What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-08 compared with 2023-02-10 · 545 added, 410 removed, 2009 unchanged (32% of the section changed)

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2023 2022 2021

Revenues including excise taxes (includes $ 8,269 in 2022, $ 7,822 in 2021 and $ 7,572 in 2020 from related parties)

$ 80,669 $ 82,223 $ 76,047

Excise taxes on products

48,907 50,818 47,353

Net revenues (includes $ 3,658 in 2022, $ 3,330 in 2021 and $ 3,233 in 2020 from related parties) (Note 18)

Net revenues 1 & 2 (Notes 6 & 13)

$ 35,174 $ 31,762 $ 31,405

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10,060 8,114 8,400

Impairment of goodwill (Note 5)

Operating income

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Interest expense, net (Note 15)

1,061 588 628

Pension and other employee benefit costs (Note 14)

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$ 5.02 $ 5.81 $ 5.83

(1) Includes net revenues from related parties of $ 3,553 million, $ 3,658 million and $ 3,330 million for the years ended December 31, 2023, 2022 and 2021, respectively

(2) Net of excise tax on products of $ 49,404 million, $ 48,958 million and $ 50,818 million for the years ended December 31, 2023, 2022 and 2021, respectively

(3) Includes an impairment charge for other intangibles of $ 112 million for the year ended December 31, 2022.

For further details, see Note 5.

Goodwill and Other Intangible Assets, net

(4) Includes an impairment charge for other intangibles of $ 15 million and a charge of $ 204 million for the South Korea indirect tax charge for the year ended December 31, 2023.

For further details, see Note 5.

Goodwill and Other Intangible Assets, net and Note 18.

Contingencies

See notes to consolidated financial statements.

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( 1,643 ) ( 1,268 ) 58

(Gains)/losses transferred to earnings, net of income taxes of $ 0 in 2023, 2022 and 2021

Change in net loss and prior service cost:

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$( 99 ) in 2022 and $( 20 ) in 2021

481 124 ( 68 )

(Gains) losses transferred to earnings, net of income taxes of

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Goodwill (Note 5)

16,779 19,655

Other intangible assets, net (Note 5)

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$ 65,304 $ 61,681

(1) Includes trade receivables from related parties of $ 688 million and $ 518 million as of December 31, 2022, and 2021, respectively (less allowances of $ 7 million in 2022 and $ 1 million in 2021).

(1) Includes trade receivables from related parties of $ 710 million and $ 688 million as of December 31, 2023, and 2022, respectively.

For further details, see Note 6.

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Dividends payable

Income taxes (Note 12)

Total current liabilities

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Adjustments to reconcile net earnings to operating cash flows:

Depreciation, amortization and impairment of intangibles 1,189 998 981

Depreciation and amortization expense 1,398 1,077 998

Impairment of goodwill and other intangibles (Note 5) 680 112 —

Deferred income tax (benefit) provision

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Accounts payable

( 288 ) 719 653

Accrued liabilities and other current assets

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Other comprehensive earnings (losses), net of income taxes 1,604 ( 79 ) 1,525

( 1,818 ) 38 ( 1,780 )

Issuance of stock awards (Note 10) 119 78 197

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Dividends paid to noncontrolling interests ( 560 ) ( 560 )

Other 17 ( 14 ) 3

Common stock repurchased ( 785 ) ( 785 )

Balances, December 31, 2021 — 2,225 33,082 ( 9,577 ) ( 35,836 ) 1,898 ( 8,208 )

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Other comprehensive earnings (losses), net of income taxes 189 ( 135 ) 54

1,604 ( 79 ) 1,525

Issuance of stock awards (Note 10) 37 118 155

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Common stock repurchased ( 199 ) ( 199 )

Acquisitions (Note 3) 2,379 2,379

Purchases of shares from noncontrolling interests (Note 3) ( 32 ) ( 171 ) ( 1,503 ) ( 1,706 )

Balances, December 31, 2022 — 2,230 34,289 ( 9,559 ) ( 35,917 ) 2,646 ( 6,311 )

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Other comprehensive earnings (losses), net of income taxes ( 2,436 ) 6 ( 2,430 )

189 ( 135 ) 54

Issuance of stock awards (Note 10) 61 132 193

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Dividends paid to noncontrolling interests ( 497 ) ( 497 )

Common stock repurchased ( 199 ) ( 199 )

Acquisitions (Note 3) 2,379 2,379

Purchases of shares from noncontrolling interests (Note 3) ( 32 ) ( 171 ) ( 1,503 ) ( 1,706 )

Sale (purchases) of subsidiary shares to/(from) noncontrolling interests (Note 3) ( 6 ) 180 ( 831 ) ( 657 )

Balances, December 31, 2023 $ — $ 2,285 $ 34,090 $ ( 11,815 ) $ ( 35,785 ) $ 1,779 $ ( 9,446 )

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is a holding company incorporated in Virginia, U.S.A.

(also referred to herein as the U.S., the United States or the United States of America), whose subsidiaries and affiliates and their licensees are primarily engaged in the manufacture and sale of cigarettes and smoke-free products including heat-not-burn, vapor, and oral nicotine products.

Throughout these financial statements, the term "PMI" refers to Philip Morris International Inc.

and its subsidiaries.

Smoke-free products ("SFPs") is the term PMI primarily uses to refer to all of its products that are not combustible tobacco products, such as heat-not-burn, e-vapor, and oral nicotine.

Smoke-free products (also referred to herein as "SFPs") is the term PMI primarily uses to refer to all of its products that are not combustible tobacco products, such as heat-not-burn, e-vapor, and oral nicotine.

In addition, SFPs include wellness and healthcare products, as well as consumer accessories such as lighters and matches.

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and OtiTopic, Inc.

On March 31, 2022, PMI launched a new Wellness and Healthcare business consolidating these entities, Vectura Fertin Pharma.

On March 31, 2022, PMI launched a Wellness and Healthcare business consolidating these entities, Vectura Fertin Pharma.

The operating results of this business are reported in the Wellness and Healthcare segment.

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Segment Reporting .

To further support the growth of PMI's smoke-free business, reinforce consumer centricity, and increase the speed of innovation and deployment, in January 2023, PMI began managing its business in four geographical segments, down from six previously, in addition to its continuing Swedish Match and Wellness and Healthcare segments.

The four geographical segments are as follows:

Europe Region;

South and Southeast Asia, Commonwealth of Independent States, Middle East and Africa Region ("SSEA, CIS & MEA");

East Asia, Australia, and PMI Duty Free Region ("EA, AU & PMI DF");

and Americas Region.

Certain prior years' amounts have been reclassified to conform with the current year's presentation.

Following the Swedish Match acquisition and a review of PMI and Swedish Match’s combined product portfolio, PMI reclassified certain of its own products previously reported under its combustible tobacco product category to the newly created smoke-free product category to better reflect the characteristics of these products.

This reclassification did not impact PMI’s segment reporting, consolidated financial position, results of operations or cash flows in any of the periods presented.

For further details, see Note 13.

Segment Reporting .

During the first quarter of 2022, one of Fertin Pharma's product lines was moved from the Wellness and Healthcare segment to the European Union segment.

As a result of the new regional structure discussed above, certain goodwill amounts under the former six geographical segments were reallocated to the four geographical segments under the new structure.

For further details, see Note 5.

Goodwill and Other Intangible Assets, net.

The change did not have a material impact on PMI's consolidated financial position, results of operations or cash flows in any of the periods presented.

These reclassifications did not impact PMI's consolidated financial position, results of operations or cash flows in any of the periods presented.

Summary of Significant Accounting Policies:

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Cash equivalents include demand deposits with banks and all highly liquid investments with original maturities of three months or less.

Depreciation and Amortization

Property, plant and equipment are stated at historical cost and depreciated primarily using the straight-line method over the estimated useful lives of the assets.

Machinery and equipment are depreciated primarily over periods ranging from 3 to 15 years, and buildings and building improvements primarily over periods up to 40 years.

Definite-lived intangible assets are amortized over their useful lives.

For further details, see Note 5.

Goodwill and Other Intangible Assets, net .

Employee benefit plans

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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.

PMI translates the results of operations of its subsidiaries and affiliates, except those operating in highly inflationary economies, 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’ (deficit) equity.

In addition, some of PMI’s 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 applies highly inflationary accounting if the cumulative inflation rate in an economy for a three-year period meets or exceeds 100%.

Subsidiaries operating in highly inflationary economies use the U.S.

dollar as the functional currency.

Monetary assets and liabilities are translated at exchange rates in effect at the balance sheet date while non-monetary assets and liabilities are translated at historical exchange rates.

Exchange gains and losses resulting from remeasurement adjustments are recorded within marketing, administration and research costs in the consolidated statements of earnings.

Goodwill and non-amortizable intangible assets valuation

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Impairment losses on assets to be disposed of, if any, are based on the lower of carrying value or estimated proceeds to be received less costs of disposal.

Impairment of investment in non-marketable equity securities

Investment in non-marketable equity securities

Non-marketable equity securities are subject to periodic impairment reviews during which PMI considers both qualitative and quantitative factors that may have a significant impact on the investees' fair value.

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PMI recognizes income taxes associated with Global Intangible Low-Taxed Income ("GILTI") taxes as current period expense rather than including these amounts in the measurement of deferred taxes.

Inventories are stated at the lower of cost or market.

Inventories are stated at the lower of cost or net realizable value.

The first-in, first-out and average cost methods are used to cost substantially all inventories.

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Turkey – In the first quarter of 2022, PMI acquired the remaining 25 % stake of its holding in Philip Morris Tütün Mamulleri Sanayi ve Ticaret A.Ş.

("PMTM") (formerly Philsa Philip Morris Sabancı Sigara ve Tütüncülük Sanayi ve Ticaret A.Ş.) and 24.75 % stake in Philip Morris Pazarlama ve Satış A.Ş.

("PMPS") (formerly Philip Morris SA, Philip Morris Sabancı Pazarlama ve Satış A.Ş.) from its Turkish partners, Sabanci Holding for a total acquisition price including transaction costs and remaining dividend entitlements of approximately $ 223 million.

("PMTM") (formerly Philsa Philip Morris Sabanci Sigara ve Tütüncülük Sanayi ve Ticaret A.Ş.) and 24.75 % stake in Philip Morris Pazarlama ve Satiş A.Ş.

("PMPS") (formerly Philip Morris SA, Philip Morris Sabanci Pazarlama ve Satiş A.Ş.) from its Turkish partners, Sabanci Holding for a total acquisition price including transaction costs and remaining dividend entitlements of approximately $ 223 million.

As a result of this acquisition, PMI owned 100 % of these Turkish subsidiaries as of December 31, 2022.

The purchase of the remaining stakes in these holdings resulted in a decrease to PMI's additional paid-in capital of $ 30 million and an increase to accumulated other comprehensive losses of $ 171 million primarily following the reclassification of accumulated currency translation losses from noncontrolling interests to PMI’s accumulated other comprehensive losses during the first quarter of 2022.

In January 2023, PMI sold the acquired stakes of its holdings in PMTM and PMPS to Pioneers Tutun Yatirim Anonim Sirketi (“Pioneers”) for a consideration of approximately $ 205 million plus remaining dividend entitlements.

The transaction will be reflected in PMI's financial statements in 2023.

In January 2023, PMI sold the acquired stakes of its holdings in PMTM and PMPS to Pioneers Tutun Yatirim Anonim Sirketi (“Pioneers”) for a consideration of approximately $ 258 million, including transaction costs and dividend entitlements.

The sale resulted in an increase to PMI's additional paid-in capital of $ 36 million and a decrease to accumulated other comprehensive losses of $ 179 million, following the reclassification of accumulated other comprehensive losses from PMI’s accumulated other comprehensive losses to noncontrolling interests.

Business Combinations

Swedish Match AB – On November 11, 2022 (the acquisition date), Philip Morris Holland Holdings B.V.

(“PMHH”), a wholly owned subsidiary of PMI, acquired a controlling interest of 85.87 % of the total issued shares in Swedish Match AB (“Swedish Match”) and has acquired 94.81 % of its outstanding shares as of December 31, 2022.

(“PMHH”), a wholly owned subsidiary of PMI, acquired a controlling interest of 85.87 % of the total issued shares in Swedish Match AB (“Swedish Match”) and acquired 94.81 % of its outstanding shares as of December 31, 2022.

The shares were acquired through acceptances of the tender offer and a series of open market and over-the-counter purchases.

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Indebtedness.

The aggregate cash paid as of the acquisition date was $ 14,460 million (or $ 13,976 million net of cash acquired), which was included in investing activities in the consolidated statements of cash flows.

The cash paid in connection with the additional purchases of the noncontrolling interests after the acquisition date amounted to $ 1,495 million and was included in financing activities in the consolidated statements of cash flows.

The cash paid in connection with the additional purchases of the noncontrolling interests after the acquisition date and through December 31, 2022 amounted to $ 1,495 million and was included in financing activities in the consolidated statements of cash flows for the year ended December 31, 2022.

In accordance with the Swedish Companies Act, PMI subsequently exercised its right to initiate arbitral proceedings to compulsorily redeem the remaining shares for which acceptances were not received and obtained legal title to 100 % of the shares in Swedish Match on February 17, 2023.

Cash paid in connection with such legal title, together with an immaterial amount attributable to open market purchases that were executed in December 2022 but settled in January 2023, amounted to $ 883 million and was included in financing activities in the consolidated statements of cash flows for the year ended December 31, 2023.

While PMI paid the referenced amounts and acquired legal title to the shares, under the Swedish Companies Act the redemption process was not complete until the final redemption price was determined by an arbitral tribunal.

On September 12, 2023, the arbitral tribunal determined the final redemption price to be Swedish krona (SEK) 115.07 , unchanged from the SEK 115.07 that PMI paid per share in connection with obtaining legal title to the shares.

This process was completed in the fourth quarter of 2023 when the opportunity to appeal the arbitral tribunal determination ended.

Swedish Match is a market leader in oral nicotine delivery with a significant presence in the United States market.

The acquisition will accelerate PMI’s transformation to become a smoke-free company with a comprehensive global smoke-free portfolio with leadership positions in heat-not-burn, and the fastest growing category of oral nicotine, with the potential for accelerated international expansion.

Due to the timing of the acquisition, and limited access to detailed and disaggregated financial information of Swedish Match, the purchase price allocation is preliminary and it is likely subject to change, including the valuation of property, plant and equipment, intangible assets, income taxes and legal contingencies among other items.

The following table summarizes the preliminary purchase price allocation for the fair value of assets acquired and liabilities assumed as of the acquisition date:

(in millions)

In November 2023, PMI finalized all measurement period adjustments related to the Swedish Match acquisition.

The table below summarizes the final purchase price allocation for the fair value of assets acquired and liabilities assumed as of the acquisition date:

(in millions) Preliminary Purchase Price Allocation Recognized as of the acquisition date Measurement Period Adjustments during 2023 Final Purchase Price Allocation Recognized as of

the acquisition date

Cash and cash equivalents $ 484 $ — $ 484

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Total consideration transferred $ 14,460 $ — $ 14,460

The total fair value step-up adjustment for inventories was $ 146 million, of which $ 125 million was recognized in cost of sales in the fourth quarter of 2022, with the remaining balance expected to be recognized in the first quarter of 2023.

The fair value of long-term debt was determined using readily available market prices as of the acquisition date and the total purchase price adjustment of $( 102 ) million is being amortized as an increase to interest expense, net over the lives of the related debt.

The total fair value step-up adjustment for inventories was $ 146 million, of which $ 125 million was recognized in cost of sales in the fourth quarter of 2022 and the remaining balance in the first quarter of 2023.

The fair value of long-term debt was primarily determined using readily available market prices as of the acquisition date and the total purchase price adjustment of $( 107 ) million is being amortized as an increase to interest expense, net over the lives of the related debt.

Goodwill is primarily attributable to future growth opportunities, anticipated synergies in the U.S.

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Total identifiable intangible assets $ 7,868

The significant assumptions used in determining the preliminary fair values of the identifiable intangible assets included royalty rates, revenue growth rates, profit margins, customer attrition rate and discount rates.

Trademarks primarily relate to $ 2,077 million for the ZYN trademark, which has been determined to have an indefinite life due to the fast growth and the leading position of the brand in the market.

All other trademarks have been preliminarily determined to have a 20 years useful life.

The preliminary fair values of the trademarks have been determined using the relief from royalty method supported by revenue growth rates assumptions and royalty rates benchmarking analysis at product category level (smoke-free brands, including

ZYN , cigar brands and lights).

In 2023, during the measurement period, the useful life, revenue growth rate and the royalty rate of each individual trademark will be reassessed to determine its final purchase price.

The significant assumptions used in determining the fair values of the identifiable intangible assets included royalty rates, revenue growth rates, profit margins, customer attrition rates and discount rates.

Trademarks primarily relate to $ 3,133 million for the ZYN trademark, which has been determined to have an indefinite life due to the fast growth and the leading position of the brand in the U.S.

All other trademarks have been determined to have a useful life ranging between 20 - 30 years.

The trademarks have been valued using the relief from royalty method supported by revenue growth rate assumptions and royalty rates disaggregated at the individual trademark level.

Developed technology, including patents, relates to the nicotine pouch technology of $ 113 million.

The patent has been assigned a useful life of 10 years, which is in line with the patent's protection.

