☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Virginia | 13-3435103 | |||||||
(State or other jurisdiction of
incorporation or organization) |
(I.R.S. Employer
Identification No.) |
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120 Park Avenue | ||||||||
New York | ||||||||
New York | 10017 | |||||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Common Stock, no par value | PM | New York Stock Exchange | ||||||||||||
1.875% Notes due 2021 | PM21B | New York Stock Exchange | ||||||||||||
4.125% Notes due 2021 | PM21 | New York Stock Exchange | ||||||||||||
2.900% Notes due 2021 | PM21A | New York Stock Exchange | ||||||||||||
2.625% Notes due 2022 | PM22A | New York Stock Exchange | ||||||||||||
2.375% Notes due 2022 | PM22B | New York Stock Exchange | ||||||||||||
2.500% Notes due 2022 | PM22 | New York Stock Exchange | ||||||||||||
2.500% Notes due 2022 | PM22C | New York Stock Exchange | ||||||||||||
2.625% Notes due 2023 | PM23 | New York Stock Exchange | ||||||||||||
2.125% Notes due 2023 | PM23B | New York Stock Exchange | ||||||||||||
3.600% Notes due 2023 | PM23A | New York Stock Exchange | ||||||||||||
2.875% Notes due 2024 | PM24 | New York Stock Exchange | ||||||||||||
2.875% Notes due 2024 | PM24C | New York Stock Exchange | ||||||||||||
0.625% Notes due 2024 | PM24B | New York Stock Exchange | ||||||||||||
3.250% Notes due 2024 | PM24A | New York Stock Exchange | ||||||||||||
2.750% Notes due 2025 | PM25 | New York Stock Exchange | ||||||||||||
3.375% Notes due 2025 | PM25A | New York Stock Exchange |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
2.750% Notes due 2026 | PM26A | New York Stock Exchange | ||||||||||||
2.875% Notes due 2026 | PM26 | New York Stock Exchange | ||||||||||||
0.125% Notes due 2026 | PM26B | New York Stock Exchange | ||||||||||||
3.125% Notes due 2027 | PM27 | New York Stock Exchange | ||||||||||||
3.125% Notes due 2028 | PM28 | New York Stock Exchange | ||||||||||||
2.875% Notes due 2029 | PM29 | New York Stock Exchange | ||||||||||||
3.375% Notes due 2029 | PM29A | New York Stock Exchange | ||||||||||||
0.800% Notes due 2031 | PM31 | New York Stock Exchange | ||||||||||||
3.125% Notes due 2033 | PM33 | New York Stock Exchange | ||||||||||||
2.000% Notes due 2036 | PM36 | New York Stock Exchange | ||||||||||||
1.875% Notes due 2037 | PM37A | New York Stock Exchange | ||||||||||||
6.375% Notes due 2038 | PM38 | New York Stock Exchange | ||||||||||||
1.450% Notes due 2039 | PM39 | New York Stock Exchange | ||||||||||||
4.375% Notes due 2041 | PM41 | New York Stock Exchange | ||||||||||||
4.500% Notes due 2042 | PM42 | New York Stock Exchange | ||||||||||||
3.875% Notes due 2042 | PM42A | New York Stock Exchange | ||||||||||||
4.125% Notes due 2043 | PM43 | New York Stock Exchange | ||||||||||||
4.875% Notes due 2043 | PM43A | New York Stock Exchange | ||||||||||||
4.250% Notes due 2044 | PM44 | New York Stock Exchange |
Class | Outstanding at | January 29, 2021 | |||||||||
Common Stock,
no par value |
1,557,451,856 | shares |
Document | Parts Into Which Incorporated | ||||
Portions of the registrant’s definitive proxy statement for use in connection with its annual meeting of shareholders to be held on May 5, 2021, to be filed with the Securities and Exchange Commission (“SEC”) on or about March 25, 2021. | Part III |
Page | |||||||||||
PART I
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Item 1. |
Business
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Item 1A. |
Risk Factors
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Item 1B. |
Unresolved Staff Comments
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Item 2. |
Properties
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Item 3. |
Legal Proceedings
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Item 4. |
Mine Safety Disclosures
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PART II
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Item 5. |
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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Item 6. |
Selected Financial Data
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Item 7. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Item 7A. |
Quantitative and Qualitative Disclosures About Market Risk
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Item 8. |
Financial Statements and Supplementary Data
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Item 9. |
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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Item 9A. |
Controls and Procedures
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Item 9B. |
Other Information
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PART III
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Item 10. |
Directors, Executive Officers and Corporate Governance
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Item 11. |
Executive Compensation
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Item 12. |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
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Item 13. |
Certain Relationships and Related Transactions, and Director Independence
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Item 14. |
Principal Accounting Fees and Services
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PART IV
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Item 15. |
Exhibits and Financial Statement Schedules
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Signatures
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• | 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 mandating 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 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 and use of tobacco and nicotine-containing products in public and work places and, in some instances, in private places and outdoors; | ||||
• | restrictions or prohibitions of novel tobacco or nicotine-containing products; | ||||
• | elimination of duty free sales and duty free allowances for travelers; |
• | encouraging litigation against tobacco companies; and |
• | excluding tobacco companies from transparent public dialogue regarding public health and other policy matters. |
• | promote brand equity successfully; | ||||
• | anticipate and respond to new adult consumer trends; | ||||
• | develop new products and markets and broaden brand portfolios; | ||||
• | improve productivity; | ||||
• | convince adult smokers to convert to our RRPs; | ||||
• | ensure effective adult consumer engagement, including communication about product characteristics and usage of RRPs; | ||||
• | provide excellent customer care; | ||||
• | ensure adequate production capacity to meet demand for our products; and | ||||
• | be able to protect or enhance margins through price increases. |
• | develop RRPs that such adult smokers find acceptable alternatives to smoking; | ||||
• | conduct rigorous scientific studies to substantiate that they reduce exposure to harmful and potentially harmful constituents in smoke and, ultimately, that these products present, are likely to present, or have the potential to present less risk of harm to adult smokers who switch to them versus continued smoking; and | ||||
• | effectively advocate for the development of science-based regulatory frameworks for the development and commercialization of RRPs, including communication of scientifically substantiated information to enable adult smokers to make better consumer choices. |
Date | PMI |
PMI Peer Group (1)
|
S&P 500 Index | ||||||||||||||||||||
December 31, 2015 | $100.00 | $100.00 | $100.00 | ||||||||||||||||||||
December 31, 2016 | $108.60 | $101.70 | $112.00 | ||||||||||||||||||||
December 31, 2017 | $130.20 | $119.60 | $136.40 | ||||||||||||||||||||
December 31, 2018 | $86.90 | $107.80 | $130.40 | ||||||||||||||||||||
December 31, 2019 | $117.30 | $133.50 | $171.50 | ||||||||||||||||||||
December 31, 2020 | $121.80 | $143.10 | $203.00 |
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 |
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October 1, 2020 –
October 31, 2020 (1) |
— | $ | — | — | $ | — | ||||||||||||||||||||
November 1, 2020 –
November 30, 2020 (1) |
— | $ | — | — | $ | — | ||||||||||||||||||||
December 1, 2020 –
December 31, 2020 (1) |
— | $ | — | — | $ | — | ||||||||||||||||||||
Pursuant to Publicly Announced
Plans or Programs
|
— | $ | — | |||||||||||||||||||||||
October 1, 2020 –
October 31, 2020 (2) |
1,126 | $ | 75.97 | |||||||||||||||||||||||
November 1, 2020 –
November 30, 2020 (2) |
3,139 | $ | 70.54 | |||||||||||||||||||||||
December 1, 2020 –
December 31, 2020 (2) |
1,155 | $ | 75.82 | |||||||||||||||||||||||
For the Quarter Ended
December 31, 2020 |
5,420 | $ | 72.79 |
2020 | 2019 | 2018 | 2017 | 2016 | |||||||||||||||||||||||||
Summary of Operations:
|
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Revenues including excise taxes
|
$ | 76,047 | $ | 77,921 | $ | 79,823 | $ | 78,098 | $ | 74,953 | |||||||||||||||||||
Excise taxes on products
|
47,353 | 48,116 | 50,198 | 49,350 | 48,268 | ||||||||||||||||||||||||
Net revenues
|
28,694 | 29,805 | 29,625 | 28,748 | 26,685 | ||||||||||||||||||||||||
Operating income
|
11,668 | 10,531 | 11,377 | 11,581 | 10,903 | ||||||||||||||||||||||||
Net earnings attributable to PMI
|
8,056 | 7,185 | 7,911 | 6,035 | 6,967 | ||||||||||||||||||||||||
Basic earnings per share
|
5.16 | 4.61 | 5.08 | 3.88 | 4.48 | ||||||||||||||||||||||||
Diluted earnings per share
|
5.16 | 4.61 | 5.08 | 3.88 | 4.48 | ||||||||||||||||||||||||
Dividends declared per share
|
4.74 | 4.62 | 4.49 | 4.22 | 4.12 | ||||||||||||||||||||||||
Total assets
|
44,815 | 42,875 | 39,801 | 42,968 | 36,851 | ||||||||||||||||||||||||
Long-term debt (1)
|
28,168 | 26,656 | 26,975 | 31,334 | 25,851 | ||||||||||||||||||||||||
Total debt
|
31,536 | 31,045 | 31,759 | 34,339 | 29,067 |
Diluted EPS |
% Growth
(Decline) |
|||||||
For the year ended December 31, 2019 | $ | 4.61 | ||||||
2019 Asset impairment and exit costs | 0.23 | |||||||
2019 Canadian tobacco litigation-related expense | 0.09 | |||||||
2019 Loss on deconsolidation of RBH | 0.12 | |||||||
2019 Russia excise and VAT audit charge | 0.20 | |||||||
2019 Fair value adjustment for equity security investments | (0.02) | |||||||
2019 Tax items | (0.04) | |||||||
Subtotal of 2019 items | 0.58 | |||||||
2020 Asset impairment and exit costs | (0.08) | |||||||
2020 Brazil indirect tax credit | 0.05 | |||||||
2020 Fair value adjustment for equity security investments | (0.04) | |||||||
2020 Tax items | 0.06 | |||||||
Subtotal of 2020 items | (0.01) | |||||||
Currency | (0.32) | |||||||
Interest | (0.02) | |||||||
Change in tax rate | 0.05 | |||||||
Operations | 0.27 | |||||||
For the year ended December 31, 2020 | $ | 5.16 | 11.9 | % |
2020 | 2019 | |||||||
Pension plans | 0.56% | 0.83% | ||||||
Postretirement plans | 2.84% | 3.28% |
(in millions) | 2020 | 2019 | 2018 | ||||||||
Net Revenues
|
|||||||||||
European Union | $ | 10,702 | $ | 9,817 | $ | 9,298 | |||||
Eastern Europe | 3,378 | 3,282 | 2,921 | ||||||||
Middle East & Africa | 3,088 | 4,042 | 4,114 | ||||||||
South & Southeast Asia | 4,396 | 5,094 | 4,656 | ||||||||
East Asia & Australia | 5,429 | 5,364 | 5,580 | ||||||||
Latin America & Canada (1)
|
1,701 | 2,206 | 3,056 | ||||||||
Net revenues | $ | 28,694 | $ | 29,805 | $ | 29,625 | |||||
Operating Income
|
|||||||||||
European Union | $ | 5,098 | $ | 3,970 | $ | 4,105 | |||||
Eastern Europe | 871 | 547 | 902 | ||||||||
Middle East & Africa | 1,026 | 1,684 | 1,627 | ||||||||
South & Southeast Asia | 1,709 | 2,163 | 1,747 | ||||||||
East Asia & Australia | 2,400 | 1,932 | 1,851 | ||||||||
