-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KcabysETnJJEYb/gJhpjkBahMUaLB5fp7E+KNVAtmcsYEP+Xsc9e+Fv0J9D5ggWs PM9fHvJqEY5JHKzu7vbG7w== 0000950144-01-503622.txt : 20010618 0000950144-01-503622.hdr.sgml : 20010618 ACCESSION NUMBER: 0000950144-01-503622 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20001230 FILED AS OF DATE: 20010615 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RJ REYNOLDS TOBACCO HOLDINGS INC CENTRAL INDEX KEY: 0000083612 STANDARD INDUSTRIAL CLASSIFICATION: CIGARETTES [2111] IRS NUMBER: 560950247 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-06388 FILM NUMBER: 1661413 BUSINESS ADDRESS: STREET 1: 401 NORTH MAIN STREET CITY: WINSTON-SALEM STATE: NC ZIP: 27102 BUSINESS PHONE: 336-741-5500 MAIL ADDRESS: STREET 1: 401 NORTH MAIN STREET CITY: WINSTON SALEM STATE: NC ZIP: 27102 FORMER COMPANY: FORMER CONFORMED NAME: RJR NABISCO INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: REYNOLDS R J INDUSTRIES INC DATE OF NAME CHANGE: 19860501 11-K 1 g70024e11-k.txt RJ REYNOLDS TOBACCO HOLDINGS INC 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------- FORM 11-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 30, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________ TO ________ COMMISSION FILE NUMBER: 1-6388 ----------- A. Full title of the plans and the address of the plans, if different from that of the issuer named below: R. J. REYNOLDS CAPITAL INVESTMENT PLAN SAVINGS AND INVESTMENT PLAN FOR EMPLOYEES OF R. J. REYNOLDS TOBACCO COMPANY IN PUERTO RICO B. Name of issuer of the securities held pursuant to the plans and the address of its principal executive office: R.J. REYNOLDS TOBACCO HOLDINGS, INC. 401 NORTH MAIN STREET WINSTON-SALEM, NC 27102-2866 ================================================================================ 2 REQUIRED INFORMATION 1. Not applicable. 2. Not applicable. 3. Not applicable. 4. The R. J. Reynolds Capital Investment Plan, referred to as the Capital Investment Plan, and the Savings and Investment Plan for Employees of R. J. Reynolds Tobacco Company in Puerto Rico, referred to as the Savings and Investment Plan, are subject to the requirements of the Employee Retirement Income Security Act of 1974, referred to as ERISA. A copy of the most recent audited financial statements and supplemental schedule, as required, of the Capital Investment Plan and the Savings and Investment Plan, prepared in accordance with the financial reporting requirements of ERISA, is attached as Exhibit 99.1 and Exhibit 99.2, respectively, to this report. Exhibits: 23.1 Consent of Deloitte & Touche LLP. 99.1 Audited financial statements of the Capital Investment Plan for the years ended December 30, 2000 and 1999. 99.2 Audited financial statements and supplemental schedule of the Savings and Investment Plan for the years ended December 30, 2000 and 1999. 3 SIGNATURE The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plans) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. R. J. REYNOLDS CAPITAL INVESTMENT PLAN Date: June 15, 2001 /s/ McDara P. Folan, III ------------------------------------------ McDara P. Folan, III Secretary, RJR Employee Benefits Committee SAVINGS AND INVESTMENT PLAN FOR EMPLOYEES OF R.J. REYNOLDS TOBACCO COMPANY IN PUERTO RICO Date: June 15, 2001 /s/ McDara P. Folan, III ------------------------------------------ McDara P. Folan, III Secretary, RJR Employee Benefits Committee 4 EXHIBIT INDEX Exhibits 23.1 Consent of Deloitte & Touche LLP. 99.1 Audited financial statements of the Capital Investment Plan for the years ended December 30, 2000 and 1999. 99.2 Audited financial statements and supplemental schedule of the Savings and Investment Plan for the years ended December 30, 2000 and 1999. EX-23.1 2 g70024ex23-1.txt CONSENT DELOITTE & TOUCHE 1 EXHIBIT 23.1 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statement Nos. 333-80595 and 333-59690 of R.J. Reynolds Tobacco Holdings, Inc. on Form S-8 of our reports dated May 25, 2001, appearing in this Annual Report on Form 11-K, of the R. J. Reynolds Capital Investment Plan and the Savings and Investment Plan for Employees of R. J. Reynolds Tobacco Company in Puerto Rico for the year ended December 30, 2000. /s/ Deloitte & Touche LLP Charlotte, North Carolina June 15, 2001 EX-99.1 3 g70024ex99-1.txt AUDITED FINANCIAL STATEMENTS/CAPITAL INVESTMENT 1 EXHIBIT 99.1 R. J. REYNOLDS CAPITAL INVESTMENT PLAN INDEPENDENT AUDITORS' REPORT FINANCIAL STATEMENTS Years Ended December 30, 2000 and 1999 2 R. J. REYNOLDS CAPITAL INVESTMENT PLAN TABLE OF CONTENTS
PAGE INDEPENDENT AUDITORS' REPORT 1 FINANCIAL STATEMENTS: Statements of Net Assets Available for Benefits as of December 30, 2000 and 1999 2 Statements of Changes in Net Assets Available for Benefits for the Years Ended December 30, 2000 and 1999 3 Notes to Financial Statements 4-10
NOTE: The accompanying financial statements have been prepared for the purpose of filing with the Department of Labor Form 5500. Supplemental schedules as required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 have been omitted because of the absence of the conditions under which they are required. 3 INDEPENDENT AUDITORS' REPORT RJR Employee Benefits Committee: We have audited the accompanying statements of net assets available for benefits of the R. J. Reynolds Capital Investment Plan, referred to as the Plan, as of December 30, 2000 and 1999, 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 auditing standards generally accepted in the United States of America. 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, 2000 and 1999, and the changes in net assets available for benefits for the years then ended in conformity with accounting principles generally accepted in the United States of America. /s/ Deloitte & Touche LLP May 25, 2001 1 4 R. J. REYNOLDS CAPITAL INVESTMENT PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS DECEMBER 30, 2000 AND 1999
