Condensed Consolidating Financial Information | Condensed Consolidating Financial Information: PM USA, which is a 100% owned subsidiary of Altria Group, Inc., has guaranteed Altria Group, Inc.’s obligations under its outstanding debt securities, borrowings under its Credit Agreement and amounts outstanding under its commercial paper program (the “Guarantees”). Pursuant to the Guarantees, PM USA fully and unconditionally guarantees, as primary obligor, the payment and performance of Altria Group, Inc.’s obligations under the guaranteed debt instruments (the “Obligations”), subject to release under certain customary circumstances as noted below. The Guarantees provide that PM USA guarantees the punctual payment when due, whether at stated maturity, by acceleration or otherwise, of the Obligations. The liability of PM USA under the Guarantees is absolute and unconditional irrespective of: any lack of validity, enforceability or genuineness of any provision of any agreement or instrument relating thereto; any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to departure from any agreement or instrument relating thereto; any exchange, release or non-perfection of any collateral, or any release or amendment or waiver of or consent to departure from any other guarantee, for all or any of the Obligations; or any other circumstance that might otherwise constitute a defense available to, or a discharge of, Altria Group, Inc. or PM USA. The obligations of PM USA under the Guarantees are limited to the maximum amount as will not result in PM USA’s obligations under the Guarantees constituting a fraudulent transfer or conveyance, after giving effect to such maximum amount and all other contingent and fixed liabilities of PM USA that are relevant under Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to the Guarantees. For this purpose, “Bankruptcy Law” means Title 11, U.S. Code, or any similar federal or state law for the relief of debtors. PM USA will be unconditionally released and discharged from the Obligations upon the earliest to occur of: ▪ the date, if any, on which PM USA consolidates with or merges into Altria Group, Inc. or any successor; ▪ the date, if any, on which Altria Group, Inc. or any successor consolidates with or merges into PM USA; ▪ the payment in full of the Obligations pertaining to such Guarantees; and ▪ the rating of Altria Group, Inc.’s long-term senior unsecured debt by Standard & Poor’s of A or higher. At June 30, 2015 , the respective principal 100% owned subsidiaries of Altria Group, Inc. and PM USA were not limited by long-term debt or other agreements in their ability to pay cash dividends or make other distributions with respect to their equity interests. The following sets forth the condensed consolidating balance sheets as of June 30, 2015 and December 31, 2014 , condensed consolidating statements of earnings and comprehensive earnings for the six and three months ended June 30, 2015 and 2014 , and condensed consolidating statements of cash flows for the six months ended June 30, 2015 and 2014 for Altria Group, Inc., PM USA and, collectively, Altria Group, Inc.’s other subsidiaries that are not guarantors of Altria Group, Inc.’s debt instruments (the “Non-Guarantor Subsidiaries”). The financial information is based on Altria Group, Inc.’s understanding of the Securities and Exchange Commission (“SEC”) interpretation and application of Rule 3-10 of SEC Regulation