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Previous: PHILIP MORRIS COMPANIES INC, 11-K, 1998-05-22 |
Next: PHILIP MORRIS COMPANIES INC, 11-K, 1998-05-22 |
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________
FORM 11-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
[X] SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
[_] SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-8940
________________
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, 1997
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page (s)
--------
<S> <C>
Report of Independent Accountants....................... 3
Financial Statements:
Statements of Financial Condition as of December 31,
1997 and 1996........................................ 4-5
Statements of Income and Changes in Plan Equity for
the years ended December 31, 1997, 1996 and 1995..... 6-8
Notes to Financial Statements......................... 9-18
Signatures.............................................. 19
Schedules:
Schedule I - Investments as of December 31, 1997...... S-1-8
</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 (the "Plan") as of December 31, 1997
and 1996, and the related statements of income and changes in plan equity for
each of the three years in the period ended December 31, 1997 and the schedule
of investments as of December 31, 1997. These financial statements and the
financial statement schedule are the responsibility of the fiduciaries of the
Plan appointed by Philip Morris Companies Inc. or Kraft Foods, Inc. Our
responsibility is to express an opinion on these financial statements and the
financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
fiduciaries, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Plan as of December 31,
1997 and 1996, and the income and changes in plan equity for each of the three
years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles. In addition, in our opinion, the financial
statement schedule referred to above, when considered in relation to the basic
financial statements taken as a whole, presents fairly, in all material
respects, the information required to be included therein.
Our audits were performed for the purpose of forming an opinion on the
basic financial statements taken as a whole. The fund information in the 1997
statements of financial condition and statements of income and changes in plan
equity is presented for purposes of additional information rather than to
present the financial condition and changes in income and plan equity of each
fund. The fund information has been subjected to the auditing procedures applied
in the audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
/s/ COOPERS & LYBRAND L.L.P.
Chicago, Illinois
March 27, 1998
-3-
<PAGE>
LONG TERM SAVINGS PLAN FOR UNION EMPLOYEES
STATEMENT OF FINANCIAL CONDITION
as of December 31, 1997
_______
<TABLE>
<CAPTION>
Philip
Interest Equity Morris
Income Index Stock Balanced
Fund Fund Fund Fund Total
--------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Allocated share of
Trust net assets $34,352,145 $13,306,016 $410,672 $6,410,378 $54,479,211
Employer contributions
receivable 142,415 20,409 2,898 9,117 174,839
Interfund receivables
(payables) (3,116,025) 2,304,305 54,642 757,078 -
----------- ----------- -------- ---------- -----------
Total assets 31,378,535 15,630,730 468,212 7,176,573 54,654,050
----------- ----------- -------- ---------- -----------
LIABILITIES:
Distributions and
withdrawals payable 350,340 71,942 - 88,349 510,631
----------- ----------- -------- ---------- -----------
Total liabilities 350,340 71,942 - 88,349 510,631
----------- ----------- -------- ---------- -----------
Plan equity $31,028,195 $15,558,788 $468,212 $7,088,224 $54,143,419
=========== =========== ======== ========== ===========
</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, 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.
-5-
<PAGE>
LONG TERM SAVINGS PLAN FOR UNION EMPLOYEES
STATEMENT OF INCOME AND CHANGES IN PLAN EQUITY
for the year ended December 31, 1997
_______
<TABLE>
<CAPTION>
Philip
Interest Equity Morris
Income Index Stock Balanced
Fund Fund Fund Fund Total
------------- ------------ --------- ----------- ------------
<S> <C> <C> <C> <C> <C>
ADDITIONS:
Employer contributions $ 1,773,282 $ 261,308 $ 19,063 $ 119,283 $ 2,172,936
Employee contributions 4,084,795 1,568,382 42,797 628,519 6,324,493
Allocated share of Trust
investment activities:
Interest income 2,269,656 69 186 2,269,911
Dividend income 4,315 503,318 507,633
Net appreciation in
fair value of
investments - 2,237,209 20,072 356,546 2,613,827
------------ ----------- -------- ---------- -----------
2,269,656 2,237,278 24,573 859,864 5,391,371
------------ ----------- -------- ---------- -----------
Total additions 8,127,733 4,066,968 86,433 1,607,666 13,888,800
------------ ----------- -------- ---------- -----------
DEDUCTIONS:
Distributions and
withdrawals (4,058,886) (350,318) (15,847) (257,525) (4,682,576)
General and administrative
expenses (12,787) - - - (12,787)
------------ ----------- -------- ---------- -----------
Total deductions (4,071,673) (350,318) (15,847) (257,525) (4,695,363)
------------ ----------- -------- ---------- -----------
Net transfers among funds (17,977,847) 11,842,138 397,626 5,738,083 -
Net additions
(deductions) (13,921,787) 15,558,788 468,212 7,088,224 9,193,437
PLAN EQUITY:
Beginning of year 44,949,982 - - - 44,949,982
------------ ----------- -------- ---------- -----------
End of year $ 31,028,195 $15,558,788 $468,212 $7,088,224 $54,143,419
============ =========== ======== ========== ===========
</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, 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.
