<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM 10-Q/A
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
-------------------
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 07054-0311
(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: APRIL 30, 2000:
<TABLE>
<C> <S>
NABISCO HOLDINGS 51,438,397 SHARES OF CLASS A COMMON STOCK, PAR VALUE $.01
CORP.: 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>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Statements of Income--Three Months
Ended March 31, 2000 and 1999............................. 1
Consolidated Condensed Statements of Comprehensive
Income--Three Months Ended March 31, 2000 and 1999........ 2
Consolidated Condensed Statements of Cash Flows--Three
Months Ended March 31, 2000 and 1999...................... 3
Consolidated Condensed Balance Sheets--March 31, 2000 and
December 31, 1999......................................... 4
Notes to Consolidated Condensed Financial Statements........ 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 9
Item 3. Quantitative and Qualitative Disclosures about Market
Risk...................................................... 13
PART II--OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders......... 14
Item 5. Other Information........................................... 15
Item 6. Exhibits and Reports on Form 8-K............................ 15
Signatures........................................................... 17
</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 THREE MONTHS
ENDED ENDED
MARCH 31, 2000 MARCH 31, 1999
------------------- -------------------
NABISCO NABISCO
HOLDINGS NABISCO HOLDINGS NABISCO
-------- -------- -------- --------
<S> <C> <C> <C> <C>
NET SALES.................................................. $ 2,069 $2,069 $ 1,855 $1,855
-------- ------ -------- ------
Costs and expenses:
Cost of products sold.................................... 1,146 1,146 1,027 1,027
Selling, advertising, administrative and general
expenses............................................... 693 693 641 641
Amortization of trademarks and goodwill.................. 55 55 53 53
-------- ------ -------- ------
OPERATING INCOME..................................... 175 175 134 134
Interest and debt expense.................................. (70) (70) (65) (65)
Other income (expense), net................................ (6) (6) (10) (10)
-------- ------ -------- ------
INCOME BEFORE INCOME TAXES........................... 99 99 59 59
Provision for income taxes................................. 39 39 23 23
-------- ------ -------- ------
NET INCOME........................................... $ 60 $ 60 $ 36 $ 36
======== ====== ======== ======
NET INCOME PER COMMON SHARE--BASIC......................... $ .23 $ .14
======== ========
NET INCOME PER COMMON SHARE--DILUTED....................... $ .22 $ .13
======== ========
DIVIDENDS DECLARED PER COMMON SHARE........................ $ .1875 $ .1875
======== ========
Average number of common shares outstanding (in thousands):
Basic.................................................... 264,663 264,736
======== ========
Diluted.................................................. 266,633 267,042
======== ========
</TABLE>
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
1
<PAGE>
NABISCO HOLDINGS CORP.
NABISCO, INC.
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 2000 MARCH 31, 1999
------------------- -------------------
NABISCO NABISCO
HOLDINGS NABISCO HOLDINGS NABISCO
-------- -------- -------- --------
<S> <C> <C> <C> <C>
NET INCOME.................................................. $ 60 $ 60 $ 36 $ 36
-------- ------ -------- ------
Other comprehensive income (loss):
Cumulative translation adjustment......................... 3 3 (135) (135)
Provision (benefit) for income taxes...................... -- -- -- --
-------- ------ -------- ------
OTHER COMPREHENSIVE INCOME (LOSS), NET OF INCOME TAX........ 3 3 (135) (135)
-------- ------ -------- ------
Comprehensive income (loss)................................. $ 63 $ 63 $ (99) $ (99)
======== ====== ======== ======
</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>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 2000 MARCH 31, 1999
------------------- -------------------
<S> <C> <C> <C> <C>
NABISCO NABISCO
HOLDINGS NABISCO HOLDINGS NABISCO
----- ----- ----- -----
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
Net income............................................... $ 60 $ 60 $ 36 $ 36
Adjustments to reconcile net income to net cash flows
from (used in) operating activities:
Depreciation of property, plant and equipment........ 66 66 67 67
Amortization of intangibles.......................... 55 55 53 53
Deferred income tax provision........................ 21 21 16 16
Restructuring payments............................... (21) (21) (18) (18)
Accounts receivable, net............................. 130 130 (8) (8)
Inventories.......................................... (74) (74) (73) (73)
Prepaid expenses and other current assets............ (3) (3) (1) (1)
Accounts payable..................................... (248) (248) (172) (172)
Accrued liabilities.................................. (13) (13) (48) (46)
Income taxes accrued................................. 10 10 (4) (4)
Other, net........................................... (2) (2) 3 3
