EX-99.1 2 ex-99_1.txt EXHIBIT 99-1 Exhibit 1 NABISCO/LIFE SAVERS CAPITAL ACCUMULATION PLAN INDEPENDENT AUDITORS' REPORT AND FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 30, 1999 AND 1998 AND SUPPLEMENTAL SCHEDULES CAPITAL ACCUMULATION PLAN -------------------------
TABLE OF CONTENTS ------------------------------------------------------------------------------------------- PAGE Independent Auditors' Report 1 Financial Statements: Statements of Net Assets Available for Benefits as of December 30, 1999 and 1998 2 Statements of Changes in Net Assets Available for Benefits for the Years Ended December 30, 1999 and 1998 3 Notes to Financial Statements 4-9 Supplemental Schedule: Item 27a - Schedule of Assets Held for Investment Purposes as of December 30, 1999 10-11 Item 27d - Schedule of Reportable Transactions for the year ended December 30, 1999 12
INDEPENDENT AUDITORS' REPORT Nabisco Employee Benefits Committee: We have audited the accompanying statements of net assets available for benefits of the Nabisco/Life Savers Capital Accumulation Plan (the "Plan") as of December 30 1999 and 1998, and the related statement 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, 1999 and 1998, 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 accompanying supplemental schedules of (1) assets held for investment as of December 30, 1999 and (2) transactions in excess of five percent of the current value of plan assets for the year ended December 30, 1999 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. These schedules are the responsibility of the Plan's management. Such schedules have been subjected to the auditing procedures applied in our audit of the basic 1999 financial statements and, in our opinion, are fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole. /s/ Deloitte & Touche LLP ---------------------------- Parsippany, New Jersey June 23, 2000 NABISCO/LIFE SAVERS CAPITAL ACCUMULATION PLAN --------------------------
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS AS OF DECEMBER 30, 1999 AND 1998 --------------------------------------------------------------------------------------------------------------- As of December 30, 1999 1998 ---------------- ----------------- ASSETS Investments at fair value $ 6,180,103 - Notes 1, 2 & 3 Interest in commingled funds ------ $ 5,445,352 - Notes 1, 2 & 3 Loans to participants 763,019 688,244 ---------------- ----------------- Total investments 6,943,122 6,133,596 ---------------- ----------------- Receivables Investment income receivable 15,937 15,422 Employee contributions 12,391 11,161 Employer contributions 4,249 4,773 ---------------- ----------------- Total receivables 32,577 31,356 ---------------- ----------------- TOTAL ASSETS 6,975,699 6,164,952 ---------------- ----------------- Payable to RJR Nabisco, Inc. ------ 8,857 ---------------- ----------------- NET ASSETS AVAILABLE FOR BENEFITS $ 6,975,699 $ 6,156,095 ================ ================= See notes to financial statements. -2- NABISCO/LIFE SAVERS CAPITAL ACCUMULATION PLAN ----------------------------------------- STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS FOR THE YEARS ENDED DECEMBER 30, 1999 AND 1998 ------------------------------------------------------------------------------------------------------------------- Year Ended December 30, 1999 1998 ----------------- --------------- ADDITIONS: ADDITIONS TO NET ASSETS ATTRIBUTED TO: INVESTMENT INCOME Net appreciation/(depreciation) in fair value of investments - Note 3 $ 257,948 $ 284,771 Interest and dividends 320,567 291,994 ----------------- --------------- TOTAL INVESTMENT INCOME 578,515 576,765 ----------------- --------------- CONTRIBUTIONS Employee 839,780 811,230 Employer 338,184 342,095 ----------------- --------------- TOTAL CONTRIBUTIONS 1,177,964 1,153,325 ----------------- --------------- DEDUCTIONS DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Administrative fees 3,964 2,860 Employee withdrawals - Note 4 932,911 506,481 ----------------- --------------- TOTAL DEDUCTIONS 936,875 509,341 ----------------- --------------- Net increase 819,604 1,220,749 NET ASSETS AVAILABLE FOR BENEFITS AT BEGINNING OF PERIOD 6,156,095 4,935,346 ----------------- --------------- NET ASSETS AVAILABLE FOR BENEFITS AT END OF PERIOD $ 6,975,699 $ 6,156,095 ================= =============== See notes to financial statements.
