NABISCO INC, 10-K405, 2000-03-22

NABISCO INC
10-K405, 2000-03-22
FOOD AND KINDRED PRODUCTS

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 21, 2000
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
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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)

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<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.)
------------------------

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

<TABLE>
<CAPTION>
NAME OF EACH
EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
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<S> <C>
NABISCO HOLDINGS CORP.
Class A Common Stock, par value $.01 per share New York
NABISCO, INC.
6 1/8% Notes due 2033 New York
</TABLE>

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

None

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 BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K. [X]

THE AGGREGATE MARKET VALUE OF VOTING STOCK HELD BY NON-AFFILIATES OF NABISCO
HOLDINGS CORP. ON MARCH 15, 2000 WAS APPROXIMATELY $1.4 BILLION. ALL OF THE
STOCK OF NABISCO, INC. IS HELD BY NABISCO HOLDINGS CORP.

INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANTS'
CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE: MARCH 15, 2000:

<TABLE>
<C> <S>
NABISCO HOLDINGS 51,412,707 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>

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NABISCO, INC. MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION J(1)(A)
AND (B) OF FORM 10-K AND IS THEREFORE FILING THIS FORM WITH THE REDUCED
DISCLOSURE FORMAT.
-------------------

DOCUMENTS INCORPORATED BY REFERENCE

PORTIONS OF THE DEFINITIVE PROXY STATEMENT OF NABISCO HOLDINGS CORP. TO BE FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO REGULATION 14A OF THE
SECURITIES EXCHANGE ACT OF 1934 ON OR PRIOR TO APRIL 30, 2000 ARE INCORPORATED
BY REFERENCE INTO PART III OF THIS REPORT.

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<PAGE>
INDEX

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PAGE
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<S> <C> <C>
PART I
Item 1. Business.................................................... 1
(a) General Development of Business..................... 1
(b) Financial Information about Industry Segments....... 2
(c) Narrative Description of Business................... 2
Other Matters..................................... 6
(d) Financial Information about Foreign and Domestic
Operations........................................ 6
Item 2. Properties.................................................. 6
Item 3. Legal Proceedings........................................... 6
Item 4. Submission of Matters to a Vote of Security Holders......... 6
Executive Officers of the Registrants....................... 7

PART II
Item 5. Market for Registrants' Common Equity and Related
Stockholder Matters....................................... 9
Item 6. Selected Financial Data..................................... 10
Item 7. Management's Discussion and Analysis of Financial Condition
and
Results of Operations..................................... 11
Item 7a. Quantitative and Qualitative Disclosures About Market
Risk...................................................... 19
Item 8. Financial Statements and Supplementary Data................. 20
Item 9. Changes in and Disagreements with Accountants on Accounting
and
Financial Disclosure...................................... 20

PART III
Item 10. Directors and Executive Officers of the Registrants......... 21
Item 11. Executive Compensation...................................... 21
Item 12. Security Ownership of Certain Beneficial Owners and
Management................................................ 21
Item 13. Certain Relationships and Related Transactions.............. 21

PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K.................................................. 21
</TABLE>
<PAGE>
PART I

ITEM 1. BUSINESS

(A) GENERAL DEVELOPMENT OF BUSINESS

The operating subsidiaries of Nabisco Holdings Corp. ("Nabisco Holdings")
comprise one of the largest food companies in the world. In the United States,
the packaged food business is conducted by Nabisco Holdings' subsidiary,
Nabisco, Inc. ("Nabisco"), the largest manufacturer and marketer of cookies and
crackers. Food operations outside the United States are conducted by Nabisco
International, Inc. and Nabisco Ltd, subsidiaries of Nabisco. For financial
information with respect to operations in various geographic locations, see Item
7, "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and Note 17 to the Consolidated Financial Statements, and the
related notes thereto, of Nabisco Holdings and Nabisco as of December 31, 1999
and 1998 and for each of the years in the three-year period ended December 31,
1999 (the "Consolidated Financial Statements").

Nabisco Holdings was incorporated in Delaware in 1981 under the name of
Nabisco Brands, Inc. in connection with the combination of Nabisco, Inc., which
was incorporated in 1898 as the National Biscuit Company, and Standard Brands
Incorporated, which was incorporated in 1929 in connection with the combination
of The Fleischmann Company, Chase & Sanborn, Inc., Royal Baking Powder Company
and E.W. Gillette Company, Limited.

In 1985, Nabisco Holdings was acquired by RJR Nabisco, Inc., which has been
renamed R.J. Reynolds Tobacco Holdings, Inc. ("RJR") and, in 1989, RJR was
acquired by RJR Nabisco Holdings Corp., which has been renamed Nabisco Group
Holdings Corp ("NGH").

On January 26, 1995, Nabisco Holdings completed the initial public offering
of 51,750,000 shares of its Class A Common Stock, par value $.01 per share (the
"Class A Common Stock"), at an initial offering price of $24.50 per share.

During the second quarter of 1999, a series of reorganization transactions
were completed, through which Nabisco Holdings, Nabisco and their subsidiaries
are no longer affiliated with RJR and its subsidiaries. The principal
transactions in this reorganization that affected the registrants are the
following:

- On May 18, 1999, RJR transferred all of the outstanding Class B Common
Stock of Nabisco Holdings to NGH through a merger transaction.

- On June 14, 1999, NGH distributed all of the outstanding shares of RJR
common stock to NGH common stockholders of record as of May 27, 1999.

NGH owns 100% of the outstanding Class B Common Stock (the "Class B Common
Stock" and, together with the Class A Common Stock, the "Common Stock") of
Nabisco Holdings, which represents approximately 80.6% of the economic interest
and 97.6% of the combined voting power of all of the outstanding Common Stock as
of March 15, 2000.

In 1999, a subsidiary of Nabisco acquired the stock of Canale S.A.,
Argentina's fourth largest biscuit company. Also in 1999, Nabisco acquired
certain assets and liabilities of Favorite Brands International, Inc., the
fourth largest non-chocolate candy company in the United States. The acquisition
further strengthened our leadership position in non-chocolate candy.

Nabisco will continue to assess its businesses to evaluate their consistency
with strategic objectives. Although Nabisco may acquire and divest additional
businesses in the future, no decisions have been made with respect to any such
acquisitions or divestitures except as described in the subsequent event section
of Item 7, "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and Note 19 to the Consolidated Financial Statements.
Under the provisions of existing credit agreements, however, there are
restrictions on the sale or disposition of all, substantially all or any
substantial portion

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of certain domestic businesses of Nabisco. See Item 7. "Management's Discussion
and Analysis of Financial Condition and Results of Operations".

(B) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

For information about operating segments for the years 1997 through 1999,
see Note 17 to the Consolidated Financial Statements.

Nabisco's businesses in the United States are comprised of the Nabisco
Biscuit Company and the U.S. Foods Group. Nabisco's businesses outside the
United States are conducted by Nabisco Ltd and Nabisco International, Inc.

Food products are sold under trademarks owned or licensed by Nabisco and
brand recognition is considered essential to their successful marketing.
Wal-Mart Stores, Inc. and its affiliates accounted for approximately 11% of
consolidated net sales in 1999 and no customer accounted for 10% or more of
consolidated net sales in 1998 and 1997.

NABISCO BISCUIT COMPANY

The Nabisco Biscuit Company is the largest manufacturer and marketer in the
United States cookie and cracker industry with seven of the top ten selling
brands. Overall, in 1999, Nabisco Biscuit had a 39.1% share of the domestic
cookie category and a 51.6% share of the domestic cracker category (in the
aggregate more than two times the share of its closest competitor). The combined
1999 cookie and cracker market share of 44.5% was 0.5 points above 1998. Leading
Nabisco Biscuit cookie brands include OREO, CHIPS AHOY!, NEWTONS and
SNACKWELL'S. Leading Nabisco Biscuit cracker brands include RITZ, PREMIUM,
TRISCUIT, WHEAT THINS and NABISCO HONEY MAID GRAHAMS.

