Regulatory News:
Third-Quarter 2014
- Reported diluted earnings per share of
$1.38, down by $0.06 or 4.2% versus $1.44 in 2013
- Excluding unfavorable currency of
$0.20, reported diluted earnings per share up by $0.14 or 9.7%
versus $1.44 in 2013 as detailed in the attached Schedule 13
- Adjusted diluted earnings per share of
$1.39, down by $0.05 or 3.5% versus $1.44 in 2013
- Excluding unfavorable currency of
$0.20, adjusted diluted earnings per share up by $0.15 or 10.4%
versus $1.44 in 2013 as detailed in the attached Schedule 12
- Cigarette shipment volume of 222.3
billion units, down by 0.4% excluding acquisitions
- Reported net revenues, excluding excise
taxes, of $7.9 billion, down by 0.9%
- Excluding unfavorable currency and the
impact of acquisitions, reported net revenues, excluding excise
taxes, up by 4.0% as detailed in the attached Schedule 10
- Reported operating companies income of
$3.5 billion, down by 5.5%
- Excluding unfavorable currency,
reported operating companies income up by 4.6%
- Adjusted operating companies income,
reflecting the items detailed in the attached Schedule 11, of $3.4
billion, down by 5.8%
- Excluding unfavorable currency,
adjusted operating companies income up by 4.3%
- Reported operating income of $3.3
billion, down by 7.1%
- Increased the regular quarterly
dividend by 6.4% to an annualized rate of $4.00 per common
share
- Repurchased 8.9 million shares of the
company's common stock for $750 million
Nine Months Year-to-Date
2014
- Reported diluted earnings per share of
$3.73, down by $0.29 or 7.2% versus $4.02 in 2013
- Excluding unfavorable currency of
$0.52, reported diluted earnings per share up by $0.23 or 5.7%
versus $4.02 in 2013 as detailed in the attached Schedule 17
- Adjusted diluted earnings per share of
$3.99, down by $0.04 or 1.0% versus $4.03 in 2013
- Excluding unfavorable currency of
$0.52, adjusted diluted earnings per share up by $0.48 or 11.9%
versus $4.03 in 2013 as detailed in the attached Schedule 16
- Cigarette shipment volume of 641.1
billion units, down by 2.4% excluding acquisitions
- Reported net revenues, excluding excise
taxes, of $22.6 billion, down by 3.7%
- Excluding unfavorable currency and the
impact of acquisitions, reported net revenues, excluding excise
taxes, up by 2.3% as detailed in the attached Schedule 14
- Reported operating companies income of
$9.4 billion, down by 10.4%
- Excluding unfavorable currency,
reported operating companies income down by 1.1%
- Adjusted operating companies income,
reflecting the items detailed in the attached Schedule 15, of $9.9
billion, down by 5.7%
- Excluding unfavorable currency,
adjusted operating companies income up by 3.6%
- Reported operating income of $9.2
billion, down by 11.2%
- Repurchased 35.9 million shares of the
company's common stock for $3.0 billion
Full-Year 2014
- The company revises its 2014 full-year
reported diluted earnings per share forecast to be in a range of
$4.76 to $4.81 versus $5.26 in 2013. On an adjusted basis, as
described below, diluted EPS are projected to increase in the range
of approximately 6.5% to 7.5% versus adjusted diluted EPS of $5.40
in 2013, as detailed in the attached Schedule 20.
Philip Morris International Inc. (NYSE / Euronext Paris: PM)
today announced its 2014 third-quarter results.
“Our results in the third quarter were slightly better than we
expected, underpinned by a modest decline in volume, continued
robust pricing and solid market share gains in each of our four
Regions," said André Calantzopoulos, Chief Executive Officer.
“While currency headwinds have stiffened, our underlying
business momentum is such that we remain confident we are on course
to achieve currency-neutral adjusted diluted EPS growth for the
full year 2014 of approximately 6.5% to 7.5%. This confidence was
further reflected in the announced increase of our regular
quarterly dividend of 6.4%."
"We are particularly excited by the commercialization, next
month, of iQOS, our first product within our innovative portfolio
of potentially Reduced-Risk Products that, we believe, represent
one of our greatest growth opportunities. I am immensely proud of
our talented employees whose exceptional work has opened this
significant new chapter in our history.”
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 16, 2014.
Access is available at www.pmi.com/webcasts.
The audio webcast may also be accessed on iOS or Android devices
by downloading PMI’s free Investor Relations Mobile Application at
www.pmi.com/irapp.
Dividends and Share Repurchase
Program
PMI increased its regular quarterly dividend during the quarter
to $1.00, up by 6.4% from $0.94, which represents an annualized
rate of $4.00 per common share. Since its spin-off in March 2008,
PMI has increased its regular quarterly dividend by 117.4% from the
initial annualized rate of $1.84 per common share.
During the quarter, PMI spent $750 million to repurchase 8.9
million shares. Under the current $18 billion share repurchase
program, PMI has spent $11.9 billion to repurchase 135.3 million
shares, as shown in the table below.
Current $18
Billion, Three-Year Program
Value
Shares
($
Mio.)
000
August - December 2012 $ 2,853 32,206 January - December
2013 6,000 67,231 January - March 2014 1,250 15,409 April - June
2014 1,000 11,610 July - September 2014 750 8,872
Total Under
Program $ 11,853 135,328
Since May 2008, when PMI began its first share repurchase
program, the company has spent an aggregate of $36.9 billion to
repurchase 592.1 million shares at an average price of $62.24 per
share, or 28.1% of the shares outstanding at the time of the
spin-off in March 2008.
Full-Year 2014 Forecast
The company revises its 2014 full-year reported diluted earnings
per share (“EPS”) forecast to be in a range of $4.76 to $4.81
versus $5.26 in 2013.
On an adjusted basis, diluted EPS are projected to increase in
the range of approximately 6.5% to 7.5% versus adjusted diluted EPS
of $5.40 in 2013, as detailed in the attached Schedule 20. This
adjustment reflects:
- an after-tax charge of $0.02 per share,
recorded as asset impairment and exit costs of $0.01 per share in
the first quarter of 2014 and an anticipated $0.01 per share in the
fourth quarter of 2014, relating to the decision to discontinue
cigarette production in Australia by the end of 2014;
- a total after-tax charge of $0.25 per
share, recorded as asset impairment and exit costs in the second
and third quarters of 2014, related to the decision to discontinue
cigarette production in the Netherlands in 2014; and
- an unfavorable currency impact, at
prevailing exchange rates, of approximately $0.72 per share for the
full-year 2014 compared to unfavorable currency of approximately
$0.61 per share in the prior guidance.
This forecast includes a productivity and cost savings target of
$300 million and a share repurchase target of $4.0 billion. This
forecast excludes the impact of any 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.
2014 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. North Africa is defined as
Algeria, Egypt, Libya, Morocco and Tunisia. 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, excluding general corporate expenses and the
amortization of intangibles, plus equity (income)/loss in
unconsolidated subsidiaries, net. PMI's management evaluates
business segment performance and allocates resources based on OCI.
“EBITDA” is defined as earnings before interest, taxes,
depreciation and amortization. Management also reviews OCI, OCI
margins and earnings per share, or “EPS,” and EBITDA 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), as well as 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 press release. In 2013, PMI concluded
a number of business development initiatives and agreements that
were not accounted for as acquisitions; thus, non-GAAP financial
measures for 2013 that exclude acquisitions do not exclude the
impact of said initiatives and agreements. Reduced-Risk
Products (“RRPs”) is the term the company uses to refer to
products with the potential to reduce individual risk and
population harm in comparison to smoking combustible cigarettes.
PMI’s RRPs are in various stages of development, and we are
conducting extensive and rigorous scientific studies to determine
whether we can support claims for such products of reduced exposure
to harmful and potentially harmful constituents in smoke, and
ultimately claims of reduced disease risk, when compared to smoking
combustible cigarettes. Before making any such claims, we will need
to rigorously evaluate the full set of data from the relevant
scientific studies to determine whether they substantiate reduced
exposure or risk. Any such claims may also be subject to government
review and approval, as is the case in the United States today.
Trademarks and service marks in this press release that are the
registered property of, or licensed by, the subsidiaries of PMI,
are italicized.
NET
REVENUES
PMI Net Revenues
($ Millions)
Third-Quarter
Nine Months
Year-to-Date
Excl. Excl.
2014
2013
Change
Curr.
2014
2013
Change
Curr.
European Union $ 2,357 $ 2,281 3.3 % 0.5 % $ 6,763 $ 6,457
4.7 % 1.0 %
Eastern Europe, Middle East & Africa 2,434
2,285 6.5 % 13.3 % 6,726 6,509 3.3 % 10.7 %
Asia 2,232 2,543
(12.2 )% (4.0 )% 6,725 8,025 (16.2 )% (5.5 )%
Latin America
& Canada 833 818 1.8 % 13.2 % 2,356
2,437 (3.3 )% 9.6 %
Total PMI $ 7,856
$ 7,927 (0.9 )% 4.1 %
$ 22,570 $ 23,428 (3.7 )%
2.4 %
Net revenues of $7.9 billion were down by 0.9%, including
unfavorable currency of $394 million. Net revenues increased by
4.1%, excluding currency, or by 4.0% excluding currency and
acquisitions, driven by favorable pricing of $491 million across
all Regions, predominantly EEMA and Latin America & Canada, led
by: Argentina, Egypt, reflecting the impact of the change to PMI's
new business structure announced on January 29, 2014, Indonesia and
Russia, partially offset by Italy and the Philippines. The
favorable pricing was partially offset by unfavorable volume/mix of
$174 million, predominantly due to Asia, mainly reflecting: lower
volume and market share in Japan resulting from a lower total
market following the consumption tax-driven price increases of
April 1, 2014, as well as the unfavorable impact of inventory
movements; and lower volume/mix in Australia, resulting from a
lower total market following the impact of tax-driven price
increases in 2014, and lower market share, primarily due to the
unfavorable impact of current competitive dynamics.
OPERATING
COMPANIES INCOME
PMI Operating
Companies Income ($ Millions)
Third-Quarter
Nine Months
Year-to-Date
Excl. Excl.
2014
2013
Change
Curr.
2014
2013
Change
Curr.
European Union $ 1,186 $ 1,207 (1.7 )% (2.4 )% $ 2,875 $
3,227 (10.9 )% (14.5 )%
Eastern Europe, Middle East &
Africa 1,204 1,088 10.7 % 25.2 % 3,218 2,968 8.4 % 20.8 %
Asia 799 1,097 (27.2 )% (13.7 )% 2,614 3,567 (26.7 )% (11.5
)%
Latin America & Canada 267 267 — % 27.3
% 734 776 (5.4 )% 18.3 %
Total PMI $
3,456 $ 3,659 (5.5 )% 4.6
% $ 9,441 $ 10,538 (10.4
)% (1.1 )%
Reported operating companies income of $3.5 billion was down by
5.5%, including unfavorable currency of $371 million. Excluding
currency, operating companies income increased by 4.6%, primarily
driven by favorable pricing as well as by an asset impairment and
exit costs adjustment of $9 million reflecting: a favorable
adjustment of $16 million associated with the decision to
discontinue cigarette production in the Netherlands, partly offset
by costs of $7 million associated with the closure of a leaf
processing facility in Canada. The increase in operating companies
income, excluding currency, was partially offset by: unfavorable
volume/mix of $166 million; higher manufacturing costs in Egypt,
mainly due to the impact of the change to PMI's new business
structure, and in Indonesia, and ongoing costs related to the
factory closure in Australia and the decision to discontinue
cigarette production in the Netherlands.
Adjusted operating companies income decreased by 5.8% as shown
in the table below and detailed in Schedule 11. Adjusted operating
companies income, excluding unfavorable currency, increased by
4.3%.
PMI Operating
Companies Income ($ Millions)
Third-Quarter
Nine Months
Year-to-Date
Excl. Excl.
2014
2013
Change
Curr.
2014
2013
Change
Curr.
Reported OCI $ 3,456 $ 3,659 (5.5 )% 4.6 % $ 9,441 $ 10,538
(10.4 )% (1.1 )% Asset impairment & exit costs 9 —
(503 ) (8 )
Adjusted OCI $ 3,447
$ 3,659 (5.8 )% 4.3 %
$ 9,944 $ 10,546 (5.7 )%
3.6 % Adjusted OCI Margin* 43.9 % 46.2 % (2.3
) 0.1 44.1 % 45.0 % (0.9 ) 0.5
*Margins are calculated as adjusted OCI,
divided by net revenues, excluding excise taxes.
Adjusted operating companies income margin, excluding currency
and acquisitions, increased by 0.1 point to 46.3%, as detailed in
Schedule 11.
SHIPMENT VOLUME
& MARKET SHARE
PMI Cigarette
Shipment Volume (Million Units)
Third-Quarter
Nine Months
Year-to-Date
2014
2013
Change
2014
2013
Change
European Union 49,209 48,969 0.5 % 140,827 140,659 0.1 %
Eastern Europe, Middle East & Africa 77,252 76,902 0.5 %
213,428 220,034 (3.0 )%
Asia 72,352 73,296 (1.3 )% 218,806
226,503 (3.4 )%
Latin America & Canada 23,487
23,957 (2.0 )% 68,001 69,774 (2.5 )%
Total
PMI 222,300 223,124 (0.4 )%
641,062 656,970 (2.4 )%
2014 Third-Quarter
PMI's cigarette shipment volume of 222.3 billion units decreased
by 0.4%, or 824 million units, due to Asia, mainly Japan, partially
offset by Indonesia and Pakistan, and Latin America & Canada,
due largely to Canada and Mexico. PMI's cigarette shipment volume
decrease in the quarter was partially offset by a solid performance
in the EU, driven notably by Italy, and EEMA, driven mainly by the
Middle East and North Africa, partly offset by Kazakhstan, Serbia
and Ukraine.
Total cigarette shipments of Marlboro of 72.6 billion units
decreased by 3.5%, due to the EU, notably Italy and Poland, Asia,
principally Japan, and Latin America & Canada, mainly Mexico.
Total cigarette shipments of Marlboro increased in EEMA driven
mainly by Algeria and Saudi Arabia, partly offset by Egypt, Russia
and Ukraine.
Total cigarette shipments of L&M of 24.0 billion units
decreased by 0.6%, due to the EU, mainly Poland and Spain, and
Asia, due primarily to Thailand, partly offset by EEMA, driven
largely by North Africa and Ukraine. Total cigarette shipments of
Bond Street of 12.0 billion units increased by 0.3%, driven
predominantly by growth in EEMA and Asia, partly offset by the EU.
Total cigarette shipments of Philip Morris of 8.0 billion units
decreased by 9.4%, primarily reflecting the morphing to Lark in
Japan. Total cigarette shipments of Parliament of 12.9 billion
units increased by 9.3%, driven by growth in all Regions, notably
in EEMA by Russia and Turkey. Total cigarette shipments of
Chesterfield of 11.6 billion units increased by 25.9%, driven
primarily in the EU by Italy and Poland. Total cigarette shipments
of Lark of 9.0 billion units increased by 25.2%, driven
predominantly by the morphing from Philip Morris in Japan, partly
offset by Turkey.
Total shipment volume of Other Tobacco Products ("OTP"), in
cigarette equivalent units, increased by 7.6%, mainly reflecting
growth in the fine cut category, notably in the Czech Republic,
France, Hungary, Italy and Poland, partly offset by Germany. Total
shipment volume for cigarettes and OTP, in cigarette equivalent
units, decreased by 0.1%.
PMI's market share increased in a number of key markets,
including Algeria, Argentina, Austria, Brazil, Colombia, the Czech
Republic, Egypt, France, Germany, Italy, Kazakhstan, the
Netherlands, the Philippines, Poland, Russia, Saudi Arabia, Spain
and Switzerland.
EUROPEAN UNION REGION
(EU)
2014 Third-Quarter
Net revenues of $2.4 billion increased by 3.3%. Excluding
favorable currency of $64 million, net revenues increased by 0.5%,
or by 0.3% excluding currency and acquisitions.
Reported operating companies income of $1.2 billion decreased by
1.7%, including favorable currency of $8 million. Excluding
currency, operating companies income decreased by 2.4%, mainly due
to: higher manufacturing costs, including ongoing costs related to
the decision to discontinue cigarette production in the
Netherlands; increased marketing costs related to the Marlboro
"Don't be a Maybe" campaign and the roll-out of the new Marlboro
Red 2.0 brand architecture; and business building initiatives in
the United Kingdom; partially offset by a favorable asset
impairment and exit costs adjustment of $16 million associated with
the decision to discontinue cigarette production in the
Netherlands.
