Christopher Growe: If you could all take your seats please, we're ready for the next presentation. Thank you. I'm pleased to introduce Philip Morris International next up for our presenting companies today and CFO, Jacek Olczak to the stand. I'd like to very much thank Philip Morris our sponsorship of CAGNY including the break this morning so please join me in congratulating and thanking them for that. PM is obviously one of the largest global tobacco companies and has dominant market shares around the world. Its business fundamentals remain strong lead by robust price realization. The company is no doubt encountered a very difficult foreign exchange environment to say the least which is masking an otherwise solid performance in the business. In addition the company has launched some innovative products in markets around the world that have reduced risk profile that could serve to change its business in the category of the long run. So I'll turn over to Jacek Olczak now to talk more of those initiatives and his strategies for the business.

Jacek Olczak: Thank you, Chris. It is a great pleasure for me to be back at the CAGNY Conference here in Florida. Let me extend a warm welcome to those joining us on the webcast. My remarks contain forward-looking statements and, accordingly, I direct your attention to the Forward-Looking and Cautionary Statements section of today’s press release, presentation and our SEC filings. Reconciliations of non-GAAP measures included in this presentation to the most comparable GAAP measures, along with a glossary of terms, are available on our website. Reduced-Risk Products, or RRPs, is the term we use to refer to products that have the potential to reduce individual risk and population harm in comparison to smoking combustible cigarettes. After a brief overview of our 2014 results, our success in meeting the key market challenges that we outlined at the beginning of last year, and our expectations for 2015, I will focus on four topics: currency exposure and strategies to mitigate its impact, our superior brands, led by Marlboro, the exciting prospects for our Reduced-Risk Products portfolio, and returning cash to our shareholders. In 2014, our adjusted diluted EPS increased by 7.8% excluding currency, surpassing the 6.5% to 7.5% guidance range that we provided in November. Last year, we successfully overcame our biggest challenge in Asia by stabilizing our market share in Japan. We achieved this thanks to our Be Marlboro marketing campaign, innovative line extensions and the morphing of Philip Morris into Lark. We are now poised to resume modest share growth. In the Philippines, cigarette consumption remained resilient and our volume was stable. In addition, retail prices at the bottom end of the market have recently increased, which is a very positive development. In the EU Region, there was a substantial moderation in 2014 in the decline rate of cigarette industry volume. We gained one share point to reach 39.8%, behind the success of Marlboro, L&M and Chesterfield. Our financial results in the EU Region were unfortunately hampered by the delay in the much-needed reform of the Italian excise tax system, which finally occurred in January this year. We have since increased our retail prices in Italy by €0.20 per pack across our portfolio. Our 2015 reported diluted EPS guidance of $4.27 to $4.37, which we announced on February 5th, corresponds to a projected increase, excluding an unfavorable currency impact of approximately $1.15, of 8% to 10%, this is versus adjusted diluted EPS of $5.02 in 2014. This is above our 2014 growth rate of 7.8%. Our guidance takes into account further incremental investments behind RRPs and assumes no share repurchases this year. We are confident in our ability to achieve our guidance range as our underlying business continues to be strong and we have resolved most of the key business challenges that we faced last year. In 2014, we gained 0.2 share points in our Top 30 OCI markets to reach a market share of 37.4%. Our strong share momentum across the EU Region and in key markets such as Russia, along with the stabilization of our market share in Japan, should enable us to outperform again in 2015. Our pricing remained robust in 2014 with a variance totaling $1.9 billion, slightly above the annual average achieved since the spin in 2008. The variance was enhanced by the favorable impact of the change to our new business structure in Egypt. We expect to continue to benefit from robust pricing in 2015. We have increased prices in recent months notably in Australia, Brazil, Canada, Indonesia, Italy, the Philippines, Poland, Russia and Turkey. We have already implemented or announced approximately 70% of the pricing included in our 2015 EPS guidance. While our underlying business fundamentals are strong, we are facing an unprecedented headwind from currency movements. This is due to a combination of macro-economic monetary policy and geopolitical factors, which has resulted in the strengthening of the U.S dollar against virtually all currencies. In some cases such as the Russian Ruble there has been huge swing since the last October triggered by the collapse of oil prices and economic sanctions. PMI's net revenues are composed of a broad basket of currencies. This pie chart shows the split of net revenues between the developed and emerging market currencies, with 55% represented by developed markets led by Euro. Our most important emerging market currencies in terms of revenues are the Indonesian Rupiah, Mexican and Philippine Pesos, Russian Ruble, Turkish Lira and Ukrainian Hryvnia. At an adjusted diluted EPS level our unfavorable currency impact was $0.80 in 2014. Despite successful hedging, the single most important currency driving this impact was the Japanese Yen which accounted for $0.20 or a quarter of the total. Overall however emerging markets play a larger role, accounting for $0.52 or 65%. Our reported diluted EPS guidance for 2015 includes $1.15 in unfavorable currency at then prevailing exchange rates. By far the largest contributor to this variance is the Russian Ruble with an unfavorable impact of $0.48 representing over 40% of the total. The Euro and other developed market currencies had a greater unfavorable impact on our guidance than last year with a combined $0.30. It should be noted that our guidance includes an unfavorable currency impact of just $0.03 related to the