From tobacco company
To tobacco harm reduction company.
®
Altria Group, Inc.
Annual Report
2025
William F. Gifford, Jr., Chief Executive Officer
Kathryn B. McQuade, Chair of the Board
March 19, 2026
For important factors that may cause actual results to differ materially from those contained in the forward-looking statements included herein, see Item 1A. Risk
Factors in Part I of the enclosed Annual Report on Form 10-K.
* For explanations and reconciliations of adjusted measures to corresponding GAAP financial measures used herein, see Item 7. Management’s Discussion and
Analysis of Financial Condition and Results of Operations in Part II of the enclosed Annual Report on Form 10-K.
D E A R F E L LO W S H A R E H O L D E R S
2025 was another year of continued momentum for Altria. We
made meaningful progress advancing our smoke-free portfolio,
delivered solid financial results and returned significant cash to
you, our valued shareholders. Our teams executed with discipline
in a complex environment across our traditional tobacco
businesses while continuing to invest in our smoke-free products
and Vision.
n Advancing Our Vision. The potential for tobacco harm
reduction in the U.S. remains significant with more than half of
U.S. nicotine consumers now choosing smoke-free products. In
2025, our companies achieved several milestones that we believe
position us for sustained success in the evolving U.S. nicotine space.
Helix grew on! reported shipment volume to more than 177 million
cans while on! retail share of the oral tobacco category reached
8.2%. Notably, Helix received marketing authorization from the FDA
for certain on! PLUS products and submitted PMTAs for on! PLUS
in six additional flavor varieties across three nicotine strengths.
We believe on! PLUS is a differentiated, premium product that is
well positioned to meet adult consumer preferences and support
continued growth for Helix.
In heated tobacco, Horizon, our joint venture with JT Group,
submitted a combined PMTA and modified risk tobacco product
application to the FDA for Ploom and Marlboro heated tobacco
sticks. Our teams continue to advance Ploom’s go-to-market plans,
and we look forward to engaging smokers with this innovative
product.
Internationally, we expanded our position in the fastest-growing
smoke-free category, nicotine pouches. In 2025, on!, on! PLUS and
FUMi competed across attractive and growing markets through
e-commerce and targeted retail distribution. Early results are
encouraging and are providing valuable insights to inform our
domestic and international smoke-free product strategies.
In e-vapor, we are working on a pipeline of products designed
to meet evolving adult consumer preferences. We believe that
responsible participation with products that resonate with adult
consumers supports our Vision and broader smoke-free strategy.
Until meaningful progress is made to address the illicit market
and increase product authorizations, we plan to take a disciplined
approach to our investments in the e-vapor category.
Achieving the full promise of tobacco harm reduction requires a
fully-enforced, science-based regulatory framework. In 2025, we
continued to advocate for increased FDA authorization of smoke-
free products and meaningful enforcement against illicit products.
We were encouraged by increased engagement and action from
federal agencies and government officials throughout the year.
While this is early progress, more action is needed. Sustained
enforcement and a predictable regulatory framework are essential
to transition smokers to smoke-free alternatives and create a level
playing field for all manufacturers.
n Resilient Traditional Tobacco Businesses. Our
traditional tobacco businesses demonstrated continued resilience
and delivered strong financial performance in 2025. For the full
year, the smokeable products segment contributed over $11
billion in adjusted OCI* and expanded adjusted OCI margins by
1.8 percentage points to 63.4%*. These results were supported
by strong net price realization and effective cost management.
Marlboro remained the dominant leader in the premium segment,
and PM USA’s total portfolio approach enabled it to compete
effectively across price tiers.
Our oral tobacco products segment financials remained strong,
driven by Copenhagen, the leader in MST. Segment adjusted OCI
grew by 1.3%* and adjusted OCI margins expanded to 67.9%*.
n Strong Financial Performance and Shareholder Returns.
We grew full-year adjusted diluted earnings per share by 4.4%* and
continued our long-standing commitment to deliver shareholder
value by returning approximately $8 billion to shareholders through
dividends and share repurchases combined. Our Board raised the
dividend for the 60th time in 56 years. At year-end 2025, we had
$1 billion remaining under our current $2 billion share repurchase
program, which expires at the end of 2026.
n Leadership Transition. After a distinguished career of over
30 years with the Altria family of companies, William “Billy” Gifford,
our CEO, has decided to retire, effective at the conclusion of the
2026 Annual Meeting of Shareholders. Billy has guided Altria
through a period of significant change, reinforcing our financial
strength, sharpening our strategic focus and advancing our Vision.
His collaborative leadership style built a stronger organization
that we believe will continue to forge our path forward in Moving
Beyond Smoking®. The Board thanks Billy for his leadership,
integrity and unwavering commitment to Altria. The Board looks
forward to driving continued progress toward our Vision under Sal
Mancuso’s leadership.
n Looking Forward. The opportunities and challenges in
the U.S. nicotine space remain dynamic, but our priorities are
unchanged: responsibly deliver smoke-free alternatives, defend
and grow the profitability of our traditional tobacco businesses
over the long term, allocate capital with discipline and continue
returning substantial cash to shareholders.
We are confident in our path forward, and we thank you for your
continued support of Altria.
UNITED STATES
DOCUMENTS INCORPORATED BY REFERENCE
ALTRIA GROUP, INC.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2025
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-08940
(Exact name of registrant as specified in its charter)
Virginia
13-3260245
State or other jurisdiction of
incorporation or organization
(I.R.S. Employer
Identification No.)
6601 West Broad Street,
Richmond, Virginia
23230
(Address of principal executive offices)
(Zip Code)
Securities registered pursuant to Section 12(b) of the Act:
Registrant’s telephone number, including area code 804-274-2200
Title of each class
Trading Symbols
Name of each exchange on which registered
Common Stock, $0.33 1/3 par value
MO
New York Stock Exchange
2.200% Notes due 2027
MO27
New York Stock Exchange
3.125% Notes due 2031
MO31
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
þ
Yes ¨ No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
¨
Yes þ No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. þ Yes ¨ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such
files). þ Yes ¨ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth
company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
þ
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any
new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that
prepared or issued its audit report. ☑
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the
filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes þ No
As of June 30, 2025, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the
registrant’s common stock held by non-affiliates of the registrant was approximately $98 billion based on the closing sale price of the common stock as
reported on the New York Stock Exchange.
Class
Outstanding at February 13, 2026
Common Stock, $0.33 1/3 par value
1,671,898,087 shares
Portions of the registrant’s definitive proxy statement for use in connection with its annual meeting of shareholders to be held on
May 14, 2026, to be filed with the U.S. Securities and Exchange Commission on or about April 2, 2026, are incorporated by
reference into Part III hereof.
TABLE OF CONTENTS
PART I
Item 1.
Business
Item 1A.
Risk Factors
Item 1B.
Unresolved Staff Comments
Item 1C.
Cybersecurity
Item 2.
Properties
Item 3.
Legal Proceedings
Item 4.
Mine Safety Disclosures
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Item 6.
[Reserved]
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
Item 8.
Financial Statements and Supplementary Data
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A.
Controls and Procedures
Item 9B.
Other Information
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
Item 11.
Executive Compensation
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Item 13.
Certain Relationships and Related Transactions, and Director Independence
Item 14.
Principal Accountant Fees and Services
PART IV
Item 15.
Exhibits and Financial Statement Schedules
Item 16.
Form 10-K Summary
Signatures
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b
Part I
Item 1. Business.
General Development of Business
When used in this Annual Report on Form 10-K (“Form 10-K”), the terms “Altria,” “we,” “us” and “our” refer to either (i) Altria
Group, Inc. and its consolidated subsidiaries or (ii) Altria Group, Inc. only and not its consolidated subsidiaries, as appropriate in the
context.
We have a leading portfolio of tobacco products for U.S. tobacco consumers age 21+. We are Moving Beyond SmokingTM, by
responsibly transitioning adult smokers to a smoke-free future, competing vigorously for existing smoke-free adult nicotine consumers
and exploring new growth opportunities - beyond the United States and beyond nicotine (“Vision”).
Our wholly owned subsidiaries include Philip Morris USA Inc. (“PM USA”), which is engaged in the manufacture and sale of cigarettes;
John Middleton Co. (“Middleton”), which is engaged in the manufacture and sale of machine-made large cigars and is a wholly owned
subsidiary of PM USA; UST LLC (“UST”), which, through its wholly owned subsidiary U.S. Smokeless Tobacco Company LLC
(“USSTC”), is engaged in the manufacture and sale of moist smokeless tobacco (“MST”) products; Helix Innovations LLC (“Helix”)
and its foreign affiliates (“Helix International”), which are engaged in the manufacture and sale of oral nicotine pouches; and NJOY,
LLC (“NJOY”), which is engaged in the manufacture and sale of e-vapor products. We operate primarily within the United States and
generate substantially all of our revenue from domestic customers. Other wholly owned subsidiaries include Altria Group Distribution
Company (“AGDC”), which provides domestic sales and distribution services to our operating companies, and Altria Client Services
LLC (“ALCS”), which provides various support services to our companies in areas such as legal, regulatory, research and product
development, consumer engagement, finance, human resources and external affairs.
At December 31, 2025, we owned a 75% economic interest in Horizon Innovations LLC (“Horizon”), a joint venture with JTI (US)
Holding, Inc. (“JTIUH”), a subsidiary of Japan Tobacco Inc. (“Japan Tobacco”), which owned the remaining 25% economic interest.
Horizon is responsible for the U.S. marketing and commercialization of heated tobacco stick (“HTS”) products owned by either party.
At December 31, 2025, our reportable segments were smokeable products, oral tobacco products and e-vapor products. Our all other
category included (i) Horizon; (ii) Helix International; and (iii) other business activities, which primarily consists of research and
development (“R&D”) expense related to certain new product platforms and technologies. For further information, see Note 15.
Segment Reporting to our consolidated financial statements in Item 8. Financial Statements and Supplementary Data of this Form 10-K
(“Item 8”).
Our investments include Anheuser-Busch InBev SA/NV (“ABI”) and Cronos Group Inc. (“Cronos”), which we account for under the
equity method of accounting using a one-quarter lag.
Description of Business
Portions of the information relating to this Item are included in Operating Results by Business Segment in Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations of this Form 10-K (“Item 7”).
Our operating companies include PM USA, Middleton, USSTC, Helix and NJOY.
The products of our operating companies include: (i) smokeable tobacco products, consisting of combustible cigarettes manufactured
and sold by PM USA and machine-made large cigars manufactured and sold by Middleton; (ii) oral tobacco products, consisting of MST
products manufactured and sold by USSTC and oral nicotine pouches manufactured and sold by Helix; and (iii) e-vapor products
manufactured and sold by NJOY.
▪
Cigarettes: PM USA is the largest cigarette company in the United States and substantially all cigarettes are manufactured and
sold to customers in the United States. Marlboro, the principal cigarette brand of PM USA, has been the largest-selling cigarette brand
in the United States for over 50 years. Total smokeable products segment’s cigarettes shipment volume in the United States was
61.8 billion units in 2025, a decrease of 10.0% from 2024.
▪
Cigars: Middleton is engaged in the manufacture and sale of machine-made large cigars. Middleton contracts with a third-
party importer to supply substantially all of its cigars and sells substantially all of its cigars to customers in the United States. Black &
Mild is the principal cigar brand of Middleton. Total smokeable products segment’s cigars shipment volume was approximately
1.8 billion units in 2025, an increase of 1.8% from 2024.
▪
Oral tobacco products: USSTC is the leading producer and marketer of MST products. The oral tobacco products segment
includes the premium brands, Copenhagen and Skoal, and a value brand, Red Seal, sold by USSTC. In addition, the oral tobacco
products segment includes on! oral nicotine pouches sold by Helix. Substantially all of the oral tobacco products are manufactured and
sold to customers in the United States. Total oral tobacco products segment’s shipment volume was 732.4 million units in 2025, a
decrease of 5.5% from 2024.
1
▪
E-Vapor products: NJOY contracts with third-party importers to supply all of its products and sells its e-vapor products to
customers in the United States. NJOY’s product portfolio of tobacco and menthol e-vapor products is covered by marketing granted
orders (“MGO”) from the U.S. Food and Drug Administration (“FDA”). NJOY ACE, the principal e-vapor product of NJOY, is subject
to an exclusion order and cease-and-desist orders issued by the U.S. International Trade Commission (“ITC”) prohibiting the importation
and sale of NJOY ACE in the United States, as further discussed in Note 18. Contingencies to our consolidated financial statements in
Item 8 (“Note 18”).
▪
Other tobacco products: In connection with the joint venture agreement with JTIUH, Horizon will market and commercialize
HTS products, which are defined in the joint venture agreement as products that include both (i) a tobacco heating device intended to
heat the consumable without combusting and (ii) a consumable that meets the definition of a cigarette under the U.S. Federal Cigarette
Labeling and Advertising Act. Horizon is responsible for the U.S. commercialization of current and future HTS products owned by
either party and, upon authorization by the FDA, will become the exclusive entity through which the parties market and commercialize
HTS products in the United States. Upon FDA authorization of Ploom HTS products, JTIUH will supply Ploom HTS devices and PM
USA will manufacture Marlboro HTS consumables for U.S. commercialization. As of February 25, 2026, there are no products in the
U.S. marketplace from the joint venture.
▪
Distribution, Competition and Raw Materials: Our tobacco subsidiaries sell their tobacco products principally to wholesalers
(including distributors) and large retail organizations, including chain stores.
The market for tobacco products is highly competitive, characterized by brand recognition and loyalty, with product quality, taste, price,
product innovation, marketing, packaging, distribution and promotional activities constituting the significant methods of competition.
Promotional activities include, in certain instances and where permitted by law, allowances, the distribution of incentive items, price
promotions, product promotions, coupons and other discounts.
In the United States, under a contract growing program, PM USA purchases the majority of its burley and flue-cured leaf tobaccos
directly from domestic tobacco growers. Under the terms of this program, PM USA agrees to purchase the amount of tobacco specified
in the grower contracts that meets PM USA’s grade and quality standards. PM USA also purchases a portion of its tobacco requirements
through leaf merchants.
Middleton purchases burley, dark air-cured and flue-cured leaf tobaccos through leaf merchants. Middleton does not have a contract
growing program.
USSTC purchases dark fire-cured, dark air-cured and burley leaf tobaccos from domestic tobacco growers under a contract growing
program. Under the terms of this program, USSTC agrees to purchase the amount of tobacco specified in the grower contracts that
meets USSTC’s grade and quality standards.
Helix, through an affiliate, and NJOY purchase tobacco-derived nicotine materials from suppliers and believe their suppliers can satisfy
current and anticipated future production requirements.
Our tobacco subsidiaries believe there is an adequate supply of tobacco in the world markets to satisfy their current and anticipated
production requirements.
Other Matters
▪
Customers: For a discussion of our largest customers, including their percentages of our consolidated net revenues for the
years ended December 31, 2025, 2024 and 2023, see Note 15. Segment Reporting to our consolidated financial statements in Item 8
(“Note 15”).
▪
Executive Officers of Altria: The disclosure regarding executive officers is included in Item 10. Directors, Executive Officers
and Corporate Governance - Information about Our Executive Officers as of February 13, 2026 of this Form 10-K.
▪
Human Capital Resources: We believe our workforce is critical to achieving our Vision. Attracting, developing, retaining
and deploying the best talent with the skills to make significant progress toward our Vision is a key business priority. Moreover, we
recognize the importance of doing business the right way. We believe culture influences employee actions and decision making. This is
why we dedicate resources to promoting an engaging workplace; attracting, developing, retaining and deploying talented employees to
build a high-performing and diverse talent pipeline; promoting a culture of compliance and integrity; creating a safe workplace; and
rewarding and recognizing employees for both the results they deliver and, importantly, how they deliver them.
Oversight and Management
Our Human Resources department is responsible for managing employment-related matters, including recruiting and hiring, onboarding,
compensation and benefits design and implementation, performance management, career management and succession planning and
professional and learning development. Our Board of Directors (“Board of Directors” or “Board”) and the Compensation and Talent
Development Committee provide oversight of human capital matters, including reviewing initiatives and programs related to corporate
culture and enterprise-wide talent development.
2
One of our core Responsibility Focus Areas revolves around our people as we are focused on our employees’ safety, wellbeing and
opportunity. We invest in our people to support their development while creating a safe and empowering environment where we believe
our employees can thrive. We regularly report specific goals and progress metrics related to these efforts on our website
(www.altria.com).
Compensation and Benefits
Our compensation and benefits programs are designed to help us attract, retain and motivate strong talent. However, we recognize that
the decreasing social acceptance of tobacco usage may impact our ability to attract and retain talent with skills necessary for us to
achieve our Vision. We work to manage this risk by, among other things, targeting total compensation packages to be above peer
companies with which we compete for talent. Depending on employee level, total compensation includes different elements – base
salary, annual cash incentives, long-term equity and cash incentives and benefits.
We are committed to pay equity across our companies. Based on the most recent annual analysis we conducted in 2025, for employees
performing the same or similar duties regardless of any differentiating factors, such as performance and tenure, salaries of our female
employees were 98.4% of those of our male employees, and salaries of our employees of color were 98.5% of those of our white
employees. If we adjust for differentiating factors that legitimately influence pay, salaries of our female employees were 99.9% of those
of our male employees, and salaries of our employees of color were 99.9% of those of our white employees.
In addition to cash and equity compensation, we offer generous employee benefits such as significant company contributions to deferred
profit sharing plans, consumer-driven health plan coverage, vacation and holiday pay, disability and life insurance. We also offer up to
12 weeks of paid family leave to bond with a newborn child, the placement of a child for adoption or foster care, or to care for a family
member who has a serious health condition. Our benefits also include physical, emotional and financial wellness programs and family
creation assistance benefits, such as reimbursement of surrogacy, adoption assistance and doula expenses. While there is some
variability in employee benefits across our companies, the examples we provide are available to most employees.
We are also committed to investing in the educational development of our workforce through a tuition refund program for job-related
courses or company-related degrees. We also provide eligible employees with a company-funded contribution applied to the employee’s
qualified higher education student loans to help reduce student loan debt.
Attracting, Developing, Retaining and Deploying Talent
We are focused on identifying the most qualified talent and investing in leader and employee development to build a diverse talent
pipeline prepared and willing to lead at every level. Additionally, we are dedicated to being an engaging place to work for all
employees, regardless of personal background or work function. We recognize the critical importance of these efforts toward pursuing
our Vision and believe in the value of a workforce composed of a broad and diverse spectrum of backgrounds, skills, experiences and
cultures.
Our salaried entry-level recruitment efforts include building relationships with university students, internship opportunities and
partnerships with organizations that support a broad range of students. We also hire experienced employees with demonstrated skills
and/or leadership capabilities.
To help our employees succeed in their roles and develop in their careers, we emphasize ongoing training and leadership development
opportunities. Building skills that drive innovation and aligning our employees to our Vision is important for our long-term success.
The Human Resources department leads our learning and development efforts partnering with learning professionals embedded in
functions throughout our operating and services companies. Employees have access to a wide variety of development programs,
including new employee onboarding, in-person, virtual and self-guided training programs, technical training, including training to
maintain professional certifications, and our educational refund program for continuing education.
We also have an employee recognition program that allows leaders and employees to reward and recognize colleagues for their
outstanding performance and everyday excellence.
We regularly conduct confidential employee engagement surveys to seek feedback on a variety of topics, including employee
satisfaction, support from leadership, corporate culture and culture of compliance. In addition, in 2025, these quarterly employee
surveys sought feedback on topics such as employee engagement, inclusion, equal opportunity, compliance, management support,
modernization efforts and employees’ understanding and belief in business strategy and organizational changes. Survey results,
including comparisons to prior results, are shared with our employees and our Board and are used to modify or enhance our human
capital management programs.
We also monitor our progress toward building our organization through various metrics, including comparisons to external benchmarks,
and report workforce data annually. Our data-driven efforts focus on removing barriers to equal opportunity in compliance with
applicable law.
3
Work Modernization
We announced a multi-phase Optimize & Accelerate initiative (“Initiative”) in October 2024 designed to enhance organizational speed,
efficiency and effectiveness. The Initiative includes centralizing work, outsourcing certain transactional activities and streamlining,
automating and standardizing processes across the enterprise. We are realizing process efficiencies, improving task turnaround times
through centralized and automated workflows and enhancing process effectiveness. Our Accelerated Business Solutions organization is
assisting with sustaining these improvements and driving further efficiency and process optimization by using technology and through
collaboration with external service providers. To support these enhanced business processes, we are implementing technology solutions,
organizational design changes and deploying enterprise-wide and function-specific change management programs to facilitate workforce
adoption. For additional information, see Our Business in Item 7.
Workplace Safety
Our goal is for every employee to experience an injury-free career, which is supported by our Safety Management System. We strive for
continuous improvement in our employee safety program through Safety Management System infrastructure. Our Occupational Safety
and Health Administration recordable injury rate for 2025 was 1.7% (versus 1.8% for 2024) and remains below the benchmark for
companies in the U.S. Beverage and Tobacco Product Manufacturing industry classification.
Number of Employees and Labor Relations
At December 31, 2025, we employed approximately 5,900 people. Twenty-six percent of our employees were hourly manufacturing
employees who are members of labor unions subject to collective bargaining agreements. We believe we engage and collaborate
effectively with our hourly employees, as demonstrated by the positive working relationship between our companies and the unions. We
also have long-term agreements that resolve any collective bargaining dispute through binding arbitration, which further demonstrates
our trust-based relationship with the unions.
Supply Chain Human Capital Matters
We manage human capital risks across our global supply chain through a risk-based due diligence approach focused on identifying and
addressing potential labor-related issues. This approach includes supplier assessments, contractual requirements and targeted
monitoring, with emphasis on higher-risk geographies, sectors and categories.
Where applicable, we use industry-led initiatives, including the GAP Connections Program and the Sustainable Tobacco Program, to
evaluate supplier practices against labor management and human rights standards. Notably, in 2025, 100% of our leaf and nicotine
suppliers participated in these programs, underscoring our commitment to upholding high standards throughout our supply network. In
addition, our Supplier Code of Conduct sets expectations for all suppliers, including prohibitions on child labor, forced labor and other
human rights violations.
We conduct social compliance audits of select suppliers, prioritizing those in high-risk regions, and require corrective actions when
findings occur. Suppliers operating in high-risk countries are subject to enhanced due diligence and ongoing monitoring.
More information about efforts discussed in this section can be found in our Corporate Responsibility Reports on our website
(www.altria.com).
▪
Intellectual Property: Trademarks are of material importance to us and are protected by registration or otherwise. In addition,
as of December 31, 2025, the portfolio of United States patents owned by our businesses, as a whole, was material to us and our
businesses. However, no one patent or group of related patents was material to our businesses as of December 31, 2025. Our businesses
also have proprietary trade secrets, technology, know-how, processes and other intellectual property rights that are protected by
appropriate confidentiality measures. Certain trade secrets are material to us and our businesses.
▪
Government Regulations: We are subject to various federal, state and local laws and regulations. For example, the Family
Smoking Prevention and Tobacco Control Act (“FSPTCA”) provides the FDA with broad authority to regulate the design, manufacture,
packaging, advertising, promotion, sale and distribution of tobacco products; the authority to require disclosures of related information;
and the authority to enforce the FSPTCA and related regulations. For further discussion of laws and regulations impacting our operating
companies, see Operating Results by Business Segment - Business Environment in Item 7.
We and our subsidiaries (and former subsidiaries) are also subject to various federal, state and local laws and regulations concerning the
discharge of materials into the environment, or otherwise related to environmental protection, including, in the United States: the Clean
Air Act, the Clean Water Act, the Resource Conservation and Recovery Act and the Comprehensive Environmental Response,
Compensation and Liability Act (commonly known as “Superfund”), which can impose joint and several liability on each responsible
party. Altria and our former subsidiaries are involved in several matters subjecting them to potential costs of remediation and natural
resource damages under Superfund or other laws and regulations. Our subsidiaries expect to continue to make capital and other
expenditures in connection with environmental laws and regulations. In the opinion of our management, however, compliance with
environmental laws and regulations, including the payment of any remediation costs or damages and related expenditures, has not had,
and is not expected to have, a material adverse effect on our business, results of operations, capital expenditures, financial position or
cash flows.
4
For further discussion of the foregoing matters, the business environment, trends in market demand and competitive conditions, and
related risks, see Item 1A. Risk Factors of this Form 10-K (“Item 1A”) and Critical Accounting Estimates and Operating Results by
Business Segment - Business Environment in Item 7.
Available Information
We are required to file annual, quarterly and current reports, proxy statements and other information with the U.S. Securities and
Exchange Commission (“SEC”). The SEC maintains an Internet website at www.sec.gov that contains reports, proxy and information
statements, and other information regarding issuers from which investors can electronically access our SEC filings.
We make available free of charge on or through our website (www.altria.com) our Form 10-K, Quarterly Reports on Form 10-Q, Current
Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange
Act of 1934, as amended (“Exchange Act”), as soon as reasonably practicable after we electronically file such material with, or furnish it
to, the SEC. Investors can access our filings with the SEC by visiting www.altria.com/secfilings.
The information on our respective websites is not, and shall not be deemed to be, a part of this Form 10-K or incorporated into any other
filings we make with the SEC.
Item 1A. Risk Factors.
Our business is subject to various risks and uncertainties that are difficult to predict, may materially affect actual results and are often
outside of our control. We identify a number of these risks and uncertainties below. You should read the following risk factors carefully
in connection with evaluating our business and the forward-looking statements contained in this Form 10-K.
This Form 10-K contains statements concerning our expectations, plans, objectives, future financial performance and other statements
that are not historical facts. You can identify these forward-looking statements by our use of words such as “strategy,” “expects,”
“continues,” “plans,” “anticipates,” “believes,” “will,” “estimates,” “forecasts,” “intends,” “projects,” “goals,” “objectives,” “guidance,”
“targets” and other words of similar meaning. You can also identify them by the fact that they do not relate strictly to historical or
current facts.
We cannot guarantee that any forward-looking statement will be realized, although we believe we have been prudent in our plans,
estimates and assumptions. Achievement of future results is subject to risks, uncertainties and assumptions that may prove to be
inaccurate. If risks or uncertainties materialize, or if underlying estimates or assumptions prove inaccurate, actual results could differ
materially from those anticipated. You should bear this in mind as you consider forward-looking statements and whether to invest in or
remain invested in our securities. Under the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we
identify important factors that, individually or in the aggregate, could cause actual results and outcomes, including with respect to our
ability to achieve our Vision, to differ materially from those contained in, or implied by, any forward-looking statements we make. We
elaborate on these important factors and the risks we face throughout this Form 10-K, particularly in the “Executive Summary” and
“Business Environment” sections preceding our discussion of the operating results of our segments in Item 7. You should understand
that it is not possible to predict or identify all factors and risks. Consequently, you should not consider the foregoing list to be complete.
We do not undertake to update any forward-looking statement that we may make from time to time except as required by applicable law.
Risks Relating to Our Business
Business Operations Risks
We may be unsuccessful in anticipating and responding to changes in adult nicotine consumer purchase behavior, including as a
result of difficult economic conditions, and preferences, each of which could have a material adverse effect on our business,
results of operations, cash flows or financial position.
Our operating companies’ portfolios of nicotine products are largely comprised of premium brands, such as Marlboro, Copenhagen and
Skoal. The willingness of adult nicotine consumers to purchase premium brands is affected by macroeconomic conditions, including
inflation and overall economic stability. In periods of economic uncertainty and high inflation, we have observed that adult nicotine
consumers reduce consumption, purchase more discount brands and consider lower-priced nicotine products, increasing the market share
of competitive discount products.
If our operating companies are unable to take actions to mitigate the effects of inflationary pressures and other factors that contribute to
their products’ industry volume decline rates, it could negatively impact our business, results of operations, cash flows or financial
position. For example, due to inflationary pressures and other adverse macroeconomic factors, our operating companies may be unable
to sufficiently increase the prices of their premium products to offset volume declines from consumers down-trading to lower-priced
competitive brands or moving across nicotine product categories. This inability to increase product prices could have a material adverse
effect on our business, results of operations, cash flows or financial position and our ability to achieve our Vision.
In addition, as adult nicotine consumer preferences evolve, consumers are increasingly moving across nicotine product categories,
including selecting different categories of nicotine products than those they traditionally purchase and purchasing illicit flavored e-vapor
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products. These evolving preferences have primarily resulted in domestic cigarette industry volume declines, which have negatively
impacted our business.
Our ability to effectively respond to new and evolving adult nicotine consumer purchase behavior catalyzed by challenging
macroeconomic conditions and changes in adult nicotine consumer preferences depends on our ability to promote brand equity
successfully among our premium and discount brands and broaden our product portfolios across price-points and categories, including
by bringing to market new and innovative nicotine products that appeal to adult nicotine consumers. Our failure to do so or our failure
to anticipate changing adult nicotine consumer preferences, improve productivity or protect or enhance margins through cost savings and
price increases, could have a material adverse effect on our business, results of operations, cash flows or financial position.
We face significant competition, including from the growth of innovative nicotine products, and our failure to compete
effectively could have a material adverse effect on our business, results of operations, cash flows or financial position and our
ability to achieve our Vision.
Our operating companies operate in highly competitive environments. Significant competition exists with respect to product quality,
taste, price, product innovation, marketing, packaging, distribution and promotional activities. Because many of our operating
companies’ products are market leaders, we are subject to antitrust risk. In addition, as adult nicotine consumer preferences evolve,
consumers are increasingly moving across nicotine product categories. Our operating companies’ failure to compete effectively in these
environments could negatively impact their profitability, market share and shipment volume.
The growth of innovative nicotine products, including legal and illicit e-vapor products and oral nicotine pouches, has contributed to
reductions in the consumption levels and industry sales volumes of cigarettes and other tobacco products, including MST products.
These reductions have negatively impacted our business. Furthermore, the proliferation of illicit flavored disposable e-vapor products
has negatively impacted the growth of FDA-authorized e-vapor products, including NJOY’s products. If we are unable to compete
effectively in innovative nicotine product categories, including through internal product development, on! oral nicotine pouch products,
NJOY e-vapor products, our participation in Horizon and other potential future relationships and investments, such inability could have a
material adverse impact on our business, results of operations, cash flows or financial position and our ability to achieve our Vision.
The competitive environments in which our operating companies compete and our operating companies’ competitive positions can be
significantly impacted by the price differentials between premium and discount brands. PM USA faces competition from lower-priced
brands sold by certain domestic and foreign manufacturers that have cost advantages because they are not parties to settlements of
certain healthcare cost recovery litigation in the United States and, as such, are not required to make annual settlement payments as
required by the parties to the settlements. These settlement payments, which are inflation-adjusted, are significant for PM USA and have
contributed to substantial cigarette price increases to help cover their cost. Manufacturers not party to the settlements are subject to state
escrow legislation requiring escrow deposits. Such manufacturers may avoid these escrow obligations by concentrating on certain states
where escrow deposits are not required or are required on fewer than all such manufacturers’ cigarettes sold in such states.
Additional price competition has resulted from diversion into the United States market of cigarettes intended for sale outside the United
States, diversion of tobacco products intended for sale in one taxing jurisdiction within the United States into another taxing jurisdiction,
the sale of counterfeit cigarettes by third parties, the sale of cigarettes by third parties over the Internet and by other means designed to
avoid collection of applicable taxes and imports of foreign lower-priced brands.
Tobacco products imported to the United States are subject to the same federal excise tax as those manufactured domestically.
Manufacturers of tobacco products imported to the United States can receive refunds of certain duties, taxes and fees paid on those
products when offsetting volumes of the same or substantially similar products are subsequently exported out of the United States. The
program that allows for these refunds is referred to as “duty drawback.” If PM USA is unable to realize duty drawback to the same
extent as other manufacturers, we may be at a competitive disadvantage with respect to our ability to invest in the long-term growth of
our core tobacco businesses and contribute to the strategic growth of our innovative nicotine product portfolio.
Our failure to compete effectively, including as a result of litigation settlement obligations, the impacts of illicit trade in nicotine
products, the price differentials between premium and discount brands and our inability to realize available tax advantages, could have a
material adverse effect on our business, results of operations, cash flows or financial position.
We may be unsuccessful in commercializing innovative products, including nicotine products with reduced health risks relative
to certain other nicotine products and that appeal to adult nicotine consumers, which may have a material adverse effect on our
business, results of operations, cash flows or financial position and our ability to achieve our Vision.
We have growth strategies involving innovative products that may have reduced health risks relative to certain other nicotine products,
while continuing to offer adult nicotine consumers (within and outside the United States) products that meet their taste expectations and
evolving preferences. These strategies include e-vapor, heated tobacco and oral nicotine pouch products. For example, in the first
quarter of 2026, we commercialized on! PLUS oral nicotine pouch products, and we have plans to commercialize additional on! and
NJOY products. If the outcome of any legal proceedings or investigations involving NJOY prevent us from, or we are otherwise
unsuccessful in, executing these strategies, there could be a material negative impact on our business and our ability to achieve our
Vision. For example, as a result of a patent lawsuit adjudicated before the ITC, the ITC imposed bans on the importation of NJOY ACE
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into the United States and our sale and marketing of NJOY ACE products previously imported into the United States. We have appealed
these bans to the U.S. Court of Appeals for the Federal Circuit, but the bans will remain in effect during the pendency of the appeal. The
success of Horizon, our joint venture with JTIUH for the marketing and commercialization of HTS products in the United States, in
generating new revenue streams by commercializing current and future HTS products owned by us or Japan Tobacco is dependent upon
a number of factors. These factors include (i) receipt of regulatory authorizations, (ii) prevailing economic, market, regulatory or
business conditions, or changes in such conditions, negatively affecting the parties, (iii) changes in market or other conditions resulting
in unanticipated delays in the design and development of future products or the commencement of test launches, (iv) the outcome of any
legal proceedings or investigations that may be instituted against the parties or others related to the joint venture, (v) changes in the
preferences of U.S. adult nicotine consumers and (vi) the failure to meet commercialization milestones. Such factors could have a
negative effect on the success of Horizon and any future collaboration or partnership between the parties, which could impact our ability
to generate new revenue streams and enter new geographic markets.
Lengthy and unpredictable regulatory review periods complicate efforts to strategize and plan with respect to commercialization of new
products, and we cannot predict or influence the speed with which the FDA reviews pre-market tobacco applications (“PMTA”). Our
operating companies may decide to commercialize products that have not received marketing granted orders from the FDA if the
operating company submitted a PMTA with respect to any such product in compliance with the FSPTCA and the FDA failed to issue a
marketing order within the statutory review period. It is possible that the FDA may bring an enforcement action relating to
commercialized products for which a PMTA has been pending longer than the statutory review period.
If we do not succeed in commercializing innovative nicotine products that appeal to adult nicotine consumers or we fail to obtain or
maintain regulatory authorization for the marketing or sale of these products, including with claims of reduced health risks, we could be
at a competitive disadvantage, which could have a material adverse effect on our business, results of operations, cash flows or financial
position and our ability to achieve our Vision.
Our inability to successfully counter the effects of illicit trade in nicotine products, including e-vapor products, could have a
material adverse effect on our business, results of operations, cash flows or financial position and our ability to achieve our
Vision.
Illicit trade in nicotine products has had, and could continue to have, an adverse impact on our business, including the sales volumes and
market shares of our operating companies’ innovative and smoke-free products and traditional tobacco products. Illicit trade in nicotine
products can take many forms, including the sale of counterfeit products; the sale of products that do not comply with the FSPTCA and
FDA regulations; the sale of products in the United States that are intended for sale outside the country; the sale of untaxed products
over the Internet and by other means designed to avoid the collection of applicable taxes; and the diversion into one taxing jurisdiction of
products intended for sale in another jurisdiction. Counterfeit versions of our operating companies’ products can negatively affect adult
nicotine consumer experiences with and opinions of those brands as well as other stakeholders’ perceptions and opinions of our
companies and brands. Illicit trade in nicotine products also harms law-abiding wholesalers and retailers by depriving them of lawful
sales and undermines the significant investment we have made in legitimate distribution channels. Moreover, illicit trade in nicotine
products results in federal, state and local governments losing tax revenues. Losses in tax revenues can cause such governments to take
various actions, including increasing excise taxes, imposing legislative or regulatory requirements, or asserting claims against
manufacturers of nicotine products or members of the trade channels through which such nicotine products are legally distributed and
sold, each of which could have an adverse effect on our business, results of operations, cash flows or financial position.
In the e-vapor category, illicit flavored disposable product usage has significantly increased, and such products now comprise the
majority of the e-vapor category. The impacts of this dynamic include declines in FDA-authorized e-vapor product volume and
increased cross-category movement among adult cigarette smokers that has contributed to domestic cigarette industry volume declines.
Recent enforcement actions by regulatory agencies have not had a material impact in curbing the proliferation and sale of illicit flavored
disposable e-vapor products. This dynamic has made the operating environment challenging for our businesses. We have increased
engagement with the FDA and other government agencies to encourage enforcement action against these illicit products, but such
enforcement has been inadequate to date. We also have taken legal action to protect our e-vapor business, which exposes us to
additional costs and expenses. Our failure to counter the impacts of illicit flavored disposable e-vapor products and the FDA’s failure to
take meaningful enforcement actions against manufacturers and products that violate the law could have a material adverse effect on our
business, results of operations, cash flows or financial position and our ability to achieve our Vision.
Failure to complete or manage strategic transactions, including acquisitions, dispositions, joint ventures and commercial
relationships with and investments in third parties, or realize the anticipated benefits of such transactions, could have a material
adverse effect on our business, financial position and our ability to achieve our Vision.
We regularly evaluate potential strategic transactions, including acquisitions, dispositions, joint ventures and commercial relationships
with and investments in third parties. Opportunities for strategic transactions may be limited, and the success of any such transaction is
dependent upon our ability to complete and realize the expected benefits of the transaction in the expected time frame or at all.
Following the completion of a transaction, there may be certain financial, managerial, staffing and talent and operational risks, including
diversion of management’s attention from existing core businesses, difficulties integrating other businesses into existing operations and
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other challenges. We may not be able to enter into attractive business relationships or execute and complete strategic transactions on
favorable terms or at all. Any such relationships or transactions may not improve our competitive position or have the intended financial
outcomes and may subject us to increased legal risk, including with respect to intellectual property infringement or breach of contract
claims. For example, our former investment in JUUL Labs, Inc. (“JUUL”) did not result in and, to date, our investment in Cronos has
not, resulted in the economic and competitive advantages expected at the time the investments were made.
We may not be able to realize the expected benefits of our acquisition of NJOY Holdings, Inc. (“NJOY Transaction”) in the expected
manner or timeframe, if at all, including due to the ITC exclusion order and cease-and-desist orders prohibiting the importation and sale
of NJOY ACE in the United States. In 2025, we recorded impairments of the value of the goodwill and other intangible assets within our
e-vapor reporting unit as a result of these orders and our expectation that effective enforcement against illicit flavored disposable e-vapor
products would occur more gradually than initially anticipated. Other factors that could negatively impact our ability to realize the
expected benefits of the NJOY Transaction in the expected manner or timeframe, if at all, include (i) our failure to receive or maintain
regulatory authorizations; (ii) changes in adult nicotine consumer preferences; (iii) our failure to comply with regulatory requirements;
(iv) prevailing economic, market, regulatory or business conditions, or changes in such conditions negatively affecting our business and
our plans with respect to the e-vapor category and (v) the outcome of any current or future legal proceeding or investigation related to
the NJOY Transaction, NJOY or its products.
PM USA imports cigarettes manufactured outside the United States for sale domestically, and PM USA has entered into strategic
commercial relationships to manufacture cigarettes in the United States for export to third parties for sale in international markets. If PM
USA is unable to maintain, expand upon or enter into new relationships of this type, it may hinder PM USA’s ability to increase the
efficiency of its cigarette manufacturing operations, develop capabilities needed to comply with various international product and other
standards and invest in the long-term growth of our core tobacco businesses and the strategic growth of our innovative nicotine product
portfolio.
If the NJOY Transaction, our strategic relationships with respect to contract manufacturing or any other acquisition, disposition, joint
venture, investment in a third party or other strategic relationship is not successful, there could be a material negative impact on our
business, financial position and results of operations and our ability to achieve our Vision.
Significant changes in price, availability or quality of tobacco, other raw materials or component parts could have a material
adverse effect on our profitability and business.
Shifts in crops (such as those driven by macroeconomic conditions and adverse weather patterns), government restrictions and mandated
prices, production control programs, economic trade sanctions, import duties and tariffs, international trade disruptions, labor
disruptions, inflation, geopolitical instability, climate and environmental changes and disruptions due to man-made or natural disasters
may increase the cost or reduce the supply or quality of tobacco and other raw materials, ingredients and component parts used to
manufacture our operating companies’ products. Any significant change in such factors could restrict our ability to continue
manufacturing and marketing existing products or impact adult nicotine consumer product acceptability and have a material adverse
effect on our business and profitability.
For varieties of tobacco only available in limited geographies, government-mandated prices and production control programs, political
instability or government prohibitions on the import or export of tobacco in certain countries pose additional risks to price, availability
and quality. As consumer demand increases for innovative smoke-free products and decreases for combustible and MST products, the
volume of tobacco leaf required for production of these products has decreased, resulting in reduced tobacco leaf demand. Reduced
demand for tobacco leaf may result in the reduced supply and availability of domestic tobacco and increased costs, as growers divert
resources to other crops or cease farming. Macroeconomic factors, such as tariffs, may exacerbate reductions in demand for tobacco leaf
by increasing the cost of purchasing tobacco leaf from a supplier in another country. The unavailability or unacceptability of any one or
more particular varieties of tobacco leaf or the unavailability of nicotine extract necessary to manufacture our operating companies’
products could negatively impact our ability to continue marketing existing products or impact adult nicotine consumer product
acceptability, which could have a material adverse effect on our business and profitability. In addition, the nicotine used in our operating
companies’ innovative smoke-free products is extracted from tobacco produced in one country. If we are unable to identify alternate
sources of nicotine for our operating companies’ innovative products, we could be exposed to the risks discussed above.
Current geopolitical and macroeconomic conditions (including tariffs, inflation, labor shortages, supply and demand imbalances and
international armed conflicts) are causing worldwide disruptions and delays to supply chains and commercial markets, which limit
access to, and increase the cost of, raw materials, ingredients and component parts (for example, wood tips used in our cigar products
and aluminum used in our packaging). As consumer demand increases for innovative smoke-free products and decreases for
combustible and MST products, the volume of raw materials, ingredients and component parts required for the production of these
products has decreased. Reduced demand for raw materials, ingredients and component parts may reduce supply and availability and
increase the cost of raw materials, ingredients and component parts as suppliers divert resources to other products or cease producing
these products. Furthermore, challenging economic conditions can create the risk that our suppliers, distributors, logistics providers or
other third-party partners suffer financial or operational difficulties, which may impact their ability to provide us with or distribute
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finished product, raw materials and component parts and services in a timely manner or at all. If we are unable to identify alternate
sources of raw materials, ingredients and component parts for our operating companies’ products, we could be exposed to supply risk.
In addition, government taxes, restrictions and prohibitions on the sale and use of certain products may limit access to, and increase the
costs of, raw materials and component parts and, potentially, impede our ability to sell certain of our products. For example, certain
states have passed extended producer responsibility legislation concerning packaging. Because certain of our operating companies’
products’ packaging consists of single-use plastics, single-use plastic bans and extended producer responsibility mandates could result in
bans on some of our operating companies’ product packaging or their products and adversely impact our costs and revenues. Additional
taxes and limitations on the use of certain single-use plastics have been proposed by the U.S. Congress and various state and local
governments. These existing and potential future laws and regulations could increase the costs of sourcing, and impair our ability to
source, certain materials used in the packaging for our products.
If our operating companies are unable to compensate for supply shortages or elevated commodity and other costs through sustained price
increases, cost efficiencies, such as in manufacturing and distribution, or otherwise manage the exposure through sourcing strategies, the
limited use of commodity hedging contracts or through other initiatives, our business, results of operations, cash flows and financial
condition could be materially adversely impacted.
Our operating companies rely on a few significant facilities and a small number of key suppliers, distributors and distribution
chain service providers, and an extended disruption at a facility or in service by a supplier, distributor or distribution chain
service provider could have a material adverse effect on our business, results of operations, cash flows or financial position.
Our operating companies face risks inherent in reliance on a few significant manufacturing facilities and a small number of key
suppliers, distributors and distribution chain service providers. A natural or man-made disaster, cybersecurity incident, global pandemic,
labor disruption or other disruption that affects the manufacturing operations of any of our operating companies, the operations of any
key supplier, distributor or distribution chain service provider of any of our operating companies or any other disruption in the supply or
distribution of goods or services (including a key supplier’s inability to comply with government regulations, lack of available workers
or unwillingness to supply goods or services to a tobacco company) could adversely impact operations. Operations of our operating
companies, suppliers, distributors and distribution chain service providers could be suspended temporarily once or multiple times, or
halted permanently, depending on various factors. An extended disruption in operations experienced by one or more of our operating
companies or in the supply or distribution of goods or services by one or more key suppliers, distributors or distribution chain service
providers, could have a material adverse effect on our business, results of operations, cash flows or financial position.
We may be required to write down goodwill and other intangible assets, including trademarks and other intellectual property,
due to impairment, which could have a material adverse effect on our results of operations or financial position.
We periodically calculate the fair value of our reporting units and intangible assets to test for impairment. These calculations may be
affected by several factors, including general macroeconomic conditions, the proliferation of illicit products, government actions,
including FDA regulatory actions and inaction, changes in category growth (decline) rates as a result of changing adult nicotine
consumer preferences, success of planned new product expansions, competitive activity, unfavorable outcomes with respect to litigation
proceedings, including actions brought against us alleging patent infringement, and income and excise taxes. Certain events also can
trigger an immediate review of intangible assets.
In 2025, we recorded impairments of the values of the goodwill and other intangible assets within our e-vapor reporting unit as a result
of the ITC exclusion order and cease-and-desist orders prohibiting the importation and sale of NJOY ACE into the United States and our
expectation that effective enforcement against illicit flavored disposable e-vapor products would occur more gradually than initially
anticipated. If we experience unfavorable outcomes with respect to litigation proceedings (including actions alleging patent
infringement), the discount rate used to estimate the fair values of the goodwill and other intangible assets within our e-vapor reporting
unit increases or any of the judgments or assumptions we made regarding the future state of the e-vapor category and NJOY’s business
fail to materialize, we could record additional non-cash impairments of our e-vapor reporting unit goodwill in future periods. The
judgments and assumptions we made regarding the future state of the e-vapor category and NJOY’s business include the (i) timing and
extent of effective enforcement against illicit flavored disposable e-vapor products; (ii) timing and likelihood of regulatory
authorizations of e-vapor products, including of NJOY’s products; (iii) timing of the commercialization of NJOY e-vapor products in the
United States; (iv) long-term growth of the e-vapor category; and (v) conversion rates of illicit flavored disposable e-vapor consumers to
FDA-authorized e-vapor products and, specifically, NJOY’s e-vapor products. Fair value calculations are sensitive to changes in these
judgments and assumptions, some of which relate to broader macroeconomic conditions and governmental actions outside of our
control.
In the second quarter of 2024, we recorded an impairment of the value of the Skoal trademark. This impairment was the result of the
decrease in the fair value of the Skoal trademark caused by decreases in the size of the MST products category, which were due, in part,
to the growth of nicotine pouch volumes. If Skoal’s actual revenue and income or long-term outlook are significantly unfavorable
compared to forecasted performance used to estimate the fair value or if the discount rate used to estimate the fair value increases, we
could have an additional non-cash impairment of the carrying value of the Skoal trademark in future periods.
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We continue to monitor several factors that impact the fair value of our goodwill and intangible assets. If any impairment is determined
to exist, we will incur impairment charges, which could have a material adverse effect on our results of operations or financial position.
Our Optimize & Accelerate initiative may expose us to increased risks relating to business continuity and our internal control
over financial reporting and audit procedures, among others, which could have a material adverse impact on our business, cash
flows, financial position or results of operations.
In October 2024, we announced the multi-phase Initiative, which is designed to enhance organizational speed, efficiency and
effectiveness. The Initiative includes centralizing work, outsourcing certain transactional activities and streamlining, automating and
standardizing processes across the enterprise. The Initiative presents a number of risks that could adversely impact our business, such as
risks relating to operational continuity, talent management and internal control over financial reporting and audit procedures. For
example, we may experience a loss of continuity, loss of accumulated knowledge and inefficiency during transitional periods.
Furthermore, many of the outsourced tasks are or will be performed in developing countries that may be at a heightened risk for
geopolitical uncertainty, which could result in service interruptions. The expected savings associated with the Initiative may be offset to
some extent by business disruption during the implementation phase as well as investments in new processes and systems until the
Initiative is fully implemented. The accelerated frequency and scale of new technology and systems deployment to support the Initiative
may increase risks to our internal control framework, protection of sensitive data and regulatory compliance. Additionally, the Initiative
may lead to a loss of control and oversight of outsourced functions, which could weaken our existing internal control over financial
reporting and present audit challenges. If the vendors to whom we outsource certain tasks do not adhere to our financial controls and
compliance processes and procedures, we could be at an increased risk for fraud and financial misstatements.
If actual results of the Initiative differ from our expectations with respect to the continuity and reliability of outsourced tasks,
maintenance of internal control over financial reporting and audit procedures, we may experience an adverse impact on our business,
results of operations or financial position.
Our operating companies could decide, or be required to, recall products, which could have a material adverse effect on our
business, reputation, results of operations, cash flows or financial position.
Our operating companies could decide, or laws or regulations could require them, to recall products due to the failure to meet quality
standards or specifications, suspected or confirmed and deliberate or unintentional product contamination, or other product adulteration,
misbranding or tampering. Similar issues may subject us to liability with respect to products our operating companies manufacture for
third parties under contract manufacturing agreements. A product recall or a product liability or other claim (even if unsuccessful or
without merit) could have negative economic consequences and also generate negative publicity about us and our operating companies’
products. In addition, if another company recalls or experiences negative publicity related to a product in a category in which one of our
operating companies competes, adult nicotine consumers might reduce their overall consumption of products in the category. Any of
these events could have a material adverse effect on our business, reputation, results of operations, cash flows or financial position.
We face various risks related to health epidemics and pandemics, and such events, and the measures that international, federal,
state and local governments, agencies, law enforcement and health authorities implement to address them, could have a material
adverse effect on our business, results of operations, cash flows or financial position.
An epidemic, pandemic or other significant public health emergency, and the measures taken by governmental authorities to address it,
could significantly disrupt our operating companies’ abilities to operate their businesses in the ordinary course. Furthermore, any
associated economic consequences could have a material adverse effect on our business, results of operations, cash flows or financial
position.
If any public health emergency were to occur in the future, we could experience negative impacts. In addition, the specific
characteristics of any future public health emergency and associated governmental responses could result in other negative impacts that
we cannot foresee. Accordingly, any future emergence or resurgence of an epidemic, pandemic or other public health emergency could
have a material adverse effect on our business, results of operations, cash flows or financial position.
