(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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June 30, 2015 and December 31, 2014
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Condensed Consolidated Statements of Earnings for the
|
|
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Six Months Ended June 30, 2015 and 2014
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Three Months Ended June 30, 2015 and 2014
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Condensed Consolidated Statements of Comprehensive Earnings for the
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Six Months Ended June 30, 2015 and 2014
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Three Months Ended June 30, 2015 and 2014
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Condensed Consolidated Statements of Stockholders’ (Deficit) Equity for the
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Six Months Ended June 30, 2015 and 2014
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Condensed Consolidated Statements of Cash Flows for the
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Six Months Ended June 30, 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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||
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Item 2.
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Item 6.
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||
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June 30,
2015 |
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December 31,
2014 |
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ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,838
|
|
|
$
|
1,682
|
|
Receivables (less allowances of $72 in 2015 and $50 in 2014)
|
3,619
|
|
|
4,004
|
|
||
Inventories:
|
|
|
|
||||
Leaf tobacco
|
3,154
|
|
|
3,135
|
|
||
Other raw materials
|
1,671
|
|
|
1,696
|
|
||
Finished product
|
2,382
|
|
|
3,761
|
|
||
|
7,207
|
|
|
8,592
|
|
||
Deferred income taxes
|
428
|
|
|
533
|
|
||
Other current assets
|
680
|
|
|
673
|
|
||
Total current assets
|
13,772
|
|
|
15,484
|
|
||
Property, plant and equipment, at cost
|
12,327
|
|
|
12,759
|
|
||
Less: accumulated depreciation
|
6,512
|
|
|
6,688
|
|
||
|
5,815
|
|
|
6,071
|
|
||
Goodwill (Note 5)
|
7,914
|
|
|
8,388
|
|
||
Other intangible assets, net (Note 5)
|
2,807
|
|
|
2,985
|
|
||
Investments in unconsolidated subsidiaries (Note 15)
|
1,020
|
|
|
1,083
|
|
||
Other assets
|
1,385
|
|
|
1,176
|
|
||
TOTAL ASSETS
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$
|
32,713
|
|
|
$
|
35,187
|
|
|
June 30,
2015 |
|
December 31,
2014 |
||||
LIABILITIES
|
|
|
|
||||
Short-term borrowings (Note 11)
|
$
|
1,710
|
|
|
$
|
1,208
|
|
Current portion of long-term debt (Note 11)
|
2,926
|
|
|
1,318
|
|
||
Accounts payable
|
1,089
|
|
|
1,242
|
|
||
Accrued liabilities:
|
|
|
|
||||
Marketing and selling
|
476
|
|
|
549
|
|
||
Taxes, except income taxes
|
4,546
|
|
|
5,490
|
|
||
Employment costs
|
834
|
|
|
1,135
|
|
||
Dividends payable
|
1,558
|
|
|
1,559
|
|
||
Other
|
1,366
|
|
|
1,375
|
|
||
Income taxes
|
651
|
|
|
1,078
|
|
||
Deferred income taxes
|
230
|
|
|
158
|
|
||
Total current liabilities
|
15,386
|
|
|
15,112
|
|
||
Long-term debt (Note 11)
|
24,566
|
|
|
26,929
|
|
||
Deferred income taxes
|
1,799
|
|
|
1,549
|
|
||
Employment costs
|
2,124
|
|
|
2,202
|
|
||
Other liabilities
|
636
|
|
|
598
|
|
||
Total liabilities
|
44,511
|
|
|
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
|
757
|
|
|
710
|
|
||
Earnings reinvested in the business
|
29,822
|
|
|
29,249
|
|
||
Accumulated other comprehensive losses
|
(8,107
|
)
|
|
(6,826
|
)
|
||
|
22,472
|
|
|
23,133
|
|
||
Less: cost of repurchased stock
(560,140,316 and 562,416,635 shares in 2015 and 2014, respectively)
|
35,623
|
|
|
35,762
|
|
||
Total PMI stockholders’ deficit
|
(13,151
|
)
|
|
(12,629
|
)
|
||
Noncontrolling interests
|
1,353
|
|
|
1,426
|
|
||
Total stockholders’ deficit
|
(11,798
|
)
|
|
(11,203
|
)
|
||
TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
|
$
|
32,713
|
|
|
$
|
35,187
|
|
|
|
|
|
||||
|
For the Six Months Ended June 30,
|
||||||
|
2015
|
|
2014
|
||||
Net revenues
|
$
|
36,115
|
|
|
$
|
38,830
|
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Cost of sales
|
4,607
|
|
|
5,070
|
|
||
Excise taxes on products
|
22,640
|
|
|
24,116
|
|
||
Gross profit
|
8,868
|
|
|
9,644
|
|
||
Marketing, administration and research costs
|
3,062
|
|
|
3,263
|
|
||
Asset impairment and exit costs (Note 2)
|
—
|
|
|
512
|
|
||
Amortization of intangibles
|
43
|
|
|
44
|
|
||
Operating income
|
5,763
|
|
|
5,825
|
|
||
Interest expense, net
|
534
|
|
|
522
|
|
||
Earnings before income taxes
|
5,229
|
|
|
5,303
|
|
||
Provision for income taxes
|
1,528
|
|
|
1,528
|
|
||
Equity (income)/loss in unconsolidated subsidiaries, net
|
(49
|
)
|
|
(36
|
)
|
||
Net earnings
|
3,750
|
|
|
3,811
|
|
||
Net earnings attributable to noncontrolling interests
|
68
|
|
|
85
|
|
||
Net earnings attributable to PMI
|
$
|
3,682
|
|
|
$
|
3,726
|
|
Per share data (Note 7):
|
|
|
|
||||
Basic earnings per share
|
$
|
2.37
|
|
|
$
|
2.35
|
|
Diluted earnings per share
|
$
|
2.37
|
|
|
$
|
2.35
|
|
Dividends declared
|
$
|
2.00
|
|
|
$
|
1.88
|
|
|
For the Three Months Ended June 30,
|
||||||
|
2015
|
|
2014
|
||||
Net revenues
|
$
|
18,763
|
|
|
$
|
21,051
|
|
Cost of sales
|
2,378
|
|
|
2,696
|
|
||
Excise taxes on products
|
11,904
|
|
|
13,254
|
|
||
Gross profit
|
4,481
|
|
|
5,101
|
|
||
Marketing, administration and research costs
|
1,568
|
|
|
1,716
|
|
||
Asset impairment and exit costs (Note 2)
|
—
|
|
|
489
|
|
||
Amortization of intangibles
|
21
|
|
|
22
|
|
||
Operating income
|
2,892
|
|
|
2,874
|
|
||
Interest expense, net
|
259
|
|
|
254
|
|
||
Earnings before income taxes
|
2,633
|
|
|
2,620
|
|
||
Provision for income taxes
|
743
|
|
|
752
|
|
||
Equity (income)/loss in unconsolidated subsidiaries, net
|
(26
|
)
|
|
(27
|
)
|
||
Net earnings
|
1,916
|
|
|
1,895
|
|
||
Net earnings attributable to noncontrolling interests
|
29
|
|
|
44
|
|
||
Net earnings attributable to PMI
|
$
|
1,887
|
|
|
$
|
1,851
|
|
Per share data (Note 7):
|
|
|
|
||||
Basic earnings per share
|
$
|
1.21
|
|
|
$
|
1.17
|
|
Diluted earnings per share
|
$
|
1.21
|
|
|
$
|
1.17
|
|
Dividends declared
|
$
|
1.00
|
|
|
$
|
0.94
|
|
|
|
|
|
|
||||
|
|
For the Six Months Ended June 30,
|
||||||
|
|
2015
|
|
2014
|
||||
Net earnings
|
|
$
|
3,750
|
|
|
$
|
3,811
|
|
Other comprehensive earnings (losses), net of income taxes:
|
|
|
|
|
||||
Change in currency translation adjustment:
|
|
|
|
|
||||
Unrealized losses, net of income taxes of ($330) in 2015 and ($59) in 2014
|
|
(1,417
|
)
|
|
(114
|
)
|
||
Change in net loss and prior service cost:
|
|
|
|
|
||||
Net losses and prior service costs, net of income taxes of $3 in 2014
|
|
—
|
|
|
(41
|
)
|
||
Amortization of net losses, prior service costs and net transition costs, net of income taxes of ($24) in 2015 and ($26) in 2014
|
|
110
|
|
|
81
|
|
||
Change in fair value of derivatives accounted for as hedges:
|
|
|
|
|
||||
Gains (losses) recognized, net of income taxes of ($6) in 2015 and $5 in 2014
|
|
66
|
|
|
(35
|
)
|
||
Gains transferred to earnings, net of income taxes of $8 in 2015 and $2 in 2014
|
|
(66
|
)
|
|
(13
|
)
|
||
Total other comprehensive losses
|
|
(1,307
|
)
|
|
(122
|
)
|
||
Total comprehensive earnings
|
|
2,443
|
|
|
3,689
|
|
||
Less comprehensive earnings attributable to:
|
|
|
|
|
||||
Noncontrolling interests
|
|
42
|
|
|
87
|
|
||
Comprehensive earnings attributable to PMI
|
|
$
|
2,401
|
|
|
$
|
3,602
|
|
|
|
For the Three Months Ended June 30,
|
||||||
|
|
2015
|
|
2014
|
||||
Net earnings
|
|
$
|
1,916
|
|
|
$
|
1,895
|
|
Other comprehensive earnings (losses), net of income taxes:
|
|
|
|
|
||||
Change in currency translation adjustments:
|
|
|
|
|
||||
Unrealized losses, net of income taxes of $104 in 2015 and ($55) in 2014
|
|
(74
|
)
|
|
(77
|
)
|
||
Change in net loss and prior service cost:
|
|
|
|
|
||||
Net losses and prior service costs, net of income taxes of $3 in 2014
|
|
—
|
|
|
(41
|
)
|
||
Amortization of net losses, prior service costs and net transition costs, net of income taxes of ($12) in 2015 and ($14) in 2014
|
|
54
|
|
|
43
|
|
||
Change in fair value of derivatives accounted for as hedges:
|
|
|
|
|
||||
Gains (losses) recognized, net of income taxes of ($4) in 2015 and $2 in 2014
|
|
41
|
|
|
(11
|
)
|
||
Gains transferred to earnings, net of income taxes of $5 in 2015 and $1 in 2014
|
|
