Philip Morris International (PM) 10-K 26 Feb 10 2009 FY Annual report Financial data

Statement Of Financial Position

Statement Of Financial Position Classified (USD $)
In Millions	Dec. 31, 2009	Dec. 31, 2008
ASSETS
Cash and cash equivalents	$1,540	$1,531
Receivables (less allowances of $33 in 2009 and $14 in 2008)	3,098	2,848
Inventories:
Leaf tobacco	4,183	3,924
Other raw materials	1,275	1,137
Finished product	3,749	4,603
Inventory, Net, Total	9,207	9,664
Deferred income taxes	305	322
Other current assets	532	574
Total current assets	14,682	14,939
Property, plant and equipment, at cost:
Land and land improvements	579	547
Buildings and building equipment	3,593	3,351
Machinery and equipment	7,591	7,170
Construction in progress	495	632
Property, Plant and Equipment, Gross, Total	12,258	11,700
Less: accumulated depreciation	5,868	5,352
Property, Plant and Equipment, Net, Total	6,390	6,348
Goodwill	9,112	8,015
Other intangible assets, net	3,546	3,084
Other assets	822	586
TOTAL ASSETS	34,552	32,972
LIABILITIES
Short-term borrowings	1,662	375
Current portion of long-term debt	82	209
Accounts payable	670	1,013
Accrued liabilities:
Marketing	441	457
Taxes, except income taxes	4,824	4,502
Employment costs	752	665
Dividends payable	1,101	1,090
Other	955	1,167
Income taxes	500	488
Deferred income taxes	191	178
Total current liabilities	11,178	10,144
Long-term debt	13,672	11,377
Deferred income taxes	1,688	1,401
Employment costs	1,260	1,682
Other liabilities	609	464
Total liabilities	28,407	25,068
STOCKHOLDERS' EQUITY
Common stock, no par value (2,109,316,331 shares issued in 2009 and 2008)	0	0
Additional paid-in capital	1,403	1,581
Earnings reinvested in the business	15,358	13,354
Accumulated other comprehensive losses	(817)	(2,281)
Stockholders Equity Subtotal Before Treasury Stock, Total	15,944	12,654
Less: cost of repurchased stock (222,151,828 and 102,053,271 shares in 2009 and 2008, respectively)	10,228	5,154
Total PMI stockholders' equity	5,716	7,500
Noncontrolling interests	429	404
Total stockholders' equity	6,145	7,904
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$34,552	$32,972

1_Statement Of Financial Positi

Statement Of Financial Position Classified (Parenthetical) (USD $)
In Millions, except Share data	Dec. 31, 2009	Dec. 31, 2008
Receivables, allowances	$33	$14
Common stock, no par value	$0	$0
Common stock, shares issued	2,109,316,331	2,109,316,331
Repurchased stock, shares	222,151,828	102,053,271

Statement Of Income

Statement Of Income (USD $)
In Millions, except Per Share data	12 Months Ended Dec. 31, 2009	12 Months Ended Dec. 31, 2008	12 Months Ended Dec. 31, 2007
Net revenues	$62,080	$63,640	$55,243
Cost of sales	9,022	9,328	8,711
Excise taxes on products	37,045	37,935	32,433
Gross profit	16,013	16,377	14,099
Marketing, administration and research costs	5,870	6,001	5,021
Asset impairment and exit costs	29	84	208
Gain on sale of business	0	0	(52)
Amortization of intangibles	74	44	28
Operating income	10,040	10,248	8,894
Interest expense, net	797	311	10
Earnings before income taxes	9,243	9,937	8,884
Provision for income taxes	2,691	2,787	2,570
Net earnings	6,552	7,150	6,314
Net earnings attributable to noncontrolling interests	210	260	276
Net earnings attributable to PMI	$6,342	$6,890	$6,038
Per share data (Note 10):
Basic earnings per share	3.25	3.32	2.86
Diluted earnings per share	3.24	3.31	2.86

Statement Of Shareholders Equit

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 Earnings(Losses)	Cost of Repurchased Stock		Noncontrolling Interests	Total
Beginning Balances at Dec. 31, 2006	$0	$1,265		$12,708	$476	$0		$419	$14,868
Comprehensive earnings:
Net earnings				6,038				276	6,314
Other comprehensive earnings (losses), net of income taxes:
Currency translation adjustments					809			46	855
Change in net loss and prior service cost, net of income taxes of $30 in 2009,$257 in 2008 and $(75)in 2007					413				413
Change in fair value of derivatives accounted for as hedges, net of income taxes of $(8) in 2009,$6 in 2008 and $1 in 2007					(10)				(10)
Total other comprehensive earnings (losses)								46	1,258
Total comprehensive earnings								322	7,572
Adoption of authoritative guidance relating to the accounting for income taxes				471					471
Dividends declared to Altria Group, Inc. ($1.43 per share in 2008 and $3.12 per share in 2007)				(6,575)					(6,575)
Purchase of subsidiary shares from noncontrolling interests								(54)	(54)
Payments to noncontrolling interests								(269)	(269)
Ending Balances at Dec. 31, 2007	0	1,265		12,642	1,688	0		418	16,013
Comprehensive earnings:
Net earnings				6,890				260	7,150
Other comprehensive earnings (losses), net of income taxes:
Currency translation adjustments					(2,566)			(104)	(2,670)
Change in net loss and prior service cost, net of income taxes of $30 in 2009,$257 in 2008 and $(75)in 2007					(1,344)				(1,344)
Change in fair value of derivatives accounted for as hedges, net of income taxes of $(8) in 2009,$6 in 2008 and $1 in 2007					(58)				(58)
Change in fair value of debt and equity securities					(1)				(1)
Total other comprehensive earnings (losses)								(104)	(4,073)
Total comprehensive earnings								156	3,077
Exercise of stock options and issuance of other stock awards		395	[1]			245	[1]		640	[1]
Measurement date change for non-U.S. benefit plans, net of income taxes				(9)					(9)
Dividends declared to public stockholders ($2.24 per share in 2009 and $1.54 per share in 2008 )				(3,150)					(3,150)
Dividends declared to Altria Group, Inc. ($1.43 per share in 2008 and $3.12 per share in 2007)				(3,019)					(3,019)
Payments to noncontrolling interests								(249)	(249)
Common stock repurchased						(5,399)			(5,399)
Other		(79)						79	0
Ending Balances at Dec. 31, 2008	0	1,581		13,354	(2,281)	(5,154)		404	7,904
Comprehensive earnings:
Net earnings				6,342				210	6,552
Other comprehensive earnings (losses), net of income taxes:
Currency translation adjustments					1,329			2	1,331
Change in net loss and prior service cost, net of income taxes of $30 in 2009,$257 in 2008 and $(75)in 2007					36				36
Change in fair value of derivatives accounted for as hedges, net of income taxes of $(8) in 2009,$6 in 2008 and $1 in 2007					87				87
Change in fair value of debt and equity securities					12				12
Total other comprehensive earnings (losses)								2	1,466
Total comprehensive earnings								212	8,018
Exercise of stock options and issuance of other stock awards		(171)				453			282
Dividends declared to public stockholders ($2.24 per share in 2009 and $1.54 per share in 2008 )				(4,338)					(4,338)
Purchase of subsidiary shares from noncontrolling interests		(7)						(2)	(9)
Payments to noncontrolling interests								(185)	(185)
Common stock repurchased						(5,527)			(5,527)
Ending Balances at Dec. 31, 2009	$0	$1,403		$15,358	($817)	($10,228)		$429	$6,145
[1]Includes an increase to additional paid-in capital for the reimbursement to PMI caused by modifications to Altria Group, Inc. stock awards. See Note 4. Transactions with Altria Group, Inc.

