PMPhilip Morris International
Philip Morris International Inc. is a Virginia holding company incorporated in 1987. 10-K, Item 1
- Employees
- 84,900
- Headquarters
- Stamford, CT
- Next results
- around Feb 5, 2027
12 paragraphs in Risk Factors of the 10-K filed Feb 6, 2026 with nothing like them in the 10-K filed Feb 6, 2025. Quoted exactly. Paragraphs that were only edited are under 10-K change.
Compared with the Risk Factors in the latest 10-K of the other 31 Consumer staples companies: a paragraph with at least half its words the same at another company is called similar, and the companies are listed under it. A paragraph most of them have is marked boilerplate. No line means no other company has one like it. This counts text; it does not say how serious a risk is.
Our strategic priority is the continued introduction, commercialization, and growth of our SFPs and if these efforts are not successful, in key markets or systematically, our financial results and future growth prospects may be materially adversely impacted. If other market participants are more successful in these efforts or if SFP categories where we hold a competitive advantage are inequitably regulated compared to cigarettes or other SFP categories without regard to the totality of the scientific evidence available for such products, we may be at a competitive disadvantage. In addition, actions of some market participants, such as the inappropriate
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We anticipate that significant regulatory restrictions will continue to be considered and adopted in many markets. Regulatory initiatives that have been contemplated, proposed, introduced, or enacted by governmental authorities in various jurisdictions include:
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Classification of the product as food such that any nicotine amounts beyond de minimis content de facto bans the nicotine product from the market
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The success of our business in the United States is dependent on an evolving legal and regulatory framework.
Similar paragraph at 1 of 31 other Consumer staples companies: CLRead in the 10-K ↗
Our business is subject to changes in adult consumer preferences and if we do not accurately assess market trends, are unable to adapt our product offerings to evolving consumer demands, or face challenges in product development, we could experience missed opportunities, supply chain challenges, reduced competitiveness, inefficient expenditures, and potential impacts on our customer base and brand reputation. Furthermore, restrictions pertaining to packaging, labeling, or promotional and advertising activities may limit our ability to effectively communicate product innovations intended to address changing adult consumer preferences. Any of these factors could have a material adverse effect on our results of operations, revenues, cash flows, profitability, and prospects for growth.
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Risks Related to Sourcing, Distribution and Quality of Products, Services and Materials
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Additionally, we expect that these third parties adhere to our applicable standards and to applicable laws related to product quality, responsible marketing, data protection, labor practices, and other areas. Our ability to monitor and enforce compliance is inherently limited and these parties may fail to comply with our standards or to operate in accordance with our expectations or legal requirements, which could expose us to operational disruptions, legal or regulatory liabilities, reputational damage, or financial losses.
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While we seek to mitigate the physical risks to our business associated with the natural environment through a comprehensive strategy that includes the development and implementation of robust mitigation and adaptation measures, we recognize that there are residual risks that lie beyond our operational control. For example, increased frequency and intensity of extreme droughts, floods, and/or heatwaves could negatively affect our manufacturing operations, tobacco-growing areas, third-party operators and third-party manufacturers sites, and supply regions for products and raw materials, all of which may lead to disruption of our supply chain and of operations at factories, warehouses and other premises.
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2 more
Additionally, we source the vast majority of our tobacco from a global network of farmers across multiple countries, rather than through commodity markets, which helps ensure the consistency, quality, and traceability of our tobacco supply. However, this model also means that disruptions to farmer livelihoods, if not actively mitigated, could lead to supply chain disruption through farmer exit, reduced crop quality, unsustainable farming practices, increased regulatory scrutiny, and reputational risks.
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We increasingly use artificial intelligence-based solutions in our business, which could result in reputational harm, legal liability, and adversely affect our operating results.
We and our business partners are increasingly incorporating artificial intelligence ("AI")-based solutions in our ways of working and operations, but this process involves uncertainty and risks, which may or may not yield corresponding benefits. Artificial intelligence technologies are complex, and there are technical and organizational challenges associated with achieving optimal levels of accuracy, efficiency, safety, explicability, reliability, and use for their intended purposes. Flaws, biases, data sourcing issues, limitations, errors, misconfiguration, or malfunctions in these systems could result in operational disruptions, including data loss and corruption. There is a risk of artificial intelligence system failures, disruptions, or vulnerabilities that could compromise PMI’s information technology
networks and systems and the integrity, availability, security, or privacy of PMI data processed by or through such systems. The emergence of AI and other technologies may also exacerbate other risks, including those related to regulation, litigation, compliance issues, ethical concerns, confidentiality, intellectual property ownership and infringement, and data privacy or security. Separately, AI presents a new attack surface that cybercriminals will attempt to exploit as well as providing means to scale and automate targeted attacks. Ineffective or inadequate artificial intelligence development, adoption, or deployment practices, including any use, reliance, or dependence on AI generated outputs, could result in unintended, unexpected, or otherwise unforeseen adverse consequences. These risks could have a material adverse effect on our business, reputation, financial condition, or operating results.
