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 Year Ended December 31, 1999
or
( ) TRANSITION REPORT PURSUANT TO SECTION 15(d)
OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ____
Commission file number: Whitman Corporation 001-15019
A. Full title of the plan and the address of the plan, if
different from that of the issuer named below:
WHITMAN CORPORATION
MASTER RETIREMENT
SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
WHITMAN CORPORATION
3501 Algonquin Road
Rolling Meadows, Illinois 60008
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Administrative Committee has duly caused this Annual Report to be signed on its
behalf by the undersigned hereunto duly authorized.
WHITMAN CORPORATION
MASTER RETIREMENT SAVINGS PLAN
By: /s/ PETER M. PEREZ
---------------------------------------
Peter M. Perez
Senior Vice President - Human Resources
Dated: June 28, 2000
<PAGE>
WHITMAN CORPORATION
MASTER RETIREMENT SAVINGS PLAN
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999 AND 1998
TOGETHER WITH AUDITORS' REPORT
<PAGE>
WHITMAN CORPORATION
MASTER RETIREMENT
SAVINGS PLAN
----------
INDEX TO FINANCIAL STATEMENTS
Report of Independent Public Accountants....................................F-4
Financial Statements:
Statements of Net Assets Available for Benefits as of December 31, 1999
and 1998 .................................................F-5
Statements of Changes in Net Assets Available for Benefits
for the years ended December 31, 1999 and 1998 .........................F-6
Notes to Financial Statements...................................F-7 to F-11
<PAGE>
Independent Auditors' Report
To the Administrative Committee of
Whitman Corporation Master Retirement Savings Plan
Rolling Meadows, Illinois
We have audited the accompanying statement of net assets available for benefits
of Whitman Corporation Master Retirement Savings Plan as of December 31, 1999,
and the related statement of changes in net assets available for benefits for
the year then ended. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits. The financial statements of Whitman
Corporation Master Retirement Savings Plan as of December 31, 1998 were audited
by other auditors whose report dated June 23, 1999, expressed an unqualified
opinion on those statements.
We conducted our audit 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
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 1999, and the changes in net assets available for benefits for the
year then ended, in conformity with generally accepted accounting principles.
/s/ Ostrow Reisin Berk & Abrams, Ltd.
Chicago, Illinois
June 20, 2000
Independent Auditors' Report
To the Administrative Committee of
Whitman Corporation Master Retirement Savings Plan
Rolling Meadows, Illinois
We have audited the accompanying statement of net assets available for benefits
of Whitman Corporation Master Retirement Savings Plan as of December 31, 1998,
and the related statement of changes in net assets available for benefits for
the year then ended. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit 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
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 1998, and the changes in net assets available for benefits for the
year then ended, in conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
Chicago, Illinois
June 23, 1999
F-4
<PAGE>
WHITMAN CORPORATION
MASTER RETIREMENT SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 1999 1998
---- ----
Assets:
Plan interest in Whitman Corporation
Defined Contribution Master Trust $ 68,760,697 $ 54,792,297
Contributions receivable:
Participant 119,957 16,643
Employer, net of forfeitures 23,356 12,842
------------ ------------
Total Assets 68,904,010 54,821,782
------------ ------------
Liabilities:
Expenses payable 37,109 43,267
------------ ------------
Total liabilities 37,109 43,267
------------ ------------
Net assets available for benefits $ 68,866,901 $ 54,778,515
============ ============
See notes to financial statements.
F-5
<PAGE>
WHITMAN CORPORATION
MASTER RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
Years ended December 31, 1999 1998
---- ----
<S> <C> <C>
Additions to net assets attributed to:
Net investment income from the Whitman Corporation
Defined Contribution Master Trust $ 8,264,331 $ 8,237,906
Contributions:
Participant 4,272,934 4,209,371
Employer, net of forfeitures 1,162,133 1,233,751
----------- -----------
Total additions 13,699,398 13,681,028
----------- -----------
Deductions from net assets attributed to:
Participants' withdrawals 4,033,747 2,112,548
Administrative expenses 162,723 148,218
----------- -----------
Total deductions 4,196,470 2,260,766
----------- -----------
Transfers (to) from other plans (Notes 6 and 7) 4,585,458 (8,472,226)
----------- -----------
Increase in net assets 14,088,386 2,948,036
Net assets available for plan benefits:
Beginning of year 54,778,515 51,830,479
----------- -----------
End of year $68,866,901 $54,778,515
=========== ===========
</TABLE>
See notes to financial statements.
