<PAGE>
DRAFT 11/12/98
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- --------------------------------------------------------------------------------
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 SEPTEMBER 30, 1998
-------------------
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
jurisdiction of number) Identification 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
(973) 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: OCTOBER 30, 1998:
<TABLE>
<C> <S>
NABISCO HOLDINGS CORP.: 51,394,359 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>
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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.
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<PAGE>
INDEX
<TABLE>
<CAPTION>
PAGE
---------
<S> <C> <C>
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Statements of Income--Three Months Ended
September 30, 1998 and 1997................................................................. 1
Consolidated Condensed Statements of Income--Nine Months Ended
September 30, 1998 and 1997................................................................. 2
Consolidated Condensed Statements of Cash Flows--Nine Months Ended September 30, 1998 and
1997........................................................................................ 3
Consolidated Condensed Balance Sheets--September 30, 1998 and
December 31, 1997........................................................................... 4
Notes to Consolidated Condensed Financial Statements.......................................... 5
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations....................................................................... 7
Item 3. Quantitative and Qualitative Disclosures about Market Risk.................................... 13
PART II-- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.............................................................. 14
Signatures............................................................................................... 15
</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>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, 1998 SEPTEMBER 30, 1997
----------------------- -----------------------
NABISCO NABISCO
HOLDINGS NABISCO HOLDINGS NABISCO
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
NET SALES............................................................. $ 2,098 $ 2,098 $ 2,203 $ 2,203
---------- ----------- ---------- -----------
Costs and expenses:
Cost of products sold............................................... 1,166 1,166 1,249 1,249
Selling, advertising, administrative and general expenses........... 694 694 653 653
Amortization of trademarks and goodwill............................. 54 54 57 57
---------- ----------- ---------- -----------
OPERATING INCOME................................................ 184 184 244 244
Interest and debt expense............................................. (72) (72) (82) (82)
Other income (expense), net........................................... (10) (10) (7) (7)
---------- ----------- ---------- -----------
Income before income taxes...................................... 102 102 155 155
Provision for income taxes............................................ 47 47 63 63
---------- ----------- ---------- -----------
NET INCOME...................................................... $ 55 $ 55 $ 92 $ 92
---------- ----------- ---------- -----------
---------- ----------- ---------- -----------
NET INCOME PER COMMON SHARE........................................... $ .21 $ .35
---------- ----------
---------- ----------
NET INCOME PER COMMON SHARE ASSUMING DILUTION......................... $ .21 $ .34
---------- ----------
---------- ----------
Dividends declared per common share................................... $ .175 $ .175
---------- ----------
---------- ----------
Average number of common shares outstanding (in thousands)............ 264,634 265,070
---------- ----------
---------- ----------
Average number of common shares outstanding assuming dilution (in
thousands).......................................................... 266,219 267,407
---------- ----------
---------- ----------
</TABLE>
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
1
<PAGE>
NABISCO HOLDINGS CORP.
NABISCO, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 1998 SEPTEMBER 30, 1997
------------------------ ------------------------
NABISCO NABISCO
HOLDINGS NABISCO HOLDINGS NABISCO
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NET SALES............................................................ $ 6,191 $ 6,191 $ 6,299 $ 6,299
----------- ----------- ----------- -----------
Costs and expenses:
Cost of products sold.............................................. 3,478 3,478 3,597 3,597
Selling, advertising, administrative and general expenses.......... 1,984 1,984 1,828 1,828
Amortization of trademarks and goodwill............................ 167 167 170 170
Restructuring charge............................................... 406 406 -- --
----------- ----------- ----------- -----------
OPERATING INCOME............................................... 156 156 704 704
Interest and debt expense............................................ (230) (230) (245) (245)
Other income (expense), net.......................................... (22) (22) (23) (23)
----------- ----------- ----------- -----------
Income (loss) before income taxes.............................. (96) (96) 436 436
Provision (benefit) for income taxes................................. (6) (6) 177 177
----------- ----------- ----------- -----------
NET INCOME (LOSS).............................................. $ (90) $ (90) $ 259 $ 259
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
NET INCOME (LOSS) PER COMMON SHARE................................... $ (.34) $ .98
----------- -----------
----------- -----------
NET INCOME (LOSS) PER COMMON SHARE ASSUMING DILUTION................. $ (.34) $ .97
----------- -----------
----------- -----------
Dividends declared per common share.................................. $ .525 $ .505
----------- -----------
----------- -----------
Average number of common shares outstanding (in thousands)........... 264,507 265,070
----------- -----------
----------- -----------
Average number of common shares outstanding assuming dilution (in
thousands)......................................................... 264,507 267,247
----------- -----------
----------- -----------
</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>
<CAPTION>
NINE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 1998 SEPTEMBER 30, 1997
-------------------- ------------------------
<S> <C> <C> <C> <C>
NABISCO NABISCO
HOLDINGS NABISCO HOLDINGS NABISCO
--------- --------- ----------- -----------
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
Net income (loss).............................................. $ (90) $ (90) $ 259 $ 259
Adjustments to reconcile net income (loss) to net cash flows
from operating activities:
Depreciation of property, plant and equipment.............. 207 207 209 209
Amortization of intangibles................................ 167 167 170 170
Deferred income tax provision (benefit).................... (183) (183) 19 19
Restructuring charge, net of cash payments................. 388 388 (107) (107)
Gain on businesses sold and exited......................... (14) (14) (32) (32)
Changes in working capital items, net...................... (192) (208) (355) (355)
Other, net................................................. (22) (22) (4) (4)
--------- --------- ----- -----
Net cash flows from operating activities..................... 261 245 159 159
--------- --------- ----- -----
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Capital expenditures........................................... (242) (242) (233) (233)
Acquisition of businesses...................................... (9) (9) -- --
Proceeds from sale of businesses............................... 550 550 50 50
Other, net..................................................... 8 8 15 15
--------- --------- ----- -----
Net cash flows from (used in) investing activities........... 307 307 (168) (168)
--------- --------- ----- -----
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Net proceeds from the issuance of long-term debt............... 1,279 1,279 242 242
Proceeds from the sale of call options on long-term debt....... 41 41 -- --
Repayments of long-term debt................................... (1,682) (1,682) (111) (111)
Increase (decrease) in notes payable........................... (95) (95) 19 19
Dividends paid on common stock................................. (139) (139) (129) (129)
Repurchases of Class A common stock............................ (38) -- -- --
Proceeds from exercise of Class A common stock options......... 24 -- -- --
--------- --------- ----- -----
Net cash flows from (used in) financing activities........... (610) (596) 21 21
--------- --------- ----- -----
Effect of exchange rate changes on cash and cash equivalents..... (6) (6) (3) (3)
--------- --------- ----- -----
Net change in cash and cash equivalents...................... (48) (50) 9 9
Cash and cash equivalents at beginning of period................. 127 127 93 93
--------- --------- ----- -----
Cash and cash equivalents at end of period....................... $ 79 $ 77 $ 102 $ 102
--------- --------- ----- -----
--------- --------- ----- -----
</TABLE>
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
3
<PAGE>
NABISCO HOLDINGS CORP.
