Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Fair Value Measurement Inputs and Valuation Techniques

The fair values of the Fixed-price Preemptive Rights and warrant are estimated using Black-Scholes option-pricing models, adjusted for unobservable inputs, including probability factors and weighting of expected life, volatility levels and risk-free interest rates (which are classified in Level 3 of the fair value hierarchy) based on the following assumptions at:

	June 30, 2019	March 8, 2019	June 30, 2019	March 8, 2019
	Fixed-price Preemptive Rights		Warrant
Expected life (1)	2.01 years	2.32 years	3.69 years	4 years
Expected volatility (2)	88.98%	93.02%	88.98%	93.02%
Risk-free interest rate (3)(4)	1.46%	1.61%	1.40%	1.67%
Expected dividend yield (5)	—%	—%	—%	—%

⁽¹⁾ Based on the weighted-average remaining expected life of the Fixed-price Preemptive Rights (with a range from approximately 2 years to 7 years at June 30, 2019 and March 8, 2019) and the March 8, 2023 expiration date of the warrant.

⁽²⁾ Based on a blend of historical volatility levels of the underlying equity security and peer companies.

⁽³⁾ Based on the implied yield currently available on Canadian Treasury zero coupon issues weighted for the remaining expected life of the Fixed-price Preemptive Rights.

⁽⁴⁾ Based on the implied yield currently available on Canadian Treasury zero coupon issues and the expected life of the warrant.

⁽⁵⁾ Based on Cronos’s expected dividend payments.

Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation

The following table provides a reconciliation of the beginning and ending balance of the Fixed-price Preemptive Rights and warrant, which are classified in Level 3 of the fair value hierarchy:

	(in millions)
Balance at December 31, 2018	$	—
Initial investment in Fixed-price Preemptive Rights and warrant	1,736
Pre-tax earnings (losses) recognized in net earnings	(660		)
Balance at June 30, 2019	$	1,076

Schedule of Derivative Liabilities at Fair Value

The fair values of Altria’s derivative financial instruments on a gross basis included on the condensed consolidated balance sheets were as follows:

	Fair Value of Assets					Fair Value of Liabilities
	Balance Sheet Classification	June 30, 2019		December 31, 2018		Balance Sheet Classification	June 30, 2019		December 31, 2018
Derivatives designated as hedging instruments:	(in millions)
Foreign currency contracts	Other current assets	$	45	$	37	Other accrued liabilities	$	—	$	—
Foreign currency contracts	Other assets	—		4		Other liabilities	16		4
Total		$	45	$	41		$	16	$	4
Derivatives not designated as hedging instruments:
Cronos warrant	Investments in equity securities	$	763	$	—
Fixed-price Preemptive Rights	Investments in equity securities	313		—
Total		$	1,076	$	—
Total derivatives		$	1,121	$	41		$	16	$	4

Pre-tax Effects of Net Investment Hedges on Accumulated Other Comprehensive Losses

The pre-tax effects of Altria’s net investment hedges on accumulated other comprehensive losses and the condensed consolidated statements of earnings were as follows:

	Gain (Loss) Recognized in Accumulated Other Comprehensive Losses					Gain (Loss) Recognized in Net Earnings (1)				Gain (Loss) Recognized in Accumulated Other Comprehensive Losses					Gain (Loss) Recognized in Net Earnings (1)
	For the Six Months Ended June 30,									For the Three Months Ended June 30,
	2019			2018		2019		2018		2019			2018		2019		2018
	(in millions)
Foreign currency contracts	$	13		$	39	$	16	$	16	$	(10	)	$	72	$	7	$	8
Foreign currency denominated debt	(32		)	—		—		—		(65		)	—		—		—
Total	$	(19	)	$	39	$	16	$	16	$	(75	)	$	72	$	7	$	8

⁽¹⁾ Related to amounts excluded from effectiveness testing.