| Statement Of Financial Position Classified (USD $) | ||
| In Millions | Jun. 30, 2009
| Dec. 31, 2008
|
| ASSETS | ||
| Cash and cash equivalents | $2,602 | $1,531 |
| Receivables (less allowances of $30 in 2009 and $14 in 2008) | 3,171 | 2,848 |
| Inventories: | ||
| Leaf tobacco | 3,731 | 3,924 |
| Other raw materials | 1,195 | 1,137 |
| Finished product | 3,303 | 4,603 |
| Inventory, Net, Total | 8,229 | 9,664 |
| Deferred income taxes | 284 | 322 |
| Other current assets | 445 | 574 |
| Total current assets | 14,731 | 14,939 |
| Property, plant and equipment, at cost | 11,562 | 11,700 |
| Less: accumulated depreciation | 5,441 | 5,352 |
| Property, Plant and Equipment, Net, Total | 6,121 | 6,348 |
| Goodwill | 8,414 | 8,015 |
| Other intangible assets, net | 3,321 | 3,084 |
| Other assets | 540 | 586 |
| TOTAL ASSETS | 33,127 | 32,972 |
| LIABILITIES | ||
| Short-term borrowings | 399 | 375 |
| Current portion of long-term debt | 195 | 209 |
| Accounts payable | 774 | 1,013 |
| Accrued liabilities: | ||
| Marketing | 437 | 457 |
| Taxes, except income taxes | 4,925 | 4,502 |
| Employment costs | 571 | 665 |
| Dividends payable | 1,054 | 1,090 |
| Other | 867 | 1,167 |
| Income taxes | 263 | 488 |
| Deferred income taxes | 181 | 178 |
| Total current liabilities | 9,666 | 10,144 |
| Long-term debt | 13,480 | 11,377 |
| Deferred income taxes | 1,449 | 1,401 |
| Employment costs | 1,273 | 1,682 |
| Other liabilities | 572 | 464 |
| Total liabilities | 26,440 | 25,068 |
| Contingencies (Note 11) | 0 | 0 |
| STOCKHOLDERS' EQUITY | ||
| Common stock, no par value (2,109,316,331 shares issued in 2009 and 2008) | 0 | 0 |
| Additional paid-in capital | 1,457 | 1,581 |
| Earnings reinvested in the business | 14,251 | 13,354 |
| Accumulated other comprehensive losses | (1,719) | (2,281) |
| Stockholders Equity Subtotal Before Treasury Stock, Total | 13,989 | 12,654 |
| Less: cost of repurchased stock (167,611,677 and 102,053,271 shares in 2009 and 2008, respectively) | 7,612 | 5,154 |
| Total PMI stockholders' equity | 6,377 | 7,500 |
| Noncontrolling interests | 310 | 404 |
| Total stockholders' equity | 6,687 | 7,904 |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $33,127 | $32,972 |
| Statement Of Financial Position Classified (Parenthetical) (USD $) | ||
| In Millions, except Share data | Jun. 30, 2009
| Dec. 31, 2008
|
| Receivables, allowances | $30 | $14 |
| Common stock, no par value | $0 | $0 |
| Common stock, shares issued | 2,109,316,331 | 2,109,316,331 |
| Repurchased stock, shares | 167,611,677 | 102,053,271 |
| Statement Of Income (USD $) | ||||
| In Millions, except Per Share data | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
| Net revenues | $15,213 | $16,703 | $28,499 | $31,057 |
| Cost of sales | 2,185 | 2,462 | 4,156 | 4,643 |
| Excise taxes on products | 9,079 | 9,994 | 16,768 | 18,427 |
| Gross profit | 3,949 | 4,247 | 7,575 | 7,987 |
| Marketing, administration and research costs | 1,498 | 1,584 | 2,788 | 2,768 |
| Asset impairment and exit costs | 1 | 48 | 2 | 71 |
| Amortization of intangibles | 21 | 7 | 36 | 16 |
| Operating income | 2,429 | 2,608 | 4,749 | 5,132 |
| Interest expense, net | 193 | 61 | 351 | 136 |
| Earnings before income taxes | 2,236 | 2,547 | 4,398 | 4,996 |
| Provision for income taxes | 639 | 790 | 1,284 | 1,515 |
| Net earnings | 1,597 | 1,757 | 3,114 | 3,481 |
| Net earnings attributable to noncontrolling interests | 51 | 65 | 92 | 116 |
| Net earnings attributable to PMI | $1,546 | $1,692 | $3,022 | $3,365 |
| Per share data (Note 9): | ||||
| Basic earnings per share | 0.79 | 0.81 | 1.53 | 1.6 |
| Diluted earnings per share | 0.79 | 0.8 | 1.52 | 1.59 |
| Dividends declared to public stockholders | 0.54 | 0.46 | 1.08 | 0.46 |
| Statement Of Shareholders Equity And Other Comprehensive Income (USD $) | |||||||
| In Millions | Common Stock
| Additional Paid-in Capital
| Earnings Reinvested in the Business
| Accumulated Other Comprehensive Income [Member]
| Cost of Repurchased Stock
| Non controlling Interests
| Total
|
| Beginning Balances at Dec. 31, 2007 | $0 | $1,265 | $12,642 | $1,688 | $0 | $418 | $16,013 |
| Comprehensive earnings: | |||||||
| Net earnings | 3,365 | 116 | 3,481 | ||||
| Other comprehensive earnings (losses), net of income taxes: | |||||||
| Currency translation adjustments | 654 | 16 | 670 | ||||
| Change in net loss and prior service cost, net of income taxes of $(8) in 2009 and $6 in 2008 | (2) | (2) | |||||
| Change in fair value of derivatives accounted for as hedges, net of income taxes of $(4) in 2009 and $8 in 2008 | (111) | (111) | |||||
| Exercise of stock options and issuance of other stock awards | 420 | 131 | 551 | ||||
| Dividends declared to Altria Group, Inc. ($1.43 per share) | (3,019) | (3,019) | |||||
| Dividends declared to public stockholders ($1.08 in 2009 and $0.46 in 2008 per share) | (956) | (956) | |||||
| Payments to noncontrolling interests | (236) | (236) | |||||
| Common stock repurchased | (2,131) | (2,131) | |||||
| Other | (79) | 78 | (1) | ||||
| Ending Balances at Jun. 30, 2008 | 0 | 1,606 | 12,032 | 2,229 | (2,000) | 392 | 14,259 |
| Beginning Balances at Mar. 31, 2008 | 0 | ||||||
| Other comprehensive earnings (losses), net of income taxes: | |||||||
| Ending Balances at Jun. 30, 2008 | 0 | ||||||
| Beginning Balances at Dec. 31, 2008 | 0 | 1,581 | 13,354 | (2,281) | (5,154) | 404 | 7,904 |
| Comprehensive earnings: | |||||||
| Net earnings | 3,022 | 92 | 3,114 | ||||
| Other comprehensive earnings (losses), net of income taxes: | |||||||
| Currency translation adjustments | 490 | (7) | 483 | ||||
| Change in net loss and prior service cost, net of income taxes of $(8) in 2009 and $6 in 2008 | 28 | 28 | |||||
| Change in fair value of derivatives accounted for as hedges, net of income taxes of $(4) in 2009 and $8 in 2008 | 44 | 44 | |||||
| Exercise of stock options and issuance of other stock awards | (124) | 278 | 154 | ||||
| Dividends declared to public stockholders ($1.08 in 2009 and $0.46 in 2008 per share) | (2,125) | (2,125) | |||||
| Payments to noncontrolling interests | (179) | (179) | |||||
