(X)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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( )
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Philip Morris International Inc.
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||||
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Virginia
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13-3435103
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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120 Park Avenue
New York, New York
|
10017
|
(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code
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(917) 663-2000
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Page No.
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PART I -
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Item 1.
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Condensed Consolidated Balance Sheets at
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Condensed Consolidated Statements of Earnings for the
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Condensed Consolidated Statements of Comprehensive Earnings for the
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Condensed Consolidated Statements of Stockholders’ (Deficit) Equity for the
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Condensed Consolidated Statements of Cash Flows for the
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Notes to Condensed Consolidated Financial Statements
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Item 2.
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Item 4.
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||
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PART II -
|
|
|
|
|
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Item 1.
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||
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|
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Item 1A.
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||
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Item 2.
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||
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Item 6.
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||
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September 30,
2012 |
|
December 31,
2011 |
||||
ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
|
4,817
|
|
|
$
|
2,550
|
|
Receivables (less allowances of $54 in 2012 and $45 in 2011)
|
3,562
|
|
|
3,201
|
|
||
Inventories:
|
|
|
|
||||
Leaf tobacco
|
3,633
|
|
|
3,463
|
|
||
Other raw materials
|
1,490
|
|
|
1,185
|
|
||
Finished product
|
3,120
|
|
|
3,472
|
|
||
|
8,243
|
|
|
8,120
|
|
||
Deferred income taxes
|
394
|
|
|
397
|
|
||
Other current assets
|
584
|
|
|
591
|
|
||
Total current assets
|
17,600
|
|
|
14,859
|
|
||
Property, plant and equipment, at cost
|
13,482
|
|
|
12,913
|
|
||
Less: accumulated depreciation
|
7,118
|
|
|
6,663
|
|
||
|
6,364
|
|
|
6,250
|
|
||
Goodwill
|
9,903
|
|
|
9,928
|
|
||
Other intangible assets, net
|
3,651
|
|
|
3,697
|
|
||
Other assets
|
791
|
|
|
754
|
|
||
TOTAL ASSETS
|
$
|
38,309
|
|
|
$
|
35,488
|
|
|
September 30,
2012 |
|
December 31,
2011 |
||||
LIABILITIES
|
|
|
|
||||
Short-term borrowings
|
$
|
2,141
|
|
|
$
|
1,511
|
|
Current portion of long-term debt
|
2,775
|
|
|
2,206
|
|
||
Accounts payable
|
1,127
|
|
|
1,031
|
|
||
Accrued liabilities:
|
|
|
|
||||
Marketing and selling
|
511
|
|
|
519
|
|
||
Taxes, except income taxes
|
5,701
|
|
|
5,346
|
|
||
Employment costs
|
876
|
|
|
894
|
|
||
Dividends payable
|
1,436
|
|
|
1,341
|
|
||
Other
|
904
|
|
|
873
|
|
||
Income taxes
|
1,125
|
|
|
897
|
|
||
Deferred income taxes
|
130
|
|
|
176
|
|
||
Total current liabilities
|
16,726
|
|
|
14,794
|
|
||
Long-term debt
|
17,520
|
|
|
14,828
|
|
||
Deferred income taxes
|
1,902
|
|
|
1,976
|
|
||
Employment costs
|
1,601
|
|
|
1,665
|
|
||
Other liabilities
|
444
|
|
|
462
|
|
||
Total liabilities
|
38,193
|
|
|
33,725
|
|
||
Contingencies (Note 10)
|
|
|
|
||||
Redeemable noncontrolling interest (Note 7)
|
1,276
|
|
|
1,212
|
|
||
STOCKHOLDERS’ (DEFICIT) EQUITY
|
|
|
|
||||
Common stock, no par value
(2,109,316,331 shares issued in 2012 and 2011) |
—
|
|
|
—
|
|
||
Additional paid-in capital
|
1,285
|
|
|
1,235
|
|
||
Earnings reinvested in the business
|
24,394
|
|
|
21,757
|
|
||
Accumulated other comprehensive losses
|
(2,835
|
)
|
|
(2,863
|
)
|
||
|
22,844
|
|
|
20,129
|
|
||
Less: cost of repurchased stock
(433,382,409 and 383,407,665 shares in 2012 and 2011, respectively)
|
24,325
|
|
|
19,900
|
|
||
Total PMI stockholders’ (deficit) equity
|
(1,481
|
)
|
|
229
|
|
||
Noncontrolling interests
|
321
|
|
|
322
|
|
||
Total stockholders’ (deficit) equity
|
(1,160
|
)
|
|
551
|
|
||
TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
|
$
|
38,309
|
|
|
$
|
35,488
|
|
|
For the Nine Months Ended September 30,
|
||||||
|
2012
|
|
2011
|
||||
Net revenues
|
$
|
57,651
|
|
|
$
|
57,470
|
|
Cost of sales
|
7,692
|
|
|
7,986
|
|
||
Excise taxes on products
|
34,163
|
|
|
34,044
|
|
||
Gross profit
|
15,796
|
|
|
15,440
|
|
||
Marketing, administration and research costs
|
5,043
|
|
|
4,911
|
|
||
Asset impairment and exit costs
|
50
|
|
|
60
|
|
||
Amortization of intangibles
|
73
|
|
|
73
|
|
||
Operating income
|
10,630
|
|
|
10,396
|
|
||
Interest expense, net
|
633
|
|
|
613
|
|
||
Earnings before income taxes
|
9,997
|
|
|
9,783
|
|
||
Provision for income taxes
|
3,034
|
|
|
2,850
|
|
||
Net earnings
|
6,963
|
|
|
6,933
|
|
||
Net earnings attributable to noncontrolling interests
|
258
|
|
|
228
|
|
||
Net earnings attributable to PMI
|
$
|
6,705
|
|
|
$
|
6,705
|
|
Per share data (Note 8):
|
|
|
|
||||
Basic earnings per share
|
$
|
3.92
|
|
|
$
|
3.76
|
|
Diluted earnings per share
|
$
|
3.92
|
|
|
$
|
3.76
|
|
Dividends declared
|
$
|
2.39
|
|
|
$
|
2.05
|
|
|
For the Three Months Ended September 30,
|
||||||
|
2012
|
|
2011
|
||||
Net revenues
|
$
|
19,592
|
|
|
$
|
20,706
|
|
Cost of sales
|
2,584
|
|
|
2,847
|
|
||
Excise taxes on products
|
11,672
|
|
|
12,344
|
|
||
Gross profit
|
5,336
|
|
|
5,515
|
|
||
Marketing, administration and research costs
|
1,655
|
|
|
1,770
|
|
||
Asset impairment and exit costs
|
34
|
|
|
43
|
|
||
Amortization of intangibles
|
24
|
|
|
25
|
|
||
Operating income
|
3,623
|
|
|
3,677
|
|
||
Interest expense, net
|
211
|
|
|
192
|
|
||
Earnings before income taxes
|
3,412
|
|
|
3,485
|
|
||
Provision for income taxes
|
1,088
|
|
|
1,024
|
|
||
Net earnings
|
2,324
|
|
|
2,461
|
|
||
Net earnings attributable to noncontrolling interests
|
97
|
|
|
84
|
|
||
Net earnings attributable to PMI
|
$
|
2,227
|
|
|
$
|
2,377
|
|
Per share data (Note 8):
|
|
|
|
||||
Basic earnings per share
|
$
|
1.32
|
|
|
$
|
1.35
|
|
Diluted earnings per share
|
$
|
1.32
|
|
|
$
|
1.35
|
|
Dividends declared
|
$
|
0.85
|
|
|
$
|
0.77
|
|
|
|
For the Nine Months Ended September 30,
|
||||||
|
|
2012
|
|
2011
|
||||
Net earnings
|
|
$
|
6,963
|
|
|
$
|
6,933
|
|
Other comprehensive earnings (losses), net of income taxes:
|
|
|
|
|
|
|
||
Currency translation adjustments, net of income taxes of $31 in 2012 and $22 in 2011
|
|
(20
|
)
|
|
(394
|
)
|
||
Change in net loss and prior service cost:
|
|
|
|
|
||||
Net losses and prior service costs, net of income taxes of ($1) in 2012 and ($2) in 2011
|
|
(2
|
)
|
|
8
|
|
||
Less amortization of net losses, prior service costs and net transition costs, net of income taxes of ($29) in 2012 and ($21) in 2011
|
|
121
|
|
|
66
|
|
||
Change in fair value of derivatives accounted for as hedges:
|
|
|
|
|
||||
(Gains)/losses transferred to earnings, net of income taxes of $1 in 2012 and ($3) in 2011
|
|
(8
|
)
|
|
27
|
|
||
Losses recognized, net of income taxes of $3 in 2012 and
$2 in 2011 |
|
(17
|
)
|
|
(20
|
)
|
||
Total other comprehensive earnings (losses)
|
|
74
|
|
|
(313
|
)
|
||
Total comprehensive earnings
|
|
7,037
|
|
|
6,620
|
|
||
Less comprehensive earnings attributable to:
|
|
|
|
|
||||
Noncontrolling interests
|
|
161
|
|
|
118
|
|
||
Redeemable noncontrolling interest
|
|
143
|
|
|
82
|
|
||
Comprehensive earnings attributable to PMI
|
|
$
|
6,733
|
|
|
$
|
6,420
|
|
|
|
For the Three Months Ended September 30,
|
||||||
|
|
2012
|
|
2011
|
||||
Net earnings
|
|
$
|
2,324
|
|
|
$
|
2,461
|
|
Other comprehensive earnings (losses), net of income taxes:
|
|
|
|
|
||||
Currency translation adjustments, net of income taxes of $64 in 2012 and ($71) in 2011
|
|
546
|
|
|
(1,222
|
)
|
||
Change in net loss and prior service cost:
|
|
|
|
|
||||
Net losses and prior service costs, net of income taxes of ($1) in 2012 and $- in 2011
|
|
(1
|
)
|
|
—
|
|
||
Less amortization of net losses, prior service costs and net transition costs, net of income taxes of ($8) in 2012 and ($9) in 2011
