(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, 2017 and December 31, 2016
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Condensed Consolidated Statements of Earnings for the
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|
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Three Months Ended March 31, 2017 and 2016
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Condensed Consolidated Statements of Comprehensive Earnings for the
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Three Months Ended March 31, 2017 and 2016
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Condensed Consolidated Statements of Stockholders’ (Deficit) Equity for the
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Three Months Ended March 31, 2017 and 2016
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Condensed Consolidated Statements of Cash Flows for the
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Three Months Ended March 31, 2017 and 2016
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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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March 31,
2017 |
|
December 31,
2016 |
||||
ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
|
5,076
|
|
|
$
|
4,239
|
|
Receivables (less allowances of $42 in 2017 and $42 in 2016)
|
3,090
|
|
|
3,499
|
|
||
Inventories:
|
|
|
|
||||
Leaf tobacco
|
2,683
|
|
|
2,498
|
|
||
Other raw materials
|
1,531
|
|
|
1,569
|
|
||
Finished product
|
3,793
|
|
|
4,950
|
|
||
|
8,007
|
|
|
9,017
|
|
||
Other current assets
|
711
|
|
|
853
|
|
||
Total current assets
|
16,884
|
|
|
17,608
|
|
||
Property, plant and equipment, at cost
|
12,862
|
|
|
12,360
|
|
||
Less: accumulated depreciation
|
6,598
|
|
|
6,296
|
|
||
|
6,264
|
|
|
6,064
|
|
||
Goodwill (Note 4)
|
7,485
|
|
|
7,324
|
|
||
Other intangible assets, net (Note 4)
|
2,517
|
|
|
2,470
|
|
||
Investments in unconsolidated subsidiaries (Note 14)
|
1,079
|
|
|
1,011
|
|
||
Deferred income taxes
|
834
|
|
|
859
|
|
||
Other assets
|
1,564
|
|
|
1,515
|
|
||
TOTAL ASSETS
|
$
|
36,627
|
|
|
$
|
36,851
|
|
|
March 31,
2017 |
|
December 31,
2016 |
||||
LIABILITIES
|
|
|
|
||||
Short-term borrowings (Note 10)
|
$
|
1,004
|
|
|
$
|
643
|
|
Current portion of long-term debt (Note 10)
|
1,754
|
|
|
2,573
|
|
||
Accounts payable
|
1,746
|
|
|
1,666
|
|
||
Accrued liabilities:
|
|
|
|
||||
Marketing and selling
|
576
|
|
|
575
|
|
||
Taxes, except income taxes
|
4,275
|
|
|
6,204
|
|
||
Employment costs
|
719
|
|
|
800
|
|
||
Dividends payable
|
1,622
|
|
|
1,621
|
|
||
Other
|
1,329
|
|
|
1,553
|
|
||
Income taxes
|
330
|
|
|
832
|
|
||
Total current liabilities
|
13,355
|
|
|
16,467
|
|
||
Long-term debt (Note 10)
|
28,588
|
|
|
25,851
|
|
||
Deferred income taxes
|
1,739
|
|
|
1,897
|
|
||
Employment costs
|
2,840
|
|
|
2,800
|
|
||
Other liabilities
|
662
|
|
|
736
|
|
||
Total liabilities
|
47,184
|
|
|
47,751
|
|
||
Contingencies (Note 8)
|
|
|
|
||||
STOCKHOLDERS’ (DEFICIT) EQUITY
|
|
|
|
||||
Common stock, no par value
(2,109,316,331 shares issued in 2017 and 2016) |
—
|
|
|
—
|
|
||
Additional paid-in capital
|
1,892
|
|
|
1,964
|
|
||
Earnings reinvested in the business
|
30,367
|
|
|
30,397
|
|
||
Accumulated other comprehensive losses
|
(9,265
|
)
|
|
(9,559
|
)
|
||
|
22,994
|
|
|
22,802
|
|
||
Less: cost of repurchased stock
(556,175,692 and 557,930,784 shares in 2017 and 2016, respectively)
|
35,386
|
|
|
35,490
|
|
||
Total PMI stockholders’ deficit
|
(12,392
|
)
|
|
(12,688
|
)
|
||
Noncontrolling interests
|
1,835
|
|
|
1,788
|
|
||
Total stockholders’ deficit
|
(10,557
|
)
|
|
(10,900
|
)
|
||
TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
|
$
|
36,627
|
|
|
$
|
36,851
|
|
|
For the Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Net revenues
|
$
|
16,556
|
|
|
$
|
16,788
|
|
Cost of sales
|
2,177
|
|
|
2,096
|
|
||
Excise taxes on products
|
10,492
|
|
|
10,705
|
|
||
Gross profit
|
3,887
|
|
|
3,987
|
|
||
Marketing, administration and research costs
|
1,469
|
|
|
1,496
|
|
||
Amortization of intangibles
|
22
|
|
|
18
|
|
||
Operating income
|
2,396
|
|
|
2,473
|
|
||
Interest expense, net
|
219
|
|
|
247
|
|
||
Earnings before income taxes
|
2,177
|
|
|
2,226
|
|
||
Provision for income taxes
|
541
|
|
|
630
|
|
||
Equity (income)/loss in unconsolidated subsidiaries, net
|
(22
|
)
|
|
(9
|
)
|
||
Net earnings
|
1,658
|
|
|
1,605
|
|
||
Net earnings attributable to noncontrolling interests
|
68
|
|
|
75
|
|
||
Net earnings attributable to PMI
|
$
|
1,590
|
|
|
$
|
1,530
|
|
Per share data (Note 6):
|
|
|
|
||||
Basic earnings per share
|
$
|
1.02
|
|
|
$
|
0.98
|
|
Diluted earnings per share
|
$
|
1.02
|
|
|
$
|
0.98
|
|
Dividends declared
|
$
|
1.04
|
|
|
$
|
1.02
|
|
|
|
For the Three Months Ended March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Net earnings
|
|
$
|
1,658
|
|
|
$
|
1,605
|
|
Other comprehensive earnings (losses), net of income taxes:
|
|
|
|
|
||||
Change in currency translation adjustments:
|
|
|
|
|
||||
Unrealized gains (losses), net of income taxes of $156 in 2017 and $162 in 2016
|
|
303
|
|
|
538
|
|
||
Change in net loss and prior service cost:
|
|
|
|
|
||||
Net losses and prior service costs, net of income taxes of $- in 2017 and $3 in 2016
|
|
—
|
|
|
(10
|
)
|
||
Amortization of net losses, prior service costs and net transition costs, net of income taxes of ($9) in 2017 and ($8) in 2016
|
|
56
|
|
|
55
|
|
||
Change in fair value of derivatives accounted for as hedges:
|
|
|
|
|
||||
Gains (losses) recognized, net of income taxes of $11 in 2017 and $17 in 2016
|
|
(75
|
)
|
|
(62
|
)
|
||
(Gains) losses transferred to earnings, net of income taxes of $2 in 2017 and ($1) in 2016
|
|
5
|
|
|
(7
|
)
|
||
Total other comprehensive earnings
|
|
289
|
|
|
514
|
|
||
Total comprehensive earnings
|
|
1,947
|
|
|
2,119
|
|
||
Less comprehensive earnings attributable to:
|
|
|
|
|
||||
Noncontrolling interests
|
|
63
|
|
|
101
|
|
||
Comprehensive earnings attributable to PMI
|
|
$
|
1,884
|
|
|
$
|
2,018
|
|
|
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, 2016
|
$
|
—
|
|
|
$
|
1,929
|
|
|
$
|
29,842
|
|
|
$
|
(9,402
|
)
|
|
$
|
(35,613
|
)
|
|
$
|
1,768
|
|
|
|
$
|
(11,476
|
)
|
Net earnings
|
|
|
|
|
1,530
|
|
|
|
|
|
|
75
|
|
|
|
1,605
|
|
|||||||||||
Other comprehensive earnings (losses), net of income taxes
|
|
|
|
|
|
|
488
|
|
|
|
|
26
|
|
|
|
514
|
|
|||||||||||
Issuance of stock awards
|
|
|
(56
|
)
|
|
|
|
|
|
115
|
|
|
|
|
|
59
|
|
|||||||||||
Dividends declared ($1.02 per share)
|
|
|
|
|
(1,587
|
)
|
|
|
|
|
|
|
|
|
(1,587
|
)
|
||||||||||||
Payments to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
(12
|
)
|
|
|
(12
|
)
|
||||||||||||
Other
|
|
|
1
|
|
|
|
|
|
|
|
|
2
|
|
|
|
3
|
|
|||||||||||
Balances, March 31, 2016
|
$
|
—
|
|
|
$
|
1,874
|
|
|
$
|
