Altria Group (MO) 10-K risk factor changes: FY2020 vs FY2019

*The following risk factors should be read carefully in connection with evaluating our business and the forward-looking statements contained in this [removed: Annual Report on] Form 10-K.

Any of the following risks could materially adversely affect our business, our results of operations, our cash flows, our financial position and the actual outcome of matters as to which forward-looking statements are made in this [removed: Annual Report on] Form 10-K.*

We [removed: (1)] may from time to time make written or oral forward-looking statements, including earnings guidance and other statements contained in filings with the SEC, reports to security holders, press releases and investor webcasts.

We elaborate on these and other risks we face throughout this [removed: Annual Report on] Form 10-K particularly in the “Business Environment” sections preceding our discussion of the operating results of our subsidiaries’ businesses below in Item 7.

You should understand that it is not possible to predict or identify all [removed: risk factors.]

Legal proceedings covering a wide range of matters are pending or threatened in various United States and foreign jurisdictions against Altria and its subsidiaries, including PM USA and USSTC, as well as their respective [removed: indemnitees] [added: indemnitees, indemnitors] and Altria’s investees.

As discussed in Note [removed: 19.][added: 5.]

*Contingencies* to the consolidated financial statements in Item 8 (“Note [removed: 19”),] [added: 18”),] tobacco litigation plaintiffs have challenged the constitutionality of Florida’s bond cap statute in several cases and plaintiffs may challenge state bond cap statutes in other jurisdictions as well.

In certain litigation, Altria, its subsidiaries and its investees may face potentially significant non-monetary [removed: remedies.][added: remedies that could have a material adverse effect on our businesses.]

For example, in the lawsuit brought by the United States Department of [removed: Justice,] [added: Justice] discussed in [removed: detail in] Note [removed: 19,] [added: 18,] the district court did not impose monetary penalties but ordered significant non-monetary remedies, including the issuance of “corrective statements.” [added: In the patent lawsuit pending before the United States International Trade Commission (“ITC”) discussed in Note 18, the plaintiffs seek a prohibition on the importation of the *IQOS* electronic device, *HeatSticks* and component parts into the United States.]

[removed: Additionally,] [added: Additionally] the *on!* transaction, discussed in Note 1.

*Background and Basis of Presentation* to the consolidated financial statements in Item 8 (“Note 1”), [removed: is] [added: had been] the subject of [removed: pending arbitration.][added: an arbitration, which the parties agreed to settle for an immaterial amount to Altria in February 2021.]

An [removed: unfavorable decision] [added: adverse outcome in the arbitration] could [added: have] adversely [removed: affect] [added: affected] Helix’s ability to compete effectively with oral nicotine pouches.

In 2019, we determined that our investment in JUUL was impaired in part due to the increase in the number and type of legal cases pending against [removed: JUUL, especially in the fourth quarter of 2019.][added: JUUL.]

*Legal Proceedings* [removed: of this Annual Report on Form 10-K] (“Item 3”), Note [removed: 19] [added: 18] and Exhibits 99.1 and 99.2 to this [removed: Annual Report on] Form 10-K for a discussion of pending tobacco-related litigation.

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

[removed: (for example, through product standards that may be proposed] [added: More broadly, actions] by the FDA [removed: for nicotine] and [removed: flavors),] [added: other federal, state or local governments or agencies, including those specific actions described in *Tobacco Space - Business Environment* in Item 7, may (i) impact the adult tobacco consumer acceptability of or access to tobacco products (for example, through nicotine or constituent limits or menthol or other flavor bans), (ii)] limit adult tobacco consumer choices, [added: (iii)] delay or prevent the launch of new or modified tobacco products or products with claims of reduced risk, [added: (iv)] require the recall or other removal of tobacco products from the marketplace (for example as a result of [added: (a)] product contamination, [added: (b) legislation and] rulemaking that bans menthol or other flavors, [added: (c)] a determination by the FDA that one or more tobacco products do not satisfy the statutory requirements for substantial equivalence, [added: (d)] because the FDA requires that a currently marketed tobacco product proceed through the pre-market review process or [added: (e)] because the FDA [added: does not authorize a PMTA or] otherwise determines that removal is necessary for the protection of public health), [added: (v)] restrict communications to adult tobacco consumers, [added: (vi)] restrict the ability to differentiate tobacco products, [added: (vii)] create a competitive advantage or disadvantage for certain tobacco companies, [added: (viii)] impose additional manufacturing, labeling or packing requirements, [added: (ix)] interrupt manufacturing or otherwise significantly increase the cost of doing [removed: business,] [added: business] or [added: (x)] restrict or prevent the use of specified tobacco products in certain locations or the sale of tobacco products by certain retail establishments.

Such shifts may [added: also] have an adverse impact on the reported share performance of tobacco products of Altria’s tobacco subsidiaries.

For further discussion, see *Tobacco Space - Business Environment - Excise Taxes* in Item [removed: 7*.*][added: 7.]

See *Tobacco Space - Business [removed: Environment*] [added: Environment] - [removed: *Summary*] [added: Summary*] in Item 7 for additional discussion concerning evolving adult tobacco consumer [removed: preferences, including e-vapor products.][added: preferences.]

Growth of the e-vapor product category and other innovative tobacco [removed: products] [added: products, including oral nicotine pouches,] has further contributed to reductions in cigarette consumption levels and cigarette industry sales volume and has adversely affected the growth rates of other tobacco [removed: products.][added: products, including smokeless tobacco.]

PM USA also faces competition from lower-priced brands sold by certain United States and foreign manufacturers that have cost advantages because they are not parties to settlements of certain tobacco litigation in the United [removed: States.][added: States and, as such, are not required to make annual settlement payments as required by the parties to the settlements.]

These settlements, among other factors, resulted in substantial cigarette price [removed: increases.][added: increases to help cover the cost of the settlement payments.]

[removed: These] [added: Such] manufacturers may [removed: fail to comply with related state escrow legislation or may] avoid [added: these] escrow [removed: deposit] obligations [removed: on the majority of their sales] by concentrating on certain states where escrow deposits are not required or are required on fewer than all such manufacturers’ cigarettes sold in such states.

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

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

[removed: | ▪ | anticipate] [added: ▪anticipate] and respond to new and evolving adult consumer preferences; [removed: |]

[removed: | ▪ | develop,] [added: ▪develop,] manufacture, market and distribute new and innovative products that appeal to adult consumers (including, where appropriate, through arrangements with, or investments in, third parties); [removed: |]

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

[removed: | ▪ | protect] [added: ▪protect] or enhance margins through cost savings and price increases. [removed: |]

See *Tobacco Space - Business [removed: Environment*] [added: Environment] - [removed: *Summary*] [added: Summary*] in Item 7 and the immediately preceding risk factor for additional discussion concerning evolving adult tobacco consumer preferences, specifically the growth of e-vapor and other innovative tobacco products and the effects on our tobacco operating companies.

See *Wine Segment - Business Environment* - [removed: *Summary*] [added: Summary] in Item 7 for additional discussion concerning evolving adult alcohol consumer preferences; specifically the slowing of the premium wine category and the effects on our wine subsidiaries.

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

Some innovative tobacco products may reduce the health risks associated with [removed: current] [added: certain other] tobacco products, while continuing to offer adult tobacco consumers (within and outside the United States) products that meet their taste expectations and evolving preferences.

Examples include tobacco-containing and nicotine-containing products that reduce or eliminate exposure to cigarette smoke and/or constituents identified by public health authorities as harmful, such as electronically heated tobacco products, oral nicotine [removed: pouches such as Helix’s *on!* products,] [added: pouches,] and e-vapor products.

In addition to internal product development, these efforts include arrangements with, or investments in, third parties such as our [removed: exclusive] arrangement with PMI to [removed: sell] [added: commercialize] *IQOS* and related [removed: heatstick] [added: *HeatStick*] products in the United States, which is [removed: dependent upon our continued ability to] [added: governed by an exclusive] license [removed: these products from PMI,] and [removed: our minority investment in JUUL.][added: distribution agreement.]

[removed: Our minority] [added: Additionally, our] investment in JUUL subjects us to non-competition obligations restricting us from investing or engaging in the e-vapor business other than through JUUL, subject to certain exceptions.

Further, we cannot predict whether regulators, including the FDA, will permit the marketing or sale of [added: any particular] innovative products (including products with claims of reduced risk to adult consumers), the speed with which they may make such determinations or whether regulators will impose an unduly burdensome regulatory framework on such products.

[removed: Nor can we] [added: We also cannot] predict whether these products will appeal to adult tobacco consumers or whether adult tobacco consumers’ purchasing decisions would be affected by reduced-risk claims on such products if permitted.

Significant changes in price, availability or quality of tobacco, other raw materials or component parts could have an adverse effect on the profitability and business of Altria’s tobacco [removed: subsidiaries.][added: subsidiaries and investees.]

risk factors.

Risks Related to Litigation, Legislative or Regulatory Action

Legislative action, such as changes to tort law, also may expand the types of claims and remedies available to plaintiffs.

As discussed in Note 18.

Altria and PM USA are also defendants in many of these cases.

In addition, in April 2020 the FTC issued an administrative complaint against Altria and JUUL alleging that Altria’s 35% investment in JUUL and the associated agreements constitute unreasonable restraint on trade.

E-vapor litigation and the FTC action, including the remedies the FTC is seeking, are further discussed in Note 18.

The frequency and magnitude of excise tax increases can be influenced by various factors, including federal and state budgets (which have been negatively impacted by the COVID-19 pandemic) and the composition of executive and legislative bodies.

Risks Related to Our Businesses

Altria, its subsidiaries and its investees face various risks related to health epidemics and pandemics, including the COVID-19 pandemic and similar outbreaks, which could have a material adverse effect on the business, consolidated results of operations, cash flows or financial position of Altria and its subsidiaries and investees.

Altria’s, its subsidiaries’ and its investees’ business and financial results, consolidated results of operations, cash flows or financial position could be negatively impacted by health epidemics, pandemics and similar outbreaks.

The spreading COVID-19 pandemic could have negative impacts, such as (i) a global or U.S. recession or other economic crisis, including a financial crisis, (ii) credit and capital markets volatility (and access to these markets, including by those in the distribution and supply chains), (iii) significant volatility in demand for our tobacco and wine subsidiaries’ and investees’ products, (iv) changes in adult consumer accessibility to those products, including due to government action, (v) changes in adult consumer behavior and preferences, including trading down to lower-priced products or cessation of product use due to public health actions or concerns and economic conditions (including those stemming from potential changes in government stimulus or reductions in unemployment payments or other benefits), and (vi) extended or multiple disruptions in our subsidiaries’ or investees’ manufacturing operations, or in their distribution and supply chains.

In addition, our subsidiaries’ and investees’ operations may incur increased costs and otherwise be negatively affected if significant portions of their respective workforces (or the workforces within their respective distribution or supply chains) are unable to work or work effectively, including because of illness, unavailability of personal protective equipment, quarantines, government actions, facility closures or other restrictions.

The impact of the COVID-19 pandemic depends on factors beyond our knowledge or control, including the duration and severity of the outbreak, increases in the number of cases in future periods, and actions taken to contain its spread and mitigate the public health effects.

We cannot at this time predict the impact of the COVID-19 pandemic on our or our investees’ future financial or operational results, but the impact could be material over time.

See the risks below related to extended disruptions at a facility, of a distributor or in service by a service provider and the risks related to our investment in ABI and the earnings from and carrying value of that investment.

For further discussion on the impact of the COVID-19 pandemic on the tobacco and wine businesses, see *Tobacco Space - Business Environment* and *Wine Segment - Business Environment* in Item 7.

In addition, growth of unregulated synthetic nicotine products, which may not be subject to the same regulatory restrictions (including marketing restrictions and FDA pre-marketing requirements) as the tobacco-derived oral nicotine products of Altria’s tobacco subsidiaries, could negatively impact the growth of our oral nicotine pouch products.

These settlement payments are significant for PM USA, as described in *Debt and Liquidity - Payments under State Settlement Agreements and FDA Regulation* in Item 7.

Manufacturers not party to the settlements are subject to state escrow legislation requiring escrow deposits.

The initial 5-year term of this agreement expires in April 2024 and renews at our option for an additional 5-year period so long as we achieve certain performance objectives.

The initial term performance objectives are based on achieving 0.5% dollar share of the cigarette category within a certain period of time in a certain number of geographic areas.

In addition, to maintain our exclusive distribution rights as to PMI during the term of the agreement, we must achieve certain performance objectives within a specified time period by April 2022.

The exclusive distribution rights performance objectives are based on achieving 0.5% dollar share of the cigarette category within a certain period of time in a single geographic area.

While we believe Altria will meet the initial term and exclusive distribution rights performance objectives, it is possible that we may not meet them or that we may have a disagreement with PMI as to whether those objectives have been met.

In either case, it could result in the loss of (i) our unilateral right to extend the agreement for the additional 5-year period, and therefore we would no longer be able to commercialize *IQOS* and related *HeatStick* products after April 2024, or (ii) our exclusive distribution rights as to PMI.

In addition, the FDA could, for a variety of reasons, determine that innovative products currently on the market but pending FDA review of the associated PMTA (such as *on!* oral nicotine pouches), or those that have previously received authorization, including with a claim of reduced exposure (such as *IQOS*), are not appropriate for the public health and the FDA could require such products be taken off the market.