|
|
43
|
|
|
22
|
|
||
Change in fair value of derivatives accounted for as hedges:
|
|
|
|
|
||||
Losses transferred to earnings, net of income taxes of $- in 2012 and ($1) in 2011
|
|
4
|
|
|
13
|
|
||
Losses recognized, net of income taxes of $4 in 2012 and $2 in 2011
|
|
(29
|
)
|
|
(25
|
)
|
||
Change in fair value of equity securities
|
|
—
|
|
|
1
|
|
||
Total other comprehensive earnings (losses)
|
|
563
|
|
|
(1,211
|
)
|
||
Total comprehensive earnings
|
|
2,887
|
|
|
1,250
|
|
||
Less comprehensive earnings attributable to:
|
|
|
|
|
||||
Noncontrolling interests
|
|
75
|
|
|
6
|
|
||
Redeemable noncontrolling interest
|
|
44
|
|
|
30
|
|
||
Comprehensive earnings attributable to PMI
|
|
$
|
2,768
|
|
|
$
|
1,214
|
|
|
PMI Stockholders’ (Deficit) Equity
|
|
|
|
|
|
|||||||||||||||||||||||
|
Common
Stock |
|
Additional
Paid-in Capital |
|
Earnings
Reinvested in the Business |
|
Accumulated
Other Comprehensive Losses |
|
Cost of
Repurchased Stock |
|
Noncontrolling
Interests |
|
Total
|
||||||||||||||||
Balances, January 1, 2011
|
$
|
—
|
|
|
$
|
1,225
|
|
|
$
|
18,133
|
|
|
$
|
(1,140
|
)
|
|
$
|
(14,712
|
)
|
|
$
|
427
|
|
|
|
$
|
3,933
|
|
|
Net earnings
|
|
|
|
|
6,705
|
|
|
|
|
|
|
148
|
|
(a)
|
|
6,853
|
|
(a)
|
|||||||||||
Other comprehensive losses,
net of income taxes |
|
|
|
|
|
|
(285
|
)
|
|
|
|
(30
|
)
|
(a)
|
|
(315
|
)
|
(a)
|
|||||||||||
Exercise of stock options and issuance of other stock awards
|
|
|
(24
|
)
|
|
|
|
|
|
211
|
|
|
|
|
|
187
|
|
|
|||||||||||
Dividends declared ($2.05 per share)
|
|
|
|
|
(3,630
|
)
|
|
|
|
|
|
|
|
|
(3,630
|
)
|
|
||||||||||||
Payments to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
(236
|
)
|
|
|
(236
|
)
|
|
||||||||||||
Purchase of subsidiary shares from noncontrolling interests
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
(2
|
)
|
|
|||||||||||
Common stock repurchased
|
|
|
|
|
|
|
|
|
(4,352
|
)
|
|
|
|
|
(4,352
|
)
|
|
||||||||||||
Balances, September 30, 2011
|
$
|
—
|
|
|
$
|
1,200
|
|
|
$
|
21,208
|
|
|
$
|
(1,425
|
)
|
|
$
|
(18,853
|
)
|
|
$
|
308
|
|
|
|
$
|
2,438
|
|
|
Balances, January 1, 2012
|
$
|
—
|
|
|
$
|
1,235
|
|
|
$
|
21,757
|
|
|
$
|
(2,863
|
)
|
|
$
|
(19,900
|
)
|
|
$
|
322
|
|
|
|
$
|
551
|
|
|
Net earnings
|
|
|
|
|
6,705
|
|
|
|
|
|
|
132
|
|
(a)
|
|
6,837
|
|
(a)
|
|||||||||||
Other comprehensive earnings, net of income taxes
|
|
|
|
|
|
|
28
|
|
|
|
|
29
|
|
(a)
|
|
57
|
|
(a)
|
|||||||||||
Exercise of stock options and issuance of other stock awards
|
|
|
50
|
|
|
|
|
|
|
115
|
|
|
|
|
|
165
|
|
|
|||||||||||
Dividends declared ($2.39 per share)
|
|
|
|
|
(4,068
|
)
|
|
|
|
|
|
|
|
|
(4,068
|
)
|
|
||||||||||||
Payments to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
(162
|
)
|
|
|
(162
|
)
|
|
||||||||||||
Common stock repurchased
|
|
|
|
|
|
|
|
|
(4,540
|
)
|
|
|
|
|
(4,540
|
)
|
|
||||||||||||
Balances, September 30, 2012
|
$
|
—
|
|
|
$
|
1,285
|
|
|
$
|
24,394
|
|
|
$
|
(2,835
|
)
|
|
$
|
(24,325
|
)
|
|
$
|
321
|
|
|
|
$
|
(1,160
|
)
|
|
|
For the Nine Months Ended September 30,
|
||||||
|
2012
|
|
2011
|
||||
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
|
|
|
||||
|
|
|
|
||||
Net earnings
|
$
|
6,963
|
|
|
$
|
6,933
|
|
|
|
|
|
||||
Adjustments to reconcile net earnings to operating cash flows:
|
|
|
|
||||
Depreciation and amortization
|
665
|
|
|
743
|
|
||
Deferred income tax benefit
|
(109
|
)
|
|
(59
|
)
|
||
Asset impairment and exit costs, net of cash paid
|
19
|
|
|
(14
|
)
|
||
Cash effects of changes, net of the effects from acquired and divested companies:
|
|
|
|
||||
Receivables, net
|
(392
|
)
|
|
(191
|
)
|
||
Inventories
|
(137
|
)
|
|
970
|
|
||
Accounts payable
|
—
|
|
|
179
|
|
||
Income taxes
|
326
|
|
|
455
|
|
||
Accrued liabilities and other current assets
|
177
|
|
|
419
|
|
||
Pension plan contributions
|
(84
|
)
|
|
(81
|
)
|
||
Other
|
343
|
|
|
214
|
|
||
Net cash provided by operating activities
|
7,771
|
|
|
9,568
|
|
||
|
|
|
|
||||
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
|
|
|
|
||||
|
|
|
|
||||
Capital expenditures
|
(719
|
)
|
|
(568
|
)
|
||
Purchases of businesses, net of acquired cash
|
—
|
|
|
(80
|
)
|
||
Other
|
28
|
|
|
(34
|
)
|
||
Net cash used in investing activities
|
(691
|
)
|
|
(682
|
)
|
|
For the Nine Months Ended September 30,
|
||||||
|
2012
|
|
2011
|
||||
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
|
|
|
||||
|
|
|
|
||||
Short-term borrowing activity by original maturity:
|
|
|
|
||||
Net issuances - maturities of 90 days or less
|
$
|
1,367
|
|
|
$
|
488
|
|
Issuances - maturities longer than 90 days
|
478
|
|
|
322
|
|
||
Repayments - maturities longer than 90 days
|
(1,220
|
)
|
|
—
|
|
||
Long-term debt proceeds
|
5,516
|
|
|
1,606
|
|
||
Long-term debt repaid
|
(2,237
|
)
|
|
(1,464
|
)
|
||
Repurchases of common stock
|
(4,557
|
)
|
|
(4,367
|
)
|
||
Issuance of common stock
|
—
|
|
|
75
|
|
||
Dividends paid
|
(3,973
|
)
|
|
(3,441
|
)
|
||
Other
|
(262
|
)
|
|
(273
|
)
|
||
Net cash used in financing activities
|
(4,888
|
)
|
|
(7,054
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
75
|
|
|
(144
|
)
|
||
|
|
|
|
||||
Cash and cash equivalents:
|
|
|
|
||||
Increase
|
2,267
|
|
|
1,688
|
|
||
Balance at beginning of period
|
2,550
|
|
|
1,703
|
|
||
Balance at end of period
|
$
|
4,817
|
|
|
$
|
3,391
|
|
(in millions)
|
For the Nine Months Ended September 30,
|
|
For the Three Months Ended September 30,
|
||||||||||||
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||
Separation programs:
|
|
|
|
|
|
|
|
||||||||
European Union
|
$
|
—
|
|
|
$
|
23
|
|
|
$
|
—
|
|
|
$
|
11
|
|
Eastern Europe, Middle East & Africa
|
—
|
|
|
6
|
|
|
—
|
|
|
4
|
|
||||
Asia
|
13
|
|
|
7
|
|
|
13
|
|
|
5
|
|
||||
Latin America & Canada
|
24
|
|
|
9
|
|
|
8
|
|
|
8
|
|
||||
Total separation programs
|
37
|
|
|
45
|
|
|
21
|
|
|
28
|
|
||||
Contract termination charges:
|
|
|
|
|
|
|
|
||||||||
Eastern Europe, Middle East & Africa
|
—
|
|
|
12
|
|
|
—
|
|
|
12
|
|
||||
Asia
|
5
|
|
|
—
|
|
|
5
|
|
|
—
|
|
||||
Total contract termination charges
|
5
|
|
|
12
|
|
|
5
|
|
|
12
|
|
||||
Asset impairment charges:
|
|
|
|
|
|
|
|
||||||||
Asia
|
6
|
|
|
—
|
|
|
6
|
|
|
—
|
|
||||
Latin America & Canada
|
2
|
|
|
3
|
|
|
2
|
|
|
3
|
|
||||
Total asset impairment charges
|
8
|
|
|
3
|
|
|
8
|
|
|
3
|
|
||||
Asset impairment and exit costs
|
$
|
50
|
|
|
$
|
60
|
|
|
$
|
34
|
|
|
$
|
43
|
|
(in millions)
|
|
||
Liability balance, January 1, 2012
|
$
|
28
|
|
Charges
|
42
|
|
|
Cash spent
|
(31
|
)
|
|
Currency/other
|
(3
|
)
|
|
Liability balance, September 30, 2012
|
$
|
36
|
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||
|
|
For the Nine Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||
(in millions)
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||
Service cost
|
|
$
|
5
|
|
|
$
|
5
|
|
|
$
|
143
|
|
|
$
|
132
|
|
Interest cost
|
|
12
|
|
|
13
|
|
|
142
|
|
|
155
|
|
||||
Expected return on plan assets
|
|
(11
|
)
|
|
(12
|
)
|
|
(243
|
)
|
|
(240
|
)
|
||||
Amortization:
|
|
|
|
|
|
|
|
|
||||||||
Net loss
|
|
7
|
|
|
6
|
|
|
92
|
|
|
42
|
|
||||
Prior service cost
|
|
1
|
|
|
1
|
|
|
8
|
|
|
6
|
|
||||
Net transition obligation
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
Other
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
||||
Net periodic pension cost
|
|
$
|
14
|
|
|
$
|
14
|
|
|
$
|
143
|
|
|
$
|
95
|
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||
|
|
For the Three Months Ended September 30,
|
|
For the Three Months Ended September 30,
|
||||||||||||
(in millions)
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||
Service cost
|
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
47
|
|
|
$
|
47
|
|
Interest cost
|
|
4
|
|
|
4
|
|
|
46
|
|
|
54
|
|
||||
Expected return on plan assets
|
|
(3
|
)
|
|
(4
|
)
|
|
(81
|
)
|
|
(84
|
)
|
||||
Amortization:
|
|
|
|
|
|
|
|
|
||||||||
Net loss
|
|
2
|
|
|
2
|
|
|
30
|
|
|
14
|
|
||||
Prior service cost
|
|
—
|
|
|
1
|
|
|
4
|
|
|
2
|
|
||||
Net transition obligation
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
Net periodic pension cost
|
|
$
|
4
|
|
|
$
|
5
|
|
|
$
|
47
|
|
|
$
|
33
|
|
|
|
Goodwill
|
|
Other Intangible Assets, net
|
||||||||||||
(in millions)
|
|
September 30,
2012 |
|
December 31,
2011 |
|
September 30,
2012 |
|
December 31,
2011 |
||||||||
European Union
|
|
$
|
1,415
|
|
|
$
|
1,392
|
|
|
$
|
647
|
|
|
$
|
663
|
|
Eastern Europe, Middle East & Africa
|
|
631
|
|
|
666
|
|
|
244
|
|
|
250
|
|
||||
Asia
|
|
4,804
|
|
|
4,966
|
|
|
1,552
|
|
|
1,633
|
|
||||
Latin America & Canada
|
|
3,053
|
|
|
2,904
|
|
|
1,208
|
|
|
1,151
|
|
||||
Total
|
|
$
|
9,903
|
|
|
$
|
9,928
|
|
|
$
|
3,651
|
|
|
$
|
3,697
|
|
(in millions)
|
|
European
Union |
|
Eastern
Europe, Middle East & Africa |
|
Asia
|
|
Latin
America & Canada |
|
Total
|
||||||||||
Balance at December 31, 2011