-7-
<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.
-8-
<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 (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. (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 meeting the necessary
service requirements, 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 (see 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 the Kraft Foods
Thrift Plan and other defined contribution plans sponsored by Kraft Foods
in a commingled investment fund known as the Kraft Foods Master Defined
Contribution Trust (hereinafter referred to as the "Trust") for which
Bankers Trust Company (the "Trustee") serves as the trustee (see Note 6).
Prior to January 1, 1997, participants' Plan Accounts (see Note 4) were
invested solely in the Interest Income Fund. Effective as of various dates
beginning January 1, 1997, participants have the option of investing their
Plan Accounts in 25 percent increments in one or more of the four funds
listed below although some participants who are members of some collective
bargaining units do not have the option of investing their Plan Accounts in
the Philip Morris Stock Fund.
-9-
<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.
Beginning January 1, 1997, the Equity Index Fund, the Balanced Fund and, if
applicable, the Philip Morris Stock Fund are 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, 1997 and 1996, there were 5,216 and 4,855 participants,
respectively, some of whom elected to invest in more than one fund effective
January 1, 1997. Set forth below is the number of participants investing in
each fund.
<TABLE>
<CAPTION>
December 31,
------------
1997 1996
------ ------
<S> <C> <C>
Interest Income Fund 4,202 4,855
Equity Index Fund 1,313 -
Philip Morris Stock Fund 169 -
Balanced Fund 1,006 -
</TABLE>
-10-
<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
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 upon a termination
of the Plan (see Note 10). Otherwise, 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, 1997 and 1996 was $639,429,002 and
$712,947,862, respectively. The average yield and crediting interest rate
of the Interest Income Fund was approximately seven percent for 1997 and
1996. The crediting interest rate for the pools of mortgaged-backed and
asset-backed securities is reset periodically by the issuer based on the
relationship between the contract value and the fair value of the
underlying securities, but cannot be less than zero. The crediting interest
rate for the investment contracts is either agreed-to in advance with the
issuer or varies based on an agreed-to formula, but cannot be less than
zero.
-11-
<PAGE>
LONG TERM SAVINGS PLAN FOR UNION EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
(continued)
Securities listed on an exchange are valued at the closing price on the
last business day of the year; listed securities for which no sale was
reported on that date are recorded at the last reported bid price. However,
if trading in Common Stock has been suspended on the New York Stock
Exchange on a trading day and not resumed before the end of the trading
day, the Trustee will use the composite price listed in The Wall Street
Journal on the next business day. Effective July 14, 1997, the Trustee will
use a weighted average sales price method for valuing the portion of
Participants' Accounts transferred from the Philip Morris Stock Fund if
using the closing price or composite price of Common Stock results in a
value of the Philip Morris Stock Fund which is at least one-tenth of one
percent (.1%) less than the value using the weighted average sales price
method. The weighted average sales price method uses the average of all of
the prices for which Common Stock is sold over one or more business days as
determined by the Trustee. Securities that are not listed on an exchange
are generally traded in active markets and valued by the Trustee from
quoted market prices.
Short-term temporary investments are generally carried at cost, which
approximates fair value.
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 one
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 based
on each hour paid and may also be permitted to make Supplemental
Contributions from special lump sum payments. The aggregate contributions
actually made by participants may not cause the Plan to violate limitations
on such contributions set forth in the Internal Revenue Code of 1986, as
amended (the "Code"). The Code also imposes a dollar limitation on the amount
of before-tax contributions for a calendar year. For 1997, a participant's
before-tax contributions (whether in the form of Basic Contributions,
Supplemental Contributions, or a combination of the two) were limited to
$9,500; for 1998, a participant's before-tax contributions will be limited to
$10,000.
-12-
<PAGE>
LONG TERM SAVINGS PLAN FOR UNION EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
(continued)
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.
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 Committee maintains Accounts for each participant to reflect the source
and the participant's share of the funds invested in the Trust:
Account Source
------- ------
Kraft Foods Matching Account Kraft Foods Matching Contributions
Basic Before-Tax Contributions Basic Contributions made with
Account before-tax contributions
After-Tax Contributions Account Basic Contributions made with after-tax
contributions
Supplemental Before-Tax Supplemental Contributions made
Contributions Account with before-tax contributions
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, After-Tax Contributions Account and Supplemental Before-Tax
Contributions Account on the basis of their proportionate share in each fund.
