UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to                    

Commission File Number 1-08940

Altria Group, Inc.

(Exact name of registrant as specified in its charter)

Virginia			13-3260245
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
6601 West Broad Street,	Richmond,	Virginia	23230
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code (804) 274-2200 

 Former name, former address and former fiscal year, if changed since last report

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbols	Name of each exchange on which registered
Common Stock, $0.33 1/3 par value	MO	New York Stock Exchange
1.700% Notes due 2025	MO25	New York Stock Exchange
2.200% Notes due 2027	MO27	New York Stock Exchange
3.125% Notes due 2031	MO31	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes   þ     No   ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes   þ    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	þ	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  ☐  No   þ

At April 18, 2023, there were 1,785,039,536 shares outstanding of the registrant’s common stock, par value $0.33 1/3 per share.

ALTRIA GROUP, INC.

TABLE OF CONTENTS

		Page No.
PART I -	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets at March 31, 2023 and December 31, 2022	3
	Condensed Consolidated Statements of Earnings for the Three Months Ended March 31, 2023 and 2022	5
	Condensed Consolidated Statements of Comprehensive Earnings for the Three Months Ended March 31, 2023 and 2022	6
	Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the Three Months Ended March 31, 2023 and 2022	7
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022	8
	Notes to Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	58
Item 4.	Controls and Procedures	59
PART II -	OTHER INFORMATION
Item 1.	Legal Proceedings	59
Item 1A.	Risk Factors	59
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	60
Item 6.	Exhibits	61
Signature	Signature	62

2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Altria Group, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in millions of dollars)

(Unaudited)

______________________________

	March 31, 2023		December 31, 2022
Assets
Cash and cash equivalents	$	3,913	$	4,030
Receivables:
Receivable from the sale of IQOS System commercialization rights	1,746		1,721
Other	58		48
Inventories:
Leaf tobacco	664		704
Other raw materials	202		186
Work in process	30		24
Finished product	356		266
	1,252		1,180
Other current assets	183		241
Total current assets	7,152		7,220
Property, plant and equipment, at cost	4,413		4,427
Less accumulated depreciation	2,820		2,819
	1,593		1,608
Goodwill	5,177		5,177
Other intangible assets, net	12,366		12,384
Investments in equity securities ($0 million and $250 million at March 31, 2023 and December 31, 2022, respectively, measured at fair value)	9,559		9,600
Other assets	979		965
Total Assets	$	36,826	$	36,954

See notes to condensed consolidated financial statements.

3

Altria Group, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (Continued)

(in millions of dollars, except share and per share data)

(Unaudited)

________________________________________________

	March 31, 2023		December 31, 2022
Liabilities
Current portion of long-term debt	$	1,339	$	1,556
Accounts payable	412		552
Accrued liabilities:
Marketing	587		599
Settlement charges	3,820		2,925
Other	1,303		1,299
Dividends payable	1,685		1,685
Total current liabilities	9,146		8,616
Long-term debt	24,048		25,124
Deferred income taxes	2,735		2,897
Accrued pension costs	128		133
Accrued postretirement health care costs	1,086		1,083
Deferred gain from the sale of IQOS System commercialization rights	2,700		2,700
Other liabilities	809		324
Total liabilities	40,652		40,877
Contingencies (Note 11)
Stockholders’ Equity (Deficit)
Common stock, par value $0.33 1/3 per share (2,805,961,317 shares issued)	935		935
Additional paid-in capital	5,866		5,887
Earnings reinvested in the business	29,898		29,792
Accumulated other comprehensive losses	(2,779)		(2,771)
Cost of repurchased stock (1,019,815,657 shares at March 31, 2023 and 1,020,427,195 shares at December 31, 2022)	(37,796)		(37,816)
Total stockholders’ equity (deficit) attributable to Altria	(3,876)		(3,973)
Noncontrolling interests	50		50
Total stockholders’ equity (deficit)	(3,826)		(3,923)
Total Liabilities and Stockholders’ Equity (Deficit)	$	36,826	$	36,954

See notes to condensed consolidated financial statements.

4

Altria Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Earnings

(in millions of dollars, except per share data)

(Unaudited)

_____________________________________ 

For the Three Months Ended March 31,	2023		2022
Net revenues	$	5,719	$	5,892
Cost of sales	1,434		1,446
Excise taxes on products	956		1,073
Gross profit	3,329		3,373
Marketing, administration and research costs	572		489
Operating income	2,757		2,884
Interest and other debt expense, net	229		281
Net periodic benefit income, excluding service cost	(31)		(46)
(Income) losses from investments in equity securities	80		(34)
Loss on Cronos-related financial instruments	—		10
Earnings before income taxes	2,479		2,673
Provision for income taxes	692		714
Net earnings	$	1,787	$	1,959
Per share data:
Basic and diluted earnings per share	$	1.00	$	1.08

See notes to condensed consolidated financial statements.

