Notes to Consolidated Financial Statements

(Continued)

Note 15.
Benefit Plans:

In December 2003, the FASB issued a revised SFAS No. 132, “Employers’ Disclosures about Pensions and Other Postretirement Benefits.” In 2003, Altria Group, Inc. adopted the revised disclosure requirements of this pronouncement, except for certain disclosures about non-U.S. plans and estimated future benefit payments which are not required until 2004.

Altria Group, Inc. sponsors noncontributory defined benefit pension plans covering substantially all U.S. employees. Pension coverage for employees of ALG’s non-U.S. subsidiaries is provided, to the extent deemed appropriate, through separate plans, many of which are governed by local statutory requirements. In addition, ALG and its U.S. and Canadian subsidiaries provide health care and other benefits to substantially all retired employees. Health care benefits for retirees outside the United States and Canada are generally covered through local government plans.

The plan assets and benefit obligations of Altria Group, Inc.’s U.S. pension plans are measured at December 31 of each year.

Pension Plans
Obligations and Funded Status

The benefit obligations, plan assets and funded status of Altria Group, Inc.’s pension plans at December 31, 2003 and 2002, were as follows:

		U.S. Plans							Non-U.S. Plans
	(in millions)		2003				2002			2003			2002
	Benefit obligation at
	January 1		$9,002				$ 8,818			$4,074			$ 3,404
	Service cost		234				215			140			105
	Interest cost		579				590			217			183
	Benefits paid		(604)				(845)			(209)			(179)
	Miller transaction						(650)
	Termination,
	settlement and
	curtailment		46				126						11
	Actuarial losses		428				756			236			208
	Currency									626			301
	Other		(2)				(8)			72			41
	Benefit obligation at
	December 31		9,683				9,002			5,156			4,074
	Fair value of plan assets
	at January 1		7,535				9,448			2,548			2,272
	Actual return on
	plan assets		1,821				(1,304)			351			(156)
	Contributions		853				705			316			399
	Benefits paid		(648)				(858)			(164)			(137)
	Miller transaction						(476)
	Currency									382			170
	Actuarial (losses) gains		(6)				20
	Fair value of plan assets at
	December 31		9,555				7,535			3,433			2,548
	Funded status (plan assets less
	than benefit obligations)
	at December 31		(128)				(1,467)			(1,723)			(1,526)
	Unrecognized actuarial
	losses		3,615				4,052			1,482			1,213
	Unrecognized prior
	service cost		130				134			105			72
	Additional minimum
	liability		(196)				(1,096)			(618)			(493)
	Unrecognized net
	transition obligation									7			7
	Net prepaid pension
	asset (liability) recognized		$3,421				$ 1,623			$  (747)			$  (727)

The combined U.S. and non-U.S. pension plans resulted in a net prepaid pension asset of $2.7 billion and $0.9 billion at December 31, 2003 and 2002, respectively. These amounts were recognized in Altria Group, Inc.’s consolidated balance sheets at December 31, 2003 and 2002, as other assets of $4.5 billion and $3.0 billion, respectively, for those plans in which plan assets exceeded their accumulated benefit obligations, and as other liabilities of $1.8 billion and $2.1 billion, respectively, for those plans in which the accumulated benefit obligations exceeded their plan assets.

For U.S. and non-U.S. pension plans, the change in the additional minimum liability in 2003 and 2002 was as follows:

		U.S. Plans							Non-U.S. Plans
	(in millions)		2003				2002			2003			2002
	Decrease (increase) in
	minimum liability included
	in other comprehensive
	earnings (losses), net of tax		$508				$(531)			$(44)			$(229)

The accumulated benefit obligation for the U.S. pension plans was $8.5 billion and $7.8 billion at December 31, 2003 and 2002, respectively.

For U.S. plans with accumulated benefit obligations in excess of plan assets, the projected benefit obligation, accumulated benefit obligation and fair value of plan assets were $557 million, $396 million and $17 million, respectively, as of December 31, 2003, and $4,026 million, $3,442 million and $2,615 million, respectively, as of December 31, 2002. At December 31, 2003, the majority of these relate to plans for salaried employees that cannot be funded under I.R.S. regulations. For non-U.S. plans with accumulated benefit obligations in excess of plan assets, the projected benefit obligation, accumulated benefit obligation and fair value of plan assets were $3,780 million, $3,307 million and $2,048 million, respectively, as of December 31, 2003, and $2,904 million, $2,512 million and $1,433 million, respectively, as of December 31, 2002.

The following weighted-average assumptions were used to determine Altria Group, Inc.’s benefit obligations under the plans at December 31:

		U.S. Plans							Non-U.S. Plans
			2003				2002			2003			2002
	Discount rate		6.25%				6.50%			4.87%			4.99%
	Rate of compensation increase		4.20				4.20			3.40			3.30