EX-99.1 2 es-earningsreleasepmxex991.htm ER AND SCHEDULES ES - Earnings Release PM-EX 99.1 - Q3

EXHIBIT 99.1
PRESS RELEASE
 
 
 
 
 
 
Investor Relations:
 
Media:
 
 
New York: +1 (917) 663 2233
 
Lausanne: +41 (0)58 242 4500
 
 
Lausanne: +41 (0)58 242 4666
 
 
 
 

PHILIP MORRIS INTERNATIONAL INC. (PMI) REPORTS 2013 THIRD-QUARTER RESULTS;
REVISES 2013 FULL-YEAR REPORTED DILUTED EPS FORECAST TO A RANGE OF $5.35 TO $5.40

Third-Quarter 2013
•
Reported diluted earnings per share of $1.44, up by $0.12 or 9.1% versus $1.32 in 2012
•
Excluding unfavorable currency of $0.09, reported diluted earnings per share up by $0.21 or 15.9% versus $1.32 in 2012 as detailed in the attached Schedule 13
•
Adjusted diluted earnings per share of $1.44, up by $0.06 or 4.3% versus $1.38 in 2012
•
Excluding unfavorable currency of $0.09, adjusted diluted earnings per share up by $0.15 or 10.9% versus $1.38 in 2012 as detailed in the attached Schedule 12
•
Cigarette shipment volume of 223.1 billion units, down by 5.7%
•
Cigarette shipment volume decrease of 4.1%, excluding the Philippines
•
Reported net revenues, excluding excise taxes, of $7.9 billion, up by 0.1%
•
Excluding unfavorable currency, reported net revenues, excluding excise taxes, up by 1.6%
•
Reported operating companies income of $3.7 billion, down by 1.0%
•
Excluding unfavorable currency, reported operating companies income up by 3.3%
•
Adjusted operating companies income of $3.7 billion, down by 1.9%
•
Excluding unfavorable currency, adjusted operating companies income up by 2.4%
•
Reported operating income of $3.6 billion, down by 0.8%
•
Increased its regular quarterly dividend by 10.6% to an annualized rate of $3.76 per common share
•
Repurchased 16.7 million shares of the company's common stock for $1.5 billion

Nine Months Year-to-Date 2013
•
Reported diluted earnings per share of $4.02, up by $0.10 or 2.6% versus $3.92 in 2012
•
Excluding unfavorable currency of $0.23, reported diluted earnings per share up by $0.33 or 8.4% versus $3.92 in 2012 as detailed in the attached Schedule 17
•
Adjusted diluted earnings per share of $4.03, up by $0.04 or 1.0% versus $3.99 in 2012
•
Excluding unfavorable currency of $0.23, adjusted diluted earnings per share up by $0.27 or 6.8% versus $3.99 in 2012 as detailed in the attached Schedule 16
•
Cigarette shipment volume of 657.0 billion units, down by 5.3%
•
Cigarette shipment volume decrease of 3.0%, excluding the Philippines
•
Reported net revenues, excluding excise taxes, of $23.4 billion, down by 0.3%
•
Excluding unfavorable currency, reported net revenues, excluding excise taxes, up by 1.7%




•
Reported operating companies income of $10.5 billion, down by 2.9%
•
Excluding unfavorable currency, reported operating companies income up by 1.0%
•
Adjusted operating companies income, reflecting the items detailed in the attached Schedule 15, of $10.5 billion, down by 3.3%
•
Excluding unfavorable currency, adjusted operating companies income up by 0.6%
•
Reported operating income of $10.3 billion, down by 3.0%
•
Repurchased 50.1 million shares of the company's common stock for $4.5 billion

Full-Year 2013
•
PMI revises its 2013 full-year reported diluted earnings per share forecast to be in a range of $5.35 to $5.40, versus $5.17 in 2012
•
This forecast includes the unfavorable special tax item of $0.01 per share associated with the enactment of the American Taxpayer Relief Act of 2012 reported in the first quarter of 2013, an anticipated 2013 fourth-quarter charge, related to a previously announced organizational restructuring, of approximately $0.03 per share, and reflects a cautious outlook regarding certain markets
•
Excluding an unfavorable currency impact, at prevailing exchange rates, of approximately $0.33 for the full-year 2013, and the aforementioned tax item and restructuring charge, reported diluted earnings per share are projected to increase by approximately 10% versus adjusted diluted earnings per share of $5.22 in 2012 as detailed in the attached Schedule 20

NEW YORK, October 17, 2013 - Philip Morris International Inc. (NYSE / Euronext Paris: PM) today announced its 2013 third-quarter results.
“Our strong EPS and cash flow performance this quarter primarily reflected robust pricing. Our share momentum, particularly in the EU, partially offset weaker industry volumes,” said André Calantzopoulos, Chief Executive Officer.
“While the evolution of the macro-economic environment and tax-paid cigarette industry volume remain a challenge, our business fundamentals are solid and we continue to anticipate a strong final quarter.”
"Our confidence in these fundamentals was further reflected in our announcement during the quarter of an increase in our regular quarterly dividend of 10.6%. Since the spin-off, we have increased the dividend every year by an accumulated 104.3% to reach an annualized rate of $3.76 per common share.”

Conference Call
A conference call, hosted by Jacek Olczak, Chief Financial Officer, with members of the investor community and news media, will be webcast at 9:00 a.m., Eastern Time, on October 17, 2013. Access is available at www.pmi.com/webcasts.

Dividends and Share Repurchase Program

During the quarter, PMI declared a regular quarterly dividend of $0.94, representing an annualized rate of $3.76 per common share, and spent $1.5 billion to repurchase 16.7 million shares, as shown in the table below.

- -2 -

Current $18 Billion, Three-Year Program
 
Value
 
Shares
 
($ Mio.)
 
000
 
 
 
 
August - December 2012
$
2,853

 
32,206

January - March 2013
1,500

 
16,685

April - June 2013
1,545

 
16,665

July - September 2013
1,455

 
16,717

Total Under Program
$
7,353

 
82,273


Since May 2008, when PMI began its first share repurchase program, the company has spent an aggregate of $32.4 billion to repurchase 539.0 million shares at an average price of $60.02 per share, or 25.6% of the shares outstanding at the time of the spin-off in March 2008.

Acquisitions and Agreements
The previously announced sale by Grupo Carso, S.A.B. de C. V. to PMI of its 20% interest in PMI's Mexican tobacco business was completed on September 30, 2013, with the approval of the Mexican antitrust authority, for $703 million.  The transaction, which resulted in PMI owning 100% of its Mexican business, is projected to be marginally accretive to PMI's earnings per share as of the fourth quarter of 2013.
On September 30, 2013, PMI announced its entry into a definitive agreement to acquire 49% of the shares of United Arab Emirates-based Arab Investors-TA (FZC) (“AITA”) for $625 million. Through its acquisition of 49% of the shares of AITA, PMI will secure an almost 25% economic interest in the Société des Tabacs Algéro-Emiratie, a joint venture which is 51% owned by AITA and 49% by the Algerian state-owned Société Nationale des Tabacs et Allumettes SpA. This equity investment in AITA will provide PMI with enhanced earnings from Algeria and is projected to be accretive to PMI’s earnings per share as of 2014.

2013 Full-Year Forecast
PMI revises its 2013 full-year reported diluted earnings per share forecast to be in a range of $5.35 to $5.40, versus $5.17 in 2012. This forecast includes the unfavorable special tax item of $0.01 per share associated with the enactment of the American Taxpayer Relief Act of 2012 reported in the first quarter of 2013, an anticipated 2013 fourth-quarter charge, related to a previously announced organizational restructuring, of approximately $0.03 per share, and reflects a cautious outlook regarding certain markets.
Excluding an unfavorable currency impact, at prevailing exchange rates, of approximately $0.33 for the full-year 2013, and the aforementioned tax item and restructuring charge, reported diluted earnings per share are projected to increase by approximately 10% versus adjusted diluted earnings per share of $5.22 in 2012 as detailed in the attached Schedule 20.
This forecast includes a one-year gross productivity and cost savings target for 2013 of approximately $300 million and a share repurchase target for 2013 of $6.0 billion.
This forecast excludes the impact of any potential future acquisitions, unanticipated asset impairment and exit cost charges, future changes in currency exchange rates and any unusual events.
The factors described in the Forward-Looking and Cautionary Statements section of this release represent continuing risks to these projections.


- -3 -


2013 THIRD-QUARTER CONSOLIDATED RESULTS

In this press release, “PMI” refers to Philip Morris International Inc. and its subsidiaries.  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. 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, OCI 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, discrete tax items and unusual 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.  PMI believes it is appropriate to disclose these measures as they improve comparability and help investors analyze business performance and trends. Non-GAAP measures used in this release should be considered neither in isolation nor as a substitute for the financial measures prepared in accordance with U.S. GAAP. 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.