Latin America & Canada (1)
|
564 | 235 | 1,145 | ||||||||
Operating income | $ | 11,668 | $ | 10,531 | $ | 11,377 |
PMI Shipment Volume (Million Units)
|
|||||||||||
2020 | 2019 | 2018 | |||||||||
Cigarettes | |||||||||||
European Union | 163,420 | 174,319 | 179,622 | ||||||||
Eastern Europe | 93,462 | 100,644 | 108,718 | ||||||||
Middle East & Africa | 117,999 | 134,568 | 136,605 | ||||||||
South & Southeast Asia | 144,788 | 174,934 | 178,469 | ||||||||
East Asia & Australia | 45,100 | 49,951 | 56,163 | ||||||||
Latin America & Canada | 63,749 | 72,293 | 80,738 | ||||||||
Total Cigarettes | 628,518 | 706,709 | 740,315 | ||||||||
Heated Tobacco Units | |||||||||||
European Union | 19,842 | 12,569 | 5,977 | ||||||||
Eastern Europe | 20,898 | 13,453 | 4,979 | ||||||||
Middle East & Africa | 1,022 | 2,654 | 3,403 | ||||||||
South & Southeast Asia | 36 | — | — | ||||||||
East Asia & Australia | 33,862 | 30,677 | 26,866 | ||||||||
Latin America & Canada (1)
|
451 | 299 | 147 | ||||||||
Total Heated Tobacco Units | 76,111 | 59,652 | 41,372 | ||||||||
Cigarettes and Heated Tobacco Units | |||||||||||
European Union | 183,262 | 186,888 | 185,599 | ||||||||
Eastern Europe | 114,360 | 114,097 | 113,697 | ||||||||
Middle East & Africa | 119,021 | 137,222 | 140,008 | ||||||||
South & Southeast Asia | 144,824 | 174,934 | 178,469 | ||||||||
East Asia & Australia | 78,962 | 80,628 | 83,029 | ||||||||
Latin America & Canada | 64,200 | 72,592 | 80,885 | ||||||||
Total Cigarettes and Heated Tobacco Units | 704,629 | 766,361 | 781,687 |
PMI Shipment Volume by Brand (Million Units) | |||||||||||
Full-Year | |||||||||||
2020 | 2019 | Change | |||||||||
Cigarettes | |||||||||||
Marlboro | 233,158 | 262,908 | (11.3) | % | |||||||
L&M | 91,098 | 92,873 | (1.9) | % | |||||||
Chesterfield | 52,139 | 57,185 | (8.8) | % | |||||||
Philip Morris | 45,645 | 49,164 | (7.2) | % | |||||||
Parliament | 34,737 | 38,723 | (10.3) | % | |||||||
Sampoerna A | 32,862 | 35,133 | (6.5) | % | |||||||
Dji Sam Soe | 24,754 | 32,435 | (23.7) | % | |||||||
Bond Street | 24,113 | 28,025 | (14.0) | % | |||||||
Lark | 15,489 | 19,602 | (21.0) | % | |||||||
Next | 8,980 | 8,602 | 4.4 | % | |||||||
Others | 65,543 | 82,059 | (20.1) | % | |||||||
Total Cigarettes | 628,518 | 706,709 | (11.1) | % | |||||||
Heated Tobacco Units (1)
|
76,111 | 59,652 | 27.6 | % | |||||||
Total Cigarettes and Heated Tobacco Units | 704,629 | 766,361 | (8.1) | % |
PMI Shipments (billion units) |
PMI Market Share (%)(1)
|
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Market |
Total Market
(billion units) |
Total | Cigarette | Heated Tobacco Unit | Total | Heated Tobacco Unit | ||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||||||||||||||||||||
Total | 2,548.4 | 2,705.0 | 704.6 | 766.4 | 628.5 | 706.7 | 76.1 | 59.7 | 27.7 | 28.4 | 3.0 | 2.2 | ||||||||||||||||||||||||||||||||||||||||||||
European Union | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
France | 36.6 | 37.9 | 16.3 | 17.0 | 16.1 | 16.9 | 0.2 | 0.1 | 44.9 | 45.0 | 0.5 | 0.2 | ||||||||||||||||||||||||||||||||||||||||||||
Germany | 74.6 | 73.3 | 29.1 | 27.9 | 27.4 | 27.0 | 1.6 | 0.9 | 39.0 | 38.0 | 2.2 | 1.2 | ||||||||||||||||||||||||||||||||||||||||||||
Italy | 67.4 | 67.9 | 34.6 | 34.9 | 29.0 | 31.4 | 5.6 | 3.5 | 52.2 | 51.8 | 8.1 | 4.8 | ||||||||||||||||||||||||||||||||||||||||||||
Poland | 45.6 | 46.2 | 17.8 | 19.0 | 15.4 | 17.9 | 2.4 | 1.1 | 39.0 | 41.2 | 5.2 | 2.5 | ||||||||||||||||||||||||||||||||||||||||||||
Spain | 41.8 | 45.4 | 13.2 | 14.5 | 12.8 | 14.1 | 0.4 | 0.3 | 31.4 | 31.3 | 1.0 | 0.7 | ||||||||||||||||||||||||||||||||||||||||||||
Eastern Europe | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Russia | 219.1 | 226.5 | 69.2 | 68.0 | 55.6 | 58.8 | 13.6 | 9.2 | 32.3 | 30.1 | 6.3 | 3.8 | ||||||||||||||||||||||||||||||||||||||||||||
Middle East & Africa | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Saudi Arabia | 21.7 | 20.8 | 9.1 | 9.2 | 9.0 | 9.2 | 0.1 | — | 39.0 | 43.0 | 0.3 | — | ||||||||||||||||||||||||||||||||||||||||||||
Turkey | 114.8 | 119.7 | 47.5 | 51.9 | 47.5 | 51.9 | — | — | 41.3 | 43.4 | — | — | ||||||||||||||||||||||||||||||||||||||||||||
South & Southeast Asia | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Indonesia | 276.3 | 305.7 | 79.5 | 98.5 | 79.5 | 98.5 | — | — | 28.8 | 32.2 | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Philippines | 62.1 | 70.5 | 41.7 | 49.7 | 41.7 | 49.7 | — | — | 67.2 | 70.5 | 0.1 | — | ||||||||||||||||||||||||||||||||||||||||||||
East Asia & Australia | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Australia | 11.0 | 12.0 | 3.3 | 3.3 | 3.3 | 3.3 | — | — | 29.9 | 27.5 | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Japan | 142.9 | 157.8 | 51.1 | 52.4 | 22.2 | 26.6 | 28.9 | 25.8 | 37.1 | 34.5 | 20.4 | 17.1 | ||||||||||||||||||||||||||||||||||||||||||||
Korea | 71.6 | 68.6 | 14.8 | 15.5 | 10.2 | 10.8 | 4.6 | 4.6 | 20.7 | 22.6 | 6.5 | 6.8 | ||||||||||||||||||||||||||||||||||||||||||||
Latin America & Canada | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Argentina | 33.6 | 33.4 | 20.5 | 23.3 | 20.5 | 23.3 | — | — | 61.0 | 70.0 | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Mexico | 30.7 | 35.5 | 19.5 | 23.8 | 19.5 | 23.8 | 0.1 | — | 63.7 | 67.1 | 0.2 | — | ||||||||||||||||||||||||||||||||||||||||||||
(1) Market share estimates are calculated using IMS data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note: % change for Total Market and PMI shipments is computed based on millions of units; PMI Market Share estimates for previous periods are restated to reflect RBH deconsolidation and exclude RBH-owned brands. |
Financial Summary | ||||||||||||||||||||||||||||||||||||||
Financial Summary -
Years Ended December 31, |
Change
Fav./(Unfav.) |
Variance
Fav./(Unfav.) |
||||||||||||||||||||||||||||||||||||
2020 | 2019 | Total |
Excl.
Curr. |
Total |
Cur-
rency |
Price |
Vol/
Mix |
Cost/Other(1)
|
||||||||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||||||||||||
Net Revenues | $ | 28,694 | $ | 29,805 | (3.7) | % | (2.2) | % | $ | (1,111) | $ | (469) | $ | 794 | $ | (1,183) | $ | (253) | ||||||||||||||||||||
Cost of Sales | (9,569) | (10,513) | 9.0 | % | 7.5 | % | 944 | 158 | — | 464 | 322 | |||||||||||||||||||||||||||
Marketing, Administration and Research Costs (2)
|
(7,384) | (8,695) | 15.1 | % | 17.0 | % | 1,311 | (166) | — | — | 1,477 | |||||||||||||||||||||||||||
Amortization of Intangibles | (73) | (66) | (10.6) | % | (13.6) | % | (7) | 2 | — | — | (9) | |||||||||||||||||||||||||||
Operating Income | $ | 11,668 | $ | 10,531 | 10.8 | % | 15.3 | % | $ | 1,137 | $ | (475) | $ | 794 | $ | (719) | $ | 1,537 |
Financial Summary -
Years Ended December 31, |
Change
Fav./(Unfav.) |
Variance
Fav./(Unfav.) |
||||||||||||||||||||||||||||||||||||
2020 | 2019 | Total |
Excl.
Curr. |
Total |
Cur-
rency |
Price |
Vol/
Mix |
Cost/
Other |
||||||||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||||||||||||
Net Revenues | $ | 10,702 | $ | 9,817 | 9.0 | % | 8.8 | % | $ | 885 | $ | 21 | $ | 187 | $ | 677 | $ | — | ||||||||||||||||||||
Operating Income | $ | 5,098 | $ | 3,970 | 28.4 | % | 29.0 | % | $ | 1,128 | $ | (24) | $ | 187 | $ | 663 | $ | 302 |
European Union Key Data | Full-Year | ||||||||||||||||||||||
Change | |||||||||||||||||||||||
2020 | 2019 | % / pp | |||||||||||||||||||||
Total Market (billion units) | 472.7 | 482.8 | (2.1) | % | |||||||||||||||||||
PMI Shipment Volume (million units) | |||||||||||||||||||||||
Cigarettes | 163,420 | 174,319 | (6.3) | % | |||||||||||||||||||
Heated Tobacco Units | 19,842 | 12,569 | 57.9 | % | |||||||||||||||||||
Total European Union | 183,262 | 186,888 | (1.9) | % | |||||||||||||||||||
PMI Market Share | |||||||||||||||||||||||
Marlboro | 17.5 | % | 18.0 | % | (0.5) | ||||||||||||||||||
L&M | 6.2 | % | 6.7 | % | (0.5) | ||||||||||||||||||
Chesterfield | 5.5 | % | 5.8 | % | (0.3) | ||||||||||||||||||
Philip Morris | 2.4 | % | 2.7 | % | (0.3) | ||||||||||||||||||
HEETS | 4.2 | % | 2.5 | % | 1.7 | ||||||||||||||||||
Others | 3.1 | % | 3.1 | % | — | ||||||||||||||||||
Total European Union | 38.9 | % | 38.8 | % | 0.1 |
Financial Summary -
Years Ended December 31, |
Change
Fav./(Unfav.) |
Variance
Fav./(Unfav.) |
||||||||||||||||||||||||||||||||||||
2020 | 2019 | Total |
Excl.
Curr. |
Total |
Cur-
rency |
Price |
Vol/
Mix |
Cost/
Other |
||||||||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||||||||||||
Net Revenues | $ | 3,378 | $ | 3,282 | 2.9 | % | 10.9 | % | $ | 96 | $ | (263) | $ | 162 | $ | 197 | $ | — | ||||||||||||||||||||
Operating Income | $ | 871 | $ | 547 | 59.2 | % | +100% | $ | 324 | $ | (299) | $ | 162 | $ | 146 | $ | 315 |
PMI Shipment Volume (million units) | Full-Year | ||||||||||||||||||||||
2020 | 2019 | Change | |||||||||||||||||||||
Cigarettes | 93,462 | 100,644 | (7.1) | % | |||||||||||||||||||
Heated Tobacco Units | 20,898 | 13,453 | 55.3 | % | |||||||||||||||||||
Total Eastern Europe | 114,360 | 114,097 | 0.2 | % |
Financial Summary -
Years Ended December 31, |
Change
Fav./(Unfav.) |
Variance
Fav./(Unfav.) |
||||||||||||||||||||||||||||||||||||
2020 | 2019 | Total |
Excl.
Curr. |
Total |
Cur-
rency |
Price |
Vol/
Mix |
Cost/
Other |
||||||||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||||||||||||
Net Revenues | $ | 3,088 | $ | 4,042 | (23.6) | % | (21.7) | % | $ | (954) | $ | (77) | $ | 186 | $ | (1,001) | $ | (62) | ||||||||||||||||||||
Operating Income | $ | 1,026 | $ | 1,684 | (39.1) | % | (35.2) | % | $ | (658) | $ | (65) | $ | 186 | $ | (784) | $ | 5 |
PMI Shipment Volume (million units) | Full-Year | ||||||||||||||||||||||
2020 | 2019 | Change | |||||||||||||||||||||
Cigarettes | 117,999 | 134,568 | (12.3) | % | |||||||||||||||||||
Heated Tobacco Units | 1,022 | 2,654 | (61.5) | % | |||||||||||||||||||
Total Middle East & Africa | 119,021 | 137,222 | (13.3) | % |
Financial Summary -
Years Ended December 31, |
Change
Fav./(Unfav.) |
Variance
Fav./(Unfav.) |
||||||||||||||||||||||||||||||||||||
2020 | 2019 | Total |
Excl.
Curr. |
Total |
Cur-
rency |
Price |
Vol/
Mix |
Cost/
Other |
||||||||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||||||||||||
Net Revenues | $ | 4,396 | $ | 5,094 | (13.7) | % | (13.3) | % | $ | (698) | $ | (19) | $ | (44) | $ | (635) | $ | — | ||||||||||||||||||||
Operating Income | $ | 1,709 | $ | 2,163 | (21.0) | % | (21.1) | % | $ | (454) | $ | 2 | $ | (44) | $ | (457) | $ | 45 |
PMI Shipment Volume (million units) | Full-Year | |||||||||||||||||||
2020 | 2019 | Change | ||||||||||||||||||
Cigarettes | 144,788 | 174,934 | (17.2) | % | ||||||||||||||||
Heated Tobacco Units | 36 | — | — | % | ||||||||||||||||
Total South & Southeast Asia | 144,824 | 174,934 | (17.2) | % |
Financial Summary -
Years Ended December 31, |
Change
Fav./(Unfav.) |
Variance
Fav./(Unfav.) |
||||||||||||||||||||||||||||||||||||
2020 | 2019 | Total |
Excl.
Curr. |
Total |
Cur-
rency |
Price |
Vol/
Mix |
Cost/
Other |
||||||||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||||||||||||
Net Revenues | $ | 5,429 | $ | 5,364 | 1.2 | % | 0.6 | % | $ | 65 | $ | 33 | $ | 168 | $ | (136) | $ | — | ||||||||||||||||||||
Operating Income | $ | 2,400 | $ | 1,932 | 24.2 | % | 23.1 | % | $ | 468 | $ | 21 | $ | 168 | $ | (68) | $ | 347 |
PMI Shipment Volume (million units) | Full-Year | |||||||||||||||||||
2020 | 2019 | Change | ||||||||||||||||||
Cigarettes | 45,100 | 49,951 | (9.7) | % | ||||||||||||||||
Heated Tobacco Units | 33,862 | 30,677 | 10.4 | % | ||||||||||||||||
Total East Asia & Australia | 78,962 | 80,628 | (2.1) | % |
Financial Summary -
Years Ended December 31, |
Change
Fav./(Unfav.) |
Variance
Fav./(Unfav.) |
||||||||||||||||||||||||||||||||||||
2020 | 2019 | Total |
Excl.
