Exhibit 99.1
PHILIP MORRIS INTERNATIONAL INC. (PMI) REPORTS 2011 SECOND-QUARTER RESULTS;
INCREASES 2011 EPS GUIDANCE BY $0.15 TO A RANGE OF $4.70 TO $4.80
| | • | | Reported diluted earnings per share of $1.35, up by 26.2%, or by 14.0% excluding currency, versus $1.07 in 2010 |
| | • | | Adjusted diluted earnings per share of $1.34, as detailed in the attached Schedule 12, up by 34.0%, or by 21.0% excluding currency, versus $1.00 in 2010 |
| | • | | Reported net revenues, excluding excise taxes, up by 17.2% to $8.3 billion, or by 10.2% excluding currency |
| | • | | Reported operating companies income up by 27.1% to $3.8 billion, or by 16.5% excluding currency |
| | • | | Adjusted operating companies income, which reflects the items detailed in the attached Schedule 11, up by 27.2% to $3.8 billion, or by 16.5% excluding currency |
| | • | | Operating income up by 27.7% to $3.7 billion |
| | • | | Free cash flow for the first half of the year, defined as net cash provided by operating activities less capital expenditures, up by 20.5% to $6.2 billion, or by 15.4% excluding currency, as detailed in the attached Schedule 19 |
| | • | | Repurchased 22.7 million shares of its common stock for $1.5 billion during the quarter |
| | • | | PMI increases its forecast for 2011 full-year reported diluted earnings per share by $0.15 to a range of $4.70 to $4.80, up by approximately 20% to 22.5% versus $3.92 in 2010 |
| | • | | Approximately $0.10 of the increased guidance are attributable to an improved business outlook, driven largely by Japan, and approximately $0.05 reflect favorable currency at prevailing rates |
| | • | | Excluding a total favorable currency impact of approximately $0.25 for the full-year 2011, reported diluted earnings per share are projected to increase by approximately 13.5% to 16.0%, or by approximately 15.0% to 17.5% versus adjusted diluted earnings per share of $3.87 in 2010 |
NEW YORK, July 21, 2011 – Philip Morris International Inc. (NYSE / Euronext Paris: PM) today announced its 2011 second-quarter results.
“Our strong second-quarter results are testament to our continued growth momentum, particularly in Asia, strong pricing in numerous key markets and our excellent executional capability, as exemplified by our performance in Japan,” said Louis C. Camilleri, Chairman and Chief Executive Officer.
“Our progress is such that we are again raising our EPS guidance for 2011, reflecting our confidence in the future.”
Conference Call
A conference call, hosted by Hermann Waldemer, Chief Financial Officer, with members of the investment community and news media, will be webcast at 9:00 a.m., Eastern Time, on July 21, 2011. Access is available atwww.pmi.com.
Dividends and Share Repurchase Program
During the second quarter, PMI spent $1.5 billion to repurchase 22.7 million shares of its common stock, as shown in the table below.
Current $12 Billion, Three-Year Program
| | | | | | | | |
| | | Value | | | Shares | |
| | | ($ Mio.) | | | 000 | |
May-December 2010 | | | 2,953 | | | | 55,933 | |
January-March 2011 | | | 1,356 | | | | 22,154 | |
April-June 2011 | | | 1,548 | | | | 22,660 | |
| | | | | | | | |
Total Under Program | | | 5,857 | | | | 100,747 | |
PMI’s 2011 full-year forecast includes planned share repurchases of approximately $5.0 billion against its previously communicated three-year share repurchase program of $12 billion, initiated in May 2010.
Since May 2008, when PMI began its first share repurchase program, the company has spent an aggregate of $18.9 billion to repurchase 378.4 million shares, or 17.9% of the shares outstanding at the time of the spin-off in March 2008.
2011 Full-Year Forecast
PMI increases its forecast for 2011 full-year reported diluted earnings per share by $0.15 to a range of $4.70 to $4.80, up by approximately 20% to 22.5% versus $3.92 in 2010. Approximately $0.10 of the increased guidance are attributable to an improved business outlook, driven largely by Japan, and approximately $0.05 reflect favorable currency at prevailing rates. Excluding a total favorable currency impact of approximately $0.25 for the full-year 2011, reported diluted earnings per share are projected to increase by approximately 13.5% to 16.0%, or by approximately 15.0% to 17.5% versus adjusted diluted earnings per share of $3.87 in 2010.
This guidance excludes the impact of any potential future acquisitions, asset impairment and exit cost charges, and any unusual events. The factors described in the Forward-Looking and Cautionary Statements section of this release represent continuing risks to these projections.
2011 SECOND-QUARTER CONSOLIDATED RESULTS
Management reviews operating companies income (OCI), which is defined as operating income before corporate expenses and amortization of intangibles, to evaluate segment performance and to allocate resources. In the following discussion, the term “net revenues” refers to net revenues, excluding excise taxes, unless otherwise stated. Management also reviews OCI, operating margins and EPS on an adjusted basis (which may exclude the impact of currency and other items such as acquisitions or asset impairment and exit costs), EBITDA, free cash flow and net debt. Management believes it is appropriate to disclose these measures to help investors analyze business performance and trends. For a reconciliation of operating companies income to operating income, see the Condensed Statements of Earnings provided with
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this release. Reconciliations of non-GAAP measures to corresponding GAAP measures are also provided with this release. References to total international cigarette market, total cigarette market, total market and market shares are PMI estimates based on latest available data from a number of sources. Comparisons are to the same prior-year period unless otherwise stated.
NET REVENUES
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | PMI Net Revenues ($ Millions) | | | | |
| | | Second-Quarter | | | Six Months Year-To-Date | |
| | | 2011 | | | 2010 | | | Change | | | Excl.
Curr. | | | 2011 | | | 2010 | | | Change | | | Excl.
Curr. | |
European Union | | $ | 2,497 | | | $ | 2,295 | | | | 8.8 | % | | | 0.7 | % | | $ | 4,498 | | | $ | 4,479 | | | | 0.4 | % | | | (1.4 | )% |
Eastern Europe, Middle East & Africa | | | 2,012 | | | | 1,889 | | | | 6.5 | % | | | 3.6 | % | | | 3,699 | | | | 3,635 | | | | 1.8 | % | | | 1.0 | % |
Asia | | | 2,936 | | | | 2,123 | | | | 38.3 | % | | | 27.8 | % | | | 5,259 | | | | 3,996 | | | | 31.6 | % | | | 22.8 | % |
Latin America & Canada | | | 828 | | | | 754 | | | | 9.8 | % | | | 5.8 | % | | | 1,608 | | | | 1,447 | | | | 11.1 | % | | | 7.4 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total PMI | | $ | 8,273 | | | $ | 7,061 | | | | 17.2 | % | | | 10.2 | % | | $ | 15,064 | | | $ | 13,557 | | | | 11.1 | % | | | 7.3 | % |
Net revenues of $8.3 billion were up by 17.2%, including favorable currency of $494 million. Excluding currency, net revenues increased by 10.2%, primarily driven by favorable pricing of $617 million, primarily in Asia, and favorable volume/mix of $98 million. The favorable volume/mix was driven by Asia, mainly Indonesia, Japan and Korea, and was partly offset by: in the EU, mainly Greece, Portugal and Spain; and, in Latin America & Canada, primarily Brazil, Canada and Mexico. Volume/mix in EEMA was essentially flat. Excluding currency and acquisitions, net revenues increased by 10.1%.
OPERATING COMPANIES INCOME
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | PMI Operating Companies Income ($ Millions) | | | | |
| | | Second-Quarter | | | Six Months Year-To-Date | |
| | | 2011 | | | 2010 | | | Change | | | Excl.
Curr. | | | 2011 | | | 2010 | | | Change | | | Excl.
Curr. | |
European Union | | $ | 1,280 | | | $ | 1,105 | | | | 15.8 | % | | | 2.1 | % | | $ | 2,286 | | | $ | 2,167 | | | | 5.5 | % | | | (0.6 | )% |
Eastern Europe, Middle East & Africa | | | 835 | | | | 786 | | | | 6.2 | % | | | 4.8 | % | | | 1,557 | | | | 1,556 | | | | 0.1 | % | | | 0.1 | % |
Asia | | | 1,398 | | | | 845 | | | | 65.4 | % | | | 48.3 | % | | | 2,491 | | | | 1,569 | | | | 58.8 | % | | | 43.0 | % |
Latin America & Canada | | | 268 | | | | 238 | | | | 12.6 | % | | | 8.8 | % | | | 519 | | | | 455 | | | | 14.1 | % | | | 11.9 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total PMI | | $ | 3,781 | | | $ | 2,974 | | | | 27.1 | % | | | 16.5 | % | | $ | 6,853 | | | $ | 5,747 | | | | 19.2 | % | | | 12.5 | % |
Operating income increased by 27.7% to $3.7 billion. Reported operating companies income was up by 27.1% to $3.8 billion, including favorable currency of $317 million. Excluding currency and acquisitions, operating companies income was up by 16.5%, primarily driven by higher pricing and favorable volume/mix, partly offset by unfavorable costs, mostly related to airfreight of product to Japan in response to in-market shortages of competitors’ products.
Adjusted operating companies income grew by 27.2% as shown in the table below and detailed on Schedule 11. Adjusted operating companies income, excluding currency and acquisitions, increased by 16.5%.
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PMI Operating Companies Income ($ Millions)
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| | | Second-Quarter | | | Six Months Year-To-Date | |
| | | 2011 | | | 2010 | | | Change | | | 2011 | | | 2010 | | | Change | |
Reported OCI | | $ | 3,781 | | | $ | 2,974 | | | | 27.1 | % | | $ | 6,853 | | | $ | 5,747 | | | | 19.2 | % |
Asset impairment & exit costs | | | (1 | ) | | | 0 | | | | | | | | (17 | ) | | | 0 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted OCI | | $ | 3,782 | | | $ | 2,974 | | | | 27.2 | % | | $ | 6,870 | | | $ | 5,747 | | | | 19.5 | % |
Adjusted OCI Margin* | | | 45.7 | % | | | 42.1 | % | | | 3.6p.p. | | | | 45.6 | % | | | 42.4 | % | | | 3.2p.p. | |
| * | Margins are calculated as adjusted OCI, divided by net revenues, excluding excise taxes. |
Adjusted operating companies income margin, excluding the impact of currency, was up by 2.4 percentage points to 44.5%, as detailed on Schedule 11. Excluding currency and acquisitions, adjusted operating companies income margin was up by 2.5 percentage points to 44.6%.