The preliminary fair value of the patent has been determined using the relief from royalty method.

Customer relationships have been valued separately by geographic locations, namely for the US market, Scandinavia, and other markets using the multiple periods excess earnings method, preliminarily reflecting a general market attrition rate for retail and revenue allocation and profit margin assumptions by customer type, which will be further assessed during the measurement period.

These patents have been assigned a useful life of 10 years, which is in line with their protection period and have been valued using the comparable transactions and income methods.

Customer relationships have been valued by categories of customers and geographic locations, namely the U.S.

market, Scandinavia, and other markets using the multiple periods excess earnings method.

The significant assumptions included customer attrition rates disaggregated at the customer category level, the revenue growth rates, as well as profit margins.

PMI consolidated statements of earnings for the year ended December 31, 2022, include $ 316 million of net revenues and $( 26 ) million of net losses associated with the results of operations of Swedish Match from the acquisition date to December 31, 2022.

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The fair value of the noncontrolling interest was based on the tender offer as of the acquisition date.

PMI’s approval of the acquisition by the European Commission, under the EU Merger Regulation, was subject to PMHH’s divestiture of Swedish Match’s subsidiary, SMD Logistics AB, following the completion of the offer to tender all shares in Swedish Match to PMHH.

As a result, these assets have been accounted for as assets held for sale and included within other current assets and other accrued liabilities in PMI’s consolidated balance sheets at December 31, 2022.

Under the EU Merger Regulation, approval by the European Commission of PMI's acquisition of Swedish Match was conditional on PMHH's divestiture of Swedish Match's subsidiary, SMD Logistics AB ("SMDL"), following the completion of the offer to tender all shares in Swedish Match to PMHH.

As a result, these assets were accounted for as assets held for sale and included within other current assets and other accrued liabilities in PMI’s consolidated balance sheets at March 31, 2023 and December 31, 2022.

PMI subsequently sold SMDL on June 30, 2023 and the transaction did not have a material impact on the consolidated statements of earnings for the year ended December 31, 2023.

The unaudited pro forma combined financial information was prepared using the acquisition method of accounting and was based on the historical financial information of PMI and Swedish Match.

In order to reflect the occurrence of the acquisition on January 1, 2021, as required, the unaudited pro forma financial information includes adjustments to reflect the following:

• incremental amortization expense to be incurred based on the current preliminary fair values of the identifiable intangible assets acquired;

• incremental amortization expense to be incurred based on the current fair values of the identifiable intangible assets acquired;

• incremental cost of products sold related to the fair value adjustments associated with acquisition date inventory;

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• impact of a deferred tax cost of $ 430 million in 2022 and $ 321 million in 2021 related to the theoretical unrealized foreign currency gains on intercompany loans related to the acquisition financing.

These theoretical unrealized pre-tax foreign currency movements were fully offset in the consolidated statements of earnings and were reflected as currency translation adjustments in PMI's consolidated statements of stockholders' (deficit) equity, while the corresponding deferred tax impacts were reflected in PMI's consolidated statements of earnings;

These theoretical unrealized pre-tax foreign currency movements were fully offset in the consolidated statements of earnings and were reflected as currency translation adjustments in

PMI's consolidated statements of stockholders' (deficit) equity, while the corresponding deferred tax impacts were reflected in PMI's consolidated statements of earnings;

• other immaterial items (i.e., the alignment of accounting policies from IFRS to US GAAP.)

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In the fourth quarter of 2022, the additional contingent payment was settled for $ 9 million.

The operating results of AG Snus are included in the European Union segment, and were not material.

The operating results of AG Snus are included in the Europe segment, and were not material.

Fertin Pharma – On September 15, 2021, PMI acquired 100 % of Fertin Pharma A/S (“Fertin Pharma”), a company based in Denmark.

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On October 20, 2022, PMI announced that it had reached an agreement with Altria Group, Inc.

to end the companies' relationship regarding the IQOS commercialization rights in the U.S.

("Altria") to end the companies' relationship regarding the IQOS commercialization rights in the U.S.

as of April 30, 2024.

As a result of PMI reacquiring these rights, effective May 1, 2024, PMI will have the full rights to commercialize IQOS in the U.S.

As a result of PMI reacquiring these rights, effective May 1, 2024, PMI will hold the full rights to commercialize IQOS in the U.S.

As part of the agreement, PMI agreed to pay a total cash consideration of $ 2.7 billion, with $ 1.0 billion paid at the inception of the agreement and the remaining $ 1.7 billion (plus interest, at a per annum rate equal to six percent ( 6 %)), to be paid by July 2023 at the latest.

The cash consideration paid at the inception of the agreement of $ 1.0 billion has been accounted for within other assets in PMI’s consolidated balance sheets as of December 31, 2022.

As of May 2024, when PMI can exercise its ability to commercialize IQOS in the U.S., PMI will finalize the accounting for this transaction by assigning the consideration to the respective assets.

The cash consideration paid at the inception of the agreement of $ 1.0 billion has been accounted for within other assets in PMI’s consolidated balance sheets as of December 31, 2023 and 2022.

The remaining consideration of $ 1.7 billion plus interest was paid to Altria on July 14, 2023 and has been accounted for within other assets in PMI's consolidated balance sheets as of December 31, 2023.

PMI will finalize the accounting for this transaction by assigning the consideration to the respective assets in May 2024, when PMI can exercise its ability to commercialize IQOS in the U.S.

For further details on PMI's agreement with Altria, see Note 18.

Contingencies .

Asset Acquisition

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As previously discussed in Note 1.

Background and Basis of Presentation on March 31, 2022, PMI launched a new Wellness and Healthcare business, Vectura Fertin Pharma, which consolidates Fertin Pharma, Vectura and OtiTopic, Inc.

Background and Basis of Presentation on March 31, 2022, PMI launched a Wellness and Healthcare business, Vectura Fertin Pharma, which consolidated Fertin Pharma, Vectura and OtiTopic, Inc.

into one operating segment.

War in Ukraine:

Since the onset of the war in Ukraine in February 2022, PMI's main priority has been the safety and security of its more than 1,300 employees and their families in the country.

Since the onset of the war in Ukraine in February 2022, PMI's main priority has been the safety and security of its employees and their families in the country.

PMI temporarily suspended its commercial and manufacturing operations in Ukraine, including the closing of its factory in Kharkiv at the end of February 2022, in order to preserve the safety of its employees.

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Production at the factory in Kharkiv remains suspended.

While the effects of the war are unpredictable and could trigger impairment reviews for long-lived assets, as of December 31, 2022, PMI is unable to estimate the information required to perform impairment analyses (i.e., forecast of revenues, manufacturing and commercial plans).

PMI is not aware of any major damage to its production facilities, inventories or other assets in Ukraine.

As a result, PMI has not recorded an impairment of long-lived assets.

On June 20, 2023, PMI announced the investment of $ 30 million in a new production facility in the Lviv region, in Western Ukraine.

In the fourth quarter of 2023, as a result of the completion of certain preparatory work for this new production facility, PMI recorded impairment of certain long-lived assets.

As of December 31, 2023, PMI’s Ukrainian operations had approximately $ 446 million in total assets, excluding intercompany balances.

These total assets included $ 69 million, $ 279 million and $ 31 million in receivables, inventories and property, plant and equipment, respectively.

These total assets included $ 82 million and $ 304 million in receivables and inventories, respectively.

PMI has suspended its planned investments in the Russian Federation including all new product launches and commercial, innovation, and manufacturing investments.

PMI has also taken steps to scale down its manufacturing operations in Russia amid ongoing supply chain disruptions and the evolving regulatory environment.

PMI is continuously assessing the evolving situation in Russia, including:

recent regulatory constraints in the market that entail very complex terms and conditions that must be met for any divestment transaction to be granted approval by the authorities;

and restrictions resulting from international regulations.

PMI is continuously assessing the evolving situation in Russia, including recent regulatory constraints in the market that entail very complex terms and conditions that must be met for any divestment transaction to be granted approval by the authorities, and restrictions resulting from international regulations.

As a result of PMI continuing operations within Russia as of December 31, 2023, it has not recorded an impairment of long-lived and other assets.

However, PMI recorded specific asset write downs as referred to in the table below.

However, PMI recorded specific asset write downs in 2022 as referred to in the table below.

PMI’s Russian operations as of December 31, 2023 had approximately $ 2.7 billion in total assets, excluding intercompany balances.

These total assets included $ 578 million, $ 541 million, $ 786 million, $ 334 million and $ 161 million in cash (primarily held in local currency), receivables, inventories, property, plant and equipment and goodwill, respectively.

These total assets included $ 773

million, $ 494 million, $ 948 million, $ 261 million and $ 167 million in cash (primarily held in local currency), receivables, inventories, property, plant and equipment and goodwill, respectively.

In addition, there was approximately $ 1,182 million of cumulative foreign currency translation losses reflected in accumulated other comprehensive losses in the consolidated statement of stockholders’ equity as of December 31, 2023.

As of December 31, 2022, PMI recorded in its consolidated statements of earnings pre-tax charges related to circumstances driven by the war as follows:

(in millions) For the Year Ended December 31, 2022

Cost of sales Marketing, administration and research costs Total

For the years ended December 31, 2023 and 2022, PMI recorded in its consolidated statements of earnings pre-tax charges related to circumstances driven by the war as follows:

(in millions) 2023 2022

Cost of sales Marketing, administration and research costs Total Cost of sales Marketing, administration and research costs Total

$ 15 $ 38 $ 53 $ 42 $ 36 $ 78

— — — 20 53 73

Total $ 15 $ 38 $ 53 $ 62 $ 89 $ 151

1 The charges were primarily due to an inventory write down, additional allowance for receivables and the cost of PMI’s humanitarian efforts, which includes salary continuation for its employees.

2 The charges were primarily due to machinery and inventory write downs related to the commercial decisions noted above.

1 The 2023 pre-tax charges were primarily due to the cost of PMI’s humanitarian efforts, which includes salary continuation for its employees, severance payments, as well as an impairment of certain long-lived assets in the fourth quarter of 2023.

The 2022 pre-tax charges were primarily due to an inventory write-down, additional allowance for receivables and the cost of PMI’s humanitarian efforts, which includes salary continuation for its employees.

2 The 2022 pre-tax charges were primarily due to machinery and inventory write downs related to the commercial decisions noted above.

PMI will continue to monitor the situation as it evolves and will determine if further charges are needed.

Goodwill and Other Intangible Assets, net:

2023 Annual impairment review of goodwill and non-amortizable intangible assets

During the second quarter of 2023, PMI completed its annual review of goodwill and non-amortizable intangible assets for potential impairment.

Based on this review, it was determined that the estimated fair value of the Wellness and Healthcare reporting unit was lower than its carrying value.

Consequently, PMI recorded a goodwill impairment charge of $ 665 million in the consolidated statements of earnings for the year ended December 31, 2023, reflecting the impact of reduced estimated future cash flows, which were primarily attributable to clinical trial results that became available in June 2023 for an inhalable aspirin product being developed by the Wellness and Healthcare business.

While it was observed that the experimental product had a rapid onset of effect, which is the key medical advantage sought, there was significant variability in inhaled dose among subjects.

The study was therefore deemed unsuccessful and, as a result, product design improvements are required.

PMI had planned to file a new drug application for this product with the U.S.

Food and Drug Administration later this year.

However, additional time is now required to evaluate design improvements and the corresponding less certain outcome.

The cash flow estimates were also adversely impacted by slower-than-anticipated development of the contract development and manufacturing organization ("CDMO") business, including challenges associated with increased cost related to certain key products.

The goodwill impairment charge is not deductible for income tax purposes.

Additionally, as a result of the impairment test of non-amortizable intangible assets, PMI recorded a pre-tax impairment charge of $ 15 million for an in-process research and development project related to one of PMI's 2021 acquisitions.

This pre-tax impairment charge of $ 15 million was recorded within marketing, administration and research costs in the consolidated statements of earnings for the year ended December 31, 2023.

The Wellness and Healthcare reporting unit's fair value was determined using the discounted cash flow model.

PMI will continue to monitor this reporting unit as any changes in assumptions and estimates, unfavorable clinical trial results, failure to obtain regulatory approvals or other market factors could result in additional future goodwill and other intangible asset impairments.

Certain Wellness and Healthcare products include components or gases which may be subject to enhanced regulations that could impact the related product development and market strategies.

This may also lead to supply disruptions that could result in additional future impairments.

While PMI’s remaining reporting units have fair values substantially in excess of their carrying values, there are still risks related to PMI’s Russian reporting unit’s assets as the fair value of these assets is difficult to predict due to the volatility in foreign currency and commodity markets, supply chain, and current economic, political and social conditions.

For more information see Note 4.

War in Ukraine .

PMI performed a quantitative impairment assessment for all of its reporting units and non-amortizable intangible assets with the exception of the Swedish Match segment.

As the purchase price allocation for the acquisition of Swedish Match was preliminary at

that time of the annual review, PMI performed a qualitative impairment assessment and concluded that it was not more likely than not that the fair value of the Swedish Match reporting units and its non-amortizable intangible assets were less than the respective carrying amounts.

The movements in goodwill were as follows:

(in millions) European Union Eastern Europe Middle East & Africa South & Southeast Asia East Asia & Australia Americas Swedish Match Wellness & Healthcare Total

(in millions) Europe SSEA, CIS & MEA

EA, AU & PMI DF

Americas Swedish Match Wellness & Healthcare Total

Balances at January 1, 2022 $ 1,455 $ 3,143 $ 540 $ 611 $ — $ 931 $ 6,680

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Currency ( 85 ) ( 274 ) ( 47 ) 4 ( 5 ) ( 109 ) ( 516 )

Other — — — — — 190 190

Balances, December 31, 2022 1,370 2,869 493 615 13,296 1,012 19,655

Changes due to:

Acquisitions — — — — — — 13,301 — 13,301

Impairment — — — — — ( 665 ) ( 665 )

Currency 69 8 ( 1 ) 89 151 43 359

Other — — — — — — — 190 190

Measurement period adjustments — — — — ( 2,570 ) — ( 2,570 )

Balances, December 31, 2023 $ 1,439 $ 2,877 $ 492 $ 704 $ 10,877 $ 390 $ 16,779

As discussed in Note 1.

Background and Basis of Presentation , in January 2023, PMI began managing its business in four geographical segments, Swedish Match segment and Wellness and Healthcare segment.

As a result, the January 1, 2022 and December 31, 2022 goodwill balances in the table above included the reclassifications from the former six geographical segments to the four geographical segments under the new structure.

The increase in goodwill in 2022 was due primarily to the final purchase price allocation associated with Vectura Group plc acquisition in 2021 (reflected in "changes due to other" in Wellness and Healthcare segment) and the preliminary purchase price allocation associated with the Swedish Match AB acquisition in the fourth quarter of 2022, partially offset by currency movements.

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Acquisitions .

At December 31, 2022, goodwill primarily reflects PMI’s business combinations in Greece, Indonesia, Mexico, the Philippines and Serbia, as well as the final purchase price allocation of Fertin Pharma A/S and Vectura Group plc., which were acquired in September 2021, and the preliminary purchase price allocation of Swedish Match AB, which was acquired in the fourth quarter of 2022.

As discussed in Note 1.

Background and Basis of Presentation , during the first quarter of 2022, one of Fertin Pharma's product lines was moved from the Wellness and Healthcare segment to the European Union segment.

As a result, the December 31, 2021 goodwill balance in the table above included a reclassification of $ 24 million from the Wellness and Healthcare segment to the European Union segment (reflected in changes due to acquisitions in 2021).

The decrease in goodwill in 2023 was primarily due to the measurement period adjustments to the Swedish Match final purchase price allocation (see Note 3, Acquisitions ), coupled with the impairment discussed above and partially offset by currency movements.

At December 31, 2023, goodwill primarily reflects PMI’s acquisitions of Swedish Match AB, Fertin Pharma A/S and Vectura Group plc., as well as acquisitions in Greece, Indonesia, Mexico, the Philippines and Serbia.

Other Intangible Assets

Details of other intangible assets were as follows:

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Total other intangible assets $ 11,427 $ 1,563 $ 9,864 $ 7,761 $ 1,029 $ 6,732

Non-amortizable intangible assets substantially consist of trademarks from PMI’s acquisitions in Indonesia and Mexico, as well as the preliminary purchase price allocation associated with the Swedish Match acquisition in 2022, and PMI's business combinations in 2021 (primarily in-process research and development).

The increase since December 31, 2021 was due to the preliminary purchase price allocation associated with the Swedish Match acquisition in 2022 of $ 2,077 million, partially offset by the final purchase price allocation associated with Vectura Group plc acquisition in 2021 in the amount of $( 3 ) million and currency movements of $( 40 ) million.

The increase in the gross carrying amount of amortizable intangible assets from December 31, 2021, was due to the preliminary purchase price allocation associated with the Swedish Match acquisition in 2022 of $ 2,435 million, partially offset by final purchase price allocation associated with PMI's business combinations in 2021 and other movements in the amount of $( 225 ) million, and currency movements of $( 93 ) million.

For further details on these business combinations, see Note 3.

Acquisitions .

The change in the accumulated amortization from December 31, 2021, was mainly due to the 2022 amortization of $ 159 million and impairment charge of $ 112 million, partially offset by currency movements of $ 34 million.

