(X)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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( )
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Philip Morris International Inc.
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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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Registrant’s telephone number, including area code
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(917) 663-2000
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Page No.
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PART I -
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Item 1.
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Condensed Consolidated Balance Sheets at
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March 31, 2015 and December 31, 2014
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Condensed Consolidated Statements of Earnings for the
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|
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Three Months Ended March 31, 2015 and 2014
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Condensed Consolidated Statements of Comprehensive Earnings for the
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Three Months Ended March 31, 2015 and 2014
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Condensed Consolidated Statements of Stockholders’ (Deficit) Equity for the
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|
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Three Months Ended March 31, 2015 and 2014
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Condensed Consolidated Statements of Cash Flows for the
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Three Months Ended March 31, 2015 and 2014
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Notes to Condensed Consolidated Financial Statements
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Item 2.
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Item 4.
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PART II -
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Item 1.
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||
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Item 1A.
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Item 2.
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Item 6.
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March 31,
2015 |
|
December 31,
2014 |
||||
ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,524
|
|
|
$
|
1,682
|
|
Receivables (less allowances of $48 in 2015 and $50 in 2014)
|
3,741
|
|
|
4,004
|
|
||
Inventories:
|
|
|
|
||||
Leaf tobacco
|
3,098
|
|
|
3,135
|
|
||
Other raw materials
|
1,636
|
|
|
1,696
|
|
||
Finished product
|
2,818
|
|
|
3,761
|
|
||
|
7,552
|
|
|
8,592
|
|
||
Deferred income taxes
|
457
|
|
|
533
|
|
||
Other current assets
|
1,001
|
|
|
673
|
|
||
Total current assets
|
14,275
|
|
|
15,484
|
|
||
Property, plant and equipment, at cost
|
12,085
|
|
|
12,759
|
|
||
Less: accumulated depreciation
|
6,388
|
|
|
6,688
|
|
||
|
5,697
|
|
|
6,071
|
|
||
Goodwill (Note 5)
|
7,920
|
|
|
8,388
|
|
||
Other intangible assets, net (Note 5)
|
2,855
|
|
|
2,985
|
|
||
Investments in unconsolidated subsidiaries (Note 15)
|
1,064
|
|
|
1,083
|
|
||
Other assets
|
1,444
|
|
|
1,176
|
|
||
TOTAL ASSETS
|
$
|
33,255
|
|
|
$
|
35,187
|
|
|
March 31,
2015 |
|
December 31,
2014 |
||||
LIABILITIES
|
|
|
|
||||
Short-term borrowings (Note 11)
|
$
|
3,384
|
|
|
$
|
1,208
|
|
Current portion of long-term debt (Note 11)
|
1,629
|
|
|
1,318
|
|
||
Accounts payable
|
1,038
|
|
|
1,242
|
|
||
Accrued liabilities:
|
|
|
|
||||
Marketing and selling
|
437
|
|
|
549
|
|
||
Taxes, except income taxes
|
3,945
|
|
|
5,490
|
|
||
Employment costs
|
848
|
|
|
1,135
|
|
||
Dividends payable
|
1,559
|
|
|
1,559
|
|
||
Other
|
1,482
|
|
|
1,375
|
|
||
Income taxes
|
493
|
|
|
1,078
|
|
||
Deferred income taxes
|
165
|
|
|
158
|
|
||
Total current liabilities
|
14,980
|
|
|
15,112
|
|
||
Long-term debt (Note 11)
|
25,572
|
|
|
26,929
|
|
||
Deferred income taxes
|
1,975
|
|
|
1,549
|
|
||
Employment costs
|
2,097
|
|
|
2,202
|
|
||
Other liabilities
|
877
|
|
|
598
|
|
||
Total liabilities
|
45,501
|
|
|
46,390
|
|
||
Contingencies (Note 9)
|
|
|
|
||||
STOCKHOLDERS’ (DEFICIT) EQUITY
|
|
|
|
||||
Common stock, no par value
(2,109,316,331 shares issued in 2015 and 2014) |
—
|
|
|
—
|
|
||
Additional paid-in capital
|
613
|
|
|
710
|
|
||
Earnings reinvested in the business
|
29,489
|
|
|
29,249
|
|
||
Accumulated other comprehensive losses
|
(8,090
|
)
|
|
(6,826
|
)
|
||
|
22,012
|
|
|
23,133
|
|
||
Less: cost of repurchased stock
(560,220,461 and 562,416,635 shares in 2015 and 2014, respectively)
|
35,628
|
|
|
35,762
|
|
||
Total PMI stockholders’ deficit
|
(13,616
|
)
|
|
(12,629
|
)
|
||
Noncontrolling interests
|
1,370
|
|
|
1,426
|
|
||
Total stockholders’ deficit
|
(12,246
|
)
|
|
(11,203
|
)
|
||
TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
|
$
|
33,255
|
|
|
$
|
35,187
|
|
|
For the Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
Net revenues
|
$
|
17,352
|
|
|
$
|
17,779
|
|
Cost of sales
|
2,229
|
|
|
2,374
|
|
||
Excise taxes on products
|
10,736
|
|
|
10,862
|
|
||
Gross profit
|
4,387
|
|
|
4,543
|
|
||
Marketing, administration and research costs
|
1,494
|
|
|
1,547
|
|
||
Asset impairment and exit costs (Note 2)
|
—
|
|
|
23
|
|
||
Amortization of intangibles
|
22
|
|
|
22
|
|
||
Operating income
|
2,871
|
|
|
2,951
|
|
||
Interest expense, net
|
275
|
|
|
268
|
|
||
Earnings before income taxes
|
2,596
|
|
|
2,683
|
|
||
Provision for income taxes
|
785
|
|
|
776
|
|
||
Equity (income)/loss in unconsolidated subsidiaries, net
|
(23
|
)
|
|
(9
|
)
|
||
Net earnings
|
1,834
|
|
|
1,916
|
|
||
Net earnings attributable to noncontrolling interests
|
39
|
|
|
41
|
|
||
Net earnings attributable to PMI
|
$
|
1,795
|
|
|
$
|
1,875
|
|
Per share data (Note 7):
|
|
|
|
||||
Basic earnings per share
|
$
|
1.16
|
|
|
$
|
1.18
|
|
Diluted earnings per share
|
$
|
1.16
|
|
|
$
|
1.18
|
|
Dividends declared
|
$
|
1.00
|
|
|
$
|
0.94
|
|
|
|
For the Three Months Ended March 31,
|
||||||
|
|
2015
|
|
2014
|
||||
Net earnings
|
|
$
|
1,834
|
|
|
$
|
1,916
|
|
Other comprehensive earnings (losses), net of income taxes:
|
|
|
|
|
||||
Change in currency translation adjustments:
|
|
|
|
|
||||
Unrealized losses, net of income taxes of ($434) in 2015 and ($4) in 2014
|
|
(1,343
|
)
|
|
(37
|
)
|
||
Change in net loss and prior service cost:
|
|
|
|
|
||||
Amortization of net losses, prior service costs and net transition costs, net of income taxes of ($12) in 2015 and ($12) in 2014
|
|
56
|
|
|
38
|
|
||
Change in fair value of derivatives accounted for as hedges:
|
|
|
|
|
||||
Gains (losses) recognized, net of income taxes of ($2) in 2015 and $3 in 2014
|
|
25
|
|
|
(24
|
)
|
||
Gains transferred to earnings, net of income taxes of $3 in 2015 and $1 in 2014
|
|
(27
|
)
|
|
(7
|
)
|
||
Total other comprehensive losses
|
|
(1,289
|
)
|
|
(30
|
)
|
||
Total comprehensive earnings
|
|
545
|
|
|
1,886
|
|
||
Less comprehensive earnings attributable to:
|
|
|
|
|
||||
Noncontrolling interests
|
|
14
|
|
|
34
|
|
||
Comprehensive earnings attributable to PMI
|
|
$
|
531
|
|
|
$
|
1,852
|
|
|
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, 2014
|
$
|
—
|
|
|
$