(39
|
)
|
|
(6
|
)
|
||
Total other comprehensive losses
|
|
(18
|
)
|
|
(92
|
)
|
||
Total comprehensive earnings
|
|
1,898
|
|
|
1,803
|
|
||
Less comprehensive earnings attributable to:
|
|
|
|
|
||||
Noncontrolling interests
|
|
28
|
|
|
53
|
|
||
Comprehensive earnings attributable to PMI
|
|
$
|
1,870
|
|
|
$
|
1,750
|
|
|
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
|
|
|
|
|
3,726
|
|
|
|
|
|
|
85
|
|
|
|
3,811
|
|
|||||||||||
Other comprehensive earnings (losses), net of income taxes
|
|
|
|
|
|
|
(124
|
)
|
|
|
|
2
|
|
|
|
(122
|
)
|
|||||||||||
Issuance of stock awards and exercise of stock options
|
|
|
(74
|
)
|
|
|
|
|
|
164
|
|
|
|
|
|
90
|
|
|||||||||||
Dividends declared ($1.88 per share)
|
|
|
|
|
(2,968
|
)
|
|
|
|
|
|
|
|
|
(2,968
|
)
|
||||||||||||
Payments to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
(134
|
)
|
|
|
(134
|
)
|
||||||||||||
Common stock repurchased
|
|
|
|
|
|
|
|
|
(2,250
|
)
|
|
|
|
|
(2,250
|
)
|
||||||||||||
Balances, June 30, 2014
|
$
|
—
|
|
|
$
|
649
|
|
|
$
|
28,601
|
|
|
$
|
(4,314
|
)
|
|
$
|
(34,228
|
)
|
|
$
|
1,445
|
|
|
|
$
|
(7,847
|
)
|
Balances, January 1, 2015
|
$
|
—
|
|
|
$
|
710
|
|
|
$
|
29,249
|
|
|
$
|
(6,826
|
)
|
|
$
|
(35,762
|
)
|
|
$
|
1,426
|
|
|
|
$
|
(11,203
|
)
|
Net earnings
|
|
|
|
|
3,682
|
|
|
|
|
|
|
68
|
|
|
|
3,750
|
|
|||||||||||
Other comprehensive earnings (losses), net of income taxes
|
|
|
|
|
|
|
(1,281
|
)
|
|
|
|
(26
|
)
|
|
|
(1,307
|
)
|
|||||||||||
Issuance of stock awards
|
|
|
(66
|
)
|
|
|
|
|
|
139
|
|
|
|
|
|
73
|
|
|||||||||||
Dividends declared ($2.00 per share)
|
|
|
|
|
(3,109
|
)
|
|
|
|
|
|
|
|
|
(3,109
|
)
|
||||||||||||
Payments to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
(115
|
)
|
|
|
(115
|
)
|
||||||||||||
Purchase price activity for subsidiary shares from noncontrolling interests (Note 16)
|
|
|
113
|
|
|
|
|
|
|
|
|
|
|
|
|
|
113
|
|
||||||||||
Balances, June 30, 2015
|
$
|
—
|
|
|
$
|
757
|
|
|
$
|
29,822
|
|
|
$
|
(8,107
|
)
|
|
$
|
(35,623
|
)
|
|
$
|
1,353
|
|
|
|
$
|
(11,798
|
)
|
|
For the Six Months Ended June 30,
|
||||||
|
2015
|
|
2014
|
||||
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
|
|
|
||||
|
|
|
|
||||
Net earnings
|
$
|
3,750
|
|
|
$
|
3,811
|
|
|
|
|
|
||||
Adjustments to reconcile net earnings to operating cash flows:
|
|
|
|
||||
Depreciation and amortization
|
377
|
|
|
427
|
|
||
Deferred income tax provision
|
146
|
|
|
81
|
|
||
Asset impairment and exit costs, net of cash paid
|
(204
|
)
|
|
282
|
|
||
Cash effects of changes, net of the effects from acquired companies:
|
|
|
|
||||
Receivables, net
|
62
|
|
|
(245
|
)
|
||
Inventories
|
809
|
|
|
1,484
|
|
||
Accounts payable
|
38
|
|
|
2
|
|
||
Income taxes
|
(379
|
)
|
|
(675
|
)
|
||
Accrued liabilities and other current assets
|
(1,461
|
)
|
|
(1,666
|
)
|
||
Pension plan contributions
|
(20
|
)
|
|
(82
|
)
|
||
Other
|
182
|
|
|
1
|
|
||
Net cash provided by operating activities
|
3,300
|
|
|
3,420
|
|
||
|
|
|
|
||||
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
|
|
|
|
||||
|
|
|
|
||||
Capital expenditures
|
(413
|
)
|
|
(508
|
)
|
||
Purchase of businesses, net of acquired cash
|
—
|
|
|
(103
|
)
|
||
Investments in unconsolidated subsidiaries
|
(11
|
)
|
|
(16
|
)
|
||
Other
|
200
|
|
|
83
|
|
||
Net cash used in investing activities
|
(224
|
)
|
|
(544
|
)
|
|
For the Six Months Ended June 30,
|
||||||
|
2015
|
|
2014
|
||||
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
|
|
|
||||
|
|
|
|
||||
Short-term borrowing activity by original maturity:
|
|
|
|
||||
Net issuances (repayments) - maturities of 90 days or less
|
$
|
513
|
|
|
$
|
(255
|
)
|
Issuances - maturities longer than 90 days
|
73
|
|
|
921
|
|
||
Repayments - maturities longer than 90 days
|
(13
|
)
|
|
(1,094
|
)
|
||
Long-term debt proceeds
|
302
|
|
|
3,632
|
|
||
Long-term debt repaid
|
(400
|
)
|
|
(1,240
|
)
|
||
Repurchases of common stock
|
(48
|
)
|
|
(2,281
|
)
|
||
Dividends paid
|
(3,110
|
)
|
|
(2,993
|
)
|
||
Purchase price activity for subsidiary shares from noncontrolling interests (Note 16)
|
113
|
|
|
—
|
|
||
Other
|
(70
|
)
|
|
(177
|
)
|
||
Net cash used in financing activities
|
(2,640
|
)
|
|
(3,487
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(280
|
)
|
|
(2
|
)
|
||
|
|
|
|
||||
Cash and cash equivalents:
|
|
|
|
||||
Increase (Decrease)
|
156
|
|
|
(613
|
)
|
||
Balance at beginning of period
|
1,682
|
|
|
2,154
|
|
||
Balance at end of period
|
$
|
1,838
|
|
|
$
|
1,541
|
|
(in millions)
|
For the Six Months Ended June 30,
|
|
For the Three Months Ended June 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Separation programs:
|
|
|
|
|
|
|
|
||||||||
European Union
|
$
|
—
|
|
|
$
|
359
|
|
|
$
|
—
|
|
|
$
|
359
|
|
Asia
|
—
|
|
|
24
|
|
|
—
|
|
|
1
|
|
||||
Total separation programs
|
—
|
|
|
383
|
|
|
—
|
|
|
360
|
|
||||
Asset impairment charges:
|
|
|
|
|
|
|
|
||||||||
European Union
|
—
|
|
|
129
|
|
|
—
|
|
|
129
|
|
||||
Total asset impairment charges
|
—
|
|
|
129
|
|
|
—
|
|
|
129
|
|
||||
Asset impairment and exit costs
|
$
|
—
|
|
|
$
|
512
|
|
|
$
|
—
|
|
|
$
|
489
|
|
(in millions)
|
|
||
Liability balance, January 1, 2015
|
$
|
270
|
|
Charges, net
|
—
|
|
|
Cash spent
|
(204
|
)
|
|
Currency/other
|
(14
|
)
|
|
Liability balance, June 30, 2015
|
$
|
52
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||
|
|
For the Six Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
(in millions)
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Service cost
|
|
$
|
3
|
|
|
$
|
3
|
|
|
$
|
101
|
|
|
$
|
104
|
|
Interest cost
|
|
9
|
|
|
8
|
|
|
72
|
|
|
103
|
|
||||
Expected return on plan assets
|
|
(7
|
)
|
|
(8
|
)
|
|
(164
|
)
|
|
(177
|
)
|
||||
Amortization:
|
|
|
|
|
|
|
|
|
||||||||
Net loss
|
|
5
|
|
|
3
|
|
|
90
|
|
|
57
|
|
||||
Prior service cost
|
|
—
|
|
|
—
|
|
|
2
|
|
|
4
|
|
||||
Net periodic pension cost
|
|
$
|
10
|
|
|
$
|
6
|
|
|
$
|
101
|
|
|
$
|
91
|
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||
|
|
For the Three Months Ended June 30,
|
|
For the Three Months Ended June 30,
|
||||||||||||
(in millions)
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Service cost
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
50
|
|
|
$
|
52
|
|
Interest cost
|
|
4
|
|
|
4
|
|
|
36
|
|
|
52
|
|
||||
Expected return on plan assets
|
|
(3
|
)
|
|
(4
|
)
|
|
(81
|
)
|
|
(89
|
)
|
||||
Amortization:
|
|
|
|
|
|
|
|
|
||||||||
Net loss
|
|
2
|
|
|
1
|
|
|
44
|
|
|
29
|
|
||||
Prior service cost
|
|
—
|
|
|
—
|
|
|
1
|
|
|
2
|
|
||||
Net periodic pension cost
|
|
$
|
5
|
|
|
$
|
3
|
|
|
$
|
50
|
|
|
$
|
46
|
|
|
|
Goodwill
|
|
Other Intangible Assets, net
|
||||||||||||
(in millions)
|
|
June 30,
2015 |
|
December 31,
2014 |
|
June 30,
2015 |
|
December 31,
2014 |
||||||||
European Union
|
|
$
|
1,311
|
|
|
$
|
1,398
|
|
|
$
|
551
|
|
|
$
|
582
|
|
Eastern Europe, Middle East & Africa
|
|
486
|
|
|
517
|
|
|
210
|
|
|
215
|
|
||||
Asia
|
|
3,701
|
|
|
3,904
|
|
|
1,131
|
|
|
1,207
|
|
||||
Latin America & Canada
|
|
2,416
|
|
|
2,569
|
|
|
915
|
|
|
981
|
|
||||
Total
|
|
$
|
7,914
|
|
|
$
|
8,388
|
|
|
$
|
2,807
|
|
|
$
|
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
|
|
(87
|
)
|
|
(31
|
)
|
|
(203
|
)
|
|
(153
|
)
|
|
(474
|
)
|
|||||
Balances, June 30, 2015
|
|
$
|
1,311
|
|
|
$
|
486
|
|
|
$
|
3,701
|
|
|
$
|
2,416
|
|
|
$
|
7,914
|
|
|
|
June 30, 2015
|
|
December 31, 2014
|
||||||||||||
(in millions)
|
|
Gross
Carrying Amount |
|
Accumulated
Amortization |
|
Gross
Carrying Amount |
|
Accumulated
Amortization |
||||||||
Non-amortizable intangible assets
|
|
$
|
1,608
|
|
|
|
|
$
|
1,704
|
|
|
|
||||
Amortizable intangible assets
|
|
1,704
|
|
|
$
|
505
|
|
|
1,877
|
|
|
$
|
596
|
|
||
Total other intangible assets
|
|
$
|
3,312
|
|
|
$
|
505
|
|
|
$
|
3,581
|
|
|
$
|
596
|
|
(dollars in millions)
|
Gross Carrying Amount
|
Initial Estimated
Useful Lives |
|
Weighted-Average
Remaining Useful Life |
||
Trademarks
|
$
|
1,452
|
|
2 - 40 years
|
|
23 years
|
Distribution networks
|
161
|
|
5 - 30 years
|
|
12 years
|
|
Other (including farmer
contracts and intellectual property rights) |
91
|
|
4 - 17 years
|
|
11 years
|
|
|
$
|
1,704
|
|
|
|
|
|
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||||||||||
|
|
|
|
Fair Value
|
|
|
|
Fair Value
|
||||||||||||
(in millions)
|
|
Balance Sheet Classification
|
|
At June 30, 2015
|
|
At December 31, 2014
|
|
Balance Sheet Classification
|
|
At June 30, 2015
|
|
At December 31, 2014
|
||||||||
Foreign exchange contracts designated as hedging instruments
|
|
Other current assets