----- ----- ----- -----
Net cash flows (used in) operating activities.......... (19) (19) (149) (147)
----- ----- ----- -----
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Capital expenditures..................................... (39) (39) (47) (47)
Proceeds from sale of assets............................. 2 2 2 2
----- ----- ----- -----
Net cash flows (used in) investing activities.......... (37) (37) (45) (45)
----- ----- ----- -----
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Net proceeds from long-term debt......................... 210 210 233 233
Repayments of long-term debt............................. (153) (153) (7) (7)
Increase in notes payable................................ 33 33 5 5
Dividends paid on common stock........................... (50) (50) (46) (46)
Net proceeds from issuance of Class A common stock....... -- -- 2 --
----- ----- ----- -----
Net cash flows from financing activities............... 40 40 187 185
----- ----- ----- -----
Effect of exchange rate changes on cash and cash
equivalents.............................................. -- -- (6) (6)
----- ----- ----- -----
Net change in cash and cash equivalents................ (16) (16) (13) (13)
Cash and cash equivalents at beginning of period........... 110 110 111 111
----- ----- ----- -----
Cash and cash equivalents at end of period................. $ 94 $ 94 $ 98 $ 98
===== ===== ===== =====
Income taxes paid, net of refunds.......................... $ 8 $ 8 $ 11 $ 11
Interest paid.............................................. $ 77 $ 77 $ 72 $ 72
</TABLE>
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
3
<PAGE>
NABISCO HOLDINGS CORP.
NABISCO, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
MARCH 31, 2000 DECEMBER 31, 1999
------------------- -------------------
<S> <C> <C> <C> <C>
NABISCO NABISCO
HOLDINGS NABISCO HOLDINGS NABISCO
------- ------- ------- -------
ASSETS
Current assets:
Cash and cash equivalents............................. $ 94 $ 94 $ 110 $ 110
Accounts receivable, net of allowance for doubtful
accounts of $51 and $52, respectively............... 553 553 681 681
Deferred income taxes................................. 100 100 116 116
Inventories........................................... 964 964 898 898
Prepaid expenses and other current assets............. 82 82 79 79
------- ------- ------- -------
TOTAL CURRENT ASSETS.............................. 1,793 1,793 1,884 1,884
------- ------- ------- -------
Property, plant and equipment--at cost.................. 5,087 5,087 5,053 5,053
Less accumulated depreciation........................... (2,030) (2,030) (1,966) (1,966)
------- ------- ------- -------
Net property, plant and equipment..................... 3,057 3,057 3,087 3,087
------- ------- ------- -------
Trademarks, net of accumulated amortization of $1,242
and $1,214, respectively.............................. 3,414 3,414 3,443 3,443
Goodwill, net of accumulated amortization of $1,032 and
$1,007, respectively.................................. 3,151 3,151 3,159 3,159
Other assets and deferred charges....................... 163 163 134 134
------- ------- ------- -------
$11,578 $11,578 $11,707 $11,707
======= ======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable......................................... $ 72 $ 72 $ 39 $ 39
Accounts payable...................................... 403 403 642 642
Accrued liabilities................................... 982 932 1,020 970
Intercompany payable to Nabisco Holdings.............. -- 7 -- 7
Current maturities of long-term debt.................. 11 11 158 158
Income taxes accrued.................................. 121 121 104 104
------- ------- ------- -------
TOTAL CURRENT LIABILITIES......................... 1,589 1,546 1,963 1,920
------- ------- ------- -------
Long-term debt (less current maturities)................ 4,094 4,094 3,892 3,892
Other noncurrent liabilities............................ 770 770 744 744
Deferred income taxes................................... 1,180 1,180 1,176 1,176
Stockholders' equity:
Class A common stock (51,412,707 shares issued and
outstanding at March 31, 2000 and December 31,
1999)............................................... 1 -- 1 --
Class B common stock (213,250,000 shares issued and
outstanding at March 31, 2000 and December 31,
1999)............................................... 2 -- 2 --
Paid-in capital....................................... 4,093 4,141 4,093 4,141
Retained earnings..................................... 158 137 148 127
Treasury stock, at cost............................... (17) -- (17) --
Accumulated other comprehensive income (loss)......... (290) (290) (293) (293)
Notes receivable on common stock purchases............ (2) -- (2) --
------- ------- ------- -------
TOTAL STOCKHOLDERS' EQUITY........................ 3,945 3,988 3,932 3,975
------- ------- ------- -------
$11,578 $11,578 $11,707 $11,707
======= ======= ======= =======
</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
GENERAL
For interim reporting purposes, certain costs and expenses are charged to
operations in proportion to the estimated total annual amount expected to be
incurred. The results for the three months ended March 31, 2000 are not
necessarily indicative of the results to be expected for the year ended
December 31, 2000.