2000 1999 ASSETS: Investments, at fair market value - plan interest in Master Trust (notes 1, 2 and 3) $1,120,387,521 $1,229,937,455 -------------- -------------- Receivables: Investment income 652,452 9,078,445 Due from broker for sale of investments 278,754 5,219,010 -------------- -------------- Total receivables 931,206 14,297,455 -------------- -------------- Total assets 1,121,318,727 1,244,234,910 -------------- -------------- LIABILITIES: Due to broker for purchase of investments -- 730,589 Accrued administrative expenses 412,656 -- Overdraft 224,982 -- -------------- -------------- Total liabilities 637,638 730,589 -------------- -------------- NET ASSETS AVAILABLE FOR BENEFITS $1,120,681,089 $1,243,504,321 ============== ==============
See notes to financial statements. 2 5 R. J. REYNOLDS CAPITAL INVESTMENT PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS YEARS ENDED DECEMBER 30, 2000 AND 1999
2000 1999 ADDITIONS: Investment income (loss) - plan interest in Master Trust (notes 1, 2, 3 and 4) $ (11,896,525) $ 187,480,495 --------------- --------------- Contributions: Employer's 11,700,841 40,050,474 Participants' 35,722,242 60,644,807 --------------- --------------- Total contributions 47,423,083 100,695,281 --------------- --------------- Allocation of shares of preferred stock of Nabisco Group Holdings Corp., at fair value (notes 1 and 4) -- 34,275,056 --------------- --------------- Total additions 35,526,558 322,450,832 --------------- --------------- DEDUCTIONS: Benefits paid to participants 154,253,884 178,413,549 Administrative expenses 1,937,579 1,758,432 Allocation of shares of preferred stock of Nabisco Group Holdings Corp., at fair value (notes 1 and 4) -- 34,275,056 Interest expense -- 682,748 --------------- --------------- Total deductions 156,191,463 215,129,785 --------------- --------------- NET INCREASE (DECREASE) PRIOR TO TRANSFERS TO OTHER PLANS (120,664,905) 107,321,047 NET TRANSFERS TO OTHER PLANS (note 1) (2,158,327) (895,918,298) --------------- --------------- NET DECREASE (122,823,232) (788,597,251) NET ASSETS AVAILABLE FOR BENEFITS: Beginning of year 1,243,504,321 2,032,101,572 --------------- --------------- End of year $ 1,120,681,089 $ 1,243,504,321 =============== ===============
See notes to financial statements. 3 6 R. J. REYNOLDS CAPITAL INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 30, 2000 AND 1999 1. DESCRIPTION OF PLAN The following description of the R. J. Reynolds Capital Investment Plan, referred to as the Plan, provides only general information. Participants should refer to the Plan document for a more complete description of the Plan's provisions. GENERAL - The Plan is a voluntary and automatic defined contribution plan for eligible employees of R.J. Reynolds Tobacco Holdings, Inc., referred to as RJR or the Company, and participating subsidiaries. All eligible employees become participants unless they elect not to participate. The RJR Employee Benefits Committee controls and manages the operation and administration of the Plan. Wachovia Bank, N.A., referred to as Wachovia, served as the trustee of the Plan through April 30, 2000. Effective May 1, 2000, the trustee of the Plan was changed to Citibank, N.A., referred to as Citibank. During 2000 and 1999, PricewaterhouseCoopers Unifi Network, formerly PricewaterhouseCoopers Kwasha HR Solutions, served as the recordkeeper for the Plan. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, referred to as ERISA. In April 2001, the Company registered with the Securities and Exchange Commission an additional five million shares of RJR common stock for issuance pursuant to the Plan and another plan sponsored by a subsidiary of the Company. In August 2000, RJR completed a $30.4 million equity financing with investors that resulted in RJR decreasing its ownership to approximately 43% in Targacept, Inc., a privately held biotechnology company. As a result of this equity financing, effective December 1, 2000, net assets of $2,158,327 were transferred from the Plan to the Targacept Retirement Savings Plan, a new plan sponsored by Targacept, Inc. Prior to June 14, 1999, the Plan was named the RJR Nabisco Capital Investment Plan and was sponsored by RJR Nabisco, Inc. During 1999, RJR Nabisco Holdings Corp., referred to as Holdings, was renamed Nabisco Group Holdings Corp., referred to as NGH. On May 18, 1999, RJR, the owner of 100% of R. J. Reynolds Tobacco Company, referred to as RJR Tobacco, transferred its approximately 80.5% interest in Nabisco Holdings Corp., referred to as Nabisco, to NGH through a merger transaction. On June 14, 1999, NGH distributed all of the outstanding shares of RJR common stock to NGH stockholders of record as of May 27, 1999. Due to the spin-off transaction, the Plan became sponsored by RJR, and its name was changed to the R. J. Reynolds Capital Investment Plan. In addition, the Nabisco Inc. Capital Investment Plan was adopted for Nabisco participants, which became