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 September 30, 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 October 17, 2023, there were 1,768,646,674 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 September 30, 2023 and December 31, 2022	3
	Condensed Consolidated Statements of Earnings for the Nine and Three Months Ended September 30, 2023 and 2022	5
	Condensed Consolidated Statements of Comprehensive Earnings for the Nine and Three Months Ended September 30, 2023 and 2022	6
	Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the Nine Months Ended September 30, 2023 and 2022	7
	Three Months Ended September 30, 2023 and 2022	8
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022	9
	Notes to Condensed Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	70
Item 4.	Controls and Procedures	70
PART II -	OTHER INFORMATION
Item 1.	Legal Proceedings	70
Item 1A.	Risk Factors	71
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	71
Item 5.	Other Information	71
Item 6.	Exhibits	72
Signature	Signature	73

2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Altria Group, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in millions of dollars)

(Unaudited)

______________________________

	September 30, 2023		December 31, 2022
Assets
Cash and cash equivalents	$	1,537	$	4,030
Receivables:
Receivable from the sale of IQOS System commercialization rights	—		1,721
Other	57		48
Inventories:
Leaf tobacco	606		704
Other raw materials	212		186
Work in process	29		24
Finished product	327		266
	1,174		1,180
Other current assets	622		241
Total current assets	3,390		7,220
Property, plant and equipment, at cost	4,526		4,427
Less accumulated depreciation	2,897		2,819
	1,629		1,608
Goodwill	6,791		5,177
Other intangible assets, net	13,727		12,384
Investments in equity securities ($0 million and $250 million at September 30, 2023 and December 31, 2022, respectively, measured at fair value)	9,907		9,600
Other assets	1,025		965
Total Assets	$	36,469	$	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)

________________________________________________

	September 30, 2023		December 31, 2022
Liabilities
Current portion of long-term debt	$	1,121	$	1,556
Accounts payable	490		552
Accrued liabilities:
Marketing	663		599
Settlement charges	2,388		2,925
Other	1,277		1,299
Deferred gain from the sale of IQOS System commercialization rights	2,700		—
Dividends payable	1,742		1,685
Total current liabilities	10,381		8,616
Long-term debt	23,977		25,124
Deferred income taxes	2,527		2,897
Accrued pension costs	127		133
Accrued postretirement health care costs	1,096		1,083
Deferred gain from the sale of IQOS System commercialization rights	—		2,700
Other liabilities	1,718		324
Total liabilities	39,826		40,877
Contingencies (Note 13)
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	5,895		5,887
Earnings reinvested in the business	30,767		29,792
Accumulated other comprehensive losses	(2,471)		(2,771)
Cost of repurchased stock (1,036,080,497 shares at September 30, 2023 and 1,020,427,195 shares at December 31, 2022)	(38,533)		(37,816)
Total stockholders’ equity (deficit) attributable to Altria	(3,407)		(3,973)
Noncontrolling interests	50		50
Total stockholders’ equity (deficit)	(3,357)		(3,923)
Total Liabilities and Stockholders’ Equity (Deficit)	$	36,469	$	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 Nine Months Ended September 30,				For the Three Months Ended September 30,
	2023		2022		2023		2022
Net revenues	$	18,508	$	18,985	$	6,281	$	6,550
Cost of sales	4,693		4,869		1,578		1,715
Excise taxes on products	3,030		3,380		1,004		1,138
Gross profit	10,785		10,736		3,699		3,697
Marketing, administration and research costs	2,034		1,635		610		585
Operating income	8,751		9,101		3,089		3,112
Interest and other debt expense, net	758		832		272		271
Net periodic benefit income, excluding service cost	(95)		(137)		(33)		(44)
(Income) losses from investments in equity securities	(105)		3,707		(58)		2,478
Loss on Cronos-related financial instruments	—		14		—		—
Earnings before income taxes	8,193		4,685		2,908		407
Provision for income taxes	2,123		1,611		742		183
Net earnings	$	6,070	$	3,074	$	2,166	$	224
Per share data:
Basic and diluted earnings per share	$	3.40	$	1.69	$	1.22	$	0.12

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 Nine Months Ended September 30,				For the Three Months Ended September 30,
	2023		2022		2023		2022
Net earnings	$	6,070	$	3,074	$	2,166	$	224
Other comprehensive earnings (losses), net of deferred income taxes:
Benefit plans	(16)		48		(5)		17
ABI	302		637		236		(6)
Currency translation adjustments and other	14		(12)		7		(17)
Other comprehensive earnings (losses), net of deferred income taxes	300		673		238		(6)
Comprehensive earnings	$	6,370	$	3,747	$	2,404	$	218

See notes to condensed consolidated financial statements.

