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 Ratings Services of A or higher. At September 30, 2017 , 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 September 30, 2017 and December 31, 2016 , condensed consolidating statements of earnings and comprehensive earnings for the nine and three months ended September 30, 2017 and 2016 , and condensed consolidating statements of cash flows for the nine months ended September 30, 2017 and 2016 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 September 30, 2017 (in millions of dollars) Altria Group, Inc. PM USA Non- Guarantor Subsidiaries Total Consolidating Adjustments Consolidated Assets Cash and cash equivalents $ 2,538 $ — $ 44 $ — $ 2,582 Receivables 1 4 143 — 148 Inventories: Leaf tobacco — 468 316 — 784 Other raw materials — 115 65 — 180 Work in process — 6 426 — 432 Finished product — 140 451 — 591 — 729 1,258 — 1,987 Due from Altria Group, Inc. and subsidiaries — 3,724 1,152 (4,876 ) — Other current assets 93 344 61 (59 ) 439 Total current assets 2,632 4,801 2,658 (4,935 ) 5,156 Property, plant and equipment, at cost — 2,925 1,921 — 4,846 Less accumulated depreciation — 2,072 867 — 2,939 — 853 1,054 — 1,907 Goodwill — — 5,307 — 5,307 Other intangible assets, net — 2 12,194 — 12,196 Investment in AB InBev 18,213 — — — 18,213 Investment in consolidated subsidiaries 12,050 2,653 — (14,703 ) — Finance assets, net — — 901 — 901 Due from Altria Group, Inc. and subsidiaries 4,790 — — (4,790 ) — Other assets 12 1,641 138 (1,311 ) 480 Total Assets $ 37,697 $ 9,950 $ 22,252 $ (25,739 ) $ 44,160 Condensed Consolidating Balance Sheets (Continued) September 30, 2017 (in millions of dollars) Altria Group, Inc. PM USA Non- Guarantor Subsidiaries Total Consolidating Adjustments Consolidated Liabilities Accounts payable $ 5 $ 89 $ 176 $ — $ 270 Accrued liabilities: Marketing — 680 79 — 759 Employment costs 19 9 124 — 152 Settlement charges — 3,376 7 — 3,383 Other 212 333 348 (59 ) 834 Dividends payable 1,264 — — — 1,264 Due to Altria Group, Inc. and subsidiaries 4,489 346 41 (4,876 ) — Total current liabilities 5,989 4,833 775 (4,935 ) 6,662 Long-term debt 13,890 — — — 13,890 Deferred income taxes 5,277 — 4,268 (1,311 ) 8,234 Accrued pension costs 200 — 411 — 611 Accrued postretirement health care costs — 1,419 766 — 2,185 Due to Altria Group, Inc. and subsidiaries — — 4,790 (4,790 ) — Other liabilities 175 56 141 — 372 Total liabilities 25,531 6,308 11,151 (11,036 ) 31,954 Contingencies Redeemable noncontrolling interest — — 37 — 37 Stockholders’ Equity Common stock 935 — 9 (9 ) 935 Additional paid-in capital 5,940 3,310 11,856 (15,166 ) 5,940 Earnings reinvested in the business 38,542 593 833 (1,426 ) 38,542 Accumulated other comprehensive losses (1,946 ) (261 ) (1,637 ) 1,898 (1,946 ) Cost of repurchased stock (31,305 ) — — — (31,305 ) Total stockholders’ equity attributable to Altria Group, Inc. 12,166 3,642 11,061 (14,703 ) 12,166 Noncontrolling interests — — 3 — 3 Total stockholders’ equity 12,166 3,642 11,064 (14,703 ) 12,169 Total Liabilities and Stockholders’ Equity $ 37,697 $ 9,950 $ 22,252 $ (25,739 ) $ 44,160 Condensed Consolidating Balance Sheets December 31, 2016 (in millions of dollars) Altria PM USA Non- Total Consolidated Assets Cash and cash equivalents $ 4,521 $ 1 $ 47 $ — $ 4,569 Receivables — 8 143 — 151 Inventories: Leaf tobacco — 541 351 — 892 Other raw materials — 111 53 — 164 Work in process — 3 509 — 512 Finished product — 112 