Swiss Franc, this is despite its recent appreciation. Around 90% of the currency impact on our adjusted OCI last year was attributable to translation. While the translational currency impact depends on the magnitude of a market’s revenues and its absolute profitability. The transactional currency impact reflects the ability to source inputs locally as well as the currency of imports. This varies considerably from market to market, as highlighted on this slide which shows the percentage of total costs that are in local currency in Germany, Indonesia, Russia and Turkey. The proportion of costs in local currency is determined by four main factors. The first is our global manufacturing footprint of 50 factories and 23 third-party manufacturers. Over three-quarters of our cigarette are manufactured locally or within the same currency zone. The second factor is availability of local tobacco leaf. Overall we're able to source about a quarter of our tobacco leaf from the countries in which the cigarettes are manufactured. The third factor is the extent to which a market is integrated into PMI's global sourcing of direct material. These global agreements provide PMI with significant cost savings. However, these suppliers do not have manufacturing facilities in every market. Finally, the relative weight of sales, marketing and other expenses in total costs also plays a role as these items tend to be predominantly in local currency. On a global basis slightly less than half of our 2014 total costs were in U.S dollars and Euros. These currencies were of particular importance with regard to the purchase of tobacco and direct material. In 2014, 7% of our total costs were in Swiss Francs. These were mainly related to our Operation Center in Lausanne and our Research and Development and Production facilities in Neuchatel. In order to mitigate unfavorable impact of currency movement, we seek to hedge transactions where this is appropriate. Unfortunately, such instruments are generally either not available or very expensive in emerging markets. As a consequence our hedging strategy centers on our sales to Japan. As mentioned earlier this month we have hedged approximately 60% of our 2015 forecast sales to Japan spread across the year, which at the then prevailing exchange rate translated into an effective rate of 110 Yen to the U.S dollar. This compares to an effective average rate of 98 Yen to the U.S dollar last year. In addition from time to time we carry out transactional hedges in our purchases of tobacco leaf in U.S dollars. We do not, however carry out any net income hedges as these could result in a significant volatility in our financial statements. Since 2008 we have implemented balance sheet hedging primarily focusing on our net asset positions in Euros. The hedging was steadily increased to 100% by the end of 2014 when PMI's balance sheet included 10 billion in net assets denominated in Euros. These net assets were hedged at an average designation rate of €1.33 to the U.S dollar. The net asset hedges are performed for Euro denominated debt complimented by other financial instruments. Valuation changes on the balance sheet hedges are booked in equity and do not impact the profit and loss statement. At the end of last year, our total debt stood at $29.5 billion. About half the debt was in U.S. dollars and around 40% in Euros. As a consequence, a 10% change in the Euro/Dollar exchange rate has an impact of approximately $1 billion on our total debt, 4 basis points on our total debt to adjusted EBITDA ratio and around $30 million on our pre-tax interest expense. Thus, while the recent depreciation of the Euro is projected to have a significant impact on our adjusted EBITDA and cash flow, this should be partly offset by a favorable impact on our balance sheet and interest expenses. Let me now turn to a key element underpinning our solid business performance; our superior brand portfolio, which is supported by the success of our new commercial approach. In 2014, the volume variance of eight of our top ten brands equaled or outperformed the international cigarette industry trend and these brands thus maintained or gained global market share. I would highlight that the volume of four of the brands shown here increased in absolute terms, with an outstanding performance by Parliament and Chesterfield. Marlboro remains the only truly global international cigarette brand and has been re-invigorated since the spin through a number of important strategic initiatives, including its new architecture. A second phase in the brand’s evolution, called Architecture 2.0, is now under way. The re-designed Marlboro Red cigarette delivers a superior round taste and uses innovative, Firm Filter technology for a consistent smoking experience in modern packaging. We launched Marlboro Red 2.0 in the EU Region and in other key markets in 2014. The roll-out is being expanded to additional geographies this year. Qualitative research confirms that adult smokers find the new Marlboro Red delivers fully on our objective to be smoother-tasting and higher in quality, achieves a better gender balance and attracts competitive adult smokers. The following video illustrates this quality message. We are now extending the Marlboro 2.0 Architecture to the Gold and Fresh lines. The second element in our Marlboro strategy has been to develop adult consumer-relevant innovations in order to widen the brand’s appeal. Our three most successful innovations generated a combined volume of over 24 billion units in 2014. These included the slightly slimmer and smoother-tasting Marlboro Touch. Last year, line extensions developed since the spin accounted for 14% of Marlboro’s volume. They have played an especially important role in the Asia and EEMA Regions. In Japan, for example, innovative line extensions accounted for 32% of Marlboro’s volume in 2014. The third element of our strategy has been the development and introduction of the Be Marlboro marketing campaign, which expresses the timeless Marlboro values of freedom, authenticity, confidence and leadership in a way that is relevant to today’s adult smokers and their evolving preferences and communications style. In 2014, Marlboro gained share in the EU and EEMA Regions and remained stable in the Asia and Latin America & Canada Regions. This enabled the brand to grow to reach a global cigarette market share, excluding China and the U.S., of 9.4%. While