Altria Group, Inc. is a holding company incorporated in the Commonwealth of
Virginia in 1985. At December 31, 2013, Altria Group, Inc.’s direct and
indirect wholly-owned subsidiaries included Philip Morris USA Inc. (“PM
USA”), which is engaged in the manufacture and sale of cigarettes and
certain smokeless tobacco products in the United States; John Middleton Co.
(“Middleton”), which is engaged in the manufacture and sale of machine-made
large cigars and pipe tobacco, and is a wholly-owned subsidiary of PM USA; and
UST LLC (“UST”), which through its direct and indirect wholly-owned
subsidiaries, including U.S. Smokeless Tobacco Company LLC (“USSTC”)
and Ste. Michelle Wine Estates Ltd. (“Ste. Michelle”), is engaged
in the manufacture and sale of smokeless tobacco products and wine. Nu Mark
LLC (“Nu Mark”), an indirect wholly-owned subsidiary of Altria Group,
Inc., is engaged in the development and marketing of innovative tobacco products
for adult tobacco consumers. Philip Morris Capital Corporation (“PMCC”),
another wholly-owned subsidiary of Altria Group, Inc., maintains a portfolio
of leveraged and direct finance leases. In addition, Altria Group, Inc. held
approximately 26.8% of the economic and voting interest of SABMiller plc (“SABMiller”),
which Altria Group, Inc. accounts for under the equity method of accounting.
On January 6, 2009, Altria Group, Inc. acquired all of the outstanding common
stock of UST. The transaction was valued at approximately $11.7 billion, which
represented a purchase price of $10.4 billion and approximately $1.3 billion
of UST debt, which together with acquisition-related costs and payments of approximately
$0.6 billion, represented a total cash outlay of approximately $11 billion.
This acquisition was financed with long-term borrowings. As a result of the
acquisition, UST became an indirect wholly-owned subsidiary of Altria Group,
Inc.
•Source of Funds: Because Altria Group, Inc. is a holding company, its
access to the operating cash flows of its wholly-owned subsidiaries consists
of cash received from the payment of dividends and distributions, and the payment
of interest on intercompany loans by its subsidiaries. Altria Group, Inc.’s
principal wholly-owned subsidiaries 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. In addition, Altria Group, Inc. receives
cash dividends on its interest in SABMiller if and when SABMiller pays such
dividends.