The amortization of intangibles for the year ended December 31, 2022 was recorded in cost of sales ($ 58 million) and in marketing, administration and research costs ($ 101 million) on PMI's consolidated statements of earnings.

Amortization expense for each of the next five years is estimated to be $ 310 million or less, assuming no additional transactions occur that require the amortization of intangible assets.

This estimate is subject to change based on the finalization of the preliminary purchase price allocation of the Swedish Match acquisition.

During the second quarter of 2022, PMI completed its annual review of goodwill and non-amortizable intangible assets for potential impairment, and no impairment charges were required as a result of this review.

However, there are still risks related to PMI’s Russian reporting unit’s assets as the fair value of these assets is difficult to predict due to the volatility in foreign currency and commodity markets, supply chain, and current economic, political and social conditions.

For more information see Note 4.

War in Ukraine .

Each of PMI’s reporting units had fair values substantially in excess of its carrying value with the exception of the Wellness and Healthcare reporting unit, which had less than 20 % excess of fair value over its carrying value in the period of the latest review of goodwill for potential impairment.

The Wellness and Healthcare reporting unit's fair value was determined using the discounted cash flow model.

PMI will continue to monitor this reporting unit as any changes in assumptions, estimates or market factors could result in a future impairment.

PMI recorded a pre-tax impairment charge of $ 112 million in the third quarter of 2022, reflecting the impact of general economic and market conditions resulting in a reduction in future estimated cash flows on certain products within the Wellness and Healthcare segment.

The impairment reduces the carrying values of developed technology definite-lived intangible assets in the Wellness and Healthcare segment to $ 325 million.

Non-amortizable intangible assets substantially consist of the ZYN trademark and other trademarks related to acquisitions in Indonesia and Mexico.

The increase since December 31, 2022 was due to the measurement period adjustments to the Swedish Match final purchase price allocation in the amount of $ 1,056 million (see Note 3, Acquisitions ), coupled with currency movements of $ 156 million, partially offset by an impairment for an in-process research and development project related to one of PMI's 2021 acquisitions discussed above.

The increase in the gross carrying amount of amortizable intangible assets from December 31, 2022, was mainly due to the measurement period adjustments to the Swedish Match final purchase price allocation in the amount of $ 2,300 million (see Note 3, Acquisitions ), coupled with currency movements of $ 161 million.

The change in the accumulated amortization from December 31, 2022, was mainly due to the 2023 amortization of $ 497 million, coupled with currency movements of $ 37 million.

The amortization of intangibles for the years ended December 31, 2023 was recorded in cost of sales of $ 58 million and in marketing, administration and research costs of $ 439 million on PMI's consolidated statements of earnings.

Amortization expense on a pre-tax basis for each of the next five years is estimated to be approximately $ 470 million or less, assuming no additional transactions occur that require the amortization of intangible assets.

Additionally, the estimated future amortization expense could significantly increase following the reacquisition of IQOS commercialization rights in the U.S.

from Altria Group, Inc.

(see Note 3, Acquisitions ), the accounting for which will depend on the facts and circumstances effective May 1, 2024, when PMI will hold the full rights.

2022 Impairment of Other Intangibles

In the third quarter of 2022, PMI recorded a pre-tax impairment charge of $ 112 million, reflecting the impact of general economic and market conditions resulting in a reduction in future estimated cash flows on certain products within the Wellness and Healthcare segment.

The impairment reduced the carrying values of developed technology definite-lived intangible assets in the Wellness and Healthcare segment to $ 325 million.

The fair value of these intangible assets was primarily determined using the multi-period excess earnings method.

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The carrying value of our equity method investments at December 31, 2023 and 2022, exceeded our share of the investees' book value by $ 907 million and $ 750 million, respectively.

The difference between the investment carrying value and the amount of underlying equity in net assets, excluding $ 715 million and $ 728 million attributable to goodwill as of December 31, 2022 and 2021, respectively, which consists primarily of definite-lived intangible assets is being amortized on a straight-line basis.

The difference between the investment carrying value and the amount of underlying equity in net assets is mainly attributable to equity method goodwill, convertible debt instruments, and definite-lived intangible assets and other assets.

The difference related to the definite-lived intangibles and other assets at December 31, 2023 and 2022 of $ 31 million and $ 35 million, respectively, is amortized on a straight-line basis and is included in Equity investments and securities (income)/loss, net on the consolidated statements of earnings.

At December 31, 2023 and 2022, PMI received year-to-date dividends from equity method investees of $ 57 million and $ 9 million, respectively.

PMI holds a 23 % equity interest in Megapolis Distribution BV, the holding company of CJSC TK Megapolis, PMI's distributor in Russia (Eastern Europe segment), which as of December 31, 2022 had a carrying value of $ 458 million.

PMI holds a 23 % equity interest in Megapolis Distribution BV, the holding company of CJSC TK Megapolis, PMI's distributor in Russia (SSEA, CIS & MEA segment), which as of December 31, 2023 had a carrying value of $ 385 million.

While as of December 31, 2023, there have been no impairment indicators based on the business’ performance, there are still risks related to this investment as the fair value of these assets is difficult to predict due to the volatility in foreign currency and commodity markets, supply chain, and current economic, political and social conditions.

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PMI holds a 49 % equity interest in United Arab Emirates-based Emirati Investors-TA (FZC) (“EITA”).

PMI holds an approximate 25 % economic interest in Société des Tabacs Algéro-Emiratie (“STAEM”), an Algerian joint venture that is 51 % owned by EITA and 49 % by the Algerian state-owned enterprise Management et Développement des Actifs et des Ressources Holding ("MADAR Holding"), which manufactures and distributes under license some of PMI’s brands (Middle East & Africa segment).

The initial investments in Megapolis Distribution BV and EITA were recorded at cost and are included in equity investments on the consolidated balance sheets.

In April 2023, PMI increased its equity ownership and acquired 66.73 % of Egyptian Investment Holding (“EIH”), a United Arab Emirates based company and as a result, acquired an approximate economic interest of 25 % in United Tobacco Company ("UTC").

UTC is an entity incorporated in Egypt, which is 38 % owned by EIH and manufactures products under license for Philip Morris Misr LCC (“PMM”), an entity incorporated in Egypt which is consolidated in PMI’s financial statements in the SSEA, CIS & MEA segment.

The initial investments in Megapolis Distribution BV, EITA and UTC have been recorded at cost and are included in equity investments on the consolidated balance sheets.

Transactions between these equity method investees and PMI subsidiaries are considered to be related-party transactions and are included in the tables below.

Equity securities:

Following the deconsolidation of RBH on March 22, 2019, PMI recorded the continuing investment in RBH, PMI's wholly owned subsidiary in Canada, at fair value of $ 3,280 million at the date of deconsolidation, within equity investments.

On March 22, 2019, PMI’s wholly owned subsidiary in Canada, Rothmans, Benson & Hedges Inc.

(“RBH”) obtained an initial order from the Ontario Superior Court of Justice granting it protection under the Companies’ Creditors Arrangement Act ("CCAA"), which is a Canadian federal law that permits a Canadian business to restructure its affairs while carrying on its business in the ordinary course with minimal disruption to its customers, suppliers and employees.

The administration of the CCAA process, principally relating to the powers provided to the court under the CCAA and the oversight provided by the court appointed monitor, removes certain elements of control of the business from both PMI and RBH.

As a result, PMI determined that it no longer had a controlling financial interest over RBH as defined in ASC 810 (Consolidation), and deconsolidated RBH as of the date of the CCAA filing.

For further details, see Note 18, Contingencies .

Since the deconsolidation of RBH on March 22, 2019, PMI has accounted for its continuing investment in RBH in accordance with ASC 321 (Investments-Equity Securities) as an equity security, without readily determinable fair value, and recorded its continuing investment in RBH at fair value of $ 3,280 million at the date of deconsolidation, within equity investments.

Developments in the CCAA process, including resolution through a plan of arrangement or compromise of some or all tobacco-related litigation pending in Canada may have a material adverse impact on the fair value of PMI’s continuing investment in RBH and may result in impairment charges.

Transactions between PMI and RBH are considered to be related-party transactions from the date of deconsolidation and are included in the tables below.

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Other related parties:

United Arab Emirates-based Trans-Emirates Trading and Investments (FZC) ("TTI") holds a 33 % non-controlling interest in Philip Morris Misr LLC ("PMM"), an entity incorporated in Egypt which is consolidated in PMI’s financial statements in the Middle East & Africa segment.

PMM sells, under license, PMI brands in Egypt through an exclusive distribution agreement with a local entity that is also controlled by TTI.

Additionally, as of December 31, 2022, TTI holds a 32.9 % non-controlling interest in United Tobacco Company (“UTC”), an entity incorporated in Egypt which manufactures products for PMM under license.

Godfrey Phillips India Ltd ("GPI") is one of the non-controlling interest holders in IPM India, which is a 56.3 % owned PMI consolidated subsidiary in the South & Southeast Asia segment.

Godfrey Phillips India Ltd ("GPI") is one of the non-controlling interest holders in IPM India, which is a 56.3 % owned PMI consolidated subsidiary in the SSEA, CIS & MEA segment.

GPI also acts as contract manufacturer and distributor for IPM India.

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$ 1,968 $ 5,637

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 PMI’s short-term borrowings at December 31, 2022 and 2021, based upon current market interest rates, approximate the amounts disclosed above.

Given the mix of PMI's legal entities 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 PMI’s short-term borrowings at December 31, 2023 and 2022, based on current market interest rates, approximate carrying value.

Long-Term Debt

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Euro notes, 0.125 % to 3.125 % (average interest rate 1.877 %), due through 2039

Swiss franc notes, 1.625 % to 2.125 % (average interest rate 1.768 %), due through 2024

Swiss franc note, 1.625 %, due 2024

Euro credit facility borrowings related to Swedish Match AB acquisition, (average interest rate 4.453 %), due through 2027

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$ 41,243 $ 34,875

(a) Includes mortgage debt in Switzerland as well as $ 54 million and $ 71 million in finance leases at December 31, 2022 and 2021, respectively.

(a) Includes long-term bank loans at subsidiaries, as well as $ 53 million and $ 54 million in finance leases at December 31, 2023 and 2022, respectively.

The fair value of PMI’s outstanding long-term debt, which is utilized solely for disclosure purposes, is determined using quotes and market interest rates currently available to PMI for issuances of debt with similar terms and remaining maturities.

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Summary of Significant Accounting Policies .

Financing of the Swedish Match Acquisition

In connection with PMI’s all-cash recommended public offer to the shareholders of Swedish Match AB ("Swedish Match"), a public limited liability company organized under the laws of Sweden, for all the outstanding shares of Swedish Match, on May 11, 2022, PMI entered into a credit agreement relating to a 364 -day senior unsecured bridge facility.

Credit Facilities related to the Financing of the Swedish Match Acquisition

In connection with PMI's all-cash recommended public offer to the shareholders of Swedish Match, on May 11, 2022, PMI entered into a credit agreement relating to a 364 -day senior unsecured bridge facility.

The facility provided for borrowings up to an aggregate principal amount of $ 17 billion, expiring 364 days after the occurrence of certain events unless extended.

On June 23, 2022, PMI entered into a new € 5.5 billion (approximately $ 5.8 billion at the date of signing) senior unsecured term loan credit agreement consisting of a € 3.0 billion (approximately $ 3.2 billion at the date of signing) tranche expiring three years after the occurrence of certain events and a € 2.5 billion (approximately $ 2.6 billion at the date of signing) tranche expiring on June 23, 2027.

On June 23, 2022, PMI entered into a € 5.5 billion (approximately $ 5.8 billion at the date of signing) senior unsecured term loan credit agreement consisting of a € 3.0 billion (approximately $ 3.2 billion at the date of signing) tranche expiring three years after the occurrence of certain events and a € 2.5 billion (approximately $ 2.6 billion at the date of signing) tranche expiring on June 23, 2027.

In connection with the term loan facility, the aggregate principal amount of commitments under the 364 -day senior unsecured bridge facility was reduced from $ 17 billion to $ 11 billion.

On November 11, 2022, PMI acquired a controlling interest of 85.87 % of the total issued shares in Swedish Match and has acquired 94.81 % of its outstanding shares as of December 31, 2022.

On November 11, 2022, PMI acquired a controlling interest of 85.87 % of the total issued shares in Swedish Match and acquired 94.81 % of its outstanding shares as of December 31, 2022.

In accordance with the Swedish Companies Act, PMI subsequently exercised its right to compulsorily redeem the remaining shares for which acceptances were not received and obtained legal title to 100 % of the shares in Swedish Match on February 17, 2023.

PMI borrowed $ 8.4 billion under the bridge facility by delivering notices of borrowing for advances of $ 7.9 billion and $ 0.5 billion on November 7, 2022 and November 10, 2022, respectively.

All amounts borrowed under the bridge facility will become due on November 8, 2023 unless prepaid or such maturity date is extended pursuant to the terms of the bridge facility.

On November 21, 2022 and February 17, 2023, PMI repaid $ 4.0 billion and $ 4.4 billion, respectively, under the bridge facility.

Effective February 20, 2023, the remaining outstanding commitments under the bridge facility were fully canceled and the bridge facility agreement was terminated in accordance with its terms.

On November 7, 2022, PMI also delivered notices of borrowing for advances totaling € 5.5 billion under the term loan facility, of which € 3.0 billion will become due on November 9, 2025 and € 2.5 billion will become due on June 23, 2027 unless prepaid pursuant to the terms of the credit agreement.

On November 21, 2022, PMI repaid $ 4.0 billion under the bridge facility.

As of December 31, 2022, outstanding borrowings under the bridge facility amounted to $ 4.4 billion and $ 1.1 billion commitments remained available for drawing.

As of December 31, 2022, the € 5.5 billion (approximately $ 5.9 billion) term loan facility was fully drawn and remained outstanding.

As of December 31, 2023 and 2022, the € 5.5 billion (approximately $ 6 billion) term loan facility was fully drawn and remained outstanding.

The proceeds under the bridge facility and the term loan facility were used, directly or indirectly, to finance the acquisition, including, the payment of related fees and expenses.

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Rate Issuance Maturity

$ 600 2.625 % March 2013 March 2023

$ 900 2.875 % May 2019 May 2024

$ 750 1.125 % May 2020 May 2023

$ 750 3.250 % November 2014 November 2024

$ 900 2.875 % May 2019 May 2024

$ 1,000 5.125 % November 2022 November 2024

$ 750 1.500 % May 2020 May 2025

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$ 750 2.750 % February 2016 February 2026

$ 1,250 4.875 % February 2023 February 2026

(a) $ 450 4.875 % May 2023 February 2026

$ 750 0.875 % November 2020 May 2026

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$ 1,500 5.125 % November 2022 November 2027

$ 1,000 4.875 % February 2023 February 2028

(b) $ 550 4.875 % May 2023 February 2028

$ 500 3.125 % November 2017 March 2028

$ 50 4.000 % May 2013 May 2028

$ 650 5.250 % September 2023 September 2028

$ 750 3.375 % May 2019 August 2029

$ 1,250 5.625 % November 2022 November 2029

$ 1,500 5.125 % February 2023 February 2030

(d) $ 700 5.125 % May 2023 February 2030

$ 750 2.100 % May 2020 May 2030

$ 700 5.500 % September 2023 September 2030

$ 750 1.750 % November 2020 November 2030

$ 1,500 5.750 % November 2022 November 2032

$ 1,500 5.375 % February 2023 February 2033

(e) $ 750 5.375 % May 2023 February 2033

$ 1,000 5.625 % September 2023 September 2033

$ 1,500 6.375 % May 2008 May 2038

(in millions)

Face Value Interest

Rate Issuance Maturity

$ 750 4.375 % November 2011 November 2041

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1.200 % June 2021 November 2025

(in millions)

Face Value Interest

Rate Issuance Maturity

€ 1,000 (approximately $ 1,372 )

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CHF 250 (approximately $ 283 )

2.125 % June 2013 June 2023

Swiss franc notes

CHF 250 (approximately $ 283 )

1.625 % May 2014 May 2024

Swedish krona notes (a)

SEK 800 (approximately $ 76 )

1.600 % February 2018 February 2023

Swedish krona notes (a)

SEK 200 (approximately $ 19 )

floating February 2018 February 2023

Swedish krona notes (a)

SEK 250 (approximately $ 24 )

floating October 2017 October 2023

Swedish krona notes (a)

Swedish krona notes (c)

SEK 1,000 (approximately $ 95 )

2.710 % January 2019 January 2026

Swedish krona notes (a)

Swedish krona notes (c)

SEK 700 (approximately $ 67 )

1.395 % February 2021 February 2026

Swedish krona notes (a)

Swedish krona notes (c)

SEK 100 (approximately $ 10 )

1.395 % March 2021 February 2026

Swedish krona notes (a)

Swedish krona notes (c)

SEK 200 (approximately $ 19 )

1.395 % September 2021 February 2026

Swedish krona notes (a)

Swedish krona notes (c)

SEK 200 (approximately $ 19 )

1.395 % January 2022 February 2026

Swedish krona notes (a)

Swedish krona notes (c)

SEK 300 (approximately $ 29 )

2.190 % April 2021 April 2029

(a) Notes issued by Swedish Match AB.

