ý
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ANNUAL 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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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
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10017
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Name of each exchange on which registered
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Common Stock, no par value
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New York Stock Exchange
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Floating Rate Notes due 2015
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New York Stock Exchange
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6.875% Notes due 2014
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New York Stock Exchange
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5.875% Notes due 2015
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New York Stock Exchange
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2.500% Notes due 2016
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New York Stock Exchange
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1.625% Notes due 2017
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New York Stock Exchange
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1.125% Notes due 2017
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New York Stock Exchange
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5.650% Notes due 2018
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New York Stock Exchange
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1.875% Notes due 2019
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New York Stock Exchange
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2.125% Notes due 2019
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New York Stock Exchange
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1.750% Notes due 2020
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New York Stock Exchange
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4.500% Notes due 2020
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New York Stock Exchange
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4.125% Notes due 2021
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New York Stock Exchange
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2.900% Notes due 2021
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New York Stock Exchange
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2.500% Notes due 2022
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New York Stock Exchange
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2.625% Notes due 2023
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New York Stock Exchange
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3.600% Notes due 2023
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New York Stock Exchange
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2.875% Notes due 2024
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New York Stock Exchange
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2.750% Notes due 2025
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New York Stock Exchange
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3.125% Notes due 2033
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New York Stock Exchange
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Title of each class
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Name of each exchange on which registered
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6.375% Notes due 2038
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New York Stock Exchange
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4.375% Notes due 2041
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New York Stock Exchange
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4.500% Notes due 2042
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New York Stock Exchange
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3.875% Notes due 2042
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New York Stock Exchange
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4.125% Notes due 2043
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New York Stock Exchange
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4.875% Notes due 2043
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New York Stock Exchange
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Large accelerated filer
þ
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Accelerated filer
¨
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Non-accelerated filer
¨
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Smaller reporting company
¨
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(Do not check if a smaller reporting company)
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Class
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Outstanding at
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January 31, 2014
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Common Stock,
no par value
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1,585,195,173
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shares
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Document
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Parts Into Which Incorporated
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Portions of the registrant’s annual report to shareholders for the year ended December 31, 2013 (the “2013 Annual Report”)
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Parts I, II, and IV
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Portions of the registrant’s definitive proxy statement for use in connection with its annual meeting of shareholders to be held on May 7, 2014, to be filed with the Securities and Exchange Commission (“SEC”) on or about March 27, 2014
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Part III
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Page
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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Item 1.
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Business.
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•
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The European Union (“EU”) Region is headquartered in Lausanne, Switzerland and covers all the EU countries except for Slovenia, Bulgaria, Croatia and Romania, and also comprises Switzerland, Norway and Iceland, which are linked to the EU through trade agreements;
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•
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The Eastern Europe, Middle East & Africa (“EEMA”) Region is also headquartered in Lausanne and includes Eastern Europe, the Balkans (including Slovenia, Bulgaria, Croatia and Romania), Turkey, the Middle East and Africa and our international duty free business;
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•
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The Asia Region is headquartered in Hong Kong and covers all other Asian markets as well as Australia, New Zealand and the Pacific Islands; and
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•
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The Latin America & Canada Region is headquartered in New York and covers the South American continent, Central America, Mexico, the Caribbean and Canada.
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2013
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2012
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2011
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European Union
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30.8
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%
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29.6
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%
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33.5
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%
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Eastern Europe, Middle East & Africa
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27.4
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26.3
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23.7
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Asia
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33.6
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36.7
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35.5
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Latin America & Canada
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8.2
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7.4
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7.3
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100.0
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%
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100.0
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%
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100.0
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%
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*
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Our management evaluates segment performance and allocates resources based on operating companies income, which we define as operating income, excluding general corporate expenses and amortization of intangibles, plus equity (income)/loss in unconsolidated subsidiaries, net. The accounting policies of the segments are the same as those described in Note 2.
Summary of Significant Accounting Policies
to our consolidated financial statements and are incorporated herein by reference to the
2013
Annual Report.
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•
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improved effectiveness of direct adult consumer engagement activities;
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more effective communication with our retailers about our brands;
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increased speed, efficiency and widespread availability of our products; and
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distribution and sales strategies tailored to the individual characteristics of each market (namely, the needs and capabilities of retailers, the wholesale infrastructure, our competitive position, operating costs and the regulatory framework).
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Direct Sales and Distribution, where we have set up our own distribution directly to retailers;
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Distribution through single independent distributors who are responsible for distribution in a single market;
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Exclusive Zonified Distribution, where distributors are assigned an exclusive territory within a market to enable them to obtain a suitable return on their investment; and
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Distribution through national or regional wholesalers that then supply the retail trade.
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to develop RRPs that provide adult smokers the taste, sensory experience, nicotine delivery profile and ritual characteristics that are similar to those currently provided by cigarettes;
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to substantiate the reduction of risk for the individual adult smoker and the reduction of harm to the population as a whole, based on robust scientific evidence derived from well-established assessment processes; and
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to advocate for the development of science-based regulatory frameworks for the approval and commercialization of RRPs, including the communication of substantiated health benefits to adult smokers.
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PMI owns all rights to the jointly funded intellectual property outside the United States, its territories and possessions; and
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PM USA owns all rights to the jointly funded intellectual property in the United States, its territories and possessions.
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restrictions on or licensing of outlets permitted to sell cigarettes;
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the levying of substantial and increasing tax and duty charges;
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restrictions or bans on advertising, marketing and sponsorship;
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the display of larger health warnings, graphic health warnings and other labeling requirements;
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restrictions on packaging design, including the use of colors, and plain packaging;
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restrictions on packaging and cigarette formats and dimensions;
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restrictions or bans on the display of tobacco product packaging at the point of sale and restrictions or bans on cigarette vending machines;
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requirements regarding testing, disclosure and performance standards for tar, nicotine, carbon monoxide and other smoke constituents;
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disclosure, restrictions, or bans of tobacco product ingredients;
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increased restrictions on smoking in public and work places and, in some instances, in private places and outdoors;
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elimination of duty free sales and duty free allowances for travelers; and
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encouraging litigation against tobacco companies.
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promote brand equity successfully;
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anticipate and respond to new consumer trends;
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develop new products and markets and broaden brand portfolios;
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improve productivity; and
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be able to protect or enhance margins through price increases.
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Item 1B.
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Unresolved Staff Comments.
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EU
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EEMA
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Asia
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Latin
America
&
Canada
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TOTAL
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Fully integrated
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9
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9
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10
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8
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36
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Make-pack
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—
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—
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4
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2
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6
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Other
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2
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1
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3
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5
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11
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Total
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11
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10
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17
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15
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53
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Item 3.
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Legal Proceedings.
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Type of Case
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Number of
Cases Pending as of February 15, 2014 |
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Number of Cases Pending as of
December 31, 2012 |
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Number of Cases Pending as of
December 31, 2011 |
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Individual Smoking and Health Cases
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63
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76
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75
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Smoking and Health Class Actions
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11
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11
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10
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Health Care Cost Recovery Actions
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15
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15
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11
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Lights Class Actions
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1
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2
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2
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Individual Lights Cases
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2
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7
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9
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Public Civil Actions
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2
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4
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3
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Date
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Location of
Court/Name of Plaintiff |
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Type of
Case |
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Verdict
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Post-Trial
Developments |
September 2009
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Brazil/Bernhardt
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Individual Smoking and Health
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The Civil Court of Rio de Janeiro found for plaintiff and ordered Philip Morris Brasil to pay R$13,000 (approximately $5,500) in “moral damages.”
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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 $42,300). Philip Morris Brasil has appealed this decision. |
Date
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Location of
Court/Name of Plaintiff |
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Type of
Case |
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Verdict
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Post-Trial
Developments |
February 2004
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Brazil/The Smoker Health Defense Association
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Class Action
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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.
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In April 2004, the court clarified its ruling, awarding “moral damages” of R$1,000 (approximately $420) 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.
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63 cases brought by individual plaintiffs in Argentina (24), Brazil (24), Canada (2), Chile (5), Costa Rica (2), Greece (1), Italy (3), the Philippines (1) and Scotland (1), compared with
76
such cases on
December 31, 2012
, and
75
cases on
December 31, 2011
; and
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•
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11 cases brought on behalf of classes of individual plaintiffs in Brazil (2) and Canada (9), compared with
11
such cases on
December 31, 2012
and
10
such cases on
December 31, 2011
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•
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1 case brought on behalf of individual plaintiffs in Israel, compared with
2
such cases on
December 31, 2012
and
December 31, 2011
, respectively; and
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•
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2 cases brought by individual plaintiffs in Chile (1) and Italy (1) compared with
7
such cases on
December 31, 2012
, and
9
such cases on
December 31, 2011
.
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Item 4.
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Mine Safety Disclosures
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Item 5.
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
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Period
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Total
Number of
Shares
Repurchased
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Average
Price Paid
per Share
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Total Number
of Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs(2)
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Approximate
Dollar Value
of Shares that
May Yet be
Purchased
Under the Plans
or Programs
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||||||
October 1, 2013 –
October 31, 2013 (1) |
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4,231,139
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$
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88.08
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86,504,550
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$
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10,274,359,697
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November 1, 2013 –
November 30, 2013 (1) |
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6,594,365
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$
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88.66
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93,098,915
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$
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9,689,718,288
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December 1, 2013 –
December 31, 2013 (1) |
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6,338,008
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$
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85.62
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99,436,923
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$
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9,147,045,916
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Pursuant to Publicly Announced
Plans or Programs |
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17,163,512
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$
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87.39
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October 1, 2013 –
October 31, 2013 (3) |
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3,218
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$
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86.26
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November 1, 2013 –
November 30, 2013 (3) |
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1,520
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$
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89.87
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December 1, 2013 –
December 31, 2013 (3) |
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2,048
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$
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85.66
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For the Quarter Ended
December 31, 2013 |
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17,170,298
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$
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87.39
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(1)
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On June 13, 2012, our Board of Directors authorized a new share repurchase program of $18 billion over three years. The new program commenced on August 1, 2012 after the completion of the three-year $12 billion program in July 2012. These share repurchases have been made pursuant to the $18 billion program.
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(2)
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Aggregate number of shares repurchased under the above-mentioned share repurchase program as of the end of the period presented.
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(3)
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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.
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Item 6.
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Selected Financial Data.
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Item 7.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations.
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Item 7A.
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Quantitative and Qualitative Disclosures About Market Risk.
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Item 8.
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Financial Statements and Supplementary Data.
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Item 9.
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
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Item 9A.
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Controls and Procedures.
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Item 9B.
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Other Information.
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Item 10.
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Directors, Executive Officers and Corporate Governance
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Name
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Office
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Age
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André Calantzopoulos
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Chief Executive Officer
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56
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Louis C. Camilleri
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Chairman of the Board
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59
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Drago Azinovic
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President, European Union Region
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51
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Bertrand Bonvin
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Senior Vice President, Research & Development
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45
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Patrick Brunel
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Senior Vice President and Chief Information Officer
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48
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Kevin Click
(1)
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Senior Vice President, Human Resources
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52
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Frederic de Wilde
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Senior Vice President, Marketing & Sales
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46
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Marc S. Firestone
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Senior Vice President and General Counsel
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54
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Jeanne Pollès
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Senior Vice President, Corporate Affairs
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49
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Martin King
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President, Latin America & Canada Region
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49
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Peter J. Luongo
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Vice President, Treasury and Planning
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35
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Antonio Marques
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Senior Vice President, Operations
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58
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James R. Mortensen
(1)
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President, Latin America & Canada Region
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56
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Jacek Olczak
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Chief Financial Officer
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49
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Matteo Pellegrini
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President, Asia Region
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51
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Joachim Psotta
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Vice President and Controller
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56
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Jerry E. Whitson
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Deputy General Counsel and Corporate Secretary
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58
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Miroslaw Zielinski
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President, Eastern Europe, Middle East & Africa Region & PMI Duty Free
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52
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Item 11.
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Executive Compensation.
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Item 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
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Number of Shares
to be Issued upon
Exercise of Outstanding
Options and Vesting of
Deferred Stock
(a)
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Weighted Average
Exercise Price of
Outstanding Options
(b)
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Number of Shares
Remaining Available for
Future Issuance Under
Equity Compensation Plans
(excluding Securities
reflected in column (a))
(c)
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||||
Equity compensation plans
approved by stockholders
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8,596,054
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$
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28.38
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27,995,515
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Item 13.
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Certain Relationships and Related Transactions, and Director Independence.
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Item 14.
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Principal Accounting Fees and Services
.
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Item 15.
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Exhibits and Financial Statement Schedules
.
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2013
Annual
Report
Page
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Data incorporated by reference to Philip Morris International Inc.’s 2013 Annual Report:
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Consolidated Balance Sheets at December 31, 2013 and 2012
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40 - 41
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Consolidated Statements of Earnings for the years ended December 31, 2013, 2012 and
2011
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42
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Consolidated Statements of Comprehensive Earnings for the years ended December 31,
2013, 2012 and 2011
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42
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Consolidated Statements of Stockholders’ (Deficit) Equity for the years ended
December 31, 2013, 2012 and 2011
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43
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Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012
and 2011
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44 - 45
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Notes to Consolidated Financial Statements
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46 - 75
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Report of Independent Registered Public Accounting Firm
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76
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Report of Management on Internal Control Over Financial Reporting
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77
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2.1
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—
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Distribution Agreement between Altria Group, Inc. and Philip Morris International Inc. dated January 30, 2008 (incorporated by reference to Exhibit 2.1 to the Registration Statement on Form 10 filed February 7, 2008).
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3.1
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—
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Amended and Restated Articles of Incorporation of Philip Morris International Inc. (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form 10 filed February 7, 2008).
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3.2
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—
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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 March 3, 2013).
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4.1
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—
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Specimen Stock Certificate of Philip Morris International Inc. (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form 10 filed February 7, 2008).
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4.2
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—
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Indenture dated as of April 25, 2008, between Philip Morris International Inc. and HSBC Bank USA, National Association, as Trustee (incorporated by reference to Exhibit 4.3 to the Registration Statement on Form S-3, dated April 25, 2008).
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4.3
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|
—
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Issue and Paying Agency Agreement, dated March 13, 2009, by and among Philip Morris International Inc., HSBC Private Bank (C.I.) Limited, Jersey Branch, as registrar, HSBC Bank PLC, as principal paying agent and HSBC Corporate Trustee Company (UK) Limited, as trustee (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed March 19, 2009).
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4.4
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—
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Trust Deed relating to Euro Medium Term Note Program, dated March 13, 2009, between Philip Morris International Inc., as issuer, and HSBC Corporate Trustee Company (UK) Limited, as trustee (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed March 19, 2009).
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4.5
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—
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The Registrant agrees to furnish copies of any instruments defining the rights of holders of long-term debt of the Registrant and its consolidated subsidiaries that does not exceed 10 percent of the total assets of the Registrant and its consolidated subsidiaries to the Commission upon request.
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10.1
|
|
—
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Tax Sharing Agreement between Altria Group, Inc. and Philip Morris International Inc., dated as of March 28, 2008 (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed March 31, 2008).
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10.2
|
|
—
|
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Employee Matters Agreement between Altria Group, Inc. and Philip Morris International Inc., dated as of March 28, 2008 (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed March 31, 2008).
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|
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10.3
|
|
—
|
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Intellectual Property Agreement between Philip Morris International Inc. and Philip Morris USA Inc., dated as of January 1, 2008 (incorporated by reference to Exhibit 10.4 to the Registration Statement on Form 10 filed March 5, 2008).
