<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 1, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED NOVEMBER 1, 1996
------------------------
NABISCO HOLDINGS CORP.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 1-13556 13-3077142
(State or other (Commission file (I.R.S. Employer Identification
jurisdiction of number) No.)
incorporation or
organization)
</TABLE>
NABISCO, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
NEW JERSEY 1-1021 13-1841519
(State or other (Commission file (I.R.S. Employer Identification
jurisdiction of number) No.)
incorporation or
organization)
</TABLE>
7 CAMPUS DRIVE
PARSIPPANY, NEW JERSEY 07054
(201) 682-5000
(Address, including zip code, and telephone number, including area code,
of the principal executive offices of Nabisco Holdings Corp. and Nabisco, Inc.)
------------------------
INDICATE BY CHECK MARK WHETHER THE REGISTRANTS (1) HAVE FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANTS WERE REQUIRED TO FILE SUCH REPORTS), AND (2) HAVE BEEN SUBJECT TO
SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X, NO ___.
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANTS'
CLASSES OF COMMON STOCK AS OF THE LATEST PRACTICABLE DATE: SEPTEMBER 30, 1996:
<TABLE>
<S> <C> <C>
NABISCO HOLDINGS CORP.: 51,804,981 SHARES OF CLASS A COMMON STOCK, PAR VALUE $.01 PER SHARE
213,250,000 SHARES OF CLASS B COMMON STOCK, PAR VALUE $.01 PER SHARE
NABISCO, INC.: 100 SHARES OF COMMON STOCK, PAR VALUE $2.50 PER SHARE
</TABLE>
------------------------
NABISCO, INC. MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(A) AND
(B) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE
FORMAT.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
INDEX
<TABLE>
<S> <C> <C>
PAGE
---------
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Statements of Income--Three Months Ended September 30, 1996 and 1995... 1
Consolidated Condensed Statements of Income--Nine Months Ended September 30, 1996 and 1995.... 2
Consolidated Condensed Statements of Cash Flows--Nine Months Ended September 30, 1996 and
1995............................................................................................ 3
Consolidated Condensed Balance Sheets--September 30, 1996 and
December 31, 1995.......................................................................... 4
Notes to Consolidated Condensed Financial Statements.......................................... 5
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations...................................................................... 7
PART II--OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.............................................................. 11
Signatures................................................................................................. 12
</TABLE>
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
NABISCO HOLDINGS CORP.
NABISCO, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<S> <C> <C> <C> <C>
THREE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, 1996 SEPTEMBER 30, 1995
----------------------- -----------------------
NABISCO NABISCO
HOLDINGS NABISCO HOLDINGS NABISCO
---------- ----------- ---------- -----------
NET SALES.......................................................... $ 2,238 $ 2,238 $ 2,044 $ 2,044
---------- ----------- ---------- -----------
Costs and expenses:
Cost of products sold............................................ 1,332 1,332 1,202 1,202
Selling, advertising, administrative and general expenses........ 642 642 589 590
Amortization of trademarks and goodwill.......................... 56 56 57 57
---------- ----------- ---------- -----------
OPERATING INCOME............................................ 208 208 196 195
Interest and debt expense.......................................... (83) (83) (84) (82)
Other income (expense), net........................................ (7) (7) 5 5
---------- ----------- ---------- -----------
Income before income taxes.................................. 118 118 117 118
Provision for income taxes......................................... 48 48 46 46
---------- ----------- ---------- -----------
INCOME BEFORE EXTRAORDINARY ITEM............................ 70 70 71 72
Extraordinary item - loss on early extinguishment of debt,
net of income taxes.............................................. -- -- (19) (19)
---------- ----------- ---------- -----------
NET INCOME.................................................. $ 70 $ 70 $ 52 $ 53
---------- ----------- ---------- -----------
---------- ----------- ---------- -----------
Net income per common and common equivalent share:
Income before extraordinary item................................. $ .26 $ .27
Extraordinary item............................................... -- (.07)
---------- ----------
NET INCOME.................................................. $ .26 $ .20
---------- ----------
---------- ----------
Dividends declared per common share................................ $ .155 $ .1375
---------- ----------
---------- ----------
Average number of common and common equivalent shares outstanding
(in thousands)..................................................... 266,799 265,500
---------- ----------
---------- ----------
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
1
<PAGE>
NABISCO HOLDINGS CORP.
NABISCO, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<S> <C> <C> <C> <C>
NINE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 1996 SEPTEMBER 30, 1995
----------------------- -----------------------
NABISCO NABISCO
HOLDINGS NABISCO HOLDINGS NABISCO
---------- ----------- ---------- -----------
NET SALES.......................................................... $ 6,406 $ 6,406 $ 5,944 $ 5,944
---------- ----------- ---------- -----------
Costs and expenses:
Cost of products sold............................................ 3,785 3,785 3,423 3,423
Selling, advertising, administrative and general expenses........ 1,829 1,829 1,736 1,741
Amortization of trademarks and goodwill.......................... 170 170 170 169
Restructuring expense............................................ 428 428 -- --
---------- ----------- ---------- -----------
OPERATING INCOME............................................ 194 194 615 611
Interest and debt expense.......................................... (248) (248) (268) (261)
Other income (expense), net........................................ (22) (22) (9) (12)
---------- ----------- ---------- -----------
Income (loss) before income taxes........................... (76) (76) 338 338
Provision for income taxes......................................... 17 17 140 140
---------- ----------- ---------- -----------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM..................... (93) (93) 198 198
Extraordinary item - loss on early extinguishment of debt,
net of income taxes.............................................. -- -- (19) (19)
---------- ----------- ---------- -----------
NET INCOME (LOSS)........................................... $ (93) $ (93) $ 179 $ 179
---------- ----------- ---------- -----------
---------- ----------- ---------- -----------
Net income (loss) per common and common equivalent share:
Income (loss) before extraordinary item.......................... $ (.35) $ .76
Extraordinary item............................................... -- (.07)
---------- ----------
NET INCOME (LOSS)........................................... $ (.35) $ .69
---------- ----------
---------- ----------
Dividends declared per common share................................ $ .4475 $ .275
---------- ----------
---------- ----------
Average number of common and common equivalent shares outstanding
(in thousands)..................................................... 265,038 260,408
---------- ----------
---------- ----------
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
2
<PAGE>
NABISCO HOLDINGS CORP.
NABISCO, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(DOLLARS IN MILLIONS)
<TABLE>
<S> <C> <C> <C> <C>
NINE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, 1996 SEPTEMBER 30, 1995
------------------------ --------------------
NABISCO NABISCO
HOLDINGS NABISCO HOLDINGS NABISCO
----------- ----------- --------- ---------
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
Net income (loss)................................................... $ (93) $ (93) $ 179 $ 179
Adjustments to reconcile net income (loss) to cash flows from
operating actvities:
Depreciation of property, plant and equipment.................. 196 196 180 180
Amortization of intangibles.................................... 170 170 170 169
Deferred income tax provision (benefit)........................ (108) (108) 6 6
Restructuring expense, net of cash payments.................... 392 392 -- --
Changes in working capital items, net.......................... (305) (305) (460) (457)
Extraordinary item--loss on early retirement of debt........... -- -- 29 29
Gain on sale of product lines before income taxes.............. -- -- (11) (11)
Other, net..................................................... 28 28 11 11
----------- ----------- --------- ---------
Net cash flows from operating activities......................... 280 280 104 106
----------- ----------- --------- ---------
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Capital expenditures................................................ (306) (306) (306) (306)
Acquisition of businesses........................................... (174) (174) (14) (14)
Proceeds from sale of businesses.................................... -- -- 162 162
Other, net.......................................................... 10 10 8 8
----------- ----------- --------- ---------
Net cash flows (used in) investing activities.................... (470) (470) (150) (150)
----------- ----------- --------- ---------
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Net proceeds from the issuance of long-term debt.................... 155 155 2,931 2,931
Repayments of long-term debt........................................ (62) (62) (465) (465)
Increase (decrease) in notes payable................................ 172 172 14 14
Dividends paid on common stock...................................... (114) -- (36) --
Net repayments under the
1994 Nabisco Credit Agreement.................................... -- -- (1,350) (1,350)
Payment of intercompany debt........................................ -- -- (2,361) (2,282)
Net proceeds from issuance of Class A common stock.................. -- -- 1,201 --
Nabisco Holdings capital contribution............................... -- -- -- 1,487
Dividends and distribution paid to Nabisco Holdings................. -- (114) -- (403)
----------- ----------- --------- ---------
Net cash flows from (used in) financing activities............... 151 151 (66) (68)
----------- ----------- --------- ---------
Effect of exchange rate changes on cash and cash equivalents.......... (1) (1) -- --
----------- ----------- --------- ---------
Net change in cash and cash equivalents.......................... (40) (40) (112) (112)
Cash and cash equivalents at beginning of period...................... 121 121 245 245
----------- ----------- --------- ---------
Cash and cash equivalents at end of period............................ $ 81 $ 81 $ 133 $ 133
----------- ----------- --------- ---------
----------- ----------- --------- ---------
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
3
<PAGE>
NABISCO HOLDINGS CORP.
NABISCO, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(DOLLARS IN MILLIONS)
<TABLE>
<S> <C> <C> <C> <C>
SEPTEMBER 30, 1996 DECEMBER 31, 1995
-------------------- --------------------
NABISCO NABISCO
HOLDINGS NABISCO HOLDINGS NABISCO
--------- --------- --------- ---------
ASSETS
Current assets:
Cash and cash equivalents........................................ $ 81 $ 81 $ 121 $ 121
Accounts and notes receivable, net............................... 618 618 523 523
Deferred income taxes............................................ 114 114 64 64
Inventories...................................................... 894 894 865 865
Prepaid expenses................................................. 67 67 51 51
--------- --------- --------- ---------
TOTAL CURRENT ASSETS........................................ 1,774 1,774 1,624 1,624
--------- --------- --------- ---------
Property, plant and equipment, net................................. 3,233 3,233 3,132 3,132
Trademarks, net.................................................... 3,888 3,888 3,977 3,977
Goodwill, net...................................................... 3,446 3,446 3,477 3,477
Other assets and deferred charges.................................. 123 123 93 93
--------- --------- --------- ---------
$ 12,464 $ 12,464 $ 12,303 $ 12,303
--------- --------- --------- ---------
--------- --------- --------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable.................................................... $ 262 $ 262 $ 76 $ 76
Accounts payable and accrued liabilities......................... 1,500 1,490 1,393 1,383
Current maturities of long-term debt............................. 25 25 24 24
Income taxes accrued............................................. 137 137 131 131
--------- --------- --------- ---------
TOTAL CURRENT LIABILITIES................................... 1,924 1,914 1,624 1,614
--------- --------- --------- ---------
Long-term debt (less current maturities)........................... 4,484 4,484 4,355 4,355
Other noncurrent liabilities....................................... 741 741 724 724
Deferred income taxes.............................................. 1,295 1,295 1,356 1,356
Stockholders' equity:
Class A common stock (51,804,981 shares issued and outstanding at
September 30, 1996)............................................ 1 -- 1 --
Class B common stock (213,250,000 shares issued and outstanding
at September 30, 1996)......................................... 2 -- 2 --
Paid-in capital.................................................. 4,087 4,174 4,085 4,174
Retained earnings (deficit)...................................... (27) (103) 186 110
Cumulative translation adjustment................................ (41) (41) (30) (30)
Notes receivable on common stock purchases....................... (2) -- -- --
--------- --------- --------- ---------
TOTAL STOCKHOLDERS' EQUITY.................................. 4,020 4,030 4,244 4,254
--------- --------- --------- ---------
$ 12,464 $ 12,464 $ 12,303 $ 12,303
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
4
<PAGE>
NABISCO HOLDINGS CORP.
