Note 20. 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"), subject to release under certain customary circumstances as noted below.

The Guarantees provide that PM USA 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; and

•

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

At December 31, 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 December 31, 2011 and 2010, condensed consolidating statements of earnings for the years ended December 31, 2011, 2010 and 2009, and condensed consolidating statements of cash flows for the years ended December 31, 2011, 2010 and 2009 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

(in millions of dollars)

December 31, 2011

Altria
Group, Inc.

PM USA

Non-Guarantor
Subsidiaries

Total
Consolidating
Adjustments

Consolidated

Assets

Consumer products

Cash and cash equivalents

3,245

—

3,270

Receivables

174

268

Inventories:

Leaf tobacco

565

369

934

Other raw materials

128

170

Work in process

312

316

Finished product

126

233

359

823

956

1,779

Due from Altria Group, Inc. and subsidiaries

403

3,007

1,765

(5,175

)

Deferred income taxes

1,157

1,207

Other current assets

430

247

(76

)

607

Total current assets

3,837

5,433

3,112

(5,251

)

7,131

Property, plant and equipment, at cost

3,280

1,446

4,728

Less accumulated depreciation

2,005

505

2,512

1,275

941

2,216

Goodwill

5,174

Other intangible assets, net

12,096

12,098

Investment in SABMiller

5,509

Investment in consolidated subsidiaries

7,009

342

(7,351

)

Due from Altria Group, Inc. and subsidiaries

6,500

(6,500

)

Other assets

941

586

111

(381

)

1,257

Total consumer products assets

23,796

7,638

21,434

(19,483

)

33,385

Financial services

Finance assets, net

3,559

Due from Altria Group, Inc. and subsidiaries

292

(292

)

Other assets

Total financial services assets

3,869

(292

)

3,577

Total Assets

23,796

7,638

25,303

(19,775

)

36,962

December 31, 2011

Altria
Group, Inc.

PM USA

Non-
Guarantor
Subsidiaries

Total
Consolidating
Adjustments

Consolidated

Liabilities

Consumer products

Current portion of long-term debt

—

600

—

600

Accounts payable

159

275

503

Accrued liabilities:

Marketing

390

430

Taxes, except income taxes

209

220

Employment costs

184

225

Settlement charges

3,508

3,513

Other

384

620

383

(76

)

1,311

Dividends payable

841

Due to Altria Group, Inc. and subsidiaries

3,792

474

1,201

(5,467

)

Total current liabilities

5,115

5,372

2,699

(5,543

)

7,643

Long-term debt

12,790

299

13,089

Deferred income taxes

1,787

3,345

(381

)

4,751

Accrued pension costs

236

1,426

1,662

Accrued postretirement health care costs

1,562

797

2,359

Due to Altria Group, Inc. and subsidiaries

6,500

(6,500

)

Other liabilities

188

216

198

602

Total consumer products liabilities

20,116

7,150

15,264

(12,424

)

30,106

Financial services

Deferred income taxes

2,811

Other liabilities

330

Total financial services liabilities

3,141

Total liabilities

20,116

7,150

18,405

(12,424

)

33,247

Contingencies

Redeemable noncontrolling interest

Stockholders' Equity

Common stock

935

)

935

Additional paid-in capital

5,674

408

8,238

(8,646

)

5,674

Earnings reinvested in the business

23,583

393

265

(658

)

23,583

Accumulated other comprehensive losses

(1,887

)

(313

)

(1,649

)

1,962

(1,887

)

Cost of repurchased stock

(24,625

)

(24,625

)

Total stockholders' equity attributable to Altria Group, Inc.

3,680

488

6,863

(7,351

)

3,680

Noncontrolling interests

Total stockholders' equity

3,680

488

6,866

(7,351

)

3,683

Total Liabilities and

Stockholders' Equity

23,796

7,638

25,303

(19,775

)

36,962

Condensed Consolidating Balance Sheets

(in millions of dollars)


December 31, 2010	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


December 31, 2010	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

(in millions of dollars)

for the year ended December 31, 2011

Altria
Group, Inc.