2_Statement Of Shareholders Equ

Statement Of Shareholders Equity And Other Comprehensive Income (Parenthetical) (USD $)
In Millions, except Per Share data	12 Months Ended Dec. 31, 2009	12 Months Ended Dec. 31, 2008	12 Months Ended Dec. 31, 2007
Change in net loss and prior service cost, income taxes	$30	$257	($75)
Change in fair value of derivatives accounted for as hedges, income taxes	($8)	$6	$1
Dividend declared to Altria Group, Inc., per share		1.43	3.12
Dividends declared to public stockholders, per share	2.24	1.54

Statement Of Cash Flows Indirec

Statement Of Cash Flows Indirect (USD $)
In Millions	12 Months Ended Dec. 31, 2009	12 Months Ended Dec. 31, 2008	12 Months Ended Dec. 31, 2007
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
Net earnings	$6,552	$7,150	$6,314
Adjustments to reconcile net earnings to operating cash flows:
Depreciation and amortization	853	842	748
Deferred income tax provision (benefit)	129	5	(22)
Equity loss from RBH legal settlement	0	124	0
Colombian investment and cooperation agreement charge	135	0	0
Gain on sale of business	0	0	(52)
Asset impairment and exit costs, net of cash paid	(27)	(15)	77
Cash effects of changes, net of the effects from acquired and divested companies:
Receivables, net	(187)	(25)	(828)
Inventories	660	(914)	(1,277)
Accounts payable	(116)	(90)	47
Income taxes	5	39	219
Accrued liabilities and other current assets	190	857	239
Pension plan contributions	(558)	(262)	(95)
Changes in amounts due from Altria Group, Inc. and affiliates	0	37	(27)
Other	248	187	207
Net cash provided by operating activities	7,884	7,935	5,550
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
Capital expenditures	(715)	(1,099)	(1,072)
Proceeds from sales of businesses	0	0	87
Purchase of businesses, net of acquired cash	(429)	(1,663)	(1,519)
Other	46	(399)	(82)
Net cash used in investing activities	(1,098)	(3,161)	(2,586)
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
Net issuance (repayment) of short-term borrowings	246	(449)	2,162
Long-term debt proceeds	2,987	11,892	4,160
Long-term debt repaid	(101)	(5,736)	(3,381)
Repurchases of common stock	(5,625)	(5,256)	0
Issuance of common stock	177	118	0
Changes in amounts due from Altria Group, Inc. and affiliates	0	664	370
Dividends paid to Altria Group, Inc.	0	(3,019)	(6,560)
Dividends paid to public stockholders	(4,327)	(2,060)	0
Other	(268)	(332)	(345)
Net cash used in financing activities	(6,911)	(4,178)	(3,594)
Effect of exchange rate changes on cash and cash equivalents	134	(566)	346
Cash and cash equivalents:
Increase (Decrease)	9	30	(284)
Balance at beginning of year	1,531	1,501	1,785
Balance at end of year	1,540	1,531	1,501
Cash paid: Interest	743	499	301
Income taxes	$2,537	$2,998	$2,215

Background and Basis of Present

Background and Basis of Presentation:
	12 Months Ended Dec. 31, 2009 USD / shares
Background and Basis of Presentation:	Note 1. Background and Basis of Presentation: Background Philip Morris International Inc. is a holding company incorporated in Virginia, U.S.A., whose subsidiaries and affiliates and their licensees are engaged in the manufacture and sale of cigarettes and other tobacco products in markets outside of the United States of America. Throughout these financial statements, the term PMI refers to Philip Morris International Inc. and its subsidiaries. Prior to March28, 2008, PMI was a wholly-owned subsidiary of Altria Group, Inc. (Altria). On March28, 2008 (the Distribution Date), Altria distributed all of its interest in PMI to Altrias stockholders in a tax-free transaction pursuant to Section355 of the U.S. Internal Revenue Code. For information regarding PMIs separation from Altria and PMIs other transactions with Altria Group, Inc. and its affiliates, see Note 4. Transactions with Altria Group, Inc. Basis of presentation The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the dates of the financial statements and the reported amounts of net revenues and expenses during the reporting periods. Significant estimates and assumptions include, among other things, pension and benefit plan assumptions, useful lives and valuation assumptions of goodwill and other intangible assets, marketing programs and income taxes. Actual results could differ from those estimates. The consolidated financial statements include PMI, as well as its wholly-owned and majority-owned subsidiaries. Investments in which PMI exercises significant influence (generally 20%-50% ownership interest), are accounted for under the equity method of accounting. Investments in which PMI has an ownership interest of less than 20%, or does not exercise significant influence, are accounted for with the cost method of accounting. All intercompany transactions and balances have been eliminated. Transactions between PMI and Altria are included in these consolidated financial statements. Certain prior years amounts have been revised to conform with the current years presentation, due primarily to the adoption of new accounting rules regarding noncontrolling interests and earnings per share. The impact of these revisions was not material to PMIs consolidated financial statements in any of the prior periods presented. PMI has evaluated subsequent events through February11, 2010, which was the date of issuance of the consolidated financial statements as filed in PMIs Current Report on Form 8-K with the Securities and Exchange Commission.

