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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 March 31, 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 April 19, 2022, there were 1,810,557,271 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)
______________________________
 
March 31, 2022December 31, 2021
Assets
Cash and cash equivalents$5,353 $4,544 
Receivables46 47 
Inventories:
Leaf tobacco677 744 
Other raw materials179 166 
Work in process30 23 
Finished product328 261 
1,214 1,194 
Other current assets149 298 
Total current assets6,762 6,083 
Property, plant and equipment, at cost4,300 4,432 
Less accumulated depreciation2,753 2,879 
1,547 1,553 
Goodwill5,177 5,177 
Other intangible assets, net12,289 12,306 
Investments in equity securities ($1,610 million and $1,720 million at March 31, 2022 and December 31, 2021, respectively, measured at fair value)
13,479 13,481 
Other assets981 923 
Total Assets$40,235 $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)
________________________________________________
 
March 31, 2022December 31, 2021
Liabilities
Current portion of long-term debt$2,517 $1,105 
Accounts payable379 449 
Accrued liabilities:
Marketing658 664 
Settlement charges4,229 3,349 
Other1,508 1,365 
Dividends payable1,637 1,647 
Total current liabilities10,928 8,579 
Long-term debt25,405 26,939 
Deferred income taxes3,766 3,692 
Accrued pension costs199 200 
Accrued postretirement health care costs1,438 1,436 
Other liabilities259 283 
Total liabilities41,995 41,129 
Contingencies (Note 10)
Stockholders’ Equity (Deficit)
Common stock, par value $0.33 1/3 per share
(2,805,961,317 shares issued)
935 935 
Additional paid-in capital5,848 5,857 
Earnings reinvested in the business30,988 30,664 
Accumulated other comprehensive losses(2,962)(3,056)
Cost of repurchased stock
(993,749,776 shares at March 31, 2022 and
982,785,699 shares at December 31, 2021)
(36,569)(36,006)
Total stockholders’ equity (deficit)(1,760)(1,606)
Total Liabilities and Stockholders’ Equity (Deficit)$40,235 $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 Three Months Ended March 31,20222021
Net revenues$5,892 $6,036 
Cost of sales1,446 1,608 
Excise taxes on products1,073 1,156 
Gross profit3,373 3,272 
Marketing, administration and research costs489 582 
Operating income2,884 2,690 
Interest and other debt expense, net281 308 
Net periodic benefit income, excluding service cost(46)(43)
Loss on early extinguishment of debt 649 
(Income) losses from equity investments(34)(51)
(Gain) loss on Cronos-related financial instruments10 (110)
Earnings before income taxes2,673 1,937 
Provision for income taxes714 516 
Net earnings1,959 1,421 
Net losses attributable to noncontrolling interests 3 
Net earnings attributable to Altria$1,959 $1,424 
Per share data:
Basic and diluted earnings per share attributable to Altria$1.08 $0.77 

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 Three Months Ended March 31,20222021
Net earnings$1,959 $1,421 
Other comprehensive earnings (losses), net of deferred income taxes:
Benefit plans15 28 
ABI78 517 
Currency translation adjustments and other1 22 
Other comprehensive earnings (losses), net of deferred
income taxes
94 567 
Comprehensive earnings2,053 1,988 
Comprehensive losses attributable to noncontrolling interests 3 
Comprehensive earnings attributable to Altria$2,053 $1,991 

See notes to condensed consolidated financial statements.
6

Altria Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity (Deficit)
for the Three Months Ended March 31, 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  1,959   1,959 
Other comprehensive earnings (losses), net of deferred income taxes
   94  94 
Stock award activity
 (9)  13 4 
Cash dividends declared ($0.90 per share)
  (1,635) — (1,635)
Repurchases of common stock    (576)(576)
Balances, March 31, 2022
$935 $5,848 $30,988 $(2,962)$(36,569)$(1,760)


 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— — 1,424 — — (4)1,420 
Other comprehensive earnings (losses), net of deferred income taxes
— — — 567 — — 567 
Stock award activity
— (5)— — 9 — 4 
Cash dividends declared ($0.86 per share)
— — (1,596)— — — (1,596)
Repurchases of common stock— — — — (325)— (325)
Balances, March 31, 2021$935 $5,905 $34,507 $(3,774)$(34,660)$82 $2,995 

See notes to condensed consolidated financial statements.


