What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-10-24 compared with 2024-07-25 · 342 added, 282 removed, 1272 unchanged (33% of the section changed)

4 unchanged sentences

(in millions of dollars, except per share data)

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Net revenues 1 & 2 (Notes 7 & 12)

16 unchanged sentences

Diluted earnings per share $ 4.89 $ 3.61

(1) Includes net revenues from related parties of $ 1,821 million and $ 1,774 million for the six months ended June 30, 2024 and 2023, respectively.

(2) Net of excise tax on products of $ 24,762 million and $ 24,048 million for the six months ended June 30, 2024 and 2023, respectively.

(3) Includes the South Korea indirect tax charge of $ 204 million for the six months ended June 30, 2023.

For further details, see Note 7.

Segment Reporting.

(1) Includes net revenues from related parties of $ 2,866 million and $ 2,631 million for the nine months ended September 30, 2024 and 2023, respectively.

(2) Net revenues are shown net of excise tax on products.

For the nine months ended September 30, 2024 and 2023, excise tax on products was $ 38,535 million and $ 37,140 million, respectively.

See notes to condensed consolidated financial statements.

3 unchanged sentences

(in millions of dollars, except per share data)

For the Three Months Ended June 30,

For the Three Months Ended September 30,

Net revenues 1 & 2 (Note 12)

3 unchanged sentences

Marketing, administration and research costs (Notes 7 & 18)

Impairment of goodwill (Note 4) — 665

Operating income 3,654 3,370

10 unchanged sentences

Diluted earnings per share $ 1.97 $ 1.32

(1) Includes net revenues from related parties of $ 961 million and $ 901 million for the three months ended June 30, 2024 and 2023, respectively.

(2) Net of excise taxes of $ 12,923 million and $ 12,749 million for the three months ended June 30, 2024 and 2023, respectively.

(3) Includes the South Korea indirect tax charge of $ 204 million for the three months ended June 30, 2023.

For further details, see Note 7.

Segment Reporting.

(1) Includes net revenues from related parties of $ 1,045 million and $ 857 million for the three months ended September 30, 2024 and 2023, respectively.

(2) Net revenues are shown net of excise tax on products.

For the three months ended September 30, 2024 and 2023, excise tax on products was $ 13,773 million and $ 13,092 million, respectively.

See notes to condensed consolidated financial statements.

3 unchanged sentences

(in millions of dollars)

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Net earnings $ 7,989 $ 5,955

2 unchanged sentences

Unrealized gains (losses), net of income taxes of $ 14 in 2024 and $( 12 ) in 2023

( 365 ) ( 669 )

(Gains)/losses transferred to earnings, net of income taxes of $ 0 in 2024 and 2023 (Notes 11, 15 & 18)

Change in net loss and prior service cost:

Net gains (losses) and prior service costs, net of income taxes of $ 0 in 2024 and $ 0 in 2023

Amortization of net losses, prior service costs and net transition costs, net of income taxes of $( 26 ) in 2024 and $( 20 ) in 2023

13 unchanged sentences

(in millions of dollars)

For the Three Months Ended June 30,

For the Three Months Ended September 30,

Net earnings $ 3,215 $ 2,171

2 unchanged sentences

Unrealized gains (losses), net of income taxes of $ 144 in 2024 and $( 95 ) in 2023

( 123 ) ( 572 )

(Gains)/losses transferred to earnings, net of income taxes of $ 0 in 2024 and 2023 (Note 18)

(Gains)/losses transferred to earnings, net of income taxes of $ 0 in 2024 and 2023

Change in net loss and prior service cost:

Net gains (losses) and prior service costs, net of income taxes of $ 0 in 2024 and $ 1 in 2023

Amortization of net losses, prior service costs and net transition costs, net of income taxes of $( 8 ) in 2024 and $( 6 ) in 2023

13 unchanged sentences

(in millions of dollars)

September 30,

2024 December 31,

15 unchanged sentences

TOTAL ASSETS $ 66,892 $ 65,304

(1) Includes trade receivables from related parties of $ 834 million and $ 710 million as of June 30, 2024, and December 31, 2023, respectively.

(1) Includes trade receivables from related parties of $ 768 million and $ 710 million as of September 30, 2024, and December 31, 2023, respectively.

For further details, see Note 12.

5 unchanged sentences

(in millions of dollars, except share data)

September 30,

2024 December 31,

35 unchanged sentences

(in millions of dollars)

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

3 unchanged sentences

Impairment of goodwill and other intangibles (Note 4) 27 680

Impairment related to Vectura Group's expected sale (Note 18)

Deferred income tax (benefit) provision 20 34

13 unchanged sentences

Acquisitions, net of acquired cash (Note 18) 44 —

Altria Group, Inc.

agreement (Note 18) — ( 1,775 )

Equity investments ( 124 ) ( 111 )

2 unchanged sentences

Net cash provided by (used in) investing activities ( 1,533 ) ( 3,030 )

(1) Includes amounts from related parties of $( 142 ) million and $( 134 ) million for June 30, 2024 and 2023, respectively

(1) Includes amounts from related parties of $( 111 ) million and $( 130 ) million for September 30, 2024 and 2023, respectively

See notes to condensed consolidated financial statements.

3 unchanged sentences

(in millions of dollars)

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

17 unchanged sentences

Balance at end of period $ 4,301 $ 3,034

(1) The amounts for cash, cash equivalents and restricted cash shown above include restricted cash of $ 69 million and $ 20 million as of June 30, 2024 and 2023, respectively, and $ 86 million and $ 10 million as of December 31, 2023 and 2022, respectively, which were included in other current assets in the condensed consolidated balance sheets.

(1) The amounts for cash, cash equivalents and restricted cash shown above include restricted cash of $ 43 million and $ 17 million as of September 30, 2024 and 2023, respectively, and $ 86 million and $ 10 million as of December 31, 2023 and 2022, respectively, which were included in other current assets in the condensed consolidated balance sheets.

See notes to condensed consolidated financial statements.

2 unchanged sentences

Condensed Consolidated Statements of Stockholders’ (Deficit) Equity

For the Six Months Ended June 30, 2024 and 2023

For the Nine Months Ended September 30, 2024 and 2023

(in millions of dollars, except per share amounts)

15 unchanged sentences

Sale (purchase) of subsidiary shares to/(from) noncontrolling interests (Note 18) ( 6 ) 180 ( 831 ) ( 657 )

Balances, June 30, 2023 $ — $ 2,240 $ 33,893 $ ( 10,045 ) $ ( 35,791 ) $ 1,743 $ ( 7,960 )

Balances, September 30, 2023 $ — $ 2,253 $ 33,919 $ ( 9,817 ) $ ( 35,788 ) $ 1,727 $ ( 7,706 )

Balances, January 1, 2024 $ — $ 2,285 $ 34,090 $ ( 11,815 ) $ ( 35,785 ) $ 1,779 $ ( 9,446 )

7 unchanged sentences

Sale (purchase) of subsidiary shares to/(from) noncontrolling interests 91 91

Balances, June 30, 2024 $ — $ 2,249 $ 34,582 $ ( 10,930 ) $ ( 35,645 ) $ 1,802 $ ( 7,942 )

Balances, September 30, 2024 $ — $ 2,283 $ 35,556 $ ( 11,892 ) $ ( 35,641 ) $ 1,981 $ ( 7,713 )

See notes to condensed consolidated financial statements.

2 unchanged sentences

Condensed Consolidated Statements of Stockholders’ (Deficit) Equity

For the Three Months Ended June 30, 2024 and 2023

For the Three Months Ended September 30, 2024 and 2023

(in millions of dollars, except per share amounts)

7 unchanged sentences

Interests Total

Balances, April 1, 2023 $ — $ 2,188 $ 34,303 $ ( 9,614 ) $ ( 35,801 ) $ 1,871 $ ( 7,053 )

Balances, July 1, 2023 $ — $ 2,240 $ 33,893 $ ( 10,045 ) $ ( 35,791 ) $ 1,743 $ ( 7,960 )

Net earnings 2,054 117 2,171

5 unchanged sentences

Sale (purchase) of subsidiary shares to/(from) noncontrolling interests ( 27 ) 1 ( 2 ) ( 28 )

Balances, June 30, 2023 $ — $ 2,240 $ 33,893 $ ( 10,045 ) $ ( 35,791 ) $ 1,743 $ ( 7,960 )

Balances, April 1, 2024 $ — $ 2,205 $ 34,208 $ ( 11,065 ) $ ( 35,657 ) $ 1,746 $ ( 8,563 )

Balances, September 30, 2023 $ — $ 2,253 $ 33,919 $ ( 9,817 ) $ ( 35,788 ) $ 1,727 $ ( 7,706 )

Balances, July 1, 2024 $ — $ 2,249 $ 34,582 $ ( 10,930 ) $ ( 35,645 ) $ 1,802 $ ( 7,942 )

Net earnings 3,082 133 3,215

4 unchanged sentences

Dividends paid to noncontrolling interests ( 98 ) ( 98 )

Acquisitions (Note 18) 159 159

Sale (purchase) of subsidiary shares to/(from) noncontrolling interests 79 79

Balances, June 30, 2024 $ — $ 2,249 $ 34,582 $ ( 10,930 ) $ ( 35,645 ) $ 1,802 $ ( 7,942 )

Balances, September 30, 2024 $ — $ 2,283 $ 35,556 $ ( 11,892 ) $ ( 35,641 ) $ 1,981 $ ( 7,713 )

See notes to condensed consolidated financial statements.

13 unchanged sentences

"Platform 1" is the term PMI uses to refer to PMI’s smoke-free products that use a precisely controlled heating device into which a specially designed and proprietary tobacco unit is inserted and heated to generate an aerosol.

On September 17, 2024, PMI announced the execution of a definitive agreement pursuant to which PMI’s direct, wholly-owned subsidiary, Vectura Fertin Pharma Inc., agreed to sell Vectura Group Ltd.

(formerly, Vectura Group plc, and hereinafter referred to as “Vectura” or "Vectura Group") to Molex Asia Holdings Ltd.

The transaction is expected to close by the end of 2024, subject to regulatory approval, which may impact the timing, and other customary closing conditions.

For further details, see Note 18.

Acquisitions and Divestitures .

Basis of Presentation

23 unchanged sentences

Up to 25 million shares of PMI’s common stock may be issued under the 2022 Plan.

At June 30, 2024, shares available for grant under the 2022 Plan were 19,161,366 .

