<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
----------------
Kraft Foods Thrift Plan
Three Lakes Drive, Northfield, Illinois 60093
(Full title and address of the plan)
PHILIP MORRIS COMPANIES INC.
120 Park Avenue
New York, New York 10017
(Name of issuer of the securities held pursuant to the plan
and address of its principal executive office.)
================================================================================
<PAGE>
KRAFT FOODS THRIFT PLAN
ANNUAL REPORT ON FORM 11-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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, 1995 and 1994.................... 6-8
Notes to Financial Statements........................................ 9-21
Signatures.............................................................. 22
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 Kraft Foods Thrift Plan:
We have audited the accompanying statements of financial condition of the
Kraft Foods Thrift Plan (the "Plan") as of December 31, 1996 and 1995, and the
related statements of income and changes in plan equity for each of the three
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 three
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.
Our audits were performed for the purpose of forming an opinion on the
basic financial statements taken as a whole. The fund information in the
statements of financial condition and statements of income and changes in plan
equity is presented for purposes of additional information rather than to
present the financial condition and changes in income and plan equity of each
fund. The fund information has been subjected to the auditing procedures applied
in the audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
March 28, 1997
-3-
<PAGE>
KRAFT FOODS THRIFT PLAN
STATEMENT OF FINANCIAL CONDITION
as of December 31, 1996
(in thousands of dollars)
---------
<TABLE>
<CAPTION>
Equity Interest Government International
Index Income Securities Philip Morris Equity Balanced
Fund Fund Fund Stock Fund Fund Fund
----------- ----------- ----------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Allocated share of
Trust net assets $ 436,889 $ 684,225 $ 30,046 $ 968,095 $ 56,194 $ 76,658
Interfund receivables
(payables) 339 532 50 (1,823) 322 706
----------- ----------- ----------- ------------- ------------- -----------
Total assets 437,228 684,757 30,096 966,272 56,516 77,364
----------- ----------- ----------- ------------- ------------- -----------
LIABILITIES:
Distributions and
withdrawals payable 814 2,609 63 1,499 85 152
Undistributed
participants' loans 43 227 3 146 6 5
General and administrative
expenses payable 57 89 4 126 7 10
----------- ----------- ----------- ------------- ------------- -----------
Total liabilities 914 2,925 70 1,771 98 167
----------- ----------- ----------- ------------- ------------- -----------
Plan equity $ 436,314 $ 681,832 $ 30,026 $ 964,501 $ 56,418 $ 77,197
=========== =========== =========== ============= ============= ===========
<CAPTION>
Growth Participants'
Equity Loan
Fund Account Total
----------- ------------- -------------
<S> <C> <C> <C>
ASSETS:
Allocated share of
Trust net assets $ 122,635 $ 36,965 $ 2,411,707
Interfund receivables
(payables) (126) -
----------- ------------- -------------
Total assets 122,509 36,965 2,411,707
----------- ------------- -------------
LIABILITIES:
Distributions and
withdrawals payable 254 24 5,500
Undistributed
participants' loans 8 (438) -
General and administrative
expenses payable 16 309
----------- ------------- -------------
Total liabilities 278 (414) 5,809
----------- ------------- -------------
Plan equity $ 122,231 $ 37,379 $ 2,405,898
=========== ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE>
KRAFT FOODS THRIFT PLAN
STATEMENT OF FINANCIAL CONDITION
as of December 31, 1995
(in thousands of dollars)
---------
<TABLE>
<CAPTION>
Equity Interest Government International
Index Income Securities Philip Morris Equity Balanced
Fund Fund Fund Stock Fund Fund Fund
--------- --------- ---------- ------------ ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Allocated share of
Trust net assets $ 311,792 $ 746,487 $ 31,759 $ 993,800 $ 22,929 $ 29,250
Interfund receivables
(payables) 529 224 256 (2,570) 449 510
Participants' loan
repayments receivables
(payables) 9 28 2 36 2
--------- --------- ---------- ------------ ------------- ---------
Total assets 312,330 746,739 32,017 991,266 23,378 29,762
