Notes to Condensed Consolidated Financial Statements
(Unaudited)
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 September 30, 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 September 30, 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 September 30, 2025, we owned a 75% economic interest in Horizon Innovations LLC (“Horizon”), a joint venture with JTI (US) Holding, Inc., 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 September 30, 2025, Horizon had no products in the U.S. marketplace.
At September 30, 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.
▪Dividends and Share Repurchases: In August 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.
In January 2025, our Board authorized a new $1.0 billion share repurchase program, of which $288 million was remaining at September 30, 2025. In October 2025, the Board authorized a $1.0 billion expansion of this program to $2.0 billion, which now 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.
In January 2024, our Board authorized a $1.0 billion share repurchase program that it increased to $3.4 billion in March 2024 (as increased, “January 2024 share repurchase program”). We subsequently entered into accelerated share repurchase (“ASR”) transactions under two separate agreements with bank counterparties (collectively, “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. 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. We funded the ASR transactions with proceeds from our sale of a portion of our investment in ABI in the first quarter of 2024 (“ABI Transaction”). For further information on the ABI Transaction, see Note 6. Investments in Equity Securities. The ASR transactions were accounted for as equity transactions and included in cost of repurchased stock on our condensed consolidated balance sheet when the shares were received. We completed the January 2024 share repurchase program in December 2024.
Our share repurchase activity was as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Nine Months Ended September 30, | | For the Three Months Ended September 30, |
| (in millions, except per share data) | 2025 |
| 2024 | (1) | | 2025 | | 2024 |
| Total number of shares repurchased | 12.3 | | | 67.6 | | | | 1.9 | | | 13.5 | |
| Aggregate cost of shares repurchased | $ | 712 | | | $ | 3,090 | | | | $ | 112 | | | 680 | |
| Average price per share of shares repurchased | $ | 58.08 | | | $ | 45.68 | | | | $ | 60.13 | | | $ | 50.37 | |
(1) Includes 53.9 million shares repurchased under the ASR Agreements at an average price per share of $44.50.
▪Basis of Presentation: Our interim condensed consolidated financial statements are unaudited. We have prepared these interim condensed consolidated financial statements in conformity with United States generally accepted accounting principles (“GAAP”) and have applied such principles on a consistent basis. We have omitted certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP. Our management believes that all adjustments necessary for a fair statement of the interim results presented have been reflected in our interim condensed consolidated financial statements. All such adjustments were of a normal recurring nature. Net revenues and net earnings for any interim period are not necessarily indicative of results that may be expected for the entire year.
These condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and related notes, which appear in our Annual Report on Form 10-K for the year ended December 31, 2024.
Certain immaterial prior year amounts have been reclassified to conform with the current year’s presentation.
For a description of issued accounting guidance applicable to, but not yet adopted by, us, see Note 15. New Accounting Guidance Not Yet Adopted.
Note 2. Revenues from Contracts with Customers
We disaggregate net revenues based on product type. For further discussion, see Note 11. Segment Reporting.
Substantially all cash discounts in contracts with our customers are based on a percentage of the list price based on agreed-upon payment terms. We record receivables net of any cash discounts on our condensed consolidated balance sheets.
Receivables and deferred revenue associated with contracts with customers were as follows:
| | | | | | | | |
| (in millions) | September 30, 2025 | December 31, 2024 |
| Receivables | $ | 249 | | $ | 177 | |
| Deferred revenue | 167 | | 215 | |
At September 30, 2025 and December 31, 2024, we did not expect differences between amounts recorded as receivables and amounts that would be subsequently received; therefore, we did not record an allowance for credit losses against these receivables.
We record deferred revenue when our businesses receive payment in advance of product shipment. These payments are included in other accrued liabilities on our condensed consolidated balance sheets until control of such products is obtained by the customer. When cash is received in advance of product shipment, our companies typically satisfy their performance obligations within three days of receiving payment. At September 30, 2025 and December 31, 2024, there were no differences between amounts recorded as deferred revenue from contracts with customers and amounts subsequently recognized as revenue.
We record an allowance for returned goods, which is included in other accrued liabilities on our condensed consolidated balance sheets. It is 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. 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 condensed consolidated financial statements. All returned goods are destroyed upon return and not included in inventory. Consequently, we do not record an asset for USSTC’s right to recover goods from customers upon return.
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 our retail partners to incent the promotion of certain product offerings in select geographic areas.
▪Wholesale and retail participation payments- We make payments to our wholesale and retail partners to incent merchandising and sharing of sales data in accordance with our trade agreements.
These estimates primarily include estimated wholesale to retail sales volume and historical acceptance rates. Actual payments will differ from estimated payments to the extent actual results differ from estimated assumptions. Differences between actual and estimated payments are reflected in the period such information becomes available. These differences, if any, have not had a material impact on our condensed consolidated financial statements.
Note 3. 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 participating third-party financial institutions at the sole discretion of both the suppliers and the financial institutions (“Program”). All outstanding balances under the Program are recorded in accounts payable on our condensed consolidated balance sheets, and the associated payments are included in operating activities within our condensed consolidated statements of cash flows.
At September 30, 2025 and December 31, 2024, confirmed outstanding obligations under the Program were $160 million and $128 million, respectively.
Note 4. Goodwill and Other Intangible Assets, net
Goodwill and other intangible assets, net, were as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| September 30, 2025 | | December 31, 2024 |
| (in millions) | Goodwill | | Other Intangible Assets, net | | Goodwill | | Other Intangible Assets, net |
| Smokeable products segment | $ | 99 | | | $ | 2,918 | | | $ | 99 | | | $ | 2,936 | |
| Oral tobacco products segment | 5,078 | | | 8,654 | | | 5,078 | | | 8,679 | |
Other (1) | 895 | | | 1,294 | | | 1,768 | | | 1,358 | |
| Total | $ | 6,072 | | | $ | 12,866 | | | $ | 6,945 | | | $ | 12,973 | |
(1) Comprised primarily of e-vapor reporting unit goodwill and definite-lived intangible assets related to the acquisition of NJOY in 2023.
Other intangible assets consisted of the following:
| | | | | | | | | | | | | | | | | | | | | | | |
| September 30, 2025 | | December 31, 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 | 2,626 | | | 849 | | | 2,621 | | | 737 | |
| Total other intangible assets | $ | 13,715 | | | $ | 849 | | | $ | 13,710 | | | $ | 737 | |
At September 30, 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 acquisition of UST, and (ii) cigar trademarks of $2.6 billion from our 2007 acquisition of Middleton. Definite-lived intangible assets, consisting primarily of intellectual property (which includes developed technology), certain cigarette trademarks, e-vapor trademarks and customer relationships, are amortized over a weighted-average period of approximately 19 years. Pre-tax amortization expense for definite-lived intangible assets was $112 million and $102 million for the nine months ended September 30, 2025 and 2024, respectively, and $38 million for the three months ended September 30, 2025 and 2024.
