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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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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1.250% 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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1.875% Notes due 2021
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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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3.250% 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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2.875% Notes due 2026
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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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2.875% Notes due 2029
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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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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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4.250% Notes due 2044
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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 30, 2015
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Common Stock,
no par value
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1,546,930,958
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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 definitive proxy statement for use in connection with its annual meeting of shareholders to be held on May 6, 2015, to be filed with the Securities and Exchange Commission (“SEC”) on or about March 26, 2015.
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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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2014
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2013
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2012
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European Union
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30.9
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%
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30.8
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%
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29.6
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%
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Eastern Europe, Middle East & Africa
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34.2
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27.4
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26.3
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Asia
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26.4
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33.6
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36.7
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Latin America & Canada
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8.5
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8.2
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7.4
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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 the consolidated financial statements in Item 8.
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•
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Improved effectiveness of direct adult smoker engagement activities;
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•
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More effective communication with our retailers about our brands;
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•
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Increased speed, efficiency and widespread availability of our products; and
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•
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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, distributors' networks, our competitive position, operating costs and the regulatory framework).
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•
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Direct Sales and Distribution, where we have set up our own distribution directly to retailers;
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•
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Distribution through single independent distributors who are responsible for distribution in a single market;
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•
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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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•
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Distribution through national or regional wholesalers that then supply the retail trade.
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•
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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 combustible cigarettes;
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•
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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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•
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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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•
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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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•
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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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•
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restrictions on or licensing of outlets permitted to sell cigarettes;
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•
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the levying of substantial and increasing tax and duty charges;
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•
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restrictions or bans on advertising, marketing and sponsorship;
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•
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the display of larger health warnings, graphic health warnings and other labeling requirements;
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•
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restrictions on packaging design, including the use of colors, and plain packaging;
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•
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restrictions on packaging and cigarette formats and dimensions;
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•
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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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•
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requirements regarding testing, disclosure and performance standards for tar, nicotine, carbon monoxide and other smoke constituents;
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•
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disclosure, restrictions, or bans of tobacco product ingredients;
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•
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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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•
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elimination of duty free sales and duty free allowances for travelers; and
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•
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encouraging litigation against tobacco companies.
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•
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promote brand equity successfully;
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•
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anticipate and respond to new consumer trends;
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•
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develop new products and markets and broaden brand portfolios;
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•
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improve productivity; and
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•
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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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8
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9
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9
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8
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34
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Make-pack
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—
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—
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2
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2
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4
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Other
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4
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1
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3
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4
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12
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Total
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12
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10
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14
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14
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50
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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, 2015 |
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Number of Cases Pending as of
December 31, 2013 |
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Number of Cases Pending as of
December 31, 2012 |
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Individual Smoking and Health Cases
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62
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62
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76
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Smoking and Health Class Actions
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11
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11
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11
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Health Care Cost Recovery Actions
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16
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15
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15
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Lights Class Actions
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-
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1
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2
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Individual Lights Cases
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2
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2
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7
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Public Civil Actions
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2
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3
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4
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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 $4,950) 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 $38,050). Philip Morris Brasil appealed. In December 2014, the Superior Court of Justice granted PMB's appeal reversing the lower court's judgment and dismissing plaintiff's claim. Plaintiff failed to appeal. The case is now terminated, and we will no longer report it. |
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 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 $380) 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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•
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62 cases brought by individual plaintiffs in Argentina (23), Brazil (23), Canada (2), Chile (7), Costa Rica (2), Greece (1), Italy (2), the Philippines (1) and Scotland (1), compared with
62
such cases on
December 31, 2013
, and
76
cases on
December 31, 2012
; 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, 2013
and
December 31, 2012
.
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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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Date
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PMI
|
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PMI Compensation Survey Group
(1,2)
|
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S&P 500 Index
|
December 31, 2009
|
|
$100.00
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|
$100.00
|
|
$100.00
|
December 31, 2010
|
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$127.20
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|
$108.20
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$115.10
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December 31, 2011
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$177.80
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$123.30
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$117.50
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December 31, 2012
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$196.70
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$138.30
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$136.30
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December 31, 2013
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$213.40
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$176.90
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$180.40
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December 31, 2014
|
|
$208.90
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$184.00
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$205.10
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Period
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Total
Number of
Shares
Repurchased
|
|
Average
Price Paid
per Share
|
|
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
|
||||||
October 1, 2014 –
October 31, 2014 (1) |
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2,527,675
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|
$
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86.26
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|
|
137,855,652
|
|
|
$
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5,929,019,556
|
|
November 1, 2014 –
November 30, 2014 (1) |
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3,028,600
|
|
|
$
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87.51
|
|
|
140,884,252
|
|
|
$
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5,663,982,894
|
|
December 1, 2014 –
December 31, 2014 (1) |
|
3,759,144
|
|
|
$
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84.31
|
|
|
144,643,396
|
|
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$
|
5,347,045,761
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Pursuant to Publicly Announced
Plans or Programs |
|
9,315,419
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|
$
|
85.88
|
|
|
|
|
|
|||
October 1, 2014 –
October 31, 2014 (3) |
|
5,566
|
|
|
$
|
82.90
|
|
|
|
|
|
|||
November 1, 2014 –
November 30, 2014 (3) |
|
1,426
|
|
|
$
|
88.14
|
|
|
|
|
|
|||
December 1, 2014 –
December 31, 2014 (3) |
|
258,942
|
|
|
$
|
82.14
|
|
|
|
|
|
|||
For the Quarter Ended
December 31, 2014 |
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9,581,353
|
|
|
$
|
85.78
|
|
|
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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. On February 5, 2015, we announced that we do not plan any share repurchases in 2015. We will revisit the potential for such repurchases as the year unfolds, depending on the currency environment.
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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 deferred stock awards and used shares to pay all, or a portion of, the related taxes.
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
||||||||||
Summary of Operations:
|
|
|
|
|
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||||||||||
Net revenues
|
$
|
80,106
|
|
|
$
|
80,029
|
|
|
$
|
77,393
|
|
|
$
|
76,346
|
|
|
$
|
67,713
|
|
Cost of sales
|
10,436
|
|
|
10,410
|
|
|
10,373
|
|
|
10,678
|
|
|
9,713
|
|
|||||
Excise taxes on products
|
50,339
|
|
|
48,812
|
|
|
46,016
|
|
|
45,249
|
|
|
40,505
|
|
|||||
Gross profit
|
19,331
|
|
|
20,807
|
|
|
21,004
|
|
|
20,419
|
|
|
17,495
|
|
|||||
Operating income
|
11,702
|
|
|
13,515
|
|
|
13,863
|
|
|
13,342
|
|
|
11,208
|
|
|||||
Interest expense, net
|
1,052
|
|
|
973
|
|
|
859
|
|
|
800
|
|
|
876
|
|
|||||
Earnings before income taxes
|
10,650
|
|
|
12,542
|
|
|
13,004
|
|
|
12,542
|
|
|
10,332
|
|
|||||
Pre-tax profit margin
|
13.3
|
%
|
|
15.7
|
%
|
|
16.8
|
%
|
|
16.4
|
%
|
|
15.3
|
%
|
|||||
Provision for income taxes
|
3,097
|
|
|
3,670
|
|
|
3,833
|
|
|
3,653
|
|
|
2,826
|
|
|||||
Net earnings
|
7,658
|
|
|
8,850
|
|
|
9,154
|
|
|
8,879
|
|
|
7,498
|
|
|||||
Net earnings attributable to noncontrolling interests
|
165
|
|
|
274
|
|
|
354
|
|
|
288
|
|
|
239
|
|
|||||
Net earnings attributable to PMI
|
7,493
|
|
|
8,576
|
|
|
8,800
|
|
|
8,591
|
|
|
7,259
|
|
|||||
Basic earnings per share
|
4.76
|
|
|
5.26
|
|
|
5.17
|
|
|
4.85
|
|
|
3.93
|
|
|||||
Diluted earnings per share
|
4.76
|
|
|
5.26
|
|
|
5.17
|
|
|
4.85
|
|
|
3.92
|
|
|||||
Dividends declared per share
|
3.88
|
|
|
3.58
|
|
|
3.24
|
|
|
2.82
|
|
|
2.44
|
|
|||||
Capital expenditures
|
1,153
|
|
|
1,200
|
|
|
1,056
|
|
|
897
|
|
|
713
|
|
|||||
Depreciation and amortization
|
889
|
|
|
882
|
|
|
898
|
|
|
993
|
|
|
932
|
|
|||||
Property, plant and equipment, net
|
6,071
|
|
|
6,755
|
|
|
6,645
|
|
|
6,250
|
|
|
6,499
|
|
|||||
Inventories
|
8,592
|
|
|
9,846
|
|
|
8,949
|
|
|
8,120
|
|
|
8,317
|
|
|||||
Total assets
|
35,187
|
|
|
38,168
|
|
|
37,670
|
|
|
35,488
|
|
|
35,050
|
|
|||||
Long-term debt
|
26,929
|
|
|
24,023
|
|
|
17,639
|
|
|
14,828
|
|
|
13,370
|
|
|||||
Total debt
|
29,455
|
|
|
27,678
|
|
|
22,839
|
|
|
18,545
|
|
|
16,502
|
|
|||||
Stockholders' (deficit) equity
|
(11,203
|
)
|
|
(6,274
|
)
|
|
(3,154
|
)
|
|
551
|
|
|
3,933
|
|
|||||
Common dividends declared as a % of Diluted EPS
|
81.5
|
%
|
|
68.1
|
%
|
|
62.7
|
%
|
|
58.1
|
%
|
|
62.2
|
%
|
|||||
Market price per common share — high/low
|
91.63-75.28
|
|
|
96.73-82.86
|
|
|
94.13-72.85
|
|
|
79.42-55.85
|
|
|
60.87-42.94
|
|
|||||
Closing price of common share at year end
|
81.45
|
|
|
87.13
|
|
|
83.64
|
|
|
78.48
|
|
|
58.53
|
|
|||||
Price/earnings ratio at year end — Diluted
|
17
|
|
|
17
|
|
|
16
|
|
|
16
|
|
|
15
|
|
|||||
Number of common shares outstanding at year end (millions)
|
1,547
|
|
|
1,589
|
|
|
1,654
|
|
|
1,726
|
|
|
1,802
|
|
|||||
Number of employees
|
82,500
|
|
|
91,100
|
|
|
87,100
|
|
|
78,100
|
|
|
78,300
|
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
|
|
|
|
|
|
|
•
|
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, 2014
, from the comparable
2013
amounts, were as follows:
|
|
Diluted EPS
|
% Growth
|
|||
For the year ended December 31, 2013
|
$
|
5.26
|
|
|
|
|
|
|
|||
2013 Asset impairment and exit costs
|
0.12
|
|
|
||
2013 Tax items
|
0.02
|
|
|
||
Subtotal of 2013 items
|
0.14
|
|
|
||
|
|
|
|||
2014 Asset impairment and exit costs
|
(0.26
|
)
|
|
||
2014 Tax items
|
—
|
|
|
||
Subtotal of 2014 items
|
(0.26
|
)
|
|
||
|
|
|
|||
Currency
|
(0.80
|
)
|
|
||
Interest
|
(0.04
|
)
|
|
||
Change in tax rate
|
0.02
|
|
|
||
Impact of lower shares outstanding and share-based payments
|
0.18
|
|
|
||
Operations
|
0.26
|
|
|
||
For the year ended December 31, 2014
|
$
|
4.76
|
|
(9.5
|
)%
|
•
|
Asset Impairment and Exit Costs –
During
2014
, we recorded pre-tax asset impairment and exit costs of
$535 million
($409 million after tax or $0.26 per share) primarily related to the factory closures in the Netherlands, Australia and Canada and the restructuring of the U.S. leaf purchasing model. 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.
|
•
|
Income Taxes -
Our effective income tax rate for
2014
decreased
by
0.2
percentage points to
29.1%
. The effective tax rate for 2014 was unfavorably impacted by the above asset impairment and exit costs related to the factory closures. The 2013 effective tax rate was unfavorably impacted by the additional expense associated with the enactment of the American Taxpayer Relief Act of 2012 ($17 million) and the enactment of tax law changes in Mexico ($14 million), which decreased our diluted EPS by
$0.02
per share in
2013
. Excluding the impact of these items, the change in tax rate that increased our diluted EPS by
$0.02
per share in 2014 was primarily due to earnings mix by taxing jurisdiction and repatriation cost differences.
|
•
|
Currency –
The unfavorable currency impact during
2014
was due primarily to the Argentine peso, Australian dollar, Canadian dollar, Euro, Indonesian rupiah, Japanese yen, Kazakhstan tenge, Russian ruble, Turkish lira and the Ukraine hryvnia.
|
•
|
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 program.
|
•
|
Operations –
The increase in diluted EPS of
$0.26
from our operations in the table above was due to the following segments:
|
•
|
EEMA: Higher pricing and higher equity income in unconsolidated subsidiaries derived from our investments in North Africa and Russia, partially offset by higher manufacturing costs, unfavorable volume/mix and higher marketing, administration and research costs; and
|
•
|
Latin America & Canada: Higher pricing, partially offset by higher marketing, administration and research costs, unfavorable volume/mix and higher manufacturing costs; partially offset by:
|
•
|
European Union: Higher marketing, administration and research costs, higher manufacturing costs and unfavorable volume/mix, partially offset by higher pricing; and
|
•
|
Asia: Unfavorable volume/mix and higher manufacturing costs, partially offset by higher pricing.