5

Altria Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Earnings

(in millions of dollars)

(Unaudited)

_____________________

For the Three Months Ended March 31,	2023		2022
Net earnings	$	1,787	$	1,959
Other comprehensive earnings (losses), net of deferred income taxes:
Benefit plans	(6)		15
ABI	(12)		78
Currency translation adjustments and other	10		1
Other comprehensive earnings (losses), net of deferred income taxes	(8)		94
Comprehensive earnings	$	1,779	$	2,053

See notes to condensed consolidated financial statements.

6

Altria Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

for the Three Months Ended March 31, 2023 and 2022

(in millions of dollars, except per share data)

(Unaudited)

_______________________________________

	Attributable to Altria
	Common Stock		Additional Paid-in Capital		Earnings Reinvested in the Business		Accumulated Other Comprehensive Losses		Cost of Repurchased Stock		Non- controlling Interests		Total Stockholders’ Equity (Deficit)
Balances, December 31, 2022	$	935	$	5,887	$	29,792	$	(2,771)	$	(37,816)	$	50	$	(3,923)
Net earnings	—		—		1,787		—		—		—		1,787
Other comprehensive earnings (losses), net of deferred income taxes	—		—		—		(8)		—		—		(8)
Stock award activity	—		(21)		—		—		20		—		(1)
Cash dividends declared ($0.94 per share)	—		—		(1,681)		—		—		—		(1,681)
Balances, March 31, 2023	$	935	$	5,866	$	29,898	$	(2,779)	$	(37,796)	$	50	$	(3,826)

	Common Stock		Additional Paid-in Capital		Earnings Reinvested in the Business		Accumulated Other Comprehensive Losses		Cost of Repurchased Stock		Total Stockholders’ Equity (Deficit)
Balances, December 31, 2021	$	935	$	5,857	$	30,664	$	(3,056)	$	(36,006)	$	(1,606)
Net earnings	—		—		1,959		—		—		1,959
Other comprehensive earnings (losses), net of deferred income taxes	—		—		—		94		—		94
Stock award activity	—		(9)		—		—		13		4
Cash dividends declared ($0.90 per share)	—		—		(1,635)		—		—		(1,635)
Repurchases of common stock	—		—		—		—		(576)		(576)
Balances, March 31, 2022	$	935	$	5,848	$	30,988	$	(2,962)	$	(36,569)	$	(1,760)

See notes to condensed consolidated financial statements.

7

Altria Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in millions of dollars)

(Unaudited)

_____________________

For the Three Months Ended March 31,	2023		2022
Cash Provided by (Used in) Operating Activities
Net earnings	$	1,787	$	1,959
Adjustments to reconcile net earnings to operating cash flows:
Depreciation and amortization	52		52
Deferred income tax provision (benefit)	(142)		43
(Income) losses from investments in equity securities	80		(34)
Loss on Cronos-related financial instruments	—		10
Cash effects of changes:
Receivables	(34)		1
Inventories	(72)		(20)
Accounts payable	(115)		(59)
Income taxes	409		637
Accrued liabilities and other current assets	(369)		(372)
Accrued settlement charges	895		880
Pension plan contributions	(7)		(3)
Pension and postretirement, net	(34)		(35)
Other, net (1)	534		16
Net cash provided by (used in) operating activities	2,984		3,075
Cash Provided by (Used in) Investing Activities
Capital expenditures	(55)		(45)
Other, net	(1)		11
Net cash provided by (used in) investing activities	$	(56)	$	(34)

(1) 2023 includes $391 million of unrecognized tax benefit from the ordinary loss for cash tax purposes with respect to a portion of our tax basis associated with our former investment in JUUL, which is substantially offset by a corresponding change included in income taxes. For further discussion, see Note 10. Income Taxes.

See notes to condensed consolidated financial statements.

8

Altria Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Continued)

(in millions of dollars)

(Unaudited)

_____________________

For the Three Months Ended March 31,	2023		2022
Cash Provided by (Used in) Financing Activities
Long-term debt repaid	$	(1,348)	$	—
Repurchases of common stock	—		(576)
Dividends paid on common stock	(1,683)		(1,645)
Other, net	(14)		(11)
Net cash provided by (used in) financing activities	(3,045)		(2,232)
Cash, cash equivalents and restricted cash:
Increase (decrease)	(117)		809
Balance at beginning of period	4,091		4,594
Balance at end of period	$	3,974	$	5,403
The following table provides a reconciliation of cash, cash equivalents and restricted cash (1) to the amounts reported on our condensed consolidated balance sheets:
	At March 31, 2023		At December 31, 2022
Cash and cash equivalents	$	3,913	$	4,030
Restricted cash included in other current assets	30		15
Restricted cash included in other assets	31		46
Cash, cash equivalents and restricted cash	$	3,974	$	4,091

(1) Restricted cash consisted primarily of cash deposits collateralizing appeal bonds posted by PM USA to obtain stays of judgments pending appeals. See Note 11. Contingencies.