--------- --------- ---------- ------------ ------------- ---------
LIABILITIES:
Distributions and
withdrawals payable 3,547 10,266 305 5,972 157 96
Undistributed
participants' loans 7 22 4 50
General and administrative
expenses payable 29 72 3 100 2 3
--------- --------- ---------- ------------ ------------- ---------
Total liabilities 3,583 10,360 312 6,122 159 99
--------- --------- ---------- ------------ ------------- ---------
Plan equity $ 308,747 $ 736,379 $ 31,705 $ 985,144 $ 23,219 $ 29,663
========= ========= ========== ============ ============= =========
<CAPTION>
Growth Participants'
Equity Loan
Fund Account Total
--------- ------------ -----------
<S> <C> <C> <C>
ASSETS:
Allocated share of
Trust net assets $ 65,372 $ 34,967 $ 2,236,356
Interfund receivables
(payables) 602 -
Participants' loan
repayments receivables
(payables) (77) -
--------- ------------ -----------
Total assets 65,974 34,890 2,236,356
--------- ------------ -----------
LIABILITIES:
Distributions and
withdrawals payable 370 93 20,806
Undistributed
participants' loans (83) -
General and administrative
expenses payable 6 215
--------- ------------ -----------
Total liabilities 376 10 21,021
--------- ------------ -----------
Plan equity $ 65,598 $ 34,880 $ 2,215,335
========= ============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-5-
<PAGE>
KRAFT FOODS THRIFT PLAN
STATEMENT OF INCOME AND CHANGES IN PLAN EQUITY
for the year ended December 31, 1996
(in thousands of dollars)
---------
<TABLE>
<CAPTION>
Equity Interest Government International
Index Income Securities Philip Morris Equity
Fund Fund Fund Stock Fund Fund
---------- --------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C>
ADDITIONS:
Employer contributions $ 5,114 $ 6,775 $ 576 $ 14,366 $ 919
Employee contributions 16,983 18,697 1,747 32,092 2,913
Allocated share of Trust
investment activities:
Interest income 41,060 1,984 1,032
Dividend income 39,903
Net appreciation
(depreciation) in
fair value of investments 76,893 (1,047) 194,971 3,681
---------- --------- ---------- ------------- -------------
76,893 41,060 937 235,906 3,681
---------- --------- ---------- ------------- -------------
Total additions 98,990 66,532 3,260 282,364 7,513
---------- --------- ---------- ------------- -------------
DEDUCTIONS:
Distributions and
withdrawals (40,362) (155,216) (7,077) (75,747) (3,461)
General and administrative
expenses (423) (917) (58) (937) (78)
---------- --------- ---------- ------------- -------------
Total deductions (40,785) (156,133) (7,135) (76,684) (3,539)
---------- --------- ---------- ------------- -------------
Net transfers among funds 69,854 36,271 2,294 (224,664) 29,195
Transfers from predecessor trusts 31 55 197 1
Participants' loans (3,301) (6,554) (334) (9,477) (347)
Participants' loan repayments 2,778 5,282 236 7,621 376
---------- --------- ---------- ------------- -------------
Net additions (deductions) 127,567 (54,547) (1,679) (20,643) 33,199
PLAN EQUITY:
Beginning of year 308,747 736,379 31,705 985,144 23,219
---------- --------- ---------- ------------- -------------
End of year $ 436,314 $ 681,832 $ 30,026 $ 964,501 $ 56,418
========== ========= ========== ============= =============
<CAPTION>
Growth Participants'
Balanced Equity Loan
Fund Fund Account Total
---------- -------- ------------- ----------
<S> <C> <C> <C> <C>
ADDITIONS:
Employer contributions $ 802 $ 1,958 $ 30,510
Employee contributions 2,573 6,318 81,323
Allocated share of Trust
investment activities:
Interest income $ 2,598 46,674
Dividend income 3,979 7,584 51,466
Net appreciation
(depreciation) in
fair value of investments 3,842 5,844 284,184
---------- -------- ------------- ----------
7,821 13,428 2,598 382,324
---------- -------- ------------- ----------
Total additions 11,196 21,704 2,598 494,157
---------- -------- ------------- ----------
DEDUCTIONS:
Distributions and
withdrawals (5,212) (10,293) (3,930) (301,298)
General and administrative
expenses (51) (132) (2,596)
---------- -------- ------------- ----------
Total deductions (5,263) (10,425) (3,930) (303,894)
---------- -------- ------------- ----------
Net transfers among funds 41,670 45,380 -
Transfers from predecessor trusts 1 15 300
Participants' loans (418) (899) 21,330 -
Participants' loan repayments 348 858 (17,499) -
---------- -------- ------------- ----------
Net additions (deductions) 47,534 56,633 2,499 190,563
PLAN EQUITY:
Beginning of year 29,663 65,598 34,880 2,215,335
