-----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, WVjoUsO6O60xR/ScPGv2ZnQdKZHZ1mKZZIStMu54H0jABriPQuwztxAbHLq6CYqU nmjUZV/MLzrU8lt0ixMHTg== 0000940180-98-000584.txt : 19980525 0000940180-98-000584.hdr.sgml : 19980525 ACCESSION NUMBER: 0000940180-98-000584 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980522 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: SEC FILE NUMBER: 001-08940 FILM NUMBER: 98630219 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 ================================================================================ 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, 1997 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 Incorporated 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 INCORPORATED DEFERRED PROFIT-SHARING PLAN ANNUAL REPORT ON FORM 11-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997 TABLE OF CONTENTS
Page(s) ------- Report of Independent Accountants.................................... 3 Financial Statements: Statements of Financial Condition as of December 31, 1997 and 1996.................................................... 4-5 Statements of Income and Changes in Plan Equity for the years ended December 31, 1997, 1996 and 1995................. 6-8 Notes to Financial Statements...................................... 9-21 Signatures........................................................... 22 Schedules: Schedule I - Investments as of December 31, 1997................... S-1-7 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 Incorporated Deferred Profit- Sharing Plan: We have audited the accompanying statements of financial condition of the Philip Morris Incorporated Deferred Profit-Sharing Plan (the "Plan") as of December 31, 1997 and 1996, and the related statements of income and changes in plan equity for each of the three years in the period ended December 31, 1997 and the schedule of investments as of December 31, 1997. These financial statements and the financial statement schedule are the responsibility of the fiduciaries of the Plan appointed by Philip Morris Companies Inc. 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, 1997 and 1996, and the income and changes in plan equity for each of the three years in the period ended December 31, 1997, 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. /s/ COOPERS & LYBRAND L.L.P. New York, New York April 10, 1998 -3- PHILIP MORRIS INCORPORATED DEFERRED PROFIT-SHARING PLAN STATEMENT OF FINANCIAL CONDITION as of December 31, 1997 (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 $ 324,200 $ 293,123 $ 71,060 $ 271,578 $ 3,291 Employer contributions receivable 8,303 18,598 10,176 9,653 120 Employee contributions receivable 126 182 32 160 6 --------- --------- -------- --------- ------- Total assets 332,629 311,903 81,268 281,391 3,417 --------- --------- -------- --------- ------- Plan equity $ 332,629 $ 311,903 $ 81,268 $ 281,391 $ 3,417 ========= ========= ======== ========= ======= Growth Participants' Balanced Equity Loan Fund Fund Account Total -------- ------ ------------- ----- ASSETS: Allocated share of Trust net assets $ 6,721 $ 7,744 $ 58,442 $ 1,036,159 Employer contributions receivable 212 269 47,331 Employee contributions receivable 8 9 523 ------- ------- -------- ----------- Total assets 6,941 8,022 58,442 1,084,013 ------- ------- -------- ----------- Plan equity $ 6,941 $ 8,022 $ 58,442 $ 1,084,013 ======= ======= ======== ===========
The accompanying notes are an integral part of these financial statements. -4- PHILIP MORRIS INCORPORATED 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 $ 249,404 $ 278,098 $ 59,054 $ 200,509 $ 2,690 Employer contributions receivable 9,245 21,521 10,747 10,808 110 --------- --------- -------- --------- ------- Total assets 258,649 299,619 69,801 211,317 2,800 --------- --------- -------- --------- ------- Plan equity $ 258,649 $ 299,619 $ 69,801 $ 211,317 $ 2,800 ========= ========= ======== ========= ======= Growth Participants' Balanced Equity Loan Fund Fund Account Total -------- ------ ------------- ----- ASSETS: Allocated share of Trust net assets $ 2,904 $ 3,359 $ 55,584 $ 851,602 Employer contributions receivable 168 184 52,783 ------- ------- -------- --------- Total assets 3,072 3,543 55,584 904,385 ------- ------- -------- --------- Plan equity $ 3,072 $ 3,543 $ 55,584 $ 904,385 ======= ======= ======== =========
The accompanying notes are an integral part of these financial statements. -5- PHILIP MORRIS INCORPORATED DEFERRED PROFIT-SHARING PLAN STATEMENT OF INCOME AND CHANGES IN PLAN EQUITY for the year ended December 31, 1997 (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 $ 8,302 $ 18,608 $ 10,176 $ 9,667 $ 120 Employee contributions 1,499 2,245 362 1,898 68 Allocated share of Trust investment activities: Interest income 18,292 4,213 441 Dividend income 9,740 Net appreciation (depreciation) in fair value of investments 80,935 1,070 37,521 44 --------- --------- -------- --------- ------- 80,935 18,292 5,283 47,702 44 --------- --------- -------- --------- ------- Total additions 90,736 39,145 15,821 59,267 232 --------- --------- -------- --------- ------- DEDUCTIONS: Distributions and withdrawals (7,324) (12,371) (2,271) (5,822) (49) General and administrative expenses (83) (196) (99) (72) (10) --------- --------- -------- --------- ------- Total deductions (7,407) (12,567) (2,370) (5,894) (59) --------- --------- -------- --------- ------- Net