What changed in this filing

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Item 1. Business

2024-02-27 compared with 2023-02-27 · 77 added, 71 removed, 139 unchanged (52% of the section changed)

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tobacco consumers age 21+.

Our Vision by 2030 is to responsibly lead the transition of adult smokers to a smoke-free future (“Vision”).

We are Moving Beyond S moking TM , leading the way in moving adult smokers away from cigarettes by taking action to transition millions to potentially less harmful choices - believing it is a substantial opportunity for adult tobacco consumers, our businesses and society.

Our Vision is to responsibly lead the transition of adult smokers to a smoke-free future (“Vision”).

We are Moving Beyond Smoking TM , leading the way in moving adult smokers away from cigarettes by taking action to transition millions to potentially less harmful choices - believing it is a substantial opportunity for adult tobacco consumers, our businesses and society.

Our wholly owned subsidiaries include Philip Morris USA Inc.

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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 include Altria Group Distribution Company, which provides sales and distribution services to our domestic tobacco operating companies;

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;

and Philip Morris Capital Corporation (“PMCC”), which completed the wind-down of its portfolio of finance assets in 2022 and had no finance assets remaining at December 31, 2022.

In October 2022, Altria, through PM USA, entered into a joint venture with JTI (US) Holding, Inc.

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 include Altria Group Distribution Company, 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.

On June 1, 2023, we completed our acquisition of NJOY Holdings, Inc.

(“NJOY Holdings”), the parent of NJOY, for total consideration of approximately $2.9 billion (“NJOY Transaction”), which consisted of approximately $2.75 billion in cash payments (net of cash acquired) plus the fair value of certain contingent consideration.

As a result of the acquisition, NJOY became a wholly owned subsidiary of Altria.

For further details, see Note 3.

Acquisition of NJOY to our consolidated financial statements in Item 8.

Financial Statements and Supplementary Data of this Form 10-K (“Item 8”).

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.

In October 2022, we entered into a joint venture with JTI (US) Holding, Inc.

(“JTIUH”), a subsidiary of Japan Tobacco Inc.

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For further information, see Other Tobacco Products below.

In October 2021, UST sold its subsidiary, International Wine & Spirits Ltd.

In October 2021, we sold International Wine & Spirits Ltd.

(“IWS”), which included Ste.

Michelle Wine Estates Ltd.

Michelle”), in an all-cash transaction with a net purchase price of approximately $1.2 billion and the assumption of certain liabilities of IWS and its subsidiaries (the “Ste.

Michelle”), in an all-cash transaction with a net purchase price of approximately $1.2 billion and the assumption of certain liabilities of IWS and its subsidiaries (“Ste.

Michelle Transaction”).

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The total purchase price of the December 2020 and April 2021 transactions was approximately $250 million.

Our reportable segments are smokeable products and oral tobacco products.

The financial services business, the IQOS System (as defined below) heated tobacco business and Helix ROW are included in an all other category due to the relative financial contribution of these businesses to our consolidated results.

At December 31, 2023, our reportable segments were smokeable products and oral tobacco products.

Our all other category included (i) the financial results of NJOY (beginning June 1, 2023);

(ii) Horizon;

(iii) Helix ROW;

and (iv) the IQOS System (as defined below) heated tobacco business due to the relative financial contribution of these businesses to our consolidated results.

Prior to the Ste.

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For further information, see Note 16.

Segment Reporting to the consolidated financial statements in Item 8.

Financial Statements and Supplementary Data of this Form 10-K (“Item 8”).

Our investments in equity securities include Anheuser-Busch InBev SA/NV (“ABI”), Cronos Group Inc.

(“Cronos”) and JUUL Labs, Inc.

We account for our investments in ABI and Cronos under the equity method of accounting using a one-quarter lag.

We account for our investment in JUUL at fair value.

For further discussion of our investments in equity securities, see Note 5.

Investments in Equity Securities to the consolidated financial statements in Item 8 (“Note 5”).

Segment Reporting to our consolidated financial statements in Item 8.

Our investments include 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, see Note 7.

Investments in Equity Securities to our consolidated financial statements in Item 8 (“Note 7”).

Description of Business

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Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Form 10-K (“Item 7”).

Tobacco Space

Our tobacco operating companies include PM USA, USSTC and other subsidiaries of UST, Middleton and Helix.

The products of our tobacco operating companies include:

Our operating companies include PM USA, USSTC, Middleton, Helix and NJOY.

The products of our operating companies 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.

(ii) oral tobacco products, consisting of MST and snus products manufactured and sold by USSTC and oral nicotine pouches manufactured and sold by Helix;

and (iii) e-vapor products contract manufactured by third-parties and sold by NJOY.

