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Segment Reporting | 6 Months Ended
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Jun. 30, 2018
Segment Reporting [Abstract] |
Segment Reporting | Segment Reporting: The products of Altria’s subsidiaries include smokeable tobacco products, consisting of combustible 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, consisting of moist smokeless tobacco and snus products manufactured and sold by USSTC; and wine produced and/or distributed by Ste. Michelle. The products and services of these subsidiaries constitute Altria’s reportable segments of smokeable products, smokeless products and wine. The financial services and the innovative tobacco products businesses are included in all other. As discussed in Note 1. Background and Basis of Presentation, on January 1, 2018, Altria adopted ASU 2017-07, which resulted in a change to prior-period operating income. As a result, certain immaterial prior-period operating companies income (loss) data has been reclassified to conform with the current period’s presentation. Altria’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, net periodic benefit cost/income, excluding service cost, 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. Segment data were as follows:
|  | For the Six Months Ended June 30, |  | For the Three Months Ended June 30,
|  | 2018 |  | 2017 |  | 2018 |  | 2017
|  | (in millions)
Net revenues: |  |  |  |  |  |  |  |
Smokeable products |  | $ | 10,960 |  |  | $ | 11,380 |  |  | $ | 5,546 |  |  | $ | 5,922 |
Smokeless products |  | 1,104 |  |  | 1,030 |  |  | 579 |  |  | 564 |
Wine |  | 308 |  |  | 290 |  |  | 166 |  |  | 150 |
All other |  | 41 |  |  | 46 |  |  | 14 |  |  | 27 |
Net revenues |  | $ | 12,413 |  |  | $ | 12,746 |  |  | $ | 6,305 |  |  | $ | 6,663 |
Earnings before income taxes: |  |  |  |  |  |  |  |
Operating companies income (loss): |  |  |  |  |  |  |  |
Smokeable products |  | $ | 4,239 |  |  | $ | 4,260 |  |  | $ | 2,201 |  |  | $ | 2,224 |
Smokeless products |  | 715 |  |  | 593 |  |  | 377 |  |  | 347 |
Wine |  | 44 |  |  | 46 |  |  | 27 |  |  | 25 |
All other |  | (83 | ) |  | (21 | ) |  | (57 | ) |  | (8 | )
Amortization of intangibles |  | (10 | ) |  | (10 | ) |  | (5 | ) |  | (5 | )
General corporate expenses |  | (91 | ) |  | (101 | ) |  | (45 | ) |  | (55 | )
Operating income |  | 4,814 |  |  | 4,767 |  |  | 2,498 |  |  | 2,528 |
Interest and other debt expense, net |  | (344 | ) |  | (356 | ) |  | (178 | ) |  | (177 | )
Net periodic benefit income, excluding service cost |  | 16 |  |  | 19 |  |  | 9 |  |  | 11 |
Earnings from equity investment in AB InBev |  | 570 |  |  | 163 |  |  | 228 |  |  | 140 |
(Loss) gain on AB InBev/SABMiller business combination |  | (33 | ) |  | 408 |  |  | — |  |  | 408 |
Earnings before income taxes |  | $ | 5,023 |  |  | $ | 5,001 |  |  | $ | 2,557 |  |  | $ | 2,910 |
The comparability of operating companies income for the reportable segments was affected by the following: Non-Participating Manufacturer (“NPM”) Adjustment Items - Pre-tax (income) expense for NPM adjustment items was recorded in Altria’s condensed consolidated statements of earnings as follows:
|  | For the Six Months Ended June 30, |  | For the Three Months Ended June 30,
|  | 2018 |  | 2017 |  | 2018 |  | 2017
|  | (in millions)
Smokeable products segment |  | $ | (145 | ) |  | $ | (8 | ) |  | $ | (77 | ) |  | $ | — |
Interest and other debt expense, net |  | — |  |  | 7 |  |  | — |  |  | — |
Total |  | $ | (145 | ) |  | $ | (1 | ) |  | $ | (77 | ) |  | $ | — |
