8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 19, 2012

Philip Morris International Inc.

(Exact name of registrant as specified in its charter)

Virginia	1-33708	13-3435103
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)
120 Park Avenue, New York, New York		10017-5592
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (917) 663-2000

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02.    Results of Operations and Financial Condition.

On July 19, 2012, Philip Morris International Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended June 30, 2012 and held a live audio webcast to discuss such results. In connection with this webcast, the Company is furnishing to the Securities and Exchange Commission the following documents attached as exhibits to this Current Report on Form 8-K and incorporated herein by reference to this Item 2.02: the earnings release attached as Exhibit 99.1 hereto, the conference call transcript attached as Exhibit 99.2 hereto and the webcast slides attached as Exhibit 99.3 hereto.

In accordance with General Instruction B.2 of Form 8-K, the information in Item 2.02 of this Current Report on Form 8-K, including Exhibits 99.1, 99.2 and 99.3, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information in Item 2.02 of this Current Report on Form 8-K shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as may be expressly set forth by specific reference in such filing or document.

Item 9.01.    Financial Statements and Exhibits.

(d) Exhibits

99.1   Philip Morris International Inc. Press Release dated July 19, 2012 (furnished pursuant to Item 2.02)

99.2   Conference Call Transcript dated July 19, 2012 (furnished pursuant to Item 2.02)

99.3   Webcast Slides dated July 19, 2012 (furnished pursuant to Item 2.02)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

PHILIP MORRIS INTERNATIONAL INC.
By:	/s/ JERRY WHITSON
Name:	Jerry Whitson
Title:	Deputy General Counsel and Corporate Secretary

DATE: July 19, 2012

EXHIBIT INDEX

Exhibit No.	Description
99.1	Philip Morris International Inc. Press Release dated July 19, 2012 (furnished pursuant to Item 2.02)
99.2	Conference Call Transcript dated July 19, 2012 (furnished pursuant to Item 2.02)
99.3	Webcast Slides dated July 19, 2012 (furnished pursuant to Item 2.02)

EX-99.1

Exhibit 99.1

PHILIP MORRIS INTERNATIONAL INC. (PMI) REPORTS 2012 SECOND-QUARTER

RESULTS; REAFFIRMS 2012 FULL-YEAR REPORTED DILUTED EPS

Second-Quarter 2012

• Reported diluted earnings per share of $1.36, up by 0.7%, or by 8.1% excluding currency, versus $1.35 in 2011, as detailed in the attached Schedule 13

• Excluding currency and the 2011 earnings per share hurdle of $0.10 related to Japan, reported diluted EPS up by 16.8%

• Adjusted diluted earnings per share of $1.36, up by 1.5%, or by 9.0% excluding currency, versus $1.34 in 2011, as detailed in the attached Schedule 12

• Excluding currency and the aforementioned Japan hurdle of $0.10, adjusted diluted EPS up by 17.7%

• Cigarette shipment volume down by 1.2%, excluding acquisitions

• Cigarette shipment volume up by 1.4% excluding acquisitions and the 6.3 billion units associated with the 2011 Japan hurdle

• Reported net revenues, excluding excise taxes, down by 1.8% to $8.1 billion, or up by 2.9% excluding currency and acquisitions

• Reported operating companies income down by 2.7% to $3.7 billion, or up by 3.4% excluding currency and acquisitions

• Adjusted operating companies income, which reflects the items detailed in the attached Schedule 11, down by 2.5% to $3.7 billion, or up by 3.5% excluding currency and acquisitions

• Operating income down by 2.9% to $3.6 billion

• Repurchased 17.8 million shares of its common stock for $1.5 billion

• Announced, during the quarter, a new three-year share repurchase program of $18 billion expected to commence August 1, 2012

• Reaffirms, at prevailing exchange rates, its 2012 full-year reported diluted earnings per share forecast to be in a range of $5.10 to $5.20, versus $4.85 in 2011.

June Year-to-Date

• Reported diluted earnings per share of $2.60, up by 7.4%, or by 12.4% excluding currency, versus $2.42 in 2011, as detailed in the attached Schedule 17

• Excluding currency and the 2011 earnings per share hurdle of $0.10 related to Japan, reported diluted EPS up by 17.2%

• Adjusted diluted earnings per share of $2.61, up by 8.3%, or by 13.3% excluding currency, versus $2.41 in 2011, as detailed in the attached Schedule 16

• Excluding currency and the aforementioned Japan hurdle of $0.10, adjusted diluted EPS up by 18.2%

• Cigarette shipment volume up by 1.8%, excluding acquisitions

• Cigarette shipment volume up by 3.3% excluding acquisitions and the 6.3 billion units associated with the 2011 Japan hurdle

• Reported net revenues, excluding excise taxes, up by 3.3% to $15.6 billion, or by 6.5% excluding currency and acquisitions

• Reported operating companies income up by 4.5% to $7.2 billion, or by 8.3% excluding currency and acquisitions

• Adjusted operating companies income, which reflects the items detailed in the attached Schedule 15, up by 4.5% to $7.2 billion, or by 8.3% excluding currency and acquisitions

• Operating income up by 4.3% to $7.0 billion

NEW YORK, July 19, 2012 – Philip Morris International Inc. (NYSE / Euronext Paris: PM) today announced its 2012 second-quarter results.

“Despite the anticipated Japan hurdle and currency headwinds, we had a solid second quarter which underscored our sustained business momentum,” said Louis C. Camilleri, Chairman of the Board and Chief Executive Officer.

“Excluding the Japan hurdle, our year-to-date organic cigarette volume grew by an exceptional 3.3%. On the same basis, our currency neutral, reported and adjusted diluted earnings per share were up by a very robust 17.2% and 18.2%, respectively.”

“Our broad geographic footprint, world-class brand portfolio and a strong pricing environment remain the cornerstone of our continuing ability to capitalize on growth opportunities around the world, whilst enabling us to weather uncertainty in those markets where economic conditions are still currently weak.”

Conference Call

A conference call, hosted by Hermann Waldemer, Chief Financial Officer, with members of the investment community and news media, will be webcast at 9:00 a.m., Eastern Time, on July 19, 2012. Access is available at www.pmi.com.

Dividends and Share Repurchase Program

During the second quarter, PMI spent $1.5 billion to repurchase 17.8 million shares, as shown in the table below.

Current $12 Billion, Three-Year Program

	Value		Shares
	($ Mio.)		000
May-December 2010		2,953		55,933
January-December 2011		5,400		80,514
January-March 2012		1,500		18,057
April-June 2012		1,535		17,774
Total Under Program		11,388		172,278

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Since May 2008, when PMI began its first share repurchase program, the company has spent an aggregate of $24.4 billion to repurchase 449.9 million shares at an average price of $54.21 per share, or 21.3% of the shares outstanding at the time of the spin-off in March 2008.

During the quarter, PMI announced a new three-year share repurchase program of $18 billion, anticipated to commence on August 1, 2012, following completion of the existing three-year program of $12 billion which began in May 2010, and which will conclude ahead of schedule.

PMI has a share repurchase target for 2012 of $6.0 billion.

2012 Full-Year Forecast

PMI reaffirms, at prevailing exchange rates, its 2012 full-year reported diluted earnings per share forecast to be in a range of $5.10 to $5.20, versus $4.85 in 2011. Forecasted total unfavorable currency of approximately $0.27 per share for the full-year 2012 is up by an additional $0.02 per share compared to the unfavorable currency forecast previously announced on June 21, 2012. This additional forecasted unfavorable currency of $0.02 per share is expected to be fully offset by an anticipated improvement in business performance driven largely by Asia and EEMA. On a currency neutral basis, reported diluted earnings per share in 2012 are projected to increase by approximately 10% to 12% versus adjusted diluted earnings per share of $4.88 in 2011.

This guidance excludes the impact of any potential future acquisitions, unanticipated asset impairment and exit cost charges, and any unusual events.

The factors described in the Forward-Looking and Cautionary Statements section of this release represent continuing risks to these projections.

2012 SECOND-QUARTER CONSOLIDATED RESULTS

In this press release, “PMI” refers to Philip Morris International Inc. and its subsidiaries. The term “net revenues” refers to operating revenues from the sale of our products, excluding excise taxes and net of sales and promotion incentives. Operating Companies Income, or “OCI”, is defined as operating income before general corporate expenses and the amortization of intangibles. PMI’s management evaluates business segment performance and allocates resources based on OCI. Management also reviews OCI, operating margins and Earnings Per Share, or “EPS”, on an adjusted basis (which may exclude the impact of currency and other items such as acquisitions, asset impairment and exit costs and discrete tax items), Earnings Before Interest, Taxes, Depreciation, and Amortization, or “EBITDA”, free cash flow, defined as net cash provided by operating activities less capital expenditures, and net debt. References to total international cigarette market, defined as worldwide cigarette volume excluding the United States, total cigarette market, total market and market shares are PMI estimates based on the latest available data from a number of internal and external sources and may, in defined instances, exclude the People’s Republic of China and/or PMI’s duty-free business. Comparisons are to the same prior-year period unless otherwise stated. For a reconciliation of non-GAAP measures to corresponding GAAP measures, see the relevant schedules provided with this release.

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NET REVENUES

PMI Net Revenues ($ Millions)

	Second-Quarter										Six Months Year-To-Date
	2012		2011		Change			Excl. Curr.			2012		2011		Change			Excl. Curr.
European Union	$	2,285	$	2,497		(8.5	)%		(0.7	)%	$	4,338	$	4,498		(3.6	)%		2.0	%
Eastern Europe, Middle East & Africa		2,151		2,012		6.9	%		13.2	%		3,986		3,699		7.8	%		13.2	%
Asia		2,855		2,936		(2.8	)%		(1.8	)%		5,632		5,259		7.1	%		6.2	%
Latin America & Canada		829		828		0.1	%		6.3	%		1,612		1,608		0.2	%		5.8	%
Total PMI	$	8,120	$	8,273		(1.8	)%		3.0	%	$	15,568	$	15,064		3.3	%		6.6	%

Net revenues of $8.1 billion were down by 1.8%, including unfavorable currency of $402 million. Excluding currency, net revenues increased by 3.0%, driven by favorable pricing of $463 million, partly offset by unfavorable volume/mix of $225 million. Excluding currency and acquisitions, net revenues increased by 2.9%, despite the challenging comparison to the second quarter of 2011 which included additional PMI shipments to Japan of 6.3 billion units, driven by the disruption of PMI’s principal competitor’s supply chain following the tragic events of March of that year.

OPERATING COMPANIES INCOME

PMI Operating Companies Income ($ Millions)

	Second-Quarter										Six Months Year-To-Date
	2012		2011		Change			Excl. Curr.			2012		2011		Change			Excl. Curr.
European Union	$	1,117	$	1,280		(12.7	)%		(2.6	)%	$	2,147	$	2,286		(6.1	)%		0.7	%
Eastern Europe, Middle East & Africa		948		835		13.5	%		23.1	%		1,758		1,557		12.9	%		20.9	%
Asia		1,364		1,398		(2.4	)%		(2.6	)%		2,771		2,491		11.2	%		9.0	%
Latin America & Canada		249		268		(7.1	)%		2.2	%		486		519		(6.4	)%		1.7	%
Total PMI	$	3,678	$	3,781		(2.7	)%		3.4	%	$	7,162	$	6,853		4.5	%		8.4	%

Reported operating companies income was down by 2.7% to $3.7 billion, including unfavorable currency of $232 million. Excluding currency, operating companies income was up by 3.4%, driven by higher pricing, partly offset by unfavorable volume/mix of $245 million, higher manufacturing costs and increased investments behind the new Marlboro advertising campaign, notably in Germany and Switzerland, new brand launches, notably Marlboro Edge in Japan and Marlboro ClearTaste in Russia, business infrastructure in Russia and anti-illicit trade investments, including organizational infrastructure and the recently announced agreement with Interpol. Adjusted operating companies income declined by 2.5% as shown in the table below and detailed on Schedule 11. Adjusted operating companies income, excluding currency and acquisitions, increased by 3.5%.

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PMI Operating Companies Income ($ Millions)

	Second-Quarter									Six Months Year-To-Date
	2012			2011			Change			2012			2011			Change
Reported OCI	$	3,678		$	3,781			(2.7	)%	$	7,162		$	6,853			4.5	%
Asset impairment & exit costs		(8	)		(1	)					(16	)		(17	)
Adjusted OCI	$	3,686		$	3,782			(2.5	)%	$	7,178		$	6,870			4.5	%
Adjusted OCI Margin*		45.4	%		45.7	%		(0.3	) p.p.		46.1	%		45.6	%		0.5	p.p.

* Margins are calculated as adjusted OCI, divided by net revenues, excluding excise taxes.

Adjusted operating companies income margin, excluding the impact of currency and acquisitions, was up by 0.3 percentage points to 46.0% during the quarter, as detailed on Schedule 11.

SHIPMENT VOLUME & MARKET SHARE

PMI Cigarette Shipment Volume by Segment (Million Units)

	Second-Quarter							Six Months Year-To-Date
	2012		2011		Change			2012		2011		Change
European Union		51,804		57,193		(9.4	)%		99,593		105,715		(5.8	)%
Eastern Europe, Middle East & Africa		79,156		75,336		5.1	%		145,084		138,979		4.4	%
Asia		83,472		84,042		(0.7	)%		164,502		156,134		5.4	%
Latin America & Canada		23,864		24,606		(3.0	)%		48,207		48,269		(0.1	)%
Total PMI		238,296		241,177		(1.2	)%		457,386		449,097		1.8	%

PMI’s cigarette shipment volume was down by 1.2%, excluding acquisitions. Excluding acquisitions, and the Japan hurdle of 6.3 billion units which is related to additional volume shipped in the second quarter of 2011 following the disruption of PMI’s principal competitor’s supply chain, PMI’s cigarette shipment volume grew by 1.4%. PMI’s June year-to-date cigarette shipment volume was up by 1.8%, excluding acquisitions. Excluding acquisitions and the Japan hurdle, PMI’s June year-to-date cigarette shipment volume was up by a strong 3.3%.

In the EU, PMI’s total cigarette shipment volume decreased by 9.4% in the quarter, predominantly due to a lower total market, particularly in southern Europe. PMI’s June year-to-date cigarette shipment volume was down by 5.8%. In EEMA, PMI’s total cigarette shipment volume grew by 5.1% in the quarter, driven mainly by a higher total market and share in Turkey and a higher share in Russia, partly offset by a lower total market in Egypt due primarily to a high incidence of illicit trade. PMI’s June year-to-date cigarette shipment volume was up by 4.2%, excluding acquisitions. In Asia, PMI’s total cigarette shipment volume decreased by 0.7% in the quarter, due to an unfavorable comparison related to the Japan hurdle and a lower total market and share in the Philippines, largely offset by a higher total market and share in Indonesia, Thailand and Vietnam. PMI’s June year-to-date cigarette shipment volume was up by 5.4%. Excluding the aforementioned Japan hurdle, PMI’s cigarette shipment volume in Asia in the second quarter and June year-to-date was up by 7.4% and 9.8%, respectively. In Latin America & Canada, PMI’s total cigarette shipment volume decreased by 3.0% in the quarter, mainly due to a lower total market, and the unfavorable impact of trade inventory movements, in Mexico. This decline was partly offset by growth in Brazil, reflecting a favorable comparison with the second quarter of 2011 which was negatively impacted by

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higher trade purchases in the first quarter of 2011 ahead of retail price increases in early April 2011. PMI’s June year-to-date cigarette shipment volume was essentially flat.