The COVID-19 pandemic also may impact the availability of direct materials necessary for our tobacco subsidiaries and JUUL to remain compliant with FDA and other regulatory requirements for tobacco products.

Altria’s subsidiaries rely on a few significant facilities and a small number of key suppliers, distributors and distribution chain service providers.

For example, in March 2020, the COVID-19 pandemic resulted in a temporary suspension of operations at PM USA’s Richmond, Virginia manufacturing facility, which is the primary facility for manufacturing PM USA cigarettes.

Some state governors also have issued executive orders requiring that certain businesses temporarily suspend operations for varying periods of time while the COVID-19 pandemic persists.

Operations of our subsidiaries, suppliers, distributors and distribution chain service providers and those of our investees could be suspended temporarily once or multiple times, or closed permanently, depending on various factors, including how long the COVID-19 pandemic persists and the extent to which state, local and federal governments, as well as foreign countries, impose restrictions on the operation of facilities or otherwise place limits on the supply and distribution chains.

communicating internally and externally with employees, investors, suppliers, trade customers, adult consumers and others.

For further discussion, see *Discussion and Analysis - Critical Accounting Policies and Estimates* in Item 7.

*Asset Impairment, Exit and Implementation Costs* to the consolidated financial statements in Item 8 (“Note 5”), during the year ended December 31, 2020, as a result of inventory levels significantly exceeding long-term forecasted demand, Ste.

Michelle recorded pre-tax charges of $411 million in cost of sales, including a $292 million inventory write off, $100 million in estimated losses on future non-cancelable grape purchase commitments and $19 million in inventory disposal costs and other charges.

Evolving adult consumer preferences, an economic downturn or recession or other factors could result in a further slowdown in the wine category and otherwise have a material adverse effect on Ste.

Michelle’s wine business.

Risks Related to the Capital Markets and Financing

For example, we typically access the commercial paper market early in the second quarter to help fund payments under the Master Settlement Agreement, tax obligations and shareholder dividends.

_________________________________________________

*(1)* *This section uses the terms “we,” “our” and “us” when it is not necessary to distinguish among Altria and its various operating subsidiaries or when any distinction is clear from the context.*

This impairment and the risks associated with our JUUL investment are discussed further in *The expected benefits of the JUUL transaction may not materialize in the expected manner or timeframe or at all*.

More broadly, 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 adult tobacco consumer acceptability of or access to tobacco products

| | |

| --- | --- |

For example, the Richmond, Virginia manufacturing facility is the primary facility for manufacturing all PM USA cigarettes and some of our other tobacco products.

An extended disruption in operations experienced

Although we seek to maintain or improve our credit ratings

In the fourth quarter of 2018, Altria incurred $209 million in goodwill and other intangible asset impairment charges related to Altria’s decision to refocus its innovative product efforts and the impairment of the *Columbia Crest* trademark.

In the fourth quarter of 2019, in the wine segment, Altria determined that the goodwill of $74 million was fully impaired as the wine reporting unit was impacted by a slowing growth rate in the premium wine category and higher inventory levels.

*Goodwill and Other Intangible Assets, net* to the consolidated financial statements in Item 8 (“Note 4”) for further discussion).

Antitrust clearance required for the conversion of our non-voting JUUL shares into voting shares may not be obtained in a timely manner or at all.

Antitrust clearance required for the conversion of the non-voting JUUL shares held by us into voting shares may not be obtained in a timely manner or at all, and such clearance may be subject to unanticipated conditions.

The Federal Trade Commission (“FTC”) may challenge the investment through litigation or administrative proceedings, potentially seeking a range of resolutions, such as modifications to the investment structure or economic terms, up to divestiture of the investment.

In April 2019, Altria and JUUL received a request for additional information (commonly referred to as a “second request”) from the FTC as part of the antitrust review process.

A second request extends the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), while the FTC conducts its review, until 30 days after the parties have substantially complied with the second request or as otherwise agreed to by the parties.

As of October 30, 2019, Altria and JUUL certified substantial compliance with the second request.

Based on the timing agreement among Altria, JUUL and the FTC staff and related extensions for the convenience of the parties, Altria believes the FTC will complete its review in the first half of 2020.

While conducting its review, on October 1, 2019, the FTC issued a Civil Investigative Demand to Altria seeking information regarding, among other things, Altria’s role in the resignation of JUUL’s former chief executive officer and the hiring by JUUL of any current or former Altria director, executive or employee.

Unless and until antitrust clearance is obtained, including expiration or termination of the waiting period under the HSR Act, our JUUL shares will not have voting rights and we will not be entitled to certain other rights, including the right to appoint any directors to the JUUL

board of directors.

As a result, we determined that our investment in JUUL was impaired and recorded a total pre-tax impairment charge of $8.6 billion for the year ended December 31, 2019, reported as impairment of JUUL equity securities in our consolidated statements of earnings.

Of this amount, Altria recorded pre-tax charges of $4.5 billion in the third quarter of 2019 and $4.1 billion in the fourth quarter of 2019.

The third quarter impairment charge was due primarily to lower e-vapor sales volume assumptions in the U.S. and international markets and a delay in achieving operating margin performance, as compared to the assumptions at the time of the JUUL transaction.

The fourth quarter impairment charge resulted substantially from increased discount rates applied to future cash flow projections, due to the increase in the number and type of legal cases pending against JUUL during the fourth quarter of 2019.

*Tobacco Space - Business Environment*, are ongoing with respect to the current fair value.

For example, in October 2018, ABI announced a 50% rebase in the dividends it pays to its shareholders, which has resulted in a reduction of cash dividends Altria receives from ABI.

Earnings from and carrying value of our equity investment in ABI are also subject to fluctuations in ABI’s stock price, for example through mark-to-market losses on ABI’s derivative financial instruments used to hedge certain share commitments.

The following discussion should be read in conjunction with the other sections of this [removed: Annual Report on] Form 10-K, including the consolidated financial statements and related notes contained in Item 8, and the discussion of risk factors that may affect future results in Item 1A.

[removed: Effective with] [added: In] the first quarter of 2020, Altria’s smokeless products segment [removed: will be] [added: was] renamed [removed: as] the oral tobacco products segment.

The changes in [removed: Altria’s] net earnings (losses) and diluted EPS attributable to Altria for the year ended December 31, [removed: 2019,] [added: 2020,] from the year ended December 31, [removed: 2018,] [added: 2019,] were due primarily to the following:

| (in millions, except per share data) | [added: | |] Net [removed: Earnings] [added: Earnings (Losses)] | | | | [added: | |] Diluted EPS | | |

| [removed: For] [added: | | | | | | For] the [removed: year ended] [added: Year Ended] December 31, [removed: 2018] [added: 2020] | [removed: $] | [removed: 6,963] | | | [removed: $] | [removed: 3.68] | | [added: | | | |]

| [removed: 2018] NPM Adjustment Items | [removed: (109] | | [removed: )] [added: (145)] | | [removed: (0.06] | [added: (36)] | [removed: )] | [added: | (109) | | | (109) | | | (0.06) | | | | | |]

| [removed: 2018] Asset impairment, exit, implementation and acquisition-related costs | [added: | | 538 | | | 106 | | |] 432 | | | [added: 432] | [added: | |] 0.23 | | | [added: | | |]

| [removed: 2018] Tobacco and health litigation items | [added: | | 131 | | | 33 | | |] 98 | | | [added: 98] | [added: | |] 0.05 | | | [added: | | |]

| [removed: 2018] ABI-related special items [added: (1)] | [removed: (68] | | [removed: )] [added: (16)] | | [removed: (0.03] | [added: (3)] | [removed: )] | [added: | (13) | | | (13) | | | — | | | | | |]

| [removed: 2018 (Gain) loss] [added: Loss] on ABI/SABMiller business combination | [added: | | 33 | | | 7 | | |] 26 | | | [added: 26] | [added: | |] 0.01 | | | [added: | | |]

| [removed: 2018] Tax items | [added: | | — | | | (197) | | |] 197 | | | [added: 197] | [added: | |] 0.11 | | | [added: | | |]

| 2019 Asset impairment, exit, implementation and acquisition-related costs | [removed: (269] | | [removed: )] [added: 269] | | [removed: (0.15] | | [removed: )] | [added: | 0.15 | | |]

| 2019 Tobacco and health litigation items | [removed: (58] | | [removed: )] [added: 58] | | [removed: (0.03] | | [removed: )] | [added: | 0.03 | | |]

| 2019 Impairment of JUUL equity securities | [removed: (8,600] | | [removed: )] [added: 8,600] | | [removed: (4.60] | | [removed: )] | [added: | 4.60 | | |]

| 2019 ABI-related special items [added: (1)] | [removed: 280] | | [added: (303)] | | [removed: 0.15] | | | [added: | (0.16) | | |]

| 2019 Cronos-related special items | [removed: (640] | | [removed: )] [added: 640] | | [removed: (0.34] | | [removed: )] | [added: | 0.34 | | |]

| 2019 Tax items | [removed: 99] | | [added: (99)] | | [removed: 0.05] | | | [added: | (0.05) | | |]

| Subtotal 2019 special items | [removed: (9,188] | | [removed: )] [added: 9,165] | | [removed: (4.92] | | [removed: )] | [added: | 4.91 | | |]

| Fewer shares outstanding | [added: | |] — | | | | [removed: 0.04] | | [added: 0.02] | [added: | |]

| Change in tax rate | [removed: (65] | | [removed: )] [added: (108)] | | [removed: (0.03] | | [removed: )] | [added: | (0.06) | | |]

| For the year ended December 31, 2019 | [removed: $] | [removed: (1,293] | [removed: )] [added: $] | [added: (1,293)] | [removed: $] | [removed: (0.70] | [removed: )] | [added: | $ | (0.70) | |]

[removed: *See the] [added: *For a] discussion of [removed: events] [added: special items and other business drivers] affecting the comparability of [removed: statement] [added: statements] of earnings (losses) amounts [removed: in] [added: and reconciliations of adjusted earnings attributable to Altria and adjusted diluted EPS attributable to Altria, see] the Consolidated Operating Results section [removed: of the following Discussion and Analysis.*][added: below.*]

[removed: | ▪ | Fewer] [added: ▪Fewer] Shares Outstanding: Fewer shares outstanding during [removed: 2019] [added: 2020] compared with [removed: 2018] [added: 2019] were due primarily to [added: the timing of] shares repurchased by Altria [added: in 2019] under its share repurchase [removed: programs. |][added: program.]

[removed: | ▪ | Change] [added: ▪Change] in Tax Rate: The change in tax rate [added: (which excludes the impact of tax items shown above)] was driven primarily by lower dividends from ABI. [removed: |]

[removed: | ▪ | Operations:] [added: ▪Operations:] The increase of [removed: $421] [added: $353] million in operations [removed: shown in] [added: (which excludes] the [removed: table above] [added: impact of special items shown above)] was due primarily to the following: [removed: |]

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

[removed: partially offset by higher] [added: ▪higher] interest and other debt expense, [removed: net, due to debt incurred in connection with the Cronos] [added: net;] and [removed: JUUL transactions.]

*For further details, see the Consolidated Operating Results and Operating Results by Business Segment sections [removed: of the following Discussion and Analysis.*][added: below.*]

[removed: 2020] [added: 2021] Forecasted Results

Altria forecasts [removed: that] its [removed: 2020] [added: 2021] full-year adjusted diluted EPS [removed: growth rate is expected] to be in [removed: the] [added: a] range of [removed: 4%] [added: $4.49] to [removed: 7%] [added: $4.62, representing a growth rate of 3% to 6%] over its [removed: 2019] [added: 2020] full-year adjusted diluted EPS base of [removed: $4.22,] [added: $4.36,] as shown in the table below.

For further [removed: discussion,] [added: discussion on goodwill,] see Note [removed: 15.][added: 4.]

Altria expects its [removed: 2020] [added: 2021] full-year adjusted effective tax rate will be in a range of [removed: 23.5%] [added: 24.5%] to [removed: 24.5%.][added: 25.5%.]

| Reconciliation of [removed: 2019] [added: 2020] Reported Diluted EPS to [removed: 2019] [added: 2020] Adjusted Diluted EPS | | | | [added: | |]

| [removed: 2019] [added: 2020] Reported diluted EPS | [added: | |] $ | [removed: (0.70] [added: 2.40] | [removed: )] |

| Asset impairment, exit, implementation and acquisition-related costs | [removed: 0.15] | | [added: (3)] | [added: | | | | | 26 | | | | | | 23 | | |]

| Tobacco and health litigation items | [added: | |] 0.03 | | |

| Impairment of JUUL equity securities | [removed: 4.60] | | [added: 8,600] | [added: | | — | | | 8,600 | | | 8,600 | | | 4.60 | | | | | |]

| ABI-related special items | [removed: (0.15] | | [removed: )] [added: 0.32] | [added: | |]

| Cronos-related special items | [removed: 0.34] | | [added: 0.03] | [added: | |]

| Tax items | [removed: (0.05] | | [removed: )] [added: —] | [added: | | 99 | | | (99) | | | (99) | | | (0.05) | | | | | |]

In this Management’s Discussion and Analysis of Financial Condition and Results of Operations section, Altria refers to the following “adjusted” financial measures: adjusted operating companies income (loss) (“OCI”); adjusted OCI margins; adjusted net earnings attributable to Altria; adjusted diluted earnings (losses) per share (“EPS”) attributable to Altria; and adjusted effective tax rates.

