncontrolling interests
 
—

 
—

 
—

 
—

 
—

Net earnings attributable to Altria Group, Inc.
 
$
1,018

 
$
1,035

 
$
191

 
$
(1,226
)
 
$
1,018

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings
 
$
1,018

 
$
1,035

 
$
191

 
$
(1,226
)
 
$
1,018

Other comprehensive (losses) earnings, net of deferred income taxes
 
(263
)
 
4

 
35

 
(39
)
 
(263
)
Comprehensive earnings
 
755

 
1,039

 
226

 
(1,265
)
 
755

Comprehensive earnings attributable to noncontrolling interests
 
—

 
—

 
—

 
—

 
—

Comprehensive earnings attributable to
Altria Group, Inc.
 
$
755

 
$
1,039

 
$
226

 
$
(1,265
)
 
$
755

Condensed Consolidating Statements of Cash Flows
For the Three Months Ended March 31, 2016
(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
 
$
1,433

 
$
2,780

 
$
108

 
$
(1,632
)
 
$
2,689

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

 
(7
)
 
(19
)
 
—

 
(26
)
Proceeds from finance assets
 
—

 
—

 
56

 
—

 
56

Other
 
—

 
—

 
4

 
—

 
4

Net cash (used in) provided by investing activities
 
—

 
(7
)
 
41

 
—

 
34

Cash Provided by (Used in) Financing Activities
 
 
 
 
 
 
 
 
 
 
Repurchases of common stock
 
(168
)
 
—

 
—

 
—

 
(168
)
Dividends paid on common stock
 
(1,108
)
 
—

 
—

 
—

 
(1,108
)
Changes in amounts due to/from Altria Group, Inc. and subsidiaries
 
1,279

 
(1,374
)
 
95

 
—

 
—

Cash dividends paid to parent
 
—

 
(1,399
)
 
(233
)
 
1,632

 
—

Other
 
—

 
—

 
(1
)
 
—

 
(1
)
Net cash provided by (used in) financing activities
 
3

 
(2,773
)
 
(139
)
 
1,632

 
(1,277
)
Cash and cash equivalents:
 
 
 
 
 
 
 
 
 
 
Increase
 
1,436

 
—

 
10

 
—

 
1,446

Balance at beginning of period
 
2,313

 
—

 
56

 
—

 
2,369

Balance at end of period
 
$
3,749

 
$
—

 
$
66

 
$
—

 
$
3,815


Condensed Consolidating Statements of Cash Flows
For the Three Months Ended March 31, 2015
(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
 
$
845

 
$
2,696

 
$
136

 
$
(1,179
)
 
$
2,498

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

 
(15
)
 
(33
)
 
—

 
(48
)
Proceeds from finance assets
 
—

 
—

 
147

 
—

 
147

Other
 
—

 
10

 
(10
)
 
—

 
—

Net cash (used in) provided by investing activities
 
—

 
(5
)
 
104

 
—

 
99

Cash Provided by (Used in) Financing Activities
 
 
 
 
 
 
 
 
 
 
Long-term debt repaid
 
(793
)
 
—

 
—

 
—

 
(793
)
Repurchases of common stock
 
(192
)
 
—

 
—

 
—

 
(192
)
Dividends paid on common stock
 
(1,026
)
 
—

 
—

 
—

 
(1,026
)
Changes in amounts due to/from Altria Group, Inc. and subsidiaries
 
1,750

 
(1,634
)
 
(116
)
 
—

 
—

Premiums and fees related to early extinguishment of debt
 
(226
)
 
—

 
—

 
—

 
(226
)
Cash dividends paid to parent
 
—

 
(1,060
)
 
(119
)
 
1,179

 
—

Other
 
—

 
—

 
(7
)
 
—

 
(7
)
Net cash used in financing activities
 
(487
)
 
(2,694
)
 
(242
)
 
1,179

 
(2,244
)
Cash and cash equivalents:
 
 
 
 
 
 
 
 
 
 
Increase (decrease)
 
358

 
(3
)
 
(2
)
 
—

 
353

Balance at beginning of period
 
3,281

 
3

 
37

 
—

 
3,321

Balance at end of period
 
$
3,639

 
$
—

 
$
35

 
$
—

 
$
3,674