| Common stock repurchased | (2,736) | (2,736) | |||||
| Ending Balances at Jun. 30, 2009 | 0 | 1,457 | 14,251 | (1,719) | (7,612) | 310 | 6,687 |
| Beginning Balances at Mar. 31, 2009 | 0 | ||||||
| Other comprehensive earnings (losses), net of income taxes: | |||||||
| Ending Balances at Jun. 30, 2009 | $0 |
| Statement Of Shareholders Equity And Other Comprehensive Income (Parenthetical) (USD $) | |||
| In Millions, except Per Share data | Earnings Reinvested in the Business
| Accumulated Other Comprehensive Income [Member]
| Total
|
| Change in net loss and prior service cost, income taxes | $6 | $6 | |
| Change in fair value of derivatives accounted for as hedges, income taxes | 8 | 8 | |
| Dividends declared to Altria Group, Inc., per share | 1.43 | 1.43 | |
| Dividends declared to public stockholders, per share | 0.46 | 0.46 | |
| Change in net loss and prior service cost, income taxes | (8) | (8) | |
| Change in fair value of derivatives accounted for as hedges, income taxes | ($4) | ($4) | |
| Dividends declared to public stockholders, per share | 1.08 | 1.08 |
| Statement Of Cash Flows Indirect (USD $) | ||
| In Millions | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
| CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | ||
| Net earnings | $3,114 | $3,481 |
| Adjustments to reconcile net earnings to operating cash flows: | ||
| Depreciation and amortization | 395 | 404 |
| Deferred income tax provision (benefit) | 77 | (6) |
| Equity loss from RBH legal settlement | 0 | 124 |
| Colombian Investment and Cooperation Agreement charge | 135 | 0 |
| Asset impairment and exit costs, net of cash paid | (35) | 8 |
| Cash effects of changes, net of the effects from acquired and divested companies: | ||
| Receivables, net | (326) | 169 |
| Inventories | 1,344 | 976 |
| Accounts payable | (27) | (4) |
| Income taxes | (201) | (152) |
| Accrued liabilities and other current assets | 358 | 115 |
| Pension plan contributions | (362) | (121) |
| Changes in amounts due from Altria Group, Inc. and affiliates | 0 | 37 |
| Other | 101 | 68 |
| Net cash provided by operating activities | 4,573 | 5,099 |
| CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | ||
| Capital expenditures | (323) | (574) |
| Purchases of businesses, net of acquired cash | (209) | (29) |
| Other | 137 | (370) |
| Net cash used in investing activities | (395) | (973) |
| CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | ||
| Net repayment of short-term borrowings | (999) | (72) |
| Long-term debt proceeds | 2,987 | 7,667 |
| Long-term debt repaid | (1) | (5,736) |
| Changes in amounts due from Altria Group, Inc. and affiliates | 0 | 721 |
| Repurchases of common stock | (2,850) | (1,948) |
| Issuance of common stock | 105 | 68 |
| Dividends paid to Altria Group, Inc. | 0 | (3,019) |
| Dividends paid to public stockholders | (2,161) | 0 |
| Other | (226) | (167) |
| Net cash used in financing activities | (3,145) | (2,486) |
| Effect of exchange rate changes on cash and cash equivalents | 38 | (113) |
| Cash and cash equivalents: | ||
| Increase | 1,071 | 1,527 |
| Balance at beginning of period | 1,531 | 1,501 |
| Balance at end of period | $2,602 | $3,028 |
| Notes to Financial Statements | |
| 6 Months Ended
Jun. 30, 2009 USD / shares | |
| Notes to Financial Statements [Abstract] | |
| Note 1. Basis of Presentation and Separation from Altria Group, Inc.: | Note 1. Basis of Presentation and Separation from Altria Group, Inc.: Basis of Presentation The interim condensed consolidated financial statements of Philip Morris International Inc. and subsidiaries (PMI) are unaudited. These interim condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles and such principles are applied on a consistent basis. It is the opinion of PMIs management that all adjustments necessary for a fair statement of the interim results presented have been reflected therein. All such adjustments were of a normal recurring nature. Net revenues and net earnings attributable to PMI for any interim period are not necessarily indicative of results that may be expected for the entire year. These statements should be read in conjunction with the audited consolidated financial statements and related notes, which appear in PMIs Annual Report to Stockholders and which are incorporated by reference into PMIs Annual Report on Form 10-K for the year ended December31, 2008 (the 2008 Form 10-K). As discussed in the 2008 Form 10-K, certain of PMIs subsidiaries prior to 2008 reported their results up to ten days before the end of December, rather than on December31. During 2008, these subsidiaries moved to a December31, 2008 closing date, which impacted the first quarter and fourth quarter results of previous periods. As a result, certain amounts in the first quarter of 2008 have been revised to reflect this change. The impact of this change resulted in a decrease in net earnings attributable to PMI and diluted earnings per share (EPS) of $194 million and approximately $0.10, respectively, in the first six months of 2008. As discussed in Note 18. New Accounting Standards, certain prior year balance sheet amounts related to noncontrolling interests have been reclassified to conform with the current years presentation. PMI has evaluated subsequent events through the time of filing for this Form 10-Q on August6, 2009, which was the date of issuance of the interim condensed consolidated financial statements. Separation from Altria Group, Inc. As discussed in the 2008 Form 10-K, prior to March28, 2008, PMI was a wholly-owned subsidiary of Altria Group, Inc. (Altria). On January30, 2008, the Altria Board of Directors announced Altrias plans to spin off all of its interest in PMI to Altrias stockholders in a tax-free transaction pursuant to Section355 of the U.S. Internal Revenue Code (the Spin-off). The distribution of all of the PMI shares owned by Altria was made on March28, 2008 (the Distribution Date) to stockholders of record as of the close of business on March19, 2008 (the Record Date). Altria distributed one share of PMI common stock for each share of Altria common stock outstanding as of the Record Date. For additional information regarding PMIs transactions with Altria Group, Inc. and its affiliates after the Spin-off, see Note 3. Transactions with Altria Group, Inc. |