NET REVENUES
PMI Net Revenues ($ Millions)
 
Third-Quarter
 
Nine Months Year-to-Date
 
 
 
 
 
Excl.
 
 
 
 
 
Excl.
 
2013
 
2012
Change
Curr.
 
2013
 
2012
Change
Curr.
European Union
$
2,281

 
$
2,125

7.3
 %
1.8
 %
 
$
6,457

 
$
6,463

(0.1
)%
(1.9
)%
Eastern Europe, Middle East & Africa
2,285

 
2,207

3.5
 %
3.9
 %
 
6,509

 
6,193

5.1
 %
5.9
 %
Asia
2,543

 
2,761

(7.9
)%
(0.8
)%
 
8,025

 
8,393

(4.4
)%
1.1
 %
Latin America & Canada
818

 
827

(1.1
)%
2.9
 %
 
2,437

 
2,439

(0.1
)%
3.2
 %
Total PMI
$
7,927

 
$
7,920

0.1
 %
1.6
 %
 
$
23,428

 
$
23,488

(0.3
)%
1.7
 %

Net revenues of $7.9 billion were up by 0.1%, including unfavorable currency of $120 million. Excluding currency, net revenues increased by 1.6%, driven by favorable pricing of $488 million across all Regions, partially offset by unfavorable volume/mix of $361 million.

OPERATING COMPANIES INCOME
PMI Operating Companies Income ($ Millions)
 
Third-Quarter
 
Nine Months Year-to-Date
 
 
 
 
 
Excl.
 
 
 
 
 
Excl.
 
2013

 
2012

Change
Curr.
 
2013

 
2012

Change
Curr.
European Union
$
1,207

 
$
1,085

11.2
 %
5.4
 %
 
$
3,227

 
$
3,232

(0.2
)%
(1.8
)%
Eastern Europe, Middle East & Africa
1,088

 
1,047

3.9
 %
7.0
 %
 
2,968

 
2,805

5.8
 %
8.1
 %
Asia
1,097

 
1,297

(15.4
)%
(1.7
)%
 
3,567

 
4,068

(12.3
)%
(2.7
)%
Latin America & Canada
267

 
267

—
 %
4.9
 %
 
776

 
753

3.1
 %
6.4
 %
Total PMI
$
3,659

 
$
3,696

(1.0
)%
3.3
 %
 
$
10,538

 
$
10,858

(2.9
)%
1.0
 %


- -4 -


Reported operating companies income of $3.7 billion was down by 1.0%, including unfavorable currency of $160 million. Excluding currency, operating companies income increased by 3.3%, reflecting favorable pricing, partly offset by unfavorable volume/mix of $289 million, primarily in the Philippines and Russia.
Adjusted operating companies income decreased by 1.9% as shown in the table below and detailed in Schedule 11. Adjusted operating companies income, excluding unfavorable currency, increased by 2.4%.

PMI Operating Companies Income ($ Millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
Third-Quarter
 
Nine Months Year-to-Date
 
 
2013
 
2012
Change
 
2013
 
2012
Change
 
Reported OCI
$
3,659

 
$
3,696

(1.0
)%
 
$
10,538

 
$
10,858

(2.9
)%
 
Asset impairment & exit costs
—

 
(34
)
 
 
(8
)
 
(50
)
 
 
Adjusted OCI
$
3,659

 
$
3,730

(1.9
)%
 
$
10,546

 
$
10,908

(3.3
)%
 
Adjusted OCI Margin*
46.2
%
 
47.1
%
(0.9
)
p.p.
45.0
%
 
46.4
%
(1.4)
p.p.
*Margins are calculated as adjusted OCI, divided by net revenues, excluding excise taxes.
 

Adjusted operating companies income margin, excluding unfavorable currency, increased by 0.4 points to 47.5%, as detailed in Schedule 11.

SHIPMENT VOLUME & MARKET SHARE
PMI Cigarette Shipment Volume (Million Units)
 
 
 
 
 
 
 
 
 
 
Third-Quarter
Nine Months Year-to-Date
 
2013
 
2012
Change
2013
 
2012
Change
European Union
48,969

 
51,629

(5.2
)%
140,659

 
151,222

(7.0
)%
Eastern Europe, Middle East & Africa
76,902

 
81,388

(5.5
)%
220,034

 
226,472

(2.8
)%
Asia
73,296

 
79,507

(7.8
)%
226,503

 
244,009

(7.2
)%
Latin America & Canada
23,957

 
24,007

(0.2
)%
69,774

 
72,214

(3.4
)%
Total PMI
223,124

 
236,531

(5.7
)%
656,970

 
693,917

(5.3
)%

2013 Third-Quarter
PMI's cigarette shipment volume of 223.1 billion units decreased by 5.7%, or 13.4 billion units, due principally to a total industry volume decline. The decrease in PMI's cigarette shipment volume mainly reflected: in the EU, the unfavorable impact of excise tax-driven price increases, the weak economic and employment environment, the share growth of the other tobacco products (OTP) category, and the prevalence of non-duty paid products; in EEMA, the impact of price increases in Russia in the first and third quarters of 2013, an increase in illicit trade and a weak economy; and, in Asia, the unfavorable impact of the disruptive January 2013 excise tax increase in the Philippines, and lower share and the reversal of trade inventory movements in Pakistan following the excise tax increase in the second quarter of 2013, partly offset by Indonesia. Excluding the Philippines, PMI's cigarette shipment volume decreased by 4.1%. On a nine months year-to-date basis, PMI's cigarette shipment volume decreased by 3.0%, excluding the Philippines.
Total cigarette shipments of Marlboro of 75.2 billion units decreased by 2.5%, due primarily to declines in: the EU, notably France and Spain, partly offset by Italy; EEMA, primarily Russia and Ukraine, partly offset by North Africa; Asia, predominantly the Philippines, partly offset by Japan reflecting the launch of Marlboro Clear Taste in September;

- -5 -


and Latin America & Canada, mainly Mexico. Excluding the Philippines, total cigarette shipments of Marlboro decreased by 0.3%.
Total cigarette shipments of L&M of 24.1 billion units decreased by 2.1%, driven notably by Algeria, Egypt and Turkey, partly offset by Germany and Thailand. Total cigarette shipments of Bond Street of 11.9 billion units decreased by 7.2%, due predominantly to Russia and Ukraine. Total cigarette shipments of Philip Morris of 8.8 billion units decreased by 6.6%, due primarily to Italy and the Philippines, partly offset by Argentina. Total cigarette shipments of Parliament of 11.8 billion units increased by 0.4%, driven mainly by Turkey, partly offset by Japan. Total cigarette shipments of Chesterfield of 9.2 billion units decreased by 1.9%, due primarily to Russia and Ukraine, partly offset by Germany and Turkey. Total cigarette shipments of Lark of 7.2 billion units decreased by 11.9%, due predominantly to Japan and Turkey.
Total shipment volume of OTP, in cigarette equivalent units, decreased by 1.7%, due mainly to a decline in Southern Africa, partly offset by growth in the EU, notably in Italy. Total shipment volume for cigarettes and OTP, in cigarette equivalent units, decreased by 5.5%.
PMI's market share increased in a number of key markets, including Algeria, Argentina, Austria, Belgium, Brazil, Canada, Egypt, France, Greece, Indonesia, Italy, Kazakhstan, Korea, the Netherlands, Poland, Portugal, Saudi Arabia, Spain, Thailand, Turkey, Ukraine and the United Kingdom.

EUROPEAN UNION REGION (EU)
2013 Third-Quarter
Net revenues of $2.3 billion increased by 7.3%.  Excluding favorable currency of $118 million, net revenues increased by 1.8%, reflecting favorable pricing of $125 million, notably in Germany, France and Spain, partly offset by unfavorable volume/mix of $87 million, largely reflecting a lower total market, notably in France, Italy, Poland and Spain.
Operating companies income of $1.2 billion increased by 11.2%, including favorable currency of $63 million. Excluding currency, operating companies income increased by 5.4%, mainly driven by favorable pricing, partly offset by unfavorable volume/mix of $68 million.
Adjusted operating companies income increased by 11.2%, as shown in the table below and detailed on Schedule 11.  Adjusted operating companies income, excluding favorable currency, increased by 5.4%.
EU Operating Companies Income ($ Millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
Third-Quarter
 
Nine Months Year-to-Date
 
 
2013
 
2012
Change
 
2013
 
2012
Change
 
Reported OCI
$
1,207

 
$
1,085

11.2
%
 
$
3,227

 
$
3,232

(0.2
)%
 
Asset impairment & exit costs
—

 
—

 
 
—

 
—

 
 
Adjusted OCI
$
1,207

 
$
1,085

11.2
%
 
$
3,227

 
$
3,232

(0.2
)%
 
Adjusted OCI Margin*
52.9
%
 
51.1
%
1.8

p.p.
50.0
%
 
50.0
%
—

p.p.
*Margins are calculated as adjusted OCI, divided by net revenues, excluding excise taxes.
 