5. Distributions:
Upon termination of employment, including retirement, distribution of a
participant's Accounts may be made in a lump sum or, in certain instances, in
installments. Normally, distributions are made approximately one month after
a distribution is requested or is required under the Plan's terms.
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.
-13-
<PAGE>
LONG TERM SAVINGS PLAN FOR UNION EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
(in thousands of dollars)
(continued)
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, 1997 and 1996, respectively, were:
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Trust 2% 2%
Interest Income Fund 5% 6%
Equity Index Fund 2% -
Philip Morris Stock Fund less than 1% -
Balanced Fund 5% -
</TABLE>
The Plan's approximate allocated share of the Trust's investment activities
for the years ended December 31, 1997, 1996 and 1995 was 1%, less than 1% and
less than 1%, respectively.
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 1997 and 1996, the approximate amount of such expenses,
expressed as a percentage of the average net assets of each fund under the
Plan, are as follows:
<TABLE>
<CAPTION>
1997 1996
------- --------
<S> <C> <C>
Interest Income Fund .03% .04%
Equity Index Fund - -
Philip Morris Stock Fund - -
Balanced Fund - -
</TABLE>
Investments that represented five percent or more of total Trust assets as of
December 31, 1997 and 1996, were:
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Equity Index Fund
GEBT Equity Index Fund $ 606,132 $ 442,151
Interest Income Fund
BT GNMA Pooled Fund $ 205,335
Philip Morris Stock Fund
Common Stock $1,228,357 $1,055,822
Growth Equity Fund $ 166,407
</TABLE>
The GEBT Equity Index Fund currently includes Common Stock.
-14-
<PAGE>
LONG TERM SAVINGS PLAN FOR UNION EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
(in thousands of dollars)
(continued)
At December 31, 1997 and 1996, the financial position of the Trust was:
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Assets:
Investments at fair value:
Equity Index Fund:
GEBT Equity Index Fund
(cost $345,425 and $296,077) $ 606,132 $ 442,151
Short-term temporary investments
(cost approximates fair value) 2,634 945
Interest Income Fund:
Investment contracts (at contract value)
(cost approximates contract value) 630,012 719,263
Short-term temporary investments
(cost approximates fair value) 21,022 31,250
Government Securities Fund:
Government securities
(cost $28,343 and $25,873) 28,596 25,693
Federal Agency Obligations
(cost $3,976 and $2,979) 3,974 2,911
Short-term temporary investments
(cost approximates fair value) 929 812
Government Securities Fund (GF):
Government securities
(cost approximates fair value) - 1,184
Short-term temporary investments
(cost approximates fair value) - 110
Philip Morris Stock Fund:
Common stock
(cost $552,253 and $439,309) 1,228,357 1,055,822
Short-term temporary investments
(cost approximates fair value) 33,679 28,613
International Equity Fund:
International Equity Fund
(cost $55,014 and $52,300) 58,229 56,401
Short-term temporary investments
(cost approximates fair value) 222 114
Balanced Fund:
Balanced Fund
(cost $114,680 and $72,891) 125,303 77,163
Short-term temporary investments
(cost approximates fair value) 503 189
Growth Equity Fund:
Growth Equity Fund
(cost $174,420 and $117,557) 166,407 122,194
Short-term temporary investments
(cost approximates fair value) 586 312
Other investments:
Participants' Loan Account:
Loans to participants 41,995 37,375
---------- ----------
Total investments 2,948,580 2,602,502
Receivables:
Interest income 811 1,063
Dividend income 11,039 11,308
Other receivables 8,507 2,980
---------- ----------
Total assets 2,968,937 2,617,853
Liabilities:
Other payables 745 1,264
---------- ----------
Net assets $2,968,192 $2,616,589
========== ==========
</TABLE>
-15-
<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, 1997, 1996
and 1995, were:
<TABLE>
<CAPTION>
1997 1996 1995
--------- -------- ---------
<S> <C> <C> <C>
Additions:
Employer contributions $ 37,225 $ 35,823 $ 42,957
Employee contributions 98,076 94,665 104,014
Transfers from predecessor trusts - 300 (448)
Investment activities:
Interest 47,603 47,971 55,956
Dividends 89,392 56,586 51,225
Interest on participant loans 2,980 2,598 2,394
---------- ---------- ----------
139,975 107,155 109,575
Net appreciation
in fair value of investments 354,618 313,941 512,078
---------- ---------- ----------
Net investment activities 494,593 421,096 621,653
Deductions:
Distributions and withdrawals (275,232) (348,908) (258,160)
General and administrative
expenses (3,059) (2,792) (3,133)
---------- ---------- ----------
Increase in Trust net assets 351,603 200,184 506,883
Net assets:
Beginning of year 2,616,589 2,416,405 1,909,522
---------- ---------- ----------
End of year $2,968,192 $2,616,589 $2,416,405