We may be unable to attract and retain a highly skilled workforce due to the decreasing social acceptance of tobacco usage,
tobacco control actions and other factors, which could have a material adverse effect on our business and our ability to achieve
our Vision.
Our ability to implement our strategy of attracting and retaining a highly skilled workforce may be impaired by the decreasing social
acceptance of tobacco usage, tobacco regulation and control actions and other factors. We compete for talent with the consumer
products industry and other companies that may enjoy greater societal acceptance and fewer long-term challenges. As a result, we may
be unable to attract and retain highly qualified talent, which could have a material adverse effect on our business and our ability to
achieve our Vision.
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Litigation, Legislative and Regulatory Risks
Unfavorable outcomes with respect to litigation proceedings or any governmental investigations could materially adversely affect
our results of operations, cash flows or financial position and our ability to achieve our Vision.
Legal proceedings covering a wide range of matters are pending or threatened in various U.S. and foreign jurisdictions against us and
our subsidiaries, including PM USA, as well as our and their respective indemnitees and indemnitors. Various types of claims may be
raised in these proceedings, including product liability, unfair trade practices, antitrust, tax, contraband-related claims, intellectual
property infringement, breach of contract, employment matters, environmental matters, claims alleging violations of the Racketeer
Influenced and Corrupt Organizations Act (“RICO”), claims for contribution and claims of competitors, shareholders and distributors.
Legislative action, such as changes to tort law, also may expand the types of claims and remedies available to plaintiffs.
Competitors and other third parties have brought and may in the future bring action against us, our subsidiaries and/or our suppliers
alleging patent infringement. Such claims, regardless of merit, expose us to significant litigation costs and damages, importation bans
with respect to products and product components manufactured abroad, divert management’s attention and compromise our operating
companies’ abilities to commercialize and improve their products. This risk is especially pertinent to smoke-free products where
technology is advancing rapidly, resulting in a high volume of patents in relevant technology spaces. In a patent lawsuit adjudicated
before the ITC, the ITC imposed bans on the importation of NJOY ACE into the United States and our sale and marketing of NJOY ACE
products previously imported into the United States. As a result of the ITC’s decision, NJOY removed NJOY ACE from the
marketplace. We have appealed the ban on the importation into the United States and our sale and marketing of NJOY ACE, but the bans
will remain in place during the pendency of the appeal. JUUL has filed similar actions in the U.S. District Court for the District of
Arizona and with the ITC alleging patent infringement based on our sale of NJOY Daily in the United States. If the bans with respect to
NJOY ACE remain effective or we experience unfavorable outcomes with respect to the patent litigation relating to NJOY Daily, either
outcome could have a material adverse effect on our valuation of our e-vapor reporting unit’s goodwill and our plans with respect to the
e-vapor category.
In certain litigation, we and our subsidiaries may face potentially significant non-monetary remedies in addition to importation bans that
could have a material adverse effect on our businesses. For example, in the Federal Government’s lawsuit alleging that certain
defendants, including Altria and PM USA, violated RICO and engaged in certain “sub-schemes” to defraud, the district court did not
impose monetary penalties but ordered significant non-monetary remedies, including the issuance of “corrective statements.”
Litigation is subject to significant uncertainty, and there could be adverse developments in pending or future cases. An unfavorable
outcome or settlement of pending tobacco-related or other litigation could encourage the commencement of additional litigation.
Damages claimed in some tobacco-related or other litigation are significant and, in certain cases, have ranged in the billions of dollars.
The variability in pleadings in multiple jurisdictions and the actual experience of management in litigating claims demonstrate that the
monetary relief that may be specified in a lawsuit bears little relevance to the ultimate outcome.
We have extensive experience litigating tobacco-related cases in a number of jurisdictions, with the vast majority of these cases having
been filed in Florida. However, in recent years, we have seen an increase in the number of these cases filed against PM USA in
jurisdictions outside of Florida. Managing complex litigation in multiple jurisdictions at an accelerated rate compounds the significant
uncertainty as to the likelihood of adverse developments in pending or future cases.
In certain cases, plaintiffs claim that defendants’ liability is joint and several. In such cases, we may face the risk that one or more co-
defendants decline or otherwise fail to participate in the bonding required for an appeal or to pay their proportionate or jury-allocated
share of a judgment. As a result, we may have to pay more than our proportionate share of any bonding- or judgment-related amounts
under certain circumstances. Furthermore, in cases where plaintiffs are successful, we also may be required to pay interest and
attorneys’ fees.
Although we historically have been able to obtain required bonds or relief from bonding requirements in order to prevent plaintiffs from
seeking to collect judgments while adverse verdicts have been appealed, there remains a risk that such relief may not be obtainable in all
cases. This risk has been substantially reduced given that 47 states and Puerto Rico limit the dollar amount of bonds or require no bond
at all. However, tobacco litigation plaintiffs have challenged the constitutionality of Florida’s bond cap statute in several cases and
plaintiffs may challenge state bond cap statutes in other jurisdictions as well. Such challenges may include the applicability of state
bond caps in federal court. Although we cannot predict the outcome of such challenges, it is possible that our business, results of
operations, cash flows or financial position could be materially adversely affected in a particular fiscal quarter or fiscal year by an
unfavorable outcome of one or more such challenges.
Each of Altria and our subsidiaries named as a defendant in pending litigation believes, and each has been so advised by counsel
handling the respective cases, that it has valid defenses to the litigation pending against it, as well as valid bases for appeal of adverse
verdicts.
We have defended, and will continue to defend, vigorously against litigation challenges. However, we may enter into settlement
discussions in particular cases if we believe it is in our best interests to do so.
11
We cannot predict the outcome of any litigation proceedings or governmental investigations, and unfavorable outcomes in any such
proceedings or investigations could materially adversely affect our results of operations, cash flows or financial position.
Significant federal, state and local governmental actions, including FDA regulatory actions and inaction, and various private
sector actions may continue to have a material adverse impact on our operating companies’ sales volumes and our business.
We face significant governmental and private sector actions, including efforts aimed at reducing the incidence of tobacco use and
seeking to hold us responsible for the adverse health effects associated with both smoking and exposure to environmental tobacco
smoke. These actions, combined with the diminishing social acceptance of smoking, have resulted in reduced cigarette industry volume,
and we expect that these factors will continue to reduce cigarette consumption levels, which could have a material adverse effect on our
business, results of operations, cash flows or financial position.
We cannot predict whether regulators, including the FDA, will permit the marketing or sale of any particular innovative products
(including products with claims of reduced risk to adult nicotine consumers) or whether they will impose a burdensome regulatory
framework on such products. In addition, the FDA could, for a variety of reasons, determine that innovative products on the market but
pending FDA review of the associated PMTA (such as on! oral nicotine pouches), or those that have previously received authorization
are not appropriate for the public health, and the FDA could require such products be taken off the market. We also cannot predict
whether or to what extent the FDA will take enforcement actions against manufacturers and products that violate the law.
The actions and inaction of regulators, including the FDA, can result in competitive challenges. For example, unpredictable and lengthy
regulatory review periods complicate efforts to strategize and plan with respect to commercialization of new products, and we cannot
predict or influence the speed with which the FDA reviews PMTAs. A protracted FDA review of one of our operating companies’
PMTAs would allow competitive products already on the market to establish market share, brand recognition and adult nicotine
consumer loyalty in the absence of competition from our product. Additionally, we cannot control the order in which the FDA reviews
PMTAs. The FDA could review a PMTA for a competitor’s product before it reviews a PMTA submitted by one of our operating
companies with respect to a competing product notwithstanding that our operating company submitted its PMTA first. Scenarios such as
these would put us at a competitive disadvantage, which could have a material adverse impact on our business, profitability and our
ability to achieve our Vision.
In addition to the outcomes discussed above, actions and inaction by the FDA and other federal, state or local governments or agencies
can (i) impact the adult nicotine consumer acceptability of or access to nicotine products (for example, through nicotine or constituent
limits or menthol or other flavor bans), (ii) limit adult nicotine consumer choices, (iii) restrict communications to adult nicotine
consumers, (iv) restrict the ability to differentiate nicotine products, (v) impose additional manufacturing, labeling or packaging
requirements, (vi) interrupt manufacturing or otherwise significantly increase the cost of doing business, (vii) result in increased illicit
trade in nicotine products, (viii) restrict or prevent the use of specified nicotine products in certain locations or the sale of nicotine
products by certain retail establishments, (ix) require the recall of nicotine products due to a determination relating to product
contamination or (x) otherwise require the removal of nicotine products from the marketplace (for example, due to a determination that
one or more nicotine products fail to satisfy the statutory requirements for substantial equivalence, must proceed through the pre-market
review process or must be removed from the marketplace for the protection of public health).
Any federal, state or local governmental action, including regulatory actions and inaction by the FDA, may have a material adverse
impact on our business, results of operations, cash flows or financial position. Such action and inaction also could negatively impact
adult smokers’ transition to potentially reduced risk products, which could materially adversely affect our ability to achieve our Vision.
Nicotine products are subject to substantial taxation, and any increases in nicotine product-related taxes could have a material
adverse impact on sales of our operating companies’ products.
Nicotine products are subject to substantial taxation, including excise taxes. Significant increases in taxes or fees on nicotine products
(including traditional tobacco products as well as e-vapor and oral nicotine products) have been proposed or enacted and are likely to
continue to be proposed or enacted within the United States at the federal, state and local levels. The frequency and magnitude of excise
tax increases can be influenced by various factors, including federal and state budgets and the composition of executive and legislative
bodies. Tax increases are expected to continue to have an adverse impact on sales of our operating companies’ products through lower
consumption levels and the potential shift in adult nicotine consumer purchases from the premium to the non-premium or discount
segments, to other low-priced or low-taxed products or to counterfeit and contraband products. Such shifts may also have an adverse
impact on the reported share performance of our operating companies’ products. Any increases in taxes or fees applicable to our
operating companies’ products could have a material adverse impact on our business, results of operations, cash flows or financial
position. In addition, substantial excise tax increases on e-vapor and oral nicotine products could negatively impact adult smokers’
transition to these products, which could materially adversely affect our ability to achieve our Vision.
International business operations subject us to various U.S. and foreign laws and regulations, and violations of such laws or
regulations could result in reputational harm, legal challenges and significant penalties and other costs.
While we are primarily engaged in business activities in the United States, we engage (directly or indirectly) in certain international
business activities that are subject to various U.S. and foreign laws and regulations, such as foreign privacy laws, the U.S. Foreign
12
Corrupt Practices Act and other laws prohibiting bribery and corruption. Although we have a Code of Conduct for Compliance and
Integrity and a compliance system designed to prevent and detect violations of applicable law, we can provide no assurance that any
system will always protect against improper actions by employees, joint venture partners, investees or third parties. Violations of these
laws, or allegations of such violations could result in reputational harm, legal challenges and significant penalties and other costs.
A challenge to our tax positions, an increase in the income tax rate or other changes to federal or state tax laws could materially
adversely affect our earnings or cash flows.
Tax laws and regulations are complex and subject to varying interpretations. Changes to federal or state tax laws or challenges to one or
more of our positions with respect to those laws, including with respect to the availability of duty drawback, which allows manufacturers
to receive refunds of certain duties, taxes and fees paid on imported tobacco products when offsetting volumes of those products or
substantially similar products are subsequently exported, could give rise to additional liabilities (including interest and potential
penalties) or reduce the amount of duties, taxes and fees paid by our operating companies for which refunds are available. Accordingly,
a successful challenge to one or more of our tax positions, an increase in the corporate income tax rate or other changes to federal or
state tax laws, including changes to how foreign investments are taxed, could materially adversely affect our earnings or cash flows.
Legal and regulatory requirements related to climate change and other environmental sustainability matters could have a
material adverse impact on our business and results of operations.
Concern over climate change and other sustainability matters is likely to result in new or additional legal and regulatory requirements
intended to reduce or mitigate environmental issues. Furthermore, as our operating companies do business in new international markets
and expand their product portfolios, we may become subject to new legal and regulatory requirements related to climate change and
other environmental and corporate sustainability matters. New or additional requirements may relate to, among other things, greenhouse
gas emissions, alternative energy policy, single-use plastics, the disposal of nicotine products or nicotine product components and
additional disclosure obligations with respect to climate change and environmental sustainability matters. These additional laws and
regulations could materially adversely affect our business, results of operations, cash flows and financial condition by increasing our
compliance and manufacturing costs and creating legal and reputational risk if we are unable to, or are perceived not to, satisfy such
requirements.
Capital Markets and Financing Risks
Disruption and uncertainty in the credit and capital markets could materially adversely affect our business.
Access to the credit and capital markets is important for us to satisfy our liquidity and financing needs. We typically access the
commercial paper market in the second quarter to help fund payments under the Master Settlement Agreement (“MSA”), tax obligations
and shareholder dividends. Disruption and uncertainty in the credit or capital markets or high interest rates could negatively impact the
availability or cost of capital and adversely affect our liquidity, cash flow, earnings and dividend rate. In addition, tighter credit markets
could lead to business disruptions for our suppliers and service providers, which could, in turn, materially adversely impact our business,
results of operations, cash flows and financial condition.
A downgrade or potential downgrade of our credit ratings could adversely impact our borrowing costs and access to credit and
capital markets, which could materially adversely affect our financial condition.
Rating agencies routinely evaluate us, and their ratings are based on a number of factors, including our cash generating capability, levels
of indebtedness, policies with respect to shareholder distributions, the impact of strategic transactions and our financial strength
generally, as well as factors beyond our control, such as the state of the economy and our industry. Any downgrade or announcement
that we are under review for a potential downgrade of our credit ratings, as occurred following our former investment in JUUL,
especially any downgrade to below investment grade, could increase our future borrowing costs, impair our ability to access the credit
and capital markets, including the commercial paper market, on terms commercially acceptable to us or at all or result in a reduction in
our liquidity, requiring us to rely on more expensive types of financing. Any such outcome could have a material adverse impact on our
financial condition.
Our performance relating to corporate responsibility matters and investor and stakeholder responses thereto may impact our
reputation, ability to attract investors and the market value of our stock.
Focus from investors and other stakeholders on corporate responsibility, including with respect to environmental, social and governance
matters, has resulted in investor demand for measurement of corporate responsibility performance. The criteria by which third-party
providers of assessments and ratings measure such performance may vary or change over time. Furthermore we have published reports
concerning our goals, approach and progress with respect to a range of corporate responsibility focus areas. Investors may use these
non-financial performance factors and reports to guide investment strategies, and investor and other stakeholder expectations of and
responses to our policies, actions, goals and disclosures concerning corporate responsibility matters may evolve over time. Investors
may choose not to invest in us if their policies prevent them from investing in tobacco companies and may base investment and other
decisions on their view of our policies, actions, goals or disclosures with respect to corporate responsibility matters.
13
Despite our efforts, any failure to achieve our corporate responsibility goals, including those aimed at reducing the harm associated with
our operating companies’ products and our underage tobacco prevention goals, could result in adverse publicity. Furthermore, if
investors or other stakeholders view our corporate responsibility policies, actions, goals or disclosures as insufficient or otherwise
unacceptable, we could incur negative publicity and litigation challenges. These outcomes could materially adversely affect our
businesses and reputation and impair our ability to attract and retain investors, which could have a material negative impact on the
market value of our stock.
Information Technology and Data Privacy Risks
The failure of our, or our service providers’, key suppliers’ or trade customers’, information systems to function as intended, or
cyber-attacks or security breaches, could have a material adverse effect on our business, reputation, results of operations, cash
flows or financial position.
We rely extensively on information technology, much of which is managed by third-party service providers (such as cloud data service
providers), to support a variety of business processes and activities, including: complying with regulatory, legal, financial reporting and
tax requirements; engaging in marketing and e-commerce activities; managing and improving the effectiveness of our operations;
researching, developing, manufacturing and distributing our operating companies’ products; collecting and storing sensitive data and
confidential information; and communicating with employees, investors, suppliers, trade customers, adult nicotine consumers and others.
Our suppliers, supply chain service providers and trade customers also rely extensively on information systems. We also have increased
the frequency and scale of new technology and systems deployment both directly and through third parties.
We continue to make appropriate investments in administrative, technical and physical safeguards to protect our information systems
and data from cyber-threats, including human error and malicious acts. Our safeguards include employee training, testing and auditing
protocols, backup systems and business continuity plans, maintenance of security policies and procedures, monitoring of networks and
systems, and third-party risk management. We can provide no guarantee that any investments or safeguards will protect our information
systems and data from all threats.
From time-to-time, we and our service providers, suppliers and trade customers experience attempts to infiltrate and interrupt
information systems. We have not experienced an information security breach within the past three years, and to date, we have not
experienced any interruptions of information systems as a result of infiltration attempts. However, because technology is increasingly
complex and cyber-attacks are increasingly sophisticated and more frequent, there can be no assurance that such incidents will not cause
interruptions that could have a material adverse effect on us in the future. For example, the rapid evolution and increased adoption of
artificial intelligence technologies may intensify our and our service providers’, key suppliers’ and trade customers’ cybersecurity risks.
Bad actors around the world use increasingly sophisticated methods, including the use of artificial intelligence, to engage in illegal
activities involving the theft and misuse of personal information, confidential information and intellectual property. Any of these
outcomes could damage our reputation, result in the loss of valuable property and information and adversely impact our business.
Outsourcing certain business functions pursuant to the Initiative may increase our exposure to risks such as data breaches, which could
compromise sensitive information. Implementation of new technology and systems deployment may increase our risk of data security
incidents, internal control failures and regulatory noncompliance. Our vendors and third-party partners may incorporate artificial
intelligence tools into their offerings with or without disclosing this use to us. The providers of these artificial intelligence tools may not
meet existing or rapidly evolving regulatory or industry standards concerning privacy and data protection, which may result in a loss of
intellectual property or confidential information or cause harm to our reputation and the public perception of the effectiveness of our
security measures. Failure of our, or our service providers’, key suppliers’ or trade customers’, information systems to function as
intended, or cyber-attacks or security breaches, could result in loss of revenue, assets, personal data, intellectual property, trade secrets or
other sensitive and confidential data, financial misstatements, violation of applicable privacy and data security laws, reputational harm to
our operating companies and their brands, operational disruptions, legal challenges and significant remediation and other costs, all of
which could have a material adverse effect on our business, reputation, results of operations, cash flows or financial position.
Our failure, or the failure of our service providers, key suppliers or trade customers, to comply with personal data protection,
privacy, artificial intelligence and information security laws could materially adversely affect our business.
We and our service providers, key suppliers and trade customers are subject to a variety of continuously evolving and developing laws
and regulations in numerous jurisdictions regarding personal data protection, privacy, artificial intelligence and information security.
These laws and regulations may be interpreted and applied differently from country to country or, within the United States, from state to
state, and can create inconsistent or conflicting requirements. For example, as our business expands internationally and we outsource
certain business functions to vendors in foreign jurisdictions as part of the Initiative, we may incur additional costs associated with
compliance with foreign data protection laws and incur additional risk of non-compliance with such laws. Privacy laws and regulations
are also expanding in the United States. Comprehensive state privacy laws are either in effect or have been enacted in a number of
states, and similar laws are being considered in several other states, as well as at the federal and local levels. Our efforts, and the efforts
of our service providers, key suppliers and trade customers, to comply with the evolving patchwork of differing foreign, federal, state
and local laws and regulations impose significant costs and challenges that are likely to continue to increase over time, particularly as
14
additional jurisdictions adopt similar regulations. Failure to comply with these laws and regulations or to otherwise protect personal data
from unauthorized access, use or other processing, could result in litigation, claims, regulatory proceedings, inquiries or investigations,
damage to our reputation, fines, penalties and business disruptions, all of which could have a material adverse effect on our business,
reputation, results of operations, cash flows or financial position.
Risks Relating to Our Investments in Equity Securities
The expected benefits of our investment in ABI may not materialize in the expected manner or timeframe or at all, which could
have a material adverse impact on our financial position or earnings.
The expected benefits of our investment in ABI may not materialize in the expected manner or timeframe or at all, including due to
foreign currency exchange rates; ABI’s business results; ABI’s share price; impairment losses on the value of our investment; our
incurrence of additional tax liabilities related to our investment in ABI; and potential reductions in the number of directors that we can
have appointed to the ABI board of directors.
We account for our investment in ABI under the equity method of accounting. For purposes of financial reporting, the earnings from
and carrying value of our investment in ABI are translated into U.S. dollars (“USD”) from various local currencies. In addition, ABI
pays dividends in euros, which we convert into USD. During times of a strengthening USD against these currencies, our reported
earnings from and carrying value of our investment in ABI will be reduced because these currencies will translate into fewer USD and
the dividends that we receive from ABI will convert into fewer USD. Dividends and earnings from and carrying value of our investment
in ABI are also subject to the risks encountered by ABI in its business, its business outlook, cash flow requirements and financial
performance, the state of the market and the general economic climate. For example, in 2020, as a result of the uncertainty, volatility
and impact of the COVID-19 pandemic on ABI’s business, ABI reduced by 50% its final 2019 dividend paid in the second quarter of
2020 and did not pay its interim 2020 dividend that would have been paid in the fourth quarter of 2020, which resulted in a reduction of
cash dividends we received from ABI.
We assess the value of our investment in ABI as required by United States generally accepted accounting principles (“GAAP”). If the
carrying value of our investment in ABI exceeds its fair value and we determine that the loss in value is other than temporary, we record
appropriate impairment losses. In a prior period, we concluded that the fair value of our investment in ABI declined below the carrying
value of our investment in ABI and that this decline in fair value was other than temporary. As a result, we recorded a non-cash, pre-tax
impairment charge for that period. It is possible that we may be required to record significant impairment charges in the future and, if
we do so, our net earnings and carrying value of our investment in ABI could be materially adversely affected.
In the event that our ownership percentage in ABI were to decrease below certain levels, (i) we may be subject to additional tax
liabilities, (ii) the number of nominees that we have the right to select for election to the ABI board of directors could be reduced and
(iii) we may be unable to continue to account for our investment in ABI under the equity method of accounting.
Our investment in Cronos subjects us to certain risks associated with Cronos’s business, including legal, regulatory and
reputational risks.
Our investment in Cronos, a Canadian cannabinoid company, subjects us to various risks relating to Cronos’s business, such as legal,
regulatory and reputational risks. Cronos is engaged in the cultivation, manufacture and marketing of cannabis and cannabis-derived
products for the medical and adult-use markets in various international jurisdictions. Accordingly, Cronos’s operations are subject to
laws, regulations and guidelines promulgated by various governmental authorities. In the United States, these laws include the
Controlled Substances Act, the Civil Assets Forfeiture Reform Act (as it relates to violation of the Controlled Substances Act), all related
applicable anti-money laundering laws and FDA regulations. A failure by Cronos or Altria to comply with applicable laws, including
cannabis laws, could result in criminal, civil or tax liability, negative impacts on the availability and cost of capital and credit or
reputational harm for Altria.
Item 1B. Unresolved Staff Comments.
None.
Item 1C. Cybersecurity.
Risk Management and Strategy
We rely extensively on information technology, much of which is managed by third-party service providers (such as cloud data service
providers), to support a variety of business processes and activities, including: complying with regulatory, legal, financial reporting and
tax requirements; engaging in marketing and e-commerce activities; managing and improving the effectiveness of our operations;
researching, developing, manufacturing and distributing our operating companies’ products; collecting and storing sensitive data and
confidential information; and communicating with employees, investors, suppliers, trade customers, adult nicotine consumers and others.
Recognizing the critical importance of cybersecurity in today’s digital landscape, we are committed to safeguarding our information
15
assets, protecting consumer data and maintaining the integrity and availability of our systems. Accordingly, we have implemented an
extensive cybersecurity risk management framework designed to identify, assess, mitigate and prevent potential cybersecurity risks and
to align with industry best practices and all applicable regulatory requirements. We leverage the National Institute of Standards and
Technology (“NIST”) Cybersecurity Framework and industry best practices to identify and prioritize cybersecurity risks based on their
potential impacts. We also use the NIST framework and industry best practices to drive enhancements to our program that are designed
to protect our assets and third-party partners. The NIST framework also helps us maintain ongoing compliance with regulatory
requirements. We align our security standards for infrastructure configuration with the Center for Internet Security’s Benchmarks,
which are prescriptive recommendations based upon the consensus of global cybersecurity experts.
Our framework is built around the following key principles: (i) risk assessment and threat intelligence; (ii) security controls; (iii) incident
response; (iv) employee awareness and training; and (v) third-party risk management. We have integrated our cybersecurity framework
into our broad enterprise risk management processes, which allows us to leverage our existing enterprise-wide experience in managing
risk and adapting to change in the cybersecurity threat landscape.
▪
Risk Assessment and Threat Intelligence: We conduct regular risk assessments to identify potential cybersecurity
vulnerabilities and threats. Our Information Technology (“IT”) Risk Management function, overseen by our Chief Information Security
Officer (“CISO”), leads internal self-assessments, which involve evaluating the security posture of critical systems, networks and
applications as well as the potential impact of cybersecurity threats on our business operations, financial condition and reputation. IT
Risk Management also conducts ongoing threat monitoring and has implemented monitoring systems, including technologies such as
intrusion detection systems, security information and event management tools and threat intelligence programs.
We regularly engage third-party consulting services to conduct audits and assessments of the effectiveness of our cybersecurity controls
and processes and identify areas for improvement based on developments in industry best practices. We typically engage these services
annually, though the cadence can differ based on the results of the audits and assessments. We also leverage third parties to evaluate our
cybersecurity and risk management strategy, review policies and procedures to address new risks and maintain ongoing compliance with
evolving legal and regulatory requirements. For example, we partner with leading global security providers to leverage various threat
intelligence channels as input to monitor and tune our cybersecurity controls.
▪
Security Controls: We employ a layered approach to cybersecurity, implementing a range of technical and procedural controls
designed to protect critical systems and data. These controls include (i) firewalls and intrusion detection and prevention systems to
monitor and block unauthorized access attempts, detect and deter malicious activity and safeguard network infrastructure, (ii)
encryption, including secure protocols and multi-factor authentication, to protect information in transit and at rest and (iii) secure
network architecture that segregates critical systems from the public internet, limiting exposure to potential threats. We also conduct
regular security patching to manage emerging cyber threats.
▪
Incident Response: We have established an incident response plan and playbooks, which include procedures designed to
respond to and recover from cybersecurity incidents. These procedures, which our IT Risk Management function reviews on an ongoing
basis both internally and with third-party consultants, provide detailed descriptions of the roles and responsibilities of key stakeholders
and the procedures for communication and coordination during an incident. The procedures also provide guidelines for escalating
information to senior management, our Disclosure Controls Committee, our Audit Committee, which, as discussed below, has been
delegated cybersecurity program oversight responsibility, and our full Board and for providing timely public disclosure, when necessary.
To maintain incident readiness, business continuity and IT resilience, we conduct periodic disaster recovery exercises and cybersecurity
incident management exercises led by our IT Risk Management function. These exercises involve simulating various scenarios and
testing our response strategies, allowing us to identify vulnerabilities, refine procedures and enhance our overall crisis management and
recovery capabilities. We believe regular practice and evaluation allows us to minimize the impact of potential disruptions and
safeguard our operations, data and reputation.
▪
Employee Awareness and Training: We recognize that employees play a critical role in maintaining a strong cybersecurity
posture. Our Information Governance Policy sets forth the requirements for employee conduct relating to company information and
company-managed devices, including relevant privacy, data security and data retention policies. We believe that our Information
Governance Policy is aligned with industry best practices and applicable legal and regulatory requirements. In addition to our
Information Governance Policy, we conduct cybersecurity training programs emphasizing the importance of cybersecurity awareness at
least annually and more frequently as necessary or advisable. These programs address relevant cybersecurity topics, such as common
cybersecurity threats, phishing awareness and best practices for safeguarding sensitive information. Employees are held accountable for
completing all assigned cybersecurity programs and meeting certain performance thresholds in phishing awareness exercises, and there
is a range of consequences for underperformance that includes termination.
▪
Third-Party Risk Management: We acknowledge the potential cybersecurity risks inherent in our relationships with third-
parties. Accordingly, we have implemented a third-party risk management program to identify and oversee such risks. This program
relies on key elements including risk assessment, due diligence, contractual provisions and ongoing monitoring to identify and mitigate
impacts from high-risk third-parties and of specific risks. We use security risk assessment questionnaire tools to identify high-risk third-
parties, which we believe allows us to effectively assess and mitigate potential security vulnerabilities.
16
Our third-party risk assessment framework evaluates the cybersecurity practices and controls of third-parties. For high-risk third-parties,
we perform due diligence inquiries, reviewing documentation with respect to their security policies, incident response capabilities, data
protection measures and regulatory compliance. We also review evidence of cybersecurity certifications and the results of independent
audits. For high-risk third-parties with access to sensitive data or systems, we conduct more in-depth assessments. Our contracts with
high-risk third-parties contain provisions related to data protection, confidentiality, incident reporting and compliance with all applicable
laws and regulations. Throughout our engagements with high-risk third-parties, we maintain a monitoring program with respect to their
cybersecurity posture. Leveraging tools such as security questionnaires, security ratings and external threat intelligence, we regularly
review and update third-party risk assessments based on changes in the third-party’s services or practices and the risk landscape.
Governance
Our Board devotes significant time and attention to our cybersecurity and information technology risks. Our Board executes its
cybersecurity risk oversight as a whole and by delegating responsibility to our Audit Committee. Our CISO and Chief Information
Officer present to our Board annually and to our Audit Committee at least twice each year on a broad range of topics, such as recent and
potential cybersecurity threats and incidents across our industry, best practices and policies, emerging trends, vulnerability assessments
and management’s ongoing efforts to prevent, detect and address internal and external cybersecurity threats specific to us. These
briefings also include reporting on periodic third-party cybersecurity program assessments and benchmarks and updates from our
cybersecurity incident management exercises. Cybersecurity risks are documented in an IT Risk Dashboard, which is shared with our
Audit Committee for awareness several times each year. Our full Board also has access to these materials. Finally, we provide periodic
cybersecurity training to our Audit Committee and Board to further cybersecurity awareness and risk oversight.
While our Board and Audit Committee oversee cybersecurity risk, senior management is responsible for actively managing
cybersecurity risk, including by overseeing and executing the risk management strategies discussed above. Our Risk Oversight
Committee, which is chaired by our Chief Compliance Officer and comprised of members of senior management, including our Chief
Financial Officer, Chief Operating Officer, Chief Strategy and Growth Officer and General Counsel, oversees the management of key
enterprise risks, including cybersecurity risks. Senior management reports annually to the Board with respect to our overall enterprise
risk management processes. Our CISO presents to the Risk Oversight Committee quarterly to review the status of management’s key
cybersecurity risk management strategies. The Risk Oversight Committee also receives the quarterly IT Risk Dashboard.
Our CISO, who reports directly to our Vice President, Enterprise Technology and Chief Information Officer, is responsible for assessing
and managing cybersecurity risks and maintaining our cybersecurity program. Our CISO has over 25 years of experience, including six
years as our CISO, managing technology risks across multiple industries, including financial services, technology and manufacturing.
Through strategic hiring and internal development, our CISO enhances the levels of skill and experience on our IT Risk Management
team to stay ahead of evolving cybersecurity threats. As of the date of this filing, 100% of our IT Risk Management team has technical
industry certification, and members of the IT Risk Management team have an average of 15 years of cybersecurity experience. Our
CISO currently serves as an advisor to multiple industry groups. Our cybersecurity program undergoes an annual third-party controls
effectiveness assessment and bi-annual program maturity evaluation against industry peers and consistently receives assessments
indicating that it is ahead of the cybersecurity programs of our peer group.
As of the date of this filing, we are not aware of any current cybersecurity threats or cybersecurity incidents that have materially affected
or are reasonably likely to materially affect our business, results of operations or financial condition. From time-to-time, we and our
third-party service providers, suppliers and trade customers experience attempts to infiltrate and interrupt information systems. We have
not experienced an information security breach within the past three years, and to date, we have not experienced any interruptions of
information systems as a result of infiltration attempts. For further discussion of the risks related to cybersecurity, see Risks Relating to
Our Business - Information Technology and Data Privacy Risks in Item 1A.
Item 2. Properties.
ALCS owns one property in Richmond, Virginia that serves as the headquarters facilities for Altria, PM USA, USSTC, Middleton,
Helix, NJOY and certain other subsidiaries.
PM USA owns and operates a manufacturing facility located in Richmond, Virginia that PM USA uses in the manufacturing of
cigarettes (smokeable products segment). PM USA leases portions of this facility to our other subsidiaries for use in the manufacturing
of cigars (smokeable products segment) and oral nicotine pouches (oral tobacco products segment). In addition, PM USA owns a
research and technology center in Richmond, Virginia that it leases to ALCS.
The oral tobacco products segment has various manufacturing and processing facilities, the most significant of which are located in
Nashville, Tennessee and Hopkinsville, Kentucky.
The plants and properties owned or leased and operated by us are maintained in good condition and are believed to be suitable and
adequate for present needs.
17
Item 3. Legal Proceedings.
The information required by this Item is included in Note 18 and Exhibits 99.1 and 99.2 to this Form 10-K. Altria’s consolidated
financial statements and accompanying notes for the year ended December 31, 2025 were filed on Form 8-K on January 29, 2026 (such
consolidated financial statements and accompanying notes are also included in Item 8). The following summarizes certain developments
in Altria’s litigation since the filing of the Form 8-K.
Recent Developments
▪
Health Care Cost Recovery Litigation
Continuing NPM Adjustment Disputes with States That Have Not Settled. In February 2026, an arbitration panel found that Missouri
was not diligent in the enforcement of its escrow statutes in 2005.
▪
Antitrust Litigation
In February 2026, the U.S. District Court for the Northern District of California certified three classes of plaintiffs (one of direct
purchasers, one of indirect purchasers and one of indirect resellers).
Item 4. Mine Safety Disclosures.
Not applicable.
18
Date
Altria
S&P Food, Beverage
& Tobacco
S&P 500
December 2020
$
100.00
$
100.00
$
100.00
December 2021
$
124.26
$
116.18
$
128.71
December 2022
$
129.70
$
126.72
$
105.40
December 2023
$
125.06
$
121.25
$
133.10
December 2024
$
176.17
$
125.52
$
166.40
December 2025
$
208.24
$
135.97
$
196.16
Source: FactSet - Total return assumes reinvestment of dividends as of the ex-dividend date.
Market and Dividend Information
The principal stock exchange on which our common stock (par value $0.33 1/3 per share) is listed is the New York Stock Exchange
under the trading symbol “MO”. At February 13, 2026, there were approximately 44,000 holders of record of our common stock.
We have a history of paying cash dividends, and have a progressive dividend goal targeting mid-single digits dividend per share growth
annually through 2028. Future dividend payments remain subject to the discretion of our Board.
Part II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities.
Performance Graph
The graph below compares the cumulative total shareholder return of our common stock for the last five years with the cumulative total
return for the same period of the S&P 500 Index and the S&P Food, Beverage and Tobacco Industry Group Total Return Index. The
graph assumes the investment of $100 in common stock and each of the indices as of the market close on December 31, 2020 and the
reinvestment of all dividends on a quarterly basis.
2020
2021
2022
2023
2024
2025
$250
$200
$150
$100
$50
Comparison of Five-Year Cumulative Total Shareholder Return
S&P Food, Beverage & Tobacco
Altria/Index Value
S&P 500
Altria
19
Issuer Purchases of Equity Securities During the Quarter Ended December 31, 2025
In January 2025, our Board authorized a $1.0 billion share repurchase program. In October 2025, the Board authorized a $1.0 billion
expansion of this program to $2.0 billion, which expires on December 31, 2026 (as expanded, “January 2025 share repurchase
program”). Share repurchases depend upon marketplace conditions and other factors, and the program remains subject to the discretion
of our Board.
Our share repurchase activity for each of the three months in the period ended December 31, 2025, was as follows:
Period
Total Number of
Shares Purchased (1)
Average
Price Paid
Per Share
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs
Approximate Dollar
Value of Shares that
May Yet be Purchased
Under the Plans or
Programs
October 1- October 31, 2025
1,796,943 $
61.52
1,796,943 $
1,177,389,567
November 1- November 30, 2025
1,561,299 $
58.26
1,560,904 $
1,086,445,148
December 1- December 31, 2025
1,477,862 $
58.54
1,476,775 $
1,000,000,025
For the Quarter Ended December 31, 2025
4,836,104 $
59.56
4,834,622
(1) The total number of shares purchased includes (a) shares purchased under the January 2025 share repurchase program and (b) shares withheld by
Altria in an amount equal to the statutory withholding taxes for vested stock-based awards previously granted to eligible employees (which totaled
395 in November and 1,087 in December).
Item 6. [Reserved].
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in
conjunction with the other sections of this Form 10-K, including our consolidated financial statements and related notes contained in
Item 8, and the discussion of risk factors that may affect future results in Item 1A. All references to “Notes” in this MD&A are to Notes
to our consolidated financial statements in Item 8. Additionally, refer to Item 7. MD&A in our 2024 Annual Report on Form 10-K for
management’s discussion and analysis of financial condition and results of operations for the year ended December 31, 2024 compared
to the year ended December 31, 2023, which we filed with the SEC on February 26, 2025 and is incorporated by reference into this
Form 10-K.
In this MD&A section, we refer to the following “adjusted” financial measures: adjusted operating companies income (loss) (“OCI”);
adjusted OCI margins; adjusted net earnings; adjusted diluted earnings per share (“EPS”); and adjusted effective tax rates. We also refer
to the ratio of debt-to-Consolidated EBITDA (earnings before interest, taxes, depreciation and amortization, as defined in our credit
agreement, which includes certain adjustments). These financial measures are not required by, or calculated in accordance with, GAAP
and may not be calculated the same as similarly titled measures used by other companies. These financial measures should thus be
considered as supplemental in nature and not considered in isolation or as a substitute for the related financial information prepared in
accordance with GAAP. For a further description of these non-GAAP financial measures, see the Non-GAAP Financial Measures
section below.
Executive Summary
Our Business
We have a leading portfolio of tobacco products for U.S. tobacco consumers age 21+. We are Moving Beyond SmokingTM, by
responsibly transitioning adult smokers to a smoke-free future, competing vigorously for existing smoke-free adult nicotine consumers
and exploring new growth opportunities - beyond the United States and beyond nicotine.
Our wholly owned subsidiaries include leading manufacturers of both combustible and smoke-free products. In combustibles, we own
PM USA, the most profitable U.S. cigarette manufacturer, and Middleton, a leading U.S. cigar manufacturer.
In smoke-free products, we own USSTC, the leading global MST manufacturer, Helix, a leading manufacturer of oral nicotine pouches,
and NJOY, an e-vapor manufacturer with products covered by MGOs from the FDA. Additionally, we have a majority-owned joint
venture, Horizon, for the U.S. marketing and commercialization of HTS products.
The brand portfolios of our operating companies include Marlboro, Black & Mild, Copenhagen, Skoal, on! and NJOY. Trademarks
related to Altria referenced in this Form 10-K are the property of Altria or our subsidiaries or are used with permission.
Our investments in equity securities include ABI, the world’s largest brewer, and Cronos, a leading Canadian cannabinoid company.
For a description of Altria, see Item 1. Business of this Form 10-K (“Item 1”).
20
Vision and 2028 Goals
As we execute on our Vision, we established our 2028 Enterprise Goals (“2028 Goals”) to provide our investors with specific metrics to
measure our progress. Our 2028 Goals are:
▪
Corporate
▪
Deliver a mid-single digits adjusted diluted EPS compounded annual growth rate (“CAGR”) in 2028 from a $4.87 base in 2022,
which has been recast as described in Non-GAAP Financial Measures below (for our progress through 2025, see Consolidated
Results of Operations);
▪
A progressive dividend goal targeting mid-single digits dividend per share growth annually through 2028;
▪
Target a debt-to-Consolidated EBITDA ratio of approximately 2.0x (see Liquidity and Capital Resources);
▪
Maintain our leadership position in the U.S. tobacco space; and
▪
Maintain a total adjusted OCI margin of at least 60% in each year through 2028 (see Operating Results by Business Segment).
▪
U.S. Smoke-Free Portfolio
▪
Due to ongoing market disruption caused by illicit e-vapor products that have evaded the regulatory process, we continue to
reassess our smoke-free goals and expect to provide updated goals when we have more clarity on how the legitimate e-vapor
market may evolve. We remain steadfast in our commitment to our Vision and to building a portfolio of FDA-authorized
smoke-free products for adult smokers and adult nicotine consumers currently using smoke-free products. For additional
information on the e-vapor category, see Operating Results by Business Segment - Business Environment.
▪
Long-Term Growth
▪
Compete internationally in the top innovative oral tobacco markets and develop a pathway to participate in heated tobacco and
e-vapor markets; and
▪
Enter non-nicotine categories with broad commercial distribution of at least five products by 2028.
Optimize & Accelerate Initiative
In October 2024, we announced a multi-phase Initiative designed to modernize our ways of working as we work towards achieving our
Vision and 2028 Goals. In 2025, we began modernizing our ways of working, which enabled increased speed, efficiency and
effectiveness across the organization. We are now adding the final phases of the Initiative and continue to expect to deliver cumulative
savings of at least $600 million by the end of 2029. We continue to plan to reinvest these savings in our businesses in support of our
Vision and 2028 Goals. These cumulative cost savings exclude our estimated pre-tax charges for the Initiative of approximately $175
million, updated from our prior estimate of approximately $125 million, as a result of finalizing the plans for all phases of the Initiative,
which we treat as special items and exclude from our adjusted diluted EPS. For further discussion of the Initiative, see Note 5. Exit and
Implementation Costs (“Note 5”).
Trends and Developments
In this section of the MD&A, we discuss certain factors that have impacted our businesses as of the date of this Form 10-K. In addition,
we are aware of and address certain trends and developments that could, individually or in the aggregate, have a material impact on our
businesses, including the value of our investments in equity securities, in the future. In this section, we focus on the discretionary
income pressures on adult nicotine consumers, tariffs, evolving consumer preferences and illicit flavored disposable e-vapor products.
Other trends and developments are discussed elsewhere in this MD&A.
Throughout 2025, U.S. adult nicotine consumers faced persistent inflationary pressures on discretionary income, with lower-income
consumers particularly affected. Inflation remained above the Federal Reserve’s 2% target, and elevated prices for essentials such as
groceries and housing continued to constrain spending, prompting many low-income earners to cut back and rely more heavily on credit.
Gas prices trended downward as expected, with the most notable improvement seen in December when the average price fell to $2.89
per gallon, bringing the average in the fourth quarter of 2025 to approximately $3.00 per gallon. Meanwhile, tariffs introduced earlier in
the year steadily increased over recent months, weighing on consumer confidence and adding headwinds to discretionary spending.
While we have not observed a material impact on adult nicotine consumer purchasing behavior as a result of tariffs, we continue to
closely monitor the additional pressure that tariff-related price increases may exert. In addition, we are monitoring other effects of tariffs
on our businesses, including the price, availability and quality of tobacco, raw materials, ingredients and component parts used to
manufacture our operating companies’ products. We do not expect tariffs to have a material impact on our costs in 2026 based on
presently available information.
Overall discretionary income pressures on adult nicotine consumers have resulted in increased discount brand share performance and
continued to contribute to evolving adult nicotine consumer preferences, each of which has negatively impacted the sales volumes of our
operating companies’ premium brands. For the fourth quarter of 2025, the discount retail share of the cigarette category reached 32.9%,
an increase of 2.6 share points versus the fourth quarter of 2024 and 0.7 share points sequentially. Additionally, we believe that a
significant number of adult nicotine consumers switch among tobacco categories, use multiple forms of tobacco products and try
21
innovative nicotine products, such as e-vapor products and oral nicotine pouches. The U.S. nicotine pouch category continued to grow
throughout the fourth quarter of 2025 to 56.9% of the U.S. oral tobacco category, an increase of 10.4 share points versus the fourth
quarter of 2024. When adjusted for trade inventory movements, smokeable products segment’s domestic cigarette shipment volume
declined by an estimated 7% in the fourth quarter of 2025 versus the fourth quarter of 2024. We estimate that, when adjusted for trade
inventory movements and other factors, total estimated domestic cigarette industry volume declined by 6.5% in the fourth quarter of
2025 versus the fourth quarter of 2024. In the third quarter of 2025, we estimated the industry decline rate to be 8% versus the third
quarter of 2024. We believe that the 1.5 percentage points reduction in the domestic cigarette industry volume decline rate in the current
quarter was primarily due to illicit flavored disposable e-vapor product growth moderating slightly in 2025 as compared to the prior
year. We have closely monitored this trend and its impact on cigarette industry decline rates. Based on our latest data, we are updating
our cigarette category volume decomposition. We now estimate that cross-category movement, primarily driven by illicit flavored
disposable e-vapor products, contributed approximately 2% to 3% to the cigarette industry volume decline during 2025 versus our prior
estimate of approximately 3% to 4%. As innovative smoke-free products evolve to better address the preferences of adult nicotine
consumers, these consumers continue to transition from cigarettes and MST products to innovative smoke-free products, which has
negatively impacted the sales volumes of our operating companies’ cigarette and MST products.
Product assortment, regulation and enforcement continue to evolve in the e-vapor category. Flavored disposable e-vapor products have
continued driving growth in the e-vapor category. We estimate that flavored disposable e-vapor products, the majority of which we
believe have evaded the regulatory process, represent approximately 70% of the e-vapor category. In response to the proliferation of
illicit flavored disposable e-vapor products, states and the federal government have taken various regulatory and enforcement actions.
For example, the FDA and U.S. Customs and Border Protection have made it more difficult to import properly declared illicit e-vapor
products, seized unauthorized e-vapor products and issued warning letters to importers. However, although the FDA, in conjunction
with other federal entities, has increased enforcement activity, insufficient actions against manufacturers, distributors and retailers of
nicotine products requiring FDA review for which no PMTAs have been submitted have allowed such products to continue to proliferate
in the market. We expect that effective enforcement against illicit flavored disposable e-vapor products will occur more gradually than
initially anticipated. As a result, in connection with the preparation of our financial statements for the year ended December 31, 2025,
we recorded non-cash impairments of our e-vapor reporting unit goodwill and definite-lived intangible assets. For further discussion,
see Note 4. Goodwill and Other Intangible Assets, net. (“Note 4”).
Additionally, we continue to see increased illicit activity across multiple nicotine categories, including nicotine pouch products and
cigarettes. Throughout 2024 and 2025, traditional tobacco retailers began to carry various synthetic oral nicotine pouch products. We
continue to track the overall dynamics across multiple nicotine categories as well as competitive threats to our brands.
See Operating Results by Business Segment - Business Environment for additional information on the trends and developments discussed
above.
With the exception of the impact of illicit flavored disposable e-vapor products on NJOY, the trends and developments above have not
had a material adverse impact on our results of operations, cash flows or financial position. We do not believe the trends and
developments discussed above have materially impacted our ability to achieve our Vision. As the trends and developments evolve and
new ones emerge, we will continue to evaluate the potential impacts on our businesses, investments and Vision.
22
Consolidated Results of Operations
The changes in net earnings and diluted EPS for the year ended December 31, 2025, from the year ended December 31, 2024, were due
primarily to the following:
(in millions, except per share data)
Net Earnings
Diluted EPS
For the year ended December 31, 2024
$
11,264
$
6.54
2024 NPM Adjustment Items
(20)
(0.01)
2024 Acquisition and disposition-related items
(1,862)
(1.08)
2024 Asset impairment, exit and implementation costs
315
0.18
2024 Tobacco and health and certain other litigation items
76
0.04
2024 Amortization of intangibles
115
0.07
2024 ABI-related special items
2
—
2024 Cronos-related special items
15
0.01
2024 Income tax items
(969)
(0.56)
Subtotal 2024 special items (1)
(2,328)
(1.35)
2025 NPM Adjustment Items
15
0.01
2025 Acquisition and disposition-related items
(66)
(0.04)
2025 Asset impairment, exit and implementation costs
(1,921)
(1.14)
2025 Tobacco and health and certain other litigation items
(44)
(0.03)
2025 Amortization of intangibles
(110)
(0.06)
2025 ABI-related special items
(75)
(0.04)
2025 Cronos-related special items
5
—
2025 Income tax items
(5)
—
Subtotal 2025 special items
(2,201)
(1.30)
Fewer shares outstanding
—
0.11
Change in tax rate
119
0.07
Operations
93
0.05
For the year ended December 31, 2025
$
6,947
$
4.12
2025 Reported Net Earnings
$
6,947
$
4.12
2024 Reported Net Earnings
$
11,264
$
6.54
% Change
(38.3) %
(37.0) %
2025 Adjusted Net Earnings and Adjusted Diluted EPS
$
9,148
$
5.42
2024 Adjusted Net Earnings and Adjusted Diluted EPS
$
8,936
$
5.19
% Change
2.4 %
4.4 %
(1) Prior period amounts have been recast to conform with current period presentation for amortization of intangibles that were not previously identified
as special items and that are now excluded from our adjusted financial measures. See Non-GAAP Financial Measures below.
For a discussion of special items and other business drivers affecting the comparability of statements of earnings amounts and
reconciliations of adjusted earnings and adjusted diluted EPS, see Consolidated Operating Results below.
▪
Fewer Shares Outstanding: Fewer shares outstanding were due to shares we repurchased under our share repurchase programs.
▪
Change in Tax Rate: The change in the tax rate (which excludes the impact of special items shown in the table above) was driven
primarily by lower state tax expense.
▪
Operations: The increase of $93 million in operations (which excludes the impact of special items shown in the table above) was
due primarily to higher OCI, partially offset by lower net periodic benefit income, excluding service cost and higher interest and
other debt expense, net.
For further details, see Consolidated Operating Results and Operating Results by Business Segment below.
23
Compounded EPS Growth Rate
Our 2028 Goals include delivering a mid-single digits adjusted diluted EPS CAGR in 2028 from a $4.87 (1) base in 2022. Our
calculation of progress towards this goal through 2025 is as follows:
For the Years Ended December 31,
CAGR
2025
2022
Reported diluted EPS
$
4.12
$
3.19
8.9 %
NPM Adjustment Items
(0.01)
(0.03)
Acquisition and disposition-related items
0.04
—
Asset impairment, exit and implementation costs
1.14
—
Tobacco and health and certain other litigation items
0.03
0.05
Amortization of intangibles
0.06
0.03
JUUL changes in fair value
—
0.81
ABI-related special items
0.04
1.12
Cronos-related special items
—
0.10
Income tax items
—
(0.40)
Adjusted diluted EPS (1)
$
5.42
$
4.87
3.6 %
(1) Prior period amounts have been recast to conform with current period presentation for amortization of intangibles that were not previously identified
as special items and that are now excluded from our adjusted financial measures. See Non-GAAP Financial Measures below.
