Altria Group (MO) 10-K risk factor changes: FY2015 vs FY2014

You can identify these forward-looking statements by use of words such as “strategy,” “expects,” “continues,” “plans,” “anticipates,” [removed: “believes,”] [added: believes,”] “will,” “estimates,” “forecasts,” “intends,” “projects,” “goals,” “objectives,” “guidance,” “targets” and other words of similar meaning.

Achievement of future results is subject to risks, uncertainties and assumptions that may prove to be [removed: inaccurate.][added: ___________________________________________________]

We elaborate on these and other risks we face throughout this document, particularly in the “Business Environment” sections preceding our discussion of [added: the] operating results of our subsidiaries’ businesses in Item 7.

Furthermore, in those cases where plaintiffs are successful, Altria Group, Inc. [removed: or its subsidiaries may also be required to pay interest and attorneys’ fees.]

This risk has been substantially reduced given that [removed: 46] [added: 47] states and Puerto Rico now limit the dollar amount of bonds or require no bond at all.

As discussed in Note 18, Contingencies to the consolidated financial statements in Item 8 (“Note 18”), tobacco litigation plaintiffs have challenged the constitutionality of Florida’s bond cap statute in [added: several cases and plaintiffs may challenge state bond cap statutes in other jurisdictions as well.]

As described in Tobacco Space - Business Environment in Item 7, PM USA faces significant governmental and private sector actions, including efforts aimed at reducing the incidence of [removed: tobacco use and efforts seeking to hold PM USA responsible for the adverse health effects associated with both smoking and exposure to environmental tobacco smoke.]

[added: Actions by the FDA and other federal, state or local governments or agencies, including those specific actions described in Tobacco Space - Business Environment in Item 7, may impact the consumer acceptability of tobacco products, limit adult tobacco consumer choices, delay or prevent the launch of new or modified tobacco] products or products with claims of reduced risk, [added: require the recall or other removal of tobacco products from the marketplace (for example as a result of product contamination or a determination by the FDA that one or more tobacco products do not satisfy the statutory requirements for substantial equivalence),] restrict communications to adult tobacco consumers, restrict the ability to differentiate tobacco products, create a competitive advantage or disadvantage for certain tobacco companies, impose additional manufacturing, labeling or packing requirements, [removed: require the recall or removal of tobacco products from the marketplace (including without limitation as a result of product contamination),] interrupt manufacturing or otherwise significantly increase the cost of doing business, or restrict or prevent the use of specified tobacco products in certain locations or the sale of tobacco products by certain retail establishments.

Our tobacco businesses face significant competition and their failure to compete effectively could have an adverse effect on the [added: consolidated results of operations or cash flows of Altria Group, Inc., or the] business of Altria Group, Inc.’s tobacco subsidiaries.

[removed: Settlements of certain tobacco litigation in the United States,] [added: These settlements,] among other factors, have resulted in substantial cigarette price increases.

PM USA [added: also] faces competition from lowest priced brands sold by certain United States and foreign manufacturers that have cost advantages because they are not parties to [removed: these settlements.][added: settlements of certain tobacco litigation in the United States.]

USSTC faces significant competition in the smokeless tobacco category and has [added: experienced consumer down-trading to lower-priced brands.]

Altria Group, Inc. and its subsidiaries may be unsuccessful in anticipating changes in adult consumer preferences, responding to changes in consumer purchase behavior or managing through difficult [added: competitive and] economic conditions.

[removed: ▪promote] [added: | ▪ | promote] brand equity successfully; [added: |]

[removed: ▪improve] [added: | ▪ | improve] productivity; and [added: |]

Continued growth of this product category could further contribute to reductions in cigarette consumption levels and cigarette industry sales volume [removed: and could adversely affect the growth rates of other tobacco products.]

[removed: The willingness] [added: In periods] of [added: economic uncertainty,] adult consumers [removed: to] [added: may] purchase [removed: premium consumer product] [added: more discount] brands [removed: depends] [added: and/or,] in [removed: part on economic conditions,] [added: the case of tobacco products, consider lower-priced tobacco products,] which could have a material adverse effect on the business, consolidated results of operations, cash flows or financial position of Altria Group, Inc. and its subsidiaries.

Altria Group, Inc.’s tobacco subsidiaries may be unsuccessful in developing and commercializing [added: adjacent products or processes, including] innovative tobacco products that may reduce the health risks associated with current tobacco products and that appeal to adult tobacco [removed: consumers.][added: consumers, which may have an adverse effect on their ability to grow new revenue streams.]

[removed: Altria Group, Inc.’s tobacco subsidiaries continue to develop and commercialize] [added: Some] innovative tobacco [removed: products, including new product technologies that] [added: products] may reduce the health risks associated with current tobacco products, while continuing to offer adult tobacco consumers (within and outside the United States) products that meet their taste expectations and evolving preferences.

If our tobacco subsidiaries do not succeed in their efforts to develop and commercialize innovative tobacco products or to obtain regulatory approval for the marketing or sale of products with claims of reduced risk, but one or more of their competitors [removed: do succeed, our tobacco subsidiaries may be at a competitive disadvantage.]

Altria Group, Inc. and its subsidiaries have [removed: adjacency] growth strategies involving moves and potential moves into [removed: complementary] [added: adjacent] products or [removed: processes.][added: processes, including innovative tobacco products.]

Because Altria Group, Inc.’s tobacco subsidiaries rely on a few significant facilities and a small number of significant suppliers, an extended disruption at a facility or in service by a supplier could have a material adverse effect on the business, the consolidated results of operations, cash flows or [added: financial position of Altria Group, Inc. and its tobacco subsidiaries.]

Although we seek to maintain or improve our credit ratings over time, it is possible that completing a given acquisition or [added: the occurrence of] other [removed: event] [added: events] could impact our credit ratings or the outlook for those ratings.

Disruption and uncertainty in the credit and debt capital markets and any resulting adverse impact on credit availability, [removed: pricing and/or] [added: pricing,] credit terms [added: or credit rating] may negatively affect the amount of credit available to us and may also increase our costs and adversely affect our earnings or our dividend rate.

Michelle’s grape supply is influenced by consumer demand for wine in relation to industry-wide production levels as well as by weather and crop [removed: conditions, particularly in eastern Washington.]

The failure of Altria Group, Inc.’s information systems [added: or service providers’ information systems] to function as intended, or [removed: the penetration by outside parties intent on disrupting business processes,] [added: cyberattacks or security breaches,] could result in [removed: significant costs,] loss of revenue, [removed: assets or] [added: assets,] personal [added: data, intellectual property, trade secrets] or other sensitive [removed: data] [added: data, violation of applicable privacy] and [added: data security laws,] reputational [removed: harm.][added: harm and significant costs.]

[removed: Nevertheless, failure] [added: Failure] of our systems [added: or service providers’ systems] to function as [removed: intended,] [added: intended] or [removed: penetration of our systems] [added: cyberattacks or security breaches] by [removed: outside] parties intent on extracting or corrupting information or otherwise disrupting business [removed: processes,] [added: processes] could result in loss of revenue, [removed: assets or] [added: assets,] personal [added: data, intellectual property, trade secrets] or other sensitive [added: and confidential] data, [removed: cause] [added: violation of applicable privacy and data security laws,] damage to the reputation of our companies and their [removed: brands and result in] [added: brands,] legal challenges and significant remediation and other costs to Altria Group, Inc. and its subsidiaries.

We cannot predict whether new investigations may be commenced or the outcome of such investigations, and it is possible that our [removed: business could be materially adversely affected by an unfavorable outcome of future investigations.]

inaccurate.

or its subsidiaries may also be required to pay interest and attorneys’ fees.

tobacco use and efforts seeking to hold PM USA responsible for the adverse health effects associated with both smoking and exposure to environmental tobacco smoke.

See Tobacco Space - Business Environment in Item 7 for a more detailed discussion of these risks.

Significant methods of

competition include product quality, taste, price, product innovation, marketing, packaging, distribution and promotional activities.

A highly competitive environment could negatively impact the profitability, market share and shipment volume of our tobacco subsidiaries, which could have an adverse effect on the consolidated results of operations or cash flows of Altria Group, Inc.

| | |

| --- | --- |

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| --- | --- |

and could adversely affect the growth rates of other tobacco products.

The willingness of adult consumers to purchase premium consumer product brands depends in part on economic conditions.

do succeed, our tobacco subsidiaries may be at a competitive disadvantage.

Any such change in ratings or outlook may negatively affect the amount of credit available to us and may also increase our costs and adversely affect our earnings or our dividend rate.

conditions, particularly in eastern Washington.

Altria Group, Inc. and its subsidiaries rely on information systems to help manage business processes, collect and interpret business data, comply with regulatory, financial reporting and tax requirements, engage in marketing and e-commerce activities, collect and store sensitive data and confidential information, and communicate internally and externally with employees, investors, suppliers, trade customers, adult consumers and others.

We have implemented administrative, technical and physical safeguards, including testing and auditing protocols, backup systems and business continuity plans, intended to protect our systems and data.

However, because the techniques used in cyberattacks and security breaches change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures.

To date, interruptions of our information systems have been infrequent and have not had a material impact on our operations.

business could be materially adversely affected by an unfavorable outcome of future investigations.

AB InBev’s proposed transaction to effect a business combination with SABMiller may not be completed within the anticipated time frame or at all, which could have a negative effect on the value of our equity investment in SABMiller.

As described in more detail in Note 6, Investment in SABMiller to the consolidated financial statements in Item 8 (“Note 6”), on November 11, 2015, AB InBev announced its firm offer to effect a business combination with SABMiller.

The proposed transaction is subject to a number of closing conditions, including shareholder approvals of both SABMiller and AB InBev, and receipt of the required regulatory approvals.

These conditions may not be satisfied or may take longer than expected to be satisfied.

The transaction is also subject to other risks and uncertainties over which Altria Group, Inc. has no control.

We cannot provide any assurance that the proposed transaction will be completed or that there will not be a delay in the completion of the proposed transaction.

If the transaction is not completed or is subject to a delay, the value of our investment in SABMiller could be adversely affected.

If AB InBev’s proposed transaction to effect a business combination with SABMiller is completed, AB InBev may not achieve the intended benefits of the transaction, which could have a negative effect on our reported earnings from and carrying value of our equity investment in the combined company.

There can be no assurance that AB InBev will be able to successfully integrate SABMiller’s business or otherwise realize the expected benefits of the proposed transaction.

Any of these outcomes could result in increased costs to the combined company and dilution to its shareholders, and could adversely affect the combined company’s financial condition and Altria Group, Inc.’s reported earnings from and carrying value of our investment in the combined company.

If AB InBev’s proposed transaction to effect a business combination with SABMiller is completed, we will receive a substantial portion of our transaction consideration in the form of restricted shares.

Furthermore, the number of restricted shares we expect to receive is, under certain circumstances described below, subject to proration, which if it were to occur would decrease the number of restricted shares and increase the amount of cash that we receive in connection with the transaction.

Any cash we receive will be subject to taxation and to risks associated with changes in the value of the U.S. dollar versus the British pound.

Altria Group, Inc. has committed to elect the partial share alternative (“PSA”) in the transaction.

Therefore, upon completion of the proposed transaction, we expect to receive a substantial portion of our transaction consideration in the form of shares that will be subject to certain limitations and restrictions, including a five-year restriction on sale or transfer, subject to limited exceptions.

These transfer restrictions will require us to bear the risks associated with our investment in the combined company for a five-year period following completion of the proposed transaction.

Further, while we have committed to elect the PSA in the transaction, our election is subject to proration to the extent that other SABMiller shareholders also elect this alternative and these elections exceed the maximum number of shares that AB InBev’s firm offer makes available to those SABMiller shareholders that elect the PSA.

If we receive more cash and less equity consideration than we currently expect, we will be subject to additional tax liabilities, our percentage ownership of the combined company will be reduced and we may be unable to account for our investment under the equity method of accounting as we currently do for our investment in SABMiller.

In addition, the cash consideration we expect to receive will be denominated in British pounds.

___________________________________________________

several cases and plaintiffs may challenge state bond cap statutes in other jurisdictions as well.

Actions by the FDA, other federal, state or local governments or agencies, including those actions described in Tobacco Space - Business Environment in Item 7, may impact the consumer acceptability of tobacco products, limit adult tobacco consumer choices, delay or prevent the launch of new or modified tobacco

experienced consumer down-trading to lower-priced brands.

In periods of economic uncertainty, adult consumers may purchase more discount brands and/or, in the case of tobacco products, consider lower-priced tobacco products.

