RJR NABISCO, INC. PUERTO RICO
DEFINED CONTRIBUTION MASTER TRUST
INDEPENDENT AUDITORS' REPORT, FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1993, AND THE PERIOD JULY 30, 1993 (DATE OF
INCEPTION) THROUGH DECEMBER 31, 1993 AND SUPPLEMENTAL SCHEDULES
RJR NABISCO, INC. PUERTO RICO DEFINED CONTRIBUTION MASTER TRUST
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TABLE OF CONTENTS
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Page
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Independent Auditors' Report 1
Financial Statements:
Statement of Net Assets as of December 31, 1993 2
Statement of Changes in Net Assets for the Period July 30, 1993
(date of inception) through December 31, 1993 3
Notes to Financial Statements 4-8
Supplemental Schedules:
Schedule of Assets Held for Investment Purposes as of
December 31, 1993 9
Schedule of Reportable Transactions for the Period July 30, 1993
(date of inception) through December 31, 1993 10
INDEPENDENT AUDITORS' REPORT
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Board of Directors,
RJR Nabisco, Inc.:
We have audited the accompanying statement of net assets of the RJR Nabisco,
Inc. Puerto Rico Defined Contribution Master Trust (the "Trust") as of December
31, 1993, and the related statement of changes in net assets for the period
July 30, 1993 (date of inception) through December 31, 1993. These financial
statements are the responsibility of RJR Nabisco, Inc. 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 of the Trust as of December 31, 1993, and the changes
in its net assets for the period July 30, 1993 (date of inception) through
December 31, 1993 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 supplemental schedules of (1)
assets held for investment purposes as of December 31, 1993 and (2) reportable
transactions for the period July 30, 1993 (date of inception) through December
31, 1993 are presented for the purpose of additional analysis and are not a
required part of the basic financial statements but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The Fund Information in the statement of net assets and the statement of
changes in net assets is presented for purposes of additional analysis rather
than to present the statement of net assets and the statement of changes in net
assets of each fund. The supplemental schedules and the Fund Information have
been subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
June 24, 1994
RJR NABISCO, INC. PUERTO RICO DEFINED CONTRIBUTION MASTER TRUST
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STATEMENT OF NET ASSETS
AS OF DECEMBER 31, 1993
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Fund Information
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Growth Real General Interest Government Common
Stock Estate Stock Income Securities Stock
Fund Fund Fund Fund Fund Fund Total
---------- ---------- ---------- ---------- --------- --------- --------
ASSETS
Investment in Wachovia
Trust -
Notes 1, 2 & 3 $ 964,381 $ 63,665 $2,278,073 $3,483,659 $130,360 $371,672 $7,291,810
---------- -------- ---------- ---------- -------- -------- ----------
NET ASSETS $ 964,381 $ 63,665 $2,278.073 $3,483,659 $130,360 $371,672 $7,291,810
========== ======== ========== ========== ======== ======== ==========
See notes to financial statements.
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RJR NABISCO, INC. PUERTO RICO DEFINED CONTRIBUTION MASTER TRUST
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STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD JULY 30, 1993 (DATE OF INCEPTION) THROUGH DECEMBER 31, 1993
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Fund Information
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Growth Real General Interest Government Common
Stock Estate Stock Income Securities Stock
Fund Fund Fund Fund Fund Fund Total
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MASTER TRUST INCOME / (LOSS)
Net appreciation/(depreciation)
in fair value of investments $40,172 $ 459 $ 67,122 $ (1,412) $ --- $ 85,721 $192,062
- Note 3
Interest and dividends, net of
administrative fees 17,427 (604) 44,961 99,285 1,245 50 162,364
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TOTAL MASTER TRUST INCOME/ 57,599 (145) 112,083 97,873 1,245 85,771 354,426
(LOSS) ---------- ---------- --------- ---------- ---------- --------- -----------
CONTRIBUTIONS
Employee 113,345 9,965 169,401 315,758 21,197 82,543 712,209
Employer 32,327 3,366 45,308 86,022 8,791 22,699 198,513
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TOTAL CONTRIBUTIONS 145,672 13,331 214,709 401,780 29,988 105,242 910,722
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DEDUCTIONS
Employee withdrawals - Note 4 86,067 4,139 172,572 318,726 8,058 42,796 632,358
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Net interfund transfers (68,929) (1,788) 71,250 16,270 (250) (16,553) ---
Transfers to the Trust - Note 5 916,106 56,406 2,052,603 3,286,462 107,435 240,008 6,659,020
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Net increase 964,381 63,665 2,278,073 3,483,659 130,360 371,672 7,291,810
NET ASSETS AT BEGINNING OF YEAR --- --- --- --- --- --- ---
---------- ---------- ---------- ----------- ----------- ---------- -----------
NET ASSETS AT END OF YEAR $ 964,381 $ 63,665 $ 2,278,073 $3,483,659 $ 130,360 $ 371,672 $ 7,291,810
========== ========== ========== =========== =========== ========== ===========
See notes to financial statements.