|
|
$
|
1,392
|
|
|
$
|
666
|
|
|
$
|
4,966
|
|
|
$
|
2,904
|
|
|
$
|
9,928
|
|
Changes due to:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Acquisitions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Currency
|
|
23
|
|
|
(35
|
)
|
|
(162
|
)
|
|
149
|
|
|
(25
|
)
|
|||||
Balance at September 30, 2012
|
|
$
|
1,415
|
|
|
$
|
631
|
|
|
$
|
4,804
|
|
|
$
|
3,053
|
|
|
$
|
9,903
|
|
|
|
September 30, 2012
|
|
December 31, 2011
|
||||||||||||
(in millions)
|
|
Gross
Carrying Amount |
|
Accumulated
Amortization |
|
Gross
Carrying Amount |
|
Accumulated
Amortization |
||||||||
Non-amortizable intangible assets
|
|
$
|
2,061
|
|
|
|
|
$
|
2,067
|
|
|
|
||||
Amortizable intangible assets
|
|
2,038
|
|
|
$
|
448
|
|
|
2,001
|
|
|
$
|
371
|
|
||
Total other intangible assets
|
|
$
|
4,099
|
|
|
$
|
448
|
|
|
$
|
4,068
|
|
|
$
|
371
|
|
Description
|
Initial
Estimated Useful Lives |
|
Weighted-Average
Remaining Useful Life |
|
Trademarks
|
2 - 40 years
|
|
26
|
years
|
Distribution networks
|
20 - 30 years
|
|
15
|
years
|
Non-compete agreements
|
3 - 10 years
|
|
3
|
years
|
Other (including farmer
contracts and intellectual property rights) |
12.5 - 17 years
|
|
13
|
years
|
|
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||||||||||
|
|
|
|
Fair Value
|
|
|
|
Fair Value
|
||||||||||||
(in millions)
|
|
Balance Sheet Classification
|
|
At September 30, 2012
|
|
At December 31, 2011
|
|
Balance Sheet Classification
|
|
At September 30, 2012
|
|
At December 31, 2011
|
||||||||
Foreign exchange contracts designated as hedging instruments
|
|
Other current assets
|
|
$
|
38
|
|
|
$
|
57
|
|
|
Other accrued liabilities
|
|
$
|
4
|
|
|
$
|
4
|
|
|
|
Other assets
|
|
15
|
|
|
—
|
|
|
Other liabilities
|
|
3
|
|
|
—
|
|
||||
Foreign exchange contracts not designated as hedging instruments
|
|
Other current assets
|
|
19
|
|
|
88
|
|
|
Other accrued liabilities
|
|
55
|
|
|
62
|
|
||||
|
|
|
|
|
|
|
|
Other liabilities
|
|
1
|
|
|
—
|
|
||||||
Total derivatives
|
|
|
|
$
|
72
|
|
|
$
|
145
|
|
|
|
|
$
|
63
|
|
|
$
|
66
|
|
(in millions)
|
|
For the Nine Months Ended September 30, 2012
|
||||||||||||||||||
Gain (Loss)
|
|
Cash Flow
Hedges |
|
Net
Investment Hedges |
|
Other
Derivatives |
|
Income
Taxes |
|
Total
|
||||||||||
Statement of Earnings:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net revenues
|
|
$
|
33
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
33
|
|
||||
Cost of sales
|
|
19
|
|
|
|
|
—
|
|
|
|
|
19
|
|
|||||||
Marketing, administration and research costs
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|||||||
Operating income
|
|
52
|
|
|
|
|
—
|
|
|
|
|
52
|
|
|||||||
Interest expense, net
|
|
(43
|
)
|
|
|
|
11
|
|
|
|
|
(32
|
)
|
|||||||
Earnings before income taxes
|
|
9
|
|
|
|
|
11
|
|
|
|
|
20
|
|
|||||||
Provision for income taxes
|
|
(1
|
)
|
|
|
|
1
|
|
|
|
|
—
|
|
|||||||
Net earnings attributable to PMI
|
|
$
|
8
|
|
|
|
|
$
|
12
|
|
|
|
|
$
|
20
|
|
||||
Other Comprehensive Earnings:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gains transferred to earnings
|
|
$
|
(9
|
)
|
|
|
|
|
|
$
|
1
|
|
|
$
|
(8
|
)
|
||||
Recognized losses
|
|
(20
|
)
|
|
|
|
|
|
3
|
|
|
(17
|
)
|
|||||||
Net impact on equity
|
|
$
|
(29
|
)
|
|
|
|
|
|
$
|
4
|
|
|
$
|
(25
|
)
|
||||
Cumulative translation adjustment
|
|
|
|
$
|
(11
|
)
|
|
|
|
$
|
4
|
|
|
$
|
(7
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
For the Nine Months Ended September 30, 2011
|
||||||||||||||||||
Gain (Loss)
|
|
Cash Flow
Hedges |
|
Net
Investment Hedges |
|
Other
Derivatives |
|
Income
Taxes |
|
Total
|
||||||||||
Statement of Earnings:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net revenues
|
|
$
|
(9
|
)
|
|
|
|
$
|
—
|
|
|
|
|
$
|
(9
|
)
|
||||
Cost of sales
|
|
5
|
|
|
|
|
—
|
|
|
|
|
5
|
|
|||||||
Marketing, administration and research costs
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|||||||
Operating income
|
|
(4
|
)
|
|
|
|
—
|
|
|
|
|
(4
|
)
|
|||||||
Interest expense, net
|
|
(26
|
)
|
|
|
|
37
|
|
|
|
|
11
|
|
|||||||
Earnings before income taxes
|
|
(30
|
)
|
|
|
|
37
|
|
|
|
|
7
|
|
|||||||
Provision for income taxes
|
|
3
|
|
|
|
|
(9
|
)
|
|
|
|
(6
|
)
|
|||||||
Net earnings attributable to PMI
|
|
$
|
(27
|
)
|
|
|
|
$
|
28
|
|
|
|
|
$
|
1
|
|
||||
Other Comprehensive Earnings:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Losses transferred to earnings
|
|
$
|
30
|
|
|
|
|
|
|
$
|
(3
|
)
|
|
$
|
27
|
|
||||
Recognized losses
|
|
(22
|
)
|
|
|
|
|
|
2
|
|
|
(20
|
)
|
|||||||
Net impact on equity
|
|
$
|
8
|
|
|
|
|
|
|
$
|
(1
|
)
|
|
$
|
7
|
|
||||
Cumulative translation adjustment
|
|
|
|
$
|
2
|
|
|
|
|
|
|
$
|
2
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
For the Three Months Ended September 30, 2012
|
||||||||||||||||||
Gain (Loss)
|
|
Cash Flow
Hedges |
|
Net
Investment Hedges |
|
Other
Derivatives |
|
Income
Taxes |
|
Total
|
||||||||||
Statement of Earnings:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net revenues
|
|
$
|
9
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
9
|
|
||||
Cost of sales
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|||||||
Marketing, administration and research costs
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|||||||
Operating income
|
|
9
|
|
|
|
|
—
|
|
|
|
|
9
|
|
|||||||
Interest expense, net
|
|
(13
|
)
|
|
|
|
5
|
|
|
|
|
(8
|
)
|
|||||||
Earnings before income taxes
|
|
(4
|
)
|
|
|
|
5
|
|
|
|
|
1
|
|
|||||||
Provision for income taxes
|
|
—
|
|
|
|
|
1
|
|
|
|
|
1
|
|
|||||||
Net earnings attributable to PMI
|
|
$
|
(4
|
)
|
|
|
|
$
|
6
|
|
|
|
|
$
|
2
|
|
||||
Other Comprehensive Earnings:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Losses transferred to earnings
|
|
$
|
4
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
4
|
|
||||
Recognized losses
|
|
(33
|
)
|
|
|
|
|
|
4
|
|
|
(29
|
)
|
|||||||
Net impact on equity
|
|
$
|
(29
|
)
|
|
|
|
|
|
$
|
4
|
|
|
$
|
(25
|
)
|
||||
Cumulative translation adjustment
|
|
|
|
$
|
(11
|
)
|
|
|
|
$
|
4
|
|
|
$
|
(7
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
For the Three Months Ended September 30, 2011
|
||||||||||||||||||
Gain (Loss)
|
|
Cash Flow
Hedges |
|
Net
Investment Hedges |
|
Other
Derivatives |
|
Income
Taxes |
|
Total
|
||||||||||
Statement of Earnings:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net revenues
|
|
$
|
(9
|
)
|
|
|
|
$
|
—
|
|
|
|
|
$
|
(9
|
)
|
||||
Cost of sales
|
|
5
|
|
|
|
|
—
|
|
|
|
|
5
|
|
|||||||
Marketing, administration and research costs
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|||||||
Operating income
|
|
(4
|
)
|
|
|
|
—
|
|
|
|
|
(4
|
)
|
|||||||
Interest expense, net
|
|
(10
|
)
|
|
|
|
23
|
|
|
|
|
13
|
|
|||||||
Earnings before income taxes
|
|
(14
|
)
|
|
|
|
23
|
|
|
|
|
9
|
|
|||||||
Provision for income taxes
|
|
1
|
|
|
|
|
(5
|
)
|
|
|
|
(4
|
)
|
|||||||
Net earnings attributable to PMI
|
|
$
|
(13
|
)
|
|
|
|
$
|
18
|
|
|
|
|
$
|
5
|
|
||||
Other Comprehensive Earnings:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Losses transferred to earnings
|
|
$
|
14
|
|
|
|
|
|
|
$
|
(1
|
)
|
|
$
|
13
|
|
||||
Recognized losses
|
|
(27
|
)
|
|
|
|
|
|
2
|
|
|
(25
|
)
|
|||||||
Net impact on equity
|
|
$
|
(13
|
)
|
|
|
|
|
|
$
|
1
|
|
|
$
|
(12
|
)
|
||||
Cumulative translation adjustment
|
|
|
|
$
|
—
|
|
|
|
|
|
|
|
$
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
(pre-tax, in millions)
|
|
For the Nine Months Ended September 30,
|
||||||||||||||||
Derivatives in
Cash Flow Hedging Relationship |
|
Statement of Earnings
Classification of Gain/(Loss) Reclassified from Other Comprehensive Earnings into Earnings |
|
Amount of Gain/(Loss)
Reclassified from Other Comprehensive Earnings into Earnings |
|
Amount of Gain/(Loss)
Recognized in Other Comprehensive Earnings on Derivatives |
||||||||||||
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||
Foreign exchange contracts
|
|
|
|
|
|
|
|
$
|
(20
|
)
|
|
$
|
(22
|
)
|
||||
|
|
Net revenues
|
|
$
|
33
|
|
|
$
|
(9
|
)
|
|
|
|
|
||||
|
|
Cost of sales
|
|
19
|
|
|
5
|
|
|
|
|
|
||||||
|
|
Marketing, administration
and research costs |
|
—
|
|
|
—
|
|
|
|
|
|
||||||
|
|
Interest expense, net
|
|
(43
|
)
|
|
(26
|
)
|
|
|
|
|
||||||
Total
|
|
|
|
$
|
9
|
|
|
$
|
(30
|
)
|
|
$
|
(20
|
)
|
|
$
|
(22
|
)
|
(pre-tax, in millions)
|
|
For the Three Months Ended September 30,
|
||||||||||||||||
Derivatives in
Cash Flow Hedging Relationship |
|
Statement of Earnings
Classification of Gain/(Loss) Reclassified from Other Comprehensive Earnings into Earnings |
|
Amount of Gain/(Loss)
Reclassified from Other Comprehensive Earnings into Earnings |
|
Amount of Gain/(Loss)
Recognized in Other Comprehensive Earnings on Derivatives |
||||||||||||
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||
Foreign exchange contracts
|
|
|
|
|
|
|
|
$
|
(33
|
)
|
|
$
|
(27
|
)
|
||||
|
|