Summary of Significant Accounti

Summary of Significant Accounting Policies:
	12 Months Ended Dec. 31, 2009 USD / shares
Summary of Significant Accounting Policies:	Note 2. Summary of Significant Accounting Policies: Cash and cash equivalents Cash equivalents include demand deposits with banks and all highly liquid investments with original maturities of three months or less. Depreciation, amortization and goodwill valuation Property, plant and equipment are stated at historical cost and depreciated by the straight-line method over the estimated useful lives of the assets. Machinery and equipment are depreciated over periods ranging from 3 to 15 years, and buildings and building improvements over periods up to 40 years. Depreciation expense for 2009, 2008 and 2007 was $779 million, $798 million and $720 million, respectively. Definite life intangible assets are amortized over their estimated useful lives, which range from 5 to 40 years for trademarks and 10 to 30 years for distribution networks and other definite lived intangible assets. PMI is required to conduct an annual review of goodwill and non-amortizable intangible assets for potential impairment. Goodwill impairment testing requires a comparison between the carrying value and fair value of each reporting unit. If the carrying value exceeds the fair value, the goodwill is considered impaired. The amount of impairment loss is measured as the difference between the carrying value and implied fair value of goodwill, which is determined using discounted cash flows. Impairment testing for non-amortizable intangible assets requires a comparison between the fair value and carrying value of the intangible asset. If the carrying value exceeds fair value, the intangible asset is considered impaired and is reduced to fair value. In 2009, 2008 and 2007, PMI did not have to record a charge to earnings for an impairment of goodwill or non-amortizable intangible assets as a result of its annual reviews. Foreign currency translation PMI translates the results of operations of its subsidiaries and affiliates using average exchange rates during each period, whereas balance sheet accounts are translated using exchange rates at the end of each period. Currency translation adjustments are recorded as a component of stockholders equity. In addition, some of PMIs subsidiaries have assets and liabilities denominated in currencies other than their functional currencies, and to the extent those are not designated as net investment hedges, these assets and liabilities generate transaction gains and losses when translated into their respective functional currencies. PMI reported its net transaction gains of $9 million for the year ended December31, 2009, losses of $54 million for the year ended December31, 2008 and gains of $117 million for the year ended December31, 2007, in marketing, administration and research costs on the consolidated statements of earnings. Guarantees PMI accounts for guarantees in accordance with the Financial Accounting Standards Board (FASB) authoritative guidance, which requires the disclosure of certain guarantees and requires the recognition of a liability for the fair value of the obligation of qualifying guarantee activities. See Note 21. Contingencies for a further discussion of guarantees. Hedging instruments Derivat

Goodwill and Other Intangible A

Goodwill and Other Intangible Assets, net:
	12 Months Ended Dec. 31, 2009 USD / shares
Goodwill and Other Intangible Assets, net:	Note 3. Goodwill and Other Intangible Assets, net: Goodwill and other intangible assets, net, by segment were as follows (in millions): Goodwill Other Intangible Assets, net December31, 2009 December31, 2008 December31, 2009 December31, 2008 European Union $ 1,539 $ 1,456 $ 699 $ 469 Eastern Europe, Middle East and Africa 743 648 253 200 Asia 3,926 3,387 1,346 1,188 Latin America Canada 2,904 2,524 1,248 1,227 Total $ 9,112 $ 8,015 $ 3,546 $ 3,084 Goodwill is due primarily to PMIs acquisitions in Canada, Indonesia, Mexico, Greece, Serbia, Colombia and Pakistan. The movements in goodwill are as follows (in millions): European Union Eastern Europe, Middle Eastand Africa Asia Latin America Canada Total Balance at January1, 2008 $ 1,510 $ 714 $ 4,033 $ 1,668 $ 7,925 Changes due to: Acquisitions 22 20 1,272 1,314 Currency (76 ) (67 ) (669 ) (416 ) (1,228 ) Other 1 3 4 Balance at December31, 2008 1,456 648 3,387 2,524 8,015 Changes due to: Acquisitions 58 163 38 259 Currency 25 (68 ) 539 342 838 Balance at December31, 2009 $ 1,539 $ 743 $ 3,926 $ 2,904 $ 9,112 The increase in goodwill from acquisitions during 2009 was due primarily to the final purchase price allocation for PMIs September 2009 purchase of Swedish Match South Africa (Proprietary) Limited, its February 2009 purchase of the Petteres tobacco business and its 2008 acquisition of Rothmans Inc. in Canada. The increase in goodwill from acquisitions during 2008 was due primarily to the preliminary allocation of purchase price for PMIs 2008 acquisition in Canada, as well as the final allocation of purchase price for PMIs 2007 acquisitions in Mexico and Pakistan. For further details, see Note 6. Acquisitions. Additional details of other intangible assets were as follows (in millions): December31, 2009 December31, 2008 Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Non-amortizable intangible assets $ 2,080 $ 1,878 Amortizable intangible assets 1,663 $ 197 1,322 $ 116 Total intangible assets $ 3,743 $ 197 $ 3,200 $ 116 Non-amortizable intangible assets substantially consist of trademarks from PMIs acquisitions 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 y

