What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-02-25 compared with 2025-02-26 · 677 added, 756 removed, 1420 unchanged (50% of the section changed)

12 unchanged sentences

Finished product 281 278

Income taxes 93 496

Other current assets 125 129

12 unchanged sentences

See notes to consolidated financial statements.

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Altria Group, Inc.

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Other 1,947 1,780

Deferred gain from the sale of IQOS System commercialization rights

Dividends payable 1,782 1,732

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Total stockholders’ equity (deficit) attributable to Altria ( 3,502 ) ( 2,238 )

Noncontrolling interests 50 50

Noncontrolling interest 50 50

Total stockholders’ equity (deficit) ( 3,452 ) ( 2,188 )

1 unchanged sentence

See notes to consolidated financial statements.

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Altria Group, Inc.

10 unchanged sentences

Asset impairment and exit costs 978 389 —

Impairment of goodwill 1,158 — —

Operating income 9,899 11,241 11,547

10 unchanged sentences

See notes to consolidated financial statements.

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Altria Group, Inc.

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

( 227 ) 273 98

Comprehensive earnings $ 6,720 $ 11,537 $ 8,228

See notes to consolidated financial statements.

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Altria Group, Inc.

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303 ( 1,128 ) 1,111

Fair value adjustment for NJOY Transaction contingent payments, net of cash paid 25 — —

(Income) losses from investments in equity securities ( 510 ) ( 652 ) ( 243 )

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Dividends from ABI 208 139 163

Asset impairment and exit costs 389 — —

Impairment of goodwill 1,158 — —

Asset impairment and exit costs, net of cash paid 960 389 —

Cash effects of changes:

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Proceeds from the sale of IQOS System commercialization rights

— 1,700 1,000

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

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Net cash provided by (used in) investing activities ( 341 ) 2,175 ( 1,283 )

(1) Substantially all of the 2025 amount relates to unrecognized tax benefits from the change in the application of foreign attribution rules relevant to our investment in ABI.

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.

5 unchanged sentences

See notes to consolidated financial statements.

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Altria Group, Inc.

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Interest $ 1,114 $ 1,113 $ 1,116

Income taxes $ 1,802 (1) $ 1,890 (1) $ 2,657

Non-cash investing activities:

Deferred proceeds from the sale of IQOS System commercialization rights

Income taxes, net of refunds (1)

$ 1,695 $ 1,709 $ 1,874

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$ 4,492 $ 3,158 $ 3,721

(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) As discussed in Note 1.

Background and Basis of Presentation , we adopted ASU No.

As a result, 2024 and 2023 amounts are now presented net of refunds.

Additionally, for the years ended December 31, 2025, 2024 and 2023, income taxes paid, net of refunds were reduced by the impact of transferable income tax credits.

At December 31, 2025, 2024 and 2023, transferable income tax credits totaled $ 419 million, $ 445 million and $ 335 million, respectively, and are included in other accrued liabilities on our consolidated balance sheets.

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

Contingencies .

See notes to consolidated financial statements.

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Altria Group, Inc.

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Losses Cost of

Interests Total

Stockholders’

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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 )

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Balances, December 31, 2025 $ 935 $ 5,921 $ 35,452 $ ( 2,627 ) $ ( 43,183 ) $ 50 $ ( 3,452 )

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

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

Background and Basis of Presentation .

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At December 31, 2025, our wholly owned subsidiaries included Philip Morris USA Inc.

(“PM USA”), which is engaged in the manufacture and sale of cigarettes in the United States;

(“PM USA”), which is engaged in the manufacture and sale of cigarettes;

John Middleton Co.

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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;

Helix Innovations LLC (“Helix”) and its foreign affiliates (“Helix International”), which 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.

We operate primarily within the United States and generate substantially all of our revenue from domestic customers.

Other wholly owned subsidiaries included Altria Group Distribution Company (“AGDC”), which provides domestic sales and distribution services to our 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, 2025, our significant subsidiaries were not limited by contractual obligations in their ability to pay cash dividends or make other distributions with respect to their equity interests.

As discussed in Note 3.

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

(“NJOY Holdings”), the parent of NJOY.

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

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

(“JTIUH”), a subsidiary of Japan Tobacco Inc., for the U.S.

marketing and commercialization of heated tobacco stick (“HTS”) products.

The joint venture entity, Horizon Innovations LLC (“Horizon”), is structured to exist in perpetuity and is responsible for the U.S.

marketing and commercialization of HTS products owned by either party.

At December 31, 2024, we owned a 75 % economic interest in Horizon;

JTIUH owned the remaining 25 % economic interest.

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

marketplace from the joint venture.

At December 31, 2025, we owned a 75 % economic interest in Horizon Innovations LLC (“Horizon”), a joint venture with JTI (US) Holding, Inc.

(“JTIUH”), a subsidiary of Japan Tobacco Inc., which owned the remaining 25 % economic interest.

Horizon is responsible for the U.S.

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

At December 31, 2025, Horizon had no products in the U.S.

At December 31, 2025, we had investments in Anheuser-Busch InBev SA/NV (“ABI”) and Cronos Group Inc.

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

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.

For further discussion of our investments, see Note 6.

Investments in Equity Securities .

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We account for our investments in equity securities in which we have the ability to exercise significant influence over the operating and financial policies of the investee, including ABI and Cronos, under the equity method of accounting using a one-quarter lag.

We accounted for our former investment in the equity securities of JUUL at fair value.

All intercompany transactions and balances have been eliminated.

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

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

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.

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.

In connection with the preparation of our annual financial statements for the year ended December 31, 2025, we adopted Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU No.

This guidance requires additional income tax disclosures, primarily related to the rate reconciliation and income taxes paid information, on an annual basis.

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

2023-09 in Note 14.

Segment Reporting .

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

Income Taxes.

Summary of Significant Accounting Policies

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▪ Depreciation, Amortization and Impairment Testing:

We record property, plant and equipment at historical costs and depreciate by the straight-line method over the estimated useful lives of the assets.

Property, plant and equipment are stated at historical costs and depreciated by the straight-line method over the estimated useful lives of the assets.

We depreciate machinery and equipment over periods up to 20 years, and buildings and building improvements over periods up to 50 years.

We amortize definite-lived intangible assets over their estimated useful lives up to 25 years.

We amortize definite-lived intangible assets over their estimated useful lives.

We review long-lived assets, including definite-lived intangible assets, for impairment whenever events or changes in business circumstances indicate that the carrying value of the assets may not be fully recoverable.

We perform undiscounted operating cash flow analyses to determine if an impairment exists.

For purposes of recognition and measurement of an impairment for assets held for use, we group assets and liabilities at the lowest level for which cash flows are separately identifiable.

For purposes of recognition and measurement of an impairment for assets held for use,

we group assets and liabilities at the lowest level for which cash flows are separately identifiable.

If we determine that an impairment exists, any related impairment loss is calculated based on fair value.

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▪ Derivative Financial Instruments:

From time to time, we enter into derivatives to mitigate the potential impact of certain market risks, including foreign currency exchange rate risk.

We use various types of derivative financial instruments, including forward contracts, options and swaps.

We record derivative financial instruments at fair value on the consolidated balance sheets as either assets or liabilities.

We designate derivative financial instruments that qualify for hedge accounting as either fair value hedges, cash flow hedges or net investment hedges at the inception of the contracts.

For fair value hedges, we record changes in the fair value of the derivative, as well as the offsetting changes in the fair value of the hedged item, in the consolidated statements of earnings each period.

For cash flow hedges, we record changes in the fair value of the derivative each period in accumulated other comprehensive earnings (losses) and reclassify changes to the consolidated statements of earnings in the same periods in which operating results are affected by the respective hedged item.

For net investment hedges, we record changes in the fair value of the derivative or foreign currency transaction gains or losses on a nonderivative hedging instrument in accumulated other comprehensive earnings (losses) to offset the change in the value of the net investment being hedged.

For derivative financial instruments designated as net investment hedges, we record changes in the fair value of the derivative or foreign currency transaction gains or losses on a nonderivative hedging instrument in accumulated other comprehensive earnings (losses) to offset the change in the value of the net investment being hedged.

Such amounts remain in accumulated other comprehensive earnings (losses) until the complete or substantially complete liquidation of the underlying foreign operations occurs for investments in foreign entities accounted for under the equity method of accounting.

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To qualify for hedge accounting, the hedging relationship, both at inception of the hedge and on an ongoing basis, is expected to be highly effective at offsetting changes in the fair value of the hedged risk during the period that the hedge is designated.

We formally designate and document, at inception, the financial instrument as a hedge of a specific underlying exposure, the risk management objective, the strategy for undertaking the hedge transaction and method for assessing hedge effectiveness.

Additionally, for qualified hedges of forecasted transactions, if it becomes probable that a forecasted transaction will not occur, we would no longer consider the hedge effective and would record all of the derivative gains and losses in the consolidated statement of earnings in the current period.

For qualified hedges of forecasted transactions, if it becomes probable that a forecasted transaction will not occur, we would no longer consider the hedge effective and would record all of the derivative gains and losses in the consolidated statement of earnings in the current period.

For financial instruments that are not designated as hedging instruments or do not qualify for hedge accounting, we record changes in fair value in the consolidated statement of earnings each period.

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 record annual amounts relating to these plans based on calculations specified by GAAP, which include various actuarial assumptions as to discount rates, assumed rates of return on plan assets, mortality, compensation increases, turnover rates and health care cost trend rates.

We recognize the funded status of our defined benefit pension and other postretirement plans on the consolidated balance sheets and record as a component of other comprehensive earnings (losses), net of deferred income taxes, the gains or losses and prior service costs or credits that have not been recognized as components of net periodic benefit cost (income).

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.

We recognize the funded status of our defined benefit plans on the consolidated balance sheets.

We record unrecognized gains and losses and prior service costs and credits in other comprehensive income (loss), net of deferred tax, and subsequently amortize these items into net periodic benefit cost (income) over future periods.

▪ Fair Value Measurements:

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Fair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

We use a fair value hierarchy, which gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

The three levels of inputs used to measure fair value are:

We use an established fair value hierarchy that uses three levels of inputs to measure fair value as follows:

Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities.

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

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

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

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 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.

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

In assessing realizability, we consider the weight of all available positive and negative evidence, including the character of the assets and the possible sources of taxable income of the appropriate character within the applicable carryback and carryforward periods available under the tax law.

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

The recognized amount is the largest benefit that is more than 50% likely to be realized upon ultimate settlement.

We do not recognize positions that do not meet this threshold in the financial statements.

We included interest and penalties related to uncertain tax positions in the provision for income taxes in our consolidated statements of earnings.

We disclose worldwide changes in unrecognized tax benefits, for the current year and prior years, within the same line in our income tax rate reconciliation.

▪ Inventories:

We use the last-in, first-out (“LIFO”) method to determine the cost of the majority of our inventories.

We determine the cost of the remaining inventories using the first-in, first-out (“FIFO”) and average cost methods.

We record inventories that are measured using the LIFO method at the lower of cost or market.

We state inventories that are measured using the FIFO and average cost methods at the lower of cost and net realizable value.

We use the last-in, first-out (“LIFO”) method to determine the cost of the majority of our inventories, with the remainder valued using the first-in, first-out (“FIFO”) and average cost methods.

We state inventories under LIFO at the lower of cost or market, while we state inventories under FIFO and average cost at the lower of cost and net realizable value.

It is a generally recognized industry practice to classify leaf tobacco inventories as a current asset although part of such inventories, because of the duration of the curing and aging process, ordinarily would not be used within one year.

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The election of the fair value option is irrevocable and is made on an investment by investment basis.

We elected to account for our investments in ABI and Cronos under the equity method of accounting.

We account for our investments in ABI and Cronos under the equity method of accounting.

Our share of equity (income) losses and other adjustments associated with these investments are included in (income) losses from investments in equity securities 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

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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.

If the carrying value of an investment 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.

Investments in Equity Securities for additional information on our accounting policy for our former investment in JUUL.

▪ Litigation Contingencies and Costs:

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▪ Marketing Costs:

Our businesses promote their products with consumer incentives, trade promotions and consumer engagement programs.

We promote our products with consumer incentives, trade promotions and consumer engagement programs.

