What changed in this filing

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Item 1. Financial Statements

2025-10-24 compared with 2025-07-25 · 381 added, 301 removed, 1359 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 (Note 13)

2 unchanged sentences

Gross profit 20,480 18,266

Marketing, administration and research costs (Note 16) 5,825 5,232

Marketing, administration and research costs (Notes 8, 9 & 16) 8,920 8,123

Impairment of goodwill (Note 5) 41 —

4 unchanged sentences

Provision for income taxes 2,062 2,145

Equity investments and securities (income)/loss, net ( 581 ) ( 352 )

Equity investments and securities (income)/loss, net (Note 13) ( 926 ) ( 852 )

Net earnings $ 9,598 $ 7,989

4 unchanged sentences

Diluted earnings per share $ 5.89 $ 4.89

(1) Includes net revenues from related parties of $ 2,080 million and $ 1,821 million for the six months ended June 30, 2025 and 2024, respectively.

(1) Includes net revenues from related parties of $ 3,387 million and $ 2,866 million for the nine months ended September 30, 2025 and 2024, respectively.

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

For the six months ended June 30, 2025 and 2024, excise tax on products was $ 25,274 million and $ 24,762 million, respectively.

For the nine months ended September 30, 2025 and 2024, excise tax on products was $ 39,495 million and $ 38,535 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 13)

2 unchanged sentences

Gross profit 7,358 6,545

Marketing, administration and research costs (Note 16)

Impairment of goodwill (Note 5) 41 —

Marketing, administration and research costs (Notes 8 & 9) 3,095 2,891

Operating income 4,263 3,654

3 unchanged sentences

Provision for income taxes 751 735

Equity investments and securities (income)/loss, net ( 376 ) ( 161 )

Equity investments and securities (income)/loss, net (Note 13) ( 345 ) ( 500 )

Net earnings 3,613 3,215

4 unchanged sentences

Diluted earnings per share $ 2.23 $ 1.97

(1) Includes net revenues from related parties of $ 1,143 million and $ 961 million for the three months ended June 30, 2025 and 2024, respectively.

(1) Includes net revenues from related parties of $ 1,307 million and $ 1,045 million for the three months ended September 30, 2025 and 2024, respectively.

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

For the three months ended June 30, 2025 and 2024, excise tax on products was $ 13,272 million and $ 12,923 million, respectively.

For the three months ended September 30, 2025 and 2024, excise tax on products was $ 14,221 million and $ 13,773 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 $ 9,598 $ 7,989

21 unchanged sentences

(in millions of dollars)

For the Three Months Ended June 30,

For the Three Months Ended September 30,

Net earnings $ 3,613 $ 3,215

3 unchanged sentences

( 291 ) ( 730 )

(Gains)/losses transferred to earnings, net of income taxes of $ 0 in 2025 and 2024 (Note 2)

Change in net loss and prior service cost:

15 unchanged sentences

(in millions of dollars)

September 30,

2025 December 31,

15 unchanged sentences

TOTAL ASSETS $ 67,061 $ 61,784

(1) Includes trade receivables from related parties of $ 1,026 million and $ 691 million as of June 30, 2025, and December 31, 2024, respectively.

(1) Includes trade receivables from related parties of $ 905 million and $ 691 million as of September 30, 2025, and December 31, 2024, respectively.

For further details, see Note 13.

5 unchanged sentences

(in millions of dollars, except share data)

September 30,

2025 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 5) 41 27

Loss on sale of Vectura Group (Notes 2 & 8)

Deferred income tax (benefit) provision ( 433 ) 20

22 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

14 unchanged sentences

Balance at end of period $ 4,061 $ 4,301

(1) The amounts for cash, cash equivalents and restricted cash shown above include restricted cash of $ 38 million and $ 69 million as of June 30, 2025 and 2024, respectively, and $ 38 million and $ 86 million as of December 31, 2024 and 2023, 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 $ 24 million and $ 43 million as of September 30, 2025 and 2024, respectively, and $ 38 million and $ 86 million as of December 31, 2024 and 2023, 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, 2025 and 2024

For the Nine Months Ended September 30, 2025 and 2024

(in millions of dollars, except per share amounts)

16 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 )

Balances, January 1, 2025 $ — $ 2,335 $ 32,869 $ ( 11,314 ) $ ( 35,640 ) $ 1,880 $ ( 9,870 )

5 unchanged sentences

Dividends paid to noncontrolling interests ( 345 ) ( 345 )

Balances, June 30, 2025 $ — $ 2,364 $ 34,376 $ ( 13,153 ) $ ( 35,553 ) $ 1,954 $ ( 10,012 )

Balances, September 30, 2025 $ — $ 2,400 $ 35,557 $ ( 13,320 ) $ ( 35,551 ) $ 1,930 $ ( 8,984 )

See notes to condensed consolidated financial statements.

2 unchanged sentences

Condensed Consolidated Statements of Stockholders’ (Deficit) Equity

For the Three Months Ended June 30, 2025 and 2024

For the Three Months Ended September 30, 2025 and 2024

(in millions of dollars, except per share amounts)

7 unchanged sentences

Interests Total

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

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 2) 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, April 1, 2025 $ — $ 2,326 $ 33,447 $ ( 11,117 ) $ ( 35,557 ) $ 1,975 $ ( 8,926 )

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

Balances, July 1, 2025 $ — $ 2,364 $ 34,376 $ ( 13,153 ) $ ( 35,553 ) $ 1,954 $ ( 10,012 )

Net earnings 3,478 135 3,613

4 unchanged sentences

Dividends paid to noncontrolling interests ( 130 ) ( 130 )

Balances, June 30, 2025 $ — $ 2,364 $ 34,376 $ ( 13,153 ) $ ( 35,553 ) $ 1,954 $ ( 10,012 )

Balances, September 30, 2025 $ — $ 2,400 $ 35,557 $ ( 13,320 ) $ ( 35,551 ) $ 1,930 $ ( 8,984 )

See notes to condensed consolidated financial statements.

37 unchanged sentences

In addition, PMI agreed to indemnify Molex for certain claims related to the pre-completion period.

As of June 30, 2025 and December 31, 2024, the liability related to the indemnity was not material.

As of September 30, 2025 and December 31, 2024, the liability related to the indemnity was not material.

Philip Morris International Inc.

42 unchanged sentences

Prior to the acquisition date, the cash consideration paid was accounted for within Other assets in PMI's consolidated balance sheets.

On the acquisition date and as of December 31, 2024 and June 30, 2025, the reacquired rights were classified as Other intangible assets, net in PMI's consolidated balance sheets, and are being amortized over their useful life of 5 years.

On the acquisition date and as of December 31, 2024 and September 30, 2025, the reacquired rights were classified as Other intangible assets, net in PMI's consolidated balance sheets, and are being amortized over their useful life of 5 years.

In May 2022, PMI’s shareholders approved the Philip Morris International Inc.

2 unchanged sentences

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

At June 30, 2025, shares available for grant under the 2022 Plan were 16,942,225 .

At September 30, 2025, shares available for grant under the 2022 Plan were 16,941,945 .

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

2 unchanged sentences

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

At June 30, 2025, shares available for grant under the plan were 865,940 .

At September 30, 2025, shares available for grant under the plan were 845,900 .

Restricted share unit (RSU) awards

During the six months ended June 30, 2025 and 2024, 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, 2025 and 2024, 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,

2025 $ 131 $ 34

2024 $ 115 $ 31

As of June 30, 2025, PMI had $ 259 million of total unrecognized compensation cost related to non-vested RSU awards.

As of September 30, 2025, PMI had $ 219 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, 2025, 1,320,538 RSU awards vested.

During the nine months ended September 30, 2025, 1,381,994 RSU awards vested.

The grant date fair value of all the vested awards was approximately $ 145 million.

The total fair value of RSU awards that vested during the six months ended June 30, 2025 was approximately $ 198 million.

The total fair value of RSU awards that vested during the nine months ended September 30, 2025 was approximately $ 209 million.