---------- -------- ------------- ----------
End of year $ 77,197 $122,231 $ 37,379 $2,405,898
========== ======== ============= ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-6-
<PAGE>
KRAFT FOODS THRIFT PLAN
STATEMENT OF INCOME AND CHANGES IN PLAN EQUITY
for the year ended December 31, 1995
(in thousands of dollars)
------------
<TABLE>
<CAPTION>
Equity Interest Government International
Index Income Securities Philip Morris Equity
Fund Fund Fund Stock Fund Fund
-------- ---------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C>
ADDITIONS:
Employer contributions $ 5,570 $ 9,763 $ 686 $ 17,786 $ 267
Employee contributions 18,505 29,341 2,035 37,810 866
Allocated share of Trust
investment activities:
Interest income 50 50,129 1,247 982
Dividend income 41,723
Net appreciation
(depreciation) in
fair value of investments 84,313 880 381,302 1,204
-------- ---------- ---------- ------------- -------------
84,363 50,129 2,127 424,007 1,204
-------- ---------- ---------- ------------- -------------
Total additions 108,438 89,233 4,848 479,603 2,337
-------- ---------- ---------- ------------- -------------
DEDUCTIONS:
Distributions and
withdrawals (31,923) (118,533) (3,719) (73,643) (972)
General and administrative
expenses (395) (1,243) (35) (1,231) (15)
-------- ---------- ---------- ------------- -------------
Total deductions (32,318) (119,776) (3,754) (74,874) (987)
-------- ---------- ---------- ------------- -------------
Net transfers among funds 13,773 (1,694) 15,241 (139,162) 21,903
Net transfers between plans 126 354 42 1,342
Participants' loans (2,996) (8,858) (288) (10,038) (159)
Participants' loan repayments 2,674 6,685 241 7,941 125
-------- ---------- ---------- ------------- -------------
Net additions (deductions) 89,697 (34,056) 16,330 264,812 23,219
PLAN EQUITY:
Beginning of year 219,050 770,435 15,375 720,332 -
-------- ---------- ---------- ------------- -------------
End of year $308,747 $ 736,379 $ 31,705 $ 985,144 $ 23,219
======== ========== ========== ============= =============
<CAPTION>
Growth Participants'
Balanced Equity Loan
Fund Fund Account Total
--------- ---------- ------------- ----------
<S> <C> <C> <C> <C>
ADDITIONS:
Employer contributions $ 233 $ 602 $ 34,907
Employee contributions 786 1,966 91,309
Allocated share of Trust
investment activities:
Interest income 1 $ 2,391 54,800
Dividend income 1,237 3,579 46,539
Net appreciation
(depreciation) in
fair value of investments 841 (501) 468,039
--------- ---------- ------------- ----------
2,078 3,079 2,391 569,378
--------- ---------- ------------- ----------
Total additions 3,097 5,647 2,391 695,594
--------- ---------- ------------- ----------
DEDUCTIONS:
Distributions and
withdrawals (1,073) (2,311) (9,588) (241,762)
General and administrative
expenses (5) (11) (2,935)
--------- ---------- ------------- ----------
Total deductions (1,078) (2,322) (9,588) (244,697)
--------- ---------- ------------- ----------
Net transfers among funds 27,637 62,302 -
Net transfers between plans 1,864
Participants' loans (114) (297) 22,750 -
Participants' loan repayments 121 268 (18,055) -
--------- ---------- ------------- ----------
Net additions (deductions) 29,663 65,598 (2,502) 452,761
PLAN EQUITY:
Beginning of year - - 37,382 1,762,574
--------- ---------- ------------- ----------
End of year $ 29,663 $ 65,598 $ 34,880 $2,215,335
========= ========== ============= ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-7-
<PAGE>
KRAFT FOODS THRIFT PLAN
STATEMENT OF INCOME AND CHANGES IN PLAN EQUITY
for the year ended December 31, 1994
(in thousands of dollars)
---------
<TABLE>
<CAPTION>
Freihofer
Equitable
Equity Interest Government Capital
Index Income Securities Management Philip Morris
Fund Fund Fund Fund Stock Fund
--------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
ADDITIONS:
Employer contributions $ 5,807 $ 12,080 $ 613 $ 20,134
Employee contributions 20,249 33,870 1,971 41,845
Allocated share of Trust
investment activities:
Interest income 15 46,123 532 216
Dividend income 35,624
Net appreciation
(depreciation) in
fair value of investments 3,490 (124) 20,682
--------- ----------- ------------ -------------
3,505 46,123 408 56,522
--------- ----------- ------------ -------------
Total additions 29,561 92,073 2,992 118,501
--------- ----------- ------------ -------------
DEDUCTIONS:
Distributions and
withdrawals (14,735) (64,190) (982) (44,779)
General and administrative
