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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Philip Morris International Inc | NYSE:PM | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.10 | 0.10% | 97.41 | 98.03 | 96.33 | 97.47 | 5,611,931 | 01:00:00 |
☑
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Philip Morris International Inc.
|
||||
|
|
|
|
|
Virginia
|
13-3435103
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
120 Park Avenue
|
New York
|
New York
|
10017
|
(Address of principal executive offices)
|
|
|
(Zip Code)
|
Registrant’s telephone number, including area code
|
(917)
|
663-2000
|
|
|
|
|
|
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
|
1.875% Notes due 2021
|
|
PM21C
|
|
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
|
Title of each class
|
|
Trading Symbol(s)
|
|
Name of each exchange on which registered
|
2.750% Notes due 2025
|
|
PM25
|
|
New York Stock Exchange
|
3.375% Notes due 2025
|
|
PM25A
|
|
New York Stock Exchange
|
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
|
|
|
Page No.
|
|
|
|
PART I -
|
|
|
|
|
|
Item 1.
|
|
|
|
|
|
|
Condensed Consolidated Statements of Earnings for the
|
|
|
Three Months Ended March 31, 2020 and 2019
|
|
|
|
|
|
Condensed Consolidated Statements of Comprehensive Earnings for the
|
|
|
Three Months Ended March 31, 2020 and 2019
|
|
|
|
|
|
Condensed Consolidated Balance Sheets at
|
|
|
March 31, 2020 and December 31, 2019
|
|
|
|
|
|
Condensed Consolidated Statements of Cash Flows for the
|
|
|
Three Months Ended March 31, 2020 and 2019
|
|
|
|
|
|
Condensed Consolidated Statements of Stockholders’ (Deficit) Equity for the
|
|
|
Three Months Ended March 31, 2020 and 2019
|
|
|
|
|
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 4.
|
||
|
|
|
PART II -
|
|
|
|
|
|
Item 1.
|
||
|
|
|
Item 1A.
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 6.
|
||
|
|
|
|
|
For the Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Revenues including excise taxes
|
$
|
18,253
|
|
|
$
|
17,705
|
|
Excise taxes on products
|
11,100
|
|
|
10,954
|
|
||
Net revenues
|
7,153
|
|
|
6,751
|
|
||
Cost of sales
|
2,402
|
|
|
2,465
|
|
||
Gross profit
|
4,751
|
|
|
4,286
|
|
||
Marketing, administration and research costs (Notes 8, 18 & 19)
|
1,944
|
|
|
2,217
|
|
||
Amortization of intangibles
|
18
|
|
|
19
|
|
||
Operating income
|
2,789
|
|
|
2,050
|
|
||
Interest expense, net
|
129
|
|
|
152
|
|
||
Pension and other employee benefit costs (Note 3)
|
23
|
|
|
21
|
|
||
Earnings before income taxes
|
2,637
|
|
|
1,877
|
|
||
Provision for income taxes
|
596
|
|
|
424
|
|
||
Equity investments and securities (income)/loss, net
|
54
|
|
|
(11
|
)
|
||
Net earnings
|
1,987
|
|
|
1,464
|
|
||
Net earnings attributable to noncontrolling interests
|
161
|
|
|
110
|
|
||
Net earnings attributable to PMI
|
$
|
1,826
|
|
|
$
|
1,354
|
|
Per share data (Note 6):
|
|
|
|
||||
Basic earnings per share
|
$
|
1.17
|
|
|
$
|
0.87
|
|
Diluted earnings per share
|
$
|
1.17
|
|
|
$
|
0.87
|
|
|
|
For the Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
Net earnings
|
|
$
|
1,987
|
|
|
$
|
1,464
|
|
Other comprehensive earnings (losses), net of income taxes:
|
|
|
|
|
||||
Change in currency translation adjustments:
|
|
|
|
|
||||
Unrealized gains (losses), net of income taxes of ($96) in 2020 and ($128) in 2019
|
|
(1,582
|
)
|
|
286
|
|
||
(Gains)/losses transferred to earnings - deconsolidation of RBH, net of income taxes of $0 in 2020 and 2019 (Note 19)
|
|
—
|
|
|
502
|
|
||
Change in net loss and prior service cost:
|
|
|
|
|
||||
Amortization of net losses, prior service costs and net transition costs, net of income taxes of ($17) in 2020 and ($4) in 2019
|
|
74
|
|
|
63
|
|
||
(Gains)/losses transferred to earnings - deconsolidation of RBH, net of income taxes of $0 in 2020 and ($15) in 2019 (Note 19)
|
|
—
|
|
|
27
|
|
||
Change in fair value of derivatives accounted for as hedges:
|
|
|
|
|
||||
Gains (losses) recognized, net of income taxes of ($5) in 2020 and $1 in 2019
|
|
26
|
|
|
(1
|
)
|
||
(Gains) losses transferred to earnings, net of income taxes of $1 in 2020 and $1 in 2019
|
|
(9
|
)
|
|
(4
|
)
|
||
Total other comprehensive earnings (losses)
|
|
(1,491
|
)
|
|
873
|
|
||
Total comprehensive earnings
|
|
496
|
|
|
2,337
|
|
||
Less comprehensive earnings attributable to:
|
|
|
|
|
||||
Noncontrolling interests
|
|
81
|
|
|
109
|
|
||
Comprehensive earnings attributable to PMI
|
|
$
|
415
|
|
|
$
|
2,228
|
|
|
March 31,
2020 |
|
December 31,
2019 |
||||
ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
|
3,746
|
|
|
$
|
6,861
|
|
Trade receivables (less allowances of $19 in 2020 and $20 in 2019)
|
2,785
|
|
|
3,080
|
|
||
Other receivables
|
549
|
|
|
637
|
|
||
Inventories:
|
|
|
|
||||
Leaf tobacco
|
2,012
|
|
|
2,052
|
|
||
Other raw materials
|
2,155
|
|
|
1,596
|
|
||
Finished product
|
4,878
|
|
|
5,587
|
|
||
|
9,045
|
|
|
9,235
|
|
||
Other current assets
|
736
|
|
|
701
|
|
||
Total current assets
|
16,861
|
|
|
20,514
|
|
||
Property, plant and equipment, at cost
|
13,700
|
|
|
14,446
|
|
||
Less: accumulated depreciation
|
7,593
|
|
|
7,815
|
|
||
|
6,107
|
|
|
6,631
|
|
||
Goodwill (Note 4)
|
5,284
|
|
|
5,858
|
|
||
Other intangible assets, net (Note 4)
|
1,850
|
|
|
2,113
|
|
||
Investments in unconsolidated subsidiaries and equity securities (Notes 11&14)
|
4,390
|
|
|
4,635
|
|
||
Deferred income taxes
|
1,113
|
|
|
1,153
|
|
||
Other assets
|
1,889
|
|
|
1,971
|
|
||
TOTAL ASSETS
|
$
|
37,494
|
|
|
$
|
42,875
|
|
|
March 31,
2020 |
|
December 31,
2019 |
||||
LIABILITIES
|
|
|
|
||||
Short-term borrowings (Note 10)
|
$
|
1,438
|
|
|
$
|
338
|
|
Current portion of long-term debt (Note 10)
|
1,933
|
|
|
4,051
|
|
||
Accounts payable
|
2,073
|
|
|
2,299
|
|
||
Accrued liabilities:
|
|
|
|
||||
Marketing and selling
|
645
|
|
|
666
|
|
||
Taxes, except income taxes
|
5,058
|
|
|
5,837
|
|
||
Employment costs
|
783
|
|
|
1,042
|
|
||
Dividends payable
|
1,832
|
|
|
1,831
|
|
||
Other
|
2,011
|
|
|
1,973
|
|
||
Income taxes
|
811
|
|
|
796
|
|
||
Total current liabilities
|
16,584
|
|
|
18,833
|
|
||
Long-term debt (Note 10)
|
24,999
|
|
|
26,656
|
|
||
Deferred income taxes
|
838
|
|
|
908
|
|
||
Employment costs
|
3,560
|
|
|
3,634
|
|
||
Income taxes and other liabilities
|
2,576
|
|
|
2,443
|
|
||
Total liabilities
|
48,557
|
|
|
52,474
|
|
||
Contingencies (Note 8)
|
|
|
|
||||
STOCKHOLDERS’ (DEFICIT) EQUITY
|
|
|
|
||||
Common stock, no par value
(2,109,316,331 shares issued in 2020 and 2019) |
—
|
|
|
—
|
|
||
Additional paid-in capital
|
1,992
|
|
|
2,019
|
|
||
Earnings reinvested in the business
