<PAGE>
Exhibit 1
NABISCO/LIFE SAVERS
CAPITAL ACCUMULATION PLAN
INDEPENDENT AUDITORS' REPORT AND FINANCIAL STATEMENTS FOR
THE YEARS ENDED DECEMBER 30, 1999 AND 1998 AND SUPPLEMENTAL
SCHEDULES
<PAGE>
CAPITAL ACCUMULATION PLAN
-------------------------
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-------------------------------------------------------------------------------------------
PAGE
<S> <C>
Independent Auditors' Report 1
Financial Statements:
Statements of Net Assets Available for Benefits
as of December 30, 1999 and 1998 2
Statements of Changes in Net Assets Available
for Benefits for the Years Ended December 30, 1999
and 1998 3
Notes to Financial Statements 4-9
Supplemental Schedule:
Item 27a - Schedule of Assets Held for Investment Purposes as of
December 30, 1999 10-11
Item 27d - Schedule of Reportable Transactions for the year ended
December 30, 1999 12
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
Nabisco Employee
Benefits Committee:
We have audited the accompanying statements of net assets available for
benefits of the Nabisco/Life Savers Capital Accumulation Plan (the "Plan") as
of December 30 1999 and 1998, and the related statement of changes in net
assets available for benefits for the years then ended. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit 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 financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of December
30, 1999 and 1998, and the changes in net assets available for benefits for
the years then ended in conformity with accounting principles generally
accepted in the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
of (1) assets held for investment as of December 30, 1999 and (2) transactions
in excess of five percent of the current value of plan assets for the year ended
December 30, 1999 are presented for the purpose of additional analysis and are
not a required part of the basic financial statements, but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. These schedules are the responsibility of the Plan's management. Such
schedules have been subjected to the auditing procedures applied in our audit of
the basic 1999 financial statements and, in our opinion, are fairly stated in
all material respects when considered in relation to the basic financial
statements taken as a whole.
/s/ Deloitte & Touche LLP
----------------------------
Parsippany, New Jersey
June 23, 2000
<PAGE>
NABISCO/LIFE SAVERS
CAPITAL ACCUMULATION PLAN
--------------------------
<TABLE>
<CAPTION>
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 30, 1999 AND 1998
---------------------------------------------------------------------------------------------------------------
As of December 30,
<S> <C> <C>
1999 1998
---------------- -----------------
ASSETS
Investments at fair value $ 6,180,103
- Notes 1, 2 & 3
Interest in commingled funds ------ $ 5,445,352
- Notes 1, 2 & 3
Loans to participants 763,019 688,244
---------------- -----------------
Total investments 6,943,122 6,133,596
---------------- -----------------
Receivables
Investment income receivable 15,937 15,422
Employee contributions 12,391 11,161
Employer contributions 4,249 4,773
---------------- -----------------
Total receivables 32,577 31,356
---------------- -----------------
TOTAL ASSETS 6,975,699 6,164,952
---------------- -----------------
Payable to RJR Nabisco, Inc. ------ 8,857
---------------- -----------------
NET ASSETS AVAILABLE FOR BENEFITS $ 6,975,699 $ 6,156,095
================ =================
See notes to financial statements.
-2-
<PAGE>
NABISCO/LIFE SAVERS
CAPITAL ACCUMULATION PLAN
-----------------------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 30, 1999 AND 1998
-------------------------------------------------------------------------------------------------------------------
Year Ended December 30,
<S> <C> <C>
1999 1998
----------------- ---------------
ADDITIONS:
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
INVESTMENT INCOME
Net appreciation/(depreciation) in fair
value of investments - Note 3 $ 257,948 $ 284,771
Interest and dividends 320,567 291,994
----------------- ---------------
TOTAL INVESTMENT INCOME 578,515 576,765
----------------- ---------------
CONTRIBUTIONS
Employee 839,780 811,230
Employer 338,184 342,095
----------------- ---------------
TOTAL CONTRIBUTIONS 1,177,964 1,153,325
----------------- ---------------
DEDUCTIONS
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Administrative fees 3,964 2,860
Employee withdrawals - Note 4 932,911 506,481
----------------- ---------------
TOTAL DEDUCTIONS 936,875 509,341
----------------- ---------------
Net increase 819,604 1,220,749
NET ASSETS AVAILABLE FOR BENEFITS AT
BEGINNING OF PERIOD 6,156,095 4,935,346
----------------- ---------------
NET ASSETS AVAILABLE FOR BENEFITS AT
END OF PERIOD $ 6,975,699 $ 6,156,095
================= ===============
See notes to financial statements.
