NABISCO GROUP HOLDINGS CORP, 10-K405/A, 2000-09-27

NABISCO GROUP HOLDINGS CORP
10-K405/A, 2000-09-27
COOKIES & CRACKERS

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM 10-K/A
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
-------------------
NABISCO GROUP HOLDINGS CORP.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 1-10215 13-3490602
(State or other (Commission file (I.R.S. Employer Identification
jurisdiction of number) No.)
incorporation or
organization)
</TABLE>

7 CAMPUS DRIVE
PARSIPPANY, NJ 07054-0311
(973) 682-5000
(Address, including zip code, and telephone number, including area code,
of the principal executive offices of Nabisco Group Holdings Corp.)

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

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<CAPTION>
NAME OF EACH
EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- ----------------
<S> <C>
NABISCO GROUP HOLDINGS CORP.
Common Stock, par value $.01 per share New York

NABISCO GROUP HOLDINGS CAPITAL TRUST II
9.5% Trust Originated Preferred Securities 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
GROUP HOLDINGS CORP. ON MARCH 15, 2000 WAS APPROXIMATELY $3.1 BILLION.

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

NABISCO GROUP HOLDINGS CORP.: 326,442,347 SHARES OF COMMON STOCK, PAR VALUE $.01
PER SHARE

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

DOCUMENTS INCORPORATED BY REFERENCE

PORTIONS OF THE DEFINITIVE PROXY STATEMENT OF NABISCO GROUP 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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PART I

Item 1. Business.................................................... 1

(a) General Development of Business..................... 1

(b) Financial Information about Industry Segments....... 2

Other Matters..................................... 6

(d) Financial Information about Foreign and Domestic
Operations........................................ 6

Item 2. Properties.................................................. 6

Item 3. Legal Proceedings........................................... 7

Item 4. Submission of Matters to a Vote of Security Holders......... 7

Executive Officers of the Registrants....................... 8

PART II

Item 5. Market for Registrants' Common Equity and Related
Stockholder Matters....................................... 9

Item 6. Selected Financial Data..................................... 11

Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 12

Item 7a. Quantitative and Qualitative Disclosures About Market
Risk...................................................... 21

Item 8. Financial Statements and Supplementary Data................. 23

Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................. 23

PART III

Item 10. Directors and Executive Officers of the Registrants......... 23

Item 11. Executive Compensation...................................... 23

Item 12. Security Ownership of Certain Beneficial Owners and
Management................................................ 24

Item 13. Certain Relationships and Related Transactions.............. 24

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K.................................................. 29
</TABLE>
<PAGE>
PART I

ITEM 1. BUSINESS

(A) GENERAL DEVELOPMENT OF BUSINESS

The operating subsidiaries of Nabisco Group Holdings Corp. ("NGH") comprise
one of the largest food companies in the world. In the United States, the
packaged food business is conducted by Nabisco Holdings Corp.'s ("Nabisco
Holdings") wholly-owned subsidiary, Nabisco, Inc. ("Nabisco"), the largest
manufacturer and marketer of cookies and crackers. 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.

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 18 to the Consolidated Financial Statements, and the
related notes thereto, of NGH 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").

RJR Nabisco, Inc., which has been renamed R.J. Reynolds Tobacco Holdings
Inc. ("RJR") was incorporated as a holding company in 1970 holding the stock of
R.J. Reynolds Tobacco Company ("Reynolds Tobacco") and other companies that have
since been sold. It acquired Nabisco Holdings (formerly Nabisco Brands, Inc.) in
1985. RJR Nabisco Holdings Corp., which has been renamed Nabisco Group Holdings
Corp. ("NGH") was organized as a Delaware corporation in 1988 to effect the
acquisition of RJR, which was completed on April 28, 1989. As a result of this
acquisition, RJR became an indirect, wholly-owned subsidiary of NGH. After a
series of holding company mergers completed on December 17, 1992, RJR became a
direct, wholly-owned subsidiary of NGH.

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

- On May 12, 1999, RJR and Reynolds Tobacco completed the sale of the
international tobacco business to Japan Tobacco Inc. for $8 billion,
including the assumption of approximately $200 million of net debt.
Proceeds from the sale were used to reduce debt and for general corporate
purposes.

- On May 18, 1999, RJR transferred all of the outstanding Class B Common
Stock of Nabisco Holdings, together with approximately $1.6 billion in net
cash proceeds from the international tobacco sale, 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.

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.

NGH will continue to assess its businesses to evaluate their consistency
with strategic objectives. Although NGH 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 events
section of Item 7, "Management's Discussion and Analysis of Financial Condition
and Results of

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Operations" and Note 20 to the Consolidated Financial Statements. Under the
provisions of Nabisco Holdings' existing credit agreements, however, there are
restrictions on the sale or disposition of all, substantially all or any
substantial portion 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 18 to the Consolidated Financial Statements.

NGH is a holding company whose operating subsidiaries are owned indirectly
through Nabisco Holdings. 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 total voting power of Nabisco Holdings' outstanding
common stock. 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

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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 ANIMAL CRACKERS, compete in consumer niche segments. Many are the first
or second largest selling brands in their respective segments. Substantial
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 snack 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

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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,
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 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

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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.

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.

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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. NGH and its subsidiaries believe that the 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. NGH and its subsidiaries do 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, NGH and its subsidiaries 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. NGH 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 18 to the Consolidated Financial Statements.

ITEM 2. PROPERTIES

For information on properties, see Item 1. For additional information
pertaining to the location of NGH's assets as of December 31, 1999 and 1998, see
Note 18 to the Consolidated Financial Statements.

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ITEM 3. LEGAL PROCEEDINGS

NGH has been named as a defendant in a number of lawsuits (40 as of
March 20, 2000) as a result of its now severed relationship with the tobacco
business conducted by Reynolds Tobacco or its subsidiaries. For information
about this litigation see Note 12 to the Consolidated Financial Statements and
Exhibit 99 to this Form 10-K, which is available at the U.S. Securities and
Exchange Commission's website at http://www.sec.gov.

Some of the claims against NGH in the tobacco-related litigation noted above
seek recovery of hundreds of millions and possibly billions of dollars. This is
also true of litigation pending against Reynolds Tobacco and RJR, former
subsidiaries of NGH. NGH believes that it has a number of valid defenses to any
such actions and intends to defend all of them vigorously. Litigation is subject
to many uncertainties. While management believes it has strong defenses in the
litigation against NGH, management is unable to predict the outcome of the
litigation against NGH, or to derive a meaningful estimate of the amount or
range of any possible loss in any quarterly or annual period or in the
aggregate.

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

Nabisco Holdings or certain of its subsidiaries have been named "potentially
responsible parties" ("PRP") 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 those companies' or
NGH's financial condition or results of operations.

In addition, in April 1995, NGH was named a PRP with certain third parties
under CERCLA with respect to a superfund site at which a former subsidiary of
RJR had operations. A subsidiary of NGH may also have indemnification
obligations to a third party with respect to certain lawsuits arising from this
same CERCLA site although the subsidiary itself is not named in the lawsuits.
Management cannot currently predict the likelihood that it will have to
contribute as a PRP or 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 Group Holdings:

<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 NGH since December
1999; President and Chief Executive Officer of Nabisco
Holdings and of Nabisco since January 1998; prior thereto
Executive Vice President-Worldwide Food of Philip Morris
Companies, January 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.
James E. Healey 58 Senior Vice President and Chief Financial Officer of NGH
since September 1999; Executive Vice President and Chief
Financial Officer of Nabisco Holdings and of Nabisco since
June 1997; 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.
James A. Kirkman III 58 Senior Vice President and Secretary of NGH since July 1999;
General Counsel of NGH since October 1999; Executive Vice
President, General Counsel and Secretary of Nabisco
Holdings and of Nabisco since April 1995; previously
Senior Vice President, General Counsel and Secretary of
Nabisco Holdings, October 1994-April 1995, and of Nabisco,
1992-April 1995.
Thomas J. Pesce 48 Senior Vice President and Controller of NGH since November
1999; Senior Vice President and Controller of Nabisco
Holdings and of Nabisco 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 NGH since August
1999; Senior Vice President and Treasurer of Nabisco
Holdings and of Nabisco since July 1998; 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 Common Stock of NGH, par value $.01 per share (the "Common Stock"), is
listed and traded on the New York Stock Exchange (the "NYSE").

As of March 15, 2000, there were approximately 45,000 record holders of the
Common Stock. The Common Stock closing price on the NYSE on March 15, 2000 was
$9 3/8.

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

<TABLE>
<CAPTION>
CASH
DIVIDENDS
1999 HIGH LOW DECLARED
---- ------------- ------------- ---------
<S> <C> <C> <C>
First Quarter........................................ $ 30 7/8 $ 25 $ .5125
Second Quarter--prior to spin-off of RJR............. $ 33 9/16 $ 24 $ .5125
Second Quarter--after spin-off of RJR................ $ 22 $ 19 5/16 $ --
Third Quarter........................................ $ 20 13/16 $ 14 11/16 $ .1225
Fourth Quarter....................................... $ 15 3/4 $ 9 3/4 $ .1225

1998
-----------------------------------------------------
First Quarter........................................ $ 38 1/16 $ 30 $ .5125
Second Quarter....................................... $ 31 5/16 $ 23 1/2 $ .5125
Third Quarter........................................ $ 27 3/8 $ 21 5/16 $ .5125
Fourth Quarter....................................... $ 31 15/16 $ 24 $ .5125
</TABLE>

- 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. Each
record holder received one share of RJR stock for every three shares of
NGH stock. The average of the high and low trading prices for the common
stock of NGH was $21.53 on June 15, 1999, the first trading day following
the distribution.

As a result of the reorganization transactions, NGH owns only food
businesses through Nabisco Holdings and its subsidiaries, and therefore NGH
decreased its annual common dividend rate to $.49 from $2.05 per share,
effective with the October 1, 1999 dividend payment.

NGH is dependent on the earnings and cash flow of Nabisco Holdings and its
subsidiaries to satisfy its obligations and other cash needs. Nabisco Holdings'
dividend payable to NGH increased from approximately $149 million annually to
$160 million annually, commencing with the April 1, 1999

9
<PAGE>
dividend payment, when Nabisco Holdings increased its quarterly dividend payment
to $.1875 per share or $.75 per share annually, from its previous level of $.70
per share. 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 11 to the Consolidated
Financial Statements. NGH does not believe that Nabisco Holdings' credit
arrangements will limit NGH's ability to pay its anticipated quarterly
dividends.

NGH, RJR and Reynolds Tobacco entered into several agreements governing the
relationships among the parties after the distribution of RJR's shares to NGH
stockholders, including the provision of intercompany services by Nabisco to
NGH, certain tax matters indemnification rights and obligations and other
matters among the parties.

These agreements replaced a predecessor intercompany services agreement, a
predecessor tax sharing agreement and a predecessor corporate agreement that had
previously been in place between Nabisco Holdings and RJR. NGH does not
anticipate that these new agreements will have a material effect on its
financial condition or results of operations.

10
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA

The selected consolidated financial data of NGH 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 NGH (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 NGH 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
NGH, 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,
----------------------------------------------------
IN MILLIONS, EXCEPT PER SHARE AMOUNTS 1999 1998 1997 1996 1995
------------------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
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................................................ 2,751 2,670 2,469 2,528 2,389
Amortization of trademarks and goodwill................... 213 221 226 228 227
Restructuring charges (credits)........................... (67) 530 -- 428 --
------- ------- ------- ------- -------
Operating income........................................ 869 296 1,089 479 902
Interest and debt expense................................. (324) (401) (421) (424) (376)
Other income (expense), net............................... (19) (29) (32) (31) (15)
------- ------- ------- ------- -------
Income (loss) before income taxes....................... 526 (134) 636 24 511
Provision (benefit) for income taxes...................... 201 (2) 257 62 208
------- ------- ------- ------- -------
Income (loss) from continuing operations before minority
interest.............................................. 325 (132) 379 (38) 303
Less minority interest in income (loss) of Nabisco
Holdings................................................ 70 (14) 84 3 59
------- ------- ------- ------- -------
Income (loss) from continuing operations.................. 255 (118) 295 (41) 244
Discontinued operations:
Income (loss) from operations of discontinued
businesses, net of income taxes....................... 24 (459) 107 652 383
Gain on sale of discontinued business, net of income
taxes................................................. 2,970 -- -- -- --
------- ------- ------- ------- -------
Income (loss) before extraordinary items................ 3,249 (577) 402 611 627
Extraordinary items - loss on early extinguishment of
debt, net of income taxes and minority interest......... (281) -- (21) -- (16)
------- ------- ------- ------- -------
Net income (loss)....................................... $ 2,968 $ (577) $ 381 $ 611 $ 611
======= ======= ======= ======= =======
PER SHARE DATA
Net income (loss) per common share - basic:
Income (loss) from continuing operations................ $ .76 $ (.49) $ .78 $ (.26) $ .41
Income (loss) from discontinued operations.............. 9.21 (1.42) .33 2.01 1.18
Extraordinary items..................................... (.86) -- (.06) -- (.05)
------- ------- ------- ------- -------
Net income (loss)..................................... $ 9.11 $ (1.91) $ 1.05 $ 1.75 $ 1.54
======= ======= ======= ======= =======
Net income (loss) per common share - diluted:
Income (loss) from continuing operations................ $ .75 $ (.49) $ .76 $ (.26) $ .41
Income (loss) from discontinued operations.............. 9.21 (1.42) .33 2.01 1.17
Extraordinary items..................................... (.86) -- (.06) -- (.05)
------- ------- ------- ------- -------
Net income (loss)..................................... $ 9.10 $ (1.91) $ 1.03 $ 1.75 $ 1.53
======= ======= ======= ======= =======
Dividends declared per common share....................... $ 1.27 $ 2.05 $ 2.05 $ 1.85 $ 1.50
Dividends declared per share--Series C preferred stock.... -- -- $ 2.25 $ 6.01 $ 6.01
BALANCE SHEET DATA (AT END OF PERIOD)
Working capital........................................... $ 30 $ 6,309 $ 508 $ 445 $ 436
Total assets.............................................. 11,961 17,845 19,832 20,574 20,811
Total debt................................................ 4,187 5,132 5,488 5,442 5,409
Stockholders' equity...................................... 3,161 8,014 9,631 10,148 10,329
</TABLE>

11
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following is a discussion and analysis of NGH's 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 NGH's financial information and the related notes
thereto are included in the Consolidated Financial Statements.

NGH's business is conducted by Nabisco Holdings Corp.'s ("Nabisco Holdings")
wholly-owned subsidiary Nabisco, Inc. ("Nabisco"). 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. NGH's 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.

12
<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. NGH's 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.

13
<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)%
Other...................................... (4) 2 7 (71)%
------ ------ ------
Total........................................ 1,015 1,047 1,315 (3)% (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)%
Other........................................ (4) 2 7 (71)%
------ ------ ------
Total........................................ $1,091 $1,050 $1,215 4% (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 FROM ONGOING BUSINESSES:

1999 VS. 1998. NGH's 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.

14
<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. The 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. NGH's operating company contribution decreased 14% to
$1.05 billion in 1998.

- 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 DECEMBER 31, PRIOR YEAR
------------------------ -------------------
DOLLARS IN MILLIONS 1999 1998 1997 1999 1998
------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
REPORTED OPERATING INCOME.............................. $ 869 $ 296 $1,089 194% (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............... $ 878 $ 835 $1,001 5% (17)%
====== ====== ======
</TABLE>

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

1999 VS. 1998. NGH's operating income was $878 million for 1999, an
increase of 5% versus last year. The increase reflects higher operating company
contribution discussed previously.

1998 VS. 1997. NGH's operating income decreased to $835 million in 1998
versus $1,001 million in 1997 as a result of the 14% decline in operating
company contribution cited earlier.

15
<PAGE>
RESTRUCTURING

Savings objectives set in Nabisco's 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 cancelations. This credit reduced the restructuring
charges to $463 million. As the remaining projects from the December 1998
restructuring program are completed, Nabisco 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 4 to the Consolidated Financial Statements.

INTEREST AND DEBT EXPENSE

1999 VS. 1998. Consolidated interest and debt expense of $324 million in
1999 decreased by $77 million or 19% 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 continuing operations, the repurchase and redemption
of trust preferred securities in the second quarter of 1999, 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 $401 million in
1998 decreased by $20 million 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 the August 1998 issuance of trust preferred securities and a reduction in
capitalized interest in 1998.

OTHER INCOME (EXPENSE), NET

1999 VS. 1998. Consolidated other income (expense), net amounted to
$19 million of expense in 1999 versus $29 million of expense in 1998, an
decrease of $10 million in expense. The lower level of expense in 1999 reflects
higher interest income and 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 for 1999 was 38.2% compared
to 1.5% for 1998. Excluding the tax related impact of restructuring credits
recorded in 1999 and restructuring charges and net gain from divestitures in
1998, the effective rates are 39.7% and 40.5% for 1999 and 1998, respectively.

16
<PAGE>
1998 VS. 1997. The reported effective tax rate for 1998 was 1.5% compared
to 40.4% for 1997. Excluding the tax related impact of restructuring charges and
net gain from divestitures in 1998, the effective rates are 40.5% and 40.4% for
1998 and 1997, respectively.

DISCONTINUED OPERATIONS

Total income from discontinued operations increased approximately $3.5
billion in 1999 compared to 1998. The increase was due primarily to the gain on
the sale of Reynolds International in May of 1999 and profitable tobacco results
prior to the sale and distribution in 1999 compared to a loss for all of 1998.

EXTRAORDINARY LOSS

The extraordinary loss in 1999 includes a loss of approximately $384 million
($250 million after tax) on the repurchase of approximately $4 billion of debt
securities by RJR and a loss of approximately $44 million ($29 million after
tax) related to the purchase and redemption of NGH's trust preferred securities.
1999 also includes a loss of $5 million ($2 million after tax, net of minority
interest) on the early redemption of Nabisco's debt.

NET INCOME (LOSS)

1999 VS. 1998. NGH's net income of $2.97 billion for 1999 compares to a net
loss of $577 million for 1998. The increase primarily reflects the net gain on
the sale of the international tobacco business and increased operating income
partially offset by a provision for income taxes in 1999 compared to a slight
tax benefit in 1998. Also contributing to the increase were profitable tobacco
results prior to the sale and distribution in 1999 compared to a loss for all of
1998, and lower interest and debt expense partially offset by an extraordinary
loss in 1999.

1998 VS. 1997. NGH's net loss of $577 million for 1998 compares to net
income of $381 million for 1997. The decrease is principally due to lower
operating income partially offset by a slight tax benefit in 1998 compared to a
tax provision in 1997, and unprofitable tobacco results in 1998 compared to
income in 1997.

SEASONALITY

NGH's business is seasonal, with generally higher sales levels in the fourth
quarter. For information concerning seasonality, see Note 19 to the Consolidated
Financial Statements.

LIQUIDITY AND FINANCIAL CONDITION

Net cash flows from continuing operating activities amounted to
$533 million for 1999 compared to $563 million for 1998. The decrease in net
cash flows from continuing operating activities primarily reflects the 1999
extraordinary losses on debt extinguishments and increased restructuring
payments, partially offset by increased income from continuing operations and
lower working capital requirements.

Net cash flows from continuing operating activities amounted to
$563 million for 1998 compared to $520 million for 1997. The increase in net
cash flows from continuing operating activities primarily reflects lower working
capital requirements.

Net cash flows from discontinued operating activities amounted to
$2,284 million for 1999 compared to $546 million for 1998. The 1999 amount
reflects the gain on sale of Reynolds International and profitable tobacco
results prior to the sale and distribution in 1999 compared to a loss for all of
1998.