NABISCO, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE 1--INTERIM REPORTING AND RESULTS OF OPERATIONS
For interim reporting purposes, certain costs and expenses are charged to
operations in proportion to the estimated total annual amount expected to be
incurred.
Certain prior year amounts have been reclassified to conform to the 1996
presentation.
In management's opinion, the accompanying unaudited consolidated condensed
financial statements (the "Consolidated Condensed Financial Statements") of
Nabisco Holdings Corp. ("Nabisco Holdings") and Nabisco, Inc. ("Nabisco" and
together with Nabisco Holdings, the "Registrants") contain all adjustments,
consisting only of normal recurring adjustments, necessary for a fair statement
of the results for the interim periods presented. The Consolidated Condensed
Financial Statements should be read in conjunction with the consolidated
financial statements and footnotes included in the Annual Report on Form 10-K of
Nabisco Holdings and Nabisco for the year ended December 31, 1995.
New Accounting Pronouncements
On January 1, 1996, Nabisco Holdings and Nabisco adopted Statement of
Financial Accounting Standards No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of ("SFAS No. 121").
The adoption of the SFAS No. 121 did not have a material impact on the financial
position or results of operations of Nabisco Holdings and Nabisco.
On January 1, 1996, Nabisco Holdings and Nabisco adopted Statement of
Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation
("SFAS No. 123"). Nabisco Holdings and Nabisco elected to continue to apply the
intrinsic value based method for recognizing compensation expense for
stock-based employee compensation plans.
Acquisitions
During 1996, subsidiaries of Nabisco acquired the stock of the Mayco and
Capri biscuit businesses and the Vizzolini pasta business in Argentina, the
stock of Pilar, a Brazilian biscuit business and the stock of Fontanda, a
Spanish biscuit business. In addition, Nabisco formed the Nabisco Taiwan
Corporation which purchased the biscuit, confectionery and snack food assets of
a Taiwan-based manufacturer. The aggregate purchase price for these acquisitions
was $204 million.
Restructuring Expense
In the second quarter of 1996, Nabisco Holdings recorded a restructuring
expense of $428 million ($300 million after tax) related to a program announced
on June 24, 1996. The restructuring program, which was undertaken to streamline
operations and improve profitability, commenced during the second quarter of
1996 and will be substantially completed during 1997. The $428 million
restructuring expense will require cash expenditures of approximately $230
million. In addition to the restructuring expense, the program will require
additional cash expenditures of approximately $81 million, of which $27 million
($16 million after tax) were recorded in the second and third quarters of 1996,
for implementation and integration expenses, principally for relocation of
employees and equipment and training. After completion of the restructuring
program, pre-tax savings are expected to be approximately $200 million annually.
5
<PAGE>
NABISCO HOLDINGS CORP.
NABISCO, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 1--INTERIM REPORTING AND RESULTS OF OPERATIONS--(CONTINUED)
The major components of the $428 million restructuring expense are domestic
and international severance and related benefits associated with workforce
reductions totaling approximately 6,000 employees (approximately $194 million),
estimated losses from disposals of equipment and inventory related to product
line rationalizations (approximately $116 million), estimated loss to write-down
the carrying value of several non-strategic product lines prior to sale
(approximately $51 million), estimated costs to terminate manufacturing supply
and distribution contracts (approximately $45 million) and estimated losses from
disposals of property related to international plant closures and domestic and
international facility reorganizations (approximately $22 million).
As of September 30, 1996, approximately $82 million of the restructuring
accruals were utilized as follows: $31 million for severance and related
benefits, $37 million for product line rationalizations, $10 million for
contract terminations and $4 million for plant closures.
NOTE 2--INVENTORIES
The major classes of inventory are shown in the table below:
<TABLE>
<S> <C> <C>
SEPTEMBER 30, DECEMBER 31,
1996 1995
--------------- ---------------
Finished products.................................................................. $ 543 $ 526
Raw materials...................................................................... 189 199
Other.............................................................................. 162 140
------ ------
$ 894 $ 865
------ ------
------ ------
</TABLE>
NOTE 3--STOCKHOLDERS' EQUITY
During 1996, 54,981 shares of Class A common stock were sold in connection
with purchase stock grants awarded under the Nabisco Holdings 1994 Long Term
Incentive Plan (the "Nabisco LTIP"). The shares were purchased at their fair
market value for a total of $1,882,491. Under the terms of the Nabisco LTIP, the
purchasers, one an executive of the Registrants, and one an executive and
director of RJR Nabisco, Inc. and both directors of the Registrants, borrowed
the total amount of the purchase price on a secured basis from Nabisco Holdings
at an average annual interest rate of approximately 6.2%, which rate was set at
the applicable federal rate for long-term loans at the purchase dates. The
indebtedness, plus accrued interest and applicable taxes, must be repaid upon
the earlier of the sale of the shares covered by the loan or termination of plan
participation. As of September 30, 1996, the entire amount remains outstanding
and is presented as notes receivable in stockholders' equity.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis of Nabisco Holdings' financial
condition and results of operations should be read in conjunction with the
historical financial information included in the Consolidated Condensed
Financial Statements.
The food business is conducted by operating subsidiaries of Nabisco
Holdings. Nabisco's businesses in the United States are comprised of the Nabisco
Biscuit Company, the Specialty Products Company, the LifeSavers Company, the
Planters Company, the Food Service Company and the Refrigerated Foods Company
(formerly the Fleischmann's Company) (collectively, the "Domestic Food Group").
Nabisco's businesses outside the United States are conducted by Nabisco Ltd and
Nabisco International, Inc. ("Nabisco International" and together with Nabisco
Ltd, the "International Food Group").
RESULTS OF OPERATIONS
Summarized financial data for Nabisco Holdings is as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------------------------- -----------------------------------
(DOLLARS IN MILLIONS) 1996 1995 % CHANGE 1996 1995 % CHANGE
--------- --------- --------------- --------- --------- -------------
Net Sales:
Domestic Food Group.................... $ 1,578 $ 1,474 7% $ 4,565 $ 4,340 5%
International Food Group............... 660 570 16% 1,841 1,604 15%
--------- --------- --------- ---------
Total Nabisco Holdings................. $ 2,238 $ 2,044 9% $ 6,406 $ 5,944 8%
--------- --------- --------- ---------
--------- --------- --------- ---------
Operating Company Contribution (1)(2):
Domestic Food Group.................... $ 208 $ 199 5% $ 623 $ 630 (1)%
International Food Group............... 56 54 4% 169 155 9%
--------- --------- --------- ---------
Total Nabisco Holdings................. $ 264 $ 253 4% $ 792 $ 785 1%
--------- --------- --------- ---------
--------- --------- --------- ---------
Operating Income (2)(3):
Domestic Food Group.................... $ 158 $ 148 7% $ 118 $ 477 (75 )%
International Food Group............... 50 48 4% 76 138 (45 )%
--------- --------- --------- ---------
Total Nabisco Holdings................. $ 208 $ 196 6% $ 194 $ 615 (68 )%
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
- ---------------
(1) Operating company contribution represents operating income before
amortization of trademarks and goodwill and is exclusive of restructuring
expense.
(2) Includes $17 million of non-recurring restructuring implementation expenses
related to the Domestic Food Group and the International Food Group of $16
million and $1 million, respectively, for the three months ended September
30, 1996 and $26 million and $1 million, respectively, for the nine months
ended September 30, 1996.
(3) The nine months ended September 30, 1996 period includes the June 1996
restructuring expense of $428 million, consisting of $353 million for the
Domestic Food Group and $75 million for the International Food Group.
Nabisco Holdings reported net sales of $2.24 billion in the third quarter
of 1996, an increase of 9% from the third quarter of 1995 level of $2.04
billion, and $6.41 billion in the first nine months of 1996, an increase of 8%
from the first nine months of 1995 level of $5.94 billion, with the Domestic
Food Group up 7% and 5%, respectively, and the International Food Group up 16%
and 15%, respectively. The Domestic Food Group's third quarter net sales
increase was attributable to volume increases, principally at the Nabisco
Biscuit Company and the Planters Company, accounting for 4 percentage points of
the increase, increased selling prices, principally at Biscuit, accounting for 2
percentage points of the increase, with the remaining percentage point increase
resulting from the impact of the Parkay acquisition, offset by the impact of the
1995 product line disposals. The Nabisco Biscuit Company volume increase was
primarily attributable to the Oreo, Ritz and Chips Ahoy! brands and the
continued success of the new Air Crisp line, partially offset by lower volume
for SnackWell's and Newtons. The Planters Company volume increase resulted from
gains in the warehouse club business, continued
7
<PAGE>
success with retailers in establishing category management programs, and a
stabilized competitive environment. The Domestic Food Group net sales
increase for the nine months was attributable to higher selling prices which
accounted for 3 percentage points of the increase, 1 percentage point
increase for higher volume and 1 percentage point increase from the impact of
the 1995 Parkay acquisition, offset by the impact of the 1995 product line
disposals. The International Food Group's net sales increases for the third
quarter and first nine months were primarily driven by the fourth quarter
1995 business acquisitions, principally Primo in Canada and Royal Beech Nut
in South Africa, and the 1996 acquisitions in Latin America.
Nabisco Holdings' operating company contribution was $264 million in the
third quarter of 1996, an increase of 4% from the third quarter 1995 level of
$253 million, and $792 million in the first nine months of 1996, an increase
of 1% from the first nine months of 1995 level of $785 million, with the
International Food Group up 4% and 9%, respectively and the Domestic Food
Group up 5% from last year's third quarter and down 1% for the comparable
nine month period. Operating company contribution for the third quarter and
first nine months of 1996 includes $16 million and $26 million, respectively,
of restructuring related expenses in the Domestic Food Group associated with
the implementation of the June 1996 restructuring program. The International
Food Group includes similar expenses of $1 million for each 1996 period. The
third quarter and nine month 1995 periods include a net gain of $11 million
from the sale of the Ortega Mexican food business ($18 million gain in the
Domestic Food Group) and New York Style Bagel Chip business ($7 million loss
in the International Food Group).