|
723
|
|
|
$
|
27,843
|
|
|
$
|
(4,190
|
)
|
|
$
|
(32,142
|
)
|
|
$
|
1,492
|
|
|
|
$
|
(6,274
|
)
|
Net earnings
|
|
|
|
|
1,875
|
|
|
|
|
|
|
41
|
|
|
|
1,916
|
|
|||||||||||
Other comprehensive earnings (losses), net of income taxes
|
|
|
|
|
|
|
(23
|
)
|
|
|
|
(7
|
)
|
|
|
(30
|
)
|
|||||||||||
Issuance of stock awards and exercise of stock options
|
|
|
(115
|
)
|
|
|
|
|
|
156
|
|
|
|
|
|
41
|
|
|||||||||||
Dividends declared ($0.94 per share)
|
|
|
|
|
(1,490
|
)
|
|
|
|
|
|
|
|
|
(1,490
|
)
|
||||||||||||
Payments to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
(70
|
)
|
|
|
(70
|
)
|
||||||||||||
Common stock repurchased
|
|
|
|
|
|
|
|
|
(1,250
|
)
|
|
|
|
|
(1,250
|
)
|
||||||||||||
Balances, March 31, 2014
|
$
|
—
|
|
|
$
|
608
|
|
|
$
|
28,228
|
|
|
$
|
(4,213
|
)
|
|
$
|
(33,236
|
)
|
|
$
|
1,456
|
|
|
|
$
|
(7,157
|
)
|
Balances, January 1, 2015
|
$
|
—
|
|
|
$
|
710
|
|
|
$
|
29,249
|
|
|
$
|
(6,826
|
)
|
|
$
|
(35,762
|
)
|
|
$
|
1,426
|
|
|
|
$
|
(11,203
|
)
|
Net earnings
|
|
|
|
|
1,795
|
|
|
|
|
|
|
39
|
|
|
|
1,834
|
|
|||||||||||
Other comprehensive earnings (losses), net of income taxes
|
|
|
|
|
|
|
(1,264
|
)
|
|
|
|
(25
|
)
|
|
|
(1,289
|
)
|
|||||||||||
Issuance of stock awards
|
|
|
(97
|
)
|
|
|
|
|
|
134
|
|
|
|
|
|
37
|
|
|||||||||||
Dividends declared ($1.00 per share)
|
|
|
|
|
(1,555
|
)
|
|
|
|
|
|
|
|
|
(1,555
|
)
|
||||||||||||
Payments to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
(70
|
)
|
|
|
(70
|
)
|
||||||||||||
Common stock repurchased
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
||||||||||||
Balances, March 31, 2015
|
$
|
—
|
|
|
$
|
613
|
|
|
$
|
29,489
|
|
|
$
|
(8,090
|
)
|
|
$
|
(35,628
|
)
|
|
$
|
1,370
|
|
|
|
$
|
(12,246
|
)
|
|
For the Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
|
|
|
||||
|
|
|
|
||||
Net earnings
|
$
|
1,834
|
|
|
$
|
1,916
|
|
|
|
|
|
||||
Adjustments to reconcile net earnings to operating cash flows:
|
|
|
|
||||
Depreciation and amortization
|
192
|
|
|
211
|
|
||
Deferred income tax provision
|
132
|
|
|
86
|
|
||
Asset impairment and exit costs, net of cash paid
|
(160
|
)
|
|
(177
|
)
|
||
Cash effects of changes, net of the effects from acquired companies:
|
|
|
|
||||
Receivables, net
|
54
|
|
|
395
|
|
||
Inventories
|
393
|
|
|
1,086
|
|
||
Accounts payable
|
44
|
|
|
35
|
|
||
Income taxes
|
(535
|
)
|
|
(762
|
)
|
||
Accrued liabilities and other current assets
|
(2,327
|
)
|
|
(2,131
|
)
|
||
Pension plan contributions
|
(9
|
)
|
|
(29
|
)
|
||
Other
|
7
|
|
|
85
|
|
||
Net cash provided by (used in) operating activities
|
(375
|
)
|
|
715
|
|
||
|
|
|
|
||||
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
|
|
|
|
||||
|
|
|
|
||||
Capital expenditures
|
(203
|
)
|
|
(256
|
)
|
||
Investments in unconsolidated subsidiaries
|
(8
|
)
|
|
—
|
|
||
Other
|
279
|
|
|
48
|
|
||
Net cash provided by (used in) investing activities
|
68
|
|
|
(208
|
)
|
|
For the Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
|
|
|
||||
|
|
|
|
||||
Short-term borrowing activity by original maturity:
|
|
|
|
||||
Net issuances - maturities of 90 days or less
|
$
|
2,237
|
|
|
$
|
655
|
|
Issuances - maturities longer than 90 days
|
13
|
|
|
744
|
|
||
Repayments - maturities longer than 90 days
|
—
|
|
|
(465
|
)
|
||
Long-term debt proceeds
|
302
|
|
|
2,359
|
|
||
Long-term debt repaid
|
(399
|
)
|
|
(1,240
|
)
|
||
Repurchases of common stock
|
(48
|
)
|
|
(1,241
|
)
|
||
Dividends paid
|
(1,555
|
)
|
|
(1,503
|
)
|
||
Other
|
(25
|
)
|
|
(114
|
)
|
||
Net cash provided by (used in) financing activities
|
525
|
|
|
(805
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(376
|
)
|
|
(33
|
)
|
||
|
|
|
|
||||
Cash and cash equivalents:
|
|
|
|
||||
Decrease
|
(158
|
)
|
|
(331
|
)
|
||
Balance at beginning of period
|
1,682
|
|
|
2,154
|
|
||
Balance at end of period
|
$
|
1,524
|
|
|
$
|
1,823
|
|
(in millions)
|
For the Three Months Ended March 31,
|
|||||
|
2015
|
2014
|
||||
Separation programs:
|
|
|
||||
Asia
|
$
|
—
|
|
$
|
23
|
|
Total separation programs
|
—
|
|
23
|
|
||
Asset impairment and exit costs
|
$
|
—
|
|
$
|
23
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||
|
|
For the Three Months Ended March 31,
|
|
For the Three Months Ended March 31,
|
||||||||||||
(in millions)
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Service cost
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
51
|
|
|
$
|
52
|
|
Interest cost
|
|
5
|
|
|
4
|
|
|
36
|
|
|
51
|
|
||||
Expected return on plan assets
|
|
(4
|
)
|
|
(4
|
)
|
|
(83
|
)
|
|
(88
|
)
|
||||
Amortization:
|
|
|
|
|
|
|
|
|
||||||||
Net loss
|
|
3
|
|
|
2
|
|
|
46
|
|
|
28
|
|
||||
Prior service cost
|
|
—
|
|
|
—
|
|
|
1
|
|
|
2
|
|
||||
Net periodic pension cost
|
|
$
|
5
|
|
|
$
|
3
|
|
|
$
|
51
|
|
|
$
|
45
|
|
|
|
Goodwill
|
|
Other Intangible Assets, net
|
||||||||||||
(in millions)
|
|
March 31,
2015 |
|
December 31,
2014 |
|
March 31,
2015 |
|
December 31,
2014 |
||||||||
European Union
|
|
$
|
1,277
|
|
|
$
|
1,398
|
|
|
$
|
556
|
|
|
$
|
582
|
|
Eastern Europe, Middle East & Africa
|
|
481
|
|
|
517
|
|
|
211
|
|
|
215
|
|
||||
Asia
|
|
3,764
|
|
|
3,904
|
|
|
1,156
|
|
|
1,207
|
|
||||
Latin America & Canada
|
|
2,398
|
|
|
2,569
|
|
|
932
|
|
|
981
|
|
||||
Total
|
|
$
|
7,920
|
|
|
$
|
8,388
|
|
|
$
|
2,855
|
|
|
$
|
2,985
|
|
(in millions)
|
|
European
Union |
|
Eastern
Europe, Middle East & Africa |
|
Asia
|
|
Latin
America & Canada |
|
Total
|
||||||||||
Balances, December 31, 2014
|
|
$
|
1,398
|
|
|
$
|
517
|
|
|
$
|
3,904
|
|
|
$
|
2,569
|
|
|
$
|
8,388
|
|
Changes due to:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Currency
|
|
(121
|
)
|
|
(36
|
)
|
|
(140
|
)
|
|
(171
|
)
|
|
(468
|
)
|
|||||
Balances, March 31, 2015
|
|
$
|
1,277
|
|
|
$
|
481
|
|
|
$
|
3,764
|
|
|
$
|
2,398
|
|
|
$
|
7,920
|
|
|
|
March 31, 2015
|
|
December 31, 2014
|
||||||||||||
(in millions)
|
|
Gross
Carrying Amount |
|
Accumulated
Amortization |
|
Gross
Carrying Amount |
|
Accumulated
Amortization |
||||||||
Non-amortizable intangible assets
|
|
$
|
1,641
|
|
|
|
|
$
|
1,704
|
|
|
|
||||
Amortizable intangible assets
|
|
1,799
|
|
|
$
|
585
|
|
|
1,877
|
|
|
$
|
596
|
|
||
Total other intangible assets
|
|
$
|
3,440
|
|
|
$
|
585
|
|
|
$
|
3,581
|
|
|
$
|
596
|
|
(dollars in millions)
|
Gross Carrying Amount
|
Initial Estimated
Useful Lives |
|
Weighted-Average
Remaining Useful Life |
||
Trademarks
|
$
|
1,444
|
|
2 - 40 years
|
|
23 years
|
Distribution networks
|
161
|
|
5 - 30 years
|
|
12 years
|
|
Non-compete agreements
|
108
|
|
4 - 10 years
|
|
0.2 years
|
|
Other (including farmer
contracts and intellectual property rights) |
86
|
|
10 - 17 years
|
|
12 years
|
|
|
$
|
1,799
|
|
|
|
|
|
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||||||||||
|
|
|
|
Fair Value
|
|
|
|
Fair Value
|
||||||||||||
(in millions)
|
|
Balance Sheet Classification
|
|
At March 31, 2015
|
|
At December 31, 2014
|
|
Balance Sheet Classification
|
|
At March 31, 2015
|
|
At December 31, 2014
|
||||||||
Foreign exchange contracts designated as hedging instruments
|
|
Other current assets
|
|
$
|
132
|
|
|
$
|
248
|
|
|
|
|
|
|
|
|
|
||
|
|
Other assets
|
|
416
|
|
|
122
|
|
|
Other liabilities
|
|
$
|
42
|
|
|
$
|
25
|
|
||
Foreign exchange contracts not designated as hedging instruments
|
|
Other current assets
|
|
65
|
|
|
34
|
|
|
Other accrued liabilities
|
|
347
|
|
|
126
|
|
||||
