What changed in this filing

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Item 1. Financial Statements

2026-07-24 compared with 2026-04-24 · 383 added, 268 removed, 904 unchanged (42% of the section changed)

4 unchanged sentences

(in millions of dollars, except per share data)

For the Three Months Ended March 31,

For the Six Months Ended June 30,

Net revenues 1 & 2 (Note 13)

3 unchanged sentences

Marketing, administration and research costs (Notes 1 & 15) 5,838 5,416

Impairment of goodwill (Note 5) — 41

Corporate expenses and other (Note 1) 303 423

4 unchanged sentences

Provision for income taxes 1,631 1,311

Impairment related to the RBH equity investment (Note 13) 511 —

Equity investments and securities (income)/loss, net (Note 13) 244 ( 581 )

5 unchanged sentences

Diluted earnings per share $ 3.36 $ 3.67

(1) Includes net revenues from related parties of $ 1,185 million and $ 937 million for the three months ended March 31, 2026 and 2025, respectively.

(1) Includes net revenues from related parties of $ 2,440 million and $ 2,080 million for the six months ended June 30, 2026 and 2025, respectively.

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

For the three months ended March 31, 2026 and 2025, excise tax on products was $ 12,853 million and $ 12,002 million, respectively.

For the six months ended June 30, 2026 and 2025, excise tax on products was $ 27,826 million and $ 25,274 million, respectively.

See notes to condensed consolidated financial statements.

1 unchanged sentence

and Subsidiaries

Condensed Consolidated Statements of Earnings

(in millions of dollars, except per share data)

For the Three Months Ended June 30,

Net revenues 1 & 2 (Note 13)

$ 11,192 $ 10,140

Cost of sales (Note 1) 3,533 3,274

Gross profit 7,659 6,866

Marketing, administration and research costs (Notes 1 & 15) 2,981 2,988

Impairment of goodwill (Note 5) — 41

Corporate expenses and other (Note 1) 148 125

Operating income 4,530 3,712

Interest expense, net 243 277

Pension and other employee benefit (income) costs (Note 4) ( 5 ) 11

Earnings before income taxes 4,292 3,424

Provision for income taxes 955 652

Impairment related to the RBH equity investment (Note 13) 511 —

Equity investments and securities (income)/loss, net (Note 13) ( 159 ) ( 376 )

Net earnings 2,985 3,148

Net earnings attributable to noncontrolling interests 168 109

Net earnings attributable to PMI $ 2,817 $ 3,039

Per share data (Note 7):

Basic earnings per share $ 1.80 $ 1.95

Diluted earnings per share $ 1.80 $ 1.95

(1) Includes net revenues from related parties of $ 1,255 million and $ 1,143 million for the three months ended June 30, 2026 and 2025, respectively.

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

For the three months ended June 30, 2026 and 2025, excise tax on products was $ 14,973 million and $ 13,272 million, respectively.

See notes to condensed consolidated financial statements.

Philip Morris International Inc.

and Subsidiaries

Condensed Consolidated Statements of Comprehensive Earnings

(in millions of dollars)

For the Three Months Ended March 31,

For the Six Months Ended June 30,

Net earnings $ 5,567 $ 5,985

2 unchanged sentences

Unrealized gains (losses), net of income taxes of $( 139 ) in 2026 and $ 433 in 2025

(Gains)/losses transferred to earnings, net of income taxes of $ 0 in 2026 and 2025

491 ( 1,626 )

(Gains)/losses transferred to earnings, net of income taxes of $ 0 in 2026 and $ 0 in 2025

Change in net loss and prior service cost:

Net gains (losses) and prior service costs, net of income taxes of $ 0 in 2026 and $( 7 ) in 2025

Amortization of net losses, prior service costs and net transition costs, net of income taxes of $( 14 ) in 2026 and $( 25 ) in 2025

11 unchanged sentences

and Subsidiaries

Condensed Consolidated Statements of Comprehensive Earnings

(in millions of dollars)

For the Three Months Ended June 30,

Net earnings $ 2,985 $ 3,148

Other comprehensive earnings (losses), net of income taxes:

Change in currency translation adjustments:

Unrealized gains (losses), net of income taxes of $( 17 ) in 2026 and $ 339 in 2025

(Gains)/losses transferred to earnings, net of income taxes of $ 0 in 2026 and $ 0 in 2025

Change in net loss and prior service cost:

Net gains (losses) and prior service costs, net of income taxes of $ 0 in 2026 and $( 7 ) in 2025

Amortization of net losses, prior service costs and net transition costs, net of income taxes of $( 7 ) in 2026 and $( 11 ) in 2025

Change in fair value of derivatives accounted for as hedges:

Gains (losses) recognized, net of income taxes of $( 8 ) in 2026 and $ 19 in 2025

(Gains) losses transferred to earnings, net of income taxes of $ 9 in 2026 and $ 7 in 2025

( 41 ) ( 29 )

Total other comprehensive earnings (losses) 109 ( 2,005 )

Total comprehensive earnings

Less comprehensive earnings (losses) attributable to:

Noncontrolling interests 145 140

Comprehensive earnings attributable to PMI $ 2,949 $ 1,003

See notes to condensed consolidated financial statements.

Philip Morris International Inc.

and Subsidiaries

Condensed Consolidated Balance Sheets

18 unchanged sentences

TOTAL ASSETS $ 68,271 $ 69,185

(1) Includes trade receivables from related parties of $ 996 million and $ 839 million as of March 31, 2026, and December 31, 2025, respectively.

(1) Includes trade receivables from related parties of $ 1,043 million and $ 839 million as of June 30, 2026, and December 31, 2025, respectively.

For further details, see Note 13.

42 unchanged sentences

(in millions of dollars)

For the Three Months Ended March 31,

For the Six Months Ended June 30,

CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

2 unchanged sentences

Depreciation and amortization expense 1,023 970

Impairment of goodwill (Note 5) — 41

Impairment related to the RBH equity investment (Note 13) 511 —

Deferred income tax (benefit) provision ( 10 ) ( 274 )

11 unchanged sentences

Capital expenditures ( 733 ) ( 760 )

Proceeds from sale of businesses, net of cash disposed (Note 2) 87 32

Purchases of debt securities ( 5 ) ( 105 )

9 unchanged sentences

(in millions of dollars)

For the Three Months Ended March 31,

For the Six Months Ended June 30,

CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

14 unchanged sentences

Balance at end of period $ 6,024 $ 4,176

(1) The amounts for cash, cash equivalents and restricted cash shown above include restricted cash of $ 20 million and $ 33 million as of March 31, 2026 and 2025, respectively, and $ 20 million and $ 38 million as of December 31, 2025 and 2024, 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 $ 25 million and $ 38 million as of June 30, 2026 and 2025, respectively, and $ 20 million and $ 38 million as of December 31, 2025 and 2024, 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 Three Months Ended March 31, 2026 and 2025

For the Six Months Ended June 30, 2026 and 2025

(in millions of dollars, except per share amounts)

14 unchanged sentences

Dividends paid to noncontrolling interests ( 215 ) ( 215 )

Balances, March 31, 2025 $ — $ 2,326 $ 33,447 $ ( 11,117 ) $ ( 35,557 ) $ 1,975 $ ( 8,926 )

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

Balances, January 1, 2026 $ — $ 2,453 $ 35,400 $ ( 12,296 ) $ ( 35,551 ) $ 1,966 $ ( 8,028 )

5 unchanged sentences

Dividends paid to noncontrolling interests ( 296 ) ( 296 )

Balances, March 31, 2026 $ — $ 2,433 $ 35,538 $ ( 11,788 ) $ ( 35,462 ) $ 1,979 $ ( 7,300 )

Balances, June 30, 2026 $ — $ 2,477 $ 36,055 $ ( 11,656 ) $ ( 35,459 ) $ 1,926 $ ( 6,657 )

See notes to condensed consolidated financial statements.