Total cigarette shipment volume of Marlboro of 76.9 billion units was down by 1.5% in the quarter. Excluding the aforementioned Japan hurdle, total cigarette shipment volume of Marlboro was up by 0.8%, reflecting growth across EEMA of 5.0%, notably in North Africa, Saudi Arabia and Serbia, partly offset by a 6.7% decline in the EU, notably in France, Italy and Spain, and a 2.3% decline in Latin America & Canada, primarily in Mexico, partly offset by growth in Brazil. Total June year-to-date cigarette shipment volume of Marlboro was up by 1.7%, or by 2.9% excluding the aforementioned Japan hurdle.

Total cigarette shipment volume of L&M of 23.6 billion units was down by 1.0% in the quarter, reflecting a decline in the EU, notably in Greece and Spain, partially offset by growth in: EEMA, notably in Russia and Turkey, partly offset by a decline in Egypt; in Asia, mainly Thailand; and in Latin America & Canada. Total June year-to-date cigarette shipment volume of L&M was up by 1.5%.

Total cigarette shipment volume of Bond Street of 12.7 billion units increased by 6.1% in the quarter, led mainly by growth in Kazakhstan and Ukraine, partly offset by a decline in Hungary. Total June year-to-date cigarette shipment volume of Bond Street was up by 5.6%.

Total cigarette shipment volume of Parliament of 11.1 billion units was up by 7.1%, fueled by double-digit growth across EEMA, notably in Russia and Turkey. Total June year-to-date cigarette shipment volume of Parliament was up by 8.6%. Excluding the aforementioned Japan hurdle, total cigarette shipment volume of Parliament increased by 10.5% in both the quarter and June year-to-date.

Total cigarette shipment volume of Philip Morris of 9.6 billion units decreased by 7.6% in the quarter, mainly reflecting a decline in Japan and the Philippines, partly offset by growth in Argentina. Total June year-to-date cigarette shipment volume of Philip Morris was down by 3.4%. Excluding the aforementioned Japan hurdle, total cigarette shipment volume of Philip Morris declined by 1.0% in the quarter and was up marginally by 0.1% June year-to-date.

Total cigarette shipment volume of Chesterfield of 9.6 billion units was down by 2.3%, due to a decline in EEMA, mainly in Ukraine, partially offset by growth in the EU, primarily in Poland. Total June year-to-date cigarette shipment volume of Chesterfield was down marginally by 0.2%.

Total cigarette shipment volume of Lark of 8.6 billion units decreased by 15.3% in the quarter and by 3.4% June year-to-date. Excluding the aforementioned Japan hurdle, total shipment volume of Lark increased by 14.1% and 14.6% in the quarter and June year-to-date, respectively.

Total shipment volume of other tobacco products (OTP), in cigarette equivalent units, grew by 11.8% in the quarter, notably in Belgium, Italy and Spain, and by 13.4%, excluding acquisitions, June year-to-date.

Total shipment volume for cigarettes and OTP combined was down by 0.9% and up by 2.1%, excluding acquisitions, for the quarter and June year-to-date, respectively. Total shipment volume for cigarettes and OTP combined was up by 1.7% and 3.5%, excluding acquisitions and the aforementioned Japan hurdle, for the quarter and June year-to-date, respectively.

PMI’s June year-to-date market share performance was stable, or registered growth, in a number of key markets, including Argentina, Australia, Austria, Belgium, Germany, Indonesia, Kazakhstan, Korea, Mexico, Poland, Russia, Thailand, Turkey, the United Kingdom and Ukraine.

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EUROPEAN UNION REGION (EU)

In the EU, net revenues decreased by 8.5% to $2.3 billion in the quarter, including unfavorable currency of $195 million. Excluding currency, net revenues decreased by 0.7%, mainly reflecting unfavorable volume/mix of $186 million, predominantly due to lower total markets across the Region, particularly in southern Europe. The decrease was partly offset by favorable pricing of $169 million, driven by France, Germany, Italy, the Netherlands, Poland, Spain and Switzerland. June year-to-date, net revenues, excluding currency, were up by 2.0%, driven by higher pricing of $275 million, partially offset by unfavorable volume/mix of $186 million.

Operating companies income decreased by 12.7% to $1.1 billion in the quarter, including unfavorable currency of $130 million. Excluding the unfavorable impact of currency, operating companies income decreased by 2.6%, as higher pricing was more than offset by: an unfavorable volume/mix of $159 million; higher manufacturing costs, mainly related to the mandated implementation of reduced cigarette ignition propensity standards which began in the fourth quarter of 2011; and higher marketing costs, principally reflecting marketing investment behind Marlboro in Germany and Switzerland. June year-to-date, operating companies income, excluding currency, was up by 0.7%.

Adjusted operating companies income decreased by 12.8% in the quarter, as shown in the table below and detailed on Schedule 11. Adjusted operating companies income, excluding currency, decreased by 2.7% in the quarter and was up by 0.2% June year-to-date.

EU Operating Companies Income ($ Millions)

	Second-Quarter									Six Months Year-To-Date
	2012			2011			Change			2012			2011			Change
Reported OCI	$	1,117		$	1,280			(12.7	)%	$	2,147		$	2,286			(6.1	)%
Asset impairment & exit costs		0			(1	)					0			(12	)
Adjusted OCI	$	1,117		$	1,281			(12.8	)%	$	2,147		$	2,298			(6.6	)%
Adjusted OCI Margin*		48.9	%		51.3	%		(2.4	) p.p.		49.5	%		51.1	%		(1.6	) p.p.

* Margins are calculated as adjusted OCI, divided by net revenues, excluding excise taxes.

Excluding the impact of currency, adjusted operating companies income margin was down by 1.0 percentage point to 50.3% in the quarter, as detailed on Schedule 11, or by 0.9 points to 50.2% June year-to-date, as detailed on Schedule 15, primarily as a result of the aforementioned higher costs.

The total cigarette market in the EU declined by 9.7% to 132.2 billion units in the quarter, due primarily to: tax-driven price increases; the unfavorable economic environment, particularly in southern Europe, and the impact of related austerity measures; the growth of the OTP segment, notably in Greece, Italy and Spain; the prevalence of illicit trade, mainly in Greece, Italy and Poland; and the timing of Easter trade inventory movements. June year-to-date, the total cigarette market in the EU declined by 5.8% to 258.2 billion units.

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PMI’s cigarette shipment volume in the EU declined by 9.4% in the quarter, due principally to a lower total market across the Region. PMI’s June year-to-date cigarette shipment volume in the EU declined by 5.8%. Shipment volume of Marlboro in the quarter decreased by 6.7%, mainly due to lower total markets, partially offset by higher share, notably in Germany, Greece, Hungary and Poland. Shipment volume of Marlboro June year-to-date was down by 4.6%. Shipment volume of L&M was down by 7.5% in the quarter, or down by 2.0% June year-to-date, mainly reflecting lower share, notably in southern Europe. Shipment volume of Chesterfield was up by 3.5% in the quarter, or by 7.3% June year-to-date, driven by higher share across northern Europe, the Baltics, Poland, Portugal and Spain.

PMI’s market share in the EU in the quarter was down 0.2 points to 38.5% as gains, notably in Austria, Belgium, Germany, Greece, Hungary and Poland were more than offset by declines, primarily in the Czech Republic, France, Italy, the Netherlands, Portugal and Spain. Marlboro’s share was up by 0.3 points to 18.4%, reflecting a higher share mainly in Belgium, the Czech Republic, Germany, Greece, Hungary, Italy and Poland which more than offset lower share mainly in France, the Netherlands, Portugal and Spain. L&M’s market share was down by 0.2 points to 6.6%, due to declines primarily in France, Greece, the Netherlands, Portugal and Spain, partly offset by gains in Germany, Finland, Poland and the Slovak Republic. Chesterfield’s market share was up by 0.3 points to 3.5%, driven mainly by gains across northern Europe, Hungary, Poland, Portugal and Spain. Philip Morris’ market share was flat at 2.1%, with gains, notably in the Czech Republic and Italy, offset by declines mainly in Portugal and Spain.

PMI’s shipments of OTP, in cigarette equivalent units, grew by 18.2% in the quarter, or by 23.1% June year-to-date, mainly reflecting a higher total market and share in France, Italy and Spain and a higher total market in Belgium. PMI’s OTP total market share was 12.7%, up by 1.3 points, driven by fine cut gains notably in France, up by 0.7 points to 25.7%, Germany, up by 1.2 points to 16.0%, and Italy, up by 24.5 points to 31.0%.

EU Key Market Commentaries

In the Czech Republic, the total cigarette market was down by 4.2% to 5.3 billion units, mainly reflecting the impact of excise tax-driven price increases in the first and second quarters of 2012. PMI’s shipments were down by 9.8%. Market share was down by 2.7 points to 42.8%, principally reflecting continued share declines for lower-margin local brands, such as Petra and Sparta, down by a combined 1.3 points, and Red & White, down by 1.1 points to 12.0%. This decline was partly offset by a higher share for Marlboro, up by 0.1 point to 7.6% and a higher share for Philip Morris, revamped during the first quarter of 2012, up by 0.7 points to 3.1%.

In France, the total cigarette market was down by 5.9% to 13.6 billion units, mainly reflecting the impact of price increases in the fourth quarter of 2011. PMI’s shipments in the second quarter of 2012 were down by 10.1%. PMI’s market share was down by 0.9 points to 40.0%, mainly due to Marlboro, down by 0.8 points to 25.2%, reflecting its crossing of the €6.00 per pack price threshold ahead of competitive brands. Market share of premium Philip Morris was flat at 8.3% and share of Chesterfield was up by 0.2 points to 3.3%. PMI’s market share increased by 0.4 points compared to the first quarter of 2012, driven by Marlboro, up by 0.5 points. PMI’s market share of the fine cut category was up by 0.7 points to 25.7%.

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In Germany, the total cigarette market was down by 5.1% to 21.2 billion units, mainly reflecting the unfavorable impact of price increases in June 2011 and March 2012. June year-to-date, the total cigarette market was down by 1.3%. PMI’s shipments were down by 4.5% in the quarter. PMI’s market share grew by 0.3 points to 36.4%, driven by a higher share for Marlboro, up by 0.3 points to 21.4%, the brand’s highest share since the fourth quarter of 2010, a higher share for L&M, up by 0.1 point to 10.5%, and a slightly higher share for Chesterfield, up by 0.1 point to 0.8%. PMI’s market share of the fine cut category was up by 1.2 points to 16.0%.

In Italy, the total cigarette market was down by 10.5% to 20.2 billion units, reflecting the impact of price increases in July and September 2011, and March 2012, an unfavorable economic environment, strong growth in the fine cut market, and an increase in illicit trade. PMI’s shipments were down by 13.4%. While PMI’s market share declined by 0.5 points to 52.9%, driven largely by low-price Diana, down by 0.8 points to 12.4%, share of Marlboro grew by 0.3 points to 23.0%, fueled by the March 2012 and June 2012 launches of Marlboro Silver and Marlboro Pocket Pack, respectively. The decline in total market share, particularly in the low-price segment due to the growth of international low-price brands, was partially offset by the first-quarter 2012 launch of Philip Morris Selection in the low-price segment, as a result of which the Philip Morris brand family grew by 0.3 points to 3.6% in the second quarter. PMI’s market share of the fine cut category was up by 24.5 points to 31.0% and up by 2.7 points compared to the first quarter of 2012.

In Poland, the total cigarette market was down by 7.7% to 13.8 billion units, mainly reflecting the impact of price increases in the first quarter of 2012. June year-to-date, the total cigarette market was down by 3.7%. Whilst PMI’s shipments were down by 2.6%, market share was up by 2.0 points to 36.9%, mainly reflecting a favorable comparison with the second quarter of 2011 impacted by the delayed implementation of price increases by competition. Shares of Marlboro, L&M, Chesterfield and Red & White were up by 0.9, 0.4, 0.9 and 0.4 points to 11.2%, 16.3%, 2.1% and 5.5%, respectively. PMI’s market share of the fine cut category was up by 0.1 point to 18.7%.

In Spain, the total cigarette market was down by 18.0% to 13.7 billion units, mainly reflecting the impact of price increases in the second half of 2011 and second quarter of 2012, the unfavorable economic environment and the growth of the OTP category. June year-to-date, the total cigarette market was down by 10.0%. PMI’s shipments were down by 16.8%. Market share was down by 1.4 points to 29.6%, with higher share of Chesterfield, revamped in the first quarter of 2012, up by 0.5 points to 8.9%, offset by Marlboro, down by 0.7 points to 13.9%, L&M, down by 0.5 points to 6.1% and Philip Morris, down by 0.4 points to 0.7%. PMI’s market share of the fine cut category was up by 1.2 points to 11.9%.

EASTERN EUROPE, MIDDLE EAST & AFRICA REGION (EEMA)

In EEMA, net revenues increased by 6.9% to $2.2 billion, despite unfavorable currency of $127 million. Excluding the impact of currency and acquisitions, net revenues increased by 12.7%, primarily due to favorable pricing of $114 million and favorable volume/mix of $141 million, the fourth consecutive quarter of favorable volume/mix. June year-to-date, net revenues, excluding currency and acquisitions, were up by 12.6%, driven by higher pricing and favorable volume/mix of $216 million and $251 million, respectively.

9

Operating companies income increased by 13.5% to $948 million, despite unfavorable currency of $80 million. Excluding the impact of currency and acquisitions, operating companies income increased by 22.9%, due primarily to higher pricing and favorable volume/mix of $104 million, partly offset by higher costs, principally related to investments in marketing, notably the launch of Marlboro ClearTaste in Russia, and business infrastructure, mainly in Russia. June year-to-date, operating companies income, excluding currency and acquisitions, was up by 20.7%.

Adjusted operating companies income increased by 13.5%, as shown in the table below and detailed on Schedule 11. Adjusted operating companies income, excluding currency and acquisitions, increased by 22.9% in the quarter and was up by 20.6% June year-to-date.

EEMA Operating Companies Income ($ Millions)

	Second-Quarter									Six Months Year-To-Date
	2012			2011			Change			2012			2011			Change
Reported OCI	$	948		$	835			13.5	%	$	1,758		$	1,557			12.9	%
Asset impairment & exit costs		0			0						0			(2	)
Adjusted OCI	$	948		$	835			13.5	%	$	1,758		$	1,559			12.8	%
Adjusted OCI Margin*		44.1	%		41.5	%		2.6	p.p.		44.1	%		42.1	%		2.0	p.p.

* Margins are calculated as adjusted OCI, divided by net revenues, excluding excise taxes.

Excluding the impact of currency and acquisitions, adjusted operating companies income margin was up by 3.8 percentage points to 45.3%, as detailed on Schedule 11, or by 3.0 points to 45.1% June year-to-date, as detailed on Schedule 15.

PMI’s cigarette shipment volume in EEMA increased by 5.1%, predominantly due to a higher total market and share in Turkey and a higher share in Russia, partly offset by a lower total market in Egypt reflecting the high incidence of illicit trade.