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10.4
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|
—
|
|
Credit Agreement relating to a US$3,500,000,000 Revolving Credit Facility (including a US$800,000,000 swingline option) dated as of October 25, 2011, among Philip Morris International Inc. and the Initial Lenders named therein and Citibank International plc as Facility Agent and Citibank, N.A. as Swingline Agent and Citigroup Global Markets Limited, Barclays Capital, BNP Paribas, Credit Suisse, Cayman Islands Branch, Deutsche Bank Securities Inc., Goldman Sachs International, HSBC Bank PLC, J.P. Morgan Limited, RBS Securities Inc. and Société Générale as Mandated Lead Arrangers and Bookrunners (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed October 26, 2011).
|
|
|
|
|
|
10.5
|
|
__
|
|
Amended and Restated Credit Agreement relating to a US$2,500,000,000 Revolving Credit Facility (including a US$700,000,000 swingline option), dated as of May 11, 2011, among Philip Morris International Inc. and the Initial Lenders named therein and J.P. Morgan Europe Limited as Facility Agent, JPMorgan Chase Bank, N.A. as Swingline Agent and J.P. Morgan Limited, Deutsche Bank Securities Inc., Citigroup Global Markets Limited, Credit Suisse AG, Cayman Islands Branch, Goldman Sachs Credit Partners L.P. and RBS Securities Inc. as Mandated Lead Arrangers and Bookrunners (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed May 17, 2011).
|
|
|
|
|
|
10.6
|
|
__
|
|
Credit Agreement, dated as of February 12, 2013, among Philip Morris International Inc., the lenders named therein and The Royal Bank of Scottland plc, as administrative agent (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed February 15, 2013).
|
|
|
|
|
|
10.7
|
|
__
|
|
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 (incorporated by reference to Exhibit 10.5 to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2012).
|
|
|
|
|
|
10.8
|
|
__
|
|
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 (incorporated by reference to Exhibit 10.6 to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2012).
|
|
|
|
|
|
10.9
|
|
—
|
|
Anti-Contraband and Anti-Counterfeit Agreement and General Release dated July 9, 2004 and Appendices (Portions of this exhibit have been omitted pursuant to a request for confidential treatment filed with the Securities and Exchange Commission) (incorporated by reference to Exhibit 10.7 to the Registration Statement on Form 10 filed February 7, 2008).
|
|
|
|
|
|
10.10
|
|
—
|
|
Philip Morris International Inc. Automobile Policy (incorporated by reference to Exhibit 10.8 to the Registration Statement on Form 10 filed February 7, 2008).*
|
|
|
|
|
|
10.11
|
|
—
|
|
Philip Morris International Benefit Equalization Plan, as amended and in effect on August 6, 2012 (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2012).*
|
|
|
|
|
|
10.12
|
|
—
|
|
Philip Morris International Inc. 2008 Performance Incentive Plan (incorporated by reference to Exhibit 10.10 to the Registration Statement on Form 10 filed February 7, 2008).*
|
|
|
|
|
|
10.13
|
|
—
|
|
Form of Philip Morris International Inc. 2008 Performance Incentive Plan Deferred Stock Agreement (2008 Grants) (incorporated by reference to Exhibit 10.12 to the Registration Statement on Form 10 filed February 7, 2008).*
|
10.14
|
|
—
|
|
Form of Philip Morris International Inc. 2008 Performance Incentive Plan Restricted Stock Agreement (2009 Grants) (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed February 10, 2009).*
|
|
|
|
|
|
10.15
|
|
—
|
|
Form of Philip Morris International Inc. 2008 Performance Incentive Plan Deferred Stock Agreement (2009 Grants) (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed February 10, 2009).*
|
|
|
|
|
|
10.16
|
|
—
|
|
Philip Morris International Inc. 2012 Performance Incentive Plan, effective May 7, 2012 (incorporated by reference to Exhibit A to the Definitive Proxy Statement filed on March 30, 2012).*
|
|
|
|
|
|
10.17
|
|
—
|
|
Pension Fund of Philip Morris in Switzerland (IC) (incorporated by reference to Exhibit 10.17 to the Annual Report on Form 10-K for the year ended December 31, 2010).*
|
|
|
|
|
|
10.18
|
|
—
|
|
Summary of Supplemental Pension Plan of Philip Morris in Switzerland (incorporated by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2013).*
|
|
|
|
|
|
10.19
|
|
—
|
|
Form of Restated Employee Grantor Trust Enrollment Agreement (Executive Trust Arrangement) (incorporated by reference to Exhibit 10.18 to the Registration Statement on Form 10 filed February 7, 2008).*
|
|
|
|
|
|
10.20
|
|
—
|
|
Form of Restated Employee Grantor Trust Enrollment Agreement (Secular Trust Arrangement) (incorporated by reference to Exhibit 10.19 to the Registration Statement on Form 10 filed February 7, 2008).*
|
|
|
|
|
|
10.21
|
|
—
|
|
Philip Morris International Inc. 2008 Stock Compensation Plan for Non-Employee Directors (amended and restated as of May 8, 2013) (incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2013).*
|
|
|
|
|
|
10.22
|
|
—
|
|
Philip Morris International Inc. 2008 Deferred Fee Plan for Non-Employee Directors (incorporated by reference to Exhibit 10.21 to the Registration Statement on Form 10 filed February 7, 2008).*
|
|
|
|
|
|
10.23
|
|
—
|
|
Amendment to Employment Agreement with André Calantzopoulos (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K/A filed June 13, 2013). The
employment agreement was previously filed as Exhibit 10.22 to the Registration Statement on Form 10 filed February 7, 2008 and is incorporated by reference to this Exhibit 10.23.*
|
|
|
|
|
|
10.24
|
|
—
|
|
Amendment to Employment Agreement with Hermann Waldemer (incorporated by reference to Exhibit 10.22 to the Annual Report on Form 10-K for the year ended December 31, 2012).
The employment agreement was previously filed as Exhibit 10.24 to the Registration Statement on Form 10 filed February 7, 2008 and is incorporated by reference to this Exhibit 10.24.*
|
|
|
|
|
|
10.25
|
|
—
|
|
Amendment to Employment Agreement with Marc S. Firestone. The employment agreement was previously filed as Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 and is incorporated by reference to this Exhibit 10.25.*
|
|
|
|
|
|
10.26
|
|
—
|
|
Amendment to Employment Agreement with Matteo Pellegrini.
The employment agreement was previously filed as Exhibit 10.4 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 and is incorporated by reference to this Exhibit 10.26.*
|
|
|
|
|
|
10.27
|
|
—
|
|
Agreement with Louis C. Camilleri (incorporated by reference to Exhibit 10.25 to the Registration Statement on Form 10 filed February 7, 2008).*
|
|
|
|
|
|
10.28
|
|
—
|
|
Amendment to Employment Agreement with Miroslaw Zielinski.
The employment agreement was previously filed as Exhibit 10.2 to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 and is incorporated by reference to this Exhibit 10.28.*
|
|
|
|
|
|
10.29
|
|
—
|
|
Time Sharing Agreement between PMI Global Services Inc. and Louis C. Camilleri dated August 18, 2010 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed August 19, 2010).*
|
|
|
|
|
|
10.30
|
|
—
|
|
Amendment No. 1 to the Time Sharing Agreement between PM Global Services Inc. and Louis C. Camilleri, dated August 22, 2012 (incorporated by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2012).*
|
|
|
|
|
|
10.31
|
|
—
|
|
Amendment No. 2 to the Time Sharing Agreement between PM Global Services Inc.
and Louis C. Camilleri, dated October 23, 2012 (incorporated by reference to Exhibit 10.27 to the Annual Report on Form 10-K for the year ended December 31, 2012).*
|
|
|
|
|
|
10.32
|
|
—
|
|
Time Sharing Agreement between PM Global Services Inc. and André Calantzopoulos, dated May 8, 2013 (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2013).*
|
|
|
|
|
|
10.33
|
|
—
|
|
Amendment to Employment Agreement with Jacek Olczak. The employment agreement was previously filed as Exhibit 10.4 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 and is incorporated by reference to this Exhibit 10.33.*
|
|
|
|
|
|
10.34
|
|
—
|
|
Amended and Restated Supplemental Management Employees’ Retirement Plan (incorporated by reference to Exhibit 10.27 to the Annual Report on Form 10-K for the year ended December 31, 2008).*
|
|
|
|
|
|
10.35
|
|
—
|
|
Supplemental Equalization Plan, amended and restated as of August 6, 2012 (incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q to the quarter ended September 30, 2012).*
|
|
|
|
|
|
10.36
|
|
—
|
|
Form of Supplemental Equalization Plan Employee Grantor Trust Enrollment Agreement (Secular Trust) (incorporated by reference to Exhibit 10.31 to the Annual Report on Form 10-K for the year ended December 31, 2008).*
|
|
|
|
|
|
10.37
|
|
—
|
|
Form of Supplemental Equalization Plan Employee Grantor Trust Enrollment Agreement (Executive Trust) (incorporated by reference to Exhibit 10.32 to the Annual Report on Form 10-K for the year ended December 31, 2008).*
|
|
|
|
|
|
10.38
|
|
—
|
|
Philip Morris International Inc. Form of Indemnification Agreement with Directors and Executive Officers (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed September 18, 2009).*
|
|
|
|
|
|
10.39
|
|
—
|
|
Form of Restricted Stock Agreement (2010 Grants) (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed February 17, 2010).*
|
|
|
|
|
|
10.40
|
|
—
|
|
Form of Deferred Stock Agreement (2010 Grants) (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed February 17, 2010).*
|
|
|
|
|
|
10.41
|
|
—
|
|
Form of Deferred Stock Agreement (April 16, 2012) (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2012).*
|
|
|
|
|
|
10.42
|
|
—
|
|
Philip Morris International Performance Incentive Plan, as amended and restated effective February 11, 2010 (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed February 17, 2010).*
|
|
|
|
|
|
10.43
|
|
—
|
|
Form of Restricted Stock Agreement (2011 Grants) (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed February 11, 2011).*
|
|
|
|
|
|
10.44
|
|
—
|
|
Form of Deferred Stock Agreement (2011 Grants) (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed February 11, 2011).*
|
|
|
|
|
|
10.45
|
|
—
|
|
Form of Deferred Stock Agreement (2012 Grants) (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed February 13, 2012).*
|
|
|
|
|
|
10.46
|
|
—
|
|
Form of Deferred Stock Agreement (2013 Grants) (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed February 12, 2013).*
|
|
|
|
|
|
10.47
|
|
—
|
|
Form of Deferred Stock Agreement (2014 Grants) (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed February 7, 2014).*
|
|
|
|
|
|
10.48
|
|
—
|
|
Separation Agreement and Release between Philip Morris International Management SA and Hermann Waldemer dated May 7, 2012 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on May 10, 2012).*
|
|
|
|
|
|
|
|
|
|
|
12
|
|
—
|
|
Statement regarding computation of ratios of earnings to fixed charges
.
|
|
|
|
|
|
13
|
|
—
|
|
Pages 9 to 77 of the 2013 Annual Report, but only to the extent set forth in Items 1, 5-8, 9A, and 15 hereof. With the exception of the aforementioned information incorporated by reference in this Annual Report on Form 10-K, the 2013 Annual Report is not to be deemed “filed” as part of this Report.
|
|
|
|
|
|
21
|
|
—
|
|
Subsidiaries of Philip Morris International Inc.
|
|
|
|
|
|
23
|
|
—
|
|
Consent of independent registered public accounting firm.
|
|
|
|
|
|
24
|
|
—
|
|
Powers of attorney.
|
|
|
|
|
|
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.
|
*
|
Denotes management contract or compensatory plan or arrangement in which directors or executive officers are eligible to participate.
|
PHILIP MORRIS INTERNATIONAL INC.
|
|
|
|
By:
|
/s/ A
NDRÉ
C
ALANTZOPOULOS
|
|
(André Calantzopoulos
Chief Executive Officer)
|
Signature
|
Title
|
Date
|
|
|
|
/s/ ANDRÉ CALANTZOPOULOS
|
Chief Executive Officer
|
February 21, 2014
|
(André Calantzopoulos)
|
||
/s/ JACEK OLCZAK
|
Chief Financial Officer
|
February 21, 2014
|
(Jacek Olczak)
|
||
/s/ JOACHIM PSOTTA
|
Vice President and Controller
|
February 21, 2014
|
(Joachim Psotta)
|
||
*HAROLD BROWN,
MATHIS CABIALLAVETTA,
LOUIS C. CAMILLERI,
J. DUDLEY FISHBURN,
JENNIFER LI,
SERGIO MARCHIONNE,
KALPANA MORPARIA,
LUCIO A. NOTO,
ROBERT B. POLET,
CARLOS SLIM HELÚ,
STEPHEN M. WOLF
|
Directors
|
|
*By:
|
/s/ ANDRÉ CALANTZOPOULOS
|
|
February 21, 2014
|
|
(André Calantzopoulos
Attorney-in-fact)
|
|
•
|
Incentive Compensation award target based on an IC business rating of 100% and an “Optimal” individual performance rating is 125 %.
|
•
|
Equity award target based on a stock business rating of 100% and an “Optimal” individual performance rating is 275%.
|
•
|
Incentive Compensation award target based on an IC business rating of 100% and an “Optimal” individual performance rating is 100%.
|
•
|
Equity award target based on a stock business rating of 100% and an “Optimal” individual performance rating is 175%.
|
•
|
Incentive Compensation award target based on an IC business rating of 100% and an “Optimal” individual performance rating is 100%.
|
•
|
Equity award target based on a stock business rating of 100% and an “Optimal” individual performance rating is 175%.
|
•
|
Incentive Compensation award target based on an IC business rating of 100% and an “Optimal” individual performance rating is 125 %.
|
•
|
Equity award target based on a stock business rating of 100% and an “Optimal” individual performance rating is 275%.
|
|
|
For the Years Ended December 31,
|
||||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
||||||||||
Earnings before income taxes
|
$
|
12,542
|
|
|
$
|
13,004
|
|
|
$
|
12,542
|
|
|
$
|
10,332
|
|
|
$
|
9,249
|
|
Add (deduct):
|
|
|
|
|
|
|
|
|
|
||||||||||
Dividends from less than 50%
owned affiliates |
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Fixed charges
|
1,216
|
|
|
1,115
|
|
|
1,042
|
|
|
1,069
|
|
|
1,006
|
|
|||||
Interest capitalized, net of
amortization |
4
|
|
|
2
|
|
|
(2
|
)
|
|
1
|
|
|
2
|
|
|||||
Earnings available for fixed charges
|
$
|
13,763
|
|
|
$
|
14,121
|
|
|
$
|
13,582
|
|
|
$
|
11,402
|
|
|
$
|
10,257
|
|
Fixed charges:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest incurred
|
$
|
1,105
|
|
|
$
|
1,009
|
|
|
$
|
940
|
|
|
$
|
976
|
|
|
$
|
920
|
|
Portion of rent expense deemed to
represent interest factor |
111
|
|
|
106
|
|
|
102
|
|
|
93
|
|
|
86
|
|
|||||
Fixed charges
|
$
|
1,216
|
|
|
$
|
1,115
|
|
|
$
|
1,042
|
|
|
$
|
1,069
|
|
|
$
|
1,006
|
|
Ratio of earnings to fixed charges
|
11.3
|
|
|
12.7
|
|
|
13.0
|
|
|
10.7
|
|
|
10.2
|
|
|
|
|
|
|
|
|
•
|
European Union;
|
•
|
Eastern Europe, Middle East & Africa (“EEMA”);
|
•
|
Asia; and
|
•
|
Latin America & Canada.
|
•
|
Consolidated Operating Results
–
The changes in our reported diluted earnings per share (“diluted EPS”) for the year ended
December 31, 2013
, from the comparable
2012
amounts, were as follows:
|
|
Diluted EPS
|
% Growth
|
|||
For the year ended December 31, 2012
|
$
|
5.17
|
|
|
|
|
|
|
|||
2012 Asset impairment and exit costs
|
0.03
|
|
|
||
2012 Tax items
|
0.02
|
|
|
||
Subtotal of 2012 items
|
0.05
|
|
|
||
|
|
|
|||
2013 Asset impairment and exit costs
|
(0.12
|
)
|
|
||
2013 Tax items
|
(0.02
|
)
|
|
||
Subtotal of 2013 items
|
(0.14
|
)
|
|
||
|
|
|
|||
Currency
|
(0.34
|
)
|
|
||
Interest
|
(0.05
|
)
|
|
||
Change in tax rate
|
(0.01
|
)
|
|
||
Impact of lower shares outstanding and share-based payments
|
0.23
|
|
|
||
Operations
|
0.35
|
|
|
||
For the year ended December 31, 2013
|
$
|
5.26
|
|
1.7
|
%
|
•
|
Asset Impairment and Exit Costs –
During
2013
, we recorded pre-tax asset impairment and exit costs of
$309 million
(
$202 million
after tax and noncontrolling interests, or
$0.12
per share) related to the termination of distribution agreements in the Eastern Europe, Middle East & Africa and Asia segments, as well as the restructuring of our global and regional functions based in Switzerland and Australia. During
2012
, we recorded pre-tax asset impairment and exit costs of
$83 million
(
$52 million
after tax and noncontrolling interests or
$0.03
per share) primarily related to factory restructurings and the consolidation of R&D activities, as well as contract termination charges in Asia. For further details, see
Note 5.
Asset Impairment and Exit Costs
to our consolidated financial statements.
|
•
|
Income Taxes -
The
2013
effective tax rate was unfavorably impacted by the additional expense associated with the enactment of the American Taxpayer Relief Act of 2012 (the "Act") ($17 million) and the enactment of tax law changes in Mexico ($14 million). The
2012
effective tax rate was unfavorably impacted by an additional income tax provision of
$79 million
following the conclusion of the IRS examination of Altria Group, Inc.'s ("Altria") consolidated tax returns for the years 2004-2006, partially offset by a
$40 million
benefit from a tax accounting method change in Germany. Prior to March 28, 2008, we were a wholly owned subsidiary of Altria. The special tax items discussed in this paragraph decreased our diluted EPS by
$0.02
per share in
2013
, and
$0.02
per share in
2012
. Excluding the impact of these special tax items, the change in tax rate that decreased our diluted EPS by
$0.01
per share in 2013 was primarily due to earnings mix and repatriation cost differences.
|
•
|
Currency –
The unfavorable currency impact during
2013
was due primarily to the Argentine peso, Australian dollar, Indonesian rupiah, Japanese yen, Russian ruble, Swiss franc and Turkish lira, partially offset by the Euro.
|
•
|
Interest –
The unfavorable impact of interest was due primarily to higher average debt levels, partially offset by lower average interest rates on debt.
|
•
|
Lower Shares Outstanding and Share-Based Payments –
The favorable diluted EPS impact was due to the repurchase of our common stock pursuant to our share repurchase programs.
|
•
|
Operations –
The increase in diluted EPS of
$0.35
from our operations was due to the following segments:
|
•
|
EEMA: Higher pricing, partially offset by unfavorable volume/mix, higher marketing, administration and research costs and higher manufacturing costs; and
|
•
|
Latin America & Canada: Higher pricing and lower marketing, administration and research costs, partially offset by unfavorable volume/mix and higher manufacturing costs; partially offset by
|
•
|
Asia: Unfavorable volume/mix and higher manufacturing costs, partially offset by higher pricing and lower marketing, administration and research costs; and
|
•
|
European Union: Unfavorable volume/mix and higher manufacturing costs, partially offset by higher pricing and lower marketing, administration and research costs.