SHIPMENT VOLUME & MARKET SHARE
PMI Cigarette Shipment Volume by Segment (Million Units)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Second-Quarter | | | Six Months Year-To-Date | |
| | | 2011 | | | 2010 | | | Change | | | 2011 | | | 2010 | | | Change | |
European Union | | | 57,193 | | | | 59,024 | | | | (3.1 | )% | | | 105,715 | | | | 111,353 | | | | (5.1 | )% |
Eastern Europe, Middle East & Africa | | | 75,336 | | | | 77,892 | | | | (3.3 | )% | | | 138,979 | | | | 142,037 | | | | (2.2 | )% |
Asia | | | 84,042 | | | | 78,185 | | | | 7.5 | % | | | 156,134 | | | | 141,400 | | | | 10.4 | % |
Latin America & Canada | | | 24,606 | | | | 25,858 | | | | (4.8 | )% | | | 48,269 | | | | 50,904 | | | | (5.2 | )% |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total PMI | | | 241,177 | | | | 240,959 | | | | 0.1 | % | | | 449,097 | | | | 445,694 | | | | 0.8 | % |
PMI’s cigarette shipment volume of 241.2 billion units was up slightly by 0.1%. In the EU, cigarette shipment volume decreased by 3.1%, predominantly due to lower total markets, mainly in Spain, lower market share, mainly in Poland, and unfavorable distributor inventory movements, partly offset by total market growth in Germany. In EEMA, cigarette shipment volume declined by 3.3%, primarily due to: a lower total market in Russia and a lower total market and share in Ukraine; the suspension of our business activities following the imposition of sanctions in Libya; and an unfavorable comparison with the second quarter of 2010 in Ukraine, impacted by trade inventory movements; partly offset by growth in Algeria and Turkey. In Asia, PMI’s cigarette shipment volume increased by 7.5%, primarily driven by double-digit growth in Indonesia, Japan and Korea. In Latin America & Canada, cigarette shipment volume decreased by 4.8%, due mainly to: Mexico, reflecting a lower total market resulting from the significant January 1, 2011, excise tax increase; and Brazil, reflecting the depletion of trade inventories established ahead of the April 2011 price increase; partly offset by growth in Argentina.
On an organic basis, which excludes acquisitions, PMI’s cigarette shipment volume was up slightly by 0.1%.
Total cigarette shipments ofMarlboro of 78.1 billion units were up by 0.2%, driven primarily by growth in EEMA of 0.9%, in particular in Algeria, and in Asia of 5.9%, notably in Indonesia, Japan, Korea and Vietnam. The growth was partly offset by decreases: in the EU of 3.3%, reflecting mainly lower total markets and share, primarily in Portugal and Spain; and in Latin America & Canada of 2.8%, due mainly to the unfavorable impact of the aforementioned excise tax increase in Mexico.
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Total cigarette shipments ofL&M of 23.9 billion units were up by 3.1%, driven by growth in the EU of 5.4%, notably in Germany and Greece, and in EEMA of 3.6%, led by Turkey.
Total cigarette shipments ofChesterfieldof 9.8 billion units were down by 4.9%, with declines, primarily in Spain and Ukraine, partly offset by growth, mainly in Portugal. Total cigarette shipments ofParliamentof 10.3 billion units were up by 4.9%, driven by growth in the EU, EEMA and Latin America & Canada.
Total cigarette shipments ofLarkof 10.1 billion units increased by 10.2%, due primarily to growth in Japan, partly offset by a decline in Turkey. Total cigarette shipments ofBond Streetof 12.0 billion units decreased by 2.3%, due mainly to declines in Turkey and Ukraine, partly offset by growth in Russia and Kazakhstan.
Total shipment volume of other tobacco products (OTP), in cigarette equivalent units, excluding acquisitions, grew by 7.9%, notably in Belgium, France and Germany. Total shipment volume for cigarettes and OTP combined was up by 0.2%, excluding acquisitions.
PMI’s market share performance was stable, or registered growth, in a number of key markets, including Algeria, Austria, Belgium, Canada, Egypt, France, Germany, Hong Kong, Indonesia, Japan, Korea, Mexico, the Netherlands, the Philippines, Singapore, Thailand and Turkey.
EUROPEAN UNION REGION (EU)
2011 Second-Quarter Results
In the EU, net revenues increased by 8.8% to $2.5 billion, including favorable currency of $187 million. Excluding currency, net revenues grew by 0.7%, primarily reflecting higher pricing of $49 million, driven mainly by France, Italy and Poland, partly offset by Spain. The favorable pricing variance more than offset the unfavorable volume/mix of $34 million. The unfavorable volume/mix was primarily attributable to a lower total market and share in Greece, Portugal, Spain and the UK, partly offset by a higher total market in Germany.
Operating companies income increased by 15.8% to $1.3 billion, due predominantly to favorable pricing, and favorable currency of $152 million, partly offset by unfavorable volume/mix of $28 million. Excluding the impact of currency, operating companies income was up by 2.1%.
Adjusted operating companies income increased by 15.9%, as shown in the table below and detailed on Schedule 11. Adjusted operating companies income, excluding currency and acquisitions, increased by 2.3%.
EU Operating Companies Income ($ Millions)
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| | | Second-Quarter | | | Six Months Year-To-Date | |
| | | 2011 | | | 2010 | | | Change | | | 2011 | | | 2010 | | | Change | |
Reported OCI | | $ | 1,280 | | | $ | 1,105 | | | | 15.8 | % | | $ | 2,286 | | | $ | 2,167 | | | | 5.5 | % |
Asset impairment & exit costs | | | (1 | ) | | | 0 | | | | | | | | (12 | ) | | | 0 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted OCI | | $ | 1,281 | | | $ | 1,105 | | | | 15.9 | % | | $ | 2,298 | | | $ | 2,167 | | | | 6.0 | % |
Adjusted OCI Margin* | | | 51.3 | % | | | 48.1 | % | | | 3.2 p.p. | | | | 51.1 | % | | | 48.4 | % | | | 2.7 p.p. | |
| * | Margins are calculated as adjusted OCI, divided by net revenues, excluding excise taxes. |
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Excluding the favorable impact of currency, adjusted operating companies income margin was up by 0.8 percentage points to 48.9%, as detailed on Schedule 11.
The total cigarette market in the EU declined by 1.7%, due mainly to Spain, reflecting the unfavorable impact of continued adverse economic conditions. Excluding Spain, the total cigarette market in the EU grew slightly by 0.2%.
PMI’s cigarette shipment volume in the EU declined by 3.1%, due primarily to the impact of the lower total market in Spain, lower share, mainly in Poland, and unfavorable distributor inventory movements, mainly in Austria, France and Spain, partly offset by total market growth in Germany. Shipment volume ofMarlboro decreased by 3.3%, due mainly to lower total markets, unfavorable distributor inventory movements, and lower share, primarily in Portugal and Spain, the former reflecting the impact of price increases in July and November 2010 and January 2011. Shipment volume ofL&Mwas up by 5.4%, driven mainly by higher share in Germany.
PMI’s market share in the EU was down slightly by 0.2 share points to 38.6% as gains, primarily in Belgium, France, Germany, the Netherlands and the Nordics, were more than offset by share declines, mainly in the Czech Republic, Italy, Poland and Portugal. WhileMarlboro’s share in the EU was flat at 18.1%, reflecting a higher share in Belgium, the Czech Republic, Greece, Hungary and the Netherlands, offset by lower share in Germany, Italy, Portugal and the UK, it grew by 0.3 points compared to the first quarter 2011.L&M’s market share in the EU grew by 0.3 points to 6.6%, its best performance since the spin-off in March 2008, primarily driven by gains in Germany, Poland and Spain.
EU Key Market Commentaries
In the Czech Republic, the total cigarette market was up by 3.3%. PMI’s shipments were down by 2.5%. Market share was down by 2.7 points to 45.5%, reflecting continued share declines for lower-margin local brands, partly offset by a higher share forMarlboro, up by 0.6 points to 7.5%, and forRed & White, up by 0.6 points to 13.1%.
In France, the total cigarette market was up by 1.8%. Whilst PMI’s shipments were down slightly by 0.5%, unfavorably impacted by distributor inventory movements, market share was up slightly by 0.1 point to 40.9%, reflecting a higher share for the premiumPhilip Morrisbrand, up by 0.5 points to 8.3%, partly offset by a lower share forMarlboro, down by 0.3 points to 26.0%. Compared to the first quarter 2011, PMI’s market share was up by 0.5 points, driven byMarlboro, up by 0.5 points.
In Germany, the total cigarette market was up by 4.6%. PMI’s shipments were up by 5.3% and market share was up by 0.2 points to 36.1%, driven byL&M, up by 1.0 points to 10.4%. Compared to the first quarter of 2011, PMI’s market share was up by 0.4 points. Although share ofMarlboroin the second quarter was down by 0.5 points to 21.1%, it was essentially flat compared to the first quarter of 2011.
In Italy, the total cigarette market was up by 0.2%. PMI’s shipments were down by 0.9%. Although PMI’s market share declined by 0.7 points to 53.4%, share was essentially flat compared to the first quarter of 2011.Marlboro’s market share in the second quarter of 2011 of 22.7% was down by 0.3 points compared to the second quarter 2010, but up by 0.2 points compared to the first quarter 2011.
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In Poland, the total cigarette market was down by 1.5%, reflecting the unfavorable impact of tax-driven price increases in the fourth quarter of 2010 and second quarter of 2011, and the introduction of an indoor public smoking ban in the fourth quarter of 2010. PMI’s shipments were down by 9.7%. Whilst PMI’s market share was down by 3.2 points to 34.9%, due mainly to lower share of low-priceRed & White, down by 3.3 points to 5.1%, share ofMarlborowas up slightly by 0.1 point to 10.3%, and share ofL&M grew by 0.8 points to 15.9%.
In Spain, the total cigarette market was down by 14.6%, largely due to the continuing adverse economic environment, the impact of the June 2010 VAT-driven price increase and the December 2010 excise tax-driven price increase, and the introduction of a total indoor public smoking ban in January 2011. PMI’s shipments were down by 17.6%. PMI’s market share was down by 0.2 points to 31.0%, due mainly to a lower share ofChesterfield, down by 0.5 points to 8.4%. Share ofMarlboro was essentially flat at 14.6%. PMI’s market share was up by 0.6 points versus the first quarter 2011, driven byMarlboro, up by 0.5 points, reflecting the positive consumer reaction to the price movements of May and June 2011.
