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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                     to                    
Commission File Number 1-08940
Altria Group, Inc.
(Exact name of registrant as specified in its charter)
Virginia 13-3260245
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer
Identification No.)
6601 West Broad Street,Richmond,Virginia23230
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code (804) 274-2200 
 Former name, former address and former fiscal year, if changed since last report
Securities registered pursuant to Section 12(b) of the Act:
               Title of each class               
Trading SymbolsName of each exchange on which registered
Common Stock, $0.33 1/3 par value
MONew York Stock Exchange
1.000% Notes due 2023
MO23ANew York Stock Exchange
1.700% Notes due 2025
MO25New York Stock Exchange
2.200% Notes due 2027
MO27New York Stock Exchange
3.125% Notes due 2031
MO31New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes   þ     No   ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes   þ    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer þAccelerated filer
Non-accelerated filer Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes    No   þ
At July 19, 2022, there were 1,800,823,383 shares outstanding of the registrant’s common stock, par value $0.33 1/3 per share.




ALTRIA GROUP, INC.
TABLE OF CONTENTS
 
  Page No.
PART I -FINANCIAL INFORMATION
Item 1.Financial Statements (Unaudited)
Item 2.
Item 3.
Item 4.
PART II -OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 6.
Signature

2

PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Altria Group, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in millions of dollars)
(Unaudited)
______________________________
 
June 30, 2022December 31, 2021
Assets
Cash and cash equivalents$2,567 $4,544 
Receivables43 47 
Inventories:
Leaf tobacco605 744 
Other raw materials183 166 
Work in process29 23 
Finished product327 261 
1,144 1,194 
Other current assets332 298 
Total current assets4,086 6,083 
Property, plant and equipment, at cost4,345 4,432 
Less accumulated depreciation2,788 2,879 
1,557 1,553 
Goodwill5,177 5,177 
Other intangible assets, net12,372 12,306 
Investments in equity securities ($451 million and $1,720 million at June 30, 2022 and December 31, 2021, respectively, measured at fair value)
12,590 13,481 
Other assets964 923 
Total Assets$36,746 $39,523 
 
See notes to condensed consolidated financial statements.
3

Altria Group, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Continued)
(in millions of dollars, except share and per share data)
(Unaudited)
________________________________________________
 
June 30, 2022December 31, 2021
Liabilities
Current portion of long-term debt$2,634 $1,105 
Accounts payable396 449 
Accrued liabilities:
Marketing708 664 
Settlement charges1,749 3,349 
Other1,194 1,365 
Dividends payable1,630 1,647 
Total current liabilities8,311 8,579 
Long-term debt25,046 26,939 
Deferred income taxes3,898 3,692 
Accrued pension costs197 200 
Accrued postretirement health care costs1,437 1,436 
Other liabilities260 283 
Total liabilities39,149 41,129 
Contingencies (Note 11)
Stockholders’ Equity (Deficit)
Common stock, par value $0.33 1/3 per share
(2,805,961,317 shares issued)
935 935 
Additional paid-in capital5,861 5,857 
Earnings reinvested in the business30,252 30,664 
Accumulated other comprehensive losses(2,377)(3,056)
Cost of repurchased stock
(1,003,717,832 shares at June 30, 2022 and
982,785,699 shares at December 31, 2021)
(37,074)(36,006)
Total stockholders’ equity (deficit)(2,403)(1,606)
Total Liabilities and Stockholders’ Equity (Deficit)$36,746 $39,523 

See notes to condensed consolidated financial statements.

4

Altria Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings
(in millions of dollars, except per share data)
(Unaudited)
_____________________________________ 
For the Six Months Ended June 30,For the Three Months Ended June 30,
2022202120222021
Net revenues$12,435 $12,972 $6,543 $6,936 
Cost of sales3,154 3,490 1,708 1,882 
Excise taxes on products2,242 2,478 1,169 1,322 
Gross profit7,039 7,004 3,666 3,732 
Marketing, administration and research costs1,050 1,128 561 546 
Operating income5,989 5,876 3,105 3,186 
Interest and other debt expense, net561 603 280 295 
Loss on early extinguishment of debt 649   
Net periodic benefit income, excluding service cost(93)(89)(47)(46)
(Income) losses from equity investments1,229 (126)1,263 (75)
(Gain) loss on Cronos-related financial instruments14 (7)4 103
Earnings before income taxes4,278 4,846 1,605 2,909 
Provision for income taxes1,428 1,275 714 759 
Net earnings2,850 3,571 891 2,150 
Net (earnings) losses attributable to noncontrolling interests 2  (1)
Net earnings attributable to Altria$2,850 $3,573 $891 $2,149 
Per share data:
Basic and diluted earnings per share attributable to Altria$1.57 $1.93 $0.49 $1.16 

See notes to condensed consolidated financial statements.