|
(in millions)
|
2013
|
|
2012
|
|
2011
|
||||||
Cigarette Volume
|
|
|
|
|
|
||||||
European Union
|
185,096
|
|
|
197,966
|
|
|
211,493
|
|
|||
Eastern Europe, Middle East & Africa
|
296,462
|
|
|
303,828
|
|
|
290,250
|
|
|||
Asia
|
301,324
|
|
|
326,582
|
|
|
313,282
|
|
|||
Latin America & Canada
|
97,287
|
|
|
98,660
|
|
|
100,241
|
|
|||
Total cigarette volume
|
880,169
|
|
|
927,036
|
|
|
915,266
|
|
|||
|
|
||||||||||
(in millions)
|
2013
|
|
2012
|
|
2011
|
||||||
Net Revenues
|
|
|
|
|
|
||||||
European Union
|
$
|
28,303
|
|
|
$
|
27,338
|
|
|
$
|
29,768
|
|
Eastern Europe, Middle East & Africa
|
20,695
|
|
|
19,272
|
|
|
17,452
|
|
|||
Asia
|
20,987
|
|
|
21,071
|
|
|
19,590
|
|
|||
Latin America & Canada
|
10,044
|
|
|
9,712
|
|
|
9,536
|
|
|||
Net revenues
|
$
|
80,029
|
|
|
$
|
77,393
|
|
|
$
|
76,346
|
|
|
|
||||||||||
(in millions)
|
2013
|
|
2012
|
|
2011
|
||||||
Excise Taxes on Products
|
|
|
|
|
|
||||||
European Union
|
$
|
19,707
|
|
|
$
|
18,812
|
|
|
$
|
20,556
|
|
Eastern Europe, Middle East & Africa
|
11,929
|
|
|
10,940
|
|
|
9,571
|
|
|||
Asia
|
10,486
|
|
|
9,873
|
|
|
8,885
|
|
|||
Latin America & Canada
|
6,690
|
|
|
6,391
|
|
|
6,237
|
|
|||
Excise taxes on products
|
$
|
48,812
|
|
|
$
|
46,016
|
|
|
$
|
45,249
|
|
(in millions)
|
2013
|
|
2012
|
|
2011
|
||||||
Operating Income
|
|
|
|
|
|
||||||
Operating companies income:
|
|
|
|
|
|
||||||
European Union
|
$
|
4,238
|
|
|
$
|
4,187
|
|
|
$
|
4,560
|
|
Eastern Europe, Middle East & Africa
|
3,779
|
|
|
3,726
|
|
|
3,229
|
|
|||
Asia
|
4,622
|
|
|
5,197
|
|
|
4,836
|
|
|||
Latin America & Canada
|
1,134
|
|
|
1,043
|
|
|
988
|
|
|||
Amortization of intangibles
|
(93
|
)
|
|
(97
|
)
|
|
(98
|
)
|
|||
General corporate expenses
|
(187
|
)
|
|
(210
|
)
|
|
(183
|
)
|
|||
Less:
|
|
|
|
|
|
||||||
Equity (income)/loss in unconsolidated subsidiaries, net
|
22
|
|
|
17
|
|
|
10
|
|
|||
Operating income
|
$
|
13,515
|
|
|
$
|
13,863
|
|
|
$
|
13,342
|
|
(in millions)
|
2013
|
|
|
2012
|
|
|
2011
|
|
|||
Separation programs:
|
|
|
|
|
|
||||||
European Union
|
$
|
13
|
|
|
$
|
—
|
|
|
$
|
35
|
|
Eastern Europe, Middle East & Africa
|
14
|
|
|
—
|
|
|
6
|
|
|||
Asia
|
19
|
|
|
13
|
|
|
7
|
|
|||
Latin America & Canada
|
5
|
|
|
29
|
|
|
15
|
|
|||
Total separation programs
|
51
|
|
|
42
|
|
|
63
|
|
|||
Contract termination charges:
|
|
|
|
|
|
||||||
Eastern Europe, Middle East & Africa
|
250
|
|
|
—
|
|
|
12
|
|
|||
Asia
|
8
|
|
|
13
|
|
|
—
|
|
|||
Total contract termination charges
|
258
|
|
|
13
|
|
|
12
|
|
|||
Asset impairment charges:
|
|
|
|
|
|
||||||
European Union
|
—
|
|
|
5
|
|
|
10
|
|
|||
Eastern Europe, Middle East & Africa
|
—
|
|
|
5
|
|
|
7
|
|
|||
Asia
|
—
|
|
|
13
|
|
|
8
|
|
|||
Latin America & Canada
|
—
|
|
|
5
|
|
|
9
|
|
|||
Total asset impairment charges
|
—
|
|
|
28
|
|
|
34
|
|
|||
Asset impairment and exit costs
|
$
|
309
|
|
|
$
|
83
|
|
|
$
|
109
|
|
•
|
in the European Union, the unfavorable impact of excise tax-driven price increases, the weak economic and employment
|
•
|
in EEMA, the impact of price increases in Russia and Ukraine, an increase in illicit trade in Russia, Turkey and Ukraine, and a weaker economy in Russia;
|
•
|
in Asia, the unfavorable impact of the disruptive January 2013 excise tax increase and a surge in the prevalence of domestic non-duty paid products in the Philippines, and lower share in Japan and Pakistan, partly offset by Indonesia; and
|
•
|
in Latin America & Canada, primarily due to a lower total cigarette market, primarily in Brazil.
|
•
|
unfavorable volume/mix ($1.5 billion) and
|
•
|
unfavorable currency ($765 million), partly offset by
|
•
|
price increases ($2.1 billion, including gains related to inventory movements, notably in the Philippines).
|
•
|
higher excise taxes resulting from changes in retail prices and tax rates ($5.1 billion), partly offset by
|
•
|
volume/mix ($1.6 billion) and
|
•
|
favorable currency ($637 million).
|
(in millions)
|
2013
|
2012
|
Variance
|
%
|
|||||||
Cost of sales
|
$
|
10,410
|
|
$
|
10,373
|
|
$
|
37
|
|
0.4
|
%
|
Marketing, administration and research costs
|
6,890
|
|
6,961
|
(71
|
)
|
(1.0
|
)%
|
||||
Operating income
|
13,515
|
|
13,863
|
|
(348
|
)
|
(2.5
|
)%
|
•
|
higher manufacturing costs ($398 million, principally in Indonesia), partly offset by
|
•
|
volume/mix ($266 million) and
|
•
|
favorable currency ($95 million).
|
•
|
lower expenses ($42 million, primarily lower marketing expenses) and
|
•
|
favorable currency ($29 million).
|
•
|
unfavorable volume/mix ($1.2 billion),
|
•
|
unfavorable currency ($640 million),
|
•
|
higher manufacturing costs ($398 million) and
|
•
|
higher pre-tax charges for asset impairment and exit costs ($226 million), partly offset by
|
•
|
price increases ($2.1 billion) and
|
•
|
lower marketing, administration and research costs ($42 million).
|
•
|
EEMA, driven mainly by Egypt, Russia and Turkey; and
|
•
|
Asia, driven mainly by Indonesia, the Philippines, Thailand and Vietnam, partially offset by Japan and Korea.
|
•
|
the European Union, predominantly due to France and southern Europe; and
|
•
|
Latin America & Canada, mainly due to Argentina, Canada, Colombia and Mexico.
|
(in millions)
|
2012
|
2011
|
Variance
|
%
|
|||||||
|
|
|
|
|
|||||||
Net revenues
|
$
|
77,393
|
|
$
|
76,346
|
|
$
|
1,047
|
|
1.4
|
%
|
Excise taxes on products
|
46,016
|
|
45,249
|
|
767
|
|
1.7
|
%
|
|||
Net revenues, excluding excise taxes on products
|
$
|
31,377
|
|
$
|
31,097
|
|
$
|
280
|
|
0.9
|
%
|
•
|
price increases ($1.8 billion) and
|
•
|
the impact of acquisitions ($28 million), partly offset by
|
•
|
unfavorable currency ($1.5 billion) and
|
•
|
unfavorable volume/mix ($12 million).
|
•
|
higher excise taxes resulting from changes in retail prices and tax rates ($3.9 billion) and
|
•
|
volume/mix ($415 million), partly offset by
|
•
|
favorable currency ($3.5 billion).
|
(in millions)
|
2012
|
2011
|
Variance
|
%
|
|||||||
Cost of sales
|
$
|
10,373
|
|
$
|
10,678
|
|
$
|
(305
|
)
|
(2.9
|
)%
|
Marketing, administration and research costs
|
6,961
|
|
6,870
|
|
91
|
|
1.3
|
%
|
|||
Operating income
|
13,863
|
|
13,342
|
|
521
|
|
3.9
|
%
|
•
|
favorable currency ($557 million), partly offset by
|
•
|
volume/mix ($221 million),
|
•
|
higher manufacturing costs ($16 million) and
|
•
|
the impact of acquisitions ($15 million).
|
•
|
higher expenses ($417 million, principally related to increased marketing expenditures, notably in 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 ($335 million).
|
•
|
price increases ($1.8 billion), partly offset by
|
•
|
unfavorable currency ($600 million),
|
•
|
higher marketing, administration and research costs ($417 million) and
|
•
|
unfavorable volume/mix ($233 million).
|
•
|
fiscal challenges, such as excise tax increases and discriminatory tax structures;
|
•
|
actual and proposed extreme regulatory requirements, including regulation of the packaging, marketing and sale of tobacco products, as well as the products themselves, that may reduce our competitiveness, eliminate our ability to communicate with adult smokers, ban certain of our products, limit our ability to differentiate our products from those of our competitors, and interfere with our intellectual property rights;
|
•
|
illicit trade in cigarettes and other tobacco products, including counterfeit, contraband and so-called "illicit whites";
|
•
|
intense competition, including from non-tax paid volume by local manufacturers;
|
•
|
pending and threatened litigation as discussed in Note 21.
Contingencies
; and
|
•
|
governmental investigations.
|
•
|
health warnings covering 65% of the front and back panels of packs with specific health warning dimensions that will in effect prohibit certain pack formats, such as smaller packs for slim cigarettes, even though the agreed text does not ban slim cigarettes. Member States would also have the option to further standardize tobacco packaging, including, under certain conditions, by introducing plain packaging;
|
•
|
a ban on packs of fewer than 20 cigarettes;
|
•
|
a ban on characterizing flavors, including menthol, in tobacco products with a four-year transition period from the date the revised directive is transposed into national law by each Member State;
|
•
|
tracking and tracing measures requiring tracking at pack level down to retail, which we believe is not feasible and will provide no incremental benefit in the fight against illicit trade; and
|
•
|
a framework for the regulation of e-cigarettes and novel tobacco products allowing some categories of e-cigarettes to be regulated under the Medicinal Products Directive or the Medical Device Directive. Other e-cigarettes and novel tobacco products would be subject to regulation requiring health warnings and information leaflets, prohibiting product packaging text related to reduced risk, and introducing notification requirements in advance of commercialization.
|
•
|
to develop RRPs that provide adult smokers the taste, sensory experience, nicotine delivery profile and ritual characteristics that are similar to those currently provided by cigarettes;
|
•
|
to substantiate the reduction of risk for the individual adult smoker and the reduction of harm to the population as a whole, based on robust scientific evidence derived from well-established assessment processes; and
|
•
|
to advocate for the development of science-based regulatory frameworks for the approval and commercialization of RRPs, including the communication of substantiated health benefits to adult smokers.
|
•
|
Platform 1
uses a precisely controlled heating device into which a specially designed tobacco product is inserted to generate an aerosol. Eight clinical trials for Platform 1 were initiated in 2013, and the results will be available in 2014.
|
•
|
Platform 2
also uses a controlled heating mechanism to generate an aerosol via the heating of tobacco and has the format and ritual of a cigarette. This platform is in the pre-clinical testing phase and early stages of industrial scale-up. We estimate that the launch of Platform 2 will start approximately one year after that of Platform 1.
|
•
|
Platform 3
is based on technology we acquired from Professor Jed Rose of Duke University and other co-inventors in May 2011. It uses a chemical reaction to generate a nicotine-containing aerosol. This platform is currently in the product development phase and early stages of pre-clinical assessment.
|
•
|
price increases ($348 million) and
|
•
|
favorable currency ($205 million), partly offset by
|
•
|
unfavorable volume/mix ($483 million).
|
•
|
price increases ($348 million),
|
•
|
favorable currency ($92 million) and
|
•
|
lower marketing, administration and research costs ($44 million), partly offset by
|
•
|
unfavorable volume/mix ($403 million),
|
•
|
higher manufacturing costs ($21 million) and
|
•
|
higher pre-tax charges for asset impairment and exit costs ($8 million).
|
•
|
price increases ($767 million), partly offset by
|
•
|
unfavorable volume/mix ($235 million) and
|
•
|
unfavorable currency ($98 million).
|
•
|
price increases ($767 million), partly offset by
|
•
|
higher pre-tax charges for asset impairment and exit costs ($259 million, including charges associated with the termination of distribution agreements resulting from a new business model in Egypt),
|
•
|
unfavorable volume/mix ($168 million),
|
•
|
unfavorable currency ($122 million),
|
•
|
higher marketing, administration and research costs ($86 million, notably related to the annualization of expenditures to expand our business infrastructure in Russia) and
|
•
|
higher manufacturing costs ($76 million).
|
•
|
unfavorable currency ($726 million) and
|
•
|
unfavorable volume/mix ($670 million, primarily due to the Philippines and Japan), partly offset by
|
•
|
price increases ($699 million).
|
•
|
unfavorable currency ($548 million),
|
•
|
unfavorable volume/mix ($536 million) and
|
•
|
higher manufacturing costs ($240 million, principally in Indonesia driven mainly by higher clove prices), partly offset by
|
•
|
price increases ($699 million),
|
•
|
lower marketing, administration and research costs ($39 million) and
|
•
|
lower pre-tax charges for asset impairment and exit costs ($12 million).
|
•
|
price increases ($252 million), partly offset by
|
•
|
unfavorable currency ($146 million) and
|
•
|
unfavorable volume/mix ($73 million).
|
•
|
price increases ($252 million),
|
•
|
lower pre-tax charges for asset impairment and exit costs ($29 million) and
|
•
|
lower marketing, administration and research costs ($23 million), partly offset by
|
•
|
unfavorable volume/mix ($88 million),
|
•
|
unfavorable currency ($64 million) and
|
•
|
higher manufacturing costs ($61 million, including higher leaf costs).
|
•
|
unfavorable currency ($716 million) and
|
•
|
unfavorable volume/mix ($445 million), partly offset by
|
•
|
price increases ($475 million).
|
•
|
unfavorable currency ($384 million),
|
•
|
unfavorable volume/mix ($380 million),
|
•
|
higher manufacturing costs ($62 million, mainly related to the mandated conversion to reduced cigarette ignition propensity paper that began in the fourth quarter of 2011) and
|
•
|
higher marketing, administration and research costs ($61 million, principally reflecting increased marketing investment behind new brand launches and roll-out of the "Be Marlboro" marketing campaign), partly offset by
|
•
|
price increases ($475 million) and
|
•
|
lower pre-tax charges for asset impairment and exit costs ($40 million).
|
•
|
price increases ($466 million),
|
•
|
favorable volume/mix ($425 million) and
|
•
|
the impact of acquisitions ($27 million), partially offset by
|
•
|
unfavorable currency ($467 million).
|
•
|
price increases ($466 million),
|
•
|
favorable volume/mix ($317 million),
|
•
|
lower manufacturing costs ($31 million) and
|
•
|
lower pre-tax charges for asset impairment and exit costs ($20 million), partially offset by
|
•
|
unfavorable currency ($199 million) and
|
•
|
higher marketing, administration and research costs ($141 million, principally related to expenditures in marketing and business infrastructure, mainly in Russia).
|
•
|
price increases ($551 million) and
|
•
|
favorable volume/mix ($57 million), partially offset by
|
•
|
unfavorable currency ($116 million).
|
•
|
price increases ($551 million),
|
•
|
lower manufacturing costs ($70 million, reflecting favorable shipping costs related to the Japan hurdle) and
|
•
|
favorable currency ($39 million), partly offset by
|
•
|
higher marketing, administration and research costs ($172 million, including higher marketing and sales investments in Indonesia),
|
•
|
unfavorable volume/mix ($99 million, due primarily to the aforementioned Japan hurdle) and
|
•
|
higher pre-tax charges for asset impairment and exit costs ($24 million).
|
•
|
price increases ($267 million), partly offset by
|
•
|
unfavorable currency ($196 million) and
|
•
|
unfavorable volume/mix ($49 million).
|
•
|
price increases ($267 million), partly offset by
|
•
|
unfavorable volume/mix ($71 million),
|
•
|
unfavorable currency ($63 million),
|
•
|
higher manufacturing costs ($55 million, primarily related to distribution infrastructure),
|
•
|
higher marketing, administration and research costs ($12 million) and
|
•
|
higher pre-tax charges for asset impairment and exit costs ($10 million, mainly related to the restructuring of manufacturing facilities).
|
•
|
more cash provided by accrued liabilities and other current assets (
$2.1 billion
), largely due to the timing of payments for excise taxes; partly offset by
|
•
|
more cash used for income taxes (
$969 million
), primarily related to the timing of payments, and
|
•
|
more cash used for inventories (
$685 million
), primarily related to the timing of inventory purchases.
|
•
|
less cash provided by accrued liabilities and other current assets ($874 million), largely due to the timing of payments for excise taxes (primarily related to forestalling);
|
•
|
more cash used for inventories ($692 million), primarily clove and the planned replenishment of tobacco leaf inventories, partly offset by lower finished goods inventories;
|
•
|
less cash provided by accounts payable ($189 million), primarily due to the timing of payables for leaf and direct materials, and
|
•
|
more cash used for accounts receivable ($147 million), primarily due to price increases for our products, the timing of cash collections and higher trade purchases in anticipation of excise-tax driven price changes; partly offset by
|
•
|
more cash provided by income taxes ($407 million), primarily due to higher income tax provisions and the timing of payments.
