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Item 2. Management’s Discussion and Analysis

2026-04-30 compared with 2025-10-30 · 260 added, 451 removed, 702 unchanged (50% of the section changed)

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These financial measures are not required by, or calculated in accordance with, United States generally accepted accounting principles (“GAAP”) and may not be calculated the same as similarly titled measures used by other companies.

These financial measures should thus be considered

as supplemental in nature and not considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP.

These financial measures should thus be considered as supplemental in nature and not considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP.

For a further description of these non-GAAP financial measures, see the Non-GAAP Financial Measures section below.

Executive Summary

We have a leading portfolio of tobacco products for U.S.

tobacco consumers age 21+.

We have a leading portfolio of nicotine products for U.S.

nicotine consumers age 21+.

We are Moving Beyond Smoking ® by responsibly transitioning adult smokers to a smoke-free future, competing vigorously for existing smoke-free adult nicotine consumers and exploring new growth opportunities - beyond the United States and beyond nicotine (“Vision”).

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In smoke-free products, we own U.S.

Smokeless Tobacco Company LLC (“USSTC”), the leading global moist smokeless tobacco (“MST”) manufacturer, Helix Innovations LLC (“Helix”), a leading manufacturer of oral nicotine pouches, and NJOY, LLC (“NJOY”), a manufacturer of tobacco and menthol e-vapor products covered by marketing granted orders (“MGO”) from the U.S.

Food and Drug Administration (“FDA”).

Smokeless Tobacco Company LLC (“USSTC”), the leading global moist smokeless tobacco (“MST”) manufacturer, Helix Innovations LLC (“Helix”), a leading manufacturer of oral nicotine pouches, and NJOY, LLC (“NJOY”), an e-vapor manufacturer with products covered by marketing granted orders (“MGO”) from the U.S.

Food and Drug Administration

Additionally, we have a majority-owned joint venture, Horizon Innovations LLC (“Horizon”), for the U.S.

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The brand portfolios of our operating companies include Marlboro ® , Black & Mild ® , Copenhagen ® , Skoal ® , on!

® and NJOY ® .

Trademarks related to Altria referenced in this Form 10-Q are the property of Altria or our subsidiaries or are used with permission.

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Trends and Developments

In this section of MD&A, we discuss certain factors that have impacted our businesses as of the date of this Form 10-Q.

In this section of the MD&A, we discuss certain factors that have impacted our businesses as of the date of this Form 10-Q.

In addition, we are aware of and address certain trends and developments that could, individually or in the aggregate, have a material impact on our businesses, including the value of our investments in equity securities, in the future.

In this section, we focus on the discretionary income pressures on adult tobacco consumers, tariffs, evolving consumer preferences and illicit flavored disposable e-vapor products.

In this section, we focus on the discretionary income pressures on adult nicotine consumers, evolving consumer preferences, illicit flavored disposable e-vapor products and supply chain disruptions.

Other trends and developments are discussed elsewhere in this MD&A.

During the first three quarters of 2025, U.S.

adult tobacco consumers continued to experience inflationary pressures on discretionary income, with lower-income consumers being particularly affected.

Inflation remained a persistent concern, staying above the Federal Reserve’s 2% target.

Persistently high prices for essentials such as groceries and housing continued to constrain consumer spending, with low-income earners increasingly cutting back and relying more on credit.

Gas prices continued to trend downward as expected despite marginal increases in the third quarter with the average price of gas remaining above $3.00 per gallon.

Tariffs introduced earlier in 2025 have steadily increased over the past several months, weighing on consumer confidence and contributing to ongoing headwinds for discretionary spending.

While we have not observed a material impact on adult tobacco consumer purchasing behavior as a result of tariffs, we continue to closely monitor the additional pressure that tariff-related price increases may exert.

In addition, we are monitoring other effects of tariffs on our businesses, including the price, availability and quality of raw materials and ingredients, and component parts for production.

We do not expect higher tariffs to have a material impact on our costs in 2025 based on presently available information on tariffs.

Overall discretionary income pressures on adult tobacco consumers have resulted in increased discount brand share performance and evolving adult tobacco consumer preferences, each of which have negatively impacted the sales volumes of our companies’ premium brands.

For the third quarter of 2025, the discount share of the cigarette category reached 32.2%, an increase of 2.4 share points versus the third quarter of 2024.

Additionally, we believe that a significant number of adult tobacco consumers switch among tobacco categories, use multiple forms of tobacco products and try innovative tobacco products, such as e-vapor products and oral nicotine pouches.

We estimate that, when adjusted for trade inventory movements, calendar differences and other factors, total estimated domestic cigarette industry volume declined by 8% in the third quarter of 2025 versus the third quarter of 2024.

When adjusted for trade inventory movements and calendar differences, PM USA’s domestic cigarette shipment volume declined by an estimated 9% in the third quarter of 2025 versus the third quarter of 2024.

In addition, the U.S.

nicotine pouch category continued to grow throughout the third quarter of 2025 to 55.7% of the U.S.

oral tobacco category, an increase of 11.1 share points versus the third quarter of 2024.

As innovative smoke-free products evolve

to better address the preferences of adult tobacco consumers, these consumers continue to transition from cigarettes and MST products to innovative smoke-free tobacco products, which has negatively impacted the sales volumes of our companies’ cigarette and MST products.

Product assortment, regulation and enforcement continue to evolve in the e-vapor category.

Flavored disposable e-vapor products have continued driving growth in the e-vapor category.

We estimate that flavored disposable e-vapor products, the majority of which we believe have evaded the regulatory process, represent more than 60% of the e-vapor category.

Through the first quarter of 2026, U.S.

adult nicotine consumers continued to face inflationary pressure on discretionary income, with impacts more pronounced among lower-income consumers.

Heightened geopolitical risk and uncertainty following the recent developments in the Middle East contributed to increased energy price volatility, with gas prices increasing to an average of $3.64 per gallon during March.

The increase in gas prices contributed to elevated inflation in March of 3.3%, above the Federal Reserve’s 2% target and the highest level since early 2024.

These macroeconomic pressures were partially offset by incremental near-term liquidity support, as Internal Revenue Service data indicates average tax refunds through the end of March increased versus the prior year.

Overall discretionary income pressures on adult nicotine consumers have resulted in increased discount brand share and contributed to evolving adult nicotine consumer preferences, each of which has negatively impacted the sales volumes of certain of our operating companies’ premium brands.

For the first quarter of 2026, the discount retail share of the cigarette category reached 33.3%, an increase of 2.4 share points versus the first quarter of 2025 and 0.5 share points sequentially.

Additionally, we believe that a significant number of adult nicotine consumers switch among nicotine categories, use multiple forms of nicotine products and try innovative nicotine products, such as e-vapor products and oral nicotine pouches.

nicotine pouch category continued to grow throughout the first quarter of 2026 to 58.1% of the U.S.

oral tobacco category, an increase of 9.1 share points versus the first quarter of 2025.

When adjusted for trade inventory movements, our smokeable products segment domestic cigarette shipment volume declined by an estimated 4% in the first quarter of 2026 versus the first quarter of 2025.

When adjusted for trade inventory movements, total estimated domestic cigarette industry volume declined by 5% in the first quarter of 2026 versus the first quarter of 2025.

In the fourth quarter of 2025, we estimated the industry decline rate to be 6.5% versus the fourth quarter of 2024.

We believe that the 1.5 percentage points change in the domestic cigarette industry volume decline rate in the first quarter of 2026 was due primarily to reduced cross-category movement between cigarettes and illicit flavored disposable e-vapor products.

As innovative smoke-free products evolve to better address the preferences of adult nicotine consumers, these consumers continue to transition from cigarettes and MST products to innovative smoke-free products, which has reduced the sales volumes of our operating companies’ cigarette and MST products.

In response to the proliferation of illicit flavored disposable e-vapor products, states and the federal government have taken various regulatory and enforcement actions.

For example, the FDA and Customs and Border Protection have made it more difficult to import properly declared illicit e-vapor products, seized unauthorized vapor products and issued warning letters to importers.

However, although the FDA, in conjunction with other federal entities, has increased enforcement activity, insufficient actions against manufacturers, distributors and retailers of tobacco products requiring FDA review for which no premarket tobacco product applications (“PMTA”) have been submitted have allowed such products to continue to proliferate in the market.

Additionally, we continue to see increased illicit activity across multiple tobacco categories, including nicotine pouch products and cigarettes.

Throughout 2024 and the first three quarters of 2025, various synthetic oral nicotine pouch products emerged in traditional tobacco retailers.

We continue to track the overall dynamics across multiple tobacco categories as well as competitive threats to our brands.

For example, the FDA and U.S.

Customs and Border Protection have made it more difficult to import properly declared illicit e-vapor products, seized unauthorized e-vapor products and issued warning letters to importers.

Despite these enforcement measures, insufficient actions against manufacturers, distributors and retailers of nicotine products requiring FDA review for which no PMTAs have been submitted have allowed such products to continue to proliferate in the market.

We expect that effective enforcement against illicit flavored disposable e-vapor products will occur more gradually than initially anticipated.

Additionally, we continue to see increased illicit activity across multiple nicotine categories, including nicotine pouch products and cigarettes.

In 2026, traditional tobacco retailers continued to carry various synthetic oral nicotine pouch products.

We continue to track the overall dynamics across multiple nicotine categories as well as competitive threats to our brands.

We are monitoring volatility in domestic and global economies and disruptions in the supply and distribution chains.

This volatility and disruption are the result of several factors, including macroeconomic conditions, raw materials availability and geopolitical events.

We continue to work to mitigate the potential negative impacts of these macroeconomic and geopolitical dynamics on our businesses through, among other actions, proactive engagement with current and potential suppliers and distributors and the development of alternative sourcing strategies.

See Operating Results by Business Segment - Business Environment for additional information on the trends and developments discussed above.

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As the trends and developments evolve and new ones emerge, we will continue to evaluate the potential impacts on our businesses, investments and Vision.

Consolidated Results of Operations for the Nine Months Ended September 30, 2025

The changes in net earnings and diluted EPS for the nine months ended September 30, 2025, from the nine months ended September 30, 2024, were due primarily to the following:

Consolidated Results of Operations for the Three Months Ended March 31, 2026

The changes in net earnings and diluted EPS for the three months ended March 31, 2026, from the three months ended March 31, 2025, were due primarily to the following:

(in millions, except per share data) Net Earnings Diluted EPS

For the nine months ended September 30, 2024

$ 8,225 $ 4.75

2024 NPM Adjustment Items

2024 Acquisition and disposition-related items

(1,849) (1.07)

2024 Asset impairment, exit and implementation costs 264 0.15

2024 Tobacco and health and certain other litigation items

2024 Amortization of intangibles

2024 ABI-related special items

2024 Cronos-related special items

2024 Income tax items

Subtotal 2024 special items (1)

For the three months ended March 31, 2025

$ 1,077 $ 0.63

2025 NPM Adjustment Items

2025 Acquisition and disposition-related items

2025 Acquisition-related items

2025 Asset impairment, exit and implementation costs

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Subtotal 2025 special items

(1,136) (0.67)

Fewer shares outstanding — 0.10

Change in tax rate 81 0.04

Operations 163 0.09

For the nine months ended September 30, 2025

$ 5,830 $ 3.45

2025 Reported Net Earnings and Reported Diluted EPS

$ 5,830 $ 3.45

2024 Reported Net Earnings and Reported Diluted EPS

$ 8,225 $ 4.75

% Change (29.1) % (27.4) %

2025 Adjusted Net Earnings and Adjusted Diluted EPS

$ 6,966 $ 4.12

2024 Adjusted Net Earnings and Adjusted Diluted EPS

$ 6,722 $ 3.89

% Change 3.6 % 5.9 %

(1) Prior period amounts have been recast to conform with current period presentation for amortization of intangibles, which we did not previously identify as a special item and we now exclude from our adjusted financial measures.

See Non-GAAP Financial Measures below.

For a discussion of special items and other business drivers affecting the comparability of statements of earnings amounts and reconciliations of adjusted earnings and adjusted diluted EPS, see Consolidated Operating Results below.

▪ Fewer Shares Outstanding:

Fewer shares outstanding were due to shares we repurchased under our share repurchase programs.