Altria Group, Inc. and its subsidiaries’ ability to grow new revenue streams may be limited if our operating companies are unable to move successfully into complementary products or processes.

We cannot guarantee that these strategies, or any products introduced in connection with these strategies, will be successful.

See the immediately preceding paragraph for a related discussion concerning new product technologies.

financial position of Altria Group, Inc. and its tobacco subsidiaries.

Altria Group, Inc. and its subsidiaries use information systems to help manage business processes, collect and interpret business

data and communicate internally and externally with employees, investors, suppliers, trade customers, adult tobacco consumers and others.

We have backup systems and business continuity plans in place and we take care to protect our systems and data from unauthorized access.

At December 31, [removed: 2014,] [added: 2015,] Altria Group, Inc.’s wholly-owned subsidiaries included PM USA, which is engaged predominantly in the manufacture and sale of cigarettes in the United States; 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; and UST, which through its wholly-owned subsidiaries, including USSTC and Ste.

Other Altria Group, Inc. wholly-owned subsidiaries included Altria Group Distribution Company, which provides sales, distribution and consumer engagement services to certain Altria Group, Inc. operating subsidiaries, and Altria Client Services [removed: Inc.,] [added: LLC,] which provides various support [removed: services,] [added: services in areas] such as legal, regulatory, finance, human resources and external affairs, to Altria Group, Inc. and its subsidiaries.

At December 31, [removed: 2014,] [added: 2015,] Altria Group, Inc.’s principal wholly-owned subsidiaries were not limited by long-term debt or other agreements in their ability to pay cash dividends or make other distributions with respect to their equity interests.

At December 31, [removed: 2014,] [added: 2015,] Altria Group, Inc. also held approximately 27% of the economic and voting interest of SABMiller, which Altria Group, Inc. accounts for under the equity method of accounting.

The financial services and the innovative tobacco products businesses are included in an all other category due to the continued reduction of the lease portfolio of PMCC and the relative financial contribution of Altria [removed: Group, Inc.’s innovative tobacco products businesses to Altria Group, Inc.’s consolidated results.]

The changes in Altria Group, Inc.’s net earnings and diluted earnings per share (“EPS”) attributable to Altria Group, Inc. for the year ended December 31, [removed: 2014,] [added: 2015,] from the year ended December 31, [removed: 2013,] [added: 2014,] were due primarily to the following:

| For the year ended December 31, [removed: 2013] [added: 2015] | $ | [removed: 4,535] [added: 5,241] | | | $ | [removed: 2.26] [added: 2.67] | |

| [removed: 2013] [added: 2015] Asset impairment, exit and [removed: implementation] [added: integration] costs | [removed: 7] [added: (9] | | [added: )] | | — | | |

| [removed: 2013] [added: 2014] Tobacco and health litigation items | [removed: 14] [added: 28] | | | | 0.01 | | |

| [removed: 2013] [added: 2014] SABMiller special items | [removed: 20] [added: 17] | | | | 0.01 | | |

| [removed: 2013] Loss on early extinguishment of debt | [removed: 678] [added: —] | | | | [removed: 0.34] [added: 0.07] | | |

| [removed: 2013] [added: 2015] Tax items | [removed: (64] [added: 11] | | [removed: )] | | [removed: (0.03] [added: —] | | [removed: )] |

| 2014 NPM Adjustment Items | [removed: 56] [added: (56] | | [added: )] | | [removed: 0.03] [added: (0.03] | | [added: )] |

| 2014 Asset impairment, exit, integration and acquisition-related costs | [removed: (14] [added: 14] | | [removed: )] | | [removed: (0.01] [added: 0.01] | | [removed: )] |

| [removed: 2014] Tobacco and health litigation items | [removed: (28] [added: —] | | [removed: )] | | [removed: (0.01] [added: 0.05] | | [removed: )] |

| [added: Subtotal] 2014 [removed: SABMiller] special items | [removed: (17] [added: 17] | | [removed: )] | | [removed: (0.01] [added: 0.01] | | [removed: )] |

| 2014 Loss on early extinguishment of debt | [removed: (28] [added: 28] | | [removed: )] | | [removed: (0.02] [added: 0.02] | | [removed: )] |

| 2014 Tax items | [removed: 14] [added: (14] | | [added: )] | | [removed: 0.01] [added: (0.01] | | [added: )] |

| Fewer shares outstanding | — | | | | [removed: 0.03] [added: 0.02] | | |

| Change in tax rate | [removed: 86] [added: (53] | | [added: )] | | [removed: 0.04] [added: (0.03] | | [added: )] |

| ▪ | Fewer Shares Outstanding: Fewer shares outstanding during [removed: 2014] [added: 2015] compared with [removed: 2013] [added: 2014] were due primarily to shares repurchased by Altria Group, Inc. under its share repurchase programs. |

| ▪ | Change in Tax Rate: The change in tax rate was due primarily to [removed: a reduction in certain consolidated tax benefits in 2013 resulting from the 2013 debt tender offer, and an increased] [added: decreased] recognition of foreign tax credits [removed: in 2014 primarily] associated with SABMiller dividends. |

| ▪ | Operations: The increase of [removed: $238] [added: $470] million in operations shown in the table above was due primarily to the following: |

| ▪ | higher income from the smokeable products [removed: segment;] and [added: smokeless products segments; and] |

[removed: ▪lower] [added: | ▪ | lower] interest and other debt expense, net; [added: |]

[removed: 2015] [added: 2016] Forecasted Results

In January [removed: 2015,] [added: 2016,] Altria Group, Inc. forecasted that its [removed: 2015] [added: 2016] full-year adjusted diluted EPS growth rate is expected to be in the range of 7% to 9% over [removed: 2014] [added: 2015] full-year adjusted diluted EPS.

[removed: The] [added: In addition, the] factors described in Item 1A represent continuing risks to this forecast.

| | 2015 | | | [removed: |] 2014 | | | [added: 2013 | |]

| [added: 2015] Tobacco and health litigation items [removed: 1] | [removed: 0.02] [added: (94] | | [added: )] | | [removed: 0.01] [added: (0.05] | | [added: )] |

| SABMiller special items | — | | | | [removed: 0.01] [added: 0.04] | | |

| [added: 2015] Loss on early extinguishment of debt | [removed: —] [added: (143] | | [added: )] | | [removed: 0.02] [added: (0.07] | | [added: )] |

Altria Group, Inc.’s management reviews certain financial results, including diluted EPS, on an adjusted basis, which [removed: exclude] [added: excludes] certain income and expense items that management believes are not part of underlying operations.

These items may include, for example, loss on early extinguishment of debt, restructuring charges, SABMiller special items, certain tax items, charges associated with tobacco and health litigation items, and settlements of, and determinations made in connection with, disputes with certain states and territories related to the [removed: non-participating manufacturer (“NPM”)] [added: NPM] adjustment provision under the [removed: 1998 Master Settlement Agreement (the “MSA”) for the years 2003-2012] [added: MSA] (such settlements and determinations are referred to collectively as “NPM Adjustment Items” and are more fully described in Health Care Cost Recovery Litigation - NPM Adjustment Disputes in Note 18).

Altria Group, Inc.’s management believes that [removed: these] adjusted financial measures provide useful [added: insight into underlying business trends and results and provide a more meaningful comparison of year-over-year results.]

These adjusted financial measures [removed: are not consistent with U.S. GAAP, and] should thus be considered as supplemental in nature and not considered in isolation or as a substitute for the related financial information prepared in accordance with U.S. GAAP.

Altria Group, Inc.’s full-year adjusted diluted EPS guidance [removed: excludes] [added: and full-year forecast for its effective tax rate on operations exclude] the impact of certain income and expense items, including those items noted in the preceding paragraph.

Altria Group, Inc.’s management cannot estimate on a forward-looking basis the impact of these items on Altria Group, Inc.’s reported diluted EPS [added: and reported effective tax rate] because these items, which could be significant, are difficult to predict and may be highly variable.

As a result, Altria Group, Inc. does not provide a corresponding U.S. GAAP measure for, or [removed: a] reconciliation to, its adjusted diluted EPS [removed: guidance.][added: guidance or its forecast for its effective tax rate on operations.]

Investments in which Altria Group, Inc. [removed: exercises] [added: has the ability to exercise] significant influence are accounted for under the equity method of accounting.

On November 11, 2015, AB InBev announced its firm offer to effect a business combination with SABMiller in a cash and stock transaction.

Group, Inc.’s innovative tobacco products businesses to Altria Group, Inc.’s consolidated results.

| 2015 NPM Adjustment Items | 51 | | | | 0.03 | | |

| 2015 SABMiller special items | (82 | | ) | | (0.04 | | ) |

| 2015 Other income, net | 3 | | | | — | | |

| Subtotal 2015 special items | (263 | | ) | | (0.13 | | ) |

| Operations | 470 | | | | 0.24 | | |

| ▪ | lower earnings from Altria’s equity investment in SABMiller. |

Altria Group, Inc. expects that its 2016 full-year effective tax rate on operations will be 35.3%.

This forecast does not include any impact from the anticipated AB InBev and SABMiller business combination, as the transaction remains subject to certain approvals and the closing date has not yet been determined.

| | 2016 | | | | 2015 | | |

| Asset impairment, exit and implementation costs1 | 0.05 | | | | — | | |

| | $ | 0.05 | | | $ | 0.13 | |

1 Represents restructuring charges, substantially all of which are expected to be recorded in the first quarter of 2016 in connection with the productivity initiative announced in January 2016.

For further discussion of the productivity initiative, see Note 21.

Subsequent Event to the consolidated financial statements in Item 8.

Altria Group, Inc.’s management also reviews income tax rates on an adjusted basis.

Altria

Group, Inc.’s effective tax rate on operations may exclude certain tax items from its reported effective tax rate.

These adjusted financial measures are not consistent with U.S. GAAP and may not be calculated the same as similarly titled measures used by other companies.

At December 31, 2015:

| ▪ | the estimated fair values of all reporting units substantially exceeded their carrying values; |

| ▪ | in the smokeless products reporting unit, the estimated fair value of the Copenhagen trademark substantially exceeded its carrying value, while the estimated fair values of the Skoal trademark and certain other smokeless products trademarks (primarily Red Seal and Husky) did not substantially exceed their carrying values. |

The 2015 results for Skoal continue to be impacted by a lower category growth rate and increased competitive activity.

USSTC continues to implement strategies to enhance Skoal’s equity and to invest more efficiently in the brand.

USSTC expects these strategies to improve Skoal’s profitability over the long term.

Red Seal and Husky continue to be impacted by lower levels of promotional support on these brands, increased competitive activity in the discount category and sustained growth in popular priced products.

income, growth rates and discount rates.

The analysis incorporated assumptions used in Altria Group, Inc.’s long-term financial forecast, which is used by Altria Group, Inc.’s management to evaluate business and financial performance, including allocating resources and evaluating results relative to setting employee compensation targets.

The perpetual growth rate used in performing all of the valuations was 2%.

For further discussion of these factors, see Operating Results by Business Segment \- Tobacco Space - Business Environment below.

USA and UST and its subsidiaries, as well as their respective indemnitees.

Benefit Plans to the consolidated financial statements in Item 8 (“Note

The gains or losses and prior service costs or credits recorded as components of other comprehensive earnings (losses) are subsequently amortized into net periodic benefit cost in future years.

At December 31, 2015, Altria Group, Inc. changed the approach used to estimate the service and interest cost components of net periodic benefit costs for Altria Group, Inc.’s pension and postretirement plans.

In 2015 and prior years, Altria Group, Inc. estimated the service and interest cost components using a single weighted-average discount rate derived from the yield curve used to measure the pension and postretirement plans benefit obligations.

Beginning in 2016, Altria Group, Inc. will use a spot rate approach in the estimation of these components of net periodic benefit costs by applying the specific spot rates along the yield curve to the relevant projected cash flows, as Altria Group, Inc. believes that this approach provides a more precise estimate of service and interest costs.

Altria Group, Inc. is accounting for this change prospectively as a change in accounting estimate.

This change will not affect the measurement of Altria Group, Inc.’s pension and postretirement benefit obligations as the change in the service and interest costs will be offset by a corresponding change in actuarial gains/losses.