OREO and CHIPS AHOY! are the two largest selling cookies in the United
States. OREO, the leading sandwich cookie, is Nabisco Biscuit's largest selling
cookie brand. Seasonal line extensions such as SPRING OREO, HALLOWEEN OREO and
the OREO MILLENIUM TIN, in addition to the "Don't Eat the Winning Oreo"
promotion, continue to increase the brand's appeal. CHIPS AHOY! is the leader in
the chocolate chip cookie segment driven by its base CHIPS AHOY! business along
with CHEWY CHIPS AHOY! and line extensions such as HOLIDAY CHIPS AHOY!

NEWTONS, the oldest Nabisco Biscuit cookie brand, is the fourth leading
cookie brand in the United States. Product improvements made in the first half
of the year provided a consumer preferred moister cookie.

SNACKWELL'S cookies and crackers, on a combined basis, is the eighth leading
brand in the United States. The recent more indulgent product introductions,
Mint Creme and Caramel Delights, have been solid contributors to the SNACKWELL'S
portfolio. SNACKWELL'S continues to maintain the leading share of the
better-for-you cookie segment.

Nabisco Biscuit's cracker business is led by RITZ, the largest selling
cracker in the United States. Successful product line extensions such as RITZ
BITS, RITZ BITS SANDWICHES and REDUCED FAT RITZ, helped drive the brand's
growth. The RITZ product line accounted for 13.9% of cracker sales in the United
States in 1999, compared to 13.4% in 1998. PREMIUM, the oldest Nabisco cracker
brand and the leader in the saltine cracker segment, is joined by TRISCUIT,
WHEAT THINS, NABISCO HONEY MAID GRAHAMS, and AIR CRISPS to comprise, along with
RITZ, six of the eight largest selling cracker brands in the United States.

Nabisco Biscuit's other cookie and cracker brands, which include NUTTER
BUTTER, TEDDY GRAHAMS, NILLA, STELLA D'ORO, CHEESE NIPS, BETTER CHEDDARS and
BARNUM'S

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ANIMAL CRACKERS, compete in consumer niche segments. Many are the first or
second largest selling brands in their respective segments. Substantial sales
growth by TEDDY GRAHAMS in 1999 resulted from the brand restage and launch of
the TEDDY GRAHAMS CHOCOLATEY CHIP line extension. CHEESE NIPS also showed
strength with its line extensions, CHEESE NIPS EXTRA CHEDDAR, CHEESE NIPS
THREE-CHEESE PIZZA and CHEESE NIPS CATDOG.

Nabisco Biscuit's products in the breakfast category include SNACKWELL'S
cereal bars and KOOL STUF toaster pastries. Both lines had product improvements
during the year with an improved topping and increased shelf life on SNACKWELL'S
HEARTY FRUIT 'N GRAIN CEREAL BARS and improved icing for KOOL STUF.

Nabisco Biscuit's products are manufactured in 11 Nabisco Biscuit owned
facilities, 13 facilities with which Nabisco Biscuit has production agreements
with contract manufacturers throughout the United States and through Nabisco
affiliates in Canada. Nabisco Biscuit also operates a flour mill in Toledo,
Ohio, which supplies approximately 85% of its flour needs.

Nabisco Biscuit's products are sold to major grocery and other large retail
chains through Nabisco Biscuit's direct store delivery system. The system is
supported by a distribution network utilizing 12 warehouses which supply 108
shipping branches where shipments are consolidated for delivery to approximately
63,000 separate delivery points.

U.S. FOODS GROUP

Nabisco manages its non-biscuit food operations in the U.S. through the U.S.
Foods Group which is comprised of the following operating units:

SALES & INTEGRATED LOGISTICS GROUP. The Sales & Integrated Logistics Group
handles sales and distribution for the LifeSavers and Planters Specialty
Companies and distribution for the Food Service Company. It sells to major
grocery chains, national drug and mass merchandisers, convenience channels and
warehouse clubs through a direct sales force. It also sells to small retail
grocery chains and regional mass merchandisers through independent brokers. The
products are distributed from 12 distribution centers located throughout the
United States.

PLANTERS SPECIALTY COMPANY. The Planters Specialty Company produces and
markets a broad range of food products. These products include nuts and salty
snacks largely for sale in the United States, primarily under the PLANTERS
trademark. Planters, the only nut brand sold nationally, is the clear leader in
the packaged nut category. The Planters Specialty Company also manufactures and
markets sauces and condiments, pet snacks, hot cereals, dry mix desserts, and
gelatins. Many of the Planters Specialty Company products are first or second in
their product categories. Well-known brand names include A.1. steak sauces, GREY
POUPON mustards, MILK-BONE pet snacks, CREAM OF WHEAT hot cereals, CORNNUTS
crispy corn kernel snacks, ROYAL desserts and KNOX gelatines.

Planters Specialty Company's primary entries in the steak sauce and mustard
segments are A.1., A.1. BOLD, A.1. THICK AND HEARTY and A.1. SWEET AND TANGY
steak sauces, the leading line of steak sauces, and GREY POUPON mustards, which
include the leading Dijon mustard.

Planters Specialty Company is the largest manufacturer of pet snacks in the
United States with MILK-BONE dog biscuits and dog snacks. MILK-BONE products
include MILK-BONE ORIGINAL BISCUITS, FLAVOR SNACKS, SUPER PREMIUM BISCUITS, DOG
TREATS and DOGGIE BAG TREATS.

The Planters Specialty Company, a leading manufacturer of hot cereals,
participates in the cook-on-stove and mix-in-bowl segments of the category.
CREAM OF WHEAT, the leading wheat-based hot cereal, and CREAM OF RICE
participate in the cook-on-stove segment. INSTANT CREAM OF WHEAT participates in
the mix-in-bowl segment and includes varieties such as BANANA NUT BREAD,

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BLUEBERRY MUFFIN and RASPBERRY DANISH. Quaker Oats Company is the most
significant participant in the hot cereal category.

Planters Specialty Company manufactures products in 6 plants and sources
products from a number of contract manufacturers.

LIFESAVERS COMPANY. The LifeSavers Company manufactures and markets
non-chocolate candy and gum primarily for sale in the United States. LifeSavers'
well-known brands include LIFE SAVERS candy, ICE BREAKERS gum, BREATH SAVERS
sugar free mints, CARE*FREE sugarless gum, CREME SAVERS candy, BUBBLE YUM bubble
gum, GUMMI SAVERS fruit chewy candy, NOW & LATER fruit chewy taffy and FRUIT
STRIPE gum. LIFE SAVERS is the largest selling non-chocolate candy brand in the
United States, with a 1999 share of 5.3%, compared to 5.1% in 1998, of the
non-chocolate candy category. BREATH SAVERS is the largest selling sugar free
breath mint in the United States and BUBBLE YUM is among the largest selling
bubble gum brands in the United States.

LifeSavers Company manufactures its products in 4 owned plants and utilizes
4 primary contract manufacturers.

FOOD SERVICE COMPANY. The Food Service Company utilizes a direct national
sales force to sell a variety of specially packaged food products of the Nabisco
Biscuit Company and U.S. Foods Group including cookies, crackers, confections,
hot cereals, nuts and condiments to the food service and vending machine
industries.

FAVORITE BRANDS. Favorite Brands is a non-chocolate confection and snack
business acquired from Favorite Brands International, Inc. in 1999. Its products
include TROLLI gummi candies, SATHERS and FARLEY'S general line candy brands,
JET-PUFFED marshmallows and FARLEY'S FRUIT SNACKS. These products are produced
and marketed in the United States and sold to major grocery chains, national
drug and mass merchandisers, convenience channels and warehouse clubs through
independent brokers and a small direct sales force for the SATHERS candy brands.
The products are distributed from 10 distribution centers located throughout the
United States. The business will be integrated into the other U.S. Foods Group
operating units in 2000.

Favorite Brands manufactures its products in 11 plants and sources products
from a number of contract manufacturers.

INTERNATIONAL FOOD GROUP

Nabisco's businesses outside the United States are conducted by Nabisco Ltd
and Nabisco International, Inc. ("Nabisco International" and together with
Nabisco Ltd, the "International Food Group").

