Philip Morris International (PM) 10-K risk factor changes: FY2020 vs FY2019

You can identify these forward-looking statements by use of words such as "strategy," "expects," "continues," "plans," "anticipates," "believes," "will," "estimates," "intends," "projects," [added: "aims,"] "goals," [removed: "targets"] [added: "targets," "forecasts"] and other words of similar meaning.

[removed: Risks] [added: *Risks] Related to [removed: Our Business and Industry][added: the Impact of COVID-19 on our Business*]

[removed: | • |] Consumption of tax-paid cigarettes continues to decline in many of our markets. [removed: |]

This decline is due to multiple factors, including increased taxes and pricing, governmental actions, the diminishing social acceptance of [removed: smoking,] [added: smoking and health concerns,] continuing economic and geopolitical uncertainty, and the continuing prevalence of illicit products.

[removed: | • | Cigarettes are subject to substantial taxes.] Significant increases in cigarette-related taxes have been proposed or enacted and are likely to continue to be proposed or enacted in numerous jurisdictions. [removed: These tax increases may disproportionately affect our profitability and make us less competitive versus certain of our competitors. |]

[removed: | • |] Our business faces significant governmental action aimed at increasing regulatory requirements with the goal of reducing or preventing the use of tobacco products. [removed: |]

| • | [added: | |] restrictions on or licensing of outlets permitted to sell cigarettes; | [added: | |]

| • | [added: | |] the levying of substantial and increasing tax and duty charges; | [added: | |]

| • | [added: | |] restrictions or bans on advertising, marketing and sponsorship; | [added: | |]

| • | [added: | |] the display of larger health warnings, graphic health warnings and other labeling requirements; | [added: | |]

| • | [added: | |] restrictions on packaging design, including the use of colors, and [added: mandating] plain packaging; | [added: | |]

| • | [added: | |] restrictions on packaging and cigarette formats and dimensions; | [added: | |]

| • | [added: | |] restrictions or bans on the display of tobacco product packaging at the point of sale and restrictions or bans on [removed: cigarette] vending machines; | [added: | |]

| • | [added: | |] requirements regarding testing, disclosure and performance standards for tar, nicotine, carbon monoxide and other smoke constituents; | [added: | |]

| • | [added: | |] disclosure, restrictions, or bans of tobacco product ingredients; | [added: | |]

| • | [added: | |] increased restrictions on smoking [added: and use of tobacco and nicotine-containing products] in public and work places and, in some instances, in private places and outdoors; | [added: | |]

| • | [removed: regulation,] [added: | |] restrictions or prohibitions of novel tobacco or nicotine-containing products; | [added: | |]

| • | [added: | |] elimination of duty free sales and duty free allowances for travelers; | [added: | |]

| • | [added: | |] encouraging litigation against tobacco companies; and | [added: | |]

| • | [added: | |] excluding tobacco companies from transparent public dialogue regarding public health and other policy matters. | [added: | |]

[removed: Our financial results could be significantly affected by regulatory initiatives resulting in a significant decrease in demand for our brands, in particular] [added: More specifically,] requirements that lead to a commoditization of tobacco products or impede adult consumers' ability to convert to our RRPs, as well as any significant increase in the cost of complying with new regulatory [removed: requirements.][added: requirements could have a material adverse effect on our financial results.]

[removed: | • |] Litigation related to tobacco use and exposure to environmental tobacco smoke could substantially reduce our profitability and could severely impair our liquidity. [removed: |]

There is litigation related to tobacco products pending in certain [removed: jurisdictions.][added: jurisdictions in which we operate.]

See Item 8, Note [removed: 18.][added: 17.]

*Contingencies* to our [added: condensed] consolidated financial statements for a discussion of pending litigation and [removed: Item 7, *Business] [added: "Business] Environment—Reduced-Risk Products (RRPs)—Legal Challenges to [removed: RRPs.*][added: RRPs."]

[removed: | • |] We face intense competition, and our failure to compete effectively could have a material adverse effect on our profitability and results of operations. [removed: |]

Certain new market entrants may alienate consumers from innovative products through inappropriate marketing [removed: campaigns and] [added: campaigns,] messaging and inferior product satisfaction, while not relying on scientific substantiation based on appropriate R&D protocols and standards.

[removed: | • |] Because we have operations in numerous countries, our results may be [removed: influenced] [added: adversely impacted] by economic, regulatory and political developments, natural disasters, pandemics or conflicts. [removed: |]

In addition, such developments could [added: increase costs of our materials and operations and] lead to loss of property or equipment that are critical to our business in certain markets and difficulty in staffing and managing our operations, [added: all of] which could reduce our volumes, revenues and net earnings.

[removed: | • |] We may be unable to anticipate changes in adult consumer preferences. [removed: |]

| • | [added: | |] promote brand equity successfully; | [added: | |]

| • | [added: | |] anticipate and respond to new adult consumer trends; | [added: | |]

| • | [added: | |] develop new products and markets and broaden brand portfolios; | [added: | |]

| • | [added: | |] improve productivity; | [added: | |]

| • | [added: | |] convince adult smokers to convert to our RRPs; | [added: | |]

| • | [added: | |] ensure adequate production capacity to meet demand for our products; and | [added: | |]

| • | [added: | |] be able to protect or enhance margins through price increases. | [added: | |]

In periods of economic uncertainty, adult consumers may tend to purchase lower-price brands, and the volume of our premium-price and mid-price brands and our profitability could [removed: suffer accordingly.][added: be materially adversely impacted as a result.]

[removed: | • |] The financial and business performance of our reduced-risk products is less predictable than our cigarette business. [removed: |]

The impact of this lower predictability on our projected results for a specific period may be significant, particularly during the early stages of this new product [removed: category.][added: category and during the COVID-19 pandemic.]

*Overall Business Risks*

Cigarettes are subject to substantial taxes.

These tax increases may disproportionately affect our profitability and make us less competitive versus certain of our competitors.

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Our financial results could be significantly affected by regulatory initiatives resulting in a significant decrease in demand for our brands.

Changes in the earnings mix and changes in tax laws may result in significant variability in our effective tax rates.

We are subject to income tax laws in the United States and numerous foreign jurisdictions.

The results of the 2020 U.S. presidential and congressional elections could lead to changes in the U.S. tax system, including significant increases in the U.S. corporate income tax rate and the minimum tax rate on certain earnings of foreign subsidiaries.

If ultimately enacted into law, such changes could have a material adverse impact on our effective tax rate thereby reducing our net earnings.

Further 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, which recommended changes to numerous long-standing tax principles.

If implemented, such changes, as well as changes in taxing jurisdictions’ administrative interpretations, decisions, policies, or positions, could also have a material adverse impact on our effective tax rate thereby reducing our net earnings.

*Risks Related to our International Operations*

We discuss risks associated with the COVID-19 pandemic below.

*Risks Related to Legal Challenges and Investigations*

convert adult smokers to our RRPs in such markets would be adversely affected.

See Item 8, Note 17.

*Contingencies—Other Litigation* to our condensed consolidated financial statements for a description of certain intellectual property proceedings.

*Risks Related to our Competitive Environment*

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| • | | | ensure effective adult consumer engagement, including communication about product characteristics and usage of RRPs; | | |

| • | | | provide excellent customer care; | | |

Our business, results of operations, cash flows and financial position will be adversely impacted during the continuation of the COVID-19 pandemic.

The COVID-19 pandemic has created significant societal and economic disruption, and resulted in closures of stores, factories and offices, and restrictions on manufacturing, distribution and travel, all of which have and will continue to adversely impact our business, results of operations, cash flows and financial position while the pandemic continues.

Our business continuity plans and other safeguards may not be effective to mitigate the impact of the pandemic.

Currently, significant risks include our diminished ability to convert adult smokers to our RRPs, significant volume declines in our duty-free business and certain other key markets, disruptions or delays in our manufacturing and supply chain, increased currency volatility, and delays in certain cost saving, transformation and restructuring initiatives.

Our business could also be adversely impacted if key personnel or a significant number of employees or business partners become unavailable due to the COVID-19 outbreak.

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without regard to the totality of scientific evidence for specific products.

The Tax Cuts and Jobs Act that was signed into law in December 2017 constitutes a major change to the U.S. tax system.

Our estimated impact of the Tax Cuts and Jobs Act is based on management’s current interpretations, and our analysis is ongoing.

Our final tax liability may be materially different from current estimates due to developments such as implementing regulations and clarifications.

Changes in the

In certain instances, we contract with third parties to manufacture some of our products or product parts or to provide other services.

Accordingly, our costs may increase significantly if we must replace such third parties with our own resources.

We are a leading international tobacco company engaged in the manufacture and sale of cigarettes, as well as smoke-free [removed: products and] [added: products,] associated electronic devices and accessories, and other nicotine-containing products in markets outside the United States.

In addition, we ship [removed: a version] [added: versions] of our Platform 1 device and [removed: its] consumables [removed: authorized by the U.S. Food and Drug Administration ("FDA")] to Altria Group, [removed: Inc.,] [added: Inc.] for sale [added: under license] in the United [removed: States] [added: States, where these products have received marketing authorizations from the U.S. Food and Drug Administration ("FDA")] under [removed: license.][added: the premarket tobacco product application ("PMTA") pathway; the FDA has also authorized the marketing of a version of our Platform 1 device and its consumables as a Modified Risk Tobacco Product ("MRTP"), finding that an exposure modification order for these products is appropriate to promote the public health.]

