-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, A9C/gxSEG73KclIY5V644cFU1SDFkmDZ+zsAJK3lJZ20FmxjMYLOpdzZMmd1rEuD 3vkabSBBE2OutSyMRgFiGA== 0000940180-97-000347.txt : 19970416 0000940180-97-000347.hdr.sgml : 19970416 ACCESSION NUMBER: 0000940180-97-000347 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970415 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PHILIP MORRIS COMPANIES INC CENTRAL INDEX KEY: 0000764180 STANDARD INDUSTRIAL CLASSIFICATION: FOOD & KINDRED PRODUCTS [2000] IRS NUMBER: 133260245 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08940 FILM NUMBER: 97581214 BUSINESS ADDRESS: STREET 1: 120 PARK AVE CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2128805000 MAIL ADDRESS: STREET 1: 120 PARK AVE CITY: NEW YORK STATE: NY ZIP: 10017 11-K 1 FORM 11-K PHILIP MORRIS DEFERRED P-S PLAN ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------- FORM 11-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1996 OR [_] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-8940 -------------------- Philip Morris Deferred Profit-Sharing Plan (Full title of the plan) PHILIP MORRIS COMPANIES INC. 120 Park Avenue New York, New York 10017 (Name of issuer of the securities held pursuant to the plan and address of its principal executive office.) ================================================================================ PHILIP MORRIS DEFERRED PROFIT-SHARING PLAN ANNUAL REPORT ON FORM 11-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 TABLE OF CONTENTS
Page(s) ------- Report of Independent Accountants..................................... 3 Financial Statements: Statements of Financial Condition as of December 31, 1996 and 1995.................................................... 4-5 Statements of Income and Changes in Plan Equity for the years ended December 31, 1996, 1995 and 1994................. 6-8 Notes to Financial Statements...................................... 9-21 Signatures............................................................ 22 Schedules: Schedule I - Investments as of December 31, 1996................... S-1-11
Other schedules are omitted because the information required is contained in the financial statements. Exhibits: 23. Consent of Independent Accountants. -2- REPORT of INDEPENDENT ACCOUNTANTS To: The Corporate Employee Plans Investment Committee of Philip Morris Companies Inc., the Corporate Employee Benefit Committee of Philip Morris Companies Inc., the Administrator, and all Participants as a group (but not individually) of the Philip Morris Deferred Profit-Sharing Plan: We have audited the accompanying statements of financial condition of the Philip Morris Deferred Profit-Sharing Plan (the "Plan") as of December 31, 1996 and 1995, and the related statements of income and changes in plan equity for each of the three years in the period ended December 31, 1996, and the schedule of investments as of December 31, 1996. These financial statements and the financial statement schedule are the responsibility of the fiduciaries of the Plan appointed by Philip Morris Companies Inc. (or its delegate). Our responsibility is to express an opinion on these financial statements and the financial statement schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the fiduciaries, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Plan as of December 31, 1996 and 1995, and the income and changes in plan equity for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. In addition, in our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information required to be included therein. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The fund information in the statements of financial condition and statements of income and changes in plan equity is presented for purposes of additional information rather than to present the financial condition and changes in income and plan equity of each fund. The fund information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. COOPERS & LYBRAND L.L.P. New York, New York April 11, 1997 -3- PHILIP MORRIS DEFERRED PROFIT-SHARING PLAN STATEMENT OF FINANCIAL CONDITION as of December 31, 1996 (in thousands of dollars) --------
U.S. Equity Interest Government International Index Income Obligations Philip Morris Equity Fund Fund Fund Stock Fund Fund ---------- ------------ ------------ ------------- ------------- ASSETS: Allocated share of Trust net assets $ 724,192 $ 686,005 $ 50,722 $ 757,242 $ 27,550 Employer contributions receivable 28,434 24,072 8,865 24,789 1,175 ---------- ------------ ------------ ------------- ------------- Total assets 752,626 710,077 59,587 782,031 28,725 ---------- ------------ ------------ ------------- ------------- Plan equity $ 752,626 $ 710,077 $ 59,587 $ 782,031 $ 28,725 ========== ============ ============ ============= ============= Growth Participants' Balanced Equity Loan Fund Fund Account Total ---------- ------------ ------------ ------------- ASSETS: Allocated share of Trust net assets $ 50,572 $ 36,719 $ 64,645 $ 2,397,647 Employer contributions receivable 1,577 1,559 90,471 ---------- ------------ ------------ ------------- Total assets 52,149 38,278 64,645 2,488,118 ---------- ------------ ------------ ------------- Plan equity $ 52,149 $ 38,278 $ 64,645 $ 2,488,118 ========== ============ ============ =============
The accompanying notes are an integral part of these financial statements. -4- PHILIP MORRIS DEFERRED PROFIT-SHARING PLAN STATEMENT OF FINANCIAL CONDITION as of December 31, 1995 (in thousands of dollars) ---------
U.S. Equity Interest Government International Index Income Obligations Philip Morris Equity Fund Fund Fund Stock Fund Fund ----------- ---------- ----------- ------------- ------------- ASSETS: Allocated share of Trust net assets $ 570,188 $ 607,329 $ 43,672 $ 672,808 $ 9,072 Employer contributions receivable 27,119 24,166 7,235 20,915 673 Interfund receivables (payables) (386) 447 716 (753) 16 ----------- ---------- ---------- ------------- ----------- Total assets 596,921 631,942 51,623 692,970 9,761 ----------- ---------- ---------- ------------- ----------- LIABILITIES: Distributions and withdrawals payable 641 1,010 65 812 1 Undistributed participants' loans 14 3 11 ----------- ---------- ---------- ------------- ----------- Total liabilities 655 1,010 68 823 1 ----------- ---------- ---------- ------------- ----------- Plan equity $ 596,266 $ 630,932 $ 51,555 $ 692,147 $ 9,760 =========== ========== ========== ============= =========== Growth Participants' Balanced Equity Loan Fund Fund Account Total --------- --------- ------------ ---------- ASSETS: Allocated share of Trust net assets $ 22,520 $ 17,592 $ 61,924 $2,005,105 Employer contributions receivable 892 897 81,897 Interfund receivables (payables) (23) (17) - -------- -------- -------- ---------- Total assets 23,389 18,472 61,924 2,087,002 -------- -------- -------- ---------- LIABILITIES: Distributions and withdrawals payable 4 2 76 2,611 Undistributed participants' loans (28) - -------- -------- -------- ---------- Total liabilities 4 2 48 2,611 -------- -------- -------- ---------- Plan equity $ 23,385 $ 18,470 $ 61,876 $2,084,391 ======== ======== ======== ==========
The accompanying notes are an integral part of these financial statements. -5- PHILIP MORRIS DEFERRED PROFIT-SHARING PLAN STATEMENT OF INCOME AND CHANGES IN PLAN EQUITY for the year ended December 31, 1996 (in thousands of dollars) --------