</TABLE>
-3-
<PAGE>
NABISCO/LIFE SAVERS
CAPITAL ACCUMULATION PLAN
-------------------------
NOTES TO FINANCIAL STATEMENTS
-------------------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN
The Plan is a voluntary defined contribution plan for all regular
employees of Nabisco de Puerto Rico, Inc. in Puerto Rico and Life
Savers. The Plan was established effective September 1, 1992 and is
jointly sponsored by Nabisco de Puerto Rico, Inc. and LifeSavers
Manufacturing, Inc. (collectively, the "Company") which are indirect
subsidiaries of Nabisco, Inc. ("Nabisco"). Pursuant to Section 165(a) of
the Puerto Rico Income Tax Act of 1954 (ITA), which is equivalent to
Section 401(k) of the US Federal Internal Revenue Code, employees may
designate contributions from pre-tax compensation up to the first 10% of
contributed compensation (limited to $8,000) as 401(k) type
contributions. Employees may contribute up to 10% of compensation on an
after-tax basis, provided that pre-tax and after-tax contributions in
the aggregate do not exceed 16% of compensation. The Company makes
matching contributions to the Plan for each pay period equal to 50% of
the employee's basic pre-tax contributions (up to 6% of pay).
Forfeitures of non-vested Company contributions are used to reduce
future Company contributions to the Plan. Although it has not expressed
any intent to do so, the Company has the right under the Plan to
discontinue its contributions at any time and to terminate the Plan
subject to the provisions of ERISA. In the event of plan termination,
participants will become 100 percent vested in their accounts.
The Loan Fund is a recordkeeping fund that holds employee promissory
notes. Participants may apply to the Nabisco Employee Benefits Committee
(the "Committee") to borrow funds from their accounts. The Committee
maintains sole discretion on whether to permit a loan in accordance with
the conditions specified under the terms of the Plan agreement. Loans
may not be less than $1,000 and are subject to a maximum amount based on
account balance and prior loan amounts. Only one loan per participant
may be outstanding at any given time.
Under the provisions of the Plan, participating employees may elect to
invest their contributions in one or more of the following investment
funds:
Continuing Funds:
Vanguard Retirement Savings Trust The objective of the Vanguard
Retirement Savings Trust is to
provide participants with an
attractive rate of interest and
safety of principal by investing
primarily in investment
contracts issued by insurance
companies and commercial banks.
The principal and interest of
these contracts are obligations
of the issuing companies and are
not guaranteed by the Federal
Government or the Vanguard
Group.
Total U.S. Stock Market Fund The fund holds a passive
investment in the Vanguard Index
Trust - Total Stock Market
Portfolio which invests in
stocks of nearly 2,000 large
companies and small to mid-size
companies. The objective of the
fund is to maximize long-term
financial return through a
combination of dividend income
and capital appreciation by
investing in a broadly
diversified portfolio of common
stock.
- 4 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
-------------------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN - CONTINUED
Total International Stock Market Fund The fund invests in the Vanguard
STAR Fund - Total International
Portfolio which holds stocks of
about 1,500 companies located in
approximately 30 countries
around the world (excluding the
U.S. and Canada). It is
comprised of a combination of
the three portfolios of the
Vanguard International Equity
Index Funds: European Portfolio,
Pacific Portfolio and Emerging
Markets Portfolio. The objective
of the fund is to maximize
long-term total return through a
combination of dividend income
and capital appreciation by
investing in a broadly
diversified portfolio of
companies located in European,
Pacific and emerging market
nations.