|
(in millions)
|
2014
|
|
2013
|
|
2012
|
||||||
Cigarette Volume
|
|
|
|
|
|
||||||
European Union
|
185,197
|
|
|
185,096
|
|
|
197,966
|
|
|||
Eastern Europe, Middle East & Africa
|
287,923
|
|
|
296,462
|
|
|
303,828
|
|
|||
Asia
|
288,128
|
|
|
301,324
|
|
|
326,582
|
|
|||
Latin America & Canada
|
94,706
|
|
|
97,287
|
|
|
98,660
|
|
|||
Total cigarette volume
|
855,954
|
|
|
880,169
|
|
|
927,036
|
|
|||
|
|
||||||||||
(in millions)
|
2014
|
|
2013
|
|
2012
|
||||||
Net Revenues
|
|
|
|
|
|
||||||
European Union
|
$
|
29,058
|
|
|
$
|
28,303
|
|
|
$
|
27,338
|
|
Eastern Europe, Middle East & Africa
|
21,928
|
|
|
20,695
|
|
|
19,272
|
|
|||
Asia
|
19,255
|
|
|
20,987
|
|
|
21,071
|
|
|||
Latin America & Canada
|
9,865
|
|
|
10,044
|
|
|
9,712
|
|
|||
Net revenues
|
$
|
80,106
|
|
|
$
|
80,029
|
|
|
$
|
77,393
|
|
|
|
||||||||||
(in millions)
|
2014
|
|
2013
|
|
2012
|
||||||
Excise Taxes on Products
|
|
|
|
|
|
||||||
European Union
|
$
|
20,219
|
|
|
$
|
19,707
|
|
|
$
|
18,812
|
|
Eastern Europe, Middle East & Africa
|
13,006
|
|
|
11,929
|
|
|
10,940
|
|
|||
Asia
|
10,527
|
|
|
10,486
|
|
|
9,873
|
|
|||
Latin America & Canada
|
6,587
|
|
|
6,690
|
|
|
6,391
|
|
|||
Excise taxes on products
|
$
|
50,339
|
|
|
$
|
48,812
|
|
|
$
|
46,016
|
|
(in millions)
|
2014
|
|
2013
|
|
2012
|
||||||
Operating Income
|
|
|
|
|
|
||||||
Operating companies income:
|
|
|
|
|
|
||||||
European Union
|
$
|
3,727
|
|
|
$
|
4,238
|
|
|
$
|
4,187
|
|
Eastern Europe, Middle East & Africa
|
4,121
|
|
|
3,779
|
|
|
3,726
|
|
|||
Asia
|
3,187
|
|
|
4,622
|
|
|
5,197
|
|
|||
Latin America & Canada
|
1,030
|
|
|
1,134
|
|
|
1,043
|
|
|||
Amortization of intangibles
|
(93
|
)
|
|
(93
|
)
|
|
(97
|
)
|
|||
General corporate expenses
|
(165
|
)
|
|
(187
|
)
|
|
(210
|
)
|
|||
Less:
|
|
|
|
|
|
||||||
Equity (income)/loss in unconsolidated subsidiaries, net
|
(105
|
)
|
|
22
|
|
|
17
|
|
|||
Operating income
|
$
|
11,702
|
|
|
$
|
13,515
|
|
|
$
|
13,863
|
|
(in millions)
|
2014
|
|
|
2013
|
|
|
2012
|
|
|||
Separation programs:
|
|
|
|
|
|
||||||
European Union
|
$
|
351
|
|
|
$
|
13
|
|
|
—
|
|
|
Eastern Europe, Middle East & Africa
|
2
|
|
|
14
|
|
|
—
|
|
|||
Asia
|
35
|
|
|
19
|
|
|
13
|
|
|||
Latin America & Canada
|
3
|
|
|
5
|
|
|
29
|
|
|||
Total separation programs
|
391
|
|
|
51
|
|
|
42
|
|
|||
Contract termination charges:
|
|
|
|
|
|
||||||
Eastern Europe, Middle East & Africa
|
—
|
|
|
250
|
|
|
—
|
|
|||
Asia
|
—
|
|
|
8
|
|
|
13
|
|
|||
Total contract termination charges
|
—
|
|
|
258
|
|
|
13
|
|
|||
Asset impairment charges:
|
|
|
|
|
|
||||||
European Union
|
139
|
|
|
—
|
|
|
5
|
|
|||
Eastern Europe, Middle East & Africa
|
—
|
|
|
—
|
|
|
5
|
|
|||
Asia
|
—
|
|
|
—
|
|
|
13
|
|
|||
Latin America & Canada
|
5
|
|
|
—
|
|
|
5
|
|
|||
Total asset impairment charges
|
144
|
|
|
—
|
|
|
28
|
|
|||
Asset impairment and exit costs
|
$
|
535
|
|
|
$
|
309
|
|
|
$
|
83
|
|
•
|
EEMA, principally Kazakhstan, Russia and Ukraine, partially offset by Algeria and Turkey;
|
•
|
Asia, predominantly Japan, reflecting a lower total market, lower market share and the unfavorable impact of an adjustment in distributor inventories, as well as Australia, Indonesia and Pakistan; and
|
•
|
Latin America & Canada, principally Canada and Mexico.
|
•
|
the positive impact of market share growth in the European Union, EEMA and Latin America & Canada Regions; and
|
•
|
cigarette shipment volume in the European Union, which was slightly positive.
|
•
|
unfavorable currency (
$2.1 billion
) and
|
•
|
unfavorable volume/mix (
$1.3 billion
), partly offset by
|
•
|
price increases (
$1.9 billion
) and
|
•
|
the impact of acquisitions ($13 million).
|
•
|
higher manufacturing costs (
$545 million
, principally in Egypt, due to the impact of the change to our new business structure; in Indonesia, due to higher distribution and manufacturing costs; investments related to the launch and commercialization of the company's Reduced-Risk Product,
iQOS;
and ongoing costs related to the factory closure in Australia and the decision to discontinue cigarette production in the Netherlands). For further details on our change in business structure in Egypt, see the
Acquisitions and Other Business Arrangements
section of this
Discussion and Analysis
and
|
•
|
the impact of acquisitions ($8 million), partially offset by
|
•
|
favorable currency (
$380 million
) and
|
•
|
volume/mix (
$147 million
).
|
•
|
higher expenses (
$340 million
, primarily higher marketing and selling expenses) and
|
•
|
the impact of acquisitions ($15 million), partly offset by
|
•
|
favorable currency (
$244 million
).
|
•
|
unfavorable currency (
$1.5 billion
),
|
•
|
unfavorable volume/mix (
$1.1 billion
),
|
•
|
higher manufacturing costs (
$545 million
),
|
•
|
higher marketing, administration and research costs (
$340 million
) and
|
•
|
higher pre-tax charges for asset impairment and exit costs (
$226 million
, primarily related to the decision to discontinue cigarette production in the Netherlands), partly offset by
|
•
|
price increases (
$1.9 billion
).
|
•
|
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).
|
•
|
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 Item 3 and Item 8, 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 various pack formats, such as certain 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 some characterizing flavors in tobacco products, with a transition period for menthol expiring in May 2020;
|
•
|
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 novel tobacco products and e-cigarettes (except for those found to be medicines or medical devices), including requirements for 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 combustible 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
, as discussed below, uses a precisely controlled heating device that we are commercializing under the
iQOS
brand name, into which a specially designed tobacco product under the
Marlboro
and
HeatSticks
brands is inserted to generate an aerosol. Eight clinical trials for Platform 1 were initiated in 2013 including six short-term clinical studies and two three-month studies. The results of those studies will be available in 2015. We initiated a longer term clinical study in December 2014 with the final results anticipated in the fourth quarter of 2016.
|
•
|
Platform 2
uses a pressed carbon heat source to generate an aerosol by heating tobacco. The product is currently in the pre-clinical testing phase, and we plan to begin clinical trials as of the second quarter of 2015.
|
•
|
Platform 3
is based on technology we acquired from Professor Jed Rose of Duke University and his co-inventors in May 2011. This product creates an aerosol of nicotine salt formed by the chemical reaction of nicotine with a weak organic acid. We are
|
•
|
Platform 4
covers e-vapor products, which are battery powered devices that produce an aerosol by vaporizing a liquid nicotine solution. Our e-vapor products comprise devices using current generation technology, and we are working on developing the next generation of e-vapor technologies to address the challenges presented by the e-vapor products currently on the market, ranging from consumer satisfaction to manufacturing processes and product consistency.
|
•
|
price increases (
$127 million
),
|
•
|
favorable currency (
$122 million
) and
|
•
|
the impact of acquisitions ($11 million), partly offset by
|
•
|
unfavorable volume/mix (
$17 million
).
|
•
|
higher pre-tax charge for asset impairment and exit costs (
$477 million
, primarily related to the decision to discontinue cigarette production in the Netherlands in 2014),
|
•
|
higher marketing, administration and research costs (
$99 million
),
|
•
|
higher manufacturing costs (
$50 million
) and
|
•
|
unfavorable volume/mix (
$46 million
), partly offset by
|
•
|
price increases (
$127 million
) and
|
•
|
favorable currency (
$37 million
).
|
•
|
price increases (
$1.1 billion
), partly offset by
|
•
|
unfavorable currency (
$761 million
) and
|
•
|
unfavorable volume/mix (
$224 million
).
|
•
|
price increases (
$1.1 billion
),
|
•
|
lower pre-tax charges for asset impairment and exit costs ($262 million) and
|
•
|
higher equity income in unconsolidated subsidiaries (
$135 million
), partly offset by
|
•
|
unfavorable currency (
$611 million
),
|
•
|
higher manufacturing costs (
$244 million
, principally related to the impact of the change to our new business structure in Egypt),
|
•
|
unfavorable volume/mix (
$202 million
) and
|
•
|
higher marketing, administration and research costs ($130 million).
|
•
|
unfavorable currency (
$1.0 billion
) and
|
•
|
unfavorable volume/mix (
$906 million
), partly offset by
|
•
|
price increases (
$155 million
).
|
•
|
unfavorable volume/mix (
$746 million
),
|
•
|
unfavorable currency (
$656 million
),
|
•
|
higher manufacturing costs (
$181 million
, principally in Indonesia driven mainly by higher clove prices and cost related to the transition from hand-rolled to machine-made kretek cigarette production) and
|
•
|
higher pre-tax charges for asset impairment and exit costs (
$8 million
, principally due to the factory closure in Australia), partly offset by
|
•
|
price increases (
$155 million
).
|
•
|
unfavorable currency (
$431 million
) and
|
•
|
unfavorable volume/mix (
$127 million
), partly offset by
|
•
|
price increases (
$481 million
).
|
•
|
unfavorable currency (
$243 million
),
|
•
|
unfavorable volume/mix (
$133 million
),
|
•
|
higher marketing, administration and research costs (
$135 million
) and
|
•
|
higher manufacturing costs (
$70 million
), partly offset by
|
•
|
price increases (
$481 million
).
|
•
|
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).
|
•
|
more cash used for accrued liabilities and other current assets (
$2.4 billion
), largely due to the timing of payments for excise taxes, partially offset by
|
•
|
more cash provided by inventories (
$1.5 billion
), primarily related to lower leaf tobacco and finished goods inventory levels.
|
•
|
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.
|
Type
|
|
Committed
Credit
Facilities
|
||
364-day revolving credit, expiring February 9, 2016
|
|
$
|
2.0
|
|
Multi-year revolving credit, expiring February 28, 2019
(1)
|
|
2.5
|
|
|
Multi-year revolving credit, expiring October 25, 2016
|
|
3.5
|
|
|
Total facilities
|
|
$
|
8.0
|
|
•
|
Off-Balance Sheet Arrangements and Aggregate Contractual Obligations
|
|
|
Payments Due
|
|||||||||||||
|
Total
|
2015
|
2016-2017
|
2018-2019
|
2020 and
Thereafter |
||||||||||
(in millions)
|
|
||||||||||||||
Long-term debt
(1)
|
|
$28,542
|
|
|
$1,318
|
|
|
$4,299
|
|
|
$4,646
|
|
|
$18,279
|
|
RBH Legal Settlement
(2)
|
128
|
|
34
|
|
75
|
|
19
|
|
—
|
|
|||||
Colombian Investment and Cooperation Agreement
(3)
|
109
|
|
8
|
|
15
|
|
13
|
|
73
|
|
|||||
Interest on borrowings
(4)
|
11,679
|
|
959
|
|
1,685
|
|
1,368
|
|
7,667
|
|
|||||
Operating leases
(5)
|
740
|
|
197
|
|
241
|
|
109
|
|
193
|
|
|||||
Purchase obligations
(6)
:
|
|
|
|
|
|
||||||||||
Inventory and production costs
|
3,980
|
|
1,902
|
|
742
|
|
512
|
|
824
|
|
|||||
Other
|
1,645
|
|
924
|
|
578
|
|
137
|
|
6
|
|
|||||
|
5,625
|
|
2,826
|
|
1,320
|
|
649
|
|
830
|
|
|||||
Other long-term liabilities
(7)
|
423
|
|
27
|
|
142
|
|
23
|
|
231
|
|
|||||
|
|
$47,246
|
|
|
$5,369
|
|
|
$7,777
|
|
|
$6,827
|
|
|
$27,273
|
|
|
Pre-Tax Earnings Impact
|
||||||
(in millions)
|
At
12/31/14
|
|
Average
|
|
High
|
|
Low
|
Instruments sensitive to:
|
|
|
|
|
|
|
|
Foreign currency rates
|
$39
|
|
$25
|
|
$39
|
|
$13
|
|
|
||||||
|
Fair Value Impact
|
||||||
(in millions)
|
At
12/31/14
|
|
Average
|
|
High
|
|
Low
|
Instruments sensitive to:
|
|
|
|
|
|
|
|
Interest rates
|
$95
|
|
$69
|
|
$95
|
|
$55
|
|
|
|
|
|
|
|
|
|
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
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk.
|
Item 8.
|
Financial Statements and Supplementary Data.