371 — 483 — 767 1,284 — 2,051 Due from Altria Group, Inc. and subsidiaries — 3,797 1,511 (5,308 ) — Other current assets 170 118 201 — 489 Total current assets 4,691 4,691 3,186 (5,308 ) 7,260 Property, plant and equipment, at cost — 2,971 1,864 — 4,835 Less accumulated depreciation — 2,073 804 — 2,877 — 898 1,060 — 1,958 Goodwill — — 5,285 — 5,285 Other intangible assets, net — 2 12,034 — 12,036 Investment in AB InBev 17,852 — — — 17,852 Investment in consolidated subsidiaries 11,636 2,632 — (14,268 ) — Finance assets, net — — 1,028 — 1,028 Due from Altria Group, Inc. and subsidiaries 4,790 — — (4,790 ) — Other assets 18 1,748 131 (1,384 ) 513 Total Assets $ 38,987 $ 9,971 $ 22,724 $ (25,750 ) $ 45,932 Condensed Consolidating Balance Sheets (Continued) December 31, 2016 (in millions of dollars) Altria PM USA Non- Total Consolidated Liabilities Accounts payable $ 1 $ 92 $ 332 $ — $ 425 Accrued liabilities: Marketing — 619 128 — 747 Employment costs 104 14 171 — 289 Settlement charges — 3,696 5 — 3,701 Other 261 438 326 — 1,025 Dividends payable 1,188 — — — 1,188 Due to Altria Group, Inc. and subsidiaries 5,030 237 41 (5,308 ) — Total current liabilities 6,584 5,096 1,003 (5,308 ) 7,375 Long-term debt 13,881 — — — 13,881 Deferred income taxes 5,424 — 4,376 (1,384 ) 8,416 Accrued pension costs 207 — 598 — 805 Accrued postretirement health care costs — 1,453 764 — 2,217 Due to Altria Group, Inc. and subsidiaries — — 4,790 (4,790 ) — Other liabilities 121 146 160 — 427 Total liabilities 26,217 6,695 11,691 (11,482 ) 33,121 Contingencies Redeemable noncontrolling interest — — 38 — 38 Stockholders’ Equity Common stock 935 — 9 (9 ) 935 Additional paid-in capital 5,893 3,310 11,585 (14,895 ) 5,893 Earnings reinvested in the business 36,906 237 1,118 (1,355 ) 36,906 Accumulated other comprehensive losses (2,052 ) (271 ) (1,720 ) 1,991 (2,052 ) Cost of repurchased stock (28,912 ) — — — (28,912 ) Total stockholders’ equity attributable to Altria Group, Inc. 12,770 3,276 10,992 (14,268 ) 12,770 Noncontrolling interests — — 3 — 3 Total stockholders’ equity 12,770 3,276 10,995 (14,268 ) 12,773 Total Liabilities and Stockholders’ Equity $ 38,987 $ 9,971 $ 22,724 $ (25,750 ) $ 45,932 Condensed Consolidating Statements of Earnings and Comprehensive Earnings For the Nine Months Ended September 30, 2017 (in millions of dollars) Altria PM USA Non- Total Consolidated Net revenues $ — $ 16,748 $ 2,754 $ (27 ) $ 19,475 Cost of sales — 4,875 851 (27 ) 5,699 Excise taxes on products — 4,533 162 — 4,695 Gross profit — 7,340 1,741 — 9,081 Marketing, administration and research costs 126 1,208 330 — 1,664 Asset impairment and exit costs — — 24 — 24 Operating (expense) income (126 ) 6,132 1,387 — 7,393 Interest and other debt expense (income), net 375 (12 ) 162 — 525 Earnings from equity investment in AB InBev (332 ) — — — (332 ) Gain on AB InBev/SABMiller business combination (445 ) — — — (445 ) Earnings before income taxes and equity earnings of subsidiaries 276 6,144 1,225 — 7,645 (Benefit) provision for income taxes (207 ) 2,173 420 — 2,386 Equity earnings of subsidiaries 4,773 234 — (5,007 ) — Net earnings 5,256 4,205 805 (5,007 ) 5,259 Net earnings attributable to noncontrolling interests — — (3 ) — (3 ) Net earnings attributable to Altria Group, Inc. $ 5,256 $ 4,205 $ 802 $ (5,007 ) $ 5,256 Net earnings $ 5,256 $ 4,205 $ 805 $ (5,007 ) $ 5,259 Other comprehensive earnings, net of deferred income taxes 106 10 83 (93 ) 106 