These consumer incentive and trade promotion activities, which include discounts, coupons, rebates, in-store display incentives and volume-based incentives, do not create a distinct deliverable and are, therefore, recorded as a reduction of revenues.

We make consumer engagement program payments to third parties.

Our businesses expense these consumer engagement programs, which include event marketing, as incurred, and such expenses are included in marketing, administration and research costs in our consolidated statements of earnings.

For interim reporting purposes, our businesses charge consumer engagement programs and certain consumer incentive expenses to operations as a percentage of sales, based on estimated sales and related expenses for the full year.

We expense payments to third parties for consumer engagement programs, which include event marketing, as incurred, and include such expenses in marketing, administration and research costs in our consolidated statements of earnings.

For interim reporting purposes, we charge consumer engagement programs and certain consumer incentive expenses as part of results of operations as a percentage of sales, based on estimated sales and related expenses for the full year.

▪ Revenue Recognition:

Our businesses generate substantially all of their revenue from sales contracts with customers.

While our businesses enter into separate sales contracts with each customer for each product type, all sales contracts are similarly structured.

These contracts create an obligation to transfer product to the customer.

We generate substantially all of our revenue from sales contracts with customers.

As presented in Note 15.

Segment Reporting , we disaggregate net revenues based on product type.

While we enter into separate sales contracts with each customer for each product type, all sales contracts have a similar structure and create an obligation to transfer product to the customer.

Our businesses satisfy all performance obligations within one year ;

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There is no financing component because our businesses expect, at contract inception, that the period between when our businesses transfer product to the customer and when the customer pays for that product will be one year or less.

Our businesses define net revenues as revenues, which include excise taxes and shipping and handling charges billed to customers, net of cash discounts for prompt payment, sales returns (also referred to as returned goods) and sales incentives.

Our businesses exclude from the transaction price sales taxes and value-added taxes imposed at the time of sale.

Our businesses recognize revenues from sales contracts with customers upon shipment of goods when control of such products is obtained by the customer.

Our businesses determine that a customer obtains control of the product upon shipment when title of such product and risk of loss transfers to the customer.

Our businesses account for shipping and handling costs as fulfillment costs and such amounts are classified as part of cost of sales in our consolidated statements of earnings.

Our businesses record an allowance for returned goods, based principally on historical volume and return rates, which is included in other accrued liabilities on our consolidated balance sheets.

Our businesses record sales incentives, which consist of consumer incentives and trade promotion activities, as a reduction to revenues (a portion of which is based on amounts estimated as being due to wholesalers, retailers and consumers at the end of a period) based principally on historical volume, utilization and redemption rates.

We define net revenues as revenues, which include excise taxes and shipping and handling charges billed to customers, net of cash discounts for prompt payment, sales returns (also referred to as returned goods) and sales incentives.

We exclude from the transaction price sales taxes and value-added taxes imposed at the time of sale.

Substantially all cash discounts in contracts with our customers are based on a percentage of the list price according to agreed-upon payment terms.

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

At December 31, 2025, 2024 and 2023, receivables were $ 263 million, $ 177 million and $ 71 million, respectively.

We recognize revenues from sales contracts with customers when control of such product is obtained by the customer, which primarily occurs upon shipment of goods.

We determine that a customer obtains control of the product upon shipment when title of such product

and risk of loss transfers to the customer.

We account for shipping and handling costs as fulfillment costs and such amounts are classified as part of cost of sales in our consolidated statements of earnings.

We record sales incentives, which consist of consumer incentives and trade promotion activities, as a reduction to revenues (a portion of which is based on amounts estimated as being due to wholesalers, retailers and consumers at the end of a period) based principally on historical volume, utilization and redemption rates.

Actual payments will differ from estimated payments to the extent actual results differ from estimated assumptions.

We reflect differences between actual and estimated payments in the period in which actual payments become known.

We include expected payments for sales incentives in accrued marketing liabilities on our consolidated balance sheets.

Sales incentives include variable payments related to goods sold by our businesses.

We include estimates of variable consideration as a reduction to revenues upon shipment of goods to customers.

The sales incentives that require significant estimates and judgments are as follows:

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

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

We record an allowance for returned goods, which we include in other accrued liabilities on our consolidated balance sheets.

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

Actual sales returns will differ from estimated sales returns to the extent actual results differ from estimated assumptions.

We reflect differences between actual and estimated sales returns in the period in which the actual amounts become known.

These differences, if any, have not had a material impact on our consolidated financial statements.

Payment terms vary depending on product type.

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 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.

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

When we receive cash in advance of product shipment, our businesses typically satisfy their performance obligations within three days of receiving payment.

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

At December 31, 2025, 2024 and 2023, deferred revenue was $ 231 million, $ 215 million and $ 258 million, respectively.

At December 31, 2025, 2024 and 2023, there were no differences between amounts recorded as deferred revenue from contracts with customers and amounts subsequently recognized as revenue.

▪ Supplier Financing:

We facilitate a voluntary supplier financing program under which participating suppliers may elect to sell receivables due from us to a third-party financial institution.

Our payments are made on the terms originally negotiated with the supplier, and we have no economic interest in a supplier’s sale of a receivable.

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

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We facilitate a voluntary supplier financing program through a third-party intermediary under which participating suppliers may elect to sell receivables due from us to a third-party financial institution at the sole discretion of both suppliers and the financial institutions.

Our payments are made on the terms originally negotiated with the supplier, up to 120 days, and we have no economic interest in a supplier’s sale of a receivable.

Under our agreement with the third-party intermediary, ALCS is obligated to pay either the participating financial institutions or suppliers when payment is due, unless it has been satisfied by the applicable ALCS affiliate.

Altria guarantees ALCS’s obligations under this arrangement.

We recorded all outstanding balances under the supplier financing program in accounts payable on our consolidated balance sheets, and we included the associated payments 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 Years Ended December 31,

(in millions) 2025 2024

Confirmed outstanding obligations at January 1 $ 128 $ 119

Invoices confirmed during the year 695 563

Confirmed invoices paid during the year ( 664 ) ( 554 )

Confirmed outstanding obligations at December 31 $ 159 $ 128

▪ New Accounting Guidance Not Yet Adopted:

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Standards Description Effective Date for Public Entity Effect on Financial Statements

2023-09 Income Taxes (Topic 740):

Improvements to Income Tax Disclosures

The guidance will require additional income tax disclosures, primarily related to the rate reconciliation and income taxes paid information.

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

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):

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

2025-05 Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets

The guidance provides a practical expedient for the calculation of current expected credit losses on current accounts receivable and current contract assets that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset.

The guidance is effective for fiscal years beginning after December 15, 2025, and interim periods within those fiscal years.

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

2025-06 Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software

The guidance replaces the current framework that is based on software development project stages with updated criteria, focused on management’s authorization and the probability of project completion, to determine the timing for cost capitalization.

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

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

2025-07 Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606):

Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract

The guidance refines the scope of Topic 815 by excluding from derivative accounting non-exchange trading contracts that have underlyings based on operations or activities specific to one of the parties to the contract with certain exceptions and clarifies the applicability of Topic 606 to share-based noncash consideration received from a customer in exchange for goods or services.

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

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

2025-09 Derivatives and Hedging (Topic 815):

Hedge Accounting Improvements

The guidance includes expanding eligibility for cash flow hedges of groups of forecasted transactions, introducing a model for hedging forecasted interest payments on “choose-your-rate” debt instruments, permitting designation of variable price components in forecasted purchases or sales of nonfinancial assets and clarifying guidance for net investment hedges and dual hedge strategies.

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

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

2025-11 Interim Reporting (Topic 270):

Narrow-Scope Improvements

The guidance clarifies interim disclosure requirements, provides a comprehensive list of disclosures required by GAAP and includes a disclosure principle for events since the last annual reporting period to enhance consistency in interim reporting.

The guidance is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027.

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

2025-12 Codification Improvements

The guidance provides changes that clarify, correct errors or make minor improvements to GAAP.

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

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

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 .

In June 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 fair value of these contingent payments on the acquisition date was approximately $ 130 million, which was included in the total consideration.

For additional information on contingent payments, see Note 7.

Financial Instruments .

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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In July 2023, we repaid the term loan facility in full, at which time the term loan facility terminated in accordance with its terms.

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

The final purchase price allocation to the assets acquired and liabilities assumed in the NJOY Transaction as of the acquisition date was as follows:

(in millions) Final Purchase Price Allocation

Cash and cash equivalents $ 22

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Trademarks (amortizable) 190

Supplier agreements (amortizable)

180 ( 180 ) —

Accounts payable ( 7 )

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Total consideration 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.

The excess of the total consideration over the identifiable net assets acquired in the NJOY Transaction primarily reflected 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.

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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

We disaggregate net revenues based on product type.

For further discussion, see Note 17.

Segment Reporting .

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.

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.

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

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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.

Actual sales returns will differ from estimated sales returns to the extent actual results differ from estimated assumptions.

We reflect differences between actual and estimated sales returns in the period in which the actual amounts become known.

These differences, if any, have not had a material impact on our consolidated financial statements.

All returned goods are destroyed upon return and not included in inventory.

Consequently, we do not record an asset for USSTC’s right to recover goods from customers upon return.

Sales incentives include variable payments related to goods sold by our businesses.

We include estimates of variable consideration as a reduction to revenues upon shipment of goods to customers.

The sales incentives that require significant estimates and judgments are as follows:

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

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

These estimates primarily include estimated wholesale to retail sales volume and historical acceptance rates.

Actual payments will differ from estimated payments to the extent actual results differ from estimated assumptions.

Differences between actual and estimated payments are reflected in the period such information becomes available.

These differences, if any, have not had a material impact on our consolidated financial statements.

Supplier Financing

We facilitate a voluntary supplier financing program through a third-party intermediary under which participating suppliers may elect to sell receivables due from us to participating third-party financial institutions at the sole discretion of both the suppliers and the financial institutions (“Program”).

Our responsibility is limited to making payment on the terms originally negotiated with our supplier, regardless of whether our supplier sells its receivable to a financial institution.

We pay the third-party intermediary a nominal fee to administer the Program.

Under the terms of the agreement with our third-party intermediary, ALCS has a direct obligation to pay the participating financial institutions or the participating suppliers when payment obligations are due, unless such obligations are satisfied by the applicable ALCS affiliate.

Additionally, Altria guarantees the obligations of ALCS to those parties.

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 (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 it sells 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 Years Ended December 31,

(in millions) 2024 2023

Confirmed outstanding obligations at beginning of year $ 119 $ 8

Invoices confirmed during the year 563 244

Confirmed invoices paid during the year ( 554 ) ( 133 )

Confirmed outstanding obligations at end of year $ 128 $ 119

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As of the acquisition date, the estimated weighted-average useful life of these intangible assets was approximately 18 years.

Goodwill and Other Intangible Assets, net

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Oral tobacco products segment 5,078 8,646 5,078 8,679

Other 1,768 (1)

E-vapor products segment (1)

610 74 1,768 1,099

Total $ 5,787 $ 11,876 $ 6,945 $ 12,973

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

Acquisition of NJOY .

(1) Comprised primarily of e-vapor reporting unit goodwill and definite-lived intangible assets related to the NJOY Transaction.

Acquisition of NJOY and Note 15.

Segment Reporting .

Other intangible assets consisted of the following at December 31:

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$ 12,745 $ 869 $ 13,710 $ 737

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.

At December 31, 2025, 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, which consist primarily of intellectual property, certain cigarette 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, 2025, 2024 and 2023 was $ 132 million, $ 139 million and $ 128 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.

We estimate our annual amortization expense for each of the next five years to be approximately $ 90 million or less, which includes the impact of an impairment of the e-vapor definite-lived intangible assets discussed below, assuming no additional transactions occur that require the amortization of intangible assets.

In April 2024, we assigned the exclusive U.S.

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

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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.

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 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.

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— 5 154 ( 220 )

Asset impairment — ( 354 ) — —

Impairments (2)

( 1,158 ) ( 970 ) — ( 354 )

Amortization — ( 132 ) — ( 139 )

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$ 5,787 $ 11,876 $ 6,945 $ 12,973

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

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

Acquisition of NJOY .

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.