F-6
<PAGE>
WHITMAN CORPORATION
MASTER RETIREMENT
SAVINGS PLAN
----------
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 and 1998
(1) Description of Plan
The following brief description of the Whitman Corporation Master Retirement
Savings Plan (the "Plan") provides only general information. Participants should
refer to the Plan document for a more complete description of the Plan's
provisions.
General
The Plan is a defined contribution plan, which covers eligible employees of
Whitman Corporation and those of its subsidiary companies which adopt the Plan,
with any company having adopted the Plan along with Whitman Corporation being
considered an Employer. Any hourly employee who is a member of a group of
employees to whom the Plan has been made available through collective
bargaining, or through other unilateral employment requirements, and has elected
to participate in the Plan is considered a Participant.
The Plan permits participating Employers to select from a variety of features to
offer a custom-tailored Plan to employee groups. The Employer may offer the Plan
in the form of a Pre-tax 401(k) Savings Plan or an After-tax Savings Plan. A
variety of employee/employer contribution arrangements are available and are in
effect for various employee groups.
The total annual pre-tax contributions by a Participant were limited in 1999 and
1998 to the lesser of $10,000 (as adjusted to reflect changes in the cost of
living pursuant to Section 402(g) of the Internal Revenue Code) or the
appropriate percentage of the Participant's total compensation during the year.
Forfeitures
Forfeited Employer contributions resulting from terminations of employment are
used to reduce Employer contributions after a Participant has terminated or
withdrawn from the Plan. In the event a Participant is rehired and reimburses
the amount disbursed to him from the Plan within the time period specified in
the Plan, the Employer is required to restore to the Participant's account any
previously forfeited amount used to reduce Employer contributions.
Plan Termination
Although it has not expressed any intent to do so, Whitman Corporation has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of Plan
termination, participants will become 100 percent vested in their accounts.
Participant Accounts
Each Participant's account is credited with the Participant's contribution,
Employer contributions, and an allocation of Plan earnings. Allocations of
earnings are based on Participant account balances. The benefit to which a
Participant is entitled is the benefit that can be provided from the
Participant's account.
F-7
<PAGE>
WHITMAN CORPORATION
MASTER RETIREMENT
SAVINGS PLAN
----------
NOTES TO FINANCIAL STATEMENTS -- (Continued)
December 31, 1999 and 1998
Participant Notes Receivable
In accordance with Plan provisions, loans are made to participants in amounts
not to exceed the lesser of one-half of the participant's vested account balance
or $50,000. The loans bear interest at the trustee's current prime rate in
effect on Monday of the week the loan is requested and are payable through
participant payroll withholdings under a reasonable repayment schedule of not
more than five years.
Vesting
Participants will be 100% vested in Employer contributions made after completion
of 5 years of vesting service, if permanently disabled, upon attainment of age
65, upon death, or if terminated by an Employer for specific reasons.
Participants are immediately vested in their voluntary contributions and actual
earnings thereon.
Payment of Benefits
On termination of service, a Participant may elect to receive the value of his
or her account in either a lump sum payment, in annual installments over a
period of time up to a maximum of fifteen years, in the form of immediate or
deferred annuity, or disbursement amounts at their discretion.
Expenses
External administrative expenses for the preparation and maintenance of the
Plan's financial records and participant statements, and service fees on
insurance contracts are paid from Plan assets. Trustee, legal, and all other
external expenses are also paid from Plan assets to the extent that those
expenses of the Plan are not paid by the Plan Sponsor.
Investment Options
Participants in the Plan have the right to direct that their contributions be
invested in one or more funds designated by the Plan's Administrative Committee
as available for investment purposes. As of December 31, 1999 and 1998, the
following investments were offered:
o Conservative Portfolio
o Moderate Portfolio
o Growth Portfolio
o Aggressive Growth Portfolio
o Fixed Income Fund
o Large Company Fund
o Small Company Fund
o International Fund
o Whitman Stock Fund
Employer matching contributions may be directed into the same funds, using the
same percentages, as Participant contributions. Earnings on investments in each
of the investment funds are reinvested in the respective funds.