This anticipated decrease is due primarily to the impact of the change in approach used to estimate service and interest costs ($90 million) and the impact of the higher discount rate.

| | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- |

| 2013 NPM Adjustment Items | (427 | | ) | | (0.21 | | ) |

| Subtotal 2013 special items | 228 | | | | 0.12 | | |

| Subtotal 2014 special items | (17 | | ) | | (0.01 | | ) |

| Operations | 238 | | | | 0.12 | | |

| ▪ | higher investment spending in the innovative tobacco products businesses; and |

▪lower income from the financial services business.

| Asset impairment, exit, integration and acquisition-related costs | — | | | | 0.01 | | |

| Tax items | — | | | | (0.01 | | ) |

| | $ | 0.02 | | | $ | 0.01 | |

1 The 2015 amount represents a provision that will be recorded by PM USA in the first quarter of 2015 related to the tentative agreement to resolve approximately 415 pending federal Engle progeny cases.

See Item 3.

insight into underlying business trends and results and provide a more meaningful comparison of year-over-year results.

customers, upon shipment of goods when title and risk of loss pass to customers.

In the smokeless products reporting unit, 2014 results for Skoal were impacted by strategies to enhance Skoal’s equity and targeted investments to narrow price gaps, which are expected to strengthen the brand over the long term.

USSTC continues to believe that the smokeless category’s growth rate is best determined over a longer time horizon and will continue to monitor industry volume closely.

Assumptions are also

made for perpetual growth rates for periods beyond the long-term financial forecast.

cigarette shipments, including roll-your-own cigarettes, in the year preceding that in which the payment is due.

In addition, at December 31, 2014, Altria Group, Inc. updated its mortality assumptions to reflect longer life expectancy for its defined benefit pension plan and postretirement health care plan participants.

This anticipated increase is due primarily to the impact of the updated mortality assumptions ($70 million).

The impact of the lower discount rate was largely offset by the impact of higher than expected returns on plan assets.

Income attributable to leveraged leases is initially

default were to occur.

| | For the Years Ended December 31, | | | | | | | | | | |

earnings as follows:

For 2012, these costs were primarily due to Altria Group, Inc.’s cost reduction program announced in 2011 (the “2011 Cost Reduction Program”).

For a breakdown of asset impairment and exit costs by segment, see Note 15.

▪PMCC Leveraged Lease Benefit: During the second quarter of 2012, Altria Group, Inc. entered into a closing agreement (the “Closing Agreement”) with the Internal Revenue Service (“IRS”) that conclusively resolved the federal income tax treatment for all prior and future tax years of certain leveraged lease transactions entered into by PMCC.

As a result of the Closing Agreement, Altria Group, Inc. recorded a one-time net earnings benefit of $68 million during the second quarter of 2012 due primarily to lower than estimated interest on tax underpayments.

▪SABMiller Special Items: Altria Group, Inc.’s earnings from its equity investment in SABMiller for 2012 included net pre-tax income of $248 million, consisting of gains resulting from SABMiller’s strategic alliance transactions with Anadolu Efes and Castel, partially offset by costs for SABMiller’s “business capability programme” and costs related to SABMiller’s acquisition of Foster’s Group Limited.

2013 Compared with 2012

Excise taxes on products decreased $315 million (4.4%), due primarily to lower smokeable products shipment volume.

Cost of sales decreased $731 million (9.2%), due primarily to NPM Adjustment Items and lower smokeable products shipment volume, partially offset by higher per unit settlement charges.

Marketing, administration and research costs increased $39 million (1.7%), due primarily to spending related to the innovative tobacco products businesses and a postretirement benefit plan curtailment gain in 2012 related to the 2011 Cost Reduction Program, partially offset by lower spending in the smokeable products segment as a result of cost reduction initiatives.

Operating income increased $831 million (11.5%), due primarily to higher operating results from the smokeable products segment (which includes NPM Adjustment Items) and higher operating results from the smokeless products segment, partially offset by changes to Mondelēz International, Inc. (“Mondelēz”) and PMI tax-related receivables/payables as discussed further in Note 14.

Interest and other debt expense, net, decreased $77 million (6.8%) due primarily to lower interest costs on debt as a result of debt refinancing activities related to the debt tender offer in 2012.

Earnings from Altria Group, Inc.’s equity investment in SABMiller decreased $233 million (19.0%), due primarily to

SABMiller special items (which included gains of $342 million resulting from SABMiller’s strategic alliance transactions with Anadolu Efes and Castel in 2012).

At December 31, [removed: 2014] [added: 2015] and [removed: 2013,] [added: 2014,] the fair value of Altria Group, Inc.’s total debt was [removed: $17.0] [added: $14.5] billion and [removed: $16.1] [added: $17.0] billion, respectively.

A 1% increase in market interest rates at December 31, [removed: 2014] [added: 2015] and [removed: 2013] [added: 2014] would decrease the fair value of Altria Group, Inc.’s total debt by approximately [removed: $1.3] [added: $1.1] billion and [removed: $1.2] [added: $1.3] billion, respectively.

A 1% decrease in market interest rates at December 31, [removed: 2014] [added: 2015] and [removed: 2013] [added: 2014] would increase the fair value of Altria Group, Inc.’s total debt by approximately [removed: $1.5] [added: $1.3] billion and [removed: $1.4] [added: $1.5] billion, respectively.

Interest rates on borrowings under the Credit Agreement are expected to be based on LIBOR plus a percentage based on the higher of the ratings of Altria Group, Inc.’s long-term senior unsecured debt from [added: Moody’s and] Standard & [removed: Poor’s and Moody’s.][added: Poor’s.]

The applicable percentage based on Altria Group, Inc.’s long-term senior unsecured debt ratings at December 31, [removed: 2014] [added: 2015] for borrowings under the Credit Agreement was 1.25%.

At December 31, [removed: 2014,] [added: 2015,] Altria Group, Inc. had no borrowings under the Credit Agreement.

At December 31, 2015, the fair value of Altria Group, Inc.’s derivative financial instrument in the form of a put option (the “option”) included in other current assets was $152 million.

A 10% devaluation of the United States dollar against the British pound would decrease the fair value of the option by approximately $97 million, with a corresponding decrease to Altria Group, Inc.’s pre-tax earnings.

A 10% appreciation of the United States dollar against the British pound would increase the fair value of the option by approximately $172 million, with a corresponding increase to Altria Group, Inc.’s pre-tax earnings.

At December 31, [removed: 2014,] [added: 2015,] Altria Group, Inc.’s wholly-owned subsidiaries included Philip Morris USA Inc. (“PM USA”), which is engaged predominantly 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; and UST LLC (“UST”), which through its wholly-owned subsidiaries, including U.S. Smokeless Tobacco Company LLC (“USSTC”) and Ste.

Other Altria Group, Inc. wholly-owned subsidiaries included Altria Group Distribution Company, which provides sales, distribution and consumer engagement services to certain Altria Group, Inc. operating subsidiaries, and Altria Client Services [removed: Inc.,] [added: LLC,] which provides various support [removed: services,] [added: services in areas] such as legal, regulatory, finance, human resources and external affairs, to Altria Group, Inc. and its subsidiaries.

At December 31, [removed: 2014,] [added: 2015,] Altria Group, Inc. also held approximately 27% of the economic and voting interest of SABMiller plc (“SABMiller”), which Altria Group, Inc. accounts for under the equity method of accounting.

At December 31, [removed: 2014,] [added: 2015,] Altria Group, Inc.’s principal wholly-owned subsidiaries were not limited by long-term debt or other agreements in their ability to pay cash dividends or make other distributions with respect to their equity interests.

[removed: The financial services and the innovative tobacco products businesses are included in an all] other category due to the continued reduction of the lease portfolio of PMCC and the relative financial contribution of Altria Group, Inc.’s innovative tobacco products businesses to Altria Group, Inc.’s consolidated results.

Altria Group, Inc.’s chief operating decision maker reviews operating companies income to evaluate the performance of, and [added: allocate resources to, the segments.]

[removed: Segment Reporting] [added: Investment in SABMiller] to the consolidated financial statements in Item 8.

| | [removed: 2014] [added: 2015] | | [removed: 2013] [added: 2014] | | [removed: 2012] [added: 2013] | |

| Smokeable products | [removed: 87.2] [added: 87.4] | % | [removed: 84.5] [added: 87.2] | % | [removed: 83.7] [added: 84.5] | % |

| Smokeless products | [removed: 13.4] [added: 12.8] | | [removed: 12.2] [added: 13.4] | | [removed: 12.5] [added: 12.2] | |

| Wine | [removed: 1.7] [added: 1.8] | | [removed: 1.4] [added: 1.7] | | 1.4 | |

| All other | [removed: (2.3] [added: (2.0] | ) | [removed: 1.9] [added: (2.3] | [added: )] | [removed: 2.4] [added: 1.9] | |

[removed: Altria Group Distribution Company provides sales,] distribution and consumer engagement services to Altria Group, Inc.’s tobacco operating companies.

The products of Altria Group, Inc.’s tobacco subsidiaries include smokeable tobacco products comprised of cigarettes manufactured and sold by PM USA and machine-made large [added: cigars and pipe tobacco manufactured and sold by Middleton; smokeless tobacco products, substantially all of which are manufactured and sold by USSTC; and innovative tobacco products, including e-vapor products manufactured and sold by Nu Mark.]

▪Cigarettes: PM USA is the largest cigarette company in the United States, with total cigarette shipment volume in the United States of approximately [removed: 125.4] [added: 126.0] billion units in [removed: 2014, a decrease] [added: 2015, an increase] of [removed: 3.0%] [added: 0.5%] from [removed: 2013.][added: 2014.]

Marlboro, the principal cigarette brand of PM USA, has been the largest-selling cigarette brand in the United States for [removed: over 35] [added: the past 40] years.

Total shipment volume for cigars was approximately 1.3 billion units in [removed: 2014,] [added: 2015,] an increase of [removed: 6.1%] [added: 4.2%] from [removed: 2013.][added: 2014.]

Total smokeless products shipment volume was [removed: 793.3] [added: 813.5] million units in [removed: 2014,] [added: 2015,] an increase of [removed: 0.7%] [added: 2.5%] from [removed: 2013.][added: 2014.]

In 2013, Nu Mark introduced MarkTen e-vapor [removed: products in Indiana and Arizona.][added: products.]

[removed: Further, in] [added: In] December 2013, Altria Group, Inc.’s subsidiaries entered into a series of agreements with Philip Morris International Inc. (“PMI”) pursuant to which Altria Group, Inc.’s subsidiaries provide an exclusive license to PMI to sell Altria Group, Inc.’s subsidiaries’ e-vapor products outside the United States, and PMI’s subsidiaries provide an exclusive license to Altria Group, Inc.’s subsidiaries to sell two of PMI’s heated tobacco product technologies in the United States.

The market for tobacco products is highly competitive, characterized by brand recognition and loyalty, with product [added: quality, taste, price, product innovation, marketing, packaging and distribution constituting the significant methods of competition.]

Promotional activities include, in certain instances and where permitted by law, allowances, the distribution of incentive items, price [removed: promotions and other discounts, including coupons,] [added: promotions,] product [removed: promotions] [added: promotions, coupons] and [removed: allowances for new products.][added: other discounts.]

The law also grants the FDA authority to extend the FSPTCA application, by regulation, to all other tobacco products, including cigars, pipe tobacco and [removed: electronic cigarettes.][added: e-vapor products.]

In April 2014, the FDA issued proposed regulations for other tobacco products, which as proposed would include machine-made large cigars, e-vapor [removed: products (such as electronic cigarettes),] [added: products,] pipe tobacco and [removed: chewable] [added: oral] tobacco-derived nicotine products marketed and sold by some of [removed: our] [added: Altria Group, Inc.’s] tobacco subsidiaries.

The proposed regulations would impose the FSPTCA regulatory [removed: framework, including the foregoing measures,] [added: framework] on products manufactured, marketed and sold by [added: Middleton and] Nu Mark [removed: and Middleton] with potentially wide-ranging impact on their businesses.

PM USA and USSTC are subject to quarterly user fees as a result of the [removed: FSPTCA, and the cost is being allocated based on the relative market shares of manufacturers and importers of each kind of tobacco product.][added: FSPTCA.]

[added: As] a result of FETRA, Altria Group, Inc.’s subsidiaries recorded charges to cost of sales of approximately $0.3 billion [removed: during] [added: for] the year ended December 31, 2014 and approximately $0.4 billion for [removed: each of] the [removed: years] [added: year] ended December 31, [removed: 2013 and 2012.][added: 2013.]

Michelle is a producer [added: and supplier] of premium varietal and blended table [added: wines and of sparkling] wines.

Michelle, Columbia Crest and 14 Hands, and owns wineries in or distributes wines from several other [removed: wine regions] [added: domestic] and foreign [removed: countries.][added: wine regions.]

