RJR NABISCO CAPITAL INVESTMENT PLAN
INDEPENDENT AUDITORS' REPORT AND FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 30, 1993 AND 1992
RJR NABISCO CAPITAL INVESTMENT PLAN
- -----------------------------------
TABLE OF CONTENTS
- ----------------------------------------------------------------
Page
----
Independent Auditors' Report 1
Financial Statements:
Statements of Net Assets Available for Benefits
as of December 30, 1993 and 1992 2-3
Statements of Changes in Net Assets Available
for Benefits for the Years Ended December 30,
1993 and 1992 4-5
Notes to Financial Statements 6-14
INDEPENDENT AUDITORS' REPORT
- ----------------------------
Board of Directors,
RJR Nabisco, Inc.:
We have audited the accompanying statements of net assets available for
benefits of the RJR Nabisco Capital Investment Plan (the "Plan") as of
December 30, 1993 and 1992, and the related statements of changes in
net assets available for benefits for the years then ended. These
financial statements are the responsibility of the Plan's management.
Our responsibility is to express an opinion on these financial
statements 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 management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of December 30,
1993 and 1992, and the changes in its net assets available for benefits for the
years then ended in conformity with generally accepted accounting principles.
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 net assets available for benefits and the statements of changes in net
assets available for benefits is presented for purposes of additional analysis
rather than to present the statements of net assets available for benefits
and the statements of changes in net assets available for benefits 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.
June 24, 1994
RJR NABISCO CAPITAL INVESTMENT PLAN
- -----------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 30, 1993
- ----------------------------------------------------------------------------------------------------------------
Fund Information
----------------------------------------------------------------------------
General Growth Real Interest Government
Stock Stock Estate Income Securities
Fund Fund Fund Fund Fund
------- ------ ------ -------- ----------
ASSETS
Master Trust investments at
fair value
- Notes 2, 3 & 4
Interest in commingled funds $ 356,689,532 $ 174,878,149 $ 8,738,020 $ 629,445,132 $ 9,965,403
Preferred Stock -- -- -- -- --
Common Stock -- -- -- -- --
Diversified Short-Term -- -- -- -- 29,967
Investment Fund
Loans to participants -- -- -- -- --
Total Master Trust ----------- ----------- ----------- ----------- -----------
Investments 356,689,532 174,878,149 8,738,020 629,445,132 9,995,370
----------- ----------- ----------- ----------- -----------
Receivables
Employee contributions 1,084,501 -- 19,771 576,862 --
Employer contributions -- -- -- -- --
Net investment income 1,587 954 48 2,254,047 2,822
----------- ----------- ----------- ----------- -----------
Total receivables 1,086,088 954 19,819 2,830,909 2,822
----------- ----------- ----------- ----------- -----------
TOTAL ASSETS 357,775,620 174,879,103 8,757,839 632,276,041 9,998,192
----------- ----------- ----------- ----------- -----------
LIABILITIES
Note payable to RJR Nabisco
Holdings Corp. - Note 8 -- -- -- -- --
Interest payable on ESOP -- -- -- -- --
loan - Note 8
----------- ----------- ----------- ----------- -----------
TOTAL LIABILITIES -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Net interfund transfers (852,778) (261,945) (200,367) (1,162,214) (15,013)
----------- ----------- ----------- ----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $ 356,922,842 $ 174,617,158 $ 8,557,472 $ 631,113,827 $ 9,983,179
=========== =========== =========== =========== ===========
See notes to financial statements.
-2A-
RJR NABISCO CAPITAL INVESTMENT PLAN
-----------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 30, 1993 - Continued
---------------------------------------------------------------------------------------------------------------------------------
Fund Information
---------------------------------------------------------------------------------
Preferred Bristol-Myers Common
Stock Stock Stock Loan Matching Stock Fund
Fund Fund Fund Fund Allocated Unallocated Total
----------- --------------- --------- ---------- ----------- ------------- ----------
ASSETS
Master Trust investments at fair
value
- Notes 2, 3 & 4
Interest in commingled funds $ -- $ -- $ -- $ -- $ -- $ -- $ 1,179,716,236
Preferred Stock -- -- -- -- 52,402,096 196,781,488 249,183,584
Common Stock -- -- 79,081,353 -- 69,089 -- 79,150,442
Diversified Short-Term Investment
Fund -- -- 1,441,863 -- 191 -- 1,472,021
Loans to participants -- -- -- 29,185,297 -- -- 29,185,297
----------- ----------- ----------- ----------- ----------- ----------- --------------
Total Master Trust Investments -- -- 80,523,216 29,185,297 52,471,376 196,781,488 1,538,707,580
----------- ----------- ----------- ----------- ----------- ----------- -------------
Receivables
Employee contributions -- -- 341,150 -- -- -- 2,022,284
Employer contributions -- -- -- -- -- -- --
Net investment income -- -- 3,094 -- 2,048,584 7,686,777 11,997,913
----------- ----------- ----------- ----------- ----------- ----------- -------------
Total receivables -- -- 344,244 -- 2,048,584 7,686,777 14,020,197
----------- ----------- ----------- ----------- ----------- ----------- -------------
TOTAL ASSETS -- -- 80,867,460 29,185,297 54,519,960 204,468,265 1,552,727,777
----------- ----------- ----------- ----------- ----------- ----------- -------------
LIABILITIES
Note payable to RJR Nabisco
Holdings Corp. - Note 8 -- -- -- -- -- 210,811,685 210,811,685
Interest payable on ESOP loan - -- -- -- -- -- 8,715,285 8,715,285
Note 8 ----------- ----------- ----------- ----------- ----------- ----------- -------------
TOTAL LIABILITIES -- -- -- -- -- 219,526,970 219,526,970
----------- ----------- ----------- ----------- ----------- ----------- -------------
Net interfund transfers -- -- 598,450 1,975,453 (81,586) -- --
----------- ----------- ----------- ----------- ----------- ----------- -------------
NET ASSETS AVAILABLE FOR BENEFITS $ -- $ -- $ 81,465,910 $31,160,750 $54,438,374 $(15,058,705)$1,333,200,807
=========== =========== ============ =========== =========== ============ ==============
See notes to financial statements.