Curr. |
Total |
Cur-
rency |
Price |
Vol/
Mix |
Cost/Other(1)
|
||||||||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||||||||||||
Net Revenues | $ | 1,701 | $ | 2,206 | (22.9) | % | (15.5) | % | $ | (505) | $ | (164) | $ | 135 | $ | (285) | $ | (191) | ||||||||||||||||||||
Operating Income | $ | 564 | $ | 235 | +100% | +100% | $ | 329 | $ | (110) | $ | 135 | $ | (219) | $ | 523 |
PMI Shipment Volume (million units) | Full-Year | |||||||||||||||||||
2020 | 2019 | Change | ||||||||||||||||||
Cigarettes | 63,749 | 72,293 | (11.8) | % | ||||||||||||||||
Heated Tobacco Units | 451 | 299 | 50.8 | % | ||||||||||||||||
Total Latin America & Canada | 64,200 | 72,592 | (11.6) | % |
For the Years Ended December 31, | |||||||||||
(in millions) | 2020 | 2019 | 2018 | ||||||||
Net cash provided by operating activities | $ | 9,812 | $ | 10,090 | $ | 9,478 | |||||
Net cash used in investing activities | (1,154) | (1,811) | (998) | ||||||||
Net cash used in financing activities | (8,496) | (8,061) | (9,651) |
Short-term | Long-term | Outlook | |||||||||
Moody’s | P-1 | A2 | Stable | ||||||||
Standard & Poor’s | A-1 | A | Stable | ||||||||
Fitch | F1 | A | Stable |
Payments Due
|
|||||||||||||||||
(in millions)
|
Total
|
2021 | 2022-2023 | 2024-2025 | 2026 and Thereafter | ||||||||||||
Long-term debt (1)
|
$31,552 | $3,124 | $5,122 | $5,866 | $17,440 | ||||||||||||
Interest on borrowings (2)
|
9,781 | 874 | 1,531 | 1,275 | 6,101 | ||||||||||||
Operating leases (3)
|
896 | 215 | 271 | 119 | 291 | ||||||||||||
Purchase obligations (4):
|
|||||||||||||||||
Inventory and production costs
|
2,902 | 2,048 | 584 | 267 | 3 | ||||||||||||
Other
|
1,719 | 1,038 | 363 | 157 | 161 | ||||||||||||
4,621 | 3,086 | 947 | 424 | 164 | |||||||||||||
Other long-term liabilities (5)
|
1,699 | 267 | 361 | 845 | 226 | ||||||||||||
$48,549 | $7,566 | $8,232 | $8,529 | $24,222 |
Fair Value Impact
|
|||||||||||||||||||||||
(in millions)
|
At
December 31, 2020 |
Average | High | Low | |||||||||||||||||||
Instruments sensitive to:
|
|||||||||||||||||||||||
Foreign currency rates
|
$59 | $78 | $136 | $54 | |||||||||||||||||||
Interest rates
|
$180 | $445 | $1,146 | $180 | |||||||||||||||||||
Fair Value Impact | |||||||||||||||||||||||
(in millions)
|
At
December 31, 2019 |
Average | High | Low | |||||||||||||||||||
Instruments sensitive to:
|
|||||||||||||||||||||||
Foreign currency rates
|
$18 | $20 | $24 | $18 | |||||||||||||||||||
Interest rates
|
$301 | $247 | $346 | $169 |
for the years ended December 31,
|
2020 | 2019 | 2018 | ||||||||||||||
Revenues including excise taxes
|
$ | 76,047 | $ | 77,921 | $ | 79,823 | |||||||||||
Excise taxes on products
|
47,353 | 48,116 | 50,198 | ||||||||||||||
Net revenues
|
28,694 | 29,805 | 29,625 | ||||||||||||||
Cost of sales
|
9,569 | 10,513 | 10,758 | ||||||||||||||
Gross profit
|
19,125 | 19,292 | 18,867 | ||||||||||||||
Marketing, administration and research costs (Notes 12, 17, 19 & 20)
|
7,384 | 8,695 | 7,408 | ||||||||||||||
Amortization of intangibles
|
73 | 66 | 82 | ||||||||||||||
Operating income
|
11,668 | 10,531 | 11,377 | ||||||||||||||
Interest expense, net (Note 14)
|
618 | 570 | 665 | ||||||||||||||
Pension and other employee benefit costs (Note 13)
|
97 | 89 | 41 | ||||||||||||||
Earnings before income taxes
|
10,953 | 9,872 | 10,671 | ||||||||||||||
Provision for income taxes (Note 11)
|
2,377 | 2,293 | 2,445 | ||||||||||||||
Equity investments and securities (income)/loss, net
|
(16) | (149) | (60) | ||||||||||||||
Net earnings
|
8,592 | 7,728 | 8,286 | ||||||||||||||
Net earnings attributable to noncontrolling interests
|
536 | 543 | 375 | ||||||||||||||
Net earnings attributable to PMI
|
$ | 8,056 | $ | 7,185 | $ | 7,911 | |||||||||||
Per share data (Note 10):
|
|||||||||||||||||
Basic earnings per share
|
$ | 5.16 | $ | 4.61 | $ | 5.08 | |||||||||||
Diluted earnings per share
|
$ | 5.16 | $ | 4.61 | $ | 5.08 |
for the years ended December 31, | 2020 | 2019 | 2018 | ||||||||||||||
Net earnings | $ | 8,592 | $ | 7,728 | $ | 8,286 | |||||||||||
Other comprehensive earnings (losses), net of income taxes: | |||||||||||||||||
Change in currency translation adjustments:
|
|||||||||||||||||
Unrealized gains (losses), net of income taxes of $94 in 2020, $(161) in 2019 and $(47) in 2018
|
(1,265) | 505 | (812) | ||||||||||||||
(Gains)/losses transferred to earnings - deconsolidation of RBH, net of income taxes of $0 in 2020, 2019 and 2018 (Note 20)
|
— | 502 | — | ||||||||||||||
Change in net loss and prior service cost:
|
|||||||||||||||||
Net gains (losses) and prior service costs, net of income taxes of $139 in 2020, $247 in 2019 and $65 in 2018
|
(726) | (454) | (1,046) | ||||||||||||||
Amortization of net losses, prior service costs and net transition costs, net of income taxes of $(67) in 2020, $(69) in 2019 and $(43) in 2018
|
299 | 243 | 218 | ||||||||||||||
(Gains)/losses transferred to earnings - deconsolidation of RBH, net of income taxes of $0 in 2020, $(15) in 2019 and $0 in 2018 (Note 20)
|
— | 27 | — | ||||||||||||||
Change in fair value of derivatives accounted for as hedges:
|
|||||||||||||||||
Gains (losses) recognized, net of income taxes of $13 in 2020, $2 in 2019 and $(4) in 2018
|
(68) | (18) | 24 | ||||||||||||||
(Gains) losses transferred to earnings, net of income taxes of $0 in 2020, $3 in 2019 and $5 in 2018
|
(20) | (14) | (31) | ||||||||||||||
Total other comprehensive earnings (losses) | (1,780) | 791 | (1,647) | ||||||||||||||
Total comprehensive earnings
|
6,812 | 8,519 | 6,639 | ||||||||||||||
Less comprehensive earnings attributable to: | |||||||||||||||||
Noncontrolling interests
|
574 | 586 | 304 | ||||||||||||||
Comprehensive earnings attributable to PMI | $ | 6,238 | $ | 7,933 | $ | 6,335 |
at December 31,
|
2020 | 2019 | |||||||||
Assets
|
|||||||||||
Cash and cash equivalents
|
$ | 7,280 | $ | 6,861 | |||||||
Trade receivables (less allowances of $23 in 2020 and $20 in 2019)
|
2,905 | 3,080 | |||||||||
Other receivables (less allowances of $38 in 2020 and $35 in 2019)
|
856 | 637 | |||||||||
Inventories:
|
|||||||||||
Leaf tobacco
|
2,063 | 2,052 | |||||||||
Other raw materials
|
1,712 | 1,596 | |||||||||
Finished product
|
5,816 | 5,587 | |||||||||
9,591 | 9,235 | ||||||||||
Other current assets
|
860 | 701 | |||||||||
Total current assets
|
21,492 | 20,514 | |||||||||
Property, plant and equipment, at cost:
|
|||||||||||
Land and land improvements
|
590 | 566 | |||||||||
Buildings and building equipment
|
4,410 | 4,132 | |||||||||
Machinery and equipment
|
9,460 | 9,354 | |||||||||
Construction in progress
|
449 | 394 | |||||||||
14,909 | 14,446 | ||||||||||
Less: accumulated depreciation
|
8,544 | 7,815 | |||||||||
6,365 | 6,631 | ||||||||||
Goodwill (Note 3)
|
5,964 | 5,858 | |||||||||
Other intangible assets, net (Note 3)
|
2,019 | 2,113 | |||||||||
Equity investments (Note 4)
|
4,798 | 4,635 | |||||||||
Deferred income taxes
|
1,410 | 1,153 | |||||||||
Other assets (less allowances of $22 in 2020 and $15 in 2019)
|
2,767 | 1,971 | |||||||||
Total Assets
|
$ | 44,815 | $ | 42,875 |
at December 31,
|
2020 | 2019 | |||||||||
Liabilities
|
|||||||||||
Short-term borrowings (Note 7)
|
$ | 244 | $ | 338 | |||||||
Current portion of long-term debt (Note 7)
|
3,124 | 4,051 | |||||||||
Accounts payable
|
2,780 | 2,299 | |||||||||
Accrued liabilities:
|
|||||||||||
Marketing and selling
|
782 | 666 | |||||||||
Taxes, except income taxes
|
6,403 | 5,837 | |||||||||
Employment costs
|
1,189 | 1,042 | |||||||||
Dividends payable
|
1,880 | 1,831 | |||||||||
Other
|
2,122 | 1,973 | |||||||||
Income taxes (Note 11)
|
1,091 | 796 | |||||||||
Total current liabilities
|
19,615 | 18,833 | |||||||||
Long-term debt (Note 7)
|
28,168 | 26,656 | |||||||||
Deferred income taxes
|
684 | 908 | |||||||||
Employment costs
|
4,470 | 3,634 | |||||||||
Income taxes and other liabilities (Note 11)
|
2,509 | 2,443 | |||||||||
Total liabilities
|
55,446 | 52,474 | |||||||||
Contingencies (Note 17)
|
|||||||||||
Stockholders’ (Deficit) Equity
|
|||||||||||
Common stock, no par value (2,109,316,331 shares issued in 2020 and 2019)
|
— | — | |||||||||
Additional paid-in capital
|
2,105 | 2,019 | |||||||||
Earnings reinvested in the business
|
31,638 | 30,987 | |||||||||
Accumulated other comprehensive losses
|
(11,181) | (9,363) | |||||||||
22,562 | 23,643 | ||||||||||
Less: cost of repurchased stock (551,942,600 and 553,421,668 shares in 2020 and 2019, respectively)
|
35,129 | 35,220 | |||||||||
Total PMI stockholders’ deficit
|
(12,567) | (11,577) | |||||||||
Noncontrolling interests
|
1,936 | 1,978 | |||||||||
Total stockholders’ deficit
|
(10,631) | (9,599) | |||||||||
Total Liabilities and Stockholders’ (Deficit) Equity
|
$ | 44,815 | $ | 42,875 |
for the years ended December 31,
|
2020 | 2019 | 2018 | ||||||||||||||
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
|||||||||||||||||
Net earnings
|
$ | 8,592 | $ | 7,728 | $ | 8,286 | |||||||||||
Adjustments to reconcile net earnings to operating cash flows:
|
|||||||||||||||||
Depreciation and amortization
|
981 | 964 | 989 | ||||||||||||||
Deferred income tax (benefit) provision
|
(143) | (141) | (100) | ||||||||||||||
Asset impairment and exit costs, net of cash paid (Note 19)
|
(14) | 371 | (3) | ||||||||||||||
Cash effects of changes in:
|
|||||||||||||||||
Receivables, net
|
26 | (331) | 53 | ||||||||||||||
Inventories
|
(165) | (548) | (613) | ||||||||||||||
Accounts payable
|
406 | 451 | (51) | ||||||||||||||
Accrued liabilities and other current assets
|
121 | 1,108 | 910 | ||||||||||||||
Income taxes
|
(260) | 75 | (135) | ||||||||||||||
Pension plan contributions
|
(102) | (200) | (110) | ||||||||||||||
Other
|
370 | 613 |
(1)
|
252 | |||||||||||||
Net cash provided by operating activities
|
9,812 | 10,090 | 9,478 | ||||||||||||||
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
|
|||||||||||||||||
Capital expenditures
|
(602) | (852) | (1,436) | ||||||||||||||
Equity investments
|
(47) | (31) | (63) | ||||||||||||||
Deconsolidation of RBH (Note 20) | — | (1,346) |
(2)
|
— | |||||||||||||
Net investment hedges
|
(551) | 386 | 416 | ||||||||||||||
Other
|
46 | 32 | 85 | ||||||||||||||
Net cash used in investing activities
|
(1,154) | (1,811) | (998) |
for the years ended December 31, | 2020 | 2019 | 2018 | ||||||||||||||
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | |||||||||||||||||
Short-term borrowing activity by original maturity: | |||||||||||||||||
Net issuances (repayments) - maturities of 90 days or less
|
$ | (70) | $ | (364) | $ | 255 | |||||||||||
Issuances - maturities longer than 90 days | 45 | 989 | — | ||||||||||||||
Repayments - maturities longer than 90 days | (45) | (989) | — | ||||||||||||||
Long-term debt proceeds | 3,713 | 3,819 | — | ||||||||||||||
Long-term debt repaid | (3,999) | (3,998) | (2,484) | ||||||||||||||
Dividends paid | (7,364) | (7,161) | (6,885) | ||||||||||||||
Payments to noncontrolling interests and Other
|
(776) | (357) | (537) | ||||||||||||||
Net cash used in financing activities | (8,496) | (8,061) | (9,651) | ||||||||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 258 | 27 | (685) | ||||||||||||||
Cash, cash equivalents and restricted cash(3):
|
|||||||||||||||||
Increase (Decrease) | 420 | 245 | (1,856) | ||||||||||||||
Balance at beginning of year
|
6,865 | 6,620 | 8,476 | ||||||||||||||
Balance at end of year
|
$ | 7,285 | $ | 6,865 | $ | 6,620 | |||||||||||
Cash Paid: | |||||||||||||||||
Interest | $ | 728 | $ | 800 | $ | 882 | |||||||||||
Income taxes | $ | 2,785 | $ | 2,430 | $ | 2,749 |
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, 2018 | $ | — | $ | 1,972 | $ | 29,859 | $ | (8,535) | $ | (35,382) | $ | 1,856 | $ | (10,230) | |||||||||||||||||||||||||||||||||
Net earnings | 7,911 | 375 | 8,286 | ||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive earnings (losses), net of income taxes
|
(1,572) | (75) | (1,647) | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of stock awards
|
47 | 81 | 128 | ||||||||||||||||||||||||||||||||||||||||||||
Dividends declared ($4.49 per share)
|
(6,994) | (6,994) | |||||||||||||||||||||||||||||||||||||||||||||
Payments to noncontrolling interests | (435) | (435) | |||||||||||||||||||||||||||||||||||||||||||||
Adoption of new accounting standards (1)
|
238 | 238 | |||||||||||||||||||||||||||||||||||||||||||||
Other (Note 6) | (80) | (4) | (1) | (85) | |||||||||||||||||||||||||||||||||||||||||||
