NABISCO EMPLOYEE SAVINGS PLAN
INDEPENDENT AUDITORS' REPORT AND FINANCIAL STATEMENTS FOR
THE YEARS ENDED DECEMBER 30, 1993 AND 1992
NABISCO EMPLOYEE SAVINGS PLAN
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TABLE OF CONTENTS
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Page
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Independent Auditors' Report 1
Financial Statements:
Statements of Net Assets Available for Benefits 2-3
as of December 30, 1993 and 1992
Statements of Changes in Net Assets Available 4-5
for Benefits for the Years Ended December 30,
1993 and 1992
Notes to Financial Statements 6-11
INDEPENDENT AUDITORS' REPORT
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Board of Directors,
RJR Nabisco, Inc.:
We have audited the accompanying statements of net assets available for
benefits for the Nabisco Employee Savings 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
NABISCO EMPLOYEE SAVINGS PLAN
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STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 30, 1993
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Fund Information
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Stock Money Interest Common Preferred
Index Market Income Stock Stock Loan
Fund Fund Fund Fund Fund Fund Total
-------- -------- ---------- --------- ---------- ------- --------
ASSETS
Master Trust investments at fair value
- Notes 2, 3, & 4
Interest in commingled funds $ 8,879,160 $12,098,400 $ 24,918 $ --- $ --- $ --- $21,002,478
Preferred Stock --- --- --- --- --- --- ---
Common Stock --- --- --- 3,442,809 --- --- 3,442,809
Diversified Short-Term Investment
Fund --- --- --- 33,972 --- --- 33,972
Loans to participants --- --- --- --- --- 691,126 691,126
----------- ---------- --------- ---------- --------- ---------- -----------
Total Master Trust Investments 8,879,160 12,098,400 24,918 3,476,781 --- 691,126 25,170,385
----------- ---------- --------- ---------- --------- ---------- -----------
Receivables
Net investment income 94 89 178 316 --- 4,335 5,012
Employee contributions 313,156 276,944 --- 240,205 --- --- 830,305
Employer contributions 34,992 39,443 --- 16,544 --- --- 90,979
----------- ---------- --------- ---------- --------- ---------- -----------
Total Receivables 348,242 316,476 178 257,065 --- 4,335 926,296
----------- ---------- --------- ---------- --------- ---------- -----------
Net interfund transfers (17,400) (39,627) (163) (2,578) --- 59,768 ---
----------- ---------- --------- ---------- --------- ---------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $9,210,002 $12,375,249 $ 24,933 $3,731,268 $ --- $ 755,229 $26,096,681
=========== =========== ========= ========== ========== ========== ===========
See notes to financial statements.
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NABISCO EMPLOYEE SAVINGS PLAN
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STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 30, 1992
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Fund Information
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Stock Money Interest Common Preferred
Index Market Income Stock Stock Loan
Fund Fund Fund Fund Fund Fund Total
-------- -------- ---------- --------- ---------- ------- --------
ASSETS
Master Trust investments at fair value
- Notes 2, 3, & 4
Interest in commingled funds $ 5,817,757 $ 8,478,123 $ 51,202 $ --- $ --- $ --- $14,347,082
Preferred Stock --- --- --- --- 56,478 --- 56,478
Common Stock --- --- --- 1,322,337 --- --- 1,322,337
Diversified Short-Term Investment Fund --- --- --- 13,002 20,921 --- 33,923
Loans to participants --- --- --- --- --- 383,508 383,508
----------- ----------- -------- ---------- -------- --------- ----------
Total Master Trust Investments 5,817,757 8,478,123 51,202 1,335,339 77,399 383,508 16,143,328
----------- ----------- -------- ---------- -------- --------- ----------
Receivables
Net investment income 235 693 4,174 68 1,240 2,695 9,105
Employee contributions 111,462 122,069 --- 68,873 --- --- 302,404
Employer contributions 21,463 30,067 --- 12,635 --- --- 64,165
----------- ----------- -------- ---------- --------- --------- ----------
Total Receivables 133,160 152,829 4,174 81,576 1,240 2,695 375,674
----------- ----------- -------- ---------- --------- --------- ----------
Net interfund transfers 6,709 5,684 --- 3,325 --- (15,718) ---
----------- ----------- -------- ----------- --------- --------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $ 5,957,626 $ 8,636,636 $ 55,376 $ 1,420,240 $ 78,639 $ 370,485 $16,519,002
=========== =========== ======== =========== ========= ========== ===========
See notes to financial statements.
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NABISCO EMPLOYEE SAVINGS PLAN
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STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 30, 1993
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Fund Information
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Stock Money Interest Common Preferred
Index Market Income Stock Stock Loan
Fund Fund Fund Fund Fund Fund Total
-------- -------- ---------- --------- ---------- ------ -----
MASTER TRUST INVESTMENT INCOME / (LOSS)
Net appreciation / (depreciation) in
fair value of investments - Note 4 $ 415,976 $ --- $ --- $ (107,662) $ (6,252) $ --- $ 302,062
Interest and dividends, net of
administrative fees 228,243 268,503 (473) (2,077) 1,038 42,134 537,368
----------- ----------- -------- ---------- --------- --------- -----------
TOTAL MASTER TRUST INVESTMENT
INCOME / (LOSS) 644,219 268,503 (473) (109,739) (5,214) 42,134 839,430
----------- ----------- -------- ---------- --------- --------- -----------
CONTRIBUTIONS
Employee 2,701,294 2,632,115 --- 2,064,719 --- --- 7,398,128
Employer 271,251 393,490 --- 167,008 --- --- 831,749
----------- ----------- -------- ---------- --------- --------- -----------
TOTAL CONTRIBUTIONS 2,972,545 3,025,605 --- 2,231,727 --- --- 8,229,877
----------- ----------- -------- ---------- --------- --------- -----------
DEDUCTIONS
Employee withdrawals - Note 5 621,043 1,312,715 4,605 167,269 221 --- 2,105,853
----------- ----------- -------- ---------- --------- --------- -----------
Net interfund transfers (102,415) (234,594) (31,519) 217,449 (73,952) 225,031 ---
----------- ----------- -------- ---------- --------- --------- -----------
Net transfers to the Plan - Note 7 359,070 1,991,814 6,154 138,860 748 117,579 2,614,225
----------- ----------- -------- ---------- --------- --------- -----------
Net increase (decrease) 3,252,376 3,738,613 (30,443) 2,311,028 (78,639) 384,744 9,577,679
NET ASSETS AVAILABLE FOR
BENEFITS AT BEGINNING OF YEAR 5,957,626 8,636,636 55,376 1,420,240 78,639 370,485 16,519,002
----------- ----------- -------- ---------- --------- --------- -----------
NET ASSETS AVAILABLE FOR
BENEFITS AT END OF YEAR $9,210,002 $12,375,249 $ 24,933 $3,731,268 $ --- $ 755,229 $26,096,681
========== =========== ======== ========== ========= ========= ===========
See notes to financial statements.
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NABISCO EMPLOYEE SAVINGS PLAN
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STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 30, 1992
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Fund Information
---------------------------------------------------------------------------
Stock Money Interest Common Preferred
Index Market Income Stock Stock Loan
Fund Fund Fund Fund Fund Fund Total
-------- -------- ---------- --------- ---------- ------- --------
MASTER TRUST INVESTMENT INCOME / (LOSS)
Net appreciation / (depreciation) in
fair value of investments - Note 4 $ 268,035 $ --- $ --- $ (243,720) $ (9,324) $ --- $ 14,991
Interest and dividends, net of 179,831 327,110 14,401 240 5,913 26,581 554,076
administrative fees ----------- ---------- --------- ---------- --------- ---------- ----------
TOTAL MASTER TRUST INVESTMENT
INCOME / (LOSS) 447,866 327,110 14,401 (243,480) (3,411) 26,581 569,067
----------- ---------- --------- ---------- --------- ---------- ----------
CONTRIBUTIONS
Employee 1,079,354 1,326,914 --- 692,324 --- --- 3,098,592
Employer 200,080 285,653 --- 123,083 --- --- 608,816
----------- ---------- --------- ---------- --------- ---------- ----------
TOTAL CONTRIBUTIONS 1,279,434 1,612,567 --- 815,407 --- --- 3,707,408
----------- ---------- --------- ---------- --------- ---------- ----------
DEDUCTIONS
Employee withdrawals - Note 5 482,417 1,390,598 28,230 85,160 4,818 --- 1,991,223
----------- ---------- --------- ---------- --------- ---------- ----------
Net interfund transfers 298,487 (224,324) (314,295) 204,180 (76,011) 111,963 ---
----------- ---------- --------- ---------- --------- ---------- ----------
Net transfers from the Plan - Note 7 (14,993) (15,026) (7) (1,884) (57) --- (31,967)
----------- ---------- --------- ---------- --------- ---------- ----------
Net increase (decrease) 1,528,377 309,729 (328,131) 689,063 (84,297) 138,544 2,253,285
NET ASSETS AVAILABLE FOR
BENEFITS AT BEGINNING OF YEAR 4,429,249 8,326,907 383,507 731,177 162,936 231,941 14,265,717
----------- ---------- --------- ---------- --------- ---------- ----------
NET ASSETS AVAILABLE FOR
BENEFITS AT END OF YEAR $ 5,957,626 $8,636,636 $ 55,376 $1,420,240 $ 78,639 $ 370,485 $16,519,002
=========== ========== ========= ========== ========= ========== ===========
See notes to financial statements.