Excluding the restructuring related expenses, Nabisco Holdings' and the
Domestic Food Group's operating company contributions were $281 million and $224
million in the third quarter of 1996, an increase of $28 million, or 11%, and
$25 million, or 13%, respectively, from the third quarter of 1995, and $819
million and $649 million in the first nine months of 1996, an increase of $34
million, or 4%, and $19 million, or 3%, from the first nine months of 1995. The
13% increase for the Domestic Food Group for the third quarter is attributable
to the profit contribution from higher net sales, partially offset by higher
advertising and promotion expenses. The 3% increase for the Domestic Food Group
for the first nine months of 1996 is primarily due to the profit impact from
higher net sales and lower advertising and promotion expenses, partially offset
by higher fixed manufacturing and distribution expenses. The International Food
Group's 6% increase in operating company contribution for the third quarter of
1996 was primarily due to the profit impact from business acquisitions,
partially offset by lower results in Latin America, principally Argentina, due
to higher commodity costs. The International Food Group's 10% increase in
operating company contribution for the first nine months of 1996 was primarily
due to the profit impact from business acquisitions and improved results in
Brazil, Iberia, and Colombia, partially offset by lower results in Argentina.
Nabisco Holdings' operating income in the third quarter and first nine
months of 1996 includes $17 million and $455 million, respectively, of
restructuring expenses. Excluding these expenses, operating income was $225
million for the third quarter of 1996 and $649 million for the first nine months
of 1996, an increase of 15% and 6%, respectively over the comparable 1995
period, reflecting higher operating company contribution.
RESTRUCTURING EXPENSE
In the second quarter of 1996, Nabisco recorded a restructuring expense of
$428 million ($300 million after tax) related to a program announced on June 24,
1996. The restructuring program, which was undertaken to streamline operations
and improve profitability, commenced during the second quarter of 1996 and will
be substantially completed during 1997. The $428 million restructuring expense
will require cash expenditures of approximately $230 million. In addition to the
restructuring expense, the program will require additional cash expenditures of
approximately $81 million, of which $27 million ($16 million after tax) was
recorded in the second and third quarters of 1996, for implementation and
integration expenses, principally for relocation of employees and equipment and
8
<PAGE>
training. After completion of the restructuring program, pre-tax savings are
expected to be approximately $200 million annually.
The major components of the $428 million restructuring expense are domestic
and international severance and related benefits associated with workforce
reductions totaling approximately 6,000 employees (approximately $194 million),
estimated losses from disposals of equipment and inventory related to product
line rationalizations (approximately $116 million), estimated loss to write-down
the carrying value of several non-strategic product lines prior to sale
(approximately $51 million), estimated costs to terminate manufacturing supply
and distribution contracts (approximately $45 million) and estimated losses from
disposals of property related to international plant closures and domestic and
international facility reorganizations (approximately $22 million).
As of September 30, 1996, approximately $82 million of the restructuring
accruals were utilized as follows: $31 million for severance and related
benefits; $37 million for product line rationalizations; $10 million for
contract terminations and $4 million for plant closures.
INTEREST AND DEBT EXPENSE
Consolidated interest expense of $83 million in the third quarter of 1996
and $248 million for the first nine months of 1996 decreased 1% and 7%,
respectively, from the corresponding 1995 periods, primarily as a result of the
application of the net proceeds from the sale and issuance of Class A Common
Stock to retire debt in January 1995, lower market interest rates and the
completion of certain 1995 debt restructuring transactions.
OTHER INCOME (EXPENSE), NET
Consolidated other income (expense), net, consisted of $(7) million of
expense in the third quarter of 1996 and $5 million of income in the third
quarter of 1995, and $(22) million of expense in the first nine months of 1996
and $(9) million of expense in the first nine months of 1995. The higher level
of expense in the 1996 third quarter reflects lower interest income, foreign
exchange losses versus income in the prior year and higher financing costs. The
higher level of expense in the first nine months of 1996 reflects lower interest
income and higher international financing costs.
NET INCOME (LOSS)
Nabisco Holdings' net income in the third quarter and net loss for the
first nine months of 1996 include after tax expenses of $10 million and $316
million, respectively, related to the June 1996 restructuring program. Excluding
the effects of this program, and the 1995 extraordinary loss on the early
extinguishment of debt, third quarter 1996 net income would have been $80
million, an increase of 13% from the 1995 third quarter level of $71 million,
and $223 million in the first nine months of 1996, an increase of 13% from the
1995 first nine months level of $198 million, reflecting improved operating
income and lower interest expense in the 1996 periods.
IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS
On January 1, 1996 Nabisco Holdings and Nabisco adopted SFAS No. 121 and
SFAS No. 123. See Note 1 to the Consolidated Condensed Financial Statements.
LIQUIDITY AND FINANCIAL CONDITION
Net cash flows from operating activities amounted to $280 million for the
first nine months of 1996 compared to $104 million for the first nine months of
1995. The increase in net cash flows from operating activities primarily
reflects the June 1996 restructuring expense, net of $36 million paid, and a
smaller increase in working capital requirements.
Cash flows used in investing activities increased $320 million in the first
nine months of 1996 to $470 million from $150 million for the first nine months
of 1995, primarily as a result of increased spending in 1996 for business
acquisitions during the first nine months of 1996 of approximately $160 million
and the absence of proceeds from the 1995 product line sales of approximately
$162 million.
9
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Capital expenditures were $306 million in the first nine months of 1996.
Management expects that the current level of capital expenditures planned for
1996 will be approximately $445 million, which is sufficient to support the
strategic and operating needs of Nabisco Holdings' businesses. Management also
expects that cash flow from operations, together with borrowings from Nabisco's
bank credit facilities, will be sufficient to support its planned capital
expenditures in 1996.
Cash flows from financing activities for the first nine months of 1996
amounted to $151 million compared to cash flows used in financing activities of
$66 million in the first nine months of 1995. The $217 million increase in cash
flows from financing reflects higher borrowings to support investing activities
and higher dividend payments.
The Credit Agreement, dated April 28, 1995, among Nabisco Holdings, Nabisco
and various financial institutions, provides lending commitments of $2.0 billion
for five years and the issuance of up to $300 million of irrevocable letters of
credit. Availability is reduced by the aggregate amount of borrowings
outstanding and letters of credit issued. At September 30, 1996, the full $2.0
billion remained available.
The Commercial Paper Facility, dated November 3, 1995, among Nabisco
Holdings, Nabisco and various financial institutions, provides a 364 day $1.5
billion credit facility primarily to support the issuance of commercial paper
borrowings. Availability is reduced by an amount equal to the aggregate amount
of outstanding Nabisco commercial paper. At September 30, 1996, approximately
$1,439 million of commercial paper was outstanding. Accordingly, $61 million was
available under the Commercial Paper Facility. At the end of the 364 day period,
any bank borrowing outstanding under the Commercial Paper Facility is
convertible into a three-year term loan at Nabisco's option.
On June 20, 1996, the Registrants amended certain terms of the Credit
Agreement and the Commercial Paper Facility to accommodate the June
restructuring program. The Registrants are in the process of finalizing a new
five year $1.5 billion credit agreement and a new 364 day $1.5 billion
commercial paper liquidity facility to replace the existing credit facilities on
substantially similar terms. The Registrants believe that they are currently in
compliance with all covenants and restrictions imposed by the terms of their
indebtedness.
At September 30, 1996, Nabisco Holdings' outstanding consolidated debt
(notes payable and long-term debt, including current maturities) and total
capital (total debt and total stockholders' equity) amounted to approximately
$4.77 billion and $8.79 billion, respectively, of which total debt is higher by
approximately $316 million and total capital is higher by approximately $92
million than their respective balances at December 31, 1995. Approximately $4.44
billion of this debt was issued by Nabisco of which $62 million was secured
debt. The $330 million balance was issued by various Nabisco subsidiaries.
Nabisco Holdings' ratios of total debt to total stockholders' equity and total
debt to total capital at September 30, 1996 were 1.19 to 1 and .54 to 1,
respectively.
On June 5, 1996, Nabisco Holdings announced a 13% increase in its quarterly
dividend to an annual rate of $.62 per share from $.55 per share. At that rate,
the aggregate amount of dividends to be paid would be approximately $164
million. Nabisco Holdings believes that its internally generated cash and
borrowings under its bank credit agreements and any other lines of credit it may
establish will provide adequate funds for working capital, interest expense,
capital expenditures and payment of its anticipated quarterly dividends. Nabisco
Holdings expects to finance future acquisitions primarily from internally
generated cash, borrowings and issuances of additional equity.
------------------------
The foregoing discussion in "Management's Discussion and Analysis of
Financial Condition and Results of Operations" contains forward-looking
statements which reflect management's current views with respect to future
events and financial performance. These forward-looking statements are subject
to certain risks and uncertainties, including, but not limited to, the effect on
financial performance and future events of competitive pricing for products,
success of new product innovations and acquisitions, local economic conditions
and the effect of currency fluctuations in countries in which Nabisco Holdings
and its subsidiaries do business, the effects of domestic and foreign government
regulation and ratings of Nabisco's securities. Due to such uncertainties and
risks, readers are cautioned not to place undue reliance on such forward-looking
statements, which speak only as of the date hereof.
10
<PAGE>
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<S> <C>
*10.1 Amended and Restated Deferred Compensation Plan for NHC Directors (dated as of September 15, 1996).
*10.2 Amended and Restated Stock Option Plan for Directors of Nabisco Holdings Corp. and Subsidiaries (dated as
of September 15, 1996).
*10.3 Amended and Restated Nabisco Holdings Corp. 1994 Long Term Incentive Plan (dated as of September 15,
1996).
*11 Nabisco Holdings Corp. Computation of Earnings Per Share for the three months and nine months ended
September 30, 1996 and 1995.
*12 Nabisco, Inc. Computation of Ratio of Earnings to Fixed Charges/Deficiency in the Coverage of Fixed
Charges by Earnings Before Fixed Charges for the nine months ended September 30, 1996.
*27.1 Nabisco Holdings Corp. Financial Data Schedule.
*27.2 Nabisco, Inc. Financial Data Schedule.
</TABLE>
- ---------------
* Filed herewith.
(b) Reports on Form 8-K
None
11
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NABISCO HOLDINGS CORP.
NABISCO, INC.
(Registrants)
<TABLE>
<S> <C>
Date: October 31, 1996 /s/ CHRISTOPHER J. COUGHLIN
........................................................
Christopher J. Coughlin,
Executive Vice President and
Chief Financial Officer
/s/ ROBERT A. SCHIFFNER
........................................................
