What changed in this filing

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Item 1. Financial Statements

2024-07-31 compared with 2024-04-25 · 399 added, 210 removed, 875 unchanged (41% of the section changed)

5 unchanged sentences

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March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Cash and cash equivalents $ 1,799 $ 3,686

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________________________________________________

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Current portion of long-term debt $ 1,553 $ 1,121

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Cost of repurchased stock

( 1,088,334,893 shares at March 31, 2024 and

( 1,095,982,189 shares at June 30, 2024 and

1,042,499,542 shares at December 31, 2023)

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For the Three Months Ended March 31, 2024 2023

For the Six Months Ended June 30, For the Three Months Ended June 30,

2024 2023 2024 2023

Net revenues $ 11,785 $ 12,227 $ 6,209 $ 6,508

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Marketing, administration and research costs 1,394 1,424 788 852

Asset impairment 354 — 354 —

Operating income 5,207 5,662 2,533 2,905

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(Income) losses from investments in equity securities ( 414 ) ( 47 ) ( 119 ) ( 127 )

Gain on the sale of IQOS System commercialization rights

( 2,700 ) — ( 2,700 ) —

Earnings before income taxes 7,855 5,285 5,116 2,806

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For the Three Months Ended March 31, 2024 2023

For the Six Months Ended June 30, For the Three Months Ended June 30,

2024 2023 2024 2023

Net earnings $ 5,932 $ 3,904 $ 3,803 $ 2,117

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Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

for the Three Months Ended March 31, 2024 and 2023

for the Six Months Ended June 30, 2024 and 2023

(in millions of dollars, except per share data)

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Other — — — — ( 24 ) — ( 24 )

Balances, March 31, 2024

Balances, June 30, 2024

$ 935 $ 5,876 $ 33,651 $ ( 2,283 ) $ ( 41,195 ) $ 50 $ ( 2,966 )

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— — ( 3,356 ) — — — ( 3,356 )

Repurchases of common stock — — — — ( 472 ) — ( 472 )

Other — — — — ( 5 ) — ( 5 )

Balances, June 30, 2023

$ 935 $ 5,880 $ 30,340 $ ( 2,709 ) $ ( 38,273 ) $ 50 $ ( 3,777 )

See notes to condensed consolidated financial statements.

Altria Group, Inc.

and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

for the Three Months Ended June 30, 2024 and 2023

( in millions of dollars, except per share data)

_______________________________________

Attributable to Altria

Stock Additional

Capital Earnings

Business Accumulated

Comprehensive

Losses Cost of

Interests Total

Stockholders’

Equity (Deficit)

Balances, March 31, 2024

$ 935 $ 5,521 $ 31,535 $ ( 2,266 ) $ ( 40,839 ) $ 50 $ ( 5,064 )

(1) Represents the remaining 15 % of the Repurchase Price related to the ASR transactions.

Net earnings — — 3,803 — — — 3,803

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

— — — ( 17 ) — — ( 17 )

Stock award activity

— 13 — — — — 13

Cash dividends declared ($ 0.98 per share)

— — ( 1,687 ) — — — ( 1,687 )

Repurchases of common stock — 342 (1) — — ( 352 ) — ( 10 )

Other — — — — ( 4 ) — ( 4 )

Balances, June 30, 2024

$ 935 $ 5,876 $ 33,651 $ ( 2,283 ) $ ( 41,195 ) $ 50 $ ( 2,966 )

Balances, March 31, 2023

$ 935 $ 5,866 $ 29,898 $ ( 2,779 ) $ ( 37,796 ) $ 50 $ ( 3,826 )

Net earnings — — 2,117 — — — 2,117

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

— — — 70 — — 70

Stock award activity

— 14 — — — — 14

Cash dividends declared ($ 0.94 per share)

— — ( 1,675 ) — — — ( 1,675 )

Repurchases of common stock — — — — ( 472 ) — ( 472 )

Other — — — — ( 5 ) — ( 5 )

Balances, June 30, 2023

$ 935 $ 5,880 $ 30,340 $ ( 2,709 ) $ ( 38,273 ) $ 50 $ ( 3,777 )

(1) Represents the fair value of the shares received at final settlement of the ASR Agreements that were transferred to cost of repurchased stock.

For further discussion, see Note 1.

Background and Basis of Presentation .

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For the Three Months Ended March 31, 2024 2023

For the Six Months Ended June 30, 2024 2023

Cash Provided by (Used in) Operating Activities

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Unrecognized tax benefit (1)

Fair value adjustment for NJOY Transaction contingent payments 140 —

(Income) losses from investments in equity securities ( 414 ) ( 47 )

Gain on the sale of IQOS System commercialization rights

Dividends from ABI 139 163

Asset impairment 354 —

Cash effects of changes:

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Proceeds from the ABI Transaction (3)

Acquisition of NJOY, net of cash acquired — ( 2,750 )

Other, net ( 10 ) ( 5 )

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(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, partially offset by our estimated corporate alternative minimum tax credit carryforward.

2023 amounts have been reclassified to conform to the current year presentation.

(2) 2023 amounts are net of the effects from the NJOY Transaction.

For further details see Note 2.

Acquisition of NJOY .

(3) For further discussion of the ABI Transaction, see Note 6.

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For the Three Months Ended March 31, 2024 2023

For the Six Months Ended June 30, 2024 2023

Cash Provided by (Used in) Financing Activities

Proceeds from short-term borrowings $ — $ 2,000

Long-term debt repaid ( 1,121 ) ( 1,566 )

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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, 2024 At December 31, 2023

At June 30, 2024 At December 31, 2023

Cash and cash equivalents $ 1,799 $ 3,686

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Cash, cash equivalents and restricted cash $ 1,836 $ 3,721

(1) Includes $ 360 million ( 15 % of the Repurchase Price) paid in March 2024 related to the ASR transactions.

Background and Basis of Presentation .

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

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▪ Background:

At March 31, 2024, our wholly owned subsidiaries included Philip Morris USA Inc.

At June 30, 2024, 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;

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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 March 31, 2024, 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.

At March 31, 2024, we also owned a 75 % economic interest in Horizon Innovations LLC (“Horizon”), a joint venture with JTI (US) Holding, Inc., a subsidiary of Japan Tobacco Inc., which owned the remaining 25 % economic interest.

Horizon is structured to exist in perpetuity and is responsible for the U.S.

At June 30, 2024, 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.

At June 30, 2024, we also owned a 75 % economic interest in Horizon Innovations LLC (“Horizon”), a joint venture with JTI (US) Holding, Inc., a subsidiary of Japan Tobacco Inc., which owned the remaining 25 % economic interest.

Horizon is responsible for the U.S.

marketing and commercialization of heated tobacco stick products owned by either party.

At March 31, 2024, we had investments in Anheuser-Busch InBev SA/NV (“ABI”) and Cronos Group Inc.

At June 30, 2024, we had investments in Anheuser-Busch InBev SA/NV (“ABI”) and Cronos Group Inc.

In March 2024, we sold a portion of our investment in ABI (“ABI Transaction”).

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In January 2024, our Board of Directors authorized a new $ 1.0 billion share repurchase program that it increased to $ 3.4 billion in March 2024 (as increased, “January 2024 share repurchase program”).

In connection with the ABI Transaction, we entered into accelerated share repurchase (“ASR”) transactions under two separate agreements with bank counterparties (collectively, “ASR Agreements”) to repurchase an aggregate $ 2.4 billion (“Repurchase Price”) of our common stock.

In March 2024, we paid the Repurchase Price and received 46.5 million shares of our common stock, which represented an aggregate value of approximately 85 % or $ 2,040 million of the Repurchase Price based on the closing price per share of our common stock on the date we entered into the ASR Agreements.

Upon final settlement of each of the ASR transactions (for the remaining 15 % or $ 360 million of the Repurchase Price), which we expect to occur by June 30, 2024, we may be entitled to receive additional shares or, under certain circumstances specified in the ASR Agreements, may be required to deliver shares of our common stock or cash, at our option, to the applicable bank counterparty.

The total number of shares to be repurchased under the ASR Agreements will be based on volume-weighted average prices of our common stock during the term of the ASR transactions, less a discount and subject to certain adjustments pursuant to the terms of the ASR Agreements.

The ASR transactions are accounted for as equity transactions and included in cost of repurchased stock on our condensed consolidated balance sheet when the shares are received.

At March 31, 2024, the remaining $ 360 million was recorded as a reduction in additional paid in capital on our condensed consolidated balance sheet, and we had $ 1.0 billion remaining under the January 2024 share repurchase program.

We entered into accelerated share repurchase (“ASR”) transactions under two separate agreements with bank counterparties (collectively, “ASR Agreements”) to repurchase shares of our common stock having an aggregate value of $ 2.4 billion (“Repurchase Price”).

In the first quarter of 2024, we paid the Repurchase Price and received 46.5 million shares of our common stock, which represented approximately 85 % of the Repurchase Price, or $ 2,040 million, based on the closing price per share of our common stock on the date we entered into the ASR Agreements.

In the second quarter of 2024, we received approximately 7.4 million additional shares of our common stock upon the final settlement of the ASR Agreements.

The total number of shares repurchased under the ASR Agreements was based on volume-weighted average prices of our common stock during the term of the ASR transactions, less a discount.

We funded the ASR transactions with proceeds from the ABI Transaction.

The ASR transactions were accounted for as equity transactions and included in cost of repurchased stock on our condensed consolidated balance sheet when the shares were received.

At June 30, 2024, we had $ 990 million remaining under the January 2024 share repurchase program.

The timing of share repurchases depends upon marketplace conditions and other factors, and the program remains subject to the discretion of our Board.

Our share repurchase activity, which consisted only of shares purchased under the ASR Agreements, was as follows:

(in millions, except per share data) For the Three Months Ended March 31, 2024

Our share repurchase activity was as follows:

For the Six Months Ended June 30, For the Three Months Ended June 30,

(in millions, except per share data) 2024 (1)

2023 2024 (1)

Total number of shares repurchased 54.1 10.4 7.6 10.4

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Average price per share of shares repurchased $ 44.50 $ 45.37 $ 48.36 $ 45.37

(1) Subject to final settlement of each of the ASR transactions, which we expect to occur by June 30, 2024, but may occur earlier in certain circumstances.