(2) The 2025 amounts represent non-cash impairments of our e-vapor reporting unit goodwill and a non-cash, pre-tax impairment of our e-vapor definite-lived intangible assets.

The 2024 amount represents a non-cash, pre-tax impairment of the Skoal trademark.

We performed our annual impairment test of goodwill and indefinite-lived intangible assets as of October 1, 2025, inclusive of the e-vapor reporting unit goodwill and the Skoal trademark.

The impairment test resulted in a non-cash goodwill impairment charge of $ 285 million for the e-vapor reporting unit in the fourth quarter of 2025 (see E-vapor Reporting Unit Goodwill & Definite-Lived Intangible Assets Impairments (2025) below).

The estimated fair value of the Skoal trademark exceeded its carrying value by approximately 7 % ($ 0.3 billion).

A hypothetical 1% increase in the discount rate used to estimate the fair value of the Skoal trademark would have resulted in an impairment charge of approximately $ 90 million in 2025.

See Skoal Trademark Impairment (2024) below for details on the Skoal trademark impairment recorded in the second quarter of 2024.

During 2024 and 2023, 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.

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.

At December 31, 2025, accumulated impairment losses related to goodwill were $ 1,158 million, all related to the e-vapor reporting unit in the e-vapor products segment, as discussed below.

There were no accumulated goodwill impairment losses at December 31, 2024.

We use an income approach to estimate the fair values of our reporting units and trademarks, discounting expected future cash flows at a rate of return reflecting the risk-free rate for the use of those funds, the expected rate of inflation and risks associated with realizing expected future cash flows.

The discounted cash flows may include multiple scenarios that consider a range of potential outcomes in projected cash flows.

In determining the estimated fair values of our reporting units and indefinite-lived intangible assets in 2025, 2024 and 2023, we made various judgments, estimates and assumptions, the most significant of which were volume, price, revenue, income, operating margins, perpetual growth rates, discount rates and scenario weightings, as applicable.

All significant inputs are classified as Level 3 in the fair value hierarchy.

E-vapor Reporting Unit Goodwill & Definite-Lived Intangible Assets Impairments (2025)

At December 31, 2024, the carrying value of the e-vapor reporting unit definite-lived intangible assets was $ 1,099 million, and the e-vapor reporting unit goodwill was $ 1,768 million.

The estimated fair value of the e-vapor reporting unit goodwill exceeded its carrying value by approximately 28 % ($ 0.3 billion).

As further discussed in Note 18.

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)

Contingencies , Altria and certain of our affiliates, including NJOY, are defendants in lawsuits alleging patent infringement based on the sale of NJOY ACE in the United States.

In January 2025, the U.S.

International Trade Commission (“ITC”) issued an exclusion order and cease-and-desist orders prohibiting the importation and sale of NJOY ACE in the United States, which became effective on March 31, 2025.

As a result, in connection with the preparation of our

financial statements for the period ended March 31, 2025, we concluded a triggering event had occurred and performed an interim impairment assessment.

As a result, we recorded a non-cash goodwill impairment of $ 873 million during the first quarter of 2025, which is recognized in our consolidated statement of earnings for the year ended December 31, 2025.

This impairment was due primarily to (i) lower projected volume and revenue due to NJOY ACE ’s removal from the U.S.

market and (ii) higher projected costs associated with the commercialization of NJOY’s future e-vapor product portfolio, resulting in lower projected operating margins.

As of March 31, 2025, after recording the impairment, the carrying value of goodwill within the e-vapor reporting unit was $ 895 million.

As a result of the ITC orders, in connection with the preparation of our financial statements for the period ended March 31, 2025, we also reviewed the definite-lived intangible assets in the e-vapor reporting unit for impairment and concluded the carrying value was recoverable and no impairment existed.

During the fourth quarter of 2025, in connection with the preparation of our financial statements for the year ended December 31, 2025, we evaluated the current enforcement environment against illicit flavored disposable e-vapor products and deemed any effective enforcement would likely occur gradually over a longer period of time, and as a primary consequence we determined that the long-lived assets in the e-vapor reporting unit may not be fully recoverable.

As a result, we first performed a recoverability test of the e-vapor definite-lived intangible assets.

We determined that the asset group was not recoverable because the estimated undiscounted cash flows, including an assumed terminal‑year EBITDA multiple, were less than its carrying value.

Second, we measured the impairment loss by comparing the carrying value of the definite-lived intangible assets, consisting of developed technology and trademarks, to their estimated fair values.

These fair values were determined using an income approach, specifically the relief from royalty method, which estimates the value of an intangible asset by calculating the present value of the hypothetical royalty payments a company avoids by owning the asset rather than licensing it from a third party.

In performing this analysis, we made various judgments, estimates and assumptions, the most significant of which were volume, price, revenue, income, operating margins, scenario weightings, discount rates, royalty rates, obsolescence rates and economic lives.

As a result, we recorded a non-cash, pre-tax impairment of these assets of $ 970 million, which we recorded in our consolidated statement of earnings for the year ended December 31, 2025.

Following the impairment charges of the e-vapor definite-lived intangible assets recognized, the carrying value of these assets as of December 31, 2025, totaled $ 60 million, which approximated fair value.

Following the impairment of these e-vapor definite-lived intangible assets, we performed our annual impairment test of goodwill, utilizing the revised carrying amount of the e-vapor reporting unit after reflecting the e-vapor definite-lived intangible assets impairment charges.

Our test indicated that the estimated fair value of the e-vapor reporting unit was below its carrying value, resulting in a non-cash goodwill impairment of $ 285 million, which we recorded in our consolidated statement of earnings for the year ended December 31, 2025.

The impairments of the e-vapor definite-lived intangible assets and the e-vapor reporting unit goodwill were due primarily to lower projected volume and revenue as a result of the impact of estimates regarding protracted ineffective enforcement against illicit flavored disposable e-vapor products.

After this e-vapor goodwill impairment charge, the carrying value of e-vapor goodwill as of December 31, 2025 was $ 610 million.

In addition, the carrying value of the e-vapor reporting unit’s net assets (including the effect of intercompany debt), which was negative, approximated its estimated fair value.

As a result of the goodwill impairments recognized in the first and the fourth quarters of 2025, the total non-cash goodwill impairment recognized in our consolidated statement of earnings for the year ended December 31, 2025, was $ 1,158 million.

At December 31, 2025 and March 31, 2025, we used an income approach to estimate the fair value of the e-vapor reporting unit.

Due to the uncertainties discussed below, our cash flows were based on a range of scenarios that consider certain potential regulatory and market outcomes, including the projected impact of enforcement on illicit flavored disposable e-vapor products.

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

The discount rates used in performing the valuations ranged from 9.5 % to 13.5 % and 12.0 % to 15.0 % at October 1, 2025 and March 31, 2025, respectively.

Additionally, in determining these significant assumptions, we made judgments regarding our expectations for the future state of the e-vapor category and NJOY’s business, including the (i) timing and extent of effective enforcement against illicit flavored disposable e-vapor products;

(ii) timing and likelihood of regulatory authorizations of e-vapor products, including of NJOY’s products;

(iii) timing of the commercialization of NJOY e-vapor products in the United States;

(iv) long-term growth of the e-vapor category;

and (v) conversion rates of illicit flavored disposable e-vapor consumers to lawful e-vapor products and, specifically, NJOY’s e-vapor products.

Fair value calculations are sensitive to changes in these estimates and assumptions, some of which relate to broader macroeconomic conditions and governmental actions outside of our control.

Although our discounted cash flow analyses are based on assumptions that we consider reasonable using the best available information as of December 31, 2025, we used significant judgment in determining future cash flows.

In addition to the judgments discussed above, the following factors also have the potential to impact our assumptions and, therefore, our impairment conclusions:

general macroeconomic conditions;

governmental actions, including U.S.

Food and Drug Administration (“FDA”) regulatory actions and inaction;

changes in the e-vapor category growth (decline) rates as a result of changing adult tobacco consumer preferences;

success of planned new product expansions;

competitive activity;

unfavorable outcomes with respect to litigation proceedings, including actions brought against us alleging patent infringement;

and income and excise taxes.

If the assumptions or judgments regarding the expectations for the future state of the e-vapor category and NJOY’s business discussed above fail to materialize as anticipated, if we experience unfavorable outcomes with respect to litigation proceedings (including actions alleging patent infringement), or if the discount rate used to estimate the fair value increases, we could have additional non-cash impairments of our e-vapor reporting unit goodwill in future periods, which could be material.

Based on our 2025 annual impairment test, a hypothetical 1% increase in the discount rate used to estimate the fair value of the e-vapor reporting unit would have resulted in an additional goodwill impairment charge of approximately $ 150 million during 2025.

Skoal Trademark Impairment (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 our Skoal trademark 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 statements of earnings for the year ended December 31, 2024.

Our carrying and estimated fair values of the Skoal trademark at June 30, 2024 were $ 3.6 billion, after recording the impairment.

Exit and Implementation Costs

Pre-tax exit and implementation costs consisted of the following for the years ended December 31:

Exit Costs Implementation Costs (1)

(in millions) 2025 2024 2025 2024 2025 2024

Smokeable products segment $ 7 $ 31 $ 42 $ 29 $ 49 $ 60

Oral tobacco products segment 1 4 6 4 7 8

Total $ 8 $ 35 $ 48 $ 33 $ 56 $ 68

(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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(1) Recorded in marketing, administration and research costs in our consolidated statements of earnings.

There were no exit or implementation costs for the year ended December 31, 2023.

In October 2024, we announced a multi-phase Optimize & Accelerate initiative (“Initiative”) designed to modernize our ways of working, which would enable us to increase our organization’s speed, efficiency and effectiveness by centralizing work, outsourcing certain transactional tasks and streamlining, automating and standardizing processes.

During the fourth quarter of 2025, we updated the estimated total pre-tax charges to approximately $ 175 million from the previous estimate of approximately $ 125 million as a result of finalizing the plans for all phases of the Initiative.

As of December 31, 2025, total pre-tax charges since the inception of the Initiative were $ 124 million, consisting of employee separation cost of $ 43 million and implementation costs of $ 81 million.

We expect to record the majority of the remaining charges by the end of 2027.

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

We record employee separation costs when probable and reasonably estimable.

As of December 31, 2025, total cash payments since the inception of the Initiative were $ 90 million, consisting of $ 18 million for exit costs and $ 72 million for implementation costs.

A summary of the charges and cash paid for exit and implementation costs related to the Initiative is as follows:

(in millions) Exit Costs Implementation Costs Total

Balances at December 31, 2023 $ — $ — $ —

Charges 35 33 68

Cash paid — ( 11 ) ( 11 )

Balances at December 31, 2024 35 22 57

Charges 8 48 56

Cash paid ( 18 ) ( 61 ) ( 79 )

Balances at December 31, 2025 $ 25 (1) $ 9 $ 34

(1) Restructuring liabilities, all of which were severance liabilities.

Investments in Equity Securities

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(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 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:

For Altria’s Year Ended December 31,

(in millions) ABI Other Investments ABI Other Investments ABI Other Investments

(3) Represents a non-cash, pre-tax loss on the disposition of our JUUL equity securities discussed below.

Investees’ summarized financial data for our equity method investments that we report using a one-quarter lag was as follows:

For the Twelve Months Ended September 30,

2025 2024 2023

(in millions) ABI Cronos ABI Cronos ABI Cronos

Net revenues $ 58,986 $ 132 $ 60,103 $ 111 $ 59,841 $ 87

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Net earnings (losses) attributable to equity investments $ 6,411 $ 36 $ 6,501 $ ( 47 ) $ 6,284 $ ( 108 )

(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,

(in millions) ABI Other Investments ABI Other Investments

(in millions) ABI Cronos ABI Cronos

Current assets $ 23,034 $ 922 $ 22,525 $ 959

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$ 10,675 $ 50 $ 10,831 $ 50

(2) Reflects a one-quarter lag.

Other Investments reflect summarized financial data of Cronos.

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Investment in 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.

At December 31, 2025, we had an approximate 8.2 % ownership interest in ABI, consisting of approximately 125 million restricted shares of ABI (“Restricted Shares”) and approximately 34 million ordinary shares of ABI.

Our Restricted Shares:

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▪ have director nomination rights with respect to ABI.

