Professional Documents
Culture Documents
1983
1984
1985
1986
1987
$7,041
5,350
103
$6,660
4,928
80
$6,831
4,969
74
$7,065
4,963
74
$7,780
5,393
79
$9,876
6,912
103
1,183
405
24
1,157
495
(8)
1,238
550
22
1,391
637
26
1,620
688
31
2,068
793
91
(38)
23
43
37
37
86
343
526
571
648
694
788
Income taxes
164
225
252
286
300
353
179
301
319
362
394
435
171
134
137
104
19
54
Net income
$350
$435
$456
$466
$413
$489
$2.13
1.20
22.83
$2.65
1.28
22.21
$3.17
1.38
28.04
$3.24
1.52
43.38
$3.06
1.68
49.38
$3.73
1.84
48.25
11
164
0.72
8
164
0.55
9
144
0.69
13
144
1.12
16
135
1.18
13
131
0.74
Revenues
a
Cost of goods sold
Depreciation
Delivery, sales, and administrative
expenses
Operating Income(EBIT)
Interest, net
Price-earnings ratioe
Number of shares (millions)e
Betaf
Sources: Company reports and casewriters estimates.
a
Includes the cumulative effect of a change in method of accounting for income taxes of $45 million in 1987 and a nonoperating item
of -$91 million in 1982.
c
Discontinued operations include Duracell, whose sale was announced in 1987, and the business of Premark International, which
was spun off on October 31, 1986. Also included in discontinued operations is a $41 million gain on the sale of KitchenAid in 1986.
d
Year-end.
Projections
Revenues
Revenue Growth
Operating Income(EBIT)
Operating Income % of Sales
1982
$7,041
405
5.75%
1983
$6,660
-5.41%
495
7.43%
1984
$6,831
2.57%
550
8.05%
1985
$7,065
3.43%
637
9.02%
1986
$7,780
10.12%
688
8.84%
EBIT growth
Revenues
Revenue Growth
1987
$9,876
26.94%
834
8.44%
21.22%
793
$7,041
$6,660
-5.41%
$6,831
2.57%
$7,065
3.43%
$7,780
10.12%
$9,876
22.00%
Projections
1988
1989
1990
1991
1992
1993
950
1,050
1155
1247
1310
1375
13.91%
10.53%
10%
8%
7%
7%
$11,200
13.41%
$12,501
11.61%
$16,217
5%
$321.5
637.6
1,061.1
236.2
127.5
1,087.7
419.0
600.7
1987
WC
$189.0 WC growth
763.6
1,283.4
178.3
161.5
1,424.2
888.3
598.4
$4,491.3
$5,486.7
Accounts payable
Short-term borrowings
Accrued compensation
Accrued advertising and promotions
Other accrued liabilities
Accrued income taxes
Current portion of long-term debt
$492.1
596.4
148.9
113.7
188.4
335.3
108.5
$544.8
645.9
151.2
132.8
245.4
399.3
37.2
Current liabilities
Long-term debt
Deferred income taxes
Other liabilities
1,983.3
237.7
286.4
185.9
2,156.6
895.3
282.7
253.7
Total Liabilities
Shareholders equity
2,693.3
1,798.0
3,588.3
1,898.4
$4,491.3
$5,486.7
86
164
423.6
87
241
46.53%
99.3885
88
353.00
30.00%
89
458.90
20.00%
90
550.68
15.00%
91
633.28
10.00%
92
696.61
5.00%
93
731.44
2.00%
Exhibit 3
1984
1985
1986
1987
$3,718.0
388.1
1,450.90
54.0
58.0
26.75%
$3,781.2
446.0
1,615.40
50.0
71.7
27.61%
$3,911.3
527.3
1,309.10
37.6
63.1
40.28%
$4,016.1
545.9
1,807.60
36.6
93.7
30.20%
$4,518.9
593.3
2,509.30
47.4
151.2
23.64%
$1,172.7
0
0
0
0
0
$1,349.3
0
0
0
0
0
$1,421.0
61.7
291.4
7.6
5.2
21.17%
$1,755.8
79.5
558.9
8.0
17.6
14.22%
$3,022.0
86.4
914.6
15.3
33.7
9.45%
International Food
Sales
Operating profit
Identifiable assets
Depreciation
Capital expenditures
Operating profits/Identifiable assets
$1,769.7
165.4
680.9
19.2
37.3
24.29%
$1,707.2
169.4
701.1
18.9
36.2
24.16%
$1,733.0
145.9
793.7
20.6
39.2
18.38%
$2,007.7
182.8
861.1
27.5
41.7
21.23%
$2,334.8
229.8
1,000.50
34.0
48.3
22.97%
Direct Selling b
Sales
Operating profit
Identifiable assets
Depreciation
Capital expenditures
Operating profits/Identifiable assets
$825.1
189.3
462.7
36.0
40.7
40.91%
$776.9
138.8
488.0
28.9
62.8
28.44%
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Consumer Products c
Sales
Operating profit
Identifiable assets
Depreciation
Capital expenditures
Operating profits/Identifiable assets
$1,181.0
104.7
828.0
26.9
43.0
12.64%
$1,244.8
118.4
958.8
42.9
67.9
12.35%
$962.5
66.9
849.6
34.2
47.4
7.87%
0
0
0
0
0
0
0
0
0
0
0
0
Commercial Products d
Sales
Operating profit
Identifiable assets
Depreciation
Capital expenditures
Operating profits/Identifiable assets
$1,047.5
104.8
727.6
30.4
25.4
14.40%
$899.3
101.0
556.9
23.9
28.1
18.14%
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Figures for 1983 and 1984 include both U.S. consumer foods and U.S. commercial foods.