Marlboro performed strongly in 2014, the performance of Parliament was nothing less than spectacular. Volume increased by 5.6% to 47.2 billion units. Parliament is performing very well in its core markets of Eastern Europe and Turkey, where it retails in the above-premium category, thus generating higher unit margins than Marlboro. More recently, we have been successful in expanding Parliament in the Middle East. It has grown most notably in Kuwait, where it reached a market share of 6.5% last year. While we have been reinforcing our position in the higher margin premium and above-premium segments, we have also been strengthening our position in the important below-premium segments with L&M, Chesterfield and Bond Street. Backed by a new marketing campaign, which emphasizes the inclusive & and sign, L&M expanded its volume from 90.1 billion units in 2011 to 94.2 billion units last year. This growth was underpinned by its renewed success in Russia, where it increased its market share to 3.1% in 2014. This was achieved through product improvements, price gap management and a new marketing campaign. L&M has a good share momentum in a wide range of markets across all four Regions, as shown on this chart. The fastest-growing international brand in our portfolio is Chesterfield. Its volume increased by 22.6% last year to 42.1 billion units. This growth was driven by significant share gains in three markets in particular; Italy, Poland and Turkey. The strength of our brands has been reinforced by the development and successful roll-out of a new commercial approach, which, we believe, provides us with a sustainable competitive advantage. The total transformation of our commercial operating model has already been implemented in 48 markets that accounted for over three quarters of our adjusted OCI in 2014. This involved revisiting distribution and key account management practices and the training of some 11,000 employees. The key elements of our new commercial approach are an increased adult smoker focus, enhanced marketing and sales collaboration, and field force empowerment. Conventional tobacco products will remain the key driver of our profit growth in the near to mid-term. However, our greatest growth opportunity lies in the area of Reduced-Risk Products. Let’s take a look at the science behind our RRPs. To understand why they may have the potential to reduce individual risk and population harm, we need to look at how combustible cigarettes work. When a conventional cigarette is lit, the tobacco reaches temperatures of more than 800 degrees Celsius, equivalent to nearly 1,500 degrees Fahrenheit, and this leads to the generation of smoke that contains more than 7,000 constituents. About 100 of these smoke constituents have been identified as harmful or potentially harmful constituents, or HPHCs. The key principle around which we designed our RRPs is to heat tobacco without burning it or to vaporize a liquid containing nicotine, in order to create a flavorful nicotine-containing aerosol, while significantly reducing the generation of HPHCs. We have a multi-technology product portfolio that addresses a wide range of adult smoker preferences. Each of our product platforms is designed to significantly reduce or eliminate the formation of HPHCs in the aerosol, while preserving as much as possible the taste, sensory experience, nicotine delivery profile and ritual characteristics of conventional cigarettes. We have recently introduced iQOS in two pilot markets and are on track to finalize our development of Platform 2 for a city launch in 2016. Platform 2 is a heat-not-burn product whose carbon tip is lit to generate the heat required to create an aerosol from heating tobacco. The following video shows how iQOS works. [Audio/Video Presentation] November 4th, 2014 marked an historic day for PMI with the pilot launch of the heat-not-burn iQOS system and Marlboro HeatSticks in Nagoya, Japan. The launch was carefully prepared through the hiring of dedicated sales executives, their training, marketing activities, education of and extensive engagement with the trade, and the development of a flagship store. The following video shows how we executed this successful pilot launch phase. [Audio/Video Presentation] In late November, we also launched iQOS and Marlboro HeatSticks in Milan, Italy. The kit sells for 70 Euros, or approximately $80. As in Japan, Marlboro HeatSticks were priced at parity with Marlboro cigarettes. The product is available in some 430 stores in the Milan area. We introduced iQOS in Japan and Italy without a reduced risk claim, although, as I will explain, we are carrying out a very comprehensive assessment with the aim of substantiating such claims in the future. The current marketing of iQOS focuses on innovation and product convenience benefits such as no ash and less smell. Although it is early days, the preliminary results are ahead of expectations. In Nagoya, the deployment of our marketing program has helped to rapidly build awareness for iQOS and generate positive word of mouth. By the end of December, we reached 34% prompted awareness among adult smokers, strong trial and solid market penetration. In Milan, where our communication opportunities are more limited, awareness building is progressing steadily, reaching 16% by the end of December. This is mainly driven by our one-to-one adult consumer engagement and trade support. We are very encouraged by the level of device purchases after adult smokers have tried the product. Given the positive initial performance of iQOS and Marlboro HeatSticks, we are confirming our plans to commence national expansion in Japan and Italy, as well as pilot or national launches in additional markets, later this year. These launches will feature a new release of the iQOS device and new HeatStick variants. The new iQOS device incorporates feedback from the pilot markets and features a variety of colors and textures. The new HeatStick variants will enhance and complement our current offerings and will broaden the product’s appeal amongst adult smokers. While we are currently marketing iQOS based on its attractive innovative features and product convenience benefits, our goal remains to make scientifically substantiated reduced exposure and reduced risk consumer communications. To substantiate such claims, we are continuing to establish robust evidence based on state-of-the-art science. As our evidence packages