Altria Group, Inc. 2019 Annual Report an Altria Company an Altria Company an Altria Company an Altria Company an Altria Company an Altria Company an Altria Company an Altria Company an Altria Company an Altria Company an Altria Company an Altria Company an Altria Company an Altria Company an Altria Company an Altria Company an Altria Company an Altria Company an Altria Company an Altria Company an Altria Company an Altria Company an Altria Company an Altria Company an Altria Company Howard A. Willard III Dear Fellow Shareholders Chairman of the Board and CEO Altria delivered solid performance in a dynamic year for the tobacco industry. Our core tobacco businesses delivered outstanding financial performance, and we made significant progress advancing our non-combustible product platform. We believe Altria’s enhanced business platform positions us well for future success. 2019 Highlights n Grew adjusted diluted earnings per share (EPS) by 5.8%, primarily driven by our core tobacco businesses; and types of legal cases pending against it, especially during the fourth n Achieved $600 million in annualized cost savings, exceeding our $575 quarter of the year. Altria recorded two impairment charges of our JUUL million target announced in December 2018; asset in 2019, reducing our investment to $4.2 billion at year-end, down from n Increased our regular quarterly dividend for the 54th time in 50 years $12.8 billion, our 2019 initial investment. JUUL remains the U.S. leader in the and paid shareholders approximately $6.1 billion in dividends; and e-vapor category, and in January 2020 we revised certain terms governing n Repurchased 16.5 million Altria shares for a total cost of $845 million. our minority investment that we believe better position both companies going forward. Continuing to Lead in Core Tobacco Categories Altria’s core tobacco businesses delivered excellent performance in 2019. Leading Responsibly The smokeable products segment grew adjusted operating companies We have worked tirelessly over the past 20+ years to act responsibly and re- income (OCI) by 8.6% and expanded adjusted OCI margins to 54.5%. PM USA duce underage smoking rates to historic lows. Our position is clear: we do not maintained share stability on Marlboro, supported by product expansions want kids using any tobacco products. Confronting the youth vaping epidem- and brand equity investments. And in cigars, Middleton grew volume by 3.1%, ic is vital to achieving our 10-year Vision, as it threatens the very real potential outpacing the machine-made large cigar category. of harm reduction for adult smokers. Therefore, we took action in 2019. The smokeless products segment delivered 9.7% adjusted OCI growth We announced a $100 million multi-year incremental investment to help in 2019 and expanded adjusted OCI margins to 71.7%. USSTC grew address underage e-vapor use. We established a new retailer trade program Copenhagen’s leading retail share by three tenths to 34.8% and launched the with enhanced age-verification technology at points of purchase. We also innovative Copenhagen Packs Wintergreen. enhanced and expanded our Success360° program, which funds youth- serving organizations providing programs to promote positive youth Advancing Non-Combustible Alternatives development and prevent risky behaviors, like tobacco use. While we continue to lead in traditional tobacco categories, we recognize consumer preferences are changing. Today over 20 million U.S. adult smokers Additionally, we championed federal legislation to raise the legal age for all seek less harmful alternatives to cigarettes. With adult smoker demand for tobacco purchases to 21, which we believe will be the single most effective non-combustible alternatives, innovation and an appropriate regulatory measure in curbing youth e-vapor use. We launched our #MoveTo21 framework, we believe we can make more progress on harm reduction in campaign across traditional and social media channels to grow awareness the next 10 years than we have in the past 50. Altria’s 10-year Vision is to and support for the legislation, and we provided #MoveTo21 toolkits and responsibly lead the transition of adult smokers to a non-combustible future. training to our retail partners. PM USA launched IQOS in two U.S. markets in 2019 and plans to expand to In Summary a third in April 2020. IQOS is the first heat-not-burn product to receive pre- 2019 was a year that made clear: our world is evolving, and our businesses market tobacco product authorization from the FDA. We are pleased with must evolve with it. Altria’s talented employees did more with less in 2019. early lead market results and excited about our introduction of IQOS in the They remained focused, anticipated change and acted with urgency. We’re Charlotte, NC market. proud of their accomplishments, and the business results they delivered. We also entered the growing oral nicotine pouch category in 2019 by We believe that our strong core businesses, alongside our growing portfolio completing the on! transaction. on! has an unmatched product portfolio of non-combustible alternatives, create a runway with strong long-term across a range of flavors and nicotine strengths. At year-end, on! was potential. We remain confident that our enhanced business platform, available in 15,000 stores nationally, including three of the top five smokeless combined with our proven history of financial strength, can continue to volume chains. reward our shareholders for years to come. Alongside these successes, the performance of our JUUL investment was disappointing. Concerns about youth e-vapor use and news of vapor-related illnesses and deaths drove significant legislative and regulatory action in the Howard A. Willard III e-vapor category. JUUL also experienced a significant increase in the number Chairman of the Board and CEO | March 1, 2020 Explanations and reconciliations of adjusted measures to corresponding GAAP financial measures are provided on the Disclosure of Non-GAAP Financial Measures pages at the back of this report. Terms used but not defined are defined in the enclosed Annual Report on Form 10-K. Center for Research and Technology UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 1-08940 ALTRIA GROUP, INC. (Exact name of registrant as specified in its charter) Virginia 13-3260245 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 6601 West Broad Street, Richmond, Virginia 23230 (Address of principal executive offices) (Zip Code) 804-274-2200 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbols Name of each exchange on which registered Common Stock, $0.33 1/3 par value MO New York Stock Exchange 1.000% Notes due 2023 MO23A New York Stock Exchange 1.700% Notes due 2025 MO25 New York Stock Exchange 2.200% Notes due 2027 MO27 New York Stock Exchange 3.125% Notes due 2031 MO31 New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files) Yes No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No As of June 30, 2019, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $88 billion based on the closing sale price of the common stock as reported on the New York Stock Exchange. Class Outstanding at February 14, 2020 Common Stock, $0.33 1/3 par value 1,858,366,804 shares DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant’s definitive proxy statement for use in connection with its annual meeting of shareholders to be held on May 14, 2020, to be filed with the Securities and Exchange Commission on or about April 2, 2020, are incorporated by reference into Part III hereof.