Conservative Growth Fund Invests in the Vanguard
LIFEStrategy Portfolios -
Conservative Growth Portfolio
which invests in a combination
of Vanguard funds and seeks to
achieve a target mix of 40%
stocks, 40% bonds and 20%
short-term reserves. The
objective of the fund is to
maximize long-term total return
primarily through compounding of
interest income and secondarily
through dividend income and
capital appreciation of common
stocks.
Moderate Growth Fund Invests in the Vanguard
LIFEStrategy Portfolios -
Moderate Growth Portfolio which
invests in a combination of
Vanguard funds and seeks to
achieve a target mix of 60%
stocks and 40% bonds. The
objective of the fund is to
maximize long-term total return
through a combination of
compounding of interest income
and through dividend income and
capital appreciation of common
stock.
Growth Fund Invests in the Vanguard
LIFEStrategy Portfolios - Growth
Portfolio which invests in a
combination of Vanguard funds
and seeks to achieve a target
mix of 80% stocks and 20% bonds.
The objective of the fund is to
maximize long-term total return
primarily through capital
appreciation and secondarily
through dividend income and
compounding of interest income.
- 5 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
-------------------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN - CONTINUED
Nabisco Group Holdings Common Stock Fund Common stock issued by Nabisco
Group Stock Holdings Corp. The
objective of the fund is to
maximize long-term total return
through capital appreciation and
dividend income.
Nabisco Common Stock Fund Class A Common Stock of Nabisco
Holdings Corp. The objective of
the fund is to maximize
long-term total return through
capital appreciation and
dividend income.
RJR Common Stock Fund The RJR Common Stock Fund seeks
to maximize long-term total
return through appreciation and
dividend income. This Fund is
invested primarily in the common
stock of R. J. Reynolds Tobacco
Holdings, Inc. The Fund will
also maintain a very small level
of cash to provide for liquidity
in processing daily
transactions. This Fund is a
frozen Fund which holds stock
transferred from the RJR Common
Stock Fund under the RJR Plan.
Participants are prohibited from
investing contributions or
reallocating amounts held under
the Plan to this Fund.
Loan Fund Participant borrowings from the
Plan subject to requirements
established by the Committee.
Additional information about the Plan agreement and the vesting and benefit
provisions is contained in the Summary Plan Description provided to
participants.
2. SIGNIFICANT ACCOUNTING POLICIES
VALUATION OF INVESTMENTS IN PLAN - The assets of the Plan are held by
Banco Popular de Puerto Rico as sole trustee (the "Trustee"). In the
prior year the assets of the Plan were held by Banco Popular de Puerto
Rico as sole trustee of the RJR Nabisco Puerto Rico Defined Contribution
Master Trust. The Vanguard Group ("Vanguard") serves as custodian of all
assets of the Plan other than loans to participants which are held by
the Trustee. All investments held by the Plan are valued at fair value
as follows. Securities which are traded on a national securities
exchange are valued at the last reported sales price on the last
business day of the Plan year. Over-the-counter investments traded on
the NASDAQ and listed securities for which no sale was reported on the
last business day of the Plan year are valued at the average of the last
reported bid and ask prices. All other over-the-counter investments are
valued at the last reported bid. The fair market value of fixed income
investments is based on an institutional based pricing system.
Investment grade bonds are valued on a pricing system based on treasury
securities. The fair market value of the participation units in common
trust funds is based on quoted redemption value on the last business day
of the Plan year. Guaranteed investment contracts are valued at contract
value plus accrued interest.
- 6 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
PLAN EXPENSES - Expenses relating to the purchase or sale of investments
are included in the cost or deducted from the proceeds, respectively.
Direct charges and expenses including investment manager fees attributable
to specific investment funds may be charged against that investment fund.
Other Plan expenses such as trustee, auditor, general Plan recordkeeping,
and Internal Revenue Service user fees may be paid directly from the Plan.