-3- NABISCO/LIFE SAVERS CAPITAL ACCUMULATION PLAN ------------------------- NOTES TO FINANCIAL STATEMENTS ------------------------------------------------------------------------------- 1. DESCRIPTION OF THE PLAN The Plan is a voluntary defined contribution plan for all regular employees of Nabisco de Puerto Rico, Inc. in Puerto Rico and Life Savers. The Plan was established effective September 1, 1992 and is jointly sponsored by Nabisco de Puerto Rico, Inc. and LifeSavers Manufacturing, Inc. (collectively, the "Company") which are indirect subsidiaries of Nabisco, Inc. ("Nabisco"). Pursuant to Section 165(a) of the Puerto Rico Income Tax Act of 1954 (ITA), which is equivalent to Section 401(k) of the US Federal Internal Revenue Code, employees may designate contributions from pre-tax compensation up to the first 10% of contributed compensation (limited to $8,000) as 401(k) type contributions. Employees may contribute up to 10% of compensation on an after-tax basis, provided that pre-tax and after-tax contributions in the aggregate do not exceed 16% of compensation. The Company makes matching contributions to the Plan for each pay period equal to 50% of the employee's basic pre-tax contributions (up to 6% of pay). 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. The Loan Fund is a recordkeeping fund that holds employee promissory notes. Participants may apply to the Nabisco Employee Benefits Committee (the "Committee") to borrow funds from their accounts. 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: Continuing Funds: Vanguard Retirement Savings Trust The objective of the Vanguard Retirement Savings Trust is to provide participants with an attractive rate of interest and safety of principal by investing primarily in investment contracts issued by insurance companies and commercial banks. The principal and interest of these contracts are obligations of the issuing companies and are not guaranteed by the Federal Government or the Vanguard Group. Total U.S. Stock Market Fund The fund holds a passive investment in the Vanguard Index Trust - Total Stock Market Portfolio which invests in stocks of nearly 2,000 large companies and small to mid-size companies. The objective of the fund is to maximize long-term financial return through a combination of dividend income and capital appreciation by investing in a broadly diversified portfolio of common stock. - 4 - NOTES TO FINANCIAL STATEMENTS - CONTINUED ------------------------------------------------------------------------------- 1. DESCRIPTION OF THE PLAN - CONTINUED Total International Stock Market Fund The fund invests in the Vanguard STAR Fund - Total International Portfolio which holds stocks of about 1,500 companies located in approximately 30 countries around the world (excluding the U.S. and Canada). It is comprised of a combination of the three portfolios of the Vanguard International Equity Index Funds: European Portfolio, Pacific Portfolio and Emerging Markets Portfolio. The objective of the fund is to maximize long-term total return through a combination of dividend income and capital appreciation by investing in a broadly diversified portfolio of companies located in European, Pacific and emerging market nations. Conservative Growth Fund Invests in the Vanguard LIFEStrategy Portfolios - Conservative Growth Portfolio which invests in a combination of Vanguard funds and seeks to achieve a target mix of 40% stocks, 40% bonds and 20% short-term reserves. The objective of the fund is to maximize long-term total return primarily through compounding of interest income and secondarily through dividend income and capital appreciation of common stocks. Moderate Growth Fund Invests in the Vanguard LIFEStrategy Portfolios - Moderate Growth Portfolio which invests in a combination of Vanguard funds and seeks to achieve a target mix of 60% stocks and 40% bonds. The objective of the fund is to maximize long-term total return through a combination of compounding of interest income and through dividend income and capital appreciation of common stock. Growth Fund Invests in the Vanguard LIFEStrategy Portfolios - Growth Portfolio which invests in a combination of Vanguard funds and seeks to achieve a target mix of 80% stocks and 20% bonds. The objective of the fund is to maximize long-term total return primarily through capital appreciation and secondarily through dividend income and compounding of interest income. - 5 - NOTES TO FINANCIAL STATEMENTS - CONTINUED ------------------------------------------------------------------------------- 1. DESCRIPTION OF THE PLAN - CONTINUED Nabisco Group Holdings Common Stock Fund Common stock issued by Nabisco Group