Net revenues
|
|
$
|
9
|
|
|
$
|
(9
|
)
|
|
|
|
|
||||
|
|
Cost of sales
|
|
—
|
|
|
5
|
|
|
|
|
|
||||||
|
|
Marketing, administration
and research costs |
|
—
|
|
|
—
|
|
|
|
|
|
||||||
|
|
Interest expense, net
|
|
(13
|
)
|
|
(10
|
)
|
|
|
|
|
||||||
Total
|
|
|
|
$
|
(4
|
)
|
|
$
|
(14
|
)
|
|
$
|
(33
|
)
|
|
$
|
(27
|
)
|
(pre-tax, in millions)
|
|
For the Nine Months Ended September 30,
|
||||||||||||||||
Derivatives in Net
Investment Hedging Relationship |
|
Statement of Earnings
Classification of Gain/(Loss) Reclassified from Other Comprehensive Earnings into Earnings |
|
Amount of Gain/(Loss)
Reclassified from Other Comprehensive Earnings into Earnings |
|
Amount of Gain/(Loss)
Recognized in Other Comprehensive Earnings on Derivatives |
||||||||||||
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||
Foreign exchange contracts
|
|
|
|
|
|
|
|
$
|
(11
|
)
|
|
$
|
2
|
|
||||
|
|
Interest expense, net
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
(pre-tax, in millions)
|
|
For the Three Months Ended September 30,
|
||||||||||||||||
Derivatives in Net
Investment Hedging Relationship |
|
Statement of Earnings
Classification of Gain/(Loss) Reclassified from Other Comprehensive Earnings into Earnings |
|
Amount of Gain/(Loss)
Reclassified from Other Comprehensive Earnings into Earnings |
|
Amount of Gain/(Loss)
Recognized in Other Comprehensive Earnings on Derivatives |
||||||||||||
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||
Foreign exchange contracts
|
|
|
|
|
|
|
|
$
|
(11
|
)
|
|
$
|
—
|
|
||||
|
|
Interest expense, net
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
(pre-tax, in millions)
|
|
|
|
|
|
|
|
|
||||||||||
Derivatives not Designated
as Hedging Instruments |
|
Statement of Earnings
Classification of Gain/(Loss) |
|
Amount of Gain/(Loss)
Recognized in Earnings |
||||||||||||||
|
|
|
|
For the Nine Months Ended September 30,
|
|
For the Three Months Ended September 30,
|
||||||||||||
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||
Foreign exchange contracts
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Marketing, administration and research costs
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Interest expense, net
|
|
11
|
|
|
37
|
|
|
5
|
|
|
23
|
|
||||
|
|
|
|
$
|
11
|
|
|
$
|
37
|
|
|
$
|
5
|
|
|
$
|
23
|
|
(in millions)
|
|
For the Nine Months Ended September 30,
|
|
For the Three Months Ended September 30,
|
||||||||||||
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||
Gain at beginning of period
|
|
$
|
15
|
|
|
$
|
2
|
|
|
$
|
15
|
|
|
$
|
21
|
|
Derivative (gains)/losses transferred to earnings
|
|
(8
|
)
|
|
27
|
|
|
4
|
|
|
13
|
|
||||
Change in fair value
|
|
(17
|
)
|
|
(20
|
)
|
|
(29
|
)
|
|
(25
|
)
|
||||
(Loss)/gain as of September 30
|
|
$
|
(10
|
)
|
|
$
|
9
|
|
|
$
|
(10
|
)
|
|
$
|
9
|
|
(in millions)
|
|
||
Redeemable noncontrolling interest at December 31, 2011
|
$
|
1,212
|
|
Share of net earnings
|
126
|
|
|
Dividend payments
|
(79
|
)
|
|
Currency translation
|
17
|
|
|
Redeemable noncontrolling interest at September 30, 2012
|
$
|
1,276
|
|
(in millions)
|
|
For the Nine Months Ended September 30,
|
|
For the Three Months Ended September 30,
|
||||||||||||
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||
Net earnings attributable to PMI
|
|
$
|
6,705
|
|
|
$
|
6,705
|
|
|
$
|
2,227
|
|
|
$
|
2,377
|
|
Less distributed and undistributed earnings attributable to share-based payment awards
|
|
36
|
|
|
38
|
|
|
12
|
|
|
14
|
|
||||
Net earnings for basic and diluted EPS
|
|
$
|
6,669
|
|
|
$
|
6,667
|
|
|
$
|
2,215
|
|
|
$
|
2,363
|
|
Weighted-average shares for basic EPS
|
|
1,701
|
|
|
1,771
|
|
|
1,683
|
|
|
1,749
|
|
||||
Plus incremental shares from assumed conversions:
|
|
|
|
|
|
|
|
|
||||||||
Stock options
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Weighted-average shares for diluted EPS
|
|
1,701
|
|
|
1,771
|
|
|
1,683
|
|
|
1,749
|
|
(in millions)
|
|
For the Nine Months Ended September 30,
|
|
For the Three Months Ended September 30,
|
||||||||||||
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||
Net revenues:
|
|
|
|
|
|
|
|
|
||||||||
European Union
|
|
$
|
20,654
|
|
|
$
|
22,650
|
|
|
$
|
6,904
|
|
|
$
|
8,155
|
|
Eastern Europe, Middle East & Africa
|
|
14,256
|
|
|
13,195
|
|
|
5,125
|
|
|
4,921
|
|
||||
Asia
|
|
15,668
|
|
|
14,577
|
|
|
5,174
|
|
|
5,143
|
|
||||
Latin America & Canada
|
|
7,073
|
|
|
7,048
|
|
|
2,389
|
|
|
2,487
|
|
||||
Net revenues
|
|
$
|
57,651
|
|
|
$
|
57,470
|
|
|
$
|
19,592
|
|
|
$
|
20,706
|
|
Earnings before income taxes:
|
|
|
|
|
|
|
|
|
||||||||
Operating companies income:
|
|
|
|
|
|
|
|
|
||||||||
European Union
|
|
$
|
3,232
|
|
|
$
|
3,548
|
|
|
$
|
1,085
|
|
|
$
|
1,262
|
|
Eastern Europe, Middle East & Africa
|
|
2,805
|
|
|
2,482
|
|
|
1,047
|
|
|
925
|
|
||||
Asia
|
|
4,068
|
|
|
3,800
|
|
|
1,297
|
|
|
1,309
|
|
||||
Latin America & Canada
|
|
753
|
|
|
774
|
|
|
267
|
|
|
255
|
|
||||
Amortization of intangibles
|
|
(73
|
)
|
|
(73
|
)
|
|
(24
|
)
|
|
(25
|
)
|
||||
General corporate expenses
|
|
(155
|
)
|
|
(135
|
)
|
|
(49
|
)
|
|
(49
|
)
|
||||
Operating income
|
|
10,630
|
|
|
10,396
|
|
|
3,623
|
|
|
3,677
|
|
||||
Interest expense, net
|
|
(633
|
)
|
|
(613
|
)
|
|
(211
|
)
|
|
(192
|
)
|
||||
Earnings before income taxes
|
|
$
|
9,997
|
|
|
$
|
9,783
|
|
|
$
|
3,412
|
|
|
$
|
3,485
|
|
Type of Case
|
|
Number of
Cases Pending as of November 1, 2012 |
|
Number of
Cases Pending as of November 1, 2011 |
|
Number of
Cases Pending as of November 1, 2010 |
|||
Individual Smoking and Health Cases
|
|
75
|
|
|
84
|
|
|
111
|
|
Smoking and Health Class Actions
|
|
10
|
|
|
10
|
|
|
11
|
|
Health Care Cost Recovery Actions
|
|
15
|
|
|
11
|
|
|
10
|
|
Lights Class Actions
|
|
2
|
|
|
2
|
|
|
2
|
|
Individual Lights Cases (small claims court)
|
|
7
|
|
|
9
|
|
|
10
|
|
Public Civil Actions
|
|
4
|
|
|
3
|
|
|
8
|
|
Date
|
|
Location of
Court/Name of Plaintiff |
|
Type of
Case |
|
Verdict
|
|
Post-Trial
Developments |
May 2011
|
|
Brazil/Laszlo
|
|
Individual Smoking and Health
|
|
The Civil Court of São Vicente found for plaintiff and ordered Philip Morris Brasil to pay damages of R$31,333 (approximately $15,435), plus future costs for cessation and medical treatment of smoking related diseases.
|
|
In June 2011, Philip Morris Brasil filed an appeal. In December 2011, the Appellate Court reversed the trial court decision. In February 2012, plaintiff appealed the decision. This appeal is still pending.
|
Date
|
|
Location of
Court/Name of Plaintiff |
|
Type of
Case |
|
Verdict
|
|
Post-Trial
Developments |
September 2009
|
|
Brazil/Bernhardt
|
|
Individual Smoking and Health
|
|
The Civil Court of Rio de Janeiro found for plaintiff and ordered Philip Morris Brasil to pay R$13,000 (approximately $6,400) in “moral damages.”
|
|
Philip Morris Brasil filed its appeal against the decision on the merits with the Court of Appeals in November 2009. In February 2010, without addressing the merits, the Court of Appeals annulled the trial court's decision and remanded the case to the trial court to issue a new ruling, which was required to address certain compensatory damage claims made by the plaintiff that the trial court did not address in its original ruling. In July 2010, the trial court reinstated its original decision, while specifically rejecting the compensatory damages claim. Philip Morris Brasil appealed this decision.
In March 2011, the Court of Appeals affirmed the trial court's decision and denied Philip Morris Brasil's appeal. The Court of Appeals increased the amount of damages awarded to the plaintiff to R$100,000 (approximately $49,300). Philip Morris Brasil filed an appeal in June 2011. This appeal is still pending. |
Date
|
|
Location of
Court/Name of Plaintiff |
|
Type of
Case |
|
Verdict
|
|
Post-Trial
Developments |
February 2004
|
|
Brazil/The Smoker Health Defense Association (“ADESF”)
|
|
Class Action
|
|
The Civil Court of São Paulo found defendants liable without hearing evidence. The court did not assess moral or actual damages, which were to be assessed in a second phase of the case. The size of the class was not defined in the ruling.
|
|
In April 2004, the court clarified its ruling, awarding “moral damages” of R$1,000 (approximately $490) per smoker per full year of smoking plus interest at the rate of 1% per month, as of the date of the ruling. The court did not award actual damages, which were to be assessed in the second phase of the case. The size of the class was not estimated. Defendants appealed to the São Paulo Court of Appeals, which annulled the ruling in November 2008, finding that the trial court had inappropriately ruled without hearing evidence and returned the case to the trial court for further proceedings. In May 2011, the trial court dismissed the claim. Plaintiff has appealed.