▪ Change in Tax Rate:

The change in the tax rate (which excludes the impact of special items shown in the table above) was driven primarily by lower state tax expense.

▪ Operations:

The increase of $163 million in operations (which excludes the impact of special items shown in the table above) was due primarily to higher OCI, partially offset by higher interest and other debt expense, net and lower net periodic benefit income, excluding service cost.

For further details, see Consolidated Operating Results and Operating Results by Business Segment below .

Consolidated Results of Operations for the Three Months Ended September 30, 2025

The changes in net earnings and diluted EPS for the three months ended September 30, 2025, from the three months ended September 30, 2024, were due primarily to the following:

(in millions, except per share data) Net Earnings Diluted EPS

For the three months ended September 30, 2024

$ 2,293 $ 1.34

2026 NPM Adjustment Items

2024 Acquisition and disposition-related items

2024 Tobacco and health and certain other litigation items

2024 Amortization of intangibles

2024 ABI-related special items

2024 Cronos-related special items

2024 Income tax items

Subtotal 2024 special items (1)

2025 NPM Adjustment Items

2025 Acquisition and disposition-related items

2026 Acquisition-related items

2026 Asset impairment, exit and implementation costs

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Operations 118 0.07

For the three months ended September 30, 2025

For the three months ended March 31, 2026

$ 2,183 $ 1.30

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% Change 6.2 % 7.3 %

See Non-GAAP Financial Measures below.

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However, our management also reviews certain financial results, including OCI, OCI margins, net earnings and diluted EPS, on an adjusted basis, which excludes certain income and expense items that our management believes are not part of underlying operations.

These items may include, for example, loss on early extinguishment of debt, restructuring charges, asset impairment charges, acquisition, disposition and integration-related items,

equity investment-related special items, certain income tax items, charges associated with tobacco and health and certain other litigation items, resolutions of certain non-participating manufacturer (“NPM”) adjustment disputes under the Master Settlement Agreement (“NPM Adjustment Items”) and amortization expense associated with definite-lived intangible assets (“amortization of intangibles”).

These items may include, for example, loss on early extinguishment of debt, restructuring charges, asset impairment charges, acquisition, disposition and integration-related items, equity investment-related special items, certain income tax items, charges associated with tobacco and health and certain other litigation items, resolutions of certain non-participating manufacturer (“NPM”) adjustment disputes under the Master Settlement Agreement (“NPM Adjustment Items”) and amortization expense associated with definite-lived intangible assets (“amortization of intangibles”).

While amortization of intangibles is excluded from our adjusted financial measures, net revenues generated from these definite-lived intangible assets during the periods

presented, if applicable, are included in our adjusted financial measures.

In addition, our management reviews the ratio of debt-to-Consolidated EBITDA, which we use as a factor to determine our ability to access the capital markets and make investments in pursuit of our Vision.

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Our management also reviews income tax rates on an adjusted basis, which may exclude certain income tax items from our reported effective tax rate.

Beginning in the first quarter of 2025, we changed our treatment of our amortization of intangibles that we previously included in our adjusted results, including adjusted net earnings and adjusted diluted EPS, and now treat this expense as a special item and exclude it from our adjusted results.

Amortization of intangibles is significantly impacted by the timing, frequency and size of acquisitions, each with unique facts and circumstances, which could result in amortization charges that could be inconsistent in size and timing.

Net revenues generated from these definite-lived intangible assets during the periods presented, if applicable, are included in our adjusted financial measures.

Our management believes that the foregoing financial measures provide useful additional insight into underlying business trends and results, and provide a more meaningful comparison of year-over-year results.

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Goodwill and Other Intangible Assets Impairment Testing

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

There have been no events or changes in circumstances that indicate an interim quantitative impairment assessment was required for the three months ended September 30, 2025.

We will perform our annual impairment testing during the fourth quarter of 2025.

We conduct a required annual review of goodwill and indefinite-lived intangible assets for potential impairment as of October 1 of each year, in accordance with our accounting policy, and more frequently if an event occurs or circumstances change that would require an interim quantitative impairment assessment.

There have been no events or changes in circumstances that indicate an interim quantitative impairment assessment was required as of March 31, 2026.

E-Vapor Reporting Unit Goodwill

At December 31, 2024, the estimated fair value of the e-vapor reporting unit exceeded its carrying value by approximately 28% ($0.3 billion).

As further discussed in Note 4.

Goodwill and Other Intangible Assets, net (“Note 4”), we determined the estimated fair value of the e-vapor reporting unit as of March 31, 2025 was below its carrying value and recorded a non-cash goodwill impairment of $873 million for the three months ended March 31, 2025 in our condensed consolidated statements of earnings.

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

In 2025, we recorded impairments of the values of the goodwill and other intangible assets within our e-vapor reporting unit as a result of the U.S.

International Trade Commission (“ITC”) exclusion order and cease-and-desist orders prohibiting the importation and sale of NJOY ACE into the United States and our expectation that effective enforcement against illicit flavored disposable e-vapor products would occur more gradually than initially anticipated.

As of December 31, 2025, the estimated fair value and carrying value of the e-vapor goodwill was $610 million after recording impairments during the first and fourth quarters of 2025.

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.

At 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 discounted cash flows are based on a range of scenarios that consider certain potential regulatory and market outcomes.

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

The discount rates used in performing the valuation ranged from 12.0% to 15.0%.

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;

We believe that the estimated fair value of the e-vapor reporting unit at December 31, 2025 remains reasonable and there are no events or circumstances indicating an impairment for the three months ended March 31, 2026.

Fair value calculations are sensitive to changes in certain judgments and assumptions.

The significant judgments and assumptions that drive the fair value of the reporting unit are 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;

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(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 March 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 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 extensions;

competitive activity;

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

and income and excise taxes.

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

Fair value calculations can be negatively affected by changes in these judgments and assumptions, some of which relate to broader macroeconomic conditions and governmental actions outside of our control.

If these assumptions or judgments regarding the expectations for the future state of the e-vapor category and NJOY’s business 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 a goodwill impairment charge of approximately $150 million.

For further discussion of these factors, see Operating Results by Business Segment - Business Environment below.

We believe that the estimated fair value of the e-vapor reporting unit at March 31, 2025 remains reasonable and there are no events or circumstances indicating an impairment for the three months ended September 30, 2025.

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.

A hypothetical 1% increase to the discount rate used to estimate the fair value of the e-vapor reporting unit as of March 31, 2025 would have resulted in an additional goodwill impairment charge of approximately $275 million in the first quarter of 2025.

Skoal Trademark Indefinite-Lived Intangible Asset

At December 31, 2025, the estimated fair value of the Skoal trademark exceeded its carrying value by approximately 7% ($0.3 billion).

MST products, including Skoal , continued to be negatively impacted due in part to evolving adult tobacco consumer preferences, which have continued to contribute to reductions in sales volumes for MST products, including Skoal .

MST products, including Skoal , continued to be negatively impacted due in part to evolving adult nicotine consumer preferences, which have continued to contribute to reductions in sales volumes for MST products, including Skoal .

For further discussion, see Trends and Developments above and Operating Results by Business Segment - Business Environment - Summary below.

We believe that the estimated fair value of the Skoal trademark at December 31, 2024 remains reasonable and there are no events or circumstances indicating an impairment for the three months ended September 30, 2025.

We believe that the estimated fair value of the Skoal trademark at December 31, 2025 remains reasonable and there are no events or circumstances indicating an impairment for the three months ended March 31, 2026.

If the decline in sales volume for Skoal is higher than currently estimated and results in material revenue declines, we believe there may be a material adverse effect on the significant assumptions used in performing our valuation.

If Skoal ’s actual revenue and income or long-term outlook are significantly unfavorable compared to forecasted performance used to estimate the fair value or if the discount rate used to estimate the fair value increases, we could have material non-cash impairments of the Skoal trademark in future periods.

Based on the 2024 annual impairment test, a hypothetical 1% increase to the discount rate used would have resulted in a pre-tax impairment charge to the Skoal intangible asset of approximately $85 million.

For further discussion of goodwill and other intangible assets, including the impairments of the e-vapor reporting unit goodwill in the first quarter of 2025 and the Skoal trademark in the second quarter of 2024, see Note 4.

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

For further discussion of these factors, see Operating Results by Business Segment - Business Environment below.

For further discussion of goodwill and other intangible assets see Note 2.

Goodwill and Other Intangible Assets, net (“Note 2”).

Consolidated Operating Results

For the Nine Months Ended September 30, For the Three Months Ended September 30,

For the Three Months Ended March 31,

(in millions) 2026 2025

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Our management believes it is appropriate to disclose this measure to help investors analyze our business performance and trends.

The following table provides a reconciliation of adjusted net earnings and adjusted diluted EPS for the nine months ended September 30:

The following table provides a reconciliation of adjusted net earnings and adjusted diluted EPS for the three months ended March 31:

(in millions of dollars, except per share data) Earnings before Income Taxes Provision for Income Taxes Net Earnings Diluted

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NPM Adjustment Items (11) (2) (9) —

Acquisition and disposition-related items 96 16 80 0.05

Asset impairment, exit and implementation costs 916 10 906 0.53

Tobacco and health and certain other litigation items

48 11 37 0.02

Amortization of intangibles 112 20 92 0.05

ABI-related special items 36 8 28 0.02

Cronos-related special items 2 — 2 —

Income tax items — 7 (7) —

2025 Adjusted for Special Items

$ 9,084 $ 2,118 $ 6,966 $ 4.12

2024 Reported

$ 10,881 $ 2,656 $ 8,225 $ 4.75

NPM Adjustment Items (27) (7) (20) (0.01)

Acquisition and disposition-related items (2,513) (664) (1,849) (1.07)

Acquisition-related items 2 — 2 —

Asset impairment, exit and implementation costs 6 1 5 —

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Amortization of intangibles 23 3 20 0.01

102 17 85 0.05

ABI-related special items 1 — 1 —

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$ 2,884 $ 666 $ 2,218 $ 1.32

See Non-GAAP Financial Measures above.

The following table provides a reconciliation of adjusted net earnings and adjusted diluted EPS for the three months ended September 30:

(in millions of dollars, except per share data) Earnings before Income Taxes Provision for Income Taxes Net Earnings Diluted

2025 Reported

$ 1,683 $ 606 $ 1,077 $ 0.63

NPM Adjustment Items (2) — (2) —

Acquisition and disposition-related items 1 (2) 3 —

Acquisition-related items 79 14 65 0.04

Asset impairment, exit and implementation costs 888 4 884 0.52

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$ 2,730 $ 641 $ 2,089 $ 1.23

2024 Reported

$ 3,026 $ 733 $ 2,293 $ 1.34

NPM Adjustment Items (21) (6) (15) (0.01)

Acquisition and disposition-related items 44 11 33 0.02

Tobacco and health and certain other litigation items 22 6 16 0.01

Amortization of intangibles

ABI-related special items 23 5 18 0.01

Cronos-related special items 2 1 1 —

Income tax items — (11) 11 0.01

2024 Adjusted for Special Items (1)

$ 3,134 $ 746 $ 2,388 $ 1.40

See Non-GAAP Financial Measures above.

The following special items affected the comparability of statements of earnings amounts for the nine and three months ended September 30, 2025 and 2024:

▪ NPM Adjustment Items:

For a discussion of NPM Adjustment Items and a breakdown of these items by segment, see Health Care Cost Recovery Litigation in Note 14.

Contingencies (“Note 14”) and NPM Adjustment Items in Note 11, respectively.

▪ Acquisition and disposition-related items:

We recorded net pre-tax charges reflecting expenses primarily related to the U.S.

International Trade Commission (“ITC”) exclusion order and cease-and-desist orders prohibiting the importation and sale of NJOY ACE in the United States.

These charges are net of insurance recoveries from insurance contracts associated with the acquisition of NJOY Holdings, Inc.

The following special items affected the comparability of statements of earnings amounts for the three months ended March 31, 2026 and 2025:

▪ Acquisition-Related Items:

We recorded net pre-tax charges reflecting expenses primarily related to the ITC exclusion order and cease-and-desist orders prohibiting the importation and sale of NJOY ACE in the United States.

These charges are net of any insurance recoveries from insurance contracts associated with the acquisition of NJOY Holdings, Inc.

(“NJOY Transaction”).

For further information on the ITC’s determination, see E-vapor Product Litigation in Note 14 .