In May 2017, PMI’s shareholders approved the Philip Morris International Inc.

2017 Stock Compensation Plan for Non-Employee Directors (the “2017 Non-Employee Directors Plan”).

A non-employee director is defined as a member of the PMI Board of Directors who is not a full-time employee of PMI or of any corporation in which PMI owns, directly or indirectly, stock possessing at least 50 % of the total combined voting power of all classes of stock entitled to vote in the election of

At September 30, 2024, shares available for grant under the 2022 Plan were 19,188,146 .

Philip Morris International Inc.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

directors in such corporation.

In May 2017, PMI’s shareholders approved the Philip Morris International Inc.

2017 Stock Compensation Plan for Non-Employee Directors (the “2017 Non-Employee Directors Plan”).

Up to 1 million shares of PMI common stock may be awarded under the 2017 Non-Employee Directors Plan.

At June 30, 2024, shares available for grant under the plan were 855,920 .

At September 30, 2024, shares available for grant under the plan were 855,920 .

Restricted share unit (RSU) awards

During the six months ended June 30, 2024 and 2023, shares granted to eligible employees and the weighted-average grant date fair value per share related to RSU awards were as follows:

During the nine months ended September 30, 2024 and 2023, shares granted to eligible employees and the weighted-average grant date fair value per share related to RSU awards were as follows:

Granted Weighted-Average Grant Date Fair Value Per RSU Award Granted

3 unchanged sentences

Compensation Expense Related to RSU Awards

(in millions) For the Six Months Ended June 30, For the Three Months Ended June 30,

(in millions) For the Nine Months Ended September 30, For the Three Months Ended September 30,

2024 $ 115 $ 31

2023 $ 124 $ 38

As of June 30, 2024, PMI had $ 228 million of total unrecognized compensation cost related to non-vested RSU awards.

As of September 30, 2024, PMI had $ 190 million of total unrecognized compensation cost related to non-vested RSU awards.

The cost is recognized over the original restriction period of the awards, which is typically three years after the date of the award, or upon death, disability or reaching the age of 58 .

During the six months ended June 30, 2024, 1,741,966 RSU awards vested.

During the nine months ended September 30, 2024, 1,826,668 RSU awards vested.

The grant date fair value of all the vested awards was approximately $ 156 million.

The total fair value of RSU awards that vested during the six months ended June 30, 2024 was approximately $ 159 million.

The total fair value of RSU awards that vested during the nine months ended September 30, 2024 was approximately $ 168 million.

Performance share unit (PSU) awards

During the six months ended June 30, 2024 and 2023, PMI granted PSU awards to certain executives.

During the nine months ended September 30, 2024 and 2023, PMI granted PSU awards to certain executives.

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 the six months ended June 30, 2023 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:

The performance metrics for such PSU's granted during the nine months ended September 30, 2023 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:

• Product 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, targets and relative weights for the PSU’s granted during the six months ended June 30, 2024 were the same as the PSU’s granted during the six months ended June 30, 2023, with the exception of adjustments made to certain components of the Sustainability Index intended to address PMI's developing sustainability strategy and reporting.

The PSU performance metrics may be adjusted if appropriate to reflect the impact of unusual or infrequently occurring events, including, to the extent significant, corporate transactions, accounting or tax law changes, asset write-downs, litigation or claim adjustments, foreign exchange gains and losses, unbudgeted capital expenditures and other such events.

• Operational Sustainability ( 10 % weight) measuring progress on PMI's efforts to benefit PMI and its stakeholders by tackling climate change, preserving nature, improving the quality of life of people in its supply chain, and fostering an empowered, and inclusive workplace.

Philip Morris International Inc.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

The performance metrics, targets and relative weights for the PSU’s granted during the nine months ended September 30, 2024 were the same as the PSU’s granted during the nine months ended September 30, 2023, with the exception of adjustments made to certain components of the Sustainability Index intended to address PMI's developing sustainability strategy and reporting.

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.

3 unchanged sentences

At the end of the performance cycle, participants are entitled to an amount equivalent to the accumulated dividends paid on common stock during the performance cycle for the number of shares earned.

During the six months ended June 30, 2024 and 2023, shares granted to eligible employees and the grant date fair value per share related to PSU awards were as follows:

During the nine months ended September 30, 2024 and 2023, shares granted to eligible employees and the grant date fair value per share related to PSU awards were as follows:

Number of Shares Granted Weighted-

16 unchanged sentences

Compensation Expense Related to PSU Awards

(in millions) For the Six Months Ended June 30, For the Three Months Ended June 30,

(in millions) For the Nine Months Ended September 30, For the Three Months Ended September 30,

2024 $ 58 $ 9

2023 $ 51 $ 6

As of June 30, 2024, PMI had $ 55 million of total unrecognized compensation cost related to non-vested PSU awards.

As of September 30, 2024, PMI had $ 42 million of total unrecognized compensation cost related to non-vested PSU awards.

The cost is recognized over the performance cycle of the awards, or upon death, disability or reaching the age of 58 .

During the six months ended June 30, 2024, 916,452 PSU awards vested.

During the nine months ended September 30, 2024, 916,452 PSU awards vested.

The grant date fair value of all the vested awards was approximately $ 86 million.

The total fair value of PSU awards that vested during the six months ended June 30, 2024 was approximately $ 83 million.

The total fair value of PSU awards that vested during the nine months ended September 30, 2024 was approximately $ 83 million.

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Benefit Plans:

5 unchanged sentences

retired employees are covered through local government plans.

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Pension and other employee benefit costs per the condensed consolidated statements of earnings consisted of the following:

For the Six Months Ended June 30, For the Three Months Ended June 30,

For the Nine Months Ended September 30, For the Three Months Ended September 30,

(in millions) 2024 2023 2024 2023

6 unchanged sentences

Net periodic pension cost consisted of the following:

For the Six Months Ended June 30, For the Three Months Ended June 30,

For the Nine Months Ended September 30, For the Three Months Ended September 30,

(in millions) 2024 2023 2024 2023

10 unchanged sentences

PMI makes, and plans to make, contributions, to the extent that they are tax deductible and meet specific funding requirements of its funded pension plans.

Employer contributions of $ 55 million were made to the pension plans during the six months ended June 30, 2024.

Employer contributions of $ 81 million were made to the pension plans during the nine months ended September 30, 2024.

Currently, PMI anticipates making additional contributions during the remainder of 2024 of approximately $ 48 million to its pension plans, based on current tax and benefit laws.

9 unchanged sentences

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.

In addition, 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 current economic, political, regulatory and social conditions as well as the volatility in foreign currency and commodity markets.

As of June 30, 2024, our Russian operations had approximately $ 2.8 billion in total assets, excluding intercompany balances, of which approximately $ 0.7 billion consisted of cash and cash equivalents held mostly in local currency (Russian rubles).

Additionally, we hold a 23 % equity interest in Megapolis Distribution B.V., the holding company of JSC TK Megapolis, PMI's distributor in Russia.

As of September 30, 2024, our Russian operations had approximately $ 2.9 billion in total assets, excluding intercompany balances, of which approximately $ 1.0 billion consisted of cash and cash equivalents held mostly in local currency (Russian rubles).

Additionally, we hold a 23 % equity interest in Megapolis Distribution B.V., the holding company of JSC TK Megapolis, pursuant to Dutch law, PMI's distributor in Russia.

For further details, see Note 8.

7 unchanged sentences

Changes due to:

Acquisitions — 510 — — — 510

Acquisitions and divestitures — 510 — — ( 65 ) 445

Currency ( 52 ) 29 5 ( 74 ) 12 ( 80 )

Balances, June 30, 2024 $ 3,945 $ 3,228 $ 465 $ 8,798 $ 383 $ 16,819

Balances, September 30, 2024 $ 4,121 $ 3,416 $ 497 $ 8,773 $ 337 $ 17,144

As discussed in Note 1.

1 unchanged sentence

As a result, the December 31, 2023 goodwill balance in the table above included the reclassification of the former Swedish Match segment to the Europe and Americas segments.

The increase in goodwill was due to the preliminary purchase price allocation of PMI's acquisition in Egypt of United Tobacco Company in the second quarter of 2024, partially offset by currency movements.

For further details on the acquisition in Egypt, see Note 18.

Acquisitions .

At June 30, 2024, goodwill primarily reflects PMI’s acquisitions of Swedish Match AB, Fertin Pharma A/S and Vectura Group plc., as well as acquisitions in Egypt, Greece, Indonesia, Mexico, the Philippines and Serbia.

The increase in goodwill was due primarily to the preliminary purchase price allocation of PMI's acquisition in Egypt of United Tobacco Company in the second quarter of 2024.

In the third quarter of 2024, the foregoing increase was partially offset by goodwill allocated to the disposal group in relation to Vectura Group's expected sale and currency movements.

For further details on the acquisition in Egypt and Vectura Group's expected sale, see Note 18.

Acquisitions and Divestitures .

At September 30, 2024, goodwill primarily reflects PMI’s acquisitions of Swedish Match AB and Fertin Pharma A/S, as well as acquisitions in Egypt, Greece, Indonesia, Mexico, the Philippines and Serbia.

Philip Morris International Inc.

3 unchanged sentences

Details of other intangible assets were as follows:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

(in millions) Weighted-Average Remaining Useful Life Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net

8 unchanged sentences

Non-amortizable intangible assets substantially consist of the ZYN trademarks and other trademarks related to acquisitions in Indonesia and Mexico, as well as the tobacco manufacturing license associated with the preliminary purchase price allocation of PMI's acquisition in Egypt in the second quarter of 2024 (see Note 18.

Acquisitions for further details).

The decrease since December 31, 2023 was mainly due to currency movements of $ 181 million and a pre-tax impairment charge in the first quarter of 2024 of $ 27 million primarily for an in-process research and development project in the Wellness and Healthcare segment, partially offset by the recognition of the Egyptian tobacco manufacturing license.

The pre-tax impairment charge of $ 27 million was recorded in marketing, administration and research costs on PMI's condensed consolidated statements of earnings during the six months ended June 30, 2024.

Acquisitions and Divestitures for further details).

The increase since December 31, 2023, was mainly due to the recognition of the Egyptian tobacco manufacturing license, partially offset by currency movements of $ 92 million and a pre-tax impairment charge in the first quarter of 2024 of $ 27 million primarily for an in-process research and development project in the Wellness and Healthcare segment.

The pre-tax impairment charge of $ 27 million was recorded in marketing, administration and research costs on PMI's condensed consolidated statements of earnings during the nine months ended September 30, 2024.