We are building a future on a new category of smoke-free products that, while not [removed: risk free,] [added: risk-free,] are a much better choice than continuing to smoke.

Our [removed: *IQOS*] smoke-free product [removed: brand] portfolio includes heat-not-burn [removed: tobacco] and nicotine-containing vapor products.

[removed: | • |] [added: -] European Union ("EU"); [removed: |]

[removed: | • |] [added: -] Eastern Europe ("EE"); [removed: |]

[removed: | • |] [added: -] Middle East & Africa ("ME&A"), which includes our international duty free business; [removed: |]

[removed: | • |] [added: -] South & Southeast Asia ("S&SA"); [removed: |]

[removed: | • |] [added: -] East Asia & Australia ("EA&A"); and [removed: |]

[removed: | • |] [added: -] Latin America & Canada ("LA&C"), which includes transactions under license with Altria Group, Inc. for the distribution of our Platform 1 product in the United States. [removed: |]

Our cigarettes are sold in more than [removed: 180] [added: 175] markets, and in many of these markets they hold the number one or number two market share position.

Our cost of sales consists principally of: tobacco leaf, non-tobacco raw materials, labor and manufacturing costs; shipping and handling costs; and the cost of [removed: the *IQOS*] devices produced by third-party electronics manufacturing service providers.

Estimated costs associated with [removed: *IQOS*] [added: device] warranty programs are generally provided for in cost of sales in the period the related revenues are recognized.

As a holding company, our principal sources of funds, including funds to make payment on our debt securities, are from the receipt of [added: dividends and repayment of debt from our subsidiaries.]

Our principal wholly owned and majority-owned subsidiaries currently are not limited by long-term debt or other agreements in their ability to pay cash dividends or to make other distributions [removed: with respect to their common stock] that are otherwise compliant with law.

The following executive summary provides [added: the business update and] significant highlights from the [removed: Discussion] [added: *Discussion] and [removed: Analysis] [added: Analysis*] that follows.

[removed: | • | Net Revenues – Net revenues of $29.8 billion for the year ended December 31, 2019, increased by $0.2 billion, or 0.6%, from the comparable 2018 amount.] The change in our net revenues from the comparable [removed: 2018] [added: 2019] amount was driven by the following (variances not to [removed: scale with year-to-date results): |][added: scale):]

[removed: ][added: ]

Net revenues, excluding [removed: unfavorable] [added: favorable] currency, increased by [removed: 3.8%, mainly] [added: 0.6%,] reflecting: a favorable pricing variance, [removed: notably in Germany, Indonesia, Japan, the Philippines and Turkey; and favorable volume/mix,] mainly driven by [added: higher] heated tobacco [removed: unit] and [added: combustible pricing in Japan, partly offset by lower] *IQOS* device [removed: volume] [added: pricing] in [removed: the EU] [added: Japan;] and [removed: Russia,] [added: unfavorable volume/mix, mainly due to lower cigarette volume (primarily in Japan), unfavorable cigarette mix in Australia, lower device volume/mix in Japan] and [added: lower] heated tobacco unit [removed: volume] [added: mix] in Japan, partly offset by [removed: unfavorable volume/mix of cigarettes, notably in Australia, the EU, Indonesia, Japan and Russia, unfavorable] [added: higher] heated tobacco unit volume in [removed: PMI Duty Free, and unfavorable *IQOS* device volume in Japan and Korea.][added: Japan.]

For further details on the deconsolidation of RBH, see Item 8, Note [removed: 18.][added: 17.]

*Contingencies* and Note [removed: 22.][added: 20.]

Net revenues by product category for the years ended December 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] are shown below:

[removed:  ][added:  ]

[removed: | • |] [added: -] Diluted Earnings Per Share – The changes in our reported diluted earnings per share (“diluted EPS”) for the year ended December 31, [removed: 2019,] [added: 2020,] from the comparable [removed: 2018] [added: 2019] amounts, were as follows: [removed: |]

| | [added: | |] Diluted EPS | | | % [removed: Growth (Decline)] [added: Growth (Decline)] | | [added: |]

| For the year ended December 31, [removed: 2018] [added: 2019] | [added: | |] $ | [removed: 5.08] [added: 4.61] | | | | [added: |]

| [removed: 2018] [added: 2019] Asset impairment and exit costs | [removed: —] | | [added: 0.23] | | | [added: | | |]

| [removed: 2019] [added: 2020] Asset impairment and exit costs | [removed: (0.23] | | [removed: )] [added: (0.08)] | | | [added: | | |]

| 2019 Canadian tobacco litigation-related expense | [removed: (0.09] | | [removed: )] [added: 0.09] | | | [added: | | |]

| 2019 Loss on deconsolidation of RBH | [removed: (0.12] | | [removed: )] [added: 0.12] | | | [added: | | |]

| 2019 Russia excise and VAT audit charge | [removed: (0.20] | | [removed: )] [added: 0.20] | | | [added: | | |]

| 2019 Fair value adjustment for equity security investments | [removed: 0.02] | | [added: (0.02)] | | | [added: | | |]

| 2019 Tax items | [removed: 0.04] | | [added: (0.04)] | | | [added: | | |]

| Subtotal of 2019 items | [removed: (0.58] | | [removed: )] [added: 0.58] | | | [added: | | |]

| Change in tax rate | [removed: (0.04] | | [removed: )] [added: 0.05] | | | [added: | | |]

| For the year ended December 31, [removed: 2019] [added: 2020] | [added: | |] $ | [removed: 4.61] [added: 5.16] | | [removed: (9.3] [added: 11.9] | [removed: )%] | [added: % |]

[added: *Income taxes –*] The 2019 Tax items that increased our 2019 diluted EPS by $0.04 per share in the table above [removed: was] [added: were] primarily due to a reduction in estimated U.S. federal income tax on dividend repatriation for the years [removed: 2015-2018] [added: 2015 - 2018] ($67 million).

The change in the tax rate that [removed: decreased] [added: increased] our diluted EPS by [removed: $0.04] [added: $0.05] per share in the table above was primarily due to changes in earnings mix by taxing [removed: jurisdiction and] [added: jurisdiction, a reduction of] U.S. state [removed: deferred] [added: tax expense and the corporate] income tax [removed: expense, partially offset by repatriation cost differences.][added: rate reduction in Indonesia,]

*Asset impairment and exit costs –* [removed: As a] [added: During 2019, as] part of the optimization of our global manufacturing infrastructure, we recorded pre-tax asset impairment and exit costs of $422 [removed: million during 2019,] [added: million,] representing $362 million net of income tax and a diluted EPS charge of $0.23 per share.

This [added: 2019] charge primarily related to a cigarette plant closure in Berlin, Germany (approximately $0.19 per share), as well as the closure of [removed: a] cigarette [removed: plant] [added: plants] in Argentina, Colombia and Pakistan.

- Net Revenues – Net revenues of $28.7 billion for the year ended December 31, 2020, decreased by $1.1 billion, or 3.7%, from the comparable 2019 amount, and were impacted by the effects of the COVID-19 pandemic, particularly in the second quarter of 2020 and continuing throughout the second half of the year.

Net revenues, excluding unfavorable currency, decreased by 2.2%, reflecting: unfavorable volume/mix, primarily due to lower cigarette volume (mainly in Argentina, Indonesia, Italy, Japan, Mexico, the Philippines, PMI Duty Free, Poland, Russia and Ukraine, partly offset by Germany), partially offset by higher heated tobacco unit volume (notably in the EU, Japan, Russia and Ukraine, partly offset by PMI Duty Free); and the unfavorable impact of $253 million, shown in "Cost/Other," mainly resulting from the deconsolidation of our Canadian subsidiary, Rothman, Benson & Hedges, Inc. ("RBH"), effective March 22, 2019, and lower fees for certain distribution rights billed to customers in certain markets; partly offset by a favorable pricing variance (notably driven by the Gulf Cooperation Council, Germany, Japan, Mexico, North Africa, the Philippines, PMI Duty Free, Russia and Ukraine, partially offset by Indonesia, Poland and Turkey).

*Deconsolidation of RBH.* The Gulf Cooperation Council ("GCC") is defined as Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE).

| 2020 Brazil indirect tax credit | | | 0.05 | | | | | |

| 2020 Fair value adjustment for equity security investments | | | (0.04) | | | | | |

| 2020 Tax items | | | 0.06 | | | | | |

| Subtotal of 2020 items | | | (0.01) | | | | | |

| Currency | | | (0.32) | | | | | |

| Interest | | | (0.02) | | | | | |

| Operations | | | 0.27 | | | | | |

During 2020, we recorded pre-tax asset impairment and exit costs of $149 million, representing $124 million net of income tax and a diluted EPS charge of

$0.08 per share, related to the organizational design optimization plan, primarily in Switzerland.

For further details, see Item 8, Note 17.

*Brazil indirect tax credit -* Following a final and enforceable decision by the highest court in Brazil in October 2020, PMI recorded a gain of $119 million for tax credits ($79 million net of income tax and $0.05 per share increase in diluted EPS) representing overpayments of indirect taxes for the period from March 2012 through December 2019; these tax credits will be applied to future tax liabilities in Brazil.

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

A decision regarding an additional amount of overpaid indirect taxes of approximately $90 million is still pending before this court.