1 unchanged sentence

and Subsidiaries

Condensed Consolidated Statements of Stockholders’ (Deficit) Equity

For the Three Months Ended June 30, 2026 and 2025

(in millions of dollars, except per share amounts)

PMI Stockholders’ (Deficit) Equity

Stock Additional

Capital Earnings

Reinvested in

Business Accumulated

Comprehensive Losses Cost of

Stock Noncontrolling

Interests Total

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

Net earnings 3,039 109 3,148

Other comprehensive earnings (losses), net of income taxes ( 2,036 ) 31 ( 2,005 )

Issuance of stock awards 38 4 42

Dividends declared ($ 1.35 per share)

( 2,110 ) ( 2,110 )

Dividends paid to noncontrolling interests ( 161 ) ( 161 )

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

Balances, April 1, 2026 $ — $ 2,433 $ 35,538 $ ( 11,788 ) $ ( 35,462 ) $ 1,979 $ ( 7,300 )

Net earnings 2,817 168 2,985

Other comprehensive earnings (losses), net of income taxes 132 ( 23 ) 109

Issuance of stock awards 44 3 47

Dividends declared ($ 1.47 per share)

( 2,300 ) ( 2,300 )

Dividends paid to noncontrolling interests ( 198 ) ( 198 )

Balances, June 30, 2026 $ — $ 2,477 $ 36,055 $ ( 11,656 ) $ ( 35,459 ) $ 1,926 $ ( 6,657 )

See notes to condensed consolidated financial statements.

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

4 unchanged sentences

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

and its affiliates.

and its subsidiaries and affiliates.

Smoke-Free Business ("SFB”) is the term PMI uses to refer to all of its smoke-free products.

SFB also includes wellness products, as well as consumer accessories, such as lighters and matches.

SFB also includes wellness products, as well as consumer accessories.

Smoke-free products (also referred to herein as "SFPs") is the term PMI uses to refer to all of its products that provide nicotine without combusting tobacco, such as heat-not-burn, e-vapor, and oral smokeless, and that therefore generate far lower levels of harmful chemicals.

30 unchanged sentences

Notes to Condensed Consolidated Financial Statements

and the loss on the completed sale, of which $ 3 million related to the reclassification of currency translation losses from other comprehensive losses for the completed sale.

and the loss on the completed sale, of which $ 6 million related to the reclassification of currency translation losses from other comprehensive losses ($ 3 million reflected in the fourth quarter of 2025 and $ 3 million in the second quarter of 2026 upon completion of sales of the respective businesses).

The loss on sale has been recorded in marketing, administration and research costs in PMI’s consolidated statement of earnings for the year ended December 31, 2025.

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

As of March 31, 2026, $ 149 million of the disposal group assets and $ 61 million of the disposal group liabilities were classified as held-for-sale and were included within other current assets and other accrued liabilities, respectively, in PMI’s consolidated balance sheet.

In the second quarter of 2026, PMI completed the sale of the remaining other businesses previously classified as held-for-sale for a total consideration of $ 121 million, of which $ 87 million of cash proceeds were received at closing and $ 34 million of deferred consideration recorded in other receivables and other assets.

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 March 31, 2026, shares available for grant under the 2022 Plan were 15,080,666 .

At June 30, 2026, shares available for grant under the 2022 Plan were 15,097,356 .

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 March 31, 2026, shares available for grant under the plan were 845,900 .

At June 30, 2026, shares available for grant under the plan were 836,062 .

Restricted share unit (RSU) awards

5 unchanged sentences

The fair value of the RSU awards at the date of grant is determined by using the closing market price of PMI’s stock on the date of the grant and is amortized to expense over the restriction period, typically three years after the date of the award, or upon death, disability or reaching the age of 58 .

During the three months ended March 31, 2026 and 2025, the recorded compensation expense related to RSU awards and the respective tax benefit (charge) were as follows:

(in millions) For the Three Months Ended March 31,

Compensation Expense Related to RSU Awards Tax Benefit/(Charge) Related to RSU Awards

During the six months and three months ended June 30, 2026 and 2025, the recorded compensation expense related to RSU awards and the respective tax benefit (charge) were as follows:

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

Compensation Expense Related to RSU Awards Tax Benefit/(Charge) Related to RSU Awards Compensation Expense Related to RSU Awards Tax Benefit/(Charge) Related to RSU Awards

2026 $ 113 $ 43 $ 41 $ 11

4 unchanged sentences

Notes to Condensed Consolidated Financial Statements

During the three months ended March 31, 2026 and 2025, shares granted to eligible employees and the weighted-average grant date fair value per share were as follows:

During the six months ended June 30, 2026 and 2025, shares granted to eligible employees and the weighted-average grant date fair value per share were as follows:

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

1 unchanged sentence

2025 1,506,180 $ 145.19

During the three months ended March 31, 2026, 1,327,466 RSU awards vested.

During the six months ended June 30, 2026, 1,405,563 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 three months ended March 31, 2026, was approximately $ 242 million.

As of March 31, 2026, PMI had $ 338 million of total unrecognized compensation cost related to non-vested RSU awards, which is expected to be recognized over the performance cycle of the awards of approximately three years .

The total fair value of RSU awards that vested during the six months ended June 30, 2026, was approximately $ 255 million.

As of June 30, 2026, PMI had $ 290 million of total unrecognized compensation cost related to non-vested RSU awards, which is expected to be recognized over the performance cycle of the awards of approximately three years .

Performance share unit (PSU) awards

3 unchanged sentences

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 three months ended March 31, 2026, 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 VALUE Index, which consists of two drivers:

The performance metrics for such PSUs granted during the six months ended June 30, 2026, 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 VALUE Index, which consists of two drivers:

• Product impact ( 20 % weight):

4 unchanged sentences

PMI’s workforce, workers in the value chain, climate, and nature.

The performance metrics, targets and relative weights for the PSU’s granted during the three months ended March 31, 2026, were the same as the PSU’s granted during the three months ended March 31, 2025, with the exception of changes made to certain components of the Sustainability Index, which was replaced with the VALUE Index.

The performance metrics, targets and relative weights for the PSUs granted during the six months ended June 30, 2026, were the same as the PSUs granted during the six months ended June 30, 2025, with the exception of changes made to certain components of the Sustainability Index, which was replaced with the VALUE Index.

The VALUE Index, built on the foundation of the Sustainability Index, continues to follow the same guiding principles, structure and governance while reflecting a more focused approach to incentivizing progress on key transformation matters.

10 unchanged sentences

Notes to Condensed Consolidated Financial Statements

During the three months ended March 31, 2026 and 2025, the recorded compensation expense related to PSU awards, and the respective tax benefit (charge) were as follows:

(in millions) For the Three Months Ended March 31,

Compensation Expense related to PSU Awards Tax Benefit/(Charge) Related to PSU Awards

During the six months ended June 30, 2026 and 2025, the recorded compensation expense related to PSU awards, and the respective tax benefit (charge) were as follows:

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

Compensation Expense related to PSU Awards Tax Benefit/(Charge) Related to PSU Awards Compensation Expense related to PSU Awards Tax Benefit/(Charge) Related to PSU Awards

2026 $ 53 $ 27 $ 7 $ 5

1 unchanged sentence

The compensation expense was recorded in corporate expenses and other costs.

