What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-26 compared with 2024-02-27 · 621 added, 504 removed, 1555 unchanged (42% of the section changed)

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Cash and cash equivalents $ 3,127 $ 3,686

Receivable from the sale of IQOS System commercialization rights

Receivables 177 71

Leaf tobacco 591 649

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Other intangible assets, net 12,973 13,686

Investments in equity securities ($ 0 million and $ 250 million at December 31, 2023 and 2022, respectively, measured at fair value)

Investments in equity securities 8,195 10,011

Other assets 934 845

1 unchanged sentence

See notes to consolidated financial statements.

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Altria Group, Inc.

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Accrued postretirement health care costs 935 1,079

Deferred gain from the sale of IQOS System commercialization rights

Other liabilities 365 1,621

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See notes to consolidated financial statements.

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Altria Group, Inc.

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Marketing, administration and research costs 2,737 2,737 2,327

Asset impairment and exit costs 389 — —

Operating income 11,241 11,547 11,919

Interest and other debt expense, net 1,037 989 1,058

Loss on early extinguishment of debt — — 649

Net periodic benefit income, excluding service cost ( 102 ) ( 127 ) ( 184 )

(Income) losses from investments in equity securities ( 652 ) ( 243 ) 3,656

Loss on Cronos-related financial instruments — 15 148

Gain on the sale of IQOS System commercialization rights

( 2,700 ) — —

Earnings before income taxes 13,658 10,928 7,389

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See notes to consolidated financial statements.

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Altria Group, Inc.

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See notes to consolidated financial statements.

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Altria Group, Inc.

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(Income) losses from investments in equity securities ( 652 ) ( 243 ) 3,656

Gain on the sale of IQOS System commercialization rights

( 2,700 ) — —

Dividends from ABI 139 163 104

Loss on Cronos-related financial instruments — 15 148

Loss on early extinguishment of debt — — 649

Asset impairment and exit costs 389 — —

Cash effects of changes:

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Capital expenditures ( 142 ) ( 196 ) ( 205 )

Proceeds from the ABI Transaction (3)

Proceeds from the sale of IQOS System commercialization rights

— 1,700 1,000

Proceeds from the Ste.

Michelle Transaction, net of cash transferred — — 1,176

Acquisition of NJOY, net of cash acquired — ( 2,751 ) —

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Net cash provided by (used in) investing activities 2,175 ( 1,283 ) 782

(1) 2023 relates to unrecognized tax benefit from the ordinary loss for cash tax purposes with respect to a portion of our tax basis associated with our former investment in JUUL.

For further discussion, see Note 15.

(1) Substantially all of the 2024 and 2023 amounts relate to an 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.

Income Taxes .

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

For further details, see Note 3.

Acquisition of NJOY .

2021 amounts reflect changes from operations for Ste.

Michelle prior to the Ste.

Michelle Transaction.

(3) See Note 8.

Investments in Equity Securities .

See notes to consolidated financial statements.

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Altria Group, Inc.

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Dividends paid on common stock ( 6,845 ) ( 6,779 ) ( 6,599 )

Premiums and fees related to early extinguishment of debt — — ( 623 )

Other, net ( 125 ) ( 27 ) ( 12 )

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$ 3,158 $ 3,721 $ 4,091

(1) For the years ended December 31, 2024 and 2023, income taxes paid were reduced by the impact of transferable income tax credits.

At December 31, 2024 and 2023, transferable income tax credits totaled $ 445 million and $ 335 million, respectively, and are included in other accrued liabilities on our consolidated balance sheets.

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

1 unchanged sentence

See notes to consolidated financial statements.

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Altria Group, Inc.

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Balances, December 31, 2021 $ 935 $ 5,857 $ 30,664 $ ( 3,056 ) $ ( 36,006 ) $ — $ ( 1,606 )

Net earnings (losses) — — 2,475 — — ( 4 ) 2,471

Net earnings — — 5,764 — — — 5,764

Other comprehensive earnings (losses), net

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Balances, December 31, 2022 935 5,887 29,792 ( 2,771 ) ( 37,816 ) 50 ( 3,923 )

Net earnings (losses) — — 5,764 — — — 5,764

Net earnings — — 8,130 — — — 8,130

Other comprehensive earnings (losses), net

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Repurchases of common stock — — — — ( 1,000 ) — ( 1,000 )

— — — — — 50 50

Other — — — — ( 8 ) — ( 8 )

Balances, December 31, 2023 935 5,906 31,094 ( 2,673 ) ( 38,802 ) 50 ( 3,490 )

Net earnings (losses) — — 8,130 — — — 8,130

Net earnings — — 11,264 — — — 11,264

Other comprehensive earnings (losses), net

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Balances, December 31, 2024 $ 935 $ 5,905 $ 35,516 $ ( 2,400 ) $ ( 42,194 ) $ 50 $ ( 2,188 )

(1) Represents the non-cash contribution made by JTIUH to Horizon in 2022 and the purchase of the remaining noncontrolling interest in Helix in 2021.

For additional information, see Note 1.

(1) Represents the non-cash contribution made by JTIUH to Horizon in 2022.

Background and Basis of Presentation .

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John Middleton Co.

(“Middleton”), which is engaged in the manufacture and sale of machine-made large cigars and pipe tobacco and is a wholly owned subsidiary of PM USA;

(“Middleton”), which is engaged in the manufacture and sale of machine-made large cigars and is a wholly owned subsidiary of PM USA;

UST LLC (“UST”), which, through its wholly owned subsidiary U.S.

Smokeless Tobacco Company LLC (“USSTC”), is engaged in the manufacture and sale of moist smokeless tobacco products (“MST”) and snus products;

Helix Innovations LLC (“Helix”), which operates in the United States and Canada, and Helix Innovations GmbH and its affiliates (“Helix ROW”), which operate internationally in the rest-of-world, are engaged in the manufacture and sale of oral nicotine pouches;

Smokeless Tobacco Company LLC (“USSTC”), is engaged in the manufacture and sale of moist smokeless tobacco (“MST”) products;

Helix Innovations LLC (“Helix”), which operates in the United States, and its foreign affiliates (“Helix International”), which operate in certain other countries, are engaged in the manufacture and sale of oral nicotine pouches;

and NJOY, LLC (“NJOY”), which is engaged in the manufacture and sale of e-vapor products.

Other wholly owned subsidiaries included Altria Group Distribution Company (“AGDC”), which provides sales and distribution services to our domestic operating companies;

and Altria Client Services LLC (“ALCS”), which provides various support services to our companies in areas such as legal, regulatory, research and product development, consumer engagement, finance, human resources and external affairs.

Our access to the operating cash flows of our subsidiaries consists of cash received from the payment of dividends and distributions, and the payment of interest on intercompany loans by our subsidiaries.

Other wholly owned subsidiaries included Altria Group Distribution Company (“AGDC”), which provides sales and distribution services to our domestic operating companies, and Altria Client Services LLC (“ALCS”), which provides various support services to our companies in areas such as legal, regulatory, research and product development, consumer engagement, finance, human resources and external affairs.

Our access to the operating cash flows of our subsidiaries consists of cash received from the payment of dividends and distributions, and the payment of interest on intercompany loans.

At December 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.

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

In March 2023, we entered into a stock transfer agreement with JUUL Labs, Inc.

(“Stock Transfer Agreement”) pursuant to which we transferred to JUUL Labs, Inc.

(“JUUL”) all of our beneficially owned JUUL equity securities.

In exchange, we received a non-exclusive, irrevocable global license to certain of JUUL’s heated tobacco intellectual property (“JUUL Heated Tobacco IP”).

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

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JTIUH owned the remaining 25 % economic interest.

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

(“IWS”), which included Ste.

Michelle Wine Estates Ltd.

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

Michelle Transaction”).

As of January 30, 2025, there are no products in the U.S.

marketplace from the joint venture.

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

For further discussion of our investments in equity securities, see Note 7.

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

In March 2023, we entered into a stock transfer agreement with JUUL Labs, Inc.

(“Stock Transfer Agreement”) pursuant to which we transferred to JUUL Labs, Inc.

(“JUUL”) all of our beneficially owned JUUL equity securities.

In exchange, we received a non-exclusive, irrevocable global license to certain of JUUL’s heated tobacco intellectual property (“JUUL Heated Tobacco IP”).

For further discussion of our current and former investments and the ABI Transaction, see Note 8.

Investments in Equity Securities .

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The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the dates of our financial statements and the reported amounts of net revenues and expenses during the reporting periods.

Significant estimates and assumptions include, among other things, pension and benefit plan assumptions, lives and valuation assumptions for goodwill, other intangible assets and investments in equity securities, marketing programs and income taxes.

Significant estimates and assumptions include, among other things, pension and benefit plan assumptions, lives and valuation assumptions for goodwill and other intangible assets, investments in equity securities, marketing programs and income taxes.

Actual results could differ from those estimates.

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

On January 1, 2023, we adopted Accounting Standards Update (“ASU”) 2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU No.

This guidance updates how an entity recognizes and measures contract assets and contract liabilities acquired in a business combination.

Our adoption of ASU No.

2021-08 had no impact on our consolidated financial statements or related disclosures.

Additionally, on January 1, 2023, we adopted ASU 2022-04, Liabilities-Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations (“ASU No.

This guidance requires that a buyer in a supplier finance program disclose sufficient qualitative and quantitative information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period and potential magnitude.

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

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU No.

This guidance clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value.

This guidance also specifies required disclosures for equity securities subject to contractual sale restrictions.

We applied ASU No.

2022-03 for the fair value disclosure of our investment in ABI.

For further discussion, see Note 8.

S upplier Financing .

Investments in Equity Securities.

Additionally, in connection with the preparation of our annual financial statements for the year ended December 31, 2024, we adopted ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU No.

This guidance

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requires disclosure of incremental segment information on an annual and interim basis.

We included expanded footnote disclosures as a result of the adoption of ASU No.

2023-07 in Note 17.

Segment Reporting .

We will include interim disclosure requirements in our interim condensed consolidated financial statements beginning in the first quarter of 2025.

Summary of Significant Accounting Policies

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We also review the estimated remaining useful lives of long-lived assets whenever events or changes in business circumstances indicate the lives may have changed.

We conduct a required annual review of goodwill and indefinite-lived intangible assets for potential impairment, and more frequently if an event occurs or circumstances change that would require us to perform an interim review.

We conduct a required annual review of goodwill and indefinite-lived intangible assets for potential impairment as of October 1 of each year, and more frequently if an event occurs or circumstances change that would require us to perform an interim review.

We have the option of first performing a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit or indefinite-lived intangible asset is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative impairment test.

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We do not enter into or hold derivative financial instruments for trading or speculative purposes.

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▪ Employee Benefit Plans:

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We subsequently amortize the gains or losses and prior service costs or credits recorded as components of other comprehensive earnings (losses) into net periodic benefit cost (income) in future years.

▪ Environmental Costs:

We are subject to laws and regulations relating to the protection of the environment.

We provide for expenses associated with environmental remediation obligations on an undiscounted basis when such amounts are probable and can be reasonably estimated.

We adjust such accruals as new information develops or circumstances change.

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

Contingencies - Environmental Regulation .

▪ Fair Value Measurements:

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See Note 20 .

Contingencies for a further discussion of guarantees.

Contingencies - Guarantees and Other Similar Matters for a further discussion of guarantees.

▪ Income Taxes:

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In reaching this determination, we consider the character of the assets and the possible sources of taxable income of the appropriate character within the available carryback and carryforward periods available under the tax law.

We recognize the financial statement benefit for uncertain income tax positions when it is more likely than not, based on the technical merits, that the position will be sustained upon examination by taxing authorities.

We recognize the financial statement benefit for uncertain income tax positions in our consolidated financial statements when it is more likely than not, based on the technical merits, that the position will be sustained upon examination by taxing authorities.

The amount recognized is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement.

For those income tax positions where it is more likely than not that a tax benefit will not be sustained, no tax benefit is recognized in the financial statements.

We recognize accrued interest and penalties associated with uncertain tax positions as part of the provision for income taxes in our consolidated statements of earnings.

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At the end of each reporting period, we review our investments accounted for under the equity method of accounting for impairment by comparing the fair value of each of our investments to their carrying value.

If the carrying value of an investment exceeds its fair value and the loss in value is other than temporary, we consider the investment impaired, reduce its carrying value to its fair value and record the impairment in our consolidated statements of earnings in the period identified.

If the carrying value of an investment

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exceeds its fair value and we determine that the loss in value is other than temporary, we consider the investment impaired, reduce its carrying value to its fair value and record the impairment in our consolidated statements of earnings in the period identified.

We use certain factors to make this determination including (i) the duration and magnitude of the fair value decline, (ii) the financial condition and near-term prospects of the investee and (iii) our intent and ability to hold our investment until recovery to its carrying value.

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Our businesses consider payments received in advance of product shipment as deferred revenue, which we include in other accrued liabilities on our consolidated balance sheets until revenue is recognized.

PM USA receives payment in advance of a customer obtaining control of the product.

USSTC and Helix receive substantially all payments within one business day of a customer obtaining control of the product.

NJOY receives substantially all payments within 30 days of a customer obtaining control of the product.

PM USA primarily receives payments in advance of a customer obtaining control of the product.

USSTC, Helix and NJOY receive substantially all payments within one business day of a customer obtaining control of the product.

We include amounts due from customers in receivables on our consolidated balance sheets.

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All outstanding balances under the supplier financing program are recorded in accounts payable on our consolidated balance sheets.

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▪ New Accounting Guidance Not Yet Adopted:

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Standards Description Effective Date for Public Entity Effect on Financial Statements

ASU 2022-03 Fair Value Measurement (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions

The guidance clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value.

The amendments also specify required disclosures for equity securities subject to contractual sale restrictions.

The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2023.

We do not expect our adoption of this guidance to have a material impact on our consolidated financial statements and related disclosures.

ASU 2023-07 Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures

The guidance will require disclosure of incremental segment information on an annual and interim basis.

The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

We are in the process of evaluating the impact of this guidance on our consolidated financial statements and related disclosures.

ASU 2023-09 Income Taxes (Topic 740):

2023-09 Income Taxes (Topic 740):

Improvements to Income Tax Disclosures

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The guidance is effective for fiscal years beginning after December 15, 2024.