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 as “NPM Adjustment Items” and are more fully described in Health Care Cost Recovery Litigation - NPM Adjustment Disputes in Note 9. Contingencies). The amounts shown in the table above for the smokeable products segment were recorded by PM USA as reductions to cost of sales, which increased operating companies income in the smokeable products segment. Tobacco and Health Litigation Items - Pre-tax charges related to certain tobacco and health litigation items were recorded in Altria’s condensed consolidated statements of earnings as follows:
|  | For the Six Months Ended June 30, |  | For the Three Months Ended June 30,
|  | 2018 |  | 2017 |  | 2018 |  | 2017
|  | (in millions)
Smokeable products segment |  | $ | 84 |  |  | $ | 16 |  |  | $ | 60 |  |  | $ | 15 |
Interest and other debt expense, net |  | 14 |  |  | 2 |  |  | 10 |  |  | 2 |
Total |  | $ | 98 |  |  | $ | 18 |  |  | $ | 70 |  |  | $ | 17 |
During the six and three months ended June 30, 2018, PM USA recorded pre-tax charges of $84 million and $60 million, respectively, in marketing, administration and research costs, all of which related to Engle progeny cases. In addition, during the six and three months ended June 30, 2018, PM USA recorded $14 million and $10 million, respectively, in interest costs, all of which related to these cases. For further discussion, see Note 9. Contingencies. During the second quarter of 2017, PM USA recorded pre-tax charges of $15 million in marketing, administration and research costs and $2 million in interest costs, all of which related to Engle progeny cases. For further discussion, see Note 9. Contingencies. Smokeless Products Recall - During the first quarter of 2017, USSTC voluntarily recalled certain smokeless tobacco products manufactured at its Franklin Park, Illinois facility due to a product tampering incident (the “Recall”). USSTC estimated that the Recall reduced smokeless products segment operating companies income by approximately $60 million in the first quarter of 2017. Asset Impairment, Exit and Implementation Costs - In October 2016, Altria announced the consolidation of certain of its operating companies’ manufacturing facilities to streamline operations and achieve greater efficiencies. In the first quarter of 2018, Middleton completed the transfer of its Limerick, Pennsylvania operations to the Manufacturing Center site in Richmond, Virginia (“Richmond Manufacturing Center”), and USSTC completed the transfer of its Franklin Park, Illinois operations to its Nashville, Tennessee facility and the Richmond Manufacturing Center. The pre-tax charges related to the consolidation are substantially complete. Pre-tax asset impairment, exit and implementation costs recorded in connection with the facilities consolidation consisted of the following:
| For the Six Months Ended June 30, 2018 |  | For the Six Months Ended June 30, 2017
| Asset Impairment and Exit Costs |  | Implementation Costs (1) |  | Total |  | Asset Impairment and Exit Costs |  | Implementation Costs (1) |  | Total
| (in millions)
Smokeable products | $ | 1 |  |  | $ | 2 |  |  | $ | 3 |  |  | $ | 2 |  |  | $ | 12 |  |  | $ | 14 |
Smokeless products | 3 |  |  | 3 |  |  | 6 |  |  | 14 |  |  | 28 |  |  | 42 |
Total | $ | 4 |  |  | $ | 5 |  |  | $ | 9 |  |  | $ | 16 |  |  | $ | 40 |  |  | $ | 56 |
| For the Three Months Ended June 30, 2018 |  | For the Three Months Ended June 30, 2017
| Asset Impairment and Exit Costs |  | Implementation Costs (1) |  | Total |  | Asset Impairment and Exit Costs |  | Implementation Costs (1) |  | Total
| (in millions)
Smokeable products | $ | 1 |  |  | $ | 1 |  |  | $ | 2 |  |  | $ | 1 |  |  | $ | 7 |  |  | $ | 8 |
Smokeless products | 1 |  |  | 3 |  |  | 4 |  |  | 11 |  |  | 10 |  |  | 21 |
Total | $ | 2 |  |  | $ | 4 |  |  | $ | 6 |  |  | $ | 12 |  |  | $ | 17 |  |  | $ | 29 |
(1) The pre-tax implementation costs were included in cost of sales in Altria’s condensed consolidated statements of earnings.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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