Transactions with Altria Group,

Transactions with Altria Group, Inc.:
	12 Months Ended Dec. 31, 2009 USD / shares
Transactions with Altria Group, Inc.:	Note 4. Transactions with Altria Group, Inc.: Separation from Altria Group, Inc. 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. Holders of Altria stock options were treated similarly to public stockholders and, accordingly, had their stock awards split into two instruments. Holders of Altria stock options received the following stock options, which, immediately after the Spin-off, had an aggregate intrinsic value equal to the intrinsic value of the pre-spin Altria options: a new PMI option to acquire the same number of shares of PMI common stock as the number of Altria options held by such person on the Distribution Date; and an adjusted Altria option for the same number of shares of Altria common stock with a reduced exercise price. As stipulated by the Employee Matters Agreement between PMI and Altria, the exercise price of each option was developed to reflect the relative market values of PMI and Altria shares by allocating the price of Altria common stock before the distribution ($73.83) to PMI shares ($51.44) and Altria shares ($22.39), and then multiplying each of these allocated values by the Option Conversion Ratio. The Option Conversion Ratio was equal to the exercise price of the Altria option, prior to any adjustment for the distribution, divided by $73.83. As a result, the new PMI option and the adjusted Altria option have an aggregate intrinsic value equal to the intrinsic value of the pre-split Altria option. Holders of Altria restricted stock or deferred stock awarded prior to January30, 2008, retained their existing awards and received the same number of shares of restricted or deferred stock of PMI. The restricted stock and deferred stock will not vest until the completion of the original restriction period (typically, three years from the date of the original grant). Recipients of Altria deferred stock awarded on January30, 2008, who were employed by Altria after the Distribution Date, received additional shares of deferred stock of Altria to preserve the intrinsic value of the award. Recipients of Altria deferred stock awarded on January30, 2008, who were employed by PMI after the Distribution Date, received substitute shares of PMI deferred stock to preserve the intrinsic value of the award. To the extent that employees of Altria and its remaining subsidiaries received PMI stock options, Altria reimbursed PMI in cash for the Black-Scholes fair value of the stock options received. To the extent that employees of PMI or its subsidiaries held Altria stock options, PMI reimbursed Altria in cash for the Black-Scholes fair value of the stock options. To the extent that employees of Altria an

Asset Impairment and Exit Costs

Asset Impairment and Exit Costs:
	12 Months Ended Dec. 31, 2009 USD / shares
Asset Impairment and Exit Costs:	Note 5. Asset Impairment and Exit Costs: During 2009, 2008 and 2007, pre-tax asset impairment and exit costs consisted of the following (in millions): 2009 2008 2007 Separation programs: European Union $ 29 $ 66 $ 137 Eastern Europe, Middle East and Africa 12 Asia 28 Latin America Canada 3 18 Total separation programs 29 69 195 Contract termination charges: Eastern Europe, Middle East and Africa 1 Asia 14 Total contract termination charges 15 General corporate 13 Asset impairment and exit costs $ 29 $ 84 $ 208 Manufacturing Optimization Program As previously discussed in Note 4. Transactions with Altria Group, Inc., PMI terminated its contract manufacturing arrangement with PM USA in 2008 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. Asset Impairment and Exit Costs PMI recorded pre-tax asset impairment and exit cost charges of $29 million, $84 million, and $208 million (including the charges associated with the Manufacturing Optimization Program discussed above) for the years ended December31, 2009, 2008 and 2007, respectively. The pre-tax separation program charges primarily related to severance costs. In 2007, asset impairment and exit costs of $208 million included general corporate pre-tax charges of $13 million related to fees associated with the Spin-off. Cash payments related to exit costs at PMI were $56 million, $99 million and $131 million for the years ended December31, 2009, 2008 and 2007, respectively. Future cash payments for exit costs incurred to date are expected to be approximately $84 million, which will be substantially paid by 2012. The movement in the exit cost liabilities for PMI was as follows (in millions): Liability balance, January1, 2008 $ 202 Charges 84 Cash spent (99 ) Currency/other (72 ) Liability balance, December31, 2008 $ 115 Charges 29 Cash spent (56 ) Currency/other (4 ) Liability balance, December31, 2009 $ 84

Acquisitions:

Acquisitions:
	12 Months Ended Dec. 31, 2009 USD / shares
Acquisitions:	Note 6. Acquisitions: Rothmans: In October 2008, PMI completed the acquisition of Rothmans Inc. (Rothmans), which is located in Canada, for CAD $2.0 billion (approximately $1.9 billion based on exchange rates prevailing at the time of the acquisition). Prior to being acquired by PMI, Rothmans sole holding was a 60% interest in Rothmans, Benson Hedges Inc. (RBH). The remaining 40% interest in RBH was owned by PMI. 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 $187 million of incremental operating income and $80 million of incremental net earnings attributable to PMI during the year ended December31, 2009. The final allocation of purchase price to Rothmans assets and liabilities at December31, 2009 was principally as follows (in billions): Goodwill $ 1.9 Acquired cash 0.3 Inventories 0.2 Definite-lived trademarks 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 Mexico: In November 2007, PMI acquired an additional 30% interest in its Mexican tobacco business from Grupo Carso, S.A.B. de C.V., (Grupo Carso), which increased PMIs ownership interest to 80%, for $1.1 billion. After this transaction was completed, Grupo Carso retained a 20% interest in the business. A director of PMI has an affiliation with Grupo Carso. PMI also entered into an agreement with Grupo Carso which provides the basis for PMI to potentially acquire, or for Grupo Carso to potentially sell to PMI, Grupo Carsos remaining 20% in the future. During 2008, the allocation of purchase price was completed. Other: In September 2009, PMI acquired Swedish Match South Africa (Proprietary) Limited, for ZAR 1.93 billion (approximately $256 million based on exchange rates prevailing at the time of the acquisition), including acquired cash. The final allocation of purchase price was primarily to goodwill ($163 million), definite-lived trademarks ($40 million), acquired cash ($36 million) and the distribution network ($19 million). In February 2009, PMI purchased the Petteres tobacco business. Assets purchased consisted primarily of definite-lived trademarks 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 consolidated statement of cash flows for the year ended December31, 2008. During the first quarter of 2007, PMI acquired an additional 58.2% interest in a Pakistan cigarette manufacturer, Lakson Tobacco Company Limited (Lakson Tobacco), which increased PMIs total ownership interest in Lakson Tobacco from 40% to approximately 98