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”). 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 nine months ended September 30, 2024 in our condensed consolidated statements of earnings.
The changes in goodwill and net carrying amount of intangible assets were as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| For the Nine Months Ended | | For the Year Ended |
| September 30, 2025 | | December 31, 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) | (873) | | | — | | | — | | | (354) | |
Amortization | — | | | (112) | | | — | | | (139) | |
| Balance at end of period | $ | 6,072 | | | $ | 12,866 | | | $ | 6,945 | | | $ | 12,973 | |
(1) The 2024 amounts represent the measurement period adjustments related to the acquisition of NJOY.
(2) The 2025 amount represents a non-cash impairment of our e-vapor reporting unit goodwill. The 2024 amount represents a non-cash, pre-tax impairment of the Skoal trademark.
We conduct a required annual review of goodwill and indefinite-lived intangible assets for potential impairment, and more frequently if an event occurs or circumstances change that would require us to perform an interim quantitative impairment assessment. There have been no events or changes in circumstances that indicate an interim quantitative impairment assessment was required for the three months ended September 30, 2025. We will perform our annual impairment testing during the fourth quarter of 2025.
Our annual impairment test of goodwill and indefinite-lived intangible assets as of October 1, 2024 resulted in no impairment charges for the fourth quarter of 2024.
At September 30, 2025, accumulated impairment losses related to goodwill were $873 million, which related to the e-vapor reporting unit goodwill impairment recorded for the three months ended March 31, 2025 in the all other category, discussed below. At December 31, 2024, there were no accumulated impairment losses related to goodwill.
First Quarter of 2025 E-vapor Reporting Unit Goodwill Impairment
At December 31, 2024, the estimated fair value of the e-vapor reporting unit exceeded its carrying value by approximately 28% ($0.3 billion). As further discussed in Note 14. 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 condensed consolidated financial statements for the period ended March 31, 2025, we concluded a triggering event had occurred and performed an interim impairment assessment for the e-vapor reporting unit.
As a result of our interim impairment testing, we determined the estimated fair value of the e-vapor reporting unit as of March 31, 2025, was below its carrying value and recorded a non-cash goodwill impairment of $873 million for the three months ended March 31, 2025 in our condensed consolidated statements of earnings. 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. 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.
We used an income approach to estimate the fair value of the e-vapor reporting unit. Our discounted cash flows are based on a range of scenarios that consider certain potential regulatory and market outcomes. 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. In performing the discounted cash flow analysis, we made various judgments, estimates and assumptions, the most significant of which were volume, revenue, income, operating margins, perpetual growth rate and discount rate. All significant inputs used in the valuation are classified in Level 3 of the fair value hierarchy.
As a result of the ITC orders, in connection with the preparation of our condensed consolidated 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.
Second Quarter of 2024 Skoal Trademark Impairment
In connection with the preparation of our condensed consolidated financial statements for the period ended June 30, 2024, 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 in our condensed consolidated statements of earnings. Our carrying value and estimated fair value 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 Nine Months Ended September 30, 2025 | | | | For the Three Months Ended September 30, 2025 | | |
| (in millions) | Exit Costs | | Implementation Costs (1) | | Exit Costs | | Implementation Costs (1) |
| | | | | | | | | | | | | | | |
| Smokeable products segment | $ | 3 | | | | | $ | 35 | | | | | $ | 2 | | | | | $ | 10 | | | |
| Oral tobacco products segment | — | | | | | 5 | | | | | — | | | | | 1 | | | |
| | | | | | | | | | | | | | | |
| Total | $ | 3 | | | | | $ | 40 | | | | | $ | 2 | | | | | $ | 11 | | | |
(1) Recorded in marketing, administration and research costs in our condensed consolidated statement of earnings.
There were no exit or implementation costs for the nine months ended September 30, 2024.
In October 2024, we announced a multi-phase Optimize & Accelerate initiative (“Initiative”) designed to modernize our ways of working. Through the Initiative, we plan to increase our organization’s speed, efficiency and effectiveness by centralizing work, outsourcing certain transactional tasks and streamlining, automating and standardizing processes. We expect the design and detailed plans for all phases of the Initiative to be substantially complete in early 2026.
We estimate total pre-tax charges for the Initiative’s currently planned phases to be approximately $125 million. As of September 30, 2025, total pre-tax charges since the inception of the Initiative were $111 million, consisting of employee separation cost of $38 million and implementation costs of $73 million. 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. Employee separation costs are recorded when probable and reasonably estimable. As we further develop and finalize detailed plans for the additional phases of the Initiative, we will update estimated pre-tax charges for the Initiative. As of September 30, 2025, total cash payments since the inception of the Initiative were $74 million, consisting of $12 million for exit costs and $62 million for implementation costs.
A summary of the Initiative’s charges and cash paid for exit and implementation costs is as follows:
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| (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 | | 3 | | | | | 40 | | | 43 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Cash paid | | (12) | | | | | (51) | | | (63) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balances at September 30, 2025 | | $ | 26 | | | | (1) | $ | 11 | | | $ | 37 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) Restructuring liabilities, all of which were severance liabilities.
Note 6. Investments in Equity Securities
The carrying amount of our investments consisted of the following:
| | | | | | | | | | | | | | |
| (in millions) | | September 30, 2025 | | December 31, 2024 |
| ABI | | $ | 8,071 | | | $ | 7,880 | |
| Cronos | | 314 | | | 315 | |
| | | | |
| Total | | $ | 8,385 | | | $ | 8,195 | |
(Income) losses from our investments in equity securities consisted of the following:
| | | | | | | | | | | | | | | | | | | | | | | | |
| For the Nine Months Ended September 30, | | For the Three Months Ended September 30, | |
| (in millions) | 2025 | 2024 | | 2025 | | 2024 |
ABI (1) | $ | (396) | | | $ | (555) | | (2) | $ | (123) | | | $ | (121) | | |
Cronos (1) | (2) | | | 25 | | | 16 | | | 5 | | |
| (Income) losses from investments in equity securities | $ | (398) | | | $ | (530) | | | $ | (107) | | | $ | (116) | | |
(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.
Investment in ABI
At September 30, 2025, we had an approximate 8.1% 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.
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 September 30, 2025, the fair value of our investment in ABI was $9.5 billion, which exceeded its carrying value of $8.1 billion by approximately 18%. At December 31, 2024, the fair value of our investment in ABI approximated its carrying value of $7.9 billion.
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 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 the ASR Agreements to repurchase shares of our common stock. For further discussion of the ASR Agreements, see Note 1. Background and Basis of Presentation.