PMI’s cigarette shipment volume of premium brands grew by 7.4% in EEMA, driven by Marlboro, up by 5.0%, mainly reflecting growth in North Africa, Saudi Arabia and Serbia, and Parliament, up by 16.3%, reflecting growth in Kazakhstan, Russia, Turkey and Ukraine.

EEMA Key Market Commentaries

In Russia, PMI’s shipment volume increased by 8.7%. Shipment volume of PMI’s premium portfolio was up by 12.5%, driven primarily by Parliament, up by 15.5%, and Marlboro, up by 6.1%. In the mid-price segment, shipment volume was up by 7.9%, mainly due to Chesterfield, up by 1.3%, and L&M, up by 27.1%, the third consecutive quarter of growth. In the low-price segment, shipment volume was up by 7.7%, driven by Apollo Soyuz, Bond Street, Next and Optima, up by 11.9%, 2.8%, 23.2%, and 5.0%, respectively. PMI’s May quarter-to-date market share of 26.1%, as measured by Nielsen, was up by 0.7 points. Market share of Parliament was up by 0.2 points to 3.1%; Marlboro was down by 0.2 points to 1.9%; L&M was up slightly by 0.1 point to 2.5% and Chesterfield was flat at 3.4%; Bond Street was up by 0.3 points to 6.3%; Next was up by 0.4 points to 2.9%; and Apollo Soyuz and Optima were essentially flat at 1.4% and 3.2%, respectively.

In Turkey, the total cigarette market increased by an estimated 5.5% to 25.5 billion units, reflecting recovery after the October 2011 excise tax-driven price increase and a decline in the incidence of illicit

10

trade. PMI’s shipment volume increased by 8.9% across all price segments, notably premium shipment volume, up by 8.5%. PMI’s May quarter-to-date market share, as measured by Nielsen, grew by 0.7 points to 45.3%, driven by premium Parliament, mid-price Muratti and low-price Lark, up by 0.8, 0.4 and 0.3 share points to 8.7%, 6.5% and 12.2%, respectively, partly offset by a decline in low-price L&M, down by 0.2 points to 8.6%. Market share of Marlboro was down slightly by 0.1 point to 9.0%.

In Ukraine, the total cigarette market declined by 3.0% to 23.1 billion units. June year-to-date, the total cigarette market was up by 0.6%. Whilst PMI’s shipment volume decreased by 2.1%, May quarter-to-date market share, as measured by Nielsen, was up by 0.2 points to 32.1%. Share for premium Parliament was up by 0.5 points to 3.2%. Share of Marlboro was flat at 5.8%, Chesterfield was up slightly by 0.1 point to 7.4% and Bond Street was up by 1.4 points to 8.1%.

ASIA REGION

In Asia, net revenues decreased by 2.8% to $2.9 billion, including unfavorable currency of $29 million. Excluding the impact of currency, net revenues decreased by 1.8%, reflecting an unfavorable volume/mix of $152 million, primarily due to the Japan hurdle, partially offset by the favorable impact of pricing of $100 million, principally in Australia, Indonesia, Korea and the Philippines. June year-to-date, net revenues, excluding currency and acquisitions, were up by 6.2%, driven by higher pricing and favorable volume/mix of $244 million and $83 million, respectively.

Operating companies income decreased by 2.4% to $1.4 billion. Excluding the marginally favorable impact of currency of $3 million, operating companies income decreased by 2.6%, reflecting an unfavorable volume/mix, partly offset by higher pricing and lower costs related to the Japan hurdle. June year-to-date, operating companies income, excluding currency, was up by 9.0%.

Adjusted operating companies income decreased by 2.4% as shown in the table below and detailed on Schedule 11. Adjusted operating companies income, excluding currency, decreased by 2.6% in the quarter and was up by 8.9% June year-to-date.

Asia Operating Companies Income ($ Millions)

	Second-Quarter									Six Months Year-To-Date
	2012			2011			Change			2012			2011			Change
Reported OCI	$	1,364		$	1,398			(2.4	)%	$	2,771		$	2,491			11.2	%
Asset impairment & exit costs		0			0						0			(2	)
Adjusted OCI	$	1,364		$	1,398			(2.4	)%	$	2,771		$	2,493			11.2	%
Adjusted OCI Margin*		47.8	%		47.6	%		0.2	p.p.		49.2	%		47.4	%		1.8	p.p.

* Margins are calculated as adjusted OCI, divided by net revenues, excluding excise taxes.

Excluding the impact of currency, adjusted operating companies income margin was down by 0.4 percentage points to 47.2%, as detailed on Schedule 11, or up by 1.2 points to 48.6% June year-to-date, as detailed on Schedule 15.

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PMI’s cigarette shipment volume in Asia decreased by 0.7%. Excluding the Japan hurdle, PMI’s cigarette shipment volume in Asia increased by 7.4%, predominantly due to growth in Indonesia, Japan, Thailand and Vietnam, partially offset by a decline in the Philippines.

Shipment volume of Marlboro was down by 0.9%, or up by 8.2% excluding the Japan hurdle, driven by growth in Indonesia, Japan and Vietnam.

Asia Key Market Commentaries

In Indonesia, the total cigarette market was up by 6.9% to 79.6 billion units, driven by growth across all price segments. PMI’s shipment volume grew by 17.8%. PMI’s market share was up by 3.1 points to 33.5%, driven notably by Sampoerna A in the premium segment, up by 1.2 points to 13.1%, and mid-price U Mild, up by 1.0 point to 2.8%. Marlboro’s market share was up by 0.3 points to 4.5% and its share of the “white” cigarettes segment increased by 4.1 points to 68.9%. Market share of Dji Sam Soe was unchanged at 7.4%.

In Japan, the total cigarette market increased by 9.5% to 49.4 billion units, mainly reflecting a favorable comparison with the second quarter of 2011 which experienced a prolonged disruption of PMI’s principal competitor’s supply chain following the tragic events of March that year. PMI’s shipment volume was down by 19.6% in the quarter, primarily reflecting an unfavorable comparison with the second quarter of 2011. Excluding the additional volume of 6.3 billion units associated with the second quarter of 2011, PMI’s shipment volume increased by 19.2%. PMI’s market share was down by 14.2 points to 27.8% in the quarter. Share of Marlboro was down by 3.9 points to 12.5%, but up by 0.1 point compared to its 2011 exit share, supported by the introduction of Marlboro Black Menthol Edge 1 and Marlboro Black Menthol Edge 8 in May. Share of Lark was down by 6.0 points to 8.4%, down by 0.2 points compared to its 2011 exit share. Share of Philip Morris was down by 1.7 points to 2.3%, and by 0.2 points compared to its 2011 exit share.

In Korea, the total cigarette market was down by 0.7% to 22.8 billion units. PMI’s shipment volume decreased by 6.8%, reflecting the impact of PMI’s price increases in February 2012. PMI’s market share in the quarter of 18.8% was down by 1.1 points, with Marlboro and Parliament down by 0.9 and 0.5 points to 7.7% and 6.2%, respectively, partly offset by Virginia Slims, up by 0.5 points to 4.0%.

In the Philippines, the total cigarette market decreased by 2.2% to 24.7 billion units. PMI’s shipment volume was down by 4.1%, mainly reflecting the impact of PMI’s price increases in January 2012. PMI’s market share declined by 1.9 points to 92.6%. Marlboro’s market share was down by 0.6 points to 20.6%. Market share of Fortune was up by 4.1 points to 50.9%.

LATIN AMERICA & CANADA REGION

In Latin America & Canada, net revenues were essentially flat at $829 million, despite unfavorable currency of $51 million. Excluding the impact of currency, net revenues increased by 6.3%, reflecting favorable pricing of $80 million, partially offset by unfavorable volume/mix of $28 million. June year-to-date, net revenues, excluding currency, were up by 5.8%, driven by higher pricing of $97 million, marginally offset by unfavorable volume/mix of $3 million.

12

Operating companies income decreased by 7.1% to $249 million. Excluding the unfavorable impact of currency of $25 million, operating companies income increased by 2.2%, primarily reflecting favorable pricing, partially offset by unfavorable volume/mix and higher costs, notably related to exit costs associated with the previously disclosed closure of a manufacturing plant in Mexico City. Adjusted operating companies income decreased by 4.1% as shown in the table below and detailed on Schedule 11. Adjusted operating companies income, excluding currency, increased by 5.2% in the quarter and by 4.6% June year-to-date.

Latin America & Canada Operating Companies Income ($ Millions)

	Second-Quarter									Six Months Year-To-Date
	2012			2011			Change			2012			2011			Change
Reported OCI	$	249		$	268			(7.1	)%	$	486		$	519			(6.4	)%
Asset impairment & exit costs		(8	)		0						(16	)		(1	)
Adjusted OCI	$	257		$	268			(4.1	)%	$	502		$	520			(3.5	)%
Adjusted OCI Margin*		31.0	%		32.4	%		(1.4	) p.p.		31.1	%		32.3	%		(1.2	) p.p.

* Margins are calculated as adjusted OCI, divided by net revenues, excluding excise taxes.

Excluding the impact of currency, adjusted operating companies income margin decreased by 0.4 percentage points to 32.0%, as detailed on Schedule 11 or by 0.3 points to 32.0% June year-to-date, as detailed on Schedule 15.

PMI’s cigarette shipment volume in Latin America & Canada decreased by 3.0%, mainly driven by a lower total market and unfavorable trade inventory movements in Mexico. Shipment volume of Marlboro decreased by 2.3%, principally driven by Mexico, partly offset by Brazil.

Latin America & Canada Key Market Commentaries

In Argentina, the total cigarette market declined slightly by 0.4% to 10.6 billion units. PMI’s cigarette shipment volume decreased by 0.4%. PMI’s market share was up by 0.3 points to 74.7%, reflecting growth of mid-price Philip Morris, up by 1.4 share points to 39.3%, partly offset by low-price Next, down by 0.5 points to 3.2%. Market share of Marlboro was essentially flat at 23.9%.

In Canada, the total tax-paid cigarette market increased slightly by 0.2% to 8.5 billion units, reflecting a return of illicit trade to the legitimate market and improved economic conditions in the western provinces. PMI’s cigarette shipment volume declined by 4.0%. PMI’s market share was down by 0.7 points to 33.3%, reflecting share losses in the mid-price segment. Premium brands Benson & Hedges and Belmont were up by 0.1 point and 0.2 points to 2.0% each, and low-price brand Next was up by 0.6 points to 7.3%, offset by mid-price Number 7 and Canadian Classics, and low-price Accord and Quebec Classique, down by 0.2, 0.2, 0.4 and 0.3 share points, to 3.9%, 8.5%, 3.2% and 2.4%, respectively.

In Mexico, the total cigarette market was down by 10.5% to 7.8 billion units, primarily due to the timing of Easter trade inventory movements. Excluding the inventory adjustments, the total cigarette market was down by an estimated 3.5% in the quarter, or by an estimated 2.6% June year-to-date. PMI’s cigarette shipment volume decreased by 9.6% in the quarter, or by 2.7% excluding the aforementioned inventory adjustments. PMI’s market share grew by 0.8 points to 73.0%, led by Marlboro, up by 1.2 share points to

13

53.2%, and Benson & Hedges, up by 0.3 points to 6.4%. Market share of low-price Delicados decreased by 1.0 point to 10.1%.

Philip Morris International Inc. Profile

Philip Morris International Inc. (PMI) is the leading international tobacco company, with seven of the world’s top 15 international brands, including Marlboro, the number one cigarette brand worldwide. PMI’s products are sold in approximately 180 countries. In 2011, the company held an estimated 16.0% share of the total international cigarette market outside of the U.S., or 28.1% excluding the People’s Republic of China and the U.S. For more information, see www.pmi.com.

Forward-Looking and Cautionary Statements

This press release contains projections of future results and other forward-looking statements. Achievement of projected results is subject to risks, uncertainties and inaccurate assumptions. In the event that risks or uncertainties materialize, or underlying assumptions prove inaccurate, actual results could vary materially from those contained in such forward-looking statements. Pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, PMI is identifying important factors that, individually or in the aggregate, could cause actual results and outcomes to differ materially from those contained in any forward-looking statements made by PMI.

PMI’s business risks include: significant increases in cigarette-related taxes; the imposition of discriminatory excise tax structures; fluctuations in customer inventory levels due to increases in product taxes and prices; increasing marketing and regulatory restrictions, often with the goal of preventing the use of tobacco products; health concerns relating to the use of tobacco products and exposure to environmental tobacco smoke; litigation related to tobacco use; intense competition; the effects of global and individual country economic, regulatory and political developments; changes in adult smoker behavior; lost revenues as a result of counterfeiting, contraband and cross-border purchases; governmental investigations; unfavorable currency exchange rates and currency devaluations; adverse changes in applicable corporate tax laws; adverse changes in the cost and quality of tobacco and other agricultural products and raw materials; and the integrity of its information systems. PMI’s future profitability may also be adversely affected should it be unsuccessful in its attempts to produce products with the potential to reduce the risk of smoking-related diseases; if it is unable to successfully introduce new products, promote brand equity, enter new markets or improve its margins through increased prices and productivity gains; if it is unable to expand its brand portfolio internally or through acquisitions and the development of strategic business relationships; or if it is unable to attract and retain the best global talent.

PMI is further subject to other risks detailed from time to time in its publicly filed documents, including the Form 10-Q for the quarter ended March 31, 2012. PMI cautions that the foregoing list of important factors is not a complete discussion of all potential risks and uncertainties. PMI does not undertake to update any forward-looking statement that it may make from time to time, except in the normal course of its public disclosure obligations.

###

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Schedule 1

PHILIP MORRIS INTERNATIONAL INC.

and Subsidiaries

Condensed Statements of Earnings

For the Quarters Ended June 30,

($ in millions, except per share data)

(Unaudited)

	2012		2011		% Change
Net revenues	$	20,037	$	20,234		(1.0	)%
Cost of sales		2,666		2,844		(6.3	)%
Excise taxes on products (1)		11,917		11,961		(0.4	)%
Gross profit		5,454		5,429		0.5	%
Marketing, administration and research costs		1,768		1,647
Asset impairment and exit costs		8		1
Operating companies income		3,678		3,781		(2.7	)%
Amortization of intangibles		25		24
General corporate expenses		49		45
Operating income		3,604		3,712		(2.9	)%
Interest expense, net		209		208
Earnings before income taxes		3,395		3,504		(3.1	)%
Provision for income taxes		988		1,019		(3.0	)%
Net earnings		2,407		2,485		(3.1	)%
Net earnings attributable to noncontrolling interests		90		76
Net earnings attributable to PMI	$	2,317	$	2,409		(3.8	)%
Per share data:(2)
Basic earnings per share	$	1.36	$	1.35		0.7	%
Diluted earnings per share	$	1.36	$	1.35		0.7	%

⁽¹⁾ The segment detail of excise taxes on products sold for the quarters ended June 30, 2012 and 2011 is shown on Schedule 2.

⁽²⁾ Net earnings and weighted-average shares used in the basic and diluted earnings per share computations for the quarters ended June 30, 2012 and 2011 are shown on Schedule 4, Footnote 1.