| Note 2. Asset Impairment and Exit Costs: | Note 2. Asset Impairment and Exit Costs: Pre-tax asset impairment and exit costs consisted of the following (in millions): FortheSixMonthsEnded June 30, FortheThreeMonthsEnded June 30, 2009 2008 2009 2008 Separation programs: European Union $ 2 $ 56 $ 1 $ 48 Total separation programs 2 56 1 48 Contract termination charges: Eastern Europe, Middle East and Africa 1 Asia 14 Total contract termination charges - 15 - - Asset impairment and exit costs $ 2 $ 71 $ 1 $ 48 In 2008, PMI terminated its contract manufacturing arrangement with Philip Morris USA Inc. (PM USA), a U.S. tobacco subsidiary of Altria, and completed the process of shifting all of its PM USA contract manufactured production to PMI facilities in Europe during the fourth quarter of 2008. During the first quarter of 2008, PMI recorded exit costs of $15 million related to the termination of its manufacturing contract with PM USA. The 2009 and 2008 pre-tax separation program charges primarily related to severance costs. Cash payments related to exit costs at PMI were $37 million and $15 million for the six months and three months ended June30, 2009, respectively, and $63 million and $34 million for the six months and three months ended June30, 2008, respectively. Future cash payments for exit costs incurred to date are expected to be approximately $76 million, which will be substantially paid by 2011. The movement in the exit cost liabilities for the six months ended June30, 2009 was as follows (in millions): Liability balance, January1, 2009 $ 115 Charges 2 Cash spent (37 ) Currency/other (4 ) Liability balance, June 30, 2009 $ 76 |
| Note 3. Transactions with Altria Group, Inc.: | Note 3. Transactions with Altria Group, Inc.: Operations Prior to 2009, PMI had contracts with PM USA for the purchase of U.S.-grown tobacco leaf, the contract manufacture of cigarettes for export from the United States and certain research and development activities. Billings for services were generally based upon PM USAs cost to provide such services, plus a service fee. The cost of leaf purchases was the market price of the leaf plus a service fee. Fees paid have been included in operating cash flows on PMIs condensed consolidated statements of cash flows. As previously discussed, PMI terminated its contract manufacturing arrangement in 2008 with PM USA and completed the process of shifting all of its PM USA contract manufactured production to PMI facilities in Europe during the fourth quarter of 2008. During the first quarter of 2008, PMI recorded exit costs of $15 million related to the termination of its manufacturing contract with PM USA. The goods and services purchased from PM USA were as follows (in millions): FortheSix MonthsEnded June30, 2008 FortheThree MonthsEnded June30, 2008 Contract manufacturing, cigarette volume 14,520 6,273 Contract manufacturing expense $ 240 $ 107 Research and development, net of billings to PM USA (2 ) Total pre-tax expense $ 238 $ 107 Leaf purchases $ 93 $ - Contract manufacturing expense included the cost of cigarettes manufactured for PMI, as well as the cost of PMIs purchases of reconstituted tobacco and production materials. The expenses shown above also included total service fees of $11 million and $5 million for the six months and three months ended June30, 2008, respectively. Net amounts due from/(to) Altria Group, Inc. and affiliates related to ongoing operations consisted of the following (in millions): June30, 2009 December31, 2008 Net receivable from Altria Group, Inc. and affiliates $ 69 $ 69 Payable for services from PM USA (53 ) Due from Altria Group, Inc. and affiliates $ 69 $ 16 The amounts due from Altria Group, Inc. and affiliates are reflected in receivables on the condensed consolidated balance sheet and primarily relate to income taxes for years in which PMI was part of Altrias consolidated tax return. The amounts payable for services from PM USA are reflected in accounts payable on the condensed consolidated balance sheet. Other On March28, 2008, PMI Global Services Inc. purchased from Altrias subsidiary, Altria Corporate Services, Inc. (ALCS), at a fair market value of $108 million, a subsidiary of ALCS, the principal assets of which are two Gulfstream airplanes. Given that the purchase was from an entity under common control, the planes were recorded at book value ($89 million) and a portion of the purchase price ($19 million) was treated as a dividend to Altria. |
| Note 4. Stock Plans: | Note 4. Stock Plans: Under the Philip Morris International Inc. 2008 Performance Incentive Plan (the Plan), PMI may grant to certain eligible employees stock options, stock appreciation rights, restricted stock, restricted stock units and deferred stock units and other stock-based awards based on PMIs common stock, as well as performance-based incentive awards. Up to 70million shares of PMIs common stock may be issued under the Plan. At June30, 2009, shares available for grant under the Plan were 33,363,977. PMI has also adopted the Philip Morris International Inc. 2008 Stock Compensation Plan for Non-Employee Directors (the Non-Employee Directors Plan). A non-employee director is defined as each member of the PMI Board of Directors who is not a full-time employee of PMI or of any corporation in which PMI owns, directly or indirectly, stock possessing at least 50% of the total combined voting power of all classes of stock entitled to vote in the election of directors in such corporation. Up to 1,000,000 shares of PMI common stock may be awarded under the Non-Employee Directors Plan. As of June30, 2009, 866,494 shares were available for grant under the plan. During the six months ended June30, 2009, PMI granted 3.8million shares of restricted stock and deferred stock awards to eligible employees at a weighted-average