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Altria

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Altria Group, Inc., through its subsidiaries, manufactures and sells smokeable and oral tobacco products in the United States. The company provides cigarettes primarily under the Marlboro brand; cigars and pipe tobacco principally under the Black & Mild brand; and moist smokeless tobacco products under the Copenhagen, Skoal, Red Seal, and Husky brands, as well as provides on! oral nicotine pouches. It sells its tobacco products primarily to wholesalers, including distributors; and large retai...

What changed in Altria's 10-K — 2024 vs 2025

Top changes in Altria's 2025 10-K

507 paragraphs added · 537 removed · 396 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Other wholly owned subsidiaries include Altria Group Distribution Company (“AGDC”), which provides sales and distribution services to our domestic operating companies, and Altria Client Services LLC (“ALCS”), which provides various support services to our companies in areas such as legal, regulatory, research and product development, consumer engagement, finance, human resources and external affairs.
Other wholly owned subsidiaries include Altria Group Distribution Company (“AGDC”), which provides domestic sales and distribution services to our operating companies, and Altria Client Services LLC (“ALCS”), which provides various support services to our companies in areas such as legal, regulatory, research and product development, consumer engagement, finance, human resources and external affairs.
The market for tobacco products is highly competitive, characterized by brand recognition and loyalty, with product quality, taste, price, product innovation, marketing, packaging and distribution constituting the significant methods of competition. Promotional activities include, in certain instances and where permitted by law, allowances, the distribution of incentive items, price promotions, product promotions, coupons and other discounts.
The market for tobacco products is highly competitive, characterized by brand recognition and loyalty, with product quality, taste, price, product innovation, marketing, packaging, distribution and promotional activities constituting the significant methods of competition. Promotional activities include, in certain instances and where permitted by law, allowances, the distribution of incentive items, price promotions, product promotions, coupons and other discounts.
We also offer up to 12 weeks paid family leave to bond with a newborn child, the placement of a child for adoption or foster care, or to care for a family member who has a serious health condition.
We also offer up to 12 weeks of paid family leave to bond with a newborn child, the placement of a child for adoption or foster care, or to care for a family member who has a serious health condition.
If we adjust for differentiating factors that legitimately influence pay, salaries of our female employees were 99.8% of those of our male employees, and salaries of our employees of color were 99.9% of those of our white employees.
If we adjust for differentiating factors that legitimately influence pay, salaries of our female employees were 99.9% of those of our male employees, and salaries of our employees of color were 99.9% of those of our white employees.
Attracting, Developing, Retaining and Deploying Talent We are focused on identifying the most qualified talent and investing in leader and employee development to build a diverse talent pipeline prepared and willing to lead at every level. Additionally, we are dedicated to being an inclusive place to work for all employees, regardless of personal background or work function.
Attracting, Developing, Retaining and Deploying Talent We are focused on identifying the most qualified talent and investing in leader and employee development to build a diverse talent pipeline prepared and willing to lead at every level. Additionally, we are dedicated to being an engaging place to work for all employees, regardless of personal background or work function.
Survey results, including comparisons to prior results, are shared with our employees and our Board and are used to modify or enhance our human capital management programs. We also monitor our progress toward building a diverse organization through various metrics, including comparisons to external benchmarks, and report workforce data annually.
Survey results, including comparisons to prior results, are shared with our employees and our Board and are used to modify or enhance our human capital management programs. We also monitor our progress toward building our organization through various metrics, including comparisons to external benchmarks, and report workforce data annually.
We and our subsidiaries (and former subsidiaries) are also subject to various federal, state and local laws and regulations concerning the discharge of materials into the environment, or otherwise related to environmental protection, including, in the United States: the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act and the Comprehensive Environmental Response, Compensation and Liability Act (commonly known as “Superfund”), which can impose joint and several liability on each responsible 4 Table of Contents party.
We and our subsidiaries (and former subsidiaries) are also subject to various federal, state and local laws and regulations concerning the discharge of materials into the environment, or otherwise related to environmental protection, including, in the United States: the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act and the Comprehensive Environmental Response, Compensation and Liability Act (commonly known as “Superfund”), which can impose joint and several liability on each responsible party.
In addition, as of December 31, 2024, the portfolio of United States patents owned by our businesses, as a whole, was material to us and our businesses. However, no one patent or group of related patents was material to our businesses as of December 31, 2024.
In addition, as of December 31, 2025, the portfolio of United States patents owned by our businesses, as a whole, was material to us and our businesses. However, no one patent or group of related patents was material to our businesses as of December 31, 2025.
We recognize the critical importance of these efforts toward pursuing our Vision and believe in the value of a workforce composed of a broad and diverse spectrum of backgrounds, skills, experiences and cultures. Our salaried entry-level recruitment efforts focus on building relationships with university students, internship opportunities and partnerships with organizations that support a broad range of students.
We recognize the critical importance of these efforts toward pursuing our Vision and believe in the value of a workforce composed of a broad and diverse spectrum of backgrounds, skills, experiences and cultures. Our salaried entry-level recruitment efforts include building relationships with university students, internship opportunities and partnerships with organizations that support a broad range of students.
This is why we dedicate resources to promoting a vibrant, inclusive workplace; attracting, developing, retaining and deploying talented employees to build a high-performing and diverse talent pipeline; 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.
This is why we dedicate resources to promoting an engaging workplace; attracting, developing, retaining and deploying talented employees to build a high-performing and diverse talent pipeline; 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.
Federal Cigarette Labeling and Advertising Act. Horizon is responsible for the U.S. commercialization of current and future HTS products owned by either party and, upon authorization by the FDA of a pre-market tobacco application (“PMTA”), will become the exclusive entity through which the parties market and commercialize HTS products in the United States.
Federal Cigarette Labeling and Advertising Act. Horizon is responsible for the U.S. commercialization of current and future HTS products owned by either party and, upon authorization by the FDA, will become the exclusive entity through which the parties market and commercialize HTS products in the United States.
Based on the most recent annual analysis we conducted in 2024, for employees performing the same or similar duties regardless of any differentiating factors, such as performance and tenure, salaries of our female employees were 98.2% of those of our male employees, and salaries of our employees of color were 98.2% of those of our white employees.
Based on the most recent annual analysis we conducted in 2025, for employees performing the same or similar duties regardless of any differentiating factors, such as performance and tenure, salaries of our female employees were 98.4% of those of our male employees, and salaries of our employees of color were 98.5% of those of our white employees.
Total smokeable products segment’s cigars shipment volume was approximately 1.8 billion units in 2024, a decrease of 1.5% from 2023. ▪ Oral tobacco products: USSTC is the leading producer and marketer of MST products. The oral tobacco products segment includes the premium brands, Copenhagen and Skoal , and a value brand, Red Seal , sold by USSTC.
Total smokeable products segment’s cigars shipment volume was approximately 1.8 billion units in 2025, an increase of 1.8% from 2024. ▪ Oral tobacco products: USSTC is the leading producer and marketer of MST products. The oral tobacco products segment includes the premium brands, Copenhagen and Skoal , and a value brand, Red Seal , sold by USSTC.
We complement these recruiting efforts with hiring experienced employees with demonstrated skills and/or leadership capabilities. To help our employees succeed in their roles and develop in their careers, we emphasize ongoing training and leadership development opportunities. Building skills that drive innovation and aligning our employees to our Vision is important for our long-term success.
We also hire experienced employees with demonstrated skills and/or leadership capabilities. To help our employees succeed in their roles and develop in their careers, we emphasize ongoing training and leadership development opportunities. Building skills that drive innovation and aligning our employees to our Vision is important for our long-term success.
Smokeless Tobacco Company LLC (“USSTC”), is engaged in the manufacture and sale of moist smokeless tobacco (“MST”) products; Helix Innovations LLC (“Helix”), which operates in the United States, and its foreign affiliates (“Helix International”), which operate in certain other countries, are engaged in the manufacture and sale of oral nicotine pouches; and NJOY, LLC (“NJOY”), which is engaged in the manufacture and sale of e-vapor products.
Smokeless Tobacco Company LLC (“USSTC”), is engaged in the manufacture and sale of moist smokeless tobacco (“MST”) products; Helix Innovations LLC (“Helix”) and its foreign affiliates (“Helix International”), which are engaged in the manufacture and sale of oral nicotine pouches; and NJOY, LLC (“NJOY”), which is engaged in the manufacture and sale of e-vapor products.
(“PM USA”), which is engaged in the manufacture and sale of cigarettes in the United States; John Middleton Co. (“Middleton”), which is engaged in the manufacture and sale of machine-made large cigars and is a wholly owned subsidiary of PM USA; UST LLC (“UST”), which, through its wholly owned subsidiary U.S.
Our wholly owned subsidiaries include Philip Morris USA Inc. (“PM USA”), which is engaged in the manufacture and sale of cigarettes; John Middleton Co. (“Middleton”), which is engaged in the manufacture and sale of machine-made large cigars and is a wholly owned subsidiary of PM USA; UST LLC (“UST”), which, through its wholly owned subsidiary U.S.
Food and Drug Administration (“FDA”). ▪ Other tobacco products: In connection with the joint venture agreement with JTIUH, Horizon will market and commercialize HTS products, which are defined in the joint venture agreement as products that include both (i) a tobacco heating device intended to heat the consumable without combusting and (ii) a consumable that meets the definition of a cigarette under the U.S.
Contingencies to our consolidated financial statements in Item 8 (“Note 18”). ▪ Other tobacco products: In connection with the joint venture agreement with JTIUH, Horizon will market and commercialize HTS products, which are defined in the joint venture agreement as products that include both (i) a tobacco heating device intended to heat the consumable without combusting and (ii) a consumable that meets the definition of a cigarette under the U.S.
Oversight and Management Our Human Resources department is responsible for managing employment-related matters, including recruiting and hiring, onboarding, compensation and benefits design and implementation, performance management, career management and succession planning and professional and learning development. Our inclusion, diversity and equity efforts are managed by our Corporate Citizenship department.
Oversight and Management Our Human Resources department is responsible for managing employment-related matters, including recruiting and hiring, onboarding, compensation and benefits design and implementation, performance management, career management and succession planning and professional and learning development.
Twenty-six percent of our employees were hourly manufacturing employees who are members of labor unions subject to collective bargaining agreements. We believe we engage and collaborate effectively with our hourly employees, as demonstrated by the positive working relationship between our companies and the unions.
Number of Employees and Labor Relations At December 31, 2025, we employed approximately 5,900 people. Twenty-six percent of our employees were hourly manufacturing employees who are members of labor unions subject to collective bargaining agreements. We believe we engage and collaborate effectively with our hourly employees, as demonstrated by the positive working relationship between our companies and the unions.
Total oral tobacco products segment’s shipment volume was 774.7 million units in 2024, a decrease of 1.0% from 2023. ▪ E-Vapor products: NJOY contracts with third-party importers to supply all of its products and sells its e-vapor products to customers in the United States. NJOY ACE is the principal e-vapor product of NJOY.
Total oral tobacco products segment’s shipment volume was 732.4 million units in 2025, a decrease of 5.5% from 2024. 1 Table of Contents ▪ E-Vapor products: NJOY contracts with third-party importers to supply all of its products and sells its e-vapor products to customers in the United States.
In the opinion of our management, however, compliance with environmental laws and regulations, including the payment of any remediation costs or damages and related expenditures, has not had, and is not expected to have, a material adverse effect on our business, results of operations, capital expenditures, financial position or cash flows.
In the opinion of our management, however, compliance with environmental laws and regulations, including the payment of any remediation costs or damages and related expenditures, has not had, and is not expected to have, a material adverse effect on our business, results of operations, capital expenditures, financial position or cash flows. 4 Table of Contents For further discussion of the foregoing matters, the business environment, trends in market demand and competitive conditions, and related risks, see Item 1A.
Our data-driven efforts focus on removing barriers to equal opportunity in compliance with applicable law. Work Modernization As part of our multi-phase Optimize & Accelerate initiative (“Initiative”), we plan to increase our organization’s speed, efficiency and effectiveness by centralizing work, outsourcing certain transactional tasks and streamlining, automating and standardizing processes.
Our data-driven efforts focus on removing barriers to equal opportunity in compliance with applicable law. 3 Table of Contents Work Modernization We announced a multi-phase Optimize & Accelerate initiative (“Initiative”) in October 2024 designed to enhance organizational speed, efficiency and effectiveness. The Initiative includes centralizing work, outsourcing certain transactional activities and streamlining, automating and standardizing processes across the enterprise.
Available Information We are required to file annual, quarterly and current reports, proxy statements and other information with the U.S. Securities and Exchange Commission (“SEC”). The SEC maintains an Internet website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers from which investors can electronically access our SEC filings.
The SEC maintains an Internet website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers from which investors can electronically access our SEC filings.
In addition, all suppliers of goods and services that maintain operations in high-risk countries are subject to social compliance audits of those operations. More information about efforts discussed in this section can be found in our Corporate Responsibility Reports at www.altria.com/ under Responsibility. ▪ Intellectual Property: Trademarks are of material importance to us and are protected by registration or otherwise.
More information about efforts discussed in this section can be found in our Corporate Responsibility Reports on our website (www.altria.com). ▪ Intellectual Property: Trademarks are of material importance to us and are protected by registration or otherwise.
We work to manage this risk by, among other things, targeting total compensation packages to be above peer companies with which we compete for talent. Depending on employee level, total compensation includes different elements – base salary, annual cash incentives, long-term equity and cash incentives and benefits. We are committed to pay equity across our companies.
Depending on employee level, total compensation includes different elements – base salary, annual cash incentives, long-term equity and cash incentives and benefits. We are committed to pay equity across our companies.
Our Board of Directors (“Board of Directors” or “Board”) and the Compensation and Talent Development Committee provide oversight of human capital matters, including reviewing initiatives and programs related to corporate culture and enterprise-wide talent development.
Our Board of Directors (“Board of Directors” or “Board”) and the Compensation and Talent Development Committee provide oversight of human capital matters, including reviewing initiatives and programs related to corporate culture and enterprise-wide talent development. 2 Table of Contents One of our core Responsibility Focus Areas revolves around our people as we are focused on our employees’ safety, wellbeing and opportunity.
Total smokeable products segment’s cigarettes shipment volume in the United States was 68.6 billion units in 2024, a decrease of 10.2% from 2023. ▪ Cigars: Middleton is engaged in the manufacture and sale of machine-made large cigars.
Marlboro , the principal cigarette brand of PM USA, has been the largest-selling cigarette brand in the United States for over 50 years. Total smokeable products segment’s cigarettes shipment volume in the United States was 61.8 billion units in 2025, a decrease of 10.0% from 2024. ▪ Cigars: Middleton is engaged in the manufacture and sale of machine-made large cigars.
Upon PMTA authorization of Ploom HTS products, JTIUH will supply Ploom HTS devices and PM USA will manufacture Marlboro HTS consumables for U.S. commercialization. As of February 26, 2025, there are no products in the U.S. marketplace from the joint venture.
Upon FDA authorization of Ploom HTS products, JTIUH will supply Ploom HTS devices and PM USA will manufacture Marlboro HTS consumables for U.S. commercialization.
PM USA also purchases a portion of its tobacco requirements through leaf merchants. USSTC purchases dark fire-cured, dark air-cured and burley leaf tobaccos from domestic tobacco growers under a contract growing program. 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 standards.