For further information on the ITC’s determination, see E-vapor Product Litigation - JUUL Patent Litigation in Note 12.

Contingencies (“Note 12”) .

We recorded these items as follows:

For the Nine Months Ended September 30, For the Three Months Ended September 30,

For the Three Months Ended March 31,

(in millions) 2026 2025

Net revenues (1)

$ 42 $ — $ — $ —

Cost of sales (1)

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(1) Included in our all other category.

(2) Recorded as general corporate expense, net of $34 million and $9 million of insurance recoveries for the nine and three months ended 2025, respectively.

In 2024 and 2025, we incurred total costs of $166 million primarily associated with the ITC determination and patent infringement lawsuits related to the NJOY Transaction, which were offset by insurance recoveries of $59 million.

These total amounts include $61 million of costs offset by $25 million of insurance recoveries recorded in 2024.

Additionally, we recorded a non-cash, pre-tax charge of $25 million for the nine months ended September 30, 2025 for the change in the fair value of the contingent payments associated with the NJOY Transaction.

In connection with the June 2024 issuance by the FDA of MGOs for four NJOY menthol e-vapor products, we recorded a pre-tax charge of approximately $140 million for the nine months ended September 30, 2024 for the change in the fair value of the contingent payments associated with the NJOY Transaction.

These charges were recorded as general corporate expense and included in marketing, administration and research costs in our condensed consolidated statements of earnings.

(2) Recorded as general corporate expense.

Amount is net of $22 million of insurance recoveries for the three months ended March 31, 2025.

To date, we incurred total costs of $152 million, primarily associated with the ITC exclusion order and cease-and desist orders prohibiting the importation and sale of NJOY ACE in the United States and patent infringement lawsuits related to the NJOY Transaction, which were offset by insurance recoveries of $64 million.

Additionally, we recorded a non-cash, pre-tax charge of $25 million for the three months ended March 31, 2025 for the change in the fair value of the contingent payments associated with the NJOY Transaction, which was recorded as general corporate expense and included in marketing, administration and research costs in our condensed consolidated statements of earnings.

For further information, see Contingent Payments in Note 5.

Financial Instruments .

We recorded a pre-tax gain of $2.7 billion upon the assignment of the IQOS Tobacco Heating System (“ IQOS System”) commercialization rights to Philip Morris International Inc.

in April 2024, for the nine months ended September 30, 2024.

▪ Asset Impairment, Exit and Implementation Costs:

We recorded a non-cash impairment charge of $873 million to reduce the carrying value of the e-vapor reporting unit goodwill to its estimated fair value for the nine months ended September 30, 2025 in our all other category.

There was no income tax benefit associated with the impairment of the e-vapor reporting unit goodwill as the impairment is non-deductible for tax purposes.

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

▪ Asset Impairment:

We recorded a non-cash impairment charge of $873 million to reduce the carrying value of the e-vapor reporting unit goodwill to its estimated fair value for the three months ended March 31, 2025 in our all other category.

For further discussion, see Note 2.

We recorded exit and implementation costs of $43 million and $13 million related to our Optimize & Accelerate initiative (“Initiative”) for the nine and three months ended September 30, 2025, respectively.

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

Exit and Implementation Costs .

▪ Tobacco and Health and Certain Other Litigation Items:

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▪ Amortization of Intangibles:

We recorded pre-tax amortization expense of definite-lived intangible assets of $112 million and $102 million for the nine months ended September 30, 2025 and 2024, respectively, and $38 million for each of the three months ended September 30, 2025 and 2024 in marketing, administration and research costs in our condensed consolidated statements of earnings.

▪ ABI-Related Special Items:

We recorded net pre-tax losses of $36 million and $34 million from our investment in ABI for the nine and three months ended September 30, 2025, respectively, consisting primarily of mark-to-market losses on certain ABI financial instruments associated with its share commitments.

We recorded net pre-tax income of $39 million from our investment in ABI for the nine months ended September 30, 2024, which consisted primarily of a gain related to our sale of a portion of our investment in ABI (“ABI Transaction”), net of transaction costs, partially offset by mark-to-market losses on certain ABI financial instruments associated with its share commitments.

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

Investments in Equity Securities.

The ABI-related special items include our respective share of the amounts recorded by ABI and additional adjustments related to (i) the conversion of ABI-related special items from international financial reporting standards to GAAP and (ii) adjustments to our investment required under the equity method of accounting.

▪ Income Tax Items:

We recorded income tax items of $20 million for the three months ended September 30, 2025, due primarily to an income tax benefit from tax reserves, which includes a favorable rate differential associated with certain cross-border taxes, related to an unfavorable federal court ruling concerning a change in the application of foreign attribution rules relevant to our investment in ABI, partially offset by tax expense associated with the increase of a valuation allowance related to our unrecognized capital losses.

For further discussion, see Note 13.

Income Taxes .

We recorded income tax items of $41 million for the nine months ended September 30, 2024, due primarily to an income tax benefit from the partial release of a valuation allowance associated with our losses related to our former investment in JUUL Labs, Inc.

(“JUUL”), partially offset by interest expense on tax reserves recorded in prior years.

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

Nine Months Ended September 30, 2025 Compared with Nine Months Ended September 30, 2024

Net revenues, which include excise taxes billed to customers, decreased $611 million (3.4%), due primarily to lower net revenues in our smokeable products segment.

Cost of sales decreased $426 million (9.3%), due primarily to lower shipment volume and lower per unit settlement charges in our smokeable products segment, partially offset by higher NJOY costs and lower NPM adjustment items.

Excise taxes on products decreased $333 million (12.3%), due primarily to lower shipment volume in our smokeable products segment.

Marketing, administration and research costs decreased $263 million (12.8%), due primarily to lower acquisition-related items discussed above and transaction costs associated with the ABI Transaction in 2024, both of which are included in general corporate expenses.

Operating income decreased $111 million (1.3%), due primarily to lower OCI (which includes the net impact of a non-cash impairment of the e-vapor reporting unit goodwill in 2025 and a non-cash impairment of the Skoal trademark in our oral tobacco product segment in 2024), partially offset by lower general corporate expenses.

(Income) losses from investments in equity securities were unfavorable $132 million (24.9%), due primarily to lower income from our equity investment in ABI (which includes our gain on the ABI Transaction in 2024 and lower ownership interest).

Provision for income taxes decreased $610 million (23%), due primarily to lower earnings before income taxes, partially offset by unfavorable tax items as discussed above.

Reported net earnings of $5,830 million decreased $2,395 million (29.1%), due primarily to the gain on the sale of the IQOS System commercialization rights in 2024, unfavorable results from our equity investment in ABI, lower operating income and unfavorable income tax items.

Reported basic and diluted EPS of $3.45, each decreased by 27.4% due to lower reported net earnings, partially offset by fewer shares outstanding.

Adjusted net earnings of $6,966 million increased $244 million (3.6%), due primarily to higher OCI and a lower adjusted tax rate, partially offset by higher interest and other debt expense, net and lower net periodic benefit income, excluding service cost.

Adjusted diluted EPS of $4.12 increased by 5.9%, due to higher adjusted net earnings and fewer shares outstanding.

Three Months Ended September 30, 2025 Compared with Three Months Ended September 30, 2024

Net revenues, which include excise taxes billed to customers, decreased $187 million (3.0%), due primarily to lower net revenues in our smokeable and oral tobacco products segments.

Cost of sales decreased $97 million (6.3%), due primarily to lower shipment volume and lower per unit settlement charges in our smokeable products segment, partially offset by lower NPM adjustment items.

Excise taxes on products decreased $94 million (10.3%), due primarily to lower shipment volume in our smokeable products segment.

Marketing, administration and research costs decreased $76 million (11.6%), due primarily to lower acquisition-related items discussed above, included in general corporate expense.

Operating income increased $78 million (2.5%), due primarily to higher OCI and lower general corporate expenses.

We recorded pre-tax amortization expense of definite-lived intangible assets of $23 million and $37 million for the three months ended March 31, 2026 and 2025, respectively, in marketing, administration and research costs in our condensed consolidated statements of earnings.

Three Months Ended March 31, 2026 Compared with Three Months Ended March 31, 2025

Net revenues, which include excise taxes billed to customers, increased $169 million (3.2%), due primarily to higher net revenues in our smokeable products segment.

Cost of sales decreased $18 million (1.4%), due primarily to lower NJOY costs and lower shipment volume in our smokeable products segment, partially offset by higher manufacturing costs in our smokeable products segment.

Excise taxes on products decreased $70 million (9.5%), due primarily to 2026 refunds of taxes and duties paid on imported cigarettes and lower shipment volume in our smokeable products segment.

Marketing, administration and research costs decreased $38 million (6.5%), due primarily to lower tobacco and health and certain other litigation items, lower amortization of intangibles, lower general corporate expenses and lower costs related to our Optimize & Accelerate initiative (“Initiative”), partially offset by higher spending in our smokeable products and oral tobacco products segments.

Operating income increased $1,168 million (65.3%), due primarily to higher OCI (which includes the impact of a non-cash impairment of the e-vapor reporting unit goodwill in 2025).

(Income) losses from investments in equity securities were favorable $15 million (10.5%), due primarily to favorable results from our investment in ABI.

Reported net earnings of $2,183 million increased $1,106 million (100%+), due primarily to higher operating income.

Reported basic and diluted EPS of $1.41, each increased by 5.2% due to higher reported net earnings and fewer shares outstanding.

Reported basic and diluted EPS of $1.30, each increased by 100%+, due primarily to higher reported net earnings.

Adjusted net earnings of $2,218 million increased $129 million (6.2%), due primarily to higher OCI.

Adjusted diluted EPS of $1.45 increased by 3.6%, due to higher adjusted net earnings and fewer shares outstanding.

Adjusted diluted EPS of $1.32 increased by 7.3%, due primarily to higher adjusted net earnings and fewer shares outstanding.

Operating Results by Business Segment

Business Environment

tobacco industry faces a number of business and legal challenges that have materially adversely affected and may continue to materially adversely affect our business, results of operations, cash flows or financial position or our ability to achieve our Vision.

These challenges, which we discuss below and in more detail in Note 14, and in Part I, Item 1A.

Risk Factors in our 2024 Form 10-K and in Part II, Item 1A.

Risk Factors of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 (“First Quarter Form 10-Q”), include:

nicotine industry faces a number of business, legal and regulatory challenges that have materially adversely affected and may continue to materially adversely affect our business, results of operations, cash flows or financial position or our ability to achieve our Vision.