|
Type
|
|
Committed
Credit
Facilities
|
||
364-day revolving credit, expiring February 10, 2015
|
|
$
|
2.0
|
|
Multi-year revolving credit, expiring March 31, 2015
|
|
2.5
|
|
|
Multi-year revolving credit, expiring October 25, 2016
|
|
3.5
|
|
|
Total facilities
|
|
$
|
8.0
|
|
|
|
Payments Due
|
|||||||||||||
|
Total
|
2014
|
2015-2016
|
2017-2018
|
2019 and
Thereafter |
||||||||||
(in millions)
|
|
||||||||||||||
Long-term debt
(1)
|
|
$25,539
|
|
|
$1,255
|
|
|
$4,093
|
|
|
$3,804
|
|
|
$16,387
|
|
RBH Legal Settlement
(2)
|
175
|
|
36
|
|
77
|
|
62
|
|
—
|
|
|||||
Colombian Investment and Cooperation Agreement
(3)
|
117
|
|
8
|
|
16
|
|
13
|
|
80
|
|
|||||
Interest on borrowings
(4)
|
10,690
|
|
890
|
|
1,591
|
|
1,311
|
|
6,898
|
|
|||||
Operating leases
(5)
|
846
|
|
218
|
|
284
|
|
133
|
|
211
|
|
|||||
Purchase obligations
(6)
:
|
|
|
|
|
|
||||||||||
Inventory and production costs
|
4,153
|
|
1,677
|
|
1,118
|
|
583
|
|
775
|
|
|||||
Other
|
2,010
|
|
1,100
|
|
579
|
|
328
|
|
3
|
|
|||||
|
6,163
|
|
2,777
|
|
1,697
|
|
911
|
|
778
|
|
|||||
Other long-term liabilities
(7)
|
434
|
|
67
|
|
118
|
|
39
|
|
210
|
|
|||||
|
|
$43,964
|
|
|
$5,251
|
|
|
$7,876
|
|
|
$6,273
|
|
|
$24,564
|
|
|
Pre-Tax Earnings Impact
|
||||||
(in millions)
|
At
12/31/13
|
|
Average
|
|
High
|
|
Low
|
Instruments sensitive to:
|
|
|
|
|
|
|
|
Foreign currency rates
|
$16
|
|
$27
|
|
$43
|
|
$16
|
|
|
||||||
|
Fair Value Impact
|
||||||
(in millions)
|
At
12/31/13
|
|
Average
|
|
High
|
|
Low
|
Instruments sensitive to:
|
|
|
|
|
|
|
|
Interest rates
|
$60
|
|
$75
|
|
$111
|
|
$56
|
|
|
|
|
|
|
|
|
|
Pre-Tax Earnings Impact
|
||||||
(in millions)
|
At
12/31/12 |
|
Average
|
|
High
|
|
Low
|
Instruments sensitive to:
|
|
|
|
|
|
|
|
Foreign currency rates
|
$20
|
|
$32
|
|
$50
|
|
$20
|
|
|
|
|
|
|
|
|
|
Fair Value Impact
|
||||||
(in millions)
|
At
12/31/12
|
|
Average
|
|
High
|
|
Low
|
Instruments sensitive to:
|
|
|
|
|
|
|
|
Interest rates
|
$70
|
|
$71
|
|
$76
|
|
$66
|
•
|
restrictions on or licensing of outlets permitted to sell cigarettes;
|
•
|
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 on packaging and cigarette formats and dimensions;
|
•
|
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.
|
|
2013
|
|
2012
(1)
|
|
2011
(1)
|
|
2010
(1)
|
|
2009
(1)
|
||||||||||
Summary of Operations:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net revenues
|
$
|
80,029
|
|
|
$
|
77,393
|
|
|
$
|
76,346
|
|
|
$
|
67,713
|
|
|
$
|
62,080
|
|
Cost of sales
|
10,410
|
|
|
10,373
|
|
|
10,678
|
|
|
9,713
|
|
|
9,022
|
|
|||||
Excise taxes on products
|
48,812
|
|
|
46,016
|
|
|
45,249
|
|
|
40,505
|
|
|
37,045
|
|
|||||
Gross profit
|
20,807
|
|
|
21,004
|
|
|
20,419
|
|
|
17,495
|
|
|
16,013
|
|
|||||
Operating income
|
13,515
|
|
|
13,863
|
|
|
13,342
|
|
|
11,208
|
|
|
10,046
|
|
|||||
Interest expense, net
|
973
|
|
|
859
|
|
|
800
|
|
|
876
|
|
|
797
|
|
|||||
Earnings before income taxes
|
12,542
|
|
|
13,004
|
|
|
12,542
|
|
|
10,332
|
|
|
9,249
|
|
|||||
Pre-tax profit margin
|
15.7
|
%
|
|
16.8
|
%
|
|
16.4
|
%
|
|
15.3
|
%
|
|
14.9
|
%
|
|||||
Provision for income taxes
|
3,670
|
|
|
3,833
|
|
|
3,653
|
|
|
2,826
|
|
|
2,691
|
|
|||||
Net earnings
|
8,850
|
|
|
9,154
|
|
|
8,879
|
|
|
7,498
|
|
|
6,552
|
|
|||||
Net earnings attributable to noncontrolling interests
|
274
|
|
|
354
|
|
|
288
|
|
|
239
|
|
|
210
|
|
|||||
Net earnings attributable to PMI
|
8,576
|
|
|
8,800
|
|
|
8,591
|
|
|
7,259
|
|
|
6,342
|
|
|||||
Basic earnings per share
|
5.26
|
|
|
5.17
|
|
|
4.85
|
|
|
3.93
|
|
|
3.25
|
|
|||||
Diluted earnings per share
|
5.26
|
|
|
5.17
|
|
|
4.85
|
|
|
3.92
|
|
|
3.24
|
|
|||||
Dividends declared per share
|
3.58
|
|
|
3.24
|
|
|
2.82
|
|
|
2.44
|
|
|
2.24
|
|
|||||
Capital expenditures
|
1,200
|
|
|
1,056
|
|
|
897
|
|
|
713
|
|
|
715
|
|
|||||
Depreciation and amortization
|
882
|
|
|
898
|
|
|
993
|
|
|
932
|
|
|
853
|
|
|||||
Property, plant and equipment, net
|
6,755
|
|
|
6,645
|
|
|
6,250
|
|
|
6,499
|
|
|
6,390
|
|
|||||
Inventories
|
9,846
|
|
|
8,949
|
|
|
8,120
|
|
|
8,317
|
|
|
9,207
|
|
|||||
Total assets
|
38,168
|
|
|
37,670
|
|
|
35,488
|
|
|
35,050
|
|
|
34,552
|
|
|||||
Long-term debt
|
24,023
|
|
|
17,639
|
|
|
14,828
|
|
|
13,370
|
|
|
13,672
|
|
|||||
Total debt
|
27,678
|
|
|
22,839
|
|
|
18,545
|
|
|
16,502
|
|
|
15,416
|
|
|||||
Stockholders' (deficit) equity
|
(6,274
|
)
|
|
(3,154
|
)
|
|
551
|
|
|
3,933
|
|
|
6,145
|
|
|||||
Common dividends declared as a % of Diluted EPS
|
68.1
|
%
|
|
62.7
|
%
|
|
58.1
|
%
|
|
62.2
|
%
|
|
69.1
|
%
|
|||||
Market price per common share — high/low
|
96.73-82.86
|
|
|
94.13-72.85
|
|
|
79.42-55.85
|
|
|
60.87-42.94
|
|
|
52.35-32.04
|
|
|||||
Closing price of common share at year end
|
87.13
|
|
|
83.64
|
|
|
78.48
|
|
|
58.53
|
|
|
48.19
|
|
|||||
Price/earnings ratio at year end — Diluted
|
17
|
|
|
16
|
|
|
16
|
|
|
15
|
|
|
15
|
|
|||||
Number of common shares outstanding at year end (millions)
|
1,589
|
|
|
1,654
|
|
|
1,726
|
|
|
1,802
|
|
|
1,887
|
|
|||||
Number of employees
|
91,100
|
|
|
87,100
|
|
|
78,100
|
|
|
78,300
|
|
|
77,300
|
|
at December 31,
|
2013
|
|
2012
|
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
2,154
|
|
|
$
|
2,983
|
|
Receivables (less allowances of $53 in 2013 and $56 in 2012)
|
3,853
|
|
|
3,589
|
|
||
Inventories:
|
|
|
|
||||
Leaf tobacco
|
3,709
|
|
|
3,548
|
|
||
Other raw materials
|
1,596
|
|
|
1,610
|
|
||
Finished product
|
4,541
|
|
|
3,791
|
|
||
|
9,846
|
|
|
8,949
|
|
||
Deferred income taxes
|
502
|
|
|
450
|
|
||
Other current assets
|
497
|
|
|
619
|
|
||
Total current assets
|
16,852
|
|
|
16,590
|
|
||
Property, plant and equipment, at cost:
|
|
|
|
||||
Land and land improvements
|
671
|
|
|
708
|
|
||
Buildings and building equipment
|
4,013
|
|
|
3,948
|
|
||
Machinery and equipment
|
8,409
|
|
|
8,380
|
|
||
Construction in progress
|
864
|
|
|
843
|
|
||
|
13,957
|
|
|
13,879
|
|
||
Less: accumulated depreciation
|
7,202
|
|
|
7,234
|
|
||
|
6,755
|
|
|
6,645
|
|
||
Goodwill (Note 3)
|
8,893
|
|
|
9,900
|
|
||
Other intangible assets, net (Note 3)
|
3,193
|
|
|
3,619
|
|
||
Investments in unconsolidated subsidiaries (Note 4)
|
1,536
|
|
|
24
|
|
||
Other assets
|
939
|
|
|
892
|
|
||
Total Assets
|
$
|
38,168
|
|
|
$
|
37,670
|
|
at December 31,
|
2013
|
|
2012
|
||||
Liabilities
|
|
|
|
||||
Short-term borrowings (Note 7)
|
$
|
2,400
|
|
|
$
|
2,419
|
|
Current portion of long-term debt (Note 7)
|
1,255
|
|
|
2,781
|
|
||
Accounts payable
|
1,274
|
|
|
1,103
|
|
||
Accrued liabilities:
|
|
|
|
||||
Marketing and selling
|
503
|
|
|
527
|
|
||
Taxes, except income taxes
|
6,492
|
|
|
5,350
|
|
||
Employment costs
|
949
|
|
|
896
|
|
||
Dividends payable
|
1,507
|
|
|
1,418
|
|
||
Other
|
1,382
|
|
|
952
|
|
||
Income taxes
|
1,192
|
|
|
1,456
|
|
||
Deferred income taxes
|
112
|
|
|
114
|
|
||
Total current liabilities
|
17,066
|
|
|
17,016
|
|
||
Long-term debt (Note 7)
|
24,023
|
|
|
17,639
|
|
||
Deferred income taxes
|
1,477
|
|
|
1,875
|
|
||
Employment costs
|
1,313
|
|
|
2,574
|
|
||
Other liabilities
|
563
|
|
|
419
|
|
||
Total liabilities
|
44,442
|
|
|
39,523
|
|
||
Contingencies (Note 21)
|
|
|
|
||||
Redeemable noncontrolling interest (Note 23)
|
—
|
|
|
1,301
|
|
||
Stockholders’ (Deficit) Equity
|
|
|
|
||||
Common stock, no par value (2,109,316,331 shares issued in 2013 and 2012)
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
723
|
|
|
1,334
|
|
||
Earnings reinvested in the business
|
27,843
|
|
|
25,076
|
|
||
Accumulated other comprehensive losses
|
(4,190
|
)
|
|
(3,604
|
)
|
||
|
24,376
|
|
|
22,806
|
|
||
Less: cost of repurchased stock (520,313,919 and 455,703,347 shares in 2013 and 2012, respectively)
|
32,142
|
|
|
26,282
|
|
||
Total PMI stockholders’ deficit
|
(7,766
|
)
|
|
(3,476
|
)
|
||
Noncontrolling interests
|
1,492
|
|
|
322
|
|
||
Total stockholders’ deficit
|
(6,274
|
)
|
|
(3,154
|
)
|
||
Total Liabilities and Stockholders’ (Deficit) Equity
|
$
|
38,168
|
|
|
$
|
37,670
|
|
for the years ended December 31,
|
2013
|
|
2012
|
|
2011
|
||||||
Net revenues
|
$
|
80,029
|
|
|
$
|
77,393
|
|
|
$
|
76,346
|
|
Cost of sales
|
10,410
|
|
|
10,373
|
|
|
10,678
|
|
|||
Excise taxes on products
|
48,812
|
|
|
46,016
|
|
|
45,249
|
|
|||
Gross profit
|
20,807
|
|
|
21,004
|
|
|
20,419
|
|
|||
Marketing, administration and research costs
|
6,890
|
|
|
6,961
|
|
|
6,870
|
|
|||
Asset impairment and exit costs (Note 5)
|
309
|
|
|
83
|
|
|
109
|
|
|||
Amortization of intangibles
|
93
|
|
|
97
|
|
|
98
|
|
|||
Operating income
|
13,515
|
|
|
13,863
|
|
|
13,342
|
|
|||
Interest expense, net (Note 14)
|
973
|
|
|
859
|
|
|
800
|
|
|||
Earnings before income taxes
|
12,542
|
|
|
13,004
|
|
|
12,542
|
|
|||
Provision for income taxes
|
3,670
|
|
|
3,833
|
|
|
3,653
|
|
|||
Equity (income)/loss in unconsolidated subsidiaries, net
|
22
|
|
|
17
|
|
|
10
|
|
|||
Net earnings
|
8,850
|
|
|
9,154
|
|
|
8,879
|
|
|||
Net earnings attributable to noncontrolling interests
|
274
|
|
|
354
|
|
|
288
|
|
|||
Net earnings attributable to PMI
|
$
|
8,576
|
|
|
$
|
8,800
|
|
|
$
|
8,591
|
|
Per share data (Note 10):
|
|
|
|
|
|
||||||
Basic earnings per share
|
$
|
5.26
|
|
|
$
|
5.17
|
|
|
$
|
4.85
|
|
Diluted earnings per share
|
$
|
5.26
|
|
|
$
|
5.17
|
|
|
$
|
4.85
|
|
for the years ended December 31,
|
2013
|
|
2012
|
|
2011
|
||||||
Net earnings
|
$
|
8,850
|
|
|
$
|
9,154
|
|
|
$
|
8,879
|
|
Other comprehensive earnings (losses), net of income taxes:
|
|
|
|
|
|
||||||
Change in currency translation adjustments:
|
|
|
|
|
|
||||||
Unrealized gains (losses), net of income taxes of $227 in 2013, $6 in 2012 and $10 in 2011
|
(1,876
|
)
|
|
15
|
|
|
(852
|
)
|
|||
(Gains)/ losses transferred to earnings, net of income taxes of $- in 2013
|
(12
|
)
|
|
—
|
|
|
—
|
|
|||
Change in net loss and prior service cost:
|
|
|
|
|
|
||||||
Net gains (losses) and prior service costs, net of income taxes of ($81) in 2013, $144 in 2012 and $148 in 2011
|
1,079
|
|
|
(943
|
)
|
|
(1,031
|
)
|
|||
Amortization of net losses, prior service costs and net transition costs, net of income taxes of ($49) in 2013, ($37) in 2012 and ($23) in 2011
|
243
|
|
|
160
|
|
|
94
|
|
|||
Change in fair value of derivatives accounted for as hedges:
|
|
|
|
|
|
||||||
(Gains)/losses transferred to earnings, net of income taxes of $34 in 2013, $3 in 2012 and ($2) in 2011
|
(235
|
)
|
|
(22
|
)
|
|
18
|
|
|||
Gains/(losses) recognized, net of income taxes of ($30) in 2013, ($14) in 2012 and ($1) in 2011
|
206
|
|
|
99
|
|
|
(5
|
)
|
|||
Change in fair value of equity securities
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||
Total other comprehensive losses
|
(595
|
)
|
|
(691
|
)
|
|
(1,777
|
)
|
|||
|
|
|
|
|
|
||||||
Total comprehensive earnings
|
8,255
|
|
|
8,463
|
|
|
7,102
|
|
|||
Less comprehensive earnings attributable to:
|
|
|
|
|
|
||||||
Noncontrolling interests
|
197
|
|
|
210
|
|
|
137
|
|
|||
Redeemable noncontrolling interest
|
68
|
|
|
194
|
|
|
97
|
|
|||
Comprehensive earnings attributable to PMI
|
$
|
7,990
|
|
|
$
|
8,059
|
|
|
$
|
6,868
|
|
|
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
|
|
|
|
|
8,591
|
|
|
|
|
|
|
191
|
|
(1)
|
|
8,782
|
|
(1)
|
|||||||||||
Other comprehensive losses, net of income taxes
|
|
|
|
|
|
|
(1,723
|
)
|
|
|
|
(54
|
)
|
(1)
|
|
(1,777
|
)
|
(1)
|
|||||||||||
Exercise of stock options and issuance of other stock awards
|
|
|
12
|
|
|
|
|
|
|
212
|
|
|
|
|
|
224
|
|
|
|||||||||||
Dividends declared ($2.82 per share)
|
|
|
|
|
(4,967
|
)
|
|
|
|
|
|
|
|
|
(4,967
|
)
|
|
||||||||||||
Payments to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
(241
|
)
|
|
|
(241
|
)
|
|
||||||||||||
Purchase of subsidiary shares from noncontrolling interests
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
(3
|
)
|
|
|||||||||||
Common stock repurchased
|
|
|
|
|
|
|
|
|
(5,400
|
)
|
|
|
|
|
(5,400
|
)
|
|
||||||||||||
Balances, December 31, 2011
|
—
|
|
|
1,235
|
|
|
21,757
|
|
|
(2,863
|
)
|
|
(19,900
|
)
|
|
322
|
|
|
|
551
|
|
|
|||||||
Net earnings
|
|
|
|
|
8,800
|
|
|
|
|
|
|
183
|
|
(1)
|
|
8,983
|
|
(1)
|
|||||||||||
Other comprehensive earnings (losses), net of income taxes
|
|
|
|
|
|
|
(741
|
)
|
|
|
|
27
|
|
(1)
|
|
(714
|
)
|
(1)
|
|||||||||||
Issuance of stock awards and exercise of stock options
|
|
|
100
|
|
|
|
|
|
|
118
|
|
|
|
|
|
218
|
|
|
|||||||||||
Dividends declared ($3.24 per share)
|
|
|
|
|
(5,481
|
)
|
|
|
|
|
|
|
|
|
(5,481
|
)
|
|
||||||||||||
Payments to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
(209
|
)
|
|
|
(209
|
)
|
|
||||||||||||
Purchase of subsidiary shares from noncontrolling interests
