Stock Analysis on Net
Stock Analysis on Net
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Philip Morris International Inc. (NYSE:PM)

Analysis of Income Taxes

Advanced level

Income Tax Expense (Benefit)

Philip Morris International Inc., income tax expense (benefit), continuing operations

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended: Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
United States federal and state (80) 17  120  1,662  (39)
Outside United States 2,600  2,417  2,425  3,146  2,625 
Current 2,520  2,434  2,545  4,808  2,586 
United States federal and state 53  24  (113) (384) 293 
Outside United States (196) (165) 13  (117) (111)
Deferred (143) (141) (100) (501) 182 
Provision for income taxes 2,377  2,293  2,445  4,307  2,768 

Based on: 10-K (filing date: 2021-02-09), 10-K (filing date: 2020-02-07), 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-13), 10-K (filing date: 2017-02-14).

Item Description The company
Current Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations. Philip Morris International Inc.’s current decreased from 2018 to 2019 but then increased from 2019 to 2020 not reaching 2018 level.
Deferred Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations. Philip Morris International Inc.’s deferred decreased from 2018 to 2019 and from 2019 to 2020.
Provision for income taxes Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. Philip Morris International Inc.’s provision for income taxes decreased from 2018 to 2019 but then increased from 2019 to 2020 not reaching 2018 level.

Effective Income Tax Rate (EITR)

Philip Morris International Inc., effective income tax rate (EITR) reconciliation

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
U.S. federal statutory tax rate 21.00% 21.00% 21.00% 35.00% 35.00%
Foreign rate differences 0.60% 1.80% 1.30% -12.20% -12.60%
Dividend repatriation cost 0.40% -0.50% 2.50% 16.40% 5.80%
Global intangible low-taxed income 0.10% 1.40% 1.20% 0.00% 0.00%
U.S. state taxes 0.20% 0.70% -1.10% 0.00% 0.00%
Foreign derived intangible income -0.60% -1.20% -1.10% 0.00% 0.00%
Other 0.00% 0.00% -0.90% 1.50% -0.30%
Effective tax rate 21.70% 23.20% 22.90% 40.70% 27.90%

Based on: 10-K (filing date: 2021-02-09), 10-K (filing date: 2020-02-07), 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-13), 10-K (filing date: 2017-02-14).

Item Description The company
Effective tax rate Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. Philip Morris International Inc.’s effective tax rate increased from 2018 to 2019 but then decreased significantly from 2019 to 2020.

Components of Deferred Tax Assets and Liabilities

Philip Morris International Inc., components of deferred tax assets and liabilities

US$ in millions

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Accrued postretirement and postemployment benefits 225  184  193  239  287 
Accrued pension costs 720  620  390  334  256 
Inventory 232  176  136  131  241 
Accrued liabilities 182  130  138  117  137 
Net operating loss carryforwards and tax credits 351  486  452  213  — 
Foreign exchange 27  —  —  91  — 
Other 124  101  37  57  173 
Deferred income tax assets 1,861  1,697  1,346  1,182  1,094 
Valuation allowance (250) (304) (257) (156) — 
Deferred income tax assets, net of valuation allowance 1,611  1,393  1,089  1,026  1,094 
Trade names (374) (469) (508) (546) (554)
Property, plant and equipment (200) (180) (222) (223) (217)
Unremitted earnings (311) (243) (123) (49) (636)
Foreign exchange —  (256) (157) —  (725)
Deferred income tax liabilities (885) (1,148) (1,010) (818) (2,132)
Net deferred income tax assets (liabilities) 726  245  79  208  (1,038)

Based on: 10-K (filing date: 2021-02-09), 10-K (filing date: 2020-02-07), 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-13), 10-K (filing date: 2017-02-14).

Item Description The company
Deferred income tax assets Amount before allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. Philip Morris International Inc.’s deferred income tax assets increased from 2018 to 2019 and from 2019 to 2020.
Deferred income tax assets, net of valuation allowance Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. Philip Morris International Inc.’s deferred income tax assets, net of valuation allowance increased from 2018 to 2019 and from 2019 to 2020.
Net deferred income tax assets (liabilities) Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, without jurisdictional netting. Philip Morris International Inc.’s net deferred income tax assets (liabilities) increased from 2018 to 2019 and from 2019 to 2020.

Deferred Tax Assets and Liabilities, Classification

Philip Morris International Inc., deferred tax assets and liabilities, classification

US$ in millions

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Deferred income tax assets 1,410  1,153  977  1,007  859 
Deferred income tax liabilities 684  908  898  799  1,897 

Based on: 10-K (filing date: 2021-02-09), 10-K (filing date: 2020-02-07), 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-13), 10-K (filing date: 2017-02-14).

