Philip Morris International Spin-off (Completed)
Stock-Based Plans

For Employees with Altria Deferred Stock

Altria Deferred Stock Awarded:

Prior to Jan 30, 2008

On or After Jan 30, 2008 - Altria Employees

On or After Jan 30, 2008 - PMI Employees

Altria Deferred Stock Awarded On or After January 30, 2008 - PMI Employees

If you received an Altria deferred stock grant on or after January 30, 2008, the treatment differs from that described in the section addressing Altria Deferred Stock Awarded Prior to January 30, 2008. 

If you received an Altria deferred stock grant and will be employed by PMI after the Spin-off, your award was converted to PMI deferred stock on the Distribution Date. The value of your Altria deferred stock grant immediately before the Adjustment equals the value of your PMI deferred stock grant immediately after the Adjustment. For each share of Altria deferred stock awarded on or after January 30, 2008, the ratio of the pre-Adjustment fair market value of Altria stock to the post-Adjustment price of PMI stock determined the number of shares of PMI deferred stock you received as a result of the Spin-off. See the example below for more information.

Your PMI deferred shares will be subject to the same restrictions and other terms and conditions as those governing your original grant of Altria deferred stock awarded on or after January 30, 2008. After the Distribution Date, you will be able to view your adjusted award on the UBS One Source Web site, www.ubs.com/onesource/pm (available after the Distribution Date). Due to the proximity of the January 30, 2008 deferred stock award to the Distribution Date and the administrative complexity of the Spin-off, the original award communicated to you on your January award statement will not be posted on the UBS One Source Web site until after the Distribution Date.

Example

In this example, let's take a look at how the Spin-off affects the deferred stock of Adam, a PMI employee. Some of the assumptions used in this example were first introduced in the stock option example.

• Adam is awarded 1,000 shares of Altria deferred stock on January 30, 2008, that have a value of $78,000 on the Distribution Date (1,000 shares x Altria pre-Adjustment fair market value of $78 per share).
• The post-Adjustment price of PMI stock is $52.
• The ratio of the pre-Adjustment fair market value of Altria stock to the post-Adjustment price of PMI stock is 1.5 ($78 / $52).

After the Spin-off, Adam will have 1,500 deferred shares of PMI. This is calculated as follows:

• 1,000 (original award of Altria deferred shares) x 1.5 (ratio) = 1,500 (converted to PMI deferred shares). 

Since only whole shares may be granted, if this ratio results in a fractional share, the value of the fractional share will be delivered in the form of a cash payment through local payroll. The cash payment, if any, is immediately taxable. 

After the Spin-off, Adam's holdings will have the following value:

• 1,500 PMI deferred shares with a value of $78,000 (1,500 shares x $52 per share).

Note: The above example is for illustrative purposes only and is not intended to reflect the price of Altria or PMI stock on the Distribution Date.

Altria Deferred Stock Awarded:

Prior to Jan 30, 2008

On or After Jan 30, 2008 - Altria Employees

On or After Jan 30, 2008 - PMI Employees

Glossary

Contact Information

Altria Contacts
www.ubs.com/
onesource/mo
Tel: 1-800-315-5250
(U.S. only)
Tel: 1-201-352-2316
(Outside U.S.)

Philip Morris International Contacts
www.ubs.com/
onesource/pm
Tel: 1-877-762-8827
(U.S. only)
Tel: 1-201-272-7741
(Outside U.S.)