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Financial Instruments | 6 Months Ended
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Jun. 30, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Financial Instruments | Financial Instruments Our investment in ABI, whose functional currency is the Euro, exposes us to foreign currency exchange risk on the carrying value of our investment. To manage this risk, we may designate Euro denominated unsecured long-term notes (“foreign currency denominated debt”) and certain foreign exchange contracts, including cross-currency swap contracts and forward contracts (collectively, “foreign currency contracts”), as net investment hedges of our investment in ABI. At June 30, 2025 and December 31, 2024, we had no outstanding foreign currency contracts. The aggregate carrying value and fair value of our total long-term debt were as follows:
(in millions) | June 30, 2025 |  | December 31, 2024
Carrying value | $ | 24,720 |  |  | $ | 24,926 |
Fair value | 22,979 |  |  | 22,741 |
Foreign currency denominated debt included in long-term debt: |  |  |
Carrying value | 2,647 |  |  | 3,100 |
Fair value | 2,629 |  |  | 3,059 |
Our estimate of the fair value of our total long-term debt is based on observable market information derived from a third-party pricing source and is classified in Level 2 of the fair value hierarchy. Net Investment Hedging We recognize changes in the carrying value of the foreign currency denominated debt due to changes in the Euro to U.S. dollar exchange rate in accumulated other comprehensive losses related to ABI. We recognized pre-tax (gains) losses of our net investment hedges of $403 million and $(98) million for the six months ended June 30, 2025 and 2024, respectively, and $264 million and $(23) million for the three months ended June 30, 2025 and 2024, respectively. In addition, as a result of the ABI Transaction, for the six months ended June 30, 2024, we reclassified $42 million of pre-tax gains from our designated net investment hedges included in accumulated other comprehensive losses to (income) losses from investments in equity securities in our condensed consolidated statement of earnings. For further discussion of the ABI Transaction and reclassification of accumulated other comprehensive losses, see Note 6. Investments in Equity Securities and Note 10. Other Comprehensive Earnings/Losses. Contingent Payments In 2023, we acquired NJOY Holdings, Inc. (“NJOY Transaction”). The total consideration for the NJOY Transaction included the fair value of up to $500 million in additional cash payments contingent on receipt of U.S. Food and Drug Administration (“FDA”) authorizations with respect to NJOY’s menthol ($250 million), blueberry ($125 million) and watermelon ($125 million) pod products. The changes in the liability associated with contingent payments were as follows:
| For the Six Months Ended June 30, 2025 |  | For the Year Ended December 31, 2024
(in millions) |
Balance at January 1 | $ | 20 |  |  |  | $ | 130 |  |
Change in the fair value of contingent payments (1) | 25 |  | (2) |  | 140 |  | (3)
Payments | — |  |  |  | (250) |  | (4)
Balance at end of period | $ | 45 |  |  |  | $ | 20 |  |
(1) Pre-tax charges were recorded in marketing, administration and research costs in our condensed consolidated statements of earnings. (2) Recorded in the first quarter of 2025 and relates to blueberry and watermelon pod products. (3) Recorded in the second quarter of 2024 and relates to menthol pod products. (4) Payments made during the third quarter of 2024 following FDA authorization of NJOY’s menthol products. Contingent payments related to the NJOY Transaction were recognized at their estimated fair value as of the acquisition date. Subsequent changes to the fair value of the liability associated with contingent payments are recognized in earnings until the contingency is resolved. In determining the estimated fair value of contingent payments, we made certain judgments, estimates and assumptions, the most significant of which was the likelihood of certain potential regulatory outcomes. Contingent payments are classified in Level 3 of the fair value hierarchy.

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