Adjusted operating companies income decreased by 3.1%, as shown
in the table below and detailed on Schedule 11. Adjusted operating
companies income, excluding favorable currency, decreased by
3.7%.
EU Operating
Companies Income ($ Millions)
Third-Quarter
Nine Months
Year-to-Date
Excl. Excl.
2014
2013
Change
Curr.
2014
2013
Change
Curr.
Reported OCI $ 1,186 $ 1,207 (1.7 )% (2.4 )% $ 2,875 $ 3,227
(10.9 )% (14.5 )% Asset impairment & exit costs 16 —
(472 ) —
Adjusted OCI $ 1,170
$ 1,207 (3.1 )% (3.7 )%
$ 3,347 $ 3,227 3.7 %
0.1 % Adjusted OCI Margin* 49.6 % 52.9 % (3.3
) (2.2 ) 49.5 % 50.0 % (0.5 ) (0.5 )
*Margins are calculated as adjusted OCI,
divided by net revenues, excluding excise taxes.
Adjusted operating companies income margin, excluding currency
and acquisitions, decreased by 2.1 points to 50.8%, as detailed in
Schedule 11.
The total cigarette market in the EU of 126.0 billion units
decreased by 3.4%, partly reflecting, in certain key geographies:
moderating total market declines compared to the same period last
year, resulting from a deceleration in the growth of the e-vapor
category, relatively lower out-switching to the fine cut category,
and a moderation in the level of illicit trade; coupled with net
favorable estimated trade inventory movements compared to the third
quarter of 2013. Excluding the impact of the estimated trade
inventory movements, the total cigarette market in the EU is
estimated to have declined by approximately 4.0% in the quarter and
by 3.5% year-to-date. For the full-year 2014, the total cigarette
market in the EU is projected to decline by approximately 4.0%. The
total OTP market in the EU in the quarter of 42.5 billion cigarette
equivalent units increased by 0.7%, reflecting a higher total fine
cut market, up by 0.4% to 37.0 billion cigarette equivalent
units.
EU Region &
Key Market Shares
Third-Quarter
Nine Months
Year-to-Date
2014
2013
Change
2014
2013
Change
p.p.
p.p.
Total EU 39.7 % 38.5 % 1.2 39.8 % 38.8 % 1.0 France 40.4 % 40.0 %
0.4 40.9 % 40.2 % 0.7 Germany 35.1 % 34.5 % 0.6 36.3 % 36.0 % 0.3
Italy 55.8 % 53.3 % 2.5 54.8 % 53.3 % 1.5 Poland 40.9 % 39.1 % 1.8
39.6 % 37.3 % 2.3 Spain 32.6 % 31.1 % 1.5 32.0 % 31.1 % 0.9
PMI's cigarette shipment volume of 49.2 billion units increased
by 0.5%, and market share increased by 1.2 points to 39.7% as shown
in the table above. While shipment volume of Marlboro decreased by
2.3% to 23.7 billion units, market share increased by 0.2 points to
19.1%. While shipment volume of L&M decreased by 3.4% to 8.7
billion units, market share was flat at 7.0%. Shipment volume of
Chesterfield of 7.3 billion units increased by 45.7%, and market
share increased by 1.4 points to 5.8%, driven mainly by Italy and
Poland. Shipment volume of Philip Morris of 2.6 billion units
increased by 5.6%, and market share increased by 0.1 point to
2.1%.
PMI's shipments of OTP of 6.0 billion cigarette equivalent units
increased by 12.2%, driven principally by a higher total market and
share. PMI's total OTP market share was 14.0%, up by 0.8 points,
reflecting gains in the fine cut category, notably in Belgium, up
by 0.4 points to 16.7%, the Czech Republic, up by 5.1 points to
24.6%, Hungary, up by 8.1 points to 18.5%, Italy, up by 0.8 points
to 41.2%, Poland, up by 11.3 points to 34.1%, and Spain, up by 0.3
points to 14.5%, partially offset by Germany, down by 0.7 points to
13.0%, and Portugal, down by 7.6 points to 23.3%.
EU Key Market
Commentaries
In France, the total cigarette market of 11.7 billion units
decreased by 3.8%, mainly reflecting the unfavorable impact of
price increases in July 2013 and January 2014. Year-to-date, the
total cigarette market decreased by 5.7%. PMI's shipments of 4.8
billion units increased by 0.2% in the quarter and market share
increased by 0.4 points to 40.4%, mainly driven by Marlboro and
premium Philip Morris, up by 0.1 point and 0.3 points to 24.7% and
9.2%, respectively. Market share of L&M and Chesterfield was
flat at 2.6% and 3.4%, respectively. The total industry fine cut
category of 3.5 billion cigarette equivalent units increased by
0.9%. PMI's market share of the category decreased by 0.6 points to
25.8%.
In Germany, the total cigarette market of 21.6 billion units
decreased by 1.5%, partially reflecting the net favorable impact of
estimated trade purchases of competitive products. Excluding the
impact of these estimated trade inventory movements, the total
cigarette market declined by approximately 2.7% in the quarter and
by approximately 0.4% year-to-date. PMI's shipments of 7.6 billion
units increased by 0.3%, and market share increased by 0.6 points
to 35.1%, driven by Marlboro, up by 0.3 points to 20.8%, and
L&M, up by 0.5 points to 11.2%. Market share of Chesterfield
decreased by 0.1 point to 1.6%. The total industry fine cut
category of 10.6 billion cigarette equivalent units decreased by
2.5%. PMI's market share of the category decreased by 0.7 points to
13.0%.
In Italy, the total cigarette market of 20.1 billion units
decreased by 0.1%, mainly reflecting a lower incidence of e-vapor
products and continued growth of the low-price segment.
Year-to-date, the total cigarette market increased by 0.7%. PMI's
shipments in the quarter of 10.8 billion units increased by 5.8%.
PMI's market share increased by 2.5 points to 55.8%, due primarily
to: Chesterfield, up by 7.4 points to 10.9%, benefiting from its
price repositioning in February 2014, partially offset by Marlboro,
down by 1.0 point to 25.2%, and Diana in the low-price segment,
down by 3.2 points to 7.9%, impacted by the growth of the super-low
price segment. Market share of Philip Morris decreased by 0.2
points to 2.3%. The total industry fine cut category of 1.6 billion
cigarette equivalent units increased by 5.8%, and PMI's market
share of the category increased by 0.8 points to 41.2%, driven by
Marlboro.
In Poland, the total cigarette market of 11.3 billion units
decreased by 10.8%, reflecting the prevalence of e-cigarettes,
illicit trade and non-duty paid OTP products. Year-to-date, the
total cigarette market decreased by 9.5%. PMI's shipments in the
quarter of 4.6 billion units decreased by 2.5%. PMI's market share
increased by 1.8 points to 40.9%, driven by Chesterfield, up by 2.7
points to 7.9%, benefiting from the morphing of Red & White in
the fourth quarter of 2013, partially offset by Marlboro, down by
0.4 points to 11.5%, and L&M, down by 0.1 point to 18.7%. The
total industry fine cut category of 913 million cigarette
equivalent units increased by 8.8%, and PMI's market share of the
category increased by 11.3 points to 34.1%.
In Spain, the total cigarette market of 13.0 billion units
decreased by 1.9%, reflecting an improving economic environment and
lower out-switching to the OTP category. Year-to-date, the total
cigarette market decreased by 2.2%. While PMI's shipments in the
quarter of 3.8 billion units decreased by 1.6%, market share
increased by 1.5 points to 32.6%, driven by higher share of
Marlboro, up by 1.2 points to 16.4%, Chesterfield, up by 0.1 point
to 9.0%, and Philip Morris, up by 0.4 points to 1.2%. Market share
of L&M was flat at 6.0%. The total industry fine cut category
of 2.6 billion cigarette equivalent units decreased by 5.3%, partly
reflecting the narrowing of price gaps with the cigarette category
since July 2013. PMI's market share of the fine cut category
increased by 0.3 points to 14.5%.
EASTERN EUROPE, MIDDLE
EAST & AFRICA REGION (EEMA)
2014 Third-Quarter
Net revenues of $2.4 billion increased by 6.5%. Excluding
unfavorable currency of $155 million, net revenues increased by
13.3%, reflecting favorable pricing of $306 million, driven
principally by Russia and Ukraine, as well as the impact of the
change to PMI's new business structure in Egypt.
Reported operating companies income of $1.2 billion increased by
10.7%. Excluding unfavorable currency of $158 million, operating
companies income increased by 25.2%, due primarily to higher
pricing, partially offset by higher costs, principally related to
the impact of the change to PMI's new business structure in
Egypt.