EASTERN EUROPE, MIDDLE EAST & AFRICA REGION (EEMA)
2011 Second-Quarter Results
In EEMA, net revenues increased by 6.5% to $2.0 billion, including favorable currency of $55 million. Excluding the impact of currency, net revenues increased by 3.6%, primarily due to favorable pricing of $69 million, primarily in Russia and Ukraine.
Operating companies income increased by 6.2% to $835 million, including favorable currency of $11 million. Excluding the impact of currency, operating companies income increased by 4.8%, due primarily to higher pricing and favorable volume/mix, partly offset by higher costs, principally related to business building initiatives in Russia. Adjusted operating companies income increased by 6.2%, as shown in the table below and detailed on Schedule 11. Adjusted operating companies income, excluding currency, increased by 4.8%.
EEMA Operating Companies Income ($ Millions)
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| | | Second-Quarter | | | Six Months Year-To-Date | |
| | | 2011 | | | 2010 | | | Change | | | 2011 | | | 2010 | | | Change | |
Reported OCI | | $ | 835 | | | $ | 786 | | | | 6.2 | % | | $ | 1,557 | | | $ | 1,556 | | | | 0.1 | % |
Asset impairment & exit costs | | | 0 | | | | 0 | | | | | | | | (2 | ) | | | 0 | | | | | |
| | | | | | | | �� | | | | | | | | | | | | | | | | |
Adjusted OCI | | $ | 835 | | | $ | 786 | | | | 6.2 | % | | $ | 1,559 | | | $ | 1,556 | | | | 0.2 | % |
Adjusted OCI Margin* | | | 41.5 | % | | | 41.6 | % | | | (0.1 | ) p.p. | | | 42.1 | % | | | 42.8 | % | | | (0.7 | ) p.p. |
| * | Margins are calculated as adjusted OCI, divided by net revenues, excluding excise taxes. |
Excluding the favorable impact of currency, adjusted operating companies income margin was up by 0.5 percentage points to 42.1%, as detailed on Schedule 11.
PMI’s cigarette shipment volume in EEMA decreased by 3.3%, principally due to: Libya, reflecting the imposition of sanctions; Russia, primarily reflecting a lower total market; and Ukraine, due to an unfavorable comparison with the second quarter of 2010, impacted by trade inventory movements ahead of
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the July 2010 excise tax-driven price increase, a lower total market and lower share. These declines were partly offset by growth in Algeria and Turkey.
PMI’s cigarette shipment volume of premium brands grew by 2.7% in EEMA, driven byMarlboro andParliament, up by 0.9% and 10.0%, respectively, reflecting the second consecutive quarter of growth following eight quarters of decline.
EEMA Key Market Commentaries
In Russia, the total cigarette market declined by an estimated annualized rate of 2-3%. PMI’s shipment volume decreased by 4.1%. Whilst shipment volume of PMI’s premium portfolio was down by 1.7%, primarily due to a decline inMarlboro of 7.3%, shipment volume of above premiumParliament was up by 1.9%. In the mid-price segment, shipment volume was down by 3.3%, with growth inChesterfield, up by 0.6%, more than offset by a decline inL&M, down by 8.3%. In the low price segment, shipment volume ofBond Streetwas up by 2.1%. PMI’s quarter-to-date May market share of 25.4%, as measured by A.C. Nielsen, was essentially flat. Market share forParliament, in the above premium segment, was up slightly by 0.1 point;Marlboro, in the premium segment, was down by 0.2 points;L&M in the mid-price segment was down by 0.4 share points;Chesterfield in the mid-price segment was up slightly by 0.1 share point; andBond Street in the low-price segment was up by 0.4 share points.
In Turkey, the total cigarette market declined by an estimated 0.8%, having stabilized following the steep January 2010 excise tax increase. PMI’s shipment volume increased by 12.1%. PMI’s quarter-to-date May market share, as measured by A.C. Nielsen, grew by 3.8 points to 44.6%, driven byParliament,Muratti andL&M,up by 1.1, 0.5 and 4.3 share points, respectively, partly offset by declines inLark andBond Street, down by 1.3 and 0.8 points, respectively. Market share ofMarlborowas flat at 9.1%.
In Ukraine, the total cigarette market declined by an estimated 15.0%, due mainly to: an unfavorable comparison with the second quarter of 2010 which was impacted by trade inventory movements ahead of the July 2010 excise tax-driven price increase; the unfavorable impact of excise tax-driven price increases in July 2010 and January 2011; and the underlying market decline. PMI’s shipment volume decreased by 24.8%, reflecting the aforementioned factors, as well as lower share driven by low-price competition. Whilst PMI’s market share, as measured by A.C. Nielsen, was down by 3.5 points to 32.1%, shares for premiumMarlboro andParliamentwere up by 0.3 and 0.2 points, respectively.
ASIA REGION
2011 Second-Quarter Results
In Asia, net revenues increased strongly by 38.3% to $2.9 billion, including favorable currency of $222 million. Excluding the impact of currency, net revenues increased by 27.8%, reflecting the favorable impact of pricing of $413 million, primarily in Australia, Indonesia, Japan and the Philippines, and favorable volume/mix of $175 million, mainly in Japan, reflecting increased shipments in response to in-market shortages of competitors’ products, Indonesia and Korea. Excluding the impact of currency and acquisitions, net revenues increased by 27.7%.
Operating companies income surged by 65.4% to reach $1.4 billion, despite significant costs related to airfreight of product to Japan. Excluding the favorable impact of currency of $145 million, operating
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companies income increased by 48.3%, driven by strong growth in Australia, Indonesia, Japan and the Philippines. Excluding the impact of currency and acquisitions, operating companies income increased by 48.2%. Adjusted operating companies income increased by 65.4% as shown in the table below and detailed on Schedule 11. Adjusted operating companies income, excluding currency, increased by 48.3%, or by 48.2% excluding both currency and acquisitions.
Asia Operating Companies Income ($ Millions)
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| | | Second-Quarter | | | Six Months Year-To-Date | |
| | | 2011 | | | 2010 | | | Change | | | 2011 | | | 2010 | | | Change | |
Reported OCI | | $ | 1,398 | | | $ | 845 | | | | 65.4 | % | | $ | 2,491 | | | $ | 1,569 | | | | 58.8 | % |
Asset impairment & exit costs | | | 0 | | | | 0 | | | | | | | | (2 | ) | | | 0 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted OCI | | $ | 1,398 | | | $ | 845 | | | | 65.4 | % | | $ | 2,493 | | | $ | 1,569 | | | | 58.9 | % |
Adjusted OCI Margin* | | | 47.6 | % | | | 39.8 | % | | | 7.8 p.p. | | | | 47.4 | % | | | 39.3 | % | | | 8.1 p.p. | |
| * | Margins are calculated as adjusted OCI, divided by net revenues, excluding excise taxes. |
Excluding the impact of currency and acquisitions, adjusted operating companies income margin was up by 6.4 percentage points to 46.2%, as detailed on Schedule 11.
PMI’s cigarette shipment volume in Asia increased by 7.5%, predominantly due to growth in Indonesia, Japan and Korea. The growth was partly offset by a decline in Pakistan of 6.6% due to the continued growth of illicit products.
Shipment volume ofMarlborowas up by 5.9%, driven mainly by growth in Indonesia, Japan, Korea and Vietnam.
Asia Key Market Commentaries
In Indonesia, the total cigarette market was up by 13.9%, driven mainly by growth in the low-price segment and moderate price increases compared to 2010. PMI’s shipment volume increased by 20.7%, with all key brand families recording growth. Market share was up by 1.6 points to a record 30.2%, driven by growth from premiumSampoerna A, mid-priceSampoerna Kretek and low-priceU MildandVegas Mild. AlthoughMarlboro’s market share declined by 0.3 points to 4.2%, shipments grew by 6.7% and share of the “white” cigarettes segment increased by 3.3 points to 64.2%.
In Japan, the total cigarette market decreased by 19.1%, reflecting the unfavorable impact of the significant October 1, 2010, tax-driven price increases and the underlying market decline. PMI’s shipment volume was up by 11.0%, driven by increased trade purchases compensating for in-market shortages of competitors’ products. Market share of 42.0% was up by 17.7 points, reflecting growth ofMarlboro, Larkand thePhilip Morrisbrand by 5.6, 7.7 and 1.6 points, to 16.4%, 14.4% and 4.0%, respectively.
In Korea, the total cigarette market declined by 1.9%. PMI’s shipment volume increased by 17.6%, driven by market share increases. PMI’s market share reached a record 19.9%, up by 3.3 points, driven byMarlboro andParliament, up by 1.8 and 1.2 points, respectively.
In the Philippines, the total market declined by 2.9%, partly reflecting the impact of PMFTC Inc.’s excise-tax driven price increase of its key brand variants in January 2011. PMI’s shipments were down by
9
1.5%. PMI’s market share was up by 1.3 points to 94.1%. Share ofMarlboro increased by 0.4 points to 21.1%.
LATIN AMERICA & CANADA REGION
2011 Second-Quarter Results
In Latin America & Canada, net revenues increased by 9.8% to $828 million, including favorable currency of $30 million. Excluding the impact of currency, net revenues increased by 5.8%, reflecting favorable pricing of $86 million, primarily in Argentina, Brazil, Canada and Mexico, that more than offset unfavorable volume/mix of $42 million.
Operating companies income increased by 12.6% to $268 million. Excluding the impact of currency, operating companies income increased by 8.8%, primarily reflecting favorable pricing. Adjusted operating companies income grew by 12.6% as shown in the table below and detailed on Schedule 11. Adjusted operating companies income, excluding currency, grew by 8.8%.
Latin America & Canada Operating Companies Income ($ Millions)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Second-Quarter | | | Six Months Year-To-Date | |
| | | 2011 | | | 2010 | | | Change | | | 2011 | | | 2010 | | | Change | |
Reported OCI | | $ | 268 | | | $ | 238 | | | | 12.6 | % | | $ | 519 | | | $ | 455 | | | | 14.1 | % |
Asset impairment & exit costs | | | 0 | | | | 0 | | | | | | | | (1 | ) | | | 0 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted OCI | | $ | 268 | | | $ | 238 | | | | 12.6 | % | | $ | 520 | | | $ | 455 | | | | 14.3 | % |
Adjusted OCI Margin* | | | 32.4 | % | | | 31.6 | % | | | 0.8 p.p. | | | | 32.3 | % | | | 31.4 | % | | | 0.9 p.p. | |
| * | Margins are calculated as adjusted OCI, divided by net revenues, excluding excise taxes. |
Excluding the impact of currency, adjusted operating companies income margin increased by 0.9 percentage points to 32.5%, as detailed on Schedule 11.