Includes Duracell, West Bend, Health Care, and KitchenAid. All assets except Duracell were sold or spun off to Premark
International in 1986.
d
83
84
85
86
87
Total Capex(net of depreciation)
-22.1
-39.0
-41.7
-80.9
-136.5
capex growth
76.47%
6.92%
94.00%
68.73%
assets 2,131.80 2,316.50 2,394.20 3,227.60 4,424.40
capex
95.3
107.9
107.5
153.0
233.2
asset growth as % of sales
32.01%
33.88%
33.89%
41.49%
44.80%
depreciation
73.2
68.9
65.8
72.1
96.7
dep/capex 0.768101 0.638554 0.612093 0.471242 0.414666
dep/assets
3.43%
2.97%
2.75%
2.23%
2.19%
sales growth
2.66%
3.33%
10.11%
26.94%
sales $6,660.4 $6,837.7 $7,065.3 $7,779.6 $9,875.7
capex/sales
1.43%
1.58%
1.52%
1.97%
2.36%
asset as
WC
164
241
wc as % of sales
2.11%
2.44%
delta WC
0
0
0
0
-77
Net
-22.1
-39.0
-41.7
-80.9
-60.0
capex net depreciation
-22.1
-39.0
-41.7
-80.9
-136.5
Debt
237.7
895.3
Equity
6666.3 6320.75
D/V
3.44%
12.41%
88
-204.8
50%
5,017.70
264.5
110.4
13.41%
$11,200
273
-32
-121.8
-154.1
89
-296.9
45%
5,600.11
295.2
90
-415.6
40%
6,160.12
324.7
91
-552.8
33%
6,652.93
350.7
92
-691.0
25%
7,118.64
375.2
93
-794.7
15%
7,616.94
401.5
123.2
135.5
146.4
156.6
167.6
11.61%
$12,500
10.00%
13750
8.00%
14850
305
335
362
388
415
-32
-140.3
-172.0
-30
-158.7
-189.2
-27
-177.5
-204.3
-25
-193.2
-218.6
-27
-206.8
-233.9
7.00%
7%
15889.5 17001.77
Exhibit 4 Condensed Operating and Stockholder Information for Philip Morris, 1982-1987 (millions
of dollars except per share data)
1982
1983
1984
1985c
1986
1987
$11,586
5,046
2,615
281
$12,976
5,028
3,510
327
$13,814
5,170
3,676
375
$15,964
5,926
3,815
424
$25,409
10,495
4,728
655
$27,695
10,664
5,416
704
2,125
2,377
2,467
3,244
6,061
7,004
71
246
44
83
230
54
273
300
82
308
111
770
126
685
1,300
518
1,587
681
1,607
718
2,329
1,074
2,811
1,333
3,348
1,506
Net income
$782
$906
$889
$1,255
$1,478
$1,842
$3.11
1.20
30
$3.58
1.45
35.875
$3.62
1.70
40.375
$5.24
2.00
44.125
$6.20
2.48
71.875
$7.75
3.15
85.375
9
252
1.04
10
250
0.77
11
243
0.94
8
239
0.88
11
238
1.24
11
237
0.88
Revenues
Cost of goods solda
Excise taxes
Depreciation and amortization
Selling, administrative, and
research expensesb
Equity in net earnings of
unconsolidated subsidiaries
Interest
Other expense
Price-earnings ratiod
Number of shares (millions)d
Betae
Year-end.