expenses (199) (721) (18) (525)
--------- ----------- ------------ -------------
Total deductions (14,934) (64,911) (1,000) (45,304)
--------- ----------- ------------ -------------
Net transfers among funds 17,811 27,504 2,143 $ (12,738) (34,720)
Transfers from predecessor trusts 5,346 58,431 246 12,738 34,951
Participants' loans (2,598) (7,251) (140) (6,751)
Participants' loan repayments 2,688 7,003 185 7,646
--------- ----------- ------------ ----------- -------------
Net additions 37,874 112,849 4,426 - 74,323
PLAN EQUITY:
Beginning of year 181,176 657,586 10,949 646,009
--------- ----------- ------------ ----------- -------------
End of year $ 219,050 $ 770,435 $ 15,375 $ - $ 720,332
========= =========== ============ =========== =============
<CAPTION>
Participants'
Loan
Account Total
-------------- -------------
<S> <C> <C>
ADDITIONS:
Employer contributions $ 38,634
Employee contributions 97,935
Allocated share of Trust
investment activities:
Interest income $ 2,306 49,192
Dividend income 35,624
Net appreciation
(depreciation) in
fair value of investments 24,048
-------------- -------------
2,306 108,864
-------------- -------------
Total additions 2,306 245,433
-------------- -------------
DEDUCTIONS:
Distributions and
withdrawals (2,636) (127,322)
General and administrative
expenses (1,463)
-------------- -------------
Total deductions (2,636) (128,785)
-------------- -------------
Net transfers among funds -
Transfers from predecessor trusts 1,244 112,956
Participants' loans 16,740 -
Participants' loan repayments (17,522) -
-------------- -------------
Net additions 132 229,604
PLAN EQUITY:
Beginning of year 37,250 1,532,970
-------------- -------------
End of year $ 37,382 $ 1,762,574
============== =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
-8-
<PAGE>
KRAFT FOODS THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS
1. General Description of the Plan:
The Kraft Foods Thrift Plan (formerly known as the Kraft General Foods Thrift
Plan and hereinafter referred to as the "Plan") is a defined contribution
plan designed to encourage employees to save for retirement by providing
eligible employees with an opportunity to invest a portion of their
compensation and to share in the profits of Kraft Foods, Inc. (formerly known
as Kraft General Foods, Inc. and hereinafter referred to as "Kraft Foods") by
making such contribution. Kraft Foods is a subsidiary of Philip Morris
Companies Inc. (the "Company").
Salaried and certain hourly employees of Kraft Foods and certain of its
domestic subsidiaries (the "Kraft Foods Companies") who are not represented
by a collective bargaining unit, are eligible to participate in the Plan,
provided they meet eligibility requirements. After completing one year of
service, eligible employees generally may make tax-deferred and after-tax
contributions. Matching contributions by Kraft Foods (the "Kraft Foods
Matching Contributions") 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".
Assets of the Plan are co-invested with the assets of 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 7).
Prior to April 1, 1995, participants had the option of investing their Plan
Accounts (see Note 4) in five percent increments in four funds. Effective May
15, 1995, participants have the option of investing their Plan Accounts in
five percent increments in the seven funds listed below.
EQUITY INDEX FUND (formerly the EQUITY 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").
-9-
<PAGE>
KRAFT FOODS THRIFT PLAN
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.
GOVERNMENT SECURITIES FUND - This fund includes primarily direct
obligations of the U.S. Government or its agencies, obligations guaranteed
by the U.S. Government or its agencies, and fully insured bank deposits.
The average maturity of the U.S. Government securities in the Government
Securities Fund is approximately five years. Prior to May 15, 1995, the
average maturity of the securities in the fund was two years.
PHILIP MORRIS STOCK FUND - This fund is invested in the common stock of
the Company (the "Common Stock") and short-term temporary investments.
INTERNATIONAL EQUITY FUND - This fund is invested primarily in common
stocks of the foreign companies that make up the Europe, Australia, and
Far East (EAFE) index. The approximate allocation of stocks in the fund is
62 percent in Europe, three percent in Australia, and 35 percent in the
Far East (including 26 percent in Japan).