These adjusted financial measures are not required by, or calculated in accordance with, United States generally accepted accounting principles (“GAAP”) and may not be calculated the same as similarly titled measures used by other companies.

Except as noted in *2021 Forecasted Results* section below, when Altria provides a non-GAAP measure in this Form 10-K, it also provides a reconciliation of that non-GAAP financial measure to the most directly comparable GAAP financial measure.

For a further description of these non-GAAP financial measures, see the *Non-GAAP Financial Measures* section below.

COVID-19 Pandemic

The COVID-19 pandemic has led to adverse impacts on the U.S. and global economies and continues to create economic uncertainty.

Although much uncertainty still surrounds the pandemic, including its duration and ultimate overall impact on U.S. and global economies, its subsidiaries’ operations and those of Altria’s investees, Altria continues to monitor the macroeconomic risks of the COVID-19 pandemic and continues to carefully evaluate potential outcomes and work to mitigate risks.

Specifically, Altria remains focused on any potential impact to its liquidity, operations, supply and distribution chains and on economic conditions.

In terms of Altria’s liquidity, despite some volatility in the commercial paper market in March 2020, Altria was able to build and maintain a higher cash balance than normal to preserve its financial flexibility.

As a precautionary measure, in March 2020, Altria borrowed the full $3.0 billion available under its senior unsecured 5-year revolving credit agreement (as amended, the “Credit Agreement”), which Altria subsequently repaid in full in June 2020.

In May 2020, Altria issued $2.0 billion of long-term debt in the form of senior unsecured notes.

In April 2020, the Board of Directors rescinded the $500 million remaining in the previously authorized $1.0 billion share repurchase program.

Altria did not repurchase any shares under its share repurchase program in 2020.

As with so many other companies throughout the U.S. and globally, Altria’s operations have been affected by the COVID-19 pandemic.

Altria has implemented remote working for many employees and aligned with the social distancing protocols recommended by public

[Table of](#ib9feb7177e6c4e279899d3c68273e2f5_7) [Contents](#ib9feb7177e6c4e279899d3c68273e2f5_7)

health authorities.

To date, Altria believes its tobacco businesses have not experienced any material adverse effects associated with governmental actions to restrict consumer movement or business operations, but continues to monitor these factors.

Altria continues to believe that remote working due to the COVID-19 pandemic has had minimal impact on productivity.

Also, Altria’s critical information technology systems have remained operational.

Although Altria’s tobacco businesses previously suspended operations temporarily at several of their manufacturing facilities in March 2020, the businesses resumed operations at those facilities under enhanced safety protocols in April 2020 and all manufacturing facilities are currently operational under enhanced safety protocols.

Altria continues to monitor the risks associated with facility disruptions and workforce availability as a result of uncertainty related to the COVID-19 pandemic.

Altria’s suppliers and those within its distribution chain are also subject to government actions that may require the closure of a facility and remote working protocols.

To date, Altria has not experienced any material disruptions to its supply chains or distribution systems, but is continuing to monitor these factors.

The majority of retail stores in which Altria’s tobacco products are sold, including convenience stores, have been deemed to be essential businesses by authorities and have remained open.

Altria continues to monitor the risk that one or more suppliers, distributors or any other entities within our supply and distribution chain closes temporarily or permanently.

In March 2020, PM USA temporarily closed its Atlanta and Richmond *IQOS* stores and paused its *IQOS* interactive marketing efforts.

In June 2020, PM USA re-opened its Atlanta and Richmond *IQOS* stores, and in July 2020, PM USA launched *IQOS* in Charlotte, with all stores operating under enhanced safety protocols.

In 2020, Altria incurred net pre-tax charges of $50 million, which were directly related to disruptions caused by or efforts to mitigate the impact of the COVID-19 pandemic.

These costs, which were recorded in the second quarter and excluded from Altria’s adjusted results, included premium pay, personal protective equipment and health screenings, partially offset by certain employment tax credits.

These net pre-tax charges do not include the inventory-related implementation costs associated with the wine business strategic reset.

Although Altria’s tobacco businesses have not been materially impacted to date by the COVID-19 pandemic, there is continued uncertainty as to how the COVID-19 pandemic may impact adult tobacco consumers in the future.

Altria continues to monitor the macroeconomic risks of the COVID-19 pandemic and their effect on adult tobacco consumers, including stay-at-home practices and disposable income (which may be impacted by unemployment rates and fiscal stimulus).

Altria also continues to monitor adult tobacco consumers’ purchasing behaviors, including overall tobacco product expenditures, mix between premium and discount brand purchases and adoption of non-combustible products.

While Altria’s tobacco businesses have not been materially impacted to date by the COVID-19 pandemic, Altria has experienced adverse impacts to its alcohol assets.

In the wine business, Ste.

Michelle’s direct-to-consumer sales and on-premise wine sales in restaurants, bars and hospitality venues and on cruise lines have been, and continue to be, negatively impacted by disruptions arising from the COVID-19 pandemic, which also may have an impact on adult wine consumers going forward.

In 2020, against a backdrop of product volume demand uncertainty and long-term, non-cancelable grape purchase commitments, which have been further negatively impacted by the COVID-19 pandemic (including economic uncertainty and government actions that restrict direct-to-consumer sales and on-premise sales), Ste.

Michelle recorded pre-tax charges of $411 million consisting primarily of (i) the write-off of inventory and (ii) estimated losses on future non-cancelable grape purchase commitments.

Altria and Ste.

Altria’s reportable segments are smokeable products, smokeless products and wine.

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’s innovative tobacco products businesses to Altria’s consolidated results.

Altria’s oral tobacco products segment will include financial results, volume and retail share performance from USSTC’s core MST and snus businesses and Helix’s *on!* oral nicotine pouches.

Prior period volume and retail share data will be updated to reflect these changes.

| | | | | | | | |

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

| Subtotal 2018 special items | 576 | | | | 0.31 | | |

| Operations | 421 | | | | 0.22 | | |

| | |

| --- | --- |

| ▪ | lower spending as a result of Altria’s decision in 2018 to refocus its innovative product efforts; and |

| ▪ | higher earnings from Altria’s equity investment in ABI; |

Altria’s 2020 guidance reflects increased investments related to PM USA’s

commercialization efforts for *IQOS*, Helix’s plans to manufacture and expand U.S. distribution of *on!* and one extra shipping day in the first quarter of 2020.

This forecasted growth rate excludes estimated per share charges in 2020 of $0.05 for tax expense, representing a partial reversal of the tax basis benefit recorded in 2017 attributable to the deemed repatriation tax related to Altria’s investment in ABI.

| | | | |

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

The factors described in Item 1A represent continuing risks to this forecast.

amount of goodwill allocated to a reporting unit.

| Smokeless products | 5,078 | | | | 8,801 | | |

Upon completion of this testing, Altria concluded that the goodwill of $74 million in the wine segment was fully impaired as the wine reporting unit was impacted by a slowing growth rate in the premium wine category and higher inventories.

In performing the 2019 quantitative annual impairment test for the wine reporting unit, Altria concluded that the fair value of the unit as a whole was approximately 25% below its carrying value of approximately $1.5 billion after the impairment charge discussed above.

Altria also evaluated all wine reporting unit assets, including current assets, property, plant and equipment, and other long-lived assets other than goodwill and concluded that these assets were fairly stated at December 31, 2019.

During 2017, Altria’s quantitative annual impairment test of goodwill and indefinite-lived intangible assets resulted in no impairment charges.

In October 2019, the fair value of Altria’s equity investment in ABI declined below its carrying value.

At February 24, 2020, the fair value of Altria’s equity investment in ABI was approximately $13.7 billion (approximately 24% below its carrying value).

This conclusion is based on: (i) the fair value of Altria’s equity investment in ABI having historically exceeded its carrying value since October 2016, when Altria obtained its ownership interest in ABI, with the exception of certain periods starting in September 2018; (ii) the period of time that ABI shares have traded below Altria’s carrying value (although ABI shares began to trade below Altria’s carrying value in September 2018, the fair value of ABI’s shares have exceeded Altria’s carrying value as recently as September 30, 2019) and the magnitude by which the carrying value of Altria’s investment in ABI exceeds its fair value; (iii) ABI’s global platform (world’s largest brewer by volume and one of the world’s top five consumer products companies by revenue) with strong market positions in key markets, geographic diversification, experienced management team, financial condition, expected earnings and history of performance; and (iv) Altria’s ownership of restricted shares being subject to a five-year lock-up (subject to limited exceptions) ending October 10, 2021, which Altria believes provides sufficient time to allow for an anticipated recovery in the fair value of its investment in ABI.

The fair value of Altria’s acquired common shares in Cronos at December 31, 2019 was $1.2 billion compared with its carrying value of $1.0 billion.

At February 24, 2020, the fair value of Altria’s acquired common shares in Cronos was approximately $1.0 billion (which approximates its carrying value).

Altria will continue to assess the fair value of its acquired common shares in Cronos to determine if any decline in fair value below its carrying value is other than temporary.

As part of the preparation of its financial statements for the periods ended September 30, 2019 and December 31, 2019, Altria performed its respective qualitative assessments of impairment indicators for its investment in JUUL and determined that indicators of impairment existed.

At September 30, 2019, these indicators included recent significant adverse changes in both the e-vapor regulatory environment and the industry in which JUUL operates.

At December 31, 2019, Altria determined that a significant increase in the number and types of legal cases pending against JUUL in the fourth quarter of 2019 and the expectation that this trend will continue resulted in an additional indicator of impairment.

The third-quarter impairment charge was due primarily to lower e-vapor sales volume assumptions in the U.S. and international markets and a delay in achieving operating margin performance, as compared to the assumptions at the time of the JUUL Transaction.

The fourth-quarter impairment charge results substantially from increased discount rates applied to future cash flow projections, due to the significant risk created by the increase in number and types of legal cases pending against JUUL in the fourth quarter.

Although Altria has not made any assumptions or drawn any conclusions regarding the merits or likelihood of success of any of any of these cases, litigation is subject to uncertainty, and it is possible that there could be adverse developments in pending or future cases.

While JUUL secured approximately $720 million in financing in early February 2020, the uncertainty has

increased the risk that JUUL may not be able to obtain financing and/or fund working capital requirements, financial obligations and international expansion plans.

Altria believes the following factors have the most potential to impact projected future cash flows and, therefore, Altria’s valuation of JUUL: federal, state, local and international regulatory developments; JUUL’s execution of its strategy, including the success of its planned international market expansions; category growth rates; e-vapor-related litigation against JUUL; consumer preferences; and competitive activity.

One or more such changes could result in additional impairment charges to Altria’s investment in JUUL in future periods.

The fair value of Altria’s long-term [removed: debt] [added: debt, all of which] is [added: fixed-rate debt, is] subject to fluctuations resulting from changes in market interest rates.

[removed: A] [added: The following table provides the fair value of Altria’s long-term debt and the change in fair value based on a] 1% increase [added: or decrease] in market interest rates at December 31, [removed: 2019 and 2018 would decrease the fair value of Altria’s long-term debt by approximately $2.4 billion] [added: 2020] and [removed: $0.8 billion, respectively.][added: 2019:]

The applicable percentage based on Altria’s long-term senior unsecured debt ratings at December 31, [removed: 2019] [added: 2020] for borrowings under the Credit Agreement was 1.0%.

At December 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] Altria had no borrowings under the Credit Agreement.

[removed: A] [added: The following table provides (i) fair values of the Fixed-price Preemptive Rights and Cronos warrants and (ii) the change in fair value based on a] 10% increase or decrease in the quoted market price of Cronos shares at December 31, [removed: 2019 would increase or decrease the fair values of the Fixed-price Preemptive Rights and Cronos warrant by approximately $13 million] [added: 2020] and [removed: $37 million, respectively.][added: 2019:]

Interest Rate Risk

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

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

| (in billions) | | | | | | December 31, 2020 | | | | | | December 31, 2019 | | |

| Fair value | | | | | | $ | 34.7 | | | | | $ | 30.7 | |

| Decrease in fair value from a 1% increase in market interest rates | | | | | | 2.7 | | | | | | 2.4 | | |

| Increase in fair value from a 1% decrease in market interest rates | | | | | | 3.1 | | | | | | 2.7 | | |

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

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

| | | | | | | December 31, 2020 | | | | | | December 31, 2019 | | | | | | December 31, 2020 | | | | | | December 31, 2019 | | |

| (in millions) | | | | | | Fixed-price Preemptive Rights | | | | | | | | | | | | Cronos Warrant | | | | | | | | |

| Fair values | | | | | | $ | 24 | | | | | $ | 69 | | | | | $ | 139 | | | | | $ | 234 | |

| Change in fair value based on a 10% increase/decrease in the quoted market price of Cronos shares | | | | | | 6 | | | | | | 13 | | | | | | 28 | | | | | | 37 | | |

[Table of](#ib9feb7177e6c4e279899d3c68273e2f5_7) [Contents](#ib9feb7177e6c4e279899d3c68273e2f5_7)

Interest Rates

At December 31, 2019 and 2018, the fair value of Altria’s long-term debt, all of which is fixed-rate debt, was $30.7 billion and $12.5 billion, respectively.