NABISCO LTD. Nabisco Ltd conducts Nabisco's Canadian operations through its
Snack and Grocery Divisions. Excluding private label brands, the Snack Division
produced nine of the top ten in each of the cookies and crackers categories in
Canada in 1999. Nabisco Ltd's cookie and cracker brands in Canada include OREO,
CHIPS AHOY!, SNACKWELL'S, FUDGEE-O, PEEK FREANS, DAD'S, DAVID, PREMIUM PLUS,
RITZ, AIR CRISPS, TRISCUIT and STONED WHEAT THINS. These products are
manufactured in four bakeries in Canada and are sold through a direct store
delivery system, utilizing 10 sales offices and distribution centers and a
combination of company trucks and common carriers.

The Snack Division also uses a separate selling and marketing organization
which offers a variety of specially packaged food products to non-grocery
outlets, wherever the consumer may have opportunity to consume food products
outside of the home. The products are sourced from both the Snack and Grocery
Divisions and include cookies, crackers, canned fruits, vegetables, pasta and
condiments.

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Nabisco Ltd's Grocery Division produces and markets canned fruits and
vegetables, fruit juices and drinks, pet snacks, pasta and other Italian food
products. The Grocery Division is the leading canned fruit producer and second
largest canned vegetable producer in Canada. Canned fruits and vegetables, as
well as fruit juices and drinks, are marketed under the DEL MONTE trademark
pursuant to a license from the Del Monte Corporation, and under the AYLMER
trademark. Dry pasta and other Italian food products are marketed under the
PRIMO trademark, which is the number two pasta brand in Canada. The Grocery
Division also markets MILK-BONE pet snacks, CREAM OF WHEAT hot cereals and MAGIC
baking powder, each a leading brand in Canada. Nabisco Ltd's Grocery Division
operated seven manufacturing facilities in 1999. Five produced canned products,
principally fruits and vegetables, one produced pet snacks and one produced
pasta. The Grocery Division's products are sold directly to retail chains and
are distributed through four regional warehouses.

NABISCO INTERNATIONAL. Nabisco International is a leading producer of
biscuits, powdered dessert and drink mixes, baking powder, pasta, juices, milk
products and other grocery items, as well as industrial yeast and bakery
ingredients. Nabisco International's operations in Latin America represented
more than 70% of Nabisco International's sales in 1999. Nabisco International
also operates growing businesses in Asia, Iberia, Middle East and South Africa.
Additionally, Nabisco International exports a variety of Nabisco Biscuit Company
and U.S. Foods Group products to markets primarily in the Caribbean and Asia.

The biscuits category represented over 50% of Nabisco International's sales
in 1999. Nabisco International is growing global brands like OREO, CHIPS AHOY!
and RITZ in various markets as part of Nabisco International's strategy to focus
growth in biscuits. Local brands such as TERRABUSI, ARTIACH, MARBU and LUCKY are
also part of this category. Nabisco International is the biscuit market leader
in Argentina, Venezuela, Puerto Rico, Peru, Ecuador, Nicaragua, Uruguay, Spain,
Taiwan and Beijing, China.

In 1999, Nabisco International increased its Latin American biscuit
operations through the acquisition of Argentina's fourth largest biscuit
company, Canale S.A.

In Asia, Nabisco International operates its Chinese biscuit business through
joint ventures in Beijing and a wholly-owned subsidiary in Suzhou. In Indonesia,
Nabisco International operates a plant which is 70% owned by Nabisco and 30%
owned by its partner and distributor.

Dessert mixes, drink mixes and baking powder are sold under the ROYAL brand,
yeast and bakery ingredients under the FLEISCHMANN's brand, processed milk
products under the GLORIA brand and juice under the MAGUARY brand. Nabisco
International is the market leader in powdered desserts in Spain and most of
Latin America and is the market leader in baking powder and yeast throughout
Latin America.

Nabisco International's grocery and biscuit products are sold to retail
outlets through its own local country sales forces and independent wholesalers
and distributors. Industrial yeast and bakery products are sold to the bakery
trade through Nabisco International's own local country sales forces and
independent distributors.

Nabisco International's largest market is Brazil, where it operates 13
manufacturing facilities out of a total of 35 manufacturing facilities in Latin
America and 49 worldwide.

RAW MATERIALS

Agricultural commodities constitute the principal raw materials used by
Nabisco in its food businesses. These raw materials are normally purchased
through supplier contracts, while the commodities market is utilized to hedge
prices for a large portion of North American and certain International
anticipated future requirements. Prices of agricultural commodities tend to
fluctuate due to seasonal, climactic and economic factors which generally also
affect Nabisco's competitors. Nabisco Holdings and Nabisco believe that the

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raw materials for Nabisco products are in plentiful supply and are readily
available from a variety of independent suppliers.

COMPETITION

Generally, the markets in which the Nabisco Biscuit Company, U.S. Foods
Group and the International Food Group conduct their business are highly
competitive. Competition consists of large domestic and international companies,
local and regional firms and generic and private label products of food
retailers. Competition is conducted on the basis of brand recognition, brand
loyalty, quality and price. Substantial advertising and promotional expenditures
are required to maintain or improve a brand's market position or to introduce a
new product.

The trademarks under which the Nabisco Biscuit Company, U.S. Foods Group and
the International Food Group market their products are generally registered in
the United States and other countries in which such products are sold and are
generally renewable indefinitely. Nabisco and certain of its subsidiaries have
from time to time granted various parties exclusive licenses to use one or more
of their trademarks in particular locations. Nabisco does not believe that such
licensing arrangements have a material effect on the conduct of its domestic or
international businesses.

OTHER MATTERS

EMPLOYEES

At December 31, 1999, Nabisco had approximately 50,700 full time employees.
Most of the unionized workers at Nabisco's domestic locations are represented
under a national contract with the Bakery, Confectionery and Tobacco Workers
International Union, which was ratified in August 1996 and which will expire in
August 2001. Other unions represent the employees at a number of Nabisco
locations. Nabisco Holdings believes that Nabisco's relations with these
employees and with their unions are good.

(D) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS

For information about foreign and domestic operations for the years 1997
through 1999, see Note 17 to the Consolidated Financial Statements.

ITEM 2. PROPERTIES

For information on properties, see Item 1. For additional information
pertaining to the location of Nabisco's assets as of December 31, 1999 and 1998,
see Note 17 to the Consolidated Financial Statements.

ITEM 3. LEGAL PROCEEDINGS

Nabisco Holdings and/or Nabisco are defendants in various lawsuits arising
in the ordinary course of business. In the opinion of management, the resolution
of these matters is not expected to have a material adverse effect on either
company's financial condition or results of operations.

Nabisco Holdings or certain of its subsidiaries have been named "potentially
responsible parties" with third parties under the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA") or may have indemnification
obligations with respect to 14 sites. Liability under CERCLA is joint and
several. Although it is difficult to identify precisely the estimated cost of
resolving these CERCLA and indemnification matters, such expenditures or costs
are not expected to have a material adverse effect on Nabisco Holdings' or
Nabisco's financial condition or results of operations.

In addition, a subsidiary of Nabisco may have indemnification obligations to
a third party with respect to certain lawsuits arising from a CERCLA site
although the subsidiary itself is not named in the lawsuits. Management cannot
currently predict the likelihood that it will have to perform on these
obligations or what the magnitude of the obligations would be.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

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EXECUTIVE OFFICERS OF THE REGISTRANTS

The following table sets forth certain information concerning the executive
officers of Nabisco Holdings and Nabisco:

<TABLE>
<CAPTION>
BUSINESS EXPERIENCE DURING PAST FIVE YEARS
NAME AGE AND OTHER INFORMATION
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<S> <C> <C>
James M. Kilts 52 President and Chief Executive Officer of Nabisco Holdings
and of Nabisco since January 1998; President and Chief
Executive Officer of Nabisco Group Holdings Corp. ("NGH")
since December 1999; prior thereto Executive Vice
President-Worldwide Food of Philip Morris Companies,
1994-March 1997; President of Kraft USA, 1989-1994. Member
of the Board of Directors of Nabisco Holdings and of
Nabisco since January 1998, NGH since July 1999, the May
Department Stores Company since November 1998 and The
Whirlpool Corporation since April 1999.