-2B-
RJR NABISCO CAPITAL INVESTMENT PLAN
- -----------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 30, 1992
- ----------------------------------------------------------------------------------------------------
Fund Information
---------------------------------------------------------
General Growth Real Interest
Stock Stock Estate Income
Fund Fund Fund Fund
----------- ----------- ----------- -----------
ASSETS
Master Trust investments at fair value
- Notes 2, 3 & 4
Interest in commingled funds $305,676,026 $ 159,294,181 $ 10,179,028 $ 609,443,221
Preferred Stock -- -- -- --
Common Stock -- -- -- --
Diversified Short-Term Investment Fund -- -- -- --
Loans to participants -- -- -- --
------------ ------------ ------------ ------------
Total Master Trust Investments 305,676,026 159,294,181 10,179,028 609,443,221
------------ ------------ ------------ ------------
Receivables
Employee contributions 709,564 573,733 49,979 948,302
Employer contributions -- -- -- --
Net investment income (2,805) 712 282 3,948,115
Due from trustee for sale
of investments -- -- -- --
------------ ------------ ------------ ------------
Total receivables 706,759 574,445 50,261 4,896,417
------------ ------------ ------------ ------------
TOTAL ASSETS 306,382,785 159,868,626 10,229,289 614,339,638
------------ ------------ ------------ ------------
LIABILITIES
Note payable to RJR Nabisco
Holdings Corp. - Note 8 -- -- -- --
Interest payable on ESOP loan - Note 8 -- -- -- --
Due to trustee for purchase of
investments -- -- -- --
------------ ------------ ------------ ------------
TOTAL LIABILITIES -- -- -- --
------------ ------------ ------------ ------------
Net interfund transfers (866,036) (410,800) (152,162) (1,133,889)
------------ ------------ ------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS $305,516,749 $ 159,457,826 $ 10,077,127 $ 613,205,749
============ ============ ============ ============
See notes to finanicial statements.
-3A-
RJR NABISCO CAPITAL INVESTMENT PLAN
- -----------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 30, 1992 - Continued
- ----------------------------------------------------------------------------------------------------
Fund Information
-----------------------------------------------------
Government Preferred Bristol-Myers Common
Securities Stock Stock Stock
Fund Fund Fund Fund
----------- ----------- ----------- -----------
ASSETS
Master Trust investments at fair value
- Notes 2, 3 & 4
Interest in commingled funds $ 5,066,279 $ -- $ -- $ --
Preferred Stock -- 2,143,660 -- --
Common Stock -- -- 562,706 77,595,731
Diversified Short-Term Investment Fund -- 31,326 112 1,974,889
Loans to participants -- -- -- --
------------ ------------ ------------ ------------
Total Master Trust Investments 5,066,279 2,174,986 562,818 79,570,620
------------ ------------ ------------ ------------
Receivables
Employee contributions 124,691 -- -- 576,597
Employer contributions -- -- -- --
Net investment income 13,493 44,828 1 3,905
Due from trustee for sale
of investments -- -- 1,357,434 --
------------ ------------ ------------ ------------
Total receivables 138,184 44,828 1,357,435 580,502
------------ ------------ ------------ ------------
TOTAL ASSETS 5,204,463 2,219,814 1,920,253 80,151,122
------------ ------------ ------------ ------------
LIABILITIES
Note payable to RJR Nabisco
Holdings Corp. - Note 8 -- -- -- --
Interest payable on ESOP loan - Note 8 -- -- -- --
Due to trustee for purchase of
investments -- -- -- 1,257,595
------------ ------------ ------------ ------------
TOTAL LIABILITIES -- -- -- 1,257,595
------------ ------------ ------------ ------------
Net interfund transfers (3,752) (29,687) (81,076) 920,612
------------ ------------ ------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS $ 5,200,711 $2,190,127 $ 1,839,177 $79,814,139
============ ============ ============ ============
See notes to financial statements.
-3B-
RJR NABISCO CAPITAL INVESTMENT PLAN
- -----------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 30, 1992 - Continued
- -------------------------------------------------------------------------------------------------
Fund Information
---------------------------------------
Loan Matching Stock Fund
Fund Allocated Unallocated Total
----------- ----------- ----------- -----------
ASSETS
Master Trust investments at fair value
- Notes 2, 3 & 4
Interest in commingled funds $ -- $ -- $ -- $ 1,089,658,735
Preferred Stock -- 26,052,832 223,947,168 252,143,660
Common Stock -- 12,580 -- 78,171,017
Diversified Short-Term Investment Fund -- -- -- 2,006,327
Loans to participants 23,179,674 -- -- 23,179,674
------------ ------------ ------------ -------------
Total Master Trust Investments 23,179,674 26,065,412 223,947,168 1,445,159,413
------------ ------------ ------------ -------------
Receivables
Employee contributions -- -- -- 2,982,866
Employer contributions -- -- -- --
Net investment income -- 1,017,692 8,747,936 13,774,159
Due from trustee for sale
of investments -- -- -- 1,357,434
------------ ------------ ------------ -------------
Total receivables -- 1,017,692 8,747,936 18,114,459
------------ ------------ ------------ -------------
TOTAL ASSETS 23,179,674 27,083,104 232,695,104 1,463,273,872
------------ ------------ ------------ -------------
LIABILITIES
Note payable to RJR Nabisco
Holdings Corp. - Note 8 -- -- 229,012,712 229,012,712
Interest payable on ESOP loan - Note 8 -- -- 15,015,296 15,015,296
Due to trustee for purchase of
investments -- -- -- 1,257,595
------------ ------------ ------------ -------------
TOTAL LIABILITIES -- -- 244,028,008 245,285,603
------------ ------------ ------------ -------------
Net interfund transfers 1,797,221 (40,431) -- --
------------ ------------ ------------ -------------
NET ASSETS AVAILABLE FOR BENEFITS $ 24,976,895 $ 27,042,673 $ (11,332,904)$ 1,217,988,269
============ ============ ============ =============
See notes to financial statements.