During 2020, we recorded an unfavorable fair value adjustment for our equity security investments of $60 million after tax (or $0.04 per share decrease in diluted EPS).

The fair value adjustment for our equity security investments was included in equity investments and securities (income)/loss, net ($76 million loss) and provision for income taxes ($16 million benefit) on the consolidated statements of earnings.

*Related Parties - Equity Investments and Other.*

The 2020 Tax items that increased our 2020 diluted EPS by $0.06 per share in the table above were due to final U.S. tax regulations under the Global Intangible Low-Taxed Income ("GILTI") provisions of the Internal Revenue Code for years 2018 and 2019 ($93 million).

partially offset by a decrease in deductions related to foreign-derived intangible income for the years 2018 and 2019 and repatriation cost differences.

*Interest* – The unfavorable impact of interest was due primarily to lower interest earned on cash balances.

- Middle East & Africa: Unfavorable volume/mix and lower fees for certain distribution rights billed to customers in certain markets, partially offset by favorable pricing, and lower marketing, administration and research costs;

COVID-19 Impact on Our Business

COVID-19: Business Continuity Update

Since the onset of the COVID-19 pandemic, PMI has undertaken a number of business continuity measures to mitigate potential disruption to its operations and route-to-market in order to preserve the availability of products to its customers and adult consumers.

Currently:

- PMI has sufficient access to the inputs for its products and is not facing any significant business continuity issues with respect to key suppliers;

- All of of PMI's cigarette and heated tobacco unit manufacturing facilities globally are operational;

- COVID-related restrictions do not have a significant impact on the availability of PMI's products to its customers and adult consumers; and

- PMI has sufficient liquidity resources through cash on hand, the ongoing cash generation of its business, and its access to the commercial paper and debt markets.

Nonetheless, significant uncertainty remains as the spread of the disease is increasing in a number of markets, resulting in additional restrictions and increasing risk of disruptions.

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| | | | 2020 | | | 2019 | | |

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(1) As of March 22, 2019, PMI deconsolidated the financial results of its Canadian subsidiary, Rothmans, Benson & Hedges Inc. ("RBH") from PMI's financial statements.

- Asset impairment and exit costs - See Item 8, Note 19.

- Russia excise and VAT audit charge - See Item 8, Note 17.

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dividends and repayment of debt from our subsidiaries.

The currency-neutral growth in net revenues of 3.8% came despite the unfavorable impact of $763 million, shown in "Other" above, predominantly resulting from the deconsolidation of our Canadian subsidiary, Rothmans, Benson & Hedges, Inc. ("RBH"), effective March 22, 2019.

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| 2018 Tax items | 0.02 | | | | |

| Subtotal of 2018 items | 0.02 | | | | |

| Currency | (0.13 | | ) | | |

| Interest | 0.04 | | | | |

| Operations | 0.22 | | | | |

*Income taxes –* The 2018 Tax items that decreased our 2018 diluted EPS by $0.02 per share in the table above represented a current income tax charge of $185 million primarily due to an increase in our final 2017 transition tax liability, mostly offset by a deferred income tax benefit of $154 million primarily due to the recognition of deferred tax assets for net operating losses in the state of New York.

*Interest* – The favorable impact of interest was due primarily to our ongoing efforts to optimize our capital structure following the passage of the U.S. Tax Cuts and Jobs Act.

This included the decision to use existing cash to repay $2.5 billion and $4.0 billion of long-term debt that matured in 2018 and in 2019, respectively.

| • | Eastern Europe: Higher marketing, administration and research costs and higher manufacturing costs, partially offset by favorable volume/mix and favorable pricing. |

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We recognize revenue when control is transferred to the customer, typically either upon shipment or delivery of goods.

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These include *HEETS*, *Next*, *Philip Morris* and *Rooftop*, which together accounted for approximately 40% of RBH's total shipment volume in 2018.

| • | Latin America & Canada, reflecting lower cigarette shipment volume, principally in Argentina, Canada (primarily due to the impact of the deconsolidation of RBH) and Venezuela. Excluding the volume impact from the RBH deconsolidation of approximately 4.3 billion units (reflecting the volume of RBH-owned brands from March 22, 2018 through December 31, 2018), our total shipment volume in the Region decreased by 5.2%; |

partly offset by

Excluding the volume impact from the deconsolidation of RBH, and the net favorable impact of estimated distributor inventory movements of approximately 1.1 billion units, our total in-market sales declined by 1.5%, due to a 3.7% decline of cigarettes, partly offset by a 35.3% increase in heated tobacco units.

The net favorable impact of estimated distributor inventory movements of approximately 1.1 billion units reflected a 2.7 billion favorable impact from heated tobacco units (driven primarily by Japan, mainly reflecting a favorable comparison with 2018 in which *IQOS* consumable inventories were reduced, partly offset by PMI Duty Free), partially offset by a 1.6 billion unfavorable impact from cigarettes (due primarily to Japan, North Africa and Thailand, partly offset by the EU Region and Saudi Arabia).

| *Marlboro* | 262,908 | | 264,423 | | (0.6 | )% |

| *L&M* | 92,873 | | 89,789 | | 3.4 | % |

| *Chesterfield* | 57,185 | | 59,452 | | (3.8 | )% |

| *Parliament* | 38,723 | | 41,697 | | (7.1 | )% |

| *Sampoerna A* | 35,133 | | 39,522 | | (11.1 | )% |

| *Lark* | 19,602 | | 23,021 | | (14.9 | )% |

| *Fortune* | 12,831 | | 16,596 | | (22.7 | )% |

| Others | 77,830 | | 94,583 | | (17.7 | )% |

| *•* | *Sampoerna A* in Indonesia, mainly reflecting the impact of retail price increases resulting in widened price gaps with competitors' products; |

| • | *Fortune* in the Philippines, mainly reflecting up-trading to *Marlboro* resulting from narrowed price gaps with the below premium price segment; and |

| *•* | *L&M*, mainly driven by Egypt and Thailand, partly offset by Russia and Turkey; and |

| • | *Dji Sam Soe* in Indonesia, driven by the strong performance of the *DSS Magnum Mild 16* variant and the introduction of 20s and 50s variants. |

| • | Total international heated tobacco unit market share of 2.2%, up by 0.6 points; and |

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We are a leading international tobacco company engaged in the manufacture and sale of cigarettes, [added: as well as] smoke-free [removed: products and] [added: products,] associated electronic devices and accessories, and other nicotine-containing products in markets outside the United States of America.

In addition, we ship [removed: a version] [added: versions] of our Platform 1 device and [removed: its] consumables [removed: authorized by the U.S. Food and Drug Administration ("FDA")] to Altria Group, [removed: Inc.,] [added: Inc.] for sale [added: under license] in the United [removed: States] [added: States, where these products have received marketing authorizations from the U.S. Food and Drug Administration ("FDA")] under [removed: license.][added: the premarket tobacco product application ("PMTA") pathway; the FDA has also authorized the marketing of a version of our Platform 1 device and its consumables as a Modified Risk Tobacco Product ("MRTP"), finding that an exposure modification order for these products is appropriate to promote the public health.]

[removed: We market our heated] [added: Heated] tobacco units [removed: under] [added: ("HTU") is] the [removed: brand names] [added: term we use to refer to heated tobacco consumables, which for us include our] *HEETS*, *HEETS [added: Creations, HEETS Dimensions, HEETS] Marlboro* and *HEETS FROM [removed: MARLBORO*, defined] [added: MARLBORO (*defined] collectively as [removed: *HEETS*,] [added: *HEETS)*, *Marlboro Dimensions*, *Marlboro* *HeatSticks* and *Parliament HeatSticks,*] as well as [removed: *Marlboro HeatSticks*] [added: the KT&G-licensed brands, *Fiit*] and [removed: *Parliament HeatSticks*.][added: *Miix* (outside of Korea).]

As of December 31, [removed: 2019,] [added: 2020,] Platform 1 is available for sale in [removed: 52] [added: 64] markets in key cities or nationwide.

Our cigarettes are sold in more than [removed: 180] [added: 175] markets, and in many of these markets they hold the number one or number two market share position.

Our portfolio comprises both international and local brands and is led by *Marlboro*, the world’s best-selling international cigarette, which accounted for approximately 37% of our total [removed: 2019] [added: 2020] cigarette shipment volume.

Our other leading international cigarette brands are *Bond Street, Chesterfield, L&M*, *Lark* and *Philip Morris.* These seven international cigarette brands contributed approximately [removed: 78%] [added: 79%] of our cigarette shipment volume in [removed: 2019.][added: 2020.]

Our principal wholly owned and majority-owned subsidiaries currently are not limited by long-term debt or other agreements in their ability to pay cash dividends or to make other distributions [removed: with respect to their common stock] that are otherwise compliant with law.