As a result of the ABI Transaction, we recorded the following pre-tax amounts in our condensed consolidated statement of earnings:
| | | | | | | | | | | |
| (in millions) | For the Nine Months Ended September 30, 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 10. 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 condensed consolidated statement of earnings for the nine months ended September 30, 2024. Subsequently, in the third quarter of 2025, we recorded a $77 million increase to this valuation allowance as discussed further in Note 13. Income Taxes.
Investment in Cronos
At September 30, 2025, we had an approximate 40.9% 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 September 30, 2025, the fair value of our investment in Cronos exceeded its carrying value by approximately $119 million or approximately 38%. At December 31, 2024, the fair value of our investment in Cronos approximated its carrying value of $315 million.
Note 7. Financial Instruments
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 September 30, 2025 and December 31, 2024, we had no outstanding foreign currency contracts.
The aggregate carrying value and fair value of our total long-term debt were as follows:
| | | | | | | | | | | |
| (in millions) | September 30, 2025 | | December 31, 2024 |
| Carrying value | $ | 25,701 | | | $ | 24,926 | |
| Fair value | 24,470 | | | 22,741 | |
| Foreign currency denominated debt included in long-term debt: | | | |
| Carrying value | 2,635 | | | 3,100 | |
| Fair value | 2,620 | | | 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 $391 million and $29 million for the nine months ended September 30, 2025 and 2024, respectively, and $(12) million and $127 million for the three months ended September 30, 2025 and 2024, respectively.
In addition, as a result of the ABI Transaction, for the nine months ended September 30, 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 condensed 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 10. Other Comprehensive Earnings/Losses.
Contingent Payments
In 2023, we acquired NJOY Holdings, Inc. (“NJOY Transaction”). The total consideration for the NJOY Transaction included the fair value of up to $500 million in additional cash payments contingent on receipt of U.S. Food and Drug Administration (“FDA”) authorizations with respect to NJOY’s menthol ($250 million), blueberry ($125 million) and watermelon ($125 million) pod products.
The changes in the liability associated with contingent payments were as follows:
| | | | | | | | | | | | | | | | | |
| For the Nine Months Ended September 30, 2025 | | For the Year Ended December 31, 2024 |
| (in millions) | |
| Balance at January 1 | $ | 20 | | | | $ | 130 | | |
Change in the fair value of contingent payments (1) | 25 | | (2) | | 140 | | (3) |
| Payments | — | | | | (250) | | (4) |
| Balance at end of period | $ | 45 | | | | $ | 20 | | |
(1) Pre-tax charges were recorded in marketing, administration and research costs in our condensed consolidated statements of earnings.
(2) Recorded in the first quarter of 2025 and relates to blueberry and watermelon pod products.
(3) Recorded in the second quarter of 2024 and relates to menthol pod products.
(4) Payments made during the third quarter of 2024 following FDA authorization of NJOY’s menthol products.
Contingent payments related to the NJOY Transaction were recognized at their estimated fair value as of the acquisition date. Subsequent changes to the fair value of the liability associated with contingent payments are recognized in earnings until the contingency is resolved. In determining the estimated fair value of contingent payments, we made certain judgments, estimates and assumptions, the most significant of which was the likelihood of certain potential regulatory outcomes. Contingent payments are classified in Level 3 of the fair value hierarchy.
Note 8. Benefit Plans
Components of Net Periodic Benefit Cost (Income)
Net periodic benefit cost (income) consisted of the following:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Pension | | Postretirement | | Pension | | Postretirement |
| For the Nine Months Ended September 30, | | For the Three Months Ended September 30, |
| (in millions) | 2025 | | 2024 | | 2025 | | 2024 | | 2025 | | 2024 | | 2025 | | 2024 |
| Service cost | $ | 28 | | | $ | 31 | | | $ | 8 | | | $ | 11 | | | $ | 10 | | | $ | 10 | | | $ | 2 | | | $ | 3 | |
| Interest cost | 237 | | | 242 | | | 42 | | | 46 | | | 78 | | | 81 | | | 14 | | | 14 | |
Expected return on plan assets | (322) | | | (349) | | | (3) | | | (4) | | | (107) | | | (116) | | | (1) | | | (1) | |
| Amortization: | | | | | | | | | | | | | | | |
| Net loss (gain) | 37 | | | 21 | | | (9) | | | (4) | | | 12 | | | 8 | | | (3) | | | (2) | |
Prior service cost (credit) | 4 | | | 4 | | | (31) | | | (30) | | | 2 | | | 1 | | | (11) | | | (10) | |
| | | | | | | | | | | | | | | |
| Net periodic benefit cost (income) | $ | (16) | | | $ | (51) | | | $ | 7 | | | $ | 19 | | | $ | (5) | | | $ | (16) | | | $ | 1 | | | $ | 4 | |
Employer Contributions
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 Internal Revenue Service (“IRS”) regulations. We made employer contributions of $11 million to our pension plans and did not make any contributions to our postretirement plans during the nine months ended September 30, 2025. Currently, we anticipate making additional employer contributions of up to approximately $5 million to our pension plans and no contributions to our postretirement plans in 2025. However, the foregoing estimates of 2025 contributions to our pension and postretirement plans are subject to change as a result of changes in tax and other benefit laws, changes in interest rates and asset performance significantly above or below the assumed long-term rate of return for each respective plan.
Note 9. Earnings per Share
We calculated basic and diluted earnings per share (“EPS”) using the following:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Nine Months Ended September 30, | | For the Three Months Ended September 30, |
| (in millions) | | 2025 | | 2024 | | 2025 | | 2024 |
| Net earnings | | $ | 5,830 | | | $ | 8,225 | | | $ | 2,375 | | | $ | 2,293 | |
| Less: Distributed and undistributed earnings attributable to share-based awards | | (17) | | | (20) | | | (6) | | | (6) | |
| Earnings for basic and diluted EPS | | $ | 5,813 | | | $ | 8,205 | | | $ | 2,369 | | | $ | 2,287 | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| Weighted-average shares for basic and diluted EPS | | 1,685 | | | 1,726 | | | 1,680 | | | 1,703 | |
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.