During the three months ended March 31, 2026 and 2025, shares granted to eligible employees and the weighted-average grant date fair value per share related to PSU awards were as follows:

During the six months ended June 30, 2026 and 2025, shares granted to eligible employees and the weighted-average grant date fair value per share related to PSU awards were as follows:

Number of Shares Granted Weighted-

15 unchanged sentences

(b) Determined using the observed historical volatility.

During the three months ended March 31, 2026, 816,829 PSU awards vested.

During the six months ended June 30, 2026, 816,829 PSU awards vested.

The grant date fair value of all the vested awards was approximately $ 94 million.

The total fair value of PSU awards that vested during the three months ended March 31, 2026, was approximately $ 149 million.

As of March 31, 2026, PMI had $ 77 million of total unrecognized compensation cost related to non-vested PSU awards, which is expected to be recognized over the performance cycle of the awards of approximately three years .

The total fair value of PSU awards that vested during the six months ended June 30, 2026, was approximately $ 149 million.

As of June 30, 2026, PMI had $ 62 million of total unrecognized compensation cost related to non-vested PSU awards, which is expected to be recognized over the performance cycle of the awards of approximately three years .

Benefit Plans:

5 unchanged sentences

retired employees are covered through local government plans.

Pension and other employee benefit (income) costs per the condensed consolidated statements of earnings consisted of the

Philip Morris International Inc.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

For the Three Months Ended March 31,

Pension and other employee benefit (income) 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,

(in millions) 2026 2025 2026 2025

6 unchanged sentences

Net periodic pension cost consisted of the following:

For the Three Months Ended March 31,

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

(in millions) 2026 2025 2026 2025

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 $ 30 million were made to the pension plans during the three months ended March 31, 2026.

Employer contributions of $ 67 million were made to the pension plans during the six months ended June 30, 2026.

Currently, PMI anticipates making additional contributions during the remainder of 2026 of approximately $ 79 million to its pension plans, based on current tax and benefit laws.

9 unchanged sentences

Currency ( 186 ) ( 152 ) ( 9 ) ( 347 )

Balances, March 31, 2026 $ 3,816 $ 4,772 $ 8,481 $ 17,069

g oodwill balance is net of accumulated impairment losses of $ 556 million at March 31, 2026, and December 31, 2025.

Balances, June 30, 2026 $ 3,727 $ 4,710 $ 8,480 $ 16,917

g oodwill balance is net of accumulated impairment losses of $ 556 million at June 30, 2026, and December 31, 2025.

These accumulated losses, which relate to PMI's wellness unit Aspeya, exclude amounts related to businesses which were subsequently sold or reclassified as held-for-sale.

At June 30, 2026, goodwill primarily reflects PMI’s acquisitions of Swedish Match AB, as well as acquisitions in Indonesia, the Philippines, Egypt, Greece, Mexico, and Serbia.

As discussed in Note 1.

5 unchanged sentences

The table above reflects the reclassification as a result of the realignment.

At March 31, 2026, goodwill primarily reflects PMI’s acquisitions of Swedish Match AB, as well as acquisitions in Indonesia, the Philippines, Egypt, Greece, Mexico, and Serbia.

During the second quarter of 2026, PMI completed its annual review of goodwill and non-amortizable intangible assets for potential impairment.

As a result of this review, no impairment charges were required.

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

PMI continues to monitor the Wellness reporting unit as any changes in assumptions and estimates, unfavorable clinical trial results, failure to obtain regulatory approvals and authorizations, and other market factors could result in future goodwill and other intangible asset impairments.

Impairment of Goodwill in 2025

During the second quarter of 2025, PMI completed its annual review of goodwill and non-amortizable intangible assets for potential impairment.

As a result of updated financial projections, it was determined that the estimated fair value of a business, which was a separate reporting unit in 2025, related to the consumer accessories products acquired as part of the Swedish Match AB acquisition in 2022 was lower than its carrying value.

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.

For further details, see Note 2.

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:

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

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

7 unchanged sentences

Total other intangible assets $ 13,771 $ 3,593 $ 10,178 $ 14,011 $ 3,127 $ 10,884

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Changes in the net carrying amount of intangible assets were as follows:

Changes Due To:

December 31, 2025 Amortization & Impairment Acquisitions & Divestitures Currency & Other March 31, 2026

December 31, 2025 Amortization & Impairment Acquisitions & Divestitures Currency & Other June 30, 2026

Non-amortizable intangible assets $ 4,776 $ — $ — $ ( 115 ) $ 4,661

12 unchanged sentences

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

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

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

8 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 March 31, 2026 At December 31, 2025

(in millions) At June 30, 2026 At December 31, 2025

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 March 31, 2026 and December 31, 2025, were as follows:

The fair value of PMI’s derivative contracts included in the condensed consolidated balance sheets as of June 30, 2026 and December 31, 2025, were as follows:

Derivative Assets Derivative Liabilities

Fair Value Fair Value

(in millions) Balance Sheet Classification March 31, 2026 December 31, 2025 Balance Sheet Classification March 31, 2026 December 31, 2025

(in millions) Balance Sheet Classification June 30, 2026 December 31, 2025 Balance Sheet Classification June 30, 2026 December 31, 2025

Derivative contracts designated as hedging instruments:

4 unchanged sentences

Commodity contracts Other current assets — — Other accrued liabilities — 1

Other assets — — Other liabilities — —

Derivative contracts not designated as hedging instruments:

11 unchanged sentences

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

PMI’s derivative contracts have been classified within Level 2 at March 31, 2026 and December 31, 2025.

PMI’s derivative contracts have been classified within Level 2 at June 30, 2026 and December 31, 2025.

Philip Morris International Inc.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

For the three months ended March 31, 2026 and 2025, 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 March 31,

For the six months ended June 30, 2026 and 2025, 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,

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

5 unchanged sentences

Foreign exchange contracts $ 148 $ ( 279 ) Net revenues $ 53 $ 63

Cost of sales — —

Marketing, administration and research costs 12 ( 27 )

10 unchanged sentences

Marketing, administration and research costs (d)

317 ( 1,350 )

Total $ 799 $ ( 2,270 ) $ 89 $ 59 $ 558 $ ( 960 )

1 unchanged sentence

(b) Amount of gains (losses) on hedges of net investments principally related to changes in foreign currency exchange and interest rates between the Euro and U.S.

