RJR 1987 Annual Report

SCHEDULE X
RJR NABISCO, INC . AND SUBSIDIARIES

SCHEDULE X-SUPPLEMENTARY INCOME STATEMENT INFORMATION
Years Ended December 31, 1988, 1987 and 1986
(Dollars in Millions)
Column A
Item
Column B
Charged to Costs and
Expenses
1988 1987 1986

Maintenance and repairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $380 $378 $370
Advertising costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $813 $774 $807
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EXHIBIT INDEX
Exhibit
No.
Sequential
Page No.
2---Agreement and Plan of Merger, dated as of November 30, 1988, among RJR
Nabisco, ]nc ., RJR Holdings Corp . RJR Holdings Group, Inc . and RJR
Acq uisition Corporation . (Exhibit 50 to Amendment No . 6 to Schedule 14D9 filed on December 7, 1988*) .
3(a)(i) -Restated Certificate of Incorporation of RJR Nabisco, Inc ., as amended

through October 26, 1987 . (Exhibit 3(a) to Report on Form 10-K for the
fiscal year ended December 31, 1987, File No . 1-6388*) .
3(a)(ii) -Certificate of Stock Designation of RJR Nabisco, Inc ., dated July 27, 1988
and filed with the Delaware Secretary of State on July 28, 1988 .
3(b) -By-Laws of RJR Nabisco, Inc ., as amended through February 9, 1989 .
4--Agreement of RJR Nabisco, Inc . to provide certain documents to the
Commission upon request .
10(a) -Retirement Plan for Directors of RJR Nabisco, Inc . (as amended and restated
on January 1, 1989) .
10(b) -Retirement Trust Agreement, made as of October 12, 1988, between RJR
Nabisco, Inc . and Wachovia Bank and Trust Company, N .A . (Exhibit 3 to
Schedule 14D-9 filed on November 8, 1988*) .
10(c) -Consulting Agreement, dated as of October 1, 1988, between RJR Nabisco,
Inc . and Andrew G .C . Sage 11 . (Exhibit 4 to Schedule 14D-9 filed on
November 8, 1988*) .
10(d)(i) --Form of Employment Agreement containing Change of Control provision .
(Exhibit 5 to Schedule 14D-9 filed on November 8, 1988*) .
10(d)(ii) --Special Addendum to Form of Employment Agreement filed as Exhibit

10(d)(i), dated December 20, 1988 .
10(d)(iii) --Form of Agreement containing Gross-Up provisions, dated January 27, 1989 .
10(d)(iv) --Trust Agreement between RJR Nabisco, Inc . and Wachovia Bank and Trust
Company, N .A ., Trustee, dated January 27, 1989 .
10(e)(i) -Agreement, dated September 29, 1986, between RJR Nabisco, Inc . and
Marshall B . Bass . (Exhibit 6 to Schedule 14D-9 filed on November 8,
1988*) .
10(e)(ii) --Letter Agreement, dated March 21, 1988, between RJR Nabisco, Inc . and
Marshall B . Bass . (Exhibit 7 to Schedule 14D-9 filed on November 8,
1988*) .
10(c)(iii) -Letter, dated June 30, 1988, from RJR Nabisco, Inc . to Marshall B . Bass .
10(e)(iv) --Consulting Agreement, dated as of Ju)y 1, 1988, between RJR Nabisco, Inc .
and Marshall B . Bass . (Exhibit 9 to Schedule 14D-9 filed on November 8,
1988*) .
10(f)(i) -Form of Employment Agreement without Change of Control provision .
10(f)(ii) --Special Addendum, dated December 20, 1988 . (Exhibit ]0(d)(ii) herein) .
10(g)(i) --Master Trust Agreement, as amended and restated as of October 12, 1988,
between RJR Nabisco, Inc . and Wachovia Bank and Trust Company, N .A .
10(g)(ii) --Amendment No . I to Master Trust Agreement, dated January 27, 1989 .
10(g)(iii) ---Amendment No . 2 to Master Trust Agreement, dated January 27, 1989 .
10(h)(i) -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 . (Exhibit 12 to Schedule 14D-9 filed on November 8, 1988*) .
10(h)(ii) --Amendment No . I to Excess Benefit Master Trust Agreement, dated January
27, 1989 .
10(i) -RJR Nabisco, Inc . 1982 Long-Term Incentive Plan, as amended on July 21,
1988 . (Exhibit 13 to Schedule 14D-9 filed on November 8, 1988*) .
Exhibit
Sequential
No .
Page
No .
10(j) -1977 Stock Option Plan of RJR Nabisco, Inc ., as amended on July 21, 1988 .
10(k)(i) -Supplementai Benefits Plan of RJR Nabisco, Inc . and Participating
Companies, as amended on October 12, 1988 . (Exhibit 15 to Schedule 14D-9
filed on November 8, 1988*) .
10(k)(ii) -Amendment to Supplemental Benefits Plan, dated November 23, 1988 .
10(k)(iii) --Amendment No . 2 to Supplemental Benefits Plan, dated January 27, 1989 .
10(I)(i) -Additional Benefits Plan of RJR Nabisco, Inc . and Participating Companies,
effective October 12, 1988 . (Exhibit 16 to Schedule 14D-9 filed on November
8, 1988*) .
10(I)(ii) -Amendment to Additional Benefits Plan, dated October 28, 1988 .
10(I)(iii) -Amendment to Additional Benefits Plan, dated November 23, 1988 .
10(1)(iv) -Amendment to Additional Benefits Plan No . 3, dated January 27, 1989 .
10(m)(i) -RJR Nabisco, Inc . Supplemental Executive Retirement Plan, as amended on
July 21, 1988 . (Exhibit 17 to Schedule 14D-9 filed on November 8, 1988*) .

I0(m)(ii) -Amendment to Supplemental Executive Retirement Plan, dated November
23, 1988 . 10(m)(iii) -Amendment No . 2 to Supplemental Executive Retirement Plan, dated
January 27, 1989 .
10(n) -Letter Agreement, dated November 29, 1988, between RJR Nabisco, Inc .
and Ward M . Miller, Jr . (Exhibit 49 to Amendment No . 6 to Schedule 14D-9
filed on December 7, 1988*) .
10(o)(i) -Letter, dated December 29, 1986, from RJR Nabisco, Inc . to Edward A .
Horrigan , Jr . (Exhibit 62 to Amendment No . 13 to Schedule 14D-9 filed on
January 5, 1989*) .
10(o)(ii) -Agreement, dated December 14, 1988, among RJR Nabisco, Inc ., Edward A .
Horrigan, Jr . and Elizabeth R . Horrigan . (Exhibit 63 to Amendment No . 13
to Schedule 14D-9 filed on January 5, 1989*) .
10(p) --Letter, dated December 21, 1987, from RJR Nabisco, Inc . to John H . Clarke .
(Exhibit 64 to Amendment No . 13 to Schedule 14D-9 filed on January 5,
1989*) .
10(q) -Letter Agreement, dated February 16, 1988, between RJR Nabisco, Inc . and
James N . Crittenden . (Exhibit 65 to Amendment No . 13 to Schedule 14D-9
filed on January 5, 1989*) .
10(r) -Letter, dated August 18, 1988, from RJR Nabisco, Inc . to Robert J .
Carbonell . (Exhibit 66 to Amendment No . 13 to Schedule 14D-9 filed on
January 5, 1989*) .
10(s) -Letter, dated June 2, ;987, from RJR Nabisco, Inc . to Edward J . Robinson .
(Exhibit 69 to Amendment No . 14 to Schedule 14D-9 filed on January 18,
1989*) .
10(t) -Letter, dated December 7, 1987, from RJR Nabisco, Inc . to W .G . Champion
Mitchell . (Exhibit 73 to Amendment No . 16 to Schedule 14D-9 filed on
January 31, 1989*) .
10(u) -Letter Agreement, dated February 20, 1989, between Kohlberg Kravis
Roberts & Co . and J . Paul Sticht .
10(v) --Addendum to Employment Agreement, dated November 10, 1988, between
RJR Nabisco, Inc . and Lester W . Pullen .
11 -Computations of Consolidated Net Income Per Share of Common Stock .
22 --Subsidiaries of the Registrant .
24 -Consent of Independent Accountants .
25
--Powers of Attorney .
*Incorporated by reference .
SECURITIES AND EXCHANGE COMMISSION

Washington, D .C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1987 Commission file number 1-6388
RJR Nabisco Inc.

'
(Exact name of registrant as specified in its charter)
DELA
ARE
56-0950247
(State or other jurisdiction of incorporation (I .R .S. Employer Identification No.)

or organization)
300 GALLERIA PARKWAY

ATLANTA, GEORGIA 30339
(Address of principal executive offices) (Zip Code)
RegiStraTt'g telephone number, 7ncludong arew e'.tdv 404=85r2=300"- -Securities registered pursuant to Section 12(b) of the Act :
Title
of
each
class
which
Name of each exchange on

registered
Registrant
Common Stock (without par value) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Series B Cumulative Preferred Stock (without par value) . . . . . . . . . . . . . . . . . . . . . . . . . . .
73ifs% Sinking Fund Debentures, Due February 1, 2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8% Sinking Fund Debentures, Due January 15, 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subsidiaries of the Registrant
R. J.
New
New
New
New
York
York
York
York
REYNOLDS TOBACCO CoMPANY7%% Sinking Fund Debentures, Due September 1, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . New York
NABISCO BRANDS, INC .-
Nabicco, Inc .
73/.% Sinking Fund Debentures, Due May 1, 2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . New York
73/.% Sinking Fund Debentures, Due November 1, 2003 . . . . . . . . . . . . . . . . . . . . . New York
Standard Brands Incorporated
6'/.% Sinking Fund Debentures, Due June 1, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . New York
73/.% Sinking Fund Debentures, Due May 1, 2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . New York
9tfi% Sinking Fund Debentures, Due December 15, 2004 . . . . . . . . . . . . . . . . . . . . New York
Securities registered pursuant to Section 12(g) of the Act :
None
Indicate by check mark whether the registrant (1) has 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
registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days. YES__4L NO
The aggregate market value of voting stock held by non-affiliates of the registrant as of March 7, 1988 was $12 .9
billion. Directors and officers are considered affiliates for purposes of this calculation but should not necessarily be
deemed affiliates for any other purpose.
The number of shares of Common Stock outstanding at March 7, 1988 was 246,442,285 .
Documents Incorporated by Reference
Portions of the Annual Report to Stockholders of Registrant for the year ended December 31, 1987 are
incorporated by reference into Parts 1, 11 and IV .
Portions of the Definitive Proxy Statement of Registrant, dated March 21, 1988 in connection with its annual
meeting of stockholders to be held on May 4, 1988 are incorporated by reference into Part 111 .
PART I
Item 1 . Business
(a) General Development of Business
Registrant, RJR Nabisco, Inc ., a Delaware corporation organized in 1970 (the "Company"), is the
parent company of R . J . Reynolds Tobacco Company ("Reynolds") and R . J . Reynolds Tobacco
International, Inc . ("Tobacco International") (tobacco) and of Nabisco Brands, Inc . ("Nabisco"), Del
Monte Corporation ("Del Monte"), Del Monte Tropical Fruit Company ("Del Monte Tropical Fruit")
and Planters LifeSavers Company ("Planters LifeSavers") ( food ) . The Company's name was changed in
April, 1986 from R . J. Reynolds Industries, Inc . to its present name .
On March 6, 1987, the Company sold its spirits and wines business, conducted principally through
Heublein, Inc., to Grand Metropolitan plc for $1 .2 billion in cash . Such business is reported as
discontinued operations in the Consolidated Financial Statements and prior years financial statements
have been restated . See Note 3 of Notes to Consolidated Financial Statements .
During the first quarter of 1987, the Company redeemed its 11 .20% Notes, Due August 1, 1997, its
11 .35% Sinking Fund Debentures, Due November 1, 2015, its 113/,% Sinking Fund Debentures, Due
August 1, 2015 and its 13 .35% Sinking Fund Debentures, Due October 1, 2012 . See Note 4 of Notes to
Consolidated Financial Statements .
During 1987, the Company announced ongoing programs for the repurchase of up to 5 million shares
of its Common Stock and up to approximately 1 .6 million shares of its Series B Cumulative Preferred
Stock, pursuant to which approximately 3 .1 million shares of Common Stock and 1 .2 million shares of such
Preferred Stock were repurchased in 1987 . See Notes 12 and 13 of Notes to Consolidated Financial
Statements .
(b) Financial Information about Industry Segments

During 1987, the Company's principal lines of business (industry segments) were tobacco and food .
The lines of business data for the years ended December 31, 1987, 1986 and 1985 appearing on page
66 of the 1987 Annual Report to Stockholders (the "1987 Annual Report") is incorporated herein by
reference .
(c) Narrative Description of Business
Tobacco
The tobacco line of business includes the operations of Reynolds and Tobacco International, which
manufacture and sell tobacco products, principally cigarettes . Products are manufactured in the United
States and in 33 foreign countries and territories by subsidiaries or licensees, and are sold throughout the
United States and in more than 1 .60 markets around the world . Also included are the operations of RJR
Archer, Inc ., a packaging company .
Domestic
The Company's domestic tobacco business is conducted through Reynolds . Reynolds' cigarette
brands include CAMEL, CENTURY, DORAL, MORE,
Now,
believes that for 1987, four of its cigarette brands,
RITZ, SALEM, VANTAGE and WINSTON . Reynolds
WINSTON, SALEM, CAMEL and VANTAGE ,
were among
the 10 largest selling cigarette brands in the United States . Although the DoRAL brand, the first branded
entry in the domestic market priced competitively with generic cigarettes, was not introduced until 1984,
Reynolds believes that it was the eleventh largest selling cigarette in the United States in 1987 .
Reynolds' tobacco products are sold in the United States primarily to chain stores, to other large retail
outlets and through distributors to other retail and wholesale outlets . The markets for cigarettes and other
tobacco products are highly competitive . Reynolds advertises its cigarette products extensively through all
major media except television and radio . Cigarette advertising and promotion is subject to significant
legislative restrictions in the United States, including a ban on radio and television advertising .
In the cigarette industry, total unit sales volume of cigarettes in the United States has declined in
recent years . However, Reynolds' unit sales volume increased in 1986, despite the overall industry decline
and Reynolds' unit sales volu :ne declined in 1987 by 1 .6% as compared to a total industry decline of 2 .0% .
According to independent analysts, total industry unit sales volume is projected to decline at an annual rate
in the range of 2% for the foreseeable future . Reynolds believes that the decline is the result of numerous
factors, including health considerations, diminishing social acceptance of smoking, legislative limitations
on smoking in public places and federal and state excise tax increases which have resulted in cigarette price
increases . However, in recent years, price increases of cigarettes by Reynolds have more than offset
Reynolds' decline in volume . No assurance can be given that Reynolds will be able to increase prices in
the future by an amount sufficient to offset any future decline in its unit sales volume .
Reynolds purchases at auction a large portion of its domestic tobacco requirements, including its fluecured and burley domestic leaf tobacco, the principal kinds of tobacco it uses . The balance of its tobacco
requirements, principally types not grown in the United States, are purchased overseas . Such tobacco is in
turn stored and aged by Reynolds for periods of approximately two to three years before it is used in
manufacture . Tobacco is an agricultural commodity subject to U .S . Government production controls and
price supports which can .substantially affect its market price . From time to time, various bills may be
pending in Congress that would amend the tobacco control and support programs, some of which, if
enacted, could have an adverse effect on Reynolds .
In September, 1987, Reynolds announced that it is developing a new cigarette that uses, but does not
burn, tobacco . Since the cigarette is in the development stage, Reynolds is unable to predict whether the
product will be introduced nationally and, if so, its impact on the cigarette industry or Reynolds .
International
The Company's international tobacco business is conducted through Tobacco International . Sales are
accomplished through exports from the United States, from foreign manufacturing operations and through
licensees . Key markets in which manufacturing subsidiaries are located include Belgium, Brazil, Canada,
the Canary Islands, Ecuador, Malaysia, Hong Kong, Puerto Rico, Switzerland and West Germany .
Additional key markets include Holland, France, Japan, Spain and Singapore .
Tobacco International's three primary cigarette brands are
CAMEL, WINSTON
and S ALEM . Local
brands such as ExPORT "A" and MACDONALD SPECIAL in Canada, MUSTANG in Brazil and DORCHESTER in
the United Kingdom also contribute significantly to Tobacco International's volume base .
Tobacco International's unit sales volume increased 3 .3% in 1986 over 1985 and 10 .3% in 1987 over
1986 . Certain foreign operations are subject to local regulations that set import quotas, restrain financing
flexibility and affect repatriation of earnings or assets . Advertising restrictions similar to, or more
restrictive than, those of the United States exist in several of Tobacco International's markets .
Legislation and Other Information Relating to Tobacco Products
For some years the advertising and sale of tobacco products, particularly cigarettes, have been under
attack in the United States and many other countries as the result of claims that smoking is detrimental to
health and, in the opinion of the Company, such attack has had and may continue to have an adverse
effect on industry sales.
In 1964, the Report of the Advisory Committee to the Surgeon General of the U .S . Public Health
Service concluded that cigarette smoking was a health hazard of sufficient importance to warrant
appropriate remedial action . Since 1969, federal law has required a warning statement on cigarette
packaging . Until October 12, 1985 the required statement was : "Warning : The Surgeon General Has
Determined That Cigarette Smoking Is Dangerous to Your Health ." Federal law also requires annual
reports to Congress from the Federal Trade Commission ("FTC") and the Secretary of Health and
Human Services . The FTC has recommended in such reports to Congress that Congress enact legislation
requiring stronger warnings and that funding be provided for antismoking messages in mass media . Since
1971, television and radio advertising of cigarettes has been prohibited in the United States . Cigarette
advertising in other media in the United States is required to include information with respect to the "tar"
and nicotine content of cigarettes as well as a warning statement .
In January 1979, the Secretary of Health, Education and Welfare released another report restating
conclusions similar to those contained in the 1964 report and asserting that a broader range of health
hazards is associated with cigarette smoking than those mentioned in the previous report . In January 1980,
the Surgeon General released a report on the health consequences of smoking to women, stating that
women face the same health hazards from smoking as men and that pregnant women and their unborn
children face greater risks . In December 1980, the Surgeon General issued a report stating that all
cigarettes, including those with the lowest "tar" and nicotine content, were health hazards and
recommended various federal measures to reduce smoking . In January 1981, the Surgeon General
released another report reviewing changes in the composition of cigarettes in recent decades, repeating the
assessment that smoking any type of cigarette involves health risks and recommending further study of the
possible risks . In February 1982, the Surgeon General released a report reviewing the recent literature
regarding cancer and concluding that cigarette smokers have overall mortality rates from cancer
substantially greater than nonsmokers and that cigarette smoking is a major cause or a contributing factor
in the development of various cancers . In November 1983, the Surgeon General released a report
reviewing the recent literature regarding cardiovascular disease and concluding that cigarette smoking is a
major cause of coronary heart disease and is associated with or a risk factor for other vascular diseases . In
May 1984, the Surgeon General released a report reviewing the recent literature regarding chronic
obstructive lung disease and concluding that cigarette smoking is the major cause of chronic obstructive
lung disease in the United States . In November 1985, the Surgeon General released a report reviewing the
recent literature regarding health effects of workplace hazards and worker smoking, concluding that the
latter was the greater hazard to the workers . In December 1986, the Surgeon General released a report
reviewing the current literature on the health effects of environmental tobacco smoke exposure and
concluding that environmental tobacco smoke is a cause of disease in nonsmokers .
In October 1984, Congress enacted the Comprehensive Smoking Education Act which, among other
things : (i) establishes an interagency committee on smoking and health which is charged with carryir ;
out a program to inform the public of any dangers to human health presented by cigarette smoking ; (ii)
requires a series of four new health warnings to be printed on cigarette packages and advertising on a
rotating basis; (iii) increases type size and area of the warning on cigarette advertisements ; and (iv)
requires that cigarette manufacturers provide annually, on a confidential basis, a list of ingredients used in
the manufacture of cigarettes to the Secretary of Health and Human Services . The new warnings required
on cigarette packages and advertisements (other than billboards) are as follows : (i) "Surgeon General's
Warning : Smoking Causes Lung Cancer, Heart Disease, Emphysema, And May Complicate Pregnancy" ;
(ii) "Surgeon General's Warning : Quitting Smoking Now Greatly Reduces Serious Risks To Your
Health"; ( iii )"Surgeon General's Warning : Smoking By Pregnant Women May Result in Fetal Injury,
Premature Birth, And Low Birth Weight" ; and (iv) "Surgeon General's Warning : Cigarette Smoke
Contains Carbon Monoxide" . Similar warnings are required on outdoor billboards . The labeling and
ingredient provisions of the Comprehensive Smoking Education Act became effective October 12, 1985 . In
October 1984, the Cigarette Safety Act of 1984 was also enacted that, among other things, creates an
interagency committee on cigarette fire safety.
In addition to the foregoing, legislation potentially detrimental to the tobacco industry, generally
relating to taxation of cigarettes and regulation of advertising, labeling, promotion, sale and smoking of
cigarettes, has been introduced and enacted from time to time in Congress and in various state and local
legislative bodies . State and local legislation imposing restrictions on public smoking has been enacted in a
number of jurisdictions, and certain employers have initiated programs restricting smoking in the
workplace . It is not possible to state whether additional federal, state or local legislation will be enacted,
or the nature of such legislation . Nor is it possible to state whether further action will be taken or
recommended by regulatory agencies or other governmental authorities .
It is not possible to predict the effect on the tobacco industry generally or on Reynolds or Tobacco
International of any of the foregoing events and circumstances .
Food
The Company's food business includes the operations of Nabisco, Del Monte, Del Monte Tropical
Fruit and Planters LifeSavers . Food products are produced, marketed or distributed worldwide and
include cookies, crackers, cereals, confectioneries, nuts, snacks, canned foods, beverages and fresh fruit .
Products and product lines of Nabisco, Del Monte, Del Monte Tropical Fruit and Planters LifeSavers are
set forth under the captions "Food Products" and "Tropical Fruit" on pages 34 and 35 of the 1987 Annual
Report, which information is incorporated herein by reference .
Nabisco
Nabisco is a leading producer of cookies and crackers and offers consumers many of the leading
brands in margarines, snack products, hot and cold breakfast cereals, desserts, and pet foods . A
disproportionate amount of Nabisco's sales occur in the latter part of a calendar year . Nabisco's
worldwide businesses are conducted through four operating units-the Biscuit Division and the Grocery
Products Division in the United States, Nabisco Brands Ltd (Canada) and International Nabisco Brands .
Nabisco maintains food research facilities in East Hanover and Fair Lawn, New Jersey . Nabisco's
business faces substantial competition in the United States and in other countries .
Del Monte
Del Monte produces and markets a wide variety of canned and dried foods and fresh fruits in many
styles and packs . Substantially all of Del Monte's operations are seasonal . Products are sold in major
consumer markets in the world and are subject to intense competition . Del Monte's products are sold
primarily under the well-known DEL MONTE brand for fruits, vegetables, tomato products, juices and dried
fruit . Most of these products are distributed both nationally and internationally . Del Monte maintains
food research facilities at Walnut Cove, California .
Del Monte Tropical Fruit