Until final settlement, $ 360 million ( 15 % of the Repurchase Price) will remain in additional paid in capital on our condensed consolidated statement of stockholders’ equity (deficit).

(2) The final price per share of shares repurchased under each ASR Agreement will be determined at the end of the applicable purchase period, which is scheduled to occur by June 30, 2024, but may occur earlier in certain circumstances.

For the three months ended March 31, 2023, there were no share repurchases.

(1) Includes 53.9 million and 7.4 million shares repurchased under the ASR Agreements at an average price per share of $ 44.50 and $ 48.44 for the six and three months ended June 30, 2024, respectively.

▪ Basis of Presentation:

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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, 2023.

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

On January 1, 2024, we adopted Accounting Standards Update (“ASU”) 2022-03, Fair Value Measurement (Topic 820):

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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 at March 31, 2024, December 31, 2023 and on the acquisition date was approximately $ 130 million, which is included in the total consideration.

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 .

Food and Drug Administration (“FDA”) authorizations with respect to NJOY’s menthol ($ 250 million), blueberry ($ 125 million) and watermelon ($ 125 million) pod products.

The fair value of these contingent payments at March 31, 2024, December 31, 2023 and on the acquisition date was approximately $ 130 million, which was included in the total consideration.

On June 21, 2024, the FDA issued marketing granted orders for four NJOY menthol e-vapor products.

As a result, we became obligated to make cash payments totaling $ 250 million under the acquisition agreement, which payments occurred in July 2024.

Additionally, we recorded a pre-tax charge of approximately $ 140 million for the change in the fair value of contingent payments for the six and three months ended June 30, 2024, as an acquisition-related cost in marketing, administration and research costs in our condensed consolidated statement of earnings.

At June 30, 2024, the fair value of total contingent payments was approximately $ 270 million after recording the fair value adjustment.

Contingent payments related to the NJOY Transaction were recognized at their estimated fair value as of the acquisition date.

Subsequent changes to the fair value of the liability resulting from contingent payments are recognized in earnings until the contingency is resolved.

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 are recognized as expenses in the period in which the costs are incurred.

For the six and three months ended June 30, 2023, we incurred $ 49 million and $ 41 million, respectively, for acquisition-related costs, consisting primarily of transaction costs and financing fees, which were included in marketing, administration and research costs and interest and other debt expense, net, respectively, in our condensed consolidated statements of earnings.

We funded the initial NJOY Transaction cash payments at closing through a combination of borrowings under 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 12.

We accounted for this acquisition as a business combination.

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 area of accounting for the NJOY Transaction that is not yet finalized is the assessment of contingent liabilities, which could impact the fair value of certain intangible assets acquired and residual goodwill, including any related tax impact.

The amounts in the table below represent the preliminary estimates for purchase price allocation to assets acquired and liabilities assumed in the NJOY Transaction, including measurement period adjustments made for the three months ended March 31, 2024.

We recorded no measurement period adjustments in 2023.

The preliminary purchase price allocation will be finalized by the end of the measurement period.

(in millions) Preliminary Purchase Price Allocation Measurement period adjustments recognized at March 31, 2024 Updated Preliminary Purchase Price Allocation

On June 1, 2024, we finalized our purchase price allocation for the NJOY Transaction.

The amounts in the table below represent the final purchase price allocation to assets acquired and liabilities assumed in the NJOY Transaction, including measurement period adjustments made during the three months ended March 31, 2024.

We recorded no measurement period adjustments in 2023 or during the three months ended June 30, 2024.

(in millions) Preliminary Purchase Price Allocation Measurement Period Adjustments Final Purchase Price Allocation

Cash and cash equivalents $ 22 $ — $ 22

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No ne of the goodwill or other intangible assets is deductible for tax purposes.

The significant assumptions used in determining the preliminary fair values of the identifiable intangible assets included volume 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 intangible assets using an income approach.

The significant assumptions used in determining the fair values of the identifiable intangible assets included volume growth rates, operating margins, the assessment of acquired technology life cycles, discount rates, as well as other factors.

We determined the fair values of the identifiable intangible 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 18 years.

Following the measurement period adjustments made in the first quarter of 2024, we estimate our total annual pre-tax amortization expense for all of our definite-lived intangible assets, which includes the impact of the NJOY Transaction, to be approximately $ 150 million for each of the next five years, assuming no additional transactions occur that require the amortization of intangible assets and no impacts of any additional measurement period adjustments related to the NJOY Transaction.

Contingent payments are classified in Level 3 of the fair value hierarchy.

We amortize these intangible assets over a weighted-average period of approximately 18 years.

Revenues from Contracts with Customers

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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 $ 234 million and $ 258 million at March 31, 2024 and December 31, 2023, respectively.

Deferred revenue from contracts with customers was $ 310 million and $ 258 million at June 30, 2024 and December 31, 2023, 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, 2024 and December 31, 2023, there were no

differences between amounts recorded as deferred revenue from contracts with customers and amounts subsequently recognized as revenue.

Receivables were $ 77 million and $ 71 million at March 31, 2024 and December 31, 2023, respectively.

At March 31, 2024 and December 31, 2023, there were no expected differences between amounts recorded and subsequently received, and we did no t record an allowance for credit losses against these receivables.

At June 30, 2024 and December 31, 2023, there were no differences between amounts recorded as deferred revenue from contracts with customers and amounts subsequently recognized as revenue.

Receivables were $ 72 million and $ 71 million at June 30, 2024 and December 31, 2023, respectively.

At June 30, 2024 and December 31, 2023, there were no expected differences between amounts recorded and subsequently received, and we did no t 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.

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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.

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.

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We have no economic interest in a supplier’s sale of a receivable.

Once a qualifying supplier elects to participate in the Program and reaches an agreement with a participating third-party financial institution, the qualifying supplier elects which individual invoices they sell to the financial institution.

All outstanding balances under the Program are recorded in accounts payable on our condensed consolidated balance sheets, and the associated payments are included in operating activities within our condensed consolidated statements of cash flows.

At March 31, 2024 and December 31, 2023, confirmed outstanding obligations under the Program were $ 120 million and $ 119 million, respectively.

At June 30, 2024 and December 31, 2023, confirmed outstanding obligations under the Program were $ 125 million and $ 119 million, respectively.

Goodwill and Other Intangible Assets, net

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

Goodwill Other Intangible Assets, net

(in millions) June 30, 2024 December 31, 2023 June 30, 2024 December 31, 2023

Smokeable products segment $ 99 $ 99 $ 2,951 $ 2,963

Oral tobacco products segment 5,078 5,078 8,695 9,065

Other 1,768 1,614 1,402 1,658

Total $ 6,945 $ 6,791 $ 13,048 $ 13,686

Other intangible assets consisted of the following:

June 30, 2024 December 31, 2023

(in millions) Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization

Indefinite-lived intangible assets

$ 11,089 $ — $ 11,443 $ —

Definite-lived intangible assets

2,621 662 2,841 598

Total other intangible assets $ 13,710 $ 662 $ 14,284 $ 598

At June 30, 2024, substantially all of our indefinite-lived intangible assets consisted of (i) MST and snus trademarks of $ 8.5 billion, which consists of Copenhagen , Skoal and other MST and snus trademarks of $ 4.0 billion, $ 3.6 billion and $ 0.9 billion, respectively, from our 2009 acquisition of UST, and (ii) cigar trademarks of $ 2.6 billion from our 2007 acquisition of

Definite-lived intangible assets, consisting primarily of intellectual property (which includes developed technology), certain cigarette trademarks, e-vapor trademarks and customer relationships, are amortized over a weighted-average period of approximately 19 years.

Pre-tax amortization expense for definite-lived intangible assets was $ 64 million and $ 45 million for the six months ended June 30, 2024 and 2023, respectively, and $ 37 million and $ 27 million for the three months ended June 30, 2024 and 2023, respectively.

We estimate our annualized amortization expense, which includes the impact of the NJOY Transaction and related measurement period adjustments, for each of the next five years to be approximately $ 150 million, assuming no additional transactions occur that require the amortization of intangible assets.

On April 30, 2024, we assigned the exclusive U.S.

commercialization rights to the IQOS Tobacco Heating System (“ IQOS System”) to Philip Morris International Inc.

(“PMI”) pursuant to the terms of a purchase agreement entered into with PMI in October 2022.

In exchange for the assignment of the U.S.

commercialization rights to the IQOS System, we received total cash payments of approximately $ 2.8 billion ($ 1.0 billion in 2022 and $ 1.8 billion, including interest, in the third quarter of 2023), $ 2.7 billion of which was classified as a deferred gain on our condensed consolidated balance sheet at December 31, 2023.

Upon the assignment of the U.S.

commercialization rights to the IQOS System, we recorded a pre-tax gain of $ 2.7 billion for the six and three months ended June 30, 2024 in our condensed consolidated statements of earnings.

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

For the Six Months Ended For the Year Ended

June 30, 2024 December 31, 2023

(in millions) Goodwill Other Intangible Assets, net Goodwill Other Intangible Assets, net

Balance at January 1

$ 6,791 $ 13,686 $ 5,177 $ 12,384

Changes due to:

Acquisitions (1)

154 ( 220 ) 1,614 1,430

Asset impairment

— ( 354 ) — —

— ( 64 ) — ( 128 )

Balance at end of period $ 6,945 $ 13,048 $ 6,791 $ 13,686

(1) Substantially all of the 2023 amounts are attributable to the NJOY Transaction.

The 2024 amount represents the measurement period adjustments made during the three months ended March 31, 2024 related to the NJOY Transaction.

For additional information regarding the NJOY Transaction, see Note 2.

Acquisition of NJOY .

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 quantitative impairment assessment.

Apart from the factors leading us to perform a quantitative assessment for the Skoal intangible asset as discussed below, there have been no events or changes in circumstances that indicate an interim quantitative impairment assessment was required as of June 30, 2024.

We will perform our annual impairment testing during the fourth quarter of 2024.

At December 31, 2023, the estimated fair value of the Skoal trademark exceeded its carrying value of $ 3.9 billion by approximately 6 % ($ 0.2 billion).

Sales volumes of MST products, including Skoal , have continued to be negatively impacted due in part to evolving adult tobacco consumer preferences, which has resulted in consumers increasingly moving across tobacco categories.

