<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-8940
--------------
Long Term Savings Plan for Union Employees
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.)
================================================================================
<PAGE>
LONG TERM SAVINGS PLAN FOR UNION EMPLOYEES
ANNUAL REPORT ON FORM 11-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page(s)
-------
<S> <C>
Report of Independent Accountants............................. 3
Financial Statements:
Statements of Financial Condition as of December 31,
1996 and 1995............................................. 4-5
Statements of Income and Changes in Plan Equity for
the years ended December 31, 1996 and 1995................ 6-7
Notes to Financial Statements.............................. 8-17
Signatures.................................................... 18
Schedules:
Schedule I - Investments as of December 31, 1996........... S-1-11
</TABLE>
Other schedules are omitted because the information required
is contained in the financial statements.
Exhibits:
23. Consent of Independent Accountants.
2
<PAGE>
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 Long Term Savings Plan For Union Employees:
We have audited the accompanying statements of financial condition of the
Long Term Savings Plan For Union Employees (formerly known as the Oscar Mayer
Foods Corporation Long-Term Savings Plan For Union Employees and hereinafter
referred to as the "Plan") as of December 31, 1996 and 1995, and the related
statements of income and changes in plan equity for each of the two years in the
period ended December 31, 1996 and the schedule of investments as of December
31, 1996. These financial statements and the financial statement schedule are
the responsibility of the fiduciaries of the Plan appointed by Philip Morris
Companies Inc. or Kraft Foods, Inc. (or their delegates). Our responsibility is
to express an opinion on these financial statements and the financial statement
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
fiduciaries, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Plan as of December 31,
1996 and 1995, and the income and changes in plan equity for each of the two
years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles. In addition, in our opinion, the financial
statement schedule referred to above, when considered in relation to the basic
financial statements taken as a whole, presents fairly, in all material
respects, the information required to be included therein.
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
March 28, 1997
3
<PAGE>
LONG TERM SAVINGS PLAN FOR UNION EMPLOYEES
STATEMENT OF FINANCIAL CONDITION
as of December 31, 1996
-------
<TABLE>
<CAPTION>
Interest
Income
Fund
-----------
<S> <C>
ASSETS:
Allocated share of
Trust net assets $45,015,699
Employer contributions
receivable 162,954
-----------
Total assets 45,178,653
-----------
LIABILITIES:
Distributions and
withdrawals payable 228,671
-----------
Total liabilities 228,671
-----------
Plan equity $44,949,982
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
LONG TERM SAVINGS PLAN FOR UNION EMPLOYEES
STATEMENT OF FINANCIAL CONDITION
as of December 31, 1995
-------
<TABLE>
<CAPTION>
Interest
Income
Fund
-----------
<S> <C>
ASSETS:
Allocated share of
Trust net assets $37,889,171
Employer contributions
receivable 172,368
Employee contributions
receivable 65,800
-----------
Total assets 38,127,339
-----------
LIABILITIES:
Distributions and
withdrawals payable 252,151
-----------
Total liabilities 252,151
-----------
Plan equity $37,875,188
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
LONG TERM SAVINGS PLAN FOR UNION EMPLOYEES
STATEMENT OF INCOME AND CHANGES IN PLAN EQUITY
for the year ended December 31, 1996
-------
<TABLE>
<CAPTION>
Interest
Income
Fund
-----------
<S> <C>
ADDITIONS:
Employer contributions $ 1,892,104
Employee contributions 5,919,616
Allocated share of Trust
investment activities:
Interest income 2,468,302
-----------
Total additions 10,280,022
-----------
DEDUCTIONS:
Distributions and
withdrawals (3,190,100)
General and administrative
expenses (15,128)
-----------
Total deductions (3,205,228)
-----------
Net additions 7,074,794
PLAN EQUITY:
Beginning of year 37,875,188
-----------
End of year $44,949,982
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
LONG TERM SAVINGS PLAN FOR UNION EMPLOYEES
STATEMENT OF INCOME AND CHANGES IN PLAN EQUITY
for the year ended December 31, 1995
-------
<TABLE>
<CAPTION>
Interest
Income
Fund
-----------
<S> <C>
ADDITIONS:
Employer contributions $ 1,624,273
Employee contributions 5,352,311
Allocated share of Trust
investment activities:
Interest income 2,210,109
-----------
Total additions 9,186,693
-----------
DEDUCTIONS:
Distributions and
withdrawals (2,558,595)
General and administrative
expenses (8,400)
-----------
Total deductions (2,566,995)
-----------
Net additions 6,619,698
PLAN EQUITY:
Beginning of year 31,255,490
-----------
End of year $37,875,188
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
LONG TERM SAVINGS PLAN FOR UNION EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
1. General Description of the Plan:
The Long Term Savings Plan for Union Employees (formerly known as the Oscar
Mayer Foods Corporation Long-Term Savings Plan for Union Employees and
hereinafter referred to as the "Plan") is a defined contribution plan
designed to assist employees in saving for retirement by providing eligible
employees with a vehicle for investing a portion of their compensation and
for certain groups of employees to receive a matching contribution from Kraft
Foods, Inc. (formerly known as Kraft General Foods, Inc. and hereinafter
referred to as "Kraft Foods"). Kraft Foods is a subsidiary of Philip Morris
Companies Inc. (the "Company").
