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, 1998
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
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
RETIREMENT SAVINGS PLAN
By: /s/ PETER M. PEREZ
----------------------------------
Peter M. Perez
Senior Vice President - Human Resources
Dated: June 29, 1999
<PAGE>
WHITMAN CORPORATION
RETIREMENT SAVINGS PLAN
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998 AND 1997
TOGETHER WITH AUDITORS' REPORT
<PAGE>
WHITMAN CORPORATION
RETIREMENT SAVINGS PLAN
---------
INDEX TO FINANCIAL STATEMENTS AND EXHIBITS
Report of Independent Public Accountants
Financial Statements:
Statements of Net Assets Available for Benefits, with Fund Information,
as of December 31, 1998 and 1997
Statements of Changes in Net Assets Available for Benefits, with Fund
Information, for the years ended December 31, 1998 and 1997
Notes to Financial Statements
Exhibits:
Exhibit A --Consent of Independent Public Accountants
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Administrative Committee of
Whitman Corporation Retirement Savings Plan:
We have audited the accompanying statements of net assets available for benefits
of WHITMAN CORPORATION RETIREMENT SAVINGS PLAN as of December 31, 1998 and 1997,
and the related statements of changes in net assets available for benefits for
the years 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.
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
management, 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 net assets available for benefits of the Plan as of
December 31, 1998 and 1997, and the changes in net assets available for benefits
for the years then ended, in conformity with generally accepted accounting
principles.
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
net assets available for benefits and the statements of changes in net assets
available for benefits is presented for purposes of additional analysis rather
than to present the net assets available for plan benefits and changes in net
assets available for plan benefits 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/ Arthur Andersen LLP
Chicago, Illinois
June 23, 1999
<PAGE>
WHITMAN CORPORATION
RETIREMENT SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
As of December 31, 1998
Participant Directed
Investment Funds
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
Aggressive Fixed Large
Conservative Moderate Growth Growth Income Company
Total Portfolio Portfolio Portfolio Portfolio Fund Fund
----------- ----------- ----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Plan interest in Whitman
Corporation Defined Contribution
Master Trust $175,744,954 $ 4,491,122 $ 16,186,365 $ 25,707,274 $ 25,515,059 $ 38,661,860 $ 21,934,107
Contributions Receivable:
Employee Contribution 64,106 1,829 7,313 12,022 19,717 10,356 5,676
Employer, net of forfeitures 22,072 772 2,590 4,119 6,187 4,336 1,702
------------ ------------ ------------ ------------ ------------ ------------ ------------
Total Assets 175,831,132 4,493,723 16,196,268 25,723,415 25,540,963 38,676,552 21,941,485
------------ ------------ ------------ ------------ ------------ ------------ ------------
Liabilities:
Expenses Payable 138,578 3,697 12,840 20,078 20,028 31,894 17,351
------------ ------------ ------------ ------------ ------------ ------------ ------------
Total Liabilities 138,578 3,697 12,840 20,078 20,028 31,894 17,351
------------ ------------ ------------ ------------ ------------ ------------ ------------
Net Assets Available for Benefits $175,692,554 $ 4,490,026 $ 16,183,428 $ 25,703,337 $ 25,520,935 $ 38,644,658 $ 21,924,134
============ ============ ============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------
Small Whitman Participant
Company International Stock Notes
Fund Fund Fund Receivable Other
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Assets:
Plan interest in Whitman
Corporation Defined Contribution
Master Trust $ 4,438,903 $ 2,729,317 $ 33,128,847 $ 2,764,761 $ 187,339
Contributions Receivable:
Employee Contribution 1,610 1,280 4,303 - -
Employer, net of forfeitures 493 375 1,498 - -
------------ ------------ ------------ ------------ ------------
Total Assets 4,441,006 2,730,972 33,134,648 2,764,761 187,339
------------ ------------ ------------ ------------ ------------
Liabilities:
Expenses Payable 3,524 2,157 24,825 2,184 -
------------ ------------ ------------ ------------ ------------
Total Liabilities 3,524 2,157 24,825 2,184 -
------------ ------------ ------------ ------------ ------------
Net Assets Available for Benefits $ 4,437,482 $ 2,728,815 $ 33,109,823 $ 2,762,577 $ 187,339
============ ============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
WHITMAN CORPORATION
RETIREMENT SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
As of December 31, 1997
Participant Directed
Investment Funds
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
Aggressive Fixed Large
Conservative Moderate Growth Growth Income Company
Total Portfolio Portfolio Portfolio Portfolio Fund Fund
------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Plan interest in Whitman
Corporation Defined Contribution
Master Trust $297,377,333 $ 9,699,952 $ 29,265,521 $ 48,294,123 $ 45,491,258 $ 65,382,857 $ 35,670,411
Contributions Receivable:
Employee Contribution 14,854 494 2,090 2,955 3,721 2,453 1,106
Employer, net of forfeitures 11,597 411 1,534 2,473 2,767 2,009 830
------------ ------------ ------------ ------------ ------------ ------------ ------------
Total Assets 297,403,784 9,700,857 29,269,145 48,299,551 45,497,746 65,387,319 35,672,347
------------ ------------ ------------ ------------ ------------ ------------ ------------
Liabilities:
Expenses Payable 111,002 3,663 10,894 18,057 17,037 24,478 13,301
------------ ------------ ------------ ------------ ------------ ------------ ------------
Total Liabilities 111,002 3,663 10,894 18,057 17,037 24,478 13,301
------------ ------------ ------------ ------------ ------------ ------------ ------------
Net Assets Available for Benefits $297,292,782 $ 9,697,194 $ 29,258,251 $ 48,281,494 $ 45,480,709 $ 65,362,841 $ 35,659,046
============ ============ ============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------
Small Whitman Participant
Company International Stock Notes
Fund Fund Fund Receivable Other
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Assets:
Plan interest in Whitman
Corporation Defined Contribution
Master Trust $ 11,804,989 $ 6,127,963 $ 39,789,118 $ 5,760,274 $ 90,867
Contributions Receivable:
Employee Contribution 282 337 1,416 - -
Employer, net of forfeitures 244 225 1,104 - -
------------ ------------ ------------ ------------ ------------
Total Assets 11,805,515 6,128,525 39,791,638 5,760,274 90,867
------------ ------------ ------------ ------------ ------------
Liabilities:
Expenses Payable 4,355 2,301 14,833 2,083 -
------------ ------------ ------------ ------------ ------------
Total Liabilities 4,355 2,301 14,833 2,083 -
------------ ------------ ------------ ------------ ------------
Net Assets Available for Benefits $ 11,801,160 $ 6,126,224 $ 39,776,805 $ 5,758,191 $ 90,867
============ ============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements
<PAGE>
WHITMAN CORPORATION
RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
For the Year Ended December 31, 1998
Participant Directed
Investment Funds
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
Aggressive Fixed Large
Conservative Moderate Growth Growth Income Company
Total Portfolio Portfolio Portfolio Portfolio Fund Fund
------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS:
Net Investment Income from
the Whitman Corporation Defined
Contribution Master Trust $ 32,566,285 $ 635,606 $ 2,584,982 $ 4,463,360 $ 4,760,519 $ 2,077,952 $ 5,027,969
Contributions:
Participant 4,890,180 135,159 688,493 995,287 1,201,694 559,676 498,269
Employer, net of forfeitures 3,330,707 89,339 387,839 630,660 876,632 424,329 357,684
------------ ------------ ------------ ------------ ------------ ------------ ------------
Total additions 40,787,172 860,104 3,661,314 6,089,307 6,838,845 3,061,957 5,883,922
DEDUCTIONS FROM NET ASSETS:
Participants' withdrawals 11,346,681 193,635 366,760 1,512,320 1,582,734 4,105,956 1,309,662
Administrative expenses 504,746 12,891 45,691 70,981 72,472 114,709 62,626
------------ ------------ ------------ ------------ ------------ ------------ ------------
Total deductions 11,851,427 206,526 412,451 1,583,301 1,655,206 4,220,665 1,372,288
------------ ------------ ------------ ------------ ------------ ------------ ------------
Transfer to other plans (Note 6) (150,535,973) (5,087,775) (14,086,897) (25,670,514) (22,979,517) (33,407,343) (17,464,069)
Interfund transfers - (772,971) (2,236,789) (1,413,649) (2,163,896) 7,847,868 (782,477)
------------ ------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) (121,600,228) (5,207,168) (13,074,823) (22,578,157) (19,959,774) (26,718,183) (13,734,912)
Net Assets Available for Benefits:
At December 31, 1997 297,292,782 9,697,194 29,258,251 48,281,494 45,480,709 65,362,841 35,659,046
------------ ------------ ------------ ------------ ------------ ------------ ------------
At December 31, 1998 $175,692,554 $ 4,490,026 $ 16,183,428 $ 25,703,337 $ 25,520,935 $ 38,644,658 $ 21,924,134
============ ============ ============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------
Small Whitman Participant
Company International Stock Notes
Fund Fund Fund Receivable Other
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS:
Net Investment Income from
the Whitman Corporation Defined
Contribution Master Trust $ 376,658 $ 524,762 $ 11,854,812 $ 246,461 $ 13,204
Contributions:
Participant 177,829 133,310 500,463 - -
Employer, net of forfeitures 126,822 81,743 355,659 - -
------------ ------------ ------------ ------------ ------------
Total additions 681,309 739,815 12,710,934 246,461 13,204
------------ ------------ ------------ ------------ ------------
DEDUCTIONS FROM NET ASSETS:
Participants' withdrawals 407,961 231,886 1,423,627 238,887 (26,747)