Philip Morris International Inc.

2 unchanged sentences

Performance share unit (PSU) awards

During the six months ended June 30, 2025 and 2024, PMI granted PSU awards to certain executives.

During the nine months ended September 30, 2025 and 2024, 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, 2025 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, 2025 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):

4 unchanged sentences

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.

The performance metrics, targets and relative weights for the PSU’s granted during the six months ended June 30, 2025 were the same as the PSU’s granted during the six months ended June 30, 2024, with the exception of the annual growth rate of adjusted diluted EPS metric goals, which was increased, and for changes to certain components of the Sustainability Index.

The performance metrics, targets and relative weights for the PSU’s granted during the nine months ended September 30, 2025 were the same as the PSU’s granted during the nine months ended September 30, 2024, with the exception of the annual growth rate of adjusted diluted EPS metric goals, which was increased, and for changes to certain components of the Sustainability Index.

In the Sustainability Index, certain KPIs were adjusted to reflect PMI’s developing sustainability strategy and the number of individual KPIs was reduced, both in acknowledgment of the maturity of certain programs measured by removed KPIs and to further focus management performance on the remaining Sustainability Index metrics.

5 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, 2025 and 2024, 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, 2025 and 2024, 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-

18 unchanged sentences

(b) Determined using the observed historical volatility.

Compensation expense related to PSU awards was as follows:

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,

2025 $ 66 $ 6

2024 $ 58 $ 9

As of June 30, 2025, PMI had $ 60 million of total unrecognized compensation cost related to non-vested PSU awards.

As of September 30, 2025, PMI had $ 50 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, 2025, 686,052 PSU awards vested.

During the nine months ended September 30, 2025, 686,052 PSU awards vested.

The grant date fair value of all the vested awards was approximately $ 84 million.

The total fair value of PSU awards that vested during the six months ended June 30, 2025 was approximately $ 102 million.

The total fair value of PSU awards that vested during the nine months ended September 30, 2025 was approximately $ 102 million.

Benefit Plans:

6 unchanged sentences

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) 2025 2024 2025 2024

9 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) 2025 2024 2025 2024

11 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 $ 62 million were made to the pension plans during the six months ended June 30, 2025.

Employer contributions of $ 91 million were made to the pension plans during the nine months ended September 30, 2025.

Currently, PMI anticipates making additional contributions during the remainder of 2025 of approximately $ 68 million to its pension plans, based on current tax and benefit laws.

However, this estimate is subject to change as a result of changes in tax and other benefit laws, as well as asset performance significantly above or below the assumed long-term rate of return on pension assets, or changes in interest and currency rates.

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Goodwill and Other Intangible Assets, net:

2 unchanged sentences

As a result of updated financial projections, it was determined that the estimated fair value of a reporting unit included within the Europe segment was lower than its carrying value.

Consequently, PMI recorded a goodwill impairment charge of $ 41 million, which represented the entirety of the goodwill recorded in the reporting unit.

Consequently, PMI recorded in the second quarter of 2025 a goodwill impairment charge of $ 41 million, which represented the entirety of the goodwill recorded in the reporting unit.

Each of PMI's reporting units had fair values substantially in excess of their carrying values.

1 unchanged sentence

In addition, there are 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 foreign currency volatility.

As of June 30, 2025, our Russian operations had approximately $ 4.3 billion in total assets, excluding intercompany balances, of which approximately $ 1.8 billion consisted of cash and cash equivalents held mostly in local currency (Russian rubles).

As of September 30, 2025, our Russian operations had approximately $ 4.5 billion in total assets, excluding intercompany balances, of which approximately $ 2.0 billion consisted of cash and cash equivalents held mostly in local currency (Russian rubles).

Additionally, we hold a 23 % equity interest in JSC TK Megapolis, PMI's distributor in Russia.

1 unchanged sentence

Related Parties – Equity Investments and Other .

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

The movements in goodwill were as follows:

7 unchanged sentences

Currency 608 ( 32 ) ( 5 ) 58 629

Balances, June 30, 2025 $ 4,681 $ 3,278 $ 475 $ 8,791 $ 17,225

Balances, September 30, 2025 $ 4,697 $ 3,212 $ 465 $ 8,807 $ 17,181

As discussed in Note 1.

2 unchanged sentences

As a result, the December 31, 2024 goodwill balance for the Europe segment in the table above includes the reclassification of the former Wellness & Healthcare segment.

At June 30, 2025, goodwill primarily reflects PMI’s acquisitions of Swedish Match AB and Fertin Pharma A/S, as well as acquisitions in Indonesia, the Philippines, Egypt, Greece, Mexico, and Serbia.

At September 30, 2025, goodwill primarily reflects PMI’s acquisitions of Swedish Match AB and Fertin Pharma A/S, as well as acquisitions in Indonesia, the Philippines, Egypt, Greece, Mexico, and Serbia.

In the second quarter of 2025, PMI finalized the measurement period adjustments related to its acquisition in Egypt of United Tobacco Company (UTC).

1 unchanged sentence

Acquisitions and Divestitures.

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Other Intangible Assets

Details of other intangible assets were as follows:

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

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

10 unchanged sentences

The increase since December 31, 2024, was mainly due to currency movements of $ 263 million and measurement period adjustments related to the final purchase price allocation of UTC acquisition in Egypt of $ 25 million.

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

The increase in the gross carrying amount of amortizable intangible assets from December 31, 2024, was primarily due to currency movements of $ 361 million.

The change in the accumulated amortization from December 31, 2024, was mainly due to the 2025 amortization of $ 746 million, combined with currency movements of $ 84 million.

The amortization of intangibles for the six months ended June 30, 2025 was recorded in cost of sales ($ 11 million) and in marketing, administration and research costs ($ 485 million) on PMI's condensed consolidated statements of earnings.

The amortization of intangibles for the nine months ended September 30, 2025 was recorded in cost of sales ($ 16 million) and in marketing, administration and research costs ($ 730 million) on PMI's condensed consolidated statements of earnings.

Amortization expense for each of the next five years is estimated to be approximately $ 996 million or less, assuming no additional transactions occur that require the amortization of intangible assets.

4 unchanged sentences

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

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

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

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

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

10 unchanged sentences

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

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

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

(in millions) At June 30, 2025 At December 31, 2024

(in millions) At September 30, 2025 At December 31, 2024

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, 2025 and December 31, 2024, were as follows:

The fair value of PMI’s derivative contracts included in the condensed consolidated balance sheets as of September 30, 2025 and December 31, 2024, were as follows:

Derivative Assets Derivative Liabilities

Fair Value Fair Value

(in millions) Balance Sheet Classification June 30, 2025 December 31, 2024 Balance Sheet Classification June 30, 2025 December 31, 2024

(in millions) Balance Sheet Classification September 30, 2025 December 31, 2024 Balance Sheet Classification September 30, 2025 December 31, 2024

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, 2025 and December 31, 2024.

PMI’s derivative contracts have been classified within Level 2 at September 30, 2025 and December 31, 2024.

Philip Morris International Inc.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

For the six months ended June 30, 2025 and 2024, 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, 2025 and 2024, 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

12 unchanged sentences

Interest rate contracts Interest expense, net (a)

$ 66 $ ( 17 )

Net investment hedges (b) :

3 unchanged sentences

Marketing, administration and research costs (d)

( 1,350 ) 432

Total $ ( 2,139 ) $ 102 $ 82 $ 167 $ ( 792 ) $ 441

6 unchanged sentences

Notes to Condensed Consolidated Financial Statements

For the three months ended June 30, 2025 and 2024, 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, 2025 and 2024, 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

26 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, 2025, PMI has hedged forecasted transactions with derivative contracts expiring at various dates through May 2028.

As of September 30, 2025, 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, 2025 was $ 4,116 million, of which $ 635 million was recorded in current portion of long-term debt and $ 3,481 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 $( 44 ) million as of June 30, 2025.