The increase in the gross carrying amount of amortizable intangible assets from December 31, 2023, was primarily due to the classification of the IQOS commercialization rights in the U.S.

on the acquisition date (May 1, 2024) as Other intangible assets, net (see Note 18.

Acquisitions ), partially offset by currency movements of $ 203 million.

The change in the accumulated amortization from December 31, 2023, was mainly due to the 2024 amortization of $ 332 million, partially offset by currency movements of $ 62 million.

The amortization of intangibles for the six months ended June 30, 2024 was recorded in cost of sales ($ 32 million) and in marketing, administration and research costs ($ 300 million) on PMI's condensed consolidated statements of earnings.

Acquisitions and Divestitures ), partially offset by developed technology assets of $ 454 million reclassified as held for sale in relation to Vectura Group's expected sale (see Note 18.

Acquisitions and Divestitures ) and currency movements of $ 62 million.

The change in the accumulated amortization from December 31, 2023, was mainly due to the 2024 amortization of $ 588 million, partially offset by accumulated amortization of developed technology assets of $ 267 million reclassified as held for sale in relation to Vectura Group's expected sale and currency movements of $ 20 million.

The amortization of intangibles for the nine months ended September 30, 2024 was recorded in cost of sales ($ 46 million) and in marketing, administration and research costs ($ 542 million) on PMI's condensed consolidated statements of earnings.

Amortization expense for each of the next five years is estimated to be approximately $ 993 million or less, assuming no additional transactions occur that require the amortization of intangible assets.

This amount includes amortization of IQOS commercialization rights in the U.S.

(see Note 18, Acquisitions ).

(see Note 18, Acquisitions and Divestitures ).

Philip Morris International Inc.

3 unchanged sentences

During the second quarter of 2023, as a result of the completion of PMI's annual review of goodwill and non-amortizable intangible assets for potential impairment, 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 six months and three months ended June 30, 2023, reflecting the impact of reduced estimated future cash flows, which were primarily attributable to unfavorable clinical trial results that became available in June 2023 for an inhalable aspirin product being developed by the Wellness and Healthcare business.

Consequently, PMI recorded a goodwill impairment charge of $ 665 million in the consolidated statements of earnings for the nine months ended September 30, 2023, reflecting the impact of reduced estimated future cash flows, which were primarily attributable to unfavorable clinical trial results that became available in June 2023 for an inhalable aspirin product being developed by the Wellness and Healthcare business.

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 six months and three months ended June 30, 2023.

This pre-tax impairment charge of $ 15 million was recorded within marketing, administration and research costs in the consolidated statements of earnings for the nine months ended September 30, 2023.

Financial Instruments:

18 unchanged sentences

The gross notional amounts for outstanding derivatives at the end of each period were as follows:

(in millions) At June 30, 2024 At December 31, 2023

(in millions) At September 30, 2024 At December 31, 2023

Derivative contracts designated as hedging instruments:

8 unchanged sentences

Notes to Condensed Consolidated Financial Statements

The fair value of PMI’s derivative contracts included in the condensed consolidated balance sheets as of June 30, 2024 and December 31, 2023, were as follows:

The fair value of PMI’s derivative contracts included in the condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023, were as follows:

Derivative Assets Derivative Liabilities

Fair Value Fair Value

(in millions) Balance Sheet Classification June 30, 2024 December 31, 2023 Balance Sheet Classification June 30, 2024 December 31, 2023

(in millions) Balance Sheet Classification September 30, 2024 December 31, 2023 Balance Sheet Classification September 30, 2024 December 31, 2023

Derivative contracts designated as hedging instruments:

18 unchanged sentences

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 June 30, 2024 and December 31, 2023.

PMI’s derivative contracts have been classified within Level 2 at September 30, 2024 and December 31, 2023.

Philip Morris International Inc.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

For the six months ended June 30, 2024 and 2023, PMI's derivative contracts impacted the condensed consolidated statements of earnings and comprehensive earnings as follows:

(pre-tax, in millions) For the Six Months Ended June 30,

For the nine months ended September 30, 2024 and 2023, PMI's derivative contracts impacted the condensed consolidated statements of earnings and comprehensive earnings as follows:

(pre-tax, in millions) For the Nine Months Ended September 30,

Amount of Gain/(Loss) Recognized in Other Comprehensive Earnings/(Losses) on Derivatives Statement of Earnings

26 unchanged sentences

Notes to Condensed Consolidated Financial Statements

For the three months ended June 30, 2024 and 2023, PMI's derivative contracts impacted the condensed consolidated statements of earnings and comprehensive earnings as follows:

(pre-tax, in millions) For the Three Months Ended June 30,

For the three months ended September 30, 2024 and 2023, PMI's derivative contracts impacted the condensed consolidated statements of earnings and comprehensive earnings as follows:

(pre-tax, in millions) For the Three Months Ended September 30,

Amount of Gain/(Loss) Recognized in Other Comprehensive Earnings/(Losses) on Derivatives Statement of Earnings

18 unchanged sentences

Marketing, administration and research costs (d)

( 80 ) ( 88 )

Total $ ( 817 ) $ 519 $ 50 $ 59 $ ( 220 ) $ 381

6 unchanged sentences

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 condensed consolidated statements of earnings.

As of June 30, 2024, PMI has hedged forecasted transactions with derivative contracts expiring at various dates through May 2028.

As of September 30, 2024, PMI has hedged forecasted transactions with derivative contracts expiring at various dates through May 2028.

Premiums paid for, and settlements of, the derivative contracts designated as cash flow hedges are included primarily in cash flows from operating activities on PMI’s condensed consolidated statements of cash flows.

6 unchanged sentences

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 June 30, 2024 was $ 941 million, of which $ 336 million was recorded in current portion of long-term debt and $ 605 million was recorded in long-term debt in the condensed consolidated balance sheets.

The cumulative amount of fair value gains/(losses) included in the carrying amount of the debt hedged was $ 57 million as of June 30, 2024.

The carrying amount of the debt hedged, which includes the cumulative adjustment for fair value gains/losses, as of September 30, 2024 was $ 952 million, of which $ 337 million was recorded in current portion of long-term debt and $ 615 million was recorded in long-term debt in the condensed consolidated balance sheets.

The cumulative amount of fair value gains/(losses) included in the carrying amount of the debt hedged was $ 46 million as of September 30, 2024.

Hedges of Net Investments in Foreign Operations

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

For the six months ended June 30, 2024 and 2023, 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 $ 5 million and $ 24 million, respectively.

For the three months ended June 30, 2024 and 2023, 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 nil and $ 23 million, respectively.

For the nine months ended September 30, 2024 and 2023, 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 $( 18 ) million and $ 51 million, respectively.

For the three months ended September 30, 2024 and 2023, 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 $( 23 ) million and $ 27 million, respectively.

Settlements of the derivative contracts designated as net investment hedges are included in cash flows from investing activities on PMI’s condensed consolidated statements of cash flows.

8 unchanged sentences

Hedging activity affected accumulated other comprehensive losses, net of income taxes, as follows:

(in millions) For the Six Months Ended June 30, For the Three Months Ended June 30,

(in millions) For the Nine Months Ended September 30, For the Three Months Ended September 30,

2024 2023 2024 2023

2 unchanged sentences

Change in fair value 126 304 ( 160 ) 58

Gain/(loss) as of June 30, $ 433 $ 408 $ 433 $ 408

At June 30, 2024, PMI expects $ 197 million of derivative gains that are included in accumulated other comprehensive losses to be reclassified to the condensed consolidated statement of earnings within the next 12 months.

Gain/(loss) as of September 30, $ 230 $ 415 $ 230 $ 415

At September 30, 2024, PMI expects $ 67 million of derivative gains that are included in accumulated other comprehensive losses to be reclassified to the condensed consolidated statement of earnings within the next 12 months.

These gains are expected to be substantially offset by the statement of earnings impact of the respective hedged transactions.

9 unchanged sentences

Other Investments

A certain PMI investment, which is comprised primarily of money market funds, has been classified within Level 1 and had a fair value of $ 144 million at June 30, 2024.

For the six months and three months ended June 30, 2024, the unrealized pre-tax gains (losses) on these investments were immaterial.

Certain PMI investments, which are comprised primarily of money market funds, have been classified within Level 1 and had a fair value of $ 128 million at September 30, 2024.

For the nine months and three months ended September 30, 2024, the unrealized pre-tax gains (losses) on these investments were immaterial.

Earnings Per Share:

Basic and diluted earnings per share (“EPS”) were calculated using the following:

(in millions) For the Six Months Ended June 30, For the Three Months Ended June 30,

(in millions) For the Nine Months Ended September 30, For the Three Months Ended September 30,

2024 2023 2024 2023

12 unchanged sentences

As discussed in Note 1.

Background and Basis of Presentation , PMI updated in January 2024 its segment reporting by including the former Swedish Match segment results into the four existing geographical segments.

Background and Basis of Presentation , in January 2024, PMI updated its segment reporting by including the former Swedish Match segment results into the four existing geographical segments.

The four existing geographical segments are as follows:

13 unchanged sentences

Segment data were as follows:

(in millions) For the Six Months Ended June 30, For the Three Months Ended June 30,

(in millions) For the Nine Months Ended September 30, For the Three Months Ended September 30,

2024 2023 2024 2023

18 unchanged sentences

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

(in millions) For the Six Months Ended June 30, For the Three Months Ended June 30,

(in millions) For the Nine Months Ended September 30, For the Three Months Ended September 30,

2024 2023 2024 2023

19 unchanged sentences

Total PMI net revenues $ 28,172 $ 26,127 $ 9,911 $ 9,141

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

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

Philip Morris International Inc.

2 unchanged sentences

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

• Egypt sales tax charge – In the third quarter of 2024, following a ruling issued by the Higher Administrative Court in Egypt and subsequent evaluation of available remedies, PMI concluded that an adverse outcome was probable and recorded a pre-tax charge of $ 45 million in relation to tax assessments for general sales tax deducted on imported cutfiller for the years 2014 to 2016.

This pre-tax charge was recorded in marketing, administration and research costs in the condensed consolidated statement of earnings for the nine months and three months ended September 30, 2024, and was included in the SSEA, CIS & MEA segment results.

• Impairment related to Vectura Group's expected sale – In September 2024, PMI announced the execution of a definitive agreement to sell Vectura to Molex Asia Holdings Ltd.