F-8
<PAGE>
WHITMAN CORPORATION
MASTER RETIREMENT
SAVINGS PLAN
----------
NOTES TO FINANCIAL STATEMENTS -- (Continued)
December 31, 1999 and 1998
(2) Interest in Whitman Corporation Defined Contribution Master Trust
Certain assets of the Plan are in the Whitman Corporation Defined Contribution
Master Trust (the Trust) which was established for the investment of assets of
the Plan and another Whitman Corporation sponsored retirement plan. Each plan
has an undivided interest in the Trust. The assets of the Trust are held by the
Northern Trust Company (the Trustee). The Plan's interest in the net assets of
the Trust is based on the individual plan participants' investment balances.
Investment income is allocated on a daily basis through a valuation performed by
the Trustee. Administrative expenses relating to the Trust are allocated to the
individual funds based upon average monthly balances invested by each plan. At
December 31, 1999 and 1998, the Plan's interest in the net assets of the Trust
was approximately 27% and 24%, respectively.
The Trust held the following classifications of investments as of December 31,
1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
----------------- -----------------
<S> <C> <C>
Investments at market value:
Common Stock: Whitman Corporation $ 20,639,597 $ 34,759,490
PepsiCo, Inc. 6,018,585 --
Collective Investment Trusts 178,817,962 151,066,205
Participant Notes Receivable 5,341,433 4,779,889
Investments at contract value:
Investment contracts 45,735,158 39,735,483
----------------- -----------------
Total Trust Investments $ 256,552,735 $ 230,341,067
================= =================
</TABLE>
As of December 31, 1999 and 1998, the net assets of the Trust include the above
investments and other miscellaneous net assets totaling $66,381 and $196,184,
respectively.
Investment Income for the Trust is as follows for the years ended December 31,
1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
----------------- -----------------
<S> <C> <C>
Net appreciation (depreciation) in fair value of investments:
Common Stock $ (17,341,043) $ 12,340,410
Collective Investment Trusts 30,021,865 25,069,057
----------------- -----------------
12,680,822 37,409,467
Interest, Dividends and Other 3,234,065 3,394,724
----------------- -----------------
Total Investment Income $ 15,914,887 $ 40,804,191
================= =================
</TABLE>
(3) Summary of Significant Accounting Policies
Basis of Presentation
The accompanying financial statements are prepared on the accrual basis of
accounting.
Investment Valuation and Income Recognition
Except for the investment contracts, the Trust's investments are stated at fair
value. The fair values of marketable securities are based on quotations obtained
from national securities exchanges. Where marketable securities are not listed
on an exchange, quotations are obtained from brokerage firms.
F-9
<PAGE>
WHITMAN CORPORATION
MASTER RETIREMENT
SAVINGS PLAN
----------
NOTES TO FINANCIAL STATEMENTS -- (Continued)
December 31, 1999 and 1998
Fully benefit-responsive investment contracts are valued at contract value,
which represents the principal balance of the investment contracts, plus accrued
interest at the stated contract rate, less payments received and contract
charges by the insurance company. The aggregate average yield of the investment
contracts for the year ended December 31, 1999 and 1998, was 6.0% and 6.2%,
respectively. The aggregate interest rate for the investment contracts as of
December 31, 1999 and 1998, was 6.2% and 6.6%, respectively. The fair value of
the investment contracts in the Trust as of December 31, 1999 and 1998, was
approximately $44,800,000 and $40,500,000, respectively.
The Trust records investment transactions on a trade date basis.
Benefits Paid to Participants
Benefits are recorded when paid.
Use of Estimates
The financial statements have been prepared in accordance with generally
accepted accounting principles and necessarily include amounts based on
estimates and assumptions by management. Actual results could differ from those
estimates.
(4) Tax Status
The Internal Revenue Service has determined and informed the Company by a letter
dated January 8, 1996, that the Plan and related trust are designed in
accordance with applicable sections of the Internal Revenue Code (IRC). The Plan
administrator believes that the Plan is designed and is currently being operated
in compliance with the applicable requirements of the IRC. Therefore, the Plan
administrator believes that the Plan was qualified and the related trust was
tax-exempt as of the financial statement dates.