We are in the process of evaluating the impact of this guidance on our consolidated financial statements and related disclosures.

The guidance will result in expanded disclosures beginning in our annual consolidated financial statements for the year ending December 31, 2025.

2024-03 and 2025-01 Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses

The guidance will require additional disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses.

The guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

We are in the process of evaluating the impact of this guidance on our disclosures.

Acquisition of NJOY

On June 1, 2023, we acquired NJOY Holdings (“NJOY Transaction”), which provided us with full global ownership of NJOY’s e-vapor product portfolio, including NJOY ACE , currently the only pod-based e-vapor product with market authorizations from the U.S.

Food and Drug Administration (“FDA”).

The total consideration for the NJOY Transaction of approximately $ 2.9 billion, consisted of approximately $ 2.75 billion in cash payments (net of cash acquired) plus the fair value of up to $ 500 million in additional cash payments that are contingent on receipt of FDA authorizations with respect to certain NJOY products.

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

We funded the NJOY Transaction cash payments through a combination of a $ 2.0 billion term loan facility, the issuance of commercial paper and available cash.

For further discussion regarding the term loan facility, see Note 9.

Short-Term Borrowings and Borrowing Arrangements .

We accounted for this acquisition as a business combination.

NJOY’s financial position and results of operations beginning June 1, 2023 have been consolidated with our consolidated financial results and included in the all other category.

Segment Reporting .

The fair value estimates of the assets acquired and liabilities assumed are preliminary and subject to adjustments during the measurement period (up to one year following the acquisition date).

The primary areas of accounting for the NJOY Transaction that are not yet finalized relate to the fair value of certain intangible assets acquired, contingent liabilities, residual goodwill and any related tax impact.

During the measurement period, we will adjust preliminary valuations assigned to assets and liabilities if new information is obtained about facts and circumstances that existed as of the NJOY Transaction date, that, if known, would have resulted in revised values for these items as of that date.

The impact of all changes, if any, that do not qualify as measurement period adjustments will be included in current period earnings.

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

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 .

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 contingent on receipt of U.S.

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

In the second quarter of 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 we made 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 year ended December 31, 2024.

At December 31, 2024, the fair value of the remaining contingent payments, which relate to blueberry and watermelon pod products, was approximately $ 20 million.

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 associated with 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 in the period in which they are incurred and are included in our consolidated statement of earnings as follows:

For the Years Ended December 31,

(in millions) 2024 2023

Marketing, administration and research costs:

Change in fair value of contingent payments $ 140 $ —

Other costs, net (1)

Interest and other debt expense, net:

Financing fees — 9

Total NJOY Transaction costs, net $ 176 $ 72

(1) For the year ended December 31, 2024, these amounts consisted primarily of acquisition-related items associated with patent infringement lawsuits related to the NJOY Transaction.

For the year ended December 31, 2023, these amounts consisted primarily of acquisition-related transaction costs.

For further discussion of the patent infringement lawsuits, see Note 20.

Contingencies .

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 10 Short-Term Borrowings .

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We accounted for the NJOY Transaction as a business combination.

On June 1, 2024, we finalized our purchase price allocation.

The amounts in the table below represent the final purchase price allocation to the assets acquired and liabilities assumed in the NJOY Transaction, including measurement period adjustments recorded during 2024.

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

Cash and cash equivalents $ 22 $ — $ 22

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Supplier agreements (amortizable)

180 ( 180 ) —

Accounts payable ( 7 ) — ( 7 )

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Total consideration 2,901 — 2,901

$ 1,614 $ 154 $ 1,768

The excess of the total consideration over the identifiable net assets acquired in the NJOY Transaction primarily reflects the value of future growth opportunities in the e-vapor category.

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 intangibles assets using an income approach.

The fair value measurements were primarily based on significant inputs that are not observable in the market, such as discounted cash flow analyses, and thus are classified in Level 3 of the fair value hierarchy.

We amortize the intangible assets over a weighted-average period of approximately 17 years.

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 year ended December 31, 2023, we incurred costs related to the NJOY Transaction of $ 72 million, substantially all of which were acquisition-related costs, consisting primarily of transaction costs and financing fees, which were included in corporate expense and interest and other debt expense, net, respectively, in our consolidated statement of earnings.

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 and discount rates.

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 were 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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Segment Reporting .

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

We record payments received by our businesses in advance of product shipment as deferred revenue.

Prior to 2024, substantially all cash discounts, offered in contracts with our customers for prompt payment, were based on a flat rate per unit based on agreed-upon payment terms.

Beginning in the first quarter of 2024 for PM USA and USSTC, cash discounts in contracts with our customers were based on a percentage of the list price based on agreed-upon payment terms.

We record receivables net of the cash discounts on our consolidated balance sheets.

Receivables and deferred revenue associated with contracts with customers were as follows at December 31:

(in millions) 2024 2023

Receivables $ 177 $ 71

Deferred revenue 215 258

At December 31, 2024 and 2023, we did not expect differences between amounts recorded as receivables and amounts that would be subsequently received;

therefore, we did no t record an allowance for credit losses against these receivables.

We record deferred revenue when our businesses receive payment in advance of product shipment.

These payments are included in other accrued liabilities on our consolidated balance sheets until control of such products is obtained by the customer.

Deferred revenue from contracts with customers was $ 258 million and $ 252 million at December 31, 2023 and 2022, respectively.

When cash is received in advance of product shipment, our companies satisfy their performance obligations within three days of receiving payment.

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

Receivables were $ 71 million and $ 48 million at December 31, 2023 and 2022, respectively, which in 2022 excluded the receivable from the sale of the IQOS Tobacco Heating System (“ IQOS System”) commercialization rights, discussed in Note 6.

Goodwill and Other Intangibles, net .

At December 31, 2023 and 2022, 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 consolidated balance sheets.

It is USSTC’s policy to accept authorized sales returns from its customers for products that have passed the freshness date printed on product

packaging due to the limited shelf life of USSTC’s MST and snus products.

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packaging due to the limited shelf life of USSTC’s MST products.

We record estimated sales returns, which are based principally on historical volume and return rates, as a reduction to revenues.

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We do not enter into agreements with any of the participating financial institutions in connection with the Program.

The range of payment terms we negotiate with our suppliers is consistent, irrespective of whether a supplier participates in the Program.

The payment terms that we have with our suppliers range up to 120 days.

The range of payment terms we negotiate with our suppliers (up to 120 days) is consistent irrespective of whether a supplier participates in the Program.

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 consolidated balance sheets, and the associated payments are included in operating activities within our consolidated statements of cash flows.

A reconciliation of the beginning and ending confirmed outstanding obligations was as follows:

For the Year Ended December 31, 2023

For the Years Ended December 31,

(in millions) 2024 2023

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Confirmed outstanding obligations at end of year $ 128 $ 119

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Goodwill and Other Intangible Assets, net

Goodwill and other intangible assets, net, were as follows at December 31:

Goodwill Other Intangible Assets, net

(in millions) 2023 2022 2023 2022

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

Smokeable products segment $ 99 $ 2,936 $ 99 $ 2,963

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Other 1,768 (1)

1,358 1,614 (1)

Total $ 6,945 $ 12,973 $ 6,791 $ 13,686

(1) Represents e-vapor reporting unit goodwill related to the NJOY Transaction.

Acquisition of NJOY .

Other intangible assets consisted of the following at December 31:

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$ 13,710 $ 737 $ 14,284 $ 598

At December 31, 2023, substantially all of our indefinite-lived intangible assets consisted of (i) MST and snus trademarks of $ 8.8 billion, which consists of Copenhagen , Skoal and other MST and snus trademarks of $ 4.0 billion, $ 3.9 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 Middleton.

Definite-lived intangible assets, consisting primarily of intellectual property (which includes developed technology), certain cigarette trademarks, e-vapor trademarks, customer relationships and supplier agreements, are amortized over a weighted-average period of approximately 18 years.

Pre-tax amortization expense for definite-lived intangible assets, which includes the impact of the NJOY Transaction, during the years ended December 31, 2023, 2022 and 2021, was $ 128 million, $ 73 million and $ 72 million, respectively.

We estimate our annual amortization expense for each of the next five years to be approximately $ 165 million, assuming no additional transactions occur that require the amortization of intangible assets or impacts of any measurement period adjustments related to the NJOY Transaction.

In July 2023, we received the remaining payment of approximately $ 1.8 billion (including interest) from Philip Morris International Inc.

(“PMI”) as part of the 2022 agreement with PMI to, among other things, transition and ultimately conclude our relationship with respect to the IQOS System in the United States (“Remaining PMI Payment”).

In 2022, we received $ 1.0 billion from PMI upon entering into the agreement.

For the years ended December 31, 2023 and 2022, we recorded disposition-related interest income for the Remaining PMI Payment of $ 54 million and $ 21 million, respectively, in our consolidated statements of earnings.

At December 31, 2023, our consolidated balance sheet included a pre-tax $ 2.7 billion deferred gain, which we expect to recognize in earnings when we relinquish our rights to the IQOS System effective April 30, 2024.

At December 31, 2024, substantially all of our indefinite-lived intangible assets consisted of (i) MST trademarks of $ 8.5 billion, which consists of Copenhagen , Skoal and other MST 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 Middleton.

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 during the years ended December 31, 2024, 2023 and 2022 was $ 139 million, $ 128 million and $ 73 million, respectively.

We estimate our annual amortization expense 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 (“ IQOS Transaction”).

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 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 year ended December 31, 2024 in our consolidated statement of earnings.

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

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154 ( 220 ) 1,614 1,430

Asset impairment — ( 354 ) — —

Amortization — ( 139 ) — ( 128 )

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

For additional information regarding the NJOY Transaction, see Note 3.

The 2024 amounts represent the measurement period adjustments related to the NJOY Transaction.

Acquisition of NJOY .

The 2022 amounts are attributable to acquisitions of certain intellectual property related to other tobacco products, which included a $ 50 million non-cash contribution made by JTIUH to Horizon.

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 been 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

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contributed 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 during the second quarter of 2024, which was recorded in our consolidated statement of earnings for the year ended December 31, 2024.

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.

During 2024, 2023 and 2022, our annual impairment test of goodwill and indefinite-lived intangible assets resulted in no impairment charges.

Based on our 2024 annual impairment test, the estimated fair values of the e-vapor reporting unit and Skoal trademark exceeded their carrying values by approximately 28 % ($ 0.3 billion) and 7 % ($ 0.3 billion), respectively.

A hypothetical 1% increase to the discount rate used to estimate the fair value of the e-vapor reporting unit would have resulted in an impairment charge of approximately $ 125 million during 2024.

A hypothetical 1% increase to the discount rate used to estimate the fair value of the Skoal trademark would have resulted in an additional impairment charge of approximately $ 85 million during 2024.

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

Based on our annual impairment analysis performed as of October 1, 2023, the estimated fair value of the Skoal trademark within the MST and snus products reporting unit, which was determined using a discounted cash flow model, exceeded its carrying value of $ 3.9 billion as of December 31, 2023 by approximately 6 % ($ 0.2 billion).

A hypothetical 1% increase to the discount rate used would have resulted in an impairment charge to the Skoal intangible asset of approximately $ 150 million during 2023.

We use an income approach to estimate the fair values of our reporting units and trademarks.

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 risk associated with realizing expected future cash flows.

In determining the estimated fair values of our reporting units and trademarks in 2024, 2023 and 2022, we made various judgments, estimates and assumptions, the most significant of which were volume, revenue, income, perpetual growth rate and discount rate.

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

As further discussed in Note 20.

Contingencies , on January 29, 2025, the U.S.

International Trade Commission (“ITC”) issued its final determination, including the form of remedy, in the complaint filed by JUUL against Altria and certain of our affiliates, including NJOY, alleging patent infringement.

Due to other factors that are uncertain at this time, we are not able to estimate the impact of the ITC’s final determination;

however, it could result in a material non-cash impairment of our e-vapor reporting unit in future periods.

Asset Impairment, Exit and Implementation Costs

Pre-tax asset impairment, exit and implementation costs consisted of the following for the year ended December 31, 2024:

(in millions) Asset Impairment and Exit Costs Implementation Costs (1)

Smokeable products

$ 31 $ 29 $ 60

Oral tobacco products (2)

Total $ 389 $ 33 $ 422

(1) Included in marketing, administration and research costs in our consolidated statement of earnings.

(2) Includes impairment of the Skoal trademark of $ 354 million.

G oodwill and Other Intangible Assets, net .

There were no asset impairment, exit or implementation costs for the years ended December 31, 2023 and 2022.

In October 2024, we announced a multi-phase Optimize & Accelerate initiative (“Initiative”) designed to modernize our ways of working.

Through the Initiative, we plan to increase our organization’s speed, efficiency and effectiveness by centralizing work, outsourcing certain transactional tasks and streamlining, automating and standardizing processes.

We expect the design and detailed plans for all phases of the Initiative to be substantially complete in early 2026.

We estimate total pre-tax charges for the Initiative’s initial phases of approximately $ 100 million to $ 125 million.

Of these amounts, during 2024, we incurred pre-tax charges of $ 68 million, consisting of employee separation cost of $ 35 million and implementation costs of $ 33 million.

We expect to record the majority of the remaining costs for these initial phases in the first half of 2025.

Substantially all of these charges will result in cash expenditures and will consist of severance payments associated with employee separations, implementation costs for new technology and business advisory services and other costs.

Employee separation costs are recorded when probable and reasonably estimable.

As we further develop and finalize detailed plans for the additional phases of the Initiative, we will update estimated pre-tax charges for the Initiative.

We made cash payments of $ 11 million for the Initiative in 2024 all of which were related to implementation costs.

At December 31, 2024, restructuring liabilities, all of which were severance liabilities, were $ 35 million.

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Investments in Equity Securities

The carrying amount of our current and former investments consisted of the following at December 31:

The carrying amount of our investments consisted of the following at December 31:

(in millions) 2024 2023

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(Income) losses from investments under equity method of accounting ( 652 ) ( 493 ) 2,201

JUUL — 250 (3) 1,455 (4)

(Income) losses from investments in equity securities $ ( 652 ) $ ( 243 ) $ 3,656

(1) Includes our share of amounts recorded by our investees and additional adjustments, if required, related to (i) the conversion from international financial reporting standards to GAAP and (ii) adjustments to our investments required under the equity method of accounting.