PM USA also purchases a portion of its tobacco requirements through leaf merchants. Middleton purchases burley, dark air-cured and flue-cured leaf tobaccos through leaf merchants. Middleton does not have a contract growing program. USSTC purchases dark fire-cured, dark air-cured and burley leaf tobaccos from domestic tobacco growers under a contract growing program.
Our investments include Anheuser-Busch InBev SA/NV (“ABI”) and Cronos Group Inc. (“Cronos”), which we account for under the equity method of accounting using a one-quarter lag. In March 2024, we sold a portion of our investment in ABI (“ABI Transaction”).
Segment Reporting to our consolidated financial statements in Item 8. Financial Statements and Supplementary Data of this Form 10-K (“Item 8”). Our investments include Anheuser-Busch InBev SA/NV (“ABI”) and Cronos Group Inc. (“Cronos”), which we account for under the equity method of accounting using a one-quarter lag.
NJOY’s commercialized product portfolio of tobacco and menthol e-vapor products is fully covered by marketing granted orders (“MGO”) from the U.S.
NJOY’s product portfolio of tobacco and menthol e-vapor products is covered by marketing granted orders (“MGO”) from the U.S. Food and Drug Administration (“FDA”). NJOY ACE , the principal e-vapor product of NJOY, is subject to an exclusion order and cease-and-desist orders issued by the U.S.
We also have long-term agreements that resolve any collective bargaining dispute through binding arbitration, which further demonstrates our trust-based relationship with the unions. Supply Chain Human Capital Matters We support efforts to address human capital concerns in the tobacco supply chain.
We also have long-term agreements that resolve any collective bargaining dispute through binding arbitration, which further demonstrates our trust-based relationship with the unions. Supply Chain Human Capital Matters We manage human capital risks across our global supply chain through a risk‑based due diligence approach focused on identifying and addressing potential labor‑related issues.
Compensation and Benefits Our compensation and benefits programs are designed to help us attract, retain and motivate strong talent. However, we recognize that the decreasing social acceptance of tobacco usage may impact our ability to attract and retain talent with skills necessary for us to achieve our Vision.
However, we recognize that the decreasing social acceptance of tobacco usage may impact our ability to attract and retain talent with skills necessary for us to achieve our Vision. We work to manage this risk by, among other things, targeting total compensation packages to be above peer companies with which we compete for talent.
Our Occupational Safety and Health Administration recordable injury rate for 2024 was 1.8 % (versus 1.2% for 2023) and remains below the benchmark for companies in the U.S. Beverage and Tobacco Product Manufacturing industry classification. Number of Employees and Labor Relations At December 31, 2024, we employed approximately 6,200 people.
We strive for continuous improvement in our employee safety program through Safety Management System infrastructure. Our Occupational Safety and Health Administration recordable injury rate for 2025 was 1.7 % (versus 1.8% for 2024) and remains below the benchmark for companies in the U.S. Beverage and Tobacco Product Manufacturing industry classification.
Directors, Executive Officers and Corporate Governance - Information about Our Executive Officers as of February 14, 2025 of this Form 10-K. 2 Table of Contents ▪ Human Capital Resources: We believe our workforce is critical to achieving our Vision.
Directors, Executive Officers and Corporate Governance - Information about Our Executive Officers as of February 13, 2026 of this Form 10-K. ▪ Human Capital Resources: We believe our workforce is critical to achieving our Vision. Attracting, developing, retaining and deploying the best talent with the skills to make significant progress toward our Vision is a key business priority.
We have a leading portfolio of tobacco products for U.S. tobacco consumers age 21+. Our Vision is to responsibly lead the transition of adult smokers to a smoke-free future (“Vision”).
We have a leading portfolio of tobacco products for U.S. tobacco consumers age 21+. We are Moving Beyond Smoking TM , by responsibly transitioning adult smokers to a smoke-free future, competing vigorously for existing smoke-free adult nicotine consumers and exploring new growth opportunities - beyond the United States and beyond nicotine (“Vision”).
Our tobacco subsidiaries believe there is an adequate supply of tobacco in the world markets to satisfy their current and anticipated production requirements.
Our tobacco subsidiaries believe there is an adequate supply of tobacco in the world markets to satisfy their current and anticipated production requirements. Other Matters ▪ Customers: For a discussion of our largest customers, including their percentages of our consolidated net revenues for the years ended December 31, 2025, 2024 and 2023, see Note 15.
The joint venture entity, Horizon Innovations LLC (“Horizon”), is structured to exist in perpetuity and is responsible for the U.S. commercialization of HTS products owned by either party. We own a 75% economic interest in Horizon with JTIUH owning a 25% economic interest.
At December 31, 2025, we owned a 75% economic interest in Horizon Innovations LLC (“Horizon”), a joint venture with JTI (US) Holding, Inc. (“JTIUH”), a subsidiary of Japan Tobacco Inc. (“Japan Tobacco”), which owned the remaining 25% economic interest. Horizon is responsible for the U.S. marketing and commercialization of heated tobacco stick (“HTS”) products owned by either party.
Attracting, developing, retaining and deploying the best talent with the skills to make significant progress toward 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.
Moreover, we recognize the importance of doing business the right way. We believe culture influences employee actions and decision making.
Our all other category included (i) NJOY (beginning June 1, 2023); (ii) Horizon; (iii) Helix International; and (iv) other business activities, all of which consists of research and development expense related to certain new product platforms and technologies. For further information, see Note 17. Segment Reporting to our consolidated financial statements in Item 8. (“Note 17”).
At December 31, 2025, our reportable segments were smokeable products, oral tobacco products and e-vapor products. Our all other category included (i) Horizon; (ii) Helix International; and (iii) other business activities, which primarily consists of research and development (“R&D”) expense related to certain new product platforms and technologies. For further information, see Note 15.
Employees have access to a wide variety of development programs, including new employee onboarding, in-person, virtual and self-guided training programs, technical training, including training to maintain professional certifications, and our educational refund program for continuing education. 3 Table of Contents We also have an employee recognition program that allows leaders and employees to reward and recognize colleagues for their outstanding performance and everyday excellence.
The Human Resources department leads our learning and development efforts partnering with learning professionals embedded in functions throughout our operating and services companies. Employees have access to a wide variety of development programs, including new employee onboarding, in-person, virtual and self-guided training programs, technical training, including training to maintain professional certifications, and our educational refund program for continuing education.
For additional information, see Our Business in Item 7. Workplace Safety Our goal is for every employee to experience an injury-free career, which is supported by our Safety Management System (“SMS”). We strive for continuous improvement in our employee safety program through SMS infrastructure.
To support these enhanced business processes, we are implementing technology solutions, organizational design changes and deploying enterprise-wide and function-specific change management programs to facilitate workforce adoption. For additional information, see Our Business in Item 7. Workplace Safety Our goal is for every employee to experience an injury-free career, which is supported by our Safety Management System.
We regularly conduct confidential employee engagement surveys to seek feedback on a variety of topics, including employee satisfaction, support from leadership, corporate culture and culture of compliance. In addition, in 2024, these quarterly employee surveys sought feedback on topics such as workplace flexibility, workload, inclusion, equal opportunity, development opportunities, management support, compliance and understanding of business strategy.
In addition, in 2025, these quarterly employee surveys sought feedback on topics such as employee engagement, inclusion, equal opportunity, compliance, management support, modernization efforts and employees’ understanding and belief in business strategy and organizational changes.
Goodwill and Other Intangible Assets, net to our consolidated financial statements in Item 8 (“Note 6”). ▪ Distribution, Competition and Raw Materials: Our tobacco subsidiaries sell their tobacco products principally to wholesalers (including distributors) and large retail organizations, including chain stores.
As of February 25, 2026, there are no products in the U.S. marketplace from the joint venture. ▪ Distribution, Competition and Raw Materials: Our tobacco subsidiaries sell their tobacco products principally to wholesalers (including distributors) and large retail organizations, including chain stores.
Middleton purchases burley, dark air-cured and flue-cured leaf tobaccos through leaf merchants. Middleton does not have a contract growing program. Helix, through an affiliate, and NJOY purchase tobacco-derived nicotine materials from suppliers and believe their suppliers can satisfy current and anticipated future production requirements.
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 standards. Helix, through an affiliate, and NJOY purchase tobacco-derived nicotine materials from suppliers and believe their suppliers can satisfy current and anticipated future production requirements.
For further discussion of the foregoing matters, the 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 Critical Accounting Estimates and Operating Results by Business Segment - Business Environment in Item 7.
Risk Factors of this Form 10-K (“Item 1A”) and Critical Accounting Estimates and Operating Results by Business Segment - Business Environment in Item 7. Available Information We are required to file annual, quarterly and current reports, proxy statements and other information with the U.S. Securities and Exchange Commission (“SEC”).
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We are Moving Beyond Smoking TM , 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, our businesses and society. Our wholly owned subsidiaries include Philip Morris USA Inc.
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We operate primarily within the United States and generate substantially all of our revenue from domestic customers.
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On June 1, 2023, we completed our acquisition of NJOY Holdings, Inc. (“NJOY Holdings”), the parent of NJOY (“NJOY Transaction”). As a result of the acquisition, NJOY became a wholly owned subsidiary of Altria. For further details, see Note 3. Acquisition of NJOY to our consolidated financial statements in Item 8.
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International Trade Commission (“ITC”) prohibiting the importation and sale of NJOY ACE in the United States, as further discussed in Note 18.
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Financial Statements and Supplementary Data of this Form 10-K (“Item 8”). In October 2022, we entered into a joint venture with JTI (US) Holding, Inc. (“JTIUH”), a subsidiary of Japan Tobacco Inc. (“Japan Tobacco”), for the U.S. marketing and commercialization of heated tobacco stick (“HTS”) products.
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Segment Reporting to our consolidated financial statements in Item 8 (“Note 15”). ▪ Executive Officers of Altria: The disclosure regarding executive officers is included in Item 10.
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Horizon is governed by a board of managers, which is comprised of four individuals designated by PM USA and three individuals designated by JTIUH. For further information, see Other Tobacco Products below. At December 31, 2024, our reportable segments were smokeable products and oral tobacco products.
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We invest in our people to support their development while creating a safe and empowering environment where we believe our employees can thrive. We regularly report specific goals and progress metrics related to these efforts on our website (www.altria.com). Compensation and Benefits Our compensation and benefits programs are designed to help us attract, retain and motivate strong talent.
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We used the proceeds from the sale to fund the repurchase of our common stock through accelerated share repurchase (“ASR”) transactions. In March 2023, we entered into a stock transfer agreement with JUUL Labs, Inc (“JUUL”) pursuant to which we transferred to JUUL all of our beneficially owned JUUL equity securities.
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We also have an employee recognition program that allows leaders and employees to reward and recognize colleagues for their outstanding performance and everyday excellence. We regularly conduct confidential employee engagement surveys to seek feedback on a variety of topics, including employee satisfaction, support from leadership, corporate culture and culture of compliance.
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For further information on our current and former investments, the ABI Transaction and the ASR transactions, see Note 8. Investments in Equity Securities to our consolidated financial statements in Item 8 (“Note 8”) and Note 12. Capital Stock to our consolidated financial statements in Item 8 (“Note 12”), respectively.
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We are realizing process efficiencies, improving task turnaround times through centralized and automated workflows and enhancing process effectiveness. Our Accelerated Business Solutions organization is assisting with sustaining these improvements and driving further efficiency and process optimization by using technology and through collaboration with external service providers.
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Marlboro , the principal cigarette brand of PM USA, has been the largest-selling cigarette brand 1 Table of Contents in the United States for 50 years.
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This approach includes supplier assessments, contractual requirements and targeted monitoring, with emphasis on higher‑risk geographies, sectors and categories. Where applicable, we use industry-led initiatives, including the GAP Connections Program and the Sustainable Tobacco Program, to evaluate supplier practices against labor management and human rights standards.
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On April 30, 2024, we assigned the exclusive U.S. commercialization rights to the IQOS Tobacco Heating System (“ IQOS System”) to Philip Morris International Inc. (“PMI”) pursuant to the terms of a purchase agreement entered into with PMI in October 2022. For further discussion of the agreement with PMI see Note 6.
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Notably, in 2025, 100% of our leaf and nicotine suppliers participated in these programs, underscoring our commitment to upholding high standards throughout our supply network. In addition, our Supplier Code of Conduct sets expectations for all suppliers, including prohibitions on child labor, forced labor and other human rights violations.
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Other Matters ▪ Customers: For a discussion of our largest customers, including their percentages of our consolidated net revenues for the years ended December 31, 2024, 2023 and 2022, see Note 17. ▪ Executive Officers of Altria: The disclosure regarding executive officers is included in Item 10.
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We conduct social compliance audits of select suppliers, prioritizing those in high‑risk regions, and require corrective actions when findings occur. Suppliers operating in high‑risk countries are subject to enhanced due diligence and ongoing monitoring.
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“Supporting our People and our Communities” is one of our Responsibility Focus Areas, which includes two goals related to developing a high-performing and diverse talent pipeline: (i) enhance the diversity of our organization and leadership teams while building an inclusive and equitable culture; and (ii) build employee capability and well-being to succeed in uncertain and rapidly changing environments.
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The Human Resources department leads our learning and development efforts partnering with learning professionals embedded in functions throughout our operating and services companies.
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Our Accelerated Business Solutions (“ABS”) organization will be responsible for driving efficiency and process improvement across our companies in partnership with external service providers. We are implementing organizational design changes to support our enhanced business processes. In addition, we are supporting the workforce with change management plans at the enterprise and function levels.
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For example, in our domestic tobacco supply chain, in 2024, all of our domestic tobacco growers participated in the Good Agricultural Practices Certification Program to assess growers’ compliance with practices related to labor management and all of our tobacco suppliers participated in the tobacco industry’s Sustainable Tobacco Program, which includes standards related to human and labor rights.
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Our tobacco companies also establish contract terms and conditions with tobacco growers and leaf suppliers addressing child and forced labor and conduct social compliance audits at leaf supplier facilities in high-risk tobacco growing regions within the United States and internationally.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

91 edited+20 added−12 removed99 unchanged
We have growth strategies involving innovative products that may have reduced health risks relative to 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. These strategies include e-vapor, heated tobacco and oral nicotine pouch products.
We have growth strategies involving innovative products that may have reduced health risks relative to certain other nicotine products, while continuing to offer adult nicotine consumers (within and outside the United States) products that meet their taste expectations and evolving preferences. These strategies include e-vapor, heated tobacco and oral nicotine pouch products.
The unavailability or unacceptability of any one or more particular varieties of tobacco leaf or the unavailability of nicotine extract necessary to manufacture our operating companies’ products could negatively impact our ability to continue marketing existing products or impact adult tobacco consumer product acceptability, which could have a material adverse effect on our business and profitability.
The unavailability or unacceptability of any one or more particular varieties of tobacco leaf or the unavailability of nicotine extract necessary to manufacture our operating companies’ products could negatively impact our ability to continue marketing existing products or impact adult nicotine consumer product acceptability, which could have a material adverse effect on our business and profitability.
Significant increases in taxes or fees on tobacco products (including traditional products as well as e-vapor and oral nicotine products) have been proposed or enacted and are likely to continue to be proposed or enacted within the United States at the federal, state and local levels.
Significant increases in taxes or fees on nicotine products (including traditional tobacco products as well as e-vapor and oral nicotine products) have been proposed or enacted and are likely to continue to be proposed or enacted within the United States at the federal, state and local levels.