The carrying amount of the debt hedged, which includes the cumulative adjustment for fair value gains/losses, as of September 30, 2025 was $ 5,124 million, of which $ 640 million was recorded in current portion of long-term debt and $ 4,484 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 $( 55 ) million as of September 30, 2025.

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, 2025 and 2024, 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 $ 5 million, respectively.

For the three months ended June 30, 2025 and 2024, 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 for both periods.

For the nine months ended September 30, 2025 and 2024, 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 $ 2 million and $( 18 ) million, respectively.

For the three months ended September 30, 2025 and 2024, 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 $ 2 million and $( 23 ) 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,

2025 2024 2025 2024

Gain/(loss) as of beginning of period, $ 467 $ 241 $ 324 $ 373

Gain as of beginning of period, $ 467 $ 241 $ 182 $ 433

Derivative (gains)/losses transferred to earnings ( 69 ) ( 137 ) ( 19 ) ( 43 )

Change in fair value ( 168 ) 126 67 ( 160 )

Gain/(loss) as of June 30, $ 182 $ 433 $ 182 $ 433

At June 30, 2025, PMI expects $ 22 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 as of September 30, $ 230 $ 230 $ 230 $ 230

At September 30, 2025, PMI expects $ 49 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.

10 unchanged sentences

Certain PMI investments, which are comprised primarily of U.S.

dollar denominated bonds in Argentina, have been classified within Level 1 and had a fair value of $ 241 million at June 30, 2025.

For the six months and three months ended June 30, 2025, the gross unrealized pre-tax gains (losses) on these investments were immaterial.

dollar denominated bonds in Argentina, have been classified within Level 1 and had a fair value of $ 292 million at September 30, 2025.

For the nine months and three months ended September 30, 2025, the gross 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,

2025 2024 2025 2024

33 unchanged sentences

(in millions) Europe SSEA, CIS & MEA EA, AU & PMI GTR Americas Total

For the Six Months Ended June 30, 2025

For the Nine Months Ended September 30, 2025

Net revenues $ 12,513 $ 8,942 $ 5,207 $ 3,624 $ 30,286

3 unchanged sentences

Operating income $ 5,255 $ 3,155 $ 2,612 $ 497 $ 11,519

For the Six Months Ended June 30, 2024

For the Nine Months Ended September 30, 2024

Net revenues $ 11,547 $ 8,393 $ 4,959 $ 3,273 $ 28,172

3 unchanged sentences

(in millions) Europe SSEA, CIS & MEA EA, AU & PMI GTR Americas Total

For the Three Months Ended June 30, 2025

For the Three Months Ended September 30, 2025

Net revenues $ 4,719 $ 3,273 $ 1,768 $ 1,085 $ 10,845

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Marketing, administration and research costs 1,394 679 387 635 3,095

Impairment of goodwill 41 — — — 41

Operating income $ 2,150 $ 1,235 $ 846 $ 32 $ 4,263

For the Three Months Ended June 30, 2024

For the Three Months Ended September 30, 2024

Net revenues $ 4,197 $ 2,964 $ 1,602 $ 1,148 $ 9,911

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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,

2025 2024 2025 2024

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• Restructuring charges - See Note 16.

Restructuring Activities for a breakdown of these costs by segment for the six months and three months ended June 30, 2025 and 2024.

Restructuring Activities for a breakdown of these costs by segment for the nine months ended September 30, 2025 and 2024.

• Impairment of goodwill – See Note 5.

Goodwill and Other Intangible Assets, net for details of the $ 41 million of goodwill impairment charge recorded in the Europe segment for the six months and three months ended June 30, 2025.

Goodwill and Other Intangible Assets, net for details of the $ 41 million of goodwill impairment charge recorded in the Europe segment for the nine months ended September 30, 2025.

• Germany excise tax classification litigation charge – See Note 9.

Contingencies for details of the $ 176 million pre-tax charge recorded in the Europe segment for the nine months and three months ended September 30, 2025.

• Loss on sale of Vectura Group – 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.

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 Europe segment results.

On December 31, 2024, PMI completed the sale.

For further details, see Note 2.

Acquisitions and Divestitures .

• 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.

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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.

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Net revenues related to wellness and healthcare refer to the operating revenues generated from the sale of product, primarily associated with inhaled therapeutics, and oral and intra-oral delivery systems.

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Other segment data were as follows:

(in millions)

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,

2025 2024 2025 2024

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(in millions)

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,

2025 2024 2025 2024

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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.

Damages claimed in some of the tobacco-related litigation are significant and, in the case of the "Health Care Cost Recovery

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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.

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Legal defense costs are expensed as incurred.

It is possible that our consolidated financial statements, including our results of operations, cash flows or financial position could be materially affected in a particular fiscal quarter or fiscal year by an unfavorable outcome or settlement of certain

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pending litigation.

Nevertheless, although litigation is subject to uncertainty, we and each of our subsidiaries named as a defendant believe, and each has been so advised by counsel handling the respective cases, that we have valid defenses to the litigation pending against us, as well as valid bases for appeal of adverse verdicts.

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After assessing the information available to it, except as stated otherwise in this Note 9.

Contingencies , (i) management has not concluded that it is probable that a loss has been incurred in any of the pending combustible tobacco product-related cases;

(ii) management is unable to estimate the possible loss or range of loss for any of the pending combustible tobacco product-related cases;

Contingencies , (i) management has not concluded that it is probable that a loss has been incurred in any of the pending cases mentioned in this Note 9.

Contingencies ;

(ii) management is unable to estimate the possible loss or range of loss for any of these cases;

and (iii) accordingly, no estimated loss has been accrued in the consolidated financial statements for unfavorable outcomes in these cases, if any.

Approval of CCAA Plan and Stay of Combustible Tobacco Product-Related Cases Pending in Canada

Approval and Implementation of CCAA Plan

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.

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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 order made by the Ontario Superior Court on March 22, 2019 authorized 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 the Effective Date (defined below) 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.

During the CCAA proceedings, there was a comprehensive stay 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 ” and have now been released under the CCAA Plan (as discussed further herein).

Ernst & Young Inc.

served as monitor of RBH in the CCAA proceedings.

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

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The RBH Objection argued that the Proposed Plan could not be approved because it failed to resolve the Allocation Issue.

The RBH Objection also stated that, without an appropriate, fair and reasonable resolution of the Allocation Issue, RBH could not consent to implementation of the Proposed Plan.

To address the Allocation Issue, the RBH Objection sought to amend the Proposed Sanction Order to include provisions (the “Proposed Allocation Provisions”) requiring that ITL and JTIM make payments to RBH from their retained working capital and net income after taxes over a period of years.

ITL, JTIM, and certain claimant groups opposed the Proposed Allocation Provisions set forth in the RBH Objection.

Following a judicial hearing on the Sanction Motion, RBH, JTIM and ITL reached a consensual resolution of all outstanding objections to the Proposed Plan filed by RBH, JTIM and ITL, including the RBH Objection, that resulted in amendments to the Proposed Plan that, among other things, would permit RBH to retain CAD 750 million (approximately $ 547 million) in accumulated cash.

On March 6, 2025, the CCAA court issued a decision approving the Proposed Plan as amended (the "Plan").

The RBH Objection also stated that,

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Notes to Condensed Consolidated Financial Statements

Under the resolution contemplated by the Plan, as approved by the CCAA Court, RBH, JTIM, and ITL will pay an aggregate global settlement amount of CAD 32.5 billion (approximately $ 23.7 billion).

This amount will be funded by an upfront payment equal to the companies’ cash and cash equivalents on hand plus court deposits, less the CAD 750 million that RBH will be permitted to retain, as well as 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.

without an appropriate, fair and reasonable resolution of the Allocation Issue, RBH could not consent to implementation of the Proposed Plan.

ITL, JTIM, and certain claimant groups opposed the Proposed Allocation Provisions set forth in the RBH Objection.

Following a judicial hearing on the Sanction Motion, RBH, JTIM and ITL reached a consensual resolution of all outstanding objections to the Proposed Plan filed by RBH, JTIM and ITL, including the RBH Objection, that resulted in amendments to the Proposed Plan that, among other things, permitted RBH to retain CAD 750 million (approximately $ 536 million) in accumulated cash.