A 1% decrease in market interest rates at December 31, 2019 and 2018 would increase the fair value of Altria’s long-term debt by approximately $2.7 billion and $0.9 billion, respectively.

At December 31, 2019, the fair values of the Fixed-price Preemptive Rights and Cronos warrant were $69 million and $234 million, respectively.

At December 31, [removed: 2019,] [added: 2020,] Altria’s [removed: wholly-owned] [added: wholly owned] subsidiaries included Philip Morris USA Inc. (“PM USA”), which is engaged in the manufacture and sale of cigarettes in the United [removed: States;] [added: States (including super premium cigarettes previously manufactured and sold by Sherman Group Holdings, LLC and its subsidiaries (“Nat Sherman”));] John Middleton Co. (“Middleton”), which is engaged in the manufacture and sale of machine-made large cigars and pipe tobacco and is a [removed: wholly-owned] [added: wholly owned] subsidiary of PM USA; [removed: Sherman Group Holdings, LLC and its subsidiaries (“Nat Sherman”), which are engaged in the manufacture and sale of super premium cigarettes and the sale of premium cigars;] UST LLC (“UST”), which through its [removed: wholly-owned] [added: wholly owned] subsidiaries, including U.S. Smokeless Tobacco Company LLC (“USSTC”) and Ste.

Michelle”), is engaged in the manufacture and sale of [added: moist] smokeless tobacco products [added: (“MST”), snus products] and wine; and Philip Morris Capital Corporation (“PMCC”), which maintains a portfolio of finance assets, substantially all of which are leveraged leases.

[removed: As discussed below,] [added: In addition, at December 31, 2020,] Altria [removed: also owns] [added: owned] an 80% interest in Helix Innovations LLC (“Helix”), which is engaged in the manufacture and sale of [removed: *on!*] oral nicotine pouches.

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

[removed: During the third quarter of] [added: In] 2019, Helix acquired Burger Söhne Holding and its subsidiaries as well as certain affiliated companies (the “Burger Group”) that are engaged in the manufacture and sale of *on!* oral nicotine pouches.

At closing, Altria [removed: indirectly] owned an 80% interest in Helix, for which Altria paid $353 million in [removed: the third quarter of] 2019.

Altria’s reportable segments are smokeable products, [removed: smokeless] [added: oral tobacco] products and wine.

For further information, see Note [removed: 16.][added: 15.]

Financial Statements and Supplementary Data of this [removed: Annual Report on] Form 10-K (“Item 8”).

[removed: At December 31, 2019,] Altria [removed: had a 10.1% ownership in ABI, which Altria] accounts for [added: its investments in ABI and Cronos] under the equity method of accounting using a one-quarter lag.

In December 2018, [removed: Altria, through a wholly-owned subsidiary, purchased] [added: Altria made an investment in JUUL by purchasing] shares of non-voting convertible common stock of JUUL [removed: Labs, Inc. (“JUUL”),] representing a 35% [removed: economic] [added: ownership] interest.

JUUL is engaged in the manufacture and sale of e-vapor products [removed: globally and is] [added: in] the U.S. [removed: leader in e-vapor.][added: and certain international markets.]

In March 2019, [removed: Altria, through a subsidiary, completed its acquisition of] [added: Altria acquired] a 45% [removed: economic and voting] [added: ownership] interest in [removed: Cronos Group Inc. (“Cronos”),] [added: Cronos,] a global cannabinoid company headquartered in Toronto, Canada.

For further discussion of Altria’s investments in equity securities, see Note [removed: 7.][added: 6.]

*Investments in Equity Securities* to the consolidated financial statements in Item 8 (“Note [removed: 7”).][added: 6”).]

[removed: Narrative Description] [added: Description] of Business

Portions of the information [removed: called for by] [added: relating to] this Item are included in *Operating Results by Business Segment* in Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of this [removed: Annual Report on] Form 10-K (“Item 7”).

Altria’s tobacco operating companies include PM USA, USSTC and other subsidiaries of UST, [removed: Middleton, Nat Sherman] [added: Middleton] and Helix.

The products of Altria’s tobacco subsidiaries include (i) smokeable tobacco products, consisting of combustible cigarettes manufactured and sold by PM USA [removed: and Nat Sherman, machine-made large cigars and pipe tobacco manufactured and sold by Middleton and] [added: (including super] premium [removed: cigars sold by Nat Sherman; and (ii) smokeless tobacco products, consisting of moist smokeless tobacco (“MST”) and snus products] [added: cigarettes previously] manufactured and sold by [removed: USSTC, and oral nicotine pouches manufactured] [added: Nat Sherman)] and [removed: sold by Helix.][added: machine-made large]

*Marlboro*, the principal cigarette brand of PM USA, has been the largest-selling cigarette brand in the United States for [removed: the past] [added: over] 45 years.

Total smokeable products segment’s cigarettes shipment volume in the United States was [removed: 101.8] [added: 101.4] billion units in [removed: 2019,] [added: 2020,] a decrease of [removed: 7.3%] [added: 0.4%] from [removed: 2018.][added: 2019.]

Total smokeable products segment’s cigars shipment volume was approximately [removed: 1.7] [added: 1.8] billion units in [removed: 2019,] [added: 2020,] an increase of [removed: 3.1%] [added: 9.0%] from [removed: 2018.][added: 2019.]

[removed: *▪*Smokeless] [added: *▪*Oral] tobacco products: USSTC is the leading producer and marketer of MST products.

The [removed: smokeless] [added: oral tobacco] products segment includes the premium brands, *Copenhagen* and *Skoal*, and value brands, *Red Seal* and *Husky,* sold by USSTC.

In addition, the [removed: smokeless] [added: oral tobacco] products segment includes *on!* oral nicotine pouches sold by Helix.

Substantially all of the [removed: smokeless] [added: oral] tobacco products are manufactured and sold to customers in the United States.

Total [removed: smokeless] [added: oral tobacco] products segment’s shipment volume was [removed: 807.0] [added: 819.6] million units in [removed: 2019, a decrease] [added: 2020, an increase] of [removed: 3.1%] [added: 1.2%] from [removed: 2018.][added: 2019, primarily driven by *on!*.]

PMI submitted a pre-market tobacco product application (“PMTA”) and modified risk tobacco product application with the FDA for its electronically heated tobacco [removed: product, *IQOS.*] [added: products, comprising the *IQOS Tobacco Heating System.*] In April 2019, the FDA authorized the PMTA for [removed: *IQOS*, which PM USA currently sells] [added: the *IQOS Tobacco Heating System* and] in [removed: limited U.S. markets.][added: July 2020, the FDA authorized the marketing of this system as a modified risk tobacco product with a reduced exposure claim.]

For [removed: further] discussion of [removed: these restrictions,] [added: laws and regulations impacting Altria’s tobacco operating companies,] see *Tobacco Space - Business Environment* in Item 7.

USSTC purchases dark fire-cured, dark air-cured and burley leaf tobaccos from domestic tobacco growers under a contract growing [removed: program as well as from leaf merchants.][added: program.]

Michelle’s total [removed: 2019] [added: 2020] wine shipment volume of approximately [removed: 8.3] [added: 7.3] million cases [removed: increased 0.6%] [added: decreased 12.0%] from [removed: 2018.][added: 2019.]

Michelle imports and markets *Antinori* [removed: and *Villa Maria Estate* wines] [added: wine] and *Champagne Nicolas Feuillatte* [added: products] in the United States.

Michelle’s strategy are expanded domestic distribution of its wines, especially in certain [removed: account] [added: retail channels] categories such as restaurants, wholesale clubs, supermarkets, wine shops and mass merchandisers, and a focus on improving product mix to higher-priced, premium products.

Michelle believes [removed: that] there is a sufficient supply of grapes and bulk wine available in the market to satisfy its current and expected production requirements.

[removed: ▪Customers: The largest customer] [added: ▪Customers: For a discussion] of PM USA, USSTC, [removed: Helix, Middleton and Nat Sherman, McLane Company, Inc., accounted for approximately 25%, 27%] [added: Helix] and [removed: 26%] [added: Middleton’s largest customers, including their percentages] of Altria’s consolidated net revenues for the years ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017, respectively.][added: 2018, see Note 15.]

Directors, Executive Officers and Corporate Governance - *Information about Our Executive Officers as of February [removed: 14, 2020*] [added: 15, 2021*] of this [removed: Annual Report on] Form 10-K.

[removed: ▪Intellectual] [added: ▪Intellectual] Property: Trademarks are of material importance to Altria and its operating companies, and are protected by registration or otherwise.

In addition, as of December 31, [removed: 2019,] [added: 2020,] the portfolio of [removed: approximately 1,150] United States patents owned by Altria’s businesses, as a whole, was material to Altria and its tobacco businesses.

However, no one patent or group of related patents was material to Altria’s business or its tobacco businesses as of December 31, [removed: 2019.][added: 2020.]

*When used in this Annual Report on Form 10-K (“Form 10-K”), the terms “Altria,” “we,” “us” and “our” refers to Altria Group, Inc. and its subsidiaries, unless the context requires otherwise.*

Altria’s 10-Year Vision is to responsibly lead the transition of adult smokers to a non-combustible future (“Vision”).

Altria is *Moving Beyond Smoking*, leading the way in moving adult smokers away from cigarettes by taking action to transition millions to potentially less harmful choices - believing it is a substantial opportunity for adult tobacco consumers, Altria’s businesses and society.

In the first quarter of 2020, Altria renamed its smokeless products segment as the oral tobacco products segment.

At December 31, 2020, Altria’s investments in equity securities consisted of Anheuser-Busch InBev SA/NV (“ABI”), Cronos Group Inc. (“Cronos”) and JUUL Labs, Inc. (“JUUL”).

Altria accounts for its equity investment in JUUL under the fair value option.

At December 31, 2020, Altria had a 10.0% ownership interest in ABI.

In November 2020, Altria exercised its rights to convert its non-voting shares to voting shares (“Share Conversion”).

Altria does not currently intend to exercise its additional governance rights obtained upon Share Conversion, including the right to elect directors to JUUL’s board, or to vote its JUUL shares other than as a passive investor, pending the outcome of the U.S. Federal Trade Commission (“FTC”) administrative complaint.

At December 31, 2020, Altria had a 35% ownership interest in JUUL.

At December 31, 2020, Altria had a 43.5% ownership interest in Cronos.

cigars and pipe tobacco manufactured and sold by Middleton; and (ii) oral tobacco products, consisting of MST and snus products manufactured and sold by USSTC and oral nicotine pouches manufactured and sold by Helix.

The oral tobacco products category volume increased in 2020 driven primarily by growth in oral nicotine pouches.

In December 2020, the FDA authorized the PMTA for a new generation of the *IQOS* *Tobacco Heating System*, *IQOS* 3*.* The modified risk tobacco product application for the original *IQOS Tobacco Heatin*g *System* does not apply to *IQOS* 3.

Future generations of the *IQOS Tobacco Heating System* will require separate PMTA and modified risk tobacco production application authorization from the FDA.

Under the terms of this program, USSTC agrees to purchase the amount of tobacco specified in the grower contracts that meets USSTC’s grade and quality standard.

For further discussion of the foregoing matters, the tobacco business environment, trends in market demand and competitive conditions, and related risks, see Item 1A.

Risk Factors of this Form 10-K (“Item 1A”) and *Tobacco Space - Business Environment* in Item 7.

For further discussion of the foregoing matters, the wine business environment, trends in market demand and competitive conditions, and related risks, see Item 1A and *Wine Segment - Business Environment* in Item 7.

Altria expects to complete the wind-down of this business by the end of 2022.

*Segment Reporting* to the consolidated financial statements in Item 8 (“Note 15”).

▪Human Capital Resources: We believe our workforce is critical to achieving our Vision.

Attracting, developing and retaining the best talent with the skills to make significant progress against our Vision is a key business priority.

Moreover, we recognize the importance of doing business the right way.

We believe culture influences employee actions and decision-making.

This is why we dedicate resources to promoting a vibrant, inclusive workplace; attracting, developing and retaining talented, diverse employees; promoting a culture of compliance and integrity; creating a safe workplace; and rewarding and recognizing employees for both the results they deliver and, importantly, how they deliver them.

*Oversight and Management*

Our Human Resources department is responsible for managing employment-related matters, including recruiting and hiring, onboarding, compensation design and implementation, performance management, advancement and succession planning and professional and learning development.

Our inclusion and diversity (“I&D”) programs are managed by our Corporate Citizenship department.

Our Board of Directors (“Board of Directors” or “Board”) and two of our Board’s committees provide oversight of human capital matters.

The Compensation and Talent Development Committee reviews initiatives and programs related to corporate culture and enterprise-wide talent development, including our I&D initiatives.

The Nominating, Corporate Governance and Social Responsibility Committee reviews our social responsibility initiatives and goals, which include our efforts to work with diverse, high-quality suppliers and to address societal issues within our companies’ supply chains.

*Inclusion and Diversity*

We recognize the critical importance of I&D in pursuing our Vision and believe in the value of a workforce composed of a broad spectrum of backgrounds and cultures.

In 2020, we established the following aspirational I&D aiming points to help guide our efforts over the next 10 years:

▪Be an inclusive place to work for all employees, regardless of level, demographic group or work function.

▪Have equal numbers of men and women among our vice president and director-level employees.

▪Increase our vice president and director-level employees who are Asian, Black, Hispanic or two or more races to at least 30%.