Non-GAAP Financial Measures
We report our financial results in accordance with GAAP. However, our management also reviews certain financial results, including
OCI, OCI margins, net earnings and diluted EPS, on an adjusted basis, which excludes certain income and expense items that our
management believes are not part of underlying operations. These items may include, for example, loss on early extinguishment of debt,
restructuring charges, asset impairment charges, acquisition, disposition and integration-related items, equity investment-related special
items, certain income tax items, charges associated with tobacco and health and certain other litigation items, resolutions of certain non-
participating manufacturer (“NPM”) adjustment disputes under the Master Settlement Agreement (“NPM Adjustment Items”) and
amortization expense associated with definite-lived intangible assets (“amortization of intangibles”). In addition, our management
reviews the ratio of debt-to-Consolidated EBITDA, which we use as a factor to determine our ability to access the capital markets and
make investments in pursuit of our Vision. Consolidated EBITDA is calculated in accordance with our Credit Agreement (defined
below in Liquidity and Capital Resources) and includes certain adjustments. Our management does not view any of these special items
to be part of our underlying results as they may be highly variable, may be unusual or infrequent, are difficult to predict and can distort
underlying business trends and results. Our management also reviews income tax rates on an adjusted basis, which may exclude certain
income tax items from our reported effective tax rate.
Beginning in the first quarter of 2025, we changed our treatment of our amortization of intangibles that we previously included in our
adjusted results, including adjusted net earnings and adjusted diluted EPS, and now treat this expense as a special item and exclude it
from our adjusted results. Amortization of intangibles is significantly impacted by the timing, frequency and size of acquisitions, each
with unique facts and circumstances, which could result in amortization charges that could be inconsistent in size and timing. Net
revenues generated from these definite-lived intangible assets during the periods presented, if applicable, are included in our adjusted
financial measures.
Our management believes that the foregoing financial measures provide useful additional insight into underlying business trends and
results, and provide a more meaningful comparison of year-over-year results. Our management uses these financial measures and
regularly provides these to our chief operating decision maker (“CODM”) for planning, forecasting and evaluating business and financial
performance, including allocating capital and other resources and evaluating results relative to employee compensation targets. The
foregoing financial measures are not required by, or calculated in accordance with, GAAP and may not be calculated the same as
similarly titled measures used by other companies. The foregoing financial measures should thus be considered as supplemental in
nature and not considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP. When
we provide a non-GAAP measure in this Form 10-K, we also provide a reconciliation of that non-GAAP financial measure to the most
directly comparable GAAP financial measure.
24
Discussion and Analysis
Critical Accounting Estimates
Note 2. Summary of Significant Accounting Policies (“Note 2”) includes a summary of the significant accounting policies and methods
used in the preparation of our consolidated financial statements. In most instances, we must use an accounting policy or method because
it is the only policy or method permitted under GAAP.
The preparation of financial statements includes the use of estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent liabilities at the dates of the financial statements and the reported amounts of net revenues and
expenses during the reporting periods. If actual amounts are ultimately different from previous estimates, the revisions are included in
our consolidated results of operations for the period in which the actual amounts become known. Historically, the aggregate differences,
if any, between our estimates and actual amounts in any year have not had a significant impact on our consolidated financial statements.
The following is a review of the more significant assumptions and estimates, as well as the accounting policies and methods, used in the
preparation of our consolidated financial statements:
▪
Revenue Recognition: We define net revenues as revenues, which include excise taxes and shipping and handling charges
billed to customers, net of cash discounts for prompt payment, sales returns (also referred to as returned goods) and sales incentives.
These consumer incentives consist primarily of price promotions, substantially all of which are made to retailers to incent the promotion
of certain product offerings in select geographic areas. These price promotions include estimates of variable consideration and require
estimates and judgments based principally on shipment volume, retail acceptance and compliance, redemption and utilization. Actual
payments will differ from estimated payments to the extent actual results differ from estimated assumptions. We reflect differences
between actual and estimated payments in the period in which actual payments become known, which have not been material to our
financial position, results of operations or operating cash flows. We record these expected payments for price promotions as a reduction
to revenues upon shipment of goods to customers in our consolidated statements of earnings and in accrued marketing liabilities on our
consolidated balance sheets.
▪
Depreciation, Amortization, Impairment Testing and Assets Valuation: We depreciate property, plant and equipment and
amortize our definite-lived intangible assets using the straight-line method over the estimated useful lives of the assets. We depreciate
machinery and equipment over periods up to 20 years, and buildings and building improvements over periods up to 50 years. We
amortize definite-lived intangible assets over their estimated useful lives.
We review long-lived assets, including definite-lived intangible assets, for impairment whenever events or changes in business
circumstances indicate that the carrying value of the assets may not be fully recoverable. We perform undiscounted operating cash flow
analyses to determine if an impairment exists. For purposes of recognition and measurement of an impairment for assets held for use,
we group assets and liabilities at the lowest level for which cash flows are separately identifiable. If the carrying value of the long-lived
asset exceeds its fair value, we measure the amount of impairment loss as the difference between the carrying value and the fair value of
the long-lived asset, which is determined using discounted cash flows. We base impairment losses on assets to be disposed of, if any, on
the estimated proceeds to be received, less costs of disposal. We also review the estimated remaining useful lives of long-lived assets
whenever events or changes in business circumstances indicate the lives may have changed.
We conduct a required annual review of goodwill and indefinite-lived intangible assets for potential impairment as of October 1 of each
year, and more frequently if an event occurs or circumstances change that would require us to perform an interim review, using either a
qualitative or quantitative assessment for each of our reporting units and indefinite-lived intangible assets. When a qualitative
assessment is performed, we determine whether it is more likely than not that an impairment exists based on qualitative factors such as
macroeconomic conditions, industry and competitive conditions, legal and regulatory environment, historical financial performance and
significant changes impacting the reporting unit and the indefinite-lived intangible assets. In performing a quantitative assessment, if the
carrying value of a reporting unit that includes goodwill exceeds its fair value, which is determined using discounted cash flows,
goodwill is considered impaired. We measure the amount of impairment loss as the difference between the carrying value and the fair
value of a reporting unit; however, the amount of the impairment loss is limited to the total amount of goodwill allocated to a reporting
unit. If the carrying value of an indefinite-lived intangible asset exceeds its fair value, which is determined using discounted cash flows,
we consider the intangible asset to be impaired and reduce the carrying value to fair value in the period identified.
We use an income approach to estimate the fair value of our reporting units and trademarks using information available as of the
impairment testing date. The income approach reflects the discounting of expected future cash flows at a rate of return that incorporates
the risk-free rate for the use of those funds, the expected rate of inflation and the risks associated with realizing expected future cash
flows. The discounted cash flows may include multiple scenarios that consider a range of potential outcomes in projected cash flows.
In determining the estimated fair values of our reporting units and indefinite-lived intangible assets in 2025, 2024 and 2023, we made
various judgments, estimates and assumptions, the most significant of which were volume, price, revenue, income, operating margins,
perpetual growth rates, discount rates and scenario weightings, as applicable.
25
Goodwill by reporting unit and indefinite-lived intangible assets at December 31, 2025 were as follows:
(in millions)
Goodwill
Indefinite-Lived
Intangible Assets
Cigarettes
$
22 $
2
MST products
5,023
8,447
Cigars
77
2,640
Oral nicotine pouches
55
—
E-vapor
610
—
Total
$
5,787 $
11,089
2025 Annual Review of Goodwill and Indefinite-lived Intangible Assets
We completed our annual impairment test of goodwill and indefinite-lived intangible assets performed as of October 1, 2025. We
elected to perform a qualitative assessment for certain of our reporting units and indefinite-lived intangible assets. This qualitative
assessment included the review of certain macroeconomic factors and entity-specific qualitative factors discussed above to determine if
it was more likely than not that the fair values of our reporting units and indefinite-lived intangible assets were below carrying value.
For certain of our other reporting units and indefinite-lived intangible assets, we elected to perform a single step quantitative assessment.
Upon completion of this testing, we determined that the estimated fair values substantially exceeded the carrying values for all of our
reporting units and indefinite-lived intangible assets with the exception of our e-vapor reporting unit and Skoal trademark.
Our annual impairment test incorporated assumptions used in our long-term financial forecast, which is used by our management to
evaluate business and financial performance, including allocating resources and evaluating results relative to employee compensation
targets. The assumptions incorporated the highest and best use of our reporting units and indefinite-lived intangible assets and also
included perpetual growth rates for periods beyond the long-term financial forecast. The perpetual growth rates and discount rates used
in performing the valuations ranged from 0% to 2% and 9.0% to 13.5%, respectively.
Additionally, in determining the significant assumptions, we made judgments regarding the: (i) timing of effective enforcement against
illicit flavored disposable e-vapor products; (ii) timing and receipt of regulatory authorizations of innovative tobacco products, including
oral nicotine pouches and e-vapor products; (iii) long-term growth of innovative tobacco products, including oral nicotine pouches, and
the related impact on the MST category; (iv) long-term growth of the e-vapor category; and (v) conversion rates of illicit flavored
disposable e-vapor consumers to FDA-authorized e-vapor products and specifically, NJOY’s e-vapor products. Fair value calculations
are sensitive to changes in these estimates and assumptions, some of which relate to broader macroeconomic conditions outside of our
control.
Although our discounted cash flow analyses are based on assumptions that we considered reasonable and are based on the best available
information as of December 31, 2025, we used significant judgment in determining future cash flows. In addition to the judgments
discussed above, the following factors also have the potential to impact our assumptions and thus the expected future cash flows and,
therefore, our impairment conclusions: general macroeconomic conditions; governmental actions, including FDA regulatory actions and
inaction; changes in category growth (decline) rates as a result of changing adult nicotine consumer preferences; success of planned new
product expansions; competitive activity; unfavorable outcomes with respect to litigation proceedings, including actions brought against
us alleging patent infringement; and income and excise taxes. For further discussion of these factors, see Operating Results by Business
Segment - Business Environment below.
While our management believes that the estimated fair values of each reporting unit and indefinite-lived intangible assets at December
31, 2025 are reasonable, actual performance in the short term or long term could be significantly different from forecasted performance,
which could result in impairment charges in future periods.
After recording the impairment charge in the fourth quarter of 2025 (discussed below), the carrying value of the e-vapor reporting unit’s
net assets (including the effect of intercompany debt), approximated its estimated fair value. If the assumptions or judgments regarding
the expectations for the future state of the e-vapor category and NJOY’s business discussed above fail to materialize as anticipated, if we
experience unfavorable outcomes with respect to litigation proceedings (including actions alleging patent infringement), or if the
discount rate used to estimate the fair value increases, we could have additional non-cash impairments of our e-vapor reporting unit
goodwill in future periods, which could be material. A hypothetical 1% increase in the discount rate used to estimate the fair value of
the e-vapor reporting unit would have resulted in an additional goodwill impairment charge of approximately $150 million during 2025.
Although the estimated fair value of the Skoal trademark exceeded its carrying value by approximately 7% ($0.3 billion), MST products,
including Skoal, continued to be negatively impacted due in part to evolving adult nicotine consumer preferences, which have continued
to contribute to reductions in sales volumes for MST products, including Skoal. If the decline in sales volume for Skoal is higher than
currently estimated and results in material revenue declines, we believe there may be a material adverse effect on the significant
assumptions used in performing our valuation. If Skoal’s actual revenue and income or long-term outlook are significantly unfavorable
26
compared to forecasted performance used to estimate the fair value or if the discount rate used to estimate the fair value increases, we
could have material non-cash impairments of the Skoal trademark in future periods. A hypothetical 1% increase in the discount rate used
to estimate the fair value of the Skoal trademark would have resulted in an impairment charge of approximately $90 million in 2025.
During 2024 and 2023, our annual impairment test of goodwill and indefinite-lived intangible assets resulted in no impairment charges.
E-vapor Reporting Unit Goodwill & Definite-Lived Intangible Assets Impairments
During the fourth quarter of 2025, we determined that the long-lived assets in the e-vapor reporting unit may not be fully recoverable.
As a result, we first performed a recoverability test of the e-vapor definite-lived intangible assets. We determined that the asset group
was not recoverable because the estimated undiscounted cash flows, including an assumed terminal-year EBITDA multiple, were less
than its carrying value. Second, we measured the impairment loss by comparing the carrying value of the definite-lived intangible
assets, consisting of developed technology and trademarks, to their estimated fair values. These fair values were determined using an
income approach, specifically the relief from royalty method, which estimates the value of an intangible asset by calculating the present
value of the hypothetical royalty payments a company avoids by owning the asset rather than licensing it from a third party. In
performing this analysis, we made various judgments, estimates and assumptions, the most significant of which were volume, price,
revenue, income, operating margins, scenario weightings, discount rates, royalty rates, obsolescence rates and economic lives. As a
result, we recorded a non-cash, pre-tax impairment of these assets of $970 million, which we recorded in our consolidated statement of
earnings for the year ended December 31, 2025.
Following the impairment of these e-vapor definite-lived intangible assets, we performed our annual impairment test of goodwill,
utilizing the revised carrying amount of the e-vapor reporting unit after reflecting the e-vapor definite-lived intangible assets impairment
charges. Our test indicated that the estimated fair value of the e-vapor reporting unit was below its carrying value, resulting in a non-
cash goodwill impairment of $285 million, which we recorded in our consolidated statement of earnings for the year ended December
31, 2025. The impairments of the e-vapor definite-lived intangible assets and the e-vapor reporting unit goodwill were due primarily to
lower projected volume and revenue as a result of the impact of estimates regarding protracted ineffective enforcement against illicit
flavored disposable e-vapor products. After this e-vapor goodwill impairment charge, the carrying value of e-vapor goodwill as of
December 31, 2025 was $610 million.
In addition to our annual impairment testing, during the first quarter of 2025 we identified a triggering event related to our e-vapor
reporting unit that required an interim impairment assessment. As a result, we performed a quantitative impairment assessment of
goodwill and related intangible assets for the e-vapor reporting unit as of March 31, 2025. As discussed in Note 4, the interim
impairment assessment resulted in a non-cash goodwill impairment of $873 million during the first quarter of 2025, which is recognized
in our consolidated statement of earnings for the year ended December 31, 2025. We concluded that the carrying value of our e-vapor
definite-lived intangible assets was recoverable and no impairment existed as of March 31, 2025.
As a result of the goodwill impairments recognized in the first and the fourth quarters of 2025, the total non-cash goodwill impairment
recognized in our consolidated statement of earnings for the year ended December 31, 2025 was $1,158 million.
▪
Investments in Equity Securities: At the end of each reporting period, we review our equity investments accounted for under
the equity method of accounting (ABI and Cronos) for impairment by comparing the fair value of each of our investments to their
carrying value. If the carrying value of an investment exceeds its fair value and the loss in value is other than temporary, we consider
the investment impaired, reduce its carrying value to its fair value and record the impairment in the period identified. We use certain
factors to make this determination, including (i) the duration and magnitude of the fair value decline, (ii) the financial condition and
near-term prospects of the investee and (iii) our intent and ability to hold our investment until recovery to its carrying value.
For further discussion of our investments in equity securities, see Note 6. Investments in Equity Securities (“Note 6”).
▪
Contingencies: As discussed in Note 18 and Item 3, legal proceedings covering a wide range of matters are pending or
threatened in various United States and foreign jurisdictions against Altria and certain of our subsidiaries, including PM USA and
NJOY, as well as certain respective indemnitees. In 1998, PM USA and certain other tobacco product manufacturers entered into the
MSA with 46 states, the District of Columbia and certain United States territories to settle asserted and unasserted health care cost
recovery and other claims. PM USA and certain other U.S. tobacco product manufacturers had previously entered into agreements to
settle similar claims brought by Mississippi, Florida, Texas and Minnesota (together with the MSA, “State Settlement Agreements”).
PM USA’s portion of ongoing adjusted payments is based on its relative share of the settling manufacturers’ domestic cigarette
shipments, including roll-your-own cigarettes, in the year preceding that in which the payment is due. PM USA’s obligations under the
State Settlement Agreements to make quarterly payments with respect to settling plaintiffs’ attorneys’ fees ended in the fourth quarter of
2024. Payments under the State Settlement Agreements are based on variable factors, such as inflation, operating income, market share
and industry volume. Our subsidiaries account for the cost of the State Settlement Agreements as a component of cost of sales. Our
subsidiaries recorded approximately $3.0 billion and $3.5 billion of charges to cost of sales for the years ended December 31, 2025 and
2024, respectively, in connection with the State Settlement Agreements.
We record provisions in our consolidated financial statements for pending litigation when we determine that an unfavorable outcome is
probable and the amount of the loss can be reasonably estimated. At the present time, while it is reasonably possible that an unfavorable
27
outcome in a case may occur, except to the extent discussed in Note 18 and Item 3: (i) management has concluded that it is not probable
that a loss has been incurred in any pending litigation; (ii) management is unable to estimate the possible loss or range of loss that could
result from an unfavorable outcome in any pending case; and (iii) accordingly, management has not provided any amounts in our
consolidated financial statements for unfavorable outcomes, if any. We expense litigation defense costs as incurred and include such
costs in marketing, administration and research costs in our consolidated statements of earnings.
▪
Employee Benefit Plans: We provide a range of benefits to certain employees and retired employees, including pension,
postretirement health care and postemployment benefits. We record annual amounts relating to these plans based on calculations
specified by GAAP, which include various actuarial assumptions as to discount rates, assumed rates of return on plan assets, mortality,
compensation increases, turnover rates and health care cost trend rates. We review our actuarial assumptions on an annual basis and
make modifications to the assumptions based on current rates and trends when it is deemed appropriate to do so. Any effect of the
modifications is generally amortized over future periods.
We recognize the funded status of our defined benefit pension and other postretirement plans on the consolidated balance sheets and
record as a component of other comprehensive earnings (losses), net of deferred income taxes, the gains and losses and prior service
costs and credits that have not been recognized as components of net periodic benefit cost (income). We subsequently amortize the
gains or losses and prior service costs or credits recorded as components of other comprehensive earnings (losses) into net periodic
benefit cost (income) in future years.
Due to changes in market factors, our discount rates used to determine our pension plan and postretirement plan obligations decreased to
5.4% at December 31, 2025 from 5.7% at December 31, 2024. We presently anticipate net pre-tax pension and postretirement expense
of approximately $48 million in 2026 versus net pre-tax income of $11 million in 2025. This change is due primarily to higher
amortization of net unrecognized losses, lower expected income on plan assets and an expected settlement charge in 2026, partially
offset by lower interest costs. Assuming no change to the shape of the yield curve, a 50 basis point decrease (increase) in our discount
rates would increase (decrease) our pension and postretirement expense by approximately $5 million. Similarly, a 50 basis point
decrease (increase) in the expected return on plan assets would increase (decrease) our pension and postretirement expense by
approximately $35 million.
For additional information see Note 16. Benefit Plans (“Note 16”).
▪
Income Taxes: Significant judgment is required in determining income tax provisions and in evaluating tax positions. We
determine deferred tax assets and liabilities based on the difference between the financial statement and tax bases of assets and liabilities,
using enacted tax rates in effect for the year in which the differences are expected to reverse. We record a valuation allowance when we
have determined that it is more likely than not that some portion or all of a deferred tax asset will not be realized. In assessing
realizability, we consider the weight of all available positive and negative evidence, including the character of the assets and the possible
sources of taxable income of the appropriate character within the applicable carryback and carryforward periods available under the tax
law.
We recognize the financial statement benefit for uncertain income tax positions in our consolidated financial statements when we have
determined that it is more likely than not, based on the technical merits, that the position will be sustained upon examination by taxing
authorities. The recognized amount is the largest benefit that is more than 50% likely to be realized upon ultimate settlement. We do
not recognize positions that do not meet this threshold in the financial statements.
We recognized income tax benefits and charges in the consolidated statements of earnings during 2025 and 2024 as a result of various
tax events.
For additional information on income taxes, see Note 14. Income Taxes (“Note 14”).
28
Consolidated Operating Results
For the Years Ended December 31,
(in millions)
2025
2024
Net Revenues:
Smokeable products
$
20,485
$
21,204
Oral tobacco products
2,802
2,776
E-vapor products
(13)
40
All other
5
(2)
Net revenues
$
23,279
$
24,018
Excise Taxes on Products:
Smokeable products
$
3,042
$
3,469
Oral tobacco products
98
105
Excise taxes on products
$
3,140
$
3,574
Operating Income:
OCI:
Smokeable products
$
10,984
$
10,821
Oral tobacco products
1,828
1,449
E-vapor products
(2,297)
(171)
All other
(229)
(243)
Amortization of intangibles
(132)
(139)
General corporate expenses
(255)
(476)
Operating income
$
9,899
$
11,241
As discussed further in Note 15, our CODM reviews OCI, which is defined as operating income before general corporate expenses and
amortization of intangibles, to evaluate the performance of, and allocate resources to, our segments. Our management believes it is
appropriate to disclose this measure to help investors analyze our business performance and trends.
29
The following table provides a reconciliation of adjusted net earnings and adjusted diluted EPS for the years ended December 31:
(in millions of dollars, except per share data)
Earnings
before Income
Taxes
Provision for
Income
Taxes
Net Earnings Diluted EPS
2025 Reported
$
9,389 $
2,442 $
6,947 $
4.12
NPM Adjustment Items
(20)
(5)
(15)
(0.01)
Acquisition and disposition-related items
76
10
66
0.04
Asset impairment, exit and implementation costs
2,184
263
1,921
1.14
Tobacco and health and certain other litigation items
58
14
44
0.03
Amortization of intangibles
132
22
110
0.06
ABI-related special items
95
20
75
0.04
Cronos-related special items
(5)
—
(5)
—
Income tax items
—
(5)
5
—
2025 Adjusted for Special Items
$
11,909 $
2,761 $
9,148 $
5.42
2024 Reported
$
13,658 $
2,394 $
11,264 $
6.54
NPM Adjustment Items
(27)
(7)
(20)
(0.01)
Acquisition and disposition-related items
(2,527)
(665)
(1,862)
(1.08)
Asset impairment, exit and implementation costs
422
107
315
0.18
Tobacco and health and certain other litigation items
101
25
76
0.04
Amortization of intangibles
139
24
115
0.07
ABI-related special items
2
—
2
—
Cronos-related special items
18
3
15
0.01
Income tax items
—
969
(969)
(0.56)
2024 Adjusted for Special Items (1)
$
11,786 $
2,850 $
8,936 $
5.19
(1) Prior period amounts have been recast to conform with current period presentation for amortization of intangibles that were not previously identified
as special items and that are now excluded from our adjusted financial measures. See Non-GAAP Financial Measures below.
The following special items affected the comparability of statements of earnings amounts for the years ended December 31, 2025 and
2024.
▪
NPM Adjustment Items: For a discussion of NPM Adjustment Items and a breakdown of these items by segment, see Health Care
Cost Recovery Litigation in Note 18 and NPM Adjustment Items in Note 15, respectively.
▪
Acquisition and Disposition-Related Items: We recorded net pre-tax charges reflecting expenses primarily related to the ITC
exclusion order and cease-and-desist orders prohibiting the importation and sale of NJOY ACE in the United States. These charges
are net of insurance recoveries from insurance contracts associated with the NJOY Transaction. For further information on the
ITC’s determination, see E-vapor Product Litigation - JUUL Patent Litigation in Note 18. We recorded these items as follows for
the years ended December 31:
(in millions)
2025
2024
Net revenues (1)
$
23 $
—
Cost of sales (1)
44
—
Marketing, administration and research costs (2)
(16)
36
Total
$
51 $
36
(1) Included in our e-vapor products segment.
(2) Recorded as general corporate expense, net of $39 million and $25 million of insurance recoveries for the year ended December 31, 2025 and
2024, respectively. In 2024 and 2025, we incurred total costs of $151 million primarily associated with the ITC exclusion order and cease-and-
desist orders prohibiting the importation and sale of NJOY ACE in the United States and patent infringement lawsuits related to the NJOY
Transaction, which were offset by insurance recoveries of $64 million.
Additionally, we recorded a non-cash, pre-tax charge of $25 million for the year ended December 31, 2025 for the change in the fair
value of the contingent payments associated with the NJOY Transaction. In connection with the June 2024 issuance by the FDA of
MGOs for four NJOY ACE menthol pod products, we recorded a pre-tax charge of approximately $140 million for the year ended
December 31, 2024 for the change in the fair value of the contingent payments associated with the NJOY Transaction. These
30
▪
Asset Impairment, Exit and Implementation Costs: We recorded non-cash, pre-tax impairment charges of $2,128 million to
reduce the carrying values of the e-vapor reporting unit goodwill and definite-lived intangible assets to their estimated fair values for
the year ended December 31, 2025 in our e-vapor products segment. We recorded a non-cash, pre-tax impairment of the Skoal
trademark of $354 million for the year ended December 31, 2024 in our oral tobacco products segment. For further discussion, see
Note 4.
We recorded pre-tax exit and implementation costs of $56 million and $68 million related to the Initiative for the years ended
December 31, 2025 and 2024, respectively. For a breakdown of these costs by segment, see Note 5.
▪
Tobacco and Health and Certain Other Litigation Items: For a discussion of tobacco and health and certain other litigation items
and a breakdown of these costs by segment, see Note 18 and Tobacco and Health and Certain Other Litigation Items in Note 15,
respectively.
▪
Amortization of Intangibles: We recorded pre-tax amortization expense of definite-lived intangible assets of $132 million and
$139 million for the years ended December 31, 2025 and 2024, respectively, in marketing, administration and research costs in our
consolidated statements of earnings.
▪
ABI-Related Special Items: We recorded net pre-tax losses of $95 million from our investment in ABI for the year ended
December 31, 2025, consisting primarily of mark-to-market losses on certain ABI financial instruments associated with its share
commitments.
We recorded net pre-tax expense of $2 million from our investment in ABI for the year ended December 31, 2024, which consisted
primarily of mark-to-market losses on certain ABI financial instruments associated with its share commitments, mostly offset by a
gain related to the partial sale of our investment in ABI (“ABI Transaction”). For further information on the gain related to the ABI
Transaction, see Note 6.
The ABI-related special items include our respective share of the amounts recorded by ABI and additional adjustments related to (i)
the conversion of ABI-related special items from international financial reporting standards to GAAP and (ii) adjustments to our
investment required under the equity method of accounting.
▪
Income Tax Items: We recorded income tax items of $969 million for the year ended December 31, 2024, due primarily to an
income tax benefit from the partial releases of valuation allowances on JUUL-related losses in connection with an agreement
reached in October 2024 with the Internal Revenue Service and in connection with the ABI Transaction. For further discussion of
income tax items, see Note 14.
2025 Compared with 2024
Net revenues, which include excise taxes billed to customers, decreased $739 million (3.1%), due primarily to lower net revenues in our
smokeable products segment.
Cost of sales decreased $480 million (7.9%), due primarily to lower shipment volume and lower per unit settlement charges in our
smokeable products segment.
Excise taxes on products decreased $434 million (12.1%), due primarily to lower shipment volume in our smokeable products segment.
Marketing, administration and research costs decreased $230 million (8.4%), due primarily to lower acquisition-related items discussed
above and transaction costs associated with the ABI Transaction in 2024, both of which are included in general corporate expenses.
Operating income decreased $1,342 million (11.9%), due primarily to lower OCI (which includes the net impact of non-cash
impairments of the e-vapor reporting unit goodwill and definite-lived intangible assets in our e-vapor products segment in 2025 and a
non-cash impairment of the Skoal trademark in our oral tobacco product segment in 2024), partially offset by lower general corporate
expenses.
Net periodic benefit income, excluding service cost, decreased by $43 million (42.2%), due primarily to lower income on plan assets and
higher amortization of net unrecognized losses in 2025, partially offset by lower interest costs. For additional information, see Note 16.
(Income) losses from investments in equity securities was unfavorable $142 million (21.8%), due primarily to lower income from our
equity investment in ABI (which includes our gain on the ABI Transaction in 2024).
Provision for income taxes increased $48 million (2%), due primarily to unfavorable income tax items discussed above, partially offset
by lower earnings before income taxes. For additional information, see Note 14.
charges were recorded as general corporate expense and included in marketing, administration and research costs in our
consolidated statements of earnings. For further information, see Contingent Payments in Note 7. Financial Instruments.
We recorded a pre-tax gain of $2.7 billion upon the assignment of the IQOS Tobacco Heating System (“IQOS System”)
commercialization rights to Philip Morris International Inc. in April 2024, for the year ended December 31, 2024. For a discussion
of the sale of the IQOS System commercialization rights, see Note 4.
31
Reported net earnings of $6,947 million decreased $4,317 million (38.3%), due primarily to the gain on the sale of the IQOS System
commercialization rights in 2024 and lower operating income. Reported basic and diluted EPS of $4.12, each decreased by 37% due to
lower reported net earnings, partially offset by fewer shares outstanding.
Adjusted net earnings of $9,148 million increased $212 million (2.4%), due primarily to higher OCI and a lower adjusted tax rate,
partially offset by lower net periodic benefit income, excluding service cost and higher interest and other debt expense, net. Adjusted
diluted EPS of $5.42 increased by 4.4%, due to higher adjusted net earnings and fewer shares outstanding.
Operating Results by Business Segment
Business Environment
Summary
The U.S. nicotine industry faces a number of business, legal and regulatory challenges that have materially adversely affected and may
continue to materially adversely affect our business, results of operations, cash flows or financial position or our ability to achieve our
Vision. These challenges, some of which are discussed in more detail in Note 18, Item 1A and Item 3, include:
▪
pending and threatened litigation and bonding requirements;
▪
restrictions and requirements imposed by the FSPTCA and restrictions and requirements (and related enforcement actions) that
have been, and in the future will be, imposed by the FDA;
▪
the FDA’s failure to effectively address illicit nicotine products on the market, including illicit disposable e-vapor and oral
nicotine pouch products;
▪
illicit trade in nicotine products, including cigarettes, e-vapor products and oral nicotine pouch products;
▪
actual and proposed excise tax increases, as well as changes in tax structures and tax stamping requirements;
▪
bans and restrictions on tobacco use imposed by governmental entities and private establishments and employers;
▪
other federal, state and local government actions, including:
▪
restrictions on the sale of certain nicotine products, the sale of nicotine products by certain retail establishments, the sale of
nicotine products with characterizing flavors and the sale of nicotine products in certain package sizes;
▪
additional restrictions on the advertising and promotion of nicotine products;
▪
other actual and proposed tobacco- or nicotine-related legislation and regulation;
▪
prohibitions on the sale of tobacco products based on environmental concerns and the imposition of responsibility on
manufacturers for the disposal, recycling or other treatment of post-consumer goods such as plastic packaging; and
▪
governmental investigations;
▪
reductions in consumption levels of cigarettes and MST products resulting in lower shipment volumes;
▪
increased efforts by tobacco control advocates and other private sector entities (including retail establishments) to further
restrict the availability and use of nicotine products or the ability to communicate with adult consumers through third-party
digital platforms;
▪
changes in adult nicotine consumer purchase behavior, which is influenced by various factors such as macroeconomic
conditions (including inflation and tariffs), the proliferation of illicit disposable e-vapor products, excise taxes and product price
gap relationships, each of which has resulted and may in the future result in adult nicotine consumers switching to lower-priced
nicotine products and lower shipment volumes;
▪
the highly competitive nature of all nicotine categories, including competitive disadvantages related to the impact on cigarette
prices due to the settlement of certain healthcare cost recovery litigation, the growth of innovative nicotine products, such as e-
vapor and oral nicotine pouch products, and the ability of competitors to receive refunds of certain duties, taxes and fees paid
on imported tobacco products when offsetting volumes of those products or substantially similar products are subsequently
exported;
▪
the growth of products using nicotine analogues that are designed to imitate the effects of nicotine but are not subject to the
FDA regulatory framework for tobacco products; and
▪
potential adverse changes in prices, availability and quality of tobacco, other raw materials and component parts, including as a
result of changes in macroeconomic, geopolitical, climate and environmental conditions.
We continue to monitor the evolving business, legal and regulatory challenges within our business environment to assess potential
impacts on us. Changes in these and other conditions could have a material adverse effect on our business, results of operations, cash
flows, financial position and our ability to achieve our Vision.
32
FSPTCA and FDA Regulation
▪
The Regulatory Framework: The FSPTCA and its related regulations establish broad FDA regulatory authority over all
tobacco products and, among other provisions:
▪
impose restrictions on the advertising, promotion, sale and distribution of tobacco products (see Final Tobacco Marketing
Rule below);
▪
establish premarket review pathways for new and modified tobacco products (see Premarket Review Pathways for Tobacco
Products and Market Authorization Enforcement below);
▪
prohibit any express or implied claims that a tobacco product is or may be less harmful than other tobacco products without
FDA authorization;
▪
authorize the FDA to impose tobacco product standards that are appropriate for the protection of public health (see
Potential Product Standards below); and
▪
equip the FDA with a variety of investigatory and enforcement tools, including the authority to inspect product
manufacturing and other facilities (see Investigation and Enforcement below).
Effective April 2022, the U.S. Congress expanded the statutory definition of tobacco products to include products containing nicotine
derived from any source, including synthetic nicotine. See Premarket Review Pathways for Tobacco Products and Market Authorization
Enforcement below for additional information. Currently, however, the statutory definition of tobacco products does not cover products
containing nicotine analogues, which are designed to imitate the effects of nicotine. As a result, products containing nicotine analogues
are not subject to the FDA regulatory framework for tobacco products.
▪
Final Tobacco Marketing Rule: As required by the FSPTCA, the FDA has promulgated a wide range of advertising and
promotion restrictions for cigarettes and smokeless tobacco(1) products (the “Final Tobacco Marketing Rule”), which the FDA has
subsequently amended to expand specific provisions to all tobacco products, including cigars, pipe tobacco and e-vapor and oral nicotine
products containing tobacco-derived nicotine or other tobacco derivatives such as synthetic nicotine. The Final Tobacco Marketing Rule
currently does not apply to products containing nicotine analogues.
▪
Rulemaking and Guidance: From time to time, the FDA issues proposed regulations and guidance, which may be issued in
draft or final form, that generally involve public comment and may include scientific review. We actively engage with the FDA to
develop and implement the FSPTCA’s regulatory framework, including submission of comments to various FDA policies and proposals
and participation in public hearings and engagement sessions.
The FDA’s implementation of the FSPTCA and related regulations and guidance also may have an impact on enforcement efforts by
states, territories and localities of their laws and regulations as well as of the State Settlement Agreements (see State Settlement
Agreements below). Such enforcement efforts may adversely affect our operating companies’ abilities to market and sell tobacco
products in those states, territories and localities.
▪
Premarket Review Pathways for Tobacco Products and Market Authorization Enforcement: The FSPTCA permits the
sale of tobacco products on the market as of February 15, 2007 and not subsequently modified (“Pre-existing Tobacco Products”) and
new or modified products authorized through the PMTA, Substantial Equivalence (“SE”) or SE Exemption pathways. Subsequent FDA
rules also provide a Supplemental PMTA pathway designed to increase the efficiency of submission and review for modified versions of
previously authorized products.
For products currently on the market, the FDA premarket authorization enforcement policy varies based on product type and date of
availability on the market, specifically:
▪
Pre-existing Tobacco Products are exempt from the premarket authorization requirement;
▪
cigarette and smokeless tobacco products that were modified or first introduced into the market between February 15, 2007
and March 22, 2011 are generally considered “Provisional Products” for which SE reports were required to be filed by
March 22, 2011. These reports must demonstrate that the product has the same characteristics as a product on the market
as of February 15, 2007 or to a product previously determined to be substantially equivalent, or has different characteristics
but does not raise different questions of public health;
▪
tobacco products that were first regulated by the FDA in 2016, including cigars, e-vapor products and oral nicotine pouches
that are not Pre-existing Tobacco Products, are generally products for which either an SE report or PMTA needed to be
filed by September 9, 2020; and
▪
tobacco products containing nicotine from any source other than tobacco (e.g., synthetic nicotine) that were on the market
between March 15, 2022 and April 14, 2022 and are not Pre-existing Tobacco Products are generally products for which a
manufacturer must have filed a PMTA by May 14, 2022. A manufacturer was permitted to keep such a product on the
(1) “Smokeless tobacco,” as used in this section of this Form 10-K, refers to smokeless tobacco products first regulated by the FDA in 2009, including
MST. It excludes oral nicotine pouches, which were first regulated by the FDA in 2016.
33
market until July 13, 2022 provided that a PMTA was filed by May 14, 2022. Thereafter, unless the FDA granted the
product a marketing order, the product is subject to possible FDA enforcement.
The FSPTCA requires the FDA to issue a marketing order (either an MGO or a marketing denial order (“MDO”)) with respect to a
PMTA no later than 180 days after receipt of the PMTA. Following the 180-day FDA review period, the FSPTCA allows any party that
receives an MDO to seek expedited judicial review of the ruling in a federal appellate court within 30 days. Together, these statutory
deadlines for FDA action and judicial review create a structure and timeline for manufacturers seeking to market new products. While it
is possible that the FDA may bring an enforcement action relating to commercialized products for which a PMTA has been pending
longer than the 180-day review period, we believe that any such enforcement action would conflict with the FSPTCA. Our operating
companies may decide to commercialize products that have not received MGOs from the FDA if the operating company submitted a
PMTA with respect to any such product in compliance with the FSPTCA and the FDA failed to issue a marketing order within the
statutory review period.
Modifications to currently marketed products, including modifications that result from, for example, changes to the quantity of tobacco
product(s) in a package, a manufacturer being unable to acquire ingredients or a supplier or contract manufacturer being unable to
maintain the consistency required in ingredients or manufacturing processes, could trigger the FDA’s premarket review process.
Additionally, a manufacturer may be unable to maintain consistency in manufacturing processes as it increases the scale of its
manufacturing operations in response to market expansion or product introduction. These circumstances could cause a manufacturer to
receive (i) a “not substantially equivalent” determination or (ii) a denial or withdrawal of a PMTA, either of which could result in a
product being removed from the market. In addition, new scientific data continues to be developed relating to innovative nicotine
products, which could impact the FDA’s determination as to whether a product is, or continues to be, appropriate for the protection of
public health and could, therefore, result in the removal of one or more products from the market. Any such actions affecting our
operating companies’ products could have a material adverse impact on our business, results of operations, cash flows or financial
position.
Products Regulated in 2009: Most cigarette and smokeless tobacco products currently marketed by PM USA and USSTC are
“Provisional Products.” PM USA and USSTC timely submitted SE reports for these Provisional Products and have received SE
determinations on certain Provisional Products. Those products that were found by the FDA to be not substantially equivalent (certain
smokeless tobacco products) had been discontinued for business reasons prior to the FDA’s determinations; therefore, those
determinations did not impact business results. PM USA and USSTC have other Provisional Products that continue to be subject to the
FDA’s premarket review process. In the meantime, they can continue marketing these products unless the FDA determines that a
specific Provisional Product is not substantially equivalent.
In addition, the FDA has communicated that it will not review a certain subset of Provisional Product SE reports and that the products
that are the subject of those reports can continue to be legally marketed without further FDA review. PM USA and USSTC have
Provisional Products included in this subset of products.
While we believe PM USA’s and USSTC’s current Provisional Products meet the statutory requirements of the FSPTCA, we cannot
predict how the FDA will ultimately apply law, regulation, guidance or enforcement authority to various SE reports. Should PM USA or
USSTC receive unfavorable determinations on any SE report currently pending with the FDA, we believe PM USA and USSTC can
replace the vast majority of these product volumes with other FDA authorized products or with Pre-existing Tobacco Products.
Cigarette and smokeless tobacco products introduced into the market or modified after March 22, 2011 are “Non-Provisional Products”
and must apply to receive an MGO from the FDA prior to being offered for sale. MGOs for Non-Provisional Products may be obtained
by filing an SE report, a PMTA or using another premarket pathway established by the FDA. PM USA and USSTC may not be able to
obtain an MGO for non-provisional products because the FDA may determine that any such product does not meet the statutory
requirements for approval.
Products Regulated in 2016: Manufacturers of products first regulated by the FDA in 2016, including cigars, oral nicotine pouches and
e-vapor products, that were on the market as of August 8, 2016 and not subsequently modified must have filed an SE report or a PMTA
by the filing deadline of September 9, 2020 in order for their products to remain on the market. These products can remain on the
market during FDA review through enforcement discretion, so long as the report or application was timely filed with the FDA. For
those products still under FDA review, it is uncertain when and for how long the FDA may permit continued marketing and sale of those
products pursuant to its discretion. For products (new or modified) not on the market as of August 8, 2016, manufacturers must file an
SE report or a PMTA. As described above, the FSPTCA requires the FDA to issue a marketing order with respect to a PMTA no later
than 180 days after receipt of the PMTA.
Helix submitted PMTAs for on! oral nicotine pouches on the market as of August 2016 in May 2020, PMTAs for additional on! oral
nicotine pouches in September 2024, PMTAs for on! PLUS oral nicotine pouches in tobacco, mint and wintergreen flavors in June 2024
and PMTAs for on! PLUS oral nicotine pouches in six additional flavors in November 2025. In September 2025, the FDA launched a
pilot program intended to increase efficiency and streamline the review process for PMTAs for select oral nicotine pouch products. Also
in September 2025, the FDA communicated to Helix that PMTAs for certain of its products, including on! PLUS, were being reviewed
through the pilot program. In December 2025, the FDA issued MGOs with respect to on! PLUS oral nicotine pouches in tobacco, mint
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and wintergreen flavors in 6 mg and 9 mg nicotine levels. As of February 23, 2026, the FDA has not issued a marketing order with
respect to any other on! or on! PLUS product.
As of February 23, 2026, Middleton has received MGOs or exemptions that cover over 99% of its cigar product volume.
As a result of the NJOY Transaction, we gained full global ownership of NJOY’s e-vapor product portfolio, including NJOY ACE, a
pod-based e-vapor product with an MGO from the FDA, and NJOY Daily, which also has an MGO. In June 2024, NJOY received
MGOs with respect to two NJOY ACE menthol products and two NJOY Daily menthol products. NJOY ACE is subject to ITC exclusion
and cease-and-desist orders prohibiting importation and sale in the United States. Although NJOY Daily is not subject to these orders,
JUUL has asserted claims of patent infringement based on the sale of NJOY Daily in the United States. See Note 18.
Effect of Adverse FDA Determinations: FDA review timeframes have varied. It is therefore difficult to predict the duration of FDA
reviews of SE reports or PMTAs. An unfavorable determination on an application, the withdrawal by the FDA of a prior MGO, an FDA
enforcement action or other changes in FDA regulatory requirements could result in the removal of products from the market. A “not
substantially equivalent” determination, a denial of a PMTA, an MGO withdrawal or an enforcement action by the FDA with respect to
one or more products (each of which could require the removal of the product or products from the market) could have a material
adverse impact on our business, results of operations, cash flows or financial position. Also, adverse FDA determinations or
enforcement actions concerning innovative nicotine products could have a material adverse effect on our innovative nicotine businesses
and our ability to achieve our Vision.
Post-Market Surveillance: Manufacturers that receive MGOs must adhere to the FDA post-market record keeping and reporting
requirements, as detailed in market orders and in the final PMTA rule. The requirements include prior notification of marketing
activities. The FDA may amend requirements of an MGO or withdraw the MGO based on this information if, among other reasons, it
determines that the continued marketing of the products is no longer appropriate for the protection of the public health. If the FDA fails
to issue a marketing order within the statutory review period with respect to a PMTA submitted by one of our operating companies and
that operating company elects to commercialize the applicable product, we expect that operating company will execute its plans
consistent with the post-market record keeping and reporting requirements of the FDA’s most recently issued MGOs for similar
products.
▪
FDA Regulatory Actions
▪
Graphic Warnings: In March 2020, the FDA issued a final rule requiring 11 textual warnings accompanied by color graphics
depicting certain negative health consequences of smoking on cigarette packaging and advertising. PM USA and other
cigarette manufacturers filed lawsuits challenging the final rule on substantive and procedural grounds. In December 2022, the
U.S. District Court for the Eastern District of Texas found in favor of cigarette manufacturers in one such suit and blocked the
rule, finding it unconstitutional on the basis that it compelled speech in violation of the First Amendment. The FDA appealed
the decision, and, in March 2024, the U.S. Court of Appeals for the Fifth Circuit reversed the district court and remanded the
case for further proceedings. In August 2024, the cigarette manufacturers in the suit petitioned the U.S. Supreme Court to
review the case, which the U.S. Supreme Court declined to do.
In January 2025, the U.S. District Court for the Eastern District of Texas found in favor of cigarette manufacturers that had
challenged the final rule on the basis that the FDA exceeded its statutory authority by requiring cigarette packaging and
advertising to contain 11 specific warnings when it only had the authority to require nine. In its ruling, the court granted a
preliminary injunction staying the FDA’s enforcement of the rule against all cigarette manufacturers pending further litigation.
In March 2025, the FDA appealed that decision to the U.S. Court of Appeals for the Fifth Circuit.
In December 2024, PM USA and several Georgia co-plaintiffs filed suit against the FDA in the U.S. District Court for the
Southern District of Georgia, challenging the final rule on substantive and procedural grounds. In August 2025, the federal
court vacated the final rule on the basis that the FDA violated federal law by not disclosing timely data it relied on in creating
the rule. In October 2025, the FDA appealed that decision to the U.S. Court of Appeals for the Eleventh Circuit.
▪
Underage Access and Use of Certain Tobacco Products: The FDA announced regulatory actions in September 2018 to address
underage access to and use of e-vapor products. We have engaged with the FDA on this topic and have reaffirmed to the FDA
our ongoing and long-standing commitment to preventing underage use. For example, we advocated raising the minimum legal
age to purchase all tobacco products to 21 at the federal and state levels to further address underage use, which is now federal
law. We continue to advocate in states that have not yet raised the minimum legal age to purchase all tobacco products to 21.
▪
E-Vapor Products: In September 2022, the FDA represented that it had resolved more than 99% of the timely applications it
had received, the vast majority of which were for e-vapor products and resulted in MDOs. As of February 23, 2026, many
manufacturers of menthol and other flavored e-vapor products have received MDOs for failure to provide sufficiently strong
product-specific scientific evidence to demonstrate that the benefits of their products to adult smokers overcome the risks that
their products pose to youth. The FDA has communicated in these MDOs that vapor products with non-tobacco flavors present
unique questions relevant to the FDA’s “Appropriate for the Protection of Public Health” standard and that successful
applications require strong, product-specific evidence. A number of these manufacturers are challenging the MDOs for their
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products. In January 2024, the U.S. Court of Appeals for the Fifth Circuit ruled that the FDA had unlawfully changed its
position with respect to the information required to obtain a PMTA. In April 2025, the U.S. Supreme Court vacated the U.S.
Court of Appeals for the Fifth Circuit’s determination, concluding that manufacturers had been given fair notice of the PMTA
requirements, and remanded the case for further review. Other U.S. Courts of Appeals have upheld adverse FDA
determinations.
▪
Potential Product Standards
▪
Nicotine in Cigarettes and Other Combustible Tobacco Products: In January 2025, the FDA proposed a tobacco product
standard that would establish a maximum nicotine level in cigarettes and certain other combustible tobacco products (including
little cigars, cigarillos and most large cigars) significantly lower than the average concentration in these products currently on
the market with the aim of making such products minimally or non-addictive. The public comment period on the proposed
product standard closed in September 2025, and we have engaged with the FDA through the rulemaking process, including by
submitting comments. We believe the rulemaking process for this proposed product standard will take multiple years to
complete.
▪
Flavors in Tobacco Products: In April 2022, the FDA issued two proposed product standards: (i) banning menthol in cigarettes
and (ii) banning all characterizing flavors (including menthol) in cigars. We submitted comments during the notice-and-
comment period. In October 2023, the FDA submitted the two proposed product standards to the White House Office of
Management and Budget for review. In January 2025, the Trump Administration withdrew the two proposed product standards
from the Office of Management and Budget (“OMB”) and sent them back to the FDA.
▪
N-nitrosonornicotine (“NNN”) in Smokeless Tobacco: In January 2017, the FDA proposed a product standard for NNN levels
in finished smokeless tobacco products.
If any one or more of the foregoing potential product standards were to become final and was appealed and upheld in the courts, it could
have a material adverse effect on our business, results of operations, cash flows or financial position, including a material adverse effect
on the carrying value of certain of our assets such as our cigar trademarks.
▪
Tobacco Product Manufacturing Practices: In March 2023, the FDA, pursuant to the requirements of the FSPTCA, issued a
proposed rule setting forth requirements for tobacco product manufacturers regarding the manufacture, design, packing and
storage of their products. This proposed rule establishes a framework of tobacco product manufacturing practices. OMB lists
the rule as a long-term action. If the proposed rule were to take effect, our operating companies could experience increased
costs to comply with the rule.
▪
Impact on Our Business; Compliance Costs and User Fees: Additional FDA regulatory actions under the FSPTCA could
have a material adverse effect on our business, results of operations, cash flows or financial position in various ways. For
example, actions (or inaction) by the FDA could:
▪
impact the consumer acceptability of nicotine products;
▪
discontinue, delay or prevent the sale or distribution of existing, new or modified nicotine products;
▪
limit adult nicotine consumer choices;
▪
impose restrictions on communications with adult nicotine consumers;
▪
create a competitive advantage or disadvantage for certain nicotine companies;
▪
impose additional manufacturing, labeling or packaging requirements;
▪
impose additional restrictions at retail;
▪
result in increased illicit trade in nicotine products; and
▪
otherwise significantly increase the cost of doing business.
The FSPTCA imposes user fees on cigarette, cigarette tobacco, smokeless tobacco, cigar and pipe tobacco manufacturers and importers
to pay for the cost of regulation and other matters. The FSPTCA does not impose user fees on e-vapor products or oral nicotine pouch
manufacturers. The cost of the FDA user fee is allocated first among tobacco product categories subject to FDA user fees and then
among manufacturers and importers within each respective category based on their relative market shares, all as prescribed by the
FSPTCA and FDA regulations. Payments for user fees are adjusted for several factors, including market share and industry volume.
See Liquidity and Capital Resources - Payments Under State Settlement Agreements and FDA Regulation below for a discussion of our
FDA user fee payments. In addition, our operating companies’ compliance with the FSPTCA’s regulatory requirements has resulted,
and will continue to result, in additional costs. The amount of additional compliance and related costs has not been material in any given
quarter or year-to-date period but could become material, either individually or in the aggregate. The failure to comply with FDA
regulatory requirements, even inadvertently, and FDA enforcement actions also could have a material adverse effect on our business,
results of operations, cash flows or financial position.
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▪
Investigation and Enforcement: The FDA has a number of investigatory and enforcement tools available to it, including
document requests and other required information submissions, facility inspections, facility closures, examinations and investigations,
injunction proceedings, monetary penalties, product withdrawal and recall orders, and product seizures. Investigations or enforcement
actions could result in significant costs or otherwise have a material adverse effect on our business, results of operations, cash flows or
financial position.
Although the FDA, in conjunction with other federal entities, has increased enforcement activity, insufficient actions against
manufacturers, distributors and retailers of tobacco products requiring FDA review for which no PMTA has been submitted have
allowed such products to proliferate on the market. In addition, the FDA’s failure to clearly define product pathways and issue
marketing orders within the statutory review period has resulted in a market with few authorized smoke-free products available to adult
nicotine consumers.