Comprehensive earnings 5,362 4,215 888 (5,100 ) 5,365 Comprehensive earnings attributable to noncontrolling interests — — (3 ) — (3 ) Comprehensive earnings attributable to Altria Group, Inc. $ 5,362 $ 4,215 $ 885 $ (5,100 ) $ 5,362 Condensed Consolidating Statements of Earnings and Comprehensive Earnings For the Nine Months Ended September 30, 2016 (in millions of dollars) Altria Group, Inc. PM USA Non- Guarantor Subsidiaries Total Consolidating Adjustments Consolidated Net revenues $ — $ 16,874 $ 2,646 $ (28 ) $ 19,492 Cost of sales — 5,084 785 (28 ) 5,841 Excise taxes on products — 4,723 165 — 4,888 Gross profit — 7,067 1,696 — 8,763 Marketing, administration and research costs 113 1,435 323 — 1,871 Asset impairment and exit costs 5 96 22 — 123 Operating (expense) income (118 ) 5,536 1,351 — 6,769 Interest and other debt expense, net 393 13 165 — 571 Loss on early extinguishment of debt 823 — — — 823 Earnings from equity investment in SABMiller (564 ) — — — (564 ) Gain on AB InBev/SABMiller business combination (205 ) — — — (205 ) (Loss) earnings before income taxes and equity earnings of subsidiaries (565 ) 5,523 1,186 — 6,144 (Benefit) provision for income taxes (269 ) 2,023 424 — 2,178 Equity earnings of subsidiaries 4,259 217 — (4,476 ) — Net earnings 3,963 3,717 762 (4,476 ) 3,966 Net earnings attributable to noncontrolling interests — — (3 ) — (3 ) Net earnings attributable to Altria Group, Inc. $ 3,963 $ 3,717 $ 759 $ (4,476 ) $ 3,963 Net earnings $ 3,963 $ 3,717 $ 762 $ (4,476 ) $ 3,966 Other comprehensive earnings (losses), net of deferred income taxes 2 (11 ) (107 ) 118 2 Comprehensive earnings 3,965 3,706 655 (4,358 ) 3,968 Comprehensive earnings attributable to noncontrolling interests — — (3 ) — (3 ) Comprehensive earnings attributable to Altria Group, Inc. $ 3,965 $ 3,706 $ 652 $ (4,358 ) $ 3,965 Condensed Consolidating Statements of Earnings and Comprehensive Earnings For the Three Months Ended September 30, 2017 (in millions of dollars) Altria PM USA Non- Total Consolidated Net revenues $ — $ 5,764 $ 974 $ (9 ) $ 6,729 Cost of sales — 1,659 290 (9 ) 1,940 Excise taxes on products — 1,551 55 — 1,606 Gross profit — 2,554 629 — 3,183 Marketing, administration and research costs 46 417 105 — 568 Asset impairment and exit costs — — 8 — 8 Operating (expense) income (46 ) 2,137 516 — 2,607 Interest and other debt expense (income), net 122 (6 ) 53 — 169 Earnings from equity investment in AB InBev (169 ) — — — (169 ) Gain on AB InBev/SABMiller business combination (37 ) — — — (37 ) Earnings before income taxes and equity earnings of subsidiaries 38 2,143 463 — 2,644 (Benefit) provision for income taxes (167 ) 776 168 — 777 Equity earnings of subsidiaries 1,661 82 — (1,743 ) — Net earnings 1,866 1,449 295 (1,743 ) 1,867 Net earnings attributable to noncontrolling interests — — (1 ) — (1 ) Net earnings attributable to Altria Group, Inc. $ 1,866 $ 1,449 $ 294 $ (1,743 ) $ 1,866 Net earnings $ 1,866 $ 1,449 $ 295 $ (1,743 ) $ 1,867 Other comprehensive (losses) earnings, net of deferred income taxes (108 ) 3 27 (30 ) (108 ) Comprehensive earnings 1,758 1,452 322 (1,773 ) 1,759 Comprehensive earnings attributable to noncontrolling interests — — (1 ) — (1 ) Comprehensive earnings attributable to $ 1,758 $ 1,452 $ 321 $ (1,773 ) $ 1,758 Condensed Consolidating Statements of Earnings and Comprehensive Earnings For the Three Months Ended September 30, 2016 (in millions of dollars) Altria PM USA Non- Total