evolve, we will determine the claims we are able to make, if any, based on existing laws and regulations and, as we are doing already, engage with regulators and share our evidence with them. In 2014, we completed the clinical phases of eight short-term clinical studies conducted with iQOS. During the first half of this year, we will finish the analysis of all the data collected from this set of studies and expect to have the scientific evidence necessary to confirm the reduced exposure potential of iQOS. We are about to start our longer-term clinical studies on exposure response and cessation. We expect to have the results of these studies available in the second half of 2016. We are on track with our Perception and Behavioral Assessment program. This research allows us to develop appropriate marketing and labeling that convey the appropriate risk perception by adult smokers, and to verify that certain groups, including never smokers and former smokers, understand that PMI’s RRPs are not intended for them. The final stage in the process will be post-market studies and surveillance based on FDA Guidance and well-established scientific standards to assess the patterns of iQOS use. We are very excited about the potential of iQOS and our portfolio of heat-not-burn and e-vapor products. We believe that heat-not-burn products will provide adult smokers with the best alternative to cigarettes based on taste, satisfaction and ritual. We believe that we have a significant head start over our competitors in terms of product development, scientific know-how and technology. Given the promising initial results from marketing iQOS without any health benefit, I am sure that you can appreciate the even greater opportunity if we are able to scientifically substantiate the reduced risk potential of such a product. As we have previously mentioned, the markets currently in scope for our contemplated launches over the next five years represent aggregate total cigarette consumption in excess of one trillion units. Assuming that 3% to 5% of this adult smoker base, net of cannibalization, fully adopts our RRPs, this implies a potential incremental volume for PMI of some 30 billion to 50 billion units. Based on our strong preliminary results, we view this as a conservative projection. However, we will know more regarding the scale and timing of the likely financial benefits at the end of this year once we have completed our city launches and national roll-outs. Our RRP portfolio also includes other nicotine-containing products. Platform 3 creates an aerosol of nicotine salt formed from the chemical reaction of nicotine with a weak organic acid. Platform 4 is our e-cigarette or e-vapor product platform. Further to participating in the existing e-vapor category with the acquisition of Nicocigs in the UK, as you heard this morning, we are preparing to launch Altria’s MarkTen product line-up under our license agreement. It is with great pleasure that I introduce to you PMI’s latest brand, Solaris. Solaris is the brand name we have chosen for the initial launch of Altria’s MarkTen e-vapor products outside of the U.S. The Solaris brand name conveys a sense of technology and positive energy. Solaris features Nu Mark’s unique FourDraw Technology, which brings an extra dimension to enjoyment, with four holes in the mouthpiece creating a smooth flow and a remarkably full and rounded vaping experience. We will introduce Solaris in Spain next month. Strengthening our business remains our top priority as we believe doing so will provide our shareholders with a superior return over time. We’re also fully committed to returning around 100% of our free cash flow to our shareholders. We are currently operating in a debt level corridor that is close to the maximum that still allows us to maintain our single-A credit rating, with all the benefits this provides in terms of financial flexibility and preferential interest rates. Hence, our ability to raise further debt is limited. Furthermore, both our free cash flow and our borrowing ability are being compressed by the currency headwind that unfavorably impacted our net earnings by $1.3 billion last year. We remain steadfast in our determination to provide an attractive dividend to our shareholders. The 6.4% increase, approved by our Board of Directors in September last year, brought the cumulative increase since the spin to approximately 117%. As you can see on this chart, this is the second-largest dividend increase among our Compensation Survey Group. At the market close last Friday, our dividend yield was 4.8%. This is above its average level for the last five years of 4.2%. Not only is our current dividend yield above its historical average, the spread between our yield and that of both our proxy peers and 10-year U.S. Treasury Notes is also well above the average for the last five years, with a difference of 161 and 281 basis points, respectively. In 2014, we paid out $6 billion in dividends to our shareholders and spent a further $3.8 billion to repurchase 45.2 million shares. In view of the continued volatility in exchange rates, we are focused on managing our cash flow prudently, notably through the judicious management of working capital and capital expenditures. We do not currently envisage any share repurchases in 2015, although we will revisit the potential for such repurchases as the year unfolds should the currency environment improve. In conclusion, our business fundamentals are strong. We have positive market share momentum, driven by our superior brand portfolio. Our strong brands are the foundation of our pricing power. We will seek to further enhance operating margins by limiting cost increases, excluding currency and RRPs, to just 1% in 2015. Presently, exchange rates are a key challenge to our reported growth. Our solid business fundamentals are further reinforced by iQOS. The pilot launches are going very well with market penetration and other initial data at levels generally in line or above our expectations. Our free cash flow remains robust and we are able to provide a generous dividend and an attractive yield in comparison to our peers and other investment alternatives. Overall, we are optimistic about our business outlook in 2015 and are targeting an improved currency-neutral adjusted diluted EPS growth rate of 8% to 10%. Thank you for your interest in our company. I will be happy to answer your questions.

