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 December 31, 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 December 31, 2015 and 2014 , condensed consolidating statements of earnings and comprehensive earnings for the years ended December 31, 2015 , 2014 and 2013 , and condensed consolidating statements of cash flows for the years ended December 31, 2015 , 2014 and 2013 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 (in millions of dollars) ____________________________ at December 31, 2015 Altria Group, Inc. PM USA Non- Guarantor Subsidiaries Total Consolidating Adjustments Consolidated Assets Cash and cash equivalents $ 2,313 $ — $ 56 $ — $ 2,369 Receivables — 7 117 — 124 Inventories: Leaf tobacco — 562 395 — 957 Other raw materials — 123 58 — 181 Work in process — 5 439 — 444 Finished product — 121 328 — 449 — 811 1,220 — 2,031 Due from Altria Group, Inc. and subsidiaries — 3,821 1,807 (5,628 ) — Deferred income taxes — 1,268 7 (100 ) 1,175 Other current assets 284 65 112 (74 ) 387 Total current assets 2,597 5,972 3,319 (5,802 ) 6,086 Property, plant and equipment, at cost — 3,102 1,775 — 4,877 Less accumulated depreciation — 2,157 738 — 2,895 — 945 1,037 — 1,982 Goodwill — — 5,285 — 5,285 Other intangible assets, net — 2 12,026 — 12,028 Investment in SABMiller 5,483 — — — 5,483 Investment in consolidated subsidiaries 11,648 2,715 — (14,363 ) — Finance assets, net — — 1,239 — 1,239 Due from Altria Group, Inc. and subsidiaries 4,790 — — (4,790 ) — Other assets 92 536 131 (327 ) 432 Total Assets $ 24,610 $ 10,170 $ 23,037 $ (25,282 ) $ 32,535 Condensed Consolidating Balance Sheets (Continued) (in millions of dollars) ____________________________ at December 31, 2015 Altria Group, Inc. PM USA Non- Guarantor Subsidiaries Total Consolidating Adjustments Consolidated Liabilities Current portion of long-term debt $ — $ — $ 4 $ — $ 4 Accounts payable 3 104 293 — 400 Accrued liabilities: Marketing — 586 109 — 695 Employment costs 18 11 169 — 198 Settlement charges — 3,585 5 — 3,590 Other 354 616 285 (174 ) 1,081 Dividends payable 1,110 — — — 1,110 Due to Altria Group, Inc. and subsidiaries 5,427 191 10 (5,628 ) — Total current liabilities 6,912 5,093 875 (5,802 ) 7,078 Long-term debt 12,903 — 12 — 12,915 Deferred income taxes 1,547 — 4,443 (327 ) 5,663 Accrued pension costs 215 — 1,062 — 1,277 Accrued postretirement health care costs — 1,460 785 — 2,245 Due to Altria Group, Inc. and subsidiaries — — 4,790 (4,790 ) — Other liabilities 153 126 168 — 447 Total Liabilities 21,730 6,679 12,135 (10,919 ) 29,625 Contingencies Redeemable noncontrolling interest — — 37 — 37 Stockholders’ Equity Common stock 935 — 9 (9 ) 935 Additional paid-in capital 5,813 3,310 11,456 (14,766 ) 5,813 Earnings reinvested in the business 27,257 436 1,099 (1,535 ) 27,257 Accumulated other comprehensive losses (3,280 ) (255 ) (1,692 ) 1,947 (3,280 ) Cost of repurchased stock (27,845 ) — — — (27,845 ) Total stockholders’ equity attributable to Altria Group, Inc. 2,880 3,491 10,872 (14,363 ) 2,880 Noncontrolling interests — — (7 ) — (7 ) Total stockholders’ equity 2,880 3,491 10,865 (14,363 ) 2,873 Total Liabilities and Stockholders’ Equity $ 24,610 $ 10,170 $ 23,037 $ (25,282 ) $ 32,535 Condensed Consolidating Balance Sheets (in millions of dollars) ____________________________ at December 31, 2014 Altria Group, Inc. PM USA Non- Guarantor Subsidiaries Total Consolidating Adjustments 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) (in millions of dollars) ____________________________ at December 31, 2014 Altria Group, Inc. PM USA Non- Guarantor Subsidiaries Total Consolidating Adjustments 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 (in millions of dollars) _____________________________ for the year ended December 31, 2015 Altria Group, Inc. PM USA Non- Guarantor Subsidiaries Total Consolidating Adjustments Consolidated Net revenues $ — $ 22,133 $ 3,342 $ (41 ) $ 25,434 Cost of sales — 6,664 1,117 (41 ) 7,740 Excise taxes on products — 6,369 211 — 6,580 Gross profit — 9,100 2,014 — 11,114 Marketing, administration and research costs 189 2,094 425 — 2,708 Changes to Mondelēz & PMI tax-related receivables/payables 41 — — — 