BALANCED FUND - This fund is invested primarily in a diversified mix of
domestic and foreign stocks, investment grade bonds, international bonds,
and investment grade money market funds. In general, the assets of the
Balanced Fund may be invested according to the following mix: 40 percent
to 70 percent in stocks, 20 percent to 55 percent in bonds, and zero
percent to 25 percent in money market instruments.
GROWTH EQUITY FUND - This fund is invested primarily in stocks of domestic
and foreign companies considered to have better-than-average prospects for
long term growth and with a history of, or commitment to, regular dividend
payments.
None of the foregoing funds guarantees a return to the participant. Prior to
June 2, 1994, participants could change their investment elections effective
the first day of the calendar quarter. From June 6, 1994 to March 31, 1995,
participants could change their investment elections effective the first day
of each month. Effective May 15, 1995, participants can change their
investment elections daily.
-10-
<PAGE>
KRAFT FOODS THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS
(continued)
Each participant may vote all the shares of Common Stock held in his or her
Plan Accounts and invested in the Philip Morris Stock Fund. The Trustee will
vote full and fractional shares of the 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 29,796 and 32,277 participants,
respectively, some of whom elected to invest in more than one fund. Set forth
below is the number of participants investing in each fund.
<TABLE>
<CAPTION>
December 31,
-----------------
1996 1995
------ ------
<S> <C> <C>
Equity Index Fund 16,116 15,897
Interest Income Fund 18,847 21,329
Government Securities Fund 3,339 3,756
Philip Morris Stock Fund 21,299 23,453
International Equity Fund 4,309 3,047
Balanced Fund 4,315 2,790
Growth Equity Fund 6,876 4,915
</TABLE>
Each participant is at all times fully vested in the balance of his or her
After-Tax Contributions, Tax-Deferred Contributions, QVEC and Rollover
Accounts (see Note 4). A participant shall be fully vested in the balance in
his or her Company Match Account upon attainment of age 65, permanent and
total disability, or death while employed by Kraft Foods or any affiliate. A
participant who is employed by Kraft Foods or any affiliate shall be fully
vested in his or her Company Match 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 2 0%
2 but less than 3 25%
3 but less than 4 50%
4 but less than 5 75%
5 or more 100%
</TABLE>
Participants who were participants in certain predecessor plans whose assets
were transferred to the Plan and who were hired prior to January 1, 1991
become 100 percent vested in amounts contributed to their Company Match
Account upon attaining age 55 if still employed by Kraft Foods or any
affiliate.
Forfeitures:
Kraft Foods Matching Contributions forfeited by terminated participants
are used to reduce future Kraft Foods Matching Contributions to the Plan.
-11-
<PAGE>
KRAFT FOODS THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS
(continued)
2. Summary of Significant Accounting Policies:
Valuation of Trust Investments:
Investments in common trust funds of the General Employee Benefit Common
Trust of Bankers Trust Company ("GEBT") are valued on the basis of the
relative interest of each participating investor (including each
participant) in the fair value of the underlying assets of each of the
respective GEBT common trust funds.
Investment contracts and the pools of mortgaged-backed and asset-backed
securities and other investments held in the Interest Income Fund are
recorded at their contract values, which represent contributions and
reinvested income, less any withdrawals plus accrued interest, because
these investments have fully benefit-responsive features. For example,
participants may ordinarily direct the withdrawal or transfer of all or a
portion of their investment at contract value. However, withdrawals
influenced by employer-initiated events, such as in connection with the
sale of a business, may result in a distribution at other than contract
value. There are no reserves against contract values for credit risk of
contract issuers or otherwise. The fair value of the investment contracts
and the pools of mortgaged-backed and asset-backed securities and other
investments at December 31, 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 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.
-12-
<PAGE>
KRAFT FOODS THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS
(continued)
Realized gains and losses are computed on the basis of average cost of
investments sold. Dividend income is recorded on the ex-dividend date;
interest income is recorded as earned on an accrual basis.
In accordance with the policy of stating investments at fair value, the
net appreciation (depreciation) in the fair value of investments reflects
both realized gains or losses and the change in the unrealized
appreciation (depreciation) of investments held at year-end (see Note 8).
3. Contributions:
No contribution is required from any eligible employee under the Plan.
Eligible employees may make contributions on a tax-deferred basis, an
after-tax basis, or in a combination of the two. Basic Contributions are
those made on an after-tax basis and that are not in excess of six percent
of each compensation payment to the participant. Tax-Deferred Basic
Contributions are those made on a tax-deferred basis and that are not in
excess of six percent of each compensation payment to the participant.