|
|
$
|
318
|
|
|
$
|
248
|
|
|
Other accrued liabilities
|
|
$
|
2
|
|
|
$
|
—
|
|
|
|
Other assets
|
|
173
|
|
|
122
|
|
|
Other liabilities
|
|
$
|
61
|
|
|
$
|
25
|
|
||
Foreign exchange contracts not designated as hedging instruments
|
|
Other current assets
|
|
21
|
|
|
34
|
|
|
Other accrued liabilities
|
|
78
|
|
|
126
|
|
||||
|
|
Other assets
|
|
47
|
|
|
2
|
|
|
|
|
|
|
|
|
|||||
Total derivatives
|
|
|
|
$
|
559
|
|
|
$
|
406
|
|
|
|
|
$
|
141
|
|
|
$
|
151
|
|
(pre-tax, millions)
|
For the Six Months Ended June 30,
|
||||||||||||||||
|
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
|
$
|
72
|
|
|
$
|
(40
|
)
|
|
|
|
|
|
|
||||
|
|
|
|
|
Net revenues
|
|
$
|
75
|
|
|
$
|
32
|
|
||||
|
|
|
|
|
Marketing, administration and research costs
|
|
16
|
|
|
(1
|
)
|
||||||
|
|
|
|
|
Interest expense, net
|
|
(17
|
)
|
|
(16
|
)
|
||||||
Derivatives in Net Investment Hedging Relationship
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
209
|
|
|
36
|
|
|
|
|
|
|
|
||||||
Total
|
$
|
281
|
|
|
$
|
(4
|
)
|
|
|
|
$
|
74
|
|
|
$
|
15
|
|
(pre-tax, millions)
|
For the Three Months Ended June 30,
|
||||||||||||||||
|
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
|
$
|
45
|
|
|
$
|
(13
|
)
|
|
|
|
|
|
|
||||
|
|
|
|
|
Net revenues
|
|
$
|
45
|
|
|
$
|
17
|
|
||||
|
|
|
|
|
Marketing, administration and research costs
|
|
9
|
|
|
(1
|
)
|
||||||
|
|
|
|
|
Interest expense, net
|
|
(10
|
)
|
|
(9
|
)
|
||||||
Derivatives in Net Investment Hedging Relationship
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
(77
|
)
|
|
11
|
|
|
|
|
|
|
|
||||||
Total
|
$
|
(32
|
)
|
|
$
|
(2
|
)
|
|
|
|
$
|
44
|
|
|
$
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
For the Six Months Ended June 30,
|
|
For the Three Months Ended June 30,
|
||||||||||||
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Gain at beginning of period
|
|
$
|
123
|
|
|
$
|
63
|
|
|
$
|
121
|
|
|
$
|
32
|
|
Derivative gains transferred to earnings
|
|
(66
|
)
|
|
(13
|
)
|
|
(39
|
)
|
|
(6
|
)
|
||||
Change in fair value
|
|
66
|
|
|
(35
|
)
|
|
41
|
|
|
(11
|
)
|
||||
Gain as of June 30,
|
|
$
|
123
|
|
|
$
|
15
|
|
|
$
|
123
|
|
|
$
|
15
|
|
(in millions)
|
|
For the Six Months Ended June 30,
|
|
For the Three Months Ended June 30,
|
||||||||||||
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Net earnings attributable to PMI
|
|
$
|
3,682
|
|
|
$
|
3,726
|
|
|
$
|
1,887
|
|
|
$
|
1,851
|
|
Less distributed and undistributed earnings attributable to share-based payment awards
|
|
13
|
|
|
17
|
|
|
6
|
|
|
9
|
|
||||
Net earnings for basic and diluted EPS
|
|
$
|
3,669
|
|
|
$
|
3,709
|
|
|
$
|
1,881
|
|
|
$
|
1,842
|
|
Weighted-average shares for basic and diluted EPS
|
|
1,549
|
|
|
1,577
|
|
|
1,549
|
|
|
1,571
|
|
(in millions)
|
|
For the Six Months Ended June 30,
|
|
For the Three Months Ended June 30,
|
||||||||||||
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Net revenues:
|
|
|
|
|
|
|
|
|
||||||||
European Union
|
|
$
|
12,276
|
|
|
$
|
14,448
|
|
|
$
|
6,336
|
|
|
$
|
7,829
|
|
Eastern Europe, Middle East & Africa
|
|
9,423
|
|
|
10,236
|
|
|
4,994
|
|
|
5,674
|
|
||||
Asia
|
|
9,803
|
|
|
9,572
|
|
|
5,039
|
|
|
5,097
|
|
||||
Latin America & Canada
|
|
4,613
|
|
|
4,574
|
|
|
2,394
|
|
|
2,451
|
|
||||
Net revenues
|
|
$
|
36,115
|
|
|
$
|
38,830
|
|
|
$
|
18,763
|
|
|
$
|
21,051
|
|
Earnings before income taxes:
|
|
|
|
|
|
|
|
|
||||||||
Operating companies income:
|
|
|
|
|
|
|
|
|
||||||||
European Union
|
|
$
|
1,890
|
|
|
$
|
1,689
|
|
|
$
|
977
|
|
|
$
|
711
|
|
Eastern Europe, Middle East & Africa
|
|
1,761
|
|
|
2,014
|
|
|
881
|
|
|
1,087
|
|
||||
Asia
|
|
1,731
|
|
|
1,815
|
|
|
797
|
|
|
900
|
|
||||
Latin America & Canada
|
|
555
|
|
|
467
|
|
|
325
|
|
|
265
|
|
||||
Amortization of intangibles
|
|
(43
|
)
|
|
(44
|
)
|
|
(21
|
)
|
|
(22
|
)
|
||||
General corporate expenses
|
|
(82
|
)
|
|
(80
|
)
|
|
(41
|
)
|
|
(40
|
)
|
||||
Less:
|
|
|
|
|
|
|
|
|
||||||||
Equity (income)/loss in unconsolidated subsidiaries, net
|
|
(49
|
)
|
|
(36
|
)
|
|
(26
|
)
|
|
(27
|
)
|
||||
Operating income
|
|
5,763
|
|
|
5,825
|
|
|
2,892
|
|
|
2,874
|
|
||||
Interest expense, net
|
|
(534
|
)
|
|
(522
|
)
|
|
(259
|
)
|
|
(254
|
)
|
||||
Earnings before income taxes
|
|
$
|
5,229
|
|
|
$
|
5,303
|
|
|
$
|
2,633
|
|
|
$
|
2,620
|
|
Type of Case
|
|
Number of Cases Pending as of July 29, 2015
|
|
Number of Cases Pending as of
July 30, 2014 |
|
Number of Cases Pending as of
August 1, 2013 |
||
Individual Smoking and Health Cases
|
|
65
|
|
63
|
|
|
63
|
|
Smoking and Health Class Actions
|
|
11
|
|
11
|
|
|
11
|
|
Health Care Cost Recovery Actions
|
|
16
|
|
15
|
|
|
15
|
|
Lights Class Actions
|
|
—
|
|
1
|
|
|
1
|
|
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 appellate 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.
|
Date
|
|
Location of
Court/Name of Plaintiff |
|
Type of
Case |
|
Verdict
|
|
Post-Trial
Developments |
May 27, 2015
|
|
Canada/Cecilia Letourneau
|
|
Class Action
|
|
On May 27, 2015, the Superior Court of the District of Montreal, Province of Quebec ruled in favor of the Letourneau class on liability and awarded a total of CAD 131 million (approximately $100.5 million) in punitive damages, allocating CAD 46 million (approximately $35.3 million) to our subsidiary. The trial court ordered defendants to pay the full punitive damage award into a trust within 60 days. The trial court found that a claims process to allocate the awarded damages to individual class members would be too expensive and difficult to administer. The trial court ordered a briefing on the proposed process for the distribution of sums remaining from the punitive damage award after payment of attorneys’ fees and legal costs.
|
|
On June 26, 2015, our subsidiary commenced the appellate process by filing its inscription in appeal of the trial court’s judgment with the Court of Appeal of Quebec. Our subsidiary also filed a motion to cancel the trial court’s order for payment of CAD 46 million (approximately $35.3 million) into a trust within 60 days notwithstanding appeal. On July 23, the Court of Appeal granted the motion to cancel and overturned the trial court’s ruling that our subsidiary make an initial payment within 60 days.
|
Date
|
|
Location of
Court/Name of Plaintiff |
|
Type of
Case |
|
Verdict
|
|
Post-Trial
Developments |
May 27, 2015
|
|
Canada/Conseil Québécois Sur Le Tabac Et La Santé and Jean-Yves Blais
|
|
Class Action
|
|
On May 27, 2015, the Superior Court of the District of Montreal, Province of Quebec ruled in favor of the Blais class on liability and found the class members’ compensatory damages totaled approximately CAD 15.5 billion (approximately $11.9 billion), including pre-judgment interest. The trial court awarded compensatory damages on a joint and several liability basis, allocating 20% to our subsidiary (approximately CAD 3.1 billion including pre-judgment interest (approximately $2.38 billion)). The trial court awarded CAD 90,000 (approximately $69,000) in punitive damages, allocating CAD 30,000 (approximately $23,000) to our subsidiary. The trial court ordered defendants to pay CAD 1 billion (approximately $770 million) of the compensatory damage award into a trust within 60 days, CAD $200 million (approximately $154 million) of which is our subsidiary’s portion, and the full punitive damage award into a trust within 60 days, CAD 30,000 (approximately $23,000) of which is our subsidiary’s portion. The trial court ordered a briefing on a proposed claims process for the distribution of damages to individual class members and for payment of attorneys’ fees and legal costs.
|
|
On June 26, 2015, our subsidiary commenced the appellate process by filing its inscription in appeal of the trial court’s judgment with the Court of Appeal of Quebec. Our subsidiary also filed a motion to cancel the trial court’s order for payment of approximately CAD 200 million (approximately $154 million) into a trust within 60 days notwithstanding appeal. On July 23, the Court of Appeal granted the motion to cancel and overturned the trial court’s ruling that our subsidiary make an initial payment within 60 days.
|
•
|
65
cases brought by individual plaintiffs in Argentina (
26
), Brazil (
22
), Canada (
2
), Chile (
7
), Costa Rica (
2
), Greece (
1
), Italy (
2
), Morocco (
1
), the Philippines (
1
) and Scotland (
1
), compared with
63
such cases on
July 30, 2014
, and
63
cases on
August 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
July 30, 2014
and
11
such cases on
August 1, 2013
.