Adjusted operating companies income margin, excluding favorable currency, increased by 1.8 points to 52.9%, as detailed in Schedule 11.


- -6 -


The total cigarette market in the EU of 130.5 billion units decreased by 5.4%, representing a more modest rate of decline compared to the 10.6% and 8.0% decrease in the first and second quarters of 2013, respectively. On a September year-to-date basis, the total cigarette market in the EU decreased by 7.9%. The decrease in the third quarter was due primarily to the impact of tax-driven price increases, the unfavorable economic and employment environment and the prevalence of non-duty paid products. The total OTP market in the EU of 42.3 billion cigarette equivalent units increased by 0.7%, reflecting a larger total fine cut market, up by 0.3% to 37.0 billion cigarette equivalent units.
Although PMI's cigarette shipment volume of 49.0 billion units decreased by 5.2%, due principally to a lower total market across the Region,  PMI's market share increased by 0.2 points to 38.3%. On a September year-to-date basis, PMI's market share increased by 0.6 points to 38.6%.  While shipment volume of Marlboro of 24.2 billion units in the quarter decreased by 3.0%, mainly due to a lower total market, market share increased by 0.1 point to 18.8%. On a September year-to-date basis, market share of Marlboro increased by 0.5 points to 19.0%. Shipment volume of L&M in the quarter increased by 1.3% to 9.0 billion units and market share increased by 0.4 points to 6.9%. Shipment volume of Chesterfield of 5.0 billion units increased by 5.7% and market share increased by 0.1 point to 4.0%, driven by gains, notably in Austria, the Czech Republic, Portugal and the UK, partly offset by Germany. Although shipment volume of Philip Morris of 2.5 billion units decreased by 13.1%, market share increased by 0.2 points to 1.9%, with gains notably in France and Italy. 
PMI's shipments of OTP of 5.3 billion cigarette equivalent units increased by 6.0%, driven by higher share. PMI's OTP total market share was 12.8%, up by 1.0 point, driven by gains in the fine cut category, notably in France, up by 1.9 points to 26.4%, Italy, up by 14.0 points to 40.3%, Poland, up by 3.1 points to 21.0%, Portugal, up by 13.4 points to 30.7%, and Spain, up by 2.3 points to 14.2%.

EU Key Market Commentaries
In France, the total cigarette market of 12.2 billion units decreased by 10.8%, mainly reflecting the unfavorable impact of price increases in the fourth quarter of 2012 and July 2013, an increase in the prevalence of non-duty paid products, growth of the fine cut category, and a weak economy. Although PMI's shipments of 4.8 billion units decreased by 6.8%, market share increased by 1.1 points to 40.0%, mainly driven by the resilience of premium Philip Morris, up by 0.7 points to 8.9%, reinforced by the Philip Morris Green variants which were introduced in February 2013, and the growth of Chesterfield, up by 0.1 point to 3.4%. Market share of Marlboro and L&M increased by 0.1 point each to 24.6% and 2.6%, respectively. The total industry fine cut category of 3.5 billion cigarette equivalent units increased by 0.7%. PMI's market share of the category increased by 1.9 points to 26.4%.
In Germany, the total cigarette market of 21.9 billion units increased by 0.8%, mainly reflecting the favorable impact of competitors' trade inventory movements. The underlying total market is estimated to have declined by 2.7%, largely due to the impact of price increases in the second quarter of 2013. PMI's shipments of 7.6 billion units decreased by 1.4%. Market share decreased by 0.7 points to 34.5%, mainly due to Marlboro and Chesterfield, down by 0.5 and 0.6 points to 20.5% and 1.7%, respectively, partly offset by L&M, up by 0.5 points to 10.7%. While PMI's market share was down in the quarter, it was up by 0.2 points to 36.0% on a September year-to-date basis, driven by Marlboro, up by 0.8 points to 22.0%. The total industry fine cut category of 10.9 billion cigarette equivalent units was flat. PMI's market share of the category was down by 0.3 points to 13.7%.
In Italy, the total cigarette market of 20.1 billion units decreased by 4.1%, reflecting an unfavorable economic and employment environment and the prevalence of illicit trade and substitute products.  Although PMI's shipments

- -7 -


of 10.2 billion units decreased by 5.4%, market share increased by 0.1 point to 53.3%, with Marlboro up by 0.3 points to 26.2%. Market share of Philip Morris increased by 1.3 points to 2.5%, benefiting from the 2012 launch of Philip Morris Selection in the low-price segment, partially offset by Chesterfield, down by 0.1 point to 3.5%, and Diana in the low-price segment, down by 1.1 points to 11.1%, impacted by the growth of the super-low price segment and the availability of non-duty paid products. The total industry fine cut category of 1.5 billion cigarette equivalent units decreased by 1.9%, reflecting the 2012 excise tax-driven reduction of the price gap differential with cigarettes. PMI's market share of the category increased by 14.0 points to 40.3%, driven by Marlboro Red and Gold fine cut.
In Poland, the total cigarette market of 12.7 billion units decreased by 8.3%, mainly reflecting the unfavorable impact of price increases in the first quarter of 2013, and the availability of non-duty paid OTP products. Although PMI's shipments of 4.7 billion units decreased by 7.4%, PMI's market share increased by 0.3 points to 37.4%, driven by Marlboro, up by 0.3 points to 11.9% and by L&M and Chesterfield, up by 2.3 and 0.3 points to 18.8% and 2.2%, respectively. While the total industry fine cut category of 0.8 billion cigarette equivalent units decreased by 6.5%, reflecting the prevalence of non-duty paid OTP products, PMI's market share of the category increased by 3.1 points to 21.0%.
In Spain, the total cigarette market of 13.2 billion units decreased by 11.3%, mainly due to the impact of price increases in 2012 and the first and third quarters of 2013, the unfavorable economic and employment environment and illicit trade. Although PMI's shipments of 3.8 billion units decreased by 13.5%, PMI's market share increased by 0.1 point to 31.1%, driven by higher share of Marlboro, up by 0.5 points to 15.3%. Market share of Chesterfield was flat at 8.9%, and share of Philip Morris and L&M was down by 0.1 point and 0.2 points to 0.8% and 6.0%, respectively. The total industry fine cut category of 2.7 billion cigarette equivalent units decreased by 5.5%, due to tax-driven price increases in the first and third quarters. PMI's market share of the category increased by 2.3 points to 14.2%.

EASTERN EUROPE, MIDDLE EAST & AFRICA REGION (EEMA)
2013 Third-Quarter
Net revenues of $2.3 billion increased by 3.5%. Excluding unfavorable currency of $9 million, net revenues increased by 3.9%, driven by favorable pricing of $201 million, principally in Kazakhstan, Russia, Turkey and Ukraine, partly offset by unfavorable volume/mix of $114 million, mainly due to lower volume in Russia.
Operating companies income of $1.1 billion increased by 3.9%. Excluding unfavorable currency of $32 million, operating companies income increased by 7.0%, due primarily to higher pricing, partly offset by unfavorable volume/mix of $91 million.
Adjusted operating companies income increased by 3.9%, as shown in the table below and detailed on Schedule 11. Adjusted operating companies income, excluding unfavorable currency, increased by 7.0%.
EEMA Operating Companies Income ($ Millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
Third-Quarter
 
Nine Months Year-to-Date
 
 
2013
 
2012
Change
 
2013
 
2012
Change
 
Reported OCI
$
1,088

 
$
1,047

3.9
%
 
$
2,968

 
$
2,805

5.8
%
 
Asset impairment & exit costs
—

 
—

 
 
—

 
—

 
 
Adjusted OCI
$
1,088

 
$
1,047

3.9
%
 
$
2,968

 
$
2,805

5.8
%
 
Adjusted OCI Margin*
47.6
%
 
47.4
%
0.2

p.p.
45.6
%
 
45.3
%
0.3

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


- -8 -


Adjusted operating companies income margin, excluding unfavorable currency, increased by 1.4 points to 48.8%, as detailed on Schedule 11.

PMI's cigarette shipment volume of 76.9 billion units decreased by 5.5%, mainly due to the Middle East, Russia and Serbia, partly offset by North Africa.
PMI's cigarette shipment volume of premium brands decreased by 1.1%, due principally to Marlboro, down by 2.4% to 22.2 billion units, partly offset by Parliament, up by 4.3% to 8.9 billion units.