17
<PAGE>
Cash flows used in investing activities were $894 million in 1999 compared
to cash inflows of $200 million in 1998. The $1,094 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 $595 million from
1997 levels to $200 million, primarily due to increased net proceeds of $500
million from the sale of food businesses, and reduced levels of capital
expenditures and acquisition spending in 1998.

Net cash flows used in financing activities were $1,773 million for 1999,
compared to $1,318 million of cash flows used in financing activities for 1998.
The $455 million change in cash flows in 1999 is principally due to the 1999
redemptions of preferred securities, partially offset by an increase in net
borrowings in 1999 of $263 million versus a reduction in net borrowings of
$717 million in 1998.

Net cash flows used in financing activities were $1,318 million for 1998,
compared to $676 million of cash flows used in financing activities in 1997. The
increase in 1998 is primarily due to debt repayments of $717 million in 1998
versus borrowings of $39 million in 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 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. An extraordinary loss of
$5 million ($2 million after tax, net of minority interest) was recognized by
NGH. 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 ($21
million after tax, net of minority interest) was recorded for this transaction.
The redemption of these notes was refinanced with additional 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.

In August 1998, a newly formed wholly-owned subsidiary trust of NGH issued
$374 million principal amount of preferred securities. The proceeds from the
sale of the preferred securities and the original capital contribution were
invested by the trust in approximately $385 million principal amount of 9 1/2%
junior subordinated debentures of NGH. The junior subordinated debentures are
redeemable by NGH at $25 per debenture on or after September 30, 2003 and are
due in September 2047. Cash distributions on the preferred securities are
cumulative at an annual rate of 9 1/2% of the liquidation amount of $25 per
security and are payable quarterly in arrears. In October 1998, NGH used $301
million of the proceeds from the issuance of the junior subordinated debentures
to redeem its outstanding Series B preferred stock.

18
<PAGE>
On April 13, 1999, NGH offered to purchase any and all of its 9 1/2% trust
preferred securities and sought consents from the holders of those securities to
waive certain covenants that might have prevented some of the reorganization
transactions described in Note 2 to the Consolidated Financial Statements. The
consent offer expired on May 17, 1999 and resulted in the tender of
approximately $276 million of the total $374 million trust preferred securities.
The total cost to tender the preferred securities, including accrued interest,
premium fees and consent fees was approximately $314 million. NGH invested
approximately $114 million of the proceeds received from RJR from the
international tobacco sale in U.S. government securities and highly rated
commercial paper which is intended to service future principal and interest
payments through 2003 on the trust securities not tendered.

On May 18, 1999, NGH called for redemption all of its $949 million 10% trust
preferred securities outstanding. NGH completed the redemption of the full
amount of the securities on June 18, 1999.

The purchase and redemption of the 9 1/2 and 10% trust preferred securities
resulted in an extraordinary loss of approximately $44 million ($29 million
after tax).

On May 18, 1999, NGH called for redemption of all of its outstanding ESOP
convertible preferred stock at $16.25 per share, plus accrued dividends. A total
of 12,412,767 shares were redeemed at a cost of approximately $202 million. NGH
completed this transaction on June 10, 1999. The 406,200 remaining shares were
repurchased at $16.00 per share.

Nabisco maintains an arrangement to sell for cash substantially all of its
eligible domestic trade accounts receivable to a financial institution pursuant
to a purchase and sale agreement. Eligible accounts are sold on a daily basis.
The maximum amount of outstnding eligible trade accounts receivable sold at any
time is $400 million. The current agreement will expire in October 2001. The
weighted-average discount rates were 5.6%, 5.8% and 5.8% for the three years
ended December 31, 1999, 1998 and 1997, respectively. These rates were based
upon the financial institution's commercial paper borrowing rate plus
participation fees of approximately 0.3% which are adjusted annually. In
addition, similar arrangements have been established for the sale of trade
accounts receivable by certain foreign subsidiaries. Eligible trade accounts
receivable balances sold were $260 million and $381 million as of December 31,
1999 and 1998, respectively.

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.

NGH currently anticipates that it will pay a regular quarterly cash dividend
that is approximately equal to the amount of the regular Nabisco Holdings'
quarterly cash dividend that NGH expects to receive. However, the dividend
payable on each NGH common share will be less than the dividend payable on each
Nabisco Holdings' common share because the number of outstanding NGH common
shares exceeds the number of Nabisco Holdings' shares owned by NGH. Passing
through Nabisco Holdings' current annual dividend of $0.75 per share of NGH's
213,250,000 shares of Nabisco Holdings' stock yield's an annual dividend of
approximately $0.49 per share on the 326,146,847 shares of NGH stock outstanding
on December 31, 1999.

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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, Nabisco Holdings'
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, NGH's total debt (notes payable and long-term debt,
including current maturities and mandatorily redeemable preferred securities)
and total capital (total debt and stockholders' equity) amounted to
approximately $4.2 billion and $7.3 billion, respectively, of which total debt
is lower by approximately $945 million and total capital is lower by
$5,798 million than at December 31, 1998. NGH's ratios of total debt to
stockholders' equity and total debt to total capital were 1.32 to 1 and .57 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'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.

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

SUBSEQUENT EVENTS

JOINT VENTURE

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
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.

STOCKHOLDER RIGHTS PLAN

On March 13, 2000, the Board of Directors ("Board") of NGH adopted a
stockholder rights plan. Under the plan, the Board declared a dividend of one
preferred stock purchase right ("Right") for each share of NGH common stock
outstanding on March 20, 2000, and authorized the distribution of one Right for
each subsequently issued common share. Each Right entitles the holder to
purchase from NGH one one-hundredth of a share of a new series of preferred
stock at an initial purchase price of $30. The Board authorized the issuance of
4,400,000 preferred shares under this plan, none of which has been issued. The
Rights will become exercisable at a specified period of time after any person
becomes the beneficial owner of 10% or more of the common stock of NGH or
commences a tender or exchange offer which, if consummated, would result in any
person becoming the beneficial owner of 10% or more of the common stock. If any
person becomes the beneficial owner of 10% or more of the common stock, each
Right will entitle the holder, other than the acquiring person, to purchase, for
$30, a number of shares of NGH common stock having a market value of $60. For
persons who as of March 13, 2000 beneficially owned 10% or more of the common
stock, the plan "grandfathers" their current level of ownership, so long as they
do not purchase additional shares. Unless earlier redeemed, the Rights will
expire on March 13, 2002.

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

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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 15 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.

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.

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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 NGH's 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 and Financial Statement Schedules
on page 31 for the required information.

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

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS

Item 10 is hereby incorporated by reference to NGH's 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 NGH's Definitive Proxy
Statement to be filed with the Securities and Exchange Commission on or prior to
April 30, 2000.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Item 12 is hereby incorporated by reference to Nabisco Group 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

RELATIONSHIP BETWEEN NGH AND RJR

This section describes the primary agreements between NGH and RJR that
define the ongoing relationship between them and their subsidiaries and
affiliates after the spin-off on June 14, 1999 to NGH stockholders of shares in
RJR and provided for an orderly separation of the two companies. The following
descriptions of the distribution agreement, the intercompany services agreement
and the tax sharing agreement summarize the material terms of those agreements.
If there is a discrepancy between this summary and those agreements, you should
rely on the information in those agreements. All stockholders should read those
agreements, forms of which NGH has filed as exhibits to RJR's Registration
Statement on Form 8-A dated May 19, 1999. See Note 2 to the Consolidated
Financial Statements regarding the spin-off.

DISTRIBUTION AGREEMENT

NGH entered into a distribution agreement with RJR and Reynolds Tobacco as
of May 12, 1999. The distribution agreement provided for the principal corporate
transactions and procedures for separating the food and tobacco businesses and
the spin-off. The distribution agreement also defines the relationship between
NGH, RJR and Reynolds Tobacco after the spin-off with respect to, among other
things, indemnification arrangements, restrictions on RJR's ability to engage in
specified transactions, and employee benefit arrangements.

INDEMNIFICATION

In the distribution agreement, each of RJR and Reynolds Tobacco has agreed,
jointly and severally, to indemnify NGH, Nabisco Holdings, Nabisco Holdings'
subsidiaries and those entities' directors, officers and employees fully against
the following liabilities:

- All liabilities, other than for taxes (which are covered by the tax
sharing agreement described below), that arise out of any claim which may
at any time be made that:

- is, in whole or in part, based on the use, sale, distribution,
manufacture, development, advertising, marketing or health effects of,
exposure to, or research, statements or warnings regarding, any tobacco
products; or

- seeks to impose liability on RJR or NGH on the grounds that any
liability of Reynolds Tobacco or any of its subsidiaries that is based
on an action described immediately above is enforceable against or
recoverable from RJR or NGH;

- All liabilities, other than for taxes (which are covered by the tax
sharing agreement described below) and those tobacco-related liabilities
described above, that in any way relate to (1) RJR, its subsidiaries or
NGH, but only as to NGH with respect to matters and conduct occurring or
arising on or before the spin-off or (2) the tobacco business, or the
ownership or use of property in connection with that business;

- All liabilities for the fees, costs, expenses and transfer taxes to be
borne by RJR in connection with the transfer of its approximately 80.5%
interest in Nabisco Holdings to NGH and the spin-off;

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- All liabilities arising from any breach by RJR or its subsidiaries of any
obligation under the distribution agreement or the other agreements
relating to the spin-off, other than the tax sharing agreement, and

- Various liabilities under the federal securities laws, including those
arising in connection with the information contained in filings made under
the federal securities laws by NGH or Nabisco Holdings, to the extent that
the information is (1) related primarily to the tobacco business, if
before the distribution date or (2) based upon information furnished to
NGH or Nabisco Holdings by RJR or its subsidiaries or incorporated by
reference by either of those parties from any SEC filings made by RJR or
its subsidiaries, if after the June 14, 1999 distribution date for the
spin-off.

In the distribution agreement, NGH has agreed to indemnify RJR, its
subsidiaries and those entities' directors, officers and employees fully against
the following liabilities:

- All liabilities, other than any for taxes (which are covered by the tax
sharing agreement described below), whenever arising, that in any way
relate to (1) any of Nabisco Holdings, Nabisco Holdings' subsidiaries or
NGH, but only as to NGH with respect to matters and conduct occurring or
arising at any time after the spin-off or (2) the food business, or the
ownership or use of property in connection with that business;

- All liabilities arising from any breach by NGH, Nabisco Holdings or
Nabisco Holdings' subsidiaries of any obligation under the distribution
agreement or any of the other agreements relating to the spin-off, other
than the tax sharing agreement; and

- Various liabilities under the federal securities law, including those
arising in connection with the information contained in filings made under
the federal securities laws by RJR, to the extent that the information is
(1) related primarily to the food business, if before the distribution
date, or (2) based upon information furnished to RJR by NGH, Nabisco
Holdings or any of its subsidiaries or incorporated by reference by RJR or
its subsidiaries from any SEC filings made by NGH, Nabisco Holdings or any
of Nabisco Holdings' subsidiaries, if after the distribution date.

The distribution agreement also includes procedures for notice and payment
of indemnification claims. Any indemnification under the indemnities described
above is to be paid net of any tax benefit to the indemnified party.
Additionally, the distribution agreement provides that NGH will have the right
to assume and control the defense of itself, RJR (but not Reynolds Tobacco and
Reynolds Tobacco's subsidiaries) and any member of the Nabisco Holdings group of
companies against any tobacco-related litigation and claims. This assumption and
control will not affect the indemnity obligations of RJR and Reynolds Tobacco
that are described above. For information regarding indemnification against tax
liabilities, see the portion of this document found under the heading "Tax
Sharing Agreement" below.

Because RJR and Reynolds Tobacco may be required to perform their indemnity
obligations to NGH and other indemnitees that are described above, the
distribution agreement imposes limitations on the ability of RJR and its
subsidiaries to engage in specific transactions.

EMPLOYEE BENEFIT MATTERS

The distribution agreement provides, generally, that RJR will be responsible
for all employee benefits relating to current and former RJR employees and that
NGH will be responsible for all

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employee benefits relating to current and former NGH employees. Under the
distribution agreement, NGH stock options were equitably adjusted to take into
account the spin-off as follows:

- The exercise price and number of shares subject to NGH options held by
current and former NGH employees were adjusted to preserve the value of
the NGH options before the spin-off.

- NGH options held by current and former employees of RJR and Reynolds
Tobacco were equitably converted into two options, one relating to RJR's
common stock and one relating to NGH common stock, with adjustments to
preserve the value of the NGH options before the spin-off.

INTERCOMPANY ACCOUNTS

Upon completion of the spin-off, there were no intercompany accounts or
indebtedness between NGH and any of its subsidiaries, on the one hand, and RJR
and any of its subsidiaries, on the other, except that Nabisco Holdings and RJR
settled any accounts between them that were outstanding on the distribution date
in the ordinary course of business.

TRANSACTION EXPENSES

RJR is responsible for all material transaction expenses incurred in
connection with the spin-off and the related transactions, except that NGH is
responsible for all fees and expenses incurred to redeem or refinance the Trust
Originated Preferred Securities of NGH's affiliates and the ESOP Convertible
Preferred Stock of NGH. RJR is also responsible for all liabilities arising out
of the closing of the NGH corporate headquarters, severance and benefits payment
obligations to corporate headquarters employees and related transaction and
ongoing administrative expenses. Before the spin-off, RJR transferred funds to
NGH in an amount that was sufficient to satisfy these obligations in full.

INTERCOMPANY SERVICES

Before the spin-off, RJR agreed to terminate an intercompany services
agreement dated as of January 26, 1995 between RJR and Nabisco Holdings. After
the spin-off, there were no material services received or provided by NGH and
any of its subsidiaries at that time, on the one hand, and RJR and any of its
subsidiaries, on the other, except for cooperation in the ordinary course
between these groups on litigation matters.

On the distribution date, NGH and Nabisco Holdings entered into an
intercompany services agreement under which Nabisco Holdings agreed to provide
various services to NGH, including those relating to the provision of insurance,
the administration of benefit plans and specified tax, accounting, reporting,
cash management, public relations, risk management, legal and other corporate
services. In return for those services, NGH will pay to Nabisco Holdings an
amount in cash equal to those services' fair market value as determined by the
parties. The intercompany services agreement will terminate on the date that NGH
owns less than 50% of the shares of Nabisco Holdings' Class B Common Stock that
NGH owns on the distribution date.

Upon completion of the spin-off, NGH was responsible for three general
categories of non-contingent obligations, (1) those arising out of the ongoing
operation of NGH as a holding company (including the services to be provided by
Nabisco Holdings to NGH under the intercompany services agreement), (2) those
arising out of the spin-off and other reorganization transactions, including
expenses relating to severance benefits, the closing of prior headquarters and
other transaction costs, and (3) those relating to Trust Originated Preferred
Securities with an aggregate outstanding liquidation preference of approximately
$97.75 million on the distribution date. NGH, upon completion of the spin-off,
had approximately $300 million in cash to satisfy these obligations, including
the ongoing administrative expenses for a number of years.

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TAX SHARING AGREEMENT

NGH entered into a tax sharing agreement with RJR, Nabisco Holdings and
Reynolds Tobacco that described, among other things, each company's rights and
obligations relating to tax payments and refunds for periods before and after
the spin-off and related matters like the filing of tax returns and the handling
of audits and other tax proceedings. The tax sharing agreement also describes
the indemnification arrangements among RJR and its subsidiaries (which this
document refers to as the RJR tax group), Nabisco Holdings and its subsidiaries
(which this document refers to as the Nabisco tax group) and NGH. The tax
sharing agreement contains the representations and covenants that the RJR tax
group, the Nabisco tax group and NGH made relating to RJR's transfer of the
Nabisco Holdings interest to NGH, the distribution of the RJR common stock to
NGH stockholders and those parties' conduct after those transactions.

RETURN FILING, TAX PAYMENT AND CONDUCT OF TAX PROCEEDINGS

In general, NGH will be responsible for filing consolidated federal and
consolidated, combined or unitary state income tax returns that include the RJR
tax group and the Nabisco tax group for periods through the distribution date of
June 14, 1999 and that include the Nabisco tax group for appropriate
post-distribution tax periods, and paying the associated taxes. RJR and Nabisco
Holdings will reimburse NGH for the portion of those taxes that relate to the
tobacco business, in RJR's case, or the food business, in Nabisco Holdings'
case. The tax sharing agreement will generally seek to allocate tax liabilities
based upon the respective tax liabilities of the RJR tax group, the Nabisco tax
group and NGH, as if each group or company had filed its own tax return. NGH
will generally pay to RJR the net benefit received by the NGH consolidated group
from the carryback of various tax attributes of the RJR tax group arising in
post-distribution tax periods to pre-distribution tax periods.

Under the tax sharing agreement, the RJR tax group and the Nabisco tax group
have irrevocably designated NGH as their agent for purposes of taking a broad
range of actions in connection with taxes for pre-distribution periods. These
arrangements may result in conflicts of interest among NGH, Nabisco Holdings,
RJR and Reynolds Tobacco.

TAX REPRESENTATIONS, COVENANTS AND INDEMNIFICATION AGREEMENTS

Under the tax sharing agreement, each of NGH and Nabisco Holdings covenanted
to the RJR tax group, and each of RJR and Reynolds Tobacco covenanted to NGH and
the Nabisco tax group, that it will not engage in various transactions for two
years after the spin-off, unless it obtains an IRS ruling or an opinion of
acceptable tax counsel that the contemplated transaction will not cause the
transfer of the Nabisco Holdings interest to NGH or the distribution of the RJR
common stock to NGH stockholders to be taxable. Transactions subject to these
restrictions include, subject to specified exceptions:

- the liquidation, merger or consolidation with another company of that
corporation or of various subsidiaries;

- the sale, exchange, distribution or other disposition of assets of that
corporation or of various subsidiaries outside the ordinary course of
business;

- the discontinuation of the active conduct of the food business or the
tobacco business, as the case may be;

- the repurchase of stock of that corporation, other than through
transactions meeting a set of IRS guidelines; and

- any transaction or change in equity structure that may cause the transfer
of the Nabisco Holdings interest to NGH and/or the distribution of RJR
common stock to NGH stockholders

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to be treated as part of a plan pursuant to which one or more persons
acquire, directly or indirectly, stock of NGH, Nabisco Holdings or RJR, as
the case may be, representing 50% or more of the vote or of the value of
any of those corporations.

Under the tax sharing agreement, the RJR tax group, the Nabisco tax group
and NGH agreed to indemnify one another against various tax liabilities. The
chart immediately below summarizes these tax indemnification arrangements.

<TABLE>
<S> <C> <C> <C> <C>
TAX SHARING AGREEMENT INDEMNITIES

The RJR tax group NGH will indemnify NGH will indemnify The Nabisco tax The Nabisco tax
will indemnify NGH the RJR tax group the Nabisco tax group will group will
and the Nabisco tax against, among group against, indemnify the RJR indemnify NGH
group against, among other things, among other things, tax group against, against, among
other things, among other things, other things,

- tax liabilities - tax liabilities - tax liabilities - tax liabilities - tax liabilities
attributable to the attributable to attributable to attributable to attributable to
RJR tax group NGH relating to NGH relating to the Nabisco tax the Nabisco tax
relating to any tax tax periods after tax periods after group relating to group relating to
period; December 1989; December 1989; tax periods after tax periods after
December 1989; December 1989;
and and

- tax liabilities - tax liabilities - tax liabilities - tax liabilities - tax liabilities
attributable to NGH relating to any relating to any relating to any relating to any
or the Nabisco tax tax period tax period tax period tax period
group relating to resulting from a resulting from a resulting from a resulting from a
tax periods before breach by NGH of breach by NGH of breach by the breach by the
January 1990; and any any Nabisco tax group Nabisco tax group
representation or representation or of any of any
covenant made in covenant made in representation or representation or
the tax sharing the tax sharing covenant made in covenant made in
agreement; and agreement; and the tax sharing the tax sharing
agreement. agreement.