U.S. Equity Interest Government International Index Income Obligations Philip Morris Equity Fund Fund Fund Stock Fund Fund ------------- ------------- ------------- ------------- ------------- ADDITIONS: Employer contributions $ 28,433 $ 24,068 $ 8,864 $ 24,783 $ 1,175 Employee contributions 9,201 7,076 1,440 8,414 813 Allocated share of Trust investment activities: Interest income 5 41,640 2,923 875 1 Dividend income 31,315 Net appreciation (depreciation) in fair value of investments 134,965 (1,363) 143,433 1,743 ------------- ------------- ------------- ------------- ------------- 134,970 41,640 1,560 175,623 1,744 ------------- ------------- ------------- ------------- ------------- Total additions 172,604 72,784 11,864 208,820 3,732 ------------- ------------- ------------- ------------- ------------- DEDUCTIONS: Distributions and withdrawals (23,813) (32,396) (2,101) (21,486) (404) General and administrative expenses (284) (408) (89) (260) (67) ------------- ------------- ------------- ------------- ------------- Total deductions (24,097) (32,804) (2,190) (21,746) (471) ------------- ------------- ------------- ------------- ------------- Net transfers among funds 8,157 37,808 (1,282) (96,589) 15,728 Net transfers between plans 160 442 47 379 (5) Participants' loans (8,368) (6,586) (1,157) (7,645) (224) Participants' loan repayments 7,904 7,501 750 6,665 205 ------------- ------------- -------------- ------------- ------------- Net additions 156,360 79,145 8,032 89,884 18,965 PLAN EQUITY: Beginning of year 596,266 630,932 51,555 692,147 9,760 ------------- ------------- ------------- ------------- ------------- End of year $ 752,626 $ 710,077 $ 59,587 $ 782,031 $ 28,725 ============= ============= ============= ============= ============= Growth Participants' Balanced Equity Loan Fund Fund Account Total ------------- ------------- ------------- ------------- ADDITIONS: Employer contributions $ 1,577 $ 1,559 $ 90,459 Employee contributions 759 1,264 28,967 Allocated share of Trust investment activities: Interest income 3 2 $ 4,490 49,939 Dividend income 2,665 2,251 36,231 Net appreciation (depreciation) in fair value of investments 2,627 1,424 282,829 ------------- ------------- ------------- ------------- 5,295 3,677 4,490 368,999 ------------- ------------- ------------- ------------- Total additions 7,631 6,500 4,490 488,425 ------------- ------------- ------------- ------------- DEDUCTIONS: Distributions and withdrawals (924) (697) (2,735) (84,556) General and administrative expenses (24) (24) (1,156) ------------- ------------- ------------- ------------- Total deductions (948) (721) (2,735) (85,712) ------------- ------------- ------------- ------------- Net transfers among funds 22,148 14,030 - Net transfers between plans (51) 42 1,014 Participants' loans (296) (324) 24,600 - Participants' loan repayments 229 374 (23,628) - ------------- ------------- ------------- ------------- Net additions 28,764 19,808 2,769 403,727 PLAN EQUITY: Beginning of year 23,385 18,470 61,876 2,084,391 ------------- ------------- ------------- ------------- End of year $ 52,149 $ 38,278 $ 64,645 $ 2,488,118 ============= ============= ============= =============
The accompanying notes are an integral part of these financial statements. -6- PHILIP MORRIS DEFERRED PROFIT-SHARING PLAN STATEMENT OF INCOME AND CHANGES IN PLAN EQUITY for the year ended December 31, 1995 (in thousands of dollars) --------
U.S. Equity Interest Government International Index Income Obligations Philip Morris Equity Fund Fund Fund Stock Fund Fund ------------- ------------- ------------- ------------- ------------- ADDITIONS: Employer contributions $ 27,105 $ 24,142 $ 7,253 $ 20,929 $ 673 Employee contributions 7,375 7,305 1,261 6,038 112 Allocated share of Trust investment activities: Interest income 2 41,513 2,302 501 Dividend income 1 27,216 Net appreciation (depreciation) in fair value of investments 158,624 1,578 247,136 301 ------------- ------------- ------------- ------------- ------------- 158,627 41,513 3,880 274,853 301 ------------- ------------- ------------- ------------- ------------- Total additions 193,107 72,960 12,394 301,820 1,086 ------------- ------------- ------------- ------------- ------------- DEDUCTIONS: Distributions and withdrawals (28,843) (42,878) (3,400) (28,406) (6) General and administrative expenses (256) (395) (76) (234) (8) ------------- ------------- ------------- ------------- ------------- Total deductions (29,099) (43,273) (3,476) (28,640) (14) ------------- ------------- ------------- ------------- ------------- Net transfers among funds (6,174) (3,701) 2,975 (40,432) 8,705 Net transfers between plans 47 271 3 300 Participants' loans (8,072) (7,757) (997) (6,674) (40) Participants' loan repayments 6,644 7,227 609 5,388 23 ------------- ------------- ------------- ------------- ------------- Net additions 156,453 25,727 11,508 231,762 9,760 PLAN EQUITY: Beginning of year 439,813 605,205 40,047 460,385 - ------------- ------------- ------------- ------------- ------------- End of year $ 596,266 $ 630,932 $ 51,555 $ 692,147 $ 9,760 ============= ============= ============= ============= =============
Growth Participants' Balanced Equity Loan Fund Fund Account Total ------------- ------------- ------------- ------------- ADDITIONS: Employer contributions $ 892 $ 897 $ 81,891 Employee contributions 131 203 22,425 Allocated share of Trust investment activities: Interest income $ 3,426 47,744 Dividend income 856 978 29,051 Net appreciation (depreciation) in fair value of investments 406 (825) 407,220 ------------- ------------- ------------- ------------- 1,262 153 3,426 484,015 ------------- ------------- ------------- ------------- Total additions 2,285 1,253 3,426 588,331 ------------- ------------- ------------- ------------- DEDUCTIONS: Distributions and withdrawals (163) (38) (2,724) (106,458) General and administrative expenses (969) ------------- ------------- ------------- ------------- Total deductions (163) (38) (2,724) (107,427) ------------- ------------- ------------- ------------- Net transfers among funds 21,335 17,292 - Net transfers between plans 10 631 Participants' loans (120) (100) 23,760 - Participants' loan repayments 48 63 (20,002) - ------------- ------------- ------------- ------------- Net additions 23,385 18,470 4,470 481,535 PLAN EQUITY: Beginning of year - - 57,406 1,602,856 ------------- ------------- ------------- ------------- End of year $ 23,385 $ 18,470 $ 61,876 $ 2,084,391 ============= ============= ============= =============
The accompanying notes are an integral part of these financial statements. -7- PHILIP MORRIS DEFERRED PROFIT-SHARING PLAN STATEMENT OF INCOME AND CHANGES IN PLAN EQUITY for the year ended December 31, 1994 (in thousands of dollars) ---------
U.S. Equity Interest Government Participants' Index Income Obligations Philip Morris Loan Fund Fund Fund Stock Fund Account Total ------------- ------------- ------------- ------------- ------------- ------------- ADDITIONS: Employer contributions $ 25,514 $ 25,342 $ 5,365 $ 18,127 $ 74,348 Employee contributions 7,463 7,670 1,077 6,363 22,573 Allocated share of Trust investment activities: Interest income 3 39,718 1,434 153 $ 3,892 45,200 Dividend income 31 23,427 23,458 Net appreciation (depreciation) in fair value of investments 6,005 (567) 12,136 17,574 ------------- ------------- ------------- ------------- ------------- ------------- 6,039 39,718 867 35,716 3,892 86,232 ------------- ------------- ------------- ------------- ------------- ------------- Total additions 39,016 72,730 7,309 60,206 3,892 183,153 ------------- ------------- ------------- ------------- ------------- ------------- DEDUCTIONS: Distributions and withdrawals (37,150) (60,486) (4,190) (38,379) (5,370) (145,575) General and administrative expenses (206) (341) (67) (174) (788) ------------- ------------- ------------- ------------- ------------- ------------- Total deductions (37,356) (60,827) (4,257) (38,553) (5,370) (146,363) ------------- ------------- ------------- ------------- ------------- ------------- Net transfers among funds 3,184 25,329 (1,334) (27,179) - Net transfers between plans 66 108 5 35 5 219 Participants' loans (6,178) (6,473) (759) (4,535) 17,945 - Participants' loan repayments 7,442 8,021 587 6,058 (22,108) - ------------- ------------- ------------- ------------- ------------- ------------- Net additions (deductions) 6,174 38,888 1,551 (3,968) (5,636) 37,009 PLAN EQUITY: Beginning of year 433,639 566,317 38,496 464,353 63,042 1,565,847 ------------- ------------- ------------- ------------- ------------- ------------- End of year $ 439,813 $ 605,205 $ 40,047 $ 460,385 $ 57,406 $ 1,602,856 ============= ============= ============= ============= ============= =============
The accompanying notes are an integral part of these financial statements. -8- PHILIP MORRIS DEFERRED PROFIT-SHARING PLAN NOTES TO FINANCIAL STATEMENTS 1. General Description of the Plan: The Philip Morris Deferred Profit-Sharing Plan (the "Plan") is a defined contribution plan maintained for the benefit of eligible non-union salaried and hourly employees of Philip Morris Companies Inc. (the "Company"), and certain of its domestic subsidiaries, including Philip Morris Incorporated and certain of its subsidiaries ("Philip Morris"), Miller Brewing Company and certain of its subsidiaries ("Miller"), Philip Morris Capital Corporation, Philip Morris Management Corp., and certain headquarters employees of Philip Morris International Inc. (collectively, the "Participating Companies"). The Plan is designed to provide eligible employees with an opportunity to share in the profits of their respective Participating Companies and to invest certain of their funds in a tax- advantaged manner. Employees of Kraft Foods, Inc. and its subsidiaries are not eligible to participate in the Plan. Eligible employees generally may make before-tax and after-tax contributions beginning on or after the January 1 following their respective dates of hire. Eligible employees who complete twenty-four months of accredited service are eligible to share in their Participating Company's contribution (the "Contribution") as described in Note 3. The provisions of the Plan are detailed in the official Plan document which legally governs the operation of the Plan. The administration of the Plan has generally been delegated to the Corporate Employee Benefit Committee of the Company (the "Committee") and the Senior Vice President, Human Resources and Administration of the Company (the "Administrator"). The Corporate Employee Plans Investment Committee of the Company (the "Investment Committee") is responsible for the selection of the investment options set forth below in which participants elect to invest their assets in the Plan and monitors the performance of these investment options. The Committee, the Administrator, and the Investment Committee are hereinafter collectively referred to as the "Fiduciaries". Assets of the Plan are co-invested with the assets of the Philip Morris Incorporated Deferred Profit-Sharing Plan (the "PMI Plan") and the assets of the Philip Morris Incorporated Deferred Profit-Sharing Plan for Craft Employees (the "PMI Craft Plan") in a commingled investment fund known as the Philip Morris Deferred Profit-Sharing Trust Fund (the "Trust") (see Note 7). Prior to June 20, 1995, participants had the option of investing their Plan Accounts (see Note 4) in ten percent increments in four funds. Effective July 10, 1995, participants have the option of investing their Plan Accounts in one percent increments in the following seven funds: EQUITY INDEX FUND - This fund is invested primarily in an index fund of stocks on a weighted average basis in approximately the same proportion as the Standard & Poor's Composite Index of 500 Stocks ("S&P 500"). -9- PHILIP MORRIS DEFERRED PROFIT-SHARING PLAN NOTES TO FINANCIAL STATEMENTS (continued) INTEREST INCOME FUND - This fund consists primarily of investment contracts entered into by Bankers Trust Company (the "Trustee") with financial institutions, each of which agrees to repay in full the amounts invested with the institution, plus interest. The assets of the Interest Income Fund are also invested in pools of mortgage-backed and asset-backed securities, corporate bonds, and obligations of the United States Government and its agencies. As an integral part of the purchase of each pool of these investments for the Interest Income Fund, a financial institution agrees to protect the pool to the extent its market value fluctuates from original cost, but not in the event of a default of any security in the pool. U.S. GOVERNMENT OBLIGATIONS FUND - This fund includes primarily direct obligations of the U.S. Government or its agencies, obligations guaranteed by the U.S. Government or its agencies, and fully insured bank deposits. The average maturity of the U.S. Government securities in the U.S. Government Obligations Fund is approximately five years. Prior to July 15, 1995, the average maturity of the securities in this fund was two years. PHILIP MORRIS STOCK FUND - This fund is invested in the common stock of the Company (the "Common Stock") and short-term temporary investments. INTERNATIONAL EQUITY FUND - This fund is invested primarily in common stocks of the foreign companies that make up the Europe, Australia, and Far East (EAFE) index. The approximate allocation of stocks in the fund is 62 percent in Europe, three percent in Australia, and 35 percent in the Far East (including 26 percent in Japan). BALANCED FUND - This fund is invested primarily in a diversified mix of domestic and foreign stocks, investment grade bonds, international bonds, and investment grade money market funds. In general, the assets of the Balanced Fund may be invested according to the following mix: 40 percent to 70 percent in stocks, 20 percent to 55 percent in bonds, and zero percent to 25 percent in money market instruments. GROWTH EQUITY FUND - This fund is invested primarily in stocks of domestic and foreign companies considered to have better-than-average prospects for long term growth and with a history of, or commitment to, regular dividend payments. None of the foregoing funds guarantees a return to the participant. Prior to June 1, 1994, participants could change their investment elections three times during each calendar year. From June 1, 1994 to June 20, 1995, participants could change their investment elections once each month. Effective July 10, 1995, participants can change their investment elections daily. -10- PHILIP MORRIS DEFERRED PROFIT-SHARING PLAN NOTES TO FINANCIAL STATEMENTS (continued) Any Contribution and participant contributions made to a Plan Account established on and after January 1, 1992, for which no investment direction has been given are invested in the U.S. Government Obligations Fund. In all other cases, the Contribution and any participant contributions made to a Plan Account for which no investment direction has been given are invested in the Equity Index Fund. Each participant may vote all the shares of Common Stock held in his or her Plan Accounts and invested in the Philip Morris Stock Fund. The Trustee will vote full and fractional shares of Common Stock in accordance with each individual participant's instruction. The Trustee votes those shares of Common Stock for which no or inadequate voting instructions have been received in the same proportions as the shares for which instructions have been received. At December 31, 1996 and 1995, there were 13,049 and 14,864 participants, respectively, some of whom elected to invest in more than one fund. Set forth below is the number of participants investing in each fund.
December 31, ----------- 1996 1995 ------ ---- Equity Index Fund 9,085 8,878 Interest Income Fund 7,551 8,041 U.S. Government Obligations Fund 2,468 2,416 Philip Morris Stock Fund 10,171 10,336 International Equity Fund 1,394 544 Balanced Fund 1,355 613 Growth Equity Fund 1,582 752
Each participant is at all times fully vested in the balance of all of his or her Accounts, which includes a Company Account and may include Personal Before-Tax, Personal After-Tax, Rollover and PAYSOP Accounts. 2. Summary of Significant Accounting Policies: Valuation of Trust Investments: Investments in common trust funds of the General Employee Benefit Common Trust of Bankers Trust Company ("GEBT") are valued on the basis of the relative interest of each participating investor (including each participant) in the fair value of the underlying assets of each of the respective GEBT common trust funds. -11- PHILIP MORRIS DEFERRED PROFIT-SHARING PLAN NOTES TO FINANCIAL STATEMENTS (continued) Investment contracts and the pools of mortgaged-backed and asset-backed securities and other investments held in the Interest Income Fund are recorded at their contract values, which represent contributions and reinvested income, less any withdrawals plus accrued interest, because these investments have fully benefit-responsive features. For example, participants may ordinarily direct the withdrawal or transfer of all or a portion of their investment at contract value. However, withdrawals influenced by employer-initiated events, such as in connection with the sale of a business, may result in a distribution at other than contract value. There are no reserves against contract values for credit risk of contract issuers or otherwise. The fair value of the investment contracts and the pools of mortgaged-backed and asset-backed securities and other investments at December 31, 1996 and 1995 was $1,027,592,000 and $910,649,000, respectively. The average yield and crediting interest rate of the Interest Income Fund was approximately seven percent for 1996 and 1995. The crediting interest rate for the pools of mortgaged-backed and asset-backed securities and other investments is reset periodically by the issuer based on the relationship between the contract value and the fair value of the underlying securities, but cannot be less than zero. The crediting interest rate for the investment contracts is either agreed-to in advance with the issuer or varies based on an agreed-to formula, but cannot be less than zero. Securities listed on an exchange are valued at the closing price on the last business day of the year; listed securities for which no sale was reported on that date are recorded at the last reported bid price. However, if trading in Common Stock has been suspended on the New York Stock Exchange and not resumed before the end of any trading day, the Trustee will use the composite price listed in The Wall Street Journal on the next business day. Securities that are not listed on an exchange are generally traded in active markets and valued by the Trustee from quoted market prices. Short-term temporary investments are generally carried at cost, which approximates fair value. Investment Transactions and Investment Income of the Trust: Investment transactions are accounted for on the dates purchases or sales are executed. Realized gains and losses are computed on the basis of average cost of investments sold. Dividend income is recorded on the ex-dividend date; interest income is recorded as earned on an accrual basis. In accordance with the policy of stating investments at fair value, the net appreciation (depreciation) in the fair value of investments reflects both realized gains or losses and the change in the unrealized appreciation (depreciation) of investments held at year-end (see Note 8). 