<PAGE>
EXHIBIT 99.1
PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION - OVERVIEW
(UNAUDITED)
PHILIP MORRIS COMPANIES INC. AND NABISCO HOLDINGS CORP.
The pro forma condensed combined financial information gives effect on a
purchase accounting basis to the acquisition of Nabisco by the Company. The
financial statements reflect the acquisition of 265.1 million outstanding Shares
for $55 per share and the assumption of approximately $4.0 billion in net debt.
These financial statements do not give effect to the proposed Kraft IPO.
The pro forma condensed combined balance sheet assumes that the acquisition
occurred on September 30, 2000, whereas the pro forma condensed combined
statements of earnings assume that the acquisition occurred on January 1, 1999.
In this connection, the Company estimates that the total amount of funds
required to purchase all outstanding Shares and to pay related costs will be
approximately $15.2 billion. In addition, the acquisition entails the assumption
of approximately $4.0 billion of existing Nabisco debt. The Company anticipates
that net acquisition borrowings will be approximately $12.2 billion. The actual
funding for the acquisition will be determined subsequent to the filing of this
Form 8-K, but before the expected closing date of the acquisition. It is not
anticipated that the total amount of actual borrowings will differ materially
from the anticipated net borrowings of $12.2 billion.
The Company has not completed appraisals, evaluations or other studies of
the fair value of Nabisco's assets and liabilities. Accordingly, the pro forma
adjustments may be subject to substantial revision once the acquisition has
occurred and the subsequent appraisals, evaluations and other studies of the
fair value of Nabisco's assets and liabilities are completed. Subsequent to the
acquisition, the Company intends to implement a plan to realign and reorganize
certain Nabisco operations. The costs of implementing the plan, which may be
significant, have not been reflected in the accompanying pro forma financial
statements. Revisions to the pro forma adjustments would increase or decrease
the amount of goodwill and intangible assets, net, deferred income taxes and
related amortization of goodwill in the accompanying pro forma financial
statements. In addition, the merger of Nabisco's operations with those of Kraft
may result in the closure of certain Kraft facilities, with Kraft recording
charges to the statement of earnings following the expected completion of the
acquisition in the fourth quarter of 2000. Such potential charges, which would
relate to plant closures and involuntary separation of employees, would be
recorded against current earnings in the period in which integration plans are
finalized.
The pro forma condensed combined results of operations do not give effect
to any synergies expected to result from the merger of Nabisco's operations with
those of Kraft.
The pro forma condensed combined financial statements are not necessarily
indicative of the results that actually would have been achieved if the
acquisition had occurred on the assumed dates, nor are they necessarily
indicative of future combined financial position or results of operations.
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PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION - OVERVIEW
(UNAUDITED)
PHILIP MORRIS COMPANIES INC. AND NABISCO HOLDINGS CORP.
(CONTINUED)
The pro forma condensed combined financial statements should be read in
conjunction with the following financial statements:
1. The consolidated financial statements of the Company filed with the
Securities and Exchange Commission in its Annual Report on Form 10-K
for the year ended December 31, 1999, and in its Quarterly Reports on
Form 10-Q for the three months ended March 31, 2000, for the three and
six months ended June 30, 2000 and for the three and nine months ended
September 30, 2000.
2. The consolidated financial statements of Nabisco filed with the
Securities and Exchange Commission in its Annual Report on Form 10-K/A
for the year ended December 31, 1999 and in its Quarterly Reports on
Form 10-Q/A for the three months ended March 31, 2000, and for the
three and six months ended June 30, 2000, all amended on October 3,
2000 and in its Quarterly Report on Form 10-Q for the three and nine
months ended September 30, 2000.
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PHILIP MORRIS COMPANIES INC. AND NABISCO HOLDINGS CORP.