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NABISCO EMPLOYEE SAVINGS PLAN
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NOTES TO FINANCIAL STATEMENTS
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1. PLAN CHANGES
Effective January 1, 1993 the Nabisco Brands Employee Savings Plan was
renamed the Nabisco Employee Savings Plan (the "Plan").
Also effective January 1, 1993, the RJR Employee Benefits Committee (the
"Committee"), acting under the direction of the Board of Directors of RJR
Nabisco, Inc. ("RJRN"), merged the Planters LifeSavers Company Savings
Plan for Eligible Hourly Employees (the "PLS SIP") into the Plan (the
"Merger"). Net assets of $3,554,501 were transferred to the Plan from the
PLS SIP as of March 1993 (See Note 7).
2. DESCRIPTION OF THE PLAN
The Plan is a voluntary defined contribution plan for eligible hourly
employees of Nabisco Brands, Inc. and participating subsidiaries. The
Plan was established effective February 1, 1987 and is sponsored by
Nabisco, Inc. (the "Company"), an indirect subsidiary of RJRN. Employees
may contribute, through payroll deductions, up to 16% of compensation.
Effective January 1, 1992 the Plan allows certain employees to make
pre-tax contributions. The Company matches participant contributions in
an amount equal to 25% of each participant's basic contribution (1% to 6%
of base pay) for each payroll period, except that the Company
contributions for Pennsauken participants are 30% of each Pennsauken
participant's basic contribution. Forfeitures of non-vested Company
contributions are used to reduce future Company contributions to the Plan.
Although it has not expressed any intent to do so, the Company 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.
Participants who have participated in the Plan for at least 2 years may
apply to the Committee to borrow funds from their account. The Committee
maintains sole discretion on whether to permit a loan in accordance with
the conditions specified under the terms of the Plan agreement. Loans may
not be less than $1,000 and are subject to a maximum amount based on
account balance and prior loan amounts. Only one loan per participant may
be outstanding at any given time.
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):
Stock Index Fund Diversified fund of primarily common stocks
selected to achieve long-term capital
growth and current income.
Money Market Fund Money Market fund consisting of short-term
investments maturing in one year or less,
including bank certificates of deposit,
commercial paper and short-term corporate
debt obligations.
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NOTES TO FINANCIAL STATEMENTS - CONTINUED
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2. DESCRIPTION OF THE PLAN - CONTINUED
Common Stock Fund Common stock issued by RJR Nabisco
Holdings Corp. ("Holdings").
The Interest Income Fund has been closed to new employee contributions, but
employees are allowed to transfer out of the fund. During 1993 the Company
was required to liquidate the Preferred Stock Fund due to Securities and
Exchange Commission trading rules and restrictions and the relatively light
trading volume. As a result, balances in the Preferred Stock Fund were
transferred to the Money Market Fund. The Loan Fund is a recordkeeping
fund that holds employee promissory notes. These funds hold assets as
follows:
Preferred Stock Fund Cumulative convertible preferred stock
issued by Holdings and convertible into
Holdings common stock.