(d) The gains (losses) from these contracts attributable to changes in foreign currency exchange rates are largely offset by the (losses) and gains generated by the underlying intercompany and third-party loans being hedged

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

For the three months ended June 30, 2026 and 2025, 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,

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

Classification of Gain/(Loss)

on Derivatives Amount of Gain/(Loss) Reclassified from Other Comprehensive Earnings/(Losses) into Earnings Amount of Gain/(Loss) Recognized in Earnings

2026 2025 2026 2025 2026 2025

Derivative contracts designated as hedging instruments:

Cash flow hedges:

Foreign exchange contracts $ 50 $ ( 133 ) Net revenues $ 31 $ 11

Marketing, administration and research costs 7 14

Interest expense, net — ( 1 )

Interest rate contracts ( 1 ) 2 Interest expense, net 12 14

Commodity contracts — ( 1 ) Cost of sales — ( 2 )

Fair value hedges:

Interest rate contracts Interest expense, net (a)

$ ( 31 ) $ 19

Net investment hedges (b) :

Foreign exchange contracts 83 ( 1,555 ) Interest expense, net (c)

Derivative contracts not designated as hedging instruments:

Foreign exchange contracts Interest expense, net 69 90

Marketing, administration and research costs (d)

Total $ 132 $ ( 1,687 ) $ 50 $ 36 $ 181 $ ( 928 )

(a) The gains (losses) from these contracts are offset by the changes in the fair value of the hedged item

(b) Amount of gains (losses) on hedges of net investments principally related to changes in foreign currency exchange and interest rates between the Euro and U.S.

Cash Flow Hedges

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

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

As of March 31, 2026, PMI has hedged forecasted transactions with derivative contracts expiring at various dates through December 2028.

As of June 30, 2026, PMI has hedged forecasted transactions with derivative contracts expiring at various dates through December 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 March 31, 2026 was $ 5,096 million, including $ 401 million related to discontinued hedges, of which $ 649 million was recorded in current portion of long-term debt and $ 4,447 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 $( 21 ) million as of March 31, 2026.

The carrying amount of the debt hedged, which includes the cumulative adjustment for fair value gains/losses, as of June 30, 2026 was $ 6,148 million, including $ 1,396 million related to discontinued hedges, and 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 $ 12 million as of June 30, 2026.

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 three months ended March 31, 2026 and 2025, 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 $ 13 million and nil , respectively.

For the six months ended June 30, 2026 and 2025, the amount of pre-tax gain/(loss) related to the non-derivative financial instruments, that was reported as a component of accumulated other comprehensive gains within currency translation adjustments, was $ 7 million and nil , respectively.

For the three months ended June 30, 2026 and 2025, 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 $( 6 ) million and nil , 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.

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

(in millions) For the Three Months Ended March 31,

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

2026 2025 2026 2025

Gain/(loss) as of beginning of period, $ 284 $ 467 $ 346 $ 324

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Change in fair value 135 ( 235 ) 41 ( 113 )

Gain/(loss) as of March 31, $ 346 $ 324

At March 31, 2026, PMI expects $ 159 million of derivative gains that are included in accumulated other comprehensive losses to be reclassified to the condensed consolidated statement of earnings within the next 12 months.

Gain/(loss) as of June 30, $ 346 $ 182 $ 346 $ 182

At June 30, 2026, PMI expects $ 171 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.

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PMI’s derivative instruments do not contain contingent features.

Credit Exposure and Credit Risk

PMI is exposed to credit loss in the event of non-performance by counterparties.

While PMI does not anticipate non-performance, its risk is limited to the fair value of the financial instruments less any cash collateral received or pledged.

Philip Morris International Inc.

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Notes to Condensed Consolidated Financial Statements

actively monitors its exposure to credit risk through the use of credit approvals and credit limits and by selecting and continuously monitoring a diverse group of major international banks and financial institutions as counterparties.

Credit Exposure and Credit Risk

PMI is exposed to credit loss in the event of non-performance by counterparties.

While PMI does not anticipate non-performance, its risk is limited to the fair value of the financial instruments less any cash collateral received or pledged.

PMI actively monitors its exposure to credit risk through the use of credit approvals and credit limits and by selecting and continuously monitoring a diverse group of major international banks and financial institutions as counterparties.

Other Investments

At March 31, 2026, the fair values of PMI's certain other investments were as follows:

(in millions)

March 31, 2026

Level 1, U.S.

dollar denominated bonds in Argentina $ 103

Level 2, Indonesian rupiah denominated bonds in Indonesia 26

For the three months ended March 31, 2026, the gross unrealized pre-tax losses on these investments were immaterial.

Certain PMI investments, which are comprised of Indonesian rupiah denominated bonds in Indonesia, have been classified within Level 2 and had a fair value of $ 24 million at June 30, 2026.

For the six months and three months ended June 30, 2026,

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 Three Months Ended March 31,

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

2026 2025 2026 2025

Net earnings attributable to PMI $ 5,255 $ 5,729 $ 2,817 $ 3,039

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Segment net revenues and segment gross profit are the primary financial measures used by the CODM to review short-term and long-term trends, forecasts, and budget-to-actual variances in order to assess the performance of PMI’s reportable segments and to allocate resources in response to changing market conditions and organizational priorities.

Marketing, administration and research costs, including restructuring charges, are not allocated to segments to determine the primary measure of segment profitability.

Additionally, interest expense, net, corporate expenses and other, and provision for

Philip Morris International Inc.

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Notes to Condensed Consolidated Financial Statements

Marketing, administration and research costs, including restructuring charges, are not allocated to segments to determine the primary measure of segment profitability.

Additionally, interest expense, net, corporate expenses and other, and provision for income taxes are centrally managed and, accordingly, such items are not presented by segment since they are excluded from the measures of segment profitability reviewed by management.

income taxes are centrally managed and, accordingly, such items are not presented by segment since they are excluded from the measures of segment profitability reviewed by management.

Information about total assets and capital expenditures by segment is not disclosed because such information is not reported to or used by PMI’s CODM.

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(in millions) International Smoke-Free International Combustibles U.S.

For the Three Months Ended March 31, 2026

For the Six Months Ended June 30, 2026

Net revenues $ 7,713 $ 12,147 $ 1,478 $ 21,338

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Gross profit $ 5,400 $ 8,229 $ 935 $ 14,564

For the Three Months Ended March 31, 2025

For the Six Months Ended June 30, 2025

Net revenues $ 6,471 $ 11,209 $ 1,762 $ 19,441

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Gross profit $ 4,405 $ 7,435 $ 1,296 $ 13,136

(in millions) International Smoke-Free International Combustibles U.S.

For the Three Months Ended June 30, 2026

Net revenues $ 3,877 $ 6,459 $ 856 $ 11,192

Cost of sales ( 1,161 ) ( 2,071 ) ( 301 ) ( 3,533 )

Gross profit $ 2,716 $ 4,388 $ 555 $ 7,659

For the Three Months Ended June 30, 2025

Net revenues $ 3,395 $ 5,883 $ 862 $ 10,140

Cost of sales ( 1,076 ) ( 1,947 ) ( 252 ) ( 3,274 )

Gross profit $ 2,319 $ 3,936 $ 611 $ 6,866

Amounts may not foot due to rounding

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PMI believes this best depicts how the nature, amount, timing and uncertainty of its revenue and cash flows are affected by economic factors.

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

(in millions) For the Three Months Ended March 31,

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

2026 2025 2026 2025

International Smoke-Free $ 7,713 $ 6,471 $ 3,877 $ 3,395

1,311 1,584 768 766

of which, Wellness 118 109 56 57

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International Combustibles 12,147 11,209 6,459 5,883

167 178 88 96

Total Combustible tobacco 12,314 11,386 6,547 5,979

Total PMI net revenues $ 21,338 $ 19,441 $ 11,192 $ 10,140

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

Amounts may not foot due to rounding

Net revenues related to smoke-free, excluding wellness, refer to the operating revenues generated from the sale of these products, including shipping and handling charges billed to customers, net of sales and promotion incentives, and excise taxes, if applicable.

These net revenue amounts consist of the sale of PMI's products that are not combustible tobacco products, such

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as heat-not-burn, e-vapor, and oral products, as well as consumer accessories.

