Note 12. Condensed Consolidating Financial Information:

PM USA, which is a wholly-owned subsidiary of Altria Group, Inc., has issued guarantees relating to Altria Group, Inc.'s obligations under its outstanding debt securities, borrowings under its Credit Agreement and amounts outstanding under its commercial paper program (the "Guarantees"). Pursuant to the Guarantees, PM USA fully and unconditionally guarantees, as primary obligor, the payment and performance of Altria Group, Inc.'s obligations under the guaranteed debt instruments (the "Obligations").

The Guarantees provide that PM USA fully and unconditionally guarantees the punctual payment when due, whether at stated maturity, by acceleration or otherwise, of the Obligations. The liability of PM USA under the Guarantees is absolute and unconditional irrespective of: any lack of validity, enforceability or genuineness of any provision of any agreement or instrument relating thereto; any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to departure from any agreement or instrument relating thereto; any exchange, release or non-perfection of any collateral, or any release or amendment or waiver of or consent to departure from any other guarantee, for all or any of the Obligations; or any other circumstance that might otherwise constitute a defense available to, or a discharge of, Altria Group, Inc. or PM USA.

The obligations of PM USA under the Guarantees are limited to the maximum amount as will, after giving effect to such maximum amount and all other contingent and fixed liabilities of PM USA that are relevant under Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to the Guarantees, result in PM USA's obligations under the Guarantees not constituting a fraudulent transfer or conveyance. For this purpose, "Bankruptcy Law" means Title 11, U.S. Code, or any similar federal or state law for the relief of debtors.

PM USA will be unconditionally released and discharged from its obligations under each of the Guarantees upon the earliest to occur of:

•

the date, if any, on which PM USA consolidates with or merges into Altria Group, Inc. or any successor;

•

the date, if any, on which Altria Group, Inc. or any successor consolidates with or merges into PM USA;

•

the payment in full of the Obligations pertaining to such Guarantees; or

•

the rating of Altria Group, Inc.'s long-term senior unsecured debt by Standard & Poor's of A or higher.

At June 30, 2011, the respective principal wholly-owned subsidiaries of Altria Group, Inc. and PM USA were not limited by long-term debt or other agreements in their ability to pay cash dividends or make other distributions with respect to their common stock.

The following sets forth the condensed consolidating balance sheets as of June 30, 2011 and December 31, 2010, condensed consolidating statements of earnings for the six and three months ended June 30, 2011 and 2010, and condensed consolidating statements of cash flows for the six months ended June 30, 2011 and 2010 for Altria Group, Inc., PM USA and Altria Group, Inc.'s other subsidiaries that are not

guarantors of Altria Group, Inc.'s debt instruments (the "Non-Guarantor Subsidiaries"). The financial information is based on Altria Group, Inc.'s understanding of the SEC interpretation and application of Rule 3-10 of SEC Regulation S-X.

The financial information may not necessarily be indicative of results of operations or financial position had PM USA and the Non-Guarantor Subsidiaries operated as independent entities. Altria Group, Inc. and PM USA account for investments in their subsidiaries under the equity method of accounting.

Condensed Consolidating Balance Sheets

June 30, 2011

(in millions of dollars)


	Altria Group, Inc.			PM USA			Non- Guarantor Subsidiaries			Total Consolidating Adjustments			Consolidated
ASSETS
Consumer products
Cash and cash equivalents	$	2,041		$	—		$	23		$	—		$	2,064
Receivables		86			15			65						166
Inventories:
Leaf tobacco					445			357						802
Other raw materials					144			44						188
Work in process					7			272						279
Finished product					168			236						404

					764			909						1,673
Due from Altria Group, Inc. and subsidiaries		551			1,843			1,367			(3,761	)
Deferred income taxes		18			1,189						(44	)		1,163
Other current assets		120			466			151			(146	)		591

Total current assets		2,816			4,277			2,515			(3,951	)		5,657
Property, plant and equipment, at cost		2			3,310			1,425						4,737
Less accumulated depreciation		2			1,965			465						2,432

					1,345			960						2,305
Goodwill								5,174						5,174
Other intangible assets, net					2			12,105						12,107
Investment in SABMiller		5,927												5,927
Investment in consolidated subsidiaries		7,228			331						(7,559	)
Due from Altria Group, Inc. and subsidiaries		6,500									(6,500	)
Other assets		1,473			634			110			(443	)		1,774

Total consumer products assets		23,944			6,589			20,864			(18,453	)		32,944
Financial services
Finance assets, net								3,869						3,869
Due from Altria Group, Inc. and subsidiaries								728			(728	)
Other assets								19						19