See notes to condensed consolidated financial statements.

9

Altria Group, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1. Background and Basis of Presentation

When used in these notes, the terms “Altria,” “we,” “us” and “our” refer to either (i) Altria Group, Inc. and its consolidated subsidiaries or (ii) Altria Group, Inc. only and not its consolidated subsidiaries, as appropriate in the context.

▪Background: At March 31, 2023, our wholly owned subsidiaries included Philip Morris USA Inc. (“PM USA”), which is engaged in the manufacture and sale of cigarettes in the United States; John Middleton Co. (“Middleton”), which is engaged in the manufacture and sale of machine-made large cigars and pipe tobacco and is a wholly owned subsidiary of PM USA; UST LLC (“UST”), which through its wholly owned subsidiary U.S. Smokeless Tobacco Company LLC (“USSTC”), is engaged in the manufacture and sale of moist smokeless tobacco products (“MST”) and snus products; and Helix Innovations LLC (“Helix”), which operates in the United States and Canada, and Helix Innovations GmbH and its affiliates (“Helix ROW”), which operate internationally in the rest-of-world, are engaged in the manufacture and sale of oral nicotine pouches. Other wholly owned subsidiaries included Altria Group Distribution Company, which provides sales and distribution services to our domestic tobacco operating companies; and Altria Client Services LLC (“ALCS”), which provides various support services to our companies in areas such as legal, regulatory, consumer engagement, finance, human resources and external affairs. Our access to the operating cash flows of our wholly owned subsidiaries consists of cash received from the payment of dividends and distributions, and the payment of interest on intercompany loans by our subsidiaries. At March 31, 2023, our significant wholly owned subsidiaries were not limited by contractual obligations in their ability to pay cash dividends or make other distributions with respect to their equity interests.

At March 31, 2023, we also owned a 75% economic interest in Horizon Innovations LLC (“Horizon”), a joint venture with Japan Tobacco, Inc., which owned the remaining 25% economic interest. Horizon is structured to exist in perpetuity and is responsible for the U.S. marketing and commercialization of heated tobacco stick products.

On March 3, 2023, we entered into a stock transfer agreement with JUUL Labs, Inc. (“Stock Transfer Agreement”) pursuant to which we transferred to JUUL Labs, Inc. (“JUUL”) all of our beneficially owned JUUL equity securities. In exchange, we received a non-exclusive, irrevocable global license to certain of JUUL’s heated tobacco intellectual property (“JUUL Heated Tobacco IP”). Prior to the exchange, we accounted for our investment in JUUL at fair value.

At March 31, 2023, we had investments in Anheuser-Busch InBev SA/NV (“ABI”) and Cronos Group Inc. (“Cronos”), which we account for under the equity method of accounting using a one-quarter lag.

For further discussion of our investments in equity securities, see Note 3. Investments in Equity Securities.

On March 3, 2023, we entered into a definitive agreement to acquire NJOY Holdings, Inc. (“NJOY”), a U.S. based e-vapor company, for approximately $2.75 billion in cash payable at closing (“NJOY Transaction”) plus up to an additional $500 million in cash payments that are contingent upon regulatory outcomes with respect to certain NJOY products. Following completion of the NJOY Transaction, NJOY will survive as a wholly owned subsidiary of Altria. The completion of the NJOY Transaction is subject to customary closing conditions, including clearance from the U.S. Federal Trade Commission (“FTC”), and is not subject to any financing condition. The parties have filed for premerger clearance with the FTC under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR Act”), which remains under FTC review. The current waiting period under the HSR Act expires in May 2023.

▪Share Repurchases: In January 2021, our Board of Directors (“Board of Directors” or “Board”) authorized a $2.0 billion share repurchase program that it expanded to $3.5 billion in October 2021 (as expanded, the “January 2021 share repurchase program”). We completed the January 2021 share repurchase program in December 2022.

In January 2023, our Board of Directors authorized a new $1.0 billion share repurchase program (the “January 2023 share repurchase program”). The timing of share repurchases under this program depends upon marketplace conditions and other factors, and the program remains subject to the discretion of our Board.

For the three months ended March 31, 2023, there were no share repurchases under the January 2023 share repurchase program.