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

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

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

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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(in millions)

For the Three Months Ended March 31,

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

2026 2025 2026 2025

Depreciation and amortization expense:

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Total depreciation and amortization expense by segment 370 348 186 176

653 622 327 314

Total depreciation and amortization expense

$ 1,023 $ 970 $ 513 $ 490

(1) Included in marketing, administration and research costs, and corporate expenses and other in PMI's condensed consolidated statements of earnings

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Contingencies:

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Legal defense costs are expensed as incurred.

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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 pending litigation.

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The pending cases include seven health care cost recovery cases, one public civil action, and individual cases.

These do not include nine proposed class actions and ten health care cost recovery cases that have been released pursuant to the CCAA Plan of PMI's wholly owned subsidiary in Canada, Rothmans, Benson & Hedges Inc., that will be formally dismissed in due course, and are no longer reported here.

These do not include nine proposed class actions and ten health care cost recovery cases that have been released pursuant to the plan of compromise and arrangement under the Companies' Creditors Arrangement Act (“CCAA”) of PMI's wholly owned subsidiary in Canada, Rothmans, Benson & Hedges Inc.

(the “CCAA Plan”), that have been or will be formally dismissed in due course, and are no longer reported here.

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, one individual case was initially decided in favor of plaintiffs, and remains on appeal.

Final resolution in the amount of the verdict in such case 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, two individual cases were initially decided in favor of plaintiffs, and remain on appeal.

Final resolution in the

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amount of the verdict in such cases 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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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 March 31, 2026, excluding the cases that will be dismissed pursuant to the CCAA Plan described above, there were 7 health care cost recovery cases pending against us, our subsidiaries or indemnitees in Brazil ( 1 ), Korea ( 1 ) and Nigeria ( 5 ), compared with 17 such cases on March 31, 2025.

As of June 30, 2026, excluding the cases that have been or will be dismissed pursuant to the CCAA Plan described above, there were 7 health care cost recovery cases pending against us, our subsidiaries or indemnitees in Brazil ( 1 ), Korea ( 1 ) and Nigeria ( 5 ), compared with 17 such cases as of June 30, 2025.

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

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Defendants filed answers to the complaint in May 2020.

On March 13, 2026, the trial court issued a procedural order directing the parties to submit closing arguments.

Between May and July 2026, at the direction of the court, plaintiff, defendants and the public prosecutor filed their closing arguments.

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

British American Tobacco (Nigeria) Limited, et al., High Court of Lagos State, Lagos, Nigeria, filed March 13, 2008, we and other members of the industry are defendants.

Plaintiff seeks reimbursement for the cost of treating alleged smoking-related diseases over the past several decades, payment of anticipated costs of treating alleged smoking-related diseases in the future, various forms of

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injunctive relief, plus punitive damages.

We are in the process of making challenges to service and the court's jurisdiction.

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

Currently, the case is stayed in the trial court pending a co-defendant's appeal relating to service objections.

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

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British American Tobacco (Nigeria) Limited, et al., High Court of Ogun State, Abeokuta, Nigeria , filed February 26, 2008, we and other members of the industry are defendants.

Plaintiff seeks reimbursement for the cost of treating alleged smoking-related diseases over the past

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several decades, payment of anticipated costs of treating alleged smoking-related diseases in the future, various forms of injunctive relief, plus punitive damages.

In May 2010, the trial court rejected our objections to the court's jurisdiction.

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al., filed April 14, 2014, our subsidiary and other Korean manufacturers are defendants.

Plaintiff alleges, among other things, that defendants concealed the health hazards of smoking, marketed to youth, added ingredients to make their products more harmful and addictive, and misled consumers into believing that Lights cigarettes are safer than regular cigarettes.

Plaintiff alleges, among other things, that defendants concealed the health hazards of smoking, marketed to underage individuals, added ingredients to make their products more harmful and addictive, and misled consumers into believing that Lights cigarettes are safer than regular cigarettes.

The National Health Insurance Service seeks to recover damages allegedly incurred in treating 3,484 patients with small cell lung cancer, squamous cell lung cancer, and squamous cell laryngeal cancer from 2003 to 2012.

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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 March 31, 2026, there was one public civil action pending against our subsidiary in Venezuela ( 1 ), compared with one such case on March 31, 2025.

As of June 30, 2026, there was one public civil action pending against our subsidiary in Venezuela ( 1 ), compared with one such case as of June 30, 2025.

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

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The plaintiffs purport to represent the right to health of the citizens of Venezuela and claim that the government failed to protect adequately its citizens' right to health.

The claim asks the court to order the government to enact stricter regulations on the

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manufacture and sale of tobacco products.

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.

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On August 20, 2024, the court granted Swedish Match North America LLC’s motion to dismiss the fraud claim and plaintiff’s request for medical monitoring, but denied the motion to dismiss other claims, denied PMI’s motion to dismiss without prejudice, and granted plaintiff’s request to conduct jurisdictional discovery.

On December 4, 2024, plaintiff filed an amended complaint against PMI and Swedish Match North America LLC and added three additional entities as named defendants:

On December 4, 2024, plaintiff

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filed an amended complaint against PMI and Swedish Match North America LLC and added three additional entities as named defendants:

Swedish Match USA Inc., PMI Global Services Inc., and Philip Morris Global Brands Inc.

On December 18, 2024, PMI, Swedish Match USA Inc., PMI Global Services Inc., and Philip Morris Global Brands Inc., filed motions to dismiss the amended complaint with prejudice, and Swedish Match North America LLC filed a motion to dismiss the fraud claim.

On December 18, 2024, PMI, Swedish Match USA Inc., PMI Global Services Inc., and Philip Morris Global Brands Inc.

filed motions to dismiss the amended complaint with prejudice, and Swedish Match North America LLC filed a motion to dismiss the fraud claim.

On March 19, 2025, the Court granted defendants’ motion to dismiss the plaintiff’s fraud claim with prejudice but denied the motion to dismiss Swedish Match USA Inc.

The Court also denied the motion to dismiss the three PMI defendants for lack of personal jurisdiction.

The defendants filed their answers to plaintiff's amended complaint on April 2, 2025, and the case moved to the discovery phase and was consolidated with the other Florida cases ( Palmer, Lendinara, and Friedman ) for purposes of pre-trial discovery.

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").

The defendants filed their answers to plaintiff's amended complaint on April 2, 2025, and the case moved to the discovery phase, which closed on June 26, 2026.

The Court scheduled the start of trial on December 7, 2026.

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

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The subclass is defined as “[a]ll persons who procured and used, in Florida, ZYN products while under the age of 21.” The subclass is sought for the FDUTPA claim only.

On June 15, 2026, defendants filed their opposition to Plaintiff's motion for class certification.

Defendants also filed motions for summary judgment on June 15, which ask the Court to enter judgment as a matter of law in favor of defendants on all of plaintiff's claims.

In the second case, a putative class action, Bates-Ferreira 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 California who used ZYN products, and (iv) all residents of California 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

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

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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.

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

Philip Morris International Inc., et al.

, filed April 3, 2024, before United States District Court for the Southern District of Florida, plaintiff alleged, 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 alleged, among other things, that defendants defectively designed ZYN products and sold them in an unreasonably unsafe and dangerous condition, marketed ZYN products to minors, and misrepresented or failed to warn consumers about information related to ZYN products, including information about health risks associated with these products.