- tax liabilities - any tax - any tax
relating to any tax liabilities liabilities
period resulting resulting from resulting from
from a breach by RJR's transfer of RJR's transfer of
the RJR tax group the Nabisco the Nabisco
of any Holdings interest Holdings interest
representation or to NGH or the to NGH or the
covenant made by spin-off, except, spin-off, except,
the RJR tax group among other among other
in the tax sharing things, to the things, to the
agreement. extent those extent those
liabilities arise liabilities arise
from a breach by from a breach by
the RJR tax group the RJR tax group
of any or the Nabisco
representation or tax group of any
covenant made in representation or
the tax sharing covenant made by
agreement. the relevant
group in the tax
sharing
agreement.
</TABLE>

28
<PAGE>
The amount of taxes against which each of the RJR tax group, NGH and the
Nabisco tax group will be required to indemnify the other parties is uncertain,
and could be material.

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 financial statement schedules listed in the accompanying
Index to Financial Statements and Financial Statement
Schedules are filed as part of this report.

3. 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

See Index to Financial Statements and Financial Statement
Schedules.
</TABLE>

29
<PAGE>
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 September 26, 2000.

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

By: /s/ JAMES E. HEALEY
...........................................
(James E. Healey)
Senior 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 September 26, 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 Senior 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
......................... .........................
(John T. Chain, Jr.) (Nancy Korch)

* 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)

* Director
.........................
(David B. Jenkins)
</TABLE>

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

30
<PAGE>
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

<TABLE>
<CAPTION>
PAGE
-----------------------
<S> <C>
FINANCIAL STATEMENTS

Management's Responsibility for Financial Statements...... F-1

Reports of Deloitte & Touche LLP, Independent Auditors.... F-2

Consolidated Statements of Income--Years Ended
December 31, 1999, 1998 and 1997........................ F-3

Consolidated Statements of Comprehensive Income--Years
Ended December 31, 1999, 1998 and 1997.................. F-4

Consolidated Statements of Cash Flows--Years Ended
December 31, 1999, 1998 and 1997........................ F-5

Consolidated Balance Sheets--December 31, 1999 and 1998... F-6 - F-7

Consolidated Statements of Stockholders' Equity--Years
Ended December 31, 1999, 1998 and 1997.................. F-8

Notes to Consolidated Financial Statements................ F-9 - F-39

FINANCIAL STATEMENT SCHEDULES

For the years ended December 31, 1999, 1998 and 1997:

Schedule I--Condensed Financial Information of
Registrant.............................................. S-1 - S-4

Schedule II--Valuation and Qualifying Accounts............ S-5
</TABLE>

31
<PAGE>
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS

The financial statements presented in this report have been prepared by
management in accordance with generally accepted accounting principles using,
where appropriate, management's best estimates and judgment. Management
maintains a system of internal controls to provide reasonable assurance that the
Company's assets are safeguarded and transactions are executed as authorized and
properly recorded. The system includes established policies and procedures, a
program of internal audits, management reviews and careful selection and
training of qualified personnel.

The audit committee is comprised solely of outside directors. It meets
periodically with management, the internal auditors, and the independent
auditors, Deloitte & Touche LLP, to discuss and address internal accounting
control, auditing and financial reporting matters. Both independent and internal
auditors have unrestricted access to the audit committee.

James M. Kilts
President and
Chief Executive Officer

James E. Healey
Senior Vice President and
Chief Financial Officer

F-1
<PAGE>
REPORTS OF DELOITTE & TOUCHE LLP, INDEPENDENT AUDITORS

Nabisco Group Holdings Corp.:

We have audited the accompanying consolidated balance sheets of Nabisco
Group Holdings Corp. ("NGH") as of December 31, 1999 and 1998, and the related
consolidated statements of income, comprehensive income, stockholders' equity,
and cash flows for each of the three years in the period ended December 31,
1999. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in
all material respects, the consolidated financial position of NGH at
December 31, 1999 and 1998, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended December 31, 1999
in conformity with generally accepted accounting principles.

Deloitte & Touche LLP

Parsippany, New Jersey
February 2, 2000

Nabisco Group Holdings Corp.:

We have audited the consolidated balance sheets of Nabisco Group Holdings
Corp. ("NGH") as of December 31, 1999 and 1998, and the related consolidated
statements of income, comprehensive income, stockholders' equity, and cash flows
for each of the three years in the period ended December 31, 1999, and have
issued our report thereon dated February 2, 2000; such report has previously
been filed as part of the company's Annual Report on Form 10-K for the year
ended December 31, 1999. Our audits also included the financial statement
schedules of NGH as of December 31, 1999 and 1998 and for each of the three
years in the period ended December 31, 1999 as listed in the accompanying index
to the financial statements. These financial statement schedules are the
responsibility of the company's management. Our responsibility is to express an
opinion based on our audits. In our opinion, such financial statement schedules,
when considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.

Deloitte & Touche LLP

Parsippany, New Jersey
February 2, 2000

F-2
<PAGE>
NABISCO GROUP HOLDINGS CORP.
CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
NET SALES................................................... $ 8,268 $ 8,400 $ 8,734
------- ------- -------
Costs and expenses:
Cost of products sold..................................... 4,502 4,683 4,950
Selling, advertising, administrative and general
expenses................................................ 2,751 2,670 2,469
Amortization of trademarks and goodwill................... 213 221 226
Restructuring charges (credits) (Note 4).................. (67) 530 --
------- ------- -------
OPERATING INCOME...................................... 869 296 1,089
Interest and debt expense................................... (324) (401) (421)
Other income (expense), net................................. (19) (29) (32)
------- ------- -------
INCOME (LOSS) BEFORE INCOME TAXES..................... 526 (134) 636
Provision (benefit) for income taxes........................ 201 (2) 257
------- ------- -------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE
MINORITY
INTEREST............................................ 325 (132) 379
Less minority interest in income (loss) of Nabisco
Holdings.................................................. 70 (14) 84
------- ------- -------
INCOME (LOSS) FROM CONTINUING OPERATIONS.............. 255 (118) 295
Discontinued operations:
Income (loss) from operations of discontinued businesses,
net of income taxes..................................... 24 (459) 107
Gain on sale of discontinued business, net of income
taxes................................................... 2,970 -- --
------- ------- -------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS.............. 3,249 (577) 402
Extraordinary items--loss on early extinguishment of debt,
net of income taxes and minority interest................. (281) -- (21)
------- ------- -------
NET INCOME (LOSS)..................................... $ 2,968 $ (577) $ 381
======= ======= =======
NET INCOME (LOSS) PER COMMON SHARE--BASIC:
Income (loss) from continuing operations.................. $ .76 $ (.49) $ .78
Income (loss) from discontinued operations................ 9.21 (1.42) .33
Loss from extraordinary items............................. (.86) -- (.06)
------- ------- -------
Net income (loss)......................................... $ 9.11 $ (1.91) $ 1.05
======= ======= =======
NET INCOME (LOSS) PER COMMON SHARE--DILUTED:
Income (loss) from continuing operations.................. $ .75 $ (.49) $ .76
Income (loss) from discontinued operations................ 9.21 (1.42) .33
Loss from extraordinary items............................. (.86) -- (.06)
------- ------- -------
Net income (loss)......................................... $ 9.10 $ (1.91) $ 1.03
======= ======= =======
DIVIDENDS DECLARED PER SHARE:
Common stock.............................................. $ 1.27 $ 2.05 $ 2.05
Series C preferred stock.................................. $ -- $ -- $ 2.25
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

F-3
<PAGE>
NABISCO GROUP HOLDINGS CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
NET INCOME (LOSS)........................................... $2,968 $ (577) $ 381
------ ------ ------

Other comprehensive income (loss):

Cumulative translation adjustment......................... (84) (56) (158)

Recognition of Reynolds International cumulative
translation adjustment upon sale........................ 218

Recognition of RJR's minimum pension liability adjustment
upon distribution of RJR Stock.......................... 6

Minimum pension liability adjustment...................... 1 4 (15)
------ ------ ------

Other comprehensive income (loss) before income taxes....... 141 (52) (173)

Provision (benefit) for income taxes...................... 1 (5) 7
------ ------ ------

OTHER COMPREHENSIVE INCOME (LOSS) NET OF INCOME TAX......... 140 (47) (180)
------ ------ ------

COMPREHENSIVE INCOME (LOSS)................................. $3,108 $ (624) $ 201
====== ====== ======
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

F-4
<PAGE>
NABISCO GROUP HOLDINGS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
Net income (loss)......................................... $ 2,968 $ (577) $ 381
Less (income) loss from discontinued operations........... (2,994) 459 (107)
------- ------- -------
Income (loss) from continuing operations.................. (26) (118) 274
Adjustments to reconcile to net cash flows from continuing
operating activities:
Depreciation of property, plant and equipment........... 265 273 277
Amortization of intangibles............................. 213 221 226
Deferred income tax provision (benefit)................. 84 (188) 12
Restructuring and restructuring-related expenses, net of
cash payments......................................... (157) 459 (179)
Accounts receivable..................................... (147) (5) 6
Inventories............................................. (102) 44 (12)
Accounts payable and accrued liabilities, including
income taxes.......................................... (86) (61) (131)
Other, net.............................................. 57 (62) 4
Extraordinary loss...................................... 432 -- 43
------- ------- -------
Total adjustments..................................... 559 681 246
------- ------- -------
Net cash flows from continuing operations............... 533 563 520
Net cash flows from discontinued operations............. 2,284 546 592
------- ------- -------
Net cash flows from operating activities................ 2,817 1,109 1,112
------- ------- -------
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Capital expenditures...................................... (241) (340) (392)
Acquisitions of businesses................................ (578) (9) (46)
Purchase of investments, net of maturities................ (107) -- --
Other, net................................................ 36 12 15
Proceeds from sale of food businesses..................... -- 550 50
Repurchases of Nabisco Holdings' common stock............. (12) (38) (22)
Net proceeds from exercise of Nabisco Holdings' common
stock options........................................... 8 25 --
------- ------- -------
Net cash flows from (used in) investing activities...... (894) 200 (395)
------- ------- -------
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Net proceeds from issuance of long-term debt.............. 777 1,279 1,229
Repayments of long-term debt.............................. (491) (1,893) (1,145)
Increase (decrease) in notes payable...................... (23) (103) (45)
Proceeds (redemption) of trust originated preferred
securities.............................................. (1,265) 374 --
Redemption of Series B preferred stock.................... -- (301) --
Redemption of ESOP preferred stock........................ (202) -- --
Dividends paid on common and preferred stock.............. (633) (742) (755)
Other, net................................................ 64 68 40
------- ------- -------
Net cash flows used in financing activities............. (1,773) (1,318) (676)
------- ------- -------
Effect of exchange rate changes on cash and cash
equivalents............................................... (8) (6) (8)
------- ------- -------
Net change in cash and cash equivalents................. 142 (15) 33
Cash and cash equivalents at beginning of period............ 112 127 94
------- ------- -------
Cash and cash equivalents at end of period.................. $ 254 $ 112 $ 127
======= ======= =======

Income taxes paid, net of refunds........................... $ 113 $ 188 $ 209

Interest paid............................................... $ 324 $ 381 $ 453
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

F-5
<PAGE>
NABISCO GROUP HOLDINGS CORP

CONSOLIDATED BALANCE SHEETS

(DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1999 1998
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 254 $ 112
Short-term investment..................................... 6 --
Accounts receivable, net of allowance for doubtful
accounts of
$52 and $29, respectively............................... 681 522
Deferred income taxes..................................... 114 101
Inventories............................................... 898 753
Prepaid expenses and other current assets................. 79 70
Net assets of discontinued businesses (Note 2)............ -- 6,696
------- -------
TOTAL CURRENT ASSETS.................................. 2,032 8,254
------- -------

Property, plant and equipment--at cost.................... 5,074 4,806
Less accumulated depreciation............................. (1,985) (1,859)
------- -------
Net property, plant and equipment....................... 3,089 2,947
------- -------

Trademarks, net of accumulated amortization of
$1,214 and $1,102, respectively......................... 3,443 3,368

Goodwill, net of accumulated amortization of
$1,007 and $910, respectively........................... 3,159 3,182

Other assets and deferred charges......................... 238 94
------- -------
$11,961 $17,845
======= =======
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

F-6
<PAGE>
NABISCO GROUP HOLDINGS CORP

CONSOLIDATED BALANCE SHEETS (CONTINUED)

(DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1999 1998
-------- --------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable............................................. $ 39 $ 68
Accounts payable.......................................... 642 407
Accrued liabilities....................................... 1,056 1,231
Current maturities of long-term debt...................... 158 118
Income taxes accrued...................................... 107 121
------- -------
TOTAL CURRENT LIABILITIES............................... 2,002 1,945
------- -------
Long-term debt (less current maturities).................... 3,892 3,619
Minority interest in Nabisco Holdings....................... 763 752
Other noncurrent liabilities................................ 768 962
Deferred income taxes....................................... 1,277 1,226

Contingencies (Note 12)
NGHs' obligated mandatorily redeemable preferred securities
of subsidiary trusts holding solely junior subordinated
debentures*............................................... 98 1,327

Stockholders' equity:
ESOP preferred stock...................................... -- 205
Common stock (326,146,847 and 325,007,848 shares issued
and outstanding at December 31, 1999 and 1998,
respectively)........................................... 3 3
Paid-in capital........................................... 3,459 9,004
Retained earnings (deficit)............................... 125 (577)
Accumulated other comprehensive income (loss)............. (320) (460)
Treasury stock, at cost................................... (100) (100)
Unamortized restricted stock.............................. (6) (26)
Notes receivable-ESOP..................................... -- (34)
Notes receivable-employees................................ -- (1)
------- -------
TOTAL STOCKHOLDERS' EQUITY............................ 3,161 8,014
------- -------
$11,961 $17,845
======= =======
</TABLE>

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

* The sole asset of the subsidiary trust is the junior subordinated debentures
of Nabisco Group Holdings Corp. The remaining outstanding junior
subordinated debentures have an aggregate principal amount of approximately
$101 million, an annual interest rate of 9 1/2%, and mature in September
2047. The preferred securities outstanding as of December 31, 1999 will be
mandatorily redeemed for $98 million upon redemption of the junior
subordinated debentures. See Note 11 regarding the partial tender and
redemption of these securities.

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

F-7
<PAGE>
NABISCO GROUP HOLDINGS CORP.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
ACCUMULATED
OTHER
CAPITAL PAID-IN RETAINED COMPREHENSIVE TREASURY
STOCK* CAPITAL EARNINGS INCOME STOCK OTHER TOTAL
-------- -------- -------- ------------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1997.................... $ 540 $ 10,050 $ -- $(233) $(100) $(109) $ 10,148
Net income.................................. 381 381
Cumulative translation adjustment, net of
tax expense of $12........................ (170) (170)
Minimum pension liability, net of tax
benefit of $5............................. (10) (10)
Retirement of 843,970 shares of ESOP
preferred stock........................... (14) (14)
Conversion of 26,675,000 shares of Series C
preferred stock into 53,350,000 shares of
common stock.............................. (3) 3 --
Issuance of 405,532 shares of common
stock..................................... 10 10
Cancellation of 171,750 shares of common
stock..................................... (5) (5)
Dividends................................... (361) (381) (742)
ESOP note payments received................. 36 36
Other....................................... (7) 4 (3)
----- -------- ------- ----- ----- ----- --------
BALANCE AT DECEMBER 31, 1997.................. 523 9,690 -- (413) (100) (69) 9,631
Net loss.................................... (577) (577)
Cumulative translation adjustment, net of
tax benefit of $6......................... (50) (50)
Minimum pension liability, net of tax
expense of $1............................. 3 3
Retirement of 895,983 shares of ESOP
preferred stock........................... (14) (14)
Redemption of 12,043,940 shares of Series B
preferred stock........................... (301) (301)
Issuance of 1,264,058 shares of common
stock..................................... 41 41
Cancellation of 37,000 shares of common
stock..................................... (1) (1)
Dividends................................... (704) (704)
ESOP note payments received................. 33 33
Other....................................... (22) (25) (47)
----- -------- ------- ----- ----- ----- --------
BALANCE AT DECEMBER 31, 1998.................. 208 9,004 (577) (460) (100) (61) 8,014
Net income.................................. 2,968 2,968
Cumulative translation adjustment........... (84) (84)
Minimum pension liability, net of tax
expense of $1............................. --
Exercise of stock options................... 28 28
Retirement of 12,818,967 shares of ESOP
preferred stock........................... (205) (2) (207)
Cash dividends declared..................... (421) (421)
ESOP note payments received................. 34 34
Recognition of Reynolds International
cumulative translation adjustments upon
sale...................................... 218 218
Distribution of RJR stock................... (5,572) (1,845) 6 7 (7,404)
Other....................................... 1 14 15
----- -------- ------- ----- ----- ----- --------
BALANCE AT DECEMBER 31, 1999.................. $ 3 $ 3,459 $ 125 $(320) $(100) $ (6) $ 3,161
===== ======== ======= ===== ===== ===== ========
</TABLE>

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

* Includes $3 million of common stock for each reporting period presented.

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

F-8
<PAGE>
NABISCO GROUP HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Summary of Significant Accounting Policies below and the other notes to
the consolidated financial statements on the following pages are integral parts
of the accompanying consolidated financial statements of Nabisco Group Holdings
Corp. ("NGH") and its majority owned subsidiaries, including 80.6% of Nabisco
Holdings Corp. ("Nabisco Holdings") and Nabisco, Inc. ("Nabisco"), its direct
wholly-owned subsidiary (the "Consolidated Financial Statements").

CONSOLIDATION AND USE OF ESTIMATES

The Consolidated Financial Statements include the accounts of NGH and its
subsidiaries. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the balance sheet date and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.

Certain prior year amounts have been reclassified to conform to the 1999
presentation.

CASH AND CASH EQUIVALENTS

Cash equivalents include all short-term, highly liquid investments that are
readily convertible to known amounts of cash and that have original maturities
of three months or less. Cash equivalents at December 31, 1999 and 1998, valued
at cost (which approximated market value), totaled $198 million and $71 million,
respectively.

INVENTORIES

Inventories are stated at the lower of cost or market. Cost is determined
principally under the first-in, first-out method.

COMMODITY CONTRACTS

Due to wide fluctuations in the market prices for various agricultural
commodities, Nabisco frequently enters into futures contracts to hedge the price
risk associated with anticipated purchases. Nabisco realizes changes in the
market value of futures contracts that qualify as hedges as an addition to, or
reduction from, the raw material inventory cost. Realized gains and losses are
recorded in cost of products sold when the related finished products are sold.
The amount of hedging losses deferred as of December 31, 1999 and 1998 was
$7 million and $5 million, respectively. Any futures contracts that do not
qualify for hedge accounting treatment are marked-to-market each reporting
period with the resulting market change reflected in cost of products sold in
the current period.

DEPRECIATION

For financial reporting purposes, depreciation expense is generally provided
on a straight-line basis, using estimated useful lives of up to 20 years for
land improvements, 20 to 40 years for buildings and leasehold improvements and 3
to 30 years for machinery and equipment.

TRADEMARKS AND GOODWILL

Values assigned to trademarks and goodwill are amortized on a straight-line
basis principally over a 40-year period.