PMI’s cigarette shipment volume in Latin America & Canada decreased by 4.8%, due mainly to Mexico and Brazil, partly offset by an increase in Argentina. Shipment volume ofMarlborodecreased by 2.8%.
Latin America & Canada Key Market Commentaries
In Argentina, the total cigarette market grew by 8.7%. PMI’s cigarette shipment volume increased by 8.4%. Although PMI’s market share was down by 0.4 points to 74.4%, share ofMarlborowas up by 0.6 points to 24.0%, offset by the mid-pricePhilip Morris brand, down by 0.4 share points to 37.9%, and low-priceNext, down by 0.2 points to 3.7%.
In Canada, the total tax-paid cigarette market was down by 4.5%, due mainly to trade inventory movements in June 2010 in anticipation of harmonized sales tax implementation in the provinces of Ontario and British Columbia and a lower total market. Although PMI’s cigarette shipment volume decreased by 1.9%, market share grew by 1.0 point to 34.0%, with low-price brandsNext andQuebec Classique, up by 2.7 and 0.3 share points, respectively, partly offset by mid-priceNumber 7 andCanadian Classics, and low-
10
priceAccord, down by 0.5, 0.5 and 0.8 share points, respectively. Market share of premiumBelmont was up slightly by 0.1 point to 1.8%.
In Mexico, the total cigarette market was down by 13.2%, primarily due to the significant January 1, 2011, excise tax increase which drove a 26.7% increase in the retail price ofMarlboro. Although PMI’s cigarette shipment volume decreased by 10.3%, market share grew by 2.3 points to 72.2%, led byMarlboro, up by 3.8 share points to a quarterly record 52.0%, andBenson & Hedges, up by 0.5 points to 6.1%. Market share of low-priceDelicados, the second best-selling brand in the market, declined by 1.1 points to 11.1%.
Philip Morris International Inc. Profile
Philip Morris International Inc. (PMI) is the leading international tobacco company, with seven of the world’s top 15 international brands, includingMarlboro, the number one cigarette brand worldwide. PMI’s products are sold in approximately 180 countries. In 2010, the company held an estimated 16.0% share of the total international cigarette market outside of the U.S., or 27.6% excluding the People’s Republic of China and the U.S. For more information, seewww.pmi.com.
Forward-Looking and Cautionary Statements
This press release contains projections of future results and other forward-looking statements that involve a number of risks and uncertainties and are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. The following important factors could cause actual results and outcomes to differ materially from those contained in such forward-looking statements.
Philip Morris International Inc. and its tobacco subsidiaries (PMI) are subject to intense price competition; changes in consumer preferences and demand for their products; fluctuations in levels of customer inventories; increases in raw material costs; the effects of global economic developments and individual country economic and market conditions; unfavorable currency movements and changes to income tax laws. Their results are dependent upon their continued ability to promote brand equity successfully; to anticipate and respond to new consumer trends; to develop new products and markets and to broaden brand portfolios in order to compete effectively; to be able to protect and enhance margins through price increases; and to improve productivity.
PMI is also subject to legislation and governmental regulation, including actual and potential excise tax increases; discriminatory excise tax structures; increasing marketing and regulatory restrictions; the effects of price increases related to excise tax increases on consumption rates and consumer preferences within price segments; health concerns relating to the use of tobacco products and exposure to environmental tobacco smoke; privately imposed smoking restrictions; and governmental investigations.
PMI is subject to litigation, including risks associated with adverse jury and judicial determinations, and courts reaching conclusions at variance with PMI’s understanding of applicable law.
PMI is further subject to other risks detailed from time to time in its publicly filed documents, including the Form 10-Q for the quarter ended March 31, 2011. PMI cautions that the foregoing list of important factors is not complete and does not undertake to update any forward-looking statements that it may make, except in the normal course of its public disclosure obligations.
###
11
Schedule 1
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Condensed Statements of Earnings
For the Quarters Ended June 30,
($ in millions, except per share data)
(Unaudited)
| | | | | | | | | | | | |
| | | 2011 | | | 2010 | | | % Change | |
Net revenues | | $ | 20,234 | | | $ | 17,383 | | | | 16.4 | % |
Cost of sales | | | 2,844 | | | | 2,550 | | | | 11.5 | % |
Excise taxes on products(1) | | | 11,961 | | | | 10,322 | | | | 15.9 | % |
| | | | | | | | | | | | |
Gross profit | | | 5,429 | | | | 4,511 | | | | 20.4 | % |
Marketing, administration and research costs | | | 1,647 | | | | 1,537 | | | | | |
Asset impairment and exit costs | | | 1 | | | | — | | | | | |
| | | | | | | | | | | | |
Operating companies income | | | 3,781 | | | | 2,974 | | | | 27.1 | % |
Amortization of intangibles | | | 24 | | | | 23 | | | | | |
General corporate expenses | | | 45 | | | | 45 | | | | | |
| | | | | | | | | | | | |
Operating income | | | 3,712 | | | | 2,906 | | | | 27.7 | % |
Interest expense, net | | | 208 | | | | 223 | | | | | |
| | | | | | | | | | | | |
Earnings before income taxes | | | 3,504 | | | | 2,683 | | | | 30.6 | % |
Provision for income taxes | | | 1,019 | | | | 641 | | | | 59.0 | % |
| | | | | | | | | | | | |
Net earnings | | | 2,485 | | | | 2,042 | | | | 21.7 | % |
Net earnings attributable to noncontrolling interests | | | 76 | | | | 60 | | | | | |
| | | | | | | | | | | | |
Net earnings attributable to PMI | | $ | 2,409 | | | $ | 1,982 | | | | 21.5 | % |
| | | | | | | | | | | | |
| | | |
Per share data:(2) | | | | | | | | | | | | |
Basic earnings per share | | $ | 1.35 | | | $ | 1.07 | | | | 26.2 | % |
| | | | | | | | | | | | |
Diluted earnings per share | | $ | 1.35 | | | $ | 1.07 | | | | 26.2 | % |
| | | | | | | | | | | | |
| (1) | The segment detail of excise taxes on products sold for the quarters ended June 30, 2011 and 2010 is shown on Schedule 2. |
| (2) | Net earnings and weighted-average shares used in the basic and diluted earnings per share computations for the quarters ended June 30, 2011 and 2010 are shown on Schedule 4, Footnote 1. |
Schedule 2
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Selected Financial Data by Business Segment
For the Quarters Ended June 30,
($ in millions)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | Net Revenues excluding Excise Taxes | |
| | | | | European
Union | | | EEMA | | | Asia | | | Latin
America &
Canada | | | Total | |
2011 | | Net Revenues(1) | | $ | 8,080 | | | $ | 4,603 | | | $ | 5,146 | | | $ | 2,405 | | | $ | 20,234 | |
| | Excise Taxes on Products | | | (5,583 | ) | | | (2,591 | ) | | | (2,210 | ) | | | (1,577 | ) | | | (11,961 | ) |
| | | | | | | | | | | | | | | | | | | | | | |
| | Net Revenues excluding Excise Taxes | | | 2,497 | | | | 2,012 | | | | 2,936 | | | | 828 | | | | 8,273 | |
| | | | | | |
2010 | | Net Revenues | | $ | 7,260 | | | $ | 4,125 | | | $ | 3,903 | | | $ | 2,095 | | | $ | 17,383 | |
| | Excise Taxes on Products | | | (4,965 | ) | | | (2,236 | ) | | | (1,780 | ) | | | (1,341 | ) | | | (10,322 | ) |
| | | | | | | | | | | | | | | | | | | | | | |
| | Net Revenues excluding Excise Taxes | | | 2,295 | | | | 1,889 | | | | 2,123 | | | | 754 | | | | 7,061 | |
| | | | | | |
Variance | | Currency | | | 187 | | | | 55 | | | | 222 | | | | 30 | | | | 494 | |
| | Acquisitions | | | — | | | | — | | | | 3 | | | | — | | | | 3 | |
| | Operations | | | 15 | | | | 68 | | | | 588 | | | | 44 | | | | 715 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | Variance Total | | | 202 | | | | 123 | | | | 813 | | | | 74 | | | | 1,212 | |
| | Variance Total (%) | | | 8.8 | % | | | 6.5 | % | | | 38.3 | % | | | 9.8 | % | | | 17.2 | % |
| | | | | | |
| | Variance excluding Currency | | | 15 | | | | 68 | | | | 591 | | | | 44 | | | | 718 | |
| | Variance excluding Currency (%) | | | 0.7 | % | | | 3.6 | % | | | 27.8 | % | | | 5.8 | % | | | 10.2 | % |
| | | | | | |
| | Variance excluding Currency & Acquisitions | | | 15 | | | | 68 | | | | 588 | | | | 44 | | | | 715 | |
| | Variance excluding Currency & Acquisitions (%) | | | 0.7 | % | | | 3.6 | % | | | 27.7 | % | | | 5.8 | % | | | 10.1 | % |
|
(1) 2011 Currency increased net revenues as follows: | |