Excise Taxes
Tobacco products are subject to substantial excise taxes in the United States. Significant increases in tobacco-related taxes or fees have
been proposed or enacted (including with respect to e-vapor products) and are likely to continue to be proposed or enacted at the federal,
state and local levels within the United States. The frequency and magnitude of excise tax increases can be influenced by various
factors, including the composition of executive and legislative bodies.
Federal, state and local cigarette excise taxes have increased substantially over the past two decades, far outpacing the rate of inflation.
Between the end of 1998 and February 23, 2026, the weighted-average state cigarette excise tax increased from $0.36 to $2.02 per pack.
Four states (Hawaii, Indiana, Maine and New Jersey) increased excise taxes in 2025. As of February 23, 2026, no states have increased
excise taxes in 2026. Various other increases are under consideration or have been proposed.
Many states currently tax MST using an ad valorem method, which is calculated as a percentage of the price of the product, typically the
wholesale price. This ad valorem method results in more tax being paid on premium products than is paid on lower-priced products of
equal weight. We support legislation to convert ad valorem taxes on MST to a weight-based methodology because, unlike the ad
valorem tax, a weight-based tax subjects cans of equal weight to the same tax. As of February 23, 2026, the federal government, 24
states, Puerto Rico, Philadelphia, Pennsylvania and Cook County, Illinois have adopted a weight-based tax methodology for MST.
An increasing number of states and localities are proposing excise taxes on e-vapor products and oral nicotine pouches. As of February
23, 2026, 34 states, the District of Columbia, Puerto Rico and a number of cities and counties have enacted legislation to tax e-vapor
products. These taxes are calculated in varying ways and may differ based on the e-vapor product form. Similarly, 19 states and the
District of Columbia have enacted legislation to tax oral nicotine pouches.
Tax increases are expected to continue to have an adverse impact on sales of our operating companies’ products through lower
consumption levels and the potential shift in adult nicotine consumer purchases from premium to non-premium or discount cigarettes, to
lower-taxed tobacco products or to counterfeit and contraband products. Lower sales volume and reported share performance of our
operating companies’ products could have a material adverse effect on our business, results of operations, cash flows or financial
position. Changes to federal or state tax laws or challenges to one or more of our positions with respect to those laws, including with
respect to the availability of duty drawback, which allows manufacturers to receive refunds of certain duties, taxes and fees paid on
imported tobacco products when offsetting volumes of those products or substantially similar products are subsequently exported, could
increase the taxes and other fees payable with respect to our operating companies’ products or reduce the amount of taxes and other fees
paid by our operating companies for which refunds are available. In addition, substantial excise tax increases on e-vapor and oral
nicotine products may negatively impact adult smokers’ transition to these products, which could materially adversely affect our
innovative nicotine businesses and our ability to achieve our Vision.
International Treaty on Tobacco Control
The World Health Organization’s Framework Convention on Tobacco Control (the “FCTC”) entered into force in February 2005. As of
February 23, 2026, 182 countries, as well as the European Union, have become parties to the FCTC. While the United States is a
signatory of the FCTC, it is not a party to the agreement, as the agreement has not been submitted to, or ratified by, the U.S. Senate. The
FCTC is the first international public health treaty and its objective is to establish a global agenda for tobacco regulation with the
purpose of reducing initiation of tobacco use and encouraging cessation. The treaty recommends (and in certain instances, requires)
signatory nations to enact legislation that would address various tobacco-related issues.
There are a number of proposals under consideration by the governing body of the FCTC, some of which call for substantial restrictions
on the manufacture, marketing, distribution and sale of tobacco products. It is not possible to predict the outcome of these proposals or
the impact of any FCTC actions on legislation or regulation in the United States, either indirectly or as a result of the United States
becoming a party to the FCTC, or whether or how these actions might indirectly influence FDA regulation and enforcement.
State Settlement Agreements
As discussed in Note 18, during 1997 and 1998, PM USA and other major domestic cigarette manufacturers entered into the State
Settlement Agreements. These settlements require participating manufacturers to make substantial annual payments, which are adjusted
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for several factors, including inflation, operating income, market share and industry volume. Higher rates of inflation can increase our
financial liability under the State Settlement Agreements as the State Settlement Agreements’ inflation calculations require us to apply
the higher of 3% or the U.S. Bureau of Labor Statistics’ Consumer Price Index for All Urban Consumers (“CPI-U”) percentage rate as
published in January of each year. As of December 2025, the applicable percentage rate was approximately 2.7% based on the latest
CPI-U data. We will continue to monitor the impact of increased inflation on the macroeconomic environment and our businesses.
For a discussion of the impact of the State Settlement Agreements on us, see Liquidity and Capital Resources - Payments Under State
Settlement Agreements and FDA Regulation below and Note 18. The State Settlement Agreements also place numerous requirements
and restrictions on participating manufacturers’ business operations, including prohibitions and restrictions on the advertising and
marketing of cigarettes and smokeless tobacco products. The State Settlement Agreements also place restrictions on the use of brand
name sponsorships and brand name non-tobacco products and prohibitions on targeting youth and the use of cartoon characters. In
addition, the State Settlement Agreements require companies to affirm corporate principles directed at reducing underage use of
cigarettes; impose requirements regarding lobbying activities; limit the industry’s ability to challenge certain tobacco control and
underage use laws; and provide for the dissolution of certain tobacco-related organizations and place restrictions on the establishment of
any replacement organizations.
In November 1998, USSTC entered into the Smokeless Tobacco Master Settlement Agreement (the “STMSA”) with the attorneys
general of various states and United States territories to resolve the remaining health care cost reimbursement cases initiated against
USSTC. The STMSA required USSTC to adopt various marketing and advertising restrictions. USSTC is the only smokeless tobacco
manufacturer to sign the STMSA.
Other International, Federal, State and Local Regulation and Governmental and Private Activity
▪
International, Federal, State and Local Regulation: Various states and localities have enacted or proposed legislation that
imposes restrictions on tobacco products (including cigarettes, smokeless tobacco, cigars, e-vapor products and oral nicotine pouches),
such as legislation that (i) prohibits the sale of all tobacco products or certain tobacco categories, such as e-vapor, (ii) prohibits the sale
of tobacco products with characterizing flavors, such as menthol cigarettes and flavored e-vapor products, (iii) requires the disclosure of
health information separate from or in addition to federally mandated health warnings, (iv) restricts commercial speech or imposes
additional restrictions on the marketing or sale of tobacco products and (v) requires manufacturers of e-vapor products to certify that
they are in compliance with FDA requirements to be allowed to sell in the state. The legislation varies in terms of the type of tobacco
products, the conditions under which such products are or would be restricted or prohibited, and exceptions to the restrictions or
prohibitions. As of February 23, 2026, multiple states and localities are considering legislation to ban flavors in one or more tobacco
products, and six states (California, Massachusetts, New Jersey, New York, Rhode Island and Utah) and the District of Columbia have
passed such legislation. Some states, such as New York and Illinois, exempt certain products that have received FDA market
authorization through the PMTA pathway. The legislation in the State of California, which became effective in December 2022, bans
the sale of most tobacco products with characterizing flavors, including menthol, mint and wintergreen. The State of Maryland banned
e-vapor product flavors other than tobacco and menthol through Maryland Department of Assessments and Taxation rulemaking.
The States of Indiana, Massachusetts and Utah passed legislation capping the amount of nicotine in e-vapor products. As of February
23, 2026, legislation relating to this issue is pending in one other state.
Similar restrictions to those enacted or proposed in various U.S. states and localities on e-vapor and oral nicotine pouch products have
been enacted or proposed internationally.
Certain legislation imposing restrictions on tobacco products, such as state laws requiring manufacturers of e-vapor products to certify
that they are in compliance with federal law in order to sell products in the state, aligns with our Vision, and we actively engage with
lawmakers in support of such legislation. It is possible, however, that legislation, regulation or other governmental action could be
enacted or implemented that could have a material adverse impact on our business, results of operations, cash flows or financial position.
Such action also could negatively impact adult smokers’ transition to smoke-free products, which could materially adversely affect our
innovative nicotine businesses and our ability to achieve our Vision. We have challenged and will continue to challenge certain federal,
state and local legislation and other governmental action, including through litigation.
▪
Federal, State and Local Legislation to Increase the Legal Age to Purchase Tobacco Products: In December 2019, after a
number of states and localities proposed and enacted legislation to increase the minimum age to purchase all tobacco products, including
e-vapor products, the federal government passed legislation increasing the minimum age to purchase all tobacco products, including e-
vapor products, to 21 nationwide. As of February 23, 2026, 44 states, the District of Columbia and Puerto Rico have enacted laws
increasing the legal age to purchase tobacco products to 21. Although an increase in the minimum age to purchase tobacco products
may have a negative impact on our operating companies’ sales volumes, we support and advocate for raising the minimum legal age to
purchase all tobacco products to 21 at the federal and state levels.
▪
Health Effects of Tobacco Products, Including E-vapor Products: Reports with respect to the health effects of smoking
have been publicized for many years, including various reports by the U.S. Surgeon General. We believe that the public should be
guided by the messages of the U.S. Surgeon General and public health authorities worldwide in making decisions concerning the use of
tobacco products, including e-vapor products. Along with the scientific and public health communities, we continue to study and gather
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scientific evidence concerning the health effects of e-vapor and other innovative nicotine products. It is not possible to predict the
results of ongoing scientific research or the types of future scientific research into the health risks of tobacco exposure and the impact of
such research on legislation and regulation. Scientific determinations as to any health risks or negative health consequences associated
with the use of e-vapor and other innovative nicotine products could materially adversely affect our innovative nicotine products
businesses and our ability to achieve our Vision.
Most jurisdictions within the United States have restricted smoking in public places and some have restricted vaping in public places.
Some public health groups have called for, and various jurisdictions have adopted or proposed, bans on smoking and vaping in outdoor
places, in private apartments and in cars transporting children.
▪
Other Legislation or Governmental Initiatives: In addition to the actions discussed above, other regulatory initiatives
affecting the tobacco industry have been adopted or are being considered at the federal level and in a number of state and local
jurisdictions. For example, legislation has been introduced or enacted at the state or local level to subject tobacco products to various
reporting requirements and performance standards; establish educational campaigns relating to tobacco consumption or tobacco control
programs or provide additional funding for governmental tobacco control activities; restrict the sale of tobacco products in certain retail
establishments and the sale of tobacco products in certain package sizes; prohibit the sale of tobacco products based on environmental
concerns; impose responsibility on manufacturers for the disposal, recycling or other treatment of post-consumer goods such as plastic
packaging; require tax stamping of smokeless tobacco products; require the use of state tax stamps using data encryption technology;
and further restrict the sale, marketing and advertising of cigarettes and other tobacco products. Such legislation may be subject to
constitutional or other challenges on various grounds, which may or may not be successful. In addition, if a pandemic or similar health
emergency occurs, state and local governments may reimpose additional health and safety requirements for all businesses, which could
result in the potential temporary closure of certain businesses and facilities. It is possible that tobacco manufacturing and other facilities
and the facilities of our suppliers, our suppliers’ suppliers and our trade partners could be subject to additional government-mandated
temporary closures and restrictions.
It is not possible to predict what, if any, additional legislation, regulation or other governmental action will be enacted or implemented
(and, if challenged, upheld) relating to the manufacturing, design, packaging, marketing, advertising, sale or use of tobacco products, or
the tobacco industry generally. Any such legislation, regulation or other governmental action could have a material adverse impact on
our business, results of operations, cash flows or financial position.
▪
Governmental Investigations: From time to time, we are subject to governmental investigations on a range of matters. For
example, we are, or have been, subject to a number of governmental investigations with respect to our former investment in JUUL,
which we divested in March 2023, including the following: (i) the U.S. Federal Trade Commission (“FTC”) issued a Civil Investigative
Demand to us while conducting its antitrust review of our former investment in JUUL; (ii) the SEC commenced an investigation relating
to our acquisition, disclosures and accounting controls in connection with the JUUL investment; and (iii) the New York State Office of
the Attorney General and the Commonwealth of Massachusetts Office of the Attorney General, separately, issued independent
subpoenas to us seeking documents relating to our former investment in and provision of services to JUUL.
Private Sector Activity on Tobacco Products
A number of retailers, including national chains, have discontinued the sale of all tobacco products, and others have discontinued the
sale of e-vapor products. Reasons for the discontinuation include change in corporate policy and, with respect to e-vapor products,
reported illnesses and the uncertain regulatory environment. Furthermore, third-party digital platforms, such as app stores, have
restricted, and in some cases prohibit, communications with adult nicotine consumers concerning tobacco products. It is possible that if
this private sector activity becomes more widespread it could have an adverse effect on our business, results of operations, cash flows or
financial position.
Illicit Trade in Tobacco Products
Illicit trade in tobacco products has had, and could continue to have, an adverse impact on our businesses, including the sales volumes
and market shares of our operating companies’ innovative and smoke-free products and traditional tobacco products. Illicit trade can
take many forms, including the sale of counterfeit tobacco products; the sale of tobacco products requiring FDA review for which no
PMTA has been submitted; the sale of tobacco products in the United States that are intended for sale outside the country; the sale of
untaxed tobacco products over the Internet and by other means designed to avoid the collection of applicable taxes; and diversion into
one taxing jurisdiction of tobacco products intended for sale in another. Counterfeit tobacco products, for example, are manufactured by
unknown third parties in unregulated environments. Counterfeit versions of our products can negatively affect adult nicotine consumer
experiences with and opinions of those brands. Illicit disposable e-vapor and oral nicotine pouch products may be designed to appeal to
youth and are manufactured without scientific standards, exposing consumers to undocumented risks. Illicit trade in tobacco products
also harms law-abiding wholesalers and retailers by depriving them of lawful sales and undermines the significant investment we have
made in legitimate distribution channels. Moreover, illicit trade in tobacco products results in federal, state and local governments losing
tax revenues. Losses in tax revenues can cause such governments to take various actions, including increasing excise taxes, imposing
legislative or regulatory requirements, or asserting claims against manufacturers of tobacco products or members of the trade channels
39
through which such tobacco products are distributed and sold, each of which could have an adverse effect on our business, results of
operations, cash flows or financial position.
Prohibitionist policies, such as California’s ban on the sale of flavored tobacco products, which went into effect in 2022, can have
unintended negative consequences, including the proliferation of counterfeit and unregulated products. We actively engage with
regulators, state and federal lawmakers, our trade partners and other stakeholders to bring awareness to these issues. When appropriate,
we also take legal action to protect our FDA-authorized e-vapor product business, such as the lawsuit we filed in federal court in
California against manufacturers, distributors and retailers of illicit e-vapor products, which we settled in October 2025. Pursuant to the
terms of the settlement, a foreign manufacturer and certain domestic distributors of illicit disposable e-vapor devices are prohibited from
selling or shipping flavored e-vapor products to consumers, retailers, wholesalers or distributors located in the State of California and
from selling or shipping such products to anyone if they have actual knowledge that the products will ultimately be resold or reshipped
to consumers in the State of California.
In June 2024, the U.S. Department of Justice (“DOJ”) and the FDA announced the creation of a federal multi-agency task force to
combat the illegal marketing and sale of e-vapor products in the United States. The DOJ and the FDA stated that the task force will
focus on many topics, such as investigating and prosecuting new criminal, civil, seizure and forfeiture actions under various U.S. laws,
including the FSPTCA. While these federal entities have increased enforcement activity against manufacturers, distributors and retailers
of tobacco products requiring FDA review for which no PMTA has been submitted, we do not believe these efforts have had a
significant impact on the volume of such products on the market.
Price, Availability and Quality of Tobacco, Other Raw Materials, Ingredients and Component Parts
Shifts in crops (such as those driven by economic conditions, adverse weather patterns and natural disasters), government restrictions
and mandated prices, production control programs, economic trade sanctions, import duties and tariffs, international trade disruptions,
labor disruptions, inflation, geopolitical instability, climate and environmental changes and disruptions due to man-made or natural
disasters may increase the cost or reduce the supply or quality of tobacco and other raw materials, ingredients and component parts used
to manufacture our operating companies’ products. Any significant change in the nature or consequences of these factors could
negatively impact our ability to continue manufacturing and marketing existing products, increase our costs or negatively impact adult
nicotine consumer product acceptability and have a material adverse effect on our business and profitability.
As with other agricultural commodities, tobacco price, quality and availability can be influenced by variations in weather patterns and
natural disasters, including those caused by climate change, and macroeconomic conditions and imbalances in supply and demand,
among other factors. For varieties of tobacco only available in limited geographies, government-mandated prices and production control
programs, political instability or government prohibitions on the import or export of tobacco in certain countries pose additional risks to
price, availability and quality. As consumer demand increases for innovative smoke-free products and decreases for combustible and
MST products, the volume of tobacco leaf required for production of these products has decreased, resulting in reduced tobacco leaf
demand. Reduced demand for tobacco leaf may result in the reduced supply and availability of domestic tobacco and increased costs, as
growers divert resources to other crops or cease farming. Macroeconomic factors, such as tariffs, may exacerbate reductions in demand
for tobacco leaf by increasing the cost of purchasing tobacco leaf from a supplier in another country. The unavailability or
unacceptability of any one or more particular varieties of tobacco leaf or the unavailability of nicotine extract necessary to manufacture
our operating companies’ products could negatively impact our ability to continue marketing existing products or impact adult nicotine
consumer product acceptability, which could have a material adverse effect on our business and profitability. In addition, the nicotine
used in our operating companies’ innovative smoke-free products is extracted from tobacco produced in one country. If we are unable to
identify alternate sources of nicotine for our operating companies’ innovative products, we could be exposed to supply risk.
Current geopolitical and macroeconomic conditions (including tariffs, inflation, high interest rates, labor shortages, supply and demand
imbalances and international armed conflict) and adverse weather events have caused and continue to cause worldwide disruptions and
delays to supply chains and commercial markets, and have limited access to, and increased the cost of, raw materials, ingredients and
component parts (for example, wood tips used in our cigar products and aluminum used in our packaging). As consumer demand
increases for innovative smoke-free products and decreases for combustible and MST products, the volume of raw materials, ingredients
and component parts required for the production of combustible and MST products has decreased. Reduced demand for raw materials,
ingredients and component parts may reduce supply and availability of raw materials, ingredients and component parts as suppliers
divert resources to other products or cease producing these products. Furthermore, challenging economic conditions can create the risk
that our suppliers, distributors, logistics providers or other third-party partners suffer financial or operational difficulties, which may
impact their ability to provide us with or distribute finished product, raw materials and component parts and services in a timely manner
or at all. If we are unable to identify alternate sources of raw materials, ingredients and component parts for our operating companies’
products, we could be exposed to supply risk.
We have implemented and continue to implement various strategies to help secure sufficient supplies of raw materials, ingredients and
component parts for production, including maintaining inventory levels of certain tobacco varieties that cover several years, purchasing
raw materials, ingredients and component parts from disperse geographic regions throughout the world and entering into long-term
contracts with some of our tobacco growers and direct material suppliers. To date, the impact on us of changes in the price, availability
40
and quality of tobacco, other raw materials, ingredients and component parts has not been material. However, the effects of current
macroeconomic and geopolitical conditions, including tariffs, on prices, availability and quality of such items may continue, which could
have a material adverse effect on our business, results of operations, cash flows or financial position.
In addition, government taxes and restrictions and prohibitions on the sale and use of certain materials used in our operating companies’
products may limit access to, and increase the costs of, raw materials and component parts and, potentially, impede our ability to sell
certain of our products. For example, certain states have passed extended producer responsibility legislation concerning packaging.
Because certain of our products’ packaging consists of single-use plastics, single-use plastic bans and extended producer responsibility
mandates could result in bans on some of our operating companies’ product packaging or their products and adversely impact our costs
and revenues. Additional taxes and limitations on the use of certain single-use plastics have been proposed by the U.S. Congress and
various state and local governments. These existing and potential future laws and regulations could increase the costs of, and impair our
ability to, source certain materials used in the packaging for our products.
Timing of Sales
In the ordinary course of business, we are subject to many influences that can impact the timing of sales to customers, including the
timing of holidays and other annual or special events, the timing of promotions, customer incentive programs and customer inventory
programs, as well as the actual or speculated timing of pricing actions and tax-driven price increases.
Operating Results
The following table provides reconciliations of reported OCI to adjusted OCI for our reportable segments, all other category and total
OCI and provides the related OCI margins:
For the Year Ended December 31, 2025
(in millions)
Smokeable
Products
Oral Tobacco
Products
E-Vapor
Products
All Other
Total
Net revenues
$
20,485 $
2,802 $
(13)
$
5 $
23,279
Excise taxes
(3,042)
(98)
—
—
(3,140)
Revenues net of excise taxes
$
17,443 $
2,704 $
(13)
$
5 $
20,139
Reported OCI
$
10,984 $
1,828 $
(2,297) $
(229)
$
10,286
NPM Adjustment Items
(24)
—
—
—
(24)
Acquisition and disposition-related items
—
—
67
—
67
Asset impairment, exit and implementation costs
49
7
2,128
—
2,184
Tobacco and health and certain other litigation items
55
—
—
—
55
Adjusted OCI
$
11,064 $
1,835 $
(102)
$
(229)
$
12,568
Reported OCI margin (1)
63.0 %
67.6 %
(100+)%
(100+)%
51.1 %
Adjusted OCI margin (1)
63.4 %
67.9 %
(100+)%
(100+)%
62.4 %
(1) Reported and adjusted OCI margins are calculated as reported and adjusted OCI, respectively, divided by revenues net of excise taxes.
41
Smokeable Products Segment
Financial Results
The following table summarizes operating results, includes reported and adjusted OCI margins and provides a reconciliation of reported
OCI to adjusted OCI for our smokeable products segment:
Operating Results
For the Years Ended December 31,
(in millions)
2025
2024
Net revenues
$
20,485
$
21,204
Excise taxes
(3,042)
(3,469)
Revenues net of excise taxes
$
17,443
$
17,735
Reported OCI
$
10,984
$
10,821
NPM Adjustment Items
(24)
(29)
Asset impairment, exit and implementation costs
49
60
Tobacco and health and certain other litigation items
55
70
Adjusted OCI
$
11,064
$
10,922
Reported OCI margins (1)
63.0 %
61.0 %
Adjusted OCI margins (1)
63.4 %
61.6 %
(1) Reported and adjusted OCI margins are calculated as reported and adjusted OCI, respectively, divided by revenues net of excise taxes.
2025 Compared with 2024
Net revenues, which include excise taxes billed to customers, decreased $719 million (3.4%), due primarily to lower shipment volume
($2,426 million), partially offset by higher pricing ($1,680 million), which includes higher promotional investments.
Reported OCI increased $163 million (1.5%), due primarily to higher pricing, which includes higher promotional investments, lower per
unit settlement charges and lower tobacco and health and certain other litigation items ($15 million), partially offset by lower shipment
volume ($1,651 million).
Adjusted OCI increased $142 million (1.3%), due primarily to higher pricing, which includes higher promotional investments, and lower
per unit settlement charges, partially offset by lower shipment volume.
Marketing, administration and research costs for the smokeable products segment include PM USA’s cost of administering and litigating
product liability claims. Litigation defense costs are influenced by a number of factors, including the number and types of cases filed,
the number of cases tried annually, the results of trials and appeals, the development of the law controlling relevant legal issues, and
litigation strategy and tactics. For further discussion on these matters, see Note 18 and Item 3. For the years ended December 31, 2025
and 2024, product liability defense costs for PM USA were $113 million and $125 million, respectively. The factors that have
influenced past product liability costs are expected to continue to influence future costs. We do not expect future product liability
defense costs for our smokeable products segment to be significantly different from product liability defense costs incurred in 2025.
42
Shipment Volume and Retail Share Results
The following table summarizes our smokeable products segment’s shipment volume performance:
Shipment Volume
For the Years Ended December 31,
(sticks in millions)
2025
2024
Cigarettes:
Marlboro
54,933
62,584
Other premium
2,845
3,186
Discount
3,974
2,812
Total cigarettes
61,752
68,582
Cigars:
Black & Mild
1,783
1,750
Other
3
4
Total cigars
1,786
1,754
Total smokeable products
63,538
70,336
Note: Cigarettes shipment volume includes Marlboro; Other premium brands, such as Virginia Slims and Parliament; and Discount brands, which
include L&M and Basic. Cigarettes volume includes units sold as well as promotional units but excludes units not considered domestic, which are not
material to our smokeable products segment.
The following table summarizes our cigarettes retail share performance:
Retail Share
For the Years Ended December 31,
2025
2024
Cigarettes:
Marlboro
40.5 %
41.7 %
Other premium
2.2
2.3
Discount
2.5
1.9
Total cigarettes
45.2 %
45.9 %
Note: Retail share results for cigarettes are based on data from Circana, LLC (“Circana”), as well as Management Science Associates, Inc. (“MSAi”).
Circana maintains a blended retail service that uses a sample of stores and certain wholesale shipments to project market share and depict share trends.
This service tracks sales in the food, drug, mass merchandisers, convenience, military, dollar store and club trade classes. For other trade classes selling
cigarettes, retail share is based on shipments from wholesalers to retailers through the Store Tracking Analytical Reporting System, as provided by
MSAi. This service is not designed to capture sales through other channels, including the internet, direct mail and some tax-advantaged outlets. It is
the standard practice of retail services to periodically refresh their retail scan services, which could restate retail share results that were previously
released in these services.
For a discussion of volume trends and factors that impact volume and retail share performance, see Trends and Developments and
Operating Results by Business Segment - Business Environment - Summary above.
2025 Compared with 2024
Our smokeable products segment’s reported domestic cigarettes shipment volume decreased 10.0%, driven primarily by the industry’s
decline rate (impacted by the continued growth of flavored disposable e-vapor products, the majority of which we believe have evaded
the regulatory process, and discretionary income pressures on adult nicotine consumers), retail share losses and calendar differences.
When adjusted for calendar differences, our smokeable products segment’s domestic cigarettes shipment volume decreased by an
estimated 9.5%. When adjusted for calendar differences, trade inventory movements and other factors, total estimated domestic cigarette
industry volume decreased by an estimated 8%.
Shipments of premium cigarettes accounted for 93.6% and 95.9% of our smokeable products segment’s reported domestic cigarettes
shipment volume for 2025 and 2024, respectively.
Our cigar reported shipment volume increased 1.8%.
Marlboro’s retail share of the premium segment was 59.4%, an increase of 0.1 share point.
Total cigarettes industry discount category retail share was 31.8%, an increase of 2.2 share points, primarily due to continued
discretionary income pressures on adult nicotine consumers.
43
For a discussion regarding discount category dynamics in 2025, the growth of flavored disposable e-vapor products and the economic
conditions that impact adult nicotine consumer purchasing behavior, see Trends and Developments and Operating Results by Business
Segment - Business Environment - Summary above.
Pricing Actions
PM USA and Middleton executed the following pricing actions during 2025 and 2024:
▪
Effective October 12, 2025, PM USA increased the list price of Marlboro (excluding Mainline Menthol and 72s Menthol) and
L&M by $0.17 per pack. PM USA also increased the list price of all its other premium cigarette brands by $0.22 per pack.
▪
Effective July 20, 2025, PM USA increased the list price of Marlboro (excluding Mainline Menthol and 72s Menthol) and
L&M by $0.17 per pack. PM USA also increased the list price of all its other premium cigarette brands by $0.22 per pack.
▪
Effective April 20, 2025, Middleton increased various list prices across substantially all of its cigar brands resulting in a
weighted-average increase of approximately $0.14 per five-pack.
▪
Effective April 13, 2025, PM USA increased the list price of Marlboro (excluding Mainline Menthol and 72s Menthol) and
L&M by $0.20 per pack. PM USA also increased the list price of all its other premium cigarette brands by $0.25 per pack.
▪
Effective January 19, 2025, PM USA increased the list price of Marlboro (excluding Mainline Menthol and 72s Menthol) and
L&M by $0.17 per pack. PM USA decreased the list price of Marlboro Black by $0.28 per pack. PM USA also increased the
list price of all its other premium cigarette brands by $0.22 per pack.
▪
Effective October 20, 2024, PM USA increased the list price of Marlboro (excluding Mainline Menthol and 72s Menthol),
L&M and Basic by $0.17 per pack. PM USA also increased the list price of all its other cigarette brands by $0.22 per pack.
▪
Effective October 6, 2024, Middleton increased various list prices across substantially all of its cigar brands resulting in a
weighted-average increase of approximately $0.13 per five-pack.
▪
Effective July 14, 2024, PM USA increased the list price of Marlboro (excluding Mainline Menthol and 72s Menthol), L&M
and Basic by $0.17 per pack. PM USA also increased the list price of all its other cigarette brands by $0.22 per pack.
▪
Effective April 21, 2024, Middleton increased various list prices across substantially all of its cigar brands resulting in a
weighted-average increase of approximately $0.16 per five-pack.
▪
Effective April 14, 2024, PM USA increased the list price of Marlboro (excluding Mainline Menthol and 72s Menthol), L&M
and Basic by $0.20 per pack. PM USA also increased the list price of all its other cigarette brands by $0.25 per pack.
▪
Effective January 14, 2024, PM USA increased the list price of Marlboro (excluding Mainline Menthol and 72s Menthol),
L&M and Basic by $0.15 per pack. PM USA also increased the list price of all its other cigarette brands by $0.20 per pack.
In addition:
▪
Effective January 18, 2026, PM USA increased the list price of Marlboro (excluding Mainline Menthol and 72s Menthol) and
L&M by $0.20 per pack. PM USA also increased the list price of all its other premium cigarette brands by $0.25 per pack.
▪
Effective February 8, 2026, Middleton increased various list prices across substantially all of its cigar brands resulting in a
weighted-average increase of approximately $0.12 per five-pack.
Oral Tobacco Products Segment
Financial Results
The following table summarizes operating results, includes reported and adjusted OCI margins and provides a reconciliation of reported
OCI to adjusted OCI for our oral tobacco products segment:
Operating Results
For the Years Ended December 31,
(in millions)
2025
2024
Net revenues
$
2,802
$
2,776
Excise taxes
(98)
(105)
Revenues net of excise taxes
$
2,704
$
2,671
Reported OCI
$
1,828
$
1,449
Asset impairment, exit and implementation costs
7
362
Adjusted OCI
$
1,835
$
1,811
Reported OCI margins (1)
67.6 %
54.2 %
Adjusted OCI margins (1)
67.9 %
67.8 %
(1) Reported and adjusted OCI margins are calculated as reported and adjusted OCI, respectively, divided by revenues net of excise taxes.
44
2025 Compared with 2024
Net revenues, which include excise taxes billed to customers, increased $26 million (0.9%), as higher pricing ($263 million), which
includes higher promotional investments, was mostly offset by lower shipment volume and a higher percentage of on! shipment volume
relative to MST (“volume/mix”) ($237 million).
Reported OCI increased $379 million (26.2%), due primarily to a non-cash impairment of the Skoal trademark ($354 million) in 2024,
higher pricing, which includes higher promotional investments, partially offset by lower volume/mix ($222 million) and higher costs
($17 million).
Adjusted OCI increased $24 million (1.3%), as higher pricing, which includes higher promotional investments, was mostly offset by
lower volume/mix and higher costs.
Shipment Volume and Retail Share Results
The following table summarizes our oral tobacco products segment’s shipment volume performance:
Shipment Volume
For the Years Ended December 31,
(cans and packs in millions)
2025
2024
Copenhagen
362.8
401.5
Skoal
127.9
147.0
on!
177.8
160.3
Other
63.9
65.9
Total oral tobacco products
732.4
774.7
Note: Other primarily includes Red Seal and Husky. Oral tobacco products shipment volume includes cans sold, as well as promotional units, but
excludes non-domestic volume, which is currently not material to our oral tobacco products segment. New types of oral tobacco products, as well as
new packaging configurations of existing oral tobacco products, may or may not be equivalent to existing MST products on a can-for-can basis. To
calculate volumes of cans shipped, one can of oral nicotine pouches, irrespective of the number of pouches in the can, is assumed to be equivalent to
one can of MST.
The following table summarizes our oral tobacco products segment’s retail restated share performance:
Retail Share
For the Years Ended December 31,
2025
2024
Copenhagen
15.4 %
19.0 %
Skoal
5.9
7.5
on!
8.2
8.1
Other
2.4
2.7
Total oral tobacco products
31.9 %
37.3 %
Note: Our oral tobacco products segment’s retail share results exclude non-domestic volume, which is currently not material to our oral tobacco
products segment. Retail share results for oral tobacco products are based on data from Circana, a tracking service that uses a sample of stores to
project market share and depict share trends. This service tracks sales in the food, drug, mass merchandisers, convenience, military, dollar store and
club trade classes on the number of cans sold. Oral tobacco products are defined by Circana as domestic oral products, in the form of MST and all oral
nicotine pouch products (inclusive of tobacco-derived and synthetic oral nicotine products). New types of oral tobacco products, as well as new
packaging configurations of existing oral tobacco products, may or may not be equivalent to existing MST products on a can-for-can basis. For
example, one can of oral nicotine pouches, irrespective of the number of pouches in the can, is assumed to be equivalent to one can of MST. Because
this service represents retail share performance only in key trade channels, it should not be considered a precise measurement of actual retail share. It is
the standard practice of retail services to periodically refresh their retail scan services, which could restate retail share results that were previously
released in these services.
We have restated prior period retail share performance data and estimated industry volume to reflect the inclusion of synthetic oral
nicotine pouch products. Prior to 2025, our reported oral tobacco segment retail share performance data excluded synthetic oral nicotine
pouch products. Throughout 2024 and into the first quarter of 2025, we tracked the quarterly sequential growth of synthetic oral nicotine
pouch products in various traditional tobacco retailers. Based on the consistency of this trend, beginning in the first quarter of 2025 our
reported oral tobacco products segment retail share performance data and category industry volume estimates have been updated to
include synthetic oral nicotine pouch products.
For a discussion of volume trends and factors that impact volume and retail share performance, see Trends and Developments and
Operating Results by Business Segment - Business Environment - Summary above.
45
2025 Compared with 2024
Our oral tobacco products segment’s reported domestic shipment volume decreased 5.5%, driven primarily by retail share losses,
calendar differences and other factors, partially offset by the industry’s growth rate and trade inventory movements. When adjusted for
calendar differences and trade inventory movements, our oral tobacco products segment’s domestic shipment volume decreased by an
estimated 4.5%.
Total oral tobacco products category industry volume increased by an estimated 14% over the six months ended December 31, 2025,
driven primarily by growth in oral nicotine pouches, partially offset by declines in MST volumes.
Our oral tobacco products segment’s retail share was 31.9%, a decrease of 5.4 share points primarily due to share declines for MST
products.
The U.S. nicotine pouch category grew to 53.3% of the U.S. oral tobacco category, an increase of 10.0 share points. In addition, on!’s
share of the nicotine pouch category was 15.4%, a decrease of 3.4 share points.
For a discussion regarding the growth of oral nicotine pouch products and the related impact on the MST category and economic
conditions that impact adult nicotine consumer purchasing behavior, see Trends and Developments and Operating Results by Business
Segment - Business Environment - Summary above.
Pricing Actions
USSTC and Helix executed the following pricing actions during 2025 and 2024:
▪
Effective November 18, 2025, USSTC increased the list price on its Copenhagen, Skoal and Red Seal brands by $0.10 per can.
USSTC also increased the list price on its Husky brands by $0.08 per can.
▪
Effective July 22, 2025, USSTC increased the list price on its Copenhagen and Red Seal brands by $0.12 per can. USSTC also
increased the list price on its Skoal brands by $0.17 per can and Husky brands by $0.25 per can.
▪
Effective April 22, 2025, USSTC increased the list price on its Copenhagen and Red Seal brands by $0.12 per can. USSTC
also increased the list price on its Skoal brands by $0.17 per can.
▪
Effective February 23, 2025, Helix increased the list price on its on! brand by $0.20 per can.
▪
Effective January 21, 2025, USSTC increased the list price on its Copenhagen and Red Seal brands by $0.12 per can. USSTC
also increased the list price on its Skoal brands by $0.17 per can.
▪
Effective August 25, 2024, Helix increased the list price on its on! brand by $0.10 per can.
▪
Effective July 23, 2024, USSTC increased the list price on its Copenhagen, Skoal and Red Seal brands by $0.10 per can.
▪
Effective April 23, 2024, USSTC increased the list price on its Copenhagen, Skoal and Red Seal brands by $0.10 per can.
▪
Effective January 23, 2024, USSTC increased the list price on its Copenhagen, Skoal and Red Seal brands by $0.11 per can.
In addition:
▪
Effective February 17, 2026, USSTC increased the list price on its Copenhagen, Skoal and Red Seal brands by $0.12 per can.
Liquidity and Capital Resources
We are a holding company that is primarily dependent on the capital resources of our subsidiaries to satisfy our liquidity requirements.
Our access to the operating cash flows of our subsidiaries consists of cash received from the payment of dividends and distributions, and
the payment of interest on intercompany loans. At December 31, 2025, our significant subsidiaries were not limited by contractual
obligations in their ability to pay cash dividends or make other distributions with respect to their equity interests. In addition, we receive
cash dividends on our interest in ABI and will continue to do so as long as we hold shares in ABI and ABI pays dividends.
At December 31, 2025, we had $4.5 billion of cash and cash equivalents. In addition to having access to the operating cash flows of our
subsidiaries, our capital resources include access to credit markets in the form of commercial paper, availability under our $3.0 billion
senior unsecured 5-year revolving credit agreement (“Credit Agreement”), which we use for general corporate purposes, and access to
credit markets through the issuance of long-term senior unsecured notes. For additional information, see Capital Markets and Other
Matters below.
In addition to funding current operations, we primarily use our net cash from operating activities for payment of dividends, share
repurchases under our share repurchase programs, repayment of debt, acquisitions of or investments in businesses and assets and capital
expenditures.
We believe our cash and cash equivalents balance, along with our future cash flows from operations, capacity for borrowings under our
Credit Agreement and access to credit and capital markets, provide sufficient liquidity to meet the needs of our business operations and
to satisfy our projected cash requirements for the foreseeable future, including the next 12 months.
46
Capital Markets and Other Matters
Credit Ratings - Our cost and terms of financing and our access to commercial paper markets may be impacted by applicable credit
ratings. The impact of credit ratings on the cost of borrowings under our Credit Agreement is discussed in Note 8. Short-Term
Borrowings and Borrowing Arrangements (“Note 8”).
At December 31, 2025, the credit ratings and outlook for our indebtedness by major credit rating agencies were:
Short-term Debt
Long-term Debt
Outlook
Moody’s Investors Service, Inc. (“Moody’s”)
P-2
A3
Stable (1)
Standard & Poor’s Financial Services LLC (“S&P”)
A-2
BBB+ (2)
Stable (2)
Fitch Ratings Inc. (“Fitch”)
F2 (3)
BBB (3)
Stable
(1) On April 28 2025, Moody’s changed its outlook to Stable from Negative.
(2) On May 14, 2025, S&P changed its long-term debt credit rating to BBB+ from BBB and outlook to Stable from Positive.
(3) On February 13, 2026, Fitch changed its short-term debt credit rating to F1 from F2 and long-term debt credit rating to BBB+ from BBB.
Credit Lines - From time to time, we have short-term borrowing needs to meet our working capital requirements arising from the timing
of payments under the State Settlement Agreements, quarterly income tax payments and quarterly dividend payments, and generally use
our commercial paper program to meet those needs.
At December 31, 2025, we had availability under our Credit Agreement for borrowings of up to an aggregate principal amount of $3.0
billion, and we were in compliance with the covenants in our Credit Agreement. We monitor the credit quality of our bank group and do
not know of any potential non-performing credit provider in that group. For further discussion on short-term borrowings and borrowing
arrangements, see Note 8.
Long-Term Debt - At December 31, 2025 and 2024, our total long-term debt was $25.7 billion and $24.9 billion, respectively.
During 2025, our long-term debt activity included the following:
▪
Debt Issuance - In the first and third quarters of 2025, we issued U.S. dollar denominated senior unsecured notes each in the
aggregate principal amount of $1.0 billion ($2.0 billion total).
▪
Debt Repayment - In the second quarter of 2025, we repaid in full at maturity (i) senior unsecured notes in the aggregate
principal amount of $750 million and (ii) senior unsecured Euro notes in the aggregate principal amount of €750 million ($857
million).
In February 2026, we repaid in full at maturity senior unsecured notes in the aggregate principal amount of approximately $1.1 billion.
All of our long-term debt outstanding at December 31, 2025 and 2024 was fixed-rate debt. At December 31, 2025 and 2024, the
weighted-average coupon interest rate on our total long-term debt was approximately 4.5% and 4.3%, respectively.
For further details on long-term debt, see Note 9. Long-Term Debt (“Note 9”).
47
At December 31, 2025, our debt-to-Consolidated net earnings and debt-to-Consolidated EBITDA ratios were calculated as follows:
For the Twelve Months Ended
December 31, 2025
(in millions)
Consolidated net earnings
$
6,947
Interest and other debt expense, net
1,079
Provision for income taxes
2,442
Depreciation and amortization
266
EBITDA
10,734
(Income) losses from investments in equity securities and noncontrolling interests, net
(510)
Dividends from less than 50% owned affiliates
208
Asset impairment and exit costs
978
Impairment of goodwill
1,158
Fair value adjustment for NJOY Transaction contingent payments
25
Consolidated EBITDA
$
12,593
Current portion of long-term debt
$
1,569
Long-term debt
24,140
Debt
$
25,709
Debt / Consolidated net earnings
3.7
Debt / Consolidated EBITDA
2.0
In October 2023, we filed a registration statement on Form S-3 with the SEC, under which we may offer debt securities or warrants to
purchase debt securities from time to time over a three-year period from the date of filing.
Off-Balance Sheet Arrangements and Other Future Contractual Obligations
We had no off-balance sheet arrangements, including special purpose entities, other than guarantees and contractual obligations that are
discussed below.
Guarantees and Other Similar Matters - As discussed in Note 18, we had unused letters of credit obtained in the ordinary course of
business and guarantees (including third-party guarantees) outstanding at December 31, 2025. From time to time, we also issue lines of
credit to affiliated entities. As part of the supplier financing program further discussed in Note 2, Altria guarantees the financial
obligations of ALCS under the financing program agreement. In addition, as discussed below in Supplemental Guarantor Financial
Information and in Note 9, PM USA guarantees our obligations under our outstanding debt securities, any borrowings under our Credit
Agreement and any amounts outstanding under our commercial paper program. These items have not had, and are not expected to have,
a significant impact on our liquidity.
Long-Term Debt and Interest on Borrowings - In addition to maturities of long-term debt, we make interest payments based on stated
coupon interest rates. For information on annual debt maturities and interest payments, see Note 9.
Purchase Obligations - We have entered into purchase obligations for inventory and production costs (such as raw materials, indirect
materials and services, contract manufacturing, packaging, storage and distribution) and other commitments for projected needs to be
used in the normal course of business. Arrangements are considered purchase obligations if a contract specifies all significant terms,
including fixed or minimum quantities to be purchased, a pricing structure and approximate timing of the transaction. Most
arrangements are cancelable without a significant penalty and with short notice (usually 30 days). At December 31, 2025, purchase
obligations for inventory and production costs for the next 12 months were $0.8 billion and $2.2 billion thereafter.
At December 31, 2025, we had $1.0 billion of other purchase obligation commitments for marketing, capital expenditures, information
technology and professional services, which occur through the ordinary course of business. The majority of these commitments are
expected to be satisfied within 12 months. Accounts payable and accrued liabilities are reflected on our consolidated balance sheet at
December 31, 2025 and are excluded from the amounts above.
Payments Under State Settlement Agreements and FDA Regulation - PM USA has entered into State Settlement Agreements with the
states, the District of Columbia and certain U.S. territories that call for certain payments. In addition, PM USA, Middleton and USSTC
are subject to quarterly user fees imposed by the FDA as a result of the FSPTCA. For further discussion of the State Settlement
Agreements, see Health Care Cost Recovery Litigation in Note 18.
48
Based on current agreements and estimates of inflation, operating income, market share and annual industry volume decline rates, the
estimated amounts that we may charge to cost of sales for payments related to State Settlement Agreements and FDA user fees are $3.0
billion on average for the next three years. The estimated amount excludes the potential impact of any NPM Adjustment Items.
The estimated amounts due under the State Settlement Agreements charged to cost of sales in each year are generally paid in April of the
following year. The amounts charged to cost of sales for FDA user fees are generally paid in the quarter in which the fees are incurred.
We paid approximately $3.5 billion and $3.9 billion for the years ended December 31, 2025 and 2024, respectively, in connection with
the State Settlement Agreements and FDA user fees, which are primarily paid in the second quarter of each period. The payments due
under the terms of the State Settlement Agreements and FDA user fees are subject to adjustment for several factors, including inflation,
operating income, market share and volume. The future payment amounts discussed above are estimates, and actual payment amounts
will differ to the extent underlying assumptions differ from actual future results. For further discussion on the potential impact of
inflation on future payments, see Operating Results by Business Segment - Business Environment - State Settlement Agreements above.
Litigation-Related Payments - Litigation is subject to uncertainty, and an adverse outcome or settlement of litigation could have a
material adverse effect on our results of operations, cash flows or financial position in a particular fiscal quarter or fiscal year, as more
fully disclosed in Note 18, Item 3 and Item 1A.
Other Long-Term Liabilities - We had $0.9 billion of accrued postretirement health care costs on our consolidated balance sheet at
December 31, 2025 and estimate approximately $82 million of annual payments. In addition, we had pension obligations, substantially
all of which are funded from pension plan assets. For further information on our postretirement health care and pension obligations, see
Note 16.
We are unable to estimate the timing of payments of other long-term liabilities included on our consolidated balance sheets at
December 31, 2025.
Equity and Dividends
Dividends paid in 2025 and 2024 were approximately $6,960 million and $6,845 million, respectively, an increase of 1.7%, reflecting a
higher dividend rate, partially offset by fewer shares outstanding as a result of shares we repurchased under our share repurchase
programs.
In the third quarter of 2025, our Board approved a 3.9% increase in the quarterly dividend rate to $1.06 per share of our common stock
versus the previous rate of $1.02 per share. Our current annualized dividend rate is $4.24 per share. We have a progressive dividend
goal targeting mid-single digits dividend per share growth annually through 2028. Future dividend payments remain subject to the
discretion of our Board.
In October 2025, the Board authorized a $1.0 billion expansion of our existing share repurchase program from $1.0 billion to $2.0
billion, which now expires on December 31, 2026. For further discussion of our share repurchase programs, see Note 10. Capital Stock
and Part II, Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities of
this Form 10-K.
Financial Review
Cash Provided by/Used in Operating Activities
During 2025, net cash provided by operating activities was $9.3 billion compared with $8.8 billion during 2024. This increase was due
primarily to lower payments for State Settlement Agreements, litigation and excise taxes, and a portion of the NJOY contingent
payments in 2024 ($140 million), partially offset by lower net revenues and higher payments for certain transferable income tax credits.
We had a working capital deficit at December 31, 2025 and 2024, and believe we have the ability to fund working capital deficits with
cash provided by operating activities, borrowings under our Credit Agreement and access to the credit and capital markets.
Cash Provided by/Used in Investing Activities
During 2025, net cash used in investing activities was $0.3 billion compared with net cash provided by investing activities of $2.2 billion
during 2024. This change was due primarily to proceeds from the ABI Transaction in 2024.
Capital expenditures for 2025 increased 52.1% to $216 million, primarily due to investments in our manufacturing capabilities and
innovative products. We expect capital expenditures for 2026 to be in the range of $300 million to $375 million, which are expected to
be funded from operating cash flows.
Cash Provided by/Used in Financing Activities
During 2025, net cash used in financing activities was $7.6 billion compared with $11.5 billion during 2024. This decrease was due to
lower share repurchases, issuances of long-term debt in 2025 and a portion of the NJOY contingent payments in 2024 ($110 million),
partially offset by higher repayments of long-term debt and higher dividends paid on our common stock.
49
New Accounting Guidance Not Yet Adopted
See Note 2 for a discussion of issued accounting guidance applicable to, but not yet adopted by, us.
Contingencies
See Note 18 and Item 3 for a discussion of contingencies.
Supplemental Guarantor Financial Information
PM USA (“Guarantor”), which is a 100% owned subsidiary of Altria Group, Inc. (“Parent”), has guaranteed the Parent’s obligations
under its outstanding debt securities, borrowings under its Credit Agreement and amounts outstanding under its commercial paper
program (“Guarantees”). Pursuant to the Guarantees, the Guarantor fully and unconditionally guarantees, as primary obligor, the
payment and performance of the Parent’s obligations under the guaranteed debt instruments (“Obligations”), subject to release under
certain customary circumstances as noted below.
The Guarantees provide that the Guarantor guarantees the punctual payment when due, whether at stated maturity, by acceleration or
otherwise, of the Obligations. The liability of the Guarantor 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, the Parent or the Guarantor.
Under applicable provisions of federal bankruptcy law or comparable provisions of state fraudulent transfer law, the Guarantees could be
voided, or claims in respect of the Guarantees could be subordinated to the debts of the Guarantor, if, among other things, the Guarantor,
at the time it incurred the Obligations evidenced by the Guarantees:
▪
received less than reasonably equivalent value or fair consideration therefor; and
▪
either:
▪
was insolvent or rendered insolvent by reason of such occurrence;
▪
was engaged in a business or transaction for which the assets of the Guarantor constituted unreasonably small capital; or
▪
intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they mature.
In addition, under such circumstances, the payment of amounts by the Guarantor pursuant to the Guarantees could be voided and
required to be returned to the Guarantor, or to a fund for the benefit of the Guarantor, as the case may be.
The measures of insolvency for purposes of the foregoing considerations will vary depending upon the law applied in any proceeding
with respect to the foregoing. Generally, however, the Guarantor would be considered insolvent if:
▪
the sum of its debts, including contingent liabilities, was greater than the saleable value of its assets, all at a fair valuation;
▪
the present fair saleable value of its assets was less than the amount that would be required to pay its probable liability on its
existing debts, including contingent liabilities, as they become absolute and mature; or
▪
it could not pay its debts as they become due.
To the extent the Guarantees are voided as a fraudulent conveyance or held unenforceable for any other reason, the holders of the
guaranteed debt obligations would not have any claim against the Guarantor and would be creditors solely of the Parent.
The obligations of the Guarantor under the Guarantees are limited to the maximum amount as will not result in the Guarantor’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 the Guarantor 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.
The Guarantor will be unconditionally released and discharged from the Obligations upon the earliest to occur of:
▪
the date, if any, on which the Guarantor consolidates with or merges into the Parent or any successor;
▪
the date, if any, on which the Parent or any successor consolidates with or merges into the Guarantor;
▪
the payment in full of the Obligations pertaining to such Guarantees; and
▪
the rating of the Parent’s long-term senior unsecured debt by S&P of A or higher.