Indebtedness:

Indebtedness:
	12 Months Ended Dec. 31, 2009 USD / shares
Indebtedness:	Note 7. Indebtedness: Short-Term Borrowings: At December31, 2009 and 2008, PMIs short-term borrowings and related average interest rates consisted of the following (in millions): December31, 2009 December31, 2008 Amount Outstanding Average Year-End Rate Amount Outstanding Average Year-End Rate Commercial paper $ 1,350 0.2 % $ 1,020 1.3 % Bank loans 312 7.8 375 12.0 Amount reclassified as long-term debt (1,020 ) $ 1,662 $ 375 Given the mix of subsidiaries and their respective local economic environments, the average interest rate for bank loans above can vary significantly from day to day and country to country. The fair values of PMIs short-term borrowings at December31, 2009 and 2008, based upon current market interest rates, approximate the amounts disclosed above. Long-Term Debt: At December31, 2009 and 2008, PMIs long-term debt consisted of the following (in millions): 2009 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 7,199 7,193 Foreign currency obligations: Euro notes payable (average interest rate 5.240%), due through 2016 5,378 2,484 Swiss franc notes payable (average interest rate 3.625%), due through 2013 969 473 Other (average interest rate 2.937%), due through 2014 208 416 13,754 11,586 Less current portion of long-term debt 82 209 $ 13,672 $ 11,377 Debt offerings in 2009: In March 2009, PMI issued Euro 2.0 billion (approximately $2,556 million) of notes under its Euro Medium Term Note Program. The Euro notes bear the following terms: Euro 1.25 billion total principal due March 2012 at a fixed interest rate of 4.250%. Interest is payable annually beginning March23, 2010. Euro 750million total principal due March 2016 at a fixed interest rate of 5.750%. Interest is payable annually beginning March24, 2010. In March 2009, PMI also issued CHF 500million (approximately $431 million) of 3.250% bonds, due in March 2013. Other debt: Other foreign debt above also includes $187 million and $306 million at December31, 2009 and 2008, respectively, of capital lease obligations associated with PMIs vending machine distribution network in Japan. Aggregate maturities: Aggregate maturities of long-term debt are as follows (in millions): 2010 $ 82 2011 1,500 2012 2,336 2013 2,506 2014 1,252 2015-2019 4,665 2020-2024 Thereafter 1,500 13,841 Debt discounts (87 ) Total long-term debt $ 13,754 See Note 16. Fair Value Measurements for additional disclosures related to the fair value of PMIs debt. Credit Lines: At December31, 2009, PMIs committed credit lines were as follows (in billions of dollars): Type Committe

Capital Stock:

Capital Stock:
	12 Months Ended Dec. 31, 2009 USD / shares
Capital Stock:	Note 8. Capital Stock: As discussed in Note 1. Background and Basis of Presentation, on March28, 2008, Altria completed the distribution of one share of PMI common stock for each share of Altria common stock outstanding as of the Record Date. As a result, PMI had 2,108,901,789 shares of common stock outstanding immediately following the distribution. PMI commenced a $13.0 billion two-year share repurchase program on May1, 2008. Since the inception of this program, the total repurchases through December31, 2009 were 236.5million shares for $10.9 billion ($46.20 per share). On February11, 2010, PMI announced that its Board of Directors authorized a new share repurchase program of $12 billion over three years. The new program will commence in May 2010 after the completion of the two-year $13 billion program that began on May1, 2008. Shares of authorized common stock are 6.0 billion; issued, repurchased and outstanding shares after the distribution by Altria were as follows: Shares Issued Shares Repurchased Shares Outstanding Balances, March28, 2008 2,108,901,789 2,108,901,789 Repurchase of shares (106,775,475 ) (106,775,475 ) Exercise of stock options and issuance of other stock awards 414,542 4,722,204 5,136,746 Balances, December31, 2008 2,109,316,331 (102,053,271 ) 2,007,263,060 Repurchase of shares (129,732,863 ) (129,732,863 ) Exercise of stock options and issuance of other stock awards 9,634,306 9,634,306 Balances, December31, 2009 2,109,316,331 (222,151,828 ) 1,887,164,503 At December31, 2009, 55,003,149 shares of common stock were reserved for stock options and other stock awards under PMIs stock plans, and 250million shares of preferred stock, without par value, were authorized but unissued. PMI currently has no plans to issue any shares of preferred stock.

Stock Plans:

Stock Plans:
	12 Months Ended Dec. 31, 2009 USD / shares
Stock Plans:	Note 9. Stock Plans: Performance Incentive Plan and Stock Compensation Plan for Non-Employee Directors 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 March31, 2008, approximately 34.1million shares were granted under the Plan to reflect PMIs Spin-off from Altria. At December31, 2009, 33,811,948 shares were available for grant under the Plan. 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 December31, 2009, 866,494 shares were available for grant under the plan. Stock Option Plan In connection with the PMI Spin-off, Altria employee stock options were modified through the issuance of PMI employee stock options and the adjustment of the stock option exercise prices for the Altria awards. As a result of these modifications, the aggregate intrinsic value of the PMI and Altria stock options immediately after the Spin-off was not greater than the aggregate intrinsic value of the Altria stock options before the Spin-off. Since the Black-Scholes fair values of the awards immediately before and immediately after the Spin-off were equivalent, as measured in accordance with the FASB authoritative guidance for Stock Compensation, no incremental compensation expense was recorded as a result of the modification of the Altria awards. On March31, 2008, upon the completion of the conversion of existing Altria stock options, PMI issued 28,336,348 shares subject to option at a weighted-average exercise price of $22.90. At December31, 2009, the number of PMI shares subject to option were as follows: Shares Subject to Option Weighted- Average Exercise Price Average Remaining Contractual Term Aggregate Intrinsic Value Balances at January1, 2009 23,298,349 $ 22.99 Options issued Options exercised (9,564,559 ) 21.21 Options cancelled (167,616 ) 31.52 Balances/Exercisable at December31, 2009 13,566,174 24.10 1year $ 327million After the Spin-off, the total intrinsic value of PMI options exercised for the years ended December31, 2009 and 2008 were $222 million and $147 million, respectively. The total intrinsic value of Altria options exercised by PMI employees during the year ended December31,