F-9
<PAGE>
NABISCO GROUP HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
LONG-LIVED ASSETS

Long-lived assets are comprised of intangible assets and property, plant and
equipment. Long-lived assets, including certain identifiable intangibles and
goodwill related to those assets to be held and used, are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of the asset may not be recoverable. An estimate of undiscounted
future cash flows produced by the asset, or the appropriate grouping of assets,
is compared to the carrying value to determine whether an impairment exists. If
an asset is determined to be impaired, the loss is measured based on quoted
market prices in active markets, if available. If quoted market prices are not
available, the estimate of fair value is based on various valuation techniques,
including a discounted value of estimated future cash flows and fundamental
analysis. Assets to be disposed of are reported at the lower of their carrying
value or estimated net realizable value.

REVENUE RECOGNITION

Revenue is recognized when title to finished product passes to the customer.
Revenue is recognized as the net amount to be received after deducting estimated
amounts for discounts and product returns.

OTHER INCOME (EXPENSE), NET

Other income (expense), net includes interest income, certain foreign
currency gains and losses, expenses related to the sales of accounts receivable,
and fees related to banking and borrowing programs.

ADVERTISING

Advertising costs are generally expensed as incurred. Advertising expense
was $250 million, $226 million and $223 million for the years ended December 31,
1999, 1998 and 1997, respectively.

RESEARCH AND DEVELOPMENT

Research and development expenses, which are expensed as incurred, were $96
million, $100 million and $95 million for the years ended December 31, 1999,
1998 and 1997, respectively.

INTEREST RATE FINANCIAL INSTRUMENTS

Interest rate swaps and caps are used to effectively hedge certain interest
rate exposures. In both types of hedges, the differential to be paid or received
is accrued and recognized in interest expense and may change as market interest
rates change. Any premium paid or received is amortized over the duration of the
hedged instrument. If an arrangement is terminated or effectively terminated
prior to maturity, then the realized or unrealized gain or loss is effectively
recognized over the remaining original life of the agreement if the hedged item
remains outstanding, or immediately, if the underlying hedged instrument does
not remain outstanding. If the arrangement is not terminated or effectively
terminated prior to maturity, but the underlying hedged instrument is no longer
outstanding, then the unrealized gain or loss on the related interest rate swap
or cap is recognized immediately.

FOREIGN CURRENCY FINANCIAL INSTRUMENTS

The forward foreign exchange contracts and other hedging arrangements
entered into by NGH and its subsidiaries generally mature at the time the hedged
foreign currency transactions are settled. Gains or losses on forward foreign
currency transactions are determined by changes in market rates and are

F-10
<PAGE>
NABISCO GROUP HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
generally included at settlement in the basis of the underlying hedged
transaction. To the extent that the foreign currency transaction does not occur,
gains and losses are recognized immediately.

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. NGH has 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.

NET INCOME PER SHARE

Per share data has been computed and presented pursuant to the provisions of
Statement of Financial Accounting Standards No. 128, Earnings per Share, which
was adopted in the fourth quarter of 1997. Net income per common share--basic is
calculated by dividing net income less preferred stock dividends by the weighted
average number of common shares outstanding during the period. Net income per
common share--diluted is calculated by dividing net income less preferred stock
dividends by the weighted average number of common shares and common equivalent
shares for stock options outstanding during the period.

INCOME TAXES

During the second quarter of 1999, RJR Nabisco, Inc., which has been renamed
R.J. Reynolds Tobacco Holdings, Inc. ("RJR"), and RJR Nabisco Holdings Corp.,
which has been renamed Nabisco Group Holdings Corp. ("NGH") completed a series
of reorganization transactions as described in Note 2 to the Consolidated
Financial Statements. As part of those transactions, NGH, Nabisco Holdings and
RJR entered into a tax sharing agreement that sets forth, among other things,
each company's rights and obligations relating to tax payments and refunds for
periods before and after those transactions, certain tax indemnification
arrangements and other tax matters such as the filing of tax returns and the
handling of audits and other tax proceedings.

NGH will file a Federal consolidated return for 1999 that will include the
results of Nabisco Holdings and its subsidiaries for the entire year and RJR and
its subsidiaries for the period from January 1 up to and including June 14.

Any adjustments to federal and state income tax liabilities for years after
1989 and prior to June 15, 1999 are the responsibility of RJR or Nabisco, as
applicable. Any adjustments to federal and state income tax liabilities for 1989
or earlier are the obligation of RJR. RJR will pay to NGH any tax refunds
received by RJR and attributable to NGH for years after 1989.

F-11
<PAGE>
NABISCO GROUP HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 2--THE REORGANIZATION

On March 9, 1999, RJR and Reynolds Tobacco entered into a definitive
agreement to sell the international tobacco business for approximately $8
billion, including the assumption of approximately $200 million of net debt, to
Japan Tobacco Inc. ("Japan Tobacco"). The sale was substantially completed on
May 12, 1999 and resulted in a net gain of approximately $2.97 billion, after
income taxes of approximately $1.9 billion, subject to post-closing adjustments.
Under the terms of the agreement, Japan Tobacco acquired substantially all of
the business, including intellectual property rights of Reynolds International,
including the international rights to the CAMEL, WINSTON and SALEM brand names.
Proceeds from the sale were used to reduce debt and for general corporate
purposes. The repurchase of approximately $4 billion of debt securities by RJR
resulted in an extraordinary loss of approximately $384 million ($250 million
after-tax) during the period.

Also on March 9, 1999, NGH announced that its board of directors had
approved a plan to separate the domestic tobacco business conducted by Reynolds
Tobacco, from the food business conducted by Nabisco Holdings' operating
subsidiaries. Under the plan, the separation was accomplished by the transfer on
May 18, 1999 of RJR's 80.5% interest in Nabisco Holdings, together with
approximately $1.6 billion in proceeds from the international tobacco sale, to
NGH through a merger transaction, followed by a spin-off on June 14, 1999 to NGH
stockholders of shares in RJR. The merger transaction and subsequent spin-off
are intended to be tax-free. An additional $200 million of proceeds from the
international tobacco sale was transferred by RJR to NGH prior to the spin-off
in satisfaction of certain liabilities assumed by NGH.

Upon completion of the spin-off, NGH was legally renamed Nabisco Group
Holdings Corp. and continues to exist as a holding company, owning 80.6% of
Nabisco Holdings. The renamed Nabisco Group Holdings Corp. (symbol: NGH) and
Nabisco Holdings (symbol: NA) each will continue to trade as separate companies
on The New York Stock Exchange. Shares of RJR (symbol: RJR), as the owner of
100% of Reynolds Tobacco, are also trading separately under the changed name of
R.J. Reynolds Tobacco Holdings, Inc.

NGH, Nabisco Holdings RJR and Reynolds Tobacco have entered into several
agreements governing the relationships among the parties after the distribution
of RJR's shares to NGH stockholders, including the provision of intercompany
services by Nabisco Holdings to NGH, certain tax matters, indemnification rights
and obligations and other matters among the parties.

On April 13, 1999, NGH offered to purchase any and all of its 9 1/2% trust
preferred securities and sought consents from the holders of those securities to
waive certain covenants that might have prevented some of the transactions
described above. The consent offer expired on May 17, 1999 and resulted in the
tender of approximately $276 million of the total $374 million trust preferred
securities. The total cost to tender the preferred securities, including accrued
interest, premium fees and consent fees was approximately $314 million. NGH
invested approximately $114 million of the proceeds received from RJR from the
international tobacco sale in highly rated U.S. government securities and
commercial paper which is intended to service future principal and interest
payments through 2003 on the trust securities not tendered.

On May 18, 1999, NGH called for redemption all of its $949 million 10% trust
preferred securities outstanding. NGH completed the redemption of the full
amount of the securities on June 18, 1999.

The purchase and redemption of the 9 1/2% and 10% trust preferred securities
resulted in an extraordinary loss of approximately $44 million ($29 million
after tax).

F-12
<PAGE>
NABISCO GROUP HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 2--THE REORGANIZATION (CONTINUED)
On or about May 18, 1999, NGH called for redemption of all of its
outstanding ESOP convertible preferred stock at $16.25 per share, plus accrued
dividends. A total of 12,412,767 shares were redeemed at a cost of approximately
$202 million. NGH completed this transaction on June 10, 1999. The 406,200
remaining shares were repurchased at $16.00 per share.

In connection with the reorganization transactions, the assets and
liabilities of the Retirement Plan for Employees of RJR Nabisco, Inc. (the "old
plan") were split into two plans. One plan covers employees and former employees
of Nabisco Holdings, Nabisco and NGH ("the Nabisco Plan") and the other plan
covers employees and former employees of RJR. For additional information, see
Note 16 to the Consolidated Financial Statements.

Summarized operating results of the discontinued businesses are as follows:

<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
-------------------
1999 1998
-------- --------
<S> <C> <C>
Net sales................................................... $4,210 $8,637
Provision benefit for income taxes.......................... 123 (21)
Net income (loss)........................................... 24 (459)
</TABLE>

Assets and liabilities of the discontinued businesses are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
1998
------------
<S> <C>
Current assets.............................................. $ 2,987
Property, plant and equipment, net.......................... 2,351
Trademarks and goodwill, net................................ 12,165
Other assets and deferred charges........................... 341
Current liabilities......................................... (2,859)
Long-term debt (less current maturities).................... (5,036)
Deferred income taxes....................................... (1,936)
Other noncurrent liabilities................................ (1,317)
-------
Net assets of discontinued businesses..................... $ 6,696
=======
</TABLE>

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

F-13
<PAGE>
NABISCO GROUP HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3--NET INCOME PER SHARE

The components of the calculation of earnings per share for income (loss)
from continuing operations are as follows:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------
1999 1998 1997
------------------- ------------------- -------------------
BASIC DILUTED BASIC DILUTED BASIC DILUTED
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Income (loss) from continuing operations applicable to
common stock:
Income (loss) from continuing operations.................. $ 255 $ 255 $ (118) $ (118) $ 295 $ 295
Preferred stock dividends................................. (8) (8) (40) (40) (44) (47)
-------- -------- -------- -------- -------- --------
$ 247 $ 247 $ (158) $ (158) $ 251 $ 248
======== ======== ======== ======== ======== ========
Weighted average number of common and common equivalent
shares outstanding (in thousands):
Common shares............................................. 324,930 324,930 323,853 323,853 323,787 323,787
Assumed exercise of NGH's stock options................... -- 214 -- -- -- 1,531
-------- -------- -------- -------- -------- --------
324,930 325,144 323,853 323,853 323,787 325,318
======== ======== ======== ======== ======== ========
</TABLE>

Shares of ESOP convertible preferred stock of 13,214,133 were not included
in computing diluted earnings per share for 1998, because the effect would have
been antidilutive. Common shares also exclude 385,000 and 954,600 shares of
restricted stock as the vesting provisions had not been met at December 31, 1999
and 1998, respectively.

NOTE 4--OPERATIONS

ACQUISITIONS

In recent years, subsidiaries of Nabisco Holdings have completed a number of
acquisitions to expand the domestic and international food businesses, all of
which have been accounted for using the purchase method of accounting for
business combinations. In September 1999, a subsidiary of Nabisco acquired the
stock of Canale S.A., Argentina's fourth largest biscuit company for
approximately $134 million resulting in goodwill of $45 million. In November
1999, Nabisco also acquired certain assets and liabilities of Favorite Brands
International, Inc., the fourth largest non-chocolate candy company in the
United States for approximately $480 million. As of December 31, 1999, a
preliminary purchase price allocation was completed, resulting in goodwill of
approximately $68 million, subject to finalization of integration plans which
could result in an adjustment to goodwill in 2000. In 1998, a subsidiary of
Nabisco acquired the assets of the Jamaican biscuit and snacking company,
Butterkist, Ltd. for $9 million. The fair value of the assets acquired
approximated the purchase price. In December, 1997, Nabisco acquired the stock
of Cornnuts, Inc., a manufacturer of crispy corn kernel snacks, for
approximately $51 million. As of December 31, 1997, the acquisition was carried
in other assets in the consolidated balance sheet pending completion of the
purchase price allocation. During 1998 the purchase price was allocated
resulting in goodwill of $30 million, including $4 million for a plant closure.

The Consolidated Statements of Income and Comprehensive Income do not
include any revenues or expenses related to the acquisitions described above
prior to their respective closing dates. The acquisitions were financed through
commercial paper borrowings. The following are NGH's unaudited

F-14
<PAGE>
NABISCO GROUP HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 4--OPERATIONS (CONTINUED)
pro forma results of operations for 1999 and 1998, assuming that the 1999
acquisition of certain assets and liabilities of Favorite Brands International,
Inc. had occurred on January 1, 1998.

<TABLE>
<CAPTION>
(UNAUDITED)
YEARS ENDED DECEMBER 31,
-------------------------
IN MILLIONS, EXCEPT PER SHARE AMOUNTS 1999 1998
------------------------------------- ----------- -----------
<S> <C> <C>
Net sales................................................... $8,890 $9,146
Income (loss) from continuing operations before
extraordinary items....................................... $ 220 $ (149)
Income (loss) per common share from continuing operations:
Basic..................................................... $ .65 $ (.58)
Diluted................................................... $ .65 $ (.58)
</TABLE>

These pro forma results of operations have been prepared for comparative
purposes only and do not purport to be indicative of the results of operations
which actually would have resulted had the acquisition occurred on the date
indicated, or which may result in the future.

FOOD DIVESTITURES AND OTHER CHARGES

The 1998 cost of products sold includes a $35 million net gain ($15 million
after tax, net of minority interest) related to businesses sold and a
$21 million charge ($14 million after tax, net of minority interest) to exit
non-strategic businesses. Both items were recorded in the third quarter.
Businesses sold in 1998 include the College Inn brand of canned broths, Plush
Pippin frozen pies, the U.S. and Canadian tablespreads and U.S. egg substitute
businesses (formerly included in the U.S. Foods Group operating segment) and the
Del Monte brand canned vegetable business in Venezuela (formerly included in the
International Food Group operating segment) for net proceeds of approximately
$550 million.

In June 1997, Nabisco sold certain domestic regional brands for $50 million
that resulted in a $32 million gain ($15 million after tax, net of minority
interest). In addition, non-recurring expenses of $31 million ($15 million after
tax, net of minority interest) were recognized. These included a $14 million
additional provision to write-down property, plant and equipment ($10 million),
intangibles ($2 million) and inventory ($2 million) of the Plush Pippin frozen
pie business sold in 1998 at its approximate carrying value of $5 million;
$10 million of severance and related benefits for approximately 80 sales persons
in the U.S. Foods Group sales organization; and $7 million of exit costs
resulting from the relocation of Nabisco International's headquarters from New
York City to New Jersey consisting of $6 million for lease abandonment costs and
$1 million for employee severance benefits. The net $1 million pre-tax gain from
these items is included in selling, advertising, administrative and general
expenses in the Consolidated Statements of Income. 1997 net sales from the Plush
Pippin frozen pie business were $40 million and operating income was not
material.

Net sales for 1998 and 1997 from all food divestitures in both years by
Nabisco were $298 million and $632 million, respectively. Operating income for
1998 and 1997 from the divested businesses was $33 million and $87 million,
respectively.

F-15
<PAGE>
NABISCO GROUP HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 4--OPERATIONS (CONTINUED)
1998 RESTRUCTURING CHARGES

In the second and fourth quarters of 1998, Nabisco recorded restructuring
charges of $406 million ($216 million after tax, net of minority interest) and
$124 million ($75 million after tax, net of minority interest), respectively.
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 6,100 positions were eliminated as of December 31,
1999. The headcount reduction represents a slight increase from the original
projection of 6,500. The increase resulted from higher than anticipated
eliminations as projects were completed and is primarily due to projects in
International manufacturing locations and to a lesser extent the Biscuit sales
force reorganization. The increase in the number of positions eliminated did not
result in incremental spending as higher costs for these projects were offset by
lower costs and cash outlays overall, as described below.

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 net cash expenditures of
approximately $140 million. In addition, the programs required additional
restructuring-related expenses of $132 million ($64 million after tax, net of
minority interest), of which $76 million ($37 million after tax, net of minority
interest) was incurred in the twelve months ended December 31, 1999, and are now
completed. These additional expenses were principally for implementation and
integration of the programs and included costs for relocation of employees and
equipment and training.

In 1999, Nabisco recorded a net restructuring credit of $67 million
($39 million after tax, net of minority interest), related to the Biscuit, U.S.
Foods Group and International businesses of $30 million, $18 million and
$19 million, respectively. The credit primarily reflects 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 offset to a minor extent by
increased costs in certain programs.

The major components of the credit were lower severance and benefit costs
for: the sales force reorganization of $21 million; staff reductions at
headquarters and operating units of $24 million; and distribution
reorganizations of $5 million. The reduced costs reflected unanticipated staff
reductions through voluntary separations rather than planned terminations and
other net changes in cost estimates. In addition, asset impairment costs were
lower by $14 million reflecting higher proceeds and anticipated proceeds from
the sales of facilities.

F-16
<PAGE>
NABISCO GROUP HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 4--OPERATIONS (CONTINUED)
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:
Year ended December 31, 1998............. (34) (3) (12) (12) (61)
Year ended December 31, 1999............. (98) (11) (221) (23) (353)
---- --- ---- --- -----
Total charges and payments, net of
cash proceeds...................... (132) (14) (233) (35) (414)
---- --- ---- --- -----
Reserve and valuation account balances as
of December 31, 1999................... $ 26 $ 5 $ 10 $ 8 $ 49
==== === ==== === =====
</TABLE>

- Sales force reorganizations consist of $35 million for the Nabisco Biscuit
Company to reorganize its direct store delivery sales force to improve its
effectiveness and $5 million for the International Food Group, principally
Latin America.

- Distribution reorganizations consist of plans to exit a number domestic
and international distribution and warehouse facilities, principally
$19 million for the Nabisco Biscuit Company and $14 million for the
International Food Group.

- Staff reductions consist of headquarters and operating unit realignments,
functional consolidations and eliminations of positions throughout the
Company. Amounts are: $37 million for the U.S. Foods Group; $26 million
for Nabisco International headquarters, Canada and other foreign units;
$15 million for corporate headquarters; and $8 million for the Nabisco
Biscuit Company.

- Manufacturing cost reduction initiatives consist of a number of domestic
and international programs to increase productivity, principally
$19 million for the Nabisco Biscuit Company and $7 million for Canada.

- Plant closure accruals are for the closure and future sale of 18
production facilities in order to improve manufacturing efficiencies and
reduce costs. Amounts are: Nabisco Biscuit Company $217 million; U.S.
Foods Group $12 million; and International Food Group $52 million. Other
exit costs consist of carrying costs to be incurred prior to sale.

F-17
<PAGE>
NABISCO GROUP HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 4--OPERATIONS (CONTINUED)
- Product line rationalizations consist of exit costs to discontinue a
number of domestic and international product lines. Other exit costs are
principally write-offs for disposals of various discontinued products.
Amounts are: U.S. Foods Group $34 million; Nabisco Biscuit Company
$14 million; and International Food Group $12 million.

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 $103 million, which is comprised of cumulative cash
expenditures of $124 million and cumulative cash proceeds of $21 million. For
the year ended December 31, 1999, cash payments, net of cash proceeds totaled
$65 million, which is comprised of $86 million of cash expenditures and
$21 million of cash proceeds which were applied against the restructuring
reserves.

Asset impairments in connection with the restructuring program were
identified and measured in accordance with SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of. In
instances where the held and used method was applied, which includes all plant
closures, the fair value of impaired assets was determined using the discounted
cash flows generated from assets while still in use and the estimated proceeds
from their ultimate sale.

As of December 31, 1999, production had ceased in 16 of the 18 facilities
identified under the programs. Nabisco decided not to close the remaining two
small facilities in the International Food Group due to volatile economic
conditions and a highly inflationary economy which made the economic benefit
unachievable.