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

(2) Includes $ 165 million of the total pre-tax gain on the ABI Transaction discussed below.

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

(4) Represents the estimated change in fair value.

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

Prior to the disposition of our JUUL equity securities in March 2023, we accounted for our former investment in JUUL as an investment in an equity security measured at fair value.

Investees’ summarized financial data for our equity method investments was as follows:

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Net earnings (losses) attributable to equity investments $ 6,501 $ ( 47 ) $ 6,284 $ ( 108 ) $ 5,838 $ ( 520 )

(1) Reflects a one-quarter lag.

Other Investments reflect summarized financial data of Cronos, as well as JUUL’s financial data for the periods during which we accounted for our former investment in JUUL as an equity method investment under the fair value option.

At September 30,

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(2) Reflects a one-quarter lag.

Other Investments reflect summarized financial data of Cronos.

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Investment in ABI

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

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.

Our Restricted Shares:

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▪ have director nomination rights with respect to ABI.

We have not elected to convert our Restricted Shares into ordinary shares of ABI.

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

Through this representation, we participate in ABI’s policy making processes.

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

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

▪ We sold 35 million of our ABI ordinary shares in a global secondary offering for gross proceeds of approximately $ 2.2 billion.

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

At December 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.

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.

In conjunction with the ABI Transaction, 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.

For further discussion of the ASR Agreements, see Note 12.

Capital Stock .

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

(in millions) For the Year Ended December 31, 2024

Gain on partial sale of our investment $ 165

Transaction costs ( 62 )

Total pre-tax gain on ABI Transaction $ 103

▪ The pre-tax gain on the partial sale of our investment was recorded in (income) losses from investments in equity securities and includes a $ 408 million gain representing the excess of the selling price of the ABI shares sold over the carrying value of those shares, partially offset by a $ 243 million reclassification of the proportionate share of our pre-tax accumulated other comprehensive losses directly attributable to ABI and our designated net investment hedges related to our investment in ABI (see Note 9.

Financial Instruments and Note 15.

Other Comprehensive Earnings/Losses ).

▪ 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 consolidated statement of earnings for the year ended December 31, 2024.

For further discussion, see Note 16.

Income Taxes .

Based on the most recent information provided to us by ABI, we expect to maintain the right to select two nominees for election to ABI’s board of directors at ABI’s 2025 annual general meeting.

We continue to account for our investment in ABI under the equity method of accounting because we have active representation on ABI’s board of directors and certain ABI board committees.

Through this representation, we believe we have the ability to exercise significant influence over the operating and financial policies of ABI and participate in ABI’s policy making processes.

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

The fair value of our investment in ABI is based on (i) unadjusted quoted prices in active markets for ABI’s ordinary shares and was classified in Level 1 of the fair value hierarchy and (ii) observable inputs other than Level 1 prices, such as quoted prices for similar assets for the Restricted Shares and was classified in Level 2 of the fair value hierarchy.

We can convert our Restricted Shares to ordinary shares at our discretion.

Therefore, the fair value of each Restricted Share is based on the value of an ordinary share.

The fair value of our investment in ABI at December 31, 2023 and 2022 was $ 12.7 billion and $ 11.9 billion, respectively, which exceeded its carrying value of $ 9.7 billion and $ 9.0 billion by approximately 32 % and 33 %, respectively.

At September 30, 2022 and 2021, the fair value of our investment in ABI had declined below its carrying value by $ 2.5 billion and $ 6.2 billion or approximately 22 % and 35 %, respectively.

We determined the declines in fair value to be other than temporary and recorded non-cash, pre-tax impairment charges of $ 2.5 billion and $ 6.2 billion during the third quarter of 2022 and 2021, respectively, which were recorded to (income) losses from investments in equity securities in our consolidated statements of earnings for the years ended December 31, 2022 and 2021, respectively.

At December 31, 2023, the carrying value of our investment in ABI exceeded its share of ABI’s net assets attributable to equity holders of ABI by approximately $ 2.5 billion.

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

The fair value of our investment in ABI is based on (i) unadjusted quoted prices in active markets for ABI’s ordinary shares and is classified in Level 1 of the fair value hierarchy and (ii) observable inputs other than Level 1 prices, such as quoted prices for similar assets for the Restricted Shares and is classified in Level 2 of the fair value hierarchy.

We can convert our Restricted Shares into ordinary shares at our discretion.

The fair value of each Restricted Share is based on the value of an ordinary share.

At December 31, 2024, the fair value of our investment in ABI approximated its carrying value of $ 7.9 billion.

At December 31, 2023, the fair value of our investment in ABI was $ 12.7 billion, which exceeded its carrying value of $ 9.7 billion by approximately 32 %.

At September 30, 2022, the fair value of our investment in ABI had declined below its carrying value by $ 2.5 billion or approximately 22 %.

We determined the decline in fair value to be other than temporary and recorded a non-cash, pre-tax impairment charge of $ 2.5 billion during the third quarter of 2022, which was recorded to (income) losses from investments in equity securities in our consolidated statement of earnings for the year ended December 31, 2022.

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At December 31, 2024, the carrying value of our investment in ABI exceeded our share of ABI’s net assets attributable to equity holders of ABI by approximately $ 2.0 billion, representing a $ 0.5 billion reduction from December 31, 2023, due primarily to the ABI Transaction.

Substantially all of the $ 2.0 billion difference at December 31, 2024 is comprised of goodwill and other indefinite-lived intangible assets (consisting primarily of trademarks).

Investment in Cronos

At December 31, 2023, we had a 41.1 % ownership interest in Cronos, consisting of 156.6 million shares, which we account for under the equity method of accounting.

At December 31, 2024, we had an approximate 40.9 % 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 is based on unadjusted quoted prices in active markets for Cronos’s common shares and was classified in Level 1 of the fair value hierarchy.

The fair value of our investment in Cronos is based on unadjusted quoted prices in active markets for Cronos’s common shares and is classified in Level 1 of the fair value hierarchy.

At December 31, 2024, the fair value of our investment in Cronos approximated its carrying value of $ 315 million.

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

Based on our evaluation of the duration and magnitude of the fair value decline, our evaluation of Cronos’s financial condition (including its cash position) and near-term prospects, and our intent and ability to hold our investment in Cronos until recovery, we concluded that the decline in fair value of our investment in Cronos below its carrying value is temporary and, therefore, no impairment was recorded.

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

At June 30, 2022 and December 31, 2021, the fair value of our investment in Cronos was less than its carrying value by approximately 20 % and 25 %, respectively.

We determined the declines in fair value to be other than temporary and recorded non-cash, pre-tax impairment charges of $ 107 million and $ 205 million in the second quarter of 2022 and the fourth quarter of 2021, respectively, which were recorded to (income) losses from investments in equity securities in our consolidated statements of earnings for years ended December 31, 2022 and 2021, respectively.

As part of our investment in Cronos, prior to December 15, 2022, we also owned a warrant that provided us the ability to purchase an additional approximate 10 % of common shares of Cronos at a per share exercise price of Canadian dollar (“CAD”) $ 19.00 , which would have expired on March 8, 2023.

On December 15, 2022, we irrevocably abandoned the Cronos warrant, and we no longer owned the warrant as of December 31, 2022.

For the years ended December 31, 2022 and 2021, we recorded $ 15 million and $ 148 million, respectively, representing non-cash, pre-tax unrealized losses on Cronos-related financial instruments, substantially all of which related to changes in the fair value of the Cronos warrant.

Based on our evaluation, we concluded that the decline in fair value of our investment in Cronos below its carrying value at December 31, 2023 was temporary and, therefore, no impairment was recorded.

At June 30, 2022, the fair value of our investment in Cronos was less than its carrying value by approximately 20 %.

We determined the decline in fair value to be other than temporary and recorded a non-cash, pre-tax impairment charge of $ 107 million in the second quarter of 2022, which was recorded to (income) losses from investments in equity securities in our consolidated statement of earnings for the year ended December 31, 2022.

Former Investment in JUUL

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As discussed in Note 1.

Background and Basis of Presentation , in March 2023 we entered into the Stock Transfer Agreement with JUUL under which we transferred to JUUL all of our beneficially owned JUUL equity securities and, in exchange, received the JUUL Heated Tobacco IP.

Background and Basis of Presentation , in March 2023, we entered into the 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.

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.

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Therefore, we were no longer able to account for our investment in JUUL as an equity method investment.

Beginning with the period ended September 30, 2022 and until March 3, 2023, when we transferred to JUUL all of our beneficially owned JUUL equity securities, we accounted for our former investment in JUUL as an investment in an equity security.

Beginning with the period ended September 30, 2022 and until March 3, 2023, when we entered into the Stock Transfer Agreement, we accounted for our former investment in JUUL as an investment in an equity security.

Our consolidated statements of earnings include any changes in the estimated fair value of our former investment, which were calculated quarterly.

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Balance at December 31, 2022 $ 250

Unrealized gains (losses) included in (income) losses from investments in equity securities ( 1,455 )

Balance at December 31, 2022 250

Non-cash, pre-tax (loss) on disposition included in (income) losses from investments in equity securities ( 250 )

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2023 Financial Activity

▪ For the year ended December 31, 2023, we recorded a non-cash, pre-tax loss on the disposition of our JUUL equity securities of $ 250 million as a result of transferring to JUUL all of our beneficially owned JUUL equity securities pursuant to the Stock Transfer Agreement.

Additionally, we considered specific facts and circumstances around the nature of the JUUL Heated Tobacco IP and determined that the fair value of such intellectual property was not material to our consolidated financial statements as of the date of the transaction.

▪ For the year ended December 31, 2023, we recorded a non-cash, pre-tax loss on the disposition of our JUUL equity securities of $ 250 million as a result of entering into the Stock Transfer Agreement.

Additionally, we considered specific facts and circumstances around the nature of the JUUL Heated Tobacco IP and determined that the fair value of such intellectual property

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was not material to our consolidated financial statements as of the date of the transaction.

As a result, we did not record an asset associated with this intellectual property on our consolidated balance sheet.

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and international markets at a rate of return that incorporated the risk-free rate for the use of those funds, the expected rate of inflation and the risks associated with realizing future cash flows.

In determining the estimated fair value of our former investment in JUUL, in 2022 and 2021, we made certain judgments, estimates and assumptions, the most significant of which were likelihood of certain potential regulatory and liquidity outcomes, sales volume, operating margins, discount rates and perpetual growth rates.

In determining the estimated fair value of our former investment in JUUL in 2022, we made certain judgments, estimates and assumptions, the most significant of which were likelihood of certain potential regulatory and liquidity outcomes, sales volume, operating margins, discount rates and perpetual growth rates.

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

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Our investment in ABI, whose functional currency is the Euro, exposes us to foreign currency exchange risk on the carrying value of our investment.

To manage this risk, we may designate certain foreign exchange contracts, including cross-currency swap contracts and forward contracts (collectively, “foreign currency contracts”), and Euro denominated unsecured long-term notes (“foreign currency denominated debt”) as net investment hedges of our investment in ABI.

To manage this risk, we may designate Euro denominated unsecured long-term notes (“foreign currency denominated debt”) and certain foreign exchange contracts, including cross-currency swap contracts and forward contracts (collectively, “foreign currency contracts”), as net investment hedges of our investment in ABI.

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

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Fair value 3,059 3,125

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

Net Investment Hedging

The pre-tax effects of our net investment hedges on accumulated other comprehensive losses were as follows:

(Gain) Loss Recognized in Accumulated Other Comprehensive Losses

For the Years Ended December 31,

(in millions) 2023 2022 2021

Foreign currency contracts

$ — $ — $ ( 16 )

Foreign currency denominated debt

108 ( 281 ) ( 359 )

Total $ 108 $ ( 281 ) $ ( 375 )

In addition, we recognized a pre-tax (gain) of our net investment hedges of $( 7 ) million on the foreign currency contracts for the year ended December 31, 2021 in our consolidated statement of earnings.

We recognized changes in the fair value of the foreign currency contracts and in the carrying value of the foreign currency denominated debt due to changes in the Euro to U.S.

We recognize changes in the carrying value of the foreign currency denominated debt due to changes in the Euro to U.S.

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

We recognized gains on the foreign currency contracts arising from components excluded from effectiveness testing in interest and other debt expense, net in our consolidated statements of earnings based on an amortization approach.

Short-Term Borrowings and Borrowing Arrangements

We recognized pre-tax (gains) losses of our net investment hedges of $( 205 ) million, $ 108 million and $( 281 ) million for the years ended December 31, 2024, 2023 and 2022, respectively, in accumulated other comprehensive losses.

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

For further discussion of the ABI Transaction and reclassification of accumulated other comprehensive losses, see Note 8.

Investments in Equity Securities and Note 15.

Other Comprehensive Earnings/Losses.

Short-Term Borrowings

At December 31, 2024 and 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 PMI Payment, we repaid the term loan facility in full.

For additional information regarding the NJOY Transaction and the Remaining PMI Payment, see Note 3.

Acquisition of NJOY and Note 6.

Goodwill and Other Intangible Assets, net , respectively.

In October 2023, we entered into a new senior unsecured 5-year revolving credit agreement for borrowings of up to an aggregate principal amount of $ 3.0 billion (“Credit Agreement”) and terminated our prior credit agreement, which was scheduled to expire on August 1, 2025 (“Prior Credit Agreement”).

Our Credit Agreement expires on October 24, 2028 and includes an option, subject to certain conditions, for us to extend our Credit Agreement for two additional one -year periods.

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, at which time the term loan facility terminated in accordance with its terms.

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 for two additional one-year periods.

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

At December 31, 2023 and 2022, we had availability under our Credit Agreement and our Prior Credit Agreement, as applicable, for borrowings of up to an aggregate principal amount of $ 3.0 billion.

At December 31, 2024 and 2023, 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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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 earnings before interest, taxes, depreciation and amortization (“EBITDA”) to Consolidated Interest Expense of not less than 4.0 to 1.0, calculated as of the end of the applicable quarter on a rolling four quarters basis.

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 December 31, 2024, we were in compliance with our covenants in our Credit Agreement.

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PM USA guarantees any borrowings under our Credit Agreement and any amounts outstanding under our commercial paper program.

For further discussion of PM USA’s guarantees, see Note 10.

For discussion of PM USA’s guarantees, see Note 11.

Long-Term Debt .