Note 10. Other Comprehensive Earnings/Losses
Changes in each component of accumulated other comprehensive losses, net of deferred income taxes, attributable to Altria were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | For the Nine Months Ended September 30, 2025 |
| (in millions) | | Benefit Plans | | ABI | | Currency Translation Adjustments | | Accumulated
Other
Comprehensive
Losses |
| Balances, December 31, 2024 | | $ | (1,392) | | | $ | (1,018) | | | $ | 10 | | | $ | (2,400) | |
| | | | | | | | |
Other comprehensive earnings (losses) before reclassifications | | — | | | (384) | | | 4 | | | (380) | |
| Deferred income taxes | | — | | | 91 | | | — | | | 91 | |
Other comprehensive earnings (losses) before reclassifications, net of deferred income taxes | | — | | | (293) | | | 4 | | | (289) | |
| | | | | | | | |
| Amounts reclassified to net earnings | | 5 | | | (31) | | | — | | | (26) | |
| Deferred income taxes | | (1) | | | 7 | | | — | | | 6 | |
| Amounts reclassified to net earnings, net of deferred income taxes | | 4 | | | (24) | | | — | | | (20) | |
| | | | | | | | |
| Other comprehensive earnings (losses), net of deferred income taxes | | 4 | | | (317) | | (1) | 4 | | | (309) | |
| | | | | | | | |
| Balances, September 30, 2025 | | $ | (1,388) | | | $ | (1,335) | | | $ | 14 | | | $ | (2,709) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended September 30, 2025 |
| (in millions) | | Benefit Plans | | ABI | | Currency Translation Adjustments | | Accumulated
Other
Comprehensive
Losses |
Balances, June 30, 2025 | | $ | (1,389) | | | $ | (1,432) | | | $ | (10) | | | $ | (2,831) | |
| | | | | | | | |
Other comprehensive earnings (losses) before reclassifications | | — | |
| 126 | | | 24 | | | 150 | |
| Deferred income taxes | | — | | | (27) | | | — | | | (27) | |
Other comprehensive earnings (losses) before reclassifications, net of deferred income taxes | | — | | | 99 | | | 24 | | | 123 | |
| | | | | | | | |
| Amounts reclassified to net earnings | | 1 | | | (3) | | | — | | | (2) | |
| Deferred income taxes | | — | | | 1 | | | — | | | 1 | |
| Amounts reclassified to net earnings, net of deferred income taxes | | 1 | | | (2) | | | — | | | (1) | |
| | | | | | | | |
| Other comprehensive earnings (losses), net of deferred income taxes | | 1 | | | 97 | | (1) | 24 | | | 122 | |
| | | | | | | | |
| Balances, September 30, 2025 | | $ | (1,388) | | | $ | (1,335) | | | $ | 14 | | | $ | (2,709) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Nine Months Ended September 30, 2024 |
| (in millions) | | Benefit Plans | | ABI | | Currency Translation Adjustments | | Accumulated
Other
Comprehensive
Losses |
| Balances, December 31, 2023 | | $ | (1,493) | | | $ | (1,195) | | | $ | 15 | | | $ | (2,673) | |
| | | | | | | | |
Other comprehensive earnings (losses) before reclassifications | | — | | | (180) | | | (4) | | | (184) | |
| Deferred income taxes | | — | | | 38 | | | — | | | 38 | |
Other comprehensive earnings (losses) before reclassifications, net of deferred income taxes | | — | | | (142) | | | (4) | | | (146) | |
| | | | | | | | |
| Amounts reclassified to net earnings | | (5) | | | 258 | | | — | | | 253 | |
| Deferred income taxes | | 1 | | | (52) | | | — | | | (51) | |
| Amounts reclassified to net earnings, net of deferred income taxes | | (4) | | | 206 | | | — | | | 202 | |
| | | | | | | | |
| Other comprehensive earnings (losses), net of deferred income taxes | | (4) | | | 64 | | (1) | (4) | | | 56 | |
| | | | | | | | |
| Balances, September 30, 2024 | | $ | (1,497) | | | $ | (1,131) | | | $ | 11 | | | $ | (2,617) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended September 30, 2024 |
| (in millions) | | Benefit Plans | | ABI | | Currency Translation Adjustments | | Accumulated
Other
Comprehensive
Losses |
Balances, June 30, 2024 | | $ | (1,495) | | | $ | (801) | | | $ | 13 | | | $ | (2,283) | |
| | | | | | | | |
Other comprehensive earnings (losses) before reclassifications | | — | | | (423) | | | (2) | | | (425) | |
| Deferred income taxes | | — | | | 92 | | | — | | | 92 | |
Other comprehensive earnings (losses) before reclassifications, net of deferred income taxes | | — | | | (331) | | | (2) | | | (333) | |
| | | | | | | | |
| Amounts reclassified to net earnings | | (2) | | | 1 | | | — | | | (1) | |
| Deferred income taxes | | — | | | — | | | — | | | — | |
| Amounts reclassified to net earnings, net of deferred income taxes | | (2) | | | 1 | | | — | | | (1) | |
| | | | | | | | |
| Other comprehensive earnings (losses), net of deferred income taxes | | (2) | | | (330) | | (1) | (2) | | | (334) | |
| | | | | | | | |
| Balances, September 30, 2024 | | $ | (1,497) | | | $ | (1,131) | | | $ | 11 | | | $ | (2,617) | |
(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.
Pre-tax amounts by component, reclassified from accumulated other comprehensive losses to net earnings were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Nine Months Ended September 30, | | For the Three Months Ended September 30, |
| (in millions) | | 2025 | | 2024 | | 2025 | | 2024 |
Benefit Plans: (1) | | | | | | | | |
| Net loss | | $ | 32 | | | $ | 21 | | | $ | 10 | | | $ | 7 | |
| Prior service credit | | (27) | | | (26) | | | (9) | | | (9) | |
| | 5 | | | (5) | | | 1 | | | (2) | |
ABI (2) | | (31) | | | 258 | | | (3) | | | 1 | |
| | | | | | | | |
| Pre-tax amounts reclassified from accumulated other comprehensive losses to net earnings | | $ | (26) | | | $ | 253 | | | $ | (2) | | | $ | (1) | |
(1) Amounts are included in net periodic benefit income, excluding service cost. For further details, see Note 8. Benefit Plans.
(2) Amounts are included in (income) losses from investments in equity securities. For the nine months ended September 30, 2024, as a result of the ABI Transaction, 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 11. Segment Reporting
At September 30, 2025, our reportable segments were (i) smokeable products, consisting of combustible cigarettes and machine-made large cigars; and (ii) oral tobacco products, consisting of MST products and oral nicotine pouches.
Our all other category included (i) NJOY; (ii) Horizon; (iii) Helix International; and (iv) 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. Segment goodwill and other intangible assets, net, are disclosed in Note 4. Goodwill and Other Intangible Assets, net.
