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 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’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 Ratings Services of A or higher. At June 30, 2019 , 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 June 30, 2019 and December 31, 2018 , condensed consolidating statements of earnings and comprehensive earnings for the six and three months ended June 30, 2019 and 2018 , and condensed consolidating statements of cash flows for six months ended June 30, 2019 and 2018 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 June 30, 2019 (in millions of dollars) Altria PM USA Non- Guarantor Subsidiaries Total Consolidating Adjustments Consolidated Assets Cash and cash equivalents $ 1,764 $ — $ 32 $ — $ 1,796 Receivables — 15 148 — 163 Inventories: Leaf tobacco — 464 373 — 837 Other raw materials — 127 67 — 194 Work in process — 4 599 — 603 Finished product — 150 451 — 601 — 745 1,490 — 2,235 Due from Altria and subsidiaries 83 2,555 1,142 (3,780 ) — Income taxes 121 2 — (44 ) 79 Other current assets 50 82 78 — 210 Total current assets 2,018 3,399 2,890 (3,824 ) 4,483 Property, plant and equipment, at cost — 2,940 1,993 — 4,933 Less accumulated depreciation — 2,144 872 — 3,016 — 796 1,121 — 1,917 Goodwill — — 5,196 — 5,196 Other intangible assets, net — 2 12,329 — 12,331 Investments in equity securities 17,669 — 14,425 — 32,094 Investment in consolidated subsidiaries 27,559 2,844 — (30,403 ) — Due from Altria and subsidiaries 4,790 — — (4,790 ) — Other assets 209 1,024 915 (668 ) 1,480 Total Assets $ 52,245 $ 8,065 $ 36,876 $ (39,685 ) $ 57,501 Condensed Consolidating Balance Sheets (Continued) June 30, 2019 (in millions of dollars) Altria PM USA Non- Guarantor Subsidiaries Total Consolidating Adjustments Consolidated Liabilities Current portion of long-term debt $ 2,144 $ — $ — $ — $ 2,144 Accounts payable — 76 148 — 224 Accrued liabilities: Marketing — 494 82 — 576 Settlement charges — 2,011 8 — 2,019 Other 572 531 432 (44 ) 1,491 Dividends payable 1,498 — — — 1,498 Due to Altria and subsidiaries 3,124 457 199 (3,780 ) — Total current liabilities 7,338 3,569 869 (3,824 ) 7,952 Long-term debt 27,096 — — — 27,096 Deferred income taxes 3,085 — 2,961 (668 ) 5,378 Accrued pension costs 179 — 260 — 439 Accrued postretirement health care costs — 1,075 693 — 1,768 Due to Altria and subsidiaries — — 4,790 (4,790 ) — Other liabilities 83 105 176 — 364 Total liabilities 37,781 4,749 9,749 (9,282 ) 42,997 Contingencies Redeemable noncontrolling interest — — 38 — 38 Stockholders’ Equity Common stock 935 — 9 (9 ) 935 Additional paid-in capital 5,953 3,310 26,998 (30,308 ) 5,953 Earnings reinvested in the business 44,081 218 1,906 (2,124 ) 44,081 Accumulated other comprehensive losses (2,646 ) (212 ) (1,826 ) 2,038 (2,646 ) Cost of repurchased stock (33,859 ) — — — (33,859 ) Total stockholders’ equity attributable to Altria 14,464 3,316 27,087 (30,403 ) 14,464 Noncontrolling interests — — 2 — 2 Total stockholders’ equity 14,464 3,316 27,089 (30,403 ) 14,466 Total Liabilities and Stockholders’ Equity $ 52,245 $ 8,065 $ 36,876 $ (39,685 ) $ 57,501 Condensed Consolidating Balance Sheets December 31, 2018 (in millions of dollars) Altria PM USA Non- Total 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 Investments in equity securities 17,696 — 12,800 — 30,496 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) December 31, 2018 (in millions of dollars) Altria PM USA Non- Total 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 Settlement charges — 3,448 6 — 3,454 Other 295 524 611 (27 ) 1,403 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 Statements of Earnings and Comprehensive Earnings For the Six Months Ended June 30, 2019 (in millions of dollars) Altria PM USA Non- Total Consolidated Net revenues $ — $ 10,336 $ 1,929 $ (18 ) $ 12,247 Cost of sales — 2,950 520 (18 ) 3,452 Excise taxes on products — 2,558 107 — 2,665 Gross profit — 4,828 1,302 — 6,130 Marketing, administration and research costs 84 789 229 — 1,102 Asset impairment and exit costs 1 38 34 — 73 Operating income (expense) (85 ) 4,001 1,039 — 4,955 Interest and other debt expense (income), net 634 (44 ) 106 — 696 Net periodic benefit (income) cost, excluding service cost 1 (13 ) (4 ) — (16 ) Earnings from equity investments (388 ) — (145 ) — (533 ) Loss on Cronos-related financial instruments — — 691 — 691 Earnings (losses) before income taxes and equity earnings of subsidiaries (332 ) 4,058 391 — 4,117 Provision (benefit) for income taxes (87 ) 1,020 66 — 999 Equity earnings of subsidiaries 3,361 209 — (3,570 ) — Net earnings 3,116 3,247 325 (3,570 ) 3,118 Net earnings attributable to noncontrolling interests — — (2 ) — (2 ) Net earnings attributable to Altria $ 3,116 $ 3,247 $ 323 $ (3,570 ) $ 3,116 Net earnings $ 3,116 $ 3,247 $ 325 $ (3,570 ) $ 3,118 Other comprehensive earnings (losses), net of deferred income taxes (99 ) 9 58 (67 ) (99 ) Comprehensive earnings 3,017 3,256 383 (3,637 ) 3,019 Comprehensive earnings attributable to noncontrolling interests — — (2 ) — (2 ) Comprehensive earnings attributable to Altria $ 3,017 $ 3,256 $ 381 $ (3,637 ) $ 3,017 Condensed Consolidating Statements of Earnings and Comprehensive Earnings For the Six Months Ended June 30, 2018 (in millions of dollars) Altria PM USA Non- Guarantor Subsidiaries Total Consolidating Adjustments Consolidated Net revenues $ — $ 10,528 $ 1,903 $ (18 ) $ 12,413 Cost of sales — 2,930 560 (18 ) 3,472 Excise taxes on products — 2,754 110 — 2,864 Gross profit — 4,844 1,233 — 6,077 Marketing, administration and research costs 77 909 273 — 1,259 Asset impairment and exit costs — — 4 — 4 Operating income (expense) (77 ) 3,935 956 — 4,814 Interest and other debt expense (income), net 251 (17 ) 110 — 344 Net periodic benefit (income) cost, excluding service cost 2 (15 ) (3 ) — (16 ) Earnings from equity investments (570 ) — — — (570 ) Loss on ABI/SABMiller business combination 33 — — — 33 Earnings (losses) before income taxes and equity earnings of subsidiaries 207 3,967 849 — 5,023 Provision (benefit) for income taxes 46 998 207 — 1,251 Equity earnings of subsidiaries 3,609 191 — (3,800 ) — Net earnings 3,770 3,160 642 (3,800 ) 3,772 Net earnings attributable to noncontrolling interests — — (2 ) — (2 ) Net earnings attributable to Altria $ 3,770 $ 3,160 $ 640 $ (3,800 ) $ 3,770 Net earnings $ 3,770 $ 3,160 $ 642 $ (3,800 ) $ 3,772 Other comprehensive earnings (losses), net of deferred income taxes 245 8 73 (81 ) 245 Comprehensive earnings 4,015 3,168 715 (3,881 ) 4,017 Comprehensive earnings attributable to noncontrolling interests — — (2 ) — (2 ) Comprehensive earnings attributable to Altria $ 4,015 $ 3,168 $ 713 $ (3,881 ) $ 4,015 Condensed Consolidating Statements of Earnings and Comprehensive Earnings For the Three Months Ended June 30, 2019 (in millions of dollars) Altria PM USA Non- Total Consolidated Net revenues $ — $ 5,611 $ 1,016 $ (8 ) $ 6,619 Cost of sales — 1,610 272 (8 ) 1,874 Excise taxes on products — 1,373 53 — 1,426 Gross profit — 2,628 691 — 3,319 Marketing, administration and research costs 49 405 115 — 569 Asset impairment and exit costs — 3 30 — 33 Operating income (expense) (49 ) 2,220 546 — 2,717 Interest and other debt expense (income), net 279 (19 ) 52 — 312 Net periodic benefit (income) cost, excluding service cost — (13 ) (2 ) — (15 ) Earnings from equity investments (302 ) — (145 ) — (447 ) Loss on Cronos-related financial instruments — — 266 — 266 Earnings (losses) before income taxes and equity earnings of subsidiaries (26 ) 2,252 375 — 2,601 Provision (benefit) for income taxes (12 ) 561 55 — 604 Equity earnings of subsidiaries 2,010 114 — (2,124 ) — Net earnings 1,996 1,805 320 (2,124 ) 1,997 Net earnings attributable to noncontrolling interests — — (1 ) — (1 ) Net earnings attributable to Altria $ 1,996 $ 1,805 $ 319 $ (2,124 ) $ 1,996 Net earnings $ 1,996 $ 1,805 $ 320 $ (2,124 ) $ 1,997 Other comprehensive earnings (losses), net of deferred income taxes 71 4 35 (39 ) 71 Comprehensive earnings 2,067 1,809 355 (2,163 ) 2,068 Comprehensive earnings attributable to noncontrolling interests — — (1 ) — (1 ) Comprehensive earnings attributable to Altria $ 2,067 $ 1,809 $ 354 $ (2,163 ) $ 2,067 Condensed Consolidating Statements of Earnings and Comprehensive Earnings For the Three Months Ended June 30, 2018 (in millions of dollars) Altria PM