Asset Impairment, Exit, Implementation and Integration Costs:

Pre-tax asset impairment, exit and implementation costs for the nine and three months ended September 30, 2012 consisted of the following:




	For the Nine Months Ended September 30, 2012							For the Three Months Ended September 30, 2012
	Asset Impairment and Exit Costs		Implementation (Gain) Costs			Total		Asset Impairment and Exit Costs		Implementation Costs		Total
	(in millions)
Smokeable products	$	24	$	(11	)	$	13	$	1	$	1	$	2
Smokeless products	22		5			27		8		—		8
General corporate	1		(1		)	—		1		—		1
Total	$	47	$	(7	)	$	40	$	10	$	1	$	11

The asset impairment, exit and implementation costs shown in the table above are related to the 2011 Cost Reduction Program. The 2011 Cost Reduction Program and related costs are discussed further below.

For the nine months ended September 30, 2011, total pre-tax asset impairment and exit costs were $3 million, all of which were reported in the smokeable products segment. There were no asset impairment and exit costs incurred during the three months ended September 30, 2011. In addition, total pre-tax integration costs of $3 million and $1 million for the nine and three months ended September 30, 2011, respectively, were reported in the smokeless products segment. There were no implementation costs incurred during the nine months ended September 30, 2011.

The movement in the severance liability and details of asset impairment and exit costs for Altria Group, Inc. for the nine months ended September 30, 2012 was as follows:



	Severance			Other			Total
	(in millions)
Severance liability balance, December 31, 2011	$	156		$	—		$	156
Charges	—			47			47
Cash spent	(88		)	(18		)	(106		)
Other	—			(29		)	(29		)
Severance liability balance, September 30, 2012	$	68		$	—		$	68

2011 Cost Reduction Program: In October 2011, Altria Group, Inc. announced a new cost reduction program for its tobacco and service company subsidiaries, reflecting Altria Group, Inc.'s objective to reduce cigarette-related infrastructure ahead of PM USA's cigarettes volume declines. As a result of this program, Altria Group, Inc. expects to incur total net pre-tax charges of approximately $300 million (concluding by the end of 2012). The estimated net charges include employee separation costs of approximately $220 million and other net charges of approximately $80 million. These other net charges include lease termination and asset impairments, partially offset by a curtailment gain related to amendments made to an Altria Group, Inc. postretirement benefit plan. Substantially all of these charges will result in cash expenditures.

Implementation (gain) costs of ($7) million shown in the table above were recorded on Altria Group, Inc.'s condensed consolidated statement of earnings for the nine months ended September 30, 2012, as follows: a net gain of $15 million, which included a $26 million curtailment gain related to amendments made to an Altria Group, Inc. postretirement benefit plan, was included in marketing, administration and research costs; and other costs of $8 million were included in cost of sales. For the three months ended September 30, 2012 implementation costs of $1 million shown in the table above were recorded in marketing, administration and research costs on Altria Group, Inc.'s condensed consolidated statement of earnings.

Total pre-tax charges, net, incurred since the inception of this program through September 30, 2012 were $264 million. Cash payments related to this program of $108 million and $35 million were made during nine and three months ended September 30, 2012, respectively, for total cash payments of $117 million since inception.

In connection with the 2011 Cost Reduction Program, Altria Group, Inc. reorganized two of its tobacco operating companies and revised its reportable segments (see Note 1. Background and Basis of Presentation and Note 7. Segment Reporting).