|
(in millions)
|
|
June 30, 2015
|
|
December 31, 2014
|
||||
U.S. dollar notes, 1.125% to 6.375% (average interest rate 3.874%), due through 2044
|
|
$
|
16,841
|
|
|
$
|
17,229
|
|
Foreign currency obligations:
|
|
|
|
|
||||
Euro notes, 1.750% to 5.875% (average interest rate 3.104%), due through 2033
|
|
8,389
|
|
|
9,161
|
|
||
Swiss franc notes, 0.750% to 2.000% (average interest rate 1.217%), due through 2024
|
|
1,792
|
|
|
1,690
|
|
||
Other (average interest rate 3.111%), due through 2024
|
|
470
|
|
|
167
|
|
||
|
|
27,492
|
|
|
28,247
|
|
||
Less current portion of long-term debt
|
|
2,926
|
|
|
1,318
|
|
||
|
|
$
|
24,566
|
|
|
$
|
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 June 30, 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
|
|
$
|
559
|
|
|
$
|
—
|
|
|
$
|
559
|
|
|
$
|
—
|
|
Total assets
|
|
$
|
559
|
|
|
$
|
—
|
|
|
$
|
559
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Debt
|
|
$
|
28,847
|
|
|
$
|
28,362
|
|
|
$
|
485
|
|
|
$
|
—
|
|
Foreign exchange contracts
|
|
141
|
|
|
—
|
|
|
141
|
|
|
—
|
|
||||
Contingent consideration
|
|
23
|
|
|
—
|
|
|
—
|
|
|
23
|
|
||||
Total liabilities
|
|
$
|
29,011
|
|
|
$
|
28,362
|
|
|
$
|
626
|
|
|
$
|
23
|
|
(in millions)
|
|
At June 30, 2015
|
|
At December 31, 2014
|
|
At June 30, 2014
|
||||||
Currency translation adjustments
|
|
$
|
(5,320
|
)
|
|
$
|
(3,929
|
)
|
|
$
|
(2,323
|
)
|
Pension and other benefits
|
|
(2,910
|
)
|
|
(3,020
|
)
|
|
(2,006
|
)
|
|||
Derivatives accounted for as hedges
|
|
123
|
|
|
123
|
|
|
15
|
|
|||
Total accumulated other comprehensive losses
|
|
$
|
(8,107
|
)
|
|
$
|
(6,826
|
)
|
|
$
|
(4,314
|
)
|
(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 June 30, 2015
|
|
|
|
|
|
|
||||||||||||
Assets
|
|
|
|
|
|
|
||||||||||||
Foreign exchange contracts
|
$
|
559
|
|
$
|
—
|
|
$
|
559
|
|
$
|
(114
|
)
|
$
|
(403
|
)
|
$
|
42
|
|
Liabilities
|
|
|
|
|
|
|
||||||||||||
Foreign exchange contracts
|
$
|
141
|
|
$
|
—
|
|
$
|
141
|
|
$
|
(114
|
)
|
$
|
(10
|
)
|
$
|
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 Six Months Ended June 30,
|
|
For the Three Months Ended June 30,
|
||||||||||
(in millions)
|
|
2015
|
2014
|
|
2015
|
2014
|
||||||||
Net revenues
|
|
$
|
2,218
|
|
$
|
2,606
|
|
|
$
|
1,322
|
|
$
|
1,420
|
|
(in millions)
|
|
At June 30, 2015
|
At December 31, 2014
|
||||
|
|
|
|
||||
Receivables
|
|
$
|
488
|
|
$
|
407
|
|
Notes receivable
|
|
$
|
104
|
|
$
|
100
|
|
Other liabilities
|
|
$
|
97
|
|
$
|
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 six months ended June 30, 2014
|
|
$
|
2.35
|
|
|
|
|
2014 Asset impairment and exit costs
|
|
0.25
|
|
|
|
||
2014 Tax items
|
|
—
|
|
|
|
||
Subtotal of 2014 items
|
|
0.25
|
|
|
|
||
2015 Asset impairment and exit costs
|
|
—
|
|
|
|
||
2015 Tax items
|
|
—
|
|
|
|
||
Subtotal of 2015 items
|
|
—
|
|
|
|
||
Currency
|
|
(0.64
|
)
|
|
|
||
Interest
|
|
(0.03
|
)
|
|
|
||
Change in tax rate
|
|
(0.04
|
)
|
|
|
||
Impact of lower shares outstanding and share-based payments
|
|
0.05
|
|
|
|
||
Operations
|
|
0.43
|
|
|
|
||
For the six months ended June 30, 2015
|
|
$
|
2.37
|
|
|
0.9
|
%
|
•
|
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 marketing, administration and research costs and higher manufacturing costs;
|
•
|
European Union: Higher pricing and lower manufacturing costs, partially offset by higher marketing, administration and research costs and unfavorable volume/mix;
|
•
|
Latin America & Canada: Higher pricing and lower marketing, administration and research costs, partially offset by unfavorable volume/mix and higher manufacturing costs; and
|
•
|
Asia: Higher pricing, partially offset by unfavorable volume/mix, higher manufacturing costs and higher marketing, administration and research costs.
|
|
|
Diluted EPS
|
|
% Growth
|
|||
For the three months ended June 30, 2014
|
|
$
|
1.17
|
|
|
|
|
2014 Asset impairment and exit costs
|
|
0.24
|
|
|
|
||
2014 Tax items
|
|
—
|
|
|
|
||
Subtotal of 2014 items
|
|
0.24
|
|
|
|
||
2015 Asset impairment and exit costs
|
|
—
|
|
|
|
||
2015 Tax items
|
|
—
|
|
|
|
||
Subtotal of 2015 items
|
|
—
|
|
|
|
||
Currency
|
|
(0.33
|
)
|
|
|
||
Interest
|
|
(0.02
|
)
|
|
|
||
Change in tax rate
|
|
(0.01
|
)
|
|
|
||
Impact of lower shares outstanding and share-based payments
|
|
0.02
|
|
|
|
||
Operations
|
|
0.14
|
|
|
|
||
For the three months ended June 30, 2015
|
|
$
|
1.21
|
|
|
3.4
|
%
|
•
|
Latin America & Canada: Higher pricing and lower marketing, administration and research costs, partially offset by unfavorable volume/mix and higher manufacturing costs;
|
•
|
European Union: Higher pricing, partially offset by unfavorable volume/mix and higher marketing, administration and research costs; and
|
•
|
EEMA: Higher pricing, partially offset by higher marketing, administration and research costs, unfavorable volume/mix and higher manufacturing costs.
|
|
|
For the Six Months Ended June 30,
|
|
For the Three Months Ended June 30,
|
||||||||||||
(in millions)
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Cigarette volume:
|
|
|
|
|
|
|
|
|
||||||||
European Union
|
|
90,880
|
|
|
91,618
|
|
|
48,159
|
|
|
49,913
|
|
||||
Eastern Europe, Middle East & Africa
|
|
138,550
|
|
|
136,176
|
|
|
73,829
|
|
|
74,170
|
|
||||
Asia
|
|
145,381
|
|
|
146,454
|
|
|
75,256
|
|
|
75,653
|
|
||||
Latin America & Canada
|
|
43,779
|
|
|
44,514
|
|
|
22,589
|
|
|
23,065
|
|
||||
Total cigarette volume
|
|
418,590
|
|
|
418,762
|
|
|
219,833
|
|
|
222,801
|
|
||||
Net revenues:
|
|
|
|
|
|
|
|
|
||||||||
European Union
|
|
$
|
12,276
|
|
|
$
|
14,448
|
|
|
$
|
6,336
|
|
|
$
|
7,829
|
|
Eastern Europe, Middle East & Africa
|
|
9,423
|
|
|
10,236
|
|
|
4,994
|
|
|
5,674
|
|
||||
Asia
|
|
9,803
|
|
|
9,572
|
|
|
5,039
|
|
|
5,097
|
|
||||
Latin America & Canada
|
|
4,613
|
|
|
4,574
|
|
|
2,394
|
|
|
2,451
|
|
||||
Net revenues
|
|
$
|
36,115
|
|
|
$
|
38,830
|
|
|
$
|
18,763
|
|
|
$
|
21,051
|
|
Excise taxes on products:
|
|
|
|
|
|
|
|
|
||||||||
European Union
|
|
$
|
8,396
|
|
|
$
|
10,042
|
|
|
$
|
4,348
|
|
|
$
|
5,436
|
|
Eastern Europe, Middle East & Africa
|
|
5,661
|
|
|
5,944
|
|
|
3,075
|
|
|
3,391
|
|
||||
Asia
|
|
5,503
|
|
|
5,079
|
|
|
2,894
|
|
|
2,786
|
|
||||
Latin America & Canada
|
|
3,080
|
|
|
3,051
|
|
|
1,587
|
|
|
1,641
|
|
||||
Excise taxes on products
|
|
$
|
22,640
|
|
|
$
|
24,116
|
|
|
$
|
11,904
|
|
|
$
|
13,254
|
|
Operating income:
|
|
|
|
|
|
|
|
|
||||||||
Operating companies income:
|
|
|
|
|
|
|
|
|
||||||||
European Union
|
|
$
|
1,890
|
|
|
$
|
1,689
|
|
|
$
|
977
|
|
|
$
|
711
|
|
Eastern Europe, Middle East & Africa
|
|
1,761
|
|
|
2,014
|
|
|
881
|
|
|
1,087
|
|
||||
Asia
|
|
1,731
|
|
|
1,815
|
|
|
797
|
|
|
900
|
|
||||
Latin America & Canada
|
|
555
|
|
|
467
|
|
|
325
|
|
|
265
|
|
||||
Amortization of intangibles
|
|
(43
|
)
|
|
(44
|
)
|
|
(21
|
)
|
|
(22
|
)
|
||||
General corporate expenses
|
|
(82
|
)
|
|
(80
|
)
|
|
(41
|
)
|
|
(40
|
)
|
||||
Less:
|
|
|
|
|
|
|
|
|
||||||||
Equity (income)/loss in unconsolidated subsidiaries, net
|
|
(49
|
)
|
|
(36
|
)
|
|
(26
|
)
|
|
(27
|
)
|
||||
Operating income
|
|
$
|
5,763
|
|
|
$
|
5,825
|
|
|
$
|
2,892
|
|
|
$
|
2,874
|
|
•
|
EEMA, driven principally by Russia and Saudi Arabia, was offset by declines in the:
|
•
|
European Union, mainly Italy;
|
•
|
Asia, largely due to Korea and the Philippines, partially offset by Indonesia; and
|
•
|
Latin America & Canada, mainly due to Argentina.
|
|
|
For the Six Months Ended June 30,
|
|
|
|||||||||||
(in millions)
|
|
2015
|
|
2014
|
|
Variance
|
|
%
|
|||||||
Net revenues
|
|
$
|
36,115
|
|
|
$
|
38,830
|
|
|
$
|
(2,715
|
)
|
|
(7.0
|
)%
|
Excise taxes on products
|
|
22,640
|
|
|
24,116
|
|
|
(1,476
|
)
|
|
(6.1
|
)%
|
|||
Net revenues, excluding excise taxes on products
|
|
$
|
13,475
|
|
|
$
|
14,714
|
|
|
$
|
(1,239
|
)
|
|
(8.4
|
)%
|
•
|
unfavorable currency (
$2.2 billion
) and
|
•
|
unfavorable volume/mix (
$89 million
), partly offset by
|
•
|
price increases (
$1.1 billion
) and
|
•
|
the impact of acquisitions ($16 million).
|
•
|
favorable currency (
$3.9 billion
) and
|
•
|
lower excise taxes resulting from unfavorable volume/mix (
$175 million
), partly offset by
|
•
|
higher excise taxes resulting from changes in retail prices and tax rates (
$2.6 billion
).
|
|
|
For the Six Months Ended June 30,
|
|
|
|||||||||||
(in millions)
|
|
2015
|
|
2014
|
|
Variance
|
|
%
|
|||||||
Cost of sales
|
|
$
|
4,607
|
|
|
$
|
5,070
|
|
|
$
|
(463
|
)
|
|
(9.1
|
)%
|
Marketing, administration and research costs
|
|
3,062
|
|
|
3,263
|
|
|
(201
|
)
|
|
(6.2
|
)%
|
|||
Operating income
|
|
5,763
|
|
|
5,825
|
|
|
(62
|
)
|
|
(1.1
|
)%
|
•
|
favorable currency (
$635 million
), partly offset by
|
•
|
higher manufacturing costs (
$114 million
, principally in our EEMA and Asia segments) and
|
•
|
higher cost of sales resulting from volume/mix (
$49 million
).
|
•
|
favorable currency (
$351 million
), partly offset by
|
•
|
higher expenses (
$143 million
, primarily higher marketing and selling expenses).
|
•
|
unfavorable currency (
$1.2 billion
),
|
•
|
higher marketing, administration and research costs (
$143 million
),
|
•
|
unfavorable volume/mix (
$138 million
) and
|
•
|
higher manufacturing costs (
$114 million
), partly offset by
|
•
|
price increases (
$1.1 billion
) and
|
•
|
the non-recurrence of the 2014 pre-tax charges for asset impairment and exit costs (
$512 million
, primarily related to the decision to discontinue cigarette production in the Netherlands).