As a result, PMI recorded in the third quarter of 2024 an impairment charge of $ 198 million related to Vectura's classification as held for sale.

For further details, see Note 18.

Acquisitions and Divestitures .

• Asset impairment and exit costs – See Note 15.

Asset Impairment and Exit Costs for a breakdown of these costs by segment for the six months ended June 30, 2024 and 2023.

Asset Impairment and Exit Costs for a breakdown of these costs by segment for the nine months ended September 30, 2024 and 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 condensed consolidated statements of earnings, and was included in the SSEA, CIS & MEA segment results for the six months ended June 30, 2023.

• Swedish Match AB acquisition accounting related items – In the first quarter of 2023, PMI recorded $ 18 million pre-tax purchase accounting adjustments related to the sale of acquired inventories stepped up to fair value included in the Americas segment.

• Impairment of goodwill and other intangibles – For the six months and three months ended June 30, 2023, PMI recorded $ 680 million of goodwill and non-amortizable intangible assets impairment charges that was included in the Wellness and Healthcare segment.

• Impairment of goodwill and other intangibles – For the nine months ended September 30, 2023, PMI recorded $ 680 million of goodwill and non-amortizable intangible assets impairment charges that was included in the Wellness and Healthcare segment.

For further details, see Note 4.

3 unchanged sentences

As a result of the ruling, we concluded that an adverse outcome was probable.

Consequently, we recorded a non-cash pre-tax charge of $ 204 million in marketing, administration and research costs in the condensed consolidated statements of earning, reflecting the full amount previously paid by PM Korea, which was included in the EA, AU & PMI DF segment for the six months and three months ended June 30, 2023.

• 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 nine months and three months ended September 30, 2023 and was included in the operating results of the following segments:

Europe ($ 60 million);

SSEA, CIS & MEA ($ 41 million);

EA, AU & PMI DF ($ 24 million);

and Americas ($ 15 million).

Net revenues related to combustible tobacco 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.

1 unchanged sentence

Other tobacco products primarily include roll-your-own and make-your-own cigarettes, pipe tobacco, cigars and cigarillos, and do not include smoke-free products.

Net revenues related to smoke-free, excluding wellness and healthcare, 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, if applicable.

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

excise taxes, if applicable.

These net revenue amounts consist of the sale of PMI's products that are not combustible tobacco products, such as heat-not-burn, e-vapor, and oral products, as well as consumer accessories.

9 unchanged sentences

It is possible that there could be adverse developments in pending cases against us and our subsidiaries.

An unfavorable

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

outcome or settlement of pending tobacco or nicotine-related litigation could encourage the commencement of additional litigation.

Damages claimed in some of the tobacco-related litigation are significant and, in certain cases in Canada and Nigeria, range into the billions of U.S.

An unfavorable outcome or settlement of pending tobacco or nicotine-related litigation could encourage the commencement of additional litigation.

Damages claimed in some of the tobacco-related litigation are significant and, in the case of the "Health Care Cost Recovery Litigation" described below, could range into the billions of U.S.

The variability in pleadings in multiple jurisdictions, together with the actual experience of management in litigating claims, demonstrate that the monetary relief that may be specified in a lawsuit bears little relevance to the ultimate outcome.

15 unchanged sentences

As a result of the Court of Appeal of Quebec’s decision in both the Létourneau and Blais cases described below, our subsidiary, Rothmans, Benson & Hedges Inc.

(“RBH”), and the other defendants, JTI Macdonald Corp., and Imperial Tobacco Canada Limited, sought protection in the Ontario Superior Court of Justice under the Companies’ Creditors Arrangement Act (“CCAA”) on March 22, March 8, and March 12, 2019, respectively.

(“RBH”), and the other defendants, JTI Macdonald Corp.

("JTIM"), and Imperial Tobacco Canada Limited ("ITL"), sought protection in the Ontario Superior Court of Justice under the Companies’ Creditors Arrangement Act (“CCAA”) on March 22, March 8, and March 12, 2019, respectively.

CCAA is a Canadian federal law that permits a Canadian business to restructure its affairs while carrying on its business in the ordinary course.

The initial CCAA order made by the Ontario Superior Court on March 22, 2019 authorizes RBH to pay all expenses incurred in carrying on its business in the ordinary course after the CCAA filing, including obligations to employees, vendors, and suppliers.

The initial CCAA

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

order made by the Ontario Superior Court on March 22, 2019 authorizes RBH to pay all expenses incurred in carrying on its business in the ordinary course after the CCAA filing, including obligations to employees, vendors, and suppliers.

RBH's financial results have been deconsolidated from our consolidated financial statements since March 22, 2019.

As part of the CCAA proceedings, there is currently a comprehensive stay up to and including September 30, 2024 of all combustible tobacco product-related litigation pending in Canada against RBH and the other defendants, including PMI and our indemnitees (PM USA and Altria), namely, the smoking and health class actions filed in various Canadian provinces and health care cost recovery actions.

As part of the CCAA proceedings, there is currently a comprehensive stay up to and including October 31, 2024 of all combustible tobacco product-related litigation pending in Canada against RBH and the other defendants, including PMI and our indemnitees (PM USA and Altria), namely, the smoking and health class actions filed in various Canadian provinces and health care cost recovery actions.

These proceedings are presented below under the caption “ Stayed Litigation — Canada .” Ernst & Young Inc.

has been appointed as monitor of RBH in the CCAA proceedings.

In accordance with the CCAA process, as the parties work towards a plan of arrangement or compromise in a confidential mediation, it is anticipated that the court will set additional hearings and further extend the stay of proceedings.

In accordance with the CCAA process, it is anticipated that the court will set additional hearings and further extend the stay of proceedings.

On April 17, 2019, the Ontario Superior Court ruled that RBH and the other defendants will not be allowed to file an application to the Supreme Court of Canada for leave to appeal the Court of Appeal’s decision in the Létourneau and the Blais cases so long as the comprehensive stay of all combustible tobacco product-related litigation in Canada remains in effect and that the time period to file the application would be extended by the stay period.

While RBH believes that the findings of liability and damages in both Létourneau and the Blais cases were incorrect, the CCAA proceedings will provide a forum for RBH to seek resolution through a plan of arrangement or compromise of all combustible tobacco product-related litigation pending in Canada.

It is not possible to predict the resolution of the underlying legal proceedings or the length of the CCAA process.

While RBH believes that the findings of liability and damages in both Létourneau and the Blais cases were incorrect, the CCAA proceedings provide a forum for RBH to seek resolution through a plan of arrangement or compromise of all combustible tobacco product-related litigation pending in Canada.

On October 17, 2024, the court-appointed mediator and monitor in the CCAA proceedings filed a proposed plan of compromise and arrangement (“Proposed Plan”) setting forth, among other things, certain terms of a proposed comprehensive resolution of Canadian tobacco claims and related litigation against RBH, its affiliates, and its affiliates’ indemnitees.

The court-appointed mediator and monitors also filed substantially similar proposed plans for ITL and JTIM.

Under the resolution contemplated by the Proposed Plan, RBH, ITL and JTIM (together, the “Companies”) would pay an aggregate global settlement amount of CAD 32.5 billion (approximately $ 23.5 billion).

This amount would be funded by an upfront payment equal to the companies’ cash and cash equivalents on hand plus court deposits (subject to an aggregate withholding of CAD 750 million (approximately $ 543 million) of working capital) and annual payments based on a percentage of the Companies’ aggregate net income after taxes (excluding that generated by alternative products such as heat-not-burn, nicotine pouches, and e-vapor) until the global settlement amount is paid in full.

As stated in the Proposed Plan, the issue of allocation of the CAD 32.5 billion aggregate settlement amount among RBH, ITL, and JTIM remains unresolved.

RBH and its affiliates, including PMI and its indemnitees, would obtain a release of claims relating to the manufacture, marketing, sale, or use of or exposure to, RBH’s combustible and traditional smokeless tobacco products based on conduct prior to the effective date of the Proposed Plan;

related litigation would also be dismissed—including those actions described in the section below entitled “ Stayed Litigation – Canada .” Alternative product businesses (including heat-not-burn, e-vapor, and nicotine pouches) would be transferred to an RBH affiliate.

The Proposed Plan also contains a number of operating covenants that would govern RBH’s business going forward until the settlement amount has been paid.

The Proposed Plan, including the terms described above, remains subject to further negotiation by the parties, voting by claimants, and approval by the CCAA court.

According to a schedule proposed by the court-appointed mediator and monitor (if ordered by the CCAA court), voting on the Proposed Plan would occur in December 2024.

If accepted by claimants, a hearing to consider whether the Proposed Plan should be approved would then be expected in the first half of 2025.

Philip Morris International Inc.

127 unchanged sentences

Combustible tobacco products litigation

Since 1995, 622 combustible tobacco product-related cases, including Smoking and Health, Label-Related, Health Care Cost Recovery, and Public Civil Actions, have been filed against a PMI entity, 552 of those cases have been terminated in our favor, and the balance of 70 remains pending.

Of those pending cases, four were initially decided in favor of plaintiffs and remain on appeal, or are subject to an appeal.

Since 1995, more than 600 combustible tobacco product-related cases, including smoking and health, label-related, health care cost recovery, and public civil actions, have been filed by governmental entities or individual plaintiffs, or on behalf of a class or purported class of individual plaintiffs against a PMI entity.

All resolved cases have been terminated in our favor and only a small number of cases remain pending.

The pending cases include 9 proposed class actions, 17 health care cost recovery cases, 1 public civil action, and individual cases.

The amounts at issue in the pending individual cases would not have a material adverse effect on our consolidated financial statements, including our results of operations, cash flows, or financial position.

Of the pending combustible tobacco product-related cases, four were initially decided in favor of plaintiffs and remain on appeal, or are subject to an appeal.

These four cases include the Blais Class Action and the Létourneau Class Action, described above under the caption " Smoking and Health Litigation — Canada, " and two individual cases where final resolution in the amount of the verdict would not have a material adverse effect on our consolidated financial statements, including our results of operations, cash flows, or financial position.

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

Smoking and Health Litigation:

These cases primarily allege personal injury and are brought by individual plaintiffs or on behalf of a class or purported class of individual plaintiffs.

Smoking and Health Proposed Class Actions:

These cases primarily allege personal injury and are brought by individual plaintiffs on behalf of a class or purported class of individual plaintiffs.

Plaintiffs' allegations of liability in these cases are based on various theories of recovery, including negligence, gross negligence, strict liability, fraud, misrepresentation, design defect, failure to warn, breach of express and implied warranties, violations of deceptive trade practice laws and consumer protection statutes.

