Asset Impairment and Exit Costs

9 Months Ended

Sep. 30, 2013

Restructuring and Related Activities [Abstract]

Asset Impairment and Exit Costs:

Pre-tax asset impairment and exit costs consisted of the following:



(in millions)	For the Nine Months Ended September 30,				For the Three Months Ended September 30,
	2013		2012		2013		2012
Separation programs:
Asia	$	—	$	13	$	—	$	13
Latin America & Canada	—		24		—		8
Total separation programs	—		37		—		21
Contract termination charges:
Asia	8		5		—		5
Total contract termination charges	8		5		—		5
Asset impairment charges:
Asia	—		6		—		6
Latin America & Canada	—		2		—		2
Total asset impairment charges	—		8		—		8
Asset impairment and exit costs	$	8	$	50	$	—	$	34

Exit Costs

Separation Programs

On September 30, 2013, PMI announced its intention to restructure its global and regional functions based in Switzerland. The potential restructuring is expected to result in the elimination or relocation of approximately 170 positions. PMI expects to finalize its plans during the fourth quarter of 2013.

In another initiative, PMI recorded pre-tax separation program charges of $37 million and $21 million for the nine months and three months ended September 30, 2012, respectively. The 2012 pre-tax separation program charges primarily related to severance costs associated with factory restructurings.

Contract Termination Charges

During the nine months ended September 30, 2013, PMI recorded exit costs of $8 million related to the termination of distribution agreements. During the third quarter of 2012, PMI recorded exit costs of $5 million related to the termination of a distribution agreement.

Movement in Exit Cost Liabilities

The movement in exit cost liabilities for the nine months ended September 30, 2013 was as follows:



(in millions)
Liability balance, January 1, 2013	$	20
Charges	8
Cash spent	(17		)
Currency/other	—
Liability balance, September 30, 2013	$	11

Cash payments related to exit costs at PMI were $17 million and $5 million for the nine months and three months ended September 30, 2013, respectively, and $31 million and $11 million for the nine months and three months ended September 30, 2012, respectively. Future cash payments for exit costs incurred to date are expected to be approximately $11 million, and will be substantially paid in 2014.

Asset Impairment Charges

During the third quarter of 2012, PMI recorded pre-tax asset impairment charges of $8 million related to factory restructurings.

- 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.

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