S-X. The financial information may not necessarily be indicative of results of operations or financial position had PM USA and the Non-Guarantor Subsidiaries operated as independent entities. Altria Group, Inc. and PM USA account for investments in their subsidiaries under the equity method of accounting. Condensed Consolidating Balance Sheets June 30, 2015 (in millions of dollars) Altria Group, Inc. PM USA Non- Guarantor Subsidiaries Total Consolidating Adjustments Consolidated Assets Cash and cash equivalents $ 1,077 $ 1 $ 45 $ — $ 1,123 Receivables — 4 138 — 142 Inventories: Leaf tobacco — 494 371 — 865 Other raw materials — 131 70 — 201 Work in process — 10 357 — 367 Finished product — 167 314 — 481 — 802 1,112 — 1,914 Due from Altria Group, Inc. and subsidiaries — 2,686 1,192 (3,878 ) — Deferred income taxes 1 1,189 9 (56 ) 1,143 Other current assets 179 82 58 (8 ) 311 Total current assets 1,257 4,764 2,554 (3,942 ) 4,633 Property, plant and equipment, at cost — 3,103 1,702 — 4,805 Less accumulated depreciation — 2,116 698 — 2,814 — 987 1,004 — 1,991 Goodwill — — 5,285 — 5,285 Other intangible assets, net — 2 12,037 — 12,039 Investment in SABMiller 6,117 — — — 6,117 Investment in consolidated subsidiaries 11,404 2,769 — (14,173 ) — Finance assets, net — — 1,339 — 1,339 Due from Altria Group, Inc. and subsidiaries 4,790 — — (4,790 ) — Other assets 141 543 105 (324 ) 465 Total Assets $ 23,709 $ 9,065 $ 22,324 $ (23,229 ) $ 31,869 Condensed Consolidating Balance Sheets (Continued) June 30, 2015 (in millions of dollars) Altria Group, Inc. PM USA Non- Guarantor Subsidiaries Total Consolidating Adjustments Consolidated Liabilities Current portion of long-term debt $ 1,000 $ — $ 3 $ — $ 1,003 Accounts payable 19 147 124 — 290 Accrued liabilities: Marketing — 588 86 — 674 Employment costs 14 9 81 — 104 Settlement charges — 2,199 7 — 2,206 Other 322 467 236 (64 ) 961 Dividends payable 1,023 — — — 1,023 Due to Altria Group, Inc. and subsidiaries 3,503 374 1 (3,878 ) — Total current liabilities 5,881 3,784 538 (3,942 ) 6,261 Long-term debt 12,901 — 16 — 12,917 Deferred income taxes 1,732 — 4,603 (324 ) 6,011 Accrued pension costs 231 — 714 — 945 Accrued postretirement health care costs — 1,588 863 — 2,451 Due to Altria Group, Inc. and subsidiaries — — 4,790 (4,790 ) — Other liabilities 185 139 151 — 475 Total liabilities 20,930 5,511 11,675 (9,056 ) 29,060 Contingencies Redeemable noncontrolling interest — — 36 — 36 Stockholders’ Equity Common stock 935 — 9 (9 ) 935 Additional paid-in capital 5,768 3,310 11,339 (14,649 ) 5,768 Earnings reinvested in the business 26,698 578 824 (1,402 ) 26,698 Accumulated other comprehensive losses (2,878 ) (334 ) (1,553 ) 1,887 (2,878 ) Cost of repurchased stock (27,744 ) — — — (27,744 ) Total stockholders’ equity attributable to Altria Group, Inc. 2,779 3,554 10,619 (14,173 ) 2,779 Noncontrolling interests — — (6 ) — (6 ) Total stockholders’ equity 2,779 3,554 10,613 (14,173 ) 2,773 Total Liabilities and Stockholders’ Equity $ 23,709 $ 9,065 $ 22,324 $ (23,229 ) $ 31,869 Condensed Consolidating Balance Sheets December 31, 2014 (in millions of dollars) Altria PM USA Non- Total Consolidated Assets Cash and cash equivalents $ 3,281 $ 3 $ 37 $ — $ 3,321 Receivables — 6 118 — 124 Inventories: Leaf tobacco — 616 375 — 991 Other raw materials — 132 68 — 200 Work in process — 4 425 — 429 Finished product — 134 286 — 420 — 886 1,154 — 2,040 Due from Altria Group, Inc. and