Philip Morris International PM · USD

Segment Reporting: PMI’s subsidiaries and affiliates are primarily engaged in the manufacture and sale of cigarettes and smoke-free products, including heat-not-burn, e-vapor and oral nicotine products. PMI's segments are organized by geographic region and managed by segment managers who are responsible for the operating and financial results of the regions inclusive of combustible tobacco and smoke-free categories sold in the region. As discussed in Note 1. Background and Basis of Presentation, in January 2025, PMI updated its segment reporting by including the ongoing Wellness results into the Europe segment. The four geographical segments are as follows: Europe Region; South and Southeast Asia, Commonwealth of Independent States, Middle East and Africa Region ("SSEA, CIS & MEA"); East Asia, Australia & PMI Global Travel Retail (“EA, AU & PMI GTR”); and Americas Region. The Group CEO PMI, who is the chief operating decision maker ("CODM") evaluates geographical segment performance based on the regional operating income, which includes results from all product categories sold in each region. The CODM reviews short-term and long-term trends, forecasts, and budget-to-actual variances to assess geographical segment performance and to allocate resources. Interest expense, net, and provision for income taxes are centrally managed and, accordingly, such items are not presented by segment since they are excluded from the measure of segment profitability reviewed by management. Information about total assets and capital expenditures by segment is not disclosed because such information is not reported to or used by PMI’s CODM. Segment goodwill and other intangible assets, net, are disclosed in Note 4. Goodwill and Other Intangible Assets, net. The accounting policies of the segments are the same as those described in Note 2. Summary of Significant Accounting Policies. PMI disaggregates its net revenues from contracts with customers by product category for each of PMI's geographical segments. PMI believes this best depicts how the nature, amount, timing and uncertainty of its revenue and cash flows are affected by economic factors.

Indebtedness:Short-Term BorrowingsAt December 31, 2025 and 2024, PMI’s short-term borrowings and related average interest rates consisted of the following:December 31, 2025December 31, 2024(in millions)Amount OutstandingAverage Year-End RateAmount OutstandingAverage Year-End RateCommercial paper$— — %$— — %Bank loans168 10.3 137 8.6 $168 $137 PMI continues to have access to liquidity in the commercial paper market through programs in place in the U.S. and in Europe having an aggregate issuance capacity of $8.0 billion. Given the mix of PMI's legal entities and their respective local economic environments, the average interest rate for bank loans above can vary significantly from day to day and country to country.The fair values of PMI’s short-term borrowings at December 31, 2025 and 2024, based on current market interest rates, approximate carrying value.Long-Term DebtAt December 31, 2025 and 2024, PMI’s long-term debt consisted of the following: December 31,(in millions)20252024U.S. dollar notes, 0.875% to 6.375% (average interest rate 4.623%), due through 2044$37,430 $35,297 Foreign currency obligations:Euro notes, 0.125% to 3.750% (average interest rate 2.162%), due through 20397,942 7,082 Euro credit facility borrowing related to Swedish Match AB acquisition, (interest rate 2.553%), due 20272,944 2,610 Swedish krona notes, 1.395% to 2.710% (average interest rate 2.016%), due through 2029267 218 Other (average interest rate 4.050%), due through 2032 (a) 84 351 Carrying value of long-term debt48,667 45,558 Less current portion of long-term debt3,533 3,392 $45,134 $42,166 (a) At December 31, 2025, represents $84 million in finance leases; at December 31, 2024 represents long-term bank loans at subsidiaries, as well as $67 million in finance leases. The fair value of PMI’s outstanding long-term debt, which is utilized solely for disclosure purposes, is determined using quotes and market interest rates currently available to PMI for issuances of debt with similar terms and remaining maturities. At December 31, 2025 and 2024 the fair value of PMI's outstanding long-term debt, excluding the aforementioned finance leases, was as follows:December 31,(in millions)20252024Level 1$45,288 $41,431 Level 23,085 3,011 For a description of the fair value hierarchy and the three levels of inputs used to measure fair values, see Note 2. Summary of Significant Accounting Policies.