EEMA Key Market Commentaries
In Russia, PMI's shipment volume of 23.0 billion units decreased by 10.1%, mainly due to the unfavorable impact of tax-driven price increases, illicit trade and a weak economy. Shipment volume of PMI's premium portfolio decreased by 8.1%, mainly due to Marlboro and Parliament, down by 16.7% and 4.1%, respectively. In the mid-price segment, shipment volume decreased by 15.3%, mainly due to Chesterfield, down by 20.7%. In the low-price segment, shipment volume decreased by 8.4%, mainly due to Bond Street, Optima and Apollo Soyuz, down by 7.7%, 14.6% and 22.5%, respectively. While PMI's August quarter-to-date market share of 26.1%, as measured by Nielsen, was down by 0.4 points, it was stable compared to the first two quarters of 2013. Market share of Parliament increased by 0.3 points to 3.4%, Marlboro decreased by 0.2 points to 1.7%, L&M increased by 0.4 points to 3.0%, Chesterfield decreased by 0.4 points to 3.0%, Bond Street decreased by 0.2 points to 6.3%, and Next increased by 0.4 points to 3.3%.
In Turkey, the total cigarette market of 24.8 billion units decreased by an estimated 5%, primarily reflecting the renewed growth of illicit trade. PMI's shipment volume of 12.6 billion units decreased by 2.4%. PMI's August quarter-to-date market share, as measured by Nielsen, increased by 0.1 point to 46.1%, mainly driven by premium Parliament and mid-price Muratti, up by 1.1 and 0.3 points to 10.2% and 6.9%, respectively, partly offset by Marlboro, down by 0.2 points to 9.1%, and low-price L&M, down by 1.1 points to 7.4%.
In Ukraine, the total cigarette market of 20.1 billion units decreased by an estimated 14%, mainly reflecting the impact of tax-driven price increases in the first quarter of 2013 and an increase in illicit trade. Although PMI's shipment volume of 6.9 billion units decreased by 5.9%, PMI's August quarter-to-date market share, as measured by Nielsen, increased by 0.6 points to 33.1%, mainly due to growth from PMI's low-price segment brands of Bond Street, Optima and President. Share for premium Parliament increased by 0.2 points to 3.4%. Share of Marlboro decreased by 0.2 points to 5.5%.

ASIA REGION
2013 Third-Quarter
Net revenues of $2.5 billion decreased by 7.9%, including unfavorable currency of $196 million. Excluding currency, net revenues decreased by 0.8%, due to unfavorable volume/mix of $144 million, primarily in the Philippines, partially offset by favorable pricing of $122 million, principally in Australia and Indonesia.
Operating companies income of $1.1 billion decreased by 15.4%, including unfavorable currency of $178 million. Excluding currency, operating companies income decreased by 1.7%, due primarily to unfavorable volume/mix of $106 million, and higher manufacturing costs, principally in Indonesia driven mainly by higher clove prices, partly offset by favorable pricing.

- -9 -


Adjusted operating companies income decreased by 17.0% as shown in the table below and detailed on Schedule 11. Adjusted operating companies income, excluding unfavorable currency, decreased by 3.5%.

Asia Operating Companies Income ($ Millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
Third-Quarter
 
Nine Months Year-to-Date
 
 
2013
 
2012
Change
 
2013
 
2012
Change
 
Reported OCI
$
1,097

 
$
1,297

(15.4
)%
 
$
3,567

 
$
4,068

(12.3
)%
 
Asset impairment & exit costs
—

 
(24
)
 
 
(8
)
 
(24
)
 
 
Adjusted OCI
$
1,097

 
$
1,321

(17.0
)%
 
$
3,575

 
$
4,092

(12.6
)%
 
Adjusted OCI Margin*
43.1
%
 
47.8
%
(4.7
)
p.p.
44.5
%
 
48.8
%
(4.3
)
p.p.
*Margins are calculated as adjusted OCI, divided by net revenues, excluding excise taxes.
 

Adjusted operating companies income margin, excluding unfavorable currency, decreased by 1.3 points to 46.5%, as detailed on Schedule 11, primarily reflecting the impact of unfavorable volume/mix, mainly in the Philippines, and higher costs.

PMI's cigarette shipment volume of 73.3 billion units decreased by 7.8%, due primarily to the lower total market in the Philippines, and lower share and the reversal of trade inventory movements in Pakistan following the excise tax increase in the second quarter of 2013, partly offset by share growth in Indonesia. Excluding the Philippines, PMI's cigarette shipment volume decreased by 2.8%.
Shipment volume of Marlboro of 19.5 billion units decreased by 1.6%. Excluding the Philippines, shipment volume of Marlboro increased by 9.6%, primarily reflecting the launch of Marlboro Clear Taste in Japan as well as market share growth in Indonesia and Vietnam.

Asia Key Market Commentaries
In Indonesia, the total cigarette market of 74.1 billion units increased by 0.3%. PMI's shipment volume in the quarter of 27.1 billion units increased by 1.6%. PMI's market share increased by 0.4 points to 36.6%, driven notably by machine-made, Low Tar Low Nicotine (LTLN) Sampoerna A in the premium segment, up by 0.6 points to 14.8%, and machine-made, LTLN mid-price U Mild, up by 0.9 points to 4.3%. Market share of the hand-rolled, full-flavor Dji Sam Soe in the premium segment decreased by 1.4 points to 6.7%, mainly due to a retail price change ahead of competition. Marlboro's market share increased by 0.5 points to 5.4% and its share of the “white” cigarettes segment, representing 7.0% of the total cigarette market, increased by 5.7 points to 77.8%.
In Japan, the total cigarette market of 50.0 billion units decreased by 1.2%. PMI's shipment volume of 13.5 billion units decreased by 2.0%, principally due to a lower total market and share. PMI's market share decreased by 1.0 point to 26.5%, reflecting the impact of PMI's principal competitor's brand launches and significant promotional activities since the start of 2013. Although Marlboro's market share decreased by 0.3 points to 12.2% in the quarter, it was essentially stable compared to the first and second quarters, reflecting the brand's overall resilience which was supported by the launch of Marlboro Clear Taste in September. Share of Lark and Philip Morris in the quarter decreased by 0.3 and 0.2 points to 7.9% and 2.1%, respectively. Share of Virginia S. was flat at 2.0%.
In Korea, the total cigarette market of 23.6 billion units decreased by 2.7%. Although PMI's shipment volume of 4.6 billion units decreased slightly by 0.6%, market share increased by 0.4 points to 19.4%, reflecting the second

- -10 -


sequential quarter of share growth. Market share of Marlboro and Parliament in the quarter increased by 0.2 and 0.5 points to 7.7% and 6.9%, respectively. Market share of Virginia S. decreased by 0.1 point to 4.3%.
In the Philippines, the total industry cigarette volume of 23.0 billion units was estimated to have decreased by 6.7%, reflecting a partial, but insufficient, improvement in declared tax-paid volume by PMI's main local competitor as well as government tax enforcement. PMI's shipment volume of 17.8 billion units decreased by 20.7%, primarily reflecting the unfavorable impact of the disruptive excise tax increase in January 2013 and the prevalence of non-duty paid domestic product. PMI's market share in the quarter decreased by 13.6 points to 77.2%, primarily due to down-trading to competitors' brands. Marlboro's market share decreased by 5.9 points to 15.3%. Share of low-price Fortune decreased by 22.6 points to 27.5%, partly offset by gains from PMI's other local low-price brands.

LATIN AMERICA & CANADA REGION
2013 Third-Quarter
Net revenues of $818 million decreased by 1.1%, including unfavorable currency of $33 million. Excluding currency, net revenues increased by 2.9%, driven by favorable pricing of $40 million, principally in Argentina, Canada and Mexico, partially offset by unfavorable volume/mix of $16 million.
Operating companies income of $267 million was flat, including unfavorable currency of $13 million. Excluding currency, operating companies income increased by 4.9%, primarily driven by favorable pricing, partially offset by unfavorable volume/mix of $24 million.
Adjusted operating companies income decreased by 3.6% as shown in the table below and detailed on Schedule 11. Adjusted operating companies income, excluding unfavorable currency, increased by 1.1%.

Latin America & Canada Operating Companies Income ($ Millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
Third-Quarter
 
Nine Months Year-to-Date
 
 
2013
 
2012
Change
 
2013
 
2012
Change
 
Reported OCI
$
267

 
$
267

—
 %
 
$
776

 
$
753

3.1
 %
 
Asset impairment & exit costs
—

 
(10
)
 
 
—

 
(26
)
 
 
Adjusted OCI
$
267

 
$
277

(3.6
)%
 
$
776

 
$
779

(0.4
)%
 
Adjusted OCI Margin*
32.6
%
 
33.5
%
(0.9
)
p.p.
31.8
%
 
31.9
%
(0.1
)
p.p.
*Margins are calculated as adjusted OCI, divided by net revenues, excluding excise taxes.
 