Earnings per Share:

Earnings per Share:
	12 Months Ended Dec. 31, 2009 USD / shares
Earnings per Share:	Note 10. Earnings per Share: Effective January1, 2009, PMI adopted the provisions of amended FASB authoritative guidance which requires 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. This amendment requires the retrospective adjustment of all prior period earnings per share data. The adoption and retrospective application of this amendment did not have a material impact on PMIs basic and diluted earnings per share (EPS). Basic and diluted EPS were calculated using the following (in millions): FortheYearsEndedDecember31, 2009 2008 2007 Net earnings attributable to PMI $ 6,342 $ 6,890 $ 6,038 Less distributed and undistributed earnings attributable to share-based payment awards 23 15 Net earnings for basic and diluted EPS $ 6,319 $ 6,875 $ 6,038 Weighted-average shares for basic EPS 1,943 2,068 2,109 Plus incremental shares from assumed conversions: Stock options 7 8 Weighted-average shares for diluted EPS 1,950 2,076 2,109 For the 2009 computation, the number of stock options excluded from the calculation of weighted-average shares for diluted EPS because their effects were antidilutive was immaterial. For the 2008 and 2007 computations, there were no antidilutive stock options. As discussed in Note 1. Background and Basis of Presentation, on March28, 2008, Altria completed the distribution of one share of PMI common stock for each share of Altria common stock outstanding as of the Record Date. As a result, PMI had 2,108,901,789 shares of common stock outstanding immediately following the distribution. Prior to the Distribution Date, PMI had 150 shares of common stock outstanding. As a result of the distribution, all EPS amounts prior to the Distribution Date were adjusted to reflect the new capital structure of PMI. The same number of shares is being used for both diluted EPS and basic EPS for all periods prior to the Distribution Date as no PMI equity awards were outstanding prior to the Distribution Date.

Income Taxes:

Income Taxes:
	12 Months Ended Dec. 31, 2009 USD / shares
Income Taxes:	Note 11. Income Taxes: Earnings before income taxes and provision for income taxes consisted of the following for the years ended December31, 2009, 2008 and 2007 (in millions): 2009 2008 2007 Earnings before income taxes $ 9,243 $ 9,937 $ 8,884 Provision for income taxes: United States federal: Current $ 348 $ 470 $ 560 Deferred (202 ) 52 72 146 522 632 State and local 1 (23 ) 7 Total United States 147 499 639 Outside United States: Current 2,213 2,335 2,025 Deferred 331 (47 ) (94 ) Total outside United States 2,544 2,288 1,931 Total provision for income taxes $ 2,691 $ 2,787 $ 2,570 United States income tax is primarily attributable to repatriation costs. At December31, 2009, applicable United States federal income taxes and foreign withholding taxes have not been provided on approximately $14 billion of accumulated earnings of foreign subsidiaries that are expected to be permanently reinvested. The determination of the amount of deferred tax related to these earnings is not practicable. On March28, 2008, PMI entered into a Tax Sharing Agreement (the Tax Sharing Agreement) with Altria. The Tax Sharing Agreement generally governs PMIs and Altrias respective rights, responsibilities and obligations for pre-distribution periods and for potential taxes on the Spin-off. With respect to any potential tax resulting from the Spin-off, responsibility for the tax will be allocated to the party that acted (or failed to act) in a manner which resulted in the tax. The U.S. federal statute of limitations remains open for the year 2000 and onward with years 2000 to 2003 currently under examination by the IRS. Foreign and U.S. state jurisdictions have statutes of limitations generally ranging from 3 to 5 years. Years still open to examination by foreign tax authorities in major jurisdictions include Germany (2002 onward), Indonesia (2007 onward), Russia (2007 onward) and Switzerland (2007 onward). PMI is currently under examination in various foreign jurisdictions. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in millions): 2009 2008 2007 Balance at January1, $ 160 $ 163 $ 165 Additions based on tax positions related to the current year 26 35 25 Additions for tax positions of previous years 1 14 Reductions for tax positions of prior years (15 ) (33 ) (17 ) Reductions due to lapse of statute of limitations (2 ) Settlements (2 ) (13 ) (10 ) Other 4 (4 ) Balance at December31, $ 174 $ 160 $ 163 Unrecognized tax benefits and PMI

Segment Reporting:

Segment Reporting:
	12 Months Ended Dec. 31, 2009 USD / shares
Segment Reporting:	Note 12. 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. PMI records net revenues and operating companies income to its segments based upon the geographic area in which the customer resides. 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. Information about total assets by segment is not disclosed because such information is not reported to or used by PMIs chief operating decision maker. Segment goodwill and other intangible assets, net, are disclosed in Note 3. Goodwill and Other Intangible Assets, net. The accounting policies of the segments are the same as those described in Note 2. Summary of Significant Accounting Policies. Segment data were as follows (in millions): For the Years Ended December31, 2009 2008 2007 Net revenues: European Union $ 28,550 $ 30,265 $ 26,829 Eastern Europe, Middle East and Africa 13,865 14,817 12,166 Asia 12,413 12,222 11,097 Latin America Canada 7,252 6,336 5,151 Net revenues (1) $ 62,080 $ 63,640 $ 55,243 (1) Total net revenues attributable to customers located in Germany, PMIs largest market in terms of net revenues, were $7.9 billion, $8.6 billion and $7.9 billion for the years ended December31, 2009, 2008 and 2007, respectively. Earnings before income taxes: Operating companies income: European Union $ 4,506 $ 4,738 $ 4,195 Eastern Europe, Middle East and Africa 2,663 3,119 2,431 Asia 2,436 2,057 1,803 Latin America Canada 666 520 514 Amortization of intangibles (74 ) (44 ) (28 ) General corporate expenses (157 ) (142 ) (73 ) Gain on sale of leasing business 52 Operating income 10,040 10,248 8,894 Interest expense, net (797 ) (311 ) (10 ) Earnings before income taxes $ 9,243 $ 9,937 $ 8,884 FortheYearsEndedDecember31, 2009 2008 2007 Depreciation expense: European Union $ 211 $ 259 $ 263 Eastern Europe, Middle East and Africa 206 228 202 Asia 286 244 194 Latin America Canada 64 62 47