6

Altria Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

for the Nine Months Ended September 30, 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	—		—		6,070		—		—		—		6,070
Other comprehensive earnings (losses), net of deferred income taxes	—		—		—		300		—		—		300
Stock award activity	—		8		—		—		20		—		28
Cash dividends declared ($2.86 per share)	—		—		(5,095)		—		—		—		(5,095)
Repurchases of common stock	—		—		—		—		(732)		—		(732)
Other	—		—		—		—		(5)		—		(5)
Balances, September 30, 2023	$	935	$	5,895	$	30,767	$	(2,471)	$	(38,533)	$	50	$	(3,357)

	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	—		—		3,074		—		—		3,074
Other comprehensive earnings (losses), net of deferred income taxes	—		—		—		673		—		673
Stock award activity	—		16		—		—		15		31
Cash dividends declared ($2.74 per share)	—		—		(4,953)		—		—		(4,953)
Repurchases of common stock	—		—		—		—		(1,451)		(1,451)
Balances, September 30, 2022	$	935	$	5,873	$	28,785	$	(2,383)	$	(37,442)	$	(4,232)

See notes to condensed consolidated financial statements.

7

Altria Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

for the Three Months Ended September 30, 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, June 30, 2023	$	935	$	5,880	$	30,340	$	(2,709)	$	(38,273)	$	50	$	(3,777)
Net earnings	—		—		2,166		—		—		—		2,166
Other comprehensive earnings (losses), net of deferred income taxes	—		—		—		238		—		—		238
Stock award activity	—		15		—		—		—		—		15
Cash dividends declared ($0.98 per share)	—		—		(1,739)		—		—		—		(1,739)
Repurchases of common stock	—		—		—		—		(260)		—		(260)
Balances, September 30, 2023	$	935	$	5,895	$	30,767	$	(2,471)	$	(38,533)	$	50	$	(3,357)

	Common Stock		Additional Paid-in Capital		Earnings Reinvested in the Business		Accumulated Other Comprehensive Losses		Cost of Repurchased Stock		Total Stockholders’ Equity (Deficit)
Balances, June 30, 2022	$	935	$	5,861	$	30,252	$	(2,377)	$	(37,074)	$	(2,403)
Net earnings	—		—		224		—		—		224
Other comprehensive earnings (losses), net of deferred income taxes	—		—		—		(6)		—		(6)
Stock award activity	—		12		—		—		—		12
Cash dividends declared ($0.94 per share)	—		—		(1,691)		—		—		(1,691)
Repurchases of common stock	—		—		—		—		(368)		(368)
Balances, September 30, 2022	$	935	$	5,873	$	28,785	$	(2,383)	$	(37,442)	$	(4,232)

See notes to condensed consolidated financial statements.

8

Altria Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in millions of dollars)

(Unaudited)

_____________________

For the Nine Months Ended September 30,	2023		2022
Cash Provided by (Used in) Operating Activities
Net earnings	$	6,070	$	3,074
Adjustments to reconcile net earnings to operating cash flows:
Depreciation and amortization	194		163
Deferred income tax provision (benefit)	(575)		(550)
Unrecognized tax benefit (1)	1,173		21
(Income) losses from investments in equity securities	(105)		3,707
Dividends from ABI	163		104
Loss on Cronos-related financial instruments	—		14
Cash effects of changes: (2)
Receivables	19		(5)
Inventories	26		88
Accounts payable	(47)		(27)
Income taxes	(210)		49
Accrued liabilities and other current assets	(210)		(382)
Accrued settlement charges	(537)		(618)
Pension plan contributions	(14)		(11)
Pension and postretirement, net	(97)		(110)
Other, net	210		120
Net cash provided by (used in) operating activities	6,060		5,637
Cash Provided by (Used in) Investing Activities
Capital expenditures	(143)		(147)
Proceeds from the sale of IQOS System commercialization rights	1,700		—
Acquisition of NJOY, net of cash acquired	(2,751)		—
Other, net	(23)		(68)
Net cash provided by (used in) investing activities	$	(1,217)	$	(215)

(1) 2023 relates to 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. For further discussion, see Note 12. Income Taxes.