Segment data were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Nine Months Ended September 30, | | For the Three Months Ended September 30, | | |
| (in millions) | 2025 | | 2024 | | 2025 | | 2024 | | | | |
| Net revenues: | | | | | | | | | | | |
| Smokeable products | $ | 15,366 | | | $ | 15,941 | | | $ | 5,387 | | | $ | 5,540 | | | | | |
| Oral tobacco products | 2,096 | | | 2,084 | | | 689 | | | 722 | | | | | |
| All other | (29) | | | 19 | | | (4) | | | (3) | | | | | |
| Net revenues | $ | 17,433 | | | $ | 18,044 | | | $ | 6,072 | | | $ | 6,259 | | | | | |
| Earnings before income taxes: | | | | | | | | | | | |
| OCI: | | | | | | | | | | | |
| Smokeable products | $ | 8,341 | | | $ | 8,183 | | | $ | 2,942 | | | $ | 2,937 | | | | | |
| Oral tobacco products | 1,390 | | | 996 | | | 459 | | | 464 | | | | | |
| All other | (1,198) | | | (291) | | | (76) | | | (119) | | | | | |
| Amortization of intangibles | (112) | | | (102) | | | (38) | | | (38) | | | | | |
| General corporate expenses | (173) | | | (427) | | | (57) | | | (92) | | | | | |
| Operating income | 8,248 | | | 8,359 | | | 3,230 | | | 3,152 | | | | | |
| Interest and other debt expense, net | 815 | | | 782 | | | 278 | | | 267 | | | | | |
| Net periodic benefit income, excluding service cost | (45) | | | (74) | | | (16) | | | (25) | | | | | |
| (Income) losses from investments in equity securities | (398) | | | (530) | | | (107) | | | (116) | | | | | |
Gain on the sale of IQOS System commercialization rights | — | | | (2,700) | | | — | | | — | | | | | |
| | | | | | | | | | | |
| Earnings before income taxes | $ | 7,876 | | | $ | 10,881 | | | $ | 3,075 | | | $ | 3,026 | | | | | |
Smokeable products segment OCI consisted of the following, including expenses under the significant expense principle in accordance with GAAP:
| | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Nine Months Ended September 30, | | For the Three Months Ended September 30, |
| (in millions) | 2025 | | 2024 | | 2025 | | 2024 | | |
| Net revenues | $ | 15,366 | | | $ | 15,941 | | | $ | 5,387 | | | $ | 5,540 | | | |
Settlement charges (1) | (2,278) | | | (2,654) | | | (792) | | | (875) | | | |
| Excise taxes on products sold | (2,299) | | | (2,630) | | | (797) | | | (888) | | | |
Other segment items (2) | (2,448) | | | (2,474) | | | (856) | | | (840) | | | |
| Operating companies income | $ | 8,341 | | | $ | 8,183 | | | $ | 2,942 | | | $ | 2,937 | | | |
(1) Represents charges related to State Settlement Agreements included in cost of sales. For additional information, see Health Care Cost Recovery Litigation in Note 14. Contingencies.
(2) Other segment items includes manufacturing, marketing, administration and research costs and FDA user fees.
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 $706 million and $1,088 million for the nine months ended September 30, 2025 and 2024, respectively, and $230 million and $258 million for the three months ended September 30, 2025 and 2024, 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.
Details of our depreciation expense and capital expenditures were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Nine Months Ended September 30, | | For the Three Months Ended September 30, |
| (in millions) | 2025 | | 2024 | | 2025 | | 2024 | | |
| Depreciation expense: | | | | | | | | | |
| Smokeable products | $ | 44 | | | $ | 52 | | | $ | 15 | | | $ | 16 | | | |
| Oral tobacco products | 30 | | | 30 | | | 9 | | | 9 | | | |
| | | | | | | | | |
| General corporate and other | 26 | | | 29 | | | 8 | | | 11 | | | |
| Total depreciation expense | $ | 100 | | | $ | 111 | | | $ | 32 | | | $ | 36 | | | |
| Capital expenditures: | | | | | | | | | |
| Smokeable products | $ | 57 | | | $ | 38 | | | $ | 27 | | | $ | 11 | | | |
| Oral tobacco products | 42 | | | 24 | | | 20 | | | 8 | | | |
| General corporate and other | 25 | | | 33 | | | 7 | | | 12 | | | |
| Total capital expenditures | $ | 124 | | | $ | 95 | | | $ | 54 | | | $ | 31 | | | |
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 Nine Months Ended September 30, | | For the Three Months Ended September 30, |
| (in millions) | | 2025 | | 2024 | | 2025 | | 2024 |
| Smokeable products segment | | $ | (2) | | | $ | (29) | | | $ | (2) | | | $ | (23) | |
| Interest and other debt expense, net | | — | | | 2 | | | — | | | 2 | |
| Total | | $ | (2) | | | $ | (27) | | | $ | (2) | | | $ | (21) | |
| | | | | | | | |
| | | | | | | | |
We recorded the amounts shown in the table above in our smokeable products segment as reductions to cost of sales in our condensed 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 14. Contingencies.
▪Asset Impairment, Exit and Implementation Costs: We recorded exit and implementation costs of $43 million and $13 million related to the Initiative for the nine and three months ended September 30, 2025, 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 nine months ended September 30, 2024 in our oral tobacco products segment. For further discussion, see Note 4. Goodwill and Other Intangible Assets, net.
▪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 Nine Months Ended September 30, | | For the Three Months Ended September 30, |
| (in millions) | 2025 | | 2024 | | 2025 | | 2024 |
Smokeable products segment | $ | 44 | | | 59 | | | 4 | | | 21 | |
| General corporate expenses | — | | | 30 | | | (1) | | | — | |
Interest and other debt expense, net | 4 | | | 1 | | | — | | | 1 | |
| Total | $ | 48 | | | $ | 90 | | | $ | 3 | | | $ | 22 | |
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 condensed consolidated statements of earnings. For further discussion, see Note 14. Contingencies.
Note 12. Debt
Short-term Borrowings and Borrowing Arrangements
At September 30, 2025 and December 31, 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 September 30, 2025, 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 September 30, 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 September 30, 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.
Long-term Debt
The aggregate carrying value of our total long-term debt at September 30, 2025 and December 31, 2024 was $25.7 billion and $24.9 billion, respectively.
In August 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 August 2025 and the first quarter 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.
PM USA guarantees our obligations under our outstanding debt securities.
At September 30, 2025 and December 31, 2024, accrued interest on long-term debt of $214 million and $389 million, respectively, was included in other accrued liabilities on our condensed consolidated balance sheets.
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.
Note 13. Income Taxes
The One Big Beautiful Bill Act (“OBBB”) was signed into law in July 2025. The OBBB includes 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 condensed consolidated financial statements.