Del Monte Tropical Fruit is engaged in the production, distribution and marketing of bananas, fresh
pineapples and other tropical fruits . Bananas are grown in Costa Rica and Guatemala on Del Monte
properties and are also supplied by associate producers there as well as in the Philippines . Bananas also
are purchased in Ecuador and Colombia for distribution in the United States . Pineapple for the fresh fruit
market is grown in Costa Rica, Hawaii, Kenya and the Philippines . Bananas and pineapples are marketed
in North America, Europe, the Middle East and the Far East, and most sales are made under the DEL
MONTE brand . Del Monte believes that it is the largest marketer of pineapples in the United States .
Planters LijeSavers
Planters LifeSavers is a leading producer of nuts and snacks and offers consumers many of the leading
brands in candy and gum . Its products are sold directly to large retail outlets as well as through
wholesalers and brokers from a network of distribution centers . Brand name products include PLANTERS
nuts and snacks, LIFE SAvEits hard-roll candy, BUBBLE Yutrt bubble gum, CARE*FREE sugarless gum, BABY
RUTH and BurrERFtNGER candy bars, JUNIOR MINTS candy, CHUCKLES candy and BONKERS! chewy candy .
In 1987, a Brazilian cashew nut producer was purchased to compliment the Planters LifeSavers line .
During 1987, operational responsibility for Planters LifeSavers was transferred to Reynolds and the
headquarters of Planters LifeSavers was relocated from New Jersey to North Carolina . Subsequently, the
sales forces of Reynolds and Planters LifeSavers were merged early in 1988 .
Employees
At December 31, 1987, the Company had 120,334 full-time employees .
Environmental Matters
Ln
The U .S . Government and various state and local governments have enacted or adopted laws and co
regulations concerning protection of the environment . The regulations promulgated by the Environmental
00
Protection Agency and other governmental agencies under various statutes have resulted in, and will likely
continue to result in, substantial expenditures for pollution control, waste treatment, plant modification and
similar activities .
The Company has been engaged in a continuing program to assure compliance with such laws and
regulations. Although it is difficult to identify precisely the portion of capital expenditures or other costs
attributable to environmental laws, the Company does not expect such expenditures or other costs to be
material or to have a material effect on the Company's financial position .
(d) Financial Information about Foreign and Domestic Operations and Export Sales
The information contained under the caption "Geographic Data" for the years 1985 through 1987 on
page 67 of the 1987 Annual Report is incorporated herein by reference .
Item 2 . Properties
The information pertaining to the Company's assets by continuing lines of business and geographic
areas for each of the years ended December 31, 1987, 1986 and 1985 set forth under the captions "Lines of
Business Data" and "Geographic Data" on pages 66 and 67 of the 1987 Annual Report is incorporated
herein by reference .
Substantially all of Reynolds' domestic tobacco manufacturing facilities, consisting principally of
factories and leaf storage warehouses, are located at or in the vicinity of Winston-Salem, North Carolina .
All such facilities are owned by Reynolds . Included in such facilities is the Tobaccoville cigarette
manufacturing plant of approximately two million square feet which commenced production in the first
quarter of 1986 and became fully operational in 1987 . In addition, Reynolds is engaged in the
modernization of its Whitaker Park cigarette manufacturing complex, which is expected to be completed in
1989 .
Tobacco International has two tobacco manufacturing facilities located in West Germany and one
each in Switzerland, Brazil, Canada, Puerto Rico, Belgium, the Canary Islands, Ecuador, Hong Kong and
Malaysia .
The Company's food operations have operating properties and facilities, both owned and leased, in
many areas of the world . Food processing plants and related facilities are located throughout the United
States and in Canada, the United Kingdom, France, Italy, Greece, Kenya, South Africa, Mexico, Brazil,
Venezuela, India, Australia and the Philippines . Del Monte also owns or operates through lease or
operating agreements farming land in California, Hawaii, Texas, and the Northwest and Midwest areas of
the United States, and in Kenya, South Africa, Latin America and the Philippines . These leases and
operating agreements generally are renewable at Del Monte's option . In addition, Del Monte Tropical
Fruit owns banana plantations in Costa Rica and Guatemala and a pineapple plantation in Costa Rica .
Del Monte Tropical Fruit owns or leases refrigerated oceangoing vessels and owns or leases banana
terminals located in the United States . Planters LifeSavers has manufacturing plants at nine locations
throughout the United States .
Item 3 . Legal Proceedings
For information relating to litigation, see Note I 1 of Notes to Consolidated Financial Statements .
Item 4 . Submission of Matters to a Vote of Security Holders
None .
Executive Officers of the Registrant
The following is a list as of March 18, 1988, of the names and ages of the Company's Executive
Officers and all positions and offices held by each during the past five years .
Name
Age
Position*
Andrew S . Barrett . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Senior Vice President, Corporate Personnel (1986) ; NBI

-Senior Vice President, Personnel (1983 ) ; Vice President
and Assistant to the President (1982 ) .
Marshall B . Bass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 Senior Vice President, Corporate Affairs (1986) ; Vice President (1982 ) ; Corporate Director of Personnel Development (1976) .
Name
Age
Position
Paul C . Bergson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Senior Vice President, Government Relations (1986) ; Reynolds-Vice President, Public Affairs (1984 ) ; Director,
Public Affairs ( 1984 ) ; Company-Federal Public Affairs
Representative (1979) .
Robert J . Carbonell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 Vice Chairman of the
President (1987 ) ;
NBI-Vice Chairman
(1984) ; Senior Vice
Board (1987) ; Senior Executive Vice

Executive Vice President ( 1986 ) ;
( 1986 ) ; Executive Vice President
President (1981) .
John H . Clarke . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Senior Vice President, Technology (1987 ) ; NBI-Executive

Vice President, Technology (1986 ) ; Senior Vice President
(1985 ) ; Nabisco Brands USA-Executive Vice President,
Corporate Technology (1984) ; Senior Vice President and
Group Executive, Corporate Technology (1982 ) .
Walter N . Coleman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Vice President and General Auditor (1987 ) ; NBI-Vice
President and General Auditor (1986 ) ; RCA Corporation-Staff Vice President-Auditing (1983 ) ; IngersollRand Corporation-Director-Internal Audit ( 1979) .
C . Dennis Durden . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 Senior Vice President (1987 ) ; Vice President and Assistant to
the President and Chief Executive Officer (1986) ; Director,
Public Policy Development (1985 ) ; Vice President and
Secretary, International Advisory Board (1977 ) .
Harold L . Henderson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 Executive Vice President and General Counsel (1986 ) ; Senior Vice President and General Counsel (1985 ) ; Vice
President and General Counsel (1985 ) ; The Firestone Tire
& Rubber Company-Senior Vice President and General
Counsel (1982 ) .
Andrew P . Hines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Vice President and Controller (1987) ; NBI-Vice President
and Controller (1986) ; Nabisco Brands UK-Vice President, Finance (1984) ; NBI-Assistant Controller (1982 ) .
Edward A . Horrigan, Jr. . . . . . . . . . . . . . . . . . . . . . . . . 58 Vice Chairman of the Board (1985 ) ; President and Chief
Operating Officer (1984 ) ; Executive Vice President
(1981) .
F . Ross Johnson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 President and Chief Executive Officer (1987 ) ; President and
Chief Operating Officer (1985 ) ; NBI-Vice Chairman of
the Board and Chief Executive Officer (1984 ) ; President
and Chief Operating Officer (1981 ) .
illiam J . Liss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8 Senior Vice President, Public Affairs (1987) ; Ohlmeyer Communications Company-Senior Vice President, Corporate
Relations ( 1984) ; American Broadcasting Companies, Inc .
-Vice President, Media Relations and Marketing Services
and Director of the Olympic Unit, ABC Publishing (1982 ) .
David G . Marshall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Vice President, Personnel, Employee Benefits (1987) ; Staff

Vice President, Employee Benefits ( 1986) ; NBI-Staff
Vice President, Employee Benefits (1984 ) ; Sun Co .,
Inc.-Manager, Benefit Planning and Development
(1978) .
John D . Martin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Executive Vice President (1988) ; Ohlmeyer Communications

Company-President and Chief Operating Officer ( 1983) .
George A . Midwood . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Vice President and Treasurer (1987 ) ; American Cyanamid

Co .-Treasurer (1979) .
Ward M . Miller, Jr . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Vice President, Associate General Counsel and Secretary
(1987) ; NBI-Senior Vice President, Law and Secretary
(1984) ; Vice President, Law and Secretary ( 1981) .
W . G . Champion Mitchell . . . . . . . . . . . . . . . . . . . . 41 Senior Vice President, External Affairs (1988) ; Womble
Carlyle Sandridge & Rice-Partner (1981 ) .
Name
Age
Position
George D . Newton, Jr . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Vice President and Deputy General Counsel for Litigation
(1987 ) ; Deputy General Counsel for Litigation (1985 ) ;
Kirkland & Ellis-Partner (1964) .
Bruce B . Overton . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Vice President, Personnel and Compensation (1988 ) ; Staff
Vice President, Personnel (1987 ) ; Staff Vice President,
Compensation and Employee Information (1986 ) ; Corporate Director, Compensation and Employee Information
(1982) .
J . Thomas Pearson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Senior Vice President, Taxation (1988 ) ; Vice President,
Taxation (1987 ) ; NBI-Vice President, Taxation (1982 ) .
Dean R . Posvar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Senior Vice President, Business Planning and Development
(1987) ; NBI-Senior Vice President, Corporate Planning
and Development (1984) ; Vice President, Corporate Planning and Development (1982 ) .
Guli R . Rajani . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Deputy Treasurer (1987 ) ; Staff Vice President and Assistant
Treasurer, International (1987 ) ; NBI-Assistant Treasurer
(1982) .
Ray D . Risner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Vice President, Financial Administration (1987) ; Staff Vice
President and Assistant Treasurer (1987 ) ; NBI-Staff Vice
President, Financial Operations (1986) ; Director, Financial Analysis (1982 ) .
Edward J . Robinson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Executive Vice President, Finance and Chief Financial Officer (1987 ) ; Senior Vice President, Finance and Chief
Financial Officer (1986 ) ; NBI-Chief Financial Officer
(1985 ) ; Senior Vice President and Controller (1983 ) ; Vice
President, Treasurer (1982 ) .
Robert E . Shultz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Vice President, Pension Asset Management (1987) ; IBM
Corp .-Director of U .S . Retirement Funds (1980) .
Kenneth D . Taylor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Senior Vice President-Corporate Government Affairs
(1987 ) ; NB1-Senior Vice President, Government Affairs
(1984 ) ; Canadian Consul General, New York and Canadian Commissioner to Bermuda (1981) .
James O . Welch, Jr . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Vice Chairman of the Board (1987) ; Senior Executive Vice
President (1986) ; NBI-Chairman and Chief Executive
Officer (1986) ; Vice Chairman and Chief Executive Officer
(1986 ) ; President and Chief Executive Officer (1985 ) ;
President and Chief Operating Officer (1984) ; Senior
Executive Vice President (1981) .
Samuel B . Witt III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 Vice President and Associate General Counsel (1988) ; Associate General Counsel (1986) ; Reynolds-Vice President,
General Counsel and Secretary (1981) .
*"NBI" refers to Nabisco Brands, Inc ., a subsidiary of the Company .
Each Executive Officer holds his term of office until the next following Annual Meeting of the Board of
Directors, held in April, May or June at such time as the Board of Directors may fix in each year, and until
his successor is elected and qualified .
I
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
The information set forth under the caption "Dividends and Stock Prices" on page 51 of the 1987
Annual Report is incorporated herein by reference .
Item 6 . Selected Financial Data
The information contained under the caption "Selected Five-Year Financial Data" on page 44 and
under the caption "Selected Five-Year Financial Condition Data" on page 48 of the 1987 Annual Report
is incorporated herein by reference .
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The information set forth under the caption "Management's Discussion and Analysis" contained on
pages 45 through 50 of the 1987 Annual Report is incorporated herein by reference .
Item 8 . Financial Statements and Supplementary Data
The information contained in the 1987 Annual Report under the captions and on the pages indicated
below is incorporated herein by reference :
Summary of Significant Accounting Policies (page 52)
Consolidated Statements of Income and Retained Earnings for the years ended December 31,
1987, 1986 and 1985 (page 53)
Consolidated Statements of Changes in Financial Position for the years ended December 31,
1987, 1986 and 1985 (page 54)
Consolidated Balance Sheets as of December 31, 1987 and 1986 (page 55)
Notes to Consolidated Financial Statements (pages 56 through 62)
Eleven-Year Financial Summary for the years ended December 31, 1987, 1986 and 1985 (page
64)
Lines of Business Data and Geographic Data for the years ended December 31, 1987, 1986 and
1985 (pages 66 and 67)
Quarterly Results of Operations for the years ended December 31, 1987 and 1986 (unaudited)
(page 68)
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None
PART III
Item 10 . Directors and Executive Officers of the Registrant
The information set forth on pages 2 through 7 and under the caption "Certain Information
Concerning the Board of Directors" on page 8 of Registrant's Definitive Proxy Statement dated March 21,
1988, in connection with its Annual Meeting of Stockholders to be held on May 4, 1988 (the "Definitive
Proxy Statement"), is incorporated herein by reference . Reference is also made to "Executive Officers of
the Registrant" following Item 4 of Part I of this Report .
Item 11 . Executive Compensation

The information contained in the Definitive Proxy Statement under the captions and on the pages
indicated below is incorporated herein by reference :
Executive Compensation (page 9)

Stock Options and Other Plans (pages 9, 10 and 1 l)
Retirement Plan (pages 11 and 12)
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information appearing under the caption "Ownership of the Company's Securities" on page 12,
the last three paragraphs appearing on page 7 and the security ownership information appearing on pages
2 through 7 of the Definitive Proxy Statement is incorporated herein by reference .
Item 13. Certain Relationships and Related Transactions
The information set forth in the last two paragraphs appearing on page 8 of the Definitive Proxy
Statement is incorporated herein by reference .
PART IV
Item 14 . Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1 . The financial statements listed in the accompanying index to financial statements and
financial statement schedules 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 1987 .
No reports on Form 8-K were filed during the fourth quarter of the year ended December 31,
1987 .
( c ) Exhibits
See Index to Exhibits .

