Exit and Implementation Costs

6 Months Ended

Jun. 30, 2026

Restructuring and Related Activities [Abstract]

Pre-tax exit and implementation costs consisted of the following:


	Exit Costs				Implementation Costs				Exit Costs				Implementation Costs
	For the Six Months Ended June 30,								For the Three Months Ended June 30,
(in millions)	2026		2025		2026 (1)		2025 (3)		2026		2025		2026 (2)		2025 (3)
USSTC Facilities Consolidation:
Oral tobacco products segment	$	19	$	—	$	59	$	—	$	19	$	—	$	59	$	—
Optimize & Accelerate initiative:
Smokeable products segment	2		1		12		25		2		1		7		12
Oral tobacco products segment	—		—		2		4		—		—		1		2
Total Optimize & Accelerate initiative	2		1		14		29		2		1		8		14
Total	$	21	$	1	$	73	$	29	$	21	$	1	$	67	$	14

Amounts are recorded in our condensed consolidated statements of earnings as follows:

(1) Cost of sales ($59 million) and marketing, administration and research costs ($14 million).

(2) Cost of sales ($59 million) and marketing, administration and research costs ($8 million).

(3) Marketing, administration and research costs.

The movement in liabilities related to exit and implementation costs is as follows:


(in millions)	Exit Costs			Implementation Costs		Total
Balances at December 31, 2024	$	35		$	22	$	57
Charges	8			48		56
Cash paid	(18)			(61)		(79)
Balances at December 31, 2025	25			9		34
Charges (1)	21			14		35
Cash paid	(10)			(14)		(24)
Balances at June 30, 2026	$	36	(2)	$	9	$	45

(1) Implementation costs exclude non-cash asset-related charges associated with the USSTC Facilities Consolidation discussed below.

(2) Represents liabilities for employee separation costs.

USSTC Facilities Consolidation

In May 2026, we announced our plan to transition USSTC’s manufacturing operations at our Nashville, Tennessee plant to a new facility to be constructed on our existing campus in Hopkinsville, Kentucky (“USSTC Facilities Consolidation”). We expect the consolidation to be substantially completed in the first quarter of 2028.

We estimate total pre-tax charges for the USSTC Facilities Consolidation to be approximately $180 million, consisting of employee separation and other associated costs, which will be paid in cash, as well as certain asset-related charges for inventory and machinery and equipment, which are non-cash charges. For the six and three months ended June 30, 2026, we incurred pre-tax charges of $78 million, which consisted of non-cash asset-related charges ($59 million) and employee separation costs ($19 million). As of June 30, 2026, there have been no cash payments related to the USSTC Facilities Consolidation.

Optimize & Accelerate

In October 2024, we announced a multi-phase Optimize & Accelerate initiative (“Initiative”) designed to modernize our ways of working and enable us to increase our organization’s speed, efficiency and effectiveness by centralizing work, outsourcing certain transactional tasks and streamlining, automating and standardizing processes.

We estimate total pre-tax charges for the Initiative to be approximately $175 million. As of June 30, 2026, total pre-tax charges since the inception of the Initiative were $140 million, consisting of employee separation costs of $45 million and implementation costs of $95 million. We expect to record the majority of the remaining charges by the end of 2027. All of these charges result in cash expenditures and consist of severance payments associated with employee separations, implementation costs for new technology and business advisory services and other costs. As of June 30, 2026, total cash payments since the inception of the Initiative were $114 million, consisting of $28 million for exit costs and $86 million for implementation costs.