UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
June 20, 1997
Date of Report (Date of earliest event reported)
RJR NABISCO HOLDINGS CORP.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 1-10215 13-3490602
(Jurisdiction of (Commission file number) (I.R.S. Employer
Incorporation or Identification No.)
Organization)
RJR NABISCO, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 1-6388 56-0950247
(Jurisdiction of (Commission file number) (I.R.S. Employer
Incorporation or Identification No.)
Organization)
1301 Avenue of the Americas
New York, New York 10019
(212) 258-5600
(Address, including zip code, and telephone number,
including area code, of Registrants' principal
executive offices)
Item 5. Other Events.
Following several months of negotiations among tobacco companies,
state attorneys general, representatives of the public health community and
plaintiff's lawyers, on June 20, 1997, counsel representing R.J. Reynolds
Tobacco Company ("RJRT") and certain other parties signed a Memorandum of
Understanding (the "Memorandum") that sets forth concepts for federal
legislation and a contractual protocol to resolve a variety of litigation
and regulatory issues concerning tobacco. The Memorandum is subject to any
necessary approvals by the various states and the Boards of Directors of
RJRT and the other participating tobacco companies. The related RJRT press
release and the Memorandum are attached as Exhibits 1 and 2, respectively.
RJRT can provide no assurance that legislation to implement the
Memorandum will be enacted or that it will be enacted without modification
that is materially adverse to the tobacco industry, particularly in light of
the complex legal and factual issues involved and the need to reconcile the
views of many competing interests. It is not certain that any proposed
legislation that emerges from this process will be acceptable to RJRT. If
enacted, the legislation could face challenges on the grounds, among others,
that the federal government lacks the authority to regulate the tobacco
industry or limit its liability in the manner contemplated by the Memorandum.
Regardless of the legislative outcome, the negotiation and signing of the
Memorandum could affect other federal, state and local regulation of the
tobacco industry, alter the climate for pending litigation against RJR Nabisco
Holdings Corp. ("Holdings"), RJR Nabisco, Inc. ("RJRN"), RJRT and other
tobacco companies and affect the number of new smoking and health claims filed
against the industry.
The Memorandum requires the tobacco companies to make an initial $10
billion payment and subsequent annual multi-billion dollar payments. Based on
discussions with other manufacturers who were participants in the negotiations
which led to the Memorandum, RJRT believes that its share of the initial
payment will be approximately $600 million and that subsequent payments will
be allocated within the industry based on market share. However, the
financial effects of this legislation and the related contractual protocol are
difficult to predict. They depend, among other things, on (i) the amount and
timing of the payments actually required of RJRT by the legislation; (ii) the
means used to finance these payments; (iii) the impact of increased cigarette
prices and other aspects of the legislation and the contractual protocol on
domestic cigarette consumption; (iv) the effect of the legislation and the
contractual protocol on the consumption of tobacco products and the regulatory
and litigation environment outside the United States; (v) their effect, if
any, on public attitudes toward smoking and the tobacco industry; and (vi)
their impact on RJRT's competitive position in the tobacco industry.
Despite these uncertainties, RJRN believes that implementation of the
Memorandum would increase the costs and reduce the consumption of RJRT's
tobacco products in the United States and that it could have a significant
negative effect on the business of RJRT and the stated financial position of
RJRN and RJRT. On the other hand, the proposals contemplated by the
Memorandum offer a measure of relief from certain litigation that could
otherwise materially affect the results of operations or cash flows of RJRN in
particular quarterly or annual periods or its financial condition. In
evaluating any legislation to resolve tobacco issues, RJRN and RJRT will
continue to weigh carefully the potential benefits, principally greater
regulatory and litigation certainty and a reduction in aggregate contingency
risk, against the resulting monetary, regulatory and other costs.
Item 7. Financial Statements and Exhibits.
Exhibits
(1) Press Release of R.J. Reynolds Tobacco Company, Philip Morris
Incorporated, Brown and Williamson Tobacco Corporation and
the Lorillard Tobacco Company dated June 20, 1997.
(2) Memorandum of Understanding dated June 20, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
RJR NABISCO HOLDINGS CORP.
RJR NABISCO, INC.
(Registrants)
By: /s/ Robert F. Sharpe, Jr.
-----------------------------------
Robert F. Sharpe, Jr.
Senior Vice President and
General Counsel
Date: June 24, 1997