PM USA

Non-Guarantor
Subsidiaries

Total
Consolidating
Adjustments

Consolidated

Net revenues

—

21,330

2,496

(26

)

23,800

Cost of sales

6,883

823

(26

)

7,680

Excise taxes on products

6,846

335

7,181

Gross profit

7,601

1,338

8,939

Marketing, administration and research costs

186

2,164

293

2,643

Changes to Kraft and PMI tax-related receivables

(14

)

(14

)

Asset impairment and exit costs

200

222

Amortization of intangibles

Operating (expense) income

(180

)

5,237

1,011

6,068

Interest and other debt expense, net

698

457

1,216

Earnings from equity investment in SABMiller

(730

)

(730

)

(Loss) earnings before income taxes and equity earnings of subsidiaries

(148

)

5,176

554

5,582

(Benefit) provision for income taxes

(199

)

1,930

458

2,189

Equity earnings of subsidiaries

3,339

(3,403

)

Net earnings

3,390

3,310

(3,403

)

3,393

Net earnings attributable to noncontrolling interests

)

Net earnings attributable to Altria Group, Inc.

3,390

3,310

(3,403

)

3,390

Condensed Consolidating Statements of Earnings

(in millions of dollars)


for the year ended December 31, 2010	Altria Group, Inc.			PM USA		Non-Guarantor Subsidiaries			Total Consolidating Adjustments			Consolidated
Net revenues	$	—		$	21,580	$	2,809		$	(26	)	$	24,363
Cost of sales					6,990		740			(26	)		7,704
Excise taxes on products					7,136		335						7,471

Gross profit					7,454		1,734						9,188
Marketing, administration and research costs		147			2,280		308						2,735
Changes to Kraft and PMI tax-related receivables		169											169
Asset impairment and exit costs					24		12						36
Amortization of intangibles							20						20

Operating (expense) income		(316	)		5,150		1,394						6,228
Interest and other debt expense, net		549			2		582						1,133
Earnings from equity investment in SABMiller		(628	)										(628	)

(Loss) earnings before income taxes and equity earnings of subsidiaries		(237	)		5,148		812						5,723
(Benefit) provision for income taxes		(329	)		1,864		281						1,816
Equity earnings of subsidiaries		3,813			46					(3,859	)

Net earnings		3,905			3,330		531			(3,859	)		3,907
Net earnings attributable to noncontrolling interests							(2	)					(2	)

Net earnings attributable to Altria Group, Inc.	$	3,905		$	3,330	$	529		$	(3,859	)	$	3,905

Condensed Consolidating Statements of Earnings

(in millions of dollars)


for the year ended December 31, 2009	Altria Group, Inc.			PM USA			Non-Guarantor Subsidiaries			Total Consolidating Adjustments			Consolidated
Net revenues	$	—		$	20,922		$	2,634		$	—		$	23,556
Cost of sales					7,332			658						7,990
Excise taxes on products					6,465			267						6,732

Gross profit					7,125			1,709						8,834
Marketing, administration and research costs		234			2,180			429						2,843
Changes to Kraft and PMI tax-related receivables		88												88
Asset impairment and exit costs					142			279						421
Amortization of intangibles					11			9						20

Operating (expense) income		(322	)		4,792			992						5,462
Interest and other debt expense (income), net		579			(3	)		609						1,185
Earnings from equity investment in SABMiller		(600	)											(600	)

(Loss) earnings before income taxes and equity earnings of subsidiaries		(301	)		4,795			383						4,877
(Benefit) provision for income taxes		(313	)		1,882			100						1,669
Equity earnings of subsidiaries		3,194									(3,194	)

Net earnings		3,206			2,913			283			(3,194	)		3,208
Net earnings attributable to noncontrolling interests								(2	)					(2	)

Net earnings attributable to Altria Group, Inc.	$	3,206		$	2,913		$	281		$	(3,194	)	$	3,206

Condensed Consolidating Statements of Cash Flows

(in millions of dollars)


for the year ended December 31, 2011	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	$	(151	)	$	3,562		$	202		$	—	$	3,613