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"
together with Nabisco Holdings, the "Companies") 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, 1999.
Certain prior period amounts have been reclassified to conform to the
current period presentation.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
During the second quarter of 1998, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 133,
Accounting for Derivative Instruments and Hedging Activities, which was required
to be adopted by January 1, 2000, with early adoption permitted. In June 1999,
the FASB issued SFAS No. 137, Accounting for Derivative Instruments and Hedging
Activities--Deferral of the Effective Date of SFAS No. 133, which amended SFAS
No. 133 to delay its effective date one year. SFAS No. 133 requires that all
derivative instruments be recorded on the consolidated balance sheet at their
fair value. Changes in the fair value of derivatives will 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
impact, if any, that adoption or subsequent application of SFAS No. 133 will
have on its financial position or results of operations.
ACQUISITION GOODWILL ADJUSTMENT
In November 1999, Nabisco acquired certain assets and liabilities of
Favorite Brands International, Inc. As of March 31, 2000 the purchase price
allocation has not been fully completed, pending the completion of the
acquisition integration plan. However, additional goodwill of $24 million was
recognized during the first quarter of 2000 from the settlement of the purchase
price for working capital amounts, resulting in total goodwill of $92 million.
5
<PAGE>
NOTE 1--INTERIM REPORTING AND RESULTS OF OPERATIONS (CONTINUED)
1998 RESTRUCTURING CHARGES
In the second and fourth quarters of 1998, Nabisco recorded restructuring
charges of $406 million ($268 million after tax) and $124 million ($94 million
after tax), respectively, and in 1999, recorded a net restructuring credit of
$67 million ($48 million after tax), resulting in a total net charge for the
1998 restructuring programs of $463 million ($314 million after tax). These
restructuring programs were undertaken to streamline operations and improve
profitability and will result in a workforce reduction of approximately 6,900
employees of which 6,700 positions were eliminated as of March 31, 2000.
The June 1998 program was substantially completed in 1999 and the December
1998 program is expected to be substantially completed by mid-year 2000. The
restructuring programs when completed will require cash expenditures, net of
cash proceeds of approximately $140 million.
The key elements of the restructuring programs include:
<TABLE>
<CAPTION>
SEVERANCE CONTRACT ASSET OTHER EXIT
IN MILLIONS AND BENEFITS TERMINATIONS IMPAIRMENTS COSTS TOTAL
----------- ------------ ------------ ----------- ---------- --------
<S> <C> <C> <C> <C> <C>
Sales force reorganizations.............. $ 37 $ 3 $ -- $ -- $ 40
Distribution reorganizations............. 16 8 9 -- 33
Staff reductions......................... 83 -- 3 -- 86
Manufacturing costs reduction
initiatives............................ 22 -- 8 -- 30
Plant closures........................... 46 3 217 15 281
Product line rationalizations............ 4 4 20 32 60
----- ---- ----- ---- -----
Total 1998 restructuring reserves.... 208 18 257 47 530
1999 net restructuring credit............ (50) 1 (14) (4) (67)
----- ---- ----- ---- -----
158 19 243 43 463
----- ---- ----- ---- -----
Charges and Payments:
Cumulative through December 31, 1999..... (132) (14) (233) (35) (414)
Three months ended March 31, 2000........ (11) -- (4) (2) (17)
----- ---- ----- ---- -----
Total charges and payments, net of
cash proceeds...................... (143) (14) (237) (37) (431)
----- ---- ----- ---- -----
Reserve and valuation account balances as
of March 31, 2000...................... $ 15 $ 5 $ 6 $ 6 $ 32
===== ==== ===== ==== =====
</TABLE>
The key elements of the restructuring programs, after the restructuring
credit of $67 million include:
<TABLE>
<CAPTION>
SEVERANCE CONTRACT ASSET OTHER EXIT
IN MILLIONS AND BENEFITS TERMINATIONS IMPAIRMENTS COSTS TOTAL
----------- ------------ ------------ ----------- ---------- --------
<S> <C> <C> <C> <C> <C>
Sales force reorganizations.............. $ 16 $ 3 $ -- $-- $ 19
Distribution reorganizations............. 11 4 7 -- 22
Staff reductions......................... 59 1 4 -- 64
Manufacturing costs reduction
initiatives............................ 19 -- 8 -- 27
Plant closures........................... 51 6 203 15 275
Product line rationalizations............ 2 5 21 28 56
---- --- ---- --- ----
Total restructuring charges.......... $158 $19 $243 $43 $463
==== === ==== === ====
</TABLE>
Total charges and payments include cash expenditures, non-cash charges
primarily for asset impairments and committed severance and benefits to be paid.