5

Altria Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Earnings
(in millions of dollars)
(Unaudited)
_____________________
For the Six Months Ended June 30,For the Three Months Ended June 30,
2022202120222021
Net earnings$2,850 $3,571 $891 $2,150 
Other comprehensive earnings (losses), net of deferred income taxes:
Benefit plans31 377 16 349 
ABI643 334 565 (183)
Currency translation adjustments and other5 28 4 6 
Other comprehensive earnings (losses), net of deferred
income taxes
679 739 585 172 
Comprehensive earnings3,529 4,310 1,476 2,322 
Comprehensive (earnings) losses attributable to noncontrolling interests 2  (1)
Comprehensive earnings attributable to Altria$3,529 $4,312 $1,476 $2,321 

See notes to condensed consolidated financial statements.
6

Altria Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity (Deficit)
for the Six Months Ended June 30, 2022 and 2021
(in millions of dollars, except per share data)
(Unaudited)
_______________________________________
 
 Common
Stock
Additional
Paid-in
Capital
Earnings
Reinvested
in the
Business
Accumulated
Other
Comprehensive
Losses
Cost of
Repurchased
Stock
Total
Stockholders’
Equity (Deficit)
Balances, December 31, 2021$935 $5,857 $30,664 $(3,056)$(36,006)$(1,606)
Net earnings  2,850   2,850 
Other comprehensive earnings (losses), net of deferred income taxes   679  679 
Stock award activity 4   15 19 
Cash dividends declared ($1.80 per share)
  (3,262)  (3,262)
Repurchases of common stock    (1,083)(1,083)
Balances, June 30, 2022$935 $5,861 $30,252 $(2,377)$(37,074)$(2,403)


 Attributable to Altria  
 Common
Stock
Additional
Paid-in
Capital
Earnings
Reinvested
in the
Business
Accumulated
Other
Comprehensive
Losses
Cost of
Repurchased
Stock
Non-
controlling
Interests
Total
Stockholders’
Equity (Deficit)
Balances, December 31, 2020$935 $5,910 $34,679 $(4,341)$(34,344)$86 $2,925 
Net earnings (losses)— — 3,573 — — (4)3,569 
Other comprehensive earnings (losses), net of deferred income taxes
— — — 739 — — 739 
Stock award activity
— 7 — — 13 — 20 
Cash dividends declared ($1.72 per share)
— — (3,187)— — — (3,187)
Repurchases of common stock— — — — (650)— (650)
Other (1)
— (77)— — — (80)(157)
Balances, June 30, 2021$935 $5,840 $35,065 $(3,602)$(34,981)$2 $3,259 
(1) Represents the purchase of the remaining noncontrolling interests in Helix in the second quarter of 2021.

See notes to condensed consolidated financial statements.


7

Altria Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity (Deficit)
for the Three Months Ended June 30, 2022 and 2021
(in millions of dollars, except per share data)
(Unaudited)
_______________________________________ 

 Common
Stock
Additional
Paid-in
Capital
Earnings
Reinvested
in the
Business
Accumulated
Other
Comprehensive
Losses
Cost of
Repurchased
Stock
Total
Stockholders’
Equity (Deficit)
Balances, March 31, 2022$935 $5,848 $30,988 $(2,962)$(36,569)$(1,760)
Net earnings   891   891 
Other comprehensive earnings (losses), net of deferred income taxes
   585  585 
Stock award activity
 13   2 15 
Cash dividends declared ($0.90 per share)
  (1,627) — (1,627)
Repurchases of common stock    (507)(507)
Balances, June 30, 2022
$935 $5,861 $30,252 $(2,377)$(37,074)$(2,403)


 Attributable to Altria  
 Common
Stock
Additional
Paid-in
Capital
Earnings
Reinvested
in the
Business
Accumulated
Other
Comprehensive
Losses
Cost of
Repurchased
Stock
Non-
controlling
Interests
Total
Stockholders’
Equity (Deficit)
Balances, March 31, 2021$935 $5,905 $34,507 $(3,774)$(34,660)$82 $2,995 
Net earnings— — 2,149 — —  2,149 
Other comprehensive earnings (losses), net of deferred income taxes
— — — 172 — — 172 
Stock award activity
— 12 — — 4 — 16 
Cash dividends declared ($0.86 per share)
— — (1,591)— — — (1,591)
Repurchases of common stock— — — — (325)— (325)
Other (1)
— (77)— — — (80)(157)
Balances, June 30, 2021$935 $5,840 $35,065 $(3,602)$(34,981)$2 $3,259 
(1) Represents the purchase of the remaining noncontrolling interests in Helix in the second quarter of 2021.