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RJR NABISCO, INC. PUERTO RICO DEFINED CONTRIBUTION MASTER TRUST
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NOTES TO FINANCIAL STATEMENTS
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1. DESCRIPTION OF THE TRUST
Indirect subsidiaries of RJR Nabisco, Inc. ("RJRN") in Puerto Rico sponsor
plans in the RJR Nabisco, Inc. Puerto Rico Defined Contribution Master
Trust (the "P.R. Trust"). Effective July 30, 1993 the RJR Nabisco Defined
Contribution Master Trust (the "Wachovia Trust") was amended to allow the
assets of the Savings and Investment Plan for Employees of R.J. Reynolds
Tobacco Company in Puerto Rico and the Nabisco Brands de Puerto Rico
Capital Accumulation Plan (the "Puerto Rico Plans") to be held solely by
Banco Popular de Puerto Rico (the "Trustee") as trustee of the P.R. Trust
and Wachovia Bank of North Carolina, N.A. ("Wachovia"), as trustee of the
Wachovia Trust, shall no longer serve as co-trustee. The RJR Employee
Benefits Committee (the "Committee") directed the Trustee to appoint
Wachovia (the "Custodian") as custodian for the assets of the Puerto Rico
Plans, to be invested in the same manner as the assets of the other
qualified defined contribution plans held by Wachovia in the Wachovia Trust
subject to the investment direction of the Puerto Rico Plans' participants.
Thus, the Wachovia Trust was amended effective July 30, 1993 to allow the
commingling of the assets for investment purposes of the Wachovia Trust
with assets of any plan established by RJRN or its affiliates, qualified
under Section 401(a) of the Internal Revenue Code or otherwise exempt from
taxation pursuant to ERISA, the assets of which are owned by another
trustee or custodian. Thus, the P.R. Trust holds an investment in the
Wachovia Trust which holds 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
plan owns an interest or an investment in the fair value of net assets held
in one or more of these investment funds. Investment income and net
appreciation (depreciation) in fair value of investments during the year
are allocated among participating plans based on procedures established by
the Custodian.
The Committee, acting under the direction of the Board of Directors (the
"Board") of RJR Nabisco Holdings Corp. ("Holdings"), authorized and
established the Nabisco Brands de Puerto Rico, Inc. Capital Accumulation
Plan effective September 1, 1992. At that time, the Wachovia Trust was
amended to show this plan as a participating plan.
Information about the P.R. Trust agreement is available from the Committee.
2. SIGNIFICANT ACCOUNTING POLICIES
Valuation of Investments - All investments held by the Wachovia Trust are
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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.
Expenses - Expenses relating to the purchase or sale of investments are
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included in the cost or deducted from the proceeds, respectively. Expenses
such as trustee, auditor, and Internal Revenue Service user fees are paid
directly from the P.R. Trust. During 1993, the P.R. Trust was amended to
also allow the payment of general plan recordkeeping expenses directly from
the P.R. Trust. Other expenses continue to be paid by RJRN.
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NOTES TO FINANCIAL STATEMENTS - CONTINUED
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3. INVESTMENTS
Under the provisions of the Wachovia Trust, pooled assets may be invested
in various funds. The investment funds are as follows (See Note 6 for
investment option changes):
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.
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 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.
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. These funds hold assets as follows:
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.