On March 6, 2025, the CCAA court issued a decision approving the Proposed Plan as amended (the "Plan").

Implementation of the Plan was subject to certain conditions precedent, including execution and delivery of definitive documentation, such as execution of contractual releases.

The Plan was implemented and became effective on August 29, 2025 (the "Effective Date").

Under the resolution contemplated by the Plan, as approved by the CCAA Court and implemented on the Effective Date, RBH, JTIM, and ITL will pay an aggregate global settlement amount of CAD 32.5 billion (approximately $ 23.1 billion).

This amount will be funded by an upfront payment equal to the companies’ cash and cash equivalents on hand plus court deposits, less the CAD 750 million that RBH was permitted to retain ("Upfront Contribution"), as well as 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.

The companies, including RBH, made the Upfront Contribution on the Effective Date.

Annual contributions start at 85 % of net after-tax income ("NATI"), with a five -percentage point reduction in NATI every five years until reaching 70 %.

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Such payment obligations concern only RBH and not PMI.

RBH and its affiliates, including PMI and its indemnitees, will 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 Plan;

related litigation will 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) will be transferred to an RBH affiliate.

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

Implementation of the Plan is subject to certain conditions precedent, including execution and delivery of definitive documentation, such as execution of contractual releases.

Subject to satisfaction of the conditions precedent, it is expected that the Plan will be implemented and become effective sometime in the second half of 2025 ("Effective Date").

For additional information concerning the fair value of PMI’s continuing investment in RBH and the impairment charge recorded in the Company’s consolidated statement of earnings for the year ended December 31, 2024, as a recognized subsequent event, see Note 13.

Moreover, the Plan, as implemented, releases RBH and its affiliates, including PMI and its indemnitees, from 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.

Related litigation will 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) will be transferred to an RBH affiliate, consistent with the terms of the Plan.

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

For additional information concerning the fair value of PMI’s continuing investment in RBH, see Note 13.

Related Parties – Equity Investments and Other .

Stayed Litigation — Canada

Under the Plan, as ordered by the CCAA Court and implemented, the claims set forth in the sections entitled “ Smoking and Health Litigation — Canada ” and “ Health Care Cost Recovery Litigation — Canada ” have been released, and the related cases must be dismissed.

We expect these cases to be dismissed in due course.

Smoking and Health Litigation — Canada

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RBH appealed to the Court of Appeal of Quebec.

In October 2015, the Court of Appeal ordered RBH to furnish security totaling CAD 226 million (approximately $ 165 million) to cover both the Létourneau and Blais cases, which RBH has paid in installments through March 2017.

In October 2015, the Court of Appeal ordered RBH to furnish security totaling CAD 226 million (approximately $ 161 million) to cover both the Létourneau and Blais cases, which RBH paid

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in installments through March 2017.

The Court of Appeal ordered Imperial Tobacco Canada Ltd.

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

In accordance with the judgment, defendants were required to deposit their respective portions of the damages awarded in both the Létourneau case described below and the Blais case,

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approximately CAD 1.1 billion (approximately $ 803 million), into trust accounts within 60 days.

In accordance with the judgment, defendants were required to deposit their respective portions of the damages awarded in both the Létourneau case described below and the Blais case, approximately CAD 1.1 billion (approximately $ 783 million), into trust accounts within 60 days.

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

PMI recorded a pre-tax charge of $ 194 million in its consolidated results, representing $ 142 million net of tax, as tobacco litigation-related expense, in the first quarter of 2019.

The charge reflects PMI’s assessment of the portion of the judgment that represents probable and estimable loss prior to the deconsolidation of RBH and corresponds to the trust account deposit required by the judgment.

The charge reflected PMI’s assessment of the portion of the judgment that represented probable and estimable loss prior to the deconsolidation of RBH and corresponded to the trust account deposit required by the judgment.

In the second class action pending in Canada, Cecilia Létourneau v.

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She is seeking compensatory and punitive damages on behalf of a proposed class comprised of all smokers who have smoked a minimum of 25,000 cigarettes and have allegedly suffered, or suffer, from COPD, emphysema, heart disease, or cancer, as well as restitution of profits.

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In the fifth class action pending in Canada, Semple v.

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In the seventh class action pending in Canada, McDermid v.

Imperial Tobacco Canada Limited, et al., Supreme Court, British Columbia, Canada , filed June 25, 2010, we, RBH, and our indemnitees (PM USA and Altria), and other members of the

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industry are defendants.

Imperial Tobacco Canada Limited, et al., Supreme Court, British Columbia, Canada , filed June 25, 2010, we, RBH, and our indemnitees (PM USA and Altria), and other members of the industry are defendants.

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

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Rothmans Inc., et al., Ontario Superior Court of Justice, Toronto, Canada , filed September 29, 2009, we, RBH, our indemnitees (PM USA and Altria), and other members of the industry are defendants.

The claim was filed by the government of the province of Ontario based on legislation enacted in the province.

The claim was filed by the government of the province of Ontario

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based on legislation enacted in the province.

This legislation is similar to the laws introduced in British Columbia and New Brunswick that authorize the government to file a direct action against cigarette manufacturers to recover the health care costs it has incurred, and will incur, as a result of a “tobacco related wrong.”

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

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In the sixth health care cost recovery case filed in Canada, Her Majesty in Right of Alberta v.

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Combustible tobacco products litigation

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 nine proposed class actions, seventeen health care cost recovery cases, one public civil action, and individual cases.

All cases resolved by final and non-appealable liability judgment have been terminated in our favor and only a small number of cases remain pending.

The pending cases include nine proposed class actions (all of which have been released and will be dismissed pursuant to the CCAA Plan), seventeen health care cost recovery cases ( ten of which have been released and will be dismissed pursuant to the CCAA Plan), one 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, three were initially decided in favor of plaintiffs and remain on appeal, or are subject to an appeal.

These three cases include the Blais Class Action and the Létourneau Class Action, described above under the caption " Smoking and Health Litigation — Canada, " and one individual case 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.

Of the pending combustible tobacco product-related cases, three were initially decided in favor of plaintiffs.

These three cases include the Blais Class Action and the Létourneau Class Action, which are described above under the caption " Smoking and Health Litigation — Canada, " and will be dismissed pursuant to the CCAA Plan, and one individual case that remains on appeal, 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:

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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.

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

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equitable relief.

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

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, 2025, there were nine cases brought on behalf of classes of individual plaintiffs pending against us, our subsidiaries or indemnitees, compared with nine such cases on June 30, 2024, and such cases are described above under the caption “ Smoking and Health Litigation — Canada.

As of September 30, 2025, there were nine cases brought on behalf of classes of individual plaintiffs pending against us, our subsidiaries or indemnitees, compared with nine such cases on September 30, 2024.

Such cases are described above under the caption “ Smoking and Health Litigation — Canada, ” have been released under the CCAA Plan and will be formally dismissed.

Health Care Cost Recovery Litigation:

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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, 2025, 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 ), unchanged from 17 such cases on June 30, 2024.

As of September 30, 2025, 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 ), from 17 such cases on September 30, 2024.

The health care cost recovery actions pending in Canada are described above under the caption “ Health Care Cost Recovery Litigation — Canada.

” These cases have been released under the CCAA Plan, and will be formally dismissed.

In the health care cost recovery case in Brazil, The Attorney General of Brazil v.

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Currently, the case is stayed in the trial court pending the appeals of certain co-defendants relating to service objections.

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In the second health care cost recovery case in Nigeria, The Attorney General of Kano State v.

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We have not yet been re-served.

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In the fifth health care cost recovery case in Nigeria, The Attorney General of Ogun State v.

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

The plaintiff's appeal remains pending, with final submissions due in August 2025.

The parties filed final appellate submissions in August 2025.

The appellate court may issue a decision in the coming months.

Public Civil Actions:

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

As of June 30, 2025, there was one public civil action pending against our subsidiary in Venezuela ( 1 ), compared with one such case on June 30, 2024.