41 Asset impairment and exit costs — — 4 — 4 Operating (expense) income (230 ) 7,006 1,585 — 8,361 Interest and other debt expense, net 560 33 224 — 817 Loss on early extinguishment of debt 228 — — — 228 Earnings from equity investment in SABMiller (757 ) — — — (757 ) Other income, net (5 ) — — — (5 ) (Loss) Earnings before income taxes and equity earnings of subsidiaries (256 ) 6,973 1,361 — 8,078 (Benefit) provision for income taxes (184 ) 2,536 483 — 2,835 Equity earnings of subsidiaries 5,313 268 — (5,581 ) — Net earnings 5,241 4,705 878 (5,581 ) 5,243 Net earnings attributable to noncontrolling interests — — (2 ) — (2 ) Net earnings attributable to Altria Group, Inc. $ 5,241 $ 4,705 $ 876 $ (5,581 ) $ 5,241 Net earnings $ 5,241 $ 4,705 $ 878 $ (5,581 ) $ 5,243 Other comprehensive (losses) earnings, net of deferred income taxes (598 ) 86 (69 ) (17 ) (598 ) Comprehensive earnings 4,643 4,791 809 (5,598 ) 4,645 Comprehensive earnings attributable to noncontrolling interests — — (2 ) — (2 ) Comprehensive earnings attributable to Altria Group, Inc. $ 4,643 $ 4,791 $ 807 $ (5,598 ) $ 4,643 Condensed Consolidating Statements of Earnings and Comprehensive Earnings (in millions of dollars) _____________________________ for the year ended December 31, 2014 Altria Group, Inc. PM USA Non- Guarantor Subsidiaries Total Consolidating Adjustments Consolidated Net revenues $ — $ 21,298 $ 3,267 $ (43 ) $ 24,522 Cost of sales — 6,722 1,106 (43 ) 7,785 Excise taxes on products — 6,358 219 — 6,577 Gross profit — 8,218 1,942 — 10,160 Marketing, administration and research costs 231 1,889 419 — 2,539 Changes to Mondelēz and PMI tax-related receivables/payables 2 — — — 2 Asset impairment and exit costs — (6 ) 5 — (1 ) Operating (expense) income (233 ) 6,335 1,518 — 7,620 Interest and other debt expense (income), net 614 (46 ) 240 — 808 Loss on early extinguishment of debt — — 44 — 44 Earnings from equity investment in SABMiller (1,006 ) — — — (1,006 ) Earnings before income taxes and equity earnings of subsidiaries 159 6,381 1,234 — 7,774 (Benefit) provision for income taxes (119 ) 2,381 442 — 2,704 Equity earnings of subsidiaries 4,792 244 — (5,036 ) — Net earnings 5,070 4,244 792 (5,036 ) 5,070 Net earnings attributable to noncontrolling interests — — — — — Net earnings attributable to Altria Group, Inc. $ 5,070 $ 4,244 $ 792 $ (5,036 ) $ 5,070 Net earnings $ 5,070 $ 4,244 $ 792 $ (5,036 ) $ 5,070 Other comprehensive losses, net of deferred income taxes (1,304 ) (110 ) (642 ) 752 (1,304 ) Comprehensive earnings 3,766 4,134 150 (4,284 ) 3,766 Comprehensive earnings attributable to noncontrolling interests — — — — — Comprehensive earnings attributable to Altria Group, Inc. $ 3,766 $ 4,134 $ 150 $ (4,284 ) $ 3,766 Condensed Consolidating Statements of Earnings and Comprehensive Earnings (in millions of dollars) _____________________________ for the year ended December 31, 2013 Altria Group, Inc. PM USA Non- Guarantor Subsidiaries Total Consolidating Adjustments Consolidated Net revenues $ — $ 21,231 $ 3,269 $ (34 ) $ 24,466 Cost of sales — 6,281 959 (34 ) 7,206 Excise taxes on products — 6,553 250 — 6,803 Gross profit — 8,397 2,060 — 10,457 Marketing, administration and research costs 223 1,837 280 — 2,340 Changes to Mondelēz and PMI tax-related receivables/payables 25 (3 ) — — 22 Asset impairment and exit costs — 3 8 — 11 Operating (expense) income (248 ) 6,560 1,772 — 8,084 Interest and other debt expense, net 643 2 404 — 1,049 Loss on early extinguishment of debt 1,084 — — — 1,084 Earnings from equity investment in SABMiller (991 ) — — — (991 ) (Loss) earnings before income taxes and equity earnings of subsidiaries (984 ) 6,558 1,368 — 6,942 (Benefit) provision for income taxes (488 ) 2,406 489 — 2,407 Equity earnings of subsidiaries 5,031 216 — (5,247 ) — Net earnings 4,535 4,368 879 (5,247 ) 4,535 Net earnings attributable to noncontrolling interests — — — — — Net earnings attributable to Altria Group, Inc. $ 4,535 $ 4,368 $ 879 $ (5,247 ) $ 4,535 Net earnings $ 4,535 $ 4,368 $ 879 $ (5,247 ) $ 4,535 Other comprehensive earnings, net of deferred income taxes 662 198 910 (1,108 ) 662 Comprehensive earnings 5,197 4,566 1,789 (6,355 ) 