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(1) Weighted-average coupon interest rate of 4.6 % and 4.5 % at December 31, 2024 and 2023, respectively.

(2) Weighted-average coupon interest rate of 2.5 % and 2.0 % at December 31, 2023 and 2022, respectively.

(2) Weighted-average coupon interest rate of 2.5 % at December 31, 2024 and 2023.

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At December 31, 2024, our outstanding long-term debt consisted of the following:

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Type Face Value Interest Rate Issuance Maturity

USD notes $ 776 4.000 % October 2013 January 2024

USD notes $ 345 3.800 % February 2019 February 2024

USD notes $ 750 2.350 % May 2020 May 2025

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At December 31, 2024 and 2023, accrued interest on long-term debt of $ 389 million and $ 410 million, respectively, was included in other accrued liabilities on our consolidated balance sheets.

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.

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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 9.

Financial Instruments .

▪ Long-Term Debt Activity:

In November 2023, we issued USD denominated senior unsecured notes in the aggregate principal amount of $ 1.0 billion.

The net proceeds from the notes are being used for general corporate purposes.

The notes contain the following terms:

▪ $ 0.5 billion at 6.200 %, due 2028, interest payable semiannually beginning May 1, 2024;

▪ $ 0.5 billion at 6.875 %, due 2033, interest payable semiannually beginning May 1, 2024.

In February and May 2023, respectively, we repaid in full the aggregate principal amounts at maturity of the following:

▪ $ 1.3 billion (€ 1.25 billion) of our senior unsecured Euro denominated notes at 1.000 %;

▪ $ 218 million of our senior unsecured notes at 2.950 %.

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

All of our notes are senior unsecured obligations and rank equally in right of payment with all of our existing and future senior unsecured indebtedness.

Following the occurrence of both (i) a change of control of Altria and (ii) the notes ceasing to be rated investment grade by each of Moody’s, S&P and Fitch Ratings Inc., we will be required to make an offer to purchase the notes at a price equal to 101 % of the aggregate principal amount of such notes, plus accrued and unpaid interest to the date of repurchase as and to the extent set forth in the terms of the notes.

▪ 2021 Debt Tender Offers and Redemption:

During the first quarter of 2021, we (i) completed debt tender offers to purchase for cash certain of our senior unsecured notes in an aggregate principal amount of $ 4,042 million and (ii) redeemed all of our outstanding 3.490 % senior unsecured notes due to mature in 2022 in the aggregate principal amount of $ 1.0 billion.

As a result of the debt tender offers and redemption, during the first quarter of 2021, we recorded pre-tax losses on early extinguishment of debt of $ 649 million, which included premiums and fees of $ 623 million and the write-off of unamortized debt discounts and debt issuance costs of $ 26 million.

▪ PM USA Guarantees:

PM USA (“Guarantor”), which is a 100 % owned subsidiary of Altria Group, Inc.

(“Parent”), has guaranteed the Parent’s obligations under its outstanding debt securities, borrowings under its Credit Agreement and amounts outstanding under its commercial paper program (“Guarantees”).

(“Parent”), has guaranteed the Parent’s obligations under its outstanding debt securities, any borrowings under its Credit Agreement and any amounts outstanding under its commercial paper program (“Guarantees”).

Pursuant to the Guarantees, the Guarantor fully and unconditionally guarantees, as primary obligor, the payment and performance of the Parent’s obligations under the guaranteed debt instruments (“Obligations”), subject to release under certain customary circumstances as noted below.

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▪ Share Repurchases:

In January 2021, our Board of Directors authorized a $ 2.0 billion share repurchase program that it expanded to $ 3.5 billion in October 2021 (as expanded, “January 2021 share repurchase program”).

We completed the January 2021 share repurchase program in December 2022.

In January 2023, our Board of Directors authorized a $ 1.0 billion share repurchase program (“January 2023 share repurchase program”).

In January 2023, our Board authorized a $ 1.0 billion share repurchase program (“January 2023 share repurchase program”), which we completed in December 2023.

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

We subsequently entered into ASR Agreements to repurchase shares of our common stock having an aggregate value of $ 2.4 billion (“Repurchase Price”).

In the first half of 2024, we paid the Repurchase Price

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and received 53.9 million shares of our common stock.

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 consolidated balance sheet when the shares were received.

We completed the January 2024 share repurchase program in December 2024.

In January 2024, our Board of Directors authorized a new $ 1.0 billion share repurchase program, which we expect to complete by December 31, 2024.

In January 2025, our Board authorized a new $ 1.0 billion share repurchase program, which we expect to complete by December 31, 2025.

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

Our total share repurchase activity was as follows for the years ending December 31:

January 2023 Share Repurchase Program January 2021 Share Repurchase Program

(in millions, except per share data) 2023 2022 2021 Total

Our total share repurchase activity was as follows for the years ended December 31:

January 2024 Share Repurchase Program January 2023 Share Repurchase Program January 2021 Share Repurchase Program

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

2023 2022 (2)

Total number of shares repurchased 73.5 22.7 38.1

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$ 46.26 $ 43.96 $ 47.83

In 2020, our Board of Directors adopted, and shareholders approved, the Altria Group, Inc.

(1) Includes 53.9 million shares repurchased under the ASR Agreements at an average price per share of $ 44.50 .

(2) In January 2021, our Board authorized a $ 2.0 billion share repurchase program that it expanded to $ 3.5 billion in October 2021, which we completed in December 2022.

In 2020, our Board adopted, and shareholders approved, the Altria Group, Inc.

2020 Performance Incentive Plan (“2020 Plan”) under which we may grant stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance stock units (“PSUs”) and other stock-based awards, as well as cash-based annual and long-term incentive awards to our employees.

Any awards granted under the 2020 Plan may be in the form of performance-based awards, including PSUs subject to the achievement or satisfaction of performance goals and performance cycles.

We may issue up to 25 million shares of common stock under the 2020 Plan.

In addition, under the 2015 Stock Compensation Plan for Non-Employee Directors (“Directors Plan”), we may grant up to one million shares of common stock to members of the Board of Directors who are not employees of Altria.

We may issue up to 25 million shares of common stock under the 2020 Plan prior to May 31, 2025.

In addition, under the 2015 Stock Compensation Plan for Non-Employee Directors (“Directors Plan”), we may grant up to one million shares of common stock to members of the Board who are not employees of Altria, provided that no awards can be made under the Directors Plan after the awards made immediately following our 2025 Annual Meeting of Shareholders.

At December 31, 2024, we had 18,507,747 and 533,843 shares available to be granted under the 2020 Plan and the Directors Plan, respectively.

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Balance at December 31, 2024 3,973,485 $ 45.87

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The weighted-average grant date fair value of RSUs granted during the years ended December 31, 2024, 2023 and 2022 was $ 67 million, $ 56 million and $ 59 million, respectively, or $ 43.29 , $ 46.38 and $ 49.22 per RSU, respectively.

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Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents are participating securities and, therefore, are included in our EPS calculation pursuant to the two-class method.

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Other Comprehensive Earnings/Losses

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Deferred income taxes

( 22 ) 18 — ( 4 )

Amounts reclassified to net earnings, net of

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Deferred income taxes

2 ( 51 ) — ( 49 )

Amounts reclassified to net earnings, net of

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Financial Instruments .

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

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Net loss $ 29 $ 8 $ 127

Prior service cost (credit) ( 34 ) ( 39 ) ( 41 )

Prior service credit ( 36 ) ( 34 ) ( 39 )

( 7 ) ( 26 ) 88

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

(3) Primarily reflects the impact of the ABI Transaction.

For the year ended December 31, 2024, 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 8.

Investments in Equity Securities.

(3) 2021 amounts are included in marketing, administration and research costs and are related to the Ste.

Michelle Transaction.

Investments in Equity Securities and Note 9.

Financial Instruments.

In August 2022, the U.S.

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however, certain unique circumstances may result in our Corporate AMT liability exceeding our regular federal income tax liability, including when tax losses are reported in a different year than book losses.

For the year ended December 31, 2023, we made estimated payments based on a Corporate AMT liability as a result of tax losses we intend to claim related to our former investment in JUUL, as discussed below.

Earnings (losses) before income taxes and provision (benefit) for income taxes consisted of the following:

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Certain of our state tax returns are currently under examination by various states as part of routine audits conducted in the ordinary course of business.

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A reconciliation of the beginning and ending unrecognized tax benefits was as follows:

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Additions for tax positions of prior years 33 — 16

Reductions for tax positions due to lapse of statutes of limitations — — ( 5 )

Reductions for tax positions related to IRS Agreement ( 1,343 ) — —

Reductions for tax positions of prior years ( 16 ) ( 6 ) —

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Balance at end of year $ 282 $ 1,608 $ 69

The amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate at December 31, 2023, was $ 35 million, along with $ 1,573 million affecting deferred taxes, a portion of which would also impact the effective tax rate due to the release of a valuation allowance, as discussed below.

The amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate at December 31, 2024, was $ 189 million, along with $ 27 million affecting deferred taxes.

For the year ended December 31, 2023, we recognized a $ 6.4 billion ordinary loss for cash tax purposes with respect to a portion of our tax basis associated with our former investment in JUUL.

For financial statement purposes, we fully reserved for the tax benefit associated with this ordinary loss by recording an unrecognized tax benefit, pending the IRS’s review of our tax position.

We recorded a tax benefit associated with the ordinary loss of $ 1,505 million and a reduction to our current income taxes payable.

We also recorded a $ 1,548 million increase in a long-term liability for unrecognized tax benefits related to this tax position, partially offset by a $ 43 million deferred federal benefit for state taxes.

There was no impact to our consolidated statement of earnings.

In addition, the $ 1,548 million increase in unrecognized tax benefits was partially offset by $ 428 million associated with an indirect deferred tax benefit caused by our estimated Corporate AMT credit carryforward, resulting in a net increase of $ 1,120 million in other liabilities on our consolidated balance sheet at December 31, 2023.

If recognized for financial statement purposes in a future period, this unrecognized tax benefit would impact the effective tax rate due to the release of a valuation allowance against this temporary difference.

In October 2024, we entered into an agreement with the IRS (“IRS Agreement”) regarding the tax treatment of a $ 6.4 billion ordinary loss we recognized in 2023 for cash tax purposes with respect to a portion of our tax basis associated with our former investment in JUUL.

In 2023, we fully reserved for the tax benefit associated with this ordinary loss by recording an unrecognized tax benefit of $ 1,548 million.

There was no impact to our consolidated statement of earnings for the year ended December 31, 2023.

Consistent with the terms of the IRS Agreement, we claimed a $ 4.0 billion ordinary loss and a $ 2.4 billion capital loss on our 2023 tax return.

For the year ended December 31, 2024, we recorded a tax benefit of $ 887 million due to the reversal of the unrecognized tax benefit in our consolidated statement of earnings, resulting in the partial release of a valuation allowance against our JUUL-related losses as discussed below.

The reversals of the unrecognized tax benefit and indirect deferred tax benefit caused by our estimated Corporate AMT credit carryforward in 2023 resulted in a net decrease of $ 1,120 million in other liabilities on our consolidated balance sheet at December 31, 2024.

At December 31, 2024, 2023 and 2022, the amount of accrued interest and penalties on our consolidated balance sheets was $ 18 million, $ 36 million and $ 18 million, respectively.

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It is reasonably possible that within the next 12 months certain examinations will be resolved, which could result in a decrease in unrecognized tax benefits of approximately $ 1 million.

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A reconciliation between actual income taxes and amounts computed by applying the federal statutory rate to earnings before income taxes was as follows:

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Effective tax rate $ 2,394 17.5 % $ 2,798 25.6 % $ 1,625 22.0 %

The tax provision (benefit) in 2023 included state tax expense, net of federal benefit, of $ 463 million and tax expense of $ 53 million for a valuation allowance recorded against a deferred tax asset related to the disposition of our former investment in JUUL.

The tax provision (benefit) in 2022 included tax benefits of $ 664 million due primarily to the release of valuation allowances related to the anticipated ability to utilize a portion of existing capital losses.

The tax provision in 2024 included tax benefits of $ 939 million due primarily to the release of valuation allowances recorded against a deferred tax asset related to our JUUL-related losses as a result of the IRS Agreement and the ABI Transaction, partially offset by state tax expense, net of federal benefit, of $ 557 million.

The tax provision in 2023 included state tax expense, net of federal benefit, of $ 463 million and tax expense of $ 53 million for a valuation allowance recorded against a deferred tax asset related to the disposition of our former investment in JUUL.

The tax provision in 2022 included tax benefits of $ 664 million due primarily to the release of valuation allowances related to the anticipated ability to utilize a portion of existing capital losses.

These tax benefits were partially offset by tax expense of $ 306 million for a valuation allowance recorded against a deferred tax asset related to the decreases in the estimated fair value of our former investment in JUUL and by the state tax treatment of the impairment charge on our investment in ABI.

The tax provision (benefit) in 2021 was impacted by the state tax treatment of the impairment charge on our investment in ABI.

The tax provision (benefit) in 2021 also included net tax expense of $ 128 million related to our investment in Cronos, including an addition to a valuation allowance on a deferred tax asset.

The tax effects of temporary differences that gave rise to deferred income tax assets and liabilities consisted of the following at December 31:

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IQOS deferred gain

Research and development costs 112 86

Net operating losses and tax credit carryforwards 224 217

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Net deferred income tax liabilities $ ( 3,744 ) $ ( 2,771 )

At December 31, 2023, we had estimated gross federal, state and foreign tax net operating losses (“NOLs”) of $ 644 million, $ 700 million and $ 38 million, respectively.

The federal NOLs and a majority of the foreign NOLs have indefinite carryforward periods.

If not used, a majority of the state NOLs will expire in 2039 through 2043.

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At December 31, 2024, we had JUUL-related gross capital loss carryforwards of $ 1.0 billion available to offset capital gains through 2028.

We had estimated gross federal, state and foreign tax net operating losses (“NOLs”) of $ 374 million, $ 1,066 million and $ 38 million, respectively.

The federal NOLs, a majority of the state NOLs and the foreign NOLs have indefinite carryforward periods.

