XML 35 R17.htm IDEA: XBRL DOCUMENT v3.20.2
Segment Reporting
 6 Months Ended
Jun. 30, 2020
Segment Reporting [Abstract]  
Segment Reporting Segment Reporting:


In the first quarter of 2020, Altria renamed its smokeless products segment as the oral tobacco products segment.

The products of Altria’s subsidiaries include smokeable tobacco products, consisting of combustible cigarettes manufactured and sold by PM USA and Nat Sherman, machine-made large cigars and pipe tobacco manufactured and sold by Middleton and premium cigars sold by Nat Sherman; oral tobacco products, consisting of MST and snus products manufactured and sold by USSTC and oral nicotine pouches manufactured and sold by Helix; and wine produced and/or distributed by Ste. Michelle. The products and services of these subsidiaries constitute Altria’s reportable segments of smokeable products, oral tobacco products (formerly smokeless products) and wine. The financial services and the innovative tobacco products businesses are included in all other.

Altria’s chief operating decision maker (the “CODM”) reviews operating companies income (loss) (“OCI”) to evaluate the performance of, and allocate resources to, the segments. OCI for the segments is defined as operating income before general corporate expenses and amortization of intangibles. Interest and other debt expense, net, net periodic benefit income/cost, excluding service cost, 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 the CODM.

Segment data were as follows: 
 
 
For the Six Months Ended June 30,
 
For the Three Months Ended June 30,
 
 
2020
 
2019
 
2020
 
2019
 
 
(in millions)
Net revenues:
 
 
 
 
 
 
 
 
Smokeable products
 
$
11,209

 
$
10,788

 
$
5,603

 
$
5,853

Oral tobacco products
 
1,261

 
1,142

 
660

 
602

Wine
 
277

 
316

 
131

 
165

All other
 
(21
)
 
1

 
(27
)
 
(1
)
Net revenues
 
$
12,726

 
$
12,247

 
$
6,367

 
$
6,619

Earnings before income taxes:
 
 
 
 
 
 
 
 
OCI:
 
 
 
 
 
 
 
 
Smokeable products
 
$
4,820

 
$
4,303

 
$
2,450

 
$
2,371

Oral tobacco products
 
861

 
778

 
447

 
420

Wine
 
(366
)
 
34

 
13

 
19

All other
 
(56
)
 
(35
)
 
(51
)
 
(23
)
Amortization of intangibles
 
(37
)
 
(16
)
 
(18
)
 
(8
)
General corporate expenses
 
(90
)
 
(108
)
 
(45
)
 
(62
)
Corporate asset impairment and exit costs
 
—

 
(1
)
 
—

 
—

Operating income
 
5,132

 
4,955

 
2,796

 
2,717

Interest and other debt expense, net
 
(583
)
 
(696
)
 
(308
)
 
(312
)
Net periodic benefit income, excluding service cost
 
55

 
16

 
28

 
15

Earnings from equity investments
 
166

 
533

 
9

 
447

Gain (loss) on Cronos-related financial instruments
 
(97
)
 
(691
)
 
40

 
(266
)
Earnings before income taxes
 
$
4,673

 
$
4,117

 
$
2,565

 
$
2,601



The comparability of OCI for the reportable segments was affected by the following:

Tobacco and Health Litigation Items - Pre-tax charges related to certain tobacco and health litigation items were recorded in Altria’s condensed consolidated statements of earnings as follows:
 
 
For the Six Months Ended June 30,
 
For the Three Months Ended June 30,
 
 
2020
 
2019
 
2020
 
2019
 
 
(in millions)
Smokeable products segment
 
$
39

 
$
40

 
$
17

 
$
25

Interest and other debt expense, net
 
3

 
5

 
1

 
3

Total
 
$
42

 
$
45

 
$
18

 
$
28



The amounts shown in the table above for the smokeable products segment were recorded in marketing, administration and research costs. For further discussion, see Note 12. Contingencies.

COVID-19 Special Items - Net pre-tax charges of $50 million ($41 million in the smokeable products segment and $9 million in the oral tobacco products segment) related to COVID-19 were recorded in Altria’s condensed consolidated statements of earnings for the six and three months ended June 30, 2020. The net charges, which were directly related to disruptions caused by or efforts to mitigate the impact of the COVID-19 pandemic, were recorded in costs of sales and included premium pay, personal protective equipment and health screenings, which were partially offset by certain employment tax credits. The COVID-19 special items do not include the inventory-related implementation costs associated with the wine business strategic reset. These implementation costs were due to increased inventory levels, which were further negatively impacted by government restrictions and economic uncertainty surrounding the COVID-19 pandemic.

Asset Impairment, Exit and Implementation Costs - See Note 3. Asset Impairment, Exit and Implementation Costs for a breakdown of these costs by segment.