In addition, the defendants filed a constitutional appeal to the Federal Supreme Tribunal on the basis that the plaintiff did not have standing to bring the lawsuit. This appeal is still pending. |
•
|
75
cases brought by individual plaintiffs in Argentina (
30
), Brazil (
29
), Canada (
2
), Chile (
4
), Costa Rica (
1
), Greece (
1
), Italy (
5
), the Philippines (
1
), Scotland (
1
) and Turkey (
1
), compared with
84
such cases on
November 1, 2011
, and
111
cases on
November 1, 2010
; and
|
•
|
10
cases brought on behalf of classes of individual plaintiffs in Brazil (
2
) and Canada (
8
), compared with
10
such cases on
November 1, 2011
, and
11
such cases on
November 1, 2010
.
|
•
|
2
cases brought on behalf of overlapping classes of individual plaintiffs in Israel, compared with
2
such cases on
November 1, 2011
and November 1,
2010
; and
|
•
|
7
cases brought by individuals in the equivalent of small claims courts in Italy, where the maximum damages are approximately
one thousand
Euros per case, compared with
9
such cases on
November 1, 2011
, and
10
such cases on
November 1, 2010
.
|
(in millions)
|
|
September 30, 2012
|
|
December 31, 2011
|
||||
U.S. dollar notes, 1.125% to 6.875% (average interest rate 4.462%), due through 2042
|
|
$
|
14,698
|
|
|
$
|
11,269
|
|
Foreign currency obligations:
|
|
|
|
|
||||
Euro notes, 2.125% to 5.875% (average interest rate 4.227%), due through 2024
|
|
3,637
|
|
|
3,533
|
|
||
Swiss franc notes, 1.0% to 3.250% (average interest rate 1.984%), due through 2021
|
|
1,540
|
|
|
1,719
|
|
||
Other (average interest rate 3.004%), due through 2024
|
|
420
|
|
|
513
|
|
||
|
|
20,295
|
|
|
17,034
|
|
||
Less current portion of long-term debt
|
|
2,775
|
|
|
2,206
|
|
||
|
|
$
|
17,520
|
|
|
$
|
14,828
|
|
(in millions)
|
|
|
|
|
|
|
|
|
Type
|
|
Face Value
|
|
Interest Rate
|
|
Issuance
|
|
Maturity
|
|
|
|
|
|
|
|
|
|
U.S. dollar notes
|
(a)
|
$700
|
|
4.500%
|
|
March 2012
|
|
March 2042
|
U.S. dollar notes
|
(a)
|
$550
|
|
1.625%
|
|
March 2012
|
|
March 2017
|
EURO notes
|
(b)
|
€750 (approximately $951)
|
|
2.125%
|
|
May 2012
|
|
May 2019
|
EURO notes
|
(b)
|
€600 (approximately $761)
|
|
2.875%
|
|
May 2012
|
|
May 2024
|
U.S. dollar notes
|
(c)
|
$750
|
|
1.125%
|
|
August 2012
|
|
August 2017
|
U.S. dollar notes
|
(c)
|
$750
|
|
2.500%
|
|
August 2012
|
|
August 2022
|
U.S. dollar notes
|
(c)
|
$750
|
|
3.875%
|
|
August 2012
|
|
August 2042
|
Swiss franc notes
|
(d)
|
CHF 325 (approximately $334)
|
|
1.000%
|
|
September 2012
|
|
September 2020
|
Level 1 -
|
Quoted prices in active markets for identical assets or liabilities;
|
Level 2 -
|
Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and
|
Level 3 -
|
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
|
(in millions)
|
|
Fair Value
at September 30, 2012 |
|
Quoted Prices
in Active Markets for Identical Assets/Liabilities (Level 1) |
|
Significant
Other Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
|
$
|
72
|
|
|
$
|
—
|
|
|
$
|
72
|
|
|
$
|
—
|
|
Total assets
|
|
$
|
72
|
|
|
$
|
—
|
|
|
$
|
72
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Debt
|
|
$
|
22,645
|
|
|
$
|
22,249
|
|
|
$
|
396
|
|
|
$
|
—
|
|
Foreign exchange contracts
|
|
63
|
|
|
—
|
|
|
63
|
|
|
—
|
|
||||
Total liabilities
|
|
$
|
22,708
|
|
|
$
|
22,249
|
|
|
$
|
459
|
|
|
$
|
—
|
|
(in millions)
|
|
At September 30, 2012
|
|
At December 31, 2011
|
|
At
September 30, 2011 |
||||||
Currency translation adjustments
|
|
$
|
(358
|
)
|
|
$
|
(293
|
)
|
|
$
|
141
|
|
Pension and other benefits
|
|
(2,467
|
)
|
|
(2,585
|
)
|
|
(1,576
|
)
|
|||
Derivatives accounted for as hedges
|
|
(10
|
)
|
|
15
|
|
|
9
|
|
|||
Equity securities
|
|
—
|
|
|
—
|
|
|
1
|
|
|||
Total accumulated other comprehensive losses
|
|
$
|
(2,835
|
)
|
|
$
|
(2,863
|
)
|
|
$
|
(1,425
|
)
|
•
|
European Union;
|
•
|
Eastern Europe, Middle East & Africa (“EEMA”);
|
•
|
Asia; and
|
•
|
Latin America & Canada.
|
|
|
Diluted EPS
|
|
% Growth
|
|||
For the nine months ended September 30, 2011
|
|
$
|
3.76
|
|
|
|
|
2012 Asset impairment and exit costs
|
|
(0.02
|
)
|
|
|
||
2012 Tax items
|
|
(0.05
|
)
|
|
|
||
Subtotal of 2012 items
|
|
(0.07
|
)
|
|
|
||
2011 Asset impairment and exit costs
|
|
0.03
|
|
|
|
||
2011 Tax items
|
|
(0.02
|
)
|
|
|
||
Subtotal of 2011 items
|
|
0.01
|
|
|
|
||
Currency
|
|
(0.19
|
)
|
|
|
||
Interest
|
|
(0.01
|
)
|
|
|
||
Change in tax rate
|
|
—
|
|
|
|
||
Impact of lower shares outstanding and share-based payments
|
|
0.17
|
|
|
|
||
Operations
|
|
0.25
|
|
|
|
||
For the nine months ended September 30, 2012
|
|
$
|
3.92
|
|
|
4.3
|
%
|
•
|
EEMA: Higher pricing and favorable volume/mix, partially offset by higher marketing, administration and research costs; and
|
•
|
Asia: Higher pricing and lower manufacturing costs, partially offset by higher marketing, administration and research costs and unfavorable volume/mix attributable to Japan.
|
|
|
Diluted EPS
|
|
% Growth
|
|||
For the three months ended September 30, 2011
|
|
$
|
1.35
|
|
|
|
|
2012 Asset impairment and exit costs
|
|
(0.01
|
)
|
|
|
||
2012 Tax items
|
|
(0.05
|
)
|
|
|
||
Subtotal of 2012 items
|
|
(0.06
|
)
|
|
|
||
2011 Asset impairment and exit costs
|
|
0.02
|
|
|
|
||
2011 Tax items
|
|
—
|
|
|
|
||
Subtotal of 2011 items
|
|
0.02
|
|
|
|
||
Currency
|
|
(0.07
|
)
|
|
|
||
Interest
|
|
(0.01
|
)
|
|
|
||
Change in tax rate
|
|
—
|
|
|
|
||
Impact of lower shares outstanding and share-based payments
|
|
0.05
|
|
|
|
||
Operations
|
|
0.04
|
|
|
|
||
For the three months ended September 30, 2012
|
|
$
|
1.32
|
|
|
(2.2
|
)%
|
•
|
EEMA: Higher pricing and favorable volume/mix, partially offset by higher marketing, administration and research costs; partially offset by
|
•
|
European Union: Unfavorable volume/mix and higher marketing, administration and research costs, partially offset by higher pricing.
|
|
|
For the Nine Months Ended September 30,
|
|
For the Three Months Ended September 30,
|
||||||||||||
(in millions)
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||
Cigarette volume:
|
|
|
|
|
|
|
|
|
||||||||
European Union
|
|
151,222
|
|
|
161,913
|
|
|
51,629
|
|
|
56,198
|
|
||||
Eastern Europe, Middle East & Africa
|
|
226,472
|
|
|
218,032
|
|
|
81,388
|
|
|
79,053
|
|
||||
Asia
|
|
244,009
|
|
|
235,187
|
|
|
79,507
|
|
|
79,053
|
|
||||
Latin America & Canada
|
|
72,214
|
|
|
73,512
|
|
|
24,007
|
|
|
25,243
|
|
||||
Total cigarette volume
|
|
693,917
|
|
|
688,644
|
|
|
236,531
|
|
|
239,547
|
|
||||
Net revenues:
|
|
|
|
|
|
|
|
|
||||||||
European Union
|
|
$
|
20,654
|
|
|
$
|
22,650
|
|
|
$
|
6,904
|
|
|
$
|
8,155
|
|
Eastern Europe, Middle East & Africa
|
|
14,256
|
|
|
13,195
|
|
|
5,125
|
|
|
4,921
|
|
||||
Asia
|
|
15,668
|
|
|
14,577
|
|
|
5,174
|
|
|
5,143
|
|
||||
Latin America & Canada
|
|
7,073
|
|
|
7,048
|
|
|
2,389
|
|
|
2,487
|
|
||||
Net revenues
|
|
$
|
57,651
|
|
|
$
|
57,470
|
|
|
$
|
19,592
|
|
|
$
|
20,706
|
|
Excise taxes on products:
|
|
|
|
|
|
|
|
|
||||||||
European Union
|
|
$
|
14,191
|
|
|
$
|
15,646
|
|
|
$
|
4,779
|
|
|
$
|
5,649
|
|
Eastern Europe, Middle East & Africa
|
|
8,063
|
|
|
7,286
|
|
|
2,918
|
|
|
2,711
|
|
||||
Asia
|
|
7,275
|
|
|
6,519
|
|
|
2,413
|
|
|
2,344
|
|
||||
Latin America & Canada
|
|
4,634
|
|
|
4,593
|
|
|
1,562
|
|
|
1,640
|
|
||||
Excise taxes on products
|
|
$
|
34,163
|
|
|
$
|
34,044
|
|
|
$
|
11,672
|
|
|
$
|
12,344
|
|
Operating income:
|
|
|
|
|
|
|
|
|
||||||||
Operating companies income:
|
|
|
|
|
|
|
|
|
||||||||
European Union
|
|
$
|
3,232
|
|
|
$
|
3,548
|
|
|
$
|
1,085
|
|
|
$
|
1,262
|
|
Eastern Europe, Middle East & Africa
|
|
2,805
|
|
|
2,482
|
|
|
1,047
|
|
|
925
|
|
||||
Asia
|
|
4,068
|
|
|
3,800
|
|
|
1,297
|
|
|
1,309
|
|
||||
Latin America & Canada
|
|
753
|
|
|
774
|
|
|
267
|
|
|
255
|
|
||||
Amortization of intangibles
|
|
(73
|
)
|
|
(73
|
)
|
|
(24
|
)
|
|
(25
|
)
|
||||
General corporate expenses
|
|
(155
|
)
|
|
(135
|
)
|
|
(49
|
)
|
|
(49
|
)
|
||||
Operating income
|
|
$
|
10,630
|
|
|
$
|
10,396
|
|
|
$
|
3,623
|
|
|
$
|
3,677
|
|
•
|
Asia, primarily driven by a higher total market and share in Indonesia, Thailand and Vietnam, partly offset by lower share in Japan and Korea; and
|
•
|
EEMA, primarily due to a higher total market and share in Turkey, a higher total market in Saudi Arabia, and higher share in Russia, partly offset by a lower total market and share in Romania.