After giving effect to the IRS Agreement and $ 1.7 billion of JUUL-related capital losses previously utilized against capital gains related to the IQOS Transaction, we have $ 5.7 billion (which includes a $ 3.5 billion outside basis difference in a domestic subsidiary, a $ 1.2 billion outside basis difference in a foreign subsidiary and $ 1.0 billion of capital loss carryforwards) of the $ 12.8 billion tax loss related to our former investment in JUUL remaining to offset future potential capital gains.

For financial statement purposes, none of the tax benefit for the remaining $ 5.7 billion was recognized at December 31, 2024.

A reconciliation of the beginning and ending valuation allowances was as follows:

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Reductions to valuation allowance credited to income tax benefit ( 1,337 ) ( 6 ) ( 730 )

Foreign currency translation ( 1 ) 4 ( 3 )

Additions to valuation allowance due to NJOY Transaction (no impact to earnings) 12 — —

(Reductions) additions to valuation allowance due to NJOY Transaction (no impact to earnings) ( 4 ) 12 —

Reductions to valuation allowance offset to deferred tax asset (no impact to earnings) ( 491 ) ( 663 ) —

Foreign currency translation — ( 1 ) 4

Balance at end of year $ 668 $ 2,256 $ 2,800

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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 additions to valuation allowances during 2023 were primarily due to deferred tax assets recorded in connection with our former investment in JUUL.

The reductions to valuation allowances during 2023 were primarily due to the reduction of a deferred tax asset for the portion of our JUUL capital losses that is now part of our tax basis in the shares of a foreign subsidiary.

The additions to valuation allowances during 2024 were due primarily to deferred tax assets recorded in connection with our JUUL-related capital loss carryforwards.

The reductions to valuation allowances during 2024 were due primarily to the $ 4.0 billion of ordinary losses recognized as part of the IRS Agreement, the reduction of a deferred tax asset for the portion of our JUUL-related capital losses that is now part of our tax basis in the shares of a domestic subsidiary and the ABI Transaction.

This outside basis difference of the domestic subsidiary is not recognized as a deferred tax asset since we do not expect the temporary difference to reverse in the foreseeable future.

The cumulative valuation allowance at December 31, 2024 was primarily attributable to deferred tax assets recorded in connection with our investment in Cronos ($ 402 million) and our JUUL-related capital loss carryforwards ($ 207 million).

The additions to valuation allowances during 2023 were due primarily to deferred tax assets recorded in connection with our former investment in JUUL.

The reductions to valuation allowances during 2023 were due primarily to the reduction of a deferred tax asset for the portion of our JUUL capital losses that is now part of our tax basis in the shares of a foreign subsidiary.

This outside basis difference of the foreign subsidiary is not recognized as a deferred tax asset since we do not expect the temporary difference to reverse in the foreseeable future.

The cumulative valuation allowance at December 31, 2023 was primarily attributable to deferred tax assets recorded in connection with our tax basis in the shares of a domestic subsidiary ($ 1,808 million) and our investment in Cronos ($ 397 million).

The additions to valuation allowances during 2022 were primarily due to deferred tax assets recorded in connection with decreases in the estimated fair value of our former investment in JUUL.

The reductions to valuation allowances during 2022 were primarily due to the anticipated ability to utilize a portion of existing losses related to our former investment in JUUL and the abandonment of our Cronos warrant.

The cumulative valuation allowance at December 31, 2022 was primarily attributable to deferred tax assets recorded in connection with our former investment in JUUL ($ 2,394 million) and our investment in Cronos ($ 379 million).

The changes in valuation allowances during 2021 were primarily due to deferred tax assets recorded in connection with our investment in Cronos.

The additions to valuation allowances during 2022 were due primarily to deferred tax assets recorded in connection with decreases in the estimated fair value of our former investment in JUUL.

The reductions to valuation allowances during 2022 were due primarily to the anticipated ability to utilize a portion of existing losses related to our former investment in JUUL and the abandonment of our Cronos warrant.

For a discussion regarding our former investment in JUUL, the impairment of our investment in ABI and our investment in Cronos, see Note 7.

For a discussion regarding our former investment in JUUL and current investments in ABI and Cronos, see Note 8.

Investments in Equity Securities .

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Segment Reporting

At December 31, 2023 our reportable segments were (i) smokeable products, consisting of combustible cigarettes manufactured and sold by PM USA, and machine-made large cigars and pipe tobacco manufactured and sold by Middleton;

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

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

At December 31, 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 products and oral nicotine pouches.

Our all other category included (i) NJOY (beginning June 1, 2023);

(ii) Horizon;

(iii) Helix ROW;

(iv) our former financial services business, which completed the wind-down of its portfolio of finance assets in 2022;

and (v) the IQOS System heated tobacco business.

Prior to the sale of our wine business on October 1, 2021, wine produced and/or sold by Ste.

Michelle was a reportable segment.

For further discussion, see Note 1.

Background and Basis of Presentation .

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

(iii) Helix International;

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”), which is Altria’s Chief Executive Officer, reviews operating companies income (loss) (“OCI”) to evaluate the performance of, and allocate resources to, our segments.

OCI for our segments is defined as operating income before general corporate expenses and amortization of intangibles.

Our CODM uses OCI for planning, forecasting and evaluating business and financial performance of the segments, including allocating capital and other resources and evaluating results relative to employee compensation targets.

Interest and other debt expense, net, along with net periodic benefit income, excluding service cost, and provision for income taxes are centrally managed at the corporate level and, accordingly, such items are not presented by segment since they are excluded from the measure of segment profitability reviewed by our CODM.

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1,037 989 1,058

Loss on early extinguishment of debt — — 649

Net periodic benefit income, excluding service cost ( 102 ) ( 127 ) ( 184 )

(Income) losses from investments in equity securities ( 652 ) ( 243 ) 3,656

Loss on Cronos-related financial instruments — 15 148

Gain on the sale of IQOS System commercialization rights

( 2,700 ) — —

Earnings before income taxes $ 13,658 $ 10,928 $ 7,389

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Smokeable products segment OCI consisted of the following, including expenses under the significant expense principle in accordance with ASU No.

For the Years Ended December 31,

(in millions) 2024 2023 2022

Net revenues $ 21,204 $ 21,756 $ 22,476

Settlement charges (1)

( 3,460 ) ( 3,711 ) ( 3,908 )

Excise taxes on products sold ( 3,469 ) ( 3,869 ) ( 4,289 )

Other segment items (2)

( 3,454 ) ( 3,506 ) ( 3,591 )

Operating companies income $ 10,821 $ 10,670 $ 10,688

(1) Represents charges related to State Settlement Agreements included in cost of sales.

For additional information, see Health Care Cost Recovery Litigation in Note 20.

Contingencies .

(2) Other segment items includes manufacturing, marketing, administration and research costs, FDA user fees and other costs.

For the oral tobacco products segment, we did not identify any expenses under the significant expense principle in accordance with ASU No.

Other segment items for our oral tobacco products segment include manufacturing, asset impairment, marketing, administration and research costs, excise taxes on products sold and other costs.

Total oral tobacco products other segment items were $ 1,327 million, $ 945 million and $ 948 million for the years ended December 31, 2024, 2023 and 2022, respectively.

The CODM reviews total oral tobacco products segment expenses in the aggregate in conjunction with the review of budget-to-actual OCI variances to manage segment operations.

The smokeable products segment included net revenues of $ 20,066 million, $ 20,665 million and $ 21,457 million for the years ended December 31, 2024, 2023 and 2022, respectively, related to cigarettes and net revenues of $ 1,138 million, $ 1,091 million and $ 1,019 million for the years ended December 31, 2024, 2023 and 2022, respectively, related to cigars.

Substantially all of our net revenues for the years ended December 31, 2023, 2022 and 2021 were from sales generated in the United States.

PM USA, USSTC, Helix, Middleton and NJOY’s customer, Performance Food Group Company, accounted for approximately 25 %, 24 % and 23 % of our consolidated net revenues for the years ended December 31, 2023, 2022 and 2021, respectively.

In addition, McLane Company, Inc., accounted for approximately 23 % of our consolidated net revenues for the years ended December 31, 2023, 2022 and 2021.

Substantially all of these net revenues were reported in the smokeable products and oral tobacco products segments.

Substantially all of our consolidated net revenues for the years ended December 31, 2024, 2023 and 2022 were from sales generated in the United States.

For the years ended December 31, 2024, 2023 and 2022, we had one customer that accounted for approximately 22 %, 25 % and 24 % of our consolidated net revenues, respectively, and one customer that accounted for approximately 20 %, 23 % and 23 % of our consolidated net revenues, respectively.

Substantially all the net revenues from these customers were reported in the smokeable products and oral tobacco products segments.

No other customer accounted for more than 10% of our consolidated net revenues for the years ended December 31, 2024, 2023 and 2022.

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Total capital expenditures $ 142 $ 196 $ 205

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

▪ Non-Participating Manufacturer (“NPM”) Adjustment Items:

We recorded pre-tax income for NPM adjustment items as follows:

We recorded net pre-tax income for NPM adjustment items as follows:

For the Years Ended December 31,

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Total $ ( 27 ) $ ( 50 ) $ ( 68 )

We recorded the amounts in the table shown above for the smokeable products segment as reductions to cost of sales in our consolidated statements of earnings, which resulted in increased OCI in our smokeable products segment.

We recorded the amounts shown in the table shown above in our smokeable products segment as reductions to cost of sales in our consolidated statements of earnings, which resulted in increased OCI in our smokeable products segment.

NPM adjustment items result from the resolutions of certain disputes with states and territories related to the NPM adjustment provision under the Master Settlement Agreement (“NPM Adjustment Items”).

For additional information, see Health Care Cost Recovery Litigation in Note 19.

For further discussion, see Health Care Cost Recovery Litigation in Note 20.

Contingencies .

▪ Asset Impairment, Exit and Implementation Costs:

We recorded a non-cash, pre-tax impairment of the Skoal trademark of $ 354 million for the year ended December 31, 2024 in our oral tobacco products segment.

In addition, we recorded exit and implementation costs of $ 68 million related to the Initiative for the year ended December 31, 2024.

For a breakdown of these costs by segment, see Note 7.

Asset Impairment, Exit and Implementation Costs .

▪ Tobacco and Health and Certain Other Litigation Items:

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Total $ 101 $ 430 $ 131

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 consolidated statements of earnings.

We recorded the amounts shown in the table above in our smokeable products segment and general corporate expenses in marketing, administration and research costs in our consolidated statements of earnings.

For further discussion, see Note 20.

Contingencies .

Michelle Transaction:

We recorded pre-tax disposition-related costs of $ 51 million for the year ended December 31, 2021 in our former wine segment, which consisted of a pre-tax charge of $ 41 million to record the assets and liabilities associated with the Ste.

Michelle Transaction at their fair value less costs to sell and $ 10 million of other disposition-related costs.

We included these costs in marketing, administration and research costs in our consolidated statements of earnings.

▪ Acquisition-Related Costs:

We recorded pre-tax acquisition-related costs of $ 37 million for the year ended December 31, 2021 in our oral tobacco products segment primarily for the settlement of an arbitration related to the 2019 on!

We included these costs in marketing, administration and research costs in our consolidated statements of earnings.

▪ Other Business Activities:

Our R&D investments have evolved and shifted from our traditional tobacco businesses to new product platforms and technologies.

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 year ended December 31, 2024, using this approach, we recorded the majority of our pre-tax R&D expense of $ 208 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 years ended December 31, 2023 and 2022, the majority of our pre-tax R&D expense of $ 220 million and $ 162 million, respectively, was recorded in our smokeable products segment.

Benefit Plans

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We base the discount rates for our plans on a yield curve developed from a model portfolio of high-quality corporate bonds with durations that match the expected future cash flows of the pension and postretirement benefit obligations.

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▪ Obligations and Funded Status:

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The accumulated benefit obligation, which represents benefits earned to date, for our pension plans was $ 5.9 billion and $ 6.3 billion at December 31, 2024 and 2023, respectively.

Actuarial gains for our pension plans for the year ended December 31, 2024 were due primarily to a higher discount rate.

Actuarial gains for our postretirement plans for the year ended December 31, 2024 were due primarily to lower assumed health care plans participation rates and a higher discount rate.

Actuarial losses for our pension plans for the year ended December 31, 2023 were due primarily to a lower discount rate.

Actuarial gains for our postretirement plans for the year ended December 31, 2023 were due primarily to a planned change in healthcare provider and other items, partially offset by actuarial losses attributable to a lower discount rate.

Actuarial gains for the year ended December 31, 2022 for our pension and postretirement plans were due primarily to a higher discount rate.

Actuarial gains for our postretirement plans for the year ended December 31, 2023 were due primarily to a planned change in healthcare provider effective January 2025, and other items, partially offset by actuarial losses attributable to a lower discount rate.

For pension plans with accumulated benefit obligations in excess of plan assets at December 31, 2024 and 2023, our accumulated benefit obligation was $ 140 million and $ 142 million, respectively.

Additionally, at December 31, 2023 and 2022, there were no plan assets for these plans.

For pension plans with projected benefit obligations in excess of plan assets at December 31, 2024 and 2023, our projected benefit obligation was $ 161 million and $ 159 million, respectively.

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Year that the rate reaches the ultimate trend rate — — 2031 2031

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▪ Components of Net Periodic Benefit Cost (Income):

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Discount rates:

5.7 % 3.2 % 3.1 % 5.7 % 3.2 % 3.1 %

Service cost 5.4 % 5.7 % 3.2 % 5.3 % 5.7 % 3.2 %

Interest cost 5.2 5.5 2.5 5.2 5.5 2.5

5.5 2.5 2.0 5.5 2.5 2.0

Expected rate of return on plan assets

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Treasury and foreign government securities and all other investments 16 % (1)

(1) Amount includes U.S Treasury and foreign government securities ( 19 %) and asset backed securities and all other investments ( 6 %).

(1) Amount includes U.S.

Treasury and foreign government securities ( 8 %) and all other investments ( 8 %).

Our pension and postretirement plan asset performance is monitored on an ongoing basis to adjust the mix as necessary to achieve our target allocations.

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Treasury securities that mirror our pension obligation benchmark, as well as U.S.

and international equity index strategies that are intended to mirror broad market indices, including, the Standard & Poor’s 500 Index and Morgan Stanley Capital International (“MSCI”) Europe, Australasia, and the Far East (“EAFE”) Index.

and international equity index strategies that are intended to mirror broad market

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indices, including, the Standard & Poor’s 500 Index and Morgan Stanley Capital International (“MSCI”) Europe, Australasia, and the Far East (“EAFE”) Index.