|
|
Other assets
|
|
59
|
|
|
2
|
|
|
|
|
|
|
|
|
|||||
Total derivatives
|
|
|
|
$
|
672
|
|
|
$
|
406
|
|
|
|
|
$
|
389
|
|
|
$
|
151
|
|
(pre-tax, millions)
|
For the Three Months Ended March 31,
|
||||||||||||||||
|
Amount of Gain/(Loss) Recognized in Other Comprehensive Earnings/(Losses) on Derivatives
|
|
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
|
||||||||||||
|
2015
|
|
2014
|
|
|
|
2015
|
|
2014
|
||||||||
Derivatives in Cash Flow Hedging Relationship
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
$
|
27
|
|
|
$
|
(27
|
)
|
|
|
|
|
|
|
||||
|
|
|
|
|
Net revenues
|
|
$
|
30
|
|
|
$
|
15
|
|
||||
|
|
|
|
|
Marketing, administration and research costs
|
|
7
|
|
|
—
|
|
||||||
|
|
|
|
|
Interest expense, net
|
|
(7
|
)
|
|
(7
|
)
|
||||||
Derivatives in Net Investment Hedging Relationship
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
286
|
|
|
25
|
|
|
|
|
|
|
|
||||||
Total
|
$
|
313
|
|
|
$
|
(2
|
)
|
|
|
|
$
|
30
|
|
|
$
|
8
|
|
|
|
|
|
|
|
|
(in millions)
|
|
For the Three Months Ended March 31,
|
||||||
|
|
2015
|
|
2014
|
||||
Gain as of January 1,
|
|
$
|
123
|
|
|
$
|
63
|
|
Derivative gains transferred to earnings
|
|
(27
|
)
|
|
(7
|
)
|
||
Change in fair value
|
|
25
|
|
|
(24
|
)
|
||
Gain as of March 31,
|
|
$
|
121
|
|
|
$
|
32
|
|
(in millions)
|
|
For the Three Months Ended March 31,
|
||||||
|
|
2015
|
|
2014
|
||||
Net earnings attributable to PMI
|
|
$
|
1,795
|
|
|
$
|
1,875
|
|
Less distributed and undistributed earnings attributable to share-based payment awards
|
|
7
|
|
|
9
|
|
||
Net earnings for basic and diluted EPS
|
|
$
|
1,788
|
|
|
$
|
1,866
|
|
Weighted-average shares for basic and diluted EPS
|
|
1,548
|
|
|
1,583
|
|
(in millions)
|
|
For the Three Months Ended March 31,
|
||||||
|
|
2015
|
|
2014
|
||||
Net revenues:
|
|
|
|
|
||||
European Union
|
|
$
|
5,940
|
|
|
$
|
6,619
|
|
Eastern Europe, Middle East & Africa
|
|
4,429
|
|
|
4,562
|
|
||
Asia
|
|
4,764
|
|
|
4,475
|
|
||
Latin America & Canada
|
|
2,219
|
|
|
2,123
|
|
||
Net revenues
|
|
$
|
17,352
|
|
|
$
|
17,779
|
|
Earnings before income taxes:
|
|
|
|
|
||||
Operating companies income:
|
|
|
|
|
||||
European Union
|
|
$
|
913
|
|
|
$
|
978
|
|
Eastern Europe, Middle East & Africa
|
|
880
|
|
|
927
|
|
||
Asia
|
|
934
|
|
|
915
|
|
||
Latin America & Canada
|
|
230
|
|
|
202
|
|
||
Amortization of intangibles
|
|
(22
|
)
|
|
(22
|
)
|
||
General corporate expenses
|
|
(41
|
)
|
|
(40
|
)
|
||
Less:
|
|
|
|
|
||||
Equity (income)/loss in unconsolidated subsidiaries, net
|
|
(23
|
)
|
|
(9
|
)
|
||
Operating income
|
|
2,871
|
|
|
2,951
|
|
||
Interest expense, net
|
|
(275
|
)
|
|
(268
|
)
|
||
Earnings before income taxes
|
|
$
|
2,596
|
|
|
$
|
2,683
|
|
Type of Case
|
|
Number of Cases Pending as of April 30, 2015
|
|
Number of Cases Pending as of
May 1, 2014 |
|
Number of Cases Pending as of
May 1, 2013 |
||
Individual Smoking and Health Cases
|
|
61
|
|
65
|
|
|
71
|
|
Smoking and Health Class Actions
|
|
11
|
|
11
|
|
|
11
|
|
Health Care Cost Recovery Actions
|
|
16
|
|
15
|
|
|
15
|
|
Lights Class Actions
|
|
—
|
|
1
|
|
|
2
|
|
Individual Lights Cases
|
|
2
|
|
2
|
|
|
1
|
|
Public Civil Actions
|
|
2
|
|
2
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
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 $340) 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 appealed the decision. In February 2015, the court unanimously dismissed plaintiff's appeal. Plaintiff may further appeal. 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.
|
•
|
61
cases brought by individual plaintiffs in Argentina (
23
), Brazil (
22
), Canada (
2
), Chile (
7
), Costa Rica (
2
), Greece (
1
), Italy (
2
), the Philippines (
1
) and Scotland (
1
), compared with
65
such cases on
May 1, 2014
, and
71
cases on
May 1, 2013
; and
|
•
|
11
cases brought on behalf of classes of individual plaintiffs in Brazil (
2
) and Canada (
9
), compared with
11
such cases on
May 1, 2014
and
11
such cases on
May 1, 2013
.
|
(in millions)
|
|
March 31, 2015
|
|
December 31, 2014
|
||||
U.S. dollar notes, 1.125% to 6.375% (average interest rate 3.874%), due through 2044
|
|
$
|
16,831
|
|
|
$
|
17,229
|
|
Foreign currency obligations:
|
|
|
|
|
||||
Euro notes, 1.750% to 5.875% (average interest rate 3.104%), due through 2033
|
|
8,165
|
|
|
9,161
|
|
||
Swiss franc notes, 0.750% to 2.000% (average interest rate 1.217%), due through 2024
|
|
1,736
|
|
|
1,690
|
|
||
Other (average interest rate 3.125%), due through 2024
|
|
469
|
|
|
167
|
|
||
|
|
27,201
|
|
|
28,247
|
|
||
Less current portion of long-term debt
|
|
1,629
|
|
|
1,318
|
|
||
|
|
$
|
25,572
|
|
|
$
|
26,929
|
|
Type
|
|
Committed
Credit
Facilities
|
||
364-day revolving credit, expiring February 9, 2016
|
|
$
|
2.0
|
|
Multi-year revolving credit, expiring February 28, 2020
|
|
2.5
|
|
|
Multi-year revolving credit, expiring October 25, 2016
|
|
3.5
|
|
|
Total facilities
|
|
$
|
8.0
|
|
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 March 31, 2015 |
|
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
|
|
$
|
672
|
|
|
$
|
—
|
|
|
$
|
672
|
|
|
$
|
—
|
|
Total assets
|
|
$
|
672
|
|
|
$
|
—
|
|
|
$
|
672
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Debt
|
|
$
|
29,881
|
|
|
$
|
29,396
|
|
|
$
|
485
|
|
|
$
|
—
|
|
Foreign exchange contracts
|
|
389
|
|
|
—
|
|
|
389
|
|
|
—
|
|
||||
Contingent consideration
|
|
21
|
|
|
—
|
|
|
—
|
|
|
21
|
|
||||
Total liabilities
|
|
$
|
30,291
|
|
|
$
|
29,396
|
|
|
$
|
874
|
|
|
$
|
21
|
|
(in millions)
|
|
At March 31, 2015
|
|
At December 31, 2014
|
|
At March 31, 2014
|
||||||
Currency translation adjustments
|
|
$
|
(5,247
|
)
|
|
$
|
(3,929
|
)
|
|
$
|
(2,237
|
)
|
Pension and other benefits
|
|
(2,964
|
)
|
|
(3,020
|
)
|
|
(2,008
|
)
|
|||
Derivatives accounted for as hedges
|
|
121
|
|
|
123
|
|
|
32
|
|
|||
Total accumulated other comprehensive losses
|
|
$
|
(8,090
|
)
|
|
$
|
(6,826
|
)
|
|
$
|
(4,213
|
)
|
(in millions)
|
Gross Amounts Recognized
|
Gross Amount Offset in the Condensed Consolidated Balance Sheet
|
Net Amounts Presented in the Condensed Consolidated Balance Sheet
|
Gross Amounts Not Offset in the
Condensed Consolidated
Balance Sheet
|
|
|||||||||||||
Financial Instruments
|
Cash Collateral Received/Pledged
|
|
||||||||||||||||
Net Amount
|
||||||||||||||||||
|
|
|
|
|
|
|
||||||||||||
At March 31, 2015
|
|
|
|
|
|
|
||||||||||||
Assets
|
|
|
|
|
|
|
||||||||||||
Foreign exchange contracts
|
$
|
672
|
|
$
|
—
|
|
$
|
672
|
|
$
|
(157
|
)
|
$
|
(447
|
)
|
$
|
68
|
|
Liabilities
|
|
|
|
|
|
|
||||||||||||
Foreign exchange contracts
|
$
|
389
|
|
$
|
—
|
|
$
|
389
|
|
$
|
(157
|
)
|
$
|
(215
|
)
|
$
|
17
|
|
At December 31, 2014
|
|
|
|
|
|
|
||||||||||||
Assets
|
|
|
|
|
|
|
||||||||||||
Foreign exchange contracts
|
$
|
406
|
|
$
|
—
|
|
$
|
406
|
|
$
|
(77
|
)
|
$
|
(306
|
)
|
$
|
23
|
|
Liabilities
|
|
|
|
|
|
|
||||||||||||
Foreign exchange contracts
|
$
|
151
|
|
$
|
—
|
|
$
|
151
|
|
$
|
(77
|
)
|
$
|
(63
|
)
|
$
|
11
|
|
|
|
For the Three Months Ended March 31,
|
|||||
(in millions)
|
|
2015
|
2014
|
||||
Net revenues
|
|
$
|
896
|
|
$
|
1,186
|
|
(in millions)
|
|
At March 31, 2015
|
At December 31, 2014
|
||||
|
|
|
|
||||
Receivables
|
|
$
|
457
|
|
$
|
407
|
|
Notes receivable
|
|
$
|
102
|
|
$
|
100
|
|
Other liabilities
|
|
$
|
95
|
|
$
|
93
|
|
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.