Adjusted operating companies income increased by 10.7%, as shown
in the table below and detailed on Schedule 11. Adjusted operating
companies income, excluding unfavorable currency, increased by
25.2%.
EEMA Operating
Companies Income ($ Millions)
Third-Quarter
Nine Months
Year-to-Date
Excl. Excl.
2014
2013
Change
Curr.
2014
2013
Change
Curr.
Reported OCI $ 1,204 $ 1,088 10.7 % 25.2 % $ 3,218 $ 2,968
8.4 % 20.8 % Asset impairment & exit costs — — —
—
Adjusted OCI $ 1,204 $
1,088 10.7 % 25.2 % $
3,218 $ 2,968 8.4 % 20.8
% Adjusted OCI Margin* 49.5 % 47.6 % 1.9 5.0 47.8 %
45.6 % 2.2 4.2
*Margins are calculated as adjusted OCI,
divided by net revenues, excluding excise taxes.
Adjusted operating companies income margin, excluding
unfavorable currency, increased by 5.0 points to 52.6%, as detailed
on Schedule 11, reflecting the impact of the aforementioned
factors.
PMI's cigarette shipment volume of 77.3 billion units increased
by 0.5%, mainly due to the Middle East, notably Saudi Arabia, and
North Africa, notably Algeria, partially offset by Kazakhstan,
Serbia and Ukraine.
PMI's cigarette shipment volume of premium brands increased by
5.1%, due principally to Marlboro, up by 2.9% to 22.9 billion
units, and Parliament, up by 9.4% to 9.8 billion units.
EEMA Key Market
Commentaries
In North Africa, the estimated total cigarette market increased
by 3.2% to 33.7 billion units, driven mainly by Algeria and Egypt,
partially offset by Libya. Year-to-date, the estimated total
cigarette market increased by 2.5%. PMI’s shipment volume in the
quarter of 9.3 billion units increased by 10.1%, driven largely by
Marlboro in Algeria and L&M in Egypt. PMI’s market share
increased by 0.6 points to 27.1%, mainly reflecting gains in
Algeria. Market share of Marlboro decreased by 1.9 points to 15.6%,
due largely to a decline in Egypt partially offset by a gain in
Algeria, while share of L&M increased by 2.8 points to
9.7%.
In Russia, the estimated total cigarette market declined by
10.2% to 83.5 billion units, mainly due to the unfavorable impact
of the tax-driven price increases and the prevalence of illicit
trade. Year-to-date, the estimated total cigarette market decreased
by 9.4%. For the full-year 2014, the total cigarette market is
projected to decline by 9.0% to 10.0%. PMI's shipment volume in the
quarter of 23.0 billion units decreased by 0.4%. PMI's August
quarter-to-date market share of 27.4%, as measured by Nielsen, was
up by 1.3 points. Market share of Parliament, L&M and Bond
Street increased by 0.4, 0.2 and 1.4 points to 3.8%, 3.1% and 7.7%,
respectively, partially offset by Marlboro and Chesterfield, down
by 0.2 points each to 1.5% and 2.8%, respectively.
In Turkey, the estimated total cigarette market increased by
7.7% to 26.5 billion units, mainly reflecting a lower prevalence of
illicit trade and the timing of trade inventory movements compared
to the third quarter of 2013. Excluding the net impact of estimated
trade inventory movements, the total cigarette market increased by
approximately 5.5% in the quarter and by 2.3% year-to-date, mainly
reflecting an increase in the adult population. PMI's shipment
volume in the quarter of 12.5 billion units decreased by 0.5%.
PMI's August quarter-to-date market share, as measured by Nielsen,
decreased by 3.0 points to 43.1%, mainly due to: Marlboro,
mid-price Muratti, low-price L&M and Lark, down by 0.4, 1.7,
1.9 and 2.7 points to 8.7%, 5.2%, 5.5% and 8.6%, respectively,
partially offset by Parliament, up by 1.3 points to 11.5%.
In Ukraine, the estimated total cigarette market decreased by
3.3% to 19.4 billion units, mainly reflecting estimated trade
inventory deloading following the excise tax-driven price increases
in July 2014, and business disruption due to the political
instability in the east of the country, partially offset by a lower
prevalence of illicit trade. Year-to-date, the estimated total
cigarette market decreased by 2.0%. PMI's shipment volume in the
quarter of 6.5 billion units decreased by 6.1% principally due to a
lower total market and a decrease in PMI's August quarter-to-date
market share, as measured by Nielsen, down by 0.4 points to 32.7%,
with Marlboro, Parliament, Bond Street and Chesterfield, down by
0.8, 0.4, 0.1 and 0.5 points to 4.7%, 3.0%, 8.9% and 5.0%,
respectively. The decrease in PMI's market share was partially
offset by growth from L&M, up by 0.5 points to 2.6%, and PMI's
low-price segment brand, President, up by 2.8 points to 5.4%.
ASIA
REGION
2014 Third-Quarter
Net revenues of $2.2 billion decreased by 12.2%, including
unfavorable currency of $210 million. Excluding currency, net
revenues decreased by 4.0%, due primarily to: unfavorable
volume/mix of $150 million, due mainly to Japan, principally
reflecting a lower total market and share as well as the
unfavorable impact of inventory movements, and Australia,
reflecting a lower total market following the impact of tax-driven
price increases in March and September of 2014, and lower market
share, primarily due to the unfavorable impact of significant
competitive price discounting in the low price segment and
continued down-trading; partially offset by favorable pricing of
$49 million, despite the adverse impact of the Philippines.
Reported operating companies income of $799 million decreased by
27.2%, including unfavorable currency of $148 million. Excluding
currency, operating companies income decreased by 13.7%,
principally due to unfavorable volume/mix of $134 million and
higher costs, mainly due to higher manufacturing costs in
Indonesia, and marketing investment in support of new brand
launches in Indonesia and Japan, partially offset by favorable
pricing.
Adjusted operating companies income decreased by 27.2% as shown
in the table below and detailed on Schedule 11. Adjusted operating
companies income, excluding unfavorable currency, decreased by
13.7%.
Asia Operating
Companies Income ($ Millions)
Third-Quarter
Nine Months
Year-to-Date
Excl. Excl.
2014
2013
Change
Curr.
2014
2013
Change
Curr.
Reported OCI $ 799 $ 1,097 (27.2 )% (13.7 )% $ 2,614 $ 3,567
(26.7 )% (11.5 )% Asset impairment & exit costs — —
(24 ) (8 )
Adjusted OCI $ 799 $
1,097 (27.2 )% (13.7 )% $
2,638 $ 3,575 (26.2 )%
(11.0 )% Adjusted OCI Margin* 35.8 % 43.1 %
(7.3 ) (4.3 ) 39.2 % 44.5 % (5.3 ) (2.6 )
*Margins are calculated as adjusted OCI,
divided by net revenues, excluding excise taxes.
Adjusted operating companies income margin, excluding
unfavorable currency, decreased by 4.3 points to 38.8%, as detailed
on Schedule 11, reflecting the impact of the aforementioned
factors.
PMI's cigarette shipment volume of 72.4 billion units decreased
by 1.3%, due primarily to a lower total market, and the timing of
distributor inventory movements compared with the third quarter of
2013, in Japan, partially offset by a higher total market in
Indonesia.
Shipment volume of Marlboro of 17.0 billion units decreased by
12.8%, due predominantly to Japan.
Asia Key Market
Commentaries
In Indonesia, the estimated total cigarette market increased by
4.9% to 78.1 billion units, reflecting strong growth of the
machine-made kretek segment. On a year-to-date basis, the total
cigarette market increased by 2.9%. For the full-year 2014, the
total cigarette market is projected to grow by approximately 2.0%.
PMI's shipment volume in the quarter of 27.7 billion units
increased by 2.1%. PMI's market share decreased by 0.9 points to
35.5%, predominantly due to the share decline of Sampoerna Hijau,
down by 1.0 point to 3.2% and the withdrawal of ultra-low price
brands Trend Mild and Vegas Mild. Market share of the brand family
Dji Sam Soe was flat at 6.7% reflecting the continuing decline of
the hand-rolled kretek segment, compounded by the unfavorable
impact resulting from the brand's hand-rolled variant having
crossed a critical price point ahead of competition, offset by the
growth of machine-made Dji Sam Soe Magnum Blue which was launched
in April 2014 and reached a market share of 0.6% in the quarter.