[removed: | • |] [added: -] The European Union Region (“EU”) is headquartered in Lausanne, Switzerland, and covers all the European Union countries and also Switzerland, Norway, Iceland and the United Kingdom; [removed: |]

[removed: | • |] [added: -] The Eastern Europe Region (“EE”) is also headquartered in Lausanne and includes Southeast Europe, Central Asia, Ukraine, Israel and Russia; [removed: |]

[removed: | • |] [added: -] The Middle East & Africa Region (“ME&A”) is also headquartered in Lausanne and covers the African continent, the Middle East, Turkey and our international duty free business; [removed: |]

[removed: | • |] [added: -] The South & Southeast Asia Region (“S&SA”) is headquartered in Hong Kong and includes Indonesia, the Philippines and other markets in this region; [removed: |]

[removed: | • |] [added: -] The East Asia & Australia Region (“EA&A”) is also headquartered in Hong Kong and includes Australia, Japan, South Korea, the People's Republic of China and other markets in this region, as well as Malaysia and Singapore; and [removed: |]

[removed: | • |] [added: -] The Latin America & Canada Region (“LA&C”) is headquartered in New York and covers the South American continent, Central America, Mexico, the Caribbean and Canada. [removed: LA&C also includes transactions under license with Altria Group, Inc., for the distribution of our Platform 1 product in the United States. |]

These include *HEETS*, *Next*, *Philip Morris* and [removed: *Rooftop*, which together accounted for approximately 40% of RBH's total shipment volume in 2018.][added: *Rooftop*.]

Our total shipments, including cigarettes and heated tobacco units, decreased by [removed: 2.0%] [added: 8.1%] in [removed: 2019] [added: 2020] to [removed: 766.4] [added: 704.6] billion units.

We estimate that international industry volumes, including cigarettes and heated tobacco units, were approximately [removed: 5.1] [added: 4.9] trillion units in [removed: 2019,] [added: 2020,] a [removed: 0.9%] [added: 3.0%] decrease from [removed: 2018.][added: 2019.]

Excluding the People’s Republic of China (“PRC”), we estimate that international cigarette and heated tobacco unit volume was [removed: 2.7] [added: 2.5] trillion units in [removed: 2019,] [added: 2020,] a [removed: 2.0%] [added: 5.8%] decrease from [removed: 2018.][added: 2019.]

We estimate that our reported share of the international market (which is defined as worldwide cigarette and heated tobacco unit volume, excluding the United States of America) was approximately [removed: 15.1%] [added: 14.4%] in [removed: 2019, 15.2%] [added: 2020, 15.1%] in [removed: 2018] [added: 2019] and [removed: 15.1%] [added: 15.2%] in [removed: 2017.][added: 2018.]

Excluding the PRC, we estimate that our reported share of the international market was approximately [added: 27.7%,] 28.4%, [removed: 28.3%,] and [removed: 27.8%] [added: 28.3%] in [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017,] [added: 2018,] respectively.

Shipments of our principal cigarette brand, *Marlboro*, decreased by [removed: 0.6%] [added: 11.3%] in [removed: 2019] [added: 2020] and represented approximately [removed: 10.0%] [added: 9.5%] of the international cigarette market, excluding the PRC, in [removed: 2019, 9.7%] [added: 2020, 10.0%] in [removed: 2018] [added: 2019] and 9.7% in [removed: 2017.][added: 2018.]

Total shipment volume of heated tobacco units reached [removed: 59.7] [added: 76.1] billion units in [removed: 2019,] [added: 2020,] up from [removed: 41.4] [added: 59.7] billion units in [removed: 2018.][added: 2019.]

We have a market share of at least 15% [removed: and,] in [removed: a number of instances, substantially more than 15%, in] approximately 95 markets, including Algeria, Argentina, Australia, Austria, Belgium, Brazil, the Czech Republic, Egypt, France, Germany, Hong Kong, Hungary, Indonesia, Israel, Italy, Japan, [removed: Kazakhstan,] Korea, Kuwait, Mexico, the Netherlands, [added: Norway,] the Philippines, Poland, Portugal, Russia, Saudi Arabia, [removed: the Slovak Republic,] Spain, Switzerland, Turkey and Ukraine.

[removed: | • |] [added: -] Direct sales and distribution, where we have set up our own distribution selling directly to the [removed: retailers (including gas stations and other key accounts); |][added: retailers;]

[removed: | • |] [added: -] Distribution through independent distributors that often distribute other fast-moving consumer goods and are responsible for distribution in a particular market; [removed: |]

[removed: | • |] [added: -] Exclusive zonified distribution, where the distributors are dedicated to us in tobacco products distribution and assigned to exclusive territories within a market; [removed: |]

[removed: | • |] [added: -] Distribution through national or regional wholesalers that then supply the retail trade; and [removed: |]

[removed: | • |] [added: -] Our own brand retail and e-commerce infrastructures for our RRP products and accessories. [removed: |]

Certain new market entrants may alienate consumers from innovative products through inappropriate marketing [removed: campaigns and] [added: campaigns,] messaging and inferior product satisfaction, while not relying on scientific substantiation based on appropriate R&D protocols and standards.

In [removed: 2019,] [added: 2020,] we also contracted directly with farmers in several countries, including Argentina, Brazil, Colombia, [removed: Ecuador,] Italy, [removed: Pakistan, the Philippines] [added: Pakistan] and Poland.

In [removed: 2019,] [added: 2020,] direct sourcing from farmers represented approximately [removed: 23%] [added: 25%] of PMI’s global leaf requirements.

In [removed: 2019,] [added: 2020,] our top ten suppliers of direct materials combined represented approximately [removed: 50%] [added: 55%] of our total direct materials purchases.

[added: For further details, see Item 8,] *Financial Statements and Supplementary Data* of this Annual Report on Form 10-K (“Item 8”) [removed: in] Note [removed: 5.][added: 20.]

[removed: *Management's] [added: Management's] Discussion and Analysis of Financial Condition and Results of [removed: Operations*] [added: Operations] of this Annual Report on Form 10-K (“Item 7”) in *Business Environment—Reduced-Risk Products*.

In [removed: 2019,] [added: 2020,] sales to a distributor in the European Union Region and a distributor in the East Asia & Australia Region each amounted to 10 percent or more of our consolidated net revenues.

[added: Our Workforce*.*] At December 31, [removed: 2019,] [added: 2020,] we employed approximately [removed: 73,500] [added: 71,000] people worldwide, including full-time, temporary and part-time staff.

We believe [removed: that our] [added: we maintain good] relations with our employees and their representative [removed: organizations are excellent.][added: organizations.]

The disclosure regarding executive officers is hereby incorporated by reference to the discussion under the heading “Information about our Executive Officers as of February [removed: 6, 2020”] [added: 8, 2021”] in Part III, Item 10.

Effective January 1, 2008, PMI entered into an Intellectual Property Agreement with Philip Morris USA [removed: Inc. (“PM USA”),] [added: Inc.,] a wholly owned subsidiary of Altria Group, Inc. [removed: The Intellectual Property Agreement allocates ownership of jointly funded intellectual property as follows:][added: (“PM USA”).]

[removed: | • |] [added: -] PMI owns all rights to jointly funded intellectual property outside the United States, its territories and possessions; and [removed: |]

LA&C also includes transactions under license with Altria Group, Inc., for the distribution of our Platform 1 product in the United States.

Unless otherwise stated, references to total industry, total market, our shipment volume and our market share performance reflect cigarettes and heated tobacco units.

2020 estimates for total industry volume and market share in certain geographies reflect limitations on the availability and accuracy of industry data during pandemic-related restrictions.

We discuss the details of our supply chain for our RRPs in Item 7.

We engage with legally recognized employee representative bodies and we have collective bargaining agreements in many of the countries in which we operate.

Our Internal Transformation.

To be successful in our transformation to a smoke-free future, we must continue transforming our culture and ways of working, align our talent with our business needs and innovate to become a truly consumer-centric business.

To achieve our strategic goals, we need to attract, retain and motivate the best global talent with the right degree of diversity, experience and skills.

Therefore, we strive to ensure the development of our existing talent while increasingly recruiting those with the expertise in areas that are new to us such as digital and technical solutions.

We set the levels of our compensation and benefit programs that we believe are necessary to achieve these goals and remain competitive with other consumer product companies.

Oversight and Management.

Our Board of Directors provides oversight of various matters pertaining to our workforce, and the Compensation and Leadership Development Committee of the Board is responsible for executive compensation matters and oversight of the risks and programs related to talent management.

As part of our commitment to workplace diversity in 2020, our Board appointed a Chief Diversity Officer who reports directly to our CEO.

Our Code of Conduct highlights our commitment to diversity, inclusion, fairness, safety and equal opportunity in all aspects of employment.

We were the first multinational company to receive a global EQUAL-SALARY certification from the EQUAL-SALARY Foundation.

This achievement is an important building block on the road to creating a more inclusive gender-balanced workplace and continuing our reputation as a top employer.

Our Initiatives in Response to COVID-19.

We focused on business continuity, health and safety of our employees, and rapidly adapting our ways of working to a new environment.

We implemented additional safety measures for essential employees in our facilities and offices and continue to pay salaries to those employees who are unable to work due to government restrictions.

We enhanced remote work arrangements and digital collaboration and related risk management, and to date, a large majority of our employees continues to work remotely.

*Government Regulation*

As a company with global operations in a heavily regulated industry, we are subject to multiple laws and regulations of jurisdictions in which we operate.

We discuss our regulatory environment in Item 7, *Business Environment*.

Our subsidiaries expect to continue to

Based on current regulations, compliance with government regulations, including environmental regulations, has not had, and is not expected to have a material adverse effect on our results of operations, capital expenditures, financial position, earnings, or competitive position.

As discussed in more detail in Item 1A.

*Risk Factors*, our financial results could be significantly affected by regulatory initiatives that could result in a significant decrease in demand for our brands.