The Parent is a holding company; therefore, its access to the operating cash flows of its wholly owned subsidiaries consists of cash
received from the payment of dividends and distributions, and the payment of interest on intercompany loans by its subsidiaries. Neither
the Guarantor nor other 100% owned subsidiaries of the Parent that are not guarantors of the debt (“Non-Guarantor Subsidiaries”) are
limited by contractual obligations on their ability to pay cash dividends or make other distributions with respect to their equity interests.
50
The following tables include summarized financial information for the Parent and the Guarantor. Transactions between the Parent and
the Guarantor (including investment and intercompany balances as well as equity earnings) have been eliminated. The Parent’s and the
Guarantor’s intercompany balances with Non-Guarantor Subsidiaries have been presented separately. This summarized financial
information is not intended to present the financial position or results of operations of the Parent or the Guarantor in accordance with
GAAP.
Summarized Balance Sheets
(in millions of dollars)
December 31, 2025
Parent
Guarantor
Assets
Due from Non-Guarantor Subsidiaries
$
— $
347
Other current assets
4,394
871
Total current assets
$
4,394 $
1,218
Due from Non-Guarantor Subsidiaries
$
6,561 $
—
Other assets
8,394
1,195
Total non-current assets
$
14,955 $
1,195
Liabilities
Due to Non-Guarantor Subsidiaries
$
3,950 $
1,140
Other current liabilities
4,329
3,628
Total current liabilities
$
8,279 $
4,768
Total non-current liabilities
$
25,785 $
607
Summarized Statements of Earnings (Losses)
(in millions of dollars)
For the Year Ended December 31, 2025
Parent (1)
Guarantor (2)
Net revenues
$
— $
19,191
Gross profit
—
11,568
Net earnings (losses)
(569)
7,783
(1) For the year ended December 31, 2025, net earnings (losses) include $368 million of intercompany interest income from non-guarantor subsidiaries
and $423 million of interest expense from non-guarantor subsidiaries.
(2) For the year ended December 31, 2025, net earnings (losses) include $258 million of intercompany interest income from non-guarantor subsidiaries.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Interest Rate Risk
The fair value of our long-term debt, all of which is fixed-rate debt, is subject to fluctuations resulting primarily from changes in market
interest rates. The following table provides the fair value of our long-term debt and the change in fair value based on a 1% increase or
decrease in market interest rates at December 31:
(in billions)
2025
2024
Fair value
$
24.3 $
22.7
Decrease in fair value from a 1% increase in market interest rates
1.8
1.7
Increase in fair value from a 1% decrease in market interest rates
2.1
2.0
51
Item 8. Financial Statements and Supplementary Data.
Altria Group, Inc. and Subsidiaries
Consolidated Balance Sheets
(in millions of dollars)
________________________
at December 31,
2025
2024
Assets
Cash and cash equivalents
$
4,474 $
3,127
Receivables
263
177
Inventories:
Leaf tobacco
531
591
Other raw materials
245
190
Work in process
13
21
Finished product
281
278
1,070
1,080
Other current assets
125
129
Total current assets
5,932
4,513
Property, plant and equipment, at cost:
Land and land improvements
125
124
Buildings and building equipment
1,574
1,552
Machinery and equipment
2,653
2,662
Construction in progress
320
199
4,672
4,537
Less accumulated depreciation
2,962
2,920
1,710
1,617
Goodwill
5,787
6,945
Other intangible assets, net
11,876
12,973
Investments in equity securities
8,617
8,195
Other assets
1,095
934
Total Assets
$
35,017 $
35,177
See notes to consolidated financial statements.
Item 8. Financial Statements and Supplementary Data.
Altria Group, Inc. and Subsidiaries
Consolidated Balance Sheets
(in millions of dollars)
________________________
at December 31,
2025
2024
Assets
Cash and cash equivalents
$
4,474 $
3,127
Receivables
263
177
Inventories:
Leaf tobacco
531
591
Other raw materials
245
190
Work in process
13
21
Finished product
281
278
1,070
1,080
Other current assets
125
129
Total current assets
5,932
4,513
Property, plant and equipment, at cost:
Land and land improvements
125
124
Buildings and building equipment
1,574
1,552
Machinery and equipment
2,653
2,662
Construction in progress
320
199
4,672
4,537
Less accumulated depreciation
2,962
2,920
1,710
1,617
Goodwill
5,787
6,945
Other intangible assets, net
11,876
12,973
Investments in equity securities
8,617
8,195
Other assets
1,095
934
Total Assets
$
35,017 $
35,177
See notes to consolidated financial statements.
Item 8. Financial Statements and Supplementary Data.
Altria Group, Inc. and Subsidiaries
Consolidated Balance Sheets
(in millions of dollars)
________________________
at December 31,
2025
2024
Assets
Cash and cash equivalents
$
4,474 $
3,127
Receivables
263
177
Inventories:
Leaf tobacco
531
591
Other raw materials
245
190
Work in process
13
21
Finished product
281
278
1,070
1,080
Other current assets
125
129
Total current assets
5,932
4,513
Property, plant and equipment, at cost:
Land and land improvements
125
124
Buildings and building equipment
1,574
1,552
Machinery and equipment
2,653
2,662
Construction in progress
320
199
4,672
4,537
Less accumulated depreciation
2,962
2,920
1,710
1,617
Goodwill
5,787
6,945
Other intangible assets, net
11,876
12,973
Investments in equity securities
8,617
8,195
Other assets
1,095
934
Total Assets
$
35,017 $
35,177
See notes to consolidated financial statements.
52
Altria Group, Inc. and Subsidiaries
Consolidated Balance Sheets (Continued)
(in millions of dollars, except share and per share data)
____________________________________________
at December 31,
2025
2024
Liabilities
Current portion of long-term debt
$
1,569 $
1,527
Accounts payable
750
700
Accrued liabilities:
Marketing
928
688
Settlement charges
2,178
2,354
Other
1,947
1,780
Dividends payable
1,782
1,732
Total current liabilities
9,154
8,781
Long-term debt
24,140
23,399
Deferred income taxes
3,370
3,749
Accrued pension costs
122
136
Accrued postretirement health care costs
939
935
Other liabilities
744
365
Total liabilities
38,469
37,365
Contingencies (Note 18)
Stockholders’ Equity (Deficit)
Common stock, par value $0.33 1/3 per share
(2,805,961,317 shares issued)
935
935
Additional paid-in capital
5,921
5,905
Earnings reinvested in the business
35,452
35,516
Accumulated other comprehensive losses
(2,627)
(2,400)
Cost of repurchased stock
(1,131,643,020 shares at December 31, 2025 and
1,115,309,450 shares at December 31, 2024)
(43,183)
(42,194)
Total stockholders’ equity (deficit) attributable to Altria
(3,502)
(2,238)
Noncontrolling interest
50
50
Total stockholders’ equity (deficit)
(3,452)
(2,188)
Total Liabilities and Stockholders’ Equity (Deficit)
$
35,017 $
35,177
See notes to consolidated financial statements.
53
for the years ended December 31,
2025
2024
2023
Net revenues
$
23,279
$
24,018
$
24,483
Cost of sales
5,597
6,077
6,218
Excise taxes on products
3,140
3,574
3,981
Gross profit
14,542
14,367
14,284
Marketing, administration and research costs
2,507
2,737
2,737
Asset impairment and exit costs
978
389
—
Impairment of goodwill
1,158
—
—
Operating income
9,899
11,241
11,547
Interest and other debt expense, net
1,079
1,037
989
Net periodic benefit income, excluding service cost
(59)
(102)
(127)
(Income) losses from investments in equity securities
(510)
(652)
(243)
Gain on the sale of IQOS System commercialization rights
—
(2,700)
—
Earnings before income taxes
9,389
13,658
10,928
Provision for income taxes
2,442
2,394
2,798
Net earnings
$
6,947
$
11,264
$
8,130
Per share data:
Basic and diluted earnings per share
$
4.12
$
6.54
$
4.57
See notes to consolidated financial statements.
Altria Group, Inc. and Subsidiaries
Consolidated Statements of Earnings
(in millions of dollars, except per share data)
54
Altria Group, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Earnings
(in millions of dollars)
_______________________
for the years ended December 31,
2025
2024
2023
Net earnings
$
6,947
$
11,264
$
8,130
Other comprehensive earnings (losses), net of deferred income taxes:
Benefit plans
(23)
101
(57)
ABI
(199)
177
174
Currency translation adjustments and other
(5)
(5)
(19)
Other comprehensive earnings (losses), net of deferred income taxes
(227)
273
98
Comprehensive earnings
$
6,720
$
11,537
$
8,228
See notes to consolidated financial statements.
55
for the years ended December 31,
2025
2024
2023
Cash Provided by (Used in) Operating Activities
Net earnings
$
6,947
$
11,264
$
8,130
Adjustments to reconcile net earnings to operating cash flows:
Depreciation and amortization
266
286
272
Deferred income tax provision (benefit)
(316)
951
(230)
Unrecognized tax benefit (1)
303
(1,128)
1,111
Fair value adjustment for NJOY Transaction contingent payments, net of
cash paid
25
—
—
(Income) losses from investments in equity securities
(510)
(652)
(243)
Gain on the sale of IQOS System commercialization rights
—
(2,700)
—
Dividends from ABI
208
139
163
Impairment of goodwill
1,158
—
—
Asset impairment and exit costs, net of cash paid
960
389
—
Cash effects of changes: (2)
Receivables
(86)
(106)
6
Inventories
(27)
102
(15)
Accounts payable
34
116
38
Income taxes
690
798
6
Accrued liabilities and other current assets
(359)
(550)
280
Accrued settlement charges
(176)
(209)
(362)
Pension plan contributions
(16)
(18)
(20)
Pension and postretirement, net
(78)
(107)
(136)
Other, net
267
178
287
Net cash provided by (used in) operating activities
9,290
8,753
9,287
Cash Provided by (Used in) Investing Activities
Capital expenditures
(216)
(142)
(196)
Proceeds from the ABI Transaction (3)
—
2,353
—
Proceeds from the sale of IQOS System commercialization rights
—
—
1,700
Acquisition of NJOY, net of cash acquired
—
—
(2,751)
Other, net
(125)
(36)
(36)
Net cash provided by (used in) investing activities
(341)
2,175
(1,283)
(1) Substantially all of the 2025 amount relates to unrecognized tax benefits from the change in the application of foreign attribution rules relevant to our investment in ABI.
Substantially all of the 2024 and 2023 amounts relate to an unrecognized tax benefit from the ordinary loss for cash tax purposes with respect to a portion of our tax
basis associated with our former investment in JUUL, partially offset by our estimated corporate alternative minimum tax credit carryforward. See Note 14. Income
Taxes.
(2) 2023 amounts are net of the effects from the NJOY Transaction. See Note 3. Acquisition of NJOY.
(3) See Note 6. Investments in Equity Securities.
See notes to consolidated financial statements.
Altria Group, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in millions of dollars)
__________________
56
for the years ended December 31,
2025
2024
2023
Cash Provided by (Used in) Financing Activities
Proceeds from short-term borrowings
$
—
$
—
$
2,000
Repayment of short-term borrowings
—
—
(2,000)
Long-term debt issued
1,992
—
998
Long-term debt repaid
(1,607)
(1,121)
(1,566)
Repurchases of common stock
(1,000)
(3,400)
(1,000)
Dividends paid on common stock
(6,960)
(6,845)
(6,779)
Other, net
(40)
(125)
(27)
Net cash provided by (used in) financing activities
(7,615)
(11,491)
(8,374)
Cash, cash equivalents and restricted cash:
Increase (decrease)
1,334
(563)
(370)
Balance at beginning of year
3,158
3,721
4,091
Balance at end of year
$
4,492
$
3,158
$
3,721
Supplemental cash flow information:
Cash paid:
Interest
$
1,114
$
1,113
$
1,116
Income taxes, net of refunds (1)
$
1,695
$
1,709
$
1,874
The following table provides a reconciliation of cash, cash equivalents and restricted cash (2) to the amounts reported on our
consolidated balance sheets:
at December 31,
2025
2024
2023
Cash and cash equivalents
$
4,474
$
3,127
$
3,686
Restricted cash included in other current assets
7
8
5
Restricted cash included in other assets
11
23
30
Cash, cash equivalents and restricted cash
$
4,492
$
3,158
$
3,721
(1) As discussed in Note 1. Background and Basis of Presentation, we adopted ASU No. 2023-09. As a result, 2024 and 2023 amounts are now presented net of refunds.
Additionally, for the years ended December 31, 2025, 2024 and 2023, income taxes paid, net of refunds were reduced by the impact of transferable income tax credits.
At December 31, 2025, 2024 and 2023, transferable income tax credits totaled $419 million, $445 million and $335 million, respectively, and are included in other
accrued liabilities on our consolidated balance sheets.
(2) Restricted cash consisted of cash deposits collateralizing appeal bonds posted by PM USA to obtain stays of judgments pending appeals. See Note 18. Contingencies.
See notes to consolidated financial statements.
Altria Group, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Continued)
(in millions of dollars)
__________________
57
Attributable to Altria
Common
Stock
Additional
Paid-in
Capital
Earnings
Reinvested in
the Business
Accumulated
Other
Comprehensive
Losses
Cost of
Repurchased
Stock
Non-
controlling
Interest (1)
Total
Stockholders’
Equity
(Deficit)
Balances, December 31, 2022
$
935
$
5,887
$
29,792
$
(2,771) $
(37,816) $
50
$
(3,923)
Net earnings
—
—
8,130
—
—
—
8,130
Other comprehensive earnings (losses), net
of deferred income taxes
—
—
—
98
—
—
98
Stock award activity
—
19
—
—
22
—
41
Cash dividends declared ($3.84 per share)
—
—
(6,828)
—
—
—
(6,828)
Repurchases of common stock
—
—
—
—
(1,000)
—
(1,000)
Other
—
—
—
—
(8)
—
(8)
Balances, December 31, 2023
935
5,906
31,094
(2,673)
(38,802)
50
(3,490)
Net earnings
—
—
11,264
—
—
—
11,264
Other comprehensive earnings (losses), net
of deferred income taxes
—
—
—
273
—
—
273
Stock award activity
—
17
—
—
24
—
41
Cash dividends declared ($4.00 per share)
—
—
(6,842)
—
—
—
(6,842)
Repurchases of common stock
—
(18)
—
—
(3,382)
—
(3,400)
Other
—
—
—
—
(34)
—
(34)
Balances, December 31, 2024
935
5,905
35,516
(2,400)
(42,194)
50
(2,188)
Net earnings
—
—
6,947
—
—
—
6,947
Other comprehensive earnings (losses), net
of deferred income taxes
—
—
—
(227)
—
—
(227)
Stock award activity
—
16
—
—
20
—
36
Cash dividends declared ($4.16 per share)
—
—
(7,011)
—
—
—
(7,011)
Repurchases of common stock
—
—
—
—
(1,000)
—
(1,000)
Other
—
—
—
—
(9)
—
(9)
Balances, December 31, 2025
$
935
$
5,921
$
35,452
$
(2,627) $
(43,183) $
50
$
(3,452)
(1) Represents the non-cash contribution made by JTIUH to Horizon. See Note 1. Background and Basis of Presentation.
See notes to consolidated financial statements.
Altria Group, Inc. and Subsidiaries
Consolidated Statements of Stockholders’ Equity (Deficit)
(in millions of dollars, except per share data)
____________________________________
58
Altria Group, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
_______________________________
Note 1. Background and Basis of Presentation
When used in these notes, the terms “Altria,” “we,” “us” and “our” refer to either (i) Altria Group, Inc. and its consolidated
subsidiaries or (ii) Altria Group, Inc. only and not its consolidated subsidiaries, as appropriate in the context.
▪
Background: At December 31, 2025, our wholly owned subsidiaries included Philip Morris USA Inc. (“PM USA”), which is
engaged in the manufacture and sale of cigarettes; John Middleton Co. (“Middleton”), which is engaged in the manufacture and sale of
machine-made large cigars and is a wholly owned subsidiary of PM USA; UST LLC (“UST”), which, through its wholly owned
subsidiary U.S. Smokeless Tobacco Company LLC (“USSTC”), is engaged in the manufacture and sale of moist smokeless tobacco
(“MST”) products; Helix Innovations LLC (“Helix”) and its foreign affiliates (“Helix International”), which are engaged in the
manufacture and sale of oral nicotine pouches; and NJOY, LLC (“NJOY”), which is engaged in the manufacture and sale of e-vapor
products. We operate primarily within the United States and generate substantially all of our revenue from domestic customers. Other
wholly owned subsidiaries included Altria Group Distribution Company (“AGDC”), which provides domestic sales and distribution
services to our operating companies, and Altria Client Services LLC (“ALCS”), which provides various support services to our
companies in areas such as legal, regulatory, research and product development, consumer engagement, finance, human resources and
external affairs. Our access to the operating cash flows of our subsidiaries consists of cash received from the payment of dividends and
distributions, and the payment of interest on intercompany loans. At December 31, 2025, our significant subsidiaries were not limited by
contractual obligations in their ability to pay cash dividends or make other distributions with respect to their equity interests.
At December 31, 2025, we owned a 75% economic interest in Horizon Innovations LLC (“Horizon”), a joint venture with JTI (US)
Holding, Inc. (“JTIUH”), a subsidiary of Japan Tobacco Inc., which owned the remaining 25% economic interest. Horizon is
responsible for the U.S. marketing and commercialization of heated tobacco stick products owned by either party. At December 31,
2025, Horizon had no products in the U.S. marketplace.
At December 31, 2025, we had investments in Anheuser-Busch InBev SA/NV (“ABI”) and Cronos Group Inc. (“Cronos”). For further
discussion of our investments, see Note 6. Investments in Equity Securities.
▪
Basis of Presentation: Our consolidated financial statements include Altria, as well as our wholly owned and majority-owned
subsidiaries. We account for our investments in equity securities in which we have the ability to exercise significant influence over the
operating and financial policies of the investee, including ABI and Cronos, under the equity method of accounting using a one-quarter
lag. All intercompany transactions and balances have been eliminated.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
(“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent liabilities at the dates of our financial statements and the reported amounts of net revenues and expenses during
the reporting periods. Significant estimates and assumptions include, among other things, pension and benefit plan assumptions, lives
and valuation assumptions for goodwill and other intangible assets, investments in equity securities, marketing programs and income
taxes. Actual results could differ from those estimates.
Certain immaterial prior year amounts have been reclassified to conform with the current year’s presentation.
In connection with the preparation of our annual financial statements for the year ended December 31, 2025, we adopted Accounting
Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU No. 2023-09”). This
guidance requires additional income tax disclosures, primarily related to the rate reconciliation and income taxes paid information, on an
annual basis. We included expanded footnote disclosures, presented retrospectively, as a result of the adoption of ASU No. 2023-09 in
Note 14. Income Taxes.
Note 2. Summary of Significant Accounting Policies
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Cash and Cash Equivalents: Cash equivalents include demand deposits with banks and all highly liquid investments with
original maturities of three months or less. We record cash equivalents at cost plus accrued interest, which approximates fair value.
▪
Depreciation, Amortization and Impairment Testing: Property, plant and equipment are stated at historical costs and
depreciated by the straight-line method over the estimated useful lives of the assets. We depreciate machinery and equipment over
periods up to 20 years, and buildings and building improvements over periods up to 50 years. We amortize definite-lived intangible
assets over their estimated useful lives.
We review long-lived assets, including definite-lived intangible assets, for impairment whenever events or changes in business
circumstances indicate that the carrying value of the assets may not be fully recoverable. We perform undiscounted operating cash flow
analyses to determine if an impairment exists. For purposes of recognition and measurement of an impairment for assets held for use,
59
we group assets and liabilities at the lowest level for which cash flows are separately identifiable. If we determine that an impairment
exists, any related impairment loss is calculated based on fair value. We base impairment losses on assets to be disposed of, if any, on
the estimated proceeds to be received, less costs of disposal. We also review the estimated remaining useful lives of long-lived assets
whenever events or changes in business circumstances indicate the lives may have changed.
We conduct a required annual review of goodwill and indefinite-lived intangible assets for potential impairment as of October 1 of each
year, and more frequently if an event occurs or circumstances change that would require us to perform an interim review. We have the
option of first performing a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit or
indefinite-lived intangible asset is less than its carrying amount as a basis for determining whether it is necessary to perform a
quantitative impairment test. If necessary, we will perform a single step quantitative impairment test. Additionally, we have the option
to unconditionally bypass the qualitative assessment and perform a single step quantitative assessment. If the carrying value of a
reporting unit that includes goodwill exceeds its fair value, which is determined using discounted cash flows, goodwill is considered
impaired. We measure the amount of impairment loss as the difference between the carrying value and the fair value of a reporting unit;
however, the amount of the impairment loss is limited to the total amount of goodwill allocated to a reporting unit. If the carrying value
of an indefinite-lived intangible asset exceeds its fair value, which is determined using discounted cash flows, we consider the intangible
asset impaired and reduce the carrying value to fair value in the period identified.
▪
Derivative Financial Instruments: We record derivative financial instruments at fair value on the consolidated balance sheets
as either assets or liabilities. For derivative financial instruments designated as net investment hedges, we record changes in the fair
value of the derivative or foreign currency transaction gains or losses on a nonderivative hedging instrument in accumulated other
comprehensive earnings (losses) to offset the change in the value of the net investment being hedged. Such amounts remain in
accumulated other comprehensive earnings (losses) until the complete or substantially complete liquidation of the underlying foreign
operations occurs for investments in foreign entities accounted for under the equity method of accounting. We classify cash flows from
hedging instruments in the same manner as the respective hedged item in the consolidated statements of cash flows.
To qualify for hedge accounting, the hedging relationship, both at inception of the hedge and on an ongoing basis, is expected to be
highly effective at offsetting changes in the fair value of the hedged risk during the period that the hedge is designated. For qualified
hedges of forecasted transactions, if it becomes probable that a forecasted transaction will not occur, we would no longer consider the
hedge effective and would record all of the derivative gains and losses in the consolidated statement of earnings in the current period.
For financial instruments that are not designated as hedging instruments or do not qualify for hedge accounting, we record changes in
fair value in the consolidated statement of earnings each period.
▪
Employee Benefit Plans: We provide a range of benefits to certain employees and retired employees, including pension,
postretirement health care and postemployment benefits. We record annual amounts relating to these plans based on calculations
specified by GAAP, which include various actuarial assumptions as to discount rates, assumed rates of return on plan assets, mortality,
compensation increases, turnover rates and health care cost trend rates.
We recognize the funded status of our defined benefit plans on the consolidated balance sheets. We record unrecognized gains and
losses and prior service costs and credits in other comprehensive income (loss), net of deferred tax, and subsequently amortize these
items into net periodic benefit cost (income) over future periods.
▪
Fair Value Measurements: We measure certain assets and liabilities at fair value. Fair value is defined as the exchange price
that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the
asset or liability in an orderly transaction between market participants on the measurement date. We use an established fair value
hierarchy that uses three levels of inputs to measure fair value as follows:
Level 1
Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2
Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets
that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the
full term of the assets or liabilities.
Level 3
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or
liabilities.
▪
Guarantees: We recognize a liability for the fair value of the obligation of qualifying guarantee activities. See Note 18.
Contingencies - Guarantees and Other Similar Matters for a further discussion of guarantees.
▪
Income Taxes: Significant judgment is required in determining income tax provisions and in evaluating tax positions.
We determine deferred tax assets and liabilities based on the difference between the financial statement and tax bases of assets and
liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse. We record a valuation allowance
when we have determined that it is more likely than not that some portion or all of a deferred tax asset will not be realized. In assessing
realizability, we consider the weight of all available positive and negative evidence, including the character of the assets and the possible
sources of taxable income of the appropriate character within the applicable carryback and carryforward periods available under the tax
law.
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We recognize the financial statement benefit for uncertain income tax positions in our consolidated financial statements when we have
determined that it is more likely than not, based on the technical merits, that the position will be sustained upon examination by taxing
authorities. The recognized amount is the largest benefit that is more than 50% likely to be realized upon ultimate settlement. We do
not recognize positions that do not meet this threshold in the financial statements. We included interest and penalties related to uncertain
tax positions in the provision for income taxes in our consolidated statements of earnings. We disclose worldwide changes in
unrecognized tax benefits, for the current year and prior years, within the same line in our income tax rate reconciliation.
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Inventories: We use the last-in, first-out (“LIFO”) method to determine the cost of the majority of our inventories, with the
remainder valued using the first-in, first-out (“FIFO”) and average cost methods. We state inventories under LIFO at the lower of cost
or market, while we state inventories under FIFO and average cost at the lower of cost and net realizable value. It is a generally
recognized industry practice to classify leaf tobacco inventories as a current asset although part of such inventories, because of the
duration of the curing and aging process, ordinarily would not be used within one year. We determined the cost of approximately 76%
and 77% of our inventories at December 31, 2025 and 2024, respectively, using the LIFO method. The recorded LIFO amounts of our
inventories were approximately $0.7 billion lower than the current cost of our inventories at December 31, 2025 and 2024.
▪
Investments in Equity Securities: Investments in equity securities in which we have the ability to exercise significant
influence over the operating and financial policies of the investee are accounted for under the equity method of accounting or the fair
value option. The election of the fair value option is irrevocable and is made on an investment by investment basis. We account for our
investments in ABI and Cronos under the equity method of accounting. Our share of equity (income) losses and other adjustments
associated with these investments are included in (income) losses from investments in equity securities in our consolidated statements of
earnings. We report the carrying value for each of our investments in ABI and Cronos in investments in equity securities on our
consolidated balance sheets. We report equity method investments accounted for under the equity method of accounting at cost and
adjust these investments each period for our share of (income) losses and dividends paid, if any. We report our share of ABI’s and
Cronos’s results using a one-quarter lag because results are not available in time for us to record them in the concurrent period. At the
end of each reporting period, we review our investments accounted for under the equity method of accounting for impairment by
comparing the fair value of each of our investments to their carrying value. If the carrying value of an investment exceeds its fair value
and we determine that the loss in value is other than temporary, we consider the investment impaired, reduce its carrying value to its fair
value and record the impairment in our consolidated statements of earnings in the period identified. We use certain factors to make this
determination including (i) the duration and magnitude of the fair value decline, (ii) the financial condition and near-term prospects of
the investee and (iii) our intent and ability to hold our investment until recovery to its carrying value.
▪
Litigation Contingencies and Costs: We record provisions in our consolidated financial statements for pending litigation
when we determine that an unfavorable outcome is probable and the amount of the loss can be reasonably estimated. We expense
litigation defense costs as incurred and include these costs in marketing, administration and research costs in our consolidated statements
of earnings. See Note 18. Contingencies.
▪
Marketing Costs: We promote our products with consumer incentives, trade promotions and consumer engagement programs.
These consumer incentive and trade promotion activities, which include discounts, coupons, rebates, in-store display incentives and
volume-based incentives, do not create a distinct deliverable and are, therefore, recorded as a reduction of revenues. We expense
payments to third parties for consumer engagement programs, which include event marketing, as incurred, and include such expenses in
marketing, administration and research costs in our consolidated statements of earnings. For interim reporting purposes, we charge
consumer engagement programs and certain consumer incentive expenses as part of results of operations as a percentage of sales, based
on estimated sales and related expenses for the full year.
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Revenue Recognition: We generate substantially all of our revenue from sales contracts with customers. As presented in Note
15. Segment Reporting, we disaggregate net revenues based on product type. While we enter into separate sales contracts with each
customer for each product type, all sales contracts have a similar structure and create an obligation to transfer product to the customer.
Our businesses satisfy all performance obligations within one year; therefore, we expense costs to obtain contracts as incurred and do not
disclose unsatisfied performance obligations. There is no financing component because our businesses expect, at contract inception, that
the period between when our businesses transfer product to the customer and when the customer pays for that product will be one year or
less.
We define net revenues as revenues, which include excise taxes and shipping and handling charges billed to customers, net of cash
discounts for prompt payment, sales returns (also referred to as returned goods) and sales incentives. We exclude from the transaction
price sales taxes and value-added taxes imposed at the time of sale.
Substantially all cash discounts in contracts with our customers are based on a percentage of the list price according to agreed-upon
payment terms. We record receivables net of the cash discounts on our consolidated balance sheets. At December 31, 2025, 2024 and
2023, receivables were $263 million, $177 million and $71 million, respectively.
We recognize revenues from sales contracts with customers when control of such product is obtained by the customer, which primarily
occurs upon shipment of goods. We determine that a customer obtains control of the product upon shipment when title of such product
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and risk of loss transfers to the customer. We account for shipping and handling costs as fulfillment costs and such amounts are
classified as part of cost of sales in our consolidated statements of earnings.
We record sales incentives, which consist of consumer incentives and trade promotion activities, as a reduction to revenues (a portion of
which is based on amounts estimated as being due to wholesalers, retailers and consumers at the end of a period) based principally on
historical volume, utilization and redemption rates. Actual payments will differ from estimated payments to the extent actual results
differ from estimated assumptions. We reflect differences between actual and estimated payments in the period in which actual
payments become known. We include expected payments for sales incentives in accrued marketing liabilities on our consolidated
balance sheets.
Sales incentives include variable payments related to goods sold by our businesses. We include estimates of variable consideration as a
reduction to revenues upon shipment of goods to customers. The sales incentives that require significant estimates and judgments are as
follows:
▪
Price promotion payments - We make price promotion payments, substantially all of which are made to retailers to incent the
promotion of certain product offerings in select geographic areas.
▪
Wholesale and retail participation payments - We make payments to wholesale customers and retailers to incent merchandising
and sharing of sales data in accordance with our trade agreements.
We record an allowance for returned goods, which we include in other accrued liabilities on our consolidated balance sheets. We record
estimated sales returns, which are based principally on historical volume and return rates, as a reduction to revenues. Actual sales
returns will differ from estimated sales returns to the extent actual results differ from estimated assumptions. We reflect differences
between actual and estimated sales returns in the period in which the actual amounts become known. These differences, if any, have not
had a material impact on our consolidated financial statements.
Payment terms vary depending on product type. PM USA primarily receives payments in advance of a customer obtaining control of the
product. USSTC and Helix receive primarily all payments within one business day of a customer obtaining control of the product.
When we receive cash in advance of product shipment, our businesses typically satisfy their performance obligations within three days
of receiving payment. We consider payments received in advance of product shipment as deferred revenue, which we include in other
current liabilities on our consolidated balance sheets until revenue is recognized. At December 31, 2025, 2024 and 2023, deferred
revenue was $231 million, $215 million and $258 million, respectively. At December 31, 2025, 2024 and 2023, there were no
differences between amounts recorded as deferred revenue from contracts with customers and amounts subsequently recognized as
revenue.
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Supplier Financing: We facilitate a voluntary supplier financing program through a third-party intermediary under which
participating suppliers may elect to sell receivables due from us to a third-party financial institution at the sole discretion of both
suppliers and the financial institutions. Our payments are made on the terms originally negotiated with the supplier, up to 120 days, and
we have no economic interest in a supplier’s sale of a receivable. Under our agreement with the third-party intermediary, ALCS is
obligated to pay either the participating financial institutions or suppliers when payment is due, unless it has been satisfied by the
applicable ALCS affiliate. Altria guarantees ALCS’s obligations under this arrangement.
We recorded all outstanding balances under the supplier financing program in accounts payable on our consolidated balance sheets, and
we included the associated payments in operating activities within our consolidated statements of cash flows.
A reconciliation of the beginning and ending confirmed outstanding obligations was as follows:
For the Years Ended December 31,
(in millions)
2025
2024
Confirmed outstanding obligations at January 1
$
128 $
119
Invoices confirmed during the year
695
563
Confirmed invoices paid during the year
(664)
(554)
Confirmed outstanding obligations at December 31
$
159 $
128
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▪
New Accounting Guidance Not Yet Adopted: The following table provides a description of issued accounting guidance
applicable to, but not yet adopted by, us:
Standards
Description
Effective Date for Public
Entity
Effect on Financial Statements
ASU Nos. 2024-03 and 2025-01
Income Statement-Reporting
Comprehensive Income-Expense
Disaggregation Disclosures
(Subtopic 220-40): Disaggregation
of Income Statement Expenses
The guidance will require additional disclosures
about specific types of expenses included in the
expense captions presented on the face of the
income statement as well as disclosures about
selling expenses.
The guidance is effective
for fiscal years beginning
after December 15, 2026,
and interim periods within
fiscal years beginning
after December 15, 2027.
We are in the process of
evaluating the impact of this
guidance on our disclosures.
ASU No. 2025-05 Financial
Instruments-Credit Losses (Topic
326): Measurement of Credit
Losses for Accounts Receivable
and Contract Assets
The guidance provides a practical expedient for
the calculation of current expected credit losses on
current accounts receivable and current contract
assets that assumes that current conditions as of
the balance sheet date do not change for the
remaining life of the asset.
The guidance is effective
for fiscal years beginning
after December 15, 2025,
and interim periods within
those fiscal years.
We do not expect our adoption
of this guidance will have a
material impact on our
consolidated financial statements
and related disclosures.
ASU No. 2025-06 Intangibles-
Goodwill and Other-Internal-Use
Software (Subtopic 350-40):
Targeted Improvements to the
Accounting for Internal-Use
Software
The guidance replaces the current framework that
is based on software development project stages
with updated criteria, focused on management’s
authorization and the probability of project
completion, to determine the timing for cost
capitalization.
The guidance is effective
for fiscal years beginning
after December 15, 2027,
and interim periods within
those fiscal years.
We are in the process of
evaluating the impact of this
guidance on our consolidated
financial statements and related
disclosures.
ASU No. 2025-07 Derivatives and
Hedging (Topic 815) and Revenue
from Contracts with Customers
(Topic 606): Derivatives Scope
Refinements and Scope
Clarification for Share-Based
Noncash Consideration from a
Customer in a Revenue Contract
The guidance refines the scope of Topic 815 by
excluding from derivative accounting non-
exchange trading contracts that have underlyings
based on operations or activities specific to one of
the parties to the contract with certain exceptions
and clarifies the applicability of Topic 606 to
share-based noncash consideration received from
a customer in exchange for goods or services.
The guidance is effective
for fiscal years beginning
after December 15, 2026,
and interim periods within
those fiscal years.
We are in the process of
evaluating the impact of this
guidance on our consolidated
financial statements and related
disclosures.
ASU No. 2025-09 Derivatives and
Hedging (Topic 815): Hedge
Accounting Improvements
The guidance includes expanding eligibility for
cash flow hedges of groups of forecasted
transactions, introducing a model for hedging
forecasted interest payments on “choose-your-
rate” debt instruments, permitting designation of
variable price components in forecasted purchases
or sales of nonfinancial assets and clarifying
guidance for net investment hedges and dual
hedge strategies.
The guidance is effective
for fiscal years beginning
after December 15, 2026,
and interim periods within
those fiscal years.
We are in the process of
evaluating the impact of this
guidance on our consolidated
financial statements and related
disclosures.
ASU No. 2025-11 Interim
Reporting (Topic 270): Narrow-
Scope Improvements
The guidance clarifies interim disclosure
requirements, provides a comprehensive list of
disclosures required by GAAP and includes a
disclosure principle for events since the last
annual reporting period to enhance consistency in
interim reporting.
The guidance is effective
for interim reporting
periods within annual
reporting periods
beginning after December
15, 2027.
We are in the process of
evaluating the impact of this
guidance on our interim
condensed consolidated financial
statements and related
disclosures.
ASU No. 2025-12 Codification
Improvements
The guidance provides changes that clarify,
correct errors or make minor improvements to
GAAP.
The guidance is effective
for fiscal years beginning
after December 15, 2026,
and interim periods within
those fiscal years.
We are in the process of
evaluating the impact of this
guidance on our consolidated
financial statements and related
disclosures.
Note 3. Acquisition of NJOY
In June 2023, we acquired NJOY Holdings (“NJOY Transaction”), which provided us with full global ownership of NJOY’s e-vapor
product portfolio, including NJOY ACE. The total consideration for the NJOY Transaction of approximately $2.9 billion consisted of
approximately $2.75 billion in cash payments (net of cash acquired) plus the fair value of up to $500 million in additional contingent
payments. The fair value of these contingent payments on the acquisition date was approximately $130 million, which was included in
the total consideration. For additional information on contingent payments, see Note 7. Financial Instruments. We funded the initial
NJOY Transaction cash payments at closing through a combination of borrowings under a $2.0 billion term loan facility, the issuance of
commercial paper and available cash. In July 2023, we repaid the term loan facility in full, at which time the term loan facility
terminated in accordance with its terms.
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We accounted for the NJOY Transaction as a business combination. The final purchase price allocation to the assets acquired and
liabilities assumed in the NJOY Transaction as of the acquisition date was as follows:
(in millions)
Final Purchase
Price Allocation
Cash and cash equivalents
$
22
Receivables
7
Inventories
19
Other assets
7
Property, plant and equipment
16
Other intangible assets:
Developed technology (amortizable)
1,000
Trademarks (amortizable)
190
Accounts payable
(7)
Accrued liabilities
(20)
Deferred income taxes
(101)
Total identifiable net assets
1,133
Total consideration
2,901
Goodwill
$
1,768
The excess of the total consideration over the identifiable net assets acquired in the NJOY Transaction primarily reflected the value of
future growth opportunities in the e-vapor category. None of the goodwill or other intangible assets is deductible for tax purposes.
The significant assumptions used in determining the fair values of the identifiable intangible assets included volume growth rates,
operating margins, the assessment of acquired technology life cycles and discount rates. We determined the fair values of the
identifiable intangible assets using an income approach. The fair value measurements were primarily based on significant inputs that are
not observable in the market, such as discounted cash flow analyses, and thus were classified in Level 3 of the fair value hierarchy. As
of the acquisition date, the estimated weighted-average useful life of these intangible assets was approximately 18 years.
Note 4. Goodwill and Other Intangible Assets, net
Goodwill and other intangible assets, net, were as follows at December 31:
2025
2024
(in millions)
Goodwill
Other Intangible
Assets, net
Goodwill
Other Intangible
Assets, net
Smokeable products segment
$
99 $
2,909 $
99 $
2,936
Oral tobacco products segment
5,078
8,646
5,078
8,679
E-vapor products segment (1)
610
74
1,768
1,099
Other
—
247
—
259
Total
$
5,787 $
11,876 $
6,945 $
12,973
(1) Comprised primarily of e-vapor reporting unit goodwill and definite-lived intangible assets related to the NJOY Transaction. See Note 3. Acquisition
of NJOY and Note 15. Segment Reporting.
Other intangible assets consisted of the following at December 31:
2025
2024
(in millions)
Gross Carrying
Amount
Accumulated
Amortization
Gross Carrying
Amount
Accumulated
Amortization
Indefinite-lived intangible assets
$
11,089 $
— $
11,089 $
—
Definite-lived intangible assets
1,656
869
2,621
737
Total other intangible assets
$
12,745 $
869 $
13,710 $
737
At December 31, 2025, substantially all of our indefinite-lived intangible assets consisted of (i) MST trademarks of $8.5 billion, which
consists of Copenhagen, Skoal and other MST trademarks of $4.0 billion, $3.6 billion and $0.9 billion, respectively, from our 2009
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acquisition of UST, and (ii) cigar trademarks of $2.6 billion from our 2007 acquisition of Middleton. Definite-lived intangible assets,
which consist primarily of intellectual property, certain cigarette trademarks and customer relationships, are amortized over a weighted-
average period of approximately 19 years. Pre-tax amortization expense for definite-lived intangible assets during the years ended
December 31, 2025, 2024 and 2023 was $132 million, $139 million and $128 million, respectively. We estimate our annual
amortization expense for each of the next five years to be approximately $90 million or less, which includes the impact of an impairment
of the e-vapor definite-lived intangible assets discussed below, assuming no additional transactions occur that require the amortization of
intangible assets.
In April 2024, we assigned the exclusive U.S. commercialization rights to the IQOS Tobacco Heating System (“IQOS System”) to Philip
Morris International Inc. (“PMI”) pursuant to the terms of a purchase agreement entered into with PMI in October 2022 (“IQOS
Transaction”). In exchange for the assignment of the U.S. commercialization rights to the IQOS System, we received total cash
payments of approximately $2.8 billion ($1.0 billion in 2022 and $1.8 billion, including interest, in 2023), $2.7 billion of which was
classified as a deferred gain on our consolidated balance sheet at December 31, 2023. Upon the assignment of the U.S.
commercialization rights to the IQOS System, we recorded a pre-tax gain of $2.7 billion for the year ended December 31, 2024 in our
consolidated statement of earnings.
The changes in goodwill and net carrying amount of intangible assets were as follows:
2025
2024
(in millions)
Goodwill
Other Intangible
Assets, net
Goodwill
Other Intangible
Assets, net
Balance at January 1
$
6,945 $
12,973 $
6,791 $
13,686
Changes due to:
Acquisitions (1)
—
5
154
(220)
Impairments (2)
(1,158)
(970)
—
(354)
Amortization
—
(132)
—
(139)
Balance at December 31
$
5,787 $
11,876 $
6,945 $
12,973
(1) The 2024 amounts represent the measurement period adjustments related to the NJOY Transaction.
(2) The 2025 amounts represent non-cash impairments of our e-vapor reporting unit goodwill and a non-cash, pre-tax impairment of our e-vapor definite-
lived intangible assets. The 2024 amount represents a non-cash, pre-tax impairment of the Skoal trademark.
We performed our annual impairment test of goodwill and indefinite-lived intangible assets as of October 1, 2025, inclusive of the e-
vapor reporting unit goodwill and the Skoal trademark. The impairment test resulted in a non-cash goodwill impairment charge of $285
million for the e-vapor reporting unit in the fourth quarter of 2025 (see E-vapor Reporting Unit Goodwill & Definite-Lived Intangible
Assets Impairments (2025) below). The estimated fair value of the Skoal trademark exceeded its carrying value by approximately 7%
($0.3 billion). A hypothetical 1% increase in the discount rate used to estimate the fair value of the Skoal trademark would have resulted
in an impairment charge of approximately $90 million in 2025. See Skoal Trademark Impairment (2024) below for details on the Skoal
trademark impairment recorded in the second quarter of 2024.
During 2024 and 2023, our annual impairment test of goodwill and indefinite-lived intangible assets resulted in no impairment charges.
At December 31, 2025, accumulated impairment losses related to goodwill were $1,158 million, all related to the e-vapor reporting unit
in the e-vapor products segment, as discussed below. There were no accumulated goodwill impairment losses at December 31, 2024.
We use an income approach to estimate the fair values of our reporting units and trademarks, discounting expected future cash flows at a
rate of return reflecting the risk-free rate for the use of those funds, the expected rate of inflation and risks associated with realizing
expected future cash flows. The discounted cash flows may include multiple scenarios that consider a range of potential outcomes in
projected cash flows.
In determining the estimated fair values of our reporting units and indefinite-lived intangible assets in 2025, 2024 and 2023, we made
various judgments, estimates and assumptions, the most significant of which were volume, price, revenue, income, operating margins,
perpetual growth rates, discount rates and scenario weightings, as applicable. All significant inputs are classified as Level 3 in the fair
value hierarchy.
E-vapor Reporting Unit Goodwill & Definite-Lived Intangible Assets Impairments (2025)
At December 31, 2024, the carrying value of the e-vapor reporting unit definite-lived intangible assets was $1,099 million, and the e-
vapor reporting unit goodwill was $1,768 million. The estimated fair value of the e-vapor reporting unit goodwill exceeded its carrying
value by approximately 28% ($0.3 billion). As further discussed in Note 18. Contingencies, Altria and certain of our affiliates, including
NJOY, are defendants in lawsuits alleging patent infringement based on the sale of NJOY ACE in the United States. In January 2025, the
U.S. International Trade Commission (“ITC”) issued an exclusion order and cease-and-desist orders prohibiting the importation and sale
of NJOY ACE in the United States, which became effective on March 31, 2025. As a result, in connection with the preparation of our
65
financial statements for the period ended March 31, 2025, we concluded a triggering event had occurred and performed an interim
impairment assessment. As a result, we recorded a non-cash goodwill impairment of $873 million during the first quarter of 2025,
which is recognized in our consolidated statement of earnings for the year ended December 31, 2025. This impairment was due
primarily to (i) lower projected volume and revenue due to NJOY ACE’s removal from the U.S. market and (ii) higher projected costs
associated with the commercialization of NJOY’s future e-vapor product portfolio, resulting in lower projected operating margins. As of
March 31, 2025, after recording the impairment, the carrying value of goodwill within the e-vapor reporting unit was $895 million.
As a result of the ITC orders, in connection with the preparation of our financial statements for the period ended March 31, 2025, we
also reviewed the definite-lived intangible assets in the e-vapor reporting unit for impairment and concluded the carrying value was
recoverable and no impairment existed.
During the fourth quarter of 2025, in connection with the preparation of our financial statements for the year ended December 31, 2025,
we evaluated the current enforcement environment against illicit flavored disposable e-vapor products and deemed any effective
enforcement would likely occur gradually over a longer period of time, and as a primary consequence we determined that the long-lived
assets in the e-vapor reporting unit may not be fully recoverable. As a result, we first performed a recoverability test of the e-vapor
definite-lived intangible assets. We determined that the asset group was not recoverable because the estimated undiscounted cash flows,
including an assumed terminal-year EBITDA multiple, were less than its carrying value. Second, we measured the impairment loss by
comparing the carrying value of the definite-lived intangible assets, consisting of developed technology and trademarks, to their
estimated fair values. These fair values were determined using an income approach, specifically the relief from royalty method, which
estimates the value of an intangible asset by calculating the present value of the hypothetical royalty payments a company avoids by
owning the asset rather than licensing it from a third party. In performing this analysis, we made various judgments, estimates and
assumptions, the most significant of which were volume, price, revenue, income, operating margins, scenario weightings, discount rates,
royalty rates, obsolescence rates and economic lives. As a result, we recorded a non-cash, pre-tax impairment of these assets of
$970 million, which we recorded in our consolidated statement of earnings for the year ended December 31, 2025. Following the
impairment charges of the e-vapor definite-lived intangible assets recognized, the carrying value of these assets as of December 31,
2025, totaled $60 million, which approximated fair value.
Following the impairment of these e-vapor definite-lived intangible assets, we performed our annual impairment test of goodwill,
utilizing the revised carrying amount of the e-vapor reporting unit after reflecting the e-vapor definite-lived intangible assets impairment
charges. Our test indicated that the estimated fair value of the e-vapor reporting unit was below its carrying value, resulting in a non-
cash goodwill impairment of $285 million, which we recorded in our consolidated statement of earnings for the year ended December
31, 2025. The impairments of the e-vapor definite-lived intangible assets and the e-vapor reporting unit goodwill were due primarily to
lower projected volume and revenue as a result of the impact of estimates regarding protracted ineffective enforcement against illicit
flavored disposable e-vapor products. After this e-vapor goodwill impairment charge, the carrying value of e-vapor goodwill as of
December 31, 2025 was $610 million. In addition, the carrying value of the e-vapor reporting unit’s net assets (including the effect of
intercompany debt), which was negative, approximated its estimated fair value.
As a result of the goodwill impairments recognized in the first and the fourth quarters of 2025, the total non-cash goodwill impairment
recognized in our consolidated statement of earnings for the year ended December 31, 2025, was $1,158 million.
At December 31, 2025 and March 31, 2025, we used an income approach to estimate the fair value of the e-vapor reporting unit. Due to
the uncertainties discussed below, our cash flows were based on a range of scenarios that consider certain potential regulatory and
market outcomes, including the projected impact of enforcement on illicit flavored disposable e-vapor products. In performing the
discounted cash flow analyses, we made various judgments, estimates and assumptions, the most significant of which were volume,
price, revenue, income, operating margins, scenario weightings, perpetual growth rate and discount rates. The discount rates used in
performing the valuations ranged from 9.5% to 13.5% and 12.0% to 15.0% at October 1, 2025 and March 31, 2025, respectively.
Additionally, in determining these significant assumptions, we made judgments regarding our expectations for the future state of the e-
vapor category and NJOY’s business, including the (i) timing and extent of effective enforcement against illicit flavored disposable e-
vapor products; (ii) timing and likelihood of regulatory authorizations of e-vapor products, including of NJOY’s products; (iii) timing of
the commercialization of NJOY e-vapor products in the United States; (iv) long-term growth of the e-vapor category; and (v) conversion
rates of illicit flavored disposable e-vapor consumers to lawful e-vapor products and, specifically, NJOY’s e-vapor products. Fair value
calculations are sensitive to changes in these estimates and assumptions, some of which relate to broader macroeconomic conditions and
governmental actions outside of our control.
Although our discounted cash flow analyses are based on assumptions that we consider reasonable using the best available information
as of December 31, 2025, we used significant judgment in determining future cash flows. In addition to the judgments discussed above,
the following factors also have the potential to impact our assumptions and, therefore, our impairment conclusions: general
macroeconomic conditions; governmental actions, including U.S. Food and Drug Administration (“FDA”) regulatory actions and
inaction; changes in the e-vapor category growth (decline) rates as a result of changing adult tobacco consumer preferences; success of
planned new product expansions; competitive activity; unfavorable outcomes with respect to litigation proceedings, including actions
brought against us alleging patent infringement; and income and excise taxes.
66
If the assumptions or judgments regarding the expectations for the future state of the e-vapor category and NJOY’s business discussed
above fail to materialize as anticipated, if we experience unfavorable outcomes with respect to litigation proceedings (including actions
alleging patent infringement), or if the discount rate used to estimate the fair value increases, we could have additional non-cash
impairments of our e-vapor reporting unit goodwill in future periods, which could be material. Based on our 2025 annual impairment
test, a hypothetical 1% increase in the discount rate used to estimate the fair value of the e-vapor reporting unit would have resulted in an
additional goodwill impairment charge of approximately $150 million during 2025.
Skoal Trademark Impairment (2024)
In connection with the preparation of our financial statements for the period ended June 30, 2024, we evaluated the accelerated growth
of innovative tobacco products, including oral nicotine pouches, and the related increase in competitive activity among tobacco
categories, which have contributed to reductions in sales volumes for MST products, including Skoal. We concluded that the expected
impact from the sales volume declines on the Skoal trademark represented a triggering event, and as a result of this conclusion, we
performed an interim impairment assessment as of June 30, 2024. As a result of (i) lower projected revenue and income due to lower
volume assumptions, (ii) a decrease in the perpetual growth rate to 0% (1% at October 1, 2023 valuation) and (iii) an increase in the
discount rate to 11.5% (11.0% at October 1, 2023 valuation), we determined the estimated fair value of our Skoal trademark was below
its carrying value and recorded a non-cash, pre-tax impairment of $354 million during the second quarter of 2024, which was recorded in
our consolidated statements of earnings for the year ended December 31, 2024. Our carrying and estimated fair values of the Skoal
trademark at June 30, 2024 were $3.6 billion, after recording the impairment.
Note 5. Exit and Implementation Costs
Pre-tax exit and implementation costs consisted of the following for the years ended December 31:
Exit Costs
Implementation Costs (1)
Total
(in millions)
2025
2024
2025
2024
2025
2024
Smokeable products segment
$
7
$
31
$
42
$
29
$
49
$
60
Oral tobacco products segment
1
4
6
4
7
8
Total
$
8
$
35
$
48
$
33
$
56
$
68
(1) Recorded in marketing, administration and research costs in our consolidated statements of earnings.