Robert A. Schiffner
Vice President and Controller
</TABLE>
12
<PAGE>
AS AMENDED AND RESTATED
(EFFECTIVE SEPTEMBER 15, 1996)
DEFERRED COMPENSATION PLAN FOR NHC DIRECTORS
ARTICLE I
1.1 NAME AND PURPOSE. The name of this plan is the "Deferred Compensation
Plan for NHC Directors" (the "Plan"). Its purpose is to provide non-employee
Directors of the Company with increased flexibility in timing the receipt of
board service fees and to assist the Company in attracting and retaining
qualified individuals to serve as Directors.
1.2 DEFINITIONS. Whenever used in the Plan, the following terms shall
have the meaning set forth below:
(a) "Closing Price" means the closing price of Common Stock, as
reported in THE Wall STREET JOURNAL.
(b) "Common Stock" means the Class A Common Stock of Nabisco
Holdings Corp.
(c) "Company" means Nabisco Holdings Corp. and each
Participating Company.
(d) "Compensation" means all remuneration paid to a Director for
service as a Director other than reimbursement for expenses
and shall include, but not be limited to, Board of Directors
retainer fees, Board of Directors committee chairmanship
and/or committee attendance fees, and any fees for
attendance at Board of Directors meetings.
(e) "Director" means any individual serving on the Board of
Directors of the Company who is not an employee of the
Company or any of its subsidiaries.
(f) "Participant" means a Director who has filed an election to
participate under Section 3.1 with regard to any Plan Year.
<PAGE>
(g) "Participating Company" means any corporation which is a
direct or indirect subsidiary of Nabisco Holdings Corp.
which has, by action of its board of directors, adopted the
Plan and consented to being a Participating Company in the
Plan.
(h) "Plan Administrator" means a Committee consisting of the
senior executive in charge of personnel at the Company and
not less than two other employees of the Company designated
by the Chief Executive Officer of the Company.
(i) "Plan Year" means the calendar year.
ARTICLE II
2.1 PARTICIPATION IN THE PLAN. Any individual who is a Director as
defined in Section 1.2(e) may participate in the Plan.
ARTICLE III
3.1 ELECTION TO PARTICIPATE. Each Director may elect annually to have
payment of all or any increment of 25% of his or her Compensation for that Plan
Year deferred. An election to defer may also provide that the Compensation
deferred will be paid in January of a specified year in the future; provided
however, that if the Participant ceases to be a Director prior to such specified
year, the Participant's account will be paid as soon as practicable following
the end of the Plan Year during which the Participant ceased to be a Director.
No election to defer under this Plan may be made after December 31 of the year
preceding the Plan Year during which Compensation would otherwise be paid or, if
later, within thirty days after the date a Director becomes a Director. An
election to defer any Compensation shall be in writing and shall be delivered to
the Plan Administrator. An election to defer shall be irrevocable by the
Director and shall be effective only for the Plan Year immediately following the
date on which it was filed. In the absence of a written election to defer filed
by a Director with the Plan Administrator, any Compensation will be paid
directly to the Director.
3.2 MODE OF DEFERRAL. Payment of a Participant's Compensation may be
deferred in 25% increments by means of a cash credit, a stock credit or a
combination of the two as the Participant shall elect in writing at the same
time as the election provided for in Section 3.1. If a
2
<PAGE>
Participant fails to make an election as to mode of deferral, he or she shall be
deemed to have elected deferral by means of a cash credit. Cash credits and
stock credits shall be recorded in accounts established in Participants' names
on the books of the Company.
(a) CASH CREDITS. If the deferral is wholly or partly by means
of a cash credit, the Participant's cash credit account
shall be credited, as of the last day of the calendar
quarter, with the dollar amount of Compensation deferred
during the quarter by means of a cash credit. As of the
last day of each calendar quarter, the Participant's cash
credit account shall also be credited with interest
equivalent in an amount determined by applying to the
balance in the account as of the first day of the quarter
(less any distributions during the quarter) an interest rate
for such quarter which, when annualized, shall be the prime
rate of Citibank, N.A. as of the first business day of the
quarter. Interest shall be calculated on the actual number
of days in the quarter based upon a 360-day year.
(b) STOCK CREDITS. If the deferral is wholly or partly by means
of a stock credit, the Participant's stock credit account
shall be credited, as of the last day of the calendar
quarter, with a Common Stock equivalent equal to the number
of shares of Common Stock (including fractions of a share)
that could have been purchased at the average of the Closing
Price of Common Stock on each business day during the last
month of the calendar quarter with the amount of the
Compensation deferred during the quarter by means of a stock
credit. As of the date any dividend is paid to shareholders
of Common Stock, the Participant's stock credit account
shall also be credited with an additional Common Stock
equivalent equal to the number of shares of Common Stock
(including fractions of a share) that could have been
purchased at the Closing Price of Common Stock on such date
with the dividend paid on the number of shares of Common
Stock to which the Participant's stock credit account is
then equivalent. In case of dividends paid in property, the
dividend shall be deemed to be the fair market value of the
property at the time of distribution of the dividend, as
determined by the Plan Administrator.
(c) A Participant may elect in writing that all or any
designated portion of his stock credit account or his cash
credit account be changed to, and such Participant shall
instead be credited with, the other type of account as of
the first day of the month following the month in
3
<PAGE>
which the election is received by the Plan Administrator. For this
purpose, the value of a participant's stock credit account will be
determined using the average of the Closing Price of Common Stock on
each business day during the month preceding the effective date of the
election. Notwithstanding the foregoing, any election to transfer
between accounts may be made no more frequently than once in any six-
month period and no such election may be made unless the transfer
would be an exempt transaction for purposes of Section 16(b) of the
Securities Exchange Act of 1934.
3.3 DISTRIBUTION OF CREDITS.
(a) Unless a Participant has elected to receive installment
payments as provided below, payment of a Participant's
accounts shall be made in one lump-sum as soon as
practicable following the end of the Plan Year in which the
Participant ceases to be a Director.
At the election of the Participant made in writing and
delivered to the Plan Administrator at any time on or before
December 1 of the year of termination of the Participant's
service as a Director, distribution of all of his or her
account, commencing as soon as practicable following the end
of the Plan Year in which the Participant ceases to be a
Director, shall be made in any number of annual installments
not exceeding ten. Any such election, unless made
irrevocable by its terms, may be changed by written notice
to the Plan Administrator at any time prior to December 1 of
the Plan Year of a Participant's termination of service as a
Director. If a Participant has elected payment in a
specified year under Section 3.1, distribution of his or her
account will only be made in a single sum payment.
(b) Distribution of a Participant's cash credit and stock credit
accounts shall be made in cash. The amount of the
distribution for stock credit accounts shall be determined
by multiplying the number of shares of Common Stock
attributable to the installment by the average of the
Closing Price of Common Stock on each business day in the
month of December immediately prior to the Plan Year in
which the installment is to be paid.
4
<PAGE>
3.4 ADJUSTMENT. If at any time the number of outstanding shares of Common
Stock shall be increased as the result of any stock dividend, subdivision or
reclassification of shares, the number of shares of Common Stock to which each
Participant's stock credit account is equivalent shall be increased in the same
proportion as the outstanding number of shares of Common Stock is increased, or
if the number of outstanding shares of Common Stock shall at any time be
decreased as the result of any combination or reclassification of shares, the
number of shares of Common Stock to which each Participant's stock credit
account is equivalent shall be decreased in the same proportion as the
outstanding number of shares of Common Stock is decreased. In the event the
Company shall at any time be consolidated with or merged into any other
corporation and holders of the Company's Common Stock receive common shares of
the resulting or surviving corporation, there shall be credited to each
Participant's stock credit account, in place of the shares then credited
thereto, a stock equivalent determined by multiplying the number of common
shares of stock given in exchange for a share of Common Stock upon such
consolidation or merger, by the number of shares of Common Stock to which the
Participant's account is then equivalent. If in such a consolidation or merger,
holders of the Company's Common Stock shall receive any consideration other than
common shares of the resulting or surviving corporation, the Plan Administrator,
in its sole discretion, shall determine the appropriate change in Participants'
accounts.
3.5 INSTALLMENT AMOUNT. In the event a Participant has elected to receive
distribution of his or her accounts in more than one installment, the amount of
each installment shall be determined by multiplying the current balance
(denominated in cash units for the portion elected to be deferred as cash
credits and denominated in stock units for the portion elected to be deferred in
stock credits) in the accounts as determined under Section 3.2, by a fraction,
the numerator of which is one, and the denominator of which is the number of
installments yet to be paid.
3.6 DISTRIBUTION UPON DEATH. In the event of the death of a Participant,
whether before or after ceasing to serve as a Director, any cash credit account
and stock credit account to which he or she was entitled, shall be converted to
cash and distributed in a lump sum to the beneficiary designated by the Director
for purposes of the Directors Life Insurance Plan. Alternatively, the
Participant may designate a different person or persons or the survivors
thereof, including corporations, unincorporated associations or trusts, as the
Participant's beneficiary under this Plan. All such designations shall be made
in writing signed by the Participant and delivered to the Plan Administrator. A
Participant may from time to time revoke or change any such designation by
written notice to the Plan Administrator. If there is no unrevoked designation
on file with the Plan Administrator at the time of the Participant's death, or
if the person or persons designated therein shall have all predeceased the
Participant or otherwise ceased to exist, and if there is no effective
beneficiary designation by the Director under the Directors Life Insurance Plan,
such distributions shall be made in accordance with the Participant's will or in
the absence of a will, to the administrator of the Participant's estate. Any
distribution under this Section 3.6
5
<PAGE>
shall be made as soon as practicable following the end of the calendar quarter
in which the Plan Administrator is notified of the Participant's death. In this
case, a Participant's stock credit account shall be converted to cash by
multiplying the number of whole and fractional shares of Common Stock to which
the Participant's stock credit account is equivalent by the average of the
Closing Price of Common Stock on each business day during the last month of the
calendar quarter prior to the date of death.
3.7 WITHHOLDING TAXES. The Company shall deduct from all distributions
under the Plan any taxes required to be withheld by federal, state, or local
governments.
ARTICLE IV
4.1 PLAN ADMINISTRATOR. The Plan Administrator shall have full power and
authority to administer the Plan including the power to promulgate forms to be
used with regard to the Plan, the power to promulgate rules of Plan
administration, the power to settle any disputes as to rights or benefits
arising from the Plan, and the power to make such decisions or take such action
as the Plan Administrator, in its sole discretion, deems necessary or advisable
to aid in the proper maintenance of the Plan.
ARTICLE V
5.1 FUNDING. No promise hereunder shall be secured by any specific assets
of the Company, nor shall any assets of the Company be designated as
attributable or allocated to the satisfaction of such promises.
ARTICLE VI
6.1 NON-ALIENATION OF BENEFITS. No benefit under the Plan shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, or charge; and any attempt to do so shall be void. No such
benefit shall, prior to receipt thereof by the Participant, be in any manner
liable for or subject to the debts, contracts, liabilities, engagements, or
torts of the Participant.