(a) These notes are a further issuance of the 4.875 % notes issued in February 2023.

(b) These notes are a further issuance of the 4.875 % notes issued in February 2023.

USD equivalents for foreign currency notes were calculated based on exchange rates on the date of acquisition.

(b) These notes are a further issuance of the 4.250 % notes issued by PMI in November 2014.

(d) These notes are a further issuance of the 5.125 % notes issued in February 2023.

(e) These notes are a further issuance of the 5.375 % notes issued in February 2023.

(f) These notes are a further issuance of the 4.250 % notes issued by PMI in November 2014.

(g) USD equivalents for foreign currency notes were calculated based on exchange rates on the date of issuance.

The net proceeds from the sale of the securities listed in the table above were primarily used for general corporate purposes, including working capital requirements and repurchase of PMI's common stock.

On February 17, 2023, PMI applied a portion of the net proceeds of the February 2023 debt issuances to prepay $ 4.4 billion under its bridge facility, which represented all borrowings outstanding under the bridge facility.

PMI used a portion of the May 2023 net proceeds to pay the remaining cash consideration due in accordance with the terms of its agreement with Altria.

For further details on PMI's agreement with Altria, see Note 3.

Acquisitions .

The remaining net proceeds of the February and May 2023 offerings, as well as the September 2023 offering have been used for general corporate purposes.

Aggregate maturities:

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Total facilities

(1) On January 25, 2023, PMI entered into an agreement to amend and extend the term of its $ 1.8 billion 364 -day committed revolving credit facility from January 31, 2023, to January 30, 2024.

(1) On January 24, 2024, PMI entered into an agreement to extend the term of its 364 -day committed revolving credit facility in the amount of $ 1.7 billion from January 30, 2024, to January 28, 2025.

(2) On January 28, 2022, PMI entered into an agreement, effective February 10, 2022, to amend and extend the term of its $ 2.0 billion multi-year revolving credit facility, for an additional year covering the period February 11, 2026 to February 10, 2027, in the amount of $ 1.9 billion.

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(4) On September 20, 2022, PMI entered into an agreement, effective September 29, 2022, to amend and extend the term of its $ 2.5 billion multi-year revolving credit facility, for an additional year covering the period September 30, 2026 to September 29, 2027, in the amount of $ 2.3 billion.

On September 20, 2023, PMI entered into an agreement, effective September 29, 2023, to amend and further extend the term to September 29, 2028.

At December 31, 2023, there were no borrowings under these committed revolving credit facilities, and the entire committed amounts were available for borrowing.

These committed revolving credit facilities do not include any credit rating triggers, material adverse change clauses or any provisions that could require PMI to post collateral.

In addition to the committed revolving credit facilities discussed above, certain subsidiaries maintain short-term credit arrangements to meet their respective working capital needs.

These credit arrangements, which amounted to approximately $ 1.9 billion at December 31, 2022, and approximately $ 2.3 billion at December 31, 2021, are for the sole use of the subsidiaries.

In addition to the committed revolving credit facilities discussed above, PMI maintains certain short-term credit arrangements, including uncommitted credit lines, to primarily meet working capital needs.

These credit arrangements amounted to approximately $ 2.7 billion at December 31, 2023, and approximately $ 1.9 billion at December 31, 2022.

Borrowings under these arrangements and other bank loans amounted to $ 283 million at December 31, 2023, and $ 295 million at December 31, 2022.

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Balances, January 1, 2021 2,109,316,331 ( 551,942,600 ) 1,557,373,731

Repurchase of shares ( 8,514,629 ) ( 8,514,629 )

Issuance of stock awards 1,310,891 1,310,891

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2022 Performance Incentive Plan (the “2022 Plan”).

The 2022 Plan replaced the 2017 Performance Incentive Plan, and there will be no additional grants under the replaced plan.

Under the 2022 Plan, PMI may grant to eligible employees restricted shares and restricted share units, performance-based cash incentive awards and performance-based equity awards.

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The PSU awards require the achievement of certain performance metrics, which are predetermined at the time of grant, typically over a three-year performance cycle.

The performance metrics for such PSU's granted during 2022 consisted of PMI's Total Shareholder Return ("TSR") relative to a predetermined peer group and on an absolute basis ( 40 % weight), PMI’s currency-neutral compound annual adjusted diluted earnings per share growth rate ( 30 % weight), and a Sustainability Index, which consists of two drivers:

• Pro duct Sustainability ( 20 % weight) measuring progress on PMI's efforts to maximize the benefits of smoke-free products, purposefully phase out cigarettes, seek net positive impact in wellness and healthcare, and reduce post-consumer waste;

The performance metrics for such PSU's granted during 2023 and 2022 consisted of PMI's Total Shareholder Return ("TSR") relative to a predetermined peer group and on an absolute basis ( 40 % weight), PMI’s currency-neutral compound annual adjusted diluted earnings per share growth rate ( 30 % weight), and a Sustainability Index, which consists of two drivers:

• Pro duct Sustainability ( 20 % weight) measuring progress primarily on PMI's efforts to maximize the benefits of smoke-free products, purposefully phase out cigarettes, and reduce post-consumer waste;

• Operational Sustainability ( 10 % weight) measuring progress on PMI's efforts to tackle climate change, preserve nature, improve the quality of life of people in its supply chain, and foster an empowered, and inclusive workplace.

The performance metrics for such PSU's granted during 2021 and 2020 consisted of PMI's TSR relative to a predetermined peer group and on an absolute basis ( 40 % weight), PMI’s currency-neutral compound annual adjusted diluted earnings per share growth rate ( 30 % weight), and PMI’s performance against specific measures of PMI’s transformation, defined as net revenues from PMI's RRPs and any other non-combustible products as a percentage of PMI's total net revenues in the last year of the performance cycle ( 30 % weight).

The performance metrics for such PSU's granted in 2021 consisted of PMI's TSR relative to a predetermined peer group and on an absolute basis ( 40 % weight), PMI’s currency-neutral compound annual adjusted diluted earnings per share growth rate ( 30 % weight), and PMI’s performance against specific measures of PMI’s transformation, defined as net revenues from PMI's RRPs and any other non-combustible products as a percentage of PMI's total net revenues in the last year of the performance cycle ( 30 % weight).

The aggregate of the weighted performance factors for the three metrics in each such PSU award determines the percentage of PSUs that will vest at the end of the three-year performance cycle.

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Shares Weighted-

Average Grant Date

Fair Value Subject to Other Performance Metrics Weighted-

Average Grant Date

Fair Value Subject to TSR Performance Metric

Average PSU Grant Date

Fair Value Subject to Other Performance Factors Weighted-

Average PSU Grant Date

Fair Value Subject to TSR Performance Factors

(Per Share) (Per Share)

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(in millions, except per PSU award granted) Weighted-

Average PSU Grant Date Fair Value Subject to Other Performance Factors Weighted-

Average PSU Grant Date Fair Value Subject to TSR Performance Factor Compensation Expense related to PSU Awards

Average PSU Grant Date

Fair Value Subject to Other Performance Factors Weighted-

Average PSU Grant Date

Fair Value Subject to TSR Performance Factors Compensation Expense related to PSU Awards

Total Per PSU Award Total Per PSU Award Total

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Weighted-average shares for diluted EPS 1,553 1,552 1,559

(1) Including rounding adjustment

For the 2023, 2022 and 2021 computations, there were no antidilutive stock awards.

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The Act includes a new corporate alternative minimum tax and an excise tax on stock buybacks effective after December 31, 2022.

As of December 31, 2022, PMI has determined that the Act had no significant tax impacts on its consolidated financial statements.

As of December 31, 2023, PMI has determined that the Act had no tax impacts on its consolidated financial statements.

On March 11, 2021, the American Rescue Plan Act of 2021 ("the ARP Act") was signed into law in the U.S.

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PMI has determined that the ARP Act had no significant impact on PMI's effective tax rate.

On July 20, 2020, the U.S.

Department of the Treasury and the Internal Revenue Service released final and proposed regulations under the Global Intangible Low-Taxed Income (“GILTI”) and other provisions of the Internal Revenue Code.

PMI has analyzed these elective regulations and recorded the impact in its consolidated financial statements, as described below.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act and, on December 27, 2020, the Consolidated Appropriations Act, 2021 (“U.S.

COVID-19 Acts”) were signed into law in the U.S.

to provide certain relief as a result of the COVID-19 pandemic.

In addition, governments around the world have enacted or implemented various forms of tax relief measures in response to the economic conditions in the wake of COVID-19.

PMI has determined that neither the U.S.

COVID-19 Acts nor changes to income tax laws or regulations in other jurisdictions had a significant impact on PMI’s effective tax rate, with the exception of the 2020 corporate income tax rate reduction in Indonesia.

At December 31, 2017, PMI recorded a one-time transition tax liability on its accumulated foreign earnings, which is payable over an eight-year period beginning in 2018.

At December 31, 2023 and December 31, 2022, $ 0.3 billion and $ 0.7 billion of PMI's remaining long-term portion of transition tax liability, respectively, was recorded in "income taxes and other liabilities" on PMI's consolidated balance sheets.

At December 31, 2023, applicable U.S.

federal income taxes have not been provided on approximately $ 0.6 billion of accumulated earnings of Swedish Match subsidiaries that are expected to be permanently reinvested.

PMI does not foresee a need to repatriate these earnings since its U.S.

cash requirements are supported by distributions of earnings from PMI foreign entities that have not been designated as permanently reinvested and existing credit facilities.

At December 31, 2023, PMI has determined the amount of deferred tax liabilities related to these unremitted Swedish Match earnings is approximately $ 71 million.

At December 31, 2023 and 2022, U.S.

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PMI is regularly examined by tax authorities around the world and is currently under examination in a number of jurisdictions.

federal statute of limitations remains open for the years 2019 and onward.

federal statute of limitations on assessment remains open for the years 2019 and onward.

Foreign and U.S.

state jurisdictions have statutes of limitations generally ranging from three to five years .

Years still open to examination by foreign tax authorities in major jurisdictions include Germany (2018 onward), Indonesia (2014 onward), Russia (2022 onward) and Switzerland (2017 onward).

In October 2021, a subsidiary of PMI in Indonesia, PT Hanjaya Mandala Sampoerna Tbk ("HMS"), received a tax assessment in the amount of 3.8 trillion Indonesian rupiah (approximately $ 260 million in the period of payment) primarily relating to corporate income taxes on domestic and other intercompany transactions for the years 2017 to 2019.

HMS paid the assessment in the fourth quarter of 2021 in order to avoid potential penalties and filed an objection letter with the tax office in January 2022.

The amount paid was

included in other assets in PMI’s consolidated balance sheets at December 31, 2022 and 2021, and negatively impacted net cash provided by operating activities in the consolidated statements of cash flows in the period of payment.

state jurisdictions have statutes of limitations generally ranging from 3 to 5 years after the filing of a return.

Years still open to examination by foreign tax authorities in major jurisdictions include Germany (2018 onward), Indonesia (2019 onward), Italy (2017 onward), Russia (2020 onward) and Switzerland (2019 onward).

At December 31, 2023, subsidiaries of PMI in Indonesia, principally PT Hanjaya Mandala Sampoerna Tbk ("HMS"), have recorded income tax receivables in the amount of 4.0 trillion Indonesian rupiah (approximately $ 255 million) relating to corporate income tax assessments paid to avoid potential penalties, primarily for domestic and other intercompany transactions for the years 2014 to 2020.

Objection letters have been filed with the Tax Office and these assessments are being challenged at various levels in court.

These income tax receivables are included in other assets in PMI’s consolidated balance sheets at December 31, 2023.

It is reasonably possible that within the next 12 months certain tax examinations will close, which could result in a change in unrecognized tax benefits along with related interest and penalties.

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Foreign exchange ( 1.6 ) ( 1.7 ) —

Non-deductible goodwill impairment 1.3 — —

Unremitted earnings of Russian subsidiaries 1.7 — —

Other ( 0.8 ) ( 0.5 ) 0.2

Effective tax rate 22.4 % 19.3 % 21.8 %

The 2022 effective tax rate decreased 2.5 percentage point to 19.3 %.

The change in the effective tax rate for 2022, as compared to 2021, was favorably impacted by changes in income tax reserves, a deferred tax benefit for unrealized foreign currency losses on intercompany loans related to the Swedish Match acquisition financing reflected in the consolidated statements of earnings ($ 203 million), while the underlying pre-tax foreign currency movements fully offset in the consolidated statements of earnings and were reflected as currency translation adjustments in its consolidated statements of stockholders' (deficit) equity, and by a reduction in

deferred tax liabilities related to pension plan assets ($ 40 million), partially offset by an increase in deferred tax liabilities related to the fair value adjustment of equity securities held by PMI ($ 10 million).

The 2023 effective tax rate increased 3.1 percentage points to 22.4 %.

The change in the effective tax rate for 2023, as compared to 2022, was unfavorably impacted by:

(i) an increase in deferred tax liabilities related to the unremitted earnings of PMI's Russian subsidiaries due to the unilateral suspension of certain Russian double tax treaties by the Russian authorities on August 8, 2023, with respect to certain payments including dividends;

(ii) the non-deductible Wellness and Healthcare goodwill impairment charge and (iii) an increase in foreign tax credit limitation related to GILTI, partially offset by changes in earnings mix by taxing jurisdiction.

The 2022 effective tax rate decreased 2.5 percentage points to 19.3 %.

For further details, see Note 6.

Related Parties - Equity Investments and Other .

The 2021 effective tax rate increased 0.1 percentage point to 21.8 %.

The change in the effective tax rate for 2021, as compared to 2020, was unfavorably impacted by repatriation cost differences and foreign tax credit limitations related to GILTI, partially offset by the corporate income tax rate reduction in the Philippines (enacted in the first quarter of 2021) and changes in earnings mix by taxing jurisdiction.

The 2020 effective tax rate was favorably impacted by the above-mentioned reduction of estimated U.S.

income tax liabilities for years 2018 and 2019 due to the GILTI regulations and the corporate income tax rate reduction in Indonesia.

The tax effects of temporary differences that gave rise to deferred income tax assets and liabilities consisted of the following:

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Accrued liabilities 191 158

Net operating loss carryforwards and tax credits 384 408

Net operating loss, tax credit, and other carryforwards 501 384

Foreign exchange 149 —

Total deferred income tax assets 1,560 1,058

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Net deferred income tax assets (liabilities) $ ( 1,521 ) $ ( 1,353 )

(1) Includes deferred tax charges of $ 153 million in 2021 related to intercompany transactions.

At December 31, 2022, PMI recorded deferred tax assets for net operating loss carryforwards and tax credits of $ 384 million, with varying dates of expiration, primarily after 2027, including $ 173 million with an unlimited carryforward period.

At December 31, 2023, PMI recorded deferred tax assets for net operating loss, tax credit, and other carryforwards of $ 501 million, with varying dates of expiration, primarily after 2028, including $ 274 million with an unlimited carryforward period.

At December 31, 2023, PMI has recorded a valuation allowance of $ 369 million against deferred tax assets that do not meet the more-likely-than not recognition threshold.

At December 31, 2021, PMI recorded deferred tax assets for net operating loss carryforwards of $ 408 million, with varying dates of expiration, primarily after 2026, including $ 183 million with an unlimited carryforward period.

At December 31, 2022, PMI recorded deferred tax assets for net operating loss, tax credit, and other carryforwards of $ 384 million, with varying dates of expiration, primarily after 2027, including $ 173 million with an unlimited carryforward period.

At December 31, 2022, PMI has recorded a valuation allowance of $ 378 million against deferred tax assets that do not meet the more-likely-than-not recognition threshold.

Segment Reporting:

PMI’s subsidiaries and affiliates are primarily engaged in the manufacture and sale of cigarettes and smoke-free products, including heat-not-burn, vapor, and oral nicotine products.

operating and financial results of the regions inclusive of combustible tobacco and smoke-free product categories sold in the region.

PMI currently has six geographical segments:

the European Union;

Eastern Europe;

Middle East & Africa;

South & Southeast Asia;

East Asia & Australia;

and Americas;

as well as the Swedish Match segment and the Wellness and Healthcare segment.

PMI’s subsidiaries and affiliates are primarily engaged in the manufacture and sale of cigarettes and smoke-free products, including heat-not-burn, e-vapor and oral nicotine products.

Excluding the Wellness and Healthcare segment and the 2022 acquisition of Swedish Match, PMI's segments are generally organized by geographic region and managed by segment managers who are responsible for the operating and financial results of the regions inclusive of combustible tobacco and smoke-free product categories sold in the region.

Effective in January 2023, PMI began managing its business in four geographical segments, down from six previously, in addition to its continuing Swedish Match and Wellness and Healthcare segments.

The four geographical segments are as

Europe Region;

South and Southeast Asia, Commonwealth of Independent States, Middle East and Africa Region ("SSEA, CIS & MEA");

East Asia, Australia, and PMI Duty Free Region ("EA, AU & PMI DF");

and Americas Region.

The Swedish Match segment represents the fourth quarter 2022 acquisition of the company.

The Wellness and Healthcare segment reflects the operating results of PMI's new business, Vectura Fertin Pharma.

The Wellness and Healthcare segment reflects the operating results of Vectura Fertin Pharma.

For further details on these acquisitions, see Note 3.

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PMI records net revenues and operating income to its geographical segments based upon the geographic area in which the customer resides.