Basic Contributions and Tax-Deferred Basic Contributions may not, in the
aggregate, exceed six percent of each compensation payment. Contributions
in excess of six percent of each compensation payment to the participant
and up to 16 percent of each compensation payment are referred to as
Supplemental Contributions if made on an after-tax basis and Tax-Deferred
Supplemental Contributions if made on a tax-deferred basis. The percentage
of compensation available for both tax-deferred and after-tax
contributions may not exceed 16 percent of a participant's compensation.
The aggregate contributions actually made by participants may not cause
the Plan to violate limitations on such contributions set forth in the
Internal Revenue Code of 1986, as amended (the "Code"). The Code also
imposes a dollar limitation on the amount of tax-deferred contributions
for a calendar year. For 1996, each participant's tax-deferred
contributions was limited to $9,500; for 1997, each participant's tax-
deferred contributions will be limited to $9,500.
Each year, Kraft Foods Matching Contributions are based on the amount of
each participant's Basic Contributions and Tax-Deferred Basic
Contributions to the Plan. Currently, the Kraft Foods Matching
Contributions percentage for the following Plan year is announced before
the end of the preceding year. Kraft Foods Matching Contributions were 57
percent of participants' Basic Contributions and Tax-Deferred Basic
Contributions for 1996, 1995 and 1994. However, due to limitations under
the Code, certain amounts for highly compensated employees are not
contributed to the Trust but are instead recorded as liabilities of the
applicable Kraft Foods Company.
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
-13-
<PAGE>
KRAFT FOODS THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS
(continued)
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").
The Plan provides, in the event of a Change of Control (as defined in the
Plan) of the Company, for Kraft Foods Matching Contributions for the year in
which the Change of Control occurs and for two years thereafter (the "Control
Period") equal to the greater of (a) the average of Kraft Foods Matching
Contributions as a percentage of Basic Contributions and Tax-Deferred Basic
Contributions that were contributed to the Plan for the two years prior to
the year in which the Change of Control occurs, or (b) 75 percent of each
participant's Basic Contributions and Tax-Deferred Basic Contributions for
each year during the Control Period.
4. Valuation of Participant Accounts:
The Committee maintains Accounts for each participant to reflect the source
and the participant's share of the funds invested in the Trust:
<TABLE>
<CAPTION>
Account Source
------- ------
<S> <C>
Company Match Account Kraft Foods Matching Contributions
Tax-Deferred Contributions Account Tax-Deferred Basic and Supplemental Contributions
After-Tax Contributions Account Basic and Supplemental Contributions
Rollover Account Amounts transferred (directly or indirectly)
from another plan qualified under Section
401(a) of the Code
QVEC Account Qualified voluntary employee contributions
made prior to January 1, 1987
Loan Account Outstanding loans obtained from the Plan
</TABLE>
At the end of each month (effective May 15, 1995, each business day), the
Trustee determines the current fair value of each of the investment funds in
the Trust described in Note 1. The fair value of each participant's share in
the Trust is determined with respect to their Company Match Account, Tax-
Deferred Contributions Account, After-Tax Contributions Account, Rollover
Account and QVEC Account on the basis of their proportionate share in each
investment fund.
5. Withdrawals and Distributions:
Participants may make withdrawals against their Company Match, Tax-Deferred
Contributions, After-Tax Contributions and Rollover Accounts under limited
circumstances in accordance with the provisions outlined in the Plan.
-14-
<PAGE>
KRAFT FOODS THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS
(continued)
Upon termination of employment, including retirement, a participant has
numerous options available, as described in the Plan, with respect to the
distribution of his or her Accounts. Normally, distributions are made within
two weeks after a distribution request is made.
In the event the Plan is terminated, distributions will be made in accordance
with the current value of participants' Accounts under the direction of the
Committee and in accordance with the Code.
6. Participants' Loans:
The loan program permits participants to borrow from their Tax-Deferred
Contributions, After-Tax Contributions and Rollover Accounts in accordance
with the provisions outlined in the Plan.
A participant's Loan Account equals the principal amount of his or her loans
outstanding. The principal amount of loan repayments reduce the Loan Account
and are added back to the participant's Accounts originally used as the
source of the loan. The repaid amount (including interest) is reinvested in
the funds according to the participant's current investment authorization.
Participants' loans are carried at the original principal amount less
principal repayments. Participants' loan repayments receivable represent
amounts withheld by the Kraft Foods Companies from participants' compensation
and not yet remitted to the Plan. Amounts to be disbursed under employee loan
agreements are recorded as undistributed participants' loans as of the loan
agreement date.