Adjusted operating companies income margin, excluding unfavorable currency, decreased by 0.6 points to 32.9%, as detailed on Schedule 11.

PMI's cigarette shipment volume of 24.0 billion units decreased by 0.2%, principally due to a lower total market and share in Mexico. Shipment volume of Marlboro of 9.2 billion units decreased by 3.0%, mainly reflecting a lower total market and share in Mexico, partly offset by higher share in Brazil and Colombia.

Latin America & Canada Key Market Commentaries
In Argentina, the total cigarette market of 10.3 billion units increased by 1.1%. PMI's cigarette shipment volume of 7.9 billion units increased by 2.1%. PMI's market share increased by 1.0 point to 76.0%, driven by mid-price Philip Morris, up by 2.4 points to 42.2%, reflecting the positive impact of its capsule variants, partly offset by low-price Next,

- -11 -


down by 0.7 points to 2.4%. Share of Marlboro decreased by 0.3 points to 23.7%.
In Canada, the total cigarette market of 7.7 billion units decreased by 2.4%. PMI's cigarette shipment volume of 2.9 billion units increased by 0.1% and market share increased by 1.5 points to 38.4%, with premium brands Benson & Hedges and Belmont up by 0.2 points each to 2.5% and 2.8%, respectively. Market share of low-price brand Next was up by 2.1 points to 10.5%, partly offset by mid-price Number 7 and low-price Accord, down by 0.3 points each to 4.2% and 2.9%, respectively. Market share of mid-price Canadian Classics was up by 0.5 points to 10.6%.
In Mexico, the total cigarette market of 8.4 billion units decreased by 0.9%. PMI's cigarette shipment volume of 6.0 billion units decreased by 2.5%. PMI's market share decreased by 1.2 points to 72.4%, due mainly to: unfavorable segment mix following the impact of price increases in January 2013; and a competitor's launch of brands in a 15s per pack format, at price parity with 14s, in the low price segment. While market share of Marlboro and Benson & Hedges decreased by 3.1 and 0.6 share points to 50.5% and 5.5%, respectively, PMI's share of the premium price segment increased by 1.1 points to 90.9%. Market share of low-price Delicados, the second best-selling brand in the market, increased by 1.2 points to 11.7%, and PMI's other local low-price brands increased by a combined 1.3 points to 4.5%.

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 more than 180 markets. In 2012, the company held an estimated 16.3% share of the total international cigarette market outside of the U.S., or 28.8% 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 reducing or 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

- -12 -


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 June 30, 2013. 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.

###


- -13 -


 
 
 
 
Schedule 1

 
PHILIP MORRIS INTERNATIONAL INC.
 
and Subsidiaries
 
Condensed Statements of Earnings
 
For the Quarters Ended September 30,
 
($ in millions, except per share data)
 
(Unaudited)
 
 
 
 
 
 
 
2013
2012
% Change
 
Net revenues
$
20,629

$
19,592

5.3
 %
 
Cost of sales
2,618

2,584

1.3
 %
 
Excise taxes on products (1)
12,702

11,672

8.8
 %
 
Gross profit
5,309

5,336

(0.5
)%
 
Marketing, administration and research costs
1,650

1,606

 
 
Asset impairment and exit costs
—

34

 
 
Operating companies income
3,659

3,696

(1.0
)%
 
Amortization of intangibles
23

24

 
 
General corporate expenses
43

49

 
 
Operating income
3,593

3,623

(0.8
)%
 
Interest expense, net
239

211

 
 
Earnings before income taxes
3,354

3,412

(1.7
)%
 
Provision for income taxes
952

1,088

(12.5
)%
 
Net earnings
2,402

2,324

3.4
 %
 
Net earnings attributable to noncontrolling interests
62

97

 
 
Net earnings attributable to PMI
$
2,340

$
2,227

5.1
 %
 
 
 
 
 
 
Per share data:(2)
 
 
 
 
  Basic earnings per share
$
1.44

$
1.32

9.1
 %
 
  Diluted earnings per share
$
1.44

$
1.32

9.1
 %
 
 
 
 
 
 
 
 
 
 
 
(1) The segment detail of excise taxes on products sold for the quarters ended September 30, 2013 and 2012 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 September 30, 2013 and 2012 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 September 30,
($ in millions)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Revenues excluding Excise Taxes
 
 
 
 
European Union
EEMA
Asia
Latin America & Canada
 
Total
 
 
 
 
 
 
 
 
 
 
 
2013
Net Revenues (1)
 
$
7,487

$
5,546

$
5,144

$
2,452

 
$
20,629

 
 
Excise Taxes on Products
 
(5,206
)
(3,261
)
(2,601
)
(1,634
)
 
(12,702
)
 
 
Net Revenues excluding Excise Taxes
 
2,281

2,285

2,543

818

 
7,927

 
 
 
 
 
 
 
 
 
 
 
2012
Net Revenues
 
$
6,904

$
5,125

$
5,174

$
2,389

 
$
19,592

 
 
Excise Taxes on Products
 
(4,779
)
(2,918
)
(2,413
)
(1,562
)
 
(11,672
)
 
 
Net Revenues excluding Excise Taxes
 
2,125

2,207

2,761

827

 
7,920

 
 
 
 
 
 
 
 
 
 
 
Variance
Currency
 
118

(9
)
(196
)
(33
)
 
(120
)
 
 
Acquisitions
 
—

—

—

—

 
—

 
 
Operations
 
38

87

(22
)
24

 
127

 
 
Variance Total
 
156

78

(218
)
(9
)
 
7

 
 
Variance Total (%)
 
7.3
%
3.5
%
(7.9
)%
(1.1
)%
 
0.1
%
 
 
 
 
 
 
 
 
 
 
 
 
Variance excluding Currency
 
38

87

(22
)
24

 
127

 
 
Variance excluding Currency (%)
 
1.8
%
3.9
%
(0.8
)%
2.9
 %
 
1.6
%
 
 
 
 
 
 
 
 
 
 
 
 
Variance excluding Currency & Acquisitions
 
38

87

(22
)
24

 
127

 
 
Variance excluding Currency & Acquisitions (%)
1.8
%
3.9
%
(0.8
)%
2.9
 %
 
1.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) 2013 Currency increased (decreased) net revenues as follows:
 
 
 
 
 
 
 
European Union
 
$
387

 
 
 
 
 
 
 
EEMA
 
(62
)
 
 
 
 
 
 
 
Asia
 
(310
)
 
 
 
 
 
 
 
Latin America & Canada
 
(124
)
 
 
 
 
 
 
 
 
 
$
(109
)
 
 
 
 
 





 
 
 
 
 
 
 
 
Schedule 3
 
PHILIP MORRIS INTERNATIONAL INC.
 
and Subsidiaries
 
Selected Financial Data by Business Segment
 
For the Quarters Ended September 30,
 
($ in millions)
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
Operating Companies Income
 
 
 
European Union
EEMA
Asia
Latin America & Canada
Total
 
 
2013
 
$
1,207

$
1,088

$
1,097

$
267

$
3,659

 
 
2012
 
1,085

1,047

1,297

267

3,696

 
 
% Change
 
11.2
%
3.9
%
(15.4
)%
—
%
(1.0
)%
 
 
 
 
 
 
 
 
 
 
 
Reconciliation:
 
 
 
 
 
 
 
 
For the quarter ended September 30, 2012
 
$
1,085

$
1,047

$
1,297

$
267

$
3,696

 
 
 
 
 
 
 
 
 
 
 
2012 Asset impairment and exit costs
 
—

—

24

10

34

 
 
2013 Asset impairment and exit costs
 
—

—

—

—

—

 
 
 
 
 
 
 
 
 
 
 
Acquired businesses
 
—

—

—

—

—

 
 
Currency
 
63

(32
)
(178
)
(13
)
(160
)
 
 
Operations
 
59

73

(46
)
3

89

 
 
For the quarter ended September 30, 2013
 
$
1,207

$
1,088

$
1,097

$
267

$
3,659

 
 
 
 
 
 
 
 
 
 





 
 
 
 
Schedule 4

 
 
PHILIP MORRIS INTERNATIONAL INC.
 
and Subsidiaries
 
Diluted Earnings Per Share
 
For the Quarters Ended September 30,
 
($ in millions, except per share data)
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
Diluted
 
 
 
 
 
E.P.S.
 