Item Description The company
Deferred income tax assets Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, with jurisdictional netting and classified as noncurrent. Philip Morris International Inc.’s deferred income tax assets increased from 2018 to 2019 and from 2019 to 2020.
Deferred income tax liabilities Amount, after deferred tax asset, of deferred tax liability attributable to taxable differences, with jurisdictional netting and classified as noncurrent. Philip Morris International Inc.’s deferred income tax liabilities increased from 2018 to 2019 but then decreased significantly from 2019 to 2020.

Adjustments to Financial Statements: Removal of Deferred Taxes

Philip Morris International Inc., adjustments to financial statements

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Adjustment to Total Assets
Total assets (as reported) 44,815  42,875  39,801  42,968  36,851 
Less: Noncurrent deferred tax assets, net 1,410  1,153  977  1,007  859 
Total assets (adjusted) 43,405  41,722  38,824  41,961  35,992 
Adjustment to Total Liabilities
Total liabilities (as reported) 55,446  52,474  50,540  53,198  47,751 
Less: Noncurrent deferred tax liabilities, net 684  908  898  799  1,897 
Total liabilities (adjusted) 54,762  51,566  49,642  52,399  45,854 
Adjustment to Total PMI Stockholders’ Deficit
Total PMI stockholders’ deficit (as reported) (12,567) (11,577) (12,459) (12,086) (12,688)
Less: Net deferred tax assets (liabilities) 726  245  79  208  (1,038)
Total PMI stockholders’ deficit (adjusted) (13,293) (11,822) (12,538) (12,294) (11,650)
Adjustment to Net Earnings Attributable To PMI
Net earnings attributable to PMI (as reported) 8,056  7,185  7,911  6,035  6,967 
Add: Deferred income tax expense (benefit) (143) (141) (100) (501) 182 
Net earnings attributable to PMI (adjusted) 7,913  7,044  7,811  5,534  7,149 

Based on: 10-K (filing date: 2021-02-09), 10-K (filing date: 2020-02-07), 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-13), 10-K (filing date: 2017-02-14).


Philip Morris International Inc., Financial Data: Reported vs. Adjusted


Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

Philip Morris International Inc., adjusted financial ratios

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Net Profit Margin
Reported net profit margin 10.59% 9.22% 9.91% 7.73% 9.30%
Adjusted net profit margin 10.41% 9.04% 9.79% 7.09% 9.54%
Total Asset Turnover
Reported total asset turnover 1.70 1.82 2.01 1.82 2.03
Adjusted total asset turnover 1.75 1.87 2.06 1.86 2.08
Financial Leverage
Reported financial leverage
Adjusted financial leverage
Return on Equity (ROE)
Reported ROE
Adjusted ROE
Return on Assets (ROA)
Reported ROA 17.98% 16.76% 19.88% 14.05% 18.91%
Adjusted ROA 18.23% 16.88% 20.12% 13.19% 19.86%

Based on: 10-K (filing date: 2021-02-09), 10-K (filing date: 2020-02-07), 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-13), 10-K (filing date: 2017-02-14).

Financial ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. Philip Morris International Inc.’s adjusted net profit margin ratio deteriorated from 2018 to 2019 but then improved from 2019 to 2020 exceeding 2018 level.
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Philip Morris International Inc.’s adjusted total asset turnover ratio deteriorated from 2018 to 2019 and from 2019 to 2020.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Philip Morris International Inc.’s adjusted ROA deteriorated from 2018 to 2019 but then slightly improved from 2019 to 2020.

Philip Morris International Inc., Financial Ratios: Reported vs. Adjusted


Adjusted Net Profit Margin

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Net earnings attributable to PMI 8,056  7,185  7,911  6,035  6,967 
Revenues including excise taxes 76,047  77,921  79,823  78,098  74,953 
Profitability Ratio
Net profit margin1 10.59% 9.22% 9.91% 7.73% 9.30%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net earnings attributable to PMI 7,913  7,044  7,811  5,534  7,149 
Revenues including excise taxes 76,047  77,921  79,823  78,098  74,953 
Profitability Ratio
Adjusted net profit margin2 10.41% 9.04% 9.79% 7.09% 9.54%

Based on: 10-K (filing date: 2021-02-09), 10-K (filing date: 2020-02-07), 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-13), 10-K (filing date: 2017-02-14).