Benefit Plans:

Benefit Plans:
	12 Months Ended Dec. 31, 2009 USD / shares
Benefit Plans:	Note 13. 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 December 2008, PMI adopted the provisions of amended FASB authoritative guidance for Retirement Benefits that requires an entity to measure plan assets and benefit obligations as of the date of its fiscal year-end statement of financial position. Prior to this adoption, PMI historically used September30 to measure its non-U.S. pension plans. The change of measurement date from September30 to December31 resulted in a net charge to stockholders equity of $9 million at December31, 2008. The amounts recorded in accumulated other comprehensive earnings (losses) at December31, 2009 consisted of the following (in millions): Pension Postretirement Postemployment Total Net losses $ (1,174 ) $ (27 ) $ (463 ) $ (1,664 ) Prior service cost (72 ) 4 (68 ) Net transition obligation (9 ) (9 ) Deferred income taxes 184 9 140 333 Amounts to be amortized $ (1,071 ) $ (14 ) $ (323 ) $ (1,408 ) The amounts recorded in accumulated other comprehensive earnings (losses) at December31, 2008 consisted of the following (in millions): Pension Postretirement Postemployment Total Net losses $ (1,385 ) $ (23 ) $ (306 ) $ (1,714 ) Prior service cost (30 ) 6 (24 ) Net transition obligation (9 ) (9 ) Deferred income taxes 190 7 106 303 Amounts to be amortized $ (1,234 ) $ (10 ) $ (200 ) $ (1,444 ) The amounts recorded in accumulated other comprehensive earnings (losses) at December31, 2007 consisted of the following (in millions): Pension Postemployment Total Net losses $ (24 ) $ (78 ) $ (102 ) Prior service cost (31 ) (31 ) Net transition obligation (11 ) (11 ) Deferred income taxes 17 27 44 Amounts to be amortized $ (49 ) $ (51 ) $ (100 ) The movements in other comprehensive earnings (losses) during the year ended December31, 2009 were as follows (in millions): Pension Postretirement Postemployment Total Amounts transferred to earnings as components of net periodi

Additional Information:

Additional Information:
	12 Months Ended Dec. 31, 2009 USD / shares
Additional Information:	Note 14. Additional Information: FortheYearsEndedDecember31, 2009 2008 2007 (in millions) Research and development expense $ 335 $ 334 $ 362 Advertising expense $ 387 $ 436 $ 429 Interest expense $ 905 $ 528 $ 268 Interest income (108 ) (217 ) (258 ) Interest expense, net $ 797 $ 311 $ 10 Rent expense $ 258 $ 226 $ 237 Minimum rental commitments under non-cancelable operating leases in effect at December31, 2009, were as follows (in millions): 2010 $ 189 2011 114 2012 81 2013 57 2014 45 Thereafter 279 $ 765

Financial Instruments:

Financial Instruments:
	12 Months Ended Dec. 31, 2009 USD / shares
Financial Instruments:	Note 15. 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 would not occur, the gain or loss would be recognized in earnings. PMI reports its net transaction losses and its net transaction gains in marketing, administration and research costs on the 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 December31, 2009 and 2008, PMI had contracts with aggregate notional amounts of $13.9 billion and $17.8 billion, respectively. Of the $13.9 billion aggregate notional amount at December31, 2009, $3.2 billion related to cash flow hedges, $1.3 billion related to hedges of net investments in foreign operations and $9.4 billion related to other derivatives that primarily offset currency exposures on intercompany financing. Of the $17.8 billion aggregate notional amount at December31, 2008, $2.1 billion related to cash flow hedges, $0.4 billion related to fair value hedges, $1.7 billion related to hedges of net investments in foreign operations and $13.6 billion related to other derivatives that primarily offset currency exposures on intercompany financing. The fair value of PMIs foreign exchange contracts as of December31, 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 Other current assets $ 140 Other accrued liabilities $ 27 F

Fair Value Measurements:

Fair Value Measurements:
	12 Months Ended Dec. 31, 2009 USD / shares
Fair Value Measurements:	Note 16. Fair Value Measurements: The authoritative guidance 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. The guidance 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 guidance describes three levels of input that may be used to measure fair value, which are as follows: Level1- 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. Level3- Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Securities Available for Sale PMI assesses the fair value of securities available for sale, which consist of warrants to purchase third-party common stock, by using a Black-Scholes methodology based on observable market inputs. Securities available for sale have been classified within Level 2. 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 15. Financial Instruments for additional discussion on derivative financial instruments. Pension Plan Assets The fair value of pension plan assets determined by using readily available quoted market prices in active markets has been classified within Level 1 of the fair value hierarchy. The fair value of pension plan assets determined by using quoted prices in markets that are not active has been classified within Level 2. See Note 13. Benefit Plans for additional discussion on pension plan assets. 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 $208 million of capital lease obligations, was $13,546 million at December31, 2009. The fair value of PMIs outstanding debt has been classified within Level 1. The aggregate fair value of PMIs securities available for sale, derivative financial instruments, pension plan assets and debt as of December31, 2009, was as follows (in millions): At December31, 2009 QuotedPrices in Ac

Accumulated Other Comprehensive

Accumulated Other Comprehensive Earnings (Losses):
	12 Months Ended Dec. 31, 2009 USD / shares
Accumulated Other Comprehensive Earnings (Losses):	Note 17. Accumulated Other Comprehensive Earnings (Losses): PMIs accumulated other comprehensive earnings (losses), net of taxes, consisted of the following (in millions): At December31, 2009 At December31, 2008 At December31, 2007 Currency translation adjustments $ 561 $ (768 ) $ 1,798 Pension and other benefits (1,408 ) (1,444 ) (100 ) Derivatives accounted for as hedges 19 (68 ) (10 ) Debt and equity securities 11 (1 ) Total accumulated other comprehensive earnings (losses) $ (817 ) $ (2,281 ) $ 1,688

Colombian Investment and Cooper

Colombian Investment and Cooperation Agreement:
	12 Months Ended Dec. 31, 2009 USD / shares
Colombian Investment and Cooperation Agreement:	Note 18. 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 consolidated statement of earnings for the year ended December31, 2009. At December31, 2009, PMI had $93 million of discounted liabilities associated with the Colombian Investment and Cooperation Agreement. These discounted liabilities are primarily reflected in other long-term liabilities on the consolidated balance sheet.