-3C-
RJR NABISCO CAPITAL INVESTMENT PLAN
- ------------------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 30, 1993
- ----------------------------------------------------------------------------------------------------
Fund Information
--------------------------------------------------------
General Growth Real Interest
Stock Stock Estate Income
Fund Fund Fund Fund
------------ ---------- ------------ ------------
MASTER TRUST INVESTMENT INCOME / (LOSS)
Net appreciation/(depreciation) in
fair value of investments - Note 4 $ 36,098,600 $ 9,123,477 $ 229,126 $ 877,456
Interest and dividends, net of
administrative fees 12,198,863 3,785,093 (247,762) 38,483,869
------------ ---------- ------------ ------------
TOTAL MASTER TRUST INVESTMENT
INCOME / (LOSS) 48,297,463 12,908,570 (18,636) 39,361,325
------------ ---------- ------------ ------------
CONTRIBUTIONS
Employee 19,388,352 13,367,549 804,557 26,230,457
Employer - Note 1 133,216 82,446 1,491 148,482
------------ ---------- ------------ ------------
TOTAL CONTRIBUTIONS 19,521,568 13,449,995 806,048 26,378,939
------------ ---------- ------------ ------------
ALLOCATION OF ESOP SHARES - NOTE 8 -- -- -- --
DEDUCTIONS
Forfeitures -- -- -- --
Allocation of ESOP shares -- -- -- --
Employee withdrawals - Note 5 16,109,192 6,964,559 589,793 40,325,888
Interest on ESOP loan - Note 8 -- -- -- --
------------ ---------- ------------ ------------
TOTAL DEDUCTIONS 16,109,192 6,964,559 589,793 40,325,888
Net interfund transfers (350,148) (4,234,674) (1,717,274) (7,555,568)
------------ ---------- ------------ ------------
Net transfers to the Plan - Note 7 46,402 -- -- 49,270
------------ ---------- ------------ ------------
Net increase (decrease) 51,406,093 15,159,332 (1,519,655) 17,908,078
NET ASSETS AVAILABLE FOR
BENEFITS AT BEGINNING OF YEAR 305,516,749 159,457,826 10,077,127 613,205,749
------------ ---------- ------------ ------------
NET ASSETS AVAILABLE FOR
BENEFITS AT END OF YEAR $ 356,922,842 $174,617,158 $ 8,557,472 $ 631,113,827
============ =========== ============ ============
See notes to financial statements.
-4A-
RJR NABISCO CAPITAL INVESTMENT PLAN
- ------------------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 30, 1993 - Continued
- -------------------------------------------------------------------------------------------------------
Fund Information
-------------------------------------------------------
Government Preferred Bristol-Myers Common
Securities Stock Stock Stock
Fund Fund Fund Fund
------------ ---------- ------------ ------------
MASTER TRUST INVESTMENT INCOME / (LOSS)
Net appreciation/(depreciation) in
fair value of investments - Note 4 $ -- $ (226,015) $ (22,315) $(17,147,965)
Interest and dividends, net of
administrative fees 239,374 25,227 16,670 (11,178)
------------ ---------- ------------ -----------
TOTAL MASTER TRUST INVESTMENT
INCOME / (LOSS) 239,374 (200,788) (5,645) (17,159,143)
------------ ---------- ------------ -----------
CONTRIBUTIONS
Employee 2,708,247 -- -- 10,880,693
Employer - Note 1 9,085 -- -- 55,279
------------ ---------- ------------ -----------
TOTAL CONTRIBUTIONS 2,717,332 -- -- 10,935,972
------------ ---------- ------------ -----------
ALLOCATION OF ESOP SHARES - NOTE 8 -- -- -- --
DEDUCTIONS
Forfeitures -- -- -- --
Allocation of ESOP shares -- -- -- --
Employee withdrawals - Note 5 869,530 25,595 18,850 2,900,769
Interest on ESOP loan - Note 8 -- -- -- --
------------ ---------- ------------ -----------
TOTAL DEDUCTIONS 869,530 25,595 18,850 2,900,769
------------ ---------- ------------ -----------
Net interfund transfers 2,695,292 (1,963,744) (1,814,682) 10,766,336
Net transfers to the Plan - Note 7 -- -- -- 9,375
------------ ---------- ------------ -----------
Net increase (decrease) 4,782,468 (2,190,127) (1,839,177) 1,651,771
NET ASSETS AVAILABLE FOR
BENEFITS AT BEGINNING OF YEAR 5,200,711 2,190,127 1,839,177 79,814,139
------------ ---------- ------------ -----------
NET ASSETS AVAILABLE FOR
BENEFITS AT END OF YEAR $ 9,983,179 $ -- $ -- $ 81,465,910
=========== =========== ============= ============
See notes to financial statements.
-4B-
RJR NABISCO CAPITAL INVESTMENT PLAN
- ------------------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 30, 1993 - Continued
- --------------------------------------------------------------------------------------------------------
Fund Information
----------------------------------------
Loan Matching Stock Fund
Fund Allocated Unallocated Total
------------ ---------- ------------ ------------
MASTER TRUST INVESTMENT INCOME / (LOSS)
Net appreciation/(depreciation) in
fair value of investments - Note 4 $ -- $ 22,367 $ ---- $ 28,954,731
Interest and dividends, net of
administrative fees 2,027,296 3,607,379 15,888,887 76,013,718
------------ ---------- ------------ ------------
TOTAL MASTER TRUST INVESTMENT
INCOME / (LOSS) 2,027,296 3,629,746 15,888,887 104,968,449
------------ ---------- ------------ ------------
CONTRIBUTIONS
Employee -- -- -- 73,379,855
Employer - Note 1 -- -- 29,058,952 29,488,951
------------ ---------- ------------ ------------
TOTAL CONTRIBUTIONS -- -- 29,058,952 102,868,806
------------ ---------- ------------ ------------
ALLOCATION OF ESOP SHARES - NOTE 8 -- 27,608,766 -- 27,608,766
DEDUCTIONS
Forfeitures -- 59,346 -- 59,346
Allocation of ESOP shares -- -- 27,165,680 27,165,680
Employee withdrawals - Note 5 -- 1,224,881 -- 69,029,057
Interest on ESOP loan - Note 8 -- -- 24,084,447 24,084,447
------------ ---------- ------------ ------------
TOTAL DEDUCTIONS -- 1,284,227 51,250,127 120,338,530
Net interfund transfers 4,156,559 (2,558,584) 2,576,487 --
------------ ---------- ------------ ------------
Net transfers to the Plan - Note 7 -- -- -- 105,047
------------ ---------- ------------ ------------
Net increase (decrease) 6,183,855 27,395,701 (3,725,801) 115,212,538
NET ASSETS AVAILABLE FOR
BENEFITS AT BEGINNING OF YEAR 24,976,895 27,042,673 (11,332,904) 1,217,988,269
------------ ---------- ------------ ------------
NET ASSETS AVAILABLE FOR
BENEFITS AT END OF YEAR $ 31,160,750 $ 54,438,374 $(15,058,705) $1,333,200,807
============ =========== ============ ============
See notes to financial statements.