|
at December 31,
|
2014
|
|
2013
|
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,682
|
|
|
$
|
2,154
|
|
Receivables (less allowances of $50 in 2014 and $53 in 2013)
|
4,004
|
|
|
3,853
|
|
||
Inventories:
|
|
|
|
||||
Leaf tobacco
|
3,135
|
|
|
3,709
|
|
||
Other raw materials
|
1,696
|
|
|
1,596
|
|
||
Finished product
|
3,761
|
|
|
4,541
|
|
||
|
8,592
|
|
|
9,846
|
|
||
Deferred income taxes
|
533
|
|
|
502
|
|
||
Other current assets
|
673
|
|
|
497
|
|
||
Total current assets
|
15,484
|
|
|
16,852
|
|
||
Property, plant and equipment, at cost:
|
|
|
|
||||
Land and land improvements
|
639
|
|
|
671
|
|
||
Buildings and building equipment
|
3,620
|
|
|
4,013
|
|
||
Machinery and equipment
|
7,664
|
|
|
8,409
|
|
||
Construction in progress
|
836
|
|
|
864
|
|
||
|
12,759
|
|
|
13,957
|
|
||
Less: accumulated depreciation
|
6,688
|
|
|
7,202
|
|
||
|
6,071
|
|
|
6,755
|
|
||
Goodwill (Note 3)
|
8,388
|
|
|
8,893
|
|
||
Other intangible assets, net (Note 3)
|
2,985
|
|
|
3,193
|
|
||
Investments in unconsolidated subsidiaries (Note 4)
|
1,083
|
|
|
1,536
|
|
||
Other assets
|
1,176
|
|
|
939
|
|
||
Total Assets
|
$
|
35,187
|
|
|
$
|
38,168
|
|
at December 31,
|
2014
|
|
2013
|
||||
Liabilities
|
|
|
|
||||
Short-term borrowings (Note 7)
|
$
|
1,208
|
|
|
$
|
2,400
|
|
Current portion of long-term debt (Note 7)
|
1,318
|
|
|
1,255
|
|
||
Accounts payable
|
1,242
|
|
|
1,274
|
|
||
Accrued liabilities:
|
|
|
|
||||
Marketing and selling
|
549
|
|
|
503
|
|
||
Taxes, except income taxes
|
5,490
|
|
|
6,492
|
|
||
Employment costs
|
1,135
|
|
|
949
|
|
||
Dividends payable
|
1,559
|
|
|
1,507
|
|
||
Other
|
1,375
|
|
|
1,382
|
|
||
Income taxes
|
1,078
|
|
|
1,192
|
|
||
Deferred income taxes
|
158
|
|
|
112
|
|
||
Total current liabilities
|
15,112
|
|
|
17,066
|
|
||
Long-term debt (Note 7)
|
26,929
|
|
|
24,023
|
|
||
Deferred income taxes
|
1,549
|
|
|
1,477
|
|
||
Employment costs
|
2,202
|
|
|
1,313
|
|
||
Other liabilities
|
598
|
|
|
563
|
|
||
Total liabilities
|
46,390
|
|
|
44,442
|
|
||
Contingencies (Note 21)
|
|
|
|
||||
Stockholders’ (Deficit) Equity
|
|
|
|
||||
Common stock, no par value (2,109,316,331 shares issued in 2014 and 2013)
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
710
|
|
|
723
|
|
||
Earnings reinvested in the business
|
29,249
|
|
|
27,843
|
|
||
Accumulated other comprehensive losses
|
(6,826
|
)
|
|
(4,190
|
)
|
||
|
23,133
|
|
|
24,376
|
|
||
Less: cost of repurchased stock (562,416,635 and 520,313,919 shares in 2014 and 2013, respectively)
|
35,762
|
|
|
32,142
|
|
||
Total PMI stockholders’ deficit
|
(12,629
|
)
|
|
(7,766
|
)
|
||
Noncontrolling interests
|
1,426
|
|
|
1,492
|
|
||
Total stockholders’ deficit
|
(11,203
|
)
|
|
(6,274
|
)
|
||
Total Liabilities and Stockholders’ (Deficit) Equity
|
$
|
35,187
|
|
|
$
|
38,168
|
|
for the years ended December 31,
|
2014
|
|
2013
|
|
2012
|
||||||
Net revenues
|
$
|
80,106
|
|
|
$
|
80,029
|
|
|
$
|
77,393
|
|
Cost of sales
|
10,436
|
|
|
10,410
|
|
|
10,373
|
|
|||
Excise taxes on products
|
50,339
|
|
|
48,812
|
|
|
46,016
|
|
|||
Gross profit
|
19,331
|
|
|
20,807
|
|
|
21,004
|
|
|||
Marketing, administration and research costs
|
7,001
|
|
|
6,890
|
|
|
6,961
|
|
|||
Asset impairment and exit costs (Note 5)
|
535
|
|
|
309
|
|
|
83
|
|
|||
Amortization of intangibles
|
93
|
|
|
93
|
|
|
97
|
|
|||
Operating income
|
11,702
|
|
|
13,515
|
|
|
13,863
|
|
|||
Interest expense, net (Note 14)
|
1,052
|
|
|
973
|
|
|
859
|
|
|||
Earnings before income taxes
|
10,650
|
|
|
12,542
|
|
|
13,004
|
|
|||
Provision for income taxes
|
3,097
|
|
|
3,670
|
|
|
3,833
|
|
|||
Equity (income)/loss in unconsolidated subsidiaries, net
|
(105
|
)
|
|
22
|
|
|
17
|
|
|||
Net earnings
|
7,658
|
|
|
8,850
|
|
|
9,154
|
|
|||
Net earnings attributable to noncontrolling interests
|
165
|
|
|
274
|
|
|
354
|
|
|||
Net earnings attributable to PMI
|
$
|
7,493
|
|
|
$
|
8,576
|
|
|
$
|
8,800
|
|
Per share data (Note 10):
|
|
|
|
|
|
||||||
Basic earnings per share
|
$
|
4.76
|
|
|
$
|
5.26
|
|
|
$
|
5.17
|
|
Diluted earnings per share
|
$
|
4.76
|
|
|
$
|
5.26
|
|
|
$
|
5.17
|
|
for the years ended December 31,
|
2014
|
|
2013
|
|
2012
|
||||||
Net earnings
|
$
|
7,658
|
|
|
$
|
8,850
|
|
|
$
|
9,154
|
|
Other comprehensive earnings (losses), net of income taxes:
|
|
|
|
|
|
||||||
Change in currency translation adjustments:
|
|
|
|
|
|
||||||
Unrealized gains (losses), net of income taxes of ($161) in 2014, $227 in 2013 and $6 in 2012
|
(1,746
|
)
|
|
(1,876
|
)
|
|
15
|
|
|||
(Gains)/losses transferred to earnings, net of income taxes of $- in 2014 and $- in 2013
|
(5
|
)
|
|
(12
|
)
|
|
—
|
|
|||
Change in net loss and prior service cost:
|
|
|
|
|
|
||||||
Net gains (losses) and prior service costs, net of income taxes of $167 in 2014, ($81) in 2013 and $144 in 2012
|
(1,148
|
)
|
|
1,079
|
|
|
(943
|
)
|
|||
Amortization of net losses, prior service costs and net transition costs, net of income taxes of ($42) in 2014, ($49) in 2013 and ($37) in 2012
|
173
|
|
|
243
|
|
|
160
|
|
|||
Change in fair value of derivatives accounted for as hedges:
|
|
|
|
|
|
||||||
Gains recognized, net of income taxes of ($13) in 2014, ($30) in 2013 and ($14) in 2012
|
98
|
|
|
206
|
|
|
99
|
|
|||
Gains transferred to earnings, net of income taxes of $10 in 2014, $34 in 2013 and $3 in 2012
|
(38
|
)
|
|
(235
|
)
|
|
(22
|
)
|
|||
Total other comprehensive losses
|
(2,666
|
)
|
|
(595
|
)
|
|
(691
|
)
|
|||
Total comprehensive earnings
|
4,992
|
|
|
8,255
|
|
|
8,463
|
|
|||
Less comprehensive earnings attributable to:
|
|
|
|
|
|
||||||
Noncontrolling interests
|
135
|
|
|
197
|
|
|
210
|
|
|||
Redeemable noncontrolling interest (Note 23)
|
—
|
|
|
68
|
|
|
194
|
|
|||
Comprehensive earnings attributable to PMI
|
$
|
4,857
|
|
|
$
|
7,990
|
|
|
$
|
8,059
|
|
|
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, 2012
|
$
|
—
|
|
|
$
|
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 earnings (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)
|
|
1,275
|
|
(1)
|
||||||||||||
Common stock repurchased
|
|
|
|
|
|
|
|
|
(6,000
|
)
|
|
|
|
|
(6,000
|
)
|
|
||||||||||||
Balances, December 31, 2013
|
—
|
|
|
723
|
|
|
27,843
|
|
|
(4,190
|
)
|
|
(32,142
|
)
|
|
1,492
|
|
|
|
(6,274
|
)
|
|
|||||||
Net earnings
|
|
|
|
|
7,493
|
|
|
|
|
|
|
165
|
|
|
|
7,658
|
|
|
|||||||||||
Other comprehensive earnings (losses), net of income taxes
|
|
|
|
|
|
|
(2,636
|
)
|
|
|
|
(30
|
)
|
|
|
(2,666
|
)
|
|
|||||||||||
Issuance of stock awards and exercise of stock options
|
|
|
(13
|
)
|
|
|
|
|
|
180
|
|
|
|
|
|
167
|
|
|
|||||||||||
Dividends declared ($3.88 per share)
|
|
|
|
|
(6,087
|
)
|
|
|
|
|
|
|
|
|
(6,087
|
)
|
|
||||||||||||
Payments to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
(207
|
)
|
|
|
(207
|
)
|
|
||||||||||||
Common stock repurchased
|
|
|
|
|
|
|
|
|
(3,800
|
)
|
|
|
|
|
(3,800
|
)
|
|
||||||||||||
Other
|
|
|
|
|
|
|
|
|
|
|
6
|
|
|
|
6
|
|
|
||||||||||||
Balances, December 31, 2014
|
$
|
—
|
|
|
$
|
710
|
|
|
$
|
29,249
|
|
|
$
|
(6,826
|
)
|
|
$
|
(35,762
|
)
|
|
$
|
1,426
|
|
|
|
$
|
(11,203
|
)
|
|
for the years ended December 31,
|
2014
|
|
2013
|
|
2012
|
||||||
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
|
|
|
|
|
||||||
Net earnings
|
$
|
7,658
|
|
|
$
|
8,850
|
|
|
$
|
9,154
|
|
Adjustments to reconcile net earnings to operating cash flows:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
889
|
|
|
882
|
|
|
898
|
|
|||
Deferred income tax benefit
|
(62
|
)
|
|
(28
|
)
|
|
(248
|
)
|
|||
Asset impairment and exit costs, net of cash paid
|
175
|
|
|
288
|
|
|
26
|
|
|||
Cash effects of changes, net of the effects from acquired companies:
|
|
|
|
|
|
||||||
Receivables, net
|
(463
|
)
|
|
(449
|
)
|
|
(398
|
)
|
|||
Inventories
|
105
|
|
|
(1,413
|
)
|
|
(728
|
)
|
|||
Accounts payable
|
177
|
|
|
103
|
|
|
10
|
|
|||
Income taxes
|
(230
|
)
|
|
(331
|
)
|
|
638
|
|
|||
Accrued liabilities and other current assets
|
(507
|
)
|
|
1,880
|
|
|
(183
|
)
|
|||
Pension plan contributions
|
(191
|
)
|
|
(150
|
)
|
|
(207
|
)
|
|||
Other
|
188
|
|
|
503
|
|
|
459
|
|
|||
Net cash provided by operating activities
|
7,739
|
|
|
10,135
|
|
|
9,421
|
|
|||
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
|
|
|
|
|
|
||||||
Capital expenditures
|
(1,153
|
)
|
|
(1,200
|
)
|
|
(1,056
|
)
|
|||
Investments in unconsolidated subsidiaries
|
(29
|
)
|
|
(1,418
|
)
|
|
(6
|
)
|
|||
Purchase of businesses, net of acquired cash
|
(110
|
)
|
|
—
|
|
|
—
|
|
|||
Other
|
296
|
|
|
(62
|
)
|
|
70
|
|
|||
Net cash used in investing activities
|
(996
|
)
|
|
(2,680
|
)
|
|
(992
|
)
|
for the years ended December 31,
|
2014
|
|
2013
|
|
2012
|
||||||
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
|
|
|
|
|
||||||
Short-term borrowing activity by original maturity:
|
|
|
|
|
|
||||||
Net issuances (repayments) - maturities of 90 days or less
|
$
|
(516
|
)
|
|
$
|
(1,099
|
)
|
|
$
|
1,515
|
|
Issuances - maturities longer than 90 days
|
1,007
|
|
|
2,000
|
|
|
603
|
|
|||
Repayments - maturities longer than 90 days
|
(1,571
|
)
|
|
(849
|
)
|
|
(1,220
|
)
|
|||
Long-term debt proceeds
|
5,591
|
|
|
7,181
|
|
|
5,516
|
|
|||
Long-term debt repaid
|
(1,240
|
)
|
|
(2,738
|
)
|
|
(2,237
|
)
|
|||
Repurchases of common stock
|
(3,833
|
)
|
|
(5,963
|
)
|
|
(6,525
|
)
|
|||
Dividends paid
|
(6,035
|
)
|
|
(5,720
|
)
|
|
(5,404
|
)
|
|||
Purchase of subsidiary shares from noncontrolling interests
|
—
|
|
|
(703
|
)
|
|
(2
|
)
|
|||
Other
|
(242
|
)
|
|
(324
|
)
|
|
(346
|
)
|
|||
Net cash used in financing activities
|
(6,839
|
)
|
|
(8,215
|
)
|
|
(8,100
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(376
|
)
|
|
(69
|
)
|
|
104
|
|
|||
Cash and cash equivalents:
|
|
|
|
|
|
||||||
(Decrease) Increase
|
(472
|
)
|
|
(829
|
)
|
|
433
|
|
|||
Balance at beginning of year
|
2,154
|
|
|
2,983
|
|
|
2,550
|
|
|||
Balance at end of year
|
$
|
1,682
|
|
|
$
|
2,154
|
|
|
$
|
2,983
|
|
|
|
|
|
|
|
||||||
Cash Paid:
|
|
|
|
|
|
||||||
Interest
|
$
|
1,068
|
|
|
$
|
978
|
|
|
$
|
986
|
|
Income taxes
|
$
|
3,577
|
|
|
$
|
3,999
|
|
|
$
|
3,420
|
|
Note 1.