1 unchanged sentence

Defenses raised in these cases include licit activity, failure to state a claim, lack of defect, lack of proximate cause, assumption of the risk, contributory negligence, and statute of limitations.

As of June 30, 2024, there were a number of smoking and health cases pending against us, our subsidiaries or indemnitees, as follows:

• 39 cases brought by individual plaintiffs in Argentina ( 27 ), Canada ( 2 ), Chile ( 9 ), and Turkey ( 1 ), compared with 50 such cases on June 30, 2023;

• 9 cases brought on behalf of classes of individual plaintiffs, compared with 9 such cases on June 30, 2023.

The class actions pending in Canada are described above under the caption “ Smoking and Health Litigation — Canada.

As of September 30, 2024, there were 9 cases brought on behalf of classes of individual plaintiffs pending against us, our subsidiaries or indemnitees, compared with 9 such cases on September 30, 2023, and such cases are described above under the caption “ Smoking and Health Litigation — Canada.

Health Care Cost Recovery Litigation:

3 unchanged sentences

Defenses raised in these cases include lack of proximate cause, remoteness of injury, failure to state a claim, adequate remedy at law, “unclean hands” (namely, that plaintiffs cannot obtain equitable relief because they participated in, and benefited from, the sale of cigarettes), and statute of limitations.

As of June 30, 2024, there were 17 health care cost recovery cases pending against us, our subsidiaries or indemnitees in Brazil ( 1 ), Canada ( 10 ), Korea ( 1 ) and Nigeria ( 5 ), compared with 17 such cases on June 30, 2023.

As of September 30, 2024, there were 17 health care cost recovery cases pending against us, our subsidiaries or indemnitees in Brazil ( 1 ), Canada ( 10 ), Korea ( 1 ) and Nigeria ( 5 ), compared with 17 such cases on September 30, 2023.

Philip Morris International Inc.

42 unchanged sentences

The plaintiff's appeal remains pending.

Label-Related Cases:

These cases, brought only by individual plaintiffs, allege that the use of the descriptor “Lights” or other alleged misrepresentations or omissions of labeling information constitute fraudulent and misleading conduct.

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

allegations of liability in these cases are based on various theories of recovery including misrepresentation, deception, and breach of consumer protection laws.

Plaintiffs seek various forms of relief including restitution, injunctive relief, and compensatory and other damages.

Defenses raised include lack of causation, lack of reliance, assumption of the risk, and statute of limitations.

As of June 30, 2024, there were 4 label-related cases brought by individual plaintiffs in Italy ( 1 ) and Chile ( 3 ) pending against our subsidiaries, compared with 5 such cases on June 30, 2023.

Public Civil Actions:

1 unchanged sentence

Plaintiffs' allegations of liability in these cases are based on various theories of recovery including product defect, concealment, and misrepresentation.

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 June 30, 2024, there was 1 public civil action pending against our subsidiary in Venezuela ( 1 ), compared with 1 such case on June 30, 2023.

Plaintiffs in

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

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 September 30, 2024, there was 1 public civil action pending against our subsidiary in Venezuela ( 1 ), compared with 1 such case on September 30, 2023.

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

8 unchanged sentences

On February 27, 2024, the Attorney General of Venezuela filed, on behalf of defendants, a motion to dismiss the case for lack of prosecution.

Government Matter:

government 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 informed Altria that it believed 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.

On April 30, 2024, the transaction contemplated by the Altria Agreement was effectuated without the U.S.

government having pursued the matter or having sought relief from the court.

Smoke-Free Products-Related Litigation

2 unchanged sentences

Plaintiffs assert a variety of common law and statutory claims, and seek various forms of relief, including monetary and equitable relief.

In the first case, a putative class action, Wolters v.

Swedish Match North America LLC, et al.

, filed March 1, 2024, before United States District Court for the Southern District of California, plaintiff alleged, among other things, addiction to nicotine and dental harm resulting from the use of ZYN nicotine pouches.

The named defendants were PMI and Swedish Match North America LLC.

Plaintiff purported to represent classes comprised of (i) all persons who purchased ZYN products in the United States, (ii) all residents of California who purchased ZYN products, and (iii) all residents of California who, at the time of their

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

use of ZYN products, were under the age of 18, and who procured and used ZYN products.

He alleged, among other things, that defendants defectively designed ZYN products and sold them in an unreasonably unsafe and dangerous condition, marketed ZYN products to minors, and misrepresented or failed to warn consumers about information related to ZYN products, including information about health risks associated with these products.

Plaintiff asserted strict liability design defect and failure to warn claims, as well as negligence and fraud claims and sought compensatory and punitive damages, attorney’s fees and costs, interest, and medical monitoring.

On April 9, 2024, plaintiff voluntarily dismissed this lawsuit without prejudice.

In the second case, a putative class action, Kelly v.

In the first case, a putative class action, Kelly v.

Philip Morris International Inc., et al.

5 unchanged sentences

On May 6, 2024, PMI and Swedish Match North America LLC filed motions to dismiss the complaint with prejudice.

The District Court has scheduled a hearing on the motions for August 19, 2024.

On August 20, 2024, the court granted Swedish Match North America LLC’s motion to dismiss the fraud claim and plaintiff’s request for medical monitoring, but denied the motion to dismiss other claims.

The court gave plaintiff the opportunity to amend his complaint by November 4, 2024.

On August 20, 2024, the court also denied PMI’s motion to dismiss without prejudice, granted plaintiff’s request to conduct jurisdictional discovery, and gave PMI the opportunity to refile its motion to dismiss by November 18, 2024.

At this time, no estimated loss has been accrued in the consolidated financial statements for this proceeding and we cannot determine the likelihood of loss, or reasonably estimate a range of loss, if any, from this proceeding.

In the third case, a putative class action, Bates-Ferreira v.

In the second case, a putative class action, Bates-Ferreira v.

Philip Morris International Inc., et al.

4 unchanged sentences

Plaintiff asserts fraud, unjust enrichment, breach of implied warranty, and breach of consumer protection, unfair competition and advertising statutes claims and is seeking compensatory and punitive damages, disgorgement of profits, attorney’s fees and expenses, interest and other applicable injunctive relief.

On June 7, 2024, PMI and Swedish Match North America LLC filed motions to dismiss the complaint with prejudice, and Swedish Match North America LLC also filed a motion to stay the proceedings pending resolution of the Kelly class action.

On June 7, 2024, PMI and Swedish Match North America LLC filed motions to dismiss the complaint with prejudice, and Swedish Match North America

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

LLC also filed a motion to stay the proceedings pending resolution of the Kelly class action.

On August 5, 2024, plaintiff voluntarily dismissed his claim against PMI without prejudice.

In the fourth case, an individual complaint, Palmer v.

In the third case, an individual complaint, Palmer v.

Philip Morris International Inc., et al.

4 unchanged sentences

On June 3, 2024, PMI and Swedish Match North America LLC filed motions to dismiss the complaint with prejudice.

The District Court has scheduled a hearing on the motions for August 19, 2024.

The court gave plaintiff the opportunity to amend his complaint by November 4, 2024.

In the fourth case, an individual complaint, Lendinara v.

Philip Morris International Inc., et al ., filed July 30, 2024, before United States District Court for the Southern District of Florida, plaintiff alleges, among other things, addiction to nicotine resulting from the use of ZYN nicotine pouches.

The named defendants are PMI and Swedish Match North America LLC.

He alleges, among other things, that defendants defectively designed ZYN products and sold them in an unreasonably unsafe and dangerous condition, marketed ZYN products to minors, and misrepresented or failed to warn consumers about information related to ZYN products, including information about health risks associated with these products.

Plaintiff asserts strict liability design defect and failure to warn claims, as well as negligence and fraud claims, and is seeking compensatory and punitive damages, attorney’s fees and costs, interest, and medical monitoring.

On September 19, 2024, the court granted the parties’ joint motion to apply its decisions on the motions to dismiss in Palmer to the Lendinara matter, including granting plaintiff’s request to conduct jurisdictional discovery and setting the same timeline for plaintiff to amend his complaint and for PMI to refile its motion to dismiss.

In the fifth case, a putative class action, Norris v.

Philip Morris International Inc., et al ., filed July 30, 2024, before United States District Court for the District of Connecticut, plaintiff alleges, among other things, addiction to nicotine resulting from the use of ZYN nicotine pouches.

The named defendants are PMI and Swedish Match North America LLC.

Plaintiff purports to represent classes comprised of (i) all persons who used ZYN products in the United States, (ii) all persons who used ZYN products in the United States while under the age of 18, (iii) all residents of Florida who used ZYN products, and (iv) all residents of Florida who used ZYN products while under the age of 18.

Plaintiff alleges, among other things, that defendants made misrepresentations about ZYN products in their advertising and marketing, marketed ZYN products to minors, and misrepresented or failed to disclose to consumers information about ZYN products, including information about health risks associated with these products.

Plaintiff asserts unjust enrichment, and breach of consumer protection, unfair trade and advertising statutes claims and is seeking compensatory and punitive damages, disgorgement of profits, attorney’s fees and expenses, interest and other applicable injunctive relief.

On September 24, PMI and Swedish Match North America LLC filed motions to dismiss the complaint with prejudice.

On October 2, 2024, Plaintiff filed a notice of voluntary dismissal without prejudice as to Swedish Match, which the Court ordered on October 3, 2024 At this time, no estimated loss has been accrued in the consolidated financial statements for this proceeding and we cannot determine the likelihood of loss, or reasonably estimate a range of loss, if any, from this proceeding.

District of Columbia Attorney General Investigation :

12 unchanged sentences

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 by Thai Customs and other Thai governmental agencies.

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

2 unchanged sentences

In December 2019, as required by the Thai law, our subsidiary paid the fine.

This payment is included in other assets on the condensed consolidated balance sheets and negatively impacted net cash provided by operating activities in the condensed consolidated statements of cash flows in the period of payment.

This payment was included in other assets on the condensed consolidated balance sheets and negatively impacted net cash provided by operating activities in the condensed consolidated statements of cash flows in the period of payment.

Both our subsidiary and the Public Prosecutor filed an appeal of the trial court's decision.

2 unchanged sentences

The appellate court affirmed the acquittals of the individual defendants.

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

The Public Prosecutor has also filed an appeal challenging the dismissal of charges against the individual defendants and the amount of the fine imposed.

