Segment Reporting

6 Months Ended

Jun. 30, 2016

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 machine-made large cigars and pipe tobacco manufactured and sold by Middleton; smokeless tobacco products, substantially all of which are 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 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 Altria Group, Inc.’s chief operating decision maker.

Segment data were as follows:

	For the Six Months Ended June 30,						For the Three Months Ended June 30,
	2016			2015			2016			2015
	(in millions)
Net revenues:
Smokeable products	$	11,251		$	11,195		$	5,829		$	5,974
Smokeless products	1,002			911			523			481
Wine	316			295			171			161
All other	18			16			(2		)	(3		)
Net revenues	$	12,587		$	12,417		$	6,521		$	6,613
Earnings before income taxes:
Operating companies income (loss):
Smokeable products	$	3,869		$	3,710		$	2,118		$	2,024
Smokeless products	618			544			338			293
Wine	62			62			34			35
All other	(54		)	(104		)	(33		)	(63		)
Amortization of intangibles	(10		)	(10		)	(5		)	(5		)
General corporate expenses	(93		)	(113		)	(42		)	(60		)
Corporate asset impairment and exit costs	(5		)	—			—			—
Operating income	4,387			4,089			2,410			2,224
Interest and other debt expense, net	(392		)	(404		)	(192		)	(195		)
Loss on early extinguishment of debt	—			(228		)	—			—
Earnings from equity investment in SABMiller	265			359			199			225
Gain on derivative financial instrument	157			—			117			—
Earnings before income taxes	$	4,417		$	3,816		$	2,534		$	2,254

The comparability of operating companies income for the reportable segments was affected by the following:

Non-Participating Manufacturer (“NPM”) Adjustment Items - Pre-tax expense for NPM adjustment items was recorded in Altria Group, Inc.’s condensed consolidated statement of earnings as follows:

	For the Six Months Ended June 30, 2016
	(in millions)
Smokeable products segment	$	12
Interest and other debt expense, net	6
Total	$	18

NPM adjustment items result from the settlement of, and determinations made in connection with, disputes with certain states and territories related to the NPM adjustment provision under the 1998 Master Settlement Agreement (such settlements and determinations are referred to collectively as “NPM Adjustment Items” and are more fully described in Health Care Cost Recovery Litigation - NPM Adjustment Disputes in Note 11. Contingencies). The amount shown in the table above for the smokeable products segment was recorded by PM USA as an increase to cost of sales, which decreased 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 Group, Inc.’s condensed consolidated statements of earnings as follows:

	For the Six Months Ended June 30,				For the Three Months Ended June 30,
	2016		2015		2016		2015
	(in millions)
Smokeable products segment	$	27	$	48	$	1	$	5
Interest and other debt expense, net	16		—		4		—
Total	$	43	$	48	$	5	$	5

During the first quarter of 2016, PM USA recorded pre-tax charges, primarily related to the Aspinall case, of $26 million in marketing, administration and research costs and $12 million in interest costs. During the first quarter of 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, during the first quarter of 2015, PM USA recorded a pre-tax provision of approximately $43 million in marketing, administration and research costs. For further discussion, see Note 11. Contingencies.

Asset Impairment, Exit and Implementation Costs - See Note 2. Asset Impairment, Exit and Implementation Costs for a breakdown of these costs by segment.