NABISCO, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998 DECEMBER 31, 1997
---------------------- ----------------------
<S> <C> <C> <C> <C>
NABISCO NABISCO
HOLDINGS NABISCO HOLDINGS NABISCO
----------- --------- ----------- ---------
ASSETS
Current assets:
Cash and cash equivalents.......................................... $ 79 $ 77 $ 127 $ 127
Accounts and notes receivable, net................................. 522 522 521 521
Deferred income taxes.............................................. 19 19 27 27
Inventories........................................................ 865 865 865 865
Prepaid expenses................................................... 73 73 59 59
----------- --------- ----------- ---------
TOTAL CURRENT ASSETS........................................... 1,558 1,556 1,599 1,599
----------- --------- ----------- ---------
Property, plant and equipment, net................................... 3,007 3,007 3,327 3,327
Trademarks, net...................................................... 3,396 3,396 3,725 3,725
Goodwill, net........................................................ 3,206 3,206 3,343 3,343
Other assets and deferred charges.................................... 109 109 133 133
----------- --------- ----------- ---------
$ 11,276 $ 11,274 $ 12,127 $ 12,127
----------- --------- ----------- ---------
----------- --------- ----------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable...................................................... $ 75 $ 75 $ 180 $ 180
Accounts payable and accrued liabilities........................... 1,323 1,277 1,318 1,263
Intercompany payable to Nabisco Holdings........................... -- 3 -- 13
Current maturities of long-term debt............................... 118 118 21 21
Income taxes accrued............................................... 178 178 131 131
----------- --------- ----------- ---------
TOTAL CURRENT LIABILITIES...................................... 1,694 1,651 1,650 1,608
----------- --------- ----------- ---------
Long-term debt (less current maturities)............................. 3,828 3,828 4,334 4,334
Other noncurrent liabilities......................................... 735 735 646 646
Deferred income taxes................................................ 1,093 1,093 1,293 1,293
Stockholders' equity:................................................
Class A common stock (51,819,653 shares issued).................... 1 -- 1 --
Class B common stock (213,250,000 shares issued
and outstanding)................................................. 2 -- 2 --
Paid-in capital.................................................... 4,092 4,141 4,087 4,141
Retained earnings.................................................. 23 (4) 268 225
Treasury stock, at cost............................................ (20) -- (32) --
Accumulated other comprehensive income............................. (170) (170) (120) (120)
Notes receivable on common stock purchases......................... (2) -- (2) --
----------- --------- ----------- ---------
TOTAL STOCKHOLDERS' EQUITY..................................... 3,926 3,967 4,204 4,246
----------- --------- ----------- ---------
$ 11,276 $ 11,274 $ 12,127 $ 12,127
----------- --------- ----------- ---------
----------- --------- ----------- ---------
</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 1998
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, 1997.
BUSINESSES SOLD AND EXITED
In the third quarter of 1998, cost of products sold was reduced by a $14
million net gain ($2 million after tax) related to businesses sold and
non-strategic businesses exited. Businesses sold include the College Inn brand
of canned broths, the U.S. and Canadian tablespreads and U.S. egg substitute
businesses, and the Del Monte brand canned vegetable business in Venezuela for
net proceeds of approximately $550 million. Net sales for the full year 1997
from the businesses sold and exited by Nabisco were $583 million.
NEW ACCOUNTING PRONOUNCEMENTS
During the second quarter of 1998, the Financial Accounting Standards Board
issued SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities ("SFAS No. 133"), which must be adopted by the Registrants by January
1, 2000, with early adoption permitted. SFAS No. 133 requires that all
derivative instruments be recorded each period in earnings or other
comprehensive income, depending on whether a derivative is designated as part of
a hedge transaction and, if it is, the type of hedge transaction. Nabisco
Holdings and Nabisco have not yet determined the timing of adoption or the
impact that adoption or subsequent application of SFAS No. 133 will have on
their financial position or results of operations.
In April of 1998, the American Institute of Certified Public Accountants'
Accounting Standards Executive Committee issued Statement of Position ("SOP")
No. 98-5, Reporting on the Costs of Start-Up Activities. SOP No. 98-5
establishes standards on accounting for start-up and organization costs and, in
general, requires such costs to be expensed as incurred. This standard is
required to be adopted on January 1, 1999. The adoption of SOP No. 98-5 is not
expected to have a material effect on Nabisco Holdings' or Nabisco's financial
position or results of operations.