Market share of Sampoerna A, in the premium machine-made
lighter-tasting kretek segment, was flat at 14.7%, while mid-price
U Mild was up by 1.2 points to 5.5%. Although Marlboro's market
share decreased by 0.3 points to 5.1%, its share of the “white”
cigarettes segment, which represented 6.5% of the total cigarette
market, increased by 0.9 points to 79.1%.
In Japan, the total cigarette market decreased by 4.0% to 48.0
billion units, partly reflecting the unfavorable impact of the
consumption tax-driven retail price increases of April 1, 2014. The
total cigarette market decreased by 3.2% year-to-date. For the
full-year 2014, the total cigarette market is projected to decline
by an estimated 3.0% to 3.5%. PMI's shipment volume in the quarter
of 12.2 billion units decreased by 10.0%, principally due to the
unfavorable timing of distributor inventory movements compared to
the third quarter of 2013. Excluding the impact of these inventory
movements, PMI's shipment volume decreased by 6.3%. PMI's market
share decreased by 0.6 points to 25.9%, with share of Marlboro and
Virginia S. down by 0.6 points and 0.1 point to 11.6% and 1.9%,
respectively. Market share of Lark increased by 0.1 point to 10.0%,
including the successful morphing of Philip Morris. PMI's market
share in the quarter was flat compared to the fourth quarter of
2013 indicating ongoing stabilization.
In Korea, the total cigarette market increased by 4.0% to 24.6
billion units, reflecting trade inventory movements ahead of a
speculated excise tax increase effective January 1, 2015. On a
year-to-date basis, the total cigarette market increased by 0.4%.
PMI's shipment volume in the quarter of 4.6 billion units increased
by 0.9% and market share decreased by 0.8 points to 18.6% due to
Parliament, Marlboro and Virginia S. down by 0.2, 0.3 and 0.5
points to 6.7%, 7.4% and 3.8%, respectively, reflecting the impact
of the aforementioned trade inventory movements.
In the Philippines, estimated total tax-paid industry cigarette
volumes decreased by 3.2% to 22.0 billion units. On a year-to-date
basis, the total tax-paid industry cigarette volume decreased by
0.8%. PMI's shipment volume in the quarter of 17.5 billion units
decreased by 1.7%. PMI's market share of the total estimated
tax-paid industry of 79.2% was up by 1.3 points. Marlboro's market
share increased by 1.4 points to 16.8% and share of Fortune
increased by 4.7 points to 32.4%.
LATIN AMERICA &
CANADA REGION
2014 Third-Quarter
Net revenues of $833 million increased by 1.8%, including
unfavorable currency of $93 million. Excluding currency, net
revenues increased by 13.2%, driven by favorable pricing of $131
million, principally in Argentina, and Canada, partially offset by
unfavorable volume/mix of $24 million, principally due to a lower
total market in Canada.
Reported operating companies income of $267 million was flat,
including unfavorable currency of $73 million. Excluding currency,
operating companies income increased by 27.3%, reflecting favorable
pricing, partially offset by unfavorable volume/mix of $27 million,
principally due to Canada, and the impact of asset impairment and
exit costs of $7 million related to a leaf processing facility
closure in Canada.
Adjusted operating companies income increased by 2.6%, as shown
in the table below and detailed on Schedule 11. Adjusted operating
companies income, excluding unfavorable currency, increased by
30.0%.
Latin America
& Canada Operating Companies Income ($ Millions)
Third-Quarter
Nine Months
Year-to-Date
Excl. Excl.
2014
2013
Change
Curr.
2014
2013
Change
Curr.
Reported OCI $ 267 $ 267 — % 27.3 % $ 734 $ 776 (5.4 )% 18.3
% Asset impairment & exit costs (7 ) — (7 ) —
Adjusted OCI $ 274 $ 267
2.6 % 30.0 % $ 741
$ 776 (4.5 )% 19.2 %
Adjusted OCI Margin* 32.9 % 32.6 % 0.3 4.9 31.5 % 31.8 %
(0.3 ) 2.8
*Margins are calculated as adjusted OCI,
divided by net revenues, excluding excise taxes.
Adjusted operating companies income margin, excluding
unfavorable currency, increased by 4.9 points to 37.5%, as detailed
on Schedule 11, reflecting the aforementioned factors.
PMI's cigarette shipment volume of 23.5 billion units decreased
by 2.0%, due largely to Canada and Mexico. Shipment volume of
Marlboro of 9.0 billion units decreased by 1.9%, due predominantly
to Brazil and Mexico.
Latin America & Canada Key Market
Commentaries
In Argentina, the total cigarette market decreased by 2.8% to
10.0 billion units. On a year-to-date basis, the total cigarette
market decreased by 1.6%. While PMI's cigarette shipment volume in
the quarter of 7.8 billion units decreased by 0.8%, market share
increased by 1.2 points to 77.2%, driven by Marlboro, up by 0.5
points to 24.2%, and mid-price Philip Morris, up by 1.4 points to
43.6%, reflecting the positive impact of its capsule variants,
partially offset by low-price Next, down by 0.5 points to 1.9%.
In Canada, the total cigarette market decreased by 4.2% to 7.3
billion units, mainly due to the impact of federal and provincial
tax-driven price increases in the first and second quarters of
2014. On a year-to-date basis, the total cigarette market decreased
by 5.4%. PMI's cigarette shipment volume of 2.8 billion units
decreased by 5.5%. PMI's market share decreased by 0.7 points to
38.0%, with premium brands Benson & Hedges down by 0.1 point to
2.4% and Belmont up by 0.3 points to 3.1%. Market share of
mid-price Canadian Classics was flat at 10.7% and mid-price Number
7 was down by 0.4 points to 3.9%. Market share of low-price Next
was flat at 10.6%, and low-price Accord was down by 0.6 points to
2.3%.
In Mexico, the total cigarette market decreased by 1.1% to 8.3
billion units. On a year-to-date basis, excluding the impact of
estimated inventory movements, the total cigarette market declined
by approximately 0.6%. PMI's cigarette shipment volume in the
quarter of 5.9 billion units decreased by 2.8%. While PMI's market
share decreased by 1.3 points to 71.1%, it was in line with market
share in the second quarter. Market share of Marlboro in the third
quarter was down by 0.6 points to 49.9% and share of premium Benson
& Hedges was down by 0.4 points to 5.1%, reflecting consumer
down-trading. PMI's share of the premium segment, representing
59.9% of the total cigarette market, increased by 0.9 points to
91.8%. Market share of Delicados, the second best-selling brand in
the market, decreased by 0.9 points to 10.8%.
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 2013, the company held an estimated 15.7% share of the total
international cigarette market outside of the U.S., or 28.3%
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 that have the
potential to reduce individual risk and population harm; 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 June 30, 2014. 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.
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)
2014 2013
(1) % Change Net revenues $
21,335 $ 20,629 3.4 %
Cost of sales 2,734 2,618 4.4 % Excise taxes on products (2) 13,479
12,702 6.1 % Gross profit 5,122 5,309 (3.5 )%
Marketing, administration and research costs 1,763 1,687 Asset
impairment and exit costs (9 ) — Amortization of intangibles 23
23
Operating income (3) 3,345
3,599 (7.1 )% Interest expense, net 267
239 Earnings before income taxes 3,078 3,360 (8.4 )%
Provision for income taxes 918 952 (3.6 )% Equity (income)/loss in
unconsolidated subsidiaries, net (38 ) 6 Net earnings
2,198 2,402 (8.5 )% Net earnings attributable to noncontrolling
interests 43 62
Net earnings attributable
to PMI $ 2,155 $
2,340 (7.9 )% Per
share data:(4) Basic earnings per share $
1.38 $ 1.44
(4.2 )% Diluted earnings per share $
1.38 $ 1.44
(4.2 )%
(1) Certain amounts have been reclassified
to conform to the current year's presentation due to the separate
disclosure ofequity (income)/loss in unconsolidated subsidiaries,
net.
(2) The segment detail of excise taxes on
products sold for the quarters ended September 30, 2014 and 2013 is
shownon Schedule 2.