These challenges, some of which are discussed in more detail in Note 12, and in Part I, Item 1A Risk Factors in our 2025 Form 10-K, include:

▪ pending and threatened litigation and bonding requirements;

▪ restrictions and requirements imposed by the Family Smoking Prevention and Tobacco Control Act (“FSPTCA”) and restrictions and requirements (and related enforcement actions) that have been, and in the future will be, imposed by the FDA;

▪ the FDA’s failure to effectively address illicit tobacco products on the market, including illicit disposable e-vapor and oral nicotine pouch products;

▪ illicit trade in tobacco products, including cigarettes, e-vapor products and oral nicotine pouch products;

▪ the FDA’s failure to effectively address illicit nicotine products on the market, including illicit disposable e-vapor and oral nicotine pouch products;

▪ illicit trade in nicotine products, including cigarettes, e-vapor products and oral nicotine pouch products;

▪ actual and proposed excise tax increases, as well as changes in tax structures and tax stamping requirements;

▪ bans and restrictions on tobacco use imposed by governmental entities and private establishments and employers;

▪ bans and restrictions on nicotine product use imposed by governmental entities and private establishments and employers;

▪ other federal, state and local government actions, including:

▪ restrictions on the sale of certain tobacco products, the sale of tobacco products by certain retail establishments, the sale of tobacco products with characterizing flavors and the sale of tobacco products in certain package sizes;

▪ additional restrictions on the advertising and promotion of tobacco products;

▪ other actual and proposed tobacco-related legislation and regulation;

▪ restrictions on the sale of certain nicotine products, the sale of nicotine products by certain retail establishments, the sale of nicotine products with characterizing flavors and the sale of nicotine products in certain package sizes;

▪ additional restrictions on the advertising and promotion of nicotine products;

▪ other actual and proposed tobacco- or nicotine-related legislation and regulation;

▪ prohibitions on the sale of tobacco products based on environmental concerns and the imposition of responsibility on manufacturers for the disposal, recycling or other treatment of post-consumer goods such as plastic packaging;

▪ governmental investigations;

▪ reductions in consumption levels of cigarettes and MST products resulting in lower shipment volumes;

▪ increased efforts by tobacco control advocates and other private sector entities (including retail establishments) to further restrict the availability and use of tobacco products or the ability to communicate with consumers through third-party digital platforms;

▪ changes in adult tobacco consumer purchase behavior, which is influenced by various factors such as macroeconomic conditions (including inflation and tariffs), the proliferation of illicit disposable e-vapor products, excise taxes and product price gap relationships, each of which has resulted and may in the future result in adult tobacco consumers switching to lower-priced tobacco products and lower shipment volumes;

▪ the highly competitive nature of all tobacco categories, including competitive disadvantages related to the impact on cigarette prices due to the settlement of certain healthcare cost recovery litigation and the growth of innovative tobacco products, such as e-vapor and oral nicotine pouch products;

▪ increased efforts by tobacco control advocates and other private sector entities (including retail establishments) to further restrict the availability and use of nicotine products or the ability to communicate with adult consumers through third-party digital platforms;

▪ changes in adult nicotine consumer purchase behavior, which is influenced by various factors such as macroeconomic and geopolitical conditions (including inflation, tariffs and the economic impacts of international armed conflicts), the proliferation of illicit disposable e-vapor products, excise taxes and product price gap relationships, each of which has resulted and may in the future result in adult nicotine consumers switching to lower-priced nicotine products and lower shipment volumes;

▪ the highly competitive nature of all nicotine categories, including competitive disadvantages related to the impact on cigarette prices due to the settlement of certain healthcare cost recovery litigation, the growth of innovative nicotine products, such as e-vapor and oral nicotine pouch products, and the ability of competitors to receive refunds of certain duties, taxes and fees paid on imported tobacco products when offsetting volumes of those products or substantially similar products are subsequently exported;

▪ the growth of products using nicotine analogues that are designed to imitate the effects of nicotine but are not subject to the FDA regulatory framework for tobacco products;

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From time to time, the FDA issues proposed regulations and guidance, which may be issued in draft or final form, that generally involve public comment and may include scientific review.

We actively engage

(1) “Smokeless tobacco,” as used in this section of this Form 10-Q, refers to smokeless tobacco products first regulated by the FDA in 2009, including MST.

It excludes oral nicotine pouches, which were first regulated by the FDA in 2016.

with the FDA to develop and implement the FSPTCA’s regulatory framework, including submission of comments to various FDA policies and proposals and participation in public hearings and engagement sessions.

We actively engage with the FDA to develop and implement the FSPTCA’s regulatory framework, including submission of comments to various FDA policies and proposals and participation in public hearings and engagement sessions.

The FDA’s implementation of the FSPTCA and related regulations and guidance also may have an impact on enforcement efforts by states, territories and localities of their laws and regulations as well as of the State Settlement Agreements (see State Settlement Agreements below).

Such enforcement efforts may adversely affect our operating companies’ abilities to market and sell tobacco products in those states, territories and localities.

▪ FDA’s Five-Year Strategic Plan for Tobacco and Nicotine Regulation:

In December 2023, the FDA released its five-year strategic plan to address concerns raised by the Reagan-Udall Foundation’s operational evaluation of the FDA’s Center for Tobacco Products.

The Reagan-Udall report urged the FDA to clearly define product pathways, accelerate PMTA decision making, address the need for health risk communications to tobacco consumers and take enforcement actions against manufacturers and products that violate the law.

The FDA’s five-year strategic plan lists five goals:

▪ develop, advance and communicate comprehensive and impactful tobacco regulations and guidance;

▪ ensure timely, clear and consistent product application review;

▪ strengthen compliance of regulated industry using all available tools, including robust enforcement actions;

▪ enhance knowledge and understanding of the risks associated with tobacco product use;

▪ advance operational excellence.

(1) “Smokeless tobacco,” as used in this section of this Form 10-Q, refers to smokeless tobacco products first regulated by the FDA in 2009, including MST.

It excludes oral nicotine pouches, which were first regulated by the FDA in 2016.

▪ Premarket Review Pathways for Tobacco Products and Market Authorization Enforcement:

The FSPTCA permits the sale of tobacco products on the market as of February 15, 2007 and not subsequently modified (“Pre-existing Tobacco Products”) and new or modified products authorized through the PMTA, Substantial Equivalence (“SE”) or SE Exemption pathways.

The FSPTCA permits the sale of tobacco products on the market as of February 15, 2007 and not subsequently modified (“Pre-existing Tobacco Products”) and new or modified products authorized through the pre-market tobacco product application (“PMTA”), Substantial Equivalence (“SE”) or SE Exemption pathways.

Subsequent FDA rules also provide a Supplemental PMTA pathway designed to increase the efficiency of submission and review for modified versions of previously authorized products.

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Additionally, a manufacturer may be unable to maintain consistency in manufacturing processes as it increases the scale of its manufacturing operations in response to market expansion or product introduction.

These circumstances could

cause a manufacturer to receive (i) a “not substantially equivalent” determination or (ii) a denial or withdrawal of a PMTA, either of which could result in a product being removed from the market.

In addition, new scientific data continues to be developed relating to innovative tobacco products, which could impact the FDA’s determination as to whether a product is, or continues to be, appropriate for the protection of public health and could, therefore, result in the removal of one or more products from the market.

These circumstances could cause a manufacturer to receive (i) a “not substantially equivalent” determination or (ii) a denial or withdrawal of a PMTA, either of which could result in a product being removed from the market.

In addition, new scientific data continues to be developed relating to innovative nicotine products, which could impact the FDA’s determination as to whether a product is, or continues to be, appropriate for the protection of public health and could, therefore, result in the removal of one or more products from the market.

Any such actions affecting our operating companies’ products could have a material adverse impact on our business, results of operations, cash flows or financial position.

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oral nicotine pouches on the market as of August 2016 in May 2020, PMTAs for additional on!

oral nicotine pouches in September 2024 and PMTAs for on!

PLUS oral nicotine pouches in tobacco, mint and wintergreen flavors in June 2024.

oral nicotine pouches in September 2024, PMTAs for on!

PLUS oral nicotine pouches in tobacco, mint and wintergreen flavors in June 2024 and PMTAs for on!

PLUS oral nicotine pouches in six additional flavors in November 2025.

In September 2025, the FDA launched a pilot program intended to increase efficiency and streamline the review process for PMTAs for select oral nicotine pouch products.

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PLUS, were being reviewed through the pilot program.

As of October 27, 2025, the FDA has not issued a marketing order with respect to any on!

In October 2025, following the expiration of the 180-day statutory review period, Helix began commercializing on!

Helix intends to comply with the post-market record keeping and reporting requirements of the FDA’s most recently issued MGOs for similar products.

As of October 27, 2025, Middleton has received MGOs or exemptions that cover over 99% of its cigar product volume.

As a result of our June 2023 acquisition of NJOY Holdings, Inc., we gained full global ownership of NJOY’s e-vapor product portfolio, including NJOY ACE , a pod-based e-vapor product with an MGO from the FDA, and NJOY DAILY , which also has an MGO.

In December 2025, the FDA issued MGOs with respect to on!

PLUS oral nicotine pouches in tobacco, mint and wintergreen flavors in 6 mg and 9 mg nicotine levels.

As of April 27, 2026, the FDA has not issued a marketing order with respect to any other on!

PLUS product.

As of April 27, 2026, Middleton has received MGOs or exemptions that cover over 99% of its cigar product volume.

As a result of the NJOY Transaction, we gained full global ownership of NJOY’s e-vapor product portfolio, including NJOY ACE , a pod-based e-vapor product with an MGO from the FDA, and NJOY Daily , which also has an MGO.

In June 2024, NJOY received MGOs with respect to two NJOY ACE menthol products and two NJOY Daily menthol products.

In May 2024, NJOY submitted a supplemental PMTA to the FDA to commercialize and market the NJOY ACE 2.0 device, which leverages Bluetooth ® connectivity to incorporate access restriction technology designed to prevent underage use by authenticating the user before unlocking the device.

Also in May 2024, NJOY re-submitted PMTAs for blueberry and watermelon flavored pod-based e-vapor products that work exclusively with the Bluetooth ® -enabled NJOY ACE 2.0 device.

These products previously received MDOs on the basis of FDA concerns regarding potential underage use.

NJOY ACE and the NJOY ACE 2.0 are subject to U.S.

International Trade Commission exclusion and cease-and-desist orders prohibiting their importation and sale in the United States.

NJOY Daily is not subject to these orders.

NJOY ACE is subject to ITC exclusion and cease-and-desist orders prohibiting importation and sale in the United States.

Although NJOY Daily is not subject to these orders, JUUL has asserted claims of patent infringement based on the sale of NJOY Daily in the United States.

Effect of Adverse FDA Determinations :

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A “not substantially equivalent” determination, a denial of a PMTA, an MGO withdrawal or an enforcement action by the FDA with respect to one or more products (each of which could require the removal of the product or products from the market) could have a material adverse impact on our business, results of operations, cash flows or financial position.

Also, adverse FDA determinations or enforcement actions concerning innovative tobacco products could have a material adverse effect on our innovative tobacco businesses and our ability to achieve our Vision.

Also, adverse FDA determinations or enforcement actions concerning innovative nicotine products could have a material adverse effect on our innovative nicotine businesses and our ability to achieve our Vision.

Post-Market Surveillance :

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In January 2025, the U.S.

District Court for the Eastern District of Texas found in favor of cigarette manufacturers that had challenged the final rule on the basis that the FDA exceeded its statutory authority by requiring cigarette packaging and advertising to contain 11 specific warnings when it only had the authority to require nine.

advertising to contain 11 specific warnings when it only had the authority to require nine.

In its ruling, the court granted a preliminary injunction staying the FDA’s enforcement of the rule against all cigarette manufacturers pending further litigation.

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We continue to advocate in states that have not yet raised the minimum legal age to purchase all tobacco products to 21.

See Federal, State and Local Legislation to Increase the Legal Age to Purchase Tobacco Products below for further discussion.

Additionally, the FDA issued final guidance in April 2020, stating that it intended to prioritize enforcement action against certain product categories, including pod-based, flavored e-vapor products and products targeted to minors.

For more information on the FDA’s and other federal agencies’ enforcement efforts, see Investigation and Enforcement below.

▪ E-Vapor Products :

In September 2022, the FDA represented that it had resolved more than 99% of the timely applications it had received, the vast majority of which were for e-vapor products and resulted in MDOs.

As of October 27, 2025, many manufacturers of menthol and other flavored e-vapor products have received MDOs for failure to provide sufficiently strong product-specific scientific evidence to demonstrate that the benefits of their products to adult smokers overcome the risks that their products pose to youth.

As of April 27, 2026, many manufacturers of menthol and other flavored e-vapor products have received MDOs for failure to provide sufficiently strong product-specific scientific evidence to demonstrate that the benefits of their products to adult smokers overcome the risks that their products pose to youth.

The FDA has communicated in these MDOs that vapor products with non-tobacco flavors present unique questions relevant to the FDA’s “Appropriate for the Protection of Public Health” standard and that successful applications require strong, product-specific evidence.

number of these manufacturers are challenging the MDOs for their products.

This perspective is reflected in the FDA’s March 2026 draft guidance on flavored electronic nicotine delivery systems.

A number of manufacturers are challenging the MDOs for their products.

In January 2024, the U.S.

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For example, actions (or inaction) by the FDA could:

▪ impact the consumer acceptability of tobacco products;

▪ discontinue, delay or prevent the sale or distribution of existing, new or modified tobacco products;

▪ limit adult tobacco consumer choices;

▪ impose restrictions on communications with adult tobacco consumers;

▪ create a competitive advantage or disadvantage for certain tobacco companies;

▪ impact the consumer acceptability of nicotine products;

▪ discontinue, delay or prevent the sale or distribution of existing, new or modified nicotine products;

▪ limit adult nicotine consumer choices;

▪ impose restrictions on communications with adult nicotine consumers;

▪ create a competitive advantage or disadvantage for certain nicotine companies;

▪ impose additional manufacturing, labeling or packaging requirements;

▪ impose additional restrictions at retail;

▪ result in increased illicit trade in tobacco products;

▪ result in increased illicit trade in nicotine products;

▪ otherwise significantly increase the cost of doing business.