Employees of Kraft Foods who are members of a collective bargaining unit and
employed at specific locations of Kraft Foods participate in the Plan,
provided they meet eligibility requirements. After completing one year of
service, eligible employees represented by certain collective bargaining
units are required to make a contribution on a before-tax or after-tax basis
("Basic Contribution") which is eligible for a matching contribution and
eligible employees are permitted to make a contribution on a before-tax basis
("Supplemental Contribution"), in excess of their Basic Contribution, which
is not eligible for a matching contribution. Matching contributions by Kraft
Foods (the "Kraft Foods Matching Contributions") on behalf of eligible
employees required to make a Basic Contribution are contributed to the Plan
in accordance with the formula described in Note 3. The provisions of the
Plan are detailed in the official Plan document which legally governs the
operation of the Plan.
The administration of the Plan has generally been delegated to the 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".
The Plan's assets are co-invested with the assets of the Kraft Foods Thrift
Plan and other 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 6).
Prior to January 1, 1997, participants' Plan Accounts (see Note 4) were
invested solely in the Interest Income Fund. Effective January 1, 1997,
participants have the option of investing their Plan Accounts in 25 percent
increments in the four funds listed below.
8
<PAGE>
LONG TERM SAVINGS PLAN FOR UNION EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
(continued)
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.
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").
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.
The Equity Index Fund and Balanced Fund are available to all eligible
employees as of January 1, 1997. The Philip Morris Stock Fund is available
to eligible employees represented by a collective bargaining unit as of the
date agreed to in the collective bargaining agreement.
None of the foregoing funds guarantees a return to the participant. Effective
January 1, 1997, participants may change their investment options quarterly.
Each participant may vote all the shares of Common Stock held in his or her
Plan Accounts and invested in the Philip Morris Stock Fund. The Trustee will
vote full and fractional shares of Common Stock in accordance with each
individual participant's instruction. The Trustee votes those shares of
Common Stock for which no or inadequate voting instructions have been
received in the same proportions as the shares for which instructions have
been received.
At December 31, 1996 and 1995, there were 4,855 and 4,164 participants,
respectively.
9
<PAGE>
LONG TERM SAVINGS PLAN FOR UNION EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
(continued)
Each participant is at all times fully vested in the balance of his or her
Basic After-Tax Contributions Account and Basic and Supplemental Before-Tax
Contributions Accounts. A participant shall be fully vested in the balance
in his or her Kraft Foods Matching Account upon attainment of age 65, death
while employed by Kraft Foods or any of its affiliates, or plan termination.
A participant 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:
<TABLE>
<CAPTION>
Vested
Years of Service Percentage
---------------- -----------
<S> <C>
Less than 5 0%
5 or more 100%
</TABLE>
Forfeitures:
Kraft Foods Matching Contributions forfeited by terminated participants are
used to reduce future Kraft Foods Matching Contributions to the Plan.
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, 1996 and 1995 was $712,948,000 and
$725,034,000, respectively. The average yield and crediting interest rate
of the Interest Income Fund was approximately seven percent for 1996 and
1995. The crediting interest rate for the
10
<PAGE>
LONG TERM SAVINGS PLAN FOR UNION EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
(continued)
pools of mortgaged-backed and asset-backed securities and other investments
is reset periodically by the issuer based on the relationship between the
contract value and the fair value of the underlying securities, but cannot
be less than zero. The crediting interest rate for the investment contracts
is either agreed-to in advance with the issuer or varies based on an agreed-
to formula, but cannot be less than zero.
Securities listed on an exchange are valued at the closing price on the last
business day of the year; listed securities for which no sale was reported
on that date are recorded at the last reported bid price. However, if
trading in Common Stock has been suspended on the New York Stock Exchange
and not resumed before the end of any trading day, the Trustee will use the
composite price listed in The Wall Street Journal on the next business day.
Securities that are not listed on an exchange are generally traded in active
markets and valued by the Trustee from quoted market prices.
Short-term temporary investments are generally carried at cost, which
approximates fair value.
Investment Transactions and Investment Income of the Trust:
Investment transactions are accounted for on the dates purchases or sales
are executed. Realized gains and losses are computed on the basis of average
cost of investments sold. Dividend income is recorded on the ex-dividend
date; interest income is recorded as earned on an accrual basis.
In accordance with the policy of stating investments at fair value, the net
appreciation (depreciation) in the fair value of investments reflects both
realized gains or losses and the change in the unrealized appreciation
(depreciation) of investments held at year-end (see Note 7).
3. Contributions:
No Basic Contribution is required from eligible employees represented by some
of the collective bargaining units while eligible employees represented by
other collective bargaining units are required to make a Basic Contribution
for each hour paid by Kraft Foods. Basic Contributions may be made on a
before-tax or after-tax basis. The amount of Basic Contribution required of
each participant varies depending on the work location of the participant.
All eligible employees are permitted to make Supplemental Contributions. 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").
11
<PAGE>
LONG TERM SAVINGS PLAN FOR UNION EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
(continued)
The Code also imposes a dollar limitation on the amount of before-tax
contributions for a calendar year. For 1996, a participant's before-tax
contributions (whether in the form of Basic Contributions, Supplemental
Contributions, or a combination of the two) were limited to $9,500; for 1997,
a participant's before-tax contributions will be limited to $9,500.
Kraft Foods Matching Contributions equal 100 percent of a participant's
required Basic Contributions to the Plan, subject to certain limitations
under the Code.
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 in accordance with the Plan's formula noted above.
Kraft Foods Matching Contributions are discretionary. While Kraft Foods
has not expressed any intent to discontinue making Kraft Foods Matching
Contributions, it is free to do so at any time. 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").