7. Investments Held by the Trust:
The Plan's allocated share of the Trust's net assets and investment
activities is based upon the total of each individual participant's share of
the Trust. The Plan's approximate allocated share of the Trust and its
approximate allocated share of the net assets of each fund in the Trust at
December 31, 1996 and 1995, were:
<TABLE>
<CAPTION>
1996 1995
----- -----
<S> <C> <C>
Trust 92% 93%
Equity Index Fund 99% 99%
Interest Income Fund 91% 93%
Government Securities Fund 100% 100%
Philip Morris Stock Fund 89% 90%
International Equity Fund 100% 100%
Balanced Fund 100% 100%
Growth Equity Fund 100% 100%
Participants' Loan Account 100% 100%
</TABLE>
-15-
<PAGE>
KRAFT FOODS THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS
(in thousands of dollars)
(continued)
The Plan's approximate allocated share of the Trust's investment activities for
the years ended December 31, 1996, 1995 and 1994, was 91 percent, 92 percent and
89 percent, respectively.
Most payments to third parties for expenses in connection with the
administration of the Plan are borne by the Trust. The following expenses are
paid from the Plan's assets: investment management fees, brokerage commissions,
trustee's fees, audit fees, recordkeeping fees and legal fees. For 1996 and
1995, the approximate amount of such expenses, expressed as a percentage of the
average net assets of each fund under the Plan, are as follows:
<TABLE>
<CAPTION>
1996 1995
----- -----
<S> <C> <C>
Equity Index Fund 0.11% 0.15%
Interest Income Fund 0.13% 0.16%
Government Securities Fund 0.19% 0.15%
Philip Morris Stock Fund 0.10% 0.14%
International Equity Fund 0.20% 0.06%
Balanced Fund 0.10% 0.02%
Growth Equity Fund 0.14% 0.02%
</TABLE>
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.
-16-
<PAGE>
KRAFT FOODS THRIFT PLAN
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>
-17-
<PAGE>
KRAFT FOODS THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS
(in thousands of dollars)
(continued)
The changes in the Trust net assets for the years ended December 31, 1996, 1995
and 1994, were:
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Additions:
Employer contributions $ 35,823 $ 42,957 $ 45,559
Employee contributions 94,665 104,014 112,998
Transfers from predecessor trusts 300 (448) 54,833
Investment activities:
Interest 47,971 55,956 53,007
Dividends 56,586 51,225 40,029
Interest on participant loans 2,598 2,394 2,304
---------- ---------- ----------
107,155 109,575 95,340
Net appreciation
in fair value of investments 313,941 512,078 26,296
---------- ---------- ----------
Net investment activities 421,096 621,653 121,636
Deductions:
Distributions and withdrawals (348,908) (258,160) (150,932)
General and administrative
expenses (2,792) (3,133) (1,628)
---------- ---------- ----------
Increase in Trust net assets 200,184 506,883 182,466
Net assets:
Beginning of year 2,416,405 1,909,522 1,727,056
---------- ---------- ----------
End of year $2,616,589 $2,416,405 $1,909,522
========== ========== ==========
</TABLE>
The transfers from the predecessor trusts for the year ended December 31, 1994,
includes the transfer of assets to the Trust of the assets of the former
Entenmann's Plan in the amount of $52,343.