The total cash payments, net of cash proceeds applied against the restructuring
reserves totaled $123 million, which is comprised of cumulative cash
expenditures of $145 million and cumulative cash proceeds of $22 million. For
the quarter ended March 31, 2000, cash payments, net of cash proceeds totaled
$20 million, which is comprised of $21 million of cash expenditures and
$1 million of cash proceeds which were applied
6
<PAGE>
NOTE 1--INTERIM REPORTING AND RESULTS OF OPERATIONS (CONTINUED)
against the restructuring reserves. Cash payments for the three months ended
March 31, 2000 exceeded charges and payments, net of cash proceeds, for the
three months ended March 31, 2000 due to payments made to satisfy severance and
benefit obligations previously committed and charged against the reserves.
NOTE 2--INVENTORIES
The major classes of inventory are shown in the table below:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
IN MILLIONS 2000 1999
----------- --------- ------------
<S> <C> <C>
Finished products........................................... $576 $551
Raw materials............................................... 244 199
Work in process............................................. 42 45
Other....................................................... 102 103
---- ----
$964 $898
==== ====
</TABLE>
NOTE 3--SEGMENT INFORMATION
OPERATING SEGMENT DATA
Nabisco Holdings is a holding company whose subsidiaries are engaged in the
manufacture, distribution and sale of cookies, crackers and other food products.
Nabisco Holdings is organized and reports its results of operations in three
business segments: Nabisco Biscuit Company, the Nabisco Foods Company and the
International Food Group which are segregated by both product and geographic
area.
The Company evaluates performance and allocates resources based on operating
company contribution ("OCC") before restructuring-related expenses. OCC before
restructuring-related expenses for each reportable segment is operating income
before amortization of intangibles, restructuring charges and credits and
exclusive of restructuring-related expenses.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
---------------------
IN MILLIONS 2000 1999
----------- -------- ----------
<S> <C> <C>
Net sales from external customers:
Nabisco Biscuit Company................................... $ 881 $ 867
Nabisco Foods Company..................................... 631 435
International Food Group.................................. 557 553
------- -------
Total............................................... $ 2,069 $ 1,855
======= =======
Operating company contribution:
Nabisco Biscuit Company................................... $ 132 $ 121
Nabisco Foods Company..................................... 65 49
International Food Group.................................. 33 32
------- -------
Total segment operating company contribution................ 230 202
Restructuring-related expenses.............................. -- 15
Amortization of trademarks and goodwill..................... 55 53
------- -------
Consolidated operating income............................... 175 134
Interest and debt expense................................... 70 65
Other expense, net.......................................... 6 10
------- -------
Income before income taxes.................................. $ 99 $ 59
======= =======
</TABLE>
7
<PAGE>
NOTE 4--SUBSEQUENT EVENT
On May 5, 2000, the European Commission gave clearance to Nabisco's
previously announced intention of joining a consortium of investors, Finalrealm
Limited ("Finalrealm"), that has acquired the equity of United Biscuits
(Holdings) plc ("UB"), a United Kingdom company, for cash of 265 pence per UB
share. Pursuant to the definitive agreements and subject to completion:
(i) Nabisco will contribute approximately $45 million in cash and its operations
in Spain, Portugal and the Middle East (in 1999, these operations had net sales
of approximately $290 million) to an associate of Finalrealm and in exchange
receive dual convertible discounted preferred securities; (ii) Finalrealm has
agreed to procure the sale to Nabisco of UB's operations in China, Hong Kong and
Taiwan (in 1999, these operations had net sales of approximately $66 million).
It is expected that Nabisco will have: (i) an economic interest of 26.5% in
the consortium which will be comprised of UB's businesses in the United Kingdom,
France, the Benelux countries and Nabisco's operations named above; and
(ii) ownership of UB's Asian businesses cited above.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following is a discussion and analysis of Nabisco Holdings' financial
condition and results of operations. The discussion and analysis of the results
of operations is divided into separate sections for sales, operating company
contribution and operating income. The sales section includes information as
reported in the historical financial statements followed by management's
discussion and analysis of these results. The operating company contribution and
operating income sections include information as reported in the historical
financial statements, followed by special items that management believes impact
the comparability of historical results, results excluding special items and
management's discussion and analysis of results excluding special items. Results
excluding special items are presented on a basis consistent with how the
businesses are managed. Special items include restructuring-related expenses
that management believes affect the comparability of the results of operations.