Our pension and postretirement plans also invest in actively managed international equity securities of mid- and small-cap companies located in developed and emerging markets.

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For postretirement plan assets, our allocation to below investment grade securities represented approximately 8 % of the fixed income holdings or approximately 3 % of our total plan assets at December 31, 2024.

Also, less than 1 % of postretirement plan assets was invested in emerging markets at December 31, 2023.

Our allocation to emerging markets represented approximately 2 % of our total plan assets at December 31, 2024.

Our risk management practices for our pension and postretirement plans include (i) ongoing monitoring of asset allocation, investment performance and investment managers’ compliance with their investment guidelines, (ii) periodic rebalancing between equity and debt asset classes and (iii) annual actuarial re-measurement of plan liabilities.

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Level 3 holdings and transactions were immaterial to total plan assets at December 31, 2024 and 2023.

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The fair values of our postretirement plan assets were as follows at December 31:

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and Foreign Government Securities :

and foreign government securities consist of investments in Treasury Nominal Bonds and Inflation Protected Securities and municipal securities.

and foreign government securities consist of investments in Treasury Nominal Bonds and Inflation Protected Securities, agency bonds and municipal securities.

Government securities are valued at a price that is based on a compilation of primarily observable market information, such as broker quotes.

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However, the foregoing estimates of 2025 contributions to our pension and postretirement plans are subject to change as a result of changes in tax and other benefit laws, changes in interest rates, as well as asset performance significantly above or below the assumed long-term rate of return for each respective plan.

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Estimated future benefit payments at December 31, 2024 were as follows:

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Total movements in other comprehensive earnings (losses) $ 21 $ 85 $ ( 5 ) $ 101

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The movements in other comprehensive earnings (losses) for the year ended December 31, 2023 were as follows:

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$ 208 $ 220 $ 162

Interest and other debt expense, net:

Interest expense $ 1,124 $ 1,149 $ 1,128

Interest income ( 87 ) ( 160 ) ( 70 )

$ 989 $ 1,058 $ 1,162

Interest and other debt expense, net $ 1,037 $ 989 $ 1,058

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The activity in the allowance for discounts and allowance for returned goods was as follows:

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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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However, we may enter into settlement discussions in particular cases if we believe it is in our best interests to do so.

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Judgments Paid and Provisions for Tobacco and Health (Including Engle Progeny Litigation) and Certain Other Litigation Items:

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Tobacco and health and certain other litigation (1)

Shareholder class action and shareholder derivative lawsuits (2)

Shareholder derivative lawsuits (2)

JUUL-related settlements (3)

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(1) Includes judgments, settlements and fee disputes associated with tobacco and health and certain other litigation.

(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 Minnesota and Alaska.

(2) See 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.

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 consolidated balance sheets.

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

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

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

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Plaintiffs’ theories of recovery and the defenses raised in tobacco-related litigation are discussed below.

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The table below lists the number of certain tobacco-related cases pending in the United States against us as of December 31:

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Other Tobacco-Related Cases (4)

(1) Includes as of December 31, 2023, 16 cases filed in Illinois, 16 cases filed in New Mexico, 58 cases filed in Massachusetts and 48 non- Engle cases filed in Florida.

(1) Includes as of December 31, 2024, 25 cases filed in Illinois, 17 cases filed in New Mexico, 75 cases filed in Massachusetts, 11 cases filed in Oregon, three cases filed in Hawaii and 22 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 1,385 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 99 Broin cases pending as of December 31, 2024.

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 December 31, 2023, 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.

(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 December 31, 2024, the remaining cases include 20 individual cases that opted out of the settlement, three class action lawsuits pending in Canada and one individual state court case relating to the Multidistrict Litigation.

For further discussion of the Multidistrict Litigation settlement, see E-vapor Product Litigation below.

(4) Includes as of December 31, 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.

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Tobacco-Related Cases Set for Trial:

As of January 29, 2024, no Engle progeny cases, three individual smoking and health case and no e-vapor cases are set for trial through March 31, 2024.

As of January 27, 2025, three Engle progeny case, two individual smoking and health case and no e-vapor cases are set for trial through March 31, 2025.

Trial dates are subject to change.

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Non- Engle Progeny Litigation:

Summarized below are the non- Engle progeny smoking and health cases pending during 2023 (or recently concluded) in which a verdict was returned in favor of plaintiff and against PM USA.

Summarized below are the non- Engle progeny smoking and health cases pending in which verdicts were returned in favor of plaintiff and against PM USA and remain outstanding or cases concluded within the last 12 months where PM USA paid a final judgment.

Charts listing certain verdicts for plaintiffs in the Engle progeny cases can be found in Smoking and Health Litigation - Engle Progeny Trial Results below.

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.

In April 2024, a jury in an Oregon state court returned a verdict in favor of plaintiff and against PM USA, awarding less than $ 1 million in compensatory damages.

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

Final judgment not yet been entered.

We intend to file post-trial motions challenging the verdict and will, if necessary, appeal.

Plaintiff has appealed the judgment, and the appeal remains pending.

PM USA filed post-trial motions, which were denied, and PM USA has noticed an appeal from the final judgment and the trial court’s denial of the post-trial motions.

The parties filed a motion to stay execution pending appeal, and the court has stayed execution of the final judgment pending conclusion of appellate activity.

Ricapor-Hall :

In August 2023, a jury in a Hawaii state court returned a verdict in favor of plaintiff and against PM USA, awarding $ 6 million in compensatory damages and $ 8 million in punitive damages.

In October 2023, the court entered judgment against PM USA for

$ 11 million, having reduced the compensatory damages award to $ 3 million based on the jury’s finding on comparative fault and a set-off against plaintiff’s settlements with other defendants, and we filed post-trial motions challenging the verdict.

If necessary, we will appeal any portion of the judgment that remains following resolution of the post-trial motions.

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.

Despite the comparative fault finding, the compensatory damages award would not have been reduced due to the jury’s finding for plaintiff on the strict liability claim.

Plaintiff’s claim for punitive damages was dismissed prior to the trial.

In lieu of appealing the trial court’s verdict, PM USA settled plaintiff’s claims in July 2023 and recorded a pre-tax charge of less than $ 1 million in the third quarter of 2023.

In October 2023, the court entered judgment against PM USA for $ 11 million, having reduced the compensatory damages award to $ 3 million based on the jury’s finding on comparative fault and a set-off against plaintiff’s settlements with other defendants.

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

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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 February 2023, a jury in a Massachusetts state court returned a verdict in favor of plaintiff and against PM USA, awarding $ 5 million in compensatory damages.

There was no claim for punitive damages.

Following the denial of PM USA’s post-trial motions, PM USA appealed the judgment to the Appeals Court of Massachusetts, and the appeal remains pending.

Following the denial of PM USA’s post-trial motions, PM USA appealed the judgment to the Appeals Court of Massachusetts, which affirmed the judgment in January 2025.

In September 2022, a jury in a Massachusetts state court returned a verdict in favor of plaintiff and against PM USA, awarding approximately $ 8 million in compensatory damages and $ 1 billion in punitive damages.

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In December 2023, the court entered a final judgment awarding plaintiff $ 8 million in compensatory damages, $ 56 million in punitive damages and prejudgment interest.

PM USA intends to appeal.

In September 2019, a jury in a Massachusetts state court returned a verdict in favor of plaintiffs and against PM USA, awarding approximately $ 10 million in compensatory damages.

In May 2020, the court ruled on plaintiffs’ remaining claim and trebled the compensatory damages award to approximately $ 30 million.

In February 2021, the trial court awarded plaintiffs attorneys’ fees and costs in the amount of approximately $ 2.3 million.

PM USA appealed the judgment, and, in May 2023, the Massachusetts Supreme Judicial Court affirmed the trial court judgment and orders denying PM USA’s post-trial motions, concluding the case.

We recorded a pre-tax charge of approximately $ 48 million and paid the recorded amount in the second quarter of 2023.

PM USA has noticed an appeal to the Appeals Court of Massachusetts, and the appeal remains pending.

Federal Government’s Lawsuit :

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(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.

(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:

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As of January 27, 2025, 147 federal and state Engle progeny cases involving PM USA have resulted in verdicts.

Eighty-seven were returned in favor of plaintiffs, six 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.

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

Fifty-nine 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 January 27, 2025.

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

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

In many cases, parties have appealed either compensatory or punitive damages awards or both.

Courts also have increased and decreased the amounts of punitive damages juries have awarded, declared mistrials and vacated judgments, in whole or in part, with respect to compensatory and punitive damages awards.

Courts also have increased and decreased the amounts of compensatory damages juries have awarded, decreased the amounts of punitive damages juries have awarded, declared mistrials and vacated judgments, in whole or in part, with respect to compensatory and punitive damages awards.

Initial verdicts have been reversed in whole or in part on appeal or following retrial.

Juries have returned verdicts in favor of or against PM USA awarding no damages.

In cases where juries returned verdicts against PM USA awarding no damages, some trial

courts have decided to award plaintiff damages notwithstanding the verdict.

In cases where juries returned verdicts against PM USA awarding no damages, some trial courts have decided to award plaintiff damages notwithstanding the verdict.

Cases also have been dismissed with or without prejudice before or after a verdict.

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Further, the damages noted reflect adjustments based on post-trial or appellate rulings.

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Currently Pending Engle Cases with Verdicts against PM USA

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(PM USA) Post-Trial Status

Ferraiuolo November 2023 PM USA and R.J.

Reynolds Duval $ 1 million (<$ 1 million PM USA)

Post-trial motions pending.

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

Garcia June 2024 PM USA Miami-Dade $ 2 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

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

Appeals to the Third District Court of Appeal pending.

Schertzer April 2022 PM USA and R.J.

Reynolds Miami-Dade $ 3 million

Appeal to the Third District Court of Appeal pending.

Lipp September 2021 PM USA Miami-Dade $ 15 million

Appeal to the Third District Court of Appeal pending.

Duignan February 2020 PM USA and R.J.

Reynolds Pinellas $ 3 million ($ 1 million PM USA)

Retrial of punitive damages claim 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)

Post-trial motions pending.

Chadwell September 2018 PM USA Miami-Dade $ 2 million

Appeal to the Third District Court of Appeal pending.

Appeal to the Fourth District Court of Appeal pending.

Kaplan ( McLaughlin )

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Cooper ( Blackwood )

September 2015 PM USA and R.J.

Reynolds Broward $ 5 million

(<$ 1 million PM USA)

September 2015 PM USA Broward <$ 1 million

Retrial of punitive damages claim pending.

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(rounded to nearest $ million)

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

Miller September 2022 PM USA and R.J.

Reynolds Miami-Dade Third quarter of 2022 <$ 1 million

December 2022

Tuttle August 2022 PM USA Duval Third quarter of 2022 <$ 1 million

Garcia May 2021 PM USA Miami-Dade Fourth quarter of 2023 $ 3 million December 2023

Holliman February 2019 PM USA Miami-Dade Fourth quarter of 2022 $ 3 million January 2023

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

Chadwell September 2018 PM USA Miami-Dade $ 2 million

Schertzer April 2022 PM USA and R.J.

Reynolds Miami-Dade $ 4 million

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.

Reynolds Pinellas $ 4 million

Ferraiuolo November 2023 PM USA and R.J.

Reynolds Duval <$ 1 million

Other Smoking and Health Class Actions:

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In general, these cases have purported to be brought on behalf of residents of a particular state or states (although a few cases have purported to be nationwide in scope) and have raised addiction claims and, in many cases, claims of physical injury as well.

Michigan ( 1 ), Minnesota ( 1 ), Nevada ( 29 ), New Jersey ( 6 ), New York ( 2 ), Ohio ( 1 ), Oklahoma ( 1 ), Oregon ( 1 ), Pennsylvania ( 1 ), Puerto Rico ( 1 ), South Carolina ( 1 ), Texas ( 1 ) and Wisconsin ( 1 ).

Class certification has been denied or reversed by courts in 61 smoking and health class actions involving PM USA in Arkansas ( 1 ), California ( 1 ), Delaware ( 1 ), the District of Columbia ( 2 ), Florida ( 2 ), Illinois ( 3 ), Iowa ( 1 ), Kansas ( 1 ), Louisiana ( 1 ), Maryland ( 1 ), Michigan ( 1 ), Minnesota ( 1 ), Nevada ( 29 ), New Jersey ( 6 ), New York ( 2 ), Ohio ( 1 ), Oklahoma ( 1 ), Oregon ( 1 ), Pennsylvania ( 1 ), Puerto Rico ( 1 ), South Carolina ( 1 ), Texas ( 1 ) and Wisconsin ( 1 ).

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.

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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 January 27, 2025, PM USA is named as a defendant in 24 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

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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, which we paid in the third quarter of 2024.

Health Care Cost Recovery Litigation

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Reynolds and, with respect to certain brands, ITG Brands, LLC (“ITG”)) make annual payments of approximately $ 10.4 billion, subject to adjustments for several factors, including inflation, market share and industry volume.

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.

The OPMs’ obligation to make quarterly payments settling plaintiffs’ attorneys’ fees, subject to an annual cap of $ 500 million, on a pro rata basis based on market share, ended in the fourth quarter of 2024.

For the years ended December 31, 2024, 2023 and 2022, the aggregate amount recorded in cost of sales with respect to the State Settlement Agreements was approximately $ 3.5 billion, $ 3.7 billion and $ 3.9 billion, respectively.

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

NPM Adjustment Disputes:

Non-Participating Manufacturer (“NPM”) Adjustment Disputes:

The “NPM Adjustment” is a reduction in MSA payments made by the OPMs and those manufacturers that are subsequent signatories to the MSA (collectively, the “participating manufacturers” or “PMs”) that applies if the PMs collectively lose at least a specified level of market share to non-participating manufacturers since 1997, subject to certain conditions and defenses.

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As of January 2022, a total of 36 states and territories had settled NPM Adjustment disputes relating to varying periods of time.

In March 2022 and August 2023, Illinois and Iowa, respectively, joined the multi-state settlement, bringing the total number of states and territories that have joined the multi-state settlement to 38 .

In March 2022, August 2023 and February 2024, Illinois, Iowa and Idaho, respectively, joined the multi-state settlement, bringing the total number of states and territories that have joined the multi-state settlement to 39 .