Richard H. Lenny 48 Executive Vice President of Nabisco Holdings and of Nabisco
and President of Nabisco Biscuit Company since February
1998; prior thereto President of Pillsbury North America,
November 1996-January 1998; President of Pillsbury
Specialty Brands, February 1995-November 1996; Senior Vice
President-Sales & Customer Service of Kraft Foods, May
1994-February 1995.

Douglas R. Conant 48 Executive Vice President of Nabisco Holdings and of Nabisco
since June 1995 and President of Nabisco U.S. Foods Group
since February 1997; previously President of Sales &
Integrated Logistics Group, 1994-June 1995; Senior Vice
President-Marketing of Nabisco Biscuit Company, 1993-1994.

Elizabeth R. Culligan 50 Executive Vice President of Nabisco Holdings and of Nabisco
and President of Nabisco International since February
1998; previously Senior Vice President-Marketing of
Nabisco Biscuit Company, September 1996-February 1998;
prior thereto, President of Ciba Self-Medication North
America, September 1995-September 1996; General Manager
and Vice President of SmithKline Beecham Consumer
Healthcare, Northern Europe, November 1994-August 1995.

Ronald D. Harris 61 Executive Vice President, Research & Development of Nabisco
since May 1999; prior thereto Adjunct Professor in Food
Science & Technology and Senior Lecturer in the Fisher
College of Business at The Ohio State University, August
1996-May 1999; Consultant and Instructor in the Keller
Graduate School of Management, March 1996-August 1996;
Vice President, Scientific Relations of Kraft Foods,
November 1994-March 1996.

James E. Healey 58 Executive Vice President and Chief Financial Officer of
Nabisco Holdings and of Nabisco since June 1997; Senior
Vice President and Chief Financial Officer of NGH since
September 1999; prior thereto, Vice President and
Treasurer of Bestfoods (formerly CPC International),
1995-1997; Comptroller of Bestfoods, 1987-1995. Member of
the Board of Directors of Interchange Financial Services
Corp. since 1994.
</TABLE>

7
<PAGE>

<TABLE>
<CAPTION>
BUSINESS EXPERIENCE DURING PAST FIVE YEARS
NAME AGE AND OTHER INFORMATION
- ---- -------- ------------------------------------------------------------
<S> <C> <C>
James A. Kirkman III 58 Executive Vice President, General Counsel and Secretary of
Nabisco Holdings and of Nabisco since April 1995; Senior
Vice President and Secretary of NGH since July 1999;
General Counsel of NGH since October 1999; previously
Senior Vice President, General Counsel and Secretary of
Nabisco Holdings, October 1994-April 1995, and of Nabisco,
1992-April 1995.

Peter Klein 53 Executive Vice President-Strategy, Business Development and
Marketing Services of Nabisco Holdings and Nabisco since
April 1998; prior thereto, Partner and Managing Director
of The Cambridge Group, November 1991-April 1998.

John F. Manfredi 59 Executive Vice President-Corporate Affairs of Nabisco
Holdings and of Nabisco since April 1995; previously
Senior Vice President-Corporate Affairs of Nabisco
Holdings, October 1994-April 1995; Senior Vice
President-External and Government Affairs of Nabisco,
1992-April 1995.

Thomas G. McBrady 62 Executive Vice President-Operations of Nabisco Holdings and
of Nabisco since February 1998; previously Senior Vice
President-Operations and Technology of Nabisco Biscuit
Company, 1988-February 1998.

C. Michael Sayeau 54 Executive Vice President and Chief Personnel Officer of
Nabisco Holdings and of Nabisco since April 1995;
previously Senior Vice President-Human Resources of
Nabisco Holdings, October 1994-April 1995, and of Nabisco,
1992-April 1995.

Doreen A. Wright 43 Executive Vice President and Chief Information Officer of
Nabisco Holdings and Nabisco since May 1999; prior thereto
Senior Vice President, Operations and Systems of
Prudential Insurance Company, 1995-1998; Senior Vice
President, Enterprise Systems of American Express, 1995.

Thomas J. Pesce 48 Senior Vice President and Controller of Nabisco Holdings and
of Nabisco since November 1999; Senior Vice President and
Controller of NGH since November 1999; previously Senior
Vice President, Finance of Nabisco Biscuit Company,
October 1996-October 1999; Senior Vice President and Chief
Financial Officer of Nabisco International, 1990-September
1996.

Robert A. Schiffner, Jr. 50 Senior Vice President and Treasurer of Nabisco Holdings and
of Nabisco since July 1998; Senior Vice President and
Treasurer of NGH since August 1999; previously Senior Vice
President and Controller of Nabisco Holdings and of
Nabisco, March 1997-June 1998; Vice President and
Controller of Nabisco Holdings and of Nabisco,
April 1995-February 1997; Senior Director-Finance and
Business Development, Specialty Products Company, January
1994-March 1995.
</TABLE>

8
<PAGE>
PART II

ITEM 5. MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Class A Common Stock of Nabisco Holdings commenced trading on the New
York Stock Exchange (the "NYSE") on January 20, 1995. There is no public trading
market for the Class B Common Stock of Nabisco Holdings, all of which is held by
NGH. All of the common stock of Nabisco is held by Nabisco Holdings.

As of March 15, 2000, there were approximately 850 record holders of the
Class A Common Stock. The initial public offering price of the Class A Common
Stock was $24.50. The closing price on the NYSE of the Class A Common Stock on
March 15, 2000 was $27 1/8.

The following table sets forth, for the calendar periods indicated, the high
and low sales prices per share for the Class A Common Stock on the NYSE
Composite Tape, as reported in the WALL STREET JOURNAL and dividends declared.

<TABLE>
<CAPTION>
CASH
DIVIDENDS
1999 HIGH LOW DECLARED
- ---- ------------- ------------- ---------
<S> <C> <C> <C> <C> <C>
First Quarter......................................... $45 13/16 $38 5/16 $.1875
Second Quarter........................................ $43 1/2 $37 9/16 $.1875
Third Quarter......................................... $43 15/16 $34 7/16 $.1875
Fourth Quarter........................................ $38 1/8 $31 3/16 $.1875

<CAPTION>
1998
- ----
First Quarter. $50 3/8 $38 $ .1750
<S> <C> <C> <C> <C> <C>
Second Quarter........................................ $54 1/4 $34 7/8 $.1750
Third Quarter......................................... $39 3/16 $31 3/4 $.1750
Fourth Quarter........................................ $42 3/8 $33 3/4 $.1750
</TABLE>

The operations of Nabisco Holdings are conducted through Nabisco and its
subsidiaries, and therefore Nabisco Holdings is dependent on the earnings and
cash flow of Nabisco and its subsidiaries to satisfy its obligations and other
cash needs. For information concerning limitations on dividends, see Item 7.
"Management's Discussion and Analysis of Financial Condition and Results of
Operations"--Liquidity and Financial Condition and Note 10 to the Consolidated
Financial Statements. Nabisco Holdings does not believe that its credit
arrangements will limit its ability to pay its anticipated quarterly dividends.

During the second quarter of 1999, a series of reorganization transactions
were completed, as a result of which Nabisco Holdings, Nabisco and their
subsidiaries are no longer affiliated with RJR and its subsidiaries. The
principal transactions in this reorganization that affected Nabisco Holdings and
Nabisco, are the following:

- On May 18, 1999, RJR transferred all of the outstanding Class B Common
Stock of Nabisco Holdings to NGH through a merger transaction.

- On June 14, 1999, NGH distributed all of the outstanding shares of RJR
common stock to NGH common stockholders of record as of May 27, 1999.

NGH owns 100% of the outstanding Class B Common Stock of Nabisco Holdings,
which represents approximately 80.6% of the economic interest and 97.6% of the
combined voting power of all of the outstanding Common Stock as of March 15,
2000.