The results of operations excluding special items should not be viewed as a
substitute for the historical results of operations but as a tool to better
understand the underlying trends in the business. The discussion and analysis of
Nabisco Holdings' financial condition and results of operations should be read
in conjunction with the historical financial information and the related notes
thereto included in the Consolidated Condensed Financial Statements.
The food business is conducted by the operating subsidiaries of Nabisco
Holdings. Nabisco's businesses in the United States are comprised of Nabisco
Biscuit Company and the Nabisco Foods Company, formerly known as the U.S. Foods
Group. Nabisco's businesses outside the United States are conducted by Nabisco
Ltd and Nabisco International, Inc. ("Nabisco International" together with
Nabisco Ltd, the "International Food Group").
SALES
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
------------------------------
DOLLARS IN MILLIONS 2000 1999 % CHANGE
------------------- -------- -------- --------
<S> <C> <C> <C>
NET SALES:
Nabisco Biscuit Company................................... $ 881 $ 867 2%
Nabisco Foods Company..................................... 631 435 45%
International Food Group.................................. 557 553 1%
------ ------
Total..................................................... $2,069 $1,855 12%
====== ======
</TABLE>
<TABLE>
<C> <S>
- Nabisco Biscuit Company's net sales increased 2% versus the
prior year due to continued momentum in volume growth from
its core cookie and cracker brands as well as the impact of
several new products. Offsetting some of these gains were
several discontinued breakfast food and snack items.
- Nabisco Foods Company's net sales increased 45% to
$631 million. Excluding the impact on net sales resulting
from the November 1999 acquisition of the Favorite Brands'
business, net sales grew 14%, over the prior year, primarily
due to volume gains from nuts, confections and pet snacks.
- International's net sales increased 1% versus the prior year
to $557 million. Excluding the impact of unfavorable foreign
currency translations, International's net sales increased
2%. This increase is primarily due to volume gains in
Argentina, principally due to the impact of the Canale S.A.
acquisition, the Andean region and Asia as well as price
increases in Brazil, partially offset by volume declines in
Brazil, Mexico and Spain.
</TABLE>
9
<PAGE>
OPERATING COMPANY CONTRIBUTION
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
------------------------------
DOLLARS IN MILLIONS 2000 1999 % CHANGE
------------------- -------- -------- --------
<S> <C> <C> <C>
REPORTED OPERATING COMPANY CONTRIBUTION(1):
Nabisco Biscuit Company................................... $ 132 $ 108 22%
Nabisco Foods Company..................................... 65 48 35%
International Food Group.................................. 33 31 6%
------ ------
Total....................................................... 230 187 23%
------ ------
SPECIAL ITEMS:
Restructuring-related expenses:
Nabisco Biscuit Company................................. -- (13)
Nabisco Foods Company................................... -- (1)
International Food Group................................ -- (1)
------ ------
Total....................................................... -- (15)
------ ------
OPERATING COMPANY CONTRIBUTION EXCLUDING SPECIAL ITEMS:
Nabisco Biscuit Company................................... 132 121 9%
Nabisco Foods Company..................................... 65 49 33%
International Food Group.................................. 33 32 3%
------ ------
Total....................................................... $ 230 $ 202 14%
====== ======
</TABLE>
------------------------
(1) Operating company contribution represents operating income before
amortization of trademarks and goodwill and restructuring charges (credits).
THE FOLLOWING DISCUSSION AND ANALYSIS IS BASED ON OPERATING COMPANY CONTRIBUTION
EXCLUDING SPECIAL ITEMS:
<TABLE>
<C> <S>
- Nabisco Biscuit Company's operating company contribution
increased 9% versus the prior year. The increase reflects
the impact of ongoing productivity programs on manufacturing
costs and volume gains in its core cookie and cracker
brands. Increased marketing spending and lower breakfast
snack volumes partially offset these gains.
- Nabisco Foods Company's operating company contribution
increased 33% versus the prior year. The results were
primarily due to strong volume gains from nuts, confections
and pet snacks partially offset by increased marketing
spending.
- International's operating company contribution increased 3%
versus the prior year. The increase was primarily due to
volume increases in Argentina, the Andean region and Asia.
Also contributing to the increase was the impact of
productivity programs on lowering costs in Canada and
Argentina. Partially offsetting this increase were volume
declines in Brazil, Mexico and Spain in addition to
increased marketing investments in Canada, Asia and Brazil.