| | European Union | | $ | 609 | | | | | |
| | EEMA | | | 94 | | |
| | Asia | | | 368 | | |
| | Latin America & Canada | | | 76 | | |
| | | | | | | |
| | | | $ | 1,147 | | |
| | | | | | | |
Schedule 3
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Selected Financial Data by Business Segment
For the Quarters Ended June 30,
($ in millions)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | |
| | | Operating Companies Income | |
| | | European
Union | | | EEMA | | | Asia | | | Latin
America &
Canada | | | Total | |
2011 | | $ | 1,280 | | | $ | 835 | | | $ | 1,398 | | | $ | 268 | | | $ | 3,781 | |
2010 | | | 1,105 | | | | 786 | | | | 845 | | | | 238 | | | | 2,974 | |
% Change | | | 15.8 | % | | | 6.2 | % | | | 65.4 | % | | | 12.6 | % | | | 27.1 | % |
| | | | | |
Reconciliation: | | | | | | | | | | | | | | | | | | | | |
For the quarter ended June 30, 2010 | | $ | 1,105 | | | $ | 786 | | | $ | 845 | | | $ | 238 | | | $ | 2,974 | |
| | | | | |
2010 Asset impairment and exit costs | | | — | | | | — | | | | — | | | | — | | | | — | |
2011 Asset impairment and exit costs | | | (1 | ) | | | — | | | | — | | | | — | | | | (1 | ) |
| | | | | |
Acquired businesses | | | (1 | ) | | | — | | | | 1 | | | | — | | | | — | |
Currency | | | 152 | | | | 11 | | | | 145 | | | | 9 | | | | 317 | |
Operations | | | 25 | | | | 38 | | | | 407 | | | | 21 | | | | 491 | |
| | | | | | | | | | | | | | | | | | | | |
For the quarter ended June 30, 2011 | | $ | 1,280 | | | $ | 835 | | | $ | 1,398 | | | $ | 268 | | | $ | 3,781 | |
| | | | | | | | | | | | | | | | | | | | |
Schedule 4
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Net Earnings Attributable to PMI and Diluted Earnings Per Share
For the Quarters Ended June 30,
($ in millions, except per share data)
(Unaudited)
| | | | | | | | |
| | | Net Earnings
Attributable to
PMI | | | Diluted
E.P.S. | |
2011 Net Earnings Attributable to PMI | | $ | 2,409 | | | $ | 1.35 | (1) |
2010 Net Earnings Attributable to PMI | | $ | 1,982 | | | $ | 1.07 | (1) |
% Change | | | 21.5 | % | | | 26.2 | % |
| | |
Reconciliation: | | | | | | | | |
2010 Net Earnings Attributable to PMI | | $ | 1,982 | | | $ | 1.07 | (1) |
| | |
Special Items: | | | | | | | | |
2011 Asset impairment and exit costs | | | (1 | ) | | | — | |
2011 Tax items | | | 15 | | | | 0.01 | |
2010 Asset impairment and exit costs | | | — | | | | — | |
2010 Tax items | | | (121 | ) | | | (0.07 | ) |
| | |
Currency | | | 235 | | | | 0.13 | |
Interest | | | 15 | | | | 0.01 | |
Change in tax rate | | | (35 | ) | | | (0.02 | ) |
Impact of lower shares outstanding and share-based payments | | | 5 | | | | 0.05 | |
Operations | | | 314 | | | | 0.17 | |
| | | | | | | | |
2011 Net Earnings Attributable to PMI | | $ | 2,409 | | | $ | 1.35 | (1) |
| | | | | | | | |
| | |
(1) Basic and diluted EPS were calculated using the following (in millions): | | | | | | | | |
| | |
| | | Q2
2011 | | | Q2
2010 | |
Net earnings attributable to PMI | | $ | 2,409 | | | $ | 1,982 | |
Less distributed and undistributed earnings attributable to share-based payment awards | | | 14 | | | | 9 | |
| | | | | | | | |
Net earnings for basic and diluted EPS | | $ | 2,395 | | | $ | 1,973 | |
| | | | | | | | |
| | |
Weighted-average shares for basic EPS | | | 1,772 | | | | 1,846 | |
Plus incremental shares from assumed conversions: | | | | | | | | |
Stock Options | | | — | | | | 3 | |
| | | | | | | | |
Weighted-average shares for diluted EPS | | | 1,772 | | | | 1,849 | |
| | | | | | | | |
Schedule 5
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Condensed Statements of Earnings
For the Six Months Ended June 30,
($ in millions, except per share data)
(Unaudited)
| | | | | | | | | | | | |
| | | 2011 | | | 2010 | | | % Change | |
Net revenues | | $ | 36,764 | | | $ | 32,970 | | | | 11.5 | % |
Cost of sales | | | 5,139 | | | | 4,922 | | | | 4.4 | % |
Excise taxes on products(1) | | | 21,700 | | | | 19,413 | | | | 11.8 | % |
| | | | | | | | | | | | |
Gross profit | | | 9,925 | | | | 8,635 | | | | 14.9 | % |
Marketing, administration and research costs | | | 3,055 | | | | 2,888 | | | | | |
Asset impairment and exit costs | | | 17 | | | | — | | | | | |
| | | | | | | | | | | | |
Operating companies income | | | 6,853 | | | | 5,747 | | | | 19.2 | % |
Amortization of intangibles | | | 48 | | | | 43 | | | | | |
General corporate expenses | | | 86 | | | | 83 | | | | | |
| | | | | | | | | | | | |
Operating income | | | 6,719 | | | | 5,621 | | | | 19.5 | % |
Interest expense, net | | | 421 | | | | 446 | | | | | |
| | | | | | | | | | | | |
Earnings before income taxes | | | 6,298 | | | | 5,175 | | | | 21.7 | % |
Provision for income taxes | | | 1,826 | | | | 1,379 | | | | 32.4 | % |
| | | | | | | | | | | | |
Net earnings | | | 4,472 | | | | 3,796 | | | | 17.8 | % |
Net earnings attributable to noncontrolling interests | | | 144 | | | | 111 | | | | | |
| | | | | | | | | | | | |
Net earnings attributable to PMI | | $ | 4,328 | | | $ | 3,685 | | | | 17.4 | % |
| | | | | | | | | | | | |
| | | |
Per share data:(2) | | | | | | | | | | | | |
Basic earnings per share | | $ | 2.42 | | | $ | 1.97 | | | | 22.8 | % |
| | | | | | | | | | | | |
Diluted earnings per share | | $ | 2.42 | | | $ | 1.97 | | | | 22.8 | % |
| | | | | | | | | | | | |
| (1) | The segment detail of excise taxes on products sold for the six months ended June 30, 2011 and 2010 is shown on Schedule 6. |
| (2) | Net earnings and weighted-average shares used in the basic and diluted earnings per share computations for the six months ended June 30, 2011 and 2010 are shown on Schedule 8, Footnote 1. |
Schedule 6
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Selected Financial Data by Business Segment
For the Six Months Ended June 30,
($ in millions)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | Net Revenues excluding Excise Taxes | |
| | | | | European
Union | | | EEMA | | | Asia | | | Latin
America &
Canada | | | Total | |
2011 | | Net Revenues(1) | | $ | 14,495 | | | $ | 8,274 | | | $ | 9,434 | | | $ | 4,561 | | | $ | 36,764 | |
| | Excise Taxes on Products | | | (9,997 | ) | | | (4,575 | ) | | | (4,175 | ) | | | (2,953 | ) | | | (21,700 | ) |
| | | | | | | | | | | | | | | | | | | | | | |
| | Net Revenues excluding Excise Taxes | | | 4,498 | | | | 3,699 | | | | 5,259 | | | | 1,608 | | | | 15,064 | |
| | | | | | |
2010 | | Net Revenues | | $ | 14,008 | | | $ | 7,481 | | | $ | 7,465 | | | $ | 4,016 | | | $ | 32,970 | |
| | Excise Taxes on Products | | | (9,529 | ) | | | (3,846 | ) | | | (3,469 | ) | | | (2,569 | ) | | | (19,413 | ) |
| | | | | | | | | | | | | | | | | | | | | | |
| | Net Revenues excluding Excise Taxes | | | 4,479 | | | | 3,635 | | | | 3,996 | | | | 1,447 | | | | 13,557 | |
| | | | | | |
Variance | | Currency | | | 81 | | | | 26 | | | | 350 | | | | 54 | | | | 511 | |
| | Acquisitions | | | — | | | | — | | | | 108 | | | | — | | | | 108 | |
| | Operations | | | (62 | ) | | | 38 | | | | 805 | | | | 107 | | | | 888 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | Variance Total | | | 19 | | | | 64 | | | | 1,263 | | | | 161 | | | | 1,507 | |
| | Variance Total (%) | | | 0.4 | % | | | 1.8 | % | | | 31.6 | % | | | 11.1 | % | | | 11.1 | % |
| | | | | | |
| | Variance excluding Currency | | | (62 | ) | | | 38 | | | | 913 | | | | 107 | | | | 996 | |
| | Variance excluding Currency (%) | | | (1.4 | )% | | | 1.0 | % | | | 22.8 | % | | | 7.4 | % | | | 7.3 | % |
| | | | | | |
| | Variance excluding Currency & Acquisitions | | | (62 | ) | | | 38 | | | | 805 | | | | 107 | | | | 888 | |
| | Variance excluding Currency & Acquisitions (%) | | | (1.4 | )% | | | 1.0 | % | | | 20.1 | % | | | 7.4 | % | | | 6.6 | % |
| |
(1) 2011 Currency increased net revenues as follows: | | | | | |
| | European Union | | $ | 281 | | |
| | EEMA | | | 8 | | |
| | Asia | | | 603 | | |
| | Latin America & Canada | | | 130 | | |
| | | | | | | |
| | | | $ | 1,022 | | |
| | | | | | | |
Schedule 7
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Selected Financial Data by Business Segment
For the Six Months Ended June 30,
($ in millions)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | |
| | | Operating Companies Income | |
| | | European
Union | | | EEMA | | | Asia | | | Latin
America &
Canada | | | Total | |
2011 | | $ | 2,286 | | | $ | 1,557 | | | $ | 2,491 | | | $ | 519 | | | $ | 6,853 | |
2010 | | | 2,167 | | | | 1,556 | | | | 1,569 | | | | 455 | | | | 5,747 | |
% Change | | | 5.5 | % | | | 0.1 | % | | | 58.8 | % | | | 14.1 | % | | | 19.2 | % |
| | | | | |
Reconciliation: | | | | | | | | | | | | | | | | | | | | |
For the six months ended June 30, 2010 | | $ | 2,167 | | | $ | 1,556 | | | $ | 1,569 | | | $ | 455 | | | $ | 5,747 | |