effective June 14, 1999, and concurrently, net assets of $891,619,532 were transferred from the Plan to the Nabisco Inc. Capital Investment Plan. 4 7 With the spin-off transaction, the Company registered with the Securities and Exchange Commission four million shares of RJR common stock for issuance pursuant to the Plan and another plan sponsored by a subsidiary of the Company. Each share of Nabisco common stock in the RJR Nabisco Common Stock Fund, which was offered to participants of the Plan as an investment option, was converted to one share of NGH common stock. Affected participants then received one share of RJR common stock for every three shares of NGH common stock. During 1999, the Plan was amended to accommodate the change in corporate structure. The RJR Common Stock Fund was established, which invests in common stock of RJR. Additionally, the Nabisco Common Stock Fund and the Nabisco Group Holdings Stock Fund, formerly named the RJR Nabisco Stock Fund, were "frozen." Participants could no longer make contributions of any type to these funds, but could transfer amounts in these funds to the other funds offered under the Plan. In accordance with action taken by the RJR Employee Benefits Committee and communicated to Plan participants, the frozen Nabisco and NGH stock funds were eliminated effective January 31, 2000. Assets still held in the frozen funds on that date were transferred to the Interest Income Fund in the Plan. An Asset Purchase Agreement, referred to as the Agreement and dated July 17, 1998, between ConAgra, Inc. and Nabisco, Inc., was entered into to provide, in part, for the sale of the tablespreads business. Based upon the terms of the Agreement, transferred employees who were participants of the Plan became fully vested and active participation in the Plan ceased 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 1999, net assets of $4,298,766 were transferred from the Plan to ConAgra, Inc. in accordance with the terms of the Agreement. INTEREST IN MASTER TRUST - The Plan's investments are in the R. J. Reynolds Defined Contribution Master Trust, which was named the Defined Contribution Master Trust prior to the spin-off transaction, referred to as the Master Trust, which was established for the investment of assets of the Plan and several other Company-sponsored plans. Each participating plan has an undivided interest in the Master Trust. The assets of the Master Trust were held by Wachovia during 1999 and prior to May 1, 2000. The assets of the Master Trust have been held by Citibank since May 1, 2000. Investment income and administrative expenses relating to the Master Trust are allocated to the individual plans based upon average monthly balances invested by each plan. CONTRIBUTIONS - Each year, participants may make basic contributions of up to 6% of pre-tax annual compensation, as defined in the Plan. In addition, participants may make supplemental contributions on a pre-tax basis of up to 16% of compensation, including the basic contribution, as well as on an after-tax basis of up to 16% of compensation. Contributions, whether made on a pre-tax or after-tax basis, may not, in the aggregate, exceed 16% of compensation. The Company contributes an amount equal to 50% of basic contributions. Contributions are subject to certain Internal Revenue Code limitations. On December 22, 1999, the Plan was amended to permit the Company to make a minimum employer contribution to the Plan each year. The amount of the minimum Company contribution for the 2000 Plan year is $25,000,000. EMPLOYEE STOCK OWNERSHIP PLAN - On April 10, 1991, the Employee Stock Ownership Plan, referred to as the ESOP, borrowed $250 million, referred to as the ESOP Loan, from Holdings to purchase 15,625,000 shares of RJR Nabisco Holdings Corp. Convertible Preferred Stock, referred to as the ESOP Preferred Stock, at the stated value of $16.00 per share. The market value of the ESOP Preferred Stock was the greater of the stated value of the ESOP Preferred Stock or the market value of Holdings' common stock, referred to as the ESOP market value. The ESOP Loan had a weighted average interest rate of 8.2% effective January 5, 1993 and matured on July 2, 2016. The ESOP Preferred Stock was convertible into 3,125,000 shares of Holdings' common stock, subject to adjustment in certain events, 5 8 and bore cumulative dividends at a rate of 7.8125% of stated value per annum at least until April 10, 1999 and was payable semi-annually in arrears commencing January 2, 1992, when, and if, declared by the Board of Directors of Holdings. The ESOP Preferred Stock represented an unallocated investment of the Plan which was allocated to individual participants' accounts as the ESOP Loan was repaid. The unallocated ESOP Preferred Stock was collateral for the ESOP Loan. The ESOP Preferred Stock was 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. Effective June 10, 1999, the Plan was amended to provide that the ESOP portion of the Plan ceased to exist. In conjunction with this cessation, all shares of the ESOP Preferred Stock held under the ESOP were redeemed by Holdings. Participants received $16.25 per share in cash for the shares of ESOP Preferred Stock allocated to their accounts; these funds were then invested in the Interest Income Fund offered as an investment option of the Plan. The remaining funds were used to repay the ESOP Loan in full. PARTICIPANT ACCOUNTS - Each