|
•
|
European Union;
|
•
|
Eastern Europe, Middle East & Africa (“EEMA”);
|
•
|
Asia; and
|
•
|
Latin America & Canada.
|
|
|
Diluted EPS
|
|
% Growth
|
|||
For the three months ended March 31, 2014
|
|
$
|
1.18
|
|
|
|
|
2014 Asset impairment and exit costs
|
|
0.01
|
|
|
|
||
2014 Tax items
|
|
—
|
|
|
|
||
Subtotal of 2014 items
|
|
0.01
|
|
|
|
||
2015 Asset impairment and exit costs
|
|
—
|
|
|
|
||
2015 Tax items
|
|
—
|
|
|
|
||
Subtotal of 2015 items
|
|
—
|
|
|
|
||
Currency
|
|
(0.31
|
)
|
|
|
||
Interest
|
|
(0.01
|
)
|
|
|
||
Change in tax rate
|
|
(0.03
|
)
|
|
|
||
Impact of lower shares outstanding and share-based payments
|
|
0.04
|
|
|
|
||
Operations
|
|
0.28
|
|
|
|
||
For the three months ended March 31, 2015
|
|
$
|
1.16
|
|
|
(1.7
|
)%
|
•
|
EEMA: Higher pricing, favorable volume/mix and higher equity income in unconsolidated subsidiaries derived from our investments in North Africa and Russia, partially offset by higher manufacturing costs and higher marketing, administration and research costs;
|
•
|
European Union: Higher pricing, favorable volume/mix and lower manufacturing costs, partially offset by higher marketing, administration and research costs;
|
•
|
Asia: Higher pricing, partially offset by unfavorable volume/mix and higher manufacturing costs; and
|
•
|
Latin America & Canada: Higher pricing, partially offset by unfavorable volume/mix, higher manufacturing costs and higher marketing, administration and research costs.
|
|
|
|
For the Three Months Ended March 31,
|
||||||
(in millions)
|
|
|
2015
|
|
2014
|
||||
Cigarette volume:
|
|
|
|
|
|
||||
European Union
|
|
|
42,721
|
|
|
41,705
|
|
||
Eastern Europe, Middle East & Africa
|
|
|
64,721
|
|
|
62,006
|
|
||
Asia
|
|
|
70,125
|
|
|
70,801
|
|
||
Latin America & Canada
|
|
|
21,190
|
|
|
21,449
|
|
||
Total cigarette volume
|
|
|
198,757
|
|
|
195,961
|
|
||
Net revenues:
|
|
|
|
|
|
||||
European Union
|
|
|
$
|
5,940
|
|
|
$
|
6,619
|
|
Eastern Europe, Middle East & Africa
|
|
|
4,429
|
|
|
4,562
|
|
||
Asia
|
|
|
4,764
|
|
|
4,475
|
|
||
Latin America & Canada
|
|
|
2,219
|
|
|
2,123
|
|
||
Net revenues
|
|
|
$
|
17,352
|
|
|
$
|
17,779
|
|
Excise taxes on products:
|
|
|
|
|
|
||||
European Union
|
|
|
$
|
4,048
|
|
|
$
|
4,606
|
|
Eastern Europe, Middle East & Africa
|
|
|
2,586
|
|
|
2,553
|
|
||
Asia
|
|
|
2,609
|
|
|
2,293
|
|
||
Latin America & Canada
|
|
|
1,493
|
|
|
1,410
|
|
||
Excise taxes on products
|
|
|
$
|
10,736
|
|
|
$
|
10,862
|
|
Operating income:
|
|
|
|
|
|
||||
Operating companies income:
|
|
|
|
|
|
||||
European Union
|
|
|
$
|
913
|
|
|
$
|
978
|
|
Eastern Europe, Middle East & Africa
|
|
|
880
|
|
|
927
|
|
||
Asia
|
|
|
934
|
|
|
915
|
|
||
Latin America & Canada
|
|
|
230
|
|
|
202
|
|
||
Amortization of intangibles
|
|
|
(22
|
)
|
|
(22
|
)
|
||
General corporate expenses
|
|
|
(41
|
)
|
|
(40
|
)
|
||
Less:
|
|
|
|
|
|
||||
Equity (income)/loss in unconsolidated subsidiaries, net
|
|
|
(23
|
)
|
|
(9
|
)
|
||
Operating income
|
|
|
$
|
2,871
|
|
|
$
|
2,951
|
|
•
|
Asia, mainly Japan, principally reflecting an unfavorable comparison with the first quarter of 2014, and Korea, resulting from the excise tax increase in January 2015, partially offset by Indonesia; and
|
•
|
Latin America & Canada, mainly Argentina and Canada, partially offset by Brazil and Mexico.
|
|
|
For the Three Months Ended March 31,
|
|
|
|||||||||||
(in millions)
|
|
2015
|
|
2014
|
|
Variance
|
|
%
|
|||||||
Net revenues
|
|
$
|
17,352
|
|
|
$
|
17,779
|
|
|
$
|
(427
|
)
|
|
(2.4
|
)%
|
Excise taxes on products
|
|
10,736
|
|
|
10,862
|
|
|
(126
|
)
|
|
(1.2
|
)%
|
|||
Net revenues, excluding excise taxes on products
|
|
$
|
6,616
|
|
|
$
|
6,917
|
|
|
$
|
(301
|
)
|
|
(4.4
|
)%
|
•
|
unfavorable currency (
$939 million
), partly offset by
|
•
|
price increases (
$552 million
),
|
•
|
favorable volume/mix (
$78 million
), and
|
•
|
the impact of acquisitions ($8 million).
|
•
|
favorable currency (
$1.5 billion
), partly offset by
|
•
|
higher excise taxes resulting from changes in retail prices and tax rates (
$1.2 billion
),
|
•
|
higher excise taxes resulting from favorable volume/mix (
$143 million
), and
|
•
|
the impact of acquisitions ($3 million).
|
|
|
For the Three Months Ended March 31,
|
|
|
|||||||||||
(in millions)
|
|
2015
|
|
2014
|
|
Variance
|
|
%
|
|||||||
Cost of sales
|
|
$
|
2,229
|
|
|
$
|
2,374
|
|
|
$
|
(145
|
)
|
|
(6.1
|
)%
|
Marketing, administration and research costs
|
|
1,494
|
|
|
1,547
|
|
|
(53
|
)
|
|
(3.4
|
)%
|
|||
Operating income
|
|
2,871
|
|
|
2,951
|
|
|
(80
|
)
|
|
(2.7
|
)%
|
•
|
favorable currency (
$257 million
), partly offset by
|
•
|
higher manufacturing costs (
$63 million
, principally in Egypt, due to the impact of the change to our new business structure, and in Indonesia),
|
•
|
higher cost of sales resulting from favorable volume/mix (
$45 million
), and
|
•
|
the impact of acquisitions ($4 million).
|
•
|
favorable currency (
$111 million
), partly offset by
|
•
|
higher expenses (
$55 million
, primarily higher marketing and selling expenses), and
|
•
|
the impact of acquisitions ($3 million).
|
•
|
unfavorable currency (
$570 million
),
|
•
|
higher manufacturing costs (
$63 million
), and
|
•
|
higher marketing, administration and research costs (
$55 million
), partly offset by
|
•
|
price increases (
$552 million
),
|
•
|
favorable volume/mix (
$33 million
), and
|
•
|
pre-tax charges for asset impairment and exit costs in 2014 ($23 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 certain local manufacturers;
|
•
|
pending and threatened litigation as discussed in Note 9.
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 characterizing flavors in some 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 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 development and commercialization of RRPs, including the communication to adult smokers of substantiated reduced exposure or reduced risk claims.
|
•
|
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. Six short-term clinical studies for Platform 1 have been completed. Two three-month clinical studies will be completed at the end of the second quarter 2015. We also 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 half 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 exploring two routes for this platform, one with electronics and one without. The product replicates the feel and ritual of smoking without tobacco and without burning. We have begun pre-clinical testing of this product.
|
•
|
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.
|
•
|
unfavorable currency (
$278 million
), partly offset by
|
•
|
price increases (
$108 million
),
|
•
|
favorable volume/mix (
$42 million
), and
|
•
|
the impact of acquisitions ($7 million).
|
•
|
unfavorable currency (
$191 million
) and
|
•
|
higher marketing, administration and research costs (
$20 million
), partly offset by
|
•
|
price increases (
$108 million
),
|
•
|
favorable volume/mix (
$29 million
), and
|
•
|
lower manufacturing costs (
$8 million
).
|
•
|
unfavorable currency (
$445 million
), partly offset by
|
•
|
price increases (
$169 million
), and
|
•
|
favorable volume/mix (
$110 million
).
|
•
|
unfavorable currency (
$271 million
),
|
•
|
higher manufacturing costs (
$24 million
, principally related to the implementation of our new business model in Egypt), and
|
•
|
higher marketing, administration and research costs (
$20 million
), partly offset by
|
•
|
price increases (
$169 million
),
|
•
|
favorable volume/mix (
$74 million
), and
|
•
|
higher equity income in unconsolidated subsidiaries (
$25 million
).
|
North Africa Market Share
|
|||||||||
|
|
First-Quarter
|
|||||||
|
|
|
|
|
|
Change
|
|
||
|
|
2015
|
|
|
2014
|
|
|
p.p.
|
|
Marlboro
|
|
14.7
|
%
|
|
15.3
|
%
|
|
(0.6
|
)
|
L&M
|
|
10.7
|
%
|
|
8.1
|
%
|
|
2.6
|
|
Others
|
|
2.0
|
%
|
|
1.9
|
%
|
|
0.1
|
|
TOTAL
|
|
27.4
|
%
|
|
25.3
|
%
|
|
2.1
|
|
Turkey Market Share
|
|||||||||
|
|
First-Quarter
|
|||||||
|
|
|
|
|
|
Change
|
|
||
|
|
2015
|
|
|
2014
|
|
|
p.p.
|
|
Parliament
|
|
11.5
|
%
|
|
10.5
|
%
|
|
1.0
|
|
Marlboro
|
|
8.9
|
%
|
|
8.6
|
%
|
|
0.3
|
|
Lark
|
|
7.3
|
%
|
|
10.3
|
%
|
|
(3.0
|
)
|
Others
|
|
15.5
|
%
|
|
15.0
|
%
|
|
0.5
|
|
TOTAL
|
|
43.2
|
%
|
|
44.4
|
%
|
|
(1.2
|
)
|
•
|
unfavorable currency (
$128 million
) and
|
•
|
unfavorable volume/mix (
$50 million
), partly offset by
|
•
|
price increases (
$151 million
).
|
•
|
price increases (
$151 million
) and
|
•
|
the 2014 pre-tax charges for asset impairment and exit costs related to the factory closure in Australia (
$23 million
), partly offset by
|
•
|
unfavorable currency (
$79 million
),
|
•
|
unfavorable volume/mix (
$44 million
), and
|
•
|
higher manufacturing costs (
$33 million
, mainly due to higher costs in Indonesia).
|
Indonesia Market Share
|
|||||||||
|
|
First-Quarter
|
|||||||
|
|
|
|
|
|
Change
|
|
||
|
|
2015
|
|
|
2014
|
|
|
p.p.
|
|
Sampoerna A
|
|
14.9
|
%
|
|
14.4
|
%
|
|
0.5
|
|
Dji Sam Soe
|
|
7.0
|
%
|
|
5.6
|
%
|
|
1.4
|
|
U Mild
|
|
5.0
|
%
|
|
5.2
|
%
|
|
(0.2
|
)
|
Others
|
|
8.5
|
%
|
|
9.4
|
%
|
|
(0.9
|
)
|
TOTAL
|
|
35.4
|
%
|
|
34.6
|
%
|
|
0.8
|
|
Japan Market Share
|
|||||||||
|
|
First-Quarter
|
|||||||
|
|
|
|
|
|
Change
|
|
||
|
|
2015
|
|
|
2014
|
|
|
p.p.
|
|
Marlboro
|
|
11.5
|
%
|
|
11.9
|
%
|
|
(0.4
|
)
|
Lark
|
|
9.9
|
%
|
|
9.4
|
%
|
|
0.5
|
|
Virginia S.
|
|
1.9
|
%
|
|
1.9
|
%
|
|
—
|
|
Others
|
|
2.3
|
%
|
|
2.3
|
%
|
|
—
|
|
TOTAL
|
|
25.6
|
%
|
|
25.5
|
%
|
|
0.1
|
|
Korea Market Share
|
|||||||||
|
|
First-Quarter
|
|||||||
|
|
|
|
|
|
Change
|
|
||
|
|
2015
|
|
|
2014
|
|
|
p.p.
|
|
Parliament
|
|
6.6
|
%
|
|
7.1
|
%
|
|
(0.5
|
)
|
Marlboro
|
|
9.1
|
%
|
|
7.9
|
%
|
|
1.2
|
|
Virginia S.
|
|
3.8
|
%
|
|
4.1
|
%
|
|
(0.3
|
)
|
Others
|
|
0.6
|
%
|
|
0.8
|
%
|
|
(0.2
|
)
|
TOTAL
|
|
20.1
|
%
|
|
19.9
|
%
|
|
0.2
|
|
•
|
price increases (
$124 million
), partly offset by
|
•
|
unfavorable currency (
$88 million
) and
|
•
|
unfavorable volume/mix (
$24 million
).
|
•
|
price increases (
$124 million
), partly offset by
|
•
|
unfavorable currency (
$44 million
),
|
•
|
unfavorable volume/mix (
$26 million
),
|
•
|
higher manufacturing costs (
$14 million
), and
|
•
|
higher marketing, administration and research costs (
$13 million
).
|
Argentina Market Share
|
|||||||||
|
|
First-Quarter
|
|||||||
|
|
|
|
|
|
Change
|
|
||
|
|
2015
|
|
|
2014
|
|
|
p.p.
|
|
Marlboro
|
|
24.4
|
%
|
|
24.1
|
%
|
|
0.3
|
|
Philip Morris
|
|
44.6
|
%
|
|
43.3
|
%
|
|
1.3
|
|
Next
|
|
1.7
|
%
|
|
2.2
|
%
|
|
(0.5
|
)
|
Others
|
|
7.8
|
%
|
|
7.5
|
%
|
|
0.3
|
|
TOTAL
|
|
78.5
|
%
|
|
77.1
|
%
|
|
1.4
|
|
•
|
less cash provided by inventories (
$693 million
), primarily related to higher leaf tobacco purchases; and
|
•
|
less cash provided by accounts receivable (
$341 million
), primarily due to the timing of sales and cash collections.
|
|
|
Short-term
|
|
Long-term
|
|
Outlook
|
Moody’s
|
|
P-1
|
|
A2
|
|
Stable
|
Standard & Poor’s
|
|
A-1
|
|
A
|
|
Stable
|
Fitch
|
|
F1
|
|
A
|
|
Stable
|
(in billions)
|
|
|
|
|
||||
Type
|
|
Committed
Credit
Facilities
|
|
Commercial
Paper
|
||||
364-day revolving credit, expiring February 9, 2016
|
|
$
|
2.0
|
|
|
|
||
Multi-year revolving credit, expiring February 28, 2020
|
|
2.5
|
|
|
|
|||
Multi-year revolving credit, expiring October 25, 2016
|
|
3.5
|
|
|
|
|
||
Total facilities
|
|
$
|
8.0
|
|
|
|
|
|
Commercial paper outstanding
|
|
|
|
|
$
|
2.6
|
|
•
|
restrictions on or licensing of outlets permitted to sell cigarettes;
|
•
|
the levying of substantial and increasing tax and duty charges;
|
•
|
restrictions or bans on advertising, marketing and sponsorship;
|
•
|
the display of larger health warnings, graphic health warnings and other labeling requirements;
|
•
|
restrictions on packaging design, including the use of colors, and plain packaging;
|
•
|
restrictions on packaging and cigarette formats and dimensions;
|
•
|
restrictions or bans on the display of tobacco product packaging at the point of sale and restrictions or bans on cigarette vending machines;
|
•
|
requirements regarding testing, disclosure and performance standards for tar, nicotine, carbon monoxide and other smoke constituents;
|
•
|
disclosure, restrictions or bans of tobacco product ingredients;
|
•
|
increased restrictions on smoking in public and work places and, in some instances, in private places and outdoors;
|
•
|
elimination of duty free sales and duty free allowances for travelers; and
|
•
|
encouraging litigation against tobacco companies.
|
•
|
promote brand equity successfully;
|
•
|
anticipate and respond to new consumer trends;
|
•
|
develop new products and markets and broaden brand portfolios;
|
•
|
improve productivity; and
|
•
|
be able to protect or enhance margins through price increases.
|
Item 1.
|
Legal Proceedings.
|
Item 1A.
|
Risk Factors.