Schedule 2

PHILIP MORRIS INTERNATIONAL INC.

and Subsidiaries

Selected Financial Data by Business Segment

For the Quarters Ended June 30,

($ in millions)

(Unaudited)

		Net Revenues excluding Excise Taxes
		European Union			EEMA			Asia			Latin America & Canada			Total
2012	Net Revenues (1)	$	7,280		$	5,062		$	5,317		$	2,378		$	20,037
	Excise Taxes on Products		(4,995	)		(2,911	)		(2,462	)		(1,549	)		(11,917	)
	Net Revenues excluding Excise Taxes		2,285			2,151			2,855			829			8,120
2011	Net Revenues	$	8,080		$	4,603		$	5,146		$	2,405		$	20,234
	Excise Taxes on Products		(5,583	)		(2,591	)		(2,210	)		(1,577	)		(11,961	)
	Net Revenues excluding Excise Taxes		2,497			2,012			2,936			828			8,273
Variance	Currency		(195	)		(127	)		(29	)		(51	)		(402	)
	Acquisitions		—			11			—			—			11
	Operations		(17	)		255			(52	)		52			238
	Variance Total		(212	)		139			(81	)		1			(153	)
	Variance Total (%)		(8.5	)%		6.9	%		(2.8	)%		0.1	%		(1.8	)%
	Variance excluding Currency		(17	)		266			(52	)		52			249
	Variance excluding Currency (%)		(0.7	)%		13.2	%		(1.8	)%		6.3	%		3.0	%
	Variance excluding Currency & Acquisitions		(17	)		255			(52	)		52			238
	Variance excluding Currency & Acquisitions (%)		(0.7	)%		12.7	%		(1.8	)%		6.3	%		2.9	%

⁽¹⁾  2012 Currency decreased net revenues as follows:

European Union	$	(653	)
EEMA		(462	)
Asia		(108	)
Latin America & Canada		(171	)
	$	(1,394	)

Schedule 3

PHILIP MORRIS INTERNATIONAL INC.

and Subsidiaries

Selected Financial Data by Business Segment

For the Quarters Ended June 30,

($ in millions)

(Unaudited)

	Operating Companies Income
	European Union			EEMA			Asia			Latin America & Canada			Total
2012	$	1,117		$	948		$	1,364		$	249		$	3,678
2011		1,280			835			1,398			268			3,781
% Change		(12.7	)%		13.5	%		(2.4	)%		(7.1	)%		(2.7	)%
Reconciliation:
For the quarter ended June 30, 2011	$	1,280		$	835		$	1,398		$	268		$	3,781
2011 Asset impairment and exit costs		1			—			—			—			1
2012 Asset impairment and exit costs		—			—			—			(8	)		(8	)
Acquired businesses		—			2			—			—			2
Currency		(130	)		(80	)		3			(25	)		(232	)
Operations		(34	)		191			(37	)		14			134
For the quarter ended June 30, 2012	$	1,117		$	948		$	1,364		$	249		$	3,678

Schedule 4

PHILIP MORRIS INTERNATIONAL INC.

and Subsidiaries

Diluted Earnings Per Share

For the Quarters Ended June 30,

($ in millions, except per share data)

(Unaudited)

	Diluted E.P.S.
2012 Diluted Earnings Per Share	$	1.36	(1)
2011 Diluted Earnings Per Share	$	1.35	(1)
Change	$	0.01
% Change		0.7	%
Reconciliation:
2011 Diluted Earnings Per Share	$	1.35	(1)
Special Items:
2012 Asset impairment and exit costs		—
2012 Tax items		—
2011 Asset impairment and exit costs		—
2011 Tax items		(0.01	)
Currency		(0.10	)
Interest		—
Change in tax rate		0.01
Impact of lower shares outstanding and share-based payments		0.06
Operations		0.05
2012 Diluted Earnings Per Share	$	1.36	(1)

⁽¹⁾  Basic and diluted EPS were calculated using the following (in millions):

	Q2 2012		Q2 2011
Net earnings attributable to PMI	$	2,317	$	2,409
Less distributed and undistributed earnings attributable to share-based payment awards		12		14
Net earnings for basic and diluted EPS	$	2,305	$	2,395
Weighted-average shares for basic EPS		1,701		1,772
Plus incremental shares from assumed conversions:
Stock Options		—		—
Weighted-average shares for diluted EPS		1,701		1,772

Schedule 5

PHILIP MORRIS INTERNATIONAL INC.

and Subsidiaries

Condensed Statements of Earnings

For the Six Months Ended June 30,

($ in millions, except per share data)

(Unaudited)

	2012		2011		% Change
Net revenues	$	38,059	$	36,764		3.5	%
Cost of sales		5,108		5,139		(0.6	)%
Excise taxes on products (1)		22,491		21,700		3.6	%
Gross profit		10,460		9,925		5.4	%
Marketing, administration and research costs		3,282		3,055
Asset impairment and exit costs		16		17
Operating companies income		7,162		6,853		4.5	%
Amortization of intangibles		49		48
General corporate expenses		106		86
Operating income		7,007		6,719		4.3	%
Interest expense, net		422		421
Earnings before income taxes		6,585		6,298		4.6	%
Provision for income taxes		1,946		1,826		6.6	%
Net earnings		4,639		4,472		3.7	%
Net earnings attributable to noncontrolling interests		161		144
Net earnings attributable to PMI	$	4,478	$	4,328		3.5	%
Per share data:(2)
Basic earnings per share	$	2.60	$	2.42		7.4	%
Diluted earnings per share	$	2.60	$	2.42		7.4	%

⁽¹⁾  The segment detail of excise taxes on products sold for the six months ended June 30, 2012 and 2011 is shown on Schedule 6.

⁽²⁾  Net earnings and weighted-average shares used in the basic and diluted earnings per share computations for the six months ended June 30, 2012 and 2011 are shown on Schedule 8, Footnote 1.

Schedule 6

PHILIP MORRIS INTERNATIONAL INC.

and Subsidiaries

Selected Financial Data by Business Segment

For the Six Months Ended June 30,

($ in millions)

(Unaudited)

		Net Revenues excluding Excise Taxes
		European Union			EEMA			Asia			Latin America & Canada			Total
2012	Net Revenues (1)	$	13,750		$	9,131		$	10,494		$	4,684		$	38,059
	Excise Taxes on Products		(9,412	)		(5,145	)		(4,862	)		(3,072	)		(22,491	)
	Net Revenues excluding Excise Taxes		4,338			3,986			5,632			1,612			15,568
2011	Net Revenues	$	14,495		$	8,274		$	9,434		$	4,561		$	36,764
	Excise Taxes on Products		(9,997	)		(4,575	)		(4,175	)		(2,953	)		(21,700	)
	Net Revenues excluding Excise Taxes		4,498			3,699			5,259			1,608			15,064
Variance	Currency		(249	)		(200	)		45			(90	)		(494	)
	Acquisitions		—			20			1			—			21
	Operations		89			467			327			94			977
	Variance Total		(160	)		287			373			4			504
	Variance Total (%)		(3.6	)%		7.8	%		7.1	%		0.2	%		3.3	%
	Variance excluding Currency		89			487			328			94			998
	Variance excluding Currency (%)		2.0	%		13.2	%		6.2	%		5.8	%		6.6	%
	Variance excluding Currency & Acquisitions		89			467			327			94			977
	Variance excluding Currency & Acquisitions (%)		2.0	%		12.6	%		6.2	%		5.8	%		6.5	%

⁽¹⁾  2012 Currency decreased net revenues as follows:

European Union	$	(867	)
EEMA		(778	)
Asia		(27	)
Latin America & Canada		(309	)
	$	(1,981	)

Schedule 7

PHILIP MORRIS INTERNATIONAL INC.

and Subsidiaries

Selected Financial Data by Business Segment

For the Six Months Ended June 30,

($ in millions)

(Unaudited)

	Operating Companies Income
	European Union			EEMA			Asia			Latin America & Canada			Total
2012	$	2,147		$	1,758		$	2,771		$	486		$	7,162
2011		2,286			1,557			2,491			519			6,853
% Change		(6.1	)%		12.9	%		11.2	%		(6.4	)%		4.5	%
Reconciliation:
For the six months ended June 30, 2011	$	2,286		$	1,557		$	2,491		$	519		$	6,853
2011 Asset impairment and exit costs		12			2			2			1			17
2012 Asset impairment and exit costs		—			—			—			(16	)		(16	)
Acquired businesses		—			2			—			—			2
Currency		(155	)		(124	)		56			(42	)		(265	)
Operations		4			321			222			24			571
For the six months ended June 30, 2012	$	2,147		$	1,758		$	2,771		$	486		$	7,162

Schedule 8

PHILIP MORRIS INTERNATIONAL INC.

and Subsidiaries

Diluted Earnings Per Share

For the Six Months Ended June 30,

($ in millions, except per share data)

(Unaudited)

	Diluted E.P.S.
2012 Diluted Earnings Per Share	$	2.60	(1)
2011 Diluted Earnings Per Share	$	2.42	(1)
Change	$	0.18
% Change		7.4	%
Reconciliation:
2011 Diluted Earnings Per Share	$	2.42	(1)
Special Items:
2012 Asset impairment and exit costs		(0.01	)
2012 Tax items		—
2011 Asset impairment and exit costs		0.01
2011 Tax items		(0.02	)
Currency		(0.12	)
Interest		—
Change in tax rate		—
Impact of lower shares outstanding and share-based payments		0.11
Operations		0.21
2012 Diluted Earnings per Share	$	2.60	(1)

⁽¹⁾  Basic and diluted EPS were calculated using the following (in millions):

	YTD June 2012		YTD June 2011
Net earnings attributable to PMI	$	4,478	$	4,328
Less distributed and undistributed earnings attributable to share-based payment awards		24		24
Net earnings for basic and diluted EPS	$	4,454	$	4,304
Weighted-average shares for basic EPS		1,710		1,782
Plus incremental shares from assumed conversions:
Stock Options		—		—
Weighted-average shares for diluted EPS		1,710		1,782

Schedule 9

PHILIP MORRIS INTERNATIONAL INC.

and Subsidiaries

Condensed Balance Sheets

($ in millions, except ratios)

(Unaudited)

	June 30, 2012			December 31, 2011
Assets
Cash and cash equivalents	$	3,846		$	2,550
All other current assets		11,715			12,309
Property, plant and equipment, net		6,161			6,250
Goodwill		9,737			9,928
Other intangible assets, net		3,614			3,697
Other assets		725			754
Total assets	$	35,798		$	35,488
Liabilities and Stockholders’ (Deficit) Equity
Short-term borrowings	$	2,694		$	1,511
Current portion of long-term debt		3,284			2,206
All other current liabilities		10,852			11,077
Long-term debt		14,824			14,828
Deferred income taxes		1,964			1,976
Other long-term liabilities		2,034			2,127
Total liabilities		35,652			33,725
Redeemable noncontrolling interest		1,262			1,212
Total PMI stockholders’ (deficit) equity		(1,366	)		229
Noncontrolling interests		250			322
Total stockholders’ (deficit) equity		(1,116	)		551
Total liabilities and stockholders’ (deficit) equity	$	35,798		$	35,488
Total debt	$	20,802		$	18,545
Total debt to EBITDA		1.43	(1)		1.29	(1)
Net debt to EBITDA		1.16	(1)		1.12	(1)

⁽¹⁾  For the calculation of Total Debt to EBITDA and Net Debt to EBITDA ratios, refer to Schedule 18.

Schedule 10

PHILIP MORRIS INTERNATIONAL INC.

and Subsidiaries

Reconciliation of Non-GAAP Measures

Adjustments for the Impact of Currency and Acquisitions

For the Quarters Ended June 30,

($ in millions)

(Unaudited)

2012																2011						% Change in Reported Net Revenues excluding Excise Taxes
Reported Net Revenues		Less Excise Taxes		Reported Net Revenues excluding Excise Taxes		Less Currency			Reported Net Revenues excluding Excise Taxes & Currency		Less Acquisi- tions		Reported Net Revenues excluding Excise Taxes, Currency & Acquisitions			Reported Net Revenues		Less Excise Taxes		Reported Net Revenues excluding Excise Taxes		Reported			Reported excluding Currency			Reported excluding Currency & Acquisitions
$	7,280	$	4,995	$	2,285	$	(195	)	$	2,480	$	—	$	2,480	European Union	$	8,080	$	5,583	$	2,497		(8.5	)%		(0.7	)%		(0.7	)%
	5,062		2,911		2,151		(127	)		2,278		11		2,267	EEMA		4,603		2,591		2,012		6.9	%		13.2	%		12.7	%
	5,317		2,462		2,855		(29	)		2,884		—		2,884	Asia		5,146		2,210		2,936		(2.8	)%		(1.8	)%		(1.8	)%
	2,378		1,549		829		(51	)		880		—		880	Latin America & Canada		2,405		1,577		828		0.1	%		6.3	%		6.3	%
$	20,037	$	11,917	$	8,120	$	(402	)	$	8,522	$	11	$	8,511	PMI Total	$	20,234	$	11,961	$	8,273		(1.8	)%		3.0	%		2.9	%
2012																2011						% Change in Reported Operating Companies Income
Reported Operating Companies Income						Less Currency			Reported Operating Companies Income excluding Currency		Less Acquisi- tions		Reported Operating Companies Income excluding Currency & Acquisitions							Reported Operating Companies Income		Reported			Reported excluding Currency			Reported excluding Currency & Acquisitions
	$1,117					$	(130	)	$	1,247	$	—	$	1,247	European Union					$	1,280		(12.7	)%		(2.6	)%		(2.6	)%
	948						(80	)		1,028		2		1,026	EEMA						835		13.5	%		23.1	%		22.9	%
	1,364						3			1,361		—		1,361	Asia						1,398		(2.4	)%		(2.6	)%		(2.6	)%
	249						(25	)		274		—		274	Latin America & Canada						268		(7.1	)%		2.2	%		2.2	%
$	3,678					$	(232	)	$	3,910	$	2	$	3,908	PMI Total					$	3,781		(2.7	)%		3.4	%		3.4	%

Schedule 11

PHILIP MORRIS INTERNATIONAL INC.

and Subsidiaries

Reconciliation of Non-GAAP Measures

Reconciliation of Reported Operating Companies Income to Adjusted Operating Companies Income &

Reconciliation of Adjusted Operating Companies Income Margin, excluding Currency and Acquisitions

For the Quarters Ended June 30,

($ in millions)

(Unaudited)

2012																			2011								% Change in Adjusted Operating Companies Income
Reported Operating Companies Income		Less Asset Impairment & Exit Costs			Adjusted Operating Companies Income			Less Currency			Adjusted Operating Companies Income excluding Currency		Less Acquisi- tions		Adjusted Operating Companies Income excluding Currency & Acquisitions				Reported Operating Companies Income		Less Asset Impairment & Exit Costs			Adjusted Operating Companies Income			Adjusted			Adjusted excluding Currency			Adjusted excluding Currency & Acquisitions
$	1,117	$	—		$	1,117		$	(130	)	$	1,247	$	—	$	1,247		European Union	$	1,280	$	(1	)	$	1,281			(12.8	)%		(2.7	)%		(2.7	)%
	948		—			948			(80	)		1,028		2		1,026		EEMA		835		—			835			13.5	%		23.1	%		22.9	%
	1,364		—			1,364			3			1,361		—		1,361		Asia		1,398		—			1,398			(2.4	)%		(2.6	)%		(2.6	)%
	249		(8	)		257			(25	)		282		—		282		Latin America & Canada		268		—			268			(4.1	)%		5.2	%		5.2	%
$	3,678	$	(8	)	$	3,686		$	(232	)	$	3,918	$	2	$	3,916		PMI Total	$	3,781	$	(1	)	$	3,782			(2.5	)%		3.6	%		3.5	%
2012																			2011								% Points Change
Adjusted Operating Companies Income excluding Currency		Net Revenues excluding Excise Taxes & Currency(1)			Adjusted Operating Companies Income Margin excluding Currency						Adjusted Operating Companies Income excluding Currency & Acquisitions		Net Revenues excluding Excise Taxes, Currency & Acquisitions(1)		Adjusted Operating Companies Income Margin excluding Currency & Acquisitions				Adjusted Operating Companies Income		Net Revenues excluding Excise Taxes(1)			Adjusted Operating Companies Income Margin						Adjusted Operating Companies Income Margin excluding Currency			Adjusted Operating Companies Income Margin excluding Currency & Acquisitions
$	1,247	$	2,480			50.3	%				$	1,247	$	2,480		50.3	%	European Union	$	1,281	$	2,497			51.3	%					(1.0	)		(1.0	)
	1,028		2,278			45.1	%					1,026		2,267		45.3	%	EEMA		835		2,012			41.5	%					3.6			3.8
	1,361		2,884			47.2	%					1,361		2,884		47.2	%	Asia		1,398		2,936			47.6	%					(0.4	)		(0.4	)
	282		880			32.0	%					282		880		32.0	%	Latin America & Canada		268		828			32.4	%					(0.4	)		(0.4	)
$	3,918	$	8,522			46.0	%				$	3,916	$	8,511		46.0	%	PMI Total	$	3,782	$	8,273			45.7	%					0.3			0.3

⁽¹⁾  For the calculation of net revenues excluding excise taxes, currency and acquisitions, refer to Schedule 10.