▪Increase our vice president and director-level employees who are LGBTQ+, a person with a disability or a veteran.

▪Have diverse functional leadership teams that reflect the organizations they lead.

▪General: Altria Group, Inc. (“Altria”) is a holding company incorporated in the Commonwealth of Virginia in 1985.

In December 2018, Altria refocused its innovative product efforts, which included the discontinuation of production and distribution of all e-vapor products by Nu Mark LLC (“Nu Mark”)*.* Prior to that time, Nu Mark was engaged in the manufacture and sale of innovative tobacco products.

In January 2017, Altria acquired Nat Sherman, which joined PM USA and Middleton as part of Altria’s smokeable products segment.

The financial results of Helix are included in Altria’s consolidated financial statements as part of its smokeless products segment, with the 20% minority ownership interest in Helix (held by the former shareholders of the Burger Group) included as a noncontrolling interest.

At September 30, 2016, Altria had an approximate 27% ownership of SABMiller plc (“SABMiller”), which Altria accounted for under the equity method of accounting.

In October 2016, Anheuser-Busch InBev SA/NV completed its business combination with SABMiller, and Altria received cash and shares representing a 9.6% ownership in the combined company (the “ABI Transaction”).

The newly formed Belgian company, which retained the name Anheuser-Busch InBev SA/NV (“ABI”), became the holding company for the combined businesses.

Subsequently, Altria purchased approximately 12 million ordinary shares of ABI, increasing Altria’s ownership to approximately 10.2% at December 31, 2016.

At December 31, 2019, Altria had a 35% economic interest in JUUL, which it accounts for as an investment in an equity security.

At December 31, 2019, Altria had a 45% economic and voting interest in Cronos, which Altria accounts for under the equity method of accounting using a one-quarter lag.

▪Source of Funds: Because Altria is a holding company, its access to the operating cash flows of its wholly-owned subsidiaries consists of cash received from the payment of dividends and distributions, and the payment of interest on intercompany loans by its subsidiaries.

In addition, Altria receives cash dividends on its interest in ABI and will continue to do so as long as ABI pays dividends.

Nat Sherman sells substantially all of its super premium cigarettes in the United States.

Nat Sherman sources all of its cigars from third-party suppliers and sells substantially all of its cigars to customers in the United States.

In December 2018, Altria refocused its innovative product efforts, which included the discontinuation of production and distribution of all e-vapor products by Nu Mark*.* Prior to that time, Nu Mark was engaged in the manufacture and sale of innovative tobacco products.

The FSPTCA went into effect in 2009 for cigarettes, cigarette tobacco and smokeless tobacco products and in August 2016 for all other tobacco products, including cigars, e-vapor products, pipe tobacco and oral nicotine products (“Other Tobacco Products”).

The FSPTCA imposes restrictions on the advertising, promotion, sale and distribution of tobacco products, including at retail.

PM USA, Middleton, Nat Sherman and USSTC are subject to quarterly user fees as a result of the FSPTCA.

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.

PM USA, Nat Sherman, USSTC and other U.S. tobacco manufacturers have agreed to other marketing restrictions in the United States as part of the settlements of state health care cost recovery actions.

Nat Sherman purchases its tobacco requirements through leaf merchants.

See Item 1A.

Risk Factors of this Annual Report on Form 10-K (“Item 1A”) and *Tobacco Space - Business Environment - Price, Availability and Quality of Tobacco, Other Raw Materials and Component Parts* in Item 7 for a discussion of risks associated with tobacco supply.

Ste.

Michelle’s business is subject to significant competition, including competition from many larger, well-established domestic and international companies, as well as from many smaller wine producers.

Wine segment competition is primarily based on quality, price, consumer and trade wine tastings, competitive wine judging, third-party acclaim and advertising.

Substantially all of Ste.

Michelle’s sales occur in the United States through state-licensed distributors.

Michelle also sells to domestic consumers through retail and e-commerce channels and exports wines to international distributors.

Adult consumer preferences among alcohol categories and within the wine category can shift due to a variety of factors, including changes in taste preferences, demographics or social trends, and changes in leisure, dining and beverage consumption patterns.

Evolving adult consumer preferences pose challenges to the wine category, which has seen slowing volume growth in the premium wine category and increases in inventory levels.

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

Further regulatory restrictions or additional excise or other taxes on the manufacture and sale of alcoholic beverages could have an adverse effect on Ste.

Michelle’s wine business.

Grape production can be adversely affected by weather and other forces that may limit production.

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

In addition, Core-Mark Holding Company, Inc. accounted for approximately 15%, 14% and 14% of Altria’s consolidated net revenues for the years ended December 31, 2019, 2018 and 2017, respectively.

Substantially all of these net revenues were reported in the smokeable products and smokeless products segments.

Sales to two distributors accounted for approximately 67% and 64% of net revenues for the wine segment for the years ended December 31, 2019 and 2018, respectively.

Sales to three distributors accounted for approximately 67% of net revenues for the wine segment for the year ended December 31, 2017.

The information required by this Item is included in Note [removed: 19] [added: 18] and Exhibits 99.1 and 99.2 to this [removed: Annual Report on] Form 10-K.

Altria’s consolidated financial statements and accompanying notes for the year ended December 31, [removed: 2019] [added: 2020] were filed on Form 8-K on January [removed: 30, 2020] [added: 28, 2021] (such consolidated financial statements and accompanying notes are also included in Item 8).

[removed: | ▪ | Engle Progeny] [added: ▪Engle Progeny] Trial [removed: Results: |][added: Results]

[removed: | ▪ | Non- Engle] [added: ▪Non-Engle] Progeny Trial [removed: Results: |][added: Results]

In *Berger* (*Cote*), as a result of the Eleventh Circuit Court of Appeals’ decision affirming the punitive damages award, PM USA recorded a pre-tax provision of $21 million, including interest, for such award in the first quarter of 2021.

PM USA previously recorded a pre-tax provision of approximately $6 million, including interest, for the compensatory damages award.

PM USA paid these amounts, plus fees in the amount of $1.5 million, in February 2021.

In *Santoro*, as a result of the Florida Supreme Court’s denial of PM USA’s appeal of the punitive damages award, PM USA recorded a pre-tax provision of $0.1 million, including interest, for such award in the first quarter of 2021.

PM USA previously recorded a pre-tax

[Table of](#ib9feb7177e6c4e279899d3c68273e2f5_7) [Contents](#ib9feb7177e6c4e279899d3c68273e2f5_7)

provision of approximately $0.8 million, including interest, for the compensatory damages award.

In January 2021, PM USA paid the recorded amounts, plus fees and additional interest.

In *Sommers*, as a result of the Florida Third District Court of Appeals’ non-appealable decision affirming an award of attorneys’ fees, costs and interest, PM USA recorded a pre-tax provision of approximately $3 million, including interest, for such award in the first quarter of 2021.

In *Greene*, a case with a trial court judgment against PM USA for $30 million, in February 2021, the trial court awarded plaintiff attorneys’ fees and costs in the amount of approximately $2.3 million.

In February 2021, PM USA served its post-trial motions, including to reverse the judgment or for a new trial.

In February 2021, the Massachusetts Supreme Judicial Court asserted jurisdiction over the appeal in *Laramie*.

▪Health Care Cost Recovery Litigation

NPM Adjustment Disputes: In connection with a proceeding pursuant to the New York settlement where an independent investigator was to determine the amounts due to the participating manufacturers from New York for 2019 and 2020, the investigator issued its determination in February 2021.

Pursuant to that determination, PM USA expects to receive approximately $56 million in April 2021 and approximately the same amount in April 2022.

▪IQOS Litigation

In the lawsuit filed by RAI Strategic Holdings, Inc. and R.J. Reynolds Vapor Co. claiming patent infringement based on the sale of the *IQOS* electronic device and *HeatSticks* in the United States, the defendants filed counterclaims alleging that plaintiffs’ e-vapor products infringe patents owned by one or more defendants.

In December 2020, the court stayed the case due to the COVID-19 pandemic.

In February 2021, the court lifted the stay with respect to defendants’ counterclaims.

▪Antitrust Litigation

The FTC has postponed the administrative trial against Altria and JUUL, originally scheduled to begin in April 2021, until June 2021.

| | |

| --- | --- |

In *Theis,* in February 2020, the Florida Second District Court of Appeal denied PM USA’s petition for review.

In the first quarter of 2020, PM USA recorded a pre-tax provision of approximately $17 million for the judgment plus interest and intends to pay this amount in the first quarter of 2020.

In *Duignan,* in February 2020, a Pinellas-County jury returned a verdict in favor of plaintiff and against PM USA and R.J. Reynolds Tobacco Company awarding approximately $3 million in compensatory damages.

The jury also awarded $12 million in punitive damages against each defendant.

PM USA intends to file post-trial motions.

In *Freeman*, in February 2020, the plaintiff withdrew the petition for review by the Florida Supreme Court of the verdict in favor of PM USA.

In *Principe*, in February 2020, a Miami-Dade county jury returned a verdict in favor of plaintiff and against PM USA awarding approximately $11 million in compensatory damages.

There was no claim for punitive damages.

[removed: FORM 10-K][added: FORM 10-K]

[removed: |] ☒ [removed: |] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [removed: |]

For the fiscal year [removed: endedDecember] [added: ended December] 31, [removed: 2019][added: 2020]

[removed: |] ☐ [removed: |] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [removed: |]

Commission File [removed: Number 1-08940][added: Number 1-08940]

| Virginia | | | [added: | | | | | |] 13-3260245 | [added: | |]

| (State or other jurisdiction [removed: of incorporation] [added: of incorporation] or organization) | | | [added: | | | | | |] (I.R.S. [removed: Employer Identification] [added: Employer Identification] No.) | [added: | |]

| 6601 West Broad Street, | [added: | |] Richmond, | [added: | |] Virginia | [added: | |] 23230 | [added: | |]

| (Address of principal executive offices) | | | [added: | | | | | |] (Zip Code) | [added: | |]

[removed: 804\-274-2200][added: 804-274-2200]

| Title of each class | [added: | |] Trading Symbols | [added: | |] Name of each exchange on which registered | [added: | |]

| Common Stock, $0.33 1/3 par value | [added: | |] MO | [added: | |] New York Stock Exchange | [added: | |]

| 1.000% Notes due 2023 | [added: | |] MO23A | [added: | |] New York Stock Exchange | [added: | |]

| 1.700% Notes due 2025 | [added: | |] MO25 | [added: | |] New York Stock Exchange | [added: | |]

| 2.200% Notes due 2027 | [added: | |] MO27 | [added: | |] New York Stock Exchange | [added: | |]

| 3.125% Notes due 2031 | [added: | |] MO31 | [added: | |] New York Stock Exchange | [added: | |]

| Large accelerated filer | | [added: | | | |] þ | | [added: | | | |] Accelerated filer | | [added: | | | |] ☐ | [added: | |]

| Non-accelerated filer | | [added: | | | |] ☐ | | [added: | | | |] Smaller reporting company | | [added: | | | |] ☐ | [added: | |]

| | | | | [added: | | | | | | | |] Emerging growth company | | [added: | | | |] ☐ | [added: | |]

As of June 30, [removed: 2019,] [added: 2020,] the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately [removed: $88] [added: $73] billion based on the closing sale price of the common stock as reported on the New York Stock Exchange.