On April 1, 1998 Nabisco Holdings and Nabisco adopted Statement of Position
("SOP") No. 98-1, Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use, which requires certain costs incurred in connection
with developing or obtaining internal-use software to be capitalized and other
costs to be expensed. The adoption of SOP No. 98-1 had no material effect on
Nabisco Holdings' or Nabisco's financial position or results of operations.
RESTRUCTURING CHARGE
In the second quarter of 1998, Nabisco recorded a restructuring charge of
$406 million ($268 million after tax) related to a program announced on June 8,
1998. The restructuring program, which was undertaken to streamline operations
and improve profitability, commenced during the second quarter of
5
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1998 and will be substantially completed during 1999. The $406 million
restructuring charge will require cash expenditures of approximately $164
million. In addition to the restructuring charge, the program will require
additional cash expenditures of approximately $118 million, of which $21 million
($12 million after tax) was incurred in the second and third quarters of 1998.
These additional expenses are principally for implementation and integration of
the program and include costs for relocation of employees and equipment and
training. After completion of the restructuring program, pre-tax savings in 2000
and thereafter are expected to be approximately $100 million annually.
The major components of the $406 million restructuring charge are $162
million for domestic and international severance and related benefits associated
with workforce reductions totaling approximately 4,300 employees, $186 million
for estimated losses from disposals of property related to domestic and
international plant closures, $43 million for estimated losses from disposals of
equipment and packaging materials related to non-strategic product line
rationalizations, and $15 million for estimated costs to terminate distribution
related contracts.
As of September 30, 1998, $27 million of charges were applied against
restructuring reserves as follows: $17 million for severance and related
benefits, $8 million for product line rationalizations, $1 million for plant
closures and $1 million for contract terminations.
NOTE 2--INVENTORIES
The major classes of inventory are shown in the table below:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
--------------- ---------------
<S> <C> <C>
Finished products....................................................... $ 528 $ 540
Raw materials........................................................... 189 182
Other................................................................... 148 143
----- -----
$ 865 $ 865
----- -----
----- -----
</TABLE>
NOTE 3--COMPREHENSIVE INCOME
On January 1, 1998, Nabisco Holdings and Nabisco adopted Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive Income, which
established standards for reporting and display of comprehensive income and its
components in a full set of financial statements. Comprehensive income is
defined as the change in stockholders' equity during a period from transactions
from nonowner sources. Comprehensive income consists of net income and other
comprehensive income, which includes all other nonowner changes in stockholders'
equity. For Nabisco Holdings and Nabisco, other comprehensive income consists of
foreign currency translation adjustments that amounted to charges of $14 million
and $9 million for the three months ended September 30, 1998 and 1997,
respectively, and $50 million and $43 million for the nine months ended
September 30, 1998 and 1997, respectively. The Cumulative Translation Adjustment
amount previously reported as a separate component of stockholders' equity is
now included in Accumulated Other Comprehensive Income in the Consolidated
Condensed Balance Sheets. Comprehensive income for the three months and
comprehensive loss for the nine months ended September 30, 1998 amounted to $41
million and $140 million, respectively. Comprehensive income for the three and
nine months ended September 30, 1997 amounted to $83 million and $216 million,
respectively.
NOTE 4--LONG-TERM DEBT
In January 1998, Nabisco issued $400 million of 6% notes due February 15,
2011 which are putable and callable on February 15, 2001; $300 million of 6 1/8%
notes due February 1, 2033 which are putable and callable on February 1, 2003;
and $300 million of 6 3/8% notes due February 1, 2035 which are putable and
callable on February 1, 2005. Unless the notes are put, the interest rates on
the 6% notes, the 6 1/8% notes and the 6 3/8% notes are reset on the applicable
put/call date to achieve a yield to maturity of 5.75%, 6.07%
6
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and 6.07%, respectively, plus, in each case, Nabisco's future credit spread on
treasury notes of comparable maturities. The $1,039 million proceeds from these
notes, which includes $41 million as compensation for the sale of the call
options, were used to repay commercial paper.
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 and the U.S. Foods Group (collectively, the "Domestic Food
Group"). The U.S. Foods Group is comprised of the Sales & Integrated Logistics
Group and the Specialty Products, LifeSavers, Planters, Tablespreads (through
August 14, 1998) and Food Service Companies. 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>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
--------------------------------- ---------------------------------
(DOLLARS IN MILLIONS) 1998 1997 % CHANGE 1998 1997 % CHANGE
--------- --------- ----------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net Sales:
Biscuit........................................... $ 926 $ 920 1% $ 2,640 $ 2,628 --
U.S. Foods Group.................................. 538 623 (14%) 1,705 1,797 (5%)
--------- --------- --------- ---------
Domestic Food Group............................... 1,464 1,543 (5%) 4,345 4,425 (2%)
International Food Group.......................... 634 660 (4%) 1,846 1,874 (1%)
--------- --------- --------- ---------
Total Nabisco Holdings............................ $ 2,098 $ 2,203 (5%) $ 6,191 $ 6,299 (2%)
--------- --------- --------- ---------
--------- --------- --------- ---------
Operating Company Contribution(1):
Biscuit(2)........................................ $ 117 $ 172 (32%) $ 385 $ 489 (21%)
U.S. Foods Group(3)............................... 64 71 (10%) 208 229 (9%)
--------- --------- --------- ---------
Domestic Food Group............................... 181 243 (26%) 593 718 (17%)
International Food Group(4)....................... 57 58 (2%) 136 156 (13%)
--------- --------- --------- ---------
Total Nabisco Holdings............................ $ 238 $ 301 (21%) $ 729 $ 874 (17%)
--------- --------- --------- ---------
--------- --------- --------- ---------
Operating Income(5):
Domestic Food Group............................... $ 133 $ 192 (31%) $ 86 $ 566 (85%)
International Food Group.......................... 51 52 (2%) 70 138 (49%)
--------- --------- --------- ---------
Total Nabisco Holdings............................ $ 184 $ 244 (25%) $ 156 $ 704 (78%)
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
- ------------------------
(1) Operating income before amortization of trademarks and goodwill and
exclusive of restructuring charge.