Total financial services assets								4,616			(728	)		3,888

TOTAL ASSETS	$	23,944		$	6,589		$	25,480		$	(19,181	)	$	36,832

LIABILITIES
Consumer products
Accounts payable	$	—		$	118		$	134		$	—		$	252
Accrued liabilities:
Marketing					397			21						418
Taxes, except income taxes					342			15						357
Employment costs		27			13			98						138
Settlement charges					2,132			5						2,137
Other		340			663			351			(44	)		1,310
Income taxes					188						(146	)		42
Dividends payable		792												792
Due to Altria Group, Inc. and subsidiaries		2,821			237			1,431			(4,489	)

Total current liabilities		3,980			4,090			2,055			(4,679	)		5,446
Long-term debt		12,789						899						13,688
Deferred income taxes		1,994						3,310			(443	)		4,861
Accrued pension costs		204						782						986
Accrued postretirement health care costs					1,497			923						2,420
Due to Altria Group, Inc. and subsidiaries								6,500			(6,500	)
Other liabilities		344			286			177						807

Total consumer products liabilities		19,311			5,873			14,646			(11,622	)		28,208
Financial services
Deferred income taxes								3,351						3,351
Other liabilities								605						605

Total financial services liabilities								3,956						3,956

Total liabilities		19,311			5,873			18,602			(11,622	)		32,164
Contingencies
Redeemable noncontrolling interest								33						33
STOCKHOLDERS' EQUITY
Common stock		935						9			(9	)		935
Additional paid-in capital		5,627			408			8,217			(8,625	)		5,627
Earnings reinvested in the business		23,256			577			4			(581	)		23,256
Accumulated other comprehensive losses		(1,279	)		(269	)		(1,387	)		1,656			(1,279	)
Cost of repurchased stock		(23,906	)											(23,906	)

Total stockholders' equity attributable to Altria Group, Inc.		4,633			716			6,843			(7,559	)		4,633
Noncontrolling interests								2						2

Total stockholders' equity		4,633			716			6,845			(7,559	)		4,635

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	23,944		$	6,589		$	25,480		$	(19,181	)	$	36,832

Condensed Consolidating Balance Sheets

December 31, 2010

(in millions of dollars)


	Altria Group, Inc.		PM USA		Non- Guarantor Subsidiaries		Total Consolidating Adjustments			Consolidated
ASSETS
Consumer products
Cash and cash equivalents	$	2,298	$	—	$	16	$	—		$	2,314
Receivables		1		9		75					85
Inventories:
Leaf tobacco				594		366					960
Other raw materials				121		39					160
Work in process						299					299
Finished product				145		239					384

				860		943					1,803
Due from Altria Group, Inc. and subsidiaries		429		2,902		1,556		(4,887	)
Deferred income taxes		18		1,190				(43	)		1,165
Other current assets		64		420		130					614

Total current assets		2,810		5,381		2,720		(4,930	)		5,981
Property, plant and equipment, at cost		2		3,749		1,399					5,150
Less accumulated depreciation		2		2,343		425					2,770

				1,406		974					2,380
Goodwill						5,174					5,174
Other intangible assets, net				2		12,116					12,118
Investment in SABMiller		5,367									5,367
Investment in consolidated subsidiaries		7,561		325				(7,886	)
Due from Altria Group, Inc. and subsidiaries		6,500						(6,500	)
Other assets		1,511		680		98		(438	)		1,851

Total consumer products assets		23,749		7,794		21,082		(19,754	)		32,871
Financial services
Finance assets, net						4,502					4,502
Due from Altria Group, Inc. and subsidiaries						690		(690	)
Other assets						29					29

Total financial services assets						5,221		(690	)		4,531

TOTAL ASSETS	$	23,749	$	7,794	$	26,303	$	(20,444	)	$	37,402

Condensed Consolidating Balance Sheets (Continued)

December 31, 2010

(in millions of dollars)


	Altria Group, Inc.			PM USA			Non- Guarantor Subsidiaries			Total Consolidating Adjustments			Consolidated
LIABILITIES
Consumer products
Accounts payable	$	—		$	215		$	314		$	—		$	529
Accrued liabilities:
Marketing					347			100						447
Taxes, except income taxes					212			19						231
Employment costs		30			18			184						232
Settlement charges					3,531			4						3,535
Other		312			467			333			(43	)		1,069
Dividends payable		797												797
Due to Altria Group, Inc. and subsidiaries		3,674			454			1,449			(5,577	)