| Class | [added: | |] Outstanding at February [removed: 14, 2020] [added: 15, 2021] | | | [added: | | |]

| Common Stock, $0.33 1/3 par value | [removed: 1,858,366,804] | | [added: 1,858,689,654 | | |] shares | [added: | |]

| Portions of the registrant’s definitive proxy statement for use in connection with its annual meeting of shareholders to be held on May [removed: 14, 2020,] [added: 20, 2021,] to be filed with the Securities and Exchange Commission on or about April [removed: 2, 2020,] [added: 8, 2021,] are incorporated by reference into Part III hereof. | [added: | |]

| | [added: | |] TABLE OF CONTENTS | | [added: | | | |]

| | | [added: | | | |] Page | [added: | |]

| PART I | | | [added: | | | | | |]

| Item 1. | [removed: [Business](#s824750B73DCC518AAEF2C3DC378AF354)] | [removed: [1](#s824750B73DCC518AAEF2C3DC378AF354)] | [added: [Business](#ib9feb7177e6c4e279899d3c68273e2f5_13) | | | [1](#ib9feb7177e6c4e279899d3c68273e2f5_13) | | |]

| Item 1A. | [added: | |] [Risk [removed: Factors](#s72E718E0DE1C5344AE87FC6242E19956)] [added: Factors](#ib9feb7177e6c4e279899d3c68273e2f5_16)] | [removed: [4](#s72E718E0DE1C5344AE87FC6242E19956)] | [added: | [5](#ib9feb7177e6c4e279899d3c68273e2f5_16) | | |]

| Item 1B. | [added: | |] [Unresolved Staff [removed: Comments](#sADCBB68EBC32555DA52EDB4A63A2C234)] [added: Comments](#ib9feb7177e6c4e279899d3c68273e2f5_19)] | [removed: [11](#sADCBB68EBC32555DA52EDB4A63A2C234)] | [added: | [14](#ib9feb7177e6c4e279899d3c68273e2f5_19) | | |]

| Item 2. | [removed: [Properties](#s4640E0FEEF4C5B5D9D8DAC5D7548E172)] | [removed: [11](#s4640E0FEEF4C5B5D9D8DAC5D7548E172)] | [added: [Properties](#ib9feb7177e6c4e279899d3c68273e2f5_22) | | | [14](#ib9feb7177e6c4e279899d3c68273e2f5_22) | | |]

| Item 3. | [added: | |] [Legal [removed: Proceedings](#s2C2E9274A6455CE892D43F5708166D44)] [added: Proceedings](#ib9feb7177e6c4e279899d3c68273e2f5_25)] | [removed: [12](#s2C2E9274A6455CE892D43F5708166D44)] | [added: | [14](#ib9feb7177e6c4e279899d3c68273e2f5_25) | | |]

| Item 4. | [added: | |] [Mine Safety [removed: Disclosures](#sB19ED964329C5362B5B1F76E2356DCCB)] [added: Disclosures](#ib9feb7177e6c4e279899d3c68273e2f5_28)] | [removed: [12](#sB19ED964329C5362B5B1F76E2356DCCB)] | [added: | [15](#ib9feb7177e6c4e279899d3c68273e2f5_28) | | |]

| PART II | | | [added: | | | | | |]

| Item 5. | [added: | |] [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#s41C0C05EBC5D5093AAC5D686FDBF65F4)] [added: Securities](#ib9feb7177e6c4e279899d3c68273e2f5_34)] | [removed: [13](#s41C0C05EBC5D5093AAC5D686FDBF65F4)] | [added: | [16](#ib9feb7177e6c4e279899d3c68273e2f5_34) | | |]

| Item 6. | [added: | |] [Selected Financial [removed: Data](#sF9A912B4E1B75AD2A70881129D419112)] [added: Data](#ib9feb7177e6c4e279899d3c68273e2f5_37)] | [removed: [14](#sF9A912B4E1B75AD2A70881129D419112)] | [added: | [17](#ib9feb7177e6c4e279899d3c68273e2f5_37) | | |]

| Item 7. | [added: | |] [Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations](#sCFE6C7FCA8035AC1A32A415BA1584D48)] [added: Operations](#ib9feb7177e6c4e279899d3c68273e2f5_40)] | [removed: [14](#sCFE6C7FCA8035AC1A32A415BA1584D48)] | [added: | [17](#ib9feb7177e6c4e279899d3c68273e2f5_40) | | |]

| Item 7A. | [added: | |] [Quantitative and Qualitative Disclosures About Market [removed: Risk](#s223F85D0A7F854268424250605422C0D)] [added: Risk](#ib9feb7177e6c4e279899d3c68273e2f5_70)] | [removed: [43](#s223F85D0A7F854268424250605422C0D)] | [added: | [53](#ib9feb7177e6c4e279899d3c68273e2f5_70) | | |]

| Item 8. | [added: | |] [Financial Statements and Supplementary [removed: Data](#s2ADE22857FB45ADABAF48017A139EC4C)] [added: Data](#ib9feb7177e6c4e279899d3c68273e2f5_73)] | [removed: [44](#s2ADE22857FB45ADABAF48017A139EC4C)] | [added: | [54](#ib9feb7177e6c4e279899d3c68273e2f5_73) | | |]

| Item 9. | [added: | |] [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#s549D8D12EFCA53449A5C95394598F275)] [added: Disclosure](#ib9feb7177e6c4e279899d3c68273e2f5_229)] | [removed: [111](#s549D8D12EFCA53449A5C95394598F275)] | [added: | [113](#ib9feb7177e6c4e279899d3c68273e2f5_229) | | |]

| Item 9A. | [added: | |] [Controls and [removed: Procedures](#s3393865682BC532F90C6C6FA6C56F9C4)] [added: Procedures](#ib9feb7177e6c4e279899d3c68273e2f5_232)] | [removed: [111](#s3393865682BC532F90C6C6FA6C56F9C4)] | [added: | [113](#ib9feb7177e6c4e279899d3c68273e2f5_232) | | |]

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

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

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

| | | | | | | | | |

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

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

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

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

| | | | | | | | | |

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

| | | | | | | | | |

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

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| [Signatures](#ib9feb7177e6c4e279899d3c68273e2f5_265) | | | | | | [119](#ib9feb7177e6c4e279899d3c68273e2f5_265) | | |

| | | | | | | | | |

| | |

| --- | --- |

| | | | |

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

| | | |

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

| | | | | | | |

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

| |

| --- |

| [Signatures](#sFC2664251B9C5E50A39A4E4509283967) | | [118](#sFC2664251B9C5E50A39A4E4509283967) |

[removed: These properties serve] [added: At December 31, 2020, ALCS owned one property in Richmond, Virginia that serves] as the headquarters facilities for Altria, PM USA, USSTC, [removed: Middleton] [added: Middleton, Helix] and certain other subsidiaries.

At December 31, [removed: 2019,] [added: 2020,] PM USA owned and operated a manufacturing facility located in Richmond, Virginia that PM USA uses in the manufacturing of cigarettes (smokeable products segment).

PM USA leases portions of this facility to [removed: Middleton and USSTC] [added: other Altria subsidiaries] for use in the manufacturing of cigars (smokeable products segment) and [removed: smokeless] [added: MST, snus and oral nicotine pouch products (oral] tobacco [removed: products, respectively.][added: products segment).]

At December 31, [removed: 2019,] [added: 2020,] the [removed: smokeless] [added: oral tobacco] products segment had various manufacturing and processing facilities, the most significant of which are located in [removed: in] Nashville, Tennessee.

At December 31, [removed: 2019,] [added: 2020,] the wine segment owned and operated various wine-making facilities in Washington, California and Oregon.

At December 31, 2019, ALCS owned one property and leased a second in Richmond, Virginia.

[Table of](#ib9feb7177e6c4e279899d3c68273e2f5_7) [Contents](#ib9feb7177e6c4e279899d3c68273e2f5_7)

The graph below compares the cumulative total shareholder return of Altria’s common stock for the last five years with the cumulative total return for the same period of the S&P 500 [removed: Index,] [added: Index and] the S&P Food, Beverage and Tobacco Industry Group Total Return [removed: Index(1) and the Altria Peer Group.(2) The graph assumes the investment of $100 in common stock and each of the indices as of the market close on December 31, 2014 and the reinvestment of all dividends on a quarterly basis.][added: Index.]

[removed: ][added: ]

| Date | | [added: | | | |] Altria | | | | [added: | |] S&P Food, Beverage & Tobacco | | | | [removed: Altria Peer Group] | | [removed: | |] S&P 500 | | |

| December [removed: 2014] [added: 2015] | | [removed: $] | [removed: 100.00] | | | [removed: $] [added: $] | [removed: 100.00] [added: 100.00] | | | [added: | |] $ | 100.00 | | | [added: | |] $ | 100.00 | |

At February [removed: 14, 2020,] [added: 15, 2021,] there were approximately [removed: 59,000] [added: 54,000] holders of record of Altria’s common stock.

Altria [added: has a history of paying cash dividends and] expects to continue to [removed: maintain] [added: do so with] a [added: long-term objective of a] dividend payout ratio target of approximately 80% of its adjusted diluted earnings per share.

Future dividend payments remain subject to the discretion of [removed: Altria’s] [added: the] Board of [removed: Directors (the “Board of Directors”).][added: Directors.]

Issuer Purchases of Equity Securities During the Quarter [removed: Ended December] [added: Ended December] 31, [removed: 2019][added: 2020]

In July 2019, the Board of Directors authorized a [removed: new] $1.0 billion share repurchase [removed: program (the “July 2019 share repurchase program”), which Altria expects to complete by the end of 2020.][added: program.]

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

Altria’s share repurchase activity for each of the three months in the period ended December 31, [removed: 2019,] [added: 2020,] was as follows:

| Period | | [added: | | | |] Total Number of Shares Purchased (1) | | | [added: | | |] Average Price Paid Per Share | | | | [added: | |] Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | | [added: | | |] Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs | | |

(1) The total number of shares purchased [removed: includes (a) shares purchased under the July 2019 share repurchase program (which totaled 5,085,064 shares in November and 5,059,892 shares in December) and (b)] [added: represents] shares withheld by Altria in an amount equal to the statutory withholding taxes for [removed: holders who] vested [removed: in] stock-based awards [removed: (which totaled 51 shares in October and 29 shares in December).][added: previously granted to eligible employees.]

The graph assumes the investment of $100 in common stock and each of the indices as of the market close on December 31, 2015 and the reinvestment of all dividends on a quarterly basis.

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

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

| December 2016 | | | | | | $ | 120.46 | | | | | $ | 108.76 | | | | | $ | 111.95 | |

| December 2017 | | | | | | $ | 131.84 | | | | | $ | 122.19 | | | | | $ | 136.38 | |

| December 2018 | | | | | | $ | 96.13 | | | | | $ | 103.96 | | | | | $ | 130.39 | |

| December 2019 | | | | | | $ | 103.78 | | | | | $ | 129.88 | | | | | $ | 171.44 | |

| December 2020 | | | | | | $ | 93.00 | | | | | $ | 137.10 | | | | | $ | 202.98 | |

[Table of](#ib9feb7177e6c4e279899d3c68273e2f5_7) [Contents](#ib9feb7177e6c4e279899d3c68273e2f5_7)

In April 2020, the Board rescinded the $500 million remaining in this program as part of Altria’s efforts to enhance its liquidity position in response to the COVID-19 pandemic.

There were no share repurchases made in 2020 under a publicly announced program.

In January 2021, the Board authorized a new $2.0 billion share repurchase program, which Altria expects to complete by June 30, 2022.

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

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

| October 1- October 31, 2020 | | | | | | 836 | | | | | | $ | 37.17 | | | | | — | | | | | | $ | — | |

| November 1- November 30, 2020 | | | | | | — | | | | | | $ | — | | | | | — | | | | | | $ | — | |

| December 1- December 31, 2020 | | | | | | 24 | | | | | | $ | 43.00 | | | | | — | | | | | | $ | — | |

| For the Quarter Ended December 31, 2020 | | | | | | 860 | | | | | | $ | 37.33 | | | | | — | | | | | | | | |

Item 6.

Selected Financial Data.

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

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

| December 2015 | | $ | 123.10 | | | $ | 114.74 | | | $ | 114.52 | | | $ | 101.37 | |

| December 2016 | | $ | 148.29 | | | $ | 124.79 | | | $ | 122.19 | | | $ | 113.49 | |

| December 2017 | | $ | 162.29 | | | $ | 140.20 | | | $ | 132.03 | | | $ | 138.26 | |

| December 2018 | | $ | 118.33 | | | $ | 119.28 | | | $ | 125.88 | | | $ | 132.19 | |

| December 2019 | | $ | 127.75 | | | $ | 149.03 | | | $ | 157.27 | | | $ | 173.80 | |

(1) To better align with comparable investment opportunities, Altria changed from the self-selected Altria Peer Group to the S&P Food, Beverage & Tobacco Industry Group Total Return Index for the year ended December 31, 2019.

Both indices are presented, in accordance with SEC rules, which require that if a company selects a different index from that used in the immediately preceding fiscal year, the company’s stock performance must be compared against both the newly selected index and previous index in the year of change.

(2) In 2019, the Altria Peer Group consisted of U.S.-headquartered consumer product companies that are competitors to Altria’s 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 Brands, Inc., General Mills, Inc., The Hershey Company, Kellogg Company, Keurig Dr Pepper Inc., Kimberly-Clark Corporation, The Kraft Heinz Company, Molson Coors Brewing Company, Mondelēz International, Inc. and PepsiCo, Inc.

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 November 9, 2016, ConAgra Foods, Inc. (CAG) spun off Lamb Weston Holdings, Inc. (LW) to its shareholders and then changed its name from ConAgra Foods, Inc. to Conagra Brands, Inc. (CAG).

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

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

| October 1- October 31, 2019 | | 51 | | | $ | 42.02 | | | — | | | $ | 1,000,000,000 | |

| November 1- November 30, 2019 | | 5,085,064 | | | $ | 48.03 | | | 5,085,064 | | | $ | 755,740,364 | |

| December 1- December 31, 2019 | | 5,059,921 | | | $ | 50.54 | | | 5,059,892 | | | $ | 500,000,064 | |

| For the Quarter Ended December 31, 2019 | | 10,145,036 | | | $ | 49.29 | | | 10,144,956 | | | | | |

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

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

| (in millions of dollars, except per share data) | 2019 | | | | 2018 | | | | 2017 | | | | 2016 | | | | 2015 | | |

| Net revenues | $ | 25,110 | | | $ | 25,364 | | | $ | 25,576 | | | $ | 25,744 | | | $ | 25,434 | |

| Net earnings (losses) (1)(2)(3) | (1,298 | | ) | | 6,967 | | | | 10,227 | | | | 14,244 | | | | 5,243 | | |

| Net earnings (losses) attributable to Altria (1)(2)(3) | (1,293 | | ) | | 6,963 | | | | 10,222 | | | | 14,239 | | | | 5,241 | | |

| Basic EPS — net earnings (losses) attributable to Altria (1)(2)(3)(4) | (0.70 | | ) | | 3.69 | | | | 5.31 | | | | 7.28 | | | | 2.67 | | |

| Diluted EPS — net earnings (losses) attributable to Altria (1)(2)(3)(4) | (0.70 | | ) | | 3.68 | | | | 5.31 | | | | 7.28 | | | | 2.67 | | |

| Dividends declared per share | 3.28 | | | | 3.00 | | | | 2.54 | | | | 2.35 | | | | 2.17 | | |

| Total assets (1)(3)(5)(6) | 49,271 | | | | 55,459 | | | | 43,034 | | | | 45,764 | | | | 31,296 | | |

| Long-term debt (5) | 27,042 | | | | 11,898 | | | | 13,030 | | | | 13,881 | | | | 12,843 | | |

| Total debt (5) | 28,042 | | | | 25,746 | | | | 13,894 | | | | 13,881 | | | | 12,847 | | |

(1) Certain 2019 amounts include the impact of Altria’s impairment of its JUUL equity securities and the loss on Cronos-related financial instruments.