|
•
|
the European Union, primarily due to a lower total market, notably in southern Europe, Germany, Hungary, Poland and the Slovak Republic and a lower total market and share in the Czech Republic, France, the Netherlands and Portugal; and
|
•
|
Latin America & Canada, due mainly to a lower total market in Brazil and Colombia.
|
|
|
For the Nine Months Ended September 30,
|
|
|
|||||||||||
(in millions)
|
|
2012
|
|
2011
|
|
Variance
|
|
%
|
|||||||
Net revenues
|
|
$
|
57,651
|
|
|
$
|
57,470
|
|
|
$
|
181
|
|
|
0.3
|
%
|
Excise taxes on products
|
|
34,163
|
|
|
34,044
|
|
|
119
|
|
|
0.3
|
%
|
|||
Net revenues, excluding excise taxes on products
|
|
$
|
23,488
|
|
|
$
|
23,426
|
|
|
$
|
62
|
|
|
0.3
|
%
|
•
|
price increases ($1.3 billion) and
|
•
|
the impact of acquisitions ($28 million), partly offset by
|
•
|
unfavorable currency ($1.2 billion) and
|
•
|
unfavorable volume/mix ($78 million).
|
•
|
higher excise taxes resulting from changes in retail prices and tax rates ($3.0 billion) and
|
•
|
volume/mix ($114 million), partly offset by
|
•
|
favorable currency ($3.0 billion).
|
|
|
For the Nine Months Ended September 30,
|
|
|
|||||||||||
(in millions)
|
|
2012
|
|
2011
|
|
Variance
|
|
%
|
|||||||
Cost of sales
|
|
$
|
7,692
|
|
|
$
|
7,986
|
|
|
$
|
(294
|
)
|
|
(3.7
|
)%
|
Marketing, administration and research costs
|
|
5,043
|
|
|
4,911
|
|
|
132
|
|
|
2.7
|
%
|
|||
Operating income
|
|
10,630
|
|
|
10,396
|
|
|
234
|
|
|
2.3
|
%
|
•
|
favorable currency ($474 million), partly offset by
|
•
|
volume/mix ($143 million),
|
•
|
higher manufacturing costs ($22 million) and
|
•
|
the impact of acquisitions ($15 million).
|
•
|
higher expenses ($376 million, principally related to increased marketing expenditures, notably in Brazil, Germany, Indonesia and Russia, increased headcount and business infrastructure in Russia and expenditures incurred to combat illicit trade in cigarettes) and
|
•
|
the impact of acquisitions ($9 million), partly offset by
|
•
|
favorable currency ($253 million).
|
•
|
price increases ($1.3 billion), partly offset by
|
•
|
unfavorable currency ($496 million),
|
•
|
higher marketing, administration and research costs ($376 million) and
|
•
|
unfavorable volume/mix ($221 million).
|
•
|
the European Union, primarily due to a lower total market, particularly in southern Europe; and
|
•
|
Latin America & Canada, mainly due to a lower total market in Argentina, Brazil, Colombia and Mexico.
|
•
|
EEMA, driven mainly by improved market conditions in Egypt and favorable distributor inventory movements and higher market share in Russia; and
|
•
|
Asia, driven mainly by Indonesia, Thailand and Vietnam largely offset by Japan due to an unfavorable comparison with the prior year period in which depleted PMI distributor inventories were rebuilt, and Korea.
|
|
|
For the Three Months Ended September 30,
|
|
|
|||||||||||
(in millions)
|
|
2012
|
|
2011
|
|
Variance
|
|
%
|
|||||||
Net revenues
|
|
$
|
19,592
|
|
|
$
|
20,706
|
|
|
$
|
(1,114
|
)
|
|
(5.4
|
)%
|
Excise taxes on products
|
|
11,672
|
|
|
12,344
|
|
|
(672
|
)
|
|
(5.4
|
)%
|
|||
Net revenues, excluding excise taxes on products
|
|
$
|
7,920
|
|
|
$
|
8,362
|
|
|
$
|
(442
|
)
|
|
(5.3
|
)%
|
•
|
unfavorable currency ($731 million) and
|
•
|
unfavorable volume/mix ($223 million), partly offset by
|
•
|
price increases ($505 million).
|
•
|
favorable currency ($1.5 billion) and
|
•
|
volume/mix ($213 million), partly offset by
|
•
|
higher excise taxes resulting from changes in retail prices and tax rates ($1.0 billion).
|
|
|
For the Three Months Ended September 30,
|
|
|
|||||||||||
(in millions)
|
|
2012
|
|
2011
|
|
Variance
|
|
%
|
|||||||
Cost of sales
|
|
$
|
2,584
|
|
|
$
|
2,847
|
|
|
$
|
(263
|
)
|
|
(9.2
|
)%
|
Marketing, administration and research costs
|
|
1,655
|
|
|
1,770
|
|
|
(115
|
)
|
|
(6.5
|
)%
|
|||
Operating income
|
|
3,623
|
|
|
3,677
|
|
|
(54
|
)
|
|
(1.5
|
)%
|
•
|
favorable currency ($259 million) and
|
•
|
volume/mix ($23 million), partly offset by
|
•
|
higher manufacturing costs ($16 million).
|
•
|
favorable currency ($239 million), partly offset by
|
•
|
higher expenses ($122 million, principally related to increased investments in marketing, notably in Indonesia, and marketing and business infrastructure in Russia).
|
•
|
unfavorable currency ($232 million),
|
•
|
unfavorable volume/mix ($200 million),
|
•
|
higher marketing, administration and research costs ($122 million) and
|
•
|
higher manufacturing costs ($16 million), partly offset by
|
•
|
price increases ($505 million).
|
•
|
actual and proposed tobacco legislation and regulation;
|
•
|
actual and proposed excise tax increases, as well as changes in excise tax structures and retail selling price regulations;
|
•
|
price gaps and changes in price gaps between premium and mid-price and low-price brands and between cigarettes and other tobacco products;
|
•
|
illicit trade in cigarettes and other tobacco products, including counterfeit, contraband and so-called "illicit whites";
|
•
|
significant governmental actions aimed at imposing regulatory requirements impacting our ability to communicate with adult consumers and differentiate our products from competitors' products;
|
•
|
increased efforts by tobacco control advocates to “denormalize” smoking and seek the implementation of extreme regulatory measures;
|
•
|
proposed legislation to mandate plain (generic) packaging resulting in the expropriation of our trademarks;
|
•
|
pending and threatened litigation as discussed in Note 10.
Contingencies
;
|
•
|
actual and proposed requirements for the disclosure of cigarette ingredients and other proprietary information without adequate trade secret protection;
|
•
|
disproportionate testing requirements and performance standards;
|
•
|
actual and proposed restrictions on the use of tobacco product ingredients, including a complete ban of tobacco product ingredients;
|
•
|
actual and proposed restrictions on imports in certain jurisdictions;
|
•
|
actual and proposed restrictions affecting tobacco manufacturing, packaging, marketing, advertising, product display and sales;
|
•
|
governmental and private bans and restrictions on smoking;
|
•
|
the outcome of proceedings and investigations, and the potential assertion of claims, and proposed regulation relating to contraband shipments of cigarettes; and
|
•
|
governmental investigations.
|
•
|
establish specific actions to prevent youth smoking;
|
•
|
restrict and/or eliminate all tobacco product advertising, marketing, promotions and sponsorships;
|
•
|
initiate public education campaigns to inform the public about the health consequences of smoking and the benefits of quitting;
|
•
|
implement regulations imposing product testing, disclosure and performance standards;
|
•
|
impose health warning requirements on packaging;
|
•
|
adopt measures aimed at eliminating illicit trade in tobacco products;
|
•
|
restrict smoking in public places;
|
•
|
implement public health-based fiscal policies (tax and price measures);
|
•
|
adopt and implement measures that ensure that packaging and labeling, including descriptive terms, do not create the false impression that one brand of cigarettes is safer than another;
|
•
|
phase out or restrict duty free tobacco sales; and
|
•
|
encourage litigation against tobacco product manufacturers.
|
•
|
to develop a series of products that provides adult smokers the taste, sensory experience and smoking ritual characteristics that are as close as possible to those currently provided by conventional cigarettes;
|
•
|
to substantiate a significant reduction of harm both for the individual adult smoker as well as the population as a whole, based on robust scientific evidence derived from well-established assessment processes; and
|
•
|
to advocate for the development of regulatory frameworks for the assessment, approval and commercialization of NGPs, including the communication of substantiated reductions in harm to consumers.
|
•
|
unfavorable currency ($583 million) and
|
•
|
unfavorable volume/mix ($340 million), partly offset by
|
•
|
price increases ($382 million).
|
•
|
unfavorable currency ($306 million),
|
•
|
unfavorable volume/mix ($295 million),
|
•
|
higher manufacturing costs ($68 million, partly related to the conversion to reduced cigarette ignition propensity paper that began in the fourth quarter of 2011) and
|
•
|
higher marketing, administration and research costs ($52 million, principally reflecting increased marketing investments in Italy, Germany and Switzerland), partly offset by
|
•
|
price increases ($382 million) and
|
•
|
the 2011 pre-tax charges for asset impairment and exit costs ($23 million).
|
•
|
price increases ($365 million),
|
•
|
favorable volume/mix ($303 million) and
|
•
|
the impact of acquisitions ($27 million), partially offset by
|
•
|
unfavorable currency ($411 million).
|
•
|
price increases ($365 million),
|
•
|
favorable volume/mix ($233 million) and
|
•
|
the 2011 pre-tax charges for asset impairment and exit costs ($18 million), partially offset by
|
•
|
unfavorable currency ($183 million) and
|
•
|
higher marketing, administration and research costs ($121 million, principally related to expenditures in marketing and business infrastructure, mainly in Russia).
|
•
|
price increases ($393 million), partially offset by
|
•
|
unfavorable currency ($59 million).