-4C-
RJR NABISCO CAPITAL INVESTMENT PLAN
- ------------------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 30, 1992
- --------------------------------------------------------------------------------------------
Fund Information
--------------------------------------------------------
General Growth Real Interest
Stock Stock Estate Income
Fund Fund Fund Fund
----------- ----------- ----------- -----------
MASTER TRUST INVESTMENT INCOME / (LOSS)
Net appreciation/(depreciation) in
fair value of investments - Note 4 $17,848,622 $ 7,019,566 $ (383,078) $ 1,678,307
Interest and dividends, net of
administrative fees 14,583,972 4,185,052 (396,823) 43,580,818
------------ ------------ ------------ ------------
TOTAL MASTER TRUST INVESTMENT
INCOME / (LOSS) 32,432,594 11,204,618 (779,901) 45,259,125
------------ ------------ ------------ ------------
CONTRIBUTIONS
Employee 18,361,448 13,589,272 1,039,834 29,048,187
Employer - Note 1 116,621 77,147 3,261 126,791
------------ ------------ ------------ ------------
TOTAL CONTRIBUTIONS 18,478,069 13,666,419 1,043,095 29,174,978
------------ ------------ ------------ ------------
EMPLOYER ADVANCE -- -- -- --
------------ ------------ ------------ ------------
ALLOCATION OF ESOP SHARES -
NOTE 8 -- -- -- --
------------ ------------ ------------ ------------
DEDUCTIONS
Forfeitures -- -- -- --
Allocation of ESOP shares -- -- -- --
Employee withdrawals - Note 5 21,803,290 11,181,120 948,288 66,004,914
Interest on ESOP loan - Note 8 -- -- -- --
------------ ------------ ------------ ------------
TOTAL DEDUCTIONS 21,803,290 11,181,120 948,288 66,004,914
------------ ------------ ------------ ------------
Net interfund transfers (8,742,836) (3,747,403) (2,682,942) (11,190,452)
------------ ------------ ------------ ------------
Net transfers to the Plan - Note 7 7,282 -- -- 13,084
------------ ------------ ------------ ------------
Net increase (decrease) 20,371,819 9,942,514 (3,368,036) (2,748,179)
NET ASSETS AVAILABLE FOR
BENEFITS AT BEGINNING OF YEAR 285,144,930 149,515,312 13,445,163 615,953,928
------------ ------------ ------------ ------------
NET ASSETS AVAILABLE FOR
BENEFITS AT END OF YEAR $ 305,516,749 $ 159,457,826 $ 10,077,127 $ 613,205,749
============ ============ ============ ============
See notes to financial statements.
-5A-
RJR NABISCO CAPITAL INVESTMENT PLAN
- ------------------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 30, 1992 - Continued
- -------------------------------------------------------------------------------------------------------
Fund Information
-------------------------------------------------------
Government Preferred Bristol-Myers Common
Securities Stock Stock Stock
Fund Fund Fund Fund
----------- ----------- ----------- -----------
MASTER TRUST INVESTMENT INCOME / (LOSS)
Net appreciation/(depreciation) in
fair value of investments - Note 4 $ -- $ (420,345) $ (786,296) $ (19,979,531)
Interest and dividends, net of
administrative fees 84,287 218,628 76,561 (7,981)
------------ ------------ ------------ ------------
TOTAL MASTER TRUST INVESTMENT
INCOME / (LOSS) 84,287 (201,717) (709,735) (19,987,512)
------------ ------------ ------------ ------------
CONTRIBUTIONS
Employee 3,016,616 11,883 -- 11,449,648
Employer - Note 1 13,237 4,383 -- 57,228
------------ ------------ ------------ ------------
TOTAL CONTRIBUTIONS 3,029,853 16,266 -- 11,506,876
------------ ------------ ------------ ------------
EMPLOYER ADVANCE -- -- -- --
------------ ------------ ------------ ------------
ALLOCATION OF ESOP SHARES -
NOTE 8 -- -- -- --
------------ ------------ ------------ ------------
DEDUCTIONS
Forfeitures -- -- -- --
Allocation of ESOP shares -- -- -- --
Employee withdrawals - Note 5 117,644 465,943 600,212 5,659,972
Interest on ESOP loan - Note 8 -- -- -- --
------------ ------------ ------------ ------------
TOTAL DEDUCTIONS 117,644 465,943 600,212 5,659,972
------------ ------------ ------------ ------------
Net interfund transfers 2,204,215 (1,715,630) (529,688) 12,271,664
------------ ------------ ------------ ------------
Net transfers to the Plan - Note 7 -- -- -- --
------------ ------------ ------------ ------------
Net increase (decrease) 5,200,711 (2,367,024) (1,839,635) (1,868,944)
NET ASSETS AVAILABLE FOR
BENEFITS AT BEGINNING OF YEAR -- 4,557,151 3,678,812 81,683,083
------------ ------------ ------------ ------------
NET ASSETS AVAILABLE FOR
BENEFITS AT END OF YEAR $ 5,200,711 $ 2,190,127 $ 1,839,177 $ 79,814,139
============ ============ ============ ============
See notes to financial statements.
