Summary
This 8-K/A filing from Altria Group, Inc. (MO) provides an update on the previously announced closure of its Philip Morris USA manufacturing facility in Cabarrus, North Carolina. The company is accelerating the closure to the end of July 2009, sooner than the initial end of 2010 target. This accelerated timeline is driven by continued declines in U.S. cigarette volumes and the impact of a recent federal excise tax increase. Altria now estimates total pre-tax charges related to this consolidation to be approximately $785 million, an increase from the previous $670 million estimate. These charges include employee separation costs, accelerated depreciation, and other exit-related expenses. Approximately 50% of these charges, or $400 million, are expected to result in cash expenditures. Investors should note the increased cost and earlier completion date of this operational restructuring.
Key Highlights
- 1Philip Morris USA is accelerating the closure of its Cabarrus, North Carolina manufacturing facility to the end of July 2009, ahead of the previously planned end of 2010.
- 2The accelerated closure is a response to ongoing declines in U.S. cigarette volume and the impact of a recently enacted federal excise tax increase.
- 3Total estimated pre-tax charges for the exit and disposal activities have increased to approximately $785 million, up from $670 million.
- 4The increase in charges is primarily due to the expedited cessation of production.
- 5The pre-tax charges consist of employee separation costs ($367 million), accelerated depreciation ($284 million), and other charges ($134 million).
- 6Approximately $400 million, or about 50% of the total pre-tax charges, will result in cash expenditures.
- 7The decommissioning of the Cabarrus facility is expected to be completed during 2010.