|
•
|
price increases ($393 million),
|
•
|
lower manufacturing costs ($97 million, primarily shipping) and
|
•
|
favorable currency ($47 million), partly offset by
|
•
|
higher marketing, administration and research costs ($145 million, including higher marketing investments in Indonesia),
|
•
|
unfavorable volume/mix ($107 million, due primarily to the aforementioned Japan hurdle) and
|
•
|
higher pre-tax charges for asset impairment and exit costs ($17 million).
|
•
|
unfavorable currency ($172 million) and
|
•
|
unfavorable volume/mix ($41 million), partially offset by
|
•
|
price increases ($197 million).
|
•
|
unfavorable currency ($59 million),
|
•
|
higher manufacturing costs ($58 million),
|
•
|
unfavorable volume/mix ($52 million),
|
•
|
higher marketing, administration and research costs ($35 million) and
|
•
|
higher pre-tax charges for asset impairment and exit costs ($14 million), partially offset by
|
•
|
price increases ($197 million).
|
•
|
unfavorable currency ($334 million) and
|
•
|
unfavorable volume/mix ($154 million), partially offset by
|
•
|
price increases ($107 million).
|
•
|
unfavorable currency ($151 million),
|
•
|
unfavorable volume/mix ($124 million),
|
•
|
higher marketing, administration and research costs ($14 million, primarily reflecting marketing investments behind new brand launches in Germany, Italy, Spain and Switzerland), and
|
•
|
higher manufacturing costs ($6 million, mainly related to the mandated implementation of reduced cigarette ignition propensity standards, which began in the fourth quarter of 2011), partially offset by
|
•
|
price increases ($107 million) and
|
•
|
the 2011 pre-tax charges for asset impairment and exit costs ($11 million).
|
•
|
unfavorable currency ($211 million), partially offset by
|
•
|
price increases ($149 million) and
|
•
|
favorable volume/mix ($52 million).
|
•
|
price increases ($149 million) and
|
•
|
favorable volume/mix ($55 million), partially offset by
|
•
|
unfavorable currency ($59 million) and
|
•
|
higher marketing, administration and research costs ($51 million, principally related to investments in marketing and business infrastructure, mainly in Russia).
|
•
|
unfavorable currency ($104 million) and
|
•
|
unfavorable volume/mix ($83 million), partially offset by
|
•
|
price increases ($149 million).
|
•
|
unfavorable volume/mix ($96 million),
|
•
|
higher marketing, administration and research costs ($41 million, including higher marketing investments, notably in Indonesia) and
|
•
|
higher pre-tax charges for asset impairment and exit costs ($19 million), partially offset by
|
•
|
price increases ($149 million).
|
•
|
unfavorable currency ($82 million) and
|
•
|
unfavorable volume/mix ($38 million), partially offset by
|
•
|
price increases ($100 million).
|
•
|
price increases ($100 million), partially offset by
|
•
|
unfavorable volume/mix ($35 million),
|
•
|
higher manufacturing costs ($24 million, including increased investments in distribution infrastructure, notably in Brazil and Colombia),
|
•
|
unfavorable currency ($17 million) and
|
•
|
higher marketing, administration and research costs ($13 million).
|
•
|
more cash used for inventories (
$1.1 billion
), primarily due to the planned replenishment of tobacco leaf and clove inventories and higher finished goods inventories (primarily related to forestalling attributable to tax-driven price increases); and
|
•
|
less cash provided by accrued liabilities and other current assets (
$242 million
), largely due to the timing of payments for excise taxes (primarily related to forestalling).
|
|
|
Short-term
|
|
Long-term
|
|
Outlook
|
Moody’s
|
|
P-1
|
|
A2
|
|
Stable
|
Standard & Poor’s
|
|
A-1
|
|
A
|
|
Stable
|
Fitch
|
|
F1
|
|
A
|
|
Stable
|
(in billions of dollars)
|
|
|
|
|
||||
Type
|
|
Committed
Credit
Facilities
|
|
Commercial
Paper
|
||||
Multi-year revolving credit, expiring March 31, 2015
|
|
$
|
2.5
|
|
|
|
||
Multi-year revolving credit, expiring October 25, 2016
|
|
3.5
|
|
|
|
|
||
Total facilities
|
|
$
|
6.0
|
|
|
|
|
|
Commercial paper outstanding
|
|
|
|
|
$
|
1.6
|
|
•
|
the levying of substantial and increasing tax and duty charges;
|
•
|
restrictions or bans on advertising, marketing and sponsorship;
|
•
|
the display of larger health warnings, graphic health warnings and other labeling requirements;
|
•
|
restrictions on packaging design, including the use of colors, and plain packaging;
|
•
|
restrictions or bans on the display of tobacco product packaging at the point of sale and restrictions or bans on cigarette vending machines;
|
•
|
requirements regarding testing, disclosure and performance standards for tar, nicotine, carbon monoxide and other smoke constituents;
|
•
|
disclosure, restrictions, or bans of tobacco product ingredients;
|
•
|
increased restrictions on smoking in public and work places and, in some instances, in private places and outdoors;
|
•
|
elimination of duty free sales and duty free allowances for travelers; and
|
•
|
encouraging litigation against tobacco companies.
|
•
|
promote brand equity successfully;
|
•
|
anticipate and respond to new consumer trends;
|
•
|
develop new products and markets and broaden brand portfolios;
|
•
|
improve productivity; and
|
•
|
be able to protect or enhance margins through price increases.
|
Item 1.
|
Legal Proceedings.
|
Item 1A.
|
Risk Factors.
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds.
|
Period
|
|
Total Number
of Shares
Repurchased
|
|
Average
Price Paid
Per Share
|
|
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs (2)
|
|
Approximate Dollar
Value of Shares that
May Yet be Purchased
Under the Plans or
Programs
|
||||
July 1, 2012 –
July 31, 2012 (1)
|
|
6,861,481
|
|
|
$
|
89.20
|
|
|
179,139,305
|
|
|
$18,000,000,000
|
August 1, 2012 –
August 31, 2012 (1)
|
|
5,581,096
|
|
|
$
|
91.38
|
|
|
5,581,096
|
|
|
$17,489,992,546
|
September 1, 2012 –
September 30, 2012 (1)
|
|
4,244,426
|
|
|
$
|
90.22
|
|
|
9,825,522
|
|
|
$17,107,045,757
|
Pursuant to Publicly
Announced Plans
or Programs
|
|
16,687,003
|
|
|
$
|
90.19
|
|
|
|
|
|
|
July 1, 2012 –
July 31, 2012 (3)
|
|
2,441
|
|
|
$
|
87.74
|
|
|
|
|
|
|
August 1, 2012 –
August 31, 2012 (3)
|
|
2,685
|
|
|
$
|
91.29
|
|
|
|
|
|
|
September 1, 2012 –
September 30, 2012 (3)
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
For the Quarter Ended September 30, 2012
|
|
16,692,129
|
|
|
$
|
90.19
|
|
|
|
|
|
(1)
|
On February 11, 2010, our Board of Directors authorized a share repurchase program of $12 billion over three years. This program commenced in May 2010, after the completion of our previous two-year $13 billion program. These share repurchases have been made pursuant to the $12 billion program. On July 31, 2012, we completed the $12 billion share repurchase program ahead of schedule by purchasing, in total, 179.1 million shares for $12.0 billion.
|
(2)
|
Aggregate number of shares repurchased under the above-mentioned share repurchase programs as of the end of the period presented.
|
(3)
|
Shares repurchased represent shares tendered to us by employees who vested in restricted and deferred stock awards, or exercised stock options, and used shares to pay all, or a portion of, the related taxes and/or option exercise price.
|
Item 6.
|
Exhibits.
|
|
|
|
3.1
|
|
Amended and Restated By-Laws of Philip Morris International Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed December 6, 2011).
|
|
|
|
10.1
|
|
Employment Agreement with Jacek Olczak (incorporated by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2012).
|
|
|
|
10.2
|
|
Philip Morris International Inc. Benefit Equalization Plan (as amended and in effect on August 6, 2012).
|
|
|
|
10.3
|
|
Supplemental Equalization Plan (amended and restated as of August 6, 2012).
|
|
|
|
10.4
|
|
Amendment No. 1 to the Time Sharing Agreement between PM Global Services Inc. and Louis C. Camilleri, dated August 22, 2012.
|
|
|
|
10.5
|
|
Amendment No. 1, dated as of August 31, 2012, to the Amended and Restated Credit Agreement, dated as of May 11, 2011, among Philip Morris International Inc., the lenders named therein and J.P. Morgan Europe Limited, as facility agent.
|
|
|
|
10.6
|
|
Amendment No. 1, dated as of August 31, 2012, to the Credit Agreement, dated as of October 25, 2011, among Philip Morris International Inc., the lenders named therein and Citibank International plc, as facility agent.
|
|
|
|
12
|
|
Statement regarding computation of ratios of earnings to fixed charges.
|
|
|
|
31.1
|
|
Certification of the Registrant's Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
31.2
|
|
Certification of the Registrant's Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.1
|
|
Certification of the Registrant's Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.2
|
|
Certification of the Registrant's Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
101.INS
|
|
XBRL Instance Document.
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema.
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase.
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase.
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase.
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase.
|
PHILIP MORRIS INTERNATIONAL INC.
|
|
/s/ JACEK OLCZAK
|
|
Jacek Olczak
|
Chief Financial Officer
|
|
November 2, 2012
|
(2)
|
a Grandfathered Benefit Equalization Joint and Survivor Allowance, or
|
(3)
|
a Grandfathered Benefit Equalization Optional Payment Allowance, and
|
A.
|
Benefit Equalization Retirement Allowances and other benefits payable under this Plan shall be as follows:
|
B.
|
Benefit Equalization Profit-Sharing Allowances payable under this Plan shall be as follows:
|
C.
|
BEP Benefit Commencement Date and termination of Benefit Equalization Retirement Allowances payable in the form of an Optional Payment:
|
Secular Trust
|
|
|
|
|||
Active Participants
|
||||||
|
|
|
|
|||
Last Name
|
First Name
|
Funding Payment Account(s)
|
Target Payment Account(s)
|
|||
Camilleri
|
Louis C.
|
FP Trust Account / FP Assumed Account
|
TP Trust Account / TP Assumed Account
|
|||
|
|
|
|
|||
Total ST Participants: 1
|
|
|
Registration
Number
|
Serial
Number
|
Aircraft Description
|
N607PM
|
5146
|
Gulfstream Aerospace GV-SP (G550)
|
N551PM
|
5374
|
Gulfstream Aerospace G-550
|
|
|
|
U.S. Department of
|
1200 New Jersey Avenue, S.E.
|
Transportation
|
Washington, D.C. 20590
|
Office of the Secretary
of Transportation |
|
|
|
|
Issue date: July 22, 2010
|
Ms. Joanne Barbera
|
Authority Expires: December July 22, 2011
|
Counsel for PMI Global Services Inc.
|
|
Barbera & Watkins, LLC
|
|
6701 W. 64
th
Street, Suite 315
|
/s/ GEORGE WELLINGTON
|
Overland Park, Kansas 66202
|
Director, Office of International Aviation
|
|
|
U.S. Department of
|
1200 New Jersey Avenue, S.E.
|
Transportation
|
Washington, D.C. 20590
|
Office of the Secretary
of Transportation |
|
|
|
|
Issue date: December 22, 2010
|
Ms. Joanne Barbera
|
Authority Expires: December 31, 2011
|
Counsel for PMI Global Services Inc.