Exhibit 5 Consolidated Balance Sheets for Philip Morris, 19861987 (millions of dollars)
Cash
Receivables
Inventories
Other current assets
Property, plant, equipment, net
Investments in unconsolidated subsidiaries
and affiliates
Goodwill and other intangibles
Other assets
Total Assets
Notes payable
Accounts payable
Current portion of long-term debt
Accrued liabilities
Income taxes payable
Dividends payable
Current liabilities
Long-term debt
Deferred income taxes
Other liabilities
Total Liabilities
Stockholders equity
Total Liabilities and Net Worth
1986
1987
$73
1,878
3,836
127
6,237
$189
2,083
4,154
146
6,582
1,067
3,988
436
1,244
4,052
695
$17,642
$19,145
$864
813
103
1,967
557
178
$691
803
465
2,277
727
213
4,482
5,176
5,945
994
566
5,222
1,288
636
11,987
5,655
12,322
6,823
$17,642
$19,145
1986
1987
Net earnings
Depreciation and amortization
Deferred income taxes
Equity in undistributed net earnings of
unconsolidated subsidiaries and affiliates
$1,255
424
159
$1,478
655
133
$1,842
704
338
(63)
(52)
(95)
1,775
2,214
2,789
1,467
169
226
487
505
20
18
211
77
210
139
$3,640
$3,214
$3,453
$1,005
1,174
74
347
479
($2)
9
14
678
590
$321
318
19
718
749
508
4,864
301
$7,943
($4,303)
$1,797
$1,417
$2,426
$1,027
$149
4,666
(326)
(216)
30
$289
1,788
(3385)
(140)
31
$189
492
(1534)
(200)
26
$4,303
$637
1,926
($1,417)
($494)
1,432
($1,027)
($36)
1,396
Exhibit 7
Financial Summary for Philip Morris by Business Segment, 1982-1987 (millions of dollars)
1982
1983
1984
1985
1986
1987
Tobacco:
Sales
Operating profit
Identifiable assets
Depreciation
Capital expenditures
Operating profit/Identifiable assets
$7,821.8
1,475.7
5,070.7
97.7
498.0
29.10%
$9,094.9
1,647.0
5,114.3
124.7
319.9
32.20%
Food Products:
Sales
Operating profit
Identifiable assets
Depreciation
Capital expenditures
Operating profit/Identifiable assets
$1,632.0
95.0
7,974.00
29.0
71.0
1.19%
$9,664.0
624.0
8,629.00
167.0
395.0
7.23%
$9,946.0
605.0
9,129.00
201.0
402.0
6.63%
$3,054.0
154.0
1,736.0
136.0
80.0
8.87%
$3,105.0
170.0
1,680.0
137.0
57.0
10.12%
Beer:
Sales
Operating profit
Identifiable assets
Depreciation
Capital expenditures
Operating profit/Identifiable assets
$2,935.5
159.0
2,113.7
122.3
286.3
7.52%
$2,935.5
227.1
2,138.9
130.5
174.6
10.62%
$2,940.0
116.0
1,892.0
144.0
94.0
6.13%
$2,925.0
136.0
1,779.0
134.0
87.0
7.64%
$822.9
(2.4)
979.4
-0.25%
$945.5
(10.9)
1,007.3
-1.08%
$1,072.0
23.0
1,018.0
2.26%
$868.0
14.0
643.0
2.18%
Other a:
Sales
Operating profit (loss)
Identifiable assets
Depreciation
Capital expenditures
Operating profit/Identifiable assets
Source: Company reports.
a
($9.0)
$19.0
Exhibit 9
Mergers and Acquisitions in the Food Processing and Beverage Industries, 1981-1987
88
83
85
79
105
127
97
$4.55
4.96
2.71
7.95
12.86
8.43
7.75
Bidder
Philip Morris
RJ Reynolds
Nestle S.A.
Beatrice Foods
RJ Reynolds
Bond Corporate Holdings Ltd.
General Foods
Nabisco Brands
Carnation Co.
Esmark, Inc.
Heublein, Inc.