(2) 2023 amounts are net of the effects from the NJOY Transaction. For further details, see Note 2. Acquisition of NJOY.

See notes to condensed consolidated financial statements.

9

Altria Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Continued)

(in millions of dollars)

(Unaudited)

_____________________

For the Nine Months Ended September 30,	2023		2022
Cash Provided by (Used in) Financing Activities
Proceeds from short-term borrowings	$	2,000	$	—
Repayment of short-term borrowings	(2,000)		—
Long-term debt repaid	(1,566)		(1,105)
Repurchases of common stock	(732)		(1,451)
Dividends paid on common stock	(5,040)		(4,908)
Other, net	(15)		(12)
Net cash provided by (used in) financing activities	(7,353)		(7,476)
Cash, cash equivalents and restricted cash:
Increase (decrease)	(2,510)		(2,054)
Balance at beginning of period	4,091		4,594
Balance at end of period	$	1,581	$	2,540
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 September 30, 2023		At December 31, 2022
Cash and cash equivalents	$	1,537	$	4,030
Restricted cash included in other current assets	10		15
Restricted cash included in other assets	34		46
Cash, cash equivalents and restricted cash	$	1,581	$	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 13. Contingencies.

See notes to condensed consolidated financial statements.

10

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 September 30, 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; 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; and NJOY, LLC (“NJOY”), which is engaged in the manufacture and sale of e-vapor products. Other wholly owned subsidiaries included Altria Group Distribution Company (“AGDC”), which provides sales and distribution services to our domestic operating companies; and Altria Client Services LLC (“ALCS”), which provides various support services to our companies in areas such as legal, regulatory, research and product development, consumer engagement, finance, human resources and external affairs. Our access to the operating cash flows of our subsidiaries consists of cash received from the payment of dividends and distributions, and the payment of interest on intercompany loans by our subsidiaries. At September 30, 2023, our significant subsidiaries were not limited by contractual obligations in their ability to pay cash dividends or make other distributions with respect to their equity interests.

As discussed in Note 2. Acquisition of NJOY, on June 1, 2023, we completed our acquisition of NJOY Holdings, Inc. (“NJOY Holdings”), the parent of NJOY. As a result of the acquisition, NJOY became a wholly owned subsidiary of Altria.

At September 30, 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.

In March 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 September 30, 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 5. Investments in Equity Securities.

▪Dividends and Share Repurchases: In August 2023, our Board of Directors (“Board of Directors” or “Board”) approved a 4.3% increase in the quarterly dividend rate to $0.98 per share of our common stock versus the previous rate of $0.94 per share. The current annualized dividend rate is $3.92. Future dividend payments remain subject to the discretion of our Board.

In January 2021, our Board of Directors 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”). At September 30, 2023, we had $268 million remaining under 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.

11

Our share repurchase activity was as follows:

	For the Nine Months Ended September 30,				For the Three Months Ended September 30,
(in millions, except per share data)	2023		2022		2023		2022
Total number of shares repurchased	16.3		29.9		5.9		8.5
Aggregate cost of shares repurchased	$	732	$	1,451	$	260	$	368
Average price per share of shares repurchased	$	44.97	$	48.60	$	44.26	$	43.68

▪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.

Certain immaterial prior year amounts have been reclassified to conform with the current year’s presentation.

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. 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 and for the nine months ended September 30, 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 14. New Accounting Guidance Not Yet Adopted.