 
 
 
 
 
 
 
2013 Diluted Earnings Per Share
 
 
$
1.44

(1) 
 
2012 Diluted Earnings Per Share
 
 
$
1.32

(1) 
 
Change
 
 
$
0.12

 
 
% Change
 
 
9.1
%
 
 
 
 
 
 
 
 
Reconciliation:
 
 
 
 
 
2012 Diluted Earnings Per Share
 
 
$
1.32

(1) 
 
 
 
 
 
 
 
Special Items:
 
 
 
 
 
2012 Asset impairment and exit costs
 
 
0.01

 
 
2012 Tax items
 
 
0.05

 
 
2013 Asset impairment and exit costs
 
 
—

 
 
2013 Tax items
 
 
—

 
 
 
 
 
 
 
 
Currency
 
 
(0.09
)
 
 
Interest
 
 
(0.01
)
 
 
Change in tax rate
 
 
0.03

 
 
Impact of lower shares outstanding and share-based payments
 
 
0.05

 
 
Operations
 
 
0.08

 
 
2013 Diluted Earnings Per Share
 
 
$
1.44

(1) 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Basic and diluted EPS were calculated using the following (in millions):
 
 
 
 
 
 
 
 
 
Q3
2013
 
Q3
2012
 
 
 
 
 
 
 
 
Net earnings attributable to PMI
$
2,340

 
$
2,227

 
 
Less distributed and undistributed earnings attributable
 
 
 
 
 
to share-based payment awards
12

 
12

 
 
Net earnings for basic and diluted EPS
$
2,328

 
$
2,215

 
 
 
 
 
 
 
 
Weighted-average shares for basic and diluted EPS
1,614

 
1,683

 
 
 
 
 
 
 





 
 
 
 
Schedule 5

 
PHILIP MORRIS INTERNATIONAL INC.
 
and Subsidiaries
 
Condensed Statements of Earnings
 
For the Nine Months Ended September 30,
 
($ in millions, except per share data)
 
(Unaudited)
 
 
 
 
 
 
 
2013
2012
% Change

 
Net revenues
$
59,639

$
57,651

3.4
 %
 
Cost of sales
7,808

7,692

1.5
 %
 
Excise taxes on products (1)
36,211

34,163

6.0
 %
 
Gross profit
15,620

15,796

(1.1
)%
 
Marketing, administration and research costs
5,074

4,888

 
 
Asset impairment and exit costs
8

50

 
 
Operating companies income
10,538

10,858

(2.9
)%
 
Amortization of intangibles
71

73

 
 
General corporate expenses
155

155

 
 
Operating income
10,312

10,630

(3.0
)%
 
Interest expense, net
721

633

 
 
Earnings before income taxes
9,591

9,997

(4.1
)%
 
Provision for income taxes
2,777

3,034

(8.5
)%
 
Net earnings
6,814

6,963

(2.1
)%
 
Net earnings attributable to noncontrolling interests
225

258

 
 
Net earnings attributable to PMI
$
6,589

$
6,705

(1.7
)%
 
 
 
 
 
 
Per share data:(2)
 
 
 
 
  Basic earnings per share
$
4.02

$
3.92

2.6
 %
 
  Diluted earnings per share
$
4.02

$
3.92

2.6
 %
 
 
 
 
 
 
 
 
 
 
 
(1) The segment detail of excise taxes on products sold for the nine months ended September 30, 2013 and 2012 is shown on Schedule 6.
 
 
 
 
 
 
(2) Net earnings and weighted-average shares used in the basic and diluted earnings per share computations for the nine months ended September 30, 2013 and 2012 are shown on Schedule 8, Footnote 1.





 
 
 
 
 
 
 
 
 
Schedule 6

PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Selected Financial Data by Business Segment
For the Nine Months Ended September 30,
($ in millions)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Revenues excluding Excise Taxes
 
 
 
 
European Union
EEMA
Asia
Latin America & Canada
 
Total
 
 
 
 
 
 
 
 
 
 
 
2013
Net Revenues (1)
 
$
21,255

$
15,346

$
15,776

$
7,262

 
$
59,639

 
 
Excise Taxes on Products
 
(14,798
)
(8,837
)
(7,751
)
(4,825
)
 
(36,211
)
 
 
Net Revenues excluding Excise Taxes
 
6,457

6,509

8,025

2,437

 
23,428

 
 
 
 
 
 
 
 
 
 
 
2012
Net Revenues
 
$
20,654

$
14,256

$
15,668

$
7,073

 
$
57,651

 
 
Excise Taxes on Products
 
(14,191
)
(8,063
)
(7,275
)
(4,634
)
 
(34,163
)
 
 
Net Revenues excluding Excise Taxes
 
6,463

6,193

8,393

2,439

 
23,488

 
 
 
 
 
 
 
 
 
 
 
Variance
Currency
 
120

(48
)
(458
)
(80
)
 
(466
)
 
 
Acquisitions
 
—

—

—

—

 
—

 
 
Operations
 
(126
)
364

90

78

 
406

 
 
Variance Total
 
(6
)
316

(368
)
(2
)
 
(60
)
 
 
Variance Total (%)
 
(0.1
)%
5.1
%
(4.4
)%
(0.1
)%
 
(0.3
)%
 
 
 
 
 
 
 
 
 
 
 
 
Variance excluding Currency
 
(126
)
364

90

78

 
406

 
 
Variance excluding Currency (%)
 
(1.9
)%
5.9
%
1.1
 %
3.2
 %
 
1.7
 %
 
 
 
 
 
 
 
 
 
 
 
 
Variance excluding Currency & Acquisitions
 
(126
)
364

90

78

 
406

 
 
Variance excluding Currency & Acquisitions (%)
(1.9
)%
5.9
%
1.1
 %
3.2
 %
 
1.7
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) 2013 Currency increased (decreased) net revenues as follows:
 
 
 
 
 
 
European Union
 
$
403

 
 
 
 
 
 
 
EEMA
 
(118
)
 
 
 
 
 
 
 
Asia
 
(666
)
 
 
 
 
 
 
 
Latin America & Canada
 
(313
)
 
 
 
 
 
 
 
 
 
$
(694
)
 
 
 
 
 




 
 
 
 
 
 
Schedule 7
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Selected Financial Data by Business Segment
For the Nine Months Ended September 30,
($ in millions)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Companies Income
 
 
European Union
EEMA
Asia
Latin America & Canada
Total
2013
 
$
3,227

$
2,968

$
3,567

$
776

$
10,538

2012
 
3,232

2,805

4,068

753

10,858

% Change
 
(0.2
)%
5.8
%
(12.3
)%
3.1
%
(2.9
)%
 
 
 
 
 
 
 
Reconciliation:
 
 
 
 
 
 
For the nine months ended September 30, 2012
 
$
3,232

$
2,805

$
4,068

$
753

$
10,858

 
 
 
 
 
 
 
2012 Asset impairment and exit costs
 
—

—

24

26

50

2013 Asset impairment and exit costs
 
—

—

(8
)
—

(8
)
 
 
 
 
 
 
 
Acquired businesses
 
—

—

—

—

—

Currency
 
53

(63
)
(393
)
(25
)
(428
)
Operations
 
(58
)
226

(124
)
22

66

For the nine months ended September 30, 2013
 
$
3,227

$
2,968

$
3,567

$
776

$
10,538

 
 
 
 
 
 
 





 
 
 
Schedule 8
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Diluted Earnings Per Share
For the Nine Months Ended September 30,
($ in millions, except per share data)
(Unaudited)
 
 
 
 
 
 
 
 
Diluted
 
 
 
 
E.P.S.
 
 
 
 
 
 
2013 Diluted Earnings Per Share
 
 
$
4.02

(1) 
2012 Diluted Earnings Per Share
 
 
$
3.92

(1) 
Change
 
 
$
0.10

 
% Change
 
 
2.6
%

 
 
 
 
 
Reconciliation:
 
 
 
 
2012 Diluted Earnings Per Share
 
 
$
3.92

(1) 
 
 
 
 
 
Special Items:
 
 
 
 
2012 Asset impairment and exit costs
 
 
0.02

 
2012 Tax items
 
 
0.05

 
2013 Asset impairment and exit costs
 
 
—

 
2013 Tax items
 
 
(0.01
)
 
 
 
 
 
 
Currency
 
 
(0.23
)
 
Interest
 
 
(0.04
)
 
Change in tax rate
 
 
0.04

 
Impact of lower shares outstanding and share-based payments
 
 
0.16

 
Operations
 
 
0.11

 
2013 Diluted Earnings Per Share
 
 
$
4.02

(1) 
 
 
 
 
 
 
 
 
 
 
(1) Basic and diluted EPS were calculated using the following (in millions):
 
 
 
 
 
 
 
YTD September
2013
 
YTD September
2012
 
 
 
 
 
 
Net earnings attributable to PMI
$
6,589

 
$
6,705

 
Less distributed and undistributed earnings attributable
 
 
 
 
to share-based payment awards
35

 
36

 
Net earnings for basic and diluted EPS
$
6,554

 
$
6,669

 
 
 
 
 
 