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

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

On August 20, 2024, the Court granted Swedish Match North America LLC’s motion to dismiss the fraud claim and plaintiff’s request for medical monitoring, but denied the motion to dismiss other claims, denied PMI’s motion to dismiss without prejudice, and granted plaintiff’s request to conduct jurisdictional discovery.

On December 4, 2024, plaintiff filed an amended complaint against PMI and Swedish Match North America LLC and added three additional entities as named defendants:

Swedish Match USA Inc., PMI Global Services Inc., and Philip Morris Global Brands Inc.

On March 19, 2025, the Court granted defendants’ motion to dismiss the fraud claim with prejudice but denied the motion to dismiss Swedish Match USA Inc.

The Court also denied the motion to dismiss the three PMI defendants for lack of personal jurisdiction.

The defendants filed their answers to plaintiff’s amended complaint on April 2, 2025, and the case moved to the discovery phase and was consolidated with the other Florida cases ( Kelly, Lendinara, and Friedman ) for purposes of pre-trial discovery.

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.

On December 12, 2025, the Court denied defendants’ motion to dismiss the FDUTPA claim.

On December 23, 2025, defendants filed their answers to plaintiff's second amended complaint.

Plaintiff has decided not to proceed with his claims, and the Court approved a stipulation dismissing his claims with prejudice on February 24, 2026.

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 alleged, 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.

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

On December 4, 2024, plaintiff filed an amended complaint against PMI and Swedish Match North America LLC and added three additional entities as named defendants:

Swedish Match USA Inc., PMI Global Services Inc., and Philip Morris Global Brands Inc.

On March 19, 2025, the Court granted defendants’ motion to dismiss the plaintiffs’ fraud claim with prejudice but denied the motion to dismiss Swedish Match USA Inc.

The Court also denied the motion to dismiss the three PMI defendants for lack of personal jurisdiction.

The defendants filed their answers to plaintiff’s amended

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complaint on April 2, 2025, and the case moved to the discovery phase and was consolidated with the other Florida cases ( Kelly, Palmer, and Friedman ) for purposes of pre-trial discovery.

The Court 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.

On December 12, 2025, the Court denied defendants’ motion to dismiss the FDUTPA claim.

On December 23, 2025, defendants filed their answers to plaintiff's second amended complaint.

Plaintiff has decided not to proceed with his claims, and the Court approved a stipulation dismissing his claims with prejudice on March 23, 2026.

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

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

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

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On April 11, 2025, PMI filed a motion to stay the proceedings until the court in the Kelly case, described above, issues a ruling on the motion recently filed by plaintiff Maultsby to certify a class.

On June 13, 2025, the Court granted PMI's motion to stay until the court in the Kelly case issues a ruling on class certification.

On June 13, 2025, the Court granted PMI's motion

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to stay until the court in the Kelly case issues a ruling on class certification.

In light of the ruling on the motion to stay, the Court denied PMI's motion to dismiss without prejudice.

In the sixth case, an individual complaint, Friedman v.

Philip Morris International Inc., et al.

, filed April 2, 2025, before United States District Court for the Southern District of Florida, plaintiff alleged, 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 asserted strict liability design defect and failure to warn claims, as well as a negligence claim, and sought compensatory and punitive damages, attorney’s fees and costs, and interest.

The defendants filed their answers to Plaintiffs’ complaint on May 5, 2025, and the case moved to the discovery phase and was consolidated with the other Florida cases ( Kelly, Palmer, Lendinara, and Friedman ) for purposes of pre-trial discovery.

The Court 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.

On December 12, 2025, the Court denied defendants’ motion to dismiss the FDUTPA claim.

On December 23, 2025, defendants filed their answers to plaintiff's second amended complaint.

Plaintiff has decided not to proceed with her claims, and the Court approved a stipulation dismissing her claims with prejudice on March 23, 2026.

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

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

Philip Morris International Inc.

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That motion is now fully briefed but resolution of the motion has been stayed pending an appellate court's disposition of a similar remand issue in an unrelated case.

Defendants have not yet

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answered or otherwise responded to the complaint.

Defendants have not yet answered or otherwise responded to 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.

In the eighth case, Austin Siegert v.

In the fifth case, Austin Siegert v.

Philip Morris International Inc.

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(“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.

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.

The Public Prosecutor alleged 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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British American Tobacco Italia S.p.a.

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 $ 59 million) in damages.

After various postponements, the trial before the court of first instance started on September 25, 2023.

The judge has scheduled a final hearing for April 29, 2026, with a decision expected thereafter.

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

(“BAT Italia”) 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 $ 57 million) in damages.

After various postponements, the trial before the court of first instance started on September 25, 2023 and continued through April 29, 2026.

On July 3, 2026, the trial court announced its decision orally.

All charges against PM Italia have been dismissed, and the company was acquitted in full.

The civil claim filed by BAT Italia against PM Italia has been dismissed.

The court acquitted one former employee of PM Italia, and convicted two other employees.

Finally, the court convicted the three government officials charged in the case.

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The court’s detailed written reasoning is expected to be issued by the end of September 2026.

Parties will then have an opportunity to appeal within 45 days of the issuance of the court’s detailed written reasoning.

Following an October 2020 final decision by the highest court in Brazil in tax litigation pertaining to overpayments of certain indirect taxes, our affiliate modified the methodology for calculation of the deduction applicable to the indirect taxes at issue.

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The proceeding is now concluded.

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

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

On December 18, 2025, FTKK filed a notice indicating that it was withdrawing its claim in one of the damages actions following an indicative opinion by the Court that FTKK was not entitled to a preliminary injunction in the related preliminary injunction action.

On January 21, 2026, the Court then issued a written decision rejecting FTKK's preliminary injunction petition in the preliminary injunction matter on the basis that the accused products do not infringe FTKK's patent.

On February 19, 2026, FTKK filed a notice indicating that it was withdrawing its claim in another preliminary injunction action following an indicative opinion in PMJ’s and Sojitz’s favor in that matter and the related damages action on the basis that FTKK’s patent was invalid.

FTKK did not withdraw its claim in the damages action, and a final written decision in this damages action is expected in the coming months.

On March 26, 2026, FTKK filed a notice indicating that it was withdrawing its claim in another preliminary injunction action following an indicative opinion in PMJ's and Sojitz's favor in that matter and the related damages action on the basis that accused products do not infringe FTKK's patent.

FTKK did not withdraw its claim in the damages action, and a final written decision in this damages action is expected in the coming months.

Merits proceedings in the remaining matters are at various stages.

To date, we have received three written rulings from the Tokyo District Court rejecting FTKK’s claims on the basis that FTKK’s patents were not infringed or were invalid.

FTKK has appealed one of these rulings to the IP High Court.

FTKK has further withdrawn eight of these actions following indicative rulings indicating that FTKK’s patents were not infringed or were invalid.

FTKK’s remaining patent infringement actions remain at various stages.

On November 27, 2024, we were informed that FTKK filed another application with Tokyo Customs against Sojitz, on the basis of alleged infringement of another FTKK patent.

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In April 2025, Tokyo Customs issued a formal notification rejecting FTKK's request for an import injunction on the basis that the accused products do not infringe FTKK's patent.

To our knowledge, FTKK has not appealed and the time for any appeal has expired, so the matter is now concluded.

On June 5, 2025, we were informed that FTKK filed a new application with Tokyo Customs against Sojitz, on the basis of alleged infringement of another FTKK patent.