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 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 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.

Because 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, 2025, the fair value of our investment in ABI was $ 10.3 billion, which exceeded its carrying value of $ 8.3 billion by approximately 24 %.

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

At December 31, 2025, the carrying value of our investment in ABI exceeded our share of ABI’s net assets attributable to equity holders of ABI as of September 30, 2025 by approximately $ 2.0 billion.

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

2024 ABI Transaction

In the first quarter of 2024, we converted 60 million of our Restricted Shares into ordinary shares of ABI and completed the sale of a portion of our investment in ABI (“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.

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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.

Subsequently, for the year ended December 31, 2025, we recorded an additional $ 77 million increase to this valuation allowance.

For further discussion of the valuation allowance, see Note 14.

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.

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

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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, 2025, the fair value of our investment in Cronos exceeded its carrying value by $ 97 million, or approximately 31 %.

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, 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

In December 2018, we made an investment in JUUL for $ 12.8 billion and received a 35 % economic interest in JUUL through non-voting shares, which we converted at our election into voting shares in November 2020, and a security convertible into additional non-voting or voting shares, as applicable, upon settlement or exercise of certain JUUL convertible securities.

At the time of the investment, we agreed to non-competition obligations generally requiring that we participate in the e-vapor business only through JUUL.

In September 2022, we exercised our option to be released from our JUUL non-competition obligations, resulting in (i) the permanent termination of our non-competition obligations to JUUL, (ii) the loss of our JUUL board designation rights (other than the right to designate one independent director so long as our ownership continued to be at least 10 %), our preemptive rights, our consent rights and certain other rights with respect to our investment in JUUL and (iii) the conversion of our JUUL shares to single vote common stock, significantly reducing our voting power.

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 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.

Following the conversion of certain non-voting shares of JUUL into voting shares in the fourth quarter of 2020, we elected to account for our investment in JUUL under the fair value option.

As a result of our loss of certain rights due to our exercise of our option to be released from our JUUL non-competition obligations in the third quarter of 2022, we determined that we no longer had the ability to exercise significant influence over the operating and financial policies of JUUL.

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 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.

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

(in millions) Investment Balance

Balance at December 31, 2022 $ 250

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

Balance at December 31, 2023 $ —

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 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.

The primary drivers of this conclusion were (i) our rights to the JUUL Heated Tobacco IP being non-exclusive, (ii) there being no product or technology transferred to us associated with the JUUL Heated Tobacco IP and (iii) there being no connection between the JUUL Heated Tobacco IP and our current product development plans.

2022 Financial Activity

▪ For the year ended December 31, 2022, we recorded non-cash, pre-tax unrealized losses of $ 1,455 million as a result of changes in the estimated fair value of our former investment in JUUL.

The decrease in the estimated fair value was primarily driven by (i) a decrease in the likelihood of a favorable outcome from the FDA for JUUL’s products that were marketed in the United States, which had received marketing denial orders (“MDOs”) in June 2022 and were under additional administrative review at the time of our subsequent quarterly valuations, (ii) a decrease in the likelihood of JUUL maintaining adequate liquidity to fund projected cash needs, which could have resulted in JUUL seeking protection under bankruptcy or other insolvency laws, (iii) projections of higher operating expenses resulting in lower long-term operating margins, (iv) projections of lower JUUL revenues in the United States over time due to lower JUUL volume assumptions and (v) an increase in the discount rate due to changes in market factors, partially offset by the effect of passage of time on the projected cash flows.

Former Investment in JUUL Labs, Inc.

As of December 31, 2022, we had an investment in JUUL of $ 250 million, representing a 35 % economic interest in JUUL.

We accounted for this investment as an investment in an equity security as we determined that we had no ability to exercise significant influence over the operating and financial policies of JUUL as a result of our loss of certain rights due to our exercise of our option to be released from our JUUL non-competition obligations in the third quarter of 2022.

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

We used an income approach to estimate the fair value of our former investment in JUUL.

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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, 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.

Additionally, in determining these significant assumptions, we made judgments regarding the (i) likelihood of certain potential regulatory actions impacting the e-vapor category and specifically whether the FDA would ultimately authorize JUUL’s products, which had received the MDOs in June 2022 and were under additional administrative review at the time of our subsequent quarterly valuations;

(ii) likelihood of JUUL maintaining adequate liquidity to fund projected cash needs, the absence of which could have resulted in JUUL seeking protection under bankruptcy or other insolvency laws;

(iii) risk created by the number and types of legal cases pending against JUUL;

(iv) expectations for the future state of the e-vapor category, including competitive dynamics;

and (v) timing of international expansion plans.

Due to these uncertainties, our future cash flow projections of JUUL were based on a range of scenarios that considered certain potential regulatory, liquidity and market outcomes.

In March 2023, we entered into a stock purchase agreement with JUUL (“Stock Transfer Agreement”) pursuant to 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 (“JUUL Heated Tobacco IP”).

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 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.

Financial Instruments

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At December 31, 2025 and 2024, we had no outstanding foreign currency contracts.

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

Under these contracts, we are exposed to potential losses in the event of non-performance by these counterparties.

We manage our credit risk by entering into transactions with counterparties that have investment grade credit ratings, limiting the amount of exposure we have with each counterparty and monitoring the financial condition of each counterparty.

The counterparty agreements contain provisions that require us to maintain an investment grade credit rating.

In the event our credit rating falls below investment grade, counterparties to our foreign currency contracts can require us to post collateral.

The aggregate carrying value and fair value of our total long-term debt were as follows at December 31:

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Fair value 2,619 3,059

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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.

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

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

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

We recognized pre-tax (gains) losses of our net investment hedges of $ 393 million, $( 205 ) million and $ 108 million for the years ended December 31, 2025, 2024 and 2023, respectively.

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.

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Other Comprehensive Earnings/Losses.

Short-Term Borrowings

Contingent Payments

The total consideration for the NJOY Transaction included the fair value of up to $ 500 million in additional cash payments contingent on receipt of FDA authorizations with respect to NJOY ACE menthol ($ 250 million), blueberry ($ 125 million) and watermelon ($ 125 million) pod products.

For additional discussion of the NJOY Transaction, see Note 3.

Acquisition of NJOY .

The changes in the liability associated with contingent payments were as follows:

For the Years Ended December 31,

(in millions) 2025 2024

Balance at January 1 $ 20 $ 130

Change in the fair value of contingent payments (1)

25 (2) 140 (3)

Payments — ( 250 ) (4)

Balance at December 31 $ 45 $ 20

(1) We recorded these pre-tax charges in marketing, administration and research costs in our consolidated statements of earnings.

(2) Relates to NJOY ACE blueberry and watermelon pod products.

(3) Relates to NJOY ACE menthol pod products.

(4) Payments made following FDA authorization of NJOY ACE menthol pod products.

We recognized the liability for contingent payments related to the NJOY Transaction at its estimated fair value as of the acquisition date.

We recognize subsequent changes to the fair value in earnings until the contingency is resolved.

In determining the estimated fair value, we made certain judgments, estimates and assumptions, the most significant of which was the likelihood of certain potential regulatory outcomes.

We classified the liability for contingent payments in Level 3 of the fair value hierarchy.

Short-Term Borrowings and Borrowing Arrangements

At December 31, 2025 and 2024, we had no short-term borrowings.

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

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

In July 2025, we entered into an agreement to extend the expiration of our $ 3.0 billion senior unsecured 5-year revolving credit agreement from October 24, 2028 to October 24, 2029 (as extended, “Credit Agreement”).

All other terms and conditions remain in full force and effect.

The Credit Agreement includes an option, subject to certain conditions, for us to extend the term for an additional one-year period.

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

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.

At December 31, 2025 and 2024, we had availability under the 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 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, 2025, we were in compliance with our covenants in our Credit Agreement.

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(1) Weighted-average coupon interest rate of 4.7 % and 4.6 % at December 31, 2025 and 2024, respectively.

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

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(2) Weighted-average coupon interest rate of 2.7 % and 2.5 % at December 31, 2025 and 2024, respectively.

At December 31, 2025, our outstanding long-term debt consisted of the following:

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Type Face Value Interest Rate Issuance Maturity

USD notes $ 750 2.350 % May 2020 May 2025

Euro notes € 750 1.700 % February 2019 June 2025

USD notes $ 1,069 4.400 % February 2019 February 2026

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Euro notes € 1,000 2.200 % February 2019 June 2027

USD notes $ 500 4.875 % February 2025 February 2028

USD notes $ 500 6.200 % November 2023 November 2028

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USD notes $ 750 3.400 % May 2020 May 2030

USD notes $ 500 4.500 % August 2025 August 2030

Euro notes € 1,250 3.125 % February 2019 June 2031

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USD notes $ 500 6.875 % November 2023 November 2033

USD notes $ 500 5.625 % February 2025 February 2035

USD notes $ 500 5.250 % August 2025 August 2035

USD notes $ 177 9.950 % November 2008 November 2038

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At December 31, 2025 and 2024, accrued interest on long-term debt of $ 425 million and $ 389 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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In the third quarter of 2025, we issued U.S.

dollar 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 4.500 %, due 2030, interest payable semiannually beginning February 6, 2026;

▪ $ 0.5 billion at 5.250 %, due 2035, interest payable semiannually beginning February 6, 2026.

In the first quarter of 2025, we issued U.S.

dollar denominated senior unsecured notes in the aggregate principal amount of $ 1.0 billion.

The net proceeds from the notes were used for general corporate purposes, which included repayment of certain of our notes in the second quarter of 2025 as discussed below.

The notes contain the following terms:

▪ $ 0.5 billion at 4.875 %, due 2028, interest payable semiannually beginning August 4, 2025;

▪ $ 0.5 billion at 5.625 %, due 2035, interest payable semiannually beginning August 6, 2025.

Similar to our other notes, the notes issued in 2025 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.

In the second quarter of 2025, we repaid in full at maturity our 2.350 % and 1.700 % senior unsecured notes in the aggregate principal amounts of $ 750 million and € 750 million ($ 857 million), respectively.

For a discussion of the fair value of our long-term debt and the designation of our Euro denominated senior unsecured notes as a net investment hedge of our investment in ABI, see Note 7.

Financial Instruments .

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.

▪ PM USA Guarantees:

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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”).

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

In the first half of 2024, we paid the Repurchase Price and received 53.9 million shares of our common stock.

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.

For further information on the ABI Transaction, see Note 6.

Investments in Equity Securities.

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.

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

We completed the January 2024 share repurchase program in December 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.

In January 2025, our Board authorized a new $ 1.0 billion share repurchase program that it expanded to $ 2.0 billion in October 2025 (as expanded, “January 2025 share repurchase program”).

At December 31, 2025, we had $ 1.0 billion remaining under this program, which expires on December 31, 2026.

Share repurchases depend on 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 ended December 31:

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(in millions, except per share data) 2025 2024 (1)

2023 2022 (2)

Total number of shares repurchased 17.1 73.5 22.7

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(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 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.

In 2025, our Board adopted, and shareholders approved, the 2025 Performance Incentive Plan (“2025 Plan”).

The 2025 Plan succeeded the 2020 Performance Incentive Plan, under which no new awards were permitted to be made after May 31, 2025.

Under the 2025 Plan, 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.

Awards granted under the 2025 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 2025 Plan through the date of our 2035 Annual Meeting of Shareholders.

In addition, in 2025, our Board adopted, and shareholders approved, the 2025 Stock Compensation Plan for Non-Employee Directors (“Directors Plan”).

The Directors Plan succeeded the 2015 Stock Compensation Plan for Non-Employee Directors, under which no new awards were permitted after the awards made immediately following our 2025 Annual Meeting of Shareholders.

Under the Directors Plan, we may grant up to one million shares of common stock to non-employee members of the Board through the date of our 2035 Annual Meeting of Shareholders.

At December 31, 2025, we had 24,827,825 and 1,000,000 shares available to be granted under the 2025 Plan and the Directors Plan, respectively.

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RSUs generally vest three years after the grant date.

We amortize to expense ratably over the restriction period, which is generally three years , the fair value of the RSUs at the date of grant, net of estimated forfeitures.

We amortize to expense ratably over the restriction period, which is generally three years , the fair value of RSUs at the date of grant, net of estimated forfeitures.

