A) Conference Call Transcript Altria Group, Inc. (MO) CFO Billy Gifford Discussing Investment at Juul Labs Inc. Dec. 21, 2018 2:46 PM ET CFO: Billy Gifford I have to say given the frustration I felt from some of the media coverage before we announced this deal I am not going to corroborate any of the leaked information. But I can give you some perspective on how to think about the economics of Juul compared to cigarettes. You're exactly right that when you look at the retail price of cigarettes that that retail price includes a federal excise tax, a state excise tax and a very significant master settlement agreement payment, and so that average price for a pack of cigarettes is a little above seven dollars today. When you look at a Juul pod, it sells for more like $4.50. And even with that lower price, which actually offers an opportunity for a cigarette smoker to switch and have some retail cost savings. There's the opportunity for high profit margins, because of course at the current moment there isn't a federal excise tax, there are relatively few states with a state excise tax. And of course, there aren't master settlement agreements on this. So we think it's actually quite an attractive profit model both now and into the future. And you could imagine over time that given the advantage it has over cigarettes that can be helpful to drive their growth. Analyst: Judy Hong And just finally just on the guidance. So I just want to make sure that we're clear. There is no equity income built-in in terms of 2019 guidance, that's because it seems like it's really more interest expense impact and doesnt seem like there's much of an equity income that's built into 2019 guidance. Is that the way to think about 2019? CFO: Billy Gifford Again, I wouldnt necessarily call it guidance, Judy. We'll be providing that in January. But you're correct in assuming, we're going to carry the asset as an investment and an equity security until post HSR. And we feel like there's high probability for that to clear HSR and then we would convert to equity accounting once we have the voting and the board representation. Analyst: Judy Hong And Billy just final question, I think strategically when you think about big investments now that you have in both year and now Juul equity investments or minority investments, you're still keeping an 80% dividend payout on your EPS, which obviously the cash impact -- cash flow impact is different. So is there any thought to whether the 80% payout policy is the right policy in the context of having a greater EPS that's coming from equity investment? CFO: Billy Gifford No Judy. We remain committed to that 80% dividend payout target ratio. And I think it shows you the nature of the cash generation of our core business. Questions 1) What is HSR? 2) Altria Inc. paid $12.8 billion for 35% of common stock of JUUL Labs, Inc. What is the journal entry for Altria to record the transaction? 3) Look at the Consolidated Statements Cash Flows of the Altria Group in 10-K for year 2018, which was filed on 02/26/2019. Did Altria keep its dividend payout promise? How is the dividend payout financed? 4) Is the dividend payout sustainable? Discuss in light of Statement of Cash Flows and Note 5. 5) Look at the 10-Q of Altria Group for the first quarter of 2019, which was filed on 04/25/2019. Has the HSR cleared? How is Altria accounting for investment in JUUL? At what value?