|
Note 2.
|
Note 3.
|
|
|
Goodwill
|
|
Other Intangible
Assets, net
|
||||||||||||
(in millions)
|
December 31, 2014
|
|
December 31, 2013
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||||
European Union
|
$
|
1,398
|
|
|
$
|
1,472
|
|
|
$
|
582
|
|
|
$
|
604
|
|
Eastern Europe, Middle East & Africa
|
517
|
|
|
617
|
|
|
215
|
|
|
228
|
|
||||
Asia
|
3,904
|
|
|
3,960
|
|
|
1,207
|
|
|
1,251
|
|
||||
Latin America & Canada
|
2,569
|
|
|
2,844
|
|
|
981
|
|
|
1,110
|
|
||||
Total
|
$
|
8,388
|
|
|
$
|
8,893
|
|
|
$
|
2,985
|
|
|
$
|
3,193
|
|
(in millions)
|
|
European
Union |
|
Eastern Europe,
Middle East
&
Africa |
|
Asia
|
|
Latin
America & Canada |
|
Total
|
||||||||||
Balance at January 1, 2013
|
|
$
|
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
|
|
|||||
Changes due to:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Acquisitions
|
|
118
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
120
|
|
|||||
Currency
|
|
(192
|
)
|
|
(100
|
)
|
|
(56
|
)
|
|
(277
|
)
|
|
(625
|
)
|
|||||
Balance at December 31, 2014
|
|
$
|
1,398
|
|
|
$
|
517
|
|
|
$
|
3,904
|
|
|
$
|
2,569
|
|
|
$
|
8,388
|
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||||||||
(in millions)
|
Gross
Carrying Amount |
|
|
Accumulated
Amortization |
|
|
Gross
Carrying Amount |
|
|
Accumulated
Amortization |
|
||||
Non-amortizable intangible assets
|
$
|
1,704
|
|
|
|
|
$
|
1,798
|
|
|
|
||||
Amortizable intangible assets
|
1,877
|
|
|
$
|
596
|
|
|
1,940
|
|
|
$
|
545
|
|
||
Total other intangible assets
|
$
|
3,581
|
|
|
$
|
596
|
|
|
$
|
3,738
|
|
|
$
|
545
|
|
Description (dollars in millions)
|
Gross
Carrying Amount |
Initial Estimated
Useful Lives |
|
Weighted-Average
Remaining Useful Life |
||
Trademarks
|
$
|
1,499
|
|
2 - 40 years
|
|
23 years
|
Distribution networks
|
168
|
|
5 - 30 years
|
|
13 years
|
|
Non-compete agreements
|
120
|
|
4 - 10 years
|
|
0.4 years
|
|
Other (including farmer contracts and intellectual property rights)
|
90
|
|
10 - 17 years
|
|
12 years
|
|
|
$
|
1,877
|
|
|
|
|
Note 4.
|
|
|
For the Years Ended December 31,
|
|||||
(in millions)
|
|
2014
|
2013
|
||||
|
|
|
|
||||
Net revenues
|
|
$
|
5,508
|
|
$
|
345
|
|
Note 5.
|
(in millions)
|
2014
|
|
2013
|
|
2012
|
||||||
Separation programs:
|
|
|
|
|
|
||||||
European Union
|
$
|
351
|
|
|
$
|
13
|
|
|
$
|
—
|
|
Eastern Europe, Middle East & Africa
|
2
|
|
|
14
|
|
|
—
|
|
|||
Asia
|
35
|
|
|
19
|
|
|
13
|
|
|||
Latin America & Canada
|
3
|
|
|
5
|
|
|
29
|
|
|||
Total separation programs
|
391
|
|
|
51
|
|
|
42
|
|
|||
Contract termination charges:
|
|
|
|
|
|
||||||
Eastern Europe, Middle East & Africa
|
—
|
|
|
250
|
|
|
—
|
|
|||
Asia
|
—
|
|
|
8
|
|
|
13
|
|
|||
Total contract termination charges
|
—
|
|
|
258
|
|
|
13
|
|
|||
Asset impairment charges:
|
|
|
|
|
|
||||||
European Union
|
139
|
|
|
—
|
|
|
5
|
|
|||
Eastern Europe, Middle East & Africa
|
—
|
|
|
—
|
|
|
5
|
|
|||
Asia
|
—
|
|
|
—
|
|
|
13
|
|
|||
Latin America & Canada
|
5
|
|
|
—
|
|
|
5
|
|
|||
Total asset impairment charges
|
144
|
|
|
—
|
|
|
28
|
|
|||
Asset impairment and exit costs
|
$
|
535
|
|
|
$
|
309
|
|
|
$
|
83
|
|
Note 6.
|
Note 7.
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||||||
(in millions)
|
Amount Outstanding
|
|
|
Average Year-End Rate
|
|
|
Amount Outstanding
|
|
|
Average Year-End Rate
|
|
||
Commercial paper
|
$
|
—
|
|
|
—
|
%
|
|
$
|
1,387
|
|
|
0.1
|
%
|
Bank loans
|
1,208
|
|
|
4.9
|
|
|
1,013
|
|
|
5.7
|
|
||
|
$
|
1,208
|
|
|
|
|
$
|
2,400
|
|
|
|
|
December 31,
|
||||||
(in millions)
|
2014
|
|
2013
|
||||
U.S. dollar notes, 0.277% to 6.375% (average interest rate 3.790%), due through 2044
|
$
|
17,229
|
|
|
$
|
16,500
|
|
Foreign currency obligations:
|
|
|
|
||||
Euro notes, 1.750% to 5.875% (average interest rate 3.104%), due through 2033
|
9,161
|
|
|
7,303
|
|
||
Swiss franc notes, 0.750% to 2.000% (average interest rate 1.217%), due through 2024
|
1,690
|
|
|
1,289
|
|
||
Other (average interest rate 3.587%), due through 2024
|
167
|
|
|
186
|
|
||
|
28,247
|
|
|
25,278
|
|
||
Less current portion of long-term debt
|
1,318
|
|
|
1,255
|
|
||
|
$
|
26,929
|
|
|
$
|
24,023
|
|
(in millions)
|
|
|
|
|
|
|
|
|
Type
|
|
Face Value
|
|
Interest
Rate |
|
Issuance
|
|
Maturity
|
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
|
|
$500
|
|
1.250%
|
|
November 2014
|
|
November 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
|
|
$750
|
|
3.250%
|
|
November 2014
|
|
November 2024
|
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
|
U.S. dollar notes
|
|
$750
|
|
4.250%
|
|
November 2014
|
|
November 2044
|
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)
|
€750 (approximately $1,029)
|
|
1.875%
|
|
March 2014
|
|
March 2021
|
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)
|
€1,000 (approximately $1,372)
|
|
2.875%
|
|
March 2014
|
|
March 2026
|
EURO notes
|
(b)
|
€500 (approximately $697)
|
|
2.875%
|
|
May 2014
|
|
May 2029
|
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)
|
CHF275 (approximately $311)
|
|
0.750%
|
|
May 2014
|
|
December 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
|
Swiss franc notes
|
(b)
|
CHF250 (approximately $283)
|
|
1.625%
|
|
May 2014
|
|
May 2024
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
||
2015
|
$
|
1,318
|
|
2016
|
2,494
|
|
|
2017
|
1,805
|
|
|
2018
|
2,502
|
|
|
2019
|
2,144
|
|
|
2020-2024
|
8,751
|
|
|
2025-2029
|
2,870
|
|
|
Thereafter
|
6,658
|
|
|
|
28,542
|
|
|
Debt discounts
|
(295
|
)
|
|
Total long-term debt
|
$
|
28,247
|
|
Type
(in billions of dollars)
|
Committed
Credit Facilities |
|
Commercial
Paper |
||||
364-day revolving credit, expiring February 10, 2015
|
$
|
2.0
|
|
|
|
||
Multi-year revolving credit, expiring February 28, 2019
|
2.5
|
|
|
|
|||
Multi-year revolving credit, expiring October 25, 2016
|
3.5
|
|
|
|
|||
Total facilities
|
$
|
8.0
|
|
|
|
||
Commercial paper outstanding
|
|
|
$
|
—
|
|
Note 8.
|
|
Shares Issued
|
|
Shares
Repurchased |
|
Shares
Outstanding |
|||
Balances, January 1, 2012
|
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
|
|
Repurchase of shares
|
|
|
(45,206,473
|
)
|
|
(45,206,473
|
)
|
|
Issuance of stock awards and exercise of stock options
|
|
|
3,103,757
|
|
|
3,103,757
|
|
|
Balances, December 31, 2014
|
2,109,316,331
|
|
|
(562,416,635
|
)
|
|
1,546,899,696
|
|
Note 9.
|
|
Number of
Shares |
|
Weighted-
Average Grant Date Fair Value Per Share |
|||
Balance at January 1, 2014
|
8,819,300
|
|
|
$
|
75.05
|
|
Granted
|
2,426,350
|
|
|
77.79
|
|
|
Vested
|
(3,974,560
|
)
|
|
64.10
|
|
|
Forfeited
|
(231,713
|
)
|
|
81.91
|
|
|
Balance at December 31, 2014
|
7,039,377
|
|
|
$
|
81.94
|
|
|
Shares
Subject to Option |
|
Weighted-
Average Exercise Price |
|||
Balance at January 1, 2014
|
22,714
|
|
|
$
|
28.38
|
|
Options exercised
|
(22,714
|
)
|
|
28.38
|
|
|
Options cancelled
|
—
|
|
|
—
|
|
|
Balance at December 31, 2014
|
—
|
|
|
$
|
—
|
|
Note 10.
|
|
For the Years Ended December 31,
|
||||||||||
(in millions)
|
2014
|
|
2013
|
|
2012
|
||||||
Net earnings attributable to PMI
|
$
|
7,493
|
|
|
$
|
8,576
|
|
|
$
|
8,800
|
|
Less distributed and undistributed earnings attributable to share-based payment awards
|
34
|
|
|
45
|
|
|
48
|
|
|||
Net earnings for basic and diluted EPS
|
$
|
7,459
|
|
|
$
|
8,531
|
|
|
$
|
8,752
|
|
Weighted-average shares for basic and diluted EPS
|
1,566
|
|
|
1,622
|
|
|
1,692
|
|
Note 11.
|
(in millions)
|
2014
|
|
2013
|
|
2012
|
||||||
Earnings before income taxes
|
$
|
10,650
|
|
|
$
|
12,542
|
|
|
$
|
13,004
|
|
Provision for income taxes:
|
|
|
|
|
|
||||||
United States federal and state:
|
|
|
|
|
|
||||||
Current
|
$
|
(56
|
)
|
|
$
|
247
|
|
|
$
|
226
|
|
Deferred
|
162
|
|
|
(5
|
)
|
|
(61
|
)
|
|||
Total United States
|
106
|
|
|
242
|
|
|
165
|
|
|||
Outside United States:
|
|
|
|
|
|
||||||
Current
|
3,215
|
|
|
3,451
|
|
|
3,855
|
|
|||
Deferred
|
(224
|
)
|
|
(23
|
)
|
|
(187
|
)
|
|||
Total outside United States
|
2,991
|
|
|
3,428
|
|
|
3,668
|
|
|||
Total provision for income taxes
|
$
|
3,097
|
|
|
$
|
3,670
|
|
|
$
|
3,833
|
|
(in millions)
|
2014
|
|
2013
|
|
2012
|
||||||
Balance at January 1,
|
$
|
114
|
|
|
$
|
124
|
|
|
$
|
104
|
|
Additions based on tax positions related to the current year
|
20
|
|
|
15
|
|
|
9
|
|
|||
Additions for tax positions of previous years
|
11
|
|
|
3
|
|
|
309
|
|
|||
Reductions for tax positions of prior years
|
(3
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|||
Reductions due to lapse of statute of limitations
|
(8
|
)
|
|
(16
|
)
|
|
—
|
|
|||
Settlements
|
(3
|
)
|
|
(10
|
)
|
|
(297
|
)
|
|||
Other
|
(8
|
)
|
|
—
|
|
|
—
|
|
|||
Balance at December 31,
|
$
|
123
|
|
|
$
|
114
|
|
|
$
|
124
|
|
(in millions)
|
December 31, 2014
|
|
|
December 31, 2013
|
|
|
December 31, 2012
|
|
|||
Unrecognized tax benefits
|
$
|
123
|
|
|
$
|
114
|
|
|
$
|
124
|
|
Accrued interest and penalties
|
40
|
|
|
24
|
|
|
37
|
|
|||
Tax credits and other indirect benefits
|
(54
|
)
|
|
(56
|
)
|
|
(72
|
)
|
|||
Liability for tax contingencies
|
$
|
109
|
|
|
$
|
82
|
|
|
$
|
89
|
|
|
2014
|
|
2013
|
|
2012
|
|||
U.S. federal statutory rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
Increase (decrease) resulting from:
|
|
|
|
|
|
|||
Foreign rate differences
|
(11.2
|
)
|
|
(12.2
|
)
|
|
(11.8
|
)
|
Dividend repatriation cost
|
5.0
|
|
|
6.6
|
|
|
6.0
|
|
Other
|
0.3
|
|
|
(0.1
|
)
|
|
0.3
|
|
Effective tax rate
|
29.1
|
%
|
|
29.3
|
%
|
|
29.5
|
%
|
|
At December 31,
|
||||||
(in millions)
|
2014
|
|
2013
|
||||
Deferred income tax assets:
|
|
|
|
||||
Accrued postretirement and postemployment benefits
|
$
|
274
|
|
|
$
|
264
|
|
Accrued pension costs
|
247
|
|
|
135
|
|
||
Inventory
|
198
|
|
|
170
|
|
||
Accrued liabilities
|
147
|
|
|
139
|
|
||
Foreign exchange
|
—
|
|
|
146
|
|
||
Other
|
162
|
|
|
144
|
|
||
Total deferred income tax assets
|
1,028
|
|
|
998
|
|
||
Deferred income tax liabilities:
|
|
|
|
||||
Trade names
|
(677
|
)
|
|
(738
|
)
|
||
Property, plant and equipment
|
(260
|
)
|
|
(311
|
)
|
||
Unremitted earnings
|
(559
|
)
|
|
(735
|
)
|
||
Foreign exchange
|
(348
|
)
|
|
—
|
|
||
Total deferred income tax liabilities
|
(1,844
|
)
|
|
(1,784
|
)
|
||
Net deferred income tax liabilities
|
$
|
(816
|
)
|
|
$
|
(786
|
)
|
Note 12.