Total current liabilities		4,813			5,244			2,403			(5,620	)		6,840
Long-term debt		11,295						899						12,194
Deferred income taxes		1,800						3,256			(438	)		4,618
Accrued pension costs		204						987						1,191
Accrued postretirement health care costs					1,500			902						2,402
Due to Altria Group, Inc. and subsidiaries								6,500			(6,500	)
Other liabilities		445			335			169						949

Total consumer products liabilities		18,557			7,079			15,116			(12,558	)		28,194
Financial services
Deferred income taxes								3,880						3,880
Other liabilities								101						101

Total financial services liabilities								3,981						3,981

Total liabilities		18,557			7,079			19,097			(12,558	)		32,175
Contingencies
Redeemable noncontrolling interest								32						32
STOCKHOLDERS' EQUITY
Common stock		935						9			(9	)		935
Additional paid-in capital		5,751			408			8,217			(8,625	)		5,751
Earnings reinvested in the business		23,459			583			385			(968	)		23,459
Accumulated other comprehensive losses		(1,484	)		(276	)		(1,440	)		1,716			(1,484	)
Cost of repurchased stock		(23,469	)											(23,469	)

Total stockholders' equity attributable to Altria Group, Inc.		5,192			715			7,171			(7,886	)		5,192
Noncontrolling interests								3						3

Total stockholders' equity		5,192			715			7,174			(7,886	)		5,195

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	23,749		$	7,794		$	26,303		$	(20,444	)	$	37,402

Condensed Consolidating Statements of Earnings

For the Six Months Ended June 30, 2011

(in millions of dollars)


	Altria Group, Inc.			PM USA		Non- Guarantor Subsidiaries			Total Consolidating Adjustments			Consolidated
Net revenues	$	—		$	10,698	$	877		$	(12	)	$	11,563
Cost of sales					3,455		382			(12	)		3,825
Excise taxes on products					3,452		166						3,618

Gross profit					3,791		329						4,120
Marketing, administration and research costs		84			1,052		136						1,272
Asset impairment and exit costs					3								3
Amortization of intangibles							11						11

Operating (expense) income		(84	)		2,736		182						2,834
Interest and other debt expense, net		340			4		228						572
Earnings from equity investment in SABMiller		(344	)										(344	)

(Loss) earnings before income taxes and equity earnings of subsidiaries		(80	)		2,732		(46	)					2,606
(Benefit) provision for income taxes		(71	)		1,016		279						1,224
Equity earnings of subsidiaries		1,390			28					(1,418	)

Net earnings (loss)		1,381			1,744		(325	)		(1,418	)		1,382
Net earnings attributable to noncontrolling interests							(1	)					(1	)

Net earnings (loss) attributable to Altria Group, Inc.	$	1,381		$	1,744	$	(326	)	$	(1,418	)	$	1,381

Condensed Consolidating Statements of Earnings

For the Six Months Ended June 30, 2010

(in millions of dollars)


	Altria Group, Inc.			PM USA		Non- Guarantor Subsidiaries			Total Consolidating Adjustments			Consolidated
Net revenues	$	—		$	10,725	$	1,309		$	—		$	12,034
Cost of sales					3,494		340						3,834
Excise taxes on products					3,578		164						3,742

Gross profit					3,653		805						4,458
Marketing, administration and research costs		60			1,045		187						1,292
Reduction of Kraft and PMI tax-related receivables		169											169
Asset impairment and exit costs					25		3						28
Amortization of intangibles					5		5						10

Operating (expense) income		(229	)		2,578		610						2,959
Interest and other debt expense, net		277			7		293						577
Earnings from equity investment in SABMiller		(251	)										(251	)

(Loss) earnings before income taxes and equity earnings of subsidiaries		(255	)		2,571		317						2,633
(Benefit) provision for income taxes		(255	)		914		118						777
Equity earnings of subsidiaries		1,855								(1,855	)

Net earnings		1,855			1,657		199			(1,855	)		1,856
Net earnings attributable to noncontrolling interests							(1	)					(1	)

Net earnings attributable to Altria Group, Inc.	$	1,855		$	1,657	$	198		$	(1,855	)	$	1,855

Condensed Consolidating Statements of Earnings

For the Three Months Ended June 30, 2011

(in millions of dollars)


	Altria Group, Inc.			PM USA		Non- Guarantor Subsidiaries			Total Consolidating Adjustments			Consolidated
Net revenues	$	—		$	5,687	$	239		$	(6	)	$	5,920
Cost of sales					1,838		198			(6	)		2,030
Excise taxes on products					1,833		85						1,918

Gross profit (loss)					2,016		(44	)					1,972
Marketing, administration and research costs		39			554		78						671
Asset impairment and exit costs					1								1
Amortization of intangibles							5						5

