Condensed Consolidating Financial Information | Condensed Consolidating Financial Information PM USA, which is a 100% owned subsidiary of Altria, has guaranteed Altria’s obligations under its outstanding debt securities, borrowings under the Borrowing Agreements 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’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 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 or any successor; ▪ the date, if any, on which Altria 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’s long-term senior unsecured debt by Standard & Poor’s of A or higher. At December 31, 2018 , the respective principal 100% owned subsidiaries of Altria 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, 2018 and 2017 , condensed consolidating statements of earnings and comprehensive earnings for the years ended December 31, 2018 , 2017 and 2016 , and condensed consolidating statements of cash flows for the years ended December 31, 2018 , 2017 and 2016 for Altria, PM USA and, collectively, Altria’s other subsidiaries that are not guarantors of Altria’s debt instruments (the “Non-Guarantor Subsidiaries”). 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 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, 2018 Altria PM USA Non- Guarantor Subsidiaries Total Consolidating Adjustments Consolidated Assets Cash and cash equivalents $ 1,277 $ — $ 56 $ — $ 1,333 Receivables — 18 124 — 142 Inventories: Leaf tobacco — 561 379 — 940 Other raw materials — 123 63 — 186 Work in process — 2 645 — 647 Finished product — 128 430 — 558 — 814 1,517 — 2,331 Due from Altria and subsidiaries 46 3,828 1,194 (5,068 ) — Income taxes 100 94 — (27 ) 167 Other current assets 41 167 118 — 326 Total current assets 1,464 4,921 3,009 (5,095 ) 4,299 Property, plant and equipment, at cost — 2,928 2,022 — 4,950 Less accumulated depreciation — 2,111 901 — 3,012 — 817 1,121 — 1,938 Goodwill — — 5,196 — 5,196 Other intangible assets, net — 2 12,277 — 12,279 Investment in AB InBev 17,696 — — — 17,696 Investment in JUUL — — 12,800 — 12,800 Investment in consolidated subsidiaries 25,996 2,825 — (28,821 ) — Due from Altria and subsidiaries 4,790 — — (4,790 ) — Other assets 193 955 952 (670 ) 1,430 Total Assets $ 50,139 $ 9,520 $ 35,355 $ (39,376 ) $ 55,638 Condensed Consolidating Balance Sheets (Continued) (in millions of dollars) ____________________________ at December 31, 2018 Altria PM USA Non- Guarantor Subsidiaries Total Consolidating Adjustments Consolidated Liabilities Short-term borrowings $ 12,704 $ — $ — $ — $ 12,704 Current portion of long-term debt 1,144 — — — 1,144 Accounts payable 1 91 307 — 399 Accrued liabilities: Marketing — 483 103 — 586 Employment costs 16 11 162 — 189 Settlement charges — 3,448 6 — 3,454 Other 279 513 449 (27 ) 1,214 Dividends payable 1,503 — — — 1,503 Due to Altria and subsidiaries 4,499 407 162 (5,068 ) — Total current liabilities 20,146 4,953 1,189 (5,095 ) 21,193 Long-term debt 11,898 — — — 11,898 Deferred income taxes 3,010 — 2,832 (670 ) 5,172 Accrued pension costs 187 — 357 — 544 Accrued postretirement health care costs — 1,072 677 — 1,749 Due to Altria and subsidiaries — — 4,790 (4,790 ) — Other liabilities 111 47 96 — 254 Total liabilities 35,352 6,072 9,941 (10,555 ) 40,810 Contingencies Redeemable noncontrolling interest — — 39 — 39 Stockholders’ Equity Common stock 935 — 9 (9 ) 935 Additional paid-in capital 5,961 3,310 25,047 (28,357 ) 5,961 Earnings reinvested in the business 43,962 359 2,201 (2,560 ) 43,962 Accumulated other comprehensive losses (2,547 ) (221 ) (1,884 ) 2,105 (2,547 ) Cost of repurchased stock (33,524 ) — — — (33,524 ) Total stockholders’ equity attributable to Altria 14,787 3,448 25,373 (28,821 ) 14,787 Noncontrolling interests — — 2 — 2 Total stockholders’ equity 14,787 3,448 25,375 (28,821 ) 14,789 Total Liabilities and Stockholders’ Equity $ 50,139 $ 9,520 $ 35,355 $ (39,376 ) $ 55,638 Condensed Consolidating Balance Sheets (in millions of dollars) ____________________________ at December 31, 2017 Altria PM USA Non- Guarantor Subsidiaries Total Consolidating Adjustments Consolidated Assets Cash and cash equivalents $ 1,203 $ 1 $ 49 $ — $ 1,253 Receivables 1 10 131 — 142 Inventories: Leaf tobacco — 579 362 — 941 Other raw materials — 111 59 — 170 Work in process — 5 555 — 560 Finished product — 128 426 — 554 — 823 1,402 — 2,225 Due from Altria and subsidiaries 2 2,413 1,022 (3,437 ) — Income taxes — 542 17 (98 ) 461 Other current assets 11 147 105 — 263 Total current assets 1,217 3,936 2,726 (3,535 ) 4,344 Property, plant and equipment, at cost — 2,930 1,949 — 4,879 Less accumulated depreciation — 2,086 879 — 2,965 — 844 1,070 — 1,914 Goodwill — — 5,307 — 5,307 Other intangible assets, net — 2 12,398 — 12,400 Investment in AB InBev 17,952 — — — 17,952 Investment in consolidated subsidiaries 13,111 2,818 — (15,929 ) — Due from Altria and subsidiaries 4,790 — — (4,790 ) — Other assets 34 671 1,056 (476 ) 1,285 Total Assets $ 37,104 $ 8,271 $ 22,557 $ (24,730 ) $ 43,202 Condensed Consolidating Balance Sheets (Continued) (in millions of dollars) ____________________________ at December 31, 2017 Altria PM USA Non- Guarantor Subsidiaries Total Consolidating Adjustments Consolidated Liabilities Current portion of long-term debt $ 864 $ — $ — $ — $ 864 Accounts payable 2 91 281 — 374 Accrued liabilities: Marketing — 578 117 — 695 Employment costs 21 14 153 — 188 Settlement charges — 2,437 5 — 2,442 Other 389 433 247 (98 ) 971 Dividends payable 1,258 — — — 1,258 Due to Altria and subsidiaries 3,040 317 80 (3,437 ) — Total current liabilities 5,574 3,870 883 (3,535 ) 6,792 Long-term debt 13,030 — — — 13,030 Deferred income taxes 2,809 — 2,914 (476 ) 5,247 Accrued pension costs 206 — 239 — 445 Accrued postretirement health care costs — 1,214 773 — 1,987 Due to Altria and subsidiaries — — 4,790 (4,790 ) — Other liabilities 108 49 126 — 283 Total liabilities 21,727 5,133 9,725 (8,801 ) 27,784 Contingencies Redeemable noncontrolling interest — — 38 — 38 Stockholders’ Equity Common stock 935 — 9 (9 ) 935 Additional paid-in capital 5,952 3,310 12,045 (15,355 ) 5,952 Earnings reinvested in the business 42,251 96 2,243 (2,339 ) 42,251 Accumulated other comprehensive losses (1,897 ) (268 ) (1,506 ) 1,774 (1,897 ) Cost of repurchased stock (31,864 ) — — — (31,864 ) Total stockholders’ equity attributable to Altria 15,377 3,138 12,791 (15,929 ) 15,377 Noncontrolling interests — — 3 — 3 Total stockholders’ equity 15,377 3,138 12,794 (15,929 ) 15,380 Total Liabilities and Stockholders’ Equity $ 37,104 $ 8,271 $ 22,557 $ (24,730 ) $ 43,202 Condensed Consolidating Statements of Earnings and Comprehensive Earnings (in millions of dollars) _____________________________ for the year ended December 31, 2018 Altria PM USA Non- Guarantor Subsidiaries Total Consolidating Adjustments Consolidated Net revenues $ — $ 21,422 $ 3,980 $ (38 ) $ 25,364 Cost of sales — 6,153 1,258 (38 ) 7,373 Excise taxes on products — 5,517 220 — 5,737 Gross profit — 9,752 2,502 — 12,254 Marketing, administration and research costs 219 1,892 645 — 2,756 Asset impairment and exit costs — 81 302 — 383 Operating (expense) income (219 ) 7,779 1,555 — 9,115 Interest and other debt expense (income), net 511 (61 ) 215 — 665 Net periodic benefit cost (income), excluding service cost 16 (41 ) (9 ) — (34 ) Earnings from equity investment in AB InBev (890 ) — — — (890 ) Loss on AB InBev/SABMiller business combination 33 — — — 33 Earnings before income taxes and equity earnings of subsidiaries 111 7,881 1,349 — 9,341 Provision for income taxes 36 1,980 358 — 2,374 Equity earnings of subsidiaries 6,888 402 — (7,290 ) — Net earnings 6,963 6,303 991 (7,290 ) 6,967 Net earnings attributable to noncontrolling interests — — (4 ) — (4 ) Net earnings attributable to Altria $ 6,963 $ 6,303 $ 987 $ (7,290 ) $ 6,963 Net earnings $ 6,963 $ 6,303 $ 991 $ (7,290 ) $ 6,967 Other comprehensive (losses) earnings, net of deferred income taxes (242 ) 104 (54 ) (50 ) (242 ) Comprehensive earnings 6,721 6,407 937 (7,340 ) 6,725 Comprehensive earnings attributable to noncontrolling interests — — (4 ) — (4 ) Comprehensive earnings attributable to Altria $ 6,721 $ 6,407 $ 933 $ (7,340 ) $ 6,721 Condensed Consolidating Statements of Earnings and Comprehensive Earnings (in millions of dollars) _____________________________ for the year ended December 31, 2017 Altria PM USA Non- Guarantor Subsidiaries Total Consolidating Adjustments Consolidated Net revenues $ — $ 21,826 $ 3,787 $ (37 ) $ 25,576 Cost of sales — 6,394 1,174 (37 ) 7,531 Excise taxes on products — 5,864 218 — 6,082 Gross profit — 9,568 2,395 — 11,963 Marketing, administration and research costs 161 1,713 464 — 2,338 Asset impairment and exit costs — — 32 — 32 Operating (expense) income (161 ) 7,855 1,899 — 9,593 Interest and other debt expense (income), net 510 (20 ) 215 — 705 Net periodic benefit cost, excluding service cost 12 18 7 — 37 Earnings from equity investment in AB InBev (532 ) — — — (532 ) Gain on AB InBev/SABMiller business combination (445 ) — — — (445 ) Earnings before income taxes and equity earnings of subsidiaries 294 7,857 1,677 — 9,828 (Benefit) provision for income taxes (2,624 ) 3,127 (902 ) — (399 ) Equity earnings of subsidiaries 7,304 558 — (7,862 ) — Net earnings 10,222 5,288 2,579 (7,862 ) 10,227 Net earnings attributable to noncontrolling interests — — (5 ) — (5 ) Net earnings attributable to Altria $ 10,222 $ 5,288 $ 2,574 $ (7,862 ) $ 10,222 Net earnings $ 10,222 $ 5,288 $ 2,579 $ (7,862 ) $ 10,227 Other comprehensive earnings, net of deferred income taxes 155 3 214 (217 ) 155 Comprehensive earnings 10,377 5,291 2,793 (8,079 ) 10,382 Comprehensive earnings attributable to noncontrolling interests — — (5 ) — (5 ) Comprehensive earnings attributable to Altria $ 10,377 $ 5,291 $ 2,788 $ (8,079 ) $ 10,377 Condensed Consolidating Statements of Earnings and Comprehensive Earnings (in millions of dollars) _____________________________ for the year ended December 31, 2016 Altria PM USA Non- Guarantor Subsidiaries Total Consolidating Adjustments Consolidated Net revenues $ — $ 22,146 $ 3,633 $ (35 ) $ 25,744 Cost of sales — 6,641 1,159 (35 ) 7,765 Excise taxes on products — 6,187 220 — 6,407 Gross profit — 9,318 2,254 — 11,572 Marketing, administration and research costs 160 2,009 493 — 2,662 Asset impairment and exit costs 5 77 67 — 149 Operating (expense) income (165 ) 7,232 1,694 — 8,761 Interest and other debt expense, net 519 10 218 — 747 Loss on early extinguishment of debt 823 — — — 823 Net periodic benefit cost (income), excluding service cost 5 (6 ) — — (1 ) Earnings from equity investment in SABMiller (795 ) — — — (795 ) Gain on AB InBev/SABMiller business combination (13,865 ) — — — (13,865 ) Earnings before income taxes and equity earnings of subsidiaries 13,148 7,228 1,476 — 21,852 Provision for income taxes 4,453 2,631 524 — 7,608 Equity earnings of subsidiaries 5,544 268 — (5,812 ) — Net earnings 14,239 4,865 952 (5,812 ) 14,244 Net earnings attributable to noncontrolling interests — — (5 ) — (5 ) Net earnings attributable to Altria $ 14,239 $ 4,865 $ 947 $ (5,812 ) $ 14,239 Net earnings $ 14,239 $ 4,865 $ 952 $ (5,812 ) $ 14,244 Other comprehensive earnings (losses), net of deferred income taxes 1,228 (16 ) (28 ) 44 1,228 Comprehensive earnings 15,467 4,849 924 (5,768 ) 15,472 Comprehensive earnings attributable to noncontrolling interests — — (5 ) — (5 ) Comprehensive earnings attributable to Altria $ 15,467 $ 4,849 $ 919 $ (5,768 ) $ 15,467 Condensed Consolidating Statements of Cash Flows (in millions of dollars) _____________________________ for the year ended December 31, 2018 Altria PM USA Non- Guarantor Subsidiaries Total Consolidating Adjustments Consolidated Cash Provided by Operating Activities Net cash provided by operating activities $ 6,907 $ 7,580 $ 1,354 $ (7,450 ) $ 8,391 Cash Provided by (Used in) Investing Activities Capital expenditures — (57 ) (181 ) — (238 ) Acquisitions of businesses and assets — — (15 ) — (15 ) Investment in JUUL — — (12,800 ) — (12,800 ) Proceeds from finance assets — — 37 — 37 Proceeds from derivative financial instruments 35 — — — 35 Investment in consolidated subsidiaries (13,003 ) — — 13,003 — Other, net — — (7 ) — (7 ) Net cash provided by (used in) investing activities (12,968 ) (57 ) (12,966 ) 13,003 (12,988 ) Cash Provided by (Used in) Financing Activities Proceeds from short-term borrowings 12,800 — — — 12,800 Long-term debt repaid (864 ) — — — (864 ) Repurchases of common stock (1,673 ) — — — (1,673 ) Dividends paid on common stock (5,415 ) — — — (5,415 ) Changes in amounts due to/from Altria and subsidiaries 1,415 (1,388 ) 12,976 (13,003 ) — Cash dividends paid to parent — (6,097 ) (1,353 ) 7,450 — Other (128 ) — (4 ) — (132 ) Net cash (used in) provided by financing activities 6,135 (7,485 ) 11,619 (5,553 ) 4,716 Cash, cash equivalents and restricted cash (1) : Increase 74 38 7 — 119 Balance at beginning of year 1,203 62 49 — 1,314 Balance at end of year $ 1,277 $ 100 $ 56 $ — $ 1,433 (1) Restricted cash consisted of cash deposits collateralizing appeal bonds posted by PM USA to obtain stays of judgments pending appeals. See Note 19 . Contingencies . Condensed Consolidating Statements of Cash Flows (in millions of dollars) _____________________________ for the year ended December 31, 2017 Altria PM USA Non- Guarantor Subsidiaries Total Consolidating Adjustments Consolidated Cash Provided by Operating Activities Net cash provided by operating activities $ 6,910 $ 4,028 $ 841 $ (6,878 ) $ 4,901 Cash Provided by (Used in) Investing Activities Capital expenditures — (34 ) (165 ) — (199 ) Acquisitions of businesses and assets — — (415 ) — (415 ) Proceeds from finance assets — — 133 — 133 Investment in consolidated subsidiaries (460 ) — — 460 — Other, net (5 ) 4 15 — 14 Net cash used in investing activities (465 ) (30 ) (432 ) 460 (467 ) Cash Provided by (Used in) Financing Activities Repurchases of common stock (2,917 ) — — — (2,917 ) Dividends paid on common stock (4,807 ) — — — (4,807 ) Changes in amounts due to/from Altria and subsidiaries (1,999 ) 1,410 1,049 (460 ) — Cash dividends paid to parent — (5,429 ) (1,449 ) 6,878 — Other (40 ) — (7 ) — (47 ) Net cash used in financing activities (9,763 ) (4,019 ) (407 ) 6,418 (7,771 ) Cash, cash equivalents and restricted cash (1) : (Decrease) increase (3,318 ) (21 ) 2 — (3,337 ) Balance at beginning of year 4,521 83 47 — 4,651 Balance at end of year $ 1,203 $ 62 $ 49 $ — $ 1,314 (1) Restricted cash consisted of cash deposits collateralizing appeal bonds posted by PM USA to obtain stays of judgments pending appeals. See Note 19 . Contingencies . Condensed Consolidating Statements of Cash Flows (in millions of dollars) _____________________________ for the year ended December 31, 2016 Altria PM USA Non- Guarantor Subsidiaries Total Consolidating Adjustments Consolidated Cash Provided by Operating Activities Net cash provided by operating activities $ 4,356 $ 5,143 $ 319 $ (5,992 ) $ 3,826 Cash Provided by (Used in) Investing Activities Capital expenditures — (45 ) (144 ) — (189 ) Acquisition of assets — — (45 ) — (45 ) Proceeds from finance assets — — 231 — 231 Proceeds from AB InBev/SABMiller business combination 4,773 — — — 4,773 Purchase of AB InBev ordinary shares (1,578 ) — — — (1,578 ) Proceeds from derivative financial instruments 510 — — — 510 Investment in consolidated subsidiaries (138 ) — — 138 — Other, net (3 ) — 9 — 6 Net cash provided by (used in) investing activities 3,564 (45 ) 51 138 3,708 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 (1,030 ) — — — (1,030 ) Dividends paid on common stock (4,512 ) — — — (4,512 ) Changes in amounts due to/from Altria and subsidiaries (392 ) (28 ) 558 (138 ) — Premiums and fees related to early extinguishment of debt (809 ) — — — (809 ) Cash dividends paid to parent — (5,064 ) (928 ) 5,992 — Other, net (12 ) — (9 ) — (21 ) Net cash used in financing activities (5,712 ) (5,092 ) (379 ) 5,854 (5,329 ) Cash, cash equivalents and restricted cash (1) : Increase (decrease) 2,208 6 (9 ) — 2,205 Balance at beginning of year 2,313 77 56 — 2,446 Balance at end of year $ 4,521 $ 83 $ 47 $ — $ 4,651 (1) Restricted cash consisted of cash deposits collateralizing appeal bonds posted by PM USA to obtain stays of judgments pending appeals. See Note 19 . Contingencies . |