|
30,984
|
|
|
30,987
|
|
||
Accumulated other comprehensive losses
|
(10,774
|
)
|
|
(9,363
|
)
|
||
|
22,202
|
|
|
23,643
|
|
||
Less: cost of repurchased stock
(552,210,107 and 553,421,668 shares in 2020 and 2019, respectively)
|
35,146
|
|
|
35,220
|
|
||
Total PMI stockholders’ deficit
|
(12,944
|
)
|
|
(11,577
|
)
|
||
Noncontrolling interests
|
1,881
|
|
|
1,978
|
|
||
Total stockholders’ deficit
|
(11,063
|
)
|
|
(9,599
|
)
|
||
TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
|
$
|
37,494
|
|
|
$
|
42,875
|
|
|
For the Three Months Ended March 31,
|
|
||||||
|
2020
|
|
2019
|
|
||||
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
|
|
|
|
||||
|
|
|
|
|
||||
Net earnings
|
$
|
1,987
|
|
|
$
|
1,464
|
|
|
|
|
|
|
|
||||
Adjustments to reconcile net earnings to operating cash flows:
|
|
|
|
|
||||
Depreciation and amortization
|
241
|
|
|
240
|
|
|
||
Deferred income tax (benefit) provision
|
(24
|
)
|
|
(94
|
)
|
|
||
Asset impairment and exit costs, net of cash paid (Note 18)
|
(48
|
)
|
|
17
|
|
|
||
Cash effects of changes in:
|
|
|
|
|
||||
Receivables, net
|
116
|
|
|
4
|
|
|
||
Inventories
|
(575
|
)
|
|
237
|
|
|
||
Accounts payable
|
(65
|
)
|
|
(7
|
)
|
|
||
Accrued liabilities and other current assets
|
(662
|
)
|
|
(855
|
)
|
|
||
Income taxes
|
(54
|
)
|
|
(251
|
)
|
|
||
Pension plan contributions
|
(23
|
)
|
|
(17
|
)
|
|
||
Other
|
218
|
|
|
503
|
|
(1)
|
||
Net cash provided by operating activities
|
1,111
|
|
|
1,241
|
|
|
||
|
|
|
|
|
||||
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
|
|
|
|
|
||||
|
|
|
|
|
||||
Capital expenditures
|
(170
|
)
|
|
(324
|
)
|
|
||
Investments in unconsolidated subsidiaries and equity securities
|
(2
|
)
|
|
(24
|
)
|
|
||
Deconsolidation of RBH (Note 19)
|
—
|
|
|
(1,346
|
)
|
(2)
|
||
Net investment hedges
|
684
|
|
|
91
|
|
|
||
Other
|
2
|
|
|
7
|
|
|
||
Net cash provided by (used in) investing activities
|
514
|
|
|
(1,596
|
)
|
|
|
For the Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
|
|
|
||||
|
|
|
|
||||
Short-term borrowing activity by original maturity:
|
|
|
|
||||
Net issuances (repayments) - maturities of 90 days or less
|
$
|
1,097
|
|
|
$
|
(167
|
)
|
Issuances - maturities longer than 90 days
|
25
|
|
|
989
|
|
||
Long-term debt repaid
|
(3,641
|
)
|
|
(2,137
|
)
|
||
Dividends paid
|
(1,828
|
)
|
|
(1,780
|
)
|
||
Sale (purchase) of subsidiary shares to/(from) noncontrolling interests
|
2
|
|
|
—
|
|
||
Other
|
(204
|
)
|
|
(56
|
)
|
||
Net cash used in financing activities
|
(4,549
|
)
|
|
(3,151
|
)
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
(191
|
)
|
|
(28
|
)
|
||
|
|
|
|
||||
Cash, cash equivalents and restricted cash(3):
|
|
|
|
||||
Increase (Decrease)
|
(3,115
|
)
|
|
(3,534
|
)
|
||
Balance at beginning of period
|
6,865
|
|
|
6,620
|
|
||
Balance at end of period
|
$
|
3,750
|
|
|
$
|
3,086
|
|
|
|
|
|
|
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, 2019
|
$
|
—
|
|
|
$
|
1,939
|
|
|
$
|
31,014
|
|
|
$
|
(10,111
|
)
|
|
$
|
(35,301
|
)
|
|
$
|
1,720
|
|
|
$
|
(10,739
|
)
|
Net earnings
|
|
|
|
|
1,354
|
|
|
|
|
|
|
110
|
|
|
1,464
|
|
|||||||||||
Other comprehensive earnings (losses), net of income taxes
|
|
|
|
|
|
|
345
|
|
|
|
|
(1
|
)
|
|
344
|
|
|||||||||||
Issuance of stock awards
|
|
|
(32
|
)
|
|
|
|
|
|
75
|
|
|
|
|
43
|
|
|||||||||||
Dividends declared ($1.14 per share)
|
|
|
|
|
(1,780
|
)
|
|
|
|
|
|
|
|
(1,780
|
)
|
||||||||||||
Payments to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
(46
|
)
|
|
(46
|
)
|
||||||||||||
Deconsolidation of RBH (Note 19)
|
|
|
|
|
|
|
529
|
|
|
|
|
|
|
529
|
|
||||||||||||
Balances, March 31, 2019
|
$
|
—
|
|
|
$
|
1,907
|
|
|
$
|
30,588
|
|
|
$
|
(9,237
|
)
|
|
$
|
(35,226
|
)
|
|
$
|
1,783
|
|
|
$
|
(10,185
|
)
|
Balances, January 1, 2020
|
$
|
—
|
|
|
$
|
2,019
|
|
|
$
|
30,987
|
|
|
$
|
(9,363
|
)
|
|
$
|
(35,220
|
)
|
|
$
|
1,978
|
|
|
$
|
(9,599
|
)
|
Net earnings
|
|
|
|
|
1,826
|
|
|
|
|
|
|
161
|
|
|
1,987
|
|
|||||||||||
Other comprehensive earnings (losses), net of income taxes
|
|
|
|
|
|
|
(1,411
|
)
|
|
|
|
(80
|
)
|
|
(1,491
|
)
|
|||||||||||
Issuance of stock awards
|
|
|
(25
|
)
|
|
|
|
|
|
74
|
|
|
|
|
49
|
|
|||||||||||
Dividends declared ($1.17 per share)
|
|
|
|
|
(1,829
|
)
|
|
|
|
|
|
|
|
(1,829
|
)
|
||||||||||||
Payments to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
(182
|
)
|
|
(182
|
)
|
||||||||||||
Other
|
|
|
(2
|
)
|
|
|
|
—
|
|
|
|
|
4
|
|
|
2
|
|
||||||||||
Balances, March 31, 2020
|
$
|
—
|
|
|
$
|
1,992
|
|
|
$
|
30,984
|
|
|
$
|
(10,774
|
)
|
|
$
|
(35,146
|
)
|
|
$
|
1,881
|
|
|
$
|
(11,063
|
)
|
|
Number of
Shares
Granted
|
|
Weighted-Average Grant Date Fair Value Per RSU Award Granted
|
|
Compensation Expense Related to RSU Awards (in millions)
|
|||||
2020
|
1,599,380
|
|
|
$ 86.62
|
|
|
$
|
39
|
|
|
2019
|
1,621,070
|
|
|
|
$ 77.13
|
|
|
$
|
36
|
|
|
|
|
|
Number of Shares Granted
|
PSU Grant Date Fair Value Subject to Other Performance Factors Per Share
|
PSU Grant Date Fair Value Subject to TSR Performance Factor Per Share
|
Compensation Expense Related to PSU Awards (in millions)
|
|||||||
2020
|
643,640
|
|
$ 86.69
|
|
$ 79.76
|
|
$
|
23
|
|
||
2019
|
625,200
|
|
|
$ 77.20
|
|
|
$ 83.59
|
|
$
|
18
|
|
|
2020
|
|
2019
|
||
Risk-free interest rate (a)
|
1.4
|
%
|
|
2.4
|
%
|
Expected volatility (b)
|
23.5
|
%
|
|
21.4
|
%
|
|
|
|
|
For the Three Months Ended March 31,
|
||||||
(in millions)
|
2020
|
|
2019
|
||||
Net pension costs (income)
|
$
|
(4
|
)
|
|
$
|
(5
|
)
|
Net postemployment costs
|
25
|
|
|
24
|
|
||
Net postretirement costs
|
2
|
|
|
2
|
|
||
Total pension and other employee benefit costs
|
$
|
23
|
|
|
$
|
21
|
|
|
Pension (1)
|
||||||
|
For the Three Months Ended March 31,
|
||||||
(in millions)
|
2020
|
|
2019
|
||||
Service cost
|
$
|
65
|
|
|
$
|
54
|
|
Interest cost
|
17
|
|
|
29
|
|
||
Expected return on plan assets
|
(86
|
)
|
|
(79
|
)
|
||
Amortization:
|
|
|
|
||||
Net loss
|
65
|
|
|
45
|
|
||
Prior service cost
|
—
|
|
|
—
|
|
||
Net periodic pension cost
|
$
|
61
|
|
|
$
|
49
|
|
(in millions)
|
European Union
|
Eastern Europe
|
Middle East & Africa
|
South & Southeast Asia
|
East Asia & Australia
|
Latin America & Canada
|
Total
|
||||||||||||||
Balances, December 31, 2019
|
$
|
1,338
|
|
$
|
300
|
|
$
|
89
|
|
$
|
2,898
|
|
$
|
551
|
|
$
|
682
|
|
$
|
5,858
|
|
Changes due to:
|
|
|
|
|
|
|
|
||||||||||||||
Currency
|
(53
|
)
|
(13
|
)
|
(19
|
)
|
(327
|
)
|
(47
|
)
|
(115
|
)
|
(574
|
)
|
|||||||
Balances, March 31, 2020
|
$
|
1,285
|
|
$
|
287
|
|
$
|
70
|
|
$
|
2,571
|
|
$
|
504
|
|
$
|
567
|
|
$
|
5,284
|
|
|
|
Derivative Assets
|