Balances, December 31, 2018 | — | 1,939 | 31,014 | (10,111) | (35,301) | 1,720 | (10,739) | ||||||||||||||||||||||||||||||||||||||||
Net earnings | 7,185 | 543 | 7,728 | ||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive earnings (losses), net of income taxes
|
219 | 43 | 262 | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of stock awards
|
79 | 81 | 160 | ||||||||||||||||||||||||||||||||||||||||||||
Dividends declared ($4.62 per share)
|
(7,212) | (7,212) | |||||||||||||||||||||||||||||||||||||||||||||
Payments to noncontrolling interests | (378) | (378) | |||||||||||||||||||||||||||||||||||||||||||||
Deconsolidation of RBH (Note 20) | 529 | 529 | |||||||||||||||||||||||||||||||||||||||||||||
Other | 1 | — | 50 | 51 | |||||||||||||||||||||||||||||||||||||||||||
Balances, December 31, 2019 | — | 2,019 | 30,987 | (9,363) | (35,220) | 1,978 | (9,599) | ||||||||||||||||||||||||||||||||||||||||
Net earnings | 8,056 | 536 | 8,592 | ||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive earnings (losses), net of income taxes
|
(1,818) | 38 | (1,780) | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of stock awards
|
69 | 91 | 160 | ||||||||||||||||||||||||||||||||||||||||||||
Dividends declared ($4.74 per share)
|
(7,405) | (7,405) | |||||||||||||||||||||||||||||||||||||||||||||
Payments to noncontrolling interests | (602) | (602) | |||||||||||||||||||||||||||||||||||||||||||||
Other | 17 | — | (14) | 3 | |||||||||||||||||||||||||||||||||||||||||||
Balances, December 31, 2020 | $ | — | $ | 2,105 | $ | 31,638 | $ | (11,181) | $ | (35,129) | $ | 1,936 | $ | (10,631) |
Note 1. |
Note 2. |
Note 3. |
(in millions) | European Union | Eastern Europe | Middle East & Africa | South & Southeast Asia | East Asia & Australia | Latin America & Canada | Total | ||||||||||||||||
Balance at January 1, 2019 | $ | 1,357 | $ | 303 | $ | 87 | $ | 2,795 | $ | 536 | $ | 2,111 | $ | 7,189 | |||||||||
Changes due to: | |||||||||||||||||||||||
Currency | (19) | (3) | 2 | 103 | 15 | 34 | 132 | ||||||||||||||||
Deconsolidation of RBH | (1,463) | (1,463) | |||||||||||||||||||||
Balances, December 31, 2019 | 1,338 | 300 | 89 | 2,898 | 551 | 682 | 5,858 | ||||||||||||||||
Changes due to: | |||||||||||||||||||||||
Currency | 96 | 17 | (3) | 17 | 8 | (29) | 106 | ||||||||||||||||
Balances, December 31, 2020 | $ | 1,434 | $ | 317 | $ | 86 | $ | 2,915 | $ | 559 | $ | 653 | $ | 5,964 |
December 31, 2020 | December 31, 2019 | |||||||||||||||||||||||||
(in millions)
|
Weighted-Average Remaining Useful Life | Gross Carrying Amount | Accumulated Amortization | Net | Gross Carrying Amount | Accumulated Amortization | Net | |||||||||||||||||||
Non-amortizable intangible assets | $ | 1,289 | $ | 1,289 | $ | 1,319 | $ | 1,319 | ||||||||||||||||||
Amortizable intangible assets: | ||||||||||||||||||||||||||
Trademarks | 13 years | 1,233 | $ | 594 | 639 | 1,217 | $ | 526 | 691 | |||||||||||||||||
Distribution networks | 7 years | 115 | 78 | 37 | 113 | 72 | 41 | |||||||||||||||||||
Other* | 8 years | 104 | 50 | 54 | 106 | 44 | 62 | |||||||||||||||||||
Total other intangible assets | $ | 2,741 | $ | 722 | $ | 2,019 | $ | 2,755 | $ | 642 | $ | 2,113 |
Note 4. |
For the Years Ended December 31, | ||||||||||||||
(in millions) | 2020 | 2019 | 2018 | |||||||||||
Net revenues | ||||||||||||||
Megapolis Group | $ | 2,174 | $ | 2,236 | $ | 1,994 | ||||||||
Other | 1,059 | 1,015 | 720 | |||||||||||
Net revenues (a)
|
$ | 3,233 | $ | 3,251 | $ | 2,714 | ||||||||
Expenses: | ||||||||||||||
Other | $ | 51 | $ | 63 | $ | 21 | ||||||||
Expenses | $ | 51 | $ | 63 | $ | 21 |
At December 31, | |||||||||||
(in millions) | 2020 | 2019 | |||||||||
Receivables: | |||||||||||
Megapolis Group | $ | 209 | $ | 375 | |||||||
Other | 156 | 148 | |||||||||
Receivables | $ | 365 | $ | 523 | |||||||
Payables: | |||||||||||
Other | $ | 13 | $ | 20 | |||||||
Payables | $ | 13 | $ | 20 | |||||||
Note 5. |
At December 31, | ||||||||
(in millions) | 2020 | 2019 | ||||||
Balance at beginning of period | $ | 140 | $ | 67 | ||||
Changes due to: | ||||||||
Warranties issued | 242 | 303 | ||||||
Settlements | (254) | (230) | ||||||
Currency/Other | 9 | — | ||||||
Balance at end of period | $ | 137 | $ | 140 |
Note 6. |
Note 7. |
December 31, 2020 | December 31, 2019 | ||||||||||||||||||||||
(in millions) | Amount Outstanding | Average Year-End Rate | Amount Outstanding | Average Year-End Rate | |||||||||||||||||||
Commercial paper
|
$ | — | — | % | $ | — | — | % | |||||||||||||||
Bank loans
|
244 | 5.3 | 338 | 5.5 | |||||||||||||||||||
$ | 244 | $ | 338 |
December 31, | |||||||||||
(in millions)
|
2020 | 2019 | |||||||||
U.S. dollar notes, 0.875% to 6.375% (average interest rate 3.199%), due through 2044
|
$ | 21,221 | $ | 19,783 | |||||||
Foreign currency obligations: | |||||||||||
Euro notes, 0.125% to 3.125% (average interest rate 1.983%), due through 2039
|
9,253 | 9,822 | |||||||||
Swiss franc notes, 1.625% to 2.000% (average interest rate 1.830%), due through 2024
|
622 | 899 | |||||||||
Other (average interest rate 3.187%), due through 2025 (a)
|
196 | 203 | |||||||||
Carrying value of long-term debt | 31,292 | 30,707 | |||||||||
Less current portion of long-term debt
|
3,124 | 4,051 | |||||||||
$ | 28,168 | $ | 26,656 |
December 31,
|
|||||||||||||||||||||||
(in millions)
|
2020 | 2019 | |||||||||||||||||||||
Level 1 | $ | 35,227 | $ | 32,821 | |||||||||||||||||||
Level 2 | 177 | 167 |
(in millions)
|
||||||||||||||||||||||||||
Type
|
Face Value |
Interest
Rate |
Issuance | Maturity | ||||||||||||||||||||||
U.S. dollar notes
|
$750 | 1.875% | February 2016 | February 2021 | ||||||||||||||||||||||
U.S. dollar notes
|
$350 | 4.125% | May 2011 | May 2021 | ||||||||||||||||||||||
U.S. dollar notes
|
$750 | 2.900% | November 2011 | November 2021 | ||||||||||||||||||||||
U.S. dollar notes
|
$500 | 2.625% | February 2017 | February 2022 | ||||||||||||||||||||||
U.S. dollar notes
|
$750 | 2.375% | August 2017 | August 2022 | ||||||||||||||||||||||
U.S. dollar notes
|
$750 | 2.500% | August 2012 | August 2022 | ||||||||||||||||||||||
U.S. dollar notes
|
$750 | 2.500% | November 2017 | November 2022 | ||||||||||||||||||||||
U.S. dollar notes
|
$600 | 2.625% | March 2013 | March 2023 | ||||||||||||||||||||||
U.S. dollar notes
|
$500 | 2.125% | May 2016 | May 2023 | ||||||||||||||||||||||
U.S. dollar notes
|
$750 | 1.125% | May 2020 | May 2023 | ||||||||||||||||||||||
U.S. dollar notes
|
$500 | 3.600% | November 2013 | November 2023 | ||||||||||||||||||||||
U.S. dollar notes
|
$900 | 2.875% | May 2019 | May 2024 | ||||||||||||||||||||||
U.S. dollar notes
|
$750 | 3.250% | November 2014 | November 2024 | ||||||||||||||||||||||
U.S. dollar notes
|
$750 | 1.500% | May 2020 | May 2025 | ||||||||||||||||||||||
U.S. dollar notes
|
$750 | 3.375% | August 2015 | August 2025 | ||||||||||||||||||||||
U.S. dollar notes
|
$750 | 2.750% | February 2016 | February 2026 | ||||||||||||||||||||||
U.S. dollar notes
|
$750 | 0.875% | November 2020 | May 2026 | ||||||||||||||||||||||
U.S. dollar notes
|
$500 | 3.125% | August 2017 | August 2027 | ||||||||||||||||||||||
U.S. dollar notes
|
$500 | 3.125% | November 2017 | March 2028 | ||||||||||||||||||||||
U.S. dollar notes
|
$750 | 3.375% | May 2019 | August 2029 | ||||||||||||||||||||||
U.S. dollar notes
|
$750 | 2.100% | May 2020 | May 2030 | ||||||||||||||||||||||
U.S. dollar notes
|
$750 | 1.750% | November 2020 | November 2030 | ||||||||||||||||||||||
U.S. dollar notes
|
$1,500 | 6.375% | May 2008 | May 2038 | ||||||||||||||||||||||
U.S. dollar notes
|
$750 | 4.375% | November 2011 | November 2041 | ||||||||||||||||||||||
U.S. dollar notes
|
$700 | 4.500% | March 2012 | March 2042 | ||||||||||||||||||||||
U.S. dollar notes
|
$750 | 3.875% | August 2012 | August 2042 | ||||||||||||||||||||||
U.S. dollar notes
|
$850 | 4.125% | March 2013 | March 2043 | ||||||||||||||||||||||
U.S. dollar notes
|
$750 | 4.875% | November 2013 | November 2043 | ||||||||||||||||||||||
U.S. dollar notes
|
$750 | 4.250% | November 2014 | November 2044 | ||||||||||||||||||||||
U.S. dollar notes
|
(a)
|
$500 | 4.250% | May 2016 | November 2044 | |||||||||||||||||||||
EURO notes
|
(b)
|
€750 (approximately $1,029)
|
1.875% | March 2014 | March 2021 | |||||||||||||||||||||
EURO notes
|
(b)
|
€600 (approximately $761)
|
2.875% | May 2012 | May 2024 | |||||||||||||||||||||
EURO notes
|
(b)
|
€500 (approximately $582)
|
0.625% | November 2017 | November 2024 | |||||||||||||||||||||
EURO notes
|
(b)
|
€750 (approximately $972)
|
2.750% | March 2013 | March 2025 | |||||||||||||||||||||
EURO notes
|
(b)
|
€1,000 (approximately $1,372)
|
2.875% | March 2014 | March 2026 | |||||||||||||||||||||
EURO notes
|
(b)
|
€500 (approximately $557)
|
0.125% | August 2019 | August 2026 | |||||||||||||||||||||
EURO notes
|
(b)
|
€500 (approximately $697)
|
2.875% | May 2014 | May 2029 | |||||||||||||||||||||
EURO notes
|
(b)
|
€750 (approximately $835)
|
0.800% | August 2019 | August 2031 | |||||||||||||||||||||
EURO notes
|
(b)
|
€500 (approximately $648)
|
3.125% | June 2013 | June 2033 | |||||||||||||||||||||
EURO notes
|
(b)
|
€500 (approximately $578)
|
2.000% | May 2016 | May 2036 | |||||||||||||||||||||
EURO notes
|
(b)
|
€500 (approximately $582)
|
1.875% | November 2017 | November 2037 | |||||||||||||||||||||
EURO notes
|
(b)
|
€750 (approximately $835)
|
1.450% | August 2019 | August 2039 | |||||||||||||||||||||
Swiss franc notes
|
(b)
|
CHF300 (approximately $335)
|
2.000% | December 2011 | December 2021 | |||||||||||||||||||||
Swiss franc notes
|
(b)
|
CHF250 (approximately $283)
|
1.625% | May 2014 | May 2024 | |||||||||||||||||||||
(in millions)
|
|||||
2021 | $ | 3,124 | |||
2022 | 2,760 | ||||
2023 | 2,362 | ||||
2024 | 3,442 | ||||
2025 | 2,424 | ||||
2026-2030 | 7,206 | ||||
2031-2035 | 1,535 | ||||
Thereafter | 8,699 | ||||
31,552 | |||||
Debt discounts | (260) | ||||
Total long-term debt | $ | 31,292 |
Type
(in billions of dollars) |
Committed
Credit Facilities |
||||||||||
364-day revolving credit, expiring February 2, 2021
|
$ | 2.0 | |||||||||
Multi-year revolving credit, expiring October 1, 2022
|
3.5 | ||||||||||
Multi-year revolving credit, expiring February 10, 2025
|
2.0 | ||||||||||
Total facilities
|
$ | 7.5 | |||||||||
Note 8. |
Shares Issued |
Shares
Repurchased |
Shares
Outstanding |
|||||||||||||||
Balances, January 1, 2018 | 2,109,316,331 | (556,098,569) | 1,553,217,762 | ||||||||||||||
Issuance of stock awards | 1,361,959 | 1,361,959 | |||||||||||||||
Balances, December 31, 2018 | 2,109,316,331 | (554,736,610) | 1,554,579,721 | ||||||||||||||
Issuance of stock awards | 1,314,942 | 1,314,942 | |||||||||||||||
Balances, December 31, 2019 | 2,109,316,331 | (553,421,668) | 1,555,894,663 | ||||||||||||||
Issuance of stock awards | 1,479,068 | 1,479,068 | |||||||||||||||
Balances, December 31, 2020 | 2,109,316,331 | (551,942,600) | 1,557,373,731 |
Note 9. |
Number of
Shares |
Weighted-
Average Grant Date Fair Value Per Share |
|||||||
Balance at January 1, 2020 | 3,725,870 | $ | 89.85 | |||||
Granted | 1,728,680 | 85.79 | ||||||
Vested | (1,206,871) | 96.91 | ||||||
Forfeited | (149,439) | 85.50 | ||||||
Balance at December 31, 2020 | 4,098,240 | $ | 86.21 |
(in millions, except per RSU award granted) | Total Grant Date Fair Value of RSU Awards Granted | Weighted-Average Grant Date Fair Value Per RSU Award Granted | Compensation Expense related to RSU Awards | |||||||||||
2020 | $ | 148 | $ | 85.79 | $ | 129 | ||||||||
2019 | $ | 133 | $ | 77.28 | $ | 118 | ||||||||
2018 | $ | 129 | $ | 100.19 | $ | 114 |
(dollars in millions) | Shares of RSU Awards that Vested | Grant Date Fair Value of Vested Shares of RSU Awards | Total Fair Value of RSU Awards that Vested | |||||||||||
2020 | 1,206,871 | $ | 117 | $ | 102 | |||||||||
2019 | 1,126,057 | $ | 101 | $ | 95 | |||||||||
2018 | 1,451,876 | $ | 121 | $ | 149 |
Number of
Shares |
Grant Date
Fair Value Subject to Other Performance Factors |
Grant Date
Fair Value Subject to TSR Performance Factor |
||||||||||||
(Per Share) | (Per Share) | |||||||||||||
Balance at January 1, 2020 | 1,347,460 | $ | 88.19 | $ | 107.61 | |||||||||
Granted | 671,220 | 86.04 | 80.36 | |||||||||||
Vested | (343,806) | 85.72 | 128.72 | |||||||||||
Forfeited | (202,074) | 95.66 | 116.67 | |||||||||||
Balance at December 31, 2020 | 1,472,800 | $ | 86.76 | $ | 90.48 |
(in millions, except per PSU award granted) | PSU Grant Date Fair Value Subject to Other Performance Factors | PSU Grant Date Fair Value Subject to TSR Performance Factor | Compensation Expense related to PSU Awards | ||||||||||||||||||||
Total | Per PSU Award | Total | Per PSU Award | Total | |||||||||||||||||||
2020 | $ | 28 | $ | 86.04 | $ | 28 | $ | 80.36 | $ | 38 | |||||||||||||
2019 | $ | 30 | $ | 77.23 | $ | 21 | $ | 83.59 | $ | 54 | |||||||||||||
2018 | $ | 20 | $ | 100.69 | $ | 24 | $ | 118.98 | $ | 24 |
For the Years Ended December 31, | ||||||||||||||||||||
2020 | 2019 | 2018 | ||||||||||||||||||
Risk-free interest rate (a)
|
1.4 | % | 2.4 | % | 2.3 | % | ||||||||||||||
Expected volatility | 23.5 | % |
(b)
|
21.4 | % |
(b)
|
19.6 | % |
(c)
|
(dollars in millions) | Shares of PSU Awards that Vested | Grant Date Fair Value of Vested Shares of PSU Awards | Total Fair Value of PSU Awards that Vested | |||||||||||
2020 | 343,806 | $ | 35 | $ | 30 | |||||||||
2019 | 330,616 | $ | 32 | $ | 28 |
Note 10. |
For the Years Ended December 31, | |||||||||||||||||
(in millions)
|
2020 | 2019 | 2018 | ||||||||||||||
Net earnings attributable to PMI | $ | 8,056 | $ | 7,185 | $ | 7,911 | |||||||||||
Less distributed and undistributed earnings attributable to share-based payment awards | 20 | 17 | 16 | ||||||||||||||
Net earnings for basic and diluted EPS | $ | 8,036 | $ | 7,168 | $ | 7,895 | |||||||||||
Weighted-average shares for basic EPS | 1,557 | 1,555 | 1,555 | ||||||||||||||
Plus contingently issuable performance stock units (PSUs) | 1 | 1 | — | ||||||||||||||
Weighted-average shares for diluted EPS | 1,558 | 1,556 | 1,555 |
Note 11. |
(in millions)
|
2020 | 2019 | 2018 | ||||||||||||||
Earnings before income taxes
|
$ | 10,953 | $ | 9,872 | $ | 10,671 | |||||||||||
Provision for income taxes:
|
|||||||||||||||||
United States federal and state:
|
|||||||||||||||||
Current
|
$ | (80) | $ | 17 | $ | 120 | |||||||||||
Deferred
|
53 | 24 | (113) | ||||||||||||||
Total United States
|
(27) | 41 | 7 | ||||||||||||||
Outside United States:
|
|||||||||||||||||
Current
|
2,600 | 2,417 | 2,425 | ||||||||||||||
Deferred
|
(196) | (165) | 13 | ||||||||||||||
Total outside United States
|
2,404 | 2,252 | 2,438 | ||||||||||||||
Total provision for income taxes
|
$ | 2,377 | $ | 2,293 | $ | 2,445 |
(in millions)
|
2020 | 2019 | 2018 | ||||||||||||||
Balance at January 1, | $ | 63 | $ | 56 | $ | 145 | |||||||||||
Additions based on tax positions related to the current year
|
11 | 10 | 10 | ||||||||||||||
Additions for tax positions of previous years
|
1 | 1 | 15 | ||||||||||||||
Reductions for tax positions of prior years
|
(4) | (2) | (94) | ||||||||||||||
Reductions due to lapse of statute of limitations
|
(1) | (1) | (3) | ||||||||||||||
Settlements
|
— | — | (19) | ||||||||||||||
Other
|
2 | (1) | 2 | ||||||||||||||
Balance at December 31, | $ | 72 | $ | 63 | $ | 56 |
(in millions)
|
December 31, 2020 | December 31, 2019 | December 31, 2018 | ||||||||||||||
Unrecognized tax benefits
|
$ | 72 | $ | 63 | $ | 56 | |||||||||||
Accrued interest and penalties
|
17 | 16 | 12 | ||||||||||||||
Tax credits and other indirect benefits
|
(9) | (12) | (14) | ||||||||||||||
Liability for tax contingencies
|
$ | 80 | $ | 67 | $ | 54 |
2020 | 2019 | 2018 | |||||||||||||||
U.S. federal statutory rate | 21.0 | % | 21.0 | % | 21.0 | % | |||||||||||
Increase (decrease) resulting from: | |||||||||||||||||
Foreign rate differences | 0.6 | 1.8 | 1.3 | ||||||||||||||
Dividend repatriation cost | 0.4 | (0.5) | 2.5 | ||||||||||||||
Global intangible low-taxed income | 0.1 | 1.4 | 1.2 | ||||||||||||||
U.S. state taxes | 0.2 | 0.7 | (1.1) | ||||||||||||||
Foreign derived intangible income | (0.6) | (1.2) | (1.1) | ||||||||||||||
Other | — | — | (0.9) | ||||||||||||||
Effective tax rate | 21.7 | % | 23.2 | % | 22.9 | % |
At December 31, | |||||||||||
(in millions)
|
2020 | 2019 | |||||||||
Deferred income tax assets: | |||||||||||
Accrued postretirement and postemployment benefits | $ | 225 | $ | 184 | |||||||
Accrued pension costs | 720 | 620 | |||||||||
Inventory | 232 | 176 | |||||||||
Accrued liabilities | 182 | 130 | |||||||||
Net operating loss carryforwards and tax credits | 351 | 486 | |||||||||
Foreign exchange | 27 | — | |||||||||
Other | 124 | 101 | |||||||||
Total deferred income tax assets | 1,861 | 1,697 | |||||||||
Less: valuation allowance | (250) | (304) | |||||||||
Deferred income tax assets, net of valuation allowance | 1,611 | 1,393 | |||||||||
Deferred income tax liabilities: | |||||||||||
Trade names | (374) | (469) | |||||||||
Property, plant and equipment | (200) | (180) | |||||||||
Unremitted earnings | (311) | (243) | |||||||||
Foreign exchange | — | (256) | |||||||||
Total deferred income tax liabilities
|
(885) | (1,148) | |||||||||
Net deferred income tax assets | $ | 726 | $ | 245 |
Note 12. |
For the Years Ended December 31, | |||||||||||||||||
(in millions) | 2020 | 2019 | 2018 | ||||||||||||||
Net revenues: | |||||||||||||||||
European Union | $ | 10,702 | $ | 9,817 | $ | 9,298 | |||||||||||
Eastern Europe | 3,378 | 3,282 | 2,921 | ||||||||||||||
Middle East & Africa | 3,088 | 4,042 | 4,114 | ||||||||||||||
South & Southeast Asia | 4,396 | 5,094 | 4,656 | ||||||||||||||
East Asia & Australia | 5,429 | 5,364 | 5,580 | ||||||||||||||
Latin America & Canada | 1,701 | 2,206 | 3,056 | ||||||||||||||
Net revenues | $ | 28,694 | $ | 29,805 | $ | 29,625 |
For the Years Ended December 31, | |||||||||||||||||
(in millions) | 2020 | 2019 | 2018 | ||||||||||||||
Combustible products: | |||||||||||||||||
European Union | $ | 8,053 | $ | 8,093 | $ | 8,433 | |||||||||||
Eastern Europe | 2,250 | 2,438 | 2,597 | ||||||||||||||
Middle East & Africa | 3,031 | 3,721 | 3,732 | ||||||||||||||
South & Southeast Asia | 4,395 | 5,094 | 4,656 | ||||||||||||||
East Asia & Australia | 2,468 | 2,693 | 3,074 | ||||||||||||||
Latin America & Canada | 1,670 | 2,179 | 3,037 | ||||||||||||||
Total combustible products | $ | 21,867 | $ | 24,218 | $ | 25,529 | |||||||||||
Reduced-risk products: | |||||||||||||||||
European Union | $ | 2,649 | $ | 1,724 | $ | 865 | |||||||||||
Eastern Europe | 1,128 | 844 | 324 | ||||||||||||||
Middle East & Africa | 57 | 321 | 382 | ||||||||||||||
South & Southeast Asia | 1 | — | — | ||||||||||||||
East Asia & Australia | 2,961 | 2,671 | 2,506 | ||||||||||||||
Latin America & Canada | 31 | 27 | 19 | ||||||||||||||
Total reduced-risk products | $ | 6,827 | $ | 5,587 | $ | 4,096 | |||||||||||
Total PMI net revenues | $ | 28,694 | $ | 29,805 | $ | 29,625 |
For the Years Ended December 31, | |||||||||||||||||
(in millions)
|
2020 | 2019 | 2018 | ||||||||||||||
Operating income:
|
|||||||||||||||||
European Union | $ | 5,098 | $ | 3,970 | $ | 4,105 | |||||||||||
Eastern Europe | 871 | 547 | 902 | ||||||||||||||
Middle East & Africa | 1,026 | 1,684 | 1,627 | ||||||||||||||
South & Southeast Asia | 1,709 | 2,163 | 1,747 | ||||||||||||||
East Asia & Australia | 2,400 | 1,932 | 1,851 | ||||||||||||||
Latin America & Canada | 564 | 235 | 1,145 | ||||||||||||||
Operating income
|
$ | 11,668 | $ | 10,531 | $ | 11,377 |
For the Years Ended December 31, | |||||||||||||||||
(in millions)
|
2020 | 2019 | 2018 | ||||||||||||||
Depreciation expense:
|
|||||||||||||||||
European Union | $ | 266 | $ | 254 | $ | 269 | |||||||||||
Eastern Europe | 173 | 147 | 101 | ||||||||||||||
Middle East & Africa | 75 | 90 | 105 | ||||||||||||||
South & Southeast Asia | 137 | 142 | 154 | ||||||||||||||
East Asia & Australia | 188 | 185 | 173 | ||||||||||||||
Latin America & Canada | 58 | 69 | 94 | ||||||||||||||
897 | 887 | 896 | |||||||||||||||
Other | 11 | 11 | 11 | ||||||||||||||
Total depreciation expense
|
$ | 908 | $ | 898 | $ | 907 |
For the Years Ended December 31, | |||||||||||||||||
(in millions)
|
2020 | 2019 | 2018 | ||||||||||||||
Capital expenditures:
|
|||||||||||||||||
European Union | $ | 326 | $ | 466 | $ | 813 | |||||||||||
Eastern Europe | 88 | 132 | 136 | ||||||||||||||
Middle East & Africa | 22 | 35 | 65 | ||||||||||||||
South & Southeast Asia | 115 | 100 | 129 | ||||||||||||||
East Asia & Australia | 13 | 67 | 215 | ||||||||||||||
Latin America & Canada | 36 | 52 | 74 | ||||||||||||||
600 | 852 | 1,432 | |||||||||||||||
Other | 2 | — | 4 | ||||||||||||||
Total capital expenditures
|
$ | 602 | $ | 852 | $ | 1,436 |
At December 31, | |||||||||||||||||
(in millions)
|
2020 | 2019 | 2018 | ||||||||||||||
Long-lived assets:
|
|||||||||||||||||
European Union | $ | 4,500 | $ | 4,275 | $ | 4,216 | |||||||||||
Eastern Europe | 668 | 774 | 547 | ||||||||||||||
Middle East & Africa | 375 | 369 | 362 | ||||||||||||||
South & Southeast Asia | 1,348 | 1,361 | 1,297 | ||||||||||||||
East Asia & Australia | 807 | 829 | 781 | ||||||||||||||
Latin America & Canada | 433 | 478 | 779 | ||||||||||||||
Total long-lived assets | 8,131 | 8,086 | 7,982 | ||||||||||||||
Other | 1,001 | 516 | 664 | ||||||||||||||
Total property, plant and equipment, net and Other assets
|
$ | 9,132 | $ | 8,602 | $ | 8,646 |
Note 13. |
(in millions) | 2020 | 2019 | 2018 | ||||||||||||||
Net pension costs (income) | $ | (14) | $ | (18) | $ | (51) | |||||||||||
Net postemployment costs | 103 | 100 | 80 | ||||||||||||||
Net postretirement costs | 8 | 7 | 12 | ||||||||||||||
Total pension and other employee benefit costs | $ | 97 | $ | 89 | $ | 41 |
Pension(1)
|
Postretirement | ||||||||||||||||||||||
(in millions)
|
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Benefit obligation at January 1 | $ | 10,612 | $ | 9,152 | $ | 190 | $ | 209 | |||||||||||||||
Service cost
|
268 | 214 | 2 | 2 | |||||||||||||||||||
Interest cost
|
68 | 118 | 6 | 7 | |||||||||||||||||||
Benefits paid(2)
|
(356) | (333) | (7) | (8) | |||||||||||||||||||
Employee contributions(2)
|
130 | 127 | — | — | |||||||||||||||||||
Settlement, curtailment and plan amendment
|
(117) | 50 | |||||||||||||||||||||
Actuarial losses (gains)
|
653 | 1,430 | 5 | 27 | |||||||||||||||||||
Currency
|
992 | 29 | 3 | — | |||||||||||||||||||
Deconsolidation of RBH | — | (166) | — | (42) | |||||||||||||||||||
Other(2)
|
(7) | (9) | (1) | (5) | |||||||||||||||||||
Benefit obligation at December 31,
|
12,243 | 10,612 | 198 | 190 | |||||||||||||||||||
Fair value of plan assets at January 1,
|
7,928 | 6,888 | |||||||||||||||||||||
Actual return on plan assets
|
206 | 1,211 | |||||||||||||||||||||
Employer contributions
|
102 | 200 | |||||||||||||||||||||
Employee contributions(2)
|
130 | 127 | |||||||||||||||||||||
Benefits paid(2)
|
(356) | (333) | |||||||||||||||||||||
Settlement
|
(16) | — | |||||||||||||||||||||
Currency
|
752 | 7 | |||||||||||||||||||||
Deconsolidation of RBH | — | (172) | |||||||||||||||||||||
Fair value of plan assets at December 31,
|
8,746 | 7,928 | |||||||||||||||||||||
Net pension and postretirement liability recognized at December 31,
|
$ | (3,497) | $ | (2,684) | $ | (198) | $ | (190) |
Pension | Postretirement | ||||||||||||||||||||||
(in millions)
|
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Other assets
|
$ | 43 | $ | 43 | |||||||||||||||||||
Accrued liabilities — employment costs
|
(26) | (23) | $ | (8) | $ | (8) | |||||||||||||||||
Long-term employment costs
|
(3,514) | (2,704) | (190) | (182) | |||||||||||||||||||
$ | (3,497) | $ | (2,684) | $ | (198) | $ | (190) |
Pension | Postretirement | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Discount rate
|
0.56 | % | 0.83 | % | 2.84 | % | 3.28 | % | |||||||||||||||
Rate of compensation increase
|
1.79 | 1.82 | |||||||||||||||||||||
Interest crediting rate
|
3.20 | 3.20 | |||||||||||||||||||||
Health care cost trend rate assumed for next year
|
6.21 | 6.21 | |||||||||||||||||||||
Ultimate trend rate
|
4.73 | 5.09 | |||||||||||||||||||||
Year that rate reaches the ultimate trend rate
|
2029 | 2023 |
Pension | Postretirement | ||||||||||||||||||||||||||||||||||
(in millions)
|
2020 | 2019 | 2018 | 2020 | 2019 | 2018 | |||||||||||||||||||||||||||||
Service cost
|
$ | 268 | $ | 214 | $ | 210 | $ | 2 | $ | 2 | $ | 4 | |||||||||||||||||||||||
Interest cost
|
68 | 118 | 109 | 6 | 7 | 9 | |||||||||||||||||||||||||||||
Expected return on plan assets
|
(353) | (328) | (349) | — | — | — | |||||||||||||||||||||||||||||
Amortization:
|
|||||||||||||||||||||||||||||||||||
Net losses
|
265 | 189 | 172 | 2 | — | 4 | |||||||||||||||||||||||||||||
Prior service cost
|
1 | (1) | 2 | — | — | (1) | |||||||||||||||||||||||||||||
Net transition obligation
|
1 | — | — | — | — | — | |||||||||||||||||||||||||||||
Settlement and curtailment
|
4 | 4 | 15 | — | — | — | |||||||||||||||||||||||||||||
Net periodic pension and postretirement costs | $ | 254 | $ | 196 | $ | 159 | $ | 10 | $ | 9 | $ | 16 |
Pension | Postretirement | ||||||||||||||||||||||||||||||||||
2020 | 2019 | 2018 | 2020 | 2019 | 2018 | ||||||||||||||||||||||||||||||
Discount rate - service cost
|
1.25 | % | 2.14 | % | 1.92 | % | 3.28 | % | 3.97 | % | 3.79 | % | |||||||||||||||||||||||
Discount rate - interest cost
|
0.67 | 1.35 | 1.25 | 3.28 | 3.97 | 3.79 | |||||||||||||||||||||||||||||
Expected rate of return on plan assets
|
4.59 | 4.70 | 4.76 | ||||||||||||||||||||||||||||||||
Rate of compensation increase
|
1.82 | 1.86 | 1.65 | ||||||||||||||||||||||||||||||||
Interest crediting rate
|
3.20 | 3.40 | 3.40 | ||||||||||||||||||||||||||||||||
Health care cost trend rate
|
6.21 | 6.17 | 6.17 |
Asset Category
(in millions) |
At December 31, 2020 |
Quoted Prices
In Active Markets for Identical Assets/Liabilities (Level 1) |
Significant
Other Observable Inputs (Level 2) |
Significant
Unobservable Inputs (Level 3) |
|||||||||||||||||||
Cash and cash equivalents
|
$ | 324 | $ | 324 | |||||||||||||||||||
Equity securities:
|
|||||||||||||||||||||||
U.S. securities
|
175 | 175 | |||||||||||||||||||||
International securities
|
605 | 605 | |||||||||||||||||||||
Investment funds(a)
|
6,811 | 5,206 | $ | 1,605 | |||||||||||||||||||
International government bonds
|
225 | 149 | 76 | ||||||||||||||||||||
Corporate bonds
|
292 | 292 | |||||||||||||||||||||
Other
|
7 | 7 | |||||||||||||||||||||
Total assets in the fair value hierarchy
|
$ | 8,439 | $ | 6,758 | $ | 1,681 | $ | — | |||||||||||||||
Investment funds measured at net asset value(b)
|
307 | ||||||||||||||||||||||
Total assets
|
$ | 8,746 |
Asset Category
(in millions) |
At December 31, 2019 |
Quoted Prices
In Active Markets for Identical Assets/Liabilities (Level 1) |
Significant
Other Observable Inputs (Level 2) |
Significant
Unobservable Inputs (Level 3) |
|||||||||||||||||||
Cash and cash equivalents
|
$ | 276 | $ | 276 | |||||||||||||||||||
Equity securities:
|
|||||||||||||||||||||||
U.S. securities
|
170 | 170 | |||||||||||||||||||||
International securities
|
563 | 563 | |||||||||||||||||||||
Investment funds(a)
|
6,125 | 4,625 | $ | 1,500 | |||||||||||||||||||
International government bonds
|
197 | 137 | 60 | ||||||||||||||||||||
Corporate bonds
|
282 | 282 | |||||||||||||||||||||
Other
|
6 | 6 | |||||||||||||||||||||
Total assets in the fair value hierarchy
|
$ | 7,619 | $ | 6,059 | $ | 1,560 | $ | — | |||||||||||||||
Investment funds measured at net asset value(b)
|
309 | ||||||||||||||||||||||
Total assets
|
$ | 7,928 |
(in millions)
|
Pension |
Post-
retirement |
Post-
employment |
Total | |||||||||||||||||||
Net losses
|
$ | (4,147) | $ | (64) | $ | (839) | $ | (5,050) | |||||||||||||||
Prior service cost
|
22 | 2 | (22) | 2 | |||||||||||||||||||
Net transition obligation
|
(3) | — | — | (3) | |||||||||||||||||||
Deferred income taxes
|
570 | 24 | 204 | 798 | |||||||||||||||||||
Losses to be amortized
|
$ | (3,558) | $ | (38) | $ | (657) | $ | (4,253) |
(in millions)
|
Pension |
Post-
retirement |
Post-
employment |
Total | |||||||||||||||||||
Net losses
|
$ | (3,718) | $ | (63) | $ | (775) | $ | (4,556) | |||||||||||||||
Prior service cost
|
3 | 2 | — | 5 | |||||||||||||||||||
Net transition obligation
|
(4) | — | — | (4) | |||||||||||||||||||
Deferred income taxes
|
520 | 24 | 182 | 726 | |||||||||||||||||||
Losses to be amortized
|
$ | (3,199) | $ | (37) | $ | (593) | $ | (3,829) |
(in millions)
|
Pension |
Post-
retirement |
Post-
employment |
Total | |||||||||||||||||||
Net losses
|
$ | (3,438) | $ | (41) | $ | (702) | $ | (4,181) | |||||||||||||||
Prior service cost
|
(27) | 3 | — | (24) | |||||||||||||||||||
Net transition obligation
|
(4) | — | — | (4) | |||||||||||||||||||
Deferred income taxes
|
379 | 20 | 164 | 563 | |||||||||||||||||||
Losses to be amortized
|
$ | (3,090) | $ | (18) | $ | (538) | $ | (3,646) |
(in millions)
|
Pension |
Post-
retirement |
Post-
employment |
Total | |||||||||||||||||||
Amounts transferred to earnings:
|
|||||||||||||||||||||||
Amortization:
|
|||||||||||||||||||||||
Net losses
|
$ | 250 | $ | 3 | $ | 78 | $ | 331 | |||||||||||||||
Prior service cost
|
29 | — | — | 29 | |||||||||||||||||||
Net transition obligation
|
1 | — | — | 1 | |||||||||||||||||||
Other income/expense:
|
|||||||||||||||||||||||
Net losses
|
3 | — | — | 3 | |||||||||||||||||||
Prior service cost
|
2 | — | — | 2 | |||||||||||||||||||
Deferred income taxes
|
(49) | (1) | (17) | (67) | |||||||||||||||||||
236 | 2 | 61 | 299 | ||||||||||||||||||||
Other movements during the year:
|
|||||||||||||||||||||||
Net losses
|
(682) | (4) | (142) | (828) | |||||||||||||||||||
Prior service cost
|
(12) | — | (22) | (34) | |||||||||||||||||||
Deferred income taxes
|
99 | 1 | 39 | 139 | |||||||||||||||||||
(595) | (3) | (125) | (723) | ||||||||||||||||||||
Total movements in other comprehensive earnings (losses)
|
$ | (359) | $ | (1) | $ | (64) | $ | (424) |
(in millions)
|
Pension |
Post-
retirement |
Post-
employment |
Total | |||||||||||||||||||
Amounts transferred to earnings:
|
|||||||||||||||||||||||
Amortization:
|
|||||||||||||||||||||||
Net losses
|
$ | 198 | $ | 3 | $ | 77 | $ | 278 | |||||||||||||||
Prior service cost
|
32 | (1) | — | 31 | |||||||||||||||||||
Other income/expense:
|
|||||||||||||||||||||||
Net losses
|
3 | — | — | 3 | |||||||||||||||||||
Deferred income taxes
|
(51) | (1) | (17) | (69) | |||||||||||||||||||
182 | 1 | 60 | 243 | ||||||||||||||||||||
Other movements during the year:
|
|||||||||||||||||||||||
Net losses
|
(521) | (27) | (150) | (698) | |||||||||||||||||||
Prior service cost
|
(2) | — | — | (2) | |||||||||||||||||||
Deconsolidation of RBH (net of deferred income taxes) | 26 | 1 | — | 27 | |||||||||||||||||||
Deferred income taxes | 206 | 6 | 35 | 247 | |||||||||||||||||||
(291) | (20) | (115) | (426) | ||||||||||||||||||||
Total movements in other comprehensive earnings (losses)
|
$ | (109) | $ | (19) | $ | (55) | $ | (183) |
(in millions)
|
Pension |
Post-
retirement |
Post-
employment |
Total | |||||||||||||||||||
Amounts transferred to earnings:
|
|||||||||||||||||||||||
Amortization:
|
|||||||||||||||||||||||
Net losses
|
$ | 180 | $ | 5 | $ | 62 | $ | 247 | |||||||||||||||
Prior service cost
|
— | (1) | — | (1) | |||||||||||||||||||
Net transition obligation
|
1 | — | — | 1 | |||||||||||||||||||
Other income/expense:
|
|||||||||||||||||||||||
Net losses
|
14 | — | — | 14 | |||||||||||||||||||
Deferred income taxes | (28) | (1) | (14) | (43) | |||||||||||||||||||
167 | 3 | 48 | 218 | ||||||||||||||||||||
Other movements during the year:
|
|||||||||||||||||||||||
Net losses
|
(1,008) | 34 | (147) | (1,121) | |||||||||||||||||||
Prior service cost
|
8 | — | — | 8 | |||||||||||||||||||
Deferred income taxes | 80 | (7) | (8) | 65 | |||||||||||||||||||
(920) | 27 | (155) | (1,048) | ||||||||||||||||||||
Total movements in other comprehensive earnings (losses)
|
$ | (753) | $ | 30 | $ | (107) | $ | (830) |
Note 14. |
For the Years Ended December 31, | |||||||||||||||||
(in millions)
|
2020 | 2019 | 2018 | ||||||||||||||
Research and development expense
|
$ | 495 | $ | 465 | $ | 383 | |||||||||||
Advertising expense
|
$ | 637 | $ | 730 | $ | 896 | |||||||||||
Foreign currency net transaction (gains)/losses
|
$ | 90 | $ | (95) | $ | 21 | |||||||||||
Interest expense
|
$ | 728 | $ | 796 | $ | 855 | |||||||||||
Interest income
|
(110) | (226) | (190) | ||||||||||||||
Interest expense, net
|
$ | 618 | $ | 570 | $ | 665 | |||||||||||
Total lease cost
|
$ | 317 |
(1)
|
$ | 332 |
(1)
|
$ | 312 |
Note 15. |
Derivative Assets | Derivative Liabilities | ||||||||||||||||||||||||||||||||||
Fair Value
|
Fair Value
|
||||||||||||||||||||||||||||||||||
(in millions)
|
Balance Sheet
Classification
|
2020 | 2019 |
Balance Sheet
Classification
|
2020 | 2019 | |||||||||||||||||||||||||||||
Derivative contracts designated as hedging instruments
|
Other current assets | $ | 130 | $ | 319 | Other accrued liabilities | $ | 241 | $ | 23 | |||||||||||||||||||||||||
Other assets | 6 | 21 | Income taxes and other liabilities | 605 | 301 | ||||||||||||||||||||||||||||||
Derivative contracts not designated as hedging instruments
|
Other current assets
|
46 | 50 | Other accrued liabilities | 207 | 70 | |||||||||||||||||||||||||||||
Other assets | — | — | Income taxes and other liabilities | 57 | 25 | ||||||||||||||||||||||||||||||
Total gross amount derivatives contracts presented in the consolidated balance sheets
|
$ | 182 | $ | 390 | $ | 1,110 | $ | 419 | |||||||||||||||||||||||||||
Gross amounts not offset in the consolidated balance sheets | |||||||||||||||||||||||||||||||||||
Financial instruments | (156) | (297) | (156) | (297) | |||||||||||||||||||||||||||||||
Cash collateral received/pledged | (23) | (91) | (892) | (59) | |||||||||||||||||||||||||||||||
Net amount | $ | 3 | $ | 2 | $ | 62 | $ | 63 |
(pre-tax, in millions) | For the Years Ended December 31, | |||||||||||||||||||||||||||||||||||||||||||
Amount of Gain/(Loss) Recognized in Other Comprehensive Earnings/(Losses) on Derivatives |
Statement of Earnings
Classification of Gain/(Loss) on Derivatives |
Amount of Gain/(Loss) Reclassified from Other Comprehensive Earnings/(Losses) into Earnings | Amount of Gain/(Loss) Recognized in Earnings | |||||||||||||||||||||||||||||||||||||||||
2020 | 2019 | 2018 | 2020 | 2019 | 2018 | 2020 | 2019 | 2018 | ||||||||||||||||||||||||||||||||||||
Derivative contracts designated as hedging instruments: | ||||||||||||||||||||||||||||||||||||||||||||
Cash flow hedges | $ | (81) | $ | (20) | $ | 28 | ||||||||||||||||||||||||||||||||||||||
Net revenues | $ | (3) | $ | 22 | $ | 18 | ||||||||||||||||||||||||||||||||||||||
Cost of sales | 7 | 1 | — | |||||||||||||||||||||||||||||||||||||||||
Marketing, administration and research costs | 27 | 2 | 6 | |||||||||||||||||||||||||||||||||||||||||
Interest expense, net | (11) | (8) | (1) | |||||||||||||||||||||||||||||||||||||||||
Net investment hedges (a)
|
(514) | 369 | 324 |
Interest expense, net (b)
|
$ | 194 | $ | 230 | $ | 260 | ||||||||||||||||||||||||||||||||||
Derivative contracts not designated as hedging instruments | Interest expense, net | 71 | 94 | 62 | ||||||||||||||||||||||||||||||||||||||||
Marketing, administration and research costs (c)
|
(368) | (115) | 378 | |||||||||||||||||||||||||||||||||||||||||
Total | $ | (595) | $ | 349 | $ | 352 | $ | 20 | $ | 17 | $ | 23 | $ | (103) | $ | 209 | $ | 700 |
For the Years Ended December 31, | |||||||||||||||||
(in millions)
|
2020 | 2019 | 2018 | ||||||||||||||
Gain as of January 1,
|
$ | 3 | $ | 35 | $ | 42 | |||||||||||
Derivative (gains)/losses transferred to earnings
|
(20) | (14) | (31) | ||||||||||||||
Change in fair value
|
(68) | (18) | 24 | ||||||||||||||
Gain/(loss) as of December 31,
|
$ | (85) | $ | 3 | $ | 35 |
Note 16. |
(Losses) Earnings | At December 31, | ||||||||||||||||
(in millions)
|
2020 | 2019 | 2018 | ||||||||||||||
Currency translation adjustments
|
$ | (6,843) | $ | (5,537) | $ | (6,500) | |||||||||||
Pension and other benefits
|
(4,253) | (3,829) | (3,646) | ||||||||||||||
Derivatives accounted for as hedges
|
(85) | 3 | 35 | ||||||||||||||
Total accumulated other comprehensive losses
|
$ | (11,181) | $ | (9,363) | $ | (10,111) |
Note 17. |
Type of Case | Number of Cases Pending as of February 5, 2021 | Number of Cases Pending as of February 3, 2020 | Number of Cases Pending as of February 4, 2019 | |||||||||||||||||
Individual Smoking and Health Cases | 43 | 50 | 55 | |||||||||||||||||
Smoking and Health Class Actions | 9 | 10 | 10 | |||||||||||||||||
Health Care Cost Recovery Actions | 17 | 17 | 16 | |||||||||||||||||
Label-Related Class Actions | — | — | 1 | |||||||||||||||||
Individual Label-Related Cases | 5 | 5 | 7 | |||||||||||||||||
Public Civil Actions | 2 | 2 | 2 |
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 $12.1 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 $2.4 billion)). The trial court awarded CAD 90,000 (approximately $70,250) in punitive damages, allocating CAD 30,000 (approximately $23,400) to our subsidiary. The trial court ordered defendants to pay CAD 1 billion (approximately $781 million) of the compensatory damage award, CAD 200 million (approximately $156.1 million) of which is our subsidiary’s portion, into a trust within 60 days.
|
In June 2015, RBH commenced the appellate process with the Court of Appeal of Quebec. On March 1, 2019, the Court of Appeal issued a decision largely affirming the trial court's decision. (See “Stayed Litigation — Canada” for further detail.)
|
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 $102.3 million) in punitive damages, allocating CAD 46 million (approximately $36 million) to RBH. 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, RBH commenced the appellate process with the Court of Appeal of Quebec. On March 1, 2019, the Court of Appeal issued a decision largely affirming the trial court's decision. (See “Stayed Litigation — Canada” 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 $1,252), plus interest, in compensatory and moral damages. The trial 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. On October 31, 2017, the Civil and Commercial Court of Appeals of Mar del Plata ruled that plaintiff's claim was barred by the statute of limitations and it reversed the trial court's decision. On November 28, 2017, plaintiff filed an extraordinary appeal of the reversal of the trial court's decision to the Supreme Court of the Province of Buenos Aires. |
Note 18. |
Note 19. |
(in millions)
|
2020 | 2019 | |||||||||||||||
Separation programs: (1)
|
|||||||||||||||||
European Union | $ | 53 | $ | 251 | |||||||||||||
Eastern Europe | 14 | — | |||||||||||||||
Middle East & Africa | 18 | — | |||||||||||||||
South & Southeast Asia | 22 | 3 | |||||||||||||||
East Asia & Australia | 25 | — | |||||||||||||||
Latin America & Canada | 9 | 49 | |||||||||||||||
Total separation programs | 141 | 303 | |||||||||||||||
Asset impairment charges (1)
|
|||||||||||||||||
European Union | 4 | 91 | |||||||||||||||
Eastern Europe | 1 | — | |||||||||||||||
Middle East & Africa | 1 | — | |||||||||||||||
South & Southeast Asia | 1 | 17 | |||||||||||||||
East Asia & Australia | 1 | — | |||||||||||||||
Latin America & Canada | — | 11 | |||||||||||||||
Total asset impairment charges | 8 | 119 | |||||||||||||||
Asset impairment and exit costs | $ | 149 | $ | 422 |
(in millions) | |||||
Liability balance, January 1, 2020 | $ | 191 | |||
Charges, net | 141 | ||||
Cash spent | (163) | ||||
Currency/other | 11 | ||||
Liability balance, December 31, 2020 | $ | 180 |
Note 20. |
Note 21. |
At December 31, | ||||||||
(in millions) | 2020 | 2019 | ||||||
Assets: | ||||||||
Other assets | $ | 697 | $ | 766 | ||||
Liabilities: | ||||||||
Current | ||||||||
Accrued liabilities - Other | $ | 190 | $ | 194 | ||||
Noncurrent | ||||||||
Income taxes and other liabilities | 517 | 569 | ||||||
Total lease liabilities | $ | 707 | $ | 763 |
For the Years Ended December 31, | |||||||||||
(in millions) | 2020 | 2019 | |||||||||
Operating lease cost | $ | 237 | $ | 242 | |||||||
Short-term lease cost | 49 | 61 | |||||||||
Variable lease cost | 31 | 29 | |||||||||
Total lease cost | $ | 317 | $ | 332 |
(in millions) | Total | ||||
2021 | $ | 215 | |||
2022 | 161 | ||||
2023 | 110 | ||||
2024 | 72 | ||||
2025 | 47 | ||||
Thereafter | 291 | ||||
Total lease payments | 896 | ||||
Less: Interest | 189 | ||||
Present value of lease liabilities | $ | 707 |
December 31, | ||||||||
(in millions) | 2020 | 2019 | ||||||
Cash paid for amounts included in the measurement of lease liabilities in Operating cash flows | $ | 238 | $ | 240 | ||||
Leased assets obtained in exchange for new operating lease liabilities | $ | 149 | $ | 221 | ||||
Weighted-average remaining lease term (years) | 10.1 | 9.6 | ||||||
Weighted-average discount rate(1)
|
4.3 | % | 4.4 | % |
Note 22. |
2020 Quarters | |||||||||||||||||||||||
(in millions, except per share data)
|
1st | 2nd | 3rd | 4th | |||||||||||||||||||
Net revenues
|
$ | 7,153 | $ | 6,651 | $ | 7,446 | $ | 7,444 | |||||||||||||||
Gross profit
|
$ | 4,751 | $ | 4,472 | $ | 5,030 | $ | 4,872 | |||||||||||||||
Net earnings attributable to PMI
|
$ | 1,826 | $ | 1,947 | $ | 2,307 | $ | 1,976 | |||||||||||||||
Per share data:
|
|||||||||||||||||||||||
Basic EPS
|
$ | 1.17 | $ | 1.25 | $ | 1.48 | $ | 1.27 | |||||||||||||||
Diluted EPS
|
$ | 1.17 | $ | 1.25 | $ | 1.48 | $ | 1.27 | |||||||||||||||
Dividends declared
|
$ | 1.17 | $ | 1.17 | $ | 1.20 | $ | 1.20 | |||||||||||||||
2019 Quarters | |||||||||||||||||||||||
(in millions, except per share data)
|
1st | 2nd | 3rd | 4th | |||||||||||||||||||
Net revenues
|
$ | 6,751 | $ | 7,699 | $ | 7,642 | $ | 7,713 | |||||||||||||||
Gross profit
|
$ | 4,286 | $ | 5,034 | $ | 5,037 | $ | 4,935 | |||||||||||||||
Net earnings attributable to PMI
|
$ | 1,354 | $ | 2,319 | $ | 1,896 | $ | 1,616 | |||||||||||||||
Per share data:
|
|||||||||||||||||||||||
Basic EPS
|
$ | 0.87 | $ | 1.49 | $ | 1.22 | $ | 1.04 | |||||||||||||||
Diluted EPS
|
$ | 0.87 | $ | 1.49 | $ | 1.22 | $ | 1.04 | |||||||||||||||
Dividends declared
|
$ | 1.14 | $ | 1.14 | $ | 1.17 | $ | 1.17 | |||||||||||||||
/S/ PRICEWATERHOUSECOOPERS SA
|
||||||||
PricewaterhouseCoopers SA
|
||||||||
/S/ CHAD MUELLER
|
/S/ TRAVIS RANDOLPH
|
|||||||
Chad Mueller | Travis Randolph | |||||||
Lausanne, Switzerland | ||||||||
February 9, 2021 |
Name | Office | Age | |||||||||||||||
André Calantzopoulos* | Chief Executive Officer | 63 | |||||||||||||||
Massimo Andolina | Senior Vice President, Operations | 52 | |||||||||||||||
Drago Azinovic | President, Middle East & Africa Region and PMI Duty Free | 58 | |||||||||||||||
Emmanuel Babeau | Chief Financial Officer | 53 | |||||||||||||||
Werner Barth | Senior Vice President, Commercial | 56 | |||||||||||||||
Charles Bendotti | Global Head, People & Culture | 48 | |||||||||||||||
Frank de Rooij | Vice President, Treasury and Corporate Finance | 55 | |||||||||||||||
Frederic de Wilde | President, European Union Region | 53 | |||||||||||||||
Suzanne Rich Folsom | Senior Vice President and General Counsel | 59 | |||||||||||||||
Jorge Insuasty | Chief Life Sciences Officer | 62 | |||||||||||||||
Stacey Kennedy | President, South and Southeast Asia Region | 48 | |||||||||||||||
Martin G. King | CEO, PMI America | 56 | |||||||||||||||
Michael Kunst | Senior Vice President, Commercial Transformation | 52 | |||||||||||||||
Andreas Kurali | Vice President and Controller | 55 | |||||||||||||||
Bin Li | Chief Product Officer | 49 | |||||||||||||||
Marco Mariotti | President, Eastern Europe Region | 56 | |||||||||||||||
Mario Masseroli | President, Latin America and Canada Region | 50 | |||||||||||||||
Deepak Mishra | Chief Strategy Officer | 49 | |||||||||||||||
Silke Muenster | Chief Diversity Officer | 60 | |||||||||||||||
Jacek Olczak* | Chief Operating Officer | 56 | |||||||||||||||
Paul Riley | President, East Asia and Australia Region | 55 | |||||||||||||||
Marian Salzman | Senior Vice President, Global Communications | 61 | |||||||||||||||
Gregoire Verdeaux | Senior Vice President, External Affairs | 48 | |||||||||||||||
Michael Voegele | Chief Technology Officer | 48 | |||||||||||||||
Stefano Volpetti | Chief Consumer Officer | 49 |
Number of Securities
to be Issued upon
Exercise of Outstanding
Options and Vesting of RSUs and PSUs
(a)
|
Weighted Average
Exercise Price of
Outstanding Options
(b)
|
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation Plans
(excluding Securities
reflected in column (a))
(c)
|
||||||||||||||||||
Equity compensation plans
approved by stockholders |
6,921,160 |
1
|
$ | — | 18,227,298 |
Page | |||||
Consolidated Statements of Earnings for the years ended December 31, 2020, 2019 and 2018 | |||||
Consolidated Statements of Comprehensive Earnings for the years ended December 31,
2020, 2019 and 2018 |
60 | ||||
Consolidated Balance Sheets at December 31, 2020 and 2019 | |||||
Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019
and 2018 |
|||||
Consolidated Statements of Stockholders’ (Deficit) Equity for the years ended
December 31, 2020, 2019 and 2018 |
|||||
Notes to Consolidated Financial Statements | |||||
Report of Independent Registered Public Accounting Firm |
116 - 118
|
||||
Report of Management on Internal Control Over Financial Reporting |
2.1 | — | |||||||||||||
3.1 | — | |||||||||||||
3.2 | — | |||||||||||||
4.1 | — | |||||||||||||
4.2 | — | |||||||||||||
4.3 | — | |||||||||||||
4.4 | — |
4.6 | — | The Registrant agrees to furnish copies of any instruments defining the rights of holders of long-term debt of the Registrant and its consolidated subsidiaries that does not exceed 10 percent of the total assets of the Registrant and its consolidated subsidiaries to the Commission upon request. | ||||||||||||
10.1 | — | |||||||||||||
10.2 | — | |||||||||||||
10.3 | __ |
10.16 | — | |||||||||||||
10.17 | — |
10.37 | — | |||||||||||||
10.38 | — | |||||||||||||
10.39 | — | |||||||||||||
10.40 | — | |||||||||||||
10.41 | — | |||||||||||||
10.42 | — | |||||||||||||
10.43 | — | |||||||||||||
10.44 | — | |||||||||||||
10.45 | — | |||||||||||||
10.46 | — | |||||||||||||
10.47 | — | |||||||||||||
10.48 | — |
21 | — | |||||||||||||
23 | — | |||||||||||||
24 | — | |||||||||||||
31.1 | — | |||||||||||||
31.2 | — | |||||||||||||
32.1 | — | |||||||||||||
32.2 | — | |||||||||||||
101.INS | — |
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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. | ||||||||||||
104 | — | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
PHILIP MORRIS INTERNATIONAL INC. | |||||
By: |
/s/ ANDRÉ CALANTZOPOULOS
|
||||
(André Calantzopoulos
Chief Executive Officer) |
Signature | Title | Date | ||||||
/s/ ANDRÉ CALANTZOPOULOS | Chief Executive Officer | February 9, 2021 | ||||||
(André Calantzopoulos) | ||||||||
/s/ EMMANUEL BABEAU | Chief Financial Officer | February 9, 2021 | ||||||
(Emmanuel Babeau) | ||||||||
/s/ ANDREAS KURALI | Vice President and Controller | February 9, 2021 | ||||||
(Andreas Kurali) | ||||||||
*MICHEL COMBES,
WERNER GEISSLER, LISA A. HOOK, JENNIFER LI, JUN MAKIHARA, KALPANA MORPARIA, LUCIO A. NOTO, FREDERIK PAULSEN, ROBERT B. POLET |
Directors |
*By: | /s/ ANDRÉ CALANTZOPOULOS | February 9, 2021 | |||||||||
(André Calantzopoulos
Attorney-in-fact) |
• | restricting dividends on our common stock; |
• | diluting the voting power of our common stock; |
• | impairing liquidation rights of our common stock; or |
• | delaying or preventing a change in control of us without further action by our shareholders. |
Under our bylaws, only our Board of Directors or our chairman may call special meetings of shareholders.
|
|||||
• | a majority of disinterested directors; and |
• | the holders of two-thirds of the voting shares, other than the shares beneficially owned by the interested shareholder, approve the affiliated transaction. |
a. |
“Account” means an unfunded deferred compensation account established by the Company pursuant to the Deferred Fee Program, consisting of one or more Subaccounts established in accordance with Section 3.2.2.
|
||||
b. |
“Allocation Date” means any date on which an amount representing all or a part of a Participant’s Compensation is to be credited to his or her Account pursuant to an effective Election Form. The Allocation Date for the Retainer Fee shall be the first day of each calendar quarter and for Meeting Fees shall be the first day of the month following the meeting.
|
||||
c. |
“Altria Deferred Fee Plan” has the meaning provided in Section 4.
|
||||
d. |
“Altria Unit Plan” has the meaning provided in Section 4.
|
||||
e. |
“Beneficiary” means any person or entity designated as such in a current Election Form. If there is no valid designation or if no designated Beneficiary survives the Participant, the Beneficiary is the Participant’s estate.
|
||||
f. |
“Board” means the Board of Directors of the Company.
|
||||
g. |
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
|
||||
h. |
“Common Stock” means the common stock, no par value, of the Company.
|
||||
i. |
“Company” means Philip Morris International Inc., a corporation organized under the laws of the Commonwealth of Virginia, or any successor corporation.
|
||||
j. |
“Compensation” means the sum of the Retainer Fee and the Meeting Fees payable by the Company to each Participant.
|
||||
k. |
“Deferral Election” means the election by a Participant on an Election Form to defer the payment of all or part of his or her Compensation to be earned and payable after the applicable effective date set forth in Sections 3.1.1 or 3.1.2.
|
||||
l. |
“Deferred Amount” means the amount of Compensation (determined as a percentage of the Retainer Fee and the Meeting Fees) subject to a current deferral election.
|
||||
m. |
“Deferred Fee Program” means the provisions of the Plan that permit Participants to defer all or part of their Compensation.
|
n. |
“Disability” means permanent and total disability within the meaning of Code section 409A, as determined under procedures established by the Board for purposes of the Plan.
|
||||
o. |
“Distribution Date” means the date designated by a Participant in accordance with Sections 3.3.1 and 3.3.2 for the commencement of payment of amounts credited to his or her Account.
|
||||
p. |
“Election Date” means the date an Election Form is received by the Secretary of the Company.
|
||||
q. |
“Election Form” means a valid Deferred Fee Program Initial Election Form or Modified Election Form properly completed and signed.
|
||||
r. |
“Exchange Act” means the Securities Exchange Act of 1934, as from time to time amended.
|
||||
s. |
“Extraordinary Distribution Request Date” means the date an Extraordinary Distribution Request Form is received by the Secretary of the Company.
|
||||
t. |
“Extraordinary Distribution Request Form” means the Deferred Fee Program Extraordinary Distribution Request Form properly completed and executed by a Participant or Beneficiary who wishes to request an extraordinary distribution of amounts credited to his or her Account in accordance with Section 3.3.3.
|
||||
u. |
“Fund” means any one of the investment vehicles in which the trust fund established under the trust agreement, as amended from time to time, entered into by the Company in connection with the Profit-Sharing Plan, is invested.
|
||||
v. |
“Meeting Fees” means the portion of a Participant’s Compensation that is based upon his or her attendance at Board meetings and meetings of committees of the Board.
|
||||
w. |
“Non-Employee Director” means each member of the Board who is not a full-time employee of the Company (or any corporation in which the Company owns, directly or indirectly, stock possessing at least fifty percent (50%) of the total combined voting power of all classes of stock entitled to vote in the election of directors in such corporation).
|
||||
x. |
“Participant” means a Non-Employee Director and a Director Emeritus. A Participant shall also include a person who was, but is no longer, a member of the Board as long as an Account is being maintained for his or her benefit.
|
||||
y. |
“Plan” means the Philip Morris International Inc. Deferred Fee Plan for Non-Employee Directors.
|
||||
z. |
“Profit-Sharing Plan” means the Philip Morris International Inc. Deferred Profit-Sharing Plan, as amended from time to time.
|
||||
aa. |
“Retainer Fee” means the portion of a Participant’s Compensation that is fixed and paid without regard to his or her attendance at meetings, but shall not include amounts credited to a Participant’s account under the Stock Compensation Plan for Non-Employee Directors.
|
||||
bb. |
“Subaccount” means one of the bookkeeping accounts established within each Participant’s Account in accordance with Section 3.2.2.
|
||||
cc. |
“Transfer Election Date” means the date set forth on a Transfer Form.
|
||||
dd. |
“Transfer Form” means a valid Deferred Fee Program Transfer Election Form completed and signed by a Participant or Beneficiary.
|
||||
ee. |
“Transferred Account” has the meaning provided in Section 4.
|
||||
ff. |
“Unit Account” has the meaning provided in Section 4.
|
a. | the percentage of the Retainer Fee that he or she wishes to defer and whether Meeting Fees are to be deferred; | |||||||
b. | the Distribution Date; | |||||||
c. | whether distributions are to be in a lump sum, in installments or a combination thereof; | |||||||
d. | the Participant’s Beneficiary or Beneficiaries; and | |||||||
e. | the Subaccounts to which the Deferred Amount is to be allocated. |
a. | the fifteenth day of the calendar month following the Participant’s separation from service, including by reason of Disability or the Participant’s death; | |||||||
b. | the fifteenth day of the earlier of (i) a calendar month specified by the Participant which is at least six months after the Election Date or (ii) the calendar month following the Participant’s death; or | |||||||
c. | the earlier to occur of a or b. |
a. | the amount to be distributed from the Account; | |||||||
b. | the Subaccount(s) from which the distribution is to be made; and | |||||||
c. | the “hardship” requiring the distribution. |
a. | the Participant’s deferral elections for 2008 under the Altria Deferred Fee Plan with respect to such Participant’s meeting fees and retainer fee paid by the Altria Group, Inc. shall also apply with respect to Compensation to be paid to the Participant by the Company for services performed in 2008 and future years; | ||||
b. | the balance credited to the Participant under the Altria Deferred Fee Plan shall be transferred to this Plan (a “Transferred Account”), and the unfunded liability relating to such Transferred Account shall be assumed by the Company; | ||||
c. | the Participant’s election as to the time and form of distribution of amounts deferred under the Altria Deferred Fee Plan and credited to the Transferred Account shall continue to apply to the Transferred Account, and the Participant’s election as to the time and form of distribution of amounts deferred in 2008 under the Altria Deferred Fee Plan shall also apply with respect to amounts deferred under this Plan in 2008 and future years; |
d. | the Participant’s most recent election as to the investment of the Transferred Account under the Altria Deferred Fee Plan shall continue to apply to the Transferred Account, and the Participant’s most recent election as to the investment of future deferrals under the Altria Deferred Fee Plan shall also apply with respect to amounts deferred under this Plan in 2008 and future years (for purposes of deferrals under this Plan, an election to be treated as invested in Subaccount D under the Altria Deferred Fee Plan, which was measured by the value of the common stock of Altria Group, Inc., shall be considered an election to be treated as invested in Subaccount D under this Plan, which is measured by the value of the common stock of the Company); and | ||||
e. | the Participant’s most recent beneficiary designation under the Altria Deferred Fee Plan shall continue to apply to the Transferred Account and shall also apply to amounts deferred under this Plan in 2008 and future years; |
a. | the balance credited to the Participant under the Altria Unit Plan shall be transferred to this Plan (a “Unit Account”) immediately before the distribution of the Company to shareholders of the Altria Group, Inc., and the unfunded liability relating to such Unit Account shall be assumed by the Company; | ||||
b. | the Participant’s election as to the form of distribution of amounts deferred under the Altria Unit Plan and credited to the Unit Account shall continue to apply to the Unit Account, and the Unit Account shall continue to be payable upon the first day of the second month following the date the Participant ceases to be a Director; | ||||
c. | the Unit Account shall continue to be treated as invested in the Stock Unit Account, Equity Index Account, and/or Interest Income Account (in each case within the meaning of the Altria Unit Plan), as previously elected by the Participant under the Altria Unit Plan, provided, however, that if as a result of adjustments or substitutions in connection with an event described in the second paragraph of Section 4 of the Company’s Stock Compensation Plan for Non-Employee Directors or the comparable provision of any successor to such plan or as a result of the transfer of the Unit Account to this Plan, a Participant has received or receives with respect to his or her Stock Unit Account rights or amounts measured by reference to stock other than Common Stock, then (i) such rights or amounts shall be accounted for in an additional account under the Plan but treated as subject to the elections made with respect to the Stock Unit Account and (ii) within 12 months following the event described in such Section 4 or the transfer of the Unit Account, the Participant shall be offered the opportunity to convert the portion of his or her Unit Account measured by reference to such other stock to an amount measured by reference to the Common Stock having the same fair market value (rounded as necessary to reflect fractional shares) as of the date of such conversion, and further provided that any crediting of amounts to reflect dividends with respect to such other stock shall be allocated among and treated as invested proportionately in the investments most recently selected by the Participant; and | ||||
d. | the Participant’s most recent beneficiary designation under the Altria Unit Plan shall continue to apply to the Unit Account. |
Damien Hiroux | ||
Head of People Sustainability,
People & Culture Switzerland
|
Yours faithfully,
PHILIP MORRIS PRODUCTS S.A.
|
|||||
|
/s/ CONSTANTIN ROMANOV
Constantin Romanov
Global Head of Total Rewards
|
/s/ RALF ZYSK
Ralf Zysk
Global Head of People Sustainability, Employee Relations
|
Signature: /s/ MARC S. FIRESTONE
Marc S. Firestone
|
Name
|
State or
Country of
Organization
|
|||||||
AO "Philip Morris Izhora"
|
Russia | |||||||
Compania Colombiana de Tabaco S.A.S.
|
Colombia
|
|||||||
f6 Cigarettenfabrik GmbH & Co. KG | Germany | |||||||
Latin America and Canada Investments B.V.
|
Netherlands
|
|||||||
Limited Liability Company "Philip Morris Sales & Distribution"
|
Ukraine
|
|||||||
Massalin Particulares S.R.L.
|
Argentina
|
|||||||
Papastratos Cigarettes Manufacturing Company S.A.
|
Greece
|
|||||||
Philip Morris ApS | Denmark | |||||||
Philip Morris Benelux BVBA
|
Belgium
|
|||||||
Philip Morris Brands Sàrl
|
Switzerland
|
|||||||
Philip Morris Brasil Industria e Comercio Ltda.
|
Brazil
|
|||||||
Philip Morris CR a.s.
|
Czech Republic
|
|||||||
Philip Morris Exports Sàrl
|
Switzerland
|
|||||||
Philip Morris Finance SA
|
Switzerland
|
|||||||
Philip Morris Finland Ltd
|
Finland
|
|||||||
Philip Morris Global Brands Inc.
|
USA
|
|||||||
Philip Morris GmbH
|
Germany
|
|||||||
Philip Morris Holland Holdings B.V.
|
Netherlands
|
|||||||
Philip Morris International Holdings B.V.
|
Netherlands
|
|||||||
Philip Morris Investments B.V.
|
Netherlands
|
|||||||
Philip Morris Italia S.r.l.
|
Italy
|
|||||||
Philip Morris Japan Limited
|
Japan
|
|||||||
Philip Morris Kazakhstan LLP
|
Kazakhstan
|
|||||||
Philip Morris Korea Inc.
|
South Korea
|
|||||||
Philip Morris Limited
|
Australia
|
|||||||
Philip Morris Limited
|
United Kingdom | |||||||
Philip Morris Manufacturing & Technology Bologna S.p.A.
|
Italy
|
|||||||
Philip Morris Mexico Productos Y Servicios, Sociedad de Responsabilidad Limitada de Capital Variable
|
Mexico
|
|||||||
Philip Morris Mexico, Sociedad Anónima de Capital Variable
|
Mexico
|
|||||||
Philip Morris Misr Limited Liability Company
|
Egypt
|
|||||||
Philip Morris Operations a.d. Nis
|
Serbia
|
|||||||
Philip Morris (Pakistan) Limited
|
Pakistan
|
|||||||
Philip Morris Philippines Manufacturing Inc.
|
Philippines
|
|||||||
Philip Morris Polska Spolka Akcyjna
|
Poland
|
|||||||
Philip Morris Polska Distribution Sp. z.o.o.
|
Poland
|
|||||||
Philip Morris Romania S.R.L.
|
Romania
|
|||||||
Philip Morris Products S.A.
|
Switzerland
|
|||||||
Philip Morris SA Philip Morris Sabanci Pazarlama ve Satis A.S.
|
Turkey
|
|||||||
Philip Morris Trading (Thailand) Company Limited
|
Thailand
|
|||||||
Philip Morris Trading S.R.L. | Romania | |||||||
Limited Liability Company "Philip Morris Sales and Marketing"
|
Russia
|
|||||||
PHILSA Philip Morris Sabanci Sigara ve Tutunculuk Sanayi ve Ticaret A.S.
|
Turkey
|
|||||||
PMFTC Inc.
|
Philippines
|
|||||||
PT Hanjaya Mandala Sampoerna Tbk.
|
Indonesia
|
|||||||
PT Philip Morris Indonesia
|
Indonesia
|
|||||||
Tabaqueira II, S.A.
|
Portugal
|
|||||||
Tabaqueira - Empresa Industrial de Tabacos, S.A.
|
Portugal
|
|||||||
UAB "Philip Morris Lietuva" | Lithuania |
/s/ PRICEWATERHOUSECOOPERS SA
|
||||||||
PricewaterhouseCoopers SA
|
||||||||
/s/ CHAD MUELLER | /s/ TRAVIS RANDOLPH | |||||||
Chad Mueller | Travis Randolph |
/s/ MICHEL COMBES
|
||
Michel Combes |
/s/ WERNER GEISSLER
|
||
Werner Geissler |
/s/ LISA A. HOOK
|
||
Lisa A. Hook |
/s/ JENNIFER LI
|
||
Jennifer Li |
/s/ JUN MAKIHARA
|
||
Jun Makihara |
/s/ KALPANA MORPARIA
|
||
Kalpana Morparia |
/s/ LUCIO A. NOTO
|
||
Lucio A. Noto |
/s/ FREDERIK PAULSEN
|
||
Frederik Paulsen |
/s/ ROBERT B. POLET
|
||
Robert B. Polet |
/s/ ANDRÉ CALANTZOPOULOS | ||
André Calantzopoulos | ||
Chief Executive Officer |
/s/ EMMANUEL BABEAU | ||
Emmanuel Babeau | ||
Chief Financial Officer |
/s/ ANDRÉ CALANTZOPOULOS
|
||
André Calantzopoulos | ||
Chief Executive Officer | ||
February 9, 2021 |
/s/ EMMANUEL BABEAU
|
||
Emmanuel Babeau | ||
Chief Financial Officer | ||
February 9, 2021 |