F-18
<PAGE>
NABISCO GROUP HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 5--ACCOUNTS RECEIVABLE

Nabisco maintains an arrangement to sell for cash substantially all of its
eligible domestic trade accounts receivable to a financial institution pursuant
to a purchase and sale agreement. Eligible trade accounts receivable, which are
sold without recourse, are accounts that are not in excess of certain
agreed-upon concentration amounts, and exclude amounts that may be delinquent,
in default, or disputed. Eligible accounts are sold on a daily basis and are
settled monthly. The maximum amount of outstanding eligible trade accounts
receivable sold at any time is $400 million. Nabisco provides ongoing credit and
collection services on the sold accounts. The current agreement will expire in
October 2001. The weighted-average discount rates were 5.6%, 5.8% and 5.8% for
the three years ended December 31, 1999, 1998 and 1997, respectively. These
rates were based upon the financial institution's commercial paper borrowing
rate plus participation fees of approximately 0.3% which are adjusted annually.
In addition, similar arrangements have been established for the sale of trade
accounts receivable by certain foreign subsidiaries. Eligible trade accounts
receivable balances sold were $260 million and $381 million as December 31, 1999
and 1998, respectively. The aggregate expenses related to the sales of trade
accounts receivable included in Other income (expense), net were $17 million in
1999, $19 million in 1998 and $20 million in 1997.

NOTE 6--INVENTORIES

The major classes of inventory are shown in the table below:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
IN MILLIONS 1999 1998
----------- ------------ ------------
<S> <C> <C>
Finished products........................................... $ 551 $ 457
Raw materials............................................... 199 164
Other....................................................... 148 132
------ ------
Total................................................... $ 898 $ 753
====== ======
</TABLE>

NOTE 7--PROPERTY, PLANT AND EQUIPMENT

Components of property, plant and equipment were as follows:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
IN MILLIONS 1999 1998
----------- ------------ ------------
<S> <C> <C>
Land and land improvements.................................. $ 196 $ 192
Buildings and leasehold improvements........................ 967 937
Machinery and equipment..................................... 3,612 3,385
Construction-in-process..................................... 299 292
------- -------
5,074 4,806
Less accumulated depreciation............................... (1,985) (1,859)
------- -------
Net property, plant and equipment....................... $ 3,089 $ 2,947
======= =======
</TABLE>

F-19
<PAGE>
NABISCO GROUP HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8--NOTES PAYABLE

Notes payable consist of notes payable to banks by foreign subsidiaries and
$5 million of commercial paper borrowings by certain foreign subsidiaries as of
December 31, 1999 and $9 million of commercial paper borrowings by certain
foreign subsidiaries as of December 31, 1998. The weighted average interest rate
on all notes payable and commercial paper borrowings was 8.2% and 8.0% at
December 31, 1999 and 1998, respectively. The weighted average interest rates
include borrowing rates in countries with high inflation, primarily in Latin
America and South Africa.

NOTE 9--ACCRUED LIABILITIES

Accrued liabilities consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
IN MILLIONS 1999 1998
----------- ------------ ------------
<S> <C> <C>
Payroll and employee benefits............................... $ 385 $ 270
Marketing and advertising................................... 272 231
Restructuring............................................... 35 202
Insurance................................................... 53 50
Dividends payable........................................... 49 220
Taxes, other than income taxes.............................. 53 47
Interest.................................................... 69 70
All other................................................... 140 141
------ ------
Total............................................... $1,056 $1,231
====== ======
</TABLE>

F-20
<PAGE>
NABISCO GROUP HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 10--INCOME TAXES

The provision (benefit) for income taxes before extraordinary item consisted
of the following:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------
IN MILLIONS 1999 1998 1997
----------- -------- -------- --------
<S> <C> <C> <C>
Current:
Federal................................................... $ 52 $116 $174
Foreign and other......................................... 65 70 71
---- ---- ----
117 186 245
---- ---- ----

Deferred:
Federal................................................... 76 (172) 3
Foreign and other......................................... 8 (16) 9
---- ---- ----
84 (188) 12
---- ---- ----

Provision for income taxes.................................. $201 $ (2) $257
==== ==== ====
</TABLE>

The components of the deferred income tax (assets) and liabilities at
December 31, 1999 and 1998 were as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
IN MILLIONS 1999 1998
----------- -------- --------
<S> <C> <C>
Current deferred income tax assets:
Accrued liabilities and other............................. $ (119) $ (106)
Valuation allowance....................................... 5 5
------ ------
Net current deferred income tax assets................ (114) (101)
------ ------

Non-current deferred income tax assets:
Pension liabilities....................................... (20) (25)
Other postretirement liabilities.......................... (151) (149)
Other non-current liabilities............................. (89) (141)
------ ------
Total non-current deferred income tax assets before
valuation allowance................................. (260) (315)
Valuation allowance, primarily foreign net operating
losses.................................................. 85 83
------ ------
Net non-current deferred income tax assets............ (175) (232)
------ ------
Non-current deferred income tax liabilities:
Property, plant and equipment............................. 276 322
Trademarks................................................ 1,005 1,027
Other..................................................... 171 109
------ ------
Total non-current deferred income tax liabilities..... 1,452 1,458
------ ------
Net non-current deferred income tax liabilities....... $1,277 $1,226
====== ======
</TABLE>

F-21
<PAGE>
NABISCO GROUP HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 10--INCOME TAXES (CONTINUED)
Pre-tax income (loss) before extraordinary item for domestic and foreign
operations is shown in the following table:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------
IN MILLIONS 1999 1998 1997
----------- -------- -------- --------
<S> <C> <C> <C>
Domestic (includes U.S. exports)............................ $ 315 $(182) $465
Foreign..................................................... 211 48 171
----- ----- ----
Pre-tax income (loss)....................................... $ 526 $(134) $636
===== ===== ====
</TABLE>

The differences between the provision for income taxes and income taxes
computed at statutory U.S. federal income tax rates are explained as follows:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Reconciliation from statutory rate to effective rate:
Income taxes computed at statutory U.S. federal income
tax rates................................................. $184 $(48) $223
State taxes, net of federal benefit......................... 15 17 21
Goodwill amortization....................................... 30 30 30
Taxes on foreign operations at rates other than statutory
U.S. federal rate......................................... (24) 11 (10)
Other items, net............................................ (4) (12) (7)
---- ---- ----
Provision for income taxes.................................. $201 $ (2) $257
==== ==== ====
Effective tax rate.......................................... 38.2% 1.5% 40.4%
==== ==== ====
</TABLE>

At December 31, 1999, there was $802 million of accumulated and
undistributed income of foreign subsidiaries. These earnings are intended by
management to be reinvested abroad indefinitely. Accordingly, no applicable U.S.
federal deferred income taxes have been provided nor is a determination of the
amount of unrecognized U.S. federal deferred income taxes practicable.

F-22
<PAGE>
NABISCO GROUP HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 11--LONG-TERM DEBT

Long-term debt consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
IN MILLIONS 1999 1998
----------- ------------ ------------
<S> <C> <C>
Commercial paper, average interest rates of 6.4%
and 5.7%.................................................. $ 902 $ 174
8.3% notes due April 15, 1999............................... -- 106
8.0% notes due January 15, 2000............................. 148 148
6.24% pound sterling notes due August 12, 2001.............. -- 163
6.8% notes due September 1, 2001............................ 80 80
6.7% notes due June 15, 2002................................ 400 400
6.85% notes due June 15, 2005............................... 400 400
7.05% notes due July 15, 2007............................... 400 400
5.38% notes due August 26, 2009............................. -- 200
6.0% notes due February 15, 2011............................ 400 400
7.55% debentures due June 15, 2015.......................... 399 399
6.13% notes due February 1, 2033............................ 299 299
6.38% notes due February 1, 2035............................ 299 299
Other long-term debt........................................ 323 269
Less current maturities..................................... (158) (118)
------ ------
Total..................................................... $3,892 $3,619
====== ======
</TABLE>

The payment of long-term debt through December 31, 2004 is due as follows
(in millions):
2001-$139; 2002-$1,399; 2003-$52 and 2004-$97.

Nabisco Holdings and Nabisco maintain a $1.5 billion revolving credit
facility and a 364-day $1.10 billion credit facility primarily to support
commercial paper issuances. 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. The commitments under the revolving credit
facility decline to approximately $1.46 billion on October 31, 2001 for the
final year. Borrowings under the revolving credit facility bear interest at
rates which vary with the prime rate or LIBOR. Borrowings under the 364-day
credit facility bear interest at rates which vary with LIBOR. At December 31,
1999, the full $1.5 billion was available under the revolving credit facility
and $198 million was available under the 364-day credit facility. Similar
facilities were in place during 1998 and 1997.

Commercial paper borrowings have been included under long-term debt based on
Nabisco's intention, and ability under its credit facilities, to refinance these
borrowings for more than one year.

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.

The Nabisco Holdings' credit facilities also 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
and Nabisco Holdings believe that they are currently in compliance with all
covenants and restrictions imposed by the terms of their indebtedness.

F-23
<PAGE>
NABISCO GROUP HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 11--LONG-TERM DEBT (CONTINUED)
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. An extraordinary loss of
$5 million ($2 million after tax, net of minority interest) was recognized by
NGH. This redemption was refinanced with commercial paper.

In December 1997, Nabisco completed a tender offer and redeemed $432 million
of its $538 million 8.3% notes due 1999 and $541 million of its $688 million
outstanding 8% notes due 2000. An extraordinary loss of $43 million ($21 million
after tax, net of minority interest) was recorded for this transaction. The
redemption of these notes was financed with additional 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 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 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.

The estimated fair value of long-term debt, including current maturities at
December 31, 1999 and 1998 was approximately $4.0 billion for both years.
Considerable judgment was required in interpreting market data to develop the
estimates of fair value. In addition, the use of different market assumptions
and/or estimation methodologies may have had a material effect on the estimated
fair value amounts. Accordingly, the estimated fair value of long-term debt as
of December 31, 1999 and 1998 is not necessarily indicative of the amounts that
Nabisco could realize in a current market exchange.

F-24
<PAGE>
NABISCO GROUP HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 12--CONTINGENCIES

TOBACCO LITIGATION

As of March 20, 2000, NGH was a defendant in 40 lawsuits arising out of its
now severed relationship with the tobacco business conducted by Reynolds Tobacco
or its subsidiaries. These cases name NGH on a variety of theories, not always
specificially pled, that seek to impose liability on NGH for injuries allegedly
caused by the use, sale, distribution, manufacture, development, advertising,
marketing or health effects of, exposure to, or research, statements or warnings
regarding cigarettes.

Fifteen of the active suits were brought in state courts by claimants
seeking recovery of health care costs they incurred for large numbers of
beneficiaries whose illnesses are allegedly related to cigarettes. The
plaintiffs in these cases include groups of union health-benefit trust funds, a
Native American tribe and two foreign countries or political subdivisions. Four
of the cases are non-union class action suits, one in Pennsylvania federal
court, one in Indiana state court, one in New York federal court and one in
Missouri state court. Another purported class action brought in Lagos, Nigeria
was dismissed by the Lagos court in February 2000 as to all the non-Nigerian
defendants.

In addition, as of March 20, 2000, 18 anti-trust cases have been served on
NGH as well as a number of cigarette manufacturers and their present or former
parent companies in two federal courts and various state courts. These cases,
all of which seek to be certified as class actions, allege violations of state
and federal anti-trust law and are brought by plaintiffs who claim to represent
direct purchasers, indirect purchasers and retail purchasers of cigarettes.

NGH's defenses in all the cigarette cases in which it is named include the
merits defenses of Reynolds Tobacco plus separate arguments that NGH is a
holding company that does not engage in any of the activities for which
plaintiffs seek to impose liability. NGH also seeks to be dismissed from some of
these cases based on the fact that as a holding company that does not conduct
business in most states, NGH lacks the minimum contacts with most states that
would be necessary for the assertion of personal jurisdiction over it.

In the health-care cost-recovery cases of the kind noted above, defendants
also argue that the case should be dismissed because of the settled law that one
who pays an injured person's medical expenses is legally too remote to maintain
an action against the person allegedly responsible for the injury. Most courts
that have decided motions to dismiss based on this argument, including the
federal courts of appeals for the Second, Third, Fifth, Seventh and Ninth
Circuits, have granted motions to dismiss on these "remoteness" grounds. Ten of
these union cases, all pending in New York State courts, have been consolidated
and, on March 6, 2000, defendants' motion to dismiss these cases on "remoteness"
grounds was granted. Plaintiffs have filed notices of appeal in these cases.

As of March 20, 2000, no case in which NGH is a named defendant was
scheduled for trial in 2000. Two cases in which Reynolds Tobacco is a defendant
are in the process of being tried and it is likely that several more will be
tried during the course of the year.

NGH's litigation defense costs as well as any liabilities it might incur as
a result of the cases pending against it are to be paid by RJR and Reynolds
Tobacco under the indemnification provisions of an agreement between NGH, RJR
and Reynolds Tobacco. NGH's costs of defense, as well as any liabilities
incurred as a result of the cases brought by plaintiffs based on sales of
cigarettes outside the United States, are generally also subject to an indemnity
from Japan Tobacco Inc. as provided under the sale agreement among Japan
Tobacco, Reynolds Tobacco and RJR. If RJR and Reynolds Tobacco and Japan Tobacco
cannot fulfill their respective indemnity obligations, NGH could be required to
make the relevant payments itself.

F-25
<PAGE>
NABISCO GROUP HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 12--CONTINGENCIES (CONTINUED)
In addition to the cases pending against NGH, there are several hundred
lawsuits relating to cigarettes in which Reynolds Tobacco, and sometimes RJR,
are named defendants. One Florida class action case, in which Reynolds Tobacco
is a defendant, ENGLE VS. R.J. REYNOLDS TOBACCO COMPANY, is being tried in
several phases. A jury found against Reynolds Tobacco and the other cigarette
company defendants in the first phase. The second phase, considering the claims
of class representatives, is ongoing and may be completed in late March, 2000.
Thereafter, the same jury will hear the case for an award of punitive damages,
which would be a lump sum for the class as a whole. A decision on this award may
be made during April 2000. It is not possible to estimate the size of such an
award if made, but it could be in the billions of dollars. No payment of damages
should be required until the end of the trial and appellate process. If Reynolds
Tobacco and RJR are unable to satisfy their payment obligations for any adverse
judgments against them in some or all of these cases, it is possible that
plaintiffs in these cases would seek to recover the unsatisfied obligations from
the assets of NGH by bringing lawsuits on various theories.

Some of the claims against NGH seek recovery of hundreds of millions and
possibly billions of dollars. This is also true of the litigation pending
against Reynolds Tobacco and RJR. Litigation is subject to many uncertainties.
Management is unable to predict the outcome of the litigation against NGH, or to
derive a meaningful estimate of the amount or range of any possible loss in any
quarterly or annual period or in the aggregate.

For a detailed list of the tobacco-related lawsuits pending against NGH, see
exhibit 99 to this Form 10-K, which is available through the U.S Securities and
Exchange Commission's website at
http://www.sec.gov/.

ENVIRONMENTAL MATTERS

Nabisco Holdings or certain of its subsidiaries have been named "potentially
responsible parties" ("PRP") 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 matters, such expenditures or costs are not
expected to have a material adverse effect on those companies' or NGH's
financial condition or results of operations.

F-26
<PAGE>
NABISCO GROUP HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 13--RELATED PARTY TRANSACTIONS

NGH, RJR and R.J. Reynolds Tobacco entered into several agreements governing
the relationships among the parties after the distribution of RJR's shares to
NGH stockholders, including the provision of intercompany services by Nabisco to
NGH, certain tax matters, indemnification rights and obligations and other
matters among the parties.

NOTE 14--COMMITMENTS

At December 31, 1999, other commitments totaled approximately $245 million,
which included $28 million for capital commitments and $217 million related to
operating lease commitments. The operating lease amounts for each of the five
succeeding years are: 2000-$41 million; 2001-$29 million; 2002-$25 million;
2003-$20 million; 2004-$20 million; and in 2005 and thereafter-$82 million. Rent
expense, including operating leases was $102 million, $89 million and $84
million for the three years ended December 31, 1999, 1998 and 1997,
respectively.

NOTE 15--FINANCIAL INSTRUMENTS

INTEREST RATE

At December 31, 1999, outstanding interest rate caps had an aggregate
notional principal amount of $700 million and expire in June 2000. The estimated
fair values of these financial instruments as of December 31, 1999, and similar
financial instruments as of December 31, 1998, were favorable by less than $1
million.

At December 31, 1999, outstanding fixed to floating interest rate swaps for
$102 million notional principal amount had estimated fair values which were
unfavorable by approximately $4 million. These swaps expire as follows:
$29 million in 2003; and $73 million in 2004. At December 31, 1998, similar
financial instruments for $565 million had estimated fair values which were
favorable by approximately $11 million.

Estimated fair values for all interest rate financial instruments were based
on calculations by independent third parties.

FOREIGN CURRENCY

At December 31, 1999 and 1998, Nabisco had outstanding forward foreign
exchange contracts with banks to purchase and sell an aggregate amount of
$5 million and $21 million, respectively. Such contracts were primarily entered
into to hedge certain international subsidiary debt. The purpose of Nabisco's
foreign currency hedging activities is to protect Nabisco from risk that the
eventual U.S. dollar cash flows resulting from transactions with international
parties will be adversely affected by changes in exchange rates. Based on
calculations from independent third parties, the estimated fair value of these
financial instruments as of December 31, 1999 was favorable by less than
$1 million and as of December 31, 1998 was unfavorable by approximately
$1 million.

F-27
<PAGE>
NABISCO GROUP HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 15--FINANCIAL INSTRUMENTS (CONTINUED)

MARKET AND CREDIT RISK

The outstanding interest rate and foreign currency financial instruments
involve, to varying degrees, elements of market risk as a result of potential
changes in interest and foreign currency exchange rates. To the extent that the
financial instruments entered into remain outstanding as effective hedges of
existing interest rate and foreign currency exposure, the impact of such
potential changes in interest rates and foreign currency exchange rates on the
financial instruments entered into would offset the related impact on the items
being hedged. Also, Nabisco may be exposed to credit losses in the event of
non-performance by the counterparties to these financial instruments. However,
management continually monitors its positions and the credit rating of its
counterparties and therefore, does not anticipate any non-performance.

There are no significant concentrations of credit risk with any individual
counterparties or groups of counterparties as a result of any financial
instruments entered into including those financial instruments discussed above.

NOTE 16--RETIREMENT BENEFITS

Nabisco and its subsidiaries sponsor a number of non-contributory and
contributory defined benefit pension plans covering most U.S. and certain
foreign employees and former employees of Nabisco, Nabisco Holdings and NGH.
Additionally, Nabisco and its subsidiaries participate in several (i) multi-
employer plans, which provide benefits to certain union employees, and
(ii) defined contribution plans, which provide benefits to certain employees in
foreign countries. Nabisco also provides certain other postretirement health and
life insurance benefits for retired employees of Nabisco, Nabisco Holdings and
NGH and their dependents.

In connection with the reorganization transactions described in Note 2 to
the Consolidated Financial Statements, the assets and liabilities of the
Retirement Plan for Employees of RJR Nabisco, Inc. (the "old plan") were split
into two plans. One plan covers employees and former employees of Nabisco,
Nabisco Holdings and NGH (the "Nabisco Plan") and the other plan covers
employees and former employees of RJR.