There were no exit or implementation costs for the year ended December 31, 2023.
In October 2024, we announced a multi-phase Optimize & Accelerate initiative (“Initiative”) designed to modernize our ways of
working, which would enable us to increase our organization’s speed, efficiency and effectiveness by centralizing work, outsourcing
certain transactional tasks and streamlining, automating and standardizing processes.
During the fourth quarter of 2025, we updated the estimated total pre-tax charges to approximately $175 million from the previous
estimate of approximately $125 million as a result of finalizing the plans for all phases of the Initiative. As of December 31, 2025, total
pre-tax charges since the inception of the Initiative were $124 million, consisting of employee separation cost of $43 million and
implementation costs of $81 million. We expect to record the majority of the remaining charges by the end of 2027. All of these
charges result in cash expenditures and consist of severance payments associated with employee separations, implementation costs for
new technology and business advisory services and other costs. We record employee separation costs when probable and reasonably
estimable. As of December 31, 2025, total cash payments since the inception of the Initiative were $90 million, consisting of
$18 million for exit costs and $72 million for implementation costs.
A summary of the charges and cash paid for exit and implementation costs related to the Initiative is as follows:
(in millions)
Exit Costs
Implementation
Costs
Total
Balances at December 31, 2023
$
—
$
— $
—
Charges
35
33
68
Cash paid
—
(11)
(11)
Balances at December 31, 2024
35
22
57
Charges
8
48
56
Cash paid
(18)
(61)
(79)
Balances at December 31, 2025
$
25 (1) $
9 $
34
(1) Restructuring liabilities, all of which were severance liabilities.
67
Note 6. Investments in Equity Securities
The carrying amount of our investments consisted of the following at December 31:
(in millions)
2025
2024
ABI
$
8,303 $
7,880
Cronos
314
315
Total
$
8,617 $
8,195
(Income) losses from our current and former investments in equity securities consisted of the following:
For the Years Ended December 31,
(in millions)
2025
2024
2023
ABI (1)
$
(498)
$
(673) (2) $
(539)
Cronos (1)
(12)
21
46
(Income) losses from investments under equity method of accounting
(510)
(652)
(493)
JUUL
—
—
250 (3)
(Income) losses from investments in equity securities
$
(510)
$
(652)
$
(243)
(1) Includes our share of amounts recorded by our investees and additional adjustments, if required, related to (i) the conversion from international
financial reporting standards to GAAP and (ii) adjustments to our investments required under the equity method of accounting.
(2) Includes $165 million of the total pre-tax gain on the ABI Transaction discussed below.
(3) Represents a non-cash, pre-tax loss on the disposition of our JUUL equity securities discussed below.
Investees’ summarized financial data for our equity method investments that we report using a one-quarter lag was as follows:
For the Twelve Months Ended September 30,
2025
2024
2023
(in millions)
ABI
Cronos
ABI
Cronos
ABI
Cronos
Net revenues
$
58,986 $
132 $
60,103 $
111 $
59,841 $
87
Gross profit
$
32,841 $
57 $
32,974 $
17 $
32,371 $
9
Earnings (losses) from
continuing operations
$
8,134 $
42 $
8,108 $
(48) $
7,956 $
(105)
Net earnings (losses)
$
8,134 $
42 $
8,108 $
(49) $
7,956 $
(108)
Net earnings (losses) attributable
to equity investments
$
6,411 $
36 $
6,501 $
(47) $
6,284 $
(108)
At September 30,
2025
2024
(in millions)
ABI
Cronos
ABI
Cronos
Current assets
$
23,034
$
922
$
22,525
$
959
Long-term assets
$
187,082
$
256
$
185,318
$
225
Current liabilities
$
35,025
$
41
$
31,182
$
40
Long-term liabilities
$
86,915
$
5
$
92,377
$
13
Noncontrolling interests
$
10,675
$
50
$
10,831
$
50
Investment in ABI
At December 31, 2025, we had an approximate 8.2% ownership interest in ABI, consisting of approximately 125 million restricted
shares of ABI (“Restricted Shares”) and approximately 34 million ordinary shares of ABI. Our Restricted Shares:
▪
are unlisted and not admitted to trading on any stock exchange;
▪
are convertible by us into ordinary shares of ABI on a one-for-one basis;
▪
rank equally with ordinary shares of ABI with regards to dividends and voting rights; and
▪
have director nomination rights with respect to ABI.
68
We account for our investment in ABI under the equity method of accounting because we have active representation on ABI’s board of
directors and certain ABI board committees. Through this representation, we believe we have the ability to exercise significant influence
over the operating and financial policies of ABI and participate in ABI’s policy making processes.
We report our share of ABI’s results using a one-quarter lag because ABI’s results are not available in time for us to record them in the
concurrent period.
The fair value of our investment in ABI is based on (i) unadjusted quoted prices in active markets for ABI’s ordinary shares and is
classified in Level 1 of the fair value hierarchy and (ii) observable inputs other than Level 1 prices, such as quoted prices for similar
assets for the Restricted Shares and is classified in Level 2 of the fair value hierarchy. Because we can convert our Restricted Shares
into ordinary shares at our discretion, the fair value of each Restricted Share is based on the value of an ordinary share.
At December 31, 2025, the fair value of our investment in ABI was $10.3 billion, which exceeded its carrying value of $8.3 billion by
approximately 24%. At December 31, 2024, the fair value of our investment in ABI approximated its carrying value of $7.9 billion.
At December 31, 2025, the carrying value of our investment in ABI exceeded our share of ABI’s net assets attributable to equity holders
of ABI as of September 30, 2025 by approximately $2.0 billion. Substantially all of this difference is comprised of goodwill and other
indefinite-lived intangible assets (consisting primarily of trademarks).
2024 ABI Transaction
In the first quarter of 2024, we converted 60 million of our Restricted Shares into ordinary shares of ABI and completed the sale of a
portion of our investment in ABI (“ABI Transaction”), which consisted of the following:
▪
We sold 35 million of our ABI ordinary shares in a global secondary offering for gross proceeds of approximately $2.2 billion.
▪
We sold $200 million of our ABI ordinary shares (approximately 3.3 million ordinary shares) to ABI in a private transaction.
As a result of the ABI Transaction, in the first quarter of 2024, we received pre-tax cash proceeds totaling approximately $2.4 billion and
incurred transaction costs of approximately $62 million. In conjunction with the ABI Transaction, we entered into accelerated share
repurchase (“ASR”) transactions under two separate agreements with bank counterparties (collectively, “ASR Agreements”) to
repurchase shares of our common stock. For further discussion of the ASR Agreements, see Note 10. Capital Stock.
As a result of the ABI Transaction, we recorded the following pre-tax amounts in our consolidated statement of earnings:
(in millions)
For the Year Ended
December 31, 2024
Gain on partial sale of our investment
$
165
Transaction costs
(62)
Total pre-tax gain on ABI Transaction
$
103
▪
The pre-tax gain on the partial sale of our investment was recorded in (income) losses from investments in equity securities and
includes a $408 million gain representing the excess of the selling price of the ABI shares sold over the carrying value of those
shares, partially offset by a $243 million reclassification of the proportionate share of our pre-tax accumulated other
comprehensive losses directly attributable to ABI and our designated net investment hedges related to our investment in ABI
(see Note 7. Financial Instruments and Note 13. Other Comprehensive Earnings/Losses).
▪
The pre-tax transaction costs were approximately $62 million ($59 million in marketing, administration and research costs and
$3 million in interest and other debt expense, net), substantially all of which were underwriter fees.
In addition, in conjunction with the ABI Transaction, we recorded an income tax benefit from the partial release of a valuation allowance
of approximately $94 million in provision for income taxes in our consolidated statement of earnings for the year ended December 31,
2024. Subsequently, for the year ended December 31, 2025, we recorded an additional $77 million increase to this valuation allowance.
For further discussion of the valuation allowance, see Note 14. Income Taxes.
Investment in Cronos
At December 31, 2025, we had an approximate 41.0% ownership interest in Cronos, consisting of approximately 157 million shares,
which we account for under the equity method of accounting. We report our share of Cronos’s results using a one-quarter lag because
Cronos’s results are not available in time for us to record them in the concurrent period.
The fair value of our investment in Cronos is based on unadjusted quoted prices in active markets for Cronos’s common shares and is
classified in Level 1 of the fair value hierarchy.
At December 31, 2025, the fair value of our investment in Cronos exceeded its carrying value by $97 million, or approximately 31%. At
December 31, 2024, the fair value of our investment in Cronos approximated its carrying value of $315 million.
69
Former Investment in JUUL Labs, Inc. (“JUUL”)
As of December 31, 2022, we had an investment in JUUL of $250 million, representing a 35% economic interest in JUUL. We
accounted for this investment as an investment in an equity security as we determined that we had no ability to exercise significant
influence over the operating and financial policies of JUUL as a result of our loss of certain rights due to our exercise of our option to be
released from our JUUL non-competition obligations in the third quarter of 2022. Our consolidated statements of earnings included any
changes in the estimated fair value of our former investment, which were calculated quarterly. We used an income approach to estimate
the fair value of our former investment in JUUL. The income approach reflected the discounting of future cash flows for the U.S. and
international markets at a rate of return that incorporated the risk-free rate for the use of those funds, the expected rate of inflation and
the risks associated with realizing future cash flows.
In March 2023, we entered into a stock purchase agreement with JUUL (“Stock Transfer Agreement”) pursuant to which we transferred
to JUUL all of our beneficially owned JUUL equity securities and, in exchange, received a non-exclusive, irrevocable global license to
certain of JUUL’s heated tobacco intellectual property (“JUUL Heated Tobacco IP”). For the year ended December 31, 2023, we
recorded a non-cash, pre-tax loss on the disposition of our JUUL equity securities of $250 million as a result of entering into the Stock
Transfer Agreement. Additionally, we considered specific facts and circumstances around the nature of the JUUL Heated Tobacco IP
and determined that the fair value of such intellectual property was not material to our consolidated financial statements as of the date of
the transaction. As a result, we did not record an asset associated with this intellectual property on our consolidated balance sheet. The
primary drivers of this conclusion were (i) our rights to the JUUL Heated Tobacco IP being non-exclusive, (ii) there being no product or
technology transferred to us associated with the JUUL Heated Tobacco IP and (iii) there being no connection between the JUUL Heated
Tobacco IP and our current product development plans.
Note 7. Financial Instruments
We enter into derivative financial instruments to mitigate the potential impact of certain market risks, including foreign currency
exchange rate risk. We use various types of derivative financial instruments, including forward contracts, options and swaps. We do not
enter into or hold derivative financial instruments for trading or speculative purposes.
Our investment in ABI, whose functional currency is the Euro, exposes us to foreign currency exchange risk on the carrying value of our
investment. To manage this risk, we may designate Euro denominated unsecured long-term notes (“foreign currency denominated
debt”) and certain foreign exchange contracts, including cross-currency swap contracts and forward contracts (collectively, “foreign
currency contracts”), as net investment hedges of our investment in ABI. At December 31, 2025 and 2024, we had no outstanding
foreign currency contracts.
The aggregate carrying value and fair value of our total long-term debt were as follows at December 31:
(in millions)
2025
2024
Carrying value
$
25,709 $
24,926
Fair value
24,303
22,741
Foreign currency denominated debt included in long-term debt:
Carrying value
2,638
3,100
Fair value
2,619
3,059
The fair value of our total long-term debt is based on observable market information derived from a third-party pricing source and is
classified in Level 2 of the fair value hierarchy.
Net Investment Hedging
We recognize changes in the carrying value of the foreign currency denominated debt due to changes in the Euro to U.S. dollar exchange
rate in accumulated other comprehensive losses related to ABI. We recognized pre-tax (gains) losses of our net investment hedges of
$393 million, $(205) million and $108 million for the years ended December 31, 2025, 2024 and 2023, respectively.
In addition, as a result of the ABI Transaction, for the year ended December 31, 2024, we reclassified $42 million of pre-tax gains from
our designated net investment hedges included in accumulated other comprehensive losses to (income) losses from investments in equity
securities in our consolidated statement of earnings.
For further discussion of the ABI Transaction and reclassification of accumulated other comprehensive losses, see Note 6. Investments in
Equity Securities and Note 13. Other Comprehensive Earnings/Losses.
70
Contingent Payments
The total consideration for the NJOY Transaction included the fair value of up to $500 million in additional cash payments contingent
on receipt of FDA authorizations with respect to NJOY ACE menthol ($250 million), blueberry ($125 million) and watermelon
($125 million) pod products. For additional discussion of the NJOY Transaction, see Note 3. Acquisition of NJOY.
The changes in the liability associated with contingent payments were as follows:
For the Years Ended December 31,
(in millions)
2025
2024
Balance at January 1
$
20
$
130
Change in the fair value of contingent payments (1)
25 (2)
140 (3)
Payments
—
(250) (4)
Balance at December 31
$
45
$
20
(1) We recorded these pre-tax charges in marketing, administration and research costs in our consolidated statements of earnings.
(2) Relates to NJOY ACE blueberry and watermelon pod products.
(3) Relates to NJOY ACE menthol pod products.
(4) Payments made following FDA authorization of NJOY ACE menthol pod products.
We recognized the liability for contingent payments related to the NJOY Transaction at its estimated fair value as of the acquisition date.
We recognize subsequent changes to the fair value in earnings until the contingency is resolved. In determining the estimated fair value,
we made certain judgments, estimates and assumptions, the most significant of which was the likelihood of certain potential regulatory
outcomes. We classified the liability for contingent payments in Level 3 of the fair value hierarchy.
Note 8. Short-Term Borrowings and Borrowing Arrangements
At December 31, 2025 and 2024, we had no short-term borrowings.
In July 2025, we entered into an agreement to extend the expiration of our $3.0 billion senior unsecured 5-year revolving credit
agreement from October 24, 2028 to October 24, 2029 (as extended, “Credit Agreement”). All other terms and conditions remain in full
force and effect. The Credit Agreement includes an option, subject to certain conditions, for us to extend the term for an additional one-
year period. We intend to use any borrowings under our Credit Agreement for general corporate purposes.
At December 31, 2025 and 2024, we had availability under the Credit Agreement for borrowings of up to an aggregate principal amount
of $3.0 billion.
Pricing for interest and fees under our Credit Agreement may be modified in the event of a change in the rating of our long-term senior
unsecured debt. We expect interest rates on borrowings under our Credit Agreement to be based on the Term Secured Overnight
Financing Rate plus a percentage based on the higher of the ratings of our long-term senior unsecured debt from Moody’s Investors
Service, Inc. (“Moody’s”) and Standard & Poor’s Financial Services LLC (“S&P”). The applicable percentage for borrowings under our
Credit Agreement at December 31, 2025 was 1.0% based on our long-term senior unsecured debt ratings on that date. Our Credit
Agreement does not include any other rating triggers or any provisions that could require the posting of collateral.
Our Credit Agreement includes various covenants, one of which requires us to maintain a ratio of Consolidated EBITDA (earnings
before interest, taxes, depreciation and amortization) to Consolidated Interest Expense of not less than 4.0 to 1.0, calculated for the four
most recent fiscal quarters. At December 31, 2025, we were in compliance with our covenants in our Credit Agreement. The terms
“Consolidated EBITDA” and “Consolidated Interest Expense,” each as defined in our Credit Agreement, include certain adjustments.
PM USA guarantees any borrowings under our Credit Agreement and any amounts outstanding under our commercial paper program.
For discussion of PM USA’s guarantees, see Note 9. Long-Term Debt.
71
Note 9. Long-Term Debt
Our long-term debt consisted of the following at December 31:
(in millions)
2025
2024
USD notes, 2.450% to 10.200%, interest payable semi-annually, due through 2061 (1)
$
23,029 $
21,784
USD debenture, 7.75%, interest payable semi-annually, due 2027
42
42
Euro notes, 2.200% to 3.125%, interest payable annually, due through 2031 (2)
2,638
3,100
25,709
24,926
Less current portion of long-term debt
1,569
1,527
$
24,140 $
23,399
(1) Weighted-average coupon interest rate of 4.7% and 4.6% at December 31, 2025 and 2024, respectively.
(2) Weighted-average coupon interest rate of 2.7% and 2.5% at December 31, 2025 and 2024, respectively.
At December 31, 2025, our outstanding long-term debt consisted of the following:
(in millions)
Type
Face Value
Interest Rate
Issuance
Maturity
USD notes
$1,069
4.400%
February 2019
February 2026
USD notes
$500
2.625%
September 2016
September 2026
USD debenture
$42
7.750%
January 1997
January 2027
Euro notes
€1,000
2.200%
February 2019
June 2027
USD notes
$500
4.875%
February 2025
February 2028
USD notes
$500
6.200%
November 2023
November 2028
USD notes
$1,906
4.800%
February 2019
February 2029
USD notes
$750
3.400%
May 2020
May 2030
USD notes
$500
4.500%
August 2025
August 2030
Euro notes
€1,250
3.125%
February 2019
June 2031
USD notes
$1,750
2.450%
February 2021
February 2032
USD notes
$500
6.875%
November 2023
November 2033
USD notes
$500
5.625%
February 2025
February 2035
USD notes
$500
5.250%
August 2025
August 2035
USD notes
$177
9.950%
November 2008
November 2038
USD notes
$208
10.200%
February 2009
February 2039
USD notes
$2,000
5.800%
February 2019
February 2039
USD notes
$1,500
3.400%
February 2021
February 2041
USD notes
$900
4.250%
August 2012
August 2042
USD notes
$650
4.500%
May 2013
May 2043
USD notes
$1,800
5.375%
October 2013
January 2044
USD notes
$1,500
3.875%
September 2016
September 2046
USD notes
$2,500
5.950%
February 2019
February 2049
USD notes
$500
4.450%
May 2020
May 2050
USD notes
$1,250
3.700%
February 2021
February 2051
USD notes
$271
6.200%
February 2019
February 2059
USD notes
$1,000
4.000%
February 2021
February 2061
72
At December 31, 2025, aggregate maturities of our long-term debt were as follows:
(in millions)
Aggregate
Maturities
2026
$
1,569
2027
1,217
2028
1,000
2029
1,906
2030
1,250
Thereafter
18,974
25,916
Less:
debt issuance costs
129
debt discounts
78
$
25,709
At December 31, 2025 and 2024, accrued interest on long-term debt of $425 million and $389 million, respectively, was included in
other accrued liabilities on our consolidated balance sheets.
In the third quarter of 2025, we issued U.S. dollar denominated senior unsecured notes in the aggregate principal amount of $1.0 billion.
The net proceeds from the notes are being used for general corporate purposes. The notes contain the following terms:
▪
$0.5 billion at 4.500%, due 2030, interest payable semiannually beginning February 6, 2026; and
▪
$0.5 billion at 5.250%, due 2035, interest payable semiannually beginning February 6, 2026.
In the first quarter of 2025, we issued U.S. dollar denominated senior unsecured notes in the aggregate principal amount of $1.0 billion.
The net proceeds from the notes were used for general corporate purposes, which included repayment of certain of our notes in the
second quarter of 2025 as discussed below. The notes contain the following terms:
▪
$0.5 billion at 4.875%, due 2028, interest payable semiannually beginning August 4, 2025; and
▪
$0.5 billion at 5.625%, due 2035, interest payable semiannually beginning August 6, 2025.
Similar to our other notes, the notes issued in 2025 are senior unsecured obligations and rank equally in right of payment with all of our
existing and future senior unsecured indebtedness. Following the occurrence of both (i) a change of control of Altria and (ii) the notes
ceasing to be rated investment grade by each of Moody’s, S&P and Fitch Ratings Inc., we will be required to make an offer to purchase
the notes at a price equal to 101% of the aggregate principal amount of such notes, plus accrued and unpaid interest to the date of
repurchase as and to the extent set forth in the terms of the notes.
In the second quarter of 2025, we repaid in full at maturity our 2.350% and 1.700% senior unsecured notes in the aggregate principal
amounts of $750 million and €750 million ($857 million), respectively.
For a discussion of the fair value of our long-term debt and the designation of our Euro denominated senior unsecured notes as a net
investment hedge of our investment in ABI, see Note 7. Financial Instruments.
▪
PM USA Guarantees: PM USA (“Guarantor”), which is a 100% owned subsidiary of Altria Group, Inc. (“Parent”), has
guaranteed the Parent’s obligations under its outstanding debt securities, any borrowings under its Credit Agreement and any amounts
outstanding under its commercial paper program (“Guarantees”). Pursuant to the Guarantees, the Guarantor fully and unconditionally
guarantees, as primary obligor, the payment and performance of the Parent’s obligations under the guaranteed debt instruments
(“Obligations”), subject to release under certain customary circumstances as noted below.
The Guarantees provide that the Guarantor guarantees the punctual payment when due, whether at stated maturity, by acceleration or
otherwise, of the Obligations. The liability of the Guarantor 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, the Parent or the Guarantor.
The Parent is a holding company; therefore, its access to the operating cash flows of its subsidiaries consists of cash received from the
payment of dividends and distributions, and the payment of interest on intercompany loans by its subsidiaries. Neither the Guarantor nor
other subsidiaries of the Parent that are not guarantors of the Obligations are limited by contractual obligations on their ability to pay
cash dividends or make other distributions with respect to their equity interests.
73
Note 10. Capital Stock
At December 31, 2025, we had 12 billion shares of authorized common stock; issued, repurchased and outstanding shares of common
stock consisted of the following:
Shares Issued
Shares
Repurchased
Shares Outstanding
Balances, December 31, 2022
2,805,961,317
(1,020,427,195)
1,785,534,122
Stock award activity
—
676,495
676,495
Repurchases of common stock
—
(22,748,842)
(22,748,842)
Balances, December 31, 2023
2,805,961,317
(1,042,499,542)
1,763,461,775
Stock award activity
—
687,715
687,715
Repurchases of common stock
—
(73,497,623)
(73,497,623)
Balances, December 31, 2024
2,805,961,317
(1,115,309,450)
1,690,651,867
Stock award activity
—
761,026
761,026
Repurchases of common stock
—
(17,094,596)
(17,094,596)
Balances, December 31, 2025
2,805,961,317
(1,131,643,020)
1,674,318,297
At December 31, 2025, we had 31,134,469 shares of common stock reserved for stock-based awards under our stock plans.
At December 31, 2025, we had 10 million authorized shares of serial preferred stock, $1.00 par value; no shares of serial preferred stock
have been issued.
▪
Dividends: In the third quarter of 2025, our Board of Directors (“Board of Directors” or “Board”) approved a 3.9% increase in
the quarterly dividend rate to $1.06 per share of our common stock versus the previous rate of $1.02 per share. The current annualized
dividend rate is $4.24 per share. Future dividend payments remain subject to the discretion of our Board.
▪
Share Repurchases: In January 2023, our Board authorized a $1.0 billion share repurchase program (“January 2023 share
repurchase program”), which we completed in December 2023.
In January 2024, our Board authorized a $1.0 billion share repurchase program that it expanded to $3.4 billion in March 2024 (as
expanded, “January 2024 share repurchase program”). We subsequently entered into ASR Agreements to repurchase shares of our
common stock having an aggregate value of $2.4 billion (“Repurchase Price”). In the first half of 2024, we paid the Repurchase Price
and received 53.9 million shares of our common stock. We funded the ASR transactions with proceeds from the ABI Transaction. For
further information on the ABI Transaction, see Note 6. Investments in Equity Securities. The total number of shares repurchased under
the ASR Agreements was based on volume-weighted average prices of our common stock during the term of the ASR transactions, less
a discount. The ASR transactions were accounted for as equity transactions and included in cost of repurchased stock on our
consolidated balance sheets when the shares were received. We completed the January 2024 share repurchase program in December
2024.
In January 2025, our Board authorized a new $1.0 billion share repurchase program that it expanded to $2.0 billion in October 2025 (as
expanded, “January 2025 share repurchase program”). At December 31, 2025, we had $1.0 billion remaining under this program, which
expires on December 31, 2026. Share repurchases depend on marketplace conditions and other factors, and the program remains subject
to the discretion of our Board.
Our total share repurchase activity was as follows for the years ended December 31:
January 2025 Share
Repurchase Program
January 2024 Share
Repurchase Program
January 2023 Share
Repurchase Program
(in millions, except per share data)
2025
2024 (1)
2023
Total number of shares repurchased
17.1
73.5
22.7
Aggregate cost of shares repurchased
$
1,000 $
3,400 $
1,000
Average price per share of shares repurchased
$
58.50 $
46.26 $
43.96
(1) Includes 53.9 million shares repurchased under the ASR Agreements at an average price per share of $44.50.
Note 11. Stock Plans
In 2025, our Board adopted, and shareholders approved, the 2025 Performance Incentive Plan (“2025 Plan”). The 2025 Plan succeeded
the 2020 Performance Incentive Plan, under which no new awards were permitted to be made after May 31, 2025. Under the 2025 Plan,
we may grant stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance stock units
74
(“PSUs”) and other stock-based awards, as well as cash-based annual and long-term incentive awards to our employees. Awards granted
under the 2025 Plan may be in the form of performance-based awards, including PSUs subject to the achievement or satisfaction of
performance goals and performance cycles. We may issue up to 25 million shares of common stock under the 2025 Plan through the
date of our 2035 Annual Meeting of Shareholders.
In addition, in 2025, our Board adopted, and shareholders approved, the 2025 Stock Compensation Plan for Non-Employee Directors
(“Directors Plan”). The Directors Plan succeeded the 2015 Stock Compensation Plan for Non-Employee Directors, under which no new
awards were permitted after the awards made immediately following our 2025 Annual Meeting of Shareholders. Under the Directors
Plan, we may grant up to one million shares of common stock to non-employee members of the Board through the date of our 2035
Annual Meeting of Shareholders.
At December 31, 2025, we had 24,827,825 and 1,000,000 shares available to be granted under the 2025 Plan and the Directors Plan,
respectively.
▪
RSUs: During the vesting period, RSUs include nonforfeitable rights to dividend equivalents and may not be sold, assigned,
pledged or otherwise encumbered. RSUs are subject to forfeiture if certain employment conditions are not met. We estimate the
number of awards expected to be forfeited and adjust this estimate when subsequent information indicates that the actual number of
forfeitures is likely to differ from previous estimates. RSUs generally vest three years after the grant date.
We amortize to expense ratably over the restriction period, which is generally three years, the fair value of RSUs at the date of grant, net
of estimated forfeitures. We recorded pre-tax compensation expense related to RSUs for the years ended December 31, 2025, 2024 and
2023 of $51 million, $50 million and $47 million, respectively. We recorded a deferred tax benefit related to this compensation expense
of $12 million for each of the years ended December 31, 2025, 2024 and 2023. The unamortized compensation expense related to RSUs
was $89 million at December 31, 2025, which we expect to be recognized over a weighted-average period of approximately two years.
RSU activity was as follows:
Number of Shares
Weighted-Average
Grant Date Fair
Value Per Share
Balance at December 31, 2024
3,973,485 $
45.87
Granted
1,152,361 $
55.95
Vested
(982,321) $
48.54
Forfeited
(210,367) $
46.16
Balance at December 31, 2025
3,933,158 $
48.14
The weighted-average grant date fair value of RSUs granted during the years ended December 31, 2025, 2024 and 2023 was $64 million,
$67 million and $56 million, respectively, or $55.95, $43.29 and $46.38 per RSU, respectively. The total vesting date fair value of
RSUs that vested during the years ended December 31, 2025, 2024 and 2023 was $56 million, $35 million and $40 million, respectively.
▪
PSUs: We granted an aggregate of 257,920, 290,980 and 255,601 of PSUs during 2025, 2024 and 2023, respectively. The
payout of the PSUs is based on the extent to which we achieve certain performance measures over the three-year performance period and
are subject to forfeiture if certain employment conditions are not met. At December 31, 2025, we had 767,341 PSUs outstanding, with a
weighted-average grant date fair value of $49.39 per PSU. We amortize to expense over the performance period the fair value of PSUs
at the date of grant, net of estimated forfeitures. We recorded pre-tax compensation expense related to PSUs for the years ended
December 31, 2025, 2024 and 2023 of $11 million, $6 million and $11 million, respectively. The unamortized compensation expense
related to PSUs was $16 million at December 31, 2025.
Note 12. Earnings per Share
We calculated basic and diluted earnings per share (“EPS”) using the following:
For the Years Ended December 31,
(in millions)
2025
2024
2023
Net earnings
$
6,947 $
11,264 $
8,130
Less: Distributed and undistributed earnings attributable to share-based awards
(20)
(28)
(17)
Earnings for basic and diluted EPS
$
6,927 $
11,236 $
8,113
Weighted-average shares for basic and diluted EPS
1,683
1,718
1,777
Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents are participating securities
and, therefore, are included in our EPS calculation pursuant to the two-class method.
75
Note 13. Other Comprehensive Earnings/Losses
Changes in each component of accumulated other comprehensive losses, net of deferred income taxes, attributable to Altria were as
follows:
(in millions)
Benefit Plans
ABI
Currency
Translation
Adjustments
and Other
Accumulated
Other
Comprehensive
Losses
Balances, December 31, 2022
$
(1,436)
$
(1,369)
$
34
$
(2,771)
Other comprehensive earnings (losses) before reclassifications
(48)
178
(28)
102
Deferred income taxes
9
(35)
9
(17)
Other comprehensive earnings (losses) before
reclassifications, net of deferred income taxes
(39)
143
(19)
85
Amounts reclassified to net earnings
(26)
39
—
13
Deferred income taxes
8
(8)
—
—
Amounts reclassified to net earnings, net of
deferred income taxes
(18)
31
—
13
Other comprehensive earnings (losses), net of deferred
income taxes
(57)
174 (1)
(19)
98
Balances, December 31, 2023
(1,493)
(1,195)
15
(2,673)
Other comprehensive earnings (losses) before reclassifications
142
(22)
(5)
115
Deferred income taxes
(36)
(1)
—
(37)
Other comprehensive earnings (losses) before
reclassifications, net of deferred income taxes
106
(23)
(5)
78
Amounts reclassified to net earnings
(7)
251
—
244
Deferred income taxes
2
(51)
—
(49)
Amounts reclassified to net earnings, net of
deferred income taxes
(5)
200
—
195
Other comprehensive earnings (losses), net of deferred
income taxes
101
177 (1)
(5)
273
Balances, December 31, 2024
(1,392)
(1,018)
10
(2,400)
Other comprehensive earnings (losses) before reclassifications
(39)
(228)
(5)
(272)
Deferred income taxes
9
55
—
64
Other comprehensive earnings (losses) before
reclassifications, net of deferred income taxes
(30)
(173)
(5)
(208)
Amounts reclassified to net earnings
9
(33)
—
(24)
Deferred income taxes
(2)
7
—
5
Amounts reclassified to net earnings, net of
deferred income taxes
7
(26)
—
(19)
Other comprehensive earnings (losses), net of deferred
income taxes
(23)
(199) (1)
(5)
(227)
Balances, December 31, 2025
$
(1,415)
$
(1,217)
$
5
$
(2,627)
(1) Primarily reflects our share of ABI’s currency translation adjustments and the impact of our designated net investment hedges related to our
investment in ABI. For further discussion of designated net investment hedges, see Note 7. Financial Instruments.
76
Pre-tax amounts by component, reclassified from accumulated other comprehensive losses to net earnings were as follows:
For the Years Ended December 31,
(in millions)
2025
2024
2023
Benefit Plans: (1)
Net loss
$
45
$
29
$
8
Prior service credit
(36)
(36)
(34)
9
(7)
(26)
ABI (2)
(33)
251 (3)
39
Pre-tax amounts reclassified from accumulated other comprehensive losses to net earnings $
(24)
$
244
$
13
(1) Amounts are included in net periodic benefit income, excluding service cost. For further details, see Note 16. Benefit Plans.
(2) Amounts are included in (income) losses from investments in equity securities.
(3) Primarily reflects the impact of the ABI Transaction. For the year ended December 31, 2024, we reclassified $243 million from our accumulated
other comprehensive losses of which $285 million is directly attributable to ABI, partially offset by $42 million from our designated net investment
hedges related to our investment in ABI. For further information, see Note 6. Investments in Equity Securities and Note 7. Financial Instruments.
Note 14. Income Taxes
The One Big Beautiful Bill Act (“OBBB”), which was signed into law in July 2025, included various tax law changes, including the
restoration of favorable tax treatment for certain business-related provisions and modifications to the international tax law framework.
The OBBB has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. These
provisions and modifications have not had a material impact on our consolidated financial statements.
Earnings (losses) before income taxes and provision (benefit) for income taxes consisted of the following:
For the Years Ended December 31,
(in millions)
2025
2024
2023
Earnings (losses) before income taxes:
United States
$
9,382 $
13,680 $
10,971
Outside United States
7
(22)
(43)
Total
$
9,389 $
13,658 $
10,928
Provision (benefit) for income taxes:
Current:
Federal
$
2,348 $
927 $
2,346
State and local
410
516
681
Outside United States
—
—
1
2,758
1,443
3,028
Deferred:
Federal
(259)
764
(133)
State and local
(57)
187
(97)
(316)
951
(230)
Total provision for income taxes
$
2,442 $
2,394 $
2,798
Our U.S. subsidiaries join in the filing of a U.S. federal consolidated income tax return. The U.S. federal income tax statute of
limitations remains open for the year 2017 and forward, with years 2017 through 2023 currently under examination by the Internal
Revenue Service (“IRS”) as part of an audit conducted in the ordinary course of business. State statutes of limitations generally remain
open for the year 2017 and forward. Certain of our state tax returns are currently under examination by various states as part of routine
audits conducted in the ordinary course of business.
77
A reconciliation of the beginning and ending unrecognized tax benefits was as follows:
For the Years Ended December 31,
(in millions)
2025
2024
2023
Balance at beginning of year
$
282 $
1,608 $
69
Additions based on tax positions related to the current year
21
—
1,548
Additions for tax positions of prior years
304
33
—
Reductions for tax positions related to IRS Agreement
—
(1,343)
—
Reductions for tax positions of prior years
(21)
(16)
(6)
Tax settlements
(1)
—
(3)
Balance at end of year
$
585 $
282 $
1,608
The amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate at December 31, 2025, was $4 million,
along with $515 million affecting deferred taxes. The amount of unrecognized tax benefits that, if recognized, would impact the
effective tax rate at December 31, 2024, was $189 million, along with $27 million affecting deferred taxes. The difference between the
amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate at December 31, 2025 and December 31,
2024, is primarily related to certain cross-border taxes included in the tax reserve related to the downward attribution rules, discussed
below.
In October 2024, we entered into an agreement with the IRS (“IRS Agreement”) regarding the tax treatment of a $6.4 billion ordinary
loss we recognized in 2023 for cash tax purposes with respect to a portion of our tax basis associated with our former investment in
JUUL. In 2023, we fully reserved for the tax benefit associated with this ordinary loss by recording an unrecognized tax benefit of
$1,548 million. Consistent with the terms of the IRS Agreement, we claimed a $4.0 billion ordinary loss and a $2.4 billion capital loss
on our 2023 tax return, resulting in a reduction of $1,343 million in unrecognized tax benefits in 2024. For the year ended December 31,
2024, we recorded a tax benefit of $887 million due to the reversal of the unrecognized tax benefit in our consolidated statement of
earnings, resulting in the partial release of a valuation allowance against our JUUL-related losses as discussed below.
In September 2025, the U.S. District Court for the Eastern District of Virginia ruled in favor of the IRS and denied our refund claim for
the 2017 tax year, based on the Tax Cuts and Jobs Act of 2017’s removal of downward attribution rules, which the IRS invoked to
attribute income from certain of ABI’s foreign subsidiaries to Altria. We intend to vigorously contest the ruling by pursuing all available
appellate remedies. This ruling also has a potential impact for our 2018 through 2025 tax years. Following this ruling, we reevaluated
our position and concluded that it is no longer more likely than not that we will prevail at the conclusion of the appellate process.
Consequently, we reversed a receivable of $45 million for the 2017 tax year and recorded a full reserve for this uncertain tax position of
$348 million for the 2018 through 2025 tax years. Additionally, we reduced a deferred tax liability by $498 million due to the resulting
increase in the tax basis of our investment in ABI, partially offset by a $77 million increase to a valuation allowance associated with the
indirect effect on unrealized capital losses due to the decrease of a previously anticipated capital gain on the ABI Transaction. As a
result of the foregoing, we recognized a net tax benefit of $28 million for the year ended December 31, 2025 in our consolidated
statement of earnings related to a favorable rate differential associated with certain cross-border taxes included in the tax reserve.
Effective January 1, 2026, the OBBB reinstates this downward attribution rule, which will limit the impact of this ruling to the 2017
through 2025 tax years.
At December 31, 2025, 2024 and 2023, the amount of accrued interest and penalties on our consolidated balance sheets was $83 million,
$18 million and $36 million, respectively. For the years ended December 31, 2025, 2024 and 2023, we recognized in our consolidated
statements of earnings $94 million, $(24) million and $20 million, respectively, of gross interest (income) expense and penalties
associated with uncertain tax positions. We recognize accrued interest and penalties associated with uncertain tax positions as part of the
tax provision.
We are subject to income taxation in many jurisdictions. Unrecognized tax benefits reflect the differences between tax positions we
have taken or expect to take on income tax returns and the amounts recognized in our financial statements. Resolution of the related tax
positions with the relevant tax authorities may take many years to complete, and such timing is not entirely within our control.
78
A reconciliation between actual income taxes and amounts computed by applying the federal statutory rate to earnings before income
taxes was as follows:
For the Years Ended December 31,
2025
2024 (1)
2023 (1)
(dollars in millions)
$
%
$
%
$
%
Provision computed at U.S. federal statutory rate
$
1,972
21.0 %
$
2,868
21.0 %
$
2,295
21.0 %
Increase (decrease) resulting from:
Domestic state and local taxes, net of federal effect (2)
278
3.0
557
4.1
463
4.2
Foreign tax effects
(10)
(0.1)
3
—
11
0.1
Cross-border tax laws
3
—
(46)
(0.4)
(2)
—
Tax credits
(39)
(0.4)
(31)
(0.2)
(25)
(0.2)
Changes in valuation allowance
91
1.0
(939)
(6.9)
57
0.5
Nontaxable or nondeductible items
Nondeductible goodwill
243
2.6
—
—
—
—
Other
8
—
(3)
—
(9)
(0.1)
Worldwide changes in unrecognized tax benefits
(104)
(1.1)
(15)
(0.1)
8
0.1
Effective tax rate
$
2,442
26.0 %
$
2,394
17.5 %
$
2,798
25.6 %
(1) As discussed in Note 1. Background and Basis of Presentation, we retrospectively adopted ASU No. 2023-09. As a result, 2024 and 2023 amounts
are now presented in categories in accordance with ASU No. 2023-09.
(2) State taxes in Pennsylvania, Virginia, New Jersey, California, Michigan, Tennessee, Illinois, Indiana and Kentucky make up greater than 50% of the
total tax effect in this category for 2025. State taxes in Pennsylvania, California, Virginia, New Jersey, Illinois, Kentucky, Michigan, Alabama and
Georgia make up greater than 50% of the total tax effect in this category for 2024. State taxes in Pennsylvania, California, Illinois, New Jersey,
Virginia, Kentucky, Michigan, Alabama and Florida make up greater than 50% of the total tax effect in this category for 2023.
The tax provision in 2025 included state tax expense, net of federal benefit, of $278 million and tax expense of $243 million for the non-
deductible impairment of the e-vapor reporting unit goodwill, partially offset by tax benefits of $104 million related to tax reserves
including a favorable rate differential associated with certain cross-border taxes relevant to our investment in ABI.
The tax provision in 2024 included tax benefits of $939 million due primarily to the release of valuation allowances recorded against a
deferred tax asset related to our JUUL-related losses as a result of the IRS Agreement and the ABI Transaction, partially offset by state
tax expense, net of federal benefit, of $557 million.
The tax provision in 2023 included state tax expense, net of federal benefit, of $463 million and tax expense of $53 million for a
valuation allowance recorded against a deferred tax asset related to the disposition of our former investment in JUUL.
Cash taxes paid, net of refunds, consisted of the following:
For the Years Ended December 31,
(in millions)
2025
2024
2023
Federal
$
1,340 $
1,161 $
1,219
State and local
354
547
654
Outside United States
1
1
1
Total
$
1,695 $
1,709 $
1,874
79
The tax effects of temporary differences that gave rise to deferred income tax assets and liabilities consisted of the following at
December 31:
(in millions)
2025
2024
Deferred income tax assets:
Accrued postretirement and postemployment benefits
$
264
$
270
Settlement charges
520
585
JUUL-related losses
290
207
Investment in Cronos
410
404
Research and development costs
14
112
Net operating losses and tax credit carryforwards
146
224
Total deferred income tax assets
1,644
1,802
Deferred income tax liabilities:
Property, plant and equipment
(231)
(235)
Intangible assets
(2,747)
(3,032)
Investment in ABI
(1,085)
(1,370)
Accrued pension costs
(126)
(108)
Other
(35)
(133)
Total deferred income tax liabilities
(4,224)
(4,878)
Valuation allowances
(779)
(668)
Net deferred income tax liabilities
$
(3,359) $
(3,744)
At December 31, 2025, we had JUUL-related gross capital loss carryforwards of $1.4 billion available to offset capital gains through
2028. We had estimated gross federal, state and foreign tax net operating losses (“NOLs”) of $106 million, $1,212 million and
$38 million, respectively. The federal NOLs and the foreign NOLs have indefinite carryforward periods. A majority of the state NOLs
will expire between 2039 through 2043 or have indefinite carryforward periods.
After giving effect to the IRS Agreement and $1.7 billion of JUUL-related capital losses previously utilized against capital gains related
to the IQOS Transaction, we have $6.1 billion (which includes a $3.5 billion outside basis difference in a domestic subsidiary, a
$1.2 billion outside basis difference in a foreign subsidiary and $1.4 billion of capital loss carryforwards) of the $12.8 billion tax loss
related to our former investment in JUUL remaining to offset future potential capital gains. For financial statement purposes, none of
the tax benefit for the remaining $6.1 billion was recognized at December 31, 2025.
A reconciliation of the beginning and ending valuation allowances was as follows:
For the Years Ended December 31,
(in millions)
2025
2024
2023
Balance at beginning of year
$
668
$
2,256
$
2,800
Additions to valuation allowance charged to income tax expense
124
244
114
Reductions to valuation allowance credited to income tax benefit
(15)
(1,337)
(6)
(Reductions) additions to valuation allowance due to NJOY Transaction (no
impact to earnings)
—
(4)
12
Reductions to valuation allowance offset to deferred tax asset (no impact to
earnings)
—
(491)
(663)
Foreign currency translation
2
—
(1)
Balance at end of year
$
779
$
668
$
2,256
We determine deferred tax assets and liabilities based on the differences between the financial statement and tax bases of assets and
liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse. We record a valuation allowance
when we have determined it is more likely than not that some portion or all of a deferred tax asset will not be realized. In assessing
realizability, we consider the weight of all available positive and negative evidence, including the character of the assets and the possible
sources of taxable income of the appropriate character within the applicable carryback and carryforward periods available under the tax
law. As has occurred in prior periods, there is a potential that sufficient positive evidence may be available in future periods to cause us
to reduce or eliminate the valuation allowance on certain deferred tax assets. That change to the valuation allowance would result in the
recognition of previously unrecognized deferred tax assets and a decrease in income tax expense in the period the release is recorded.
80
The additions to valuation allowances during 2025 were due primarily to the indirect effects of tax reserves, as discussed above, on our
unrealized capital losses. The cumulative valuation allowance at December 31, 2025 was primarily attributable to deferred tax assets
recorded in connection with our investment in Cronos ($405 million) and our JUUL-related capital loss carryforwards ($290 million).
The additions to valuation allowances during 2024 were due primarily to deferred tax assets recorded in connection with our JUUL-
related capital loss carryforwards. The reductions to valuation allowances during 2024 were due primarily to the $4.0 billion of ordinary
losses recognized as part of the IRS Agreement, the reduction of a deferred tax asset for the portion of our JUUL-related capital losses
that is now part of our tax basis in the shares of a domestic subsidiary and the ABI Transaction. This outside basis difference of the
domestic subsidiary is not recognized as a deferred tax asset since we do not expect the temporary difference to reverse in the
foreseeable future. The cumulative valuation allowance at December 31, 2024 was primarily attributable to deferred tax assets recorded
in connection with our investment in Cronos ($402 million) and our JUUL-related capital loss carryforwards ($207 million).
The additions to valuation allowances during 2023 were due primarily to deferred tax assets recorded in connection with our former
investment in JUUL. The reductions to valuation allowances during 2023 were due primarily to the reduction of a deferred tax asset for
the portion of our JUUL capital losses that is now part of our tax basis in the shares of a foreign subsidiary. This outside basis difference
of the foreign subsidiary is not recognized as a deferred tax asset since we do not expect the temporary difference to reverse in the
foreseeable future. The cumulative valuation allowance at December 31, 2023 was primarily attributable to deferred tax assets recorded
in connection with our tax basis in the shares of a domestic subsidiary ($1,808 million) and our investment in Cronos ($397 million).
For a discussion regarding our former investment in JUUL and current investments in ABI and Cronos, see Note 6. Investments in
Equity Securities.
Note 15. Segment Reporting
At December 31, 2025, our reportable segments were (i) smokeable products, consisting of combustible cigarettes and machine-made
large cigars; (ii) oral tobacco products, consisting of MST products and oral nicotine pouches; and (iii) e-vapor products, consisting of
our NJOY business.
For the year ended December 31, 2025, we concluded that our e-vapor products operating segment met the quantitative threshold for
presentation as a reportable segment in accordance with Accounting Standards Codification 280, Segment Reporting, as a result of the
non-cash impairments of e-vapor reporting unit goodwill and related definite-lived intangible assets recorded in 2025. See Note 4.
Goodwill and Other Intangible Assets, net. As a result, we presented e-vapor products as a reportable segment (previously in our all
other category) and recast segment information for comparative periods.
Our all other category included (i) Horizon; (ii) Helix International; and (iii) other business activities, which primarily consists of
research and development (“R&D”) expense related to certain new product platforms and technologies.
Altria’s Chief Executive Officer is our chief operating decision maker (“CODM”). Our measure of segment profitability is segment
operating companies income (loss) (“OCI”), which is defined as operating income before general corporate expenses and amortization of
intangibles. Our CODM uses OCI for planning, forecasting and evaluating business and financial performance of the segments,
including allocating capital and other resources to our segments and evaluating results relative to employee compensation targets.
Interest and other debt expense, net, along with net periodic benefit income, excluding service cost, and provision for income taxes are
centrally managed at the corporate level and, accordingly, such items are not presented by segment since they are excluded from the
measure of segment profitability reviewed by our CODM. We do not disclose information about total assets by segment because such
information is not reported to or used by our CODM. Substantially all of our long-lived assets were located in the United States at
December 31, 2025. Segment goodwill and other intangible assets, net, are disclosed in Note 4. Goodwill and Other Intangible Assets,
net. The accounting policies of the segments were the same at December 31, 2025 as those described in Note 2. Summary of Significant
Accounting Policies.
81
Segment data were as follows:
For the Years Ended December 31,
(in millions)
2025
2024
2023
Net revenues:
Smokeable products
$
20,485
$
21,204
$
21,756
Oral tobacco products
2,802
2,776
2,667
E-vapor products
(13)
40
62
All other
5
(2)
(2)
Net revenues
$
23,279
$
24,018
$
24,483
Earnings before income taxes:
OCI:
Smokeable products
$
10,984
$
10,821
$
10,670
Oral tobacco products
1,828
1,449
1,722
E-vapor products
(2,297)
(171)
(16)
All other
(229)
(243)
(58)
Amortization of intangibles
(132)
(139)
(128)
General corporate expenses
(255)
(476)
(643)
Operating income
9,899
11,241
11,547
Interest and other debt expense, net
1,079
1,037
989
Net periodic benefit income, excluding service cost
(59)
(102)
(127)
(Income) losses from investments in equity securities
(510)
(652)
(243)
Gain on the sale of IQOS System commercialization rights
—
(2,700)
—
Earnings before income taxes
$
9,389
$
13,658
$
10,928
Smokeable products segment OCI consisted of the following, including expenses under the significant expense principle in accordance
with GAAP:
For the Years Ended December 31,
(in millions)
2025
2024
2023
Net revenues
$
20,485
$
21,204
$
21,756
Settlement charges (1)
(3,028)
(3,460)
(3,711)
Excise taxes on products sold
(3,042)
(3,469)
(3,869)
Other segment items (2)
(3,431)
(3,454)
(3,506)
Operating companies income
$
10,984
$
10,821
$
10,670
(1) Represents charges related to State Settlement Agreements included in cost of sales. For additional information, see Health Care Cost Recovery
Litigation in Note 18. Contingencies.
(2) Other segment items includes manufacturing, marketing, administration and research costs, FDA user fees and other costs.
For the oral tobacco products segment, we did not identify any expenses under the significant expense principle in accordance with
GAAP. Other segment items for our oral tobacco products segment include manufacturing, asset impairment, marketing, administration
and research costs and excise taxes on products sold. Total oral tobacco products other segment items were $974 million, $1,327 million
and $945 million for the years ended December 31, 2025, 2024 and 2023, respectively. The CODM reviews total oral tobacco products
segment expenses in the aggregate in conjunction with the review of budget-to-actual OCI variances to manage segment operations.
For the e-vapor products segment, we did not identify any expenses under the significant expense principle in accordance with GAAP.
Other segment items for our e-vapor products segment include manufacturing, goodwill impairment, asset impairment and marketing,
administration and research costs. Total e-vapor products other segment items were $2,284 million, $211 million and $78 million for the
years ended December 31, 2025, 2024 and 2023, respectively. The CODM reviews total e-vapor products segment expenses in the
aggregate in conjunction with the review of budget-to-actual OCI variances to manage segment operations.
The smokeable products segment included net revenues of $19,248 million, $20,066 million and $20,665 million for the years ended
December 31, 2025, 2024 and 2023, respectively, related to cigarettes and net revenues of $1,237 million, $1,138 million and
$1,091 million for the years ended December 31, 2025, 2024 and 2023, respectively, related to cigars.
82
Substantially all of our consolidated net revenues for the years ended December 31, 2025, 2024 and 2023 were from sales generated in
the United States. For the years ended December 31, 2025, 2024 and 2023, we had one customer that accounted for approximately 23%,
22% and 25% of our consolidated net revenues, respectively, and one customer that accounted for approximately 19%, 20% and 23% of
our consolidated net revenues, respectively. Substantially all the net revenues from these customers were reported in the smokeable
products, oral tobacco products and e-vapor products segments. No other customer accounted for more than 10% of our consolidated net
revenues for the years ended December 31, 2025, 2024 and 2023.