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds.
|
Period
|
|
Total Number
of Shares
Repurchased
|
|
Average
Price Paid
Per Share
|
|
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs (2)
|
|
Approximate Dollar
Value of Shares that
May Yet be Purchased
Under the Plans or
Programs
|
||||||
January 1, 2015 –
January 31, 2015 (1)
|
|
—
|
|
|
$
|
—
|
|
|
144,643,396
|
|
|
$
|
5,347,045,761
|
|
February 1, 2015 –
February 28, 2015 (1)
|
|
—
|
|
|
$
|
—
|
|
|
144,643,396
|
|
|
$
|
5,347,045,761
|
|
March 1, 2015 –
March 31, 2015 (1)
|
|
—
|
|
|
$
|
—
|
|
|
144,643,396
|
|
|
$
|
5,347,045,761
|
|
Pursuant to Publicly
Announced Plans
or Programs
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|||
January 1, 2015 –
January 31, 2015 (3) |
|
1,819
|
|
|
$
|
80.92
|
|
|
|
|
|
|||
February 1, 2015 –
February 28, 2015 (3) |
|
256,442
|
|
|
$
|
82.61
|
|
|
|
|
|
|||
March 1, 2015 –
March 31, 2015 (3) |
|
6,448
|
|
|
$
|
82.20
|
|
|
|
|
|
|||
For the Quarter Ended March 31, 2015
|
|
264,709
|
|
|
$
|
82.59
|
|
|
|
|
|
(1)
|
On June 13, 2012, our Board of Directors authorized a share repurchase program of $18 billion over three years. The 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.
|
(2)
|
Aggregate number of shares repurchased under the above-mentioned share repurchase program as of the end of the period presented.
|
(3)
|
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.
|
Item 6.
|
Exhibits.
|
|
|
|
3.1
|
|
Amended and Restated By-Laws of Philip Morris International Inc., effective January 1, 2015 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed December 15, 2014).
|
3.2
|
|
Amended and Restated By-Laws of Philip Morris International Inc., effective immediately prior to the 2015 Annual Meeting of Shareholders (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed March 13, 2015).
|
10.1
|
|
Employment Agreement with Martin King.
|
10.2
|
|
Pension Fund of Philip Morris in Switzerland (IC).
|
10.3
|
|
Summary of Supplemental Pension Plan of Philip Morris in Switzerland (incorporated by reference to Exhibit 10.19 to the Annual Report on Form 10-K for the year ended December 31, 2014).
|
10.4
|
|
Form of Deferred Stock Agreement (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed February 10, 2015).
|
10.5
|
|
Extension Agreement, effective February 10, 2015, 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 January 29, 2015).
|
10.6
|
|
Extension Agreement, effective February 28, 2015, 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 10.2 to Form 8-K filed January 29, 2015).
|
12
|
|
Statement regarding computation of ratios of earnings to fixed charges.
|
|
|
|
31.1
|
|
Certification of the Registrant's Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
31.2
|
|
Certification of the Registrant's Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.1
|
|
Certification of the Registrant's Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.2
|
|
Certification of the Registrant's Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
101.INS
|
|
XBRL Instance Document.
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema.
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase.
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase.
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase.
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase.
|
PHILIP MORRIS INTERNATIONAL INC.
|
|
/s/ JACEK OLCZAK
|
|
Jacek Olczak
|
Chief Financial Officer
|
|
May 1, 2015
|
/s/ RALF ZYSK
|
/s/ KRISTIN HOLTER
|
Ralf Zysk
|
Kristin Holter
|
Vice President Compensation & Benefits and
International Assignments PMI
|
Director Human Resources Switzerland
|
•
|
You must not distribute business cards naming the Home Company;
|
•
|
Your e-mail signature and contact details must reference the Host Company only;
|
•
|
You must not use your Home Company title, but should use a title that is legally acceptable to, and approved by, the Host Company;
|
•
|
You may send e-mails only from an e-mail address associated with the Host Company;
|
•
|
You should not transact any business whatsoever on behalf of the Home Company.
|
•
|
You may not sign any agreements, reports to third parties or regulatory filings on behalf of the Home Company, or on behalf of any other Company affiliates except the Host Company;
|
•
|
You may not sign any document on behalf of the Home Company;
|
•
|
You are expressly forbidden to bind the Home Company in any way, whether verbally or in writing.
|
/s/ RALF ZYSK
|
/s/ KRISTIN HOLTER
|
Ralf Zysk
|
Kristin Holter
|
Vice President Compensation & Benefits and
International Assignments PMI
|
Director Human Resources Switzerland
|
Martin King
|
Pension Fund Philip Morris in Switzerland
|
|
|
Regulations - IC Pension Plan
|
page
i
|
Introduction
|
1
|
|
1.
Membership in the IC Plan
|
1
|
|
Article 1 - Principle
|
1
|
|
Art. 2 - Start of Membership
|
1
|
|
Art. 3 - Termination of Membership
|
1
|
|
2.
Definitions
|
2
|
|
Art. 4 - Normal retirement
|
2
|
|
Art. 5 - Contributory salary
|
2
|
|
Art. 6 - Retirement savings capital
|
2
|
|
Art. 7 - Retirement credits
|
3
|
|
Art. 8 - Voluntary contributions
|
3
|
|
Art. 9 - Loss of benefits
|
4
|
|
Art. 10 - Interest
|
4
|
|
3.
IC Pension Plan benefits
|
4
|
|
General principles
|
4
|
|
Art. 11 - Insured benefits
|
4
|
|
Lump-sum Retirement Capital
|
5
|
|
Art. 12 - Entitlement
|
5
|
|
Art. 13 - Amount
|
5
|
|
Lump-sum disability benefit
|
5
|
|
Art. 14 - Recognition of Disability
|
5
|
|
Art. 15 - Entitlement and amount
|
5
|
|
Lump-sum death benefit
|
6
|
|
Art. 16 - Entitlement and amount
|
6
|
|
Art. 17 - Beneficiaries
|
6
|
|
Benefits in Case of Divorce
|
6
|
|
Art. 18 - Transfer of Termination Benefit in Case of Divorce
|
6
|
|
Pension Fund Philip Morris in Switzerland
|
|
|
Regulations - IC Pension Plan
|
page
ii
|
Vested Termination Benefit
|
7
|
|
Art. 19 - Termination of employment
|
7
|
|
Art. 20 - Amount of the Vested Termination Benefit
|
7
|
|
Art. 21 - Minimum Amount of Vested Termination Benefit
|
7
|
|
Art. 22 -Transfer of the Vested Termination Benefit
|
8
|
|
Art. 23 - Cash Payment
|
8
|
|
Art. 24 - End of insurance
|
8
|
|
Maintenance of Insurance Coverage
|
9
|
|
Art. 25 - Maintenance of Insurance as an External Member
|
9
|
|
4.
IC Pension Plan Resources
|
9
|
|
Art. 26 - General Resources
|
9
|
|
Art. 27 - Member's Contributions
|
10
|
|
Art. 28 - Employer's contribution
|
10
|
|
5.
Transitional Provisions
|
10
|
|
Art. 29 – Member’s contribution and retirement credits
|
11
|
|
6.