The split of assets and liabilities of the old plan was in accordance with a
May 1999 agreement between the Pension Benefit Guaranty Corporation ("PBGC") and
RJR Nabisco Holdings Corp. (now known as NGH). Based on this agreement and as
required by Section 414(l) of the Internal Revenue Code, the assets of the old
plan were allocated in proportion to the benefit obligations of each of the
respective plans. The use of this methodology resulted in a lower actual net
transfer of assets to the Nabisco Plan of $69 million and assumption of higher
actual benefit obligations of $30 million than the allocated amounts used in the
December 31, 1998 consolidated financial statements. These amounts have been
reflected as transfers between other members of a controlled group in the
following disclosures. The impact of this change, an increase in the unfunded
pension liability of $99 million, will be recognized in net periodic benefit
costs over future periods. As a result, the 1999 net periodic benefit cost for
Nabisco increased by approximately $7 million. The PBGC agreement did not
require Nabisco to make additional contributions to the Nabisco Plan.

F-28
<PAGE>
NABISCO GROUP HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 16--RETIREMENT BENEFITS (CONTINUED)

<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
---------------------- ----------------------
DECEMBER 31, DECEMBER 31,
---------------------- ----------------------
IN MILLIONS 1999 1998 1999 1998
----------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at January 1........................... $1,693 $1,718 $ 460 $ 531
Service cost.............................................. 50 46 6 6
Interest cost............................................. 112 114 32 33
Plan amendments........................................... -- (6) -- --
Actuarial (gain) loss..................................... (206) (6) (31) (68)
Foreign currency translation.............................. 15 (15) 2 (2)
Benefits paid............................................. (158) (158) (44) (40)
Transfer from other members of controlled group........... 58 -- 4 --
------ ------ ------ ------
Obligations at December 31................................ 1,564 1,693 429 460
------ ------ ------ ------
CHANGE IN PLAN ASSETS
Fair value of plan assets at January 1.................... 1,576 1,568 -- --
Actual return on plan assets.............................. 247 141 -- --
Employer contributions.................................... 36 40 44 40
Plan participants' contributions.......................... 1 1 -- --
Foreign currency translation.............................. 17 (16) -- --
Benefits paid............................................. (158) (153) (44) (40)
Settlements............................................... -- (5) -- --
Transfer to other members of controlled group............. (69) -- -- --
------ ------ ------ ------
Fair value of plan assets at December 31.................. 1,650 1,576 -- --
------ ------ ------ ------
FUNDED STATUS
Funded status at December 31.............................. 86 (117) (429) (460)
Unrecognized transition asset............................. (1) (2) (2) (3)
Unrecognized prior service cost........................... 4 5 -- --
Unrecognized (gain) loss.................................. (189) 35 8 37
------ ------ ------ ------
Net amount recognized..................................... $ (100) $ (79) $ (423) $ (426)
====== ====== ====== ======
AMOUNTS RECOGNIZED IN THE CONSOLIDATED BALANCE SHEETS
Prepaid benefit cost...................................... $ 22 $ 19 $ -- $ --
Accrued benefit liability................................. (135) (112) (423) (426)
Intangible asset.......................................... 2 2 -- --
Accumulated other comprehensive income.................... 11 12 -- --
------ ------ ------ ------
Net amount recognized..................................... $ (100) $ (79) $ (423) $ (426)
====== ====== ====== ======
</TABLE>

F-29
<PAGE>
NABISCO GROUP HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 16--RETIREMENT BENEFITS (CONTINUED)
Plan assets consist primarily of a diversified portfolio of fixed-income
investments, debt and equity securities and cash equivalents. The projected
benefit obligation, accumulated benefit obligation, and fair value of plan
assets for the pension plans with accumulated benefit obligations in excess of
plan assets were as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
IN MILLIONS 1999 1998
----------- -------- --------
<S> <C> <C> <C> <C>
Projected benefit obligation................................ $67 $ 95
Accumulated benefit obligation.............................. $67 $ 92
Fair value of plan assets................................... $ 3 $ 40
</TABLE>

The components of net periodic benefit cost are as follows:

<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
------------------------------ --------------------------------------
YEARS ENDED DECEMBER 31, YEARS ENDED DECEMBER 31,
------------------------------ --------------------------------------
IN MILLIONS 1999 1998 1997 1999 1998 1997
----------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Service cost.................................. $ 50 $ 46 $ 39 $ 6 $ 6 $ 7
Employee contributions........................ (1) -- -- -- -- --
Interest cost................................. 112 114 116 32 33 36
Expected return on plan assets................ (133) (135) (129) -- -- --
Amortization of transition (asset)
obligation.................................. (1) (1) (1) (3) (2) (3)
Amortization of prior service cost............ 3 3 3 -- -- --
Amortization of net (gain) loss............... 1 (2) (2) 1 -- --
Settlement (gain) loss........................ -- 2 -- -- -- --
----- ----- ----- --- --- ---
Net periodic benefit cost..................... 31 27 26 $36 $37 $40
=== === ===
Multi-employer and defined contribution
plans....................................... 32 32 33
----- ----- -----
Total pension benefit cost.................... $ 63 $ 59 $ 59
===== ===== =====
</TABLE>

The principal plans used the following weighted average actuarial
assumptions for accounting purposes:

<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
------------------- -------------------
DECEMBER 31, DECEMBER 31,
------------------- -------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Discount rate.............................................. 7.9% 6.9% 8.0% 6.8%
Expected return on plan assets............................. 9.3% 9.3%
Rate of compensation increase.............................. 4.6% 4.7%
</TABLE>

The assumed health care cost trend rate was 5.5% in 1999 and 5% in 2000 and
thereafter. Assumed health care cost trend rates have a significant effect on
the amounts reported for the health

F-30
<PAGE>
NABISCO GROUP HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 16--RETIREMENT BENEFITS (CONTINUED)
care plan. A one-percentage-point change in the assumed health care cost trend
rates would have had the following impact on 1999 amounts:

<TABLE>
<CAPTION>
1-PERCENTAGE- 1-PERCENTAGE-
POINT POINT
IN MILLIONS INCREASE DECREASE
----------- ------------- -------------
<S> <C> <C>
Increase (decrease) in postretirement benefit cost.......... $ 3 $ (2)
Increase (decrease) in postretirement benefit obligation.... $ 31 $(27)
</TABLE>

NOTE 17--STOCKHOLDERS' EQUITY

The authorized capital stock of NGH consists of (a) 440,000,000 shares of
Common Stock, par value $.01 per share, of which 329,524,147 shares were issued
as of December 31, 1999, and (b) 150,000,000 shares of preferred stock, par
value $.01 per share, of which no shares have been issued.

NGH redeemed 12,044 shares of its Series B preferred stock on October 13,
1998, resulting in the redemption of 12,043,940 shares of its Series B
depositary shares at $25 per Series B depositary share plus accrued and unpaid
dividends. Each share of Series B preferred stock paid cash dividends of
$2,312.50 per share per annum until the shares were redeemed.

NGH and its subsidiaries sponsored a defined contribution plan in which
matching contributions to eligible employees were made in the form of ESOP
preferred stock. Every five shares of ESOP preferred stock was generally
convertible into one share of common stock of NGH, and was entitled to
cumulative dividends at 7.8125% of stated value per annum at least until
April 10, 1999, payable semi-annually in arrears. NGH matched $.50 for every
pre-tax dollar contributed by each eligible employee, up to a maximum of 6% of
the employee's pay. During 1999, 1998 and 1997, approximately $39 million, $28
million and $32 million, respectively, was contributed to the ESOP by NGH and
approximately $8 million, $17 million and $18 million, respectively, of ESOP
dividends were used to service the ESOP's debt to NGH that was incurred in
connection with the initial formation of the ESOP. On or about May 18, 1999 NGH
called for redemption of all of its outstanding ESOP convertible preferred stock
at $16.25 per share, plus accrued dividends. A total of 12,412,767 shares were
redeemed at a cost of approximately $202 million. NGH completed this transaction
on June 10, 1999. The 406,200 remaining shares were repurchased at $16.00 per
share.

STOCK PLANS

NGH's 1989 stock plan provides for grants of options to purchase common
stock of NGH to non-employee directors, directors and key employees. A maximum
of 6 million shares may be issued under this plan. The options granted under the
plan generally vest over three years, are separately exercisable for primarily
ten years from the date of grant and are exercisable at a price that is
generally the fair market value of the stock at the grant date.

NGH's 1990 long-term incentive plan ("LTIP") provides for grants of
incentive stock options, other stock options, stock appreciation rights,
restricted stock, purchase stock, dividend equivalent rights, performance units,
performance shares and other stock-based grants to key employees. A maximum of
33 million shares of common stock of NGH may be issued under the LTIP. The
options granted under the plan generally vest over three years, are exercisable
for 10-15 years from date of grant, and are exercisable at a price that is
generally the fair market value of the stock at the grant

F-31
<PAGE>
NABISCO GROUP HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 17--STOCKHOLDERS' EQUITY (CONTINUED)
date. As of December 31, 1999, purchase stock, stock options other than
incentive stock options, restricted stock and other stock-based grants have been
granted under the LTIP.

Nabisco Holdings' 1994 long-term incentive plan is similar to the LTIP
except that stock-based awards are denominated in shares of Class A common stock
of Nabisco Holdings.

As of December 31, 1999, 10,658,210 shares were available for future grants
under NGH's stock plans. The changes in stock options under the stock plans were
as follows:

<TABLE>
<CAPTION>
1999 1998 1997
-------------------- -------------------- --------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
OPTIONS IN THOUSANDS OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE
-------------------- -------- --------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of year........... 17,490 $29.72 17,378 $29.54 17,783 $29.54
Granted................................ 2,618 22.20 657 35.78 590 32.37
Exercised.............................. (1,144) 25.36 (271) 26.37 (396) 25.81
Cancelled.............................. (48) 28.16 (274) 35.87 (599) 34.68
Distribution adjustment................ 1,290
------ ------- -------
Balance at end of year................. 20,206 $19.53 17,490 $29.72 17,378 $29.54
====== ======= =======
Exercisable at end of year............. 16,855 $19.39 15,394 $29.05 5,684 $31.09
====== ======= =======
</TABLE>

On June 15, 1999, as a result of the distribution to shareholders, options
held by employees to purchase RJR Nabisco Holdings Corp.'s common stock
(17,065,066 options) were equitably adjusted into options covering NGH shares
(18,354,932 options) and options covering RJR shares (5,456,114 options) in a
manner intended to preserve the aggregate benefits under the options.

As of December 31, 1999, 9,108,434 shares of Class A common stock were
available for future grants under Nabisco Holdings' stock plans. Outstanding
stock options have exercise prices from $24.50 to $52.88 per share and a
weighted-average remaining contractual life of 8.7 years. The changes in stock
options under the stock plan were as follows:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------
1999 1998 1997
-------------------- -------------------- --------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
OPTIONS IN THOUSANDS OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE
-------------------- -------- --------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of year........... 15,514 $32.75 14,160 $30.15 11,728 $28.57
Granted................................ 3,604 42.61 2,831 45.51 2,759 37.22
Exercised.............................. (278) 28.89 (833) 27.50 -- --
Cancelled.............................. (528) 42.62 (644) 38.59 (327) 33.13
------ ------- -------
Balance at end of year................. 18,312 $34.46 15,514 $32.75 14,160 $30.15
====== ======= =======
Exercisable at end of year............. 10,222 $28.52 7,806 $26.67 --
====== ======= =======
</TABLE>

F-32
<PAGE>
NABISCO GROUP HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 17--STOCKHOLDERS' EQUITY (CONTINUED)

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
-------------------------------------------------
OPTIONS IN THOUSANDS, LIFE IN YEARS NUMBER WEIGHTED-AVERAGE
----------------------------------- OUTSTANDING REMAINING WEIGHTED-AVERAGE
RANGE OF EXERCISE PRICES AT 12/31/99 CONTRACTUAL LIFE EXERCISE PRICE
------------------------ ----------- ---------------- ----------------
<S> <C> <C> <C>
$15.50 - $17.35.................................... 6,436 10.3 $17.34
$17.63 - $19.76.................................... 5,721 9.3 18.37
$21.13 - $22.25.................................... 3,342 8.8 20.40
$22.41 - $33.73.................................... 4,707 6.6 23.33
------
20,206 8.9 $19.53
======
</TABLE>

NGH and its subsidiaries recognize and measure compensation costs related to
employee stock plans utilizing the intrinsic value based method. Had
compensation expense been determined based upon the fair value of awards granted
during 1999, 1998 and 1997, NGH's results would have been as follows:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------
1999 1998 1997
--------------------- --------------------- ---------------------
AS AS AS
REPORTED PRO FORMA REPORTED PRO FORMA REPORTED PRO FORMA
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net income (loss) (in millions)... $2,968 $2,944 $ (577) $ (602) $ 381 $ 354
Net income (loss) per
share--basic.................... $ 9.11 $ 9.04 $(1.91) $(1.98) $1.05 $ 0.96
Net income (loss) per
share--diluted.................. $ 9.10 $ 9.02 $(1.91) $(1.98) $1.03 $ 0.94
Weighted-average fair value of
options granted during the year:
NGH............................. -- $ 6.65 -- $ 7.33 -- $ 6.79
Nabisco Holdings................ -- $13.17 -- $14.27 -- $12.55
</TABLE>

Had compensation expense been determined based upon the fair value of awards
granted to employees of NGH's continuing businesses, results from continuing
operations would have been as follows:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------
1999 1998 1997
------------------- ------------------- -------------------
AS PRO AS PRO AS PRO
IN MILLIONS, EXCEPT PER SHARE AMOUNTS REPORTED FORMA REPORTED FORMA REPORTED FORMA
------------------------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net income (loss) from continuing
operations............................... $ 255 $ 237 $ (118) $ (133) $ 295 $ 280
Net income (loss) per share from continuing
operations--basic........................ $ .76 $ .70 $ (.49) $ (.53) $ .78 $ .73
Net income (loss) per share from continuing
operations--diluted...................... $ .75 $ .70 $ (.49) $ (.53) $ .76 $ .72
</TABLE>

For the years ended December 31, 1998 and 1997, all options granted to
employees of NGH's continuing businesses were granted under Nabisco Holdings'
stock plans.

F-33
<PAGE>
NABISCO GROUP HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 17--STOCKHOLDERS' EQUITY (CONTINUED)
For options granted, fair value was determined using the Black-Scholes
option pricing model with the following weighted-average assumptions:

<TABLE>
<CAPTION>
1999 1998 1997
------------------- ------------------- -------------------
NABISCO NABISCO NABISCO
NGH HOLDINGS NGH HOLDINGS NGH HOLDINGS
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Dividend yield.................................. 3.7% 1.9% 5.8% 1.7% 5.8% 1.7%
Expected volatility............................. 34% 26% 31% 23% 31% 23%
Risk-free interest rate......................... 5.7% 5.1% 5.8% 5.7% 6.4% 6.6%
Expected option life (years).................... 7 7 5 7 5 7
</TABLE>

In 1998, NGH granted 954,600 shares of restricted stock to eligible
employees, net of forfeitures. During 1999, 40,500 shares were forfeited and
529,100 shares were vested in connection with the June 1999 distribution to
shareholders. The market price of the stock at the date of grant was charged to
stockholders' equity as unearned compensation. The weighted-average grant-date
fair value for the restricted stock granted in 1998 was $34.42 per share.
Compensation expense of approximately $28 million and $6 million was recorded in
1999 and 1998, respectively, and was reflected in operations of discontinued
businesses. Restrictions on the stock lapse as follows: 2003 -- 185,000 shares
and 2006 -- 200,000 shares. The unvested portion remaining in stockholders'
equity at December 31, 1999 was $6 million.

NOTE 18--SEGMENT INFORMATION

OPERATING SEGMENT DATA

NGH is a holding company whose majority-owned subsidiaries are engaged in
the manufacture, distribution and sale of cookies, crackers, and other food
products. NGH is organized and reports its results of operations in three
business segments: Nabisco Biscuit, the U.S. Foods Group and the International
Food Group which are segregated by both product and geographic area.

The Company evaluates performance and allocates resources based on ongoing
operating company contribution ("OCC"). Ongoing OCC for each reportable segment
is operating income before amortization of intangibles and exclusive of
restructuring charges and credits, restructuring-related expenses, and net gains
on divested food businesses. The accounting policies of the segments are the
same as those described in Note 1.

Nabisco Biscuit manufacturers and markets cookies and crackers in the United
States. Its products are sold to major grocery and other large retail chains
through its own direct store delivery system. The U.S. Foods Group represents
other food operations in the United States and manufactures and markets sauces
and condiments, pet snacks, hot cereals, dry mix desserts, gelatins,
non-chocolate candy, gum, nuts and salty snacks. 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 International
Food Group conducts Nabisco's international operations, outside the United
States, primarily in markets in Latin America, Canada, certain markets in
Europe, the Middle East, Africa and Asia. The International Food Group primarily
produces and markets biscuits, powdered dessert and dry mixes, baking powder,
pasta, juices, milk products and other grocery items.

F-34
<PAGE>
NABISCO GROUP HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 18--SEGMENT INFORMATION (CONTINUED)
One of Nabisco's customers 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. Sales to this customer are included in the net sales
amount for each of our business segments.

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
IN MILLIONS 1999 1998 1997
----------- -------- -------- --------
<S> <C> <C> <C>
Net sales from external customers:
Biscuit................................................... $ 3,640 $ 3,542 $ 3,545
U.S. Foods Group.......................................... 2,246 2,047 1,988
International Food Group.................................. 2,382 2,513 2,569
------- ------- -------
Total ongoing........................................... 8,268 8,102 8,102
------- ------- -------
U.S. Foods Group.......................................... -- 287 616
International Food Group.................................. -- 11 16
------- ------- -------
Total divested.......................................... -- 298 632
------- ------- -------
Total................................................. $ 8,268 $ 8,400 $ 8,734
======= ======= =======
Segment operating company contribution
Biscuit................................................... $ 557 $ 542 $ 691
U.S. Foods Group.......................................... 338 301 281
International Food Group.................................. 200 205 236
Other..................................................... (4) 2 7
------- ------- -------
Total ongoing........................................... 1,091 1,050 1,215
------- ------- -------
U.S. Foods Group.......................................... -- 38 97
International Food Group.................................. -- 1 2
------- ------- -------
Total divested.......................................... -- 39 99
------- ------- -------
Total segment operating company contribution................ 1,091 1,089 1,314
Restructuring-related expenses.............................. 76 56 31
Net gain on divested businesses............................. -- (14) (32)
Amortization of trademarks and goodwill..................... 213 221 226
Restructuring charge (credit)............................... (67) 530 --
------- ------- -------
Consolidated operating income............................... 869 296 1,089
Interest and debt expense................................... 324 401 421
Other expense, net.......................................... 19 29 32
------- ------- -------
Income (loss) before income taxes........................... $ 526 $ (134) $ 636
======= ======= =======
</TABLE>

F-35
<PAGE>
NABISCO GROUP HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 18--SEGMENT INFORMATION (CONTINUED)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
IN MILLIONS 1999 1998 1997
----------- -------- -------- --------
<S> <C> <C> <C>
Depreciation:
Nabisco Biscuit........................................... $ 146 $ 146 $ 148
U.S. Food Group........................................... 42 46 49
International Food Group.................................. 77 81 80
------- ------- -------
Total..................................................... $ 265 $ 273 $ 277
======= ======= =======
</TABLE>

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
IN MILLIONS 1999 1998 1997
----------- -------- -------- --------
<S> <C> <C> <C>
Capital expenditures:
Nabisco Biscuit........................................... $ 128 $ 188 $ 206
U.S. Food Group........................................... 42 49 64
International Food Group.................................. 71 103 122
------- ------- ------
Total..................................................... $ 241 $ 340 $ 392
======= ======= ======

<CAPTION>
DECEMBER 31,
-------------------
IN MILLIONS 1999 1998
----------- -------- --------
Segment assets:
<S> <C> <C> <C>
Nabisco Biscuit........................................... $ 2,170 $ 2,124
U.S. Foods Group.......................................... 1,506 840
International Food Group.................................. 2,644 2,579
Corporate................................................. 254 32
------- -------
Total Segment Assets...................................... 6,574 5,575
Unallocated intangibles, net (1).......................... 5,387 5,574
Net assets of discontinued businesses..................... -- 6,696
------- -------
Consolidated assets....................................... $11,961 $17,845
======= =======
</TABLE>

GEOGRAPHIC SEGMENT INFORMATION

<TABLE>
<CAPTION>
NET SALES NET PROPERTY
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ -------------------
IN MILLIONS 1999 1998 1997 1999 1998
----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
United States....................................... $5,886 $5,876 $6,149 $2,190 $2,023
Latin America....................................... 1,249 1,428 1,438 499 550
Other............................................... 1,133 1,096 1,147 400 374
------ ------ ------ ------ ------
$8,268 $8,400 $8,734 $3,089 $2,947
====== ====== ====== ====== ======
</TABLE>

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

(1) Represents unallocated goodwill, trademarks and tradename resulting from the
1989 acquisition of Nabisco Holdings' parent company.