We recorded pre-tax compensation expense related to RSUs for the years ended December 31, 2025, 2024 and 2023 of $ 51 million, $ 50 million and $ 47 million, respectively.

We recorded a deferred tax benefit related to this compensation expense of $ 12 million, $ 12 million and $ 10 million for the years ended December 31, 2024, 2023 and 2022, respectively.

We recorded a deferred tax benefit related to this compensation expense of $ 12 million for each of the years ended December 31, 2025, 2024 and 2023.

The unamortized compensation expense related to RSUs was $ 89 million at December 31, 2025, which we expect to be recognized over a weighted-average period of approximately two years .

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Balance at December 31, 2025 3,933,158 $ 48.14

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The weighted-average grant date fair value of RSUs granted during the years ended December 31, 2025, 2024 and 2023 was $ 64 million, $ 67 million and $ 56 million, respectively, or $ 55.95 , $ 43.29 and $ 46.38 per RSU, respectively.

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We granted an aggregate of 257,920 , 290,980 and 255,601 of PSUs during 2025, 2024 and 2023, respectively.

The payout of the PSUs is based on the extent to which we achieve certain performance measures over the three-year performance period.

Performance measures consist of our adjusted diluted earnings per share compounded annual growth rate and a cash conversion measure.

Additionally, the payout resulting from the performance measures is then adjusted up or down by a total shareholder return (“TSR”) performance multiplier, which depends on our relative TSR to a predetermined peer group.

PSUs are subject to forfeiture if certain employment conditions are not met.

The payout of the PSUs is based on the extent to which we achieve certain performance measures over the three-year performance period and are subject to forfeiture if certain employment conditions are not met.

At December 31, 2025, we had 767,341 PSUs outstanding, with a weighted-average grant date fair value of $ 49.39 per PSU.

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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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(in millions) Benefit Plans ABI Currency

and Other Accumulated

Adjustments and Other Accumulated

Comprehensive

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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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Deferred income taxes

( 36 ) ( 1 ) — ( 37 )

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

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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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( 33 ) 251 (3) 39

Currency Translation Adjustments and Other — — ( 1 )

Pre-tax amounts reclassified from accumulated other comprehensive losses to net earnings $ ( 24 ) $ 244 $ 13

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Financial Instruments.

In August 2022, the U.S.

Government enacted legislation commonly referred to as the Inflation Reduction Act that became effective January 1, 2023.

The main provisions of the Inflation Reduction Act that impact us are:

(i) a 15% corporate alternative minimum tax (“Corporate AMT”) and (ii) a 1% excise tax on share repurchases, which is recorded in equity on our consolidated statements of stockholders’ equity (deficit).

We are considered an “applicable corporation” for purposes of Corporate AMT.

We expect our regular federal income tax liability will generally exceed our Corporate AMT liability;

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

The One Big Beautiful Bill Act (“OBBB”), which was signed into law in July 2025, included various tax law changes, including the restoration of favorable tax treatment for certain business-related provisions and modifications to the international tax law framework.

The OBBB has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027.

These provisions and modifications have not had a material impact on our consolidated financial statements.

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

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federal income tax statute of limitations remains open for the year 2017 and forward, with years 2017 through 2023 currently under examination by the Internal Revenue Service (“IRS”) as part of an audit conducted in the ordinary course of business.

State statutes of limitations will also generally remain open for the year 2017 and forward.

State statutes of limitations generally remain open for the year 2017 and forward.

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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The amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate at December 31, 2025, was $ 4 million, along with $ 515 million affecting deferred taxes.

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.

The difference between the amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate at December 31, 2025 and December 31, 2024, is primarily related to certain cross-border taxes included in the tax reserve related to the downward attribution rules, discussed below.

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.

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.

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.

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, resulting in a reduction of $ 1,343 million in unrecognized tax benefits in 2024.

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.

In September 2025, the U.S.

District Court for the Eastern District of Virginia ruled in favor of the IRS and denied our refund claim for the 2017 tax year, based on the Tax Cuts and Jobs Act of 2017’s removal of downward attribution rules, which the IRS invoked to attribute income from certain of ABI’s foreign subsidiaries to Altria.

We intend to vigorously contest the ruling by pursuing all available appellate remedies.

This ruling also has a potential impact for our 2018 through 2025 tax years.

Following this ruling, we reevaluated our position and concluded that it is no longer more likely than not that we will prevail at the conclusion of the appellate process.

Consequently, we reversed a receivable of $ 45 million for the 2017 tax year and recorded a full reserve for this uncertain tax position of $ 348 million for the 2018 through 2025 tax years.

Additionally, we reduced a deferred tax liability by $ 498 million due to the resulting increase in the tax basis of our investment in ABI, partially offset by a $ 77 million increase to a valuation allowance associated with the indirect effect on unrealized capital losses due to the decrease of a previously anticipated capital gain on the ABI Transaction.

As a result of the foregoing, we recognized a net tax benefit of $ 28 million for the year ended December 31, 2025 in our consolidated statement of earnings related to a favorable rate differential associated with certain cross-border taxes included in the tax reserve.

Effective January 1, 2026, the OBBB reinstates this downward attribution rule, which will limit the impact of this ruling to the 2017 through 2025 tax years.

At December 31, 2025, 2024 and 2023, the amount of accrued interest and penalties on our consolidated balance sheets was $ 83 million, $ 18 million and $ 36 million, respectively.

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Resolution of the related tax positions with the relevant tax authorities may take many years to complete, and such timing is not entirely within our control.

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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(dollars in millions) $ % $ % $ %

Provision computed at U.S.

federal statutory rate $ 1,972 21.0 % $ 2,868 21.0 % $ 2,295 21.0 %

Increase (decrease) resulting from:

State and local income taxes, net of federal tax benefit 557 4.1 463 4.2 435 5.9

Tax basis in foreign investments ( 11 ) ( 0.1 ) 34 0.3 11 0.1

Uncertain tax positions ( 15 ) ( 0.1 ) 8 0.1 — —

Investment in ABI ( 35 ) ( 0.3 ) ( 37 ) ( 0.3 ) ( 24 ) ( 0.3 )

Investment in JUUL — — 53 0.5 306 4.1

Investment in Cronos 3 — 11 0.1 30 0.4

Valuation allowance releases ( 939 ) ( 6.9 ) — — ( 664 ) ( 9.0 )

Domestic state and local taxes, net of federal effect (2)

278 3.0 557 4.1 463 4.2

Foreign tax effects ( 10 ) ( 0.1 ) 3 — 11 0.1

Cross-border tax laws 3 — ( 46 ) ( 0.4 ) ( 2 ) —

Tax credits ( 39 ) ( 0.4 ) ( 31 ) ( 0.2 ) ( 25 ) ( 0.2 )

Changes in valuation allowance 91 1.0 ( 939 ) ( 6.9 ) 57 0.5

Nontaxable or nondeductible items

Nondeductible goodwill 243 2.6 — — — —

Other 8 — ( 3 ) — ( 9 ) ( 0.1 )

Worldwide changes in unrecognized tax benefits ( 104 ) ( 1.1 ) ( 15 ) ( 0.1 ) 8 0.1

Effective tax rate $ 2,442 26.0 % $ 2,394 17.5 % $ 2,798 25.6 %

(1) As discussed in Note 1.

Background and Basis of Presentation , we retrospectively adopted ASU No.

As a result, 2024 and 2023 amounts are now presented in categories in accordance with ASU No.

(2) State taxes in Pennsylvania, Virginia, New Jersey, California, Michigan, Tennessee, Illinois, Indiana and Kentucky make up greater than 50% of the total tax effect in this category for 2025.

State taxes in Pennsylvania, California, Virginia, New Jersey, Illinois, Kentucky, Michigan, Alabama and Georgia make up greater than 50% of the total tax effect in this category for 2024.

State taxes in Pennsylvania, California, Illinois, New Jersey, Virginia, Kentucky, Michigan, Alabama and Florida make up greater than 50% of the total tax effect in this category for 2023.

The tax provision in 2025 included state tax expense, net of federal benefit, of $ 278 million and tax expense of $ 243 million for the non-deductible impairment of the e-vapor reporting unit goodwill, partially offset by tax benefits of $ 104 million related to tax reserves including a favorable rate differential associated with certain cross-border taxes relevant to our investment in ABI.

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.

Cash taxes paid, net of refunds, consisted of the following:

For the Years Ended December 31,

(in millions) 2025 2024 2023

Federal $ 1,340 $ 1,161 $ 1,219

State and local 354 547 654

Outside United States 1 1 1

Total $ 1,695 $ 1,709 $ 1,874

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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Investment in Cronos 410 404

IQOS deferred gain

Research and development costs 14 112

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Net deferred income tax liabilities $ ( 3,359 ) $ ( 3,744 )

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At December 31, 2025, we had JUUL-related gross capital loss carryforwards of $ 1.4 billion available to offset capital gains through 2028.

We had estimated gross federal, state and foreign tax net operating losses (“NOLs”) of $ 106 million, $ 1,212 million and $ 38 million, respectively.

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

The federal NOLs and the foreign NOLs have indefinite carryforward periods.

A majority of the state NOLs will expire between 2039 through 2043 or 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 $ 6.1 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 $ 1.4 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.

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

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

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

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

As has occurred in prior periods, there is a potential that sufficient positive evidence may be available in future periods to cause us to reduce or eliminate the valuation allowance on certain deferred tax assets.

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

The additions to valuation allowances during 2025 were due primarily to the indirect effects of tax reserves, as discussed above, on our unrealized capital losses.

The cumulative valuation allowance at December 31, 2025 was primarily attributable to deferred tax assets recorded in connection with our investment in Cronos ($ 405 million) and our JUUL-related capital loss carryforwards ($ 290 million).

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

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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 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.

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).

For a discussion regarding our former investment in JUUL and current investments in ABI and Cronos, see Note 6.

Investments in Equity Securities .

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Segment Reporting

At December 31, 2025, 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 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.

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

and (iii) e-vapor products, consisting of our NJOY business.

For the year ended December 31, 2025, we concluded that our e-vapor products operating segment met the quantitative threshold for presentation as a reportable segment in accordance with Accounting Standards Codification 280, Segment Reporting , as a result of the non-cash impairments of e-vapor reporting unit goodwill and related definite-lived intangible assets recorded in 2025.

Goodwill and Other Intangible Assets, net .

As a result, we presented e-vapor products as a reportable segment (previously in our all other category) and recast segment information for comparative periods.

Our all other category included (i) Horizon;

(ii) Helix International;

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

Altria’s Chief Executive Officer is our chief operating decision maker (“CODM”).

Our measure of segment profitability is segment operating companies income (loss) (“OCI”), which 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 to our segments 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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Oral tobacco products 2,802 2,776 2,667

E-vapor products ( 13 ) 40 62

All other 5 ( 2 ) ( 2 )

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Oral tobacco products 1,828 1,449 1,722

E-vapor products ( 2,297 ) ( 171 ) ( 16 )

All other ( 229 ) ( 243 ) ( 58 )

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Earnings before income taxes $ 9,389 $ 13,658 $ 10,928

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

Smokeable products segment OCI consisted of the following, including expenses under the significant expense principle in accordance with GAAP:

For the Years Ended December 31,

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(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.

For the oral tobacco products segment, we did not identify any expenses under the significant expense principle in accordance with GAAP.

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

Total oral tobacco products other segment items were $ 974 million, $ 1,327 million and $ 945 million for the years ended December 31, 2025, 2024 and 2023, 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.

For the e-vapor products segment, we did not identify any expenses under the significant expense principle in accordance with GAAP.

Other segment items for our e-vapor products segment include manufacturing, goodwill impairment, asset impairment and marketing, administration and research costs.

Total e-vapor products other segment items were $ 2,284 million, $ 211 million and $ 78 million for the years ended December 31, 2025, 2024 and 2023, respectively.

The CODM reviews total e-vapor 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 $ 19,248 million, $ 20,066 million and $ 20,665 million for the years ended December 31, 2025, 2024 and 2023, respectively, related to cigarettes and net revenues of $ 1,237 million, $ 1,138 million and $ 1,091 million for the years ended December 31, 2025, 2024 and 2023, respectively, related to cigars.