During 1993 the Wachovia Trust's investments (including investments
bought, sold, as well as held during the year) appreciated (depreciated)
in fair value as follows:
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NOTES TO FINANCIAL STATEMENTS - CONTINUED
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3. INVESTMENTS - CONTINUED
YEAR ENDED DECEMBER 31, 1993
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Net Appreciation
(Depreciation) Fair
in Fair Value Value at
During Year End of Year
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GROWTH STOCK FUND
Equity investment funds $ 9,173,988 $ 174,798,915
Wachovia Bank of North Carolina,
N.A. Diversified Short-Term
Investment Fund ---- 1,042,500
Other Short-Term Investments ---- 1,110
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$ 9,173,988 $ 175,842,525
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P.R. Trust's interest therein $ 40,172 $ 964,381
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REAL ESTATE FUND
Real estate investment funds $ 230,547 $ 8,749,673
Wachovia Bank of North Carolina,
N.A. Diversified Short-Term
Investment Fund ---- 52,012
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$ 230,547 $ 8,801,685
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P.R. Trust's interest therein $ 459 $ 63,665
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GENERAL STOCK FUND
Equity investment fund $ 36,352,032 $ 357,698,005
Wachovia Bank of North Carolina,
N.A. Diversified Short-Term
Investment Fund ---- 1,266,484
Other Short-Term Investments ---- 1,380
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$ 36,352,032 $ 358,965,869
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P.R. Trust's interest therein $ 67,122 $ 2,278,073
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INTEREST INCOME FUND
Guaranteed insurance contracts $ ---- $ 446,272,955
Treasury Obligations 541,444 8,005,040
Federal Agency CMOs (97,635) ----
Corporate Mortgage Pools 669,823 21,046
Bond Investment Funds (231,370) 150,344,174
Wells Fargo Bank Money
Market Fund ---- 84
Fisher Francis Trees & Watts
Short-Term Investment Fund ---- ----
Wachovia Bank of North Carolina,
N.A. Diversified Short-Term
Investment Fund ---- 28,285,509
Other Short-Term Investments ---- 14,149
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$ 882,262 $ 632,942,957
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P.R. Trust's interest therein $ (1,412) $ 3,483,659
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NOTES TO FINANCIAL STATEMENTS - CONTINUED
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3. INVESTMENTS - CONTINUED
YEAR ENDED DECEMBER 31, 1993
--------------------------------
Net Appreciation
(Depreciation) Fair
in Fair Value Value at
During Year End of Year
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GOVERNMENT SECURITIES FUND
Equity investment funds $ ---- $ 22,366
Wachovia Bank of North Carolina,
N.A. Diversified Short-Term
Investment Fund ---- 10,100,939
Other Short-Term Investments ---- 2,389
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$ $ 10,125,694
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P.R. Trust's interest therein $ ---- $ 130,360
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COMMON STOCK FUND
RJR Nabisco Holdings Corp.
Common Stock $ (17,335,826) $ 82,893,245
Wachovia Bank of North Carolina,
N.A. Diversified Short-Term
Investment Fund ---- 1,478,403
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$ (17,335,826) $ 84,371,648
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P.R. Trust's interest therein $ 85,721 $ 371,672
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Individual investments that represent 5% or more of the P.R. Trust's fair
value of net assets as of December 31, 1993 are as follows:
DECEMBER 31, 1993
IDENTITY OF ISSUE, -------------------------------
BORROWER, LESSOR OR DESCRIPTION OF
SIMILAR PARTY INVESTMENT FAIR VALUE
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Interest in Wachovia Trust Interest in
Wachovia Trust $ 7,291,810
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NOTES TO FINANCIAL STATEMENTS - CONTINUED
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4. EMPLOYEE WITHDRAWALS
At December 31, 1993, employee withdrawal requests of $347 were not accrued
in accordance with the AICPA Audit and Accounting Guide "Audits of Employee
Benefit Plans".
5. NET TRANSFERS TO THE TRUST
During 1993 net transfers of assets of $6,551,586 were made to the P.R.
Trust due to its establishment (see Note 1) as well as employees
transferring between affiliated plans.
6. 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.
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RJR NABISCO, INC. PUERTO RICO DEFINED CONTRIBUTION MASTER TRUST
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ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1993
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DESCRIPTION OF INVESTMENT
IDENTITY OF ISSUE, INCLUDING MATURITY DATE
BORROWER, LESSOR RATE OF INTEREST FAIR
OR SIMILAR PARTY PAR OR MATURITY VALUE COST VALUE
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Given that the P.R. Trust holds an investment in the Wachovia Trust
which holds pooled assets and related liabilities within various funds
established on behalf of participating defined contribution plans (see Note 1),
all assets held by the Wachovia Trust are reported on its own schedule of assets
held for investment purposes.
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RJR NABISCO, INC. PUERTO RICO DEFINED CONTRIBUTION MASTER TRUST
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ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE PERIOD JULY 30, 1993 (DATE OF INCEPTION) THROUGH DECEMBER 31, 1993
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SELLING
PRICE OR
NUMBER OF NUMBER OF PURCHASE MATURITY NET
PURCHASES SALES PRICE VALUE GAIN/(LOSS)
--------- --------- -------- ---------- -----------
None to report. Given that the P.R. Trust holds an investment in the Wachovia
Trust which holds pooled assets and related liabilities within various funds
established on behalf of participating defined contribution plans (see Note 1),
all reportable transactions of the Wachovia Trust are reported on its own
schedule of reportable transactions.
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