In connection with the preparation of our financial statements for the period ended June 30, 2024, we evaluated the accelerated growth of innovative tobacco products, including oral nicotine pouches, and the related increase in competitive activity among tobacco categories, which have continued to contribute to reductions in sales volumes for MST products, including Skoal .

We concluded that the expected impact from the sales volume declines on the Skoal trademark represented a triggering event, and as a result of this conclusion, we performed an interim impairment assessment as of June 30, 2024.

As a result of (i) lower projected revenue and income due to lower volume assumptions, (ii) a decrease in the perpetual growth rate to 0 % ( 1 % at October 1, 2023 valuation) and (iii) an increase in the discount rate to 11.5 % ( 11.0 % at October 1, 2023 valuation), we determined the estimated fair value of the Skoal trademark as of June 30, 2024, was below its carrying value and recorded a non-cash, pre-tax impairment of $ 354 million for the six and three months ended June 30, 2024 in our condensed consolidated statements of earnings.

Our estimate of the fair value and carrying value of the Skoal trademark at June 30, 2024 was $ 3.6 billion, after recording the impairment.

We used an income approach to estimate the fair value of the Skoal trademark.

The income approach reflects the discounting of expected future cash flows at a rate of return that incorporates the risk-free rate for the use of those funds, the expected rate of inflation and the risks associated with realizing expected future cash flows.

In performing the discounted cash flow analysis, we made various judgments, estimates and assumptions, the most significant of which were volume, revenue, income, operating margins, perpetual growth rate and discount rate.

All significant inputs used in the valuation are classified in Level 3 of the fair value hierarchy.

Our annual impairment test of goodwill and indefinite-lived intangible assets as of October 1, 2023 resulted in no impairment charges.

At June 30, 2024 and December 31, 2023, there were no accumulated impairment losses related to goodwill.

Investments in Equity Securities

The carrying amount of our investments consisted of the following:

(in millions) March 31, 2024 December 31, 2023

(in millions) June 30, 2024 December 31, 2023

ABI $ 8,020 $ 9,676

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

For the Three Months Ended March 31,

For the Six Months Ended June 30, For the Three Months Ended June 30,

(in millions) 2024 2023 2024 2023

$ ( 434 ) (2)

$ ( 340 ) $ ( 121 ) $ ( 135 )

(Income) losses from investments under equity method of accounting ( 414 ) ( 297 ) ( 119 ) ( 127 )

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Prior to March 14, 2024, we had an approximate 10 % ownership interest in ABI, consisting of approximately 185 million restricted shares of ABI (“Restricted Shares”) and approximately 12 million ordinary shares of ABI.

On March 14, 2024, we converted 60 million shares of our Restricted Shares to ordinary shares of ABI.

Our Restricted Shares:

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▪ have director nomination rights with respect to ABI.

In the ABI Transaction:

▪ On March 14, 2024, we entered into an underwriting agreement in connection with a global secondary offering that closed on March 19, 2024, in which we sold 35 million ordinary shares of ABI for gross proceeds of approximately $ 2.2 billion (“Secondary Offering”).

In connection with the Secondary Offering, we (i) agreed to a 180-day lockup with the lead underwriter with respect to our remaining approximately 159 million ABI shares (ending September 10, 2024) and (ii) granted the underwriters an option to purchase up to an additional 5.25 million ordinary shares of ABI, exercisable within 30 days following the date of the underwriting agreement, which the underwriters did not exercise prior to expiration.

▪ On March 13, 2024, we entered into a share repurchase agreement with ABI, conditioned upon the closing of the Secondary Offering and certain other customary conditions, to sell $ 200 million of our ABI ordinary shares to ABI in a private transaction.

We completed the sale of approximately 3.3 million ordinary shares to ABI on March 19, 2024.

At March 31, 2024, we had an approximate 8.1 % ownership interest in ABI, consisting of approximately 125 million Restricted Shares and approximately 34 million ordinary shares of ABI.

On March 14, 2024, we converted 60 million shares of our Restricted Shares to ordinary shares of ABI.

In March 2024, we completed the ABI Transaction, which consisted of the following:

▪ We sold 35 million ordinary shares of ABI in a global secondary offering for gross proceeds of approximately $ 2.2 billion (“Secondary Offering”).

In connection with the Secondary Offering, we (i) agreed to a 180-day lockup with the lead underwriter with respect to our remaining approximately 159 million ABI shares (ending September 10, 2024) and (ii) granted the underwriters an option to purchase up to an additional 5.25 million ordinary shares of ABI, which the underwriters did not exercise prior to its expiration.

▪ We sold $ 200 million of our ABI ordinary shares (approximately 3.3 million ordinary shares) to ABI in a private transaction.

At June 30, 2024, we had an approximate 8.1 % ownership interest in ABI, consisting of approximately 125 million Restricted Shares and approximately 34 million ordinary shares of ABI.

As a result of the ABI Transaction, in the first quarter of 2024, we received pre-tax cash proceeds totaling approximately $ 2.4 billion and incurred transaction costs of approximately $ 62 million.

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As a result of the ABI Transaction, we recorded the following pre-tax amounts in our condensed consolidated statement of earnings:

(in millions) For the Three Months Ended March 31, 2024

(in millions) For the Six Months Ended June 30, 2024

Gain on partial sale of our investment $ 165

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▪ The pre-tax transaction costs were approximately $ 62 million ($ 59 million in marketing, administration and research costs and $ 3 million in interest and other debt expense, net), substantially all of which were underwriter fees.

In addition, in conjunction with the ABI Transaction, we recorded an income tax benefit from the partial release of a valuation allowance of approximately $ 94 million in provision for income taxes in our condensed consolidated statement of earnings for the three months ended March 31, 2024.

For further discussion, see Note 13.

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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, 2024 and December 31, 2023 was $ 9.7 billion and $ 12.7 billion, respectively, which exceeded its carrying value of $ 8.1 billion and $ 9.7 billion, respectively, by approximately 20 % and 32 %, respectively.

The fair value of our investment in ABI at June 30, 2024 and December 31, 2023 was $ 9.2 billion and $ 12.7 billion, respectively, which exceeded its carrying value of $ 8.0 billion and $ 9.7 billion, respectively, by approximately 15 % and 32 %, respectively.

At June 30, 2024, the carrying value of our investment in ABI exceeded its share of ABI’s net assets attributable to equity holders of ABI by approximately $ 1.9 billion.

Substantially all of this difference is comprised of goodwill and other indefinite-lived intangible assets (consisting primarily of trademarks).

This difference represents a $ 0.6 billion reduction from December 31, 2023, primarily due to the ABI Transaction.

Investment in Cronos

At March 31, 2024, we had a 41.0 % ownership interest in Cronos, consisting of approximately 157 million shares, which we account for under the equity method of accounting.

At June 30, 2024, we had a 41.0 % ownership interest in Cronos, consisting of approximately 157 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 investment in Cronos was 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, 2024, the fair value of our investment in Cronos exceeded its carrying value by approximately $ 85 million or approximately 26 %.

At June 30, 2024, the fair value of our investment in Cronos exceeded its carrying value by approximately $ 50 million or approximately 16 %.

At December 31, 2023, the fair value of our investment in Cronos was less than its carrying value by $ 8 million or approximately 2 %.

Former Investment in JUUL Labs, Inc.

In March 2023, we entered into a stock transfer agreement with JUUL (“Stock Transfer Agreement”) under which we transferred to JUUL all of our beneficially owned JUUL equity securities and, in exchange, received a non-exclusive, irrevocable global license to certain of JUUL’s heated tobacco intellectual property.

In addition, all other agreements between us and JUUL 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 the Stock Transfer Agreement, for the three months ended March 31, 2023, we recorded a non-cash, pre-tax loss of $ 250 million on the disposition of our JUUL equity securities in (income) losses from investments in equity securities in our condensed consolidated statement of earnings.

In March 2023, we entered into a stock transfer agreement with JUUL under which we transferred to JUUL all of our beneficially owned JUUL equity securities and, in exchange, received a non-exclusive, irrevocable global license to certain of JUUL’s heated tobacco intellectual property.

intellectual property as of or prior to March 3, 2023.

As a result of the stock transfer agreement, for the six months ended June 30, 2023, we recorded a non-cash, pre-tax loss of $ 250 million on the disposition of our JUUL equity securities in (income) losses from investments in equity securities in our condensed consolidated statement of earnings.

Financial Instruments

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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, 2024 and December 31, 2023, we had no outstanding foreign currency contracts.

At June 30, 2024 and December 31, 2023, we had no outstanding foreign currency contracts.

When we have foreign currency contracts in effect, counterparties are domestic and international financial institutions.

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

(in millions) March 31, 2024 December 31, 2023

(in millions) June 30, 2024 December 31, 2023

Carrying value $ 25,023 $ 26,233

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dollar exchange rate in accumulated other comprehensive losses related to ABI.

We recognized pre-tax (gains) losses of our net investment hedges of $( 75 ) million and $ 48 million for the three months ended March 31, 2024 and 2023, respectively, in accumulated other comprehensive losses.

In addition, as a result of the ABI Transaction, for the three months ended March 31, 2024, we reclassified $ 42 million of pre-tax gains from our designated net investments hedges included in accumulated other comprehensive losses to (income) losses from investments in equity securities in our condensed consolidated statement of earnings.

We recognized pre-tax (gains) losses of our net investment hedges of $( 98 ) million and $ 69 million for the six months ended June 30, 2024 and 2023, respectively, and $( 23 ) million and $ 21 million for the three months ended June 30, 2024 and 2023, respectively, in accumulated other comprehensive losses.

In addition, as a result of the ABI Transaction, for the six months ended June 30, 2024, we reclassified $ 42 million of pre-tax gains from our designated net investments hedges included in accumulated other comprehensive losses to (income) losses from investments in equity securities in our condensed consolidated statement of earnings.

For further discussion of the ABI Transaction and reclassification of accumulated other comprehensive losses, see Note 6.

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

Pension Postretirement

For the Three Months Ended March 31,

Pension Postretirement Pension Postretirement

For the Six Months Ended June 30, For the Three Months Ended June 30,

(in millions) 2024 2023 2024 2023 2024 2023 2024 2023

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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 regulations.

