Subject: ACCEPTED FORM TYPE 10-K (0001193125-12-076983) Date: 24-Feb-2012 09:29 THE FOLLOWING SUBMISSION HAS BEEN ACCEPTED BY THE U.S. SECURITIES AND EXCHANGE COMMISSION. COMPANY: Philip Morris International Inc. FORM TYPE: 10-K NUMBER OF DOCUMENTS: 17 RECEIVED DATE: 24-Feb-2012 09:28 ACCEPTED DATE: 24-Feb-2012 09:29 FILING DATE: 24-Feb-2012 09:28 TEST FILING: NO CONFIRMING COPY: NO ACCESSION NUMBER: 0001193125-12-076983 FILE NUMBER(S): 1. 001-33708 THE PASSWORD FOR LOGIN CIK 0001193125 WILL EXPIRE 09-Feb-2013 13:14. PLEASE REFER TO THE ACCESSION NUMBER LISTED ABOVE FOR FUTURE INQUIRIES. REGISTRANT(S): 1. CIK: 0001413329 COMPANY: Philip Morris International Inc. ACCELERATED FILER STATUS: LARGE ACCELERATED FILER FORM TYPE: 10-K FILE NUMBER(S): 1. 001-33708 24-Feb-2012 09:29 Page 1 of 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ⌧ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2011 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-33708 PHILIP MORRIS INTERNATIONAL INC. (Exact name of registrant as specified in its charter) Virginia 13-3435103 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 120 Park Avenue, New York, New York 10017 (Address of principal executive offices) (Zip Code) 917-663-2000 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common Stock, no par value New York Stock Exchange 4.875% Notes due 2013 New York Stock Exchange 6.875% Notes due 2014 New York Stock Exchange 5.875% Notes due 2015 New York Stock Exchange 2.500% Notes due 2016 New York Stock Exchange 5.650% Notes due 2018 New York Stock Exchange 4.500% Notes due 2020 New York Stock Exchange 4.125% Notes due 2021 New York Stock Exchange 2.900% Notes due 2021 New York Stock Exchange 6.375% Notes due 2038 New York Stock Exchange 4.375% Notes due 2041 New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T; during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No As of June 30, 2011, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $118 billion based on the closing sale price of the common stock as reported on the New York Stock Exchange. Class Outstanding at January 31, 2012 Common Stock, 1,721,873,303 shares no par value DOCUMENTS INCORPORATED BY REFERENCE Document Parts Into Which Incorporated Portions of the registrant’s annual report to shareholders for the year ended Parts I, II, and IV December 31, 2011 (the “2011 Annual Report”) Portions of the registrant’s definitive proxy statement for use in connection with its Part III annual meeting of shareholders to be held on May 9, 2012, to be filed with the Securities and Exchange Commission (“SEC”) on or about March 30, 2012 TABLE OF CONTENTS Page PART I Item 1. Business 1 Item 1A. Risk Factors 9 Item 1B. Unresolved Staff Comments 14 Item 2. Properties 14 Item 3. Legal Proceedings 14 Item 4. Mine Safety Disclosures 25 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 26 Item 6. Selected Financial Data 27 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 27 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 27 Item 8. Financial Statements and Supplementary Data 27 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 27 Item 9A. Controls and Procedures 27 Item 9B. Other Information 27 PART III Item 10. Directors, Executive Officers and Corporate Governance 28 Item 11. Executive Compensation 29 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 29 Item 13. Certain Relationships and Related Transactions, and Director Independence 29 Item 14. Principal Accounting Fees and Services 29 PART IV Item 15. Exhibits and Financial Statement Schedules 30 Signatures 36 In this report, “PMI,” “we,” “us” and “our” refers to Philip Morris International Inc. and subsidiaries. PART I Item 1. Business. (a) General Development of Business General Philip Morris International Inc. is a Virginia holding company incorporated in 1987. Our subsidiaries and affiliates and their licensees are engaged in the manufacture and sale of cigarettes and other tobacco products in markets outside of the United States of America. Our products are sold in approximately 180 countries and, in many of these countries, they hold the number one or number two market share position. We have a wide range of premium, mid-price and low-price brands. Our portfolio comprises both international and local brands. Our portfolio of international and local brands is led by Marlboro, the world’s best selling international cigarette, which accounted for approximately 33% of our total 2011 shipment volume. Marlboro is complemented in the premium- price category by Merit, Parliament and Virginia Slims. Our leading mid-price brands are L&M and Chesterfield. Other leading international brands include Bond Street, Lark, Muratti, Next, Philip Morris and Red & White. We also own a number of important local cigarette brands, such as Sampoerna A, Dji Sam Soe and Sampoerna Kretek in Indonesia, Fortune, Champion and Hope in the Philippines, Diana in Italy, Optima and Apollo-Soyuz in Russia, Morven Gold in Pakistan, Boston in Colombia, Belmont, Canadian Classics and Number 7 in Canada, Best and Classic in Serbia, f6 in Germany, Delicados in Mexico, Assos in Greece and Petra in the Czech Republic and Slovakia. While there are a number of markets where local brands remain important, international brands are expanding their share in numerous markets. With international brands contributing approximately 70% of our shipment volume in 2011, we are well-positioned to continue to benefit from this trend. Separation from Altria Group, Inc. We were a wholly owned subsidiary of Altria Group, Inc. (“Altria”) until the distribution of all of our shares owned by Altria (the “Spin-off”) was made on March 28, 2008 (the “Distribution Date”). Acquisitions and Other Business Arrangements During 2011, 2010 and 2009, we expanded our business with the following transactions: 2011: In June 2011, we completed the acquisition of a cigarette business in Jordan, consisting primarily of cigarette manufacturing assets and inventories, for $42 million. In January 2011, we acquired a cigar business, consisting primarily of trademarks in the Australian and New Zealand markets, for $20 million. Effective January 1, 2011, we established a new business structure with Vietnam National Tobacco Corporation (“Vinataba”) in Vietnam, further developing our existing joint venture with Vinataba through the licensing of Marlboro and establishing a PMI-controlled branch for the building of our brands. -1- 2010: In February 2010, our affiliate, Philip Morris Philippines Manufacturing Inc. (“PMPMI”), and Fortune Tobacco Corporation (“FTC”) combined their respective business activities by transferring selected assets and liabilities of PMPMI and FTC to a new company called PMFTC Inc. (“PMFTC”). PMPMI and FTC hold equal economic interests in PMFTC, while we manage the day-to-day operations of PMFTC and have a majority of its Board of Directors. The establishment of PMFTC permits both parties to benefit from their complementary brand portfolios, as well as cost synergies from the resulting integration of manufacturing, distribution and procurement, and the further development and advancement of tobacco growing in the Philippines. In June 2010, we announced that our affiliate, Philip Morris Brasil Industria e Comercio Ltda. (“PMB”), would begin directly sourcing tobacco leaf from approximately 17,000 tobacco farmers in Southern Brazil.