29,785
|
|
|
$
|
(8,914
|
)
|
|
$
|
(35,498
|
)
|
|
$
|
1,859
|
|
|
|
$
|
(10,894
|
)
|
Balances, January 1, 2017
|
$
|
—
|
|
|
$
|
1,964
|
|
|
$
|
30,397
|
|
|
$
|
(9,559
|
)
|
|
$
|
(35,490
|
)
|
|
$
|
1,788
|
|
|
|
$
|
(10,900
|
)
|
Net earnings
|
|
|
|
|
1,590
|
|
|
|
|
|
|
68
|
|
|
|
1,658
|
|
|||||||||||
Other comprehensive earnings (losses), net of income taxes
|
|
|
|
|
|
|
294
|
|
|
|
|
(5
|
)
|
|
|
289
|
|
|||||||||||
Issuance of stock awards
|
|
|
(71
|
)
|
|
|
|
|
|
104
|
|
|
|
|
|
33
|
|
|||||||||||
Dividends declared ($1.04 per share)
|
|
|
|
|
(1,620
|
)
|
|
|
|
|
|
|
|
|
(1,620
|
)
|
||||||||||||
Payments to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
(17
|
)
|
|
|
(17
|
)
|
||||||||||||
Other
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
1
|
|
|
|
—
|
|
|||||||||||
Balances, March 31, 2017
|
$
|
—
|
|
|
$
|
1,892
|
|
|
$
|
30,367
|
|
|
$
|
(9,265
|
)
|
|
$
|
(35,386
|
)
|
|
$
|
1,835
|
|
|
|
$
|
(10,557
|
)
|
|
For the Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
|
|
|
||||
|
|
|
|
||||
Net earnings
|
$
|
1,658
|
|
|
$
|
1,605
|
|
|
|
|
|
||||
Adjustments to reconcile net earnings to operating cash flows:
|
|
|
|
||||
Depreciation and amortization
|
197
|
|
|
175
|
|
||
Deferred income tax provision
|
27
|
|
|
10
|
|
||
Asset impairment and exit costs, net of cash paid
|
(2
|
)
|
|
(14
|
)
|
||
Cash effects of changes:
|
|
|
|
||||
Receivables, net
|
504
|
|
|
(175
|
)
|
||
Inventories
|
1,243
|
|
|
49
|
|
||
Accounts payable
|
84
|
|
|
223
|
|
||
Income taxes
|
(510
|
)
|
|
(485
|
)
|
||
Accrued liabilities and other current assets
|
(2,207
|
)
|
|
(922
|
)
|
||
Pension plan contributions
|
(18
|
)
|
|
(52
|
)
|
||
Other
|
(133
|
)
|
|
48
|
|
||
Net cash provided by operating activities
|
843
|
|
|
462
|
|
||
|
|
|
|
||||
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
|
|
|
|
||||
|
|
|
|
||||
Capital expenditures
|
(292
|
)
|
|
(226
|
)
|
||
Investments in unconsolidated subsidiaries
|
(5
|
)
|
|
(7
|
)
|
||
Other
|
(282
|
)
|
|
(186
|
)
|
||
Net cash used in investing activities
|
(579
|
)
|
|
(419
|
)
|
|
For the Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
|
|
|
||||
|
|
|
|
||||
Short-term borrowing activity by original maturity:
|
|
|
|
||||
Net issuances (repayments) - maturities of 90 days or less
|
$
|
374
|
|
|
$
|
(136
|
)
|
Long-term debt proceeds
|
2,482
|
|
|
1,978
|
|
||
Long-term debt repaid
|
(814
|
)
|
|
(827
|
)
|
||
Dividends paid
|
(1,618
|
)
|
|
(1,585
|
)
|
||
Sale (purchase) of subsidiary shares to/(from) noncontrolling interests
|
—
|
|
|
6
|
|
||
Other
|
(83
|
)
|
|
(29
|
)
|
||
Net cash provided by (used in) financing activities
|
341
|
|
|
(593
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
232
|
|
|
77
|
|
||
|
|
|
|
||||
Cash and cash equivalents:
|
|
|
|
||||
Increase (Decrease)
|
837
|
|
|
(473
|
)
|
||
Balance at beginning of period
|
4,239
|
|
|
3,417
|
|
||
Balance at end of period
|
$
|
5,076
|
|
|
$
|
2,944
|
|
|
Number of Shares Granted
|
Weighted-Average Grant Date Fair Value Per RSU Award Granted
|
Compensation Expense Related to RSU Awards (in millions)
|
|||||
2017
|
1,202,060
|
|
$
|
98.47
|
|
$
|
35
|
|
2016
|
1,212,050
|
|
$
|
89.02
|
|
$
|
41
|
|
|
Number of Shares Granted
|
Grant Date Fair Value Subject to TSR Performance Factor Per Share
(a)
|
Grant Date Fair Value Subject to Other Performance Factors Per Share
(b)
|
Compensation Expense Related to PSU Awards (in millions)
|
|||||||
2017
|
393,460
|
|
$
|
128.72
|
|
$
|
98.29
|
|
$
|
17
|
|
2016
|
428,400
|
|
$
|
104.60
|
|
$
|
89.02
|
|
$
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||
|
|
For the Three Months Ended March 31,
|
|
For the Three Months Ended March 31,
|
||||||||||||
(in millions)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Service cost
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
50
|
|
|
$
|
50
|
|
Interest cost
|
|
3
|
|
|
4
|
|
|
23
|
|
|
31
|
|
||||
Expected return on plan assets
|
|
(3
|
)
|
|
(3
|
)
|
|
(76
|
)
|
|
(81
|
)
|
||||
Amortization:
|
|
|
|
|
|
|
|
|
||||||||
Net loss
|
|
—
|
|
|
1
|
|
|
44
|
|
|
44
|
|
||||
Prior service cost
|
|
2
|
|
|
1
|
|
|
1
|
|
|
1
|
|
||||
Net periodic pension cost
|
|
$
|
3
|
|
|
$
|
4
|
|
|
$
|
42
|
|
|
$
|
45
|
|
|
|
Goodwill
|
|
Other Intangible Assets, net
|
||||||||||||
(in millions)
|
|
March 31,
2017 |
|
December 31,
2016 |
|
March 31,
2017 |
|
December 31,
2016 |
||||||||
European Union
|
|
$
|
1,278
|
|
|
$
|
1,238
|
|
|
$
|
473
|
|
|
$
|
479
|
|
Eastern Europe, Middle East & Africa
|
|
388
|
|
|
372
|
|
|
199
|
|
|
200
|
|
||||
Asia
|
|
3,626
|
|
|
3,596
|
|
|
1,079
|
|
|
1,074
|
|
||||
Latin America & Canada
|
|
2,193
|
|
|
2,118
|
|
|
766
|
|
|
717
|
|
||||
Total
|
|
$
|
7,485
|
|
|
$
|
7,324
|
|
|
$
|
2,517
|
|
|
$
|
2,470
|
|
(in millions)
|
|
European
Union |
|
Eastern
Europe, Middle East & Africa |
|
Asia
|
|
Latin
America & Canada |
|
Total
|
||||||||||
Balances, December 31, 2016
|
|
$
|
1,238
|
|
|
$
|
372
|
|
|
$
|
3,596
|
|
|
$
|
2,118
|
|
|
$
|
7,324
|
|
Changes due to:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Currency
|
|
40
|
|
|
16
|
|
|
30
|
|
|
75
|
|
|
161
|
|
|||||
Balances, March 31, 2017
|
|
$
|
1,278
|
|
|
$
|
388
|
|
|
$
|
3,626
|
|
|
$
|
2,193
|
|
|
$
|
7,485
|
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||||||||||
(in millions)
|
|
Gross
Carrying Amount |
|
Accumulated
Amortization |
|
Gross
Carrying Amount |
|
Accumulated
Amortization |
||||||||
Non-amortizable intangible assets
|
|
$
|
1,356
|
|
|
|
|
$
|
1,455
|
|
|
|
||||
Amortizable intangible assets
|
|
1,773
|
|
|
$
|
612
|
|
|
1,598
|
|
|
$
|
583
|
|
||
Total other intangible assets
|
|
$
|
3,129
|
|
|
$
|
612
|
|
|
$
|
3,053
|
|
|
$
|
583
|
|
(dollars in millions)
|
Gross Carrying Amount
|
Initial Estimated
Useful Lives |
|
Weighted-Average
Remaining Useful Life |
||
Trademarks
|
$
|
1,535
|
|
2 - 40 years
|
|
19 years
|
Distribution networks
|
150
|
|
5 - 30 years
|
|
10 years
|
|
Other (including farmer
contracts and intellectual property rights) |
88
|
|
4 - 17 years
|
|
9 years
|
|
|
$
|
1,773
|
|
|
|
|
|
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||||||||||
|
|
|
|
Fair Value
|
|
|
|
Fair Value
|
||||||||||||
(in millions)
|
|
Balance Sheet Classification
|
|
At March 31, 2017
|
|
At December 31, 2016
|
|
Balance Sheet Classification
|
|
At March 31, 2017
|
|
At December 31, 2016
|
||||||||
Foreign exchange contracts designated as hedging instruments
|
|
Other current assets
|
|
$
|
82
|
|
|
$
|
207
|
|
|
Other accrued liabilities
|
|
$
|
10
|
|
|
$
|
66
|
|
|
|
Other assets
|
|
291
|
|
|
436
|
|
|
Other liabilities
|
|
101
|
|
|
36
|
|
||||
Foreign exchange contracts not designated as hedging instruments
|
|
Other current assets
|
|
106
|
|
|
161
|
|
|
Other accrued liabilities
|
|
96
|
|
|
61
|
|
||||
|
|
Other assets
|
|
1
|
|
|
9