Consolidated Net revenues $ — $ 5,964 $ 950 $ (9 ) $ 6,905 Cost of sales — 1,767 285 (9 ) 2,043 Excise taxes on products — 1,654 58 — 1,712 Gross profit — 2,543 607 — 3,150 Marketing, administration and research costs 40 607 119 — 766 Asset impairment and exit costs — 1 1 — 2 Operating (expense) income (40 ) 1,935 487 — 2,382 Interest and other debt expense (income), net 129 (4 ) 54 — 179 Loss on early extinguishment of debt 823 — — — 823 Earnings from equity investment in SABMiller (299 ) — — — (299 ) Gain on AB InBev/SABMiller business combination (48 ) — — — (48 ) (Loss) earnings before income taxes and equity earnings of subsidiaries (645 ) 1,939 433 — 1,727 (Benefit) provision for income taxes (232 ) 707 158 — 633 Equity earnings of subsidiaries 1,506 77 — (1,583 ) — Net earnings 1,093 1,309 275 (1,583 ) 1,094 Net earnings attributable to noncontrolling interests — — (1 ) — (1 ) Net earnings attributable to Altria Group, Inc. $ 1,093 $ 1,309 $ 274 $ (1,583 ) $ 1,093 Net earnings $ 1,093 $ 1,309 $ 275 $ (1,583 ) $ 1,094 Other comprehensive earnings, net of deferred income taxes 62 4 22 (26 ) 62 Comprehensive earnings 1,155 1,313 297 (1,609 ) 1,156 Comprehensive earnings attributable to noncontrolling interests — — (1 ) — (1 ) Comprehensive earnings attributable to $ 1,155 $ 1,313 $ 296 $ (1,609 ) $ 1,155 Condensed Consolidating Statements of Cash Flows For the Nine Months Ended September 30, 2017 (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 $ 4,777 $ 3,685 $ 639 $ (4,936 ) $ 4,165 Cash Provided by (Used in) Investing Activities Capital expenditures — (21 ) (130 ) — (151 ) Proceeds from finance assets — — 133 — 133 Other (4 ) 2 (182 ) — (184 ) Net cash used in investing activities (4 ) (19 ) (179 ) — (202 ) Cash Provided by (Used in) Financing Activities Repurchases of common stock (2,359 ) — — — (2,359 ) Dividends paid on common stock (3,544 ) — — — (3,544 ) Changes in amounts due to/from Altria Group, Inc. and subsidiaries (813 ) 182 631 — — Cash dividends paid to parent — (3,849 ) (1,087 ) 4,936 — Other (40 ) — (7 ) — (47 ) Net cash used in financing activities (6,756 ) (3,667 ) (463 ) 4,936 (5,950 ) Cash and cash equivalents: Decrease (1,983 ) (1 ) (3 ) — (1,987 ) Balance at beginning of period 4,521 1 47 — 4,569 Balance at end of period $ 2,538 $ — $ 44 $ — $ 2,582 Condensed Consolidating Statements of Cash Flows For the Nine Months Ended September 30, 2016 (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 $ 4,271 $ 3,582 $ 8 $ (4,331 ) $ 3,530 Cash Provided by (Used in) Investing Activities Capital expenditures — (23 ) (105 ) — (128 ) Proceeds from finance assets — — 207 — 207 Other (3 ) — (41 ) — (44 ) Net cash (used in) provided by investing activities (3 ) (23 ) 61 — 35 Cash Provided by (Used in) Financing Activities Long-term debt issued 1,976 — — — 1,976 Long-term debt repaid (933 ) — — — (933 ) Repurchases of common stock (512 ) — — — (512 ) Dividends paid on common stock (3,321 ) — — — (3,321 ) Changes in amounts due to/from Altria Group, Inc. and subsidiaries (715 ) 128 587 — — Premiums and fees related to early extinguishment of debt (809 ) — — — (809 ) Cash dividends paid to parent — (3,686 ) (645 ) 4,331 — Other (28 ) — (9 ) — (37 ) Net cash used in financing activities (4,342 ) (3,558 ) (67 ) 4,331 (3,636 ) Cash and cash equivalents: (Decrease) increase (74 ) 1 2 — (71 ) Balance at beginning of period 2,313 — 56 — 2,369 Balance at end of period $ 2,239 $ 1 $ 58 $ — $ 2,298 |