Schedule 12

PHILIP MORRIS INTERNATIONAL INC.

and Subsidiaries

Reconciliation of Non-GAAP Measures

Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS and Adjusted Diluted EPS, excluding Currency

For the Quarters Ended June 30,

(Unaudited)

	2012			2011			% Change
Reported Diluted EPS	$	1.36		$	1.35			0.7	%
Adjustments:
Asset impairment and exit costs		—			—
Tax items		—			(0.01	)
Adjusted Diluted EPS	$	1.36		$	1.34			1.5	%
Less:
Currency impact		(0.10	)
Adjusted Diluted EPS, excluding Currency	$	1.46		$	1.34			9.0	%

Schedule 13

PHILIP MORRIS INTERNATIONAL INC.

and Subsidiaries

Reconciliation of Non-GAAP Measures

Reconciliation of Reported Diluted EPS to Reported Diluted EPS, excluding Currency

For the Quarters Ended June 30,

(Unaudited)

	2012			2011		% Change
Reported Diluted EPS	$	1.36		$	1.35		0.7	%
Less:
Currency impact		(0.10	)
Reported Diluted EPS, excluding Currency	$	1.46		$	1.35		8.1	%

Schedule 14

PHILIP MORRIS INTERNATIONAL INC.

and Subsidiaries

Reconciliation of Non-GAAP Measures

Adjustments for the Impact of Currency and Acquisitions

For the Six Months Ended June 30,

($ in millions)

(Unaudited)

2012																2011						% Change in Reported Net Revenues excluding Excise Taxes
Reported Net Revenues		Less Excise Taxes		Reported Net Revenues excluding Excise Taxes		Less Currency			Reported Net Revenues excluding Excise Taxes & Currency		Less Acquisi- tions		Reported Net Revenues excluding Excise Taxes, Currency & Acquisitions			Reported Net Revenues		Less Excise Taxes		Reported Net Revenues excluding Excise Taxes		Reported			Reported excluding Currency			Reported excluding Currency & Acquisitions
$	13,750	$	9,412	$	4,338	$	(249	)	$	4,587	$	—	$	4,587	European Union	$	14,495	$	9,997	$	4,498		(3.6	)%		2.0	%		2.0	%
	9,131		5,145		3,986		(200	)		4,186		20		4,166	EEMA		8,274		4,575		3,699		7.8	%		13.2	%		12.6	%
	10,494		4,862		5,632		45			5,587		1		5,586	Asia		9,434		4,175		5,259		7.1	%		6.2	%		6.2	%
	4,684		3,072		1,612		(90	)		1,702		—		1,702	Latin America & Canada		4,561		2,953		1,608		0.2	%		5.8	%		5.8	%
$	38,059	$	22,491	$	15,568	$	(494	)	$	16,062	$	21	$	16,041	PMI Total	$	36,764	$	21,700	$	15,064		3.3	%		6.6	%		6.5	%
2012																2011						% Change in Reported Operating Companies Income
Reported Operating Companies Income						Less Currency			Reported Operating Companies Income excluding Currency		Less Acquisi- tions		Reported Operating Companies Income excluding Currency & Acquisitions							Reported Operating Companies Income		Reported			Reported excluding Currency			Reported excluding Currency & Acquisitions
$	2,147					$	(155	)	$	2,302	$	—	$	2,302	European Union					$	2,286		(6.1	)%		0.7	%		0.7	%
	1,758						(124	)		1,882		2		1,880	EEMA						1,557		12.9	%		20.9	%		20.7	%
	2,771						56			2,715		—		2,715	Asia						2,491		11.2	%		9.0	%		9.0	%
	486						(42	)		528		—		528	Latin America & Canada						519		(6.4	)%		1.7	%		1.7	%
$	7,162					$	(265	)	$	7,427	$	2	$	7,425	PMI Total					$	6,853		4.5	%		8.4	%		8.3	%

Schedule 15

PHILIP MORRIS INTERNATIONAL INC.

and Subsidiaries

Reconciliation of Non-GAAP Measures

Reconciliation of Reported Operating Companies Income to Adjusted Operating Companies Income &

Reconciliation of Adjusted Operating Companies Income Margin, excluding Currency and Acquisitions

For the Six Months Ended June 30,

($ in millions)

(Unaudited)

2012																			2011								% Change in Adjusted Operating Companies Income
Reported Operating Companies Income		Less Asset Impairment & Exit Costs			Adjusted Operating Companies Income			Less Currency			Adjusted Operating Companies Income excluding Currency		Less Acquisi- tions		Adjusted Operating Companies Income excluding Currency & Acquisitions				Reported Operating Companies Income		Less Asset Impairment & Exit Costs			Adjusted Operating Companies Income			Adjusted			Adjusted excluding Currency			Adjusted excluding Currency & Acquisitions
$	2,147	$	—		$	2,147		$	(155	)	$	2,302	$	—	$	2,302		European Union	$	2,286	$	(12	)	$	2,298			(6.6	)%		0.2	%		0.2	%
	1,758		—			1,758			(124	)		1,882		2		1,880		EEMA		1,557		(2	)		1,559			12.8	%		20.7	%		20.6	%
	2,771		—			2,771			56			2,715		—		2,715		Asia		2,491		(2	)		2,493			11.2	%		8.9	%		8.9	%
	486		(16	)		502			(42	)		544		—		544		Latin America & Canada		519		(1	)		520			(3.5	)%		4.6	%		4.6	%
$	7,162	$	(16	)	$	7,178		$	(265	)	$	7,443	$	2	$	7,441		PMI Total	$	6,853	$	(17	)	$	6,870			4.5	%		8.3	%		8.3	%
2012																			2011								% Points Change
Adjusted Operating Companies Income excluding Currency		Net Revenues excluding Excise Taxes & Currency(1)			Adjusted Operating Companies Income Margin excluding Currency						Adjusted Operating Companies Income excluding Currency & Acquisitions		Net Revenues excluding Excise Taxes, Currency & Acquisitions(1)		Adjusted Operating Companies Income Margin excluding Currency & Acquisitions				Adjusted Operating Companies Income		Net Revenues excluding Excise Taxes(1)			Adjusted Operating Companies Income Margin						Adjusted Operating Companies Income Margin excluding Currency			Adjusted Operating Companies Income Margin excluding Currency & Acquisitions
$	2,302	$	4,587			50.2	%				$	2,302	$	4,587		50.2	%	European Union	$	2,298	$	4,498			51.1	%					(0.9	)		(0.9	)
	1,882		4,186			45.0	%					1,880		4,166		45.1	%	EEMA		1,559		3,699			42.1	%					2.9			3.0
	2,715		5,587			48.6	%					2,715		5,586		48.6	%	Asia		2,493		5,259			47.4	%					1.2			1.2
	544		1,702			32.0	%					544		1,702		32.0	%	Latin America & Canada		520		1,608			32.3	%					(0.3	)		(0.3	)
$	7,443	$	16,062			46.3	%				$	7,441	$	16,041		46.4	%	PMI Total	$	6,870	$	15,064			45.6	%					0.7			0.8

⁽¹⁾  For the calculation of net revenues excluding excise taxes, currency and acquisitions, refer to Schedule 14.

Schedule 16

PHILIP MORRIS INTERNATIONAL INC.

and Subsidiaries

Reconciliation of Non-GAAP Measures

Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS and Adjusted Diluted EPS, excluding Currency

For the Six Months Ended June 30,

(Unaudited)

	2012			2011			% Change
Reported Diluted EPS	$	2.60		$	2.42			7.4	%
Adjustments:
Asset impairment and exit costs		0.01			0.01
Tax items		—			(0.02	)
Adjusted Diluted EPS	$	2.61		$	2.41			8.3	%
Less:
Currency impact		(0.12	)
Adjusted Diluted EPS, excluding Currency	$	2.73		$	2.41			13.3	%

Schedule 17

PHILIP MORRIS INTERNATIONAL INC.

and Subsidiaries

Reconciliation of Non-GAAP Measures

Reconciliation of Reported Diluted EPS to Reported Diluted EPS, excluding Currency

For the Six Months Ended June 30,

(Unaudited)

	2012			2011		% Change
Reported Diluted EPS	$	2.60		$	2.42		7.4	%
Less:
Currency impact		(0.12	)
Reported Diluted EPS, excluding Currency	$	2.72		$	2.42		12.4	%

Schedule 18

PHILIP MORRIS INTERNATIONAL INC.

and Subsidiaries

Reconciliation of Non-GAAP Measures

Calculation of Total Debt to EBITDA and Net Debt to EBITDA Ratios

($ in millions, except ratios)

(Unaudited)

	For the Year Ended June 30, 2012						For the Year Ended December 31, 2011
	July ~ December 2011		January ~ June 2012		12 months rolling
Earnings before income taxes	$	6,234	$	6,585	$	12,819	$	12,532
Interest expense, net		379		422		801		800
Depreciation and amortization		505		449		954		993
EBITDA	$	7,118	$	7,456	$	14,574	$	14,325
					June 30, 2012		December 31, 2011
Short-term borrowings					$	2,694	$	1,511
Current portion of long-term debt						3,284		2,206
Long-term debt						14,824		14,828
Total Debt					$	20,802	$	18,545
Less: Cash and cash equivalents						3,846		2,550
Net Debt					$	16,956	$	15,995
Ratios
Total Debt to EBITDA						1.43		1.29
Net Debt to EBITDA						1.16		1.12

Schedule 19

PHILIP MORRIS INTERNATIONAL INC.

and Subsidiaries

Reconciliation of Non-GAAP Measures

Reconciliation of Operating Cash Flow to Free Cash Flow and Free Cash Flow, excluding Currency

Reconciliation of Operating Cash Flow to Operating Cash Flow, excluding Currency

For the Quarters and Six Months Ended June 30,

($ in millions)

(Unaudited)

	For the Quarters Ended June 30,								For the Six Months Ended June 30,
	2012			2011		% Change			2012			2011		% Change
Net cash provided by operating activities(a)	$	3,480		$	4,120		(15.5	)%	$	5,378		$	6,515		(17.5	)%
Less:
Capital expenditures		249			186					476			345
Free cash flow	$	3,231		$	3,934		(17.9	)%	$	4,902		$	6,170		(20.6	)%
Less:
Currency impact		(389	)							(439	)
Free cash flow, excluding currency	$	3,620		$	3,934		(8.0	)%	$	5,341		$	6,170		(13.4	)%
	For the Quarters Ended June 30,								For the Six  Months Ended June 30,
	2012			2011		% Change			2012			2011		% Change
Net cash provided by operating activities(a)	$	3,480		$	4,120		(15.5	)%	$	5,378		$	6,515		(17.5	)%
Less:
Currency impact		(401	)							(455	)
Net cash provided by operating activities, excluding currency	$	3,881		$	4,120		(5.8	)%	$	5,833		$	6,515		(10.5	)%

(a) Operating cash flow.

Schedule 20

PHILIP MORRIS INTERNATIONAL INC.

and Subsidiaries

Reconciliation of Non-GAAP Measures

Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS

For the Year Ended December 31,

(Unaudited)

	2011
Reported Diluted EPS	$	4.85
Adjustments:
Asset impairment and exit costs		0.05
Tax items		(0.02	)
Adjusted Diluted EPS	$	4.88

EX-99.2

Exhibit 99.2

Philip Morris International Inc.

2012 Second-Quarter Results Conference Call

July 19, 2012

NICK ROLLI

(SLIDE 1.)

Welcome. Thank you for joining us. Earlier today, we issued a press release containing detailed information on our 2012 second-quarter results. You may access the release on our web site at www.pmi.com.

(SLIDE 2.)

During our call today, we will be talking about results for the second-quarter 2012 and comparing them with the same period in 2011, unless otherwise stated. References to volumes are to PMI shipments. Industry volume and market shares are the latest data available from a number of internal and external sources. Organic volume refers to volume excluding acquisitions. Net revenues exclude excise taxes. Operating Companies Income, or “OCI”, is defined as operating income before general corporate expenses and the amortization of intangibles.

You will find data tables showing adjustments to net revenues and OCI, for currency, acquisitions, asset impairment, exit and other costs, free cash flow calculations, and adjustments to earnings per share, or “EPS”, as well as reconciliations to U.S. GAAP measures, at the end of today’s webcast slides, which are posted on our web site.

(SLIDE 3.)

Today’s remarks contain forward-looking statements and projections of future results. I direct your attention to the Forward-Looking and Cautionary Statements disclosure in today’s presentation and press release for a review of the various factors that could cause actual results to differ materially from projections or forward-looking statements.

It’s now my pleasure to introduce Hermann Waldemer, Chief Financial Officer.

Hermann.

HERMANN WALDEMER

(SLIDE 4.)

Thank you Nick, and welcome ladies and gentlemen.

We again achieved strong underlying business results in the second quarter, with actual results impacted both by unfavorable currency movements and the

1

hurdle we faced in Japan due to our extraordinary results there during the second quarter last year.

Our organic cigarette volume in the quarter was down by 1.2% to 238.3 billion units. However, excluding the Japan hurdle of 6.3 billion units, organic cigarette volume was up by 1.4%. In addition, our organic volume of Other Tobacco Products increased by 11.8% in the quarter.

(SLIDE 5.)

Net revenues and adjusted OCI, excluding currency and acquisitions, were up by 2.9% and 3.5%, respectively. Without the Japan hurdle, our growth rates would have been in line with our annual mid to long-term currency-neutral targets of 4% to 6% and 6% to 8%, respectively.

(SLIDE 6.)

Adjusted diluted EPS reached $1.36 in the second quarter, slightly ahead of last year, and were up by 9.0%, excluding currency. If one also takes into consideration the previously disclosed Japan hurdle of ten cents at an EPS level, then adjusted diluted EPS, excluding currency, was up by a very strong 17.7% in the second quarter.

(SLIDE 7.)

Our results for the first half of the year were excellent. Organic cigarette volume was up 1.8%. Excluding currency and acquisitions, net revenues and adjusted OCI grew by 6.5% and 8.3%, respectively. Finally, adjusted diluted EPS increased by 13.3%, excluding currency.

(SLIDE 8.)

These results confirm our expectation of solid organic cigarette volume growth in 2012. We have the best geographic footprint in the industry and leadership in both emerging and developed markets. Our volume is growing strongly in many markets in both the Asia and EEMA Regions, offsetting weaker volume trends in the EU Region due to the deterioration of the economic situation and weaker consumer confidence. Consequently, we expect to continue to grow currency-neutral profitability at a rapid pace, with sustained strong pricing and a favorable product mix only partially offset by an unfavorable geographic mix.

Exchange rates however continue to be volatile. At prevailing exchange rates, the forecast currency headwind this year is slightly higher than the 25 cents per share that we predicted in June. However, our underlying business is very strong and this is expected to offset the additional unfavorable currency impact of two cents per share.

2

(SLIDE 9.)

We are therefore today reaffirming our reported diluted 2012 EPS guidance of $5.10 to $5.20, compared to $4.85 in 2011. On a currency-neutral basis, our guidance implies a forecast growth rate of approximately 10% to 12%, compared to adjusted diluted EPS of $4.88 in 2011, this despite the Japan hurdle and weak industry volume in Europe. Let me remind you that our mid to long-term currency-neutral annual growth target for adjusted diluted EPS is also 10% to 12%.

(SLIDE 10.)

As we indicated during our Investor Day last month, cigarette industry volumes in the EU Region were unusually depressed in the second quarter. The overall decline was 9.7%, with significant reductions not only in markets such as Greece and Spain, but also in Italy and Poland, with even Germany suffering a 5.1% drop. The decline was driven by a reduction in daily consumption, while smoking incidence has remained relatively stable.

For the first half of the year, cigarette industry volume in the EU Region was down 5.8%. This confirms that the second quarter decline was unusually severe as adult smokers adjusted to the renewed recessionary environment and there were some unfavorable timing issues. Our current expectation for the second half of the year is that the decline rate for cigarette industry volume in the EU Region should be similar to that experienced during the first half of the year.

(SLIDE 11.)

The average unemployment rate across the European Union increased by 0.7 points between June 2011 and May 2012, with significantly more pronounced increases in Greece, Spain and Italy. Only Germany showed a meaningful decline.

As a result of the deteriorating job market, the average unemployment level in the EU stood at 10.3% in May, with Spain and Greece double this level. France and Italy are just below the EU average, while Germany and the Netherlands continue to have relatively low levels of unemployment.

We have always highlighted unemployment levels and trends as key indicators for industry volume. We therefore do not expect a return to the normal underlying decline rate of 2% to 3% in the EU Region until the issue is addressed in a meaningful way.

(SLIDE 12.)

We achieved a resilient market share performance in the second quarter, with 38.5% overall in the EU Region, 0.2 points below the previous year’s level. On a half year basis, our share of 37.9% was down 0.4 points.

3

We are very encouraged by the performance of Marlboro in this difficult economic environment. In the second quarter, Marlboro’s share in the Region grew by 0.3 points to 18.4%, and it was up slightly on a six month basis. Marlboro gained share in the quarter notably in Belgium, the Czech Republic, Finland, Germany, Greece, Hungary, Italy and Poland. L&M continued to grow share in such markets as Finland, Germany, Poland and Slovakia, but this was not enough to offset declines in the quarter in Greece, the Netherlands, Portugal and Spain. Chesterfield is performing very well and is being successfully established as a strong second leg for us in the low-price segment in the EU Region.

(SLIDE 13.)

We are rapidly gaining share in the growing fine-cut category. Industry volumes increased by nearly 8% in both the second quarter and the first half, as adult smokers down-traded to less expensive options. Our share of the fine cut category rose by 1.4 points in the quarter and by 1.7 points in the first half to 14.1% and 14.0%, respectively.

(SLIDE 14.)

The market situation in Italy deserves specific attention.

Cigarette industry volume in Italy declined by 10.5% in the second quarter and by 8.5% in the first half of 2012. The most important single factor has been a reduction in consumer purchasing power, aggravated by the payment of increased property taxes in June and the increase in cigarette prices over the last twelve months. This unfavorable development in the cigarette industry is not a unique phenomenon as a wide range of consumer products have been affected by the economic slowdown.

Impacting specifically the cigarette industry, there has also been down-trading to the fine cut category and an increase in illicit trade, particularly the so-called “illicit whites”, with brands such as Jin-Ling and Classic. Despite recent price increases, the fine cut category grew by 74.6% in the quarter, though it still represents a relatively modest 6.5% of total tobacco industry volume.

In terms of market share, Marlboro is performing strongly. It gained 0.3 points to reach a 23.0% share in the quarter, despite the continued pressure on the premium segment. However, our overall cigarette market share declined in both the quarter and the first half, as the strong performance of Marlboro and the launch of Philip Morris Selection in the low-price segment were unable to offset the decline of our local heritage brand Diana. In contrast, our share in fine cut grew by 24.5 points in the quarter to a record level of 31.0%, firmly establishing us as the category leader in Italy.

(SLIDE 15.)

In Germany, cigarette industry volume declined in the quarter by 5.1%. This was attributable to the impact of the recent price increases, a decline in

4

consumer confidence in spite of low unemployment rates, a difficult comparison with a second quarter last year that was up 4.6%, and some timing issues. We believe that the first half decline of 1.3% is a better reflection of the underlying trend.

PMI continued to perform strongly with further share gains in the second quarter. Our share in cigarettes was up 0.3 points to 36.4% and our share in fine cut grew by 1.2 points to 16.0%. We are very pleased by the improved performance of Marlboro, which gained 0.3 points in the cigarette category and 1.2 points in the fine cut category, while L&M continued to grow share in the cigarette category and Chesterfield gained in both the cigarette and the fine cut categories.

(SLIDE 16.)

As a consequence of the industry volume declines, our second quarter results were soft in the EU Region. Cigarette volume was down 9.4%, only partially offset by a strong 18.2% growth in OTP volume. Net revenues and adjusted OCI, excluding currency and acquisitions, were down 0.7% and 2.7%, respectively. We were largely able to offset the lower volumes with higher prices. Excluding currency and acquisitions, June Year-to-Date net revenues, increased by 2.0% and adjusted OCI was just above the prior year level on the same basis.

(SLIDE 17.)

In contrast, we had another very strong quarter in the EEMA Region and our results Year-to-Date June were equally excellent. In the quarter, organic volume grew by 4.9%, while net revenues and adjusted OCI, excluding currency and acquisitions, increased by 12.7% and 22.9%, respectively.

(SLIDE 18.)

While pricing at $114 million continued to be a significant contributor to the growth in EEMA’s OCI, it was almost matched in the quarter by our $104 million volume/mix variance. This is in fact the fifth consecutive quarter of positive volume/mix in the Region.

(SLIDE 19.)

This was driven by the strength of our brand portfolio, with a particularly encouraging performance of our premium brands, with volume up 7.4% in the second quarter. Overall, nine of our top ten brands in the EEMA Region grew volume in the quarter, with just Chesterfield down. Marlboro had a strong quarter with a volume gain of over one billion units, or 5.0%, driven mainly by North Africa, Saudi Arabia and Serbia. The performance of Parliament was truly outstanding with volume up 1.1 billion units, or 16.3%, driven mainly by Eastern Europe and Turkey.

5

On a market basis, our strong results were led by Russia, so let me provide you with further details on this important market.

(SLIDE 20.)

Though we do not have definitive data yet, we believe that the Russian cigarette market grew slightly during the first half of the year. We attribute this to an improvement in the economy and a return of foreign workers as the construction industry has started to pick up again. As a result of recent price increases in cigarettes, foreseen hikes in utility prices, and slightly slower expected economic growth in the second half of the year, we forecast that full year industry cigarette volume should reach a level similar to last year’s.

We are outpacing industry volume. During the second quarter, our volume increased at a much faster rate of 8.7% and was 5.0% higher in the first half. Two very important positive aspects of the Russian market were uptrading by adult smokers, in spite of significant price increases, and our ability to gain market share, thanks to the strength and breadth of our brand portfolio. For the quarter through the end of May, our market share was 0.7 points higher at 26.1% thanks to the strong performance of Parliament, L&M, Bond Street and Next.

We took a further price increase of 3 Rubles per pack across our portfolio in July.

(SLIDE 21.)

We launched Marlboro ClearTaste in Russia in June. This is a much smoother-tasting line of products, which addresses adult smoker preferences. We started the launch in key cities and have already achieved outstanding distribution at point of sale. Initial consumer feedback and trial data are positive. It will of course take several months before we can draw any firm conclusions.

(SLIDE 22.)

Our performance in the Asia Region was again very strong in the second quarter. This was, however, masked by the aforementioned hurdle in Japan.

Our organic cigarette volume in the quarter was up 7.4% excluding the Japan hurdle, driven primarily by Indonesia, though down 0.7% on a reported basis. Likewise, excluding the Japan hurdle, adjusted OCI, excluding currency and acquisitions, would have shown a strong increase, but it was down 2.6% including the full comparison for Japan.

(SLIDE 23.)

Industry volume in Japan increased by nearly 10% in the second quarter compared to the distorted period last year. For 2012, we are now forecasting

6

a stable total market, though the underlying trend remains a moderate decline of 1% to 2% a year going forward.

During the first half of this year, Japan Tobacco accelerated its program of new launches and this has had some impact on our market share, which reached 27.8% in the second quarter. This was 0.2 points lower than the previous quarter but still substantially above the pre-earthquake share levels.

Lark Hybrid 100s maintained a 0.4% market share and we launched Marlboro Black Menthol Edge 8 and Marlboro Menthol Edge 1 during the second quarter. Our latest launch this month is Marlboro Ice Blast in 5mg and 1mg variants - the 8mg variant having achieved a 1.3% market share during the second quarter. With these efforts and additional new launches in the pipeline, we are confident that we should be able to stabilize our market position going forward.

On the fiscal front, the Japanese Government obtained Parliamentary approval for a two-step increase in Consumption Tax from 5% today to 8% in 2014 and 10% in 2015. While prices remain government controlled, the last tax increases resulted in margin-enhancing price increases.

(SLIDE 24.)

Volumes continued to grow in the second quarter in Indonesia, albeit, as expected, at a slower rate than in the first quarter. Industry volume grew by 6.9% in the second quarter, while PMI volume increased by 17.8%. Supported by a strong economy, adult smokers have been uptrading to the premium segment, which has grown by 2.0 points in the first six months of this year.

PMI has the strongest and broadest portfolio in the Indonesian market along with an unmatched national distribution network and highly qualified and motivated employees. Our market share grew by 3.1 points in the quarter to 33.5% as Sampoerna A remained the fastest-growing brand, in terms of share gains, with an increase of 1.2 points to 13.1%, and we continued to benefit from rounded price points.

Going forward, we forecast a market growth of around 8% for the full year, and look for further PMI share growth, though at a slower pace than in the first half of this year.

(SLIDE 25.)

Pricing continues to be the most important single driver of PMI’s profitability. The pricing variance was $463 million in the quarter, giving a half year pricing variance of $832 million. This year we have increased prices notably in Argentina, Australia, Brazil, Germany, Indonesia, Italy, Korea, Mexico, the Philippines, Poland, Russia, Saudi Arabia, Spain and Ukraine.

7

(SLIDE 26.)

Our volume/mix variance was obviously negative in the quarter due to the Japan hurdle. However, as you can see on the chart, excluding the hurdle, eight of our top ten brands grew volume in the first half of the year and the other two were essentially stable. In volume terms, Marlboro achieved the largest growth, while in percentage terms, Fortune, Sampoerna A, Parliament and Lark all recorded double digit growth.

(SLIDE 27.)

We are continuing to expand our market share in our top 30 OCI markets. Our June three-month moving average share of 36.9% is above both our 12-month moving share and the 2011 results, and 1.4 share points above the 2010 share level.

(SLIDE 28.)

Free cash flow declined in the second quarter by $703 million to $3.2 billion. Unfavorable currency movements were responsible for over half this decrease. In addition, we built up finished goods stock in Brazil and Russia, and working capital consequently increased by $388 million. This will be reversed during the third quarter when this inventory is sold.

(SLIDE 29.)

During the second quarter, we spent a further $1.5 billion to repurchase 17.8 million shares. In June, the Board approved a new three-year $18 billion share repurchase program, which will start in August when funds from the previous program will have been fully utilized ahead of schedule. Our target remains to spend $6 billion on share repurchases this year.

Since the spin through the end of June this year, we spent $24.4 billion to repurchase 449.9 million shares, representing 21.3% of our shares outstanding at the time of the spin, at an average price of $54.21.

(SLIDE 30.)

In conclusion, the second quarter of 2012 was, as expected, a very strong one in terms of underlying business momentum, but a challenging one in terms of reported results due to the Japan hurdle and unfavorable currency movements.

As we foresaw during our June Investor Day, EEMA and Asia Region results were very strong in the second quarter, enabling us to offset unusually weak cigarette industry volume in the EU Region.

The breadth of our geographic footprint, the continued strong pricing environment based on our superior brand portfolio, and productivity gains

8

enabled us to grow both net revenues and adjusted OCI in the second quarter, excluding currency and acquisitions.

Adjusted diluted EPS, excluding currency, increased by 9.0% in the second quarter. If the ten cents hurdle related to Japan were excluded, the increase in adjusted diluted EPS, excluding currency, was a very substantial 17.7%, confirming the overall strength of our business.

We have reaffirmed today our 2012 reported diluted EPS guidance of $5.10 to $5.20. Compared to adjusted diluted EPS of $4.88 in 2011, this represents a growth rate of approximately 10% to 12%, excluding currency.

(SLIDE 31.)

I will now be happy to answer your questions.

NICK ROLLI

Well, thank you for joining us. That concludes our call today. If you have any follow-up questions, please contact the investor relations team here in Lausanne.

Thank you again and have a nice day.

9

EX-99.3

Exhibit 99.3

2012 Second-Quarter Results

July 19, 2012

2

Introduction

Unless otherwise stated, we will be talking about results for the second-

quarter 2012 and comparing them with the same period in 2011

References to PMI volumes refer to PMI shipment data, unless

otherwise stated

Industry volume and market shares are the latest data available from a

number of internal and external sources

Organic volume refers to volume excluding acquisitions

Net revenues exclude excise taxes

OCI stands for Operating Companies Income, which is defined as

operating income before general corporate expenses and the

amortization

of

intangibles.