F-36
<PAGE>
NABISCO GROUP HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 19--QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The following is a summary of 1999 and 1998 quarterly results of operations
and per share data for NGH:

<S> <C> <C> <C> <C>
IN MILLIONS, EXCEPT PER SHARE AMOUNTS FIRST SECOND THIRD FOURTH
--------------------------------------------------------- ------- ------- ------- -------
1999(1)
Net sales.............................................. $ 1,855 $ 2,023 $ 2,057 $ 2,333
Gross profit........................................... 828 934 924 1,080
Operating income....................................... 134 177 250 308
Income from continuing operations...................... 10 38 94 113
Income from discontinued operations, net of income
taxes................................................ 66 2,928 -- --
Income before extraordinary item....................... 76 2,966 94 113
Net income............................................. 76 2,687 92 113
PER SHARE DATA:
Net income per share - basic:
Continuing operations................................ $ .02 $ .10 $ .29 $ .35
Discontinued operations.............................. .20 9.01 -- --
Net income............................................. .22 8.25 .28 .35
Net income per share - diluted:
Continuing operations................................ .02 .10 .29 .35
Discontinued operations.............................. .20 9.01 -- --
Net income............................................. .22 8.25 .28 .35
Dividends declared..................................... .5125 .5125 .1225 .1225
Market price
High................................................. 30 7/8 33 9/16 20 13/16 15 3/4
Low.................................................. 25 19 5/16 14 11/16 9 3/4
</TABLE>

<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
-------- -------- -------- --------
<S> <C> <C> <C> <C>
1998(2)
Net sales.............................................. $ 1,962 $ 2,131 $ 2,098 $ 2,209
Gross profit........................................... 837 944 932 1,004
Operating income (loss)................................ 183 (210) 185 138
Income (loss) from continuing operations............... 32 (177) 32 (5)
Income (loss) from discontinued operations, net of
income taxes......................................... (52) 47 126 (580)
Net income (loss)...................................... (20) (130) 158 (585)
PER SHARE DATA:
Net income (loss) per share - basic:
Continuing operations................................ $ .06 $ (.58) $ .06 $ (.04)
Discontinued operations.............................. (.16) .14 .39 (1.79)
Net income (loss)...................................... (.10) (.44) .45 (1.83)
Net income (loss) per share - diluted:
Continuing operations................................ .06 (.58) .06 (.04)
Discontinued operations.............................. (.16) .14 .39 (1.79)
Net income (loss)...................................... (.10) (.44) .45 (1.83)
Dividends declared..................................... .5125 .5125 .5125 .5125
Market price
High................................................. 38 1/16 31 5/16 27 3/8 31 15/16
Low.................................................. 30 23 1/2 21 5/16 24
</TABLE>

F-37
<PAGE>
NABISCO GROUP HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 19--QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) (CONTINUED)
------------------------

(1) The first quarter of 1999 includes $15 million ($7 million after tax, net of
minority interest or $.02 per share) of restructuring related expenses.

The second quarter of 1999 includes $19 million ($9 million after tax, net
of minority interest or $.03 per share) of restructuring related expenses
and a $279 million after-tax extraordinary loss on the early extinguishment
of debt.

The third quarter of 1999 includes $12 million ($6 million after tax, net of
minority interest or $.02 per share) of restructuring related expenses, a
credit of $59 million ($35 million after tax, net of minority interest or
$.11 per share) applicable to the June and December 1998 restructuring
programs and an extraordinary loss on the early extinguishment of debt of
$2 million after tax, net of minority interest.

The fourth quarter of 1999 includes $30 million ($15 million after tax, net
of minority interest or $.04 per share) of restructuring related expenses
and a credit of $8 million ($4 million after tax, net of minority interest
or $.01 per share) applicable to the June and December 1998 restructuring
programs.

(2) The second quarter of 1998 includes a $406 million ($216 million after tax,
net of minority interest or $.67 per share) restructuring charge and
$6 million ($3 million after tax, net of minority interest or $.01 per
share) of restructuring related expenses.

The third quarter of 1998 includes a net gain of $14 million ($1 million
after tax, net of minority interest) from divestitures and $15 million
($7 million after tax, net of minority interest or $.02 per share) of
restructuring related expenses.

The fourth quarter of 1998 includes a $124 million ($75 million after tax,
net of minority interest or $.23 per share) restructuring charge and
$35 million ($17 million after tax, net of minority interest or $.06 per
share) of restructuring related expenses.

F-38
<PAGE>
NABISCO GROUP HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 20--SUBSEQUENT EVENTS (UNAUDITED)

JOINT VENTURE

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
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.

STOCKHOLDER RIGHTS PLAN

F-39
<PAGE>
SCHEDULE I

NABISCO GROUP HOLDINGS CORP.
SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31 1999 1998 1997
----------------------- -------- -------- --------
<S> <C> <C> <C>
Interest and debt expense................................... $ (65) $(108) $ (98)
Other income (expense), net................................. 7 2 7
------ ----- -----
Loss before income taxes................................ (58) (106) (91)
Benefit for income taxes.................................... (21) (42) (36)
------ ----- -----
Loss before equity in income (loss) from subsidiaries... (37) (64) (55)
Equity in income (loss) from subsidiaries, net of income
taxes..................................................... 3,286 (513) 457
------ ----- -----
Income (loss) before extraordinary item................. 3,249 (577) 402
Extraordinary item--loss on early extinguishment of debt of
subsidiary,
net of income taxes....................................... (281) -- (21)
------ ----- -----
NET INCOME (LOSS)........................................... 2,968 (577) 381
------ ----- -----

Other comprehensive income (loss):
Cumulative translation adjustment......................... (84) (56) (158)
Recognition of Reynolds International cumulative
translation adjustment upon sale........................ 218 -- --
Recognition of RJR's minimum pension liability adjustment
upon distribution of RJR Stock.......................... 6 -- --
Minimum pension liability adjustment...................... 1 4 (15)
------ ----- -----
Other comprehensive income (loss) before income taxes....... 141 (52) (173)
Provision (benefit) for income taxes...................... 1 (5) 7
------ ----- -----

OTHER COMPREHENSIVE INCOME (LOSS) NET OF INCOME TAX......... 140 (47) (180)
------ ----- -----

COMPREHENSIVE INCOME (LOSS)................................. $3,108 $(624) $ 201
====== ===== =====
</TABLE>

SEE NOTES TO CONDENSED FINANCIAL INFORMATION.

S-1
<PAGE>
SCHEDULE I

NABISCO GROUP HOLDINGS CORP.
SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED STATEMENTS OF CASH FLOWS
(DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31 1999 1998 1997
----------------------- -------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:

Net income (loss)......................................... $2,968 $ (577) $ 381
------ ------ ------
Adjustments to reconcile net income (loss) to net cash
flows from operating activities:
Deferred income tax provision (benefit)................. 37 -- 1
Extraordinary items..................................... 281 -- 43
Equity in income (loss) from subsidiaries, net of income
taxes................................................. (3,286) 513 (457)
Dividends received from subsidiary...................... 471 607 834
Other, net.............................................. (15) (20) 16
------ ------ ------
Total adjustments................................... (2,512) 1,100 437
------ ------ ------
Net cash flows from operating activities................ 456 523 818
------ ------ ------
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Purchase of investments, net of maturities................ (107) -- --
------ ------ ------
Net cash flows used in investing activities............. (107) -- --
------ ------ ------
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Repurchase of ESOP preferred stock........................ (202) -- --
Redemption of Trust preferred certificates................ (1,265) -- --
Dividends paid on common and preferred stock.............. (595) (706) (721)

Proceeds from issuance of junior subordinated
debentures.............................................. -- 385 --
Redemption of Series B preferred stock.................... -- (301) --
Other, net--primarily intercompany transfers and
payments................................................ 1,856 100 (98)
------ ------ ------
Net cash flows used in financing activities............... (206) (522) (819)
------ ------ ------
Net change in cash and cash equivalents................... 143 1 (1)
Cash and cash equivalents at beginning of period............ 1 -- 1
------ ------ ------
Cash and cash equivalents at end of period.................. $ 144 $ 1 $ --
====== ====== ======
</TABLE>

SEE NOTES TO CONDENSED FINANCIAL INFORMATION.

S-2
<PAGE>
SCHEDULE I

NABISCO GROUP HOLDINGS CORP.

SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF REGISTRANT

CONDENSED BALANCE SHEETS

(DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
DECEMBER 31 1999 1998
----------- -------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 144 $ 1
Short-term investments.................................... 6 --
Accounts receivable, net.................................. 40 16
------ ------
TOTAL CURRENT ASSETS.................................. 190 17
------ ------
Investment in subsidiaries.................................. 3,173 9,937
Other assets................................................ 106 12
------ ------
$3,469 $9,966
====== ======

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities.................. $ 78 $ 191
Income taxes accrued...................................... 5 7
------ ------
TOTAL CURRENT LIABILITIES............................. 83 198
------ ------
Intercompany (receivable) payable, net...................... (1) 322
Other noncurrent liabilities................................ 24 --
Deferred income taxes....................................... 101 64
Junior subordinated debentures.............................. 101 1,368
Commitments and contingencies (Note C)
Stockholders' equity:
Preferred stock........................................... -- 205
Common stock--(1999--329,524,147 shares issued,
1998--328,385,148 shares issued......................... 3 3
Paid-in capital........................................... 3,459 9,004
Retained earnings (accumulated deficit)................... 125 (577)
Accumulated other comprehensive income:
Cumulative translation adjustment....................... (314) (441)
Minimum pension liability............................... (6) (19)
------ ------
Accumulated other comprehensive income.................. (320) (460)
------ ------
Treasury stock, at cost................................... (100) (100)
Other stockholders' equity................................ (6) (61)
------ ------
TOTAL STOCKHOLDERS' EQUITY............................ 3,161 8,014
------ ------
$3,469 $9,966
====== ======
</TABLE>

SEE NOTES TO CONDENSED FINANCIAL INFORMATION.

S-3
<PAGE>
SCHEDULE I

NABISCO GROUP HOLDINGS CORP.

SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF REGISTRANT

NOTES TO CONDENSED FINANCIAL INFORMATION

NOTE A--BASIS OF PRESENTATION

Certain prior years' amounts have been reclassified to conform to the 1999
presentation.

See Note 2 to the consolidated financial statements regarding the sale by
NGH and RJR of the international tobacco business and the separation of the
domestic tobacco and food businesses.

NOTE B--JUNIOR SUBORDINATED DEBENTURES

See Note 11 to the consolidated financial statements for information
regarding the issuance of the junior subordinated debentures.

NGH's obligations under the junior subordinated debentures are unsecured and
subordinate to all senior indebtedness of NGH, but junior to all future stock
issuances and stock guarantees. As of December 31, 1999, Nabisco Group Holdings
had no senior indebtedness. Nabisco Group Holdings guarantees all distributions
made by its subsidiary trusts, subordinate to any distributions to any senior
debenture holders and junior subordinated debenture holders.

Interest on the junior subordinated debentures is payable quarterly in
arrears. The junior subordinated debentures may be redeemed by NGH on or after
September 30, 2003 and mature in September 2047. Covenants applicable to the
junior subordinated debentures limit NGH ability to enter into certain capital
stock transactions, among other things, if NGH is in default of any payments or
guarantees with respect to the junior subordinated debentures.

NOTES C--CONTINGENCIES

For disclosure of additional contingent liabilities, see Note 12 to the
Consolidated Financial Statements.

S-4
<PAGE>
SCHEDULE II

NABISCO GROUP HOLDINGS CORP.
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- ----------- --------------------------- ------------ -----------
(ADDITIONS)
---------------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
----------- ----------- ------------ ------------ ------------ -----------
(A)
<S> <C> <C> <C> <C> <C>
1999:
Allowances deducted from related
balance sheet accounts:
Accounts receivable.............. $ 29 $34 -- $ 11 $ 52
Inventory........................ 19 18 -- 11 26
Property, plant & equipment...... 29 14 -- 17 26
Current deferred income taxes.... 5 -- -- -- 5
Non-current deferred income
taxes.......................... 83 13 -- 11 85
---- --- ---------- ---- ----
$165 $79 $ -- $ 50 $194
==== === ========== ==== ====

1998:
Allowances deducted from related
balance sheet accounts:
Accounts receivable.............. $ 26 $17 -- $ 14 $ 29
Inventory........................ 23 18 -- 22 19
Property, plant & equipment...... 40 20 -- 31 29
Current deferred income taxes.... 6 -- -- 1 5
Non-current deferred income
taxes.......................... 77 6 -- -- 83
---- --- ---------- ---- ----
$172 $61 $ -- $ 68 $165
==== === ========== ==== ====

1997:
Allowances deducted from related
balance sheet accounts:
Accounts receivable.............. $ 31 $11 -- $ 16 $ 26
Inventory........................ 25 20 -- 22 23
Property, plant & equipment...... 85 15 -- 60 40
Current deferred income taxes.... 6 -- -- -- 6
Non-current deferred income
taxes.......................... 83 -- -- 6 77
---- --- ---------- ---- ----
$230 $46 $ -- $104 $172
==== === ========== ==== ====
</TABLE>

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

Notes:

1999 and 1998 amounts exclude activity related to the 1998 restructuring
programs disclosed in NGH's 1999 Form 10-K, Note 4 to the Consolidated Financial
Statements-Operations.

(A) Represents charges for which allowances were created.

S-5
<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO.
-----------
<C> <S>
2.1 Certificate of Ownership and Merger merging Nabisco Group
Holdings Corp. into RJR Nabisco Holdings Corp. filed
June 14, 1999 (incorporated by reference to Exhibit 2.1 of
the Registrant's Quarterly Report on Form 10-Q for the
fiscal quarter ended June 30, 1999 (the "Second Quarter 1999
10-Q")).

2.1(a) Certificate and Plan of Merger dated as of June 14, 1999
between RJR Nabisco Holdings Corp. and Nabisco Group
Holdings Corp. (incorporated by reference to Exhibit 2.1 of
the Registrant's Form 8-K filed on June 16, 1999).

3.1(a) Restated Certificate of Incorporation of Nabisco Group
Holdings Corp. dated June 16, 1999 (incorporated by
reference to Exhibit 3.1 of the Second Quarter 1999 10-Q).

3.1(b) Certificate of Designation of Series A Participating
Cumulative Preferred Stock of Nabisco Group Holdings Corp.
(incorporated by reference to Exhibit 3.1(b) to Annual
Report on Form 10-K of Nabisco Group Holdings Corp. for the
fiscal year ended December 31, 1999, filed March 21, 2000
(the "1999 NGH Form 10-K")).

3.2 Amended By-Laws of Nabisco Group Holdings Corp. as amended
effective January 1, 2000 (incorporated by reference to
Exhibit 3.2 to the 1999 NGH Form 10-K).

4.1 Indenture (the "TOPrS Indenture"), dated as of September 21,
1995, between RJR Nabisco Holdings Corp. and the Bank of New
York (incorporated by reference to Exhibit 4.1 to the
Registration Statement on Form S-4 of RJR Nabisco Holdings
Corp. and RJR Nabisco Holdings Capital Trust I, Registration
Nos. 33-60415 and 33-60415-01, filed
June 20, 1995 (the "TOPrS Registration Statement")).

4.2 Form of Second Supplemental Indenture to the TOPrS Indenture
(incorporated by reference to Exhibit 4.3 to the
Registration Statement on Form S-3 of RJR Nabisco Holdings
Corp. and RJR Nabisco Holdings Capital Trusts II-IV, File
No. 333-60811, filed on August 6, 1998 (the "TOPrS II-VI
Registration Statement")).

4.3 Form of Amended and Restated Declaration of Trust of RJR
Nabisco Holdings Capital Trust II (incorporated by reference
to Exhibit 4.5 to the TOPrS II-VI Registration Statement).

4.4 Form of Preferred Security of RJR Nabisco Holdings Capital
Trust II (included in
Exhibit 4.3 above).

4.5 Form of Junior Subordinated Debenture (included in Exhibit
4.2 above).

4.6 Form of Guarantee Agreement with respect to Preferred
Securities between RJR Nabisco Holdings Corp. and the Bank
of New York as the Guarantee Trustee (incorporated by
reference to Exhibit 4.15 to the TOPrS II-VI Registration
Statement).

4.7 Indenture, dated as of June 5, 1995, between Nabisco, Inc.
and Citibank, N.A., (incorporated by reference to Exhibit
4.1 to Amendment No. 1 to the Registration Statement on Form
S-4 of Nabisco, Inc., Registration No. 33-90224, filed March
29, 1995).

4.8 The Registrant agrees to furnish copies of any instrument
defining the rights of holders of long-term debt of the
Registrant and its consolidated subsidiaries that does not
exceed 10 percent of the total assets of the Registrant and
its consolidated subsidiaries to the Commission upon
request.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO.
-----------
<C> <S>
4.9 Rights Agreement dated as of March 13, 2000 between Nabisco
Group Holdings Corp. and EquiServe Trust Company, N.A., as
Rights Agent (incorporated by reference to Exhibit 1 to the
Registration Statement on Form 8-A of Nabisco Group Holdings
Corp. filed on March 20, 2000).

10.1 Nabisco Group Holdings Corp. 1990 Long Term Incentive Plan
as Amended and Restated effective June 15, 1999
(incorporated by reference to Exhibit 10.1 on Form 10-Q of
RJR Nabisco Holdings Corp. and RJR Nabisco, Inc. for the
fiscal quarter ended June 30, 1999 (the "Second Quarter
1999 10-Q")).

10.2 Form of Stock Option Agreement between Nabisco Group
Holdings Corp. and the Executives named therein, dated July
14, 1999 (incorporated by reference to Exhibit 10.1 on
Form 10-Q of RJR Nabisco Holdings Corp. and RJR Nabisco,
Inc. for the fiscal quarter ended September 30, 1999 (the
"Third Quarter 1999 10-Q")).

10.3(a) Credit Agreement (the "Revolving Credit Agreement"), dated
as of October 31, 1996, among Nabisco Holdings Corp.,
Nabisco, Inc. and the lending institutions parties thereto
(incorporated by reference to Exhibit 10.1 to Annual Report
on Form 10-K of Nabisco Holdings Corp. and Nabisco, Inc. for
the fiscal year ended December 31, 1996, filed March 10,
1997 (the "1996 Nabisco Form 10-K")).

10.3(b) Credit Agreement (the "364 Day Facility"), dated as of
October 31, 1996, as amended as of October 28, 1999, among
Nabisco Holdings Corp., Nabisco, Inc. and the lending
institutions parties thereto (incorporated by reference to
Exhibit 10.2 of the Annual Report on Form 10-K of Nabisco
Holdings Corp. and Nabisco, Inc. for the fiscal year ended
December 31, 1999 (the "1999 Nabisco Form 10-K")).