Details of our depreciation expense and capital expenditures were as follows:
For the Years Ended December 31,
(in millions)
2025
2024
2023
Depreciation expense:
Smokeable products
$
58
$
67
$
73
Oral tobacco products
41
42
37
E-vapor products
—
3
2
General corporate and other
35
35
32
Total depreciation expense
$
134
$
147
$
144
Capital expenditures:
Smokeable products
$
107
$
54
$
77
Oral tobacco products
75
39
59
E-vapor products
1
—
—
General corporate and other
33
49
60
Total capital expenditures
$
216
$
142
$
196
The comparability of OCI for our reportable segments was affected by the following:
▪
Non-Participating Manufacturer (“NPM”) Adjustment Items: We recorded net pre-tax income for NPM adjustment items
as follows:
For the Years Ended December 31,
(in millions)
2025
2024
2023
Smokeable products segment
$
(24)
$
(29)
$
(29)
Interest and other debt expense, net
4
2
(21)
Total
$
(20)
$
(27)
$
(50)
We recorded the amounts shown in the table above in our smokeable products segment as reductions to cost of sales in our consolidated
statements of earnings, which resulted in increased OCI in our smokeable products segment. NPM adjustment items result from the
resolutions of certain disputes with states and territories related to the NPM adjustment provision under the Master Settlement
Agreement (“NPM Adjustment Items”). For further discussion, see Health Care Cost Recovery Litigation in Note 18. Contingencies.
▪
Acquisition-Related Items: We recorded pre-tax charges of $23 million and $44 million in net revenues and cost of sales,
respectively, related to the ITC exclusion order and cease-and-desist orders prohibiting the importation and sale of NJOY ACE in the
United States in our e-vapor products segment for the year ended December 31, 2025.
▪
Asset Impairment, Exit and Implementation Costs: We recorded pre-tax charges of $2,128 million, primarily due to non-
cash impairments of the e-vapor reporting unit goodwill and definite-lived intangible assets in our e-vapor products segment for the year
ended December 31, 2025. We recorded exit and implementation costs of $56 million and $68 million related to the Initiative for the
years ended December 31, 2025 and 2024, respectively. For a breakdown of these costs by segment, see Note 5. Exit and
Implementation Costs. We recorded a non-cash, pre-tax impairment of the Skoal trademark of $354 million for the year ended
December 31, 2024 in our oral tobacco products segment. For further discussion of the impairments recorded in our e-vapor products
segment and our oral tobacco products segment, see Note 4. Goodwill and Other Intangible Assets, net.
83
▪
Tobacco and Health and Certain Other Litigation Items: We recorded pre-tax charges related to tobacco and health and
certain other litigation items as follows:
For the Years Ended December 31,
(in millions)
2025
2024
2023
Smokeable products segment
$
55
$
70
$
69
General corporate expenses
—
30
350
Interest and other debt expense, net
3
1
11
Total
$
58
$
101
$
430
We recorded the amounts shown in the table above in our smokeable products segment and general corporate expenses in marketing,
administration and research costs in our consolidated statements of earnings. For further discussion, see Note 18. Contingencies.
▪
Other Business Activities: Our R&D investments have evolved and shifted from our traditional tobacco businesses to new
product platforms and technologies. Beginning January 1, 2024, our R&D expense is aligned with how our CODM evaluates
performance results and allocates resources for segment reporting. For the years ended December 31, 2025 and 2024, using this
approach, we recorded the majority of our pre-tax R&D expense of $195 million and $208 million, respectively, in our all other
category, which now includes other business activities related to R&D expense for certain new product platforms and technologies. For
the year ended December 31, 2023, the majority of our pre-tax R&D expense of $220 million was recorded in our smokeable products
segment.
Note 16. Benefit Plans
Our subsidiaries sponsor noncontributory defined benefit pension plans covering certain employees. Employees hired on or after a
specified date are instead eligible to participate in a defined contribution plan with enhanced benefits. We also provide postretirement
health care and other benefits to certain retired employees.
We measure the plan assets and benefit obligations of our pension and postretirement plans at December 31 of each year.
84
▪
Obligations and Funded Status: Benefit obligations, plan assets and funded status for our pension and postretirement plans
were as follows at December 31:
Pension
Postretirement
(in millions)
2025
2024
2025
2024
Change in benefit obligation:
Benefit obligation at beginning of year (1)
$
6,082 $
6,428
$
1,078 $
1,246
Service cost
37
41
11
15
Interest cost
318
321
56
62
Benefits paid
(457)
(457)
(90)
(91)
Actuarial (gains) losses
216
(251)
21
(153)
Plan amendments
4
—
—
(1)
Benefit obligation at end of year (1)
6,200
6,082
1,076
1,078
Change in plan assets:
Fair value of plan assets at beginning of year
6,545
6,775
84
102
Actual return on plan assets
646
209
9
12
Employer contributions
16
18
—
—
Benefits paid
(457)
(457)
(23)
(30)
Fair value of plan assets at end of year
6,750
6,545
70
84
Funded status at December 31
$
550 $
463
$
(1,006) $
(994)
Amounts recognized on our consolidated balance sheets:
Other assets
$
727 $
624
$
— $
—
Other accrued liabilities
(55)
(25)
(67)
(59)
Accrued pension costs
(122)
(136)
—
—
Accrued postretirement health care costs
—
—
(939)
(935)
$
550 $
463
$
(1,006) $
(994)
(1) We measure our pension plans using the projected benefit obligation and our postretirement plans using the accumulated postretirement benefit
obligation.
Actuarial losses for our pension and postretirement plans for the year ended December 31, 2025 were due primarily to a lower discount
rate. Actuarial gains for our pension plans for the year ended December 31, 2024 were due primarily to a higher discount rate. Actuarial
gains for our postretirement plans for the year ended December 31, 2024 were due primarily to lower assumed health care plan
participation rates and a higher discount rate.
The accumulated benefit obligation, which represents benefits earned to date, for all of our pension plans in aggregate was $6.1 billion
and $5.9 billion at December 31, 2025 and 2024, respectively. For pension plans with accumulated benefit obligations in excess of plan
assets at December 31, 2025 and 2024, our accumulated benefit obligation was $159 million and $140 million, respectively. For pension
plans with projected benefit obligations in excess of plan assets at December 31, 2025 and 2024, our projected benefit obligation was
$177 million and $161 million, respectively. Additionally, at December 31, 2025 and 2024, there were no plan assets for these plans.
For all postretirement plans, our accumulated postretirement benefit obligations were in excess of plan assets at December 31, 2025 and
2024.
We used the following assumptions to determine our benefit obligations at December 31:
Pension
Postretirement
2025
2024
2025
2024
Discount rate
5.4 %
5.7 %
5.4 %
5.7 %
Rate of compensation increase - long-term
4.0
4.0
—
—
Health care cost trend rate assumed for next year
—
—
6.1
6.3
Ultimate trend rate
—
—
5.0
5.0
Year that the rate reaches the ultimate trend rate
—
—
2031
2031
85
We based the discount rates for our plans on a yield curve developed from a model portfolio of high-quality corporate bonds with
durations that match the expected future cash flows of the benefit obligations.
▪
Components of Net Periodic Benefit Cost (Income): Net periodic benefit cost (income) consisted of the following for the
years ended December 31:
Pension
Postretirement
(in millions)
2025
2024
2023
2025
2024
2023
Service cost
$
37 $
41 $
39
$
11 $
15 $
15
Interest cost
318
321
333
56
62
65
Expected return on plan assets
(430)
(465)
(485)
(5)
(6)
(8)
Amortization:
Net loss (gain)
50
28
4
(12)
(6)
(2)
Prior service cost (credit)
5
5
6
(41)
(41)
(40)
Net periodic benefit cost (income)
$
(20) $
(70) $
(103)
$
9 $
24 $
30
We used the following assumptions to determine our net periodic benefit cost (income) for the years ended December 31:
Pension
Postretirement
2025
2024
2023
2025
2024
2023
Discount rates:
Service cost
5.9 %
5.4 %
5.7 %
5.9 %
5.3 %
5.7 %
Interest cost
5.4
5.2
5.5
5.4
5.2
5.5
Expected rate of return on plan assets
6.1
6.1
6.1
7.4
7.4
7.4
Rate of compensation increase - long-term
4.0
4.0
4.0
—
—
—
Health care cost trend rate
—
—
—
6.3
6.5
6.5
▪
Defined Contribution Plan Expense: We sponsor tax-qualified defined contribution plans covering certain salaried and hourly
(non-union and union) employees. Contributions and costs are determined generally as a percentage of earnings, as defined by our
plans. Amounts charged to expense for these defined contribution plans totaled $110 million, $112 million and $109 million in 2025,
2024 and 2023, respectively.
▪
Pension and Postretirement Plan Assets: We managed our pension plan assets using a liability-driven investment framework
that aligns plan assets with liabilities. This strategy is designed to balance pension liability hedging and asset growth in order to
maintain our plan’s funded status and cover incremental service accruals and interest cost. Liability hedging is achieved through
investing in rate-sensitive fixed income securities, while growth assets are comprised of publicly traded equity securities. The current
equity/fixed income target allocation is 10%/90%.
Our investment strategy for our postretirement plan assets is intended to maximize our total asset return based on the expectation that
equity securities will outperform debt securities over the long term and reflects the maturity structure of our benefit obligation. The
current equity/fixed income target allocation is 55%/45%.
The actual composition of our plan assets at December 31, 2025 was broadly characterized with the following allocation:
Pension
Postretirement
Equity securities
11 %
54 %
Corporate bonds
71 %
31 %
U.S. Treasury and foreign government securities
10 %
5 %
All other investments
8 %
10 %
We implement our investment strategy for our plan assets by investing in long-duration fixed income securities that primarily include
U.S. corporate bonds of companies from diversified industries and U.S. Treasury securities that mirror our pension obligation
benchmark, as well as U.S. and international equity index strategies that are intended to mirror broad market indices, including, the
Standard & Poor’s 500 Index and Morgan Stanley Capital International (“MSCI”) Europe, Australasia, and the Far East (“EAFE”)
Index. Our plans also invest in actively managed international equity securities of mid- and small-cap companies located in developed
and emerging markets.
86
Our risk management practices for our plans include (i) ongoing monitoring of asset allocation, investment performance and investment
managers’ compliance with their investment guidelines, (ii) periodic rebalancing between equity and debt asset classes and (iii) annual
actuarial re-measurement of plan liabilities.
Our expected rate of return on our plan assets is determined by our plan assets’ historical long-term investment performance, current
asset allocation and estimates of future long-term returns by asset class. The forward-looking estimates are consistent with the long-term
historical averages exhibited by returns on equity and fixed income securities. For determining our pension and postretirement net
periodic benefit cost (income), our 2026 expected rate of return assumptions are 6.1% and 7.4%, respectively.
The fair values of our pension plan assets by asset category were as follows at December 31:
2025
2024
(in millions)
Level 1
Level 2
Total
Level 1
Level 2
Total
U.S. and foreign government securities or their agencies:
U.S. government and agencies
$
— $
634 $
634 $
— $
508 $
508
U.S. municipal bonds
—
63
63
—
69
69
Foreign government and agencies
—
30
30
—
54
54
Corporate debt instruments:
Above investment grade
—
4,151
4,151
—
3,572
3,572
Below investment grade and no rating
—
698
698
—
582
582
Common stock:
International equities
249
—
249
398
—
398
U.S. equities
205
—
205
361
—
361
Asset backed securities
—
203
203
—
185
185
Other, net
(6)
98
92
(15)
99
84
$
448 $ 5,877 $ 6,325 $
744 $ 5,069 $ 5,813
Investments measured at NAV as a practical expedient for fair value:
Collective investment funds
U.S. large cap
$
259
$
445
U.S. small cap
17
100
International developed markets
27
53
Total investments measured at NAV
$
303
$
598
Other
122
134
Fair value of plan assets, net
$ 6,750
$ 6,545
Level 3 holdings and transactions were immaterial relative to total plan assets at December 31, 2025 and 2024.
87
The fair values of our postretirement plan assets were as follows at December 31:
2025
2024
(in millions)
Level 1
Level 2
Total
Level 1
Level 2
Total
U.S. and foreign government securities or their agencies:
U.S. government and agencies
$
— $
2 $
2 $
— $
1 $
1
Foreign government and agencies
—
2
2
—
2
2
Corporate debt instruments:
Above investment grade
—
20
20
—
24
24
Below investment grade and no rating
—
2
2
—
2
2
Other, net
—
7
7
—
8
8
$
— $
33 $
33 $
— $
37 $
37
Investments measured at NAV as a practical expedient for fair value:
Collective investment funds:
U.S. large cap
$
25
$
35
International developed markets
13
12
Total investments measured at NAV
$
38
$
47
Other
(1)
—
Fair value of plan assets, net
$
70
$
84
There were no Level 3 postretirement plan holdings or transactions during 2025 and 2024.
For a description of the fair value hierarchy and the three levels of inputs used to measure fair value, see Note 2. Summary of Significant
Accounting Policies.
Following is a description of the valuation methodologies used for investments measured at fair value.
▪
U.S. and Foreign Government Securities: U.S. and foreign government securities consist of investments in Treasury Nominal Bonds
and Inflation Protected Securities, agency bonds and municipal securities. Government securities are valued at a price that is based
on a compilation of primarily observable market information, such as broker quotes. Matrix pricing, yield curves and indices are
used when broker quotes are not available.
▪
Corporate Debt Instruments: Corporate debt instruments are valued at a price that is based on a compilation of primarily observable
market information, such as broker quotes. Matrix pricing, yield curves and indices are used when broker quotes are not available.
▪
Common Stock: Common stocks are valued based on the price of the security as listed on an open active exchange on last trade date.
▪
Asset Backed Securities: Asset backed securities are fixed income securities such as mortgage backed securities, syndicated bank
loans and auto loans that are collateralized by pools of underlying assets. They are valued at a price that is based on a compilation
of primarily observable market information or a broker quote in a non-active over-the-counter market.
▪
Collective Investment Funds: Collective investment funds consist of funds that are intended to mirror indices such as Standard &
Poor’s 500 Index and MSCI EAFE Index. They are valued on the basis of the relative interest of each participating investor in the
fair value of the underlying assets of each of the respective collective investment funds, which are valued based on the net asset
value (“NAV”), and are provided by the investment account manager as a practical expedient to estimate fair value. These
investments are not classified by level but are disclosed to permit reconciliation to the fair value of plan assets.
Cash Flows: We make contributions to our pension plans to the extent that the contributions are tax deductible and pay benefits that
relate to plans for salaried employees that cannot be funded under IRS regulations. Currently, we anticipate making employer
contributions in 2026 to our pension and postretirement plans of up to approximately $60 million and $100 million, respectively.
However, the foregoing estimates of 2026 contributions are subject to change as a result of changes in tax and other benefit laws,
changes in interest rates, as well as asset performance significantly above or below the assumed long-term rate of return for each
respective plan.
88
Estimated future benefit payments at December 31, 2025 were as follows:
(in millions)
Pension
Postretirement
2026
$
528
$
82
2027
482
81
2028
482
81
2029
481
82
2030
481
82
2031-2035
2,330
416
Comprehensive Earnings/Losses
We recorded the following amounts in accumulated other comprehensive losses at December 31, 2025:
(in millions)
Pension
Post-
retirement
Post-
employment
Total
Net (loss) gain
$
(2,164) $
142 $
(54) $
(2,076)
Prior service (cost) credit
(12)
175
(5)
158
Deferred income taxes
566
(78)
15
503
Amounts recorded in accumulated other comprehensive losses
$
(1,610) $
239 $
(44) $
(1,415)
We recorded the following amounts in accumulated other comprehensive losses at December 31, 2024:
(in millions)
Pension
Post-
retirement
Post-
employment
Total
Net (loss) gain
$
(2,213) $
172 $
(45) $
(2,086)
Prior service (cost) credit
(13)
216
(5)
198
Deferred income taxes
578
(95)
13
496
Amounts recorded in accumulated other comprehensive losses
$
(1,648) $
293 $
(37) $
(1,392)
The movements in other comprehensive earnings (losses) for the year ended December 31, 2025 were as follows:
(in millions)
Pension
Post-
retirement
Post-
employment
Total
Amounts reclassified to net earnings as components of net periodic
benefit cost (income):
Amortization:
Net loss (gain)
$
50 $
(12) $
7 $
45
Prior service cost (credit)
5
(41)
—
(36)
Deferred income taxes
(13)
13
(2)
(2)
$
42 $
(40) $
5 $
7
Other movements during the year:
Net (loss) gain
$
(1) $
(18) $
(16) $
(35)
Prior service (cost) credit
(4)
—
—
(4)
Deferred income taxes
1
4
4
9
$
(4) $
(14) $
(12) $
(30)
Total movements in other comprehensive earnings (losses)
$
38 $
(54) $
(7) $
(23)
89
The movements in other comprehensive earnings (losses) for the year ended December 31, 2024 were as follows:
(in millions)
Pension
Post-
retirement
Post-
employment
Total
Amounts reclassified to net earnings as components of net periodic
benefit cost (income):
Amortization:
Net loss (gain)
$
28 $
(6) $
7 $
29
Prior service cost (credit)
5
(41)
—
(36)
Deferred income taxes
(8)
12
(2)
2
$
25 $
(35) $
5 $
(5)
Other movements during the year:
Net (loss) gain
$
(5) $
159 $
(13) $
141
Prior service (cost) credit
—
1
—
1
Deferred income taxes
1
(40)
3
(36)
$
(4) $
120 $
(10) $
106
Total movements in other comprehensive earnings (losses)
$
21 $
85 $
(5) $
101
The movements in other comprehensive earnings (losses) for the year ended December 31, 2023 were as follows:
(in millions)
Pension
Post-
retirement
Post-
employment
Total
Amounts reclassified to net earnings as components of net periodic
benefit cost (income):
Amortization:
Net loss (gain)
$
4 $
(2) $
6 $
8
Prior service cost (credit)
6
(40)
—
(34)
Deferred income taxes
(2)
11
(1)
8
$
8 $
(31) $
5 $
(18)
Other movements during the year:
Net (loss) gain
$
(60) $
20 $
(11) $
(51)
Prior service (cost) credit
—
3
—
3
Deferred income taxes
16
(10)
3
9
$
(44) $
13 $
(8) $
(39)
Total movements in other comprehensive earnings (losses)
$
(36) $
(18) $
(3) $
(57)
Note 17. Additional Information
For the Years Ended December 31,
(in millions)
2025
2024
2023
Research and development expense
$
195 $
208 $
220
Interest expense
$
1,177 $
1,124 $
1,149
Interest income
(98)
(87)
(160)
Interest and other debt expense, net
$
1,079 $
1,037 $
989
90
The activity in the allowance for discounts and allowance for returned goods (1) was as follows:
For the Years Ended December 31,
(in millions)
2025
2024
2023
Discounts
Returned
Goods
Discounts
Returned
Goods
Discounts
Returned
Goods
Balance at beginning of year
$
3 $
51
$
— $
39
$
— $
41
Charged to costs and expenses
579
132
603
142
597
118
Deductions (2)
(578)
(134)
(600)
(130)
(597)
(120)
Balance at end of year
$
4 $
49
$
3 $
51
$
— $
39
(1) Primarily related to USSTC’s policy to accept authorized sales returns from its customers for products that have passed the freshness date printed on
product packaging due to the limited shelf life of USSTC’s MST products.
(2) Represents the recording of discounts and returns for which allowances were created.
Note 18. Contingencies
Legal proceedings covering a wide range of matters are pending or threatened in various United States and foreign jurisdictions against
Altria and certain of our subsidiaries, including PM USA and NJOY, as well as our indemnitees. Various types of claims may be raised
in these proceedings, including product liability, unfair trade practices, antitrust, tax liability, contraband shipments, patent infringement,
employment matters, environmental matters, claims alleging violation of the Racketeer Influenced and Corrupt Organizations Act
(“RICO”), claims for contribution and claims of competitors, shareholders or distributors. Legislative action, such as changes to tort
law, also may expand the types of claims and remedies available to plaintiffs.
Litigation is subject to uncertainty, and it is possible that there could be adverse developments in pending or future cases. An
unfavorable outcome or settlement of pending tobacco-related or other litigation could encourage the commencement of additional
litigation. Damages claimed in some tobacco-related and other litigation are or can be significant and, in certain cases, have ranged in
the billions of dollars. The variability in pleadings in multiple jurisdictions, together with the actual experience of management in
litigating claims, demonstrates that the monetary relief that may be specified in a lawsuit bears little relevance to the ultimate outcome.
In certain cases, plaintiffs claim that defendants’ liability is joint and several. In such cases, we may face the risk that one or more co-
defendants decline or otherwise fail to participate in the bonding required for an appeal or to pay their proportionate or jury-allocated
share of a judgment. As a result, under certain circumstances, we may have to pay more than our proportionate share of any bonding- or
judgment-related amounts. Furthermore, in those cases where plaintiffs are successful, we also may be required to pay interest and
attorneys’ fees.
Although PM USA historically has been able to obtain required bonds or relief from bonding requirements in order to prevent plaintiffs
from seeking to collect judgments while adverse verdicts have been appealed, there remains a risk that such relief may not be obtainable
in all cases. This risk has been substantially reduced given that 47 states and Puerto Rico limit the dollar amount of bonds or require no
bond at all. However, tobacco litigation plaintiffs have challenged the constitutionality of Florida’s bond cap statute in several cases,
and plaintiffs may challenge state bond cap statutes in other jurisdictions as well. Such challenges may include the applicability of state
bond caps in federal court. States, including Florida, also may seek to repeal or alter bond cap statutes through legislation. Although we
cannot predict the outcome of such challenges, it is possible that our consolidated results of operations, cash flows or financial position
could be materially affected in a particular fiscal quarter or fiscal year by an unfavorable outcome of one or more such challenges.
We record provisions in our consolidated financial statements for pending litigation when we determine that an unfavorable outcome is
probable and the amount of the loss can be reasonably estimated. At the present time, while it is reasonably possible that an unfavorable
outcome in a case may occur, except to the extent discussed elsewhere in this Note 18. Contingencies: (i) management has concluded
that it is not probable that a loss has been incurred in any of the pending cases; (ii) management is unable to estimate the possible loss or
range of loss that could result from an unfavorable outcome in any of the pending cases; and (iii) accordingly, management has not
provided any amounts in our consolidated financial statements for unfavorable outcomes, if any. Litigation defense costs are expensed
as incurred.
We have achieved substantial success in managing litigation. Nevertheless, litigation is subject to uncertainty and significant challenges
remain. It is possible that our consolidated results of operations, cash flows or financial position could be materially affected in a
particular fiscal quarter or fiscal year by an unfavorable outcome or settlement of certain pending litigation. We believe, and have been
so advised by counsel handling the respective cases, that we have valid defenses to the litigation pending against us, as well as valid
bases for appeal of adverse verdicts. We have defended, and will continue to defend, vigorously against litigation challenges. However,
we may enter into settlement discussions in particular cases if we believe it is in our best interests to do so.
91
Judgments Paid and Provisions for Tobacco and Health (Including Engle Progeny Litigation) and Certain Other Litigation
Items: The changes in our accrued liability for tobacco and health and certain other litigation items, including related interest costs, for
the periods specified below are as follows:
(in millions)
2025
2024
2023
Accrued liability for tobacco and health and certain other litigation items at beginning of
period
$
96
$
346
$
71
Pre-tax charges for:
Tobacco and health and certain other litigation (1)
55
70
79
Shareholder derivative lawsuits (2)
—
—
98
JUUL-related settlements (3)
—
30
242
Related interest costs
3
1
11
Payments
(83)
(351)
(155)
Accrued liability for tobacco and health and certain other litigation items at end of period
$
71
$
96
$
346
(1) Includes judgments, settlements and fee disputes associated with tobacco and health and certain other litigation.
(2) See Federal and State Shareholder Derivative Lawsuits below for a discussion of the settlement of the federal and state shareholder derivative
lawsuits.
(3) Includes the settlement of certain e-vapor product litigation relating to JUUL e-vapor products. See E-vapor Product Litigation below for a
discussion of these settlements.
The accrued liability for tobacco and health and certain other litigation items, including related interest costs, was included in accrued
liabilities and other liabilities on our consolidated balance sheets. Pre-tax charges except for related interest costs were included in
marketing, administration and research costs in our consolidated statements of earnings. Pre-tax charges for related interest costs were
included in interest and other debt expense, net in our consolidated statements of earnings.
Since October 2004, PM USA has paid judgments and settlements (including related costs and fees) totaling approximately $1.1 billion
and interest totaling approximately $245 million as of December 31, 2025. These amounts include payments for Engle progeny
judgments (and related costs and fees) totaling approximately $453 million and related interest totaling approximately $62 million.
Security for Judgments: To obtain stays of judgments pending appeal, PM USA has posted various forms of security. As of
December 31, 2025, PM USA has posted appeal bonds totaling approximately $18 million, which have been collateralized with
restricted cash and are included in assets on our consolidated balance sheets.
Overview of Tobacco-Related Litigation
Types and Number of U.S. Cases: Claims related to tobacco products generally fall within the following categories: (i) smoking and
health cases alleging personal injury brought on behalf of individual plaintiffs; (ii) health care cost recovery cases brought by
governmental (both domestic and foreign) plaintiffs seeking reimbursement for health care expenditures allegedly caused by cigarette
smoking and/or disgorgement of profits; (iii) e-vapor cases alleging violation of RICO, fraud, failure to warn, design defect, negligence,
antitrust, patent infringement and unfair trade practices; and (iv) other tobacco-related litigation described below. Plaintiffs’ theories of
recovery and the defenses raised in tobacco-related litigation are discussed below.
The table below lists the number of certain tobacco-related cases pending in the United States against us as of December 31:
2025
2024
2023
Individual Smoking and Health Cases (1)
182
180
172
Health Care Cost Recovery Actions
1
1
1
E-vapor Cases (2)
16
24
5,177
Other Tobacco-Related Cases (3)
3
3
3
(1) Includes as of December 31, 2025, 29 cases filed in Illinois, nine cases filed in New Mexico, 79 cases filed in Massachusetts, 15 cases filed in
Oregon, eight cases filed in Hawaii, 11 cases filed in the U.S. Virgin Islands and eight non-Engle cases filed in Florida. Does not include individual
smoking and health cases brought by or on behalf of plaintiffs in Florida state and federal courts following the decertification of the Engle class
(these Engle progeny cases are discussed below in Smoking and Health Litigation - Engle Progeny Cases).
(2) In May 2023, we reached agreement on terms to resolve the majority of the Multidistrict Litigation lawsuits, and, in March 2024, the court granted
final approval of the settlement. Pending final dismissal of these cases, as of December 31, 2025, the remaining cases include 11 individual cases
that opted out of the settlement, four class action lawsuits pending in Canada and one individual state court case relating to the Multidistrict
Litigation. For further discussion of the Multidistrict Litigation settlement, see E-vapor Product Litigation below.
(3) See Certain Other Tobacco-Related Litigation - “Lights/Ultra Lights” Cases and Other Smoking and Health Class Actions below.
92
International Tobacco-Related Cases: As of January 26, 2026, (i) Altria is named as a defendant in four e-vapor class action lawsuits
in Canada; (ii) PM USA is a named defendant in 10 health care cost recovery actions in Canada, eight of which also name Altria as a
defendant; and (iii) PM USA and Altria are named as defendants in seven smoking and health class actions filed in various Canadian
provinces. See Smoking and Health Litigation - Other Smoking and Health Class Actions below for a discussion of the smoking and
health class actions filed in various Canadian Provinces. Also, see Guarantees and Other Similar Matters below for a discussion of the
Distribution Agreement (defined below) between Altria and PMI that provides for indemnities for certain liabilities concerning tobacco
products.
Tobacco-Related Cases Set for Trial: As of January 26, 2026, two Engle progeny cases, one individual smoking and health cases and
no e-vapor cases are set for trial through March 31, 2026. Trial dates are subject to change.
Trial Results: Since January 1999, excluding the Engle progeny cases (separately discussed below), verdicts have been returned in 87
tobacco-related cases in which PM USA was a defendant. Verdicts in favor of PM USA and other defendants were returned in 53 of the
87 cases. Of the 34 non-Engle progeny cases in which verdicts were returned in favor of plaintiffs, 28 have reached final resolution.
See Smoking and Health Litigation - Engle Progeny Trial Results below for a discussion of verdicts in state and federal Engle progeny
cases involving PM USA as of January 26, 2026.
Smoking and Health Litigation
Overview: Plaintiffs’ allegations of liability in smoking and health cases are based on various theories of recovery, including
negligence, gross negligence, strict liability, fraud, misrepresentation, design defect, failure to warn, nuisance, breach of express and
implied warranties, breach of special duty, conspiracy, concert of action, violations of unfair trade practice laws and consumer protection
statutes and claims under the federal and state anti-racketeering statutes. Plaintiffs in the smoking and health cases seek various forms of
relief, including compensatory and punitive damages, treble/multiple damages and other statutory damages and penalties, creation of
medical monitoring and smoking cessation funds, disgorgement of profits, and injunctive and equitable relief. Defenses raised in these
cases include lack of proximate cause, assumption of the risk, comparative fault and/or contributory negligence, statutes of limitations
and preemption by the Federal Cigarette Labeling and Advertising Act.
Non-Engle Progeny Litigation: The charts below summarize the verdicts in and post-trial status of certain non-Engle progeny smoking
and health cases in which verdicts were returned in favor of plaintiffs. The first chart lists cases that are pending as of January 26, 2026
where PM USA has determined an unfavorable outcome is not probable and the amount of loss cannot be reasonably estimated, and the
second chart lists cases that have concluded in the past 12 months where PM USA paid a final judgment. In this Note 18. Contingencies,
references to “R.J. Reynolds” are to R.J. Reynolds Tobacco Company. Unless otherwise noted for a particular case, the jury’s award for
compensatory damages will not be reduced by any finding of plaintiff’s comparative fault. Further, the damages noted reflect
adjustments based on post-trial or appellate rulings. A chart listing certain verdicts for plaintiffs in pending Engle progeny cases can be
found in Smoking and Health Litigation - Engle Progeny Trial Results below.
Currently Pending Non-Engle Cases with Verdicts against PM USA
(rounded to nearest $ million)
Plaintiff
Verdict Date
Defendant(s)
State
Compensatory
Damages (1)
Punitive
Damages
(PM USA)
Post-Trial Status
Petruzziello
November 2025 PM USA
R.J. Reynolds
MA
<$1 million
$0
Plaintiff has filed a motion for a new trial.
Perez-Trinidad October 2025
PM USA
R.J. Reynolds
MA
$1 million
$5.5 million PM USA intends to appeal.
Amaral
March 2025
PM USA
R.J. Reynolds
MA
$4 million
$25 million
PM USA has filed post-trial motions challenging the
verdict and, if necessary, will appeal.
Taylor
April 2024
PM USA
OR
<$1 million
$0
PM USA filed post-trial motions, which were denied,
and PM USA filed a notice of appeal of the final
judgment and the trial court’s denial of the post-trial
motions.
Ricapor-Hall
August 2023
PM USA
HI
$6 million
($3 million)
$8 million
PM USA’s appeal and plaintiff’s cross-appeal remain
pending. In April 2025, the Hawaii Supreme Court
granted plaintiff’s application to transfer the appeal to
that Court from the Intermediate Court of Appeals.
Fontaine
September 2022 PM USA
MA
$8 million
$56 million
PM USA’s appeal remains pending. In May 2025,
the Massachusetts Supreme Judicial Court took
jurisdiction over the appeal from the Appeals Court of
Massachusetts.
(1) PM USA’s portion of the compensatory damages award is noted parenthetically where the court has ruled that comparative fault applies.
93
Non-Engle Cases Concluded in Past 12 Months
(rounded to nearest $ million)
Plaintiff
Verdict Date
Defendant(s)
State
Payment Amount for Damages (if any)
Woodley
August 2023
PM USA
MA
$5 million
Engle Progeny Cases: Engle progeny cases are individual smoking and health lawsuits filed by Florida resident plaintiffs against one or
more cigarette manufacturer defendants. The lawsuits arose following the Florida Supreme Court’s decertification of the class in Engle,
et. al. v. R.J. Reynolds Tobacco Co., et. al., a smoking and health class action lawsuit filed in Florida state court against multiple
defendants, including PM USA, in which the jury returned a verdict in favor of the plaintiff class and the trial court assessed punitive
damages against the defendants. In July 2006, the Florida Supreme Court mandated that the trial court’s punitive damages award be
vacated, that the class approved by the trial court be decertified and that members of the decertified class could file individual actions
against defendants within one year of issuance of the mandate. Plaintiffs in Engle progeny lawsuits are entitled to rely on certain
liability findings from the class action lawsuit, substantially reducing each plaintiff’s burden of proof. These liability findings stipulate:
(i) that smoking causes various diseases; (ii) that nicotine in cigarettes is addictive; (iii) that defendants’ cigarettes were defective and
unreasonably dangerous; (iv) that defendants concealed or omitted material information not otherwise known or available knowing that
the material was false or misleading or failed to disclose a material fact concerning the health effects or addictive nature of smoking; (v)
that defendants agreed to conceal or omit information regarding the health effects of cigarettes or their addictive nature with the intention
that smokers would rely on the information to their detriment; (vi) that defendants sold or supplied cigarettes that were defective; and
(vii) that defendants were negligent.
Pending Engle Progeny Cases: The deadline for filing Engle progeny cases expired in January 2008, at which point a total of
approximately 9,300 federal and state claims were pending. As of January 26, 2026, approximately 48 state court cases were pending
against PM USA or Altria. Each federal Engle progeny case has been resolved.
Engle Progeny Trial Results: As of January 26, 2026, 147 federal and state Engle progeny cases involving PM USA have resulted in
verdicts. Eighty-eight were returned in favor of plaintiffs, four of which have been reversed post-trial or on appeal and remain pending.
Fifty-nine verdicts were returned in favor of PM USA, one of which has been reversed post-trial or on appeal and remains pending. In
addition, there have been a number of mistrials, only some of which have resulted in new trials as of January 26, 2026.
Post-trial activity in a case can result in a final resolution that differs from the initial verdict. In many cases, parties have appealed either
compensatory or punitive damages awards or both. Courts also have increased and decreased the amounts of compensatory damages
juries have awarded, decreased the amounts of punitive damages juries have awarded, declared mistrials and vacated judgments, in
whole or in part, with respect to compensatory and punitive damages awards. Initial verdicts have been reversed in whole or in part on
appeal or following retrial. Juries have returned verdicts in favor of or against PM USA awarding no damages. In cases where juries
returned verdicts against PM USA awarding no damages, some trial courts have decided to award plaintiff damages notwithstanding the
verdict. Cases also have been dismissed with or without prejudice before or after a verdict.
The charts below list the verdicts in and post-trial status of certain Engle progeny cases in which verdicts were returned in favor of
plaintiffs. The first chart lists cases that are pending as of January 26, 2026 where PM USA has determined an unfavorable outcome is
not probable and the amount of loss cannot be reasonably estimated, and the second chart lists cases that have concluded in the past 12
months. Unless otherwise noted for a particular case, the jury’s award for compensatory damages will not be reduced by any finding of
plaintiff’s comparative fault. Further, the damages noted reflect adjustments based on post-trial or appellate rulings.
Currently Pending Engle Cases with Verdicts against PM USA
(rounded to nearest $ million)
Plaintiff
Verdict Date
Defendant(s)
Court
Compensatory
Damages (1)
Punitive
Damages
(PM USA)
Post-Trial Status
Garcia
June 2024
PM USA
Miami-Dade
$2 million
$10 million
Appeals to the Third District Court of Appeal pending.
(1) PM USA’s portion of the compensatory damages award is noted parenthetically where the court has ruled that comparative fault applies.
Engle Cases Concluded in Past 12 Months
(rounded to nearest $ million)
Plaintiff
Verdict Date
Defendant(s)
Court
Payment Amount for Damages (if any)
Chacon
October 2023
PM USA
Miami-Dade
$1 million
McCall
October 2023
PM USA
Broward
<$1 million
Other Smoking and Health Class Actions: Since the dismissal in May 1996 of a purported nationwide class action brought on behalf
of allegedly addicted smokers, plaintiffs have filed numerous putative smoking and health class action suits in various state and federal
courts. In general, these cases have purported to be brought on behalf of residents of a particular state or states (although a few cases
have purported to be nationwide in scope) and have raised addiction claims and, in many cases, claims of physical injury as well.
94
Class certification has been denied or reversed by courts in approximately 60 smoking and health class actions involving PM USA. See
Certain Other Tobacco-Related Litigation below for a discussion of “Lights” and “Ultra Lights” class action cases and medical
monitoring class action cases pending against PM USA.
As of January 26, 2026, PM USA and Altria are named as defendants, along with other cigarette manufacturers, in seven class actions
filed in the Canadian provinces of Alberta, Manitoba, Nova Scotia, Saskatchewan, British Columbia and Ontario. In Saskatchewan,
British Columbia (two separate cases) and Ontario, plaintiffs seek class certification on behalf of individuals who suffer or have suffered
from various diseases, including chronic obstructive pulmonary disease, emphysema, heart disease or cancer, after smoking defendants’
cigarettes. In the actions filed in Alberta, Manitoba and Nova Scotia, plaintiffs seek certification of classes of all individuals who
smoked defendants’ cigarettes. In March 2019, all of these class actions were stayed as a result of three Canadian tobacco manufacturers
(none of which is related to us) seeking protection under Canada’s Companies’ Creditors Arrangement Act (which is similar to Chapter
11 bankruptcy in the United States). The companies entered into these proceedings following a Canadian appellate court upholding two
smoking and health class action verdicts against those companies totaling approximately CAD $13 billion. In August 2025, a plan for
those companies was implemented, under which those companies agreed, among other things, to pay an aggregate global settlement
amount of CAD $32.5 billion to resolve all tobacco product-related claims and litigation in Canada. Under the plan, Altria and PM USA
have obtained releases of claims and the related litigation against them will be dismissed. Pursuant to the indemnification obligations in
the Distribution Agreement, neither Altria nor PM USA is responsible for any payments required to resolve the Canadian litigation. See
Guarantees and Other Similar Matters below for a discussion of the Distribution Agreement between Altria and PMI, which provides
for indemnities for certain liabilities concerning tobacco products.
Health Care Cost Recovery Litigation
Overview: In the health care cost recovery litigation, governmental entities seek reimbursement of health care cost expenditures
allegedly caused by tobacco products and, in some cases, of future expenditures and damages. Relief sought by some but not all
plaintiffs includes punitive damages, multiple damages and other statutory damages and penalties, injunctions prohibiting alleged
marketing and sales to minors, disclosure of research, disgorgement of profits, funding of anti-smoking programs, additional disclosure
of nicotine yields, and payment of attorney and expert witness fees.
Although there have been some decisions to the contrary, most judicial decisions in the United States have dismissed all or most health
care cost recovery claims against cigarette manufacturers. Nine federal circuit courts of appeals and eight state appellate courts, relying
primarily on grounds that plaintiffs’ claims were too remote, have ordered or affirmed dismissals of health care cost recovery actions.
The U.S. Supreme Court has refused to consider plaintiffs’ appeals from the cases decided by five federal circuit courts of appeal.
In addition to the cases brought in the United States, health care cost recovery actions have been brought against tobacco industry
participants, including PM USA and Altria, in Canada (10 cases), and other entities have stated that they are considering filing such
actions.
Since the beginning of 2008, the Canadian Provinces of British Columbia, New Brunswick, Ontario, Newfoundland and Labrador,
Quebec, Alberta, Manitoba, Saskatchewan, Prince Edward Island and Nova Scotia have brought health care reimbursement claims
against cigarette manufacturers. PM USA is named as a defendant in the British Columbia and Quebec cases, while both Altria and PM
USA are named as defendants in the New Brunswick, Ontario, Newfoundland and Labrador, Alberta, Manitoba, Saskatchewan, Prince
Edward Island and Nova Scotia cases. The Nunavut Territory and Northwest Territory have passed legislation permitting similar claims,
but lawsuits based on this legislation have not been filed. All of these cases were stayed pending resolution of proceedings in Canada
involving three tobacco manufacturers (none of which are affiliated with us) under the Companies’ Creditors Arrangement Act discussed
above. As discussed above, in August 2025, a plan for those companies was implemented. See Smoking and Health Litigation - Other
Smoking and Health Class Actions above for a discussion of these proceedings. See Guarantees and Other Similar Matters below for a
discussion of the Distribution Agreement between Altria and PMI that provides for indemnities for certain liabilities concerning tobacco
products.
Settlements of Health Care Cost Recovery Litigation: In November 1998, PM USA and certain other tobacco product manufacturers
entered into the Master Settlement Agreement (the “MSA”) with 46 states, the District of Columbia and certain United States territories
to settle asserted and unasserted health care cost recovery and other claims. PM USA and certain other tobacco product manufacturers
had previously entered into agreements to settle similar claims brought by the States of Mississippi, Florida, Texas and Minnesota
(together with the MSA, the “State Settlement Agreements”). The State Settlement Agreements require that the original participating
manufacturers or “OPMs” (now PM USA, R.J. Reynolds and, with respect to certain brands, ITG Brands, LLC (“ITG”)) make annual
payments of approximately $10.4 billion, subject to adjustments for several factors, including inflation, market share and industry
volume. The OPMs’ obligation to make quarterly payments settling plaintiffs’ attorneys’ fees, subject to an annual cap of $500 million,
on a pro rata basis based on market share, ended in the fourth quarter of 2024. For the years ended December 31, 2025, 2024 and 2023,
the aggregate amount recorded in cost of sales with respect to the State Settlement Agreements was approximately $3.0 billion, $3.5
billion and $3.7 billion, respectively. These amounts include PM USA’s estimate of amounts related to NPM Adjustments discussed
below.
95
Non-Participating Manufacturer (“NPM”) Adjustment Disputes: The “NPM Adjustment” is a reduction in MSA payments made by
the OPMs and those manufacturers that are subsequent signatories to the MSA (collectively, the “participating manufacturers” or
“PMs”) that applies if the PMs collectively lose at least a specified level of market share to non-participating manufacturers since 1997,
subject to certain conditions and defenses. The applicability of this reduction has been subject to certain disputes, some of which have
been resolved via settlement, as discussed below.
Settlements of NPM Adjustment Disputes.
▪
Multi-State Settlement. As of December 2025, a total of 39 states and territories had joined the multi-state settlement. Pursuant to
this settlement, PM USA has received $1.47 billion since 2014 and expects to receive annual credits applied against PM USA’s
MSA payments through 2041.
▪
New York Settlement. In 2015, PM USA entered into a separate NPM Adjustment settlement in which PM USA settled the NPM
Adjustment disputes with the State of New York in perpetuity. PM USA has received $646 million pursuant to the New York
settlement and expects to receive annual credits applied against the MSA payments due to the State of New York going forward.
▪
Montana Settlement. In 2020, PM USA entered into a separate NPM Adjustment settlement in which PM USA settled the NPM
Adjustment disputes with the State of Montana through 2030, resulting in a payment from PM USA to the State of Montana for an
insignificant amount.
▪
Massachusetts Settlement. In 2024, PM USA entered into a separate NPM Adjustment settlement in which PM USA settled the
NPM Adjustment disputes with the Commonwealth of Massachusetts through 2011. As a result of this settlement, PM USA expects
to receive $28 million in April 2026. Accordingly, PM USA recorded $28 million as a reduction in costs of sales in the third quarter
of 2024.
▪
Washington Settlement. In 2025, PM USA entered into a separate NPM Adjustment settlement in which PM USA settled the NPM
Adjustment disputes with the State of Washington through 2015. As a result of this settlement, PM USA will receive $53 million as
a credit against its MSA payment due in 2026. In addition to the amounts recorded in the fourth quarter of 2023 discussed below in
connection with the 2005 through 2007 NPM Adjustments, PM USA recorded a $22 million reduction in costs of sales and
$4 million of interest expense in the fourth quarter of 2025.
▪
U.S. Territories Settlement. In 2025, PM USA entered into a separate NPM Adjustment settlement in which PM USA settled the
NPM Adjustment disputes with American Samoa, Guam, the Commonwealth of the Northern Mariana Islands and the U.S. Virgin
Islands through 2024. As a result of this settlement, PM USA will receive a credit in an insignificant amount applied against its
April 2026 MSA payment to those territories. Accordingly, PM USA recorded an insignificant amount as a reduction in cost of
sales in the third quarter of 2025.
Continuing NPM Adjustment Disputes with States That Have Not Settled.
▪
2004 NPM Adjustment. The PMs and 10 states that had not settled the NPM Adjustment disputes for 2004 participated in a multi-
state arbitration. The arbitration panel found three of these states (Washington, Missouri and New Mexico) were not diligent in the
enforcement of their escrow statutes in 2004, and PM USA received approximately $52 million on account of the 2004 NPM
Adjustment as a credit against its April 2023 MSA payment. The State of New Mexico challenged the determination in its state
court, and the trial court vacated the award. PM USA appealed, and the New Mexico Court of Appeals reinstated the award. The
appellate court’s ruling remains subject to appeal, and the outcome of an appeal may affect the final amount of the 2004 NPM
adjustment PM USA and other PMs will receive.
▪
2005-2007 NPM Adjustments. The PMs and six states that had not settled the NPM Adjustment disputes are currently arbitrating
certain NPM Adjustment disputes before a single arbitration panel. The arbitration encompasses three years, 2005 through 2007, for
five of the six states, and one year, 2005, for one state. As of January 26, 2026, the arbitration panel found the States of Maryland,
Wisconsin and Ohio diligent for all three years and the State of Washington not diligent for all three years. The State of
Washington subsequently settled, as discussed above. PM USA recorded $14 million as a reduction of costs of sales and
$21 million as interest income in the fourth quarter of 2023 for its estimate of the minimum amount of the 2005 through 2007 NPM
Adjustments it will receive.
▪
Subsequent Years. No assurance can be given as to when proceedings for 2008 and subsequent years will be scheduled or the
precise form those proceedings will take.
Other Disputes under the State Settlement Agreements: The payment obligations of the tobacco product manufacturers that are
parties to the State Settlement Agreements, as well as the allocations of any NPM Adjustments and related settlements, have been and
may continue to be affected by R.J. Reynolds’s acquisition of Lorillard Tobacco Company in 2015 and its related sale of certain
cigarette brands to ITG (the “ITG transferred brands”). PM USA continues to dispute how the ITG transferred brands are treated in
allocating the NPM Adjustments and profit adjustments under the State Settlement Agreements.
In December 2019, the State of Mississippi filed a motion in Mississippi state court seeking to enforce the Mississippi State Settlement
Agreement against PM USA, R.J. Reynolds and ITG concerning the tax rates used in the annual calculation of the net operating profit
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adjustment payments starting in 2018. In September 2024, PM USA and the State of Mississippi settled their dispute over the profit
adjustment payments. Pursuant to the settlement, PM USA paid $7 million to the State of Mississippi for 2018 through 2023.
Accordingly, PM USA recorded $5 million of expense to cost of sales and $2 million of interest expense in the third quarter of 2024.
In May 2023, PM USA and R.J. Reynolds filed a motion in the U.S. District Court for the Eastern District of Texas seeking to enforce
the Texas State Settlement Agreement against the State of Texas concerning the same tax rate issue raised by the State of Mississippi.
The State of Texas filed a cross-motion to enforce, and the court found in favor of the State of Texas. In March 2025, the court issued a
final order in the matter, finding that PM USA owes $31 million to the State of Texas, plus pre- and post-judgment interest. PM USA
has appealed, and the appeal remains pending.
In July 2024, the State of Minnesota filed a motion in Minnesota state court seeking to enforce the Minnesota State Settlement
Agreement against PM USA, R.J. Reynolds and ITG concerning the same tax rate issues raised by the States of Mississippi and Texas.
The court found in favor of the State of Minnesota. In October 2025, the court issued an order as to damages, finding that PM USA
owes the State of Minnesota $10 million plus pre- and post-judgment interest. PM USA intends to appeal.
E-vapor Product Litigation
We have been named as defendants in federal class action lawsuits, individual lawsuits and “third party” lawsuits relating to JUUL e-
vapor products, which include school districts, state and local governments and tribal and healthcare organization lawsuits. We refer to
this litigation in the United States collectively as the “Multidistrict Litigation.” The theories of recovery in the Multidistrict Litigation
include violation of RICO, fraud, failure to warn, design defect, negligence, public nuisance and unfair trade practices. Plaintiffs seek
various remedies, including compensatory and punitive damages, restitution or remediation (for plaintiffs that are government entities)
and an injunction prohibiting product sales. We also have been named as defendants in a group of cases pending in a consolidated
California state court proceeding.
In May 2023, we reached agreement on terms to resolve the majority of the Multidistrict Litigation lawsuits as well as the majority of the
group of cases pending in the consolidated California state court proceeding for $235 million, for which amount we recorded a pre-tax
provision in the second quarter of 2023. In March 2024, the court granted final approval of the class action settlement, and we paid the
settlement amount in the second quarter of 2024. The settlement applies to all of the Multidistrict Litigation except 11 individual cases
that opted out of the settlement, all of the consolidated California cases except nine individual cases that opted out of the settlement and
38 “third party” cases brought by Native American tribes. We separately agreed to settle the cases brought by Native American tribes in
July 2024, and these cases have been dismissed. We recorded a pre-tax provision for $20 million in the second quarter of 2024 related to
the Native American tribes settlement and paid the settlement amount in October 2024. Neither settlement applies to four class action
lawsuits pending in Canada or 17 putative class action antitrust lawsuits. For a description of the antitrust cases not subject to the
settlement, see Antitrust Litigation below.
E-vapor Patent Litigation
JUUL Patent Litigation: In May 2023, Fuma International LLC (“Fuma”) filed a lawsuit against Altria and our affiliates Nu Mark LLC
(“Nu Mark”), AGDC, ALCS and NJOY in the U.S. District Court for the Eastern District of Virginia asserting claims of patent
infringement based on the sale of various Nu Mark and NJOY products, including NJOY ACE, in the United States. In August 2023, we
entered into an agreement with Fuma resulting in NJOY’s acquisition of the patents that Fuma asserted in its lawsuit. The parties
separately agreed that Fuma would dismiss its patent infringement claims in exchange for $10 million, and such claims were dismissed
in August 2023. We recorded a pre-tax provision for $10 million in the third quarter of 2023 related to the agreement and paid such
amount to Fuma in August 2023.
In June 2023, JUUL and VMR Products LLC (“VMR”) filed a lawsuit against Altria and our affiliates AGDC, ALCS, NJOY Holdings,
Inc. (“NJOY Holdings”) and NJOY in the U.S. District Court for the District of Arizona asserting claims of patent infringement based on
the sale of NJOY ACE in the United States. Plaintiffs seek various remedies, including damages and an injunction on sales of NJOY
ACE. The lawsuit is currently stayed.
Also in June 2023, the same plaintiffs filed a related action against the same defendants with the ITC. There, the plaintiffs also allege
patent infringement, but the remedies sought include an exclusion order that would prohibit the importation of NJOY ACE into the
United States. No damages are recoverable in the proceedings before the ITC. In January 2025, following an initial determination by
the Administrative Law Judge (“ALJ”), the ITC issued its final determination finding that NJOY ACE infringes the four patents plaintiff
asserted and issued an exclusion order and cease-and-desist orders prohibiting the importation and sale of NJOY ACE in the United
States. The orders became effective on March 31, 2025. We have appealed the orders to the U.S. Court of Appeals for the Federal
Circuit. The orders will remain in effect during the pendency of the appeal.