Q - Christopher: Let’s start with Michael Lavery here.

Growe: Let’s start with Michael Lavery here.

Michael Lavery : Just looking at your organic growth it was roughly flat last year and the year before a little bit stronger, so can you point to a couple of areas where you see the sharpest acceleration that helps to drive how you expect to get to the six to eight organic EBIT and eight to ten EPS especially without buybacks and with the headwinds in places like Korea and the investment spending on iQOS.

Jacek Olczak: Sure, thanks. The biggest driver which we had last year clearly coming from the Philippines in terms of the margin drive the top line flowing through the bottom line was coming from the Philippines, was coming from Japan, it was coming from Italy. As you have heard, you must have heard in our earnings call and in today’s remarks. I mean it was the hardest year -- hard year here for us, that’s PMI but we’re very pleased with what we’ve achieved and at the tone of the note in which we finish 2014. I mean, we feel we’re in a much better shape on how we address all of this market specific issues and none of them seems to remain any drag or any significant drag if at all. I mentioned in Philippines the situation is getting better as bottom the market finally took a while but since the tax sticker implementations and some of our governmental enforcement actions that bringing the result. Japan surely stabilized, the year was essentially, if not in Italy which we had this surprising tax issue, yield frankly speaking has five quarters in a row of improving total industry trends and this is very much also supported by other very stronger market share growth, not only Marlboro but L&M, Chesterfield, et cetera. And our e-markets has momentum clearly in Russia, is a country -- is a market on our watch-out list, But momentum from [human] momentum from L.A. I mean it makes us deliver that returning to 8% to 10% EPS growth this is something absolutely realistic for us this year.

Michael Lavery : And just one follow up on a Philippines as you talked about the pricing coming up with the bottom end and that's where most of the pressure has been, but the taxes have been going up on all the brands and the pricing at the top has been steady. Do you see upside for that as well?