grant date fair value of $36.93. PMI recorded compensation expense for restricted stock and deferred stock awards of $44 million and $30 million during the six months ended June30, 2009 and 2008, respectively, and $25 million and $20 million during the three months ended June30, 2009 and 2008, respectively. As of June30, 2009, PMI had $194 million of total unrecognized compensation cost related to non-vested restricted and deferred shares. The cost is recognized over the original restriction period of the awards, which is typically three years from the date of the original grant. During the six months ended June30, 2009, 1.4million shares of PMI restricted stock and deferred stock awards vested. Of this amount 0.9million shares went to PMI employees and the remainder went to Altria and Kraft employees who held PMI stock awards as a result of the Spin-off. The grant date fair value of all the vested shares was approximately $104 million or $73.92 per share. The total fair value of restricted stock and deferred stock awards that vested during the six months ended June30, 2009 was approximately the same as the grant date fair value. The grant price information for restricted stock and deferred stock awarded prior to January30, 2008 reflects historical market prices of Altria stock at date of grant and is not adjusted to reflect the Spin-off. For the six months ended June30, 2009, the total intrinsic value of the 5.4million PMI stock options exercised was $102 million. |
| Note 5. Benefit Plans: | Note 5. Benefit Plans: Pension coverage for employees of PMIs non-U.S. subsidiaries is provided, to the extent deemed appropriate, through separate plans, many of which are governed by local statutory requirements. Prior to the Spin-off, certain employees of PMI participated in the U.S. benefit plans offered by Altria. After the Distribution Date, the benefits previously provided by Altria are now provided by PMI. As a result, new postretirement and pension plans have been established by PMI, and the related plan assets (to the extent that the benefit plans were previously funded) and liabilities have been transferred to the new plans. In addition, PMI provides health care and other benefits to certain non-U.S. retired employees. In general, health care benefits for non-U.S. retired employees are covered through local government plans. Pension Plans Components of Net Periodic Benefit Cost Net periodic pension cost consisted of the following (in millions): U.S.Plans Non-U.S.Plans FortheSixMonths Ended June30, FortheSixMonths Ended June30, 2009 2009 2008 Service cost $ 6 $ 62 $ 65 Interest cost 9 82 83 Expected return on plan assets (6 ) (107 ) (128 ) Amortization: Net loss 2 16 4 Prior service cost 3 3 Other 4 7 Net periodic pension cost $ 15 $ 56 $ 34 U.S.Plans Non-U.S. Plans FortheThreeMonths Ended June30, FortheThreeMonths Ended June30, 2009 2009 2008 Service cost $ 3 $ 31 $ 33 Interest cost 4 41 43 Expected return on plan assets (3 ) (54 ) (66 ) Amortization: Net loss 1 8 2 Prior service cost 2 1 Other 7 Net periodic pension cost $ 5 $ 28 $ 20 Other above was primarily related to early retirement programs in 2009 and curtailment losses related to plan changes in 2008. The U.S. pension expense for the six months and three months ended June30, 2008 was insignificant. Employer Contributions PMI presently makes, and plans to make, contributions, to the extent that they are tax deductible and meet funding requirements, in order to maintain plan assets in excess of the accumulated benefit obligation of its funded U.S. and non-U.S. plans. Employer contributions of $362 million were made to the pension plans during the six months ended June30, 2009. Currently, PMI anticipates making additional contributions during the remainder of 2009 of approximately $156 million to its pension plans, based on current tax and benefit laws. However, this estimate is subject to change as a result of changes in tax and other benefit laws, as well as asset performance significantly above or below the assumed long-term rate of return on pension assets, or changes in interest rates. |
| Note 6. Goodwill and Other Intangible Assets, net: | Note 6. Goodwill and Other Intangible Assets, net: Goodwill and other intangible assets, net, by segment were as follows (in millions): Goodwill OtherIntangibleAssets,net June30, 2009 December31, 2008 June30, 2009 December31, 2008 European Union $ 1,477 $ 1,456 $ 678 $ 469 Eastern Europe, Middle East and Africa 579 648 196 200 Asia 3,653 3,387 1,265 1,188 Latin America Canada 2,705 2,524 1,182 1,227 Total $ 8,414 $ 8,015 $ 3,321 $ 3,084 Goodwill is due primarily to PMIs acquisitions in Canada, Indonesia, Mexico, Greece, Serbia, Colombia and Pakistan. The movement in goodwill and the gross carrying amount of intangible assets from December31, 2008, is as follows (in millions): Goodwill Other Intangible Assets, gross Balance at December 31, 2008 $ 8,015 $ 3,200 Changes due to: Acquisitions 116 137 Currency 283 138 Balance at June 30, 2009 $ 8,414 $ 3,475 The changes from acquisitions are due to the purchase price allocation for PMIs February 2009 purchase of the Petteres tobacco business and its September 2008 acquisition of Rothmans Inc. in Canada. For further details on acquisitions, see Note 8. Acquisitions. Additional details of other intangible assets were as follows (in millions): June30, 2009 December31, 2008 Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Non-amortizable intangible assets $ 1,974 $ 1,878 Amortizable intangible assets 1,501 $ 154 1,322 $ 116 Total other intangible assets $ 3,475 $ 154 $ 3,200 $ 116 Non-amortizable intangible assets substantially consist of trademarks from PMIs acquisition in Indonesia in 2005 and Mexico in 2007. Amortizable intangible assets consist of certain trademarks, distribution networks and non-compete agreements associated with acquisitions. Pre-tax amortization expense for intangible assets during the six months ended June30, 2009 and 2008 was $36 million and $16 million, respectively, and $21 million and $7 million for the three months ended June30, 2009 and 2008, respectively. Amortization expense for each of the next five years is estimated to be $75 million or less, assuming no additional transactions occur that require the amortization of intangible assets. During the first quarter of 2009, PMI completed its annual review of goodwill and non-amortizable intangible assets, and no impairment charges were required as a result of this review. |
| Note 7. Financial Instruments: | Note 7. Financial Instruments: Overview PMI operates in markets outside of the United States, with manufacturing and sales facilities in various locations around the world. PMI utilizes certain financial instruments to manage foreign currency exposure. Derivative financial instruments are used by PMI principally to reduce exposures to market risks resulting from fluctuations in foreign exchange rates by creating offsetting exposures. PMI is not a party to leveraged derivatives and, by policy, does not use derivative financial instruments for speculative purposes. Financial instruments qualifying for hedge accounting must maintain a specified level of effectiveness between the hedging instrument and the item being hedged, both at inception and throughout the hedged period. PMI formally documents the nature and relationships between the hedging instruments and hedged items, as well as its risk-management objectives, strategies for undertaking the various hedge transactions and method of assessing hedge effectiveness. Additionally, for hedges of forecasted transactions, the significant characteristics and expected terms of the forecasted transaction must be specifically identified, and it must be probable that each forecasted transaction will occur. If it were deemed probable that the forecasted transaction will not occur, the gain or loss would be recognized in earnings currently. PMI reports its net transaction losses and its net transaction gains in marketing, administration and research costs on the condensed consolidated statements of earnings. PMI uses forward foreign exchange contracts, foreign currency swaps and foreign currency options, hereafter collectively referred to as foreign exchange contracts, to mitigate its exposure to changes in exchange rates from third-party and intercompany actual and forecasted transactions. The primary currencies to which PMI is exposed include the Euro, Indonesian rupiah, Japanese yen, Mexican peso, Russian ruble, Swiss franc and Turkish lira. At June30, 2009, PMI had foreign exchange contracts with aggregate notional amounts of $9.2 billion. Of this amount, $0.8 billion related to cash flow hedges, $1.2 billion related to hedges of net investments in foreign operations and $7.2 billion related to other derivatives that primarily offset currency exposures on inter-company financing. The fair value of PMIs foreign exchange contracts as of June30, 2009, was as follows (in millions): Asset Derivatives Liability Derivatives Balance Sheet Classification Fair Value Balance Sheet Classification Fair Value Foreign exchange contracts designated as hedging instruments under SFAS No.133 Other current assets $ 53 Other accrued liabilities $ 54 Foreign exchange contracts not designated as hedging instruments under SFAS No.133 Other current assets 55 Other accrued liabilities 36 Total Derivatives $ 108 $ 90 Hedging activities, which represent movement in derivatives as well as the respective underlying transactions, |
| Note 8. Acquisitions: | Note 8. Acquisitions: Rothmans: On July31, 2008, PMI announced that it had entered into an agreement with Rothmans Inc. (Rothmans), which is located in Canada, to purchase, by way of a tender offer, all of the outstanding common shares of Rothmans for CAD $30 per share in cash, or CAD $2.0 billion (approximately $1.9 billion based on exchange rates prevailing at the time of the acquisition). Prior to this agreement, Rothmans sole holding was a 60% interest in Rothmans, Benson Hedges Inc. (RBH). The remaining 40% interest in RBH was owned by PMI. In October 2008, PMI completed the acquisition of all the Rothmans shares. From January 2008 to September 2008, PMI recorded equity earnings on its equity interest in RBH. After the completion of the acquisition, Rothmans became a wholly-owned subsidiary of PMI and, as a result, PMI recorded all of Rothmans earnings during the fourth quarter of 2008. Rothmans contributed $114 million of incremental operating income and $48 million of incremental net earnings attributable to PMI during the first six months of 2009, and $62 million of incremental operating income and $25 million of incremental net earnings attributable to PMI during the second quarter of 2009. The final allocation of purchase price to Rothmans assets and liabilities at June30, 2009 was principally as follows (in billions): Goodwill $ 1.9 Acquired cash 0.3 Inventories 0.2 Definite-lived brand names 0.3 Fixed assets 0.1 Other assets 0.1 Total assets 2.9 Short-term debt 0.2 Accrued settlement costs 0.4 Other liabilities 0.4 Total liabilities 1.0 Cash paid for Rothmans $ 1.9 Other: In February 2009, PMI purchased the Petteres tobacco business. Assets purchased consist primarily of amortizable intangible assets related to brands primarily sold in Norway and Sweden. In June 2008, PMI purchased the fine cut trademark Interval and certain other trademarks in the other tobacco products category from Imperial Tobacco Group PLC for $407 million. This purchase is reflected in other investing activities in the condensed consolidated statement of cash flows for the six months ended June30, 2008. The effect of these other acquisitions presented above was not material to PMIs consolidated financial position, results of operations or operating cash flows in any of the periods presented. In July 2009, PMI announced that it had entered into an agreement to purchase 100% of the shares of privately owned Colombian cigarette manufacturer, Productora Tabacalera de Colombia, Protabaco Ltda., for $452 million. The transaction, which is subject to competition authority approval and final confirmatory due diligence, is expected to close within six months of the announcement. In July 2009, PMI also entered into an agreement with Swedish Match AB to purchase its South African affiliate, Swedish Match South Africa (Proprietary) Limited, for ZAR 1.75 billion (approximately $222 million). The transaction is subject to South African regulatory approval and is expected to be comple |