(d) Financial Statement Schedules
See Index to Financial Statements and Financial Statement Schedules .
The 1987 Annual Report is included as an Exhibit to this report . Except for portions expressly
incorporated herein, such Annual Report shall not be deemed "filed" as part of this report .
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 .
RJR NABISCO, INC .
( Registrant )
By:
HAROLD
L. HENDERSON
(Harold L Henderson)
Executive Vice President
and General Counsel
Date : March 22, 1988

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 and on the dates
indicated.
Signature
Title
Principal Executive Officer :

F.
Date
Ross
President and
Chief Executive Officer,
Director
JOHNSON*
(F . Ross Johnson)
Principal Financial Officer :
Executive
Vice President,
Finance and
EDWARD J . ROBINSON* Chief Financial Officer
(Edward J . Robinson)
Principal Accounting Officer :
Vice President
ANDREW P . HINES* and Controller
(Andrew P. Hines)
Directors :
WILLIAM S .
ANDERSON*
Director
March
22,
1988
(Wiiiiam S . Anderson)
ALBERT L . BUTLER, JR .*
Director
(Albert L Butler, Jr .)
ROBERT J .
CARBONELL*
Director
.... .. . .. . . . . . . . . . . . . .. . ......... ...... .. . . . . . . . . . . . . .. . .. ... ... . . .. . . . . . . . . . . . . . . . .. ... ............. ... ... .
(Robert J . Carboneli )
JOHN L . CLENDENIN*
Director
(John L Clendenin)
RONALD H .
GRIERSON*
Director
(Ronald H . Grierson)
JOHN W .
HANLEY*
Director
. . . . . .-. . ..---------------------------------------------------------------------------------------. ......-(John W . Hanley)
Cn
EDWARD A . HORRIGAN, JR .*
Director
(Edward A . Horrigan, Jr .)
N
kD
W
10
OD
~
Signature
Title
Date
Director
CHARLES E . HUGEL*
(Charles E . Hugel)
VERNON E . JORDAN, JR .*
Director
(Vernon E . Jordan, Jr.)
Director
(Juanita M . Kreps)
Director
JOHN D . MACOMBER*
(John D. Macomber)
Director l, March 22, 1988
JOHN G . MEDLIN, JR .*
------------------------------------------------------ . . .------------------------------------
(John G . Medlin, Jr. )
ANDREW G . C .
SAGE
11*
Director
(Andrew G . C. Sage lI)
ROBERT M .
SCHAEBERLEt
Director
(Robert M. Schaeberle)
Director
(J . Paul Sticht)
JAMES 0 . WELCH, JR . *
------------------------------------ . .._ _. . .------ . _ . .. ._. . .. . .---- .. . . . . . . .....-------------_ . . .
(James O. Welch, Jr .)
*By :
LEO
C . WILKERSON
(Leo C . Wilkerson, Attorney-in-Fact)
11
Director
INDEX TO FINANCIAL STATEMENTS

AND FINANCIAL STATEMENT SCHEDULES
Financial Statements :
The following consolidated financial statements and supplementary data included in the 1987 Annual
Report are incorporated by reference in Item 8 appearing on page 8 herein :
Reference
1987
Annual Report
(page)
Summary of Significant Accounting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Income and Retained Earnings for the years ended
December 31, 1987, 1986 and 1985 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Changes in Financial Position for the years ended
December 31, 1987, 1986 and 1985 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets at December 31, 1987 and 1986 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Eleven-Year Financial Summary for the years ended December 31, 1987, 1986
and 1985 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lines of Business Data and Geographic Data for the years ended December 31,
1987, 1986 and 1985 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Quarterly Results of Operations for the years ended December 31, 1987 and
1986 (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
52
53
54
55
56
64
66
68
Financial Statement Schedules:

The following financial statement schedules and report of independent accountants are included
herein :
Page
Report of Independent Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
Schedules V, VI, VIII, IX and X of RJR Nabisco, Inc . and subsidiaries for the
three years ended December 31, 1987 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2

All other schedules for which provision is made in the applicable regulations of the Securities and
Exchange Commission are omitted because they are not required under the related instructions or are not
applicable or the required information is shown in the financial statements or notes thereto .
12
RJR NABISCO, INC.

Annual Report on Form 10-K
Year Ended December 31, 1987
Item 14(d) . Financial Statement Schedules
I
REPORT OF INDEPENDENT ACCOUNTANTS

RJR Nabisco, Inc .
Its Directors and Stockholders
We have examined the consolidated financial statements and related schedules of RJR Nabisco, Inc .
and subsidiaries listed in the Index to Financial Statements and Financial Statement Schedules of the
annual report on Form 10-K of RJR Nabisco, Inc. for the year ended December 31, 1987 . Our
examinations were made in accordance with generally accepted auditing standards and, accordingly,
included such tests of the accounting records and such other auditing procedures as we considered
necessary in the circumstances .
In our opinion, the financial statements referred to above present fairly the consolidated financial
position of RJR Nabisco, Inc . and subsidiaries at December 31, 1987 and 1986, and the consolidated
results of their operations and the changes in their consolidated financial position for each of the three
years in the period ended December 31, 1987, in conformity with generally accepted accounting principles
applied on a consistent basis . Further, it is our opinion that the schedules referred to above present fairly
the information set forth therein in compliance with the applicable accounting regulation of the Securities
and Exchange Commission .
ERNST & WHINNEY
Atlanta, Georgia
February 1, 1988
lD
F-I
00
OD
SCHEDULE V
RJR NABISCO, INC. AND SUBSICIARIES
SCHEDULE V-PROPERTY, PLANT AND EQUIPMENT
Column A
Column B
Column C
Classification
Balance at
Beginning
of Period
$ 296
Column D
Column E
Column F
Additions
at Cost
Retirements
Other Changes
Add (Deduct)
Describe
Balance
at End
of Period
$ 9
$ 2
$ 21
$ 324
126
1,571
5,064
Year ended December 31, 1987 :

Land and land improvements . . . . . . . . . .
Buildings and leasehold
improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,418
41
14
Machinery and equipment . . . . . . . . . . . . . . . .
4,373
247
103
547
Construction-in-process . . . . . . . . . . . . . . . . . . . . .
607
639
(642)
$6,694
$ 936
$119
$ 52 (A )
$7,563
604

Land and land improvements . . . . . . . . . . .
S 246
$ 12
$ 5
$ 43
$ 296

improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,105
81
240
1,418
3,303
371
98
797
4,373
1,054
558
(997)
$5,708
$1,022
$119
$ 83 ( B )
$6,694
Land and land improvements . . . . . . . . . . .
$ 187
$ 5
$ 4
$ 4 (B)
54(C)
$ 246

improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
538
82
17
1,105
1,715
229
91
611
630
63 (B)
439 (C)
347 (B)
1,103 (C)
(417)(B)
607
3,303
1,054
231 (C)
$3,051
$ 946
$113
$ 1,824
$5,708
Prior years have been restated to report the Company's former spirits and wines business as
discontinued operations .
(A) Includes foreign currency translation effects of $175, divestments ($) 51) and reclassifications and
miscellaneous adjustments .
(B) Reclassifications, foreign currency -translation effects and/or miscellaneous adjustments .
( C ) Acquisitions at cost .
F-2
SCHEDULE VI
RJR NABISCO, INC. AND SUBSIDIARIES
SCHEDULE VI-ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
Column A
Column B
Column C
Column D
Column E
Column F
Other Changes
Balance at
Add (Deduct )
End of
Describe(A)
Period
$ -
$ 38
of Period
Additions
Charged
to Costs and
Expenses
$ 30
$ 8
$-
221
1,100
56
386
3
70
(12)
274
1,404
$1,351
$450
$73
$(12)
$1,716

Land improvements . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 24
$ 7
$-
$ (1)
$ 30

improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
184
822
49
346
1
56
(11)
(12)
221
1,100
$1,030
$402
$57
$(24)
$1,351
$ 20
$ 5
$-
$ (1 )
$ 24
Balance at
Beginning
escription

improvements . . . . . . . . . . . . . . : . . . . . . . . . . . . . . . . .

improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
etirements
184
153
33
685
220
53
(30)
822
$ 858
$258
$55
$(31)
$1,030
(A) Reclassifications, foreign currency translation effects and/or miscellaneous adjustments .
SCHEDULE VIII
RJR NABISCO, INC. AND SUBSIDIARIES
SCHEDULE VIII-VALUATION AND QUALIFYING ACCOUNTS
Column A
Column B Column C Column D Column E

Additions
escription
Balance at
Beginning
of Period
(1)
Charged
to Costs
and
Expenses
(2)
Charged
to Other
Accounts
(Describe)
Deduction
(Describe)
(A)
Balance
at End of
Period

Those valuation and qualifying accounts which are deducted in the
balance sheet from the assets to
which they apply:
For discounts and doubtful
accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
67
18
61
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
225
138
15
369
$292
$147
$27
$430
$18(B)

which they apply :
accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
76
21
30
67
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
112
139
27
225
$188
$160
$ 1(B)
$57
$292
42
43
27
64
9
5
76
112
$ 85
$ 91
$14
$188

which they apply:
accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16
10
$26(C)
(A) Charges against the accounts .
Ln
( B ) Miscellaneous adjustments .
( C ) Principally acquisitions .
0
N
l0
F-4
w
~
~
SCHEDULE IX
SCHEDULE IX-SHORT-TERM BORROWINGS

Column A
Column B Column C Column D Column E Column F
Weighted
Maximum Average Average
Weighted Amount Amount Interest
Average Outstanding Outstanding Rate
Category of Aggregate Balance at Interest During the During the During the
Short-term Borrowings End of Period(C) Rate Period Period(A) Period(B)
Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial Paper Holders . . . . . .
$159
283
44 .38%(D) $169 $ 98 33 .24%(D)

7 .41
640
17 .03%
$126
7 .97
674
17 .22%
$175
7 .90
715
368
6 .68
Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
99
419
$104
535
86
427
$115
277
24 .32%
6 .99
24 .34%
7 .99
(A) Primarily daily average balance of total short-term debt .
(B) Short-term interest expense as a percentage of the average balance of interest bearing short-term debt .
(C) Varying maturity dates with no provision for extension at maturity .

(D)Higher weighted average interest rate is principally due to Brazilian borrowings .
l0
F-5
~
tJ
SCHEDULE X
SCHEDULE X-SUPPLEMENTARY INCOME STATEMENT INFORMATION

Column A
Item
Column B
Charged
to
Costs
and
Expenses
1987
1986
1985
Maintenance and repairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$378
$370
$264
Advertising costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$774
$807
$684
F-6
RJR Nabisco, Inc .

RJR Nabisco, Inc . is among the world's
largest consumer products companies,
holding leading positions in both tobacco
and food products .
RJR Nabisco's principal operating units are
R .J. Reynolds Tobacco Co ., Nabisco Brands, Inc,
and Del Monte Tropical Fruit Co .
These businesses produce a wide range of
products, including cigarettes, cookies, crackers, nuts, snacks, confectionery products,
processed fruits and vegetables, cereals,
margarines and fresh fruit .
RJR Nabisco makes its products at 260 facilities in 40 countries . These consumer goods
are marketed in 160 countries and territories
around the world . Each day, consumers
purchase more than 80 million packages
of the company's products .

RJR Nabisco believes that superior returns
can be achieved on a consistent basis by market leadership in the consumer packaged
goods industry. The company's strategy is to
concentrate on core businesses, product quality, management decentralization, financial
strength, internal capital generation, and
ongoing investment in technology, productivity and marketing .
RJR Nabisco, Inc .
Highlights
/DollarsinMillionsExceptPerShareAmounts/
For the Years Ended December 31

Net sales
Operating income*
Income from continuing operations
Net income
Preferred dividends
Net income applicable to

Common Stock
Income from continuing
operations per common share
Net income per common share
Dividends per common share
Return on average total capital

Return on average common
stockholders' equity
Contents
Letter to Shareholders
Operating Review
Famous Brands
from RJR Nabisco
Board of Directors
Officers of the
Corporation
Financial Review
Shareholder Informatlon
34
40
At Year End
Workingcapital
Book value per common share
Number of common shares
outstanding (in thousands)
Number of stockholders
Number of full-time employees
1987 1986
Change
S 15,766 $15,102
2,304 2,340
1,081 1,025
1,209 1,064
+ 4%
- 2%
+ 5%
+ 14 %
30 102
- 71 %
1,179 962
+ 23 %
4 .19 3 .68
4 .70 3 .83
+ 14 %
+ 23 %
1 .76 1 .51
+ 17 %
13 .6% 1 1 .9%
20 .8% 19 .0%
S 1,717 S 1,329
24 .41 21 .21
+29%
+ 15 %
247,357 250,395
112,879 114,121
120,334 122,395
- i%
- 1%
- 2%
Prior years have been restated to report the Company s former spirits and wines business as
discontinued operations (see Note 3 to the Financial Statements) .
*Operating income includes the effects of net restructuring expense incurred in 1987 of S250
million (see Note 1 to the Financial Statements) .
42
43
69
Letter to Shareholders
In 1987 RJR Nabisco achieved record
results while successfully sharpening its
competitive effectiveness in the global
consumer products market .
Net income rose 14 percent to S 1 .21 billion,
up from $1 .06 billion in 1986 . Net income per
common share increased 23 percent to 54 .70,
or 87 cents per share . Consolidated net sales
reached S 15 .77 billion, up 4 percent from
S 15 .10 billion in the prior year .

Both our tobacco and food businesses contributed to these gains . The company's worldwide tobacco business achieved 1987 sales of
56 .35 billion, an 8 percent increase over 55 .87
billion in 1986, and operating income rose to
51 .82 billion, climbing 10 percent from 51 .66
billion . Our food business reported 1987 sales
of 59 .42 billion, up 2 percent from S 9 .24
billion, and operating income totaled 5915
million, a 12 percent gain over S820 million
in the prior year.

From an earnings perspective, we have an
excellent balance in the company between
our tobacco and our food businesses . By comparing operating income, you see a percentage contribution of 67 percent from tobacco
and 33 percent from food . However, when
you look at our operations on an after-tax
basis and excluding intangible amortization,
tobacco represents 60 percent and food
represents 40 percent of the total .
Strategies for Growth

RJR Nabisco's activities in 1987, as well as
our strateqies for 1988, are based on four
overriding principles :
RJR Nabisco relocated Its corporate headquarters

staff to Atlanta, Georgia, during 1987.
Ensuring that our company continues as a

highly responsive and flexible organization ;
Continuing to build on the strength of our
core businesses and well-established brands

in both tobacco and foods ;
Continuing to invest in technological excellence in manufacturing and product development ; and
Continuing to maximize our balance
sheet strength .
Corporate Organization
With the restructuring of our corporate
staff and the decentralization of our operating
units now complete, our organization is ideally
set as an active, responsive and resultsoriented team .
2
F Ross Johnson, President and Chief Executive W

Officer, RJR Nabisco, Inc .
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During the year, both our domestic and

international tobacco businesses were placed
under the management of R .J . Reynolds
Tobacco Co . In addition, Planters LifeSavers
Co. was assigned to R .J . Reynolds Tobacco to
take full advantage of common sales and distribution strategies . The senior management
group of our international tobacco business
moved to London, closer to its major markets,
and our international food business will follow
there in 1988 .
As part of our strategy of building strength

on strength and concentrating on core
businesses, we sold several operations that
did not fit our strategic business focus or
meet our criteria for long-term growth .
These divestitures included ;
Heublein Inc ., sold to Grand Metropolitan
PLC for 51 .2 billion ;
specialty tobacco and little cigar products ;
Canadian confectionery, margarine, dessert
and food service businesses ; and our
date and dry mix business and selected
confectionery products in early 1988 .
We will primarily utilize internal opportu-
nities to expand our tobacco and food operations . However, as with any organization,
should the right major acquisition opportunity
arise, we would give it full consideration .
Concurrently, we will continue to make
smaller acquisitions that complement our
existing operations, as we did in 1987 with
the purchases of a :
cashew nut company in Brazil ;

snack producer in New Zealand; and
frozen pastry firm in France .
Brand Strength
Our greatest asset is our lineup of leading
brand-name products . In tobacco, our
WINSTON, SALEM, CAMEL, VANTAGE and DORAL
brands rank among the 15 best selling cigarettes in the United States, and CAMEL is a leading global brand . In foods, the excellent results
of line extensions such as OREO Big Stuf cookies
and RITZ BiTS bite-size crackers demonstrate the
vitality of these long-time favorite brands .
Building on the powerful strength of our
famous brands, we will continue to maximize
their product potential and use our market
leadership position as a springboard for introducing successful new brands .
Charles E . Hugel, Chairman of the Board,

RJR Nabisco, Inc .
Technology
We firmly believe that technology is the cornerstone of future growth in both our tobacco
and food businesses . Reflecting this commitment, we raised our investment in research
and development by 19 percent to 5204
million in 1987.
Perhaps no better example of the potential
impact of technological innovation was our
September announcement of a new cigarette
developed through our own technology-
a product that heats, rather than burns,

tobacco . We are excited about the product
and its U .S. market introduction in the latter
part of 1988, as well as what it could represent for the future growth of our industry .
To broaden our foods technology base, we
formed a joint venture with BioTechnica International, Inc ., a biotechnology firm, to conduct long-term development of improved
crops using genetic engineering techniques .
Technology is essential in assuring that our
manufacturing facilities are state of the art .
Our cigarette manufacturing complex in
Tobaccoville, North Carolina-the world's
largest and most technically advanced
facility of its kind-became fully operational
during the year. Modernization of the Whitaker Park plant, another key component
of our S2 billion tobacco facilities program,

is nearing completion .
In foods, we will spend more than 54
billion over the next several years to introduce leading-edge technology to all of
our manufacturing far-ilities .
Financial Position
The company took several actions in 1987
to improve its already strong financial position .
The early retirement of high-interest debt and
the repurchase of a portion of the Series B
preferred stock contributed to lowering the
corporation's total debt-to-capital ratio in
1987 to 42 percent, compared to 51 percent
on December 31, 1986 . Our interest costs
have declined, and our remaining debt is
set at fixed rates averaging below 9 percent .
Dr . Robert J . Carbonell, Vice Chairman of the Board,

RJR Nabisco, Inc .
Before capital expenditures and dividends,

our cash flow totaled 52 .12 billion from continuing operations in 1987. This places us in an
excellent position to service both the long- and
short-term objectives of our company.
It allows us to respond quickly to business

opportunities, as well as changing conditions
in the financial market . As an example of this,
in October we announced plans to repurchase up to 5 million shares of our common
stock . We did so to take advantage of the
unusual opportunity to repurchase our shares
at attractive price levels .
Reflecting our corporation's strong 1987
results, as well as our excellent financial
position, the Board of Directors raised
the quarterly dividend on RJR Nabisco's
common stock in July to 48 cents per
share, an increase of 20 percent .
Litigation
Litigation involving the tobacco industry
continues to be of interest and concern to our
company and its shareholders . While the company remains a defendant in a number of
product liability lawsuits in the United States,
favorable decisions by Federal Circuit Courts of
Appeal during the year affirmed the adequacy
of federally mandated health warnings for cigarettes . A number of our state courts reached
the same conclusion in favorable rulings for
the defendant cigarette companies .
We believe that such lawsuits are inappropriate both from a legal and a public policy
standpoint, and that our position in the litigation will ultimately prevail .
Executive Appointments
During 1987 a number of important
charige~ took place in the senior management of our company.
Charles E . Hugel became Chairman of
the Board of RJR Nabisco on October 1, 1987,
succeeding J . Paul Sticht .
Among other key appointments :