Jacek Olczak: You saw in our chart that the earnings release in today's remarks that the price drops in Philippines’ are significantly closed and that's the development of the last say two months, three months. So I believe once we will go into the direct territory when we’re comfortable with the price drops, I mean literally it is open on the pricing opportunity, we can't talk about our future pricing moves but about what drags us on the pricing is this, despite GAAP openings in the past. So once we recovered from that situation I think we've to look more positively into Philippines.

Unidentified Analyst : Thank you, just a quick question for you on Marlboro. I'm just curious, there are number of different factors that led to Marlboro's performance in 2014 and thinking like Japan and markets for there is some significant reductions in inventory, I'm just curious if the brand like excluding those factors if you know would it share, would have grown. I'm also curious like with Marlboro 2.0 and markets for which it’s been released, are you seeing like an accelerated market share growth is there such that you roll it out to more markets this year, you may see accelerating market share for the brand?

Jacek Olczak: Well, I think the best testimony to the strength of Marlboro is that the growth of Marlboro in the EU region because if you take from a consumer perspective, the consumer is clearly not in a full recovery on a macro side and you can move the Marlboro up in terms of the market share. I think that's essentially the market, I think Marlboro 2.0 that's the commercial approach as the number of our initiatives which we took behind the entire brand architecture. Just to correct one thing. The inventories, the difference between the shipments and in-market sales in Japan doesn't have an impact on the market. I mean we have the decline of the Marlboro in Japan but Inventories movement doesn't impact that number. Philippines obviously was a drag for obvious situation, so we lost quite a lot of volumes in Philippines which has brought the share down. But I think it's not an equity problem with Marlboro in Philippines, completely other factor. So this one, we’re actually very confident that Marlboro should and will be growing in Philippines.

Christopher Growe: Let's go all the way this way, we'll come back at you. Let’s do Bonnie and then we’ll come back at you.

Bonnie Herzog : Okay, I have a question on how you're positioning RRP within your company over the long term. On one hand it's going to eventually cannibalize your combustible cigs business which generates very attractive margins, but then there is possibly an incentive fee to do this given the more favorable tax structure you might have for this product for many key markets. So could you just kind of walk through that for us in terms of how are you going to start this for the next few years?

Jacek Olczak: Bonnie, it's a great question. Yes the tax structure are more favorable today, I mean we're paying Marlboro HeatSticks in Japan base about 15% to 20% lower tax than a regular Marlboro and it's even bigger tax differential in Italy and is obviously supporting the margins -- much more important presume here to beginning where obviously our cost are not where they will be once we will reach the critical mass, the [indiscernible] factory is completed et cetera. There is a lot of also cost when you launch the product first time in the market so this is helpful. We have said and made it very clear in the past and this is what we touched in top market so far. This is a product which deserves the premium positioning, so the price territory is Marlboro around Marlboro. That is obviously already gives you above average margins for Philip Morris, but also for the industry. So even if we just stay at that level that -- take the tax out of the equation and just look at targeted cost structure going forward, price positioning I mean we've product which is equally not better than the Marlboro going forward for the margin accretion. Now if I add the tax for the same than obviously that accretion is even high. Now our excitement at PMI, there is a tremendous excitement about this product in PMI is not only from the perspective of a unit margins because obviously we will have the product with a high unit margins but also I think with the potential of what that product can do for the entire category. So I think is the volume potential it’s more than just the unit margin.

Bonnie Herzog : Okay, thank you for that and just a quick question on Solaris, do you think that you're going to be rolling out in Spain that you just mentioned? Where are you going to price that, would be my first question and is it going to be the exact same product just with the different name than MarkTen or you making any modifications to that product or will there be any --?

Jacek Olczak: I think it's basically the Nu Mark’s MarkTen technology. I think that product is I think if I compare this product to what is available in the market today, I think it would compare quite favorable to the most of the products in the market, we all know what is the inefficiency of the technology or short comings of this technology today. As you know we're working through come up with an improved technology, this is our just the first step in doing the whole journey. When it comes to price positioning you know Philip Morris, I mean I have not disclosed the price, but we usually like the higher pricing territory, there's no surprise for you.

Christopher Growe: Let's go to Judy and then we will come to you Matt.

Judy Hong: Two questions. First so just thinking about Russia in 2015 as you think about your ability to achieve fixed 3% organic operating profit growth, how big a risk factor is Russia particularly as it relates to last year when you saw pretty strong price and profit growth in that market?