|
Derivative Liabilities
|
||||||||||||||||
|
|
|
|
Fair Value
|
|
|
|
Fair Value
|
||||||||||||
(in millions)
|
|
Balance Sheet Classification
|
|
At March 31, 2020
|
|
At December 31, 2019
|
|
Balance Sheet Classification
|
|
At March 31, 2020
|
|
At December 31, 2019
|
||||||||
Derivative contracts designated as hedging instruments
|
|
Other current assets
|
|
$
|
239
|
|
|
$
|
319
|
|
|
Other accrued liabilities
|
|
$
|
35
|
|
|
$
|
23
|
|
|
|
Other assets
|
|
161
|
|
|
21
|
|
|
Income taxes and other liabilities
|
|
89
|
|
|
301
|
|
||||
Derivative contracts not designated as hedging instruments
|
|
Other current assets
|
|
92
|
|
|
50
|
|
|
Other accrued liabilities
|
|
100
|
|
|
70
|
|
||||
|
|
Other assets
|
|
—
|
|
|
—
|
|
|
Income taxes and other liabilities
|
|
25
|
|
|
25
|
|
||||
Total derivatives
|
|
|
|
$
|
492
|
|
|
$
|
390
|
|
|
|
|
$
|
249
|
|
|
$
|
419
|
|
|
|
|
|
|
|
|
|
|
|
(pre-tax, in millions)
|
For the Three Months Ended March 31,
|
||||||||||||||||
|
Amount of Gain/(Loss) Recognized in Other Comprehensive Earnings/(Losses) on Derivatives
|
|
Statement of Earnings
Classification of Gain/(Loss)
Reclassified from Other
Comprehensive
Earnings/(Losses) into
Earnings
|
|
Amount of Gain/(Loss) Reclassified from Other Comprehensive Earnings/(Losses) into Earnings
|
||||||||||||
|
2020
|
|
2019
|
|
|
|
2020
|
|
2019
|
||||||||
Derivatives in Cash Flow Hedging Relationship
|
|
|
|
|
|
|
|
|
|
||||||||
Derivative contracts
|
$
|
31
|
|
|
$
|
(2
|
)
|
|
|
|
|
|
|
||||
|
|
|
|
|
Net revenues
|
|
$
|
3
|
|
|
$
|
10
|
|
||||
|
|
|
|
|
Cost of sales
|
|
4
|
|
|
—
|
|
||||||
|
|
|
|
|
Marketing, administration and research costs
|
|
5
|
|
|
(3
|
)
|
||||||
|
|
|
|
|
Interest expense, net
|
|
(2
|
)
|
|
(2
|
)
|
||||||
Derivatives in Net Investment Hedging Relationship
|
|
|
|
|
|
|
|
|
|
||||||||
Derivative contracts
|
407
|
|
|
211
|
|
|
|
|
|
|
|
||||||
Total
|
$
|
438
|
|
|
$
|
209
|
|
|
|
|
$
|
10
|
|
|
$
|
5
|
|
(pre-tax, in millions)
|
|
For the Three Months Ended March 31,
|
||||||||
Derivatives not Designated
as Hedging Instruments |
|
Statement of Earnings
Classification of Gain/(Loss) |
|
Amount of Gain/(Loss)
Recognized in Earnings |
||||||
|
|
|
|
For the Three Months Ended March 31,
|
||||||
|
|
|
|
2020
|
|
2019
|
||||
Derivative contracts
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|||
|
|
Interest expense, net
|
|
$
|
34
|
|
|
$
|
17
|
|
Total
|
|
|
|
$
|
34
|
|
|
$
|
17
|
|
(in millions)
|
For the Three Months Ended March 31,
|
|||||
|
2020
|
2019
|
||||
Gain/(loss) as of January 1,
|
$
|
3
|
|
$
|
35
|
|
Derivative (gains)/losses transferred to earnings
|
(9
|
)
|
(4
|
)
|
||
Change in fair value
|
26
|
|
(1
|
)
|
||
Gain/(loss) as of March 31,
|
$
|
20
|
|
$
|
30
|
|
(in millions)
|
For the Three Months Ended March 31,
|
|||||
|
2020
|
2019
|
||||
Net earnings attributable to PMI
|
$
|
1,826
|
|
$
|
1,354
|
|
Less distributed and undistributed earnings attributable to share-based payment awards
|
5
|
|
4
|
|
||
Net earnings for basic and diluted EPS
|
$
|
1,821
|
|
$
|
1,350
|
|
Weighted-average shares for basic EPS
|
1,557
|
|
1,555
|
|
||
Plus contingently issuable performance stock units (PSUs)
|
1
|
|
1
|
|
||
Weighted-average shares for diluted EPS
|
1,558
|
|
1,556
|
|
(in millions)
|
For the Three Months Ended March 31,
|
|||||
|
2020
|
2019
|
||||
Net revenues:
|
|
|
||||
European Union
|
$
|
2,535
|
|
$
|
2,159
|
|
Eastern Europe
|
788
|
|
579
|
|
||
Middle East & Africa
|
876
|
|
927
|
|
||
South & Southeast Asia
|
1,251
|
|
1,113
|
|
||
East Asia & Australia
|
1,255
|
|
1,321
|
|
||
Latin America & Canada (1)
|
448
|
|
652
|
|
||
Net revenues
|
$
|
7,153
|
|
$
|
6,751
|
|
Operating income (loss):
|
|
|
||||
European Union
|
$
|
1,158
|
|
$
|
896
|
|
Eastern Europe
|
99
|
|
129
|
|
||
Middle East & Africa
|
321
|
|
344
|
|
||
South & Southeast Asia
|
599
|
|
440
|
|
||
East Asia & Australia
|
486
|
|
427
|
|
||
Latin America & Canada (1)
|
126
|
|
(186
|
)
|
||
Operating income
|
$
|
2,789
|
|
$
|
2,050
|
|
•
|
Canadian tobacco litigation-related expense - See Note 8. Contingencies and Note 19. Deconsolidation of RBH for details of the $194 million pre-tax charge included in the Latin America & Canada segment for the three months ended March 31, 2019.
|
•
|
Loss on deconsolidation of RBH - See Note 19. Deconsolidation of RBH for details of the $239 million loss included in the Latin America & Canada segment for the three months ended March 31, 2019.
|
•
|
Asset impairment and exit costs - See Note 18. Asset Impairment and Exit Costs for details of the $20 million pre-tax charge included in the South & Southeast Asia segment for the three months ended March 31, 2019.
|
(in millions)
|
For the Three Months Ended March 31,
|
|||||
|
2020
|
2019
|
||||
Net revenues:
|
|
|
||||
Combustible products:
|
|
|
||||
European Union
|
$
|
1,911
|
|
$
|
1,812
|
|
Eastern Europe
|
523
|
|
471
|
|
||
Middle East & Africa
|
832
|
|
829
|
|
||
South & Southeast Asia
|
1,251
|
|
1,113
|
|
||
East Asia & Australia
|
642
|
|
638
|
|
||
Latin America & Canada
|
440
|
|
646
|
|
||
Total combustible products
|
$
|
5,598
|
|
$
|
5,508
|
|
Reduced-risk products:
|
|
|
||||
European Union
|
$
|
624
|
|
$
|
347
|
|
Eastern Europe
|
265
|
|
108
|
|
||
Middle East & Africa
|
44
|
|
98
|
|
||
South & Southeast Asia
|
—
|
|
—
|
|
||
East Asia & Australia
|
613
|
|
683
|
|
||
Latin America & Canada
|
8
|
|
6
|
|
||
Total reduced-risk products
|
$
|
1,555
|
|
$
|
1,243
|
|
|
|
|
||||
Total PMI net revenues
|
$
|
7,153
|
|
$
|
6,751
|
|
Type of Case
|
|
Number of Cases Pending as of April 24, 2020
|
|
Number of Cases Pending as of April 23, 2019
|
|
Number of Cases Pending as of April 24, 2018
|
Individual Smoking and Health Cases
|
|
48
|
|
53
|
|
62
|
Smoking and Health Class Actions
|
|
10
|
|
10
|
|
11
|
Health Care Cost Recovery Actions
|
|
17
|
|
16
|
|
16
|
Label-Related Class Actions
|
|
—
|
|
1
|
|
1
|
Individual Label-Related Cases
|
|
4
|
|
7
|
|
1
|
Public Civil Actions
|
|
2
|
|
2
|
|
2
|
Date
|
|
Location of
Court/Name of Plaintiff |
|
Type of
Case |
|
Verdict
|
|
Post-Trial
Developments |
February 2004
|
|
Brazil/The Smoker Health Defense Association
|
|
Class Action
|
|
The Civil Court of São Paulo found defendants liable without hearing evidence. In April 2004, the court awarded “moral damages” of R$1,000 (approximately $183) per smoker per full year of smoking plus interest at the rate of 1% per month, as of the date of the ruling. The court did not assess actual damages, which were to be assessed in a second phase of the case. The size of the class was not defined in the ruling.
|
|
Defendants appealed to the São Paulo Court of Appeals, which annulled the ruling in November 2008, finding that the trial court had inappropriately ruled without hearing evidence and returned the case to the trial court for further proceedings. In May 2011, the trial court dismissed the claim. In March 2017, plaintiff filed an en banc appeal to the Superior Court of Justice. In addition, the defendants filed a constitutional appeal to the Federal Supreme Tribunal on the basis that plaintiff did not have standing to bring the lawsuit. Both appeals are still pending.
|
Date
|
|
Location of
Court/Name of Plaintiff |
|
Type of
Case |
|
Verdict
|
|
Post-Trial
Developments |
May 27, 2015
|
|
Canada/Conseil Québécois Sur Le Tabac Et La Santé and Jean-Yves Blais
|
|
Class Action
|
|
On May 27, 2015, the Superior Court of the District of Montreal, Province of Quebec ruled in favor of the Blais class on liability and found the class members’ compensatory damages totaled approximately CAD 15.5 billion (approximately $11 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 $2.2 billion)). The trial court awarded CAD 90,000 (approximately $63,760) in punitive damages, allocating CAD 30,000 (approximately $21,250) to our subsidiary. The trial court ordered defendants to pay CAD 1 billion (approximately $708.5 million) of the compensatory damage award, CAD 200 million (approximately $141.7 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 $92.8 million) in punitive damages, allocating CAD 46 million (approximately $32.6 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 $1,661), 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.
|
•
|
48 cases brought by individual plaintiffs in Argentina (31), Brazil (5), Canada (2), Chile (4), Costa Rica (1), Italy (1), the Philippines (1), Poland (1), Turkey (1) and Scotland (1), compared with 53 such cases on April 23, 2019, and 62 cases on April 24, 2018; and
|
•
|
10 cases brought on behalf of classes of individual plaintiffs in Brazil (1) and Canada (9), compared with 10 such cases on April 23, 2019 and 11 such cases on April 24, 2018.
|
(in millions)
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
U.S. dollar notes, 1.875% to 6.375% (average interest rate 3.567%), due through 2044
|
|
$
|
17,489
|
|
|
$
|
19,783
|
|
Foreign currency obligations:
|
|
|
|
|
||||
Euro notes, 0.125% to 3.125% (average interest rate 1.983%), due through 2039
|
|
8,331
|
|
|
9,822
|
|
||
Swiss franc notes, 1.000% to 2.000% (average interest rate 1.521%), due through 2024
|
|
915
|
|
|
899
|
|
||
Other (average interest rate 3.009%), due through 2025
|
|
197
|
|
|
203
|
|
||
|
|
26,932
|
|
|
30,707
|
|
||
Less current portion of long-term debt
|
|
1,933
|
|
|
4,051
|
|
||
|
|
$
|
24,999
|
|
|
$
|
26,656
|
|
|
|
|
|
|
|
|
|
|
Type
|
|
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
|
|
Level 1 -
|
Quoted prices in active markets for identical assets or liabilities;
|
Level 2 -
|
Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and
|
Level 3 -
|
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
|
(in millions)
|
|
Fair Value at March 31, 2020
|
|
Quoted Prices
in Active Markets for Identical Assets/Liabilities (Level 1) |
|
Significant
Other Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Equity securities (1)
|
|
$
|
254
|
|
|
$
|
254
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Derivative contracts
|
|
492
|
|
|
—
|
|
|
492
|
|
|
—
|
|
||||
Total assets
|
|
$
|
746
|
|
|
$
|
254
|
|
|
$
|
492
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Debt
|
|
$
|
28,127
|
|
|
$
|
27,959
|
|
|
$
|
168
|
|
|
$
|
—
|
|
Derivative contracts
|
|
249
|
|
|
—
|
|
|
249
|
|
|
—
|
|
||||
Total liabilities
|
|
$
|
28,376
|
|
|
$
|
27,959
|
|
|
$
|
417
|
|
|
$
|
—
|
|
(in millions)
|
|
At March 31, 2020
|
|
At December 31, 2019
|
|
At March 31, 2019
|
||||||
Currency translation adjustments
|
|
$
|
(7,039
|
)
|
|
$
|
(5,537
|
)
|
|
$
|
(5,711
|
)
|
Pension and other benefits
|
|
(3,755
|
)
|
|
(3,829
|
)
|
|
(3,556
|
)
|
|||
Derivatives accounted for as hedges
|
|
20
|
|
|
3
|
|
|
30
|
|
|||
Total accumulated other comprehensive losses
|
|
$
|
(10,774
|
)
|
|
$
|
(9,363
|
)
|
|
$
|
(9,237
|
)
|
(in millions)
|
Gross Amounts Recognized
|
Gross Amount Offset in the Condensed Consolidated Balance Sheet
|
Net Amounts Presented in the Condensed Consolidated Balance Sheet
|
Gross Amounts Not Offset in the
Condensed Consolidated
Balance Sheet
|
|
||||||||||||||
Financial Instruments
|
Cash Collateral Received/Pledged
|
Net Amount
|
|||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||
At March 31, 2020
|
|
|
|
|
|
|
|||||||||||||
Assets
|
|
|
|
|
|
|
|||||||||||||
Derivative contracts
|
$
|
492
|
|
$
|
—
|
|
$
|
492
|
|
$
|
(212
|
)
|
$
|
(253
|
)
|
$
|
27
|
|
|
Liabilities
|
|
|
|
|
|
|
|||||||||||||
Derivative contracts
|
$
|
249
|
|
$
|
—
|
|
$
|
249
|
|
$
|
(212
|
)
|
$
|
(1
|
)
|
$
|
36
|
|
|
At December 31, 2019
|
|
|
|
|
|
|
|||||||||||||
Assets
|
|
|
|
|
|
|
|||||||||||||
Derivative contracts
|
$
|
390
|
|
$
|
—
|
|
$
|
390
|
|
$
|
(297
|
)
|
$
|
(91
|
)
|
$
|
2
|
|
|
Liabilities
|
|
|
|
|
|
|
|||||||||||||
Derivative contracts
|
$
|
419
|
|
$
|
—
|
|
$
|
419
|
|
$
|
(297
|
)
|
$
|
(59
|
)
|
$
|
63
|
|
|
For the Three Months Ended March 31,
|
|||||
(in millions)
|
2020
|
2019
|
||||
|
|
|
||||
Net revenues:
|
|
|
||||
Megapolis Group
|
$
|
496
|
|
$
|
359
|
|
Other
|
281
|
|
213
|
|
||
Net revenues (a)
|
$
|
777
|
|
$
|
572
|
|
|
|
|
||||
Expenses:
|
|
|
||||
Other
|
$
|
19
|
|
$
|
13
|
|
Expenses
|
$
|
19
|
|
$
|
13
|
|
(in millions)
|
|
At March 31, 2020
|
At December 31, 2019
|
||||
|
|
|
|
||||
Receivables:
|
|
|
|
|
|||
Megapolis Group
|
|
$
|
271
|
|
$
|
375
|
|
Other
|
|
242
|
|
148
|
|
||
Receivables
|
|
$
|
513
|
|
$
|
523
|
|
|
|
|
|
||||
Payables:
|
|
|
|
||||
Other
|
|
$
|
10
|
|
$
|
20
|
|
Payables
|
|
$
|
10
|
|
$
|
20
|
|
(in millions)
|
At March 31, 2020
|
At December 31, 2019
|
||||
Balance at beginning of period
|
$
|
140
|
|
$
|
67
|
|
Changes due to:
|
|
|
||||
Warranties issued
|
84
|
|
303
|
|
||
Settlements
|
(66
|
)
|
(230
|
)
|
||
Currency
|
—
|
|
—
|
|
||
Balance at end of period
|
$
|
158
|
|
$
|
140
|
|
|
For the Three Months Ended March 31,
|
||||||
(in millions)
|
2020
|
|
2019
|
||||
Operating lease cost
|
$
|
60
|
|
|
$
|
60
|
|
Short-term lease cost
|
13
|
|
|
12
|
|
||
Variable lease cost
|
8
|
|
|
8
|
|
||
Total lease cost
|
$
|
81
|
|
|
$
|
80
|
|
|
|
(in millions)
|
|
||
Liability balance, January 1, 2020
|
$
|
191
|
|
Charges, net
|
—
|
|
|
Cash spent
|
(48
|
)
|
|
Currency/other
|
(3
|
)
|
|
Liability balance, March 31, 2020
|
$
|
140
|
|
•
|
European Union ("EU");
|
•
|
Eastern Europe ("EE");
|
•
|
Middle East & Africa ("ME&A"), which includes our international duty free business;
|
•
|
South & Southeast Asia ("S&SA");
|
•
|
East Asia & Australia ("EA&A"); and
|
•
|
Latin America & Canada ("LA&C"), which includes transactions under license with Altria Group, Inc. for the distribution of our Platform 1 product in the United States.
|
•
|
Net Revenues - Net revenues of $7.2 billion for the three months ended March 31, 2020 increased by $402 million, or 6.0%, from the comparable 2019 amount. The change in our net revenues from the comparable 2019 amount was driven by the following (variances not to scale with quarterly results):
|
•
|
Diluted Earnings Per Share - The changes in our reported diluted earnings per share ("diluted EPS") for the three months ended March 31, 2020, from the comparable 2019 amounts, were as follows:
|
|
Diluted EPS
|
% Growth (Decline)
|
|||
For the three months ended March 31, 2019
|
$
|
0.87
|
|
|
|
2019 Asset impairment and exit costs
|
0.01
|
|
|
||
2019 Canadian tobacco litigation-related expense
|
0.09
|
|
|
||
2019 Loss on deconsolidation of RBH
|
0.12
|
|
|
||
2019 Tax items
|
—
|
|
|
||
Subtotal of 2019 items
|
0.22
|
|
|
||
2020 Asset impairment and exit costs
|
—
|
|
|
||
2020 Fair value adjustment for equity security investments
|
(0.04
|
)
|
|
||
2020 Tax items
|
—
|
|
|
||
Subtotal of 2020 items
|
(0.04
|
)
|
|
||
Currency
|
(0.13
|
)
|
|
||
Interest
|
0.01
|
|
|
||
Change in tax rate
|
(0.01
|
)
|
|
||
Operations
|
0.25
|
|
|
||
For the three months ended March 31, 2020
|
$
|
1.17
|
|
34.5
|
%
|
•
|
European Union: Favorable volume/mix and favorable pricing, partially offset by higher marketing, administration and research costs, and higher manufacturing costs;
|
•
|
South & Southeast Asia: Favorable pricing, partially offset by unfavorable volume/mix and higher marketing, administration and research costs;
|
•
|
East Asia & Australia: Lower manufacturing costs, lower marketing, administration and research costs and favorable pricing, partially offset by unfavorable volume/mix; and
|
•
|
Eastern Europe: Favorable volume/mix and favorable pricing, partially offset by higher manufacturing costs and higher marketing, administration and research costs;
|
•
|
Latin America & Canada: Unfavorable impact resulting from the deconsolidation of RBH, as well as unfavorable volume/mix, partially offset by favorable pricing and lower marketing, administration and research costs; and
|
•
|
Middle East & Africa: Unfavorable volume/mix, higher manufacturing costs and lower fees for certain distribution rights billed to customers in certain markets, partially offset by favorable pricing and lower marketing, administration and research costs.
|
•
|
Reduced Duty-Free Sales: Government travel restrictions and related reductions in passenger travel are having a significant impact on the company's duty-free business, which contributed approximately 4% of total net revenues in 2019 and has relatively high unit margins reflecting its skew to premium brands. As a result of this premium skew, only a portion of the COVID-linked duty-free volume decline is expected to be recovered by the company's own brand portfolio in local markets, and generally at lower margins.
|
•
|
Delayed IQOS User Acquisition: Lock-down measures and other restrictions limit PMI's ability to engage with adult smokers through the company's field sales forces, as well as company-owned and third-party retail touch-points, and are only partly mitigated by PMI's increasing use of digital tools that enable virtual guided trials and other e-commerce activities. Based on trends since lock-down measures were introduced, PMI expects the rate of new user acquisition to be, on average, around 50% lower than it previously anticipated for as long as government restrictions are in place, with variations depending on the level of restrictions by market. We do not expect customer retention or conversion rates to be significantly affected.
|
•
|
Indonesia - Minimum Retail Price Delay: The Indonesian government has announced that the enforcement of the new minimum price, originally scheduled for April 1, 2020, is delayed until June, due to COVID-19 restrictions. PMI expects the delay to prolong unfavorable retail price gaps between the low end of the market and PMI's cigarette brands, with a corresponding negative impact on PMI's cigarette market share and timing of pricing.
|
(in millions)
|
For the Three Months Ended March 31,
|
|||||||
|
2020
|
2019
|
Change
|
|||||
Net revenues:
|
|
|
|
|||||
European Union
|
$
|
2,535
|
|
$
|
2,159
|
|
17.4
|
%
|
Eastern Europe
|
788
|
|
579
|
|
36.1
|
%
|
||
Middle East & Africa
|
876
|
|
927
|
|
(5.5
|
)%
|
||
South & Southeast Asia
|
1,251
|
|
1,113
|
|
12.4
|
%
|
||
East Asia & Australia
|
1,255
|
|
1,321
|
|
(5.0
|
)%
|
||
Latin America & Canada (1)
|
448
|
|
652
|
|
(31.3
|
)%
|
||
Net revenues
|
$
|
7,153
|
|
$
|
6,751
|
|
6.0
|
%
|
Operating income (loss):
|
|
|
|
|||||
European Union
|
$
|
1,158
|
|
$
|
896
|
|
29.2
|
%
|
Eastern Europe
|
99
|
|
129
|
|
(23.3
|
)%
|
||
Middle East & Africa
|
321
|
|
344
|
|
(6.7
|
)%
|
||
South & Southeast Asia
|
599
|
|
440
|
|
36.1
|
%
|
||
East Asia & Australia
|
486
|
|
427
|
|
13.8
|
%
|
||
Latin America & Canada (1)
|
126
|
|
(186
|
)
|
+100%
|
|
||
Operating income
|
$
|
2,789
|
|
$
|
2,050
|
|
36.0
|
%
|
•
|
Canadian tobacco litigation-related expense - See Note 8. Contingencies and Note 19. Deconsolidation of RBH for details of the $194 million pre-tax charge included in the Latin America & Canada segment for the three months ended March 31, 2019.
|
•
|
Loss on deconsolidation of RBH - See Note 19. Deconsolidation of RBH for details of the $239 million loss included in the Latin America & Canada segment for the three months ended March 31, 2019.
|
•
|
Asset impairment and exit costs - See Note 18. Asset Impairment and Exit Costs for details of the $20 million pre-tax charge included in the South & Southeast Asia segment for the three months ended March 31, 2019.
|
PMI Shipment Volume (Million Units)
|
||||||
|
For the Three Months Ended March 31,
|
|||||
|
2020
|
2019
|
Change
|
|||
Cigarettes
|
|
|
|
|||
European Union
|
40,646
|
|
39,488
|
|
2.9
|
%
|
Eastern Europe
|
21,419
|
|
20,320
|
|
5.4
|
%
|
Middle East & Africa
|
29,996
|
|
33,304
|
|
(9.9
|
)%
|
South & Southeast Asia
|
37,595
|
|
41,492
|
|
(9.4
|
)%
|
East Asia & Australia
|
12,299
|
|
12,113
|
|
1.5
|
%
|
Latin America & Canada
|
15,063
|
|
17,580
|
|
(14.3
|
)%
|
Total Cigarettes
|
157,018
|
|
164,297
|
|
(4.4
|
)%
|
Heated Tobacco Units
|
|
|
|
|||
European Union
|
4,661
|
|
2,293
|
|
+100%
|
|
Eastern Europe
|
4,366
|
|
1,548
|
|
+100%
|
|
Middle East & Africa
|
470
|
|
754
|
|
(37.7
|
)%
|
South & Southeast Asia
|
—
|
|
—
|
|
—
|
%
|
East Asia & Australia
|
7,122
|
|
6,849
|
|
4.0
|
%
|
Latin America & Canada (1)
|
108
|
|
54
|
|
+100%
|
|
Total Heated Tobacco Units
|
16,727
|
|
11,498
|
|
45.5
|
%
|
Cigarettes and Heated Tobacco Units
|
|
|
|
|||
European Union
|
45,307
|
|
41,781
|
|
8.4
|
%
|
Eastern Europe
|
25,785
|
|
21,868
|
|
17.9
|
%
|
Middle East & Africa
|
30,466
|
|
34,058
|
|
(10.5
|
)%
|
South & Southeast Asia
|
37,595
|
|
41,492
|
|
(9.4
|
)%
|
East Asia & Australia
|
19,421
|
|
18,962
|
|
2.4
|
%
|
Latin America & Canada
|
15,171
|
|
17,634
|
|
(14.0
|
)%
|
Total Cigarettes and Heated Tobacco Units
|
173,745
|
|
175,795
|
|
(1.2
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
Middle East & Africa, reflecting lower cigarette shipment volume, notably in Saudi Arabia and Turkey, partly offset by North Africa;
|
•
|
South & Southeast Asia, reflecting lower cigarette shipment volume, primarily in Indonesia, Pakistan and the Philippines; and
|
•
|
Latin America & Canada, reflecting lower cigarette shipment volume, primarily in Argentina, Canada (mainly due to the impact of the deconsolidation of RBH), and Mexico. Excluding the volume impact from the RBH deconsolidation, our total shipment volume in the Region decreased by 8.8%;
|
•
|
the EU, reflecting higher heated tobacco unit shipment volume across the Region, particularly in Italy, as well as higher cigarette shipment volume, notably in Germany and Italy;
|
•
|
Eastern Europe, reflecting higher heated tobacco unit shipment volume across the Region, notably in Russia and Ukraine, as well as higher cigarette shipment volume, mainly in Russia, partly offset by Ukraine; and
|
•
|
East Asia & Australia, mainly reflecting higher cigarette and heated tobacco unit shipment volume in Japan.
|
•
|
A net favorable impact of 4.7 billion cigarettes, mainly driven by the EU Region, Japan, North Africa, PMI Duty Free and Russia, partly offset by Saudi Arabia; and
|
•
|
A net favorable impact of 0.7 billion heated tobacco units, mainly driven by the EU Region and Russia.
|
•
|
Marlboro, mainly due to the GCC, Indonesia, Mexico and Turkey, partially offset by Germany, Italy, Japan, North Africa and Russia;
|
•
|
Chesterfield, mainly due to Argentina, Russia, Saudi Arabia and Turkey, partly offset by Brazil;
|
•
|
Parliament, mainly due to Russia and Turkey;
|
•
|
Dji Sam Soe in Indonesia, mainly due to Dji Sam Soe Magnum Mild, reflecting adult smoker down-trading to super-low-price brands due to widened price gaps;
|
•
|
Bond Street, mainly due to Ukraine, partly offset by Russia;
|
•
|
Lark, mainly due to Japan and Turkey;
|
•
|
Fortune in the Philippines, mainly reflecting the impact of the August 2019 price increase, which widened price gaps with competitive brands; and
|
•
|
"Others," notably due to: the impact of the deconsolidation of RBH in Canada; mid-price Sampoerna U in Indonesia and Muratti in Turkey; and low-price Morven in Pakistan.
|
•
|
L&M, mainly driven by Mexico and North Africa (primarily Egypt), partly offset by Saudi Arabia;
|
•
|
Philip Morris, primarily driven by Japan and Russia, partly offset by Argentina; and
|
•
|
Sampoerna A in Indonesia, mainly driven by premium A Mild, notably reflecting reduced price gaps with directly competitive mid and low-price brands.
|
•
|
Total international market share for cigarettes of 25.0%, down by 1.1 points; and
|
•
|
Total international market share for heated tobacco units of 2.9%, up by 0.9 points.
|
Financial Summary
|
||||||||||||||||||||||||||||
Financial Summary -
Quarters Ended March 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
|
|
$
|
7,153
|
|
$
|
6,751
|
|
|
6.0
|
%
|
7.1
|
%
|
|
$
|
402
|
|
$
|
(74
|
)
|
$
|
323
|
|
$
|
381
|
|
$
|
(228
|
)
|
Cost of Sales
|
|
(2,402
|
)
|
(2,465
|
)
|
|
2.6
|
%
|
0.6
|
%
|
|
63
|
|
49
|
|
—
|
|
29
|
|
(15
|
)
|
|||||||
Marketing, Administration and Research Costs(2)
|
|
(1,944
|
)
|
(2,217
|
)
|
|
12.3
|
%
|
20.0
|
%
|
|
273
|
|
(171
|
)
|
—
|
|
—
|
|
444
|
|
|||||||
Amortization of Intangibles
|
|
(18
|
)
|
(19
|
)
|
|
5.3
|
%
|
5.3
|
%
|
|
1
|
|
—
|
|
—
|
|
—
|
|
1
|
|
|||||||
Operating Income
|
|
$
|
2,789
|
|
$
|
2,050
|
|
|
36.0
|
%
|
45.6
|
%
|
|
$
|
739
|
|
$
|
(196
|
)
|
$
|
323
|
|
$
|
410
|
|
$
|
202
|
|
•
|
regulatory restrictions on our products, including restrictions on the packaging, marketing, and sale of tobacco or other nicotine-containing products that could reduce our competitiveness, eliminate our ability to communicate with adult consumers, or even ban certain of our products;
|
•
|
fiscal challenges, such as excessive excise tax increases and discriminatory tax structures;
|
•
|
illicit trade in cigarettes and other tobacco products, including counterfeit, contraband and so-called “illicit whites”;
|
•
|
intense competition, including from non-tax paid volume by certain local manufacturers;
|
•
|
pending and threatened litigation as discussed in Note 8. Contingencies; and
|
•
|
governmental investigations.
|
•
|
health warnings covering 65% of the front and back panels of cigarette packs, with an option for Member States to further standardize tobacco packaging, including the introduction of plain packaging;
|
•
|
a ban on characterizing flavors in some tobacco products, with a transition period for menthol expiring in May 2020;
|
•
|
security features and tracking and tracing measures that became effective on May 20, 2019; and
|
•
|
a framework for the regulation of novel tobacco products and e-cigarettes, including requirements for health warnings and information leaflets, a prohibition on product packaging text related to reduced risk, and the introduction of notification requirements or authorization procedures in advance of commercialization.
|
•
|
to develop RRPs that adult smokers who would otherwise continue to smoke find to be satisfying alternatives to smoking;
|
•
|
for those adult smokers, our goal is to offer RRPs with a scientifically substantiated risk-reduction profile that approaches as closely as possible that associated with smoking cessation;
|
•
|
to substantiate the reduction of risk for the individual adult smoker and the reduction of harm to the population as a whole, based on scientific evidence of the highest standard that is made available for scrutiny and review by external independent scientists and relevant regulatory bodies; and
|
•
|
to advocate for the development of science-based regulatory frameworks for the development and commercialization of RRPs, including the communication of scientifically substantiated information to enable adult smokers to make better consumer choices.
|
•
|
In light of the current confusion in the e-vapor category, in February 2020, we postponed our planned launch of an improved version of this product until the third quarter of 2020, expecting to reach the optimal capacity for commercialization at scale. We will adjust our launch plans based on market-specific factors.
|
•
|
With respect to TEEPS, our Platform 2 product, we are finalizing our improvements to this product and plan to conduct a consumer test in the beginning of 2021.
|
•
|
We plan to conduct a consumer test of our Platform 3 product by the end of 2020.
|
Financial Summary -
Quarters Ended March 31, |
|
|
|
|
Change
Fav./(Unfav.) |
|
Variance
Fav./(Unfav.) |
|||||||||||||||||||||
|
2020
|
2019
|
|
Total
|
Excl.
Curr. |
|
Total
|
Cur-
rency |
Price
|
Vol/
Mix |
Cost/
Other |
|||||||||||||||||
(in millions)
|
|
|
|
|||||||||||||||||||||||||
Net Revenues
|
|
$
|
2,535
|
|
$
|
2,159
|
|
|
17.4
|
%
|
20.7
|
%
|
|
$
|
376
|
|
$
|
(70
|
)
|
$
|
16
|
|
$
|
430
|
|
$
|
—
|
|
Operating Income
|
|
$
|
1,158
|
|
$
|
896
|
|
|
29.2
|
%
|
36.5
|
%
|
|
$
|
262
|
|
$
|
(65
|
)
|
$
|
16
|
|
$
|
378
|
|
$
|
(67
|
)
|
European Union Key Data
|
|
First-Quarter
|
|||||
|
|
|
|
Change
|
|
||
|
|
2020
|
|
2019
|
|
% / pp
|
|
Total Market (billion units)
|
|
109.3
|
|
107.4
|
|
1.8
|
%
|
|
|
|
|
|
|||
PMI Shipment Volume (million units)
|
|
|
|
|
|||
Cigarettes
|
|
40,646
|
|
39,488
|
|
2.9
|
%
|
Heated Tobacco Units
|
|
4,661
|
|
2,293
|
|
+100%
|
|
Total European Union
|
|
45,307
|
|
41,781
|
|
8.4
|
%
|
|
|
|
|
|
|||
PMI Market Share
|
|
|
|
|
|||
Marlboro
|
|
17.7
|
%
|
18.2
|
%
|
(0.5
|
)
|
L&M
|
|
6.5
|
%
|
6.7
|
%
|
(0.2
|
)
|
Chesterfield
|
|
5.7
|
%
|
5.9
|
%
|
(0.2
|
)
|
Philip Morris
|
|
2.6
|
%
|
2.8
|
%
|
(0.2
|
)
|
HEETS
|
|
3.9
|
%
|
2.1
|
%
|
1.8
|
|
Others
|
|
3.0
|
%
|
3.2
|
%
|
(0.2
|
)
|
Total European Union
|
|
39.4
|
%
|
38.9
|
%
|
0.5
|
|
•
|
Denmark, up by +100%, mainly reflecting the net favorable impact of estimated trade inventory movements in advance of a significant excise tax increase on April 1, 2020. Excluding these movements, the total estimated market decreased by 2.0%; and
|
•
|
Germany, up by 3.7%, or down by 1.8% excluding the net favorable impact of estimated trade inventory movements, primarily reflecting the impact of price increases in March 2019;
|
•
|
France, down by 8.7%, primarily reflecting the impact of significant excise tax-driven price increases in November 2019 and March 2020, and a higher prevalence of illicit trade.
|
•
|
higher heated tobacco unit shipment volume across the Region, driven by higher market share (notably in Germany, Italy and Poland) and the net favorable impact of estimated distributor inventory movements (partly driven by distributor inventory increases related to COVID-19, notably in Italy); and
|
•
|
higher cigarette shipment volume, mainly driven by the net favorable impact of estimated distributor inventory movements (partly driven by distributor inventory increases related to COVID-19, notably in Italy and Spain), partly offset by lower market share (notably in Italy and Poland, partially reflecting out-switching to heated tobacco units).
|
Financial Summary -
Quarters Ended March 31, |
|
|
|
|
Change
Fav./(Unfav.) |
|
Variance
Fav./(Unfav.) |
|||||||||||||||||||||
|
2020
|
2019
|
|
Total
|
Excl.
Curr. |
|
Total
|
Cur-
rency |
Price
|
Vol/
Mix |
Cost/
Other |
|||||||||||||||||
(in millions)
|
|
|
|
|||||||||||||||||||||||||
Net Revenues
|
|
$
|
788
|
|
$
|
579
|
|
|
36.1
|
%
|
35.1
|
%
|
|
$
|
209
|
|
$
|
6
|
|
$
|
14
|
|
$
|
189
|
|
$
|
—
|
|
Operating Income
|
|
$
|
99
|
|
$
|
129
|
|
|
(23.3
|
)%
|
48.1
|
%
|
|
$
|
(30
|
)
|
$
|
(92
|
)
|
$
|
14
|
|
$
|
129
|
|
$
|
(81
|
)
|
•
|
Russia, down by 0.1%, or by 3.9% excluding the net favorable impact of estimated trade inventory movements, primarily reflecting the impact of price increases, as well as an increase in the prevalence of illicit trade; and
|
•
|
Ukraine, down by 6.5%, mainly reflecting the impact of excise tax-driven price increases.
|
PMI Shipment Volume (million units)
|
First-Quarter
|
|||||
|
2020
|
|
2019
|
|
Change
|
|
Cigarettes
|
21,419
|
|
20,320
|
|
5.4
|
%
|
Heated Tobacco Units
|
4,366
|
|
1,548
|
|
+100%
|
|
Total Eastern Europe
|
25,785
|
|
21,868
|
|
17.9
|
%
|
•
|
Kazakhstan, up by 15.6%, mainly reflecting a higher market share of heated tobacco units; and
|
•
|
Russia, up by 24.0%, or by 14.5% excluding the net favorable impact of estimated distributor inventory movements (primarily for cigarettes and driven by distributor inventory increases due to COVID-19), mainly reflecting a higher market share of heated tobacco units.
|
Financial Summary -
Quarters Ended March 31, |
|
|
|
|
Change
Fav./(Unfav.) |
|
Variance
Fav./(Unfav.) |
|||||||||||||||||||||
|
2020
|
2019
|
|
Total
|
Excl.
Curr. |
|
Total
|
Cur-
rency |
Price
|
Vol/
Mix |
Cost/
Other |
|||||||||||||||||
(in millions)
|
|
|
|
|||||||||||||||||||||||||
Net Revenues
|
|
$
|
876
|
|
$
|
927
|
|
|
(5.5
|
)%
|
(5.3
|
)%
|
|
$
|
(51
|
)
|
$
|
(2
|
)
|
$
|
72
|
|
$
|
(76
|
)
|
$
|
(45
|
)
|
Operating Income
|
|
$
|
321
|
|
$
|
344
|
|
|
(6.7
|
)%
|
(1.2
|
)%
|
|
$
|
(23
|
)
|
$
|
(19
|
)
|
$
|
72
|
|
$
|
(30
|
)
|
$
|
(46
|
)
|
•
|
International Duty Free, down by 33.0%, primarily reflecting the impact of government travel restrictions and reduced passenger traffic due to the COVID-19 pandemic;
|
•
|
Saudi Arabia, down by 18.6%, notably reflecting the increased prevalence of non-domestic products following the implementation of plain packaging in the fourth quarter of 2019; and
|
•
|
Turkey, down by 24.1%, mainly reflecting a higher prevalence of illicit trade related to cut tobacco following significant industry-wide price increases in 2019;
|
•
|
Egypt, up by 5.9%, partly reflecting a lower prevalence of illicit trade and in-switching to cigarettes from other tobacco products.
|
PMI Shipment Volume (million units)
|
First-Quarter
|
|||||
|
2020
|
|
2019
|
|
Change
|
|
Cigarettes
|
29,996
|
|
33,304
|
|
(9.9
|
)%
|
Heated Tobacco Units
|
470
|
|
754
|
|
(37.7
|
)%
|
Total Middle East & Africa
|
30,466
|
|
34,058
|
|
(10.5
|
)%
|
•
|
PMI Duty Free, down by 12.8%, or by 28.1% excluding the net favorable impact of estimated distributor inventory movements (driven by cigarettes), mainly reflecting the lower total market;
|
•
|
Saudi Arabia, down by 72.6%. Excluding the net unfavorable impact of estimated distributor inventory movements of 2.3 billion cigarettes, largely attributable to the timing of shipments in 2019, PMI's in-market sales decreased by 20.4%, mainly due to the lower total market; and
|
•
|
Turkey, down by 27.0%, mainly reflecting the lower total market and lower market share due primarily to adult smoker down-trading following the price increases;
|
•
|
Egypt, up by 17.1%, or by 6.1% excluding the net favorable impact of estimated distributor inventory movements, mainly reflecting the higher total market.
|
Financial Summary -
Quarters Ended March 31, |
|
|
|
|
Change
Fav./(Unfav.) |
|
Variance
Fav./(Unfav.) |
|||||||||||||||||||||
|
2020
|
2019
|
|
Total
|
Excl.
Curr. |
|
Total
|
Cur-
rency |
Price
|
Vol/
Mix |
Cost/
Other |
|||||||||||||||||
(in millions)
|
|
|
|
|||||||||||||||||||||||||
Net Revenues
|
|
$
|
1,251
|
|
$
|
1,113
|
|
|
12.4
|
%
|
10.7
|
%
|
|
$
|
138
|
|
$
|
19
|
|
$
|
159
|
|
$
|
(40
|
)
|
$
|
—
|
|
Operating Income
|
|
$
|
599
|
|
$
|
440
|
|
|
36.1
|
%
|
31.8
|
%
|
|
$
|
159
|
|
$
|
19
|
|
$
|
159
|
|
$
|
(18
|
)
|
$
|
(1
|
)
|
•
|
Indonesia, down by 0.6%, or by approximately 7% excluding the net favorable impact of estimated trade inventory movements, mainly reflecting the impact of excise tax-driven price increases;
|
•
|
Pakistan, down by 25.3%, or by 41.9% excluding the net favorable impact of estimated trade inventory movements, mainly due to the impact of excise tax-driven price increases in June 2019; and
|
•
|
the Philippines, down by 8.9%, or by 13.2% excluding the net favorable impact of estimated trade inventory movements, mainly reflecting the impact of industry-wide price increases in the third quarter of 2019 and the implementation of quarantines related to COVID-19 in select geographies beginning in mid-March 2020.
|
PMI Shipment Volume (million units)
|
First-Quarter
|
|||||
|
2020
|
|
2019
|
|
Change
|
|
Cigarettes
|
37,595
|
|
41,492
|
|
(9.4
|
)%
|
Heated Tobacco Units
|
—
|
|
—
|
|
—
|
%
|
Total South & Southeast Asia
|
37,595
|
|
41,492
|
|
(9.4
|
)%
|
•
|
Indonesia, down by 7.6%, primarily reflecting lower market share, mainly due to Marlboro and Dji Sam Soe Magnum Mild, partly offset by Sampoerna A;
|
•
|
Pakistan, down by 35.0%, mainly due to the lower total market; and
|
•
|
the Philippines, down by 8.8%, mainly reflecting the lower total market.
|
Financial Summary -
Quarters Ended March 31, |
|
|
|
|
Change
Fav./(Unfav.) |
|
Variance
Fav./(Unfav.) |
|||||||||||||||||
|
2020
|
2019
|
|
Total
|
Excl.
Curr. |
|
Total
|
Cur-
rency |
Price
|
Vol/
Mix |
Cost/
Other |
|||||||||||||
(in millions)
|
|
|
|
|||||||||||||||||||||
Net Revenues
|
|
$ 1,255
|
$ 1,321
|
|
(5.0
|
)%
|
(4.3
|
)%
|
|
$
|
(66
|
)
|
$
|
(9
|
)
|
$
|
13
|
|
$
|
(70
|
)
|
$
|
—
|
|
Operating Income
|
|
$ 486
|
$ 427
|
|
13.8
|
%
|
14.8
|
%
|
|
$
|
59
|
|
$
|
(4
|
)
|
$
|
13
|
|
$
|
(11
|
)
|
$
|
61
|
|
•
|
Australia, down by 19.1%, or by 7.9% excluding the net unfavorable impact of estimated trade inventory movements, mainly due to the impact of excise tax-driven retail price increases;
|
•
|
Japan, down by 5.7%, mainly reflecting adult smoker out-switching from cigarettes to the cigarillo category; and
|
•
|
Taiwan, down by 14.4%, or by 3.2% excluding the net unfavorable impact of estimated trade inventory movements, notably due to an increase in the prevalence of illicit trade.
|
PMI Shipment Volume (million units)
|
First-Quarter
|
|||||
|
2020
|
|
2019
|
|
Change
|
|
Cigarettes
|
12,299
|
|
12,113
|
|
1.5
|
%
|
Heated Tobacco Units
|
7,122
|
|
6,849
|
|
4.0
|
%
|
Total East Asia & Australia
|
19,421
|
|
18,962
|
|
2.4
|
%
|
•
|
Japan, up by 5.6%, reflecting the net favorable impact of estimated distributor inventory movements of approximately 0.8 billion units (driven by a 0.9 billion favorable impact for cigarettes), partly due to accelerated cigarette and heated tobacco unit shipments to the distributor related to COVID-19. Excluding the impact of these inventory movements, PMI's in-market sales decreased by 0.9%, mainly due to the lower total market, partly offset by higher heated tobacco unit market share.
|
Financial Summary -
Quarters Ended March 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
|
|
$
|
448
|
|
$
|
652
|
|
|
(31.3
|
)%
|
(28.5
|
)%
|
|
$
|
(204
|
)
|
$
|
(18
|
)
|
$
|
49
|
|
$
|
(52
|
)
|
$
|
(183
|
)
|
Operating Income
|
|
$
|
126
|
|
$
|
(186
|
)
|
|
+100%
|
|
+100%
|
|
|
$
|
312
|
|
$
|
(35
|
)
|
$
|
49
|
|
$
|
(38
|
)
|
$
|
336
|
|
•
|
Argentina, down by 5.7%, mainly reflecting the impact of price increases; and
|
•
|
Mexico, down by 10.5%, mainly due to the impact of excise tax-driven price increases in January 2020;
|
•
|
Brazil, up by 10.3%, mainly reflecting an estimated lower prevalence of illicit trade due to reduced price gaps with legal products and improved macro-economic conditions.
|
PMI Shipment Volume (million units)
|
First-Quarter
|
|||||
|
2020
|
|
2019
|
|
Change
|
|
Cigarettes
|
15,063
|
|
17,580
|
|
(14.3
|
)%
|
Heated Tobacco Units
|
108
|
|
54
|
|
+100%
|
|
Total Latin America & Canada
|
15,171
|
|
17,634
|
|
(14.0
|
)%
|
•
|
Argentina, down by 13.2%, primarily reflecting a lower market share due to adult smoker down-trading to ultra-low-price brands produced by local manufacturers, as well as the lower total market; and
|
•
|
Mexico, down by 14.0%, mainly due to the lower total market and lower market share due to adult smoker down-trading.
|
|
For the Three Months Ended March 31,
|
|||||
(in millions)
|
2020
|
2019
|
||||
Net cash provided by operating activities
|
$
|
1,111
|
|
$
|
1,241
|
|
Net cash provided by (used in) investing activities
|
514
|
|
(1,596
|
)
|
||
Net cash used in financing activities
|
(4,549
|
)
|
(3,151
|
)
|
|
|
Short-term
|
|
Long-term
|
|
Outlook
|
Moody’s
|
|
P-1
|
|
A2
|
|
Stable
|
Standard & Poor’s
|
|
A-1
|
|
A
|
|
Stable
|
Fitch
|
|
F1
|
|
A
|
|
Stable
|
(in billions)
|
|
|
|
|
||||
Type
|
|
Committed
Credit
Facilities
|
|
Commercial
Paper
|
||||
364-day revolving credit, expiring February 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
|
|
|
|
|
|
Commercial paper outstanding
|
|
|
|
|
$
|
1.1
|
|
|
|
|
|
|
|
|
|
|
•
|
restrictions on or licensing of outlets permitted to sell cigarettes;
|
•
|
the levying of substantial and increasing tax and duty charges;
|
•
|
restrictions or bans on advertising, marketing and sponsorship;
|
•
|
the display of larger health warnings, graphic health warnings and other labeling requirements;
|
•
|
restrictions on packaging design, including the use of colors, and plain packaging;
|
•
|
restrictions on packaging and cigarette formats and dimensions;
|
•
|
restrictions or bans on the display of tobacco product packaging at the point of sale and restrictions or bans on cigarette vending machines;
|
•
|
requirements regarding testing, disclosure and performance standards for tar, nicotine, carbon monoxide and other smoke constituents;
|
•
|
disclosure, restrictions, or bans of tobacco product ingredients;
|
•
|
increased restrictions on smoking in public and work places and, in some instances, in private places and outdoors;
|
•
|
regulation, 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 adequate production capacity to meet demand for our products; and
|
•
|
be able to protect or enhance margins through price increases.
|
Item 1.
|
Legal Proceedings.
|
Item 1A.
|
Risk Factors.
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds.
|
Period
|
|
Total Number
of Shares
Repurchased
|
|
Average
Price Paid
Per Share
|
|
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs
|
|
Approximate Dollar
Value of Shares that
May Yet be Purchased
Under the Plans or
Programs
|
|||||||
January 1, 2020 –
January 31, 2020 (1)
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
February 1, 2020 –
February 29, 2020 (1)
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
March 1, 2020 –
March 31, 2020 (1)
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
Pursuant to Publicly
Announced Plans
or Programs
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||||
January 1, 2020 –
January 31, 2020 (2)
|
|
5,814
|
|
|
$
|
84.25
|
|
|
|
|
|
||||
February 1, 2020 –
February 29, 2020 (2)
|
|
135,549
|
|
|
$
|
87.41
|
|
|
|
|
|
||||
March 1, 2020 –
March 31, 2020 (2)
|
|
2,200
|
|
2,342
|
|
$
|
79.85
|
|
|
|
|
|
|||
For the Quarter Ended March 31, 2020
|
|
143,563
|
|
|
$
|
87.16
|
|
|
|
|
|
(1)
|
During this reporting period, we did not have an authorized share repurchase program.
|
(2)
|
Shares repurchased represent shares tendered to us by employees who vested in restricted and performance share unit awards and used shares to pay all, or a portion of, the related taxes.
|
Item 6.
|
Exhibits.
|
|
|
|
3.1
|
|
|
|
|
|
10.1
|
|
|
|
|
|
10.2
|
|
|
|
|
|
10.3
|
|
|
|
|
|
10.4
|
|
|
|
|
|
10.5
|
|
|
|
|
|
10.6
|
|
|
|
|
|
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.
|
|
/s/ MARTIN G. KING
|
|
Martin G. King
|
Chief Financial Officer
|
|
April 28, 2020
|
1 Year Philip Morris Chart |
1 Month Philip Morris Chart |
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