Edward A . Horrigan, Jr., Vice Chairman of
the Board of RJR Nabisco, was also named
Chairman and Chief Executive Officer of the
restructured R .J . Reynolds Tobacco Co . ;
Dr. Robert J . Carbonell was elected Vice
Chairman of the Board of RJR Nabisco ;
James O. Welch, Jr . was elected Vice
Chairman of the Board of RJR Nabisco ;
Edward J . Robinson was elected Executive
Vice President, Finance, and Chief
Financial Officer ;
6
James O . Welch, Jr., Vice Chairman of the Board,

RJR Nabisco, Inc ., and Chairman, Nabisco Brands, Inc .
John D . Martin was elected Executive

Vice President, effective January 15, 1988 .
He formerly served as President and
Chief Operating Officer of Ohlmeyer
Communications Co ., our joint-venture
communications company.
H . John Greeniaus was named
President and Chief Executive Officer
of Nabisco Brands ;
Dolph V(/W von Arx was named President

and Chief Executive Officer of R .J . Reynolds
Tobacco USA ;
John H . Clarke was elected Senior Vice
President, Corporate Technology ;
Dennis Durden was elected Senior
Vice President ;
William J . Liss was elected Senior Vice
President, Public Affairs ;
W.G . Champion Mitchell was elected
Senior Vice President, External Affairs ;
J . Thomas Pearson was elected Senior
Vice President, Taxation ;
Dean R . Posvar was elected Senior
Vice President, Business Planning
and Development ;
Kenneth D. Taylor was elected Senior Vice President .
Retiring from the company's Board of
Directors during 1988 will be J . Paul Sticht
and Gerald H . Long . We are grateful for
their leadership and many contributions
to our company.
Paul Sticht will retire from the Board after
21 years of service to RJR Nabisco and its
predecessor, R .J . Reynolds Industries . He joined
the Board in 1968, and has served as both
President and Chief Operating Officer and
Chairman and Chief Executive Officer of
Outlook
RJR Nabisco is today in an enviable
position to meet the challenges of an everchanging global market and to enhance
our shareholder value .
Our accomplishments to date and our plans

for the future are possible only through the
support of our more than 120,000 employees
worldwide . On behalf of the Board of Directors, I wish to express our deep appreciation
for their many contributions to making
RJR Nabisco one of the world's premier
consumer products companies .
F Ross Johnson
Atlanta, Georgia
February 19, 1988
our company.
Gerald Long, Senior Executive Vice President
of RJR Nabisco and Chairman of R .J . Reynolds
Tobacco USA, will retire after 20 years with
the company. He has been a member of our
Board since 1984 .
In February 1988, Martin S . Davis,
Chairman and Chief Executive Officer of
Gulf+Western Inc ., was nominated for
election to our Board of Directors at the
May 1988 annual stockholders meeting .
R .J. Reynolds Tobacco Company

The worldwide tobacco businesses of
RJR Nabisco achieved outstanding results for
1987. The domestic and international tobacco
businesses produced combined sales of $6 .35 biIIion, up 8 percent from 1986 . Operating income
was S 1 .82 billion, an increase of 10 percent .
The tobacco operations achieved these
results by strengthening core brands, increasing manufacturing efficiencies, developing
new products, and enhancing their sales
and marketing strategies .
During 1987, RJR Nabisco's worldwide
tobacco business was restructured under
R .J . Reynolds Tobacco Co . to help ensure the
most effective management of all global resources .
A new business unit, R .J. Reynolds Tobacco
Development Corp ., was created to over-
see new product developments on a worldwide basis . The senior executive group of
R .J . Reynolds Tobacco International moved to
London, enabling management to be even
more responsive to changing international
market conditions .
'
Responsibility for Planters LifeSavers Co . was

transferred to R .J . Reynolds Tobacco Co . from
Nabisco Brands, and the business was relocated to Winston-Salem, North Carolina, from
Parsippany, New Jersey. The sales forces of
R .J. Reynolds Tobacco USA and Planters
LifeSavers were merged in early 1988, forming
RJR Sales Co ., to share distribution strengths .
In September, R .J . Reynolds Tobacco Co .
announced the development of the most significant cigarette innovation in decades . The
company's new cigarette will provide consumers with an alternative in their selection of cigarette brands . The cigarette looks, lights and
smokes like other cigarettes, but produces no
ash and virtually no sidestream smoke after
the first few puffs . Because the tobacco is
heated rather than burned, a majority of the
compounds of burning tobacco are either
eliminated or greatly reduced .
Development of the new cigarette continued in 1988, and the product is scheduled to
enter lead markets by the end of the year .
Throughout 1987 R .J. Reynolds Tobacco
Co ., and the entire tobacco industry, again
faced external pressures in the United States
and abroad . Reynolds Tobacco will continue to
vigorously defend its position in product liability litigation and on issues of higher cigarette
taxes, public smoking regulations, and bans on
cigarette advertising and promotion .
With refinements made in the company's structure and capabilities during 1987 R .J. Reynolds
Tobacco Co . is better prepared than ever to be
the lowest cost supplier of the highest quality
products in the global tobacco industry.
8
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Edward A . Horrigan, Jr., Vice Chairman of the ~o

Board, RJR Nabisco, Inc ., and Chairman and Chief 'P
Executive Officer, R .J . Reynolds Tobacco Co .
N
R.J. Reynolds Tobacco USA

R .J . Reynolds Tobacco USA achieved record
results in 1987 posting gains in both sales and
operating income while increasing its share of
the U .S . cigarette market .
Two key factors contributed to R .J. Reynolds
Tobacco USA's continued success : its strong
lineup of major brands targeted to appeal to
individual preferences for taste, style and price ;
and its ongoing improvements in manufacturing and productivity
The solid showing by R .J . Reynolds Tobacco
USA brands in each major segment of the cigarette industry helped increase the company's
share of the U .S. market to 32 .52 percent from
32 .36 percent . Since 1976, Reynolds Tobacco
USA has manufactured and marketed four of
the nation's top 10 cigarette brands-WiNSroN,
SALEM, CAMEL and VANTAGE .
Once again, Reynolds Tobacco USA outperformed the U .S. tobacco industry. While
unit volume for the overall U .S. tobacco
industry declined 2 percent, Reynolds
Tobacco USA's unit volume for the year
declined byjust 1 .6 percent .
The company achieved its record results by
using a two-pronged approach of redoubling
its efforts to enhance its established core
brands and applying the necessary resources
to develop new brands .
WINSTON, SALEM, and CAMEL cigarettes are
benefiting from enhanced consumer appeal as
the result of new packaging and advertising
campaigns and line extensions .
SALEM, in particular, highlights the impact
that successful advertising and appealing packaging can make on consumers . SALEM packaging which had remained largely the same
since the 1950s, was redesigned in 1987 with
bolder colors, a crisp sailboat logo and new
lettering . In consumer testing, smokers of competitive products preferred the new packaging
over the old style by a three-to-one margin . In
addition, the packaging change was supported by new advertising that emphasizes ~
the brand's coolness and refreshment value .
1988 marks CAMEL cigarettes' 75th anniversary, an unusual brand milestone of longevity
and consumer acceptance . The brand introduced new advertising, marketing and promotional efforts in early 1988 to celebrate the
brand's birthday. In addition, CAMEL Filters 100s
were introduced during 1987, further broadening that brand's appeal among smokers .
10
Gerald H . Long (right), Chairman, R .J. Reynolds

Tobacco USA
Dolph W. von Arx, President and Chief Executive
Officer, R .J . Reynolds Tobacco USA
Salem cigarettes, the nation's leading menthol

brand, received an exciting new look for Its
packaging and advertising during 1987. The new
package design and marketing support emphasize
Salem cigarettes' refreshing menthol flavor.
The company's efforts were not limited to its

established brands . Since the DORAL brand was
reintroduced in 1984 as the first branded cigarette in the savings segment, targeted to
appeal to price-conscious smokers, its success
has been phenomenal . DoRAL cigarettes' share
of the domestic market has climbed steadily,
and it has become the number one brand in
the savings segment . The brand reached a 3 .0
share in 1987 up from 2 .1 percent in 1986 .
New, more distinctive packaging for the
entire DORAL brand family, along with the addition of three new styles, DORAL Full Flavor 85s,
DORAL Full Flavor 100s and DORAL Ultra Lights
100s, strengthened the company's leadership
position in the growing savings segment .
Oth e r key brand accomplishments for the
year included a new advertising program for

MORE cigarettes, new packaging for CENTURY
cigarettes, favorable consumer response to

VANTAGE cigarettes' action-oriented advertising
campaign, and a successful year of share

growth for NOW cigarettes .
Complementing the company's aggressive
marketing programs are the results of several
years of manufacturing and productivity improvements . In 1987, the company's Tobaccoville complex-the world's largest and most
technologically advanced cigarette manufacturing facility-was brought fully on line . With
the phased start-up of the plant that began in
1985 now complete, the company is realizing
substantial increases in productivity and the
highest levels of product quality in its history.
Reynolds Tobacco USA's Whitaker Park
manufacturing complex is undergoing renovatic.n to make it the technological equivalent of
Tobaccoville . The installation of new making
and packing equipment is scheduled for completion in 1988 .
The combined manufacturing resources of
Tobaccoville and Whitaker Park, together with
the efforts of its skilled and knowledgeable
employees, will put R .J . Reynolds Tobacco USA
in an unparalleled position to become the
industry's lowest cost supplier of the highest
quality cigarettes available .
With its exceptional line of leading cigarette
brands and advances in achieving greater
operating efficiencies, R .J . Reynolds Tobacco
USA is well positioned to continue its record of
steady earnings growth .
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Winston is R .J . Reynolds Tobacco USA's best

selling brand family. The brand appeals to
a wide range of consumers through a variety
of styles and packaging alternatives .
I
12
R.J. Reynolds Tobacco International, Inc.

R .J . Reynolds Tobacco International achieved
record unit volume of 99 billion units in 1987,
an increase of more than 10 percent over 1986
and about 10 times the growth rate of the
worldwide cigarette market .
Tobacco International substantially increased
marketing spending for its key brands around
the world, and achieved strong sales and operating income in 1987
Paced by its major brands-CAMEL, WINSTON
and SALEM-R .J . Reynolds Tobacco International increased or maintained share in all
of its top 20 markets during 1987 with a strong
and balanced worldwide performance .
CAMEL, Tobacco International's global brand,
increased or held share in all of its top 10 markets . The CAMEL brand increased unit volume
and market share in its traditionally strongest
region, Western Europe, where overall industry unit volume declined .
A new cornerstone for Tobacco International's sponsorships established CAMEL cigarettes

as a major force in Formula One automobile
racing . Throughout the year, CAMEL cigarettes
received worldwide publicity, targeted exposure and enhanced imagery at the Grand Prix
race courses of the world .
The company's other top brands also
contributed to Tobacco International's record
1987 performance . For WINSTON cigarettes,
unit volume rose more than 10 percent in its
strongholds of Spain, Portugal, Puerto Rico
and Hong Kong . The WINSTON brand also
was successfully relaunched in Switzerland
and France .
In the menthol segment, SALEM cigarettes
were a powerfui presence with unit volume
up 18 percent in 1987. In Asia, which accounts
for about half of the brand's unit volume,
SALEM cigarettes' volume grew by almost
Lester W. Pullen, Chairman and Chief Executive

Officer, R .J. Reynolds Tobacco International, Inc .
40 percent .
Tobacco International's local brands, which
posted a 10 percent unit volume increase in

1987 also contributed to the company's excellent year. Especially strong performances came
from MUSTANG in Brazil, and EXPORT "A" and
MACDONALD SPEC IAL in Canada .
Operations will begin by the middle of 1988

at Tobacco International's joint venture cigarette factory in the People's Republic of China .
Access to Taiwan was achieved in 1987, and
the company continued to make progress
toward greater access to other major Camel cigarettes, R
.J . Reynolds Tobacco
government-controlled markets such as International's global brand, reinforced Its
Turkey, Thailand and Korea
. Image and expanded Its worldwide marketing
Building on the momentum established in effort by becoming a sponsor of Formula One
1987, R .J . Reynolds Tobacco International is automobile racing .
looking ahead to further growth in its global
tobacco business .
14
15
Planters LifeSavers Company

Planters LifeSavers Co . recorded higher sales
and operating income in 1987, while increasing
marketing support for core brands and products introduced during the year.
PLANTERS nuts, the leading brand name in
packaged nuts, continued to show gains in
the United States . The popular PLANTERS Honey
Roasted nuts, as well as other PLANTERS nut and
snack products, contributed to the brand's
overall volume growth . RJR Nabisco's purchase in July of a major Brazilian cashew nut
producer, Iracema Industrias de Caju S.A .,
complemented the PLANTERS nut business .
PLANTERS Premium Select popcorn entered
the growing popcorn market in March 1987.
The premium brand of unpopped popcorn is
available in jars and microwave bags . A natural extension of the PLANTERS snack line, PLANTERS popcorn made good progress in'a
competitive market during its first year, backed

by strong marketing support at both the trade
and consumer levels .
Individual-size packages of 12 different
PLANTERS nuts and salted snacks, along with
products from Nabisco Brands' Biscuit
Division, were successfully launched as the
SNACK-ALONGS line during 1987. This program
provides a one-of-a-kind, full-line snack center
for convenience stores, drug stores and other
retail outlets in the United States .
LIFE SAVERS Fruit Juicers, a roll candy in four
flavors made with 10 percent real fruit juice,
underwent successful development and consumer testing in 1987. National introduction
was completed in early 1988 .
BUBBLE YUM bubble gum and CARE*FREE SUgariesS gwYi achieved improved results for the
year. BUBBLE YuM bubble gum widened its margin as the leading product in its category .
CARE*FREE sugarless gum enjoyed excellent volume and market share growth following the
introduction of a new, better-tasting product .
BUTTERFINGER candy bars completed a third
straight year of strong sales growth, while the
successful relaunch of BABY RUTH candy bars
exceeded the company's goals for distribution
and sales volume .
Joining with R .J . Reynolds Tobacco USA,
Planters LifeSavers expects to improve distribution at approximately 75,000 convenience
stores and 113,000 small retailers throughout
the United States .
By combining a superior product lineup
with a powerful new sales and distribution
force, Planters LifeSavers is well positioned to
be the best and lowest cost supplier of the
industry's most complete line of snacks and
confectionery products .
16
John P. Polychron, President and Chief Executive

Officer, Planters LifeSavers Co .
Building on Its lineup of popular leading brands,

Planters LifeSavers is offering consumers a growing
variety of snacks and confectionery products .
Nabisco Brands, Inc .

Nabisco Brands, Inc . enjoyed a strong
performance in 1987, with volumes from
continuing businesses up 3 percent and sales
from continuing businesses up 10 percent .
New product successes led to market share
improvements in nearly all key business areas .
Nabisco Brands is the largest component of
RJR Nabisco's food business . The company's
highly successful strategy of concentrating on
core brands and building growth from the
strength of its many leading brand name products contributed to improved results in 1987 .
New product introductions and growth
in established brands resulted in U.S. market
share gains in cookies, crackers, breakfast
cereal, margarine and other products . Strong
volume gains in the United Kingdom and
other international markets also contributed
to Nabisco Brands' results .
To help assure continued progress, during
1987 Nabisco Brands increased investments in
marketing for its key brands, in technology for
new product development and in advancements in manufacturing capabilities .
RJR Nabisco will spend more than S4 billion
over the next several years to assure that its
food manufacturing facilities are the most technologically advanced in the industry. A major
dimension of the program will involve Nabisco's Biscuit Division, which announced plans
in early 1988 to construct a new, state-of-theart bakery near Raleigh, North Carolina .
This new bakery will produce cookie and
cracker products using the latest in food processing technology. The North Carolina facility
will prod! ~ce ma;or high-volume brands more
efficiently with enhanced quality control . In
addition, it will give Nabisco Brands greater
flexibility in packaging its products to meet
consumer needs and production of specialty
items, new products and special packs at its
other plants .
With an unparalleled lineup of famous
brands and a firm commitment to manufacturing excellence, Nabisco Brands is prepared
to meet the varied needs and individual tastes
of consumers around the world with its highquality food products .
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H . John GreEnia us(rigPrEsiatn ; Cr

Executive Officer, Nabisco B~ands .
Peter N . Rooers, Executive Vice President,
American Classic crackers was one of 18 products

introduced under the "'Nevv Sta-s from Nat .:isco"
campaign . The largest product launch in company
history, the "New Stars" program achieved
excellent results in 1987.
Biscuit Division
Bolstered by successful new products
and line extensions of its leading cookie and
cracker brands, the Biscuit Division of Nabisco
Brands achieved solid volume growth which
contributed to higher sales and operating
income for 1987.
Nabisco's Biscuit Division widened its U .S .
market leadership in cookies and crackers
through successful line extensions and new
brand introductions .
Nabisco Brands initiated the largest product
launch in its history during July. Under the
"New Stars from Nabisco" banner, 18 new
cookie and cracker productsjoined other
Nabisco favorites in stores nationwide . This
new product effort achieved an outstanding
first-year sales performance . At the same time,
it strengthened major brand franchises and
enhanced Nabisco's product presence on
supermarket shelves .
In cookies, Nabisco extended several of its
strong established brands with appealing new
items . OREO, the world's largest selling cookie
brand, achieved record volume for the third
consecutive year. An 8 percent volume
increase in 1987 followed an exceptional performance in 1986, the brand's 75th anniversary. Strong consumer response to the new
Fudge Covered OREO and OReo Big Stuf cookies, both introduced as part of the "New Stars"
program, demonstrated the ongoing vitality
of this long-time cookie favorite .
CHIPS AHOYI chocolate chip cookies, the
number one brand in its category, recorded
volume gains in 1987, aided by the introduction
of Fudge Strired CHIPS .AHovI cookies . The addition of Newrorvs fruit-filled cookies in new
single-serve variety packs contributed to that
brand's 1987 volume growth .
Nabisco achieved its highest ever share of
the growing U .S . cracker market in 1987. RrTz
crackers, America's favorite cracker brand,
enjoyed overwhelming success with the introduction of RrTZ BITS, bite-size snack crackers .
Two entirely new cracker products joined
the Nabisco lineup as well . AMERICAN CLASSIC
crackers were introduced to meet growing
consumer interest in premium snack products
and in-home entertaining . QUACKERS snacks, a
bite-size cracker in the shape of a duck, also
received enthusiastic consumer response .
The Biscuit Division's powerful market position in cookies and crackers, coupled with
improved manufacturing capabilities, offers
tremendous potential for continued growth .
20
Wilfiam B . McKnipht, President, 6 :scui ;

The popularity of Oreo Bio Stuf cook ies exFm ; ,i!` c :

Nabisco Brands' successful strateov of introc,lcr-, ;
line extensions of its many weEi-knov .r,
established brands .
Grocery Products Division