Stock Holdings Corp. The objective of the fund is to maximize long-term total return through capital appreciation and dividend income. Nabisco Common Stock Fund Class A Common Stock of Nabisco Holdings Corp. The objective of the fund is to maximize long-term total return through capital appreciation and dividend income. RJR Common Stock Fund The RJR Common Stock Fund seeks to maximize long-term total return through appreciation and dividend income. This Fund is invested primarily in the common stock of R. J. Reynolds Tobacco Holdings, Inc. The Fund will also maintain a very small level of cash to provide for liquidity in processing daily transactions. This Fund is a frozen Fund which holds stock transferred from the RJR Common Stock Fund under the RJR Plan. Participants are prohibited from investing contributions or reallocating amounts held under the Plan to this Fund. Loan Fund Participant borrowings from the Plan subject to requirements established by the Committee. Additional information about the Plan agreement and the vesting and benefit provisions is contained in the Summary Plan Description provided to participants. 2. SIGNIFICANT ACCOUNTING POLICIES VALUATION OF INVESTMENTS IN PLAN - The assets of the Plan are held by Banco Popular de Puerto Rico as sole trustee (the "Trustee"). In the prior year the assets of the Plan were held by Banco Popular de Puerto Rico as sole trustee of the RJR Nabisco Puerto Rico Defined Contribution Master Trust. The Vanguard Group ("Vanguard") serves as custodian of all assets of the Plan other than loans to participants which are held by the Trustee. All investments held by the Plan are valued at fair 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 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. Guaranteed investment contracts are valued at contract value plus accrued interest. - 6 - NOTES TO FINANCIAL STATEMENTS - CONTINUED ------------------------------------------------------------------------------ 2. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED PLAN EXPENSES - Expenses relating to the purchase or sale of investments are included in the cost or deducted from the proceeds, respectively. Direct charges and expenses including investment manager fees attributable to specific investment funds may be charged against that investment fund. Other Plan expenses such as trustee, auditor, general Plan recordkeeping, and Internal Revenue Service user fees may be paid directly from the Plan. Other expenses continue to be paid by the Company USE OF ESTIMATES - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. RECLASSIFICATIONS - Certain 1998 amounts have been reclassified to conform to the 1999 presentation. - In September 1999, The American Institute of Certified Public Accountants issued Statement of Position No. 99-3 (SOP 99-3), "Accounting for and Reporting of Certain Defined Contribution Plan Investments and Other Disclosure Matters". Effective for fiscal year 1999, the Plan adopted (SOP 99-3), which simplifies disclosures for certain participant directed investments. Accordingly, information for both 1999 and 1998 are presented in the aggregate for all related funds. - 7 - NOTES TO FINANCIAL STATEMENTS - CONTINUED ------------------------------------------------------------------------------- 3. INVESTMENTS During 1999 and 1998, the Plan's investments bought, sold, as well as held during the year, appreciated (depreciated) in fair value as follows:
Net Appreciation/ Fair (Depreciation) in Value at Fair Value During Year End of Year ---------------------- ----------- Year Ended December 31, 1999: Common Trust Fund $ ------ $3,471,879 Vanguard Index Trust - Total Stock Market Portfolio 175,099 1,049,356 Vanguard Star Fund - Total International Portfolio 11,797 55,742 Nabisco Group Holdings Corp. Common Stock (6,050) 32,165 R. J. Reynolds Tobacco Holdings, Inc. Common Stock 1,116 6,394 Nabisco Holdings Corp. Class A Common Stock (36,141) 116,798 Vanguard Life Strategy Portfolios - Conservative Growth Portfolio 5,836 221,393 Vanguard Life Strategy Portfolios - Moderate 60,799 831,744 Vanguard Life Strategy Portfolios - Growth Portfolio 45,492 394,632 -------- ---------- $257,948 $6,180,103 ======== ========== Year Ended December 31, 1998: Common Trust Fund $ ------ $3,273,595 Vanguard Index Trust - Total Stock Market Portfolio 152,016 814,065 Vanguard Star Fund - Total International Portfolio 3,755 36,091 RJR Nabisco Holdings Corp. Common Stock (2,465) 5,849 Nabisco Holdings Corp. Class A Common Stock 1,001 129,121 Vanguard Life Strategy Portfolios - Conservative Growth Portfolio 13,528 186,684 Vanguard Life Strategy Portfolios - Moderate 76,580 736,292 Vanguard Life Strategy Portfolios - Growth Portfolio 40,356 263,655 -------- ---------- $284,771 $5,445,352 ======== ==========