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
(2
|
)
|
|
|||||||||||
Common stock repurchased
|
|
|
|
|
|
|
|
|
(6,500
|
)
|
|
|
|
|
(6,500
|
)
|
|
||||||||||||
Balances, December 31, 2012
|
—
|
|
|
1,334
|
|
|
25,076
|
|
|
(3,604
|
)
|
|
(26,282
|
)
|
|
322
|
|
|
|
(3,154
|
)
|
|
|||||||
Net earnings
|
|
|
|
|
8,576
|
|
|
|
|
|
|
175
|
|
(1)
|
|
8,751
|
|
(1)
|
|||||||||||
Other comprehensive losses, net of income taxes
|
|
|
|
|
|
|
(535
|
)
|
|
|
|
(29
|
)
|
(1)
|
|
(564
|
)
|
(1)
|
|||||||||||
Issuance of stock awards and exercise of stock options
|
|
|
61
|
|
|
|
|
|
|
140
|
|
|
|
|
|
201
|
|
|
|||||||||||
Dividends declared ($3.58 per share)
|
|
|
|
|
(5,809
|
)
|
|
|
|
|
|
|
|
|
(5,809
|
)
|
|
||||||||||||
Payments to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
(210
|
)
|
|
|
(210
|
)
|
|
||||||||||||
Purchase of subsidiary shares from noncontrolling interests
|
|
|
(672
|
)
|
|
|
|
(51
|
)
|
|
|
|
(41
|
)
|
|
|
(764
|
)
|
|
||||||||||
Transfer of redeemable noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
1,275
|
|
|
|
1,275
|
|
|
||||||||||||
Common stock repurchased
|
|
|
|
|
|
|
|
|
(6,000
|
)
|
|
|
|
|
(6,000
|
)
|
|
||||||||||||
Balances, December 31, 2013
|
$
|
—
|
|
|
$
|
723
|
|
|
$
|
27,843
|
|
|
$
|
(4,190
|
)
|
|
$
|
(32,142
|
)
|
|
$
|
1,492
|
|
|
|
$
|
(6,274
|
)
|
|
for the years ended December 31,
|
2013
|
|
2012
|
|
2011
|
||||||
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
|
|
|
|
|
||||||
Net earnings
|
$
|
8,850
|
|
|
$
|
9,154
|
|
|
$
|
8,879
|
|
Adjustments to reconcile net earnings to operating cash flows:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
882
|
|
|
898
|
|
|
993
|
|
|||
Deferred income tax (benefit) provision
|
(28
|
)
|
|
(248
|
)
|
|
15
|
|
|||
Asset impairment and exit costs, net of cash paid
|
288
|
|
|
26
|
|
|
11
|
|
|||
Cash effects of changes, net of the effects from acquired companies:
|
|
|
|
|
|
||||||
Receivables, net
|
(449
|
)
|
|
(398
|
)
|
|
(251
|
)
|
|||
Inventories
|
(1,413
|
)
|
|
(728
|
)
|
|
(36
|
)
|
|||
Accounts payable
|
103
|
|
|
10
|
|
|
199
|
|
|||
Income taxes
|
(331
|
)
|
|
638
|
|
|
231
|
|
|||
Accrued liabilities and other current assets
|
1,880
|
|
|
(183
|
)
|
|
691
|
|
|||
Pension plan contributions
|
(150
|
)
|
|
(207
|
)
|
|
(535
|
)
|
|||
Other
|
503
|
|
|
459
|
|
|
332
|
|
|||
Net cash provided by operating activities
|
10,135
|
|
|
9,421
|
|
|
10,529
|
|
|||
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
|
|
|
|
|
|
||||||
Capital expenditures
|
(1,200
|
)
|
|
(1,056
|
)
|
|
(897
|
)
|
|||
Investments in unconsolidated subsidiaries
|
(1,418
|
)
|
|
(6
|
)
|
|
(36
|
)
|
|||
Purchase of businesses, net of acquired cash
|
—
|
|
|
—
|
|
|
(80
|
)
|
|||
Other
|
(62
|
)
|
|
70
|
|
|
(19
|
)
|
|||
Net cash used in investing activities
|
(2,680
|
)
|
|
(992
|
)
|
|
(1,032
|
)
|
for the years ended December 31,
|
2013
|
|
2012
|
|
2011
|
||||||
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
|
|
|
|
|
||||||
Short-term borrowing activity by original maturity:
|
|
|
|
|
|
||||||
Net issuances (repayments) - maturities of 90 days or less
|
$
|
(1,099
|
)
|
|
$
|
1,515
|
|
|
$
|
(968
|
)
|
Issuances - maturities longer than 90 days
|
2,000
|
|
|
603
|
|
|
921
|
|
|||
Repayments - maturities longer than 90 days
|
(849
|
)
|
|
(1,220
|
)
|
|
(179
|
)
|
|||
Long-term debt proceeds
|
7,181
|
|
|
5,516
|
|
|
3,767
|
|
|||
Long-term debt repaid
|
(2,738
|
)
|
|
(2,237
|
)
|
|
(1,483
|
)
|
|||
Repurchases of common stock
|
(5,963
|
)
|
|
(6,525
|
)
|
|
(5,372
|
)
|
|||
Issuances of common stock
|
—
|
|
|
1
|
|
|
75
|
|
|||
Dividends paid
|
(5,720
|
)
|
|
(5,404
|
)
|
|
(4,788
|
)
|
|||
Purchase of subsidiary shares from noncontrolling interests
|
(703
|
)
|
|
(2
|
)
|
|
(3
|
)
|
|||
Other
|
(324
|
)
|
|
(347
|
)
|
|
(308
|
)
|
|||
Net cash used in financing activities
|
(8,215
|
)
|
|
(8,100
|
)
|
|
(8,338
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(69
|
)
|
|
104
|
|
|
(312
|
)
|
|||
Cash and cash equivalents:
|
|
|
|
|
|
||||||
(Decrease) Increase
|
(829
|
)
|
|
433
|
|
|
847
|
|
|||
Balance at beginning of year
|
2,983
|
|
|
2,550
|
|
|
1,703
|
|
|||
Balance at end of year
|
$
|
2,154
|
|
|
$
|
2,983
|
|
|
$
|
2,550
|
|
|
|
|
|
|
|
||||||
Cash Paid:
|
|
|
|
|
|
||||||
Interest
|
$
|
978
|
|
|
$
|
986
|
|
|
$
|
963
|
|
Income taxes
|
$
|
3,999
|
|
|
$
|
3,420
|
|
|
$
|
3,366
|
|
Note 1.
|
Note 2.
|
Note 3.
|
|
|
Goodwill
|
|
Other Intangible
Assets, net
|
||||||||||||
(in millions)
|
December 31, 2013
|
|
December 31, 2012
|
|
December 31, 2013
|
|
December 31, 2012
|
||||||||
European Union
|
$
|
1,472
|
|
|
$
|
1,448
|
|
|
$
|
604
|
|
|
$
|
647
|
|
Eastern Europe, Middle East & Africa
|
617
|
|
|
637
|
|
|
228
|
|
|
242
|
|
||||
Asia
|
3,960
|
|
|
4,791
|
|
|
1,251
|
|
|
1,542
|
|
||||
Latin America & Canada
|
2,844
|
|
|
3,024
|
|
|
1,110
|
|
|
1,188
|
|
||||
Total
|
$
|
8,893
|
|
|
$
|
9,900
|
|
|
$
|
3,193
|
|
|
$
|
3,619
|
|
(in millions)
|
|
European
Union |
|
Eastern Europe,
Middle East
&
Africa |
|
Asia
|
|
Latin
America & Canada |
|
Total
|
||||||||||
Balance at January 1, 2012
|
|
$
|
1,392
|
|
|
$
|
666
|
|
|
$
|
4,966
|
|
|
$
|
2,904
|
|
|
$
|
9,928
|
|
Changes due to:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Currency
|
|
56
|
|
|
(29
|
)
|
|
(175
|
)
|
|
120
|
|
|
(28
|
)
|
|||||
Balances, December 31, 2012
|
|
1,448
|
|
|
637
|
|
|
4,791
|
|
|
3,024
|
|
|
9,900
|
|
|||||
Changes due to:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Currency
|
|
24
|
|
|
(20
|
)
|
|
(831
|
)
|
|
(180
|
)
|
|
(1,007
|
)
|
|||||
Balance at December 31, 2013
|
|
$
|
1,472
|
|
|
$
|
617
|
|
|
$
|
3,960
|
|
|
$
|
2,844
|
|
|
$
|
8,893
|
|
|
December 31, 2013
|
|
December 31, 2012
|
||||||||||||
(in millions)
|
Gross
Carrying Amount |
|
|
Accumulated
Amortization |
|
|
Gross
Carrying Amount |
|
|
Accumulated
Amortization |
|
||||
Non-amortizable intangible assets
|
$
|
1,798
|
|
|
|
|
$
|
2,046
|
|
|
|
||||
Amortizable intangible assets
|
1,940
|
|
|
$
|
545
|
|
|
2,046
|
|
|
$
|
473
|
|
||
Total other intangible assets
|
$
|
3,738
|
|
|
$
|
545
|
|
|
$
|
4,092
|
|
|
$
|
473
|
|
Description (in millions)
|
Gross
Carrying Amount |
Initial Estimated
Useful Lives |
|
Weighted-Average
Remaining Useful Life |
||
Trademarks
|
$
|
1,586
|
|
2 - 40 years
|
|
24 years
|
Distribution networks
|
160
|
|
20 - 30 years
|
|
14 years
|
|
Non-compete agreements
|
135
|
|
3 - 10 years
|
|
1 year
|
|
Other (including farmer contracts and intellectual property rights)
|
59
|
|
12.5 - 17 years
|
|
12 years
|
|
|
$
|
1,940
|
|
|
|
|
Note 4.
|
Note 5.
|
(in millions)
|
2013
|
|
2012
|
|
2011
|
||||||
Separation programs:
|
|
|
|
|
|
||||||
European Union
|
$
|
13
|
|
|
$
|
—
|
|
|
$
|
35
|
|
Eastern Europe, Middle East & Africa
|
14
|
|
|
—
|
|
|
6
|
|
|||
Asia
|
19
|
|
|
13
|
|
|
7
|
|
|||
Latin America & Canada
|
5
|
|
|
29
|
|
|
15
|
|
|||
Total separation programs
|
51
|
|
|
42
|
|
|
63
|
|
|||
Contract termination charges:
|
|
|
|
|
|
||||||
Eastern Europe, Middle East & Africa
|
250
|
|
|
—
|
|
|
12
|
|
|||
Asia
|
8
|
|
|
13
|
|
|
—
|
|
|||
Total contract termination charges
|
258
|
|
|
13
|
|
|
12
|
|
|||
Asset impairment charges:
|
|
|
|
|
|
||||||
European Union
|
—
|
|
|
5
|
|
|
10
|
|
|||
Eastern Europe, Middle East & Africa
|
—
|
|
|
5
|
|
|
7
|
|
|||
Asia
|
—
|
|
|
13
|
|
|
8
|
|
|||
Latin America & Canada
|
—
|
|
|
5
|
|
|
9
|
|
|||
Total asset impairment charges
|
—
|
|
|
28
|
|
|
34
|
|
|||
Asset impairment and exit costs
|
$
|
309
|
|
|
$
|
83
|
|
|
$
|
109
|
|
Note 6.
|
Note 7.
|
|
December 31, 2013
|
|
December 31, 2012
|
||||||||||
(in millions)
|
Amount Outstanding
|
|
|
Average Year-End Rate
|
|
|
Amount Outstanding
|
|
|
Average Year-End Rate
|
|
||
Commercial paper
|
$
|
1,387
|
|
|
0.1
|
%
|
|
$
|
1,972
|
|
|
0.2
|
%
|
Bank loans
|
1,013
|
|
|
5.7
|
|
|
447
|
|
|
6.6
|
|
||
|
$
|
2,400
|
|
|
|
|
$
|
2,419
|
|
|
|
(in millions)
|
2013
|
|
2012
|
||||
U.S. dollar notes, 0.287% to 6.875% (average interest rate 4.105%), due through 2043
|
$
|
16,500
|
|
|
$
|
14,702
|
|
Foreign currency obligations:
|
|
|
|
||||
Euro notes, 1.750% to 5.875% (average interest rate 3.340%), due through 2033
|
7,303
|
|
|
3,724
|
|
||
Swiss franc notes, 0.875% to 2.000% (average interest rate 1.240%), due through 2021
|
1,289
|
|
|
1,579
|
|
||
Other (average interest rate 3.621%), due through 2024
|
186
|
|
|
415
|
|
||
|
25,278
|
|
|
20,420
|
|
||
Less current portion of long-term debt
|
1,255
|
|
|
2,781
|
|
||
|
$
|
24,023
|
|
|
$
|
17,639
|
|
(in millions)
|
|
|
|
|
|
|
|
|
Type
|
|
Face Value
|
|
Interest
Rate |
|
Issuance
|
|
Maturity
|
U.S. dollar notes
|
|
$1,250
|
|
6.875%
|
|
November 2008
|
|
March 2014
|
U.S. dollar notes
|
|
$400
|
|
Floating
|
|
March 2013
|
|
February 2015
|
U.S. dollar notes
|
|
$650
|
|
2.500%
|
|
May 2011
|
|
May 2016
|
U.S. dollar notes
|
|
$600
|
|
2.500%
|
|
August 2011
(a)
|
|
May 2016
|
U.S. dollar notes
|
|
$550
|
|
1.625%
|
|
March 2012
|
|
March 2017
|
U.S. dollar notes
|
|
$750
|
|
1.125%
|
|
August 2012
|
|
August 2017
|
U.S. dollar notes
|
|
$2,500
|
|
5.650%
|
|
May 2008
|
|
May 2018
|
U.S. dollar notes
|
|
$750
|
|
1.875%
|
|
November 2013
|
|
January 2019
|
U.S. dollar notes
|
|
$1,000
|
|
4.500%
|
|
March 2010
|
|
March 2020
|
U.S. dollar notes
|
|
$350
|
|
4.125%
|
|
May 2011
|
|
May 2021
|
U.S. dollar notes
|
|
$750
|
|
2.900%
|
|
November 2011
|
|
November 2021
|
U.S. dollar notes
|
|
$750
|
|
2.500%
|
|
August 2012
|
|
August 2022
|
U.S. dollar notes
|
|
$600
|
|
2.625%
|
|
March 2013
|
|
March 2023
|
U.S. dollar notes
|
|
$500
|
|
3.600%
|
|
November 2013
|
|
November 2023
|
U.S. dollar notes
|
|
$1,500
|
|
6.375%
|
|
May 2008
|
|
May 2038
|
U.S. dollar notes
|
|
$750
|
|
4.375%
|
|
November 2011
|
|
November 2041
|
U.S. dollar notes
|
|
$700
|
|
4.500%
|
|
March 2012
|
|
March 2042
|
U.S. dollar notes
|
|
$750
|
|
3.875%
|
|
August 2012
|
|
August 2042
|
U.S. dollar notes
|
|
$850
|
|
4.125%
|
|
March 2013
|
|
March 2043
|
U.S. dollar notes
|
|
$750
|
|
4.875%
|
|
November 2013
|
|
November 2043
|
EURO notes
|
(b)
|
€750 (approximately $1,105)
|
|
5.875%
|
|
September 2008
|
|
September 2015
|
EURO notes
|
(b)
|
€750 (approximately $976)
|
|
5.750%
|
|
March 2009
|
|
March 2016
|
EURO notes
|
(b)
|
€750 (approximately $951)
|
|
2.125%
|
|
May 2012
|
|
May 2019
|
EURO notes
|
(b)
|
€1,250 (approximately $1,621)
|
|
1.750%
|
|
March 2013
|
|
March 2020
|
EURO notes
|
(b)
|
€600 (approximately $761)
|
|
2.875%
|
|
May 2012
|
|
May 2024
|
EURO notes
|
(b)
|
€750 (approximately $972)
|
|
2.750%
|
|
March 2013
|
|
March 2025
|
EURO notes
|
(b)
|
€500 (approximately $648)
|
|
3.125%
|
|
June 2013
|
|
June 2033
|
Swiss franc notes
|
(b)
|
CHF325 (approximately $362)
|
|
1.000%
|
|
December 2011
|
|
December 2016
|
Swiss franc notes
|
(b)
|
CHF200 (approximately $217)
|
|
0.875%
|
|
March 2013
|
|
March 2019
|
Swiss franc notes
|
(b)
|
CHF325 (approximately $334)
|
|
1.000%
|
|
September 2012
|
|
September 2020
|
Swiss franc notes
|
(b)
|
CHF300 (approximately $335)
|
|
2.000%
|
|
December 2011
|
|
December 2021
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
||
2014
|
$
|
1,255
|
|
2015
|
1,439
|
|
|
2016
|
2,654
|
|
|
2017
|
1,302
|
|
|
2018
|
2,502
|
|
|
2019-2023
|
8,389
|
|
|
2024-2028
|
2,010
|
|
|
Thereafter
|
5,988
|
|
|
|
25,539
|
|
|
Debt discounts
|
(261
|
)
|
|
Total long-term debt
|
$
|
25,278
|
|
Type
(in billions of dollars)
|
Committed
Credit Facilities |
|
Commercial
Paper |
||||
364-day revolving credit, expiring February 11, 2014
|
$
|
2.0
|
|
|
|
||
Multi-year revolving credit, expiring March 31, 2015
|
2.5
|
|
|
|
|||
Multi-year revolving credit, expiring October 25, 2016
|
3.5
|
|
|
|
|||
Total facilities
|
$
|
8.0
|
|
|
|
||
Commercial paper outstanding
|
|
|
$
|
1.4
|
|
Note 8.
|
|
Shares Issued
|
|
Shares
Repurchased |
|
Shares
Outstanding |
|||
Balances, January 1, 2011
|
2,109,316,331
|
|
|
(307,532,841
|
)
|
|
1,801,783,490
|
|
Repurchase of shares
|
|
|
(80,514,257
|
)
|
|
(80,514,257
|
)
|
|
Exercise of stock options and issuance of other stock awards
|
|
|
4,639,433
|
|
|
4,639,433
|
|
|
Balances, December 31, 2011
|
2,109,316,331
|
|
|
(383,407,665
|
)
|
|
1,725,908,666
|
|
Repurchase of shares
|
|
|
(74,897,499
|
)
|
|
(74,897,499
|
)
|
|
Issuance of stock awards and exercise of stock options
|
|
|
2,601,817
|
|
|
2,601,817
|
|
|
Balances, December 31, 2012
|
2,109,316,331
|
|
|
(455,703,347
|
)
|
|
1,653,612,984
|
|
Repurchase of shares
|
|
|
(67,231,392
|
)
|
|
(67,231,392
|
)
|
|
Issuance of stock awards and exercise of stock options
|
|
|
2,620,820
|
|
|
2,620,820
|
|
|
Balances, December 31, 2013
|
2,109,316,331
|
|
|
(520,313,919
|
)
|
|
1,589,002,412
|
|
Note 9.