9
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA

The selected consolidated financial data of Nabisco Holdings Corp. ("Nabisco
Holdings") presented below as of December 31, 1999 and 1998 and for each of the
years in the three-year period ended December 31, 1999 were derived from the
consolidated financial statements of Nabisco Holdings (the "Consolidated
Financial Statements") set forth herein, which have been audited by Deloitte &
Touche LLP, independent auditors. In addition, the selected consolidated
financial data of Nabisco Holdings presented below as of December 31, 1997, 1996
and 1995 and for each of the years in the two year period ended December 31,
1996 were derived from audited consolidated financial statements of Nabisco
Holdings, not presented herein. The data should be read in conjunction with the
Consolidated Financial Statements, related notes and other financial information
included herein.

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------------------
<S> <C> <C> <C> <C> <C>
IN MILLIONS, EXCEPT PER SHARE AMOUNTS 1999 1998 1997 1996
- -------------------------------------------------- ------- ------- ------- -------
RESULTS OF OPERATIONS
Net sales....................................... $ 8,268 $ 8,400 $ 8,734 $ 8,889 $ 8,294
------- ------- ------- ------- -------
Cost of products sold........................... 4,502 4,683 4,950 5,226 4,776
Selling, advertising, administrative and general
expenses...................................... 2,747 2,672 2,476 2,533 2,389
Amortization of trademarks and goodwill......... 213 221 226 228 227
Restructuring charges (credits)................. (67) 530 -- 428 --
------- ------- ------- ------- -------
Operating income.............................. 873 294 1,082 474 902
Interest and debt expense(1).................... (260) (296) (326) (329) (349)
Other income (expense), net..................... (31) (29) (32) (32) (17)
------- ------- ------- ------- -------
Income (loss) before income taxes............. 582 (31) 724 113 536
Provision for income taxes...................... 222 40 293 96 222
------- ------- ------- ------- -------
Income (loss) before extraordinary item....... 360 (71) 431 17 314
Extraordinary item - loss on early
extinguishment of debt, net of income taxes... (3) -- (26) -- (19)
------- ------- ------- ------- -------
Net income (loss)............................. $ 357 $ (71) $ 405 $ 17 $ 295
======= ======= ======= ======= =======
<CAPTION>
PER SHARE DATA
Net income (loss) per common share - basic:
<S> <C> <C> <C> <C> <C>
Income (loss) before extraordinary item....... $ 1.36 $ (.27) $ 1.63 $ .06 $ 1.20
Extraordinary item............................ (.01) -- (.10) -- (.07)
------- ------- ------- ------- -------
Net income (loss)........................... $ 1.35 $ (.27) $ 1.53 $ .06 $ 1.13
======= ======= ======= ======= =======
Net income (loss) per common share - diluted:
Income (loss) before extraordinary item....... $ 1.35 $ (.27) $ 1.61 $ .06 $ 1.20
Extraordinary item............................ (.01) -- (.10) -- (.07)
------- ------- ------- ------- -------
Net income (loss)........................... $ 1.34 $ (.27) $ 1.51 $ .06 $ 1.13
======= ======= ======= ======= =======
Dividends declared per common share............. $ .75 $ .70 $ .68 $ .6025 $ .4125
======= ======= ======= ======= =======
<CAPTION>
BALANCE SHEET DATA (AT END OF PERIOD)
Working capital. ) (79 ) (209 ) (41 ) (340 $ --
<S> <C> <C> <C> <C> <C>
Total assets.................................... 11,707 11,117 12,117 12,290 12,303
Total debt...................................... 4,089 3,805 4,535 4,488 4,455
Stockholders' equity............................ 3,932 3,885 4,204 4,084 4,244
</TABLE>

- ------------------------

(1) For 1995, interest expense included payments to RJR (formerly RJR Nabisco,
Inc.) and affiliates of $141 million.

10
<PAGE>
ITEM 7. 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 for sales,
operating company contribution and operating income includes information as
reported in the historical financial statements, followed by items that
management believes impact the comparability of historical results, ongoing
results and management's discussion and analysis of ongoing results. Ongoing
results are presented on a basis consistent with how the ongoing businesses are
managed. They exclude sales, operating company contribution and operating income
from divested businesses, restructuring charges and credits,
restructuring-related expenses and net gains on divested businesses that
management believes affect the comparability of the results of operations. The
ongoing results of operations 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 information and the related notes thereto are included in
the Consolidated Financial Statements.

The food business is conducted by the operating subsidiaries of Nabisco
Holdings. Nabisco's businesses in the United States are comprised of Biscuit and
the U.S. Foods Group. Nabisco's businesses outside the United States are
conducted by Nabisco Ltd and Nabisco International, Inc. ("Nabisco
International" and together with Nabisco Ltd, the "International Food Group").

NET SALES

<TABLE>
<CAPTION>
% CHANGE
FROM
YEARS ENDED DECEMBER 31, PRIOR YEAR
------------------------------ --------------------
DOLLARS IN MILLIONS 1999 1998 1997 1999 1998
- ------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
REPORTED NET SALES:

Biscuit.............................................. $3,640 $3,542 $3,545 3% --%
U.S. Foods Group..................................... 2,246 2,334 2,604 (4)% (10)%
International Food Group............................. 2,382 2,524 2,585 (6)% (2)%
------ ------ ------
Total................................................ 8,268 8,400 8,734 (2)% (4)%
------ ------ ------
NET SALES FROM DIVESTED BUSINESSES:

U.S. Foods Group..................................... -- 287 616
International Food Group............................. -- 11 16
------ ------ ------
Total................................................ -- 298 632
------ ------ ------
NET SALES FROM ONGOING BUSINESSES:

Biscuit.............................................. 3,640 3,542 3,545 3% --%
U.S. Foods Group..................................... 2,246 2,047 1,988 10% 3%
International Food Group............................. 2,382 2,513 2,569 (5)% (2)%
------ ------ ------
Total................................................ $8,268 $8,102 $8,102 2% --%
====== ====== ======
</TABLE>

THE FOLLOWING DISCUSSION AND ANALYSIS IS BASED ON NET SALES FROM ONGOING
BUSINESSES:

1999 VS. 1998. Nabisco Holdings' net sales of $8.27 billion were up 2%
compared to 1998 net sales.

- Biscuit's net sales increased 3% versus the prior year. The sales increase
reflects the carryover effect of 1998 price increases and volume increases
in cookie and cracker brands behind increased marketing spending and the
continued efforts of Biscuit's redesigned direct store delivery sales
force. Partially offsetting this increase was a decline in breakfast snack
volumes.

11
<PAGE>
- The U.S. Foods Group's net sales increased 10% versus the prior year. The
sales increase was paced by strong volume gains from nuts, confections,
condiments and pet snacks. The inclusion of Favorite Brands, acquired in
November 1999, contributed 2% points to the overall increase.

- The International Food Group's net sales decreased 5% versus the prior
year. The sales decline was primarily driven by unfavorable foreign
currency translation rates, principally in Brazil. Excluding the impact of
unfavorable foreign currency translation, sales increased 5%. The increase
was primarily due to price increases partially offset by volume declines.
The price increases, paced by Brazil, were across all regions, with the
exception of Argentina which experienced competitive pricing pressures.
The volume declines were primarily in Brazil, the Andean region and Spain
offset in part by volume gains in Canada, the Caribbean and Mexico.

1998 VS. 1997. Nabisco Holdings' net sales were flat at $8.10 billion.

- Biscuit's net sales were flat at $3.54 billion versus the prior year
reflecting price increases and volume gains in cookies and crackers
largely offset by lower volumes in SnackWell's and breakfast snacks.
Although net sales were flat versus the prior year, momentum was
reestablished in the second half of 1998 and after adjusting selling days
to an equal days basis, Biscuit's net sales rose nearly 5% in the fourth
quarter of 1998 versus the same period a year ago. These sales reflect the
impact of increased marketing spending and the efforts of Biscuit's
redesigned direct store delivery sales force which was approximately
one-third in place at December 31, 1998.

- The U.S. Foods Group's net sales increased 3% primarily due to the
inclusion of Cornnuts snacks acquired in December 1997 and increased
volume for Planters nuts, A.1. steak sauces and pet snacks, partially
offset by lower volume for confections.