More specifically, any regulatory requirements that lead to a commoditization of tobacco products or impede adult consumers' ability to convert to our RRPs, as well as any significant increase in the cost of complying with new regulatory requirements could have a material adverse effect on our financial results.

The Intellectual Property Agreement allocates ownership of jointly funded intellectual property as follows:

the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

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For further details, see Item 8, Note 22.

The adequate supply chain for our RRP portfolio, including the supply of electronic devices, is important to our business.

We work with two electronics manufacturing service providers for the supply of our Platform 1 devices and a small number of other providers for other products in our RRP portfolio and related accessories.

Although we work closely with these service providers on monitoring their

production capability and financial health, the commercialization of our RRPs could be adversely affected if they are unable to meet their commitments.

The production of our RRP portfolio requires various metals, and we believe that there is an adequate supply of such metals in the world markets to satisfy our current and anticipated production requirements.

However, some components and materials necessary for the production of our RRPs are obtained from single or limited sources, and can be subject to industry-wide shortages and price fluctuations.

Our inability to secure an adequate supply of such components and materials could negatively impact the commercialization of our RRPs.

Our *IQOS* devices are subject to product warranties, which are described in more detail in Item 8.

*Product Warranty* to our consolidated financial statements.

We discuss our RRP products in more detail in Item 7.

*Environmental Regulation*

We also conduct regular safety assessments at our offices, warehouses and car fleet organizations.

The environmental performance data we report externally is also verified by a qualified third party.

The information called for by this Item is incorporated herein by reference to Item 8, Note [removed: 18.][added: 17.]

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[removed: FORM 10-K][added: FORM 10-K]

| ☒ | [added: | |] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

For the fiscal year ended December 31, [removed: 2019][added: 2020]

| ☐ | [added: | |] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

Commission File [removed: Number: 001-33708][added: Number: 001-33708]

| Virginia | | [added: | | | |] 13-3435103 | [added: | |]

| (State or other jurisdiction [removed: of incorporation] [added: of incorporation] or organization) | | [added: | | | |] (I.R.S. [removed: Employer Identification] [added: Employer Identification] No.) | [added: | |]

| 120 Park Avenue | | | [added: | | | | | |]

| New York | | | [added: | | | | | |]

| New York | | [added: | | | |] 10017 | [added: | |]

| (Address of principal executive offices) | | [added: | | | |] (Zip Code) | [added: | |]

[removed: 917\-663-2000][added: 917-663-2000]

| Title of each class | | [added: | | | |] Trading Symbol(s) | | [added: | | | |] Name of each exchange on which registered | [added: | |]

| Common Stock, no par value | | [added: | | | |] PM | | [added: | | | |] New York Stock Exchange | [added: | |]

| 2.000% Notes due [removed: 2020] [added: 2036] | | [removed: PM20B] | | [added: | | PM36 | | | | | |] New York Stock Exchange | [added: | |]

| [removed: Floating] [added: 1.875%] Notes due [removed: 2020] [added: 2021] | | [removed: PM20C] | | [added: | | PM21B | | | | | |] New York Stock Exchange | [added: | |]

| [removed: 1.750%] [added: 4.125%] Notes due [removed: 2020] [added: 2021] | | [removed: PM20A] | | [added: | | PM21 | | | | | |] New York Stock Exchange | [added: | |]

| 4.500% Notes due [removed: 2020] [added: 2042] | | [removed: PM20] | | [added: | | PM42 | | | | | |] New York Stock Exchange | [added: | |]

| 1.875% Notes due [removed: 2021] [added: 2037] | | [removed: PM21B] | | [added: | | PM37A | | | | | |] New York Stock Exchange | [added: | |]

| [removed: 1.875%] [added: 2.900%] Notes due 2021 | | [removed: PM21C] | | [added: | | PM21A | | | | | |] New York Stock Exchange | [added: | |]

| 4.125% Notes due [removed: 2021] [added: 2043] | | [removed: PM21] | | [added: | | PM43 | | | | | |] New York Stock Exchange | [added: | |]

| [removed: 2.900%] [added: 2.625%] Notes due [removed: 2021] [added: 2022] | | [removed: PM21A] | | [added: | | PM22A | | | | | |] New York Stock Exchange | [added: | |]

| 2.625% Notes due [removed: 2022] [added: 2023] | | [removed: PM22A] | | [added: | | PM23 | | | | | |] New York Stock Exchange | [added: | |]

| 2.375% Notes due 2022 | | [added: | | | |] PM22B | | [added: | | | |] New York Stock Exchange | [added: | |]

| 2.500% Notes due 2022 | | [added: | | | |] PM22 | | [added: | | | |] New York Stock Exchange | [added: | |]

| 2.500% Notes due 2022 | | [added: | | | |] PM22C | | [added: | | | |] New York Stock Exchange | [added: | |]

| [removed: 2.625%] [added: 2.125%] Notes due 2023 | | [removed: PM23] | | [added: | | PM23B | | | | | |] New York Stock Exchange | [added: | |]

| [removed: 2.125%] [added: 3.600%] Notes due 2023 | | [removed: PM23B] | | [added: | | PM23A | | | | | |] New York Stock Exchange | [added: | |]

| [removed: 3.600%] [added: 2.875%] Notes due [removed: 2023] [added: 2024] | | [removed: PM23A] | | [added: | | PM24 | | | | | |] New York Stock Exchange | [added: | |]

| 2.875% Notes due 2024 | | [removed: PM24] | | [added: | | PM24C | | | | | |] New York Stock Exchange | [added: | |]

| 2.875% Notes due [removed: 2024] [added: 2026] | | [removed: PM24C] | | [added: | | PM26 | | | | | |] New York Stock Exchange | [added: | |]

| 0.625% Notes due 2024 | | [added: | | | |] PM24B | | [added: | | | |] New York Stock Exchange | [added: | |]

| 3.250% Notes due 2024 | | [added: | | | |] PM24A | | [added: | | | |] New York Stock Exchange | [added: | |]

| 2.750% Notes due 2025 | | [added: | | | |] PM25 | | [added: | | | |] New York Stock Exchange | [added: | |]

| 3.375% Notes due 2025 | | [added: | | | |] PM25A | | [added: | | | |] New York Stock Exchange | [added: | |]

| 2.750% Notes due 2026 | | [added: | | | |] PM26A | | [added: | | | |] New York Stock Exchange | [added: | |]

| 2.875% Notes due [removed: 2026] [added: 2029] | | [removed: PM26] | | [added: | | PM29 | | | | | |] New York Stock Exchange | [added: | |]

| 0.125% Notes due 2026 | | [added: | | | |] PM26B | | [added: | | | |] New York Stock Exchange | [added: | |]

| 3.125% Notes due 2027 | | [added: | | | |] PM27 | | [added: | | | |] New York Stock Exchange | [added: | |]

| 3.125% Notes due 2028 | | [added: | | | |] PM28 | | [added: | | | |] New York Stock Exchange | [added: | |]

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| Title of each class | | | | | | Trading Symbol(s) | | | | | | Name of each exchange on which registered | | |

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

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| Signatures | | | | | | | | | [127](#i6547b3d1941544a483ff674f776217f4_295) | | |

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| 4.500% Notes due 2042 | | PM42 | | New York Stock Exchange |

| 3.875% Notes due 2042 | | PM42A | | New York Stock Exchange |

| 4.125% Notes due 2043 | | PM43 | | New York Stock Exchange |

| 4.875% Notes due 2043 | | PM43A | | New York Stock Exchange |

| 4.250% Notes due 2044 | | PM44 | | New York Stock Exchange |

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| [Signatures](#s2DDA299EB5595D8D9CD3BA4939EF23BA) | | | [123](#s8AA426B58CF657ADAFBCB8D5E452339B) |

At December 31, [removed: 2019,] [added: 2020,] we operated and owned a total of [removed: 38] [added: 39] manufacturing facilities across our six operating segments.

In [removed: 2019,] [added: 2020,] certain facilities each manufactured over 30 billion units (cigarettes and heated tobacco units combined).

The largest manufacturing facilities, in terms of volume, are located in Indonesia (S&SA), [added: Poland (EU),] Turkey (ME&A), [added: Russia (EE),] the Philippines (S&SA), [removed: Russia (EE), Poland (EU),] Lithuania (EU), [removed: and] Italy [added: (EU), the Czech Republic (EU) and Portugal] (EU).

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At January [removed: 31, 2020,] [added: 29, 2021,] there were approximately [removed: 50,800] [added: 48,300] holders of record of our common stock.

The graph assumes the investment of $100 as of December 31, [removed: 2014,] [added: 2015,] in PMI common stock (at prices quoted on the New York Stock Exchange) and each of the indices as of the market close and reinvestment of dividends on a quarterly basis.