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We were informed on January 22, 2026, that FTKK has filed a request for re-investigation of the matter with Tokyo Customs.

PMJ submitted a response on February 19, 2026.

PMJL submitted a response on February 19, 2026, and filed an additional brief on May 7, 2026.

On December 16, 2025, we were informed that FTKK filed a new application with Tokyo Customs against Sojitz, on the basis of alleged infringement of another FTKK patent.

FTKK is seeking an order to stop the importation of TEREA and SENTIA consumables.

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

PMJL entered an appearance in the proceeding as an interested party and filed an opposition to FTKK’s application on January 27, 2026.

A hearing was held on March 31, 2026.

FTKK sought an order to stop the importation of TEREA and SENTIA consumables.

FTKK withdrew its Customs application following the issuance of an opinion from expert advisors to Customs that the patent at issue was not infringed.

The proceeding is now concluded.

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

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.

While the outcomes of these proceedings are uncertain, management does not expect that the ultimate outcomes of other litigation, including any reasonably

Philip Morris International Inc.

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Notes to Condensed Consolidated Financial Statements

possible losses in excess of current accruals, will have a material adverse effect on our consolidated results of operations, cash flows or financial position.

Income Taxes:

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The provisions and modifications included in the Act did not have a material impact on PMI’s 2025 consolidated financial statements.

PMI’s effective tax rates for the three months ended March 31, 2026 and 2025 were 18.5 % and 20.0 %, respectively.

The effective tax rate for the three months ended March 31, 2026 was favorably impacted by a decrease in deferred tax liabilities related to the fair value adjustment of equity securities held by PMI ($ 95 million), partly offset by deferred tax expense for unrealized foreign currency losses on intercompany loans related to the Swedish Match acquisition financing reflected in the condensed consolidated statements of earnings ($ 75 million), while the underlying pre-tax foreign currency movements fully offset in the condensed consolidated statements of earnings and were reflected as currency translation adjustments in its condensed consolidated statements of stockholders' (deficit) equity.

The effective tax rate for the three months ended March 31, 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 ($ 93 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 ($ 40 million).

PMI’s effective tax rates for the six months and three months ended June 30, 2026 were 20.5 % and 22.3 %, respectively.

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

The effective tax rate for the six months ended June 30, 2026 was unfavorably impacted by deferred tax expense for unrealized foreign currency gains on intercompany loans related to the Swedish Match acquisition financing reflected in the condensed consolidated statements of earnings ($ 97 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, partly offset by a decrease in deferred tax liabilities related to the fair value adjustment of equity securities held by PMI ($ 68 million).

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).

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-standing tax principles.

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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 March 31, 2026 and December 31, 2025.

These income tax receivables are included in other assets in PMI’s condensed consolidated balance sheets at June 30, 2026 and December 31, 2025.

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 March 31, 2026 and December 31, 2025, PMI’s short-term borrowings and related average interest rates consisted of the following:

March 31, 2026 December 31, 2025

At June 30, 2026 and December 31, 2025, PMI’s short-term borrowings and related average interest rates consisted of the following:

June 30, 2026 December 31, 2025

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

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Given the mix of PMI's legal entities and their respective local economic environments, the average interest rate for bank loans above can vary significantly from day to day and country to country.

The fair values of PMI’s short-term borrowings at March 31, 2026 and December 31, 2025, based on current market interest rates, approximate carrying value.

The fair values of PMI’s short-term borrowings at June 30, 2026 and December 31, 2025, based on current market interest rates, approximate carrying value.

Long-term Debt:

At March 31, 2026 and December 31, 2025, PMI’s long-term debt consisted of the following:

(in millions) March 31, 2026 December 31, 2025

At June 30, 2026 and December 31, 2025, PMI’s long-term debt consisted of the following:

(in millions) June 30, 2026 December 31, 2025

dollar notes, 1.750 % to 6.375 % (average interest rate 4.719 %), due through 2044

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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 March 31, 2026, the fair value of PMI's outstanding long-term debt, excluding the aforementioned finance leases, was as follows:

At June 30, 2026, the fair value of PMI's outstanding long-term debt, excluding the aforementioned finance leases, was as follows:

(in millions)

March 31, 2026

June 30, 2026

Level 1 $ 43,216

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Notes to Condensed Consolidated Financial Statements

Debt Issuances

PMI's debt issuances in the first six months of 2026 were as follows:

(in millions)

Type Face Value Interest Rate Issuance Maturity

dollar notes (a)

$ 750 4.125 % April 2026 April 2029

dollar notes (a)

$ 750 4.875 % April 2026 April 2036

(a) Interest is payable semi-annually, commencing in October 2026

The net proceeds from the sale of the securities listed in the table above have been or will be used for general corporate purposes, including working capital requirements, repayment of commercial paper or to refinance certain of our outstanding notes due in 2026.

Euro Term Loan Facility related to the Financing of the Swedish Match Acquisition

On June 29, 2026, PMI prepaid € 1.0 billion (approximately $ 1.1 billion), including a portion of the outstanding principal and accrued interest, under the 5 -year tranche of the term loan facility.

Borrowings in the amount of € 1.5 billion (approximately $ 1.7 billion) under the 5 -year tranche of the term loan facility remain outstanding, expiring on June 23, 2027.

Revolving Credit Facilities:

At March 31, 2026, PMI's total committed revolving credit facilities were as follows:

At June 30, 2026, 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 March 31, 2026, there were no borrowings under these committed revolving credit facilities, and the entire committed amounts were available for borrowing.

At June 30, 2026, there were no borrowings under these committed revolving credit facilities, and the entire committed amounts were available for borrowing.

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

These credit arrangements amounted to approximately $ 3.7 billion at March 31, 2026, and approximately $ 3.9 billion at December 31, 2025.

Borrowings under these arrangements and other bank loans amounted to $ 216 million at March 31, 2026, and $ 168 million at December 31, 2025.

These credit arrangements amounted to approximately $ 4.2 billion at June 30, 2026, and approximately $ 3.9 billion at December 31, 2025.

Borrowings under these arrangements and other bank loans amounted to $ 689 million at June 30, 2026, and $ 168 million at December 31, 2025.

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Accumulated Other Comprehensive Losses:

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(Losses) Earnings At At At

(in millions) March 31, 2026 December 31, 2025 March 31, 2025

(in millions) June 30, 2026 December 31, 2025 June 30, 2025

Currency translation adjustments $ ( 10,647 ) $ ( 11,175 ) $ ( 10,979 )

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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 three months ended March 31, 2026 and 2025.

For additional information, see Note 4.

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Financial Instruments for disclosures related to derivative financial instruments.

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Related Parties - Equity Investments and Other:

Equity Method Investments:

At March 31, 2026 and December 31, 2025, PMI had total equity method investments of $ 1,001 million and $ 1,019 million, respectively.

At June 30, 2026 and December 31, 2025, PMI had total equity method investments of $ 1,008 million and $ 1,019 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 March 31, 2026 and December 31, 2025, exceeded our share of the investees' book value by $ 1,026 million and $ 1,033 million, respectively.

The carrying value of our equity method investments at June 30, 2026 and December 31, 2025, exceeded our share of the investees' book value by $ 1,023 million and $ 1,033 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 March 31, 2026 and December 31, 2025 of $ 160 million and $ 161 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 March 31, 2026 and December 31, 2025, PMI received year-to-date dividends from equity method investees of $ 2 million and $ 203 million, respectively.