(3) PMI's management evaluates segment
performance and allocates resources based on operating companies
income,which PMI defines as operating income, excluding general
corporate expenses and amortization of intangibles, plusequity
(income)/loss in unconsolidated subsidiaries, net. The
reconciliation from operating income to operating companiesincome
is as follows:
2014 2013 % Change
Operating Income $ 3,345 $ 3,599
(7.1 )%
Excluding:
- Amortization of Intangibles 23 23 - General corporate expenses
(included in marketing, administration and research costs above) 50
43 Plus: Equity (income)/loss in unconsolidated subsidiaries, net
(38 ) 6
Operating Companies Income $
3,456 $ 3,659
(5.5 )%
(4) Net earnings and weighted-average
shares used in the basic and diluted earnings per share
computations for thequarters ended September 30, 2014 and 2013 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
EuropeanUnion
EEMA Asia
LatinAmerica
&Canada
Total 2014 Net Revenues (1) $
7,777 $ 6,111 $ 4,943 $ 2,504 $ 21,335
Excise Taxes on Products (5,420 ) (3,677 ) (2,711 )
(1,671 ) (13,479 )
Net Revenues excluding Excise
Taxes 2,357 2,434 2,232 833
7,856 2013 Net Revenues $ 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 Variance
Currency 64 (155 ) (210 ) (93 ) (394 ) Acquisitions 5 — —
1
6 Operations 7 304 (101 ) 107
317
Variance Total 76 149
(311 ) 15 (71 ) Variance Total
(%) 3.3 % 6.5 % (12.2 )% 1.8 % (0.9 )% Variance excluding
Currency 12 304 (101 ) 108 323 Variance excluding Currency (%) 0.5
% 13.3 % (4.0 )% 13.2 % 4.1 % Variance excluding Currency
& Acquisitions 7 304 (101 ) 107 317 Variance excluding Currency
& Acquisitions (%) 0.3 % 13.3 % (4.0 )% 13.1 % 4.0 %
(1) 2014 Currency increased (decreased) net revenues
as follows: European Union $ 196 EEMA (448 ) Asia (359 ) Latin
America & Canada (353 ) $ (964 )
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
EuropeanUnion
EEMA Asia
LatinAmerica
&Canada
Total 2014 $ 1,186 $ 1,204 $ 799
$ 267 $ 3,456 2013 1,207 1,088 1,097 267 3,659 %
Change (1.7 )% 10.7 % (27.2 )% — % (5.5 )%
Reconciliation:
For the quarter ended September 30, 2013 $
1,207 $ 1,088 $ 1,097 $
267 $ 3,659 2013 Asset impairment and
exit costs — — — — — 2014 Asset impairment and exit costs 16 — — (7
) 9 Acquired businesses — — — — — Currency 8 (158 ) (148 )
(73 ) (371 ) Operations (45 ) 274 (150 )
80 159
For the quarter ended
September 30, 2014 $ 1,186
$ 1,204 $
799 $ 267
$ 3,456 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.
2014 Diluted Earnings Per Share $ 1.38 (1)
2013 Diluted Earnings Per Share $ 1.44 (1) Change $ (0.06 ) %
Change (4.2 )%
Reconciliation:
2013 Diluted Earnings Per Share $ 1.44 (1)
Special
Items:
2013 Asset impairment and exit costs — 2013 Tax items — 2014 Asset
impairment and exit costs (0.01 ) 2014 Tax items — Currency
(0.20 ) Interest (0.01 ) Change in tax rate (0.02 ) Impact of lower
shares outstanding and share-based payments 0.05 Operations 0.13
2014 Diluted Earnings Per Share $
1.38 (1) (1) Basic and diluted EPS were
calculated using the following (in millions):
Q32014
Q32013
Net earnings attributable to PMI $ 2,155 $ 2,340 Less
distributed and undistributed earnings attributable to share-based
payment awards 9 12 Net earnings for basic and
diluted EPS $ 2,146 $ 2,328
Weighted-average shares for basic and diluted EPS 1,560
1,614 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)
2014 2013 (1) % Change
Net revenues $ 60,165 $
59,639 0.9 % Cost of sales 7,804 7,808 (0.1 )%
Excise taxes on products (2) 37,595 36,211 3.8
% Gross profit 14,766 15,620 (5.5 )% Marketing, administration and
research costs 5,026 5,214 Asset impairment and exit costs 503 8
Amortization of intangibles 67 71
Operating
income (3) 9,170 10,327 (11.2 )%
Interest expense, net 789 721 Earnings before
income taxes 8,381 9,606 (12.8 )% Provision for income taxes 2,446
2,777 (11.9 )% Equity (income)/loss in unconsolidated subsidiaries,
net (74 ) 15 Net earnings 6,009 6,814 (11.8 )% Net
earnings attributable to noncontrolling interests 128
225
Net earnings attributable to PMI $
5,881 $ 6,589
(10.7 )% Per share data:(4) Basic
earnings per share $ 3.73
$ 4.02 (7.2 )% Diluted
earnings per share $ 3.73
$ 4.02 (7.2 )%
(1) Certain amounts have been reclassified
to conform to the current year's presentation due to the separate
disclosureof equity (income)/loss in unconsolidated subsidiaries,
net.
(2) The segment detail of excise taxes on
products sold for the nine months ended 2014 and 2013 is shown
onSchedule 6.
(3) PMI's management evaluates segment
performance and allocates resources based on operating
companiesincome, which PMI defines as operating income, excluding
general corporate expenses and amortization ofintangibles, plus
equity (income)/loss in unconsolidated subsidiaries, net. The
reconciliation from operating income tooperating companies income
is as follows:
2014 2013 % Change
Operating Income $ 9,170 $
10,327 (11.2 )%
Excluding:
- Amortization of Intangibles 67 71 - General corporate expenses
(included in marketing, administration and research costs above)
130 155 Plus: Equity (income)/loss in unconsolidated subsidiaries,
net (74 ) 15
Operating Companies Income
$ 9,441 $
10,538 (10.4 )%
(4) Net earnings and weighted-average
shares used in the basic and diluted earnings per share
computations for thenine months ended 2014 and 2013 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
EuropeanUnion
EEMA Asia
LatinAmerica
&Canada
Total 2014 Net Revenues (1) $
22,225 $ 16,347 $ 14,515 $ 7,078 $
60,165 Excise Taxes on Products (15,462 ) (9,621 )
(7,790 ) (4,722 ) (37,595 )
Net Revenues excluding
Excise Taxes 6,763 6,726 6,725
2,356 22,570 2013 Net Revenues $ 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
Variance Currency 243 (477 ) (861 ) (316 ) (1,411 )
Acquisitions 5 — — 1
6
Operations 58 694 (439 ) 234
547
Variance Total 306
217 (1,300 ) (81 ) (858
) Variance Total (%) 4.7 % 3.3 % (16.2 )% (3.3 )% (3.7 )%
Variance excluding Currency 63 694 (439 ) 235 553 Variance
excluding Currency (%) 1.0 % 10.7 % (5.5 )% 9.6 % 2.4 %
Variance excluding Currency & Acquisitions 58 694 (439 ) 234
547 Variance excluding Currency & Acquisitions (%) 0.9 % 10.7 %
(5.5 )% 9.6 % 2.3 % (1) 2014 Currency
increased (decreased) net revenues as follows: European Union $ 756
EEMA (1,484 ) Asia (1,634 ) Latin America & Canada (1,148 ) $
(3,510 ) 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
EuropeanUnion
EEMA Asia