Weighted-average shares for basic and diluted EPS
1,630

 
1,701

 





 
 
 
 
 
 
 
 
Schedule 9
 
PHILIP MORRIS INTERNATIONAL INC.
 
 
and Subsidiaries
 
 
Condensed Balance Sheets
 
 
($ in millions, except ratios)
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
September 30,
 
December 31,
 
 
 
2013
 
2012
 
 
Assets
 
 
 
 
 
Cash and cash equivalents
$
3,382

 
$
2,983

 
 
All other current assets
12,634

 
13,607

 
 
Property, plant and equipment, net
6,583

 
6,645

 
 
Goodwill
9,177

 
9,900

 
 
Other intangible assets, net
3,290

 
3,619

 
 
Investments in unconsolidated subsidiaries
665

 
24

 
 
Other assets
1,064

 
892

 
 
      Total assets
$
36,795

 
$
37,670

 
 
 
 
 
 
 
 
Liabilities and Stockholders' (Deficit) Equity
 
 
 
 
 
Short-term borrowings
$
3,668

 
$
2,419

 
 
Current portion of long-term debt
1,255

 
2,781

 
 
All other current liabilities
11,095

 
11,816

 
 
Long-term debt
21,877

 
17,639

 
 
Deferred income taxes
1,807

 
1,875

 
 
Other long-term liabilities
3,001

 
2,993

 
 
      Total liabilities
42,703

 
39,523

 
 
 
 
 
 
 
 
Redeemable noncontrolling interest
1,283

 
1,301

 
 
 
 
 
 
 
 
Total PMI stockholders' deficit
(7,429
)
 
(3,476
)
 
 
Noncontrolling interests
238

 
322

 
 
      Total stockholders' deficit
(7,191
)
 
(3,154
)
 
 
      Total liabilities and stockholders' (deficit) equity
$
36,795

 
$
37,670

 
 
 
 
 
 
 
 
Total debt
$
26,800

 
$
22,839

 
 
Total debt to EBITDA
1.86

(1) 
1.55

(1) 
 
Net debt to EBITDA
1.62

(1) 
1.35

(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 September 30,
($ in millions)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2013
 
 
 
2012
 
% 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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
7,487

 
$
5,206

 
$
2,281

 
$
118

 
$
2,163

 
$
—

 
$
2,163

 
European Union
 
$
6,904

 
$
4,779

 
$
2,125

 
7.3
 %
1.8
 %
1.8
 %
5,546

 
3,261

 
2,285

 
(9
)
 
2,294

 
—

 
2,294

 
EEMA
 
5,125

 
2,918

 
2,207

 
3.5
 %
3.9
 %
3.9
 %
5,144

 
2,601

 
2,543

 
(196
)
 
2,739

 
—

 
2,739

 
Asia
 
5,174

 
2,413

 
2,761

 
(7.9
)%
(0.8
)%
(0.8
)%
2,452

 
1,634

 
818

 
(33
)
 
851

 
—

 
851

 
Latin America & Canada
 
2,389

 
1,562

 
827

 
(1.1
)%
2.9
 %
2.9
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
20,629

 
$
12,702

 
$
7,927

 
$
(120
)
 
$
8,047

 
$
—

 
$
8,047

 
PMI Total
 
$
19,592

 
$
11,672

 
$
7,920

 
0.1
 %
1.6
 %
1.6
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2013
 
 
 
2012
 
% 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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
1,207

 
 
 
 
 
$
63

 
$
1,144

 
$
—

 
$
1,144

 
European Union
 
 
 
 
 
$
1,085

 
11.2
 %
5.4
 %
5.4
 %
1,088

 
 
 
 
 
(32
)
 
1,120

 
—

 
1,120

 
EEMA
 
 
 
 
 
1,047

 
3.9
 %
7.0
 %
7.0
 %
1,097

 
 
 
 
 
(178
)
 
1,275

 
—

 
1,275

 
Asia
 
 
 
 
 
1,297

 
(15.4
)%
(1.7
)%
(1.7
)%
267

 
 
 
 
 
(13
)
 
280

 
—

 
280

 
Latin America & Canada
 
 
 
 
 
267

 
—
 %
4.9
 %
4.9
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
3,659

 
 
 
 
 
$
(160
)
 
$
3,819

 
$
—

 
$
3,819

 
PMI Total
 
 
 
 
 
$
3,696

 
(1.0
)%
3.3
 %
3.3
 %




 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 September 30,
($ in millions)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2013
 
 
 
2012
 
% 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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
1,207

 
$
—

 
$
1,207

 
$
63

 
$
1,144

 
$
—

 
$
1,144

 
European Union
 
$
1,085

 
$
—

 
$
1,085

 
11.2
 %
5.4
 %
5.4
 %
1,088

 
—

 
1,088

 
(32
)
 
1,120

 
—

 
1,120

 
EEMA
 
1,047

 
—

 
1,047

 
3.9
 %
7.0
 %
7.0
 %
1,097

 
—

 
1,097

 
(178
)
 
1,275

 
—

 
1,275

 
Asia
 
1,297

 
(24
)
 
1,321

 
(17.0
)%
(3.5
)%
(3.5
)%
267

 
—

 
267

 
(13
)
 
280

 
—

 
280

 
Latin America & Canada
 
267

 
(10
)
 
277

 
(3.6
)%
1.1
 %
1.1
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
3,659

 
$
—

 
$
3,659

 
$
(160
)
 
$
3,819

 
$
—

 
$
3,819

 
PMI Total
 
$
3,696

 
$
(34
)
 
$
3,730

 
(1.9
)%
2.4
 %
2.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2013
 
 
 
2012
 
 
% 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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
1,144

 
$
2,163

 
52.9
%
 
 
 
$
1,144

 
$
2,163

 
52.9
%
 
European Union
 
$
1,085

 
$
2,125

 
51.1
%
 
 
1.8

1.8

1,120

 
2,294

 
48.8
%
 
 
 
1,120

 
2,294

 
48.8
%
 
EEMA
 
1,047

 
2,207

 
47.4
%
 
 
1.4

1.4

1,275

 
2,739

 
46.5
%
 
 
 
1,275

 
2,739

 
46.5
%
 
Asia
 
1,321

 
2,761

 
47.8
%
 
 
(1.3
)
(1.3
)
280

 
851

 
32.9
%
 
 
 
280

 
851

 
32.9
%
 
Latin America & Canada
 
277

 
827

 
33.5
%
 
 
(0.6
)
(0.6
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
3,819

 
$
8,047

 
47.5
%
 
 
 
$
3,819

 
$
8,047

 
47.5
%
 
PMI Total
 
$
3,730

 
$
7,920

 
47.1
%
 
 
0.4

0.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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 September 30,
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2013
 
2012
 
% Change
 
 
 
 
 
 
 
 
 
 
 
Reported Diluted EPS
 
$
1.44

 
$
1.32

 
9.1
%
 
 
 
 
 
 
 
 
 
 
 
Adjustments:
 
 
 
 
 
 
 
 
Asset impairment and exit costs
—

 
0.01

 
 
 
 
Tax items
 
—

 
0.05

 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Diluted EPS
 
$
1.44

 
$
1.38

 
4.3
%
 
 
 
 
 
 
 
 
 
 
 
Less:
 
 
 
 
 
 
 
 
Currency impact
 
(0.09
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Diluted EPS, excluding Currency
$
1.53

 
$
1.38

 
10.9
%
 
 





 
 
 
 
 
 
 
 
 
 
 
 
 
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 September 30,
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2013
 
2012
 
% Change
 
 
 
 
 
 
 
 
 
Reported Diluted EPS
 
$
1.44

 
$
1.32

 
9.1
%
 
 
 
 
 
 
 
 
 
Less:
 
 
 
 
 
 
 
Currency impact
 
(0.09
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Reported Diluted EPS, excluding Currency
$
1.53

 
$
1.32

 
15.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 





 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Schedule 14

PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP Measures
Adjustments for the Impact of Currency and Acquisitions
For the Nine Months Ended September 30,
($ in millions)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2013
 
 
 
2012
 
% 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
$
21,255

 
$
14,798

 
$
6,457

 
$
120

 
$
6,337

 
$
—

 
$
6,337

 
European Union
 
$
20,654

 
$
14,191

 
$
6,463

 
(0.1
)%
(1.9
)%
(1.9
)%
15,346

 
8,837

 
6,509

 
(48
)
 
6,557

 
—

 
6,557

 
EEMA
 
14,256

 
8,063

 
6,193

 
5.1
 %
5.9
 %
5.9
 %
15,776

 
7,751

 
8,025

 
(458
)
 
8,483

 
—

 
8,483

 
Asia
 
15,668

 
7,275

 
8,393

 
(4.4
)%
1.1
 %
1.1
 %
7,262

 
4,825

 
2,437

 
(80
)
 