participant's account is credited with the participant's contributions and allocations of the Company's contributions and Plan earnings, and debited with the participant's withdrawals and an allocation of administrative expenses. Allocations are based on participant earnings or account balances, as defined. Forfeited balances of terminated participants' nonvested accounts are used to reduce future Company contributions. The benefit to which a participant is entitled is the benefit that can be provided from the participant's vested account. VESTING - Participants are immediately vested in their contributions plus actual earnings thereon. Vesting in Company contributions occurs upon the earlier of completion of 24 months of Plan participation, 60 months of service, as defined, with the Company or affiliated companies or upon the occurrence of certain events as defined in the Plan document. INVESTMENT OPTIONS - Upon enrollment in the Plan, a participant may direct his or her employee contributions in 1% increments in any of eight investment fund options before June 14, 1999, and seven investment fund options after June 14, 1999. As of June 16, 2000, three additional investment fund options were made available. As of December 8, 2000, a brokerage account option was made available as an additional investment option to participants. The brokerage account option is managed by Charles Schwab & Co. Inc. Participants may change or transfer their investments options at any time via telephone. LOANS TO PARTICIPANTS - Participants may borrow from their fund accounts a minimum of $1,000 up to a maximum of the lesser of $50,000, or 50% of their vested account balance, reduced by the highest outstanding loan balance during the preceding 12 months. Loan transactions are treated as a transfer between the investment fund and the loan fund. Loan terms shall not be for more than 5 years or up to 10 years for the purchase of a primary residence. The loans are secured by the balance in the participant's account and bear interest at a rate commensurate with local prevailing rates as determined quarterly by the Plan administrator. Principal and interest are paid ratably through payroll deductions. PAYMENT OF BENEFITS - On termination of service, a participant will receive a lump-sum amount equal to the value of the participant's vested interest in his or her account, or for certain participants, annual installments over a period not to exceed the lesser of 15 years or the participant's life expectancy, if certain requirements set forth in the Plan are met. 6 9 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, general plan recordkeeping and Internal Revenue Service user fees may be paid directly from the Master Trust. Other expenses continue to be paid by the Company. 2. SUMMARY OF ACCOUNTING POLICIES BASIS OF ACCOUNTING - The accompanying financial statements of the Plan have been prepared in accordance with accounting principles generally accepted in the United States of America. USE OF ESTIMATES - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates. The Master Trust utilizes various investment instruments. Investment securities, in general, are exposed to various risks, such as interest rate, credit and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the statements of net assets available for benefits. INVESTMENT VALUATION AND INCOME RECOGNITION - The Plan's interest in the Master Trust, except for the guaranteed investment contracts, is valued at estimated fair value. If available, quoted market prices are used to value the underlying investments. In instances wherein quoted market prices are not available, the fair value of investments is estimated primarily by independent investment brokerage firms and insurance companies. The Plan has entered into various benefit-responsive investment contracts with insurance companies which maintain the contributions in a general account. The accounts are credited with earnings on the underlying investments and charged for participant withdrawals and administrative expenses. The contracts are included in the financial statements at contract value, which approximates fair value, as reported to the Plan by the insurance companies. Contract value represents contributions made under the contract, plus earnings, less participant withdrawals and administrative expenses. Participants may ordinarily direct the withdrawal or transfer of all or a portion of their investment at contract value. There are no reserves against contract value for credit risk of the contract issuer or otherwise. The contract rates ranged from 5.42% to 8.10% and 4.92% to 8.10% at December 30, 2000 and 1999, respectively. The crediting interest rate is based on a formula agreed upon with the issuer, but may not be less than certain percentages. Within the Master Trust, purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. PAYMENT OF BENEFITS - Benefits are recorded when paid. 7 10 3. MASTER TRUST Investments and investment income for the Master Trust were:
DECEMBER 30, ------------------------------------ 2000 1999 Investments: At fair value: Wachovia Bank, N.A. Diversified Short-Term Investment Fund $ -- $ 58,527,157 C. E. B. T. Liquid Reserve Fund 8,967,932 -- Nabisco Group Holdings Corp. Common Stock -- 2,482,527 Nabisco Holdings Corp. Class A Common Stock -- 13,093,331 R.J. Reynolds Tobacco Holdings, Inc. Common Stock 40,432,275 19,676,293 Mutual funds 652,053,521 689,979,659 Corporate bonds -- 98,139,938 Loans to participants 17,481,901 17,054,117 -------------- -------------- 718,935,629 898,953,022 Guaranteed investment contracts, at contract value 401,451,892 330,984,433 -------------- -------------- Total investments $1,120,387,521 $1,229,937,455 ============== ==============