|
|
Number of
Shares |
|
Weighted-
Average Grant Date Fair Value Per Share |
|||
Balance at January 1, 2013
|
9,484,865
|
|
|
$
|
62.44
|
|
Granted
|
2,783,310
|
|
|
88.43
|
|
|
Vested
|
(3,276,901
|
)
|
|
50.02
|
|
|
Forfeited
|
(171,974
|
)
|
|
73.02
|
|
|
Balance at December 31, 2013
|
8,819,300
|
|
|
$
|
75.05
|
|
|
Shares
Subject to Option |
|
Weighted-
Average Exercise Price |
|
Average
Remaining Contractual Term |
|
Aggregate
Intrinsic Value |
|||||
Balance at January 1, 2013
|
36,811
|
|
|
$
|
26.13
|
|
|
|
|
|
||
Options exercised
|
(14,097
|
)
|
|
22.50
|
|
|
|
|
|
|||
Options cancelled
|
—
|
|
|
—
|
|
|
|
|
|
|||
Balance/Exercisable at December 31, 2013
|
22,714
|
|
|
$
|
28.38
|
|
|
0.4 years
|
|
$
|
1
|
million
|
Note 10.
|
|
For the Years Ended December 31,
|
||||||||||
(in millions)
|
2013
|
|
2012
|
|
2011
|
||||||
Net earnings attributable to PMI
|
$
|
8,576
|
|
|
$
|
8,800
|
|
|
$
|
8,591
|
|
Less distributed and undistributed earnings attributable to share-based payment awards
|
45
|
|
|
48
|
|
|
49
|
|
|||
Net earnings for basic and diluted EPS
|
$
|
8,531
|
|
|
$
|
8,752
|
|
|
$
|
8,542
|
|
Weighted-average shares for basic EPS
|
1,622
|
|
|
1,692
|
|
|
1,761
|
|
|||
Plus incremental shares from assumed conversions:
|
|
|
|
|
|
||||||
Stock options
|
—
|
|
|
—
|
|
|
1
|
|
|||
Weighted-average shares for diluted EPS
|
1,622
|
|
|
1,692
|
|
|
1,762
|
|
Note 11.
|
(in millions)
|
2013
|
|
2012
|
|
2011
|
||||||
Earnings before income taxes
|
$
|
12,542
|
|
|
$
|
13,004
|
|
|
$
|
12,542
|
|
Provision for income taxes:
|
|
|
|
|
|
||||||
United States federal:
|
|
|
|
|
|
||||||
Current
|
$
|
247
|
|
|
$
|
226
|
|
|
$
|
270
|
|
Deferred
|
(5
|
)
|
|
(61
|
)
|
|
118
|
|
|||
Total United States
|
242
|
|
|
165
|
|
|
388
|
|
|||
Outside United States:
|
|
|
|
|
|
||||||
Current
|
3,451
|
|
|
3,855
|
|
|
3,368
|
|
|||
Deferred
|
(23
|
)
|
|
(187
|
)
|
|
(103
|
)
|
|||
Total outside United States
|
3,428
|
|
|
3,668
|
|
|
3,265
|
|
|||
Total provision for income taxes
|
$
|
3,670
|
|
|
$
|
3,833
|
|
|
$
|
3,653
|
|
(in millions)
|
2013
|
|
2012
|
|
2011
|
||||||
Balance at January 1,
|
$
|
124
|
|
|
$
|
104
|
|
|
$
|
95
|
|
Additions based on tax positions related to the current year
|
15
|
|
|
9
|
|
|
17
|
|
|||
Additions for tax positions of previous years
|
3
|
|
|
309
|
|
|
8
|
|
|||
Reductions for tax positions of prior years
|
(2
|
)
|
|
(1
|
)
|
|
(8
|
)
|
|||
Reductions due to lapse of statute of limitations
|
(16
|
)
|
|
—
|
|
|
(7
|
)
|
|||
Settlements
|
(10
|
)
|
|
(297
|
)
|
|
—
|
|
|||
Other
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||
Balance at December 31,
|
$
|
114
|
|
|
$
|
124
|
|
|
$
|
104
|
|
(in millions)
|
December 31, 2013
|
|
|
December 31, 2012
|
|
|
December 31, 2011
|
|
|||
Unrecognized tax benefits
|
$
|
114
|
|
|
$
|
124
|
|
|
$
|
104
|
|
Accrued interest and penalties
|
24
|
|
|
37
|
|
|
28
|
|
|||
Tax credits and other indirect benefits
|
(56
|
)
|
|
(72
|
)
|
|
(55
|
)
|
|||
Liability for tax contingencies
|
$
|
82
|
|
|
$
|
89
|
|
|
$
|
77
|
|
|
2013
|
|
2012
|
|
2011
|
|||
U.S. federal statutory rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
Increase (decrease) resulting from:
|
|
|
|
|
|
|||
Foreign rate differences
|
(12.2
|
)
|
|
(11.8
|
)
|
|
(12.5
|
)
|
Dividend repatriation cost
|
6.6
|
|
|
6.0
|
|
|
6.5
|
|
Other
|
(0.1
|
)
|
|
0.3
|
|
|
0.1
|
|
Effective tax rate
|
29.3
|
%
|
|
29.5
|
%
|
|
29.1
|
%
|
|
At December 31,
|
||||||
(in millions)
|
2013
|
|
2012
|
||||
Deferred income tax assets:
|
|
|
|
||||
Accrued postretirement and postemployment benefits
|
$
|
264
|
|
|
$
|
279
|
|
Accrued pension costs
|
135
|
|
|
262
|
|
||
Inventory
|
170
|
|
|
135
|
|
||
Accrued liabilities
|
139
|
|
|
150
|
|
||
Foreign exchange
|
146
|
|
|
52
|
|
||
Other
|
144
|
|
|
139
|
|
||
Total deferred income tax assets
|
998
|
|
|
1,017
|
|
||
Deferred income tax liabilities:
|
|
|
|
||||
Trade names
|
(738
|
)
|
|
(816
|
)
|
||
Property, plant and equipment
|
(311
|
)
|
|
(320
|
)
|
||
Unremitted earnings
|
(735
|
)
|
|
(845
|
)
|
||
Total deferred income tax liabilities
|
(1,784
|
)
|
|
(1,981
|
)
|
||
Net deferred income tax liabilities
|
$
|
(786
|
)
|
|
$
|
(964
|
)
|
Note 12.
|
|
For the Years Ended December 31,
|
||||||||||
(in millions)
|
2013
|
|
2012
|
|
2011
|
||||||
Net revenues:
|
|
|
|
|
|
||||||
European Union
|
$
|
28,303
|
|
|
$
|
27,338
|
|
|
$
|
29,768
|
|
Eastern Europe, Middle East & Africa
|
20,695
|
|
|
19,272
|
|
|
17,452
|
|
|||
Asia
|
20,987
|
|
|
21,071
|
|
|
19,590
|
|
|||
Latin America & Canada
|
10,044
|
|
|
9,712
|
|
|
9,536
|
|
|||
Net revenues
(1)
|
$
|
80,029
|
|
|
$
|
77,393
|
|
|
$
|
76,346
|
|
Earnings before income taxes:
|
|
|
|
|
|
||||||
Operating companies income:
|
|
|
|
|
|
||||||
European Union
|
$
|
4,238
|
|
|
$
|
4,187
|
|
|
$
|
4,560
|
|
Eastern Europe, Middle East & Africa
|
3,779
|
|
|
3,726
|
|
|
3,229
|
|
|||
Asia
|
4,622
|
|
|
5,197
|
|
|
4,836
|
|
|||
Latin America & Canada
|
1,134
|
|
|
1,043
|
|
|
988
|
|
|||
Amortization of intangibles
|
(93
|
)
|
|
(97
|
)
|
|
(98
|
)
|
|||
General corporate expenses
|
(187
|
)
|
|
(210
|
)
|
|
(183
|
)
|
|||
Less:
|
|
|
|
|
|
||||||
Equity (income)/loss in unconsolidated subsidiaries, net
|
22
|
|
|
17
|
|
|
10
|
|
|||
Operating income
|
13,515
|
|
|
13,863
|
|
|
13,342
|
|
|||
Interest expense, net
|
(973
|
)
|
|
(859
|
)
|
|
(800
|
)
|
|||
Earnings before income taxes
|
$
|
12,542
|
|
|
$
|
13,004
|
|
|
$
|
12,542
|
|
|
For the Years Ended December 31,
|
||||||||||
(in millions)
|
2013
|
|
2012
|
|
2011
|
||||||
Depreciation expense:
|
|
|
|
|
|
||||||
European Union
|
$
|
190
|
|
|
$
|
181
|
|
|
$
|
210
|
|
Eastern Europe, Middle East & Africa
|
227
|
|
|
211
|
|
|
227
|
|
|||
Asia
|
277
|
|
|
315
|
|
|
358
|
|
|||
Latin America & Canada
|
85
|
|
|
84
|
|
|
90
|
|
|||
|
779
|
|
|
791
|
|
|
885
|
|
|||
Other
|
10
|
|
|
10
|
|
|
10
|
|
|||
Total depreciation expense
|
$
|
789
|
|
|
$
|
801
|
|
|
$
|
895
|
|
Capital expenditures:
|
|
|
|
|
|
||||||
European Union
|
$
|
480
|
|
|
$
|
391
|
|
|
$
|
382
|
|
Eastern Europe, Middle East & Africa
|
247
|
|
|
197
|
|
|
133
|
|
|||
Asia
|
317
|
|
|
277
|
|
|
208
|
|
|||
Latin America & Canada
|
156
|
|
|
127
|
|
|
140
|
|
|||
|
1,200
|
|
|
992
|
|
|
863
|
|
|||
Other
|
—
|
|
|
64
|
|
|
34
|
|
|||
Total capital expenditures
|
$
|
1,200
|
|
|
$
|
1,056
|
|
|
$
|
897
|
|
|
At December 31,
|
||||||||||
(in millions)
|
2013
|
|
2012
|
|
2011
|
||||||
Long-lived assets:
|
|
|
|
|
|
||||||
European Union
|
$
|
3,403
|
|
|
$
|
3,065
|
|
|
$
|
2,938
|
|
Eastern Europe, Middle East & Africa
|
1,265
|
|
|
1,215
|
|
|
1,094
|
|
|||
Asia
|
1,758
|
|
|
1,824
|
|
|
1,681
|
|
|||
Latin America & Canada
|
759
|
|
|
719
|
|
|
678
|
|
|||
|
7,185
|
|
|
6,823
|
|
|
6,391
|
|
|||
Other
|
208
|
|
|
139
|
|
|
146
|
|
|||
Total long-lived assets
|
$
|
7,393
|
|
|
$
|
6,962
|
|
|
$
|
6,537
|
|
•
|
Asset Impairment and Exit Costs -
See Note 5.
Asset Impairment and Exit Costs
for a breakdown of asset impairment and exit costs by segment.
|
•
|
Acquisitions and Other Business Arrangements -
For further details, see Note 6.
Acquisitions and Other Business Arrangements.
|
Note 13.
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||
(in millions)
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Benefit obligation at January 1,
|
$
|
383
|
|
|
$
|
352
|
|
|
$
|
7,262
|
|
|
$
|
5,625
|
|
Service cost
|
7
|
|
|
6
|
|
|
255
|
|
|
189
|
|
||||
Interest cost
|
16
|
|
|
16
|
|
|
169
|
|
|
189
|
|
||||
Benefits paid
|
(13
|
)
|
|
(16
|
)
|
|
(156
|
)
|
|
(160
|
)
|
||||
Termination, settlement and curtailment
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
(8
|
)
|
||||
Assumption changes
|
(45
|
)
|
|
28
|
|
|
(894
|
)
|
|
1,176
|
|
||||
Actuarial losses (gains)
|
16
|
|
|
(3
|
)
|
|
76
|
|
|
41
|
|
||||
Currency
|
—
|
|
|
—
|
|
|
141
|
|
|
167
|
|
||||
Other
|
—
|
|
|
—
|
|
|
43
|
|
|
43
|
|
||||
Benefit obligation at December 31,
|
364
|
|
|
383
|
|
|
6,893
|
|
|
7,262
|
|
||||
Fair value of plan assets at January 1,
|
284
|
|
|
269
|
|
|
5,627
|
|
|
4,778
|
|
||||
Actual return on plan assets
|
33
|
|
|
27
|
|
|
731
|
|
|
625
|
|
||||
Employer contributions
|
1
|
|
|
4
|
|
|
149
|
|
|
203
|
|
||||
Employee contributions
|
—
|
|
|
—
|
|
|
47
|
|
|
47
|
|
||||
Benefits paid
|
(13
|
)
|
|
(16
|
)
|
|
(156
|
)
|
|
(160
|
)
|
||||
Termination, settlement and curtailment
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(5
|
)
|
||||
Currency
|
—
|
|
|
—
|
|
|
170
|
|
|
139
|
|
||||
Fair value of plan assets at December 31,
|
305
|
|
|
284
|
|
|
6,566
|
|
|
5,627
|
|
||||
Net pension liability recognized at December 31,
|
$
|
(59
|
)
|
|
$
|
(99
|
)
|
|
$
|
(327
|
)
|
|
$
|
(1,635
|
)
|
(in millions)
|
2013
|
|
2012
|
||||
Other assets
|
$
|
151
|
|
|
$
|
29
|
|
Accrued liabilities — employment costs
|
(55
|
)
|
|
(22
|
)
|
||
Long-term employment costs
|
(482
|
)
|
|
(1,741
|
)
|
||
|
$
|
(386
|
)
|
|
$
|
(1,734
|
)
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||
Discount rate
|
4.80
|
%
|
|
4.05
|
%
|
|
3.09
|
%
|
|
2.38
|
%
|
Rate of compensation increase
|
3.00
|
|
|
3.50
|
|
|
2.34
|
|
|
2.61
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||||||||||
(in millions)
|
2013
|
|
2012
|
|
2011
|
|
2013
|
|
2012
|
|
2011
|
||||||||||||
Service cost
|
$
|
7
|
|
|
$
|
6
|
|
|
$
|
5
|
|
|
$
|
255
|
|
|
$
|
189
|
|
|
$
|
178
|
|
Interest cost
|
16
|
|
|
16
|
|
|
16
|
|
|
169
|
|
|
189
|
|
|
205
|
|
||||||
Expected return on plan assets
|
(16
|
)
|
|
(15
|
)
|
|
(15
|
)
|
|
(347
|
)
|
|
(320
|
)
|
|
(323
|
)
|
||||||
Amortization:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net losses
|
11
|
|
|
9
|
|
|
5
|
|
|
205
|
|
|
120
|
|
|
58
|
|
||||||
Prior service cost
|
1
|
|
|
1
|
|
|
1
|
|
|
9
|
|
|
9
|
|
|
8
|
|
||||||
Net transition obligation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||||
Termination, settlement and curtailment
|
—
|
|
|
2
|
|
|
2
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||||
Net periodic pension cost
|
$
|
19
|
|
|
$
|
19
|
|
|
$
|
14
|
|
|
$
|
292
|
|
|
$
|
188
|
|
|
$
|
128
|
|
Asset Category
(in millions)
|
At December 31, 2013
|
|
Quoted Prices
In Active Markets for Identical Assets/Liabilities (Level 1) |
|
Significant
Other Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs
(Level 3)
|
||||||||
Cash and cash equivalents
|
$
|
608
|
|
|
$
|
608
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Equity securities:
|
|
|
|
|
|
|
|
||||||||
U.S. securities
|
119
|
|
|
119
|
|
|
—
|
|
|
—
|
|
||||
International securities
|
1,280
|
|
|
1,280
|
|
|
—
|
|
|
—
|
|
||||
Investment funds
(a)
|
4,508
|
|
|
2,805
|
|
|
1,703
|
|
|
—
|
|
||||
International government bonds
|
317
|
|
|
313
|
|
|
4
|
|
|
—
|
|
||||
Corporate bonds
|
2
|
|
|
2
|
|
|
—
|
|
|
—
|
|
||||
Other
|
37
|
|
|
37
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
6,871
|
|
|
$
|
5,164
|
|
|
$
|
1,707
|
|
|
$
|
—
|
|
Asset Category
(in millions)
|
At December 31, 2012
|
|
Quoted Prices
In Active Markets for Identical Assets/Liabilities (Level 1) |
|
Significant
Other Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
||||||||
Cash and cash equivalents
|
$
|
420
|
|
|
$
|
420
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Equity securities:
|
|
|
|
|
|
|
|
||||||||
U.S. securities
|
106
|
|
|
106
|
|
|
—
|
|
|
—
|
|
||||
International securities
|
1,129
|
|
|
1,129
|
|
|
—
|
|
|
—
|
|
||||
Investment funds
(b)(c)
|
3,805
|
|
|
2,313
|
|
|
1,492
|
|
|
—
|
|
||||
International government bonds
|
411
|
|
|
411
|
|
|
—
|
|
|
—
|
|
||||
Corporate bonds
|
3
|
|
|
3
|
|
|
—
|
|
|
—
|
|
||||
Other
|
37
|
|
|
37
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
5,911
|
|
|
$
|
4,419
|
|
|
$
|
1,492
|
|
|
$
|
—
|
|
(in millions)
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||
2014
|
$
|
48
|
|
|
$
|
246
|
|
2015
|
18
|
|
|
255
|
|
||
2016
|
18
|
|
|
250
|
|
||
2017
|
21
|
|
|
260
|
|
||
2018
|
19
|
|
|
276
|
|
||
2019 - 2023
|
119
|
|
|
1,576
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||||||||||
(in millions)
|
2013
|
|
2012
|
|
2011
|
|
2013
|
|
2012
|
|
2011
|
||||||||||||
Service cost
|
$
|
3
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
2
|
|
Interest cost
|
5
|
|
|
5
|
|
|
5
|
|
|
5
|
|
|
5
|
|
|
5
|
|
||||||
Amortization:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net losses
|
3
|
|
|
2
|
|
|
1
|
|
|
2
|
|
|
1
|
|
|
1
|
|
||||||
Net postretirement health care costs
|
$
|
11
|
|
|
$
|
9
|
|
|
$
|
8
|
|
|
$
|
9
|
|
|
$
|
8
|
|
|
$
|
8
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2013
|
|
2012
|
|
2011
|
||||||
Discount rate
|
4.05
|
%
|
|
4.50
|
%
|
|
5.40
|
%
|
|
4.59
|
%
|
|
5.45
|
%
|
|
5.14
|
%
|
Health care cost trend rate
|
7.50
|
|
|
7.50
|
|
|
8.00
|
|
|
6.46
|
|
|
6.55
|
|
|
6.29
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||
(in millions)
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Accumulated postretirement benefit obligation at January 1,
|
$
|
132
|
|
|
$
|
115
|
|
|
$
|
113
|
|
|
$
|
96
|
|
Service cost
|
3
|
|
|
2
|
|
|
2
|
|
|
2
|
|
||||
Interest cost
|
5
|
|
|
5
|
|
|
5
|
|
|
5
|
|
||||
Benefits paid
|
(5
|
)
|
|
(4
|
)
|
|
(5
|
)
|
|
(5
|
)
|
||||
Assumption changes
|
(23
|
)
|
|
10
|
|
|
(5
|
)
|
|
11
|
|
||||
Actuarial losses (gains)
|
1
|
|
|
4
|
|
|
(3
|
)
|
|
6
|
|
||||
Plan changes
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(3
|
)
|
||||
Currency
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
1
|
|
||||
Accumulated postretirement benefit obligation at December 31,
|
$
|
113
|
|
|
$
|
132
|
|
|
$
|
100
|
|
|
$
|
113
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||
Discount rate
|
4.95
|
%
|
|
4.05
|
%
|
|
5.07
|
%
|
|
4.59
|
%
|
Health care cost trend rate assumed for next year
|
7.00
|
|
|
7.50
|
|
|
6.14
|
|
|
6.46
|
|
Ultimate trend rate
|
5.00
|
|
|
5.00
|
|
|
4.87
|
|
|
4.88
|
|
Year that rate reaches the ultimate trend rate