| Note 9. Earnings Per Share: | Note 9. Earnings Per Share: Effective January1, 2009, PMI adopted FASB Staff Position No. EITF 03-6-1 Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities (FSP 03-6-1). FSP 03-6-1 states that unvested share-based payment awards that contain nonforfeitable rights to dividends are participating securities and therefore shall be included in the earnings per share calculation pursuant to the two-class method described in SFAS No.128, Earnings Per Share. FSP 03-6-1 requires the retrospective adjustment of all prior period earnings per share data. The adoption and retrospective application of FSP 03-6-1 did not have a material impact on PMIs basic and diluted EPS. Basic and diluted EPS were calculated using the following (in millions): FortheSixMonthsEnded June30, FortheThreeMonthsEnded June30, 2009 2008 2009 2008 Net earnings attributable to PMI $ 3,022 $ 3,365 $ 1,546 $ 1,692 Less distributed and undistributed earnings attributable to share-based payment awards (11 ) (6 ) (6 ) (4 ) Net earnings for basic and diluted EPS $ 3,011 $ 3,359 $ 1,540 $ 1,688 Weighted-average shares for basic EPS 1,974 2,101 1,955 2,095 Plus incremental shares from assumed conversions: Stock options 6 6 6 11 Weighted-average shares for diluted EPS 1,980 2,107 1,961 2,106 |
| Note 10. Segment Reporting: | Note 10. Segment Reporting: PMIs subsidiaries and affiliates are engaged in the manufacture and sale of cigarettes and other tobacco products in markets outside of the United States of America. Reportable segments for PMI are organized and managed by geographic region. PMIs reportable segments are European Union; Eastern Europe, Middle East and Africa; Asia; and Latin America Canada. PMIs management evaluates segment performance and allocates resources based on operating companies income, which PMI defines as operating income before general corporate expenses and amortization of intangibles. Interest expense, net, and provision for income taxes are centrally managed and, accordingly, such items are not presented by segment since they are excluded from the measure of segment profitability reviewed by management. Segment data were as follows (in millions): FortheSixMonthsEnded June 30, FortheThreeMonthsEnded June 30, 2009 2008 2009 2008 Net revenues: European Union $ 13,205 $ 14,976 $ 7,155 $ 8,279 Eastern Europe, Middle East and Africa 6,231 7,085 3,400 3,802 Asia 5,804 6,146 2,947 3,170 Latin America Canada 3,259 2,850 1,711 1,452 Net revenues $ 28,499 $ 31,057 $ 15,213 $ 16,703 Earnings before income taxes: Operating companies income: European Union $ 2,130 $ 2,454 $ 1,163 $ 1,287 Eastern Europe, Middle East and Africa 1,221 1,493 635 813 Asia 1,280 1,073 619 523 Latin America Canada 226 172 71 23 Amortization of intangibles (36 ) (16 ) (21 ) (7 ) General corporate expenses (72 ) (44 ) (38 ) (31 ) Operating income 4,749 5,132 2,429 2,608 Interest expense, net (351 ) (136 ) (193 ) (61 ) Earnings before income taxes $ 4,398 $ 4,996 $ 2,236 $ 2,547 Items affecting the comparability of PMIs results from operations were as follows: Asset Impairment and Exit Costs See Note 2. Asset Impairment and Exit Costs for a breakdown of asset impairment and exit costs by segment. Equity loss from RBH Legal Settlement As discussed in Note 17. RBH Legal Settlement, operating companies income of the Latin America Canada segment for the six months and three months ended June30, 2008 included a $124 million charge related to the RBH settlement with the Government of Canada and all ten provinces. Colombian Investment and Cooperation Agreement charge As discussed in Note 16. Colombian Investment and Cooperation Agreement, during the second quarter of 2009, PMI recorded a pre-tax charge of $135 million related to the Investment and Cooperation Agreement in Colombia. The charge was recorded in the o |
| Note 11. Contingencies: | Note 11. Contingencies: Legal proceedings covering a wide range of matters are pending or threatened against us, and/or our subsidiaries, and/or our indemnitees in various jurisdictions. Our indemnitees include distributors, licensees, and others that have been named as parties in certain cases and that we have agreed to defend, as well as pay costs and some or all of judgments, if any, that may be entered against them.Altria Group, Inc. and PM USA are also indemnitees, in certain cases, pursuant to the terms of the Distribution Agreement between Altria Group, Inc. and PMI. Various types of claims are raised in these proceedings, including, among others, product liability, consumer protection, antitrust, and tax. It is possible that there could be adverse developments in pending cases against us and our subsidiaries. An unfavorable outcome or settlement of pending tobacco-related litigation could encourage the commencement of additional litigation. Damages claimed in some of the tobacco-related litigation are significant and, in certain cases in Brazil, Israel, Nigeria and Canada, range into the billions of dollars. The variability in pleadings in multiple jurisdictions, together with the actual experience of management in litigating claims, demonstrate that the monetary relief that may be specified in a lawsuit bears little relevance to the ultimate outcome. Much of the litigation is in its early stages and litigation is subject to uncertainty. However, as discussed below, we have to date been largely successful in defending tobacco-related litigation. We and our subsidiaries record provisions in the consolidated financial statements for pending litigation when we determine that an unfavorable outcome is probable and the amount of the loss can be reasonably estimated. At the present time, while it is reasonably