transfers among funds (6,976) (14,503) (3,386) 17,992 464 Net transfers between plans (68) (156) (30) (51) Participants' loans (5,519) (6,787) (2,074) (5,187) (63) Participants' loan repayments 3,214 7,152 3,506 3,947 43 --------- --------- -------- --------- ------- Net additions 73,980 12,284 11,467 70,074 617 PLAN EQUITY: Beginning of year 258,649 299,619 69,801 211,317 2,800 --------- --------- -------- --------- ------- End of year $ 332,629 $ 311,903 $ 81,268 $ 281,391 $ 3,417 ========= ========= ======== ========= ======= Growth Participants' Balanced Equity Loan Fund Fund Account Total --------- ------- -------------- ----------- ADDITIONS: Employer contributions $ 211 $ 269 $ 47,353 Employee contributions 96 123 6,291 Allocated share of Trust investment activities: Interest income $ 4,241 27,187 Dividend income 599 1,469 11,808 Net appreciation (depreciation) in fair value of investments 174 (844) 118,900 ------- ------- -------- ----------- 773 625 4,241 157,895 ------- ------- -------- ----------- Total additions 1,080 1,017 4,241 211,539 ------- ------- -------- ----------- DEDUCTIONS: Distributions and withdrawals (24) (65) (3,206) (31,132) General and administrative expenses (2) (4) (466) ------- ------- -------- ----------- Total deductions (26) (69) (3,206) (31,598) ------- ------- -------- ----------- Net transfers among funds 2,826 3,583 - Net transfers between plans (3) (5) (313) Participants' loans (73) (117) 19,820 - Participants' loan repayments 62 68 (17,992) - ------- ------- -------- ----------- Net additions 3,869 4,479 2,858 179,628 PLAN EQUITY: Beginning of year 3,072 3,543 55,584 904,385 ------- ------- -------- ----------- End of year $ 6,941 $ 8,022 $ 58,442 $ 1,084,013 ======= ======= ======== ===========
The accompanying notes are an integral part of these financial statements. -6- PHILIP MORRIS INCORPORATED 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 $ 9,242 $ 21,520 $ 10,744 $ 10,806 $ 110 Employee contributions 1,468 2,711 358 1,601 39 Allocated share of Trust investment activities: Interest income 1 17,517 3,568 222 Dividend income 8,039 Net appreciation (depreciation) in fair value of investments 46,628 (1,453) 35,813 160 --------- --------- -------- --------- ------- 46,629 17,517 2,115 44,074 160 --------- --------- -------- --------- ------- Total additions 57,339 41,748 13,217 56,481 309 --------- --------- -------- --------- ------- DEDUCTIONS: Distributions and withdrawals (5,606) (8,965) (1,523) (3,908) (11) General and administrative expenses (133) (148) (108) (64) (9) --------- --------- -------- --------- ------- Total deductions (5,739) (9,113) (1,631) (3,972) (20) --------- --------- -------- --------- ------- Net transfers among funds 3,034 4,162 (527) (11,758) 1,805 Net transfers between plans (164) (284) (56) (139) 2 Participants' loans (5,926) (8,558) (2,338) (3,845) (69) Participants' loan repayments 2,805 6,805 3,189 2,871 27 --------- --------- -------- --------- ------- Net additions 51,349 34,760 11,854 39,638 2,054 PLAN EQUITY: Beginning of year 207,300 264,859 57,947 171,679 746 --------- --------- -------- --------- ------- End of year $ 258,649 $ 299,619 $ 69,801 $ 211,317 $ 2,800 ========= ========= ======== ========= ======= Growth Participants' Balanced Equity Loan Fund Fund Account Total -------- ------- ------------- --------- ADDITIONS: Employer contributions $ 168 $ 184 $ 52,774 Employee contributions 25 67 6,269 Allocated share of Trust investment activities: Interest income $ 3,634 24,942 Dividend income 154 206 8,399 Net appreciation (depreciation) in fair value of investments 148 124 81,420 ------- ------- -------- --------- 302 330 3,634 114,761 ------- ------- -------- --------- Total additions 495 581 3,634 173,804 ------- ------- -------- --------- DEDUCTIONS: Distributions and withdrawals (25) (9) (3,177) (23,224) General and administrative expenses (2) (464) ------- ------- -------- --------- Total deductions (25) (11) (3,177) (23,688) ------- ------- -------- --------- Net transfers among funds 1,299 1,985 - Net transfers between plans 1 (21) (661) Participants' loans (73) (50) 20,859 - Participants' loan repayments 30 43 (15,770) - ------- ------- -------- --------- Net additions 1,726 2,549 5,525 149,455 PLAN EQUITY: Beginning of year 1,346 994 50,059 754,930 ------- ------- -------- --------- End of year $ 3,072 $ 3,543 $ 55,584 $ 904,385 ======= ======= ======== =========
The accompanying notes are an integral part of these financial statements. -7- PHILIP MORRIS INCORPORATED 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 $ 8,827 $ 21,397 $ 10,575 $ 9,457 $ 59 Employee contributions 1,230 2,607 239 1,314 4 Allocated share of Trust investment activities: Interest income 1 16,716 2,582 115 Dividend income 6,306 Net appreciation (depreciation) in fair value of investments 55,379 1,774 56,412 23 --------- --------- -------- --------- ----- 55,380 16,716 4,356 62,833 23 --------- --------- -------- --------- ----- Total additions 65,437 40,720 15,170 73,604 86 --------- --------- -------- --------- ----- DEDUCTIONS: Distributions and withdrawals (4,769) (9,534) (1,662) (2,860) (1) General and administrative expenses (89) (156) (86) (54) (1) --------- --------- -------- --------- ----- Total deductions (4,858) (9,690) (1,748) (2,914) (2) --------- --------- -------- --------- ----- Net transfers among funds (1,161) (4,112) (593) 3,136 666 Net transfers between plans (242) (1,107) (26) (959) Participants' loans (6,270) (8,764) (2,144) (3,720) (9) Participants' loan repayments 2,088 5,538 2,536 2,229 5 --------- --------- -------- --------- ----- Net additions 54,994 22,585 13,195 71,376 746 PLAN EQUITY: Beginning of year 152,306 242,274 44,752 100,303 - --------- --------- -------- --------- ----- End of year $ 207,300 $ 264,859 $ 57,947 $ 171,679 $ 746 ========= ========= ======== ========= ===== Growth Participants' Balanced Equity Loan Fund Fund Account Total -------- ------- ------------- --------- ADDITIONS: Employer contributions $ 113 $ 105 $ 50,533 Employee contributions 5 10 5,409 Allocated share of Trust investment activities: Interest income $ 2,606 22,020 Dividend income 48 50 6,404 Net appreciation (depreciation) in fair value of investments 25 (37) 113,576 ------- ----- -------- --------- 73 13 2,606 142,000 ------- ----- -------- --------- Total additions 191 128 2,606 197,942 ------- ----- -------- --------- DEDUCTIONS: Distributions and withdrawals (4) (2) (1,718) (20,550) General and administrative expenses (386) ------- ----- -------- --------- Total deductions (4) (2) (1,718) (20,936) ------- ----- -------- --------- Net transfers among funds 1,200 864 - Net transfers between plans (26) (2,360) Participants' loans (51) (12) 20,970 - Participants' loan repayments 10 16 (12,422) - ------- ----- -------- --------- Net additions 1,346 994 9,410 174,646 PLAN EQUITY: Beginning of year - - 40,649 580,284 ------- ----- -------- --------- End of year $ 1,346 $ 994 $ 50,059 $ 754,930 ======= ===== ======== =========
The accompanying notes are an integral part of these financial statements. -8- PHILIP MORRIS INCORPORATED DEFERRED PROFIT-SHARING PLAN NOTES TO FINANCIAL STATEMENTS 1. General Description of the Plan: The Philip Morris Incorporated Deferred Profit-Sharing Plan (the "Plan") is a defined contribution plan maintained for the benefit of eligible employees of Philip Morris Incorporated ("Philip Morris"), represented by the Bakery, Confectionery and Tobacco Workers Union ("BCT Union"). Philip Morris is a subsidiary of Philip Morris Companies Inc. (the "Company"). The Plan is designed to provide eligible employees with an opportunity to share in the profits of Philip Morris and to invest certain of their funds in a tax- advantaged manner (see Note 3). Eligible employees generally may make before-tax and after-tax contributions beginning on or after the January 1 following their respective dates of hire and become eligible for the Philip Morris contribution (the "Contribution") upon completion of twenty-four months of accredited service. Each year, Philip Morris makes the Contribution to the Plan in accordance with the formula 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 Deferred Profit-Sharing Plan (the "DPS 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") for which Bankers Trust Company (the "Trustee") serves as the trustee (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"). INTEREST INCOME FUND - This fund consists primarily of investment contracts entered into by the Trustee with financial institutions, each of which agrees to repay in full the amounts invested with the institution, plus interest. -9- PHILIP MORRIS INCORPORATED DEFERRED PROFIT-SHARING PLAN NOTES TO FINANCIAL STATEMENTS (continued) 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. 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 20, 1995, participants could change their investment elections once each month. Effective July 10, 1995, participants normally can change their investment elections on any business day. Participant contributions made to a Plan Account established on and after January 1, 1992 and any Contribution made on and after February 1, 1992 for which no investment direction has been given are invested in the U.S. Government Obligations Fund. In all other cases, participant contributions made to a Plan Account for which no investment direction was given by the participant are invested in the Equity Index Fund. -10- PHILIP MORRIS INCORPORATED DEFERRED PROFIT-SHARING PLAN NOTES TO FINANCIAL STATEMENTS (continued) 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, 1997 and 1996, there were 6,764 and 6,716 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, ------------- 1997 1996 ----- ----- Equity Index Fund 3,853 3,816 Interest Income Fund 3,992 4,214 U.S. Government Obligations Fund 1,736 1,793 Philip Morris Stock Fund 5,860 5,789 International Equity Fund 200 149 Balanced Fund 222 123 Growth Equity Fund 289 153
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. 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, 1997 and 1996 was $1,008,934,751 and $1,027,591,523, -11- PHILIP MORRIS INCORPORATED DEFERRED PROFIT-SHARING PLAN NOTES TO FINANCIAL STATEMENTS (continued) respectively. The average yield and crediting interest rate of the Interest Income Fund was approximately seven percent for 1997 and 1996. 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 on a trading day and not resumed before the end of the trading day, the Trustee will use the composite price listed in The Wall Street Journal on the next business day. Effective July 14, 1997, the Trustee will use a weighted average sales price method for valuing the portion of Participants' Accounts transferred from the Philip Morris Stock Fund if using the closing price or composite price of Common Stock results in a value of the Philip Morris Stock Fund which is at least one-tenth of one percent (.1%) less than the value using the weighted average sales price method. The weighted average sales price method uses the average of all of the prices for which Common Stock is sold over one or more business days as determined by the Trustee. 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 Philip Morris. -12- PHILIP MORRIS INCORPORATED 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 Operating Profit (defined below), less the amounts allocated for participants in the DPS 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 aggregate of the Contribution to the Plan and the contributions to the DPS 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, before cumulative effect of accounting changes, discontinued operations, extraordinary items, interest and other debt expense, income taxes, amortization of goodwill, any minority interest, general corporate expenses, the amount of any deduction used in computing such earnings for the Contribution to the Plan and the contributions to the DPS Plan and the PMI Craft Plan, contributions to any incentive compensation plan and effective in 1997, before such other charges as the Compensation Committee of the Board of Directors of the Company, in its sole discretion, shall determine to exclude from Operating Profit. As permitted by the Plan, for 1997, initial settlement charges relating to the resolution of certain litigation were excluded in calculating Operating Profit. 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. The aggregate contributions actually made by participants may not cause the Plan to violate limitations on such contributions set forth in the Internal Revenue Code of 1986, as amended (the "Code"). The Code also imposes a dollar limitation on the amount of before-tax contributions for a calendar year. For 1997, each participant's before-tax contribution was limited to $9,500, with a limitation of eight percent of compensation on the total amount of before-tax and after-tax contributions. For 1998, each participant's before-tax contribution will be limited to $10,000, with a limitation of ten percent of compensation on the total amount of before-tax and after-tax contributions. 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"). 4. Valuation of Participant Accounts: The Committee maintains Accounts for each participant to reflect the source and the participant's share of the funds invested in the Trust: -13- PHILIP MORRIS INCORPORATED DEFERRED PROFIT-SHARING PLAN NOTES TO FINANCIAL STATEMENTS (continued)
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 Union Employees' 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. 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. Withdrawals by participants will not be permitted if they would have the effect of disqualifying the Plan and the related Trust from exemption from taxation. Only 50 percent of a participant's Company Account as of December 31, 1988 is available for hardship withdrawals as defined by the Plan. Any withdrawals will reduce the amount available for future withdrawals. The portion of a Company Account eligible for withdrawal will be unavailable if it serves as collateral for an outstanding loan. 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. -14- PHILIP MORRIS INCORPORATED DEFERRED PROFIT-SHARING PLAN NOTES TO FINANCIAL STATEMENTS (continued) 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 Philip Morris 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 1997 and 1996, ($313,000) and ($661,000) were transferred out of the Plan, net of transfers into the Plan, respectively, to the DPS Plan and the PMI Craft Plan as a result of employees being transferred between hourly and salaried status or between the BCT Union and the International Association of Machinists and Aerospace Workers and other unions. 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, 1997 and 1996, were:
1997 1996 ---- ---- Trust 24% 24% Equity Index Fund 24% 24% Interest Income Fund 27% 26% U.S. Government Obligations Fund 50% 51% Philip Morris Stock Fund 21% 19% International Equity Fund 9% 9% Balanced Fund 6% 5% Growth Equity Fund 9% 8% Participants' Loan Account 45% 44%
-15- PHILIP MORRIS INCORPORATED DEFERRED PROFIT-SHARING PLAN NOTES TO FINANCIAL STATEMENTS (in thousands of dollars) (continued) The Plan's approximate allocated share of the Trust's investment activities for the years ended December 31, 1997, 1996 and 1995, was 23 percent, 22 percent and 21 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 1997 and 1996, the approximate amount of such expenses, expressed as a percentage of the average net assets of each fund under the Plan, are as follows:
1997 1996 ----- ----- Equity Index Fund 0.03% 0.06% Interest Income Fund 0.06% 0.05% U.S. Government Obligations Fund 0.13% 0.17% Philip Morris Stock Fund 0.03% 0.03% International Equity Fund 0.32% 0.51% Balanced Fund 0.04% 0.00% Growth Equity Fund 0.07% 0.09%
Investments that represented five percent or more of total Trust assets as of December 31, 1997 and 1996, were:
1997 1996 ---------- ---------- Equity Index Fund GEBT Equity Index Fund $1,377,252 $1,035,144 Interest Income Fund BT GNMA Pooled Fund $ 323,525 Philip Morris Stock Fund Common Stock $1,249,425 $1,017,594
The GEBT Equity Index Fund currently includes Common Stock. -16- PHILIP MORRIS INCORPORATED DEFERRED PROFIT-SHARING PLAN NOTES TO FINANCIAL STATEMENTS (in thousands of dollars) (continued) At December 31, 1997 and 1996, the financial position of the Trust was:
1997 1996 ---------- ---------- Assets: Investments at fair value: Equity Index Fund: GEBT Equity Index Fund (cost $751,660 and $663,661) $1,377,252 $1,035,144 Interest Income Fund: Investment contracts (at contract value) (cost approximates contract value) 988,404 998,637 Short-term temporary investments (cost approximates fair value) 96,954 58,829 U.S. Government Obligations Fund: Government securities (cost $119,577 and $100,977) 121,223 100,773 Federal agency obligations (cost $16,774 and $12,392) 16,904 12,212 Short-term temporary investments (cost approximates fair value) 2,594 1,040 Philip Morris Stock Fund: Common stock (cost $756,882 and $517,740) 1,249,425 1,017,594 Short-term temporary investments (cost approximates fair value) 32,486 24,282 International Equity Fund: International Equity Fund (cost $37,823 and $29,618) 38,619 31,548 Balanced Fund: Balanced Fund (cost $95,674 and $53,125) 101,002 55,832 Growth Equity Fund: Growth Equity Fund (cost $92,678 and $41,359) 83,517 42,018 Other investments: Participants' Loan Account: Loans to participants 131,375 126,525 ---------- ---------- Total investments 4,239,755 3,504,434 Receivables: Investments sold 946 8,388 Interest income 9,205 9,211 Dividend income 11,112 10,826 ---------- ---------- Total assets 4,261,018 3,532,859 Liabilities: Investments purchased 3,179 6,116 Other payables - 1,527 ---------- ---------- Net assets $4,257,839 $3,525,216 ========== ==========
-17- PHILIP MORRIS INCORPORATED 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, 1997, 1996 and 1995, were:
1997 1996 1995 ---------- ---------- ---------- Additions: Employer contributions $ 155,951 $ 144,224 $ 127,873 Employee contributions 41,969 38,823 33,393 Investment activities: Interest 77,778 72,270 69,274 Dividends 72,286 48,968 39,053 Interest on participant loans 9,655 8,642 7,005 ---------- ---------- ---------- 159,719 129,880 115,332 Net appreciation in fair value of investments 524,019 394,208 563,777 ---------- ---------- ---------- Net investment activities 683,738 524,088 679,109 Deductions: Distributions and withdrawals (146,913) (114,236) (149,624) General and administrative expenses (2,122) (1,748) (1,466) ---------- ---------- ---------- Increase in Trust net assets 732,623 591,151 689,285 Net assets: Beginning of year 3,525,216 2,934,065 2,244,780 ---------- ---------- ---------- End of year $4,257,839 $3,525,216 $2,934,065 ========== ========== ==========
-18- PHILIP MORRIS INCORPORATED 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, 1997 and 1996, were:
U.S. Inter- Equity Interest Government national Growth Index Income Obligations Philip Morris Equity Balanced Equity Fund Fund Fund Stock Fund Fund Fund Fund ---------- ---------- ----------- ------------- ---------- -------- ---------- 1997: Net Assets $1,379,028 $1,091,193 $ 142,054 $1,292,070 $ 38,831 $ 99,422 $ 83,033 Number of participation units 146,142 300,910 50,193 135,499 33,678 65,534 58,232 Net asset value per unit $ 9.4362 $ 3.6263 $ 2.8302 $ 9.5356 $ 1.1530 $ 1.5171 $ 1.4259 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 Participants' Loan Account Total ------------ ---------- 1997: Net Assets $ 132,208 $4,257,839 Number of participation units Net asset value per unit 1996: Net Assets $ 127,290 $3,525,216 Number of participation units Net asset value per unit
-19- PHILIP MORRIS INCORPORATED 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, 1997, 1996, and 1995 were:
U.S. Equity Government International Index Obligations Philip Morris Equity Fund Fund Stock Fund Fund --------- ----------- -------------- ------------- 1997 ---- Realized gains (losses): Proceeds $ 211,278 $ 114,509 $ 1,169,804 $ 25,783 Cost 126,652 114,730 976,746 24,285 --------- --------- ----------- -------- Net realized gains (losses) 84,626 (221) 193,058 1,498 --------- --------- ----------- -------- Unrealized appreciation (depreciation): Beginning of year 371,483 (384) 499,853 1,930 End of year 625,591 1,776 492,544 796 --------- --------- ----------- -------- Increase (Decrease) 254,108 2,160 (7,309) (1,134) --------- --------- ----------- -------- Net appreciation (depreciation) in fair value of investments $ 338,734 $ 1,939 $ 185,749 $ 364 ========= ========= =========== ======== 1996 ---- Realized gains: Proceeds $ 154,267 $ 90,198 $ 912,475 $ 13,482 Cost 107,599 90,187 732,182 13,036 --------- --------- ----------- -------- Net realized gains 46,668 11 180,293 446 --------- --------- ----------- -------- Unrealized appreciation (depreciation): Beginning of year 224,832 2,652 482,740 364 End of year 371,483 (384) 499,853 1,930 --------- --------- ----------- -------- Increase (Decrease) 146,651 (3,036) 17,113 1,566 --------- --------- ----------- -------- Net appreciation (depreciation) in fair value of investments $ 193,319 $ (3,025) $ 197,406 $ 2,012 ========= ========= =========== ======== 1995 ---- Realized gains (losses): Proceeds $ 86,846 $ 170,836 $ 237,900 $ 1,592 Cost 73,684 170,697 200,477 1,616 --------- --------- ----------- -------- Net realized gains (losses) 13,162 139 37,423 (24) --------- --------- ----------- -------- Unrealized appreciation (depreciation): Beginning of year 9,957 (753) 187,838 - End of year 224,832 2,652 482,740 364 --------- --------- ----------- -------- Increase (Decrease) 214,875 3,405 294,902 364 --------- --------- ----------- -------- Net appreciation (depreciation) in fair value of investments $ 228,037 $ 3,544 $ 332,325 $ 340 ========= ========= =========== ======== Growth Balanced Equity Fund Fund Total --------- -------- ----------- 1997 ---- Realized gains (losses): Proceeds $ 26,837 $ 24,555 $ 1,572,766 Cost 24,190 22,770 1,289,373 -------- -------- ----------- Net realized gains (losses) 2,647 1,785 283,393 -------- -------- ----------- Unrealized appreciation (depreciation): Beginning of year 2,708 660 876,250 End of year 5,329 (9,160) 1,116,876 -------- -------- ----------- Increase (Decrease) 2,621 (9,820) 240,626 -------- -------- ----------- Net appreciation (depreciation) in fair value of investments $ 5,268 $ (8,035) $ 524,019 ======== ======== =========== 1996 ---- Realized gains: Proceeds $ 17,103 $ 19,723 $ 1,207,248 Cost 16,517 19,686 979,207 -------- -------- ----------- Net realized gains 586 37 228,041 -------- -------- ----------- Unrealized appreciation (depreciation): Beginning of year 413 (919) 710,082 End of year 2,708 659 876,249 -------- -------- ----------- Increase (Decrease) 2,295 1,578 166,167 -------- -------- ----------- Net appreciation (depreciation) in fair value of investments $ 2,881 $ 1,615 $ 394,208 ======== ======== =========== 1995 ---- Realized gains (losses): Proceeds $ 1,848 $ 2,211 $ 501,233 Cost 1,817 2,205 450,496 -------- -------- ----------- Net realized gains (losses) 31 6 50,737 -------- -------- ----------- Unrealized appreciation (depreciation): Beginning of year - - 197,042 End of year 413 (919) 710,082 -------- -------- ----------- Increase (Decrease) 413 (919) 513,040 -------- -------- ----------- Net appreciation (depreciation) in fair value of investments $ 444 $ (913) $ 563,777 ======== ======== ===========
-20- PHILIP MORRIS INCORPORATED DEFERRED PROFIT-SHARING PLAN NOTES TO FINANCIAL STATEMENTS (concluded) 9. Transactions with Parties in Interest: The Fiduciaries are not aware of any transaction between the Plan and a party in interest (as defined in ERISA) or disqualified person (as defined in the Code) to the Plan (1) which is prohibited under the fiduciary responsibility provisions of ERISA or the prohibited transaction provisions of the Code, or (2) which has not been exempted from such prohibitions pursuant to a class exemption issued by the Department of Labor. 10. Tax Status: By letter dated June 28, 1995, the Internal Revenue Service 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 Plan has been subsequently amended and no determination as to the continued qualification of the Plan under Section 401(a) of the Code and of the exemption of the related Trust from Federal income taxes under Section 501(a) of the Code has been sought from the Internal Revenue Service. The Fiduciaries believe that the Plan continues to be designed and operated in accordance with the applicable provisions of the Code. Therefore, no provision for income taxes has been included in the Plan's financial statements. Accordingly, participants will not be subject to income tax on the Contribution and before-tax contributions made on their behalf by Philip Morris, on the making of a timely rollover contribution to the Trust, nor on earnings credited to their Accounts until withdrawn or distributed. 11. Plan Termination: The Board of Directors of the Company has the right, subject to the applicable provisions of ERISA and the Code, to amend (retroactively or otherwise) the Plan, suspend making the Contribution to the Plan or to terminate the Plan. -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 INCORPORATED 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: May 21, 1998 -22- PHILIP MORRIS DEFERRED PROFIT-SHARING TRUST FUND SCHEDULE I - INVESTMENTS as of December 31, 1997
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 -- 32.48% GEBT Equity Index Fund -- 32.48% 607,050 $ 751,660,394 $ 1,377,251,721 ------------- --------------- Total Equity Index Fund 751,660,394 1,377,251,721 ------------- --------------- INTEREST INCOME FUND -- 25.60% Investment Contracts -- 23.31% (The amounts included in Column D for the investment contracts represent contract value, see Note 2.) Participation Contracts with Institutions -- 5.71% Commonwealth Life Insurance Company No. 00343 FR 8.68% matures 2/28/1998 13,429,215 13,429,215 13,429,215 New York Life Insurance Company No. 06121 8.50% matures 3/1/1998 22,251,355 22,251,355 22,251,355 Principal Mutual Life Insurance Company No. 74811-2 8.87% matures 5/1/1998 45,527,674 45,527,674 45,527,674 Allstate Life Insurance Company No. 5421 6.47% matures 4/7/1999 26,308,421 26,308,421 26,308,421 New York Life Insurance Company No. 06989 7.33% matures 7/31/1999 23,723,252 23,723,252 23,723,252 Principal Mutual Life Insurance Company No. 3-74811-4 5.82% matures 9/6/1999 37,538,601 37,538,601 37,538,601 Jackson National Life Insurance Company No. G-1036 6.91% matures 2/29/2000 20,568,084 20,568,084 20,568,084 Security Life of Denver No. FA 0147 9.10% matures 8/1/2000 1,217,540 1,217,540 1,217,540 Continental Assurance Company No. GP 24024 6.63% matures 8/31/2001 26,535,879 26,535,879 26,535,879 Sun America Life Insurance Company No. 4697 6.67% matures 12/31/2001 24,858,748 24,858,748 24,858,748 ------------- --------------- Total Participation Contracts 241,958,769 241,958,769 ------------- ---------------
S-1 PHILIP MORRIS DEFERRED PROFIT-SHARING TRUST FUND SCHEDULE I - INVESTMENTS as of December 31, 1997
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 -- 17.60% National Westminster Bank No. SAM 0104A 5.90% GEBT Short-Term Investment Fund $ 483,692 $ 483,692 Federal Home Loan Mortgage Corporation matures 8/15/2005 6.25% 893,810 893,810 Federal Home Loan Mortgage Corporation matures 4/1/2008 7.00% 79,353 79,353 Federal Home Loan Mortgage Corporation matures 8/15/2008 6.50% 854,990 854,990 Federal Home Loan Mortgage Corporation matures 9/1/2008 6.50% 30,035 30,035 Federal Home Loan Mortgage Corporation matures 12/1/2008 6.50% 32,512 32,512 Federal Home Loan Mortgage Corporation matures 2/1/2009 6.50% 1,404,982 1,404,982 Federal Home Loan Mortgage Corporation matures 6/1/2009 6.50% 59,933 59,933 Federal Home Loan Mortgage Corporation matures 10/1/2010 7.00% 171,087 171,087 Federal Home Loan Mortgage Corporation matures 2/1/2011 6.50% 93,670 93,670 Federal Home Loan Mortgage Corporation matures 2/1/2011 7.00% 525,639 525,639 Federal Home Loan Mortgage Corporation matures 3/1/2011 7.00% 923,254 923,254 Federal Home Loan Mortgage Corporation matures 12/15/2015 6.50% 2,173,326 2,173,326 Federal Home Loan Mortgage Corporation matures 1/15/2018 6.00% 3,342,763 3,342,763 Federal Home Loan Mortgage Corporation matures 6/15/2018 7.00% 241,055 241,055 Federal National Mortgage Association matures 6/25/2005 6.25% 1,788,171 1,788,171 Federal National Mortgage Association matures 8/25/2005 6.00% 389,262 389,262 Federal National Mortgage Association matures 7/1/2008 7.00% 664,114 664,114 Federal National Mortgage Association matures 8/1/2008 7.00% 607,449 607,449 Federal National Mortgage Association matures 1/1/2009 6.50% 122,472 122,472 Federal National Mortgage Association matures 2/1/2009 6.50% 402,432 402,432 Federal National Mortgage Association matures 3/1/2009 6.50% 136,288 136,288 Federal National Mortgage Association matures 5/1/2009 6.50% 848,743 848,743
S-2 PHILIP MORRIS DEFERRED PROFIT-SHARING TRUST FUND SCHEDULE I - INVESTMENTS as of December 31, 1997
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 matures 8/25/2012 5.60% $ 929,239 $ 929,239 Federal National Mortgage Association matures 8/25/2013 6.70% 1,568,013 1,568,013 Federal National Mortgage Association matures 9/25/2015 6.00% 1,779,483 1,779,483 Federal National Mortgage Association matures 6/25/2016 5.70% 1,771,617 1,771,617 Federal National Mortgage Association matures 7/25/2016 5.65% 1,077,996 1,077,996 Government National Mortgage Association matures 12/15/2023 6.50% 204,584 204,584 Government National Mortgage Association matures 3/15/2024 6.50% 62,894 62,894 Government National Mortgage Association matures 4/15/2024 6.50% 1,033,547 1,033,547 Government National Mortgage Association matures 5/15/2024 6.50% 1,184,617 1,184,617 ------------ ------------ Total National Westminster Bank Contract 25,881,022 25,881,022 ------------ ------------ Commonwealth Life Insurance Company No. ADA00043TR, 6.23%, Peoples Life Insurance Company No. BDA00058TR, 6.39%, Trans America Life Insurance Company No. 76587, 5.92%, Trans America Life Insurance Company No. 76595, 6.80%, Trans America Life Insurance Company No. 76691, 6.33%, National Westminster Bank No. 188M, 6.34% & J P Morgan No. APHILMO1, 6.35% GEBT Short-Term Investment Fund 76,492 76,492 BT GNMA Pooled Fund 7.27% 323,524,625 323,524,625 United States Treasury Note matures 3/31/2002 6.63% 10,620,222 10,620,222 United States Treasury Note matures 4/30/2002 6.63% 14,546,992 14,546,992 United States Treasury Note matures 9/30/2002 5.88% 23,436,510 23,436,510 United States Treasury Note matures 11/30/2002 5.75% 2,948,058 2,948,058 United States Treasury Note matures 7/15/2006 7.00% 91,375,386 91,375,386 United States Treasury Note matures 5/15/2007 6.63% 80,787,286 80,787,286 United States Treasury Note matures 8/15/2007 6.13% 52,640,540 52,640,540
S-3 PHILIP MORRIS DEFERRED PROFIT-SHARING TRUST FUND SCHEDULE I - INVESTMENTS as of December 31, 1997
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, National Westminster Bank & J P Morgan (continued) Federal National Mortgage Association matures 11/23/2001 6.35% $ 433,627 $ 433,627 Federal National Mortgage Association matures 9/9/2003 5.97% 267,573 267,573 Federal National Mortgage Association matures 10/25/2004 8.40% 1,077,673 1,077,673 Federal National Mortgage Association matures 11/10/2004 8.63% 977,952 977,952 Federal Home Loan Mortgage Corporation matures 11/15/2003 5.50% 1,575,419 1,575,419 Premier Auto TR matures 2/4/1999 7.15% 370,048 370,048 Bayerische Landesbank Girozentrale matures 7/19/1999 6.55% 2,857,315 2,857,315 Standard Credit Card Master Trust matures 6/7/2000 6.75% 989,048 989,048 Standard Credit Card Master Trust matures 4/7/2001 6.80% 495,812 495,812 Asian Development Bank NTS matures 5/2/2001 8.50% 1,846,154 1,846,154 American Express Master Trust matures 7/15/2001 5.38% 5,868,730 5,868,730 General Electric Cap Corp matures 11/1/2001 5.50% 2,894,250 2,894,250 MBNA Master Credit Card Trust matures 1/15/2003 6.60% 2,016,982 2,016,982 Ford Credit Auto Loan Master Trust matures 2/15/2003 5.50% 5,296,284 5,296,284 First Bank Corporate Card Master Trust matures 2/15/2003 6.40% 3,741,683 3,741,683 Outlet Broadcasting matures 7/15/2003 10.88% 1,553,527 1,553,527 Avis matures 10/20/2003 6.40% 5,938,436 5,938,436 Citibank Credit Card Master Trust matures 2/15/2004 6.55% 8,941,837 8,941,837 MBNA Master Credit Card Trust matures 11/15/2004 6.60% 12,003,593 12,003,593