G. Heileman Brewing Co.
1985
1985
1984
1984
1982
1987
$9,022.4
5,985.0
3,370.0
4,120.0
2,140.0
1,173.8
$5,627.5
4,906.4
2,885.4
2,508.6
1,302.6
1,083.6
35.2%
31.5
9.9
39.5
36.5
21.6
Price-Earnings
Ratio
Multiple to
Book
18.7
16.7
14.4
15.7
13.1
23.0
3.5
4.1
2.7
2.5
2.7
3.2
Exhibit 10
1982
1983
1984
1985
1986
1987
144.1
128.8
114.8
133.0
132.9
117.7
114.7
148.5
161.2
144.8
202.1
161.1
142.4
134.5
200.6
190.0
192.2
256.4
186.9
165.7
136.4
321.2
218.3
220.1
365.4
297.6
179.2
172.3
397.3
368.7
357.4
413.5
387.4
279.7
197.6
409.3
453.0
337.0
440.8
398.8
299.0
201.5
12.6%
21.3
20.8
16.6
14.3
19.0
10.9
14.9%
22.4
17.1
15.0
17.0
18.2
11.7
17.6%
21.7
22.3
17.0
17.9
19.4
13.1
16.2%
26.5
20.8
17.3
18.0
21.6
11
23.0%
26.1
20.0
16.8
12.0
20.0
10.5
25.8%
27.0
22.8
13.5
12.5
20.3
11.8
Exhibit 11
dollars)
$9,876
834
91
743
353
45
$11,200
950
95
855
333
-
$12,500
1,050
108
942
368
-
435
54
522
658
574
-
$489
$1,180
$574
Duracell was sold to Kohlberg, Kravis, Roberts & Co. for $1.8 billion on June 24, 1988. Duracells 1987
after-tax income was $54 million, and Krafts 1988 gain on its sale was $658 million.
Exhibit 12
Sales
Earnings before interest and taxes
Interest
Taxes
Profit (loss) after taxes from continuing
operations
Cash flow available for capital
paymentsa
Principal payments
Preexisting debt
Bank debt
Year-end book values
Preexisting debt
Bank debt
High-yield debt
Cram-down debt
Total
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
$6,515
1,280
1,380
(39)
$6,804
1,487
1,270
89
$7,125
1,671
1,310
148
$7,481
1,755
1,286
192
$7,855
1,842
1,278
231
$8,248
1,935
1,257
278
$8,660
2,031
1,212
336
$9,093
2,133
1,155
401
$9,548
2,239
1,086
473
$10,025
2,351
1,010
550
(61)
128
213
277
333
400
483
577
680
791
2,481b
496
636
630
742
334
411
500
597
728
111
2,370
33
463
57
579
287
343
100
642
100
234
100
311
100
400
16
581
0
728
793
4,430
3,000
1,974
759
3,968
3,000
2,286
703
3,389
3,000
2,648
416
3,046
3,000
3,067
316
2,404
3,000
3,553
216
2,170
3,000
3,553
116
1,859
3,000
3,553
16
1,459
3,000
3,553
0
878
3,000
3,553
0
150
3,000
3,553
$10,197
$10,013
$9,740
$9,529
$9,273
$8,939
$8,528
$8,028
$7,431
$6,703
Cash flow available for capital payments = net income + depreciation, amortization, deferred taxes - capital expenditures - change in working capital + net proceeds from asset sales & non-cash
interest. bIncludes the $2,146 million in cash proceeds from the sale of businesses in 1989.
Exhibit 13
Date
Philip
Morris
Oct. 3
4
5
6
7
$97.000
98.000
97.375
96.875
100.875
$60.000
58.500
59.375
59.375
60.625
10
11
12
13
14
101.125
100.750
98.875
99.250
98.625
60.750
60.375
59.500
59.250
59.500
655.320
654.680
645.470
648.480
649.230
17
18
19
20
21
100.000
95.500
94.000
99.000
97.375
60.125
88.250
90.375
90.250
92.000
651.460
658.560 Philip Morris bids $90 per share for Kraft.
652.970
666.990 RJR Nabisco management proposes a $17 billion
668.920 leveraged buyout.
24
25
26
27
28
97.500
95.875
95.500
95.000
94.750
102.000
99.000
97.500
94.500
96.500
Kraft
S&P 500
Event
638.710
637.010 Grand Metropolitan bids for Pillsbury Company.
640.020
641.360
654.830