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For the years ended December 31, 2025, 2024 and 2023, we had one customer that accounted for approximately 23 %, 22 % and 25 % of our consolidated net revenues, respectively, and one customer that accounted for approximately 19 %, 20 % 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.

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

No other customer accounted for more than 10% of our consolidated net revenues for the years ended December 31, 2025, 2024 and 2023.

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Oral tobacco products 41 42 37

E-vapor products — 3 2

General corporate and other 35 35 32

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Oral tobacco products 75 39 59

E-vapor products 1 — —

General corporate and other 33 49 60

Total capital expenditures $ 216 $ 142 $ 196

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

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Interest and other debt expense, net

2 ( 21 ) ( 5 )

Total $ ( 20 ) $ ( 27 ) $ ( 50 )

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.

We recorded the amounts shown in the table 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”).

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Contingencies .

▪ Acquisition-Related Items:

We recorded pre-tax charges of $ 23 million and $ 44 million in net revenues and cost of sales, respectively, related to the ITC exclusion order and cease-and-desist orders prohibiting the importation and sale of NJOY ACE in the United States in our e-vapor products segment for the year ended December 31, 2025.

▪ 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.

We recorded pre-tax charges of $ 2,128 million, primarily due to non-cash impairments of the e-vapor reporting unit goodwill and definite-lived intangible assets in our e-vapor products segment for the year ended December 31, 2025.

We recorded exit and implementation costs of $ 56 million and $ 68 million related to the Initiative for the years ended December 31, 2025 and 2024, respectively.

For a breakdown of these costs by segment, see Note 5.

Asset Impairment, Exit and Implementation Costs .

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.

For further discussion of the impairments recorded in our e-vapor products segment and our oral tobacco products segment, see Note 4.

Goodwill and Other Intangible Assets, net.

▪ Tobacco and Health and Certain Other Litigation Items:

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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.

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

For the years ended December 31, 2025 and 2024, using this approach, we recorded the majority of our pre-tax R&D expense of $ 195 million and $ 208 million, respectively, in our all other category, which now includes other business activities related to R&D expense for certain new product platforms and technologies.

For the year ended December 31, 2023, the majority of our pre-tax R&D expense of $ 220 million was recorded in our smokeable products segment.

Benefit Plans

Our subsidiaries sponsor noncontributory defined benefit pension plans covering certain employees of Altria and our subsidiaries.

Employees hired on or after a date specific to their employee group are not eligible to participate in these noncontributory defined benefit pension plans but are instead eligible to participate in a defined contribution plan with enhanced benefits.

Our subsidiaries sponsor noncontributory defined benefit pension plans covering certain employees.

Employees hired on or after a specified date are instead eligible to participate in a defined contribution plan with enhanced benefits.

We also provide postretirement health care and other benefits to certain retired employees.

We measure the plan assets and benefit obligations of our pension plans and postretirement plans at December 31 of each year.

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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We measure the plan assets and benefit obligations of our pension and postretirement plans at December 31 of each year.

▪ Obligations and Funded Status:

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Benefit obligation at beginning of year (1)

$ 6,082 $ 6,428 $ 1,078 $ 1,246

Interest cost

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Benefit obligation at end of year (1)

6,200 6,082 1,076 1,078

Change in plan assets:

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$ 550 $ 463 $ ( 1,006 ) $ ( 994 )

The table above presents the projected benefit obligation for our pension plans.

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.

(1) We measure our pension plans using the projected benefit obligation and our postretirement plans using the accumulated postretirement benefit obligation.

Actuarial losses for our pension and postretirement plans for the year ended December 31, 2025 were due primarily to a lower discount rate.

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 effective January 2025, and other items, partially offset by actuarial losses attributable to a lower discount rate.

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

The accumulated benefit obligation, which represents benefits earned to date, for all of our pension plans in aggregate was $ 6.1 billion and $ 5.9 billion at December 31, 2025 and 2024, respectively.

For pension plans with accumulated benefit obligations in excess of plan assets at December 31, 2025 and 2024, our accumulated benefit obligation was $ 159 million and $ 140 million, respectively.

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Additionally, at December 31, 2025 and 2024, there were no plan assets for these plans.

At December 31, 2024 and 2023, our accumulated postretirement benefit obligations were in excess of plan assets for all postretirement plans.

We used the following assumptions to determine our pension and postretirement benefit obligations at December 31:

For all postretirement plans, our accumulated postretirement benefit obligations were in excess of plan assets at December 31, 2025 and 2024.

We used the following assumptions to determine our benefit obligations at December 31:

Pension Postretirement

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

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We based 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 benefit obligations.

▪ Components of Net Periodic Benefit Cost (Income):

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Net periodic benefit cost (income) $ ( 20 ) $ ( 70 ) $ ( 103 ) $ 9 $ 24 $ 30

The following assumptions were used to determine our net periodic benefit cost (income) for the years ended December 31:

We used the following assumptions to determine our net periodic benefit cost (income) for the years ended December 31:

Pension Postretirement

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— — — 6.3 6.5 6.5

▪ Defined Contribution Plans:

▪ Defined Contribution Plan Expense:

We sponsor tax-qualified defined contribution plans covering certain salaried and hourly (non-union and union) employees.

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▪ Pension and Postretirement Plan Assets:

In managing our pension assets, we implement a liability-driven investment framework that aligns plan assets with liabilities.

The current equity/fixed income target allocation of 20 %/ 80 % is designed to balance pension liability hedging and asset growth in order to maintain our plan’s funded status and cover incremental service accruals and interest cost.

Liability hedging is achieved through investing in rate-sensitive fixed income securities, primarily corporate bonds and U.S.

Treasuries, while growth assets are comprised of publicly traded equity securities.

We managed our pension plan assets using a liability-driven investment framework that aligns plan assets with liabilities.

This strategy is designed to balance pension liability hedging and asset growth in order to maintain our plan’s funded status and cover incremental service accruals and interest cost.

Liability hedging is achieved through investing in rate-sensitive fixed income securities, while growth assets are comprised of publicly traded equity securities.

The current equity/fixed income target allocation is 10 %/ 90 %.

Our investment strategy for our postretirement plan assets is intended to maximize our total asset return based on the expectation that equity securities will outperform debt securities over the long term and reflects the maturity structure of our benefit obligation.

The equity/fixed income target allocation for postretirement plan assets is 55 %/ 45 %.

We believe that we implement these investment strategies in a prudent and risk-controlled manner, consistent with the fiduciary requirements of the Employee Retirement Income Security Act of 1974, by investing retirement plan assets in a well-diversified mix of equities, fixed income and other securities.

The current equity/fixed income target allocation is 55 %/ 45 %.

The actual composition of our plan assets at December 31, 2025 was broadly characterized with the following allocation:

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Corporate bonds

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

(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.

Substantially all pension and all postretirement assets can be used to make monthly benefit payments.

We implement our investment strategy for our pension and postretirement plan assets by investing in long-duration fixed income securities that primarily include U.S.

Treasury and foreign government securities 10 % 5 %

All other investments 8 % 10 %

We implement our investment strategy for our plan assets by investing in long-duration fixed income securities that primarily include U.S.

corporate bonds of companies from diversified industries and U.S.

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

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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.

For pension plan assets, our allocation to below investment grade securities represented approximately 8 % of the fixed income holdings or approximately 7 % of our total plan assets at December 31, 2024.

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

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.

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.

Our expected rate of return on pension and postretirement plan assets is determined by our plan assets’ historical long-term investment performance, current asset allocation and estimates of future long-term returns by asset class.

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.

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

Our risk management practices for our 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.

Our expected rate of return on our plan assets is determined by our plan assets’ historical long-term investment performance, current asset allocation and estimates of future long-term returns by asset class.

The forward-looking estimates are consistent with the long-term historical averages exhibited by returns on equity and fixed income securities.

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Fair value of plan assets, net $ 6,750 $ 6,545

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

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Level 3 holdings and transactions were immaterial relative to total plan assets at December 31, 2025 and 2024.

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

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▪ Asset Backed Securities :

Asset backed securities are fixed income securities such as mortgage backed securities and auto loans that are collateralized by pools of underlying assets that are unable to be sold individually.

Asset backed securities are fixed income securities such as mortgage backed securities, syndicated bank loans and auto loans that are collateralized by pools of underlying assets.

They are valued at a price that is based on a compilation of primarily observable market information or a broker quote in a non-active over-the-counter market.

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We make contributions to our pension plans to the extent that the contributions are tax deductible and pay benefits that relate to plans for salaried employees that cannot be funded under IRS regulations.

Currently, we anticipate making employer contributions to our pension and postretirement plans of up to approximately $ 30 million for each i n 2025.

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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Currently, we anticipate making employer contributions in 2026 to our pension and postretirement plans of up to approximately $ 60 million and $ 100 million, respectively.

However, the foregoing estimates of 2026 contributions 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.

Estimated future benefit payments at December 31, 2025 were as follows:

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Total movements in other comprehensive earnings (losses) $ 38 $ ( 54 ) $ ( 7 ) $ ( 23 )

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The movements in other comprehensive earnings (losses) for the year ended December 31, 2024 were as follows:

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Interest and other debt expense, net $ 1,079 $ 1,037 $ 989

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The activity in the allowance for discounts and allowance for returned goods (1) was as follows:

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Balance at end of year $ 4 $ 49 $ 3 $ 51 $ — $ 39

(1) Primarily related to 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 products.

(2) Represents the recording of discounts and returns for which allowances were created .

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

After exhausting all appeals in those cases resulting in adverse verdicts associated with tobacco-related litigation, since October 2004, PM USA has paid judgments and settlements (including related costs and fees) totaling approximately $ 1.1 billion and interest totaling approximately $ 242 million as of December 31, 2024.

Since October 2004, PM USA has paid judgments and settlements (including related costs and fees) totaling approximately $ 1.1 billion and interest totaling approximately $ 245 million as of December 31, 2025.

These amounts include payments for Engle progeny judgments (and related costs and fees) totaling approximately $ 453 million and related interest totaling approximately $ 62 million.

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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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E-vapor Cases (2)

24 5,177 5,283

Other Tobacco-Related Cases (3)

(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.

(1) Includes as of December 31, 2025, 29 cases filed in Illinois, nine cases filed in New Mexico, 79 cases filed in Massachusetts, 15 cases filed in Oregon, eight cases filed in Hawaii, 11 cases filed in the U.S.

Virgin Islands and eight 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 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.

(2) 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.

Pending final dismissal of these cases, as of December 31, 2025, the remaining cases include 11 individual cases that opted out of the settlement, four 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.

(3) See Certain Other Tobacco-Related Litigation - “Lights/Ultra Lights” Cases and Other Smoking and Health Class Actions below.

International Tobacco-Related Cases:

As of January 27, 2025, (i) Altria is named as a defendant in three e-vapor class action lawsuits in Canada;

As of January 26, 2026, (i) Altria is named as a defendant in four e-vapor class action lawsuits in Canada;

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

and (iii) PM USA and Altria are named as defendants in seven smoking and health class actions filed in various Canadian provinces.

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

See Smoking and Health Litigation - Other Smoking and Health Class Actions below for a discussion of the smoking and health class actions filed in various Canadian Provinces.

Also, see Guarantees and Other Similar Matters below for a discussion of the Distribution Agreement (defined below) between Altria and PMI that provides for indemnities for certain liabilities concerning tobacco products.

Tobacco-Related Cases Set for Trial:

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.

As of January 26, 2026, two Engle progeny cases, one individual smoking and health cases and no e-vapor cases are set for trial through March 31, 2026.

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 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 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.

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.

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, 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.

In September 2023, the court denied PM USA’s motion for a new trial and partially granted PM USA’s motion for remittitur, reducing the punitive damages award to $ 56 million.

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

Federal Government’s Lawsuit :

See Health Care Cost Recovery Litigation - Federal Government’s Lawsuit below for a discussion of the verdict and post-trial developments in the United States of America health care cost recovery case.

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

The first chart lists cases that are pending as of January 26, 2026 where PM USA has determined an unfavorable outcome is not probable and the amount of loss cannot be reasonably estimated, and the second chart lists cases that have concluded in the past 12 months where PM USA paid a final judgment.

In this Note 18.

