Asset Impairment, Exit and Implementation Costs

12 Months Ended

Dec. 31, 2019

Restructuring and Related Activities [Abstract]

Asset Impairment, Exit, and Implementation Costs

Asset Impairment, Exit and Implementation Costs

Pre-tax asset impairment, exit and implementation costs consisted of the following:



(in millions)	Asset Impairment and Exit Costs						Implementation Costs							Total
For the year ended December 31,	2019		2018		2017		2019⁽¹⁾			2018 ⁽²⁾		2017 ⁽²⁾		2019		2018		2017
Smokeable products	$	59	$	79	$	4	$	33		$	1	$	17	$	92	$	80	$	21
Smokeless products	9		20		28		5			3		28		14		23		56
Wine⁽³⁾	76		54		—		—			—		—		76		54		—
All other	14		227		—		(10		)	63		—		4		290		—
General corporate	1		3		—		—			—		—		1		3		—
Total	159		383		32		28			67		45		187		450		77
Plus amounts included in net periodic benefit (income) cost, excluding service cost⁽⁴⁾	29		3		1		—			—		—		29		3		1
Total	$	188	$	386	$	33	$	28		$	67	$	45	$	216	$	453	$	78

⁽¹⁾ Included in cost of sales ($2 million) and marketing, administration and research costs ($26 million) in Altria’s consolidated statement of earnings (losses).

⁽²⁾ Included in cost of sales in Altria’s consolidated statements of earnings (losses).

⁽³⁾ Includes impairment of goodwill for the wine reporting unit in 2019 and impairment of the Columbia Crest trademark in 2018. See Note 4. Goodwill and Other Intangible Assets, net.

⁽⁴⁾ Represents settlement and curtailment costs. See Note 17. Benefit Plans.

The 2019 pre-tax asset impairment, exit and implementation costs were related to the cost reduction program and the refocus of innovative product efforts discussed below, and the goodwill impairment for the wine reporting unit.

Substantially all of the 2018 pre-tax asset impairment, exit and implementation costs were related to the refocus of innovative product efforts and the cost reduction program discussed below, and the impairment of the Columbia Crest trademark.

The pre-tax asset impairment, exit and implementation costs for 2017 were related to the facilities consolidation discussed below.

The movement in the restructuring liabilities, substantially all of which were severance liabilities, for the years ended December 31, 2019 and 2018 was as follows:



(in millions)
Balances at December 31, 2017	$	33
Charges	154
Cash spent	(32		)
Balances at December 31, 2018	155
Charges	59
Cash spent	(147		)
Balances at December 31, 2019	$	67

▪Refocus of Innovative Product Efforts: During the fourth quarter of 2018, Altria refocused its innovative product efforts, which included Nu Mark’s discontinuation of production and distribution of all e-vapor products. During the year ended December 31, 2019, Altria incurred pre-tax charges of $9 million, consisting of asset impairment, exit and implementation costs. During 2018, Altria incurred pre-tax charges of $272 million, consisting of asset impairment and exit costs of $209 million primarily related to the impairment of goodwill and other intangible assets and other charges of $63 million related to inventory write-offs and accelerated depreciation. The pre-tax charges related to the refocus of innovative product efforts have been completed. The majority of the charges related to these efforts did not result in cash payments.

▪Cost Reduction Program: In December 2018, Altria announced a cost reduction program that includes workforce reductions and third-party spending reductions across the businesses. As a result of the cost reduction program, Altria recorded total pre-tax restructuring charges of $254 million, which included employee benefit-related curtailment and settlement costs. Of this amount, Altria incurred pre-tax charges of $133 million in 2019 and $121 million in 2018. The total charges, the majority of which will result in cash expenditures, related primarily to employee separation costs of $202 million and other costs of $52 million. The pre-tax charges related to this cost reduction program have been substantially completed. Cash payments related to this cost reduction program of $136 million were made during the year ended December 31, 2019. There were no cash payments related to this program in 2018.

▪Facilities Consolidation: 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. At December 31, 2018, pre-tax charges related to the consolidation were completed.

As a result of the consolidation, Altria recorded total pre-tax charges of $155 million. During 2018 and 2017, Altria recorded pre-tax charges of $6 million and $78 million, respectively. The total charges related primarily to accelerated depreciation and asset impairment ($55 million), employee separation costs ($40 million) and other exit and implementation costs ($60 million).

Cash payments related to the consolidation of $3 million were made during the year ended December 31, 2019, for total cash payments of $100 million since inception. At December 31, 2019, cash payments related to the consolidation were completed.