Income Taxes: PMI adopted Accounting Standards Update ASU 2023-09, “Improvements to Income Tax Disclosures” (“ASU 2023-09”) on a prospective basis within its annual reporting for the year ended December 31, 2025. For further details, see Note 21. New Accounting Standards. Earnings before income taxes and provision for income taxes consisted of the following for the year ended December 31, 2025: (in millions)2025Earnings before income taxesUnited States$870 Foreign13,010 Total earnings before income taxes$13,880 Provision for income taxes:Current tax expense (benefit)U.S. Federal$371 U.S. State and Local31 Foreign3,182 Total current tax expense (benefit)3,584 Deferred tax expense (benefit)U.S. Federal(817)U.S. State and Local(40)Foreign10 Total deferred tax expense (benefit)(847)Total provision for income taxes$2,737 Earnings before income taxes and provision for income taxes consisted of the following for the years ended December 31, 2024 and 2023:(in millions)20242023Earnings before income taxes$12,199 $10,450 Provision for income taxes:United States federal and state:Current$465 $201 Deferred(81)(368)Total United States384 (167)Outside United States:Current2,668 2,468 Deferred(35)38 Total outside United States2,633 2,506 Total provision for income taxes$3,017 $2,339 On July 4, 2025, the One Big Beautiful Bill Act ("the Act") was signed into law in the U.S. The Act contains several provisions related to corporate income taxes, including the extension of many expiring provisions from the Tax Cuts and Jobs Act of 2017, modifications to the international tax framework, and the restoration of favorable tax treatment for certain business provisions. The provisions and modifications included in the Act did not have a material impact on PMI’s 2025 consolidated financial statements.Changes in the tax laws of foreign jurisdictions could arise as a result of the Base Erosion and Profit Shifting project undertaken by the Organisation for Economic Co-operation and Development (“OECD”), which recommended changes to numerous long-standing tax principles. Many countries have enacted the OECD’s framework on a global minimum tax (referred to as “Pillar Two”), effective for taxable years beginning after December 31, 2023. PMI has determined that Pillar Two did not have a material impact on its 2024 or 2025 consolidated financial statements. At December 31, 2025, U.S.

Leases:PMI has operating and finance leases that are principally for real estate (office space, warehouses and retail store space), machinery and equipment, and vehicles. Lease terms range from 1 year to 68 years, some of which include options to renew, which are reasonably certain to be renewed. Lease terms may also include options to terminate the lease. The exercise of a lease renewal or termination option is at PMI’s discretion. PMI’s operating and finance leases at December 31, 2025 and 2024, were as follows: At December 31,(in millions)20252024Operating LeasesFinance LeasesOperating LeasesFinance LeasesAssets:Machinery and equipment$— $165 $— $126 Other assets679 — 585 — Total lease assets$679 $165 $585 $126 Liabilities:CurrentCurrent portion of long-term debt$— $35 $— $37 Accrued liabilities - Other207 — 177 — Noncurrent Long-term debt— 49 — 30 Other liabilities526 — 427 — Total lease liabilities$733 $84 $604 $67 The components of PMI’s lease cost were as follows for the years ended December 31, 2025, 2024 and 2023:For the Years Ended December 31,(in millions)202520242023Operating lease cost$313 $283 $266 Finance lease cost:Amortization of right-of-use assets58 72 49 Interest on lease liabilities2 2 1 Short-term lease cost63 63 59 Variable lease cost32 28 28 Total lease cost$468 $448 $403 Maturity of PMI’s lease liabilities, on an undiscounted basis, as of December 31, 2025, were as follows:(in millions)Operating LeasesFinance Leases2026$244 $38 2027177 21 2028125 16 202980 11 203053 3 Thereafter204 — Total lease payments883 89 Less: Interest150 5 Present value of lease liabilities$733 $84 Other information related to PMI’s leases was as follows for the years ended December 31, 2025, 2024 and 2023: December 31,(in millions)202520242023Operating LeasesFinance LeasesOperating LeasesFinance LeasesOperating LeasesFinance LeasesCash paid for amounts included in the measurement of lease liabilities in operating cash flows (1)$309 $— $281 $— $265 $— Cash paid for amounts included in the measurement of lease liabilities in financing cash flows$— $41 $— $29 $— $27 Leased assets obtained in exchange for new lease liabilities$277 $91 $214 $73 $205 $55 Weighted-average remaining lease term (years) 10.03.010.42.610.22.6Weighted-average discount rate(2) (3)6.0 %4.2 %5.9 %4.4 %5.1 %4.9 %(1) Cash paid included in the operating cash flows for finance leases is not material.

Acquisitions and Divestitures: Sale of certain other businesses During the fourth quarter of 2025, PMI completed the sale of one business and classified as held-for-sale net assets of certain other businesses (disposal group), primarily related to its consumer accessories products acquired as part of the Swedish Match AB acquisition in 2022. $142 million of the disposal group assets and $59 million of the disposal group liabilities were classified as held-for-sale and were included within other current assets and other accrued liabilities, respectively, in PMI’s consolidated balance sheet as of December 31, 2025. As a result, PMI recorded a pre-tax loss of $94 million, primarily related to the impairment charge to record the net assets held-for-sale at the lower of their carrying value or fair value less costs to sell and the loss on the completed sale, of which $3 million related to the reclassification of currency translation losses from other comprehensive losses for the completed sale. The loss on sale has been recorded in marketing, administration and research costs in the Europe segment in PMI’s consolidated statement of earnings for the year ended December 31, 2025. The estimated fair value of the disposal group less costs to sell was determined using a market approach, based upon the expected net sales proceeds of the disposal group.Sale of Vectura Group Ltd. On September 17, 2024, PMI announced the execution of a definitive agreement pursuant to which PMI’s direct, wholly-owned subsidiary, Vectura Fertin Pharma Inc., agreed to sell Vectura Group Ltd. (formerly, Vectura Group plc, and hereinafter referred to as “Vectura” or "Vectura Group") to Molex Asia Holdings Ltd. ("Molex"), subject to customary regulatory approval and other completion conditions. On December 31, 2024, PMI completed the sale of Vectura for an upfront cash consideration of GBP 152 million (approximately $191 million at exchange rate on sale completion date) and a short-term receivable of GBP 24 million (approximately $30 million at exchange rate on sale completion date) which was collected in the second quarter of 2025, reflecting certain customary completion account adjustments, with additional deferred payments at December 31, 2025 of up to GBP 101 million (approximately $127 million at exchange rate on sale completion date), contingent on achievement of certain milestones over periods up to and through 2039.