We made employer contributions of $ 4 million to our pension plans and did no t make any contributions to our postretirement plans during the three months ended March 31, 2024.

We made employer contributions of $ 9 million to our pension plans and did no t make any contributions to our postretirement plans during the six months ended June 30, 2024.

Currently, we anticipate making additional employer contributions of up to approximately $ 20 million to our pension plans and contributions of up to approximately $ 30 million to our postretirement plans in 2024.

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

For the Three Months Ended March 31,

For the Six Months Ended June 30, For the Three Months Ended June 30,

(in millions) 2024 2023 2024 2023

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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, 2024

For the Six Months Ended June 30, 2024

(in millions) Benefit Plans ABI Currency

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Other comprehensive earnings (losses) before reclassifications

— 243 ( 2 ) 241

Deferred income taxes — ( 54 ) — ( 54 )

Other comprehensive earnings (losses) before reclassifications, net of deferred income taxes

— 189 ( 2 ) 187

Amounts reclassified to net earnings ( 3 ) 257 — 254

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Other comprehensive earnings (losses), net of deferred income taxes ( 2 ) 394 (1)

Balances, June 30, 2024 $ ( 1,495 ) $ ( 801 ) $ 13 $ ( 2,283 )

For the Three Months Ended June 30, 2024

(in millions) Benefit Plans ABI Currency

Adjustments and Other Accumulated

Comprehensive

Balances, March 31, 2024

For the Three Months Ended March 31, 2023

$ ( 1,494 ) $ ( 793 ) $ 21 $ ( 2,266 )

Other comprehensive earnings (losses) before reclassifications

( 11 ) ( 8 ) ( 19 )

Deferred income taxes — 1 — 1

Other comprehensive earnings (losses) before reclassifications, net of deferred income taxes

— ( 10 ) ( 8 ) ( 18 )

Amounts reclassified to net earnings ( 1 ) 2 — 1

Deferred income taxes — — — —

Amounts reclassified to net earnings, net of deferred income taxes ( 1 ) 2 — 1

Other comprehensive earnings (losses), net of deferred income taxes ( 1 ) ( 8 ) (1)

Balances, June 30, 2024 $ ( 1,495 ) $ ( 801 ) $ 13 $ ( 2,283 )

For the Six Months Ended June 30, 2023

(in millions) Benefit Plans ABI Currency

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Other comprehensive earnings (losses) before reclassifications

Deferred income taxes — ( 13 ) — ( 13 )

Other comprehensive earnings (losses) before reclassifications, net of deferred income taxes

Amounts reclassified to net earnings ( 14 ) 9 — ( 5 )

Deferred income taxes 3 ( 2 ) — 1

Amounts reclassified to net earnings, net of deferred income taxes ( 11 ) 7 — ( 4 )

Other comprehensive earnings (losses), net of deferred income taxes ( 11 ) 66 (1)

Balances, June 30, 2023 $ ( 1,447 ) $ ( 1,303 ) $ 41 $ ( 2,709 )

For the Three Months Ended June 30, 2023

(in millions) Benefit Plans ABI Currency

Adjustments and Other Accumulated

Comprehensive

Balances, March 31, 2023

$ ( 1,442 ) $ ( 1,381 ) $ 44 $ ( 2,779 )

Other comprehensive earnings (losses) before reclassifications

— 90 ( 3 ) 87

Deferred income taxes — ( 18 ) — ( 18 )

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Other comprehensive earnings (losses), net of deferred income taxes ( 5 ) 78 (1)

Balances, March 31, 2023 $ ( 1,442 ) $ ( 1,381 ) $ 44 $ ( 2,779 )

Balances, June 30, 2023 $ ( 1,447 ) $ ( 1,303 ) $ 41 $ ( 2,709 )

(1) Primarily reflects our share of ABI’s currency translation adjustments and the impact of our designated net investment hedges related to our investment in ABI.

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

For the Three Months Ended March 31,

For the Six Months Ended June 30, For the Three Months Ended June 30,

(in millions) 2024 2023 2024 2023

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Prior service cost/credit ( 17 ) ( 17 ) ( 8 ) ( 8 )

( 3 ) ( 14 ) ( 1 ) ( 6 )

Pre-tax amounts reclassified from accumulated other comprehensive losses to net earnings $ 254 $ ( 5 ) $ 1 $ 2

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(2) Amounts are included in (income) losses from investments in equity securities.

For the three months ended March 31, 2024, as a result of the ABI Transaction, we reclassified $ 243 million from our accumulated other comprehensive losses of which $ 285 million is directly attributable to ABI, partially offset by $ 42 million from our designated net investment hedges related to our investment in ABI.

For the six months ended June 30, 2024, as a result of the ABI Transaction, we reclassified $ 243 million from our accumulated other comprehensive losses of which $ 285 million is directly attributable to ABI, partially offset by $ 42 million from our designated net investment hedges related to our investment in ABI.

For further information, see Note 6.

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Segment Reporting

At March 31, 2024, our reportable segments were (i) smokeable products, consisting of combustible cigarettes and machine-made large cigars;

At June 30, 2024, our reportable segments were (i) smokeable products, consisting of combustible cigarettes and machine-made large cigars;

and (ii) oral tobacco products, consisting of MST, snus and oral nicotine pouches.

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(iii) Helix International;

and (iv) other business activities, substantially all of which consists of research and development (“R&D”) expense related to certain new product platforms and technologies.

and (iv) other business activities, all of which consists of research and development (“R&D”) expense related to certain new product platforms and technologies.

Our chief operating decision maker (“CODM”) reviews operating companies income (loss) (“OCI”) to evaluate the performance of, and allocate resources to, our segments.

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Segment data were as follows:

For the Three Months Ended March 31,

For the Six Months Ended June 30, For the Three Months Ended June 30,

(in millions) 2024 2023 2024 2023

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(Income) losses from investments in equity securities ( 414 ) ( 47 ) ( 119 ) ( 127 )

Gain on the sale of IQOS System commercialization rights

( 2,700 ) — ( 2,700 ) —

Earnings before income taxes $ 7,855 $ 5,285 $ 5,116 $ 2,806

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

▪ Asset Impairment:

We recorded a non-cash, pre-tax impairment of the Skoal trademark of $ 354 million for the six and three months ended June 30, 2024 in our oral tobacco products segment.

For further discussion, see Note 5.

Goodwill and Other Intangible Assets, net.

▪ 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,

For the Six Months Ended June 30, For the Three Months Ended June 30,

(in millions) 2024 2023 2024 2023

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Total $ 68 $ 401 $ 44 $ 290

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.

We recorded the amounts shown in the table above for our 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 14.

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Beginning January 1, 2024, our R&D expense is aligned with how our CODM now evaluates performance results and allocates resources for segment reporting.

For the three months ended March 31, 2024, using this approach, we recorded substantially all of our pre-tax R&D expense of $ 51 million in our all other category, which now includes other business activities related to R&D expense for certain new product platforms and technologies.

For the three months ended March 31, 2023, the majority of our pre-tax R&D expense of $ 43 million was recorded in our smokeable products segment.

For the six and three months ended June 30, 2024, using this approach, we recorded the majority of our pre-tax R&D expense of $ 104 million and $ 53 million, respectively, in our all other category, which now includes other business activities related to R&D expense for certain new product platforms and technologies.

For the six and three months ended June 30, 2023, the majority of our pre-tax R&D expense of $ 98 million and $ 55 million, respectively, was recorded in our smokeable products segment.

Short-term Borrowings and Borrowing Arrangements

At March 31, 2024 and December 31, 2023, we had no short-term borrowings.

At June 30, 2024 and December 31, 2023, we had no short-term borrowings.

In June 2023, we entered into a $ 2.0 billion term loan facility and borrowed the full amount available to fund a portion of the cash payments at the closing of the NJOY Transaction.

In July 2023, upon receipt of the remaining payment of approximately $ 1.8 billion (including interest) from PMI related to the sale of the IQOS System commercialization rights, we repaid the term loan facility in full.

We have a $ 3.0 billion senior unsecured 5-year revolving credit agreement (“Credit Agreement”) that expires on October 24, 2028 and includes an option, subject to certain conditions, for us to extend the term of our Credit Agreement for two additional one-year periods.

We intend to use any borrowings under our Credit Agreement for general corporate purposes.

At March 31, 2024, we had availability under our Credit Agreement for borrowings of up to an aggregate principal amount of $ 3.0 billion.

At June 30, 2024, we had availability under our Credit Agreement for borrowings of up to an aggregate principal amount of $ 3.0 billion.

Pricing for interest and fees under our Credit Agreement may be modified in the event of a change in the rating of our long-term senior unsecured debt.

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and Standard & Poor’s Financial Services LLC.

The applicable percentage for borrowings under our Credit Agreement at March 31, 2024 was 1.0 % based on our long-term senior unsecured debt ratings on that date.

The applicable percentage for borrowings under our Credit Agreement at June 30, 2024 was 1.0 % based on our long-term senior unsecured debt ratings on that date.

Our Credit Agreement does not include any other rating triggers or any provisions that could require the posting of collateral.

Our Credit Agreement includes various covenants, one of which requires us to maintain a ratio of Consolidated EBITDA (earnings before interest, taxes, depreciation and amortization) 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, 2024, we were in compliance with our covenants in our Credit Agreement.

At June 30, 2024, we were in compliance with our covenants in our Credit Agreement.

The terms “Consolidated EBITDA” and “Consolidated Interest Expense,” each as defined in our Credit Agreement, include certain adjustments.

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Long-term Debt

The aggregate carrying value of our total long-term debt at March 31, 2024 and December 31, 2023 was $ 25.0 billion and $ 26.2 billion, respectively.

In January and February 2024, we repaid in full at maturity our 4.000 % and 3.800 % senior unsecured notes, respectively, in the aggregate principal amount of $ 776 million and $ 345 million, respectively.

At March 31, 2024 and December 31, 2023, accrued interest on long-term debt of $ 248 million and $ 410 million, respectively, was included in other accrued liabilities on our condensed consolidated balance sheets.

The aggregate carrying value of our total long-term debt at June 30, 2024 and December 31, 2023 was $ 25.0 billion and $ 26.2 billion, respectively.