|
•
|
European Union, mainly Italy, Poland and Spain, partly offset by France;
|
•
|
EEMA, principally due to Kazakhstan and Ukraine, partly offset by Russia and Saudi Arabia;
|
•
|
Asia, largely due to Australia, Indonesia, Korea and the Philippines, partly offset by Japan; and
|
•
|
Latin America & Canada, mainly Argentina and Mexico.
|
|
|
For the Three Months Ended June 30,
|
|
|
|||||||||||
(in millions)
|
|
2015
|
|
2014
|
|
Variance
|
|
%
|
|||||||
Net revenues
|
|
$
|
18,763
|
|
|
$
|
21,051
|
|
|
$
|
(2,288
|
)
|
|
(10.9
|
)%
|
Excise taxes on products
|
|
11,904
|
|
|
13,254
|
|
|
(1,350
|
)
|
|
(10.2
|
)%
|
|||
Net revenues, excluding excise taxes on products
|
|
$
|
6,859
|
|
|
$
|
7,797
|
|
|
$
|
(938
|
)
|
|
(12.0
|
)%
|
•
|
unfavorable currency (
$1.3 billion
) and
|
•
|
unfavorable volume/mix (
$167 million
), partly offset by
|
•
|
price increases (
$514 million
).
|
•
|
favorable currency (
$2.4 billion
) and
|
•
|
lower excise taxes resulting from unfavorable volume/mix (
$318 million
), partly offset by
|
•
|
higher excise taxes resulting from changes in retail prices and tax rates (
$1.4 billion
).
|
|
|
For the Three Months Ended June 30,
|
|
|
|||||||||||
(in millions)
|
|
2015
|
|
2014
|
|
Variance
|
|
%
|
|||||||
Cost of sales
|
|
$
|
2,378
|
|
|
$
|
2,696
|
|
|
$
|
(318
|
)
|
|
(11.8
|
)%
|
Marketing, administration and research costs
|
|
1,568
|
|
|
1,716
|
|
|
(148
|
)
|
|
(8.6
|
)%
|
|||
Operating income
|
|
2,892
|
|
|
2,874
|
|
|
18
|
|
|
0.6
|
%
|
•
|
favorable currency (
$378 million
), partly offset by
|
•
|
higher manufacturing costs (
$51 million
, principally in our EEMA and Asia segments).
|
•
|
favorable currency (
$240 million
), partly offset by
|
•
|
higher expenses (
$88 million
, primarily higher marketing and selling expenses).
|
•
|
price increases (
$514 million
) and
|
•
|
the non-recurrence of the 2014 pre-tax charges for asset impairment and exit costs ($489 million, primarily related to the decision to discontinue cigarette production in the Netherlands), partly offset by
|
•
|
unfavorable currency (
$673 million
),
|
•
|
unfavorable volume/mix (
$171 million
),
|
•
|
higher marketing, administration and research costs (
$88 million
) and
|
•
|
higher manufacturing costs (
$51 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 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 scientifically 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
brand names is inserted to generate an aerosol. Six short-term clinical studies have been completed.
The study results show a substantial reduction in relevant biomarkers of exposure in adult consumers who switched to
iQOS
compared to adult consumers who continued to smoke cigarettes over a five-day period.
The conduct phase of two three-month clinical studies for Platform 1 has been completed. The final report of the two three-month clinical studies will be completed in the second half of 2015. We also initiated a longer term clinical study in December 2014, with the final results anticipated in the second half of 2016.
|
•
|
Platform 2
uses a pressed carbon heat source to generate an aerosol by heating tobacco. Clinical testing of Platform 2 started in 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 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 and plan to begin clinical trials as of the second half of 2015.
|
•
|
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.
|
European Union
|
|
For the Six Months Ended June 30,
|
|
|
|||||||||||
(in millions)
|
|
2015
|
|
2014
|
|
Variance
|
|
%
|
|||||||
Net revenues
|
|
$
|
12,276
|
|
|
$
|
14,448
|
|
|
$
|
(2,172
|
)
|
|
(15.0
|
)%
|
Excise taxes on products
|
|
8,396
|
|
|
10,042
|
|
|
(1,646
|
)
|
|
(16.4
|
)%
|
|||
Net revenues, excluding excise taxes on products
|
|
3,880
|
|
|
4,406
|
|
|
(526
|
)
|
|
(11.9
|
)%
|
|||
Operating companies income
|
|
1,890
|
|
|
1,689
|
|
|
201
|
|
|
11.9
|
%
|
•
|
unfavorable
currency (
$766 million
) and
|
•
|
unfavorable
volume/mix (
$18 million
), partly offset by
|
•
|
price increases (
$247 million
).
|
•
|
the non-recurrence of the 2014 pre-tax charge for asset impairment and exit costs (
$488 million
) related to the decision to discontinue cigarette production in the Netherlands,
|
•
|
price increases (
$247 million
) and
|
•
|
lower manufacturing costs (
$17 million
), partly offset by
|
•
|
unfavorable currency (
$470 million
),
|
•
|
higher marketing, administration and research costs (
$53 million
) and
|
•
|
unfavorable volume/mix (
$24 million
).
|
European Union
|
|
For the Three Months Ended June 30,
|
|
|
|||||||||||
(in millions)
|
|
2015
|
|
2014
|
|
Variance
|
|
%
|
|||||||
Net revenues
|
|
$
|
6,336
|
|
|
$
|
7,829
|
|
|
$
|
(1,493
|
)
|
|
(19.1
|
)%
|
Excise taxes on products
|
|
4,348
|
|
|
5,436
|
|
|
(1,088
|
)
|
|
(20.0
|
)%
|
|||
Net revenues, excluding excise taxes on products
|
|
1,988
|
|
|
2,393
|
|
|
(405
|
)
|
|
(16.9
|
)%
|
|||
Operating companies income
|
|
977
|
|
|
$
|
711
|
|
|
266
|
|
|
37.4
|
%
|
•
|
unfavorable currency (
$488 million
) and
|
•
|
unfavorable volume/mix (
$60 million
), partly offset by
|
•
|
price increases (
$139 million
).
|
•
|
the non-recurrence of the 2014 pre-tax charge for asset impairment and exit costs (
$488 million
) related to the decision to discontinue cigarette production in the Netherlands,
|
•
|
price increases (
$139 million
), partly offset by
|
•
|
unfavorable currency (
$279 million
),
|
•
|
unfavorable volume/mix (
$53 million
) and
|
•
|
higher marketing, administration and research costs (
$33 million
).
|
European Union Cigarette Shipment Volume by Brand (Million Units)
|
|||||||||||||||
|
Second-Quarter
|
|
Six Months Year-to-Date
|
||||||||||||
|
2015
|
|
|
2014
|
|
Change
|
|
|
2015
|
|
2014
|
Change
|
|||
Marlboro
|
23,554
|
|
|
23,913
|
|
(1.5
|
)%
|
|
44,346
|
|
|
44,144
|
|
0.5
|
%
|
L&M
|
8,528
|
|
|
8,717
|
|
(2.2
|
)%
|
|
15,926
|
|
|
16,122
|
|
(1.2
|
)%
|
Chesterfield
|
6,905
|
|
|
7,501
|
|
(7.9
|
)%
|
|
13,210
|
|
|
12,908
|
|
2.3
|
%
|
Philip Morris
|
3,634
|
|
|
2,590
|
|
40.3
|
%
|
|
6,016
|
|
|
4,941
|
|
21.8
|
%
|
Others
|
5,538
|
|
|
7,192
|
|
(23.0
|
)%
|
|
11,382
|
|
|
13,503
|
|
(15.7
|
)%
|
Total EU
|
48,159
|
|
|
49,913
|
|
(3.5
|
)%
|
|
90,880
|
|
|
91,618
|
|
(0.8
|
)%
|
|
France Key Market Data
|
||||||||||||||||
|
Second-Quarter
|
|
Six Months Year-to-Date
|
||||||||||||||
|
|
|
|
|
Change
|
|
|
|
|
|
|
Change
|
|||||
|
2015
|
|
|
2014
|
|
|
% / p.p.
|
|
2015
|
|
2014
|
|
% / p.p.
|
||||
Total Cigarette Market (billion units)
|
11.8
|
|
|
11.8
|
|
|
0.1
|
%
|
|
22.4
|
|
|
22.3
|
|
|
0.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
PMI Shipments (million units)
|
5,126
|
|
|
4,816
|
|
|
6.4
|
%
|
|
9,704
|
|
|
9,378
|
|
|
3.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
PMI Cigarette Market Share
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Marlboro
|
25.9
|
%
|
|
25.5
|
%
|
|
0.4
|
|
|
25.7
|
%
|
|
25.3
|
%
|
|
0.4
|
|
Philip Morris
|
9.6
|
%
|
|
9.4
|
%
|
|
0.2
|
|
|
9.6
|
%
|
|
9.4
|
%
|
|
0.2
|
|
Chesterfield
|
3.3
|
%
|
|
3.4
|
%
|
|
(0.1
|
)
|
|
3.3
|
%
|
|
3.4
|
%
|
|
(0.1
|
)
|
Others
|
3.0
|
%
|
|
3.1
|
%
|
|
(0.1
|
)
|
|
2.9
|
%
|
|
3.1
|
%
|
|
(0.2
|
)
|
Total
|
41.8
|
%
|
|
41.4
|
%
|
|
0.4
|
|
|
41.5
|
%
|
|
41.2
|
%
|
|
0.3
|
|
|
Germany Key Market Data
|
||||||||||||||||
|
Second-Quarter
|
|
Six Months Year-to-Date
|
||||||||||||||
|
|
|
|
|
Change
|
|
|
|
|
|
|
Change
|
|||||
|
2015
|
|
|
2014
|
|
|
% / p.p.
|
|
2015
|
|
2014
|
|
% / p.p.
|
||||
Total Cigarette Market (billion units)
|
19.9
|
|
|
20.9
|
|
|
(5.0
|
)%
|
|
38.0
|
|
|
39.1
|
|
|
(2.7
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
PMI Shipments (million units)
|
7,756
|
|
|
7,732
|
|
|
0.3
|
%
|
|
14,501
|
|
|
14,440
|
|
|
0.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
PMI Cigarette Market Share
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Marlboro
|
23.0
|
%
|
|
21.8
|
%
|
|
1.2
|
|
|
22.5
|
%
|
|
21.9
|
%
|
|
0.6
|
|
L&M
|
12.7
|
%
|
|
11.9
|
%
|
|
0.8
|
|
|
12.5
|
%
|
|
11.8
|
%
|
|
0.7
|
|
Chesterfield
|
1.8
|
%
|
|
1.7
|
%
|
|
0.1
|
|
|
1.7
|
%
|
|
1.7
|
%
|
|
—
|
|
Others
|
1.5
|
%
|
|
1.5
|
%
|
|
—
|
|
|
1.4
|
%
|
|
1.5
|
%
|
|
(0.1
|
)
|
Total
|
39.0
|
%
|
|
36.9
|
%
|
|
2.1
|
|
|
38.1
|
%
|
|
36.9
|
%
|
|
1.2
|
|
|
Italy Key Market Data
|
||||||||||||||||
|
Second-Quarter
|
|
Six Months Year-to-Date
|
||||||||||||||
|
|
|
|
|
Change
|
|
|
|
|
|
|
Change
|
|||||
|
2015
|
|
|
2014
|
|
|
% / p.p.
|
|
2015
|
|
2014
|
|
% / p.p.