Earnings before income taxes, provision for income taxes and income tax rates consisted of the following:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Nine Months Ended September 30, | | For the Three Months Ended September 30, |
| (in millions) | | 2025 | | 2024 | | 2025 | | 2024 |
| Earnings before income taxes | | $ | 7,876 | | $ | 10,881 | | $ | 3,075 | | $ | 3,026 |
| Provision for income taxes | | 2,046 | | 2,656 | | 700 | | 733 |
| Income tax rate | | 26.0 | % | | 24.4 | % | | 22.8 | % | | 24.2 | % |
Our income tax rate for the nine months ended September 30, 2025 differed from the U.S. federal statutory rate of 21%, due primarily to state tax expense, the non-deductible impairment of the e-vapor reporting unit goodwill and a valuation allowance associated with our unrealized capital losses, partially offset by a net income tax benefit related to tax reserves as discussed below. Our income tax rate for the three months ended September 30, 2025 differed from the U.S. federal statutory rate of 21%, due primarily to state tax expense and a valuation allowance associated with our unrealized capital losses, partially offset by a net income tax benefit related to tax reserves as discussed below. For further discussion of the impairment charge, see Note 4. Goodwill and Other Intangible Assets, net.
Our income tax rate for the nine months ended September 30, 2024 differed from the U.S. federal statutory rate of 21%, due primarily to state tax expense, partially offset by an income tax benefit from the partial release of a valuation allowance recorded against a deferred tax asset associated with our losses related to our former investment in JUUL Labs, Inc. (“JUUL”). The valuation allowance release was due to our capital gain on the ABI Transaction. Our income tax rate for the three months ended September 30, 2024 differed from the U.S. federal statutory rate of 21%, due primarily to state tax expense. For further discussion of the ABI Transaction, see Note 6. Investments in Equity Securities.
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 the 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.
On September 29, 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 as of September 30, 2025, 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 $310 million for the 2018 through 2025 tax years. Additionally, we reduced a deferred tax liability by $461 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 $29 million for the nine and three months ended September 30, 2025 in our condensed 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 September 30, 2025, our total unrecognized tax benefits were $573 million. The amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate at September 30, 2025, was $20 million, along with $410 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. Unrecognized tax benefits increased by $291 million from December 31, 2024 due primarily to the removal of downward attribution rules applicable to income from certain ABI foreign subsidiaries.
The following chart provides a reconciliation of the beginning and ending valuation allowances for the nine months ended September 30, 2025:
| | | | | | | | |
| (in millions) | | |
| Balance at beginning of year | | $ | 668 | |
| Additions to valuation allowance charged to income tax expense | | 84 | |
| Releases of valuation allowance credited to income tax benefit | | (12) | |
| | |
| | |
| Balance at end of period | | $ | 740 | |
The changes in the valuation allowances for the nine months ended September 30, 2025 were due primarily to the indirect effects of tax reserves, as discussed above, on our unrealized capital losses. The cumulative valuation allowance at September 30, 2025 was primarily attributable to deferred tax assets recorded in connection with the unrealized capital losses related to our former investment in JUUL and our investment in Cronos. As we continue to evaluate all sources of potential income that may become available to utilize these losses, our valuation allowance position may change. It is possible 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.
Note 14. 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 condensed 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 14. 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 condensed 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.
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:
| | | | | | | | | | | | | | | | | | | | | | | |
| For the Nine Months Ended September 30, | | For the Three Months Ended September 30, |
| (in millions) | 2025 | | 2024 | | 2025 | | 2024 |
| Accrued liability for tobacco and health and certain other litigation items at beginning of period | $ | 96 | | | $ | 346 | | | $ | 95 | | | $ | 151 | |
| Pre-tax charges for: | | | | | | | |
Tobacco and health and certain other litigation (1) | 44 | |
| 59 | | | 4 | | | 21 | |
Shareholder derivative lawsuits (2) | — | | | — | | | — | | | — | |
JUUL-related settlements (3) | — | | | 30 | | | (1) | | | — | |
| Related interest costs | 4 | | | 1 | | | — | | | 1 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Payments | (76) | | | (300) | | | (30) | | | (37) | |
| Accrued liability for tobacco and health and certain other litigation items at end of period | $ | 68 | | | $ | 136 | | | $ | 68 | | | $ | 136 | |
| | | | | | | |
(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 condensed consolidated balance sheets. Pre-tax charges except for related interest costs were included in marketing, administration and research costs in our condensed consolidated statements of earnings. Pre-tax charges for related interest costs were included in interest and other debt expense, net in our condensed 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 $246 million as of September 30, 2025. These amounts include payments for Engle progeny judgments (and related costs and fees) totaling approximately $452 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 September 30, 2025, PM USA has posted appeal bonds totaling approximately $24 million, which have been collateralized with restricted cash and are included in assets on our condensed 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:
| | | | | | | | | | | | | | | | | |
| October 27, 2025 | | October 28, 2024 | | October 23, 2023 |
Individual Smoking and Health Cases (1) | 181 | | 178 | | 167 |
Health Care Cost Recovery Actions (2) | 1 | | 1 | | 1 |
E-vapor Cases(3) | 16 | | 75 | | 5,177 |
Other Tobacco-Related Cases (4) | 3 | | 3 | | 3 |
(1) Includes as of October 27, 2025, 28 cases filed in Illinois, nine cases filed in New Mexico, 83 cases filed in Massachusetts, 15 cases filed in Oregon, eight cases filed in Hawaii, 11 cases filed in the U.S. Virgin Islands and 12 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). Also does not include one Broin case pending as of October 27, 2025. For further discussion of the Broin cases, see Other Smoking and Health Class Actions below.
(2) See Health Care Cost Recovery Litigation - Federal Government’s Lawsuit below.
(3) 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 October 27, 2025, the remaining cases include 12 individual cases that opted out of the settlement, three 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.
(4) Includes as of October 27, 2025, one inactive smoking and health case alleging personal injury and purporting to be brought on behalf of a class of individual plaintiffs and two inactive class action lawsuits alleging that use of the terms “Lights” and “Ultra Lights” constitute deceptive and unfair trade practices, common law or statutory fraud, unjust enrichment, breach of warranty or violations of RICO.
International Tobacco-Related Cases: As of October 27, 2025, (i) Altria is named as a defendant in three 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 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 October 27, 2025, no Engle progeny cases, two individual smoking and health cases and no e-vapor cases are set for trial through December 31, 2025. Trial dates are subject to change.
Trial Results: Since January 1999, excluding the Engle progeny cases (separately discussed below), verdicts have been returned in 86 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 86 cases. Of the 33 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 October 27, 2025.
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: Summarized below are the non-Engle progeny smoking and health cases pending in which verdicts were returned in favor of plaintiff and against PM USA and remain outstanding or cases concluded within the last 12 months where PM USA paid a final judgment. 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.
Perez-Trinidad: In October 2025, a jury in a Massachusetts state court returned a verdict in favor of plaintiff and against PM USA and R.J. Reynolds Tobacco Company (“R.J. Reynolds”), awarding an aggregate of $1 million in compensatory damages against PM USA and R.J. Reynolds and $5.5 million in punitive damages against PM USA. PM USA intends to file post-trial motions challenging the verdict and, if necessary, will appeal.