During the first quarter of 2024, we repaid in full at maturity our 4.000 % and 3.800 % senior unsecured notes in the aggregate principal amounts of $ 776 million and $ 345 million, respectively.

At June 30, 2024 and December 31, 2023, accrued interest on long-term debt of $ 351 million and $ 410 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 7.

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

For the Three Months Ended March 31,

For the Six Months Ended June 30, For the Three Months Ended June 30,

(in millions) 2024 2023 2024 2023

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Income tax rate 24.5 % 26.1 % 25.7 % 24.6 %

Our income tax rate for the three months ended March 31, 2024 differs from the U.S.

federal statutory rate of 21%, due primarily to state tax expense, partially offset by an income tax benefit from the partial release of a valuation allowance recorded against a deferred tax asset associated with our JUUL-related losses.

Our income tax rate for the six months ended June 30, 2024 differs from the U.S.

federal statutory rate of 21%, due primarily to state tax expense and the change in the fair value of the contingent payments related to the NJOY Transaction, which is treated as an outside basis difference that we do not expect to reverse in the foreseeable future, partially offset by an income tax benefit from the partial release of a valuation allowance recorded against a deferred tax asset associated with our JUUL-related losses.

The valuation allowance release was due to our capital gain on the ABI Transaction.

Our income tax rate for the three months ended March 31, 2023 differs from the U.S.

Our income tax rate for the three months ended June 30, 2024 differs from the U.S.

do not expect to reverse in the foreseeable future.

For further discussion regarding the NJOY Transaction, see Note 2.

Acquisition of NJOY .

Our income tax rate for the six months ended June 30, 2023 differs from the U.S.

federal statutory rate of 21%, due primarily to state tax expense and a valuation allowance recorded against a deferred tax asset related to the disposition of our former investment in JUUL.

The following chart provides a reconciliation of the beginning and ending valuation allowances for the three months ended March 31, 2024:

Our income tax rate for the three months ended June 30, 2023 differs from the U.S.

federal statutory rate of 21%, due primarily to state tax expense.

The following chart provides a reconciliation of the beginning and ending valuation allowances for the six months ended June 30, 2024:

(in millions)

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We determine deferred tax assets and liabilities based on the differences between the financial statement and tax bases of assets and liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse.

valuation allowance when it is more likely than not that some portion or all of a deferred tax asset will not be realized.

We record a valuation allowance when it is more likely than not that some portion or all of a deferred tax asset will not be realized.

We determine the realizability of deferred tax assets based on the weight of all available positive and negative evidence.

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There is a potential that sufficient positive evidence may be available in future periods to cause us to further reduce or eliminate the valuation allowance on certain deferred tax assets.

That change to the valuation allowance would result in the recognition of previously unrecognized deferred tax assets and a decrease in income tax expense in the period the release is recorded.

The changes in the valuation allowances for the three months ended March 31, 2024 were due primarily to the ABI Transaction.

The cumulative valuation allowance at March 31, 2024 was primarily attributable to deferred tax assets recorded in connection with the unrealized capital losses related to our former investment in JUUL and our investment in Cronos.

That change to the valuation allowance would result in the recognition of previously unrecognized deferred tax assets and a decrease in income tax expense in the period the release would be recorded.

The changes in the valuation allowances for the six months ended June 30, 2024 were due primarily to the ABI Transaction.

The cumulative valuation allowance at June 30, 2024 was primarily attributable to deferred tax assets recorded in connection with the unrealized capital losses related to our former investment in JUUL and our investment in Cronos.

As we continue to evaluate all sources of potential income that may become available to utilize these losses, our valuation allowance position may change.

For further discussion of our ABI Transaction, see Note 5.

For further discussion of the ABI Transaction, see Note 6.

Investments in Equity Securities .

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Legal proceedings covering a wide range of matters are pending or threatened in various United States and foreign jurisdictions against Altria and certain of our subsidiaries, including PM USA and NJOY, as well as our indemnitees.

Various types of claims may be raised in these proceedings, including product liability, unfair trade practices, antitrust, income tax liability, contraband shipments, patent infringement, employment matters, claims alleging violation of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), claims for contribution and claims of competitors, shareholders or distributors.

Various types of claims may be raised in these proceedings, including product liability, unfair trade practices, antitrust, income tax liability, contraband shipments, patent infringement, employment matters, environmental matters, claims alleging violation of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), claims for contribution and claims of competitors, shareholders or distributors.

Legislative action, such as changes to tort law, also may expand the types of claims and remedies available to plaintiffs.

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The changes in our accrued liability for tobacco and health and certain other litigation items, including related interest costs, for the periods specified below are as follows:

For the Three Months Ended March 31,

For the Six Months Ended June 30, For the Three Months Ended June 30,

(in millions) 2024 2023 2024 2023

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JUUL-related settlements (3)

30 240 24 240

Related interest costs — 11 — 10

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(2) See Shareholder Class Action and Shareholder Derivative Lawsuits - Federal and State Shareholder Derivative Lawsuits below for a discussion of the settlement of the federal and state shareholder derivative lawsuits.

(3) Includes the settlement of certain e-vapor product litigation relating to JUUL e-vapor products and the e-vapor product litigation brought by the attorneys general of Hawaii, Minnesota and Alaska.

(3) Includes the settlement of certain e-vapor product litigation relating to JUUL e-vapor products.

See E-vapor Product Litigation below for a discussion of these settlements.

The accrued liability for tobacco and health and certain other litigation items, including related interest costs, was included in accrued liabilities and other liabilities on our condensed consolidated balance sheets.

Pre-tax charges for tobacco and health and certain other litigation were included in marketing, administration and research costs in our condensed consolidated statements of earnings.

Pre-tax charges except for related interest costs were included in marketing, administration and research costs in our condensed consolidated statements of earnings.

Pre-tax charges for related interest costs were included in interest and other debt expense, net in our condensed consolidated statements of earnings.

After exhausting all appeals in those cases resulting in adverse verdicts associated with tobacco-related litigation, since October 2004, PM USA has paid judgments and settlements (including related costs and fees) totaling approximately $ 1 billion and interest totaling approximately $ 241 million as of March 31, 2024.

After exhausting all appeals in those cases resulting in adverse verdicts associated with tobacco-related litigation, since October 2004, PM USA has paid judgments and settlements (including related costs and fees) totaling approximately $ 1.1 billion and interest totaling approximately $ 241 million as of June 30, 2024.

These amounts include payments for Engle progeny judgments (and related costs and fees) totaling approximately $ 444 million and related interest totaling approximately $ 60 million.

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To obtain stays of judgments pending appeal, PM USA has posted various forms of security.

As of March 31, 2024, PM USA has posted appeal bonds totaling approximately $ 38 million, which have been collateralized with restricted cash and are included in assets on our condensed consolidated balance sheets.

As of June 30, 2024, PM USA has posted appeal bonds totaling approximately $ 37 million, which have been collateralized with restricted cash and are included in assets on our condensed consolidated balance sheets.

Overview of Tobacco-Related Litigation

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The table below lists the number of certain tobacco-related cases pending in the United States against us as of:

April 22, 2024 April 24, 2023 April 25, 2022

July 29, 2024 July 27, 2023 July 25, 2022

Individual Smoking and Health Cases (1)

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E-vapor Cases 81 (3)

5,177 5,270 3,744

Other Tobacco-Related Cases (4)

(1) Includes as of April 22, 2024, 20 cases filed in Illinois, 14 cases filed in New Mexico, 63 cases filed in Massachusetts and 41 non- Engle cases filed in Florida.

(1) Includes as of July 29, 2024, 23 cases filed in Illinois, 15 cases filed in New Mexico, 73 cases filed in Massachusetts, 11 cases filed in Oregon, three cases filed in Hawaii and 29 non- Engle cases filed in Florida.

Does not include individual smoking and health cases brought by or on behalf of plaintiffs in Florida state and federal courts following the decertification of the Engle class (these Engle progeny cases are discussed below in Smoking and Health Litigation - Engle Progeny Cases ).

Also does not include 1,113 cases brought by flight attendants seeking compensatory damages for personal injuries allegedly caused by exposure to environmental tobacco smoke (“ETS”).

The flight attendants allege that they are members of an ETS smoking and health class action in Florida, which was settled in 1997 ( Broin ).

The terms of the court-approved settlement in that case allowed class members to file individual lawsuits seeking compensatory damages but prohibited them from seeking punitive damages.

Class members were prohibited from filing individual lawsuits after 2000 under the court-approved settlement.

Also does not include approximately 664 Broin cases.

For further discussion of the Broin cases, see Other Smoking and Health Class Actions below.

(2) See Health Care Cost Recovery Litigation - Federal Government’s Lawsuit below.

(3) Includes as of April 22, 2024, 57 class action lawsuits, 3,614 individual lawsuits and 1,506 “third party” lawsuits relating to the Multidistrict Litigation discussed under E-vapor Product Litigation below.

The 57 class action lawsuits include 32 cases in the Northern District of California involving plaintiffs whose claims were previously included in other class action complaints but were refiled as separate stand-alone class actions for procedural and other reasons.

In May 2023, we reached agreement on terms to resolve the majority of the Multidistrict Litigation lawsuits.

Also includes three patent infringement lawsuits filed against us and certain of our affiliates.

For further discussion of the pending Multidistrict Litigation settlement and patent infringement litigation, see E-vapor Product Litigation below.

(4) Includes as of April 22, 2024, one inactive smoking and health case alleging personal injury and purporting to be brought on behalf of a class of individual plaintiffs and two inactive class action lawsuits alleging that use of the terms “Lights” and “Ultra Lights” constitute deceptive and unfair trade practices, common law or statutory fraud, unjust enrichment, breach of warranty or violations of RICO.

(3) In May 2023, we reached agreement on terms to resolve the majority of the Multidistrict Litigation lawsuits, and, in March 2024, the court granted final approval of the settlement.

Pending final dismissal of these cases, as of July 29, 2024, the remaining cases include 21 individual cases that opted out of the settlement, 21 class action lawsuits ( three class action lawsuits pending in Canada and 18 class actions participating in the settlement but pending dismissal) and one individual state court case relating to the Multidistrict Litigation.

Also includes 38 cases brought by Native American tribes that are subject to a separate settlement.