7

Altria Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in millions of dollars)
(Unaudited)
_____________________
For the Three Months Ended March 31,20222021
Cash Provided by (Used in) Operating Activities
Net earnings$1,959 $1,421 
Adjustments to reconcile net earnings to operating cash flows:
Depreciation and amortization52 63 
Deferred income tax provision (benefit)43 65 
(Income) losses from equity investments(34)(51)
(Gain) loss on Cronos-related financial instruments10 (110)
Loss on early extinguishment of debt 649 
Cash effects of changes:
Receivables1 (5)
Inventories(20)18 
Accounts payable(59)(98)
Income taxes637 396 
Accrued liabilities and other current assets(372)(307)
Accrued settlement charges880 975 
Pension plan contributions(3)(3)
Pension provisions and postretirement, net(35)(32)
Other, net16 59 
Net cash provided by (used in) operating activities3,075 3,040 
Cash Provided by (Used in) Investing Activities
Capital expenditures(45)(26)
Other, net11 (3)
Net cash provided by (used in) investing activities$(34)$(29)

See notes to condensed consolidated financial statements.

8

Altria Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Continued)
(in millions of dollars)
(Unaudited)
_____________________
For the Three Months Ended March 31,20222021
Cash Provided by (Used in) Financing Activities
Long-term debt issued$ $5,472 
Long-term debt repaid (5,042)
Repurchases of common stock(576)(325)
Dividends paid on common stock(1,645)(1,601)
Premiums and fees related to early extinguishment of debt (623)
Other, net(11)(53)
Net cash provided by (used in) financing activities(2,232)(2,172)
Cash, cash equivalents and restricted cash:
Increase (decrease)809 839 
Balance at beginning of period4,594 5,006 
Balance at end of period$5,403 $5,845 
The following table provides a reconciliation of cash, cash equivalents and restricted cash to the amounts reported on Altria’s condensed consolidated balance sheets:
At March 31, 2022At December 31, 2021
Cash and cash equivalents$5,353 $4,544 
Restricted cash included in other assets (1)
50 50 
Cash, cash equivalents and restricted cash$5,403 $4,594 
(1)Restricted cash consisted of cash deposits collateralizing appeal bonds posted by PM USA to obtain stays of judgments pending appeals. See Note 10. Contingencies.

See notes to condensed consolidated financial statements.
9


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 March 31, 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 subsidiaries (“Helix ROW”), which operate internationally in the rest-of-world, are engaged in the manufacture and sale of on! 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 March 31, 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 March 31, 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 March 31, 2022, we had $1,249 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 Three Months Ended March 31,
(in millions, except per share data)20222021
Total number of shares repurchased
11.3 6.9 
Aggregate cost of shares repurchased
$576 $325 
Average price per share of shares repurchased
$50.69 $47.02 
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.
For a description of issued accounting guidance applicable to, but not yet adopted by, us, see Note 11. New Accounting Guidance Not Yet Adopted.
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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 $247 million and $287 million at March 31, 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 March 31, 2022 and December 31, 2021, there were no differences between amounts recorded as deferred revenue and amounts subsequently recognized as revenue.
Receivables were $46 million and $47 million at March 31, 2022 and December 31, 2021, respectively. At March 31, 2022 and December 31, 2021, there were no expected differences between amounts recorded and subsequently received, and we did not record an allowance for doubtful accounts against these receivables.
We record an allowance for returned goods, which is included in other accrued liabilities on our condensed consolidated balance sheets. While all of our tobacco operating companies sell tobacco products with dates relative to freshness as printed on product packaging, it is USSTC’s policy to accept authorized sales returns from its customers for products that have passed such dates 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 their 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)March 31, 2022December 31, 2021
ABI$11,318 $11,144 
JUUL
1,605 1,705 
Cronos (1)
556 632 
Total
$13,479 $13,481 
(1) Our investment in Cronos at March 31, 2022 and December 31, 2021 consisted of our equity method investment in Cronos of $551 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.
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(Income) losses from equity investments accounted for under the equity method of accounting and fair value option consisted of the following:
For the Three Months Ended March 31,
(in millions)20222021
ABI (1)
$(200)$(318)
Cronos (1)
66 67 
(Income) losses from investments under equity method of accounting(134)(251)
JUUL100 200 
(Income) losses from equity investments$(34)$(51)
(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 March 31, 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.
The fair value of our equity investment in ABI at March 31, 2022 and December 31, 2021 was $11.9 billion for both periods, which exceeded its carrying value of $11.3 billion and $11.1 billion by approximately 5% and 7%, respectively.
In the first quarter of 2022, ABI will record a non-cash impairment charge of $1.1 billion on its investment of AB InBev Efes JSC, which has direct exposure to the Russia and Ukraine regions. Consistent with the one-quarter lag for reporting ABI’s results in our financial results, we expect to record our share of the financial statement impact related to this impairment, which we do not expect to be material, in the second quarter of 2022.
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 March 31, 2022, we had a 35% ownership interest in JUUL, consisting of 42 million voting shares.
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.
12