The Grocery Products Division of Nabisco
Brands recorded higher sales and operating
income in 1987, a performance strengthened
by increased marketing support for established
brands, as well as growth from successful new
product introductions.
In cereals, Nabisco Brands increased its
share of the highly competitive ready-to-eat
category, supported by the excellent results of
NABISCO Shredded Wheat cereals . The successful national rollout of FRUIT WHEATS cereal reinforced Nabisco's strong position in the adult
cereal market . Nabisco holds a 23 percent
share of this growing cereal segment, a solid
foundation for generating future expansion .
Good volume gains by FLEiscHnnANN's margarines enabled Nabisco to achieve its highest
market share in recent history. An advertising
and promotion campaign aimed at healthconscious consumers contributed to the
brand's performance . BLUE BONNET margarine
continued to compete effectively in the intermediate price segment, modestly increasing in
both volume and share .
Building on the prominence of the A .1 .
brand, the leader in the steak sauce category,
the Grocery Products Division introduced A .1 .
Poultry Sauce in 1987. The new product was
developed by Nabisco Brands to take advantage of the growing popularity of chicken .
Striking new packaging, coupled with innovative merchandising programs, sparked volume improvement for ORTEGA Mexican foods .
Five new table sauces introduced in 1987 complement the ORTEGA product line and help position the brand to increase its share of the
fast-growing Mexican food category.
Other Grocery Products Division products
also achieved good results in 1987, including
MILK-BONE dog biscuits, GREY POUPON DlJon
mustards, ROYAL desserts, COLLEGE INN broths
and REGINA wine vinegar.
During the year, the Grocery Products Division established its own dedicated sales group .
This step provided the division with more flexibility by combining the strengths of both a
direct sales unit for cereal and pet snack products, and broker representation for other grocery products . This focused effort enhanced
overall sales and merchandising effectiveness
and strengthened the division's ability to service the grocery trade and to reach new outlets,
such as drug stores and mass merchandisers .
The Grocery Products Division of Nabisco
Brands, with its large and diverse group of
well-known brand names, is managing its
product portfolio aggressively to assure continued profitable growth .
22
Ellen R . M,arrarn, President, Grocery Products

Division, Nabisco Brands, Inc .
Nabisco Fruit Wheats cereal, one of Nabisco Brands'

shredded wheat products, and its Fleischmann's
margarines appeal to the growing number of
consumers wanting healthy foods .
Del Monte USA

Del Monte USA, the largest canner of fruits
and vegetables in the United States, maintained a firm hold of the number one share
position in both segments . Anchored by one
of the most widely recognized and respected
trademarks in the food industry, Del Monte
USA achieved higher sales and operating
income in 1987
In its core business, processed fruits and
vegetables, Del Monte USA gained market
share and improved profitability during 1987.
Canned fruit and vegetable volume significantly increased compared to 1986 and
bettered the industry, which registered a
modest volume decline .
Del Monte is following a strategy of creating
new products and "niche" line extensions that
take advantage of its rich heritage, as well as
technical and distribution strengths in processed fruits and vegetables .
A major step in this regard occurred in 1987
with the introduction into test markets of DEL
MONTE Vegetable Classics, a line of vegetable
side dishes packaged in shelf-stable plastic
trays . The trays are designed for use in microwave ovens, providing both convenient and
good-tasting side dishes . Following successful
test marketing in Phoenix and Seattle, Vegetabie Classics will be expanded to additional
markets during 1988 .
Del Monte USA also introduced DEL MONTE
Specialties, a line of premium quality vegetables in smaller-sized, gold-label cans . This new
value-added product line was designed for
consumers seeking variety and superior
quality. As an extension of the popular
indiviaual-serving fruit cups, Del Monte USA
introduced Fruit-In-Gel Cups, a line of fruits
packed in fruit-flavored gelatin . A companion
line of flavored applesauces, called Applesauce
Cups, aiso joined the DEL MONTE line .
Recognizing the on-the-go lifestyles of consumers, Del Monte began distribution of ,
single-serve sizes of its DEL MONTE FRUIT SNACKS
and Fruit Blends juice drinks in 1987 The line
extensions expanded distribution beyond grocery stores into convenience stores, drug
stores and small retail outlets .
Del Monte's umbrella advertising campaign,
based on the "We Grow" theme, was
extended to all major product lines in both
print and television . The use of this common
theme capitalizes on the synergies that
exist when one brand name spans many
different products .
Building on its long-established strengths in
processed fruits and vegetables, Del Monte
USA is aggressively seeking opportunities to
expand its business .
24
A . Ewan Macdonald, President, Del Monte USA
Del Monte USA's new Vegetable Classics side dishes

combine the nutritious goodness of Del Monte
vegetables with the convenience and ease of
microwave cooking .
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25
Nabisco Brands Ltd

Nabisco Brands Ltd of Canada accomplished a dramatic turnaround in its key food
businesses during 1987 . The Canadian food
company recorded gains in volume and market share for nearly all major advertised
brands, reversing the prior year's declining
trend . Both sales and operating income from
Nabisco Brands Ltd's ongoing operations also
improved significantly .
Nabisco Brands Ltd's strategy of concentrating marketing resources behind core brands,
along with a program of restructuring,
streamlining and decentralization, contributed
greatly to the year's performance . Through a
successful divestiture program, the company
sold a number of businesses that did not fit its
long-term strategic plans .
Nabisco Brands Ltd today is focused on two
primary businesses-the Biscuit Division,
which is Canada's top cookie and cracker producer, and the Grocery Division, a leading producer of cereals, pet snacks, canned fruits and
vegetables, and fruit juices .
In both divisions, increased spending on
advertising and promotions for core brands
contributed to overall volume growth .
The Biscuit Division, led by Christie Brown,
benefited from a number of successful line
extensions and new product introductions
during 1987. These products included FuDGEE-O
DOUBLE STUF cookies, new flavors of NEwroN
fruit-filled cookies, Striped CHIPS AHOYI cookies,
OREO DOUBLE STUF cookies, Whole Wheat RiTz
and PREMIUM crackers, and new flavors of
CHRISTIE snacking crackers .
Nabisco Brands Ltd's new COUNTRY FIBRE
line of three cookie and cracker products,
the company's largest product launch of the
year, achieved promising results . This
unique biscuit line offers consumers a good
source of dietary fibre in wholesome, goodtasting cookies and crackers .
In the Grocery Division, NABisco RAISIN
WHEATS cereal continued to show volume
growth momentum . Nabisco Brands Ltd also
introduced SHREDDED WHEAT'N BRAN nationally
in 1987 and launched a highly successful marketing effort to revitalize SHREDDIES cereal .
DEL MONTE canned fruit and fruit juices, each
the leading brand in their product categories,
achieved solid volume gains . DEL MONTE
canned vegetables experienced a slight volume decline, due primarily to reduced availability of crops for processing .
With a firm focus on its core businesses and
major brands, Nabisco Brands Ltd is capitalizing on its leadership positions in a variety of
well-known biscuit and grocery products .
26
Raymond J . Verdon, President and Chief Executive

Officer, Nabisco Brands Ltd
Nabisco Brands Ltd, one of Canada's leadino food

companies, Is strengthening its business by focusing
on core brands, such as Peek Freans and
Christie biscuit products .
lnternational Nabisco Brands

International Nabisco Brands' higher 1987
sales and operating income benefited from
particularly strong performances in the United
Kingdom and Europe .
In the United Kingdom, International
Nabisco's largest single market, good volume
growth came from WALKERS and SMITHS crisps
and snacks, as well as NABisco cereals . Successful product introductions included SMITHS Jackets crisps, a chip made using unpeeled
potatoes, and TEAM FLAKES cereal .
In France, volume and market share increases for the BELIN line of cookies extended
the company's position as one of the country's
top biscuit producers . The acquisition of ULA
Bahlsen, a French frozen pastry business,
made Nabisco the leading marketer of this
popular French dessert .
Other major European markets also showed
good progress . In Italy, Nabisco continued to
register market share gains for the SAiwA line of
cookies . In Spain, the company's biscuit business achieved sharply higher volume and
market share improvements . To enhance its
distribution channels there, the company
entered into a partnership with Tabacalera,
S .A ., Spain's government-owned tobacco
and foods company.
International Nabisco expanded its operations in a number of other countries as well .
Britannia Industries, Nabisco's 38 percentowned business in India, began operating a
new soya processing plant and maintained its
leadership position in the biscuit category. In
New Zealand, the company added to its number one position in biscuit products by
acquiring the country's leading snack producer, Abels Industries, Ltd .
Nabisco Brands' joint venture in the People's
Republic of China completed construction and
began start-up of a new bakery in late 1987.
The Beging bakery will begin producing crackers for sale in China and other Far East countries during 1988 . In addition, a joint-venture
business in Thailand began operating a new
bakery during 1987.
The diversity of its products and the geographic reach of its markets are important factors in the overall strength of International
Nabisco Brands . This balanced portfolio will
help assure steady progress for the company's
worldwide food business .
78
R . Edwrd, Gfove ; . President, In :e ; n~ :io ti,='

Nabisco Brands
Belin, the leading cookie and cracker pro ::ij : r- i~,

France, expanded its dessert line with the of new frozen pastry products in 1987
.
Del Monte Tropical Fruit Company

Del Monte Tropical Fruit Co . remained
one of the world's top fresh fruit companies in
1987, while taking steps to improve operations
and profitability. Results met expectations,
although they were below 1986's record
performance .
Del Monte Tropical Fruit's principal products,
fresh bananas and pineapples, maintained volume strength in the key markets of North
America, Europe and the Far East . The company continued to improve production, transportation and agricultural techniques.
During 1987, Del Monte Tropical Fruit sold

57 million 40-pound boxes of bananas in the
markets of North America, Europe, the Far
East and the Middle East . In addition, the company maintained its position as one of the
world's leading marketers of fresh pineapple
with a 33 percent share and sold approximately 10 million boxes in North America,
Europe and the Far East .
High-quality pineapples from Del Monte's
newest production facility in Costa Rica continued to receive excellent consumer acceptance . Production at the 6,000-acre facility
increased 25 percent over 1986 levels, enabling
Del Monte Tropical Fruit to increase sales to
North American and European markets by
31 percent..
Del Monte Tropical Fruit will increase its
presence in the European fresh fruit market
through a 1987 agreement with the stateowned Cameroon Development Corp . Under
the agreement, 3,000 acres of new banana
plantations will be developed in the African
nation of Cameroon . By early 1989, the new
business will supply bananas to Del Monte for
sale in France and other European markets .
Paul J. Bott, President and Chief Executive Officer,

Del Monte Tropical Fruit Co .
In addition, the company's plantation in

Kenya began providing fresh pineapple to new
markets in Europe in early 1988 .
Del Monte Tropical Fruit signed an agreement in 1987 to build six refrigerated ships for
transporting bananas, pineapples and other
fruits . The vessels, scheduled for deployment in
late 1989, are designed to accommodate Del
Monte's efficient system of palletized shipping
and will be used for shipments from Central
America to North America . Use of the technologically sophisticated ships will improve product quality while reducing operating costs .
Del Monte Tropical Fruit is developing its

production facilities, expanding into new markets, and improving operating and marketing
efficiencies to take full advantage of growing
fresh fruit consumption worldwide .
30
Del Monte Tropical Fruit Co . is expanding its banana

and pineapple growing operations and improving
its transportation system to meet Increasing
demand for fresh fruit worldwide .
Sports Marketing
By teaming up sports and marketing,
RJR Nabisco is using one of the most effective
means available to marketers of consumer products to reach key consumer audiences .
RJR Nabisco companies were involved
with some 1,800 individual sporting events
around the world in 1987 . Millions of spectators
attended these events in venues ranging from
the Daytona 500 stock car race to the Nabisco
Masters tennis championship, while millions
more viewed them on television .
In motor sports, more than 6 million racing
enthusiasts filled the stands at events sponsored by R .J . Reynolds Tobacco USA during
1987 Through its sponsorship of the NASCAR
Winston Cup Series in stock car racing,
Winston drag racing, Camel GT sports car racing,
and Camel motorcycle racing, R .J. Reynolds
Tobacco is one of the best-known names in
American motor sports .
R .J . Reynolds Tobacco International moved
into the high-speed world of international Formula One racing during 1987. The company's
CAMEL brand added sponsorship of the Lotus
Grand Prix Racing Team to its motor sports
involvement in Europe .
RJR Nabisco expanded its sponsorship of
professional golf, one of America's fastest
growing spectator sports, in 1987 The Nabisco
Grand Prix of Golf, a year-long points competition among individual PGA tour professionals
that also benefits charities throughout the
United States, completed a successful first year.
R .J. Reynolds Tobacco Co . sponsored the inaugural Vantage Cup Championship in WinstonSalem, North Carolina, in 1987 This event
capped off the first year of the Vantage Cup
team competition on the Senior PGA Tour.
In ladies' professional golf, Planters LifeSavers
Co . will sponsor the first Planters Pat Bradley
International Tournament in 1988 . RJR Nabisco's
involvement with women's golf began in 1982
with the Nabisco Dinah Shore tournament,
one of the major events on the LPGA tour .
The Nabisco Grand Prix of Tennis brought
together the world's top men tennis players
to compete in more than 70 events in 1987
Highlighting the year-long competition was
the Nabisco Masters Championship in men's
singles tennis, held at New York's Madison
Square Garden, and the Nabisco Masters
Championship in doubles at Royal Albert Hall
in London .
RJR Nabisco remains a leader in corporate
use of sporting events to reach consumers
around the world . For RJR Nabisco, sports and
marketing are truly a winning combination .
32
Bob Goalby, former Masters champion and a member of Team RJR Nabisco, competed with other
Senior PGA golfers at the first Vantage Championship, sponsored by R .J . Reynolds Tobacco Co .
Top, right : The excitement of Winston Cup stock car

racing draws millions of enthusiastic fans each year
to events throughout the United States .
Middle, right : Professional golfers Jack Nicklaus,
Raymond Floyd and Ben Crenshaw (left to right) are
members of Team RJR Nabisco, a group of athletes
who represent the company In various sales,
marketing and charitable activities .
Bottom, right : Ivan Lendl, the world's top men's
tennis player, received first place honors at the 1987
Nabisco Masters Championship from tennis great
Rod Laver, a member of Team RJR Nabisco .
Famous Brands From RJR Nabisco, Inc .

TOBACCO PRODUCTS
Ideal Chocolate and Peanut Bars

Lorna Doone Shortbread
UNITED STATES
Cigarette Brands
Camel NOW
Century Salem
Doral Vantage
More Winston
INTERNATIONAL
Cigarette Brands
Camel More
Winston Vantage
Salem YSL
KEY NATIONAL BRANDS
Europe
Reyno
M
Time
United Kingdom
Dorchester
Belgium/Luxembourg
St . Michel
West Germany
Overstolz
Eastern Europe
Gold Coast
Canada
Export'A"
Macdonald Select
Macdonald Special
Brazil
Mustang
Tempo
LS
Luxor
Mallomars Chocolate Cakes

Mystic Mint Sandwich Cookies
Nabisco Brown Edge Wafers
Nabisco Chocolate Chip Snaps
Nabisco Chocolate Grahams
Nabisco Chocolate Pinwheels Cakes
Nabisco Chocolate Snaps
Nabisco Devil's Food Cakes
Nabisco Famous Chocolate Wafers
Nabisco Famous Cookie Assortment

Nabisco Imported Danish Cookies
Nabisco Marshmallow Puffs

Nabisco Marshmallow Sandwich
Nabisco Marshmallow Twirls

Fudge Cakes
Nabisco Old Fashion Ginger Snaps

Nabisco Pecan Shortbread Cookies
Nabisco Pure Chocolate Middles
National Arrowroot Biscuit
Newtons Fruit-Filled Cookies
Nilla Wafers
Nutter Butter Peanut Butter Cookies

Oreo Chocolate Sandwich Cookies
Oreo Fudge-Covered Cookies
Oreo Big Stuf Cookies
Pantry Molasses Cookies
Social Tea Biscuits
Crackers
American Classic Crackers

Better Snack Thins Crackers
Cheese Nips Crackers
Cheese Tid-Bit Crackers
Triscuit Wafers
Twigs Sesame and Cheese Snack Sticks
Uneeda Biscuits
Vegetable Thins Flavored Crackers
Waverly Crackers
Wheatsworth Stone Ground
Wheat Crackers
Wheat Thins Snack Crackers
Other Biscuit Products
Comet Cones , Cups and Sugar Cones
Easy Cheese Pasteurized Process Cheese
Spreads
Mister Salty Pretzels
NAB Packs
Toastettes Toaster Pastries
Confectionery & Snack Produ-
Baby Ruth Candy Bars

Beechies Candy-Coated Gum
Beech-Nut Chewing Gum
Bonkersl Chewy Candy
Breath Savers Sugar Free Mints
Bubble Yum Bubble Gum
Butterfinger Candy Bars
Care*Free Sugarless Gum
Life Savers Roll Candy and Lollipops
Pearson Specialty Candy
Planters Nuts
Planters Peanut Candy

Planters Premium Select Popping Corn
Planters Snacks
Grocery Products
A .I . Steak and Poultry Sauces

Blue Bonnet Margarines
Chicken In A Biskit Flavored Crackers
Brer Rabbit Molasses and Syrups
Crown Pilot Crackers

Dandy Soup and Oyster Crackers
Chun King Oriental Canned Foods
Almost Home Cookies

Bakers Bonus Cookies
Barnum's Animals Crackers
Meal Mates Sesame Bread Wafers

Nabisco Bacon Flavored Crackers
Nabisco Cinnamon Treats
Nabisco Cracker Meal
Nabisco Graham Crackers
Nabisco Graham Cracker Crumbs
Nabisco Zweiback
Oysterettes Soup and Oyster Crackers
College Inn Broths and Heat &

Serve Entrees
Cream of Wheat and Cream of
Rice Cereals
Davis Baking Powder
Del Monte Canned Vegetables and
No Salt Added Vegetables
Del Monte Tomato Products and No Salt
Added Tomato Products
Del Monte Canned Fruits and Lite
Canned Fruits
Del Monte Dried Fruits
Del Monte Pickles and Pickle Products
Del Monte Fruit Cups
Biscos Cookies
Premium Crackers
Del Monte Fruit Snacks
Bugs Bunny Graham Cookies

Cameo Creme Sandwich
Chips Ahoyt Chocolate Chip Cookies
Chips 'n More Chocolate Chip Cookies
Cookie Break Sandwich Cookies
Ouackers Snacks
Sea Rounds Crackers
Del Monte Pudding Cups

Del Monte Sardines in Tomato Sauce
Egg Beaters Cholesterol-Free 99 % Real
Egg Product
Escoffier Sauces Ln
Cookies 'n Fudge Cookies
Sociables Crackers
Fleischmann's Margarines ~
m
Chanceller
ECllci :jill"
Doral Suave
Full Speed
King
FOOD PRODUCTS
UNITED STATES
Cookies
Giggles Sandwich Cookies

Hey Day Fudge, Caramel and
Peanut Bars
34
Doo Dads Snacks
Escort Crackers
Great Crispsl Snacks
Holland Rusk Instant Toast
Honey Maid Graham Crackers
Ritz Crackers
Ritz Bits Crackers