|
|
For the Years Ended December 31,
|
||||||||||
(in millions)
|
2014
|
|
2013
|
|
2012
|
||||||
Net revenues:
|
|
|
|
|
|
||||||
European Union
|
$
|
29,058
|
|
|
$
|
28,303
|
|
|
$
|
27,338
|
|
Eastern Europe, Middle East & Africa
|
21,928
|
|
|
20,695
|
|
|
19,272
|
|
|||
Asia
|
19,255
|
|
|
20,987
|
|
|
21,071
|
|
|||
Latin America & Canada
|
9,865
|
|
|
10,044
|
|
|
9,712
|
|
|||
Net revenues
(1)
|
$
|
80,106
|
|
|
$
|
80,029
|
|
|
$
|
77,393
|
|
|
For the Years Ended December 31,
|
||||||||||
(in millions)
|
2014
|
|
2013
|
|
2012
|
||||||
Earnings before income taxes:
|
|
|
|
|
|
||||||
Operating companies income:
|
|
|
|
|
|
||||||
European Union
|
$
|
3,727
|
|
|
$
|
4,238
|
|
|
$
|
4,187
|
|
Eastern Europe, Middle East & Africa
|
4,121
|
|
|
3,779
|
|
|
3,726
|
|
|||
Asia
|
3,187
|
|
|
4,622
|
|
|
5,197
|
|
|||
Latin America & Canada
|
1,030
|
|
|
1,134
|
|
|
1,043
|
|
|||
Amortization of intangibles
|
(93
|
)
|
|
(93
|
)
|
|
(97
|
)
|
|||
General corporate expenses
|
(165
|
)
|
|
(187
|
)
|
|
(210
|
)
|
|||
Less:
|
|
|
|
|
|
||||||
Equity (income)/loss in unconsolidated subsidiaries, net
|
(105
|
)
|
|
22
|
|
|
17
|
|
|||
Operating income
|
11,702
|
|
|
13,515
|
|
|
13,863
|
|
|||
Interest expense, net
|
(1,052
|
)
|
|
(973
|
)
|
|
(859
|
)
|
|||
Earnings before income taxes
|
$
|
10,650
|
|
|
$
|
12,542
|
|
|
$
|
13,004
|
|
|
For the Years Ended December 31,
|
||||||||||
(in millions)
|
2014
|
|
2013
|
|
2012
|
||||||
Depreciation expense:
|
|
|
|
|
|
||||||
European Union
|
$
|
198
|
|
|
$
|
190
|
|
|
$
|
181
|
|
Eastern Europe, Middle East & Africa
|
220
|
|
|
227
|
|
|
211
|
|
|||
Asia
|
278
|
|
|
277
|
|
|
315
|
|
|||
Latin America & Canada
|
90
|
|
|
85
|
|
|
84
|
|
|||
|
786
|
|
|
779
|
|
|
791
|
|
|||
Other
|
10
|
|
|
10
|
|
|
10
|
|
|||
Total depreciation expense
|
$
|
796
|
|
|
$
|
789
|
|
|
801
|
|
|
For the Years Ended December 31,
|
||||||||||
(in millions)
|
2014
|
|
2013
|
|
2012
|
||||||
Capital expenditures:
|
|
|
|
|
|
||||||
European Union
|
$
|
519
|
|
|
$
|
480
|
|
|
$
|
391
|
|
Eastern Europe, Middle East & Africa
|
234
|
|
|
247
|
|
|
197
|
|
|||
Asia
|
272
|
|
|
317
|
|
|
277
|
|
|||
Latin America & Canada
|
125
|
|
|
156
|
|
|
127
|
|
|||
|
1,150
|
|
|
1,200
|
|
|
992
|
|
|||
Other
|
3
|
|
|
—
|
|
|
64
|
|
|||
Total capital expenditures
|
$
|
1,153
|
|
|
$
|
1,200
|
|
|
$
|
1,056
|
|
|
At December 31,
|
||||||||||
(in millions)
|
2014
|
|
2013
|
|
2012
|
||||||
Long-lived assets:
|
|
|
|
|
|
||||||
European Union
|
$
|
3,167
|
|
|
$
|
3,403
|
|
|
$
|
3,065
|
|
Eastern Europe, Middle East & Africa
|
911
|
|
|
1,265
|
|
|
1,215
|
|
|||
Asia
|
1,838
|
|
|
1,758
|
|
|
1,824
|
|
|||
Latin America & Canada
|
704
|
|
|
759
|
|
|
719
|
|
|||
|
6,620
|
|
|
7,185
|
|
|
6,823
|
|
|||
Other
|
269
|
|
|
208
|
|
|
139
|
|
|||
Total long-lived assets
|
$
|
6,889
|
|
|
$
|
7,393
|
|
|
$
|
6,962
|
|
•
|
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)
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Benefit obligation at January 1,
|
$
|
364
|
|
|
$
|
383
|
|
|
$
|
6,893
|
|
|
$
|
7,262
|
|
Service cost
|
5
|
|
|
7
|
|
|
211
|
|
|
255
|
|
||||
Interest cost
|
17
|
|
|
16
|
|
|
205
|
|
|
169
|
|
||||
Benefits paid
|
(23
|
)
|
|
(13
|
)
|
|
(245
|
)
|
|
(156
|
)
|
||||
Termination, settlement and curtailment
|
(1
|
)
|
|
—
|
|
|
(73
|
)
|
|
(3
|
)
|
||||
Assumption changes
|
76
|
|
|
(45
|
)
|
|
1,368
|
|
|
(894
|
)
|
||||
Actuarial losses (gains)
|
—
|
|
|
16
|
|
|
16
|
|
|
76
|
|
||||
Currency
|
—
|
|
|
—
|
|
|
(777
|
)
|
|
141
|
|
||||
Other
|
—
|
|
|
—
|
|
|
40
|
|
|
43
|
|
||||
Benefit obligation at December 31,
|
438
|
|
|
364
|
|
|
7,638
|
|
|
6,893
|
|
||||
Fair value of plan assets at January 1,
|
305
|
|
|
284
|
|
|
6,566
|
|
|
5,627
|
|
||||
Actual return on plan assets
|
19
|
|
|
33
|
|
|
620
|
|
|
731
|
|
||||
Employer contributions
|
11
|
|
|
1
|
|
|
180
|
|
|
149
|
|
||||
Employee contributions
|
—
|
|
|
—
|
|
|
42
|
|
|
47
|
|
||||
Benefits paid
|
(23
|
)
|
|
(13
|
)
|
|
(245
|
)
|
|
(156
|
)
|
||||
Termination, settlement and curtailment
|
—
|
|
|
—
|
|
|
(37
|
)
|
|
(2
|
)
|
||||
Currency
|
—
|
|
|
—
|
|
|
(716
|
)
|
|
170
|
|
||||
Fair value of plan assets at December 31,
|
312
|
|
|
305
|
|
|
6,410
|
|
|
6,566
|
|
||||
Net pension liability recognized at December 31,
|
$
|
(126
|
)
|
|
$
|
(59
|
)
|
|
$
|
(1,228
|
)
|
|
$
|
(327
|
)
|
(in millions)
|
2014
|
|
2013
|
||||
Other assets
|
$
|
42
|
|
|
$
|
151
|
|
Accrued liabilities — employment costs
|
(55
|
)
|
|
(55
|
)
|
||
Long-term employment costs
|
(1,341
|
)
|
|
(482
|
)
|
||
|
$
|
(1,354
|
)
|
|
$
|
(386
|
)
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||
Discount rate
|
3.95
|
%
|
|
4.80
|
%
|
|
1.92
|
%
|
|
3.09
|
%
|
Rate of compensation increase
|
3.00
|
|
|
3.00
|
|
|
2.06
|
|
|
2.34
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||||||||||
(in millions)
|
2014
|
|
2013
|
|
2012
|
|
2014
|
|
2013
|
|
2012
|
||||||||||||
Service cost
|
$
|
5
|
|
|
$
|
7
|
|
|
$
|
6
|
|
|
$
|
211
|
|
|
$
|
255
|
|
|
$
|
189
|
|
Interest cost
|
17
|
|
|
16
|
|
|
16
|
|
|
205
|
|
|
169
|
|
|
189
|
|
||||||
Expected return on plan assets
|
(16
|
)
|
|
(16
|
)
|
|
(15
|
)
|
|
(357
|
)
|
|
(347
|
)
|
|
(320
|
)
|
||||||
Amortization:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net losses
|
6
|
|
|
11
|
|
|
9
|
|
|
115
|
|
|
205
|
|
|
120
|
|
||||||
Prior service cost
|
1
|
|
|
1
|
|
|
1
|
|
|
5
|
|
|
9
|
|
|
9
|
|
||||||
Net transition obligation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||||
Termination, settlement and curtailment
|
5
|
|
|
—
|
|
|
2
|
|
|
1
|
|
|
1
|
|
|
—
|
|
||||||
Net periodic pension cost
|
$
|
18
|
|
|
$
|
19
|
|
|
$
|
19
|
|
|
$
|
180
|
|
|
$
|
292
|
|
|
$
|
188
|
|
Asset Category
(in millions)
|
At December 31, 2014
|
|
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
|
$
|
286
|
|
|
$
|
286
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Equity securities:
|
|
|
|
|
|
|
|
||||||||
U.S. securities
|
136
|
|
|
136
|
|
|
—
|
|
|
—
|
|
||||
International securities
|
418
|
|
|
418
|
|
|
—
|
|
|
—
|
|
||||
Investment funds
(a)
|
5,558
|
|
|
3,689
|
|
|
1,869
|
|
|
—
|
|
||||
International government bonds
|
293
|
|
|
293
|
|
|
—
|
|
|
—
|
|
||||
Other
|
31
|
|
|
31
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
6,722
|
|
|
$
|
4,853
|
|
|
$
|
1,869
|
|
|
$
|
—
|
|
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
|
|
|
$
|
—
|
|
(in millions)
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||
2015
|
$
|
50
|
|
|
$
|
263
|
|
2016
|
19
|
|
|
244
|
|
||
2017
|
21
|
|
|
251
|
|
||
2018
|
19
|
|
|
265
|
|
||
2019
|
25
|
|
|
271
|
|
||
2020 - 2024
|
120
|
|
|
1,572
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||||||||||
(in millions)
|
2014
|
|
2013
|
|
2012
|
|
2014
|
|
2013
|
|
2012
|
||||||||||||
Service cost
|
$
|
2
|
|
|
$
|
3
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
2
|
|
Interest cost
|
5
|
|
|
5
|
|
|
5
|
|
|
5
|
|
|
5
|
|
|
5
|
|
||||||
Amortization:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net losses
|
1
|
|
|
3
|
|
|
2
|
|
|
1
|
|
|
2
|
|
|
1
|
|
||||||
Prior service cost
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Net postretirement health care costs
|
$
|
7
|
|
|
$
|
11
|
|
|
$
|
9
|
|
|
$
|
8
|
|
|
$
|
9
|
|
|
$
|
8
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||
(in millions)
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Accumulated postretirement benefit obligation at January 1,
|
$
|
113
|
|
|
$
|
132
|
|
|
$
|
100
|
|
|
$
|
113
|
|
Service cost
|
2
|
|
|
3
|
|
|
2
|
|
|
2
|
|
||||
Interest cost
|
5
|
|
|
5
|
|
|
5
|
|
|
5
|
|
||||
Benefits paid
|
(5
|
)
|
|
(5
|
)
|
|
(5
|
)
|
|
(5
|
)
|
||||
Assumption changes
|
24
|
|
|
(23
|
)
|
|
13
|
|
|
(5
|
)
|
||||
Actuarial (gains) losses
|
(2
|
)
|
|
1
|
|
|
—
|
|
|
(3
|
)
|
||||
Plan changes
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
||||
Termination, settlement and curtailment
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Currency
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
(6
|
)
|
||||
Accumulated postretirement benefit obligation at December 31,
|
$
|
135
|
|
|
$
|
113
|
|
|
$
|
103
|
|
|
$
|
100
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||
Discount rate
|
4.10
|
%
|
|
4.95
|
%
|
|
4.28
|
%
|
|
5.07
|
%
|
Health care cost trend rate assumed for next year
|
7.00
|
|
|
7.00
|
|
|
6.03
|
|
|
6.14
|
|
Ultimate trend rate
|
5.00
|
|
|
5.00
|
|
|
4.91
|
|
|
4.87
|
|
Year that rate reaches the ultimate trend rate
|
2019
|
|
2018
|
|
2029
|
|
2029
|
|
One-Percentage-Point Increase
|
|
|
One-Percentage-Point Decrease
|
|
Effect on total service and interest cost
|
23.0
|
%
|
|
(17.7
|
)%
|
Effect on postretirement benefit obligation
|
17.0
|
|
|
(19.9
|
)
|
(in millions)
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||
2015
|
$
|
5
|
|
|
$
|
5
|
|
2016
|
6
|
|
|
4
|
|
||
2017
|
6
|
|
|
4
|
|
||
2018
|
6
|
|
|
4
|
|
||
2019
|
6
|
|
|
4
|
|
||
2020 - 2024
|
33
|
|
|
23
|
|
|
For the Years Ended December 31,
|
||||||||||
(in millions)
|
2014
|
|
2013
|
|
2012
|
||||||
Service cost
|
$
|
38
|
|
|
$
|
34
|
|
|
$
|
30
|
|
Interest cost
|
26
|
|
|
20
|
|
|
22
|
|
|||
Amortization of net loss
|
66
|
|
|
60
|
|
|
53
|
|
|||
Other expense
|
421
|
|
|
84
|
|
|
75
|
|
|||
Net postemployment costs
|
$
|
551
|
|
|
$
|
198
|
|
|
$
|
180
|
|
(in millions)
|
2014
|
|
2013
|
||||
Accrued postemployment costs at January 1,
|
$
|
763
|
|
|
$
|
682
|
|
Service cost
|
38
|
|
|
34
|
|
||
Interest cost
|
26
|
|
|
20
|
|
||
Benefits paid
|
(279
|
)
|
|
(173
|
)
|
||
Actuarial losses
|
126
|
|
|
109
|
|
||
Other
|
323
|
|
|
91
|
|
||
Accrued postemployment costs at December 31,
|
$
|
997
|
|
|
$
|
763
|
|
(in millions)
|
Pension
|
|
Post-
retirement |
|
Post-
employment |
|
Total
|
||||||||
Net losses
|
$
|
(2,760
|
)
|
|
$
|
(77
|
)
|
|
$
|
(721
|
)
|
|
$
|
(3,558
|
)
|
Prior service cost
|
(45
|
)
|
|
6
|
|
|
—
|
|
|
(39
|
)
|
||||
Net transition obligation
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
||||
Deferred income taxes
|
342
|
|
|
25
|
|
|
216
|
|
|
583
|
|
||||
Losses to be amortized
|
$
|
(2,469
|
)
|
|
$
|
(46
|
)
|
|
$
|
(505
|
)
|
|
$
|
(3,020
|
)
|
(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
|
||||||||
Amounts transferred to earnings as components of net periodic benefit cost:
|
|
|
|
|
|
|
|
||||||||
Amortization:
|
|
|
|
|
|
|
|
||||||||
Net losses
|
$
|
121
|
|
|
$
|
2
|
|
|
$
|
66
|
|
|
$
|
189
|
|
Prior service cost
|
6
|
|
|
(1
|
)
|
|
—
|
|
|
5
|
|
||||
Net transition obligation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Other income/expense:
|
|
|
|
|
|
|
|
||||||||
Net losses
|
14
|
|
|
2
|
|
|
—
|
|
|
16
|
|
||||
Prior service cost
|
5
|
|
|
—
|
|
|
—
|
|
|
5
|
|
||||
Deferred income taxes
|
(21
|
)
|
|
(1
|
)
|
|
(20
|
)
|
|
(42
|
)
|
||||
|
125
|
|
|
2
|
|
|
46
|
|
|
173
|
|
||||
Other movements during the year:
|
|
|
|
|
|
|
|
||||||||
Net losses
|
(1,149
|
)
|
|
(34
|
)
|
|
(126
|
)
|
|
(1,309
|
)
|
||||
Prior service cost
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
||||
Net transition obligation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Deferred income taxes
|
118
|
|
|
12
|
|
|
37
|
|
|
167
|
|
||||
|
(1,036
|
)
|
|
(22
|
)
|
|
(89
|
)
|
|
(1,147
|
)
|
||||
Total movements in other comprehensive earnings (losses)
|
$
|
(911
|
)
|
|
$
|
(20
|
)
|
|
$
|
(43
|
)
|
|
$
|
(974
|
)
|
(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
|
)
|
Note 14.