10

Our share repurchase activity was as follows:

	For the Three Months
(in millions, except per share data)	Ended March 31, 2022
Total number of shares repurchased	11.3
Aggregate cost of shares repurchased	$	576
Average price per share of shares repurchased	$	50.69

▪Basis of Presentation: Our interim condensed consolidated financial statements are unaudited. Our management believes that all adjustments necessary for a fair statement of the interim results presented have been reflected in our interim condensed consolidated financial statements. All such adjustments were of a normal recurring nature. Net revenues and net earnings for any interim period are not necessarily indicative of results that may be expected for the entire year.

These statements should be read in conjunction with our audited consolidated financial statements and related notes, which appear in our Annual Report on Form 10-K for the year ended December 31, 2022.

On January 1, 2023 we adopted Accounting Standards Update (“ASU”) 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU No. 2021-08”). This guidance updates how an entity recognizes and measures contract assets and contract liabilities acquired in a business combination. As of March 31, 2023, our adoption of ASU No. 2021-08 had no impact on our condensed consolidated financial statements or related disclosures.

Additionally, on January 1, 2023 we adopted ASU 2022-04, Liabilities- Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations (“ASU No. 2022-04”). This guidance requires that a buyer in a supplier finance program disclose sufficient qualitative and quantitative information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period and potential magnitude. As of March 31, 2023, our adoption of ASU No. 2022-04 had no material impact on our condensed consolidated financial statements or related disclosures.

For a description of issued accounting guidance applicable to, but not yet adopted by, us, see Note 12. New Accounting Guidance Not Yet Adopted.

Note 2. Revenues from Contracts with Customers

We disaggregate net revenues based on product type. For further discussion, see Note 8. Segment Reporting.

We calculate substantially all cash discounts, offered to customers for prompt payment, as a flat rate per unit based on agreed-upon payment terms and record receivables net of the cash discounts on our condensed consolidated balance sheets.

We record payments received by our businesses in advance of product shipment as deferred revenue. These payments are included in other accrued liabilities on our condensed consolidated balance sheets until control of such products is obtained by the customer. Deferred revenue from contracts with customers was $268 million and $252 million at March 31, 2023 and December 31, 2022, respectively. When cash is received in advance of product shipment, our companies satisfy their performance obligations within three days of receiving payment. At March 31, 2023 and December 31, 2022, there were no differences between amounts recorded as deferred revenue from contracts with customers and amounts subsequently recognized as revenue.

Receivables (excluding receivable from the sale of IQOS System commercialization rights) were $58 million and $48 million at March 31, 2023 and December 31, 2022, respectively. At March 31, 2023 and December 31, 2022, there were no expected differences between amounts recorded and subsequently received, and we did not record an allowance for credit losses against these receivables.

We record an allowance for returned goods, which is included in other accrued liabilities on our condensed consolidated balance sheets. It is USSTC’s policy to accept authorized sales returns from its customers for products that have passed the freshness date printed on product packaging due to the limited shelf life of USSTC’s MST and snus products. We record estimated sales returns, which are based principally on historical volume and return rates, as a reduction to revenues. Actual sales returns will differ from estimated sales returns to the extent actual results differ from estimated assumptions. We reflect differences between actual and estimated sales returns in the period in which the actual amounts become known. These differences, if any, have not had a material impact on our condensed consolidated financial statements. All returned goods are destroyed upon return and not included in inventory. Consequently, we do not record an asset for USSTC’s right to recover goods from customers upon return.

11

Sales incentives include variable payments related to goods sold by our businesses. We include estimates of variable consideration as a reduction to revenues upon shipment of goods to customers. The sales incentives that require significant estimates and judgments are as follows:

▪Price promotion payments- We make price promotion payments, substantially all of which are made to our retail partners to incent the promotion of certain product offerings in select geographic areas.

▪Wholesale and retail participation payments- We make payments to our wholesale and retail partners to incent merchandising and sharing of sales data in accordance with our trade agreements.

These estimates primarily include estimated wholesale to retail sales volume and historical acceptance rates. Actual payments will differ from estimated payments to the extent actual results differ from estimated assumptions. Differences between actual and estimated payments are reflected in the period such information becomes available. These differences, if any, have not had a material impact on our condensed consolidated financial statements.

Note 3. Investments in Equity Securities

The carrying amount of our investments consisted of the following:

(in millions)	March 31, 2023		December 31, 2022
ABI	$	9,211	$	8,975
JUUL	—		250
Cronos	348		375
Total	$	9,559	$	9,600

(Income) losses from investments in equity securities consisted of the following:

	For the Three Months Ended March 31,
(in millions)	2023			2022
ABI (1)	$	(205)		$	(200)
Cronos (1)	35			66
(Income) losses from investments under equity method of accounting	(170)			(134)
JUUL	250		(2)	100		(3)
(Income) losses from investments in equity securities	$	80		$	(34)

(1) Includes our share of amounts recorded by our investees and additional adjustments, if required, related to (i) the conversion from international financial reporting standards to United States generally accepted accounting principles (“GAAP”) and (ii) adjustments to our investment required under the equity method of accounting.