4. Valuation of Participant Accounts:
The Trustee maintains Accounts for each participant to reflect the source and
the participant's share of the funds invested in the Trust:
<TABLE>
<CAPTION>
Account Source
------- ------
<S> <C>
Kraft Foods Matching Account Kraft Foods Matching Contributions
Basic Before-Tax Contributions Account Basic Contributions made with before-tax
contributions
Basic After-Tax Contributions Account Basic Contributions made with after-tax
contributions
Supplemental Before-Tax Contributions Supplemental Contributions made with before-tax
Account contributions
</TABLE>
At the end of each calendar quarter, 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, Basic Before-Tax Contributions
Account, Basic After-Tax Contributions Account and Supplemental Before-Tax
Contributions Account on the basis of their proportionate share in each fund.
12
<PAGE>
LONG TERM SAVINGS PLAN FOR UNION EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
(in thousands of dollars)
(continued)
5. Distributions:
Upon termination of employment, including retirement, distribution of a
participant's Accounts is made in a lump sum or, in certain instances, in
installments. Normally, distributions are made one month after such
termination.
In the event the Plan is terminated, distributions will be made in accordance
with the current value of participants' Accounts under the direction of the
Committee and in accordance with the Code.
6. 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 in the Trust at
December 31, 1996 and 1995, respectively, were:
<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
Trust 2% 1%
Interest Income Fund 6% 5%
</TABLE>
The Plan's approximate allocated share of the Trust's investment activities
for each of the years ended December 31, 1996 and 1995 was less than one
percent.
All expenses incurred in administering the Plan are borne by Kraft Foods,
with the exception of investment management fees which are paid from the
Plan's assets. For 1996 and 1995, the amount of such expenses expressed as a
percentage of the Plan's average net assets was .04 percent and .02 percent,
respectively.
Investments that represented five percent or more of total Trust assets as of
December 31, 1996 and 1995, were:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Philip Morris Stock Fund
Common Stock $1,055,822 $1,071,626
Equity Index Fund
GEBT Equity Index Fund $442,151 $312,179
</TABLE>
The GEBT Equity Index Fund currently includes Common Stock.
13
<PAGE>
LONG TERM SAVINGS PLAN FOR UNION EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
(in thousands of dollars)
(continued)
At December 31, 1996 and 1995, the financial position of the Trust was:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Assets:
Investments at fair value:
Equity Index Fund:
GEBT Equity Index Fund
(cost $296,077 and $230,148) $ 442,151 $ 312,179
Short-term temporary investments
(cost approximates fair value) 945 3,928
Interest Income Fund:
Investment contracts (at contract value)
(cost approximates contract value) 719,263 729,677
Short-term temporary investments
(cost approximates fair value) 31,250 74,111
Government Securities Fund:
Government securities
(cost $25,873 and $26,340) 25,693 27,129
Federal Agency Obligations
(cost $2,979) 2,911 -
Short-term temporary investments
(cost approximates fair value) 812 4,060
Government Securities Fund (GF):
Government securities
(cost approximates fair value) 1,184 1,198
Short-term temporary investments
(cost approximates fair value) 110 59
Philip Morris Stock Fund:
Common stock
(cost $439,309 and $478,175) 1,055,822 1,071,626
Short-term temporary investments
(cost approximates fair value) 28,613 26,940
International Equity Fund:
International Equity Fund
(cost $52,300 and $21,536) 56,401 22,713
Short-term temporary investments
(cost approximates fair value) 114 216
Balanced Fund:
Balanced Fund
(cost $72,891 and $28,863) 77,163 29,655
Short-term temporary investments
(cost approximates fair value) 189 152
Growth Equity Fund:
Growth Equity Fund
(cost $117,557 and $66,204) 122,194 65,591
Short-term temporary investments
(cost approximates fair value) 312 465
Other investments:
Participants' Loan Account:
Loans to participants 37,375 34,968
---------- ----------
Total investments 2,602,502 2,404,667
Receivables:
Interest income 1,063 1,052
Dividend income 11,308 11,926
Other receivables 2,980 -
---------- ----------
Total assets 2,617,853 2,417,645
Liabilities:
Other payables 1,264 1,240
---------- ----------
Net assets $2,616,589 $2,416,405
========== ==========
</TABLE>
14
<PAGE>
LONG TERM SAVINGS PLAN FOR UNION EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
(in thousands of dollars)
(continued)
The changes in the Trust net assets for the years ended December 31, 1996 and
1995, were:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Additions:
Employer contributions $ 35,823 $ 42,957
Employee contributions 94,665 104,014
Transfers from predecessor trusts 300 (448)
Investment activities:
Interest 47,971 55,956
Dividends 56,586 51,225
Interest on participant loans 2,598 2,394
---------- ----------
107,155 109,575
Net appreciation
in fair value of investments 313,941 512,078
---------- ----------
Net investment activities 421,096 621,653
Deductions:
Distributions and withdrawals (348,908) (258,160)
General and administrative
expenses (2,792) (3,133)
---------- ----------
Increase in Trust net assets 200,184 506,883
Net assets:
Beginning of year 2,416,405 1,909,522
---------- ----------
End of year $2,616,589 $2,416,405
========== ==========
</TABLE>
15
<PAGE>
LONG TERM SAVINGS PLAN FOR UNION EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
(in thousands of dollars)
(continued)
7. Net Appreciation (Depreciation) in Fair Value of Trust Investments:
The realized gains and losses on disposals and changes in unrealized
appreciation or depreciation of investments in the Trust for the years ended
December 31, 1996 and 1995 were:
<TABLE>
<CAPTION>
Freihofer
Equitable
Equity Government Government Capital
Index Securities Securities Philip Morris Management
Fund Fund Fund (GF) Stock Fund Fund
---------- ---------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C>
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)
======== ======= ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
International Growth
Equity Balanced Equity
Fund Fund Fund Total
----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
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
======= ====== ======== ========
</TABLE>
-16-
<PAGE>
LONG TERM SAVINGS PLAN FOR UNION EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
(concluded)
8. Tax Status:
The U.S. Treasury Department has determined that the Plan, as amended and
in effect as of April 1, 1992, constitutes a qualified plan under Section
401(a) of the Code and the related Trust is, therefore, exempt from
Federal income taxes under the provisions of Section 501(a) of the Code.
The Fiduciaries believe that the Plan continues to be administered in
accordance with the applicable provisions of the Code.
Therefore, participants will not be subject to income tax on Kraft Foods
Matching Contributions or before-tax contributions made on their behalf by
Kraft Foods, nor on earnings credited to their Accounts until distributed.
17
<PAGE>
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.
LONG TERM SAVINGS
PLAN FOR UNION
EMPLOYEES
(Name of Plan)
By /s/ TERRY M. FAULK
------------------------------------
Terry M. Faulk, Chairman,
Management Committee for Employee
Benefits of Kraft Foods, Inc.
Date: March 28, 1997
18
<PAGE>
KRAFT FOODS MASTER DEFINED CONTRIBUTION TRUST
SCHEDULE I - INVESTMENTS as of December 31, 1996
<TABLE>
<CAPTION>
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
--------------------------------- --------------- ----------- ----------
<S> <C> <C> <C>
EQUITY INDEX FUND -- 17.03%
GEBT Equity Index Fund -- 16.99% 259,974 $296,077,339 $442,150,965
Short-Term Investments -- 0.04%
GEBT Short-Term Investment Fund 944,612 944,612 944,612
------------ ------------
Total Equity Index Fund 297,021,951 443,095,577
------------ ------------
INTEREST INCOME FUND -- 28.84%
Investment Contracts -- 27.64%
(The amounts included in Column D for the
investment contracts represent contract value,
see Note 2.)
Participation Contracts with Institutions -- 17.22%
Connecticut General Ins.
No. 7771 4.55%
matures 1/1/1997 11,761,408 11,761,408 11,761,408
J P Morgan
No. 95-03 8.10%
matures 1/25/1997 25,877,500 25,877,500 25,877,500
Hartford Life Ins. Co.
No. 9108 8.74%
matures 5/1/1997 32,378,796 32,378,796 32,378,796
Confederation Life Ins.
No. 62325 0.00%
matures 5/1997 21,109,885 21,109,885 21,109,885
Provident Mutual
No. 008159-001 8.55%
matures 3/1/1998 1,004,095 1,004,095 1,004,095
Mass Mutual
No. 10223 8.25%
matures 4/30/1998 11,913,686 11,913,686 11,913,686
Provident National Assurance
No. 02705689 6.96%
matures 7/31/1998 23,799,860 23,799,860 23,799,860
Connecticut General Life Ins.
No. 25119 8.81%
matures 8/1/1998 21,756,995 21,756,995 21,756,995
Hartford Life Ins. Co.
No. 10225 5.68%
matures 1/31/1999 20,052,910 20,052,910 20,052,910
Allstate Life Insurance Company
No. 5428 6.15%
matures 4/30/1999 36,609,754 36,609,754 36,609,754
</TABLE>
S-1
<PAGE>
KRAFT FOODS MASTER DEFINED CONTRIBUTION TRUST
SCHEDULE I - INVESTMENTS as of December 31, 1996
<TABLE>
<CAPTION>
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
- --------------------------------- --------------- ----------- ----------
<S> <C> <C> <C>
Participation Contracts with Institutions (continued)
Allstate Life Ins. Co.
No. 5581 7.23%
matures 5/20/1999 1,943,201 $ 1,943,201 $ 1,943,201
CNA Insurance Co.
No. 24023 6.61%
matures 6/29/2001 20,017,544 20,017,544 20,017,544
Sun America Life
No. 4696 6.67%
matures 12/31/2001 20,017,698 20,017,698 20,017,698
Mass Mutual
No. 1040 6.21% 32,695,251 32,695,251 32,695,251
Prudential
No. 7269 6.16% 70,734,000 70,734,000 70,734,000
New York Life
No. 20013 6.39% 31,985,090 31,985,090 31,985,090
John Hancock
No. 6436 5.82% 64,373,330 64,373,330 64,373,330
--------------- ---------------
Total Contracts 448,031,003 448,031,003
--------------- ---------------
<CAPTION>
<S> <C> <C>
Financial Institution Pools -- 10.42%
National Westminster Bank
No. SAM 0104B 4.28%
GEBT Short-Term Investment Fund 668,903 668,903
Confederation Life Insurance GAC No. 62381
matured 11/30/1995 8.61% 8,108,070 8,108,070
Federal National Mortgage Association Remic
matures 6/25/2005 6.25% 2,367,771 2,367,771
Federal National Mortgage Association Remic
matures 8/25/2005 6.00% 514,937 514,937
Federal National Mortgage Association Remic
matures 8/25/2012 5.60% 1,576,665 1,576,665
Federal National Mortgage Association Remic
matures 8/25/2013 6.70% 4,044,382 4,044,382
Federal National Mortgage Association Remic
matures 9/25/2015 6.00% 2,353,243 2,353,243
Federal National Mortgage Association Remic
matures 6/25/2016 5.70% 4,366,089 4,366,089
Federal National Mortgage Association Remic
matures 7/25/2016 5.65% 2,341,523 2,341,523
Federal National Mortgage Association Remic
matures 1/25/2020 7.00% 854,086 854,086
Federal National Mortgage Association Pool
matures 7/1/2008 7.00% 1,041,452 1,041,452
Federal National Mortgage Association Pool
matures 8/1/2008 7.00% 1,030,303 1,030,303
</TABLE>
S-2
<PAGE>
KRAFT FOODS MASTER DEFINED CONTRIBUTION TRUST
SCHEDULE I - INVESTMENTS as of December 31, 1996
<TABLE>
<CAPTION>
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
- --------------------------------- --------------- ------------ ----------
<S> <C> <C> <C>
Financial Institution Pools (continued)
National Westminster Bank (continued)
Federal National Mortgage Association Pool
matures 1/1/2009 6.50% $ 171,619 $ 171,619
Federal National Mortgage Association Pool
matures 2/1/2009 6.50% 613,304 613,304
Federal National Mortgage Association Pool
matures 3/1/2009 6.50% 205,223 205,223
Federal National Mortgage Association Pool
matures 5/1/2009 6.50% 1,271,306 1,271,306
Government National Mortgage Association Pool
matures 12/15/2023 6.50% 284,287 284,287
Government National Mortgage Association Pool
matures 3/15/2024 6.50% 93,774 93,774
Government National Mortgage Association Pool
matures 4/15/2024 6.50% 1,776,787 1,776,787
Government National Mortgage Association Pool
matures 5/15/2024 6.50% 1,276,524 1,276,524
Federal Home Loan Mtg. Corporation
matures 8/15/2005 6.25% 1,184,252 1,184,252
Federal Home Loan Mtg. Corporation
matures 4/1/2008 7.00% 127,322 127,322
Federal Home Loan Mtg. Corporation
matures 8/15/2008 6.50% 1,692,931 1,692,931
Federal Home Loan Mtg. Corporation
matures 9/1/2008 6.50% 46,077 46,077
Federal Home Loan Mtg. Corporation
matures 12/1/2008 6.50% 48,731 48,731
Federal Home Loan Mtg. Corporation
matures 2/1/2009 6.50% 2,029,335 2,029,335
Federal Home Loan Mtg. Corporation
matures 6/1/2009 6.50% 88,055 88,055
Federal Home Loan Mtg. Corporation
matures 10/1/2010 7.00% 260,939 260,939
Federal Home Loan Mtg. Corporation
matures 2/1/2011 6.50% 138,688 138,688
Federal Home Loan Mtg. Corporation
matures 2/1/2011 7.00% 791,070 791,070
Federal Home Loan Mtg. Corporation
matures 3/1/2011 7.00% 1,271,320 1,271,320
Federal Home Loan Mtg. Corporation
matures 4/15/2011 5.00% 1,769,714 1,769,714
Federal Home Loan Mtg. Corporation
matures 12/15/2015 6.50% 2,887,649 2,887,649
Federal Home Loan Mtg. Corporation
matures 6/15/2016 7.00% 318,819 318,819
Federal Home Loan Mtg. Corporation
matures 1/15/2018 6.00% 4,415,122 4,415,122
----------------- ---------------
</TABLE>
S-3
<PAGE>
KRAFT FOODS MASTER DEFINED CONTRIBUTION TRUST
SCHEDULE I - INVESTMENTS as of December 31, 1996
<TABLE>
<CAPTION>
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
--------------------------------- --------------- ----------- ----------
<S> <C> <C> <C>
Financial Institution Pools (continued)
National Westminster Bank (continued)
Total National Westminster Bank Contract $52,030,272 $52,030,272
----------- -----------
Trans America Life Insurance Company
No. 76594 6.82%
GEBT Short-Term Investment Fund 7,487,114 7,487,114
U. S. Treasury Note
matures 6/30/1998 6.25% 1,399,192 1,399,192
U. S. Treasury Note
matures 9/30/1998 6.00% 1,770,883 1,770,883
U. S. Treasury Note
matures 12/31/1998 5.75% 1,801,674 1,801,674
U. S. Treasury Note
matures 5/15/1999 6.38% 11,137,269 11,137,269
U. S. Treasury Note
matures 11/15/1999 5.88% 916,316 916,316
U. S. Treasury Note
matures 6/30/2001 6.63% 2,469,791 2,469,791
U. S. Treasury Note
matures 9/30/2001 6.38% 279,189 279,189
U. S. Treasury Note
matures 12/31/2001 6.13% 3,595,726 3,595,726
U. S. Treasury Note
matures 5/15/2006 6.88% 1,592,869 1,592,869
Federal National Mortgage Association Pool
matures 11/1/2002 7.00% 55,748 55,748
Federal National Mortgage Association Pool
matures 4/1/2003 7.00% 151,031 151,031
Federal National Mortgage Association Pool
matures 5/1/2003 7.00% 192,231 192,231
Federal National Mortgage Association Pool
matures 6/1/2003 7.00% 342,011 342,011
Federal National Mortgage Association Pool
matures 4/1/2026 7.00% 130,578 130,578
Federal National Mortgage Association Pool
matures 5/1/2026 7.00% 189,143 189,143
Federal National Mortgage Association Pool
matures 6/1/2026 7.00% 181,817 181,817
Federal National Mortgage Association Pool
matures 7/1/2026 7.00% 10,098 10,098
Federal National Mortgage Association Pool
matures 8/1/2026 7.00% 33,608 33,608
Federal National Mortgage Association Pool
matures 9/1/2026 7.00% 167,014 167,014
Federal National Mortgage Association Pool
matures 10/1/2026 7.00% 245,231 245,231
</TABLE>
S-4
<PAGE>
KRAFT FOODS MASTER DEFINED CONTRIBUTION TRUST
SCHEDULE I - INVESTMENTS as of December 31, 1996
<TABLE>
<CAPTION>
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
- ---------------------------------- --------------- ----------- ----------
<S> <C> <C> <C>
Financial Institution Pools (continued)
Trans America Life Insurance Company (continued)
Federal National Mortgage Association Pool
matures 12/1/2026 7.00% $ 959,819 $ 959,819
Federal National Mortgage Association
matures 9/1/2021 8.00% 2,576,286 2,576,286
Government National Mortgage Association
matures 2/1/2021 9.00% 612,717 612,717
Federal Home Loan Mtg. Corporation
matures 5/1/2007 7.50% 1,128,692 1,128,692
Federal Home Loan Mtg. Corporation
matures 7/1/2026 6.50% 2,376,643 2,376,643
---------------- ---------------
Total Trans America Life Insurance Company Contract 41,802,690 41,802,690
---------------- ---------------
Commonwealth Life Insurance Company No. ADA00199TR, 6.22%,
Peoples Life Insurance Company No. BDA00291TR, 6.37% &
Trans America Life Insurance Company No. 76586, 5.62%
GEBT Short-Term Investment Fund 32,146,777 32,146,777
U. S. Treasury Note
matures 6/30/1998 6.25% 2,429,586 2,429,586
U. S. Treasury Note
matures 9/30/1998 6.00% 9,204,797 9,204,797
U. S. Treasury Note
matures 12/31/1998 5.75% 9,249,548 9,249,548
U. S. Treasury Note
matures 5/15/1999 6.38% 20,682,257 20,682,257
U. S. Treasury Note
matures 11/15/1999 5.88% 12,997,667 12,997,667
U. S. Treasury Note
matures 2/29/2000 7.13% 2,251,283 2,251,283
U. S. Treasury Note
matures 6/30/2001 6.63% 9,517,681 9,517,681
U. S. Treasury Note
matures 9/30/2001 6.38% 1,176,769 1,176,769
U. S. Treasury Note
matures 12/31/2001 6.13% 16,589,539 16,589,539
U. S. Treasury Note
matures 7/15/2006 7.00% 667,757 667,757
Federal National Mortgage Association
matures 11/23/2001 6.35% 341,296 341,296
Federal National Mortgage Association
matures 9/9/2003 5.97% 514,159 514,159
Federal National Mortgage Association
matures 10/25/2004 8.40% 665,643 665,643
Federal National Mortgage Association
matures 11/10/2004 8.63% 1,257,242 1,257,242
</TABLE>
S-5
<PAGE>
KRAFT FOODS MASTER DEFINED CONTRIBUTION TRUST
SCHEDULE I - INVESTMENTS as of December 31, 1996
<TABLE>
<CAPTION>
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
- --------------------------------- --------------- ----------- ----------
<S> <C> <C> <C>
Financial Institution Pools (continued)
Commonwealth Life Insurance Company, Peoples Life Insurance
Company & Trans America Life Insurance Company (continued)
Federal National Mortgage Association Pool
matures 6/1/2001 10.50% $ 1,169,781 $ 1,169,781
Federal National Mortgage Association Pool
matures 12/1/2002 6.00% 45,064 45,064
Federal National Mortgage Association Pool
matures 2/1/2003 6.00% 987,864 987,864
Federal National Mortgage Association Pool
matures 3/1/2003 6.00% 30,101 30,101
Federal National Mortgage Association Pool
matures 4/1/2003 6.00% 96,329 96,329
Federal National Mortgage Association Pool
matures 9/1/2007 7.00% 254,869 254,869
Federal National Mortgage Association Pool
matures 6/1/2008 7.00% 126,761 126,761
Federal National Mortgage Association Pool
matures 8/1/2008 7.00% 1,229,298 1,229,298
Federal National Mortgage Association Pool
matures 12/1/2008 6.00% 326,260 326,260
Federal National Mortgage Association Pool
matures 2/1/2009 6.00% 797,532 797,532
Federal National Mortgage Association Pool
matures 3/1/2009 6.00% 355,401 355,401
Federal National Mortgage Association Pool
matures 3/1/2011 6.50% 475,099 475,099
Federal National Mortgage Association Pool
matures 2/1/2023 7.00% 387,455 387,455
Federal National Mortgage Association Pool
matures 5/1/2023 8.00% 2,234,254 2,234,254
Federal National Mortgage Association Pool
matures 2/1/2024 6.50% 461,246 461,246
Federal National Mortgage Association Pool
matures 2/1/2024 7.00% 1,267,814 1,267,814
Federal National Mortgage Association Pool
matures 4/1/2024 6.50% 154,870 154,870
Federal National Mortgage Association Pool
matures 5/1/2024 6.50% 420,761 420,761
Federal National Mortgage Association Pool
matures 6/1/2024 6.50% 657,839 657,839
Federal National Mortgage Association Pool
matures 11/1/2024 9.00% 445,065 445,065
Federal National Mortgage Association Pool
matures 7/1/2025 7.00% 1,060,349 1,060,349
Federal National Mortgage Association Pool
matures 8/1/2025 7.00% 586,886 586,886
</TABLE>
S-6
<PAGE>
KRAFT FOODS MASTER DEFINED CONTRIBUTION TRUST
SCHEDULE I - INVESTMENTS as of December 31, 1996
<TABLE>
<CAPTION>
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
- --------------------------------- --------------- ----------- ----------
<S> <C> <C> <C>
Financial Institution Pools (continued)
Commonwealth Life Insurance Company, Peoples Life Insurance
Company & Trans America Life Insurance Company (continued)
Federal National Mortgage Association Pool
matures 4/1/2026 7.00% $1,772,204 $1,772,204
Federal National Mortgage Association Pool
matures 10/1/2026 7.00% 293,720 293,720
Government National Mortgage Association Pool
matures 11/15/2017 9.50% 1,640,665 1,640,665
Government National Mortgage Association Pool
matures 12/15/2019 9.00% 311,303 311,303
Government National Mortgage Association Pool
matures 1/15/2020 9.00% 157,022 157,022
Government National Mortgage Association Pool
matures 5/15/2020 9.00% 348,067 348,067
Government National Mortgage Association Pool
matures 11/15/2020 9.00% 284,443 284,443
Government National Mortgage Association Pool
matures 12/15/2020 9.00% 255,567 255,567
Government National Mortgage Association Pool
matures 8/15/2021 9.00% 438,442 438,442
Government National Mortgage Association Pool
matures 10/15/2021 9.00% 377,590 377,590
Government National Mortgage Association Pool
matures 10/20/2021 9.50% 1,052,170 1,052,170
Government National Mortgage Association Pool
matures 11/15/2021 9.00% 188,364 188,364
Government National Mortgage Association Pool
matures 1/15/2022 9.00% 51,323 51,323
Government National Mortgage Association Pool
matures 3/15/2024 6.50% 401,633 401,633
Government National Mortgage Association Pool
matures 4/15/2024 6.50% 390,394 390,394
Government National Mortgage Association Pool
matures 5/15/2024 6.50% 1,999,237 1,999,237
Government National Mortgage Association Pool
matures 7/15/2024 6.50% 1,361,039 1,361,039
Government National Mortgage Association Pool
matures 1/15/2025 9.00% 873,781 873,781
Federal Home Loan Mtg. Corporation
matures 11/1/2008 6.00% 3,640,485 3,640,485
Federal Home Loan Mtg. Corporation
matures 3/1/2009 6.50% 1,490,923 1,490,923
Federal Home Loan Mtg. Corporation
matures 4/1/2009 6.00% 109,466 109,466
Federal Home Loan Mtg. Corporation
matures 4/1/2009 6.50% 153,765 153,765
</TABLE>
S-7
<PAGE>
KRAFT FOODS MASTER DEFINED CONTRIBUTION TRUST
SCHEDULE I - INVESTMENTS as of December 31, 1996
<TABLE>
<CAPTION>
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
--------------------------------- --------------- ----------- ----------
<S> <C> <C> <C>
Financial Institution Pools (continued)
Commonwealth Life Insurance Company, Peoples Life Insurance
Company & Trans America Life Insurance Company (continued)
Federal Home Loan Mtg. Corporation
matures 10/1/2011 6.50% $ 1,499,186 $ 1,499,186
Federal Home Loan Mtg. Corporation
matures 12/15/2019 6.00% 544,917 544,917
Federal Home Loan Mtg. Corporation
matures 4/15/2021 9.00% 1,369,729 1,369,729
Federal Home Loan Mtg. Corporation
matures 1/1/2026 6.00% 936,908 936,908
Federal Home Loan Mtg. Corporation
matures 7/1/2026 6.50% 519,682 519,682
Student Loan Marketing Association
matures 8/1/2007 7.13% 701,902 701,902
Banc One Auto TR
matures 11/15/1997 6.85% 163,478 163,478
Premier Auto TR
matures 2/4/1999 7.15% 1,894,195 1,894,195
Bayerische Landesbank Girozentrale
matures 7/19/1999 6.55% 2,297,149 2,297,149
MBNA Master Credit Card TR
matures 8/16/1999 6.20% 2,527,260 2,527,260
Standard Credit Card Master TR
matures 6/7/2000 6.75% 785,382 785,382
Standard Credit Card Master TR
matures 4/7/2001 6.80% 522,286 522,286
Asian Development Bank NTS
matures 5/2/2001 8.50% 1,473,645 1,473,645
American Express Master TR
matures 7/15/2001 5.38% 1,366,641 1,366,641
MBNA Master Credit Card TR
matures 1/15/2003 6.60% 1,014,626 1,014,626
Japan Fin Corp
matures 4/27/2005 7.38% 1,453,580 1,453,580
International BK for Recon & Dev
matures 7/21/2005 6.38% 1,620,393 1,620,393
Bayerische Landesbank Girozentrale
matures 2/1/2006 6.17% 1,663,401 1,663,401
KFW Int'l Fin Inc
matures 6/1/2006 8.20% 983,074 983,074
General Electric Cap Corp
matures 7/24/2008 8.50% 1,050,622 1,050,622
Landesbank Hessen
matures 11/10/2008 6.25% 1,607,286 1,607,286
International BK for Recon & Dev
matures 3/1/2026 8.88% 548,882 548,882
----------- -----------
</TABLE>
S-8
<PAGE>
KRAFT FOODS MASTER DEFINED CONTRIBUTION TRUST
SCHEDULE I - INVESTMENTS as of December 31, 1996
<TABLE>
<CAPTION>
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
--------------------------------- --------------- ----------- ----------
<S> <C> <C> <C>
Commonwealth Life Insurance Company, Peoples Life Insurance
Company & Trans America Life Insurance Company (continued)
Total Commonwealth, Peoples & Trans America Contract $177,398,726 $177,398,726
------------ ------------
Total Pools 271,231,688 271,231,688
------------ ------------
Total Investment Contracts 719,262,691 719,262,691
------------ ------------
Short-Term Investments -- 1.20%
GEBT Short-Term Investment Fund 25,748,659 25,748,659 25,748,659
GEBT Stable Value Government Fund 5,501,801 5,501,801 5,501,801
------------ ------------
Total Short-Term Investments 31,250,460 31,250,460
------------ ------------
Total Interest Income Fund 750,513,151 750,513,151
------------ ------------
GOVERNMENT SECURITIES FUND -- 1.13%
Government Securities -- 0.99%
United States Treasury Notes
7.25% due 2/15/1998 1,650,000 1,666,601 1,677,076
United States Treasury Notes
7.125% due 9/30/1999 4,350,000 4,502,688 4,470,321
United States Treasury Notes
7.125% due 2/29/2000 4,350,000 4,510,313 4,478,456
United States Treasury Notes