PMI’s chief operating decision maker evaluates geographical segment performance and allocates resources based on regional operating income, which includes results from substantially all product categories sold in each region.

Business operations in the Wellness and Healthcare segment and the Swedish Match segment are managed and evaluated separately.

PMI’s chief operating decision maker evaluates geographical segment performance and allocates resources based on regional operating income, which includes results from all product categories sold in each region, excluding Swedish Match and Wellness and Healthcare products.

Business operations in the Swedish Match segment and the Wellness and Healthcare segment are evaluated separately.

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.

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Summary of Significant Accounting Policies.

PMI disaggregates its net revenues from contracts with customers by product category for each of PMI's six geographical segments and for the Swedish Match segment.

PMI disaggregates its net revenues from contracts with customers by product category for each of PMI's four geographical segments and for the Swedish Match segment.

For the Wellness and Healthcare business, Vectura Fertin Pharma discussed above, net revenues from contracts with customers are included in the Wellness and Healthcare segment.

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Net revenues:

European Union $ 12,119 $ 12,275 $ 10,702

Eastern Europe 3,725 3,544 3,378

Middle East & Africa 3,901 3,293 3,088

South & Southeast Asia 4,395 4,396 4,396

East Asia & Australia 5,132 5,953 5,429

Europe $ 13,598 $ 12,869 $ 13,155

SSEA, CIS & MEA

10,629 10,467 9,858

EA, AU & PMI DF

6,201 5,936 6,448

Americas 1,944 1,903 1,843

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Total net revenues attributable to customers located in Japan, PMI's largest market in terms of net revenues, were $ 3.9 billion, $ 3.9 billion and $ 4.6 billion in 2023, 2022 and 2021, respectively.

PMI had one customer in the East Asia & Australia segment that accounted for 12 %, 15 % and 14 % of PMI’s consolidated net revenues, and one customer in the European Union segment that accounted for 13 %, 13 % and 11 % of PMI’s consolidated net revenues in 2022, 2021 and 2020, respectively.

PMI had one customer in the EA, AU & PMI DF segment that accounted for 11 %, 12 % and 15 % of PMI’s consolidated net revenues, and one customer in the Europe segment that accounted for 12 %, 13 % and 13 % of PMI’s consolidated net revenues in 2023, 2022 and 2021, respectively.

PMI's net revenues by product category were as follows:

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Combustible tobacco products:

European Union $ 7,212 $ 8,211 $ 8,052

Eastern Europe 2,410 2,240 2,250

Middle East & Africa 3,567 3,110 3,005

South & Southeast Asia 4,372 4,385 4,395

East Asia & Australia 2,138 2,414 2,468

Europe $ 8,037 $ 7,694 $ 8,767

SSEA, CIS & MEA

9,321 9,173 8,734

EA, AU & PMI DF

2,676 2,831 2,861

Americas 1,869 1,804 1,706

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Smoke-free products excluding Wellness and Healthcare:

European Union 4,907 4,064 2,650

Eastern Europe 1,315 1,304 1,128

Middle East & Africa 334 183 83

South & Southeast Asia 23 11 1

East Asia & Australia 2,994 3,539 2,961

Europe 5,561 5,175 4,388

SSEA, CIS & MEA

1,308 1,294 1,124

EA, AU & PMI DF

3,525 3,105 3,587

Americas 75 99 137

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Sum of product categories or Regions might not foot to total PMI due to roundings.

This reclassification did not impact PMI’s segment reporting, consolidated financial position, results of operations or cash flows in any of the periods presented.

Net revenues related to combustible tobacco products refer to the operating revenues generated from the sale of these products, including shipping and handling charges billed to customers, net of sales and promotion incentives, and excise taxes.

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These net revenue amounts consist of the sale of all of PMI's products that are not combustible tobacco products, such as heat-not-burn, e-vapor, and oral nicotine, also including wellness and healthcare products, as well as consumer accessories such as lighters and matches.

Net revenues related to wellness and healthcare products consist of operating revenues generated from the sale of products primarily associated with inhaled therapeutics, and oral and intra-oral delivery systems that are included in the operating results of PMI's new Wellness and Healthcare business, Vectura Fertin Pharma.

Net revenues related to wellness and healthcare products consist of operating revenues generated from the sale of products primarily associated with inhaled therapeutics, and oral and intra-oral delivery systems that are included in the operating results of PMI's Wellness and Healthcare business, Vectura Fertin Pharma.

Operating income (loss) by segment were as follows:

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Operating income (loss):

European Union $ 5,788 $ 6,119 $ 5,098

Eastern Europe 1,166 1,213 871

Middle East & Africa 1,758 1,146 1,026

South & Southeast Asia 1,459 1,506 1,709

East Asia & Australia 1,919 2,556 2,400

Europe $ 6,012 $ 5,802 $ 6,409

SSEA, CIS & MEA

3,047 3,864 3,295

EA, AU & PMI DF

2,481 2,424 2,836

Americas 62 436 487

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Items affecting the comparability of results from operations were as follows:

• Impairment of goodwill and other intangibles – For the year ended December 31, 2023, PMI recorded $ 680 million of goodwill and non-amortizable intangible assets impairment charges that was included in the Wellness and Healthcare segment.

For the year ended December 31, 2022, PMI recorded an impairment charge related to definite-lived intangible assets of $ 112 million.

This charge was included in the Wellness and Healthcare segment.

For further details, see Note 5.

Goodwill and Other Intangible Assets, net .

• South Korea indirect tax charge – See Note 18.

Contingencies for details of the $ 204 million pre-tax charge included in the EA, AU & PMI DF segment results for the year ended December 31, 2023.

• Termination of distribution arrangement in the Middle East – In the first quarter of 2023, PMI recorded a pre-tax charge of $ 80 million following the termination of a distribution arrangement in the Middle East.

This pre-tax charge was recorded as a reduction of net revenues in the consolidated statements of earnings, and was included in the SSEA, CIS & MEA segment results for the year ended December 31, 2023.

• Charges related to the war in Ukraine - See Note 4.

War in Ukraine for details of the $ 151 million pre-tax charges in the Eastern Europe segment for the year ended December 31, 2022.

War in Ukraine for details of the $ 53 million and $ 151 million pre-tax charges in the Europe segment for the years ended December 31, 2023 and 2022, respectively.

• Swedish Match AB acquisition accounting related item - See Note 3.

Acquisitions for details of the $ 125 million pre-tax purchase accounting adjustments related to the sale of acquired inventories stepped up to fair value included in the Swedish Match segment for the year ended December 31, 2022.

• Impairment of intangibles - See Note 5.

Goodwill and Other Intangible Assets, net for the details of the $ 112 million pre-tax impairment charge included in the Wellness and Healthcare segment within the operating income table above for the year ended December 31, 2022.

Acquisitions for details of the $ 18 million and $ 125 million pre-tax purchase accounting adjustments related to the sale of acquired inventories stepped up to fair value included in the Swedish Match segment for the years ended December 31, 2023 and 2022, respectively.

• Asset impairment and exit costs - See Note 20.

Asset Impairment and Exit Costs for details of the $ 109 million and $ 216 million pre-tax charges for the year ended December 31, 2023 and 2021, respectively, as well as a breakdown of these costs by segment.

• Saudi Arabia customs assessments - See Note 18.

Contingencies for the details of the $ 246 million reduction in net revenues of combustible tobacco products included in the Middle East & Africa segment for the year ended December 31, 2021.

• Termination of agreement with Foundation for a Smoke-Free World – On September 29, 2023, PMI and the Foundation for a Smoke-Free World (the "Foundation") entered into the Final Grant Agreement and Termination of the Second Amended and Restated Pledge Agreement ("Agreement").

Under the terms of the agreement, PMI paid $ 140 million in the third quarter of 2023 in return for the termination of the pledge agreement between the parties.

As a result, in the third quarter of 2023, PMI recorded a pre-tax charge of $ 140 million commensurate with the early termination of the pledge agreement.

The pre-tax charge was recorded in marketing, administration and research costs in the consolidated statements of earnings for the year ended December 31, 2023 and was included in the operating results of the following segments:

Europe ($ 62 million);

SSEA, CIS & MEA ($ 44 million);

EA, AU & PMI DF ($ 27 million);

and Americas ($ 7 million).

• Saudi Arabia customs assessments - In June 2021, PMI recorded a pre-tax charge of $ 246 million in relation to additional customs duties in Saudi Arabia assessed for the periods of 2014 through 2020 in line with existing and contemplated arrangements with our distributors.

In accordance with U.S.

GAAP, the charge was recorded as a reduction in net revenues of combustible tobacco products included in the SSEA, CIS & MEA segment for the year ended December 31, 2021.

• Asset acquisition cost - See Note 3.

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included in the Wellness and Healthcare segment within the operating income table above for the year ended December 31, 2021.

• Brazil indirect tax credit - Following a final and enforceable decision by the highest court in Brazil in October 2020, PMI recorded a gain of $ 119 million for tax credits representing overpayments of indirect taxes for the period from March 2012 through December 2019;

these tax credits were applied to tax liabilities in Brazil during 2021.

This amount was included as a reduction in marketing, administration and research costs in the consolidated statements of earnings for the year ended December 31, 2020 and was included in the operating income of the Americas segment.

An additional amount of overpaid indirect taxes of approximately $ 90 million is dependent on the outcome of a challenge by the local tax authority.

Other segment data were as follows:

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2023 2022 2021

Depreciation, amortization and impairment of intangibles expense:

European Union $ 349 $ 342 $ 300

Eastern Europe 137 133 175

Middle East & Africa 96 97 83

South & Southeast Asia 151 164 154

East Asia & Australia 151 157 191

Depreciation and amortization expense:

Europe $ 333 $ 377 $ 371

SSEA, CIS & MEA 309 340 354

EA, AU & PMI DF 148 167 168

Americas 77 74 71

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Wellness and Healthcare 84 85 34

Total depreciation, amortization and impairment of intangibles expense

Total depreciation and amortization expense

$ 1,398 $ 1,077 $ 998

PMI’s total capital expenditures and total property, plant and equipment, net and other assets by geographic area were:

For the Years Ended December 31,

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Capital expenditures:

European Union $ 682 $ 498 $ 384

Eastern Europe 52 71 88

Middle East & Africa 39 37 22

South & Southeast Asia 179 52 57

East Asia & Australia 24 36 13

Europe $ 778 $ 642 $ 481

SSEA, CIS & MEA 287 258 149

EA, AU & PMI DF 38 25 36

Americas 57 92 54

Swedish Match 127 15 —

Wellness and Healthcare 34 45 28

Total capital expenditures

$ 1,321 $ 1,077 $ 748

PMI’s total property, plant and equipment, net and other assets by geographic area were:

At December 31,

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Long-lived assets:

European Union $ 5,077 $ 4,787 $ 4,500

Eastern Europe 541 635 668

Middle East & Africa 244 289 375

South & Southeast Asia 1,365 1,390 1,348

East Asia & Australia 674 740 807

Europe $ 5,697 $ 5,179 $ 4,918

SSEA, CIS & MEA 2,197 2,047 2,181

East Asia and Australia 481 675 742

Americas 1,310 1,282 666

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other intangible assets, net;

deferred tax assets, equity investments, financial instruments and payment under the agreement with Altria Group, Inc, see Note 3, Acquisitions .

PMI's largest markets in terms of long-lived assets are Switzerland, Italy and Indonesia.

Total long-lived assets located in Switzerland, which is reflected in the European Union segment above, were $ 1.4 billion, $ 1.3 billion and $ 1.3 billion at December 31, 2022, 2021 and 2020, respectively.

Total long-lived assets located in Italy, which is reflected in the European Union segment above, were $ 0.9 billion, $ 0.9 billion and $ 1.1 billion at December 31, 2022, 2021 and 2020, respectively.

Total long-lived assets located in Indonesia, which is reflected in the South & Southeast Asia segment above, were $ 0.9 billion, $ 0.9 billion and $ 0.7 billion at December 31, 2022, 2021 and 2020, respectively.

deferred tax assets, equity investments, financial instruments and payment under the agreement with Altria Group, Inc., see Note 3, Acquisitions and Note 18, Contingencies .

PMI's largest markets in terms of long-lived assets are Switzerland, Indonesia and Italy.

Total long-lived assets located in Switzerland, which is reflected in the Europe segment above, were $ 1.6 billion, $ 1.4 billion and $ 1.3 billion at December 31, 2023, 2022 and 2021, respectively.

Total long-lived assets located in Indonesia, which is reflected in the SSEA, CIS & MEA segment above, were $ 1.1 billion, $ 0.9 billion and $ 0.9 billion at December 31, 2023, 2022 and 2021, respectively.

Total long-lived assets located in Italy, which is reflected in the Europe segment above, were $ 1.0 billion, $ 0.9 billion and $ 0.9 billion at December 31, 2023, 2022 and 2021, respectively.

Benefit Plans:

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based defined benefit retirement plans.

At December 31, 2022 and 2021, actuarial losses (gains) consisted primarily of gains for assumption changes related to higher discount rates year-over-year for Swiss, German and Dutch plans.

At December 31, 2023 , actuarial losses (gains) consisted primarily of losses for assumption changes related to lower discount rates year-over-year for Swiss, German and Dutch plans.

At December 31, 2022 actuarial losses (gains) consisted primarily of gains for assumption changes related to higher discount rates year-over-year for Swiss, German and Dutch plans.

At December 31, 2023 and 2022, the Swiss pension plan represented 67 % and 64 % of the benefit obligation, respectively, and approximately 62 % and 60 % of the fair value of plan assets at December 31, 2023 and 2022, respectively.

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Investment funds measured at net asset value (b)

(a) Investment funds whose objective seeks to replicate the returns and characteristics of specified market indices (primarily MSCI — Europe, Switzerland, North America, Asia Pacific, Japan;

Russell 3000;

S&P 500 for equities, and Citigroup EMU, Citigroup Non-EGBI EuroBIG, SBI AAA-BBB and JP Morgan EMBI for bonds), primarily consist of mutual funds, common trust funds and commingled funds.

(a) Investment funds whose objective seeks to replicate the returns and characteristics of specified market indices (primarily MSCI — Europe, Switzerland, North America, Asia Pacific, Japan, Emerging Markets for equities, and FTSE EMU, FTSE Non-EGBI EuroBIG, SBI AAA-BBB and JP Morgan EMBI for bonds), primarily consist of mutual funds, common trust funds and commingled funds.

Of these funds, 57 % are invested in U.S.

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6,419 4,870 $ 1,549

International government bonds

Government bonds

Corporate bonds

35 — 3 32 (c)

Total assets in the fair value hierarchy

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(a) Investment funds whose objective seeks to replicate the returns and characteristics of specified market indices (primarily MSCI — Europe, Switzerland, North America, Asia Pacific, Japan;

Russell 3000;

S&P 500 for equities, and Citigroup EMU and JP Morgan EMBI for bonds), primarily consist of mutual funds, common trust funds and commingled funds.

Russell 3000, S&P 500 for equities and Citigroup EMU, Citigroup Non-EGBI EuroBIG, SBI AAA-BBB and JP Morgan EMBI for bonds), primarily consist of mutual funds, common trust funds and commingled funds.

Of these funds, 57 % were invested in U.S.

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The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statement of financial position.

For a description of the fair value hierarchy and the three levels of inputs used to measure fair values, see Note 2 .

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Prior service cost (credit)

( 4 ) — — ( 4 )

Net transition obligation (asset)

Other income/expense:

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( 764 ) ( 18 ) ( 72 ) ( 854 )

769 37 35 841

Total movements in other comprehensive earnings (losses)

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Prior service cost (credit)

( 4 ) — — ( 4 )

Other income/expense:

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Prior service cost (credit)

Net transition obligation (asset)

Other income/expense:

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Prior service (cost) credit

( 12 ) — ( 22 ) ( 34 )

Deferred income taxes ( 241 ) 1 30 ( 210 )

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2023 2022 2021

Depreciation expense $ 901 $ 918 $ 902

Research and development expense

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Financial Instruments:

PMI operates in markets primarily outside of the United States of America, with manufacturing and sales facilities in various locations around the world.

PMI utilizes certain financial instruments to manage foreign currency and interest rate exposures.

Derivative financial instruments are used by PMI principally to reduce exposures to market risks resulting from fluctuations in foreign currency exchange and interest rates by creating offsetting exposures.

PMI operates in markets primarily outside of the United States of America, with manufacturing and sales facilities in various locations around the world and is exposed to risks such as changes in foreign currency exchange rates and interest rates.

As a result, PMI uses deliverable and non-deliverable forward foreign exchange contracts, foreign currency swaps and foreign currency options, (collectively referred to as "foreign exchange contracts"), and interest rate contracts to mitigate its exposure to changes in foreign currency exchange and interest rates related to net investments in foreign operations, third-party and intercompany actual and forecasted transactions.

The primary currencies to which PMI is exposed include the Euro, Egyptian pound, Indonesian rupiah, Japanese yen, Mexican peso, Philippine peso, Russian ruble and Swiss franc.

Additionally, certain materials that PMI uses in the manufacturing of its products are exposed to market price risks.

PMI uses commodity derivative contracts (“commodity contracts") to manage its exposure to the market price volatility of certain commodity components of these materials.