3. Contributions: The Contribution for the year is accrued by the Plan based upon the amount to be funded each year in accordance with the defined contribution formula noted below. Participants' contributions are recorded in the period in which they are withheld by the Participating Companies. -12- PHILIP MORRIS DEFERRED PROFIT-SHARING PLAN NOTES TO FINANCIAL STATEMENTS (continued) The Contribution on behalf of eligible employees of Philip Morris who have met the twenty-four month service requirement is an amount equal to the lesser of (1) three percent of the Operating Profit (defined below) of Philip Morris, less the amounts allocated for participants in the PMI Plan and the PMI Craft Plan or (2) 15 percent of the aggregate participant compensation for such year of the participants employed by Philip Morris among whom the Contribution is to be allocated. The Contribution on behalf of eligible employees of Miller who have met the twenty-four month service requirement is an amount equal to the lesser of (1) three percent of the Operating Profit of Miller, or (2) 15 percent of the aggregate participant compensation for such year of the participants employed by Miller among whom the Contribution is to be allocated. The Contribution by Philip Morris, expressed as a uniform percentage of aggregate participant compensation, is allocated ratably among participants (the "Philip Morris Contribution Percentage") according to their individual compensation. The Contribution by Miller, expressed as a uniform percentage of aggregate participant compensation, is allocated ratably among participants (the "Miller Contribution Percentage") according to their individual compensation. The Contribution on behalf of eligible employees of any other of the Participating Companies is the greater of (1) the Philip Morris Contribution Percentage, or (2) the Miller Contribution Percentage, multiplied in either case by aggregate participant compensation for such year of the participants of these other Participating Companies among whom the contribution is to be allocated. The aggregate of the Contribution to the Plan and the contributions to the PMI Plan and the PMI Craft Plan may not be more than three percent of consolidated earnings of the Company and its subsidiaries before income taxes and cumulative effect of any accounting change and provisions for deferred profit-sharing and incentive compensation plans. Operating Profit is defined as the earnings of Philip Morris or Miller, as the case may be, before cumulative effect of any accounting changes, discontinued operations and extraordinary items, interest and other debt expense, income taxes, amortization of goodwill, minority interest, unallocated corporate expenses, the amount of any deduction used in computing such earnings for the Contribution to the Plan and the contributions to the PMI Plan and the PMI Craft Plan and contributions to any incentive compensation plan. However, due to limitations under the Internal Revenue Code of 1986, as amended (the "Code"), certain amounts for highly compensated employees are not contributed to the Trust but are instead recorded as liabilities of the Participating Companies. No contribution is required from any participant under the Plan. Participants may make contributions on a before-tax and after-tax basis to the Plan. If a participant has not made the maximum after-tax contribution, he or she may make an additional lump sum contribution, subject to certain statutory limits. The percentage of compensation available for these contributions may vary from year-to-year and by Participating Company. The -13- PHILIP MORRIS DEFERRED PROFIT-SHARING PLAN NOTES TO FINANCIAL STATEMENTS (continued) aggregate contributions actually made by participants may not cause the Plan to violate limitations on such contributions set forth in the Code. The Code also imposes a dollar limitation on the amount of before-tax contributions for a calendar year. For 1996, a participant's before-tax contribution was limited to $9,500; for 1997, a participant's before-tax contribution will be limited to $9,500, with a limitation in each year of eight percent of compensation (11 percent in the case of employees of Miller) on the total amount of before-tax and after-tax contributions. While the Participating Companies have not expressed any intent to discontinue making the Contribution, they are free to do so at any time. The Contribution and participant contributions are subject to specified limitations as described in the Code and the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). The Plan provides, in the event of a Change of Control (as defined in the Plan) of the Company, for a Contribution for the year in which the Change of Control occurs and for two years thereafter at least equal to the lesser of (a) the percentage of participants' compensation that was contributed to the Plan for the year prior to the year in which the Change of Control occurs or (b) 10 percent of the participants' applicable annual compensation. 4. Valuation of Participant Accounts: The Trustee maintains Accounts for each participant to reflect the source and the participant's share of the funds invested in the Trust:
Account Source ------- ------ Company Account Contributions Personal Before-Tax Account Before-tax contributions Personal After-Tax Account After-tax contributions Rollover Account Amounts transferred, directly or indirectly, from another plan qualified under Section 401(a) of the Code PAYSOP Account The account balance transferred from the Philip Morris Employee Stock Ownership Plan Loan Account Outstanding loans obtained from the Plan
At the end of each month (effective July 10, 1995, each business day), the Trustee determines the current fair value of each of the investment funds in the Trust described in Note 1. The fair value of each participant's share in the Trust is determined with respect to their Company, Personal Before-Tax, Personal After-Tax, Rollover and PAYSOP Accounts on the basis of their proportionate share in each investment fund. -14- PHILIP MORRIS DEFERRED PROFIT-SHARING PLAN NOTES TO FINANCIAL STATEMENTS (continued) 5. Withdrawals and Distributions: Participants may make withdrawals against their Company, Personal Before-Tax, Personal After-Tax, Rollover and PAYSOP Accounts in accordance with the provisions outlined in the Plan. All withdrawals by participants are subject to approval of the Committee (or other administrator of the Plan acting pursuant to the Committee's delegated authority) and will not be permitted if they would have the effect of disqualifying the Plan and the related Trust from exemption from taxation. Distributions are made only in the event that a person ceases to be a participant. Upon termination of employment, including retirement, a participant has numerous options available, as described in the Plan, with respect to his or her Company, Personal Before-Tax, Personal After-Tax, Rollover and PAYSOP Accounts. Normally, distributions are made within one month after such termination. In the event the Plan is terminated, distributions will be made in accordance with the current value of participants' Accounts under the direction of the Committee and in accordance with the Code. 6. Participants' Loans: The loan program permits participants to borrow from their Company, Personal Before-Tax, Personal After-Tax, Rollover and PAYSOP Accounts under the Plan in accordance with the provisions outlined in the Plan. A participant's Loan Account equals the principal amount of his or her loans outstanding. The principal amount of loan repayments reduce the Loan Account and are added back to the participant's Accounts originally used as the source of the loan. The repaid amount (including interest) is reinvested in the funds according to the participant's current investment authorization. Participants' loans are carried at the original principal amount less principal repayments. Participants' loan repayments receivable represent amounts withheld by the Participating Companies from participants' compensation and not yet remitted to the Plan. Amounts to be disbursed under employee loan agreements are recorded as undistributed participants' loans as of the loan agreement date. 7. Investments Held by the Trust: In 1996 and 1995, $1,014,000 and $631,000 were transferred into the Plan, net of transfers out of the Plan, respectively, from the PMI Plan and the PMI Craft Plan as a result of employees being transferred between hourly and salaried status. The Plan's allocated share of the Trust's net assets and investment activities is based upon the total of each individual participant's share of the Trust. The Plan's approximate allocated share of the Trust and its approximate allocated share of the net assets of each fund in the Trust at December 31, 1996 and 1995, were: -15- PHILIP MORRIS DEFERRED PROFIT-SHARING PLAN NOTES TO FINANCIAL STATEMENTS (in thousands of dollars) (continued)
1996 1995 ---- ---- Trust 68% 68% Equity Index Fund 70% 70% Interest Income Fund 65% 66% U.S. Government Obligations Fund 44% 45% Philip Morris Stock Fund 72% 73% International Equity Fund 87% 89% Balanced Fund 91% 90% Growth Equity Fund 87% 90% Participants' Loan Account 51% 53%
The Plan's approximate allocated share of the Trust's investment activities for the years ended December 31, 1996, 1995 and 1994, was 70 percent, 71 percent and 70 percent, respectively. Taxes and fees incurred by the Trust and most of the costs of administering the Plan and Trust paid to third parties are paid by the Trust. The following expenses are paid from the Plan's assets: investment management fees, brokerage commissions, trustee's fees, audit fees, recordkeeping fees and legal fees. For 1996 and 1995, the approximate amount of such expenses, expressed as a percentage of the average net assets of each fund under the Plan, are as follows:
1996 1995 ---- ---- Equity Index Fund 0.04% 0.05% Interest Income Fund 0.06% 0.06% U.S. Government Obligations Fund 0.16% 0.17% Philip Morris Stock Fund 0.04% 0.04% International Equity Fund 0.35% 0.08% Balanced Fund 0.06% 0.00% Growth Equity Fund 0.08% 0.00%
Investments that represented five percent or more of total Trust assets as of December 31, 1996 and 1995, were:
1996 1995 ---- ---- Philip Morris Stock Fund Common Stock $1,017,594 $896,063 Equity Index Fund GEBT Equity Index Fund $1,035,144 $819,834 Interest Income Fund Commonwealth Life Insurance Co. $149,205
The GEBT Equity Index Fund currently includes Common Stock. -16- PHILIP MORRIS DEFERRED PROFIT-SHARING PLAN NOTES TO FINANCIAL STATEMENTS (in thousands of dollars) (continued) At December 31, 1996 and 1995, the financial position of the Trust was:
1996 1995 -------------- -------------- Assets: Investments at fair value: Equity Index Fund: GEBT Equity Index Fund (cost $663,661 and $595,002) $ 1,035,144 $ 819,834 Interest Income Fund: Investment contracts (at contract value) (cost approximates contract value) 998,637 878,131 Short-term temporary investments (cost approximates fair value) 58,829 45,557 U.S. Government Obligations Fund: Federal agency obligations (cost $12,392 and $2,026) 12,212 2,048 Government securities (cost $100,977 and $81,944) 100,773 84,574 Short-term temporary investments (cost approximates fair value) 1,040 8,532 Philip Morris Stock Fund: Common stock (cost $517,740 and $413,322) 1,017,594 896,063 Short-term temporary investments (cost approximates fair value) 24,282 14,433 International Equity Fund: International Equity Fund (cost $29,618 and $9,831) 31,548 10,194 Balanced Fund: Balanced Fund (cost $53,125 and $24,452) 55,832 24,865 Growth Equity Fund: Growth Equity Fund (cost $41,359 and $20,349) 42,018 19,431 Other investments: Participants' Loan Account: Loans to participants 126,525 117,604 -------------- -------------- Total investments 3,504,434 2,921,266 Receivables: Investments sold 8,388 149 Interest income 9,211 7,741 Dividend income 10,826 10,040 -------------- -------------- Total assets 3,532,859 2,939,196 Liabilities: Investments purchased 6,116 5,013 Other payables 1,527 118 -------------- -------------- Net assets $ 3,525,216 $ 2,934,065 ============== ==============
-17- PHILIP MORRIS DEFERRED PROFIT-SHARING PLAN NOTES TO FINANCIAL STATEMENTS (in thousands of dollars) (continued) The changes in the Trust net assets for the years ended December 31, 1996, 1995 and 1994, were:
1996 1995 1994 ---------- ---------- ---------- Additions: Employer contributions $ 144,224 $ 127,873 $ 156,080 Employee contributions 38,823 33,393 29,484 Investment activities: Interest 72,270 69,274 63,760 Dividends 48,968 39,053 31,039 Interest on participant loans 8,642 7,005 6,379 ---------- ---------- ---------- 129,880 115,332 101,178 Net appreciation in fair value of investments 394,208 563,777 22,530 ---------- ---------- ---------- Net investment activities 524,088 679,109 123,708 Deductions: Distributions and withdrawals (114,236) (149,624) (267,720) General and administrative expenses (1,748) (1,466) (1,194) ---------- ---------- ---------- Increase in Trust net assets 591,151 689,285 40,358 Net assets: Beginning of year 2,934,065 2,244,780 2,204,422 ---------- ---------- ---------- End of year $3,525,216 $2,934,065 $2,244,780 ========== ========== ==========
-18- PHILIP MORRIS DEFERRED PROFIT-SHARING PLAN NOTES TO FINANCIAL STATEMENTS (in thousands of dollars, except per unit data) (continued) The number of employee participation units and the net asset value per unit for the funds at December 31, 1996 and 1995, were:
U.S. Equity Interest Government International Growth Index Income Obligations Philip Morris Equity Balanced Equity Fund Fund Fund Stock Fund Fund Fund Fund ------------ ------------ ------------ ------------- ------------- ------------ ------------ 1996: Net Assets $ 1,035,144 $ 1,057,368 $ 116,520 $ 1,059,496 $ 31,548 $ 55,832 $ 42,018 Number of participation units 146,462 309,144 44,421 138,398 28,324 44,725 34,944 Net asset value per unit $ 7.0677 $ 3.4203 $ 2.6231 $ 7.6554 $ 1.1138 $ 1.2483 $ 1.2024 1995: Net Assets $ 819,809 $ 923,894 $ 96,953 $ 920,488 $ 10,195 $ 25,000 $ 19,433 Number of participation units 142,492 287,928 38,587 156,242 10,047 23,140 18,627 Net asset value per unit $ 5.7534 $ 3.2088 $ 2.5126 $ 5.8914 $ 1.0147 $ 1.0804 $ 1.0433 Participants' Loan Account Total ------------- ------------ 1996: Net Assets $ 127,290 $ 3,525,216 Number of participation units Net asset value per unit 1995: Net Assets $ 118,293 $ 2,934,065 Number of participation units Net asset value per unit
-19- PHILIP MORRIS DEFERRED PROFIT-SHARING PLAN NOTES TO FINANCIAL STATEMENTS (in thousands of dollars) (continued) 8. Net Appreciation (Depreciation) in Fair Value of Trust Investments: The realized gains and losses on disposals and changes in unrealized appreciation or depreciation of investments in the Trust for the years ended December 31, 1996, 1995, and 1994 were:
U.S. Equity Government International Growth Index Obligations Philip Morris Equity Balanced Equity Fund Fund Stock Fund Fund Fund Fund Total ---------- ----------- -------------- ------------- ---------- ---------- ----------- 1996 - ---- Realized gains: Proceeds $ 154,267 $ 90,198 $ 912,475 $ 13,482 $ 17,103 $ 19,723 $ 1,207,248 Cost 107,599 90,187 732,182 13,036 16,517 19,686 979,207 ---------- ----------- -------------- ------------- ---------- ---------- ----------- Net realized gains 46,668 11 180,293 446 586 37 228,041 ---------- ----------- -------------- ------------- ---------- ---------- ----------- Unrealized appreciation (depreciation): Beginning of year 224,832 2,652 482,740 364 413 (919) 710,082 End of year 371,483 (384) 499,853 1,930 2,708 659 876,249 ---------- ----------- -------------- ------------- ---------- ---------- ----------- Increase (Decrease) 146,651 (3,036) 17,113 1,566 2,295 1,578 166,167 ---------- ----------- -------------- ------------- ---------- ---------- ----------- Net appreciation (depreciation) in fair value of investments $ 193,319 $ (3,025) $ 197,406 $ 2,012 $ 2,881 $ 1,615 $ 394,208 ========== =========== ============== ============= ========== ========== =========== 1995 - ---- Realized gains (losses): Proceeds $ 86,846 $ 170,836 $ 237,900 $ 1,592 $ 1,848 $ 2,211 $ 501,233 Cost 73,684 170,697 200,477 1,616 1,817 2,205 450,496 ---------- ----------- -------------- ------------- ---------- ---------- ----------- Net realized gains (losses) 13,162 139 37,423 (24) 31 6 50,737 ---------- ----------- -------------- ------------- ---------- ---------- ----------- Unrealized appreciation (depreciation): Beginning of year 9,957 (753) 187,838 - - - 197,042 End of year 224,832 2,652 482,740 364 413 (919) 710,082 ---------- ----------- -------------- ------------- ---------- ---------- ----------- Increase (Decrease) 214,875 3,405 294,902 364 413 (919) 513,040 ---------- ----------- -------------- ------------- ---------- ---------- ----------- Net appreciation (depreciation) in fair value of investments $ 228,037 $ 3,544 $ 332,325 $ 340 $ 444 $ (913) $ 563,777 ========== =========== ============== ============= ========== ========== =========== 1994 - ---- Realized gains (losses): Proceeds $ 712,663 $ 195,232 $ 161,885 - - - $ 1,069,780 Cost 481,914 195,625 142,757 - - - 820,296 ---------- ----------- -------------- ------------- ---------- ---------- ----------- Net realized gains (losses) 230,749 (393) 19,128 - - - 249,484 ---------- ----------- -------------- ------------- ---------- ---------- ----------- Unrealized appreciation (depreciation): Beginning of year 232,189 78 191,729 - - - 423,996 End of year 9,957 (753) 187,838 - - - 197,042 ---------- ----------- -------------- ------------- ---------- ---------- ----------- (Decrease) (222,232) (831) (3,891) - - - (226,954) ---------- ----------- -------------- ------------- ---------- ---------- ----------- Net appreciation (depreciation) in fair value of investments $ 8,517 $ (1,224) $ 15,237 - - - $ 22,530 ========== =========== ============== ============= ========== ========== ===========
-20- PHILIP MORRIS DEFERRED PROFIT-SHARING PLAN NOTES TO FINANCIAL STATEMENTS (concluded) 9. Tax Status: The U.S. Treasury Department has determined that the Plan, as amended and in effect as of June 1, 1994, constitutes a qualified plan under Section 401(a) of the Code and the related Trust is, therefore, exempt from Federal income taxes under the provisions of Section 501(a) of the Code. The Fiduciaries believe that the Plan continues to be administered in accordance with the applicable provisions of the Code. Therefore, participants will not be subject to income tax on the Contribution and before-tax contributions made on their behalf by the Participating Companies, nor on earnings credited to their Accounts until withdrawn or distributed. -21- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Corporate Employee Benefit Committee of Philip Morris Companies Inc., having administrative responsibility of the Plan, has duly caused this annual report to be signed by the undersigned thereunto duly authorized. PHILIP MORRIS DEFERRED PROFIT-SHARING PLAN (Name of Plan) By /s/ TIMOTHY A. SOMPOLSKI -------------------------------------- Timothy A. Sompolski, Chairman, Corporate Employee Benefit Committee of Philip Morris Companies Inc. Date: April 14, 1997 -22- PHILIP MORRIS DEFERRED PROFIT-SHARING TRUST FUND SCHEDULE I - INVESTMENTS as of December 31, 1996
Column A Column B Column C Column D -------- --------------- --------------- --------------- Face Amount Cost or Number Basis of Name of Issuer and Title of Issue of Shares/Units Investments Fair Value - --------------------------------- --------------- --------------- --------------- EQUITY INDEX FUND -- 29.54% GEBT Equity Index Fund -- 29.54% 608,639 $ 663,660,884 $1,035,143,779 -------------- -------------- Total Equity Index Fund 663,660,884 1,035,143,779 -------------- -------------- INTEREST INCOME FUND -- 30.18% Investment Contracts -- 28.50% (The amounts included in Column D for the investment contracts represent contract value, see Note 2.) Participation Contracts with Institutions -- 18.00% Prudential Life Insurance Company No. 5905-211 8.29% matures 2/1/1997 436,696 436,696 436,696 Bank of America No. SP1 212 9.47% matures 7/31/1997 20,874,552 20,874,552 20,874,552 Hartford Life Insurance Company No. 9067 8.60% matures 9/30/1997 13,612,945 13,612,945 13,612,945 Prudential Life Insurance Company No. 5905-216 9.45% matures 9/30/1997 10,230,209 10,230,209 10,230,209 Commonwealth Life Insurance Company No. 00343 FR 8.68% matures 2/28/1998 23,596,288 23,596,288 23,596,288 New York Life Insurance Company No. 06121 8.50% matures 3/1/1998 55,054,606 55,054,606 55,054,606 Principal Mutual Life Insurance Company No. 74811-2 8.87% matures 5/1/1998 73,704,208 73,704,208 73,704,208 J P Morgan No. 95-06 8.10% matures 9/25/1998 16,561,600 16,561,600 16,561,600 Allstate Life Insurance Company No. 5421 6.47% matures 4/7/1999 26,448,877 26,448,877 26,448,877 New York Life Insurance Company No. 06989 7.33% matures 7/31/1999 23,866,538 23,866,538 23,866,538 Principal Mutual Life Insurance Company No. 3-74811-4 5.82% matures 9/6/1999 35,644,859 35,644,859 35,644,859
S-1 PHILIP MORRIS DEFERRED PROFIT-SHARING TRUST FUND SCHEDULE I - INVESTMENTS as of December 31, 1996
Column A Column B Column C Column D -------- --------------- ----------- -------- Face Amount Cost or Number Basis of Name of Issuer and Title of Issue of Shares/Units Investments Fair Value - --------------------------------- --------------- ----------- ---------- Participation Contracts with Institutions (continued) Jackson National Life Insurance Company No. G-1036 6.91% matures 2/29/2000 20,482,189 $ 20,482,189 $ 20,482,189 Security Life of Denver No. FA 0147 9.10% matures 8/1/2000 1,785,076 1,785,076 1,785,076 Continental Assurance Company No. GP 24024 6.63% matures 8/31/2001 25,021,994 25,021,994 25,021,994 Sun America Life Insurance Company No. 4697 6.67% matures 12/31/2001 25,022,123 25,022,123 25,022,123 New York Life Insurance Company No. 20012 6.47% 32,251,867 32,251,867 32,251,867 Metropolitan Life Insurance Company No. 12861 5.92% 67,985,706 67,985,706 67,985,706 Massachusetts Mutual Life Insurance No. 10403 6.38% 102,493,740 102,493,740 102,493,740 John Hancock Mutual Life Insurance No. 6435 5.76% 55,531,615 55,531,615 55,531,615 ---------------- ---------------- Total Contracts 630,605,688 630,605,688 ---------------- ---------------- Financial Institution Pools -- 10.50% National Westminster Bank No. SAM 0104A 6.09% GEBT Short-Term Investment Fund 510,395 510,395 Federal National Mortgage Association Remic matures 6/25/2005 6.25% 1,806,687 1,806,687 Federal National Mortgage Association Remic matures 8/25/2005 6.00% 392,914 392,914 Federal National Mortgage Association Remic matures 8/25/2012 5.60% 1,203,048 1,203,048 Federal National Mortgage Association Remic matures 8/25/2013 6.70% 3,085,997 3,085,997 Federal National Mortgage Association Remic matures 9/25/2015 6.00% 1,795,603 1,795,603 Federal National Mortgage Association Remic matures 6/25/2016 5.70% 3,331,471 3,331,471 Federal National Mortgage Association Remic matures 7/25/2016 5.65% 1,786,660 1,786,660 Federal National Mortgage Association Remic matures 1/25/2020 7.00% 651,696 651,696 Federal National Mortgage Association Pool matures 7/1/2008 7.00% 794,663 794,663 Federal National Mortgage Association Pool matures 8/1/2008 7.00% 786,155 786,155
S-2 PHILIP MORRIS DEFERRED PROFIT-SHARING TRUST FUND SCHEDULE I - INVESTMENTS as of December 31, 1996
Column A Column B Column C Column D -------- -------- -------- -------- Face Amount Cost or Number Basis of Name of Issuer and Title of Issue of Shares/Units Investments Fair Value - --------------------------------- --------------- ----------- ---------- Financial Institution Pools (continued) National Westminster Bank (continued) Federal National Mortgage Association Pool matures 1/1/2009 6.50% $ 130,951 $ 130,951 Federal National Mortgage Association Pool matures 2/1/2009 6.50% 467,971 467,971 Federal National Mortgage Association Pool matures 3/1/2009 6.50% 156,592 156,592 Federal National Mortgage Association Pool matures 5/1/2009 6.50% 970,049 970,049 Government National Mortgage Association Pool matures 12/15/2023 6.50% 216,921 216,921 Government National Mortgage Association Pool matures 3/15/2024 6.50% 71,552 71,552 Government National Mortgage Association Pool matures 4/15/2024 6.50% 1,355,747 1,355,747 Government National Mortgage Association Pool matures 5/15/2024 6.50% 974,030 974,030 Federal Home Loan Mtg. Corporation matures 8/15/2005 6.25% 903,623 903,623 Federal Home Loan Mtg. Corporation matures 4/1/2008 7.00% 97,151 97,151 Federal Home Loan Mtg. Corporation matures 8/15/2008 6.50% 1,291,763 1,291,763 Federal Home Loan Mtg. Corporation matures 9/1/2008 6.50% 35,158 35,158 Federal Home Loan Mtg. Corporation matures 12/1/2008 6.50% 37,183 37,183 Federal Home Loan Mtg. Corporation matures 2/1/2009 6.50% 1,548,450 1,548,450 Federal Home Loan Mtg. Corporation matures 6/1/2009 6.50% 67,189 67,189 Federal Home Loan Mtg. Corporation matures 10/1/2010 7.00% 199,105 199,105 Federal Home Loan Mtg. Corporation matures 2/1/2011 6.50% 105,824 105,824 Federal Home Loan Mtg. Corporation matures 2/1/2011 7.00% 603,612 603,612 Federal Home Loan Mtg. Corporation matures 3/1/2011 7.00% 970,059 970,059 Federal Home Loan Mtg. Corporation matures 4/15/2011 5.00% 1,350,351 1,350,351 Federal Home Loan Mtg. Corporation matures 12/15/2015 6.50% 2,203,372 2,203,372 Federal Home Loan Mtg. Corporation matures 6/15/2016 7.00% 243,269 243,269 Federal Home Loan Mtg. Corporation matures 1/15/2018 6.00% 3,368,886 3,368,886 ---------- ----------