(2) Represents loss as a result of the disposition of our JUUL equity securities discussed below.

(3) Represents the estimated change in fair value. Prior to the disposition of our JUUL equity securities on March 3, 2023, we accounted for our investment in JUUL as an investment in an equity security measured at fair value.

Investment in ABI

At March 31, 2023, we had an approximate 10% ownership interest in ABI, consisting of 185 million restricted shares of ABI (the “Restricted Shares”) and 12 million ordinary shares of ABI. The Restricted Shares:

▪are unlisted and not admitted to trading on any stock exchange;

▪are convertible by us into ordinary shares of ABI on a one-for-one basis;

▪rank equally with ordinary shares of ABI with regards to dividends and voting rights; and

▪have director nomination rights with respect to ABI.

As of this filing, we have not elected to convert our Restricted Shares into ordinary shares of ABI.

We account for our investment in ABI under the equity method of accounting because we have the ability to exercise significant influence over the operating and financial policies of ABI, including having active representation on ABI’s board of directors and certain ABI board committees. Through this representation, we participate in ABI’s policy making processes.

We report our share of ABI’s results using a one-quarter lag because ABI’s results are not available in time for us to record them in the concurrent period.

12

The fair value of our equity investment in ABI is based on (i) unadjusted quoted prices in active markets for ABI’s ordinary shares and was classified in Level 1 of the fair value hierarchy and (ii) observable inputs other than Level 1 prices, such as quoted prices for similar assets for the Restricted Shares, and was classified in Level 2 of the fair value hierarchy. We can convert our Restricted Shares to ordinary shares at our discretion. Therefore, the fair value of each Restricted Share is based on the value of an ordinary share.

The fair value of our equity investment in ABI at March 31, 2023 and December 31, 2022 was $13.1 billion and $11.9 billion, respectively, which exceeded its carrying value of $9.2 billion and $9.0 billion by approximately 42% and 33%, respectively.

Investment in JUUL

On March 3, 2023, we entered into the Stock Transfer Agreement with JUUL pursuant to which, among other things, we transferred to JUUL all of our beneficially owned JUUL equity securities. Concurrently with and in connection with the execution of the Stock Transfer Agreement, JUUL entered into an agreement with us that provides us with a non-exclusive, irrevocable global license to certain of the JUUL Heated Tobacco IP. In addition, all other agreements between us, on the one hand, and JUUL, on the other hand, were terminated or we were removed as parties thereto, other than certain litigation-related agreements and a license agreement relating to our non-trademark licensable intellectual property rights in the e-vapor field, which remain in force solely with respect to our e-vapor intellectual property as of or prior to March 3, 2023.

As a result of transferring to JUUL all of our beneficially owned JUUL equity securities pursuant to the Stock Transfer Agreement, for the three months ended March 31, 2023, we recorded a non-cash, pre-tax loss on the disposition of our JUUL equity securities of $250 million. Additionally, we considered specific facts and circumstances around the nature of the JUUL Heated Tobacco IP and determined that the fair value of such intellectual property was not material to our consolidated financial statements as of the date of the transaction. As a result, we did not record an asset associated with this intellectual property on our condensed consolidated balance sheet at March 31, 2023. The primary drivers of this conclusion were (i) our rights to the JUUL Heated Tobacco IP being non-exclusive, (ii) there being no product or technology transferred to us associated with the JUUL Heated Tobacco IP and (iii) there being no connection between the JUUL Heated Tobacco IP and our current product development plans.

In April 2020, the FTC issued an administrative complaint challenging our investment in JUUL. In February 2022, the administrative law judge dismissed the FTC’s complaint. FTC complaint counsel appealed that decision to the FTC, which appeal remains pending. For further discussion, see Note 11. Contingencies - Antitrust Litigation.

The following table provides a reconciliation of the beginning and ending balance of our investment in JUUL, which was classified in Level 3 of the fair value hierarchy prior to the disposition of our JUUL equity securities discussed above:

(in millions)	Investment Balance
Balance at December 31, 2021	$	1,705
Unrealized losses (1)	(1,455)
Balance at December 31, 2022	250
Loss on disposition of JUUL equity securities (1)	(250)
Balance at March 31, 2023	$	—

(1) Included in (income) losses from investments in equity securities.

Investment in Cronos

At March 31, 2023, we had a 41.1% ownership interest in Cronos, consisting of 156.6 million shares, which we account for under the equity method of accounting. We report our share of Cronos’s results using a one-quarter lag because Cronos’s results are not available in time for us to record them in the concurrent period.