Final Provisions
|
10
|
|
Art. 30 - Amendment of the Regulations
|
11
|
|
Art. 31 - Interpretation
|
11
|
|
Art. 32 - Disputes
|
11
|
|
Art. 33 - Translations
|
11
|
|
Art. 34 - Effective Date
|
11
|
|
1.
|
Membership in the IC Plan is compulsory for all grade 14 employees or higher who are members of the Pension Fund's Main Plan.
|
1.
|
Membership in the IC Plan commences on the first day of the month in which a bonus is paid. As a result, the employee acquires the status of insured member.
|
1.
|
Membership in the IC Pension Plan ceases at the date of termination of employment
|
2.
|
Termination of membership in the IC Plan entails the loss member status, subject, however, to Article 24 (end of insurance) and Article 25 (maintenance of insurance as an external member) and to the Pension Fund's obligation to provide the individual concerned with all necessary information.
|
1.
|
Normal retirement begins on the first day of the month following a member's 65th birthday, irrespective of gender.
|
1.
|
The contributory salary of members in salary grades 19 to 28 is equal to the contributory salary of the Main Plan. This salary is hereafter referred to as "contributory salary I".
|
2.
|
The contributory salary of members in salary grade 14 to 17 is equal to the bonus (IC). This salary is hereafter referred to as “contributory salary II”.
|
3.
|
The contributory salary of members in salary grade 18 is equal to the contributory salary I when the sum of compensation elements defined in Article 6(1) of the Main Plan regulations plus the bonus (IC) exceeds ten times the upper amount defined in Article 8(1) LPP/BVG.
|
4.
|
If any bonus (IC) is paid during the current year, the contributory salary is equal to zero.
|
5.
|
The contributory salary never includes any compensation earned from employment with a third party.
|
1.
|
A retirement savings capital is created for each member, consisting of:
|
-
|
retirement credits in accordance with Article 7 below
|
-
|
the member's voluntary contributions;
|
-
|
possible repayments of amounts lost in implementation of Article 9 (loss of benefits); and
|
-
|
interest accrued on the above amounts.
|
1.
|
The retirement credits calculated on a yearly basis and expressed as a percentage of the contributory salary are equal to:
|
a.
|
contributory salary I:
|
-
|
grades 28 to 24 : 3 %
|
-
|
grade 23 : 11.4 %
|
-
|
grade 22 : 10.8 %
|
-
|
grade 21 : 9.6 %
|
-
|
grade 20 : 9.0 %
|
-
|
grade 19 : 8.4 %
|
-
|
grade 18 : 7.8 % ;
|
b.
|
contributory salary II: 12 %
|
1.
|
An active member who has accrued the maximum duration specified in Article 10(1) of the Main Plan regulations may purchase pension benefits at any time by means of a voluntary contribution.
|
2.
|
Vested termination benefits that are not entirely absorbed by the Main Plan in accordance with Article 10(5) of its regulations may be applied to the purchase of benefits in the IC Pension Plan.
|
3.
|
Voluntary contributions are limited to the difference between:
|
a.
|
contributory salary I:
|
-
|
3 % of the contributory salary I, multiplied by the difference in years between the year of the member's 30th birthday and the current calendar year, and
|
-
|
the retirement savings capital accrued at the date of the voluntary contribution, increased by an annual interest of 4%;
|
b.
|
contributory salary II:
|
-
|
12 % of the contributory salary, multiplied by the difference in years between the year of the member's 30th birthday and the current calendar year, and
|
-
|
the retirement savings capital accrued at the date of the voluntary contribution, increased by an annual interest of 4%.
|
4.
|
Members can only make a voluntary contribution if they have fully repaid any previous withdrawals obtained for the financing of home ownership. However, voluntary contributions made after the 62th birthday are allowed, to the extent that when added to the withdrawals, they do not exceed the maximum benefits under the present regulations.
|
5.
|
The maximum amount that may be allocated to the voluntary purchase is reduced by any vested termination benefit that has not been transferred to the Fund plus that portion of the member’s 3a pillar assets which exceeds the sum of the maximum annual tax deductible contributions from age 24, plus interest, in accordance with Article 7(1)(a) OPP 3.
|
6.
|
In the case of members arriving from abroad who have never belonged to a a pension plan in Switzerland, the maximum annual voluntary contribution is limited, during the first 5 years of membership in a Swiss pension scheme, to 20 % of the contributory salary.
|
7.
|
Benefits deriving from a member's voluntary contributions may not be paid out in the form of capital for at least three years.
|
8.
|
If one of the Employers finances all or part of a purchase of benefits in the context of a member's international transfer within the Philip Morris Group, an agreement will be concluded between the Fund, the Employer and the member.
|
1.
|
If Article 18 (transfer of termination benefits in case of divorce) is applied following a divorce, the member's retirement savings capital will be reduced and his voluntary and regulatory contributions accounts will be adjusted accordingly.
|
2.
|
If a member makes a withdrawal for the financing of home ownership and an amount is transferred from the IC Pension Plan, the member's retirement savings capital will be reduced by an equal amount. The voluntary and regulatory contributions of the member will be reduced proportionately with the reduction in retirement savings capital.
|
1.
|
The interest rate payable on the retirement savings capital is set by the Pension Board.
|
2.
|
Interest is credited at the end of each calendar year or on the date the member leaves the IC Pension Plan if an insured event occurs during the year.
|
3.
|
Retirement credits bear interest from the 1st day of the month following their payment; voluntary contributions bear interest from the date they are paid in.
|
4.
|
The default interest rate is the minimum interest rate set in the LPP plus one percentage point.
|
3.
|
IC Pension Plan benefits
|
1.
|
Subject to the conditions set out below, the IC Pension Plan insures benefits in the form of:
|
a)
|
lump-sum retirement capital ;
|
b)
|
lump-sum disability benefit;
|
c)
|
lump-sum death benefit
|
d)
|
benefits in case of divorce;
|
e)
|
vested termination benefit.
|
1.
|
Entitlement to retirement benefits begins on the normal retirement date.
|
2.
|
If a member leaves the Main Plan after the last day of the month preceding his 58th birthday for any reason other than death or disability, he is entitled to the retirement benefits of the IC Pension Plan from that date. Article 19(1bis) (entitlement to a vested termination benefit) remains applicable.
|
3.
|
A member who has applied to the Main Plan for a partial or full retirement pension may use all or part of his IC Pension Plan retirement savings capital to purchase retirement pension benefits from the Main Plan. Pension benefits thus purchased are governed by the regulations of the Main Plan.
|
4.
|
The member must inform the Pension Fund's management of his choice 3 months before retirement date, otherwise he shall be deemed to have opted for payment of a lump-sum retirement capital. Article 8(7) remains applicable.
|
5.
|
If the member is married, payment of a lump-sum capital is subject to the written consent of his spouse. If such agreement cannot be obtained or if it is refused, the member may appeal to the courts.
|
1.
|
The lump-sum retirement capital is equal to the retirement savings capital accrued at the retirement date.
|
2.
|
The annual retirement pension purchased in the Main Plan results from the conversion of all or part of the accrued retirement savings capital using the conversion factor for the member's age at retirement indicated in Annexe 1 of the Main Plan regulations, plus a percentage of the reserve for changes in mortality tables indicated in the balance sheet of the Main Plan on 1 January of the year of retirement.
|
1.
|
A member who is recognised as disabled under the Main Plan regulations qualifies as disabled at the same date and to the same degree under the IC Pension Plan.
|
1.
|
The member is entitled to a lump-sum disability benefit when he is recognised as disabled under the Main Plan regulations.
|
2.
|
The lump-sum disability benefit is equal to the accrued retirement savings capital at the date of recognition of disability by the Main Plan.
|
3.
|
Entitlement to the full Main Plan pension entails entitlement to full payment of the capital.
|
1.
|
If an active member dies, a lump-sum death benefit is payable to the beneficiaries in accordance with Article 17 below.
|
2.
|
The lump-sum death benefit is equal to:
|
a)
|
the retirement savings capital accrued at the date of the member's death, if the beneficiaries are beneficiaries within the meaning of Article 17(1) of these Regulations, or of Article 46(1) of the Main Plan regulations.
|
b)
|
50 % of the retirement savings capital, but no less than the aggregate of the member's contributions, without interest, if the beneficiaries are "other legal heirs" within the meaning of the LPP.
|
1.
|
The lump-sum death benefit is payable:
|
•
|
first: to the surviving spouse or to the surviving partner who can claim payment of a pension in accordance with Article 40
bis
of the Main Plan regulations;
|
•
|
failing them: to the other beneficiaries in accordance with Article 46 of the Main Plan regulations.
|
2.
|
If there are no beneficiaries in accordance with paragraph 1 above, the lump-sum death benefit vests in the IC Pension Plan.
|
1.
|
If an active member divorces, the termination benefits that accrued to the member and his ex-spouse during their marriage are divided between them in accordance with Sections 122, 123, 141 and 142 of the Swiss Civil Code. The Court automatically notifies the Fund of the amount to be transferred and all information necessary for the transfer
.
|
2.
|
If the court notifies the Fund in accordance with paragraph 1, the retirement savings capital in the IC Pension Plan at the time of the divorce is reduced by the amount attributed by the court to the ex-spouse. The member may partially or fully repay the amount thus transferred; the repayment will be applied to rebuilding his retirement savings capital. Article 8(6) remains applicable.
|
3.
|
The sum of voluntary and regulatory contributions made by the member up to the divorce will be reduced proportionately to the reduction in retirement savings capital.
|
1.
|
A member who leaves the Main Plan for any reason other than death or disability before he is entitled to draw retirement benefits is entitled to vested termination benefits in the amount determined in accordance with Article 20 (amount of vested termination benefits) and Article 21 (minimum amount of vested termination benefits) below.
|
1
bis
|
A member wishing to avail himself of his right to a termination benefit in accordance with Article 51(1bis) of the Main Plan regulations, obtains also a vested termination benefit from the IC Pension Plan.
|
2.
|
Vested termination benefits are payable when a member leaves the IC Pension Plan. After that date, they earn interest at the minimum LPP/BVG rate. If the Fund does not transfer the benefits due within 30 days of receipt of all requisite information, default interest shall accrue as of that time.
|
1.
|
Subject to Article 21 below, the vested termination benefits are equal to the member's retirement savings capital at the date he leaves.
|
2.