|
2018
|
|
2018
|
|
2029
|
|
2029
|
|
One-Percentage-Point Increase
|
|
|
One-Percentage-Point Decrease
|
|
Effect on total service and interest cost
|
18.2
|
%
|
|
(14.0
|
)%
|
Effect on postretirement benefit obligation
|
14.1
|
|
|
(11.6
|
)
|
(in millions)
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||
2014
|
$
|
5
|
|
|
$
|
6
|
|
2015
|
5
|
|
|
5
|
|
||
2016
|
6
|
|
|
5
|
|
||
2017
|
6
|
|
|
5
|
|
||
2018
|
6
|
|
|
5
|
|
||
2019 - 2023
|
33
|
|
|
26
|
|
|
For the Years Ended December 31,
|
||||||||||
(in millions)
|
2013
|
|
2012
|
|
2011
|
||||||
Service cost
|
$
|
34
|
|
|
$
|
30
|
|
|
$
|
28
|
|
Interest cost
|
20
|
|
|
22
|
|
|
22
|
|
|||
Amortization of net loss
|
60
|
|
|
53
|
|
|
39
|
|
|||
Other expense
|
84
|
|
|
75
|
|
|
106
|
|
|||
Net postemployment costs
|
$
|
198
|
|
|
$
|
180
|
|
|
$
|
195
|
|
(in millions)
|
2013
|
|
2012
|
||||
Accrued postemployment costs at January 1,
|
$
|
682
|
|
|
$
|
619
|
|
Service cost
|
34
|
|
|
30
|
|
||
Interest cost
|
20
|
|
|
22
|
|
||
Benefits paid
|
(173
|
)
|
|
(196
|
)
|
||
Actuarial losses
|
109
|
|
|
129
|
|
||
Other
|
91
|
|
|
78
|
|
||
Accrued postemployment costs at December 31,
|
$
|
763
|
|
|
$
|
682
|
|
(in millions)
|
Pension
|
|
Post-
retirement |
|
Post-
employment |
|
Total
|
||||||||
Net losses
|
$
|
(1,746
|
)
|
|
$
|
(47
|
)
|
|
$
|
(661
|
)
|
|
$
|
(2,454
|
)
|
Prior service cost
|
(51
|
)
|
|
7
|
|
|
—
|
|
|
(44
|
)
|
||||
Net transition obligation
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
||||
Deferred income taxes
|
245
|
|
|
14
|
|
|
199
|
|
|
458
|
|
||||
Losses to be amortized
|
$
|
(1,558
|
)
|
|
$
|
(26
|
)
|
|
$
|
(462
|
)
|
|
$
|
(2,046
|
)
|
(in millions)
|
Pension
|
|
Post-
retirement |
|
Post-
employment |
|
Total
|
||||||||
Net losses
|
$
|
(3,199
|
)
|
|
$
|
(82
|
)
|
|
$
|
(612
|
)
|
|
$
|
(3,893
|
)
|
Prior service cost
|
(60
|
)
|
|
7
|
|
|
—
|
|
|
(53
|
)
|
||||
Net transition obligation
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
||||
Deferred income taxes
|
377
|
|
|
26
|
|
|
185
|
|
|
588
|
|
||||
Losses to be amortized
|
$
|
(2,889
|
)
|
|
$
|
(49
|
)
|
|
$
|
(427
|
)
|
|
$
|
(3,365
|
)
|
(in millions)
|
Pension
|
|
Post-
retirement |
|
Post-
employment |
|
Total
|
||||||||
Net losses
|
$
|
(2,401
|
)
|
|
$
|
(54
|
)
|
|
$
|
(536
|
)
|
|
$
|
(2,991
|
)
|
Prior service cost
|
(70
|
)
|
|
3
|
|
|
—
|
|
|
(67
|
)
|
||||
Net transition obligation
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
||||
Deferred income taxes
|
299
|
|
|
19
|
|
|
163
|
|
|
481
|
|
||||
Losses to be amortized
|
$
|
(2,180
|
)
|
|
$
|
(32
|
)
|
|
$
|
(373
|
)
|
|
$
|
(2,585
|
)
|
(in millions)
|
Pension
|
|
Post-
retirement |
|
Post-
employment |
|
Total
|
||||||||
Amounts transferred to earnings as components of net periodic benefit cost:
|
|
|
|
|
|
|
|
||||||||
Amortization:
|
|
|
|
|
|
|
|
||||||||
Net losses
|
$
|
216
|
|
|
$
|
5
|
|
|
$
|
60
|
|
|
$
|
281
|
|
Prior service cost
|
10
|
|
|
—
|
|
|
—
|
|
|
10
|
|
||||
Net transition obligation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Other income/expense:
|
|
|
|
|
|
|
|
||||||||
Net losses
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Deferred income taxes
|
(29
|
)
|
|
(2
|
)
|
|
(18
|
)
|
|
(49
|
)
|
||||
|
198
|
|
|
3
|
|
|
42
|
|
|
243
|
|
||||
Other movements during the year:
|
|
|
|
|
|
|
|
||||||||
Net losses
|
1,236
|
|
|
30
|
|
|
(109
|
)
|
|
1,157
|
|
||||
Prior service cost
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
||||
Net transition obligation
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Deferred income taxes
|
(103
|
)
|
|
(10
|
)
|
|
32
|
|
|
(81
|
)
|
||||
|
1,133
|
|
|
20
|
|
|
(77
|
)
|
|
1,076
|
|
||||
Total movements in other comprehensive earnings (losses)
|
$
|
1,331
|
|
|
$
|
23
|
|
|
$
|
(35
|
)
|
|
$
|
1,319
|
|
(in millions)
|
Pension
|
|
Post-
retirement |
|
Post-
employment |
|
Total
|
||||||||
Amounts transferred to earnings as components of net periodic benefit cost:
|
|
|
|
|
|
|
|
||||||||
Amortization:
|
|
|
|
|
|
|
|
||||||||
Net losses
|
$
|
129
|
|
|
$
|
3
|
|
|
$
|
53
|
|
|
$
|
185
|
|
Prior service cost
|
10
|
|
|
—
|
|
|
—
|
|
|
10
|
|
||||
Net transition obligation
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Other income/expense:
|
|
|
|
|
|
|
|
||||||||
Net losses
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
||||
Deferred income taxes
|
(20
|
)
|
|
(1
|
)
|
|
(16
|
)
|
|
(37
|
)
|
||||
|
124
|
|
|
2
|
|
|
37
|
|
|
163
|
|
||||
Other movements during the year:
|
|
|
|
|
|
|
|
||||||||
Net losses
|
(931
|
)
|
|
(31
|
)
|
|
(129
|
)
|
|
(1,091
|
)
|
||||
Prior service cost
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
||||
Deferred income taxes
|
98
|
|
|
8
|
|
|
38
|
|
|
144
|
|
||||
|
(833
|
)
|
|
(19
|
)
|
|
(91
|
)
|
|
(943
|
)
|
||||
Total movements in other comprehensive losses
|
$
|
(709
|
)
|
|
$
|
(17
|
)
|
|
$
|
(54
|
)
|
|
$
|
(780
|
)
|
(in millions)
|
Pension
|
|
Post-
retirement |
|
Post-
employment |
|
Total
|
||||||||
Amounts transferred to earnings as components of net periodic benefit cost:
|
|
|
|
|
|
|
|
||||||||
Amortization:
|
|
|
|
|
|
|
|
||||||||
Net losses
|
$
|
63
|
|
|
$
|
3
|
|
|
$
|
39
|
|
|
$
|
105
|
|
Prior service cost
|
9
|
|
|
(1
|
)
|
|
—
|
|
|
8
|
|
||||
Net transition obligation
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Other income/expense:
|
|
|
|
|
|
|
|
||||||||
Net losses
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||
Deferred income taxes
|
(10
|
)
|
|
(1
|
)
|
|
(12
|
)
|
|
(23
|
)
|
||||
|
66
|
|
|
1
|
|
|
27
|
|
|
94
|
|
||||
Other movements during the year:
|
|
|
|
|
|
|
|
||||||||
Net losses
|
(1,042
|
)
|
|
(11
|
)
|
|
(107
|
)
|
|
(1,160
|
)
|
||||
Prior service cost
|
(17
|
)
|
|
—
|
|
|
—
|
|
|
(17
|
)
|
||||
Deferred income taxes
|
110
|
|
|
5
|
|
|
33
|
|
|
148
|
|
||||
|
(949
|
)
|
|
(6
|
)
|
|
(74
|
)
|
|
(1,029
|
)
|
||||
Total movements in other comprehensive losses
|
$
|
(883
|
)
|
|
$
|
(5
|
)
|
|
$
|
(47
|
)
|
|
$
|
(935
|
)
|
Note 14.
|
|
For the Years Ended December 31,
|
||||||||||
(in millions)
|
2013
|
|
2012
|
|
2011
|
||||||
Research and development expense
|
$
|
449
|
|
|
$
|
415
|
|
|
$
|
413
|
|
Advertising expense
|
$
|
435
|
|
|
$
|
483
|
|
|
$
|
464
|
|
Interest expense
|
$
|
1,104
|
|
|
$
|
1,007
|
|
|
$
|
934
|
|
Interest income
|
(131
|
)
|
|
(148
|
)
|
|
(134
|
)
|
|||
Interest expense, net
|
$
|
973
|
|
|
$
|
859
|
|
|
$
|
800
|
|
Rent expense
|
$
|
334
|
|
|
$
|
318
|
|
|
$
|
308
|
|
(in millions)
|
|
||
2014
|
$
|
218
|
|
2015
|
160
|
|
|
2016
|
124
|
|
|
2017
|
81
|
|
|
2018
|
52
|
|
|
Thereafter
|
211
|
|
|
|
$
|
846
|
|
Note 15.
|
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||||||||||
|
|
|
Fair
Value
|
|
|
|
Fair
Value
|
||||||||||||
(in millions)
|
Balance Sheet Classification
|
|
2013
|
|
2012
|
|
Balance Sheet Classification
|
|
2013
|
|
2012
|
||||||||
Foreign exchange contracts designated as hedging instruments
|
Other current
assets
|
|
$
|
111
|
|
|
$
|
146
|
|
|
Other accrued
liabilities
|
|
$
|
44
|
|
|
$
|
8
|
|
|
Other assets
|
|
—
|
|
|
—
|
|
|
Other liabilities
|
|
46
|
|
|
—
|
|
||||
Foreign exchange contracts not designated as hedging instruments
|
Other current
assets
|
|
42
|
|
|
14
|
|
|
Other accrued
liabilities
|
|
12
|
|
|
47
|
|
||||
|
|
|
|
|
|
|
Other liabilities
|
|
14
|
|
|
—
|
|
||||||
Total derivatives
|
|
|
$
|
153
|
|
|
$
|
160
|
|
|
|
|
$
|
116
|
|
|
$
|
55
|
|
|
For the Year Ended December 31, 2013
|
||||||||||||||||||
(in millions)
|
Cash Flow
Hedges |
|
Net Investment
Hedges |
|
Other
Derivatives |
|
Income
Taxes |
|
Total
|
||||||||||
Gain (Loss)
|
|
|
|
|
|
|
|
|
|
||||||||||
Statement of Earnings:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net revenues
|
$
|
319
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
319
|
|
||||
Cost of sales
|
6
|
|
|
|
|
—
|
|
|
|
|
6
|
|
|||||||
Marketing, administration and research costs
|
—
|
|
|
|
|
1
|
|
|
|
|
1
|
|
|||||||
Operating income
|
325
|
|
|
|
|
1
|
|
|
|
|
326
|
|
|||||||
Interest expense, net
|
(56
|
)
|
|
|
|
3
|
|
|
|
|
(53
|
)
|
|||||||
Earnings before income taxes
|
269
|
|
|
|
|
4
|
|
|
|
|
273
|
|
|||||||
Provision for income taxes
|
(34
|
)
|
|
|
|
2
|
|
|
|
|
(32
|
)
|
|||||||
Net earnings attributable to PMI
|
$
|
235
|
|
|
|
|
$
|
6
|
|
|
|
|
$
|
241
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Other Comprehensive Earnings/(Losses):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Gains transferred to earnings
|
$
|
(269
|
)
|
|
|
|
|
|
$
|
34
|
|
|
$
|
(235
|
)
|
||||
Recognized gains
|
236
|
|
|
|
|
|
|
(30
|
)
|
|
206
|
|
|||||||
Net impact on equity
|
$
|
(33
|
)
|
|
|
|
|
|
$
|
4
|
|
|
$
|
(29
|
)
|
||||
Currency translation adjustments
|
|
|
$
|
(79
|
)
|
|
|
|
$
|
27
|
|
|
$
|
(52
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
For the Year Ended December 31, 2012
|
||||||||||||||||||
(in millions)
|
Cash Flow
Hedges |
|
Net Investment
Hedges |
|
Other
Derivatives |
|
Income
Taxes |
|
Total
|
||||||||||
Gain (Loss)
|
|
|
|
|
|
|
|
|
|
||||||||||
Statement of Earnings:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net revenues
|
$
|
66
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
66
|
|
||||
Cost of sales
|
19
|
|
|
|
|
—
|
|
|
|
|
19
|
|
|||||||
Marketing, administration and research costs
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|||||||
Operating income
|
85
|
|
|
|
|
—
|
|
|
|
|
85
|
|
|||||||
Interest expense, net
|
(60
|
)
|
|
|
|
14
|
|
|
|
|
(46
|
)
|
|||||||
Earnings before income taxes
|
25
|
|
|
|
|
14
|
|
|
|
|
39
|
|
|||||||
Provision for income taxes
|
(3
|
)
|
|
|
|
1
|
|
|
|
|
(2
|
)
|
|||||||
Net earnings attributable to PMI
|
$
|
22
|
|
|
|
|
$
|
15
|
|
|
|
|
$
|
37
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Other Comprehensive Earnings/(Losses):
|
|
|
|
|
|
|
|
|
|
||||||||||
Gains transferred to earnings
|
$
|
(25
|
)
|
|
|
|
|
|
$
|
3
|
|
|
$
|
(22
|
)
|
||||
Recognized gains
|
113
|
|
|
|
|
|
|
(14
|
)
|
|
99
|
|
|||||||
Net impact on equity
|
$
|
88
|
|
|
|
|
|
|
$
|
(11
|
)
|
|
$
|
77
|
|
||||
Currency translation adjustments
|
|
|
$
|
(19
|
)
|
|
|
|
$
|
5
|
|
|
$
|
(14
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31, 2011
|
||||||||||||||||||
(in millions)
|
Cash
Flow Hedges |
|
Net
Investment Hedges |
|
Other
Derivatives |
|
Income
Taxes |
|
Total
|
||||||||||
Gain (Loss)
|
|
|
|
|
|
|
|
|
|
||||||||||
Statement of Earnings:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net revenues
|
$
|
(17
|
)
|
|
|
|
$
|
—
|
|
|
|
|
$
|
(17
|
)
|
||||
Cost of sales
|
34
|
|
|
|
|
—
|
|
|
|
|
34
|
|
|||||||
Marketing, administration and research costs
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|||||||
Operating income
|
17
|
|
|
|
|
—
|
|
|
|
|
17
|
|
|||||||
Interest expense, net
|
(37
|
)
|
|
|
|
56
|
|
|
|
|
19
|
|
|||||||
Earnings before income taxes
|
(20
|
)
|
|
|
|
56
|
|
|
|
|
36
|
|
|||||||
Provision for income taxes
|
2
|
|
|
|
|
(13
|
)
|
|
|
|
(11
|
)
|
|||||||
Net earnings attributable to PMI
|
$
|
(18
|
)
|
|
|
|
$
|
43
|
|
|
|
|
$
|
25
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Other Comprehensive Earnings/(Losses):
|
|
|
|
|
|
|
|
|
|
||||||||||
Losses transferred to earnings
|
$
|
20
|
|
|
|
|
|
|
$
|
(2
|
)
|
|
$
|
18
|
|
||||
Recognized losses
|
(4
|
)
|
|
|
|
|
|
(1
|
)
|
|
(5
|
)
|
|||||||
Net impact on equity
|
$
|
16
|
|
|
|
|
|
|
$
|
(3
|
)
|
|
$
|
13
|
|
||||
Currency translation adjustments
|
|
|
|
$
|
2
|
|
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|||
|
|
|
|
|
|
|
|
|
|
(pre-tax, in millions)
|
|
For the Years Ended December 31,
|
|||||||||||||||||||||||
Derivatives in Cash Flow Hedging Relationship
|
|
Statement of Earnings
Classification of Gain/(Loss)
Reclassified from Other
Comprehensive Earnings/(Losses) into Earnings
|
Amount of
Gain/(Loss)
Reclassified from Other Comprehensive Earnings/(Losses) into Earnings |
|
Amount of
Gain/(Loss)
Recognized in Other Comprehensive Earnings/(Losses) on Derivatives |
||||||||||||||||||||
|
|
|
2013
|
|
2012
|
|
2011
|
|
2013
|
|
2012
|
|
2011
|
||||||||||||
Foreign exchange contracts
|
|
|
|
|
|
|
|
|
$
|
236
|
|
|
$
|
113
|
|
|
$
|
(4
|
)
|
||||||
|
|
Net revenues
|
$
|
319
|
|
|
$
|
66
|
|
|
$
|
(17
|
)
|
|
|
|
|
|
|
||||||
|
|
Cost of sales
|
6
|
|
|
19
|
|
|
34
|
|
|
|
|
|
|
|
|||||||||
|
|
Interest expense, net
|
(56
|
)
|
|
(60
|
)
|
|
(37
|
)
|
|
|
|
|
|
|
|||||||||
Total
|
|
|
$
|
269
|
|
|
$
|
25
|
|
|
$
|
(20
|
)
|
|
$
|
236
|
|
|
$
|
113
|
|
|
$
|
(4
|
)
|
(pre-tax, in millions)
|
|
For the Years Ended December 31,
|
||||||||||||||||||||||||
Derivatives in Net Investment
Hedging Relationship
|
|
Statement of Earnings
Classification of Gain/(Loss) Reclassified from Other Comprehensive Earnings/(Losses) into Earnings
|
|
Amount of
Gain/(Loss) Reclassified from Other Comprehensive Earnings/(Losses) into Earnings |
|
Amount of
Gain/(Loss) Recognized in Other Comprehensive Earnings/(Losses) on Derivatives |
||||||||||||||||||||
|
|
|
|
2013
|
|
2012
|
|
2011
|
|
2013
|
|
2012
|
|
2011
|
||||||||||||
Foreign exchange contracts
|
|
|
|
|
|
|
|
|
|
$
|
(79
|
)
|
|
$
|
(19
|
)
|
|
$
|
2
|
|
||||||
|
|
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 |
|
|||||||||
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
Foreign exchange contracts
|
|
|
|
|
|
|
|
||||||
|
|
Marketing, administration
and research costs
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Interest expense, net
|
3
|
|
|
14
|
|
|
56
|
|
|||
Total
|
|
|
$
|
4
|
|
|
$
|
14
|
|
|
$
|
56
|
|
|
For the Years Ended December 31,
|
||||||||||
(in millions)
|
2013
|
|
2012
|
|
2011
|
||||||
Gain as of January 1,
|
$
|
92
|
|
|
$
|
15
|
|
|
$
|
2
|
|
Derivative (gains)/losses transferred to earnings
|
(235
|
)
|
|
(22
|
)
|
|
18
|
|
|||
Change in fair value
|
206
|
|
|
99
|
|
|
(5
|
)
|
|||
Gain as of December 31,
|
$
|
63
|
|
|
$
|
92
|
|
|
$
|
15
|
|
Note 16.