We typically access the commercial paper market in the second quarter to help fund payments under the Master Settlement Agreement (the “MSA”), tax obligations and shareholder dividends. Disruption and uncertainty in the credit or capital markets or high interest rates could negatively impact the availability or cost of capital and adversely affect our liquidity, cash flow, earnings and dividend rate.
We typically access the commercial paper market in the second quarter to help fund payments under the Master Settlement Agreement (“MSA”), tax obligations and shareholder dividends. Disruption and uncertainty in the credit or capital markets or high interest rates could negatively impact the availability or cost of capital and adversely affect our liquidity, cash flow, earnings and dividend rate.
In addition to the outcomes discussed above, actions and inaction by the FDA and other federal, state or local governments or agencies can (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, (iii) restrict communications to adult tobacco consumers, (iv) restrict the ability to differentiate tobacco products, (v) impose additional manufacturing, labeling or packaging requirements, (vi) interrupt manufacturing or otherwise significantly increase the cost of doing business, (vii) result in increased illicit trade in tobacco products, (viii) restrict or prevent the use of specified tobacco products in certain locations or the sale of tobacco products by certain retail establishments, (ix) require the recall of tobacco products due to a determination relating to product contamination or (x) otherwise require the removal of tobacco products from the marketplace (for example, due to a determination that one or more tobacco products fail to satisfy the statutory requirements for substantial equivalence, must proceed through the pre-market review process or must be removed from the marketplace for the protection of public health).
In addition to the outcomes discussed above, actions and inaction by the FDA and other federal, state or local governments or agencies can (i) impact the adult nicotine consumer acceptability of or access to nicotine products (for example, through nicotine or constituent limits or menthol or other flavor bans), (ii) limit adult nicotine consumer choices, (iii) restrict communications to adult nicotine consumers, (iv) restrict the ability to differentiate nicotine products, (v) impose additional manufacturing, labeling or packaging requirements, (vi) interrupt manufacturing or otherwise significantly increase the cost of doing business, (vii) result in increased illicit trade in nicotine products, (viii) restrict or prevent the use of specified nicotine products in certain locations or the sale of nicotine products by certain retail establishments, (ix) require the recall of nicotine products due to a determination relating to product contamination or (x) otherwise require the removal of nicotine products from the marketplace (for example, due to a determination that one or more nicotine products fail to satisfy the statutory requirements for substantial equivalence, must proceed through the pre-market review process or must be removed from the marketplace for the protection of public health).
This risk has been substantially reduced given that 47 states and Puerto Rico now limit the dollar amount of bonds or require no bond at all. However, tobacco litigation plaintiffs have challenged the constitutionality of Florida’s bond cap statute in several cases and plaintiffs may challenge state bond cap statutes in other jurisdictions as well.
This risk has been substantially reduced given that 47 states and Puerto Rico limit the dollar amount of bonds or require no bond at all. However, tobacco litigation plaintiffs have challenged the constitutionality of Florida’s bond cap statute in several cases and plaintiffs may challenge state bond cap statutes in other jurisdictions as well.
Additional competition has resulted from diversion into the United States market of cigarettes intended for sale outside the United States, diversion of tobacco products intended for sale in one taxing jurisdiction within the United States into another taxing jurisdiction, the sale of counterfeit cigarettes by third parties, the sale of cigarettes by third parties over the Internet and by other means designed to avoid collection of applicable taxes and imports of foreign lower-priced brands.
Additional price competition has resulted from diversion into the United States market of cigarettes intended for sale outside the United States, diversion of tobacco products intended for sale in one taxing jurisdiction within the United States into another taxing jurisdiction, the sale of counterfeit cigarettes by third parties, the sale of cigarettes by third parties over the Internet and by other means designed to avoid collection of applicable taxes and imports of foreign lower-priced brands.
We may be required to write down goodwill and intangible assets, including trademarks and intellectual property, due to impairment, which could have a material adverse effect on our results of operations or financial position. We periodically calculate the fair value of our reporting units and intangible assets to test for impairment.
We may be required to write down goodwill and other intangible assets, including trademarks and other intellectual property, due to impairment, which could have a material adverse effect on our results of operations or financial position. We periodically calculate the fair value of our reporting units and intangible assets to test for impairment.
PM USA 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 healthcare cost recovery litigation in the United States and, as such, are not required to make annual settlement payments as required by the parties to the settlements.
PM USA faces competition from lower-priced brands sold by certain domestic and foreign manufacturers that have cost advantages because they are not parties to settlements of certain healthcare cost recovery litigation in the United States and, as such, are not required to make annual settlement payments as required by the parties to the settlements.
We have increased engagement with the FDA and other government agencies to encourage enforcement action against these illicit products, but such enforcement has been inadequate to date. We also have taken legal action to protect our lawful e-vapor business, which exposes us to additional costs and expenses.
We have increased engagement with the FDA and other government agencies to encourage enforcement action against these illicit products, but such enforcement has been inadequate to date. We also have taken legal action to protect our e-vapor business, which exposes us to additional costs and expenses.
Recent enforcement actions by regulatory agencies have not had a material impact in curbing the proliferation and sale of illicit disposable e-vapor products. This dynamic has made the operating environment challenging for our businesses.
Recent enforcement actions by regulatory agencies have not had a material impact in curbing the proliferation and sale of illicit flavored disposable e-vapor products. This dynamic has made the operating environment challenging for our businesses.
Illicit trade in tobacco products has had, and could continue to have, an adverse impact on our business, including the sales volumes and market shares of our operating companies’ innovative and smoke-free products and traditional tobacco products.
Illicit trade in nicotine products has had, and could continue to have, an adverse impact on our business, including the sales volumes and market shares of our operating companies’ innovative and smoke-free products and traditional tobacco products.
Shifts in crops (such as those driven by macroeconomic conditions and adverse weather patterns), government restrictions and mandated prices, production control programs, economic trade sanctions, import duties and tariffs, international trade disruptions, labor disruptions, inflation, geopolitical instability, climate and environmental changes and disruptions due to man-made or natural disasters may increase the cost or reduce the supply or quality of tobacco and other raw materials, ingredients and component parts used to manufacture our products.
Shifts in crops (such as those driven by macroeconomic conditions and adverse weather patterns), government restrictions and mandated prices, production control programs, economic trade sanctions, import duties and tariffs, international trade disruptions, labor disruptions, inflation, geopolitical instability, climate and environmental changes and disruptions due to man-made or natural disasters may increase the cost or reduce the supply or quality of tobacco and other raw materials, ingredients and component parts used to manufacture our operating companies’ products.
Congress and various state and local governments. These existing and potential future laws and regulations could increase the costs of, and impair our ability to, source certain materials used in the packaging for our products.
Congress and various state and local governments. These existing and potential future laws and regulations could increase the costs of sourcing, and impair our ability to source, certain materials used in the packaging for our products.
If we do not succeed in commercializing innovative tobacco products that appeal to adult tobacco consumers or we fail to obtain or maintain regulatory authorization for the marketing or sale of these products, including with claims of reduced health risks, we could be at a competitive disadvantage, which could have a material adverse effect on our business, results of operations, cash flows or financial position and our ability to achieve our Vision.
If we do not succeed in commercializing innovative nicotine products that appeal to adult nicotine consumers or we fail to obtain or maintain regulatory authorization for the marketing or sale of these products, including with claims of reduced health risks, we could be at a competitive disadvantage, which could have a material adverse effect on our business, results of operations, cash flows or financial position and our ability to achieve our Vision.
Losses in tax revenues can cause such governments to take various actions, including increasing excise taxes, imposing legislative or regulatory requirements, or asserting claims against manufacturers of tobacco products or members of the trade channels through which such tobacco products are legally distributed and sold, each of which could have an adverse effect on our business, results of operations, cash flows or financial position.
Losses in tax revenues can cause such governments to take various actions, including increasing excise taxes, imposing legislative or regulatory requirements, or asserting claims against manufacturers of nicotine products or members of the trade channels through which such nicotine products are legally distributed and sold, each of which could have an adverse effect on our business, results of operations, cash flows or financial position.
Illicit trade can take many forms, including the sale of counterfeit tobacco products; the sale of tobacco products that do not comply with the FSPTCA and FDA regulations; the sale of tobacco products in the United States that are intended for sale outside the country; the sale of untaxed tobacco products over the Internet and by other means designed to avoid the collection of applicable taxes; and the diversion into one taxing jurisdiction of tobacco products intended for sale in another jurisdiction.
Illicit trade in nicotine products can take many forms, including the sale of counterfeit products; the sale of products that do not comply with the FSPTCA and FDA regulations; the sale of products in the United States that are intended for sale outside the country; the sale of untaxed products over the Internet and by other means designed to avoid the collection of applicable taxes; and the diversion into one taxing jurisdiction of products intended for sale in another jurisdiction.
This risk is especially pertinent to smoke-free products where technology continues advancing rapidly, resulting in a high volume of patents in relevant technology spaces.
This risk is especially pertinent to smoke-free products where technology is advancing rapidly, resulting in a high volume of patents in relevant technology spaces.
We may be unsuccessful in commercializing innovative products, including tobacco products with reduced health risks relative to certain other tobacco products and that appeal to adult tobacco consumers, which may have a material adverse effect on our business, results of operations, cash flows or financial position and our ability to achieve our Vision.
We may be unsuccessful in commercializing innovative products, including nicotine products with reduced health risks relative to certain other nicotine products and that appeal to adult nicotine consumers, which may have a material adverse effect on our business, results of operations, cash flows or financial position and our ability to achieve our Vision.
Tax increases are expected to continue to have an adverse impact on sales of our operating companies’ tobacco products through lower consumption levels and the potential shift in adult tobacco consumer purchases from the premium to the non-premium or discount segments, to other low-priced or low-taxed tobacco products or to counterfeit and contraband products.
Tax increases are expected to continue to have an adverse impact on sales of our operating companies’ products through lower consumption levels and the potential shift in adult nicotine consumer purchases from the premium to the non-premium or discount segments, to other low-priced or low-taxed products or to counterfeit and contraband products.
A protracted FDA review of one of our operating companies’ PMTAs would allow competitive products already on the market to establish market share, brand recognition and adult tobacco consumer loyalty in the absence of competition from our product. Additionally, we cannot control the order in which the FDA reviews PMTAs.
A protracted FDA review of one of our operating companies’ PMTAs would allow competitive products already on the market to establish market share, brand recognition and adult nicotine consumer loyalty in the absence of competition from our product. Additionally, we cannot control the order in which the FDA reviews PMTAs.
Although we have a Code of Conduct for Compliance and Integrity and a compliance system designed to prevent and detect violations of applicable law, no system can provide assurance that it will always protect against improper actions by employees, joint venture partners, investees or third parties.
Although we have a Code of Conduct for Compliance and Integrity and a compliance system designed to prevent and detect violations of applicable law, we can provide no assurance that any system will always protect against improper actions by employees, joint venture partners, investees or third parties.
Our failure to do so or our failure to anticipate changing adult tobacco consumer preferences, improve productivity or protect or enhance margins through cost savings and price increases, could have a material adverse effect on our business, results of operations, cash flows or financial position.
Our failure to do so or our failure to anticipate changing adult nicotine consumer preferences, improve productivity or protect or enhance margins through cost savings and price increases, could have a material adverse effect on our business, results of operations, cash flows or financial position.
Legal and regulatory requirements related to climate change and other environmental sustainability matters could have a material adverse impact on our business and results of operations. The increased concern over climate change and other sustainability matters is likely to result in new or additional legal and regulatory requirements intended to reduce or mitigate environmental issues.
Legal and regulatory requirements related to climate change and other environmental sustainability matters could have a material adverse impact on our business and results of operations. Concern over climate change and other sustainability matters is likely to result in new or additional legal and regulatory requirements intended to reduce or mitigate environmental issues.
Illicit trade in tobacco products also harms law-abiding wholesalers and retailers by depriving them of lawful sales and undermines the significant investment we have made in legitimate distribution channels. Moreover, illicit trade in tobacco products results in federal, state and local governments losing tax revenues.
Illicit trade in nicotine products also harms law-abiding wholesalers and retailers by depriving them of lawful sales and undermines the significant investment we have made in legitimate distribution channels. Moreover, illicit trade in nicotine products results in federal, state and local governments losing tax revenues.
Our inability to successfully counter the effects of illicit trade in tobacco products, including e-vapor products, could have a material adverse effect on our business, results of operations, cash flows or financial position and our ability to achieve our Vision.
Our inability to successfully counter the effects of illicit trade in nicotine products, including e-vapor products, could have a material adverse effect on our business, results of operations, cash flows or financial position and our ability to achieve our Vision.
If we are unable to compensate for supply shortages or elevated commodity and other costs through sustained price increases, cost efficiencies, such as in manufacturing and distribution, or otherwise manage the exposure through sourcing strategies, the limited use of commodity hedging contracts or through other initiatives, our business, results of operations, cash flows and financial condition could be materially adversely impacted.
If our operating companies are unable to compensate for supply shortages or elevated commodity and other costs through sustained price increases, cost efficiencies, such as in manufacturing and distribution, or otherwise manage the exposure through sourcing strategies, the limited use of commodity hedging contracts or through other initiatives, our business, results of operations, cash flows and financial condition could be materially adversely impacted.
Our operating companies’ portfolios of tobacco products are largely comprised of premium brands, such as Marlboro , Copenhagen and Skoal . The willingness of adult tobacco consumers to purchase premium brands is affected by macroeconomic conditions, including inflation and overall economic stability.
Our operating companies’ portfolios of nicotine products are largely comprised of premium brands, such as Marlboro , Copenhagen and Skoal . The willingness of adult nicotine consumers to purchase premium brands is affected by macroeconomic conditions, including inflation and overall economic stability.
We cannot predict whether regulators, including the FDA, will permit the marketing or sale of any particular innovative products (including products with claims of reduced risk to adult tobacco consumers) or whether they will impose a burdensome regulatory framework on such products.
We cannot predict whether regulators, including the FDA, will permit the marketing or sale of any particular innovative products (including products with claims of reduced risk to adult nicotine consumers) or whether they will impose a burdensome regulatory framework on such products.
We rely extensively on information technology, much of which is managed by third-party service providers (such as cloud data service providers), to support a variety of business processes and activities, including: complying with regulatory, legal, financial reporting and tax requirements; engaging in marketing and e-commerce activities; managing and improving the effectiveness of our operations; researching, developing, manufacturing and distributing our products; collecting and storing sensitive data and confidential information; and communicating with employees, investors, suppliers, trade customers, adult tobacco consumers and others.
We rely extensively on information technology, much of which is managed by third-party service providers (such as cloud data service providers), to support a variety of business processes and activities, including: complying with regulatory, legal, financial reporting and tax requirements; engaging in marketing and e-commerce activities; managing and improving the effectiveness of our operations; researching, developing, manufacturing and distributing our operating companies’ products; collecting and storing sensitive data and confidential information; and communicating with employees, investors, suppliers, trade customers, adult nicotine consumers and others.
Current geopolitical and macroeconomic conditions (including tariffs, inflation, high interest rates, labor shortages, supply and demand imbalances and international armed conflicts) are causing worldwide disruptions and delays to supply chains and commercial markets, which limit access to, and increase the cost of, raw materials, ingredients and component parts (for example, wood tips used in our cigar products and aluminum used in our packaging).
Current geopolitical and macroeconomic conditions (including tariffs, inflation, labor shortages, supply and demand imbalances and international armed conflicts) are causing worldwide disruptions and delays to supply chains and commercial markets, which limit access to, and increase the cost of, raw materials, ingredients and component parts (for example, wood tips used in our cigar products and aluminum used in our packaging).