For further discussion, see Note 7.

(2) Certain 2019, 2018 and 2017 amounts include the impact of the enactment of the Tax Reform Act.

For further discussion, see Note 15.

*Income Taxes* to the consolidated financial statements in Item 8 (“Note 15”).

(3) Certain 2016 amounts include the impact of the gain on the ABI/SABMiller business combination.

(4) “EPS” is defined as basic and diluted earnings (losses) per share.

(5) Certain 2019 and 2018 amounts include the impact of Altria’s investments in JUUL and Cronos.

For further discussion, see Note 7, Note 9. *Short-Term Borrowings and Borrowing Arrangements* to the consolidated financial statements in Item 8 (“Note 9”) and Note 10.

*Long-Term Debt* to the consolidated financial statements in Item 8 (“Note 10”)*.*

(6) Certain immaterial prior year amounts have been adjusted to conform with the current year’s presentation.

The Selected Financial Data should be read in conjunction with Item 7 and Item 8.

| at December 31, | [removed: 2019] | | | | [added: | | | | 2020 | | | | | | 2019 | | | | | |] 2018 | | |

| Assets | | | | | | | | [added: | | | |]

| Cash and cash equivalents | [added: | | | | | | | |] $ | [removed: 2,117] [added: 4,945] | | | [added: | |] $ | [added: 2,117 | | | | | $ |] 1,333 | |

| Receivables | [removed: 152] | | [added: 137] | | [removed: 142] | | | [added: | 152 | | |]

| Inventories: | | | | | | | | [added: | | | |]

| Leaf tobacco | [removed: 874] | | [added: 844] | | [removed: 940] | | | [added: | 874 | | |]

| Other raw materials | [removed: 192] | | [added: 200] | | [removed: 186] | | | [added: | 192 | | |]

| Work in process | [removed: 696] | | [added: 502] | | [removed: 647] | | | [added: | 696 | | |]

| Finished product | [removed: 531] | | [added: 420] | | [removed: 558] | | | [added: | 531 | | |]

| Income taxes | [removed: 116] | | | | [removed: 167] | | | [added: | (29) | | | | | | 89 | | | | | | 218 | | |]

| Other current assets | [removed: 146] | | [added: 69] | | [removed: 326] | | | [added: | 262 | | |]

| Total current assets | [removed: 4,824] | | [added: 7,117] | | [removed: 4,299] | | | [added: | 4,824 | | |]

| Property, plant and equipment, at cost: | | | | | | | | [added: | | | |]

| Land and land improvements | [removed: 353] | | [added: 348] | | [removed: 309] | | | [added: | 353 | | |]

| Buildings and building equipment | [removed: 1,461] | | [added: 1,480] | | [removed: 1,442] | | | [added: | 1,461 | | |]

| Machinery and equipment | [removed: 2,998] | | [added: 3,010] | | [removed: 2,981] | | | [added: | 2,998 | | |]

| Construction in progress | [removed: 262] | | [added: 312] | | [removed: 218] | | | [added: | 262 | | |]

| Less accumulated depreciation | [removed: 3,075] | | [added: 3,138] | | [removed: 3,012] | | | [added: | 3,075 | | |]

| Goodwill | [added: | |] 5,177 | | | | [removed: 5,196] | | [added: 5,177] | [added: | |]

| Other intangible assets, net | [removed: 12,687] | | [added: 12,615] | | [removed: 12,279] | | | [added: | 12,687 | | |]

[removed: |] Investments in [removed: equity securities | 23,581 | | | | 30,496 | | |][added: Equity Securities]

| Other assets | [removed: 1,003] | | [added: 964] | | [removed: 1,251] | | | [added: | 1,003 | | |]

| Total Assets | [added: | |] $ | [removed: 49,271] [added: 47,414] | | | [added: | |] $ | [removed: 55,459] [added: 49,271] | |

| Liabilities | | | | | | | | [added: | | | |]

| [removed: Short-term] [added: Repayment of short-term] borrowings | [removed: $] | [removed: —] | | | [removed: $] | [removed: 12,704] | | [added: | (3,000) | | | | | | (12,800) | | | | | | — | | |]

| Current portion of long-term debt | [removed: 1,000] | | [added: $] | [added: 1,500] | [removed: 1,144] | | | [added: | $ | 1,000 | |]

| Accounts payable | [removed: 325] | | [added: 380] | | [removed: 399] | | | [added: | 325 | | |]

| Accrued liabilities: | | | | | | | | [added: | | | |]

| Marketing | [removed: 393] | | [added: 523] | | [removed: 586] | | | [added: | 393 | | |]

| Settlement charges | [removed: 3,346] | | [added: 3,564] | | [removed: 3,454] | | | [added: | 3,346 | | |]

| Other | [removed: 1,545] | | [added: 1,494] | | [removed: 1,403] | | | [added: | 1,545 | | |]

| Dividends payable | [removed: 1,565] | | [added: 1,602] | | [removed: 1,503] | | | [added: | 1,565 | | |]

| Total current liabilities | [removed: 8,174] | | [added: 9,063] | | [removed: 21,193] | | | [added: | 8,174 | | |]

| Long-term debt | [removed: 27,042] | | [added: 27,971] | | [removed: 11,898] | | | [added: | 27,042 | | |]

| Deferred income taxes | [removed: 5,083] | | [added: 4,532] | | [removed: 4,993] | | | [added: | 5,083 | | |]

| Accrued pension costs | [removed: 473] | | [added: 551] | | [removed: 544] | | | [added: | 473 | | |]

| Accrued postretirement health care costs | [removed: 1,797] | | [added: 1,951] | | [removed: 1,749] | | | [added: | 1,797 | | |]

| Other liabilities | [removed: 345] | | [added: 381] | | [removed: 254] | | | [added: | 345 | | |]

| Total liabilities | [removed: 42,914] | | [added: 44,449] | | [removed: 40,631] | | | [added: | 42,914 | | |]

| Contingencies (Note [removed: 19)] [added: 18)] | | | | | | | | [added: | | | |]

| | | | 1,966 | | | | | | 2,293 | | |

| | | | 5,150 | | | | | | 5,074 | | |

| | | | 2,012 | | | | | | 1,999 | | |

| Investments in equity securities ($1,868 million and $303 million at December 31, 2020 and 2019, respectively, measured at fair value) | | | 19,529 | | | | | | 23,581 | | |

[Table of](#ib9feb7177e6c4e279899d3c68273e2f5_7) [Contents](#ib9feb7177e6c4e279899d3c68273e2f5_7)

[Table of](#ib9feb7177e6c4e279899d3c68273e2f5_7) [Contents](#ib9feb7177e6c4e279899d3c68273e2f5_7)

[Table of](#ib9feb7177e6c4e279899d3c68273e2f5_7) [Contents](#ib9feb7177e6c4e279899d3c68273e2f5_7)

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

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

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

[Table of](#ib9feb7177e6c4e279899d3c68273e2f5_7) [Contents](#ib9feb7177e6c4e279899d3c68273e2f5_7)

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

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

| Pension plan contributions | | | | | | | | | (33) | | | | | | (56) | | | | | | (41) | | |

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

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

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

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

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

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

(1) 2020 reflects inventory-related amounts associated with the Wine Business Strategic Reset.

[Table of](#ib9feb7177e6c4e279899d3c68273e2f5_7) [Contents](#ib9feb7177e6c4e279899d3c68273e2f5_7)

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

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

| for the years ended December 31, | | | | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | |

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

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

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

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

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

[Table of](#ib9feb7177e6c4e279899d3c68273e2f5_7) [Contents](#ib9feb7177e6c4e279899d3c68273e2f5_7)

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

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

| Net earnings (losses) (2) | | | — | | | | | | — | | | | | | 4,467 | | | | | | — | | | | | | — | | | | | | (16) | | | | | | 4,451 | | |

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

| Balances, December 31, 2020 | | | $ | 935 | | | | | $ | 5,910 | | | | | $ | 34,679 | | | | | $ | (4,341) | | | | | $ | (34,344) | | | | | $ | 86 | | | | | $ | 2,925 | |

*When used in these notes, the term “Altria” refers to Altria Group, Inc. and its subsidiaries, unless the context requires otherwise.*

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

At December 31, 2020, Altria’s investments in equity securities consisted of Anheuser-Busch InBev SA/NV (“ABI”), Cronos Group Inc. (“Cronos”) and JUUL Labs, Inc. (“JUUL”).

At December 31, 2020, Altria had a 10.0% ownership interest in ABI.

| | | | | | | | |

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

| | 2,293 | | | | 2,331 | | |

| | 5,074 | | | | 4,950 | | |

| | 1,999 | | | | 1,938 | | |

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

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

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

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

| Pension and postretirement plans contributions | | | (56 | | ) | | (41 | | ) | | (294 | | ) |

| Repayment of short-term borrowings | | | (12,800 | | ) | | — | | | | — | | |

(1) Restricted cash consisted of cash deposits collateralizing appeal bonds posted by PM USA to obtain stays of judgments pending appeals.

*Contingencies*.

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

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

| Balances, December 31, 2016 | $ | 935 | | | $ | 5,893 | | | $ | 36,906 | | | $ | (2,052 | ) | | $ | (28,912 | ) | | $ | 3 | | | $ | 12,773 | |

Prior to that time, Nu Mark was engaged in the manufacture and sale of innovative tobacco products.

The financial results of Helix are included in Altria’s consolidated financial statements as part of its smokeless products segment, with the 20% minority ownership interest in Helix (held by the former shareholders of the Burger Group) included as a noncontrolling interest.

The final purchase price allocation, which is subject to post-closing adjustments, will be completed by the third quarter of 2020.

At December 31, 2019, Altria had a 35% economic interest in JUUL, which Altria accounts for as an investment in an equity security.

On January 1, 2019, Altria adopted ASU No. 2016-02, *Leases (Topic 842)* and all related ASU amendments (collectively “ASU No. 2016-02”), which requires entities to recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements.

Altria has elected to apply the guidance retrospectively at the beginning of the period of adoption.

As a result, comparative periods prior to adoption will continue to be presented in accordance with prior lease guidance, including disclosures.

As a result of the adoption, Altria and its subsidiaries,

as lessees, recorded right-of-use assets and lease liabilities of $179 million at January 1, 2019 for its leases, which were all operating leases.

There was no cumulative effect adjustment to the opening balance of earnings reinvested in the business.

Right-of-use assets and lease liabilities on Altria’s consolidated balance sheet at December 31, 2019 were not materially different than the amounts recorded upon adoption of ASU No. 2016-02.

Additionally, in accordance with ASU No. 2016-02, lessor accounting for leveraged leases that commenced before the January 1, 2019 adoption date of ASU No. 2016-02 is unchanged unless there is a change in the scope of, or the consideration for, such leases.

As a result, adoption of ASU No. 2016-02 as it relates to PMCC’s leveraged leases had no impact on Altria’s consolidated financial statements at the adoption date.

During 2019, PMCC had no new leases nor any changes in the scope of or the consideration for its existing leveraged leases.

During the fourth quarter of 2019, in conjunction with its annual impairment testing, Altria adopted ASU No. 2017-04, *Intangibles-Goodwill and Other (Topic 350)*: *Simplifying the Test for Goodwill Impairment* (“ASU 2017-04”), which simplifies how an entity is required to test goodwill for impairment.

On December 31, 2019, Altria adopted ASU No. 2018-14, *Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20)*: *Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans* (“ASU No. 2018-14”), which amends certain defined benefit plan disclosures.

The adoption of ASU No. 2018-14 had no impact on the amount of defined benefit plan assets, obligations or expenses recognized by Altria’s businesses.

Altria reviews its equity investment in JUUL (which is accounted for as an equity security without a readily determinable fair value) for impairment by performing a qualitative assessment of impairment indicators.

| | |

| --- | --- |

| | | | |

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

Receivables, which primarily reflect sales of wine produced and/or distributed by Ste.

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

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

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’s definitive proxy statement for use in connection with its Annual Meeting of Shareholders to be held on May [removed: 14, 2020] [added: 20, 2021] that is expected to be filed with the SEC on or about April [removed: 2, 2020] [added: 8, 2021] (the “proxy statement”), and, except as indicated therein, made a part hereof.