Contingencies , references to “R.J.

Reynolds” are to R.J.

Reynolds Tobacco Company.

Unless otherwise noted for a particular case, the jury’s award for compensatory damages will not be reduced by any finding of plaintiff’s comparative fault.

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

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

Currently Pending Non-Engle Cases with Verdicts against PM USA

(rounded to nearest $ million)

Plaintiff Verdict Date Defendant(s) State Compensatory Damages (1)

Punitive Damages

(PM USA) Post-Trial Status

Petruzziello November 2025 PM USA R.J.

Reynolds MA <$ 1 million

Plaintiff has filed a motion for a new trial.

Perez-Trinidad October 2025 PM USA R.J.

Reynolds MA $ 1 million

$ 5.5 million

PM USA intends to appeal.

Amaral March 2025 PM USA R.J.

Reynolds MA $ 4 million

PM USA has filed post-trial motions challenging the verdict and, if necessary, will appeal.

Taylor April 2024 PM USA OR <$ 1 million

PM USA filed post-trial motions, which were denied, and PM USA filed a notice of appeal of the final judgment and the trial court’s denial of the post-trial motions.

Ricapor-Hall August 2023 PM USA HI $ 6 million ($ 3 million)

PM USA’s appeal and plaintiff’s cross-appeal remain pending.

In April 2025, the Hawaii Supreme Court granted plaintiff’s application to transfer the appeal to that Court from the Intermediate Court of Appeals.

Fontaine September 2022 PM USA MA $ 8 million

PM USA’s appeal remains pending.

In May 2025, the Massachusetts Supreme Judicial Court took jurisdiction over the appeal from the Appeals Court of Massachusetts.

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

Non-Engle Cases Concluded in Past 12 Months

(rounded to nearest $ million)

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

Woodley August 2023 PM USA MA $ 5 million

Engle Progeny Cases:

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

As of January 27, 2025, approximately 105 state court cases were pending against PM USA or Altria asserting individual claims by or on behalf of approximately 132 state court plaintiffs.

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

As of January 26, 2026, approximately 48 state court cases were pending against PM USA or Altria.

Each federal Engle progeny case has been resolved.

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As of January 26, 2026, 147 federal and state Engle progeny cases involving PM USA have resulted in verdicts.

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

Fifty-nine 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, four of which have been reversed post-trial or on appeal and remain pending.

Fifty-nine verdicts were returned in favor of PM USA, one of which has been reversed post-trial or on appeal and remains pending.

In addition, there have been a number of mistrials, only some of which have resulted in new trials as of January 26, 2026.

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In this Note 20.

Contingencies , references to “R.J.

Reynolds” are to R.J.

Reynolds Tobacco Company.

Unless otherwise noted for a particular case, the jury’s award for compensatory damages will not be reduced by any finding of plaintiff’s comparative fault.

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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Appeals to the Third District Court of Appeal pending.

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

Appeals to the Third District Court of Appeal 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)

Appeal to the Fourth District Court of Appeal pending.

Kaplan ( McLaughlin )

July 2018 PM USA and R.J.

Reynolds Broward $ 2 million

Appeal to the Fourth District Court of Appeal pending.

Cooper ( Blackwood )

September 2015 PM USA Broward <$ 1 million

Retrial of punitive damages claim pending.

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

Engle Cases Concluded within Past 12 Months

Engle Cases Concluded in Past 12 Months

(rounded to nearest $ million)

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

Chacon October 2023 PM USA Miami-Dade $ 1 million

McCall October 2023 PM USA Broward <$ 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.

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 ).

Class certification has been denied or reversed by courts in approximately 60 smoking and health class actions involving PM USA.

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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The companies entered into these proceedings following a Canadian appellate court upholding two smoking and health class action verdicts against those companies totaling approximately CAD $ 13 billion.

In August 2025, a plan for those companies was implemented, under which those companies agreed, among other things, to pay an aggregate global settlement amount of CAD $ 32.5 billion to resolve all tobacco product-related claims and litigation in Canada.

Under the plan, Altria and PM USA have obtained releases of claims and the related litigation against them will be dismissed.

Pursuant to the indemnification obligations in the Distribution Agreement, neither Altria nor PM USA is responsible for any payments required to resolve the Canadian litigation.

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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The Nunavut Territory and Northwest Territory have passed legislation permitting similar claims, but lawsuits based on this legislation have not been filed.

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

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

As discussed above, in August 2025, a plan for those companies was implemented.

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

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In November 1998, PM USA and certain other tobacco product manufacturers entered into the Master Settlement Agreement (the “MSA”) with 46 states, the District of Columbia and certain United States territories to settle asserted and unasserted health care cost recovery and other claims.

PM USA and certain other tobacco product manufacturers had previously entered into agreements to settle similar claims brought by Mississippi, Florida, Texas and Minnesota (together with the MSA, the “State Settlement Agreements”).

PM USA and certain other tobacco product manufacturers had previously entered into agreements to settle similar claims brought by the States of Mississippi, Florida, Texas and Minnesota (together with the MSA, the “State Settlement Agreements”).

The State Settlement Agreements require that the original participating manufacturers or “OPMs” (now PM USA, R.J.

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▪ Multi-State Settlement .

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, 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.

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.

As of December 2025, a total of 39 states and territories had joined the multi-state settlement.

Pursuant to this settlement, PM USA has received $ 1.47 billion since 2014 and expects to receive annual credits applied against PM USA’s MSA payments through 2041.

▪ New York Settlement.

In 2015, PM USA entered into a separate NPM Adjustment settlement in which PM USA settled the NPM Adjustment disputes with New York in perpetuity.

PM USA has received $ 572 million pursuant to the New York settlement and expects to receive annual credits applied against the MSA payments due to New York going forward.

In 2015, PM USA entered into a separate NPM Adjustment settlement in which PM USA settled the NPM Adjustment disputes with the State of New York in perpetuity.

PM USA has received $ 646 million pursuant to the New York settlement and expects to receive annual credits applied against the MSA payments due to the State of New York going forward.

▪ Montana Settlement .

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.

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

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

As a result of this settlement, PM USA expects to receive $ 28 million in April 2026.

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

▪ Washington Settlement.

In 2025, PM USA entered into a separate NPM Adjustment settlement in which PM USA settled the NPM Adjustment disputes with the State of Washington through 2015.

As a result of this settlement, PM USA will receive $ 53 million as a credit against its MSA payment due in 2026.

In addition to the amounts recorded in the fourth quarter of 2023 discussed below in connection with the 2005 through 2007 NPM Adjustments, PM USA recorded a $ 22 million reduction in costs of sales and $ 4 million of interest expense in the fourth quarter of 2025.

Territories Settlement .

In 2025, PM USA entered into a separate NPM Adjustment settlement in which PM USA settled the NPM Adjustment disputes with American Samoa, Guam, the Commonwealth of the Northern Mariana Islands and the U.S.

Virgin Islands through 2024.

As a result of this settlement, PM USA will receive a credit in an insignificant amount applied against its April 2026 MSA payment to those territories.

Accordingly, PM USA recorded an insignificant amount as a reduction in cost of sales in the third quarter of 2025.

Continuing NPM Adjustment Disputes with States That Have Not Settled .

▪ 2004 NPM Adjustment.

The PMs and the nine states that had not settled the NPM Adjustment disputes for 2004 participated in a multi-state arbitration.

Iowa subsequently joined the multistate settlement in August 2023.

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

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

Washington, Missouri and New Mexico have challenged those determinations in their respective state courts, and several issues remain to be resolved by the state trial and appellate courts that may affect the final amount of the 2004 NPM adjustment PM USA and other PMs will receive.

The PMs and 10 states that had not settled the NPM Adjustment disputes for 2004 participated in a multi-state arbitration.

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

The State of New Mexico challenged the determination in its state court, and the trial court vacated the award.

PM USA appealed, and the New Mexico Court of Appeals reinstated the award.

The appellate court’s ruling remains subject to appeal, and the outcome of an appeal may affect the final amount of the 2004 NPM adjustment PM USA and other PMs will receive.

▪ 2005-2007 NPM Adjustments.

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 PMs and six states that had not settled the NPM Adjustment disputes are currently arbitrating certain 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.

As of January 26, 2026, the arbitration panel found the States of Maryland, Wisconsin and Ohio diligent for all three years and the State of Washington not diligent for all three years .

The State of Washington subsequently settled, as discussed above.

▪ Subsequent Years.

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In December 2019, the State of Mississippi filed a motion in Mississippi state court seeking to enforce the Mississippi State Settlement Agreement against PM USA, R.J.

Reynolds and ITG concerning the tax rates used in the annual calculation of the net operating profit adjustment payments starting in 2018.

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

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.

Reynolds and ITG concerning the tax rates used in the annual calculation of the net operating profit

adjustment payments starting in 2018.

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

Pursuant to the settlement, PM USA paid $ 7 million to the State of 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.

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

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

PM USA intends to appeal.

In March 2025, the court issued a final order in the matter, finding that PM USA owes $ 31 million to the State of Texas, plus pre- and post-judgment interest.

PM USA has appealed, and the appeal remains pending.

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.

Reynolds and ITG concerning the same tax rate issues raised by the States of 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.

In October 2025, the court issued an order as to damages, finding that PM USA owes the State of Minnesota $ 10 million plus pre- and post-judgment interest.

PM USA intends to appeal.

Federal Government’s Lawsuit:

In 1999, the U.S.

government filed a lawsuit in the U.S.

District Court for the District of Columbia against various cigarette manufacturers, including PM USA, and others, including Altria, asserting claims under three federal statutes.

The case ultimately proceeded only under the civil provisions of RICO.

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 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 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

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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 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 the 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.

The settlement applies to all of the Multidistrict Litigation except 11 individual cases that opted out of the settlement, all of the consolidated California cases except nine 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 American 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 Native American tribes settlement and paid the settlement amount in October 2024.

Neither settlement applies to four class action lawsuits pending in Canada 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.

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.

E-vapor Patent Litigation

JUUL Patent Litigation:

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.

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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 (“VMR”) filed a lawsuit against Altria and our affiliates AGDC, ALCS, NJOY Holdings and NJOY in the U.S.

In June 2023, JUUL and VMR Products LLC (“VMR”) filed a lawsuit against Altria and our affiliates AGDC, ALCS, NJOY Holdings, Inc.

(“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.

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No damages are recoverable in the proceedings before the ITC.

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 January 2025, following an initial determination by the Administrative Law Judge (“ALJ”), 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 in the United States.

The orders became effective on March 31, 2025.

We have appealed the orders to the U.S.

Court of Appeals for the Federal Circuit.

The orders will remain in effect during the pendency of the 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.

In May, June and August 2024, the PTAB denied Altria’s requests 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.

In June 2025, the PTAB issued its decision concluding that the patent it reviewed was valid.

We have appealed the PTAB’s decision to the U.S.

Court of Appeals for the Federal Circuit.

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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.

The lawsuit was stayed pending the final determination of an ITC investigation NJOY filed against JUUL in August 2023 (discussed below).

In October 2025, after the final determination of the corresponding ITC investigation, NJOY moved to lift the stay, and the court granted the motion.

JUUL subsequently moved to re-stay the case.

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.

On review, the ITC affirmed the ALJ’s initial determination that the JUUL products do not infringe the asserted patents and terminated the investigation.

In May 2025, we appealed the ITC’s final determination to the U.S.

Court of Appeals for the Federal Circuit.

Subsequently, in July 2025, we voluntarily dismissed the appeal and, in October 2025, moved to lift the stay on NJOY’s lawsuit against JUUL in the U.S.

District Court for the District of Delaware (discussed above).

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

In April 2020, RAI Strategic Holdings, Inc.

Reynolds Vapor Co., which are affiliates of R.J.

Reynolds, filed a lawsuit against Altria, PM USA, ALCS, PMI and its affiliate, Philip Morris Products S.A., in the U.S.

District Court for the Eastern District of Virginia asserting claims of patent infringement based on the sale of the IQOS System electronic device and Marlboro HeatSticks in the United States.

Plaintiffs seek various remedies, including preliminary and permanent injunctive relief, treble damages and attorneys’ fees.

Altria and PMI were previously dismissed from the lawsuit, and plaintiffs’ claims against the other defendants have been stayed.

