Goodwill and Other Intangible Assets, net

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets, net

Goodwill and Other Intangible Assets, net

Goodwill and other intangible assets, net, were as follows at December 31:

	Goodwill				Other Intangible Assets, net
(in millions)	2022		2021		2022		2021
Smokeable products segment	$	99	$	99	$	2,989	$	3,017
Oral tobacco products segment	5,078		5,078		9,097		9,129
Other	—		—		298		160
Total	$	5,177	$	5,177	$	12,384	$	12,306

Other intangible assets consisted of the following at December 31:

	2022				2021
(in millions)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Indefinite-lived intangible assets	$	11,443	$	—	$	11,443	$	—
Definite-lived intangible assets	1,411		470		1,260		397
Total other intangible assets	$	12,854	$	470	$	12,703	$	397

At December 31, 2022, substantially all of our indefinite-lived intangible assets consisted of (i) MST and snus trademarks of $8.8 billion, which consists of Copenhagen, Skoal and other MST and snus trademarks of $4.0 billion, $3.9 billion and $0.9 billion, respectively, and (ii) cigar trademarks of $2.6 billion from our 2009 acquisition of UST and 2007 acquisition of Middleton, respectively. Definite-lived intangible assets, which consist primarily of intellectual property, certain cigarette trademarks and customer relationships, are amortized over a weighted-average period of 20 years. Pre-tax amortization expense for definite-lived intangible assets during the years ended December 31, 2022, 2021 and 2020, was $73 million, $72 million and $72 million, respectively. Annual amortization expense for each of the next five years is estimated to be approximately $75 million, assuming no additional transactions occur that require the amortization of intangible assets.

In October 2022, ALCS and Altria (solely with respect to certain provisions thereunder) entered into an agreement with Triaga, Inc. (“Triaga”), a subsidiary of Philip Morris International Inc. (“PMI”), and PMI (solely with respect to certain provisions thereunder), to, among other things, transition and ultimately conclude our relationship with respect to the IQOS Tobacco Heating System (“IQOS System”) in the United States. Under the terms of the agreement, Triaga paid ALCS $1.0 billion upon entry into the agreement and is obligated to make an additional payment of $1.7 billion (plus interest thereon from the effective date of October 19, 2022 at a per annum rate equal to 6%) to ALCS by July 15, 2023, for a total cash payment of approximately $2.7 billion (plus interest). For the consideration received, ALCS has agreed to assign to Triaga exclusive U.S. commercialization rights to the IQOS System effective April 30, 2024. PMI will not have access to the Marlboro brand name or other brand assets, as PM USA owns the Marlboro trademark in the United States.

As a result of the agreement, we recorded (i) a pre-tax $2.7 billion deferred gain, which we expect to recognize in earnings when we relinquish our rights to the IQOS System, (ii) a $1.7 billion receivable and (iii) a $21 million interest receivable on our consolidated balance sheet at December 31, 2022. For the year ended December 31, 2022, we recorded $21 million of interest income in our consolidated statement of earnings. For the year ended December 31, 2022, we recorded $1.0 billion in cash received upon entry into the agreement.

The changes in goodwill and net carrying amount of intangible assets were as follows:

	2022				2021
(in millions)	Goodwill		Other Intangible Assets, net		Goodwill		Other Intangible Assets, net
Balance at January 1	$	5,177	$	12,306	$	5,177	$	12,615
Changes due to:
Acquisitions (1)	—		151		—		—
Dispositions (2)	—		—		—		(237)
Amortization	—		(73)		—		(72)
Balance at December 31	$	5,177	$	12,384	$	5,177	$	12,306

(1) Acquisitions of certain intellectual property related to other tobacco products, which included a $50 million non-cash contribution made by JTIUH to Horizon. For additional information regarding Horizon, see Note 1. Background and Basis of Presentation.

(2) Dispositions related to the Ste. Michelle Transaction. See Note 1. Background and Basis of Presentation.

During 2022, 2021 and 2020, our annual impairment test of goodwill and indefinite-lived intangible assets resulted in no impairment charges. At December 31, 2022 and 2021, there were no accumulated impairment losses related to goodwill.