Michelle’s total [removed: 2014] [added: 2015] wine shipment volume of approximately [removed: 8.4] [added: 8.9] million cases increased [removed: 4.8%] [added: 6.2%] from [removed: 2013.][added: 2014.]

Michelle’s sales occur [added: in the United States] through state-licensed distributors.

Federal, state and local governmental agencies regulate the [removed: alcohol] beverage [added: alcohol] industry through various means, including licensing requirements, [removed: pricing,] [added: pricing rules,] labeling and advertising restrictions, and distribution and production policies.

[added: Further] regulatory restrictions or additional excise or other taxes on the manufacture and sale of alcoholic beverages may have an adverse effect on Ste.

▪Customers: The largest customer of PM USA, USSTC and Middleton, McLane Company, Inc., accounted for approximately [removed: 27%] [added: 26%] of Altria Group, Inc.’s consolidated net revenues for [added: the year ended December 31, 2015, and 27% for] each of the years ended December 31, [removed: 2014, 2013] [added: 2014] and [removed: 2012.][added: 2013.]

Sales to three distributors accounted for approximately [added: 66%,] 67% [added: and 66%] of net revenues for the wine segment for the [removed: year ended December 31, 2014 and 66% for each of the] years ended December 31, [removed: 2013] [added: 2015, 2014] and [removed: 2012.][added: 2013, respectively.]

▪Employees: At December 31, [removed: 2014,] [added: 2015,] Altria Group, Inc. and its subsidiaries employed approximately [removed: 9,000] [added: 8,800] people.

Directors, Executive Officers and Corporate Governance - Executive Officers as of February [removed: 13, 2015] [added: 12, 2016] of this Annual Report on Form 10-K.

▪Research and Development: Research and development expense for the years ended December 31, [removed: 2014, 2013] [added: 2015, 2014] and [removed: 2012] [added: 2013] is set forth in Note 17.

In addition, as of December 31, [removed: 2014,] [added: 2015,] the portfolio of over [removed: 650] [added: 600] United States patents owned by Altria Group, Inc.’s businesses, as a whole, was material to Altria Group, Inc. and its tobacco businesses.

However, no one patent or group of related patents was material to Altria Group, Inc.’s business or its tobacco businesses as of December 31, [removed: 2014.][added: 2015.]

On November 11, 2015, Anheuser-Busch InBev SA/NV (“AB InBev”) announced its firm offer to effect a business combination with SABMiller in a cash and stock transaction.

For further discussion, see Note 6.

The financial services and the innovative tobacco products businesses are included in an all

Altria Group Distribution Company provides sales,

Further, in July 2015, Altria Group, Inc. announced the expansion of its strategic framework with PMI to include a joint research, development and

technology-sharing agreement.

Under this agreement, Altria Group, Inc. and PMI will collaborate to develop e-vapor products for commercialization in the United States by Altria Group, Inc. and in markets outside the United States by PMI.

This agreement also provides for exclusive technology cross licenses, technical information sharing and cooperation on scientific assessment, regulatory engagement and approval related to e-vapor products.

Their respective FDA user fee amounts are determined by an allocation formula administered by the FDA that is based on the respective market shares of manufacturers and importers of each kind of tobacco product.

See Item 1A for a discussion of risks associated with competition, unfavorable changes in grape supply and governmental regulations.

In addition, Core-Mark Holding Company, Inc. accounted for approximately 10% of Altria Group, Inc.’s consolidated net revenues for the year ended December 31, 2015.

allocate resources to, the segments.

cigars and pipe tobacco manufactured and sold by Middleton; smokeless tobacco products, substantially all of which are manufactured and sold by USSTC; and innovative tobacco products, including e-vapor products manufactured and sold by Nu Mark.

During 2014, Nu Mark expanded MarkTen nationally.

quality, taste, price, product innovation, marketing, packaging and distribution constituting the significant methods of competition.

As

The quota buy-out and the expiration of the quota buy-out did not have a material impact on Altria Group, Inc.’s 2014 consolidated results.

Further

Altria Group, Inc. makes available free of charge on or through its website (www.altria.com) its Annual Report on

[removed: Altria Group, Inc.’s consolidated financial statements and] accompanying notes for the year ended December 31, [removed: 2014] [added: 2015] were filed on Form 8-K on January [removed: 30, 2015] [added: 28, 2016] (such consolidated financial statements and accompanying notes are also included in Item 8).

[added: In addition,] PM USA will record a [added: corresponding reduction to its] pre-tax [removed: provision of $42.5 million] [added: earnings] in the first quarter of [removed: 2015.][added: 2016.]

In [removed: McKeever,] [added: Ahrens,] on February [removed: 20, 2015,] [added: 13, 2016,] a [removed: Broward] [added: Pinellas] County jury returned a verdict in favor of plaintiff and against PM USA [added: and R.J. Reynolds Tobacco Company (“R.J. Reynolds”)] awarding [removed: approximately $5.78] [added: $9] million in compensatory damages and allocating [removed: 60%] [added: 24%] of the fault to PM [removed: USA (an amount of approximately $3.48 million).][added: USA.]

The jury also awarded [removed: plaintiff approximately $11.63] [added: $2.5] million in punitive [removed: damages.][added: damages against each defendant.]

[removed: In McMannis,] [added: Smith, on February 22, 2016,] a [removed: Charlotte] [added: Palm Beach] County jury returned a verdict in favor of PM USA [removed: on February 19, 2015.][added: and R.J. Reynolds.]

In [removed: Boatright,] [added: Barbose,] on February [removed: 9, 2015,] [added: 17, 2016, PM USA posted a bond in the amount of $2.5 million and, on February 16, 2016,] defendants filed a notice of appeal to the Florida Second District Court of Appeal.

[removed: “Lights/Ultra-Lights”] [added: “Lights/Ultra Lights”] Cases

Altria Group, Inc.’s consolidated financial statements and

▪Non-Engle Progeny Litigation:

In Pooshs, on February 8, 2016, a California federal court jury returned a verdict in favor of PM USA.

In Bullock, on February 8, 2016, the district court denied plaintiff’s motion for a new trial.

In Schwarz, on February 10, 2016, PM USA filed a petition for writ of certiorari with the United States Supreme Court.

In McCoy, on January 27, 2016, plaintiff filed a notice of cross-appeal to the Florida Fourth District Court of Appeal.

In Ewing, on January 28, 2016, an Escambia County jury returned a verdict in favor of PM USA.

In Pollari, on January 28, 2016, PM USA posted a bond in the amount of $2.5 million.

On January 29, 2016, the Florida Supreme Court upheld the trial court’s decision in favor of plaintiff in R.

Cohen.

On February 1, 2016, the Florida Supreme Court upheld the trial courts’ decisions in favor of plaintiffs in Kayton and Putney.

On February 3, 2016, defendants filed a motion for clarification in Putney.

On February 8, 2016, in Kayton and R.

Cohen, PM USA posted riders increasing the amount of its bonds to $15 million and $7.5 million, respectively.

In Buchanan, on February 2, 2016, the Florida Supreme Court declined to accept jurisdiction of PM USA’s petition for review.

On February 8, 2016, PM USA posted a rider increasing the amount of its bond to $5.5 million.

In Bowden, on February 2, 2016, the Florida First District Court of Appeal affirmed the trial court’s decision in favor of plaintiff.

In the first quarter of 2016, PM USA will record a provision of approximately $1.6 million for the judgment plus interest.

In Cooper, on February 10, 2016, the trial court entered final judgment in favor of plaintiff, reducing the compensatory damages award against PM USA to approximately $300,000.

In Greene (formerly Rizzuto), on February 16, 2016, PM USA paid the judgment plus interest in the amount of approximately $6.8 million.

In Hess, on February 22, 2016, PM USA paid the judgment plus interest and associated costs in the amount of approximately $10.6 million.

In E.

In Ledoux, on February 23, 2016, the trial court denied defendants’ post-trial motions.

Medical Monitoring Class Actions: In Donovan, on February 10, 2016, a Massachusetts jury returned a verdict in favor of PM USA.

Health Care Cost Recovery Litigation

▪NPM Adjustment Disputes: On February 8, 2016, PM USA and certain other manufacturers entered into an agreement with the State of Missouri to settle the non-participating manufacturer (“NPM”) adjustment disputes under the 1998 Master Settlement Agreement (“MSA”).

The settlement is contingent upon Missouri’s enactment by June 3, 2016 of certain amendments to its existing escrow statute.

Similar to the settlement of these disputes with 24 other signatory states, the settlement with Missouri would resolve the disputes for the years 2003-2012 and treat 2013-2014 as “transition years.” If the settlement becomes effective, PM USA will retain approximately $36 million previously received as a result of an arbitration panel’s ruling that Missouri did not diligently enforce its escrow statue during 2003 and will receive an additional approximately $18 million in the form of a reduction to the next MSA payment following the effectiveness of the settlement.

In addition, if the settlement becomes effective, the NPM Adjustment provision will be revised and streamlined as to Missouri for the years after 2014.

The original participating manufacturers have agreed that the amounts they receive under the settlement for the years after 2014 will be allocated among them pursuant to a formula that modifies the MSA allocation formula in a manner favorable to PM USA, although the extent to which it remains favorable to PM USA will depend upon future developments.

On February 22, 2016, the Court of Appeals of Maryland denied PM USA’s petition for discretionary judicial review of the Maryland intermediate appellate court decision that had reversed the Maryland trial court’s ruling in PM USA’s favor on the pro rata judgment reduction method.

This decision leaves in effect the intermediate court’s decision applying a judgment reduction method that is more favorable to the state.

As a result of this denial of PM USA’s petition, PM USA will be required to return approximately $12 million of the 2003 NPM Adjustment and $7 million of the interest it received (plus interest on those amounts).

▪Federal Government’s Lawsuit: On February 8, 2016, the U.S. District Court for the District of Columbia issued an order on the content of the corrective communications and ordered the parties to submit proposed changes to the consent order on the implementation details by April 1, 2016.

▪State Trial Court Class Certifications: In Aspinall, on February 19, 2016, the trial court issued its “Findings of Fact and Conclusions of Law.” The court found that (1) PM USA violated Massachusetts consumer protection laws in marketing Marlboro “Lights” and (2) plaintiffs proved that class members were economically injured, but did not prove a specific measure of damages.

As a result, the court awarded statutory damages of $25 per class member, for a total of $4.9 million, plus interest, attorneys’ fees and costs.

Certain Other Tobacco-Related Litigation

▪Argentine Grower Cases: In Hupan, on January 29, 2016, plaintiffs filed an amended complaint against defendants, including PM USA.

On February 12, 2016, PM USA and Philip Morris Global Brands Inc. (a subsidiary of PMI) filed a motion to strike the amended complaint.

▪UST Litigation: In Vassallo, on February 3, 2016, the trial court denied plaintiff’s motion to amend the complaint to add fraud and conspiracy claims.

▪Tentative Agreement to Resolve Federal Engle Progeny Cases:

On February 25, 2015, PM USA, R.J. Reynolds Tobacco Company and Lorillard Tobacco Company reached a tentative agreement to resolve approximately 415 pending federal Engle progeny cases (the “Agreement”).

Under the terms of the Agreement, PM USA will pay $42.5 million.

Federal cases that were in trial as of February 25, 2015 and those that have previously reached final verdict are not included in the Agreement.

Engle progeny lawsuits pending in Florida state courts are also not part of the Agreement.

The Agreement is conditioned on approval by all federal-court plaintiffs in the cases resolved by the Agreement or as the parties otherwise agree.

On February 25, 2015, the U.S. District Court for the Middle District of Florida issued an order staying all upcoming federal trials pending final approval of the Agreement.

In Caprio, on February 24, 2015, a Broward County jury returned a partial verdict in favor of plaintiff and against PM

USA, R.J. Reynolds Tobacco Company, Lorillard Tobacco Company and Liggett Group LLC.

The jury found against defendants on class membership allocating 25% of the fault to PM USA.

The jury also found $559,172 in economic damages.

The jury deadlocked with respect to the intentional torts, certain elements of compensatory damages and punitive damages.

However, the jury found in favor of PM USA on the statute of repose defense to plaintiff’s intentional tort and punitive damages claims.

The Florida Supreme Court is currently considering the applicability of the statue of repose defense in Engle progeny cases.

In Landau, on February 19, 2015, a jury in the U.S. District Court for the Middle District of Florida returned a verdict in favor of plaintiff and against PM USA, R.J. Reynolds Tobacco Company and Lorillard Tobacco Company awarding $100,000 in compensatory damages.

One defendant settled the case.