See notes to condensed consolidated financial statements.


8

Altria Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in millions of dollars)
(Unaudited)
_____________________
For the Six Months Ended June 30,20222021
Cash Provided by (Used in) Operating Activities
Net earnings$2,850 $3,571 
Adjustments to reconcile net earnings to operating cash flows:
Depreciation and amortization109 128 
Deferred income tax provision (benefit)20 64 
(Income) losses from equity investments1,229 (126)
Dividends from ABI104 119 
(Gain) loss on Cronos-related financial instruments14 (7)
Loss on early extinguishment of debt 649 
Cash effects of changes:
Receivables4 5 
Inventories50 172 
Accounts payable(47)(113)
Income taxes6 (171)
Accrued liabilities and other current assets(177)3 
Accrued settlement charges(1,600)(1,584)
Pension plan contributions(8)(6)
Pension provisions and postretirement, net(74)(73)
Other, net81 48 
Net cash provided by (used in) operating activities2,561 2,679 
Cash Provided by (Used in) Investing Activities
Capital expenditures(83)(53)
Other, net(67)44 
Net cash provided by (used in) investing activities$(150)$(9)

See notes to condensed consolidated financial statements.

9

Altria Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Continued)
(in millions of dollars)
(Unaudited)
_____________________
For the Six Months Ended June 30,20222021
Cash Provided by (Used in) Financing Activities
Long-term debt issued$ $5,472 
Long-term debt repaid (6,542)
Repurchases of common stock(1,083)(650)
Dividends paid on common stock(3,279)(3,196)
Premiums and fees related to early extinguishment of debt (623)
Other, net(11)(210)
Net cash provided by (used in) financing activities(4,373)(5,749)
Cash, cash equivalents and restricted cash:
Increase (decrease)(1,962)(3,079)
Balance at beginning of period4,594 5,006 
Balance at end of period$2,632 $1,927 
The following table provides a reconciliation of cash, cash equivalents and restricted cash (1) to the amounts reported on Altria’s condensed consolidated balance sheets:
At June 30, 2022At December 31, 2021
Cash and cash equivalents$2,567 $4,544 
Restricted cash included in other current assets24  
Restricted cash included in other assets41 50 
Cash, cash equivalents and restricted cash$2,632 $4,594 
(1) Restricted cash consisted primarily of cash deposits collateralizing appeal bonds posted by PM USA to obtain stays of judgments pending appeals. See Note 11. Contingencies.