(2) Includes $10 million and $14 million, respectively, of restructuring related
expenses associated with the June 1998 restructuring program for the three
and nine months ended September 30, 1998.
(3) Includes $1 million and $3 million, respectively, of restructuring related
expenses associated with the June 1998 restructuring program for the three
and nine months ended September 30, 1998. Both periods also include a $2
million net gain from businesses sold and exited. The nine months ended
September 30, 1997 includes a $32 million gain from the sale of certain
regional brands, a $14 million provision for the additional write-down of a
business held for sale and a $10 million charge related to the
reorganization of the U.S. Foods Group selling organization.
7
<PAGE>
(4) Each 1998 period includes $4 million of restructuring related expenses
associated with the June 1998 restructuring program and a $12 million gain
from businesses sold and exited. The nine months ended September 30, 1997
include $7 million of expense to relocate the International Food Group's
headquarters from New York to New Jersey.
(5) The nine months ended September 30, 1998 include the June restructuring
charge of $406 million, consisting of $358 million for the Domestic Food
Group (Biscuit $268 million and U.S. Foods Group $90 million) and $48
million for the International Food Group.
SALES
Nabisco Holdings reported net sales of $2.10 billion in the third quarter of
1998, a decrease of 5% from the third quarter 1997 level of $2.20 billion, and
$6.19 billion in the first nine months of 1998, a decrease of 2% from the first
nine months of 1997 level of $6.30 billion. The Domestic Food Group's net sales
declined 5% for the third quarter and 2% for the first nine months. Within the
Domestic Food Group, Nabisco Biscuit's net sales increased 1% in the third
quarter and were flat in the first nine months versus the prior year. The
increase in the third quarter was primarily due to price increases and volume
gains in core cookie and cracker brands, partially offset by lower volume in
Snackwell's and breakfast snacks. The sales performance for the first nine
months reflects price increases, and volume increases in core cookie and cracker
brands, largely offset by lower volumes in Snackwell's and breakfast snacks. Net
sales for the first nine months of 1998 were favorably impacted by four
additional selling days. Without these extra days, net sales would have declined
2%. The U.S. Foods Group's net sales decrease of 14% in the third quarter and 5%
for the first nine months of 1998 was primarily due to the disposal of certain
regional brands in 1997, and College Inn broths, the Tablespreads and egg
substitute businesses, Plush Pippin frozen pies and non-strategic businesses
exited in 1998. Excluding the impact of these disposals and businesses exited,
net sales would have risen 3% in both the third quarter and nine-month periods.
The key contributors to the sales performance of the on-going U.S. Foods Group
business were increased sales for nuts, pet snacks and hot cereals, and the
inclusion of Cornnuts snacks acquired in December 1997, partially offset by
lower sales volume for confections.
The International Food Group's net sales decreased 4% in the third quarter
due to unfavorable foreign currency translations and volume declines in Brazil
and Argentina, partially offset by volume increases in other Latin American
markets. For the first nine months of 1998 net sales decreased by 1% as a result
of unfavorable foreign currency translations and volume declines in Brazil,
Argentina, and Asia, offset in part by improvements in several Latin American
markets.
OPERATING INCOME AND OPERATING COMPANY CONTRIBUTION
Nabisco Holdings reported operating income of $184 million for the third
quarter of 1998, a $60 million decline in operating results from the $244
million of operating income reported for the same period of 1997. The decline
primarily resulted from a 21% decrease in operating company contribution offset
by a $3 million decrease in intangible amortization for the same period.
Declines occurred in both the Domestic Food Group and the International Food
Group.
In the Domestic Food Group, a 26% decline in operating company contribution
offset by a $3 million decrease in intangible amortization accounted for the
drop in operating income from $192 million in 1997 to $133 million in 1998. The
1998 third quarter results for operating company contribution in the Domestic
Food Group include a $2 million net gain from U.S. Foods Group businesses sold
and exited and $11 million of restructuring related expenses of which $10
million was attributable to Nabisco Biscuit and $1 million to the U.S. Foods
Group. Excluding the impact of these items, the Domestic Food Group's operating
company contribution would have decreased 22% to $190 million in 1998 from $243
million in 1997. On this basis, the Domestic Food Group's results were primarily
impacted by a decrease of $45 million in Nabisco Biscuit resulting from the
previously announced initiatives to significantly increase marketing spending.
The U.S. Foods Group's operating company contribution, on the same basis,
declined
8
<PAGE>
$8 million primarily due to the absence of profits in 1998 from businesses sold
and exited in both years, partially offset by gains in nuts and the acquisition
of Cornnuts snacks in 1997.
The International Food Group reported operating income of $51 million in the
third quarter of 1998 versus $52 million in 1997. Operating company contribution
also decreased by 2%. The 1998 third quarter operating company contribution
includes a $12 million net gain from businesses sold and exited and $4 million
of restructuring related expenses. Excluding these items, the International Food
Group's decrease in operating company contribution would have been 16%. This
decline in operating company contribution was principally due to lower earnings
as a result of economic downturn in Brazil and Asia and unfavorable foreign
currency translations, which more than offset profitability improvements in
other Latin American markets.