In the first quarter of 2022, PM USA recorded $ 80 million, $ 20 million of which related to the 2019 through 2021 “transition years,” as a reduction in cost of sales as a result of Illinois joining the multi-state settlement.

As a result of Iowa joining the multi-state settlement, PM USA will receive approximately $ 19 million for 2005 through 2022, $ 4 million of which relates to the 2020 through 2022 “transition years.” Accordingly, PM USA recorded $ 19 million as a reduction in cost of sales in the third quarter of 2023.

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.

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

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$ 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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In 2020, PM USA entered into a separate NPM Adjustment settlement in which PM USA settled the NPM Adjustment disputes with Montana through 2030, resulting in a payment from PM USA to Montana for an immaterial amount.

▪ Massachusetts Settlement .

In 2024, PM USA entered into a separate NPM Adjustment settlement in which PM USA settled the NPM Adjustment disputes with Massachusetts through 2011.

As a result of this settlement, PM USA will receive $ 28 million.

Accordingly, PM USA recorded $ 28 million as a reduction in costs of sales in the third quarter of 2024.

Continuing NPM Adjustment Disputes with States That Have Not Settled .

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▪ 2005-2007 NPM Adjustments.

The PMs and the eight states that have not settled the NPM Adjustment disputes are currently arbitrating NPM Adjustment disputes before a single arbitration panel.

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

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

The PMs and the six states that have not settled the NPM Adjustment disputes are currently arbitrating NPM Adjustment disputes before a single arbitration panel.

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

As of January 27, 2025, 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 .

Washington challenged that determination in Washington state court, and the challenge was denied by the trial court.

Washington has appealed that denial, and the appeal remains pending.

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.

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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.

In September 2024, PM USA and Mississippi settled their dispute over the profit adjustment payments.

Pursuant to the settlement, PM USA paid $ 7 million to Mississippi for 2018 through 2023.

Accordingly, PM USA recorded $ 5 million of expense to cost of sales and $ 2 million of interest expense in the third quarter of 2024.

In May 2023, PM USA and R.J.

Reynolds filed a motion in the United States District Court for the Eastern District of Texas seeking to enforce the Texas State Settlement Agreement against the State of Texas concerning the same tax rate issue raised by the State of Mississippi.

The State of Texas filed a cross-motion to enforce, and the matter remains pending in the trial court.

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.

(“S&M Brands”), under which the states released certain claims against S&M Brands in exchange for receiving a portion of the funds S&M Brands deposited into escrow accounts in those states pursuant to the states’ escrow statutes.

In consideration for waiving its most favored nation claim, PM USA received approximately $ 32 million from the escrow funds paid to those MSA states under their settlement with S&M Brands.

These funds were received in January 2021 and were recorded in our condensed consolidated statement of earnings (losses) for the first quarter of 2021 as a reduction in cost of sales.

Reynolds filed a motion in the U.S.

District Court for the Eastern District of Texas seeking to enforce the Texas State Settlement Agreement against the State of Texas concerning the same tax rate issue raised by the State of Mississippi.

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

As of January 27, 2025, 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 court found in favor of the State of Minnesota.

As of January 27, 2025, the court had not made a determination on damages.

PM USA intends to appeal.

Federal Government’s Lawsuit:

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In August 2006, the district court held that certain defendants, including Altria and PM USA, violated RICO and engaged in certain “sub-schemes” to defraud that the government had alleged.

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The court did not impose monetary penalties on defendants, but ordered various types of non-monetary relief, including an injunction against conveying any express or implied health message or health descriptors on cigarette packaging or in cigarette advertising or promotional material, including “lights,” “ultra lights” and “low tar,” which the court found could cause consumers to believe one cigarette brand is less hazardous than another brand, and the issuance of “corrective statements” in various media regarding the adverse health effects of smoking, the addictiveness of smoking and nicotine, the lack of any significant health benefit from smoking “low tar” or “light” cigarettes, defendants’ manipulation of cigarette design to ensure optimum nicotine delivery and the adverse health effects of exposure to ETS.

Corrective statements began appearing in newspapers and on television in the fourth quarter of 2017 and on websites in the second quarter of 2018, and the onserts began appearing in the fourth quarter of 2018.

Corrective statements appeared in newspapers and on television for four months and one year , respectively, beginning in the fourth quarter of 2017, and the onserts appeared for two weeks at a time for a total of twelve weeks over two years beginning in the fourth quarter of 2018.

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.

In June 2020, the U.S.

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.

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.

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.

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 and whether the court-ordered injunction that applies to cigarettes discussed above also applies to HeatSticks, a heated tobacco product used with the IQOS System.

Under the agreement, 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 January 29, 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.

We refer to this litigation 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.

Three of the class action lawsuits are pending in Canada.

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

We have been named as defendants in federal 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.

An additional group of cases is pending in California state courts.

In January 2020, the Judicial Council of California determined that this group of cases was appropriate for coordination and assigned the group to the Superior Court of California, Los Angeles County, for pretrial purposes.

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 September 2023, the court granted preliminary 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 and the three class action lawsuits pending in Canada.

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

We also have been named as defendants in a group of cases pending in a consolidated California state court proceeding.

In May 2023, we reached agreement on terms to resolve the majority of the Multidistrict Litigation lawsuits as well as the majority of 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, and we paid the settlement amount in the second quarter of 2024.

The settlement applies to all of the Multidistrict Litigation except 20 individual cases that opted out of the settlement and 38 “third party” cases brought by Native American tribes.

We separately agreed to settle the cases brought by Native America tribes in July 2024, and these cases have been dismissed.

We recorded a pre-tax provision for $ 20 million in the second quarter of 2024 related to the settlement and paid the settlement amount in October 2024.

Neither settlement applies to three class action lawsuits pending in Canada, the cases brought by state attorneys general, discussed below, or 17 putative class action 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 and January 2024, we agreed to settle the Minnesota and Alaska lawsuits, respectively, for immaterial amounts.

The trial court in the Hawaii lawsuit has set the trial for February 2024.

In January 2024, we agreed to the terms of a tentative settlement of the Hawaii lawsuit for an immaterial amount.

As of January 29, 2024, the trial court in New Mexico has not set a trial date.

In May 2023, Fuma International LLC (“Fuma”) filed a lawsuit against Altria and our affiliates Nu Mark LLC (“Nu Mark”), AGDC, ALCS and NJOY in the United States District Court for the Eastern District of Virginia asserting claims of patent infringement based on the sale of various Nu Mark and NJOY products, including NJOY ACE , in the United States.

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.

In May 2023, Fuma International LLC (“Fuma”) filed a lawsuit against Altria and our affiliates Nu Mark LLC (“Nu Mark”), AGDC, ALCS and NJOY in the U.S.

District Court for the Eastern District of Virginia asserting claims of patent infringement based on the sale of various Nu Mark and NJOY products, including NJOY ACE , in the United States.

In August 2023, we entered into an agreement with Fuma resulting in NJOY’s acquisition of the patents that Fuma asserted in its lawsuit.

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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 U.S.

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 .

The lawsuit is currently stayed.

Also in June 2023, the same plaintiffs filed a related action against the same defendants with the U.S.

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.

Also in June 2023, the same plaintiffs filed a related action against the same defendants with the ITC.

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.

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.

A hearing before the Administrative Law Judge (“ALJ”)

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was held in May 2024, and, in August 2024, the ALJ issued an initial determination supporting the plaintiffs’ allegations with respect to four patents and recommending an exclusion order.

In September 2024, NJOY petitioned the ITC to review the ALJ’s initial determination.

In October 2024, the ITC granted review of the ALJ’s initial determination with respect to aspects of two of the four patents.

On January 29, 2025, the ITC issued its final determination finding that NJOY ACE infringes the four patents plaintiff asserted and issued an exclusion order and cease-and-desist orders prohibiting the importation and sale of NJOY ACE .

The ITC sent its orders to the Office of the United States Trade Representative for review.

The Trade Representative has 60 days to review the ITC’s determination.

If the Trade Representative disapproves of the ITC’s determination, the orders will not go into effect.

If the Trade Representative does not affirmatively reject the ITC’s determination, the determination automatically becomes final and takes effect after the 60 days have elapsed (March 31, 2025) or earlier if the Trade Representative notifies the ITC of approval before the 60 days elapse.

The final exclusion order and cease-and-desist orders can be appealed to the U.S.

Court of Appeals for the Federal Circuit, but the final exclusion order and cease-and-desist orders prohibiting the importation and sale of NJOY ACE would likely not be stayed during the pendency of such an appeal.

In November and December 2023 and February 2024, 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 May, June and August 2024, the PTAB denied Altria’s request to institute review as to four patents (including three of the patents that form the basis of the ITC’s final determination) and, in June 2024, granted Altria’s request to institute review as to one of the patents that forms the basis of the ITC’s final determination.

The PTAB will conduct proceedings and issue its validity decision as to the one JUUL patent by June 2025, after which appeals may be filed with the U.S.

Court of Appeals for the Federal Circuit.

In August 2023, NJOY filed a complaint against JUUL in the U.S.

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.

The lawsuit is currently stayed.

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 was held in June 2024.

In December 2024, the ALJ issued an initial determination concluding that, while the patents NJOY asserted against JUUL are valid, JUUL products do not infringe the patents.

The ALJ also determined that, with respect to the asserted patents, NJOY did not satisfy the “domestic industry” requirement, which requires the party asserting a patent to show significant and substantial domestic investments, such as investments related to engineering, research and development or licensing, designed to exploit the patent.

Subsequently, in December 2024, NJOY petitioned the ITC to review the ALJ’s initial determination.

The ITC must decide whether to grant or deny review of the ALJ’s initial determination in whole or in part by February 3, 2025, subject to the ITC’s right to grant itself an extension.

If granted, the ITC’s review of the ALJ’s initial determination will proceed in the same manner as discussed above with respect to VMR and JUUL’s action against NJOY.

The ITC must issue its final determination, including with respect to the form of remedy, if any, to be ordered, by April 7, 2025, subject to its right to grant itself an extension.

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.

The PTAB will conduct proceedings and issue its validity decisions by May 2025, after which appeals may be filed with the U.S.

Court of Appeals for the Federal Circuit.

We, JUUL and VMR previously engaged with a mediator to attempt to negotiate a resolution of the proceedings pending before the ITC, U.S.

District Courts and the PTAB.

The parties also have engaged in negotiations without a mediator.

Based on the status of the negotiations and the proceedings before the ITC, U.S.

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.

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 consolidated financial statements for the fiscal year ended December 31, 2023.

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.

Reynolds filed a notice of appeal of the judgment to the U.S.

Court of Appeals for the Federal Circuit, which affirmed the judgment in December 2024.

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

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

In December 2024, the district court denied the motion as to the damages award and royalties due through December 2023.

The district court also found that additional proceedings were warranted on the part of the motion regarding royalties after R.J.

Reynolds obtained an evidentiary hearing.

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 November 2020, Healthier Choices Management Corp.

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On remand, the U.S.

District Court stayed the case pending the outcome of plaintiff’s appeal from a ruling by the U.S.

Patent and Trademark Office, which issued a decision that the claims of the asserted patent are not valid.

That appeal remains pending.

District Court stayed the case pending the outcome of plaintiff’s appeal from a ruling by the PTAB, which issued a decision that the claims of the asserted patent are invalid.

In November 2024, the U.S.

Court of Appeals for the Federal Circuit affirmed the PTAB’s decision that the asserted patent is invalid.

In December 2024, Healthier Choices Management Corp.

voluntarily dismissed its case.

Antitrust Litigation

In March 2023, we entered into a stock transfer agreement with JUUL pursuant to which, among other things, we transferred to JUUL all of our beneficially owned JUUL equity securities.

In March 2023, we entered into the Stock Transfer Agreement with JUUL pursuant to which, among other things, we transferred to JUUL all of our beneficially owned JUUL equity securities.

Investments in Equity Securities for a discussion of our disposition of our investment in JUUL.

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

As of January 27, 2025, 17 putative class action lawsuits have been filed against Altria and JUUL in the U.S.

District Court for the Northern District of California.

The lawsuits initially named, in addition to the two companies, certain senior executives and certain members of the board of directors of both companies as defendants;

however, those individuals currently or formerly affiliated with Altria were later dismissed.

In November 2020, these lawsuits were consolidated into three complaints (one on behalf of direct purchasers, one on behalf of indirect purchasers and one on behalf of indirect resellers).

The consolidated lawsuits, as amended, cite the FTC administrative complaint and allege that Altria and JUUL violated Sections 1, 2 and/or 3 of the Sherman Act and Section 7 of the Clayton Act and various state antitrust, consumer protection and unjust enrichment laws by restraining trade and/or substantially lessening competition in the U.S.

The consolidated lawsuits, as amended, allege that Altria and JUUL violated Sections 1, 2 and/or 3 of the Sherman Antitrust Act of 1890 and Section 7 of the Clayton Antitrust Act and various state antitrust, consumer protection and unjust enrichment laws by restraining trade and/or substantially lessening competition in the U.S.

closed-system electronic cigarette market.

Plaintiffs seek various remedies, including treble damages, attorneys’ fees, a declaration that the agreements between Altria and JUUL are invalid and rescission of the transaction.

We filed a motion to dismiss these lawsuits in January 2021.

In August 2021, the U.S.

District Court for the Northern District of California denied our motion to dismiss except with respect to plaintiffs’ claims for injunctive and equitable relief.

However, plaintiffs were granted the opportunity to replead such claims by the trial court, which plaintiffs did in September 2021.

In January 2022, the trial court ordered that the direct-purchaser plaintiffs’ claims against JUUL be sent to arbitration pursuant to an arbitration provision in JUUL’s online purchase agreement.

The court granted plaintiffs’ leave to replead the complaint with new direct-purchaser plaintiffs, which plaintiffs did in February 2022, substituting four new plaintiffs.

In September 2023, the direct-purchaser plaintiffs filed a third amended consolidated class action complaint, substituting three of the four named plaintiffs.

In October 2023, JUUL filed a motion to compel arbitration as to certain new direct-purchaser plaintiffs and a motion to dismiss the direct-purchaser plaintiffs’ claims for injunctive relief.

Altria joined the motion to dismiss the injunctive relief claims.