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

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

The Public Prosecutor also filed an appeal challenging the dismissal of charges against the individual defendants and the amount of the fine imposed.

On September 5, 2024, the Supreme Court of Thailand issued its decision.

The Supreme Court affirmed the findings of under-declaration of import prices of cigarettes but further reduced the fine imposed to THB 50 million (approximately $ 1.5 million), which PMI recorded as a pre-tax charge in the condensed consolidated statements of earnings for the nine months ended September 30, 2024.

The Supreme Court also affirmed the acquittals of the individual defendants.

Thailand is required to refund the payment made by our subsidiary in 2019 in excess of the THB 50 million (approximately $ 1.5 million) fine ultimately assessed by the Supreme Court.

The DSI also conducted an investigation into alleged underpayment by PM Thailand of customs duties and excise taxes relating to imports from Indonesia covering the period 2000-2003.

On January 26, 2017, the Public Prosecutor filed charges against PM Thailand and its former Thai employee in the Bangkok Criminal Court alleging that PM Thailand and its former employee jointly and with the intention to defraud the Thai government under-declared import prices of cigarettes to avoid full payment of taxes and duties in connection with import entries during the period from January 2002 to July 2003.

The government is seeking a fine of approximately THB 19.8 billion (approximately $ 545 million).

The government sought a fine of approximately THB 19.8 billion (approximately $ 592 million).

In May 2017, Thailand enacted a new customs act.

15 unchanged sentences

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

In July 2020, the Public Prosecutor’s office of Rome, Italy, notified our Italian subsidiary, Philip Morris Italia S.r.l.

(“PM Italia”), as well as three former or current employees and a former external consultant of PM Italia in July and March 2020, respectively, that it concluded a preliminary investigation against them for alleged contravention of anti-corruption laws and related disruption of trade freedom.

Philip Morris International Inc.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

Italia lacked appropriate organizational controls to prevent the alleged actions by the individuals.

In July 2020, the Public Prosecutor’s office of Rome, Italy, notified our Italian subsidiary, Philip Morris Italia S.r.l.

The Public Prosecutor alleges that the individuals involved promised certain personal favors to government officials from January to July of 2018 in exchange for favorable treatment for PM Italia, and that PM Italia lacked appropriate organizational controls to prevent the alleged actions by the individuals.

In September 21, 2020, the Public Prosecutor issued his indictment and referred the matter to the court.

2 unchanged sentences

BAT has filed a civil claim against PM Italia claiming vicarious liability for the alleged wrongdoings of its former or current employees and seeking EUR 50 million (approximately $ 54 million) in damages.

After various postponements, trial started on September 25, 2023, and will continue through a series of hearings until 2025 (the court set the calendar only through January 20, 2025, although other hearings will have to be scheduled thereafter for the examination of the remaining witnesses).

PM Italia believes the charges are without merit and will defend them vigorously.

The Ministry of Industry and Trade of the Russian Federation filed a petition before the Arbitrazh Court of the Moscow Region seeking the suspension of corporate rights that Megapolis Distribution B.V.

(“MDBV”), a legal entity incorporated in the Netherlands, holds in JSC TK Megapolis (formerly CJSC TK Megapolis), distributor of PMI’s products in Russia.

(“MDBV”), a legal entity incorporated in the Netherlands, holds, pursuant to Dutch law, in JSC TK Megapolis (formerly CJSC TK Megapolis), which is the distributor of PMI’s products in Russia.

Our affiliate holds a 23 % equity interest in MDBV.

On July 18, 2024, the court admitted the petition and scheduled a hearing for August 8, 2024.

MDBV is named as respondent.

On July 18, 2024, the court admitted the petition.

On August 8, 2024, the Arbitrazh Court of the Moscow Region granted the forced localization, as requested by the Ministry of Industry and Trade.

As a result, MDBV's interest and corporate rights in JSC TK Megapolis were transferred to JSC TK Megapolis.

We currently expect such interest and corporate rights will be subsequently transferred to JSC TK Megapolis' indirect shareholders, or their designees, during the fourth quarter of 2024.

For additional information, see Part I, Item 1.

12 unchanged sentences

The declaratory judgment action has now concluded following FTKK's waiver of its right to seek relief from PMJL for infringement of JP7299432, which effectively resolved PMJL's request for a declaration of no liability for infringement of that patent.

In July and August 2024, respectively, FTKK filed two patent infringement actions against Sojitz, PMJL’s importer and distributor, for alleged infringement of two patents by TEREA consumables.

FTKK asserts a claim for damages.

PMJL is obligated to indemnify Sojitz for damages and intervened in the matters.

Merits briefing in the matters is expected to commence in late 2024.

PMJL intends to vigorously defend these matters.

Other patent challenges are pending in various jurisdictions.

3 unchanged sentences

Income tax provisions for jurisdictions outside the United States of America, as well as state and local income tax provisions, were determined on a separate company basis, and the related assets and liabilities were recorded in PMI’s condensed consolidated balance sheets.

PMI’s effective tax rates for the six months and three months ended June 30, 2024 were 24.2 % and 23.7 %, respectively.

PMI’s effective tax rates for the six months and three months ended June 30, 2023 were 20.8 % and 24.7 %, respectively.

The effective tax rate for the six months ended June 30, 2024, was unfavorably impacted by a deferred tax charge for unrealized foreign currency gains on intercompany loans related to the Swedish Match acquisition financing reflected in the condensed consolidated statements of earnings ($ 142 million), while the underlying pre-tax foreign currency movements fully offset in the condensed consolidated statements of earnings and were reflected as currency translation adjustments in its condensed consolidated statements of stockholders' (deficit) equity, and an increase in deferred tax liabilities related to the fair value adjustment of equity securities held by PMI ($ 77 million), partially offset by a U.S.

tax benefit for a worthless stock deduction under section 165(g) of the Internal Revenue Code related to PMI's investment in C.A.

Tabacalera Nacional, a wholly owned foreign corporation incorporated in Venezuela ($ 47 million).

For further details on PMI's ceased operations in Venezuela, see Note 15.

Asset Impairment and Exit Costs .

Changes in the tax laws of foreign jurisdictions could arise as a result of the Base Erosion and Profit Shifting project undertaken by the Organisation for Economic Co-operation and Development (“OECD”), which recommended changes to numerous long-

PMI’s effective tax rates for the nine months and three months ended September 30, 2024 were 23.1 % and 21.3 %, respectively.

PMI’s effective tax rates for the nine months and three months ended September 30, 2023 were 25.7 % and 33.2 %, respectively.

Philip Morris International Inc.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

standing tax principles.

The effective tax rate for the nine months ended September 30, 2024, was unfavorably impacted by:

(i) an increase in deferred tax liabilities related to the fair value adjustment of equity securities held by PMI ($ 185 million);

and (ii) an impairment loss related to the sale of Vectura Group, partially offset by:

(i) a deferred tax benefit for unrealized foreign currency losses on intercompany loans related to the Swedish Match acquisition financing reflected in the condensed consolidated statements of earnings ($ 9 million), while the underlying pre-tax foreign currency movements fully offset in the condensed consolidated statements of earnings and were reflected as currency translation adjustments in its condensed consolidated statements of stockholders' (deficit) equity;

and (ii) a U.S.

tax benefit for a worthless stock deduction under section 165(g) of the Internal Revenue Code related to PMI's investment in C.A.

Tabacalera Nacional, a wholly owned foreign corporation incorporated in Venezuela ($ 47 million).

For further details on PMI's ceased operations in Venezuela and the impairment loss related to the sale of Vectura Group, see Note 15.

Asset Impairment and Exit Costs and Note 18.

Acquisitions and Divestitures , respectively.

Many countries have enacted the OECD’s framework on a global minimum tax (referred to as “Pillar Two”), effective for taxable years beginning after December 31, 2023.

PMI has determined that Pillar Two should not have a material impact on its 2024 consolidated financial statements.

The effective tax rate for the six months ended June 30, 2023, was unfavorably impacted by the non-deductible Wellness and Healthcare goodwill impairment charge, partially offset by a deferred tax benefit for unrealized foreign currency losses on intercompany loans related to the Swedish Match acquisition financing reflected in the condensed consolidated statements of earnings ($ 96 million), while the underlying pre-tax foreign currency movements fully offset in the condensed consolidated statements of earnings and were reflected as currency translation adjustments in its condensed consolidated statements of stockholders' (deficit) equity.

The effective tax rate for the nine months ended September 30, 2023, was unfavorably impacted by:

(i) an increase in deferred tax liabilities related to the unremitted earnings of PMI's Russian subsidiaries ($ 173 million) 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) a deferred tax costs for unrealized foreign currency losses on intercompany loans related to the Swedish Match acquisition financing reflected in the condensed consolidated statements of earnings ($ 41 million), while the underlying pre-tax foreign currency movements fully offset in the condensed consolidated statements of earnings and were reflected as currency translation adjustments in its condensed consolidated statements of stockholders' (deficit) equity.

The effective tax rate for the three months ended September 30, 2023 was unfavorably impacted by an increase in deferred tax liabilities related to the unremitted earnings of PMI's Russian subsidiaries ($ 173 million) and a deferred tax cost for unrealized foreign currency gains on intercompany loans related to the Swedish Match acquisition financing reflected in the condensed consolidated statements of earnings ($ 138 million).

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

4 unchanged sentences

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 condensed consolidated balance sheets at June 30, 2024 and December 31, 2023.

These income tax receivables are included in other assets in PMI’s condensed consolidated balance sheets at September 30, 2024 and 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.

An estimate of any possible change cannot be made at this time.

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Indebtedness:

Short-term Borrowings:

At June 30, 2024 and December 31, 2023, PMI’s short-term borrowings and related average interest rates consisted of the following:

June 30, 2024 December 31, 2023

At September 30, 2024 and December 31, 2023, PMI’s short-term borrowings and related average interest rates consisted of the following:

September 30, 2024 December 31, 2023

(in millions) Amount Outstanding Average Rate Amount Outstanding Average Rate

5 unchanged sentences

The fair values of PMI’s short-term borrowings, based on current market interest rates, approximate carrying value.

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Long-term Debt:

At June 30, 2024 and December 31, 2023, PMI’s long-term debt consisted of the following:

(in millions) June 30, 2024 December 31, 2023

At September 30, 2024 and December 31, 2023, PMI’s long-term debt consisted of the following:

(in millions) September 30, 2024 December 31, 2023

dollar notes, 0.875 % to 6.375 % (average interest rate 4.572 %), due through 2044

9 unchanged sentences

$ 44,237 $ 41,243

(a) Includes long-term bank loans at subsidiaries, as well as $ 43 million and $ 53 million in finance leases at June 30, 2024 and December 31, 2023, respectively.