-5B-
RJR NABISCO CAPITAL INVESTMENT PLAN
- ------------------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 30, 1992 - Continued
- ----------------------------------------------------------------------------------------------------
Fund Information
---------------------------------------
Loan Matching Stock Fund
Fund Allocated Unallocated Total
----------- ----------- ----------- -----------
MASTER TRUST INVESTMENT INCOME / (LOSS)
Net appreciation/(depreciation) in
fair value of investments - Note 4 $ -- $ 430 $ -- $ 4,977,675
Interest and dividends, net of
administrative fees 1,499,769 1,448,879 18,513,561 83,786,723
------------ ------------ ------------ ------------
TOTAL MASTER TRUST INVESTMENT
INCOME / (LOSS) 1,499,769 1,449,309 18,513,561 88,764,398
------------ ------------ ------------ ------------
CONTRIBUTIONS
Employee -- -- -- 76,516,888
Employer - Note 1 -- -- 29,197,361 29,596,029
------------ ------------ ------------ ------------
TOTAL CONTRIBUTIONS -- -- 29,197,361 106,112,917
------------ ------------ ------------ ------------
EMPLOYER ADVANCE -- -- 156,250 156,250
------------ ------------ ------------ ------------
ALLOCATION OF ESOP SHARES -
NOTE 8 -- 26,024,106 -- 26,024,106
------------ ------------ ------------ ------------
DEDUCTIONS
Forfeitures -- 17,595 -- 17,595
Allocation of ESOP shares -- -- 26,052,832 26,052,832
Employee withdrawals - Note 5 -- 389,781 -- 107,171,164
Interest on ESOP loan - Note 8 -- -- 30,538,736 30,538,736
------------ ------------ ------------ ------------
TOTAL DEDUCTIONS -- 407,376 56,591,568 163,780,327
------------ ------------ ------------ ------------
Net interfund transfers 14,156,438 (23,366) -- --
------------ ------------ ------------ ------------
Net transfers to the Plan - Note 7 -- -- -- 20,366
------------ ------------ ------------ ------------
Net increase (decrease) 15,656,207 27,042,673 (8,724,396) 57,297,710
NET ASSETS AVAILABLE FOR
BENEFITS AT BEGINNING OF YEAR 9,320,688 -- (2,608,508) 1,160,690,559
------------ ------------ ------------ ------------
NET ASSETS AVAILABLE FOR
BENEFITS AT END OF YEAR $ 24,976,895 $ 27,042,673 $ (11,332,904)$ 1,217,988,269
============ ============ ============ ============
See notes to financial statements.
-5C-
RJR NABISCO CAPITAL INVESTMENT PLAN
- -----------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. PLAN CHANGES
Effective January 1, 1992 the RJR Nabisco Capital Accumulation Plan which
was comprised of five separate programs - the RJR Nabisco Capital
Accumulation Program, the RJR Employees' Savings and Investment Program,
the Nabisco Brands Capital Accumulation Program, the Planters LifeSavers
Capital Accumulation Program and the RJR Nabisco Employee Stock Ownership
Program (the "ESOP")--see Note 8, was renamed the RJR Nabisco Capital
Investment Plan (the "Plan"). The individual programs thereunder no
longer exist as separate programs in order to standardize provisions.
Participant investment in the ESOP through RJR Nabisco, Inc. ("RJRN")
matching contributions began January 1, 1992. Participants employed by
Winston-Salem Health Care Plan, Inc. and Wiston-Salem Dental Care Plan,
Inc. are excluded from participation in the ESOP and continue to receive
RJRN matching contributions in cash.
2. DESCRIPTION OF THE PLAN
The Plan is a voluntary defined contribution plan for eligible regular,
full-time employees of RJRN and participating affiliates. The Plan was
established effective October 1, 1987 and is sponsored by RJRN. Employees
may contribute, through payroll deductions, up to 16% of their
compensation. The Plan allows participants to make after-tax
contributions up to 16% regardless of whether or not pre-tax contributions
are made providing the combined percentage of compensation for pre-tax
and/or after-tax contributions is a minimum of 2% and a maximum of 16%.
RJRN makes matching contributions to the Plan equal to 50% of each
participant's basic contribution (basic contribution is 2% to 6% of
compensation made on a pre-tax basis except for the RJR Employees'
Savings and Investment Program which is pre- or after-tax). Forfeitures
of non-vested RJRN contributions are used to reduce future RJRN
contributions to the Plan. Although it has not expressed any intent
to do so, RJRN has the right under the Plan to discontinue its
contributions at any time and to terminate the Plan subject
to the provisions of ERISA. In the event of plan termination,
participants will become 100 percent vested in their accounts.
Effective January 1, 1992, all participants who have participated in the
Plan for at least two years may apply to the RJR Employee Benefits
Committee (the "Committee") to borrow funds from their account. The
amount of a loan to a participant may not be less than $1,000 and is
subject to a maximum amount based on account balance and prior loan
amounts.
Under the provisions of the Plan, participating employees may elect to
invest their contributions in one or more of the following investment
funds (see explanation of commingled funds in Note 3 and investment
option changes in Note 10):
General Stock Fund Diversified fund of primarily
common stocks selected to achieve
long-term capital growth and
current income.
Growth Stock Fund Diversified fund of common stocks
and other securities selected to
achieve significant capital
gains.
-6-
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- --------------------------------------------------------------------------------
2. DESCRIPTION OF THE PLAN - CONTINUED
Real Estate Fund Pooled funds selected to achieve
stable long-term rates of return
through direct ownership of income
producing properties diversified
by usage and location.
Common Stock Fund Common stock issued by RJR Nabisco
Holdings Corp. ("Holdings").
Government Securities Fund Short-term U.S. Government
Securities that mature within one
year, with a maximum average
maturity of 90 days selected to
maximize current income that is
consistent with the preservation of
capital and liquidity. This fund
was opened to participant
contributions commencing in 1992.