2,517

 
—

 
2,517

 
Latin America & Canada
 
7,073

 
4,634

 
2,439

 
(0.1
)%
3.2
 %
3.2
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
59,639

 
$
36,211

 
$
23,428

 
$
(466
)
 
$
23,894

 
$
—

 
$
23,894

 
PMI Total
 
$
57,651

 
$
34,163

 
$
23,488

 
(0.3
)%
1.7
 %
1.7
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2013
 
 
 
2012
 
% 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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
3,227

 
 
 
 
 
$
53

 
$
3,174

 
$
—

 
$
3,174

 
European Union
 
 
 
 
 
$
3,232

 
(0.2
)%
(1.8
)%
(1.8
)%
2,968

 
 
 
 
 
(63
)
 
3,031

 
—

 
3,031

 
EEMA
 
 
 
 
 
2,805

 
5.8
 %
8.1
 %
8.1
 %
3,567

 
 
 
 
 
(393
)
 
3,960

 
—

 
3,960

 
Asia
 
 
 
 
 
4,068

 
(12.3
)%
(2.7
)%
(2.7
)%
776

 
 
 
 
 
(25
)
 
801

 
—

 
801

 
Latin America & Canada
 
 
 
 
 
753

 
3.1
 %
6.4
 %
6.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
10,538

 
 
 
 
 
$
(428
)
 
$
10,966

 
$
—

 
$
10,966

 
PMI Total
 
 
 
 
 
$
10,858

 
(2.9
)%
1.0
 %
1.0
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 





 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 Nine Months Ended September 30,
($ in millions)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2013
 
 
 
2012
 
% 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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
3,227

 
$
—

 
$
3,227

 
$
53

 
$
3,174

 
$
—

 
$
3,174

 
European Union
 
$
3,232

 
$
—

 
$
3,232

 
(0.2
)%
(1.8
)%
(1.8
)%
2,968

 
—

 
2,968

 
(63
)
 
3,031

 
—

 
3,031

 
EEMA
 
2,805

 
—

 
2,805

 
5.8
 %
8.1
 %
8.1
 %
3,567

 
(8
)
 
3,575

 
(393
)
 
3,968

 
—

 
3,968

 
Asia
 
4,068

 
(24
)
 
4,092

 
(12.6
)%
(3.0
)%
(3.0
)%
776

 
—

 
776

 
(25
)
 
801

 
—

 
801

 
Latin America & Canada
 
753

 
(26
)
 
779

 
(0.4
)%
2.8
 %
2.8
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
10,538

 
$
(8
)
 
$
10,546

 
$
(428
)
 
$
10,974

 
$
—

 
$
10,974

 
PMI Total
 
$
10,858

 
$
(50
)
 
$
10,908

 
(3.3
)%
0.6
 %
0.6
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2013
 
 
 
2012
 
 
% 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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
3,174

 
$
6,337

 
50.1
%
 
 
 
$
3,174

 
$
6,337

 
50.1
%
 
European Union
 
$
3,232

 
$
6,463

 
50.0
%
 
 
0.1

0.1

3,031

 
6,557

 
46.2
%
 
 
 
3,031

 
6,557

 
46.2
%
 
EEMA
 
2,805

 
6,193

 
45.3
%
 
 
0.9

0.9

3,968

 
8,483

 
46.8
%
 
 
 
3,968

 
8,483

 
46.8
%
 
Asia
 
4,092

 
8,393

 
48.8
%
 
 
(2.0
)
(2.0
)
801

 
2,517

 
31.8
%
 
 
 
801

 
2,517

 
31.8
%
 
Latin America & Canada
 
779

 
2,439

 
31.9
%
 
 
(0.1
)
(0.1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
10,974

 
$
23,894

 
45.9
%
 
 
 
$
10,974

 
$
23,894

 
45.9
%
 
PMI Total
 
$
10,908

 
$
23,488

 
46.4
%
 
 
(0.5
)
(0.5
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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 Nine Months Ended September 30,
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2013
 
2012
 
% Change
 
 
 
 
 
 
 
 
 
Reported Diluted EPS
 
$
4.02

 
$
3.92

 
2.6
%
 
 
 
 
 
 
 
 
 
Adjustments:
 
 
 
 
 
 
 
Asset impairment and exit costs
—

 
0.02

 
 
 
Tax items
 
0.01

 
0.05

 
 
 
 
 
 
 
 
 
 
 
Adjusted Diluted EPS
 
$
4.03

 
$
3.99

 
1.0
%
 
 
 
 
 
 
 
 
 
Less:
 
 
 
 
 
 
 
Currency impact
 
(0.23
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Diluted EPS, excluding Currency
$
4.26

 
$
3.99

 
6.8
%
 
 
 
 
 
 
 
 
 





 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 Nine Months Ended September 30,
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2013
 
2012
 
% Change
 
 
 
 
 
 
 
 
 
 
 
Reported Diluted EPS
 
$
4.02

 
$
3.92

 
2.6
%
 
 
 
 
 
 
 
 
 
 
 
Less:
 
 
 
 
 
 
 
 
Currency impact
 
(0.23
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reported Diluted EPS, excluding Currency
$
4.25

 
$
3.92

 
8.4
%
 
 
 
 
 
 
 
 
 
 
 





 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
 
For the Year Ended
 
 
September 30,
 
December 31,
 
 
 
 
2013
 
 
 
2012
 
 
October ~ December
 
January ~ September
 
12 months
 
 
 
 
2012
 
2013
 
rolling
 
 
 
 
 
 
 
 
 
 
 
Earnings before income taxes
 
$
2,990

 
$
9,591

 
$
12,581

 
$
12,987

Interest expense, net
 
226

 
721

 
947

 
859

Depreciation and amortization
 
233

 
659

 
892

 
898

EBITDA
 
$
3,449

 
$
10,971

 
$
14,420

 
$
14,744

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
September 30,
 
December 31,
 
 
 
 
 
 
2013
 
2012
 
 
 
 
 
 
 
 
 
Short-term borrowings
 
 
 
 
 
$
3,668

 
$
2,419

Current portion of long-term debt
 
 
 
 
1,255

 
2,781

Long-term debt
 
 
 
 
 
21,877

 
17,639

Total Debt
 
 
 
 
 
$
26,800

 
$
22,839

Less: Cash and cash equivalents
 
 
 
 
3,382

 
2,983

Net Debt
 
 
 
 
 
$
23,418

 
$
19,856

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ratios
 
 
 
 
 
 
 
 
Total Debt to EBITDA
 
 
 
 
 
1.86

 
1.55

Net Debt to EBITDA
 
 
 
 
 
1.62

 
1.35

 
 
 
 
 
 
 
 
 





 
 
 
 
 
 
 
 
 
 
 
 
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 Nine Months Ended September 30,
($ in millions)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Quarters Ended
 
 
 
For the Nine Months Ended
 
 
 
 
September 30,
 
 
 
September 30,
 
 
 
 
2013
 
2012
 
% Change
 
2013
 
2012
 
% Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Net cash provided by operating activities(a)
 
$
3,315

 
$
2,393

 
38.5
%
 
$
7,815

 
$
7,771

 
0.6
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
Less:
 
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
 
301

 
243

 
 
 
821

 
719

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Free cash flow
 
$
3,014

 
$
2,150

 
40.2
%
 
$
6,994

 
$
7,052

 
(0.8
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
Less:
 
 
 
 
 
 
 
 
 
 
 
 
Currency impact
 
(114
)
 
 
 
 
 
(135
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Free cash flow, excluding currency
 
$
3,128

 
$
2,150

 
45.5
%
 
$
7,129

 
$
7,052

 
1.1
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Quarters Ended
 
 
 
For the Nine Months Ended
 
 
 
 
September 30,
 
 
 
September 30,
 
 
 
 
2013
 
2012
 
% Change
 
2013
 
2012
 
% Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Net cash provided by operating activities(a)
 
$
3,315

 
$
2,393

 
38.5
%
 
$
7,815

 
$
7,771

 
0.6
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
Less:
 
 
 
 
 
 
 
 
 
 
 
 
Currency impact
 
(116
)
 
 
 
 
 
(150
)
 
 
 
 
Net cash provided by operating activities,
excluding currency
 
$
3,431

 
$
2,393

 
43.4
%
 
$
7,965

 
$
7,771

 
2.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
(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)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2012
 
 
 
 
 
 
 
 
 
Reported Diluted EPS
 
$
5.17

 
 
 
 
 
 
 
 
 
Adjustments:
 
 
 
 
 
Asset impairment and exit costs
 
0.03

 
 
 
Tax items
 
0.02

 
 
 
 
 
 
 
 
 
Adjusted Diluted EPS
 
$
5.22