OCI

growth

rates

are

on

an

adjusted

basis,

which excludes asset impairment, exit and other costs

Data tables showing adjustments to net revenues and OCI for currency,

acquisitions, asset impairment, exit and other costs, free cash flow

calculations, adjustments to EPS, and reconciliations to U.S. GAAP

measures are at the end of today’s webcast slides and are posted on

our web site

3

Forward-Looking and Cautionary Statements

This presentation and related discussion contain forward-looking statements. Achievement of

projected results is subject to risks, uncertainties and inaccurate assumptions, and PMI is identifying

important factors that, individually or in the aggregate, could cause actual results to differ materially

from those contained in any forward-looking statements made by PMI

PMI’s business risks include: significant increases in cigarette-related taxes; the imposition of

discriminatory excise tax structures; fluctuations in customer inventory levels due to increases in

product taxes and prices; increasing marketing and regulatory restrictions, often with the goal of

preventing

the

use

of

tobacco

products;

health

concerns

relating

to

the

use

of

tobacco

products and

exposure to environmental tobacco smoke; litigation related to tobacco use; intense competition; the

effects of global and individual country economic, regulatory and political developments; changes in

adult smoker

behavior;

lost

revenues

as

a

result

of

counterfeiting, contraband and cross-border

purchases; governmental investigations; unfavorable currency exchange rates and currency

devaluations; adverse changes in applicable corporate tax laws; adverse changes in the cost and

quality of tobacco and other agricultural products and raw materials; and the integrity of its

information systems. PMI’s future profitability may also be adversely affected should it be

unsuccessful in its attempts to produce products with the potential to reduce the risk of smoking-

related diseases; if it is unable to successfully introduce new products, promote brand equity, enter

new markets

or

improve

its

margins

through

increased prices and productivity gains; if it is unable to

expand its brand portfolio internally or through acquisitions and the development of strategic

business relationships; or if it is unable to attract and retain

the best global talent

PMI is further

subject

to

other

risks

detailed

from

time

to

time

in

its

publicly

filed

documents, including

the Form 10-Q for the quarter ended March 31, 2012. PMI cautions that the foregoing list of important

factors is not a complete discussion of all potential risks and uncertainties. PMI does not undertake to

update any forward-looking statement that it may make from time to time, except in the normal

course of its public disclosure obligations

4

Strong Underlying Business Results in Q2, 2012

Organic cigarette volume down by 1.2%

Organic cigarette volume, excluding Japan hurdle, up by

1.4%

Organic OTP volume up by 11.8%

Note: OTP stands for other tobacco products, including cigars, cigarillos, fine cut, pipe tobacco and snus. Fine cut converted to cigarette equivalents

based on conversion ratio of 1 unit = 0.75g

Source: PMI Financials

5

Strong Underlying Business Results in Q2, 2012

Organic cigarette volume down by 1.2%

Organic cigarette volume, excluding Japan hurdle, up

by 1.4%

Organic OTP volume up by 11.8%

Net revenues, excluding currency and acquisitions, up

by 2.9%

Adjusted OCI, excluding currency and acquisitions, up

by 3.5%

Note: OTP stands for other tobacco products, including cigars, cigarillos, fine cut, pipe tobacco and snus. Fine cut converted to cigarette equivalents

based on conversion ratio of 1 unit = 0.75g

Source: PMI Financials

6

Strong Underlying Business Results in Q2, 2012

Organic cigarette volume down by 1.2%

Organic cigarette volume, excluding Japan hurdle, up by

1.4%

Organic OTP volume up by 11.8%

Net revenues, excluding currency and acquisitions,

up by 2.9%

Adjusted OCI, excluding currency and acquisitions,

up by 3.5%

Adjusted diluted EPS, excluding currency, up by 9.0%

Adjusted diluted EPS, excluding currency and Japan

hurdle, up by 17.7%

Note: OTP stands for other tobacco products, including cigars, cigarillos, fine cut, pipe tobacco and snus. Fine cut converted to cigarette equivalents

based on conversion ratio of 1 unit = 0.75g

Source: PMI Financials

Excellent First-Half 2012 Results

(a)

Excluding currency and acquisitions

(b)

Excluding currency

Source: PMI Financials

(a)

(a)

7

(%)

Growth H1, 2012 vs. H1, 2011

(b)

1.8

6.5

8.3

13.3

0

15

Organic Cigarette 

Volume

Net

Revenues

Adjusted

OCI

Adjusted Diluted

EPS

8

2012 EPS Guidance

These results confirm our expectation of solid organic

cigarette volume growth in 2012

Continued strong pricing and a favorable product mix only

partially offset by an unfavorable geographic mix

At current prevailing exchange rates, forecast currency

headwind slightly above the 25 cents per share predicted in

June for full year

Strong underlying business momentum expected to offset

the additional unfavorable currency impact of 2 cents per

share

Source: PMI forecasts

9

2012 EPS Guidance

Reported diluted 2012 EPS guidance range reaffirmed at

$5.10 to $5.20, compared to $4.85 in 2011

On a currency-neutral basis, our guidance implies a

forecast growth rate of approximately 10% to 12%,

compared to adjusted diluted EPS of $4.88 in 2011

Source: PMI forecasts

EU Region: Cigarette Industry Volume Under

Considerable Pressure

% Change

Q2, 2012

H1, 2012

Greece

(16.8)

(18.9)

Hungary

(16.0)

(10.9)

Spain

(18.0)

(10.0)

Italy

(10.5)

(8.5)

Netherlands

(5.7)

(6.0)

EU Region

(9.7)

(5.8)

France

(5.9)

(4.0)

Poland

(7.7)

(3.7)

Czech Republic

(4.2)

(3.6)

UK

(6.0)

(3.1)

Germany

(5.1)

(1.3)

10

Source: PMI estimates

EU Region: Deteriorating Job Market

11

(a)  March 2012 vs. June 2011

(b)  March

2012

Note:

Gre.

is

Greece,

Spa.

is

Spain,

Ita.

is

Italy,

Neth.

is

Netherlands,

EU

Avg.

is

EU

average,

Fra.

is

France,

Pol.

is

Poland,

Hun.

is

Hungary,

Cze.

is

Czech Republic and Ger. is Germany

Source: Eurostat

(pp)

Avg.

(a)

(a)

Variance in Unemployment Rates

May 2012 vs. June 2011

0

(%)

Unemployment Rates (May 2012)

Avg.

Cze.

Ger.

(b)

(b)

0.7

5

Gre.

Spa.

Ita.

Neth.

EU

Fra.

Pol.

UK

Hun.

10.3

0

5

10

15

20

25

Spa.

Gre.

Hun.

EU

Ita.

Fra.

Pol.

UK

Cze.

Ger.

Neth.

(1)

EU Region: Resilient Cigarette Market Shares

Variance vs. PY

Q2, 2012

H1, 2012

Q2, 2012

H1, 2012

Total PMI

38.5%

37.9%

(0.2)pp

(0.4)pp

Marlboro

18.4

18.0

()

()pp

L&M

6.6

6.6

(0.2)

(- )pp

Chesterfield

3.5

3.4

()

(p

12

Source: PMI estimates

0.3

0.1

0.3

0.4

EU Region: PMI Gaining Share in Expanding

Fine Cut Category

Variance vs. PY

Q2, 2012

H1, 2012

Q2, 2012

H1, 2012

Industry Volume (units billion)

30.9

59.3

(

PMI Share (%)

14.1

14.0

(

(

13

Note: Fine cut converted to cigarette equivalents based on conversion ratio of 1 unit = 0.75g

Source: PMI estimates

7.7%

7.9%

1.4pp

1.7pp

Cigarette industry volume

declined by 10.5% in Q2,

2012:

-

Reduced consumer

purchasing power

-

Impact of price increases

-

Substitution by fine cut

-

Increase in illicit trade

Marlboro

performing strongly

with share up in Q2, 2012

PMI overall share down

despite

launch

of

Philip

Morris

Selection

in low-price segment

Fine cut leadership

14

Italy: Increased Pressure due to Weak Economy

Note: Totals may not add up due to rounding

Source: PMI estimates

Cigarettes

Marlboro

23.0%

22.6%

(

(

-)pp

Chesterfield

3.5%

3.5%

(0.2)pp

(0.2)p

Diana

12.4 %

12.6 %

(0.8)pp

(0.7)pp

Other

14.0 %

14.1 %

(

()pp

Total PMI

52.9 %

52.8 %

(0.5)pp

(0.6)pp

Fine Cut

Total PMI

31.0 %

29.8 %

24.5pp

26.0

Q2

2012

H1

2012

Q2

H1

Market Shares

Variance

vs. PY

0.3

pp

0.2

0.2

15

Germany: Positive PMI Share Momentum 

Cigarette industry volume declined

by 5.1% in Q2, 2012:

-

Recent price increases

-

Lower consumer confidence

-

Difficult comparison with 2011

-

Some timing issues

PMI achieved modest share gains

in cigarette category and

continued strong momentum in

fine cut

Marlboro

gained share in both

cigarettes and fine cut in Q2, 2012

Source: PMI estimates

PMI Fine Cut Market Share (%)

PMI Cigarette Market Share (%)

Total PMI

Other

Chesterfield

Marlboro

L&M

Total PMI

Other

Marlboro

L&M

2.0

3.2

5.9

5.6

5.0

5.3

14.8

16.0

Q2

2011

Q2

2012

21.1

21.4

10.4

10.5

36.1

36.4

Q2

2011

Q2

2012

Cigarette industry volume down 

by 1.3% YTD June, 2012

EU Region: Weaker Results in Q2, 2012

Variance vs. PY

Q2, 2012

H1, 2012

Q2, 2012

H1, 2012

Cigarette Volume (units billion)

51.8

99.6

(9.4)%

(5.8)%

OTP Volume (units billion)

4.7

9.1

()%

()%

Net Revenues ($ billion)

2.3

4.3

(0.7)%

()%

Adjusted OCI ($ billion)

1.1

2.1

(2.7)%

()%

16

(a)  Excluding currency and acquisitions

Note: OTP stands for other tobacco products, including cigars, cigarillos, fine cut, pipe tobacco and snus. Fine cut converted to cigarette equivalents

based on conversion ratio of 1 unit = 0.75g

Source: PMI Financials

(a)

(a)

(a)

(a)

18.2

23.1

2.0

0.2

EEMA Region: Another Very Strong Quarter

17

(a)  Excluding acquisitions

(b)  Excluding currency and acquisitions

Source: PMI Financials

Variance vs. PY

Q2, 2012

H1, 2012

Q2, 2012

H1, 2012

Cigarette Volume (units billion)

79.2

145.1

(

Net Revenues ($ billion)

2.2

4.0

Adjusted OCI ($ billion)

0.9

1.8

4.9%

(a)

12.7

(b)

22.9

(b)

4.2%

(a)

12.6

(b)

20.6

(b)

18

EEMA Region: Positive Pricing and Volume/Mix

Note: Variances at OCI level

Source: PMI Financials

0

125

($ million)

Q2, 2012

114

104

Pricing

Variance

Volume/Mix

Variance

EEMA Region: Growth of Key Brands

(units million)

19

Chest.

Note:

Marlb.

is

Marlboro,

Parl.

is

Parliament

and

Chest.

is Chesterfield

Source: PMI Financials

Street

Soyuz

Volume Growth (Q2, 2012 vs. Q2, 2011)

(400)

0

400

800

1,200

Marlb.

Bond

L&M

Parl.

Lark

Optima

Next

Muratti

Apollo

-

Total market grew slightly

during first half of 2012

PMI volume increased by

8.7% in Q2, 2012

Adult smokers continue to

uptrade gradually

PMI market share gains QTD

May thanks to Parliament,

L&M, Bond Street

and Next

Price increase of RUB 3/pack

in July 2012

Price Segments (%)

Russia: Market and Share Growth

20

PMI Market Share (%)

Premium

Mid

Low

Super-

Low

(a)  Q2 and H1 data through end May

Source: PMI estimates, PMI Financials and Nielsen

+0.7pp

(a)

(a)

(a)

(a)

25.4

26.1

Q2

2011

Q2

2012

35.7

32.5

23.7

26.0

24.9

25.7

15.7

15.8

H1

2011

H1

2012

21

Russia: Marlboro ClearTaste Launched

Asia Region: Japan Hurdle Masks

Another Very Strong Quarter

Variance vs. PY

Q2, 2012

H1, 2012

Q2, 2012

H1, 2012

Cigarette Volume (units billion)

83.5

164.5

(0.7)%

(5.4 )%

Cigarette Volume

ex. Japan Hurdle

(7.4 )%

(9.8)%

Adjusted OCI ($ billion)

1.4

2.8

(2.6)%

(8.9 )%

22

(a)  Excluding currency and acquisitions

Source: PMI Financials

(a)

(a)

Japan: Resilient Share Performance

23

Industry volume should be

stable in 2012 and underlying

trend remains a moderate

decline of 1-2% per year

PMI Q2, 2012 market share

slightly down due to

acceleration in new launches

by Japan Tobacco

Marlboro Black Menthol Edge

launched in Q2, 2012

Marlboro

Ice

Blast

5mg

/

1mg

launched this July

Increase of Consumption Tax

from 5% to 8% in 2014 and

10% in 2015 approved

Source: PMI estimates and Tobacco Institute of Japan

PMI Market Share (%)

Indonesia: PMI Momentum Continues

24

Industry volume growth of

6.9% in Q2, 2012

PMI volume increased by

17.8% in second quarter

Adult smokers uptrading in

strong economy

PMI share up 3.1 points to

33.5% in Q2, 2012:

Strongest and broadest portfolio

Sampoerna

A

fastest-growing

brand

Rounded price points

Premium

(a)

Mid

Low

(a)  Includes above premium

Source: PMI estimates and PMI Financials

+3.1pp

Price Segments (%)

PMI Market Share (%)

25

Favorable Pricing Continued in Q2, 2012

Note: Variances at OCI level

Source: PMI Financials

($ million)

Strong Brand Performance Continues

Volume Growth (H1, 2012 vs. H1, 2011)

(a)

26

(a)  Excluding Japan hurdle

Source: PMI Financials

(units billion)

0

2.5

5.0

PMI Expanding its Market Share

27

Top 30 PMI OCI Markets

(a)

(%)

(a)  Excluding duty free

Note: Historical data adjusted for pro forma inclusion of business combination with Fortune Tobacco Corporation in the Philippines and Jordan

acquisition

Source: PMI Financials and PMI estimates

28

Free Cash Flow

(a)

Impacted by Currency and

Working Capital Requirements

(a)

Free cash flow equals net cash provided by operating activities less capital expenditures

Source: PMI Financials

($ million)

29

Share Repurchase Program Further Extended

In Q2, 2012, PMI spent $1.5 billion to repurchase

17.8 million shares

New three-year $18 billion share repurchase program to

start in August when funds from previous authorization fully

utilized

Target for 2012 remains $6 billion in share repurchases

Since spin, $24.4 billion spent to repurchase 21.3% of

shares outstanding at the time

Source: PMI Financials

Underlying business momentum remains strong

Very strong results in EEMA and Asia Regions offset unusually

weak industry volume in EU Region and the Japan hurdle

Breadth of footprint, superior brand portfolio and continued

strong pricing environment driving growth

Net revenues and adjusted OCI increased in Q2, 2012,

excluding currency and acquisitions

Adjusted diluted EPS, excluding currency, up 9.0% in Q2, 2012

Reaffirmed guidance range of $5.10 to $5.20 for reported diluted

EPS in 2012, despite slightly greater currency unfavorability

This represents a growth rate of approximately 10% to 12% on a

currency-neutral basis, compared to adjusted diluted EPS of

$4.88 in 2011

30

Conclusion

Source: PMI Financials

2012 Second-Quarter Results

Questions & Answers

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries

Reconciliation of Non-GAAP Measures

Adjustments for the Impact of Currency and Acquisitions

For the Quarters Ended June 30,

($ in millions)