PRO FORMA CONDENSED COMBINED BALANCE SHEET
As of September 30, 2000
(in millions of dollars)
(Unaudited)
<TABLE>
<CAPTION>
Historical Pro Forma
------------------------------ -------------------------------
Philip Morris Nabisco Adjustments Combined
-------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
ASSETS
Consumer products
Cash and cash equivalents $ 4,779 $ 140 $ (3,022)(a) $ 1,897
Receivables, net 4,549 555 5,104
Inventories 8,100 951 9,051
Other current assets 2,171 183 2,354
-------------- ------------ ------------- ------------
Total current assets 19,599 1,829 (3,022) 18,406
Property, plant and equipment, net 12,252 2,942 15,194
Goodwill and other intangible assets, net 16,381 6,388 11,173 (b) 33,942
Other assets 3,910 451 4,361
-------------- ------------ ------------- ------------
Total consumer products assets 52,142 11,610 8,151 71,903
-------------- ------------ ------------- ------------
Financial services
Finance assets, net 7,972 7,972
Other assets 165 165
-------------- ------------ ------------- ------------
Total financial services assets 8,137 - - 8,137
-------------- ------------ ------------- ------------
TOTAL ASSETS $ 60,279 $ 11,610 $ 8,151 $ 80,040
============== ============ ============= ============
LIABILITIES
Consumer products
Short-term borrowings $ 200 $ 80 $ 5,000 (a) $ 5,280
Current portion of long-term debt 1,741 100 1,841
Accounts payable 2,703 359 3,062
Accrued liabilities 11,352 1,039 12,391
Income taxes 1,318 173 1,491
Dividends payable 1,192 50 1,242
-------------- ------------ ------------- ------------
Total current liabilities 18,506 1,801 5,000 25,307
Long-term debt 9,327 3,834 7,200 (a) 20,361
Deferred income taxes 1,423 1,143 2,566
Accrued postretirement healthcare costs 2,697 385 3,082
Other liabilities 6,375 398 6,773
-------------- ------------ ------------- ------------
Total consumer products liabilities 38,328 7,561 12,200 58,089
Financial services
Short-term borrowings 795 795
Long-term debt 890 890
Deferred income taxes 4,666 4,666
Other liabilities 698 698
-------------- ------------ ------------- ------------
Total financial services liabilities 7,049 - - 7,049
-------------- ------------ ------------- ------------
Total liabilities 45,377 7,561 12,200 65,138
Contingencies
STOCKHOLDERS' EQUITY
Common stock 935 3 (3)(c) 935
Earnings reinvested in the business 32,617 4,319 (4,319)(c) 32,617
Accumulated other comprehensive losses (2,997) (273) 273 (c) (2,997)
-------------- ------------ ------------- ------------
30,555 4,049 (4,049) 30,555
Less cost of repurchased stock (15,653) (15,653)
-------------- ------------ ------------- ------------
Total stockholders' equity 14,902 4,049 (4,049) 14,902
-------------- ------------ ------------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 60,279 $ 11,610 $ 8,151 $ 80,040
============== ============ ============= ============
</TABLE>
See Overview and Notes to Pro Forma Condensed Combined Balance Sheet.
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PHILIP MORRIS COMPANIES INC. AND NABISCO HOLDINGS CORP.
NOTES TO PRO FORMA CONDENSED COMBINED BALANCE SHEET
As of September 30, 2000
(in millions of dollars)
(Unaudited)
The following is a summary of estimated adjustments reflected in the pro
forma condensed combined balance sheet:
(a) Estimated acquisition borrowings for the purchase of outstanding Shares and
other relevant estimated payments as follows:
Debt:
Estimated cost to purchase outstanding Shares and
related options $14,902
Estimated transaction costs 200
Estimated change in control costs 120
Estimated cash used to purchase outstanding Shares
and related options (3,022)
-------
Total ($5,000 short-term; $7,200 long-term) $12,200
=======
The net acquisition borrowings will comprise $12,200 in short-term
borrowings, of which $7,200 will be reclassified as long-term borrowings
based upon the Company's reliance on an existing revolving bank credit
agreement which expires in 2002.
(b) Estimated adjustments to goodwill and other intangible assets:
Record goodwill and other intangible assets $17,561
Eliminate Nabisco's pre-acquisition goodwill and
other intangible assets (6,388)
-------
Total $11,173
=======
(c) Elimination of Nabisco's stockholders' equity accounts.
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PHILIP MORRIS COMPANIES INC. AND NABISCO HOLDINGS CORP.
PRO FORMA CONDENSED COMBINED STATEMENT OF EARNINGS
For the Nine Months Ended September 30, 2000
(in millions of dollars, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Historical Pro Forma
-------------------------------- ---------------------------------
Philip Morris Nabisco Adjustments Combined
---------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Operating revenues $ 60,942 $ 6,580 $ 67,522
Cost of sales 22,091 3,594 25,685
Excise taxes on products 13,172 13,172
---------------- -------------- -------------- --------------
Gross profit 25,679 2,986 28,665
Marketing, administration and research costs 14,043 2,199 $ (49) (a) 16,193
Amortization of goodwill 442 165 164 (b) 771
---------------- -------------- -------------- --------------
Operating income 11,194 622 (115) 11,701
Interest and other debt expense, net 536 228 765 (c) 1,529
---------------- -------------- -------------- --------------
Earnings before income taxes 10,658 394 (880) 10,172
Provision for income taxes 4,159 158 (279) (d) 4,038
---------------- -------------- -------------- --------------
Net earnings $ 6,499 $ 236 $ (601) $ 6,134
================ ============== ============== ==============
Per share data:
Basic earnings per share $ 2.86 $ 2.70
================ ==============
Diluted earnings per share $ 2.85 $ 2.69
================ ==============
Basic weighted average number of
shares (millions) 2,276 2,276
================ ==============
Diluted weighted average number of
shares (millions) 2,284 2,284
================ ==============
</TABLE>
See Overview and Notes to Pro Forma Condensed Combined Statements of Earnings.