possible that an unfavorable outcome in a case may occur, (i)management has concluded that it is not probable that a loss has been incurred in any of the pending tobacco-related cases; (ii)management is unable to estimate the possible loss or range of loss that could result from an unfavorable outcome of any of the pending tobacco-related cases; and (iii)accordingly, management has not provided any amounts in the consolidated financial statements for unfavorable outcomes in these cases, if any. Legal defense costs are expensed as incurred. It is possible that our consolidated results of operations, cash flows or financial position could be materially affected in a particular fiscal quarter or fiscal year by an unfavorable outcome or settlement of certain pending litigation. Nevertheless, although litigation is subject to uncertainty, we and each of our subsidiaries named as a defendant believe, and each has been so advised by counsel handling the respective cases, that we have valid defenses to the litigation pending against us, as well as valid bases for appeal of adverse verdicts, if any. All such cases are, and will continue to be, vigorously defended. However, we and our subsidiaries may enter into settlement discussions in particular cases if we believe it is in our best interests to do so. The table below l |
| Note 12. Income Taxes: | Note 12. Income Taxes: PMI accounts for income taxes in accordance with SFAS No.109, Accounting for Income Taxes. Income tax provisions for jurisdictions outside the United States, as well as state and local income tax provisions, were determined on a separate company basis and the related assets and liabilities were recorded in PMIs condensed consolidated balance sheets. PMIs effective tax rates for the six months and three months ended June30, 2009 were 29.2% and 28.6%, respectively. PMIs effective tax rates for the six months and three months ended June30, 2008 were 30.3% and 31.0%, respectively. The 2008 tax rates were unfavorably impacted by 0.7 percentage points for the six months and by 1.4 percentage points for the three months due to the after-tax charge of $124 million related to the RBH settlement with the Government of Canada and all ten provinces. The effective tax rates are based on PMIs full year geographical earnings mix projections and cash repatriation plans. Changes in earnings mix or in cash repatriation plans could have an impact on the effective tax rates which PMI monitors each quarter. Significant judgment is required in determining income tax provisions and in evaluating tax positions. PMI is regularly examined by tax authorities around the world. It is reasonably possible that within the next 12 months certain tax examinations will close, which could result in a decrease in unrecognized tax benefits along with related interest and penalties. An estimate of the range of the possible decrease cannot be made at this time. |
| Note 13. Indebtedness: | Note 13. Indebtedness: At June30, 2009 and December31, 2008, PMIs long-term debt consisted of the following (in millions): June30,2009 December31,2008 Short-term borrowings, reclassified as long-term debt $ - $ 1,020 Notes, 4.875% to 6.875% (average interest rate 5.796%), due through 2038 7,196 7,193 Foreign currency obligations: Euro notes payable (average interest rate 5.240%), due through 2016 5,216 2,484 Swiss Franc notes payable (average interest rate 3.625%), due through 2013 915 473 Other (average interest rate 5.038%), due through 2014 348 416 13,675 11,586 Less current portion of long-term debt (195 ) (209 ) $ 13,480 $ 11,377 In March 2009, PMI issued Euro 2.0 billion (approximately $2.6 billion) of notes. The Euro notes bear the following terms: Euro 1.25 billion total principal due March 2012 at a fixed interest rate of 4.250%. Euro 750million total principal due March 2016 at a fixed interest rate of 5.750%. In March 2009, PMI also issued CHF 500million (approximately $431 million) of 3.250% bonds, due in March 2013. The net proceeds of these offerings were used to repay commercial paper borrowings and for general corporate purposes. |
| Note 14. Fair Value Measurements: | Note 14. Fair Value Measurements: On January1, 2008, PMI adopted SFAS No.157 Fair Value Measurements (SFAS No.157). SFAS No.157 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. SFAS No.157 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of input that may be used to measure fair value: Level 1 - Quoted prices in active markets for identical assets or liabilities. Level2- Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Debt The fair value of PMIs outstanding debt, as utilized solely for disclosure purposes, is determined by utilizing quotes and market interest rates currently available to PMI for issuances of debt with similar terms and remaining maturities. The aggregate carrying value of PMIs debt, excluding capital leases obligations, was $13,425 million at June30, 2009. Derivative Financial Instruments PMI assesses the fair value of its derivative financial instruments using internally developed models that use, as their basis, readily observable future amounts, such as cash flows, earnings, and the current market expectations of those future amounts. These derivatives include forward foreign exchange contracts, foreign currency swaps and foreign currency options. Derivative financial instruments have been classified within Level 2. See Note 7. Financial Instruments for additional discussion on derivative financial instruments. The aggregate fair value of PMIs debt and derivative financial instruments as of June30, 2009, was as follows (in millions): June30, 2009 QuotedPrices in Active Markets for Identical Assets/Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Derivatives - Assets $ 108 $ - $ 108 $ - Debt $ 14,299 $ 14,202 $ 97 $ - Derivatives Liabilities $ 90 $ - $ 90 $ - |