For further discussion of the Multidistrict Litigation settlement and the settlement of the cases brought by Native American tribes, see E-vapor Product Litigation below.

(4) Includes as of July 29, 2024, one inactive smoking and health case alleging personal injury and purporting to be brought on behalf of a class of individual plaintiffs and two inactive class action lawsuits alleging that use of the terms “Lights” and “Ultra Lights” constitute deceptive and unfair trade practices, common law or statutory fraud, unjust enrichment, breach of warranty or violations of RICO.

International Tobacco-Related Cases:

As of April 22, 2024, (i) Altria is named as a defendant in three e-vapor class action lawsuits in Canada;

As of July 29, 2024, (i) Altria is named as a defendant in three e-vapor class action lawsuits in Canada;

(ii) PM USA is a named defendant in 10 health care cost recovery actions in Canada, eight of which also name Altria as a defendant;

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Tobacco-Related Cases Set for Trial:

As of April 22, 2024, one Engle progeny case, two individual smoking and health cases and no e-vapor cases are set for trial through June 30, 2024.

As of July 29, 2024, one Engle progeny case, one individual smoking and health case and no e-vapor cases are set for trial through September 30, 2024.

Trial dates are subject to change.

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Of the 31 non- Engle progeny cases in which verdicts were returned in favor of plaintiffs, 27 have reached final resolution.

See Smoking and Health Liti gation - Engle Progeny Trial Results below for a discussion of verdicts in state and federal Engle progeny cases involving PM USA as of April 22, 2024.

See Smoking and Health Liti gation - Engle Progeny Trial Results below for a discussion of verdicts in state and federal Engle progeny cases involving PM USA as of July 29, 2024.

Smoking and Health Litigation

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The jury found that plaintiff was not entitled to punitive damages.

Plaintiff has filed a notice of appeal of the judgment, and PM USA intends to appeal the judgment.

In December 2023, a jury in a Hawaii state court returned a verdict in favor of plaintiff and against PM USA, awarding less than $ 1 million in compensatory damages and allocating 39 % of the fault to PM USA.

The jury found that plaintiff was not entitled to punitive damages.

Following the verdict, the parties agreed to submit a stipulation of dismissal with prejudice to the court.

Following the verdict, the parties submitted a stipulation of dismissal with prejudice to the court.

Pursuant to the agreement, PM USA was not required to pay the damages awarded by the jury, the parties agreed to bear their own costs and the parties agreed not to pursue appeals.

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We filed post-trial motions challenging the verdict, which were denied in March 2024.

In April 2024, we filed a notice of appeal and a motion to stay execution pending appeal.

Plaintiff has agreed not to oppose the motion to stay and not to attempt to execute on the final judgment until 30 days after all appeals have been exhausted.

In April 2024, we filed a notice of appeal and a motion to stay execution pending appeal, and the court has stayed execution of the final judgment pending resolution of PM USA’s appeal rights.

PM USA’s appeal remains pending, and plaintiff has noticed a cross-appeal.

In May 2023, a jury in a Pennsylvania state court returned a verdict in favor of plaintiff and against PM USA, awarding less than $ 1 million in compensatory damages and allocating 50 % of the fault to PM USA.

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(iii) that defendants’ cigarettes were defective and unreasonably dangerous;

(iv) that defendants concealed or omitted material information not otherwise known or available knowing that the material was false or misleading or failed to disclose a material fact concerning the health effects or addictive nature of smoking;

(v) that defendants agreed to misrepresent information regarding the health effects or addictive nature of cigarettes with the intention of causing the public to rely on this information to their detriment;

(vi) that defendants agreed to conceal or omit information regarding the health effects of cigarettes or their addictive nature with the intention that smokers would rely on the information to their detriment;

(vii) that all defendants sold or supplied cigarettes that were defective;

and (viii) that defendants were negligent.

(iv) that defendants concealed or omitted material information not otherwise known or available knowing that the material was

false or misleading or failed to disclose a material fact concerning the health effects or addictive nature of smoking;

(v) that defendants agreed to conceal or omit information regarding the health effects of cigarettes or their addictive nature with the intention that smokers would rely on the information to their detriment;

(vi) that defendants sold or supplied cigarettes that were defective;

and (vii) that defendants were negligent.

Pending Engl e Progeny Cases:

The deadline for filing Engle progeny cases expired in January 2008, at which point a total of approximately 9,300 federal and state claims were pending.

As of April 22, 2024, approximately 288 state court cases were pending against PM USA or Altria asserting individual claims by or on behalf of approximately 357 state court plaintiffs.

As of July 29, 2024, approximately 252 state court cases were pending against PM USA or Altria asserting individual claims by or on behalf of approximately 287 state court plaintiffs.

Because of a number of factors, including docketing delays, duplicated filings and overlapping dismissal orders, these numbers are estimates.

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Engle Progeny Trial Results:

As of April 22, 2024, 145 federal and state Engle progeny cases involving PM USA have resulted in verdicts.

Eighty-seven were returned in favor of plaintiffs, five of which have been reversed post-trial or on appeal and remain pending.

As of July 29, 2024, 146 federal and state Engle progeny cases involving PM USA have resulted in verdicts.

Eighty-eight were returned in favor of plaintiffs, five of which have been reversed post-trial or on appeal and remain pending.

Fifty-eight verdicts were returned in favor of PM USA, two of which have been reversed post-trial or on appeal and remain pending.

In addition, there have been a number of mistrials, only some of which have resulted in new trials as of April 22, 2024.

In addition, there have been a number of mistrials, only some of which have resulted in new trials as of July 29, 2024.

Post-trial activity in a case can result in final resolution that differs from the initial verdict.

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The charts below list the verdicts in and post-trial status of certain Engle progeny cases in which verdicts were returned in favor of plaintiffs.

The first chart lists cases that are pending as of April 22, 2024 where PM USA has determined an unfavorable outcome is not probable and the amount of loss cannot be reasonably estimated, and the second chart lists cases that have concluded in the past 12 months.

The first chart lists cases that are pending as of July 29, 2024 where PM USA has determined an unfavorable outcome is not probable and the amount of loss cannot be reasonably estimated, and the second chart lists cases that have concluded in the past 12 months.

In this Note 14.

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(PM USA) Post-Trial Status

Garcia June 2024 PM USA Miami-Dade $ 6 million

Post-trial motions pending.

Chacon October 2023 PM USA Miami-Dade <$ 1 million

Appeals to the Third District Court of Appeal pending.

Hoffman January 2023 PM USA Miami-Dade $ 5 million ($ 3 million PM USA)

Appeal to the Third District Court of Appeal pending.

Levine September 2022 PM USA and R.J.

Reynolds Miami-Dade $ 1 million

Third District Court of Appeal affirmed compensatory damages award.

Schertzer April 2022 PM USA and R.J.

Reynolds Miami-Dade $ 3 million $ 0 PM USA intends to appeal to the Florida Supreme Court.

Lipp September 2021 PM USA Miami-Dade $ 15 million

Third District Court of Appeal reversed and remanded for a new trial.

Reynolds Miami-Dade $ 3 million $ 0 Appeal to the Florida Supreme Court pending.

Lipp September 2021 PM USA Miami-Dade $ 15 million $ 28 million Third District Court of Appeal reversed and remanded for a new trial.

Plaintiff's motion for rehearing pending.

McCall March 2019 PM USA Broward <$ 1 million (<$ 1 million PM USA)

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Chadwell September 2018 PM USA Miami-Dade $ 2 million

Appeal to the Third District Court of Appeal pending.

Third District Court of Appeal reversed the judgment in part and remanded for entry of a verdict reducing compensatory damages based on jury’s comparative fault finding.

Kaplan ( McLaughlin )

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(1) PM USA’s portion of the compensatory damages award is noted parenthetically where the court has ruled that comparative fault applies.

(2) Does not include a separate judgment against PM USA for $ 3 million in fees and costs.

PM USA has appealed the fees and costs judgment to the Third District Court of Appeal, which has stayed the appeal pending Florida Supreme Court disposition of the merits appeal.

Engle Cases Concluded Within Past 12 Months

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Plaintiff Verdict Date Defendant(s) Court Payment Amount for Damages (if any)

Hoffman January 2023 PM USA Miami-Dade $ 3 million

Levine September 2022 PM USA and R.J.

Reynolds Miami-Dade $ 1 million

Duignan February 2020 PM USA and R.J.

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Garcia May 2021 PM USA Miami-Dade $ 3 million

Holliman February 2019 PM USA Miami-Dade $ 3 million

Other Smoking and Health Class Actions:

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See Certain Other Tobacco-Related Litigation below for a discussion of “Lights” and “Ultra Lights” class action cases and medical monitoring class action cases pending against PM USA.

As of April 22, 2024, PM USA and Altria are named as defendants, along with other cigarette manufacturers, in seven class actions filed in the Canadian provinces of Alberta, Manitoba, Nova Scotia, Saskatchewan, British Columbia and Ontario.

As of July 29, 2024, PM USA and Altria are named as defendants, along with other cigarette manufacturers, in seven class actions filed in the Canadian provinces of Alberta, Manitoba, Nova Scotia, Saskatchewan, British Columbia and Ontario.

In Saskatchewan, British Columbia ( two separate cases) and Ontario, plaintiffs seek class certification on behalf of individuals who suffer or have suffered from various diseases, including chronic obstructive pulmonary disease, emphysema, heart disease or cancer, after smoking defendants’ cigarettes.

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See Guarantees and Other Similar Matters below for a discussion of the Distribution Agreement between Altria and PMI, which provides for indemnities for certain liabilities concerning tobacco products.

As of July 29, 2024, PM USA is named as a defendant in approximately 664 cases brought by flight attendants against United States cigarette manufacturers seeking compensatory damages for personal injuries allegedly caused by exposure to environmental tobacco smoke (“ETS”).

The flight attendants allege that they are members of an ETS smoking and health class action in Florida that was settled in 1997 ( Broin ).

The terms of the court-approved settlement in that case allowed class members to file individual lawsuits seeking compensatory damages but prohibited them from seeking punitive damages.

Class members were prohibited from filing individual lawsuits after 2000 under the court-approved settlement.

In July 2024, we reached agreement on terms to resolve approximately 627 individual Broin lawsuits.