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PHILIP MORRIS COMPANIES INC. AND NABISCO HOLDINGS CORP.
PRO FORMA CONDENSED COMBINED STATEMENT OF EARNINGS
For the Year Ended December 31, 1999
(in millions of dollars, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Historical Pro Forma
------------------------------ -------------------------------
Philip Morris Nabisco* Adjustments Combined
-------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Operating revenues $ 78,596 $ 8,268 $ 86,864
Cost of sales 29,561 4,502 34,063
Excise taxes on products 16,845 16,845
-------------- ------------ ------------- ------------
Gross profit 32,190 3,766 35,956
Marketing, administration and research costs 18,118 2,691 20,809
Amortization of goodwill 582 213 $ 226 (b) 1,021
-------------- ------------ ------------- ------------
Operating income 13,490 862 (226) 14,126
Interest and other debt expense, net 795 280 1,020 (c) 2,095
-------------- ------------ ------------- ------------
Earnings before income taxes 12,695 582 (1,246) 12,031
Provision for income taxes 5,020 222 (403)(d) 4,839
-------------- ------------ ------------- ------------
Net earnings $ 7,675 $ 360 $ (843) $ 7,192
============== ============ ============= ============
Per share data:
Basic earnings per share $ 3.21 $ 3.01
============== ============
Diluted earnings per share $ 3.19 $ 2.99
============== ============
Basic weighted average number of
shares (millions) 2,393 2,393
============== ============
Diluted weighted average number of
shares (millions) 2,403 2,403
============== ============
</TABLE>
* Excludes $3 million extraordinary loss on the early extinguishment of debt,
net of income taxes.
See Overview and Notes to Pro Forma Condensed Combined Statements of Earnings.
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PHILIP MORRIS COMPANIES INC. AND NABISCO HOLDINGS CORP.
NOTES TO PRO FORMA CONDENSED COMBINED STATEMENTS OF EARNINGS
For the Nine Months Ended September 30, 2000 and the Year Ended
December 31, 1999
(Unaudited)
The following is a summary of the estimated adjustments reflected in the
pro forma condensed combined statement of earnings:
(a) Reversal of Nabisco's non-recurring pre-tax charge of $49 million
included in earnings for the nine months ended September 30, 2000 for
expenses associated with the pending sale of Nabisco to the Company.
(b) Amortization of acquisition goodwill over 40 years, net of reversal of
Nabisco's amortization of pre-acquisition goodwill.
(c) Represents estimated interest expense of $618 million and $147 million
of estimated interest income reduction, and estimated interest expense
of $824 million and $196 million of estimated interest income
reduction, for the nine months ended September 30, 2000 and the year
ended December 31, 1999, respectively. Interest expense has been
computed based on assumed net acquisition borrowings of $12.2 billion.
The net acquisition borrowings will comprise $12.2 billion in short-
term borrowings, of which $7.2 billion will be reclassified as long-
term borrowings based upon the Company's reliance on an existing
revolving bank credit agreement which expires in 2002. Interest
expense has been calculated using a weighted average interest rate of
6.75% for all borrowings. This rate approximates rates currently
available. For every 1/8% (12.5 basis points) change in the assumed
interest rate for the borrowings, there would be a corresponding
effect of approximately $7 million (less than $0.01 per share) and $9
million (less than $0.01 per share), on the pro forma combined net
earnings, for the nine months ended September 30, 2000 and for the
year ended December 31, 1999, respectively. The reduction of interest
income reflects a $3.0 billion reduction in cash and cash equivalents,
which funds were assumed to have been used to fund the acquisition, at
an assumed rate of 6.5%, the rate currently earned by the Company on
its investment of excess cash.
(d) Recognition of income tax effects at 39.0% for the nine months ended
September 30, 2000 and at 39.5% for the year ended December 31, 1999.
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