In November and December 2023 and February 2024, Altria and our affiliates filed petitions with the U.S. Patent Office Patent Trial and
Appeal Board (“PTAB”) challenging the validity of the patents underlying JUUL and VMR’s patent infringement claims. In May, June
and August 2024, the PTAB denied Altria’s requests to institute review as to four patents (including three of the patents that form the
basis of the ITC’s final determination) and, in June 2024, granted Altria’s request to institute review as to one of the patents that forms
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the basis of the ITC’s final determination. In June 2025, the PTAB issued its decision concluding that the patent it reviewed was valid.
We have appealed the PTAB’s decision to the U.S. Court of Appeals for the Federal Circuit.
In August 2023, NJOY filed a complaint against JUUL in the U.S. District Court for the District of Delaware asserting claims of patent
infringement based on the sale of certain JUUL e-vapor products, including the currently marketed JUUL device and JUULpods, in the
United States. The lawsuit was stayed pending the final determination of an ITC investigation NJOY filed against JUUL in August 2023
(discussed below). In October 2025, after the final determination of the corresponding ITC investigation, NJOY moved to lift the stay,
and the court granted the motion. JUUL subsequently moved to re-stay the case.
Also in August 2023, NJOY filed a related action against JUUL with the ITC alleging patent infringement and seeking a ban on the
importation and sale of the same JUUL products in the United States. In December 2024, the ALJ issued an initial determination
concluding that, while the patents NJOY asserted against JUUL are valid, JUUL products do not infringe the patents. On review, the
ITC affirmed the ALJ’s initial determination that the JUUL products do not infringe the asserted patents and terminated the
investigation. In May 2025, we appealed the ITC’s final determination to the U.S. Court of Appeals for the Federal Circuit.
Subsequently, in July 2025, we voluntarily dismissed the appeal and, in October 2025, moved to lift the stay on NJOY’s lawsuit against
JUUL in the U.S. District Court for the District of Delaware (discussed above).
In November 2023, JUUL filed petitions with the PTAB challenging the validity of the patents underlying NJOY’s patent infringement
claims. In May 2024, the PTAB agreed to review JUUL’s challenge to both of the NJOY patents asserted against JUUL. In May 2025,
the PTAB issued its decision concluding that the patents it reviewed were valid. The deadline to appeal the PTAB’s decision has passed,
and JUUL did not appeal.
In August 2025, JUUL filed an additional lawsuit against Altria and our affiliates AGDC, ALCS, NJOY Holdings and NJOY in the U.S.
District Court for the District of Arizona asserting claims of patent infringement based on the sale of NJOY Daily in the United States.
Plaintiff seeks various remedies, including damages and an injunction on sales of NJOY Daily and any other products NJOY may be
developing or preparing for commercialization in the United States that would infringe JUUL’s patent.
Also in August 2025, JUUL filed a related action against the same defendants with the ITC. There, JUUL also alleges patent
infringement, but the remedies sought include an exclusion order that would prohibit the importation into the United States of NJOY
Daily and any other products NJOY may be developing or preparing for commercialization in the United States that would infringe
JUUL’s patent. No damages are recoverable in the proceedings before the ITC. A hearing before the ALJ is scheduled for April 2026,
and we expect an initial determination from the ALJ in September 2026, subject to the ALJ’s ability to grant herself an extension. The
ALJ’s recommendation will be reviewed by the ITC, and we expect the ITC’s final determination in January 2027, subject to the ITC’s
right to grant itself an extension.
In November 2025, Altria, AGDC, ALCS, NJOY Holdings and NJOY sued the ITC and the ALJ in the U.S. District Court for the
Eastern District of Virginia, seeking to enjoin the ITC and ALJ from adjudicating JUUL’s action. The lawsuit asserts that Altria and our
affiliates are entitled to have JUUL’s claims heard in a federal court and be tried to a jury, and that the ALJ is unconstitutionally
appointed and shielded from removal by the President. Altria and our affiliates have moved for summary judgment and a preliminary
injunction. Also in November 2025, NJOY Holdings and NJOY filed a petition with PTAB challenging the validity of the patent
underlying JUUL’s August 2025 actions.
In September 2025, NJOY filed an additional complaint against JUUL in the U.S. District Court for the District of Delaware asserting
claims of patent infringement based on the sale of certain JUUL e-vapor products, including the currently marketed JUUL device and
JUULpods, in the United States. Also in September 2025, NJOY, ALCS, and AGDC filed a related action against JUUL with the ITC
alleging patent infringement and seeking a ban on the importation and sale of the same JUUL products in the United States. A hearing
before the ALJ is scheduled for September 2026, and we expect an initial determination from the ALJ in December 2026, subject to the
ALJ’s ability to grant himself an extension. The ALJ’s recommendation will be reviewed by the ITC, and we expect the ITC’s final
determination in April 2027, subject to the ITC’s right to grant itself an extension.
R.J. Reynolds Patent Litigation: ALCS filed a lawsuit against R.J. Reynolds in the U.S. District Court for the Middle District of North
Carolina alleging patent infringement by R.J. Reynolds’ e-vapor products. In September 2022, a jury awarded ALCS $95 million in
damages for past infringement, plus supplemental damages and interest. In January 2023, the court ordered R.J. Reynolds to pay ALCS
a 5.25% royalty on future sales of its infringing product resulting in positive net income through the expiration of the relevant patents in
2035. R.J. Reynolds filed a notice of appeal of the judgment to the U.S. Court of Appeals for the Federal Circuit, which affirmed the
judgment in December 2024. In August 2025, R.J. Reynolds petitioned the U.S. Supreme Court to review the federal appellate court’s
affirmance of the federal district court’s judgment. In October 2025, the U.S. Supreme Court denied R.J. Reynolds’ petition.
In July 2024, R.J. Reynolds moved the district court to vacate the judgment, including the damages awards and ongoing royalties, on the
grounds that R.J. Reynolds obtained a sublicense to the asserted patents from JUUL in December 2023. In December 2024, the district
court denied the motion as to the damages award and royalties due through December 2023. The district court also found that additional
proceedings were warranted on the part of the motion regarding royalties after R.J. Reynolds obtained the sublicense. The district court
has set an estimated timeframe to hold an evidentiary hearing for February or March 2026. Any gains related to this lawsuit remain
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subject to these district court proceedings. Accordingly, they have not yet been determined to be realized or realizable in accordance
with GAAP and have not been recognized in our consolidated financial statements.
Antitrust Litigation
In March 2023, we entered into a stock transfer agreement with JUUL pursuant to which, among other things, we transferred to JUUL
all of our beneficially owned JUUL equity securities.
As of January 26, 2026, 17 putative class action lawsuits have been filed against Altria and JUUL in the U.S. District Court for the
Northern District of California. In November 2020, these lawsuits were consolidated into three complaints (one on behalf of direct
purchasers, one on behalf of indirect purchasers and one on behalf of indirect resellers). The consolidated lawsuits, as amended, allege
that Altria and JUUL violated Sections 1, 2 and/or 3 of the Sherman Antitrust Act of 1890 and Section 7 of the Clayton Antitrust Act and
various state antitrust and consumer protection laws by restraining trade and/or substantially lessening competition in the U.S. closed-
system electronic cigarette market. Plaintiffs seek various remedies, including treble damages, attorneys’ fees, a declaration that the
agreements between Altria and JUUL are invalid and rescission of the transaction. In February 2024, the court ordered that certain of
the direct-purchaser plaintiffs’ claims against JUUL be sent to arbitration pursuant to an arbitration provision in JUUL’s online purchase
agreement and dismissed without prejudice the direct-purchaser plaintiffs’ claims for injunctive relief. In April 2025, plaintiffs
voluntarily dismissed all monopolization claims and all claims against the Altria defendants under California’s Unfair Competition Law.
The trial with respect to the remaining claims in the consolidated lawsuits is set to commence in May 2026.
Federal and State Shareholder Derivative Lawsuits
In October 2022, we agreed to settle a series of federal and state derivative cases brought by Altria shareholders on behalf of themselves
and Altria against Altria and certain of our current and former executives and directors and JUUL, its founders and certain of its current
and former executives. The cases related to our former investment in JUUL and asserted claims of breach of fiduciary duty by the Altria
defendants and aiding and abetting in that alleged breach of fiduciary duty by the remaining defendants.
Under the terms of the settlement, which became effective in May 2023, among other things, we agreed to provide $100 million in
funding over a five-year period to underage tobacco prevention and cessation programs, which may include positive youth development
programs, led by independent third-party organizations. We began providing funding in the third quarter of 2024. In 2022, we recorded
pre-tax provisions totaling $27 million for costs associated with the independent monitoring of our funding commitments and attorneys’
fees. In the first quarter of 2023, we recorded pre-tax provisions totaling approximately $100 million related to the settlement, and in
April 2023, paid $15 million to plaintiffs’ escrow account for attorneys’ fees.
Certain Other Tobacco-Related Litigation
“Lights/Ultra Lights” Cases and Other Smoking and Health Class Actions: Plaintiffs have sought certification of their cases as class
actions, alleging among other things, that the uses of the terms “Lights” and/or “Ultra Lights” constitute deceptive and unfair trade
practices, common law or statutory fraud, unjust enrichment or breach of warranty, and have sought injunctive and equitable relief,
including restitution and, in certain cases, punitive damages. These class actions have been brought against PM USA and, in certain
instances, Altria or our other subsidiaries, on behalf of individuals who purchased and consumed various brands of cigarettes. Defenses
raised in these cases include lack of misrepresentation, lack of causation, injury and damages, the statute of limitations, non-liability
under state statutory provisions exempting conduct that complies with federal regulatory directives, and the First Amendment. Twenty-
one state courts in 23 “Lights” cases have refused to certify class actions, dismissed class action allegations, reversed prior class
certification decisions or have entered judgment in favor of PM USA. As of January 26, 2026, two “Lights/Ultra Lights” class actions
are pending in U.S. state courts. Neither case is active.
As of January 26, 2026, one smoking and health case alleging personal injury or seeking court-supervised programs or an ongoing
medical monitoring program on behalf of individuals exposed to ETS and purporting to be brought on behalf of a class of individual
plaintiffs, is pending in a U.S. state court. The case is currently inactive.
Environmental Regulation
Altria and our former subsidiaries are subject to various federal, state and local laws and regulations concerning the discharge of
materials into the environment, or otherwise related to environmental protection, including, in the United States: the Clean Air Act, the
Clean Water Act, the Resource Conservation and Recovery Act and the Comprehensive Environmental Response, Compensation and
Liability Act (commonly known as “Superfund”), which can impose joint and several liability on each responsible party. Altria and our
former subsidiaries are involved in several cost recovery/contribution cases subjecting them to potential costs of remediation and natural
resource damages under Superfund or other laws and regulations. We expect to continue to make capital and other expenditures in
connection with environmental laws and regulations.
We provide for expenses associated with environmental remediation obligations on an undiscounted basis when such amounts are
probable and can be reasonably estimated. Such accruals are adjusted as new information develops or circumstances change. Other than
those amounts, it is not possible to reasonably estimate the cost of any environmental remediation and compliance efforts that we may
undertake in the future. In the opinion of our management, however, compliance with environmental laws and regulations, including the
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payment of any remediation costs or damages and the making of related expenditures, has not had a material adverse effect on our
consolidated results of operations, capital expenditures, financial position or cash flows.
Guarantees and Other Similar Matters
In the ordinary course of business, we have agreed to indemnify a limited number of third parties in the event of future litigation. At
December 31, 2025, we (i) had $43 million of unused letters of credit obtained in the ordinary course of business and (ii) were
contingently liable for guarantees related to our own performance. In addition, from time to time, we issue lines of credit to affiliated
entities. These items have not had, and are not expected to have, a significant impact on our liquidity.
Under the terms of a distribution agreement between Altria and PMI (“Distribution Agreement”), entered into as a result of our 2008
spin-off of our former subsidiary PMI, liabilities concerning tobacco products will be allocated based in substantial part on the
manufacturer. PMI will indemnify Altria and PM USA for liabilities related to tobacco products manufactured by PMI or contract
manufactured for PMI by PM USA, and PM USA will indemnify PMI for liabilities related to tobacco products manufactured by PM
USA, excluding tobacco products contract manufactured for PMI. We do not have a related liability recorded on our consolidated
balance sheet at December 31, 2025 as the fair value of this indemnification is insignificant.
As part of our supplier financing program, Altria guarantees the financial obligations of ALCS under the financing program agreement.
For further discussion of our supplier financing program, see Note 2. Summary of Significant Accounting Policies - Supplier Financing.
PM USA guarantees our obligations under our outstanding debt securities, any borrowings under our $3.0 billion Credit Agreement and
any amounts outstanding under our commercial paper program.
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Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Altria Group, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Altria Group, Inc. and its subsidiaries (the “Company”) as of
December 31, 2025 and 2024, and the related consolidated statements of earnings, of comprehensive earnings, of stockholders’ equity
(deficit) and of cash flows for each of the three years in the period ended December 31, 2025, including the related notes (collectively
referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as
of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the
Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period
ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America. Also in our
opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025,
based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over
financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Report of Management on Internal Control Over Financial Reporting. Our responsibility is to express opinions on the Company’s
consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a public
accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to
error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits
also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating
the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other
procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect
on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements
that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are
material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole,
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and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the
accounts or disclosures to which they relate.
Skoal Trademark Impairment Assessment
As described in Notes 2 and 4 to the consolidated financial statements, the Company’s indefinite-lived intangible assets carrying value
was $11,089 million as of December 31, 2025, and the balance associated with the Skoal trademark was approximately $3,600 million.
Management conducts an annual review of indefinite-lived intangible assets for potential impairment as of October 1 of each year, and
more frequently if an event occurs or circumstances change that would require management to perform an interim review. If the
carrying value of an indefinite-lived intangible asset exceeds its fair value, management considers the intangible asset impaired and
reduces the carrying value to fair value in the period identified. Management used an income approach to estimate the fair value of the
Skoal trademark, discounting expected future cash flows at a rate of return reflecting the risk-free rate for the use of those funds, the
expected rate of inflation and risks associated with realizing expected future cash flows. In determining the estimated fair value of the
Skoal trademark, management made various judgments, estimates and assumptions, the most significant of which were volume, price,
revenue, income, operating margins, perpetual growth rates, discount rates and scenario weightings, as applicable.
The principal considerations for our determination that performing procedures relating to the Skoal trademark impairment assessment is
a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the Skoal trademark;
(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant
assumptions related to revenue and the discount rate; and (iii) the audit effort involved the use of professionals with specialized skill and
knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on
the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s
indefinite-lived intangible asset impairment assessment, including controls over the valuation of the Skoal trademark. These procedures
also included, among others (i) testing management’s process for developing the fair value estimates of the Skoal trademark; (ii)
evaluating the appropriateness of the income approach used by management; (iii) testing the completeness and accuracy of underlying
data used in the income approach; and (iv) evaluating the reasonableness of the significant assumptions used by management related to
revenue and the discount rate. Evaluating management’s assumption related to revenue involved evaluating whether the assumption
used by management was reasonable considering (i) the current and past performance of the Skoal brand; (ii) the consistency with
external market and industry data; and (iii) whether the assumption was consistent with evidence obtained in other areas of the audit.
Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the income approach and
(ii) the reasonableness of the discount rate assumption.
Goodwill Impairment Assessments - E-vapor Reporting Unit
As described in Notes 2 and 4 to the consolidated financial statements, the Company's goodwill balance was $5,787 million as of
December 31, 2025, and the goodwill associated with the e-vapor reporting unit was $610 million. Management conducts an annual
review of goodwill for potential impairment as of October 1 of each year, and more frequently if an event occurs or circumstances
change that would require management to perform an interim review. If the carrying value of a reporting unit that includes goodwill
exceeds its fair value, which is determined using discounted cash flows, goodwill is considered impaired. In January 2025, the U.S.
International Trade Commission (“ITC”) issued an exclusion order and cease-and-desist orders prohibiting the importation and sale of
NJOY ACE in the United States, which became effective on March 31, 2025. As a result, in connection with the preparation of the
Company’s financial statements for the period ended March 31, 2025, management concluded a triggering event had occurred and
performed an interim impairment assessment. Management recorded a goodwill impairment of $873 million during the first quarter of
2025. During the fourth quarter of 2025, management evaluated the current enforcement environment against illicit flavored disposable
e-vapor products and deemed any effective enforcement would likely occur gradually over a longer period of time. Management
performed the annual impairment test of goodwill as of October 1, 2025. The annual test indicated that the estimated fair value of the e-
vapor reporting unit was below its carrying value, resulting in a goodwill impairment of $285 million. Management used an income
approach to estimate the fair values of the Company’s reporting units, discounting expected future cash flows at a rate of return
reflecting the risk-free rate for the use of those funds, the expected rate of inflation and risks associated with realizing expected future
cash flows. Management’s cash flows were based on a range of scenarios that consider certain potential regulatory and market
outcomes. In performing the discounted cash flow analyses, management made various judgments, estimates and assumptions, the most
significant of which were volume, price, revenue, income, operating margins, scenario weightings, perpetual growth rate and discount
rates.
The principal considerations for our determination that performing procedures relating to the goodwill impairment assessments of the e-
vapor reporting unit is a critical audit matter are (i) the significant judgment by management when developing the fair value estimates of
the reporting unit; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s
significant assumptions related to volume, price, operating margins, scenario weightings, perpetual growth rate and discount rates; and
(iii) the audit effort involved the use of professionals with specialized skill and knowledge.
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Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on
the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s goodwill
impairment assessments, including controls over the valuation of the e-vapor reporting unit. These procedures also included, among
others (i) testing management’s process for developing the fair value estimates; (ii) evaluating the appropriateness of the income
approach used by management; (iii) testing the completeness and accuracy of the underlying data used in the income approach; and (iv)
evaluating the reasonableness of the significant assumptions used by management related to volume, price, operating margins, scenario
weightings, perpetual growth rate and discount rates. Evaluating management’s assumptions related to volume, price, operating
margins, and scenario weightings involved evaluating whether the assumptions used by management were reasonable considering (i) the
current and past performance of the e-vapor reporting unit; (ii) the consistency with external market, regulatory, and industry data, as
applicable; and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit. Professionals with
specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the Company’s income approach and (ii) the
reasonableness of the perpetual growth rate and discount rates assumptions.
E-vapor Definite-Lived Intangible Assets Impairment Assessment
As described in Notes 2 and 4 to the consolidated financial statements, the Company’s definite-lived intangible assets carrying value was
$787 million as of December 31, 2025, and the carrying value associated with e-vapor definite-lived intangible assets was $60 million.
Management reviews long-lived assets, including definite-lived intangible assets, for impairment whenever events or changes in
business circumstances indicate that the carrying value of the assets may not be fully recoverable. Management performs undiscounted
operating cash flow analyses to determine if an impairment exists. For purposes of recognition and measurement of an impairment for
assets held for use, management groups assets and liabilities at the lowest level for which cash flows are separately identifiable. If
management determines that an impairment exists, any related impairment loss is calculated based on fair value. During the fourth
quarter of 2025, management evaluated the current enforcement environment against illicit flavored disposable e-vapor products and
deemed any effective enforcement would likely occur gradually over a longer period of time. As a result, management performed a
recoverability test of the e-vapor definite-lived intangible assets. Management determined that the asset group was not recoverable
because the estimated undiscounted cash flows, including an assumed terminal-year EBITDA multiple, were less than its carrying value.
Management then measured the impairment loss by comparing the carrying value of the definite-lived intangible assets, consisting of
developed technology and trademarks, to their estimated fair values, which were determined using an income approach, specifically the
relief from royalty method, which estimates the value of an intangible asset by calculating the present value of the hypothetical royalty
payments a company avoids by owning the asset rather than licensing it from a third party. In performing the analysis, management
made various judgments, estimates and assumptions, the most significant of which were volume, price, revenue, income, operating
margins, scenario weightings, discount rates, royalty rates, obsolescence rates and economic lives. As a result, management recorded a
pre-tax impairment of these assets of $970 million.
The principal considerations for our determination that performing procedures relating to the e-vapor definite-lived intangible asset
impairment assessment is a critical audit matter are (i) the significant judgment by management when developing the fair value estimates
of the e-vapor definite-lived intangible assets; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures
and evaluating management’s significant assumptions related to volume, price, operating margins, scenario weightings, discount rates,
royalty rates, obsolescence rates, economic lives and EBITDA multiple; and (iii) the audit effort involved the use of professionals with
specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on
the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s definite-
lived intangible asset impairment assessment, including controls over the valuation of the e-vapor definite-lived intangible assets. These
procedures also included, among others (i) testing management’s process for developing the fair value estimates of the e-vapor definite-
lived intangible assets; (ii) evaluating the appropriateness of the income approach used by management; (iii) testing the completeness
and accuracy of underlying data used in the income approach; and (iv) evaluating the reasonableness of the significant assumptions used
by management related to volume, price, operating margins, scenario weightings, discount rates, royalty rates, obsolescence rates,
economic lives and EBITDA multiple. Evaluating management’s assumptions related to volume, price, operating margins, and scenario
weighting involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past
performance of the e-vapor asset group; (ii) the consistency with external market, regulatory, and industry data, as applicable; and (iii)
whether the assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and
knowledge were used to assist in evaluating (i) the appropriateness of the income approach and (ii) the reasonableness of the discount
rates, royalty rates, obsolescence rates, economic lives and EBITDA multiple.
/s/ PricewaterhouseCoopers LLP
Richmond, Virginia
January 29, 2026
We have served as the Company’s auditor since at least 1934, which is when the Company became subject to SEC reporting
requirements. We have not been able to determine the specific year we began serving as auditor of the Company.
103
Report of Management on Internal Control Over Financial Reporting
Management of Altria Group, Inc. is responsible for establishing and maintaining adequate internal control over financial reporting as
defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. Altria Group, Inc.’s internal control
over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United
States of America. Internal control over financial reporting includes those written policies and procedures that:
n pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
assets of Altria Group, Inc.;
n provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with accounting principles generally accepted in the United States of America;
n provide reasonable assurance that receipts and expenditures of Altria Group, Inc. are being made only in accordance with the
authorization of management and directors of Altria Group, Inc.; and
n provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that
could have a material effect on the consolidated financial statements.
Internal control over financial reporting includes the controls themselves, monitoring and internal auditing practices and actions taken to
correct deficiencies as identified.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of Altria Group, Inc.’s internal control over financial reporting as of December 31, 2025.
Management based this assessment on criteria for effective internal control over financial reporting described in Internal Control -
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
Management’s assessment included an evaluation of the design of Altria Group, Inc.’s internal control over financial reporting and
testing of the operational effectiveness of its internal control over financial reporting. Management reviewed the results of its
assessment with the Audit Committee of Altria Group, Inc.’s Board of Directors.
Based on this assessment, management determined that, as of December 31, 2025, Altria Group, Inc. maintained effective internal
control over financial reporting.
PricewaterhouseCoopers LLP, an independent registered public accounting firm, who audited and reported on the consolidated financial
statements of Altria Group, Inc. included in this report, has audited the effectiveness of Altria Group, Inc.’s internal control over
financial reporting as of December 31, 2025, as stated in their report herein.
January 29, 2026
104
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Disclosure Controls and Procedures
We carried out an evaluation, with the participation of our management, including our Chief Executive Officer and Chief Financial
Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the
end of the period covered by this Form 10-K. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that our disclosure controls and procedures are effective.
There have been no changes in our internal control over financial reporting during the most recent fiscal quarter that have materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting.
The Report of Independent Registered Public Accounting Firm and the Report of Management on Internal Control over Financial
Reporting are included in Item 8.
Item 9B. Other Information.
During the quarter ended December 31, 2025, none of our directors or officers adopted, modified or terminated any “Rule 10b5-1
trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
Part III
Except for the information relating to the executive officers set forth in Item 10, the information called for by Items 10-14 is hereby
incorporated by reference to our definitive proxy statement for use in connection with our 2026 Annual Meeting of Shareholders (“2026
Annual Meeting”) to be held on May 14, 2026 that is expected to be filed with the SEC on or about April 2, 2026 (“proxy statement”),
and, except as indicated therein, made a part hereof.
Item 10. Directors, Executive Officers and Corporate Governance.
Refer to “Board and Governance Matters - Proposal 1 - Election of Directors” and “Board and Governance Matters - Board and
Committee Governance” sections of the proxy statement.
Information about Our Executive Officers as of February 13, 2026:
Name
Office
Age
Jody L. Begley
Executive Vice President and Chief Operating Officer
54
William F. Gifford, Jr.
Chief Executive Officer
55
Salvatore Mancuso
Executive Vice President and Chief Financial Officer
60
Robert A. McCarter III
Executive Vice President and General Counsel
53
Heather A. Newman
Senior Vice President, Chief Strategy & Growth Officer
48
Katie F. Patterson
Vice President and Controller
40
Charles N. Whitaker
Senior Vice President, Chief Human Resources Officer and Chief Compliance Officer
59
All of the above-mentioned executive officers have been employed by Altria or our subsidiaries in various capacities during the past five
years.
As previously announced, effective upon the conclusion of the 2026 Annual Meeting on May 14, 2026, Mr. Gifford will retire as Chief
Executive Officer and Mr. Mancuso will become Chief Executive Officer. Additionally, Ms. Newman will become Executive Vice
President and Chief Financial Officer, effective upon the conclusion of the 2026 Annual Meeting.
105
Insider Trading Policy
We have adopted an insider trading policy that governs transactions in our securities by our directors, officers and employees, and by
Altria and our subsidiaries. Our insider trading policy is designed to promote compliance with insider trading laws, rules and regulations
applicable to us. A copy of our insider trading policy is filed with this Annual Report on Form 10-K as Exhibit 19.
Codes of Conduct and Corporate Governance
We have adopted the Altria Code of Conduct for Compliance and Integrity, which complies with requirements set forth in Item 406 of
Regulation S-K. This Code of Conduct applies to all of our employees, including our principal executive officer, principal financial
officer, principal accounting officer or controller, and persons performing similar functions. We have also adopted a code of business
conduct and ethics that applies to the members of our Board of Directors. These documents are available free of charge on our website
at www.altria.com.
Any waiver granted by us to our principal executive officer, principal financial officer or controller under the Code of Conduct, and
certain amendments to the Code of Conduct, will be disclosed on our website at www.altria.com within the time period required by
applicable rules.
In addition, we have adopted corporate governance guidelines and charters for our Audit, Compensation and Talent Development and
Nominating, Corporate Governance and Social Responsibility Committees and the other committees of our Board of Directors. All of
these documents are available free of charge on our website at www.altria.com.
The information on our websites is not, and shall not be deemed to be, a part of this Form 10-K or incorporated into any other filings we
make with the SEC.
Item 11. Executive Compensation.
Refer to “Executive Compensation,” and “Board and Governance Matters - Director Compensation” sections of our proxy statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.
The number of shares to be issued upon exercise or vesting and the number of shares remaining available for future issuance under our
equity compensation plans at December 31, 2025, were as follows:
Number of Shares
to be Issued upon
Exercise of
Outstanding
Options and Vesting of
Deferred Stock
(a)
Weighted Average
Exercise Price of
Outstanding
Options
(b)
Number of Shares
Remaining Available for
Future Issuance Under Equity
Compensation
Plans
(c)
Equity compensation plans approved by shareholders (1)
5,306,644 (2)
$—
25,827,825 (3)
(1) Our shareholders have approved the following plans, shares of which are referenced in column (a) or column (c): the 2020 Performance Incentive
Plan, the 2025 Performance Incentive Plan and the 2025 Stock Compensation Plan for Non-Employee Directors.
(2) Represents 3,933,158 shares of restricted stock units and 1,373,486 shares that may be issued upon vesting of performance stock units if maximum
performance measures are achieved.
(3) Includes 24,827,825 shares available under the 2025 Performance Incentive Plan and 1,000,000 shares available under the 2025 Stock Compensation
Plan for Non-Employee Directors, and excludes shares reflected in column (a).
Refer to “Ownership of Equity Securities - Directors, Nominees and Executive Officers” and “Ownership of Equity Securities - Certain
Other Beneficial Owners” sections of our proxy statement.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Refer to “Board and Governance Matters - Our Board of Directors - Related Person Transactions, Director Code and Code of Conduct”
and “Board and Governance Matters - Our Board of Directors - Director Independence Determinations” sections of our proxy statement.
Item 14. Principal Accountant Fees and Services.
Refer to “Audit Committee Matters - Independent Registered Public Accounting Firm’s Fees” and “Audit Committee Matters - Pre-
Approval Policy” sections of our proxy statement.
106
Part IV
Item 15. Exhibits and Financial Statement Schedules.
(a) Index to Consolidated Financial Statements
Page
Consolidated Balance Sheets at December 31, 2025 and 2024
52
Consolidated Statements of Earnings for the years ended December 31, 2025, 2024 and 2023
54
Consolidated Statements of Comprehensive Earnings for the years ended December 31, 2025, 2024 and 2023
55
Consolidated Statements of Cash Flows for the years ended December 31, 2025, 2024 and 2023
56
Consolidated Statements of Stockholders’ Equity (Deficit) for the years ended December 31, 2025, 2024 and 2023
58
Notes to Consolidated Financial Statements
59
Report of Independent Registered Public Accounting Firm (PCAOB ID 238)
101
Report of Management on Internal Control Over Financial Reporting
104
Schedules have been omitted either because such schedules are not required or are not applicable.
In accordance with Regulation S-X Rule 3-09, the audited financial statements of ABI for the year ended December 31, 2025 will be
filed by amendment within six months after ABI’s year ended December 31, 2025.
(b) The following exhibits are filed as part of this Form 10-K:
2.1
Distribution Agreement by and between Altria Group, Inc. and Kraft Foods Inc. (now known as Mondelēz
International, Inc.), dated as of January 31, 2007. Incorporated by reference to Altria Group, Inc.’s Current Report on
Form 8-K filed on January 31, 2007 (File No. 1-08940).
2.2
Distribution Agreement by and between Altria Group, Inc. and Philip Morris International Inc., dated as of January 30,
2008. Incorporated by reference to Altria Group, Inc.’s Current Report on Form 8-K filed on January 30, 2008 (File
No. 1-08940).
3.1
Articles of Amendment to the Restated Articles of Incorporation of Altria Group, Inc. and Restated Articles of
Incorporation of Altria Group, Inc. Incorporated by reference to Altria Group, Inc.’s Annual Report on Form 10-K for
the year ended December 31, 2002 (File No. 1-08940).
3.2
Amended and Restated By-Laws of Altria Group, Inc. (effective as of October 26, 2022). Incorporated by reference to
Altria Group, Inc.’s Current Report on Form 8-K filed on October 27, 2022 (File No. 1-08940).
4.1
Description of Altria Group, Inc.’s Registered Securities. Incorporated by reference to Altria Group, Inc.’s Quarterly
Report on Form 10-Q for the period ended June 30, 2025 (File No. 1-08940).
4.2
Indenture between Altria Group, Inc. and The Bank of New York (as successor in interest to JPMorgan Chase Bank,
formerly known as The Chase Manhattan Bank), as Trustee, dated as of December 2, 1996. Incorporated by reference
to Altria Group, Inc.’s Registration Statement on Form S-3/A filed on January 29, 1998 (No. 333-35143).
4.3
First Supplemental Indenture to Indenture, dated as of December 2, 1996, between Altria Group, Inc. and The Bank of
New York (as successor in interest to JPMorgan Chase Bank, formerly known as The Chase Manhattan Bank), as
Trustee, dated as of February 13, 2008. Incorporated by reference to Altria Group, Inc.’s Current Report on Form 8-K
filed on February 15, 2008 (File No. 1-08940).
4.4
Indenture among Altria Group, Inc., as Issuer, Philip Morris USA Inc., as Guarantor, and Deutsche Bank Trust
Company Americas, as Trustee, dated as of November 4, 2008. Incorporated by reference to Altria Group, Inc.’s
Registration Statement on Form S-3 filed on November 4, 2008 (No. 333-155009).
4.5
The Registrant agrees to furnish copies of any instruments defining the rights of holders of long-term debt of the
Registrant and its consolidated subsidiaries that does not exceed 10 percent of the total assets of the Registrant and its
consolidated subsidiaries to the Commission upon request.
107
10.1
Comprehensive Settlement Agreement and Release related to settlement of Mississippi health care cost recovery
action, dated as of October 17, 1997. Incorporated by reference to Altria Group, Inc.’s Annual Report on Form 10-K
for the year ended December 31, 1997 (File No. 1-08940).
10.2
Settlement Agreement related to settlement of Florida health care cost recovery action, dated August 25, 1997.
Incorporated by reference to Altria Group, Inc.’s Current Report on Form 8-K filed on September 3, 1997 (File No.
1-08940).
10.3
Comprehensive Settlement Agreement and Release related to settlement of Texas health care cost recovery action,
dated as of January 16, 1998. Incorporated by reference to Altria Group, Inc.’s Current Report on Form 8-K filed on
January 28, 1998 (File No. 1-08940).
10.4
Settlement Agreement and Stipulation for Entry of Judgment regarding the claims of the State of Minnesota, dated as
of May 8, 1998. Incorporated by reference to Altria Group, Inc.’s Quarterly Report on Form 10-Q for the period ended
March 31, 1998 (File No. 1-08940).
10.5
Settlement Agreement and Release regarding the claims of Blue Cross and Blue Shield of Minnesota, dated as of May
8, 1998. Incorporated by reference to Altria Group, Inc.’s Quarterly Report on Form 10-Q for the period ended March
31, 1998 (File No. 1-08940).
10.6
Stipulation of Amendment to Settlement Agreement and For Entry of Agreed Order regarding the settlement of the
Mississippi health care cost recovery action, dated as of July 2, 1998. Incorporated by reference to Altria Group, Inc.’s
Quarterly Report on Form 10-Q for the period ended June 30, 1998 (File No. 1-08940).
10.7
Stipulation of Amendment to Settlement Agreement and For Entry of Consent Decree regarding the settlement of the
Texas health care cost recovery action, dated as of July 24, 1998. Incorporated by reference to Altria Group, Inc.’s
Quarterly Report on Form 10-Q for the period ended June 30, 1998 (File No. 1-08940).
10.8
Stipulation of Amendment to Settlement Agreement and For Entry of Consent Decree regarding the settlement of the
Florida health care cost recovery action, dated as of September 11, 1998. Incorporated by reference to Altria Group,
Inc.’s Quarterly Report on Form 10-Q for the period ended September 30, 1998 (File No. 1-08940).
10.9
Master Settlement Agreement relating to state health care cost recovery and other claims, dated as of November 23,
1998. Incorporated by reference to Altria Group, Inc.’s Current Report on Form 8-K filed on November 25, 1998, as
amended by Form 8-K/A filed on December 24, 1998 (File No. 1-08940).
10.10
Stipulation and Agreed Order Regarding Stay of Execution Pending Review and Related Matters, dated as of May 7,
2001. Incorporated by reference to Altria Group, Inc.’s Current Report on Form 8-K filed on May 8, 2001 (File No.
1-08940).
10.11
Term Sheet effective December 17, 2012, between Philip Morris USA Inc., the other participating manufacturers, and
various states and territories for settlement of the 2003 - 2012 Non-Participating Manufacturer Adjustment with those
states. Incorporated by reference to Altria Group, Inc.’s Current Report on Form 8-K filed on December 18, 2012 (File
No. 1-08940).
10.12
Intellectual Property Agreement by and between Philip Morris International Inc. and Philip Morris USA Inc., dated as
of January 1, 2008. Incorporated by reference to Altria Group, Inc.’s Current Report on Form 8-K filed on March 28,
2008 (File No. 1-08940).
10.13
5-Year Revolving Credit Agreement, dated as of October 24, 2023, among Altria Group, Inc., JPMorgan Chase Bank,
N.A. and Citibank, N.A., as administrative agents, and the lenders named therein. Incorporated by reference to Altria
Group, Inc.’s Current Report on Form 8-K filed on October 25, 2023 (File No. 1-08940).
10.14
Guarantee made by Philip Morris USA Inc. in favor of the lenders party to the 5-Year Revolving Credit Agreement,
dated as of October 24, 2023, among Altria Group, Inc., the lenders named therein and JPMorgan Chase Bank, N.A.
and Citibank, N.A., as administrative agents, dated as of October 24, 2023. Incorporated by reference to Altria Group,
Inc.’s Current Report on Form 8-K filed on October 25, 2023 (File No. 1-08940).
10.15
Extension Agreement, effective July 23, 2025, among Altria Group, Inc., JPMorgan Chase Bank, N.A. and Citibank,
N.A., as administrative agents, and the lenders named therein. Incorporated by reference to Altria Group, Inc.’s
Current Report on Form 8-K filed on July 23, 2025 (File No. 1-08940).
10.16
Benefit Equalization Plan, effective September 2, 1974, as amended. Incorporated by reference to Altria Group, Inc.’s
Annual Report on Form 10-K for the year ended December 31, 2014 (File No. 1-08940).*
10.17
Amendment to Benefit Equalization Plan, effective March 31, 2016. Incorporated by reference to Altria Group, Inc.’s
Quarterly Report on Form 10-Q for the period ended March 31, 2016 (File No. 1-08940).*
10.18
Amendment to Benefit Equalization Plan, effective January 1, 2016 and October 1, 2016. Incorporated by reference to
Altria Group, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2016 (File No. 1-08940).*
108
10.19
Amendment to Benefit Equalization Plan, effective January 1, 2019. Incorporated by reference to Altria Group, Inc.’s
Annual Report on Form 10-K for year ended December 31, 2018 (File No. 1-08940).*
10.20
Form of Employee Grantor Trust Enrollment Agreement. Incorporated by reference to Altria Group, Inc.’s Annual
Report on Form 10-K for the year ended December 31, 1995 (File No. 1-08940).*
10.21
Long-Term Disability Benefit Equalization Plan, effective as of January 1, 1989, as amended. Incorporated by
reference to Altria Group, Inc.’s Quarterly Report on Form 10-Q for the period ended June 30, 2009 (File No.
1-08940).*
10.22
Deferred Fee Plan for Non-Employee Directors, as amended and restated effective October 28, 2015. Incorporated by
reference to Altria Group, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2015 (File No.
1-08940).*
10.23
2015 Stock Compensation Plan for Non-Employee Directors, as amended and restated effective October 26, 2022.
Incorporated by reference to Altria Group, Inc.’s Quarterly Report on Form 10-Q for the period ended September 30,
2022 (File No. 1-08940).*
10.24
2020 Performance Incentive Plan. Incorporated by reference to Exhibit A to Altria Group, Inc.’s Definitive Proxy
Statement on Schedule 14A filed on April 2, 2020, as amended by Altria Group, Inc.'s Supplement to Proxy Statement
on Schedule 14A filed on April 17, 2020 (File No. 1-08940).*
10.25
Form of Indemnity Agreement. Incorporated by reference to Altria Group, Inc.’s Current Report on Form 8-K filed on
October 30, 2006 (File No. 1-08940).
10.26
Form of Restricted Stock Unit Agreement (2020). Incorporated by reference to Altria Group, Inc.’s Quarterly Report
on Form 10-Q for the period ended March 31, 2020 (File No. 1-08940).*
10.27
Form of Performance Stock Unit Agreement (2020). Incorporated by reference to Altria Group, Inc.’s Quarterly
Report on Form 10-Q for the period ended March 31, 2020 (File No. 1-08940).*
10.28
Form of Restricted Stock Unit Agreement (2021). Incorporated by reference to Altria Group, Inc.’s Quarterly Report
on Form 10-Q for the period ended March 31, 2021 (File No. 1-08940).*
10.29
Form of Performance Stock Unit Agreement (2021). Incorporated by reference to Altria Group, Inc.’s Quarterly
Report on Form 10-Q for the period ended March 31, 2021 (File No. 1-08940).*
10.30
Form of Restricted Stock Unit Agreement (2022). Incorporated by reference to Altria Group, Inc.’s Quarterly Report
on Form 10-Q for the period ended March 31, 2022 (File No. 1-08940).*
10.31
Form of Performance Stock Unit Agreement (2022). Incorporated by reference to Altria Group, Inc.’s Quarterly
Report on Form 10-Q for the period ended March 31, 2022 (File No. 1-08940).*
10.32
Form of Restricted Stock Unit Agreement (2023). Incorporated by reference to Altria Group, Inc.’s Quarterly Report
on Form 10-Q for the period ended March 31, 2023 (File No. 1-08940).*
10.33
Form of Performance Stock Unit Agreement (2023). Incorporated by reference to Altria Group, Inc.’s Quarterly
Report on Form 10-Q for the period ended March 31, 2023 (File No. 1-08940).*
10.34
Form of Restricted Stock Unit Agreement (2024). Incorporated by reference to Altria Group, Inc.’s Quarterly Report
on Form 10-Q for the period ended March 31, 2024 (File No. 1-08940).*
10.35
Form of Performance Stock Unit Agreement (2024). Incorporated by reference to Altria Group, Inc.’s Quarterly
Report on Form 10-Q for the period ended March 31, 2024 (File No. 1-08940).*
10.36
Deferred Fee Plan for Non-Employee Directors, as amended and restated effective October 29, 2025.*
10.37
2025 Performance Incentive Plan. Incorporated by reference to Exhibit A to Altria Group, Inc.’s Definitive Proxy
Statement on Schedule 14A filed on April 3, 2025 (File No. 1-08940).*
10.38
2025 Stock Compensation Plan for Non-Employee Directors. Incorporated by reference to Exhibit B to Altria Group,
Inc.’s Definitive Proxy Statement on Schedule 14A filed on April 3, 2025 (File No. 1-08940).*
10.39
Form of Restricted Stock Unit Agreement (2025). Incorporated by reference to Altria Group, Inc.’s Quarterly Report
on Form 10-Q for the period ended June 30, 2025 (File No. 1-08940).*
10.40
Form of Performance Stock Unit Agreement (2025). Incorporated by reference to Altria Group, Inc.’s Quarterly
Report on Form 10-Q for the period ended June 30, 2025 (File No. 1-08940).*
109
10.41
Form of Executive Confidentiality and Non-Competition Agreement (October 2018). Incorporated by reference to
Altria Group, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2018 (File No. 1-08940).*
10.42
Form of Confidentiality and Non-Competition Agreement (February 2019). Incorporated by reference to Altria Group,
Inc.’s Quarterly Report on Form 10-Q for the period ended March 31, 2019 (File No. 1-08940).*
10.43
Form of Letter Regarding Reimbursement of Legal Expenses. Incorporated by reference to Altria Group, Inc.’s
Annual Report on Form 10-K for the year ended December 31, 2020 (File No. 1-08940).*
10.44
Time Sharing Agreement between Altria Client Services LLC and William F. Gifford, Jr., dated February 23, 2023.
Incorporated by reference to Altria Group, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2022
(File No. 1-08940).*
10.45
Form of Agreement and General Release (September 2019). Incorporated by reference to Altria Group, Inc.’s Annual
Report on Form 10-K for the year ended December 31, 2019 (File No. 1-08940).*
19
Insider trading policy.
21
Subsidiaries of Altria Group, Inc.
22
Guarantor Subsidiary of the Registrant.
23
Consent of independent registered public accounting firm.
24
Powers of attorney.
31.1
Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934,
as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934,
as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
32.2
Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
97
Altria Group, Inc. Dodd-Frank Compensation Recoupment Policy. Incorporated by reference to Altria Group, Inc.’s
Annual Report on Form 10-K for the year ended December 31, 2023 (File No. 1-08940).
99.1
Certain Litigation Matters.
99.2
Trial Schedule for Certain Cases.
101
The following financial statements from the our Annual Report on Form 10-K for the year ended December 31, 2025,
formatted in Inline XBRL: (i) Consolidated Statements of Cash Flows, (ii) Consolidated Statements of Earnings, (iii)
Consolidated Statements of Comprehensive Earnings, (iv) Consolidated Balance Sheets, (v) Consolidated Statements
of Stockholders’ Equity (Deficit), and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and
including detailed tags.Inline XBRL Instance Document - the instance document does not appear in the Interactive
Data File because its XBRL tags are embedded within the Inline XBRL document.
104
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).
* Denotes management contract or compensatory plan or arrangement in which directors or executive officers are eligible to participate.
Item 16. Form 10-K Summary.
None.
110
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ALTRIA GROUP, INC.
By: /s/ WILLIAM F. GIFFORD, JR.
(William F. Gifford, Jr.
Chief Executive Officer)
Date: February 25, 2026
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the date indicated.
Signature
Title
Date
/s/ WILLIAM F. GIFFORD, JR.
(William F. Gifford, Jr.)
Director and Chief Executive Officer
February 25, 2026
/s/ SALVATORE MANCUSO
(Salvatore Mancuso)
Director, Executive Vice President and Chief Financial
Officer
February 25, 2026
/s/ KATIE F. PATTERSON
(Katie F. Patterson)
Vice President and Controller
February 25, 2026
* IAN L.T. CLARKE,
Directors
MARJORIE M. CONNELLY,
R. MATT DAVIS,
DEBRA J. KELLY-ENNIS,
KATHRYN B. MCQUADE,
GEORGE MUÑOZ,
VIRGINIA E. SHANKS,
RICHARD S. STODDART,
ELLEN R. STRAHLMAN,
M. MAX YZAGUIRRE
* By:
/s/ WILLIAM F. GIFFORD, JR.
(WILLIAM F. GIFFORD, JR.
ATTORNEY-IN-FACT)
February 25, 2026
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S H A R E H O L D E R I N F O R M AT I O N
B O A R D O F D I R E C T O R S
Design: Andra Hoffman | andradesignstudio.com
Photography: Andy Lilien, Casey Templeton
Printer: DG3 | Diversified Global Graphics Group
© Copyright 2026 Altria
Ian L.T. Clarke1,4,6
Retired Chief Financial Officer,
Greater Toronto Airports
Authority
Director since 2022
Marjorie M. Connelly1,2,3,6
Retired Chief Operating Officer,
Convergys Corporation
Director since 2021
R. Matt Davis2,5,6
Retired President, North America,
and Senior Vice President,
Global Corporate Affairs,
Dow Inc. and
President, Driftwood
Leadership, LLC
Director since 2021
William F. Gifford, Jr.3
Chief Executive Officer,
Altria Group, Inc.
Director since 2020
Debra J. Kelly-Ennis1,3,5,6
Retired President and
Chief Executive Officer,
Diageo Canada, Inc.
Director since 2013
Salvatore Mancuso
Executive Vice President and
Chief Financial Officer,
Altria Group, Inc.
Director since 2026
Kathryn B. McQuade 2,3,4
Retired Executive Vice President
and Chief Financial Officer,
Canadian Pacific Railway
Limited
Director since 2012
George Muñoz1,2,3,4
Principal, Muñoz Investment
Banking Group, LLC and
Partner, Tobin & Muñoz
Director since 2004
Virginia E. Shanks 2,3,4,5
Retired Executive Vice President
and Chief Administrative Officer,
Pinnacle Entertainment, Inc.
Director since 2017
Richard S. Stoddart1,5,6
Chair of the Board, Hasbro, Inc.
and former President and
Chief Executive Officer,
InnerWorkings, Inc.
Director since 2025
Ellen R. Strahlman3,4,5,6
Retired Executive Vice President,
Research & Development and
Chief Medical Officer, Becton,
Dickinson and Company
Director since 2020
M. Max Yzaguirre 1,2,4,5
Retired Executive Chairman,
Forbes Bros. Holdings, Ltd.
Director since 2022
Independent Chair of the Board
Kathryn B. McQuade
Committees
1 Member of Audit Committee,
Marjorie M. Connelly, Chair
2 Member of Compensation and
Talent Development Committee,
George Muñoz, Chair
3 Member of Executive Committee,
Kathryn B. McQuade, Chair
4 Member of Finance Committee,
Virginia E. Shanks, Chair
5 Member of Innovation Committee,
Ellen R. Strahlman, Chair
6 Member of Nominating,
Corporate Governance and
Social Responsibility Committee,
Debra J. Kelly-Ennis, Chair
Shareholder Response Center:
Computershare Trust Company,
N.A. (Computershare), our
transfer agent, will be happy to
answer questions about your
accounts, certificates, dividends
or the Direct Stock Purchase and
Dividend Reinvestment Plan.
Within the U.S. and Canada,
shareholders may call toll-free:
1-800-442-0077
From outside the U.S. or Canada,
shareholders may call:
1-781-575-3572
Postal address:
Computershare Trust
Company, N.A.
P.O. Box 43078
Providence, RI 02940-3078
To eliminate duplicate mailings,
please contact Computershare
(if you are a registered share-
holder) or your broker (if you hold
your shares through a brokerage
firm).
Direct Stock Purchase and
Dividend Reinvestment Plan:
Altria offers a Direct Stock
Purchase and Dividend
Reinvestment Plan, administered
by Computershare. For more
information, please contact
Computershare.
Shareholder Publications:
Altria makes a variety of
publications and reports
available. These include the
Annual Report, news releases
and other publications.
For copies, please visit our
website at: www.altria.com/
investors
Altria makes available free of
charge its filings with the U.S.
Securities and Exchange
Commission (SEC), such as Proxy
Statements and Reports on Form
10-K, 10-Q and 8-K.
For copies, please visit our
website at:
www.altria.com/SECfilings
If you do not have Internet
access, you may call:
1-804-484-8222
Internet Access Helps
Reduce Costs:
As a convenience to shareholders
and an important cost-reduction
and environmentally friendly
measure, you can register to
receive future shareholder
materials (i.e., Annual Report and
Proxy Statement) electronically.
Shareholders also can vote their
proxies electronically.
For more information, please
visit our website at:
www.altria.com/investors
Additional Information:
The information on the respec-
tive websites of Altria and its
subsidiaries is not, and shall not
be deemed to be, a part of this
report or incorporated into any
filings Altria makes with the SEC.
Trademarks and service marks
in this report are the registered
property of or licensed by Altria
or its subsidiaries.
2026 Annual Meeting:
The Altria Annual Meeting of
Shareholders will be held at 9:00
a.m. (Eastern Time) on Thursday,
May 14, 2026. For more
information about the Annual
Meeting, please refer to Altria’s
2026 Proxy Statement or call:
1-804-484-8838
Transfer Agent and Registrar:
Computershare Trust
Company, N.A.
P.O. Box 43078
Providence, RI 02940-3078
Independent Auditors:
PricewaterhouseCoopers LLP
1021 E. Cary Street, Suite 1250
Richmond, VA 23219-4058
Stock Exchange Listing:
The principal stock
exchange on which
Altria’s common
stock (par value
$0.33 per share) is listed is the
New York Stock Exchange (ticker
symbol: MO). At February 13,
2026, there were approximately
44,000 holders of record of
Altria’s common stock.
1⁄3
Altria Group, Inc. | 6601 W. Broad Street | Richmond, VA 23230-1723 | altria.com