On a year to date basis, Nabisco Holdings reported operating income of $156
million in 1998 versus operating income of $704 million in the 1997 period. The
$406 million restructuring charge recorded in the second quarter and a 17%
decrease in operating company contribution offset by a $3 million decrease in
intangible amortization account for the decline in both the Domestic Food Group
and the International Food Group.
In the Domestic Food Group, the drop in operating income from $566 million
in 1997 to $86 million in 1998 is due to the $358 million second quarter
restructuring charge combined with a 17% decline in operating company
contribution offset by a $3 million decrease in intangible amortization. The
1998 operating company contribution includes $17 million of restructuring
related expenses and a $2 million net gain from U.S. Foods Group businesses sold
and exited. The 1997 period includes a $32 million gain from the sale of certain
U.S. Foods Group regional brands offset in part by a $14 million provision for
the additional write-down of a business held for sale and $10 million related to
the reorganization of its selling organization. Excluding the impact of these
items from both years, the Domestic Food Group's operating company contribution
would have decreased 14% to $608 million in 1998 from $710 million in 1997. On
this basis, the Domestic Food Group's results were primarily impacted by a
decrease of $90 million in Nabisco Biscuit, attributed primarily to increased
marketing support and higher manufacturing and selling related expenses. The
U.S. Foods Group results, on the same basis, declined $12 million primarily due
to the absence of profits in 1998 from businesses sold and exited in both years
and declines in confections principally offset by gains in nuts and the profit
impact of the Cornnuts snacks acquisition.
For the first nine months, the International Food Group reported operating
income of $70 million in 1998 versus $138 million in 1997. The second quarter
restructuring charge of $48 million combined with a decrease of 13% in operating
company contribution accounted for the decline. The 1998 operating company
contribution includes a $12 million gain from businesses sold and exited and $4
million of restructuring related expenses. The 1997 operating company
contribution includes expense of $7 million related to the relocation of its
headquarters from New York City to New Jersey. Excluding the impact of these
items from both years, the International Food Group's decrease in operating
company contribution would have been 21%. The decline in operating company
contribution for the first nine months was principally due to lower earnings in
Spain, Asia and Canada, which more than offset small profitablity improvements
in several Latin America markets.
RESTRUCTURING CHARGE
In the second quarter of 1998, Nabisco recorded a restructuring charge of
$406 million ($268 million after tax) related to a program announced on June 8,
1998. The restructuring program, which was undertaken to streamline operations
and improve profitability, commenced during the second quarter of 1998 and will
be substantially completed during 1999. The restructuring charge for the
Domestic Food Group amounted to $358 million and consisted of $268 million for
the Nabisco Biscuit Company, $30 million for the LifeSavers Company, $15 million
for the Specialty Products Company and the remaining $45 million for corporate
headquarters operations, the Sales & Integrated Logistics Group and other
business units. The restructuring charge for the International Food Group
amounted to $48 million
9
<PAGE>
and primarily consisted of $7 million for Canada and $37 million for Latin
American operations, including $15 million for Brazil and $15 million for
Argentina.
The $406 million restructuring charge will require cash expenditures of
approximately $164 million. In addition to the restructuring expense, the
program will require additional expenditures of approximately $118 million, of
which $21 million ($12 million after tax) was incurred in the second and third
quarters of 1998. These additional expenses are principally for implementation
and integration of the program and also include costs for relocation of
employees and equipment and training. Key components of the restructuring
program include the disposal of plant and distribution assets in the United
States and Latin America, including facilities in Argentina and Brazil; the
reconfiguring of sales organizations to improve their effectiveness and drive
revenue growth; the downsizing of departmental organizations and operating
company structures; and the discontinuance of certain non-strategic product
lines. After completion of the restructuring program, pre-tax savings in 2000
and thereafter are expected to be approximately $100 million annually.
The major components of the $406 million restructuring charge are discussed
further in Note 1 to the Consolidated Condensed Financial Statements.
Management of Nabisco Holdings is currently evaluating ways to increase
efficiency and productivity and to reduce costs, actions that, if implemented,
could result in a restructuring charge in the fourth quarter of 1998.
INTEREST AND DEBT EXPENSE
Consolidated interest and debt expense of $72 million in the third quarter
of 1998 and $230 million for the first nine months of 1998 decreased 12% and 6%,
respectively, from the same 1997 period primarily due to the paydown of
commercial paper with the net proceeds from businesses divested in the third
quarter of 1998 and the replacement of fixed rate debt at lower interest rates.
OTHER INCOME (EXPENSE), NET
Other income (expense), net for the third quarter 1998 amounted to $10
million expense, an increase of $3 million from the third quarter of 1997
primarily due to higher foreign exchange losses partially offset by higher
interest income. For the first nine months of 1998, other income (expense), net
amounted to $22 million expense, a decrease of $1 million from the first nine
months of 1997 principally due to higher interest income offset in part by
higher foreign exchange losses.
NET INCOME (LOSS)
Nabisco Holdings' net income for the third quarter and net loss for the
first nine months of 1998 include a $2 million after tax net gain related to
businesses sold and exited and after tax charges of $8 million and $280 million
related to the June 1998 restructuring program. The first nine months of 1997
include a $1 million net gain. Excluding these items, third quarter net income
of $61 million was 34% lower than the 1997 third quarter level of $92 million.
On the same basis, net income of $188 million in the first nine months of 1998
decreased 27% from the 1997 first nine months level of $258 million, reflecting
lower operating income, partially offset by lower interest expense.