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.
Additionally, with respect to certain litigation in which we and JUUL are both defendants against third-party plaintiffs, we agreed not 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 appeal remains pending. For further discussion, see Note 10. Contingencies - Antitrust Litigation.
In November 2020, we exercised our rights to convert our non-voting JUUL shares into voting shares. We do not currently intend to exercise our additional governance rights obtained upon Share Conversion, including the right to elect directors to JUUL’s board, as described below, or to vote our JUUL shares other than as a passive investor, pending the outcome of the FTC litigation.
If we choose to exercise our governance rights, JUUL has agreed to:
▪    restructure JUUL’s current seven-member board of directors to a nine-member board that will include independent board members. The new structure will include: (i) three independent directors (one of whom will be designated by us and two of whom will be designated by JUUL stockholders other than us) unanimously certified as independent by a nominating committee, which will include at least one Altria designee, (ii) two directors designated by us, (iii) three directors designated by JUUL stockholders other than us and (iv) the JUUL chief executive officer; and
▪    create a litigation oversight committee, which will include two Altria designated directors (one of whom will chair the litigation oversight committee). The committee will have oversight authority and review of litigation management for matters in which JUUL and we are co-defendants and have, or reasonably could have, a written joint defense agreement in effect between them. Subject to certain limitations, the Litigation Oversight Committee will recommend to JUUL changes to outside counsel and litigation strategy by majority vote, with disagreements by JUUL’s management being resolved by majority vote of JUUL’s board of directors.
Following Share Conversion in the fourth quarter of 2020, we elected to account for our equity method investment in JUUL under the fair value option. Under this option, our condensed consolidated statements of earnings include any cash dividends received from our investment in JUUL and any changes in the estimated fair value of our investment, which is calculated quarterly. We believe the fair value option provides quarterly transparency to investors as to the fair market value of our investment in JUUL, given the changes and volatility in the e-vapor category since our initial investment, as well as the lack of publicly available information regarding JUUL’s business or a market-derived valuation.
We use an income approach to estimate the fair value of our investment in JUUL. The income approach reflects the discounting of future cash flows for the United States and international markets 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 future cash flows. Future cash flow projections are based on a range of scenarios that consider various potential regulatory and market outcomes.
In determining the estimated fair value of our investment in JUUL, at March 31, 2022 and December 31, 2021, we made various judgments, estimates and assumptions, the most significant of which were sales volume, operating margins, discount rates and perpetual growth rates. All significant inputs used in the valuation are classified in Level 3 of the fair value hierarchy. Additionally, in determining these significant assumptions, we made judgments regarding the (i) likelihood and extent of various potential regulatory actions and the continued adverse public perception impacting the e-vapor category and specifically JUUL, (ii) risk created by the number and types of legal cases pending against JUUL, (iii) expectations for the future state of the e-vapor category, including competitive dynamics, and (iv) timing of international expansion plans.
13