YEAR ENDED DECEMBER 30, ------------------------------------ 2000 1999 Investment income: Net appreciation (depreciation) in fair value of investments: Nabisco Group Holdings Corp. Common Stock $ (2,831,076) $ 40,055,886 Nabisco Holdings Corp. Class A Common Stock (137,460) (445,950) R.J. Reynolds Tobacco Holdings, Inc. Common Stock 30,660,988 (59,151,447) Nabisco Group Holdings Corp. Convertible Preferred Stock -- 3,102,192 Mutual funds (93,334,263) 149,176,730 Corporate bonds -- 6,246,153 -------------- -------------- (65,641,811) 138,983,564 Interest and dividends 53,746,064 54,009,079 -------------- -------------- Total investment income (loss) $ (11,895,747) $ 192,992,643 ============== ==============
The Plan's interest in the net assets of the Master Trust was 100% at December 30, 2000 and 1999. 8 11 4. EMPLOYEE STOCK OWNERSHIP PLAN Information about the net assets and the significant components of the changes in net assets relating to the nonparticipant-directed ESOP investments of the Plan were:
YEAR ENDED DECEMBER 30, 1999 -------------------------------------------------------- ALLOCATED UNALLOCATED TOTAL Changes in net assets: Additions: Investment income $ 9,630,718 $ -- $ 9,630,718 Participants' contributions -- 32,953,961 32,953,961 Allocation of shares of preferred stock of Nabisco Group Holdings Corp. 34,275,056 -- 34,275,056 ------------- ------------ ------------- Total additions 43,905,774 32,953,961 76,859,735 ------------- ------------ ------------- Deductions: Benefits paid to participants 5,846,396 -- 5,846,396 Allocation of shares of preferred stock of Nabisco Group Holdings Corp. -- 34,275,056 34,275,056 Redemption of shares of preferred stock of Nabisco Group Holdings Corp. 201,707,448 -- 201,707,448 Interest expense -- 682,748 682,748 ------------- ------------ ------------- Total deductions 207,553,844 34,957,804 242,511,648 ------------- ------------ ------------- Interfund transfers, net (13,295,474) 13,295,474 -- ------------- ------------ ------------- Net increase (decrease) prior to transfers to other plans (176,943,544) 11,291,631 (165,651,913) Net transfer to other plans (659,654) -- (659,654) ------------- ------------ ------------- Net increase (decrease) (177,603,198) 11,291,631 (166,311,567) Net assets (deficit) available for benefits: Beginning of year 177,603,198 (11,291,631) 166,311,567 ------------- ------------ ------------- End of year $ -- $ -- $ -- ============= ============ =============
5. RELATED PARTY TRANSACTIONS Certain Plan investments are shares of funds managed by Citibank, the trustee of the Plan effective May 1, 2000, and Wachovia, the trustee of the Plan prior to May 1, 2000; therefore, these transactions qualify as party-in-interest. 6. PLAN TERMINATION 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 the Plan's termination, participants would become 100% vested in their employer contributions. 9 12 7. INCOME TAX STATUS The Plan obtained its latest determination letter dated February 20, 1996, in which the Internal Revenue Service stated that the Plan, as then designed, was in compliance with the applicable requirements of the Internal Revenue Code. The Plan has been amended and restated since receiving this determination letter. The Company believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code, and the Plan and related trust continue to be tax-exempt. Therefore, no provision for income taxes has been included in the Plan's financial statements. ********** 10 EX-99.2 4 g70024ex99-2.txt AUDITED FINANCIAL STATEMENTS/SAVINGS & INVESTMENT 1 EXHIBIT 99.2 SAVINGS AND INVESTMENT PLAN FOR EMPLOYEES OF R. J. REYNOLDS TOBACCO COMPANY IN PUERTO RICO INDEPENDENT AUDITORS' REPORT FINANCIAL STATEMENTS Years Ended December 30, 2000 and 1999 Supplemental Schedule Year Ended December 30, 2000 2 SAVINGS AND INVESTMENT PLAN FOR EMPLOYEES OF R. J. REYNOLDS TOBACCO COMPANY IN PUERTO RICO TABLE OF CONTENTS
PAGE INDEPENDENT AUDITORS' REPORT 1 FINANCIAL STATEMENTS: Statements of Net Assets Available for Benefits as of December 30, 2000 and 1999 2 Statements of Changes in Net Assets Available for Benefits for the Years Ended December 30, 2000 and 1999 3 Notes to Financial Statements 4-8 SUPPLEMENTAL SCHEDULE - Form 5500, Schedule H, Part IV, Line 4i - Schedule of Assets Held for Investment Purposes at End of Year as of December 30, 2000 9