|
|
Barbera & Watkins, LLC
|
|
6701 W. 64
th
Street, Suite 315
|
/s/ GEORGE WELLINGTON
|
Overland Park, Kansas 66202
|
Director, Office of International Aviation
|
|
|
U.S. Department of
|
1200 New Jersey Avenue, S.E.
|
Transportation
|
Washington, D.C. 20590
|
Office of the Secretary
of Transportation |
|
|
|
|
Issue date: December 2, 2011
|
Ms. Joanne Barbera
|
Authority Expires: December 31, 2012
|
Counsel for PMI Global Services Inc.
|
|
Barbera & Watkins, LLC
|
|
6701 W. 64
th
Street, Suite 315
|
/s/ ROBERT FINAMORE
|
Overland Park, Kansas 66202
|
Director, Office of International Aviation
|
|
|
U.S. Department of
|
1200 New Jersey Avenue, S.E.
|
Transportation
|
Washington, D.C. 20590
|
Office of the Secretary
of Transportation |
|
|
|
|
Issue date: July 18, 2012
|
Ms. Joanne Barbera
|
Authority Expires: December 31, 2012
|
Counsel for PMI Global Services Inc.
|
|
Barbera & Watkins, LLC
|
|
6701 W. 64
th
Street, Suite 315
|
/s/ CATHERINE C. BROWN
|
Overland Park, Kansas 66202
|
Director, Office of International Aviation
|
|
|
1.
|
Mail a copy of the Agreement to the following address via certified mail, return receipt requested, immediately upon execution of the agreement (14 C.F.R. 91.23 requires that the copy be sent within twenty-four (24) hours after it is signed):
|
2.
|
Telephone or fax the nearest Flight Standards District Office at least forty-eight (48) hours prior to the first flight of each Aircraft made under this Agreement.
|
3.
|
Carry a copy of the Agreement in the Aircraft at all times when the Aircraft is being operated under the Agreement.
|
1.
|
The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, an interest in and to the Assignor’s rights and obligations under the Credit Agreement as of the date hereof equal to the percentage interest specified on Schedule 1 hereto of all outstanding rights and obligations under the Credit Agreement. After giving effect to such sale and assignment, the Assignee’s Commitment and the amount of the Advances owing to the Assignee will be as set forth on Schedule 1 hereto. Each of the Assignor and the Assignee represents and warrants that it is authorized to execute and deliver this Assignment and Acceptance.
|
2.
|
The Assignor (i) represents and warrants that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim; (ii) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any other instrument or document furnished pursuant thereto; and (iii) makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Borrower or PMI or the performance or observance by any Borrower or PMI of any of its obligations under the Credit Agreement or any other instrument or document furnished pursuant thereto.
|
3.
|
The Assignee (i) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements referred to in Section 4.1(e) thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (ii) agrees that it will, independently and without reliance upon J.P. Morgan Europe Limited, as Facility Agent, any other Agent, the Assignor or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iii) confirms that it is an Eligible Assignee; (iv) represents that (A) the source of any funds it is using to acquire the Assignor’s interest or to make any Advance is not and will not be plan assets as defined under the regulations of the Department of Labor of any Plan subject to Title I of ERISA or Section 4975 of the Code or (B) the assignment or Advance is not and will be not be a non-exempt prohibited transaction as defined in Section 406 of ERISA; (v) appoints and authorizes J.P. Morgan Europe Limited, as Facility Agent, to take such action as agent on its behalf and to exercise such powers and
|
4.
|
This Assignment and Acceptance will be delivered to J.P. Morgan Europe Limited, as Facility Agent, for acceptance and recording by J.P. Morgan Europe Limited, as Facility Agent following its execution. The effective date for this Assignment and Acceptance (the “
Effective Date
”) shall be the date of acceptance hereof by J.P. Morgan Europe Limited, as Facility Agent, unless otherwise specified on Schedule 1 hereto.
|
5.
|
Upon such acceptance and recording by J.P. Morgan Europe Limited, as Facility Agent, as of the Effective Date, (i) the Assignee shall be a party to the Credit Agreement and, to the extent provided in this Assignment and Acceptance, have the rights and obligations of a Lender thereunder and (ii) the Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Credit Agreement.
|
6.
|
Upon such acceptance and recording by J.P. Morgan Europe Limited, as Facility Agent, from and after the Effective Date, J.P. Morgan Europe Limited, as Facility Agent, shall make all payments under the Credit Agreement in respect of the interest assigned hereby (including, without limitation, all payments of principal, interest and facility fees with respect thereto) to the Assignee. The Assignor and Assignee shall make all appropriate adjustments in payments under the Credit Agreement for periods prior to the Effective Date directly between themselves.
|
7.
|
This Assignment and Acceptance shall be governed by, and construed in accordance with, the laws of the State of New York.
|
8.
|
This Assignment and Acceptance may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of Schedule 1 to this Assignment and Acceptance by telecopier shall be effective as delivery of a manually executed counterpart of this Assignment and Acceptance.
|
1.
|
The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, an interest in and to the Assignor’s rights and obligations under the Credit Agreement as of the date hereof equal to the percentage interest specified on Schedule 1 hereto of all outstanding rights and obligations under the Credit Agreement. After giving effect to such sale and assignment, the Assignee’s Commitment and the amount of the Advances owing to the Assignee will be as set forth on Schedule 1 hereto. Each of the Assignor and the Assignee represents and warrants that it is authorized to execute and deliver this Assignment and Acceptance.
|
2.
|
The Assignor (i) represents and warrants that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim; (ii) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any other instrument or document furnished pursuant thereto; and (iii) makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Borrower or PMI or the performance or observance by any Borrower or PMI of any of its obligations under the Credit Agreement or any other instrument or document furnished pursuant thereto.
|
3.
|
The Assignee (i) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements referred to in Section 4.1(e) thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (ii) agrees that it will, independently and without reliance upon Citibank International plc, as Facility Agent, any other Agent, the Assignor or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iii) confirms that it is an Eligible Assignee; (iv) represents that (A) the source of any funds it is using to acquire the Assignor’s interest or to make any Advance is not and will not be plan assets as defined under the regulations of the Department of Labor of any Plan subject to Title I of ERISA or Section 4975 of the Code or (B) the assignment or Advance is not and will be not be a non-exempt prohibited transaction as defined in Section 406 of ERISA; (v) appoints and authorizes Citibank International plc, as
|
4.
|
This Assignment and Acceptance will be delivered to Citibank International plc, as Facility Agent, for acceptance and recording by Citibank International plc, as Facility Agent following its execution. The effective date for this Assignment and Acceptance (the “
Effective Date
”) shall be the date of acceptance hereof by Citibank International plc, as Facility Agent, unless otherwise specified on Schedule 1 hereto.
|
5.
|
Upon such acceptance and recording by Citibank International plc, as Facility Agent, as of the Effective Date, (i) the Assignee shall be a party to the Credit Agreement and, to the extent provided in this Assignment and Acceptance, have the rights and obligations of a Lender thereunder and (ii) the Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Credit Agreement.
|
6.
|
Upon such acceptance and recording by Citibank International plc, as Facility Agent, from and after the Effective Date, Citibank International plc, as Facility Agent, shall make all payments under the Credit Agreement in respect of the interest assigned hereby (including, without limitation, all payments of principal, interest and facility fees with respect thereto) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date. The Assignor and Assignee shall make all appropriate adjustments in payments under the Credit Agreement for periods prior to the Effective Date directly between themselves.
|
7.
|
This Assignment and Acceptance shall be governed by, and construed in accordance with, the laws of the State of New York.
|
8.
|
This Assignment and Acceptance may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of Schedule 1 to this Assignment and Acceptance by telecopier shall be effective as delivery of a manually executed counterpart of this Assignment and Acceptance.
|
|
Nine Months Ended
September 30, 2012
|
|
Three Months Ended
September 30, 2012
|
||||
Earnings before income taxes
|
$
|
9,997
|
|
|
$
|
3,412
|
|
Add (deduct):
|
|
|
|
||||
Equity in net loss of less than 50% owned affiliates
|
11
|
|
|
2
|
|
||
Dividends from less than 50% owned affiliates
|
—
|
|
|
—
|
|
||
Fixed charges
|
822
|
|
|
276
|
|
||
Interest capitalized, net of amortization
|
6
|
|
|
3
|
|
||
Earnings available for fixed charges
|
$
|
10,836
|
|
|
$
|
3,693
|
|
Fixed charges:
|
|
|
|
||||
Interest incurred
|
$
|
745
|
|
|
$
|
250
|
|
Portion of rent expense deemed to represent interest factor
|
77
|
|
|
26
|
|
||
Fixed charges
|
$
|
822
|
|
|
$
|
276
|
|
Ratio of earnings to fixed charges
|
13.2
|
|
|
13.4
|
|
|
For the Years Ended December 31,
|
||||||||||||||||||
|
2011
|
|
2010
|
|
2009
|
|
2008
|
|
2007
|
||||||||||
Earnings before income taxes
|
$
|
12,532
|
|
|
$
|
10,324
|
|
|
$
|
9,243
|
|
|
$
|
9,937
|
|
|
$
|
8,884
|
|
Add (deduct):
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity in net loss (earnings) of less
than 50% owned affiliates |
10
|
|
|
8
|
|
|
6
|
|
|
64
|
|
|
(100
|
)
|
|||||
Dividends from less than 50%
owned affiliates |
—
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|
100
|
|
|||||
Fixed charges
|
1,042
|
|
|
1,069
|
|
|
1,006
|
|
|
618
|
|
|
359
|
|
|||||
Interest capitalized, net of
amortization |
(2
|
)
|
|
1
|
|
|
2
|
|
|
(11
|
)
|
|
(8
|
)
|
|||||
Earnings available for fixed charges
|
$
|
13,582
|
|
|
$
|
11,402
|
|
|
$
|
10,257
|
|
|
$
|
10,620
|
|
|
$
|
9,235
|
|
Fixed charges:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest incurred
|
$
|
940
|
|
|
$
|
976
|
|
|
$
|
920
|
|
|
$
|
543
|
|
|
$
|
280
|
|
Portion of rent expense deemed to
represent interest factor |
102
|
|
|
93
|
|
|
86
|
|
|
75
|
|
|
79
|
|
|||||
Fixed charges
|
$
|
1,042
|
|
|
$
|
1,069
|
|
|
$
|
1,006
|
|
|
$
|
618
|
|
|
$
|
359
|
|
Ratio of earnings to fixed charges
|
13.0
|
|
|
10.7
|
|
|
10.2
|
|
|
17.2
|
|
|
25.7
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Philip Morris International Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ LOUIS C. CAMILLERI
|
Louis C. Camilleri
|
Chairman and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Philip Morris International Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ JACEK OLCZAK
|
Jacek Olczak
|
Chief Financial Officer
|
/s/ LOUIS C. CAMILLERI
|
Louis C. Camilleri
|
Chairman and Chief Executive Officer
|
November 2, 2012
|
/s/ JACEK OLCZAK
|
Jacek Olczak
|
Chief Financial Officer
|
November 2, 2012
|