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Although the FDA, in conjunction with other federal entities, has increased enforcement activity, insufficient actions against manufacturers, distributors and retailers of tobacco products requiring FDA review for which no PMTA has been submitted have allowed such products to proliferate on the market.

In addition, the FDA’s failure to clearly define product pathways and issue marketing orders within the statutory review period has resulted in a market with few authorized smoke-free products available to adult tobacco consumers.

Tobacco products are subject to substantial excise taxes in the United States.

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Federal, state and local cigarette excise taxes have increased substantially over the past two decades, far outpacing the rate of inflation.

Between the end of 1998 and October 27, 2025, the weighted-average state cigarette excise tax increased from $0.36 to $2.01 per pack.

Three states (Maryland, Colorado and Rhode Island) increased excise taxes in 2024.

As of October 27, 2025, four states (Hawaii, Indiana, Maine and New Jersey) have increased excise taxes in 2025.

Various other increases are under consideration or have been proposed.

Between the end of 1998 and April 27, 2026, the weighted-average state cigarette excise tax increased from $0.36 to $2.02 per pack.

As of April 27, 2026, one state (Utah) has enacted legislation increasing cigarette excise taxes in 2026, and various increases are under consideration or have been proposed.

Many states currently tax MST using an ad valorem method, which is calculated as a percentage of the price of the product, typically the wholesale price.

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We support legislation to convert ad valorem taxes on MST to a weight-based methodology because, unlike the ad valorem tax, a weight-based tax subjects cans of equal weight to the same tax.

As of October 27, 2025, the federal government, 25 states, Puerto Rico, Philadelphia, Pennsylvania and Cook County, Illinois have adopted a weight-based tax methodology for MST.

As of April 27, 2026, the federal government, 24 states, Puerto Rico, Philadelphia, Pennsylvania and Cook County, Illinois have adopted a weight-based tax methodology for MST.

An increasing number of states and localities are proposing excise taxes on e-vapor products and oral nicotine pouches.

As of October 27, 2025, 34 states, the District of Columbia, Puerto Rico and a number of cities and counties have enacted legislation to tax e-vapor products.

As of April 27, 2026, 34 states, the District of Columbia, Puerto Rico and a number of cities and counties have enacted legislation to tax e-vapor products.

These taxes are calculated in varying ways and may differ based on the e-vapor product form.

Similarly, 19 states and the District of Columbia have enacted legislation to tax oral nicotine pouches.

Tax increases are expected to continue to have an adverse impact on sales of our operating companies’ products through lower consumption levels and the potential shift in adult tobacco consumer purchases from premium to non-premium or discount cigarettes, to lower-taxed tobacco products or to counterfeit and contraband products.

Tax increases are expected to continue to have an adverse impact on sales of our operating companies’ products through lower consumption levels and the potential shift in adult nicotine consumer purchases from premium to non-premium or discount cigarettes, to lower-taxed nicotine products or to counterfeit and contraband products.

Lower sales volume and reported share performance of our operating companies’ products could have a material adverse effect on our business, results of operations, cash flows or financial position.

In addition, substantial excise tax increases on e-vapor and oral nicotine products may negatively impact adult smokers’ transition to these products, which could materially adversely affect our innovative tobacco businesses and our ability to achieve our Vision.

Changes to federal or state tax laws or challenges to one or more of our positions with respect to those laws, including with respect to the availability of duty drawback, which allows manufacturers to receive refunds of certain duties, taxes and fees paid on imported tobacco products when offsetting volumes of those products or substantially similar products are subsequently exported, could

increase the taxes and other fees payable with respect to our operating companies’ products or reduce the amount of taxes and other fees paid by our operating companies for which refunds are available.

In addition, substantial excise tax increases on e-vapor and oral nicotine products may negatively impact adult smokers’ transition to these products, which could materially adversely affect our innovative nicotine businesses and our ability to achieve our Vision.

International Treaty on Tobacco Control

The World Health Organization’s Framework Convention on Tobacco Control (the “FCTC”) entered into force in February 2005.

As of October 27, 2025, 182 countries, as well as the European Union, have become parties to the FCTC.

As of April 27, 2026, 182 countries, as well as the European Union, have become parties to the FCTC.

While the United States is a signatory of the FCTC, it is not a party to the agreement, as the agreement has not been submitted to, or ratified by, the U.S.

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As discussed in Note 12, during 1997 and 1998, PM USA and other major domestic cigarette manufacturers entered into the State Settlement Agreements.

These settlements require participating manufacturers to make substantial annual payments,

which are adjusted for several factors, including inflation, operating income, market share and industry volume.

These settlements require participating manufacturers to make substantial annual payments, which are adjusted for several factors, including inflation, operating income, market share and industry volume.

Higher rates of inflation can increase our financial liability under the State Settlement Agreements as the State Settlement Agreements’ inflation calculations require us to apply the higher of 3% or the U.S.

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The legislation varies in terms of the type of tobacco products, the conditions under which such products are or would be restricted or prohibited, and exceptions to the restrictions or prohibitions.

As of October 27, 2025, multiple states and localities are considering legislation to ban flavors in one or more tobacco products, and six states (California, Massachusetts, New Jersey, New York, Rhode Island and Utah) and the District of Columbia have passed such legislation.

As of April 27, 2026, multiple states and localities are considering legislation to ban flavors in one or more tobacco products, and six states (California, Massachusetts, New Jersey, New York, Rhode Island and Utah) and the District of Columbia have passed such legislation.

Some states, such as New York and Illinois, exempt certain products that have received FDA market authorization through the PMTA pathway.

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The States of Indiana, Massachusetts and Utah passed legislation capping the amount of nicotine in e-vapor products.

As of October 27, 2025, legislation relating to this issue is pending in one other state.

As of April 27, 2026, legislation relating to this issue is pending in one other state.

Similar restrictions to those enacted or proposed in various U.S.

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It is possible, however, that legislation, regulation or other governmental action could be enacted or implemented that could have a material adverse impact on our business, results of operations, cash flows or financial position.

Such action also could negatively impact adult smokers’ transition to smoke-free products, which could materially adversely affect our innovative tobacco businesses and our ability to achieve our Vision.

Such action also could negatively impact adult smokers’ transition to smoke-free products, which could materially adversely affect our innovative nicotine businesses and our ability to achieve our Vision.

We have challenged and will continue to challenge certain federal, state and local legislation and other governmental action, including through litigation.

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In December 2019, after a number of states and localities proposed and enacted legislation to increase the minimum age to purchase all tobacco products, including e-vapor products, the federal government passed legislation increasing the minimum age to purchase all tobacco products, including e-vapor products, to 21 nationwide.

As of October 27, 2025, 44 states, the District of Columbia and Puerto Rico have enacted laws increasing the legal age to purchase tobacco products to 21.

As of April 27, 2026, 44 states, the District of Columbia and Puerto Rico have enacted laws increasing the legal age to purchase tobacco products to 21.

Although an increase in the minimum age to purchase tobacco products may have a negative impact on our operating companies’ sales volumes, we support and advocate for raising the minimum legal age to purchase all tobacco products to 21 at the federal and state levels.

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Surgeon General and public health authorities worldwide in making decisions concerning the use of tobacco products, including e-vapor products.

Along with the scientific and public health communities, we continue to study and gather scientific evidence concerning the health effects of e-vapor and other innovative tobacco products.

Along with the scientific and public health communities, we continue to study and gather scientific evidence concerning the health effects of e-vapor and other innovative nicotine products.

It is not possible to predict the results of ongoing scientific research or the types of future scientific research into the health risks of tobacco exposure and the impact of such research on legislation and regulation.

Scientific determinations as to any health risks or negative health consequences associated with the use of e-vapor and other innovative tobacco products could materially adversely affect our innovative tobacco products businesses and our ability to achieve our Vision.

Scientific determinations as to any health risks or negative health consequences associated with the use of e-vapor and other innovative nicotine products could materially adversely affect our innovative nicotine products businesses and our ability to achieve our Vision.

Most jurisdictions within the United States have restricted smoking in public places and some have restricted vaping in public places.

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Federal Trade Commission (“FTC”) issued a Civil Investigative Demand to us while conducting its antitrust review of our former investment in JUUL;

(ii) the SEC commenced an investigation relating to our acquisition, disclosures and accounting controls in connection with the JUUL investment;

(ii) the U.S.

Securities and Exchange Commission commenced an investigation relating to our acquisition, disclosures and accounting controls in connection with the JUUL investment;

and (iii) the New York State Office of the Attorney General and the Commonwealth of Massachusetts Office of the Attorney General, separately, issued independent subpoenas to us seeking documents relating to our former investment in and provision of services to JUUL.

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Reasons for the discontinuation include change in corporate policy and, with respect to e-vapor products, reported illnesses and the uncertain regulatory environment.

Furthermore, third-party digital platforms, such as app stores, have restricted, and in some cases prohibit, communications with adult tobacco consumers concerning tobacco products.

Furthermore, third-party digital platforms, such as app stores, have restricted, and in some cases prohibit, communications with adult nicotine consumers concerning tobacco products.

It is possible that if this private sector activity becomes more widespread it could have an adverse effect on our business, results of operations, cash flows or financial position.

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Counterfeit tobacco products, for example, are manufactured by unknown third parties in unregulated environments.

Counterfeit versions

of our products can negatively affect adult tobacco consumer experiences with and opinions of those brands.

Counterfeit versions of our products can negatively affect adult nicotine consumer experiences with and opinions of those brands.

Illicit disposable e-vapor and oral nicotine pouch products may be designed to appeal to youth and are manufactured without scientific standards, exposing consumers to undocumented risks.

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We actively engage with regulators, state and federal lawmakers, our trade partners and other stakeholders to bring awareness to these issues.

When appropriate, we also take legal action to protect our lawful e-vapor product business, such as the lawsuit we filed in federal court in California against manufacturers, distributors and retailers of illicit e-vapor products, which we settled in October 2025.

When appropriate, we also take legal action to protect our FDA-authorized e-vapor product business, such as the lawsuit we filed in federal court in California against manufacturers, distributors and retailers of illicit e-vapor products, which we settled in October 2025.

Pursuant to the terms of the settlement, a foreign manufacturer and certain domestic distributors of illicit disposable e-vapor devices are prohibited from selling or shipping flavored e-vapor products to consumers, retailers, wholesalers or distributors located in the State of California and from selling or shipping such products to anyone if they have actual knowledge that the products will ultimately be resold or reshipped to consumers in the State of California.

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Shifts in crops (such as those driven by economic conditions, adverse weather patterns and natural disasters), government restrictions and mandated prices, production control programs, economic trade sanctions, import duties and tariffs, international trade disruptions, labor disruptions, inflation, geopolitical instability, climate and environmental changes and disruptions due to man-made or natural disasters may increase the cost or reduce the supply or quality of tobacco and other raw materials, ingredients and component parts used to manufacture our operating companies’ products.

Any significant change in the nature or consequences of these factors could negatively impact our ability to continue manufacturing and marketing existing products, increase our costs or negatively impact adult tobacco consumer product acceptability and have a material adverse effect on our business and profitability.

Any significant change in the nature or consequences of these factors could negatively impact our ability to continue manufacturing and marketing existing products, increase our costs or negatively impact adult nicotine consumer product acceptability and have a material adverse effect on our business and profitability.

As with other agricultural commodities, tobacco price, quality and availability can be influenced by variations in weather patterns and natural disasters, including those caused by climate change, and macroeconomic conditions and imbalances in supply and demand, among other factors.

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Macroeconomic factors, such as tariffs, may exacerbate reductions in demand for tobacco leaf by increasing the cost of purchasing tobacco leaf from a supplier in another country.

The unavailability or unacceptability of any one or more particular varieties of tobacco leaf or the unavailability of nicotine extract necessary to manufacture our operating companies’ products could negatively impact our ability to continue marketing existing products or impact adult tobacco consumer product acceptability, which could have a material adverse effect on our business and profitability.