S-3 PHILIP MORRIS DEFERRED PROFIT-SHARING TRUST FUND SCHEDULE I - INVESTMENTS as of December 31, 1996
Column A Column B Column C Column D -------- --------------- ----------- ---------- Face Amount Cost or Number Basis of Name of Issuer and Title of Issue of Shares/Units Investments Fair Value - --------------------------------- --------------- ----------- ---------- Financial Institution Pools (continued) National Westminster Bank (continued) Total National Westminster Bank Contract $ 33,514,097 $ 33,514,097 ---------------- ---------------- Trans America Life Insurance Company No. 76595 6.82% GEBT Short-Term Investment Fund 18,717,784 18,717,784 U. S. Treasury Note matures 6/30/1998 6.25% 3,497,979 3,497,979 U. S. Treasury Note matures 9/30/1998 6.00% 4,427,208 4,427,208 U. S. Treasury Note matures 12/31/1998 5.75% 4,504,186 4,504,186 U. S. Treasury Note matures 5/15/1999 6.38% 27,843,172 27,843,172 U. S. Treasury Note matures 11/15/1999 5.88% 2,290,790 2,290,790 U. S. Treasury Note matures 6/30/2001 6.63% 6,174,477 6,174,477 U. S. Treasury Note matures 9/30/2001 6.38% 697,972 697,972 U. S. Treasury Note matures 12/31/2001 6.13% 8,989,315 8,989,315 U. S. Treasury Note matures 5/15/2006 6.88% 3,982,173 3,982,173 Federal National Mortgage Association Pool matures 11/1/2002 7.00% 139,371 139,371 Federal National Mortgage Association Pool matures 4/1/2003 7.00% 377,578 377,578 Federal National Mortgage Association Pool matures 5/1/2003 7.00% 480,579 480,579 Federal National Mortgage Association Pool matures 6/1/2003 7.00% 855,028 855,028 Federal National Mortgage Association Pool matures 4/1/2026 7.00% 326,446 326,446 Federal National Mortgage Association Pool matures 5/1/2026 7.00% 472,857 472,857 Federal National Mortgage Association Pool matures 6/1/2026 7.00% 454,543 454,543 Federal National Mortgage Association Pool matures 7/1/2026 7.00% 25,244 25,244 Federal National Mortgage Association Pool matures 8/1/2026 7.00% 84,020 84,020 Federal National Mortgage Association Pool matures 9/1/2026 7.00% 417,536 417,536 Federal National Mortgage Association Pool matures 10/1/2026 7.00% 613,078 613,078
S-4 PHILIP MORRIS DEFERRED PROFIT-SHARING TRUST FUND SCHEDULE I - INVESTMENTS as of December 31, 1996
Column A Column B Column C Column D -------- --------------- ----------- ---------- Face Amount Cost or Number Basis of Name of Issuer and Title of Issue of Shares/Units Investments Fair Value - --------------------------------- --------------- ----------- ---------- Financial Institution Pools (continued) Trans America Life Insurance Company (continued) Federal National Mortgage Association Pool matures 12/1/2026 7.00% $ 2,399,547 $ 2,399,547 Federal National Mortgage Association matures 9/1/2021 8.00% 6,440,714 6,440,714 Government National Mortgage Association matures 2/1/2021 9.00% 1,531,792 1,531,792 Federal Home Loan Mtg. Corporation matures 5/1/2007 7.50% 2,821,730 2,821,730 Federal Home Loan Mtg. Corporation matures 7/1/2026 6.50% 5,941,607 5,941,607 --------------- --------------- Total Trans America Life Insurance Company Contract 104,506,726 104,506,726 --------------- --------------- Commonwealth Life Insurance Company No. ADA00201TR, 6.14%, Peoples Life Insurance Company No. BDA00292TR, 6.37% & Trans America Life Insurance Company No. 76587, 5.62% GEBT Short-Term Investment Fund 42,861,135 42,861,135 U. S. Treasury Note matures 6/30/1998 6.25% 2,103,528 2,103,528 U. S. Treasury Note matures 9/30/1998 6.00% 10,531,318 10,531,318 U. S. Treasury Note matures 12/31/1998 5.75% 10,263,234 10,263,234 U. S. Treasury Note matures 5/15/1999 6.38% 23,492,434 23,492,434 U. S. Treasury Note matures 11/15/1999 5.88% 16,671,271 16,671,271 U. S. Treasury Note matures 2/29/2000 7.13% 2,751,748 2,751,748 U. S. Treasury Note matures 6/30/2001 6.63% 12,891,773 12,891,773 U. S. Treasury Note matures 9/30/2001 6.38% 1,625,724 1,625,724 U. S. Treasury Note matures 12/31/2001 6.13% 21,116,267 21,116,267 U. S. Treasury Note matures 5/15/2006 6.88% 577,092 577,092 U. S. Treasury Note matures 7/15/2006 7.00% 866,963 866,963 Federal National Mortgage Association matures 1/1/2000 6.00% 811,411 811,411 Federal National Mortgage Association matures 11/23/2001 6.35% 413,409 413,409 Federal National Mortgage Association matures 9/9/2003 5.97% 252,085 252,085
S-5 PHILIP MORRIS DEFERRED PROFIT-SHARING TRUST FUND SCHEDULE I - INVESTMENTS as of December 31, 1996
Column A Column B Column C Column D -------- --------------- ----------- ---------- Face Amount Cost or Number Basis of Name of Issuer and Title of Issue of Shares/Units Investments Fair Value --------------------------------- --------------- ----------- ---------- Financial Institution Pools (continued) Commonwealth Life Insurance Company, Peoples Life Insurance Company & Trans America Life Insurance Company (continued) Federal National Mortgage Association matures 10/25/2004 8.40% $ 1,041,722 $ 1,041,722 Federal National Mortgage Association matures 11/10/2004 8.63% 946,427 946,427 Federal National Mortgage Association matures 9/1/2021 8.00% 13,038,238 13,038,238 Federal National Mortgage Association matures 10/1/2021 9.50% 509,047 509,047 Federal National Mortgage Association matures 12/1/2002 6.00% 890,285 890,285 Federal National Mortgage Association Pool matures 2/1/2003 6.00% 83,751 83,751 Federal National Mortgage Association Pool matures 3/1/2003 6.00% 611,686 611,686 Federal National Mortgage Association Pool matures 4/1/2003 6.00% 290,350 290,350 Federal National Mortgage Association Pool matures 1/1/2009 6.00% 384,227 384,227 Federal National Mortgage Association Pool matures 2/1/2009 6.00% 452,169 452,169 Federal National Mortgage Association Pool matures 7/1/2009 6.00% 697,749 697,749 Federal National Mortgage Association Pool matures 5/1/2023 8.00% 3,168,661 3,168,661 Federal National Mortgage Association Pool matures 12/1/2023 6.50% 500,889 500,889 Federal National Mortgage Association Pool matures 2/1/2024 6.50% 228,556 228,556 Federal National Mortgage Association Pool matures 2/1/2024 7.00% 2,737,974 2,737,974 Federal National Mortgage Association Pool matures 4/1/2024 6.50% 137,943 137,943 Federal National Mortgage Association Pool matures 5/1/2024 6.50% 510,452 510,452 Federal National Mortgage Association Pool matures 6/1/2024 6.50% 571,249 571,249 Federal National Mortgage Association Pool matures 7/1/2025 7.00% 654,547 654,547 Federal National Mortgage Association Pool matures 8/1/2025 7.00% 2,727,673 2,727,673 Federal National Mortgage Association Pool matures 4/1/2026 7.00% 505,887 505,887 Federal National Mortgage Association Pool matures 5/1/2026 7.00% 98,491 98,491
S-6 PHILIP MORRIS DEFERRED PROFIT-SHARING TRUST FUND SCHEDULE I - INVESTMENTS as of December 31, 1996
Column A Column B Column C Column D -------- --------------- ----------- ---------- Face Amount Cost or Number Basis of Name of Issuer and Title of Issue of Shares/Units Investments Fair Value --------------------------------- --------------- ----------- ---------- Financial Institution Pools (continued) Commonwealth Life Insurance Company, Peoples Life Insurance Company & Trans America Life Insurance Company (continued) Federal National Mortgage Association Pool matures 6/1/2026 7.00% $ 817,690 $ 817,690 Federal National Mortgage Association Pool matures 9/1/2026 7.00% 93,053 93,053 Federal National Mortgage Association Pool matures 10/1/2026 7.00% 317,589 317,589 Government National Mortgage Association Pool matures 11/15/2017 9.50% 4,516,642 4,516,642 Government National Mortgage Association Pool matures 9/15/2019 9.00% 110,643 110,643 Government National Mortgage Association Pool matures 11/15/2019 9.00% 147,676 147,676 Government National Mortgage Association Pool matures 1/15/2020 9.00% 344,423 344,423 Government National Mortgage Association Pool matures 6/15/2020 9.00% 209,849 209,849 Government National Mortgage Association Pool matures 9/15/2020 9.00% 129,279 129,279 Government National Mortgage Association Pool matures 4/15/2021 9.00% 111,113 111,113 Government National Mortgage Association Pool matures 5/15/2021 9.00% 238,682 238,682 Government National Mortgage Association Pool matures 8/15/2021 9.00% 337,372 337,372 Government National Mortgage Association Pool matures 9/15/2021 9.00% 228,213 228,213 Government National Mortgage Association Pool matures 10/20/2021 9.50% 792,202 792,202 Government National Mortgage Association Pool matures 8/15/2022 9.00% 196,819 196,819 Government National Mortgage Association Pool matures 5/15/2024 6.50% 1,505,405 1,505,405 Government National Mortgage Association Pool matures 7/15/2024 6.50% 2,004,744 2,004,744 Government National Mortgage Association Pool matures 1/15/2025 9.00% 657,857 657,857 Government National Mortgage Association matures 2/1/2021 9.00% 495,665 495,665 Government National Mortgage Association matures 2/1/2021 9.50% 101,751 101,751 Federal Home Loan Mtg. Corporation matures 11/15/2003 5.50% 5,647,444 5,647,444 Federal Home Loan Mtg. Corporation matures 6/1/2008 7.00% 1,804,435 1,804,435