(5) Transfer to Other Plans
On June 23, 1997, Whitman Corporation announced the planned spin-offs of two of
its operating subsidiaries, Midas, Inc. ("Midas") and Hussmann International,
Inc. ("Hussmann") to Whitman shareholders. Effective January 1, 1998, Midas
created the Midas Retirement Savings Plan for Salaried Employees, the Midas
Retirement Savings Plan for Hourly Employees, and the Midas Defined Contribution
Master Trust; and Hussmann created the Hussmann International, Inc. Retirement
Savings Plan for Salaried Employees, the Hussmann International, Inc. Retirement
Savings Plan for Hourly Employees, and the Hussmann International, Inc. Defined
Contribution Master Trust, to manage activity previously performed with the
Whitman Corporation Retirement Savings Plan, the Whitman Corporation Master
Retirement Savings Plan and the Whitman Corporation Defined Contribution Master
Trust.
F-10
<PAGE>
WHITMAN CORPORATION
MASTER RETIREMENT
SAVINGS PLAN
----------
NOTES TO FINANCIAL STATEMENTS -- (Continued)
December 31, 1999 and 1998
In conjunction with the spin-offs, investment management for the S&P 500,
extended market, EAFE, and U.S. debt funds was transferred from Barclays Global
Investors to State Street Global Advisors. Effective January 1, 1998, $224.7
million of Whitman Corporation Defined Contribution Master Trust assets were
transferred from Barclays Global Investors to State Street Global Advisors.
Effective January 9, 1998, the fair market value of assets attributable to the
accounts of the participants who were employees of Midas and Hussmann was
transferred by the Whitman Corporation Defined Contribution Master Trust to the
Midas Defined Contribution Master Trust and Hussmann International, Inc. Defined
Contribution Master Trust, respectively, in accordance with the Distribution and
Indemnity Agreements executed by Whitman with Midas and Hussmann. The asset
transfer was $61.1 million to the Midas Defined Contribution Master Trust and
$97.9 million to the Hussmann International, Inc. Defined Contribution Master
Trust.
On January 30, 1998, Whitman completed the dividend distribution of Midas and
Hussmann common stock to Whitman shareholders of record on January 16, 1998. On
February 3, 1998, the Whitman Corporation Defined Contribution Master Trust
transferred the Midas and Hussmann shares received in the dividend distribution
to the Midas Defined Contribution Master Trust and Hussmann International, Inc.
Defined Contribution Master Trust, respectively, in exchange for Whitman
Corporation common shares. The market value of the asset exchange was $2.1
million with the Midas Defined Contribution Master Trust and $5.7 million with
the Hussmann International, Inc. Defined Contribution Master Trust.
(6) Transfers From Other Plans
On January 25, 1999, Whitman Corporation announced that its Board of Directors
had approved a new business relationship with PepsiCo, Inc. ("PepsiCo"). As part
of the Contribution and Merger Agreement (the "Agreement") with PepsiCo and
Heartland Territories Holdings, Inc. ("New Whitman"), PepsiCo contributed
certain assets of several domestic franchise territories in May 1999 to New
Whitman and Whitman Corporation merged into New Whitman. In addition, the
Agreement provided for Whitman Corporation's principal operating subsidiary,
Pepsi-Cola General Bottlers, Inc. ("Pepsi General") to sell to PepsiCo certain
of its operations. The sale of these operations occurred in March 1999. Pepsi
General also acquired certain international operations of PepsiCo in May 1999.
Effective June 11, 1999, the assets attributable to the participants under the
PepsiCo sponsored retirement plan were transferred to the Whitman Corporation
Defined Contribution Master Trust. The asset transfer amounted to approximately
$16.5 million.
(7) Subsequent Event
Effective January 1, 2000, the Board of Directors of Whitman Corporation
transferred sponsorship to the Plan and Trust to Pepsi-Cola General Bottlers,
Inc. The Plan name was changed to the Pepsi-Cola General Bottlers, Inc. Hourly
Retirement Savings Plan and the Trust name was changed to Pepsi-Cola General
Bottlers, Inc. Defined Contribution Master Trust.
In February, 2000, as part of the Contribution and Merger Agreement with
PepsiCo, the assets attributable to the accounts of the participants who were
employees of the domestic operations sold to PepsiCo were transferred to the
trust established under PepsiCo's retirement plans. The asset transfer is
approximately $5 million.
F-11