▪ Cigarettes:

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Middleton is engaged in the manufacture and sale of machine-made large cigars and pipe tobacco.

Middleton contracts with a third-party importer to supply a majority of its cigars and sells substantially all of its cigars to customers in the United States.

Middleton contracts with a third-party importer to supply substantially all of its cigars and sells substantially all of its cigars to customers in the United States.

Black & Mild is the principal cigar brand of Middleton.

Total smokeable products segment’s cigars shipment volume was approximately 1.7 billion units in 2022, a decrease of 4.0% from 2021.

Total smokeable products segment’s cigars shipment volume was approximately 1.8 billion units in 2023, an increase of 2.8% from 2022.

▪ Oral tobacco products:

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Total oral tobacco products segment’s shipment volume was 782.9 million units in 2023, a decrease of 2.2% from 2022.

▪ E-Vapor products:

NJOY contracts with third-party importers to supply all of its products and sells its e-vapor products to customers in the United States.

NJOY ACE is the principal e-vapor product of NJOY.

NJOY is currently the only e-vapor manufacturer to receive market authorizations from the U.S.

Food and Drug Administration (“FDA”) for a pod-based e-vapor product.

▪ Other tobacco products:

In December 2013, we entered into a series of agreements with Philip Morris International Inc.

(“PMI”), including an agreement that granted us an exclusive right to commercialize certain of PMI’s heated tobacco products in the United States.

In 2019, PM USA began commercialization of PMI’s IQOS Tobacco Heating System (“ IQOS System”) in select markets.

In connection with a patent dispute, the U.S.

International Trade Commission (“ITC”) issued a limited exclusion order barring the importation of the IQOS System electronic device, Marlboro HeatSticks and the infringing components into the United States and a cease and desist order barring domestic sales, marketing and distribution of these imported products effective November 29, 2021.

Due to this litigation, we removed the IQOS System electronic device and Marlboro HeatSticks from the marketplace.

For a further discussion of the ITC decision, see Note 17.

Contingencies to the consolidated financial statements in Item 8 (“Note 17”).

In October 2022, we entered into an agreement with PMI to, among other things, transition and ultimately conclude our relationship with respect to the IQOS System in the United States.

We have agreed to assign to PMI exclusive U.S.

commercialization rights to the IQOS System effective April 30, 2024.

PMI will not have access to the Marlboro brand name or other brand assets, as PM USA owns the Marlboro trademark in the United States.

For further discussion see Note 4.

Goodwill and Other Intangible Assets, net to the consolidated financial statements in Item 8 (“Note 4”).

In connection with the joint venture agreement with JTIUH, Horizon will market and commercialize HTS products, which are defined in the joint venture agreement as products that include both (i) a tobacco heating device intended to heat the consumable without combusting and (ii) a consumable that meets the definition of a cigarette under the U.S.

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Horizon is responsible for the U.S.

commercialization of current and future HTS products owned by either party and, upon authorization by the U.S.

Food and Drug Administration (“FDA”) of a pre-market tobacco application (“PMTA”), will become the exclusive entity through which the parties market and commercialize HTS products in the United States.

commercialization of current and future HTS products owned by either party and, upon authorization by the FDA of a pre-market tobacco application (“PMTA”), will become the exclusive entity through which the parties market and commercialize HTS products in the United States.

Upon PMTA authorization of Ploom HTS products, JTIUH will supply Ploom HTS devices and PM USA will manufacture Marlboro HTS consumables for U.S.

commercialization.

In October 2022, we agreed to assign to Philip Morris International Inc.

(“PMI”) exclusive U.S.

commercialization rights to the IQOS Tobacco Heating System (“ IQOS System”) effective April 30, 2024.

For further discussion of the agreement with PMI see Note 6.

Goodwill and Other Intangible Assets, net to our consolidated financial statements in Item 8 (“Note 6”).

▪ Distribution, Competition and Raw Materials:

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Promotional activities include, in certain instances and where permitted by law, allowances, the distribution of incentive items, price promotions, product promotions, coupons and other discounts.

The Family Smoking Prevention and Tobacco Control Act (“FSPTCA”) provides the FDA with broad authority to regulate the design, manufacture, packaging, advertising, promotion, sale and distribution of tobacco products;

the authority to require disclosures of related information;

and the authority to enforce the FSPTCA and related regulations.

In the United States, under a contract growing program, PM USA purchases the majority of its burley and flue-cured leaf tobaccos directly from domestic tobacco growers.

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Middleton does not have a contract growing program.