|
|
|
Other liabilities
|
|
—
|
|
|
—
|
|
||||
Total derivatives
|
|
|
|
$
|
480
|
|
|
$
|
813
|
|
|
|
|
$
|
207
|
|
|
$
|
163
|
|
|
|
|
|
|
|
|
|
|
|
(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
|
||||||||||||
|
2017
|
|
2016
|
|
|
|
2017
|
|
2016
|
||||||||
Derivatives in Cash Flow Hedging Relationship
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
$
|
(86
|
)
|
|
$
|
(79
|
)
|
|
|
|
|
|
|
||||
|
|
|
|
|
Net revenues
|
|
$
|
9
|
|
|
$
|
5
|
|
||||
|
|
|
|
|
Cost of sales
|
|
—
|
|
|
14
|
|
||||||
|
|
|
|
|
Marketing, administration and research costs
|
|
(9
|
)
|
|
4
|
|
||||||
|
|
|
|
|
Interest expense, net
|
|
(3
|
)
|
|
(17
|
)
|
||||||
Derivatives in Net Investment Hedging Relationship
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
(249
|
)
|
|
(197
|
)
|
|
|
|
|
|
|
||||||
Total
|
$
|
(335
|
)
|
|
$
|
(276
|
)
|
|
|
|
$
|
(3
|
)
|
|
$
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
For the Three Months Ended March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Gain as of January 1,
|
|
$
|
97
|
|
|
$
|
59
|
|
Derivative (gains)/losses transferred to earnings
|
|
5
|
|
|
(7
|
)
|
||
Change in fair value
|
|
(75
|
)
|
|
(62
|
)
|
||
Gain/(loss) as of March 31,
|
|
$
|
27
|
|
|
$
|
(10
|
)
|
(in millions)
|
|
For the Three Months Ended March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Net earnings attributable to PMI
|
|
$
|
1,590
|
|
|
$
|
1,530
|
|
Less distributed and undistributed earnings attributable to share-based payment awards
|
|
3
|
|
|
5
|
|
||
Net earnings for basic and diluted EPS
|
|
$
|
1,587
|
|
|
$
|
1,525
|
|
Weighted-average shares for basic EPS
|
|
1,552
|
|
|
1,550
|
|
||
Plus contingently issuable performance stock units (PSUs)
|
|
1
|
|
|
—
|
|
||
Weighted-average shares for diluted EPS
|
|
1,553
|
|
|
1,550
|
|
(in millions)
|
|
For the Three Months Ended March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Net revenues:
|
|
|
|
|
||||
European Union
|
|
$
|
5,889
|
|
|
$
|
6,143
|
|
Eastern Europe, Middle East & Africa
|
|
3,695
|
|
|
3,997
|
|
||
Asia
|
|
4,838
|
|
|
4,689
|
|
||
Latin America & Canada
|
|
2,134
|
|
|
1,959
|
|
||
Net revenues
|
|
$
|
16,556
|
|
|
$
|
16,788
|
|
Earnings before income taxes:
|
|
|
|
|
||||
Operating companies income:
|
|
|
|
|
||||
European Union
|
|
$
|
772
|
|
|
$
|
906
|
|
Eastern Europe, Middle East & Africa
|
|
690
|
|
|
633
|
|
||
Asia
|
|
852
|
|
|
778
|
|
||
Latin America & Canada
|
|
177
|
|
|
229
|
|
||
Amortization of intangibles
|
|
(22
|
)
|
|
(18
|
)
|
||
General corporate expenses
|
|
(51
|
)
|
|
(46
|
)
|
||
Less:
|
|
|
|
|
||||
Equity (income)/loss in unconsolidated subsidiaries, net
|
|
(22
|
)
|
|
(9
|
)
|
||
Operating income
|
|
2,396
|
|
|
2,473
|
|
||
Interest expense, net
|
|
(219
|
)
|
|
(247
|
)
|
||
Earnings before income taxes
|
|
$
|
2,177
|
|
|
$
|
2,226
|
|
Type of Case
|
|
Number of Cases Pending as of
April 25, 2017 |
|
Number of Cases Pending as of
April 22, 2016 |
|
Number of Cases Pending as of
April 30, 2015 |
||
Individual Smoking and Health Cases
|
|
63
|
|
66
|
|
|
61
|
|
Smoking and Health Class Actions
|
|
11
|
|
11
|
|
|
11
|
|
Health Care Cost Recovery Actions
|
|
16
|
|
16
|
|
|
16
|
|
Lights Class Actions
|
|
—
|
|
—
|
|
|
—
|
|
Individual Lights Cases
|
|
1
|
|
3
|
|
|
2
|
|
Public Civil Actions
|
|
2
|
|
3
|
|
|
2
|
|
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. In April 2004, the court awarded “moral damages” of R$1,000 (approximately $318) 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 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.
|
|
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. In September 2015, plaintiff appealed to the Superior Court of Justice. In addition, the defendants filed a constitutional appeal to the Federal Supreme Tribunal on the basis that 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 Létourneau
|
|
Class Action
|
|
On May 27, 2015, the Superior Court of the District of Montreal, Province of Quebec ruled in favor of the
Létourneau
class on liability and awarded a total of CAD 131 million (approximately $97 million) in punitive damages, allocating CAD 46 million (approximately $34 million) to our subsidiary. The trial court ordered defendants to pay the full punitive damage award into a trust within 60 days. The court did not order the payment of compensatory damages.
|
|
In June 2015, our subsidiary commenced the appellate process with the Court of Appeal of Quebec. Our subsidiary also filed a motion to cancel the trial court’s order for payment into a trust notwithstanding appeal. In July 2015, the Court of Appeal granted the motion to cancel and overturned the trial court’s ruling that our subsidiary make the payment into a trust. In August 2015, plaintiffs filed a motion for security with the Court of Appeal covering both the
Létourneau
case and the
Blais
case described below. In October 2015, the Court of Appeal granted the motion and ordered our subsidiary to furnish security totaling CAD 226 million (approximately $167 million) to cover both the
Létourneau
and
Blais
cases. The hearing for the merits appeal took place in November 2016. (See below for further detail.)
|
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 $11.4 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 $2.3 billion)). The trial court awarded CAD 90,000 (approximately $66,300) in punitive damages, allocating CAD 30,000 (approximately $22,100) to our subsidiary. The trial court ordered defendants to pay CAD 1 billion (approximately $737 million) of the compensatory damage award, CAD 200 million (approximately $147 million) of which is our subsidiary’s portion, into a trust within 60 days.
|
|
In June 2015, our subsidiary commenced the appellate process with the Court of Appeal of Quebec. Our subsidiary also filed a motion to cancel the trial court’s order for payment into a trust notwithstanding appeal. In July 2015, the Court of Appeal granted the motion to cancel and overturned the trial court’s ruling that our subsidiary make the payment into a trust. In August 2015, plaintiffs filed a motion for security with the Court of Appeal. In October 2015, the Court of Appeal granted the motion and ordered our subsidiary to furnish security totaling, together with the
Létourneau
case, CAD 226 million (approximately $167 million). The hearing for the merits appeal took place in November 2016. (See below for further detail.)
|
Date
|
|
Location of
Court/Name of Plaintiff |
|
Type of
Case |
|
Verdict
|
|
Post-Trial
Developments |
August 5, 2016
|
|
Argentina/Hugo Lespada
|
|
Individual Action
|
|
On August 5, 2016, the Civil Court No. 14 - Mar del Plata, issued a verdict in favor of plaintiff, an individual smoker, and awarded him ARS 110,000 (approximately $7,100), plus interest, in compensatory and moral damages.
The Court found that our subsidiary failed to warn plaintiff of the risk of becoming addicted to cigarettes.
|
|
On August 23, 2016, our subsidiary filed its notice of appeal.
|
•
|
63
cases brought by individual plaintiffs in Argentina (
35
), Brazil (
14
), Canada (
2
), Chile (
5
), Costa Rica (
2
), Italy (
2
), the Philippines (
1
), Russia (
1
) and Scotland (
1
), compared with
66
such cases on
April 22, 2016
, and
61
cases on
April 30, 2015
; and
|
•
|
11
cases brought on behalf of classes of individual plaintiffs in Brazil (
2
) and Canada (
9
), compared with
11
such cases on
April 22, 2016
and
11
such cases on
April 30, 2015
.
|
(in millions)
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
U.S. dollar notes, 1.125% to 6.375% (average interest rate 3.520%), due through 2044
|
|
$
|
21,796
|
|
|
$
|
19,857
|
|
Foreign currency obligations:
|
|
|
|
|
||||
Euro notes, 1.750% to 3.125% (average interest rate 2.402%), due through 2036
|
|
7,032
|
|
|
6,828
|
|
||
Swiss franc notes, 0.750% to 2.000% (average interest rate 1.269%), due through 2024
|
|
1,354
|
|
|
1,312
|
|
||
Other (average interest rate 3.586%), due through 2024
|
|
160
|
|
|
427
|
|
||
|
|
30,342
|
|
|
28,424
|
|
||
Less current portion of long-term debt
|
|
1,754
|
|
|
2,573
|
|
||
|
|
$
|
28,588
|
|
|
$
|
25,851
|
|
Type
|
|
Committed
Credit
Facilities
|
||
364-day revolving credit, expiring February 6, 2018
|
|
$
|
2.0
|
|
Multi-year revolving credit, expiring February 28, 2021
|
|
2.5
|
|
|
Multi-year revolving credit, expiring October 1, 2020
(1)
|
|
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, 2017 |
|
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
|
|
$
|
480
|
|
|
$
|
—
|
|
|
$
|
480
|
|
|
$
|
—
|
|
Total assets
|
|
$
|
480
|
|
|
$
|
—
|
|
|
$
|
480
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Debt
|
|
$
|
32,005
|
|
|
$
|
31,834
|
|
|
$
|
171
|
|
|
$
|
—
|
|
Foreign exchange contracts
|
|
207
|
|
|
—
|
|
|
207
|
|
|
—
|
|
||||
Total liabilities
|
|
$
|
32,212
|
|
|
$
|
31,834
|
|
|
$
|
378
|
|
|
$
|
—
|
|
(in millions)
|
|
At March 31, 2017
|
|
At December 31, 2016
|
|
At March 31, 2016
|
||||||
Currency translation adjustments
|
|
$
|
(5,783
|
)
|
|
$
|
(6,091
|
)
|
|
$
|
(5,617
|
)
|
Pension and other benefits
|
|
(3,509
|
)
|
|
(3,565
|
)
|
|
(3,287
|
)
|
|||
Derivatives accounted for as hedges
|
|
27
|
|
|
97
|
|
|
(10
|
)
|
|||
Total accumulated other comprehensive losses
|
|
$
|
(9,265
|
)
|
|
$
|
(9,559
|
)
|
|
$
|
(8,914
|
)
|
(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, 2017
|
|
|
|
|
|
|
|||||||||||||
Assets
|
|
|
|
|
|
|
|||||||||||||
Foreign exchange contracts
|
$
|
480
|
|
$
|
—
|
|
$
|
480
|
|
$
|
(170
|
)
|
$
|
(258
|
)
|
$
|
52
|
|
|
Liabilities
|
|
|
|
|
|
|
|||||||||||||
Foreign exchange contracts
|
$
|
207
|
|
$
|
—
|
|
$
|
207
|
|
$
|
(170
|
)
|
$
|
(11
|
)
|
$
|
26
|
|
|
At December 31, 2016
|
|
|
|
|
|
|
|||||||||||||
Assets
|
|
|
|
|
|
|
|||||||||||||
Foreign exchange contracts
|
$
|
813
|
|
$
|
—
|
|
$
|
813
|
|
$
|
(126
|
)
|
$
|
(607
|
)
|
$
|
80
|
|
|
Liabilities
|
|
|
|
|
|
|
|||||||||||||
Foreign exchange contracts
|
$
|
163
|
|
$
|
—
|
|
$
|
163
|
|
$
|
(126
|
)
|
$
|
(31
|
)
|
$
|
6
|
|
|
|
For the Three Months Ended March 31,
|
|||||
(in millions)
|
|
2017
|
2016
|
||||
Net revenues
|
|
$
|
840
|
|
$
|
777
|
|
(in millions)
|
|
At March 31, 2017
|
At December 31, 2016
|
||||
|
|
|
|
||||
Receivables
|
|
$
|
394
|
|
$
|
289
|
|
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, 2016
|
|
$
|
0.98
|
|
|
|
|
2016 Asset impairment and exit costs
|
|
—
|
|
|
|
||
2016 Tax items
|
|
—
|
|
|
|
||
Subtotal of 2016 items
|
|
—
|
|
|
|
||
2017 Asset impairment and exit costs
|
|
—
|
|
|
|
||
2017 Tax items
|
|
0.04
|
|
|
|
||
Subtotal of 2017 items
|
|
0.04
|
|
|
|
||
Currency
|
|
—
|
|
|
|
||
Interest
|
|
0.02
|
|
|
|
||
Change in tax rate
|
|
0.01
|
|
|
|
||
Operations
|
|
(0.03
|
)
|
|
|
||
For the three months ended March 31, 2017
|
|
$
|
1.02
|
|
|
4.1
|
%
|
•
|
European Union: Unfavorable volume/mix and higher marketing, administration and research costs, partially offset by higher pricing; and
|
•
|
Latin America & Canada: Unfavorable volume/mix and higher manufacturing costs, partially offset by higher pricing;
|
•
|
EEMA: Higher pricing and lower marketing, administration and research costs, partially offset by unfavorable volume/mix; and
|
•
|
Asia: Higher pricing, partially offset by unfavorable volume/mix, higher marketing, administration and research costs and higher manufacturing costs.
|
|
|
For the Three Months Ended March 31,
|
||||||
(in millions)
|
|
2017
|
|
2016
|
||||
Net revenues:
|
|
|
|
|
||||
European Union
|
|
$
|
5,889
|
|
|
$
|
6,143
|
|
Eastern Europe, Middle East & Africa
|
|
3,695
|
|
|
3,997
|
|
||
Asia
|
|
4,838
|
|
|
4,689
|
|
||
Latin America & Canada
|
|
2,134
|
|
|
1,959
|
|
||
Net revenues
|
|
$
|
16,556
|
|
|
$
|
16,788
|
|
Excise taxes on products:
|
|
|
|
|
||||
European Union
|
|
$
|
4,149
|
|
|
$
|
4,280
|
|
Eastern Europe, Middle East & Africa
|
|
2,218
|
|
|
2,395
|
|
||
Asia
|
|
2,597
|
|
|
2,721
|
|
||
Latin America & Canada
|
|
1,528
|
|
|
1,309
|
|
||
Excise taxes on products
|
|
$
|
10,492
|
|
|
$
|
10,705
|
|
Operating income:
|
|
|
|
|
||||
Operating companies income:
|
|
|
|
|
||||
European Union
|
|
$
|
772
|
|
|
$
|
906
|
|
Eastern Europe, Middle East & Africa
|
|
690
|
|
|
633
|
|
||
Asia
|
|
852
|
|
|
778
|
|
||
Latin America & Canada
|
|
177
|
|
|
229
|
|
||
Amortization of intangibles
|
|
(22
|
)
|
|
(18
|
)
|
||
General corporate expenses
|
|
(51
|
)
|
|
(46
|
)
|
||
Less:
|
|
|
|
|
||||
Equity (income)/loss in unconsolidated subsidiaries, net
|
|
(22
|
)
|
|
(9
|
)
|
||
Operating income
|
|
$
|
2,396
|
|
|
$
|
2,473
|
|
PMI Net Revenues by Product Category
|
||||||||
|
|
For the Three Months Ended March 31,
|
||||||
(in millions)
|
|
2017
|
|
2016
|
||||
Combustible Products
|
|
|
|
|
||||
European Union
|
|
$
|
5,852
|
|
|
$
|
6,134
|
|
Eastern Europe, Middle East & Africa
|
|
3,687
|
|
|
3,998
|
|
||
Asia
|
|
4,442
|
|
|
4,642
|
|
||
Latin America & Canada
|
|
2,134
|
|
|
1,958
|
|
||
Total Combustible Products
|
|
$
|
16,116
|
|
|
$
|
16,732
|
|
Reduced-Risk Products
|
|
|
|
|
||||
European Union
|
|
$
|
36
|
|
|
$
|
9
|
|
Eastern Europe, Middle East & Africa
|
|
8
|
|
|
(1
|
)
|
||
Asia
|
|
396
|
|
|
47
|
|
||
Latin America & Canada
|
|
—
|
|
|
1
|
|
||
Total Reduced-Risk Products
|
|
$
|
440
|
|
|
$
|
56
|
|
|
|
|
|
|
||||
Total PMI Net Revenues
|
|
$
|
16,556
|
|
|
$
|
16,788
|
|
•
|
European Union, principally Italy and Spain, partly offset by Poland;
|
•
|
EEMA, mainly North Africa, primarily Egypt and Tunisia, as well as Russia and Ukraine;
|
•
|
Asia, principally Indonesia, Japan, Korea, Pakistan and the Philippines; and
|
•
|
Latin America & Canada, principally Argentina, Canada and Mexico.
|
|
|
For the Three Months Ended March 31,
|
|
|
|||||||||||
(in millions)
|
|
2017
|
|
2016
|
|
Variance
|
|
%
|
|||||||
Net revenues
|
|
$
|
16,556
|
|
|
$
|
16,788
|
|
|
$
|
(232
|
)
|
|
(1.4
|
)%
|
Excise taxes on products
|
|
10,492
|
|
|
10,705
|
|
|
(213
|
)
|
|
(2.0
|
)%
|
|||
Net revenues, excluding excise taxes on products
|
|
$
|
6,064
|
|
|
$
|
6,083
|
|
|
$
|
(19
|
)
|
|
(0.3
|
)%
|
•
|
unfavorable
volume/mix (
$307 million
) and
|
•
|
unfavorable
currency (
$120 million
), partly offset by
|
•
|
price increases (
$408 million
).
|
•
|
lower excise taxes resulting from volume/mix (
$881 million
) and
|
•
|
favorable currency (
$666 million
), partly offset by
|
•
|
higher excise taxes resulting from changes in retail prices and tax rates (
$1.3 billion
).
|
|
|
For the Three Months Ended March 31,
|
|
|
|||||||||||
(in millions)
|
|
2017
|
|
2016
|
|
Variance
|
|
%
|
|||||||
Cost of sales
|
|
$
|
2,177
|
|
|
$
|
2,096
|
|
|
$
|
81
|
|
|
3.9
|
%
|
Marketing, administration and research costs
|
|
1,469
|
|
|
1,496
|
|
|
(27
|
)
|
|
(1.8
|
)%
|
|||
Operating income
|
|
2,396
|
|
|
2,473
|
|
|
(77
|
)
|
|
(3.1
|
)%
|
•
|
higher cost of sales resulting from volume/mix (
$68 million
) and
|
•
|
higher manufacturing costs (
$36 million
), partly offset by
|
•
|
favorable currency (
$23 million
).
|
•
|
favorable currency (
$86 million
), partly offset by
|
•
|
higher expenses (
$59 million
, largely reflecting increased support behind reduced-risk products).
|
•
|
unfavorable volume/mix (
$375 million
),
|
•
|
higher marketing, administration and research costs (
$59 million
),
|
•
|
higher manufacturing costs (
$36 million
) and
|
•
|
unfavorable currency (
$11 million
), partly offset by
|
•
|
price increases (
$408 million
).
|
•
|
regulatory restrictions on our products, including restrictions on the packaging, marketing, and sale of tobacco or other nicotine-containing products that could reduce our competitiveness, eliminate our ability to communicate with adult smokers, or even ban certain of our products;
|
•
|
fiscal challenges, such as excise tax increases and discriminatory tax structures;
|
•
|
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 8.
Contingencies
; and
|
•
|
governmental investigations.
|
•
|
health warnings covering 65% of the front and back panels of cigarette packs, with an option for Member States to further standardize tobacco packaging, including the introduction of plain packaging;
|
•
|
a ban on characterizing flavors in some tobacco products, with a transition period for menthol expiring in May 2020;
|
•
|
security features and tracking and tracing measures some of which could increase operational expenses depending on the scope of the implementing regulation; and
|
•
|
a framework for the regulation of novel tobacco products and e-cigarettes, including requirements for health warnings and information leaflets, a prohibition on product packaging text related to reduced risk, and the introduction of notification requirements or authorization procedures in advance of commercialization.
|
•
|
to develop RRPs that adult smokers who would otherwise continue to smoke find to be satisfying alternatives to smoking;
|
•
|
for those adult smokers, our goal is to offer RRPs with a scientifically substantiated risk-reduction profile that approaches as closely as possible that associated with smoking cessation;
|
•
|
to substantiate the reduction of risk for the individual adult smoker and the reduction of harm to the population as a whole, based on scientific evidence of the highest standard that is made available for scrutiny and review by external independent scientists and relevant regulatory bodies; and
|
•
|
to advocate for the development of science-based regulatory frameworks for the development and commercialization of RRPs, including the communication of scientifically substantiated information to enable adult consumers to make better health choices.
|
European Union
|
|
For the Three Months Ended March 31,
|
|
|
|||||||||||
(in millions)
|
|
2017
|
|
2016
|
|
Variance
|
|
%
|
|||||||
Net revenues
|
|
$
|
5,889
|
|
|
$
|
6,143
|
|
|
$
|
(254
|
)
|
|
(4.1
|
)%
|
Excise taxes on products
|
|
4,149
|
|
|
4,280
|
|
|
(131
|
)
|
|
(3.1
|
)%
|
|||
Net revenues, excluding excise taxes on products
|
|
1,740
|
|
|
1,863
|
|
|
(123
|
)
|
|
(6.6
|
)%
|
|||
Operating companies income
|
|
772
|
|
|
906
|
|
|
(134
|
)
|
|
(14.8
|
)%
|
•
|
unfavorable volume/mix (
$115 million
) and
|
•
|
unfavorable currency (
$55 million
), partly offset by
|
•
|
price increases (
$47 million
).
|
•
|
unfavorable volume/mix (
$109 million
),
|
•
|
higher marketing, administration and research costs (
$41 million
, primarily related to increased investment behind reduced-risk products) and
|
•
|
unfavorable currency (
$28 million
), partially offset by
|
•
|
price increases (
$47 million
).
|
European Union PMI Shipment Volume (Million Units)
|
|||||||
|
First-Quarter
|
||||||
|
|
|
|
|
|||
|
2017
|
|
|
2016
|
|
Change
|
|
|
|
|
|
|
|||
Cigarettes
|
42,540
|
|
|
45,993
|
|
(7.5
|
)%
|
Heated Tobacco Units
|
184
|
|
|
16
|
|
+100%
|
|
Total European Union
|
42,724
|
|
|
46,009
|
|
(7.1
|
)%
|
|
France Key Market Data
|
|||||||
|
First-Quarter
|
|||||||
|
|
|
|
|
Change
|
|
||
|
2017
|
|
|
2016
|
|
|
% / p.p.
|
|
Total Market (billion units)
|
10.8
|
|
|
10.7
|
|
|
1.4
|
%
|
|
|
|
|
|
|
|||
PMI Shipments (million units)
|
4,726
|
|
|
4,779
|
|
|
(1.1
|
)%
|
|
|
|
|
|
|
|||
PMI Market Share
|
|
|
|
|
|
|||
Marlboro
|
26.6
|
%
|
|
26.1
|
%
|
|
0.5
|
|
Philip Morris
|
10.3
|
%
|
|
10.1
|
%
|
|
0.2
|
|
Chesterfield
|
3.1
|
%
|
|
3.1
|
%
|
|
—
|
|
Others*
|
2.8
|
%
|
|
2.8
|
%
|
|
—
|
|
Total
|
42.8
|
%
|
|
42.1
|
%
|
|
0.7
|
|
|
Germany Key Market Data
|
|||||||
|
First-Quarter
|
|||||||
|
|
|
|
|
Change
|
|
||
|
2017
|
|
|
2016
|
|
|
% / p.p.
|
|
Total Market (billion units)
|
17.5
|
|
|
17.8
|
|
|
(2.2
|
)%
|
|
|
|
|
|
|
|||
PMI Shipments (million units)
|
6,662
|
|
|
6,767
|
|
|
(1.6
|
)%
|
|
|
|
|
|
|
|||
PMI Market Share
|
|
|
|
|
|
|||
Marlboro
|
23.4
|
%
|
|
22.9
|
%
|
|
0.5
|
|
L&M
|
11.7
|
%
|
|
11.8
|
%
|
|
(0.1
|
)
|
Chesterfield
|
1.6
|
%
|
|
1.6
|
%
|
|
—
|
|
Others*
|
1.5
|
%
|
|
1.6
|
%
|
|
(0.1
|
)
|
Total
|
38.2
|
%
|
|
37.9
|
%
|
|
0.3
|
|
|
Italy Key Market Data
|
|||||||
|
First-Quarter
|
|||||||
|
|
|
|
|
Change
|
|
||
|
2017
|
|
|
2016
|
|
|
% / p.p.
|
|
Total Market (billion units)
|
16.2
|
|
|
17.1
|
|
|
(5.2
|
)%
|
|
|
|
|
|
|
|||
PMI Shipments (million units)
|
7,801
|
|
|
9,853
|
|
|
(20.8
|
)%
|
|
|
|
|
|
|
|||
PMI Market Share
|
|
|
|
|
|
|||
Marlboro
|
23.5
|
%
|
|
24.4
|
%
|
|
(0.9
|
)
|
Chesterfield
|
11.3
|
%
|
|
11.6
|
%
|
|
(0.3
|
)
|
Philip Morris
|
7.9
|
%
|
|
9.0
|
%
|
|
(1.1
|
)
|
HEETS
|
0.5
|
%
|
|
—
|
%
|
|
0.5
|
|
Others
|
8.5
|
%
|
|
8.5
|
%
|
|
—
|
|
Total
|
51.7
|
%
|
|
53.5
|
%
|
|
(1.8
|
)
|
|
Poland Key Market Data
|
|||||||
|
First-Quarter
|
|||||||
|
|
|
|
|
Change
|
|
||
|
2017
|
|
|
2016
|
|
|
% / p.p.
|
|
Total Cigarette Market (billion units)
|
10.2
|
|
|
10.1
|
|
|
1.5
|
%
|
|
|
|
|
|
|
|||
PMI Cigarette Shipments (million units)
|
4,302
|
|
|
4,145
|
|
|
3.8
|
%
|
|
|
|
|
|
|
|||
PMI Cigarette Market Share
|
|
|
|
|
|
|||
Marlboro
|
10.2
|
%
|
|
11.2
|
%
|
|
(1.0
|
)
|
L&M
|
18.8
|
%
|
|
18.5
|
%
|
|
0.3
|
|
Chesterfield
|
9.9
|
%
|
|
8.6
|
%
|
|
1.3
|
|
Others
|
3.2
|
%
|
|
2.9
|
%
|
|
0.3
|
|
Total
|
42.1
|
%
|
|
41.2
|
%
|
|
0.9
|
|
|
Spain Key Market Data
|
|||||||
|
First-Quarter
|
|||||||
|
|
|
|
|
Change
|
|
||
|
2017
|
|
|
2016
|
|
|
% / p.p.
|
|
Total Market (billion units)
|
9.9
|
|
|
10.4
|
|
|
(4.7
|
)%
|
|
|
|
|
|
|
|||
PMI Shipments (million units)
|
3,185
|
|
|
4,022
|
|
|
(20.8
|
)%
|
|
|
|
|
|
|
|||
PMI Market Share
|
|
|
|
|
|
|||
Marlboro
|
16.2
|
%
|
|
17.7
|
%
|
|
(1.5
|
)
|
L&M
|
5.5
|
%
|
|
5.6
|
%
|
|
(0.1
|
)
|
Chesterfield
|
8.7
|
%
|
|
8.9
|
%
|
|
(0.2
|
)
|
Others*
|
1.8
|
%
|
|
1.9
|
%
|
|
(0.1
|
)
|
Total
|
32.2
|
%
|
|
34.1
|
%
|
|
(1.9
|
)
|
Eastern Europe, Middle East & Africa
|
|
For the Three Months Ended March 31,
|
|
|
|||||||||||
(in millions)
|
|
2017
|
|
2016
|
|
Variance
|
|
%
|
|||||||
Net revenues
|
|
$
|
3,695
|
|
|
$
|
3,997
|
|
|
$
|
(302
|
)
|
|
(7.6
|
)%
|
Excise taxes on products
|
|
2,218
|
|
|
2,395
|
|
|
(177
|
)
|
|
(7.4
|
)%
|
|||
Net revenues, excluding excise taxes on products
|
|
1,477
|
|
|
1,602
|
|
|
(125
|
)
|
|
(7.8
|
)%
|
|||
Operating companies income
|
|
690
|
|
|
633
|
|
|
57
|
|
|
9.0
|
%
|
•
|
unfavorable volume/mix (
$179 million
) and
|
•
|
unfavorable currency (
$99 million
), partly offset by
|
•
|
price increases (
$153 million
).
|
•
|
price increases (
$153 million
) and
|
•
|
lower marketing, administration and research costs (
$30 million
), partly offset by
|
•
|
unfavorable volume/mix (
$135 million
).
|
EEMA PMI Shipment Volume (Million Units)
|
|||||||
|
First-Quarter
|
||||||
|
|
|
|
|
|||
|
2017
|
|
|
2016
|
|
Change
|
|
|
|
|
|
|
|||
Cigarettes
|
56,574
|
|
|
63,126
|
|
(10.4
|
)%
|
Heated Tobacco Units
|
105
|
|
|
2
|
|
+100%
|
|
Total EEMA
|
56,679
|
|
|
63,128
|
|
(10.2
|
)%
|
|
North Africa Key Market Data
|
|||||||
|
First-Quarter
|
|||||||
|
|
|
|
|
Change
|
|
||
|
2017
|
|
|
2016
|
|
|
% / p.p.
|
|
Total Cigarette Market (billion units)
|
33.1
|
|
|
34.4
|
|
|
(3.5
|
)%
|
|
|
|
|
|
|
|||
PMI Cigarette Shipments (million units)
|
8,780
|
|
|
10,230
|
|
|
(14.2
|
)%
|
|
|
|
|
|
|
|||
PMI Cigarette Market Share
|
|
|
|
|
|
|||
Marlboro
|
8.3
|
%
|
|
7.3
|
%
|
|
1.0
|
|
L&M
|
12.1
|
%
|
|
14.1
|
%
|
|
(2.0
|
)
|
Others
|
2.7
|
%
|
|
3.1
|
%
|
|
(0.4
|
)
|
Total
|
23.1
|
%
|
|
24.5
|
%
|
|
(1.4
|
)
|
|
Turkey Key Market Data
|
|||||||
|
First-Quarter
|
|||||||
|
|
|
|
|
Change
|
|
||
|
2017
|
|
|
2016
|
|
|
% / p.p.
|
|
Total Cigarette Market (billion units)
|
22.6
|
|
|
22.4
|
|
|
0.8
|
%
|
|
|
|
|
|
|
|||
PMI Cigarette Shipments (million units)
|
9,830
|
|
|
10,345
|
|
|
(5.0
|
)%
|
|
|
|
|
|
|
|||
PMI Cigarette Market Share
|
|
|
|
|
|
|||
Marlboro
|
9.9
|
%
|
|
10.0
|
%
|
|
(0.1
|
)
|
Parliament
|
11.3
|
%
|
|
11.5
|
%
|
|
(0.2
|
)
|
Lark
|
6.8
|
%
|
|
7.8
|
%
|
|
(1.0
|
)
|
Others
|
14.9
|
%
|
|
14.6
|
%
|
|
0.3
|
|
Total
|
42.9
|
%
|
|
43.9
|
%
|
|
(1.0
|
)
|
Asia
|
|
For the Three Months Ended March 31,
|
|
|
|||||||||||
(in millions)
|
|
2017
|
|
2016
|
|
Variance
|
|
%
|
|||||||
Net revenues
|
|
$
|
4,838
|
|
|
$
|
4,689
|
|
|
$
|
149
|
|
|
3.2
|
%
|
Excise taxes on products
|
|
2,597
|
|
|
2,721
|
|
|
(124
|
)
|
|
(4.6
|
)%
|
|||
Net revenues, excluding excise taxes on products
|
|
2,241
|
|
|
1,968
|
|
|
273
|
|
|
13.9
|
%
|
|||
Operating companies income
|
|
852
|
|
|
778
|
|
|
74
|
|
|
9.5
|
%
|
•
|
price increases (
$143 million
),
|
•
|
favorable volume/mix (
$74 million
) and
|
•
|
favorable currency (
$56 million
).
|
•
|
price increases (
$143 million
) and
|
•
|
favorable currency (
$54 million
), partly offset by
|
•
|
unfavorable volume/mix (
$56 million
),
|
•
|
higher marketing, administration and research costs (
$45 million
, primarily related to increased investment behind reduced-risk products, notably in Japan) and
|
•
|
higher manufacturing costs (
$23 million
).
|
Asia PMI Shipment Volume (Million Units)
|
|
|||||||
|
First-Quarter
|
|
||||||
|
|
|
|
|
|
|||
|
2017
|
|
|
2016
|
|
Change
|
|
|
|
|
|
|
|
|
|||
Cigarettes
|
55,142
|
|
|
65,222
|
|
(15.5
|
)%
|
|
Heated Tobacco Units
|
4,145
|
|
|
435
|
|
+100%
|
|
|
Total Asia
|
59,287
|
|
|
65,657
|
|
(9.7
|
)%
|
|
|
Indonesia Key Market Data
|
|||||||
|
First-Quarter
|
|||||||
|
|
|
|
|
Change
|
|
||
|
2017
|
|
|
2016
|
|
|
% / p.p.
|
|
Total Cigarette Market (billion units)
|
71.0
|
|
|
75.2
|
|
|
(5.5
|
)%
|
|
|
|
|
|
|
|||
PMI Cigarette Shipments (million units)
|
23,399
|
|
|
25,142
|
|
|
(6.9
|
)%
|
|
|
|
|
|
|
|||
PMI Cigarette Market Share
|
|
|
|
|
|
|||
Sampoerna A
|
13.9
|
%
|
|
14.3
|
%
|
|
(0.4
|
)
|
Dji Sam Soe
|
6.3
|
%
|
|
6.6
|
%
|
|
(0.3
|
)
|
Sampoerna U
|
5.0
|
%
|
|
4.5
|
%
|
|
0.5
|
|
Others
|
7.8
|
%
|
|
8.1
|
%
|
|
(0.3
|
)
|
Total
|
33.0
|
%
|
|
33.5
|
%
|
|
(0.5
|
)
|
|
Indonesia Segmentation Data
|
|||||||
|
First-Quarter
|
|||||||
|
|
|
|
|
Change
|
|
||
|
2017
|
|
|
2016
|
|
|
p.p.
|
|
Segment % of Total Market
|
|
|
|
|
|
|||
Hand-Rolled Kretek (SKT)
|
18.2
|
%
|
|
18.8
|
%
|
|
(0.6
|
)
|
Machine-Made Kretek (SKM)
|
76.3
|
%
|
|
75.2
|
%
|
|
1.1
|
|
Whites (SPM)
|
5.5
|
%
|
|
6.0
|
%
|
|
(0.5
|
)
|
Total
|
100.0
|
%
|
|
100.0
|
%
|
|
—
|
|
|
|
|
|
|
|
|||
PMI % Share of Segment
|
|
|
|
|
|
|||
Hand-Rolled Kretek (SKT)
|
38.0
|
%
|
|
38.1
|
%
|
|
(0.1
|
)
|
Machine-Made Kretek (SKM)
|
28.6
|
%
|
|
28.5
|
%
|
|
0.1
|
|
Whites (SPM)
|
76.5
|
%
|
|
81.3
|
%
|
|
(4.8
|
)
|
|
Japan Key Market Data
|
|||||||
|
First-Quarter
|
|||||||
|
|
|
|
|
Change
|
|
||
|
2017
|
|
|
2016
|
|
|
% / p.p.
|
|
Total Market (billion units)
|
40.6
|
|
|
43.9
|
|
|
(7.4
|
)%
|
|
|
|
|
|
|
|||
PMI Shipments (million units)
|
|
|
|
|
|
|||
Cigarettes
|
10,701
|
|
|
11,551
|
|
|
(7.4
|
)%
|
Heated Tobacco Units
|
4,145
|
|
|
435
|
|
|
+100%
|
|
Total
|
14,846
|
|
|
11,986
|
|
|
23.9
|
%
|
|
|
|
|
|
|
|||
PMI Market Share
|
|
|
|
|
|
|||
Marlboro
|
10.0
|
%
|
|
10.6
|
%
|
|
(0.6
|
)
|
Marlboro HeatSticks
|
7.1
|
%
|
|
0.8
|
%
|
|
6.3
|
|
Parliament
|
2.2
|
%
|
|
2.3
|
%
|
|
(0.1
|
)
|
Lark
|
9.2
|
%
|
|
9.2
|
%
|
|
—
|
|
Others
|
1.5
|
%
|
|
1.7
|
%
|
|
(0.2
|
)
|
Total
|
30.0
|
%
|
|
24.6
|
%
|
|
5.4
|
|
|
Korea Key Market Data
|
|||||||
|
First-Quarter
|
|||||||
|
|
|
|
|
Change
|
|
||
|
2017
|
|
|
2016
|
|
|
% / p.p.
|
|
Total Cigarette Market (billion units)
|
16.1
|
|
|
17.0
|
|
|
(5.2
|
)%
|
|
|
|
|
|
|
|||
PMI Cigarette Shipments (million units)
|
3,049
|
|
|
3,543
|
|
|
(13.9
|
)%
|
|
|
|
|
|
|
|||
PMI Cigarette Market Share
|
|
|
|
|
|
|||
Marlboro
|
8.7
|
%
|
|
9.4
|
%
|
|
(0.7
|
)
|
Parliament
|
8.0
|
%
|
|
7.5
|
%
|
|
0.5
|
|
Virginia S.
|
2.0
|
%
|
|
3.4
|
%
|
|
(1.4
|
)
|
Others
|
0.4
|
%
|
|
0.6
|
%
|
|
(0.2
|
)
|
Total
|
19.1
|
%
|
|
20.9
|
%
|
|
(1.8
|
)
|
|
Philippines Key Market Data
|
|||||||
|
First-Quarter
|
|||||||
|
|
|
|
|
Change
|
|
||
|
2017
|
|
|
2016
|
|
|
% / p.p.
|
|
Total Cigarette Market (billion units)
|
16.6
|
|
|
19.6
|
|
|
(15.6
|
)%
|
|
|
|
|
|
|
|||
PMI Cigarette Shipments (million units)
|
10,955
|
|
|
14,474
|
|
|
(24.3
|
)%
|
|
|
|
|
|
|
|||
PMI Cigarette Market Share
|
|
|
|
|
|
|||
Marlboro
|
32.5
|
%
|
|
27.5
|
%
|
|
5.0
|
|
Fortune
|
17.4
|
%
|
|
25.0
|
%
|
|
(7.6
|
)
|
Jackpot
|
5.9
|
%
|
|
9.0
|
%
|
|
(3.1
|
)
|
Others
|
10.3
|
%
|
|
12.2
|
%
|
|
(1.9
|
)
|
Total
|
66.1
|
%
|
|
73.7
|
%
|
|
(7.6
|
)
|
Latin America & Canada
|
|
For the Three Months Ended March 31,
|
|
|
|||||||||||
(in millions)
|
|
2017
|
|
2016
|
|
Variance
|
|
%
|
|||||||
Net revenues
|
|
$
|
2,134
|
|
|
$
|
1,959
|
|
|
$
|
175
|
|
|
8.9
|
%
|
Excise taxes on products
|
|
1,528
|
|
|
1,309
|
|
|
219
|
|
|
16.7
|
%
|
|||
Net revenues, excluding excise taxes on products
|
|
606
|
|
|
650
|
|
|
(44
|
)
|
|
(6.8
|
)%
|
|||
Operating companies income
|
|
177
|
|
|
229
|
|
|
(52
|
)
|
|
(22.7
|
)%
|
•
|
unfavorable volume/mix (
$87 million
) and
|
•
|
unfavorable currency (
$22 million
), partly offset by
|
•
|
price increases (
$65 million
).
|
•
|
unfavorable volume/mix (
$75 million
),
|
•
|
unfavorable currency (
$26 million
) and
|
•
|
higher manufacturing costs (
$17 million
), partly offset by
|
•
|
price increases (
$65 million
).
|
Latin America & Canada PMI Shipment Volume (Million Units)
|
|||||||
|
First-Quarter
|
||||||
|
|
|
|
|
|||
|
2017
|
|
|
2016
|
|
Change
|
|
|
|
|
|
|
|||
Cigarettes
|
19,296
|
|
|
21,700
|
|
(11.1
|
)%
|
Heated Tobacco Units
|
1
|
|
|
—
|
|
—
|
%
|
Total Latin America & Canada
|
19,297
|
|
|
21,700
|
|
(11.1
|
)%
|
|
Argentina Key Market Data
|
|||||||
|
First-Quarter
|
|||||||
|
|
|
|
|
Change
|
|
||
|
2017
|
|
|
2016
|
|
|
% / p.p.
|
|
Total Cigarette Market (billion units)
|
9.3
|
|
|
9.8
|
|
|
(4.3
|
)%
|
|
|
|
|
|
|
|||
PMI Cigarette Shipments (million units)
|
6,948
|
|
|
7,526
|
|
|
(7.7
|
)%
|
|
|
|
|
|
|
|||
PMI Cigarette Market Share
|
|
|
|
|
|
|||
Marlboro
|
20.2
|
%
|
|
24.0
|
%
|
|
(3.8
|
)
|
Chesterfield
|
14.5
|
%
|
|
1.6
|
%
|
|
12.9
|
|
Philip Morris
|
33.9
|
%
|
|
44.6
|
%
|
|
(10.7
|
)
|
Others
|
5.9
|
%
|
|
7.0
|
%
|
|
(1.1
|
)
|
Total
|
74.5
|
%
|
|
77.2
|
%
|
|
(2.7
|
)
|
|
Canada Key Market Data
|
|||||||
|
First-Quarter
|
|||||||
|
|
|
|
|
Change
|
|
||
|
2017
|
|
|
2016
|
|
|
% / p.p.
|
|
Total Market (billion units)
|
4.9
|
|
|
5.6
|
|
|
(12.4
|
)%
|
|
|
|
|
|
|
|||
PMI Shipments (million units)
|
1,776
|
|
|
2,184
|
|
|
(18.7
|
)%
|
|
|
|
|
|
|
|||
PMI Market Share
|
|
|
|
|
|
|||
Belmont
|
3.6
|
%
|
|
3.7
|
%
|
|
(0.1
|
)
|
Canadian Classics
|
8.9
|
%
|
|
10.7
|
%
|
|
(1.8
|
)
|
Next
|
10.9
|
%
|
|
11.6
|
%
|
|
(0.7
|
)
|
Others*
|
11.5
|
%
|
|
13.2
|
%
|
|
(1.7
|
)
|
Total
|
34.9
|
%
|
|
39.2
|
%
|
|
(4.3
|
)
|
|
Mexico Key Market Data
|
|||||||
|
First-Quarter
|
|||||||
|
|
|
|
|
Change
|
|
||
|
2017
|
|
|
2016
|
|
|
% / p.p.
|
|
Total Cigarette Market (billion units)
|
7.9
|
|
|
8.9
|
|
|
(11.3
|
)%
|
|
|
|
|
|
|
|||
PMI Cigarette Shipments (million units)
|
5,059
|
|
|
5,982
|
|
|
(15.4
|
)%
|
|
|
|
|
|
|
|||
PMI Cigarette Market Share
|
|
|
|
|
|
|||
Marlboro
|
46.0
|
%
|
|
47.5
|
%
|
|
(1.5
|
)
|
Delicados
|
8.2
|
%
|
|
9.9
|
%
|
|
(1.7
|
)
|
Benson & Hedges
|
4.9
|
%
|
|
4.2
|
%
|
|
0.7
|
|
Others
|
5.2
|
%
|
|
5.9
|
%
|
|
(0.7
|
)
|
Total
|
64.3
|
%
|
|
67.5
|
%
|
|
(3.2
|
)
|
•
|
more cash provided by inventories, primarily due to lower finished goods inventories and lower leaf purchases; and
|
•
|
more cash provided by accounts receivable, primarily due to the timing of sales and cash collections; partially offset by
|
•
|
more cash used for accrued liabilities and other current assets, primarily due to the timing of payments for excise taxes.
|
|
|
Short-term
|
|
Long-term
|
|
Outlook
|
Moody’s
|
|
P-1
|
|
A2
|
|
Stable
|
Standard & Poor’s
|
|
A-1
|
|
A
|
|
Negative
|
Fitch
|
|
F1
|
|
A
|
|
Negative
|
(in billions)
|
|
|
|
|
||||
Type
|
|
Committed
Credit
Facilities
|
|
Commercial
Paper
|
||||
364-day revolving credit, expiring February 6, 2018
|
|
$
|
2.0
|
|
|
|
||
Multi-year revolving credit, expiring February 28, 2021
|
|
2.5
|
|
|
|
|||
Multi-year revolving credit, expiring October 1, 2020
(1)
|
|
3.5
|
|
|
|
|
||
Total facilities
|
|
$
|
8.0
|
|
|
|
|
|
Commercial paper outstanding
|
|
|
|
|
$
|
—
|
|
•
|
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 novel tobacco or 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 adult consumer trends;
|
•
|
develop new products and markets and broaden brand portfolios;
|
•
|
improve productivity;
|
•
|
ensure adequate production capacity to meet demand for our products; 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
|
|
Approximate Dollar
Value of Shares that
May Yet be Purchased
Under the Plans or
Programs
|
||||||
January 1, 2017 –
January 31, 2017 (1)
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
February 1, 2017 –
February 28, 2017 (1)
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
March 1, 2017 –
March 31, 2017 (1)
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Pursuant to Publicly
Announced Plans
or Programs
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|||
January 1, 2017 –
January 31, 2017 (2)
|
|
234
|
|
|
$
|
91.48
|
|
|
|
|
|
|||
February 1, 2017 –
February 28, 2017 (2)
|
|
181,890
|
|
|
$
|
102.24
|
|
|
|
|
|
|||
March 1, 2017 –
March 31, 2017 (2)
|
|
1,394
|
|
|
$
|
108.10
|
|
|
|
|
|
|||
For the Quarter Ended March 31, 2017
|
|
183,518
|
|
|
$
|
102.27
|
|
|
|
|
|
(1)
|
During this reporting period, we did not have an authorized share repurchase program.
|
(2)
|
Shares repurchased represent shares tendered to us by employees who vested in restricted share unit 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. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed December 9, 2016).
|
|
|
|
10.1
|
|
Extension Agreement, effective February 7, 2017, to the Credit Agreement, dated as of February 12, 2013, among Philip Morris International Inc., the lenders named therein, Citibank Europe PLC, UK Branch (formerly, Citibank International Limited), as Administrative Agent (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed January 30, 2017).
|
|
|
|
10.2
|
|
Form of Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed February 7, 2017).
|
|
|
|
10.3
|
|
Form of Performance Share Unit Agreement (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed February 7, 2017).
|
|
|
|
10.4
|
|
Amendment to Employment Agreement with André Calantzopoulos.
|
|
|
|
10.5
|
|
Amendment to Employment Agreement with Marc S. Firestone.
|
|
|
|
10.6
|
|
Amendment to Employment Agreement with Martin King.
|
|
|
|
10.7
|
|
Amendment to Employment Agreement with Jacek Olczak.
|
|
|
|
10.8
|
|
Amendment to Employment Agreement with Miroslaw Zielinski.
|
|
|
|
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
|
|
April 27, 2017
|
|
Three Months Ended
March 31, 2017
|
||
Earnings before income taxes
|
$
|
2,177
|
|
Add (deduct):
|
|
||
Dividends from less than 50% owned affiliates
|
—
|
|
|
Fixed charges
|
284
|
|
|
Interest capitalized, net of amortization
|
—
|
|
|
Earnings available for fixed charges
|
$
|
2,461
|
|
Fixed charges:
|
|
||
Interest incurred
|
$
|
260
|
|
Portion of rent expense deemed to represent interest factor
|
24
|
|
|
Fixed charges
|
$
|
284
|
|
Ratio of earnings to fixed charges
|
8.7
|
|
|
For the Years Ended December 31,
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Earnings before income taxes
|
$
|
9,924
|
|
|
$
|
9,615
|
|
|
$
|
10,650
|
|
|
$
|
12,542
|
|
|
$
|
13,004
|
|
Add (deduct):
|
|
|
|
|
|
|
|
|
|
||||||||||
Dividends from less than 50%
owned affiliates |
117
|
|
|
127
|
|
|
107
|
|
|
1
|
|
|
—
|
|
|||||
Fixed charges
|
1,166
|
|
|
1,232
|
|
|
1,284
|
|
|
1,216
|
|
|
1,115
|
|
|||||
Interest capitalized, net of
amortization |
—
|
|
|
(3
|
)
|
|
1
|
|
|
4
|
|
|
2
|
|
|||||
Earnings available for fixed charges
|
$
|
11,207
|
|
|
$
|
10,971
|
|
|
$
|
12,042
|
|
|
$
|
13,763
|
|
|
$
|
14,121
|
|
Fixed charges:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest incurred
|
$
|
1,071
|
|
|
$
|
1,137
|
|
|
$
|
1,172
|
|
|
$
|
1,105
|
|
|
$
|
1,009
|
|
Portion of rent expense deemed to
represent interest factor |
95
|
|
|
95
|
|
|
112
|
|
|
111
|
|
|
106
|
|
|||||
Fixed charges
|
$
|
1,166
|
|
|
$
|
1,232
|
|
|
$
|
1,284
|
|
|
$
|
1,216
|
|
|
$
|
1,115
|
|
Ratio of earnings to fixed charges
|
9.6
|
|
|
8.9
|
|
|
9.4
|
|
|
11.3
|
|
|
12.7
|
|
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
|
April 27, 2017
|
/s/ JACEK OLCZAK
|
Jacek Olczak
|
Chief Financial Officer
|
April 27, 2017
|