Information about Our Executive Officers as of February [removed: 14, 2020:][added: 15, 2021:]

| Name | [added: | |] Office | [added: | |] Age | [added: | |]

| Daniel J. Bryant | [added: | |] Vice President and Treasurer | [removed: 50] | [added: | 51 | | |]

| Steven D’Ambrosia | [added: | |] Vice President and Controller | [removed: 53] | [added: | 54 | | |]

| Murray R. Garnick | [added: | |] Executive Vice President and General Counsel | [removed: 60] | [added: | 61 | | |]

| William F. Gifford, Jr. | [removed: Vice Chairman and] [added: | |] Chief [removed: Financial] [added: Executive] Officer | [removed: 49] | [added: | 50 | | |]

| Salvatore Mancuso | [removed: Senior] [added: | | Executive] Vice [removed: President, Finance] [added: President] and [removed: Procurement] [added: Chief Financial Officer] | [removed: 54] | [added: | 55 | | |]

| Heather A. Newman | [added: | |] Senior Vice President, Corporate Strategy | [removed: 42] | [added: | 43 | | |]

| W. Hildebrandt Surgner, Jr. | [added: | |] Vice President, Corporate Secretary and Associate General Counsel | [removed: 54] | [added: | 55 | | |]

| Charles N. Whitaker | [added: | |] Senior Vice President, Chief Human Resources Officer and Chief Compliance Officer | [removed: 53] | [added: | 54 | | |]

Altria has also adopted a code of business conduct [added: and ethics that applies to the members of its Board of Directors.]

The information on the respective websites of Altria and its subsidiaries is not, and shall not be deemed to be, a part of this [removed: Annual Report on] Form 10-K or incorporated into any other filings Altria makes with the SEC.

| | | | | | | | | |

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

| Jody L. Begley | | | Executive Vice President and Chief Operating Officer | | | 49 | | |

Effective September 1, 2020, Mr. Begley, previously Senior Vice President, Tobacco Products of Altria, was elected Executive Vice President and Chief Operating Officer of Altria.

Effective April 16, 2020, Mr. Gifford, previously Vice Chairman and Chief Financial Officer of Altria, was elected Chief Executive Officer of Altria.

Effective April 16, 2020, Mr. Mancuso, previously Senior Vice President, Finance and Procurement of Altria, was elected Executive Vice President and Chief Financial Officer of Altria.

[Table of](#ib9feb7177e6c4e279899d3c68273e2f5_7) [Contents](#ib9feb7177e6c4e279899d3c68273e2f5_7)

| | | |

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

| Jody L. Begley | Senior Vice President, Tobacco Products | 48 |

| Howard A. Willard III | Chairman and Chief Executive Officer | 56 |

Effective January 1, 2020, Ms. Newman was elected Senior Vice President, Corporate Strategy of Altria.

Ms. Newman has been employed by Altria subsidiaries in positions across their businesses, including as President and Chief Executive Officer of PM USA and in various Brand Management and Sales roles, since 1998.

and ethics that applies to the members of its Board of Directors.

The number of shares to be issued upon exercise or vesting and the number of shares remaining available for future issuance under Altria’s equity compensation plans at December 31, [removed: 2019,] [added: 2020,] were as follows:

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

| Equity compensation plans approved by shareholders (1) | [removed: 2,378,531 (2)] | [removed: $—] | [removed: 36,909,792 (3)] [added: 2,771,586 (2)] | [added: | | $— | | | 25,586,394 (3) | | |]

[removed: | (1) | The] [added: (1)The] following plans have been approved by Altria shareholders and have shares referenced in column (a) or column (c): the [removed: 2010] [added: 2015] Performance Incentive Plan, the [removed: 2015] [added: 2020] Performance Incentive Plan and the 2015 Stock Compensation Plan for Non-Employee Directors. [removed: |]

[removed: | (2) | Represents 1,909,642] [added: (2)Represents 2,239,379] shares of restricted stock units and [removed: 468,889] [added: 532,207] shares that may be issued upon vesting of performance stock units if maximum performance measures are achieved. [removed: |]

[removed: | (3) | Includes 36,078,232] [added: (3)Includes 24,827,160] shares available under the [removed: 2015] [added: 2020] Performance Incentive Plan and [removed: 831,560] [added: 759,234] shares available under the 2015 Stock Compensation Plan for Non-Employee Directors, and excludes shares reflected in column (a). [removed: |]

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

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

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

| | | | |

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

| | |

| --- | --- |

[Table of](#ib9feb7177e6c4e279899d3c68273e2f5_7) [Contents](#ib9feb7177e6c4e279899d3c68273e2f5_7)

| | [added: | |] Page | [added: | |]

| Consolidated Balance Sheets at December 31, [removed: 2019] [added: 2020] and [removed: 2018] [added: 2019] | [removed: [44](#s4AACED228CC35D63AC1D5B5DE10CFAD3)] | [added: | [54](#ib9feb7177e6c4e279899d3c68273e2f5_76) | | |]

| Consolidated Statements of Earnings (Losses) for the years ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017] [added: 2018] | [removed: [46](#s9924836F6492548489F34DDC5E1C039D)] | [added: | [56](#ib9feb7177e6c4e279899d3c68273e2f5_82) | | |]

| Consolidated Statements of Comprehensive Earnings (Losses) for the years ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017] [added: 2018] | [removed: [47](#sFA39B4DB18545358B6D6A20231C53F20)] | [added: | [57](#ib9feb7177e6c4e279899d3c68273e2f5_85) | | |]

| Consolidated Statements of Cash Flows for the years ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017] [added: 2018] | [removed: [48](#s6714E85C5EBB5A8082880053C502ABCD)] | [added: | [58](#ib9feb7177e6c4e279899d3c68273e2f5_88) | | |]

| Consolidated Statements of Stockholders’ Equity for the years ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017] [added: 2018] | [removed: [50](#s0489B9C5232A5016984303B6BC9D8507)] | [added: | [60](#ib9feb7177e6c4e279899d3c68273e2f5_91) | | |]

| Notes to Consolidated Financial Statements | [removed: [51](#sF15D66738579529EB424D1B200B8D3A7)] | [added: | [61](#ib9feb7177e6c4e279899d3c68273e2f5_97) | | |]

| Report of Independent Registered Public Accounting Firm | [removed: [107](#s2008F08B8D8E578ABE5C30B4750F8480)] | [added: | [109](#ib9feb7177e6c4e279899d3c68273e2f5_223) | | |]

| Report of Management on Internal Control Over Financial Reporting | [removed: [110](#s06196079047B5E10B813E0EDB11A73DB)] | [added: | [112](#ib9feb7177e6c4e279899d3c68273e2f5_226) | | |]

In accordance with Regulation S-X Rule 3-09, the audited financial statements of ABI for the year ended December 31, [removed: 2019] [added: 2020] will be filed by amendment within six months after ABI’s year ended December 31, [removed: 2019.][added: 2020.]

(b) The following exhibits are filed as part of this [removed: Annual Report on] Form 10-K:

| | [added: | |] 2.1 | | [added: | | | |] [Distribution Agreement by and between Altria Group, Inc. and Kraft Foods Inc. (now known as Mondelēz International, Inc.), dated as of January 31, 2007. Incorporated by reference to Altria Group, Inc.’s Current Report on Form 8-K filed on January 31, 2007 (File No. 1-08940).](http://www.sec.gov/Archives/edgar/data/764180/000119312507017014/dex21.htm) | [added: | |]

| | [added: | |] 2.2 | | [added: | | | |] [Distribution Agreement by and between Altria Group, Inc. and Philip Morris International Inc., dated as of January 30, 2008. Incorporated by reference to Altria Group, Inc.’s Current Report on Form 8-K filed on January 30, 2008 (File No. 1-08940).](http://www.sec.gov/Archives/edgar/data/764180/000119312508015121/dex21.htm) | [added: | |]

| | [added: | |] 2.3 | | [added: | | | |] [Class C-1 Common Stock Purchase Agreement, dated as of December 20, 2018, by and among JUUL Labs, Inc., Altria Group, Inc. and Altria Enterprises LLC. Incorporated by reference to Altria Group, Inc.’s Current Report on Form 8-K filed on December 20, 2018 (File No. 1-08940).](http://www.sec.gov/Archives/edgar/data/764180/000119312518353970/d660871dex21.htm) | [added: | |]

| | [removed: 2.4] | | [added: 2.5 | | | | | |] [Relationship Agreement, dated as of December 20, 2018, by and among JUUL Labs, Inc., Altria Group, Inc. and Altria Enterprises LLC. Incorporated by reference to Altria Group, Inc.’s Current Report on Form 8-K filed on December 20, 2018 (File No. 1-08940).](http://www.sec.gov/Archives/edgar/data/764180/000119312518353970/d660871dex22.htm) | [added: | |]

| | [added: | |] 3.1 | | [added: | | | |] [Articles of Amendment to the Restated Articles of Incorporation of Altria Group, Inc. and Restated Articles of Incorporation of Altria Group, Inc. Incorporated by reference to Altria Group, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2002 (File No. 1-08940).](http://www.sec.gov/Archives/edgar/data/764180/000095011703001167/ex3-1.htm) | [added: | |]

| | [added: | |] 3.2 | | [added: | | | |] [Amended and Restated By-Laws of Altria Group, Inc., effective as of May [removed: 17, 2018.] [added: 14, 2020.] Incorporated by reference to Altria Group, Inc.’s Current Report on Form 8-K filed on [removed: February 1, 2018] [added: May 18, 2020] (File No. [removed: 1-08940).](http://www.sec.gov/Archives/edgar/data/764180/000076418018000013/exhibit31amendedandrestate.htm)] [added: 1-08940).](http://www.sec.gov/Archives/edgar/data/764180/000076418020000052/exhibit31may2020.htm)] | [added: | |]

| | [added: | |] 4.1 | | [added: | | | |] [Description of Altria Group, Inc.’s [removed: Securities.](https://www.sec.gov/Archives/edgar/data/764180/000076418020000018/exhibit41descriptionof.htm)] [added: Registered Securities.](https://www.sec.gov/Archives/edgar/data/764180/000076418021000037/exhibit41descriptionofregi.htm)] | [added: | |]

| | [added: | |] 4.2 | | [added: | | | |] Indenture between Altria Group, Inc. and The Bank of New York (as successor in interest to JPMorgan Chase Bank, formerly known as The Chase Manhattan Bank), as Trustee, dated as of December 2, 1996. Incorporated by reference to Altria Group, Inc.’s Registration Statement on Form S-3/A filed on January 29, 1998 (No. 333-35143). | [added: | |]

| | [added: | |] 4.3 | | [added: | | | |] [First Supplemental Indenture to Indenture, dated as of December 2, 1996, between Altria Group, Inc. and The Bank of New York (as successor in interest to JPMorgan Chase Bank, formerly known as The Chase Manhattan Bank), as Trustee, dated as of February 13, 2008. Incorporated by reference to Altria Group, Inc.’s Current Report on Form 8-K filed on February 15, 2008 (File No. 1-08940).](http://www.sec.gov/Archives/edgar/data/764180/000119312508032447/dex41.htm) | [added: | |]

| | [added: | |] 4.4 | | [added: | | | |] [Indenture among Altria Group, Inc., as Issuer, Philip Morris USA Inc., as Guarantor, and Deutsche Bank Trust Company Americas, as Trustee, dated as of November 4, 2008. Incorporated by reference to Altria Group, Inc.’s Registration Statement on Form S-3 filed on November 4, 2008 (No. 333-155009).](http://www.sec.gov/Archives/edgar/data/764180/000119312508224082/dex45.htm) | [added: | |]

| | [added: | |] 4.5 | | [added: | | | |] [5-Year Revolving Credit Agreement, dated as of August 1, 2018, among Altria Group, Inc., the lenders named therein 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 1, 2018 (File No. 1-08940).](http://www.sec.gov/Archives/edgar/data/764180/000119312518234104/d572226dex101.htm) | [added: | |]

| | [added: | |] 4.6 | | [added: | | | |] [Amendment No. 1 to the Credit Agreement, dated January 25, 2019, among Altria Group, Inc. the Lenders 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 January 31, 2019 (File No. 1-08940).](http://www.sec.gov/Archives/edgar/data/764180/000119312519023405/d699612dex101.htm) | [added: | |]

| | [added: | |] 4.7 | | [added: | | | |] 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. | [added: | |]

| | [added: | |] 10.1 | | [added: | | | |] Comprehensive Settlement Agreement and Release related to settlement of Mississippi health care cost recovery action, dated as of October 17, 1997. Incorporated by reference to Altria Group, Inc.’s Annual Report on Form 10-K for the year ended December 31, 1997 (File No. 1-08940). | [added: | |]

| | [added: | |] 10.2 | | [added: | | | |] Settlement Agreement related to settlement of Florida health care cost recovery action, dated August 25, 1997. Incorporated by reference to Altria Group, Inc.’s Current Report on Form 8-K filed on September 3, 1997 (File No. 1-08940). | [added: | |]

| | [added: | |] 10.3 | | [added: | | | |] Comprehensive Settlement Agreement and Release related to settlement of Texas health care cost recovery action, dated as of January 16, 1998. Incorporated by reference to Altria Group, Inc.’s Current Report on Form 8-K filed on January 28, 1998 (File No. 1-08940). | [added: | |]

| | [added: | |] 10.4 | | [added: | | | |] Settlement Agreement and Stipulation for Entry of Judgment regarding the claims of the State of Minnesota, dated as of May 8, 1998. Incorporated by reference to Altria Group, Inc.’s Quarterly Report on Form 10-Q for the period ended March 31, 1998 (File No. 1-08940). | [added: | |]