[removed: ][added: ]

| Date | | [added: | | | |] PMI | | | [added: | | | | | |] PMI Peer Group (1) | | [added: | | | |] S&P 500 Index | [added: | |]

| December 31, [removed: 2014] [added: 2015] | | [added: | | | |] $100.00 | | | [added: | | | | | |] $100.00 | | [added: | | | |] $100.00 | [added: | |]

| December 31, 2017 | | [removed: $147.60] | | | [added: |] $130.20 | | [removed: $138.30] | [added: | | | | | | $119.60 | | | | | | $136.40 | | |]

Issuer Purchases of Equity Securities During the Quarter [removed: Ended December] [added: Ended December] 31, [removed: 2019][added: 2020]

Our share repurchase activity for each of the three months in the quarter ended December 31, [removed: 2019,] [added: 2020,] was as follows:

| Period | | [removed: Total Number of Shares Repurchased] | | | [removed: Average Price Paid per] [added: | Total Number of Shares Repurchased | | | | | | Average Price Paid per] Share | | | | [added: | |] Total [removed: Number of Shares Purchased as Part] [added: Number] of [removed: Publicly Announced Plans or Programs] [added: Shares Purchased as Part of Publicly Announced Plans or Programs] | | | [removed: Approximate Dollar Value of] [added: | | | Approximate Dollar Value of] Shares [removed: that May] [added: that May] Yet [removed: be Purchased Under] [added: be Purchased Under] the [removed: Plans or] [added: Plans or] Programs | | |

| December [removed: 1, 2019 – December] 31, 2019 [removed: (1)] | | [removed: —] | | | [removed: $] | [removed: —] [added: $117.30] | | | [removed: —] | | | [removed: $] | [removed: —] | | [added: $133.50 | | | | | | $171.50 | | |]

| Pursuant to Publicly Announced Plans or Programs | | [added: | | | |] — | | | [added: | | |] $ | — | | | | | | | | | [added: | | | | |]

| For the Quarter Ended December 31, [removed: 2019] [added: 2020] | | [removed: 2,773] | | | [added: | 5,420 | | | | | |] $ | [removed: 79.98] [added: 72.79] | | | | | | | | | [added: | | | | |]

[removed: | (1) | During] [added: (1)During] this reporting period, we did not have an authorized share repurchase program. [removed: |]

[removed: | (2) | Shares] [added: (2)Shares] repurchased represent shares tendered to us by employees who vested in restricted and performance share unit awards and used shares to pay all, or a portion of, the related taxes. [removed: |]

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| December 31, 2016 | | | | | | $108.60 | | | | | | | | | $101.70 | | | | | | $112.00 | | |

| December 31, 2018 | | | | | | $86.90 | | | | | | | | | $107.80 | | | | | | $130.40 | | |

| December 31, 2020 | | | | | | $121.80 | | | | | | | | | $143.10 | | | | | | $203.00 | | |

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| October 1, 2020 – October 31, 2020 (1) | | | | | | — | | | | | | $ | — | | | | | — | | | | | | $ | — | |

| November 1, 2020 – November 30, 2020 (1) | | | | | | — | | | | | | $ | — | | | | | — | | | | | | $ | — | |

| December 1, 2020 – December 31, 2020 (1) | | | | | | — | | | | | | $ | — | | | | | — | | | | | | $ | — | |

| October 1, 2020 – October 31, 2020 (2) | | | | | | 1,126 | | | | | | $ | 75.97 | | | | | | | | | | | | | |

| November 1, 2020 – November 30, 2020 (2) | | | | | | 3,139 | | | | | | $ | 70.54 | | | | | | | | | | | | | |

| December 1, 2020 – December 31, 2020 (2) | | | | | | 1,155 | | | | | | $ | 75.82 | | | | | | | | | | | | | |

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| December 31, 2015 | | $113.40 | | | $108.20 | | $101.40 |

| December 31, 2016 | | $123.10 | | | $109.70 | | $113.50 |

| December 31, 2018 | | $98.60 | | | $118.30 | | $132.20 |

| December 31, 2019 | | $133.00 | | | $146.40 | | $173.90 |

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| October 1, 2019 – October 31, 2019 (1) | | — | | | $ | — | | | — | | | $ | — | |

| November 1, 2019 – November 30, 2019 (1) | | — | | | $ | — | | | — | | | $ | — | |

| October 1, 2019 – October 31, 2019 (2) | | 897 | | | $ | 75.37 | | | | | | | | |

| November 1, 2019 – November 30, 2019 (2) | | 690 | | | $ | 81.33 | | | | | | | | |

| December 1, 2019 – December 31, 2019 (2) | | 1,186 | | | $ | 82.69 | | | | | | | | |

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| | [added: | | 2020 | | | | | |] 2019 | | | | [added: | |] 2018 | | | | [removed: 2017] | | [added: 2017] | | [removed: 2016] | | | | [removed: 2015] [added: 2016] | | |

| Summary of Operations: | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]

| Revenues including excise taxes | [added: | |] $ | [removed: 77,921] [added: 76,047] | | | [added: | |] $ | [removed: 79,823] [added: 77,921] | | | [added: | |] $ | [removed: 78,098] [added: 79,823] | | | [added: | |] $ | [removed: 74,953] [added: 78,098] | | | [added: | |] $ | [removed: 73,908] [added: 74,953] | |

| Excise taxes on products | [removed: 48,116] | | [added: 47,353] | | [added: | | | | 48,116 | | | | | |] 50,198 | | | | [removed: 49,350] | | [added: 49,350] | | [removed: 48,268] | | | | [removed: 47,114] [added: 48,268] | | |

| Net revenues | [removed: 29,805] | | [added: 28,694] | | [added: | | | | 29,805 | | | | | |] 29,625 | | | | [removed: 28,748] | | [added: 28,748] | | [removed: 26,685] | | | | [removed: 26,794] [added: 26,685] | | |

| Operating income | [removed: 10,531] | | [added: 11,668] | | [added: | | | | 10,531 | | | | | |] 11,377 | | | | [removed: 11,581] | | [added: 11,581] | | [removed: 10,903] | | | | [removed: 10,745] [added: 10,903] | | |

| Net earnings attributable to PMI | [removed: 7,185] | | [added: 8,056] | | [added: | | | | 7,185 | | | | | |] 7,911 | | | | [removed: 6,035] | | [added: 6,035] | | [removed: 6,967] | | | | [removed: 6,873] [added: 6,967] | | |

| Basic earnings per share | [removed: 4.61] | | [added: 5.16] | | [added: | | | | 4.61 | | | | | |] 5.08 | | | | [removed: 3.88] | | [added: 3.88] | | [removed: 4.48] | | | | [removed: 4.42] [added: 4.48] | | |

| Diluted earnings per share | [removed: 4.61] | | [added: 5.16] | | [added: | | | | 4.61 | | | | | |] 5.08 | | | | [removed: 3.88] | | [added: 3.88] | | [removed: 4.48] | | | | [removed: 4.42] [added: 4.48] | | |

| Dividends declared per share | [removed: 4.62] | | [added: 4.74] | | [added: | | | | 4.62 | | | | | |] 4.49 | | | | [removed: 4.22] | | [added: 4.22] | | [removed: 4.12] | | | | [removed: 4.04] [added: 4.12] | | |

| Total assets | [removed: 42,875] | | [added: 44,815] | | [added: | | | | 42,875 | | | | | |] 39,801 | | | | [removed: 42,968] | | [added: 42,968] | | [removed: 36,851] | | | | [removed: 33,956] [added: 36,851] | | |

| Long-term debt (1) | [removed: 26,656] | | [added: 28,168] | | [added: | | | | 26,656 | | | | | |] 26,975 | | | | [removed: 31,334] | | [added: 31,334] | | [removed: 25,851] | | | | [removed: 25,250] [added: 25,851] | | |

| Total debt | [removed: 31,045] | | [added: 31,536] | | [added: | | | | 31,045 | | | | | |] 31,759 | | | | [removed: 34,339] | | [added: 34,339] | | [removed: 29,067] | | | | [removed: 28,480] [added: 29,067] | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | |

| --- | --- |

| for the years ended December 31, | [removed: 2019] | | [added: 2020] | | [removed: 2018] | | | | [removed: 2017] [added: 2019] | | | [added: | | | 2018 | | |]

| Revenues including excise taxes | [added: | |] $ | [removed: 77,921] [added: 76,047] | | | [added: | |] $ | [removed: 79,823] [added: 77,921] | | | [added: | |] $ | [removed: 78,098] [added: 79,823] | |

| Excise taxes on products | [removed: 48,116] | | [added: 47,353] | | [removed: 50,198] | | | | [removed: 49,350] [added: 48,116] | | | [added: | | | 50,198 | | |]

| Net revenues | [removed: 29,805] | | [added: 28,694] | | [removed: 29,625] | | | | [removed: 28,748] [added: 29,805] | | | [added: | | | 29,625 | | |]

| Cost of sales | [removed: 10,513] | | [added: 9,569] | | [removed: 10,758] | | | | [removed: 10,432] [added: 10,513] | | | [added: | | | 10,758 | | |]

| Gross profit | [removed: 19,292] | | [added: 19,125] | | [removed: 18,867] | | | | [removed: 18,316] [added: 19,292] | | | [added: | | | 18,867 | | |]

| Marketing, administration and research costs (Notes [removed: 18, 21] [added: 12, 17, 19] & [removed: 22)] [added: 20)] | [removed: 8,695] | | [added: 7,384] | | [removed: 7,408] | | | | [removed: 6,647] [added: 8,695] | | | [added: | | | 7,408 | | |]

| Amortization of intangibles | [removed: 66] | | [added: 73] | | [removed: 82] | | | | [removed: 88] [added: 66] | | | [added: | | | 82 | | |]

| Operating income | [removed: 10,531] | | [added: 11,668] | | [removed: 11,377] | | | | [removed: 11,581] [added: 10,531] | | | [added: | | | 11,377 | | |]