Royal Lunch Milk Crackers
Grey Poupon Dijon Mustards 00

N
Milk-Bone Brand Dog Biscuits
~
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Milk-Bone Brand Butcher Bones

Dog Snacks
Milk-Bone Brand Jerky Strips
My*T*Fine Puddings and Pie Fillings
Nabisco 100% Bran
Nabisco Shredded Wheat, Fruit Wheats,
Cookies de Belin
Crackers Gourmand
Del Monte Canned Fruits
Toasted Wheat and Raisin,
Del Monte Fruit Juice and Nectars
Shredded Wheat and Bran,
Del Monte Tomato Products

Del Monte Fresh Bananas and Pineapples
Feuillete Dore
Spoon Size Shredded Wheat Cereals
Ortega Mexican Foods

Regina Cooking Wines and
Wine Vinegars
Royai Gelatins, Puddings and No Bake
Desserts
Steak Supreme Steak Sauce
Team Flakes
Vermont Maid Syrup
Wright's Natural Hickory Seasoning
Beverages
Del Monte Blends Juice Drinks
Del Monte Juices, Juice Drinks
and Nectars
Hawaiian Punch Beverages
Snap-E-Tom Tomato and Chile Cocktail
Ice Cream and Frozen Confections
Life Savers Flavor Pops
Oreo Cookies 'n Cream Ice Cream*

Oreo Cookies 'n Cream on a Stick*
Oreo Cookies 'n Cream Sandwich*
Feuillete Snack Crackers
Miniquiche Crackers
Minizza Snack Crackers
Oro Sweet Biscuits
Oxford Range of Biscuits and Cookies
Parisienne Pastry Cake

Pepito Chocolate-Covered Sweet Biscuits
Petits Coeurs Sweet Biscuits
Premium Saltine Crackers
Planters Nuts and Snack Products
Riera-Marsa Dry Baby Foods, Flour Mixes
and Instant Mashed Potatoes
Ritz Crackers
Royal Desserts, Gelatins and Cake Mixes
Saiwa Sugar Wafers

Urra Chocolate Enrobed Wafer
Latin America
Middle East, Africa, Asia/Pacific
Britannia Biscuits
Britannia Vital Cooking Oil
Chicken In A Biskit Flavored Crackers
Chips Ahoyl Chocolate Chip Cookies
Chip Star Fabricated Potato Chips

Corn Diggers Snacks
Del Monte Banana Ketchup
Del Monte Beverages
Del Monte Vinegar
ETA Snacks and Nuts
Griffins Biscuits
Life Savers Roll Candy and Gum
Minties Candies
Ole Nuts and Snacks
Parfait Soft Cake
Picola Crepe Cookies
Pianters Peanut Butter
Premium Saltine Crackers
Ritz Crackers
Royal Brand Biscuits
Rum Slice Biscuits
Vita Brits Cereal
Weeties Cereal
David Cookies
Aurora Dessert Products

Beechies Gum and Hard Roll Candy
Cameo Cream Sandwich Cookies
Chips Ahoyl Chocolate Chip Cookies
Del Monte Catsup
Del Monte Fruit Juices
Del Monte Marmalades
Del Monte Mexican Peppers
Del Monte Pickles and Olives
Del Monte Pudding and Fruit Cups
Fleischmann's Baking Products
Gamesa Biscuits and Pasta
Del Monte Canned Fruits and Vegetables
Gloria Powdered Milk
Trio Countline
Del Monte Beverages
Hawaiian Punch Beverages
Walkers Crisps and Snack Products
Del Monte and Aylmer Tomato Products
Life Savers Roll Candy
Del Monte Pudding Cups
Lyons Baking Powder

Newton Fruit-Filled Cookies
Oreo Chocolate Sandwich Cookies
Pommys Delicatessen Products
Ritz Crackers
Royal Baking Products
Royal Tea
Royal Desserts and Drink Powders
Royalina Drink Powders
Sabueso Dog Biscuits
Saromo Desserts and Drink Powders
Sorbetto Sugar Wafers
INTERNATIONAL BRANDS
Del Monte
Nabisco
Planters
Ritz
Royal
KEY NATIONAL BRANDS
Canada
Aylmer Canned Fruits and Vegetables
Aylmer Soups
Christie Cookies, Crackers and Snacks
Cream of Wheat Cereals
Dad's Cookies
Milk-Bone Dog Snacks
Nabisco Cereals
Peek Freans Biscuits
Continental Europe
Artiach Range of Biscuits
Ati Herb Tea

Belin/Lenorte Frozen Pastries
Belin Pastries
Catari Pizza Mixes
Chipster Potato Snacks
United Kingdom
Bendicks Confectionery
Big D Nuts
Hovis Crackers and Digestive Biscuits

Huntley & Palmer's Biscuits
Island Blends Fruit Juices
Jacob's Club Countline
Nabisco Shredded Wheat Cereal
Nabisco Team Flakes
Peek Freans Biscuits
Planters Nuts
Ritz Crackers
Shreddies Cereal
Smiths Crisps and Snack Products
Tea Time Sweet Biscuits
TROPICAL FRUIT
United States
Del Monte Fresh Bananas, Pineapples
and Papayas
Canada
Del Monte Fresh Bananas and Pineapples

Europe, Asia/Pacific
Del Monte Fresh Bananas , Pineapples,

Papayas and Mangoes
Middle East
Del Monte Fresh Bananas
Sultana Soda Crackers

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Board of Directors
William S . Anderson
Chairman, Executive Committee
NCR Corporation
Albert L . Butler, Jr.

President
The Arista Company
Dr. Robert J. Carbonell

Vice Chairman of the Board
RJR Nabisco, Inc .
John W. Hanley
Chairman of the Executive Committee
Monsanto Company
Edward A . Horrigan, Jr.

RJR Nabisco, Inc . and
Chairman and Chief Executive Officer
R .J. Reynolds Tobacco Company
Charles E . Hugel
Chairman of the Board
Gerald H . Long
Senior Executive Vice President
Chairman
R .J . Reynolds Tobacco USA
John D . Macomber
Robert M . Schaeberle
J. Paul Sticht
James 0. Welch, Jr.
Former Chairman of the Board
Former Chairman of the Board
RJR Nabisco, Inc .

Chairman
Combustion Engineering, Inc .
s
Dr. Juanita M . Kreps
Former United States Secretary
of Commerce
40
Former Chairman of the Board and

Chief Executive Officer
Celanese Corporation
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N
~
w
Committees
Executive Committee
F Ross Johnson, Chairman
Edward A . Horrigan, Jr., Vice Chairman
Dr. Robert J . Carbonell
John L . Clendenin
Charles E . Hugel
John G . Medlin, Jr.
Andrew G .C . Sage II
James O. Welch, Jr.
John L . Clendenin
Chairman and Chief Executive Officer
BeIlSouth Corporation
Ronald H . Grierson
Vice Chairman
General Electric Company PLC
Audit Committee
William S. Anderson, Chairman
John L . Clendenin, Vice Chairman
Ronald H . Grierson
Vernon E . Jordan, Jr.

Andrew G .C . Sage II
Robert M . Schaeberle
Organization, Compensation and
Nominating Committee
Albert L . Butler, Jr., Chairman
John G . Medlin, Jr ., Vice Chairman
John W. Hanley
Charles E . Hugel
F. Ross Johnson
RJR Nabisco, Inc .
Vernon E . Jordan, Jr .
Partner
Dr. Juanita M . Kreps

John D. Macomber
Akin, Gump, Strauss, Hauer & Feld
RJR Nabisco, Inc .

International
Advisory Council
William S. Anderson
Chairman
John G . Medlin, Jr.

Chairman, President and
First Wachovia Corporation
Andrew G .C . Sage 11
Former Managing Director
Shearson Lehman Brothers
United States
Jaime Carvajal
Spain
Richard J. Currie
Canada
Regula M . Dobie
Kenya
Simon Hornby .
United Kingdom
Erling S. Lorentzen
Brazil
Yohei Mimura
Japan
Louis von Planta
Switzerland
Brian E . Quinn
Australia
J . Paul Sticht
United States
Kenneth D. Taylor
Vice Chairman
Canada
Francois Vaxelaire
Belgium
Alberto J . Vollmer
Venezuela
WR .A . Wyllie
Hong Kong
Dennis Durden
Secretary
United States
41
RJR Nabisco, Inc .
Officers of the Corporation
F. Ross Johnson
President and
Gerald H . Long
Senior Executive
Vice President
Charles E . Hugel
Chairman of the Board
Dr. Robert J. Carbonell

Vice Chairman
of the Board
Harold L . Henderson
and General Counsel
Edward A . Horrigan, Jr. James O. Welch, Jr.

Vice Chairman Vice Chairman
of the Board of the Board
John D . Martin
Andrew S. Barrett
Senior Vice President,
Corporate Personnel
Marshall B . Bass
Corporate Affairs
William J. Liss
Public Affairs
WG . Champion Mitchell J. Thomas Pearson

Senior Vice President, Senior Vice President,
External Affairs Taxation
Walter N . Coleman
Vice President and
General Auditor
George A . Midwood
Vice President and
Treasurer
Bruce B . Overton
Robert E . Shultz
Vice President, Personnel

and Compensation
Vice President, Pension

Asset Management
Andrew P. Hines
Vice President and
Controller
Ward M . Miller, Jr.

Vice President, Associate
General Counsel and
Secretary
Gull R . RaJanl
Deputy Treasurer
Samuel B . Witt III

Vice President and
Associate General Counsel
David G . Marshall
Vice President, Personnel,
Employee Benefits
George D . Newton, Jr.

Vice President and
Deputy General Counsel
42
Paul C. Bergson
Government Relations
Ray D. Risner
Vice President, Financial
Administration
Edward J . Robinson
Executive Vice President,
Finance, and
Chief Financial Officer
John H . Clarke
Technology
Dennls Durden
Senior Vice President
Dean R. Posvar
Business Planning and
Development
Kenneth D . Taylor
Senior Vice President
Financial Review
Contents
Selected Five-Year Financial Data
44
Management's Discussion and Analysis
Results of Operations
45
Selected Five-Year Financial Condition Data

Financial Condition
48
49
Foreign Currency
50
Dividends and Stock Prices
51
Consolidated Financial Statements

Summary of Significant Accounting Policies
Statements of Income and Retained Earnings
52
Statements of Changes in Financial Position
53
54
Balance Sheets
55
Notes to Financial Statements

Responsibility for Financial Statements
56
63
Report of Independent Auditors
63
Other Financial Data

Eleven-Year Financial Summary
64
Lines of Business Data
66
Geographic Data
67
68
Quarterly Results of Operations
43
RJR Nabisco, Inc .
Selected Ftve Year Financial Data

/Dollars in Millions Except Per Share Amounts/
1987
1986
1985
1984
1983
Net sales
Operating in come
(1)
Interest and debt expense

Net income (2)
Preferred dividends
Net income applicable to Common Stock
$15,766
2,304
$15,102
2,340
$11,622
1,949
58,200
1,412
$7,565
1,205
489
565
337
166
1,081
1,209
1,025
1,064
917
1,001
747
1,210
177
626
30
102
91
56
1,179
962
910
1,154
62
819
4 .19
3 .68
3 .27
2 .46
2 .00
4 .70
3 .83
3 .60
4 .11
2 .90
S 440
1 .76
37 .3%
S 378
1 .51
39 .3 %
5 357
1 .41
39 .2 %
S 360
1 .30
31 .2 %
5 345
1 .22
42 .1 %
S 71 1/s
34t/i
S 55%
31
S 35
243/4
S 29
21 %
S 253/e
18
247,357
881
Income from continuing

operations per common share
Net income per common share (2)
Other Data
Dividends on Common Stock
Dividends per common share
Dividend payout percentage (3)
Common Stock price range :
High
Low
Number of common shares outstanding
155,138
258,383
114,220
283,183
112,879
250,395
114,121
250,566
Number of stockholders at year end
Number of full-time employees of

continuing operatior,s at year end
120,334
122,395
127,404
79,234
78,266
at year end (in thousands)
126,889
Prior years have been restated to report the Company's former spirits and wines business as discontinued operations (see Note 3 to the Financial
Statements) . The 1985 amounts include the operations of Nabisco Brands from July 2, 1985 (see Note 16 to the Financial Statements) .
(1) Operating income includes the effects of net restructuring expense incurred in 1987 of $250 million (see Note 1 to the Financial Statements) .
(2) The 1987 and 1984 amounts include net gains on the sale of the Company's discontinued operations of S215 million or 86 cents per share and $275
million or 98 cents per share, respectively. In addition, the 1987 amounts include an extraordinary loss from the early extinguishment of debt of S80
million or 32 cents per share . (See Notes 3 and 4 to the Financial Statements .)
(3) Dividends on Common Stock as a percentage of net income applicable to Common Stock . The 1987 and 1984 dividend payout percentage would be
45 .6 and 41 .0 percent, respectively, excluding the gain on the sale of discontinued operations .
44
Management's Discussion
and Anaiysis
The operations of the Company's former
spirits and wines business have been
reported as discontinued operations, and
prior years have been restated (see Note 3 to
the Financial Statements) . The Company
now classifies its continuing operations into
two lines of business, tobacco and food .
Consolidated
Consolidated net sales for 1987 increased
4 percent over the prior year to S 15 .8 billion .
Both the tobacco and food lines of business
contributed to the increase . The tobacco gain
was due principally to price increases together
with favorable foreign currency exchange
rates and international tobacco unit volume
growth . The food gain was due to new product introductions and volume gains.
Operating income increased in both lines of
business principally due to the factors noted
above; however, the improvements were
more than offset by the $250 million special
charge for net restructuring expense (see
Note 1 to the Financial Statements) .
The 1987 income from continuing operations increased S56 million, or 5 percent, and
income from continuing operations per share
increased 51 cents, or 14 percent, to $4 .19 .
These increases were mainly due to the sales
increases noted above and decreased interest
and debt expense resulting from the early
extinguishment of 51 .6 billion of high-interest
debt in the first quarter of 1987 (see Note 4 to
the Financial Statements) .
Net incurne fur 1987 rose 5145 million to $1 .2
billion and net income per share increased 23
percent to $4 .70. The higher net income and
net income per share were primarily the result
of improved income from continuing operations and the S215 million gain on the sale of
discontinued operations (see Note 3 to the
Financial Statements), partly offset by the
extraordinary loss of 580 million on the early
extinguishment of debt . During 1987, the Company repurchased 3 .6 million shares of its
Common Stock and 1 .2 million shares of its
Series B Cumulative Preferred Stock (ste Notes Consolidated

12 and 13 to the Financial Statements) . Net Sales
Consolidated net sales for 1986 increased 30 (Dollars in Billions)
percent over the prior year to S 15 .1 billion . The

s17 .5
improvement was principally due to the inclusion of Nabisco Brands, which was acquired
14 .0
on July 2,1985 (see Note 16 to the Financial
Statements) . Tobacco operations also contributed to the sales gain through volume and 10 .5
price increases .
Consolidated operating income for 1986
7.0
increased 20 percent, or 5391 million . The
increase was primarily the result of the Nabisco
Brands acquisition, and contributions from
tobacco operations . Partially offsetting these
increases was a charge of approximately S 94

million related to the streamlining of the corporate office functions in connection with the
planned relocation of the corporate headquarters to Atlanta, Georgia in 1987.
The 1986 income from continuing operations increased $108 million, or 12 percent, and
income from continuing operations per share
increased 41 cents, or 13 percent, to $3 .68 .
These increases were mainly due to the improved operating income noted above . Partially offsetting these increases were higher
interest and debt expense, mainly related to
the Nabisco Brands acquisition, the corporate
streamlining noted above, the early retirement
of high-cost debt and the reversal of investment tax credits as a result of the Tax Reform
Act of 1986 .
3 .5
'83 '84 '85 '86 '87
Consolidated
Operating Income
$2 .500
2,000
1,500
1,000
500
Net income for 1986 rose S63 million to $1 .1

billion and net income per share increased 6
percent to 53 .83 . The higher net income and
net income per share were primarily the result
'83 '84 '85 '86 '87
Consolidated Income
from Continuing Operations
(Dollars in Miltions)
$1,100
880
660
440
220
'83 '84 '85 '86 '87
50782 9439
45
Consolidated Income from

Continuing Operations
Per Common Share
(Dollars)
$4 .75
of improved operating income . The percentage contributions of each of the Company's

lines of business to net sales and operating income during the last five years
were as follows :
1987
3 .80
Net Sales
Tobacco
Food
2 .85
40%
60
1986
39%
61
1985
47 %
53
1984
1983
63 %
37
64 %
36
100% 100% 100% 100% 100%
1 .90
Operatiny Irxome
Tobacco
Food
.95
67% 67% 73% 88% 90%

33
33
27
12
10
100% 100% 100% 100% 100%

'83 '84 '85 '86 '87
Tobacco
Sales
(Dollars in Billions)
S 6 .5
5 .2
3 .9
2 .6
1 .3
'83 '84 '85 '86 '87
Tobacco Operating
Income'
51,875
"Contributions by line of business computed without

effects of corporate and restructuring expense
(see Note 1 to the Financial Statements) .
Tobacco
The tobacco line of business includes the
operations of R .J. Reynolds Tobacco USA and
R .J . Reynolds Tobacco International, which
manufacture and sell tobacco products, principally cigarettes . Products are manufactured in
the United States and in 33 foreign countries
and territories by subsidiaries or licensees, and
are sold throughout the United States and in
more than 160 markets around the world . Also
included are the operations of RJR Archer, a
packaging company.
Sales for the tobacco operations were S 6 .3
billion for 1987 up $480 million over the prior
year. The sales increase for the year was due to
higher manufacturers' selling prices, record
international unit volume growth and favorable foreign currency rates .
Domestic market share for 198Z measured
on a manufacturer's shipment basis, increased
to 32 .5 percent . While the total industry volume declined 2 .0 percent, R .J . Reynolds
Tobacco USA once again outperformed the
industry with a decline of only 1 .6 percent to
185 .3 billion units .
The gain in international unit volume, to