|
|
For the Years Ended December 31,
|
||||||||||
(in millions)
|
2014
|
|
2013
|
|
2012
|
||||||
Research and development expense
|
$
|
433
|
|
|
$
|
449
|
|
|
$
|
415
|
|
Advertising expense
|
$
|
439
|
|
|
$
|
435
|
|
|
$
|
483
|
|
Interest expense
|
$
|
1,170
|
|
|
$
|
1,104
|
|
|
$
|
1,007
|
|
Interest income
|
(118
|
)
|
|
(131
|
)
|
|
(148
|
)
|
|||
Interest expense, net
|
$
|
1,052
|
|
|
$
|
973
|
|
|
$
|
859
|
|
Rent expense
|
$
|
336
|
|
|
$
|
334
|
|
|
$
|
318
|
|
(in millions)
|
|
||
2015
|
$
|
197
|
|
2016
|
144
|
|
|
2017
|
97
|
|
|
2018
|
67
|
|
|
2019
|
42
|
|
|
Thereafter
|
193
|
|
|
|
$
|
740
|
|
Note 15.
|
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||||||||||
|
|
|
Fair
Value
|
|
|
|
Fair
Value
|
||||||||||||
(in millions)
|
Balance Sheet Classification
|
|
2014
|
|
2013
|
|
Balance Sheet Classification
|
|
2014
|
|
2013
|
||||||||
Foreign exchange contracts designated as hedging instruments
|
Other current
assets
|
|
$
|
248
|
|
|
$
|
111
|
|
|
Other accrued
liabilities
|
|
$
|
—
|
|
|
$
|
44
|
|
|
Other assets
|
|
122
|
|
|
—
|
|
|
Other liabilities
|
|
25
|
|
|
46
|
|
||||
Foreign exchange contracts not designated as hedging instruments
|
Other current
assets
|
|
34
|
|
|
42
|
|
|
Other accrued
liabilities
|
|
126
|
|
|
12
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Other assets
|
|
2
|
|
|
—
|
|
|
Other liabilities
|
|
—
|
|
|
14
|
|
||||
Total derivatives
|
|
|
$
|
406
|
|
|
$
|
153
|
|
|
|
|
$
|
151
|
|
|
$
|
116
|
|
|
For the Year Ended December 31, 2014
|
||||||||||||||||||
(in millions)
|
Cash Flow
Hedges |
|
Net Investment
Hedges |
|
Other
Derivatives |
|
Income
Taxes |
|
Total
|
||||||||||
Gain (Loss)
|
|
|
|
|
|
|
|
|
|
||||||||||
Statement of Earnings:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net revenues
|
$
|
115
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
115
|
|
||||
Cost of sales
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|||||||
Marketing, administration and research costs
|
(28
|
)
|
|
|
|
—
|
|
|
|
|
(28
|
)
|
|||||||
Operating income
|
87
|
|
|
|
|
—
|
|
|
|
|
87
|
|
|||||||
Interest expense, net
|
(39
|
)
|
|
|
|
(4
|
)
|
|
|
|
(43
|
)
|
|||||||
Earnings before income taxes
|
48
|
|
|
|
|
(4
|
)
|
|
|
|
44
|
|
|||||||
Provision for income taxes
|
(10
|
)
|
|
|
|
2
|
|
|
|
|
(8
|
)
|
|||||||
Net earnings attributable to PMI
|
$
|
38
|
|
|
|
|
$
|
(2
|
)
|
|
|
|
$
|
36
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Other Comprehensive Earnings/(Losses):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Gains transferred to earnings
|
$
|
(48
|
)
|
|
|
|
|
|
$
|
10
|
|
|
$
|
(38
|
)
|
||||
Recognized gains
|
111
|
|
|
|
|
|
|
(13
|
)
|
|
98
|
|
|||||||
Net impact on equity
|
$
|
63
|
|
|
|
|
|
|
$
|
(3
|
)
|
|
$
|
60
|
|
||||
Currency translation adjustments
|
|
|
$
|
269
|
|
|
|
|
$
|
(91
|
)
|
|
$
|
178
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
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
|
)
|
|||
|
|
|
|
|
|
|
|
|
|
(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 |
||||||||||||||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
|
2014
|
|
2013
|
|
2012
|
||||||||||||
Foreign exchange contracts
|
|
|
|
|
|
|
|
|
$
|
111
|
|
|
$
|
236
|
|
|
$
|
113
|
|
||||||
|
|
Net revenues
|
$
|
115
|
|
|
$
|
319
|
|
|
$
|
66
|
|
|
|
|
|
|
|
||||||
|
|
Cost of sales
|
—
|
|
|
6
|
|
|
19
|
|
|
|
|
|
|
|
|||||||||
|
|
Marketing, administration and research costs
|
(28
|
)
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|||||||||
|
|
Interest expense, net
|
(39
|
)
|
|
(56
|
)
|
|
(60
|
)
|
|
|
|
|
|
|
|||||||||
Total
|
|
|
$
|
48
|
|
|
$
|
269
|
|
|
$
|
25
|
|
|
$
|
111
|
|
|
$
|
236
|
|
|
$
|
113
|
|
(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 |
||||||||||||||||||||
|
|
|
|
2014
|
|
2013
|
|
2012
|
|
2014
|
|
2013
|
|
2012
|
||||||||||||
Foreign exchange contracts
|
|
|
|
|
|
|
|
|
|
$
|
269
|
|
|
$
|
(79
|
)
|
|
$
|
(19
|
)
|
||||||
|
|
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 |
|
|||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
Foreign exchange contracts
|
|
|
|
|
|
|
|
||||||
|
|
Marketing, administration
and research costs
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
|
Interest expense, net
|
(4
|
)
|
|
3
|
|
|
14
|
|
|||
Total
|
|
|
$
|
(4
|
)
|
|
$
|
4
|
|
|
$
|
14
|
|
|
For the Years Ended December 31,
|
||||||||||
(in millions)
|
2014
|
|
2013
|
|
2012
|
||||||
Gain as of January 1,
|
$
|
63
|
|
|
$
|
92
|
|
|
$
|
15
|
|
Derivative gains transferred to earnings
|
(38
|
)
|
|
(235
|
)
|
|
(22
|
)
|
|||
Change in fair value
|
98
|
|
|
206
|
|
|
99
|
|
|||
Gain as of December 31,
|
$
|
123
|
|
|
$
|
63
|
|
|
$
|
92
|
|
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.
|
(in millions)
|
Fair Value
At
December 31, 2014 |
|
Quoted
Prices
in Active Markets for
Identical Assets/Liabilities (Level 1) |
|
Significant Other
Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs
(Level 3) |
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
$
|
406
|
|
|
$
|
—
|
|
|
$
|
406
|
|
|
$
|
—
|
|
Pension plan assets
|
6,722
|
|
|
4,853
|
|
|
1,869
|
|
|
—
|
|
||||
Total assets
|
$
|
7,128
|
|
|
$
|
4,853
|
|
|
$
|
2,275
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Debt
|
$
|
30,582
|
|
|
$
|
30,405
|
|
|
$
|
177
|
|
|
$
|
—
|
|
Foreign exchange contracts
|
151
|
|
|
—
|
|
|
151
|
|
|
—
|
|
||||
Contingent consideration
|
22
|
|
|
—
|
|
|
—
|
|
|
22
|
|
||||
Total liabilities
|
$
|
30,755
|
|
|
$
|
30,405
|
|
|
$
|
328
|
|
|
$
|
22
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|||||||||||
(in millions)
|
Fair Value 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) |
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
$
|
153
|
|
|
$
|
—
|
|
|
$
|
153
|
|
|
$
|
—
|
|
Pension plan assets
|
6,871
|
|
|
5,164
|
|
|
1,707
|
|
|
—
|
|
||||
Total assets
|
$
|
7,024
|
|
|
$
|
5,164
|
|
|
$
|
1,860
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Debt
|
$
|
26,141
|
|
|
$
|
25,961
|
|
|
$
|
180
|
|
|
$
|
—
|
|
Foreign exchange contracts
|
116
|
|
|
—
|
|
|
116
|
|
|
—
|
|
||||
Total liabilities
|
$
|
26,257
|
|
|
$
|
25,961
|
|
|
$
|
296
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
|
Note 17.
|
(Losses) Earnings
|
At December 31,
|
||||||||||
(in millions)
|
2014
|
|
2013
|
|
2012
|
||||||
Currency translation adjustments
|
$
|
(3,929
|
)
|
|
$
|
(2,207
|
)
|
|
$
|
(331
|
)
|
Pension and other benefits
|
(3,020
|
)
|
|
(2,046
|
)
|
|
(3,365
|
)
|
|||
Derivatives accounted for as hedges
|
123
|
|
|
63
|
|
|
92
|
|
|||
Total accumulated other comprehensive losses
|
$
|
(6,826
|
)
|
|
$
|
(4,190
|
)
|
|
$
|
(3,604
|
)
|
Note 18.
|
Note 19.
|
Note 20.
|
Note 21.
|
Type of Case
|
|
Number of Cases Pending as of December 31, 2014
|
|
Number of Cases Pending as of
December 31, 2013 |
|
Number of Cases Pending as of
December 31, 2012 |
|||
Individual Smoking and Health Cases
|
|
63
|
|
|
62
|
|
|
76
|
|
Smoking and Health Class Actions
|
|
11
|
|
|
11
|
|
|
11
|
|
Health Care Cost Recovery Actions*
|
|
15
|
|
|
15
|
|
|
15
|
|
Lights Class Actions
|
|
—
|
|
|
1
|
|
|
2
|
|
Individual Lights Cases
|
|
2
|
|
|
2
|
|
|
7
|
|
Public Civil Actions
|
|
2
|
|
|
3
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
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 $4,950) 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 $38,050). Philip Morris Brasil appealed. In December 2014, the Superior Court of Justice granted PMB’s appeal reversing the lower court’s judgment and dismissing plaintiff’s claim. Plaintiff may appeal. |
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 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 $380) 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.
|
•
|
63
cases brought by individual plaintiffs in Argentina (
23
), Brazil (
23
), Canada (
2
), Chile (
8
), Costa Rica (
2
), Greece (
1
), Italy (
2
), the Philippines (
1
) and Scotland (
1
), compared with
62
such cases on
December 31, 2013
, and
76
cases on
December 31, 2012
; 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, 2013
and
December 31, 2012
.
|
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, 2014
|
|
|
|
|
|
|
||||||||||||
Assets
|
|
|
|
|
|
|
||||||||||||
Foreign exchange contracts
|
$
|
406
|
|
$
|
—
|
|
$
|
406
|
|
$
|
(77
|
)
|
$
|
(306
|
)
|
$
|
23
|
|
Liabilities
|
|
|
|
|
|
|
||||||||||||
Foreign exchange contracts
|
$
|
151
|
|
$
|
—
|
|
$
|
151
|
|
$
|
(77
|
)
|
$
|
(63
|
)
|
$
|
11
|
|
At December 31, 2013
|
|
|
|
|
|
|
||||||||||||
Assets
|
|
|
|
|
|
|
||||||||||||
Foreign exchange contracts
|
$
|
153
|
|
$
|
—
|
|
$
|
153
|
|
$
|
(52
|
)
|
$
|
(79
|
)
|
$
|
22
|
|
Liabilities
|
|
|
|
|
|
|
||||||||||||
Foreign exchange contracts
|
$
|
116
|
|
$
|
—
|
|
$
|
116
|
|
$
|
(52
|
)
|
$
|
(47
|
)
|
$
|
17
|
|
Note 23.