COMPREHENSIVE INCOME (LOSS)
Comprehensive income of $41 million and comprehensive loss of $140 million
in the third quarter and first nine months of 1998 compares with comprehensive
income of $83 million and $216 million for the same 1997 periods. Both 1998
periods reflect lower net income and higher foreign currency translation losses
in 1998 of $5 million and $7 million, respectively.
10
<PAGE>
IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS
On January 1, 1998, Nabisco Holdings and Nabisco adopted Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive Income. See Note
3 to the Consolidated Condensed Financial Statements.
See Note 1 to the Consolidated Condensed Financial Statements for a further
discussion regarding new accounting pronouncements.
LIQUIDITY AND FINANCIAL CONDITION
The increase in net cash flows from operating activities primarily reflects
1998 payments related to the 1998 restructuring program which were $68 million
lower than the 1997 payments related to the 1996 restructuring program. Working
capital requirements were also lower.
Cash flows from investing activities for the first nine months of 1998
increased $475 million to $307 million from the first nine months of 1997,
primarily due to an increase of $500 million of net proceeds from the sale of
businesses partially offset by an increase in capital expenditures in 1998 of $9
million.
Capital expenditures were $242 million in the first nine months of 1998.
Management expects that the current level of capital expenditures planned for
1998 will be approximately $330 million to $350 million, which is sufficient to
support the strategic and operating needs of Nabisco Holdings' businesses.
Management also expects that cash flow from operations will be sufficient to
support its planned capital expenditures in 1998.
Cash flows used in financing activities were $610 million for the first nine
months of 1998, compared to $21 million of cash flows from financing activities
for the first nine months of 1997. The $631 million increase in 1998 is
primarily due to a reduction in net borrowings of $498 million in 1998 versus a
1997 increase in net borrowings of $150 million.
As of September 30, 1998, the five-year $1.5 billion revolving credit
facility was unutilized and fully available. In addition, the 364-day $1.381
billion credit facility was utilized to support outstanding commercial paper
borrowings of $218 million, and accordingly, $1.163 billion was available.
Effective October 29, 1998, the 364-day credit facility was extended and amended
to provide a $1.108 billion credit facility.
Registrants believe that they are currently in compliance with all covenants
and restrictions imposed by the terms of their indebtedness.
On October 23, 1998 Nabisco filed a shelf registration with the Securities
and Exchange Commission for $1.0 billion of debt.
At September 30, 1998, Nabisco Holdings' total debt (notes payable and
long-term debt, including current maturities) and total capital (total debt and
total stockholders' equity) amounted to approximately $4.0 billion and $7.9
billion, respectively, of which total debt is lower by $514 million and total
capital is lower by $792 million than their respective balances at December 31,
1997. Approximately $3.5 billion of this debt was issued by Nabisco, of which
$27 million was secured debt. The $482 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, 1998 were
1.02 to 1 and 0.51 to 1, respectively.
Nabisco Holdings currently pays regular quarterly dividends on its common
stock at an annual rate of $.70 per share. At that rate, the aggregate amount of
dividends to be paid would be approximately $185 million during 1998.
In the third quarter of 1998, Nabisco sold its College Inn brand of canned
broths, the U.S. and Canadian tablespreads and U.S. egg substitute businesses,
the Del Monte brand canned vegetable business
11
<PAGE>
in Venezuela and exited certain non-strategic businesses. These transactions
generated pre-tax net proceeds of $550 million which resulted in a $14 million
gain ($2 million after tax). Net sales for the full year 1997 from the
businesses sold and exited were $583 million.
Management of Nabisco Holdings is continuing to review various strategic
transactions, including but not limited to, acquisitions, divestitures, mergers
and joint ventures.
YEAR 2000 ISSUE
Nabisco Holdings has developed plans to address the implications of the Year
2000 on its computer systems and business operations. The Year 2000 Issue stems
from computer applications that were written using two digits rather than four
digits to define the applicable year. The issue is whether computer systems will
properly interpret date-sensitive information when the year changes to 2000.
Nabisco Holdings is continuing to assess and inventory its financial,
information and operational systems, including equipment with embedded
microprocessors, and is developing detailed plans for required systems
modifications or replacements. Management estimates that the inventory and
assessment process for information technology systems ("IT systems") is 99% or
more complete and will be complete by year end 1998. Management also estimates
that this process for non-information technology systems with embedded
technology ("non-IT systems") is 18% complete and scheduled to be 100% complete
by the first quarter of 1999.
Software remediation is ongoing and, in the case of IT systems, is
approximately 75% complete. Management expects this phase of Year 2000 readiness
to be complete by the end of first quarter 1999. In the case of non-IT systems,
hardware and software remediation is in its early stages with an estimated
completion date of the third quarter of 1999.
Software testing following remediation is approximately 50% complete for IT
systems. Management expects that testing will be complete by the second quarter
of 1999. With respect to non-IT systems, testing has recently begun and is
expected to be complete by the third quarter of 1999.
Approximately 50% of IT systems are remediated and in production. Management
expects the remainder to be complete and in production by the second quarter of
1999. Non-IT systems are expected to be fully Year 2000 compliant by the third
quarter of 1999.
Incremental costs, which include contractor costs to modify or replace
existing systems, and costs of internal resources dedicated to achieving Year
2000 compliance are charged to expense as incurred and are funded by operating
cash flows. Costs are expected to total approximately $35 million to $40
million, of which $12 million has been spent to date.
Nabisco Holdings is also in contact with suppliers, vendors, service
providers and customers to assess their progress on Year 2000 compliance issues
and to assess the potential impact on operations if key third parties are not
successful in converting their systems in a timely manner. Most respondents to
date have not completed their own compliance programs but have given assurance
that such programs are ongoing.