As of September 30, 2025, there was one public civil action pending against our subsidiary in Venezuela ( 1 ), compared with one such case on September 30, 2024.

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

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The claim asks the court to order the government to enact stricter regulations on the manufacture and sale of tobacco products.

In addition, the plaintiffs ask the court to order companies involved in the tobacco industry to allocate a percentage of their “sales or benefits” to establish a fund to pay for the health care costs of treating smoking-related diseases.

In addition, the plaintiffs ask the court to order companies involved in the tobacco

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industry to allocate a percentage of their “sales or benefits” to establish a fund to pay for the health care costs of treating smoking-related diseases.

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

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Plaintiff 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,

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interest, and medical monitoring.

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

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The Court has set a deadline of June 26, 2026 for the completion of all fact and expert discovery and December 7, 2026 for the start of trial.

On September 15, 2025, Plaintiff filed a motion to amend his complaint to add two additional named plaintiffs.

Darryl Maultsby and Griffin Dykes, as well as a new claim under the Florida Deceptive and Unfair Practices Trade Act ("FDUPTA").

On October 14, 2025, the Court granted Plaintiff's motion to amend the complaint.

On October 22, 2025, defendants filed a motion to dismiss the FDUTPA claim.

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

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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.

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

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The Court has set a deadline of June 26, 2026 for the completion of all fact and expert discovery and December 7, 2026 for the start of trial.

On September 15, 2025, Plaintiff filed a motion to amend his complaint to add a new claim under the Florida Deceptive and Unfair Practices Trade Act ("FDUPTA").

On October 14, 2025, the Court granted Plaintiff's motion to amend the complaint.

On October 23, 2025, defendants filed a motion to dismiss the FDUTPA claim.

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 complaint named PMI and Swedish Match North America LLC as

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The complaint named PMI and Swedish Match North America LLC as defendants.

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The Court has set a deadline of June 26, 2026 for the completion of all fact and expert discovery and December 7, 2026 for the start of trial.

On September 15, 2025, Plaintiff filed a motion to amend his complaint to add a new claim under the Florida Deceptive and Unfair Practices Trade Act ("FDUPTA").

On October 14, 2025, the Court granted Plaintiff's motion to amend the complaint.

On October 23, 2025, defendants filed a motion to dismiss the FDUTPA claim.

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

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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 alleges, among other things, that defendants

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Notes to Condensed Consolidated Financial Statements

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.

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The Court has set a deadline of June 26, 2026 for the completion of all fact and expert discovery and December 7, 2026 for the start of trial.

On September 15, 2025, Plaintiff filed a motion to amend her complaint to add a new claim under the Florida Deceptive and Unfair Practices Trade Act ("FDUPTA").

On October 14, 2025, the Court granted Plaintiff's motion to amend the complaint.

On October 23, 2025, defendants filed a motion to dismiss the FDUTPA claim.

In the seventh case, Mayor and City Council of Baltimore v.

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On July 7, 2025, Defendants removed the case to the United States District Court for the District of Maryland.

Defendants have not yet

On August 6, 2025, Plaintiff filed a motion to remand the case back to state court.

That motion is now fully briefed and remains pending.

Defendants have not yet answered or otherwise responded to the complaint.

In the eighth case, an individual complaint, Maultsby v.

Philip Morris International Inc., et al , filed August 5, 2025, before United States District Court for the Middle District of Florida, plaintiff alleges, among other things, addiction to nicotine resulting from the use of ZYN nicotine pouches.

The complaint named PMI, Swedish Match North America LLC, Swedish Match USA Inc., PMI Global Services Inc., and Philip Morris Global Brands Inc.

as defendants.

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

Defendants have not yet answered or otherwise responded to the complaint.

On September 15, 2025, Plaintiff in the Kelly case moved to amend the complaint in that matter to add Darryl Maultsby as a named plaintiff in the class action proceeding.

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Notes to Condensed Consolidated Financial Statements

answered or otherwise responded to the complaint.

In the ninth case, an individual complaint, Dykes v.

Philip Morris International Inc., et al , filed August 5, 2025, before United States District Court for the Northern District of Florida, plaintiff alleges, among other things, addiction to nicotine resulting from the use of ZYN nicotine pouches.

The complaint named PMI, Swedish Match North America LLC, Swedish Match USA Inc., PMI Global Services Inc., and Philip Morris Global Brands Inc.

as defendants.

Defendants have not yet answered or otherwise responded to the complaint.

On September 15, 2025, Plaintiff in the Kelly case moved to amend the complaint in that matter to add Griffin Dykes as a named plaintiff in the class action proceeding.

In the tenth case, Austin Siegert v.

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et al , filed September 26, 2025, before the 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 complaint named PMI and Swedish Match North America LLC as defendants.

Plaintiff purports to represent classes comprised of (i) all persons who purchased ZYN in the United States and (ii) a subclass of persons who purchased ZYN in New York.

Plaintiff alleges, among other things, that defendants misrepresented that ZYN is tobacco-free;

misled consumers regarding ZYN ’s nicotine strength and addictive potential;

and deployed misleading advertisements geared towards those under the legal age.

Plaintiff asserts claims for violations of New York General Business Law § 349 (deceptive and unfair trade practices);

violations of New York General Business Law § 350 (misleading advertising);

violations of state consumer protection statutes;

and breaches of the implied warranty of merchantability.

Plaintiff seeks compensatory, statutory and punitive damages, attorney’s fees and expenses, prejudgment interest, and declaratory and injunctive relief.

Defendants have not yet been served with the complaint.

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.

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nicotine pouch market.

Plaintiff asserts claims under the Sherman Antitrust Act, the Clayton Antitrust Act, state antitrust law, and for unjust enrichment.

Plaintiff seeks to represent (i) all natural persons, businesses, entities, and corporations in the United States who purchased ZYN at retail during the class period;

Plaintiff asserted claims under the Sherman Antitrust Act, the Clayton Antitrust Act, state antitrust law, and for unjust enrichment.

Plaintiff sought to represent (i) all natural persons, businesses, entities, and corporations in the United States who purchased ZYN at retail during the class period;

and (ii) all natural persons, businesses, entities, and corporations in the United States who live in states that have certain antitrust statutes who purchase ZYN at retail during the class period.

Plaintiff is seeking damages (including treble damages as available under antitrust laws), costs, attorneys’ fees, disgorgement of profit, pre- and post-judgment interest, and declaratory and injunctive relief (including a declaration that the acquisition of Swedish Match North America LLC by PMI is unlawful and must result in divestiture or be enjoined).

Plaintiff sought damages (including treble damages as available under antitrust laws), costs, attorneys’ fees, disgorgement of profit, pre- and post-judgment interest, and declaratory and injunctive relief (including a declaration that the acquisition of Swedish Match North America LLC by PMI was unlawful and must result in divestiture or be enjoined).

On January 15, 2025, Swedish Match North America LLC filed a motion to dismiss the complaint with prejudice.

Rather than respond to the motion, Plaintiff filed an amended complaint ("Amended Complaint") on February 10, 2025.

The Amended Complaint dropped Plaintiff's baseless litigation theory and named PMI as a defendant in its merger challenge claim.

The Amended Complaint added an additional named plaintiff, dropped Plaintiff's baseless litigation theory and named PMI as a defendant in its merger challenge claim.

Swedish Match North America and PMI filed a motion to dismiss on March 3, 2025.

Briefing is completed and we are awaiting a decision from the court.

On September 18, 2025, the Court granted defendants' motion to dismiss the Amended Complaint in its entirety, with prejudice.

The Department of Special Investigations of the government of Thailand ("DSI") conducted an investigation into alleged underpayment by Philip Morris (Thailand) Limited ("PM Thailand") of customs duties and excise taxes relating to imports from Indonesia covering the period 2000-2003.

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

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

Philip Morris International Inc.

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Notes to Condensed Consolidated Financial Statements

already taken by Thai Customs and a Thai court.