-18-
<PAGE>
KRAFT FOODS THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS
(in thousands of dollars)
(continued)
8. Net Appreciation (Depreciation) in Fair Value of Trust Investments:
The realized gains and losses on disposals and changes in unrealized
appreciation or depreciation of investments in the Trust for the years ended
December 31, 1996, 1995, and 1994 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)
======== ======= ====== ======== =======
1994
----
Realized gains (losses):
Proceeds $194,914 $ 3,955 $1,860 $ 44,214 $ 1,455
Cost 135,224 3,969 1,867 31,833 659
-------- ------- ------ -------- -------
Net realized gains
(losses) 59,690 (14) (7) 12,381 796
-------- ------- ------ -------- -------
Unrealized appreciation
(depreciation):
Beginning of year 59,995 1 (5) 220,615 7,743
End of year 3,838 (109) 231,434 6,636
-------- ------- ------ -------- -------
(Decrease) increase (56,157) (110) 5 10,819 (1,107)
-------- ------- ------ -------- -------
Net appreciation
(depreciation) in fair
value of investments $ 3,533 $ (124) $ (2) $ 23,200 $ (311)
======== ======= ====== ======== =======
<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
======= ====== ======= ========
1994
----
Realized gains (losses):
Proceeds $246,398
Cost 173,552
------- ------ ------- --------
Net realized gains
(losses) 72,846
------- ------ ------- --------
Unrealized appreciation
(depreciation):
Beginning of year 288,349
End of year 241,799
------- ------ ------- --------
(Decrease) increase (46,550)
------- ------ ------- --------
Net appreciation
(depreciation) in fair
value of investments $ 26,296
======= ====== ======= ========
</TABLE>
-19-
<PAGE>
KRAFT FOODS THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS
(in thousands of dollars, except per unit data)
(continued)
9. Participation Units
The number of employee participation units and the net asset value per unit
for the funds at December 31, 1996 and 1995, were:
<TABLE>
<CAPTION>
Equity Interest Government International
Index Income Securities Philip Morris Equity
Fund Fund Fund Stock Fund Fund
-------- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
1996: Net Assets $436,314 $681,832 $ 30,026 $964,501 $ 56,418
Number of
participation units 28,345 613,255 2,679 56,704 4,832
Net asset value
per unit $15.3930 $ 1.1118 $11.2079 $17.0094 $11.6759
1995:
Net Assets $308,747 $736,379 $ 31,705 $985,144 $ 23,219
Number of
participation units 24,648 702,160 2,931 71,904 2,155
Net asset value
per unit $12.5262 $ 1.0487 $10.8171 $13.7008 $10.7745
<CAPTION>
Growth Participants'
Balanced Equity Loan
Fund Fund Account Total
-------- --------- ------------- -------------
<S> <C> <C> <C> <C>
1996: Net Assets $ 77,197 $122,231 $37,379 $2,405,898
Number of
participation units 5,953 9,353
Net asset value
per unit $12.9677 $13.0686
1995:
Net Assets $ 29,663 $ 65,598 $34,880 $2,215,335
Number of
participation units 2,657 5,782
Net asset value
per unit $11.1641 $11.3452
</TABLE>
-20-
<PAGE>
KRAFT FOODS THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS
(concluded)
10. Tax Status:
The U.S. Treasury Department has determined that the Plan, as amended and in
effect as of July 1, 1994, constitutes a qualified plan under Section 401(a)
of the Code and the related Trust is, therefore, exempt from Federal income
taxes under the provisions of Section 501(a) of the Code. The 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, tax-deferred contributions made on their behalf by
Kraft Foods or with respect to rollover contributions when made to the
Trust, nor on earnings credited to their Accounts until withdrawn or
distributed.
11. Transferred Plan Participants and Net Assets and Terminated Plans:
During 1996, Kraft Foods disposed of several of its operating companies and
subsidiaries, including Rondele Foods, Lenders Bagel Bakery, and Louis
Rich/West Liberty. In each case, except for West Liberty, affected employees
were given the option of (1) directly transferring the balance in their
Accounts under the Plan to the defined contribution plan maintained by the
buyer of the operating company or subsidiary, (2) taking a lump sum
distribution of the balance in their Accounts at any time before December
31, 1998, or (3) retaining the balance in their Accounts in the Plan and
receiving distribution upon retirement or other termination of employment
with the buyer or upon the occurrence of any other event permitting
distribution of the balance of the Accounts under the Plan. In the case of
West Liberty, affected employees were only permitted distribution in
accordance with option (3) described in the preceding sentence.
During 1995, Kraft Foods disposed of several of its operating companies and
subsidiaries, including Kraft Foodservice, Inc., Entenmann's, Inc. and the
Charles C. Freihofer Baking Company. In each instance, affected employees
were given the option of directly transferring the balance in their Accounts
under the Plan to the defined contribution plan maintained by the buyer of
the operating company or subsidiary or to retain the balance in their
Accounts in the Plan and to receive distribution upon retirement or other
termination of employment with the buyer or upon the occurrence of any other
event permitting distribution of the balance of the Accounts under the Plan.
-21-
<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.
KRAFT FOODS THRIFT PLAN
(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
-22-
<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 Nos. 33-1480, 33-17870, 33-37115,
33-38781 and 33-39162) of the Kraft Foods Thrift Plan of our report dated March
28, 1997, on our audits of the financial statements of the Kraft Foods Thrift
Plan as of December 31, 1996 and 1995 and for the years ended December 31, 1996,
1995 and 1994, 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