PM USA, ALCS and Philip Morris Products S.A.

filed counterclaims against plaintiffs in the Eastern District of Virginia lawsuit alleging patent infringement by R.J.

Reynolds’ e-vapor products.

In June 2022, PM USA and ALCS reached an agreement with R.J.

Reynolds resulting in dismissal of their counterclaims.

In addition, ALCS filed a separate lawsuit against R.J.

In May 2025, the PTAB issued its decision concluding that the patents it reviewed were valid.

The deadline to appeal the PTAB’s decision has passed, and JUUL did not appeal.

In August 2025, JUUL filed an additional 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 Daily in the United States.

Plaintiff seeks various remedies, including damages and an injunction on sales of NJOY Daily and any other products NJOY may be developing or preparing for commercialization in the United States that would infringe JUUL’s patent.

Also in August 2025, JUUL filed a related action against the same defendants with the ITC.

There, JUUL also alleges patent infringement, but the remedies sought include an exclusion order that would prohibit the importation into the United States of NJOY Daily and any other products NJOY may be developing or preparing for commercialization in the United States that would infringe JUUL’s patent.

No damages are recoverable in the proceedings before the ITC.

A hearing before the ALJ is scheduled for April 2026, and we expect an initial determination from the ALJ in September 2026, subject to the ALJ’s ability to grant herself an extension.

The ALJ’s recommendation will be reviewed by the ITC, and we expect the ITC’s final determination in January 2027, subject to the ITC’s right to grant itself an extension.

In November 2025, Altria, AGDC, ALCS, NJOY Holdings and NJOY sued the ITC and the ALJ in the U.S.

District Court for the Eastern District of Virginia, seeking to enjoin the ITC and ALJ from adjudicating JUUL’s action.

The lawsuit asserts that Altria and our affiliates are entitled to have JUUL’s claims heard in a federal court and be tried to a jury, and that the ALJ is unconstitutionally appointed and shielded from removal by the President.

Altria and our affiliates have moved for summary judgment and a preliminary injunction.

Also in November 2025, NJOY Holdings and NJOY filed a petition with PTAB challenging the validity of the patent underlying JUUL’s August 2025 actions.

In September 2025, NJOY filed an additional complaint against JUUL in the U.S.

Also in September 2025, NJOY, ALCS, and AGDC filed a related action against JUUL with the ITC alleging patent infringement and seeking a ban on the importation and sale of the same JUUL products in the United States.

A hearing before the ALJ is scheduled for September 2026, and we expect an initial determination from the ALJ in December 2026, subject to the ALJ’s ability to grant himself an extension.

The ALJ’s recommendation will be reviewed by the ITC, and we expect the ITC’s final determination in April 2027, subject to the ITC’s right to grant itself an extension.

Reynolds Patent Litigation:

ALCS filed a lawsuit against R.J.

Reynolds in the U.S.

District Court for the Middle District of North Carolina also alleging patent infringement by R.J.

District Court for the Middle District of North Carolina alleging patent infringement by R.J.

Reynolds’ e-vapor products.

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

In August 2025, R.J.

Reynolds petitioned the U.S.

Supreme Court to review the federal appellate court’s affirmance of the federal district court’s judgment.

In October 2025, the U.S.

Supreme Court denied R.J.

Reynolds’ petition.

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.

Reynolds obtained a sublicense 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.

filed an additional unrelated patent infringement case in the U.S.

District Court for the Northern District of Georgia against PM USA and Philip Morris Products S.A.

seeking damages and equitable relief.

In February 2021, defendants filed a motion to dismiss the lawsuit, which the court granted in July 2021.

In December 2021, the U.S.

District Court denied plaintiff’s motion to amend the complaint and plaintiff appealed this ruling to the U.S.

Court of Appeals for the Federal Circuit, which reversed the district court’s decision and remanded for further proceedings.

On remand, the U.S.

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.

Reynolds obtained the sublicense.

The district court has set an estimated timeframe to hold an evidentiary hearing for February or March 2026.

Any gains related to this lawsuit remain

subject to these district court proceedings.

Accordingly, they have not yet been determined to be realized or realizable in accordance with GAAP and have not been recognized in our consolidated financial statements.

Antitrust Litigation

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 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.

As of January 26, 2026, 17 putative class action lawsuits have been filed against Altria and JUUL in the U.S.

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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, 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.

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 and consumer protection laws by restraining trade and/or substantially lessening competition in the U.S.

closed-system electronic cigarette market.

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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.

In April 2025, plaintiffs voluntarily dismissed all monopolization claims and all claims against the Altria defendants under California’s Unfair Competition Law.

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

Federal and State Shareholder Derivative Lawsuits

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The case is currently inactive.

UST Litigation :

UST and/or its tobacco subsidiaries have been named in a number of individual tobacco and health lawsuits over time.

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.

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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.

As of January 27, 2025, there is no such case pending against UST and/or its tobacco subsidiaries.

Environmental Regulation

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

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

In the opinion of our management, however, compliance with environmental laws and regulations, including the

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

Guarantees and Other Similar Matters

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

At 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.

At December 31, 2025, 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.

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, 2025 as the fair value of this indemnification is insignificant.

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.

For further discussion of the supplier financing program, see Note 5.

Supplier Financing .

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

For further discussion of our supplier financing program, see Note 2.

Summary of Significant Accounting Policies - Supplier Financing.

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.

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Report of Independent Registered Public Accounting Firm

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We have audited the accompanying consolidated balance sheets of Altria Group, Inc.

and its subsidiaries (the “Company”) as of December 31, 2024 and 2023, and the related consolidated statements of earnings, comprehensive earnings, stockholders’ equity (deficit) and cash flows for each of the three years in the period ended December 31, 2024, including the related notes (collectively referred to as the “consolidated financial statements”).

and its subsidiaries (the “Company”) as of December 31, 2025 and 2024, and the related consolidated statements of earnings, of comprehensive earnings, of stockholders’ equity (deficit) and of cash flows for each of the three years in the period ended December 31, 2025, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

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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.

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 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, 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.

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;

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

Skoal Trademark Impairment Assessment

As described in Notes 2 and 4 to the consolidated financial statements, the Company’s indefinite-lived intangible assets carrying value was $11,089 million as of December 31, 2025, and the balance associated with the Skoal trademark was approximately $3,600 million.

Management conducts an annual review of 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 management to perform an interim review.

If the carrying value of an indefinite-lived intangible asset exceeds its fair value, management considers the intangible asset impaired and reduces the carrying value to fair value in the period identified.

Management used an income approach to estimate the fair value of the Skoal trademark, discounting expected future cash flows at a rate of return reflecting the risk-free rate for the use of those funds, the expected rate of inflation and risks associated with realizing expected future cash flows.

In determining the estimated fair value of the Skoal trademark, management made various judgments, estimates and assumptions, the most significant of which were volume, price, revenue, income, operating margins, perpetual growth rates, discount rates and scenario weightings, as applicable.

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 and the 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 forming our overall opinion on the consolidated financial statements.

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 included testing the effectiveness of controls relating to management’s indefinite-lived intangible asset impairment assessment, including controls over the valuation 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;

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(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 rates, and the discount rates.

and (iv) evaluating the reasonableness of the significant assumptions used by management related to revenue and the discount rate.

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 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) whether the assumption was 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 income approach and (ii) the reasonableness of the discount rate assumption.

Goodwill Impairment Assessments - E-vapor Reporting Unit

As described in Notes 2 and 4 to the consolidated financial statements, the Company's goodwill balance was $5,787 million as of December 31, 2025, and the goodwill associated with the e-vapor reporting unit was $610 million.

Management conducts an annual review of goodwill for potential impairment as of October 1 of each year, and more frequently if an event occurs or circumstances change that would require management to perform an interim review.

If the carrying value of a reporting unit that includes goodwill exceeds its fair value, which is determined using discounted cash flows, goodwill is considered impaired.

In January 2025, the U.S.

As a result, in connection with the preparation of the Company’s financial statements for the period ended March 31, 2025, management concluded a triggering event had occurred and performed an interim impairment assessment.

Management recorded a goodwill impairment of $873 million during the first quarter of 2025.

During the fourth quarter of 2025, management evaluated the current enforcement environment against illicit flavored disposable e-vapor products and deemed any effective enforcement would likely occur gradually over a longer period of time.

Management performed the annual impairment test of goodwill as of October 1, 2025.

The annual test indicated that the estimated fair value of the e-vapor reporting unit was below its carrying value, resulting in a goodwill impairment of $285 million.

Management used an income approach to estimate the fair values of the Company’s reporting units, discounting expected future cash flows at a rate of return reflecting the risk-free rate for the use of those funds, the expected rate of inflation and risks associated with realizing expected future cash flows.

Management’s cash flows were based on a range of scenarios that consider certain potential regulatory and market outcomes.

In performing the discounted cash flow analyses, management made various judgments, estimates and assumptions, the most significant of which were volume, price, revenue, income, operating margins, scenario weightings, perpetual growth rate and discount rates.

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessments of the e-vapor reporting unit is a critical audit matter are (i) the significant judgment by management when developing the fair value estimates 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, price, operating margins, scenario weightings, perpetual growth rate and discount rates;

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 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;

These procedures also included, among others (i) testing management’s process for developing the fair value estimates;

(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 assumption was consistent with evidence obtained in other areas of the audit.

and (iv) evaluating the reasonableness of the significant assumptions used by management related to volume, price, operating margins, scenario weightings, perpetual growth rate and discount rates.

Evaluating management’s assumptions related to volume, price, operating margins, and scenario weightings involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the e-vapor reporting unit;

(ii) the consistency with external market, regulatory, and industry data, as applicable;

and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit.

E-vapor Definite-Lived Intangible Assets Impairment Assessment

As described in Notes 2 and 4 to the consolidated financial statements, the Company’s definite-lived intangible assets carrying value was $787 million as of December 31, 2025, and the carrying value associated with e-vapor definite-lived intangible assets was $60 million.

Management reviews long-lived assets, including definite-lived intangible assets, for impairment whenever events or changes in business circumstances indicate that the carrying value of the assets may not be fully recoverable.

Management performs undiscounted operating cash flow analyses to determine if an impairment exists.

For purposes of recognition and measurement of an impairment for assets held for use, management groups assets and liabilities at the lowest level for which cash flows are separately identifiable.

If management determines that an impairment exists, any related impairment loss is calculated based on fair value.

As a result, management performed a recoverability test of the e-vapor definite-lived intangible assets.

Management determined that the asset group was not recoverable because the estimated undiscounted cash flows, including an assumed terminal‑year EBITDA multiple, were less than its carrying value.

Management then measured the impairment loss by comparing the carrying value of the definite-lived intangible assets, consisting of developed technology and trademarks, to their estimated fair values, which were determined using an income approach, specifically the relief from royalty method, which estimates the value of an intangible asset by calculating the present value of the hypothetical royalty payments a company avoids by owning the asset rather than licensing it from a third party.

In performing the analysis, management made various judgments, estimates and assumptions, the most significant of which were volume, price, revenue, income, operating margins, scenario weightings, discount rates, royalty rates, obsolescence rates and economic lives.

As a result, management recorded a pre-tax impairment of these assets of $970 million.

The principal considerations for our determination that performing procedures relating to the e-vapor definite-lived intangible asset impairment assessment is a critical audit matter are (i) the significant judgment by management when developing the fair value estimates of the e-vapor definite-lived intangible assets;

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 forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s definite-lived intangible asset impairment assessment, including controls over the valuation of the e-vapor definite-lived intangible assets.

These procedures also included, among others (i) testing management’s process for developing the fair value estimates of the e-vapor definite-lived intangible assets;

(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 volume, price, operating margins, scenario weightings, discount rates, royalty rates, obsolescence rates, economic lives and EBITDA multiple.

Evaluating management’s assumptions related to volume, price, operating margins, and scenario weighting involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the e-vapor asset group;

(ii) the consistency with external market, regulatory, and industry data, as applicable;

and (iii) whether the 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 income approach and (ii) the reasonableness of the discount rates, royalty rates, obsolescence rates, economic lives and EBITDA multiple.

/s/ PricewaterhouseCoopers LLP

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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

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January 29, 2026

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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