Amaral: In March 2025, a jury in a Massachusetts state court returned a verdict in favor of plaintiff and against PM USA and R.J. Reynolds, awarding an aggregate of $4 million in compensatory damages against PM USA and R.J. Reynolds and $25 million in punitive damages against PM USA. PM USA has filed post-trial motions challenging the verdict and, if necessary, will appeal.
Taylor: In April 2024, a jury in an Oregon state court returned a verdict in favor of plaintiff and against PM USA, awarding less than $1 million in compensatory damages. The jury found that plaintiff was not entitled to punitive damages. Plaintiff has appealed the judgment, and the appeal remains pending. 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: In August 2023, a jury in a Hawaii state court returned a verdict in favor of plaintiff and against PM USA, awarding $6 million in compensatory damages and $8 million in punitive damages. In October 2023, the court entered judgment against PM USA for $11 million, having reduced the compensatory damages award to $3 million based on the jury’s finding on comparative fault and a set-off against plaintiff’s settlements with other defendants. PM USA filed post-trial motions challenging the verdict, which were denied in March 2024. In April 2024, PM USA filed a notice of appeal. PM USA’s appeal remains pending, and plaintiff has noticed a cross-appeal. In April 2025, the Hawaii Supreme Court granted plaintiff’s application to transfer the appeal to that Court from the Intermediate Court of Appeals.
Woodley: In February 2023, a jury in a Massachusetts state court returned a verdict in favor of plaintiff and against PM USA, awarding $5 million in compensatory damages. There was no claim for punitive damages. Following the denial of PM USA’s post-trial motions, PM USA appealed the judgment to the Appeals Court of Massachusetts, which affirmed the judgment in January 2025. Accordingly, we recorded a pre-tax charge of $5 million and paid the recorded amount in the first quarter of 2025.
Fontaine: In September 2022, a jury in a Massachusetts state court returned a verdict in favor of plaintiff and against PM USA, awarding approximately $8 million in compensatory damages and $1 billion in punitive damages. In September 2023, the court denied PM USA’s motion for a new trial and partially granted PM USA’s motion for remittitur, reducing the punitive damages award to $56 million. In December 2023, the court entered a final judgment awarding plaintiff $8 million in compensatory damages, $56 million in punitive damages and prejudgment interest. PM USA has noticed an appeal to the Appeals Court of Massachusetts. In May 2025, the Massachusetts Supreme Judicial Court took jurisdiction over the appeal. The appeal remains pending.
Federal Government’s Lawsuit: See Health Care Cost Recovery Litigation - Federal Government’s Lawsuit below for a discussion of the verdict and post-trial developments in the United States of America health care cost recovery case.
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 October 27, 2025, approximately 51 state court cases were pending against PM USA or Altria asserting individual claims by or on behalf of approximately 66 state court plaintiffs. Because of a number of factors, including docketing delays, duplicated filings and overlapping dismissal orders, these numbers are estimates. Each federal Engle progeny case has been resolved.
Engle Progeny Trial Results: As of October 27, 2025, 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 October 27, 2025.
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 chart below lists the verdicts in and post-trial status of certain Engle progeny cases in which verdicts were returned in favor of plaintiffs. The chart lists cases that are pending as of October 27, 2025 where PM USA has determined an unfavorable outcome is not probable and the amount of loss cannot be reasonably estimated. 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. |
| Chacon | October 2023 | PM USA | Miami-Dade | <$1 million | <$1 million | Appeals to the Third District Court of Appeal pending. |
| Lipp | September 2021 | PM USA | Miami-Dade | $15 million | $28 million | Third District Court of Appeal reversed and remanded for a new trial. |
| McCall | March 2019 | PM USA | Broward | <$1 million (<$1 million PM USA) | <$1 million | Appeal to the Fourth 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.
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.
Class certification has been denied or reversed by courts in 61 smoking and health class actions involving PM USA in Arkansas (1), California (1), Delaware (1), the District of Columbia (2), Florida (2), Illinois (3), Iowa (1), Kansas (1), Louisiana (1), Maryland (1), Michigan (1), Minnesota (1), Nevada (29), New Jersey (6), New York (2), Ohio (1), Oklahoma (1), Oregon (1), Pennsylvania (1), Puerto Rico (1), South Carolina (1), Texas (1) and Wisconsin (1). 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 October 27, 2025, 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.
As of October 27, 2025, PM USA is named as a defendant in one case brought by a flight attendant against United States cigarette manufacturers seeking compensatory damages for personal injuries allegedly caused by exposure to environmental tobacco smoke (“ETS”). The flight attendant alleges that they are a member of an ETS smoking and health class action in Florida that was settled in 1997 (Broin). The terms of the court-approved settlement in that case allowed class members to file individual lawsuits seeking compensatory damages but prohibited them from seeking punitive damages. Class members were prohibited from filing individual lawsuits after 2000 under the court-approved settlement. In July 2024, we reached agreement on terms to resolve approximately 627 individual Broin lawsuits. Accordingly, in the second quarter of 2024, we recorded a pre-tax provision of $4 million related to the settlement of these cases, which we paid in the third quarter of 2024.
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 nine months ended September 30, 2025 and 2024, the aggregate amount recorded in cost of sales with respect to the State Settlement Agreements was approximately $2.3 billion and $2.7 billion, respectively. For the three months ended September 30, 2025 and 2024, the aggregate amount recorded in cost of sales with respect to the State Settlement Agreements was approximately $800 million and $900 million, respectively. These amounts include PM USA’s estimate of amounts related to NPM Adjustments discussed below.
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 2024, a total of 39 states and territories have 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 immaterial 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 will receive $28 million. Accordingly, PM USA recorded $28 million as a reduction in costs of sales in the third quarter of 2024.
▪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 immaterial amount applied against its April 2026 MSA payment to those territories. Accordingly, PM USA recorded an immaterial 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 the 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 States of Washington, Missouri and New Mexico have challenged those determinations in their respective state courts, and several issues remain to be resolved by the state trial and appellate courts that may affect the final amount of the 2004 NPM adjustment PM USA and other PMs will receive.
▪2005-2007 NPM Adjustments. The PMs and the six states that have 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 October 27, 2025, the arbitration panel had issued decisions for four of the six states (Maryland, Washington, Wisconsin and Ohio), finding the States of Maryland, Wisconsin and Ohio diligent for all three years and Washington not diligent for all three years. Washington challenged that determination in Washington state court, and the challenge was denied by the trial court. The State of Washington has appealed that denial, and the appeal remains pending. PM USA recorded $35 million in the fourth quarter of 2023 for its estimate of the minimum amount of the 2005 through 2007 NPM Adjustment 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 adjustment payments starting in 2018. The Mississippi state court held a hearing in October 2021 and issued a decision in June 2022 granting the State’s motion. PM USA appealed the court’s decision in June 2024. 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-judgment and post-judgment interest. PM USA intends to appeal.