Interest Income Fund Contracts issued by insurance
companies or financial institutions
as well as one to three year
investment grade fixed income
securities. Contracts are
diversified by size, maturity,
quality and interest rate.
Direct transfers between the Government Securities Fund and the Interest
Income Fund are not allowed due to restrictions in the investment
contracts in the Interest Income Fund. During 1993 the Company was
required to liquidate the Preferred Stock Fund and Bristol-Myers Stock
Fund due to Securities and Exchange Commission trading rules and
restrictions and the relatively light trading volume. As a result,
balances in these funds were transferred to the Government Securities
Fund. The Loan Fund is a recordkeeping fund that holds employee
promissory notes. The Matching Stock Fund is available for RJRN
matching contributions only and is not open to participant
contribution. These funds hold assets as follows:
Preferred Stock Fund Cumulative convertible preferred
stock issued by Holdings and
convertible into Holdings common
stock.
Bristol-Myers Stock Fund Common stock of Bristol-Myers
Squibb Company that came into the
LifeSavers Savings Plan as a result
of the 1989 conversion of Squibb
Corporation Common Stock.
-7-
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- -------------------------------------------------------------------------------
2. DESCRIPTION OF THE PLAN - CONTINUED
Loan Fund Participant borrowings from
the Plan subject to requirements
established by the Committee.
Matching Stock Fund Holdings ESOP Convertible Preferred
Stock representing RJRN matching
contributions.
Information about the Plan agreement and the vesting and benefit
provisions is available from the Committee.
3. SIGNIFICANT ACCOUNTING POLICIES
Commingled Funds - The RJR Nabisco, Inc. Defined Contribution Master Trust
----------------
(the "Trust") administers pooled assets and related liabilities within
various funds established on behalf of participating defined contribution
plans for employees of RJRN and affiliated companies. Each participating
defined contribution plan owns an interest in the fair value of net assets
held in the Trust. The trustee and custodian of the Trust is Wachovia
Bank of North Carolina, N.A. (the "Trustee").
Valuation of Investments in Master Trust - All investments held by the
----------------------------------------
Trust are valued at fair value (except unallocated insurance contracts
which are valued at contract value) as follows. Securities which are
traded on a national securities exchange are valued at the last reported
sales price on the last business day of the Plan year. Over-the-counter
investments traded on the NASDAQ and listed securities for which no sale
was reported on the last business day of the Plan year are valued at the
average of the last reported bid and ask prices. All other
over-the-counter investments are valued at the last reported bid.
The fair market value of real estate is based on periodic independent
appraisals. The fair market value of fixed income investments
is based on an institutional based pricing system. Investment grade bonds
are valued on a pricing system based on treasury securities. The fair
market value of the participation units in common trust funds is based on
quoted redemption value on the last business day of the Plan year.
Plan Expenses - Expenses relating to the purchase or sale of investments
-------------
are included in the cost or deducted from the proceeds, respectively.
Direct charges and expenses including investment manager fees attributable
to specific investment funds may be charged against that investment fund.
Other plan expenses such as trustee, auditor, and Internal Revenue Service
("IRS") user fees are paid directly from the Trust. Other expenses
continue to be paid by RJRN.
-8-
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- -------------------------------------------------------------------------------
4. INVESTMENTS
Within the Trust at December 30, 1993, the Plan owned 99.37, 99.45, 99.28,
99.45, 95.44, 98.71, 97.69, and 100.00 percent of the total current value
of the investment of the General Stock Fund, Growth Stock Fund, Real
Estate Fund, Interest Income Fund, Common Stock Fund, Government
Securities Fund, Loan Fund and Matching Stock Fund, respectively.
Within the Trust at December 30, 1992, the Plan owned 99.27, 99.49, 99.47,
99.46, 96.45, 97.71, 98.52, 100.00, 97.91, and 100.00 percent of the total
current value of the investments of the General Stock Fund, Growth Stock
Fund, Real Estate Fund, Interest Income Fund, Preferred Stock Fund, Common
Stock Fund, Government Securities Fund, Bristol-Myers Stock Fund, Loan
Fund and Matching Stock Fund, respectively.
Investment income and the net appreciation (depreciation) in the fair
value of the investments held by the Trust are allocated to the
participating defined contribution plans based on each plan's percentage
interest in the fair value of such investments.