========== ========== ==========
</TABLE>
-16-
<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, 1997, 1996, and 1995 were:
<TABLE>
<CAPTION>
Freihofer
Equitable
Equity Government Government Capital International
Index Securities Securities Philip Morris Management Equity
Fund Fund Fund (GF) Stock Fund Fund Fund
------- ---------- ----------- ------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
1997
- ----
Realized gains (losses):
Proceeds $ 89,418 $ 8,972 $ 475 $ 269,015 $ 23,172
Cost 55,447 9,049 475 122,940 21,054
Net realized gains -------- ------- ------- ----------- ---------- ----------
(losses) 33,971 (77) - 146,075 2,118
-------- ------- ------- ----------- ---------- ----------
Unrealized appreciation
(depreciation):
Beginning of year 146,074 (248) 616,513 4,101
End of year 260,707 251 676,104 3,216
-------- ------- ------- ----------- ---------- ----------
Increase (decrease) 114,633 499 - 59,591 (885)
-------- ------- ------- ----------- ---------- ----------
Net appreciation
(depreciation) in fair
value of investments $148,604 $ 422 $ - $ 205,666 $ 1,233
======== ======= ======= =========== ========== ==========
1996
- ----
Realized gains (losses):
Proceeds $ 51,031 $ 9,262 $1,436 $ 373,172 $ 15,309
Cost 37,037 9,271 1,436 172,650 14,552
-------- ------- ------- ----------- ---------- ----------
Net realized gains
(losses) 13,994 (9) - 200,522 757
-------- ------- ------- ----------- ---------- ----------
Unrealized appreciation
(depreciation):
Beginning of year 82,031 789 593,451 1,177
End of year 146,074 (248) 616,513 4,101
-------- ------- ------- ----------- ---------- ----------
Increase (decrease) 64,043 (1,037) - 23,062 2,924
-------- ------- ------- ----------- ---------- ----------
Net appreciation
(depreciation) in fair
value of investments $ 78,037 $(1,046) $ - $ 223,584 $ 3,681
======== ======= ======= =========== ========== ==========
1995
- ----
Realized gains:
Proceeds $ 44,833 $16,505 $1,431 $ 173,058 $ 12,642 $ 2,036
Cost 37,484 16,505 1,431 94,527 6,063 2,012
-------- ------- ------- ----------- ---------- ----------
Net realized gains 7,349 - - 78,531 6,579 24
-------- ------- ------- ----------- ---------- ----------
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 1,177
-------- ------- ------- ----------- ---------- ----------
Increase (decrease) 78,193 898 - 345,634 (6,636) 1,177
-------- ------- ------- ----------- ---------- ----------
Net appreciation
(depreciation) in fair
value of investments $ 85,542 $ 898 $ - $ 424,165 $ (57) $ 1,201
======== ======= ======= =========== ========== ==========
<PAGE>
<CAPTION>
Growth
Balanced Equity
Fund Fund Total
-------- ------- -------
<S> <C> <C> <C>
1997
- ----
Realized gains (losses):
Proceeds $ 21,845 $ 32,533 $445,430
Cost 19,574 29,812 258,351
-------- -------- --------
Net realized gains
(losses) 2,271 2,721 187,079
-------- -------- --------
Unrealized appreciation
(depreciation):
Beginning of year 4,272 4,637 775,349
End of year 10,623 (8,013) 942,888
-------- -------- --------
Increase (decrease) 6,351 (12,650) 167,539
-------- -------- --------
Net appreciation
(depreciation) in fair
value of investments $ 8,622 $ (9,929) $ 354,618
======== ========= =========
1996
- ----
Realized gains (losses):
Proceeds $ 9,120 $ 25,847 $ 485,177
Cost 8,758 25,254 268,958
-------- --------- ---------
Net realized gains
(losses) 362 593 216,219
-------- --------- ---------
Unrealized appreciation
(depreciation):
Beginning of year 792 (613) 677,627
End of year 4,272 4,637 775,349
-------- --------- ---------
Increase (decrease) 3,480 5,250 97,722
-------- --------- ---------
Net appreciation
(depreciation) in fair
value of investments $ 3,842 $ 5,843 $ 313,941
======== ======== =========
1995
- ----
Realized gains:
Proceeds $ 1,859 $ 2,514 $ 254,878
Cost 1,813 2,410 162,245
-------- --------- ---------
Net realized gains 46 104 92,633
-------- --------- ---------
Unrealized appreciation
(depreciation):
Beginning of year 241,799
Transfer from Entenmann's 16,383
End of year 792 (613) 677,627
--------- --------- ---------
Increase (decrease) 792 (613) 419,445
--------- --------- ---------
Net appreciation
(depreciation) in fair
value of investments $ 838 $ (509) $ 512,078
========= ========= =========
</TABLE>
-17-
<PAGE>
LONG TERM SAVINGS PLAN FOR UNION EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
(concluded)
8. Transactions with Parties in Interest:
The Fiduciaries are not aware of any transaction between the Plan and a
party in interest (as defined in ERISA) or disqualified person (as defined
in the Code) to the Plan (1) which is prohibited under the fiduciary
responsibility provisions of ERISA or the prohibited transaction provisions
of the Code, or (2) which has not been exempted from such prohibitions
pursuant to a class exemption issued by the Department of Labor.
