MO
#All right, good to talk to you.
Sure.
Let me separate out, for purposes, my answer: this application, then the process generally.
I think that's probably the way to do it.
We remain ---+ I think you've seen PMI say this ---+ that I think the schedule remains for late third quarter, perhaps fourth quarter of this year, to file the application, which is consistent with, I think, what we've said before.
You know, these applications are quite voluminous.
There's a lot of science and clinical ---+ I'm sure you've been briefed on that; it's a lot of work.
I don't want to comment about talking to FDA about this application, but generally speaking, I can tell you how it works, which is: when you want to have applications like this, you want to partner with FDA.
And so we communicate with FDA regularly on our issues and try to get feedback from them.
I think in the pharmaceutical side, for example, it's well-known that if you're going to design clinical trials, you want to go in and talk to your regulator, and show them your trial protocols, and get feedback on that before you go to that time and expense.
So it's ---+ I would say generally it's working about the same way.
And that's what you would expect if you're going to have a good relationship with your regulators, which is what we see.
Yes, I think there are some questions to be worked through there.
I think at a very high level, without getting ahead of ourselves, I think if it's characterized as a cigarette ---+ which, as you know, there's the device, and then the cigarette, which is warmed.
The cigarettes would be covered by the MSA.
I think that's the thinking.
Let me just start, and then I'll hand it to <UNK> for a word of detail.
Remember, the productivity initiative consists of a couple of pieces, one of which is the organizational realignment.
That is largely completed.
And our organization is now really in place and going.
And then there are other SG&A savings.
<UNK>, you may want to say a word about that.
Yes, <UNK>.
We had a little bit of those savings in the first quarter, but you are correct in thinking that the majority of those savings will be progressing as we move through the year.
And that was all incorporated in the guidance.
Thanks for calling, <UNK>.
Sure.
Let's start with the competitive environment.
It's always competitive, and it continues to be competitive.
But I think you're right that there hasn't been a marked change in that regard subsequent to some owners getting new brands.
They're executing the strategies that I think they said they would execute.
They are the strategies we would expect for them to execute.
And as you might expect, we have very good plans in place.
You know, at a very high level what I would say is: we have been the market leader for decades.
There's a reason for that, through thick and thin, which is we have very good people.
We have the leading brands and the leading positions.
And so while we respect our competition, I assure you that our people are ready to compete in this new environment.
We haven't seen anything that's markedly different there.
You know, with respect to Marlboro, I'm tempted but I won't reprise the presentation that we put on in CAGNY just a few months ago about all the many strengths of Marlboro.
You're right, <UNK>.
It's modest share momentum over time, and a quarter is not over time.
I think when we were talking about this several weeks ago, we looked back, and Marlboro has actually grown about 2 full share points if you look back from the period, call it, 2007/2008 to date, which is terrific share performance for a brand that's as big as that.
You know, one way to look at the competitive environment is how PM USA did in the quarter.
So just to call out, again, a few of the highlights: it grew its income more than 9% over a tough comp.
It expanded its margins.
It had net pricing realization in-line with the long-term trends.
So it's a terrific performance, despite the fact that we have a transaction, and there are some new owners of new brands out there.
I think that's how we'd look at it.
Yes, thanks for the question, <UNK>.
Nothing significantly unusual in that.
You hit the first point, which was volume was up, so that drove it up higher.
And then every year, we have the inflation factor that gets topped on for the MSA.
So those are the two major drivers of MSA for the quarter.
But thanks for your question.
See you.
<UNK>.
Yes, thanks for your question.
No, no change in strategy or philosophy.
Look, we want to maintain an investment-grade credit rating, and that's what we strive to do.
We are pleased with the upgrades, because we think it's recognition of the strong balance sheet that we have and the strength of the businesses.
But yes, no change in the underlying strategy.
Thanks for calling.
Yes, thanks for your question.
Here's the way we think about it.
We feel very comfortable where we are at.
We always monitor market conditions and try to take advantage of market conditions.
So I'm not going to commit to any future actions one way or the other, but that's the way we think about it.
We are comfortable where we're at, but we do monitor the market conditions.
Sure.
Thanks for those, <UNK>.
Look, we did have an extra shipping day for PM USA, so it obviously flattered the volume a little bit.
We have one fewer in the fourth quarter, so on a yearly basis, which is how we think about it, it will wash itself out.
On L&M, I would say that it's doing exactly what we want it to do.
We want to have L&M participate in the declining discount segment.
That industry segment continues to decline as the premium effect in the category obtains.
But L&M is doing a very good job there, but we don't want to grow the discount category.
And L&M is doing exactly that.
I read with interest and listened to the reports about Director Zeller.
I've seen his presentation.
We continue to be encouraged and optimistic that the FDA will adopt the continuum of risk with respect to products.
It's the right thing for consumers.
I think it's the right public policy, and it should promote innovation.
You know, this is a category in which the FDA, in our opinion, should be promoting innovation to bring new products to smokers in particular.
And I thought it was great that Director Zeller went out and shared his views at the conference.
Thanks for calling, <UNK>.
Thank you, everyone, for joining our call this morning.
If you have any follow-up questions, please contact us at investor relations.