- The International Food Group's net sales decreased by 2% in 1998 versus
1997. Excluding the impact of foreign currency translation, net sales were
up 2% in 1998 versus the prior year primarily due to price increases and
increased volumes in several Latin American markets partially offset by
volume declines in Brazil, Argentina and Asia.

12
<PAGE>
OPERATING COMPANY CONTRIBUTION

Biscuit.............................................. $ 504 $ 500 $ 691 1% (28)%
U.S. Foods Group..................................... 329 335 386 (2)% (13)%
International Food Group............................. 186 210 231 (11)% (9)%
------ ------ ------
Total.................................................. 1,019 1,045 1,308 (2)% (20)%
------ ------ ------
ITEMS EXCLUDED FROM ONGOING OPERATING COMPANY
CONTRIBUTION:

Biscuit:
Restructuring-related expenses..................... (53) (42) --
U.S. Foods Group:
Restructuring-related expenses..................... (9) (6) (24)
Results from divested businesses................... -- 38 97
Net gain on divested businesses.................... -- 2 32
International Food Group:
Restructuring-related expenses..................... (14) (8) (7)
Results from divested businesses................... -- 1 2
Net gain on divested businesses.................... -- 12 --
------ ------ ------
Total.................................................. (76) (3) 100
------ ------ ------

OPERATING COMPANY CONTRIBUTION FROM ONGOING BUSINESSES:

Biscuit................................................ 557 542 691 3% (22)%
U.S. Foods Group....................................... 338 301 281 12% 7%
International Food Group............................... 200 205 236 (2)% (13)%
------ ------ ------
Total.................................................. $1,095 $1,048 $1,208 4% (13)%
====== ====== ======
</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 FROM ONGOING BUSINESSES:

1999 VS. 1998. Nabisco Holdings' operating company contribution increased
4% to $1.09 billion compared to 1998.

- Biscuit's operating company contribution increased 3% versus the prior
year. The increase reflects the carryover effects of 1998 price increases
and lower manufacturing overhead costs resulting from ongoing productivity
programs, along with volume gains for both cookies and crackers. Lower
breakfast snack volumes, increased marketing spending and increased
selling costs associated with the implementation of the redesigned direct
store delivery sales force partially offset these gains. Also impacting
the 1999 results was a one-time charge of $6 million reflecting the
settlement with the Department of Labor regarding overtime pay for sales
personnel.

13
<PAGE>
- The U.S. Foods Group's operating company contribution increased 12% versus
the prior year. The results were primarily due to strong volume gains from
nuts, confections, condiments and pet snacks partially offset by increased
advertising and consumer promotion spending. The impact of productivity
programs on fixed selling costs also contributed to the favorable results.

- The International Food Group's operating company contribution decreased 2%
versus the prior year. The decrease was principally due to higher
marketing investment across most regions and lower volume and higher raw
material costs in the Andean region. This decrease was offset in part by
earnings improvements in Asia due to volume, in Argentina resulting from
productivity improvements and in Spain due to pricing actions. The
unfavorable foreign currency impact at operating company contribution,
primarily in Brazil, was mitigated in large part by favorable pricing
actions by the Brazilian business.

1998 VS. 1997. Nabisco Holdings' operating company contribution decreased
13% to $1.05 billion in 1998, compared to $1.21 billion in 1997.

- Biscuit's operating company contribution declined 22% to $542 million,
largely the result of increased marketing spending invested behind core
brands including the SnackWell's line. Higher costs associated with
strengthening and redesigning the direct store delivery sales organization
also significantly contributed to the profit decline.

- The U.S. Foods Group's operating company contribution in 1998 increased 7%
to $301 million from $281 million in 1997 primarily due to gains in
Planters nuts, A.1. steak sauces, pet snacks and the acquisition of
Cornnuts in December 1997, partially offset by declines in confections.

- The International Food Group's operating company contribution decreased
13% to $205 million. The decrease in operating company contribution was
principally due to unfavorable foreign currency translation of $20 million
and lower earnings, exclusive of foreign currency translation, in Spain,
Asia and Canada which more than offset increased earnings in Brazil and
Argentina as progress was made in lowering costs in these operating units.

OPERATING INCOME

<TABLE>
<CAPTION>
% CHANGE
FROM
YEARS ENDED DEEMBER 31, PRIOR YEAR
------------------------------ --------------------
DOLLARS IN MILLIONS 1999 1998 1997 1999 1998
- ------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
REPORTED OPERATING INCOME.............................. $ 873 $ 294 $1,082 197% (73)%
------ ------ ------
OPERATING INCOME (EXPENSE) EXCLUDED FROM ONGOING
BUSINESSES:
Restructuring (charge) credit........................ 67 (530) --
Restructuring-related expenses....................... (76) (56) (31)
Net gain on divested businesses...................... -- 14 32
Results from divested businesses..................... -- 33 87
------ ------ ------
Total................................................ (9) (539) 88
------ ------ ------
OPERATING INCOME FROM ONGOING BUSINESSES............... $ 882 $ 833 $ 994 6% (16)%
====== ====== ======
</TABLE>

THE FOLLOWING DISCUSSION AND ANALYSIS IS BASED ON OPERATING INCOME FROM
ONGOING BUSINESSES:

1999 VS. 1998. Nabisco Holdings' operating income was $882 million for
1999, an increase of 6% versus last year. The increase reflects higher operating
company contribution discussed previously.

14
<PAGE>
1998 VS. 1997. Nabisco Holdings' operating income decreased to
$833 million in 1998 versus $994 million in 1997 as a result of the 13% decline
in operating company contribution cited earlier.

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 1999 were
approximately $90 million including cash savings of $86 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 reflecting higher than anticipated proceeds
from the sale of facilities closed as part of the 1998 restructuring programs,
lower costs and cash outlays than originally estimated for certain of these
programs and minor project cancellations. This 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 to date have totaled $103 million with $65 million
expended in 1999. The cash component of the restructuring charge for the
programs will be approximately $140 million including an estimated $37 million
expenditure in 2000. For a further discussion of the restructuring programs, see
Note 3 to the Consolidated Financial Statements.

INTEREST AND DEBT EXPENSE

1999 VS. 1998. Consolidated interest and debt expense of $260 million in
1999 decreased by $36 million or 12% from 1998 as a result of lower average
borrowing levels and lower average interest rates. Debt levels were reduced by
the application of net proceeds from businesses sold in the third quarter of
1998, along with funds from operations and lower capital spending. Debt levels
edged upward in the second half of 1999 due to borrowings to finance the
acquisitions of Canale S.A. and certain assets and liabilities of Favorite
Brands International, Inc.

1998 VS. 1997. Consolidated interest and debt expense of $296 million in
1998 decreased by $30 million or 9% from 1997 primarily due to the paydown of
commercial paper with the net proceeds from businesses sold in the third quarter
of 1998 and the replacement of fixed rate debt at lower rates partially offset
by a reduction in capitalized interest in 1998.

OTHER INCOME (EXPENSE), NET

1999 VS. 1998. Consolidated other income (expense), net amounted to
$31 million of expense in 1999 versus $29 million of expense in 1998, an
increase of $2 million in expense. The higher level of expense in 1999 reflects
lower interest income partially offset by lower financing costs.

1998 VS 1997. Consolidated other income (expense), net amounted to
$29 million of expense in 1998 versus $32 million of expense in 1997, a decrease
of $3 million in expense. The lower level of expense in 1998 reflects higher
interest income partially offset by an increase in foreign exchange losses.

PROVISION FOR INCOME TAXES

1999 VS. 1998. The reported effective tax rate was 38.2% in 1999 versus the
(128.4)% rate for 1998. The 38.2% effective tax rate benefited from the 28.3%
effective tax rate recorded on restructuring credits. Excluding the tax related
impact from restructuring credits in 1999 and restructuring charges and the net
gain from divestitures in 1998, the effective tax rates are 39.5% and 40.5% for
1999 and 1998, respectively.