5.875% due 6/30/2000 4,350,000 4,343,360 4,317,375
United States Treasury Notes
5.625% due 2/28/2001 750,000 736,582 735,120
United States Treasury Notes
6.375% due 8/15/2002 4,900,000 4,961,787 4,932,144
United States Treasury Notes
6.50% due 5/15/2005 3,000,000 3,060,541 3,020,160
United States Treasury Notes
6.50% due 8/15/2005 1,300,000 1,332,109 1,308,333
United States Treasury Notes
6.50% due 10/15/2006 750,000 759,023 754,103
------------ ------------
Total Government Securities 25,873,004 25,693,088
------------ ------------
Federal Agency Obligations -- 0.11%
Federal Home Loan Mtg. Corporation
SER A 5.5% due 2/2/2001 3,000,000 2,978,775 2,911,410
------------ ------------
</TABLE>
S-9
<PAGE>
KRAFT FOODS MASTER DEFINED CONTRIBUTION TRUST
SCHEDULE I - INVESTMENTS as of December 31, 1996
<TABLE>
<CAPTION>
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
- --------------------------------- --------------- ----------- ----------
<S> <C> <C> <C>
Total Federal Agency Obligations $ 2,978,775 $ 2,911,410
---------------- ---------------
Short-Term Investments -- 0.03%
BT Pyramid Government Securities Cash Fund 811,717 811,717 811,717
---------------- ---------------
Total Government Securities Fund 29,663,496 29,416,215
---------------- ---------------
GOVERNMENT SECURITIES FUND (GF) -- 0.05%
Government Securities -- 0.05%
United States Treasury Bills
due 5/01/1997 500,000 473,324 473,324
United States Treasury Bills
due 7/24/1997 500,000 472,400 472,400
United States Treasury Bills
due 11/13/1997 250,000 238,077 238,077
---------------- ---------------
Total Government Securities 1,183,801 1,183,801
---------------- ---------------
Short-Term Investments -- 0.00%
BT Pyramid Government Securities Cash Fund 109,585 109,585 109,585
---------------- ---------------
Total Government Securities Fund (GF) 1,293,386 1,293,386
---------------- ---------------
PHILIP MORRIS STOCK FUND -- 41.67%
Common Stock -- 40.57%
Tobacco -- 40.57%
Philip Morris Companies Inc. 9,343,555 * 439,309,053 1,055,821,715
Short-Term Investments -- 1.10%
GEBT Short-Term Investment Fund 28,613,393 28,613,393 28,613,393
---------------- ---------------
Total Philip Morris Stock Fund 467,922,446 1,084,435,108
---------------- ---------------
</TABLE>
* On February 26, 1997, Philip Morris
Companies Inc. announced a three-for-one
split of its Common Stock, to be effected
by a distribution on April 10, 1997, of two
shares for each share held of record at the
close of business on March 17, 1997.
S-10
<PAGE>
KRAFT FOODS MASTER DEFINED CONTRIBUTION TRUST
SCHEDULE I - INVESTMENTS as of December 31, 1996
<TABLE>
<CAPTION>
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
--------------------------------- --------------- ----------- ----------
<S> <C> <C> <C>
INTERNATIONAL EQUITY FUND -- 2.17%
Japanese Equity Index Fund -- 0.57% 174,579 $ 16,928,012 $ 14,865,375
Non Japanese Equity Index Fund -- 1.60% 282,909 35,371,872 41,535,576
-------------- --------------
Total Equity Index Funds 52,299,884 56,400,951
-------------- --------------
Short-Term Investments -- 0.00%
GEBT Short-Term Investment Fund 114,499 114,499 114,499
-------------- --------------
Total International Equity Index Fund 52,414,383 56,515,450
-------------- --------------
BALANCED FUND -- 2.97%
Balanced Fund -- 2.96% 6,451,741 72,890,632 77,162,828
Short-Term Investments -- 0.01%
GEBT Short-Term Investment Fund 188,536 188,536 188,536
-------------- --------------
Total Balanced Fund 73,079,168 77,351,364
-------------- --------------
GROWTH EQUITY FUND -- 4.71%
Growth Equity Fund -- 4.70% 10,123,806 117,556,907 122,194,340
Short-Term Investments -- 0.01%
GEBT Short-Term Investment Fund 312,426 312,426 312,426
-------------- --------------
Total Growth Equity Fund 117,869,333 122,506,766
-------------- --------------
PARTICIPANTS' LOAN ACCOUNT -- 1.43%
Loans to Participants -- 1.43% 37,374,798 37,374,798 37,374,798
-------------- --------------
Total Participants' Loan Account 37,374,798 37,374,798
-------------- --------------
TOTAL INVESTMENTS $1,827,152,112 $2,602,501,815
============== ==============
</TABLE>
S-11
<PAGE>
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. 333-20747) of the Long Term
Savings Plan for Union Employees of our report dated March 28, 1997, on our
audits of the financial statements of the Long Term Savings Plan for Union
Employees as of December 31, 1996 and 1995 and for the years ended December 31,
1996 and 1995 and the financial statement schedule as of December 31, 1996,
which report is included in this annual report on Form 11-K.
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
April 14, 1997