The fair value of our equity method investment in Cronos is based on unadjusted quoted prices in active markets for Cronos’s common shares and was classified in Level 1 of the fair value hierarchy. At March 31, 2023, the fair value of our equity method investment in Cronos was less than its carrying value by $47 million or approximately 13%. Based on our evaluation of the duration and magnitude of the fair value decline, our evaluation of Cronos’s financial condition (including its strong cash position) and near-term prospects, and our intent and ability to hold our investment in Cronos until recovery, we concluded that the decline in fair value of our equity method investment in Cronos below its carrying value is temporary and, therefore, no impairment was recorded.

As part of our investment in Cronos, at March 31, 2023, we also owned anti-dilution protections to purchase Cronos common shares, exercisable each quarter upon dilution, to maintain our ownership percentage. Certain of the anti-dilution protections provide us the ability to purchase additional Cronos common shares at a per share exercise price of CAD $16.25 upon the occurrence of specified events (“Fixed-price Preemptive Rights”). The Fixed-price Preemptive Rights had no value at March 31, 2023 and December 31, 2022. Prior to December 2022, we also owned a warrant providing us the ability to purchase an

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additional approximate 10% of common shares of Cronos at a per share exercise price of CAD $19.00, which would have expired on March 8, 2023. In December 2022, we irrevocably abandoned the Cronos warrant.

Note 4. Financial Instruments

We enter into derivative financial instruments to mitigate the potential impact of certain market risks, including foreign currency exchange rate risk. We use various types of derivative financial instruments, including forward contracts, options and swaps. We do not enter into or hold derivative financial instruments for trading or speculative purposes.

Our investment in ABI, whose functional currency is the Euro, exposes us to foreign currency exchange risk on the carrying value of our investment. To manage this risk, we may designate certain foreign exchange contracts, including cross-currency swap contracts and forward contracts (collectively, “foreign currency contracts”), and Euro denominated unsecured long-term notes (“foreign currency denominated debt”) as net investment hedges of our investment in ABI.

At March 31, 2023 and December 31, 2022, we had no outstanding foreign currency contracts. When we have foreign currency contracts in effect, counterparties are domestic and international financial institutions. Under these contracts, we are exposed to potential losses in the event of non-performance by these counterparties. We manage our credit risk by entering into transactions with counterparties that have investment grade credit ratings, limiting the amount of exposure we have with each counterparty and monitoring the financial condition of each counterparty. The counterparty agreements contain provisions that require us to maintain an investment grade credit rating. In the event our credit rating falls below investment grade, counterparties to our foreign currency contracts can require us to post collateral.

The aggregate carrying value and fair value of our total long-term debt were as follows:

(in millions)	March 31, 2023		December 31, 2022
Carrying value	$	25,387	$	26,680
Fair value	22,565		22,928
Foreign currency denominated debt included in long-term debt:
Carrying value	3,242		4,540
Fair value	2,940		4,165

Our estimate of the fair value of our total long-term debt is based on observable market information derived from a third-party pricing source and is classified in Level 2 of the fair value hierarchy.

Net Investment Hedging

We recognized changes in the carrying value of the foreign currency denominated debt due to changes in the Euro to U.S. dollar exchange rate in accumulated other comprehensive losses related to ABI.

We recognized pre-tax (gains) losses of our net investment hedges of $48 million and $(128) million for the three months ended March 31, 2023 and 2022, respectively, in accumulated other comprehensive losses.

Note 5. Benefit Plans

Components of Net Periodic Benefit Cost (Income)

Net periodic benefit cost (income) consisted of the following:

	Pension				Postretirement
	For the Three Months Ended March 31,
(in millions)	2023		2022		2023		2022
Service cost	$	9	$	15	$	4	$	5
Interest cost	83		52		17		10
Expected return on plan assets	(121)		(123)		(2)		(3)
Amortization:
Net loss	1		24		—		4
Prior service cost (credit)	1		2		(10)		(12)
Net periodic benefit cost (income)	$	(27)	$	(30)	$	9	$	4

Employer Contributions

We make contributions to our pension plans to the extent that the contributions are tax deductible and pay benefits that relate to plans for salaried employees that cannot be funded under Internal Revenue Service (“IRS”) regulations. We made employer

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contributions of $7 million to our pension plans and did not make any contributions to our postretirement plans during the three months ended March 31, 2023. Currently, we anticipate making additional employer contributions of up to approximately $25 million to our pension plans and $30 million to our postretirement plans in 2023. However, the foregoing estimates of 2023 contributions to our pension and postretirement plans are subject to change as a result of changes in tax and other benefit laws, changes in interest rates, as well as asset performance significantly above or below the assumed long-term rate of return for each respective plan.