(a) Includes long-term bank loans at subsidiaries, as well as $ 41 million and $ 53 million in finance leases at September 30, 2024 and December 31, 2023, 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.

At June 30, 2024, the fair value of PMI's outstanding long-term debt, excluding the aforementioned finance leases, was as follows:

At September 30, 2024, the fair value of PMI's outstanding long-term debt, excluding the aforementioned finance leases, was as follows:

(in millions)

June 30, 2024

September 30, 2024

Level 1 $ 42,337

Level 2 6,716

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

For a description of the fair value hierarchy and the three levels of inputs used to measure fair values, see Item 8, Note 2.

10 unchanged sentences

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.

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

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.

As of June 30, 2024 and December 31, 2023, the € 5.5 billion (approximately $ 6 billion) term loan facility was fully drawn and remained outstanding.

As of September 30, 2024 and December 31, 2023, 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.

Debt Issuances

PMI's debt issuances in the first six months of 2024 were as follows:

PMI's debt issuances in the first nine months of 2024 were as follows:

(in millions)

14 unchanged sentences

The net proceeds from the sale of the securities listed in the table above have been or will be used for general corporate purposes, including working capital requirements, repayment of commercial paper and to refinance certain of our outstanding notes due in 2024.

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Revolving Credit Facilities:

At June 30, 2024, PMI's total committed revolving credit facilities were as follows:

At September 30, 2024, PMI's total committed revolving credit facilities were as follows:

(in billions)

8 unchanged sentences

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

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

At June 30, 2024, there were no borrowings under these committed revolving credit facilities, and the entire committed amounts were available for borrowing.

At September 30, 2024, there were no borrowings under these committed revolving credit facilities, and the entire committed amounts were available for borrowing.

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 $ 2.1 billion at June 30, 2024, and approximately $ 2.7 billion at December 31, 2023.

Borrowings under these arrangements and other bank loans amounted to $ 139 million at June 30, 2024, and $ 283 million at December 31, 2023.

These credit arrangements amounted to approximately $ 2.2 billion at September 30, 2024, and approximately $ 2.7 billion at December 31, 2023.

Borrowings under these arrangements and other bank loans amounted to $ 152 million at September 30, 2024, and $ 283 million at December 31, 2023.

Accumulated Other Comprehensive Losses:

1 unchanged sentence

(Losses) Earnings At At At

(in millions) June 30, 2024 December 31, 2023 June 30, 2023

(in millions) September 30, 2024 December 31, 2023 September 30, 2023

Currency translation adjustments $ ( 9,636 ) $ ( 9,467 ) $ ( 8,475 )

3 unchanged sentences

Reclassifications from Other Comprehensive Earnings

The movements in accumulated other comprehensive losses and the related tax impact, for each of the components above, that are due to current period activity and reclassifications to the income statement, are shown on the condensed consolidated statements of comprehensive earnings for the six months and three months ended June 30, 2024 and 2023.

The movements in accumulated other comprehensive losses and the related tax impact, for each of the components above, that are due to current period activity and reclassifications to the income statement, are shown on the condensed consolidated statements of comprehensive earnings for the nine months and three months ended September 30, 2024 and 2023.

For additional information, see Note 3.

1 unchanged sentence

Financial Instruments for disclosures related to derivative financial instruments, as well as Note 15.

Asset Impairment and Exit Costs and Note 18.

Acquisitions for disclosures related to the reclassification of accumulated foreign currency translation losses from other comprehensive losses.

Asset Impairment and Exit Costs and

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Acquisitions and Divestitures for disclosures related to the reclassification of accumulated foreign currency translation losses from other comprehensive losses.

Related Parties - Equity Investments and Other:

Equity Method Investments:

At June 30, 2024 and December 31, 2023, PMI had total equity method investments of $ 1,145 million and $ 1,309 million, respectively.

At September 30, 2024 and December 31, 2023, PMI had total equity method investments of $ 1,203 million and $ 1,309 million, respectively.

Equity method investments are initially recorded at cost.

Under the equity method of accounting, the investment is adjusted for PMI's proportionate share of earnings or losses, dividends, capital contributions, changes in ownership interests and movements in currency translation adjustments.

The carrying value of our equity method investments at June 30, 2024 and December 31, 2023, exceeded our share of the investees' book value by $ 1,075 million and $ 907 million, respectively.

The carrying value of our equity method investments at September 30, 2024 and December 31, 2023, exceeded our share of the investees' book value by $ 1,121 million and $ 907 million, respectively.

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 June 30, 2024 and December 31, 2023 of $ 153 million and $ 31 million, respectively, is amortized on a straight-line basis and is included in Equity investments and securities (income)/loss, net on the condensed consolidated statements of earnings.

At June 30, 2024, PMI received no year-to-date dividends from equity method investees.

The difference related to the definite-lived intangibles and other assets at September 30, 2024 and December 31, 2023 of $ 152 million and $ 31 million, respectively, is amortized on a straight-line basis and is included in Equity investments and securities (income)/loss, net on the condensed consolidated statements of earnings.

At September 30, 2024, PMI received no year-to-date dividends from equity method investees.

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

PMI holds a 23 % equity interest in Megapolis Distribution B.V.

("MDBV"), the holding company of JSC TK Megapolis (formerly CJSC TK Megapolis), PMI's distributor in Russia (SSEA, CIS & MEA segment), which as of June 30, 2024 had a carrying value of $ 431 million.

Additionally, there was approximately $ 540 million of cumulative foreign currency translation losses associated with MDBV reflected in accumulated other comprehensive losses in the condensed consolidated statement of stockholders’ equity as of June 30, 2024.

("MDBV"), the holding company of JSC TK Megapolis (formerly CJSC TK Megapolis), pursuant to Dutch law, PMI's distributor in Russia (SSEA, CIS & MEA segment), which as of September 30, 2024 had a carrying value of $ 408 million.

Additionally, there was approximately $ 573 million of cumulative foreign currency translation losses associated with MDBV reflected in accumulated other comprehensive losses in the condensed consolidated statement of stockholders’ equity as of September 30, 2024.

In June 2024, the Russian government included JSC TK Megapolis in the list of economically significant organizations that may be subject to forced localization under applicable Russian law, which refers to the mandatory removal of a foreign holding company from the shareholding structure.

If a forced localization were to occur, MDBV’s shares in JSC TK Megapolis will be transferred to JSC TK Megapolis and may subsequently be transferred to its indirect shareholders.

On July 18, 2024, the Ministry of Industry and Trade (given standing to initiate the claim under the law)

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

filed a petition before the Arbitrazh Court of Moscow seeking the forced localization of JSC TK Megapolis.

The court scheduled a hearing on August 8, 2024.

While as of June 30, 2024, there have been no impairment indicators based on the business’ performance or legal status, there are still risks related to this investment and our associated economic and control rights as the fair value of these assets with their associated rights is difficult to predict due to the current economic, political, regulatory, legal and social conditions as well as the volatility in foreign currency and commodity markets.

On August 8, 2024, the Arbitrazh Court of the Moscow Region granted the forced localization of MDBV as requested by the Ministry of Industry and Trade on July 18, 2024.

As a result, MDBV’s shares in JSC TK Megapolis were transferred to JSC TK Megapolis and we currently expect they will be subsequently transferred to its indirect shareholders or their designees during the fourth quarter of 2024.

While as of September 30, 2024, there was no other-than-temporary impairment identified, there are still risks related to this investment and our associated economic and ownership rights as the fair value of these assets with their associated rights is difficult to predict due to the current economic, political, regulatory, legal and social conditions as well as the foreign currency volatility.

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

4 unchanged sentences

For further details, see Note 18.

Acquisitions .

Acquisitions and Divestitures .

In May 2024, PMI acquired an indirect economic interest of 14.7 % in Eastern Company (“Eastern"), Egypt’s largest cigarette manufacturer which also includes cigars and pipe tobacco, among others, in its portfolio.

PMI accounted for its investment in Eastern under the equity method of accounting as it has the indirect ability to participate in Eastern's policy making processes.

As of June 30, 2024, PMI has not finalized the basis difference allocation resulting from the investment.

In relation to the acquisition, PMI subsequently entered into an agreement in August 2024 to guarantee certain credit facilities and repayment of certain bank loan liabilities.

The maximum amount of these guarantee obligations is $ 385 million and they will be in effect until 2034.

As of September 30, 2024, PMI has not finalized the basis difference allocation resulting from the investment.

The initial investments in Megapolis Distribution BV, EITA, Eastern and UTC (up to the acquisition of controlling interest in UTC on May 16, 2024) have been recorded at cost and are included in equity investments on the consolidated balance sheets.

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

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

4 unchanged sentences

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.

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, which included the estimated settlement amount at the date of deconsolidation, within equity investments.

Under the resolution contemplated by the Proposed Plan, RBH, ITL and JTIM would pay an aggregate global settlement amount of CAD 32.5 billion (approximately $ 23.5 billion).

Further developments in the CCAA process, including with respect to the issue of allocation of CAD 32.5 billion aggregate settlement amount among RBH, ITL, and JTIM 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.

For further details, see Note 8.

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.

The fair value of PMI’s other equity securities, which have been classified within Level 1, was $ 694 million at June 30, 2024.

Unrealized pre-tax gain (loss) of $ 319 million ($ 242 million net of tax) on these equity securities was recorded in equity investments and securities (income)/loss, net on the condensed consolidated statements of earnings for the six months ended June 30, 2024.

The fair value of PMI’s other equity securities, which have been classified within Level 1, was $ 1,174 million at September 30, 2024.

Unrealized pre-tax gain (loss) of $ 799 million ($ 614 million net of tax) on these equity securities was recorded in equity investments and securities (income)/loss, net on the condensed consolidated statements of earnings for the nine months ended September 30, 2024.

Other related parties:

1 unchanged sentence

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

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.

Philip Morris International Inc.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

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.

Financial activity with the above related parties:

PMI’s net revenues and expenses with the above related parties were as follows:

For the Six Months Ended June 30, For the Three Months Ended June 30,

For the Nine Months Ended September 30, For the Three Months Ended September 30,

(in millions) 2024 2023 2024 2023

8 unchanged sentences

PMI’s balance sheet activity with the above related parties was as follows:

(in millions) At June 30, 2024 At December 31, 2023

(in millions) At September 30, 2024 At December 31, 2023

Megapolis Group $ 457 $ 474

12 unchanged sentences

When applicable, a servicing liability is recorded for the estimated fair value of the servicing.

The amounts associated with the servicing liability were not material as of June 30, 2024 and June 30, 2023.

The amounts associated with the servicing liability were not material as of September 30, 2024 and September 30, 2023.

Under the non-servicing arrangements, PMI does not provide any administrative support or servicing after the trade receivables have been sold to the unaffiliated financial institutions.

Cumulative trade receivables sold, including excise taxes, for the six months ended June 30, 2024 and 2023, were $ 5.6 billion and $ 6.1 billion, respectively.

PMI’s operating cash flows were positively impacted by the amount of the trade receivables sold

Cumulative trade receivables sold, including excise taxes, for the nine months ended September 30, 2024 and 2023, were $ 8.8 billion and $ 9.4 billion, respectively.

PMI’s operating cash flows were positively impacted by the amount of the trade receivables sold and derecognized from the condensed consolidated balance sheets, which remained outstanding with the unaffiliated financial institutions.

The trade receivables sold that remained outstanding under these arrangements as of September 30, 2024 and September 30, 2023, were $ 0.6 billion and $ 0.7 billion, respectively.

The net proceeds received are included in cash provided by operating activities in the condensed consolidated statements of cash flows.

The difference

Philip Morris International Inc.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

and derecognized from the condensed consolidated balance sheets, which remained outstanding with the unaffiliated financial institutions.

The trade receivables sold that remained outstanding under these arrangements as of June 30, 2024 and 2023 were $ 0.7 billion.

The net proceeds received are included in cash provided by operating activities in the condensed consolidated statements of cash flows.

The difference between the carrying amount of the trade receivables sold and the sum of the cash received is recorded as a loss on sale of trade receivables within marketing, administration and research costs in the condensed consolidated statements of earnings.

between the carrying amount of the trade receivables sold and the sum of the cash received is recorded as a loss on sale of trade receivables within marketing, administration and research costs in the condensed consolidated statements of earnings.

The loss on sale of trade receivables was as follows:

(in millions) For the Six Months Ended June 30, For the Three Months Ended June 30,

(in millions) For the Nine Months Ended September 30, For the Three Months Ended September 30,

2024 $ 33 $ 11

6 unchanged sentences

PMI accounts for its product warranties within other accrued liabilities.

At June 30, 2024 and December 31, 2023, these amounts were as follows:

(in millions) As of and For the Six Months Ended June 30, 2024 As of and For the Year Ended December 31, 2023

At September 30, 2024 and December 31, 2023, these amounts were as follows:

(in millions) As of and For the Nine Months Ended September 30, 2024 As of and For the Year Ended December 31, 2023

Balance at beginning of period $ 80 $ 104

5 unchanged sentences

Asset Impairment and Exit Costs:

For the six months ended June 30, 2024 and 2023, PMI recorded total pre-tax asset impairment and exit costs of $ 168 million and $ 109 million, respectively, related to restructuring activities.

For the nine months ended September 30, 2024 and 2023, PMI recorded total pre-tax asset impairment and exit costs of $ 168 million and $ 109 million, respectively, related to restructuring activities.

These 2024 and 2023 pre-tax charges were included in marketing, administration and research costs in the condensed consolidated statements of earnings.

For the three months ended June 30, 2024 and 2023, PMI did not record any charges for asset impairment and exit costs related to restructuring activities.

During the six months ended June 30, 2024, PMI recorded a pre-tax impairment charge on other intangibles of $ 27 million within the Wellness and Healthcare segment.

During the six months and three months ended June 30, 2023, PMI recorded a pre-tax impairment charge on goodwill and other intangibles of $ 680 million within the Wellness and Healthcare segment.

For the three months ended September 30, 2024 and 2023, PMI did not record any charges for asset impairment and exit costs related to restructuring activities.

For the nine months ended September 30, 2024, PMI recorded a pre-tax impairment charge of other intangibles of $ 27 million within the Wellness and Healthcare segment.

For the nine months and the three months ended September 30, 2024, PMI recorded an impairment charge of $ 198 million related to Vectura's classification as held for sale.

For the nine months ended September 30, 2023, PMI recorded a pre-tax impairment charge of goodwill and other intangibles of $ 680 million within the Wellness and Healthcare segment.

For further details on these impairment charges, see Note 4.

Goodwill and Other Intangible Assets, net .

Goodwill and Other Intangible Assets, net and Note 18.

Acquisitions and Divestitures .

Philip Morris International Inc.

9 unchanged sentences

and the related agreement with Altria Group, Inc (“Altria”), see Note 18.

Contingencies and Note 18.

Acquisitions .

During the first quarter of 2024, PMI recorded pre-tax asset impairment and exit costs of $ 121 million related to this restructuring activity.

Acquisitions and Divestitures .

In the first quarter of 2024, PMI recorded pre-tax asset impairment and exit costs of $ 121 million related to this restructuring activity.

This amount included contract termination costs with suppliers of $ 61 million, including prepaid commitments of $ 20 million.

5 unchanged sentences

Income Taxes .

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

e-Vapor Products Manufacturing Optimization

3 unchanged sentences

This amount also included asset impairment costs of $ 31 million, primarily related to machinery and equipment, which were non-cash charges.

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Asset Impairment and Exit Costs by Segment

PMI recorded the following pre-tax asset impairment and exit costs by segment:

(in millions) For the Six Months Ended June 30,

(in millions) For the Nine Months Ended September 30,

Reclassification of accumulated foreign currency translation losses from other comprehensive losses:

13 unchanged sentences

Movement in Exit Cost Liabilities

The movement in exit cost liabilities for the six months ended June 30, 2024 was as follows:

The movement in exit cost liabilities for the nine months ended September 30, 2024 was as follows:

(in millions)

4 unchanged sentences

Currency/other 2

Liability balance, June 30, 2024 $ 43

Liability balance, September 30, 2024 $ 42

Future cash payments for exit costs incurred to date are anticipated to be substantially paid by the end of 2025, with approximately $ 31 million expected to be paid in the remainder of 2024.

2 unchanged sentences

Notes to Condensed Consolidated Financial Statements

The components of PMI’s lease cost were as follows for the six months and three months ended June 30, 2024 and 2023:

For the Six Months Ended June 30, For the Three Months Ended June 30,

The components of PMI’s lease cost were as follows for the nine months and three months ended September 30, 2024 and 2023:

For the Nine Months Ended September 30, For the Three Months Ended September 30,

(in millions) 2024 2023 2024 2023

16 unchanged sentences

The associated payments are included in cash flows from operating activities within PMI's condensed consolidated statement of cash flows.

As of June 30, 2024 and December 31, 2023, the total amount due to suppliers participating in the SCF program was approximately $ 0.8 billion and $ 0.9 billion, respectively.

Acquisitions:

As of September 30, 2024 and December 31, 2023, the total amount due to suppliers participating in the SCF program was approximately $ 0.9 billion.

Acquisitions and Divestitures:

Transactions With Noncontrolling Interests - Turkey

16 unchanged sentences

The cash consideration paid was accounted for within Other assets in PMI's condensed consolidated balance sheets as of December 31, 2023.

On the acquisition date and as of June 30, 2024, the reacquired rights were classified as Other intangible assets, net in PMI's condensed consolidated balance sheets, and will be amortized over their useful life of 5 years.

For further details on PMI's agreement with Altria, see Note 8.

Contingencies .

On the acquisition date and as of September 30, 2024, the reacquired rights were classified as Other intangible assets, net in PMI's condensed consolidated balance sheets, and will be amortized over their useful life of 5 years.

United Tobacco Company

6 unchanged sentences

The total purchase price for the incremental equity interest of $ 315 million included cash consideration of $ 30 million, contingent consideration of $ 22 million and $ 263 million of assumed bank loan liabilities.

During the third quarter of 2024, PMI paid the contingent consideration of $ 22 million and $ 240 million of assumed bank loans.

The following table summarizes the preliminary purchase price allocation for the fair value of assets acquired and liabilities assumed as of the date of the acquisition, which includes previously held interest:

13 unchanged sentences

PMI is evaluating the deductibility of goodwill for income tax purposes.

UTC's results of operations from May 16, 2024, through June 30, 2024, were included in PMI's consolidated statements of earnings and were not material.

UTC's results of operations from May 16, 2024, through September 30, 2024, were included

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

in PMI's consolidated statements of earnings and were not material.

Pro forma results of operations for the business combination have not been presented as the aggregate impact is not material to PMI's consolidated statements of earnings.

Agreement to sell Vectura Group Ltd.

On September 17, 2024, PMI announced the execution of a definitive agreement pursuant to which PMI’s direct, wholly-owned subsidiary, Vectura Fertin Pharma Inc., agreed to sell Vectura Group Ltd.

to Molex Asia Holdings Ltd.

Vectura's results are included in the Wellness and Healthcare segment.

The transaction price is GBP 150 million (approximately $ 201 million), with additional deferred payments of up to GBP 148 million (approximately $ 198 million), contingent on achievement of certain milestones over periods up to and through 2039.

The transaction is expected to close during the fourth quarter of 2024, subject to customary regulatory approvals and other closing conditions.

In connection with the expected transaction, Vectura’s net assets including $ 333 million of assets and $ 191 million of liabilities have been classified as held-for-sale and included within other current assets and other accrued liabilities, respectively, in PMI’s condensed consolidated balance sheet as of September 30, 2024.

Carrying value of Vectura’s net assets held for sale exceeded their fair value less costs to sell, resulting in an impairment charge of $ 198 million, which has been recorded in marketing, administration and research costs in PMI’s condensed consolidated statements of earnings during the nine months and the three months ended September 30, 2024.

The estimated fair value of the disposal group less costs to sell was determined using a market approach, based upon the expected net sales proceeds of the disposal group.

Philip Morris International Inc.

3 unchanged sentences

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.

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”), which improves reportable segment disclosures, primarily through enhanced disclosures about significant segment expenses that impact segment profit and loss, regularly provided to the chief operating decision maker.

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.

PMI will adopt the additional disclosure requirements on the specified effective date within its annual reporting for the year ending December 31, 2024, and its interim reporting starting for the quarter ending March 31, 2025.

Improvements to Income Tax Disclosures

6 unchanged sentences

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-Q

Item 1. Financial Statements