Progress against Year 2000 compliance plans is monitored by management as
well as the internal audit department. Results are reported to the Board of
Directors on a regular basis.
Nabisco Holdings' systems existing risk management program includes
emergency backup and recovery procedures to be followed in the event of failure
of a business-critical system. In addition, contingency plans to protect the
business from Year 2000-related interruptions are being developed, which will
include development of backup procedures, identification of alternate suppliers
and possible increases in safety inventory levels. These plans will be complete
by the second quarter of 1999. The possible consequences of Nabisco Holdings or
key third parties not being fully Year 2000 compliant include temporary plant
closings, delays in the delivery of products or receipt of supplies, invoice and
collection errors, and inventory obsolescence. However, Nabisco Holdings
believes its Year 2000 implementation plan, including contingency measures,
should be completed in all material respects by the end of 1999, thereby
reducing
12
<PAGE>
the possible material adverse effects of the Year 2000 on Nabisco Holding's
business, results of operations, cash flows or financial condition.
EURO CURRENCY CONVERSION
On January 1, 1999, eleven of the fifteen member countries of the European
Union are scheduled to adopt the euro as their common legal currency. The euro
will then trade on currency exchanges and be available for non-cash
transactions. From January 1, 1999 through January 1, 2002, participating
countries are also scheduled to maintain their national ("legacy") currencies as
legal tender for goods and services. Beginning January 1, 2002, new
euro-denominated bills and coins will be issued, and legacy currencies will be
withdrawn from circulation no later than July 1, 2002. Nabisco's operating
subsidiaries in Spain and Portugal will be affected by the euro conversion and
have established plans to address any business issues raised, including the
competitive impact of cross-border price transparency. It is not anticipated
that there will be any near term business ramifications; however, the long-term
implications, including any changes or modification that will need to be made to
business and financial strategies, are still being reviewed. From an accounting,
treasury and computer system standpoint, the impact from the euro currency
conversion is not expected to have a material impact on the financial position
or results of operations of Nabisco and its subsidiaries.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Nabisco is exposed to changes in interest rates primarily as a result of its
borrowing activities which include commercial paper, short-term borrowings and
long-term fixed rate debt used to maintain liquidity and fund its business
operations. Nabisco employs a variance/co-variance approach to its calculation
of Value at Risk ("VaR"), which is a statistical measure of potential loss in
terms of fair value, cash flows, or earnings of interest rate sensitive
financial instruments over a one year horizon using a 95% confidence interval
for changes in interest rates. The model assumes that financial returns are
normally distributed. For options and instruments with non-linear returns, the
model uses the delta/gamma method to approximate the financial return.
The VaR, which is the potential loss in fair value associated with Nabisco's
exposure to changing interest rates was $249 million after tax at September 30,
1998, an increase of $83 million from the December 31, 1997 amount. This change
is primarily due to i) the increase in price volatility of long-term U.S.
treasuries which are used to estimate the VaR of Nabisco's interest rate
sensitive financial instruments, and ii) the impact of the change in mix of
variable and fixed rate debt due to the January 1998 issuance of $1.0 billion of
putable/callable long-term debt that replaced commercial paper borrowings.
The VaR model is a risk analysis tool and does not purport to represent
actual losses in fair value that will be incurred by Nabisco, nor does it
consider the potential effect of favorable changes in market factors.
------------------------
The foregoing discussion in "Management's Discussion and Analysis of
Financial Condition and Results of Operations" contains forward-looking
statements concerning, among other things, the impact of Year 2000 on systems
and applications, the ramification of euro currency conversion, the level of
restructuring-related expenses and the amount of savings from the restructuring
program, the level of future capital expenditures, and the level of dividends.
These statements reflect management's current views with respect to future
events and financial performance. These forward-looking statements are based on
many assumptions and factors including competitive pricing for products,
commodity prices, success of new product innovations and acquisitions, economic
conditions in countries where Nabisco Holdings' subsidiaries do business, the
effects of currency fluctuations and the effects of government regulation. Any
changes in such assumptions or factors could produce significantly different
results.
13
<PAGE>
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<S> <C>
10.1 Third Amendment to the 364 Day Facility, dated September 25, 1998, among
Nabisco Holdings Corp., Nabisco Inc., and the lending institutions parties
thereto.
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, 1998.
27.1 Nabisco Holdings Corp. Financial Data Schedule.
27.2 Nabisco, Inc. Financial Data Schedule.
</TABLE>
----------------------------
(b) Reports on Form 8-K
None.
14
<PAGE>
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.
<TABLE>
<S> <C>
NABISCO HOLDINGS CORP.
NABISCO, INC.
(Registrants)
Date: November 12, 1998 /s/ JAMES E. HEALEY
...........................................................................................
James E. Healey
Executive Vice President and
Chief Financial Officer
/s/ IAN E. LEE-LEVITEN
...........................................................................................
Ian E. Lee-Leviten
Senior Vice President and Controller
</TABLE>
15
<PAGE>
EXHIBIT 10.1
THIRD AMENDMENT TO THE 364 DAY CREDIT AGREEMENT
THIRD AMENDMENT (this "Amendment"), dated as of September 25, 1998 among
NABISCO HOLDINGS CORP., a Delaware corporation ("Holdings"), NABISCO, INC., a
New Jersey corporation (the "Borrower"), and the lending institutions party to
the 364 Day Credit Agreement referred to below. All capitalized terms used
herein and not otherwise defined herein shall have the respective meanings
provided such terms in the 364 Day Credit Agreement.