During 1993 and 1992, the Trust 's investments (including investments
bought, sold, as well as held during the year) appreciated (depreciated)
in fair value as follows:
-9-
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- ------------------------------------------------------------------------------------------------------------------------------
3. INVESTMENTS - CONTINUED
YEAR ENDED DECEMBER 30, 1993 YEAR ENDED DECEMBER 30, 1992
------------------------------------- -------------------------------------
Net Appreciation Net Appreciation
(Depreciation) Fair (Depreciation) Fair
in Fair Value Value at in Fair Value Value at
During Year End of Year During Year End of Year
---------------- ---------------- ---------------- ----------------
GROWTH STOCK FUND
Equity investment funds $ 9,173,988 $ 174,798,915 $ 7,058,911 $ 159,930,462
Wachovia Bank of North Carolina,
N.A. Diversified Short-Term
Investment Fund - 1,042,500 - 177,387
Other Short-Term Investments - 1,110 - -
---------------- ---------------- ---------------- ----------------
$ 9,173,988 $ 175,842,525 $ 7,058,911 $ 160,107,849
---------------- ---------------- ---------------- ----------------
Plan's interest therein $ 9,123,477 $ 174,878,149 $ 7,019,566 $ 159,294,181
---------------- ---------------- ---------------- ----------------
REAL ESTATE FUND
Real estate investment funds $ 230,547 $ 8,749,673 $ (385,135) $ 10,110,263
Wachovia Bank of North Carolina,
N.A. Diversified Short-Term
Investment Fund - 52,012 - 122,515
---------------- ---------------- ---------------- ----------------
$ 230,547 $ 8,801,685 $ (385,135) $ 10,232,778
---------------- ---------------- ---------------- ----------------
Plan's interest therein $ 229,126 $ 8,738,020 $ (383,078) $ 10,179,028
---------------- ---------------- ---------------- ----------------
GENERAL STOCK FUND
Equity investment funds $ 36,352,032 $ 357,698,005 $ 17,974,032 $ 307,653,297
Wachovia Bank of North Carolina,
N.A. Diversified Short-Term
Investment Fund - 1,266,484 - 256,596
Other Short-Term Investments - 1,380 - -
---------------- ---------------- ---------------- ----------------
$ 36,352,032 $ 358,965,869 $ 17,974,032 $ 307,909,893
---------------- ---------------- ---------------- ----------------
Plan's interest therein $ 36,098,600 $ 356,689,532 $ 17,848,622 $ 305,676,026
---------------- ---------------- ---------------- ----------------
BRISTOL-MYERS STOCK FUND
Bristol-Myers Squibb Common Stock $ (22,315) $ - $ (786,296) $ 562,706
Wachovia Bank of North Carolina,
N.A. Diversified Short-Term
Investment Fund - - - 112
---------------- ---------------- ---------------- ----------------
$ (22,315) $ - $ (786,296) $ 562,818
---------------- ---------------- ---------------- ----------------
Plan's interest therein $ (22,315) $ - $ (786,296) $ 562,818
---------------- ---------------- ---------------- ----------------
-10-
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- ------------------------------------------------------------------------------------------------------------------------------
3. INVESTMENTS - CONTINUED
YEAR ENDED DECEMBER 30, 1993 YEAR ENDED DECEMBER 30, 1992
------------------------------------- -------------------------------------
Net Appreciation Net Appreciation
(Depreciation) Fair (Depreciation) Fair
in Fair Value Value at in Fair Value Value at
During Year End of Year During Year End of Year
---------------- ---------------- ---------------- ----------------
INTEREST INCOME FUND
Guaranteed insurance contracts $ - $ 446,272,955 $ - $ 448,477,423
Treasury Obligations 541,444 8,005,040 2,075,764 60,108,170
Federal Agency CMOs (97,635) - 8,154 18,295,300
Corporate Mortgage Pools 669,823 21,046 (422,771) 64,877,320
Bond Investment Funds (231,370) 150,344,174 - -
Wells Fargo Bank Money
Market Fund - 84 - -
Fisher Francis Trees & Watts
Short-Term Investment Fund - - - 12,674,376
Wachovia Bank of North Carolina,
N.A. Diversified Short-Term
Investment Fund - 28,285,509 - 8,293,268
Other Short-Term Investments - 14,149 25,199 688
---------------- ---------------- ---------------- ----------------
$ 882,262 $ 632,942,957 $ 1,686,346 $ 612,726,545
---------------- ---------------- ---------------- ----------------
Plan's interest therein $ 877,456 $ 629,445,132 $ 1,678,307 $ 609,443,221
---------------- ---------------- ---------------- ----------------
COMMON STOCK FUND
RJR Nabisco Holdings Corp.
Common Stock $ (17,335,826) $ 82,893,245 $ (20,315,710) $ 79,417,339
Wachovia Bank of North Carolina,
N.A. Diversified Short-Term
Investment Fund - 1,478,403 - 2,014,456
---------------- ---------------- ---------------- ----------------
$ (17,335,826) $ 84,371,648 $ (20,315,710) $ 81,431,795
---------------- ---------------- ---------------- ----------------
Plan's interest therein $ (17,147,965) $ 80,523,216 $ (19,979,531) $ 79,570,620
---------------- ---------------- ---------------- ----------------
PREFERRED STOCK FUND
RJR Nabisco Holdings Corp.
Cumulative Convertible
Preferred Stock $ (232,322) $ - $ (434,756) $ 2,202,441
RJR Nabisco Holdings Corp.
Common Stock - - 3,605 -
Wachovia Bank of North Carolina,
N.A. Diversified Short-Term
Investment Fund - - - 52,680
---------------- ---------------- ---------------- ----------------
$ (232,322) $ - $ (431,151) $ 2,255,121
---------------- ---------------- ---------------- ----------------
Plan's interest therein $ (226,015) $ - $ (420,345) $ 2,174,986
---------------- ---------------- ---------------- ----------------
MATCHING STOCK FUND
RJR Nabisco Holdings
Corp. ESOP Convertible
Preferred Stock $ - $ 249,183,584 $ - $ 250,000,000
RJR Nabisco Holdings Corp.
Common Stock 22,367 69,089 430 12,580
Other Short-Term Investments - 191 - -
---------------- ---------------- ---------------- ----------------
$ 22,367 $ 249,252,864 $ 430 $ 250,012,580
---------------- ---------------- ---------------- ----------------
Plan's interest therein $ 22,367 $ 249,252,864 $ 430 $ 250,012,580
---------------- ---------------- ---------------- ----------------
-11-
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- ------------------------------------------------------------------------------------------------------------------------------
3. INVESTMENTS - CONTINUED
YEAR ENDED DECEMBER 30, 1993 YEAR ENDED DECEMBER 30, 1992
------------------------------------- -------------------------------------
Net Appreciation Net Appreciation
(Depreciation) Fair (Depreciation) Fair
in Fair Value Value at in Fair Value Value at
During Year End of Year During Year End of Year
---------------- ---------------- ---------------- ----------------
GOVERNMENT SECURITIES FUND
Equity investment funds $ - $ 22,366 $ - $ 5,034,108
Wachovia Bank of North Carolina,
N.A. Diversified Short-Term
Investment Fund - 10,100,939 - 108,475
Other Short-Term Investments - 2,389 - -
---------------- ---------------- ---------------- ----------------
$ - $ 10,125,694 $ - $ 5,142,583
---------------- ---------------- ---------------- ----------------
Plan's interest therein $ - $ 9,995,370 $ - $ 5,066,279
---------------- ---------------- ---------------- ----------------
LOAN FUND
Loans to participants $ - $ 29,876,426 $ - $ 23,674,814
---------------- ---------------- ---------------- ----------------
$ - $ 29,876,426 $ - $ 23,674,814
---------------- ---------------- ---------------- ----------------
Plan's interest therein $ - $ 29,185,297 $ - $ 23,179,674
---------------- ---------------- ---------------- ----------------
-12-
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- --------------------------------------------------------------------------------
5. EMPLOYEE WITHDRAWALS
At December 30, 1993 and 1992, employee withdrawal requests of $4,519,390
and $3,308,581, respectively, were not accrued in accordance with the
AICPA Audit and Accounting Guide "Audits of Employee Benefit Plans".