The unavailability or

unacceptability of any one or more particular varieties of tobacco leaf or the unavailability of nicotine extract necessary to manufacture our operating companies’ products could negatively impact our ability to continue marketing existing products or impact adult nicotine consumer product acceptability, which could have a material adverse effect on our business and profitability.

In addition, the nicotine used in our operating companies’ innovative smoke-free products is extracted from tobacco produced in one country.

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As consumer demand increases for innovative smoke-free products and decreases for combustible and MST products, the volume of raw materials, ingredients and component parts required for the production of combustible and MST products has decreased.

Reduced demand for raw materials, ingredients and component parts may reduce supply and availability of raw materials, ingredients and component parts as suppliers divert resources to other products or cease producing

these products.

Furthermore, challenging economic conditions can create the risk that our suppliers, distributors, logistics providers or other third-party partners suffer financial or operational difficulties, which may impact their ability to provide us with or distribute finished product, raw materials and component parts and services in a timely manner or at all.

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However, the effects of current macroeconomic and geopolitical conditions, including tariffs, on prices, availability and quality of such items may continue, which could have a material adverse effect on our business, results of operations, cash flows or financial position.

In addition, government taxes and restrictions and prohibitions on the sale and use of certain materials used in our operating companies’ products may limit access to, and increase the costs of, raw materials and component parts and, potentially, impede our ability to sell certain of our products.

For example, certain states have passed extended producer responsibility legislation concerning packaging.

Because certain of our products’ packaging consists of single-use plastics, single-use plastic bans and extended producer responsibility mandates could result in bans on some of our product packaging or our products and adversely impact our costs and revenues.

Because certain of our operating companies’ products’ packaging consists of single-use plastics, single-use plastic bans and extended producer responsibility mandates could result in bans on some of our operating companies’ product packaging or their products and adversely impact our costs and revenues.

Additional taxes and limitations on the use of certain single-use plastics have been proposed by the U.S.

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Operating Results

For the Nine Months Ended September 30, For the Three Months Ended September 30,

(in millions) 2025 2024 Change 2025 2024 Change

For the Three Months Ended March 31,

(in millions) 2026 2025 Change

Net revenues $ 4,758 $ 4,622 2.9 %

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Reported OCI margins (1)

63.8 % 61.5 % 2.3 pp 64.1 % 63.1 % 1.0 pp

65.0 % 63.2 % 1.8 pp

Adjusted OCI margins (1)

64.4 % 61.7 % 2.7 pp 64.4 % 63.1 % 1.3 pp

65.1 % 64.4 % 0.7 pp

(1) Reported and adjusted OCI margins are calculated as reported and adjusted OCI, respectively, divided by revenues net of excise taxes.

Nine Months Ended September 30, 2025 Compared with Nine Months Ended September 30, 2024

Net revenues, which include excise taxes billed to customers, decreased $575 million (3.6%), due primarily to lower shipment volume ($1,944 million), partially offset by higher pricing ($1,327 million), which includes higher promotional investments.

Reported OCI increased $158 million (1.9%), due primarily to higher pricing, which includes higher promotional investments, lower per unit settlement charges, lower costs ($33 million) and lower tobacco and health and certain other litigation items ($15 million), partially offset by lower shipment volume ($1,308 million), costs associated with the Initiative in 2025 ($38 million) and lower NPM adjustment items ($27 million).

Adjusted OCI increased $208 million (2.5%), due primarily to higher pricing, which includes higher promotional investments, lower per unit settlement charges and lower costs, partially offset by lower shipment volume.

Three Months Ended September 30, 2025 Compared with Three Months Ended September 30, 2024

Net revenues, which include excise taxes billed to customers, decreased $153 million (2.8%), due primarily to lower shipment volume ($530 million), partially offset by higher pricing ($359 million), which includes higher promotional investments.

Reported OCI increased $5 million (0.2%), due primarily to higher pricing, which includes higher promotional investments, lower per unit settlement charges and lower tobacco and health and certain other litigation items ($17 million), partially offset by lower shipment volume ($366 million), lower NPM adjustment items ($21 million) and higher costs ($20 million).

Adjusted OCI increased $21 million (0.7%), due primarily to higher pricing, which includes higher promotional investments, lower per unit settlement charges, partially offset by lower shipment volume and higher costs.

Three Months Ended March 31, 2026 Compared with Three Months Ended March 31, 2025

Net revenues, which include excise taxes billed to customers, increased $136 million (2.9%), due primarily to higher pricing ($330 million), which includes higher promotional investments, lower shipment volume and a higher percentage of discount shipment volume relative to premium (“volume/cigarette mix”) ($196 million).

Reported OCI increased $204 million (8.3%), due primarily to higher pricing, which includes higher promotional investments, 2026 refunds of taxes and duties paid on imported cigarettes ($51 million) and lower tobacco and health and certain other litigation items ($34 million), p artially offset by volume/cigarette mix ($160 million) and higher manufacturing costs ($47 million).

Adjusted OCI increased $158 million (6.3%), due primarily to higher pricing, which includes higher promotional investments, and 2026 refunds of taxes and duties paid on imported cigarettes, p artially offset by volume/cigarette mix and higher manufacturing costs.

Shipment Volume and Retail Share Results

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Shipment Volume

For the Nine Months Ended September 30, For the Three Months Ended September 30,

(sticks in millions) 2025 2024 Change 2025 2024 Change

For the Three Months Ended March 31,

(sticks in millions) 2026 2025 Change

Marlboro 11,960 12,978 (7.8) %

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Discount 1,306 548 100%+

Total cigarettes 46,462 51,989 (10.6) % 16,192 17,641 (8.2) %

Total domestic cigarettes (1)

13,867 14,204 (2.4) %

Black & Mild 403 405 (0.5) %

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Total cigars 404 405 (0.2) %

Total smokeable products 47,799 53,312 (10.3) % 16,645 18,085 (8.0) %

Cigarettes shipment volume includes Marlboro ;

Total domestic smokeable products 14,271 14,609 (2.3) %

Contract manufactured export cigarettes (2)

(1) Domestic cigarettes shipment volume includes Marlboro ;

Other premium brands, such as Virginia Slims and Parliament ;

and Discount brands, which include L&M and Basic.

Cigarettes volume includes units sold as well as promotional units but excludes units not considered domestic, which are not material to our smokeable products segment.

The following table summarizes our cigarettes retail share performance:

For the Nine Months Ended September 30, For the Three Months Ended September 30,

2025 2024 Percentage Point Change 2025 2024 Percentage Point Change

Domestic cigarettes volume includes units sold as well as promotional units sold for distribution in the U.S.

and excludes units sold for distribution to Puerto Rico, U.S.

Territories to overseas military and by Philip Morris Duty Free Inc., none of which, individually or in the aggregate, is material to our smokeable products segment.

(2) Contract manufactured export cigarettes shipment volume represents contract manufactured cigarettes for third parties that market and sell tobacco products outside the U.S.

The following table summarizes our domestic cigarettes retail share performance:

For the Three Months Ended March 31,

2026 2025 Percentage Point Change

Marlboro 39.7 % 41.1 % (1.4)

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For a discussion of volume trends and factors that impact volume and retail share performance, see Trends and Developments and Operating Results by Business Segment - Business Environment - Summary above.

Nine Months Ended September 30, 2025 Compared with the Nine Months Ended September 30, 2024

Our smokeable products segment’s reported domestic cigarettes shipment volume decreased 10.6%, driven primarily by the industry’s decline rate (impacted by the continued growth of flavored disposable e-vapor products, the majority of which we believe have evaded the regulatory process, and discretionary income pressures on adult tobacco consumers), retail share losses and calendar differences, partially offset by trade inventory movements.

When adjusted for calendar differences and trade inventory movements, our smokeable products segment domestic cigarette shipment volume decreased by an estimated 10.5%.

When adjusted for trade inventory movements, calendar differences and other factors, total estimated domestic cigarette industry volume decreased by an estimated 8.5%.

Shipments of premium cigarettes accounted for 94.3% and 95.8% of our smokeable products segment’s reported domestic cigarettes shipment volume for the nine months ended September 30, 2025 and 2024, respectively.

Marlboro share of the premium segment was 59.5%, an increase of 0.2 share points.

Total cigarettes industry discount category retail share was 31.4%, an increase of 2.0 share points, primarily due to continued discretionary income pressures on adult tobacco consumers.

Three Months Ended September 30, 2025 Compared with the Three Months Ended September 30, 2024

Our smokeable products segment’s reported domestic cigarettes shipment volume decreased 8.2%, driven primarily by the industry’s decline rate (impacted by the continued growth of flavored disposable e-vapor products, the majority of which we believe have evaded the regulatory process, and discretionary income pressures on adult tobacco consumers) and retail share losses, partially offset by trade inventory movements.

When adjusted for trade inventory movements and calendar differences, our smokeable products segment domestic cigarette shipment volume decreased by an estimated 9%.

When adjusted for trade inventory movements, calendar differences and other factors, total estimated domestic cigarette industry volume decreased by an estimated 8%.

Shipments of premium cigarettes accounted for 92.5% and 96.1% of our smokeable products segment’s reported domestic cigarettes shipment volume for the three months ended September 30, 2025 and 2024, respectively.

Marlboro share of the premium segment was 59.6%, an increase of 0.3 share points versus the prior year and 0.1 share point sequentially.

Total cigarettes industry discount category retail share was 32.2%, an increase of 2.4 share points versus the prior year and 1.0 share point sequentially, primarily due to continued discretionary income pressures on adult tobacco consumers.

For a discussion regarding discount category dynamics in 2025, the growth of flavored disposable e-vapor products and the economic conditions that impact adult tobacco consumer purchasing behavior, see Trends and Developments and Operating Results by Business Segment - Business Environment - Summary above.

Three Months Ended March 31, 2026 Compared with the Three Months Ended March 31, 2025

Our smokeable products segment’s reported domestic cigarettes shipment volume decreased 2.4%, driven primarily by the industry’s decline rate (impacted by the continued discretionary income pressures on adult nicotine consumers), partially offset by trade inventory movements and retail share gains.

When adjusted for trade inventory movements, our smokeable products segment domestic cigarette shipment volume decreased by an estimated 4%.

When adjusted for trade inventory movements, total domestic cigarette industry volume decreased by an estimated 5%.

Marlboro ’s retail share of the premium segment was 59.5%, an increase of 0.1 share point versus the prior year and 0.2 share points sequentially.

Total cigarettes industry discount category retail share was 33.3%, an increase of 2.4 share points versus the prior year and 0.5 share points sequentially, due primarily to continued discretionary income pressures on adult nicotine consumers.

Pricing Actions

PM USA and Middleton executed the following pricing actions during 2026 and 2025:

▪ Effective February 8, 2026, Middleton increased various list prices across substantially all of its cigar brands resulting in a weighted-average increase of approximately $0.12 per five-pack.

▪ Effective January 18, 2026, PM USA increased the list price of Marlboro (excluding Mainline Menthol and 72s Menthol) and L&M by $0.20 per pack.

PM USA also increased the list price of all its other premium cigarette brands by $0.25 per pack.

▪ Effective October 12, 2025, PM USA increased the list price of Marlboro (excluding Mainline Menthol and 72s Menthol) and L&M by $0.17 per pack.

PM USA also increased the list price of all its other premium cigarette brands by $0.22 per pack.

▪ Effective July 20, 2025, PM USA increased the list price of Marlboro (excluding Mainline Menthol and 72s Menthol) and L&M by $0.17 per pack.

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PM USA also increased the list price of all its other premium cigarette brands by $0.22 per pack.

▪ Effective October 20, 2024, PM USA increased the list price of Marlboro (excluding Mainline Menthol and 72s Menthol) , L&M and Basic by $0.17 per pack.

PM USA also increased the list price of all its other cigarette brands by $0.22 per pack.

▪ Effective October 6, 2024, Middleton increased various list prices across substantially all of its cigar brands resulting in a weighted-average increase of approximately $0.13 per five-pack.

▪ Effective July 14, 2024, PM USA increased the list price of Marlboro (excluding Mainline Menthol and 72s Menthol) , L&M and Basic by $0.17 per pack.

PM USA also increased the list price of all its other cigarette brands by $0.22 per pack.

▪ Effective April 21, 2024, Middleton increased various list prices across substantially all of its cigar brands resulting in a weighted-average increase of approximately $0.16 per five-pack.