W I T N E S S E T H:
WHEREAS, Holdings, the Borrower and various lending institutions (the
"Banks") are parties to a Credit Agreement, dated as of October 31, 1996 (the
"364 Day Credit Agreement");
WHEREAS, Holdings, the Borrower and the Banks wish to amend the 364 Day
Credit Agreement as herein provided;
NOW, THEREFORE, it is agreed:
I. Amendment to the 364 Day Credit Agreement.
1. The definition of "Commitment Expiry Date" appearing in Section 10
of the Credit Agreement shall be amended in its entirety as follows:
"Commitment Expiry Date" shall mean the date which is 364 days after
the Third Amendment Effective Date.
2. Section 10 of the 364 Day Credit Agreement is hereby further amended
by (i) deleting definitions of "First Amendment" and "First Amendment
Effective Date" appearing in said Section and (ii) inserting the following
new definitions in appropriate alphabetical order:
"Third Amendment" shall mean the Third Amendment to this Agreement,
dated as of September 25, 1998.
"Third Amendment Effective Date" shall have the meaning provided in
the Third Amendment.
II. Miscellaneous Provisions.
1. In order to induce the Banks to enter into this Amendment, each Credit
Party hereby (i) makes each of the representations, warranties and agreements
contained in Section 6 of the 364 Day Credit Agreement and (ii) represents and
warrants that there exists no Default or Event of Default, in each case on the
Third Amendment Date (as defined below), both before and after giving effect to
this Amendment.
2. This Amendment is limited as specified and shall not constitute a
modification acceptance or waiver of any other provision of the 364 Day Credit
Agreement or any other Credit Document.
3. This Amendment may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which counterparts
when executed and delivered shall be an original, but all of which shall
together constitute one and the same instrument. A complete set of counterparts
shall be lodged with Holdings and the Payment Administrator.
4. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF
NEW YORK.
5. This Amendment shall become effective on October 29, 1998 (the "Third
Amendment Effective Date"), so long as on or prior to such date (i) each of the
Credit Parties and (ii) each of the Banks shall have signed a copy hereof
(whether the same or different copies) and shall have delivered (including by
way of facsimile transmission) the same to White & Case, 1155 Avenue of the
Americas, New York, New York 10036, Attention: Ms. Jacqueline Lawrence
(Facsimile No. (212) 354-8113).
* * *
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has created a counterpart of
this Amendment to be duly executed and delivered as of the date first above
written.
<TABLE>
<S> <C> <C>
NABISCO HOLDINGS CORP.
By: /s/ Robert A. Schiffner
-----------------------------------------
Name: Robert A. Schiffner
Title: Senior Vice President & Treasurer
NABISCO, INC.
By: /s/ Robert A. Schiffner
-----------------------------------------
Name: Robert A. Schiffner
Title: Senior Vice President & Treasurer
</TABLE>
<PAGE>
EXHIBIT 12
NABISCO, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, 1998
---------------------
<S> <C>
Earnings before fixed charges:
Net loss.................................................................................... $ (90)
Benefit for income taxes.................................................................... (6)
-----
Loss before income taxes.................................................................... (96)
Interest and debt expense................................................................... 230
Interest portion of rental expense.......................................................... 21
-----
Earnings before fixed charges................................................................. $ 155
-----
-----
Fixed charges:
Interest and debt expense................................................................... $ 230
Interest portion of rental expense.......................................................... 21
Capitalized interest........................................................................ 3
-----
Total fixed charges....................................................................... $ 254
-----
-----
Ratio of earnings to fixed charges............................................................ .6
-----
-----
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OF NABISCO HOLDINGS CORP., WHICH
WERE FILED WITH SEC FORM 10-Q, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH STATEMENTS.
</LEGEND>
<CIK> 0000932130
<NAME> NABISCO HOLDINGS CORP.
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 79
<SECURITIES> 0
<RECEIVABLES> 522
<ALLOWANCES> 0
<INVENTORY> 865
<CURRENT-ASSETS> 1,558
<PP&E> 3,007
<DEPRECIATION> 0
<TOTAL-ASSETS> 11,276
<CURRENT-LIABILITIES> 1,694
<BONDS> 3,828
0
0
<COMMON> 3
<OTHER-SE> 3,923
<TOTAL-LIABILITY-AND-EQUITY> 11,276
<SALES> 6,191
<TOTAL-REVENUES> 6,191
<CGS> 3,478
<TOTAL-COSTS> 3,478
<OTHER-EXPENSES> 167
<LOSS-PROVISION> 406
<INTEREST-EXPENSE> 230
<INCOME-PRETAX> (96)
<INCOME-TAX> (6)
<INCOME-CONTINUING> (90)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (90)
<EPS-PRIMARY> (.34)
<EPS-DILUTED> (.34)
</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 THE SEC FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000069526
<NAME> NABISCO, INC.
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 77
<SECURITIES> 0
<RECEIVABLES> 522
<ALLOWANCES> 0
<INVENTORY> 865
<CURRENT-ASSETS> 1,556
<PP&E> 3,007
<DEPRECIATION> 0
<TOTAL-ASSETS> 11,274
<CURRENT-LIABILITIES> 1,651
<BONDS> 3,828
0
0
<COMMON> 0
<OTHER-SE> 3,967
<TOTAL-LIABILITY-AND-EQUITY> 11,274
<SALES> 6,191
<TOTAL-REVENUES> 6,191
<CGS> 3,478
<TOTAL-COSTS> 3,478
<OTHER-EXPENSES> 167
<LOSS-PROVISION> 406
<INTEREST-EXPENSE> 230
<INCOME-PRETAX> (96)
<INCOME-TAX> (6)
<INCOME-CONTINUING> (90)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (90)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