The trial is set to commence in May 2026.

Shareholder Class Action and Shareholder Derivative Lawsuits

Shareholder Class Action :

In the fourth quarter of 2021, we agreed to settle a class action lawsuit brought by purported Altria shareholders against Altria and certain of our current and former executives and JUUL, its founders and certain of its current and former executives alleging false and misleading statements and omissions relating to our former investment in JUUL.

Pursuant to the settlement, which was granted final approval by the trial court in March 2022, among other things, (i) all claims asserted against Altria and the other named defendants were resolved without any liability or wrongdoing attributed to them personally or to Altria and (ii) Altria agreed to pay the class an aggregate amount of $ 90 million, which amount included attorneys’ fees.

We recorded pre-tax provisions totaling $ 90 million in 2021 and, in January 2022, paid $ 90 million to plaintiffs’ escrow account.

In February 2024, the court ordered that certain of the direct-purchaser plaintiffs’ claims against JUUL be sent to arbitration pursuant to an arbitration provision in JUUL’s online purchase agreement and dismissed without prejudice the direct-purchaser plaintiffs’ claims for injunctive relief.

The trial with respect to the consolidated lawsuits is set to commence in May 2026.

Federal and State Shareholder Derivative Lawsuits

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Under the terms of the settlement, which became effective in May 2023, among other things, we agreed to provide $ 100 million in funding over a five-year period to underage tobacco prevention and cessation programs, which may include positive youth development programs, led by independent third-party organizations.

We expect to begin funding in 2024.

We began providing funding in the third quarter of 2024.

In 2022, we recorded pre-tax provisions totaling $ 27 million for costs associated with the independent monitoring of our funding commitments and attorneys’ fees.

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Plaintiffs’ allegations of liability in these cases have been based on various theories of recovery, such as negligence, strict liability, fraud, misrepresentation, design defect, failure to warn, breach of implied warranty, addiction and breach of consumer protection statutes.

Plaintiffs have typically sought various forms of relief, including compensatory and punitive damages, and certain equitable relief,

including disgorgement.

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Plaintiffs have typically sought various forms of relief, including compensatory and punitive damages, and certain equitable relief, including disgorgement.

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

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

At December 31, 2023, 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 consolidated balance sheet.

At December 31, 2024, we (i) had $ 43 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.

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

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We do not have a related liability recorded on our consolidated balance sheet at December 31, 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.

District Court for the Northern District of Georgia.

PMI has agreed not to seek indemnification with respect to the active IQOS System patent litigation discussed above under IQOS Litigation .

As part of the supplier financing program, Altria guarantees the financial obligations of ALCS under the financing program agreement.

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PM USA guarantees our obligations under our outstanding debt securities, any borrowings under our $ 3.0 billion Credit Agreement and any amounts outstanding under our commercial paper program.

For further discussion, see Note 10.

Long-Term Debt.

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Report of Independent Registered Public Accounting Firm

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We believe that our audits provide a reasonable basis for our opinions.

As described in the Report of Management On Internal Control Over Financial Reporting, management has excluded NJOY Holdings, Inc.

from its assessment of internal control over financial reporting as of December 31, 2023 because it was acquired by the Company in a business combination during 2023.

We have also excluded NJOY Holdings, Inc.

from our audit of internal control over financial reporting.

NJOY Holdings, Inc.

is a wholly-owned subsidiary whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting each represent less than 1% of the related consolidated financial statement amounts as of and for the year ended December 31, 2023.

Definition and Limitations of Internal Control over Financial Reporting

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The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Tobacco and Health Litigation

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole,

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and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

E-Vapor Product Litigation

As described in Note 20 to the consolidated financial statements, legal proceedings covering a wide range of matters are pending or threatened in various U.S.

and foreign jurisdictions against the Company as well as its respective indemnitees.

The Company records provisions in the consolidated financial statements for pending litigation when management determines that an unfavorable outcome is probable and the amount of the loss can be reasonably estimated.

The Company’s most significant category of legal proceedings is tobacco and health litigation.

The Company’s accrued liability for tobacco and health litigation makes up a significant portion of the tobacco and health and certain other litigation items liability of $346 million as of December 31, 2023.

While it is reasonably possible that an unfavorable outcome in a case may occur, except for those cases which have been accrued for:

(i) management has concluded that it is not probable that a loss has been incurred in any of the pending tobacco and health related cases;

(ii) management is unable to estimate the possible loss or range of loss that could result from an unfavorable outcome in any of the pending tobacco and health related cases;

Management records provisions in the consolidated financial statements for pending litigation when they determine that an unfavorable outcome is probable and the amount of the loss can be reasonably estimated.

The Company's accrued liability for tobacco and health and certain other litigation items is $96 million as of December 31, 2024.

In establishing this liability, management evaluates tobacco and health and certain other litigation items, including e-vapor product litigation.

While it is reasonably possible that an unfavorable outcome in a case may occur, except for those cases which, as described in Note 20, have been accrued for, (i) management has concluded that it is not probable that a loss has been incurred in any of the pending cases;

(ii) management is unable to estimate the possible loss or range of loss that could result from an unfavorable outcome in any of the pending cases;

and (iii) accordingly, management has not provided any amounts in the consolidated financial statements for unfavorable outcomes, if any.

The principal considerations for our determination that performing procedures relating to tobacco and health litigation is a critical audit matter are (i) the significant judgment by management when determining if a loss for tobacco and health litigation should be recorded in the consolidated financial statements and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to management’s determination of whether a loss should be recorded.

The principal considerations for our determination that performing procedures relating to e-vapor product litigation is a critical audit matter are (i) the significant judgment by management when determining if a loss for e-vapor product litigation should be recorded in the consolidated financial statements and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to management’s determination of whether a loss should be recorded.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s loss determination for tobacco and health litigation matters and controls over the related financial statement disclosures.

These procedures also included, among others, (i) evaluating the completeness of the Company’s description of tobacco and health litigation matters;

(ii) confirming with external and internal legal counsel the likelihood of an unfavorable outcome and the extent to which a loss is estimable;

(iii) evaluating the reasonableness of management’s determination regarding the likelihood of an unfavorable outcome;

and (iv) evaluating the sufficiency of the Company’s tobacco and health litigation disclosures.

Skoal Trademark Impairment Assessment

These procedures included testing the effectiveness of controls relating to management’s loss determination for tobacco and health litigation matters, including e-vapor product litigation, and controls over the related financial statement disclosures.

These procedures also included, among others, (i) evaluating the completeness of the Company’s description of e-vapor product litigation matters;

(ii) confirming with external and internal legal counsel the likelihood of an unfavorable outcome and the extent to which a loss is estimable for e-vapor product litigation matters;

(iii) evaluating the reasonableness of management’s determination regarding the likelihood of an unfavorable outcome for e-vapor product litigation matters;

and (iv) evaluating the sufficiency of the Company’s e-vapor product litigation disclosures.

Skoal Trademark Impairment Assessments

As described in Notes 2 and 6 to the consolidated financial statements, the Company’s Skoal trademark had a carrying value of $3.6 billion as of December 31, 2024.

Management conducts an annual review of indefinite-lived intangible assets for potential impairment, and more frequently if an event occurs or circumstances change that would require management to perform an interim review.

During 2023, management’s annual impairment test of indefinite-lived intangible assets resulted in no impairment charges.

As disclosed by management, the Company uses an income approach to estimate the fair values of its indefinite-lived intangible assets.

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

In performing the 2023 valuation, management’s cash flow analysis for the Skoal trademark included significant judgments and assumptions related to volume, revenue, income, perpetual growth rate and discount rate.

The principal considerations for our determination that performing procedures relating to the Skoal trademark impairment assessment is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the Skoal trademark;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to revenue, perpetual growth rate, and the discount rate;

In connection with the preparation of the financial statements for the interim period ended June 30, 2024, management evaluated the accelerated growth of innovative tobacco products, including oral nicotine pouches, and the related increase in competitive activity among tobacco categories, which have contributed to reductions in sales volumes for Moist Smokeless Tobacco products, including Skoal .

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

Management determined the estimated fair value of the Skoal trademark as of June 30, 2024 was below its carrying value and recorded an impairment of $354 million during the second quarter of 2024.

Management’s annual impairment test of indefinite-lived intangible assets as of October 1, 2024 resulted in no impairment charge.

Management 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 use of those funds, the expected rate of inflation and the risks associated with realizing expected future cash flows.

In performing the 2024 valuation, management’s cash flow analysis for the Skoal trademark included significant judgments and assumptions related to volume, revenue, income, operating margins, perpetual growth rate and discount rate.

The principal considerations for our determination that performing procedures relating to the Skoal trademark impairment assessments is a critical audit matter are (i) the significant judgment by management when developing the fair value estimates of the Skoal trademark;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

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These procedures included testing the effectiveness of controls relating to management’s indefinite-lived intangible asset impairment assessments, including controls over the valuation of the Company’s Skoal trademark.

These procedures also included, among others (i) testing management’s process for developing the fair value estimate of the Skoal trademark;

These procedures also included, among others (i) testing management’s process for developing the fair value estimates of the Skoal trademark;

(ii) evaluating the appropriateness of the income approach used by management;

(iii) testing the completeness and accuracy of underlying data used in the income approach;

and (iv) evaluating the reasonableness of the significant assumptions used by management related to revenue, perpetual growth rate, and the discount rate.

Evaluating management’s assumptions related to revenue and perpetual growth rate involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the Skoal brand;

and (iv) evaluating the reasonableness of the significant assumptions used by management related to revenue, perpetual growth rates, and the discount rates.

Evaluating management’s assumption related to revenue involved evaluating whether the assumption used by management was reasonable considering (i) the current and past performance of the Skoal brand;

(ii) the consistency with external market and industry data;

and (iii) whether these assumptions

were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the Company’s income approach;

and (ii) the reasonableness of the discount rate assumption.

Acquisition of NJOY Holdings, Inc.

– Valuation of Developed Technology

As described in Notes 1 and 3 to the consolidated financial statements, the Company completed the acquisition of NJOY Holdings, Inc.

(“NJOY”) on June 1, 2023 for total consideration of $2.9 billion.

Of the acquired intangible assets, $1 billion of developed technology was recorded.

Management determined the preliminary fair value of the developed technology intangible asset using an income approach.

The significant assumptions used by management in determining the preliminary fair value of the developed technology intangible asset included volume growth rates, operating margins, the assessment of acquired technology life cycles, the discount rate, as well as other factors.

The principal considerations for our determination that performing procedures relating to the valuation of developed technology acquired in the acquisition of NJOY is a critical audit matter are (i) the significant judgment by management when developing the preliminary fair value estimate of the developed technology acquired;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to volume growth rates, operating margins, the assessment of acquired technology life cycles, and the discount rate;

and (iii) whether the assumption was consistent with evidence

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obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the Company’s income approach and (ii) the reasonableness of the perpetual growth rate and discount rate assumptions.

Goodwill Impairment Assessment- E-Vapor Reporting Unit

As described in Notes 2 and 6 to the consolidated financial statements, the Company’s goodwill balance was $6.9 billion as of December 31, 2024, and the goodwill associated with the e-vapor reporting unit was $1.8 billion.

Management conducts an annual review of goodwill for potential impairment, and more frequently if an event occurs or circumstances change that would require management to perform an interim review.

Management used an income approach to estimate the fair values of the Company’s reporting units.

If the carrying value of a reporting unit that includes goodwill exceeds its fair value, goodwill is considered impaired.

In performing the 2024 valuation, management’s cash flow analysis for the e-vapor reporting unit included significant judgments and assumptions related to volume, revenue, income, perpetual growth rate and discount rate.

During 2024, management’s annual impairment test of goodwill resulted in no impairment charges.

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment of the e-vapor reporting unit is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the reporting unit;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to volume, perpetual growth rate, and discount rate;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with performing our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s valuation of the acquired developed technology.

These procedures also included, among others (i) reading the purchase agreement and vouching the cash paid for the acquisition;

(ii) testing management’s process for developing the preliminary fair value estimate of developed technology acquired;

(iii) evaluating the appropriateness of the income approach used by management;

(iv) testing the completeness and accuracy of the underlying data used in the income approach;

and (v) evaluating the reasonableness of the significant assumptions used by management related to the volume growth rates, operating margins, the assessment of the acquired technology life cycles, and the discount rate.

Evaluating management’s assumptions related to the volume growth rates and operating margins involved considering (i) the current and past performance of the NJOY business;

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessments, including controls over the valuation of the e-vapor reporting unit.

These procedures also included, among others (i) testing management’s process for developing the fair value estimate;

(ii) evaluating the appropriateness of the income approach used by management;

(iii) testing the completeness and accuracy of the underlying data used in the income approach;

and (iv) evaluating the reasonableness of the significant assumptions used by management related to the volume, perpetual growth rate and discount rate.

Evaluating management’s assumption related to volume involved considering (i) the current and past performance of the Company’s e-vapor reporting unit;

(ii) the consistency with external market and industry data;

and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skills and knowledge were used to assist in evaluating (i) the appropriateness of the income approach utilized by management;

and (ii) the reasonableness of the acquired technology life cycles and the discount rate assumptions.

and (iii) whether the assumption was consistent with evidence obtained in other areas of the audit.

/s/ PricewaterhouseCoopers LLP

Richmond, Virginia

February 1, 2024

January 30, 2025

We have served as the Company’s auditor since at least 1934, which is when the Company became subject to SEC reporting requirements.

We have not been able to determine the specific year we began serving as auditor of the Company.

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Report of Management On Internal Control Over Financial Reporting

17 unchanged sentences

maintained effective internal control over financial reporting.

Management of Altria Group, Inc.

excluded NJOY Holdings, Inc., a wholly owned subsidiary, from its assessment of internal control over financial reporting as of December 31, 2023, because it was acquired by Altria Group, Inc.

in a business combination during 2023.

NJOY Holdings, Inc.’s total assets and total revenues each represent less than 1% of the related consolidated financial statement amounts as of and for the year ended December 31, 2023.

PricewaterhouseCoopers LLP, an independent registered public accounting firm, who audited and reported on the consolidated financial statements of Altria Group, Inc.

included in this report, has audited the effectiveness of Altria Group, Inc.’s internal control over financial reporting as of December 31, 2024, as stated in their report herein.

February 1, 2024

January 30, 2025

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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data