LatinAmerica
&Canada
Total 2014 $ 2,875 $ 3,218 $
2,614 $ 734 $ 9,441 2013 3,227 2,968 3,567 776 10,538
% Change (10.9 )% 8.4 % (26.7 )% (5.4 )% (10.4 )%
Reconciliation:
For the nine months ended September 30, 2013 $
3,227 $ 2,968 $ 3,567 $
776 $ 10,538 2013 Asset impairment and
exit costs — — 8 — 8 2014 Asset impairment and exit costs (472 ) —
(24 ) (7 ) (503 ) Acquired businesses — — — —
—
Currency 117 (368 ) (544 ) (184 ) (979 ) Operations 3
618 (393 ) 149 377
For
the nine months ended September 30, 2014 $
2,875 $ 3,218
$ 2,614 $
734 $ 9,441
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. 2014 Diluted
Earnings Per Share $ 3.73 (1) 2013 Diluted Earnings Per
Share $ 4.02 (1) Change $ (0.29 ) % Change (7.2 )%
Reconciliation:
2013 Diluted Earnings Per Share $ 4.02 (1)
Special
Items:
2013 Asset impairment and exit costs — 2013 Tax items 0.01 2014
Asset impairment and exit costs (0.26 ) 2014 Tax items —
Currency (0.52 ) Interest (0.03 ) Change in tax rate 0.01 Impact of
lower shares outstanding and share-based payments 0.15 Operations
0.35
2014 Diluted Earnings Per Share $
3.73 (1) (1) Basic and diluted EPS were
calculated using the following (in millions):
YTDSeptember2014
YTDSeptember2013
Net earnings attributable to PMI $ 5,881 $ 6,589 Less
distributed and undistributed earnings attributable to share-based
payment awards 27 35 Net earnings for basic and
diluted EPS $ 5,854 $ 6,554
Weighted-average shares for basic and diluted EPS 1,571
1,630 Schedule 9 PHILIP MORRIS
INTERNATIONAL INC. and Subsidiaries
Condensed Balance Sheets
($ in millions, except ratios) (Unaudited)
September 30, December 31, 2014 2013
Assets
Cash and cash equivalents $ 2,043 $ 2,154 All other current assets
12,718 14,698 Property, plant and equipment, net 6,273 6,755
Goodwill 8,707 8,893 Other intangible assets, net 3,134 3,193
Investments in unconsolidated subsidiaries 1,371 1,536 Other assets
1,155 939
Total assets $ 35,401
$ 38,168
Liabilities and
Stockholders' (Deficit) Equity
Short-term borrowings $ 2,091 $ 2,400 Current portion of long-term
debt 1,357 1,255 All other current liabilities 11,669 13,411
Long-term debt 25,395 24,023 Deferred income taxes 1,709 1,477
Other long-term liabilities 1,857 1,876 Total
liabilities 44,078 44,442 Total PMI stockholders' deficit
(10,112 ) (7,766 ) Noncontrolling interests 1,435 1,492
Total stockholders' deficit (8,677 ) (6,274 )
Total
liabilities and stockholders' (deficit) equity $
35,401 $ 38,168 Total
debt $ 28,843 $ 27,678 Total debt to EBITDA 2.05
(1)
1.88 (1) Net debt to EBITDA 1.91
(1)
1.74 (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)
2014 2013
% Change in Reported NetRevenues
excluding ExciseTaxes
ReportedNetRevenues
LessExciseTaxes
ReportedNetRevenuesexcludingExciseTaxes
LessCurrency
ReportedNetRevenuesexcludingExciseTaxes
&Currency
LessAcquisi-tions
Reported
NetRevenuesexcludingExcise
Taxes,Currency &Acquisitions
ReportedNetRevenues
LessExciseTaxes
Reported
NetRevenuesexcludingExcise Taxes
Reported
ReportedexcludingCurrency
ReportedexcludingCurrency
&Acquisitions
$ 7,777 $ 5,420 $ 2,357 $ 64 $ 2,293 $ 5 $ 2,288 European
Union $ 7,487 $ 5,206 $ 2,281 3.3 % 0.5 % 0.3 % 6,111 3,677 2,434
(155 ) 2,589 — 2,589 EEMA 5,546 3,261 2,285 6.5 % 13.3 % 13.3 %
4,943 2,711 2,232 (210 ) 2,442 — 2,442 Asia 5,144 2,601 2,543 (12.2
)% (4.0 )% (4.0 )% 2,504 1,671 833 (93 ) 926 1 925 Latin America
& Canada 2,452 1,634 818 1.8 % 13.2 % 13.1 %
$ 21,335 $ 13,479
$ 7,856 $ (394 ) $
8,250 $ 6 $ 8,244
PMI Total $ 20,629 $
12,702 $ 7,927 (0.9
)% 4.1 % 4.0 %
2014 2013
% Change in Reported
OperatingCompanies Income
ReportedOperatingCompaniesIncome
LessCurrency
ReportedOperatingCompaniesIncomeexcludingCurrency
LessAcquisi-tions
ReportedOperatingCompaniesIncomeexcludingCurrency
&Acquisitions
ReportedOperatingCompaniesIncome
Reported
ReportedexcludingCurrency
ReportedexcludingCurrency
&Acquisitions
$ 1,186 $ 8 $ 1,178 $ — $ 1,178 European Union $ 1,207 (1.7
)% (2.4 )% (2.4 )% 1,204 (158 ) 1,362 — 1,362 EEMA 1,088 10.7 %
25.2 % 25.2 % 799 (148 ) 947 — 947 Asia 1,097 (27.2 )% (13.7 )%
(13.7 )% 267 (73 ) 340 — 340 Latin America & Canada 267 — %
27.3 % 27.3 %
$ 3,456 $ (371 ) $
3,827 $ — $ 3,827
PMI Total $ 3,659 (5.5
)% 4.6 % 4.6 %
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)
2014 2013
% Change in Adjusted
OperatingCompanies Income
ReportedOperatingCompaniesIncome
LessAssetImpairment
&Exit Costs
AdjustedOperatingCompaniesIncome
LessCurrency
AdjustedOperatingCompaniesIncomeexcludingCurrency
LessAcquisi-tions
AdjustedOperatingCompaniesIncomeexcludingCurrency
&Acquisitions
ReportedOperatingCompaniesIncome
LessAssetImpairment
&Exit Costs
AdjustedOperatingCompaniesIncome
Adjusted
AdjustedexcludingCurrency
AdjustedexcludingCurrency
&Acquisitions
$ 1,186 $ 16 $ 1,170 $ 8 $ 1,162 $ — $ 1,162
EuropeanUnion
$ 1,207 $ — $ 1,207 (3.1 )% (3.7 )% (3.7 )% 1,204 — 1,204 (158 )
1,362 — 1,362 EEMA 1,088 — 1,088 10.7 % 25.2 % 25.2 % 799 — 799
(148 ) 947 — 947 Asia 1,097 — 1,097 (27.2 )% (13.7 )% (13.7 )% 267
(7 ) 274 (73 ) 347 — 347
Latin America& Canada
267 — 267 2.6 % 30.0 % 30.0 %
$ 3,456
$ 9 $ 3,447
$ (371 ) $ 3,818 $
— $ 3,818 PMI Total
$ 3,659 $ — $
3,659 (5.8 )% 4.3 %
4.3 % 2014 2013
% Points Change
AdjustedOperatingCompaniesIncomeexcludingCurrency
Net
RevenuesexcludingExcise Taxes&
Currency(1)
AdjustedOperatingCompaniesIncome
MarginexcludingCurrency
AdjustedOperatingCompaniesIncomeexcludingCurrency
&Acquisitions
Net
RevenuesexcludingExcise Taxes,Currency
&Acquisitions(1)
AdjustedOperatingCompaniesIncome
MarginexcludingCurrency
&Acquisitions
AdjustedOperatingCompaniesIncome
NetRevenuesexcludingExciseTaxes(1)
AdjustedOperatingCompaniesIncome
Margin
AdjustedOperatingCompaniesIncomeMarginexcludingCurrency
AdjustedOperatingCompaniesIncome
MarginexcludingCurrency
&Acquisitions
$ 1,162 $ 2,293 50.7 % $ 1,162 $ 2,288 50.8 %
EuropeanUnion
$ 1,207 $ 2,281 52.9 % (2.2 ) (2.1 ) 1,362 2,589 52.6 % 1,362 2,589
52.6 % EEMA 1,088 2,285 47.6 % 5.0 5.0 947 2,442 38.8 % 947 2,442
38.8 % Asia 1,097 2,543 43.1 % (4.3 ) (4.3 ) 347 926 37.5 % 347 925
37.5 %
Latin America& Canada
267 818 32.6 % 4.9 4.9
$ 3,818 $ 8,250
46.3 % $ 3,818 $
8,244 46.3 % PMI Total $
3,659 $ 7,927 46.2
% 0.1 0.1 (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)
2014 2013 % Change Reported
Diluted EPS $ 1.38 $ 1.44
(4.2 )% Adjustments: Asset impairment and exit
costs 0.01 — Tax items — —
Adjusted Diluted
EPS $ 1.39 $ 1.44 (3.5
)% Less: Currency impact (0.20 )