9. Tax Status:
By letter dated March 1, 1995, the Internal Revenue Service 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 Plan has been subsequently amended and no
determination as to the continued qualification of the Plan under Section
401(a) of the Code and of the exemption of the related Trust from Federal
income taxes under Section 501(a) of the Code has been sought from the
Internal Revenue Service. The Fiduciaries believe that the Plan continues to
be designed and operated in accordance with the applicable provisions of the
Code. Therefore, no provision for income taxes has been included in the
Plan's financial statements. Accordingly, participants will not be subject
to income tax on Kraft Foods Matching Contributions or before-tax
contributions made on their behalf by Kraft Foods, nor on earnings credited
to their Accounts until distributed.
10. Plan Termination:
The Board of Directors of Kraft Foods has the right, subject to the
applicable provisions of ERISA, the Code and other applicable law, to amend
(retroactively or otherwise) the Plan, suspend making Kraft Foods Matching
Contributions to the Plan or to terminate the Plan. In the event the Plan is
terminated or partially terminated (within the meaning of the Code), each
affected participant will become fully vested in the balance in his or her
Kraft Foods Matching Account.
-18-
<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: May 21, 1998
-19-
<PAGE>
KRAFT FOODS MASTER DEFINED CONTRIBUTION TRUST
SCHEDULE I - INVESTMENTS as of December 31, 1997
<TABLE>
<CAPTION>
Column A Column B Column C Column D
-------- -------- -------- --------
Face Amount Cost
or Nuumber Basis of
Name of Issuer and Title of Issue of Shares/Units Investments Fair Value
- --------------------------------- --------------- ----------- ----------
<S> <C> <C> <C>
EQUITY INDEX FUND -- 20.65%
GEBT Equity Index Fund -- 20.56% 267,164 $ 345,424,848 $ 606,131,969
Short-Term Investments -- .09%
GEBT Short-Term Investment Fund 2,634,009 2,634,009 2,634,009
------------- -------------
Total Equity Index Fund 348,058,857 608,765,978
------------- -------------
INTEREST INCOME FUND -- 22.08%
Investment Contracts -- 21.37%
(The amounts included in Column D for the investment
contracts represent contract value, see Note 2.)
Participation Contracts with Institutions -- 5.19%
Confederation Life Ins.
No. 62381 8.61%
matured 11/30/1995 519,733 519,733 519,733
Confederation Life Ins.
No. 62325 0.00%
matured 5/1997 1,567,323 1,567,323 1,567,323
Provident Mutual
No. 008159-001 8.55%
matures 3/1/1998 363,316 363,316 363,316
Mass Mutual
No. 10223 8.25%
matures 4/30/1998 12,896,565 12,896,565 12,896,565
Provident National Assurance
No. 02705689 6.96%
matures 7/31/1998 25,456,330 25,456,330 25,456,330
Connecticut General Life Ins.
No. 25119 8.81%
matures 8/1/1998 12,087,717 12,087,717 12,087,717
Hartford Life Ins. Co.
No. 10225 5.70%
matures 1/31/1999 20,053,096 20,053,096 20,053,096
Allstate Life Insurance Company
No. 5428 6.15%
matures 4/30/1999 36,615,741 36,615,741 36,615,741
Allstate Life Ins. Co.
No. 5581 7.23%
matures 5/20/1999 1,942,458 1,942,458 1,942,458
CNA Insurance Co.