Note 6. Earnings per Share

We calculated basic and diluted earnings per share (“EPS”) using the following:

	For the Three Months Ended March 31,
(in millions)	2023		2022
Net earnings	$	1,787	$	1,959
Less: Distributed and undistributed earnings attributable to share-based awards	(3)		(4)
Earnings for basic and diluted EPS	$	1,784	$	1,955
Weighted-average shares for basic and diluted EPS	1,786		1,818

Note 7. Other Comprehensive Earnings/Losses

Changes in each component of accumulated other comprehensive losses, net of deferred income taxes, attributable to Altria were as follows:

	For the Three Months Ended March 31, 2023
(in millions)	Benefit Plans		ABI			Currency Translation Adjustments and Other		Accumulated Other Comprehensive Losses
Balances, December 31, 2022	$	(1,436)	$	(1,369)		$	34	$	(2,771)
Other comprehensive earnings (losses) before reclassifications	—		(18)			10		(8)
Deferred income taxes	—		5			—		5
Other comprehensive earnings (losses) before reclassifications, net of deferred income taxes	—		(13)			10		(3)
Amounts reclassified to net earnings	(8)		1			—		(7)
Deferred income taxes	2		—			—		2
Amounts reclassified to net earnings, net of deferred income taxes	(6)		1			—		(5)
Other comprehensive earnings (losses), net of deferred income taxes	(6)		(12)		(1)	10		(8)
Balances, March 31, 2023	$	(1,442)	$	(1,381)		$	44	$	(2,779)

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	For the Three Months Ended March 31, 2022
(in millions)	Benefit Plans		ABI			Currency Translation Adjustments and Other		Accumulated Other Comprehensive Losses
Balances, December 31, 2021	$	(1,612)	$	(1,512)		$	68	$	(3,056)
Other comprehensive earnings (losses) before reclassifications	—		138			1		139
Deferred income taxes	—		(32)			—		(32)
Other comprehensive earnings (losses) before reclassifications, net of deferred income taxes	—		106			1		107
Amounts reclassified to net earnings	21		(35)			—		(14)
Deferred income taxes	(6)		7			—		1
Amounts reclassified to net earnings, net of deferred income taxes	15		(28)			—		(13)
Other comprehensive earnings (losses), net of deferred income taxes	15		78		(1)	1		94
Balances, March 31, 2022	$	(1,597)	$	(1,434)		$	69	$	(2,962)

(1) Primarily reflects the impact of our designated net investment hedges related to our equity investment in ABI and our share of ABI’s currency translation adjustments. For further discussion of designated net investment hedges, see Note 4. Financial Instruments.

Pre-tax amounts by component, reclassified from accumulated other comprehensive losses to net earnings were as follows:

	For the Three Months Ended March 31,
(in millions)	2023		2022
Benefit Plans: (1)
Net loss	$	1	$	31
Prior service cost/credit	(9)		(10)
	(8)		21
ABI (2)	1		(35)
Pre-tax amounts reclassified from accumulated other comprehensive losses to net earnings	$	(7)	$	(14)

(1) Amounts are included in net defined benefit plan costs. For further details, see Note 5. Benefit Plans.

(2) Amounts are included in (income) losses from investments in equity securities. For further information, see Note 3. Investments in Equity Securities.

Note 8. Segment Reporting

Our operating companies’ products include (i) smokeable tobacco products, consisting of combustible cigarettes manufactured and sold by PM USA, and machine-made large cigars and pipe tobacco manufactured and sold by Middleton; and (ii) oral tobacco products, consisting of MST and snus products manufactured and sold by USSTC, and oral nicotine pouches manufactured and sold by Helix. These products constituted our reportable segments of smokeable products and oral tobacco products at March 31, 2023. Our former financial services business, which completed the wind-down of its portfolio of finance assets in 2022, the IQOS System heated tobacco business and Helix ROW were included in all other.

Our chief operating decision maker (“CODM”) reviews operating companies income (loss) (“OCI”) to evaluate the performance of, and allocate resources to, our segments. OCI for our segments is defined as operating income before general corporate expenses and amortization of intangibles. Interest and other debt expense, net, along with net periodic benefit income, excluding service cost, and provision for income taxes are centrally managed at the corporate level and, accordingly, such items are not presented by segment since they are excluded from the measure of segment profitability reviewed by our CODM.