(Unaudited)

32

Reported Net

Revenues

Less

Excise

Taxes

Reported Net

Revenues

excluding

Excise Taxes

Less

Currency

Reported Net

Revenues

excluding

Excise Taxes &

Currency

Less

Acquisi-

tions

Reported Net

Revenues

excluding

Excise Taxes, 

Currency &

Acquisitions

Reported

Net

Revenues

Less

Excise

Taxes

Reported Net

Revenues

excluding

Excise Taxes

Reported

Reported

excluding

Currency

Reported

excluding

Currency &

Acquisitions

7,280

$         

4,995

$  

2,285

$         

(195)

$    

2,480

$            

-

$        

2,480

$         

European Union

8,080

$    

5,583

$  

2,497

$         

(8.5)%

(0.7)%

(0.7)%

5,062

2,911

2,151

(127)

2,278

11

2,267

EEMA

4,603

2,591

2,012

6.9%

13.2%

12.7%

5,317

2,462

2,855

(29)

2,884

-

2,884

Asia

5,146

2,210

2,936

(2.8)%

(1.8)%

(1.8)%

2,378

1,549

829

(51)

880

-

880

Latin America & Canada

2,405

1,577

828

0.1%

6.3%

6.3%

20,037

$       

11,917

$

8,120

$         

(402)

$    

8,522

$            

11

$     

8,511

$         

PMI Total

20,234

$  

11,961

$

8,273

$         

(1.8)%

3.0%

2.9%

Reported

Operating

Companies

Income

Less

Currency

Reported

Operating

Companies

Income

excluding

Currency

Less

Acquisi-

tions

Reported

Operating

Companies

Income

excluding

Currency &

Acquisitions

Reported

Operating

Companies

Income

Reported

Reported

excluding

Currency

Reported

excluding

Currency &

Acquisitions

1,117

$         

(130)

$    

1,247

$            

-

$        

1,247

$         

1,280

$         

(12.7)%

(2.6)%

(2.6)%

948

(80)

1,028

2

1,026

835

13.5%

23.1%

22.9%

1,364

3

1,361

-

1,361

1,398

(2.4)%

(2.6)%

(2.6)%

249

(25)

274

-

274

268

(7.1)%

2.2%

2.2%

3,678

$         

(232)

$    

3,910

$            

2

$       

3,908

$         

3,781

$         

(2.7)%

3.4%

3.4%

2012

2011

% Change in Reported Operating

Companies Income

2012

2011

% Change in Reported Net Revenues

excluding Excise Taxes

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries

Reconciliation of Non-GAAP Measures

Reconciliation of Reported Operating Companies Income to Adjusted Operating Companies Income &

Reconciliation of Adjusted Operating Companies Income Margin, excluding Currency and Acquisitions

For the Quarters Ended June 30,

($ in millions)

(Unaudited)

33

Reported

Operating

Companies

Income

Less

Asset

Impairment &

Exit Costs

Adjusted

Operating

Companies

Income

Less

Currency

Adjusted

Operating

Companies

Income

excluding

Currency

Less

Acquisi-

tions

Adjusted

Operating

Companies

Income

excluding

Currency &

Acquisitions

Reported

Operating

Companies

Income

Less

Asset Impairment &

Exit Costs

Adjusted

Operating

Companies

Income

Adjusted

Adjusted

excluding

Currency

Adjusted

excluding

Currency &

Acquisitions

1,117

$         

-

$                    

1,117

$      

(130)

$    

1,247

$       

-

$                   

1,247

$          

European Union

1,280

$      

(1)

$                          

1,281

$      

(12.8)%

(2.7)%

(2.7)%

948

-

948

(80)

1,028

2

1,026

EEMA

835

-

835

13.5%

23.1%

22.9%

1,364

-

1,364

3

1,361

-

1,361

Asia

1,398

-

1,398

(2.4)%

(2.6)%

(2.6)%

249

(8)

257

(25)

282

-

282

Latin America & Canada

268

-

268

(4.1)%

5.2%

5.2%

3,678

$         

(8)

$                  

3,686

$      

(232)

$    

3,918

$       

2

$                  

3,916

$          

PMI Total

3,781

$      

(1)

$                          

3,782

$      

(2.5)%

3.6%

3.5%

% Points Change

Adjusted

Operating

Companies

Income

excluding

Currency

Net Revenues

excluding

Excise Taxes &

Currency

(a)

Adjusted

Operating

Companies

Income

Margin

excluding

Currency

Adjusted

Operating

Companies

Income

excluding

Currency &

Acquisitions

Net Revenues

excluding

Excise Taxes,

Currency &

Acquisitions

(a)

Adjusted

Operating

Companies

Income

Margin

excluding

Currency &

Acquisitions

Adjusted

Operating

Companies

Income

Net Revenues

excluding Excise

Taxes

(a)

Adjusted

Operating

Companies

Income

Margin

Adjusted

Operating

Companies

Income

Margin

excluding

Currency

Adjusted

Operating

Companies

Income Margin

excluding

Currency &

Acquisitions

1,247

$         

2,480

$            

50.3%

1,247

$       

2,480

$           

50.3%

European Union

1,281

$      

2,497

$                     

51.3%

(1.0)

(1.0)

1,028

2,278

45.1%

1,026

2,267

45.3%

EEMA

835

2,012

41.5%

3.6

3.8

1,361

2,884

47.2%

1,361

2,884

47.2%

Asia

1,398

2,936

47.6%

(0.4)

(0.4)

282

880

32.0%

282

880

32.0%

Latin America & Canada

268

828

32.4%

(0.4)

(0.4)

3,918

$         

8,522

$            

46.0%

3,916

$       

8,511

$           

46.0%

PMI Total

3,782

$      

8,273

$                     

45.7%

0.3

0.3

% Change in Adjusted Operating

Companies Income

2011

2012

2011

2012

(a)  For the calculation of net revenues excluding excise taxes, currency and acquisitions, refer to previous slide

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries

Reconciliation of Non-GAAP Measures

Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS and Adjusted Diluted EPS, excluding Currency

For the Quarters Ended June 30,

(Unaudited)

34

2012

2011

% Change

Reported Diluted EPS

1.36

$                   

1.35

$                   

0.7%

Adjustments:

Asset impairment and exit costs

-

-

Tax items

-

(0.01)

Adjusted Diluted EPS

1.36

$                   

1.34

$                   

1.5%

Less:

Currency impact

(0.10)

Adjusted Diluted EPS, excluding Currency

1.46

$                   

1.34

$                   

9.0%

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries

Reconciliation of Non-GAAP Measures

Reconciliation of Reported Diluted EPS to Reported Diluted EPS, excluding Currency

For the Quarters Ended June 30,

(Unaudited)

35

2012

2011

% Change

Reported Diluted EPS

1.36

$                   

1.35

$                   

0.7%

Less:

Currency impact

(0.10)

Reported Diluted EPS, excluding Currency

1.46

$                   

1.35

$                   

8.1%

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries

Reconciliation of Non-GAAP Measures

Adjustments for the Impact of Currency and Acquisitions

For the Six Months Ended June 30,

($ in millions)

(Unaudited)

36

Reported Net

Revenues

Less

Excise

Taxes

Reported Net

Revenues

excluding

Excise Taxes

Less

Currency

Reported Net

Revenues

excluding

Excise Taxes &

Currency

Less

Acquisi-

tions

Reported Net

Revenues

excluding

Excise Taxes, 

Currency &

Acquisitions

Reported

Net

Revenues

Less

Excise

Taxes

Reported Net

Revenues

excluding

Excise Taxes

Reported

Reported

excluding

Currency

Reported

excluding

Currency &

Acquisitions

13,750

$       

9,412

$  

4,338

$         

(249)

$    

4,587

$            

-

$        

4,587

$         

European Union

14,495

$  

9,997

$  

4,498

$         

(3.6)%

2.0%

2.0%

9,131

5,145

3,986

(200)

4,186

20

4,166

EEMA

8,274

4,575

3,699

7.8%

13.2%

12.6%

10,494

4,862

5,632

45

5,587

1

5,586

Asia

9,434

4,175

5,259

7.1%

6.2%

6.2%

4,684

3,072

1,612

(90)

1,702

-

1,702

Latin America & Canada

4,561

2,953

1,608

0.2%

5.8%

5.8%

38,059

$       

22,491

$

15,568

$       

(494)

$    

16,062

$          

21

$     

16,041

$        

PMI Total

36,764

$  

21,700

$

15,064

$       

3.3%

6.6%

6.5%

Reported

Operating

Companies

Income

Less

Currency

Reported

Operating

Companies

Income

excluding

Currency

Less

Acquisi-

tions

Reported

Operating

Companies

Income

excluding

Currency &

Acquisitions

Reported

Operating

Companies

Income

Reported

Reported

excluding

Currency

Reported

excluding

Currency &

Acquisitions

2,147

$         

(155)

$    

2,302

$            

-

$        

2,302

$         

European Union

2,286

$         

(6.1)%

0.7%

0.7%

1,758

(124)

1,882

2

1,880

EEMA

1,557

12.9%

20.9%

20.7%

2,771

56

2,715

-

2,715

Asia

2,491

11.2%

9.0%

9.0%

486

(42)

528

-

528

Latin America & Canada

519

(6.4)%

1.7%

1.7%

7,162

$         

(265)

$    

7,427

$            

2

$       

7,425

$         

PMI Total

6,853

$         

4.5%

8.4%

8.3%

2012

2011

% Change in Reported Operating

Companies Income

2012

2011

% Change in Reported Net Revenues

excluding Excise Taxes

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries

Reconciliation of Non-GAAP Measures

37

Reconciliation of Reported Operating Companies Income to Adjusted Operating Companies Income &

Reconciliation of Adjusted Operating Companies Income Margin, excluding Currency and Acquisitions

For the Six Months Ended June 30,

($ in millions)

(Unaudited)

Reported

Operating

Companies

Income

Less

Asset

Impairment &

Exit Costs

Adjusted

Operating

Companies

Income

Less

Currency

Adjusted

Operating

Companies

Income

excluding

Currency

Less

Acquisi-

tions

Adjusted

Operating

Companies

Income

excluding

Currency &

Acquisitions

Reported

Operating

Companies

Income

Less

Asset Impairment &

Exit Costs

Adjusted

Operating

Companies

Income

Adjusted

Adjusted

excluding

Currency

Adjusted

excluding

Currency &

Acquisitions

2,147

$         

-

$                    

2,147

$      

(155)

$    

2,302

$       

-

$                   

2,302

$          

European Union

2,286

$      

(12)

$                        

2,298

$      

(6.6)%

0.2%

0.2%

1,758

-

1,758

(124)

1,882

2

1,880

EEMA

1,557

(2)

1,559

12.8%

20.7%

20.6%

2,771

-

2,771

56

2,715

-

2,715

Asia

2,491

(2)

2,493

11.2%

8.9%

8.9%

486

(16)

502

(42)

544

-

544

Latin America & Canada

519

(1)

520

(3.5)%

4.6%

4.6%

7,162

$         

(16)

$                

7,178

$      

(265)

$    

7,443

$       

2

$                  

7,441

$          

PMI Total

6,853

$      

(17)

$                        

6,870

$      

4.5%

8.3%

8.3%

% Points Change

Adjusted

Operating

Companies

Income

excluding

Currency

Net Revenues

excluding

Excise Taxes &

Currency

(a)

Adjusted

Operating

Companies

Income

Margin

excluding

Currency

Adjusted

Operating

Companies

Income

excluding

Currency &

Acquisitions

Net Revenues

excluding

Excise Taxes,

Currency &

Acquisitions

(a)

Adjusted

Operating

Companies

Income

Margin

excluding

Currency &

Acquisitions

Adjusted

Operating

Companies

Income

Net Revenues

excluding Excise

Taxes

(a)

Adjusted

Operating

Companies

Income

Margin

Adjusted

Operating

Companies

Income

Margin

excluding

Currency

Adjusted

Operating

Companies

Income Margin

excluding

Currency &

Acquisitions

2,302

$         

4,587

$            

50.2%

2,302

$       

4,587

$           

50.2%

European Union

2,298

$      

4,498

$                     

51.1%

(0.9)

(0.9)

1,882

4,186

45.0%

1,880

4,166

45.1%

EEMA

1,559

3,699

42.1%

2.9

3.0

2,715

5,587

48.6%

2,715

5,586

48.6%

Asia

2,493

5,259

47.4%

1.2

1.2

544

1,702

32.0%

544

1,702

32.0%

Latin America & Canada

520

1,608

32.3%

(0.3)

(0.3)

7,443

$         

16,062

$          

46.3%

7,441

$       

16,041

$         

46.4%

PMI Total

6,870

$      

15,064

$                   

45.6%

0.7

0.8

2012

2011

2012

2011

% Change in Adjusted Operating

Companies Income

(a)  For the calculation of net revenues excluding excise taxes, currency and acquisitions, refer to previous slide

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries

Reconciliation of Non-GAAP Measures

Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS and Adjusted Diluted EPS, excluding Currency

For the Six Months Ended June 30,

(Unaudited)

38

2012

2011

% Change

Reported Diluted EPS

2.60

$                  

2.42

$                  

7.4%

Adjustments:

Asset impairment and exit costs

0.01

0.01

Tax items

-

(0.02)

Adjusted Diluted EPS

2.61

$                  

2.41

$                  

8.3%

Less:

Currency impact

(0.12)

Adjusted Diluted EPS, excluding Currency

2.73

$                  

2.41

$                  

13.3%

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries

Reconciliation of Non-GAAP Measures

Reconciliation of Reported Diluted EPS to Reported Diluted EPS, excluding Currency

For the Six Months Ended June 30,

(Unaudited)

39

2012

2011

% Change

Reported Diluted EPS

2.60

$                   

2.42

$                   

7.4%

Less:

Currency impact

(0.12)

Reported Diluted EPS, excluding Currency

2.72

$                   

2.42

$                   

12.4%

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries

Reconciliation of Non-GAAP Measures

Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS

For the Year Ended December 31,

(Unaudited)

40

2011

Reported Diluted EPS

4.85

$                   

Adjustments:

Asset impairment and exit costs

0.05

Tax items

(0.02)

Adjusted Diluted EPS

4.88

$                   

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries

Reconciliation of Non-GAAP Measures

Reconciliation

of

Operating

Cash

Flow

to

Free

Cash

Flow

and

Free

Cash

Flow,

excluding

Currency

For the Quarters and Six Months Ended June 30,

($ in millions)

(Unaudited)

(a)  Operating Cash Flow

41

For the Quarters Ended

For the Six Months Ended

June 30,

June 30,

2012

2011

% Change

2012

2011

% Change

Net

cash

provided

by

operating

activities

(a)

3,480

$             

4,120

$             

(15.5)%

5,378

$             

6,515

$             

(17.5)%

Less:

Capital expenditures

249

186

476

345

Free cash flow

3,231

$             

3,934

$             

(17.9)%

4,902

$             

6,170

$             

(20.6)%

Less:

Currency impact

(389)

(439)

Free cash flow, excluding currency

3,620

$             

3,934

$             

(8.0)%

5,341

$             

6,170

$             

(13.4)%

2012 Second-Quarter Results

July 19, 2012