</TABLE>
10
<PAGE>
OPERATING INCOME
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
------------------------------
DOLLARS IN MILLIONS 2000 1999 % CHANGE
------------------- -------- -------- --------
<S> <C> <C> <C>
REPORTED OPERATING INCOME................................. $ 175 $ 134 31%
------ ------
SPECIAL ITEMS:
Restructuring-related expenses.......................... -- (15)
------ ------
OPERATING INCOME EXCLUDING SPECIAL ITEMS.................. $ 175 $ 149 17%
====== ======
</TABLE>
THE FOLLOWING DISCUSSION AND ANALYSIS IS BASED ON OPERATING INCOME EXCLUDING
SPECIAL ITEMS:
<TABLE>
<C> <S>
- Nabisco Holdings' operating income was $175 million in the
first quarter of 2000, an increase of 17% from the first
quarter 1999 level of $149 million, primarily due to the
increase in operating company contribution discussed
previously.
</TABLE>
INTEREST AND DEBT EXPENSE
Consolidated interest and debt expense of $70 million in the first quarter
of 2000 increased 8% from the first quarter of 1999, due to higher average debt
levels and higher average interest rates.
OTHER INCOME (EXPENSE), NET
Other income (expense), net was $6 million expense in the first three months
of 2000 compared to $10 million expense in the first three months of 1999. The
first three months comparison primarily reflects foreign exchange gains in 2000
versus foreign exchange losses in 1999.
NET INCOME
Nabisco Holdings reported net income of $60 million in the first quarter of
2000, an increase of 67% when compared with net income of $36 million for the
first quarter of 1999. This increase resulted primarily from higher operating
income and lower other income (expense), net offset by higher interest and debt
expense and an increase in the provision for income taxes.
COMPREHENSIVE INCOME (LOSS)
Comprehensive income (loss) was $63 million income in the first quarter of
2000 versus a loss of $99 million in the first quarter of 1999. The
$162 million change reflects higher net income and foreign currency translation
gains in 2000 compared to foreign currency translation losses in 1999.
RESTRUCTURING
Savings objectives set in our 1998 restructuring programs are on target
despite lower than anticipated spending to date. The June 1998 program was
substantially completed in 1999 and the December 1998 program is expected to be
substantially completed by mid-year 2000. Pre-tax savings in 2000 are expected
to be approximately $140 million including cash savings of $133 million and,
after completion of the programs, are expected to be approximately $145 million
annually including cash savings of $135 million. In 1999, Nabisco recorded a net
restructuring credit of $67 million. This net credit reduced the restructuring
charges to $463 million. As the remaining projects from the December 1998
restructuring program are completed, we will continue to analyze the actual
spending and the estimated cost to complete the programs. The results of that
analysis will determine what further adjustments, if any, will be necessary.
Cumulative cash expenditures, net of cash proceeds to date have totaled
$123 million with $20 million expended in the first three months of 2000. The
cash component of the restructuring charge for the programs will be
approximately $140 million including an estimated
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$37 million expenditure in 2000. For a further discussion of the restructuring
programs, see Note 1 to the Consolidated Financial Statements.
LIQUIDITY AND FINANCIAL CONDITION
Net cash flows used in operating activities amounted to $19 million for the
first quarter of 2000 compared to $149 million for the first quarter of 1999.
The decrease in net cash flows used in operating activities primarily reflects
the 2000 increase in net income and lower working capital requirements.
Cash flows used in investing activities decreased $8 million in the first
quarter of 2000 to $37 million from the first quarter of 1999 primarily because
of lower capital expenditures.
Capital expenditures were $39 million in the first quarter of 2000.
Management expects that capital expenditures for 2000 will be approximately $250
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
2000.
Cash flows from financing activities for the first quarter of 2000 decreased
$147 million to $40 million from the first quarter of 1999, principally due to
lower net proceeds from long-term debt partially offset by a higher increase in
notes payable.
As of March 31, 2000, the $1.5 billion revolving credit facility was
unutilized and available to support borrowings and the 364-day $1.1 billion
credit facility was unavailable as it supported outstanding commercial paper
borrowings.
The Nabisco Holdings' credit facilities restrict dividends and distributions
after January 1, 1999 by Nabisco Holdings to holders of its equity securities by
requiring a minimum net worth amount. As of March 31, 2000, actual net worth, as
defined, exceeded required net worth by approximately $810 million. Nabisco
Holdings does not believe that its credit arrangements will limit its ability to
pay dividends.
Nabisco's credit facilities limit the ability of Nabisco Holdings and its
subsidiaries to incur indebtedness, engage in transactions with stockholders and
affiliates, create liens, acquire, sell or dispose of certain assets and
securities and engage in certain mergers or consolidations. Nabisco Holdings and
Nabisco believe that they are currently in compliance with all covenants and
restrictions imposed by the terms of their indebtedness.