1998 VS. 1997. The reported effective tax rate was (128.4)% in 1998 versus
the 40.5% rate for 1997 due to the greater impact of non-deductible goodwill
amortization relative to income (loss) before taxes, a

15
<PAGE>
31.7% effective tax rate on the 1998 restructuring charges, and an 80.9%
effective tax rate on the net gain from divestitures in 1998. Excluding the
restructuring charges and the net gain from divestitures and their related tax
impact, the effective tax rate was 40.5% for 1998.

NET INCOME (LOSS)

1999 VS. 1998. Nabisco Holdings' net income of $357 million for 1999
compares to a net loss of $71 million for 1998. The increase primarily reflects
higher operating income of $579 million and lower interest and debt expense of
$36 million partially offset by an increase in the provision for income taxes of
$182 million and a $3 million extraordinary loss.

1998 VS. 1997. Nabisco Holdings' net loss for 1998 includes a $2 million
after tax net gain related to divestitures and after tax charges of $395 million
related to the 1998 restructuring program. 1997 includes a $1 million net gain
and a $26 million extraordinary loss. Excluding these items, net income of $322
million in 1998 decreased 25% from the 1997 full year level of $430 million,
reflecting lower operating income, partially offset by lower intangible
amortization and interest expense.

SEASONALITY

Nabisco's business is seasonal, with generally higher sales levels in the
fourth quarter. For information concerning seasonality, see Note 18 to the
Consolidated Financial Statements.

LIQUIDITY AND FINANCIAL CONDITION

Net cash flows from operating activities amounted to $726 million for 1999
compared to $650 million for 1998. The increase in net cash flows from operating
activities primarily reflects the higher level of net income and lower working
capital requirements, partially offset by increased spending for restructuring
payments.

Net cash flows from operating activities amounted to $650 million for 1998
compared to $573 million for 1997. The increase in net cash flows from operating
activities primarily reflects lower working capital requirements.

Cash flows used in investing activities were $783 million in 1999 compared
to cash inflows of $214 million in 1998. The $997 million change in cash flows
was primarily due to increased spending for business acquisitions in 1999 and
the absence in 1999 of proceeds from the sale of businesses partially offset by
lower capital expenditures and higher proceeds from the sale of assets.

Net cash flows from investing activities in 1998 increased $587 million from
1997 levels to $214 million, primarily due to increased net proceeds of $500
million from the sale of businesses, and reduced levels of capital expenditures
and acquisition spending in 1998.

Net cash flows from financing activities were $64 million for 1999, compared
to $874 million of cash flows used in financing activities for 1998. The
$938 million change in cash flows in 1999 is principally due to an increase in
net borrowings in 1999 of $263 million versus a reduction in net borrowings of
$717 million in 1998 partially offset by the absence in 1999 of proceeds from
the sale of call options on long-term debt issued in January 1998.

Net cash flows used in financing activities were $874 million for 1998,
compared to $158 million of cash flows used in financing activities in 1997. The
increase in 1998 is primarily due to higher debt repayments of $748 million in
1998 versus 1997.

Capital expenditures were $241 million in 1999. Management expects that the
level of 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

16
<PAGE>
will be sufficient to support its planned capital expenditures in 2000. Nabisco
Holdings' long-term commitments for capital expenditures are not material.

In August 1997, Nabisco issued $200 million of floating rate (5.38% at
December 31, 1998) notes due August 2009. During the third quarter of 1999
Nabisco exercised a call option to redeem these notes and recognized an after
tax extraordinary loss of approximately $3 million. This redemption was
refinanced with commercial paper.

In December 1997, Nabisco completed a tender offer and redeemed $432 million
of its $538 million outstanding 8.3% notes due 1999 and $541 million of its $688
million outstanding 8% notes due 2000. An extraordinary loss of $43 million ($26
million after tax) was recorded for this transaction. The redemption of these
notes was refinanced with short-term borrowings, which in turn were refinanced
by the issuance of long-term debt in January 1998.

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 at 5.75%, 6.07% and 6.07%, respectively, plus, in each case,
Nabisco's future credit spread on treasury notes at a fixed rate resulting in a
yield to maturity of comparable maturities. Nabisco no longer retains the right
to call these notes as these options were sold at issuance for $41 million. The
net proceeds from these notes and the sale of call options were used to repay
commercial paper borrowings.

Nabisco maintains a three-year $1.5 billion revolving credit facility, of
which no borrowings were outstanding at December 31, 1999, and a 364-day $1.10
billion credit facility primarily to support commercial paper borrowings of $902
million. Accordingly, $198 million was available at December 31, 1999. At the
end of the 364-day period, any borrowings outstanding under the 364-day credit
facility are convertible into a three-year term loan at Nabisco's option. Unless
extended, the revolving credit facility expires in October 2002 and the 364-day
credit facility expires in October 2000. The commitments under the revolving
credit facility decline to approximately $1.46 billion in the final year. The
revolving credit facility also provides for the issuance of up to $300 million
of letters of credit, of which none was issued at December 31, 1999.
Availability under the revolving credit facility is reduced by the amount of any
borrowings outstanding and letters of credit issued under the facility and by
the amount of outstanding commercial paper in excess of $1.10 billion.

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 December 31, 1999, actual net worth,
as defined, exceeded required net worth by approximately $915 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.

Nabisco filed a shelf registration statement with the Securities and
Exchange Commission for $1.0 billion of debt which was declared effective on
December 10, 1999.

At December 31, 1999, Nabisco Holdings' total debt (notes payable and
long-term debt, including current maturities) and total capital (total debt and
stockholders' equity) amounted to approximately $4.1 billion and $8.0 billion,
respectively, of which total debt is higher by approximately $284 million and
total capital is higher by $331 million than at December 31, 1998. Approximately
$3.8 billion of this debt was issued by Nabisco, of which $27 million was
secured debt. The $276 million balance was issued by

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various Nabisco subsidiaries. Nabisco Holdings' ratios of total debt to
stockholders' equity and total debt to total capital were 1.04 to 1 and .51 to
1, respectively.

The 1998 restructuring programs will require cash expenditures of
approximately $140 million, of which $103 million has been spent through
December 31, 1999. The remaining amount of $37 million will be expended
primarily in 2000. In addition, the programs required additional expenditures of
$132 million, of which $76 million was incurred in 1999. These additional
expenses were principally for implementation and integration of the programs and
included costs for relocation of employees and equipment and training. Nabisco
expects to incur capital expenditures of approximately $85 million over the
programs' duration, of which $69 million has been incurred since the programs'
inception. All cash requirements are expected to be funded from operations.

At December 31, 1999, there was $802 million of accumulated and
undistributed income of foreign subsidiaries. No applicable U.S. taxes have been
provided because management intends for these earnings to be reinvested abroad
indefinitely. The accumulated and undistributed earnings have funded and will
continue to fund international acquisitions, new product introductions and other
business building opportunities.

INFLATION

Inflation has not had a material effect on Nabisco Holdings' or Nabisco's
business in recent years.

YEAR 2000 ISSUE

The Year 2000 Issue was a result of computer applications that were written
using two digits rather than four digits to define the applicable year. The
issue was whether computer systems would properly interpret date-sensitive
information when the year changed to 2000. Nabisco recognized the issues
associated with the Year 2000 problem and the need to ensure that its operations
would not be adversely impacted by Year 2000 software failures. Comprehensive
reviews of all systems and applications, including those of key third parties
(suppliers, service providers and customers) were conducted and detailed plans
were developed for required system modifications and replacements.

Incremental costs, which included contractor costs to modify or replace
existing systems, and costs of internal resources dedicated to achieving Year
2000 compliance were charged to expense as incurred and were funded from
operating cash flows. The total cost of achieving Year 2000 compliance was
$40 million, of which $24 million was incurred in 1999.

Nabisco's Year 2000 implementation plan, including contingency measures, was
completed in all material respects by the end of 1999. The Year 2000 issue did
not have a material effect on Nabisco's business, results of operations, cash
flows or financial condition.