subsidiaries 568 3,535 1,279 (5,382 ) — Deferred income taxes — 1,190 9 (56 ) 1,143 Other current assets 54 101 122 (27 ) 250 Total current assets 3,903 5,721 2,719 (5,465 ) 6,878 Property, plant and equipment, at cost — 3,112 1,643 — 4,755 Less accumulated depreciation — 2,091 681 — 2,772 — 1,021 962 — 1,983 Goodwill — — 5,285 — 5,285 Other intangible assets, net — 2 12,047 — 12,049 Investment in SABMiller 6,183 — — — 6,183 Investment in consolidated subsidiaries 10,665 2,775 — (13,440 ) — Finance assets, net — — 1,614 — 1,614 Due from Altria Group, Inc. and subsidiaries 4,790 — — (4,790 ) — Other assets 148 541 121 (327 ) 483 Total Assets $ 25,689 $ 10,060 $ 22,748 $ (24,022 ) $ 34,475 Condensed Consolidating Balance Sheets (Continued) December 31, 2014 (in millions of dollars) Altria PM USA Non- Total Consolidated Liabilities Current portion of long-term debt $ 1,000 $ — $ — $ — $ 1,000 Accounts payable 18 118 280 — 416 Accrued liabilities: Marketing — 505 113 — 618 Employment costs 18 10 158 — 186 Settlement charges — 3,495 5 — 3,500 Other 321 400 287 (83 ) 925 Dividends payable 1,028 — — — 1,028 Due to Altria Group, Inc. and subsidiaries 4,414 402 566 (5,382 ) — Total current liabilities 6,799 4,930 1,409 (5,465 ) 7,673 Long-term debt 13,693 — — — 13,693 Deferred income taxes 1,754 — 4,661 (327 ) 6,088 Accrued pension costs 233 — 779 — 1,012 Accrued postretirement health care costs — 1,608 853 — 2,461 Due to Altria Group, Inc. and subsidiaries — — 4,790 (4,790 ) — Other liabilities 196 151 156 — 503 Total liabilities 22,675 6,689 12,648 (10,582 ) 31,430 Contingencies Redeemable noncontrolling interest — — 35 — 35 Stockholders’ Equity Common stock 935 — 9 (9 ) 935 Additional paid-in capital 5,735 3,310 10,688 (13,998 ) 5,735 Earnings reinvested in the business 26,277 402 995 (1,397 ) 26,277 Accumulated other comprehensive losses (2,682 ) (341 ) (1,623 ) 1,964 (2,682 ) Cost of repurchased stock (27,251 ) — — — (27,251 ) Total stockholders’ equity attributable to Altria Group, Inc. 3,014 3,371 10,069 (13,440 ) 3,014 Noncontrolling interests — — (4 ) — (4 ) Total stockholders’ equity 3,014 3,371 10,065 (13,440 ) 3,010 Total Liabilities and Stockholders’ Equity $ 25,689 $ 10,060 $ 22,748 $ (24,022 ) $ 34,475 Condensed Consolidating Statements of Earnings and Comprehensive Earnings For the Six Months Ended June 30, 2015 (in millions of dollars) Altria PM USA Non- Total Consolidated Net revenues $ — $ 10,878 $ 1,560 $ (21 ) $ 12,417 Cost of sales — 3,312 510 (21 ) 3,801 Excise taxes on products — 3,164 106 — 3,270 Gross profit — 4,402 944 — 5,346 Marketing, administration and research costs 89 959 205 — 1,253 Asset impairment and exit costs — — 4 — 4 Operating (expense) income (89 ) 3,443 735 — 4,089 Interest and other debt expense, net 292 — 112 — 404 Loss on early extinguishment of debt 228 — — — 228 Earnings from equity investment in SABMiller (359 ) — — — (359 ) (Loss) Earnings before income taxes and equity earnings of subsidiaries (250 ) 3,443 623 — 3,816 (Benefit) provision for income taxes (145 ) 1,274 220 — 1,349 Equity earnings of subsidiaries 2,571 126 — (2,697 ) — Net earnings 2,466 2,295 403 (2,697 ) 2,467 Net earnings attributable to noncontrolling interests — — (1 ) — (1 ) Net earnings attributable to Altria Group, Inc. $ 2,466 $ 2,295 $ 402 $ (2,697 ) $ 2,466 Net earnings $ 2,466 $ 2,295 $ 403 $ (2,697 ) $ 2,467 Other comprehensive (losses) earnings, net of deferred income