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New in the latest 10-Q
27 paragraphs in the 10-Q filed Oct 23, 2026 with nothing like them in the 10-Q filed Jul 24, 2026 (at least half the words must differ; new numbers alone do not count). Quoted exactly, grouped by the item heading above them. This is text that changed, not a judgement of how serious it is.
Financial statements and notes
The Dutch Future Pensions Act (Wet toekomst pensioenen), enacted in 2023, requires Dutch pension plans to transition from defined benefit plans to defined contribution plans by January 1, 2028 in order to comply with the new legal and tax framework. In connection with this regulatory change, during the third quarter of 2026, PMI's Dutch affiliate substantially completed the buy-out of its defined benefit pension plan through the transfer of the plan's pension obligations to a third-party insurer.
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As a result of the transaction, PMI recognized a pre-tax settlement loss of $ 74 million ($ 65 million net of tax), primarily attributable to the partial utilization of surplus plan assets in connection with the settlement. The settlement loss was recorded within Pension and other employee benefit costs in the condensed consolidated statements of earnings for the three months and nine months ended September 30, 2026. At the settlement date, the benefit obligation transferred to the insurer was approximately $ 1.0 billion.
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In the third quarter of 2026, PMI received cash refunds of surplus assets of $ 682 million primarily from its German defined benefit pension plans following the simplification of the German legal entity structure.
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Pension plan contributions and refunds of surplus assets are included in pension plan contributions, net of refunds in cash provided by operating activities in the condensed consolidated statements of cash flows.
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On March 6, 2025, the CCAA court issued a decision approving the plan of compromise and arrangement (the "Plan") setting forth certain terms of a proposed comprehensive resolution of Canadian tobacco claims and related litigation, including the global settlement amount. The Plan became effective on August 29, 2025. On September 24, 2025, as permitted by the Plan, RBH paid a dividend of CAD $ 750 million (approximately $ 536 million) to PMI. The dividend distribution triggered a re-assessment of the carrying value of the investment in RBH and resulted in a downward adjustment, decreasing the carrying value of PMI’s investment in RBH to $ 567 million. Consequently, in the third quarter of 2025, PMI recorded pre-tax income of $ 303 million within equity investments and securities (income)/loss, net, in PMI’s consolidated statement of earnings, reflecting the dividend income net of the corresponding decrease in the carrying value of the investment.
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In October 2026, PMI initiated a project to optimize the operations of its wellness business unit, Aspeya. As part of this initiative, operations related to certain product lines are expected to transition to an asset-light operating model, primarily through joint ventures and other partnership arrangements. PMI is currently evaluating the total costs associated with the restructuring project, which are expected to be incurred in the fourth quarter of 2026 and the first half of 2027. In addition, the transition to a partnership-based operating model may result in revisions to the financial projections for the wellness business unit, which could result in an impairment of goodwill. For further details related to goodwill attributed to the wellness reporting unit, see Note 5. Goodwill and Other Intangible Assets, net.
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MD&A
Germany excise tax classification litigation charge - In August 2024, the German Main Custom Office (“MCO”) notified Philip Morris (Germany) GmbH (“PM Germany”) of its decision to classify TEREA consumables as a cigarette for excise tax purposes with the associated tax assessment totaling EUR 151 million (approximately $176 million) covering the period of February 15, 2023, through August 1, 2024. In April 2025, PM Germany paid the outstanding amount, which was recorded in Other assets on the consolidated balance sheets, while it challenged the MCO’s decision in court. On September 17, 2025, PM Germany filed a request to withdraw the proceedings. As a result, the tax assessment amount of $176 million (representing $150 million net of income tax and a diluted EPS charge of $0.10 per share) was recorded as a pre-tax charge in marketing, administration and research costs in the condensed consolidated statements of earnings for the nine months ended September 30, 2025.