Accordingly, in the second quarter of 2024, we recorded a pre-tax provision of $ 4 million related to the settlement of these cases.

Health Care Cost Recovery Litigation

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All of these cases have been stayed pending resolution of proceedings in Canada involving three tobacco manufacturers (none of which are affiliated with us) under the Companies’ Creditors Arrangement Act discussed above.

See Smoking and Health

Litigation - Other Smoking and Health Class Actions above for a discussion of these proceedings.

See Smoking and Health Litigation - Other Smoking and Health Class Actions above for a discussion of these proceedings.

See Guarantees and Other Similar Matters below for a discussion of the Distribution Agreement between Altria and PMI that provides for indemnities for certain liabilities concerning tobacco products.

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In addition, the OPMs are required to pay settling plaintiffs’ attorneys’ fees, subject to an annual cap of $ 500 million, on a pro rata basis based on market share.

These quarterly payments are expected to end in the fourth quarter of 2024.

For the three months ended March 31, 2024 and 2023, the aggregate amount recorded in cost of sales with respect to the State Settlement Agreements was approximately $ 900 million for each period.

These quarterly payments will end in the fourth quarter of 2024.

For the three months ended June 30, 2024 and 2023, the aggregate amount recorded in cost of sales with respect to the State Settlement Agreements was approximately $ 900 million and $ 1.0 billion, respectively.

For the six months ended June 30, 2024 and 2023, the aggregate amount recorded in cost of sales with respect to the State Settlement Agreements was approximately $ 1.8 billion and $ 1.9 billion, respectively.

These amounts include PM USA’s estimate of amounts related to NPM Adjustments discussed below.

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As a result of Idaho joining the multi-state settlement, PM USA will receive approximately $ 8 million for 2005 through 2023, $ 2 million of which relates to the 2021 through 2023 “transition years.” In connection with this development, PM USA recorded $ 8 million as a reduction in cost of sales in the first quarter of 2024.

Pursuant to the multi-state settlement, PM USA has received $ 1.24 billion since the first group of states entered the NPM Adjustment dispute settlement in 2014 and expects to receive approximately $ 353 million in credits to offset PM USA’s MSA payments through 2039.

Pursuant to the multi-state settlement, PM USA has received $ 1.37 billion since the first group of states entered the NPM Adjustment dispute settlement in 2014 and expects to receive annual credits applied against PM USA’s MSA payments through 2041.

▪ New York Settlement.

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Iowa subsequently joined the multistate settlement in August 2023.

The arbitration panel found three of the remaining eight states that have not settled the NPM Adjustment disputes, Washington, Missouri and New Mexico, were not diligent in the enforcement of their escrow statutes in 2004, and PM USA received approximately $ 52 million on account of the 2004 NPM Adjustment as a credit against its April 2023 MSA payment.

approximately $ 52 million on account of the 2004 NPM Adjustment as a credit against its April 2023 MSA payment.

PM USA recorded $ 44 million and $ 8 million in third quarter of 2021 and fourth quarter of 2022, respectively.

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The arbitration encompasses three years , 2005-2007, for six of the seven states, and one year , 2005, for one state.

As of April 22, 2024, the arbitration panel had issued decisions for Maryland, Washington and Wisconsin, finding Maryland and Wisconsin diligent for all three years and Washington not diligent for all three years .

PM USA recorded $ 14 million as a reduction of costs of sales and $ 21 million

as interest income in the fourth quarter of 2023 for its estimate of the minimum amount of the 2005 through 2007 NPM Adjustment it will receive.

As of July 29, 2024, the arbitration panel had issued decisions for Maryland, Washington and Wisconsin, finding Maryland and Wisconsin diligent for all three years and Washington not diligent for all three years .

PM USA recorded $ 14 million as a reduction of costs of sales and $ 21 million as interest income in the fourth quarter of 2023 for its estimate of the minimum amount of the 2005 through 2007 NPM Adjustment it will receive.

▪ Subsequent Years.

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The Mississippi state court held a hearing in October 2021 and issued a decision in June 2022 granting the State’s motion.

Further proceedings remain outstanding, and a final judgment has not yet been issued.

PM USA appealed the court’s decision in June 2024, and the appeal remains pending.

In May 2023, PM USA and R.J.

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The State of Texas filed a cross-motion to enforce, and the court found in favor of the State of Texas.

As of April 22, 2024, the court had not made a determination on damages.

As of July 29, 2024, the court had not made a determination on damages.

PM USA intends to appeal.

In July 2024, the State of Minnesota filed a motion in Minnesota state court seeking to enforce the Minnesota State Settlement Agreement against PM USA, R.J.

Reynolds and ITG concerning the same state tax issues raised by Mississippi and Texas.

The motion remains pending.

In January 2021, PM USA and other PMs reached an agreement with several MSA states to waive the PMs’ claim under the most favored nation provision of the MSA in connection with a settlement between those MSA states and a non-participating manufacturer, S&M Brands, Inc.

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Corrective statements have appeared on websites since the second quarter of 2018.

In December 2022, the district court entered a consent order approving a settlement with respect to corrective statements on point-of-sale signage.

2022, the district court entered a consent order approving a settlement with respect to corrective statements on point-of-sale signage.

In addition to the $ 28 million of provisions recorded in 2022, we recorded in the first quarter of 2024 provisions of $ 15 million for estimated costs of implementing the corrective statements on point-of-sale signage remedy.

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government filed a motion with the district court asking for clarification as to whether the court-ordered injunction that applies to cigarettes discussed above also applies to HeatSticks, a heated tobacco product used with the IQOS System.

In August 2020, we filed an opposition to the government’s motion and, in the alternative, a motion to modify the injunction to make clear it does not apply to HeatSticks .

In July 2023, the district court ruled that HeatSticks are cigarettes as defined in the court ordered injunction.

The district court also ruled that PM USA can make FDA authorized reduced exposure claims about HeatSticks .

In September 2023, PM USA appealed the district court’s ruling that HeatSticks are subject to the court’s injunction.

In connection with our assignment of exclusive U.S.

The district court ruled that HeatSticks are cigarettes as defined in the court ordered injunction, and PM USA appealed the district court’s ruling.

In connection with our assignment of the exclusive U.S.

commercialization rights to the IQOS System to PMI, the U.S.

government has asserted that the assignment of those rights required district court approval and was subject to PMI becoming bound by the court-ordered injunction and, in January 2024, requested that we petition the district court for approval of that agreement.

government asserted that the assignment of those rights required district court approval and was subject to PMI becoming bound by the court-ordered injunction and, in January 2024, requested that we petition the district court for approval of the assignment agreement.

In May 2024, we entered into an agreement with the U.S.

government resolving its concerns regarding our assignment of the exclusive U.S.

commercialization rights to the IQOS System to PMI, in which PM USA agreed to obtain district court approval for any future similar transaction and to post additional point-of-sale signage containing the corrective statements referenced above.

The cost of implementing the additional point-of-sale signage did not require an increase to the previously recorded provisions for point-of-sale signage discussed above.

Pursuant to the settlement, PM USA voluntarily dismissed its appeal of the district court’s ruling that HeatSticks are subject to the court’s injunction.

E-vapor Product Litigation

As of April 22, 2024, we are defendants in 57 class action lawsuits, 3,614 individual lawsuits and 1,506 “third party” lawsuits relating to JUUL e-vapor products, which include school districts, state and local governments and tribal and healthcare organization lawsuits.

Three of the class action lawsuits are pending in Canada.

We refer to this litigation in the United States collectively as the “Multidistrict Litigation.” The 57 class action lawsuits include 32 cases involving plaintiffs whose claims were previously included in other class action complaints but were refiled as separate stand-alone class actions for procedural and other reasons.

The theories of recovery in the Multidistrict Litigation include violation of RICO, fraud, failure to warn, design defect, negligence, public nuisance and unfair trade practices.

We have been named as defendants in class action lawsuits, individual lawsuits and “third party” lawsuits relating to JUUL e-vapor products, which include school districts, state and local governments and tribal and healthcare organization lawsuits.

We refer to this litigation in the United States collectively as the “Multidistrict Litigation.” The theories of recovery in the Multidistrict Litigation include violation of RICO, fraud, failure to warn, design defect, negligence, public nuisance and unfair trade practices.

Plaintiffs seek various remedies, including compensatory and punitive damages, restitution or remediation (for plaintiffs that are government entities) and an injunction prohibiting product sales.

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In May 2023, we reached agreement on terms to resolve the majority of the Multidistrict Litigation lawsuits as well as the group of cases pending in a consolidated California state court proceeding for $ 235 million, for which amount we recorded a pre-tax provision in the second quarter of 2023.

In March 2024, the court granted final approval of the class action settlement.

The settlement is conditioned on certain participation rates among plaintiffs, and certain plaintiffs may opt out of the settlement and attempt to continue litigating their individual cases.

The settlement applies to all of the Multidistrict Litigation except 35 “third party” cases brought by Native American tribes.

The settlement does not apply to the three class action lawsuits pending in Canada, the cases brought by state attorneys general, discussed below, or 17 putative class actions antitrust lawsuits.

In March 2024, the court granted final approval of the class action settlement, and we paid the settlement amount in the second quarter of 2024.

The settlement applies to all of the Multidistrict Litigation except 38 “third party” cases brought by Native American tribes, which we separately agreed to settle in July 2024.

We recorded a pre-tax provision for $ 20 million in the second quarter of 2024 related to the settlement of these cases.

Neither settlement applies to three class action lawsuits pending in Canada, the cases brought by state attorneys general, discussed below, or 17 putative class actions antitrust lawsuits.

For a description of the antitrust cases not subject to the settlement, see Antitrust Litigation below.

Four of the “third party” lawsuits noted above against us and JUUL were initiated, individually, by the attorneys general of Alaska, Hawaii, Minnesota and New Mexico alleging violations of state consumer protection and other similar laws.

We filed motions to dismiss the lawsuits.

In Alaska, Hawaii, Minnesota and New Mexico, the motions were denied in February 2022, May 2021, June 2021 and December 2023, respectively.

In April 2023, January 2024, February 2024 and April 2024, we agreed to settle the Minnesota, Alaska, Hawaii and New Mexico lawsuits, respectively, for immaterial amounts.