5,197 Comprehensive earnings attributable to noncontrolling interests — — — — — Comprehensive earnings attributable to Altria Group, Inc. $ 5,197 $ 4,566 $ 1,789 $ (6,355 ) $ 5,197 Condensed Consolidating Statements of Cash Flows (in millions of dollars) _____________________________ for the year ended December 31, 2015 Altria Group, Inc. PM USA Non- Guarantor Subsidiaries Total Consolidating Adjustments Consolidated Cash Provided by Operating Activities Net cash provided by operating activities $ 5,085 $ 5,204 $ 961 $ (5,440 ) $ 5,810 Cash Provided by (Used in) Investing Activities Capital expenditures — (51 ) (178 ) — (229 ) Proceeds from finance assets — — 354 — 354 Payment for derivative financial instrument (132 ) — — — (132 ) Other — 10 (18 ) — (8 ) Net cash (used in) provided by investing activities (132 ) (41 ) 158 — (15 ) Cash Provided by (Used in) Financing Activities Long-term debt repaid (1,793 ) — — — (1,793 ) Repurchases of common stock (554 ) — — — (554 ) Dividends paid on common stock (4,179 ) — — — (4,179 ) Changes in amounts due to/from Altria Group, Inc. and subsidiaries 814 (495 ) (319 ) — — Premiums and fees related to early extinguishment of debt (226 ) — — — (226 ) Cash dividends paid to parent — (4,671 ) (769 ) 5,440 — Other 17 — (12 ) — 5 Net cash used in financing activities (5,921 ) (5,166 ) (1,100 ) 5,440 (6,747 ) Cash and cash equivalents: (Decrease) increase (968 ) (3 ) 19 — (952 ) Balance at beginning of year 3,281 3 37 — 3,321 Balance at end of year $ 2,313 $ — $ 56 $ — $ 2,369 Condensed Consolidating Statements of Cash Flows (in millions of dollars) _____________________________ for the year ended December 31, 2014 Altria Group, Inc. PM USA Non- Guarantor Subsidiaries Total Consolidating Adjustments Consolidated Cash Provided by Operating Activities Net cash provided by operating activities $ 4,924 $ 4,451 $ 707 $ (5,419 ) $ 4,663 Cash Provided by (Used in) Investing Activities Capital expenditures — (44 ) (119 ) — (163 ) Acquisition of Green Smoke, net of acquired cash — — (102 ) — (102 ) Proceeds from finance assets — — 369 — 369 Other — 70 3 — 73 Net cash provided by investing activities — 26 151 — 177 Cash Provided by (Used in) Financing Activities Long-term debt issued 999 — — — 999 Long-term debt repaid (525 ) — (300 ) — (825 ) Repurchases of common stock (939 ) — — — (939 ) Dividends paid on common stock (3,892 ) — — — (3,892 ) Changes in amounts due to/from Altria Group, Inc. and subsidiaries (411 ) (351 ) 762 — — Premiums and fees related to early extinguishment of debt — — (44 ) — (44 ) Cash dividends paid to parent — (4,124 ) (1,295 ) 5,419 — Other 11 — (4 ) — 7 Net cash used in financing activities (4,757 ) (4,475 ) (881 ) 5,419 (4,694 ) Cash and cash equivalents: Increase (decrease) 167 2 (23 ) — 146 Balance at beginning of year 3,114 1 60 — 3,175 Balance at end of year $ 3,281 $ 3 $ 37 $ — $ 3,321 Condensed Consolidating Statements of Cash Flows (in millions of dollars) _____________________________ for the year ended December 31, 2013 Altria Group, Inc. PM USA Non- Guarantor Subsidiaries Total Consolidating Adjustments Consolidated Cash Provided by Operating Activities Net cash provided by operating activities $ 4,520 $ 4,192 $ 387 $ (4,724 ) $ 4,375 Cash Provided by (Used in) Investing Activities Capital expenditures — (31 ) (100 ) — (131 ) Proceeds from finance assets — — 716 — 716 Other — — 17 — 17 Net cash (used in) provided by investing activities — (31 ) 633 — 602 Cash Provided by (Used in) Financing Activities Long-term debt issued 4,179 — — — 4,179 Long-term debt repaid (3,559 ) — — — (3,559 ) Repurchases of common stock (634 ) — — — (634 ) Dividends paid on common stock (3,612 ) — — — (3,612 ) Changes in amounts due to/from Altria Group, Inc. and subsidiaries 432 240 (672 ) — — Premiums and fees related to early extinguishment of debt (1,054 ) — — — (1,054 ) Cash dividends paid to parent — (4,400 ) (324 ) 4,724 — Other (20 ) — (2 ) — (22 ) Net cash used in financing activities (4,268 ) (4,160 ) (998 ) 4,724 (4,702 ) Cash and cash equivalents: Increase 252 1 22 — 275 Balance at beginning of year 2,862 — 38 — 2,900 Balance at end of year $ 3,114 $ 1 $ 60 $ — $ 3,175 |