See notes to condensed consolidated financial statements.
10


Altria Group, Inc. and Subsidiaries
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 June 30, 2022, our wholly owned subsidiaries included Philip Morris USA Inc. (“PM USA”), which is engaged in the manufacture and sale of cigarettes in the United States; John Middleton Co. (“Middleton”), which is engaged in the manufacture and sale of machine-made large cigars and pipe tobacco 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 products (“MST”) and snus products; Helix Innovations LLC (“Helix”), which operates in the United States and Canada, and Helix Innovations GmbH and its affiliates (“Helix ROW”), which operate internationally in the rest-of-world, are engaged in the manufacture and sale of oral nicotine pouches; and Philip Morris Capital Corporation (“PMCC”), which has one leveraged lease remaining. Other wholly owned subsidiaries included Altria Group Distribution Company, which provides sales and distribution services to our domestic tobacco operating companies, and Altria Client Services LLC, which provides various support services to our companies in areas such as legal, regulatory, consumer engagement, finance, human resources and external affairs. Altria’s access to the operating cash flows of our wholly owned subsidiaries consists of cash received from the payment of dividends and distributions, and the payment of interest on intercompany loans by our subsidiaries. At June 30, 2022, our significant wholly owned subsidiaries were not limited by contractual obligations in their ability to pay cash dividends or make other distributions with respect to their equity interests.
On October 1, 2021, UST sold its subsidiary, International Wine & Spirits, which included Ste. Michelle Wine Estates Ltd. (“Ste. Michelle”).
At June 30, 2022, we had investments in the following equity securities: Anheuser-Busch InBev SA/NV (“ABI”), Cronos Group Inc. (“Cronos”) and JUUL Labs, Inc. (“JUUL”). We account for our investments in ABI and Cronos under the equity method of accounting using a one-quarter lag. We account for our equity investment in JUUL under the fair value option.
For further discussion of our investments in equity securities, see Note 3. Investments in Equity Securities.
Share Repurchases: In January 2021, our Board of Directors (“Board of Directors” or “Board”) authorized a $2.0 billion share repurchase program that it expanded to $3.5 billion in October 2021 (as expanded, the “January 2021 share repurchase program”). At June 30, 2022, we had $742 million remaining in the January 2021 share repurchase program. The timing of share repurchases under this program depends upon marketplace conditions and other factors, and the program remains subject to the discretion of our Board.
Our share repurchase activity was as follows:
For the Six Months Ended June 30,For the Three Months Ended June 30,
(in millions, except per share data)2022202120222021
Total number of shares repurchased
21.4 13.5 10.1 6.6 
Aggregate cost of shares repurchased
$1,083 $650 $507 $325 
Average price per share of shares repurchased
$50.53 $48.09 $50.35 $49.21 
Basis of Presentation: Our interim condensed consolidated financial statements are unaudited. 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 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, 2021.
On January 1, 2022, we adopted Accounting Standards Update (“ASU”) 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU No. 2020-06”). This guidance simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. Our adoption of ASU No. 2020-06 did not have a material impact on our condensed consolidated financial statements.
11

For a description of issued accounting guidance applicable to, but not yet adopted by, us, see Note 12. 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 8. Segment Reporting.
We calculate substantially all cash discounts, offered to customers for prompt payment, as a flat rate per unit based on agreed-upon payment terms. Prior to the first quarter of 2021 for USSTC and the third quarter of 2021 for PM USA, cash discounts were calculated as a percentage of the list price based on historical experience and agreed-upon payment terms. We record receivables net of the cash discounts on our condensed consolidated balance sheets.
We record payments received in advance of product shipment as deferred revenue. These payments are included in other accrued liabilities on our condensed consolidated balance sheets until control of such products is obtained by the customer. Deferred revenue was $303 million and $287 million at June 30, 2022 and December 31, 2021, respectively. When cash is received in advance of product shipment, we satisfy our performance obligations within three days of receiving payment. At June 30, 2022 and December 31, 2021, there were no differences between amounts recorded as deferred revenue and amounts subsequently recognized as revenue.
Receivables were $43 million and $47 million at June 30, 2022 and December 31, 2021, respectively. At June 30, 2022 and December 31, 2021, there were no expected differences between amounts recorded and subsequently received, and we did not record an allowance for credit losses against these receivables.
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 and snus 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. 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. Investments in Equity Securities
The carrying amount of our investments consisted of the following:
(in millions)June 30, 2022December 31, 2021
ABI$11,702 $11,144 
JUUL
450 1,705 
Cronos (1)
438 632 
Total
$12,590 $13,481 
(1) Our investment in Cronos at June 30, 2022 and December 31, 2021 consisted of our equity method investment in Cronos of $437 million and $617 million, respectively, and also included the Cronos warrant and the Fixed-price Preemptive Rights, which are measured at fair value (collectively, “Investment in Cronos”). See below for further discussion.
12