Other expenses continue to be paid by the Company
USE OF ESTIMATES - 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 at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
RECLASSIFICATIONS - Certain 1998 amounts have been reclassified to conform
to the 1999 presentation.
- In September 1999, The American Institute of Certified Public
Accountants issued Statement of Position No. 99-3 (SOP 99-3),
"Accounting for and Reporting of Certain Defined Contribution Plan
Investments and Other Disclosure Matters". Effective for fiscal year
1999, the Plan adopted (SOP 99-3), which simplifies disclosures for
certain participant directed investments. Accordingly, information for
both 1999 and 1998 are presented in the aggregate for all related
funds.
- 7 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
-------------------------------------------------------------------------------
3. INVESTMENTS
During 1999 and 1998, the Plan's investments bought, sold, as well as held
during the year, appreciated (depreciated) in fair value as follows:
<TABLE>
<CAPTION>
Net Appreciation/ Fair
(Depreciation) in Value at
Fair Value During Year End of Year
---------------------- -----------
<S> <C> <C>
Year Ended December 31, 1999:
Common Trust Fund $ ------ $3,471,879
Vanguard Index Trust - Total Stock
Market Portfolio 175,099 1,049,356
Vanguard Star Fund - Total
International Portfolio 11,797 55,742
Nabisco Group Holdings Corp.
Common Stock (6,050) 32,165
R. J. Reynolds Tobacco Holdings, Inc.
Common Stock 1,116 6,394
Nabisco Holdings Corp. Class A
Common Stock (36,141) 116,798
Vanguard Life Strategy Portfolios -
Conservative Growth Portfolio 5,836 221,393
Vanguard Life Strategy Portfolios -
Moderate 60,799 831,744
Vanguard Life Strategy Portfolios -
Growth Portfolio 45,492 394,632
-------- ----------
$257,948 $6,180,103
======== ==========
Year Ended December 31, 1998:
Common Trust Fund $ ------ $3,273,595
Vanguard Index Trust - Total Stock
Market Portfolio 152,016 814,065
Vanguard Star Fund - Total
International Portfolio 3,755 36,091
RJR Nabisco Holdings Corp.
Common Stock (2,465) 5,849
Nabisco Holdings Corp. Class A
Common Stock 1,001 129,121
Vanguard Life Strategy Portfolios -
Conservative Growth Portfolio 13,528 186,684
Vanguard Life Strategy Portfolios -
Moderate 76,580 736,292
Vanguard Life Strategy Portfolios -
Growth Portfolio 40,356 263,655
-------- ----------
$284,771 $5,445,352
======== ==========
</TABLE>
- 8 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
-------------------------------------------------------------------------------
3. INVESTMENTS - CONTINUED
Individual investments that represent 5% or more of the Plan's net assets
as of December 31, 1999 and 1998, are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1999 DECEMBER 31, 1998
----------------- -----------------
<S> <C> <C> <C> <C>
IDENTITY OF ISSUER,
BORROWER, LESSOR OR DESCRIPTION OF DESCRIPTION OF
SIMILAR PARTY INVESTMENT FAIR VALUE INVESTMENT FAIR VALUE
------------- ---------- ---------- ---------- ----------
Vanguard Index Trust-Total
Stock Market Portfolio 31,760 units $1,049,356 29,830 units $814,065
Vanguard Life Strategy
Portfolios - Moderate
Growth Portfolio 45,801 units 831,744 43,775 units 736,292
Vanguard Life Strategy
Portfolios - Growth Portfolio 18,467 units 394,632 14,069 units 263,655
Common Trust Fund 3,471,879 units 3,471,879 3,273,595 units 3,273,595
</TABLE>
4. EMPLOYEE WITHDRAWALS
There were no pending employee withdrawal requests at December 30, 1999 and
1998.
5. INCOME TAX STATUS
The Plan is intended to comply with Section 165(a) of the Puerto Rico
Income Tax Act of 1954 ("ITA"). The Plan is required to operate in
conformity with the ITA to maintain its qualification. The United States
qualification of the Plan was dropped effective with the 1995 Plan year.