SUBSEQUENT EVENT

On December 14, 1999, Nabisco announced its participation in a joint
venture, Burlington Biscuits plc ("Burlington"), with Hicks, Muse, Tate & Furst
Limited ("HMTF"), an investment firm, to bid for 100% of United Biscuits
(Holdings) plc ("UB"). Subsequently, Burlington acquired 29.9% of UB. As
announced on March 20, 2000, Nabisco and HMTF have entered into definitive
agreements under which: (i) Nabisco and HMTF will join a consortium of
investors, Finalrealm Limited ("Finalrealm"), also bidding for UB; (ii) an
associate of Finalrealm will acquire Burlington's 29.9% interest in UB, giving
Finalrealm a 47.6% interest in UB; (iii) Finalrealm's cash offer of 265 pence
per UB share becomes a Final Offer under the City Code and is extended until
April 5, 2000; (iv) subject to Finalrealm being entitled to exercise compulsory
acquisition rights in respect of minority interests in UB and regulatory
competition clearance, 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

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<PAGE>
Finalrealm; (v) Finalrealm has agreed to procure the sale to Nabisco of UB's
operations in China, Hong Kong and Taiwan conditional on the Final Offer
becoming or being declared wholly unconditional (in 1999, these operations had
net sales of approximately $66 million); and (vi) following completion of the
Final Offer and its related transactions, Nabisco would have an equity interest
of 24.6% in the joint venture.

Upon completion, the joint venture will be comprised of UB businesses in the
United Kingdom, France and the Benelux countries, Nabisco's operations named
above and HMTF's UK Horizon Biscuits business.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk represents the risk of loss that may impact the consolidated
financial position, results of operations or cash flows of Nabisco due to
adverse changes in financial and commodity market prices and rates. In the
ordinary course of business, Nabisco is exposed to market risk in the areas of
foreign currency exchange rates, interest rates and commodity prices. These
exposures are directly related to its international operations, its use of
agricultural commodities in its operations, and its normal investing and funding
activities. Nabisco has established various policies and procedures to manage
its exposure to market risks, including the use of financial and commodity
derivatives, which are highly correlated to its underlying exposures. The
counterparties in these transactions are highly rated financial institutions.
The fair value of derivative financial instruments is monitored based on the
amounts the company would receive or pay when settling the contracts. Additional
information regarding our use of financial instruments is included in Notes 1
and 14 to the Consolidated Financial Statements.

Nabisco estimates its market risk due to changes in foreign currency rates,
interest rates and commodity prices utilizing financial models called Value at
Risk ("VaR"). Nabisco employs a variance/co-variance approach to its calculation
of VaR, which is a statistical measure of the potential loss in terms of fair
value, cash flows or earnings of market risk sensitive instruments over a
one-year horizon using a 95% confidence interval for changes in market rates and
prices. 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 model is a risk analysis tool and does not purport to represent
actual losses in fair value or pre-tax earnings that will be incurred by
Nabisco, nor does it consider the potential effect of favorable changes in
market factors.

INTEREST RATE EXPOSURE

Nabisco manages its debt structure and interest rate risk through the use of
fixed and floating rate debt, and through the use of derivatives. Nabisco uses
interest rate swaps and caps to hedge its exposure to interest rate changes, and
also to lower its financing costs. 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. The 1999 average VaR associated with
the fair value of financial instruments resulting from changes in interest rates
was a $216 million after-tax loss. At December 31, 1999, it was a $221 million
after-tax loss, a decrease of $25 million from the December 31, 1998 amount.
This change is primarily due to the decrease in price volatility of long-term
U.S. treasuries which are used to estimate the VaR of Nabisco's interest rate
sensitive financial instruments.

Nabisco does not believe that reasonably possible near-term changes in
interest rates will have a material effect on the future earnings or cash flows
of Nabisco.

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<PAGE>
FOREIGN EXCHANGE EXPOSURE

Foreign currency fluctuations can affect Nabisco's net investments, earnings
and cash flows denominated in foreign currencies. Nabisco primarily uses foreign
currency forward contracts and option contracts to hedge certain international
subsidiary debt and protect Nabisco from the risk that eventual dollar cash
flows resulting from transactions with international third parties will be
adversely affected by changes in exchange rates. Nabisco's primary exchange rate
exposure is with various Latin American currencies and the Canadian dollar
against the U.S. dollar.

Upon reviewing its derivatives and other foreign currency instruments, based
on historical foreign currency rate movements, Nabisco does not believe that
reasonably possible near-term changes in foreign currency will result in a
material effect on the future earnings, fair values or cash flows of Nabisco.

COMMODITY PRICE EXPOSURE

The acquisition of certain raw materials used in Nabisco's products exposes
it to commodity price changes. Nabisco utilizes purchase orders, non-cancelable
contracts, futures contracts and futures options to manage its commodity price
risk. Nabisco's primary commodity price exposures are to wheat, sugar, cocoa and
vegetable oils.

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 $30 million at December 31,
1999, an increase of $12 million from the December 31, 1998 amount primarily due
to the volatility of soy oil and wheat commodity prices on our underlying
positions in those commodities. For 1999, the average VaR associated with
Nabisco's net commodity exposure was a pre-tax loss of $36 million.

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
restructuring programs, 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.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Refer to the Index to Financial Statements on page 24 for the required
information.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

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<PAGE>
PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS

Item 10 is hereby incorporated by reference to Nabisco Holdings' Definitive
Proxy Statement to be filed with the Securities and Exchange Commission on or
prior to April 30, 2000. Reference is also made regarding the executive officers
of the Registrants to "Executive Officers of the Registrants" following Item 4
of Part I of this Report.

ITEM 11. EXECUTIVE COMPENSATION

Item 11 is hereby incorporated by reference to Nabisco Holdings' Definitive
Proxy Statement to be filed with the Securities and Exchange Commission on or
prior to April 30, 2000.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Item 12 is hereby incorporated by reference to Nabisco Holdings' Definitive
Proxy Statement to be filed with the Securities and Exchange Commission on or
prior to April 30, 2000.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Item 13 is hereby incorporated by reference to Nabisco Holdings' Definitive
Proxy Statement to be filed with the Securities and Exchange Commission on or
prior to April 30, 2000.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

<TABLE>
<S> <C> <C>
(A) 1. The financial statements listed in the accompanying Index to
Financial Statements are filed as part of this report.

2. The exhibits listed in the accompanying Index to Exhibits
are filed as part of this report.

(B) REPORTS ON FORM 8-K FILED IN FOURTH QUARTER 1999

None.

See Exhibit Index.

(D) FINANCIAL STATEMENT SCHEDULES

None.
</TABLE>

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the Township of
Parsippany, State of New Jersey on March 21, 2000.

<TABLE>
<S> <C> <C>
NABISCO HOLDINGS CORP.

By: /s/ JAMES E. HEALEY
...........................................
(James E. Healey)
Executive Vice President and
Chief Financial Officer

/s/ THOMAS J. PESCE
...........................................
(Thomas J. Pesce)
Senior Vice President
and Controller
</TABLE>

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on March 21, 2000.

<TABLE>
<CAPTION>
SIGNATURE TITLE SIGNATURE TITLE
--------- ----- --------- -----
<S> <C> <C> <C>
* President and Chief Executive
......................... Officer (principal
(James M. Kilts) executive officer) and
Director

/s/ JAMES E. HEALEY Executive Vice President and
......................... Chief Financial Officer
(James E. Healey)

/s/ THOMAS J. PESCE Senior Vice President and
......................... Controller (principal
(Thomas J. Pesce) accounting officer)

* Director * Director
......................... .........................
(Herman Cain) (David B. Jenkins)

* Director Director
......................... .........................
(John T. Chain, Jr.) (Kay Koplovitz)

* Director * Director
......................... .........................
(Julius L. Chambers) (Fred H. Langhammer)

* Director * Director
......................... .........................
(John L. Clendenin) (H. Eugene Lockhart)

* Chairman of the * Director
......................... Board of Directors .........................
(Steven F. Goldstone) (Theodore E. Martin)

* Director * Director
......................... .........................
(Ray J. Groves) (Rozanne L. Ridgway)
</TABLE>

<TABLE>
<S> <C> <C>
*By: /s/ JAMES A. KIRKMAN III
...........................................
(James A. Kirkman III)
Attorney-in-Fact
</TABLE>

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SIGNATURES

<TABLE>
<S> <C> <C>
NABISCO, INC.