98 .9 billion units compared with 89 .7 billion
units in 1986, was the highest rate of growth
among major multinational tobacco companies . This was achieved through advances in
1,500
1,125
750
375
'83 '84 '85 '86 '87
Excludes 1987 restructuring expense .
46
the Company's three primary international

brands : CAMEL, Sjit.EM and WINSTON . At the
same time, growth was achieved in all major
geographic regions including Europe, Asia,
Canada and Latin America . R .J . Reynolds
Tobacco International increased or maintained
its share of market in all of its top 20 markets .
Operating income was 51 .8 billion for 1987,
or 10 percent higher than last year, excluding
restructuring expense . The improvement in
operating income was the result of the sales
gains noted above, improved operating efficiencies and continuing cost-control efforts .
These factors more than offset increased
expenses designed to strengthen marketing
and selling activities .
Sales for the tobacco operations were $5 .9

billion for 1986, up $444 million over the prior
year. The sales increase for the year was due to
improved volumes, favorable foreign currency
effects and increased selling prices .
Domestic market share for 1986, measured
on a manufacturer's shipment basis, increased
to 32 .4 percent, and unit volume increased to
188.3 billion units, despite an overall industry
decline . Market share also improved at the consumer level due to strong performance
from established brands and volume from

new brands .
International volume for 1986 was up 3 .3
percent to 89 .7 billion units, with CAMEL volume up 8 percent . CAMEL held or increased its
share of market in 9 of its top 10 markets and
reached a 3 .6 percent share of the European
market . WINSTON and SALEM also performed
well in their respective regions of emphasis .
Operating income was 51 .7 billion for 1986,
or 12 percent higher than in 1985 . The
improvement in operating income resulted
from the higher prices and volumes and foreign currency effects noted above as well as
continuing cost-control efforts .
Food
The food line of business includes the
operations of Nabisco Brands and Planters
LifeSavers, acquired in July 1985, and Del
Monte . Food products are produced, marketed
or distributed worldwide and include cookies,
crackers, cereals, confectioneries, nuts, snacks,
canned foods, beverages and fresh fruit .
Foods sales were $9 .4 billion in 1987 an
increase of S 184 million over the prior year
despite the loss of S639 million in sales from
the divestment of certain Canadian and other
food businesses in 1987 and 1986 . New product introductions and volume growth in established brands resulted in higher United States
market share in a number of product categories, such as cookies, crackers, cereal and
margarine . Also contributing to the sales
improvement were volume gains in the
United Kingdom and other international
markets .
Operating income increased to S915 million,
excluding restructuring expense, compared
with $820 million for the prioryear, an increase of 12 percent, due principally to strong
results from the Company's United States
cookie, cracker, grocery products, hard-roll
candy and gum businesses . The performance
of Del Monte's tropical fruit business met
expectations, although it was below the
strong performance of 1986 .
Food sales were $9 .2 billion in 1986, an
increase of 49 percent over 1985 . This increase
was principally due to the inclusion of the fullyear results of Nabisco Brands . Partially offsetting this increase was the loss of sales from the
dispositions of iranchise beverages, vinegar
and yeast, and frozen foods operations .
Operating income increased to S820 million
for 1986 compared with S549 million for the
prior year, an increase of 49 percent, due principally to the inclusion of a full-year's results of
operations by Nabisco Brands . Also contributing to the operating income increase was a
strong performance by the tropical fruit operations .
Restructuring Expense
During 1987 the Company incurred $250
million (net of nonrecurring gains) for restructuring expense (see Note 1 to the Financial
Statements) . These provisions were principally
for the write-do-wn of redundant equipment
and facilities from the continuing modernization of domestic tobacco operations, implementation of a Voluntary Separation Incentive
Program for tobacco employees, restructuring
programs in its food subsidjaries and relocating
the Planters LifeSavers headquarters offices to Food

Winston-Salem, North Carolina from New Jer- Sales
sey. As part of this program, the restructuring (Dollars in Billions)
expenses were partially offset by nonrecurring
s1o,0
gains from the sales of the Canadian coffee,
margarine and confectionery businesses, sale
8 .0
of U .S. specialty tobacco brands, and
premium refunds from a restructuring of
insurance programs .
6 .0
The R .J . Reynolds Tobacco Co .'s Voluntary
Separation Incentive Program was imple- 4 .0

mented to increase operating efficiency and
strengthen the Company's competitive position by reducing its work force . The Planters
LifeSavers relocation, to occur in 1988, will take
advantage of many common opportunities, in
2 .0
[
'83 '84 '85 '86 '87
such areas as sales and distribution, with R .J.

Reynolds Tobacco USA .
Interest and Debt Expense

Interest and debt expense (net of capitalized
interest) for 1987 was $489 million, compared
with S565 million and S337 million for 1986
and 1985, respectively. The 1987 decrease was
principally due to the lower level of debt as a
Food Operating
Income*
s 1,000
result of the early extinguishment of 51 .6 billion 800

of high-interest debt (see Note 4 to the Financial Statements) in the first quarter of 1987,
while the 1986 increase was principally due to
the higher level of long-term debt associated
with the Nabisco Brands acquisition (see Note
16 to the Financial Statements) .
600
400
200
Income Taxes
The FASB has issued a final statement,

' Accounting for Income Taxes, "which the
Company expects to adopt in 1988 . The new
standard requires use of the liability method
under which the effects on deferred taxes of
changes in tax rates and laws are recorded as
a component of tax expense in the period of
change rather than the period of timing difference reversal as the current deferred method
requires . The Company would realize, in the
year of adoption, a one-time cumulative benefit to income from reductions of deferred
income taxes resulting from lower income tax
rates . The effect on annual income is not
expected to be material .
'83 '84 '85 '86 '87
*Excludes 1987 restructuring expense .
The Company has chosen not to adopt this

statement in 1987 to provide adequate leadtime for analyzing the effect of the new
accounting standard .
47
RJR Nabisco, Inc .
Selected Five Year Financial Condition Data

1987 (1) 1986 1985 1984 (1) 1983
(i7oNars in Millions Except PerSnareA rnounts/
Funds provided by continuing operations $ 2,124
S 1,875
S 1,447
S 1,082
S 943
Workingcapital $ 1,717
Current
ratio
1 .4
$ 1,329
1 .3
S 1,617
1 .4
$2,780
2 .5
$2,853
3 .3
Total assets $16,861

Return on beginning total assets (2) 9 .0%
Return on average total assets 8 .9%
$16,701
8 .5 %
8 .4%
$16,414
13 .5 %
9 .4%
58,805
14 .8 %
14 .8%
58,776
1 1 .2 %
11 .2%
Total debt (3) $ 4,488

Preferredstock
173
Common stockholders' equity 6,038
S 5,774
291
5,312
S 5,628
1,587
4,796
$1,443
499
4,478
$1,444
631
5,223
Tota1
$10,699
S 1 1,377
$12,011
$6,420
$7,298
Return on beginning total capital (4) 13 .2%

Return on average total capital 13 .6%
Total debt as a percentage of total capital (5) 41 .9%
1 1 .6%
11 .9%
50 .8%
18 .5%
12 .9%
46 .9%
17 .8%
19 .0%
22 .5%
13 .6%
13 .5%
19 .8%
20 .1 %
20 .3 %
22 .1 %
17 .2 %
19 .0%
19 .6%
23 .8%
16 .4%
S 1,022
S 21 .21
S 946
S 19 .14
S 642
S 492
$17 .33
$18 .44
capital
Return on beginning common

stockholders' equity (6)
.
22 .2%
Return on average common
stockholders'equiry 20 .8%
Capital
expenditures
936
Book value per common share $ 24 .41
Prior years have been restated to report the Company's former spirits and wines business as discontinued operations (see Note 3 to the Financial
Statements) . The 1985 amounts include the operatiorls of Nabisco Brands from July 2, 1985 (see Note 16 to the Financial Statements) .
(1) Net income for 1987 and 1984 includes a $215 million and $275 million gain, respectively, on the sale of the Company's discontinued operations . In
addition, the 1987 net income includes an extraordinary loss from the early extinguish ment of debt of $80 million . (See Notes 3 and 4 to the Financial
Statements .)
(2) Net income plus after-tax interest ard debt expense divided by beginning total assets .
(3) Total debt consists of notes payable and long-term debt (including current maturities) .
(4) Net income plus after-tax interest and debt expense divided by beginning total capital .
(5) At December 31, 1987 . 1986, 1985, 1984 and 1983, the sum of the total debt and redeemable preferred stock as a percentage of total capital was 43 .6
percent, 53 .3 percent, 60.1 percent, 30.2 percent and 28 .4 percent, respectively .
(6) Net income applicable to Common Stock divided by beginning common stockhotders ' equity .
I
1
48
Financiai Condition
Funds Provided by
Continuing Operations
Funds provided by continuing operations
were 52 .1 billion in 1987 compared with 51 .9
billion in 1986 and 51 .4 billion in 1985 . The
increases in funds provided by continuing
operations were due to higher levels of income
and noncash charges . Internally generated
funds from operations represent a major
source of funds available to the Company.
During 1987, funds provided by continuing

operations continued to be sufficient, as in
prior years, to meet capital expenditures and
cash dividends . Over the past five years, funds
provided by continuing operations totaled
$7.5 billion and have increased at a compounded rate of 23 percent . These funds were
principally used for capital expenditures and
cash dividends, leaving S 1 .2 billion of internally
generated funds available for other Company
purposes . In the future, the Company expects
that internally generated funds will continue
to be more than sufficient to meet projected
capital expenditures and cash dividends . The
Company has paid a dividend every year since
1900 and in the *.hird quarter of 1987 increased
the regular quarterly cash dividend on Common Stock by 20 percent to 48 cents per share .
Liquidity
At December 31,1987, working capital was
$1 .7 billion compared with 51 .3 billion atyearend 1986 and the current ratio was 14 and 1 .3
for 1987 and 1986 . respectively.
The Company believes that its continued
favorable current ratio is an important indicator of its ability to meet short-term obligations .
A further indication of the Company's favorable liquidity position is that 20 percent of current assets are LIFO inventories, which are
carried at values substantially less than current
cost . The current cost of inventories was 51 .3
billion more than the amounts at which they
were carried on the 1987 Balance Sheet (see
Note 6 to the Financial Statements) .
During 1987, the Company's extinguishment

of S 1 .6 billion of high-interest debt (see Note 4
to the Financial Statements) and the issuance
of S 1 .3 billion of lower interest debt resulted in
a weighted average interest rate of less than

996 for debt outstanding at December 31,
1987 In addition, the Company maintained
seasonal credit facilities with various banks, as
well as a Eurodollar credit facility which expires
in 1993 (see Notes 8 and 10 to the Financial
Statements) . The credit available through
these facilities ensures the Company's access
to credit markets and the availability of significant financial resources, as well as operational
flexibility. Unused credit facilities totaled
$1 .2 billion atyear-end 1987, including S550
million to support outstanding commercial
paper. The Company utilizes commercial paper
to fund seasonal working capital requirements
as needed .
Capital Resources
Total capital was 510.7 billion at December
31,1987, compared with S 11 .4 billion for the
prior year end . The decrease was due principally to the early extinguishment of 51 .6 billion
of high-interest debt (see Note 4 to the Financial Statements), retirement of substantially all
of the short-term notes which were classified
as long-term in the prior year, and the repurchase of a portion of its Common Stock and
Series B Cumulative Preferred Stock . Through
December 31,1987, 3,103,400 shares have
been repurchased under the Common Stock
repurchase program which announced the
repurchase of up to 5 million shares . The primary sources of funds for the above transactions were the proceeds from the sale of
Heublein (see Note 3 to the Financial Statements), the issuance of $1 .3 billion of long-term
debt and internally generated funds .
Consequently, total debt as a percentage of
total capital at December 31,1987, declined to
42 percent compared with 51 percent at yearend 1986, and the sum of total debt and
redeemable preferred stock as a percentage of
total capital decreased to 44 percent from 53
percent for the previous year.
The Company believes its financial position
is strong, as indicated by continued favorable
financial ratios, and that it has the ability to
finance operations as necessary. The Company also believes that the debt-to-capital
ratios will improve over time as internally
generated funds are expected to exceed projected capital expenditures and cash dividends .
Should the need for external financing arise,
the Company expects to have continued
access to short-term credit markets to fund
seasonal working capital requirements and to
have the ability to raise additional funds in the
long-term debt market .
Funds Provided by
Continuing Operations,
Capital Expenditures and
Cash Dividends
(Dotlars in Millions)
s2,2oo
1,760
1,320
880
440
'83 '84 '85
'86 '87
Funds Provided
Capital Expenditures
Cash Dividends
Composition
of Capital
(Dollars in Billions)
s 12 .5
10.0
7 .5
5 .0
2 .5
'83 '84 '85 '86 '87

Total Debt
Preferred Stock
Common Stockholders' Equity
49
Capital Expenditures
Consolidated capital expenditures for 1987
1986 and 1985 were $936 million, $1,022 million and S 946 million, respectively. Tobacco
capital expenditures accounted for 46 percent
of the 1987 consolidated total, while food
expenditures were 48 percent of the total .
Tobacco
Food
Corporate
1988-1990 Projected
Capital Expenditures by
Une of Business
Tobacco capital expenditures during 1987

were $433 million compared with S613 million
for the prior year The expenditures for both
years were principally for a new manufacturing complex in North Carolina and for the
expansion and modernization of facilities
worldwide. The new cigarette plant began initial production in January 1986 and became
fully operational by the end of 1987 supplying
over 50 percent of the domestic tobacco production requirements .
Food capital expenditures totaled $445 million in 1987 compared with $344 million in
1986 . The increase was primarily due to the
modernization and cost reduction efforts of
food operations .
Capital expenditures are currently projected
to total S 5 .0 billion over the next three years
compared with S2 .9 billion for the last three
years . The projected increase is principally due
to the food businesses . Over this period, food
capital expenditures are expected to increase
to approximately 60 percent of the consolidated total, principally for the modernization
and expansion of facilities in the Biscuit Division .
Foreign Currency
Tobacco
Food
Corporate
50
The Company has operations in many

countries, utilizing 33 functional currencies in
its more than 300 subsidiaries and branches .
The major functional currency is the U.S. dollar.
Significant foreign currency net investments
are located in Canada, the United Kingdom,
France, West Germany, Italy and the Philippines . Changes in the strength of these countries' currencies relative to the U .S. dollar result
in direct charges or credits to the equity section on the Consolidated Balance Sheets . The
Company also has significant exposure to foreign exchange sale and purchase transactions
in currencies other than a functional currency.
The exposures include the West German mark,

Japanese yen, U.S. dollar, French franc, British
pound and Spanish peseta . The Company
manages these exposures to minimize the
effects of foreign currency transactions
on its income.
Although fluctuations in the value of foreign
currencies cause U .S. dollar translated amounts
to change in comparison with previous periods, the Company cannot quantify in any
meaningful way the effect of such fluctuations
upon future income . This is due to the large
number of currencies involved, the constantly
changing exposure to these currencies, the
complexity of intercompany relationships, the
hedging activity entered into to minimize the
effect of rate changes, and the fact that all foreign currencies do not react in the same manner against the U.S. dollar.
Dividends and Stock Prices

The Company's Common Stock is listed on
the New York Stock Exchange (trading symbol : RJR) and on stock exchanges in London,
Geneva, Zurich, Basel, Frankfurt, Dusseldorf,
Berlin, Amsterdam, Paris, Brussels, Antwerp
and Tokyo . The number of common stockhotders of record at December 31,1987
was 104,720.
Net Income Per

Common Share and
Dividends Per Common Share
(Dollan)
$4 .75
3 .80
The Company's Series B Cumulative Preferred Stock is listed and traded only in the
United States . The regular quarterly dividend
per share is 52 .87% .
The following table sets forth the dividends
paid per share of Common Stock and the high
and low sales prices, taken from the Composite Tape as reported by the Wall Street Journal,
for the common and preferred stock during
the last two years:
2 .85
1 .90
.95
'83 '84 '85 '86 '87

Net Incorne
Net Income from Continuing Operations
Dvidends
Common Stock
Ouarters
Dividends
Market Price
(hlgh-low)
Series B Cumulative
Preferred Stock
Market Price
(high-low)
1987
First
Second
Thlyd
Fourth
Year
1986
First
Second
Third
Fourth
S .40
.40
.48
.48
$65s/e - 49
59'/e - 47 1/4
71 '/e - 523/4
68S/e - 341h
$1 .76
571 I/e - 341/i
$125'h - 121
124 - 117 1h
123 - 117 1h
120 - 115A/4
$125'h - 1153/4
S .37
.37
.37
.40
$44'/z - 31
543/a - 37
55% - 44%
535/e - 473/e
S 121 %- 1103/e
1253/8 - 120%
1253/4 - 121 %4
1263/4 - 1203/4
Year
$1 .51
$55% - 31
S 1263/4 - 1 103/e
51
RJR Nabisco, Inc .
Consolidated Financial Statements

The Summary of Significant Accounting Policies below, the Notes to Consolidated Financial Statements on pages 56 through 62, and
the Lines of Business and Geographic Data on
pages 66 and 67 are integral parts of the
accompanying financial statements .
Summary of Significant
Accounting Policies
This summary of significant accounting policies is presented to assist in understanding the
Company's financial statements included in
this report . These policies conform to generally
accepted accounting principles and have been
consistently followed by the Company in all
material respects.
Consolidation
The Company includes in its consolidated
financial statements the accounts of the parent
and all subsidiaries . The Company's former
spirits and wines business is reported as discontinued operations, and prior years financial
statements have been restated accordingly .
Inventories
In all of the Company's businesses, inventories are stated at the lower of cost or market .
Various methods are used for determining cost
as described below
The cost of domestic inventories is determined principally under the LIFO method . The
cost of remaining inventories is determined
52
under the FIFO, specific lot and weighted average methods . In accordance with recognized
trade practice, stocks of tobacco, which must
be cured for more than one year, are classified
as current assets .
Depreciation
Property, plant and equipment are depreciated principally by the straight-line method .
Goodwill and Trademarks
Goodwill and trademarks are generally
amortized on a straight-line basis over a
40-year period .
Other Income and Expense
The Company includes in "Other income
(expense), net" items of a financial nature,
principally interest income and gains and
losses on foreign currency transactions.
Income Taxes
The Company uses the flow-through
method in accounting for investment tax credits, whereby the provision for income taxes is
reduced in the year the tax credits first become
available.
Excise Taxes
Excise taxes are excluded from "Net sales"
and "Cost of products sold ."
RJR Nabisco, Inc .
Consolidated Statements of Income and Retained Earnings

/oalars in!uimons Except Persnare Amounts) 1987 1986 1985
Net sales*
S 15,766
S 15,102
S11,622
8,221
7,920
6,024
4,991
250
4,842
-
3,649
-
Operating income
Interest and debt expense (net of capitalized
amounts of 519, $71 and S67, respectively)
Other income (expense), net
2,304
2,340
1,949
(489)
1
(337)
51
Income before provision for income taxes

Provision for income taxes (Note 2)
1,816
735
1,081
(565)
7
1,782
757
1,663
746
1,025
917
78
84
215
(39)
Income before extraordinary Item

Extraordinary item - loss from early
extinguishment of debt, net of taxes (Note 4)
1,289
1,064
1,001
80
Net Income
1,209
1,064
1,001
30
102
91
1,179
4,832
962
4,357
910
4,034
440
23
378
109
357
230
Retained earnings at end of year
S 5,548
S 4,832
S 4,357
Income per common share :

Continuing operations
Discontinued operations
Extraordinary item
S 4 .19
0 .83
(0 .32)
S 3 .68
0.15
-
S 3 .27
0 .33
-
Net Income
$ 4.70
S 3 .83
S 3.60
Average number of common shares

outstanding (in thousands)
250,612
251,073
252,941
Costs and expenses :

Cost of products sold*
Selling, advertising, administrative
and general expenses
Restructuring expense, net (Note 1)

Income (loss) from discontinued operations,
net of taxes (Note 3)
Gain (loss) on sale of discontinued operations,
net of taxes (Note 3)
(7)
Less preferred dividends
Net Income applicable to Common Stock