Federal Government’s Lawsuit: In 1999, the U.S. government filed a lawsuit in the U.S. District Court for the District of Columbia against various cigarette manufacturers, including PM USA, and others, including Altria, asserting claims under three federal statutes. The case ultimately proceeded only under the civil provisions of RICO. In August 2006, the district court held that certain defendants, including Altria and PM USA, violated RICO and engaged in certain “sub-schemes” to defraud that the government had alleged.
The court did not impose monetary penalties on defendants, but ordered various types of non-monetary relief, including an injunction against conveying any express or implied health message or health descriptors on cigarette packaging or in cigarette advertising or promotional material, including “lights,” “ultra lights” and “low tar,” which the court found could cause consumers to believe one cigarette brand is less hazardous than another brand, and the issuance of “corrective statements” in various media regarding the adverse health effects of smoking, the addictiveness of smoking and nicotine, the lack of any significant health benefit from smoking “low tar” or “light” cigarettes, defendants’ manipulation of cigarette design to ensure optimum nicotine delivery and the adverse health effects of exposure to ETS.
Corrective statements appeared in newspapers and on television for four months and one year, respectively, beginning in the fourth quarter of 2017, and the onserts appeared for two weeks at a time for a total of twelve weeks over two years beginning in the fourth quarter of 2018. Corrective statements have appeared on websites since the second quarter of 2018. In December 2022, the district court entered a consent order approving a settlement with respect to corrective statements on point-of-sale signage, which appeared through June 2025. In addition to the $28 million of provisions recorded in 2022, we recorded provisions of $15 million in the first quarter of 2024 for estimated costs of implementing the corrective statements on point-of-sale signage remedy.
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 three 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.
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 August 2024, the Administrative Law Judge (“ALJ”) issued an initial determination supporting the plaintiffs’ allegations with respect to four patents and recommending an exclusion order. In September 2024, NJOY petitioned the ITC to review the ALJ’s initial determination. In October 2024, the ITC granted review of the ALJ’s initial determination with respect to aspects of two of the four patents. In January 2025, 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 ITC sent its orders to the Office of the United States Trade Representative, which had 60 days to review the ITC’s determination. The orders became effective on March 31, 2025 after the 60-day review period ended without the United States Trade Representative taking action. In February 2025, we filed a motion for reconsideration of the ITC’s determination finding that NJOY ACE infringes the four patents plaintiff asserted, asking the ITC to reverse its determination that NJOY ACE infringes one of the four patents. The ITC denied the motion in April 2025. We have appealed the final exclusion order and cease-and-desist orders to the U.S. Court of Appeals for the Federal Circuit. The final exclusion order and cease-and-desist 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 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 is currently stayed. However, as discussed below, we have moved to lift the stay.
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. The ALJ also determined that, with respect to the asserted patents, NJOY did not satisfy the “domestic industry” requirement, which requires the party asserting a patent to show significant and substantial domestic investments, such as investments related to engineering, research and development or licensing, designed to exploit the patent. Subsequently, in December 2024, NJOY petitioned the ITC to review the ALJ’s initial determination. In March 2025, the ITC granted in part NJOY’s petition to review the ALJ’s initial determination. 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 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.
We, JUUL and VMR previously engaged with a mediator to attempt to negotiate a resolution of the proceedings pending before the ITC discussed above, U.S. District Courts and the PTAB. The parties also have engaged in negotiations without a mediator. Based on the status of the negotiations and the proceedings before the ITC, U.S. District Courts, the PTAB and the U.S. Court of Appeals for the Federal Circuit, we have determined that a loss with respect to a negotiated resolution of such proceedings is not probable or reasonably estimable as of the date of this filing.
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. Plaintiffs seek 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 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.
R.J. Reynolds Litigation
In April 2020, RAI Strategic Holdings, Inc. and R.J. Reynolds Vapor Co., which are affiliates of R.J. Reynolds, filed a lawsuit against Altria, PM USA, ALCS, PMI and its affiliate, Philip Morris Products S.A., in the U.S. District Court for the Eastern District of Virginia asserting claims of patent infringement based on the sale of the IQOS System electronic device and Marlboro HeatSticks in the United States. Plaintiffs sought various remedies, including preliminary and permanent injunctive relief, treble damages and attorneys’ fees. Altria and PMI were previously dismissed from the lawsuit, and plaintiffs’ claims against the other defendants were dismissed in August 2025.
PM USA, ALCS and Philip Morris Products S.A. filed counterclaims against plaintiffs in the Eastern District of Virginia lawsuit alleging patent infringement by R.J. Reynolds’ e-vapor products. In June 2022, PM USA and ALCS reached an agreement with R.J. Reynolds resulting in dismissal of their counterclaims.
In addition, ALCS filed a separate lawsuit against R.J. Reynolds in the U.S. District Court for the Middle District of North Carolina also 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 sub-license 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 sub-license. The district court has set an evidentiary hearing for February 2026. Any gains related to this lawsuit remain 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 condensed 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 October 27, 2025, 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, consumer protection and unjust enrichment 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 October 27, 2025, two “Lights/Ultra Lights” class actions are pending in U.S. state courts. Neither case is active.
As of October 27, 2025, 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.
UST Litigation: UST and/or its tobacco subsidiaries have been named in a number of individual tobacco and health lawsuits over time. Plaintiffs’ allegations of liability in these cases have been based on various theories of recovery, such as negligence, strict liability, fraud, misrepresentation, design defect, failure to warn, breach of implied warranty, addiction and breach of consumer protection statutes. Plaintiffs have typically sought various forms of relief, including compensatory and punitive damages, and certain equitable relief, including disgorgement. Defenses raised in these cases have included lack of causation, assumption of the risk, comparative fault and/or contributory negligence, and statutes of limitations. As of October 27, 2025, there is no such case pending against UST and/or its tobacco subsidiaries.
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 payment of any remediation costs or damages and the making of related expenditures, has not had a material adverse effect on our condensed 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 September 30, 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, including $90 million for surety bonds. 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 condensed consolidated balance sheet at September 30, 2025 as the fair value of this indemnification is insignificant. PMI has agreed not to seek indemnification with respect to the active IQOS System patent litigation discussed above under IQOS Litigation.
As part of the supplier financing program, Altria guarantees the financial obligations of ALCS under the financing program agreement.
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.
Note 15. 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 |
Accounting Standards Update (“ASU”) No. 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures | The guidance will require additional income tax disclosures, primarily related to the rate reconciliation and income taxes paid information. | The guidance is effective for fiscal years beginning after December 15, 2024. | The guidance will result in expanded disclosures beginning in our annual consolidated financial statements for the year ending December 31, 2025, which we plan to adopt retrospectively. |
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 are in the process of evaluating the impact of this guidance 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. |