The following table summarizes the final purchase price allocation for the fair value of assets acquired and liabilities assumed as of the date of the acquisition, which includes previously held interest:(in millions)Preliminary Purchase Price Allocation Recognized in the second quarter 2024Measurement Period AdjustmentsFinal Purchase Price AllocationCash and cash equivalent$74 $— $74 Current assets, including receivables and inventories11 — 11 Other intangible assets - Tobacco manufacturing license211 25 236 Other non-current assets, including property, plant and equipment16 — 16 Current liabilities(8)— (8)Non-Current liabilities— (18)(18)Identifiable net assets acquired304 7 311 Noncontrolling interest(159)(1)(160)Goodwill510 (5)505 Acquisition fair value$655 $1 $656

Our cybersecurity risk program, managed by our Chief Information Security Officer and the information security team, is conducted under our enterprise risk management framework and operates on a risk-based approach in assessing risks from cybersecurity threats, as follows:•Cybersecurity Threat Scenarios. Our cybersecurity risk assessment process consists of identifying and compiling a catalogue of top cybersecurity threat scenarios relevant to PMI, which facilitates risk assessments with our IT and business stakeholders. •Cybersecurity Maturity Assessment. Our risk exposure from relevant cybersecurity threat scenarios is mitigated by evaluating existing cybersecurity capabilities and corresponding maturity to identify and address areas for improvement.•Cybersecurity Threat Assessment. To establish PMI’s current and target cybersecurity risk exposure, residual risk exposure from the most relevant cybersecurity threat scenarios across IT platforms and regions is evaluated and measured based upon the cybersecurity maturity assessments. •Cybersecurity Risk Program. PMI has a cybersecurity risk program to enhance its ability to identify, prevent, mitigate, respond and recover from disruptive cybersecurity threats and incidents and to reduce cybersecurity risk exposure. Improvements in our cybersecurity defense capabilities are prioritized based upon the results of cybersecurity threat assessments and cybersecurity maturity assessments. Identified issues from these assessments form the improvement initiatives under our cybersecurity risk program. As discussed in more detail below under “Governance,” the program’s key improvement initiatives, their implementation status, and the overall progression in our cybersecurity capability maturity are regularly presented to the applicable governing body within PMI. In addition, our cybersecurity risk program operates in coordination with the following:Cyber Defense. Our dedicated cyber defense team provides services to identify, help prevent, detect and respond against cybersecurity threats and intrusions and collaborates with internal and external stakeholders to help protect PMI’s information, mitigate operational disruptions and maintain business continuity. The cyber defense team’s controls and procedures identify and enable escalation of cybersecurity incidents to the applicable governing body within PMI, as appropriate, to meet disclosure and reporting requirements for such incidents.

Stock Plans: In May 2022, PMI’s shareholders approved the Philip Morris International Inc. 2022 Performance Incentive Plan (the “2022 Plan”). Under the 2022 Plan, PMI may grant to eligible employees restricted shares and restricted share units, performance-based cash incentive awards and performance-based equity awards. Up to 25 million shares of PMI’s common stock may be issued under the 2022 Plan. At December 31, 2025, shares available for grant under the 2022 Plan were 16,951,135.In May 2017, PMI’s shareholders approved the Philip Morris International Inc. 2017 Stock Compensation Plan for Non-Employee Directors (the “2017 Non-Employee Directors Plan”). A non-employee director is defined as a member of the PMI Board of Directors who is not a full-time employee of PMI or of any corporation in which PMI owns, directly or indirectly, stock possessing at least 50% of the total combined voting power of all classes of stock entitled to vote in the election of directors in such corporation. Up to 1 million shares of PMI common stock may be awarded under the 2017 Non-Employee Directors Plan. At December 31, 2025, shares available for grant under the plan were 845,900.Restricted share unit (RSU) awardsPMI may grant RSU awards to eligible employees; recipients may not sell, assign, pledge or otherwise encumber such awards. Such awards are subject to forfeiture if certain employment conditions are not met. RSU awards do not carry voting rights, although they do earn dividend equivalents. RSU awards generally vest on the third anniversary of the grant date.The fair value of the RSU awards is determined by using the closing market price of PMI’s stock on the date of the grant and is amortized to expense over the restriction period, typically three years after the date of the award, or upon death, disability or reaching the age of 58. During the years ended December 31, 2025, 2024 and 2023, the recorded compensation expense related to RSU awards, and the respective tax benefit (charge) were as follows: (in millions)Compensation Expense Related to RSU AwardsTax Benefit/(Charge) Related to RSU Awards2025$175 $41 2024$157 $29 2023$153 $26 The expense was recorded primarily in marketing, administration and research costs.