2020 Calculations

1 Net profit margin = 100 × Net earnings attributable to PMI ÷ Revenues including excise taxes
= 100 × 8,056 ÷ 76,047 = 10.59%

2 Adjusted net profit margin = 100 × Adjusted net earnings attributable to PMI ÷ Revenues including excise taxes
= 100 × 7,913 ÷ 76,047 = 10.41%

Profitability ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. Philip Morris International Inc.’s adjusted net profit margin ratio deteriorated from 2018 to 2019 but then improved from 2019 to 2020 exceeding 2018 level.

Adjusted Total Asset Turnover

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Revenues including excise taxes 76,047  77,921  79,823  78,098  74,953 
Total assets 44,815  42,875  39,801  42,968  36,851 
Activity Ratio
Total asset turnover1 1.70 1.82 2.01 1.82 2.03
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Revenues including excise taxes 76,047  77,921  79,823  78,098  74,953 
Adjusted total assets 43,405  41,722  38,824  41,961  35,992 
Activity Ratio
Adjusted total asset turnover2 1.75 1.87 2.06 1.86 2.08

Based on: 10-K (filing date: 2021-02-09), 10-K (filing date: 2020-02-07), 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-13), 10-K (filing date: 2017-02-14).

2020 Calculations

1 Total asset turnover = Revenues including excise taxes ÷ Total assets
= 76,047 ÷ 44,815 = 1.70

2 Adjusted total asset turnover = Revenues including excise taxes ÷ Adjusted total assets
= 76,047 ÷ 43,405 = 1.75

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Philip Morris International Inc.’s adjusted total asset turnover ratio deteriorated from 2018 to 2019 and from 2019 to 2020.

Adjusted Financial Leverage

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Total assets 44,815  42,875  39,801  42,968  36,851 
Total PMI stockholders’ deficit (12,567) (11,577) (12,459) (12,086) (12,688)
Solvency Ratio
Financial leverage1
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted total assets 43,405  41,722  38,824  41,961  35,992 
Adjusted total PMI stockholders’ deficit (13,293) (11,822) (12,538) (12,294) (11,650)
Solvency Ratio
Adjusted financial leverage2

Based on: 10-K (filing date: 2021-02-09), 10-K (filing date: 2020-02-07), 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-13), 10-K (filing date: 2017-02-14).

2020 Calculations

1 Financial leverage = Total assets ÷ Total PMI stockholders’ deficit
= 44,815 ÷ -12,567 =

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted total PMI stockholders’ deficit
= 43,405 ÷ -13,293 =


Adjusted Return on Equity (ROE)

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Net earnings attributable to PMI 8,056  7,185  7,911  6,035  6,967 
Total PMI stockholders’ deficit (12,567) (11,577) (12,459) (12,086) (12,688)
Profitability Ratio
ROE1
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net earnings attributable to PMI 7,913  7,044  7,811  5,534  7,149 
Adjusted total PMI stockholders’ deficit (13,293) (11,822) (12,538) (12,294) (11,650)
Profitability Ratio
Adjusted ROE2

Based on: 10-K (filing date: 2021-02-09), 10-K (filing date: 2020-02-07), 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-13), 10-K (filing date: 2017-02-14).

2020 Calculations

1 ROE = 100 × Net earnings attributable to PMI ÷ Total PMI stockholders’ deficit
= 100 × 8,056 ÷ -12,567 =

2 Adjusted ROE = 100 × Adjusted net earnings attributable to PMI ÷ Adjusted total PMI stockholders’ deficit
= 100 × 7,913 ÷ -13,293 =


Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Net earnings attributable to PMI 8,056  7,185  7,911  6,035  6,967 
Total assets 44,815  42,875  39,801  42,968  36,851 
Profitability Ratio
ROA1 17.98% 16.76% 19.88% 14.05% 18.91%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net earnings attributable to PMI 7,913  7,044  7,811  5,534  7,149 
Adjusted total assets 43,405  41,722  38,824  41,961  35,992 
Profitability Ratio
Adjusted ROA2 18.23% 16.88% 20.12% 13.19% 19.86%

Based on: 10-K (filing date: 2021-02-09), 10-K (filing date: 2020-02-07), 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-13), 10-K (filing date: 2017-02-14).

2020 Calculations

1 ROA = 100 × Net earnings attributable to PMI ÷ Total assets
= 100 × 8,056 ÷ 44,815 = 17.98%

2 Adjusted ROA = 100 × Adjusted net earnings attributable to PMI ÷ Adjusted total assets
= 100 × 7,913 ÷ 43,405 = 18.23%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Philip Morris International Inc.’s adjusted ROA deteriorated from 2018 to 2019 but then slightly improved from 2019 to 2020.