These foreign exchange contracts, interest rate contracts and commodity contracts are collectively referred to as "derivative contracts".

PMI is not a party to leveraged derivatives and, by policy, does not use derivative financial instruments for speculative purposes.

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If it were deemed probable that the forecasted transaction would not occur, the gain or loss would be recognized in earnings.

PMI uses deliverable and non-deliverable forward foreign exchange contracts, foreign currency swaps and foreign currency options, collectively referred to as foreign exchange contracts ("foreign exchange contracts"), and interest rate contracts to mitigate its exposure to changes in exchange and interest rates related to net investments in foreign operations, third-party and intercompany actual and forecasted transactions.

Both foreign exchange contracts and interest rate contracts are collectively referred to as derivative contracts ("derivative contracts").

The primary currencies to which PMI is exposed include the Euro, Egyptian pound, Indonesian rupiah, Japanese yen, Mexican peso, Philippine peso, Russian ruble and Swiss franc.

The gross notional amounts for outstanding derivatives as of December 31, 2023 and 2022, were as follows:

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Interest rate contracts 3,600 1,019

Commodity contracts 20 —

Derivative contracts not designated as hedging instruments:

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Other assets — — Income taxes and other liabilities 18 56

Commodity contracts Other current assets — — Other accrued liabilities 5 —

Other assets — — Income taxes and other liabilities 1 —

Derivative contracts not designated as hedging instruments:

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Net amount $ 101 $ 186 $ 443 $ 143

PMI assesses the fair value of its foreign exchange contracts and interest rate contracts using standard valuation models that use, as their basis, readily observable market inputs.

The fair value of PMI’s foreign exchange forward contracts, foreign currency swaps and interest rate contracts is determined by using the prevailing foreign exchange spot rates and interest rate differentials, and the respective maturity dates of the instruments.

PMI assesses the fair value of its derivative contracts using standard valuation models that use, as their basis, readily observable market inputs.

The fair value of PMI’s currency options is determined by using a Black-Scholes methodology based on foreign exchange spot rates and interest rate differentials, currency volatilities and maturity dates.

The fair value of PMI’s commodity contracts is determined by using the prevailing market spot and futures prices and the respective maturity dates of the instruments.

PMI’s derivative contracts have been classified within Level 2 at December 31, 2023 and 2022.

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Interest rate contracts 37 292 6 Interest expense, net 46 ( 2 ) ( 1 )

Commodity contracts ( 7 ) — — Cost of sales — — —

Fair value hedges:

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Cash Flow Hedges

PMI has entered into derivative contracts to hedge the foreign currency exchange and interest rate risks related to certain forecasted transactions.

PMI has entered into derivative contracts to hedge the foreign currency exchange, interest rate and commodity price risks related to certain forecasted transactions.

Gains and losses associated with qualifying cash flow hedge contracts are deferred as components of accumulated other comprehensive losses until the underlying hedged transactions are reported in PMI’s consolidated statements of earnings.

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For derivative contracts that are designated and qualify as fair value hedges the gain or loss on the derivative, as well as the offsetting gain or loss on the hedged items attributable to the hedged risk, is recognized in current earnings.

The carrying amount of the debt hedged, which includes the cumulative adjustment for fair value gains/losses, as of December 31, 2022 was $ 913 million, and is recorded in long-

term debt in the consolidated balance sheets.

The carrying amount of the debt hedged, which includes the cumulative adjustment for fair value gains/losses, as of December 31, 2023 was $ 937 million, and is recorded in long-term debt in the consolidated balance sheets.

The cumulative amount of fair value gains/(losses) included in the carrying amount of the debt hedged was $ 60 million as of December 31, 2023.

Hedges of Net Investments in Foreign Operations

PMI designates derivative contracts and certain foreign currency denominated debt instruments as net investment hedges, primarily of its Euro net assets.

The amount of pre-tax gain/(loss) related to these debt instruments, that was reported as a component of accumulated other comprehensive losses within currency translation adjustments, was $ 521 million , $ 278 million and $( 465 ) million, for the years ended December 31, 2022, 2021 and 2020, respectively.

PMI designates derivative contracts and certain foreign currency denominated debt and other financial instruments as net investment hedges, primarily of its Euro net assets.

The amount of pre-tax gain/(loss) related to the non-derivative financial instruments, that was reported as a component of accumulated other comprehensive losses within currency translation adjustments, was $ 48 million , $ 521 million and $ 278 million, for the years ended December 31, 2023, 2022 and 2021, respectively.

The premiums paid for, and settlements of, net investment hedges are included in investing cash flows on PMI’s consolidated statements of cash flows.

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Change in fair value

481 124 ( 68 )

Gain/(loss) as of December 31,

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In the first class action pending in Canada, Conseil Québécois Sur Le Tabac Et La Santé and Jean-Yves Blais v.

Imperial Tobacco Ltd., Rothmans, Benson & Hedges Inc.

Imperial Tobacco Canada Ltd., Rothmans, Benson & Hedges Inc.

and JTI-Macdonald Corp., Quebec Superior Court, Canada , filed in November 1998, RBH and other Canadian cigarette manufacturers (Imperial Tobacco Canada Ltd.

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The trial court issued its judgment on May 27, 2015.

The trial court found RBH and two other Canadian manufacturers liable and found that the class members’ compensatory damages totaled approximately CAD 15.5 billion, including pre-judgment interest (approximately $ 11.5 billion).

The trial court awarded compensatory damages on a joint and several liability basis, allocating 20 % to our subsidiary (approximately CAD 3.1 billion, including pre-judgment interest (approximately $ 2.3 billion)).

The trial court found RBH and two other Canadian manufacturers liable and found that the class members’ compensatory damages totaled approximately CAD 15.5 billion (approximately $ 11.5 billion), including pre-judgment interest.

The trial court awarded compensatory damages on a joint and several liability basis, allocating 20 % to our subsidiary (approximately CAD 3.1 billion (approximately $ 2.3 billion) including pre-judgment interest).

In addition, the trial court awarded CAD 90,000 (approximately $ 67,000 ) in punitive damages, allocating CAD 30,000 (approximately $ 22,000 ) to RBH.

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The Court of Appeal ordered that the security is payable upon a final judgment of the Court of Appeal affirming the trial court’s judgment or upon further order of the Court of Appeal.

On March 1, 2019, the Court of Appeal issued a decision largely affirming the trial court’s findings of liability and the compensatory and punitive damages award while reducing the total amount of compensatory damages to approximately CAD 13.5 billion including interest (approximately $ 10.1 billion) due to the trial court’s error in the calculation of interest.

The compensatory damages award is on a joint and several basis with an allocation of 20 % to RBH (approximately CAD 2.7 billion, including pre-judgment interest (approximately $ 2.0 billion)).

On March 1, 2019, the Court of Appeal issued a decision largely affirming the trial court’s findings of liability and the compensatory and punitive damages award while reducing the total amount of compensatory damages to approximately CAD 13.5 billion (approximately $ 10 billion), including interest due to the trial court’s error in the calculation of interest.

The compensatory damages award is on a joint and several basis with an allocation of 20 % to RBH (approximately CAD 2.7 billion (approximately $ 2 billion), including pre-judgment interest).

The Court of Appeal upheld the trial court’s findings that defendants violated the Civil Code of Quebec, the Quebec Charter of Human Rights and Freedoms, and the Quebec Consumer Protection Act by failing to warn adequately of the dangers of smoking and by conspiring to prevent consumers from learning of the dangers of smoking.

The Court of Appeal further held that the plaintiffs either need not prove, or had adequately proven, that these faults were a cause of the class members’ injuries.

In accordance with the judgment, defendants were required to deposit their respective portions of the damages awarded in both the Létourneau case described below and the Blais case, approximately CAD 1.1 billion (approximately $ 819 million), into trust accounts within 60 days.

In accordance with the judgment, defendants were required to deposit their respective portions of the damages awarded in

both the Létourneau case described below and the Blais case, approximately CAD 1.1 billion (approximately $ 813 million), into trust accounts within 60 days.

RBH’s share of the deposit was approximately CAD 257 million (approximately $ 194 million).

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The trial court found that a claims process to allocate the awarded punitive damages to individual class members would be too expensive and difficult to administer.

On March 1, 2019, the Court of Appeal issued a decision largely affirming the trial court’s findings of liability and the total amount of punitive damages awarded allocating CAD 57 million including interest (approximately $ 42 million) to RBH.

On March 1, 2019, the Court of Appeal issued a decision largely affirming the trial court’s findings of liability and the total amount of punitive damages awarded allocating CAD 57 million (approximately $ 42 million), including interest to RBH.

See the Blais description above for further detail concerning the security order pertaining to both Létourneau and Blais cases and the impact of the decision on PMI’s financial statements.

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(ii) defendants cannot be liable to class members who would have smoked regardless of what warnings were given;

and (iii) defendants cannot be liable to all class members given the individual differences between class members.

and (iii) defendants cannot be liable to all class members given the individual differences among class members.

In the third class action pending in Canada, Kunta v.

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The plaintiff, an individual smoker, alleges his own addiction to tobacco products and heart disease resulting from the use of tobacco products.

He is seeking compensatory and punitive damages on behalf of a proposed class comprised of all smokers who

were alive on June 12, 2007, and who suffered from heart disease allegedly caused by smoking, their estates, dependents and family members, plus disgorgement of revenues earned by the defendants from January 1, 1954, to the date the claim was filed.

He is seeking compensatory and punitive damages on behalf of a proposed class comprised of all smokers who were alive on June 12, 2007, and who suffered from heart disease allegedly caused by smoking, their estates, dependents and family members, plus disgorgement of revenues earned by the defendants from January 1, 1954, to the date the claim was filed.

In the eighth class action pending in Canada, Bourassa v.

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Rothmans, Benson & Hedges, Inc., et al., The Queen's Bench, Winnipeg Judicial Centre, Canada , filed May 31, 2012, we, RBH, our indemnitees (PM USA and Altria), and other members of the industry are defendants.

The claim was filed by the government of the province of Manitoba based on legislation enacted in the province that is similar to the laws enacted in several other Canadian provinces.

The claim was filed by the government of the province of Manitoba based on legislation enacted in the province that is similar to the laws enacted in several other Canadian

The legislation authorizes the government to file a direct action against cigarette manufacturers to recover the health care costs it has incurred, and will incur, as a result of a “tobacco related wrong.”

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The table below lists the number of tobacco-related cases pertaining to combustible products pending against us and/or our subsidiaries or indemnitees as of December 31, 2023, December 31, 2022 and December 31, 2021:

Type of Case Number of Cases Pending as of December 31, 2022 Number of Cases Pending as of December 31, 2021 Number of Cases Pending as of December 31, 2020

Type of Case 1

Number of Cases Pending as of December 31, 2023 Number of Cases Pending as of December 31, 2022 Number of Cases Pending as of December 31, 2021

Individual Smoking and Health Cases 45 40 40

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Public Civil Actions 1 1 1

Since 1995, when the first tobacco-related litigation was filed against a PMI entity, 528 Smoking and Health, Label-Related, Health Care Cost Recovery, and Public Civil Actions in which we and/or one of our subsidiaries and/or indemnitees were a defendant have been terminated in our favor.

Fourteen cases have had decisions in favor of plaintiffs.

Ten of these cases have subsequently reached final resolution in our favor and four remain on appeal.

¹ Includes cases pending in Canada.

The table below lists the verdict and significant post-trial developments in the four pending cases where a verdict was returned in favor of the plaintiff:

Since 1995, when the first tobacco-related litigation was filed against a PMI entity, 544 Smoking and Health, Label-Related, Health Care Cost Recovery, and Public Civil Actions in which we and/or one of our subsidiaries and/or indemnitees were a defendant have been terminated in our favor.

Fifteen cases have had decisions in favor of plaintiffs.

Ten of these cases have subsequently reached final resolution in our favor and five remain on appeal, or are subject to an appeal, or our subsidiary may file an appeal.

The table below lists the verdict and significant post-trial developments in the five pending cases where a verdict was returned in favor of the plaintiff:

Date Location of

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On June 15, 2022, plaintiff filed an extraordinary appeal.

Date Location of

Court/Name of

Plaintiff Type of

Case Verdict Post-Trial

June 23, 2023 Turkey/ Senem Yilmazel Individual Action On June 23, 2023, the Ankara Consumer Court published its decision in favor of plaintiff, the daughter of an individual smoker, against our subsidiary and a BAT subsidiary, awarding her TRY 10,000 (approximately $ 327 ) in damages.

The trial court found that the plaintiff’s father died as a result of lung cancer and COPD caused by his cigarette consumption.

On September 8, 2023, our subsidiary filed its appeal.

On September 25, 2023, the plaintiff filed an appeal challenging the damages amount determined by the court.

Pending claims related to tobacco products generally fall within the following categories:

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As of December 31, 2023, there were a number of smoking and health cases pending against us, our subsidiaries or indemnitees, as follows:

• 40 cases brought by individual plaintiffs in Argentina ( 30 ), Canada ( 2 ), Chile ( 4 ) , the Philippines ( 1 ), Turkey ( 1 ) and Scotland ( 1 ), as well as 1 case brought by an individual plaintiff in the United States District Court for the District of Oregon in May 2021.

(See information regarding the provisions of the 2008 Share Distribution Agreement between PMI and Altria that provide for indemnities to PMI for certain liabilities concerning tobacco products under the caption " Tobacco-Related Litigation " described above), compared with 40 such cases on December 31, 2021, and 43 cases on December 31, 2020;

• 45 cases brought by individual plaintiffs in Argentina ( 31 ), Canada ( 2 ), Chile ( 11 ) , and Turkey ( 1 ), compared with 40 such cases on December 31, 2022, and 40 cases on December 31, 2021;

• 9 cases brought on behalf of classes of individual plaintiffs, compared with 9 such cases on December 31, 2022 and 9 such cases on December 31, 2021.

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These cases, brought by governmental and non-governmental plaintiffs, seek reimbursement of health care cost expenditures allegedly caused by tobacco products.

Plaintiffs' allegations of liability in these cases are based on

various theories of recovery including unjust enrichment, negligence, negligent design, strict liability, breach of express and implied warranties, violation of a voluntary undertaking or special duty, fraud, negligent misrepresentation, conspiracy, public nuisance, defective product, failure to warn, sale of cigarettes to minors, and claims under statutes governing competition and deceptive trade practices.

Plaintiffs' allegations of liability in these cases are based on various theories of recovery including unjust enrichment, negligence, negligent design, strict liability, breach of express and implied warranties, violation of a voluntary undertaking or special duty, fraud, negligent misrepresentation, conspiracy, public nuisance, defective product, failure to warn, sale of cigarettes to minors, and claims under statutes governing competition and deceptive trade practices.

Plaintiffs in these cases seek various forms of relief including compensatory and other damages, and injunctive and equitable relief.

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The trial court dismissed the case in its entirety on November 20, 2020.

The Appellate court granted the Plaintiff a de novo

appeal in 2021 and determined that the appellate proceedings will take place in stages:

The Appellate court granted the Plaintiff a de novo appeal in 2021 and determined that the appellate proceedings will take place in stages:

wrongful conduct/product defect allegations first, then causation and finally issues such as standing/direct action.

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Plaintiffs in these cases seek various forms of relief including injunctive relief such as banning cigarettes, descriptors, smoking in certain places and advertising, as well as implementing communication campaigns and reimbursement of medical expenses incurred by public or private institutions.

As of December 31, 2022, there was 1 public civil action pending against our subsidiary in Venezuela ( 1 ), compared with 1 such case on December 31, 2021, and 2 such cases on December 31, 2020.

As of December 31, 2023, there was 1 public civil action pending against our subsidiary in Venezuela ( 1 ), compared with 1 such case on December 31, 2022, and 1 such case on December 31, 2021.

In a public civil action in Venezuela, Federation of Consumers and Users Associations (“FEVACU”), et al.

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In October 2008, the court ruled that plaintiffs have standing to file the claim and that the claim meets the threshold admissibility requirements.

In December 2012, the court admitted our subsidiary and BAT's subsidiary as interested third parties.

In December 2012, the court admitted our subsidiary and a subsidiary of British American Tobacco plc as interested third parties.

In February 2013, our subsidiary answered the complaint.

Reduced-Risk Products

In Colombia, an individual filed a purported class action, Ana Ferrero Rebolledo v.

Philip Morris Colombia S.A., et al.

, in April 2019 against our subsidiaries with the Civil Court of Bogota related to the marketing of our Platform 1 product.

Plaintiff alleged that our subsidiaries advertise the product in contravention of law and in a manner that misleads consumers by portraying the product in a positive light, and further asserts that the Platform 1 vapor contains many toxic compounds, creates a high level of dependence, and has damaging second-hand effects.

Plaintiff sought injunctive relief and damages on her behalf and on behalf of two classes (class 1 - all Platform 1 consumers in Colombia who seek damages for the purchase price of the product and personal injuries related to the alleged addiction, and class 2 - all residents of the neighborhood where the advertising allegedly took place who seek damages for exposure to the alleged illegal advertising).

Our subsidiaries answered the complaint in January 2020, and in February 2020, plaintiff filed an amended complaint.

The amended complaint modifies the relief sought on behalf of the named plaintiff and on behalf of a single class (all consumers of Platform 1 products in Colombia who seek damages for the product purchase price and personal injuries related to the use of an allegedly harmful product).

