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 March 31, 2025 and December 31, 2024, we had no outstanding foreign currency contracts.


(in millions)	March 31, 2025		December 31, 2024
Carrying value	$	26,059	$	24,926
Fair value	24,121		22,741
Foreign currency denominated debt included in long-term debt:
Carrying value	3,239		3,100
Fair value	3,196		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.

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. For the three months ended March 31, 2025 and 2024, we recognized pre-tax (gains) losses of our net investment hedges of $139 million and $(75) million, respectively.

In addition, as a result of the ABI Transaction, for the three months ended March 31, 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.

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. We made cash payments totaling $250 million in the second quarter of 2024 following FDA authorization of NJOY’s menthol pod products.

In the first quarter of 2025, we recorded a non-cash, pre-tax charge of approximately $25 million for the increase in the fair value of contingent payments, which relate to blueberry and watermelon pod products. At March 31, 2025 and December 31, 2024, the fair values of the remaining contingent payments were approximately $45 million and $20 million, respectively.

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.