▪ Effective April 14, 2024, PM USA increased the list price of Marlboro (excluding Mainline Menthol and 72s Menthol) , L&M and Basic by $0.20 per pack.

PM USA also increased the list price of all its other cigarette brands by $0.25 per pack.

▪ Effective January 14, 2024, PM USA increased the list price of Marlboro (excluding Mainline Menthol and 72s Menthol) , L&M and Basic by $0.15 per pack.

PM USA also increased the list price of all its other cigarette brands by $0.20 per pack.

▪ Effective October 12, 2025, PM USA increased the list price of Marlboro (excluding Mainline Menthol and 72s Menthol) and L&M by $0.17 per pack.

▪ Effective April 12, 2026, PM USA increased the list price of Marlboro (excluding Mainline Menthol and 72s Menthol) and L&M by $0.20 per pack.

PM USA also increased the list price of all its other premium cigarette brands by $0.25 per pack.

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Operating Results

For the Nine Months Ended September 30, For the Three Months Ended September 30,

(in millions) 2025 2024 Change 2025 2024 Change

For the Three Months Ended March 31,

(in millions) 2026 2025 Change

Net revenues $ 669 $ 654 2.3 %

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Reported OCI margins (1)

68.7 % 49.6 % 19.1 pp 69.0 % 66.8 % 2.2 pp

67.2 % 68.8 % (1.6) pp

Adjusted OCI margins (1)

69.0 % 67.2 % 1.8 pp 69.2 % 66.8 % 2.4 pp

67.4 % 69.2 % (1.8) pp

(1) Reported and adjusted OCI margins are calculated as reported and adjusted OCI, respectively, divided by revenues net of excise taxes.

Nine Months Ended September 30, 2025 Compared with Nine Months Ended September 30, 2024

Three Months Ended March 31, 2026 Compared with Three Months Ended March 31, 2025

Net revenues, which include excise taxes billed to customers, increased $15 million (2.3%), as higher pricing ($47 million), which includes higher promotional investments, was partially offset by lower shipment volume and a higher percentage of on!

shipment volume relative to MST (“volume/mix”) ($180 million).

Reported OCI increased $394 million (39.6%), due primarily to a non-cash impairment of the Skoal trademark ($354 million) in 2024, higher pricing, which includes higher promotional investments, and lower costs ($29 million), partially offset by lower volume/mix ($176 million).

Adjusted OCI increased $45 million (3.3%), due to higher pricing, which includes higher promotional investments, and lower costs, partially offset by lower volume/mix.

Three Months Ended September 30, 2025 Compared with Three Months Ended September 30, 2024

Net revenues, which include excise taxes billed to customers, decreased $33 million (4.6%) due primarily to lower volume/mix ($97 million), partially offset by higher pricing ($64 million).

Reported OCI decreased $5 million (1.1%), due primarily to lower volume/mix ($86 million), partially offset by higher pricing and lower costs ($18 million).

Adjusted OCI decreased $4 million (0.9%), due primarily to lower volume/mix, partially offset by higher pricing and lower costs.

shipment volume relative to MST (“volume/product mix”) ($32 million).

Reported and adjusted OCI were essentially unchanged as higher pricing, which includes higher promotional investments, was mostly offset by lower volume/product mix ($29 million) and higher costs ($17 million).

Shipment Volume and Retail Share Results

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Shipment Volume

For the Nine Months Ended September 30, For the Three Months Ended September 30,

(cans in millions) 2025 2024 Change 2025 2024 Change

For the Three Months Ended March 31,

(cans in millions) 2026 2025 Change

Copenhagen 80.4 89.7 (10.4) %

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To calculate volumes of cans shipped, one can of oral nicotine pouches, irrespective of the number of pouches in the can, is assumed to be equivalent to one can of MST.

We have restated prior period retail share performance data and estimated industry volume to reflect the inclusion of synthetic oral nicotine pouch products.

Prior to 2025, our reported oral tobacco segment retail share performance data excluded synthetic oral nicotine pouch products.

Throughout 2024 and into the first quarter of 2025, we tracked the quarterly sequential growth of synthetic oral nicotine pouch products in various traditional tobacco retailers.

Based on the consistency of this trend, beginning in the first quarter of 2025 our reported oral tobacco products segment retail share performance data and category industry volume estimates have been updated to include synthetic oral nicotine pouch products.

The following table summarizes our oral tobacco products segment’s retail restated share performance:

For the Nine Months Ended September 30, For the Three Months Ended September 30,

2025 2024 Percentage Point Change 2025 2024 Percentage Point Change

The following table summarizes our oral tobacco products segment’s retail share performance:

For the Three Months Ended March 31,

2026 2025 Percentage Point Change

Copenhagen 13.7 % 16.9 % (3.2)

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Nine Months Ended September 30, 2025 Compared with Nine Months Ended September 30, 2024

Our oral tobacco products segment’s reported domestic shipment volume decreased 5.2%, driven primarily by retail share losses, calendar differences and other factors, partially offset by the industry’s growth rate and trade inventory movements.

When adjusted for calendar differences and trade inventory movements, our oral tobacco products segment’s reported domestic shipment volume decreased by an estimated 3.5%.

Total oral tobacco products category industry volume increased by an estimated 14.5% over the six months ended September 30, 2025, driven primarily by growth in oral nicotine pouches, partially offset by declines in MST volumes.

nicotine pouch category grew to 52.4% of the U.S.

oral tobacco category, an increase of 10.0 share points versus the prior year.

In addition, on!

’s share of the nicotine pouch category was 16.6%, a decrease of 2.1 share points versus the prior year.

Three Months Ended September 30, 2025 Compared with Three Months Ended September 30, 2024

Our oral tobacco products segment’s reported domestic shipment volume decreased 9.6%, driven primarily by retail share losses, calendar differences, trade inventory movements and other factors, partially offset by the industry’s growth rate.

When adjusted for calendar differences and trade inventory movements, our oral tobacco products segment’s reported domestic shipment volume decreased by an estimated 5.5%.

Three Months Ended March 31, 2026 Compared with Three Months Ended March 31, 2025

Our oral tobacco products segment’s reported domestic shipment volume decreased 3.1%, driven primarily by retail share losses, partially offset by the industry’s growth rate and trade inventory movements.

When adjusted for trade inventory movements, our oral tobacco products segment’s reported domestic shipment volume decreased by an estimated 8.5%.

Total oral tobacco products category industry volume increased by an estimated 9.5% over the six months ended March 31, 2026, driven primarily by growth in oral nicotine pouches, partially offset by declines in MST volumes.

Our oral tobacco products segment’s retail share was 29.0%, a decrease of 5.5 share points versus the prior year due primarily to share declines for MST products, and a decrease of 0.4 share points sequentially, as share declines for MST products were partially offset by oral nicotine pouch segment share growth.

oral tobacco category share for on!

nicotine pouches was 8.7%, a decrease of 0.1 share point versus the prior year and unchanged sequentially.

nicotine pouches was 7.8%, a decrease of 0.8 share points versus the prior year and an increase of 0.2 share points sequentially.

nicotine pouch category grew to 58.1% of the U.S.

oral tobacco category, an increase of 11.1 share points versus the prior year.

In addition, on!

’s share of the nicotine pouch category was 15.6%, a decrease of 4.1 share points versus the prior year.

For a discussion regarding the growth of oral nicotine pouch products and the related impact on the MST category and economic conditions that impact adult tobacco consumer purchasing behavior, see Trends and Developments and Operating Results by Business Segment - Business Environment - Summary above.

oral tobacco category, an increase of 9.1 share points.

’s share of the nicotine pouch category was 13.4%, a decrease of 4.2 share points.

Pricing Actions

USSTC and Helix executed the following pricing actions during 2026 and 2025:

▪ Effective March 29, 2026, Helix increased the list price on its on!

brand by $0.20 per can.

▪ Effective February 17, 2026, USSTC increased the list price on its Copenhagen , Skoal and Red Seal brands by $0.12 per can.

▪ Effective November 18, 2025, USSTC increased the list price on its Copenhagen , Skoal and Red Seal brands by $0.10 per can.

USSTC also increased the list price on its Husky brands by $0.08 per can.

▪ Effective July 22, 2025, USSTC increased the list price on its Copenhagen and Red Seal brands by $0.12 per can.

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USSTC also increased the list price on its Skoal brands by $0.17 per can.

▪ Effective August 25, 2024, Helix increased the list price on its on!

brand by $0.10 per can.

▪ Effective July 23, 2024, USSTC increased the list price on its Copenhagen , Skoal and Red Seal brands by $0.10 per can.

▪ Effective April 23, 2024, USSTC increased the list price on its Copenhagen , Skoal and Red Seal brands by $0.10 per can.

▪ Effective January 23, 2024, USSTC increased the list price on its Copenhagen , Skoal and Red Seal brands by $0.11 per can.

Liquidity and Capital Resources

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

At September 30, 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.

At March 31, 2026, 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.

In addition, we receive cash dividends on our interest in ABI and will continue to do so as long as we hold shares in ABI and ABI pays dividends.

At September 30, 2025, we had $3.5 billion of cash and cash equivalents.

At March 31, 2026, we had $3.5 billion of cash and cash equivalents.

In addition to having access to the operating cash flows of our subsidiaries, our capital resources include access to credit markets in the form of commercial paper, availability under our $3.0 billion senior unsecured 5-year revolving credit agreement (“Credit Agreement”), which we use for general corporate purposes, and access to credit markets through the issuance of long-term senior unsecured notes.

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The impact of credit ratings on the cost of borrowings under our Credit Agreement is discussed in Note 10.

At September 30, 2025, the credit ratings and outlook for our indebtedness by major credit rating agencies were:

Debt (“Note 10”).

At March 31, 2026, the credit ratings and outlook for our indebtedness by major credit rating agencies were:

Short-term Debt Long-term Debt Outlook

Moody’s Investors Service, Inc.

(“Moody’s”) P-2 A3 Stable

P-2 A3 Stable

Standard & Poor’s Financial Services LLC (“S&P”) A-2 BBB+ Stable

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Credit Lines - From time to time, we have short-term borrowing needs to meet our working capital requirements arising from the timing of payments under State Settlement Agreements, quarterly income tax payments and quarterly dividend payments, and generally use our commercial paper program to meet those needs.

At September 30, 2025, we had availability under our Credit Agreement for borrowings of up to an aggregate principal amount of $3.0 billion, and we were in compliance with the covenants in our Credit Agreement.

At March 31, 2026, we had availability under our Credit Agreement for borrowings of up to an aggregate principal amount of $3.0 billion, and we were in compliance with the covenants in our Credit Agreement.

We monitor the credit quality of our bank group and do not know of any potential non-performing credit provider in that group.

For further discussion on borrowing arrangements, see Note 10.

Long-Term Debt - At September 30, 2025 and December 31, 2024, our total long-term debt was $25.7 billion and $24.9 billion, respectively.

In the first and third quarters of 2025, we issued senior unsecured notes each in the aggregate principal amount of $1.0 billion ($2.0 billion total).

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

As a result of the issuances and repayments, the weighted-average coupon interest rate on our total long-term debt increased to approximately

4.5% at September 30, 2025 from approximately 4.3% at December 31, 2024.

Long-Term Debt - At March 31, 2026 and December 31, 2025, our total long-term debt was $24.6 billion and $25.7 billion, respectively.

In February 2026, we repaid in full at maturity our 4.400% senior unsecured notes in the aggregate principal amount of approximately $1.1 billion.

For further discussion of long-term debt, see Note 10.

At September 30, 2025, our debt-to-Consolidated net earnings and debt-to-Consolidated EBITDA ratios were calculated as follows:

For the Twelve Months Ended September 30, 2025 (1)

At March 31, 2026, our debt-to-Consolidated net earnings and debt-to-Consolidated EBITDA ratios were calculated as follows:

For the Twelve Months Ended March 31, 2026 (1)

(in millions)

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Dividends from less than 50% owned affiliates 208

Exit costs 38

Asset impairment and exit costs 978

Impairment of goodwill 285

Fair value adjustment for NJOY Transaction contingent payments 25

Consolidated EBITDA $ 12,837

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(1) Calculated for the four most recent fiscal quarters.

(2) Balance at September 30, 2025.