Note 2. Acquisition of NJOY

On June 1, 2023, we acquired NJOY Holdings (“NJOY Transaction”), which provided us with full global ownership of NJOY’s e-vapor product portfolio, including NJOY ACE, currently the only pod-based e-vapor product with market authorizations from the U.S. Food and Drug Administration (“FDA”). The total consideration for the NJOY Transaction of approximately $2.9 billion, consisted of approximately $2.75 billion in cash payments (net of cash acquired) plus the fair value of up to $500 million in additional cash payments that are contingent on receipt of FDA authorizations with respect to certain NJOY products. The fair value of these contingent payments on the acquisition date, at June 30, 2023 and at September 30, 2023 was approximately $130 million, which is included in the total consideration.

We funded the NJOY Transaction cash payments through a combination of a $2.0 billion term loan facility, the issuance of commercial paper and available cash. For further discussion regarding the term loan facility, see Note 11. Debt.

We accounted for this acquisition as a business combination. NJOY’s financial position and results of operations beginning June 1, 2023 have been consolidated with our consolidated financial results and included in the all other category.

The fair value estimates of the assets acquired and liabilities assumed are preliminary and subject to adjustments during the measurement period (up to one year following the acquisition date). The primary areas of accounting for the NJOY Transaction that are not yet finalized relate to the fair value of certain intangible assets acquired, contingent liabilities, residual goodwill and any related tax impact. During the measurement period, we will adjust preliminary valuations assigned to assets and liabilities if new information is obtained about facts and circumstances that existed as of the NJOY Transaction date, that, if known, would have resulted in revised values for these items as of that date. The impact of all changes, if any, that do not qualify as measurement period adjustments will be included in current period earnings.

12

The following amounts represent the preliminary estimates for purchase price allocation to assets acquired and liabilities assumed in the NJOY Transaction, which will be finalized by the end of the measurement period:

(in millions)
Cash and cash equivalents	$	22
Receivables	7
Inventories	19
Other assets	7
Property, plant and equipment	16
Other intangible assets:
Developed technology (amortizable)	1,000
Trademarks (amortizable)	230
Supplier agreements (amortizable)	180
Accounts payable	(7)
Accrued liabilities	(20)
Deferred income taxes	(167)
Total identifiable net assets	1,287
Total consideration	2,901
Goodwill	$	1,614

The excess of the total consideration over the identifiable net assets acquired in the NJOY Transaction primarily reflects the value of future growth opportunities in the e-vapor category. None of the goodwill or other intangible assets will be deductible for tax purposes.

The significant assumptions used in determining the preliminary fair values of the identifiable intangible assets included revenue growth rates, operating margins, the assessment of acquired technology life cycles, discount rates, as well as other factors. We determined the preliminary fair values of the identifiable intangibles assets using an income approach. The fair value measurements were primarily based on significant inputs that are not observable in the market, such as discounted cash flow analyses, and thus are classified in Level 3 of the fair value hierarchy. We amortize the intangible assets over a weighted-average period of approximately 17 years.

In determining the estimated fair value of contingent payments, we made certain judgments, estimates and assumptions, the most significant of which was the likelihood of certain potential regulatory outcomes. Contingent payments are classified in Level 3 of the fair value hierarchy.

Costs incurred for the NJOY Transaction have been and will be recognized as expenses in the period in which the costs are incurred. We incurred costs related to the NJOY Transaction of $63 million and $14 million for the nine and three months ended September 30, 2023, respectively. For the nine months ended September 30, 2023, substantially all of these costs were acquisition-related costs, consisting primarily of transaction costs and financing fees, which were included in corporate expense and interest and other debt expense, net, respectively, in our condensed consolidated statement of earnings.

Note 3. Revenues from Contracts with Customers

We disaggregate net revenues based on product type. For further discussion, see Note 10. 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 $284 million and $252 million at September 30, 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 September 30, 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 were $57 million and $48 million (excluding the 2022 receivable from the sale of IQOS System commercialization rights) at September 30, 2023 and December 31, 2022, respectively. At September 30, 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.

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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.