|
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.
|
Note 17.
|
(Losses) Earnings
|
At December 31,
|
||||||||||
(in millions)
|
2013
|
|
2012
|
|
2011
|
||||||
Currency translation adjustments
|
$
|
(2,207
|
)
|
|
$
|
(331
|
)
|
|
$
|
(293
|
)
|
Pension and other benefits
|
(2,046
|
)
|
|
(3,365
|
)
|
|
(2,585
|
)
|
|||
Derivatives accounted for as hedges
|
63
|
|
|
92
|
|
|
15
|
|
|||
Total accumulated other comprehensive losses
|
$
|
(4,190
|
)
|
|
$
|
(3,604
|
)
|
|
$
|
(2,863
|
)
|
Note 18.
|
Note 19.
|
Note 20.
|
Note 21.
|
Type of Case
|
|
Number of Cases Pending as of December 31, 2013
|
|
Number of Cases Pending as of
December 31, 2012 |
|
Number of Cases Pending as of
December 31, 2011 |
|||
Individual Smoking and Health Cases
|
|
62
|
|
|
76
|
|
|
75
|
|
Smoking and Health Class Actions
|
|
11
|
|
|
11
|
|
|
10
|
|
Health Care Cost Recovery Actions
|
|
15
|
|
|
15
|
|
|
11
|
|
Lights Class Actions
|
|
1
|
|
|
2
|
|
|
2
|
|
Individual Lights Cases
|
|
2
|
|
|
7
|
|
|
9
|
|
Public Civil Actions
|
|
3
|
|
|
4
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
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 $5,500) 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 $42,300). Philip Morris Brasil has appealed this decision. |
Date
|
|
Location of
Court/Name of Plaintiff |
|
Type of
Case |
|
Verdict
|
|
Post-Trial
Developments |
February 2004
|
|
Brazil/The Smoker Health Defense Association
|
|
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 $420) 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.
|
•
|
62
cases brought by individual plaintiffs in Argentina (
24
), Brazil (
24
), Canada (
2
), Chile (
4
), Costa Rica (
2
), Greece (
1
), Italy (
3
), the Philippines (
1
) and Scotland (
1
), compared with
76
such cases on
December 31, 2012
, and
75
cases on
December 31, 2011
; and
|
•
|
11
cases brought on behalf of classes of individual plaintiffs in Brazil (
2
) and Canada (
9
), compared with
11
such cases on
December 31, 2012
and
10
such cases on
December 31, 2011
.
|
•
|
1
case brought on behalf of individual plaintiffs in Israel, compared with
2
such cases on
December 31, 2012
and
December 31, 2011
, respectively; and
|
•
|
2
cases brought by individual plaintiffs in Chile (
1
) and Italy (
1
), compared with
7
such cases on
December 31, 2012
, and
9
such cases on
December 31, 2011
.
|
Note 22.
|
(in millions)
|
Gross Amounts Recognized
|
Gross Amount Offset in the Consolidated Balance Sheet
|
Net Amounts Presented in the Consolidated Balance Sheet
|
Gross Amounts Not Offset in the
Consolidated
Balance Sheet
|
|
|||||||||||||
Financial Instruments
|
Cash Collateral Received/Pledged
|
|
||||||||||||||||
Net Amount
|
||||||||||||||||||
|
|
|
|
|
|
|
||||||||||||
At December 31, 2013
|
|
|
|
|
|
|
||||||||||||
Assets
|
|
|
|
|
|
|
||||||||||||
Foreign exchange contracts
|
$
|
153
|
|
$
|
—
|
|
$
|
153
|
|
$
|
(52
|
)
|
$
|
(79
|
)
|
$
|
22
|
|
Liabilities
|
|
|
|
|
|
|
||||||||||||
Foreign exchange contracts
|
$
|
116
|
|
$
|
—
|
|
$
|
116
|
|
$
|
(52
|
)
|
$
|
(47
|
)
|
$
|
17
|
|
At December 31, 2012
|
|
|
|
|
|
|
||||||||||||
Assets
|
|
|
|
|
|
|
||||||||||||
Foreign exchange contracts
|
$
|
160
|
|
$
|
—
|
|
$
|
160
|
|
$
|
(24
|
)
|
$
|
—
|
|
$
|
136
|
|
Liabilities
|
|
|
|
|
|
|
||||||||||||
Foreign exchange contracts
|
$
|
55
|
|
$
|
—
|
|
$
|
55
|
|
$
|
(24
|
)
|
$
|
—
|
|
$
|
31
|
|
Note 23.
|
|
|
Note 24.
|
|
2013 Quarters
|
||||||||||||||
(in millions, except per share data)
|
1st
|
|
2nd
|
|
3rd
|
|
4th
|
||||||||
Net revenues
|
$
|
18,527
|
|
|
$
|
20,483
|
|
|
$
|
20,629
|
|
|
$
|
20,390
|
|
Gross profit
|
$
|
5,095
|
|
|
$
|
5,216
|
|
|
$
|
5,309
|
|
|
$
|
5,187
|
|
Net earnings attributable to PMI
|
$
|
2,125
|
|
|
$
|
2,124
|
|
|
$
|
2,340
|
|
|
$
|
1,987
|
|
Per share data:
|
|
|
|
|
|
|
|
||||||||
Basic EPS
|
$
|
1.28
|
|
|
$
|
1.30
|
|
|
$
|
1.44
|
|
|
$
|
1.24
|
|
Diluted EPS
|
$
|
1.28
|
|
|
$
|
1.30
|
|
|
$
|
1.44
|
|
|
$
|
1.24
|
|
Dividends declared
|
$
|
0.85
|
|
|
$
|
0.85
|
|
|
$
|
0.94
|
|
|
$
|
0.94
|
|
Market price:
|
|
|
|
|
|
|
|
||||||||
— High
|
$
|
93.61
|
|
|
$
|
96.73
|
|
|
$
|
91.40
|
|
|
$
|
91.81
|
|
— Low
|
$
|
84.33
|
|
|
$
|
86.05
|
|
|
$
|
82.86
|
|
|
$
|
83.81
|
|
|
|
||||||||||||||
|
2012 Quarters
|
||||||||||||||
(in millions, except per share data)
|
1st
|
|
2nd
|
|
3rd
|
|
4th
|
||||||||
Net revenues
|
$
|
18,022
|
|
|
$
|
20,037
|
|
|
$
|
19,592
|
|
|
$
|
19,742
|
|
Gross profit
|
$
|
5,006
|
|
|
$
|
5,454
|
|
|
$
|
5,336
|
|
|
$
|
5,208
|
|
Net earnings attributable to PMI
|
$
|
2,161
|
|
|
$
|
2,317
|
|
|
$
|
2,227
|
|
|
$
|
2,095
|
|
Per share data:
|
|
|
|
|
|
|
|
||||||||
Basic EPS
|
$
|
1.25
|
|
|
$
|
1.36
|
|
|
$
|
1.32
|
|
|
$
|
1.25
|
|
Diluted EPS
|
$
|
1.25
|
|
|
$
|
1.36
|
|
|
$
|
1.32
|
|
|
$
|
1.25
|
|
Dividends declared
|
$
|
0.77
|
|
|
$
|
0.77
|
|
|
$
|
0.85
|
|
|
$
|
0.85
|
|
Market price:
|
|
|
|
|
|
|
|
||||||||
— High
|
$
|
88.86
|
|
|
$
|
91.05
|
|
|
$
|
93.60
|
|
|
$
|
94.13
|
|
— Low
|
$
|
72.85
|
|
|
$
|
81.10
|
|
|
$
|
86.11
|
|
|
$
|
82.10
|
|
|
|
|
|
|
|
|
|
|
2013 Quarters
|
||||||||||||||
(in millions)
|
1st
|
|
2nd
|
|
3rd
|
|
4th
|
||||||||
Asset impairment and exit costs
|
$
|
3
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
301
|
|
|
|
||||||||||||||
|
2012 Quarters
|
||||||||||||||
(in millions)
|
1st
|
|
2nd
|
|
3rd
|
|
4th
|
||||||||
Asset impairment and exit costs
|
$
|
8
|
|
|
$
|
8
|
|
|
$
|
34
|
|
|
$
|
33
|
|
|
|
|
|
|
|
|
|
/
S
/ BARRY J. MISTHAL
|
|
/S/ FELIX ROTH
|
Barry J. Misthal
|
|
Felix Roth
|
|
|
|
Lausanne, Switzerland
|
|
|
February 6, 2014
|
|
|
•
|
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of PMI;
|
•
|
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America;
|
•
|
provide reasonable assurance that receipts and expenditures of PMI are being made only in accordance with the authorization of management and directors of PMI; and
|
•
|
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the consolidated financial statements.
|
|
|
|
Name
|
|
State or
Country of
Organization
|
|
||
|
|
|
|
|
|
Compania Colombiana de Tabaco S.A.
|
|
Colombia
|
Intertaba S.p.A.
|
|
Italy
|
Leonard Dingler (Proprietary) Limited
|
|
South Africa
|
Massalin Particulares S.A.
|
|
Argentina
|
Papastratos Cigarette Manufacturing Company
|
|
Greece
|
Philip Morris Brands S.a.r.l.
|
|
Switzerland
|
Philip Morris Brasil Industria e Comercio Ltda.
|
|
Brazil
|
Philip Morris Cigatam Productos Y Servicios, S. de R.L. de C.V.
|
|
Mexico
|
Philip Morris CR a.s.
|
|
Czech Republic
|
Philip Morris Exports S.a.r.l.
|
|
Switzerland
|
Philip Morris Finance S.A.
|
|
Switzerland
|
Philip Morris Finland OY
|
|
Finland
|
Philip Morris Global Brands Inc.
|
|
USA
|
Philip Morris GmbH
|
|
Germany
|
Philip Morris Holland B.V.
|
|
Netherlands
|
Philip Morris Holland Holdings B.V.
|
|
Netherlands
|
Philip Morris International Management SA
|
|
Switzerland
|
Philip Morris Investments B.V.
|
|
Netherlands
|
Philip Morris Italia S.r.l.
|
|
Italy
|
Philip Morris Japan Kabushiki Kaisha
|
|
Japan
|
Philip Morris Kazakhstan LLP
|
|
Kazakhstan
|
Philip Morris Korea Inc.
|
|
Korea, Republic of
|
Philip Morris Limited
|
|
Australia
|
Philip Morris Manufacturing GmbH
|
|
Germany
|
Philip Morris Mexico, Sociedad Anónima de Capital Variable
|
|
Mexico
|
Philip Morris Operations a.d.
|
|
Serbia
|
Philip Morris (Pakistan) Limited
|
|
Pakistan
|
Philip Morris Polska S.A.
|
|
Poland
|
Philip Morris Products S.A.
|
|
Switzerland
|
Philip Morris SA, Philip Morris Sabanci Pazarlama ve Satis A.S.
|
|
Turkey
|
Philip Morris Sales and Marketing Ltd.
|
|
Russia
|
Philip Morris World Trade S.a.r.l.
|
|
Switzerland
|
PHILSA Philip Morris Sabanci Sigara ve Tutunculuk Sanayi ve Ticaret A.S.
|
|
Turkey
|
PMFTC Inc.
|
|
Philippines
|
PM Tobakk Norge AS
|
|
Norway
|
PRSJC Philip Morris Ukraine
|
|
Ukraine
|
PT Hanjaya Mandala Sampoerna Tbk.
|
|
Indonesia
|
PT Philip Morris Indonesia
|
|
Indonesia
|
Rothmans, Benson & Hedges Inc.
|
|
Canada
|
Tabaqueira II, S.A.
|
|
Portugal
|
Tabaqueira - Empresa Industrial de Tabacos, S.A.
|
|
Portugal
|
ZAO Philip Morris Izhora
|
|
Russia
|
|
|
|
|
|
/s/ BARRY J. MISTHAL
|
|
|
|
/s/
FELIX ROTH
|
|
|
|
|
|
Barry J. Misthal
|
|
|
|
Felix Roth
|
|
/s/ H
AROLD
B
ROWN
|
Harold Brown
|
|
/s/ M
ATHIS
C
ABIALLAVETTA
|
Mathis Cabiallavetta
|
|
/s/ LOUIS C. CAMILLERI
|
Louis C. Camilleri
|
|
/s/ J. D
UDLEY
F
ISHBURN
|
J. Dudley Fishburn
|
|
/s/ J
ENNIFER
L
I
|
Jennifer Li
|
|
/s/ S
ERGIO
M
ARCHIONNE
|
Sergio Marchionne
|
|
/s/ K
ALPANA
M
ORPARIA
|
Kalpana Morparia
|
|
/s/ L
UCIO
A. N
OTO
|
Lucio A. Noto
|
|
/s/ R
OBERT
B. P
OLET
|
Robert B. Polet
|
|
/s/ C
ARLOS
S
LIM
H
ELÚ
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Carlos Slim Helú
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/s/ S
TEPHEN
M. W
OLF
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Stephen M. Wolf
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1.
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I have reviewed this
annual
report on
Form 10-K
of Philip Morris International Inc.;
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2.
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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;
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3.
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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;
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4.
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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:
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a.
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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;
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b.
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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;
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c.
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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
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d.
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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
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5.
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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):
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a.
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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
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b.
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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.
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/s/ ANDRÉ CALANTZOPOULOS
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André Calantzopoulos
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Chief Executive Officer
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1.
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I have reviewed this
annual
report on
Form 10-K
of Philip Morris International Inc.;
|
2.
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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;
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3.
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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;
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4.
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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;
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b.
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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;
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c.
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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
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d.
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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
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5.
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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.
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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
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b.
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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.
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/s/ JACEK OLCZAK
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Jacek Olczak
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Chief Financial Officer
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/s/ ANDRÉ CALANTZOPOULOS
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André Calantzopoulos
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Chief Executive Officer
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February 21, 2014
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/s/ JACEK OLCZAK
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Jacek Olczak
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Chief Financial Officer
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February 21, 2014
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