| | | | | |
2010 Asset impairment and exit costs | | | — | | | | — | | | | — | | | | — | | | | — | |
2011 Asset impairment and exit costs | | | (12 | ) | | | (2 | ) | | | (2 | ) | | | (1 | ) | | | (17 | ) |
| | | | | |
Acquired businesses | | | (1 | ) | | | — | | | | 24 | | | | — | | | | 23 | |
Currency | | | 131 | | | | (1 | ) | | | 247 | | | | 10 | | | | 387 | |
Operations | | | 1 | | | | 4 | | | | 653 | | | | 55 | | | | 713 | |
| | | | | | | | | | | | | | | | | | | | |
For the six months ended June 30, 2011 | | $ | 2,286 | | | $ | 1,557 | | | $ | 2,491 | | | $ | 519 | | | $ | 6,853 | |
| | | | | | | | | | | | | | | | | | | | |
Schedule 8
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Net Earnings Attributable to PMI and Diluted Earnings Per Share
For the Six Months Ended June 30,
($ in millions, except per share data)
(Unaudited)
| | | | | | | | |
| | | Net Earnings
Attributable to
PMI | | | Diluted
E.P.S. | |
2011 Net Earnings Attributable to PMI | | $ | 4,328 | | | $ | 2.42 | (1) |
2010 Net Earnings Attributable to PMI | | $ | 3,685 | | | $ | 1.97 | (1) |
% Change | | | 17.4 | % | | | 22.8 | % |
| | |
Reconciliation: | | | | | | | | |
2010 Net Earnings Attributable to PMI | | $ | 3,685 | | | $ | 1.97 | (1) |
| | |
Special Items: | | | | | | | | |
2011 Asset impairment and exit costs | | | (11 | ) | | | (0.01 | ) |
2011 Tax items | | | 26 | | | | 0.02 | |
2010 Asset impairment and exit costs | | | — | | | | — | |
2010 Tax items | | | (121 | ) | | | (0.07 | ) |
| | |
Currency | | | 291 | | | | 0.16 | |
Interest | | | 19 | | | | 0.01 | |
Change in tax rate | | | (26 | ) | | | (0.01 | ) |
Impact of lower shares outstanding and share-based payments | | | 7 | | | | 0.10 | |
Operations | | | 458 | | | | 0.25 | |
| | | | | | | | |
2011 Net Earnings Attributable to PMI | | $ | 4,328 | | | $ | 2.42 | (1) |
| | | | | | | | |
|
| (1) Basic and diluted EPS were calculated using the following (in millions): | |
| | |
| | | YTD June
2011 | | | YTD June
2010 | |
Net earnings attributable to PMI | | $ | 4,328 | | | $ | 3,685 | |
Less distributed and undistributed earnings attributable to share-based payment awards | | | 24 | | | | 17 | |
| | | | | | | | |
Net earnings for basic and diluted EPS | | $ | 4,304 | | | $ | 3,668 | |
| | | | | | | | |
| | |
Weighted-average shares for basic EPS | | | 1,782 | | | | 1,860 | |
Plus incremental shares from assumed conversions: | | | | | | | | |
Stock Options | | | — | | | | 3 | |
| | | | | | | | |
Weighted-average shares for diluted EPS | | | 1,782 | | | | 1,863 | |
| | | | | | | | |
Schedule 9
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Condensed Balance Sheets
($ in millions, except ratios)
(Unaudited)
| | | December 31, | | | | December 31, | |
| | | June 30,
2011 | | | December 31,
2010 | |
Assets | | | | | | | | |
Cash and cash equivalents | | $ | 2,178 | | | $ | 1,703 | |
All other current assets | | | 12,155 | | | | 12,053 | |
Property, plant and equipment, net | | | 6,793 | | | | 6,499 | |
Goodwill | | | 10,652 | | | | 10,161 | |
Other intangible assets, net | | | 4,020 | | | | 3,873 | |
Other assets | | | 996 | | | | 761 | |
| | | | | | | | |
Total assets | | $ | 36,794 | | | $ | 35,050 | |
| | | | | | | | |
| | |
Liabilities and Stockholders’ Equity | | | | | | | | |
Short-term borrowings | | $ | 570 | | | $ | 1,747 | |
Current portion of long-term debt | | | 3,314 | | | | 1,385 | |
All other current liabilities | | | 10,879 | | | | 9,672 | |
Long-term debt | | | 13,037 | | | | 13,370 | |
Deferred income taxes | | | 2,067 | | | | 2,027 | |
Other long-term liabilities | | | 1,747 | | | | 1,728 | |
| | | | | | | | |
Total liabilities | | | 31,614 | | | | 29,929 | |
| | |
Redeemable noncontrolling interest | | | 1,204 | | | | 1,188 | |
| | |
Total PMI stockholders’ equity | | | 3,669 | | | | 3,506 | |
Noncontrolling interests | | | 307 | | | | 427 | |
| | | | | | | | |
Total stockholders’ equity | | | 3,976 | | | | 3,933 | |
| | | | | | | | |
Total liabilities and stockholders’ equity | | $ | 36,794 | | | $ | 35,050 | |
| | | | | | | | |
| | |
Total debt | | $ | 16,921 | | | $ | 16,502 | |
Total debt to EBITDA | | | 1.28 | (1) | | | 1.36 | (1) |
Net debt to EBITDA | | | 1.11 | (1) | | | 1.22 | (1) |
| (1) | For the calculation of Total Debt to EBITDA and Net Debt to EBITDA ratios, refer to Schedule 18. |
Schedule 10
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP Measures
Adjustments for the Impact of Currency and Acquisitions
For the Quarters Ended June 30,
($ in millions)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2011 | | | | | 2010 | | | % Change in Reported Net Revenues
excluding Excise Taxes | |
Reported Net
Revenues | | | Less
Excise
Taxes | | | Reported Net
Revenues
excluding
Excise Taxes | | | Less
Currency | | | Reported Net
Revenues
excluding
Excise Taxes
& Currency | | | Less
Acquisi-
tions | | | Reported Net
Revenues
excluding
Excise Taxes,
Currency &
Acquisitions | | | | | Reported
Net
Revenues | | | Less
Excise
Taxes | | | Reported Net
Revenues
excluding
Excise Taxes | | | Reported | | | Reported
excluding
Currency | | | Reported
excluding
Currency &
Acquisitions | |
| $ | 8,080 | | | $ | 5,583 | | | $ | 2,497 | | | $ | 187 | | | $ | 2,310 | | | $ | — | | | $ | 2,310 | | | European Union | | $ | 7,260 | | | $ | 4,965 | | | $ | 2,295 | | | | 8.8 | % | | | 0.7 | % | | | 0.7 | % |
| | 4,603 | | | | 2,591 | | | | 2,012 | | | | 55 | | | | 1,957 | | | | — | | | | 1,957 | | | EEMA | | | 4,125 | | | | 2,236 | | | | 1,889 | | | | 6.5 | % | | | 3.6 | % | | | 3.6 | % |
| | 5,146 | | | | 2,210 | | | | 2,936 | | | | 222 | | | | 2,714 | | | | 3 | | | | 2,711 | | | Asia | | | 3,903 | | | | 1,780 | | | | 2,123 | | | | 38.3 | % | | | 27.8 | % | | | 27.7 | % |
| | 2,405 | | | | 1,577 | | | | 828 | | | | 30 | | | | 798 | | | | — | | | | 798 | | | Latin America & Canada | | | 2,095 | | | | 1,341 | | | | 754 | | | | 9.8 | % | | | 5.8 | % | | | 5.8 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| $ | 20,234 | | | $ | 11,961 | | | $ | 8,273 | | | $ | 494 | | | $ | 7,779 | | | $ | 3 | | | $ | 7,776 | | | PMI Total | | $ | 17,383 | | | $ | 10,322 | | | $ | 7,061 | | | | 17.2 | % | | | 10.2 | % | | | 10.1 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | |
| 2011 | | | | | 2010 | | | % Change in Reported Operating
Companies Income | |
Reported
Operating
Companies
Income | | | | | | | | | Less
Currency | | | Reported
Operating
Companies
Income
excluding
Currency | | | Less
Acquisi-
tions | | | Reported
Operating
Companies
Income
excluding
Currency &
Acquisitions | | | | | | | | | | | Reported
Operating
Companies
Income | | | Reported | | | Reported
excluding
Currency | | | Reported
excluding
Currency &
Acquisitions | |
| $ | 1,280 | | | | | | | | | | | $ | 152 | | | $ | 1,128 | | | $ | (1 | ) | | $ | 1,129 | | | European Union | | | | | | | | | | $ | 1,105 | | | | 15.8 | % | | | 2.1 | % | | | 2.2 | % |
| | 835 | | | | | | | | | | | | 11 | | | | 824 | | | | — | | | | 824 | | | EEMA | | | | | | | | | | | 786 | | | | 6.2 | % | | | 4.8 | % | | | 4.8 | % |
| | 1,398 | | | | | | | | | | | | 145 | | | | 1,253 | | | | 1 | | | | 1,252 | | | Asia | | | | | | | | | | | 845 | | | | 65.4 | % | | | 48.3 | % | | | 48.2 | % |
| | 268 | | | | | | | | | | | | 9 | | | | 259 | | | | — | | | | 259 | | | Latin America & Canada | | | | | | | | | | | 238 | | | | 12.6 | % | | | 8.8 | % | | | 8.8 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| $ | 3,781 | | | | | | | | | | | $ | 317 | | | $ | 3,464 | | | $ | — | | | $ | 3,464 | | | PMI Total | | | | | | | | | | $ | 2,974 | | | | 27.1 | % | | | 16.5 | % | | | 16.5 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Schedule 11
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP Measures
Reconciliation of Reported Operating Companies Income to Adjusted Operating Companies Income &
Reconciliation of Adjusted Operating Companies Income Margin, excluding Currency and Acquisitions
For the Quarters Ended June 30,
($ in millions)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2011 | | | | | 2010 | | | % Change in Adjusted
Operating Companies Income | |
Reported
Operating
Companies
Income | | | Less
Asset
Impairment
& Exit Costs | | | Adjusted
Operating
Companies
Income | | | Less
Currency | | | Adjusted
Operating
Companies
Income
excluding
Currency | | | Less
Acquisi-
tions | | | Adjusted
Operating
Companies
Income
excluding
Currency &
Acquisitions | | | | | Reported
Operating
Companies
Income | | | Less
Asset
Impairment
& Exit Costs | | | Adjusted
Operating
Companies
Income | | | Adjusted | | | Adjusted
excluding
Currency | | | Adjusted
excluding
Currency &
Acquisitions | |