Guarantees and Other Similar Matters - As discussed in Note 14, we had unused letters of credit obtained in the ordinary course of business and guarantees (including third-party guarantees) outstanding at September 30, 2025.

From time to time, we also issue lines of credit to affiliated entities.

(2) Balance at March 31, 2026.

Guarantees and Other Similar Matters - As discussed in Note 12, we had unused letters of credit obtained in the ordinary course of business and certain guarantees to a limited number of third parties related to contractual obligations.

As part of the supplier financing program further discussed in Note 13.

Supplier Financing , Altria guarantees the financial obligations of ALCS under the financing program agreement.

Additional Financial Statement Information - Supplier Financing , Altria guarantees the financial obligations of ALCS under the financing program agreement.

In addition, as discussed below in Supplemental Guarantor Financial Information and in Note 10, PM USA guarantees our obligations under our outstanding debt securities, any borrowings under our Credit Agreement and any amounts outstanding under our commercial paper program.

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For further discussion of the State Settlement Agreements, see Health Care Cost Recovery Litigation in Note 12.

Based on current agreements, estimated annual industry volume decline rates, estimated operating income, estimated market share and inflation, the estimated amounts that we may charge to cost of sales for payments related to State Settlement Agreements and FDA user fees are $3.0 billion on average for the next three years.

Based on current agreements and estimates of inflation, operating income, market share and annual industry volume decline rates, the estimated amounts that we may charge to cost of sales for payments related to State Settlement Agreements and FDA user fees are $3.0 billion on average for the next three years.

The estimated amount excludes the potential impact of any NPM Adjustment Items.

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The amounts charged to cost of sales for FDA user fees are generally paid in the quarter in which the fees are incurred.

We paid approximately $2.9 billion and $3.3 billion for the nine months ended September 30, 2025 and 2024, respectively, in connection with the State Settlement Agreements and FDA user fees, primarily all of which was paid in the second quarter of each period.

We recorded $2.5 billion and $2.9 billion of charges to cost of sales for the nine months ended September 30, 2025 and 2024, respectively, and $0.9 billion of charges to cost of sales for each of the three months ended September 30, 2025 and 2024, in connection with the State Settlement Agreements and FDA user fees.

As previously stated, the payments due under the terms of the State Settlement Agreements and FDA user fees are subject to adjustment for several factors, including volume, operating income, market share and inflation.

We paid approximately $2.4 billion in April 2026 for amounts accrued in 2025 under the State Settlement Agreements.

We recorded $0.7 billion of charges to cost of sales for each of the three months ended March 31, 2026 and 2025, in connection with the State Settlement Agreements and FDA user fees.

The payments due under the terms of the State Settlement Agreements and FDA user fees are subject to adjustment for several factors, including inflation, operating income, market share and volume.

The future payment amounts discussed above are estimates, and actual payment amounts will differ to the extent underlying assumptions differ from actual future results.

further discussion on the potential impact of inflation on future payments, see Operating Results by Business Segment - Business Environment - State Settlement Agreements above.

Litigation-Related Deposits and Payments - With respect to certain adverse verdicts currently on appeal, to obtain stays of judgments pending appeals, as of September 30, 2025, PM USA had posted appeal bonds totaling $24 million, which have been collateralized with restricted cash that is included in assets on our condensed consolidated balance sheet.

Litigation is subject to uncertainty, and an adverse outcome or settlement of litigation could have a material adverse effect on our results of operations, cash flows or financial position in a particular fiscal quarter or fiscal year, as more fully disclosed in Note 14.

For further discussion on the potential impact of inflation on future payments, see Operating Results by Business Segment - Business Environment - State Settlement Agreements above.

Litigation-Related Deposits and Payments - Litigation is subject to uncertainty, and an adverse outcome or settlement of litigation could have a material adverse effect on our results of operations, cash flows or financial position in a particular fiscal quarter or fiscal year, as more fully disclosed in Note 12.

Equity and Dividends

During the first nine months of 2025 and 2024, we paid dividends of $5,175 million and $5,108 million, respectively, an increase of 1.3%, reflecting a higher dividend rate, partially offset by fewer shares outstanding as a result of shares we repurchased under our share repurchase programs.

In August 2025, our Board of Directors (“Board of Directors” or “Board”) approved a 3.9% increase in the quarterly dividend rate to $1.06 per share of our common stock versus the previous rate of $1.02 per share.

During the first three months of 2026 and 2025, we paid dividends of $1,780 million and $1,730 million, respectively, an increase of 2.9%, reflecting a higher dividend rate, partially offset by fewer shares outstanding as a result of shares we repurchased under our share

repurchase program.

Our current annualized dividend rate is $4.24 per share.

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Future dividend payments remain subject to the discretion of our Board.

In October 2025, the Board authorized a $1.0 billion expansion of our existing share repurchase program from $1.0 billion to $2.0 billion, which now expires on December 31, 2026.

For further discussion of our share repurchase programs, see Note 13.

Background and Basis of Presentation and Part II, Item 2.

Additional Financial Statement Information - Share Repurchases and Part II, Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds of this Form 10-Q.

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Cash Provided by/Used in Operating Activities

During the first nine months of 2025, net cash provided by operating activities was $6,019 million compared with $5,413 million during the first nine months of 2024.

This increase was due primarily to lower payments for State Settlement Agreements, excise taxes and litigation, and a portion of the NJOY contingent payments in 2024 ($140 million), partially offset by lower net revenues.

We had a working capital deficit at September 30, 2025 and December 31, 2024, and believe we have the ability to fund working capital deficits with cash provided by operating activities, borrowings under our Credit Agreement and access to the credit and capital markets.

During the first three months of 2026, net cash provided by operating activities was $2,324 million compared with $2,720 million during the first three months of 2025.

This decrease was due primarily to payments for certain transferable income tax credits in 2026 and higher payments for interest on long-term debt, partially offset by higher net revenues in our smokeable products segment.

We had a working capital deficit at March 31, 2026 and December 31, 2025, and believe we have the ability to fund working capital deficits with cash provided by operating activities, borrowings under our Credit Agreement and access to the credit and capital markets.

Cash Provided by/Used in Investing Activities

During the first nine months of 2025, net cash used in investing activities was $139 million compared with net cash provided by investing activities of $2,238 million during the first nine months of 2024.

This change was due primarily to proceeds from the ABI Transaction in 2024.

During the first three months of 2026, net cash used in investing activities was $109 million compared with $43 million during the first three months of 2025.

This increase was due primarily to investments in our manufacturing capabilities and innovative products.

Cash Provided by/Used in Financing Activities

During the first nine months of 2025, net cash used in financing activities was $5,542 million compared with $9,444 million during the first nine months of 2024.

This decrease was due to lower share repurchases, issuances of long-term debt in 2025 and a portion of the NJOY contingent payments in 2024 ($110 million), partially offset by higher repayments of long-term debt.

During the first three months of 2026, net cash used in financing activities was $3,157 million compared with $1,085 million during the first three months of 2025.

This increase was due to repayments of long-term debt in 2026 and issuances of long-term debt in 2025.

New Accounting Guidance Not Yet Adopted

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Parent Guarantor

September 30, 2025 December 31, 2024 September 30, 2025 December 31, 2024

March 31, 2026 December 31, 2025 March 31, 2026 December 31, 2025

Due from Non-Guarantor Subsidiaries

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(in millions of dollars)

For the Nine Months Ended September 30, 2025

For the Three Months Ended March 31, 2026

Guarantor (2)

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Net earnings (losses) (138) 1,923

(1) For the nine months ended September 30, 2025, net earnings (losses) include $277 million of intercompany interest income from non-guarantor subsidiaries and $314 million of interest expense from non-guarantor subsidiaries.

(2) For the nine months ended September 30, 2025, net earnings (losses) include $190 million of intercompany interest income from non-guarantor subsidiaries.

(1) For the three months ended March 31, 2026, net earnings (losses) include $92 million of intercompany interest income from non-guarantor subsidiaries and $103 million of interest expense from non-guarantor subsidiaries.

(2) For the three months ended March 31, 2026, net earnings (losses) include $65 million of intercompany interest income from non-guarantor subsidiaries.

Cautionary Factors That May Affect Future Results

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Any such statement is qualified by reference to the following cautionary statements.

We elaborate on these important

factors and the risks we face throughout this Form 10-Q, particularly in the Executive Summary and Business Environment sections preceding our discussion of the operating results of our segments above, and in our other publicly filed reports, including our 2024 Form 10-K and First Quarter Form 10-Q.

We elaborate on these important factors and the risks we face throughout this Form 10-Q, particularly in the Executive Summary and Business Environment sections preceding our discussion of the operating results of our segments above, and in our other publicly filed reports, including our 2025 Form 10-K.

These factors and risks include the following:

▪ our inability to anticipate and respond to changes in adult tobacco consumer preferences and purchase behavior;

▪ our inability to anticipate and respond to changes in adult nicotine consumer preferences and purchase behavior;

▪ our inability to compete effectively;

▪ the growth of the e-vapor category, including illicit disposable e-vapor products, which contributes to reductions in domestic cigarette consumption levels and shipment volume;

▪ the impact of illicit trade in tobacco products and the sale of products designed to avoid the regulatory framework for tobacco products, each of which contribute to reductions in the consumption levels and shipment volumes of our businesses’ products;

▪ our failure to develop and commercialize innovative products, including tobacco products that may reduce health risks relative to other tobacco products and appeal to adult tobacco consumers;

▪ changes, including in macroeconomic and geopolitical conditions (including inflation and tariffs), that result in shifts in adult tobacco consumer disposable income and purchasing behavior, including choosing lower-priced and discount brands or products, and reductions in shipment volumes;

▪ the impact of illicit trade in nicotine products and the sale of products designed to avoid the regulatory framework for nicotine products, each of which contribute to reductions in the consumption levels and shipment volumes of our businesses’ products;

▪ our failure to develop and commercialize innovative products, including nicotine products that may reduce health risks relative to other nicotine products and appeal to adult nicotine consumers;

▪ changes, including in macroeconomic and geopolitical conditions (including inflation, tariffs and the economic impacts of international armed conflicts), that result in shifts in adult nicotine consumer disposable income and purchasing behavior, including choosing lower-priced and discount brands or products, and reductions in shipment volumes;

▪ unfavorable outcomes with respect to litigation proceedings or any governmental investigations, including significant monetary and non-monetary remedies and importation bans;

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▪ the risk that regulators, including the FDA, and courts may interpret laws, rules and regulations applicable to our operating companies’ products differently than we do;

▪ increases in tobacco product-related taxes;

▪ our failure to complete or manage successfully strategic relationships or transactions, including acquisitions, dispositions, joint ventures and investments in third parties, or realize the anticipated benefits of such transactions;

▪ significant changes in price, availability or quality of tobacco, other raw materials or component parts, including as a result of changes in macroeconomic, climate and geopolitical conditions;

▪ increases in nicotine product-related taxes;

▪ our failure to complete or manage successfully strategic relationships or transactions, including acquisitions, dispositions, joint ventures, commercial relationships and investments in third parties, or realize the anticipated benefits of such transactions;

▪ significant changes in price, availability or quality of tobacco, other raw materials or component parts, including as a result of changes in macroeconomic, geopolitical, climate and environmental conditions;

▪ our reliance on a few significant facilities and a small number of key suppliers, distributors and distribution chain service providers and the risks associated with an extended disruption at a facility or in service by a supplier, distributor or distribution chain service provider;

▪ the risk that we may be required to write down goodwill and intangible assets, including trademarks and other intellectual property, due to impairment;

▪ the risks associated with the Initiative, including risks relating to business continuity, our internal control over financial reporting and audit procedures and our ability to recognize the expected savings;

▪ the risks associated with our Initiative, including risks relating to business continuity, our internal control over financial reporting and audit procedures and our ability to recognize the expected efficiencies;

▪ the risk that we could decide, or be required, to recall products;

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▪ our inability to attract and retain a highly skilled workforce due to the decreasing social acceptance of tobacco usage, tobacco control actions and other factors;

▪ the risks associated with the various U.S.

and foreign laws and regulations to which we are subject due to our international business operations;

▪ the compliance risks associated with our expanded international business activities and the related complexity of U.S.

and foreign laws and regulations applicable to those activities;

▪ the risks concerning a challenge to our tax positions, an increase in the income tax rate or other changes to federal or state tax laws;

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis