Philip Morris International Inc. presentation slides, dated November 18, 2008

EX-99.2 3 dex992.htm PHILIP MORRIS INTERNATIONAL INC. PRESENTATION SLIDES, DATED NOVEMBER 18, 2008 Philip Morris International Inc. presentation slides, dated November 18, 2008

Morgan Stanley Global Consumer & Retail Conference

New York, 18 November 2008

Exhibit 99.2

Philip Morris International

Forward-Looking Statements

This presentation and related discussion contain statements that to the extent they

do not relate strictly to historical or current facts, constitute “forward-looking

statements” within the meaning of the Private Securities Litigation Reform Act of

1995. Such forward-looking statements are based on current plans, estimates and

expectations, and are not guarantees of future performance. They are based on

management’s expectations that involve a number of business risks and

uncertainties, any of which could cause actual results to differ materially from

those expressed in or implied by the forward-looking statements. PMI undertakes

no obligation to publicly update or revise any forward-looking statements, except

in the normal course of its public disclosure obligations. The risks and

uncertainties relating to the forward-looking statements in this presentation

include those described under the caption “Cautionary Factors that May Affect

Future Results” in PMI’s Registration Statement on Form 10 that was declared

effective by the Securities and Exchange Commission on March 7, 2008 and in

PMI’s quarterly reports on Form 10-Q for the quarters ended March 31, June 30 and

September 30, 2008.

Reconciliations of non-GAAP measures included in this presentation to the most

comparable GAAP measures are provided on the last slide of this presentation and

are

available

www.philipmorrisinternational.com.

Philip Morris International

Summary

Well-positioned to weather the current global crisis

Philip Morris International

Summary

Well-positioned to weather the current global crisis

Investor concerns:

Risk of consumer downtrading

Emerging market volatility

Currency exposure

Philip Morris International

Summary

Well-positioned to weather the current global crisis

Investor concerns:

Risk of consumer downtrading

Emerging market volatility

Currency exposure

PMI attributes:

Solid business momentum

Exciting growth prospects

Strong cash flows

–

Philip Morris International

Summary

Well-positioned to weather the current global crisis

Investor concerns:

Risk of consumer downtrading

Emerging market volatility

Currency exposure

PMI attributes:

Solid business momentum

Exciting growth prospects

Strong cash flows

Enhance long-term shareholder value

Philip Morris International

PMI 2008 Results

(a)

For reconciliation of reported results to organic results, see last slide of the presentation

Source: PMI Financials

+1.1 %

+2.4%

651

667

Cigarette Volume

Organic

(a)

Change (%)

Reported

Change (%)

YTD Sept

2007

YTD Sept

2008

(bio)

Philip Morris International

PMI 2008 Results

+5.7%

+15.6%

$17.3

$20.0

Net Revenues

(b)

+1.1 %

+2.4%

651

667

Cigarette Volume

Organic

(a)

Change (%)

Reported

Change (%)

YTD Sept

2007

YTD Sept

2008

(bio)

(a)

For reconciliation of reported results to organic results, see last slide of the presentation

(b)

Excluding excise taxes

Source: PMI Financials

Philip Morris International

PMI 2008 Results

+39.1%

$4.6

$6.4

Cash Flow

(c)

+21.7%

2.21

2.69

Diluted EPS

($/Share)

+11.3%

+21.8%

$6.9

$8.4

OCI

+5.7%

+15.6%

$17.3

$20.0

Net Revenues

(b)

+1.1 %

+2.4%

651

667

Cigarette Volume

Organic

(a)

Change (%)

Reported

Change (%)

YTD Sept

2007

YTD Sept

2008

(bio)

(a)

For reconciliation of reported results to organic results, see last slide of the presentation

(b)

Excluding excise taxes

(c)

Discretionary cash flow which represents net cash provided by operating activities of $7,185 million in 2008 and $5,318 million in 2007 less

capital

expenditures

$824

million

2008

and

$714

million

2007

Source: PMI Financials

Philip Morris International

PMI 2008 YTD Sept OCI Variance Analysis

823

749

(87)

(66)

8,422

6,912

2007

Currency

Vol/Mix

Price

Costs

Other

Acq.

2008

Source: PMI Financials

($mio)

Philip Morris International

YTD Sept

OCI Variance Analysis: Volume/Mix

(201)

(198)

(157)

(290)

2008

2005

2006

2004

2007

($mio)

Philip Morris International

PMI 2008 YTD Sept OCI Variance Analysis

823

749

(87)

(66)

8,422

6,912

2007

Currency

Vol/Mix

Price

Costs

Other

Acq.

2008

Source: PMI Financials

($mio)

Philip Morris International

Currencies

95.67

105.88

119.36

Japanese Yen

11,364

9,254

9,110

Indonesian Rupiah

13.09

10.53

10.96

Mexican Peso

1.35

25.89

1.22

1.34

YTD Sept

2007

1.65

1.23

Turkish Lira

27.56

24.05

Russian Ruble

1.19

1.06

Swiss Franc

1.25

1.52

Euro

14 Nov

2008

YTD Sept

2008

(a)

Local currency to the US Dollar except Euro

Source: Interbank

rate on www.oanda.com

(a)

Philip Morris International

Volume:

1-2%

Net revenues

(a)

4-6%

Operating income:

6-8%

EPS:

10-12%

Constant Currency Long-Term

Annual Growth Targets

(a)

Excluding excise taxes

Philip Morris International

2008 Guidance

Expect to meet the low end of annual earnings

guidance range of $3.32 to $3.38 per share, reflecting

19%-21% growth rate

Continued currency volatility could have impact of +/-

one to two cents per share from the low end of the

range

Philip Morris International

Estimated EPS Growth

Weighted Average 2008

Note: EPS growth reflects calendar year 2008 EPS growth

Source: Thompson

One

Analytics,

FactSet

and

Wall

Street

equity

research

Global Mega Cap Peer Group

Company Peer Group

Global CPG Group

Tobacco Peer Group

9.7%

10.0%

10.1%

19.0%

10.6%

Philip Morris International

Business Update

Developed markets:

Germany

Japan

Emerging Markets:

Russia

Indonesia

Philip Morris International

5.3

6.8

Jan 08

Oct 08

25.2

24.2

Germany Business Update

Cigarette industry volume

down 3.1% YTD Oct

PMI share is up 0.3 share

points to 36.8% YTD Oct

Marlboro

share stabilizing in

last few months

L&M

fastest growing brand

Build

momentum

L&M,

notably

L&M

Night

priced

a €0.10/pack premium

L&M

Marlboro

Source: PMI estimates

Market Shares (%)

12 MM

Philip Morris International

YTD Oct

Germany Business Update

Strong PMI share growth in fine

cut:

Innovative expansion

L&M

expansion

Improved outlook for PMI across

the tobacco market

Cautiously optimistic regarding

higher minimum pack size

regulations

(%)

7.4

11.3

13.7

L&M

Others

Source: PMI estimates

–

PMI Fine Cut SoM

2006

2007

2008

Philip Morris International

Japan Business Update

Total market down 3.7% YTD

Sept

TASPO card penetration at

32%

Consumers switching to

convenience stores

Debate around excise tax and

pricing freedom

Source: Tobacco Institute of Japan and PMI consumer research

Philip Morris International

Japan Business Update

PMI shipments have dropped

6.0% YTD Sept reflecting

market decline and distributor

inventory adjustments

PMI share at 24.0% in Q3 has

been stable for four

consecutive quarters

Market Shares (%)

9.9

9.8

10.2

6.7

6.6

6.8

6.6

7.3

7.5

7.3

7.2

23.9

24.0

Lark

Other

Marlboro

23.9

2008

2007

2008

Source: PMI Financials and Tobacco Institute of Japan

Philip Morris International

Japan Business Update

Strategic focus on innovation,

new line extensions and

product improvement

Marlboro Black Menthol

1.0%

share in Sept; best launch ever

Marlboro Filter Plus

in November

Source: Tobacco Institute of Japan

launched

Philip Morris International

Russia Business Update

Key Consumer Trends (SoM)

2008

YTD Sept

2008

YTD Sept

2008

YTD Sept

Source: Business Analytica

Medium Plus Price

2006

2007

Lighter Taste

2006

2007

Slims Diameter

2006

2007

Philip Morris International

Russia Business Update

PMI shipments have increased

8.0% YTD Sept

PMI market share in Q3

reached 27.0%, up 0.4 pp

versus prior year

Consumer uptrading and

pricing driving strong

profitability gains

PMI has strong brands in all

price categories

Mid

Low/

Super-low

Premium &

Above

6.7% SoM

10.9% SoM

9.4% SoM

Source: PMI Financials and Business Analytica

Philip Morris International

Russia Business Update

Business momentum continues unabated

Efficient and effective distribution network

Payment terms respected

Stable and predictable excise tax structure

Attractive retail prices

Strong manufacturing presence

Broad portfolio of growing brands

Philip Morris International

Indonesia Business Update

Industry volume up 5% YTD

Sept driven by favorable

demographics and moderate

price increases

Key growth segment is

machine made kreteks that are

lighter in taste

Tax reform tending towards

greater role of specific element

and reduction in complexity

Premium cigarette volume

increasing

2008

YTD Sept

Source: PMI estimates and Indonesian Central Bureau of Statistics

Estimated Industry Growth

2005

2006

2007

Philip Morris International

Indonesia Business Update

PMI shipments up 10% YTD

Sept (after adjustment)

(a)

PMI market share up 0.3

points YTD Sept

Marlboro

has

benefited from

launch

Marlboro

kretek

+ 10 %

(a)

Total PMI

+ 45 %

Others

2 %

A Hijau

+ 6 %

Dji Sam Soe

+ 12 %

A Mild

+ 16 %

Marlboro

YTD Sept

08 vs 07

Volume Change

(a)

Adjustment for timing of shipment (800 million) related to Ramadan. Adjustment pro-rated across the brands

Source: PMI Financials and AC Nielsen

Philip Morris International

Emerging Markets: Analysis of Previous Crisis

Analysis of impact of previous economic crises:

–

1998/1999 in Indonesia, Mexico, the Philippines, Russia and

Ukraine

–

2001/2002 in Argentina, Egypt and Turkey

Philip Morris International

Emerging Markets: Indonesia 1997-2000

(13)

GDP Growth (%)

Inflation (%)

8,422

7,855

10,014

2,909

Exchange Rate (IDR/USD)

2000

1999

1998

1997

Economic

Indicators

Source: Global Insight

Philip Morris International

Emerging Markets: Indonesia 1997-2000

Sampoerna / PMI Volume

1997

1998

1999

2000

(bio)

2000

1999

1998

1997

253

1,985

944

7,412

107

1,075

464

4,649

244

211

OCI

($mio)

2,052

615

OCI

(IDR bio)

1,191

1,069

Revenues

($mio)

10,029

3,111

Revenues

(IDR bio)

Sampoerna Financial Results

Source: Sampoerna and PMI company records

Philip Morris International

Indonesian economy much stronger today than in 1998

Emerging Markets: Indonesia 2008

-28%

up to -500%

Exchange Rate (IDR/USD)

Inflation (%)

Reserves ($bio)

Export Contribution to GDP (%)

479

GDP ($bio)

2008

1998

Source: Global Insight

Philip Morris International

Market Shares

13.9

29.5

36.1

22.1

15.8

18.0

2.4

6.3

4.1

5.9

10.6

2.4

1998

YTD Sept 08

Emerging Markets: Indonesia 2008

(%)

Gudang Garam

Nojorono

Bentoel

BAT

Djarum

PMI/Sampoerna

Sampoerna / PMI

Portfolio

26%

36%

52%

27%

17%

15%

1998

2008

A Hijau

A Mild

Dji

Sam Soe

Marlboro

Other

Source: Sampoerna company records, PMI Financials and AC Nielsen

Philip Morris International

Emerging Markets: Russia 1998-99

Industry Price Segmentation

57%

81%

43%

19%

50%

100%

1998

1999

Premium/

Mid

Value/

Low

4.5x

3.2x

L&M

Bond Street

Marlboro

Apollo-Soyuz

Source: Business Analytica

7.4

25.4

4.4

13.8

3.4

10.2

5.7

2.3

Jul 1998

Jul 1999

RUB/Pack

Philip Morris International

Emerging Markets: Russia 1998-2001

Switch to local manufacturing

Strengthened low price portfolio

Volume recovered by 2001

Profitability grew at a rapid pace starting in 2000

Source: Local affiliate financials

Philip Morris International

St. Petersburg

Moscow

Novosibirsk

Ekaterinburg

Rostov-on-Don

Emerging Markets: Russia 2008

Field offices

Offices

80,000

Outlets on Routes

990

Locales covered

1,030

Field Force

Area offices

Russia is now a significant economy which has

accumulated strong foreign currency reserves

Source: PMI

Philip Morris International

Emerging Markets: Economic

Crises

Driven primarily by overheating of local economies

Massive devaluation of local currencies and strong inflationary

pressures

Philip Morris International

Emerging Markets: Economic

Crises

Driven primarily by overheating of local economies

Massive devaluation of local currencies and strong inflationary

pressures

Current

Situation

Global financial crisis originating in developed countries

Inflation tending to moderate as fuel and food prices drop

Economies much stronger today and foreign reserves much larger

Philip Morris International

Emerging Markets: PMI

Crises

Currency devaluation and imports driving higher retail prices

Ad valorem excise taxes exacerbated price gaps

Markets resilient, but consumer downtrading

PMI

portfolio

heavily

dependent

Marlboro

and

L&M

Philip Morris International

Emerging Markets: PMI

Crises

Currency devaluation and imports driving higher retail prices

Ad valorem excise taxes exacerbated price gaps

Markets resilient, but consumer downtrading

PMI

portfolio

heavily

dependent

Marlboro

and

L&M

Current

Situation

Disposable consumer income at record levels

Excise tax systems are more oriented to specific amounts

PMI volume locally manufactured

PMI acquisitions in Indonesia and Mexico

International portfolio extended into low price segments

Philip Morris International

PMI Volume and OCI in Eight Emerging Markets

Combined Market Results Indexed

125

155

100

120

140

160

1997

1998

1999

2000

2001

2002

Volume

OCI

CAGR: 9%

CAGR: 5%

Source: PMI local affiliate records

Philip Morris International

Geographic Balance

2008 YTD Sept Volume

2008 YTD Sept OCI

OECD

Non-OECD

(a)

Excluding PRC and duty-free

Source: PMI Financials

(a)

Non-OECD

55%

OECD

45%

Non-OECD

35%

OECD

65%

Brand Portfolio Strategy

Philip Morris International

100

Fra

Ger

Ita

Pol

Rus

Turk

Ukr

Indo

Jap

Arg

Mex

PMI Share of Premium & Above

EEMA

LA & Can

Asia

2008 YTD Sept

(%)

Source: PMI GIMS

Philip Morris International

Brand Portfolio Strategy

Philip Morris International

PMI Share of Mid Price

Fra

Ita

Pol

Rus

Turk

Ukr

Indo

Jap

Thai

EEMA

Asia

Source: PMI GIMS

2008 YTD Sept

(%)

Philip Morris International

Brand Portfolio Strategy

Philip Morris International

Brand Portfolio Strategy

Philip Morris International

Brand Portfolio Strategy

Red

Gold

Fresh

Philip Morris International

Marlboro Filter Plus

Unique, multi-chamber filter,

including tobacco plug

Flavorful alternative that

extends Marlboro

heritage to

6mg, 3mg and 1mg

Generally sold at a premium

Sept 2008 Market Shares

2.1

2.0

1.4

0.6

1.0

2.5

Kuw

Rom

Almaty

Kiev

Moscow

Vilnius

(%)

Source: AC Nielsen and Business Analytica

Eastern Europe

Key Cities

Philip Morris International

Marlboro Intense / Compact

Marlboro Intense

is a rich,

flavorful, generally shorter

cigarette

Launched in Turkey and

several EU markets

Lighter

version,

Marlboro

Compact

Italy

has

achieved

0.6%

Source: AC Nielsen

Philip Morris International

Marlboro Gold

New more modern pack in test

market in Austria, France and

Italy

Positive reaction from trade

and adult smokers

New pack perceived as

“modern, dynamic and

elegant”

Philip Morris International

Marlboro Gold Edge

is the first

entry into super slims for

Marlboro

Launch in Poland and Russia,

where slims are growing

driven by both male and

female adult smokers

Philip Morris International

Marlboro

Refreshing Taste Sensations

Innovative Marlboro Crisp

Mint, Marlboro Fresh Mint

and

Marlboro

Ice

Mint

launched

selected Asian countries in

2007

Expanded to selected Latin

American markets

11.5

10.8

1.3

2007

2008

11.5%

12.1%

Ice Mint

YTD Sept

Singapore

Marlboro

Menthol

SoM

Source: AC Nielsen

Philip Morris International

Marlboro

Refreshing

Taste

Sensations

Marlboro Black Menthol

launched in Japan in Q3, 2008

Most successful new PMI

launch in this market

5.2

4.9

0.3

0.8

2008 H1

2008 Q3

Black

Menthol

Ice Mint

Japan

Marlboro

Menthol

SoM

5.5%

6.0%

Source: Tobacco Institute of Japan

Philip Morris International

Marlboro

Market Leadership

market

(selected)

premium

(selected)

Ukraine

Turkey

Serbia

Philippines

Poland

Kazakhstan

Japan

Finland

Egypt

Czech Rep

Costa Rica

Argentina

Algeria

Switzerland

Spain

Saudi Arabia

Netherlands

Mexico

Lebanon

Kuwait

Italy

Hong Kong

Greece

Germany

France

Belgium

Austria

Source: PMI GIMS

Philip Morris International

Parliament

Prestige brand with recessed

filter

Generally above premium

price with superior margins

Parliament

volume grew by

20.6% YTD Sept

Source: PMI Financials

Philip Morris International

Parliament

Growth driven by Korea,

Russia, Turkey and Ukraine

Parliament Reserve

launched

in Russia, Turkey and Ukraine

to reinforce prestigious image

1.7

2.4

5.8

1.3

3.1

2.6

7.1

1.8

7.5

Korea

Russia

Turkey

Ukraine

Source: AC Nielsen and Business Analytica

Market Shares YTD Sept

2007

2008

(%)

Philip Morris International

Virginia Slims

Stand-alone slims and super

slims product

Virginia Slims

volume grew by

9.6% YTD Sept

Virginia Slims Uno

pack format

Geographic expansion

1.9

2.6

0.8

2.1

2.9

1.1

Japan

Korea

Romania

(%)

Source: PMI Financials, Tobacco Institute of Japan and AC Nielsen

Market Shares YTD Sept

2007

2008

Philip Morris International

In Market Sales

600

L&M

repositioned in 2007 in

key EEMA markets

L&M

volume down 5.0% YTD

Sept

Rate of volume decline

moderating in Romania and

Ukraine

(mio)

Source: PMI Financials and GIMS

Ukraine

Romania

2008

2007

Philip Morris International

L&M

Second largest brand in EU

region after Marlboro

L&M

volume in EU up 4.2%

YTD Sept

Fastest growing brand in

Germany and Netherlands

Growing market leader in

Poland, helped by slims

Largest international brand in

Thailand

4.7

4.1

13.8

15.9

6.8

6.1

14.5

16.6

Germany

Netherlands

Poland

Thailand

Source: PMI Financials and AC Nielsen

Market Shares YTD Sept

(%)

2007

2008

Philip Morris International

3.2

2.4

9.6

5.9

3.6

2.8

9.8

7.2

Italy

Russia

Spain

Ukraine

Chesterfield

volume grew

16.9% YTD Sept

Key markets are Italy, Russia,

Spain and Ukraine

(%)

Source: PMI Financials, AC Nielsen, Business Analytica and estimates based on Logista

Market Shares YTD Sept

2007

2008

Philip Morris International

Low Price

Combined volume of Bond

Street

and Red & White

over 50 billion YTD Sept

Complementary roles in

Central and Eastern Europe

Source: PMI Financials

Philip Morris International

Brand Portfolio

Mid Price

Premium &

Above

Local Heritage

International

Low Price

Philip Morris International

Rothmans Inc. Acquisition

Provides meaningful presence in one of the most

profitable markets

Has a growing 33% share of the Canadian cigarette

market

Is the leader in value segment and fine cut market

44.5

47.3

53.7

57.8

55.5

52.7

46.3

42.2

100%

2005

2006

2007

2008

YTD Sept

Value

Premium

Cigarette Price Segments

Philip Morris International

Acquisition Opportunities

Pipeline of other opportunities; timing uncertain

Strict strategic and financial criteria

Excellent integration track record

Philip Morris International

Market Opportunities

PRC

Vietnam

Bangladesh

India

2007

Volume:

2.3

trillion

units

Source: PMI GIMS

Philip Morris International

China

Building relationship with CNTC

Marlboro

manufactured and sold under license

International joint-venture showing signs of promise

Objective is to be CNTC’s

key strategic partner

Marlboro

(under license)

RGD

(low price)

Dubliss

(mid)

Harmony

(premium)

Philip Morris International

Global Leadership and Scale

25.2%

20.2%

18.0%

8.7%

27.9%

15.6%

12.5%

11.0%

5.4%

55.5%

PMI

BAT

IMT

Other

PMI

BAT

IMT

Other

International

Market

(a)

International

Market

excl.

PRC

(a)

(a) Assumes JT’s acquisition of Gallaher and Imperial’s acquisition of Altadis were effective as of January 1, 2007.

Source: 2007 competitive data derived by PMI from 2007 company reports. PMI data and total market from GIMS.

Philip Morris International

Key Opportunities in Other Tobacco Products

Cigarettes by far the most profitable tobacco category

but opportunities for incremental profitability exist in

OTP

PMI has built a sizeable fine cut business through

organic growth supplemented by acquisitions

Philip Morris International

Interval

Acquisition

Acquisition of Interval

and

other fine cut brands from

Imperial in June 2008 for €254

million

Acquisition adds about two

market share points in the EU

Interval

is the leading fine cut

brand in France with potential

for geographic expansion

Source: PMI Financials and PMI estimates

Philip Morris International

Key Opportunities in OTP

Cigarettes remain by far the most profitable tobacco

category but opportunities for incremental profitability

exist in other tobacco segments

PMI has built a sizeable fine cut business through

organic growth supplemented by acquisitions

PMI has launched a snus product in Sweden

Philip Morris International

Capital Structure

Strong balance sheet

Long-term credit ratings A2 / A / A+

Short-term credit ratings P-1 / A-1 / F1

Continuous access to Tier 1 commercial paper market

Over $10 billion bond offerings in US Dollars, Euros

and Swiss Francs

$6.4 billion of committed revolving credit facilities

Source: PMI Treasury

Philip Morris International

Shareholder Returns

Dividend raised by 17.4% in August to annualized level

of $2.16 a share

Target dividend payout ratio of 65%

Two year $13 billion share repurchase program

initiated in May

Share repurchase program ahead of schedule: $4.7

billion spent

Q4 2008 share repurchases expected to be low

Source: PMI Financials

Philip Morris International

Stock Price Performance $US

Weighted Average

(33.6%)

(31.1%)

(27.8%)

(26.3%)

(25.1%)

(24.8%)

(23.2%)

Note: Peer groups represent the market weighted average performance of the group. Market weighting is based on current U.S. dollar denominated market

capitalization. Exchange rates are as of 3/28/08 and 11/14/08.

Share price performance is for the period beginning 3/28/08 and ending 11/14/08.

Source: FactSet. Centerview

Partners.

Global Mega Cap Peer Group

Global CPG Group

S&P 500 -

Ex-Financials

Tobacco Peer Group

S&P 500

Company Peer Group

March 28,2008 –

November 14, 2008

Philip Morris International

Conclusions

Strong business fundamentals and results

Currency important but temporary phenomenon

Expect to deliver against long term targets

Emerging markets much better placed today

Superior infrastructure, brand portfolio and geographic

balance

Pricing ability remains powerful

Tremendous cash flows and strong balance sheet

Continue to reward shareholders over the long term

Questions & Answers

Philip Morris International

Reconciliation of Reported Results to

Organic Results

(For

the

Nine

Months

Ended

September

30,

2008

and

2007

Billions)

(a)

Defined as operating income before general corporate expenses ($80 million in 2008 and $51 million in 2007)

and amortization of intangibles ($29 million in 2008 and $18 million in 2007)

Source: PMI Financials

2008

2007

Less:

Add

Less:

Add

Reported

Excise

Unusual

Organic

Reported

Excise

Unusual

Organic

Results

Taxes

Currency

Items*

Results

Taxes

Divestiture

Items*

Results

% Change

Volume

667.00

9.60

657.40

651.50

1.20

650.30

1.1%

Net Revenues

49.67

29.67

1.71

0.06

18.23

41.45

24.15

0.05

17.25

5.7%

OCI (a)

8.42

0.75

0.05

0.21

7.83

6.91

0.03

0.15

7.03

11.3%

*Unusual items include asset impairment and exit costs in both years and the equity loss from RBH legal settlement in 2008