The Committee is not aware of any course of action or series of events that
have occurred that might adversely affect the Plan's qualified status.
Therefore, no provision for income taxes has been included in the Plan's
financial statements.
-9-
<PAGE>
NABISCO/LIFE SAVERS CAPITAL ACCUMULATION PLAN
---------------------------------------------
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 30, 1999
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION OF INVESTMENT
IDENTITY OF ISSUER, INCLUDING MATURITY DATE,
BORROWER, LESSOR RATE OF INTEREST
OR SIMILAR PARTY PAR OR MATURITY VALUE COST FAIR VALUE
---------------- --------------------- ---- ----------
<S> <C> <C> <C>
RETIREMENT SAVINGS TRUST
------------------------
Common/collective trusts:
Vanguard Retirement Savings Trust 3,471,879 shares $3,471,879 $3,471,879
NABISCO GROUP HOLDINGS STOCK FUND
---------------------------------
Nabisco Group Holdings Corp. 8,501 shares, par
Common Stock value $.01 per share 36,020 32,165
TOTAL U.S. STOCK MARKET FUND
----------------------------
Equity investment funds:
Vanguard Index Trust -
Total Stock Market Portfolio 31,760 shares 713,566 1,049,356
TOTAL INTERNATIONAL STOCK MARKET FUND
-------------------------------------
Equity investment funds:
Vanguard STAR Fund -
Total International Portfolio 3,896 shares 42,374 55,742
RJR TOBACCO STOCK FUND
----------------------
R.J. Reynolds Tobacco Holdings, Inc. 586 shares, par
Common Stock value $.01 per share 7,160 6,394
NABISCO COMMON STOCK FUND
-------------------------
Nabisco Holdings Corp. Class A 10,967 shares, par
Common Stock value $.01 per share 146,745 116,798
</TABLE>
-10-
<PAGE>
NABISCO/LIFE SAVERS CAPITAL ACCUMULATION PLAN
---------------------------------------------
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 30, 1999
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CONSERVATIVE GROWTH FUND
------------------------
<S> <C> <C> <C>
Equity investment funds:
Vanguard LIFEStrategy Portfolios - 14,652 shares $201,730 $221,393
Conservative Growth Portfolio
MODERATE GROWTH FUND
--------------------
Equity investment funds:
Vanguard LIFEStrategy Portfolios - 45,801 shares 703,991 831,744
Moderate Growth Portfolio
GROWTH FUND
-----------
Equity investment funds:
Vanguard LIFEStrategy Portfolios - 18,467 shares 324,318 394,632
Growth Portfolio
LOAN FUND
---------
Loans to participants * 763,019 763,019
----------------- ------------------
TOTAL ASSETS HELD FOR INVESTMENT PURPOSES $1,993,058 $2,210,788
================= ==================
</TABLE>
* With respect to the Plan, there is a total of 242 loans to participants at
December 31, 1999 ranging from $1,000 to $29,900.
-11-
<PAGE>
NABISCO/LIFE SAVERS CAPITAL ACCUMULATION PLAN
---------------------------------------------
<TABLE>
<CAPTION>
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 30, 1999
---------------------------------------------------------------------------------------------------------------
SELLING
PRICE OR
NUMBER OF NUMBER OF PURCHASE MATURITY NET
PURCHASES SALES PRICE VALUE GAIN/(LOSS)
---------- ----------- -------- -------- -----------
<S> <C> <C> <C> <C> <C>
ISSUE
VANGUARD RETIREMENT SAVINGS TRUST
SERIES OF SECURITIES TRANSACTIONS IN EXCESS OF 5% OF NET FUND ASSETS:
VANGUARD RETIREMENT SAVINGS TRUST 241 154 $ 1,390,912 $ 1,184,366 $ ----
Total U.S. STOCK MARKET FUND
SERIES OF SECURITIES TRANSACTIONS IN EXCESS OF 5% OF NET FUND ASSETS:
Vanguard Index Trust - Total Stock Market Portfolio 165 ---- $ 343,871 $ ---- $ ----
</TABLE>
-12-
