01—Abstract
Summary
Summary of the 10-K filed February 26, 2009. Cited figures are marked; the original filing is the authoritative source.
Philip Morris International Inc. (PM) has filed its 2008 Form 10-K, reflecting its first full year as an independent, publicly traded company following its spin-off from Altria Group, Inc. on March 28, 2008.
The company's business operates exclusively outside the United States, selling cigarettes and other tobacco products in approximately 160 countries. PM International holds leading market share positions in many of these regions, with its flagship brand, Marlboro, accounting for a significant portion of its sales volume. For the fiscal year ended December 31, 2008, PM International reported increased shipment volumes, driven by its strong brand portfolio and strategic market presence.
The company also engaged in significant corporate activities, including the acquisition of Rothmans Inc. in Canada and increased ownership in its Mexican operations. The report details the company's operational structure across four geographic segments: European Union, Eastern Europe, Middle East & Africa, Asia, and Latin America & Canada. Investors should note the ongoing risks associated with the tobacco industry, including increased taxation, stringent regulatory environments, litigation, and currency fluctuations, all of which are discussed extensively.
02—Key points
Key Highlights
- Philip Morris International Inc. (PM) completed its spin-off from Altria Group, Inc. on March 28, 2008, operating as an independent entity for the full fiscal year 2008.
- The company's operations are entirely outside the United States, with products sold in approximately 160 countries.
- Marlboro remains the world's best-selling international cigarette, representing approximately 36% of PM's total 2008 shipment volume.
- Total cigarette shipments increased by 2.5% in 2008 to 869.8 billion units.
- Acquisitions during 2008 included Rothmans Inc. in Canada for approximately $1.9 billion and an increased stake in its Mexican tobacco business.
- The company manages its global operations across four distinct geographic segments: EU, EEMA, Asia, and Latin America & Canada, with the EU region contributing the largest share of operating companies income (45.4%).
- PM International highlighted its ongoing research and development efforts focused on understanding tobacco-related diseases and developing potentially reduced-risk products.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2008, Philip Morris International Inc. kept $0.11.
- Revenue$63.64B100.0%
- Cost of revenue−$47.26B74.3%
- Gross profit$16.38B25.7%
- Operating costs−$6.13B9.6%
- Operating income$10.25B16.1%
- Interest, other & tax−$3.36B5.3%
- Net income$6.89B10.8%
Where FY2008 revenue went
$63.64B- Other operating costs: $43.73B, 69% of revenue
- Cost of revenue: $9.33B, 15% of revenue
- Net income: $6.89B, 11% of revenue
- R&D: $334.0M, 0.5% of revenue
- Interest, other & tax: $3.36B, 5.3% of revenue
Kept 11% as net incomeR&D $334.0M · 0.5%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2008filed February 26, 2009Financial Statements
FY2008 against FY2007
| Line item | FY2008FY2007 | Change |
|---|---|---|
| Revenue | $63.64B$55.24B | +15.2% |
| Cost of Revenue | $9.33B$8.71B | +7.1% |
| Gross Profit | $16.38B$14.10B | +16.2% |
| R&D Expenses | $334.00M— | — |
| Operating Income | $10.25B$8.89B | +15.2% |
| Interest Expense | $528.00M— | — |
| Net Income | $6.89B$6.04B | +14.1% |
| EPS (Basic) | $3.32$2.86 | +16.1% |
| EPS (Diluted) | $3.31$2.86 | +15.7% |
| Shares Outstanding (Basic) | 2.07B— | — |
| Shares Outstanding (Diluted) | 2.08B— | — |
05—Questions
Frequently Asked Questions
What is the primary business of Philip Morris International Inc. as described in this filing?
Philip Morris International Inc. (PM) is engaged in the manufacture and sale of cigarettes and other tobacco products in markets outside of the United States. Its operations span approximately 160 countries, with a diverse portfolio of international and local brands.
What were the significant corporate actions taken by PM International in 2008?
The most significant event was the spin-off from Altria Group, Inc. on March 28, 2008, making PM International an independent public company. Other key actions included the acquisition of Rothmans Inc. in Canada and an increase in ownership of its Mexican tobacco business.
What are the main risks and challenges highlighted by PM International in this report?
The company faces significant risks including increased taxation on tobacco products globally, stringent government regulations and public health initiatives aimed at reducing smoking, potential litigation related to smoking and health, intense competition, adverse currency exchange rate fluctuations, and the potential inability to innovate or adapt to changing consumer preferences.
How does PM International structure its business operations and reporting?
PM International divides its operations into four geographic reporting segments: European Union (EU), Eastern Europe, Middle East and Africa (EEMA), Asia, and Latin America & Canada. These segments are used for financial reporting and performance evaluation.
06—Continue