|
||||
Total Cigarette Market (billion units)
|
18.9
|
|
|
19.2
|
|
|
(1.6
|
)%
|
|
35.4
|
|
|
36.0
|
|
|
(1.7
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
PMI Shipments (million units)
|
10,564
|
|
|
11,402
|
|
|
(7.3
|
)%
|
|
20,214
|
|
|
20,469
|
|
|
(1.2
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
PMI Cigarette Market Share
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Marlboro
|
24.1
|
%
|
|
25.0
|
%
|
|
(0.9
|
)
|
|
24.2
|
%
|
|
25.3
|
%
|
|
(1.1
|
)
|
Chesterfield
|
10.8
|
%
|
|
10.0
|
%
|
|
0.8
|
|
|
10.7
|
%
|
|
7.7
|
%
|
|
3.0
|
|
Diana
|
6.2
|
%
|
|
8.5
|
%
|
|
(2.3
|
)
|
|
6.9
|
%
|
|
9.2
|
%
|
|
(2.3
|
)
|
Others
|
12.7
|
%
|
|
11.8
|
%
|
|
0.9
|
|
|
12.1
|
%
|
|
12.0
|
%
|
|
0.1
|
|
Total
|
53.8
|
%
|
|
55.3
|
%
|
|
(1.5
|
)
|
|
53.9
|
%
|
|
54.2
|
%
|
|
(0.3
|
)
|
|
Poland Key Market Data
|
||||||||||||||||
|
Second-Quarter
|
|
Six Months Year-to-Date
|
||||||||||||||
|
|
|
|
|
Change
|
|
|
|
|
|
|
Change
|
|||||
|
2015
|
|
|
2014
|
|
|
% / p.p.
|
|
2015
|
|
2014
|
|
% / p.p.
|
||||
Total Cigarette Market (billion units)
|
10.6
|
|
|
11.1
|
|
|
(4.7
|
)%
|
|
20.3
|
|
|
21.6
|
|
|
(5.7
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
PMI Shipments (million units)
|
4,266
|
|
|
4,489
|
|
|
(5.0
|
)%
|
|
8,023
|
|
|
8,159
|
|
|
(1.7
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
PMI Cigarette Market Share
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Marlboro
|
11.4
|
%
|
|
10.9
|
%
|
|
0.5
|
|
|
11.0
|
%
|
|
10.6
|
%
|
|
0.4
|
|
L&M
|
17.9
|
%
|
|
17.8
|
%
|
|
0.1
|
|
|
17.7
|
%
|
|
17.1
|
%
|
|
0.6
|
|
Chesterfield
|
8.6
|
%
|
|
7.9
|
%
|
|
0.7
|
|
|
8.3
|
%
|
|
7.5
|
%
|
|
0.8
|
|
Others
|
2.4
|
%
|
|
3.8
|
%
|
|
(1.4
|
)
|
|
2.4
|
%
|
|
3.6
|
%
|
|
(1.2
|
)
|
Total
|
40.3
|
%
|
|
40.4
|
%
|
|
(0.1
|
)
|
|
39.4
|
%
|
|
38.8
|
%
|
|
0.6
|
|
|
Spain Key Market Data
|
||||||||||||||||
|
Second-Quarter
|
|
Six Months Year-to-Date
|
||||||||||||||
|
|
|
|
|
Change
|
|
|
|
|
|
|
Change
|
|||||
|
2015
|
|
|
2014
|
|
|
% / p.p.
|
|
2015
|
|
2014
|
|
% / p.p.
|
||||
Total Cigarette Market (billion units)
|
11.8
|
|
|
12.3
|
|
|
(4.1
|
)%
|
|
22.3
|
|
|
22.8
|
|
|
(2.4
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
PMI Shipments (million units)
|
4,121
|
|
|
4,337
|
|
|
(5.0
|
)%
|
|
7,688
|
|
|
7,524
|
|
|
2.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
PMI Cigarette Market Share
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Marlboro
|
16.8
|
%
|
|
15.8
|
%
|
|
1.0
|
|
|
16.4
|
%
|
|
15.5
|
%
|
|
0.9
|
|
Chesterfield
|
9.1
|
%
|
|
9.2
|
%
|
|
(0.1
|
)
|
|
9.3
|
%
|
|
9.3
|
%
|
|
—
|
|
L&M
|
5.9
|
%
|
|
6.1
|
%
|
|
(0.2
|
)
|
|
5.9
|
%
|
|
6.2
|
%
|
|
(0.3
|
)
|
Others
|
1.4
|
%
|
|
0.9
|
%
|
|
0.5
|
|
|
1.4
|
%
|
|
0.7
|
%
|
|
0.7
|
|
Total
|
33.2
|
%
|
|
32.0
|
%
|
|
1.2
|
|
|
33.0
|
%
|
|
31.7
|
%
|
|
1.3
|
|
Eastern Europe, Middle East & Africa
|
|
For the Six Months Ended June 30,
|
|
|
|||||||||||
(in millions)
|
|
2015
|
|
2014
|
|
Variance
|
|
%
|
|||||||
Net revenues
|
|
$
|
9,423
|
|
|
$
|
10,236
|
|
|
$
|
(813
|
)
|
|
(7.9
|
)%
|
Excise taxes on products
|
|
5,661
|
|
|
5,944
|
|
|
(283
|
)
|
|
(4.8
|
)%
|
|||
Net revenues, excluding excise taxes on products
|
|
3,762
|
|
|
4,292
|
|
|
(530
|
)
|
|
(12.3
|
)%
|
|||
Operating companies income
|
|
1,761
|
|
|
2,014
|
|
|
(253
|
)
|
|
(12.6
|
)%
|
•
|
unfavorable currency (
$909 million
), partly offset by
|
•
|
price increases (
$311 million
) and
|
•
|
favorable volume/mix (
$67 million
).
|
•
|
unfavorable currency (
$524 million
),
|
•
|
higher marketing, administration and research costs ($67 million) and
|
•
|
higher manufacturing costs (
$38 million
), partially offset by
|
•
|
price increases (
$311 million
),
|
•
|
favorable volume/mix (
$35 million
) and
|
•
|
higher equity income in unconsolidated subsidiaries (
$31 million
).
|
Eastern Europe, Middle East & Africa
|
|
For the Three Months Ended June 30,
|
|
|
|||||||||||
(in millions)
|
|
2015
|
|
2014
|
|
Variance
|
|
%
|
|||||||
Net revenues
|
|
$
|
4,994
|
|
|
$
|
5,674
|
|
|
$
|
(680
|
)
|
|
(12.0
|
)%
|
Excise taxes on products
|
|
3,075
|
|
|
3,391
|
|
|
(316
|
)
|
|
(9.3
|
)%
|
|||
Net revenues, excluding excise taxes on products
|
|
1,919
|
|
|
2,283
|
|
|
(364
|
)
|
|
(15.9
|
)%
|
|||
Operating companies income
|
|
881
|
|
|
$
|
1,087
|
|
|
(206
|
)
|
|
(19.0
|
)%
|
•
|
unfavorable currency (
$464 million
) and
|
•
|
unfavorable volume/mix (
$43 million
), partly offset by
|
•
|
price increases (
$142 million
).
|
•
|
unfavorable currency (
$253 million
),
|
•
|
higher marketing, administration and research costs (
$47 million
),
|
•
|
unfavorable volume/mix (
$39 million
) and
|
•
|
higher manufacturing costs (
$14 million
), partly offset by
|
•
|
price increases (
$142 million
).
|
|
North Africa Key Market Data
|
||||||||||||||||
|
Second-Quarter
|
|
Six Months Year-to-Date
|
||||||||||||||
|
|
|
|
|
Change
|
|
|
|
|
|
|
Change
|
|||||
|
2015
|
|
|
2014
|
|
|
% / p.p.
|
|
2015
|
|
2014
|
|
% / p.p.
|
||||
Total Cigarette Market (billion units)
|
34.8
|
|
|
36.1
|
|
|
(3.8
|
)%
|
|
67.1
|
|
|
70.6
|
|
|
(4.9
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
PMI Shipments (million units)
|
8,806
|
|
|
9,204
|
|
|
(4.3
|
)%
|
|
18,008
|
|
|
17,760
|
|
|
1.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
PMI Cigarette Market Share
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Marlboro
|
13.9
|
%
|
|
14.2
|
%
|
|
(0.3
|
)
|
|
14.3
|
%
|
|
14.7
|
%
|
|
(0.4
|
)
|
L&M
|
10.6
|
%
|
|
8.4
|
%
|
|
2.2
|
|
|
10.7
|
%
|
|
8.2
|
%
|
|
2.5
|
|
Others
|
1.8
|
%
|
|
1.8
|
%
|
|
—
|
|
|
1.9
|
%
|
|
1.8
|
%
|
|
0.1
|
|
Total
|
26.3
|
%
|
|
24.4
|
%
|
|
1.9
|
|
|
26.9
|
%
|
|
24.7
|
%
|
|
2.2
|
|
|
Russia Key Market Data
|
||||||||||||||||
|
Second-Quarter
|
|
Six Months Year-to-Date
|
||||||||||||||
|
|
|
|
|
Change
|
|
|
|
|
|
|
Change
|
|||||
|
2015
|
|
|
2014
|
|
|
% / p.p.
|
|
2015
|
|
2014
|
|
% / p.p.
|
||||
Total Cigarette Market (billion units)
|
77.2
|
|
|
80.6
|
|
|
(4.2
|
)%
|
|
138.6
|
|
|
148.3
|
|
|
(6.5
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
PMI Shipments (million units)
|
23,075
|
|
|
21,906
|
|
|
5.3
|
%
|
|
42,084
|
|
|
40,495
|
|
|
3.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
PMI Cigarette Market Share
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Marlboro
|
1.4
|
%
|
|
1.6
|
%
|
|
(0.2
|
)
|
|
1.4
|
%
|
|
1.6
|
%
|
|
(0.2
|
)
|
Parliament
|
3.9
|
%
|
|
3.6
|
%
|
|
0.3
|
|
|
3.9
|
%
|
|
3.6
|
%
|
|
0.3
|
|
Bond Street
|
8.1
|
%
|
|
7.4
|
%
|
|
0.7
|
|
|
8.0
|
%
|
|
7.2
|
%
|
|
0.8
|
|
Others
|
14.4
|
%
|
|
14.3
|
%
|
|
0.1
|
|
|
14.4
|
%
|
|
14.5
|
%
|
|
(0.1
|
)
|
Total
|
27.8
|
%
|
|
26.9
|
%
|
|
0.9
|
|
|
27.7
|
%
|
|
26.9
|
%
|
|
0.8
|
|
|
Turkey Key Market Data
|
||||||||||||||||
|
Second-Quarter
|
|
Six Months Year-to-Date
|
||||||||||||||
|
|
|
|
|
Change
|
|
|
|
|
|
|
Change
|
|||||
|
2015
|
|
|
2014
|
|
|
% / p.p.
|
|
2015
|
|
2014
|
|
% / p.p.
|
||||
Total Cigarette Market (billion units)
|
25.8
|
|
|
24.1
|
|
|
7.2
|
%
|
|
45.8
|
|
|
42.2
|
|
|
8.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
PMI Shipments (million units)
|
12,012
|
|
|
12,248
|
|
|
(1.9
|
)%
|
|
21,283
|
|
|
21,205
|
|
|
0.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
PMI Cigarette Market Share
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Marlboro
|
9.3
|
%
|
|
8.5
|
%
|
|
0.8
|
|
|
9.1
|
%
|
|
8.5
|
%
|
|
0.6
|
|
Parliament
|
11.6
|
%
|
|
10.9
|
%
|
|
0.7
|
|
|
11.6
|
%
|
|
10.7
|
%
|
|
0.9
|
|
Lark
|
7.5
|
%
|
|
9.7
|
%
|
|
(2.2
|
)
|
|
7.4
|
%
|
|
10.0
|
%
|
|
(2.6
|
)
|
Others
|
15.0
|
%
|
|
15.3
|
%
|
|
(0.3
|
)
|
|
15.2
|
%
|
|
15.2
|
%
|
|
—
|
|
Total
|
43.4
|
%
|
|
44.4
|
%
|
|
(1.0
|
)
|
|
43.3
|
%
|
|
44.4
|
%
|
|
(1.1
|
)
|
|
Ukraine Key Market Data
|
||||||||||||||||
|
Second-Quarter
|
|
Six Months Year-to-Date
|
||||||||||||||
|
|
|
|
|
Change
|
|
|
|
|
|
|
Change
|
|||||
|
2015
|
|
|
2014
|
|
|
% / p.p.
|
|
2015
|
|
2014
|
|
% / p.p.
|
||||
Total Cigarette Market (billion units)
|
18.9
|
|
|
20.4
|
|
|
(7.5
|
)%
|
|
33.6
|
|
|
34.7
|
|
|
(3.1
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
PMI Shipments (million units)
|
5,070
|
|
|
6,176
|
|
|
(17.9
|
)%
|
|
9,678
|
|
|
11,287
|
|
|
(14.3
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
PMI Cigarette Market Share
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Marlboro
|
3.8
|
%
|
|
4.8
|
%
|
|
(1.0
|
)
|
|
4.1
|
%
|
|
5.0
|
%
|
|
(0.9
|
)
|
Parliament
|
2.7
|
%
|
|
2.9
|
%
|
|
(0.2
|
)
|
|
2.8
|
%
|
|
3.0
|
%
|
|
(0.2
|
)
|
Bond Street
|
8.0
|
%
|
|
9.1
|
%
|
|
(1.1
|
)
|
|
7.9
|
%
|
|
9.2
|
%
|
|
(1.3
|
)
|
Others
|
15.4
|
%
|
|
15.8
|
%
|
|
(0.4
|
)
|
|
16.1
|
%
|
|
15.6
|
%
|
|
0.5
|
|
Total
|
29.9
|
%
|
|
32.6
|
%
|
|
(2.7
|
)
|
|
30.9
|
%
|
|
32.8
|
%
|
|
(1.9
|
)
|
Asia
|
|
For the Six Months Ended June 30,
|
|
|
||||||||||||
(in millions)
|
|
2015
|
|
2014
|
|
Variance
|
|
%
|
||||||||
Net revenues
|
|
$
|
9,803
|
|
|
$
|
9,572
|
|
|
$
|
231
|
|
|
2.4
|
%
|
|
Excise taxes on products
|
|
5,503
|
|
10,527
|
|
5,079
|
|
|
424
|
|
|
8.3
|
%
|
|||
Net revenues, excluding excise taxes on products
|
|
4,300
|
|
|
4,493
|
|
|
(193
|
)
|
|
(4.3
|
)%
|
||||
Operating companies income
|
|
1,731
|
|
|
1,815
|
|
|
(84
|
)
|
|
(4.6
|
)%
|
•
|
unfavorable currency (
$357 million
) and
|
•
|
unfavorable volume/mix (
$92 million
), partly offset by
|
•
|
price increases (
$256 million
).
|
•
|
unfavorable currency (
$176 million
),
|
•
|
unfavorable volume/mix (
$99 million
),
|
•
|
higher manufacturing costs (
$60 million
, mainly due to higher costs in Indonesia) and
|
•
|
higher marketing, administration and research costs (
$27 million
), partly offset by
|
•
|
price increases (
$256 million
) and
|
•
|
the non-recurrence of the 2014 pre-tax charges for asset impairment and exit costs (
$24 million
) due to the factory closure in Australia.
|
Asia
|
|
For the Three Months Ended June 30,
|
|
|
|||||||||||
(in millions)
|
|
2015
|
|
2014
|
|
Variance
|
|
%
|
|||||||
Net revenues
|
|
$
|
5,039
|
|
|
$
|
5,097
|
|
|
$
|
(58
|
)
|
|
(1.1
|
)%
|
Excise taxes on products
|
|
2,894
|
|
|
2,786
|
|
|
108
|
|
|
3.9
|
%
|
|||
Net revenues, excluding excise taxes on products
|
|
2,145
|
|
|
2,311
|
|
|
(166
|
)
|
|
(7.2
|
)%
|
|||
Operating companies income
|
|
797
|
|
|
900
|
|
|
(103
|
)
|
|
(11.4
|
)%
|
•
|
unfavorable currency (
$229 million
) and
|
•
|
unfavorable volume/mix (
$42 million
), partly offset by
|
•
|
price increases (
$105 million
).
|
•
|
unfavorable currency (
$97 million
),
|
•
|
unfavorable volume/mix (
$55 million
),
|
•
|
higher marketing, administration and research costs ($28 million) and
|
•
|
higher manufacturing costs (
$27 million
, mainly due to higher costs in Indonesia), partly offset by
|
•
|
price increases (
$105 million
).
|
|
Indonesia Key Market Data
|
||||||||||||||||
|
Second-Quarter
|
|
Six Months Year-to-Date
|
||||||||||||||
|
|
|
|
|
Change
|
|
|
|
|
|
|
Change
|
|||||
|
2015
|
|
|
2014
|
|
|
% / p.p.
|
|
2015
|
|
2014
|
|
% / p.p.
|
||||
Total Cigarette Market (billion units)
|
78.6
|
|
|
82.4
|
|
|
(4.6
|
)%
|
|
156.9
|
|
|
156.2
|
|
|
0.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
PMI Shipments (million units)
|
27,659
|
|
|
28,598
|
|
|
(3.3
|
)%
|
|
55,343
|
|
|
54,133
|
|
|
2.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
PMI Cigarette Market Share
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Sampoerna A
|
15.0
|
%
|
|
14.1
|
%
|
|
0.9
|
|
|
15.0
|
%
|
|
14.2
|
%
|
|
0.8
|
|
Dji Sam Soe
|
7.0
|
%
|
|
6.2
|
%
|
|
0.8
|
|
|
7.0
|
%
|
|
5.9
|
%
|
|
1.1
|
|
U Mild
|
4.9
|
%
|
|
5.6
|
%
|
|
(0.7
|
)
|
|
5.0
|
%
|
|
5.4
|
%
|
|
(0.4
|
)
|
Others
|
8.3
|
%
|
|
8.8
|
%
|
|
(0.5
|
)
|
|
8.3
|
%
|
|
9.1
|
%
|
|
(0.8
|
)
|
Total
|
35.2
|
%
|
|
34.7
|
%
|
|
0.5
|
|
|
35.3
|
%
|
|
34.6
|
%
|
|
0.7
|
|
|
Japan Key Market Data
|
||||||||||||||||
|
Second-Quarter
|
|
Six Months Year-to-Date
|
||||||||||||||
|
|
|
|
|
Change
|
|
|
|
|
|
|
Change
|
|||||
|
2015
|
|
|
2014
|
|
|
% / p.p.
|
|
2015
|
|
2014
|
|
% / p.p.
|
||||
Total Cigarette Market (billion units)
|
46.0
|
|
|
41.5
|
|
|
11.0
|
%
|
|
88.5
|
|
|
90.9
|
|
|
(2.5
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
PMI Shipments (million units)
|
13,552
|
|
|
11,750
|
|
|
15.3
|
%
|
|
25,398
|
|
|
25,237
|
|
|
0.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
PMI Cigarette Market Share
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Marlboro
|
11.3
|
%
|
|
11.5
|
%
|
|
(0.2
|
)
|
|
11.4
|
%
|
|
11.7
|
%
|
|
(0.3
|
)
|
Parliament
|
2.3
|
%
|
|
2.4
|
%
|
|
(0.1
|
)
|
|
2.3
|
%
|
|
2.2
|
%
|
|
0.1
|
|
Lark
|
10.0
|
%
|
|
10.4
|
%
|
|
(0.4
|
)
|
|
10.0
|
%
|
|
9.8
|
%
|
|
0.2
|
|
Others
|
1.8
|
%
|
|
2.1
|
%
|
|
(0.3
|
)
|
|
1.8
|
%
|
|
2.2
|
%
|
|
(0.4
|
)
|
Total
|
25.4
|
%
|
|
26.4
|
%
|
|
(1.0
|
)
|
|
25.5
|
%
|
|
25.9
|
%
|
|
(0.4
|
)
|
|
Korea Key Market Data
|
||||||||||||||||
|
Second-Quarter
|
|
Six Months Year-to-Date
|
||||||||||||||
|
|
|
|
|
Change
|
|
|
|
|
|
|
Change
|
|||||
|
2015
|
|
|
2014
|
|
|
% / p.p.
|
|
2015
|
|
2014
|
|
% / p.p.
|
||||
Total Cigarette Market (billion units)
|
18.1
|
|
|
22.4
|
|
|
(19.2
|
)%
|
|
30.7
|
|
|
41.8
|
|
|
(26.6
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
PMI Shipments (million units)
|
3,732
|
|
|
4,404
|
|
|
(15.3
|
)%
|
|
6,190
|
|
|
8,230
|
|
|
(24.8
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
PMI Cigarette Market Share
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Marlboro
|
9.2
|
%
|
|
7.6
|
%
|
|
1.6
|
|
|
9.2
|
%
|
|
7.8
|
%
|
|
1.4
|
|
Parliament
|
7.1
|
%
|
|
7.2
|
%
|
|
(0.1
|
)
|
|
6.9
|
%
|
|
7.2
|
%
|
|
(0.3
|
)
|
Virginia S.
|
3.8
|
%
|
|
4.0
|
%
|
|
(0.2
|
)
|
|
3.8
|
%
|
|
4.0
|
%
|
|
(0.2
|
)
|
Others
|
0.6
|
%
|
|
0.8
|
%
|
|
(0.2
|
)
|
|
0.5
|
%
|
|
0.7
|
%
|
|
(0.2
|
)
|
Total
|
20.7
|
%
|
|
19.6
|
%
|
|
1.1
|
|
|
20.4
|
%
|
|
19.7
|
%
|
|
0.7
|
|
|
Philippines Key Market Data
|
||||||||||||||||
|
Second-Quarter
|
|
Six Months Year-to-Date
|
||||||||||||||
|
|
|
|
|
Change
|
|
|
|
|
|
|
Change
|
|||||
|
2015
|
|
|
2014
|
|
|
% / p.p.
|
|
2015
|
|
2014
|
|
% / p.p.
|
||||
Total Cigarette Market (billion units)
|
21.2
|
|
|
20.0
|
|
|
6.0
|
%
|
|
39.8
|
|
|
38.8
|
|
|
2.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
PMI Shipments (million units)
|
16,725
|
|
|
17,243
|
|
|
(3.0
|
)%
|
|
32,629
|
|
|
33,408
|
|
|
(2.3
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
PMI Cigarette Market Share
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Marlboro
|
20.2
|
%
|
|
18.1
|
%
|
|
2.1
|
|
|
21.1
|
%
|
|
18.7
|
%
|
|
2.4
|
|
Fortune
|
32.1
|
%
|
|
36.0
|
%
|
|
(3.9
|
)
|
|
32.5
|
%
|
|
34.7
|
%
|
|
(2.2
|
)
|
Jackpot
|
13.7
|
%
|
|
17.6
|
%
|
|
(3.9
|
)
|
|
15.2
|
%
|
|
17.7
|
%
|
|
(2.5
|
)
|
Others
|
12.9
|
%
|
|
14.5
|
%
|
|
(1.6
|
)
|
|
13.2
|
%
|
|
15.1
|
%
|
|
(1.9
|
)
|
Total
|
78.9
|
%
|
|
86.2
|
%
|
|
(7.3
|
)
|
|
82.0
|
%
|
|
86.2
|
%
|
|
(4.2
|
)
|
Latin America & Canada
|
|
For the Six Months Ended June 30,
|
|
|
|||||||||||
(in millions)
|
|
2015
|
|
2014
|
|
Variance
|
|
%
|
|||||||
Net revenues
|
|
$
|
4,613
|
|
|
$
|
4,574
|
|
|
$
|
39
|
|
|
0.9
|
%
|
Excise taxes on products
|
|
3,080
|
|
|
3,051
|
|
|
29
|
|
|
1.0
|
%
|
|||
Net revenues, excluding excise taxes on products
|
|
1,533
|
|
|
1,523
|
|
|
10
|
|
|
0.7
|
%
|
|||
Operating companies income
|
|
555
|
|
|
467
|
|
|
88
|
|
|
18.8
|
%
|
•
|
price increases (
$252 million
), partly offset by
|
•
|
unfavorable currency (
$200 million
) and
|
•
|
unfavorable volume/mix (
$46 million
).
|
•
|
price increases (
$252 million
) and
|
•
|
lower marketing, administration and research costs (
$11 million
), partly offset by
|
•
|
unfavorable currency (
$95 million
),
|
•
|
unfavorable volume/mix (
$50 million
) and
|
•
|
higher manufacturing costs (
$33 million
).
|
Latin America & Canada
|
|
For the Three Months Ended June 30,
|
|
|
|||||||||||
(in millions)
|
|
2015
|
|
2014
|
|
Variance
|
|
%
|
|||||||
Net revenues
|
|
$
|
2,394
|
|
|
$
|
2,451
|
|
|
$
|
(57
|
)
|
|
(2.3
|
)%
|
Excise taxes on products
|
|
1,587
|
|
|
1,641
|
|
|
(54
|
)
|
|
(3.3
|
)%
|
|||
Net revenues, excluding excise taxes on products
|
|
807
|
|
|
810
|
|
|
(3
|
)
|
|
(0.4
|
)%
|
|||
Operating companies income
|
|
325
|
|
|
265
|
|
|
60
|
|
|
22.6
|
%
|
•
|
unfavorable currency (
$112 million
) and
|
•
|
unfavorable volume/mix (
$22 million
), partly offset by
|
•
|
price increases (
$128 million
).
|
•
|
price increases (
$128 million
) and
|
•
|
lower marketing, administration and research costs (
$24 million
), partly offset by
|
•
|
unfavorable currency (
$51 million
),
|
•
|
unfavorable volume/mix (
$24 million
) and
|
•
|
higher manufacturing costs (
$19 million
).
|
|
Argentina Key Market Data
|
||||||||||||||||
|
Second-Quarter
|
|
Six Months Year-to-Date
|
||||||||||||||
|
|
|
|
|
Change
|
|
|
|
|
|
|
Change
|
|||||
|
2015
|
|
|
2014
|
|
|
% / p.p.
|
|
2015
|
|
2014
|
|
% / p.p.
|
||||
Total Cigarette Market (billion units)
|
9.4
|
|
|
10.0
|
|
|
(5.3
|
)%
|
|
19.7
|
|
|
20.6
|
|
|
(4.4
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
PMI Shipments (million units)
|
7,463
|
|
|
7,656
|
|
|
(2.5
|
)%
|
|
15,586
|
|
|
15,935
|
|
|
(2.2
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
PMI Cigarette Market Share
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Marlboro
|
24.3
|
%
|
|
23.8
|
%
|
|
0.5
|
|
|
24.4
|
%
|
|
24.0
|
%
|
|
0.4
|
|
Parliament
|
2.1
|
%
|
|
2.1
|
%
|
|
—
|
|
|
2.1
|
%
|
|
2.1
|
%
|
|
—
|
|
Philip Morris
|
45.3
|
%
|
|
42.9
|
%
|
|
2.4
|
|
|
44.9
|
%
|
|
43.1
|
%
|
|
1.8
|
|
Others
|
7.1
|
%
|
|
7.5
|
%
|
|
(0.4
|
)
|
|
7.3
|
%
|
|
7.5
|
%
|
|
(0.2
|
)
|
Total
|
78.8
|
%
|
|
76.3
|
%
|
|
2.5
|
|
|
78.7
|
%
|
|
76.7
|
%
|
|
2.0
|
|
|
Canada Key Market Data
|
||||||||||||||||
|
Second-Quarter
|
|
Six Months Year-to-Date
|
||||||||||||||
|
|
|
|
|
Change
|
|
|
|
|
|
|
Change
|
|||||
|
2015
|
|
|
2014
|
|
|
% / p.p.
|
|
2015
|
|
2014
|
|
% / p.p.
|
||||
Total Cigarette Market (billion units)
|
7.3
|
|
|
7.3
|
|
|
0.6
|
%
|
|
12.8
|
|
|
13.1
|
|
|
(2.2
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
PMI Shipments (million units)
|
2,647
|
|
|
2,707
|
|
|
(2.2
|
)%
|
|
4,700
|
|
|
4,932
|
|
|
(4.7
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
PMI Cigarette Market Share
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Belmont
|
3.2
|
%
|
|
2.9
|
%
|
|
0.3
|
|
|
3.1
|
%
|
|
2.9
|
%
|
|
0.2
|
|
Canadian Classics
|
10.2
|
%
|
|
10.3
|
%
|
|
(0.1
|
)
|
|
10.4
|
%
|
|
10.7
|
%
|
|
(0.3
|
)
|
Next
|
10.3
|
%
|
|
10.7
|
%
|
|
(0.4
|
)
|
|
10.4
|
%
|
|
10.8
|
%
|
|
(0.4
|
)
|
Others
|
12.5
|
%
|
|
13.3
|
%
|
|
(0.8
|
)
|
|
12.8
|
%
|
|
13.4
|
%
|
|
(0.6
|
)
|
Total
|
36.2
|
%
|
|
37.2
|
%
|
|
(1.0
|
)
|
|
36.7
|
%
|
|
37.8
|
%
|
|
(1.1
|
)
|
|
Mexico Key Market Data
|
||||||||||||||||
|
Second-Quarter
|
|
Six Months Year-to-Date
|
||||||||||||||
|
|
|
|
|
Change
|
|
|
|
|
|
|
Change
|
|||||
|
2015
|
|
|
2014
|
|
|
% / p.p.
|
|
2015
|
|
2014
|
|
% / p.p.
|
||||
Total Cigarette Market (billion units)
|
8.6
|
|
|
8.4
|
|
|
1.9
|
%
|
|
16.1
|
|
|
15.6
|
|
|
3.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
PMI Shipments (million units)
|
5,891
|
|
|
5,991
|
|
|
(1.7
|
)%
|
|
10,887
|
|
|
10,862
|
|
|
0.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
PMI Cigarette Market Share
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Marlboro
|
47.5
|
%
|
|
49.3
|
%
|
|
(1.8
|
)
|
|
46.5
|
%
|
|
48.2
|
%
|
|
(1.7
|
)
|
Delicados
|
10.7
|
%
|
|
11.5
|
%
|
|
(0.8
|
)
|
|
10.8
|
%
|
|
11.1
|
%
|
|
(0.3
|
)
|
Benson & Hedges
|
4.6
|
%
|
|
5.2
|
%
|
|
(0.6
|
)
|
|
4.6
|
%
|
|
5.2
|
%
|
|
(0.6
|
)
|
Others
|
5.7
|
%
|
|
5.0
|
%
|
|
0.7
|
|
|
5.6
|
%
|
|
5.0
|
%
|
|
0.6
|
|
Total
|
68.5
|
%
|
|
71.0
|
%
|
|
(2.5
|
)
|
|
67.5
|
%
|
|
69.5
|
%
|
|
(2.0
|
)
|
•
|
more cash provided by accounts receivable, primarily due to the timing of sales and cash collections; and
|
•
|
less cash used for income taxes, primarily due to the timing of payments.
|
|
|
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
|
|
|
|
|
$
|
0.8
|
|
•
|
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;
|
•
|
restrictions on the sale of potentially reduced-risk tobacco products and other nicotine-containing products;
|
•
|
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
|
||||||
April 1, 2015 –
April 30, 2015 (1)
|
|
—
|
|
|
$
|
—
|
|
|
144,643,396
|
|
|
$
|
5,347,045,761
|
|
May 1, 2015 –
May 31, 2015 (1)
|
|
—
|
|
|
$
|
—
|
|
|
144,643,396
|
|
|
$
|
5,347,045,761
|
|
June 1, 2015 –
June 30, 2015 (1)
|
|
—
|
|
|
$
|
—
|
|
|
144,643,396
|
|
|
$
|
5,347,045,761
|
|
Pursuant to Publicly
Announced Plans
or Programs
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|||
April 1, 2015 –
April 30, 2015 (3) |
|
16,398
|
|
|
$
|
83.66
|
|
|
|
|
|
|||
May 1, 2015 –
May 31, 2015 (3) |
|
897
|
|
|
$
|
83.00
|
|
|
|
|
|
|||
June 1, 2015 –
June 30, 2015 (3) |
|
363
|
|
|
$
|
82.92
|
|
|
|
|
|
|||
For the Quarter Ended June 30, 2015
|
|
17,658
|
|
|
$
|
83.61
|
|
|
|
|
|
(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 immediately prior to the 2015 Annual Meeting of Shareholders (incorporated by reference to Exhibit 3.1 to the Current Report on From 8-K filed March 13, 2015).
|
|
|
|
10.1
|
|
Summary of Supplemental Pension Plan of Philip Morris in Switzerland.
|
|
|
|
10.2
|
|
Supplemental Equalization Plan (amended and restated as of June 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
|
|
July 30, 2015
|
•
|
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.
|
ADMINISTRATION OF THE
|
FONDATION DE FINANCEMENT PHILIP MORRIS EN SUISSE
|
/s/ ANNICK PERRENOUD
|
Annick Perrenoud
|
Secular Trust
|
|
|
|
|||
Active Participants
|
||||||
|
|
|
|
|||
Last Name
|
First Name
|
Funding Payment Account(s)
|
Target Payment Account(s)
|
|||
Camilleri
|
Louis C.
|
FP Trust Account / FP Assumed Account
|
TP Trust Account / TP Assumed Account
|
|||
|
|
|
|
|||
Total ST Participants: 1
|
|
|
|
Six Months Ended
June 30, 2015
|
|
Three Months Ended
June 30, 2015
|
||||
Earnings before income taxes
|
$
|
5,229
|
|
|
$
|
2,633
|
|
Add (deduct):
|
|
|
|
||||
Dividends from less than 50% owned affiliates
|
86
|
|
|
86
|
|
||
Fixed charges
|
645
|
|
|
311
|
|
||
Interest capitalized, net of amortization
|
(1
|
)
|
|
(1
|
)
|
||
Earnings available for fixed charges
|
$
|
5,959
|
|
|
$
|
3,029
|
|
Fixed charges:
|
|
|
|
||||
Interest incurred
|
$
|
589
|
|
|
$
|
283
|
|
Portion of rent expense deemed to represent interest factor
|
56
|
|
|
28
|
|
||
Fixed charges
|
$
|
645
|
|
|
$
|
311
|
|
Ratio of earnings to fixed charges
|
9.2
|
|
|
9.7
|
|
|
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
|
July 30, 2015
|
/s/ JACEK OLCZAK
|
Jacek Olczak
|
Chief Financial Officer
|
July 30, 2015
|