In June 2021, our subsidiaries answered the amended complaint.

The court has scheduled evidentiary hearings to take place in February 2023.

Government Matter:

government has contacted Altria and PM USA in connection with an agreement between PMI and Altria to end their commercial relationship with respect to Platform 1 in the U.S.

as of April 30, 2024 (“Altria Agreement").

Altria and PM USA are parties to a 2006 order in the United States District Court for the District of Columbia holding that they violated the Racketeer Influenced and Corrupt Organizations Act (“2006 Order”).

PMI was not a defendant in that proceeding.

The 2006 Order imposed injunctive relief on defendants including, but not limited to, enjoining false, misleading, or deceptive statements concerning cigarettes;

prohibiting express or implied health statements for any cigarette brand;

and requiring defendants to make certain corrective statements at point-of sale and on websites.

The 2006 Order also imposed restrictions on defendants from selling or transferring their cigarette brands, brand names, cigarette product formulas or cigarette businesses without the transferee submitting to the jurisdiction of the court and subjecting itself to the 2006 Order as of the date of sale or transfer.

government has informed Altria that it believes the transaction contemplated by the Altria Agreement falls within the scope of this provision and that, before it can be effectuated, PMI must submit to the 2006 Order.

While we do not know the specific relief the U.S.

government may seek from the court, we believe that there are strong arguments as to why the provision cited by the U.S.

government is inapplicable to the Altria Agreement.

Other Litigation

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The new act, which took effect in November 2017, substantially limits the amount of fines that Thailand could seek in these proceedings.

PM Thailand believes that its declared import prices are in compliance with the Customs Valuation

Agreement of the World Trade Organization and Thai law and that the allegations of the Public Prosecutor are inconsistent with several decisions already taken by Thai Customs and other Thai governmental agencies.

PM Thailand believes that its declared import prices are in compliance with the Customs Valuation Agreement of the World Trade Organization and Thai law and that the allegations of the Public Prosecutor are inconsistent with several decisions already taken by Thai Customs and other Thai governmental agencies.

Trial in the case began in November 2017 and concluded in September 2019.

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The appellate court affirmed the findings of under-declaration of import prices of cigarettes but reduced the fine imposed by the trial court.

The appellate court directed the Public Prosecutor to coordinate with customs officials to calculate such reduced fine in accordance with the appellate court’s decision, which will occur at a later date.

The appellate court directed the Public Prosecutor to coordinate with customs officials to calculate such reduced fine in accordance with the appellate court’s decision.

The appellate court affirmed the acquittal of the individual defendant.

Both the Public Prosecutor and our subsidiary may appeal the decision to the Supreme Court of Thailand.

Our subsidiary has appealed the decision to the Supreme Court of Thailand.

The Public Prosecutor has filed an appeal to the Supreme Court of

Thailand challenging the dismissal of charges against the individual defendant and the amount of the fine.

Thailand is required to refund any payment made by our subsidiary in excess of any fine assessed by the courts.

The South Korean Board of Audit and Inspection (“BAI”) conducted an audit of certain Korean government agencies and the tobacco industry into whether inventory movements ahead of the January 1, 2015 increase of cigarette-related taxes by tobacco companies, including Philip Morris Korea Inc.

("PM Korea"), our South Korean subsidiary, were in compliance with South Korean tax laws.

The South Korean Board of Audit and Inspection (“BAI”) conducted an audit of certain Korean government agencies and the tobacco industry into whether inventory movements ahead of the January 1, 2015 increase of cigarette-related taxes and funds by tobacco companies, including Philip Morris Korea Inc.

("PM Korea"), our South Korean subsidiary, were in compliance with South Korean laws.

In November 2016, the tax authorities completed their audit and assessed allegedly underpaid taxes and penalties.

In order to avoid nonpayment financial costs, PM Korea paid approximately KRW 272 billion (approximately $ 204 million), of which KRW 100 billion (approximately $ 75 million) was paid in 2016 and KRW 172 billion (approximately $ 129 million) was paid in the first quarter of 2017.

These paid amounts are included in other assets in the consolidated balance sheets and negatively impacted net cash provided by operating activities in the consolidated statements of cash flows in the period of payment.

These paid amounts negatively impacted net cash provided by operating activities in the consolidated statements of cash flows in the period of payment.

PM Korea appealed the assessments.

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In September 2020, the appellate court upheld the trial court's decision.

The tax authorities have appealed to the Supreme Court of South Korea.

In June 2020, another trial court ruled that PM Korea did not underpay approximately KRW 54 billion (approximately $ 43 million) of alleged underpayments.

The tax authorities appealed to the Supreme Court of South Korea.

On July 13, 2023, the Supreme Court reversed the appellate court's decision and remanded the tax cases to the appellate court.

Two separate panels at the appellate court were assigned to implement the Supreme Court decision, one related to the local level tobacco consumption tax (“TCT”) and the other related to the national level individual consumption tax (“ICT”).

The first two hearings for the TCT case took place on October 18, 2023, and December 6, 2023, and the next hearing is scheduled on March 20, 2024.

The first hearing for the ICT case took place on November 17, 2023, and the next hearing is put on hold until all issues are cleared in the TCT case hearings.

PM Korea made factual and legal arguments which were not previously reviewed and factored in the Supreme Court decision.

Based on the decision issued by the Supreme Court of South Korea on July 13, 2023, management has concluded that an adverse outcome is probable.

In June 2020, another trial court ruled that PM Korea did not underpay approximately KRW 54 billion (approximately $ 40 million) of alleged funds underpayments.

The government agencies appealed this decision.

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The government agencies appealed to the Supreme Court of South Korea.

If the tax authorities and government agencies ultimately lose, then they would be required to return the paid amounts to PM Korea.

The Saudi Arabia Customs General Authority issued its assessments requiring our distributors to pay additional customs duties in the amount of approximately 1.5 billion Saudi Riyal, or approximately $ 396 million, in relation to the fees paid by these distributors under their agreements with our subsidiary for exclusive rights to distribute our products in Saudi Arabia.

In order to challenge these assessments, the distributors posted bank guarantees.

To enable the distributors' challenge, our subsidiary agreed with the banks to bear a portion of the amount the authority may draw on the bank guarantees.

In September and October 2020, respectively, the distributors lost their challenges of the assessments.

Both distributors appealed, and in June 2021, the Customs Appeal Committee in Riyadh notified the distributors of its decisions to largely reject their appeals.

On the basis of the above-mentioned decisions, in June 2021, PMI recorded a pre-tax charge of $ 246 million in relation to the period of 2014 through 2020 in line with existing and

contemplated arrangements with the distributors.

The estimated amounts for 2021 and 2022 are immaterial.

In accordance with U.S.

GAAP, the charge was recorded as a reduction in net revenues on the consolidated statements of earnings for the three months and six months ended June 30, 2021.

Despite the unfavorable decisions, our subsidiary believes that customs duties paid in Saudi Arabia were in compliance with the applicable law and the WTO Customs Valuation Agreement.

This funds case is still pending review at the Supreme Court without a specific decision date.

Based on the decision issued by the Supreme Court of South Korea on July 13, 2023, management has concluded that an adverse outcome is probable.

Consequently, in the second quarter of 2023, PMI recorded a non-cash pre-tax charge of $ 204 million in marketing, administration and research costs, reflecting the full amount previously paid by PM Korea.

A putative shareholder class action lawsuit, In re Philip Morris International Inc.

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On September 10, 2021, the court granted defendant's motion to dismiss plaintiffs' amended complaint in its entirety.

Plaintiffs have filed an appeal with the U.S.

Court of Appeal for the Second Circuit.

We believe that this lawsuit is without merit and will continue to defend it vigorously.

In April 2020, affiliates of British American Tobacco plc (“BAT”) commenced patent infringement proceedings, RAI Strategic Holdings, Inc., et al.

On December 26, 2023, the U.S.

Court of Appeals for the Second Circuit upheld the dismissal of plaintiffs' claims.

On February 1, 2024, Philip Morris Products S.A.

("PMPSA") entered into a settlement agreement (the “Settlement Agreement”) with Nicoventures Trading Limited (“NTV”), an affiliate of British American Tobacco p.l.c.

Under the Settlement Agreement, PMPSA, NTV and their respective affiliates (the “Parties”) have agreed, among other things, to:

(i) dismiss with prejudice, subject to certain limited exceptions, and without admission of liability certain pending legal proceedings (the “Proceedings”) between them and concerning certain of their respective products;

(ii) request rescission of the limited exclusion order and the cease-and-desist order issued by the International Trade Commission (“ITC”) on September 29, 2021, and (iii) fully and finally discharge without admission of liability any injunctions granted to the Parties in the Proceedings.

In April 2020, affiliates of BAT commenced patent infringement proceedings, RAI Strategic Holdings, Inc., et al.

Altria Client Services LLC, et al.

, in the federal court in the Eastern District of Virginia, where PMI's subsidiary, Philip Morris Products S.A., as well as Altria Group, Inc.'s subsidiaries, are defendants.

, in the federal court in the Eastern District of Virginia, where PMI's subsidiary, PMPSA, as well as Altria Group, Inc.'s subsidiaries, are defendants.

Plaintiffs seek damages and injunctive relief against the commercialization of the Platform 1 blade products in the United States.

In April 2020, BAT affiliates filed a complaint against PMI, Philip Morris Products S.A., Altria Group, Inc., and its subsidiaries before the International Trade Commission ("ITC").

Plaintiffs seek an order to prevent the importation of Platform 1 products into the United States.

In April 2020, BAT affiliates filed a complaint against PMI, PMPSA, Altria Group, Inc., and its

subsidiaries before the ITC.

Plaintiffs sought an order to prevent the importation of Platform 1 products into the United States.

The ITC evidentiary hearing closed on February 1, 2021.

On May 14, 2021, the administrative law judge issued an Initial and Recommended Determination ("ID/RD") finding that the Platform 1 blade products infringe two of the three patents asserted by Plaintiffs, recommending that the ITC issue a Limited Exclusion order against infringing products, and recommending against a cease-and-desist, as well as recommending against a bond pending Presidential review of the ITC's Final Determination ("FD").

Defendants and Plaintiffs filed separate Petitions for Review with the ITC of the ID on May 28, 2021;

on July 27, 2021, the ITC granted each of the petitions in part, deciding to review certain issues in the ID.

Defendants and Plaintiffs filed separate Petitions for Review with the ITC of the ID/RD on May 28, 2021;

on July 27, 2021, the ITC granted each of the petitions in part, deciding to review certain issues in the ID/RD.

Plaintiffs and Defendants also submitted brief statements of the public interest factors in issue to the ITC on June 15, 2021.

On September 29, 2021, the ITC issued its FD finding a violation of section 337 of the U.S.

Tariff Act and issued (a) a limited exclusion order against Philip Morris Products S.A., prohibiting, inter alia, the importation of Platform 1 product and infringing components;

Tariff Act and issued (a) a limited exclusion order against PMPSA, prohibiting, inter alia, the importation of Platform 1 product and infringing components;

and (b) a cease-and-desist order against Altria Client Services, LLC and its affiliate prohibiting, inter alia, sales of imported Platform 1 products.

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the ITC denied the motion on January 20, 2022 and the Federal Circuit denied the motion on January 25, 2022.

The Federal Circuit heard oral argument on defendants' appeal of the FD on October 3, 2022 and a decision is awaited.

We estimate that an adverse ruling is probable due to our inability to import the products and components impacted by the ITC's FD with immaterial financial impact.

The Federal Circuit heard oral argument on defendants' appeal of the FD on October 3, 2022 and, on March 31, 2023, the Federal Circuit affirmed the FD.

The Eastern District of Virginia and ITC cases filed by BAT are among the Proceedings to be dismissed pursuant to the Settlement Agreement including through the Parties’ request for rescission of the limited exclusion order and the cease-and-desist order issued by the ITC on September 29, 2021.

In the Eastern District of Virginia case, the defendants also counterclaimed that BAT infringed their patents relating to certain e-vapor products, seeking damages for, and injunctive relief against, the commercialization of these products by BAT.

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the jury also found BAT’s affiliate did not infringe one of the two PMPSA patents and that the BAT affiliates had failed to prove one of the two PMPSA patents was invalid.

PMPSA filed a motion for an injunction or, in the alternative, an ongoing royalty on August 12, 2022 which remains pending.

Upon petition of Philip Morris Products S.A., the Patent Trial and Appeal Board ("PTAB") of the United States Patent and Trademark Office has instituted review of certain claims pertaining to four of the six patents asserted by BAT affiliates in both proceedings.

PMPSA filed a motion for an injunction or, in the alternative, an ongoing royalty on August 12, 2022.

On March 30, 2023, the court denied PMPSA's motion for an injunction and granted PMPSA an ongoing royalty against two of BAT's U.S.

e-vapor products.

On May 1, 2023, the court entered partial final judgment under Rule 54(b) on PMPSA's claim against BAT's affiliate.

That same day, BAT's affiliate filed a notice of appeal to the U.S.

Court of Appeals for the Federal Circuit.

On May 10, 2023, PMPSA filed a notice of cross-appeal.

This case is among the Proceedings to be dismissed pursuant to the Settlement Agreement.

Upon petition of PMPSA, the Patent Trial and Appeal Board ("PTAB") of the United States Patent and Trademark Office has instituted review of certain claims pertaining to four of the six patents asserted by BAT affiliates in both proceedings.

On January 11, 2022, PTAB issued its final decision on one of the two patents underlying the ITC's FD, invalidating all challenged claims of BAT's patent.

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Court of Appeals for the Federal Circuit.

On July 21, 2022, PMPSA filed a Request for Rehearing of PTAB's November 2020

decision not to institute review of certain claims in the second of the two patents underlying the ITC's FD;

Oral argument was held on July 13, 2023.

On July 17, 2023, the Federal Circuit issued a decision summarily affirming PTAB’s decision to invalidate all challenged claims in one of the two patents underlying the ITC’s FD.

The Federal Circuit issued the mandate notifying the USPTO to record the invalidity of the challenged claims on August 23, 2023.

On September 14, 2023, the Federal Circuit issued a decision affirming the PTAB's decision finding certain claims in the second of the two patents underlying the ITC’s FD patentable.

PMPSA’s counterclaim in the Eastern District of Virginia challenging the validity of the remaining claims in the second of the two patents underlying the ITC’s FD is currently stayed.

On July 21, 2022, PMPSA filed a Request for Rehearing of PTAB's November 2020 decision not to institute review of certain claims in the second of the two patents underlying the ITC's FD;

PTAB denied the Request on October 13, 2022.

In April 2020, BAT’s affiliate commenced patent infringement proceedings, Nicoventures Trading Limited v.

PM GmbH, et al., against PMI’s German subsidiary, Philip Morris GmbH, and Philip Morris Products S.A., in the Regional Court in Munich, Germany.

PM GmbH, et al., against PMI’s German subsidiary, Philip Morris GmbH, and PMPSA, in the Regional Court in Munich, Germany.

Plaintiffs seek damages and injunctive relief against the commercialization of the Platform 1 blade products in Germany.

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Following the December 2022 confirmation of the revocation of the other BAT patent by the European Patent Office Board of Appeal, BAT withdrew its initial claim based on that patent;

the stayed action based on the second patent remains pending.

the stayed action based on the second patent remains pending and is stayed pending final resolution of the revocation action.

This case is among the Proceedings to be dismissed pursuant to the Settlement Agreement.

In September 2020, BAT’s affiliates commenced patent infringement and unfair competition proceedings, RAI Strategic Holdings, Inc., et al.

Philip Morris Products S.A., et al.

, against Philip Morris Products S.A.

and PMI’s Italian subsidiaries, Philip Morris Manufacturing & Technology Bologna S.p.A.

, against PMPSA and PMI’s Italian subsidiaries, Philip Morris Manufacturing & Technology Bologna S.p.A.

and Philip Morris Italia S.r.l., in the Court of Milan, Italy.

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As part of this proceeding, in October 2020, BAT’s affiliates filed a request based on one of the two asserted patents seeking preliminary injunctive relief against the manufacture and commercialization of the Platform 1 blade products in Italy.

In July 2022, the court dismissed plaintiffs’ request for preliminary injunction in its entirety and plaintiffs did not appeal this ruling.

In July 2022, the court dismissed plaintiffs’ request for preliminary injunction in its entirety

and plaintiffs did not appeal this ruling.

The merits proceeding remains pending;

the next hearing is currently scheduled to occur in the first quarter of 2024.

This case is among the Proceedings to be dismissed pursuant to the Settlement Agreement.

In October 2020, BAT’s affiliates commenced patent infringement proceedings, RAI Strategic Holdings, Inc., et al.

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BAT filed an appeal of this dismissal.

On September 21, 2023, the IP High Court issued its judgment dismissing BAT's appeal regarding the first patent.

BAT appealed this decision to the Supreme Court on November 2, 2023.

On November 29, 2023, the Tokyo District Court issued a first instance decision favorable to PMI, finding no infringement of the second patent BAT asserted and dismissing BAT's claim.

BAT appealed this decision to the IP High Court on January 12, 2024.

These cases are among the Proceedings to be dismissed pursuant to the Settlement Agreement.

In November 2020, BAT’s affiliates commenced patent infringement proceedings, RAI Strategic Holdings, Inc., et al.