Helix, through an affiliate, purchases tobacco-derived nicotine materials from suppliers and believes its suppliers can satisfy current and anticipated future production requirements.

Helix, through an affiliate, and NJOY purchase tobacco-derived nicotine materials from suppliers and believe their suppliers can satisfy current and anticipated future production requirements.

Our tobacco subsidiaries believe there is an adequate supply of tobacco in the world markets to satisfy their current and anticipated production requirements.

For further discussion of the foregoing matters, the tobacco business environment, trends in market demand and competitive conditions, and related risks, see Item 1A.

Risk Factors of this Form 10-K (“Item 1A”) and Tobacco Space - Business Environment in Item 7.

For further discussion of the foregoing matters, the business environment, trends in market demand and competitive conditions, and related risks, see Item 1A.

Risk Factors of this Form 10-K (“Item 1A”) and Operating Results by Business Segment - Business Environment in Item 7.

Other Matters

For a discussion of PM USA, USSTC, Helix and Middleton’s largest customers, including their percentages of our consolidated net revenues for the years ended December 31, 2022, 2021 and 2020, see Note 14.

Segment Reporting to the consolidated financial statements in Item 8 (“Note 14”).

For a discussion of our largest customers, including their percentages of our consolidated net revenues for the years ended December 31, 2023, 2022 and 2021, see Note 16.

▪ Executive Officers of Altria:

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We believe our workforce is critical to achieving our Vision.

Attracting, developing, deploying and retaining the best talent with the skills to make significant progress toward our Vision is a key business priority.

Attracting, developing, retaining and deploying the best talent with the skills to make significant progress toward our Vision is a key business priority.

Moreover, we recognize the importance of doing business the right way.

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This is why we dedicate resources to promoting a vibrant, inclusive workplace;

attracting, developing and retaining talented, diverse employees;

attracting, developing, retaining and deploying talented, diverse employees;

promoting a culture of compliance and integrity;

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▪ Increase our vice president and director-level employees who are LGBTQ+, a person with a disability or a veteran.

▪ Have diverse functional leadership teams that reflect the organizations they lead.

As of December 31, 2022, women represented 34% of vice president-level and 41% of director-level roles;

Asian, Black, Hispanic or employees of two or more races represented 21% of our vice president-level and 26% of our director-level roles.

▪ Have diverse leadership teams that reflect the organizations they lead.

We maintain our commitment to building an inclusive organization and workforce that reflects the diversity of the labor market from which we hire.

Our data-driven efforts focus on removing barriers to equal opportunity in compliance with applicable law.

We strive for an organization that is more reflective of the diversity of the labor market from which we hire, and we remain committed to ID&E.

We monitor our ID&E progress through inclusive leadership ratings and other measures and report our ID&E progress annually through our corporate responsibility reporting.

Compensation and Benefits

Our compensation and benefits programs are designed to help us attract, retain and motivate strong talent.

However, we recognize that the decreasing social acceptance of tobacco usage may impact our ability to attract and retain talent.

However, we recognize that the decreasing social acceptance of tobacco usage may impact our ability to attract and retain talent with skills necessary for us to achieve our Vision.

We work to manage this risk by, among other things, targeting total compensation packages to be above peer companies with which we compete for talent.

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We are committed to pay equity across our companies.

Based on the most recent annual analysis we conducted in December 2022, adjusting for factors generally considered to be legitimate differentiators of salary, such as performance and tenure, salaries of our female employees were 99.6% of those of our male employees, and salaries of our non-white employees were 100% of those of our white employees.

In addition to cash and equity compensation, we offer generous employee benefits such as significant company contributions to deferred profit sharing plans, consumer-driven health plan coverage, vacation and holiday pay, disability and life insurance, and up to 12 weeks paid parental and family leave for birth, adoption and foster placement and an additional six weeks paid leave for birth mothers.

Our benefits also include physical, emotional and financial wellness programs and family creation assistance benefits, such as adoption assistance and coverage for fertility treatments.

Based on the most recent annual analysis we conducted in November 2023, for employees performing the same or similar duties regardless of any differentiating factors, such as performance and tenure, salaries of our female employees were 97.8% of those of our male employees, and salaries of our employees of color were 98.1% of those of our white employees.

If we adjust for differentiating factors that legitimately influence pay, salaries of our female employees were 99.6% of those of our male employees, and salaries of our employees of color were 99.9% of those of our white employees.

We also offer up to 12 weeks paid family leave to bond with a newborn child, the placement of a child for adoption or foster care, or to care for a family member who has a serious health condition.

