XML 29 R11.htm IDEA: XBRL DOCUMENT
v3.20.2

Asset Impairment, Exit and Implementation Costs | 6 Months Ended
--- | ---
Jun. 30, 2020
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:
|  | For the Six Months Ended June 30,
|  | 2020 |  | 2019
|  | Implementation Costs (1) |  | Total |  | Asset Impairment and Exit Costs |  | Implementation Costs (2) |  | Total
| (in millions)
Smokeable products |  | $ | — |  |  | $ | — |  |  | $ | 50 |  |  | $ | 25 |  |  | $ | 75 |
Oral tobacco products |  | — |  |  | — |  |  | 8 |  |  | 3 |  |  | 11 |
Wine |  | 394 |  |  | 394 |  |  | — |  |  | — |  |  | — |
All other |  | — |  |  | — |  |  | 14 |  |  | (7 | ) |  | 7 |
General corporate |  | — |  |  | — |  |  | 1 |  |  | — |  |  | 1 |
Total |  | 394 |  |  | 394 |  |  | 73 |  |  | 21 |  |  | 94 |
Plus amounts included in net periodic benefit income, excluding service cost (3) |  | — |  |  | — |  |  | 12 |  |  | — |  |  | 12 |
Total |  | $ | 394 |  |  | $ | 394 |  |  | $ | 85 |  |  | $ | 21 |  |  | $ | 106 |
(1) Included in cost of sales in Altria’s condensed consolidated statements of earnings. (2) Included in cost of sales ($2 million cost reversal) and marketing, administration and research costs ($23 million) in Altria’s condensed consolidated statement of earnings. (3) Represents curtailment costs. See Note 6. Benefit Plans.
|  | For the Three Months Ended June 30,
| 2020 |  | 2019
|  | Implementation Costs (1) |  | Total |  | Asset Impairment and Exit Costs |  | Implementation Costs (2) |  | Total
| (in millions)
Smokeable products |  | $ | — |  |  | $ | — |  |  | $ | 14 |  |  | $ | 17 |  |  | $ | 31 |
Oral tobacco products |  | — |  |  | — |  |  | — |  |  | 2 |  |  | 2 |
Wine |  | 2 |  |  | 2 |  |  | — |  |  | — |  |  | — |
All other |  | — |  |  | — |  |  | 19 |  |  | (7 | ) |  | 12 |
Total |  | $ | 2 |  |  | $ | 2 |  |  | $ | 33 |  |  | $ | 12 |  |  | $ | 45 |
(1) Included in cost of sales in Altria’s condensed consolidated statements of earnings. (2) Included in cost of sales ($2 million cost reversal) and marketing, administration and research costs ($14 million) in Altria’s condensed consolidated statement of earnings. Implementation costs for 2020 were related to Ste. Michelle’s strategic reset as discussed below. The 2019 pre-tax asset impairment, exit and implementation costs were related to the cost reduction program announced in December 2018, which was completed in 2019. The movement in the restructuring liabilities, substantially all of which were severance liabilities, related to the cost reduction program was as follows:
| (in millions)
Balances at December 31, 2019 | $ | 67 |
Charges | — |
Cash spent | (41 | )
Balances at June 30, 2020 | $ | 26 |
Wine Business Strategic Reset Evolving adult consumer preferences have posed strategic challenges for Ste. Michelle, which has seen slowing growth in the wine category and increased inventory levels in recent periods. Against a backdrop of product volume demand uncertainty and long-term non-cancelable grape purchase commitments, which have been further negatively impacted by government actions which restrict direct-to-consumer sales and on-premise sales, and economic uncertainty surrounding the COVID-19 pandemic, Ste. Michelle experienced additional increases in inventory levels that at March 31, 2020 significantly exceeded long-term forecasted demand. During the six and three months ended June 30, 2020, Ste. Michelle recorded pre-tax charges of $394 million and $2 million, respectively, which were included in cost of sales in Altria’s condensed consolidated statement of earnings. The charges consisted of the following: (i) write-off of inventory ($292 million recorded in the first quarter of 2020) as Ste. Michelle no longer believes that the benefit of the blending and production plans for its inventory outweighs inventory carrying cost given the reduced product volume demand; (ii) estimated losses on future non-cancelable grape purchase commitments that Ste. Michelle believes no longer have a future economic benefit ($100 million recorded in the first quarter of 2020); and (iii) inventory disposal costs and other charges ($2 million recorded in the second quarter of 2020). The non-cancelable grape purchase commitments will continue to require cash payments as grape commitments are fulfilled over the next five years. Given such uncertainty in economic conditions and product volume demand, as well as long-term supply-side contractual challenges, Altria and Ste. Michelle undertook a review of the wine business. As a result, Altria and Ste. Michelle implemented a strategic reset in order to maximize Ste. Michelle’s profitability and achieve improved long-term cash-flow generation. This strategic reset includes: (i) an updated approach to forecasting demand; (ii) supply chain optimization; (iii) SKU rationalization to reduce the number of products and eliminate underperforming brands; and (iv) streamlining operations by reducing future capital expenditures, working capital requirements and ongoing operating costs. Ste. Michelle expects to record additional charges of approximately $25 million in 2020, consisting of inventory disposal costs and other charges.

X
- References No definition available. + Details
Name: | us-gaap_RestructuringAndRelatedActivitiesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -URI http://asc.fasb.org/topic&trid=2175745 + Details
Name: | us-gaap_RestructuringAndRelatedActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration