-----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, RG3Zwv68ps0OSEAYAyjMx3j7LWVUZJESSzdU2EvO+JppHhgBhoRHN10jxYHaJh8N i4j/gO4DZOgWF4UycQAyCA== 0000940180-98-000587.txt : 19980525 0000940180-98-000587.hdr.sgml : 19980525 ACCESSION NUMBER: 0000940180-98-000587 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: 98630221 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) ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE [X] 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 ________________ Kraft Foods Employee Thrift-Investment Plan Three Lakes Drive, Northfield, Illinois 60093 (Full title and address 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.) ================================================================================ KRAFT FOODS EMPLOYEE THRIFT-INVESTMENT 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-1-8
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 Management Committee for Employee Benefits of Kraft Foods, Inc., the Administrative Committee and all Participants as a group (but not individually) of the Kraft Foods Employee Thrift-Investment Plan: We have audited the accompanying statements of financial condition of the Kraft Foods Employee Thrift-Investment 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. or Kraft Foods, 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. Chicago, Illinois March 27, 1998 -3- KRAFT FOODS EMPLOYEE THRIFT-INVESTMENT PLAN STATEMENT OF FINANCIAL CONDITION as of December 31, 1997 (in thousands of dollars) ______
Diversified Equity Interest Government Participants' Index Income Securities Philip Morris Balanced Loan Fund Fund Fund Stock Fund Fund Account Total ------------- ---------- ------------- ---------------- ---------- -------------- --------- ASSETS: Allocated share of Trust net assets $ 8,140 $ 12,672 $ 1,537 $ 130,747 $ 791 $ 2,186 $ 156,073 Interfund receivables (payables) 36 392 (428) - ------------ ---------- ----------- ------------- --------- ------------ --------- Total assets 8,176 13,064 1,537 130,319 791 2,186 156,073 ------------ ---------- ----------- ------------- --------- ------------ --------- LIABILITIES: Distributions and withdrawals payable 7 8 124 139 Undistributed participants' loans 2 1 29 (32) - General and administrative expenses payable 8 15 2 85 1 111 ------------ ---------- ----------- ------------- --------- ------------ --------- Total liabilities 17 24 2 238 1 (32) 250 ------------ ---------- ----------- ------------- --------- ------------ --------- Plan equity $ 8,159 $ 13,040 $ 1,535 $ 130,081 $ 790 $ 2,218 $ 155,823 ============ ========== =========== ============= ========= ============ =========
The accompanying notes are an integral part of these financial statements. -4- KRAFT FOODS EMPLOYEE THRIFT-INVESTMENT PLAN STATEMENT OF FINANCIAL CONDITION as of December 31, 1996 (in thousands of dollars) __________
Diversified Equity Interest Government Index Income Securities Philip Morris Fund Fund Fund (GF) Stock Fund Total ----------- -------- ---------- ------------- ---------- ASSETS: Allocated share of Trust net assets $ 5,778 $ 13,373 $ 1,149 $ 127,059 $147,359 Employer contributions receivable 1 1 1 221 224 Interfund receivables (payables) 79 381 140 (600) - ----------- -------- ---------- ------------- ---------- Total assets 5,858 13,755 1,290 126,680 147,583 ----------- -------- ---------- ------------- ---------- LIABILITIES: Distributions and withdrawals payable 57 247 14 3,742 4,060 General and administrative expenses payable 1 5 1 33 40 ----------- -------- ---------- ------------- ---------- Total liabilities 58 252 15 3,775 4,100 ----------- -------- ---------- ------------- ---------- Plan equity $ 5,800 $ 13,503 $ 1,275 $ 122,905 $143,483 =========== ======== ========== ============= ==========
The accompanying notes are an integral part of these financial statements. -5- KRAFT FOODS EMPLOYEE THRIFT-INVESTMENT PLAN STATEMENT OF INCOME AND CHANGES IN PLAN EQUITY for the year ended December 31, 1997 (in thousands of dollars) _____
Diversified Equity Interest Government Government Index Income Securities Securities Philip Morris Balanced Fund Fund Fund Fund (GF) Stock Fund Fund ----------- ---------- ------------ ------------ -------------- ---------- ADDITIONS: Employer contributions $ 25 $ 20 $ 10 $ 3 $ 2,481 $ 4 Employee contributions 505 548 95 33 4,762 16 Allocated share of Trust investment activities: Interest income 773 70 21 187 Dividend income 5,114 22 Net appreciation in fair value of investments 1,853 21 23,786 15 ----------- ---------- ------------ ------------ -------------- ---------- 1,853 773 91 21 29,087 37 ----------- ---------- ------------ ------------ -------------- ---------- Total additions 2,383 1,341 196 57 36,330 57 ----------- ----------- ------------ ------------ -------------- ----------- DEDUCTIONS: Distributions and withdrawals (1,262) (3,809) (231) (45) (22,069) (12) General and administrative expenses (30) (55) (11) (1) (558) (1) ----------- ---------- ------------ ------------ -------------- ---------- Total deductions (1,292) (3,864) (242) (46) (22,627) (13) ----------- ---------- ------------ ------------ -------------- ---------- Net transfers among funds 1,365 2,167 1,598 (1,286) (4,598) 754 Participants' loans (106) (120) (20) (2,129) (8) Participants' loan repayments 9 13 3 200 ----------- ---------- ------------ ------------ -------------- ---------- Net additions (deductions) 2,359 (463) 1,535 (1,275) 7,176 790 PLAN EQUITY: Beginning of year 5,800 13,503 - 1,275 122,905 - ----------- ---------- ------------ ------------ -------------- ---------- End of year $ 8,159 $ 13,040 $ 1,535 $ - $ 130,081 $ 790 =========== ========== ============ ============ ============== ========== Participants' Loan Account Total ------------ ---------- ADDITIONS: Employer contributions $ 2,543 Employee contributions 5,959 Allocated share of Trust investment activities: Interest income $ 60 1,111 Dividend income 5,136 Net appreciation in fair value of investments 25,675 ------------ ---------- 60 31,922 ------------ ---------- Total additions 60 40,424 ------------ ---------- DEDUCTIONS: Distributions and withdrawals (27,428) General and administrative expenses (656) ------------ ---------- Total deductions - (28,084) ------------ ---------- Net transfers among funds - Participants' loans 2,383 - Participants' loan repayments (225) - ------------ ---------- Net additions (deductions) 2,218 12,340 PLAN EQUITY: Beginning of year - 143,483 ------------ ---------- End of year $ 2,218 $ 155,823 ============ ==========
The accompanying notes are an integral part of these financial statements. -6- KRAFT FOODS EMPLOYEE THRIFT-INVESTMENT PLAN STATEMENT OF INCOME AND CHANGES IN PLAN EQUITY for the year ended December 31, 1996 (in thousands of dollars) ____
Diversified Equity Interest Government Index Income Securities Philip Morris Fund Fund Fund (GF) Stock Fund Total ----------- ---------- ------------ ------------- ---------- ADDITIONS: Employer contributions $ 10 $ 18 $ 12 $ 2,367 $ 2,407 Employee contributions 435 667 135 4,690 5,927 Allocated share of Trust investment activities: Interest income 786 63 147 996 Dividend income 5,127 5,127 Net appreciation in fair value of investments 1,089 25,050 26,139 ----------- ---------- ------------ ------------- ---------- 1,089 786 63 30,324 32,262 ----------- ---------- ------------ ------------- ---------- Total additions 1,534 1,471 210 37,381 40,596 ----------- ---------- ------------ ------------- ---------- DEDUCTIONS: Distributions and withdrawals (1,292) (3,529) (189) (25,088) (30,098) General and administrative expenses (9) (30) (2) (200) (241) ----------- ---------- ------------ ------------- ---------- Total deductions (1,301) (3,559) (191) (25,288) (30,339) ----------- ---------- ------------ ------------- ---------- Net transfers among funds 1,291 2,181 124 (3,596) - ----------- ---------- ------------ ------------- ---------- Net additions 1,524 93 143 8,497 10,257 PLAN EQUITY: Beginning of year 4,276 13,410 1,132 114,408 133,226 ----------- ---------- ------------ ------------- ---------- End of year $ 5,800 $ 13,503 $ 1,275 $ 122,905 $ 143,483 =========== ========== ============ ============= ==========
The accompanying notes are an integral part of these financial statements. -7- KRAFT FOODS EMPLOYEE THRIFT-INVESTMENT PLAN STATEMENT OF INCOME AND CHANGES IN PLAN EQUITY for the year ended December 31, 1995 (in thousands of dollars) ________
Diversified Equity Interest Government Index Income Securities Philip Morris Fund Fund Fund (GF) Stock Fund Total ----------- ----------- ----------- ----------- ----------- ADDITIONS: Employer contributions $ 11 $ 21 $ 14 $ 3,054 $ 3,100 Employee contributions 379 743 154 4,577 5,853 Allocated share of Trust investment activities: Interest income 791 46 96 933 Dividend income 4,684 4,684 Net appreciation in fair value of investments 1,212 17 42,863 44,092 ----------- ----------- ----------- ----------- ----------- 1,212 791 63 47,643 49,709 ----------- ----------- ----------- ----------- ----------- Total additions 1,602 1,555 231 55,274 58,662 ----------- ----------- ----------- ----------- ----------- DEDUCTIONS: Distributions and withdrawals (859) (2,221) (156) (17,748) (20,984) General and administrative expenses (11) (39) (3) (260) (313) ----------- ----------- ----------- ----------- ----------- Total deductions (870) (2,260) (159) (18,008) (21,297) ----------- ----------- ----------- ----------- ----------- Net transfers among funds 73 1,598 101 (1,772) - Net transfers between plans (59) (112) (18) (1,159) (1,348) ----------- ----------- ----------- ----------- ----------- Net additions 746 781 155 34,335 36,017 PLAN EQUITY: Beginning of year 3,530 12,629 977 80,073 97,209 ----------- ----------- ----------- ----------- ----------- End of year $ 4,276 $ 13,410 $ 1,132 $ 114,408 $ 133,226 =========== =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements. -8- KRAFT FOODS EMPLOYEE THRIFT-INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS 1. General Description of the Plan: The Kraft Foods Employee Thrift-Investment Plan (the "Plan") is a defined contribution plan designed to encourage employees to save for retirement by providing eligible employees with an opportunity to invest a portion of their compensation and to share in a matching contribution by Kraft Foods, Inc. (hereinafter referred to as "Kraft Foods") by making such contribution. Kraft Foods is a subsidiary of Philip Morris Companies Inc. (the "Company"). Hourly and certain salaried employees of Kraft Foods and certain of its domestic subsidiaries (the "Kraft Foods Companies") who are represented by designated collective bargaining units are eligible to participate in the Plan, provided they meet eligibility requirements. The benefits offered under the Plan may vary, depending upon the job location of the employee and the collective bargaining unit of which he or she is a member. After completing one year of service, eligible employees may make before-tax and/or after-tax contributions. Matching contributions by Kraft Foods (the "Kraft Foods Matching Contributions") are contributed to the Plan (see Note 3). Prior to 1997, Kraft Foods Matching Contributions were based on profits from certain of Kraft Foods' operating units. Currently, Kraft Foods Matching Contributions are made at a fixed rate. 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 Management Committee for Employee Benefits of Kraft Foods (the "Committee") comprised of employees of Kraft Foods. The Committee has appointed the Administrative Committee to handle certain Plan administration matters. The Corporate Employee Plans Investment Committee of Philip Morris Companies Inc. (the "Investment Committee") is responsible for the selection of the investment options in which participants elect to invest their assets in the Plan and monitors the performance of these investment options. The Committee and the Investment Committee are hereinafter collectively referred to as the "Fiduciaries". Assets of the Plan are co-invested with the assets of the Kraft Foods Thrift Plan and other defined contribution plans sponsored by Kraft Foods in a commingled investment fund known as the Kraft Foods Master Defined Contribution Trust (hereinafter referred to as the "Trust") for which Bankers Trust Company (the "Trustee") serves as the trustee (see Note 7). Prior to May 12, 1997, participants had the option of investing their Plan Accounts (see Note 4) in 25 percent increments in each of the funds (except the Balanced Fund) listed below. Effective May 12, 1997, participants have the option of investing their Plan Accounts in five percent increments in the five funds listed below. Except for participants employed at the Naperville, Illinois facility of Kraft Foods (a "Naperville Participant"), Kraft Foods Matching Contributions made prior to May 12, 1997 were initially invested -9- KRAFT FOODS EMPLOYEE THRIFT-INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS (continued) in the Philip Morris Stock Fund but could have been allocated and invested in the same manner as participant contributions in the month following the month in which the Kraft Foods Matching Contributions were made. Effective May 12, 1997, the participant may reallocate and invest Kraft Foods Matching Contributions initially invested in the Philip Morris Stock Fund on any business day. DIVERSIFIED EQUITY INDEX FUND (also referred to as the 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. 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. GOVERNMENT SECURITIES 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. Prior to May 1, 1997, participants had the option of investing their Plan Accounts in the Government Securities Fund (GF), which had the same investment objective as the Government Securities Fund except that the average maturity of the securities was less than two years. Effective May 1, 1997, the Government Securities Fund (GF) was merged into the Government Securities Fund. The average maturity of the U.S. Government securities in the Government Securities Fund is approximately five years. Prior to May 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. 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. None of the foregoing funds guarantees a return to the participant. Participants may change their options once a month (effective May 12, 1997, normally on any business day). Prior to May 12, 1997, participants could not directly transfer amounts between the Interest Income Fund and the Government Securities Fund (GF). -10- KRAFT FOODS EMPLOYEE THRIFT-INVESTMENT 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 3,384 and 3,523 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 ------- ------- Diversified Equity Index Fund 692 598 Interest Income Fund 966 1,052 Government Securities Fund 301 - Government Securities Fund (GF) - 258 Philip Morris Stock Fund 3,297 3,331 Balanced Fund 70 -
Each participant is at all times fully vested in the balance of his or her After-Tax Contributions Account, Before-Tax Contributions Account, and in the balance of his or her Kraft Foods Matching Account attributable to amounts contributed before January 1, 1986 or transferred from the General Foods Employee Stock Ownership Plan ("ESOP") (see Note 4), and, in the case of a Naperville Participant, in the balance of the employer contribution-derived account transferred from the predecessor plan. A participant shall be fully vested in the balance in his or her Kraft Foods Matching Account upon attainment of age 55, permanent and total disability, or death while employed by Kraft Foods or any of its affiliates, upon a change in control of the Company (see Note 3), or upon a termination of the Plan (see Note 12). Otherwise, a participant who is employed by Kraft Foods or any of its affiliates at other than the Naperville, Illinois facility of Kraft Foods shall become vested in his or her Kraft Foods Matching Account based on the number of years of vesting service determined in accordance with the following schedule:
Vested Years of Service Percentage ---------------- ---------- Less than 3 0% 3 but less than 4 50% 4 but less than 5 75% 5 or more 100%
A Naperville Participant shall be fully vested in the entire balance in his or her Kraft Foods Matching Account after two years of participation in the Plan (and the predecessor plan) or the completion of five years of service. Forfeitures: Kraft Foods Matching Contributions forfeited by terminated participants are used to reduce future Kraft Foods Matching Contributions to the Plan. -11- KRAFT FOODS EMPLOYEE THRIFT-INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS (continued) 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 $639,429,002 and $712,947,862, 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 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. -12- KRAFT FOODS EMPLOYEE THRIFT-INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS (continued) 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: No contribution is required from any eligible employee under the Plan. Eligible employees (other than Naperville Participants) may elect to contribute from one percent to 10 percent of his or her base rate of compensation, but contributions from base compensation over $15,000 may not exceed six percent. A Naperville Participant may elect to contribute from one percent to 16 percent of his or her compensation, but only contributions not in excess of six percent of compensation are eligible for Kraft Foods Matching Contributions described below. Contributions may be made on a before-tax basis, an after-tax basis, or in a combination of the two. The percentage of compensation available for both before-tax and after-tax 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, a participant's before-tax contributions were limited to $9,500; for 1998, a participant's before-tax contributions will be limited to $10,000. Each year Kraft Foods Matching Contributions are based on the amount of each participant's contributions to the Plan, subject to certain limitations under the Code. Kraft Foods Matching Contributions on behalf of Naperville Participants equal 25 percent of each Naperville Participant's contributions not in excess of six percent of compensation. Beginning January 1, 1997, the Kraft Foods Matching Contributions on behalf of all other participants will equal 45 percent of each participants' contributions. The Kraft Foods Matching Contributions percentage for years prior to 1997 was the greater of (i) 75 percent of the matching contribution rate under the Kraft Foods Thrift Plan or (ii) from 30 percent to 65 percent of a participant's contributions, depending on the annual percent change in earnings shown in the table below. The Kraft Foods Matching Contributions percentage to the Plan for a Plan year could not exceed the percentage contributed by Kraft Foods to the Kraft Foods Thrift Plan for the same year. The average annual percent change in earnings is the percent change in earnings, before income taxes, -13- KRAFT FOODS EMPLOYEE THRIFT-INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS (continued) goodwill amortization, interest and Company assessments of certain operating units of Kraft Foods, over the five-year period immediately preceding the Plan year for which the Kraft Foods Matching Contributions were to be made.
The Kraft Foods Matching If Annual Percent Contribution as a Percentage of Change in Earnings Is Participant Contributions Is --------------------- ------------------------------- 5% (or less) 30% 6-8% 35% 9-11% 40% 12-14% 45% 15-17% 50% 18-20% 55% 21-23% 60% 24% (or more) 65%
The Kraft Foods Matching Contributions percentage was 43 percent and 55 percent in 1996 and 1995, respectively. Participants' contributions are recorded in the period in which they are withheld by the Kraft Foods Companies. Kraft Foods Matching Contributions for the year are accrued by the Plan based upon the amount to be funded each year. Kraft Foods Matching Contributions are discretionary. Kraft Foods Matching Contributions 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 the preservation of the Kraft Foods Matching Contributions for all participants for the year in which the Change of Control occurs and for two years thereafter. 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:
Account Source ------- ------ Kraft Foods Matching Account Kraft Foods Matching Contributions and amounts transferred from the ESOP and other predecessor plans Before-Tax Contributions Account Before-Tax Contributions After-Tax Contributions Account After-Tax Contributions Rollover Account Amounts transferred (directly or indirectly) from another plan qualified under Section 401 (a) of the
Code -14- KRAFT FOODS EMPLOYEE THRIFT-INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS (continued) At the end of each month (effective May 12, 1997, 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 Kraft Foods Matching Account, Before-Tax Contributions Account, After-Tax Contributions Account and Rollover Account, on the basis of their proportionate share in each fund. 5. Withdrawals and Distributions: Participants may make withdrawals against their Kraft Foods Matching, Before- Tax Contributions and After-Tax Contributions Accounts under limited circumstances in accordance with the provisions outlined in the Plan. Upon termination of employment, including retirement, a participant has several options available, as described in the Plan, with respect to the distribution of his or her Accounts. Normally, distributions are made within two weeks after a distribution request is made. 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: Effective May 12, 1997, participants may borrow from their Before-Tax Contributions, After-Tax Contributions and Rollover Accounts 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 Kraft Foods 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: 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 -15- KRAFT FOODS EMPLOYEE THRIFT-INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS (in thousands of dollars) (continued) in the Trust at December 31, 1997 and 1996, respectively, were:
1997 1996 -------- -------- Trust 5% 6% Diversified Equity Index Fund 1% 1% Interest Income Fund 2% 2% Government Securities Fund 4% - Government Securities Fund (GF) - 100% Philip Morris Stock Fund 10% 11% Balanced Fund 1% - Participants' Loan Account 6% -
The Plan's approximate allocated share of the Trust's investment activities for the years ended December 31, 1997, 1996 and 1995, was six percent, eight percent and eight percent, respectively. Most expenses incurred in administering the Plan and paid to third parties are borne 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 -------- ------- Diversified Equity Index Fund 0.43% 0.18% Interest Income Fund 0.41% 0.22% Government Securities Fund 1.43% - Government Securities Fund (GF) 0.16% 0.17% Philip Morris Stock Fund 0.44% 0.17% Balanced Fund 0.25% -
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 $606,132 $442,151 Interest Income Fund BT GNMA Pooled Fund $205,335 Philip Morris Stock Fund Common Stock $1,228,357 $1,055,822 Growth Equity Fund $166,407
The GEBT Equity Index Fund currently includes Common Stock. -16- KRAFT FOODS EMPLOYEE THRIFT-INVESTMENT 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 $345,425 and $296,077) $ 606,132 $ 442,151 Short-term temporary investments (cost approximates fair value) 2,634 945 Interest Income Fund: Investment contracts (at contract value) (cost approximates contract value) 630,012 719,263 Short-term temporary investments (cost approximates fair value) 21,022 31,250 Government Securities Fund: Government securities (cost $28,343 and $25,873) 28,596 25,693 Federal Agency Obligations (cost $3,976 and $2,979) 3,974 2,911 Short-term temporary investments (cost approximates fair value) 929 812 Government Securities Fund (GF): Government securities (cost approximates fair value) - 1,184 Short-term temporary investments (cost approximates fair value) - 110 Philip Morris Stock Fund: Common stock (cost $552,253 and $439,309) 1,228,357 1,055,822 Short-term temporary investments (cost approximates fair value) 33,679 28,613 International Equity Fund: International Equity Fund (cost $55,014 and $52,300) 58,229 56,401 Short-term temporary investments (cost approximates fair value) 222 114 Balanced Fund: Balanced Fund (cost $114,680 and $72,891) 125,303 77,163 Short-term temporary investments (cost approximates fair value) 503 189 Growth Equity Fund: Growth Equity Fund (cost $174,420 and $117,557) 166,407 122,194 Short-term temporary investments (cost approximates fair value) 586 312 Other investments: Participants' Loan Account: Loans to participants 41,995 37,375 ---------- ---------- Total investments 2,948,580 2,602,502 Receivables: Interest income 811 1,063 Dividend income 11,039 11,308 Other receivables 8,507 2,980 ---------- ---------- Total assets 2,968,937 2,617,853 Liabilities: Other payables 745 1,264 ---------- ---------- Net assets $2,968,192 $2,616,589 ========== ==========
-17- KRAFT FOODS EMPLOYEE THRIFT-INVESTMENT 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 $ 37,225 $ 35,823 $ 42,957 Employee contributions 98,076 94,665 104,014 Transfers from predecessor trusts - 300 (448) Investment activities: Interest 47,603 47,971 55,956 Dividends 89,392 56,586 51,225 Interest on participant loans 2,980 2,598 2,394 ---------- ---------- ---------- 139,975 107,155 109,575 Net appreciation in fair value of investments 354,618 313,941 512,078 ---------- ---------- ---------- Net investment activities 494,593 421,096 621,653 Deductions: Distributions and withdrawals (275,232) (348,908) (258,160) General and administrative expenses (3,059) (2,792) (3,133) ---------- ---------- ---------- Increase in Trust net assets 351,603 200,184 506,883 Net assets: Beginning of year 2,616,589 2,416,405 1,909,522 ---------- ---------- ---------- End of year $2,968,192 $2,616,589 $2,416,405 ========== ========== ==========
-18- KRAFT FOODS EMPLOYEE THRIFT-INVESTMENT 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:
Freihofer Equitable Equity Government Government Capital Index Securities Securities Philip Morris Management Fund Fund Fund (GF) Stock Fund Fund ---------- -------------- --------------- --------------- ------------ 1997 - ---- Realized gains (losses): Proceeds $ 89,418 $ 8,972 $ 475 $ 269,015 Cost 55,447 9,049 475 122,940 -------- ---------- ------------ --------- ------------ Net realized gains (losses) 33,971 (77) - 146,075 -------- ---------- ------------ --------- ------------ Unrealized appreciation (depreciation): Beginning of year 146,074 (248) 616,513 End of year 260,707 251 676,104 -------- ---------- ------------ --------- ------------ Increase (decrease) 114,633 499 - 59,591 -------- ---------- ------------ --------- ------------ Net appreciation (depreciation) in fair value of investments $148,604 $ 422 $ - $ 205,666 ======== ========== ============ ========= ============ 1996 - ---- Realized gains (losses): Proceeds $ 51,031 $ 9,262 $ 1,436 $ 373,172 Cost 37,037 9,271 1,436 172,650 -------- ---------- ------------ --------- ------------ Net realized gains (losses) 13,994 (9) - 200,522 -------- ---------- ------------ --------- ------------ Unrealized appreciation (depreciation): Beginning of year 82,031 789 593,451 End of year 146,074 (248) 616,513 -------- ---------- ------------ --------- ------------ Increase (decrease) 64,043 (1,037) - 23,062 -------- ---------- ------------ --------- ------------ Net appreciation (depreciation) in fair value of investments $ 78,037 $ (1,046) $ - $ 223,584 ======== ========== ============ ========= ============ 1995 - ---- Realized gains: Proceeds $ 44,833 $ 16,505 $ 1,431 $ 173,058 $ 12,642 Cost 37,484 16,505 1,431 94,527 6,063 -------- ---------- ------------ --------- ------------ Net realized gains 7,349 - - 78,531 6,579 -------- ---------- ------------ --------- ------------ Unrealized appreciation (depreciation): Beginning of year 3,838 (109) 231,434 6,636 Transfer from Entenmann's 16,383 End of year 82,031 789 593,451 -------- ---------- ------------ --------- ------------ Increase (decrease) 78,193 898 - 345,634 (6,636) -------- ---------- ------------ --------- ------------ Net appreciation (depreciation) in fair value of investments $ 85,542 $ 898 $ - $ 424,165 $ (57) ======== ========== ============ ========= ============ International Growth Equity Balanced Equity Fund Fund Fund Total ------------- ----------- ---------- --------- 1997 - ---- Realized gains (losses): Proceeds $ 23,172 $ 21,845 $ 32,533 $ 445,430 Cost 21,054 19,574 29,812 258,351 --------- -------- --------- --------- Net realized gains (losses) 2,118 2,271 2,721 187,079 --------- -------- --------- --------- Unrealized appreciation (depreciation): Beginning of year 4,101 4,272 4,637 775,349 End of year 3,216 10,623 (8,013) 942,888 --------- -------- --------- --------- Increase (decrease) (885) 6,351 (12,650) 167,539 --------- -------- --------- --------- Net appreciation (depreciation) in fair value of investments $ 1,233 $ 8,622 $ (9,929) $ 354,618 ========= ======== ========= ========= 1996 - ---- Realized gains (losses): Proceeds $ 15,309 $ 9,120 $ 25,847 $ 485,177 Cost 14,552 8,758 25,254 268,958 --------- -------- --------- --------- Net realized gains (losses) 757 362 593 216,219 --------- -------- --------- --------- Unrealized appreciation (depreciation): Beginning of year 1,177 792 (613) 677,627 End of year 4,101 4,272 4,637 775,349 --------- -------- --------- --------- Increase (decrease) 2,924 3,480 5,250 97,722 --------- -------- --------- --------- Net appreciation (depreciation) in fair value of investments $ 3,681 $ 3,842 $ 5,843 $ 313,941 ========= ======== ========= ========= 1995 - ---- Realized gains: Proceeds $ 2,036 $ 1,859 $ 2,514 $ 254,878 Cost 2,012 1,813 2,410 162,245 --------- -------- --------- --------- Net realized gains 24 46 104 92,633 --------- -------- --------- --------- Unrealized appreciation (depreciation): Beginning of year 241,799 Transfer from Entenmann's 16,383 End of year 1,177 792 (613) 677,627 --------- -------- --------- --------- Increase (decrease) 1,177 792 (613) 419,445 --------- -------- --------- --------- Net appreciation (depreciation) in fair value of investments $ 1,201 $ 838 $ (509) $ 512,078 ========= ======== ========= =========
-19- KRAFT FOODS EMPLOYEE THRIFT-INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS (in thousands of dollars, except per unit data) (continued) 9. Participation Units: The number of employee participation units and the net asset value per unit for the funds at December 31, 1997 was:
Diversified Equity Interest Government Participants' Index Income Securities Philip Morris Balanced Loan Fund Fund Fund Stock Fund Fund Account Total ----------- ----------- ------------ ------------- ----------- -------------- ----------- 1997: Net Assets $ 8,159 $ 13,040 $ 1,535 $ 130,081 $ 790 $ 2,218 $155,823 Number of participation units 630 12,456 143 10,991 70 Net asset value per unit $ 12.9508 $ 1.0469 $ 10.7343 $ 11.8352 $ 11.2857
-20- KRAFT FOODS EMPLOYEE THRIFT-INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS (concluded) 10. 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. 11. Tax Status: By letter dated November 14, 1995, the Internal Revenue Service has determined that the Plan, as amended and in effect as of January 1, 1993, 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 Kraft Foods Matching Contributions and before-tax contributions made on their behalf by Kraft Foods, on the making of a timely rollover contribution to the Trust, nor on earnings credited to their Accounts until withdrawn or distributed. 12. Plan Termination: The Board of Directors of Kraft Foods has the right, subject to the applicable provisions of ERISA and the Code, to amend (retroactively or otherwise) the Plan, suspend making Kraft Foods Matching Contributions to the Plan or to terminate the Plan. In the event the Plan is terminated or partially terminated (within the meaning of the Code), each affected participant will become fully vested in the balance in his or her Kraft Foods Matching Account. -21- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Management Committee for Employee Benefits of Kraft Foods, Inc., having administrative responsibility of the Plan, has duly caused this annual report to be signed by the undersigned thereunto duly authorized. KRAFT FOODS EMPLOYEE THRIFT-INVESTMENT PLAN (Name of Plan) By /s/ TERRY M. FAULK ------------------------------------ Terry M. Faulk, Chairman, Management Committee for Employee Benefits of Kraft Foods, Inc. Date: May 21, 1998 -22- KRAFT FOODS MASTER DEFINED CONTRIBUTION TRUST SCHEDULE I - INVESTMENTS as of December 31, 1997
Column A Column B Column C Column D -------- -------- -------- -------- Face Amount Cost or Nuumber Basis of Name of Issuer and Title of Issue of Shares/Units Investments Fair Value - --------------------------------- --------------- ----------- ---------- EQUITY INDEX FUND -- 20.65% GEBT Equity Index Fund -- 20.56% 267,164 $ 345,424,848 $ 606,131,969 Short-Term Investments -- .09% GEBT Short-Term Investment Fund 2,634,009 2,634,009 2,634,009 ------------- ------------- Total Equity Index Fund 348,058,857 608,765,978 ------------- ------------- INTEREST INCOME FUND -- 22.08% Investment Contracts -- 21.37% (The amounts included in Column D for the investment contracts represent contract value, see Note 2.) Participation Contracts with Institutions -- 5.19% Confederation Life Ins. No. 62381 8.61% matured 11/30/1995 519,733 519,733 519,733 Confederation Life Ins. No. 62325 0.00% matured 5/1997 1,567,323 1,567,323 1,567,323 Provident Mutual No. 008159-001 8.55% matures 3/1/1998 363,316 363,316 363,316 Mass Mutual No. 10223 8.25% matures 4/30/1998 12,896,565 12,896,565 12,896,565 Provident National Assurance No. 02705689 6.96% matures 7/31/1998 25,456,330 25,456,330 25,456,330 Connecticut General Life Ins. No. 25119 8.81% matures 8/1/1998 12,087,717 12,087,717 12,087,717 Hartford Life Ins. Co. No. 10225 5.70% matures 1/31/1999 20,053,096 20,053,096 20,053,096 Allstate Life Insurance Company No. 5428 6.15% matures 4/30/1999 36,615,741 36,615,741 36,615,741 Allstate Life Ins. Co. No. 5581 7.23% matures 5/20/1999 1,942,458 1,942,458 1,942,458 CNA Insurance Co. No. 24023 6.61% matures 6/29/2001 21,340,704 21,340,704 21,340,704
S-1 KRAFT FOODS MASTER DEFINED CONTRIBUTION TRUST SCHEDULE I - INVESTMENTS as of December 31, 1997
Column A Column B Column C Column D -------- -------- -------- -------- Face Amount Cost or Nuumber Basis of Name of Issuer and Title of Issue of Shares/Units Investments Fair Value - --------------------------------- --------------- ----------- ---------- Participation Contracts with Institutions (continued) Sun America Life No. 4696 6.67% matures 12/31/2001 20,003,538 $ 20,003,538 $ 20,003,538 ------------- ------------- Total Participation Contracts 152,846,521 152,846,521 ------------- ------------- Financial Institution Pools -- 16.18% National Westminster Bank No. SAM 0104B 6.93% GEBT Short-Term Investment Fund 597,142 597,142 Federal Home Loan Mortgage Corporation matures 8/15/2005 6.25% 1,103,454 1,103,454 Federal Home Loan Mortgage Corporation matures 4/1/2008 7.00% 97,965 97,965 Federal Home Loan Mortgage Corporation matures 8/15/2008 6.50% 1,055,529 1,055,529 Federal Home Loan Mortgage Corporation matures 9/1/2008 6.50% 37,080 37,080 Federal Home Loan Mortgage Corporation matures 12/1/2008 6.50% 40,138 40,138 Federal Home Loan Mortgage Corporation matures 2/1/2009 6.50% 1,734,521 1,734,521 Federal Home Loan Mortgage Corporation matures 6/1/2009 6.50% 73,991 73,991 Federal Home Loan Mortgage Corporation matures 10/1/2010 7.00% 211,216 211,216 Federal Home Loan Mortgage Corporation matures 2/1/2011 6.50% 115,640 115,640 Federal Home Loan Mortgage Corporation matures 2/1/2011 7.00% 648,928 648,928 Federal Home Loan Mortgage Corporation matures 3/1/2011 7.00% 1,139,803 1,139,803 Federal Home Loan Mortgage Corporation matures 12/15/2015 6.50% 2,683,080 2,683,080 Federal Home Loan Mortgage Corporation matures 1/15/2018 6.00% 4,126,809 4,126,809 Federal Home Loan Mortgage Corporation matures 6/15/2018 7.00% 297,594 297,594 Federal National Mortgage Association matures 6/25/2005 6.25% 2,207,587 2,207,587 Federal National Mortgage Association matures 8/25/2005 6.00% 480,564 480,564 Federal National Mortgage Association matures 7/1/2008 7.00% 819,882 819,882 Federal National Mortgage Association matures 8/1/2008 7.00% 749,927 749,927
S-2 KRAFT FOODS MASTER DEFINED CONTRIBUTION TRUST 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 1/1/2009 6.50% $ 151,198 $ 151,198 Federal National Mortgage Association matures 2/1/2009 6.50% 496,822 496,822 Federal National Mortgage Association matures 3/1/2009 6.50% 168,254 168,254 Federal National Mortgage Association matures 5/1/2009 6.50% 1,047,816 1,047,816 Federal National Mortgage Association matures 8/25/2012 5.60% 1,147,192 1,147,192 Federal National Mortgage Association matures 8/25/2013 6.70% 1,935,791 1,935,791 Federal National Mortgage Association matures 9/25/2015 6.00% 2,196,862 2,196,862 Federal National Mortgage Association matures 6/25/2016 5.70% 2,187,150 2,187,150 Federal National Mortgage Association matures 7/25/2016 5.65% 1,330,841 1,330,841 Government National Mortgage Association matures 12/15/2023 6.50% 252,569 252,569 Government National Mortgage Association matures 3/15/2024 6.50% 77,645 77,645 Government National Mortgage Association matures 4/15/2024 6.50% 1,275,965 1,275,965 Government National Mortgage Association matures 5/15/2024 6.50% 1,462,469 1,462,469 ------------- ------------- Total National Westminster Bank Contract 31,951,424 31,951,424 ------------- ------------- Commonwealth Life Insurance Company No. ADA00044TR, 6.29%, Peoples Life Insurance Company No. BDA00059TR, 6.38%, Trans America Life Insurance Company No. 76586, 5.94%, Trans America Life Insurance Company No. 76594, 6.91%, Trans America Life Insurance Company No. 76690, 6.28%, National Westminster Bank No. 189M, 6.25% & J P Morgan No. AKRAFT1, 6.26% GEBT Short-Term Investment Fund 570,752 570,752 BT GNMA Pooled Fund 7.27% 205,335,286 205,335,286 United States Treasury Note matures 3/31/2002 6.63% 4,745,909 4,745,909 United States Treasury Note matures 4/30/2002 6.63% 4,579,060 4,579,060 United States Treasury Note matures 11/30/2002 5.75% 1,978,028 1,978,028
S-3 KRAFT FOODS MASTER DEFINED CONTRIBUTION TRUST 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) United States Treasury Note matures 7/15/2006 7.00% $ 68,603,938 $ 68,603,938 United States Treasury Note matures 5/15/2007 6.63% 39,869,492 39,869,492 United States Treasury Note matures 8/15/2007 6.13% 37,925,895 37,925,895 Federal National Mortgage Association matures 11/23/2001 6.35% 337,233 337,233 Federal National Mortgage Association matures 9/9/2003 5.97% 514,111 514,111 Federal National Mortgage Association matures 10/25/2004 8.40% 648,692 648,692 Federal National Mortgage Association matures 11/10/2004 8.63% 1,223,803 1,223,803 Student Loan Marketing Association matures 8/1/2007 7.13% 718,654 718,654 Premier Auto TR matures 2/4/1999 7.15% 286,603 286,603 Bayerische Landesbank Girozentrale matures 7/19/1999 6.55% 2,225,377 2,225,377 MBNA Master Credit Card Trust matures 8/15/1999 6.20% 410,918 410,918 Standard Credit Card Master Trust matures 6/7/2000 6.75% 762,658 762,658 Standard Credit Card Master Trust matures 4/7/2001 6.80% 509,087 509,087 Asian Development Bank NTS matures 5/2/2001 8.50% 1,426,806 1,426,806 American Express Master Trust matures 7/15/2001 5.38% 3,937,682 3,937,682 General Electric Cap Corp matures 11/1/2001 5.50% 1,941,925 1,941,925 MBNA Master Credit Card Trust matures 1/15/2003 6.60% 994,986 994,986 Ford Credit Auto Loan Master Trust matures 2/15/2003 5.50% 3,553,594 3,553,594 First Bank Corporate Card Master Trust matures 2/15/2003 6.40% 2,324,429 2,324,429 Outlet Broadcasting matures 7/15/2003 10.88% 2,046,305 2,046,305
S-4 KRAFT FOODS MASTER DEFINED CONTRIBUTION TRUST 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) Avis matures 10/20/2003 6.40% $ 3,984,452 $ 3,984,452 Citibank Credit Card Master Trust matures 2/15/2004 6.55% 6,340,501 6,340,501 MBNA Master Credit Card Trust matures 11/15/2004 6.60% 8,053,929 8,053,929 First USA Credit Card Master Trust matures 3/17/2005 6.42% 3,992,177 3,992,177 Japan Fin Corp matures 4/27/2005 7.38% 1,452,918 1,452,918 International Bank for Recon & Dev matures 7/21/2005 6.38% 1,638,975 1,638,975 NationsBank Credit Card Master Trust matures 12/15/2005 6.00% 2,930,942 2,930,942 Bayerische Landesbank Girozentrale matures 2/1/2006 6.17% 1,701,481 1,701,481 Bayerische Landesbank Girozentrale matures 2/9/2006 6.20% 3,709,875 3,709,875 KFW Int'l Fin Inc matures 6/1/2006 8.20% 2,007,445 2,007,445 General Electric Cap Corp matures 3/1/2007 8.85% 6,873,148 6,873,148 General Electric Cap Corp matures 7/24/2008 8.50% 1,062,868 1,062,868 First Plus Home Loan Trust matures 3/12/2012 6.80% 3,977,355 3,977,355 International Bank for Recon & Dev matures 3/1/2026 8.88% 572,654 572,654 Inter-American Development Bank matures 7/15/2027 6.75% 6,385,881 6,385,881 Merck matures 5/3/2037 5.76% 3,058,354 3,058,354 ---------------- ----------------- Total Commonwealth, Peoples, Trans America, Nat West & J P Morgan Contracts 445,214,178 445,214,178 ---------------- ----------------- Total Financial Institution Pools 477,165,602 477,165,602 ---------------- ----------------- Total Investment Contracts 630,012,123 630,012,123 ---------------- -----------------
S-5 KRAFT FOODS MASTER DEFINED CONTRIBUTION TRUST 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 - --------------------------------- --------------- ----------- ---------- Short-Term Investments -- .71% GEBT Short-Term Investment Fund 15,166,810 $ 15,166,810 $ 15,166,810 GEBT Stable Value Government Fund 5,854,964 5,854,964 5,854,964 ------------- ------------- Total Short-Term Investments 21,021,774 21,021,774 ------------- ------------- Total Interest Income Fund 651,033,897 651,033,897 ------------- ------------- GOVERNMENT SECURITIES FUND -- 1.14% Government Securities -- .97% United States Treasury Notes 7.125% due 9/30/1999 2,375,000 2,436,231 2,431,406 United States Treasury Notes 7.125% due 2/29/2000 6,600,000 6,815,847 6,790,806 United States Treasury Notes 5.875% due 6/30/2000 3,700,000 3,695,980 3,716,761 United States Treasury Notes 5.625% due 2/28/2001 1,025,000 1,009,734 1,022,274 United States Treasury Notes 6.375% due 8/15/2002 5,625,000 5,695,005 5,770,013 United States Treasury Notes 6.50% due 5/15/2005 3,550,000 3,627,690 3,700,875 United States Treasury Notes 6.50% due 8/15/2005 3,000,000 3,089,781 3,130,320 United States Treasury Notes 6.875% due 5/15/2006 1,900,000 1,972,463 2,033,000 ------------- ------------- Total Government Securities 28,342,731 28,595,455 ------------- ------------- Federal Agency Obligations -- .14% Federal National Mortgage Association 6.41% due 5/22/2000 1,000,000 997,344 1,013,750 Federal National Mortgage Association 5.5% due 2/2/2001 3,000,000 2,978,775 2,960,610 ------------- ------------- Total Federal Agency Obligations 3,976,119 3,974,360 ------------- -------------
S-6 KRAFT FOODS MASTER DEFINED CONTRIBUTION TRUST 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 - --------------------------------- --------------- ----------- ---------- Short-Term Investments -- .03% BT Pyramid Government Securities Cash Fund 928,671 $ 928,671 $ 928,671 ------------- ------------- Total Government Securities Fund 33,247,521 33,498,486 ------------- ------------- PHILIP MORRIS STOCK FUND -- 42.80% Common Stock -- 41.66% Tobacco -- 41.66% Philip Morris Companies Inc. 27,146,005 552,253,198 1,228,356,726 Short-term Investments -- 1.14% GEBT Short-Term Investment Fund 33,679,046 33,679,046 33,679,046 ------------- ------------- Total Philip Morris Stock Fund 585,932,244 1,262,035,772 ------------- ------------- INTERNATIONAL EQUITY FUND -- 1.98% Japanese Equity Index Fund -- .45% 204,407 18,957,475 13,344,091 Non Japanese Equity Index Fund -- 1.52% 265,870 36,056,129 44,885,194 ------------- ------------- Total Equity Index Funds 55,013,604 58,229,285 ------------- ------------- Short-Term Investments -- .01% GEBT Short-Term Investment Fund 221,545 221,545 221,545 ------------- ------------- Total International Equity Fund 55,235,149 58,450,830 ------------- ------------- BALANCED FUND -- 4.27% Balanced Fund -- 4.25% 9,428,381 114,680,409 125,303,190 Short-Term Investments -- .02% GEBT Short-Term Investment Fund 503,476 503,476 503,476 ------------- ------------- Total Balanced Fund 115,183,885 125,806,666 ------------- -------------
S-7 KRAFT FOODS MASTER DEFINED CONTRIBUTION TRUST 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 - --------------------------------- --------------- ----------- ---------- GROWTH EQUITY FUND -- 5.66% Growth Equity Fund -- 5.64% 14,470,210 $ 174,419,967 $ 166,407,417 Short-Term Investments -- .02% GEBT Short-Term Investment Fund 585,573 585,573 585,573 --------------- --------------- Total Growth Equity Fund 175,005,540 166,992,990 --------------- --------------- PARTICIPANTS' LOAN ACCOUNT -- 1.42% Loans to Participants -- 1.42% 41,995,421 41,995,421 41,995,421 --------------- --------------- Total Participants' Loan Account 41,995,421 41,995,421 --------------- --------------- TOTAL INVESTMENTS $ 2,005,692,514 $ 2,948,580,040 =============== ===============
S-8 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. 33-1479) of the Kraft Foods Employee Thrift-Investment Plan of our report dated March 27, 1998, on our audits of the financial statements of the Kraft Foods Employee Thrift-Investment 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. Chicago, Illinois May 21, 1998 -----END PRIVACY-ENHANCED MESSAGE-----