Cash Provided by (Used in) Investing Activities
Consumer products
Capital expenditures					(26	)		(79	)				(105	)
Other					1			1					2
Financial services
Proceeds from finance assets								490					490

Net cash (used in) provided by investing activities					(25	)		412					387

Cash Provided by (Used in) Financing Activities
Consumer products
Long-term debt issued		1,494											1,494
Repurchases of common stock		(1,327	)										(1,327	)
Dividends paid on common stock		(3,222	)										(3,222	)
Issuances of common stock		29											29
Changes in amounts due to/from Altria Group, Inc. and subsidiaries		441			(28	)		(413	)
Financing fees and debt issuance costs		(24	)										(24	)
Cash dividends received from/(paid by)subsidiaries		3,666			(3,453	)		(213	)
Other		41			(56	)		21					6

Net cash provided by (used in) financing activities		1,098			(3,537	)		(605	)				(3,044	)

Cash and cash equivalents:
Increase		947			—			9			—		956
Balance at beginning of year		2,298						16					2,314

Balance at end of year	$	3,245		$	—		$	25		$	—	$	3,270

Condensed Consolidating Statements of Cash Flows

(in millions of dollars)


for the year ended December 31, 2010	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	$	(712	)	$	2,993		$	486		$	—	$	2,767

Cash Provided by (Used in) Investing Activities
Consumer products
Capital expenditures					(54	)		(114	)				(168	)
Other					3			112					115
Financial services
Proceeds from finance assets								312					312

Net cash (used in) provided by investing activities					(51	)		310					259

Cash Provided by (Used in) Financing Activities
Consumer products
Long-term debt issued		1,007											1,007
Long-term debt repaid		(775	)										(775	)
Dividends paid on common stock		(2,958	)										(2,958	)
Issuances of common stock		104											104
Changes in amounts due to/from Altria Group, Inc. and subsidiaries		279			325			(604	)
Financing fees and debt issuance costs		(6	)										(6	)
Cash dividends received from/(paid by)subsidiaries		3,438			(3,259	)		(179	)
Other		59			(8	)		(6	)				45

Net cash provided by (used in) financing activities		1,148			(2,942	)		(789	)				(2,583	)

Cash and cash equivalents:
Increase		436			—			7			—		443
Balance at beginning of year		1,862						9					1,871

Balance at end of year	$	2,298		$	—		$	16		$	—	$	2,314

Condensed Consolidating Statements of Cash Flows

(in millions of dollars)


for the year ended December 31, 2009	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	$	(10	)	$	3,496		$	(43	)	$	—	$	3,443

Cash Provided by (Used in) Investing Activities
Consumer products
Capital expenditures					(149	)		(124	)				(273	)
Acquisition of UST, net of acquired cash								(10,244	)				(10,244	)
Changes in amounts due to/from Altria Group, Inc. and subsidiaries		(6,000	)					6,000
Other					(4	)		(27	)				(31	)
Financial services
Investment in finance assets								(9	)				(9	)
Proceeds from finance assets								793					793

Net cash used in investing activities		(6,000	)		(153	)		(3,611	)				(9,764	)

Cash Provided by (Used in) Financing Activities
Consumer products
Net repayment of short-term borrowings								(205	)				(205	)
Long-term debt issued		4,221											4,221
Long-term debt repaid					(135	)		(240	)				(375	)
Financial Services
Long-term debt repaid								(500	)				(500	)
Dividends paid on common stock		(2,693	)										(2,693	)
Issuances of common stock		89											89
Financing fees and debt issuance costs		(177	)										(177	)
Changes in amounts due to/from Altria Group, Inc. and subsidiaries		(5,227	)		423			4,804
Cash dividends received from/(paid by)subsidiaries		3,711			(3,575	)		(136	)
Other		38			(57	)		(65	)				(84	)

Net cash (used in) provided by financing activities		(38	)		(3,344	)		3,658					276

Cash and cash equivalents:
(Decrease) increase		(6,048	)		(1	)		4			—		(6,045	)
Balance at beginning of year		7,910			1			5					7,916

Balance at end of year	$	1,862		$	—		$	9		$	—	$	1,871