6
<PAGE>
ARTICLE VII
7.1 DELEGATION OF ADMINISTRATIVE DUTIES. Administrative duties imposed by
this Plan may be delegated by the Plan Administrator or the individual charged
with such duties.
7.2 GOVERNING LAW. This Plan shall be governed by the laws of the State
of Delaware.
7.3 AMENDMENT, MODIFICATION AND TERMINATION OF THE PLAN. The Plan
Administrator at any time may terminate and in any respect, amend or modify the
Plan.
7
<PAGE>
STOCK OPTION PLAN FOR DIRECTORS
OF
NABISCO HOLDINGS CORP. AND SUBSIDIARIES
(AS AMENDED AND RESTATED EFFECTIVE SEPTEMBER 15, 1996)
Nabisco Holdings Corp. ("Holdings"), a Delaware corporation, hereby adopts
the Stock Option Plan for Directors of Nabisco Holdings Corp. and Subsidiaries,
subject to approval of its stockholders. The purposes of this Plan are as
follows:
(1) To further the growth, development and financial success of
Holdings by providing additional incentives to certain of its Directors who have
been or will have or be given responsibility for the management or
administration of Holdings' business affairs by assisting them to become owners
of capital stock of Holdings and thus to benefit directly from its growth,
development and financial success.
(2) To enable Holdings to obtain and retain the services of Directors
considered essential to the long range success of Holdings by providing and
offering them an opportunity to become owners of capital stock of Holdings under
Options.
ARTICLE I
DEFINITIONS
SECTION 1.1 - GENERAL
Whenever the following terms are used in this Plan they shall have the
meaning specified below unless the context clearly indicates to the contrary.
SECTION 1.2 - BOARD
"Board" shall mean the Board of Directors of Holdings.
SECTION 1.3 - CODE
"Code" shall mean the Internal Revenue Code of 1986, as amended.
SECTION 1.4 - COMMITTEE
"Committee" shall mean the Compensation Committee of the Board or any
other committee appointed by the Board pursuant to Section 6.1.
1
<PAGE>
SECTION 1.5 - COMMON STOCK
"Common Stock" shall mean the Class A Common Stock of Holdings.
SECTION 1.6 - DIRECTOR
"Director" shall mean a member of the Board.
SECTION 1.7 - ELIGIBLE DIRECTOR
"Eligible Director" shall mean a Director who has never been an
employee or officer of RJRN Holdings or any of its Subsidiaries.
SECTION 1.8 - HOLDINGS
"Holdings" shall mean Nabisco Holdings Corp.
SECTION 1.9 - OPTION
"Option" shall mean an option granted under the Plan to purchase
Common Stock. Options include only options which are not intended to be
"incentive stock options" under Section 422 of the Code.
SECTION 1.10 - OPTION PRICE
"Option Price" shall have the meaning given in Section 4.2.
SECTION 1.11 - OPTIONEE
"Optionee" shall mean a Director to whom an Option is granted under
the Plan.
SECTION 1.12 - PLAN
"Plan" shall mean the Stock Option Plan for Directors of Nabisco
Holdings Corp. and Subsidiaries.
SECTION 1.13 - RJRN HOLDINGS
"RJRN Holdings" shall mean RJR Nabisco Holding Corp.
2
<PAGE>
SECTION 1.14 - SECRETARY
"Secretary" shall mean the Secretary of Holdings.
SECTION 1.15 - SUBSIDIARY
"Subsidiary" shall mean any corporation in an unbroken chain of
corporations if each of the corporations, or if each group of commonly
controlled corporations, other than the last corporation in an unbroken chain
then owns stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
3
<PAGE>
ARTICLE II
SHARES SUBJECT TO PLAN
SECTION 2.1 - SHARES SUBJECT TO PLAN
The shares of stock subject to Options shall be shares of Common
Stock. The aggregate number of shares of Common Stock which may be issued upon
exercise of Options shall not exceed 300,000.
SECTION 2.2 - UNEXERCISED OPTIONS
If any Option expires or is canceled without having been fully
exercised, the number of shares subject to such Option but as to which such
Option was not exercised prior to its expiration or cancellation may again be
optioned hereunder, subject to the limitations of Section 2.1.
4
<PAGE>
ARTICLE III
GRANTING OF OPTIONS
SECTION 3.1 - ELIGIBILITY
Any Eligible Director of Holdings or of any Subsidiary shall be
eligible to be granted Options as set forth in this Article III.
SECTION 3.2 - GRANTING OF INITIAL OPTIONS
Each Eligible Director who is elected to serve on the Board shall be
granted an Option to purchase an aggregate of 6,000 shares of Common Stock.
Such Option shall be granted only once to each Eligible Director as soon as
practicable following the Director's initial election to serve on the Board and
shall be subject to the terms and conditions set forth in Article IV.
SECTION 3.3 - GRANTING OF ANNUAL OPTIONS
In addition to Options granted pursuant to Section 3.2, each Eligible
Director shall receive an annual grant of an Option to purchase the number of
shares of Common Stock determined pursuant to the following formula (rounded up
to the next multiple of 100): $45,000, divided by the closing trading price of
Common Stock (as reported on the New York Stock Exchange consolidated tape) on
the date of grant.
Such Option shall be granted annually on the date of such Director's
election or re-election to serve on the Board; provided, however, that the grant
for 1995 shall be made on February 15, 1995.
All Options granted pursuant to this Section 3.3 shall be subject to the
terms and conditions set forth in Article IV.
5
<PAGE>
ARTICLE IV
TERMS OF OPTIONS
SECTION 4.1 - OPTION AGREEMENT
The grant of Options to Eligible Directors shall be evidenced by a
Stock Option Agreement, which shall be executed by the Optionee and an
authorized officer of Holdings and which shall incorporate the terms and
conditions of this Article IV and such other terms and conditions as the
Committee shall determine consistent with the Plan.
SECTION 4.2 - OPTION PRICE
The exercise price of each share of Common Stock subject to an Option
granted pursuant to Section Article III shall be the closing trading price of
Common Stock (as reported on the New York Stock Exchange consolidated tape) on
the date of grant.
SECTION 4.3 - COMMENCEMENT OF EXERCISABILITY
Options granted pursuant to Section 3.2 shall vest immediately but shall
not be exercisable prior to the date set forth in the Stock Option Agreement,
which date shall be no earlier than six months after the date of grant.
Thereafter, such Options shall be exercisable in full, subject to applicable
securities regulations. Options granted pursuant to Section 3.3 shall vest in
three installments. The first installment shall vest on the first anniversary
of the date of grant for 33% of the number of shares of Common Stock subject to
the Option. Thereafter, on each subsequent anniversary of the date of grant, an
installment shall vest for 33% and 34%, respectively, of the number of shares
subject to the Option until the Option has become fully vested. The Stock
Option Agreements may contain restrictions on the exercisability of such
Options. To the extent that any of the above installments is not exercised when
it becomes exercisable, it shall not expire, but shall continue to be
exercisable at any time thereafter until the Option shall terminate, expire or
be surrendered. An exercise shall be for whole shares only.
SECTION 4.4 - EXPIRATION OF OPTION
The Option shall expire and may not be exercised to any extent after
the expiration of ten years from the date the Option was granted.
6
<PAGE>
ARTICLE V
EXERCISE OF OPTIONS
SECTION 5.1 - PERSONS ELIGIBLE TO EXERCISE
During the lifetime of the Optionee, only he or his guardian may
exercise an Option granted to him, or any portion thereof. After the death of
the Optionee, any exercisable portion of an Option may, prior to the time when
such portion becomes unexercisable under Section 4.4 be exercised by his
personal representative or by any person empowered to do so under the deceased
Optionee's will or under the then applicable laws of descent and distribution.
SECTION 5.2 - PARTIAL EXERCISE
At any time and from time to time prior to the time when any exercisable
Option or exercisable portion thereof expires or becomes unexercisable under
Section 4.4, such Option or portion thereof may be exercised in whole or in
part; provided, however, that Holdings shall not be required to issue fractional
shares.
SECTION 5.3 - MANNER OF EXERCISE
An exercisable Option, or any exercisable portion thereof, may be
exercised solely by delivering to the Secretary or his office all of the
following prior to the time when such Option or such portion becomes
unexercisable:
(a) Notice in writing signed by the Optionee or other person then
entitled to exercise such Option or portion thereof, stating that such
Option or portion thereof is exercised;
(b) Full payment of the Option Price (in cash, by check or by a
combination thereof) for the shares with respect to which such Option or
portion thereof is thereby exercised, together with payment or arrangement
for payment of any federal income or other tax required to be withheld by
Holdings with respect to such shares;
(c) Such representations and documents as the Committee reasonably
deems necessary or advisable to effect compliance with all applicable
provisions of the Securities Act of 1933, as amended and any other federal,
state or foreign securities laws or regulations. The Committee may, in its
absolute discretion, also take whatever additional actions it deems
appropriate to effect such compliance,
7
<PAGE>
including, without limitation, placing legends on share certificates and
issuing stop-transfer orders to transfer agents and registrars; and
(d) In the event that the Option or portion thereof shall be
exercised pursuant to Section 5.1 by any person or persons other than the
Optionee, appropriate proof of the right of such person or persons to
exercise the Option or portion thereof.
SECTION 5.4 - RIGHTS AS STOCKHOLDERS
The holders of Options shall not be, nor have any of the rights or
privileges of, stockholders of Holdings in respect of any shares purchasable
upon the exercise of any part of an Option unless and until certificates
representing such shares have been issued by Holdings to such holders.
SECTION 5.5 - TRANSFER RESTRICTIONS
The Committee, in its absolute discretion, may impose such
restrictions on the transferability of the shares purchasable upon the exercise
of an Option as it deems appropriate, and any such restriction shall be set
forth in the respective Stock Option Agreement and may be referred to on the
certificates evidencing such shares.
8
<PAGE>
ARTICLE VI
ADMINISTRATION
SECTION 6.1 - COMPENSATION COMMITTEE
The Plan shall be administered by the Compensation Committee of the
Board. In its absolute discretion, the Board may appoint a different committee
comprised of two or more Directors to administer all or a portion of the Plan.
Appointment of Committee members shall be effective upon acceptance of
appointment. Committee members may resign at any time by delivering written
notice to the Board. Vacancies in the Committee shall be filled by the Board.
SECTION 6.2 - DUTIES AND POWERS OF COMMITTEE
It shall be the duty of the Committee to conduct the general
administration of the Plan in accordance with its provisions. The Committee
shall have the power to interpret the Plan and the Options and to adopt such
rules for the administration, interpretation, and application of the Plan as are
consistent therewith and to interpret, amend or revoke any such rules. Any such
interpretations and rules shall be consistent with the basic purpose of the Plan
to grant Options. In its absolute discretion, the Board may at any time and
from time to time exercise any and all rights and duties of the Committee under
the Plan. The Committee may act either by vote at a telephonic or other meeting
or by a memorandum or other written instrument signed by a majority of the
Committee.