| Interest expense, net (Note 14) | [removed: 570] | | [added: 618] | | [removed: 665] | | | | [removed: 914] [added: 570] | | | [added: | | | 665 | | |]

| Pension and other employee benefit costs (Note 13) | [removed: 89] | | [added: 97] | | [removed: 41] | | | | [removed: 78] [added: 89] | | | [added: | | | 41 | | |]

| Earnings before income taxes | [removed: 9,872] | | [added: 10,953] | | [removed: 10,671] | | | | [removed: 10,589] [added: 9,872] | | | [added: | | | 10,671 | | |]

| Provision for income taxes (Note 11) | [removed: 2,293] | | [added: 2,377] | | [removed: 2,445] | | | | [removed: 4,307] [added: 2,293] | | | [added: | | | 2,445 | | |]

| Equity investments and securities (income)/loss, net | [removed: (149] | | [removed: )] [added: (16)] | | [removed: (60] | | [removed: )] | | [removed: (59] [added: (149)] | | [removed: )] | [added: | | | (60) | | |]

| Net earnings | [removed: 7,728] | | [added: 8,592] | | [removed: 8,286] | | | | [removed: 6,341] [added: 7,728] | | | [added: | | | 8,286 | | |]

| Net earnings attributable to noncontrolling interests | [removed: 543] | | [added: 536] | | [removed: 375] | | | | [removed: 306] [added: 543] | | | [added: | | | 375 | | |]

| Net earnings attributable to PMI | [added: | |] $ | [removed: 7,185] [added: 8,056] | | | [added: | |] $ | [removed: 7,911] [added: 7,185] | | | [added: | |] $ | [removed: 6,035] [added: 7,911] | |

| Per share data (Note 10): | | | | | | | | | | | | [added: | | | | | |]

| Basic earnings per share | [added: | |] $ | [removed: 4.61] [added: 5.16] | | | [added: | |] $ | [removed: 5.08] [added: 4.61] | | | [added: | |] $ | [removed: 3.88] [added: 5.08] | |

| Diluted earnings per share | [added: | |] $ | [removed: 4.61] [added: 5.16] | | | [added: | |] $ | [removed: 5.08] [added: 4.61] | | | [added: | |] $ | [removed: 3.88] [added: 5.08] | |

| Net earnings | [added: | |] $ | [removed: 7,728] [added: 8,592] | | | [added: | |] $ | [removed: 8,286] [added: 7,728] | | | [added: | |] $ | [removed: 6,341] [added: 8,286] | |

| Other comprehensive earnings (losses), net of income taxes: | | | | | | | | | | | | [added: | | | | | |]

| Change in currency translation adjustments: | | | | | | | | | | | | [added: | | | | | |]

| Unrealized gains (losses), net of income taxes of [removed: ($161)] [added: $94] in [removed: 2019, ($47)] [added: 2020, $(161)] in [removed: 2018] [added: 2019] and [removed: $620] [added: $(47)] in [removed: 2017] [added: 2018] | [removed: 505] | | [added: (1,265)] | | [removed: (812] | | [removed: )] | | [removed: 330] [added: 505] | | | [added: | | | (812) | | |]

| [removed: (Gains)/losses] [added: (Gains) losses] transferred to earnings, net of income taxes of $0 in [removed: 2019, 2018] [added: 2020, $3 in 2019] and [removed: 2017] [added: $5 in 2018] | [removed: —] | | [added: (20)] | | [removed: —] | | | | [removed: (2] [added: (14)] | | [removed: )] | [added: | | | (31) | | |]

| (Gains)/losses transferred to earnings - deconsolidation of RBH, net of income taxes of $0 in [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017] [added: 2018] (Note [removed: 22)] [added: 20)] | [removed: 502] | | [added: —] | | [removed: —] | | | | [added: 502 | | | | | |] — | | |

| Change in net loss and prior service cost: | | | | | | | | | | | | [added: | | | | | |]

| Net gains (losses) and prior service costs, net of income taxes of [added: $139 in 2020,] $247 in [removed: 2019,] [added: 2019 and] $65 in 2018 [removed: and ($17) in 2017] | [removed: (454] | | [removed: )] [added: (726)] | | [removed: (1,046] | | [removed: )] | | [removed: 523] [added: (454)] | | | [added: | | | (1,046) | | |]

| Amortization of net losses, prior service costs and net transition costs, net of income taxes of [removed: ($69)] [added: $(67)] in [removed: 2019, ($43)] [added: 2020, $(69)] in [removed: 2018] [added: 2019] and [removed: ($31)] [added: $(43)] in [removed: 2017] [added: 2018] | [removed: 243] | | [added: 299] | | [removed: 218] | | | | [removed: 228] [added: 243] | | | [added: | | | 218 | | |]

| (Gains)/losses transferred to earnings - deconsolidation of RBH, net of income taxes of [removed: ($15) in 2019,] $0 in [removed: 2018] [added: 2020, $(15) in 2019] and $0 in [removed: 2017] [added: 2018] (Note [removed: 22)] [added: 20)] | [removed: 27] | | [added: —] | | [removed: —] | | | | [added: 27 | | | | | |] — | | |

| Change in fair value of derivatives accounted for as hedges: | | | | | | | | | | | | [added: | | | | | |]

| Gains (losses) recognized, net of income taxes of [removed: $2] [added: $13] in [removed: 2019, ($4)] [added: 2020, $2] in [removed: 2018] [added: 2019] and [removed: $8] [added: $(4)] in [removed: 2017] [added: 2018] | [removed: (18] | | [removed: )] [added: (68)] | | [removed: 24] | | | | [removed: (44] [added: (18)] | | [removed: )] | [added: | | | 24 | | |]

| Total other comprehensive earnings (losses) | [removed: 791] | | [added: (1,780)] | | [removed: (1,647] | | [removed: )] | | [removed: 1,024] [added: 791] | | | [added: | | | (1,647) | | |]

| Total comprehensive earnings | [removed: 8,519] | | [added: 6,812] | | [removed: 6,639] | | | | [removed: 7,365] [added: 8,519] | | | [added: | | | 6,639 | | |]

| Less comprehensive earnings attributable to: | | | | | | | | | | | | [added: | | | | | |]

| Noncontrolling interests | [removed: 586] | | [added: 574] | | [removed: 304] | | | | [removed: 306] [added: 586] | | | [added: | | | 304 | | |]

| Comprehensive earnings attributable to PMI | [added: | |] $ | [removed: 7,933] [added: 6,238] | | | [added: | |] $ | [removed: 6,335] [added: 7,933] | | | [added: | |] $ | [removed: 7,059] [added: 6,335] | |

| [removed: at December 31,] [added: (in millions)] | [removed: 2019] | | [added: December 31, 2020] | | [removed: 2018] | | | [added: | December 31, 2019 | | | | | | December 31, 2018 | | |]

| Assets | | | | | | | | [added: | | | |]

| Cash and cash equivalents | [added: | |] $ | [removed: 6,861] [added: 7,280] | | | [added: | |] $ | [removed: 6,593] [added: 6,861] | |

| for the years ended December 31, | | | 2020 | | | | | | 2019 | | | | | | 2018 | | |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

| Other receivables (less allowances of $38 in 2020 and $35 in 2019) | | | 856 | | | | | | 637 | | |

| | | | 9,591 | | | | | | 9,235 | | |

| | | | 14,909 | | | | | | 14,446 | | |

| | | | 6,365 | | | | | | 6,631 | | |

| Equity investments (Note 4) | | | 4,798 | | | | | | 4,635 | | |

| Other assets (less allowances of $22 in 2020 and $15 in 2019) | | | 2,767 | | | | | | 1,971 | | |

| | | | 22,562 | | | | | | 23,643 | | |

| | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| for the years ended December 31, | | | 2020 | | | | | | 2019 | | | | | | 2018 | | |

| Net earnings | | | $ | 8,592 | | | | | $ | 7,728 | | | | | $ | 8,286 | |

| Equity investments | | | (47) | | | | | | (31) | | | | | | (63) | | |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| for the years ended December 31, | | | 2020 | | | | | | 2019 | | | | | | 2018 | | |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

| Payments to noncontrolling interests and Other | | | (776) | | | | | | (357) | | | | | | (537) | | |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Net earnings | | | | | | | | | | | | | | | 8,056 | | | | | | | | | | | | | | | | | | 536 | | | | | | | | | 8,592 | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Balances, December 31, 2020 | | | $ | — | | | | | $ | 2,105 | | | | | $ | 31,638 | | | | | $ | (11,181) | | | | | $ | (35,129) | | | | | $ | 1,936 | | | | | | | | $ | (10,631) | | | | |