The following table provides a reconciliation of the beginning and ending balance of our investment in JUUL, which is classified in Level 3 of the fair value hierarchy:
Investment
(in millions)Balance
Balance at December 31, 2020$1,705 
Unrealized gains (losses) included in (income) losses from equity investments 
Balance at December 31, 2021$1,705 
Unrealized gains (losses) included in (income) losses from equity investments(100)
Balance at March 31, 2022
$1,605 
For the three months ended March 31, 2022, we recorded a non-cash, pre-tax unrealized loss of $100 million as a result of a decrease in the estimated fair value of our investment in JUUL. The decrease in the estimated fair value was primarily driven by an increase in the discount rate due to an increase in U.S. interest rates, partially offset by the effect of passage of time on the projected cash flows.
For the three months ended March 31, 2021, we recorded a non-cash, pre-tax unrealized loss of $200 million as a result of a decrease in the estimated fair value of our investment in JUUL. The decrease in the estimated fair value was primarily driven by (i) our projections of lower JUUL revenues in the U.S. over time due to lower JUUL volume assumptions resulting from a continuation of heightened competitive dynamics in the U.S. e-vapor category and (ii) an increase in the discount rate due to a change in market factors.
Investment in Cronos
At March 31, 2022, we had a 41.7% ownership interest in Cronos, consisting of 156.6 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 equity method 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 March 31, 2022, the fair value of our equity method investment in Cronos exceeded its carrying value by $55 million or approximately 10%. At December 31, 2021, the fair value and carrying value of our equity method investment in Cronos were $617 million. At April 25, 2022, the fair value of our equity method investment in Cronos was below its carrying value by $74 million or approximately 13%.
As part of our Investment in Cronos, at March 31, 2022, we also owned:
anti-dilution protections to purchase Cronos common shares, exercisable each quarter upon dilution, to maintain our ownership percentage. Certain of the anti-dilution protections provide us the ability to purchase additional Cronos common shares at a per share exercise price of Canadian dollar (“CAD”) $16.25 upon the occurrence of specified events (“Fixed-price Preemptive Rights”). Based on our assumptions as of March 31, 2022, we estimate the Fixed-price Preemptive Rights allows us to purchase up to an additional approximately 11 million common shares of Cronos; and
a warrant providing us the ability to purchase an additional approximate 10% of common shares of Cronos (approximately 83 million common shares at March 31, 2022) at a per share exercise price of CAD $19.00, which expires on March 8, 2023.
If exercised in full, the exercise prices for the warrant and Fixed-price Preemptive Rights are approximately CAD $1.6 billion and CAD $0.2 billion, respectively (approximately U.S. dollar $1.2 billion and $0.1 billion, respectively, based on the CAD to U.S. dollar exchange rate on April 25, 2022). At March 31, 2022, upon full exercise of the Fixed-price Preemptive Rights, to the extent such rights become available, and the warrant, we would own approximately 52% of the outstanding common shares of Cronos.
The Fixed-price Preemptive Rights and Cronos warrant are derivative financial instruments, which are required to be recorded at fair value. The fair values of the Fixed-price Preemptive Rights and Cronos warrant are estimated using Black-Scholes option-pricing models, adjusted for observable inputs (which are classified in Level 1 of the fair value hierarchy), including share price, and unobservable inputs, including probability factors and weighting of expected life, volatility levels and risk-free interest rates (which are classified in Level 3 of the fair value hierarchy). We elect to record the gross assets and liabilities of derivative financial instruments executed with the same counterparty on our condensed consolidated balance sheets in investments in equity securities.
We record in our condensed consolidated statements of earnings any changes in the fair values of the Fixed-price Preemptive Rights and Cronos warrant as gains or losses on Cronos-related financial instruments in the periods in which the changes occur.
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We recorded non-cash, pre-tax unrealized (gains) losses, representing the changes in the fair values of the Fixed-price Preemptive Rights and Cronos warrant, as follows:
For the Three Months Ended March 31,
(in millions)20222021
Fixed-price Preemptive Rights$ $(14)
Cronos warrant10 (96)
Total$10 $(110)

Note 4. Financial Instruments
We enter into derivative financial instruments to mitigate the potential impact of certain market risks, including foreign currency exchange rate risk. We use various types of derivative financial instruments, including forward contracts, options and swaps. We do not enter into or hold derivative financial instruments for trading or speculative purposes.
Our investment in ABI, whose functional currency is the Euro, exposes us to foreign currency exchange risk on the carrying value of our investment. To manage this risk, we may designate certain foreign exchange contracts, including cross-currency swap contracts and forward contracts (collectively, “foreign currency contracts”), and Euro denominated unsecured long-term notes (“foreign currency denominated debt”) as net investment hedges of our investment in ABI.
In May 2021, all outstanding foreign currency contracts matured and, at March 31, 2022 and December 31, 2021, we had no outstanding foreign currency contracts. When we have foreign currency contracts in effect, counterparties are domestic and international financial institutions. Under these contracts, we are exposed to potential losses in the event of non-performance by these counterparties. We manage our credit risk by entering into transactions with counterparties that have investment grade credit ratings, limiting the amount of exposure we have with each counterparty and monitoring the financial condition of each counterparty. The counterparty agreements contain provisions that require us to maintain an investment grade credit rating. In the event our credit rating falls below investment grade, counterparties to our foreign currency contracts can require us to post collateral.
The following table provides the aggregate carrying value and fair value of our total long-term debt:
(in millions)March 31, 2022December 31, 2021
Carrying value$27,922 $28,044 
Fair value27,670 30,459 
Our estimate of 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.
The following table provides the aggregate carrying value and fair value of our foreign currency denominated debt:
(in millions)March 31, 2022December 31, 2021
Foreign currency denominated debt
Carrying value$4,690 $4,817 
Fair value4,713 5,114 
Net Investment Hedging
The pre-tax effects of our net investment hedges on accumulated other comprehensive losses and our condensed consolidated statements of earnings were as follows:
(Gain) Loss Recognized in Accumulated Other Comprehensive Losses(Gain) Loss Recognized in
Net Earnings
For the Three Months Ended March 31,
(in millions)2022202120222021
Foreign currency contracts$ $(35)$ $(5)
Foreign currency denominated debt(128)(206)  
Total$(128)$(241)$ $(5)
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We recognized changes in the fair value of the foreign currency contracts and 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 gains on the foreign currency contracts arising from components excluded from effectiveness testing in interest and other debt expense, net in our condensed consolidated statements of earnings based on an amortization approach.

Note 5. Benefit Plans
Components of Net Periodic Benefit (Income) Cost
Net periodic benefit (income) cost consisted of the following:
PensionPostretirement
For the Three Months Ended March 31,
 (in millions)2022202120222021
Service cost$15 $17 $5 $5 
Interest cost52 46 10 11 
Expected return on plan assets
(123)(131)(3)(4)
Amortization:
Net loss24 33 4 7 
Prior service cost (credit)
2 1 (12)(6)
Net periodic benefit (income) cost$(30)$(34)$4 $13 
Employer Contributions
We make contributions to our pension plans to the extent that the contributions are tax deductible and pays benefits that relate to plans for salaried employees that cannot be funded under Internal Revenue Service regulations. We made employer contributions of $3 million to our pension plans and did not make any contributions to our postretirement plans during the three months ended March 31, 2022. Currently, we anticipate making additional employer contributions to our pension and postretirement plans of up to approximately $30 million for each plan in 2022. However, the foregoing estimates of 2022 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, as well as asset performance significantly above or below the assumed long-term rate of return for each respective plan.

Note 6. Earnings per Share
We calculated basic and diluted earnings per share (“EPS”) using the following:
For the Three Months Ended March 31,
(in millions)20222021
Net earnings attributable to Altria$1,959 $1,424 
Less: Distributed and undistributed earnings attributable to share-based awards
(4)(3)
Earnings for basic and diluted EPS$1,955 $1,421 
Weighted-average shares for basic and diluted EPS1,818 1,857 

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Note 7. Other Comprehensive Earnings/Losses
The following tables set forth the changes in each component of accumulated other comprehensive losses, net of deferred income taxes, attributable to Altria:
 For the Three Months Ended March 31, 2022
(in millions)Benefit PlansABICurrency
Translation
Adjustments and Other
Accumulated
Other
Comprehensive
Losses
Balances, December 31, 2021$(1,612)$(1,512)$68 $(3,056)
Other comprehensive earnings (losses) before reclassifications
 138 1 139 
Deferred income taxes (32) (32)
Other comprehensive earnings (losses) before reclassifications, net of deferred income taxes
 106 1 107 
Amounts reclassified to net earnings21 (35) (14)
Deferred income taxes(6)7  1 
Amounts reclassified to net earnings, net of deferred income taxes15 (28) (13)
Other comprehensive earnings (losses), net of deferred income taxes
15 78 
(1)
1 94 
Balances, March 31, 2022$(1,597)$(1,434)$69 $(2,962)
(1) Primarily reflects the impact of our designated net investment hedges related to our investment in ABI. For further discussion of designated net investment hedges, see Note 4. Financial Instruments.

For the Three Months Ended March 31, 2021
(in millions)Benefit PlansABICurrency
Translation
Adjustments and Other
Accumulated
Other
Comprehensive
Losses
Balances, December 31, 2020$(2,420)$(1,938)$17 $(4,341)
Other comprehensive earnings (losses) before reclassifications
 690 22 712 
Deferred income taxes (151) (151)
Other comprehensive earnings (losses) before reclassifications, net of deferred income taxes
 539 22 561 
Amounts reclassified to net earnings38 (28) 10 
Deferred income taxes(10)6  (4)
Amounts reclassified to net earnings, net of deferred income taxes28 (22) 6 
Other comprehensive earnings (losses), net of deferred income taxes
28 517 
(1)
22 567 
Balances, March 31, 2021$(2,392)$(1,421)$39 $(3,774)
(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 4. Financial Instruments.

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The following table sets forth pre-tax amounts by component, reclassified from accumulated other comprehensive losses to net earnings:
For the Three Months Ended March 31,
(in millions)20222021
Benefit Plans: (1)
Net loss$31 $43 
Prior service cost/credit(10)(5)
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