At March 31, 2000, 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 $4.2 billion and $8.1 billion,
respectively, of which total debt is higher by $88 million and total capital is
higher by $101 million than their respective balances at December 31, 1999.
Nabisco Holdings' ratios of total debt to total stockholders' equity and total
debt to total capital at March 31, 2000 were 1.1 to 1 and .51 to 1,
respectively.
Nabisco Holdings currently pays regular quarterly dividends on its common
stock at an annual rate of $.75 per share. At that rate, the aggregate amount of
dividends to be paid would be approximately $198 million during 2000. Nabisco
holdings believes that its internally generated cash and borrowings under its
bank credit agreement 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 or borrowings.
SUBSEQUENT EVENT
On May 5, 2000, the European Commission gave clearance to Nabisco's
previously announced intention of joining a consortium of investors, Finalrealm
Limited ("Finalrealm"), that has acquired the equity of United Biscuits
(Holdings) plc ("UB"), a United Kingdom company, for cash of 265 pence
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<PAGE>
per UB share. Pursuant to the definitive agreements and subject to completion:
(i) Nabisco will contribute approximately $45 million in cash and its operations
in Spain, Portugal and the Middle East (in 1999, these operations had net sales
of approximately $290 million) to an associate of Finalrealm and in exchange
receive dual convertible discounted preferred securities; (ii) Finalrealm has
agreed to procure the sale to Nabisco of UB's operations in China, Hong Kong and
Taiwan (in 1999, these operations had net sales of approximately $66 million).
It is expected that Nabisco will have: (i) an economic interest of 26.5% in
the consortium which will be comprised of UB's businesses in the United Kingdom,
France, the Benelux countries and Nabisco's operations named above; and
(ii) ownership of UB's Asian businesses cited above.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
INTEREST RATE EXPOSURE
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 $226 million after tax at March 31,
2000, an increase of $5 million from the December 31, 1999 amount.
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.
COMMODITY PRICE EXPOSURE
The VaR associated with Nabisco's derivative commodity instruments due to
reasonably possible near-term changes in commodity prices, based on historical
commodity price movements, would not result in a material effect on the future
earnings of Nabisco.
The VaR associated with Nabisco's net commodity exposure (anticipated future
purchases less derivatives, inventory and firm purchase commitments) would
result in a potential loss in pre-tax earnings of $40 million at March 31, 2000,
an increase of $10 million from the December 31, 1999 amount.
The VaR associated with either Nabisco's derivative commodity instruments or
its net commodity exposure would not have a material effect on the fair values
or cash flows of Nabisco.
------------------------
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 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.
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<PAGE>
PART II
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The matters below were voted upon at the annual meeting of stockholders of
Nabisco Holdings Corp. held on May 8, 2000. At the meeting, 41,499,066 shares of
Class A Common Stock and 213,250,000 shares of Class B Common Stock were
represented in person or by proxy. Class A Common Stock and Class B Common Stock
are entitled to one (1) vote and ten (10) votes per share, respectively, and
vote together as a single class.
(a) Election of thirteen Directors
<TABLE>
<CAPTION>
NAME VOTES FOR VOTES WITHHELD
---- --------- --------------
<S> <C> <C>
Herman Cain................................ 2,173,893,881 105,187
John T. Chain, Jr.......................... 2,173,872,821 126,247
Julius L. Chambers......................... 2,173,859,228 139,840
John L. Clendenin.......................... 2,173,868,225 130,843
Steven F. Goldstone........................ 2,173,890,640 108,428
Ray J. Groves.............................. 2,173,869,013 130,055
David B. Jenkins........................... 2,173,868,539 130,529
Nancy Karch................................ 2,173,896,131 102,937
James M. Kilts............................. 2,173,891,046 108,022
Fred H. Langhammer......................... 2,173,893,931 105,137
H. Eugene Lockhart......................... 2,173,894,101 104,967
Theodore E. Martin......................... 2,173,869,491 129,577
Rozanne L. Ridgway......................... 2,173,870,245 128,823
</TABLE>
(b) Ratification of appointment of Deloitte & Touche LLP as independent
auditors.
<TABLE>
<S> <C> <C>
For........................................... 2,173,960,677
Against....................................... 22,019
Abstain....................................... 16,372
</TABLE>
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<PAGE>
PART II
ITEM 5. OTHER INFORMATION
EXPLORATION OF ALTERNATIVES TO MAXIMIZE SHAREHOLDER VALUE
On April 3, 2000, the Board of Directors of Nabisco Group Holdings Corp.
("NGH") directed its management to explore all alternatives to maximize
shareholder value, including the sale of NGH or the sale of Nabisco Holdings. In
this connection, NGH engaged UBS Warburg LLC and Morgan Stanley & Co.