| Note 15. Accumulated Other Comprehensive Earnings (Losses): | Note 15. Accumulated Other Comprehensive Earnings (Losses): PMIs accumulated other comprehensive earnings (losses) consisted of the following (in millions): AtJune30, 2009 AtDecember31, 2008 AtJune30, 2008 Currency translation adjustments $ (278 ) $ (768 ) $ 2,452 Pension and other benefits (1,416 ) (1,444 ) (102 ) Derivatives accounted for as hedges (24 ) (68 ) (121 ) Debt and equity securities (1 ) (1 ) Total accumulated other comprehensive earnings (losses) $ (1,719 ) $ (2,281 ) $ 2,229 |
| Note 16. Colombian Investment and Cooperation Agreement: | Note 16. Colombian Investment and Cooperation Agreement: On June19, 2009, PMI announced that it had signed an agreement with the Republic of Colombia, together with the Departments of Colombia and the Capital District of Bogota, to promote investment and cooperation with respect to the Colombian tobacco market and to fight counterfeit and contraband tobacco products. The Investment and Cooperation Agreement provides $200 million in funding to the Colombian governments over a 20-year period to address issues of mutual interest, such as combating the illegal cigarette trade, including the threat of counterfeit tobacco products, and increasing the quality and quantity of locally grown tobacco. As a result of the Investment and Cooperation Agreement, PMI recorded a pre-tax charge of $135 million in the operating results of the Latin America Canada segment during the second quarter of 2009. This pre-tax charge, which represents the net present value of the payments prescribed by the agreement, is reflected in marketing, administration and research costs on the condensed consolidated statements of earnings. |
| Note 17. RBH Legal Settlement: | Note 17. RBH Legal Settlement: On July31, 2008, Rothmans announced the finalization of a CAD $550 million (or $475 million) settlement between itself and RBH on the one hand and the Government of Canada and all ten provinces on the other hand. The settlement resolves the Royal Canadian Mounted Polices investigation relating to products exported from Canada by RBH during the 1989-1996 period. Rothmans sole holding was a 60% interest in RBH. The remaining 40% interest in RBH was owned by PMI. As a result of the finalization of the settlement, PMI recorded a charge of $124 million in the operating results of the Latin America Canada segment during the second quarter of 2008. The charge represented the present value of PMIs 40% equity interest in RBHs portion of the settlement. Subsequent to the finalization of the settlement, PMI announced on July31, 2008 that it had entered into an agreement with Rothmans to purchase, by way of a tender offer, all of the outstanding common shares of Rothmans. See Note 8. Acquisitions for more details regarding this acquisition. At June30, 2009, PMI had $225 million of discounted accrued settlement charges associated with the RBH legal settlement. These accrued settlement charges are reflected in other accrued liabilities ($25 million) and other long-term liabilities ($200 million) on the condensed consolidated balance sheet. At December31, 2008, PMI had $207 million of discounted accrued settlement charges associated with the RBH legal settlement. These accrued settlement charges are reflected in other accrued liabilities ($15 million) and other long-term liabilities ($192 million) on the condensed consolidated balance sheet. |
| Note 18. New Accounting Standards: | Note 18. New Accounting Standards: As previously discussed in Note 9. Earnings Per Share, PMI adopted FSP 03-6-1 Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities. Effective January1, 2009, PMI adopted SFAS No.160 Noncontrolling Interests in Consolidated Financial Statements (SFAS No.160). SFAS No.160 changed the reporting for minority interest by requiring that noncontrolling interests be reported within equity. Additionally, SFAS No. 160 requires that any transaction between an entity and a noncontrolling interest be accounted for as an equity transaction. SFAS No. 160 has been applied prospectively, except for the presentation and disclosure requirements which have been adjusted retrospectively for all periods presented. Effective January1, 2009, PMI adopted SFAS No.141 (Revised 2007) Business Combinations (SFAS No.141(R)). SFAS No.141(R) requires the recognition of assets acquired, liabilities assumed and any noncontrolling interest in the acquiree to be measured at fair value as of the acquisition date. Additionally, costs incurred to effect the acquisition are to be recognized separately from the acquisition and expensed as incurred. Effective January1, 2009, PMI adopted SFAS No.161 Disclosures about Derivative Instruments and Hedging Activities (SFAS No.161). SFAS No.161 changes the disclosure requirements for derivative instruments and hedging activities. SFAS No.161 requires disclosures about how and why a company uses derivative instruments, how derivative instruments and related hedged items are accounted for and how derivative instruments and related hedged items affect the companys financial position, financial performance, and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years beginning after November15, 2008. PMI has amended its disclosures accordingly. The adoption of these new accounting standards did not have a material impact on PMIs consolidated financial position, results of operations or cash flows. |
| Document Information | |
| 6 Months Ended
Jun. 30, 2009 USD / shares | |
| Document Information [Text Block] | |
| Document Type | 10-Q |
| Amendment Flag | false |
| Amendment Description | N.A. |
| Document Period End Date | 2009-06-30 |
| Entity Information (USD $) | |||
| 6 Months Ended
Jun. 30, 2009 | Jul. 31, 2009
| Jun. 30, 2008
| |
| Entity [Text Block] | |||
| Trading Symbol | PM | ||
| Entity Registrant Name | Philip Morris International Inc. | ||
| Entity Central Index Key | 0001413329 | ||
| Current Fiscal Year End Date | --12-31 | ||
| Entity Well-known Seasoned Issuer | Yes | ||
| Entity Current Reporting Status | Yes | ||
| Entity Voluntary Filers | No | ||
| Entity Filer Category | Large Accelerated Filer | ||
| Entity Common Stock, Shares Outstanding | 1,934,458,475 | ||
| Entity Public Float | $102,000,000,000 |