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Segment data were as follows:

	For the Three Months Ended March 31,
(in millions)	2023		2022
Net revenues:
Smokeable products	$	5,090	$	5,265
Oral tobacco products	628		613
All other	1		14
Net revenues	$	5,719	$	5,892
Earnings before income taxes:
OCI:
Smokeable products	$	2,503	$	2,559
Oral tobacco products	416		407
All other	(9)		(5)
Amortization of intangibles	(18)		(17)
General corporate expenses	(135)		(60)
Operating income	2,757		2,884
Interest and other debt expense, net	229		281
Net periodic benefit income, excluding service cost	(31)		(46)
(Income) losses from investments in equity securities	80		(34)
Loss on Cronos-related financial instruments	—		10
Earnings before income taxes	$	2,479	$	2,673

The comparability of OCI for our reportable segments was affected by the following:

▪Non-Participating Manufacturer (“NPM”) Adjustment Items: We recorded pre-tax income for NPM adjustment items of $60 million for the three months ended March 31, 2022 in our smokeable products segment. We recorded these items as reductions to cost of sales in our condensed consolidated statement of earnings, which resulted in increased OCI in our smokeable products segment. NPM adjustment items result from the resolutions of certain disputes with states and territories related to the NPM adjustment provision under the Master Settlement Agreement (such dispute resolutions are referred to as “NPM Adjustment Items” and are more fully described in Health Care Cost Recovery Litigation in Note 11. Contingencies).

▪Tobacco and Health and Certain Other Litigation Items: We recorded pre-tax charges related to tobacco and health and certain other litigation items as follows:

	For the Three Months Ended March 31,
(in millions)	2023		2022
Smokeable products segment	$	12	$	12
General corporate expenses	98		—
Interest and other debt expense, net	1		—
Total	$	111	$	12

We recorded the amounts shown in the table above for the smokeable products segment and general corporate expenses in marketing, administration and research costs in our condensed consolidated statements of earnings. For further discussion, see Note 11. Contingencies.

Note 9. Debt

Short-term Borrowings and Borrowing Arrangements

At March 31, 2023 and December 31, 2022, we had no short-term borrowings.

We have a $3.0 billion senior unsecured 5-year revolving credit agreement (as amended, the “Credit Agreement”), which is used for general corporate purposes and expires on August 1, 2025.

At March 31, 2023, we had availability under the Credit Agreement for borrowings of up to an aggregate principal amount of $3.0 billion.

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Pricing for interest and fees under the Credit Agreement may be modified in the event of a change in the rating of our long-term senior unsecured debt. We expect interest rates on borrowings under the Credit Agreement to be based on the Term Secured Overnight Financing Rate plus a percentage based on the higher of the ratings of our long-term senior unsecured debt from Moody’s Investors Service, Inc. and Standard & Poor’s Financial Services LLC. The applicable percentage for borrowings under the Credit Agreement at March 31, 2023 was 1.0% based on our long-term senior unsecured debt ratings on that date. The Credit Agreement does not include any other rating triggers or any provisions that could require the posting of collateral.

The Credit Agreement includes various covenants, one of which requires us to maintain a ratio of consolidated earnings before interest, taxes, depreciation and amortization (“EBITDA”) to Consolidated Interest Expense of not less than 4.0 to 1.0, calculated as of the end of the applicable quarter on a rolling four quarters basis. At March 31, 2023, the ratio of Consolidated EBITDA to Consolidated Interest Expense, calculated in accordance with the Credit Agreement, was 10.9 to 1.0. At March 31, 2023, we were in compliance with our covenants in the Credit Agreement. The terms “Consolidated EBITDA” and “Consolidated Interest Expense,” each as defined in the Credit Agreement, include certain adjustments.

Any commercial paper issued by us and borrowings under the Credit Agreement are guaranteed by PM USA.

Long-term Debt

The aggregate carrying value of our total long-term debt at March 31, 2023 and December 31, 2022 was $25.4 billion and $26.7 billion, respectively.

In February 2023, we repaid in full our 1.000% senior unsecured Euro notes in the aggregate principal amount of $1.3 billion (€1.25 billion) at maturity.

At March 31, 2023 and December 31, 2022, accrued interest on long-term debt of $233 million and $411 million, respectively, was included in other accrued liabilities on our condensed consolidated balance sheets.

For a discussion of the fair value of our long-term debt and the designation of our Euro denominated senior unsecured notes as a net investment hedge of our investment in ABI, see Note 4. Financial Instruments.

Note 10. Income Taxes

In August 2022, the U.S. Government enacted legislation commonly referred to as the Inflation Reduction Act that became effective January 1, 2023. The main provisions of the Inflation Reduction Act that impact us are: (i) a 15% corporate alternative minimum tax (“Corporate AMT”) and (ii) a 1% excise tax on share repurchases, which we will record in equity on our consolidated statements of stockholders’ equity (deficit).

We are considered an “applicable corporation” for purposes of Corporate AMT. We expect our regular federal income tax liability will generally exceed our Corporate AMT liability; however, certain unique circumstances may result in our Corporate AMT liability exceeding our regular federal income tax liability, including when tax losses are reported in a different year than book losses.

Earnings before income taxes, provision for income taxes and income tax rates consisted of the following:

	For the Three Months Ended March 31,
(in millions)