Jacek Olczak: I mean that so far the momentum in Russia continues. I mean that Russia is not maybe on the risk side, it's more on the watch-out side. I mean there are many components which can come to play in Russia and to some extent only known to us. I mean it's the ruble strength or weakness, it's how that weakness of ruble is going to translate into the other macros in the economy, the [indiscernible] oil price has an impact on the Russian state budget and it's all this issue about the Ukraine sanctions et cetera, so you have a number of variables which are around or in Russia and we just have to watch it very carefully. So far, we are not observing any change in the trends in what we had last year. Okay so, the way I look at that thing is that, obviously PMI had this fortunate or unfortunate experience that it seems EBIT will hit, if it will happen, that this a second crisis in the modern history in Russia. We had that unfortunate experience to be a part of the first crisis, if I confer how do we stand today in Russia PMI versus that some years ago, I think our portfolio; our infrastructure is in a much better shape. Our distribution is better, portfolio is vastly better that we hedged this time, which I think naturally hedges your with the Parliament because we will always have that super premium type of a segment there, but obviously hedging give more -- should there be acceleration or sudden down trading et cetera [indiscernible]. So I think portfolio wise, infrastructure wise I mean we -- I think we should be okay. But there are few unknowns which maybe beyond our control, but so far we don't observe any change in the trends I mean look at the total market December, January I know is always distorted around the tax price changes but nothing which will spook me if --which will signal something wrong to me. Pricing was strong last year in Russia, I don’t see the reason why it shouldn't happen this year if tax structure clears, the government has a focus on [anti-releasing] activities, so none of these components has changed but the other externalities which we will have to watch carefully.

Judy Hong: And then just on currency I really appreciate a lot of these disclosures that you have given on the local versus non-local cost. I guess as we think about some of the markets like Turkey and Russia where there is a bigger portion of non-local cost and acknowledging that some of that is leave cost that you can't really control, but are you actively looking ways of optimizing manufacturing footprint, overhead expenses to really line up more on the local cost side?

Jacek Olczak: Yes absolutely we do I mean the last year we mainly talked about the [indiscernible] facilities, the European one of the largest facilities in Australia, but there were much more restructuring which we have initiated which will continue this year. Fierce revenue, we're continuously looking on the infrastructure installed and to making sure that this somehow goes parallel with the market demand with the capacity required. But you need to -- we are selling a quality cigarette regardless of the price segments in which we sell them, these are quality cigarettes and this is how those brands also have that pricing power. And I think that is starting to compromise because of the currency difficulties and replacing some of the critical materials with something which is cheaper may buy me a quarter or two but then I’ve lost the decade, so this is not our philosophy.

Christopher Growe: We will go to Matt and then we will come to Vivian.

Matthew Grainger: I just wanted to follow-up on Judy's question first on the sourcing structure and cost structure and the one thing that kind of stood out to me is that there has been a very, very gradual shift it seems like it's becoming slightly more local overtime, but within that maybe there’s individual markets like Russia where if we look back five years ago I think it was 40% local resource cost and now it's 65%. So I guess first question is, what were you able to do there over the past five years which shifted the balance?

Jacek Olczak: We have a more flexibility on some direct materials notably related to materials and obviously now you have the suppliers which also making their investment in the country, so you can bring their cost to the local. It's also I think overtime that some of the cost which in the past -- from the discretionary type of a cost which you only could procure from outside are being given services and then you can procure them today in the local currency. So the question is not on the phenomena in Russia but in many developing countries over a period of time you can see that the services, the labor supplies et cetera, I mean that you can make them available on the local currency.

Matthew Grainger: Just a follow-up on the excise tax environment. The improvement that you saw in Italy I think it was an improvement maybe it was a little bit less of a shift than you would have hoped for initially, so I guess the question on Italy is, is that dialogue still open, can you continue pushing for ongoing annual improvement or should we not get our hopes up and then any other similar market for you highlight where you’re hoping for some -- to implements some change over the next year or two?

Jacek Olczak: Matt I’m smiling because Italy is the country where you are in an ongoing dialog always, so you have to be in this ongoing dialog. I think it’s very important step, is always we’ve this experience in the past in Spain for example and in the countries which were very stable in the higher tolerance structures are not seeing the benefit of a more specific MET, Minimum Excise Tax structures, I mean the most critical element is to make the first step and once they go into this renovation this change the whole philosophy, the whole thinking about my tax revenues as a state, et cetera. So my experience -- our experience is always the most difficult is to make the first step, but Italy, believe me you have to -- dialog is critical in Italy.

