Segment Reporting

9 Months Ended

Sep. 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 Nine Months Ended September 30,						For the Three Months Ended September 30,
	2016			2015			2016			2015
	(in millions)
Net revenues:
Smokeable products	$	17,398		$	17,235		$	6,147		$	6,040
Smokeless products	1,530			1,393			528			482
Wine	498			461			182			166
All other	66			27			48			11
Net revenues	$	19,492		$	19,116		$	6,905		$	6,699
Earnings before income taxes:
Operating companies income (loss):
Smokeable products	$	5,955		$	5,831		$	2,086		$	2,121
Smokeless products	930			830			312			286
Wine	100			97			38			35
All other	(46		)	(139		)	8			(35		)
Amortization of intangibles	(15		)	(16		)	(5		)	(6		)
General corporate expenses	(150		)	(166		)	(57		)	(53		)
Reduction of PMI tax-related receivable	—			(41		)	—			(41		)
Corporate asset impairment and exit costs	(5		)	—			—			—
Operating income	6,769			6,396			2,382			2,307
Interest and other debt expense, net	(571		)	(609		)	(179		)	(205		)
Loss on early extinguishment of debt	(823		)	(228		)	(823		)	—
Earnings from equity investment in SABMiller	564			546			299			187
Gain on derivative financial instruments	205			—			48			—
Earnings before income taxes	$	6,144		$	6,105		$	1,727		$	2,289

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

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

	For the Nine Months Ended September 30,					For the Three Months Ended September 30,
	2016		2015			2016		2015
	(in millions)
Smokeable products segment	$	12	$	(126	)	$	—	$	(126	)
Interest and other debt expense, net	6		—			—		—
Total	$	18	$	(126	)	$	—	$	(126	)

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 amounts shown in the table above for the smokeable products segment were recorded by PM USA as increases (reductions) to cost of sales, which decreased (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 Group, Inc.’s condensed consolidated statements of earnings as follows:

	For the Nine Months Ended September 30,				For the Three Months Ended September 30,
	2016		2015		2016		2015
	(in millions)
Smokeable products segment	$	72	$	102	$	45	$	54
Interest and other debt expense, net	16		13		—		13
Total	$	88	$	115	$	45	$	67

During the third quarter of 2016, PM USA recorded a pre-tax charge related to the Miner case of $45 million in marketing, administration and research costs. 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. For further discussion, see “Lights/Ultra Lights” Cases - State Trial Court Class Certifications inNote 11. Contingencies.

During the third quarter of 2015, PM USA recorded pre-tax charges of $54 million in marketing, administration and research costs related to tobacco and health judgments in six state Engle progeny lawsuits, as well as $13 million in interest costs related to those cases. 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 Smoking and Health Litigation in 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.