6. INCOME TAX STATUS
The Internal Revenue Service issued a favorable determination letter dated
6/93, stating that the merged Plan/ESOP is a qualified plan under Sections
401(a) and 401(k) of the Internal Revenue Code ("IRC") and its related
Trust is exempt from tax under Section 501. The Plan is required to
operate in conformity with the IRC to maintain its qualification. The
Committee is not aware of any course of action or series of events that
have occurred that might adversely affect the Plan's qualified status.
Therefore, no provision for income taxes has been included in the Plan's
financial statements.
7. NET TRANSFERS TO/FROM THE PLAN
Net transfers of assets of $105,047 and $20,366 were made to the Plan
during 1993 and 1992, respectively, due to employees transferring between
affiliated plans.
8. MATCHING STOCK
On April 10, 1991, the ESOP borrowed $250 million (the "ESOP Loan") from
Holdings, an indirect parent of RJRN, to purchase 15,625,000 shares of
Holdings ESOP Convertible Preferred Stock, stated value $16.00 per share
(the "ESOP Preferred Stock"). The market value of the ESOP Preferred
Stock is the greater of the stated value of the ESOP Preferred Stock or
the market value of Holdings common stock (the "ESOP market value").
The ESOP Loan has a weighted average interest rate of 8.2% in 1993
and 12.9% in 1992 and matures on July 2, 2016. The ESOP Preferred
Stock is convertible into 15,625,000 shares of Holdings' common
stock, subject to adjustment in certain events, and bears cumulative
dividends at a rate of 7.8125% of stated value per annum at least
until April 10, 1999 and is payable semi-annually in arrears
commencing January 2, 1992, when, as and if declared by the Board
of Directors (the "Board") of Holdings. The ESOP Preferred Stock
represents an unallocated investment of the Plan which is allocated to
individual participants' accounts as the ESOP Loan is repaid. The
unallocated ESOP Preferred Stock is collateral for the ESOP Loan. The
Plan obtains funds to repay the ESOP Loan primarily from dividends
on the ESOP Preferred Stock and RJRN matching contributions. The
ESOP Preferred Stock is redeemable at the option of Holdings, in
whole or in part, at any time on or after April 10, 1999, at an
initial optional redemption price of $16.25 per share. The
initial optional redemption price declines thereafter on an
annual basis in the amount of $.125 a year to $16 per
share on April 10, 2001, plus accrued and unpaid dividends.
On December 17, 1992, the Board declared a dividend of $0.625 on each
share of ESOP Preferred Stock issued and outstanding as of that date. The
financial statements reflect the accrued dividend of $9,765,625 which was
paid on January 4, 1993. In addition, interest expense of $15,015,296 was
accrued at December 31, 1992 on the ESOP loan.
On December 17, 1993, the Board declared a dividend of $0.625 on each
share of ESOP Preferred Stock issued and outstanding as of that date. The
financial statements reflect the accrued dividend of $9,735,361 which was
paid on January 3, 1994. In addition, interest expense of $8,715,285 was
accrued at December 31, 1993 on the ESOP loan.
-13-
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- --------------------------------------------------------------------------------
8. MATCHING STOCK - CONTINUED
Shares of unallocated ESOP Preferred Stock are held as plan assets which
have not been released for allocation to the individual participant
accounts. Dividends on the ESOP Preferred Stock and contributions from
RJRN are used to service the ESOP Loan. When the ESOP Loan is serviced,
shares become available for allocation to individual participants'
accounts. Allocation of released shares are net of dividends on the ESOP
Preferred Stock, sales of shares for distribution and forfeitures.
During 1993, an ESOP Treasury Suspense Account was established to hold
shares of ESOP Preferred Stock resulting from sales for distribution and
forfeitures pending transfer to RJRN for retirement.
Any participant who is entitled to receive a distribution shall, at the
participant's option, receive either cash equal to the ESOP market value
or a number of shares of Holdings common stock with a value equal to the
ESOP market value.
9. SALE OF BUSINESS AND TRANSFER OF ASSETS
An Asset Purchase Agreement (the "Agreement") dated November 13, 1992
among Kraft General Foods, Inc. and Nabisco, Inc. and Nabisco Cereals,
Inc. was entered into to provide in part for the sale of RJRN's cereal
business. Based upon the terms of the Agreement, transferred employees
who are participants of the Plan shall be fully vested and active
participation in the Plan shall cease as of the closing date.
Additionally, the Plan was amended to provide for the direct
trustee-to-trustee transfer of assets representing the full account
balances of transferred employees.
10. SUBSEQUENT EVENTS
New investment options became available for participants' future
contributions effective January 1, 1994 and for accumulated balances
effective March 1, 1994. Three current investment options will remain:
the Interest Income Fund, the Real Estate Fund and the Common Stock Fund.
The new investment options available include the U.S. Stock Index Fund,
the International Stock Index Fund and the Balanced Funds. The U.S. Stock
Index Fund replaces the General Stock and Growth Stock Funds. As of
January 1, 1994, all contributions to these discontinued funds will be
directed to the U.S. Stock Index Fund. Balances remaining in these funds
on December 31, 1993 will be automatically transferred to the U.S. Stock
Index Fund on January 1, 1994. The Government Securities Fund is
discontinued and as of January 1, 1994 all contributions to this fund will
be directed to the Interest Income Fund. Balances remaining in the
Government Securities Fund on December 31, 1993 will be automatically
transferred to the Interest Income Fund on January 1, 1994.
-14-