Altria Group Inc (MO)

[EZ2]

Form 8-K for ALTRIA GROUP, INC.


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26-Jun-2007

Costs Associated with Exit or Disposal Activities



Item 2.05. Costs Associated with Exit or Disposal Activities.
On June 26, 2007, Altria Group, Inc. announced plans by its tobacco subsidiaries to optimize worldwide cigarette production by moving U.S.-based cigarette production for non-U.S. markets to Philip Morris International (PMI) facilities in Europe. Due to declining U.S. cigarette volume, as well as PMI's decision to re-source its production, Philip Morris USA (PM USA) will close its Cabarrus, NC manufacturing facility and consolidate manufacturing for the U.S. market at its Richmond, VA manufacturing center.
The program is expected to generate pre-tax cost savings beginning in 2008, with total estimated annual cost savings of approximately $335 million by 2011, of which $179 million will be realized by PMI and $156 million will be realized by PM USA. Cumulative total expenses of the program, all of which will be taken by PM USA, are estimated at approximately $670 million, comprising accelerated depreciation of $143 million, employee separation cost of $353 million and other charges, primarily related to the relocation of employees and equipment, of $174 million. Approximately $440 million, or 66% of the total charges, will result in cash expenditures. In addition, the program will entail capital expenditures of approximately $230 million at PM USA and $50 million at PMI. Altria Group, Inc. expects PM USA to record an initial charge for the program of approximately $325 million, or $0.10 per Altria share, in the second quarter of 2007, related primarily to employee separation programs.
Altria's press release regarding the program is attached hereto as Exhibit 99.1 and incorporated by reference herein.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
99.1 Altria Group, Inc. Press Release dated June 26, 2007