|
If, on the last day of employment, the member was employed with the Philip Morris Group for less than 5 years starting from the date of the member’s 18th birthday, the vested termination benefit will be reduced by any amounts financed by the Employer pursuant to Articles 8(8). That reduction is decreased by one tenth of the amount financed by the Employer for every year of employment with the Philip Morris Group starting from the date of the member’s 18th birthday. The reduction for a fraction of a year is calculated pro rata temporis. The amount not attributed to the member is treated as a contribution reserve of the Employer. If, on the last day of employment, the member has been employed with the Philip Morris Group for 5 years or more since the date of his 18th birthday, no reduction shall be made.
|
1.
|
When a member leaves the Pension Fund, he is entitled at least to any voluntary contributions made pursuant to Articles 8 and to any repayments of amounts lost pursuant to Article 9, with interest at the rate set in the LPP; in addition, the member is entitled to any personal contributions to the IC Pension Plan paid in after 1 January following his 24th birthday, without interest but increased by 4 % per year over age 20, up to a maximum of 100 %.
|
2.
|
The vested termination benefits are reduced by any amount financed by the Employer in accordance with Article 8(8). That deduction is reduced by one tenth of the amount financed by the Employer for every year of contribution to the IC Pension Plan. The reduction for a fraction of a year is calculated pro rata temporis. The amount not attributed to the member is treated as a contribution reserve of the Employer.
|
1.
|
When a member leaves the Pension Fund, the Fund informs him of the amount of his vested termination benefits, inviting him to provide the necessary instructions for their transfer within 30 days in accordance with paragraphs 2 and 3 below.
|
2.
|
If the member starts working for a new employer, the Fund shall transfer the vested termination benefits together with the vested termination benefits of the Main Plan to the new employer's pension plan in accordance with the member's instructions.
|
3.
|
If the member does not go to work for a new employer, he may choose between:
|
a)
|
purchasing a vested benefits policy with an insurance company subject to ordinary insurance regulation; or
|
b)
|
opening a vested benefits account with a pension fund whose assets are invested by, or with, a bank governed by the Federal Law on Banks and Savings Institutions.
|
4.
|
If the member fails to provide the requisite information within the specified time, the IC Pension Plan shall transfer the vested termination benefit, including interest, to a vested benefits account or to the Substitute Pension Plan no later than two years after termination of employment.
|
5.
|
Article 23 remains applicable.
|
1.
|
Subject to Article 8(7), a member may apply to receive his vested termination benefit in cash:
|
a)
|
if he leaves Switzerland permanently for a country other than the Principality of Liechtenstein;
|
b)
|
if he becomes self-employed and is no longer subject to the LPP/BVG;
|
c)
|
if the vested termination benefit is less than the member’s annual contribution at the time of termination of employment.
|
2.
|
If the member is married, payment in cash may only be made with the written consent of the spouse. If such consent cannot be obtained, or is unduly withheld, the member may appeal to the courts.
|
3.
|
The Pension Board may require the member to submit any proof it deems necessary and may delay payment until such proof is submitted.
|
1.
|
IC Pension Plan insurance coverage ends on the day the member leaves the Pension Fund, namely on the last day of the month when employment ends.
|
2.
|
If, in the month following the end of employment, the member does not enter into an employment contract with a new employer, and if he has an earning incapacity which subsequently causes him to be qualified as disabled under the Main Plan, the benefits paid by the IC Pension Plan are those that were insured on the day the member left the IC Pension Plan.
|
3.
|
If the IC Pension Plan intervenes in accordance with paragraph 2 of this Article, and if the vested termination benefit was already transferred, the Pension Fund shall claim restitution. If restitution is not forthcoming, the IC Plan benefits shall be reduced accordingly.
|
4.
|
Article 25 (maintenance of insurance as an external member) remains applicable.
|
1.
|
A member who applies to maintain his insurance cover as an external member under the Main Plan in accordance with Articles 57 and 58 of that Plan's regulations also maintains his insurance coverage under the IC Pension Plan. The same applies to a member who applies to maintain his insurance cover as a contributing external member under the Main Plan in accordance with Article 59 of that Plan's regulations.
|
2.
|
The member stops paying contributions; the retirement savings capital accrued at the last day of employment will be increased by interest at the rate set by the Pension Board.
|
3.
|
Benefit entitlements remain subject to the provisions of these Regulations. However, the application of Article 8 (voluntary contributions) of present regulations, and Articles 60 to 73 (accession to the property) of Main Plan regulations, is excluded.
|
4.
|
A member who is downgraded below grade 14 maintains his insurance coverage under the IC Pension Plan as an external member from the 1st day of the month coinciding with the downgrading. The member stops paying contributions; the accrued retirement savings capital will be increased by interest at the rate set by the Pension Board. Benefit entitlements remain subject to the provisions of these Regulations. Notwithstanding, Article 8 is excluded from application from the date of downgrading.
|
1.
|
The resources of the IC Plan consist of:
|
a)
|
regulatory contributions of the members;
|
b)
|
voluntary contributions within the meaning of Article 8 (voluntary contributions) and any repayments of amounts lost in accordance with Article 9 (loss of benefits);
|
c)
|
the regulatory contributions of the Employer;
|
d)
|
any temporary remedial contributions from members and the Employer;
|
e)
|
any grants, donations and bequests;
|
f)
|
insurance benefits and residual balances which, for whatever reason, are not allocated to the beneficiaries;
|
g)
|
income on Fund’s assets.
|
1.
|
Each member must pay contributions from the time he joins the IC Pension Plan and for as long as he is a member of that plan, but no later than the date on which he is recognised as disabled, or until the date he reaches normal retirement age. Article 25 (maintenance of insurance as an external member) remains applicable.
|
2.
|
The member’s annual contribution is equal to:
|
a.
|
contributory salary I:
|
-
|
grades 28 to 24 : 1,5 %
|
-
|
grade 23 : 5.7 %
|
-
|
grade 22 : 5.4 %
|
-
|
grade 21 : 4.8 %
|
-
|
grade 20 : 4.5 %,
|
-
|
grade 19 : 4.2 %
|
-
|
grade 18 : 3.9 % ;
|
b.
|
contributory salary II: 6 %
|
3.
|
The member's contribution to the IC Pension Plan is deducted from the member's salary each year.
|
1.
|
As long as the member is required to pay contributions, the Employer shall do so as well.
|
2.
|
For each active member, the Employer pays a contribution equal to the contribution amount paid by the member.
|
1.
|
The members who, on April 1
st
2014, are in grade 22 or 23 pay an annual contribution of 1.5% of contributory salary I as long as they remain in one of these grades. The retirement credits equal to 3 % of contributory salary I.
|
1.
|
The Pension Board may amend these Regulations at any time provided it does not reduce members' vested benefits calculated at the date of the amendment.
|
1.
|
The Main Plan regulations apply to all matters not explicitly mentioned for in these Regulations.
|
2.
|
Any cases not explicitly mentioned for in these Regulations or in the Main Plan regulations shall be decided by the Pension Board taking into account the meaning and spirit of the Statutes of the Pension Fund, the Regulations of the IC Pension Plan, applicable legislation and the corresponding implementation ordinances.
|
1.
|
Any dispute arising out of the interpretation, the application or non-application of these Regulations shall be submitted to the competent courts at the registered office or Swiss domicile of the defendant, or of the place of business in Switzerland where the member was employed.
|
1.
|
These Regulations were drawn up in French; they may be translated into English.
|
2.
|
In case of discrepancy between the French version and the English translation, the French version shall take precedence.
|
1.
|
These Regulations enter into effect on
1 January 2015
; they supersede the Regulations effective on 1 January 2011.
|
2.
|
They shall be submitted to the competent regulatory authority.
|
3.
|
They shall be published on the Employer’s intranet site and a hard copy shall be sent to members upon request.
|
|
Three Months Ended
March 31, 2015
|
||
Earnings before income taxes
|
$
|
2,596
|
|
Add (deduct):
|
|
||
Dividends from less than 50% owned affiliates
|
—
|
|
|
Fixed charges
|
334
|
|
|
Interest capitalized, net of amortization
|
—
|
|
|
Earnings available for fixed charges
|
$
|
2,930
|
|
Fixed charges:
|
|
||
Interest incurred
|
$
|
306
|
|
Portion of rent expense deemed to represent interest factor
|
28
|
|
|
Fixed charges
|
$
|
334
|
|
Ratio of earnings to fixed charges
|
8.8
|
|
|
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
|
|
1.
|
I have reviewed this
quarterly
report on
Form 10-Q
of Philip Morris International Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ ANDRÉ CALANTZOPOULOS
|
André Calantzopoulos
|
Chief Executive Officer
|
1.
|
I have reviewed this
quarterly
report on
Form 10-Q
of Philip Morris International Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ JACEK OLCZAK
|
Jacek Olczak
|
Chief Financial Officer
|
/s/ ANDRÉ CALANTZOPOULOS
|
André Calantzopoulos
|
Chief Executive Officer
|
May 1, 2015
|
/s/ JACEK OLCZAK
|
Jacek Olczak
|
Chief Financial Officer
|
May 1, 2015
|