Adjusted Diluted EPS, excluding Currency $
1.59 $ 1.44 10.4 %
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)
2014 2013 % Change Reported Diluted
EPS $ 1.38 $ 1.44 (4.2
)% Less: Currency impact (0.20 )
Reported Diluted EPS, excluding Currency $
1.58 $ 1.44 9.7 %
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)
2014 2013
% Change in Reported NetRevenues
excluding ExciseTaxes
ReportedNetRevenues
LessExciseTaxes
ReportedNetRevenuesexcludingExciseTaxes
LessCurrency
ReportedNetRevenuesexcludingExciseTaxes
&Currency
LessAcquisi-tions
Reported
NetRevenuesexcludingExcise
Taxes,Currency &Acquisitions
ReportedNetRevenues
LessExciseTaxes
Reported
NetRevenuesexcludingExcise Taxes
Reported
ReportedexcludingCurrency
ReportedexcludingCurrency
&Acquisitions
$ 22,225 $ 15,462 $ 6,763 $ 243 $ 6,520 $ 5 $ 6,515 European Union
$ 21,255 $ 14,798 $ 6,457 4.7 % 1.0 % 0.9 % 16,347 9,621 6,726 (477
) 7,203 — 7,203 EEMA 15,346 8,837 6,509 3.3 % 10.7 % 10.7 % 14,515
7,790 6,725 (861 ) 7,586 — 7,586 Asia 15,776 7,751 8,025 (16.2 )%
(5.5 )% (5.5 )% 7,078 4,722 2,356 (316 ) 2,672 1 2,671 Latin
America & Canada 7,262 4,825 2,437 (3.3 )% 9.6 % 9.6 %
$ 60,165 $ 37,595
$ 22,570 $ (1,411 )
$ 23,981 $ 6 $
23,975 PMI Total $ 59,639
$ 36,211 $ 23,428
(3.7 )% 2.4 % 2.3 %
2014 2013
% Change in Reported
OperatingCompanies Income
ReportedOperatingCompaniesIncome
LessCurrency
ReportedOperatingCompaniesIncomeexcludingCurrency
LessAcquisi-tions
ReportedOperatingCompaniesIncomeexcludingCurrency
&Acquisitions
ReportedOperatingCompaniesIncome
Reported
ReportedexcludingCurrency
ReportedexcludingCurrency
&Acquisitions
$ 2,875 $ 117 $ 2,758 $ — $ 2,758 European Union
$
3,227 (10.9 )% (14.5 )% (14.5 )% 3,218 (368 ) 3,586 — 3,586 EEMA
2,968 8.4 % 20.8 % 20.8 % 2,614 (544 ) 3,158 — 3,158 Asia 3,567
(26.7 )% (11.5 )% (11.5 )% 734 (184 ) 918 — 918 Latin America &
Canada 776 (5.4 )% 18.3 % 18.3 %
$ 9,441 $ (979
) $ 10,420 $ —
$ 10,420 PMI Total $
10,538 (10.4 )% (1.1 )%
(1.1 )%
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)
2014 2013
% Change in Adjusted
OperatingCompanies Income
ReportedOperatingCompaniesIncome
LessAssetImpairment
&Exit Costs
AdjustedOperatingCompaniesIncome
LessCurrency
AdjustedOperatingCompaniesIncomeexcludingCurrency
LessAcquisi-tions
AdjustedOperatingCompaniesIncomeexcludingCurrency
&Acquisitions
ReportedOperatingCompaniesIncome
LessAssetImpairment
&Exit Costs
AdjustedOperatingCompaniesIncome
Adjusted
AdjustedexcludingCurrency
AdjustedexcludingCurrency
&Acquisitions
$ 2,875 $ (472 ) $ 3,347 $ 117 $ 3,230 $ — $ 3,230
EuropeanUnion
$ 3,227 $ — $ 3,227 3.7 % 0.1 % 0.1 % 3,218 — 3,218 (368 ) 3,586 —
3,586 EEMA 2,968 — 2,968 8.4 % 20.8 % 20.8 % 2,614 (24 ) 2,638 (544
) 3,182 — 3,182 Asia 3,567 (8 ) 3,575 (26.2 )% (11.0 )% (11.0 )%
734 (7 ) 741 (184 ) 925 — 925
Latin America& Canada
776 — 776 (4.5 )% 19.2 % 19.2 %
$ 9,441
$ (503 ) $ 9,944
$ (979 ) $ 10,923
$ — $ 10,923 PMI
Total $ 10,538 $ (8 )
$ 10,546 (5.7 )% 3.6
% 3.6 % 2014 2013
% Points Change
AdjustedOperatingCompaniesIncomeexcludingCurrency
Net
RevenuesexcludingExcise Taxes&
Currency(1)
AdjustedOperatingCompaniesIncome
MarginexcludingCurrency
AdjustedOperatingCompaniesIncomeexcludingCurrency
&Acquisitions
Net
RevenuesexcludingExcise Taxes,Currency
&Acquisitions(1)
AdjustedOperatingCompaniesIncome
MarginexcludingCurrency
&Acquisitions
AdjustedOperatingCompaniesIncome
NetRevenuesexcludingExciseTaxes(1)
AdjustedOperatingCompaniesIncome
Margin
AdjustedOperatingCompaniesIncomeMarginexcludingCurrency
AdjustedOperatingCompaniesIncome
MarginexcludingCurrency
&Acquisitions
$ 3,230 $ 6,520 49.5 % $ 3,230 $ 6,515 49.6 %
EuropeanUnion
$ 3,227 $ 6,457 50.0 % (0.5 ) (0.4 ) 3,586 7,203 49.8 % 3,586 7,203
49.8 % EEMA 2,968 6,509 45.6 % 4.2 4.2 3,182 7,586 41.9 % 3,182
7,586 41.9 % Asia 3,575 8,025 44.5 % (2.6 ) (2.6 ) 925 2,672 34.6 %
925 2,671 34.6 %
Latin America& Canada
776 2,437 31.8 % 2.8 2.8
$ 10,923 $ 23,981
45.5 % $ 10,923 $
23,975 45.6 % PMI Total $
10,546 $ 23,428 45.0
% 0.5 0.6 (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)
2014 2013 % Change Reported
Diluted EPS $ 3.73 $ 4.02
(7.2 )% Adjustments: Asset impairment and exit
costs 0.26 — Tax items — 0.01
Adjusted
Diluted EPS $ 3.99 $ 4.03
(1.0 )% Less: Currency impact (0.52 )
Adjusted Diluted EPS, excluding Currency $
4.51 $ 4.03 11.9 %
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)
2014
2013
% Change
Reported Diluted EPS $ 3.73 $
4.02 (7.2 )% Less: Currency impact
(0.52 )
Reported Diluted EPS, excluding
Currency $ 4.25 $ 4.02
5.7 %
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,
2014 2013
October ~December
January ~September
12 months 2013 2014 rolling Earnings before income
taxes $ 2,936 $ 8,381 $ 11,317 $ 12,542 Interest
expense, net 252 789 1,041 973 Depreciation and amortization 223
660 883 882 Extraordinary, unusual or non-recurring expenses, net
(1) 301 503 804 309
EBITDA $
3,712 $ 10,333 $ 14,045 $
14,706 September 30, December
31, 2014 2013 Short-term borrowings $
2,091 $ 2,400 Current portion of long-term debt 1,357 1,255
Long-term debt 25,395 24,023
Total Debt $
28,843 $ 27,678 Less: Cash and cash
equivalents 2,043 2,154
Net Debt $
26,800 $ 25,524
Ratios
Total Debt to EBITDA 2.05 1.88 Net
Debt to EBITDA 1.91 1.74 (1)
Asset Impairment and Exit Costs at Operating Income level.
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,
2014 2013 % Change 2014 2013
% Change Net cash provided by operating
activities(a) $ 2,965 $ 3,315
(10.6 )% $ 6,385 $ 7,815
(18.3 )% Less: Capital expenditures 296
301 804 821
Free cash flow
$ 2,669 $ 3,014 (11.4 )%
$ 5,581 $ 6,994 (20.2 )%
Less: Currency impact (752 ) (1,372 )
Free cash flow, excluding currency $ 3,421
$ 3,014 13.5 % $
6,953 $ 6,994 (0.6
)%
For the
Quarters Ended For the Nine Months Ended September
30, September 30, 2014 2013 %
Change 2014 2013 % Change Net
cash provided by operating activities(a) $ 2,965
$ 3,315 (10.6 )% $ 6,385
$ 7,815 (18.3 )% Less: Currency
impact (764 ) (1,412 )
Net cash provided by
operating activities,excluding currency $
3,729 $ 3,315 12.5
% $ 7,797 $ 7,815
(0.2 )% (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)
2013 Reported
Diluted EPS $ 5.26 Adjustments:
Asset impairment and exit costs 0.12 Tax items 0.02
Adjusted Diluted EPS $ 5.40
Philip Morris International Inc.Investor Relations:New York: +1
(917) 663 2233Lausanne: +41 (0)58 242 4666orMedia:Lausanne: +41
(0)58 242 4500
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