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 4. Goodwill and Other Intangible Assets, net

Goodwill and other intangible assets, net, were as follows:

	Goodwill				Other Intangible Assets, net
(in millions)	September 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022
Smokeable products segment	$	99	$	99	$	2,970	$	2,989
Oral tobacco products segment	5,078		5,078		9,073		9,097
Other	1,614		—		1,684		298
Total	$	6,791	$	5,177	$	13,727	$	12,384

Other intangible assets consisted of the following:

	September 30, 2023				December 31, 2022
(in millions)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Indefinite-lived intangible assets	$	11,443	$	—	$	11,443	$	—
Definite-lived intangible assets	2,841		557		1,411		470
Total other intangible assets	$	14,284	$	557	$	12,854	$	470

At September 30, 2023, substantially all of our indefinite-lived intangible assets consisted of our trademarks from our 2009 acquisition of UST ($8.8 billion) and 2007 acquisition of Middleton ($2.6 billion). Definite-lived intangible assets, consisting primarily of intellectual property (which includes developed technology), certain cigarette trademarks, e-vapor trademarks, customer relationships and supplier agreements are amortized over a weighted-average period of approximately 18 years. Pre-tax amortization expense for definite-lived intangible assets was $87 million and $54 million for the nine months ended September 30, 2023 and 2022, respectively, and $42 million and $19 million for the three months ended September 30, 2023 and 2022, respectively. We estimate our annualized amortization expense, which includes the impact of the NJOY Transaction, for each of the next five years to be approximately $170 million, assuming no additional transactions occur that require the amortization of intangible assets.

In July 2023, we received the remaining payment of approximately $1.8 billion (including interest) from Philip Morris International Inc. (“PMI”) as part of the agreement with PMI to, among other things, transition and ultimately conclude our relationship with respect to the IQOS Tobacco Heating System (“IQOS System”) in the United States (“Remaining PMI Payment”). In 2022, we received $1.0 billion from PMI upon entering into the agreement. For the nine and three months ended September 30, 2023, we recorded disposition-related interest income for the Remaining PMI Payment of $54 million and $3 million, respectively, in our condensed consolidated statements of earnings. At September 30, 2023, our condensed

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consolidated balance sheet included a pre-tax $2.7 billion deferred gain, which we expect to recognize in earnings when we relinquish our rights to the IQOS System effective April 30, 2024.

The changes in goodwill and net carrying amount of intangible assets were as follows:

	For the Nine Months Ended				For the Year Ended
	September 30, 2023				December 31, 2022
(in millions)	Goodwill		Other Intangible Assets, net		Goodwill		Other Intangible Assets, net
Balance at January 1	$	5,177	$	12,384	$	5,177	$	12,306
Changes due to:
Acquisitions (1)	1,614		1,430		—		151
Amortization	—		(87)		—		(73)
Balance at end of period	$	6,791	$	13,727	$	5,177	$	12,384

(1) Substantially all of the 2023 amounts are attributable to the NJOY Transaction. For additional information regarding the NJOY Transaction, see Note 2. Acquisition of NJOY. 2022 amounts attributable to certain intellectual property for other tobacco products.

We conduct a required annual review of goodwill and indefinite-lived intangibles for potential impairment, and more frequently if an event occurs or circumstances change that would require us to perform an interim review. There have been no events or changes in circumstances that indicate an interim impairment review was required as of September 30, 2023. We will perform our annual impairment testing during the fourth quarter of 2023.

Note 5. Investments in Equity Securities

The carrying amount of our current and former investments consisted of the following:

(in millions)	September 30, 2023		December 31, 2022
ABI	$	9,563	$	8,975
Cronos	344		375
JUUL	—		250
Total	$	9,907	$	9,600

(Income) losses from our current and former investments in equity securities consisted of the following:

	For the Nine Months Ended September 30,						For the Three Months Ended September 30,
(in millions)	2023			2022			2023		2022
ABI (1)	$	(401)		$	2,155		$	(61)	$	2,367
Cronos (1)	46			197			3		11
(Income) losses from investments under equity method of accounting	(355)			2,352			(58)		2,378
JUUL	250		(2)	1,355		(3)	—		100		(3)
(Income) losses from investments in equity securities	$	(105)		$	3,707		$	(58)	$	2,478

(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 investments 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 former investment in JUUL as an investment in an equity security measured at fair value.

Investment in ABI

At September 30, 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;

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

▪have director nomination rights with respect to ABI.

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.

