Asset Impairment and Exit Costs:
During 2013, 2012 and 2011, pre-tax asset impairment and exit costs consisted of the following:
|
| | | | | | | | | | | |
(in millions) | 2013 | | 2012 | | 2011 |
Separation programs: | | | | | |
European Union | $ | 13 |
| | $ | — |
| | $ | 35 |
|
Eastern Europe, Middle East & Africa | 14 |
| | — |
| | 6 |
|
Asia | 19 |
| | 13 |
| | 7 |
|
Latin America & Canada | 5 |
| | 29 |
| | 15 |
|
Total separation programs | 51 |
| | 42 |
| | 63 |
|
Contract termination charges: | | | | | |
Eastern Europe, Middle East & Africa | 250 |
| | — |
| | 12 |
|
Asia | 8 |
| | 13 |
| | — |
|
Total contract termination charges | 258 |
| | 13 |
| | 12 |
|
Asset impairment charges: | | | | | |
European Union | — |
| | 5 |
| | 10 |
|
Eastern Europe, Middle East & Africa | — |
| | 5 |
| | 7 |
|
Asia | — |
| | 13 |
| | 8 |
|
Latin America & Canada | — |
| | 5 |
| | 9 |
|
Total asset impairment charges | — |
| | 28 |
| | 34 |
|
Asset impairment and exit costs | $ | 309 |
| | $ | 83 |
| | $ | 109 |
|
Exit Costs
Separation Programs
PMI recorded pre-tax separation program charges of $51 million, $42 million and $63 million for the years ended December 31, 2013, 2012 and 2011, respectively. The 2013 pre-tax separation program charges primarily related to the restructuring of global and regional functions based in Switzerland and Australia. The 2012 pre-tax separation program charges primarily related to severance costs associated with factory restructurings. The 2011 pre-tax separation program charges primarily related to severance costs for factory and R&D restructurings.
Contract Termination Charges
During 2013, PMI recorded exit costs of $258 million related to the termination of distribution agreements in Eastern Europe, Middle East & Africa (due to a new business model in Egypt) and Asia. During 2012, PMI recorded exit costs of $13 million related to the termination of distribution agreements in Asia. During 2011, PMI recorded exit costs of $12 million related to the termination of a distribution agreement in Eastern Europe, Middle East & Africa.
Movement in Exit Cost Liabilities
The movement in exit cost liabilities for PMI was as follows:
|
| | | |
(in millions) | |
Liability balance, January 1, 2012 | $ | 28 |
|
Charges | 55 |
|
Cash spent | (57 | ) |
Currency/other | (6 | ) |
Liability balance, December 31, 2012 | $ | 20 |
|
Charges | 309 |
|
Cash spent | (21 | ) |
Currency/other | — |
|
Liability balance, December 31, 2013 | $ | 308 |
|
Cash payments related to exit costs at PMI were $21 million, $57 million and $98 million for the years ended December 31, 2013, 2012 and 2011, respectively. Future cash payments for exit costs incurred to date are expected to be approximately $308 million, and these costs will be substantially paid in 2014.
49
Asset Impairment Charges
PMI recorded pre-tax asset impairment charges of $28 million and $34 million for the years ended December 31, 2012 and 2011, respectively, primarily related to the consolidation of R&D activities as well as charges for factory restructurings.