NOTE: The accompanying financial statements have been prepared for the purpose of filing with the Department of Labor Form 5500. Supplemental schedules required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, other than the schedule listed above, have been omitted because of the absence of the conditions under which they are required. 3 INDEPENDENT AUDITORS' REPORT RJR Employee Benefits Committee: We have audited the accompanying statements of net assets available for benefits of the Savings and Investment Plan for Employees of R. J. Reynolds Tobacco Company in Puerto Rico, referred to as the Plan, as of December 30, 2000 and 1999, 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 auditing standards generally accepted in the United States of America. 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, 2000 and 1999, and the changes in net assets available for benefits for the years then ended in conformity with accounting principles generally accepted in the United States of America. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule listed in the Table of Contents is presented for the purpose of additional analysis and is not a required part of the basic financial statements, but is 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. This schedule is the responsibility of the Plan's management. Such schedule has been subjected to the auditing procedures applied in our audit of the basic 2000 financial statements and, in our opinion, is fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole. /s/ Deloitte & Touche LLP May 25, 2001 1 4 SAVINGS AND INVESTMENT PLAN FOR EMPLOYEES OF R. J. REYNOLDS TOBACCO COMPANY IN PUERTO RICO STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS DECEMBER 30, 2000 AND 1999
2000 1999 ASSETS: Investments, at fair value (notes 1, 2, 3 and 4): Vanguard LifeStrategy Conservative Growth Fund $ 260,310 $ -- Vanguard LifeStrategy Growth Fund 646,499 -- Vanguard LifeStrategy Moderate Growth Fund 606,473 -- Vanguard Total International Stock Index Fund 47,067 -- Vanguard Total Stock Market Index Fund 3,256,580 -- Vanguard Retirement Savings Trust 1,942,900 -- RJR Common Stock Fund 57,992 -- Participant loans 177,870 -- Plan interest in Master Trust -- 7,347,160 ----------- ----------- Total investments 6,995,691 7,347,160 Receivable - investment income 9,752 35,289 ----------- ----------- NET ASSETS AVAILABLE FOR BENEFITS $ 7,005,443 $ 7,382,449 =========== ===========
See notes to financial statements. 2 5 SAVINGS AND INVESTMENT PLAN FOR EMPLOYEES OF R. J. REYNOLDS TOBACCO COMPANY IN PUERTO RICO STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS YEARS ENDED DECEMBER 30, 2000 AND 1999
2000 1999 ADDITIONS: Investment income (loss) (notes 1, 2, 3 and 4): Net depreciation in fair value of investments $ (422,805) $ -- Interest and dividends 230,250 -- Plan interest in Master Trust -- 1,391,354 ------------ ------------ Total investment income (loss) (192,555) 1,391,354 ------------ ------------ Contributions: Employer's 115,954 207,276 Participants' 379,159 734,301 ------------ ------------ Total contributions 495,113 941,577 ------------ ------------ Total additions 302,558 2,332,931 ------------ ------------ DEDUCTIONS: Benefits paid to participants 679,564 1,640,502 Administrative expenses -- 111 ------------ ------------ Total deductions 679,564 1,640,613 ------------ ------------ NET INCREASE (DECREASE) PRIOR TO TRANSFER TO OTHER PLAN (377,006) 692,318 TRANSFER TO OTHER PLAN (note 1) -- 7,130,130 ------------ ------------ NET DECREASE (377,006) (6,437,812) NET ASSETS AVAILABLE FOR BENEFITS: Beginning of year 7,382,449 13,820,261 ------------ ------------ End of year $ 7,005,443 $ 7,382,449 ============ ============
See notes to financial statements. 3 6 SAVINGS AND INVESTMENT PLAN FOR EMPLOYEES OF R. J. REYNOLDS TOBACCO COMPANY IN PUERTO RICO NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 30, 2000 AND 1999 1. DESCRIPTION OF PLAN The following description of the Savings and Investment Plan for Employees of R. J. Reynolds Tobacco Company in Puerto Rico, referred to as the Plan, provides only general information. Participants should refer to the Plan document for a more complete description of the Plan's provisions. GENERAL - The Plan is a voluntary defined contribution plan covering all regular, full-time employees of R. J. Reynolds Tobacco Co., a Delaware corporation, referred to as the Company, in Puerto Rico. The RJR Employee Benefits Committee, referred to as the Committee, controls and manages the operation and administration of the Plan. Banco Popular de Puerto Rico serves as the trustee of the Plan, and Vanguard Fiduciary Trust Company, referred to as Vanguard, serves as the recordkeeper for the Plan. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, referred to as ERISA. In April 2001, R.J. Reynolds Tobacco Holdings, Inc., referred to as RJR, registered with the Securities and Exchange Commission an additional five million shares of RJR common stock for issuance pursuant to the Plan and another plan sponsored by RJR. During 1999, RJR Nabisco Holdings Corp. was renamed Nabisco Group Holdings Corp., referred to as NGH. On May 18, 1999, RJR, the owner of 100% of R. J. Reynolds Tobacco Company, the owner of 100% of the Company, transferred its approximately 80.5% interest in Nabisco Holdings Corp., referred to as Nabisco, to NGH through a merger transaction. On June 14, 1999, NGH distributed all of the outstanding shares of RJR common stock to NGH stockholders of record as of May 27, 1999. With the spin-off transaction, RJR registered with the Securities and Exchange Commission four million shares of RJR common stock for issuance pursuant to the Plan and another plan sponsored by RJR. Each share of Nabisco common stock in the Nabisco Common Stock Fund, which was offered to participants of the Plan as an investment option, was converted to one share of NGH common stock. Affected participants then received one share of RJR common stock for every three shares of NGH common stock. On March 9, 1999, RJR and R. J. Reynolds Tobacco Company entered into a definitive agreement to sell the international tobacco business to Japan Tobacco Inc., referred