taxes (196 ) 7 70 (77 ) (196 ) Comprehensive earnings 2,270 2,302 473 (2,774 ) 2,271 Comprehensive earnings attributable to noncontrolling interests — — (1 ) — (1 ) Comprehensive earnings attributable to Altria Group, Inc. $ 2,270 $ 2,302 $ 472 $ (2,774 ) $ 2,270 Condensed Consolidating Statements of Earnings and Comprehensive Earnings For the Six Months Ended June 30, 2014 (in millions of dollars) Altria Group, Inc. PM USA Non- Guarantor Subsidiaries Total Consolidating Adjustments Consolidated Net revenues $ — $ 10,261 $ 1,534 $ (22 ) $ 11,773 Cost of sales — 3,247 495 (22 ) 3,720 Excise taxes on products — 3,089 105 — 3,194 Gross profit — 3,925 934 — 4,859 Marketing, administration and research costs 104 867 187 — 1,158 Asset impairment and exit costs — (8 ) — — (8 ) Operating (expense) income (104 ) 3,066 747 — 3,709 Interest and other debt expense (income), net 308 (47 ) 122 — 383 Earnings from equity investment in SABMiller (425 ) — — — (425 ) Earnings before income taxes and equity earnings of subsidiaries 13 3,113 625 — 3,751 (Benefit) provision for income taxes (65 ) 1,154 225 — 1,314 Equity earnings of subsidiaries 2,359 117 — (2,476 ) — Net earnings 2,437 2,076 400 (2,476 ) 2,437 Net earnings attributable to noncontrolling interests — — — — — Net earnings attributable to Altria Group, Inc. $ 2,437 $ 2,076 $ 400 $ (2,476 ) $ 2,437 Net earnings $ 2,437 $ 2,076 $ 400 $ (2,476 ) $ 2,437 Other comprehensive earnings, net of deferred income taxes 149 5 42 (47 ) 149 Comprehensive earnings 2,586 2,081 442 (2,523 ) 2,586 Comprehensive earnings attributable to noncontrolling interests — — — — — Comprehensive earnings attributable to Altria Group, Inc. $ 2,586 $ 2,081 $ 442 $ (2,523 ) $ 2,586 Condensed Consolidating Statements of Earnings and Comprehensive Earnings For the Three Months Ended June 30, 2015 (in millions of dollars) Altria PM USA Non- Total Consolidated Net revenues $ — $ 5,810 $ 815 $ (12 ) $ 6,613 Cost of sales — 1,746 270 (12 ) 2,004 Excise taxes on products — 1,684 54 — 1,738 Gross profit — 2,380 491 — 2,871 Marketing, administration and research costs 47 494 102 — 643 Asset impairment and exit costs — — 4 — 4 Operating (expense) income (47 ) 1,886 385 — 2,224 Interest and other debt expense, net 138 1 56 — 195 Earnings from equity investment in SABMiller (225 ) — — — (225 ) Earnings before income taxes and equity earnings of subsidiaries 40 1,885 329 — 2,254 (Benefit) provision for income taxes (2 ) 690 117 — 805 Equity earnings of subsidiaries 1,406 65 — (1,471 ) — Net earnings 1,448 1,260 212 (1,471 ) 1,449 Net earnings attributable to noncontrolling interests — — (1 ) — (1 ) Net earnings attributable to Altria Group, Inc. $ 1,448 $ 1,260 $ 211 $ (1,471 ) $ 1,448 Net earnings $ 1,448 $ 1,260 $ 212 $ (1,471 ) $ 1,449 Other comprehensive earnings, net of deferred income taxes 67 3 35 (38 ) 67 Comprehensive earnings 1,515 1,263 247 (1,509 ) 1,516 Comprehensive earnings attributable to noncontrolling interests — — (1 ) — (1 ) Comprehensive earnings attributable to $ 1,515 $ 1,263 $ 246 $ (1,509 ) $ 1,515 Condensed Consolidating Statements of Earnings and Comprehensive Earnings For the Three Months Ended June 30, 2014 (in millions of dollars) Altria PM USA Non- Total Consolidated Net revenues $ — $ 5,443 $ 831 $ (18 ) $ 6,256 Cost of sales — 1,706 280 (18 ) 1,968 Excise taxes on products — 1,629 56 — 1,685 Gross profit — 2,108 495 — 2,603 Marketing, administration and