Operating (expense) income		(39	)		1,461		(127	)					1,295
Interest and other debt expense, net		175			6		113						294
Earnings from equity investment in SABMiller		(155	)										(155	)

(Loss) earnings before income taxes and equity earnings of subsidiaries		(59	)		1,455		(240	)					1,156
(Benefit) provision for income taxes		(41	)		543		210						712
Equity earnings of subsidiaries		462			15					(477	)

Net earnings (loss) attributable to Altria Group, Inc.	$	444		$	927	$	(450	)	$	(477	)	$	444

Condensed Consolidating Statements of Earnings

For the Three Months Ended June 30, 2010

(in millions of dollars)


	Altria Group, Inc.			PM USA		Non- Guarantor Subsidiaries			Total Consolidating Adjustments			Consolidated
Net revenues	$	—		$	5,592	$	682		$	—		$	6,274
Cost of sales					1,791		176						1,967
Excise taxes on products					1,847		86						1,933

Gross profit					1,954		420						2,374
Marketing, administration and research costs		24			536		91						651
Reduction of Kraft and PMI tax-related receivables		169											169
Asset impairment and exit costs					20		1						21
Amortization of intangibles					2		2						4

Operating (expense) income		(193	)		1,396		326						1,529
Interest and other debt expense, net		138			6		146						290
Earnings from equity investment in SABMiller		(113	)										(113	)

(Loss) earnings before income taxes and equity earnings of subsidiaries		(218	)		1,390		180						1,352
(Benefit) provision for income taxes		(228	)		480		57						309
Equity earnings of subsidiaries		1,032								(1,032	)

Net earnings		1,042			910		123			(1,032	)		1,043
Net earnings attributable to noncontrolling interests							(1	)					(1	)

Net earnings attributable to Altria Group, Inc.	$	1,042		$	910	$	122		$	(1,032	)	$	1,042

Condensed Consolidating Statements of Cash Flows

For the Six Months Ended June 30, 2011

(in millions of dollars)


	Altria Group, Inc.			PM USA			Non- Guarantor Subsidiaries			Total Consolidating Adjustments		Consolidated
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
Net cash (used in) provided by operating activities	$	(427	)	$	967		$	(61	)	$	—	$	479

CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
Consumer products
Capital expenditures					(10	)		(30	)				(40	)
Other					1								1
Financial services
Proceeds from finance assets								129					129

Net cash (used in) provided by investing activities					(9	)		99					90

CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
Consumer products
Long-term debt issued		1,494											1,494
Repurchases of common stock		(575	)										(575	)
Dividends paid on common stock		(1,589	)										(1,589	)
Issuances of common stock		29											29
Changes in amounts due to/from Altria Group, Inc. and subsidiaries		(975	)		880			95
Financing fees and debt issuance costs		(23	)										(23	)
Cash dividends received from/(paid by) subsidiaries		1,783			(1,728	)		(55	)
Other		26			(110	)		(71	)				(155	)

Net cash provided by (used in) financing activities		170			(958	)		(31	)				(819	)

Cash and cash equivalents:
(Decrease) Increase		(257	)		—			7			—		(250	)
Balance at beginning of period		2,298						16					2,314

Balance at end of period	$	2,041		$	—		$	23		$	—	$	2,064

Condensed Consolidating Statements of Cash Flows

For the Six Months Ended June 30, 2010

(in millions of dollars)


	Altria Group, Inc.			PM USA			Non- Guarantor Subsidiaries			Total Consolidating Adjustments		Consolidated
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
Net cash (used in) provided by operating activities	$	(201	)	$	300		$	192		$	—	$	291

CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
Consumer products
Capital expenditures					(22	)		(47	)				(69	)
Other					2			16					18
Financial services
Proceeds from finance assets								72					72

Net cash (used in) provided by investing activities					(20	)		41					21

CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
Consumer products
Issuances of short-term borrowings		200											200
Long-term debt issued		797											797
Long-term debt repaid		(775	)										(775	)
Dividends paid on common stock		(1,435	)										(1,435	)
Issuances of common stock		39											39
Changes in amounts due to/from Altria Group, Inc. and subsidiaries		(1,441	)		1,501			(60	)
Financing fees and debt issuance costs		(5	)										(5	)
Cash dividends received from/(paid by) subsidiaries		1,766			(1,700	)		(66	)
Other		27			(80	)		(97	)				(150	)

Net cash used in financing activities		(827	)		(279	)		(223	)				(1,329	)

Cash and cash equivalents:
(Decrease) Increase		(1,028	)		1			10			—		(1,017	)
Balance at beginning of period		1,862						9					1,871

Balance at end of period	$	834		$	1		$	19		$	—	$	854