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In an October 14, 2021 hearing, the court stayed the proceeding.

This case is among the Proceedings to be dismissed pursuant to the Settlement Agreement.

In March 2021, BAT’s affiliates commenced patent infringement proceedings, RAI Strategic Holdings, Inc., et al.

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Plaintiffs seek damages and injunctive relief against the commercialization of the Platform 1 blade heated tobacco units in South Korea.

This case is among the Proceedings to be dismissed pursuant to the Settlement Agreement.

On May 30, 2022, the Korean Patent Office issued a decision that all of the challenged claims in the patent asserted by Plaintiffs are invalid;

Plaintiffs filed an appeal of this decision.

In July, 2021, Philip Morris Products, S.A.

filed a claim at the High Court of Justice of England and Wales against BAT affiliates Nicoventures Trading Limited and British American Tobacco (Investments) Limited seeking revocation of the UK parts of two BAT European patents.

In March, the BAT affiliates stated that they would consent to revocation of one of the patents and filed a counterclaim against Philip Morris Products S.A.

and Philip Morris Limited seeking from the court a declaration that the remaining BAT affiliate patent is infringed by Platform 1 induction products, as well as damages and injunctive relief against the commercialization of the Platform 1 induction products in the U.K.

The trial took place from September 21-28, 2022, and a decision is awaited.

Following BAT’s unsuccessful correction action at the Korean Patent Office, the court held the first hearing in the appeal of the infringement proceeding on September 12, 2023.

An additional hearing in the appeal is currently scheduled to occur in the fourth quarter of 2024.

In July, 2021, PMPSA filed a claim at the High Court of Justice of England and Wales against BAT affiliates Nicoventures Trading Limited and British American Tobacco (Investments) Limited seeking revocation of the UK parts of two BAT European patents.

In March, the BAT affiliates stated that they would consent to revocation of one of the patents and filed a counterclaim against PMPSA and Philip Morris Limited seeking from the court a declaration that the remaining BAT affiliate patent is infringed by Platform 1 induction products, as well as damages and injunctive relief against the commercialization of the Platform 1 induction products in the U.K.

The trial took place from September 21-28, 2022.

On October 25, 2023, the Court issued its decision finding that the remaining BAT patent was invalid and not infringed.

BAT has elected not to appeal this decision.

Other patent challenges by both parties are pending in various jurisdictions.

We believe that the foregoing proceedings by the affiliates of BAT are without merit and will defend them vigorously.

On December 21, 2023, we were informed that Future Technology K.K.

(“FTKK”) filed an application with Tokyo Customs against Sojitz Corporation (“Sojitz”), Philip Morris Japan Limited’s (“PMJL”) importer and distributor, due to alleged infringement of JP7299432.

FTKK is seeking an order stopping the importation of TEREA consumables.

At this time, FTKK is not seeking any monetary damages or costs.

PMJL has entered an appearance in the proceeding as an interested party and filed its response to FTKK's application on January 31, 2024.

We believe that this lawsuit is without merit and will defend it vigorously.

On January 26, 2024, PMJL filed a declaratory judgment action in Tokyo District Court seeking a declaration that JP7299432 is invalid and/or infringed.

We are also involved in additional litigation arising in the ordinary course of our business.

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On October 17, 2020, Medicago had entered into a contribution agreement with the Canadian government (the “Contribution Agreement”) whereby the Canadian government agreed to contribute up to CAD 173 million (approximately $ 131 million on the date of signing) to Medicago, to support its on-going COVID-19 vaccine development and clinical trials ("First Stage"), and for the construction of its Quebec City manufacturing facility ("Second Stage", and together with the First Stage, the “Project”).

On March 31, 2022, the Contribution Agreement was amended (the “Contribution Agreement Amendment”) to reflect an additional contribution from the Canadian government up to CAD 27 million (approximately $ 22 million on the date of signing) to Medicago for the Second Stage.

On March 31, 2022, the Contribution Agreement was amended (the “Contribution Agreement Amendment”) to reflect an additional

contribution from the Canadian government up to CAD 27 million (approximately $ 22 million on the date of signing) to Medicago for the Second Stage.

In August 2022, Medicago received the final tranche of the contribution from the Canadian government in relation to the First Stage, confirming thereby the completion of such first stage and consequently reducing by approximately CAD 123 million (approximately $ 93 million on the date of signing) the Repayment Obligations (as defined below).

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The guarantees are in effect through March 31, 2026.

It is reasonably possible that PMI will be responsible for a portion of these costs and obligations.

The maximum amount of these obligations is currently non-estimable.

Prior to the release of PMIBV from its obligations as guarantor described below, it was reasonably possible that PMI could have been responsible for a portion of those costs and obligations.

On November 1, 2022, PMIBV transferred all of the shares it owned in Medicago to MTPC Holdings Canada Inc., the majority shareholder of Medicago.

MTPC assumed and agreed to perform all of PMIBV's obligations under the guarantees and to indemnify and save PMIBV harmless in respect of any and all claims related to the guaranteed obligations.

On February 3, 2023, PMI learned through a public announcement that a decision has been taken to cease all operations at Medicago and to proceed with an orderly wind up of Medicago’s business and operations.

PMI has determined that these guarantees did not have a material impact on its consolidated financial statements for the year ended December 31, 2022.

On February 3, 2023, PMI learned through a public announcement that a decision had been taken to cease all operations at Medicago and to proceed with an orderly wind up of Medicago’s business and operations.

On September 27, 2023, the Canadian government released PMIBV from all its obligations as guarantor under the Contribution Agreement and the Contribution Agreement Amendment.

Sale of Accounts Receivable:

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Asset Impairment and Exit Costs:

For the year ended December 31, 2022, PMI did not record any charges for asset impairment and exit costs related to restructuring activities.

As previously discussed, PMI recorded a pre-tax impairment charge on intangibles of $ 112 million for the year ended December 31, 2022 within the Wellness and Healthcare segment.

For the years ended December 31, 2023 and 2021, PMI recorded total pre-tax asset impairment and exit costs of $ 109 million and $ 216 million, respectively, related to restructuring activities.

These pre-tax asset impairment and exit costs were included in marketing, administration and research costs on the consolidated statements of earnings.

For the year ended December 31, 2022, PMI did no t record any charges for asset impairment and exit costs related to restructuring activities.

For the year ended December 31, 2023, PMI recorded a pre-tax impairment charge on goodwill and other intangibles of $ 680 million within the Wellness and Healthcare segment.

For the year ended December 31, 2022, PMI recorded a pre-tax impairment charge on

other intangibles of $ 112 million within the Wellness and Healthcare segment.

For further details, see Note 5.

Goodwill and Other Intangible Assets, net .

For the years ended December 31, 2021 and 2020, PMI recorded total pre-tax asset impairment and exit costs related to

restructuring activities of $ 216 million and $ 149 million, respectively.

These pre-tax asset impairment and exit costs were included in marketing, administration and research costs on the consolidated statements of earnings.

For the year ended December 31, 2023, PMI recorded an impairment of certain long-lived assets in Ukraine.

War in Ukraine for the impact of the war on PMI.

e-Vapor Products Manufacturing Optimization

In the first quarter of 2023, PMI initiated a project to fully outsource and restructure the manufacturing of e-vapor devices and consumables.

As a result, PMI recorded pre-tax asset impairment and exit costs of $ 109 million.

This amount included contract termination costs for suppliers of $ 78 million, including $ 21 million of embedded finance lease terminations, payable in cash.

This amount also included asset impairment costs of $ 31 million, primarily related to machinery and equipment, which were non-cash charges.

In 2021, PM Korea implemented a new business operating model, which required the restructuring of its current distribution agreements.

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This multi-phase restructuring project was completed in the fourth quarter of 2021.

For the years ended December 31, 2021 and 2020, PMI recorded pre-tax charges of $ 159 million and $ 149 million, respectively, related to the organizational design optimization.

For the year ended December 31, 2021, PMI recorded pre-tax charges of $ 159 million related to the organizational design optimization.

Since inception of this multi-phase restructuring project in January 2020 through December 31, 2021, approximately 1,020 positions in total were impacted, resulting in cumulative pre-tax charges of $ 308 million related to the organizational design optimization program.

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Separation programs:

European Union $ 68 $ 53

Eastern Europe 14 14

Middle East & Africa 17 18

South & Southeast Asia 21 22

East Asia & Australia 31 25

Europe $ — $ 72

SSEA, CIS & MEA — 45

EA, AU & PMI DF — 34

Swedish Match — —

Wellness and Healthcare — —

Total separation programs — 159

Contract termination charges:

East Asia & Australia 57 —

SSEA, CIS & MEA 25 —

EA, AU & PMI DF 15 57

Swedish Match — —

Wellness and Healthcare — —

Total contract termination charges 78 57

Asset impairment charges (1)

European Union — 4

Eastern Europe — 1

Middle East & Africa — 1

South & Southeast Asia — 1

East Asia & Australia — 1

SSEA, CIS & MEA 9 —

EA, AU & PMI DF 6 —

Swedish Match — —

Wellness and Healthcare — —

Total asset impairment charges 31 —

Asset impairment and exit costs $ 109 216

(1) Organizational design optimization pre-tax charges in 2021 and 2020 were allocated across all geographical segments.

(1) Organizational design optimization pre-tax charges in 2021 and e-vapor products manufacturing optimization charges in 2023 were allocated across all geographical segments.

Movement in Exit Cost Liabilities

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Present value of lease liabilities $ 653 $ 53

Other information related to PMI’s leases was as follows for the year ended December 31, 2022, 2021 and 2020:

Other information related to PMI’s leases was as follows for the years ended December 31, 2023, 2022 and 2021:

(in millions) 2023 2022 2021

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5.1 % 4.9 % 3.4 % 4.4 % 3.6 % 5.3 %

(1) Cash paid included in the operating cash flows of finance leases is not material.

(1) Cash paid included in the operating cash flows for finance leases is not material.

(2) PMI’s weighted-average discount rate for operating leases is based on its estimated pre-tax cost of debt adjusted for country-specific risk.

(3) PMI’s weighted-average discount rate for finance leases, excluding embedded leases, is based on its estimated pre-tax cost of debt adjusted for country-specific risk and where applicable the interest rate explicit to lease contracts.

Supply Chain Financing:

PMI has engaged with unaffiliated global financial institutions that offer a voluntary supply chain financing ("SCF") program to some of our suppliers.

Under the SCF program, the suppliers may elect, at their sole discretion, to sell PMI's payment obligations to these financial institutions.

The suppliers independently negotiate the sale arrangements directly with these financial institutions.

PMI does not participate in these negotiations, nor does it have any economic interest in these agreements, or in the designated suppliers’ voluntary decision to sell PMI's payment obligations to these financial institutions.

No guarantees or securities are provided by PMI or any of its subsidiaries under the SCF programs.

PMI's obligations to its suppliers, including amounts due and scheduled payment terms are not impacted by the suppliers’ decision to sell amounts under the SCF program.

The payment terms of PMI’s suppliers generally do not exceed 120 days.

All outstanding payable amounts related to suppliers that are participating in the SCF program are recorded in accounts payable in PMI's consolidated balance sheets.

The associated payments are included in cash flows from operating activities within PMI's consolidated statement of cash flows.

As of December 31, 2023 and 2022, the total amount due to suppliers participating in the SCF program was approximately $ 0.9 billion and $ 1.1 billion, respectively.

New Accounting Standards:

Improvements to Reportable Segment Disclosures

On November 27, 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ASU 2023-07, “Improvements to Reportable Segment Disclosures” (“ASU 2023-07”).

ASU 2023-07 improves reportable segment disclosures, primarily through enhanced disclosures about significant segment expenses regularly provided to the chief operating decision maker that impact segment profit or loss.

The amendments are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, on a retrospective basis, with early adoption permitted.

PMI is currently evaluating the impact of ASU 2023-07 on its disclosures.

Improvements to Income Tax Disclosures

On December 14, 2023, the FASB issued Accounting Standards Update ASU 2023-09, “Improvements to Income Tax Disclosures” (“ASU 2023-09”).

ASU 2023-09 enhances the transparency of income tax disclosures, primarily by requiring public business entities to disclose specific categories in the rate reconciliation tabular presentation, as well as by providing additional information for reconciling items that meet a quantitative threshold.

The ASU also requires disaggregated disclosures of federal, state and foreign income tax taxes paid.

ASU 2023-09 is effective for annual periods beginning after December 15, 2024, and early adoption is permitted.

The amendments are applicable on a prospective basis, although retrospective basis is also permitted.

PMI is currently evaluating the impact of ASU 2023-09 on its disclosures.

Report of Independent Registered Public Accounting Firm

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We believe that our audits provide a reasonable basis for our opinions.

As described in the Report of Management on Internal Control Over Financial Reporting, management has excluded Swedish Match AB from its assessment of internal control over financial reporting as of December 31, 2022 because it was acquired by the Company in a purchase business combination during 2022.

We have also excluded Swedish Match AB from our audit of internal control over financial reporting.

Swedish Match AB is a majority-owned subsidiary whose total assets and total third-party net revenues excluded from management’s assessment and our audit of internal control over financial reporting represent 4% and 1%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2022.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the

maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

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These procedures also included, among others, obtaining and evaluating the letters of audit inquiry with external and internal legal counsel, evaluating the reasonableness of management’s assessment regarding whether an unfavorable outcome is reasonably possible or probable and reasonably estimable, and evaluating the sufficiency of the Company’s smoking and health class actions and health care cost recovery actions contingencies disclosures.

Preliminary Valuation of Trademarks and Customer Relationships - Acquisition of Swedish Match AB

As described in Note 3 to the consolidated financial statements, the Company acquired a controlling interest in Swedish Match AB for consideration of $14.5 billion in 2022, which resulted in $4.5 billion of intangible assets preliminarily being recorded, of which $4.1 billion relate to trademarks and customer relationships.

Management applied significant judgment in estimating the preliminary fair value of intangible assets acquired, which involved the use of significant estimates and assumptions with respect to the timing and amounts of revenue growth rates, royalty rates, and discount rates for trademarks, and profit margins, customer attrition rates, and discount rates for customer relationships.

The principal considerations for our determination that performing procedures relating to the preliminary valuation of trademarks and customer relationships acquired in the acquisition of Swedish Match AB is a critical audit matter are the significant judgment by management when developing the preliminary fair value estimate of the trademarks and customer relationships acquired, which in turn led to a high degree of auditor judgment, and subjectivity in performing procedures and evaluating management’s significant assumptions of revenue growth rates, royalty rates, and discount rates for trademarks, and profit margins, customer attrition rates, and

discount rates for customer relationships.

Acquisition of Swedish Match AB - Valuation of Trademarks and Customer Relationships

As described in Note 3 to the consolidated financial statements, the Company acquired a controlling interest in Swedish Match AB for consideration of $14.5 billion in 2022, which resulted in $7.9 billion of intangible assets being recorded, of which $7.8 billion relate to trademarks and customer relationships.

Management applied significant judgment in estimating the fair value of intangible assets acquired, which involved the use of significant estimates and assumptions with respect to the revenue growth rates, royalty rates, and discount rates for trademarks, and revenue growth rates, profit margins, customer attrition rates, and discount rates for customer relationships.

The principal considerations for our determination that performing procedures relating to the valuation of trademarks and customer relationships acquired in the acquisition of Swedish Match AB is a critical audit matter are the significant judgment by management when developing the fair value estimate of the trademarks and customer relationships acquired, which in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions of revenue growth rates, royalty rates, and discount rates for trademarks, and revenue growth rates, profit margins, customer attrition rates, and discount rates for customer relationships.

In addition, the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s preliminary valuation of the trademarks and customer relationships acquired and controls over the development of significant assumptions related to revenue growth rates, profit margins, customer attrition rates, royalty rates, and discount rates.

These procedures also included, among others, testing management’s process for estimating the preliminary fair value of trademarks and customer relationships.

These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s valuation of the trademarks and customer relationships acquired and controls over

the development of significant assumptions related to revenue growth rates, profit margins, customer attrition rates, royalty rates, and discount rates.

These procedures also included, among others, testing management’s process for estimating the fair value of trademarks and customer relationships.

Testing management’s process included evaluating the appropriateness of the valuation methods, testing the completeness and accuracy of data provided by management, and evaluating the reasonableness of significant assumptions related to revenue growth rates, profit margins, customer attrition rates, royalty rates, and discount rates.

Evaluating the reasonableness of the revenue growth rates and profit margins involved considering the past performance of the acquired business, as well as economic and industry forecasts.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s valuation methods, the appropriateness of the discounted cash flow model, and the reasonableness of the customer attrition rate, royalty rate, and discount rate assumptions.

Professionals with specialized skill and knowledge were used to assist in the evaluation of management’s valuation methods, and the reasonableness of the customer attrition rate, royalty rate, and discount rate assumptions.

/S/ PRICEWATERHOUSECOOPERS SA

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In November 2022 we acquired Swedish Match.

We have excluded the Swedish Match acquisition from our assessment of the effectiveness of internal control over financial reporting.

Total assets excluding goodwill and intangible assets (which are included in our assessment) represent 4% of consolidated assets as of December 31, 2022.

Total third-party net revenues represent 1% of consolidated net revenues for the year ended December 31, 2022.

Management assessed the effectiveness of PMI’s internal control over financial reporting as of December 31, 2023.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data