| $ | 1,280 | | | $ | (1 | ) | | $ | 1,281 | | | $ | 152 | | | $ | 1,129 | | | $ | (1 | ) | | $ | 1,130 | | | European Union | | $ | 1,105 | | | $ | — | | | $ | 1,105 | | | | 15.9 | % | | | 2.2 | % | | | 2.3 | % |
| | 835 | | | | — | | | | 835 | | | | 11 | | | | 824 | | | | — | | | | 824 | | | EEMA | | | 786 | | | | — | | | | 786 | | | | 6.2 | % | | | 4.8 | % | | | 4.8 | % |
| | 1,398 | | | | — | | | | 1,398 | | | | 145 | | | | 1,253 | | | | 1 | | | | 1,252 | | | Asia | | | 845 | | | | — | | | | 845 | | | | 65.4 | % | | | 48.3 | % | | | 48.2 | % |
| | 268 | | | | — | | | | 268 | | | | 9 | | | | 259 | | | | — | | | | 259 | | | Latin America & Canada | | | 238 | | | | — | | | | 238 | | | | 12.6 | % | | | 8.8 | % | | | 8.8 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| $ | 3,781 | | | $ | (1 | ) | | $ | 3,782 | | | $ | 317 | | | $ | 3,465 | | | $ | — | | | $ | 3,465 | | | PMI Total | | $ | 2,974 | | | $ | — | | | $ | 2,974 | | | | 27.2 | % | | | 16.5 | % | | | 16.5 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | |
| 2011 | | | | | 2010 | | | % Points Change | |
Adjusted
Operating
Companies
Income
excluding
Currency | | | Net Revenues
excluding
Excise
Taxes
& Currency(1) | | | Adjusted
Operating
Companies
Income
Margin
excluding
Currency | | | | | | Adjusted
Operating
Companies
Income
excluding
Currency &
Acquisitions | | | Net Revenues
excluding
Excise
Taxes,
Currency &
Acquisitions(1) | | | Adjusted
Operating
Companies
Income
Margin
excluding
Currency &
Acquisitions | | | | | Adjusted
Operating
Companies
Income | | | Net
Revenues
excluding
Excise
Taxes(1) | | | Adjusted
Operating
Companies
Income
Margin | | | | | | Adjusted
Operating
Companies
Income
Margin
excluding
Currency | | | Adjusted
Operating
Companies
Income
Margin
excluding
Currency &
Acquisitions | |
| $ | 1,129 | | | $ | 2,310 | | | | 48.9 | % | | | | | | $ | 1,130 | | | $ | 2,310 | | | | 48.9 | % | | European Union | | $ | 1,105 | | | $ | 2,295 | | | | 48.1 | % | | | | | | | 0.8 | | | | 0.8 | |
| | 824 | | | | 1,957 | | | | 42.1 | % | | | | | | | 824 | | | | 1,957 | | | | 42.1 | % | | EEMA | | | 786 | | | | 1,889 | | | | 41.6 | % | | | | | | | 0.5 | | | | 0.5 | |
| | 1,253 | | | | 2,714 | | | | 46.2 | % | | | | | | | 1,252 | | | | 2,711 | | | | 46.2 | % | | Asia | | | 845 | | | | 2,123 | | | | 39.8 | % | | | | | | | 6.4 | | | | 6.4 | |
| | 259 | | | | 798 | | | | 32.5 | % | | | | | | | 259 | | | | 798 | | | | 32.5 | % | | Latin America & Canada | | | 238 | | | | 754 | | | | 31.6 | % | | | | | | | 0.9 | | | | 0.9 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| $ | 3,465 | | | $ | 7,779 | | | | 44.5 | % | | | | | | $ | 3,465 | | | $ | 7,776 | | | | 44.6 | % | | PMI Total | | $ | 2,974 | | | $ | 7,061 | | | | 42.1 | % | | | | | | | 2.4 | | | | 2.5 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (1) | For the calculation of net revenues excluding excise taxes, currency and acquisitions, refer to Schedule 10. |
Schedule 12
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP Measures
Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS and Adjusted Diluted EPS, excluding Currency
For the Quarters Ended June 30,
(Unaudited)
| | | | | | | | | | | | |
| | | 2011 | | | 2010 | | | % Change | |
Reported Diluted EPS | | $ | 1.35 | | | $ | 1.07 | | | | 26.2 | % |
| | | |
Adjustments: | | | | | | | | | | | | |
Asset impairment and exit costs | | | — | | | | — | | | | | |
Tax items | | | (0.01 | ) | | | (0.07 | ) | | | | |
| | | | | | | | | | | | |
Adjusted Diluted EPS | | $ | 1.34 | | | $ | 1.00 | | | | 34.0 | % |
| | | |
Less: | | | | | | | | | | | | |
Currency impact | | | 0.13 | | | | | | | | | |
| | | | | | | | | | | | |
Adjusted Diluted EPS, excluding Currency | | $ | 1.21 | | | $ | 1.00 | | | | 21.0 | % |
| | | | | | | | | | | | |
Schedule 13
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP Measures
Reconciliation of Reported Diluted EPS to Reported Diluted EPS, excluding Currency
For the Quarters Ended June 30,
(Unaudited)
| | | | | | | | | | | | |
| | | 2011 | | | 2010 | | | % Change | |
Reported Diluted EPS | | $ | 1.35 | | | $ | 1.07 | | | | 26.2 | % |
| | | |
Less: | | | | | | | | | | | | |
Currency impact | | | 0.13 | | | | | | | | | |
| | | | | | | | | | | | |
Reported Diluted EPS, excluding Currency | | $ | 1.22 | | | $ | 1.07 | | | | 14.0 | % |
| | | | | | | | | | | | |
Schedule 14
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP Measures
Adjustments for the Impact of Currency and Acquisitions
For the Six Months Ended June 30,
($ in millions)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2011 | | | | | 2010 | | | % Change in Reported Net Revenues
excluding Excise Taxes | |
Reported Net
Revenues | | | Less
Excise
Taxes | | | Reported Net
Revenues
excluding
Excise Taxes | | | Less
Currency | | | Reported Net
Revenues
excluding
Excise Taxes
& Currency | | | Less
Acquisi-
tions | | | Reported Net
Revenues
excluding
Excise Taxes,
Currency &
Acquisitions | | | | | Reported
Net
Revenues | | | Less
Excise
Taxes | | | Reported
Net
Revenues
excluding
Excise
Taxes | | |
Reported | | |
Reported
excluding
Currency | | | Reported
excluding
Currency &
Acquisitions | |
| $ | 14,495 | | | $ | 9,997 | | | $ | 4,498 | | | $ | 81 | | | $ | 4,417 | | | $ | — | | | $ | 4,417 | | | European Union | | $ | 14,008 | | | $ | 9,529 | | | $ | 4,479 | | | | 0.4 | % | | | (1.4 | )% | | | (1.4 | )% |
| | 8,274 | | | | 4,575 | | | | 3,699 | | | | 26 | | | | 3,673 | | | | — | | | | 3,673 | | | EEMA | | | 7,481 | | | | 3,846 | | | | 3,635 | | | | 1.8 | % | | | 1.0 | % | | | 1.0 | % |
| | 9,434 | | | | 4,175 | | | | 5,259 | | | | 350 | | | | 4,909 | | | | 108 | (1) | | | 4,801 | | | Asia | | | 7,465 | | | | 3,469 | | | | 3,996 | | | | 31.6 | % | | | 22.8 | % | | | 20.1 | % |
| | 4,561 | | | | 2,953 | | | | 1,608 | | | | 54 | | | | 1,554 | | | | — | | | | 1,554 | | | Latin America & Canada | | | 4,016 | | | | 2,569 | | | | 1,447 | | | | 11.1 | % | | | 7.4 | % | | | 7.4 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| $ | 36,764 | | | $ | 21,700 | | | $ | 15,064 | | | $ | 511 | | | $ | 14,553 | | | $ | 108 | | | $ | 14,445 | | | PMI Total | | $ | 32,970 | | | $ | 19,413 | | | $ | 13,557 | | | | 11.1 | % | | | 7.3 | % | | | 6.6 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | |
| 2011 | | | | | 2010 | | | % Change in Reported Operating
Companies Income | |
Reported
Operating
Companies
Income | | | | | | | | | Less
Currency | | | Reported
Operating
Companies
Income
excluding
Currency | | | Less
Acquisi-
tions | | | Reported
Operating
Companies
Income
excluding
Currency &
Acquisitions | | | | | | | | | | | Reported
Operating
Companies
Income | | |
Reported | | | Reported
excluding
Currency | | | Reported
excluding
Currency &
Acquisitions | |
| $ | 2,286 | | | | | | | | | | | $ | 131 | | | $ | 2,155 | | | $ | (1 | ) | | $ | 2,156 | | | European Union | | | | | | | | | | $ | 2,167 | | | | 5.5 | % | | | (0.6 | )% | | | (0.5 | )% |
| | 1,557 | | | | | | | | | | | | (1 | ) | | | 1,558 | | | | — | | | | 1,558 | | | EEMA | | | | | | | | | | | 1,556 | | | | 0.1 | % | | | 0.1 | % | | | 0.1 | % |
| | 2,491 | | | | | | | | | | | | 247 | | | | 2,244 | | | | 24 | (2) | | | 2,220 | | | Asia | | | | | | | | | | | 1,569 | | | | 58.8 | % | | | 43.0 | % | | | 41.5 | % |
| | 519 | | | | | | | | | | | | 10 | | | | 509 | | | | — | | | | 509 | | | Latin America & Canada | | | | | | | | | | | 455 | | | | 14.1 | % | | | 11.9 | % | | | 11.9 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| $ | 6,853 | | | | | | | | | | | $ | 387 | | | $ | 6,466 | | | $ | 23 | | | $ | 6,443 | | | PMI Total | | | | | | | | | | $ | 5,747 | | | | 19.2 | % | | | 12.5 | % | | | 12.1 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (1) | Includes the business combination in the Philippines ($105). |
| (2) | Includes the business combination in the Philippines ($23). |
Schedule 15
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP Measures
Reconciliation of Reported Operating Companies Income to Adjusted Operating Companies Income &
Reconciliation of Adjusted Operating Companies Income Margin, excluding Currency and Acquisitions
For the Six Months Ended June 30,
($ in millions)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2011 | | | | | 2010 | | | % Change in Adjusted Operating
Companies Income | |
Reported
Operating
Companies
Income | | | Less
Asset
Impairment
& Exit Costs | | | Adjusted
Operating
Companies
Income | | | Less
Currency | | | Adjusted
Operating
Companies
Income
excluding
Currency | | | Less
Acquisi-
tions | | | Adjusted
Operating
Companies
Income
excluding
Currency &
Acquisitions | | | | | Reported
Operating
Companies
Income | | | Less
Asset
Impairment
& Exit Costs | | | Adjusted
Operating
Companies
Income | | |
Adjusted | | | Adjusted
excluding
Currency | | | Adjusted
excluding
Currency &
Acquisitions | |
| $ | 2,286 | | | $ | (12 | ) | | $ | 2,298 | | | $ | 131 | | | $ | 2,167 | | | $ | (1 | ) | | $ | 2,168 | | | European Union | | $ | 2,167 | | | $ | — | | | $ | 2,167 | | | | 6.0 | % | | | — | % | | | — | % |
| | 1,557 | | | | (2 | ) | | | 1,559 | | | | (1 | ) | | | 1,560 | | | | — | | | | 1,560 | | | EEMA | | | 1,556 | | | | — | | | | 1,556 | | | | 0.2 | % | | | 0.3 | % | | | 0.3 | % |
| | 2,491 | | | | (2 | ) | | | 2,493 | | | | 247 | | | | 2,246 | | | | 24 | (1) | | | 2,222 | | | Asia | | | 1,569 | | | | — | | | | 1,569 | | | | 58.9 | % | | | 43.1 | % | | | 41.6 | % |
| | 519 | | | | (1 | ) | | | 520 | | | | 10 | | | | 510 | | | | — | | | | 510 | | | Latin America & Canada | | | 455 | | | | — | | | | 455 | | | | 14.3 | % | | | 12.1 | % | | | 12.1 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| $ | 6,853 | | | $ | (17 | ) | | $ | 6,870 | | | $ | 387 | | | $ | 6,483 | | | $ | 23 | | | $ | 6,460 | | | PMI Total | | $ | 5,747 | | | $ | — | | | $ | 5,747 | | | | 19.5 | % | | | 12.8 | % | | | 12.4 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | |
| 2011 | | | | | 2010 | | | % Points Change | |
Adjusted
Operating
Companies
Income
excluding
Currency | | | Net Revenues
excluding
Excise Taxes
& Currency(2) | | | Adjusted
Operating
Companies
Income
Margin
excluding
Currency | | | | | | Adjusted
Operating
Companies
Income
excluding
Currency &
Acquisitions | | | Net Revenues
excluding
Excise Taxes,
Currency &
Acquisitions(2) | | | Adjusted
Operating
Companies
Income
Margin
excluding
Currency &
Acquisitions | | | | | Adjusted
Operating
Companies
Income | | | Net Revenues
excluding
Excise
Taxes(2) | | | Adjusted
Operating
Companies
Income
Margin | | | | | | Adjusted
Operating
Companies
Income
Margin
excluding
Currency | | | Adjusted
Operating
Companies
Income
Margin
excluding
Currency &
Acquisitions | |
| $ | 2,167 | | | $ | 4,417 | | | | 49.1 | % | | | | | | $ | 2,168 | | | $ | 4,417 | | | | 49.1 | % | | European Union | | $ | 2,167 | | | $ | 4,479 | | | | 48.4 | % | | | | | | | 0.7 | | | | 0.7 | |
| | 1,560 | | | | 3,673 | | | | 42.5 | % | | | | | | | 1,560 | | | | 3,673 | | | | 42.5 | % | | EEMA | | | 1,556 | | | | 3,635 | | | | 42.8 | % | | | | | | | (0.3 | ) | | | (0.3 | ) |
| | 2,246 | | | | 4,909 | | | | 45.8 | % | | | | | | | 2,222 | | | | 4,801 | | | | 46.3 | % | | Asia | | | 1,569 | | | | 3,996 | | | | 39.3 | % | | | | | | | 6.5 | | | | 7.0 | |
| | 510 | | | | 1,554 | | | | 32.8 | % | | | | | | | 510 | | | | 1,554 | | | | 32.8 | % | | Latin America & Canada | | | 455 | | | | 1,447 | | | | 31.4 | % | | | | | | | 1.4 | | | | 1.4 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| $ | 6,483 | | | $ | 14,553 | | | | 44.5 | % | | | | | | $ | 6,460 | | | $ | 14,445 | | | | 44.7 | % | | PMI Total | | $ | 5,747 | | | $ | 13,557 | | | | 42.4 | % | | | | | | | 2.1 | | | | 2.3 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (1) | Includes the business combination in the Philippines ($23). |
| (2) | For the calculation of net revenues excluding excise taxes, currency and acquisitions, refer to Schedule 14. |
Schedule 16
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP Measures
Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS and Adjusted Diluted EPS, excluding Currency
For the Six Months Ended June 30,
(Unaudited)
| | | | | | | | | | | | |
| | | 2011 | | | 2010 | | | % Change | |
Reported Diluted EPS | | $ | 2.42 | | | $ | 1.97 | | | | 22.8 | % |
| | | |
Adjustments: | | | | | | | | | | | | |
Asset impairment and exit costs | | | 0.01 | | | | — | | | | | |
Tax items | | | (0.02 | ) | | | (0.07 | ) | | | | |
| | | | | | | | | | | | |
| | | |
Adjusted Diluted EPS | | $ | 2.41 | | | $ | 1.90 | | | | 26.8 | % |
| | | |
Less: | | | | | | | | | | | | |
Currency impact | | | 0.16 | | | | | | | | | |
| | | | | | | | | | | | |
| | | |
Adjusted Diluted EPS, excluding Currency | | $ | 2.25 | | | $ | 1.90 | | | | 18.4 | % |
| | | | | | | | | | | | |
Schedule17
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP Measures
Reconciliation of Reported Diluted EPS to Reported Diluted EPS, excluding Currency
For the Six Months Ended June 30,
(Unaudited)
| | | | | | | | | | | | |
| | | 2011 | | | 2010 | | | % Change | |
Reported Diluted EPS | | $ | 2.42 | | | $ | 1.97 | | | | 22.8 | % |
| | | |
Less: | | | | | | | | | | | | |
Currency impact | | | 0.16 | | | | | | | | | |
| | | | | | | | | | | | |
| | | |
Reported Diluted EPS, excluding Currency | | $ | 2.26 | | | $ | 1.97 | | | | 14.7 | % |
| | | | | | | | | | | | |
Schedule 18
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP Measures
Calculation of Total Debt to EBITDA and Net Debt to EBITDA Ratios
($ in millions, except ratios)
(Unaudited)
| | | | | | | | | | | | | | | | |
| | | For the Year Ended
June 30,
2011 | | | For the Year Ended
December 31,
2010 | |
| | | July ~ December | | | January ~ June | | | 12 months | | | | |
| | | 2010 | | | 2011 | | | rolling | | | | |
Earnings before income taxes | | $ | 5,149 | | | $ | 6,298 | | | $ | 11,447 | | | $ | 10,324 | |
Interest expense, net | | | 430 | | | | 421 | | | | 851 | | | | 876 | |
Depreciation and amortization | | | 485 | | | | 488 | | | | 973 | | | | 932 | |
| | | | | | | | | | | | | | | | |
EBITDA | | $ | 6,064 | | | $ | 7,207 | | | $ | 13,271 | | | $ | 12,132 | |
| | | | |
| | | | | | | | | June 30,
2011 | | | December 31,
2010 | |
Short-term borrowings | | | | | | | | | | $ | 570 | | | $ | 1,747 | |
Current portion of long-term debt | | | | | | | | | | | 3,314 | | | | 1,385 | |
Long-term debt | | | | | | | | | | | 13,037 | | | | 13,370 | |
| | | | | | | | | | | | | | | | |
Total Debt | | | | | | | | | | $ | 16,921 | | | $ | 16,502 | |
Less: Cash and cash equivalents | | | | | | | | | | | 2,178 | | | | 1,703 | |
| | | | | | | | | | | | | | | | |
Net Debt | | | | | | | | | | $ | 14,743 | | | $ | 14,799 | |
| | | | |
Ratios | | | | | | | | | | | | | | | | |
Total Debt to EBITDA | | | | | | | | | | | 1.28 | | | | 1.36 | |
| | | | | | | | | | | | | | | | |
Net Debt to EBITDA | | | | | | | | | | | 1.11 | | | | 1.22 | |
| | | | | | | | | | | | | | | | |
Schedule 19
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP Measures
Reconciliation of Operating Cash Flow to Free Cash Flow and Free Cash Flow, excluding Currency
Reconciliation of Operating Cash Flow to Operating Cash Flow, excluding Currency
For the Quarters and Six Months Ended June 30,
($ in millions)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | For the Quarters Ended
June 30, | | | | | | For the Six Months Ended
June 30, | | | | |
| | | 2011 | | | 2010 | | | % Change | | | 2011 | | | 2010 | | | % Change | |
Net cash provided by operating activities(a) | | $ | 4,120 | | | $ | 3,465 | | | | 18.9 | % | | $ | 6,515 | | | $ | 5,439 | | | | 19.8 | % |
| | | | | | |
Less: | | | | | | | | | | | | | | | | | | | | | | | | |
Capital expenditures | | | 186 | | | | 169 | | | | | | | | 345 | | | | 319 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Free cash flow | | $ | 3,934 | | | $ | 3,296 | | | | 19.4 | % | | $ | 6,170 | | | $ | 5,120 | | | | 20.5 | % |
| | | | | | |
Less: | | | | | | | | | | | | | | | | | | | | | | | | |
Currency impact | | | 236 | | | | | | | | | | | | 264 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Free cash flow, excluding currency | | $ | 3,698 | | | $ | 3,296 | | | | 12.2 | % | | $ | 5,906 | | | $ | 5,120 | | | | 15.4 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | |
| | | For the Quarters Ended
June 30, | | | | | | For the Six Months Ended
June 30, | | | | |
| | | 2011 | | | 2010 | | | % Change | | | 2011 | | | 2010 | | | % Change | |
Net cash provided by operating activities(a) | | $ | 4,120 | | | $ | 3,465 | | | | 18.9 | % | | $ | 6,515 | | | $ | 5,439 | | | | 19.8 | % |
| | | | | | |
Less: | | | | | | | | | | | | | | | | | | | | | | | | |
Currency impact | | | 250 | | | | | | | | | | | | 279 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net cash provided by operating activities, excluding currency | | $ | 3,870 | | | $ | 3,465 | | | | 11.7 | % | | $ | 6,236 | | | $ | 5,439 | | | | 14.7 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Schedule 20
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP Measures
Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS
For the Year Ended December 31,
(Unaudited)
| | | | |
| | | 2010 | |
Reported Diluted EPS | | $ | 3.92 | |
| |
Adjustments: | | | | |
Tax items | | | (0.07 | ) |
Asset impairment and exit costs | | | 0.02 | |
| | | | |
Adjusted Diluted EPS | | $ | 3.87 | |
| | | | |