- 8 - NOTES TO FINANCIAL STATEMENTS - CONTINUED ------------------------------------------------------------------------------- 3. INVESTMENTS - CONTINUED Individual investments that represent 5% or more of the Plan's net assets as of December 31, 1999 and 1998, are as follows:
DECEMBER 31, 1999 DECEMBER 31, 1998 ----------------- ----------------- IDENTITY OF ISSUER, BORROWER, LESSOR OR DESCRIPTION OF DESCRIPTION OF SIMILAR PARTY INVESTMENT FAIR VALUE INVESTMENT FAIR VALUE ------------- ---------- ---------- ---------- ---------- Vanguard Index Trust-Total Stock Market Portfolio 31,760 units $1,049,356 29,830 units $814,065 Vanguard Life Strategy Portfolios - Moderate Growth Portfolio 45,801 units 831,744 43,775 units 736,292 Vanguard Life Strategy Portfolios - Growth Portfolio 18,467 units 394,632 14,069 units 263,655 Common Trust Fund 3,471,879 units 3,471,879 3,273,595 units 3,273,595
4. EMPLOYEE WITHDRAWALS There were no pending employee withdrawal requests at December 30, 1999 and 1998. 5. INCOME TAX STATUS The Plan is intended to comply with Section 165(a) of the Puerto Rico Income Tax Act of 1954 ("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. Therefore, no provision for income taxes has been included in the Plan's financial statements. -9- NABISCO/LIFE SAVERS CAPITAL ACCUMULATION PLAN --------------------------------------------- ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AS OF DECEMBER 30, 1999 -------------------------------------------------------------------------------
DESCRIPTION OF INVESTMENT IDENTITY OF ISSUER, INCLUDING MATURITY DATE, BORROWER, LESSOR RATE OF INTEREST OR SIMILAR PARTY PAR OR MATURITY VALUE COST FAIR VALUE ---------------- --------------------- ---- ---------- RETIREMENT SAVINGS TRUST ------------------------ Common/collective trusts: Vanguard Retirement Savings Trust 3,471,879 shares $3,471,879 $3,471,879 NABISCO GROUP HOLDINGS STOCK FUND --------------------------------- Nabisco Group Holdings Corp. 8,501 shares, par Common Stock value $.01 per share 36,020 32,165 TOTAL U.S. STOCK MARKET FUND ---------------------------- Equity investment funds: Vanguard Index Trust - Total Stock Market Portfolio 31,760 shares 713,566 1,049,356 TOTAL INTERNATIONAL STOCK MARKET FUND ------------------------------------- Equity investment funds: Vanguard STAR Fund - Total International Portfolio 3,896 shares 42,374 55,742 RJR TOBACCO STOCK FUND ---------------------- R.J. Reynolds Tobacco Holdings, Inc. 586 shares, par Common Stock value $.01 per share 7,160 6,394 NABISCO COMMON STOCK FUND ------------------------- Nabisco Holdings Corp. Class A 10,967 shares, par Common Stock value $.01 per share 146,745 116,798
-10- NABISCO/LIFE SAVERS CAPITAL ACCUMULATION PLAN --------------------------------------------- ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AS OF DECEMBER 30, 1999 -------------------------------------------------------------------------------
CONSERVATIVE GROWTH FUND ------------------------ Equity investment funds: Vanguard LIFEStrategy Portfolios - 14,652 shares $201,730 $221,393 Conservative Growth Portfolio MODERATE GROWTH FUND -------------------- Equity investment funds: Vanguard LIFEStrategy Portfolios - 45,801 shares 703,991 831,744 Moderate Growth Portfolio GROWTH FUND ----------- Equity investment funds: Vanguard LIFEStrategy Portfolios - 18,467 shares 324,318 394,632 Growth Portfolio LOAN FUND --------- Loans to participants * 763,019 763,019 ----------------- ------------------ TOTAL ASSETS HELD FOR INVESTMENT PURPOSES $1,993,058 $2,210,788 ================= ==================
* With respect to the Plan, there is a total of 242 loans to participants at December 31, 1999 ranging from $1,000 to $29,900. -11- NABISCO/LIFE SAVERS CAPITAL ACCUMULATION PLAN ---------------------------------------------
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS FOR THE YEAR ENDED DECEMBER 30, 1999 --------------------------------------------------------------------------------------------------------------- SELLING PRICE OR NUMBER OF NUMBER OF PURCHASE MATURITY NET PURCHASES SALES PRICE VALUE GAIN/(LOSS) ---------- ----------- -------- -------- ----------- ISSUE VANGUARD RETIREMENT SAVINGS TRUST SERIES OF SECURITIES TRANSACTIONS IN EXCESS OF 5% OF NET FUND ASSETS: VANGUARD RETIREMENT SAVINGS TRUST 241 154 $ 1,390,912 $ 1,184,366 $ ---- Total U.S. STOCK MARKET FUND SERIES OF SECURITIES TRANSACTIONS IN EXCESS OF 5% OF NET FUND ASSETS: Vanguard Index Trust - Total Stock Market Portfolio 165 ---- $ 343,871 $ ---- $ ----
-12-