to as JTI. On May 11, 1999, net assets for those employees in the Plan affected by the sale of the Yabucoa plant to JTI in the amount of $7,130,130 were transferred to a plan sponsored by JTI. During 1999, the Plan was amended to accommodate the change in corporate structure. The RJR Common Stock Fund was established, which invests in common stock of RJR. Additionally, the Nabisco Common Stock Fund and the Nabisco Group Holdings Stock Fund, formerly named the RJR Nabisco Stock Fund, were "frozen." Participants could no longer make contributions of any type to 4 7 these funds. Participants could, however, transfer amounts in these funds to the other funds offered under the Plan at any time. In accordance with action taken by the Committee and communicated to Plan participants, the frozen Nabisco and NGH stock funds were eliminated effective May 1, 2000. Assets still held in the frozen funds on that date were transferred to the Vanguard Retirement Savings Trust in the Plan. INTEREST IN MASTER TRUST - During 1999, the Plan's investments were held in the R. J. Reynolds Puerto Rico Defined Contribution Master Trust, which was named the RJR Nabisco Puerto Rico Defined Contribution Master Trust prior to the spin-off transaction, referred to as the Master Trust, which was established for the investment of the assets of the Plan and several other Company-sponsored plans. In conjunction with the spin-off transaction, the assets of all other Company-sponsored plans were transferred out of the Master Trust. At December 30, 1999, the Plan's interest in the net assets of the Master Trust was 100%. Since only the assets of the Plan remained in the Master Trust, the Master Trust became inactive effective December 30, 1999. Each participating plan had an undivided interest in the Master Trust. The assets of the Master Trust were held by Banco Popular de Puerto Rico. Investment income and administrative expenses relating to the Master Trust were allocated to the individual plans based upon average monthly balances invested by each plan. CONTRIBUTIONS - Each year, participants may make basic contributions of up to 6% of compensation, as defined in the Plan, on a pre-tax or after-tax basis. If participants have authorized the maximum basic contribution of 6% of compensation on a pre-tax basis, participants may make additional supplemental contributions on a pre-tax basis of between 1% and 4% of compensation, as well as additional supplemental contributions on an after-tax basis. Contributions, whether made on a pre-tax or after-tax basis, may not, in the aggregate, exceed 16% of compensation. The Company contributes an amount equal to 50% of the basic contributions that a participant contributes to the Plan. Contributions are subject to certain limitations. PARTICIPANT ACCOUNTS - Each participant's account is credited with the participant's contributions and allocations of the Company's contributions and Plan earnings, and debited with the participant's withdrawals and an allocation of administrative expenses. Allocations are based on participant earnings or account balances, as defined. Forfeited balances of terminated participants' non-vested accounts are used to reduce future Company contributions. The benefit to which a participant is entitled is the benefit that can be provided from the participant's vested account. VESTING - Participants are immediately vested in their contributions plus actual earnings thereon. Vesting in Company contributions occurs upon the earlier of completion of 24 months of Plan participation, 60 months of service, as defined, with the Company or affiliated companies or upon the occurrence of certain events as defined in the Plan document. INVESTMENT OPTIONS - Upon enrollment in the Plan, a participant may direct contributions in 1% increments in any of eight investment fund options before June 14, 1999, and seven investment fund options after June 14, 1999. Participants may change or transfer their investments options at any time via telephone. LOANS TO PARTICIPANTS - Participants may borrow from their fund accounts a minimum of $1,000 up to a maximum of the lesser of $50,000, or 50% of their vested account balance, reduced by the highest outstanding loan balance during the preceding 12 months. Loan transactions are treated as a transfer between the investment fund and the loan fund. Loan terms shall not be for more than 5 years or up to 10 years for the purchase of a primary residence. The loans are secured by the balance in the participant's account and bear interest at a rate commensurate with local prevailing rates as determined quarterly by the Plan administrator. Principal and interest is paid ratably through payroll deductions. 5 8 PAYMENT OF BENEFITS - On termination of service, a participant will receive a lump-sum amount equal to the value of the participant's vested interest in his or her account, or for certain participants, annual installments over a period not to exceed the lesser of 15 years or the participant's life expectancy, if certain requirements set forth in the Plan are met. 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, general plan recordkeeping and Internal Revenue Service user fees may be paid directly from the Master Trust or the Plan. Other expenses continue to be paid by the Company. 