SECTION 6.3 - COMPENSATION; PROFESSIONAL ASSISTANCE; GOOD FAITH ACTIONS
Members of the Committee shall not receive compensation for their
services as members but all expenses and liabilities they incur in connection
with the administration of the Plan shall be borne by Holdings. The Committee
may employ attorneys, consultants, accountants, appraisers, brokers or other
persons. The Committee, Holdings and the officers and Directors of Holdings
shall be entitled to rely upon the advice, opinions or valuations of any such
persons. All actions taken and all interpretations and determinations made by
the Committee in good faith shall be final and binding upon all Optionees,
Holdings and all other interested persons. No member of the Committee shall be
personally liable for any action, determination or interpretation made in good
faith with respect to the Plan or the Options, and all members of the Committee
shall be fully protected by Holdings with respect to any such action,
determination or interpretation.
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ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.1 - AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN
The Plan may be wholly or partially amended or otherwise modified,
suspended or terminated at any time or from time to time by the Board. Except as
expressly permitted by the terms of the Plan, neither the amendment, suspension
nor termination of the Plan shall, without the consent of the holder of the
Option, alter or impair any rights or obligations under any Option theretofore
granted. No Option may be granted during any period of suspension nor after
termination of the Plan, and in no event may any Option be granted under this
Plan after the expiration of ten years from the date the Plan is adopted or the
date the stockholders of Holdings approve this Plan, if earlier.
SECTION 7.2 - ADJUSTMENTS IN OUTSTANDING OPTIONS
In the event that the outstanding shares of Common Stock subject to
Options are, from time to time, changed into or exchanged for a different number
or kind of shares of Holdings or other securities of Holdings by reason of a
merger, consolidation, recapitalization, reclassification, stock split-up, stock
dividend, combination of shares, or otherwise, the Committee shall make an
appropriate and equitable adjustment in the aggregate number of shares which may
be issued pursuant to Section 2.1 hereof and the number and kind of shares or
other consideration as to which all outstanding Options, or portions thereof
then unexercised, shall be exercisable. Any such adjustment made by the
Committee shall be final and binding upon all Optionees, Holdings and all other
interested persons.
SECTION 7.3- EFFECT OF PLAN UPON OTHER OPTIONS AND COMPENSATION PLANS
Nothing in this Plan shall be construed to limit the right of Holdings
or any of its Subsidiaries (a) to establish any other forms of incentives or
compensation for employees or Directors of Holdings or any of its Subsidiaries
or (b) to grant or assume options otherwise than under this Plan in connection
with any proper corporate purpose, including, but not by way of limitation, the
grant or assumption of options in connection with the acquisition by purchase,
lease, merger, consolidation or otherwise, of the business, stock or assets of
any corporation, firm or association.
SECTION 7.4 - TITLES
Titles are provided herein for convenience only and are not to serve
as a basis for interpretation or construction of the Plan.
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SECTION 7.5 - PRONOUNS
The masculine pronoun shall include the feminine and neuter and the
singular shall include the plural, where the context so indicates.
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EXHIBIT 10.3
PLAN DOCUMENT
NABISCO HOLDINGS CORP. 1994
LONG TERM INCENTIVE PLAN
(AS AMENDED AND RESTATED
EFFECTIVE SEPTEMBER 15, 1996)
1. PURPOSE OF PLAN
The Nabisco Holdings Corp. 1994 Long Term Incentive Plan (the "Plan") is
designed:
(a) to promote the long term financial interests and growth of Nabisco
Holdings Corp. and subsidiaries (the "Corporation") by attracting and retaining
management personnel with the training, experience and ability to enable them to
make a substantial contribution to the success of the Corporation's business;
(b) to motivate management personnel by means of growth-related incentives
to achieve long range goals; and
(c) to further the identity of interests of participants with those of the
stockholders of the Corporation through opportunities for increased stock, or
stock-based, ownership in the Corporation.
2. DEFINITIONS
As used in the Plan, the following words shall have the following meanings:
(a) "Nabisco" means Nabisco Holdings Corp.;
(b) "RJRN" means RJR Nabisco Holdings Corp.;
(c) "Grant" means an award made to a Participant pursuant to the Plan and
described in Paragraph 5, including, without limitation, an award of an
Incentive Stock Option, Stock Option, Stock Appreciation Right, Dividend
Equivalent Right, Restricted Stock, Purchase Stock, Performance Units,
Performance Shares or Other Stock-Based Grant, or any combination of the
foregoing;
(d) "Grant Agreement" means an agreement between Nabisco and a Participant
that sets forth the terms, conditions and limitations applicable to a Grant;
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(e) "Board of Directors" means the Board of Directors of Nabisco;
(f) "Committee" means the Compensation Committee of the Board of
Directors;
(g) "Common Stock" or "Share" means Class A common stock of Nabisco which
may be authorized but unissued, or issued and reacquired;
(h) "Exchange Act" means the Securities Exchange Act of 1934, as amended;
(i) "Key Employee" means a person, including an officer, in the regular
full-time employment of Nabisco or one of its Subsidiaries who, in the opinion
of the Committee, is, or is expected, to be primarily responsible for the
management, growth or protection of some part or all of the business of the
Corporation. "Key Employee" also means a person, including an officer, in the
regular full-time employment of RJRN or one of its subsidiaries who, in the
opinion of the Committee has, or is expected to have, a significant impact on
the management, growth or protection of some part or all of the business of the
Corporation;
(j) "Fair Market Value" means such value of a Share as reported for stock
exchange transactions and/or determined in accordance with any applicable
resolutions or regulations of the Committee in effect at the relevant time;
(k) "Participant" means a Key Employee, or other person having a unique
relationship with Nabisco or one of its Subsidiaries, to whom Grants may be made
in accordance with Paragraph 4, or to whom one or more Grants have been made and
such Grants have not all been forfeited or terminated under the Plan; provided,
however, a non-employee director of RJRN, Nabisco or one of its Subsidiaries may
not be a Participant;
(l) "Subsidiary" means any corporation other than Nabisco in an unbroken
chain of corporations beginning with Nabisco if each of the corporations other
than the last corporation in the unbroken chain owns 50% or more of the voting
stock in one of the other corporations in such chain.
3. ADMINISTRATION OF PLAN
(a) The Plan shall be administered by the Committee, which shall be
composed solely of "non-employee directors" within the meaning of Rule 16b-3
(and any other applicable rule) promulgated under Section 16(b) of the Exchange
Act. The Committee may adopt its own rules of procedure, and the action of a
majority of the Committee, taken at a meeting or taken without
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a meeting by a writing signed by such majority, shall constitute action by the
Committee. The Committee shall have the power and authority to administer,
construe and interpret the Plan, to make rules for carrying it out and to make
changes in such rules. Any such interpretations, rules, and administration
shall be consistent with the basic purposes of the Plan.
(b) The Committee may delegate to the Chief Executive Officer and to other
senior officers of the Corporation its duties under the Plan subject to such
conditions and limitations as the Committee shall prescribe except that only the
Committee may designate and make Grants to Participants who are subject to
Section 16 of the Exchange Act.
(c) The Committee may employ attorneys, consultants, accountants,
appraisers, brokers or other persons. The Committee, Nabisco, and the officers
and directors of Nabisco shall be entitled to rely upon the advise, opinions or
valuations of any such persons. All actions taken and all interpretations and
determinations made by the Committee in good faith shall be final and binding
upon all Participants, Nabisco and all other interested persons. No member of
the Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or the Grants, and
all members of the Committee shall be fully protected by Nabisco with respect to
any such action, determination or interpretation.
4. ELIGIBILITY
The Committee may from time to time make Grants under the Plan to such Key
Employees, or other persons having a unique relationship with Nabisco or any of
its Subsidiaries, and in such form and having such terms, conditions and
limitations as the Committee may determine. No Grants may be made under this
Plan to non-employee directors of RJRN, Nabisco or any of its Subsidiaries.
Grants may be granted singly, in combination or in tandem. The terms,
conditions and limitations of each Grant under the Plan shall be set forth in a
Grant Agreement, in a form approved by the Committee, consistent, however, with
the terms of the Plan; provided, however, such Grant Agreement shall contain
provisions dealing with the treatment of Grants in the event of the termination,
death or disability of a Participant, and may also include provisions concerning
the treatment of Grants in the event of a change of control of Nabisco.
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5. GRANTS
From time to time, the Committee will determine the forms and amounts of
Grants for Participants. Such Grants may take the following forms in the
Committee's sole discretion:
(a) INCENTIVE STOCK OPTIONS - These are stock options within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended ("Code"), to
purchase Common Stock. In addition to other restrictions contained in the Plan,
an option granted under this Section 5(a), (i) may not be exercised more than 10
years after the date it is granted, (ii) may not have an option price less than
the Fair Market Value of Common Stock on the date the option is granted, (iii)
must otherwise comply with Code Section 422, and (iv) must be designated as an
"Incentive Stock Option" by the Committee. The maximum aggregate Fair Market
Value of Common Stock (determined at the time of each Grant) with respect to
which any Participant may first exercise Incentive Stock Options under this Plan
and any Incentive Stock Options granted to the Participant for such year under
any plans of RJRN, Nabisco or any Subsidiary in any calendar year is $100,000.
Payment of the option price shall be made in cash or in shares of Common Stock,
or a combination thereof, in accordance with the terms of the Plan, the Grant
Agreement, and of any applicable guidelines of the Committee in effect at the
time. No Participant may receive Grants of Incentive Stock Options in any
calendar year to purchase more than one million shares.
(b) OTHER STOCK OPTIONS - These are options to purchase Common Stock which
are not designated by the Committee as "Incentive Stock Options". At the time
of the Grant the Committee shall determine, and shall have contained in the
Grant Agreement or other Plan rules, the option exercise period, the option
price, and such other conditions or restrictions on the grant or exercise of the
option as the Committee deems appropriate, which may include the requirement
that the grant of options is predicated on the acquisition of Purchase Stock
under Section 5(e) by the Optionee. In addition to other restrictions contained
in the Plan, an option granted under this Section 5(b), (i) may not be exercised
more than 15 years after the date it is granted and (ii) may not have an option
exercise price less than 50% of the Fair Market Value of Common Stock on the
date the option is granted. Payment of the option price shall be made in cash
or in shares of Common Stock, or a combination thereof, in accordance with the
terms of
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the Plan and of any applicable guidelines of the Committee in effect at the
time. Payment of the option price may also be made by tender of an amount equal
to the full exercise price which has been borrowed from Nabisco or one of its
Subsidiaries if the Participant also authorizes the concurrent sale of the
exercised Common Stock by a broker (through an arrangement established by
Nabisco, or one of its Subsidiaries, for Participants) and repays the borrowing,
all in accordance with any applicable guidelines of the Committee. No
participant may receive Grants of options in any calendar year to purchase more
than one million Shares.