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Impairment of Wellness business related equity investment - In the third quarter of 2025, PMI recorded a non-cash after tax charge of $146 million (representing a diluted EPS charge of $0.09 per share), primarily representing an other-than-temporary impairment of one equity method investment within the Wellness business following a reassessment of its estimated fair value triggered by the amendment of existing investment agreements in the third quarter of 2025. The impairment charge was recorded in equity investments and securities (income)/loss, net in the condensed consolidated statements of earnings for the nine months ended September 30, 2025.
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• U.S. segment: Unfavorable volume/mix and higher manufacturing costs, partly offset by slightly favorable price comparisons against promotional activity in the third quarter last year; and
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Germany excise tax classification litigation charge - In August 2024, the German Main Custom Office (“MCO”) notified Philip Morris (Germany) GmbH (“PM Germany”) of its decision to classify TEREA consumables as a cigarette for excise tax purposes with the associated tax assessment totaling EUR 151 million (approximately $176 million) covering the period of February 15, 2023, through August 1, 2024. In April 2025, PM Germany paid the outstanding amount, which was recorded in Other assets on the consolidated balance sheets, while it challenged the MCO’s decision in court. On September 17, 2025, PM Germany filed a request to withdraw the proceedings. As a result, the tax assessment amount of $176 million (representing $150 million net of income tax and a diluted EPS charge of $0.10 per share) was recorded as a pre-tax charge in marketing, administration and research costs in the condensed consolidated statements of earnings in the third quarter of 2025.
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Impairment of Wellness business related equity investment - In the third quarter of 2025, PMI recorded a non-cash after tax charge of $146 million (representing a diluted EPS charge of $0.09 per share), primarily representing an other-than-temporary impairment of one equity method investment within the Wellness business following a reassessment of its estimated fair value triggered by the amendment of existing investment agreements in the third quarter of 2025. The impairment charge was recorded in equity investments and securities (income)/loss, net in the condensed consolidated statements of earnings in the third quarter of 2025.
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RBH (Canada) Plan implementation, including dividend income, net - On August 29, 2025, the plan of compromise and arrangement (the “Plan”) setting forth the terms of a resolution of Canadian tobacco claims and related litigation became effective. In the third quarter of 2025, we recorded after-tax income of $156 million ($0.10 per share increase in diluted EPS) following the Plan implementation, including $303 million of dividend income net of the corresponding decrease in the
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• U.S. segment: Growing ZYN shipment volume and a favorable price variance against prior year promotions, partly offset by higher manufacturing costs; and
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Segment Operating Results - Three Months and Nine Months Ended September 30, 2026
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In the heat-not-burn category, IQOS grew shipment volumes by 1.5% to 41.5 billion units. HTU adjusted IMS grew by 7.1%. Excluding Japan and Poland, adjusted IMS continued to grow in the double digits, increasing by 10%, reflecting broad-based growth across a variety of markets, underscoring the increasing geographic diversification of IQOS. In Japan and Poland, we faced specific headwinds from the impact of excise-driven pricing and the characterizing flavor ban, respectively.
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• In Japan, PMI HTU adjusted IMS grew by 3.4%, or by 1.3% excluding the estimated consumer pantry-loading impact ahead of the October 1 excise-driven price increase (JPY20 per pack). This continues to be broadly in line with our expectations as consumers adjust following the first excise-driven price increase (JPY40 per pack) on April 1. IQOS maintained a strong
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category share at 68%, with SENTIA continuing to play a key role in capturing price-sensitive TEREA consumers.
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• In Europe, IQOS HTU adjusted IMS growth strengthened to an estimated 6.0%, notwithstanding ongoing disruptions in Ukraine and the continued impact of the characterizing flavor ban in Poland. IQOS HTU adjusted market share increased by 0.9 percentage points to 11.6%. This growth was led by strong performance in many markets, notably Germany, Greece, Spain and Romania. Adjusted IMS in Italy continued its strong growth trajectory, underscoring the category's significant potential across the region. Excluding Poland, adjusted IMS volumes grew by around 8%.
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• Outside Europe and Japan, adjusted IMS grew by 12.7% and offtake share increased in key cities across the globe, including Riyadh, Kuala Lumpur, Mexico City, Jakarta and Taipei, underlining the global growth potential of the heat-not-burn category.