2. SUMMARY OF ACCOUNTING POLICIES BASIS OF ACCOUNTING - The accompanying financial statements of the Plan have been prepared in accordance with accounting principles generally accepted in the United States of America. USE OF ESTIMATES - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of net assets available for benefits and changes therein. Actual results could differ from those estimates. The Plan utilizes various investment instruments. Investment securities, in general, are exposed to various risks, such as interest rate, credit and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the statements of net assets available for benefits. INVESTMENT VALUATION AND INCOME RECOGNITION - The Plan's investments are stated at fair value. Shares of mutual funds are valued at the net asset value of shares held by the Plan at year-end. Investments in common trust funds, referred to as the funds, are stated at estimated fair values, which have been determined based on the unit values of the funds. Unit values are determined by the organization sponsoring such funds by dividing the fund's net assets at fair value by its units outstanding at each valuation date. During 1999, if available, quoted market prices were used to value the underlying investments of the Master Trust. In instances wherein quoted market prices were not available, the fair value of investments was estimated primarily by independent investment brokerage firms and insurance companies. Loans to participants are valued at cost plus accrued interest, which approximates fair value. Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. PAYMENT OF BENEFITS - Benefits are recorded when paid. 6 9 3. MASTER TRUST As discussed in note 1, the Master Trust became inactive effective December 30, 1999. The following table presents the fair values of investments and investment income for the Master Trust as of and for the year ended December 30, 1999: Investments, at fair value: Nabisco Group Holdings Corp. Common Stock $ 334,589 Nabisco Holdings Corp. Class A Common Stock 15,399 R.J. Reynolds Tobacco Holdings, Inc. Common Stock 51,962 Mutual funds 5,180,916 Common trust fund 1,629,819 Loans to participants 134,475 ---------- Total investments $7,347,160 ========== Investment income: Net appreciation (depreciation) in fair value of investments: Nabisco Group Holdings Corp. Common Stock $ 89,537 Nabisco Holdings Corp. Class A Common Stock (36,996) R.J. Reynolds Tobacco Holdings, Inc. Common Stock (193,097) Mutual funds 1,363,176 ---------- 1,222,620 Interest and dividends 745,167 ---------- Total investment income $1,967,787 ==========
4. INVESTMENTS Investments that represent 5% or more of the Plan's net assets as of December 30 were:
2000 1999 Vanguard LifeStrategy Growth Fund, 33,001 shares $ 646,499 $ -- Vanguard LifeStrategy Moderate Growth Fund, 35,178 shares 606,473 -- Vanguard Total Stock Market Index Fund, 111,298 shares 3,256,580 -- Vanguard Retirement Savings Trust, 1,942,900 shares 1,942,900 -- Plan interest in Master Trust -- 7,347,160
During 2000, the Plan's investments, including gains and losses on investments bought and sold, and those held during the year, depreciated in value by: Mutual funds $ (510,297) Common stock 87,492 ----------- $ (422,805) ===========
7 10 5. RELATED PARTY TRANSACTIONS Certain Plan investments are shares of mutual funds and units of participation in a common trust fund managed by Vanguard. Vanguard is the recordkeeper as defined by the Plan and, therefore, these transactions qualify as party-in-interest transactions. 6. PLAN TERMINATION 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 the Plan's termination, participants would become 100% vested in their employer contributions. 7. INCOME TAX STATUS The Plan is intended to comply with Section 165(a) of the Puerto Rico Income Tax Act of 1954, referred to as ITA. The Plan is required to operate in conformity with the ITA to maintain its qualification. The United States qualification of the Plan was dropped, effective with the 1995 plan year. 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. The Committee believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the ITA, and the Plan and related trust continue to be tax-exempt. Therefore, no provision for income taxes has been included in the Plan's financial statements. ******** 8 11 SAVINGS AND INVESTMENT PLAN FOR EMPLOYEES OF R. J. REYNOLDS TOBACCO COMPANY IN PUERTO RICO FORM 5500, SCHEDULE H, PART IV, LINE 4i - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR YEAR ENDED DECEMBER 30, 2000
DESCRIPTION OF INVESTMENT, INCLUDING MATURITY DATE, IDENTITY OF ISSUE, BORROWER, RATE OF INTEREST, COLLATERAL, CURRENT LESSOR OR SIMILAR PARTY PAR OR MATURITY VALUE COST VALUE * Vanguard LifeStrategy Conservative Growth Fund Mutual Fund ** $ 260,310 * Vanguard LifeStrategy Growth Fund Mutual Fund ** 646,499 * Vanguard LifeStrategy Moderate Growth Fund Mutual Fund ** 606,473 * Vanguard Total International Stock Index Fund Mutual Fund ** 47,067 * Vanguard Total Stock Market Index Fund Mutual Fund ** 3,256,580 * Vanguard Retirement Savings Trust Common/Collective Trust Fund ** 1,942,900 * RJR Common Stock Fund Company Stock Fund ** 57,992 * Loan Fund Participant loans, with interest rates ranging from 9.25% to 9.75% ** 177,870 ----------- TOTAL ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR $ 6,995,691 ===========
* Permitted party-in-interest. ** Cost information is not required for participant-directed investments and, therefore, is not included. 9 -----END PRIVACY-ENHANCED MESSAGE-----