Incorporated as financial advisors.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<S> <C>
10.1 Nabisco Holdings Corp. 1994 Long Term Incentive Plan
(effective April 17, 1997 as amended and restated through
March 17, 2000) (incorporated by reference to Exhibit 10.1
to Quarterly Report on Form 10-Q of Nabisco Holdings Corp.
and Nabisco, Inc. for the fiscal quarter ended March 31,
2000, filed May 12, 2000 (the "March 2000 Nabisco
Form 10-Q")).
10.2 Form of Restricted Stock Units Agreement between Nabisco
Holdings Corp. and the grantee named therein (incorporated
by reference to Exhibit 10.2 to the March 2000 Nabisco
Form 10-Q).
10.3 Form of Non-Qualified Stock Option Agreement between Nabisco
Holdings Corp. and optionee named therein (2000 grant)
(incorporated by reference to Exhibit 10.3 to the March 2000
Nabisco Form 10-Q).
10.4 Amended and Restated Employment Agreement by and among
Nabisco Holdings Corp., Nabisco, Inc., Nabisco Group
Holdings Corp. and James M. Kilts (effective April 1, 2000)
(incorporated by reference to Exhibit 10.4 to the March 2000
Nabisco Form 10-Q).
10.5 Employment Agreement (dated October 1, 1997) by and among
Nabisco, Inc., Nabisco Holdings Corp., Nabisco Group
Holdings Corp. and James E. Healey (as amended and restated
effective March 17, 2000) (incorporated by reference to
Exhibit 10.5 to the March 2000 Nabisco Form 10-Q).
10.6 Employment Agreement (dated October 12, 1988) by and among
Nabisco, Inc., Nabisco Holdings Corp., Nabisco Group
Holdings Corp. and C. Michael Sayeau (as amended and
restated effective March 17, 2000) (incorporated by
reference to Exhibit 10.6 to the March 2000 Nabisco
Form 10-Q).
10.7 Employment Agreement (dated February 9, 1998) by and among
Nabisco, Inc., Nabisco Holdings Corp., Nabisco Group
Holdings Corp. and Richard H. Lenny (as amended and restated
effective March 17, 2000) (incorporated by reference to
Exhibit 10.7 to the March 2000 Nabisco Form 10-Q).
10.8 Employment Agreement (dated September 1, 1995) by and among
Nabisco, Inc., Nabisco Holdings Corp., Nabisco Group
Holdings Corp. and Douglas R. Conant (as amended and
restated effective March 17, 2000) (incorporated by
reference to Exhibit 10.8 to the March 2000 Nabisco
Form 10-Q).
10.9 Nabisco Holdings Corp. Annual Incentive Award Plan
(effective January 1, 1995 as amended and restated as of
March 17, 2000) (incorporated by reference to Exhibit 10.9
to the March 2000 Nabisco Form 10-Q).
10.10 Nabisco Holdings Corp. 1999 Retention Plan Guidelines
(effective July 1, 1999) (incorporated by reference to
Exhibit 10.10 to the March 2000 Nabisco Form 10-Q).
</TABLE>
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<TABLE>
<S> <C>
10.11 Nabisco Salary and Benefit Continuation Program (as amended
and restated effective January 1, 1997) (incorporated by
reference to Exhibit 10.11 to the March 2000 Nabisco
Form 10-Q).
10.12 Nabisco Flexible Perquisite Program Guidelines (as updated
January 1, 2000) (incorporated by reference to
Exhibit 10.12 to the March 2000 Nabisco Form 10-Q).
12 Nabisco, Inc. Computation of Ratio of Earnings to Fixed
Charges for the three months ended March 31, 2000
(incorporated by reference to Exhibit 12 to the March 2000
Nabisco Form 10-Q).
27.1 Nabisco Holdings Corp. Financial Data Schedule for the first
quarter of 2000 (incorporated by reference to Exhibit 27.1
to the March 2000 Nabisco Form 10-Q).
27.2 Nabisco, Inc. Financial Data Schedule for the first quarter
of 2000 (incorporated by reference to Exhibit 27.2 to the
March 2000 Nabisco Form 10-Q).
</TABLE>
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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.
<TABLE>
<S> <C>
NABISCO HOLDINGS CORP.
NABISCO, INC.
(Registrants)
/s/ JAMES E. HEALEY
......................................
James E. Healey
Executive Vice President and
Chief Financial Officer
Date: October 3, 2000 /s/ THOMAS J. PESCE
......................................
Thomas J. Pesce
Senior Vice President and Controller
</TABLE>
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