Vivien Azer: My question has to do with Marlboro innovation, clearly it is a much bigger piece of the business today and its driven nice improvement in your market shares around the world and hopefully in stabilization of Asia specifically, but as you think about your innovation pipeline going forward do you need to accelerate the combustible innovation specifically around Marlboro as landscape gets increasingly competitors and then second to that how do you balance that investment relative to RRPs?

Jacek Olczak: I mean it’s important is to bring the -- it is obvious what I will say, but it’s very important to bring the relevant innovations to the market and I mean you can burn a lot of money by throwing the things which don’t matter and much more like a promotional additions of the product there’s a lot of efforts, maybe you have a 10s of the points of the markets for short period of time and it’s not worth. Actually I think over period of time it rolls in equity of the brand, consumers don’t treat a burnt service. I think that Marlboro has a very solid pipeline of their consumer relevant innovations, being on the filter, being on there’s new mantle segment which has a lot of tractions in many geographies. The packaging -- I mean the things the [silk] packs et cetera, which protects the product from countries where the humidity is different, temperatures are much higher and it supports or enhances the product maintenance of the product quality. But it is also important that once you have the strong portfolio like PMI we can cascade this innovations to other brands, and so obviously Marlboro will very often will have the priority, but then we will not stay shy of deploying the same innovations maybe with some tweaks et cetera to Parliament , to Chesterfield. And that helps a lot because yes there is a cost of developing something new but later on I don’t incur that cost once I roll this out, so this is how we look at it.

Vivien Azer: And a quick follow up you mentioned the Japanese yen hedged at 60% of sales, is that roughly hedged equally across the four quarters of 2015 or is that?

Jacek Olczak: Yes it is.

Christopher Growe: Eric and then Ann behind him.

Unidentified Analyst: With respect to Australia the competitive environment’s been difficult you’ve lost share in the low price segment so I’m wondering how are you characterizing the outlook for 2015 is this an area in which you’re going to deploy the new commercial approach is that something you see it potentially effective in addressing some of the problems you’ve had in Australia thank you.

Jacek Olczak: I mean Australia actually on the commercial approach there are [indiscernible] for some time sales forces, there’s a lot of key accounts trade cigarettes for all the Australia that requires more of the negotiations pushing the brand pushing the product at the trade level so I think on this one we were pretty strong. I mean that there was some price moves at the bottom of the market very recently I mean at beginning of this year we know that the excise goes up the second -- sorry the scheduled excise increases in the March -- beginning of March, March 1. I mean that the prices ahead of that excise increase start moving up, it’s always been move in the right direction. So I think the worse for us -- I assume the worse for us is Australia is behind us and the things will come to some normality.

Christopher Growe: We’ll go to Ann right behind you.

Ann Gurkin: I have two questions on your latest conference call I think you talked about expectations for the global industry volumes to return to more historic declines rate of 1% to 2%. What should I think about risk to that number that could throw it off -- to make it weaker than expected, what should we watch for the markets any taxation if you don’t mind?

Jacek Olczak: Well I mean in last year the global was 3 point slightly above 3% and I think it should improve this year 2015, but you have to adjust going to composition of what is global and if you have the Russia more or less going into direction of 9% to 10% that’s an estimate today I mean Russia by size already will keep that global volumes around 3% peripheral. I think the global will be below 3%, will it go to the 1% to 2% which we predict is more of the mix of the long-term trend maybe this is not the 50. But we should see the improvements there I mean even if I take into consideration the Russian estimate for a time being we’ll have better volumes in EU, Indonesia so far I mean and I think there’s a slowing down in the trend. You have a number of geographies when the volumes are growing 30. So all-in-all I think it will be better than the last year but I don’t think it’s going to come closer to 1% to 2% which we have in our mid to long-term.

Ann Gurkin: Costs can you -- I think overall cost for 2015 should I can on that 3% to 5% increase range or can you help me think about cost increases?

Jacek Olczak: No, we said that for 2015 our total cost ex-RRP and ex-currency obviously should not go up, should not increase more than 1%. We’re very confident it is one. Look we have the number of the productivity initiatives from the last year which I’m rolling out in terms of a benefit in 2015 I mean [indiscernible], Australia the fact was closure. I think we feel very comfortable the way we managing now the lift prices and the close prices, so this is sort of inflationary pressure on that component, I should be expecting negatives here and I think going to ‘16 to ’17, broadly the cost should be in the range of 1% to 3% increases. I mean we have a number of productivity initiatives in the pipeline than we can hold the cost increases for this level.

Christopher Growe: We will leave the presentation and thank you very much again for your participation here and we’ll have breakout session for more Q&A. Thank you.