Asset Impairment and Exit Costs

12 Months Ended

Dec. 31, 2016

Restructuring and Related Activities [Abstract]

Asset Impairment and Exit Costs

Asset Impairment and Exit Costs:

During 2016, PMI did not incur asset impairment and exit costs. During 2015 and 2014, pre-tax asset impairment and exit costs consisted of the following:

(in millions)	2015		2014
Separation programs:
European Union	$	68	$	351
Eastern Europe, Middle East & Africa	—		2
Asia	—		35
Latin America & Canada	—		3
Total separation programs	68		391
Asset impairment charges:
European Union	—		139
Latin America & Canada	—		5
Total asset impairment charges	—		144
Asset impairment and exit costs	$	68	$	535

Movement in Exit Cost Liabilities

The movement in exit cost liabilities for PMI was as follows:

(in millions)
Liability balance, January 1, 2015	$	270
Charges, net	68
Cash spent	(232		)
Currency/other	(52		)
Liability balance, December 31, 2015	$	54
Charges, net	—
Cash spent	(31		)
Currency/other	(4		)
Liability balance, December 31, 2016	$	19

Cash payments related to exit costs at PMI were $31 million, $232 million and $360 million for the years ended December 31, 2016, 2015 and 2014, respectively. Future cash payments for exit costs incurred to date are expected to be approximately $19 million and will be substantially paid by the end of 2017.

The pre-tax asset impairment and exit costs shown above are primarily a result of the following:

The Netherlands

On April 4, 2014, PMI announced the initiation by its affiliate, Philip Morris Holland B.V. (“PMH”), of consultations with employee representatives on a proposal to discontinue cigarette production at its factory located in Bergen op Zoom, the Netherlands. PMH reached an agreement with the trade unions and their members on a social plan and ceased cigarette production on September 1, 2014. During 2014, total pre-tax asset impairment and exit costs of $489 million were recorded for this program in the European Union segment. This amount includes employee separation costs of $343 million, asset impairment costs of $139 million and other separation costs of $7 million.

Other

Separation Program Charges

PMI recorded other pre-tax separation program charges of $68 million and $41 million for the years ended December 31, 2015 and 2014, respectively. The 2015 other pre-tax separation program charges primarily related to severance costs for the organizational restructuring in the European Union segment. The 2014 other pre-tax separation program charges were primarily related to severance costs for factory closures in Australia and Canada and the restructuring of the U.S. leaf purchasing model.

Asset Impairment Charges

During 2014, PMI recorded other pre-tax asset impairment charges of $5 million related to a factory closure in Canada.