Trial in the case began in November 2018 and concluded in December 2019.

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In April 2020, as required by Thai law, our subsidiary paid the fine.

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

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

Our subsidiary filed an appeal of the trial court's decision.

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The appellate court affirmed the acquittal of the individual defendant.

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

The Public Prosecutor has filed an appeal to the Supreme Court of Thailand challenging the dismissal of charges against the individual defendant and the amount of the fine.

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

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

The Public Prosecutor filed an appeal to the Supreme Court of Thailand challenging the dismissal of charges against the individual defendant and the amount of the fine.

On October 9, 2025, the Supreme Court of Thailand issued its decision.

The Supreme Court determined that the majority of imports at issue had not been under-declared, affirmed the findings of under-declaration of import prices of cigarettes with respect to certain imports, and further reduced the fine imposed to THB 20 million (approximately $ 0.6 million).

The Supreme Court also affirmed the acquittal of the individual defendant.

Thailand is required to refund the payment made by our subsidiary in 2020 in excess of the THB 20 million (approximately $ 0.6 million) fine ultimately assessed by the Supreme Court.

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.

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Notes to Condensed Consolidated Financial Statements

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

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.

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

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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 $ 58 million) in damages.

After various postponements, the trial started on September 25, 2023, and is expected to continue in 2025 and onwards through a series of evidentiary hearings.

After various postponements, the trial started on September 25, 2023, and is expected to continue through 2025.

PM Italia believes it has strong defenses to the charges against it and will defend them vigorously.

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An appeal including suspension of proceedings and execution was submitted on January 9, 2025.

In April 2025 PM Germany paid the amount outstanding which is recorded in Other assets in the consolidated balance sheets and negatively impacted cash provided by operating activities in the consolidated statements of cash flows in the period of payment.

In April 2025 PM Germany paid the amount outstanding which was recorded in Other assets in the consolidated balance sheets and negatively impacted cash provided by operating activities in the consolidated statements of cash flows in the period of payment.

An oral hearing was held before the FC Düsseldorf on July 15, 2025.

Following the hearing, on July 22, 2025, PM Germany was notified of the Fiscal Court Düsseldorf’s decision to refer two questions to the European General Court:

(1) whether, based on EU tax laws, heated tobacco products fall under the conventional cigarette definition;

and (2) if so, whether EU tax laws preclude the application to heated tobacco of a tax rate lower than that applicable to cigarettes.

An unfavorable outcome in the appeal could result in a loss corresponding to the amount of the tax assessment.

Following the hearing, on July 22, 2025, PM Germany was notified of the Fiscal Court Düsseldorf’s decision to make a limited referral to the European General Court.

On September 17, 2025, PM Germany filed a request to withdraw the proceedings.

On September 22, 2025, the FC Düsseldorf decided to discontinue the proceedings with immediate effect, and to withdraw the referral to the European General Court.

As a result, the amount of the tax assessment, $ 176 million was recorded

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Notes to Condensed Consolidated Financial Statements

in marketing, administration and research costs in the condensed consolidated statements of earnings for the nine months and three months ended September 30, 2025.

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

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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 commenced in December 2024.

FTKK asserted a claim for damages in these two actions.

PMJL was obligated to indemnify Sojitz for damages and intervened in these matters.

After receiving in August 2025 an indicative view from the Tokyo District Court that FTKK's patents were not infringed, FTKK withdrew its claims and the matters were terminated in September 2025.

Between November 2024 and March 2025, FTKK filed nine additional patent infringement actions against Sojitz for alleged infringement of nine new FTKK patents by TEREA and SENTIA consumables.

FTKK asserts a claim for damages in these actions.

Between February 2025 and July 2025, FTKK filed seven patent infringement actions against Sojitz seeking a preliminary injunction.

Between February 2025 and July 2025, FTKK filed eight patent infringement actions against Sojitz seeking a preliminary injunction.

The patents FTKK has asserted in each of these actions were previously asserted by FTKK in earlier filed (and still pending) actions seeking monetary damages.

PMJL is obligated to indemnify Sojitz for damages and has intervened, or will intervene, in all of these matters.

PMJL is obligated to indemnify Sojitz for damages and has intervened in all of these matters.

Merits proceedings in these matters are at various stages.

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FTKK did not seek any monetary damages or costs.

PMJL has entered an appearance in the proceeding as an interested party and filed its opposition to FTKK’s application on January 9, 2025.

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Notes to Condensed Consolidated Financial Statements

hearing before Customs officials was held on March 31, 2025.

PMJL entered an appearance in the proceeding as an interested party and filed its opposition to FTKK’s application on January 9, 2025.

A hearing before Customs officials was held on March 31, 2025.

On April 16, 2025, expert advisors to Tokyo Customs provided their opinion that the patent at issue in the Customs matter is not infringed.

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

PMJL has entered an appearance in the proceeding as an interested party and filed its opposition to FTKK’s application on July 9, 2025.

A hearing before Customs officials has not yet been scheduled.

PMJL entered an appearance in the proceeding as an interested party and filed its opposition to FTKK’s application on July 9, 2025.

A hearing before Customs officials was held on September 18, 2025.

On October 14, 2025, expert advisors to Tokyo Customs provided their opinion that the patent at issue in the Customs matter is not infringed.

PMJL intends to vigorously defend the matters commenced by FTKK and take steps to mitigate disruption, if any, that could result from FTKK’s claims.

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While the outcomes of these proceedings are uncertain, management does not expect that the ultimate outcomes of other litigation, including any reasonably possible losses in excess of current accruals, will have a material adverse effect on our consolidated results of operations, cash flows or financial position.

Philip Morris International Inc.

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Notes to Condensed Consolidated Financial Statements

Income Taxes:

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The Act contains several provisions related to corporate income taxes, including the extension of many expiring provisions from the Tax Cuts and Jobs Act of 2017, modifications to the international tax framework, and the restoration of favorable tax treatment for certain business provisions.

PMI is currently evaluating the impact on its consolidated financial statements.

PMI’s effective tax rates for the six months and three months ended June 30, 2025 were 19.5 % and 19.0 %, respectively.

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

The effective tax rate for the six months ended June 30, 2025 was favorably impacted 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 ($ 373 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;

partially offset by an increase in deferred tax liabilities related to the fair value adjustment of equity securities held by PMI ($ 115 million), as well as the recognition of current tax expense related to the potential disallowance of intercompany transactions in Indonesia ($ 46 million).

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

(i) 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 (ii) 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.

While PMI is still evaluating the full extent of the Act’s impact, PMI does not expect these provisions and modifications to have a material impact on its 2025 consolidated financial statements.

PMI’s effective tax rates for the nine months and three months ended September 30, 2025 were 19.2 % and 18.7 %, respectively.

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

The effective tax rate for the nine months ended September 30, 2025 was favorably impacted 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 ($ 369 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, (ii) benefits related to an interest expense election primarily driven by a reduction in tax costs associated with global intangible low-taxed income (including $ 174 million for 2024) and (iii) refunds expected on amended tax returns filed in Germany ($ 89 million);

partially offset by:

(i) an increase in deferred tax liabilities related to the fair value adjustment of equity securities held by PMI ($ 143 million), (ii) tax impacts of the RBH (Canada) Plan Implementation ($ 166 million), (iii) valuation allowances recorded on deferred tax assets related to U.S.

foreign tax credits ($ 50 million), and (iv) the recognition of current tax expense related to the potential disallowance of intercompany transactions in Indonesia ($ 46 million).

For further details on the RBH (Canada) Plan Implementation, see Note 9.

Contingencies and Note 13.

Related Parties - Equity Investments and Other .

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, see Note 16.

Restructuring Activities .

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-

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Notes to Condensed Consolidated Financial Statements

standing tax principles.

For further details on the impairment loss related to the sale of Vectura Group and PMI's ceased operations in Venezuela, see Note 2.

Acquisitions and Divestitures and Note 16.

Restructuring Activities, 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.

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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, 2025 and December 31, 2024.

These income tax receivables are included in other assets in PMI’s condensed consolidated balance sheets at September 30, 2025.

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Notes to Condensed Consolidated Financial Statements

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

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Short-term Borrowings:

At June 30, 2025 and December 31, 2024, PMI’s short-term borrowings and related average interest rates consisted of the following:

June 30, 2025 December 31, 2024

At September 30, 2025 and December 31, 2024, PMI’s short-term borrowings and related average interest rates consisted of the following:

September 30, 2025 December 31, 2024

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

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

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Notes to Condensed Consolidated Financial Statements

Long-term Debt:

At June 30, 2025 and December 31, 2024, PMI’s long-term debt consisted of the following:

(in millions) June 30, 2025 December 31, 2024

At September 30, 2025 and December 31, 2024, PMI’s long-term debt consisted of the following:

(in millions) September 30, 2025 December 31, 2024

dollar notes, 0.875 % to 6.375 % (average interest rate 4.677 %), due through 2044

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Euro notes, 0.125 % to 3.750 % (average interest rate 2.121 %), due through 2039

Euro credit facility borrowings related to Swedish Match AB acquisition, (average interest rate 2.626 %), due 2027

Euro credit facility borrowing related to Swedish Match AB acquisition, (interest rate 2.546 %), due 2027

Swedish krona notes, 1.395 % to 2.710 % (average interest rate 2.016 %), due through 2029

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$ 41,863 $ 42,166

(a) Includes long-term bank loans at subsidiaries, as well as $ 93 million and $ 67 million in finance leases at June 30, 2025 and December 31, 2024, respectively.

(a) Includes long-term bank loans at subsidiaries, as well as $ 92 million and $ 67 million in finance leases at September 30, 2025 and December 31, 2024, 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, 2025, the fair value of PMI's outstanding long-term debt, excluding the aforementioned finance leases, was as follows:

At September 30, 2025, the fair value of PMI's outstanding long-term debt, excluding the aforementioned finance leases, was as follows:

(in millions)

June 30, 2025

September 30, 2025

Level 1 $ 44,606

Level 2 3,332

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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.

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On November 21, 2024, PMI prepaid approximately € 3 billion (approximately $ 3.2 billion), including outstanding principal and accrued interest, representing all borrowings outstanding under the 3 -year tranche of the senior unsecured term loan facility.

As of June 30, 2025, borrowings in the amount of € 2.5 billion (approximately $ 2.9 billion) under the 5 -year tranche of the term loan facility remained outstanding.

As of September 30, 2025, borrowings in the amount of € 2.5 billion (approximately $ 2.9 billion) under the 5 -year tranche of the term loan facility remained outstanding.

Philip Morris International Inc.

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Debt Issuances

PMI's debt issuances in the first six months of 2025 were as follows:

PMI's debt issuances in the first nine months of 2025 were as follows:

(in millions)

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Revolving Credit Facilities:

At June 30, 2025, PMI's total committed revolving credit facilities were as follows:

At September 30, 2025, PMI's total committed revolving credit facilities were as follows:

(in billions)

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

At June 30, 2025, there were no borrowings under these committed revolving credit facilities, and the entire committed amounts were available for borrowing.

At September 30, 2025, there were no borrowings under these committed revolving credit facilities, and the entire committed amounts were available for borrowing.

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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 $ 3.8 billion at June 30, 2025, and approximately $ 2.1 billion at December 31, 2024.

Borrowings under these arrangements and other bank loans amounted to $ 230 million at June 30, 2025, and $ 137 million at December 31, 2024.

These credit arrangements amounted to approximately $ 3.8 billion at September 30, 2025, and approximately $ 2.1 billion at December 31, 2024.

Borrowings under these arrangements and other bank loans amounted to $ 195 million at September 30, 2025, and $ 137 million at December 31, 2024.

Accumulated Other Comprehensive Losses:

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(Losses) Earnings At At At

(in millions) June 30, 2025 December 31, 2024 June 30, 2024

(in millions) September 30, 2025 December 31, 2024 September 30, 2024

Currency translation adjustments $ ( 11,241 ) $ ( 9,320 ) $ ( 9,636 )

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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, 2025 and 2024.

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, 2025 and 2024.

For additional information, see Note 2.

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Equity Method Investments:

At June 30, 2025 and December 31, 2024, PMI had total equity method investments of $ 1,093 million and $ 1,005 million, respectively.

At September 30, 2025 and December 31, 2024, PMI had total equity method investments of $ 977 million and $ 1,005 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, 2025 and December 31, 2024, exceeded our share of the investees' book value by $ 1,160 million and $ 1,060 million, respectively.

The carrying value of our equity method investments at September 30, 2025 and December 31, 2024, exceeded our share of the investees' book value by $ 1,022 million and $ 1,060 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, 2025 and December 31, 2024 of $ 178 million and $ 152 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, 2025 and December 31, 2024, PMI received year-to-date dividends from equity method investees of $ 139 million and $ 151 million, respectively.

PMI holds a 23 % equity interest in JSC TK Megapolis ("TKM"), PMI's distributor in Russia (SSEA, CIS & MEA segment), which as of June 30, 2025 had a carrying value of $ 319 million.

Additionally, there was approximately $ 521 million of cumulative foreign currency translation losses associated with TKM reflected in accumulated other comprehensive losses in the condensed consolidated statement of stockholders’ equity as of June 30, 2025.

The difference related to the definite-lived intangibles and other assets at September 30, 2025 and December 31, 2024 of $ 161 million and $ 152 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, 2025 and December 31, 2024, PMI received year-to-date dividends from equity method investees of $ 162 million and $ 151 million, respectively.

PMI holds a 23 % equity interest in JSC TK Megapolis ("TKM"), PMI's distributor in Russia (SSEA, CIS & MEA segment), which as of September 30, 2025 had a carrying value of $ 305 million.

Additionally, there was approximately $ 538 million of cumulative foreign currency translation losses associated with TKM reflected in accumulated other comprehensive losses in the condensed consolidated statement of stockholders’ equity as of September 30, 2025.

Previously TKM was a subsidiary of Megapolis Distribution B.V.

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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 TKM were transferred to TKM and subsequently transferred to the Russian subsidiaries of its indirect shareholders during the fourth quarter of 2024.

As a result of

As a result, MDBV’s shares in TKM were

Philip Morris International Inc.

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Notes to Condensed Consolidated Financial Statements

the transfer of shares, PMI recorded a tax charge of $ 77 million in the fourth quarter of 2024, primarily reflecting additional deferred withholding taxes related to the TKM pre-localization earnings and other adjustments of accumulated earnings of the Russian subsidiary.

As of June 30, 2025, there are risks related to this investment 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.

transferred to TKM and subsequently transferred to the Russian subsidiaries of its indirect shareholders during the fourth quarter of 2024.

As a result of the transfer of shares, PMI recorded a tax charge of $ 77 million in the fourth quarter of 2024, primarily reflecting additional deferred withholding taxes related to the TKM pre-localization earnings and other adjustments of accumulated earnings of the Russian subsidiary.

As of September 30, 2025, there are risks related to this investment 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”).

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

Additionally, as part of its Wellness and Healthcare business strategy, PMI holds non-controlling equity interests in certain companies, which as of June 30, 2025 had a carrying value of $ 152 million.

There are risks associated with these investments as changes in assumptions and estimates, unfavorable regulatory developments, failure to obtain regulatory approvals and authorizations, and other factors could have an adverse impact on the fair value of these investments and may result in impairment charges.

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 condensed consolidated balance sheets.

Additionally, as part of its Wellness and Healthcare business strategy, PMI holds non-controlling equity interests in certain companies, which as of September 30, 2025 had a carrying value of $ 27 million.

During the third quarter of 2025, PMI recorded a non-cash charge of $ 146 million, primarily representing other-than-temporary impairment of one equity method investment following a reassessment of its estimated fair value triggered by the amendment of existing transaction agreements in the third quarter of 2025.

The decline in the estimated fair value was primarily driven by the determination of a lower likelihood of success of certain projects in development.

The impairment charge was recorded within equity investments and securities (income)/loss, net, in the condensed consolidated statements of earnings for the nine months and three months ended September 30, 2025.

The initial investments in Megapolis Distribution BV, EITA, Eastern, Wellness and Healthcare business related investments 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 condensed consolidated balance sheets.

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

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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.

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.

Under the resolution contemplated by the Proposed Plan, RBH, Imperial Tobacco Canada Limited ("ITL") and JTI Macdonald Corp ("JTIM") would pay an aggregate global settlement amount of CAD 32.5 billion (approximately 23.7 billion).

A significant determinative factor in the analysis of impairment indicators was the issue of allocation of CAD 32.5 billion aggregate settlement amount among RBH, ITL, and JTIM which remained unresolved

Philip Morris International Inc.

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Notes to Condensed Consolidated Financial Statements

at the time of filing.

Canadian tobacco claims and related litigation.

On January 24, 2025, RBH filed an objection to approval of the Proposed Plan with the CCAA court (for further details, see Note 9.

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

On March 6, 2025, the CCAA court issued a decision approving the Proposed Plan as amended (the "Plan"), for further details, see Note 9.

On March 6, 2025, the CCAA court issued a decision approving the Proposed Plan as amended (the "Plan").

The Plan became effective on August 29, 2025.

On September 24, 2025, as permitted by the Plan, RBH paid a dividend of CAD $ 750 million (approximately $ 536 million) to PMI.

The dividend distribution triggered a re-assessment of the carrying value of the investment in RBH and resulted in a downward adjustment, decreasing the carrying value of PMI’s investment in RBH to $ 567 million.

Consequently, in the third quarter of 2025, PMI recorded pre-tax income of $ 303 million within equity investments and securities (income)/loss, net, in PMI’s consolidated statement of earnings, reflecting the dividend income net of the corresponding decrease in the carrying value of the investment.

PMI evaluated the terms of the Plan and concluded that powers provided under the Plan to RBH’s CCAA Plan Administrator (as that term is defined in the Plan) and to the Claimants (as that term is defined in the Plan) continue to remove certain elements of control of the business from PMI and RBH.

As a result, PMI has determined that RBH will remain deconsolidated as it does not have a controlling financial interest over RBH as defined in ASC 810 (Consolidation).

PMI also does not exert "significant influence" over RBH as that term is defined in ASC 323 (Investments-Equity Method and Joint Ventures).

Therefore, PMI will continue to account for its investment in RBH in accordance with ASC 321 (Investments-Equity Securities) as an equity security, without readily determinable fair value, until the aggregate global settlement amount has been paid and the operating covenants that govern RBH’s business are lifted.

For further details regarding the terms of the Plan, see Note 9.

Contingencies .

PMI evaluated the terms of the Plan, and no indicators of further impairment were identified as a result of this evaluation.

PMI records its continuing investment in RBH at its fair value determined as of December 31, 2024, adjusted for currency translation adjustments.

The fair value of PMI’s other equity securities, which have been classified within Level 1, was $ 1,446 million at June 30, 2025.

Unrealized pre-tax gain (loss) of $ 525 million ($ 410 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, 2025.

The fair value of PMI’s other equity securities, which have been classified within Level 1, was $ 1,578 million at September 30, 2025.

Unrealized pre-tax gain (loss) of $ 656 million ($ 513 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, 2025.

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Other related parties:

3 unchanged sentences

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

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

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) 2025 2024 2025 2024

8 unchanged sentences

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

(in millions) At June 30, 2025 At December 31, 2024

(in millions) At September 30, 2025 At December 31, 2024

Megapolis Group $ 607 $ 405

11 unchanged sentences

For servicing arrangements, PMI continues to service the sold trade receivables on an administrative basis and does not act on behalf of the unaffiliated financial institutions.

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

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, 2025 and June 30, 2024.

The amounts associated with the servicing liability were not material as of September 30, 2025 and September 30, 2024.

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, 2025 and 2024, were $ 5.6 billion for both periods.

Cumulative trade receivables sold, including excise taxes, for the nine months ended September 30, 2025 and 2024, were $ 8.6 billion and $ 8.8 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 June 30, 2025 and June 30, 2024, were $ 0.7 billion for both periods.

The trade receivables sold that remained outstanding under these arrangements as of September 30, 2025 and September 30, 2024, were $ 0.6 billion for both periods.

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

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

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 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.

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,

2025 $ 26 $ 9

6 unchanged sentences

PMI accounts for its product warranties within other accrued liabilities.

At June 30, 2025 and December 31, 2024, these amounts were as follows:

(in millions) As of and For the Six Months Ended June 30, 2025 As of and For the Year Ended December 31, 2024

At September 30, 2025 and December 31, 2024, these amounts were as follows:

(in millions) As of and For the Nine Months Ended September 30, 2025 As of and For the Year Ended December 31, 2024

Balance at beginning of period $ 76 $ 80

5 unchanged sentences

Restructuring Activities:

For the six months and three months ended June 30, 2025, PMI recorded total pre-tax restructuring charges of $ 243 million.

For the six months ended June 30, 2024, PMI recorded total pre-tax restructuring charges of $ 168 million.

For the three months ended June 30, 2024, PMI did not record any charges related to restructuring activities.

For the nine months ended September 30, 2025, PMI recorded total pre-tax restructuring charges of $ 243 million.

For the nine months ended September 30, 2024, PMI recorded total pre-tax restructuring charges of $ 168 million.

For the three months ended September 30, 2025 and 2024, PMI did not record any charges related to restructuring activities.

The 2025 and 2024 pre-tax charges were included in marketing, administration and research costs in the condensed consolidated statements of earnings.

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Manufacturing Footprint Optimization - Germany

3 unchanged sentences

This amount included pension and employee separation costs of $ 127 million and contract termination and other costs of $ 24 million, which will be paid in cash, as well as asset impairment costs of $ 92 million, primarily related to property lease, and machinery and equipment, which are non-cash charges.

The final amount of the charges, as well as the timing of payments, will depend on the separation options selected by impacted employees under the agreement and the evaluation of the potential future use of assets.

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

IQOS products sourcing for the U.S.

14 unchanged sentences

Income Taxes .

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Restructuring Charges by Segment

PMI recorded the following pre-tax restructuring charges by segment:

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

2025 2024 2025 2024

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

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

2 unchanged sentences

Separation programs:

Europe 127 — 127 —

Total separation programs 127 —

Contract termination and other charges:

Europe 24 — 24 —

Americas — 65

1 unchanged sentence

Asset impairment charges:

Europe 92 — 92 —

Americas — 65

1 unchanged sentence

Restructuring charges $ 243 $ 168

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Movement in Restructuring Related Liabilities

The movement in restructuring related liabilities for the six months ended June 30, 2025 was as follows:

The movement in restructuring related liabilities for the nine months ended September 30, 2025 was as follows:

(in millions)

3 unchanged sentences

Currency/other ( 28 )

Liability balance, June 30, 2025 $ 161

Liability balance, September 30, 2025 $ 124

Future cash payments for restructuring activities incurred to date are anticipated to be substantially paid by the end of 2026.

The components of PMI’s lease cost were as follows for the six months and three months ended June 30, 2025 and 2024:

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

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

The components of PMI’s lease cost were as follows for the nine months and three months ended September 30, 2025 and 2024:

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

(in millions) 2025 2024 2025 2024

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, 2025 and December 31, 2024, the total amount due to suppliers participating in the SCF program was $ 0.8 billion and $ 1.0 billion, respectively.

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

As of September 30, 2025 and December 31, 2024, the total amount due to suppliers participating in the SCF program was $ 1.0 billion for both periods.

New Accounting Standards:

4 unchanged sentences

The amendments are applicable on a prospective basis, although retrospective basis is also permitted.

PMI is currently evaluating the impact of ASU 2023-09 on its disclosures.

PMI will adopt the additional disclosure requirements on the specified effective date within its annual reporting for the year ending December 31, 2025, on a prospective basis.

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