research costs 65 465 108 — 638 Asset impairment and exit costs — (10 ) — — (10 ) Operating (expense) income (65 ) 1,653 387 — 1,975 Interest and other debt expense, net 152 17 61 — 230 Earnings from equity investment in SABMiller (200 ) — — — (200 ) (Loss) earnings before income taxes and equity earnings of subsidiaries (17 ) 1,636 326 — 1,945 (Benefit) provision for income taxes (42 ) 607 118 — 683 Equity earnings of subsidiaries 1,237 64 — (1,301 ) — Net earnings 1,262 1,093 208 (1,301 ) 1,262 Net earnings attributable to noncontrolling interests — — — — — Net earnings attributable to Altria Group, Inc. $ 1,262 $ 1,093 $ 208 $ (1,301 ) $ 1,262 Net earnings $ 1,262 $ 1,093 $ 208 $ (1,301 ) $ 1,262 Other comprehensive earnings, net of deferred income taxes 89 3 20 (23 ) 89 Comprehensive earnings 1,351 1,096 228 (1,324 ) 1,351 Comprehensive earnings attributable to noncontrolling interests — — — — — Comprehensive earnings attributable to $ 1,351 $ 1,096 $ 228 $ (1,324 ) $ 1,351 Condensed Consolidating Statements of Cash Flows For the Six Months Ended June 30, 2015 (in millions of dollars) Altria Group, Inc. PM USA Non- Guarantor Subsidiaries Total Consolidating Adjustments Consolidated Cash Provided by Operating Activities Net cash provided by operating activities $ 2,316 $ 1,312 $ 311 $ (2,692 ) $ 1,247 Cash Provided by (Used in) Investing Activities Capital expenditures — (25 ) (74 ) — (99 ) Proceeds from finance assets — — 185 — 185 Other — 10 (9 ) — 1 Net cash (used in) provided by investing activities — (15 ) 102 — 87 Cash Provided by (Used in) Financing Activities Long-term debt repaid (793 ) — — — (793 ) Repurchases of common stock (455 ) — — — (455 ) Dividends paid on common stock (2,050 ) — — — (2,050 ) Changes in amounts due to/from Altria Group, Inc. and subsidiaries (996 ) 820 176 — — Premiums and fees related to early extinguishment of debt (226 ) — — — (226 ) Cash dividends paid to parent — (2,119 ) (573 ) 2,692 — Other — — (8 ) — (8 ) Net cash used in financing activities (4,520 ) (1,299 ) (405 ) 2,692 (3,532 ) Cash and cash equivalents: (Decrease) increase (2,204 ) (2 ) 8 — (2,198 ) Balance at beginning of period 3,281 3 37 — 3,321 Balance at end of period $ 1,077 $ 1 $ 45 $ — $ 1,123 Condensed Consolidating Statements of Cash Flows For the Six Months Ended June 30, 2014 (in millions of dollars) Altria Group, Inc. PM USA Non- Guarantor Subsidiaries Total Consolidating Adjustments Consolidated Cash Provided by Operating Activities Net cash provided by operating activities $ 2,121 $ 846 $ 223 $ (2,431 ) $ 759 Cash Provided by (Used in) Investing Activities Capital expenditures — (21 ) (39 ) — (60 ) Acquisition of Green Smoke, net of acquired cash — — (93 ) — (93 ) Proceeds from finance assets — — 189 — 189 Other — 70 (4 ) — 66 Net cash provided by investing activities — 49 53 — 102 Cash Provided by (Used in) Financing Activities Long-term debt repaid (525 ) — — — (525 ) Repurchases of common stock (404 ) — — — (404 ) Dividends paid on common stock (1,912 ) — — — (1,912 ) Changes in amounts due to/from Altria Group, Inc. and subsidiaries (1,248 ) 1,042 206 — — Cash dividends paid to parent — (1,938 ) (493 ) 2,431 — Other — — (2 ) — (2 ) Net cash used in financing activities (4,089 ) (896 ) (289 ) 2,431 (2,843 ) Cash and cash equivalents: Decrease (1,968 ) (1 ) (13 ) — (1,982 ) Balance at beginning of period 3,114 1 60 — 3,175 Balance at end of period $ 1,146 $ — $ 47 $ — $ 1,193 |