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 September 30, 2023 and December 31, 2022 was $11.0 billion and $11.9 billion, respectively, which exceeded its carrying value of $9.6 billion and $9.0 billion by approximately 15% and 33%, respectively.

At September 30, 2022, the fair value of our equity investment in ABI had declined below its carrying value by $2.5 billion or approximately 22%. We determined the decline in fair value to be other than temporary and recorded a non-cash, pre-tax impairment charge of $2.5 billion for the nine and three months ended September 30, 2022, which was recorded to (income) losses from investments in equity securities in our condensed consolidated statements of earnings.

Investment in Cronos

At September 30, 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 December 31, 2022, the fair value of our equity method investment in Cronos exceeded its carrying value by $22 million or approximately 6%.

At September 30, 2023, the fair value of our equity method investment in Cronos was less than its carrying value by $31 million or approximately 9%. 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 September 30, 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 Canadian dollar (“CAD”) $16.25 upon the occurrence of specified events (“Fixed-price Preemptive Rights”). The Fixed-price Preemptive Rights had no value at September 30, 2023 and December 31, 2022.

Former Investment in JUUL

In March 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

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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.

Note 6. 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 September 30, 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)	September 30, 2023		December 31, 2022
Carrying value	$	25,098	$	26,680
Fair value	21,325		22,928
Foreign currency denominated debt included in long-term debt:
Carrying value	3,164		4,540
Fair value	2,867		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) of our net investment hedges of $(32) million and $(664) million for the nine months ended September 30, 2023 and 2022, respectively, and $(101) million and $(289) million for the three months ended September 30, 2023 and 2022, respectively, in accumulated other comprehensive losses.

Note 7. Benefit Plans

Components of Net Periodic Benefit Cost (Income)

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

	Pension				Postretirement				Pension				Postretirement
	For the Nine Months Ended September 30,								For the Three Months Ended September 30,
(in millions)	2023		2022		2023		2022		2023		2022		2023		2022
Service cost	$	29	$	48	$	11	$	17	$	9	$	16	$	3	$	7
Interest cost	250		155		49		31		84		51		15		11
Expected return on plan assets	(364)		(370)		(5)		(10)		(121)		(123)		(1)		(4)
Amortization:
Net loss (gain)	3		72		(2)		14		1		24		(2)		6
Prior service cost (credit)	4		5		(30)		(34)		1		2		(10)		(11)
Net periodic benefit cost (income)	$	(78)	$	(90)	$	23	$	18	$	(26)	$	(30)	$	5	$	9

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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 contributions of $14 million to our pension plans and did not make any contributions to our postretirement plans during the nine months ended September 30, 2023. Currently, we anticipate making additional employer contributions of up to approximately $10 million to our pension plans and no contributions 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 8. Earnings per Share

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

	For the Nine Months Ended September 30,				For the Three Months Ended September 30,
(in millions)	2023		2022		2023		2022
Net earnings	$	6,070	$	3,074	$	2,166	$	224
Less: Distributed and undistributed earnings attributable to share-based awards	(12)		(9)		(5)		(3)
Earnings for basic and diluted EPS	$	6,058	$	3,065	$	2,161	$	221
Weighted-average shares for basic and diluted EPS	1,780		1,808		1,773		1,799

Note 9. 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 Nine Months Ended September 30, 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	—		388			14		402
Deferred income taxes	—		(82)			—		(82)
Other comprehensive earnings (losses) before reclassifications, net of deferred income taxes	—		306			14		320
Amounts reclassified to net earnings	(21)		(5)			—		(26)
Deferred income taxes	5		1			—		6
Amounts reclassified to net earnings, net of deferred income taxes	(16)		(4)			—		(20)
Other comprehensive earnings (losses), net of deferred income taxes	(16)		302		(1)	14		300
Balances, September 30, 2023	$	(1,452)	$	(1,067)		$	48	$	(2,471)

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	For the Three Months Ended September 30, 2023
(in millions)	Benefit Plans		ABI		Currency Translation Adjustments and Other		Accumulated Other Comprehensive Losses
Balances, June 30, 2023	$	(1,447)	$	(1,303)	$	41	$	(2,709)
Other comprehensive earnings (losses) before reclassifications	—		316		7		323
Deferred income taxes	—		(