Administrative expenses 11,356 7,167 92,564 7,704 6,585
----------- ------------ ------------ ------------ ------------
Total deductions 419,317 239,053 1,516,191 246,591 (20,162)
----------- ------------ ------------ ------------ ------------
Transfer to other plans (Note 6) (6,089,625) (3,366,857) (19,537,376) (2,846,000) -
Interfund transfers (1,536,045) (531,314) 1,675,651 (149,484) 63,106
----------- ------------ ------------ ------------ ------------
Net increase (decrease) (7,363,678) (3,397,409) (6,666,982) (2,995,614) 96,472
Net Assets Available for Benefits:
At December 31, 1997 11,801,160 6,126,224 39,776,805 5,758,191 90,867
----------- ------------ ------------ ------------ ------------
At December 31, 1998 4,437,482 2,728,815 33,109,823 2,762,577 187,339
=========== ============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
WHITMAN CORPORATION
RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
For the Year Ended December 31, 1997
Participant Directed
Investment Funds
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
Aggressive Fixed Large
Conservative Moderate Growth Growth Income Company
Total Portfolio Portfolio Portfolio Portfolio Fund Fund
------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS:
Net Investment Income from
the Whitman Corporation Defined
Contribution Master Trust $ 45,359,173 $ 1,294,699 $ 4,935,795 $ 9,082,908 $ 9,218,220 $ 4,362,470 $ 9,108,150
Contributions:
Participant 10,884,412 327,837 1,221,767 2,330,723 2,586,157 1,618,243 1,180,420
Employer, net of forfeitures 7,392,849 226,781 850,901 1,549,452 1,669,876 1,124,459 789,396
Transfers from prior plans 1,023,301 - - - - 863,853 -
------------ ------------ ------------ ------------ ------------ ------------ ------------
Total additions 64,659,735 1,849,317 7,008,463 12,963,083 13,474,253 7,969,025 11,077,966
------------ ------------ ------------ ------------ ------------ ------------ ------------
DEDUCTIONS FROM NET ASSETS:
Participants' Withdrawals 18,699,185 742,916 1,213,531 1,818,688 1,694,825 8,114,502 2,516,693
Administrative Expenses 767,299 15,009 47,351 76,888 70,610 214,848 58,227
------------ ------------ ------------ ------------ ------------ ------------ ------------
Total Deductions 19,466,484 757,925 1,260,882 1,895,576 1,765,435 8,329,350 2,574,920
------------ ------------ ------------ ------------ ------------ ------------ ------------
Interfund Transfers - (84,400) (2,213,627) (1,212,998) 481,020 (2,619,648) 564,571
------------ ------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) 45,193,251 1,006,992 3,533,954 9,854,509 12,189,838 (2,979,973) 9,067,617
Net Assets Available for Benefits:
At December 31, 1996 252,099,531 8,690,202 25,724,297 38,426,985 33,290,871 68,342,814 26,591,429
----------- ------------ ------------ ------------ ------------ ------------ ------------
At December 31, 1997 $297,292,782 $ 9,697,194 $ 29,258,251 $ 48,281,494 $ 45,480,709 $ 65,362,841 $ 35,659,046
============ ============ ============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------
Small Whitman Participant
Company International Stock Notes
Fund Fund Fund Receivable Other
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS:
Net Investment Income from
the Whitman Corporation Defined
Contribution Master Trust $ 2,128,910 $ 136,173 $ 4,629,302 $ 439,363 $ 23,183
Contributions:
Participant 479,398 412,348 851,391 - (123,872)
Employer, net of forfeitures 328,146 274,962 597,500 - (18,624)
Transfers from prior plans - - - 159,448 -
------------ ------------ ------------ ------------ ------------
Total additions 2,936,454 823,483 6,078,193 598,811 (119,313)
------------ ------------ ------------ ------------ ------------
DEDUCTIONS FROM NET ASSETS:
Participants' withdrawals 453,647 347,525 1,522,981 260,385 13,492
Administrative expenses 17,089 11,878 55,530 2,083 197,786
----------- ------------ ------------ ------------ ------------
Total deductions 470,736 359,403 1,578,511 262,468 211,278
----------- ------------ ------------ ------------ ------------
Interfund transfers 1,445,190 (1,813,113) 5,250,410 192,188 10,407
Net increase (decrease) 3,910,908 (1,349,033) 9,750,092 528,531 320,184
----------- ------------ ------------ ------------ ------------
Net Assets Available for Benefits:
At December 31, 1996 7,890,252 7,475,257 30,026,713 5,229,660 411,051
----------- ------------ ------------ ------------ ------------
At December 31, 1997 $11,801,160 $ 6,126,224 $ 39,776,805 $ 5,758,191 $ 90,867
=========== ============ ============ ============ ============
</TABLE>
<PAGE>
WHITMAN CORPORATION
RETIREMENT SAVINGS PLAN
----------
NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997
(1) Description of Plan
The following brief description of the Whitman Corporation 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 salaried, non-union employee who has met limited
employment requirements and has elected to participate in the Plan is considered
a Participant. The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974 (ERISA).
Contributions
Participant contributions are made to the Plan through periodic payroll
deductions in amounts ranging from 2% to 10% of base salary, in 1% increments.
Participant contributions made via periodic payroll deductions are matched in
equal amounts by Employer contributions up to a 6% limit.
The total annual pre-tax contributions by a Participant were limited in 1998 and
1997 to the lesser of $10,000 and $9,500, respectively (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 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.
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 are immediately vested in their voluntary contributions, actual
earnings thereon, and in all prior and future Employer matching contributions.
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 an immediate or
deferred annuity, or disbursement amounts at their discretion.
Expenses
External administrative expenses for the preparation and maintenance of the Plan
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, 1998 and 1997 the
following investment options 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.
(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, 1998 and 1997, the Plan's interest in the net assets of the Trust
was approximately 76% and 85%, respectively.
The Trust held the following classifications of investments as of December 31,
1998 and 1997:
1998 1997
---------------- ----------------
Investments at market value:
Common Stock $ 34,759,490 $ 40,068,461
Collective Investment Trusts 151,066,205 233,152,798
Participant Notes Receivable 4,779,889 7,932,041
Investments at contract value:
Investment contracts 39,735,483 67,731,979
---------------- ----------------
Total Trust Investments $ 230,341,067 $ 348,885,279
================ ================
As of December 31, 1998 and 1997, the net assets of the Trust include the above
investments and other miscellaneous net assets totaling $196,184 and $249,329,
respectively.
Investment Income for the Trust is as follows for the years ended December 31,
1998 and 1997:
1998 1997
---------------- ----------------
Net appreciation in fair value of
investments:
Common Stock $ 12,340,410 $ 4,124,603
Collective Investment Trusts 25,069,057 42,698,298
---------------- ----------------
37,409,467 46,822,901
Interest and Dividends 3,394,724 6,275,399
---------------- ----------------
Total Investment Income $ 40,804,191 $ 53,098,300
================ ================
(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.
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, 1998 and 1997 was 6.2% and 6.5%,
respectively. The aggregate interest rate for the investment contracts as of
December 31, 1998 and 1997, was 6.6% and 6.7%, respectively. The fair value of
the investment contracts in the Trust as of December 31, 1998 and 1997, was
approximately $40,500,000 and $68,900,000, 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) Transfer From Prior Plan
Effective January 1, 1997, the assets attributable to the salaried participants
under the Lou Gen, Ltd. Profit Sharing Plan were transferred to the Plan.
(5) Tax Status
The Internal Revenue Service has determined and informed the Company by a letter
dated April 1, 1996 that the Plan and related trust are designed in accordance
with applicable sections of the Internal Revenue Code (IRC). The Plan has been
amended since receiving the determination letter. However, 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.
(6) 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.
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.
(7) Subsequent Event
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.
In July, 1999, the assets attributable to the accounts of the participants who
were employees of the domestic operations sold to PepsiCo are expected to be
transferred to the trust established under PepsiCo's retirement plans. The asset
transfer is expected to be approximately $5 million.
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
$15 million.
<PAGE>
Exhibit A
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report, included in this Form 11-K, into Whitman Corporation's previously filed
Registration Statement File No. 33-28238.
ARTHUR ANDERSEN LLP
Chicago, Illinois,
June 23, 1999