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In the third quarter, our U.S. smoke-free product shipment volume increased by 2.3%. Our U.S. oral smoke-free products shipment volume increased by 2.3% to 3.7 billion equivalent units, including a 4.2% increase in ZYN shipments to 3.2 billion pouches, despite challenging comparisons against a special promotional campaign last year and supported by the ongoing launches of ZYN ULTRA, new flagship dry flavors, and 1.5mg and 8mg flagship variants. These portfolio extensions enable ZYN to cover a broader range of consumer preferences and compete in the most dynamic growing segments of the category. We expect fourth quarter ZYN shipment volumes to be broadly in-line to modestly above third quarter levels, as we continue to expand distribution and support the rollout of the enhanced portfolio.
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As part of our previously announced plans to accelerate investments in the second half, and with distribution of the extended range of ZYN products continuing to progress, we plan to further increase investments to support the brand in the fourth quarter. This reflects a ramp-up in consumer communications, notably an expansion of the 'When It Clicks' brand campaign, and the transition of the majority of the ZYN flagship portfolio to 20-pouch cans (from 15-pouch cans today), including associated transitional support programs. The change to 20-pouch cans is designed to align the value proposition across the portfolio and optimize ZYN's price premium to support future growth in the dynamic U.S. nicotine pouch category.
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The transition to 20-pouch cans represents a significant investment in consumer value, which - all else equal - translates into approximately 25% less revenue-per-pouch. Combined with additional short-term support to manage the changeover at retail, this will impact fourth quarter net revenues. Taking the aggregate impact of these actions and the expansion of our manufacturing capacity to support future growth, the fourth quarter of 2026 will be a unique quarter of investment. We expect an abnormally low level of U.S. profitability in the fourth quarter.
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Much of the regulation that shapes the business environment in which we operate is driven by the WHO Framework Convention on Tobacco Control (the "FCTC"). The FCTC's governing body, the Conference of the Parties (“CoP”), has adopted non-binding guidelines and policy recommendations relating to tobacco products and has also discussed regulatory approaches to certain smoke-free and nicotine-containing products.
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The CoP and other WHO bodies have, from time to time, considered regulatory approaches to SFPs, including heated tobacco products, e-vapor products and nicotine pouches. These discussions and related policy recommendations may influence how jurisdictions regulate such products, including through restrictions on product availability, product characteristics, marketing and communication.
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Some governments have sought, or may seek, to standardize the design and functionality of SFPs, or to set minimum quality and safety requirements for SFPs, including heat-not-burn products, e-Vapor products, and modern oral pouches. These regulatory requirements may be mandatory or voluntary, depending on the market and can create challenges with the commercialization of our SFPs. For example, Egypt, the Philippines, Japan, UK, and Mexico have adopted minimum quality and safety requirements for certain SFPs.
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On December 16, 2021, PMTAs were submitted for ZYN ULTRA products, a newer line of nicotine pouches with modified pouch design, higher moisture content, in two nicotine strengths (9 mg and 11 mg). On August 21, 2026, the FDA authorized the marketing of 11 ZYN ULTRA nicotine pouch products, including all 9 mg variants and one 11 mg variant. The FDA’s evaluation found that the new products, including the 11 mg variant, contain lower levels of most HPHCs compared to other oral and smokeless tobacco products, with many constituents present at levels too low to be quantified. Additional 11 mg variants remain under scientific review.
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The evolution of the situation in Ukraine has caused certain disruptions to our business this year, including the impact of strikes on our supply chain and logistics infrastructure in certain locations. We expect this disruption to have an impact on our operating income this year.
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The 10-Q's risk factors against the 10-K
Item 1A of the 10-Q filed Oct 23, 2026 against Item 1A of the 10-K filed Feb 6, 2026.
A 10-Q repeats only the risks that changed, so a 10-K paragraph that is missing from it is not counted as removed.
Added is a paragraph with nothing like it in the 10-K, Reworded a sentence that is in both with several words changed,
Quiet changes a sentence in both where one to four words changed and one is a hedge or a modal
(cut words struck through, new words highlighted and underlined).
Text on the page, not a score; each links to the filing at sec.gov.
What the 10-Q itself says about its risk factors:
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Information regarding Risk Factors appears in “Management's Discussion and Analysis of Financial Condition and Results of Operations - Cautionary Factors That May Affect Future Results,” in Part I - Item 2 of this Form 10-Q and in Part I - Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2025.
1 paragraph in the 10-Q's Item 1A, and none of them adds, rewords or quietly edits a paragraph of the 10-K's.
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