For example, in 2020, as a result of the uncertainty, volatility and impact of the COVID-19 pandemic on ABI’s business, ABI reduced by 50% its final 2019 dividend paid in the second quarter of 14 Table of Contents 2020 and did not pay its interim 2020 dividend that would have been paid in the fourth quarter of 2020, which resulted in a reduction of cash dividends we received from ABI.
For example, in 2020, as a result of the uncertainty, volatility and impact of the COVID-19 pandemic on ABI’s business, ABI reduced by 50% its final 2019 dividend paid in the second quarter of 2020 and did not pay its interim 2020 dividend that would have been paid in the fourth quarter of 2020, which resulted in a reduction of cash dividends we received from ABI.
Any significant change in such factors could restrict our ability to continue manufacturing and marketing existing products or impact adult tobacco consumer product acceptability and have a material adverse effect on our business and profitability.
Any significant change in such factors could restrict our ability to continue manufacturing and marketing existing products or impact adult nicotine consumer product acceptability and have a material adverse effect on our business and profitability.
Furthermore, our ability to effectively respond to new and evolving adult tobacco consumer purchase behavior catalyzed by challenging macroeconomic conditions and changes in adult tobacco consumer preferences depends on our ability to promote brand equity successfully among our premium and discount brands and broaden our product portfolios across price-points and categories, including by bringing to market new and innovative tobacco products that appeal to adult tobacco consumers.
Our ability to effectively respond to new and evolving adult nicotine consumer purchase behavior catalyzed by challenging macroeconomic conditions and changes in adult nicotine consumer preferences depends on our ability to promote brand equity successfully among our premium and discount brands and broaden our product portfolios across price-points and categories, including by bringing to market new and innovative nicotine products that appeal to adult nicotine consumers.
The expected savings associated with the Initiative may be offset to some extent by business disruption during the implementation phase as well as investments in new processes and systems until such time as the Initiative is fully implemented.
The expected savings associated with the Initiative may be offset to some extent by business disruption during the implementation phase as well as investments in new processes and systems until the Initiative is fully implemented.
However, we may enter into settlement discussions in particular cases if we believe it is in our best interests to do so. We cannot predict the outcome of any litigation proceedings or governmental investigations, and unfavorable outcomes in any such proceedings or investigations could materially adversely affect our results of operations, cash flows or financial position.
However, we may enter into settlement discussions in particular cases if we believe it is in our best interests to do so. 11 Table of Contents We cannot predict the outcome of any litigation proceedings or governmental investigations, and unfavorable outcomes in any such proceedings or investigations could materially adversely affect our results of operations, cash flows or financial position.
In periods of economic uncertainty and high inflation, we have observed that adult tobacco consumers reduce consumption, purchase more discount brands and consider lower-priced tobacco products, increasing the market share of competitive discount products.
In periods of economic uncertainty and high inflation, we have observed that adult nicotine consumers reduce consumption, purchase more discount brands and consider lower-priced nicotine products, increasing the market share of competitive discount products.
Risks Relating to Our Business Business Operations Risks We may be unsuccessful in anticipating and responding to changes in adult tobacco consumer preferences and purchase behavior, including as a result of difficult economic conditions, which could have a material adverse effect on our business, results of operations, cash flows or financial position.
Risks Relating to Our Business Business Operations Risks We may be unsuccessful in anticipating and responding to changes in adult nicotine consumer purchase behavior, including as a result of difficult economic conditions, and preferences, each of which could have a material adverse effect on our business, results of operations, cash flows or financial position.
Tobacco products are subject to substantial taxation, and any increases in tobacco product-related taxes could have a material adverse impact on sales of our operating companies’ products. Tobacco products are subject to substantial taxation, including excise taxes.
Nicotine products are subject to substantial taxation, and any increases in nicotine product-related taxes could have a material adverse impact on sales of our operating companies’ products. Nicotine products are subject to substantial taxation, including excise taxes.
Our efforts, and the efforts of our service providers, key suppliers and trade customers, to comply with the evolving patchwork of differing foreign, federal, state and local laws and regulations impose significant costs and challenges that are likely to continue to increase over time, particularly as additional jurisdictions adopt similar regulations.
Our efforts, and the efforts of our service providers, key suppliers and trade customers, to comply with the evolving patchwork of differing foreign, federal, state and local laws and regulations impose significant costs and challenges that are likely to continue to increase over time, particularly as 14 Table of Contents additional jurisdictions adopt similar regulations.
If we are unable to compete effectively in innovative tobacco product categories, including through internal product development, on! oral nicotine pouch products, NJOY e-vapor products, our participation in Horizon, other potential future partnerships with Japan Tobacco and potential future relationships and investments, such inability could have a material adverse impact on our business, results of operations, cash flows or financial position and our ability to achieve our Vision.
If we are unable to compete effectively in innovative nicotine product categories, including through internal product development, on! oral nicotine pouch products, NJOY e-vapor products, our participation in Horizon and other potential future relationships and investments, such inability could have a material adverse impact on our business, results of operations, cash flows or financial position and our ability to achieve our Vision.
Counterfeit versions of our operating companies’ products can negatively affect adult tobacco consumer experiences with and opinions of those brands as well as other stakeholders’ perceptions and opinions of our companies and brands.
Counterfeit versions of our operating companies’ products can negatively affect adult nicotine consumer experiences with and opinions of those brands as well as other stakeholders’ perceptions and opinions of our companies and brands.
Furthermore, challenging economic conditions can create the risk that our suppliers, distributors, logistics providers or other third-party partners suffer financial or operational difficulties, which may impact their ability to provide us with or distribute finished product, raw materials and component parts and services in a timely manner or at all.
Furthermore, challenging economic conditions can create the risk that our suppliers, distributors, logistics providers or other third-party partners suffer financial or operational difficulties, which may impact their ability to provide us with or distribute 8 Table of Contents finished product, raw materials and component parts and services in a timely manner or at all.
Any federal, state or local governmental action, including regulatory actions and inaction by the FDA, may have a material adverse impact on our business, results of operations, cash flows or financial position. Such action and inaction also could negatively impact adult smokers’ transition to these products, which could materially adversely affect our ability to achieve our Vision.
Any federal, state or local governmental action, including regulatory actions and inaction by the FDA, may have a material adverse impact on our business, results of operations, cash flows or financial position. Such action and inaction also could negatively impact adult smokers’ transition to potentially reduced risk products, which could materially adversely affect our ability to achieve our Vision.
The competitive environments in which our operating companies compete and our operating companies’ competitive positions can be significantly influenced by the price differentials between premium and discount brands.
The competitive environments in which our operating companies compete and our operating companies’ competitive positions can be significantly impacted by the price differentials between premium and discount brands.
For example, unpredictable and lengthy regulatory review periods complicate efforts to strategize and plan with respect to commercialization of new products, and we cannot 11 Table of Contents predict or influence the speed with which the FDA reviews PMTAs.
For example, unpredictable and lengthy regulatory review periods complicate efforts to strategize and plan with respect to commercialization of new products, and we cannot predict or influence the speed with which the FDA reviews PMTAs.
This calculation may be affected by several factors, including general macroeconomic conditions, the proliferation of illicit products, government actions, including FDA regulatory actions and inaction, changes in category growth (decline) rates as a result of changing adult tobacco consumer preferences, success of planned new product expansions, competitive activity, unfavorable outcomes with respect to litigation proceedings, including actions brought against us alleging patent infringement, and income and excise taxes.
These calculations may be affected by several factors, including general macroeconomic conditions, the proliferation of illicit products, government actions, including FDA regulatory actions and inaction, changes in category growth (decline) rates as a result of changing adult nicotine consumer preferences, success of planned new product expansions, competitive activity, unfavorable outcomes with respect to litigation proceedings, including actions brought against us alleging patent infringement, and income and excise taxes.
An epidemic, pandemic or other significant public health emergency, and the measures taken by governmental authorities to address it, could significantly disrupt our ability to operate our businesses in the ordinary course. Furthermore, any associated economic consequences could have a material adverse effect on our business, results of operations, cash flows or financial position.
An epidemic, pandemic or other significant public health emergency, and the measures taken by governmental authorities to address it, could significantly disrupt our operating companies’ abilities to operate their businesses in the ordinary course. Furthermore, any associated economic consequences could have a material adverse effect on our business, results of operations, cash flows or financial position.
While we are primarily engaged in business activities in the United States, we engage (directly or indirectly) in certain international business activities that are subject to various U.S. and foreign laws and regulations, such as foreign privacy laws, the U.S. Foreign Corrupt Practices Act and other laws prohibiting bribery and corruption.
While we are primarily engaged in business activities in the United States, we engage (directly or indirectly) in certain international business activities that are subject to various U.S. and foreign laws and regulations, such as foreign privacy laws, the U.S. Foreign 12 Table of Contents Corrupt Practices Act and other laws prohibiting bribery and corruption.
We could decide, or be required to, recall products, which could have a material adverse effect on our business, reputation, results of operations, cash flows or financial position.
Our operating companies could decide, or be required to, recall products, which could have a material adverse effect on our business, reputation, results of operations, cash flows or financial position.
If the NJOY Transaction or any other acquisition, disposition, joint venture, investment in a third party or other strategic relationship is not successful, there could be a material negative impact on our business, financial position and results of operations and our ability to achieve our Vision.
If the NJOY Transaction, our strategic relationships with respect to contract manufacturing or any other acquisition, disposition, joint venture, investment in a third party or other strategic relationship is not successful, there could be a material negative impact on our business, financial position and results of operations and our ability to achieve our Vision.
Various types of claims may be raised in these proceedings, including product liability, unfair trade practices, antitrust, tax, contraband-related claims, patent infringement, employment matters, environmental matters, claims alleging violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), claims for contribution and claims of competitors, shareholders and distributors.
Various types of claims may be raised in these proceedings, including product liability, unfair trade practices, antitrust, tax, contraband-related claims, intellectual property infringement, breach of contract, employment matters, environmental matters, claims alleging violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), claims for contribution and claims of competitors, shareholders and distributors.
Our suppliers, supply chain service providers and trade customers also rely extensively on information systems. We are also increasing the frequency and scale of new technology and systems deployment both directly and through third parties.
Our suppliers, supply chain service providers and trade customers also rely extensively on information systems. We also have increased the frequency and scale of new technology and systems deployment both directly and through third parties.
Because certain of our products’ packaging consists of single-use plastics, single-use plastic bans and extended producer responsibility mandates could result in bans on some of our product packaging or our products and adversely impact our costs and revenues. Additional taxes and limitations on the use of certain 8 Table of Contents single-use plastics have been proposed by the U.S.
Because certain of our operating companies’ products’ packaging consists of single-use plastics, single-use plastic bans and extended producer responsibility mandates could result in bans on some of our operating companies’ product packaging or their products and adversely impact our costs and revenues. Additional taxes and limitations on the use of certain single-use plastics have been proposed by the U.S.
In addition, if another company recalls or experiences negative publicity related to a product in a category in which we compete, adult tobacco consumers might reduce their overall consumption of products in the category. Any of these events could have a material adverse effect on our business, reputation, results of operations, cash flows or financial position.
In addition, if another company recalls or experiences negative publicity related to a product in a category in which one of our operating companies competes, adult nicotine consumers might reduce their overall consumption of products in the category. Any of these events could have a material adverse effect on our business, reputation, results of operations, cash flows or financial position.
Such shifts may also have an adverse impact on the reported share performance of our tobacco products. Any increases in tobacco-related taxes or fees could have a material adverse impact on our business, results of operations, cash flows or financial position.
Such shifts may also have an adverse impact on the reported share performance of our operating companies’ products. Any increases in taxes or fees applicable to our operating companies’ products could have a material adverse impact on our business, results of operations, cash flows or financial position.
In the e-vapor category, illicit flavored disposable product usage has significantly increased, and such products now comprise the majority of the e-vapor category. The impacts of this dynamic include declines in pod-based e-vapor product volume and increased cross-category movement among adult cigarette smokers that has contributed to higher than expected domestic cigarette industry volume declines.
In the e-vapor category, illicit flavored disposable product usage has significantly increased, and such products now comprise the majority of the e-vapor category. The impacts of this dynamic include declines in FDA-authorized e-vapor product volume and increased cross-category movement among adult cigarette smokers that has contributed to domestic cigarette industry volume declines.
Failure to complete or manage strategic transactions, including acquisitions, dispositions, joint ventures and investments in third parties, or realize the anticipated benefits of such transactions, could have a material adverse effect on our business, financial position and our ability to achieve our Vision. We regularly evaluate potential strategic transactions, including acquisitions, dispositions, joint ventures and investments in third parties.
Failure to complete or manage strategic transactions, including acquisitions, dispositions, joint ventures and commercial relationships with and investments in third parties, or realize the anticipated benefits of such transactions, could have a material adverse effect on our business, financial position and our ability to achieve our Vision.
Furthermore, many of the tasks that will be outsourced will be performed in developing countries that may be at a heightened risk for geopolitical uncertainty, which could result in service 9 Table of Contents interruptions.
Furthermore, many of the outsourced tasks are or will be performed in developing countries that may be at a heightened risk for geopolitical uncertainty, which could result in service interruptions.
We could decide, or laws or regulations could require us, to recall products due to the failure to meet quality standards or specifications, suspected or confirmed and deliberate or unintentional product contamination, or other product adulteration, misbranding or tampering.
Our operating companies could decide, or laws or regulations could require them, to recall products due to the failure to meet quality standards or specifications, suspected or confirmed and deliberate or unintentional product contamination, or other product adulteration, misbranding or tampering.
A successful challenge to one or more of our tax positions (which could give rise to additional liabilities, including interest and potential penalties), an increase in the corporate income tax rate or other changes to federal or state tax laws, including changes to how foreign investments are taxed, could materially adversely affect our earnings or cash flows.
Accordingly, a successful challenge to one or more of our tax positions, an increase in the corporate income tax rate or other changes to federal or state tax laws, including changes to how foreign investments are taxed, could materially adversely affect our earnings or cash flows.
Following the completion of a transaction there may be certain financial, managerial, staffing and talent and operational risks, including diversion of management’s attention from existing core businesses, difficulties integrating other businesses into existing operations and other challenges presented by a transaction 7 Table of Contents that does not achieve anticipated sales levels and profitability.
Following the completion of a transaction, there may be certain financial, managerial, staffing and talent and operational risks, including diversion of management’s attention from existing core businesses, difficulties integrating other businesses into existing operations and 7 Table of Contents other challenges.
New or additional requirements may relate to, among other things, greenhouse gas emissions, alternative energy policy, single-use plastics and additional disclosure obligations with respect to 12 Table of Contents climate change and environmental sustainability matters.
New or additional requirements may relate to, among other things, greenhouse gas emissions, alternative energy policy, single-use plastics, the disposal of nicotine products or nicotine product components and additional disclosure obligations with respect to climate change and environmental sustainability matters.
For example, we have plans to commercialize next generation on! and NJOY products once regulatory authorizations are received. If the outcome of any legal proceedings or investigations involving NJOY prevent us from, or we are otherwise unsuccessful in, executing these strategies, there could be a material negative impact on our business and our ability to achieve our Vision.
If the outcome of any legal proceedings or investigations involving NJOY prevent us from, or we are otherwise unsuccessful in, executing these strategies, there could be a material negative impact on our business and our ability to achieve our Vision.