(c) STOCK APPRECIATION RIGHTS - These are rights that on exercise entitle
the holder to receive the excess of (i) the Fair Market Value of a share of
Common Stock on the date of exercise over (ii) the Fair Market Value on the date
of Grant (the "base value") multiplied by (iii) the number of rights exercised
in cash, stock or a combination thereof as determined by the Committee. Stock
Appreciation Rights granted under the Plan may, but need not be, granted in
conjunction with an option under Paragraphs 5(a) or 5(b). The Committee, in the
Grant Agreement or by other Plan rules, may impose such conditions or
restrictions on the exercise of Stock Appreciation Rights as it deems
appropriate, and may terminate, amend, or suspend such Stock Appreciation Rights
at any time. No Stock Appreciation Right granted under this Plan may be
exercised more than 15 years after the date it is granted. To the extent that
any Stock Appreciation Right that shall have become exercisable, but shall not
have been exercised or canceled or, by reason of any termination of employment,
shall have become non-exercisable, it shall be deemed to have been exercised
automatically, without any notice of exercise, on the last day of which it is
exercisable, provided that any conditions or limitations on its exercise are
satisfied (other than (i) notice of exercise and (ii) exercise or election to
exercise during the period prescribed) and the Stock Appreciation Right shall
then have value. Such exercise shall be deemed to specify that, the holder
elects to receive cash and that such exercise of a Stock Appreciation Right
shall be effective as of the time of automatic exercise. Stock Appreciation
Rights will be granted for no consideration. No Participant may receive Grants
of more than one million Stock Appreciation Rights in any calendar year.
(d) RESTRICTED STOCK - Restricted Stock is Common Stock delivered to a
Participant with or without payment of consideration with restrictions or
conditions on the Participant's right to transfer or sell such stock; provided
that the price of any Restricted Stock delivered for
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consideration and not as bonus stock may not be less than 50% of the Fair Market
Value of Common Stock on the date such Restricted Stock is granted or the price
of such Restricted Stock may be the par value. If a Participant irrevocably
elects in writing in the calendar year preceding a Grant of Restricted Stock,
dividends paid on the Restricted Stock granted may be paid in shares of
Restricted Stock equal to the cash dividend paid on Common Stock. The number of
shares of Restricted Stock and the restrictions or conditions on such shares
shall be as the Committee determines, in the Grant Agreement or by other Plan
rules, and the certificate for the Restricted Stock shall bear evidence of the
restrictions or conditions. No Participant may receive Grants of more than
100,000 shares of Restricted Stock in any calendar year.
(e) PURCHASE STOCK - Purchase Stock are shares of Common Stock offered to
a Participant at such price as determined by the Committee, the acquisition of
which may make him eligible to receive other grants under the Plan, including,
but not limited to, Stock Options; provided, however, that the price of such
Purchase Shares may not be less than 50% of the Fair Market Value of the Common
Stock on the date such shares of Purchase Stock are offered. No Participant may
receive Grants of more than one million shares of Purchase Stock in any calendar
year.
(f) DIVIDEND EQUIVALENT RIGHTS - These are rights to receive cash payments
from Nabisco at the same time and in the same amount as any cash dividends paid
on an equal number of shares of Common Stock to shareholders of record during
the period such rights are effective. The Committee, in the Grant Agreement or
by other Plan rules, may impose such restrictions and conditions on the Dividend
Equivalent Rights, including the date such rights will terminate, as it deems
appropriate, and may terminate, amend, or suspend such Dividend Equivalent
Rights at any time. No Participant may receive Grants of Dividend Equivalent
Rights on the equivalent of more than one million Shares in any calendar year.
(g) PERFORMANCE UNITS - These are rights to receive at a specified future
date, payment in cash of an amount equal to all or a portion of the value of a
unit granted by the Committee. At the time of the Grant, in the Grant Agreement
or by other Plan rules, the Committee must determine the base value of the unit,
the performance factors applicable to the determination of the ultimate payment
value of the unit and the period over which Corporation performance will be
measured. The performance factors for any specific Grants hereunder shall be
determined in
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the discretion of the Committee, and may be based on any of the following:
return on equity; net income; cash net income; free cash flow; earnings per
share; cash earnings per share; or operating company contribution. These
factors must include a minimum performance standard for the Corporation below
which no payment will be made and a maximum performance level above which no
increased payment will be made. No Participant may receive Grants of
Performance Units in any calendar year with a maximum payment (if maximum
performance level is attained) in excess of $8 million. The term over which
Corporation performance will be measured shall be not less than six months.
(h) PERFORMANCE SHARES - These are rights to receive at a specified future
date, payment in cash or Common Stock, as determined by the Committee, of an
amount equal to all or a portion of the Fair Market Value for all days that the
Common Stock is traded during the last forty-five (45) days of the specified
period of performance of a specified number of shares of Common Stock at the end
of a specified period based on Corporation performance during the period. At
the time of the Grant, the Committee, in the Grant Agreement or by Plan rules,
will determine the factors which will govern the portion of the rights so
payable and the period over which Corporation performance will be measured. The
performance factors for any specific Grants hereunder shall be determined in the
discretion of the Committee, and may be based on any of the following: return
on equity; net income; cash net income; free cash flow; earnings per share; cash
earnings per share; or operating company contribution. The factors will be
based on Corporation performance and must include a minimum performance standard
for the Corporation below which no payment will be made and a maximum
performance level above which no increased payment will be made. No Participant
may receive Grants of Performance Shares in any calendar year with a maximum
payment (if the maximum performance level is attained) of more than 300,000
Shares (or its cash equivalent). The term over which Corporation performance
will be measured shall be not less than six months. Performance Shares will be
granted for no consideration.
(i) OTHER STOCK-BASED GRANTS - The Committee may make other Grants under
the Plan pursuant to which shares of Common Stock (which may, but need not, be
shares of Restricted Stock pursuant to Paragraph 5(d)), are or may in the future
be acquired, or Grants denominated in stock units, including ones valued using
measures other than market value. Other Stock-Based
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Grants may be granted with or without consideration; provided, however, that the
price of any such Grant made for consideration that provides for the acquisition
of shares of Common Stock or other equity securities of the Corporation may not
be less than 50% of the Fair Market Value of the Common Stock or such other
equity securities on the date of grant of such Grant. Such Other Stock-Based
Grants may be made alone, in addition to or in tandem with any Grant of any type
made under the Plan and must be consistent with the purposes of the Plan. No
Participant may receive Other Stock-Based Grants of more than one million shares
in any calendar year.
6. LIMITATIONS AND CONDITIONS
(a) The number of Shares available for Grants under this Plan shall be
16.3 million shares of the authorized Common Stock as of the effective date of
the Plan. The number of Shares subject to Grants under this Plan to any one
Participant during the term of this Plan shall not be more than 10 million
shares. No more than 1% of the authorized Common Stock as of the effective date
of the Plan may be granted as Incentive Stock Options as described in Paragraph
5(a). Shares related to Grants that are forfeited, terminated, canceled, expire
unexercised, settled in cash in lieu of stock or in such manner that all or some
of the Shares covered by a Grant are not issued to a Participant, shall
immediately become available for Grants; provided, however, that the number of
Shares available for Grants shall be limited to the extent necessary to satisfy
Section 16 of the Exchange Act.
(b) No Grants shall be made under the Plan beyond ten years after the
effective date of the Plan, but the terms of Grants made on or before the
expiration thereof may extend beyond such expiration. At the time a Grant is
made or amended or the terms or conditions of a Grant are changed, the Committee
may provide for limitations or conditions on such Grant.
(c) Nabisco shall not be obligated to deliver any Shares until they have
been listed (or authorized for listing upon official notice of issuance) upon
each stock exchange upon which outstanding shares of the same class at the time
are listed nor until there has been compliance with such laws or regulations as
Nabisco may deem applicable. Nabisco shall use its best efforts to effect such
listing and compliance. No fractional Shares shall be delivered.
(d) Nothing contained herein shall affect the right of the Corporation to
terminate any Participant's employment at any time or for any reason.
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(e) Deferrals of Grant payouts may be provided for, at the sole discretion
of the Committee, in the Grant Agreements.
(f) Except as otherwise prescribed by the Committee, the amounts of the
Grants for any employee of a Subsidiary, along with interest, dividend, and
other expenses accrued on deferred Grants shall be charged to the Participant's
employer during the period for which the Grant is made. If the Participant is
employed by more than one Subsidiary or by both Nabisco and a Subsidiary during
the period for which the Grant is made, the Participant's Grant and related
expenses will be allocated between the companies employing the Participant in a
manner prescribed by the Committee.
(g) No benefit under the Plan shall, prior to receipt thereof by the
Participant, be in any manner liable for or subject to the debts, contracts,
liabilities, engagements, or torts of the Participant.
(h) Participants shall not be, and shall not have any of the rights or
privileges of, stockholders of Nabisco in respect of any Shares purchasable in
connection with any Grant unless and until certificates representing any such
Shares have been issued by Nabisco to such Participants.
(i) Except to the extent otherwise provided in any other retirement or
benefit plan, any grant under this Plan shall not be deemed compensation for
purposes of computing benefits or contributions under any retirement plan of
Nabisco or its Subsidiaries and shall not affect any benefits under any other
benefit plan of any kind or subsequently in effect under which the availability
or amount of benefits is related to level of compensation. This Plan is not a
"Retirement Plan" or "Welfare Plan" under the Employee Retirement Income
Security Act of 1974, as amended.
(j) Unless the Committee determines otherwise, no benefit or promise under
the Plan shall be secured by any specific assets of Nabisco or any of its
Subsidiaries, nor shall any assets of Nabisco or any of its Subsidiaries be
designated as attributable or allocated to the satisfaction of Nabisco's
obligations under the Plan.
(k) In the event of a Participant's death, the right to receive benefits
or exercise awards shall pass to the Participant's spouse, and if the
Participant does not have a spouse at the date of
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death, to the Participant's designated beneficiary under the Company's SELECT
Core Life Insurance Plan.
7. TRANSFERS AND LEAVES OF ABSENCE
For purposes of the Plan: (a) a transfer of a Participant's employment
without an intervening period of separation from Nabisco to a Subsidiary or vice
versa, or from one Subsidiary to another, shall not be deemed a termination of
employment, and (b) a Participant who is granted in writing a leave of absence
shall be deemed to have remained in the employ of the Corporation during such
leave of absence.
8. ADJUSTMENTS
(a) In the event of any change in the outstanding Common Stock by reason
of a stock split, spin-off, stock dividend, stock combination or
reclassification, recapitalization or merger, or similar event, the Committee
may adjust appropriately the number of Shares subject to the Plan and available
for or covered by Grants and Share prices related to outstanding Grants and make
such other revisions to outstanding Grants as it deems are equitably required.