No. 24023 6.61%
matures 6/29/2001 21,340,704 21,340,704 21,340,704
</TABLE>
S-1
<PAGE>
KRAFT FOODS MASTER DEFINED CONTRIBUTION TRUST
SCHEDULE I - INVESTMENTS as of December 31, 1997
<TABLE>
<CAPTION>
Column A Column B Column C Column D
-------- -------- -------- --------
Face Amount Cost
or Nuumber Basis of
Name of Issuer and Title of Issue of Shares/Units Investments Fair Value
- --------------------------------- --------------- ----------- ----------
<S> <C> <C> <C>
Participation Contracts with Institutions (continued)
Sun America Life
No. 4696 6.67%
matures 12/31/2001 20,003,538 $ 20,003,538 $ 20,003,538
------------- -------------
Total Participation Contracts 152,846,521 152,846,521
------------- -------------
Financial Institution Pools -- 16.18%
National Westminster Bank
No. SAM 0104B 6.93%
GEBT Short-Term Investment Fund 597,142 597,142
Federal Home Loan Mortgage Corporation
matures 8/15/2005 6.25% 1,103,454 1,103,454
Federal Home Loan Mortgage Corporation
matures 4/1/2008 7.00% 97,965 97,965
Federal Home Loan Mortgage Corporation
matures 8/15/2008 6.50% 1,055,529 1,055,529
Federal Home Loan Mortgage Corporation
matures 9/1/2008 6.50% 37,080 37,080
Federal Home Loan Mortgage Corporation
matures 12/1/2008 6.50% 40,138 40,138
Federal Home Loan Mortgage Corporation
matures 2/1/2009 6.50% 1,734,521 1,734,521
Federal Home Loan Mortgage Corporation
matures 6/1/2009 6.50% 73,991 73,991
Federal Home Loan Mortgage Corporation
matures 10/1/2010 7.00% 211,216 211,216
Federal Home Loan Mortgage Corporation
matures 2/1/2011 6.50% 115,640 115,640
Federal Home Loan Mortgage Corporation
matures 2/1/2011 7.00% 648,928 648,928
Federal Home Loan Mortgage Corporation
matures 3/1/2011 7.00% 1,139,803 1,139,803
Federal Home Loan Mortgage Corporation
matures 12/15/2015 6.50% 2,683,080 2,683,080
Federal Home Loan Mortgage Corporation
matures 1/15/2018 6.00% 4,126,809 4,126,809
Federal Home Loan Mortgage Corporation
matures 6/15/2018 7.00% 297,594 297,594
Federal National Mortgage Association
matures 6/25/2005 6.25% 2,207,587 2,207,587
Federal National Mortgage Association
matures 8/25/2005 6.00% 480,564 480,564
Federal National Mortgage Association
matures 7/1/2008 7.00% 819,882 819,882
Federal National Mortgage Association
matures 8/1/2008 7.00% 749,927 749,927
</TABLE>
S-2
<PAGE>
KRAFT FOODS MASTER DEFINED CONTRIBUTION TRUST
SCHEDULE I - INVESTMENTS as of December 31, 1997
<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
matures 1/1/2009 6.50% $ 151,198 $ 151,198
Federal National Mortgage Association
matures 2/1/2009 6.50% 496,822 496,822
Federal National Mortgage Association
matures 3/1/2009 6.50% 168,254 168,254
Federal National Mortgage Association
matures 5/1/2009 6.50% 1,047,816 1,047,816
Federal National Mortgage Association
matures 8/25/2012 5.60% 1,147,192 1,147,192
Federal National Mortgage Association
matures 8/25/2013 6.70% 1,935,791 1,935,791
Federal National Mortgage Association
matures 9/25/2015 6.00% 2,196,862 2,196,862
Federal National Mortgage Association
matures 6/25/2016 5.70% 2,187,150 2,187,150
Federal National Mortgage Association
matures 7/25/2016 5.65% 1,330,841 1,330,841
Government National Mortgage Association
matures 12/15/2023 6.50% 252,569 252,569
Government National Mortgage Association
matures 3/15/2024 6.50% 77,645 77,645
Government National Mortgage Association
matures 4/15/2024 6.50% 1,275,965 1,275,965
Government National Mortgage Association
matures 5/15/2024 6.50% 1,462,469 1,462,469
------------- -------------
Total National Westminster Bank Contract 31,951,424 31,951,424
------------- -------------
Commonwealth Life Insurance Company No. ADA00044TR, 6.29%,
Peoples Life Insurance Company No. BDA00059TR, 6.38%,
Trans America Life Insurance Company No. 76586, 5.94%,
Trans America Life Insurance Company No. 76594, 6.91%,
Trans America Life Insurance Company No. 76690, 6.28%,
National Westminster Bank No. 189M, 6.25% & J P Morgan No. AKRAFT1, 6.26%
GEBT Short-Term Investment Fund 570,752 570,752