Our benefits also include physical, emotional and financial wellness programs and family creation assistance benefits, such as reimbursement of surrogacy, adoption assistance and fertility expenses.

While there is some variability in employee benefits across our companies, the examples we provide are available to most employees.

We are also committed to investing in the educational development of our workforce through an unlimited tuition refund program for job-related courses or company-related degrees.

We are also committed to investing in the educational development of our workforce through a tuition refund program for job-related courses or company-related degrees.

We also provide eligible employees with a company-funded contribution applied to the employee’s qualified higher education student loans to help reduce student loan debt.

Attracting, Developing and Retaining Talent

Attracting, Developing, Retaining and Deploying Talent

Our salaried entry-level recruitment efforts focus on recruiting relationships with universities, internship opportunities and partnerships with organizations that support diverse students.

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Employees have access to a wide variety of development programs, including new employee onboarding, in-person, virtual and self-guided training programs, technical training, including training to maintain professional certifications, and our educational refund program for continuing education.

An additional tool we use to motivate and recognize employees is our employee recognition program, Snap, which allows leaders and employees to reward and recognize colleagues for their outstanding performance and everyday excellence.

We also have an employee recognition program that allows leaders and employees to reward and recognize colleagues for their outstanding performance and everyday excellence.

We regularly conduct confidential employee engagement surveys to seek feedback on a variety of topics, including employee satisfaction, support from leadership, corporate culture and culture of compliance.

In addition, in 2022, we conducted quarterly employee surveys to gauge overall engagement and to obtain feedback on topics such as workplace flexibility, workload, inclusion, development opportunities, management support, compliance and understanding of business strategy.

In addition, in 2023, these quarterly employee surveys sought feedback on topics such as workplace flexibility, workload, inclusion, development opportunities, management support, compliance and understanding of business strategy.

Survey results, including comparisons to prior results, are shared with our employees and our Board and are used to modify or enhance our human capital management programs.

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At December 31, 2023, we employed approximately 6,400 people.

Twenty-eight percent of our employees were hourly manufacturing employees who are members of labor unions subject to collective bargaining agreements.

Twenty-seven percent of our employees were hourly manufacturing employees who are members of labor unions subject to collective bargaining agreements.

We believe we engage and collaborate effectively with our hourly employees, as demonstrated by the positive working relationship between our companies and the unions.

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Trademarks are of material importance to us and are protected by registration or otherwise.

In addition, as of December 31, 2022, the portfolio of United States patents owned by our businesses, as a whole, was material to us and our tobacco businesses.

However, no one patent or group of related patents was material to our business or our tobacco businesses as of

December 31, 2022.

In addition, as of December 31, 2023, the portfolio of United States patents owned by our businesses, as a whole, was material to us and our businesses.

However, no one patent or group of related patents was material to our businesses as of December 31, 2023.

Our businesses also have proprietary trade secrets, technology, know-how, processes and other intellectual property rights that are protected by appropriate confidentiality measures.

Certain trade secrets are material to us and our tobacco businesses.

Certain trade secrets are material to us and our businesses.

▪ Government Regulations:

We are subject to various federal, state and local laws and regulations.

For discussion of laws and regulations impacting our tobacco operating companies, see Tobacco Space - Business Environment in Item 7.

For example, the Family Smoking Prevention and Tobacco Control Act (“FSPTCA”) provides the FDA with broad authority to regulate the design, manufacture, packaging, advertising, promotion, sale and distribution of tobacco products;

the authority to require disclosures of related information;

and the authority to enforce the FSPTCA and related regulations.

For further discussion of laws and regulations impacting our operating companies, see Operating Results by Business Segment - Business Environment in Item 7.

We and our subsidiaries (and former subsidiaries) are also subject to various federal, state and local laws and regulations concerning the discharge of materials into the environment, or otherwise related to environmental protection, including, in the United States:

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As discussed in Note 2.

Summary of Significant Accounting Policies to the consolidated financial statements in Item 8 (“Note 2”), we provide for expenses associated with environmental remediation obligations on an undiscounted basis when such amounts are probable and can be reasonably estimated.

Summary of Significant Accounting Policies to our consolidated financial statements in Item 8 (“Note 2”), we provide for expenses associated with environmental remediation obligations on an undiscounted basis when such amounts are probable and can be reasonably estimated.

Such accruals are adjusted as new information develops or circumstances change.

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The SEC maintains an Internet website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers from which investors can electronically access our SEC filings.

We make available free of charge on or through our website (www.altria.com) our Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

We make available free of charge on or through our website (www.altria.com) our Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

Investors can access our filings with the SEC by visiting www.altria.com/secfilings.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business