(b) In the event of a Change of Control (as defined in paragraph 8 (c)
hereof):
(i) Stock options granted pursuant to paragraphs 5 (a) or 5 (b)
hereof shall become fully vested and exercisable (subject to
paragraph 5 (b) (iii)); provided; however, that the Committee may
elect to make a cash payment to Participants in lieu of the
delivery of shares upon exercise, equal to the product of (x) and
(y), where (x) is the excess of the fair market value of Common
Stock on the date of exercise over the exercise price, and (y) is
the number of Shares subject to the stock options being
exercised;
(ii) Stock Appreciation Rights granted pursuant to paragraph 5 (c)
hereof shall become fully vested and exercisable;
(iii) Performance Units granted pursuant to paragraph 5 (g) hereof
whose performance periods ends after the date of the Change of
Control shall become vested as to a percentage of performance
units granted equal to the number of months (including partial
months) in the performance period before the date of the Change
of
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Control, divided by the total number of months in the performance
period. The value of the performance units shall be equal to the
greater of the target value of the units or the value derived
from the actual performance as of the date of the Change of
Control; and
(iv) the Committee shall have authority to revise the terms of any
other Grant as it, in it's discretion, deems appropriate;
provided; however, that the Committee may not make revisions that
are adverse to the Participant without the Participant's consent
unless such revision is provided for or contemplated in the terms
of the Grant.
(c) For purposes of the Plan, a "Change of Control" shall be deemed to
occur on the date upon which one of the following events occurs:
(i) Any individual, corporation, partnership, group, associate or
other entity or "person" as such term is defined in Section 14(d)
of the Securities Exchange Act of 1934 (the "Exchange Act"),
other than Nabisco, RJRN or any of its subsidiaries, or any
employee benefit plan(s) sponsored by Nabisco, RJRN or any of its
subsidiaries, is or becomes the "beneficial owner" (as defined in
Rule 13D-3 under the Exchange Act), directly or indirectly, of
50% or more of the combined voting power of Nabisco's outstanding
securities ordinarily having the right to vote at elections of
directors;
(ii) Individuals who constitute the Board of Nabisco on April 13, 1995
(the "Incumbent Board") cease for any reason to constitute at
least a majority thereof, provided that any person becoming a
director subsequent to the date hereof whose election, or
nomination for election by Nabisco's shareholders, was approved
by a vote of at least three-quarters of the directors comprising
that Incumbent Board (either by a specific vote or by approval of
the proxy statement of Nabisco in which such person is named a
nominee for director, without objection to such nominates) shall
be, for purposes of this paragraph 8(c)(ii) considered as though
such person were a member of the Incumbent Board; or
(iii) The approval by the shareholders of Nabisco of a plan or
agreement providing (I) for a merger or consolidation of Nabisco
other than with a wholly-owned
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subsidiary or with RJRN, Nabisco or any of its subsidiaries, and
other than a merger or consolidation that would result in the
voting securities of Nabisco outstanding immediately prior
thereto continuing to represent (either by remaining outstanding
or by being converted into voting securities of the surviving
entity) more than 50% of the combined voting power of the voting
securities of Nabisco or such surviving entity outstanding
immediately after such merger or consolidation or (II) for a
sale, exchange or other disposition of all or substantially all
of the assets of Nabisco. If any of the events enumerated in
this paragraph 8(c) (iii) occur, the Board of Directors shall
determine the effective date of the Change of Control resulting
therefrom for purposes of the Plan.
9. AMENDMENT AND TERMINATION
The Committee shall have the authority to make such amendments to any terms
and conditions applicable to outstanding Grants as are consistent with this Plan
provided that, except for adjustments under Paragraph 8 hereof, no such action
shall modify such Grant in a manner adverse to the Participant without the
Participant's consent except as such modification is provided for or
contemplated in the terms of the Grant.
The Board of Directors may amend, suspend or terminate the Plan.
10. FOREIGN OPTIONS AND RIGHTS
(a) The Committee may make Grants to Key Employees who are subject to the
tax laws of nations other than the United States, which Grants may have terms
and conditions that differ from the terms thereof as provided elsewhere in the
Plan for the purpose of complying with the foreign tax laws. Grants of Options
may have terms and conditions that differ from Incentive Stock Options and Other
Stock Options for the purposes of complying with the foreign tax laws.
(b) The terms and conditions of Options granted under Paragraph 10(a) may
differ from the terms and conditions which the Plan would require to be imposed
upon Incentive Stock Options and Other Stock Options if the Committee determines
that the Grants are desirable to promote the purposes of the Plan for the Key
Employees identified in Paragraph 10(a); provided
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that the Committee may not grant such Options or Stock Appreciation Rights that
do not comply with the limitations of Paragraph 6.
11. WITHHOLDING TAXES
The Corporation shall have the right to deduct from any cash payment made
under the Plan any federal, state or local income or other taxes required by law
to be withheld with respect to such payment. It shall be a condition to the
obligation of the Corporation to deliver shares upon the exercise of an Option
or Stock Appreciation Right, upon payment of Performance units or shares, upon
delivery of Restricted Stock or upon exercise, settlement or payment of any
Other Stock-Based Grant that the Participant pay to the Corporation such amount
as may be requested by the Corporation for the purpose of satisfying any
liability for such withholding taxes. Any Grant Agreement may provide that the
Participant may elect, in accordance with any conditions set forth in such Grant
Agreement, to pay a portion or all of such withholding taxes in shares of Common
Stock.
12. EFFECTIVE DATE AND TERMINATION DATES
The Plan shall be effective on and as of the date of its approval by the
stockholders of Nabisco and shall terminate ten years later, subject to earlier
termination by the Board of Directors pursuant to Paragraph 9.
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EXHIBIT 11
NABISCO HOLDINGS CORP.
COMPUTATION OF EARNINGS PER SHARE
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<S> <C> <C> <C> <C>
THREE MONTHS THREE MONTHS
ENDED ENDED
SEPTEMBER 30, 1996 SEPTEMBER 30, 1995
------------------------ ------------------------
FULLY FULLY
PRIMARY DILUTED PRIMARY DILUTED
---------- ------------ ---------- ------------
Average number of common and common equivalent shares
outstanding during the period (in thousands):
Common Stock issued and outstanding at beginning of period..... 265,055 265,055 265,000 265,000
Average number of shares of common stock issued during
the period................................................... -- -- -- --
Average number of stock options outstanding during the
period........................................................... 1,744 1,744 500 861
---------- ------------ ---------- ------------
Average number of common and common equivalent shares
outstanding during the period................................ 266,799 266,799 265,500 265,861
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
Income (loss) applicable to common stock:
Income before extraordinary income............................. $ 70 $ 70 $ 71 $ 71
Extraordinary item............................................. -- -- (19) (19)
---------- ------------ ---------- ------------
Net income applicable to common stock.......................... $ 70 $ 70 $ 52 $ 52
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
Income (loss) per common and common equivalent share:
Income before extraordinary income............................. $ 0.26 $ 0.26 $ 0.27 $ 0.27
Extraordinary item............................................. -- -- (0.07) (0.07)
---------- ------------ ---------- ------------
Net income..................................................... $ 0.26 $ 0.26 $ 0.20 $ 0.20
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
NINE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, 1996(A) SEPTEMBER 30, 1995
------------------------ ------------------------
FULLY FULLY
PRIMARY DILUTED PRIMARY DILUTED
---------- ------------ ---------- ------------
Average number of common and common equivalent shares
outstanding during the period (in thousands):
Common Stock issued and outstanding at beginning of period..... 265,000 265,000 213,250 213,250
Average number of shares of common stock issued during
the period................................................... 38 38 46,766 46,766
Average number of stock options outstanding during the
period........................................................... -- 1,908 392 554
---------- ------------ ---------- ------------
Average number of common and common equivalent shares
outstanding during the period................................ 265,038 266,946 260,408 260,570
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
Income (loss) applicable to common stock:
Income before extraordinary income............................. $ (93) $ (93) $ 198 $ 198
Extraordinary item............................................. -- -- (19) (19)
---------- ------------ ---------- ------------
Net income applicable to common stock.......................... $ (93) $ (93) $ 179 $ 179
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
Income (loss) per common and common equivalent share:
Income before extraordinary income............................. $ (0.35) $ (0.35) $ 0.76 $ 0.76
Extraordinary item............................................. -- -- (0.07) (0.07)
---------- ------------ ---------- ------------
Net income..................................................... $ (0.35) $ (0.35) $ 0.69 $ 0.69
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
</TABLE>
- ------------------------
(A) The calculation of fully diluted earnings per share for the nine months
ended September 30, 1996 is presented in accordance with Regulation S-K item
601(b)(11) and includes the average number of common equivalent shares
although it is contrary to paragraph 40 of APB Opinion No. 15 because it
produces an antidilutive result for this net loss period.
<PAGE>
EXHIBIT 12
NABISCO, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES/DEFICIENCY IN THE COVERAGE OF
FIXED CHARGES BY EARNINGS BEFORE FIXED CHARGES
(DOLLARS IN MILLIONS)
<TABLE>
<S> <C>
NINE MONTHS
ENDED
SEPTEMBER 30, 1996
---------------------
Earnings before fixed charges:
Net (loss).............................................................................. $ (93)
Provision (benefit) for income taxes.................................................... 17
------
Income (loss) before income taxes....................................................... (76)
Interest and debt expense............................................................... 248
Interest portion of rental expense...................................................... 18
------
Earnings before fixed charges............................................................. $ 190
------
------
Fixed charges:
Interest and debt expense............................................................... $ 248
Interest portion of rental expense...................................................... 18
Capitalized interest.................................................................... 11
------
Total fixed charges.................................................................. $ 277
------
------
Deficiency in the coverage of fixed charges by earnings before fixed charges.............. $ (87)
------
------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OF NABISCO, INC. WHICH WERE FILED
WITH SEC FORM 10-Q, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
NABISCO, INC.
(Dollars in Millions Except Per Share Amounts)
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 81
<SECURITIES> 0
<RECEIVABLES> 618
<ALLOWANCES> 0
<INVENTORY> 894
<CURRENT-ASSETS> 1,774
<PP&E> 3,233
<DEPRECIATION> 0
<TOTAL-ASSETS> 12,464
<CURRENT-LIABILITIES> 1,914
<BONDS> 4,484
0
0
<COMMON> 0
<OTHER-SE> 4,030
<TOTAL-LIABILITY-AND-EQUITY> 12,464
<SALES> 6,406
<TOTAL-REVENUES> 6,406
<CGS> 3,785
<TOTAL-COSTS> 3,785
<OTHER-EXPENSES> 598
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 248
<INCOME-PRETAX> (76)
<INCOME-TAX> 17
<INCOME-CONTINUING> (93)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (93)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