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| (Gains) losses transferred to earnings, net of income taxes of $3 in 2019, $5 in 2018 and $2 in 2017 | (14 | | ) | | (31 | | ) | | (11 | | ) |

| | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- |

| Other receivables | 637 | | | | 614 | | |

| | 9,235 | | | | 8,804 | | |

| | 14,446 | | | | 14,557 | | |

| | 6,631 | | | | 7,201 | | |

| Investments in unconsolidated subsidiaries and equity securities (Notes 4 & 16) | 4,635 | | | | 1,269 | | |

| | 23,643 | | | | 22,842 | | |

| Investments in unconsolidated subsidiaries and equity securities | (31 | | ) | | (63 | | ) | | (111 | | ) |

| Sale (purchase) of subsidiary shares to/(from) noncontrolling interests (Note 6) | 51 | | | | (81 | | ) | | 5 | | |

| Other | (408 | | ) | | (456 | | ) | | (426 | | ) |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Balances, January 1, 2017 | $ | — | | | $ | 1,964 | | | $ | 30,397 | | | $ | (9,559 | ) | | $ | (35,490 | ) | | $ | 1,788 | | | $ | (10,900 | ) |

| Net earnings | | | | | | | | | 6,035 | | | | | | | | | | | | 306 | | | | 6,341 | | |

| | | | | |

| --- | --- | --- | --- | --- |

| | |

| --- | --- |

Impairment of investments in unconsolidated subsidiaries

Lease expense is recognized on a straight-line basis over the lease term.

or rebate redemption, where relevant, and the terms of any underlying discount or rebate programs, which may change from time to time as the business and product categories evolve.

| | | |

| --- | --- | --- |

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Balance at January 1, 2018 | $ | 1,419 | | $ | 321 | | $ | 102 | | $ | 3,010 | | $ | 567 | | $ | 2,247 | | $ | 7,666 | |

| Currency | (62 | | ) | (18 | | ) | (15 | | ) | (215 | | ) | (31 | | ) | (136 | | ) | (477 | | ) |

*Deconsolidation of RBH.*

Investments in unconsolidated subsidiaries:

Prior periods do not include these transactions as they were not material.

| | | | | | | | | | | |

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| --- | --- |

Except for the information relating to the executive officers set forth in Item 10 and the information relating to equity compensation plans set forth in Item 12, the information called for by Items 10-14 is hereby incorporated by reference to PMI’s definitive proxy statement for use in connection with its annual meeting of stockholders to be held on May [removed: 6, 2020,] [added: 5, 2021,] that will be filed with the SEC on or about March [removed: 26, 2020] [added: 25, 2021] (the “proxy statement”), and, except as indicated therein, made a part hereof.

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| --- | --- |

Information About Our Executive Officers as of February [removed: 6, 2020:][added: 8, 2021:]

| Name | | [added: | | | |] Office | | [added: | | | |] Age | | | [added: | | |]

| André [removed: Calantzopoulos] [added: Calantzopoulos*] | | [added: | | | |] Chief Executive Officer | | [removed: 62] | | | [added: | 63 | | | | | |]

| Massimo Andolina | | [added: | | | |] Senior Vice President, Operations | | [removed: 51] | | | [added: | 52 | | | | | |]

| Drago Azinovic | | [added: | | | |] President, Middle East & Africa Region and PMI Duty Free | | [removed: 57] | | | [added: | 58 | | | | | |]

| Werner Barth | | [added: | | | |] Senior Vice President, Commercial | | [removed: 55] | | | [added: | 56 | | | | | |]

| Charles Bendotti | | [removed: Senior Vice President,] [added: | | | | Global Head,] People [removed: and] [added: &] Culture | | [removed: 47] | | | [added: | 48 | | | | | |]

| Frank de Rooij | | [added: | | | |] Vice President, Treasury and Corporate Finance | | [removed: 54] | | | [added: | 55 | | | | | |]

| Frederic de Wilde | | [added: | | | |] President, European Union Region | | [removed: 52] | | | [added: | 53 | | | | | |]

| Stacey Kennedy | | [added: | | | |] President, South and Southeast Asia Region | | [removed: 47] | | | [added: | 48 | | | | | |]

| [removed: Martin G. King] [added: Emmanuel Babeau] | | [added: | | | |] Chief Financial Officer | | [removed: 55] | | | [added: | 53 | | | | | |]

| Michael Kunst | | [added: | | | |] Senior Vice President, Commercial Transformation | | [removed: 51] | | | [added: | 52 | | | | | |]

| Andreas Kurali | | [added: | | | |] Vice President and Controller | | [removed: 54] | | | [added: | 55 | | | | | |]

| Bin Li | | [added: | | | |] Chief Product Officer | | [removed: 48] | | | [added: | 49 | | | | | |]

| Marco Mariotti | | [added: | | | |] President, Eastern Europe Region | | [removed: 55] | | | [added: | 56 | | | | | |]

| Mario Masseroli | | [added: | | | |] President, Latin America [removed: &] [added: and] Canada Region | | [removed: 49] | | | [added: | 50 | | | | | |]

| Deepak Mishra | | [added: | | | |] Chief Strategy Officer | | [removed: 48] | | | [added: | 49 | | | | | |]

| [removed: John O'Mullane] [added: Jorge Insuasty] | | [added: | | | |] Chief Life Sciences Officer | | [removed: 66] | | | [added: | 62 | | | | | |]

| Jacek [removed: Olczak] [added: Olczak*] | | [added: | | | |] Chief Operating Officer | | [removed: 55] | | | [added: | 56 | | | | | |]

| Paul Riley | | [added: | | | |] President, East Asia and Australia Region | | [removed: 54] | | | [added: | 55 | | | | | |]

| Marian Salzman | | [added: | | | |] Senior Vice President, Global Communications | | [added: | | | |] 61 | | | [added: | | |]

| Michael Voegele | | [added: | | | |] Chief Technology Officer | | [removed: 47] | | | [added: | 48 | | | | | |]

| Stefano Volpetti | | [added: | | | |] Chief Consumer Officer | | [removed: 48] | | | [added: | 49 | | | | | |]

All of the above-mentioned officers, except [removed: Ms. Salzman,] Mr. [removed: Mishra,] [added: Babeau, Ms. Folsom, Dr. Insuasty,] Mr. Kunst, Mr. [removed: Voegele,] [added: Li,] Mr. [removed: O'Mullane,] [added: Mishra, Ms. Salzman,] Mr. [removed: Volpetti] [added: Voegele, Mr. Volpetti,] and Mr. [removed: Li,] [added: Verdeaux,] have been employed by us in various capacities [removed: during] [added: over] the past five years.

[removed: Before joining Philip Morris International Inc. in September 2018, Mr. Mishra] [added: Previously, he] was Managing Director, Portfolio Operations at Centerbridge Partners, a private equity firm, [removed: from 2014,] where he led commercial, [removed: operational] [added: operational,] and digital transformation in various business sectors.

[removed: From 2001 to 2014, Mr. Mishra was] [added: He is a former] Partner [removed: and part] of [removed: the Consumer Goods, Retail and Operations leadership team of] McKinsey & Co, where he supported clients in their transformation [removed: projects.][added: projects as part of the Consumer Goods, Retail and Operations leadership team.]

[removed: Before] [added: He served as Chief Marketing Officer at Luxottica Group S.p.A before] joining Philip Morris International Inc. [removed: in June 2019, Mr. Volpetti served in various] [added: and has also held] executive [removed: capacities] [added: roles] at the Procter & Gamble [removed: Company from 1996, most recently,] [added: Company, including] as Vice President of a global business unit.

[removed: Before joining] [added: Mr. Li joined] Philip Morris International Inc. in August 2019, [removed: Mr. Li] [added: having] served in [removed: various] [added: senior] executive capacities at Harman International, a subsidiary of Samsung Electronics Co. [removed: Ltd., from 2010, most recently, as Senior Vice President] [added: Ltd. He is an entrepreneurial leader with a strong technical, product development,] and [removed: General Manager, Consumer Audio Product Development] [added: operations background] and [removed: Operations.][added: vast experience in product design and innovation developed within world-class consumer electronics companies.]

In addition, we have adopted corporate governance guidelines and charters for our Audit, Finance, Compensation and Leadership Development, Product Innovation and Regulatory [removed: Affairs] [added: Affairs, Consumer Relationships] and [added: Regulation, and] Nominating and Corporate Governance committees of the Board of Directors.

Any waiver granted by Philip Morris International Inc. to its principal executive officer, principal financial officer or [removed: controller] [added: controller,] or any person performing similar functions under the Code of Conduct, or certain amendments to the Code of Conduct, will be disclosed on our website at www.pmi.com.

Also refer to *Board Operations and Governance—Committees of the Board*, *Election of Directors—Process for Nominating Directors* and *Election of Directors—Director Nominees* and [removed: *Delinquent] [added: *Stock Ownership Information—Delinquent] Section 16(a) Reports* sections of the proxy statement.

| | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Suzanne Rich Folsom | | | | | | Senior Vice President and General Counsel | | | | | | 59 | | | | | |

| Martin G. King | | | | | | CEO, PMI America | | | | | | 56 | | | | | |

| Silke Muenster | | | | | | Chief Diversity Officer | | | | | | 60 | | | | | |

| Gregoire Verdeaux | | | | | | Senior Vice President, External Affairs | | | | | | 48 | | | | | |

*André Calantzopoulos will become Executive Chairman of the Board of Directors immediately before the 2021 Annual Meeting of Shareholders to be held on May 5, 2021 ("Annual Meeting").

Jacek Olczak will succeed Mr. Calantzopoulos as Chief Executive Officer effective immediately after the Annual Meeting.

The business experience of Mr. Babeau, Ms. Folsom, Dr. Insuasty, Mr. Kunst, Mr. Li, Mr. Mishra, Ms. Salzman, Mr. Voegele, Mr. Volpetti, and Mr. Verdeaux for the past five years is summarized below.

Mr. Babeau joined Philip Morris International Inc. in May 2020.

He was formerly Deputy Chief Executive Officer of Schneider Electric.