PMI holds a 23 % equity interest in JSC TK Megapolis ("TKM"), PMI's distributor in Russia, which as of March 31, 2026 had a carrying value of $ 307 million.

Additionally, there was approximately $ 531 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 March 31, 2026.

The difference related to the definite-lived intangibles and other assets at June 30, 2026 and December 31, 2025 of $ 161 million in both periods, 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, 2026 and December 31, 2025, PMI received year-to-date dividends from equity method investees of $ 17 million and $ 203 million, respectively.

PMI holds a 23 % equity interest in JSC TK Megapolis ("TKM"), PMI's distributor in Russia, which as of June 30, 2026 had a book value of $ 0.8 billion, including related cumulative foreign currency translation losses of $ 0.5 billion reflected in accumulated other comprehensive losses in stockholders’ equity.

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”).

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

PMI holds an indirect economic interest of approximately 25 % in Société des Tabacs Algéro-Emiratie (“STAEM”), an Algerian joint venture with the Algerian state-owned enterprise Management et Développement des Actifs et des Ressources Holding ("MADAR Holding").

STAEM manufactures and distributes under license some of PMI’s brands.

As of June 30, 2026, the book value of PMI’s investment in STAEM was $ 0.7 billion, including related cumulative foreign currency translation losses of $ 0.3 billion reflected in accumulated other comprehensive losses in stockholders’ equity.

PMI monitors general economic, political, regulatory, and other market factors for potential unfavorable developments which could impact the value of the investment.

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

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

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Additionally, as part of its Wellness business strategy, PMI holds non-controlling equity interests in certain companies.

The initial investments in TKM, EITA, Eastern and Wellness business related investments have been recorded at cost and are included in equity investments on the condensed consolidated balance sheets.

The initial investments in TKM, STAEM, Eastern and Wellness business related investments 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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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 global settlement amount has been paid and the operating covenants that govern RBH’s business are lifted.

As of March 31, 2026 and December 31, 2025, the carrying

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

value of PMI's investment in RBH was $ 555 million and $ 569 million, respectively, including the cumulative amount of impairments and downward adjustments of $ 2,549 million in both periods.

In May 2026, pursuant to its obligation under the Plan, RBH provided an annual business plan to its Plan Administrator containing updated five-year financial projections reflecting current industry dynamics.

As a result, PMI determined that the estimated fair value of its investment in RBH was lower than its carrying value and recorded a non-cash impairment charge of $ 511 million in the second quarter of 2026.

As of June 30, 2026 and December 31, 2025, the carrying value of PMI's investment in RBH was $ 51 million and $ 569 million, respectively.

This included the cumulative amount of impairments and downward adjustments of $ 3,060 million as of June 30, 2026 and $ 2,549 million as of December 31, 2025.

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

The fair value of PMI’s other equity securities, which have been classified within Level 1, was $ 859 million and $ 1,291 million at March 31, 2026 and December 31, 2025, respectively.

Unrealized pre-tax gain (loss) of $( 433 ) million ($( 338 ) 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 three months ended March 31, 2026.

The fair value of PMI’s other equity securities, which have been classified within Level 1, was $ 983 million and $ 1,291 million at June 30, 2026 and December 31, 2025, respectively.

Unrealized pre-tax gain (loss) of $( 308 ) million ($( 240 ) 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, 2026.

Other related parties:

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GPI also acts as contract manufacturer and distributor for PM 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 Three Months Ended March 31,

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

(in millions) 2026 2025 2026 2025

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

(in millions) At March 31, 2026 At December 31, 2025

(in millions) At June 30, 2026 At December 31, 2025

Megapolis Group $ 699 $ 568

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Payables $ 46 $ 37

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

The activities with the above related parties are in the ordinary course of business, and are primarily for distribution, service fees, contract manufacturing and license agreements.

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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 March 31, 2026 and 2025.

The amounts associated with the servicing liability were not material as of June 30, 2026 and 2025.

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 three months ended March 31, 2026 and 2025, were $ 2.5 billion and $ 2.4 billion, respectively.

Cumulative trade receivables sold, including excise taxes, for the six months ended June 30, 2026 and 2025, were $ 5.3 billion and $ 5.6 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 March 31, 2026 and 2025, were $ 0.6 billion for both periods.

The trade receivables sold that remained outstanding under these arrangements as of June 30, 2026 and 2025, were

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

$ 0.6 billion and $ 0.7 billion, respectively.

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

The difference 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.

For the three months ended March 31, 2026 and 2025, the loss on sale of trade receivables was $ 7 million and $ 8 million, respectively.

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,

2026 $ 14 $ 7

2025 $ 17 $ 9

Restructuring Activities:

For the three months ended March 31, 2026, PMI recorded total pre-tax restructuring charges of $ 24 million.

For the three months ended March 31, 2025, PMI did not record any charges related to restructuring activities.

For the six months and three months ended June 30, 2026, PMI recorded total pre-tax restructuring charges of $ 30 million and $ 6 million, respectively.

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

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

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The program also includes the closure of the cigar manufacturing facility in Dothan, Alabama and the consolidation of its cigar production operations into PMI’s manufacturing footprint in the Dominican Republic.

As a result of these actions, PMI recorded pre‑tax restructuring charges of $ 24 million during the first quarter of 2026.

These charges primarily consist of employee separation and other employee related costs of $ 19 million, and asset impairment charges of $ 5 million.

As a result of these actions, PMI recorded pre‑tax restructuring charges of $ 30 million for the six months ended June 30, 2026.

These charges primarily included employee separation and other employee related costs of $ 25 million, and asset impairment charges of $ 5 million.

For the full year 2026, PMI expects total pre‑tax restructuring charges associated with the FIP program to be approximately $ 50 million.

Manufacturing Footprint Optimization - Germany

As a result of declining demand for cigarettes and other combustible tobacco products in Europe, two of PMI’s German subsidiaries, Philip Morris Manufacturing GmbH and F6 Cigarettenfabrik GmbH & Co.

KG, initiated consultations with employee representatives on October 29, 2024, on a proposal to end production in the factories located in Berlin and in Dresden by the end of the second quarter of 2025, and to seek to agree on fair solutions for any impacted employees.

The consultation processes for both of these factories were concluded in April 2025, and as a result of the closure PMI recorded pre-tax restructuring charges of $ 243 million in the second quarter of 2025.

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

Philip Morris International Inc.

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Movement in Restructuring Related Liabilities

The movement in restructuring related liabilities for the three months ended March 31, 2026 was as follows:

The movement in restructuring related liabilities for the six months ended June 30, 2026 was as follows:

(in millions)

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Currency/other ( 6 )

Liability balance, March 31, 2026 $ 102

Liability balance, June 30, 2026 $ 89

Future cash payments for restructuring activities incurred to date are anticipated to be substantially paid by the end of 2027.

The components of PMI’s lease cost were as follows for the three months ended March 31, 2026 and 2025:

For the Three Months Ended March 31,

The components of PMI’s lease cost were as follows for the six months and three months ended June 30, 2026 and 2025:

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

(in millions) 2026 2025 2026 2025

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

As of March 31, 2026 and December 31, 2025, the total amount due to suppliers participating in the SCF program was $ 1.0 billion and $ 1.1 billion, respectively.

Philip Morris International Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

As of June 30, 2026 and December 31, 2025, the total amount due to suppliers participating in the SCF program was $ 1.0 billion and $ 1.1 billion, respectively.

New Accounting Standards:

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements