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Segment Reporting | 12 Months Ended
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Dec. 31, 2017
Segment Reporting [Abstract] |
Segment Reporting | Segment Reporting The products of Altria Group, Inc.’s subsidiaries include smokeable tobacco products, consisting of cigarettes manufactured and sold by PM USA and Nat Sherman, machine-made large cigars and pipe tobacco manufactured and sold by Middleton and premium cigars sold by Nat Sherman; smokeless tobacco products manufactured and sold by USSTC; and wine produced and/or distributed by Ste. Michelle. The products and services of these subsidiaries constitute Altria Group, Inc.’s reportable segments of smokeable products, smokeless products and wine. The financial services and the innovative tobacco products businesses are included in all other. Altria Group, Inc.’s chief operating decision maker (the “CODM”) reviews operating companies income to evaluate the performance of, and allocate resources to, the segments. Operating companies income for the segments is defined as operating income before general corporate expenses and amortization of intangibles. Interest and other debt expense, net, and provision for income taxes are centrally managed at the corporate level and, accordingly, such items are not presented by segment since they are excluded from the measure of segment profitability reviewed by the CODM. Information about total assets by segment is not disclosed because such information is not reported to or used by the CODM. Segment goodwill and other intangible assets, net, are disclosed in Note 3. Goodwill and Other Intangible Assets, net. The accounting policies of the segments are the same as those described in Note 2. Summary of Significant Accounting Policies. Segment data were as follows:
| For the Years Ended December 31,
(in millions) | 2017 |  |  | 2016 |  |  | 2015 |
Net revenues: |  |  |  |  |
Smokeable products | $ | 22,636 |  |  | $ | 22,851 |  |  | $ | 22,792 |
Smokeless products | 2,155 |  |  | 2,051 |  |  | 1,879 |
Wine | 698 |  |  | 746 |  |  | 692 |
All other | 87 |  |  | 96 |  |  | 71 |
Net revenues | $ | 25,576 |  |  | $ | 25,744 |  |  | $ | 25,434 |
Earnings before income taxes: |  |  |  |  |
Operating companies income (loss): |  |  |  |  |
Smokeable products | $ | 8,408 |  |  | $ | 7,768 |  |  | $ | 7,569 |
Smokeless products | 1,300 |  |  | 1,177 |  |  | 1,108 |
Wine | 147 |  |  | 164 |  |  | 152 |
All other | (51 | ) |  | (99 | ) |  | (169 | )
Amortization of intangibles | (21 | ) |  | (21 | ) |  | (21 | )
General corporate expenses | (227 | ) |  | (222 | ) |  | (237 | )
Reduction of PMI tax-related receivable | — |  |  | — |  |  | (41 | )
Corporate asset impairment and exit costs | — |  |  | (5 | ) |  | — |
Operating income | 9,556 |  |  | 8,762 |  |  | 8,361 |
Interest and other debt expense, net | (705 | ) |  | (747 | ) |  | (817 | )
Loss on early extinguishment of debt | — |  |  | (823 | ) |  | (228 | )
Earnings from equity investment in AB InBev/SABMiller | 532 |  |  | 795 |  |  | 757 |
Gain on AB InBev/SABMiller business combination | 445 |  |  | 13,865 |  |  | 5 |
Earnings before income taxes | $ | 9,828 |  |  | $ | 21,852 |  |  | $ | 8,078 |
The smokeable products segment included net revenues of $21,900 million, $22,199 million and $22,193 million for the years ended December 31, 2017, 2016 and 2015, respectively, related to cigarettes and net revenues of $736 million, $652 million and $599 million for the years ended December 31, 2017, 2016 and 2015, respectively, related to cigars. PM USA, USSTC, Middleton and Nat Sherman’s largest customer, McLane Company, Inc., accounted for approximately 26%, 25% and 26% of Altria Group, Inc.’s consolidated net revenues for the years ended December 31, 2017, 2016 and 2015, respectively. In addition, Core-Mark Holding Company, Inc. accounted for approximately 14%, 14% and 10% of Altria Group, Inc.’s consolidated net revenues for the years ended December 31, 2017, 2016 and 2015, respectively. Substantially all of these net revenues were reported in the smokeable products and smokeless products segments. Sales to three distributors accounted for approximately 67%, 69% and 66% of net revenues for the wine segment for the years ended December 31, 2017, 2016 and 2015, respectively. Details of Altria Group, Inc.’s depreciation expense and capital expenditures were as follows:
| For the Years Ended December 31,
(in millions) | 2017 |  |  | 2016 |  |  | 2015 |
Depreciation expense: |  |  |  |  |
Smokeable products | $ | 93 |  |  | $ | 93 |  |  | $ | 117 |
Smokeless products | 29 |  |  | 26 |  |  | 27 |
Wine | 40 |  |  | 36 |  |  | 32 |
General corporate and other | 26 |  |  | 28 |  |  | 28 |
Total depreciation expense | $ | 188 |  |  | $ | 183 |  |  | $ | 204 |
Capital expenditures: |  |  |  |  |
Smokeable products | $ | 39 |  |  | $ | 55 |  |  | $ | 56 |
Smokeless products | 61 |  |  | 52 |  |  | 113 |
Wine | 53 |  |  | 59 |  |  | 42 |
General corporate and other | 46 |  |  | 23 |  |  | 18 |
Total capital expenditures | $ | 199 |  |  | $ | 189 |  |  | $ | 229 |
The comparability of operating companies income for the reportable segments was affected by the following: ▪Non-Participating Manufacturer (“NPM”) Adjustment Items: For the years ended December 31, 2017, 2016 and 2015, pre-tax expense (income) for NPM adjustment items was recorded in Altria Group, Inc.’s consolidated statements of earnings as follows:
(in millions) |  | 2017 |  |  | 2016 |  |  | 2015 |
Smokeable products segment |  | $ | (5 | ) |  | $ | 12 |  |  | $ | (97 | )
Interest and other debt expense, net |  | 9 |  |  | 6 |  |  | 13 |
Total |  | $ | 4 |  |  | $ | 18 |  |  | $ | (84 | )
NPM adjustment items result from the resolutions of certain disputes with states and territories related to the NPM adjustment provision under the 1998 Master Settlement Agreement (such dispute resolutions are referred to collectively as “NPM Adjustment Items”). For the year ended December 31, 2015, the NPM Adjustment Items primarily relate to the resolution of the dispute with New York. For further discussion, see Health Care Cost Recovery Litigation - NPM Adjustment Disputes in Note 18. Contingencies. The amounts shown in the table above for the smokeable products segment were recorded by PM USA as increases (reductions) to cost of sales, which decreased (increased) operating companies income in the smokeable products segment. ▪Tobacco and Health Litigation Items: For the years ended December 31, 2017, 2016 and 2015, pre-tax charges related to certain tobacco and health litigation items were recorded in Altria Group, Inc.’s consolidated statements of earnings as follows:
(in millions) |  | 2017 |  |  | 2016 |  |  | 2015 |
Smokeable products segment |  | $ | 72 |  |  | $ | 88 |  |  | $ | 127 |
Interest and other debt expense, net |  | 8 |  |  | 17 |  |  | 23 |
Total |  | $ | 80 |  |  | $ | 105 |  |  | $ | 150 |
During 2017, PM USA recorded pre-tax charges of$72 million in marketing, administration and research costs and $8 million in interest costs, substantially all of which related to 11 Engle progeny cases. For further discussion, see Note 18. Contingencies. During 2016, PM USA recorded pre-tax charges of $88 million in marketing, administration and research costs, primarily related to settlements in the Miner and Aspinall cases totaling approximately $67 million, and $16 million related to a judgment in the Merino case. In addition, during 2016, PM USA recorded $17 million in interest costs primarily related to Aspinall. For further discussion, see Note 18. Contingencies. During 2015, PM USA recorded pre-tax charges in marketing, administration and research costs in seven state Engle progeny cases and Schwarz of $59 million and $25 million, respectively, as well as $14 million and $9 million, respectively, in interest costs related to these cases. Additionally in 2015, PM USA and certain other cigarette manufacturers reached an agreement to resolve approximately 415 pending federal Engle progeny cases. As a result of the agreement, PM USA recorded a pre-tax provision of approximately $43 million in marketing, administration and research costs. For further discussion, see Note 18. Contingencies. ▪Settlement for Lump Sum Pension Payments: In the third quarter of 2017, Altria Group, Inc. made a voluntary, limited-time offer to former employees with vested benefits in the Altria Retirement Plan who had not commenced receiving benefit payments and who met certain other conditions. Eligible participants were offered the opportunity to make a one-time election to receive their pension benefit as a single lump sum payment or as a monthly annuity. As a result of the 2017 lump sum distributions, a one-time pre-tax settlement charge of $81 million was recorded in 2017 in Altria Group, Inc.’s consolidated statement of earnings as follows:
For the Year Ended December 31, 2017
(in millions) | Cost of Sales |  |  | Marketing, Administration and Research Costs |  |  | Total |
Smokeable products | $ | 39 |  |  | $ | 18 |  |  | $ | 57 |
Smokeless products | — |  |  | 16 |  |  | 16 |
General corporate and other | — |  |  | 8 |  |  | 8 |
Total | $ | 39 |  |  | $ | 42 |  |  | $ | 81 |
For further discussion, see Note 16. Benefit Plans. ▪Smokeless Products Recall: During 2017, USSTC voluntarily recalled certain smokeless tobacco products manufactured at its Franklin Park, Illinois facility due to a product tampering incident (the “Recall”). USSTC estimates that the Recall reduced smokeless products segment operating companies income by approximately $60 million in 2017. ▪Asset Impairment, Exit and Implementation Costs: See Note 4. Asset Impairment, Exit and Implementation Costs for a breakdown of these costs by segment.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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