These factors include (i) receipt of regulatory authorizations, (ii) prevailing economic, market, regulatory or business conditions, or changes in such conditions, negatively affecting the parties or their plans for future collaboration and partnerships, (iii) changes in market or other conditions resulting in unanticipated delays in the design and development of future products or the commencement of test launches, (iv) the outcome of any legal proceedings or investigations that may be instituted against the parties or others related to the joint venture, (v) changes in the preferences of U.S. adult tobacco consumers, (vi) the failure to meet commercialization milestones and (vii) the ability of the parties to enter into future partnerships on terms acceptable to both parties and in the expected manner or timeframe, if at all.
These factors include (i) receipt of regulatory authorizations, (ii) prevailing economic, market, regulatory or business conditions, or changes in such conditions, negatively affecting the parties, (iii) changes in market or other conditions resulting in unanticipated delays in the design and development of future products or the commencement of test launches, (iv) the outcome of any legal proceedings or investigations that may be instituted against the parties or others related to the joint venture, (v) changes in the preferences of U.S. adult nicotine consumers and (vi) the failure to meet commercialization milestones.
In addition, as adult tobacco consumer preferences evolve, consumers are increasingly moving across tobacco categories, including selecting different categories of tobacco products than those they traditionally purchase and purchasing illicit flavored e-vapor products. 5 Table of Contents The primary impacts of these conditions include higher than expected domestic cigarette industry volume declines and declines in pod-based product volume within the e-vapor category, which have negatively impacted our business.
In addition, as adult nicotine consumer preferences evolve, consumers are increasingly moving across nicotine product categories, including selecting different categories of nicotine products than those they traditionally purchase and purchasing illicit flavored e-vapor 5 Table of Contents products. These evolving preferences have primarily resulted in domestic cigarette industry volume declines, which have negatively impacted our business.
To date, we have not experienced any interruptions of these information systems as a result of infiltration attempts. However, because technology is increasingly complex and cyber-attacks are increasingly sophisticated and more frequent, there can be no assurance that such incidents will not cause interruptions that could have a material adverse effect on us in the future.
However, because technology is increasingly complex and cyber-attacks are increasingly sophisticated and more frequent, there can be no assurance that such incidents will not cause interruptions that could have a material adverse effect on us in the future.
The impairment was the result of the decrease in the fair value of the Skoal trademark caused by decreases in the size of the MST products category, which were due, in part, to the growth of nicotine pouch volumes. We continue to monitor several factors that impact the fair value of the Skoa l trademark.
This impairment was the result of the decrease in the fair value of the Skoal trademark caused by decreases in the size of the MST products category, which were due, in part, to the growth of nicotine pouch volumes.
We may not be able to enter into attractive business relationships or execute and complete strategic transactions on favorable terms or at all, and any such relationships or transactions may not improve our competitive position or have the intended financial outcomes.
We may not be able to enter into attractive business relationships or execute and complete strategic transactions on favorable terms or at all. Any such relationships or transactions may not improve our competitive position or have the intended financial outcomes and may subject us to increased legal risk, including with respect to intellectual property infringement or breach of contract claims.
Additionally, in January 2025, in a patent lawsuit adjudicated before the ITC, the ITC imposed bans on the importation of NJOY ACE into the United States and the sale and marketing of NJOY ACE products previously imported into the United States.
In a patent lawsuit adjudicated before the ITC, the ITC imposed bans on the importation of NJOY ACE into the United States and our sale and marketing of NJOY ACE products previously imported into the United States. As a result of the ITC’s decision, NJOY removed NJOY ACE from the marketplace.
Opportunities for strategic transactions may be limited, and the success of any such transaction is dependent upon our ability to complete and realize the expected benefits of the transaction in the expected time frame or at all.
We regularly evaluate potential strategic transactions, including acquisitions, dispositions, joint ventures and commercial relationships with and investments in third parties. Opportunities for strategic transactions may be limited, and the success of any such transaction is dependent upon our ability to complete and realize the expected benefits of the transaction in the expected time frame or at all.
For example, our former investment in JUUL did not result in and, to date, our investment in Cronos has not, resulted in the economic and competitive advantages expected at the time the investments were made.
For example, our former investment in JUUL Labs, Inc. (“JUUL”) did not result in and, to date, our investment in Cronos has not, resulted in the economic and competitive advantages expected at the time the investments were made. We may not be able to realize the expected benefits of our acquisition of NJOY Holdings, Inc.
For example, if Skoal ’s actual revenue and income or long-term outlook are significantly different from forecasted performance used to estimate the fair value or if the discount rate used to estimate the fair value increases, we could have an additional non-cash impairment on the carrying value of the Skoal trademark in future periods.
If Skoal ’s actual revenue and income or long-term outlook are significantly unfavorable compared to forecasted performance used to estimate the fair value or if the discount rate used to estimate the fair value increases, we could have an additional non-cash impairment of the carrying value of the Skoal trademark in future periods. 9 Table of Contents We continue to monitor several factors that impact the fair value of our goodwill and intangible assets.
The growth of innovative tobacco products, including legal and illicit e-vapor products and oral nicotine pouches, has contributed to reductions in the consumption levels and industry sales volumes of cigarettes and other tobacco products, including MST products. These reductions have negatively impacted our business.
Our operating companies’ failure to compete effectively in these environments could negatively impact their profitability, market share and shipment volume. The growth of innovative nicotine products, including legal and illicit e-vapor products and oral nicotine pouches, has contributed to reductions in the consumption levels and industry sales volumes of cigarettes and other tobacco products, including MST products.
We face significant competition, and our failure to compete effectively could have a material adverse effect on our business, results of operations, cash flows or financial position and our ability to achieve our Vision. Our operating companies operate in highly competitive environments. Significant competition exists with respect to product quality, taste, price, product innovation, marketing, packaging, distribution and promotional activities.
We face significant competition, including from the growth of innovative nicotine products, and our failure to compete effectively could have a material adverse effect on our business, results of operations, cash flows or financial position and our ability to achieve our Vision. Our operating companies operate in highly competitive environments.
In October 2024, we announced the multi-phase Initiative, through which we plan to increase our organization’s speed, efficiency and effectiveness by centralizing work, outsourcing certain transactional tasks and streamlining, automating and standardizing processes.
In October 2024, we announced the multi-phase Initiative, which is designed to enhance organizational speed, efficiency and effectiveness. The Initiative includes centralizing work, outsourcing certain transactional activities and streamlining, automating and standardizing processes across the enterprise.
We may not be able to realize the expected benefits of the NJOY Transaction in the expected manner or timeframe, if at all, including due to failure to receive or maintain regulatory authorizations, changes in adult tobacco consumer preferences, failure to comply with regulatory requirements, prevailing economic, market, regulatory or business conditions, or changes in such conditions negatively affecting our business and our plans with respect to the e-vapor category, the outcome of any current or future legal proceeding or investigation related to the NJOY Transaction or NJOY or its products and the occurrence of any event requiring us to write down the value of NJOY’s goodwill or intangible assets, or both, due to impairment.
Other factors that could negatively impact our ability to realize the expected benefits of the NJOY Transaction in the expected manner or timeframe, if at all, include (i) our failure to receive or maintain regulatory authorizations; (ii) changes in adult nicotine consumer preferences; (iii) our failure to comply with regulatory requirements; (iv) prevailing economic, market, regulatory or business conditions, or changes in such conditions negatively affecting our business and our plans with respect to the e-vapor category and (v) the outcome of any current or future legal proceeding or investigation related to the NJOY Transaction, NJOY or its products.
For example, in January 2025, in a patent lawsuit adjudicated before the U.S. International Trade Commission (“ITC”), the ITC imposed bans on the importation of NJOY ACE into the United States and the sale and marketing of NJOY ACE products previously imported into the United States.
For example, as a result of a patent lawsuit adjudicated before the ITC, the ITC imposed bans on the importation of NJOY ACE 6 Table of Contents into the United States and our sale and marketing of NJOY ACE products previously imported into the United States. We have appealed these bans to the U.S.
Investors may choose not to invest in us if their policies prevent them from investing in tobacco companies and may base investment and other decisions on their view of our policies, actions, goals or disclosures with respect to corporate responsibility matters.
Investors may choose not to invest in us if their policies prevent them from investing in tobacco companies and may base investment and other decisions on their view of our policies, actions, goals or disclosures with respect to corporate responsibility matters. 13 Table of Contents Despite our efforts, any failure to achieve our corporate responsibility goals, including those aimed at reducing the harm associated with our operating companies’ products and our underage tobacco prevention goals, could result in adverse publicity.
A product recall or a product liability or other claim (even if unsuccessful or without merit) could have negative economic consequences and also generate negative publicity about us and our products.
Similar issues may subject us to liability with respect to products our operating companies manufacture for third parties under contract manufacturing agreements. A product recall or a product liability or other claim (even if unsuccessful or without merit) could have negative economic consequences and also generate negative publicity about us and our operating companies’ products.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Risk Management and Strategy We rely extensively on information technology, much of which is managed by third-party service providers (such as cloud data service providers), to support a variety of business processes and activities, including: complying with regulatory, legal, financial reporting and tax requirements; engaging in marketing and e-commerce activities; managing and improving the effectiveness of our operations; researching, developing, manufacturing and distributing our products; collecting and storing sensitive data and confidential information; and communicating with employees, investors, suppliers, trade customers, adult tobacco consumers and others.
Risk Management and Strategy We rely extensively on information technology, much of which is managed by third-party service providers (such as cloud data service providers), to support a variety of business processes and activities, including: complying with regulatory, legal, financial reporting and tax requirements; engaging in marketing and e-commerce activities; managing and improving the effectiveness of our operations; researching, developing, manufacturing and distributing our operating companies’ products; collecting and storing sensitive data and confidential information; and communicating with employees, investors, suppliers, trade customers, adult nicotine consumers and others.
We regularly engage third-party consulting services to conduct audits and assessments of the effectiveness of our cybersecurity controls and processes and identify areas for improvement based on developments in industry best practices. We typically engage these services 15 Table of Contents annually, though the cadence can differ based on the results of the audits and assessments.
We regularly engage third-party consulting services to conduct audits and assessments of the effectiveness of our cybersecurity controls and processes and identify areas for improvement based on developments in industry best practices. We typically engage these services annually, though the cadence can differ based on the results of the audits and assessments.
We use security risk assessment questionnaire tools to identify high-risk third-parties, which we believe allows us to effectively assess and mitigate potential security vulnerabilities. Our third-party risk assessment framework evaluates the cybersecurity practices and controls of third-parties.
We use security risk assessment questionnaire tools to identify high-risk third-parties, which we believe allows us to effectively assess and mitigate potential security vulnerabilities. 16 Table of Contents Our third-party risk assessment framework evaluates the cybersecurity practices and controls of third-parties.
Recognizing the critical importance of cybersecurity in today’s digital landscape, we are committed to safeguarding our information assets, protecting consumer data and maintaining the integrity and availability of our systems.
Recognizing the critical importance of cybersecurity in today’s digital landscape, we are committed to safeguarding our information 15 Table of Contents assets, protecting consumer data and maintaining the integrity and availability of our systems.
Finally, we provide periodic cybersecurity training to our Audit Committee and Board to further cybersecurity awareness and risk oversight. 16 Table of Contents While our Board and Audit Committee oversee cybersecurity risk, senior management is responsible for actively managing cybersecurity risk, including by overseeing and executing the risk management strategies discussed above.
Finally, we provide periodic cybersecurity training to our Audit Committee and Board to further cybersecurity awareness and risk oversight. While our Board and Audit Committee oversee cybersecurity risk, senior management is responsible for actively managing cybersecurity risk, including by overseeing and executing the risk management strategies discussed above.
To date, we have not experienced any interruptions of these information systems as a result of infiltration attempts . For further discussion of the risks related to cybersecurity, see Risks Relating to Our Business - Information Technology and Data Privacy Risks in Item 1A .
We have not experienced an information security breach within the past three years, and to date, we have not experienced any interruptions of information systems as a result of infiltration attempts . For further discussion of the risks related to cybersecurity, see Risks Relating to Our Business - Information Technology and Data Privacy Risks in Item 1A .
Our CISO is responsible for assessing and managing cybersecurity risks and maintaining our cybersecurity program. Our CISO has over 25 years of experience, including five years as our CISO, managing technology risks across multiple industries, including financial services, technology and manufacturing.
Our CISO, who reports directly to our Vice President, Enterprise Technology and Chief Information Officer, is responsible for assessing and managing cybersecurity risks and maintaining our cybersecurity program. Our CISO has over 25 years of experience, including six years as our CISO, managing technology risks across multiple industries, including financial services, technology and manufacturing.

Item 2. Properties

Properties — owned and leased real estate

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The oral tobacco products segment has various manufacturing and processing facilities, the most significant of which are located in Nashville, Tennessee and Hopkinsville, Kentucky. The plants and properties owned or leased and operated by us are maintained in good condition and are believed to be suitable and adequate for present needs.
The oral tobacco products segment has various manufacturing and processing facilities, the most significant of which are located in Nashville, Tennessee and Hopkinsville, Kentucky. The plants and properties owned or leased and operated by us are maintained in good condition and are believed to be suitable and adequate for present needs. 17 Table of Contents

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Item 3. Legal Proceedings. The information required by this Item is included in Note 20. Contingencies to our consolidated financial statements in Item 8 (“Note 20”) and Exhibits 99.1 and 99.2 to this Form 10-K.
Item 3. Legal Proceedings. The information required by this Item is included in Note 18 and Exhibits 99.1 and 99.2 to this Form 10-K. Altria’s consolidated financial statements and accompanying notes for the year ended December 31, 2025 were filed on Form 8-K on January 29, 2026 (such consolidated financial statements and accompanying notes are also included in Item 8).
Removed
Altria’s consolidated financial statements and accompanying notes for the year ended December 31, 2024 were filed on Form 8-K on January 30, 2025 (such consolidated financial statements and accompanying notes are also included in Item 8). The following summarizes certain developments in Altria’s litigation since the filing of the Form 8-K.
Added
The following summarizes certain developments in Altria’s litigation since the filing of the Form 8-K. Recent Developments ▪ Health Care Cost Recovery Litigation Continuing NPM Adjustment Disputes with States That Have Not Settled .
Removed
Recent Developments ▪ E-vapor Product Litigation In February 2025, we filed a motion for reconsideration of the ITC’s determination finding that NJOY ACE infringes the four patents plaintiff asserted, asking the ITC to reverse its determination that NJOY ACE infringes one of the four patents that the ITC determined NJOY ACE infringes.
Added
In February 2026, an arbitration panel found that Missouri was not diligent in the enforcement of its escrow statutes in 2005. ▪ Antitrust Litigation In February 2026, the U.S. District Court for the Northern District of California certified three classes of plaintiffs (one of direct purchasers, one of indirect purchasers and one of indirect resellers). Item 4. Mine Safety Disclosures.
Added
Not applicable. 18 Table of Contents Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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The graph assumes the investment of $100 in common stock and each of the indices as of the market close on December 31, 2019 and the reinvestment of all dividends on a quarterly basis.
The graph assumes the investment of $100 in common stock and each of the indices as of the market close on December 31, 2020 and the reinvestment of all dividends on a quarterly basis.
Market and Dividend Information The principal stock exchange on which our common stock (par value $0.33 1/3 per share) is listed is the New York Stock Exchange under the trading symbol “MO”. At February 14, 2025, there were approximately 46,000 holders of record of our common stock.
Market and Dividend Information The principal stock exchange on which our common stock (par value $0.33 1/3 per share) is listed is the New York Stock Exchange under the trading symbol “MO”. At February 13, 2026, there were approximately 44,000 holders of record of our common stock.
Future dividend payments remain subject to the discretion of our Board. 18 T able of Contents Issuer Purchases of Equity Securities During the Quarter Ended December 31, 2024 In January 2024, our Board authorized a $1.0 billion share repurchase program that it increased to $3.4 billion in March 2024 (as increased, “January 2024 share repurchase program”), which we completed in December 2024.
Future dividend payments remain subject to the discretion of our Board. 19 Table of Contents Issuer Purchases of Equity Securities During the Quarter Ended December 31, 2025 In January 2025, our Board authorized a $1.0 billion share repurchase program.
In January 2025, our Board authorized a new $1.0 billion share repurchase program, which we expect to complete by December 31, 2025. The timing of share repurchases under this program depends upon marketplace conditions and other factors, and the program remains subject to the discretion of our Board.
In October 2025, the Board authorized a $1.0 billion expansion of this program to $2.0 billion, which expires on December 31, 2026 (as expanded, “January 2025 share repurchase program”). Share repurchases depend upon marketplace conditions and other factors, and the program remains subject to the discretion of our Board.
Our share repurchase activity for each of the three months in the period ended December 31, 2024, was as follows: Period Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs October 1- October 31, 2024 2,352,238 $ 50.04 2,351,399 $ 191,863,426 November 1- November 30, 2024 1,781,329 $ 55.30 1,777,700 $ 93,546,378 December 1- December 31, 2024 1,707,103 $ 54.80 1,707,103 $ — For the Quarter Ended December 31, 2024 5,840,670 $ 53.04 5,836,202 (1) The total number of shares purchased includes (a) shares purchased under the January 2024 share repurchase program and (b) shares withheld by Altria in an amount equal to the statutory withholding taxes for vested stock-based awards previously granted to eligible employees (which totaled 839 in October and 3,629 in November).
Our share repurchase activity for each of the three months in the period ended December 31, 2025, was as follows: Period Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs October 1- October 31, 2025 1,796,943 $ 61.52 1,796,943 $ 1,177,389,567 November 1- November 30, 2025 1,561,299 $ 58.26 1,560,904 $ 1,086,445,148 December 1- December 31, 2025 1,477,862 $ 58.54 1,476,775 $ 1,000,000,025 For the Quarter Ended December 31, 2025 4,836,104 $ 59.56 4,834,622 (1) The total number of shares purchased includes (a) shares purchased under the January 2025 share repurchase program and (b) shares withheld by Altria in an amount equal to the statutory withholding taxes for vested stock-based awards previously granted to eligible employees (which totaled 395 in November and 1,087 in December).
Date Altria S&P Food, Beverage & Tobacco S&P 500 December 2019 $ 100.00 $ 100.00 $ 100.00 December 2020 $ 89.62 $ 105.56 $ 118.40 December 2021 $ 111.37 $ 122.64 $ 152.39 December 2022 $ 116.24 $ 133.76 $ 124.79 December 2023 $ 112.08 $ 127.99 $ 157.59 December 2024 $ 157.88 $ 132.50 $ 197.02 Source: FactSet - Total return assumes reinvestment of dividends as of the ex-dividend date.
Date Altria S&P Food, Beverage & Tobacco S&P 500 December 2020 $ 100.00 $ 100.00 $ 100.00 December 2021 $ 124.26 $ 116.18 $ 128.71 December 2022 $ 129.70 $ 126.72 $ 105.40 December 2023 $ 125.06 $ 121.25 $ 133.10 December 2024 $ 176.17 $ 125.52 $ 166.40 December 2025 $ 208.24 $ 135.97 $ 196.16 Source: FactSet - Total return assumes reinvestment of dividends as of the ex-dividend date.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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We believe if the decline in sales volume for Skoal is higher than currently estimated and results in material revenue declines, there may be a material adverse effect on the significant assumptions used in performing our valuation.
If the decline in sales volume for Skoal is higher than currently estimated and results in material revenue declines, we believe there may be a material adverse effect on the significant assumptions used in performing our valuation.
In addition, substantial excise tax increases on e-vapor and oral nicotine products may negatively impact adult smokers’ transition to these products, which could materially adversely affect our innovative tobacco businesses and our ability to achieve our Vision. International Treaty on Tobacco Control The World Health Organization’s Framework Convention on Tobacco Control (the “FCTC”) entered into force in February 2005.
In addition, substantial excise tax increases on e-vapor and oral nicotine products may negatively impact adult smokers’ transition to these products, which could materially adversely affect our innovative nicotine businesses and our ability to achieve our Vision. International Treaty on Tobacco Control The World Health Organization’s Framework Convention on Tobacco Control (the “FCTC”) entered into force in February 2005.
Counterfeit tobacco products, for example, are manufactured by unknown third parties in unregulated environments. Counterfeit versions of our products can negatively affect adult tobacco consumer experiences with and opinions of those brands. Illicit disposable e-vapor and oral nicotine pouch products may be designed to appeal to youth and are manufactured without scientific standards, exposing consumers to undocumented risks.
Counterfeit tobacco products, for example, are manufactured by unknown third parties in unregulated environments. Counterfeit versions of our products can negatively affect adult nicotine consumer experiences with and opinions of those brands. Illicit disposable e-vapor and oral nicotine pouch products may be designed to appeal to youth and are manufactured without scientific standards, exposing consumers to undocumented risks.
The unavailability or unacceptability of any one or more particular varieties of tobacco leaf or the unavailability of nicotine extract necessary to manufacture our operating companies’ products could negatively impact our ability to continue marketing existing products or impact adult tobacco consumer product acceptability, which could have a material adverse effect on our business and profitability.
The unavailability or unacceptability of any one or more particular varieties of tobacco leaf or the unavailability of nicotine extract necessary to manufacture our operating companies’ products could negatively impact our ability to continue marketing existing products or impact adult nicotine consumer product acceptability, which could have a material adverse effect on our business and profitability.
The payments due under the terms of the State Settlement Agreements and FDA user fees are subject to adjustment for several factors, including volume, operating income, market share and inflation. The future payment amounts discussed above are estimates, and actual payment amounts will differ to the extent underlying assumptions differ from actual future results.
The payments due under the terms of the State Settlement Agreements and FDA user fees are subject to adjustment for several factors, including inflation, operating income, market share and volume. The future payment amounts discussed above are estimates, and actual payment amounts will differ to the extent underlying assumptions differ from actual future results.
Retail share results for oral tobacco products are based on data from Circana, a tracking service that uses a sample of stores to project market share and depict share trends. This service tracks sales in the food, drug, mass merchandisers, convenience, military, dollar store and club trade classes on the number of cans and packs sold.
Retail share results for oral tobacco products are based on data from Circana, a tracking service that uses a sample of stores to project market share and depict share trends. This service tracks sales in the food, drug, mass merchandisers, convenience, military, dollar store and club trade classes on the number of cans sold.
For other trade classes selling cigarettes, retail share is based on shipments from wholesalers to retailers through the Store Tracking Analytical Reporting System, as provided by MSAi. This service is not designed to capture sales through other channels, including the internet, direct mail and some illicitly tax-advantaged outlets.
For other trade classes selling cigarettes, retail share is based on shipments from wholesalers to retailers through the Store Tracking Analytical Reporting System, as provided by MSAi. This service is not designed to capture sales through other channels, including the internet, direct mail and some tax-advantaged outlets.
We recognize the funded status of our defined benefit pension and other postretirement plans on the consolidated balance sheets and record as a component of other comprehensive earnings (losses), net of deferred income taxes, the gains or losses and prior service costs or credits that have not been recognized as components of net periodic benefit cost (income).
We recognize the funded status of our defined benefit pension and other postretirement plans on the consolidated balance sheets and record as a component of other comprehensive earnings (losses), net of deferred income taxes, the gains and losses and prior service costs and credits that have not been recognized as components of net periodic benefit cost (income).
Tax increases are expected to continue to have an adverse impact on sales of our operating companies’ products through lower consumption levels and the potential shift in adult tobacco consumer purchases from premium to non-premium or discount cigarettes, to lower taxed tobacco products or to counterfeit and contraband products.
Tax increases are expected to continue to have an adverse impact on sales of our operating companies’ products through lower consumption levels and the potential shift in adult nicotine consumer purchases from premium to non-premium or discount cigarettes, to lower-taxed tobacco products or to counterfeit and contraband products.
For example, in recent years, legislation has been introduced or enacted at the state or local level to subject tobacco products to various reporting requirements and performance standards; establish educational campaigns relating to tobacco consumption or tobacco control programs or provide additional funding for governmental tobacco control activities; restrict the sale of tobacco products in certain retail establishments and the sale of tobacco products in certain package sizes; prohibit the sale of tobacco products based on environmental concerns; impose responsibility on manufacturers for the disposal, recycling or other treatment of post-consumer goods such as plastic packaging; require tax stamping of smokeless tobacco products; require the use of state tax stamps using data encryption technology; and further restrict the sale, marketing and advertising of cigarettes and other tobacco products.
For example, legislation has been introduced or enacted at the state or local level to subject tobacco products to various reporting requirements and performance standards; establish educational campaigns relating to tobacco consumption or tobacco control programs or provide additional funding for governmental tobacco control activities; restrict the sale of tobacco products in certain retail establishments and the sale of tobacco products in certain package sizes; prohibit the sale of tobacco products based on environmental concerns; impose responsibility on manufacturers for the disposal, recycling or other treatment of post-consumer goods such as plastic packaging; require tax stamping of smokeless tobacco products; require the use of state tax stamps using data encryption technology; and further restrict the sale, marketing and advertising of cigarettes and other tobacco products.
For example, actions (or inaction) by the FDA could: ▪ impact the consumer acceptability of tobacco products; ▪ discontinue, delay or prevent the sale or distribution of existing, new or modified tobacco products; ▪ limit adult tobacco consumer choices; ▪ impose restrictions on communications with adult tobacco consumers; ▪ create a competitive advantage or disadvantage for certain tobacco companies; ▪ impose additional manufacturing, labeling or packaging requirements; ▪ impose additional restrictions at retail; ▪ result in increased illicit trade in tobacco products; and ▪ otherwise significantly increase the cost of doing business.
For example, actions (or inaction) by the FDA could: ▪ impact the consumer acceptability of nicotine products; ▪ discontinue, delay or prevent the sale or distribution of existing, new or modified nicotine products; ▪ limit adult nicotine consumer choices; ▪ impose restrictions on communications with adult nicotine consumers; ▪ create a competitive advantage or disadvantage for certain nicotine companies; ▪ impose additional manufacturing, labeling or packaging requirements; ▪ impose additional restrictions at retail; ▪ result in increased illicit trade in nicotine products; and ▪ otherwise significantly increase the cost of doing business.
There are a number of proposals currently under consideration by the governing body of the FCTC, some of which call for substantial restrictions on the manufacture, marketing, distribution and sale of tobacco products.
There are a number of proposals under consideration by the governing body of the FCTC, some of which call for substantial restrictions on the manufacture, marketing, distribution and sale of tobacco products.
The FDA pre-market authorization enforcement policy varies based on product type and date of availability on the market, specifically: ▪ Pre-existing Tobacco Products are exempt from the pre-market authorization requirement; ▪ cigarette and smokeless tobacco products that were modified or first introduced into the market between February 15, 2007 and March 22, 2011 are generally considered “Provisional Products” for which SE reports were required to be filed by March 22, 2011.
For products currently on the market, the FDA premarket authorization enforcement policy varies based on product type and date of availability on the market, specifically: ▪ Pre-existing Tobacco Products are exempt from the premarket authorization requirement; ▪ cigarette and smokeless tobacco products that were modified or first introduced into the market between February 15, 2007 and March 22, 2011 are generally considered “Provisional Products” for which SE reports were required to be filed by March 22, 2011.
We depreciate machinery and equipment over periods up to 20 years, and buildings and building improvements over periods up to 50 years. We amortize definite-lived intangible assets over their estimated useful lives up to 25 years.
We depreciate machinery and equipment over periods up to 20 years, and buildings and building improvements over periods up to 50 years. We amortize definite-lived intangible assets over their estimated useful lives.
Prohibitory policies, such as California’s ban on the sale of flavored tobacco products, which went into effect in 2022, can have unintended negative consequences, including the proliferation of counterfeit and unregulated products. We actively engage with regulators, state and federal lawmakers, our trade partners and other stakeholders to bring awareness to these issues.
Prohibitionist policies, such as California’s ban on the sale of flavored tobacco products, which went into effect in 2022, can have unintended negative consequences, including the proliferation of counterfeit and unregulated products. We actively engage with regulators, state and federal lawmakers, our trade partners and other stakeholders to bring awareness to these issues.
Increases in inflation can increase our financial liability under the State Settlement Agreements. The State Settlement Agreements’ inflation calculations require us to apply the higher of 3% or the U.S. Bureau of Labor Statistics’ Consumer Price Index for All Urban Consumers (“CPI-U”) percentage rate as published in January of each year.
Higher rates of inflation can increase our financial liability under the State Settlement Agreements as the State Settlement Agreements’ inflation calculations require us to apply the higher of 3% or the U.S. Bureau of Labor Statistics’ Consumer Price Index for All Urban Consumers (“CPI-U”) percentage rate as published in January of each year.
Scientific determinations as to any health risks or negative health consequences associated with the use of e-vapor and other innovative tobacco products could materially adversely affect our innovative tobacco products businesses and our ability to achieve our Vision. Most jurisdictions within the United States have restricted smoking in public places and some have restricted vaping in public places.
Scientific determinations as to any health risks or negative health consequences associated with the use of e-vapor and other innovative nicotine products could materially adversely affect our innovative nicotine products businesses and our ability to achieve our Vision. Most jurisdictions within the United States have restricted smoking in public places and some have restricted vaping in public places.
At December 31, 2024, we had availability under our Credit Agreement for borrowings of up to an aggregate principal amount of $3.0 billion, and we were in compliance with the covenants in our Credit Agreement. We monitor the credit quality of our bank group and do not know of any potential non-performing credit provider in that group.
At December 31, 2025, we had availability under our Credit Agreement for borrowings of up to an aggregate principal amount of $3.0 billion, and we were in compliance with the covenants in our Credit Agreement. We monitor the credit quality of our bank group and do not know of any potential non-performing credit provider in that group.
We elected to perform a qualitative assessment for certain of our reporting units and indefinite-lived intangible assets. This qualitative assessment included the review of certain macroeconomic factors and entity-specific qualitative factors to determine if it was more likely than not that the fair values of our reporting units and indefinite-lived intangible assets were below carrying value.
We elected to perform a qualitative assessment for certain of our reporting units and indefinite-lived intangible assets. This qualitative assessment included the review of certain macroeconomic factors and entity-specific qualitative factors discussed above to determine if it was more likely than not that the fair values of our reporting units and indefinite-lived intangible assets were below carrying value.
We support legislation to convert ad valorem taxes on MST to a weight-based methodology because, unlike the ad valorem tax, a weight-based tax subjects cans of equal weight to the same tax. As of February 24, 2025, the federal government, 23 states, Puerto Rico, Philadelphia, Pennsylvania and Cook County, Illinois have adopted a weight-based tax methodology for MST.
We support legislation to convert ad valorem taxes on MST to a weight-based methodology because, unlike the ad valorem tax, a weight-based tax subjects cans of equal weight to the same tax. As of February 23, 2026, the federal government, 24 states, Puerto Rico, Philadelphia, Pennsylvania and Cook County, Illinois have adopted a weight-based tax methodology for MST.
Some states, such as New York, Utah and Illinois, exempt certain products that have received FDA market authorization through the PMTA pathway. The legislation in California, which became effective in December 2022, bans the sale of most tobacco products with characterizing flavors, including menthol, mint and wintergreen.
Some states, such as New York and Illinois, exempt certain products that have received FDA market authorization through the PMTA pathway. The legislation in the State of California, which became effective in December 2022, bans the sale of most tobacco products with characterizing flavors, including menthol, mint and wintergreen.
In addition, as discussed below in Supplemental Guarantor Financial Information and in Note 11, PM USA guarantees our obligations under our outstanding debt securities, any borrowings under our Credit Agreement and any amounts outstanding under our commercial paper program. These items have not had, and are not expected to have, a significant impact on our liquidity.
In addition, as discussed below in Supplemental Guarantor Financial Information and in Note 9, PM USA guarantees our obligations under our outstanding debt securities, any borrowings under our Credit Agreement and any amounts outstanding under our commercial paper program. These items have not had, and are not expected to have, a significant impact on our liquidity.
The failure to comply with FDA 36 T able of Contents regulatory requirements, even inadvertently, and FDA enforcement actions also could have a material adverse effect on our business, results of operations, cash flows or financial position. ▪ Investigation and Enforcement: The FDA has a number of investigatory and enforcement tools available to it, including document requests and other required information submissions, facility inspections, facility closures, examinations and investigations, injunction proceedings, monetary penalties, product withdrawal and recall orders, and product seizures.
The failure to comply with FDA regulatory requirements, even inadvertently, and FDA enforcement actions also could have a material adverse effect on our business, results of operations, cash flows or financial position. 36 Table of Contents ▪ Investigation and Enforcement: The FDA has a number of investigatory and enforcement tools available to it, including document requests and other required information submissions, facility inspections, facility closures, examinations and investigations, injunction proceedings, monetary penalties, product withdrawal and recall orders, and product seizures.
The assumptions incorporated the highest and best use of our reporting units and indefinite-lived intangible assets and also included perpetual growth rates for periods beyond the long-term financial forecast. The perpetual growth rates and discount rates used in performing the valuations ranged from 0% to 2% and 10.0% to 13.5%, respectively.
The assumptions incorporated the highest and best use of our reporting units and indefinite-lived intangible assets and also included perpetual growth rates for periods beyond the long-term financial forecast. The perpetual growth rates and discount rates used in performing the valuations ranged from 0% to 2% and 9.0% to 13.5%, respectively.
Litigation defense costs are influenced by a number of factors, including the number and types of cases filed, the number of cases tried annually, the results of trials and appeals, the development of the law controlling relevant legal issues, and litigation strategy and tactics. For further discussion on these matters, see Note 20 and Item 3.
Litigation defense costs are influenced by a number of factors, including the number and types of cases filed, the number of cases tried annually, the results of trials and appeals, the development of the law controlling relevant legal issues, and litigation strategy and tactics. For further discussion on these matters, see Note 18 and Item 3.
In addition, new scientific data continues to be developed relating to innovative tobacco products, which could impact the FDA’s determination as to whether a product is, or continues to be, appropriate for the protection of public health and could, therefore, result in the removal of one or more products from the market.
In addition, new scientific data continues to be developed relating to innovative nicotine products, which could impact the FDA’s determination as to whether a product is, or continues to be, appropriate for the protection of public health and could, therefore, result in the removal of one or more products from the market.
Any significant change in the nature or consequences of these factors could negatively impact our ability to continue manufacturing and marketing existing products, increase our costs or negatively impact adult tobacco consumer product acceptability and have a material adverse effect on our business and profitability.
Any significant change in the nature or consequences of these factors could negatively impact our ability to continue manufacturing and marketing existing products, increase our costs or negatively impact adult nicotine consumer product acceptability and have a material adverse effect on our business and profitability.
Losses in tax revenues can cause such governments to take various actions, including increasing excise taxes, imposing 39 T able of Contents legislative or regulatory requirements, or asserting claims against manufacturers of tobacco products or members of the trade channels through which such tobacco products are distributed and sold, each of which could have an adverse effect on our business, results of operations, cash flows or financial position.
Losses in tax revenues can cause such governments to take various actions, including increasing excise taxes, imposing legislative or regulatory requirements, or asserting claims against manufacturers of tobacco products or members of the trade channels 39 Table of Contents through which such tobacco products are distributed and sold, each of which could have an adverse effect on our business, results of operations, cash flows or financial position.
We recognize the financial statement benefit for uncertain income tax positions in our consolidated financial statements when it is more likely than not, based on the technical merits, that the position will be sustained upon examination by taxing authorities.
We recognize the financial statement benefit for uncertain income tax positions in our consolidated financial statements when we have determined that it is more likely than not, based on the technical merits, that the position will be sustained upon examination by taxing authorities.
A majority of states currently tax MST using an ad valorem method, which is calculated as a percentage of the price of the product, typically the wholesale price. This ad valorem method results in more tax being paid on premium products than is paid on lower-priced products of equal weight.
Many states currently tax MST using an ad valorem method, which is calculated as a percentage of the price of the product, typically the wholesale price. This ad valorem method results in more tax being paid on premium products than is paid on lower-priced products of equal weight.
Should PM USA or USSTC receive unfavorable determinations on any SE reports currently pending with the FDA, we believe PM USA and USSTC can replace the vast majority of these product volumes with other FDA authorized products or with Pre-existing Tobacco Products.
Should PM USA or USSTC receive unfavorable determinations on any SE report currently pending with the FDA, we believe PM USA and USSTC can replace the vast majority of these product volumes with other FDA authorized products or with Pre-existing Tobacco Products.
However, the effects of the current macroeconomic and geopolitical conditions on prices, availability and quality of such items may continue, which could have a material adverse effect on our business, results of operations, cash flows or financial position.
However, the effects of current macroeconomic and geopolitical conditions, including tariffs, on prices, availability and quality of such items may continue, which could have a material adverse effect on our business, results of operations, cash flows or financial position.
Furthermore, third-party digital platforms, such as app stores, have restricted, and in some cases prohibited, communications with adult tobacco consumers concerning tobacco products. It is possible that if this private sector activity becomes more widespread it could have an adverse effect on our business, results of operations, cash flows or financial position.
Furthermore, third-party digital platforms, such as app stores, have restricted, and in some cases prohibit, communications with adult nicotine consumers concerning tobacco products. It is possible that if this private sector activity becomes more widespread it could have an adverse effect on our business, results of operations, cash flows or financial position.
For example, we currently are, or recently have been, subject to a number of governmental investigations with respect to our former investment in JUUL, which we divested in March 2023, including the following: (i) the U.S.
For example, we are, or have been, subject to a number of governmental investigations with respect to our former investment in JUUL, which we divested in March 2023, including the following: (i) the U.S.
The majority of these commitments are expected to be satisfied within 12 months. Accounts payable and accrued liabilities are reflected on our consolidated balance sheet at December 31, 2024 and are excluded from the amounts above.
The majority of these commitments are expected to be satisfied within 12 months. Accounts payable and accrued liabilities are reflected on our consolidated balance sheet at December 31, 2025 and are excluded from the amounts above.
We had a working capital deficit at December 31, 2024 and 2023, and believe we have the ability to fund working capital deficits with cash provided by operating activities, borrowings under our Credit Agreement and access to the credit and capital markets.
We had a working capital deficit at December 31, 2025 and 2024, and believe we have the ability to fund working capital deficits with cash provided by operating activities, borrowings under our Credit Agreement and access to the credit and capital markets.
The FDA has communicated in these MDOs that vapor products with non-tobacco flavors present unique questions relevant to the FDA’s “Appropriate for the Protection of Public Health” standard and that successful applications require strong, product-specific evidence. A number of these manufacturers are challenging the MDOs for their products. In January 2024, the U.S.
The FDA has communicated in these MDOs that vapor products with non-tobacco flavors present unique questions relevant to the FDA’s “Appropriate for the Protection of Public Health” standard and that successful applications require strong, product-specific evidence. A number of these manufacturers are challenging the MDOs for their 35 Table of Contents products. In January 2024, the U.S.
Neither the Guarantor nor other 100% owned subsidiaries of the Parent that are not guarantors of the debt (“Non-Guarantor Subsidiaries”) are limited by contractual obligations on their ability to pay cash dividends or make other distributions with respect to their equity interests. 50 T able of Contents The following tables include summarized financial information for the Parent and the Guarantor.
Neither the Guarantor nor other 100% owned subsidiaries of the Parent that are not guarantors of the debt (“Non-Guarantor Subsidiaries”) are limited by contractual obligations on their ability to pay cash dividends or make other distributions with respect to their equity interests. 50 Table of Contents The following tables include summarized financial information for the Parent and the Guarantor.
In addition: ▪ Effective January 21, 2025, USSTC increased the list price on its Copenhagen and Red Seal brands by $0.12 per can. USSTC also increased the list price on its Skoal brands by $0.17 per can. ▪ Effective February 23, 2025, Helix increased the list price on its on! brand by $0.20 per can.
USSTC also increased the list price on its Skoal brands by $0.17 per can. ▪ Effective February 23, 2025, Helix increased the list price on its on! brand by $0.20 per can. ▪ Effective January 21, 2025, USSTC increased the list price on its Copenhagen and Red Seal brands by $0.12 per can.
Those products that were found by the FDA to be not substantially equivalent (certain smokeless tobacco products) had been discontinued for business reasons prior to the FDA’s determinations; therefore, those determinations did not impact business results. PM USA and USSTC have other Provisional Products that continue to be subject to the FDA’s pre-market review process.
Those products that were found by the FDA to be not substantially equivalent (certain smokeless tobacco products) had been discontinued for business reasons prior to the FDA’s determinations; therefore, those determinations did not impact business results. PM USA and USSTC have other Provisional Products that continue to be subject to the FDA’s premarket review process.
We believe our cash and cash equivalents balance, along with our future cash flows from operations, capacity for borrowings under our Credit Agreement and access to credit and capital markets, provide sufficient liquidity to meet the needs of our business operations and to satisfy our projected cash requirements for the next 12 months and the foreseeable future. 46 T able of Contents Capital Markets and Other Matters Credit Ratings - Our cost and terms of financing and our access to commercial paper markets may be impacted by applicable credit ratings.
We believe our cash and cash equivalents balance, along with our future cash flows from operations, capacity for borrowings under our Credit Agreement and access to credit and capital markets, provide sufficient liquidity to meet the needs of our business operations and to satisfy our projected cash requirements for the foreseeable future, including the next 12 months. 46 Table of Contents Capital Markets and Other Matters Credit Ratings - Our cost and terms of financing and our access to commercial paper markets may be impacted by applicable credit ratings.
We have implemented and continue to implement various strategies to help secure sufficient supplies of raw materials, ingredients and component parts for production, including maintaining inventory levels of certain tobacco varieties that cover several years, purchasing 40 T able of Contents raw materials, ingredients and component parts from disperse geographic regions throughout the world and entering into long-term contracts with some of our tobacco growers and direct material suppliers.
We have implemented and continue to implement various strategies to help secure sufficient supplies of raw materials, ingredients and component parts for production, including maintaining inventory levels of certain tobacco varieties that cover several years, purchasing raw materials, ingredients and component parts from disperse geographic regions throughout the world and entering into long-term contracts with some of our tobacco growers and direct material suppliers.
Because certain of our products’ packaging consists of single-use plastics, single-use plastic bans and extended producer responsibility mandates could result in bans on some of our product packaging or our products and adversely impact our costs and revenues. Additional taxes and limitations on the use of certain single-use plastics have been proposed by the U.S.
Because certain of our products’ packaging consists of single-use plastics, single-use plastic bans and extended producer responsibility mandates could result in bans on some of our operating companies’ product packaging or their products and adversely impact our costs and revenues. Additional taxes and limitations on the use of certain single-use plastics have been proposed by the U.S.
Operating Results by Business Segment Business Environment Summary The U.S. tobacco industry faces a number of business and legal challenges that have materially adversely affected and may continue to materially adversely affect our business, results of operations, cash flows or financial position or our ability to achieve our Vision.
Operating Results by Business Segment Business Environment Summary The U.S. nicotine industry faces a number of business, legal and regulatory challenges that have materially adversely affected and may continue to materially adversely affect our business, results of operations, cash flows or financial position or our ability to achieve our Vision.
Long-Term Debt and Interest on Borrowings - In addition to maturities of long-term debt, we make interest payments based on stated coupon interest rates. For information on annual debt maturities and interest payments, see Note 11.
Long-Term Debt and Interest on Borrowings - In addition to maturities of long-term debt, we make interest payments based on stated coupon interest rates. For information on annual debt maturities and interest payments, see Note 9.
Summary of Significant Accounting Policies to our consolidated financial statements in Item 8 (“Note 2”) includes a summary of the significant accounting policies and methods used in the preparation of our consolidated financial statements. In most instances, we must use an accounting policy or method because it is the only policy or method permitted under GAAP.
Summary of Significant Accounting Policies (“Note 2”) includes a summary of the significant accounting policies and methods used in the preparation of our consolidated financial statements. In most instances, we must use an accounting policy or method because it is the only policy or method permitted under GAAP.
At the present time, while it is reasonably possible that an unfavorable outcome in a case may occur, except to the extent discussed in Note 20 and Item 3: (i) management has concluded that it is not probable that a loss has been incurred in any pending litigation; (ii) management is unable to estimate the possible loss or range of loss that could result from an unfavorable outcome in any pending case; and (iii) accordingly, management has not provided any amounts in our consolidated financial statements for unfavorable outcomes, if any.
At the present time, while it is reasonably possible that an unfavorable 27 Table of Contents outcome in a case may occur, except to the extent discussed in Note 18 and Item 3: (i) management has concluded that it is not probable that a loss has been incurred in any pending litigation; (ii) management is unable to estimate the possible loss or range of loss that could result from an unfavorable outcome in any pending case; and (iii) accordingly, management has not provided any amounts in our consolidated financial statements for unfavorable outcomes, if any.
For a discussion regarding the growth of oral nicotine pouch products and the related impact on the MST category and economic conditions that impact adult tobacco consumer purchasing behavior, see Operating Results by Business Segment - Business Environment - Summary above.
For a discussion regarding the growth of oral nicotine pouch products and the related impact on the MST category and economic conditions that impact adult nicotine consumer purchasing behavior, see Trends and Developments and Operating Results by Business Segment - Business Environment - Summary above.
Current geopolitical and macroeconomic conditions (including tariffs, inflation, high interest rates, labor shortages, supply and demand imbalances and international armed conflict) and adverse weather events have caused and continue to cause worldwide disruptions and delays to supply chains and commercial markets, which limit access to, and increase the cost of, raw materials, ingredients and component parts (for example, wood tips used in our cigar products and aluminum used in our packaging).
Current geopolitical and macroeconomic conditions (including tariffs, inflation, high interest rates, labor shortages, supply and demand imbalances and international armed conflict) and adverse weather events have caused and continue to cause worldwide disruptions and delays to supply chains and commercial markets, and have limited access to, and increased the cost of, raw materials, ingredients and component parts (for example, wood tips used in our cigar products and aluminum used in our packaging).