Interest Income Fund Contracts issued by insurance companies or
financial institutions.
Loan Fund Participant borrowings from the Plan subject
to requirements established by the
Committee.
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
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(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..
Valuation of Investments in Master Trust - All investments held by the
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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.
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NOTES TO FINANCIAL STATEMENTS - CONTINUED
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3. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Plan Expenses - Expenses relating to the purchase or sale of investments
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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
user fees are paid directly from the Trust. Other expenses continue to be
paid by the Company.
4. INVESTMENTS
Within the Trust at December 30, 1993, the Plan owned 100.00, 100.00,
0.004, 4.12, and 2.31 percent of the total current value of the investments
of the Stock Index Fund, Money Market Fund, Interest Income Fund, Common
Stock Fund and Loan Fund, respectively.
Within the Trust at December 30, 1992, the Plan owned 88.88, 77.31, 0.01,
3.43, 1.64, and 1.62 percent of the total current value of the investments
of the Stock Index Fund, Money Market Fund, Interest Income Fund, Preferred
Stock Fund, Common Stock Fund and the Loan 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 period) appreciated (depreciated)
in fair value as follows:
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NOTES TO FINANCIAL STATEMENTS - CONTINUED
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4. 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
------------------ -------------- ------------------ -------------
STOCK INDEX FUND
Equity investment funds $ 426,785 $ 8,872,279 $ 301,841 $ 6,445,494
Wachovia Bank of North Carolina,
N.A. Diversified Short-Term
Investment Fund ---- 6,881 ---- 99,996
-------------- ------------- -------------- ------------
$ 426,785 $ 8,879,160 $ 301,841 $ 6,545,490
-------------- ------------- -------------- ------------
Plan's interest therein $ 415,976 $ 8,879,160 $ 268,035 $ 5,817,757
-------------- ------------- -------------- ------------
MONEY MARKET FUND
Money market investment funds $ ---- $ 12,089,655 $ ---- $ 10,866,219
Wachovia Bank of North Carolina,
N.A. Diversified Short-Term
Investment Fund ---- 8,745 ---- 100,731
-------------- ------------- -------------- ------------
$ ---- $ 12,098,400 $ ---- $ 10,966,950
-------------- ------------- -------------- ------------
Plan's interest therein $ ---- $ 12,098,400 $ ---- $ 8,478,123
-------------- ------------- -------------- ------------
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 $ ---- $ 24,918 $ ---- $ 51,202
-------------- ------------- -------------- ------------
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 $ (107,662) $ 3,476,781 $ (243,720) $ 1,335,339
-------------- ------------- -------------- ------------
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NOTES TO FINANCIAL STATEMENTS - CONTINUED
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4. 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
------------------ -------------- ------------------ -------------
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 $ (6,252) $ ---- $ (9,324) $ 77,399
-------------- ------------- -------------- ------------
LOAN FUND
Loans to participants $ ---- $ 29,876,423 $ ---- $ 23,674,814
-------------- ------------- -------------- ------------
$ ---- $ 29,876,423 $ ---- $ 23,674,814
-------------- ------------- -------------- ------------
Plan's interest therein $ ---- $ 691,126 $ ---- $ 383,508
-------------- ------------- -------------- ------------
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NOTES TO FINANCIAL STATEMENTS - CONTINUED
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5. WITHDRAWALS
At December 30, 1993 and 1992, employee withdrawal requests of $ 174,415
and $ 49,934, respectively, were not accrued in accordance with the AICPA
Audit and Accounting Guide "Audits of Employee Benefit Plans".
6. INCOME TAX STATUS
The Plan received an IRS determination letter dated 4/89 which states that
the Plan qualifies under Section 401 of the Internal Revenue Code ("IRC")
and is exempt from federal income tax. 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
During 1993 net transfers of assets of $2,614,225 were made to the plan due
to the Merger (see Note 1), the sale of RJRN's cereal business (see Note
8), the divestiture of the Merckens business and transfers to affiliated
plans.
During 1992 net transfers of assets of $31,967 were made from the Plan due
to the divestiture of the Merckens business and transfers to affiliated
plans.
8. 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. During
1993 net assets of $853,990 were transferred from the Plan to Kraft General
Foods, Inc. in accordance with the terms of the Agreement.
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