(Income) losses from equity investments accounted for under the equity method of accounting and fair value option consisted of the following:
For the Six Months Ended June 30,For the Three Months Ended June 30,
(in millions)2022202120222021
ABI (1)
$(212)$(392)$(12)$(74)
Cronos (1)
186 166 120 99 
(Income) losses from investments under equity method of accounting(26)(226)$108 $25 
JUUL1,255 100 1,155 (100)
(Income) losses from equity investments$1,229 $(126)$1,263 $(75)
(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 investment required under the equity method of accounting.
Investment in ABI
At June 30, 2022, we had an approximate 10% ownership interest in ABI, consisting of 185 million restricted shares of ABI (the “Restricted Shares”) and 12 million ordinary shares of ABI. The 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.
The Restricted Shares were subject to a five-year lock-up period that ended October 10, 2021. As of this filing, we have not elected to convert our Restricted Shares into ordinary shares of ABI.
We account for our investment in ABI under the equity method of accounting because we have the ability to exercise significant influence over the operating and financial policies of ABI, including having active representation on ABI’s board of directors and certain ABI board committees. Through this representation, we 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 equity investment in ABI is based on (i) unadjusted quoted prices in active markets for ABI’s ordinary shares and was 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 was classified in Level 2 of the fair value hierarchy. We can convert the Restricted Shares to ordinary shares at our discretion. Therefore, the fair value of each Restricted Share is based on the value of an ordinary share.
At June 30, 2022, the fair value of our equity investment in ABI was $10.6 billion (carrying value of $11.7 billion), which was below its carrying value by $1.1 billion or approximately 9%. The fair value of our equity investment in ABI at December 31, 2021 was $11.9 billion, which exceeded its carrying value of $11.1 billion by approximately 7%. Accounting guidance requires the evaluation of the following factors when determining if the decline in fair value is other than temporary: (i) the duration and magnitude of the fair value decline; (ii) the financial condition and near-term prospects of the investee; and (iii) the investor’s intent and ability to hold its equity investment until full recovery to its carrying value in the near term. In preparing our financial statements for the period ended June 30, 2022, we have evaluated these factors, including the macroeconomic and geopolitical factors that have resulted in significant changes to certain foreign exchange rates, including the Euro to U.S. dollar exchange rate. Additionally, ABI has delivered consistent business and earnings performance over the past several quarters demonstrating its ability to continue to execute its strategies and navigate challenges. At June 30, 2022, we concluded that the decline in fair value of our equity investment in ABI below its carrying value was temporary and, therefore, no impairment was recorded. At July 25, 2022, the fair value of our equity investment in ABI was below its carrying value by $0.9 billion or approximately 8%.
Investment in JUUL
In December 2018, we made an investment in JUUL for $12.8 billion and received a 35% economic interest in JUUL through non-voting shares, which were convertible at our election into voting shares (“Share Conversion”), and a security convertible into additional non-voting or voting shares, as applicable, upon settlement or exercise of certain JUUL convertible securities (the “JUUL Transaction”). At June 30, 2022, we had a 35% ownership interest in JUUL, consisting of 42 million voting shares.
13

We received a broad preemptive right to purchase JUUL shares, exercisable each quarter upon dilution, to maintain our ownership percentage and we are subject to a standstill restriction under which we may not acquire additional JUUL shares above our 35% interest. Furthermore, we agreed not to sell or transfer any of our JUUL shares until December 20, 2024.
As part of the JUUL Transaction, we entered into a services agreement with JUUL pursuant to which we agreed to provide JUUL with certain commercial services, as requested by JUUL, for an initial term of six years. In January 2020, we amended certain JUUL Transaction agreements and entered into a new cooperation agreement. In conjunction with these amendments, the parties agreed that we would discontinue all services as of March 31, 2020 except regulatory affairs support for JUUL’s pursuit of its pre-market tobacco applications and/or its modified risk tobacco products applications.
We also agreed to non-competition obligations generally requiring that we participate in the e-vapor business only through JUUL. However, we have the option to be released from our non-compete obligation (i) in the event JUUL is prohibited by federal law from selling e-vapor products in the United States for a continuous period of at least 12 months (subject to tolling of this period in certain circumstances), (ii) if the carrying value of our investment in JUUL is not more than 10% of its initial carrying value of $12.8 billion or (iii) if we are no longer providing JUUL services as of December 20, 2024. If any of the conditions described above are met and we elect to be released from our non-competition obligations, we would lose our board designation rights (other than the right to appoint one independent director so long as our ownership continues to be at least 10%), preemptive rights, consent rights and certain other rights with respect to our investment in JUUL and, in addition, our JUUL shares would be converted to single vote common stock, which would result in a significant reduction in our voting power. As discussed below, at June 30, 2022, the carrying value of our investment in JUUL was $450 million, which was less than 10% of our initial carrying value of $12.8 billion. As a result, we currently have the option to be released from our non-competition obligations. However, as of this filing, we have not elected to be released from our non-competition obligations. We retain our option to be released from the non-competition obligations in accordance with our relationship agreement with JUUL.
Additionally, with respect to certain litigation in which we and JUUL are both defendants against third-party plaintiffs, we agreed not to pursue any claims against JUUL for indemnification or reimbursement except for any non-contractual claims for contribution or indemnity where a judgment has been entered against us and JUUL.
In April 2020, the U.S. Federal Trade Commission (“FTC”) issued an administrative complaint challenging our investment in JUUL. In February 2022, the administrative law judge dismissed the FTC’s complaint. FTC complaint counsel appealed that decision to the FTC, which