S-4 PHILIP MORRIS DEFERRED PROFIT-SHARING TRUST FUND SCHEDULE I - INVESTMENTS as of December 31, 1997
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, National Westminster Bank & J P Morgan (continued) First USA Credit Card Master Trust matures 3/17/2005 6.42% $ 5,949,951 $ 5,949,951 Japan Fin Corp matures 4/27/2005 7.38% 1,875,654 1,875,654 International Bank for Recon & Dev matures 7/21/2005 6.38% 2,109,865 2,109,865 NationsBank Credit Card Master Trust matures 12/15/2005 6.00% 4,853,646 4,853,646 Bayerische Landesbank Girozentrale matures 2/1/2006 6.17% 2,192,441 2,192,441 Bayerische Landesbank Girozentrale matures 2/9/2006 6.20% 11,058,411 11,058,411 KFW Int'l Fin Inc matures 6/1/2006 8.20% 2,911,785 2,911,785 General Electric Cap Corp matures 3/1/2007 8.85% 10,243,755 10,243,755 General Electric Cap Corp matures 7/24/2008 8.50% 1,061,934 1,061,934 First Plus Home Loan Trust matures 3/12/2012 6.80% 5,927,858 5,927,858 International Bank for Recon & Dev matures 3/1/2026 8.88% 1,429,091 1,429,091 Inter-American Development Bank matures 7/15/2027 6.75% 9,517,532 9,517,532 Merck matures 5/3/2037 5.76% 2,329,736 2,329,736 -------------- -------------- Total Commonwealth, Peoples, Trans America, Nat West & J P Morgan Contracts 720,563,713 720,563,713 -------------- -------------- Total Financial Institution Pools 746,444,735 746,444,735 -------------- -------------- Total Investment Contracts 988,403,504 988,403,504 -------------- -------------- Short-Term Investments -- 2.29% GEBT Short-Term Investment Fund 96,953,625 96,953,625 96,953,625 -------------- -------------- Total Interest Income Fund 1,085,357,129 1,085,357,129 -------------- --------------
S-5 PHILIP MORRIS DEFERRED PROFIT-SHARING TRUST FUND SCHEDULE I - INVESTMENTS as of December 31, 1997
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 --------------------------------- --------------- ------------ ------------ U.S. GOVERNMENT OBLIGATIONS FUND -- 3.32% Government Securities -- 2.86% United States Treasury Notes 7.125% due 9/30/1999 11,000,000 $ 11,347,126 $ 11,261,250 United States Treasury Notes 7.125% due 2/29/2000 28,300,000 29,250,642 29,118,153 United States Treasury Notes 5.875% due 6/30/2000 15,200,000 15,075,578 15,268,856 United States Treasury Notes 5.625% due 2/28/2001 5,300,000 5,237,766 5,285,902 United States Treasury Notes 6.375% due 8/15/2002 23,300,000 23,333,352 23,900,674 United States Treasury Notes 6.50% due 5/15/2005 14,375,000 14,459,684 14,985,938 United States Treasury Notes 6.50% due 8/15/2005 12,000,000 12,250,609 12,521,280 United States Treasury Notes 6.875% due 5/15/2006 8,300,000 8,621,814 8,881,000 ------------ ------------ Total Government Securities 119,576,571 121,223,053 ------------ ------------ Federal Agency Obligations -- .40% Federal National Mortgage Association 6.41% due 5/22/2000 4,000,000 3,989,375 4,055,000 Federal National Mortgage Association 5.50% due 2/2/2001 13,020,000 12,784,924 12,849,047 ------------ ------------ Total Federal Agency Obligations 16,774,299 16,904,047 ------------ ------------ Short-Term Investments -- .06% GEBT Short-Term Investment Fund 2,594,285 2,594,285 2,594,285 ------------ ------------ Total U.S. Government Obligations Fund 138,945,155 140,721,385 ------------ ------------
S-6 PHILIP MORRIS DEFERRED PROFIT-SHARING TRUST FUND SCHEDULE I - INVESTMENTS as of December 31, 1997
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 --------------------------------- --------------- ------------ --------------- PHILIP MORRIS STOCK FUND -- 30.24% Common Stock -- 29.47% Tobacco -- 29.47% Philip Morris Companies Inc. 27,611,611 $ 756,881,577 $ 1,249,425,398 Short-Term Investments -- .77% GEBT Short-Term Investment Fund 32,486,026 32,486,026 32,486,026 --------------- --------------- Total Philip Morris Stock Fund 789,367,603 1,281,911,424 --------------- --------------- INTERNATIONAL EQUITY FUND -- .91% Japanese Equity Index Fund -- .21% 135,567 12,169,697 8,850,053 Non Japanese Equity Index Fund -- .70% 176,330 25,653,032 29,768,806 --------------- --------------- Total International Equity Fund 37,822,729 38,618,859 --------------- --------------- BALANCED FUND -- 2.38% Balanced Fund -- 2.38% 7,599,884 95,673,695 101,002,457 --------------- --------------- Total Balanced Fund 95,673,695 101,002,457 --------------- --------------- GROWTH EQUITY FUND -- 1.97% Growth Equity Fund -- 1.97% 7,262,375 92,677,510 83,517,314 --------------- --------------- Total Growth Equity Fund 92,677,510 83,517,314 --------------- --------------- PARTICIPANTS' LOAN ACCOUNT -- 3.10% Loans to Participants -- 3.10% 131,375,081 131,375,081 131,375,081 --------------- --------------- Total Participants' Loan Account 131,375,081 131,375,081 --------------- --------------- TOTAL INVESTMENTS $ 3,122,879,296 $ 4,239,755,370 =============== ===============
S-7 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. 33-13210) of the Philip Morris Incorporated Deferred Profit-Sharing Plan of our report dated April 10, 1998, on our audits of the financial statements of the Philip Morris Incorporated Deferred Profit-Sharing Plan as of December 31, 1997 and 1996 and for the years ended December 31, 1997, 1996 and 1995, and the financial statement schedule as of December 31, 1997, which report is included in this annual report on Form 11-K. /s/ COOPERS & LYBRAND L.L.P. New York, New York May 21, 1998 -----END PRIVACY-ENHANCED MESSAGE-----