BT GNMA Pooled Fund 7.27% 205,335,286 205,335,286
United States Treasury Note
matures 3/31/2002 6.63% 4,745,909 4,745,909
United States Treasury Note
matures 4/30/2002 6.63% 4,579,060 4,579,060
United States Treasury Note
matures 11/30/2002 5.75% 1,978,028 1,978,028
</TABLE>
S-3
<PAGE>
KRAFT FOODS MASTER DEFINED CONTRIBUTION TRUST
SCHEDULE I - INVESTMENTS as of December 31, 1997
<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, National
Westminster Bank & J P Morgan (continued)
United States Treasury Note
matures 7/15/2006 7.00% $ 68,603,938 $ 68,603,938
United States Treasury Note
matures 5/15/2007 6.63% 39,869,492 39,869,492
United States Treasury Note
matures 8/15/2007 6.13% 37,925,895 37,925,895
Federal National Mortgage Association
matures 11/23/2001 6.35% 337,233 337,233
Federal National Mortgage Association
matures 9/9/2003 5.97% 514,111 514,111
Federal National Mortgage Association
matures 10/25/2004 8.40% 648,692 648,692
Federal National Mortgage Association
matures 11/10/2004 8.63% 1,223,803 1,223,803
Student Loan Marketing Association
matures 8/1/2007 7.13% 718,654 718,654
Premier Auto TR
matures 2/4/1999 7.15% 286,603 286,603
Bayerische Landesbank Girozentrale
matures 7/19/1999 6.55% 2,225,377 2,225,377
MBNA Master Credit Card Trust
matures 8/15/1999 6.20% 410,918 410,918
Standard Credit Card Master Trust
matures 6/7/2000 6.75% 762,658 762,658
Standard Credit Card Master Trust
matures 4/7/2001 6.80% 509,087 509,087
Asian Development Bank NTS
matures 5/2/2001 8.50% 1,426,806 1,426,806
American Express Master Trust
matures 7/15/2001 5.38% 3,937,682 3,937,682
General Electric Cap Corp
matures 11/1/2001 5.50% 1,941,925 1,941,925
MBNA Master Credit Card Trust
matures 1/15/2003 6.60% 994,986 994,986
Ford Credit Auto Loan Master Trust
matures 2/15/2003 5.50% 3,553,594 3,553,594
First Bank Corporate Card Master Trust
matures 2/15/2003 6.40% 2,324,429 2,324,429
Outlet Broadcasting
matures 7/15/2003 10.88% 2,046,305 2,046,305
</TABLE>
S-4
<PAGE>
KRAFT FOODS MASTER DEFINED CONTRIBUTION TRUST
SCHEDULE I - INVESTMENTS as of December 31, 1997
<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, National
Westminster Bank & J P Morgan (continued)
Avis
matures 10/20/2003 6.40% $ 3,984,452 $ 3,984,452
Citibank Credit Card Master Trust
matures 2/15/2004 6.55% 6,340,501 6,340,501
MBNA Master Credit Card Trust
matures 11/15/2004 6.60% 8,053,929 8,053,929
First USA Credit Card Master Trust
matures 3/17/2005 6.42% 3,992,177 3,992,177
Japan Fin Corp
matures 4/27/2005 7.38% 1,452,918 1,452,918
International Bank for Recon & Dev
matures 7/21/2005 6.38% 1,638,975 1,638,975
NationsBank Credit Card Master Trust
matures 12/15/2005 6.00% 2,930,942 2,930,942
Bayerische Landesbank Girozentrale
matures 2/1/2006 6.17% 1,701,481 1,701,481
Bayerische Landesbank Girozentrale
matures 2/9/2006 6.20% 3,709,875 3,709,875
KFW Int'l Fin Inc
matures 6/1/2006 8.20% 2,007,445 2,007,445
General Electric Cap Corp
matures 3/1/2007 8.85% 6,873,148 6,873,148
General Electric Cap Corp
matures 7/24/2008 8.50% 1,062,868 1,062,868
First Plus Home Loan Trust
matures 3/12/2012 6.80% 3,977,355 3,977,355
International Bank for Recon & Dev
matures 3/1/2026 8.88% 572,654 572,654
Inter-American Development Bank
matures 7/15/2027 6.75% 6,385,881 6,385,881
Merck
matures 5/3/2037 5.76% 3,058,354 3,058,354
---------------- -----------------
Total Commonwealth, Peoples, Trans America, Nat West & J P Morgan Contracts 445,214,178 445,214,178
---------------- -----------------
Total Financial Institution Pools 477,165,602 477,165,602
---------------- -----------------
Total Investment Contracts 630,012,123 630,012,123
---------------- -----------------
</TABLE>
S-5
<PAGE>
KRAFT FOODS MASTER DEFINED CONTRIBUTION TRUST
SCHEDULE I - INVESTMENTS as of December 31, 1997
<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>
Short-Term Investments -- .71%
GEBT Short-Term Investment Fund 15,166,810 $ 15,166,810 $ 15,166,810
GEBT Stable Value Government Fund 5,854,964 5,854,964 5,854,964
------------- -------------