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We recorded a pre-tax provision for $ 10 million in the third quarter of 2023 related to the agreement and paid such amount to Fuma in August 2023.

In June 2023, JUUL and VMR Products LLC filed a lawsuit against Altria and our affiliates AGDC, ALCS, NJOY Holdings and NJOY in the United States District Court for the District of Arizona asserting claims of patent infringement based on the sale of NJOY ACE in the United States.

In June 2023, JUUL and VMR Products LLC (“VMR”) filed a lawsuit against Altria and our affiliates AGDC, ALCS, NJOY Holdings and NJOY in the United States District Court for the District of Arizona asserting claims of patent infringement based on the sale of NJOY ACE in the United States.

Plaintiffs seek various remedies, including damages and an injunction on sales of NJOY ACE .

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International Trade Commission (“ITC”).

There, the plaintiffs also allege patent infringement, but the remedies sought include a prohibition on the importation of NJOY ACE into the United States.

There, the plaintiffs also allege patent infringement, but the remedies sought include an exclusion order that would prohibit the importation of NJOY ACE into the United States.

No damages are recoverable in the proceedings before the ITC.

A hearing before the ALJ is scheduled for May 2024, and the ALJ’s recommendation will be reviewed by the ITC.

A hearing before the ALJ was held in May 2024, and the ALJ must issue an initial determination and recommendation by August 9, 2024.

Once issued, the ALJ’s decision will be reviewed by the ITC, which must issue its final determination by

December 9, 2024.

If the ITC issues an exclusion order, the ITC must send that order to the President of the United States for review.

The President would then have 60 days to review the ITC’s determination.

If the President does not affirmatively reject the ITC’s determination, the determination automatically becomes final and takes effect after the 60 days have elapsed or earlier if the President notifies the ITC of approval before the 60 days elapse.

A final exclusion order can be appealed to the United States Court of Appeals for the Federal Circuit, but a final exclusion order prohibiting the importation of NJOY ACE would be unlikely to be stayed during the pendency of such an appeal.

In November 2023, Altria and our affiliates filed petitions with the U.S.

Patent Office Patent Trial and Appeal Board (“PTAB”) challenging the validity of the patents underlying JUUL and VMR’s patent infringement claims.

In June 2024, the PTAB denied Altria’s request to institute review as to two of the patents and granted Altria’s request as to one of the patents.

The request with respect to one patent remains pending.

The PTAB will conduct proceedings and issue its validity decisions within 12 months from the date it instituted review, after which appeals may be filed with the United States Court of Appeals for the Federal Circuit.

In August 2023, NJOY filed a complaint against JUUL in the United States District Court for the District of Delaware asserting claims of patent infringement based on the sale of certain JUUL e-vapor products, including the currently marketed JUUL device and JUULpods , in the United States.

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Also in August 2023, NJOY filed a related action against JUUL with the ITC alleging patent infringement and seeking a ban on the importation and sale of the same JUUL products in the United States.

A hearing before the ALJ is scheduled for June 2024, and the ALJ’s recommendation will be reviewed by the ITC.

A hearing before the ALJ was held in June 2024, and, once issued, the ALJ’s recommendation will be reviewed by the ITC.

NJOY’s action against JUUL in the ITC will proceed in the same manner as discussed above with respect to VMR and JUUL’s action against NJOY.

In November 2023, JUUL filed petitions with the PTAB challenging the validity of the patents underlying NJOY’s patent infringement claims.

In May 2024, the PTAB agreed to review JUUL’s challenge to both of the NJOY patents asserted against JUUL.

We, JUUL and VMR have engaged with a mediator to attempt to negotiate a resolution of the proceedings pending before the ITC, United States District Courts and the PTAB.

Based on the preliminary status of the mediation and the status of the proceedings before the ITC, United States District Courts and the PTAB, we have determined that a loss is not probable or reasonably estimable as of the date of this filing.

IQOS Litigation

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Reynolds to pay ALCS a 5.25 % royalty on future sales of its infringing product resulting in positive net income through the expiration of the relevant patents in 2035.

Reynolds has filed a notice of appeal of the judgment.

Reynolds has filed a notice of appeal of the judgment, and the appeal remains pending.

In July 2024, R.J.

Reynolds moved the district court to vacate the judgment, including the damages awards and ongoing royalties, on the grounds that R.J.

Reynolds obtained a sub-license to the asserted patents from JUUL in December 2023.

We will oppose the motion.

As gains related to this lawsuit have not yet been determined to be realized or realizable in accordance with GAAP, they have not been recognized in our financial statements.

In April 2020, a related patent infringement action was filed against the same defendants by the same plaintiffs, as well as R.J.

Reynolds, with the ITC, but the remedies sought included a prohibition on the importation of the IQOS System electronic device, Marlboro HeatSticks and component parts into the United States and on the sale of any such products previously imported into the United States.

No damages are recoverable in the proceedings before the ITC.

In September 2021, the 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.

The orders became effective in November 2021.

Consequently, PM USA removed the IQOS System electronic device and Marlboro HeatSticks from the marketplace.

In December 2021, defendants appealed the orders to the U.S.

Court of Appeals for the Federal Circuit and, in March 2023, the U.S.

Court of Appeals for the Federal Circuit issued its decision affirming the ITC exclusion order in full.

In February 2024, PMI and British American Tobacco p.l.c.

agreed to settle multiple ongoing patent infringement disputes, including the patent infringement action pending before the ITC.

Under the terms of the settlement agreement, the parties agreed, among other things, to request rescission of the limited exclusion order barring the importation of the IQOS System electronic device, Marlboro HeatSticks and component parts into the United States and the cease and desist order barring domestic sales, marketing and distribution of these imported products.

In November 2020, Healthier Choices Management Corp.

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In April 2020, the FTC issued an administrative complaint against Altria and JUUL alleging that our 35 % investment in JUUL and the associated agreements constitute an unreasonable restraint of trade in violation of Section 1 of the Sherman Antitrust Act of 1890 (“Sherman Act”) and Section 5 of the Federal Trade Commission Act of 1914, and substantially lessened competition in violation of Section 7 of the Clayton Antitrust Act (“Clayton Act”).

In February 2022, the administrative law judge dismissed the FTC’s complaint and, also in February 2022, FTC complaint counsel appealed the administrative law judge’s decision to the FTC.

In March 2023, following our disposition of our investment in JUUL, we filed a motion to dismiss the complaint.

In June 2023, the FTC dismissed the action as no longer in the public interest.

Also as of April 22, 2024, 17 putative class action lawsuits have been filed against Altria and JUUL in the U.S.

Also as of July 29, 2024, 17 putative class action lawsuits have been filed against Altria and JUUL in the U.S.

District Court for the Northern District of California.

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Defenses raised in these cases include lack of misrepresentation, lack of causation, injury and damages, the statute of limitations, non-liability under state statutory provisions exempting conduct that complies with federal regulatory directives, and the First Amendment.

Twenty-one state courts in 23 “Lights” cases have refused to certify class actions, dismissed class action allegations, reversed prior class certification decisions or have entered judgment in favor of PM USA.

As of April 22, 2024, two “Lights/Ultra Lights” class actions are pending in U.S.

Twenty-one state courts in 23 “Lights” cases have refused to certify class actions,

dismissed class action allegations, reversed prior class certification decisions or have entered judgment in favor of PM USA.

As of July 29, 2024, two “Lights/Ultra Lights” class actions are pending in U.S.

state courts.

Neither case is active.

As of April 22, 2024, one smoking and health case alleging personal injury or seeking court-supervised programs or an ongoing medical monitoring program on behalf of individuals exposed to ETS and purporting to be brought on behalf of a class of individual plaintiffs, is pending in a U.S.

As of July 29, 2024, one smoking and health case alleging personal injury or seeking court-supervised programs or an ongoing medical monitoring program on behalf of individuals exposed to ETS and purporting to be brought on behalf of a class of individual plaintiffs, is pending in a U.S.

The case is currently inactive.

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Defenses raised in these cases have included lack of causation, assumption of the risk, comparative fault and/or contributory negligence, and statutes of limitations.

As of April 22, 2024, there is no such case pending against UST and/or its tobacco subsidiaries.

As of July 29, 2024, there is no such case pending against UST and/or its tobacco subsidiaries.

Environmental Regulation

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Other than those amounts, it is not possible to reasonably estimate the cost of any environmental remediation and compliance efforts that we may undertake in the future.

In the opinion of our management, however, compliance with environmental laws and regulations, including the payment of any remediation costs or damages and the making of related

expenditures, has not had a material adverse effect on our condensed consolidated results of operations, capital expenditures, financial position or cash flows.

In the opinion of our management, however, compliance with environmental laws and regulations, including the payment of any remediation costs or damages and the making of related expenditures, has not had a material adverse effect on our condensed consolidated results of operations, capital expenditures, financial position or cash flows.

Guarantees and Other Similar Matters

In the ordinary course of business, we have agreed to indemnify a limited number of third parties in the event of future litigation.

At March 31, 2024, we (i) had $ 48 million of unused letters of credit obtained in the ordinary course of business and (ii) were contingently liable for guarantees related to our own performance, including $ 19 million for surety bonds recorded on our condensed consolidated balance sheet.

At June 30, 2024, we (i) had $ 45 million of unused letters of credit obtained in the ordinary course of business and (ii) were contingently liable for guarantees related to our own performance, including $ 19 million for surety bonds recorded on our condensed consolidated balance sheet.

In addition, from time to time, we issue lines of credit to affiliated entities.

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PMI will indemnify Altria and PM USA for liabilities related to tobacco products manufactured by PMI or contract manufactured for PMI by PM USA, and PM USA will indemnify PMI for liabilities related to tobacco products manufactured by PM USA, excluding tobacco products contract manufactured for PMI.

We do not have a related liability recorded on our condensed consolidated balance sheet at March 31, 2024 as the fair value of this indemnification is insignificant.

We do not have a related liability recorded on our condensed consolidated balance sheet at June 30, 2024 as the fair value of this indemnification is insignificant.

PMI has agreed not to seek indemnification with respect to the IQOS System patent litigation discussed above under IQOS Litigation, excluding the patent infringement case filed with the U.S.

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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-Q

Item 1. Financial Statements