10.3(c) First Amendment to the Revolving Credit Agreement and Second
Amendment to the 364 Day Facility, dated May 19, 1998, among
Nabisco Holdings Corp., Nabisco, Inc. and the lending
institutions parties thereto (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 June 30, 1998, filed August 14, 1998 (the "June 1998
Nabisco Form 10-Q")).

10.3(d) Second Amendment to the Revolving Credit Agreement and
Fourth Amendment to the 364 Day Facility, dated April 25,
1999, among Nabisco Holdings Corp., Nabisco, Inc. and the
lending institutions parties thereto (incorporated by
reference to the 1999 Nabisco Form 10-K).

10.3(e) Third Amendment to the Revolving Credit Agreement, dated
October 28, 1999, among Nabisco Holdings Corp., Nabisco,
Inc. and the lending institutions parties thereto
(incorporated by reference to the 1999 Nabisco Form 10-K).

10.4 Tax Sharing Agreement dated as of June 14, 1999 among RJR
Nabisco Holdings Corp., R.J. Reynolds Tobacco Holdings,
Inc., R.J. Reynolds Tobacco Company and Nabisco Holdings
Corp. (incorporated by reference to Exhibit 10.1 to
Form 8-K of Nabisco Group Holdings Corp. filed on June 16,
1999).

10.5 Corporate Agreement dated as of June 14, 1999 among RJR
Nabisco Holdings Corp., Nabisco Holdings Corp., and
R.J. Reynolds Tobacco Holdings, Inc. (incorporated by
reference to Exhibit 10.2 to Form 8-K of Nabisco Group
Holdings Corp. filed on June 16, 1999).

10.6 Intercompany Services Agreement dated as of June 14, 1999
among RJR Nabisco Holdings Corp., Nabisco Holdings Corp.,
and R.J. Reynolds Holdings Inc. (incorporated by reference
to Exhibit 10.3 to Form 8-K of Nabisco Group Holdings Corp.
filed on June 16, 1999).
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO.
-----------
<C> <S>
10.7 Third Supplemental Indenture and Waiver dated as of May 18,
1999 between RJR Nabisco Holdings Corp. and The Bank of New
York, to the Indenture dated as of September 21, 1995
between RJR Nabisco Holdings Corp. and The Bank of New York,
as supplemented by the First Supplemental Indenture thereto
dated as of September 21, 1995 and the Second Supplemental
Indenture thereto dated as of September 16, 1998
(incorporated by reference to Exhibit 10.4 to Form 8-K of
Nabisco Group Holdings Corp. filed on June 16, 1999).

10.8 Purchase Agreement dated March 9, 1999 among R.J. Reynolds
Tobacco Company, RJR Nabisco, Inc. and Japan Tobacco Inc.
(incorporated by reference to Exhibit 2.1 on Form 8-K of RJR
Nabisco Holdings Corp. and R.J. Reynolds Tobacco Holdings,
Inc. dated May 12, 1999 and filed on May 28, 1999).

10.9 RJR Nabisco, Inc. Annual Incentive Award Plan, as amended
and restated effective January 1, 1997 (incorporated by
reference to Exhibit 10.2 of the Third Quarter 1997 Form
10-Q).

10.10 RJR Nabisco Holdings Corp. 1990 Long Term Incentive Plan as
amended and restated effective April 16, 1997 (incorporated
by reference to Exhibit 10.1 of the Second Quarter 1997 Form
10-Q).

10.11 Form of Deferred Stock Unit Agreement between RJR Nabisco
Holdings Corp. and the Director named therein dated as of
April 16, 1997 (incorporated by reference to
Exhibit 10.2 of the Second Quarter 1997 Form 10-Q).

10.12 Form of Deferred Stock Unit Agreement, dated May 13, 1998,
between various unnamed grantees and RJR Nabisco Holdings
Corp. in connection with the Equity Incentive Award Plan for
Directors and Key Employees of RJR Nabisco Holdings Corp.
and Subsidiaries (incorporated by reference to Exhibit 10.4
to the Second Quarter 1998 Form 10-Q).

10.13 Form of Stock Option Agreement, dated May 13, 1998, between
various unnamed optionees and RJR Nabisco Holdings Corp. in
connection with the Equity Incentive Award Plan for
Directors and Key Employees of RJR Nabisco Holdings Corp.
and Subsidiaries (incorporated by reference to Exhibit 10.5
to the Second Quarter 1998 Form 10-Q).

10.14 Retention Trust Agreement, dated May 13, 1998 by and between
RJR Nabisco, Inc. and Wachovia Bank, N.A. (incorporated by
reference to Exhibit 10.6 to the Second Quarter 1998 Form
10-Q).

10.15 Form of Non-Qualified Stock Option Agreement between RJR
Nabisco Holdings Corp. and the Director named therein dated
as of April 16, 1997 (incorporated by reference to Exhibit
10.3 of the Second Quarter 1997 Form 10-Q).

10.16 Form of Performance Unit Agreement between RJR Nabisco
Holdings Corp. and the grantee named therein (1997 grant-1
year period) dated as of February 28, 1997 (incorporated by
reference to Exhibit 10.4 of the Second Quarter 1997 Form
10-Q).

10.17 Form of Performance Unit Agreement between RJR Nabisco
Holdings Corp. and the grantee named therein (1998 grant--1
year period) dated as of February 6, 1998 (incorporated by
reference to Exhibit 10.3 to the Registrant's Quarterly
Report on Form 10-Q for the fiscal quarter ended March 31,
1998, filed May 15, 1998 (the "First Quarter 1998 Form
10-Q")).

10.18 Form of Restricted Stock Unit Agreement between RJR Nabisco
Holdings Corp. and the grantee named therein dated as of
June 16, 1997 (incorporated by reference to Exhibit 10.5 of
the Second Quarter 1997 Form 10-Q).
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO.
-----------
<C> <S>
10.19 Intentionally left blank

10.20 Form of Performance Appreciation Right Agreement between RJR
Nabisco Holdings Corp. and the grantee named therein
(incorporated by reference to Exhibit 10.2 of the First
Quarter 1997 Form 10-Q).

10.21 Form of Performance Appreciation Right Agreement between RJR
Nabisco Holdings Corp. and the grantee named therein (1998
Grant) (incorporated by reference to Exhibit 10.8 to the
First Quarter 1998 Form 10-Q).

10.22 Restricted Stock Unit Agreement dated March 24, 1997 between
RJR Nabisco Holdings Corp. and David B. Rickard
(incorporated by reference to Exhibit 10.3 of the First
Quarter 1997 Form 10-Q).

10.23 Form of Performance Unit Agreement between RJR Nabisco
Holdings Corp. and the grantee named therein (1996;
three-year period) (incorporated by reference to Exhibit
10.2 of the Registrant's Quarterly Report on Form 10-Q for
the fiscal quarter ended March 31, 1996, filed on May 1,
1996 (the "First Quarter 1996 Form 10-Q")).

10.24 Form of Non-Qualified Stock Option Agreement between RJR
Nabisco Holdings Corp. and the grantee named therein (1996
grant-regular) incorporated by reference to Exhibit 10.3 of
the First Quarter 1996 Form 10-Q.

10.25 Form of Non-Qualified Stock Option Agreement between RJR
Nabisco Holdings Corp. and the grantee named therein (1996
grant-insider) (incorporated by reference to Exhibit 10.4 of
the First Quarter 1996 Form 10-Q).

10.26 Form of Non-Qualified Stock Option Agreement between RJR
Nabisco Holdings Corp. and the grantee named therein (1996
grant-executive) (incorporated by reference to Exhibit 10.5
of the First Quarter 1996 Form 10-Q).

10.27 Amendment to Form of Non-Qualified Stock Option Agreement
between RJR Nabisco Holdings Corp. and the grantee named
therein (1996 grant-insider) (incorporated by reference to
Exhibit 10.5 to the Second Quarter 1996 Form 10-Q).

10.28 Retirement Trust Agreement, made as of October 12, 1988,
between RJR Nabisco, Inc. and Wachovia Bank and Trust
Company, N.A. (incorporated by reference to Exhibit 10.6 to
the Registration Statement on Form S-4 of RJR Holdings Corp.
and RJR Holdings Group, Inc., Registration No. 33-27894,
filed April 5, 1989, as amended (the "Form S-4, Registration
No. 33-27894")).

10.29 Trust Agreement between RJR Nabisco, Inc. and Wachovia Bank
and Trust Company, N.A., Trustee, dated January 27, 1989
(incorporated by reference to Exhibit 10(d)(iv) to the
Registrants' Annual Report on Form 10-K for the fiscal year
ended December 31, 1988, filed March 9, 1989 (the "1988 Form
10-K")).

10.30 Master Trust Agreement, as amended and restated as of
October 12, 1988, between RJR Nabisco, Inc. and Wachovia
Bank and Trust Company, N.A. (incorporated by reference to
Exhibit 10.18 to the Form S-4, Registration No. 33-27894).

10.31(a) Amendment No. 1 to Master Trust Agreement, dated January 27,
1989 (incorporated by reference to Exhibit 10(g)(ii) to the
1988 Form 10-K).

10.31(b) Amendment No. 2 to Master Trust Agreement, dated January
27,1989 (incorporated by reference to Exhibit 10(g)(iii) to
the 1988 Form 10-K).

10.32 Excess Benefit Master Trust Agreement, as amended and
restated as of October 12, 1988, between RJR Nabisco, Inc.
and Wachovia Bank and Trust Company, N.A. (incorporated by
reference to Exhibit 10.21 to the Form S-4, Registration No.
33-27894).
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO.
-----------
<C> <S>
10.33 Amendment No. 1 to Excess Benefit Master Trust Agreement,
dated January 27, 1989 (incorporated by reference to Exhibit
10(h)(ii) to the 1988 Form 10-K).

10.34 RJR Nabisco, Inc. Supplemental Executive Retirement Plan, as
amended on July 21, 1988 (incorporated by reference to
Exhibit 10.32 to the Form S-4, Registration No. 33-27894).

10.35(a) Amendment to Supplemental Executive Retirement Plan, dated
November 23, 1988 (incorporated by reference to Exhibit
10(m)(ii) to the 1988 Form 10-K).

10.35(b) Amendment No. 2 to Supplemental Executive Retirement Plan,
dated January 27, 1989 (incorporated by reference to Exhibit
10(m)(iii) to the 1988 Form 10-K).

10.35(c) Amendment to Supplemental Executive Retirement Plan, dated
April 10, 1993 (incorporated by reference to the
Registrants' Annual Report on Form 10-K for the fiscal year
ended December 31, 1993, File No.'s I- 10215 and I-6388
filed on February 24, 1994 (the "1993 Form 10-K")).

10.36 Non-Qualified Stock Option Agreement between RJR Nabisco
Holdings Corp. and
James M. Kilts, dated as of January 2, 1998 (incorporated by
reference to Exhibit 10.6 to the First Quarter 1998 Form
10-Q).

10.37 Engagement Agreement (dated March 3, 1995) between RJR
Nabisco Holdings Corp. and Steven F. Goldstone (incorporated
by reference to Exhibit 10.38 of the 1995 Form 10-K).

10.38 Amended and Restated Employment Agreement (dated December 5,
1995) by and among RJR Nabisco Holdings Corp., and RJR
Nabisco, Inc. and Steven F. Goldstone (incorporated by
reference to Exhibit 10.40 of the 1995 Form 10-K).

10.39 Contingent Performance Share Agreement (dated December 5,
1995) between RJR Nabisco Holdings Corp. and Steven F.
Goldstone (incorporated by reference to
Exhibit 10.42 of the 1995 Form 10-K).

10.40 Secured Promissory Note (dated December 5, 1995) of Steven
F. Goldstone in favor of RJR Nabisco Holdings Corp.
(incorporated by reference to Exhibit 10.43 of the 1995 Form
10-K).

10.41 Secured Promissory Note (dated May 15, 1996) of Steven F.
Goldstone in favor of Nabisco Holdings Corp. (incorporated
by reference to Exhibit 10.6 to the Third Quarter 1996
Form 10-Q).

10.42 Non-Qualified Stock Option Agreement dated January 10, 1997
between RJR Nabisco Holdings Corp. and Steven F. Goldstone
(incorporated by reference to Exhibit 10.1 of the
Registrants' Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1997, filed May 13, 1997 (the "First
Quarter 1997 Form 10-Q"))

10.43 Restricted Stock Agreement between RJR Nabisco Holdings
Corp. and Steven F. Goldstone, dated as of January 15, 1998
(incorporated by reference to Exhibit 10.1 to the First
Quarter 1998 Form 10-Q).

10.44 Non-Qualified Stock Option Agreement between Nabisco
Holdings Corp. and Steven F. Goldstone, dated as of January
15, 1998 (incorporated by reference to Exhibit 10.2 to the
First Quarter 1998 Form 10-Q).
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO.
-----------
<C> <S>
10.45 Amendment to Contingent Performance Share Agreement (dated
October 14, 1998) between RJR Nabisco Holdings Corp. and
Steven F. Goldstone (incorporated by reference to Exhibit
10.56 to the Annual Report on Form 10-K of RJR Nabisco
Holdings Corp. and RJR Nabisco, Inc. for the fiscal year
ended December 31, 1998 filed March 26, 1999).

10.46 Amended and Restated Employment Agreement (dated January 1,
1997) among RJR Nabisco Holdings Corp., RJR Nabisco, Inc.
and Steven F. Goldstone (incorporated by reference to
Exhibit 10.7 to the First Quarter 1998 Form 10-Q).

10.47 Letter Agreement, dated as of October 27, 1999, between the
Registrant and Steven F. Goldstone (incorporated by
reference to Exhibit 10.47 to the 1999 NGH Form 10-K).

10.48 Restricted Stock Agreement between RJR Nabisco Holdings
Corp. and David B. Rickard, dated as of January 15, 1998
(incorporated by reference to Exhibit 10.9 to the First
Quarter 1998 Form 10-Q).

10.49 Non-Qualified Stock Option Agreement between RJR Nabisco
Holdings Corp. and
David B. Rickard, dated as of January 15, 1998 (incorporated
by reference to Exhibit 10.10 to the First Quarter 1998 Form
10-Q).

10.50 Letter Agreement, dated as of August 10, 1999, between the
Registrant and David B. Rickard (incorporated by reference
to Exhibit 10.50 to the 1999 NGH Form 10-K).

10.51 Employment Agreement (dated January 15, 1998) among RJR
Nabisco Holdings Corp., RJR Nabisco, Inc. and William L.
Rosoff (incorporated by reference to Exhibit 10.5 to the
First Quarter 1998 Form 10-Q).

10.52 Restricted Stock Agreement between RJR Nabisco Holdings
Corp. and William L. Rosoff, dated as of January 15, 1998
(incorporated by reference to Exhibit 10.11 to the First
Quarter 1998 Form 10-Q).

10.53 Non-Qualified Stock Option Agreement between RJR Nabisco
Holdings Corp. and William L. Rosoff, dated as of January
15, 1998 (incorporated by reference to
Exhibit 10.12 to the First Quarter 1998 Form 10-Q).

10.54 Letter Agreement, dated as of September 24, 1999, between
the Registrant and William L. Rosoff (incorporated by
reference to Exhibit 10.54 to the 1999 NGH Form 10-K).

10.55 Amended and Restated Deferred Compensation Plan for RJR
Directors (dated as of September 1, 1996) (incorporated by
reference to Exhibit 10.2 of the Third Quarter 1996 Form
10-Q).

10.56 Amended and Restated Equity Incentive Award Plan for
Directors and Key Employees of RJR Nabisco Holdings Corp.
and Subsidiaries (dated as of September 1, 1996)
(incorporated by reference to Exhibit 10.3 to the Third
Quarter 1996 Form 10-Q).

10.57 Performance Unit Program under RJR Nabisco Holdings Corp.
1990 Long Term Incentive Plan (incorporated by reference to
Exhibit 10.3 to the First Quarter 1994 Form 10-Q).

10.58 Amendment to Non-Qualified Stock Option Agreements dated
prior to October 11, 1995 (incorporated by reference to
Exhibit 10.75 of the 1995 Form 10-K).

10.59 Form of Non-Qualified Stock Option Agreement dated April 27,
1995 between RJR Nabisco Holdings Corp. and the grantee
named therein (Reissued options) (incorporated by reference
to Exhibit 10.77 of the 1995 Form 10-K).
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO.
-----------
<C> <S>
10.60 Form of Non-Qualified Stock Option Agreement dated April 27,
1995 between RJR Nabisco Holdings Corp. and the grantee
named therein (Premium options) (incorporated by reference
to Exhibit 10.78 of the 1995 Form 10-K).

10.61 Form of Non-Qualified Stock Option Agreement between RJR
Nabisco Holdings Corp. and the grantee named therein
(incorporated by reference to Exhibit 10.79 of the 1995 Form
10-K).

10.62 Form of Deferred Stock Unit Agreement between RJR Nabisco
Holdings Corp. and the grantee named therein dated as of May
31, 1996 (incorporated by reference to
Exhibit 10.5 to the Third Quarter 1996 Form 10-Q).

10.63 Amendment dated July 10, 1995 to Executive Equity Program
Agreement under the 1990 Long Term Incentive Plan between
RJR Nabisco Holdings Corp. and the grantee named therein
(incorporated by reference to Exhibit 10.82 of the 1995 Form
10-K).

10.64 Form of Employment Agreement dated October 11, 1995
(incorporated by reference to Exhibit 10.83 of the 1995 Form
10-K).

10.65 Form of Employment Agreement dated November 1, 1995
(incorporated by reference to Exhibit 10.84 of the 1995 Form
10-K).

10.66 Form of Non-Qualified Stock Option Agreement between RJR
Nabisco Holdings Corp., and Director named therein (Election
version) (incorporated by reference to Exhibit 10.86 of the
1995 Form 10-K).

10.67 Form of Non-Qualified Stock Option Agreement between RJR
Nabisco Holdings Corp., and Director named therein (Annual
version) (incorporated by reference to Exhibit 10.87 of the
1995 Form 10-K).

12.1 Nabisco Group Holdings Corp. Computation of Ratio of
Earnings to Combined Fixed Charges and Preferred Stock
Dividends/Deficiency in the Coverage of Combined Fixed
Charges and Preferred Stock Dividends by Earnings Before
Fixed Charges for each of the periods within the five year
period ended December 31, 1999 (incorporated by reference to
Exhibit 12.1 to the 1999 NGH Form 10-K).

12.2 Nabisco Group Holdings Corp. Computation of Ratio of
Earnings to Fixed Charges/ Deficiency in the Coverage of
Fixed Charges By Earnings Before Fixed Charges for each of
the periods within the five year period ended December 31,
1999 (incorporated by reference to Exhibit 12.2 to the 1999
NGH Form 10-K).

21. Subsidiaries of the Registrants (incorporated by reference
to Exhibit 21 to the 1999 NGH Form 10-K).

23.1 Consent of Independent Auditors dated March 21, 2000
(incorporated by reference to Exhibit 23.1 to the 1999 NGH
Form 10-K).

23.2 Consent of Independent Auditors dated September 26, 2000.

24. Powers of Attorney. (incorporated by reference to
Exhibit 24 to the 1999 NGH Form 10-K).

27 Financial Data Schedule of Nabisco Group Holdings Corp.
(incorporated by reference to Exhibit 27 to the 1999 NGH
Form 10-K).

99 Expanded Tobacco Litigation Disclosure (incorporated by
reference to Exhibit 99 to the 1999 NGH Form 10-K).
</TABLE>