RBH Legal Settlement:

RBH Legal Settlement:
	12 Months Ended Dec. 31, 2009 USD / shares
RBH Legal Settlement:	Note 19. RBH Legal Settlement: On July31, 2008, Rothmans announced the finalization of a CAD $550 million settlement (or approximately $540 million, based on the prevailing exchange rate at that time) 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 and was reflected in marketing, administration and research costs on the consolidated statement of earnings for the year ended December31, 2008. Subsequent to the finalization of the settlement, PMI announced 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. In October 2008, PMI completed the acquisition of all of Rothmans shares. See Note 6. Acquisitions for more details regarding this acquisition. At December31, 2009 and 2008, PMI had $243 million and $207 million, respectively, of discounted accrued settlement charges associated with the RBH legal settlement. These accrued settlement charges are primarily reflected in other long-term liabilities on the consolidated balance sheets.

E.C. Agreement:

E.C. Agreement:
	12 Months Ended Dec. 31, 2009 USD / shares
E.C. Agreement:	Note 20. E.C. Agreement: In 2004, PMI entered into an agreement with the European Commission (E.C.) and 10 Member States of the European Union that provides for broad cooperation with European law enforcement agencies on anti-contraband and anti-counterfeit efforts. This agreement has been signed by all 27 Member States. The agreement resolves all disputes between the parties relating to these issues. Under the terms of the agreement, PMI will make 13 payments over 12 years, including an initial payment of $250 million, which was recorded as a pre-tax charge against its earnings in 2004. The agreement calls for additional payments of approximately $150 million on the first anniversary of the agreement (this payment was made in July 2005), approximately $100 million on the second anniversary (this payment was made in July 2006) and approximately $75 million each year thereafter for 10 years, each of which is to be adjusted based on certain variables, including PMIs market share in the European Union in the year preceding payment. Because future additional payments are subject to these variables, PMI records charges for them as an expense in cost of sales when product is shipped. In addition, PMI is also responsible to pay the excise taxes, VAT and customs duties on qualifying product seizures of up to 90million cigarettes and is subject to payments of five times the applicable taxes and duties if qualifying product seizures exceed 90million cigarettes in a given year. To date, PMIs annual payments related to product seizures have been immaterial. Total charges related to the E.C. Agreement of $84 million, $80 million and $100 million were recorded in cost of sales in 2009, 2008 and 2007, respectively.

Contingencies:

Contingencies:
	12 Months Ended Dec. 31, 2009 USD / shares
Contingencies:	Note 21. 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 lists th

Quarterly Financial Data

Quarterly Financial Data (Unaudited):
	12 Months Ended Dec. 31, 2009 USD / shares
Quarterly Financial Data (Unaudited):	Note 22. Quarterly Financial Data (Unaudited): 2009 Quarters 1st 2nd 3rd 4th (in millions, except per share data) Net revenues $ 13,286 $ 15,213 $ 16,573 $ 17,008 Gross profit $ 3,626 $ 3,949 $ 4,267 $ 4,171 Net earnings attributable to PMI $ 1,476 $ 1,546 $ 1,798 $ 1,522 Per share data: Basic EPS $ 0.74 $ 0.79 $ 0.93 $ 0.80 Diluted EPS $ 0.74 $ 0.79 $ 0.93 $ 0.80 Dividends declared to public stockholders $ 0.54 $ 0.54 $ 0.58 $ 0.58 Market price: - High $ 45.02 $ 45.44 $ 49.95 $ 52.35 - Low $ 32.04 $ 35.15 $ 42.02 $ 47.07 2008 Quarters 1st 2nd 3rd 4th (in millions, except per share data) Net revenues $ 14,354 $ 16,703 $ 17,365 $ 15,218 Gross profit $ 3,740 $ 4,247 $ 4,472 $ 3,918 Net earnings attributable to PMI $ 1,673 $ 1,692 $ 2,080 $ 1,445 Per share data: Basic EPS $ 0.79 $ 0.81 $ 1.01 $ 0.71 Diluted EPS $ 0.79 $ 0.80 $ 1.01 $ 0.71 Dividends declared to public stockholders $ $ 0.46 $ 0.54 $ 0.54 Market price: - High $ 54.70 $ 53.95 $ 56.26 $ 51.95 - Low $ 50.00 $ 47.43 $ 46.80 $ 33.30 The first quarter 2008 market price information in the table above reflects the market prices for PMI stock on March31, 2008, which was the first publicly-traded day subsequent to the Distribution Date. Basic and diluted EPS are computed independently for each of the periods presented. Accordingly, the sum of the quarterly EPS amounts may not agree to the total for the year. During 2009 and 2008, PMI recorded the following pre-tax charges in earnings (in millions): 2009 Quarters 1st 2nd 3rd 4th Asset impairment and exit costs $ 1 $ 1 $ 1 $ 26 Colombian Investment and Cooperation Agreement charge 135 $ 1 $ 136 $ 1 $ 26 2008 Quarters 1st 2nd 3rd 4th Asset impairment and exit costs $ 23 $ 48 $ 13 $ Equity loss from RBH legal settlement 124 $ 23 $ 172 $ 13 $

Document Information

Document Information
	12 Months Ended Dec. 31, 2009 USD / shares
Document Type	10-K
Amendment Flag	false
Document Period End Date	2009-12-31

Entity Information

Entity Information (USD $)
	12 Months Ended Dec. 31, 2009	Jan. 29, 2010	Jun. 30, 2009
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		1,880,963,027
Entity Public Float			$85,000,000,000