|
(in millions)
|
|
||
Redeemable noncontrolling interest at January 1, 2012
|
$
|
1,212
|
|
Share of net earnings
|
171
|
|
|
Dividend payments
|
(105
|
)
|
|
Currency translation gains
|
25
|
|
|
Net loss and prior service cost
|
(2
|
)
|
|
Redeemable noncontrolling interest at December 31, 2012
|
$
|
1,301
|
|
Share of net earnings
|
99
|
|
|
Dividend payments
|
(94
|
)
|
|
Currency translation losses
|
(33
|
)
|
|
Net loss and prior service cost
|
2
|
|
|
Termination of rights agreement
|
(1,275
|
)
|
|
Redeemable noncontrolling interest at December 31, 2013
|
$
|
—
|
|
Note 24.
|
1.
|
retrospectively to each prior period presented; or
|
2.
|
retrospectively, with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application, with additional disclosures in reporting periods that include the date of initial application.
|
Note 25.
|
|
2014 Quarters
|
||||||||||||||
(in millions, except per share data)
|
1st
|
|
2nd
|
|
3rd
|
|
4th
|
||||||||
Net revenues
|
$
|
17,779
|
|
|
$
|
21,051
|
|
|
$
|
21,335
|
|
|
$
|
19,941
|
|
Gross profit
|
$
|
4,543
|
|
|
$
|
5,101
|
|
|
$
|
5,122
|
|
|
$
|
4,565
|
|
Net earnings attributable to PMI
|
$
|
1,875
|
|
|
$
|
1,851
|
|
|
$
|
2,155
|
|
|
$
|
1,612
|
|
Per share data:
|
|
|
|
|
|
|
|
||||||||
Basic EPS
|
$
|
1.18
|
|
|
$
|
1.17
|
|
|
$
|
1.38
|
|
|
$
|
1.03
|
|
Diluted EPS
|
$
|
1.18
|
|
|
$
|
1.17
|
|
|
$
|
1.38
|
|
|
$
|
1.03
|
|
Dividends declared
|
$
|
0.94
|
|
|
$
|
0.94
|
|
|
$
|
1.00
|
|
|
$
|
1.00
|
|
Market price:
|
|
|
|
|
|
|
|
||||||||
— High
|
$
|
87.20
|
|
|
$
|
91.63
|
|
|
$
|
86.85
|
|
|
$
|
90.25
|
|
— Low
|
$
|
75.28
|
|
|
$
|
81.70
|
|
|
$
|
81.19
|
|
|
$
|
81.16
|
|
|
|
||||||||||||||
|
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
|
|
|
|
|
|
|
|
|
|
|
2014 Quarters
|
||||||||||||||
(in millions)
|
1st
|
|
2nd
|
|
3rd
|
|
4th
|
||||||||
Asset impairment and exit costs
|
$
|
23
|
|
|
$
|
489
|
|
|
$
|
(9
|
)
|
|
$
|
32
|
|
|
|
||||||||||||||
|
2013 Quarters
|
||||||||||||||
(in millions)
|
1st
|
|
2nd
|
|
3rd
|
|
4th
|
||||||||
Asset impairment and exit costs
|
$
|
3
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
301
|
|
|
|
|
|
|
|
|
|
/
S
/ BARRY J. MISTHAL
|
|
/S/ FELIX ROTH
|
Barry J. Misthal
|
|
Felix Roth
|
|
|
|
Lausanne, Switzerland
|
|
|
February 5, 2015
|
|
|
•
|
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.
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
|
Item 9A.
|
Controls and Procedures.
|
Item 9B.
|
Other Information.
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
.
|
Name
|
|
Office
|
|
Age
|
|
|
André Calantzopoulos
|
|
Chief Executive Officer
|
|
57
|
|
|
Drago Azinovic
|
|
President, European Union Region
|
|
52
|
|
|
Bertrand Bonvin
|
|
Senior Vice President, Research & Development
|
|
46
|
|
|
Patrick Brunel
|
|
Senior Vice President and Chief Information Officer
|
|
49
|
|
|
Frederic de Wilde
|
|
Senior Vice President, Marketing & Sales
|
|
47
|
|
|
Marc S. Firestone
|
|
Senior Vice President and General Counsel
|
|
55
|
|
|
Martin King
|
|
President, Latin America & Canada Region
|
|
50
|
|
|
Peter J. Luongo
|
|
Vice President, Treasury and Planning
|
|
36
|
|
|
Antonio Marques
|
|
Senior Vice President, Operations
|
|
59
|
|
|
James R. Mortensen
|
|
Senior Vice President, Human Resources
|
|
57
|
|
|
Jacek Olczak
|
|
Chief Financial Officer
|
|
50
|
|
|
Matteo Pellegrini
|
|
President, Asia Region
|
|
52
|
|
|
Jeanne Pollès
|
|
Senior Vice President, Corporate Affairs
|
|
50
|
|
|
Joachim Psotta
(1)
|
|
Vice President and Controller
|
|
57
|
|
|
Jerry E. Whitson
|
|
Deputy General Counsel and Corporate Secretary
|
|
59
|
|
|
Miroslaw Zielinski
|
|
President, Eastern Europe, Middle East & Africa Region & PMI Duty Free
|
|
53
|
|
|
Item 11.
|
Executive Compensation.
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
|
|
Number of Shares
to be Issued upon
Exercise of Outstanding
Options and Vesting of
Deferred Stock
(a)
|
|
Weighted Average
Exercise Price of
Outstanding Options
(b)
|
|
Number of Shares
Remaining Available for
Future Issuance Under
Equity Compensation Plans
(excluding Securities
reflected in column (a))
(c)
|
||||
Equity compensation plans
approved by stockholders
|
7,039,377
|
|
(1)
|
$
|
—
|
|
|
25,501,164
|
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence.
|
Item 14.
|
Principal Accounting Fees and Services
.
|
Item 15.
|
Exhibits and Financial Statement Schedules
.
|
|
Page
|
Consolidated Balance Sheets at December 31, 2014 and 2013
|
59 - 60
|
Consolidated Statements of Earnings for the years ended December 31, 2014, 2013 and 2012
|
61
|
Consolidated Statements of Comprehensive Earnings for the years ended December 31,
2014, 2013 and 2012
|
62
|
Consolidated Statements of Stockholders’ (Deficit) Equity for the years ended
December 31, 2014, 2013 and 2012
|
63
|
Consolidated Statements of Cash Flows for the years ended December 31, 2014, 2013
and 2012
|
64 - 65
|
Notes to Consolidated Financial Statements
|
66 - 110
|
Report of Independent Registered Public Accounting Firm
|
111
|
Report of Management on Internal Control Over Financial Reporting
|
112
|
2.1
|
|
—
|
|
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).
|
3.1
|
|
—
|
|
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).
|
3.2
|
|
—
|
|
Amended and Restated By-laws of Philip Morris International Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed December 15, 2014).
|
4.1
|
|
—
|
|
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).
|
4.2
|
|
—
|
|
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).
|
4.3
|
|
—
|
|
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).
|
4.4
|
|
—
|
|
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).
|
|
|
|
|
|
4.5
|
|
—
|
|
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.
|
10.1
|
|
—
|
|
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).
|
10.2
|
|
—
|
|
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).
|
10.3
|
|
—
|
|
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).
|
10.4
|
|
—
|
|
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 Scotland 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
|
|
__
|
|
Credit Agreement, dated as of February 28, 2014, among Philip Morris International Inc., the lenders named therein, J.P. Morgan Europe Limited, as facility Agent, and JPMorgan Chase Bank, N.A. as Swingline Agent (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed March 3, 2014).
|
10.8
|
|
__
|
|
Extension Agreement, dated as of January 31, 2014, to Credit Agreement, dated as of February 12, 2013, among Philip Morris International Inc., the lenders party thereto and the Royal Bank of Scotland plc, as administrative agent (incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2014).
|
10.9
|
|
__
|
|
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).
|
10.10
|
|
__
|
|
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).
|
10.11
|
|
—
|
|
Anti-Contraband and Anti-Counterfeit Agreement and General Release dated as of 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).
|
10.12
|
|
—
|
|
Modification Agreement, dated as of October 14, 2014, to the Anti-Contraband and Anti-Counterfeit Agreement and General Release, dated as of July 9, 2004 (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2014).
|
10.13
|
|
—
|
|
Philip Morris International Inc. Automobile Policy (incorporated by reference to Exhibit 10.8 to the Registration Statement on Form 10 filed February 7, 2008).*
|
10.14
|
|
—
|
|
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).*
|
10.15
|
|
—
|
|
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).*
|
10.16
|
|
—
|
|
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).*
|
10.17
|
|
—
|
|
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).*
|
10.18
|
|
—
|
|
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).*
|
10.19
|
|
—
|
|
Summary of Supplemental Pension Plan of Philip Morris in Switzerland.*
|
10.20
|
|
—
|
|
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).*
|
10.21
|
|
—
|
|
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).*
|
10.22
|
|
—
|
|
Philip Morris International Inc. 2008 Stock Compensation Plan for Non-Employee Directors (amended and restated as of September 9, 2014) (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed September 10, 2014).*
|
10.23
|
|
—
|
|
Philip Morris International Inc. 2008 Stock Compensation Plan for Non-Employee Directors (amended and restated as of January 1, 2015) (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed December 15, 2014).*
|
10.24
|
|
—
|
|
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).*
|
10.25
|
|
—
|
|
Supplemental Letter to the Employment Agreement with André Calantzopoulos (as amended). 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 10.25. The Amendment to the employment agreement was previously filed as Exhibit 10.1 to the Current Report on Form 8-K/A filed June 13, 2013 and is incorporated by reference to this Exhibit 10.25.*
|
10.26
|
|
—
|
|
Amendment to Employment Agreement with Marc S. Firestone (incorporated by reference to Exhibit 10.25 to the Annual Report on Form 10-K for the year ended December 31, 2013). 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 10.26.*
|
10.27
|
|
—
|
|
Amendment to Employment Agreement with Matteo Pellegrini (incorporated by reference to Exhibit 10.26 to the Annual Report on Form 10-K for the year ended December 31, 2013). 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 10.27.*
|
10.28
|
|
—
|
|
Agreement with Louis C. Camilleri (incorporated by reference to Exhibit 10.25 to the Registration Statement on Form 10 filed February 7, 2008).*
|
10.29
|
|
—
|
|
Separation Agreement with Louis C. Camilleri, dated December 18, 2014.*
|
10.30
|
|
—
|
|
Amendment to Employment Agreement with Miroslaw Zielinski (incorporated by reference to Exhibit 10.28 to the Annual Report on Form 10-K for the year ended December 31, 2013). 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 10.30.*
|
10.31
|
|
—
|
|
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).*
|
10.32
|
|
—
|
|
Amendment No. 1 to the Time Sharing Agreement between PMI 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).*
|
10.33
|
|
—
|
|
Amendment No. 2 to the Time Sharing Agreement between PMI 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).*
|
10.34
|
|
—
|
|
Amendment No. 3 to the Time Sharing Agreement between PMI Global Services Inc. and Louis C. Camilleri, dated December 31, 2014.*
|
10.35
|
|
—
|
|
Time Sharing Agreement between PMI 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).*
|
10.36
|
|
|
|
Amendment No. 1 to the Time Sharing Agreement between PMI Global Services Inc. and André Calantzopoulos, dated December 23, 2014.*
|
10.37
|
|
—
|
|
Amendment to Employment Agreement with Jacek Olczak (incorporated by reference to Exhibit 10.33 to the Annual Report on Form 10-K for the year ended December 31, 2013). 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 10.37.*
|
10.38
|
|
—
|
|
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).*
|
10.39
|
|
—
|
|
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).*
|
10.40
|
|
—
|
|
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).*
|
10.41
|
|
—
|
|
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).*
|
10.42
|
|
—
|
|
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).*
|
10.43
|
|
—
|
|
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).*
|
10.44
|
|
—
|
|
Philip Morris International Inc. 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).*
|
10.45
|
|
—
|
|
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).*
|
10.46
|
|
—
|
|
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).*
|
10.47
|
|
—
|
|
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).*
|
10.48
|
|
—
|
|
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).*
|
10.49
|
|
—
|
|
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).*
|
10.50
|
|
—
|
|
Form of Deferred Stock Agreement (2015 Grants) (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed February 10, 2015).*
|
10.51
|
|
—
|
|
Philip Morris International Inc. Tax Return Preparation Services Policy.*
|
12
|
|
—
|
|
Statement regarding computation of ratios of earnings to fixed charges.
|
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 20, 2015
|
(André Calantzopoulos)
|
||
/s/ JACEK OLCZAK
|
Chief Financial Officer
|
February 20, 2015
|
(Jacek Olczak)
|
||
/s/ JOACHIM PSOTTA
|
Vice President and Controller
|
February 20, 2015
|
(Joachim Psotta)
|
||
*HAROLD BROWN,
LOUIS C. CAMILLERI,
WERNER GEISSLER,
JENNIFER LI,
JUN MAKIHARA,
SERGIO MARCHIONNE,
KALPANA MORPARIA,
LUCIO A. NOTO,
FREDERIK PAULSEN,
ROBERT B. POLET,
CARLOS SLIM HELÚ,
STEPHEN M. WOLF
|
Directors
|
|
*By:
|
/s/ ANDRÉ CALANTZOPOULOS
|
|
February 20, 2015
|
|
(André Calantzopoulos
Attorney-in-fact)
|
|
|
|
|
|
Overview:
|
The supplemental plan is a non-qualified plan that provides retirement, disability and death benefits to executives whose benefits would otherwise be limited by the compensation cap under the Swiss social security legislation. The purpose of this plan is to provide an employee with the same benefits the employee would have been entitled to receive from the Philip Morris Pension Fund in Switzerland (Main plan and IC pension plan) without taking into consideration the cap, and it is not intended to otherwise increase the benefits promised under the Pension Fund.
|
|
|
Eligible population:
|
Swiss-based employees either in salary band 22 or above or with Main plan pensionable earnings in excess of the salary limit described in article 79c of the Federal Law on Occupational Retirement, Survivors’ and Disability Pension Plans (LPP), currently CHF 842’400.- per year.
|
|
|
Benefits:
|
Benefits from the supplemental plan are generally equal to:
- the benefits from the Pension Fund without taking into account the salary cap
- less the benefits entitlement from the Pension Fund
- less the unpaid personal contribution due to the salary cap.
|
|
|
Employee contribution:
|
None.
|
|
|
Company contribution:
|
100% funded by the company under a non-qualified trust arrangement (separate legal entity).
|
|
|
Time and form of payment:
|
Lump sum payment, generally at retirement, disability, death or termination of employment, if the plan’s Board of Trustees determines in its sole discretion that the employee is entitled to benefits from the supplemental plan.
|
|
|
Tax impact:
|
Benefits are taxable to the employee and subject to social security deductions upon distribution. Tax and social security gross-up will be applied.
|
Yours sincerely,
PHILIP MORRIS INTERNATIONAL MANAGEMENT S.A.
|
|
Kevin Click
|
Senior Vice President Human Resources PMI
|
To: Mr. Louis C. Camilleri
|
December 18, 2014
|
Operator:
|
User:
|
|
|
PMI GLOBAL SERVICES INC.
|
|
|
|
By:
/s/ JOHN HAMMEL
|
/s/ LOUIS C. CAMILLERI
|
Name: John Hammel
|
Name: Louis C. Camilleri
|
Title: Vice President
|
|
|
|
U.S. Department of
|
1200 New Jersey Avenue, S.E.
|
Transportation
|
Washington, D.C. 20590
|
Office of the Secretary
of Transportation
|
|
|
Issue date: December 18, 2014
|
|
|
Ms. Joanne Barbera
|
Authority expires: December 31, 2015
|
Counsel for PMI Global Services Inc.
|
|
Barbera & Watkins, LLC
|
|
6701 W. 64
th
Street, Suite 315
|
/s/ ROBERT FINAMORE
|
Overland Park, Kansas 66202
|
Director, Office of International Aviation
|
|
|
U.S. Department of
|
1200 New Jersey Avenue, S.E.
|
Transportation
|
Washington, D.C. 20590
|
Office of the Secretary
of Transportation
|
|
|
Issue date: December 12, 2013
|
|
|
Ms. Joanne Barbera
|
Authority expires: December 31, 2014
|
Counsel for PMI Global Services Inc.
|
|
Barbera & Watkins, LLC
|
|
6701 W. 64
th
Street, Suite 315
|
/s/ ROBERT FINAMORE
|
Overland Park, Kansas 66202
|
Director, Office of International Aviation
|
|
|
U.S. Department of
|
1200 New Jersey Avenue, S.E.
|
Transportation
|
Washington, D.C. 20590
|
Office of the Secretary
of Transportation
|
|
|
Issue date: December 19, 2012
|
|
|
Ms. Joanne Barbera
|
Authority expires: December 31, 2013
|
Counsel for PMI Global Services Inc.
|
|
Barbera & Watkins, LLC
|
|
6701 W. 64
th
Street, Suite 315
|
/s/ ROBERT FINAMORE
|
Overland Park, Kansas 66202
|
Director, Office of International Aviation
|
|
|
U.S. Department of
|
1200 New Jersey Avenue, S.E.
|
Transportation
|
Washington, D.C. 20590
|
Office of the Secretary
of Transportation
|
|
|
Issue date: July 18, 2012
|
|
|
Ms. Joanne Barbera
|
Authority expires: December 31, 2012
|
Counsel for PMI Global Services Inc.
|
|
Barbera & Watkins, LLC
|
|
6701 W. 64
th
Street, Suite 315
|
/s/ CATHERINE C. BROWN
|
Overland Park, Kansas 66202
|
Director, Office of International Aviation
|
|
|
U.S. Department of
|
1200 New Jersey Avenue, S.E.
|
Transportation
|
Washington, D.C. 20590
|
Office of the Secretary
of Transportation
|
|
|
Issue date: December 2, 2011
|
|
|
Ms. Joanne Barbera
|
Authority expires: December 31, 2012
|
Counsel for PMI Global Services Inc.
|
|
Barbera & Watkins, LLC
|
|
6701 W. 64
th
Street, Suite 315
|
/s/ ROBERT FINAMORE
|
Overland Park, Kansas 66202
|
Director, Office of International Aviation
|
|
|
U.S. Department of
|
1200 New Jersey Avenue, S.E.
|
Transportation
|
Washington, D.C. 20590
|
Office of the Secretary
of Transportation
|
|
|
|
|
Issue date: December 22, 2010
|
Ms. Joanne Barbera
|
Authority expires: December 31, 2011
|
Counsel for PMI Global Services Inc.
|
|
Barbera & Watkins, LLC
|
|
6701 W. 64
th
Street, Suite 315
|
/s/ GEORGE WELLINGTON
|
Overland Park, Kansas 66202
|
Director, Office of International Aviation
|
|
|
|
|
U.S. Department of
|
1200 New Jersey Avenue, S.E.
|
Transportation
|
Washington, D.C. 20590
|
Office of the Secretary
of Transportation
|
|
|
|
|
|
|
Issue date: July 22, 2010
|
Ms. Joanne Barbera
|
Authority expires: July 22, 2011
|
Counsel for PMI Global Services Inc.
|
|
Barbera & Watkins, LLC
|
|
6701 W. 64
th
Street, Suite 315
|
/s/ GEORGE WELLINGTON
|
Overland Park, Kansas 66202
|
Director, Office of International Aviation
|
|
|
Operator:
|
User:
|
|
|
PMI GLOBAL SERVICES INC.
|
|
|
|
By:
/s/ JOHN K. HAMMEL
|
/s/
ANDRÉ CALANTZOPOULOS
|
Name: John K. Hammel
|
Name: André Calantzopoulos
|
Title: Vice President
|
|
|
|
|
|
|
|
|
|
U.S. Department of
|
1200 New Jersey Avenue, S.E.
|
Transportation
|
Washington, D.C. 20590
|
Office of the Secretary
of Transportation
|
|
|
Issue date: December 18, 2014
|
|
|
Ms. Joanne Barbera
|
Authority expires: December 31, 2015
|
Counsel for PMI Global Services Inc.
|
|
Barbera & Watkins, LLC
|
|
6701 W. 64
th
Street, Suite 315
|
/s/ ROBERT FINAMORE
|
Overland Park, Kansas 66202
|
Director, Office of International Aviation
|
|
|
U.S. Department of
|
1200 New Jersey Avenue, S.E.
|
Transportation
|
Washington, D.C. 20590
|
Office of the Secretary
of Transportation
|
|
|
Issue date: December 12, 2013
|
|
|
Ms. Joanne Barbera
|
Authority expires: December 31, 2014
|
Counsel for PMI Global Services Inc.
|
|
Barbera & Watkins, LLC
|
|
6701 W. 64
th
Street, Suite 315
|
/s/ ROBERT FINAMORE
|
Overland Park, Kansas 66202
|
Director, Office of International Aviation
|
|
|
U.S. Department of
|
1200 New Jersey Avenue, S.E.
|
Transportation
|
Washington, D.C. 20590
|
Office of the Secretary
of Transportation
|
|
|
Issue date: December 19, 2012
|
|
|
Ms. Joanne Barbera
|
Authority expires: December 31, 2013
|
Counsel for PMI Global Services Inc.
|
|
Barbera & Watkins, LLC
|
|
6701 W. 64
th
Street, Suite 315
|
/
s/ ROBERT FINAMORE
|
Overland Park, Kansas 66202
|
Director, Office of International Aviation
|
|
|
U.S. Department of
|
1200 New Jersey Avenue, S.E.
|
Transportation
|
Washington, D.C. 20590
|
Office of the Secretary
of Transportation
|
|
|
Issue date: July 18, 2012
|
|
|
Ms. Joanne Barbera
|
Authority expires: December 31, 2012
|
Counsel for PMI Global Services Inc.
|
|
Barbera & Watkins, LLC
|
|
6701 W. 64
th
Street, Suite 315
|
/s/ CATHERINE C. BROWN
|
Overland Park, Kansas 66202
|
Director, Office of International Aviation
|
|
|
U.S. Department of
|
1200 New Jersey Avenue, S.E.
|
Transportation
|
Washington, D.C. 20590
|
Office of the Secretary
of Transportation
|
|
|
Issue date: December 2, 2011
|
|
|
Ms. Joanne Barbera
|
Authority expires: December 31, 2012
|
Counsel for PMI Global Services Inc.
|
|
Barbera & Watkins, LLC
|
|
6701 W. 64
th
Street, Suite 315
|
/s/ ROBERT FINAMORE
|
Overland Park, Kansas 66202
|
Director, Office of International Aviation
|
|
|
U.S. Department of
|
1200 New Jersey Avenue, S.E.
|
Transportation
|
Washington, D.C. 20590
|
Office of the Secretary
of Transportation
|
|
|
|
|
Issue date: December 22, 2010
|
Ms. Joanne Barbera
|
Authority expires: December 31, 2011
|
Counsel for PMI Global Services Inc.
|
|
Barbera & Watkins, LLC
|
|
6701 W. 64
th
Street, Suite 315
|
/s/ GEORGE WELLINGTON
|
Overland Park, Kansas 66202
|
Director, Office of International Aviation
|
|
|
|
|
U.S. Department of
|
1200 New Jersey Avenue, S.E.
|
Transportation
|
Washington, D.C. 20590
|
Office of the Secretary
of Transportation
|
|
|
|
|
|
|
Issue date: July 22, 2010
|
Ms. Joanne Barbera
|
Authority expires: July 22, 2011
|
Counsel for PMI Global Services Inc.
|
|
Barbera & Watkins, LLC
|
|
6701 W. 64
th
Street, Suite 315
|
/s/ GEORGE WELLINGTON
|
Overland Park, Kansas 66202
|
Director, Office of International Aviation
|
|
|
|
|
For the Years Ended December 31,
|
||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
||||||||||
Earnings before income taxes
|
$
|
10,650
|
|
|
$
|
12,542
|
|
|
$
|
13,004
|
|
|
$
|
12,542
|
|
|
$
|
10,332
|
|
Add (deduct):
|
|
|
|
|
|
|
|
|
|
||||||||||
Dividends from less than 50%
owned affiliates |
107
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Fixed charges
|
1,284
|
|
|
1,216
|
|
|
1,115
|
|
|
1,042
|
|
|
1,069
|
|
|||||
Interest capitalized, net of
amortization |
1
|
|
|
4
|
|
|
2
|
|
|
(2
|
)
|
|
1
|
|
|||||
Earnings available for fixed charges
|
$
|
12,042
|
|
|
$
|
13,763
|
|
|
$
|
14,121
|
|
|
$
|
13,582
|
|
|
$
|
11,402
|
|
Fixed charges:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest incurred
|
$
|
1,172
|
|
|
$
|
1,105
|
|
|
$
|
1,009
|
|
|
$
|
940
|
|
|
$
|
976
|
|
Portion of rent expense deemed to
represent interest factor |
112
|
|
|
111
|
|
|
106
|
|
|
102
|
|
|
93
|
|
|||||
Fixed charges
|
$
|
1,284
|
|
|
$
|
1,216
|
|
|
$
|
1,115
|
|
|
$
|
1,042
|
|
|
$
|
1,069
|
|
Ratio of earnings to fixed charges
|
9.4
|
|
|
11.3
|
|
|
12.7
|
|
|
13.0
|
|
|
10.7
|
|
|
|
|
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 Benelux B.V.B.A.
|
|
Belgium
|
Philip Morris Brands S.a.r.l.
|
|
Switzerland
|
Philip Morris Brasil Industria e Comercio Ltda.
|
|
Brazil
|
Philip Morris Mexico 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 Misr Limited Liability company
|
|
Egypt
|
Philip Morris Operations a.d.
|
|
Serbia
|
Philip Morris (Pakistan) Limited
|
|
Pakistan
|
Philip Morris Philippines Manufacturing Inc.
|
|
Philippines
|
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/ HAROLD BROWN
|
Harold Brown
|
|
/s/ LOUIS C. CAMILLERI
|
Louis C. Camilleri
|
|
/s/ WERNER GEISSLER
|
Werner Geissler
|
|
/s/ JENNIFER LI
|
Jennifer Li
|
|
/s/ JUN MAKIHARA
|
Jun Makihara
|
|
/s/ SERGIO MARCHIONNE
|
Sergio Marchionne
|
|
/s/ KALPANA MORPARIA
|
Kalpana Morparia
|
|
/s/ LUCIO A. NOTO
|
Lucio A. Noto
|
|
/s/ FREDERIK PAULSEN
|
Frederik Paulsen
|
|
/s/ ROBERT B. POLET
|
Robert B. Polet
|
|
/s/ CARLOS SLIM HELU
|
Carlos Slim Helú
|
|
/s/ STEPHEN M. WOLF
|
Stephen M. Wolf
|
1.
|
I have reviewed this
annual
report on
Form 10-K
of Philip Morris International Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ ANDRÉ CALANTZOPOULOS
|
André Calantzopoulos
|
Chief Executive Officer
|
/s/ ANDRÉ CALANTZOPOULOS
|
André Calantzopoulos
|
Chief Executive Officer
|
February 20, 2015
|
1.
|
I have reviewed this
annual
report on
Form 10-K
of Philip Morris International Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ JACEK OLCZAK
|
Jacek Olczak
|
Chief Financial Officer
|
/s/ JACEK OLCZAK
|
Jacek Olczak
|
Chief Financial Officer
|
February 20, 2015
|