Segment Reporting:

PMI’s subsidiaries and affiliates are engaged in the manufacture and sale of cigarettes and other nicotine-containing products, including RRPs, in markets outside of the United States of America. Reportable segments for PMI are organized by geographic region and managed by segment managers who are responsible for the operating and financial results of the regions inclusive of all product categories sold in the region. PMI’s reportable segments are the European Union; Eastern Europe, Middle East & Africa; Asia; and Latin America & Canada for all periods presented in these financial statements. PMI records net revenues and operating companies income to its segments based upon the geographic area in which the customer resides.

PMI’s chief operating decision maker evaluates segment performance and allocates resources based on regional operating companies income, which includes results from all product categories sold in each region. PMI defines operating companies income as operating income, excluding general corporate expenses and amortization of intangibles, plus equity (income)/loss in unconsolidated subsidiaries, net. General corporate expenses include amounts relating to central functions that provide strategic direction and support for activities including new product and market launches across the product portfolio. 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 by segment is not disclosed because such information is not reported to or used by PMI’s chief operating decision maker. Segment goodwill and other intangible assets, net, are disclosed in Note 3. 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.

Segment data were as follows:



	For the Years Ended December 31,
(in millions)	2017		2016		2015
Net revenues:
European Union	$	27,580	$	27,129	$	26,563
Eastern Europe, Middle East & Africa	18,045		18,286		18,328
Asia	22,635		20,531		19,469
Latin America & Canada	9,838		9,007		9,548
Net revenues⁽¹⁾	$	78,098	$	74,953	$	73,908

⁽¹⁾ Total net revenues attributable to customers located in Indonesia, PMI’s largest market in terms of net revenues, were $8.0 billion, $7.7 billion and $7.1 billion for the years ended December 31, 2017, 2016 and 2015, respectively. Total net revenues attributable to customers located in Germany were $7.2 billion, $7.1 billion and $7.2 billion for the years ended December 31, 2017, 2016 and 2015, respectively.



	For the Years Ended December 31,
(in millions)	2017			2016			2015
Earnings before income taxes:
Operating companies income:
European Union	$	3,775		$	3,994		$	3,576
Eastern Europe, Middle East & Africa	2,888			3,016			3,425
Asia	4,149			3,196			2,886
Latin America & Canada	1,002			938			1,085
Amortization of intangibles	(88		)	(74		)	(82		)
General corporate expenses	(164		)	(161		)	(162		)
Less:
Equity (income)/loss in unconsolidated subsidiaries, net	(59		)	(94		)	(105		)
Operating income	11,503			10,815			10,623
Interest expense, net	(914		)	(891		)	(1,008		)
Earnings before income taxes	$	10,589		$	9,924		$	9,615



	For the Years Ended December 31,
(in millions)	2017		2016		2015
Depreciation expense:
European Union	$	213	$	184	$	184
Eastern Europe, Middle East & Africa	164		150		163
Asia	313		247		230
Latin America & Canada	85		79		85
	775		660		662
Other	12		9		10
Total depreciation expense	$	787	$	669	$	672



	For the Years Ended December 31,
(in millions)	2017		2016		2015
Capital expenditures:
European Union	$	956	$	665	$	497
Eastern Europe, Middle East & Africa	182		223		147
Asia	227		180		185
Latin America & Canada	175		103		130
	1,540		1,171		959
Other	8		1		1
Total capital expenditures	$	1,548	$	1,172	$	960



	At December 31,
(in millions)	2017		2016		2015
Long-lived assets:
European Union	$	4,130	$	3,282	$	3,129
Eastern Europe, Middle East & Africa	976		866		743
Asia	2,078		1,916		1,743
Latin America & Canada	885		765		605
Total long-lived assets	8,069		6,829		6,220
Other	1,126		750		644
Total property, plant and equipment, net and Other assets	$	9,195	$	7,579	$	6,864

Long-lived assets consist of non-current assets other than goodwill; other intangible assets, net; deferred tax assets, investments in unconsolidated subsidiaries, and financial instruments. PMI's largest markets in terms of long-lived assets are Italy, Switzerland and Indonesia. Total long-lived assets located in Italy, which is reflected in the European Union segment above, were $1.2 billion, $0.7 billion and $0.4 billion at December 31, 2017, 2016 and 2015, respectively. Total long-lived assets located in Switzerland, which is reflected in the European Union segment above, were $0.9 billion, $0.9 billion and $0.9 billion at December 31, 2017, 2016 and 2015, respectively. Total long-lived assets located in Indonesia, which is reflected in the Asia segment above, were $0.8 billion, $0.8 billion and $0.7 billion at December 31, 2017, 2016 and 2015, respectively.