In Sowers, a jury in the U.S. District Court for the Middle District of Florida returned a verdict in favor of PM USA on February 11, 2015.

Medical Monitoring Cases

Trial in the Donovan case is scheduled for January 25, 2016.

The re-trial in the Larsen case is scheduled to begin on February 22, 2016.

In the Price case, on February 9, 2015, plaintiffs filed a new motion seeking recusal or disqualification of Justice Karmeier, one of the Illinois Supreme Court justices.

For the fiscal year ended December 31, [removed: 2014][added: 2015]

| Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K [removed: o] [added: þ] |

As of June 30, [removed: 2014,] [added: 2015,] the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately [removed: $83] [added: $96] billion based on the closing sale price of the common stock as reported on the New York Stock Exchange.

| Class | Outstanding at February [removed: 13, 2015] [added: 12, 2016] |

| Common Stock, $0.33 1/3 par value | [removed: 1,969,316,914] [added: 1,957,931,815] shares |

| Portions of the registrant’s definitive proxy statement for use in connection with its annual meeting of shareholders to be held on May [removed: 20, 2015,] [added: 19, 2016,] to be filed with the Securities and Exchange Commission on or about April [removed: 9, 2015,] [added: 7, 2016,] are incorporated by reference into Part III hereof. |

| Item 1. | [removed: [Business](#s750D0FB6BEA3C7F84F8975F0F4E649A8)] [added: [Business](#sE8F64EB3206A54A5BB996C4E7657AB26)] | [removed: [1](#s750D0FB6BEA3C7F84F8975F0F4E649A8)] [added: [1](#sE8F64EB3206A54A5BB996C4E7657AB26)] |

| Item 1A. | [Risk [removed: Factors](#sAE5B791B9418F561A71275F11283777E)] [added: Factors](#sBFA2D68A55415ECA8674234608DB7B80)] | [removed: [4](#sAE5B791B9418F561A71275F11283777E)] [added: [4](#sBFA2D68A55415ECA8674234608DB7B80)] |

| Item 1B. | [Unresolved Staff [removed: Comments](#s4B64658308E251ED9FEC75F112A3D89B)] [added: Comments](#sE5409AAACAA05B15832D42FBA824E632)] | [removed: [8](#s4B64658308E251ED9FEC75F112A3D89B)] [added: [10](#sE5409AAACAA05B15832D42FBA824E632)] |

| Item 2. | [removed: [Properties](#s2253E29E078528D02EEA75F112E14F0F)] [added: [Properties](#sE0619A51AEEE53838DA384A7E824F769)] | [removed: [8](#s2253E29E078528D02EEA75F112E14F0F)] [added: [10](#sE0619A51AEEE53838DA384A7E824F769)] |

| Item 3. | [Legal [removed: Proceedings](#s1F0046DD86E97B1FA3E675F1130034B5)] [added: Proceedings](#s02F6500AC96450B9A106E4255EA9AC59)] | [removed: [9](#s1F0046DD86E97B1FA3E675F1130034B5)] [added: [10](#s02F6500AC96450B9A106E4255EA9AC59)] |

| Item 4. | [Mine Safety [removed: Disclosures](#s1C774FD8127369D0715F75F1132F2F52)] [added: Disclosures](#s5EFA10C754FF55409CFF607CF293C07B)] | [removed: [9](#s1C774FD8127369D0715F75F1132F2F52)] [added: [11](#s5EFA10C754FF55409CFF607CF293C07B)] |

| Item 5. | [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#s60BEF5C9C78073A2D93975F10403C1A3)] [added: Securities](#s46547F0BDA36553BAEA7C32E27D127A7)] | [removed: [10](#s60BEF5C9C78073A2D93975F10403C1A3)] [added: [12](#s46547F0BDA36553BAEA7C32E27D127A7)] |

| Item 6. | [Selected Financial [removed: Data](#s2DDA2557C90C854B37C475F0EAF7E299)] [added: Data](#s45D2F95AC5155A938BF57D2090D78921)] | [removed: [12](#s2DDA2557C90C854B37C475F0EAF7E299)] [added: [14](#s45D2F95AC5155A938BF57D2090D78921)] |

| Item 7. | [Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations](#s9BD723EDC077619C083375F113EA6632)] [added: Operations](#sE3DF2700987F50469B98D98D3F3F70E8)] | [removed: [13](#s9BD723EDC077619C083375F113EA6632)] [added: [15](#sE3DF2700987F50469B98D98D3F3F70E8)] |

| Item 7A. | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#s64ABD039BC96A916E9A175F1158F59F3)] [added: Risk](#s48DBDE0FA8FE5979B56340D801B2A5BD)] | [removed: [36](#s64ABD039BC96A916E9A175F1158F59F3)] [added: [38](#s48DBDE0FA8FE5979B56340D801B2A5BD)] |

| Item 8. | [Financial Statements and Supplementary [removed: Data](#s27882172C4B10BC3CBAB75F1158F38B2)] [added: Data](#s8E43DF2DFCCB5D83A3E108280DA60330)] | [removed: [37](#s27882172C4B10BC3CBAB75F1158F38B2)] [added: [39](#s8E43DF2DFCCB5D83A3E108280DA60330)] |

| Item 9. | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#sF32F7DF7EC796DBD94E475F11E65CA1E)] [added: Disclosure](#sD6718FEAB0FE5CF0BDE47B90BC83EEF7)] | [removed: [107](#sF32F7DF7EC796DBD94E475F11E65CA1E)] [added: [110](#sD6718FEAB0FE5CF0BDE47B90BC83EEF7)] |

| Item 9A. | [Controls and [removed: Procedures](#s0B8735FCAAE1DDD8A82F75F11E94FE1E)] [added: Procedures](#sC1EEF5E91BAB55F4B76EF7C6F23BA6FA)] | [removed: [107](#s0B8735FCAAE1DDD8A82F75F11E94FE1E)] [added: [110](#sC1EEF5E91BAB55F4B76EF7C6F23BA6FA)] |

| Item 9B. | [Other [removed: Information](#s4BEF20B6B16859BC517175F11EB3701F)] [added: Information](#s3D4A78D2E2BE550BBF06965AF26DCADE)] | [removed: [107](#s4BEF20B6B16859BC517175F11EB3701F)] [added: [110](#s3D4A78D2E2BE550BBF06965AF26DCADE)] |

| Item 10. | [Directors, Executive Officers and Corporate [removed: Governance](#s77AA4F0D3CD11FDC912F75F11F01D2C4)] [added: Governance](#sB43F1EC839B45409B1C9AEB9B5B865B0)] | [removed: [107](#s77AA4F0D3CD11FDC912F75F11F01D2C4)] [added: [110](#sB43F1EC839B45409B1C9AEB9B5B865B0)] |

| Item 11. | [Executive [removed: Compensation](#s12987C7CA58BD7BA796775F11F403D81)] [added: Compensation](#s36BD1D4C80E55E0D8FD9859B7B14A327)] | [removed: [108](#s12987C7CA58BD7BA796775F11F403D81)] [added: [111](#s36BD1D4C80E55E0D8FD9859B7B14A327)] |

| Item 12. | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#sEC783E8ADC767D2CA9B875F11F5F2ECA)] [added: Matters](#s51932CBF8BF55759A463EEFECF3798E1)] | [removed: [108](#sEC783E8ADC767D2CA9B875F11F5F2ECA)] [added: [111](#s51932CBF8BF55759A463EEFECF3798E1)] |

| Item 13. | [Certain Relationships and Related Transactions, and Director [removed: Independence](#s5D5A47B81FA71841BD0775F11F8E13D7)] [added: Independence](#s681B1D3EAB4B5F4BBE786F80CB57AB8F)] | [removed: [108](#s5D5A47B81FA71841BD0775F11F8E13D7)] [added: [111](#s681B1D3EAB4B5F4BBE786F80CB57AB8F)] |

| Item 14. | [Principal Accounting Fees and [removed: Services](#s55D05255DE2377FCE82A75F11FADE32F)] [added: Services](#s7AB61C9D4166574A9444C816A0E3DE32)] | [removed: [108](#s55D05255DE2377FCE82A75F11FADE32F)] [added: [111](#s7AB61C9D4166574A9444C816A0E3DE32)] |

| Item 15. | [Exhibits and Financial Statement [removed: Schedules](#sDFBEB99ABE771ED0EDDD75F11FFB7A44)] [added: Schedules](#sC809AA50ED005B4B99DDC0C54B13B122)] | [removed: [109](#sDFBEB99ABE771ED0EDDD75F11FFB7A44)] [added: [112](#sC809AA50ED005B4B99DDC0C54B13B122)] |

10-K 1 a2015form10-k.htm FORM 10-K

| [Signatures](#s1C3308B078D1551A8CDB15DDDC2B717E) | | [117](#s1C3308B078D1551A8CDB15DDDC2B717E) |

10-K 1 a2014form10-kq42014.htm FORM 10-K

| [Signatures](#s2314CD521036096FDDD575F120392A74) | | [114](#s2314CD521036096FDDD575F120392A74) |

At December 31, [removed: 2014,] [added: 2015,] the smokeable products segment used four manufacturing and processing facilities.

Middleton owns and operates two manufacturing and processing facilities - one in King of Prussia, Pennsylvania and one in Limerick, Pennsylvania [added: - that are used in the manufacturing and processing of cigars and pipe tobacco.]

In addition, PM USA owns a research and technology center in Richmond, Virginia that is leased to an affiliate, Altria Client Services [removed: Inc.][added: LLC.]

At December 31, [removed: 2014,] [added: 2015,] the smokeless products segment used four smokeless tobacco manufacturing and processing facilities located in Franklin Park, Illinois; Hopkinsville, Kentucky; Nashville, Tennessee; and Richmond, Virginia, all of which are owned and operated by USSTC.

At December 31, [removed: 2014,] [added: 2015,] the wine segment used 11 wine-making facilities - seven in Washington, three in California and one in Oregon.

In addition, in order to support the production of its wines, the wine segment used vineyards in Washington, California and Oregon [removed: which] [added: that] are leased or owned by Ste.

In 2016, USSTC expects to complete construction of a new facility located in Hopkinsville, Kentucky and expects the facility to be operational in the second half of 2016.

\- that are used in the manufacturing and processing of cigars and pipe tobacco.

At February [removed: 13, 2015,] [added: 12, 2016,] there were approximately [removed: 74,000] [added: 71,000] holders of record of Altria Group, Inc.’s common stock.

The graph below compares the cumulative total shareholder return of Altria Group, Inc.’s common stock for the last five years with the cumulative total return for the same period of the S&P 500 Index and the Altria Group, Inc. Peer Group [removed: Index] (1).

The graph assumes the investment of $100 in common stock and each of the indices as of the market close on December 31, [removed: 2009] [added: 2010] and the reinvestment of all dividends on a quarterly basis.

[removed: ][added: ]

| December [removed: 2009] [added: 2010] | | $ | 100.00 | | | $ | 100.00 | | | $ | 100.00 | |

[removed: (1)The] [added: (1)In 2015, the] Altria Group, Inc. Peer Group [removed: consists] [added: consisted] of [removed: 13] U.S.-headquartered consumer product companies that are competitors to Altria Group, Inc.’s tobacco operating companies subsidiaries or that have been selected on the basis of revenue or market capitalization: Campbell Soup Company, The Coca-Cola Company, Colgate-Palmolive Company, ConAgra Foods, Inc., General Mills, Inc., The Hershey Company, Kellogg Company, Kimberly-Clark Corporation, [removed: Mondelēz International, Inc.,] Kraft Foods Group, Inc., [added: The Kraft Heinz Company,] Lorillard, Inc., [added: Mondelēz International, Inc.,] PepsiCo, Inc. and Reynolds American Inc.

Issuer Purchases of Equity Securities During the Quarter Ended December 31, [removed: 2014][added: 2015]

[removed: Altria Group, Inc.’s] [added: The] Board of Directors [removed: (the “Board of Directors”),] authorized a $1.0 billion share repurchase program in July [removed: 2014] [added: 2015] (the “July [removed: 2014] [added: 2015] share repurchase program”), which Altria Group, Inc. expects to complete by the end of [removed: 2015.][added: 2016.]

The timing of share repurchases under the July [removed: 2014] [added: 2015] share repurchase program depends upon marketplace conditions and other factors, and the program remains subject to the discretion of the Board of Directors.

Altria Group, Inc.’s share repurchase activity for each of the three months in the period ended December 31, [removed: 2014,] [added: 2015,] was as follows:

| (1) | The total number of shares purchased include (a) shares purchased under the July [removed: 2014] [added: 2015] share repurchase program (which totaled [removed: 543,000 shares in October, 2,112,000 shares in November and 2,585,000] [added: 612,000] shares in December) and (b) shares withheld by Altria Group, Inc. in an amount equal to the statutory withholding taxes for holders who vested in restricted [added: stock] and [removed: deferred stock,] [added: restricted stock units,] and forfeitures of restricted stock for which consideration was paid in connection with termination of employment of certain employees (which totaled [removed: 248] [added: 1,811] shares in [removed: October] [added: October, 1,977 shares in November] and [removed: 288,672] [added: 1,973] shares in December). |

| December 2011 | | $ | 127.66 | | | $ | 114.65 | | | $ | 102.11 | |

| December 2012 | | $ | 142.68 | | | $ | 124.68 | | | $ | 118.44 | |

| December 2013 | | $ | 183.42 | | | $ | 155.86 | | | $ | 156.79 | |

| December 2014 | | $ | 246.72 | | | $ | 175.31 | | | $ | 178.24 | |

| December 2015 | | $ | 303.71 | | | $ | 204.47 | | | $ | 180.68 | |

On July 2, 2015, Kraft Foods Group, Inc. merged with and into a wholly owned subsidiary of H.J. Heinz Holding Corporation, which was renamed The Kraft Heinz Company (KHC).

On June 12, 2015, Reynolds American Inc. (RAI) acquired Lorillard, Inc. (LO).

Market and Dividend Information

The table below discloses the high and low sales prices and cash dividends declared per share for Altria Group, Inc.’s common stock as reported by the New York Stock Exchange.

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | |

| | Price Per Share | | | | | | | | Cash Dividends Declared Per Share | | |

| | High | | | | Low | | | | | | |

| 2015: | | | | | | | | | | | |

| Fourth Quarter | $ | 61.74 | | | $ | 53.68 | | | $ | 0.565 | |

| Third Quarter | $ | 56.39 | | | $ | 47.41 | | | $ | 0.565 | |

| Second Quarter | $ | 52.99 | | | $ | 47.31 | | | $ | 0.52 | |

| First Quarter | $ | 56.70 | | | $ | 48.52 | | | $ | 0.52 | |

| 2014: | | | | | | | | | | | |

| Fourth Quarter | $ | 51.67 | | | $ | 44.59 | | | $ | 0.52 | |

| Third Quarter | $ | 46.20 | | | $ | 40.26 | | | $ | 0.52 | |

| Second Quarter | $ | 43.38 | | | $ | 37.13 | | | $ | 0.48 | |

| First Quarter | $ | 38.38 | | | $ | 33.80 | | | $ | 0.48 | |

| October 1- October 31, 2015 | | 1,811 | | | $ | 61.14 | | | — | | | $ | 1,000,000,000 | |

| November 1- November 30, 2015 | | 1,977 | | | $ | 54.03 | | | — | | | $ | 1,000,000,000 | |

| December 1- December 31, 2015 | | 613,973 | | | $ | 57.65 | | | 612,000 | | | $ | 964,710,531 | |

| For the Quarter Ended December 31, 2015 | | 617,761 | | | $ | 57.65 | | | | | | | | |

| December 2010 | | $ | 133.92 | | | $ | 113.38 | | | $ | 115.06 | |

| December 2011 | | $ | 170.96 | | | $ | 129.99 | | | $ | 117.49 | |

| December 2012 | | $ | 191.08 | | | $ | 141.36 | | | $ | 136.27 | |

| December 2013 | | $ | 245.66 | | | $ | 176.72 | | | $ | 180.40 | |

| December 2014 | | $ | 330.43 | | | $ | 198.76 | | | $ | 205.08 | |

| October 1- October 31, 2014 | | 543,248 | | | $ | 45.88 | | | 543,000 | | | $ | 752,882,710 | |

| November 1- November 30, 2014 | | 2,112,000 | | | $ | 49.25 | | | 2,112,000 | | | $ | 648,865,971 | |

| December 1- December 31, 2014 | | 2,873,672 | | | $ | 50.45 | | | 2,585,000 | | | $ | 518,341,843 | |

| For the Quarter Ended December 31, 2014 | | 5,528,920 | | | $ | 49.54 | | | | | | | | |

The other information called for by this Item is included in Note 20.

Quarterly Financial Data (Unaudited) to the consolidated financial statements in Item 8.

| | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | | | [removed: 2011] [added: 2012] | | | | [removed: 2010] [added: 2011] | | |

| Net revenues | $ | [removed: 24,522] [added: 25,434] | | | $ | [removed: 24,466] [added: 24,522] | | | $ | [removed: 24,618] [added: 24,466] | | | $ | [removed: 23,800] [added: 24,618] | | | $ | [removed: 24,363] [added: 23,800] | |

| Cost of sales | [removed: 7,785] [added: 7,740] | | | | [removed: 7,206] [added: 7,785] | | | | [removed: 7,937] [added: 7,206] | | | | [removed: 7,680] [added: 7,937] | | | | [removed: 7,704] [added: 7,680] | | |

| Excise taxes on products | [removed: 6,577] [added: 6,580] | | | | [removed: 6,803] [added: 6,577] | | | | [removed: 7,118] [added: 6,803] | | | | [removed: 7,181] [added: 7,118] | | | | [removed: 7,471] [added: 7,181] | | |

| Operating income | [removed: 7,620] [added: 8,361] | | | | [removed: 8,084] [added: 7,620] | | | | [removed: 7,253] [added: 8,084] | | | | [removed: 6,068] [added: 7,253] | | | | [removed: 6,228] [added: 6,068] | | |

| Interest and other debt expense, net | [removed: 808] [added: 817] | | | | [removed: 1,049] [added: 808] | | | | [removed: 1,126] [added: 1,049] | | | | [removed: 1,216] [added: 1,126] | | | | [removed: 1,133] [added: 1,216] | | |

| Earnings from equity investment in SABMiller | [removed: 1,006] [added: 757] | | | | [removed: 991] [added: 1,006] | | | | [removed: 1,224] [added: 991] | | | | [removed: 730] [added: 1,224] | | | | [removed: 628] [added: 730] | | |

| Earnings before income taxes | [removed: 7,774] [added: 8,078] | | | | [removed: 6,942] [added: 7,774] | | | | [removed: 6,477] [added: 6,942] | | | | [removed: 5,582] [added: 6,477] | | | | [removed: 5,723] [added: 5,582] | | |

| Pre-tax profit margin | [removed: 31.7] [added: 31.8] | | % | | [removed: 28.4] [added: 31.7] | | % | | [removed: 26.3] [added: 28.4] | | % | | [removed: 23.5] [added: 26.3] | | % | | 23.5 | | % |

| Provision for income taxes | [removed: 2,704] [added: 2,835] | | | | [removed: 2,407] [added: 2,704] | | | | [removed: 2,294] [added: 2,407] | | | | [removed: 2,189] [added: 2,294] | | | | [removed: 1,816] [added: 2,189] | | |

| Net earnings | [removed: 5,070] [added: 5,243] | | | | [removed: 4,535] [added: 5,070] | | | | [removed: 4,183] [added: 4,535] | | | | [removed: 3,393] [added: 4,183] | | | | [removed: 3,907] [added: 3,393] | | |

| Net earnings attributable to Altria Group, Inc. | [removed: 5,070] [added: 5,241] | | | | [removed: 4,535] [added: 5,070] | | | | [removed: 4,180] [added: 4,535] | | | | [removed: 3,390] [added: 4,180] | | | | [removed: 3,905] [added: 3,390] | | |

| Basic and Diluted EPS — net earnings attributable to Altria Group, Inc. | [removed: 2.56] [added: 2.67] | | | | [removed: 2.26] [added: 2.56] | | | | [removed: 2.06] [added: 2.26] | | | | [removed: 1.64] [added: 2.06] | | | | [removed: 1.87] [added: 1.64] | | |

| Dividends declared per share | [removed: 2.00] [added: 2.17] | | | | [removed: 1.84] [added: 2.00] | | | | [removed: 1.70] [added: 1.84] | | | | [removed: 1.58] [added: 1.70] | | | | [removed: 1.46] [added: 1.58] | | |

| Weighted average shares (millions) — Basic [added: and Diluted] | [removed: 1,978] [added: 1,961] | | | | [removed: 1,999] [added: 1,978] | | | | [removed: 2,024] [added: 1,999] | | | | [removed: 2,064] [added: 2,024] | | | | [removed: 2,077] [added: 2,064] | | |

| Capital expenditures | [removed: 163] [added: 229] | | | | [removed: 131] [added: 163] | | | | [removed: 124] [added: 131] | | | | [removed: 105] [added: 124] | | | | [removed: 168] [added: 105] | | |

| Depreciation | [removed: 188] [added: 204] | | | | [removed: 192] [added: 188] | | | | [removed: 205] [added: 192] | | | | [removed: 233] [added: 205] | | | | [removed: 256] [added: 233] | | |

| Property, plant and equipment, net | [removed: 1,983] [added: 1,982] | | | | [removed: 2,028] [added: 1,983] | | | | [removed: 2,102] [added: 2,028] | | | | [removed: 2,216] [added: 2,102] | | | | [removed: 2,380] [added: 2,216] | | |

| Inventories | [removed: 2,040] [added: 2,031] | | | | [removed: 1,879] [added: 2,040] | | | | [removed: 1,746] [added: 1,879] | | | | [removed: 1,779] [added: 1,746] | | | | [removed: 1,803] [added: 1,779] | | |

| Total assets | [removed: 34,475] [added: 32,535] | | | | [removed: 34,859] [added: 34,475] | | | | [removed: 35,329] [added: 34,859] | | | | [removed: 36,751] [added: 35,329] | | | | [removed: 37,402] [added: 36,751] | | |

| Long-term debt | [removed: 13,693] [added: 12,915] | | | | [removed: 13,992] [added: 13,693] | | | | [removed: 12,419] [added: 13,992] | | | | [removed: 13,089] [added: 12,419] | | | | [removed: 12,194] [added: 13,089] | | |

| Total debt | [removed: 14,693] [added: 12,919] | | | | [removed: 14,517] [added: 14,693] | | | | [removed: 13,878] [added: 14,517] | | | | [removed: 13,689] [added: 13,878] | | | | [removed: 12,194] [added: 13,689] | | |

| Total stockholders’ equity | [removed: 3,010] [added: 2,873] | | | | [removed: 4,118] [added: 3,010] | | | | [removed: 3,170] [added: 4,118] | | | | [removed: 3,683] [added: 3,170] | | | | [removed: 5,195] [added: 3,683] | | |

| Common dividends declared as a % of Basic and Diluted EPS | [removed: 78.1] [added: 81.3] | | % | | [removed: 81.4] [added: 78.1] | | % | | [removed: 82.5] [added: 81.4] | | % | | [removed: 96.3] [added: 82.5] | | % | | [removed: 78.1] [added: 96.3] | | % |

| Book value per common share outstanding | [removed: 1.53] [added: 1.47] | | | | [removed: 2.07] [added: 1.53] | | | | [removed: 1.58] [added: 2.07] | | | | [removed: 1.80] [added: 1.58] | | | | [removed: 2.49] [added: 1.80] | | |

| Market price per common share — high/low | [removed: 51.67-33.80] [added: 61.74-47.31] | | | | [removed: 38.58-31.85] [added: 51.67-33.80] | | | | [removed: 36.29-28.00] [added: 38.58-31.85] | | | | [removed: 30.40-23.20] [added: 36.29-28.00] | | | | [removed: 26.22-19.14] [added: 30.40-23.20] | | |

| Closing price per common share at year end | [removed: 49.27] [added: 58.21] | | | | [removed: 38.39] [added: 49.27] | | | | [removed: 31.44] [added: 38.39] | | | | [removed: 29.65] [added: 31.44] | | | | [removed: 24.62] [added: 29.65] | | |

| Price/earnings ratio at year end — Basic and Diluted | [removed: 19] [added: 22] | | | | [removed: 17] [added: 19] | | | | [removed: 15] [added: 17] | | | | [removed: 18] [added: 15] | | | | [removed: 13] [added: 18] | | |

| Number of common shares outstanding at year end (millions) | [removed: 1,971] [added: 1,960] | | | | [removed: 1,993] [added: 1,971] | | | | [removed: 2,010] [added: 1,993] | | | | [removed: 2,044] [added: 2,010] | | | | [removed: 2,089] [added: 2,044] | | |

| Approximate number of employees | [removed: 9,000] [added: 8,800] | | | | 9,000 | | | | [removed: 9,100] [added: 9,000] | | | | [removed: 9,900] [added: 9,100] | | | | [removed: 10,000] [added: 9,900] | | |

| Weighted average shares (millions) — Diluted | 1,978 | | | | 1,999 | | | | 2,024 | | | | 2,064 | | | | 2,079 | | |

| at December 31, | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | |

| Cash and cash equivalents | $ | [removed: 3,321] [added: 2,369] | | | $ | [removed: 3,175] [added: 3,321] | |

| Receivables | 124 | | | | [removed: 115] [added: 124] | | |

| Leaf tobacco | [removed: 991] [added: 957] | | | | [removed: 933] [added: 991] | | |

| Other raw materials | [removed: 200] [added: 181] | | | | [removed: 180] [added: 200] | | |

| Work in process | [removed: 429] [added: 444] | | | | [removed: 394] [added: 429] | | |

| Finished product | [removed: 420] [added: 449] | | | | [removed: 372] [added: 420] | | |

| Deferred income taxes | [removed: 1,143] [added: 1,175] | | | | [removed: 1,100] [added: 1,143] | | |

| Other current assets | [removed: 250] [added: 387] | | | | [removed: 321] [added: 250] | | |

| Total current assets | [removed: 6,878] [added: 6,086] | | | | [removed: 6,590] [added: 6,878] | | |

| Land and land improvements | [removed: 293] [added: 295] | | | | [removed: 291] [added: 293] | | |

| Buildings and building equipment | [removed: 1,323] [added: 1,406] | | | | [removed: 1,308] [added: 1,323] | | |

| Machinery and equipment | [removed: 2,986] [added: 2,969] | | | | [removed: 3,111] [added: 2,986] | | |

| Construction in progress | [removed: 153] [added: 207] | | | | [removed: 107] [added: 153] | | |

| Less accumulated depreciation | [removed: 2,772] [added: 2,895] | | | | [removed: 2,789] [added: 2,772] | | |

| Goodwill | 5,285 | | | | [removed: 5,174] [added: 5,285] | | |

| Other intangible assets, net | [removed: 12,049] [added: 12,028] | | | | [removed: 12,058] [added: 12,049] | | |

| Investment in SABMiller | [removed: 6,183] [added: 5,483] | | | | [removed: 6,455] [added: 6,183] | | |

| Finance assets, net | [removed: 1,614] [added: 1,239] | | | | [removed: 1,997] [added: 1,614] | | |

| Other assets | [removed: 483] [added: 432] | | | | [removed: 557] [added: 483] | | |

| Total Assets | $ | [removed: 34,475] [added: 32,535] | | | $ | [removed: 34,859] [added: 34,475] | |

[removed: See notes] [added: Notes] to [removed: consolidated financial statements.][added: Consolidated Financial Statements]

| Current portion of long-term debt | $ | [removed: 1,000] [added: 4] | | | $ | [removed: 525] [added: 1,000] | |

| Accounts payable | [removed: 416] [added: 400] | | | | [removed: 409] [added: 416] | | |

| Marketing | [removed: 618] [added: 695] | | | | [removed: 512] [added: 618] | | |

| Employment costs | [removed: 186] [added: 198] | | | | [removed: 255] [added: 186] | | |

| Settlement charges | [removed: 3,500] [added: 3,590] | | | | [removed: 3,391] [added: 3,500] | | |

| Other | [removed: 925] [added: 1,081] | | | | [removed: 1,007] [added: 925] | | |

| Dividends payable | [removed: 1,028] [added: 1,110] | | | | [removed: 959] [added: 1,028] | | |

| Total current liabilities | [removed: 7,673] [added: 7,078] | | | | [removed: 7,058] [added: 7,673] | | |

| Long-term debt | [removed: 13,693] [added: 12,915] | | | | [removed: 13,992] [added: 13,693] | | |

| Deferred income taxes | [removed: 6,088] [added: 5,663] | | | | [removed: 6,854] [added: 6,088] | | |

| Accrued pension costs | [removed: 1,012] [added: 1,277] | | | | [removed: 212] [added: 1,012] | | |

| Accrued postretirement health care costs | [removed: 2,461] [added: 2,245] | | | | [removed: 2,155] [added: 2,461] | | |

| Other liabilities | [removed: 503] [added: 447] | | | | [removed: 435] [added: 503] | | |

| Total liabilities | [removed: 31,430] [added: 29,625] | | | | [removed: 30,706] [added: 31,430] | | |

| Redeemable noncontrolling interest | [removed: 35] [added: 37] | | | | 35 | | |

| Additional paid-in capital | [removed: 5,735] [added: 5,813] | | | | [removed: 5,714] [added: 5,735] | | |

| Earnings reinvested in the business | [removed: 26,277] [added: 27,257] | | | | [removed: 25,168] [added: 26,277] | | |

| Accumulated other comprehensive losses | [removed: (2,682] [added: (3,280] | | ) | | [removed: (1,378] [added: (2,682] | | ) |

| | 2,031 | | | | 2,040 | | |

| | 4,877 | | | | 4,755 | | |

| | 1,982 | | | | 1,983 | | |

| Payment for derivative financial instrument | | | (132 | | ) | | — | | | | — | | |

| Net earnings (losses) (1) | — | | | | — | | | | 5,241 | | | | — | | | | — | | | | (3 | | ) | | 5,238 | | |

| Balances, December 31, 2015 | $ | 935 | | | $ | 5,813 | | | $ | 27,257 | | | $ | (3,280 | ) | | $ | (27,845 | ) | | $ | (7 | ) | | $ | 2,873 | |

On November 11, 2015, Anheuser-Busch InBev SA/NV (“AB InBev”) announced its firm offer to effect a business combination with SABMiller in a cash and stock transaction.

and expenses during the reporting periods.

▪Derivative Financial Instruments: Derivative financial instruments are recorded at fair value on the consolidated balance sheets as either assets or liabilities.

Changes in the fair value of derivatives are recorded each period either in accumulated other comprehensive earnings (losses) or in earnings, depending on the

type of derivative and whether the derivative qualifies for hedge accounting treatment.

Gains and losses on derivative instruments reported in accumulated other comprehensive earnings (losses) are reclassified to the consolidated statements of earnings in the periods in which operating results are affected by the respective hedged item.

Cash flows from hedging instruments are classified in the same manner as the respective hedged item in the consolidated statements of cash flows.

Altria Group, Inc. does not enter into or hold derivative financial instruments for trading or speculative purposes.

As a result of an August 2015 FASB

update, the new guidance will be effective for Altria Group, Inc. for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period.

Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period.

In April 2015, the FASB issued authoritative guidance to simplify the presentation of debt issuance costs by requiring that debt issuance costs related to a recognized debt liability be presented on the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts, rather than as a deferred charge (an asset).

For Altria Group, Inc., the new guidance will be effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period.

The guidance requires all prior period balance sheets to be adjusted retrospectively and early adoption is permitted.

Altria Group, Inc. will adopt the new guidance in the first quarter of 2016.

In November 2015, the FASB issued authoritative guidance to simplify the presentation of deferred income taxes by requiring that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position.

This guidance does not change the current requirement that deferred tax liabilities and assets for each tax-paying jurisdiction be offset and presented as a single amount.

The guidance may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented.

Altria Group, Inc. will adopt the new guidance by the first quarter of 2017.

Under the new guidance, at December 31, 2015, current deferred income tax assets of approximately $1.2 billion would have been reclassified to noncurrent deferred income tax liabilities ($1.0 billion) and noncurrent deferred income tax assets ($0.2 billion).

On January 5, 2016, the FASB issued authoritative guidance to address certain aspects of recognition, measurement, presentation and disclosure of financial instruments.

For Altria Group, Inc., the new guidance will be effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period.

Early adoption of the guidance is not permitted, except for a certain provision of the guidance.

Altria Group, Inc. is in the process of evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

The purchase price allocation has been completed, and there were no changes subsequent to the acquisition date.

| (in millions) | 2015 | | | | 2014 | | |

▪AB InBev and SABMiller Business Combination: On November 11, 2015, AB InBev announced its firm offer to effect a business combination with SABMiller in a cash and stock transaction valued at approximately $107 billion.

Under the terms of the transaction, SABMiller shareholders will receive 44 British pounds in cash for each SABMiller share, with a partial share alternative (“PSA”) available for approximately 41% of the SABMiller shares.

Under the terms of the PSA, SABMiller shareholders may elect to receive for each SABMiller share held (i) 0.483969 restricted shares (the “Restricted Shares”) in a newly formed Belgian company (“NewCo”) that will own the combined SABMiller and AB InBev business plus (ii) 3.7788 British pounds (“GBP”) in cash.

On November 10, 2015, the Board of Directors of Altria Group, Inc. (the “Board of Directors”) authorized Altria Group, Inc. to provide an irrevocable undertaking to vote Altria Group, Inc.’s shares of SABMiller in favor of the proposed transaction and to elect the PSA (the “Irrevocable Undertaking”).

Altria Group, Inc. delivered the Irrevocable Undertaking on November 11, 2015.

If the transaction is completed, NewCo will acquire SABMiller and, following the closing of that acquisition, AB InBev will merge into NewCo.

Altria Group, Inc. expects to exchange its approximate 27% economic and voting interest in SABMiller for an interest that will be converted into Restricted Shares representing an approximate 10.5% economic and voting interest in NewCo plus approximately $2.5 billion in pre-tax cash (subject to proration as further described below).

The Restricted Shares of NewCo will:

(in millions of dollars)

| | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- |

| | 2,040 | | | | 1,879 | | |

| | 4,755 | | | | 4,817 | | |

| | 1,983 | | | | 2,028 | | |

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

__________________

| | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| IRS payment related to the Closing Agreement | | | — | | | | — | | | | (456 | | ) |

Consolidated Statements of Cash Flows (Continued)

| Balances, December 31, 2011 | $ | 935 | | | $ | 5,674 | | | $ | 23,583 | | | $ | (1,887 | ) | | $ | (24,625 | ) | | $ | 3 | | | $ | 3,683 | |

December 31, 2014, 2013 and 2012.

beyond the grace period of their contractual due date.

be reasonably estimated.

The following amounts represent the fair value of identifiable assets acquired and liabilities assumed in the Green Smoke acquisition, which will be finalized during the first quarter of 2015:

| | | | |

| --- | --- | --- | --- |

| (in millions) | | | |

| Inventory and other current assets | 12 | | |

| Other assets and liabilities, net | 1 | | |

| Total identifiable net assets | 19 | | |

| Total purchase price | 130 | | |

| Goodwill | $ | 111 | |

| | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Indefinite-lived intangible assets | $ | 11,711 | | | $ | — | | | $ | 11,701 | | | $ | — | |

| Definite-lived intangible assets | 465 | | | | 127 | | | | 464 | | | | 107 | | |

lived intangible assets, and no impairment charges resulted.

Altria Group, Inc.’s pre-tax earnings from its equity investment in SABMiller for the year ended December 31, 2012 included its share of pre-tax non-cash gains of $342 million resulting from SABMiller’s strategic alliance transactions with Anadolu Efes and Castel.

| Current liabilities | $ | 10,051 | | | $ | 8,177 | |

| | For the Years Ended December 31, | | | | | | | | | | |

During the second quarter of 2012, Altria Group, Inc. entered into a closing agreement (the “Closing Agreement”)

with the Internal Revenue Service (the “IRS”) that conclusively resolved the federal income tax treatment for all prior and future tax years of certain leveraged lease transactions entered into by PMCC.

As a result of the Closing Agreement, Altria Group, Inc. recorded a one-time net earnings benefit of $68 million during the second quarter of 2012, due primarily to lower than estimated interest on tax underpayments, which was recorded as follows:

| | | For the Year Ended December 31, 2012 | | | | | | | | | | |

Altria Group, Inc. carried out an evaluation, with the participation of Altria Group, Inc.’s management, including Altria Group, Inc.’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of Altria Group, Inc.’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange [removed: Act)] [added: Act,] as [added: amended) as] of the end of the period covered by this Annual Report on Form 10-K.

Based upon that evaluation, Altria Group, Inc.’s Chief Executive Officer and Chief Financial Officer [removed: concluded]

[added: concluded] that Altria Group, Inc.’s disclosure controls and procedures are effective.

Except for the information relating to the executive officers set forth in Item 10, the information called for by Items 10-14 is hereby incorporated by reference to Altria Group, Inc.’s definitive proxy statement for use in connection with its Annual Meeting of Shareholders to be held on May [removed: 20, 2015] [added: 19, 2016] that will be filed with the SEC on or about April [removed: 9, 2015] [added: 7, 2016] (the “proxy statement”), and, except as indicated therein, made a part hereof.

Executive Officers as of February [removed: 13, 2015:][added: 12, 2016:]

| Martin J. Barrington | [removed: Chairman of the Board and] [added: Chairman,] Chief Executive Officer [added: and President] | [removed: 61] [added: 62] |

| [removed: David R. Beran] [added: Howard A. Willard III] | [added: Executive Vice] President and Chief Operating Officer | [removed: 60] [added: 52] |

[removed: | James E. Dillard III |] [added: Effective January 1, 2016, Mr. Dillard, previously] Senior Vice President, Regulatory Affairs and Chief Innovation Officer, Altria Client Services [removed: Inc. | 51 |][added: LLC, was appointed Senior Vice President,]

| Ivan S. Feldman | Vice President and Controller | [removed: 48] [added: 49] |

| Clifford B. Fleet | President and Chief Executive Officer, Philip Morris USA Inc. | [removed: 44] [added: 45] |

| William F. Gifford, Jr. | [removed: Senior] [added: Executive] Vice [removed: President, Strategy] [added: President] and [removed: Business Development] [added: Chief Financial Officer] | [removed: 44] [added: 45] |

| Craig A. Johnson | President and Chief Executive Officer, Altria Group Distribution Company | [removed: 62] [added: 63] |

| Denise F. Keane | Executive Vice President and General Counsel | [removed: 62] [added: 63] |

| Salvatore Mancuso | [removed: Treasurer and] Senior Vice President, [removed: Investor Relations] [added: Strategy, Planning] and Accounting | [removed: 49] [added: 50] |

| Brian W. Quigley | President and Chief Executive Officer, U.S. Smokeless Tobacco Company LLC | [removed: 41] [added: 42] |

| W. Hildebrandt Surgner, Jr. | Corporate Secretary and Senior Assistant General Counsel | [removed: 49] [added: 50] |

| Charles N. Whitaker | Senior Vice President, Human [removed: Resources &] [added: Resources,] Compliance [added: & Information Services] and Chief Compliance Officer | [removed: 48] [added: 49] |

All of the above-mentioned officers have been employed by Altria Group, Inc. or its subsidiaries in various capacities during the past five [removed: years, except for Mr. French, who joined Altria Client Services Inc. in 2012 after having served as Senior][added: years.]

Any waiver granted by Altria Group, Inc. to its principal executive officer, principal financial officer or controller under the Code of Conduct, and certain amendments to the Code of [removed: Conduct, will be disclosed on Altria Group, Inc.’s website at www.altria.com within the time period required by applicable rules.]

| Daniel J. Bryant | Vice President and Treasurer | 46 |

| James E. Dillard III | Senior Vice President, Research, Development and Regulatory Affairs | 52 |

Research, Development and Regulatory Affairs, Altria Group, Inc.

Conduct, will be disclosed on Altria Group, Inc.’s website at www.altria.com within the time period required by applicable rules.

| Michael B. French | Senior Vice President and Chief Marketing Officer, Altria Client Services Inc. | 60 |

| Louanna O. Heuhsen | Vice President, Corporate Governance and Associate General Counsel | 64 |

| John R. Nelson | Executive Vice President and Chief Technology Officer | 62 |

| Howard A. Willard III | Executive Vice President and Chief Financial Officer | 51 |

Vice President, Corporate Strategy at Brown Forman Corporation, one of the leading American-owned companies in the wine and spirits business, from March 2007 until May 2011.

From May

2011 until joining Altria Client Services Inc., Mr. French worked as a private marketing and strategy consultant.

On January 30, 2015, Altria Group, Inc. announced that Mr. Beran will retire as President and Chief Operating Officer effective March 1, 2015.

Altria Group, Inc. further announced that Mr. Willard will become Executive Vice President and Chief Operating Officer of Altria Group, Inc. and Mr. Gifford will become Executive Vice President and Chief Financial Officer of Altria Group, Inc. effective immediately upon Mr. Beran’s retirement.

Effective March 1, 2015, Daniel J.

Bryant will become Vice President and Treasurer of Altria Group, Inc. effective March 1, 2015.

Mr. Bryant, age 45, currently serves as Assistant Treasurer of Altria Group, Inc., a position he has held since November 2013.

Since 1995, he has been employed by Altria Group, Inc. or its subsidiaries in various finance positions.

Effective March 1, 2015, Mr. Whitaker will become Senior Vice President, Human Resources, Compliance and Information Services and Chief Compliance Officer of Altria Group, Inc.

Effective March 1, 2015, Mr. Mancuso will become Senior Vice President, Strategy, Planning and Accounting of Altria Group, Inc.

Effective March 1, 2015, Mr. Barrington will become Chairman of the Board, Chief Executive Officer and President of Altria Group, Inc.

Effective December 1, 2014, Mr. Dillard, Senior Vice President, Regulatory Affairs, Altria Client Services Inc. was appointed to the additional position of Chief Innovation Officer.

Mr. Dillard has held the position of Senior Vice President, Regulatory Affairs since 2009.

Prior to Altria Group, Inc.’s acquisition of UST in 2009, Mr. Dillard served as Senior Vice President, Manufacturing, Science and Technology for USSTC.

He joined USSTC in December 2001.

Refer to “Executive Compensation,” “Compensation Committee Matters - Compensation Committee Interlocks and Insider Participation,” “Compensation Committee Matters - Compensation Committee Report for the Year Ended December 31, [removed: 2014,”] [added: 2015”] and “Board and Governance Matters - Directors - Director Compensation” sections of the proxy statement.

Refer to “Ownership of Equity Securities of the [removed: Company”] [added: Company - Directors] and [removed: “Equity Compensation Plan Information”] [added: Executive Officers” and “Ownership of Equity Securities of the Company - Certain Other Beneficial Owners”] sections of the proxy statement.

The number of shares to be issued upon exercise or vesting and the number of shares remaining available for future issuance under Altria Group, Inc.’s equity compensation plans at December 31, 2015, were as follows:

| | | | |

| --- | --- | --- | --- |

| | | | |

| | | | |

| | Number of Shares to be Issued upon Exercise of Outstanding Options and Vesting of Deferred Stock (a) | Weighted Average Exercise Price of Outstanding Options (b) | Number of Shares Remaining Available for Future Issuance Under Equity Compensation Plans (c) |

| Equity compensation plans approved by shareholders (1) | 1,221,985 (2) | $— | 40,987,766 (3) |

| | |

| --- | --- |

| (1) | The following plans have been approved by Altria Group, Inc. shareholders and have shares referenced in column (a) or column (c): the 2010 Performance Incentive Plan, the 2015 Performance Incentive Plan and the 2015 Stock Compensation Plan for Non-Employee Directors. |

| | |

| --- | --- |

| (2) | Represents 1,221,985 shares of restricted stock units (also referred to as deferred stock). |

| | |

| --- | --- |

| (3) | Includes 39,994,482 shares available under the 2015 Performance Incentive Plan and 993,284 shares available under the 2015 Stock Compensation Plan for Non-Employee Directors, and excludes shares reflected in column (a). |

| Consolidated Balance Sheets at December 31, [removed: 2014] [added: 2015] and [removed: 2013] [added: 2014] | [removed: [37](#sC9049290A3C996FB04AE75F0D0F2F97C)] [added: [39](#sFE81A302DA5B596EA2CEC9896DE0E550)] |

| Consolidated Statements of Earnings for the years ended December 31, [removed: 2014, 2013] [added: 2015, 2014] and [removed: 2012] [added: 2013] | [removed: [39](#s25EE61F4DA3643A8C35875F0D111EA89)] [added: [41](#s8170BE2905DE5FAA8A982F8B135FDFA1)] |

| Consolidated Statements of Comprehensive Earnings for the years ended December 31, [removed: 2014, 2013] [added: 2015, 2014] and [removed: 2012] [added: 2013] | [removed: [40](#sBE749C481610A37FA72975F0D121BD1B)] [added: [42](#s78D34347F3D95668A7FCA59B5A1D853A)] |

| Consolidated Statements of Cash Flows for the years ended December 31, [removed: 2014, 2013] [added: 2015, 2014] and [removed: 2012] [added: 2013] | [removed: [41](#s0654267ACB4622CE83CF75F0D130654F)] [added: [43](#sF382E15057645AF29176711608C66FE0)] |

| Consolidated Statements of Stockholders’ Equity for the years ended December 31, [removed: 2014, 2013] [added: 2015, 2014] and [removed: 2012] [added: 2013] | [removed: [43](#s7380AA2EBD41C5713BEF75F0D14FC173)] [added: [44](#s85C37DB85AEB541EA6FBAF3A01F7FDCE)] |

| Notes to Consolidated Financial Statements | [removed: [44](#s1898FB072CB1F2A038A975F116E77883)] [added: [45](#sE867A79F12555587A5D00748512EFB80)] |

| Report of Independent Registered Public Accounting Firm | [removed: [105](#sD837BF72ADB5AD8E233775F11E08AF73)] [added: [108](#s71E0604EC19A5F98A46125DBB7713B6B)] |

| Report of Management on Internal Control Over Financial Reporting | [removed: [106](#s49C608C5E5F3BFDBE18075F11E46A905)] [added: [109](#sF5C9342A800F5BEBA9CBE9588F5A7F5C)] |

| | 3.2 | | Amended and Restated By-laws of Altria Group, Inc., effective [removed: August 21, 2014.] [added: as of October 28, 2015.] Incorporated by reference to Altria Group, Inc.’s Current Report on Form 8-K filed on [removed: August 21, 2014] [added: October 29, 2015] (File No. 1-08940). |

| | 4.5 | | Extension Agreement, effective August 19, 2014, among Altria Group, Inc. and the lenders [removed: party] thereto and JPMorgan Chase Bank, N.A. and Citibank, N.A., as Administrative Agents. Incorporated by reference to Altria Group, Inc.’s Current Report on Form 8-K filed on August 21, 2014 (File No. 1-08940). |

| | [removed: 4.6] [added: 4.7] | | The Registrant agrees to furnish copies of any instruments defining the rights of holders of long-term debt of the Registrant and its consolidated subsidiaries that does not exceed 10 percent of the total assets of the Registrant and its consolidated subsidiaries to the Commission upon request. |

| | [removed: 10.27] [added: 10.29] | | [removed: 2005] [added: 2010] Performance Incentive Plan, effective on May [removed: 1, 2005.] [added: 20, 2010.] Incorporated by reference to Altria Group, Inc.’s definitive proxy statement filed on [removed: March 14, 2005] [added: April 9, 2010] (File No. 1-08940).* |

| | [removed: 10.28] [added: 10.19] | | [removed: Deferred Fee Plan for Non-Employee Directors, as amended and restated] [added: Benefit Equalization Plan,] effective [removed: October 1, 2012.] [added: September 2, 1974, as amended.] Incorporated by reference to Altria Group, [removed: Inc.’s] [added: Inc.'s] Annual Report on Form 10-K for the year ended December 31, [removed: 2012] [added: 2014] (File No. 1-08940).* |

| | [removed: 10.29] [added: 10.38] | | [added: Form of Deferred] Stock [removed: Compensation Plan for Non-Employee Directors,] [added: Agreement, dated] as [removed: amended and restated effective] [added: of] January [removed: 29,] [added: 28,] 2014. Incorporated by reference to Altria Group, Inc.’s Quarterly Report on Form 10-Q for the period ended March 31, 2014 (File No. 1-08940).* |

| | 10.30 | | [removed: 2010] [added: 2015] Performance Incentive Plan, effective on May [removed: 20, 2010.] [added: 1, 2015.] Incorporated by reference to Altria Group, Inc.’s definitive proxy statement [added: on Schedule 14A] filed on April 9, [removed: 2010] [added: 2015] (File No. 1-08940).* |

| | 10.33 | | Form of Restricted Stock Agreement, dated as of [removed: December 31, 2009.] [added: January 25, 2012.] Incorporated by reference to Altria Group, Inc.’s [removed: Annual] [added: Current] Report on Form [removed: 10-K for the year ended December 31, 2009] [added: 8-K filed on January 27, 2012] (File No. 1-08940).* |

| | 10.34 | | Form of Restricted Stock Agreement, dated as of [removed: January 25, 2011.] [added: May 16, 2012.] Incorporated by reference to Altria Group, Inc.’s Current Report on Form 8-K filed on [removed: January 27, 2011(File] [added: May 17, 2012 (File] No. 1-08940).* |