Total Short-Term Investments 21,021,774 21,021,774
------------- -------------
Total Interest Income Fund 651,033,897 651,033,897
------------- -------------
GOVERNMENT SECURITIES FUND -- 1.14%
Government Securities -- .97%
United States Treasury Notes
7.125% due 9/30/1999 2,375,000 2,436,231 2,431,406
United States Treasury Notes
7.125% due 2/29/2000 6,600,000 6,815,847 6,790,806
United States Treasury Notes
5.875% due 6/30/2000 3,700,000 3,695,980 3,716,761
United States Treasury Notes
5.625% due 2/28/2001 1,025,000 1,009,734 1,022,274
United States Treasury Notes
6.375% due 8/15/2002 5,625,000 5,695,005 5,770,013
United States Treasury Notes
6.50% due 5/15/2005 3,550,000 3,627,690 3,700,875
United States Treasury Notes
6.50% due 8/15/2005 3,000,000 3,089,781 3,130,320
United States Treasury Notes
6.875% due 5/15/2006 1,900,000 1,972,463 2,033,000
------------- -------------
Total Government Securities 28,342,731 28,595,455
------------- -------------
Federal Agency Obligations -- .14%
Federal National Mortgage Association
6.41% due 5/22/2000 1,000,000 997,344 1,013,750
Federal National Mortgage Association
5.5% due 2/2/2001 3,000,000 2,978,775 2,960,610
------------- -------------
Total Federal Agency Obligations 3,976,119 3,974,360
------------- -------------
</TABLE>
S-6
<PAGE>
KRAFT FOODS MASTER DEFINED CONTRIBUTION TRUST
SCHEDULE I - INVESTMENTS as of December 31, 1997
<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>
Short-Term Investments -- .03%
BT Pyramid Government Securities Cash Fund 928,671 $ 928,671 $ 928,671
------------- -------------
Total Government Securities Fund 33,247,521 33,498,486
------------- -------------
PHILIP MORRIS STOCK FUND -- 42.80%
Common Stock -- 41.66%
Tobacco -- 41.66%
Philip Morris Companies Inc. 27,146,005 552,253,198 1,228,356,726
Short-term Investments -- 1.14%
GEBT Short-Term Investment Fund 33,679,046 33,679,046 33,679,046
------------- -------------
Total Philip Morris Stock Fund 585,932,244 1,262,035,772
------------- -------------
INTERNATIONAL EQUITY FUND -- 1.98%
Japanese Equity Index Fund -- .45% 204,407 18,957,475 13,344,091
Non Japanese Equity Index Fund -- 1.52% 265,870 36,056,129 44,885,194
------------- -------------
Total Equity Index Funds 55,013,604 58,229,285
------------- -------------
Short-Term Investments -- .01%
GEBT Short-Term Investment Fund 221,545 221,545 221,545
------------- -------------
Total International Equity Fund 55,235,149 58,450,830
------------- -------------
BALANCED FUND -- 4.27%
Balanced Fund -- 4.25% 9,428,381 114,680,409 125,303,190
Short-Term Investments -- .02%
GEBT Short-Term Investment Fund 503,476 503,476 503,476
------------- -------------
Total Balanced Fund 115,183,885 125,806,666
------------- -------------
</TABLE>
S-7
<PAGE>
KRAFT FOODS MASTER DEFINED CONTRIBUTION TRUST
SCHEDULE I - INVESTMENTS as of December 31, 1997
<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>
GROWTH EQUITY FUND -- 5.66%
Growth Equity Fund -- 5.64% 14,470,210 $ 174,419,967 $ 166,407,417
Short-Term Investments -- .02%
GEBT Short-Term Investment Fund 585,573 585,573 585,573
--------------- ---------------
Total Growth Equity Fund 175,005,540 166,992,990
--------------- ---------------
PARTICIPANTS' LOAN ACCOUNT -- 1.42%
Loans to Participants -- 1.42% 41,995,421 41,995,421 41,995,421
--------------- ---------------
Total Participants' Loan Account 41,995,421 41,995,421
--------------- ---------------
TOTAL INVESTMENTS $ 2,005,692,514 $ 2,948,580,040
=============== ===============
</TABLE>
S-8
<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 27, 1998, on our
audits of the financial statements of the Long Term Savings Plan for Union
Employees as of December 31, 1997 and 1996 and for the years ended December 31,
1997, 1996 and 1995 and the financial statement schedule as of December 31,
1997, which report is included in this annual report on Form 11-K.
/s/ COOPERS & LYBRAND L.L.P.
Chicago, Illinois
May 21, 1998
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