S-7 PHILIP MORRIS DEFERRED PROFIT-SHARING TRUST FUND SCHEDULE I - INVESTMENTS as of December 31, 1996
Column A Column B Column C Column D -------- --------------- ----------- ---------- Face Amount Cost or Number Basis of Name of Issuer and Title of Issue of Shares/Units Investments Fair Value --------------------------------- --------------- ----------- ---------- Financial Institution Pools (continued) Commonwealth Life Insurance Company, Peoples Life Insurance Company & Trans America Life Insurance Company (continued) Federal Home Loan Mtg. Corporation matures 11/1/2008 6.00% $ 3,051,663 $ 3,051,663 Federal Home Loan Mtg. Corporation matures 3/1/2009 6.50% 1,122,434 1,122,434 Federal Home Loan Mtg. Corporation matures 4/1/2009 6.50% 115,718 115,718 Federal Home Loan Mtg. Corporation matures 10/1/2011 6.50% 1,756,797 1,756,797 Federal Home Loan Mtg. Corporation matures 12/15/2019 6.00% 408,951 408,951 Federal Home Loan Mtg. Corporation matures 4/15/2021 9.00% 1,261,712 1,261,712 Federal Home Loan Mtg. Corporation matures 3/1/2026 6.50% 448,551 448,551 Federal Home Loan Mtg. Corporation matures 7/1/2026 6.50% 1,105,502 1,105,502 Banc One Auto TR matures 11/15/1997 6.85% 211,669 211,669 Premier Auto TR matures 2/4/1999 7.15% 2,303,900 2,303,900 Bayerische Landesbank Girozentrale matures 7/19/1999 6.55% 2,778,472 2,778,472 Standard Credit Card Master TR matures 6/7/2000 6.75% 959,468 959,468 Standard Credit Card Master TR matures 4/7/2001 6.80% 479,178 479,178 Asian Development Bank NTS matures 5/2/2001 8.50% 1,796,214 1,796,214 American Express Master TR matures 7/15/2001 5.38% 1,029,802 1,029,802 MBNA Master Credit Card TR matures 1/15/2003 6.60% 1,937,553 1,937,553 Japan Fin Corp matures 4/27/2005 7.38% 1,767,718 1,767,718 International BK for Recon & Dev matures 7/21/2005 6.38% 1,965,011 1,965,011 Bayerische Landesbank Girozentrale matures 2/1/2006 6.17% 2,019,112 2,019,112 KFW Int'l Fin Inc matures 6/1/2006 8.20% 1,554,384 1,554,384 General Electric Cap Corp matures 7/24/2008 8.50% 988,841 988,841 Landesbank Hessen matures 11/10/2008 6.25% 831,268 831,268
S-8 PHILIP MORRIS DEFERRED PROFIT-SHARING TRUST FUND SCHEDULE I - INVESTMENTS as of December 31, 1996
Column A Column B Column C Column D -------- ------------ ------------ -------- Face Amount Cost or Number Basis of Name of Issuer and Title of Issue of Shares/Units Investments Fair Value --------------------------------- --------------- ----------- ---------- Commonwealth Life Insurance Company, Peoples Life Insurance Company & Trans America Life Insurance Company (continued) International BK for Recon & Dev matures 3/1/2026 8.88% $ 1,290,359 $ 1,290,359 ----------------- ---------------- Total Commonwealth, Peoples & Trans America Contracts 230,010,188 230,010,188 ----------------- ---------------- Total Pools 368,031,011 368,031,011 ----------------- ---------------- Total Investment Contracts 998,636,699 998,636,699 ----------------- ---------------- Short-Term Investments -- 1.68% GEBT Short-Term Investment Fund 58,828,795 58,828,795 58,828,795 ----------------- ---------------- Total Interest Income Fund 1,057,465,494 1,057,465,494 ----------------- ---------------- U.S. GOVERNMENT OBLIGATIONS FUND -- 3.25% Government Securities -- 2.88% United States Treasury Notes 7.25% due 2/15/1998 9,000,000 9,078,693 9,147,690 United States Treasury Notes 7.125% due 9/30/1999 16,125,000 16,723,613 16,571,018 United States Treasury Notes 7.125% due 2/29/2000 16,625,000 17,272,480 17,115,936 United States Treasury Notes 5.875% due 6/30/2000 16,700,000 16,570,570 16,574,750 United States Treasury Notes 5.625% due 2/28/2001 3,000,000 2,961,094 2,940,480 United States Treasury Notes 6.375% due 8/15/2002 18,550,000 18,577,805 18,671,688 United States Treasury Notes 6.50% due 5/15/2005 11,750,000 11,836,940 11,828,960 United States Treasury Notes 6.50% due 8/15/2005 5,000,000 5,046,563 5,032,050 United States Treasury Notes 6.50% due 10/15/2006 2,875,000 2,909,590 2,890,726 ----------------- ---------------- Total Government Securities 100,977,348 100,773,298 ----------------- ---------------- Federal Agency Obligations -- 0.35% Federal Home Loan Mtg. Corporation SER B 7.75% due 1/27/1997 10,520,000 2,025,938 2,002,500 Federal Home Loan Mtg. Corporation SER A 5.50% due 2/2/2001 2,000,000 10,366,174 10,209,344 ----------------- ----------------
S-9 PHILIP MORRIS DEFERRED PROFIT-SHARING TRUST FUND SCHEDULE I - INVESTMENTS as of December 31, 1996
Column A Column B Column C Column D -------- -------- -------- -------- Face Amount Cost or Number Basis of Name of Issuer and Title of Issue of Shares/Units Investments Fair Value - --------------------------------- --------------- ----------- ---------- Total Federal Agency Obligations $ 12,392,112 $ 12,211,844 ----------------- ----------------- Short-Term Investments -- 0.02% GEBT Short-Term Investment Fund 1,040,405 1,040,405 1,040,405 ----------------- ----------------- Total U.S. Government Obligations Fund 114,409,865 114,025,547 ----------------- ----------------- PHILIP MORRIS STOCK FUND -- 29.73% Common Stock -- 29.04% Tobacco -- 29.04% Philip Morris Companies Inc. 9,005,254 * 517,740,367 1,017,593,702 Short-Term Investments -- 0.69% GEBT Short-Term Investment Fund 24,281,628 24,281,628 24,281,628 ----------------- ----------------- Total Philip Morris Stock Fund 542,021,995 1,041,875,330 ----------------- ----------------- * On February 26, 1997, Philip Morris Companies Inc. announced a three-for-one split of its Common Stock, to be effected by a distribution on April 10, 1997, of two shares for each share held of record at the close of business on March 17, 1997. INTERNATIONAL EQUITY FUND -- 0.90% Japanese Equity Index Fund -- 0.24% 97,655 9,511,364 8,315,278 Non Japanese Equity Index Fund -- 0.66% 158,244 20,106,362 23,232,728 ----------------- ----------------- Total International Equity Index Fund 29,617,726 31,548,006 ----------------- ----------------- BALANCED FUND -- 1.59% Balanced Fund -- 1.59% 4,668,274 53,124,737 55,832,553 ----------------- ----------------- Total Balanced Fund 53,124,737 55,832,553 ----------------- ----------------- GROWTH EQUITY FUND -- 1.20% Growth Equity Fund -- 1.20% 3,481,201 41,358,537 42,018,091 ----------------- ----------------- Total Growth Equity Fund 41,358,537 42,018,091 ----------------- -----------------
S-10 PHILIP MORRIS DEFERRED PROFIT-SHARING TRUST FUND SCHEDULE I - INVESTMENTS as of December 31, 1996
Column A Column B Column C Column D -------- --------------- ----------- ---------- Face Amount Cost or Number Basis of Name of Issuer and Title of Issue of Shares/Units Investments Fair Value - --------------------------------- --------------- ----------- ---------- PARTICIPANTS' LOAN ACCOUNT -- 3.61% Loans to Participants -- 3.61% 126,524,962 $ 126,524,962 $ 126,524,962 ---------------- ---------------- Total Participants' Loan Account 126,524,962 126,524,962 ---------------- ---------------- TOTAL INVESTMENTS $ 2,628,184,200 $ 3,504,433,762 ================ ================
S-11 EX-23 2 CONSENT OF COOPERS & LYBRAND L.L.P. Exhibit 23 CONSENT of INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the Philip Morris Companies Inc. registration statement on Form S-8 (File No. 33-10218) of the Philip Morris Deferred Profit-Sharing Plan of our report dated April 11, 1997, on our audits of the financial statements of the Philip Morris Deferred Profit-Sharing Plan as of December 31, 1996 and 1995 and for the years ended December 31, 1996, 1995 and 1994, and the financial statement schedule as of December 31, 1996, which report is included in this annual report on Form 11-K. COOPERS & LYBRAND L.L.P. New York, New York April 14, 1997 -----END PRIVACY-ENHANCED MESSAGE-----