USA Non- Total Consolidated Net revenues $ — $ 5,314 $ 999 $ (8 ) $ 6,305 Cost of sales — 1,443 303 (8 ) 1,738 Excise taxes on products — 1,371 55 — 1,426 Gross profit — 2,500 641 — 3,141 Marketing, administration and research costs 39 460 142 — 641 Asset impairment and exit costs — — 2 — 2 Operating income (expense) (39 ) 2,040 497 — 2,498 Interest and other debt expense (income), net 129 (8 ) 57 — 178 Net periodic benefit (income) cost, excluding service cost 1 (9 ) (1 ) — (9 ) Earnings from equity investments (228 ) — — — (228 ) Earnings (losses) before income taxes and equity earnings of subsidiaries 59 2,057 441 — 2,557 Provision (benefit) for income taxes 59 516 105 — 680 Equity earnings of subsidiaries 1,876 102 — (1,978 ) — Net earnings 1,876 1,643 336 (1,978 ) 1,877 Net earnings attributable to noncontrolling interests — — (1 ) — (1 ) Net earnings attributable to Altria $ 1,876 $ 1,643 $ 335 $ (1,978 ) $ 1,876 Net earnings $ 1,876 $ 1,643 $ 336 $ (1,978 ) $ 1,877 Other comprehensive earnings (losses), net of deferred income taxes 275 4 34 (38 ) 275 Comprehensive earnings 2,151 1,647 370 (2,016 ) 2,152 Comprehensive earnings attributable to noncontrolling interests — — (1 ) — (1 ) Comprehensive earnings attributable to Altria $ 2,151 $ 1,647 $ 369 $ (2,016 ) $ 2,151 Condensed Consolidating Statements of Cash Flows For the Six Months Ended June 30, 2019 (in millions of dollars) Altria PM USA Non- Guarantor Subsidiaries Total Consolidating Adjustments Consolidated Cash Provided by (Used In) Operating Activities Net cash provided by (used in) operating activities $ 3,829 $ 2,078 $ 491 $ (4,006 ) $ 2,392 Cash Provided by (Used in) Investing Activities Capital expenditures — (20 ) (59 ) — (79 ) Investment in Cronos — — (1,832 ) — (1,832 ) Investment in consolidated subsidiaries (1,951 ) — — 1,951 — Other, net 22 1 (88 ) — (65 ) Net cash provided by (used in) investing activities (1,929 ) (19 ) (1,979 ) 1,951 (1,976 ) Cash Provided by (Used in) Financing Activities Repayment of short-term borrowings (12,800 ) — — — (12,800 ) Long-term debt issued 16,265 — — — 16,265 Repurchases of common stock (346 ) — — — (346 ) Dividends paid on common stock (3,001 ) — — — (3,001 ) Changes in amounts due to/from Altria and subsidiaries (1,410 ) 1,269 2,092 (1,951 ) — Cash dividends paid to parent — (3,388 ) (618 ) 4,006 — Other (121 ) — (10 ) — (131 ) Net cash provided by (used in) financing activities (1,413 ) (2,119 ) 1,464 2,055 (13 ) Cash, cash equivalents and restricted cash (1) : Increase (decrease) 487 (60 ) (24 ) — 403 Balance at beginning of period 1,277 100 56 — 1,433 Balance at end of period $ 1,764 $ 40 $ 32 $ — $ 1,836 (1) Restricted cash consisted of cash deposits collateralizing appeal bonds posted by PM USA to obtain stays of judgments pending appeals. See Note 12 . Contingencies . Condensed Consolidating Statements of Cash Flows For the Six Months Ended June 30, 2018 (in millions of dollars) Altria PM USA Non- Guarantor Subsidiaries Total Consolidating Adjustments Consolidated Cash Provided by (Used In) Operating Activities Net cash provided by (used in) operating activities $ 2,681 $ 3,549 $ 595 $ (2,975 ) $ 3,850 Cash Provided by (Used in) Investing Activities Capital expenditures — (10 ) (62 ) — (72 ) Investment in consolidated subsidiaries (176 ) — — 176 — Other, net 8 — (17 ) — (9 ) Net cash provided by (used in) investing activities (168 ) (10 ) (79 ) 176 (81 ) Cash Provided by (Used in) Financing Activities Repurchases of common stock (950 ) — — — (950 ) Dividends paid on common stock (2,585 ) — — — (2,585 ) Changes in amounts due to/from Altria and subsidiaries 1,233 (1,209 ) 152 (176 ) — Cash dividends paid to parent — (2,298 ) (677 ) 2,975 — Other (21 ) — (4 ) — (25 ) Net cash provided by (used in) financing activities (2,323 ) (3,507 ) (529 ) 2,799 (3,560 ) Cash, cash equivalents and restricted cash (1) : Increase (decrease) 190 32 (13 ) — 209 Balance at beginning of period 1,203 62 49 — 1,314 Balance at end of period $ 1,393 $ 94 $ 36 $ — $ 1,523 (1) Restricted cash consisted of cash deposits collateralizing appeal bonds posted by PM USA to obtain stays of judgments pending appeals. See Note 12 . Contingencies . |