While our management believes that the estimated fair values of each reporting unit and indefinite-lived intangible asset at December 31, 2024 are reasonable, actual performance in the short term or long term could be significantly different from forecasted performance, which could result in impairment charges in future periods.
While our management believes that the estimated fair values of each reporting unit and indefinite-lived intangible assets at December 31, 2025 are reasonable, actual performance in the short term or long term could be significantly different from forecasted performance, which could result in impairment charges in future periods.
When we provide a non-GAAP measure in this Form 10-K, we also provide a reconciliation of that non-GAAP financial measure to the most directly comparable GAAP financial measure. Discussion and Analysis Critical Accounting Estimates Note 2.
When we provide a non-GAAP measure in this Form 10-K, we also provide a reconciliation of that non-GAAP financial measure to the most directly comparable GAAP financial measure. 24 Table of Contents Discussion and Analysis Critical Accounting Estimates Note 2.
In January 2025, the U.S. District Court for the Eastern District of Texas found in favor of cigarette manufacturers that had challenged the final rule on the basis that the FDA exceeded its statutory authority by requiring cigarette packaging and advertising to contain 11 specific warnings when it only had the authority to require nine.
District Court for the Eastern District of Texas found in favor of cigarette manufacturers that had challenged the final rule on the basis that the FDA exceeded its statutory authority by requiring cigarette packaging and advertising to contain 11 specific warnings when it only had the authority to require nine.
Modifications to currently marketed products, including modifications that result from, for example, changes to the quantity of tobacco product(s) in a package, a manufacturer being unable to acquire ingredients or a supplier or contract manufacturer being unable to maintain the consistency required in ingredients or manufacturing processes, could trigger the FDA’s pre-market review processes.
Modifications to currently marketed products, including modifications that result from, for example, changes to the quantity of tobacco product(s) in a package, a manufacturer being unable to acquire ingredients or a supplier or contract manufacturer being unable to maintain the consistency required in ingredients or manufacturing processes, could trigger the FDA’s premarket review process.
As of February 24, 2025, multiple states and localities are considering legislation to ban flavors in one or more tobacco products, and six states (California, Massachusetts, New Jersey, New York, Rhode Island and Utah) and the District of Columbia have passed such legislation.
As of February 23, 2026, multiple states and localities are considering legislation to ban flavors in one or more tobacco products, and six states (California, Massachusetts, New Jersey, New York, Rhode Island and Utah) and the District of Columbia have passed such legislation.
In addition: ▪ Effective January 19, 2025, PM USA increased the list price of Marlboro (excluding Mainline Menthol and 72s Menthol) and L&M by $0.17 per pack. PM USA decreased the list price of Marlboro Black by $0.28 per pack. PM USA also increased the list price of all its other premium cigarette brands by $0.22 per pack.
PM USA also increased the list price of all its other premium cigarette brands by $0.25 per pack. ▪ Effective January 19, 2025, PM USA increased the list price of Marlboro (excluding Mainline Menthol and 72s Menthol) and L&M by $0.17 per pack. PM USA decreased the list price of Marlboro Black by $0.28 per pack.
Assuming no change to the shape of the yield curve, a 50 basis point decrease (increase) in our discount rates would increase (decrease) our pension and postretirement expense by approximately $10 million. Similarly, a 50 basis point decrease (increase) in the expected return on plan assets would increase (decrease) our pension and postretirement expense by approximately $40 million.
Assuming no change to the shape of the yield curve, a 50 basis point decrease (increase) in our discount rates would increase (decrease) our pension and postretirement expense by approximately $5 million. Similarly, a 50 basis point decrease (increase) in the expected return on plan assets would increase (decrease) our pension and postretirement expense by approximately $35 million.
To date, the impact on us of changes in the price, availability and quality of tobacco, other raw materials, ingredients and component parts has not been material.
To date, the impact on us of changes in the price, availability 40 Table of Contents and quality of tobacco, other raw materials, ingredients and component parts has not been material.
We paid approximately $3.9 billion and $4.3 billion for the years ended December 31, 2024 and 2023, respectively, in connection with the State Settlement Agreements and FDA user fees, which are primarily paid in the second quarter of each period.
We paid approximately $3.5 billion and $3.9 billion for the years ended December 31, 2025 and 2024, respectively, in connection with the State Settlement Agreements and FDA user fees, which are primarily paid in the second quarter of each period.
At December 31, 2024, purchase obligations for inventory and production costs for the next 12 months were $0.8 billion and $2.3 billion thereafter. At December 31, 2024, we had $0.9 billion of other purchase obligation commitments for marketing, capital expenditures, information technology and professional services, which occur through the ordinary course of business.
At December 31, 2025, purchase obligations for inventory and production costs for the next 12 months were $0.8 billion and $2.2 billion thereafter. At December 31, 2025, we had $1.0 billion of other purchase obligation commitments for marketing, capital expenditures, information technology and professional services, which occur through the ordinary course of business.
While we believe PM USA’s and USSTC’s current Provisional Products meet the statutory requirements of the FSPTCA, we cannot predict how the FDA will ultimately apply law, regulation and guidance to their various SE reports.
While we believe PM USA’s and USSTC’s current Provisional Products meet the statutory requirements of the FSPTCA, we cannot predict how the FDA will ultimately apply law, regulation, guidance or enforcement authority to various SE reports.
State Settlement Agreements As discussed in Note 20, during 1997 and 1998, PM USA and other major domestic cigarette manufacturers entered into the State Settlement Agreements. These settlements require participating manufacturers to make substantial annual payments, which are adjusted for several factors, including inflation, operating income, market share and industry volume.
State Settlement Agreements As discussed in Note 18, during 1997 and 1998, PM USA and other major domestic cigarette manufacturers entered into the State Settlement Agreements. These settlements require participating manufacturers to make substantial annual payments, which are adjusted 37 Table of Contents for several factors, including inflation, operating income, market share and industry volume.
For the years ended December 31, 2024 and 2023, product liability defense costs for PM USA were $125 million and $133 million, respectively. The factors that have influenced past product liability costs are expected to continue to influence future costs.
For the years ended December 31, 2025 and 2024, product liability defense costs for PM USA were $113 million and $125 million, respectively. The factors that have influenced past product liability costs are expected to continue to influence future costs.
We believe that a significant number of adult tobacco consumers switch among tobacco categories, use multiple forms of tobacco products and try innovative tobacco products, such as e-vapor products and oral nicotine pouches.
Additionally, we believe that a significant number of adult nicotine consumers switch among tobacco categories, use multiple forms of tobacco products and try 21 Table of Contents innovative nicotine products, such as e-vapor products and oral nicotine pouches.
As of February 24, 2025, 182 countries, as well as the European Union, have become parties to the FCTC. While the United States is a signatory of the FCTC, it is not currently a party to the agreement, as the agreement has not been submitted to, or ratified by, the U.S. Senate.
As of February 23, 2026, 182 countries, as well as the European Union, have become parties to the FCTC. While the United States is a signatory of the FCTC, it is not a party to the agreement, as the agreement has not been submitted to, or ratified by, the U.S. Senate.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion should be read in conjunction with the other sections of this Form 10-K, including our consolidated financial statements and related notes contained in Item 8, and the discussion of risk factors that may affect future results in Item 1A. Additionally, refer to Item 7.
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the other sections of this Form 10-K, including our consolidated financial statements and related notes contained in Item 8, and the discussion of risk factors that may affect future results in Item 1A.
Although the estimated fair value of the Skoal trademark exceeded its carrying value of $3.6 billion by approximately 7% ($0.3 billion), MST products, including Skoal , continued to be negatively impacted due in part to evolving adult tobacco consumer preferences, which have continued to contribute to reductions in sales volumes for MST products, including Skoal, as discussed above.
Although the estimated fair value of the Skoal trademark exceeded its carrying value by approximately 7% ($0.3 billion), MST products, including Skoal , continued to be negatively impacted due in part to evolving adult nicotine consumer preferences, which have continued to contribute to reductions in sales volumes for MST products, including Skoal .
It is not possible to predict the results of ongoing scientific research or the types of future scientific research into the health risks of tobacco exposure and the impact of such 38 T able of Contents research on legislation and regulation.
It is not possible to predict the results of ongoing scientific research or the types of future scientific research into the health risks of tobacco exposure and the impact of such research on legislation and regulation.
The FDA appealed the decision, and, in March 2024, the U.S. Court of Appeals for the Fifth Circuit reversed the trial court and remanded the case for further proceedings. In August 2024, the cigarette manufacturers in the suit petitioned the U.S. Supreme Court to review the case, which the U.S. Supreme Court declined to do in November 2024.
The FDA appealed the decision, and, in March 2024, the U.S. Court of Appeals for the Fifth Circuit reversed the district court and remanded the case for further proceedings. In August 2024, the cigarette manufacturers in the suit petitioned the U.S. Supreme Court to review the case, which the U.S. Supreme Court declined to do. In January 2025, the U.S.
For further information on the gain related to the ABI Transaction, see Note 8.
For further information on the gain related to the ABI Transaction, see Note 6.
Any such actions affecting our 33 T able of Contents operating companies’ products could have a material adverse impact on our business, results of operations, cash flows or financial position.
Any such actions affecting our operating companies’ products could have a material adverse impact on our business, results of operations, cash flows or financial position.
These items may include, for example, loss on early extinguishment of debt, restructuring charges, asset impairment charges, acquisition, disposition and integration-related items, equity investment-related special items, certain income tax items, charges associated with tobacco and health and certain other litigation items, and resolutions of certain non-participating manufacturer (“NPM”) adjustment disputes under the Master Settlement Agreement (“NPM Adjustment Items”).
These items may include, for example, loss on early extinguishment of debt, restructuring charges, asset impairment charges, acquisition, disposition and integration-related items, equity investment-related special items, certain income tax items, charges associated with tobacco and health and certain other litigation items, resolutions of certain non-participating manufacturer (“NPM”) adjustment disputes under the Master Settlement Agreement (“NPM Adjustment Items”) and amortization expense associated with definite-lived intangible assets (“amortization of intangibles”).
Guarantees and Other Similar Matters - As discussed in Note 20, we had unused letters of credit obtained in the ordinary course of business and guarantees (including third-party guarantees) outstanding at December 31, 2024. From time to time, we also issue lines of credit to affiliated entities. As further discussed in Note 5.
Guarantees and Other Similar Matters - As discussed in Note 18, we had unused letters of credit obtained in the ordinary course of business and guarantees (including third-party guarantees) outstanding at December 31, 2025. From time to time, we also issue lines of credit to affiliated entities.
In January 2025, the FDA proposed a tobacco product standard that would establish a maximum nicotine level in cigarettes and certain other combustible tobacco products (including little cigars, cigarillos and most large cigars) significantly lower than the average concentration in these products currently on the market with the aim of making such products minimally or non-addictive.
Courts of Appeals have upheld adverse FDA determinations. ▪ Potential Product Standards ▪ Nicotine in Cigarettes and Other Combustible Tobacco Products : In January 2025, the FDA proposed a tobacco product standard that would establish a maximum nicotine level in cigarettes and certain other combustible tobacco products (including little cigars, cigarillos and most large cigars) significantly lower than the average concentration in these products currently on the market with the aim of making such products minimally or non-addictive.
Cigarette and smokeless tobacco products introduced into the market or modified after March 22, 2011 are “Non-Provisional Products” and must receive a marketing order from the FDA prior to being offered for sale. Marketing orders for Non-Provisional Products may be obtained by filing an SE report, a PMTA or using another pre-market pathway established by the FDA.
Cigarette and smokeless tobacco products introduced into the market or modified after March 22, 2011 are “Non-Provisional Products” and must apply to receive an MGO from the FDA prior to being offered for sale. MGOs for Non-Provisional Products may be obtained by filing an SE report, a PMTA or using another premarket pathway established by the FDA.
A “not substantially equivalent” determination, a denial of a PMTA or an MGO withdrawal by the FDA on one or more products (which would require the removal of the product or products from the market) could have a material adverse impact on our business, results of operations, cash flows or financial position.
A “not substantially equivalent” determination, a denial of a PMTA, an MGO withdrawal or an enforcement action by the FDA with respect to one or more products (each of which could require the removal of the product or products from the market) could have a material adverse impact on our business, results of operations, cash flows or financial position.
PM USA and USSTC may not be able to obtain a marketing order for non-provisional products because the FDA may determine that any such product does not meet the statutory requirements for approval.
PM USA and USSTC may not be able to obtain an MGO for non-provisional products because the FDA may determine that any such product does not meet the statutory requirements for approval.
Adjusted OCI increased $212 million (2.0%), due primarily to higher pricing, which includes higher promotional investments, and lower marketing, administration and research costs ($86 million), partially offset by lower shipment volume, higher per unit settlement charges and manufacturing costs. Marketing, administration and research costs for the smokeable products segment include PM USA’s cost of administering and litigating product liability claims.
Adjusted OCI increased $142 million (1.3%), due primarily to higher pricing, which includes higher promotional investments, and lower per unit settlement charges, partially offset by lower shipment volume. Marketing, administration and research costs for the smokeable products segment include PM USA’s cost of administering and litigating product liability claims.
When adjusted for calendar differences and trade inventory movements, our smokeable products segment’s domestic cigarettes shipment volume decreased by an estimated 11%. When adjusted for calendar differences and trade inventory movements, total estimated domestic cigarette industry volume decreased by an estimated 9%.
When adjusted for calendar differences, our smokeable products segment’s domestic cigarettes shipment volume decreased by an estimated 9.5%. When adjusted for calendar differences, trade inventory movements and other factors, total estimated domestic cigarette industry volume decreased by an estimated 8%.
To calculate volumes of cans and packs shipped, one can of oral nicotine pouches, irrespective of the number of pouches in the pack, is assumed to be equivalent to one can or pack of MST.
To calculate volumes of cans shipped, one can of oral nicotine pouches, irrespective of the number of pouches in the can, is assumed to be equivalent to one can of MST.
(2) For the year ended December 31, 2024, net earnings (losses) include $294 million of intercompany interest income from non-guarantor subsidiaries.
(2) For the year ended December 31, 2025, net earnings (losses) include $258 million of intercompany interest income from non-guarantor subsidiaries.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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The following table provides the fair value of our long-term debt and the change in fair value based on a 1% increase or decrease in market interest rates at December 31: (in billions) 2024 2023 Fair value $ 22.7 $ 24.4 Decrease in fair value from a 1% increase in market interest rates 1.7 1.9 Increase in fair value from a 1% decrease in market interest rates 2.0 2.2 We expect interest rates on borrowings under our Credit Agreement to be based on the Term Secured Overnight Financing Rate, plus a percentage based on the higher of the ratings of our long-term senior unsecured debt from Moody’s and S&P.
The following table provides the fair value of our long-term debt and the change in fair value based on a 1% increase or decrease in market interest rates at December 31: (in billions) 2025 2024 Fair value $ 24.3 $ 22.7 Decrease in fair value from a 1% increase in market interest rates 1.8 1.7 Increase in fair value from a 1% decrease in market interest rates 2.1 2.0 51 Table of Contents
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The applicable percentage for borrowings under our Credit Agreement at December 31, 2024 was 1.0% based on our long-term senior unsecured debt ratings on that date. At December 31, 2024 and 2023, we had no borrowings under our Credit Agreement. 51 T able of Contents

Other MO 10-K year-over-year comparisons