Retained earnings at beginning of year
Less :
Cash dividends on Common Stock
Retirement of Company's stocks
*Excludes excise taxes of 53 .314, $3,057 and $2 .640 for 1987,1986 and 1985, respectively.
53
RJR Nabisco, Inc .
Consolidated Statements of Changes In Financial Position

(Dollars in Millions/
Funds provided by continuing operations :

Net sales
Less operating costs and expenses which required
the outlay of working capital
Total funds provided by continuing operations
Funds required by continuing operations :
1987
1986
1985
$15,766
$15,102
$11,622
13,642
2,124
13,227
1,875
10,175
1,447
Change in working capital resulting

62
(116)
(46)
Capital expenditures
from operations (see below)
936
1,022
946
Miscellaneous acquisitions of businesses

Miscellaneous dispositions of businesses
Disposals of property, plant and equipment
Cash dividends
Cumulative translation adjustments
Other
78
(125)
(46)
470
(88)
108
(376)
(62)
480
(10)
(172)
34
(58)
448
15
242
1,395
729
766
1,109
1,581
(134)
Funds provided (required) by financing transactions :

Net change in current notes payable
Issuance of long-term debt
Retirements of long-term debt
Issuance of Company's stocks (Notes 12 and 13)
Repurchases of Company's stocks (Notes 12 and 13)
Extraordinary loss (Note 4)
(76)
1,288
(2,545)
24
(317)
(80)
(121)
1,125
(909)
41
(1,469)
-
429
3,334
(445)
1,241
(403)
-
Net funds provided (required) by financing transactions
(1,706)
(1,333)
4,156
1,238
504
(85)
(4,672)
Increase (decrease) In cash and short-term Investments
S 261
S 280
S (735)
Analysis of change In working capital

resulting from operations :
Funds required (provided) by the change in :
Accounts and notes receivable
Inventories
Prepaid expenses and excise taxes
Accounts payable and accrued accounts
Income taxes accrued
S 70
58
48
(236)
122
S (49)
(256)
63
(154)
280
S 107
(29)
22
Change In working capital resulting from operations
S 62
S (116)
Total funds required by continuing operatlons

Net funds provided (required) by continuing operations
Net change in funds related to

discontinued operations (Note 3)
Net funds required for acquisition
of Nabisco Brands, Inc . (Note 16)
54
(418)
272
S (46)
RJR Nabisco, Inc .
Consotidated Balance Sheets

December 31
/Lbllars in Millpns/
1987
1986
Assets
Current assets :
Cash and short-term investments (Note 5)
Accounts and notes receivable

(less allowances of $61 and $67, respectively)
Inventories (Note 6)
Prepaid expenses and excise taxes
Total current assets
Property, plant and equipment - at cost (Note 7)

Less accumulated depreciation
Net property, plant and equipment
Goodwill and trademarks
(net of amortization of S 326 and $ 207, respectively)
Other assets and deferred charges
Net assets of discontinued operations (Note 3)

Liabilities and Stockholders' Equity
Current liabilities :
Notes payable (Note 8)
Accounts payable and accrued accounts (Note 9)
Current maturities of long-term debt (Note 10)
Income taxes accrued

Total current liabilities
Long-term debt (Note 10)
Other noncurrent liabilities
Deferred Income taxes
Commitments and contingencies (Note 11)
Redeemable preferred stock (Note 12)
Common stockholders' equlty :
Common Stock (Note 13)
Paid-in capita! (Note 13} ,

Cumulative translation adjustments (Note 14)
Retained earnings
Treasury stock, at cost (Note 13)
Total common stockholders' equlty
S 1,088
S 827
1,745
2,678
329
5,840
1,675
2,620
273
5,395
7,563
6,694
1,716
1,351
5,847
5,343
4,525
649
-
4,603
644
716
$16,861
$16,701
S 442
3,187
162
S 518
332
202
4,123
3,884
1,797
846
4,066
4,833
1,448
751
173
291
251
312
86
5,548
(159)
6,038
251
320
(76)
4,832
(15)
5,312
$16,861
2,923
423
$16,701
55
RJR Nabisco, Inc .
Notes to Consolidated Financial Statements

(Dollars in Millions Except Per Share Amounts)
Note I The differences between the provision for
Restructuring Expense, Net income taxes and income taxes computed at
Restructuring expense for 1987 included statutory U.S. federal income tax rates are
costs principally related to the write-down of explained as follows :
redundant equipment and facilities from the
1987
1986
1985
continuing modernization of domestic
Income taxes computed
tobacco operations /5135 million), the Volunat statutory U .S.
federal income tax rates
S726 S820 S765
tary Separation Incentive Program announced
Taxes on foreign operations
by R .J. Reynolds Tobacco Co . in June 1987
less than statutory
(5180 million), restructuring programs in the
U .S . federal Income tax rates
f25)
(48)
(25)
food subsidiaries (S 134 million) and relocation
State taxes, net of
federal beneflt
46
51
48
of the Planters LifeSavers headquarters to
Investment tax credit
(14)
(46)
(60)
Winston-Salem, North Carolina ($50 million) .
Goodwill amortization
48
58
25 #
This restructuring program included nonreMiscellaneous Items
(46)
(78)
(7) i
curring gains from the sales of the Company's
Canadian coffee, margarine and confectionery Provision for
Incometaxes
i735 $757 $746
businesses (5178 million), premium refunds
Effective tax rate
40 .5% 42 .5 % 44 .9%
from a restructuring of insurance programs
and miscellaneous gains from the sale of speAt December 31,1987, there was S 2 .2 billion
cialty tobacco brands .
of accumulated and undistributed income of
Note 2
foreign subsidiaries for which no provision for
Provision for Income Taxes
U .S. federal income taxes had been made . The
The provision for income taxes consisted of
undistributed income is intended to be reinthe following :
vested abroad indefinitely or repatriated sub1987
1986
1985
stantially free of additional tax .
Current:
Federal
Foreign and other
Deferred :
Federal
Foreign and other
Provision for
income taxes
$370
$305
$507
312
228
177
682
533
684
84
178
25
(31)
46
37
53
224
62
$735
$757
$746
Deferred income tax expense results from

timing differences in the recognition of revenue and expense for book and tax purposes .
The sources of these differences and the tax
effect of each were as follows :
1987
1986
1985
Excess of tax over

book depreciation
$171
S178
S 94
Restructuring items
Various other items
(123)
5
46
(32)
S 53
$224
S 62
Deferred income taxes
Pretax income from continuing operations

for domestic and foreign operations is shown
in the following table :
1987
1986
1985
Domestic (includes
U.S. exports)
Foreign*
$1,020 $1,209 $1,256

796
573
407
$1,816 $1,782 $1,663

"Pretax income of foreign operations Is Income of aii operations located outside the United States, some of which
may also be currently subject to US tax jurisdlction .
56
50782
There are a number of issues pending as a

result of Internal Revenue Service audits . The
resolution of these issues is not expected to
have a material effect on the Company s financial position .
Note 3
Discontinued Operations
On March 6,1987, the Company sold its
spirits and wines business, conducted principally through Heublein, Inc ., for 51 .2 billion in
cash . After provision for income taxes of $230
million, the gain on the sale was $ 215 million
or 86 cents per share .
On October 1,1986, the Company sold, for
cash, its quick-service restaurant business,
essentially Kentucky Fried Chicken, for $840
million . After provision for income taxes of 528
million, the loss on the sale was $39 million .
The loss reduced 1986 net income per share
by 16 cents .
Summarized information for discontinued

operations is shown in the following table :
1987 1986
Net sales
Operating income (loss)
Income (loss) before provision
for income taxes
Provision (benefit) for
income taxes
Income (loss) from
discontinued operations
Gain (ioss) on saie, net of tax
1985
$102 $1,896 S 1,912

214
(7) 208
(10) 187
191
(3) 109
107
(7) 78
84
215 (39)
$208 S 39 $ 84
Discontinued operations
per common share
1 .83 S
.15 S
9450
.33
Note 4
Extraordinary Item
During the first quarter of 1987 the Company sustained an extraordinary loss as a result
of the early extinguishment of $1 .2 billion of
the 11 .2% Notes issued in the Nabisco Brands
acquisition (see Note 16 to the Financial Statements), as well as 11 .35 %,11 .75 % and 13 .35 %
Debentures classified as short-term at year-end
1986 . Proceeds from the sale of Heublein were
used to extinguish the 11 .2 % Notes . A total of
$1 .6 billion of debt was extinguished at a premium of $80 million (after a tax benefit of $55
million), which decreased income per share by
32 cents .
Note 5
Cash and Short-Term Investments
Short-term investments at December 31,
1987 and 1986, valued at cost (approximate
market), totaled S786 million and S675 million,
respectively. Short-term investments at December 31, 1987 principally consisted of certificates
of deposit.
Note 6
Inventories
The major classes of inventory and the
amount of each at December 31 were :
Leaf tobacco
Finished products
Raw materials
Other
1987
1986
S 833
S 945
1 .087
375
383
953
416
306
$2,678 $2,620
At December 31,1987 and 1986, 51 .2 billion

and $1 .3 billion, respectively, of the inventory
was valued by the LIFO method . The balance
of the inventory was valued by various other
methods, principally FIFO.
The current cost of LIFO inventories at
December 31,1987 and 1986, was greater than
the amounts at which these inventories were
carried on the balance sheets by $1 .3 billion in
each year.
During 1987 and 1986, net income was
increased by S20 million and S33 million,
respectively, as a result of LIFO inventory liquidations . The LIFO liquidations resulted from
management's plan to manage leaf tobacco
inventory levels, consistent with its forecast of
future operating requirements . The overall
cost of recent leaf purchases at auction has
been increasing, which results in higher cost of
sales .
Note 7
Property, Plant and Equipment
Components of property, plant and equipment at December 31 are shown in the following table :
Land and land improvements
Buildings and
lea hold imprDvements
Machinery and equipment
Construction-In-process
1987
1986
S 324
S 296
1 .571
6,064
604
1,418
4,373
607
S7,563
$6,694
Note 8
Notes Payable and Related Information
Notes payable consisted of the following at
December 31 :
Commercial paper
Notes payable, principally
to domestic banks
1987
1986
$283
$419
159
99
S442
S518
Unused lines of credit at December 31,1987,

totaled $1 .2 billion and included $550 million to
support outstanding domestic commercial
paper. Of these lines at December 31,1987,
$639 million was in the form of seasonal credit
facilities . The S 550 million was in the form of a
Eurodollar credit facility with various foreign
banks and foreign branches of domestic banks
which provides for commitments up to S600
million in borrowings . Under this facility agreement, the Company is obligated to pay a commitment fee of 8/100 of 1 percent per annum
on the committed amount . It expires in 1993
(see Note 10 to the Financial Statements) .
Note 9
Accounts Payable and Accrued Accounts
Accounts payable and accrued accounts
consisted of the following at December 31 :
1987
Trade accounts
Marketing and advertising
Payroll and employee benefits
Restructuring and relocation
Excise taxes
other
S 621
666
489
255
226
930
1986
S
532
460
444
310
1,177
53,187 52,923
57
Note 10
Long-term Debt
December 31,1987
Due Within Due After
One Year One Year (1)
December 31,1986
Due Within
Due After
One Year
One Year
Long-term debt consisted of the following :

73/e - 93/e % Debentures, with semiannual and annual
sinking fund payments through 2017 (reduced by
S 79 million and $88 million of such debentures heldby

the Company on December 31,1987 and 1986,
respectively, for future sinking fund requirements)
11 .35 -13 .35% Debentures
6% - 93/4 % Notes, due through 1994
10 -10% % Notes, due 1988 to 1993
11 .2 % Notes, due 1997
7 .61-10.88% effective interest rates, foreign currency debt,
due 1990 to 2001(2)
Zero Coupon Guaranteed Notes, due 1992, net of discount
of S 160 million and S202 million at December 31,
1987 and 1986, respectively, effective interest rate
of 14 .64%
Credit agreements with various banks, due 1993 (3)
Other indebtedness
(1)
(2)
(3)
S 6
S 1,454
5 6
353
351
700
250
699
1,199
653
648
56
205
50
471
64
$162
$3,884
$423
198
877
479
54,833
100
S 483
The payment schedule of debt due through 1992 is as follows (in millions) :1989-5310 ;1990-$274 ;1991-5422 : and 1992-s 517 .
The Company has entered into hedging arrangements which will offset the effects of future exchange rate movements on these debt issues .
At December 31, 1987, the Company's Eurodollar credit facility (see Note 8 to the Financial statementsl supported S 50 million of short-term notes
that have been classified as long-term based upon the Company's intention to continue that amount o~ debt in some form for more than one year .
Note 11
Commitments and Contingencies
Various legal actions, proceedings and
claims are pending or may be instituted
against the Company and its subsidiaries,
including those claiming that lung cancer and
other diseases have resulted from the use of
the tobacco products of R .J. Reynolds Tobacco
Co . (Reynolds) . During 1987, 14 new such
actions were commenced, and 42 such
actions were dismissed or otherwise resolved
in favor of Reynolds prior to trial . A total of 68
such actions were pending at December 31,
1987 Some of the foregoing involve or may
involve claims for compensatory, punitive or
other damages in substantial amounts .
Litigation is subject to many uncertainties,
and it is possible that some of the legal actions,
proceedings or claims could be decided
unfavorably to Reynolds .
The Company has product liability insurance covering only a portion of such legal
actions, proceedings or claims, and the
maximum insurance coverage available on
reasonable terms and conditions is substantially less than the aggregate compensatory
and other damages alleged in such actions,
proceedings or claims.
S8
The Company believes that the above

actions, proceedings or claims, in the aggregate, should not have any material adverse
effect on the Company's financial position.
At December 31, 1987, the Company had
commitments totaling approximately $450 million for the purchase of machinery and equip
ment in connection with its facilities
modernization programs .
Note 12
Redeemable Preferred Stock
The Company had one class of cumulative
preferred stock (Series B) outstanding at
December 31,1987. The stock is senior to the
Common Stock as to dividends and preferences in liquidation .
The Series B Stock is subject to mandatory
redemption of 327,375 shares peryear, commencing November 1,1989, at a redemption
price of S 100 per share plus any accrued dividends . The Company has the noncumulative
option to double the amount redeemed pursuant to such mandatory redemption in any
year. The Company may elect to redeem all or
part of the Series B Stock, in addition to the
mandatory redemption requirement, at an initial optional redemption price of S 111 .50 plus
50782 9452
accrued dividends on November 1, 1989 . The

optional redemption price declines thereafter
on an annual basis to $100 plus accrued dividends on November 1, 1994, and thereafter .
During 1987, the Company repurchased and
retired 1 .174,217 shares of the Series B Stock
under a repurchase program to buy back up to
1, 597,021 shares . Cumulative dividends are
payable quarterly on the Series B Stock at an
annual rate of 511 .50 and aggregated 530 million in 1987 and S33 million in 1986 and 1985,
respectively . Additionally, holders of the Series
B Stock are entitled to one vote per share on all
matters on which holders of Common Stock
have the right to vote.
On March 1,1986, the Company redeemed

all remaining shares of its Series A Cumulative
Preferred Stock at S48 .50 per share plus
accrued dividends . Dividends on Series A Stock
were $1 million in 1986 and S9 million in 1985 .
On December 1,1986, the Company
redeemed all remaining shares of its Series C
Cumulative Preferred Stock at 5135 .23 per
share plus 51 .08 per share in accrued dividends . Dividends on Series C Stock were $68
million in 1986 and S49 million in 1985 .
Changes in redeemable preferred stock are
summarized in the following table :
1987
Shares Amount
Series A Cumulative Preferred Stock without par value (548 .50 stated value) :
Balance at beginning of year
Shares redeemed and retired
1986
1985
Shares
Amount
Shares
Amount
1,634,494
(1,634,494)
5 79
(79)
7,053,478
(5,418,984)
$ 342
(263)
1,634,494
79
Less treasury stock :

Balance at beginning ofyear
Shares purchased
Shares retired
(2)
2
(2,801,856)
(644,617)
3,404,664
(133)
(32)
163
Balance at end of year
(41,809)
41,809
-
(41,809)
1,592,685
(2)
S 77
2,906,521 $ 291
2,911,295
S 291
2,899,112
S 290
(4,774)
12,183
-
1
-
291
2,911,295
291
Series B Cumulative Preferred Stock without par value (S 100 stated

value-authorized 1,732,304 shares at
December 3 ., 1987) :
Shares issued upon conversion of 4~/2 %
Convertible Subordinated Debentures
Shares retired*
(1,174,217/ (118)
1,732,304 173
Less treasury stock:

Shares retired
(4,774)
4,774
(4,774)
-
(4,774)
1,732,304 S 173
2.906,521
5 291
2,906,521
S 291
9,750,095
S1,219
S -
(9,750,095)
(1,219)
9,750,095
1,219
9,750,095
S1,2119
*The aggregate cost to the Company, including all related fees and expenses, was S 141 million in 1987 and $1,328 million in 1986 . The excess of the cost
of shares repurchased and retired over the stated value of S 118 million and51,2I 9 million, In 1987 and 1986, respectively, has been charged to retained
Batance at end of year
Series C Cumulative Preferred Stock without par value (S 125 stated value) :
Shares issued in Nabisco Brands
acquisition (see Note 16)
2,906,521
Shares redeemed and retired*
earnings.
59
cn
m
oJo
N
Note 13
Common Stock and Pald-In Capital
1987
Common Stock-no par (S1 stated valueauthorized 600,000,000 shares at
December 31, 1987) :
Shares issued upon conversion of
4%96 Convertible Subordinated
Debentures
Shares repurchased and retired (1)
Shares
Amount '
50,698,401
251
250,698,401
$251
Pald-In capital :
Common Stock repurchased and retired (I)
Other
Bafance at end of year

Treasury stock :
Shares purchased (2)
Shares issued under incentive
compensation plan awards, net
1986
Shares
1985
Amount
Shares
50,698,401
251
58,548,528
259
--
78,932
(7,929,059)
(8)
250,698,401 ,
$251
250,698,401
Amount
S251
S 320
{8)
S332
(12)
S344
(10)
(2)
S 312
$320
S332
/303,468)
S (15)
(131,940)
S (4)
(165,273)
S (4)
(3,633,200)
(176)
(1,300,000)
(62)
(850,000)
/25)
595,432
32
1,128,472
51
883,333
25
(3,341,236)
$/159)
(303,468)
(131,940)
S (4)
S (15)
(1) The aggregate cost to the Company including all related fees and expenses was $248 million in 1985 . The excess of the cost of shares repurchase
and retired over the stated value has been charged to retained earnings, S230 million, and paid-in capital, S 10 million .
(2) In October 1987, the Company announced its intention to repurchase up to 5 miliion shares of its Common Stock . At December 31, 1987, 3,103,400
shares had been repurchased under this program at an aggregate cost of $145 million .
The Company has three stock option plans

that provide for the granting of options to purchase shares of the Company's Common
Stock to certain officers and other employees .
These plans permit the granting of incentive
awards in the form of incentive stock options
(ISOs), stock appreciation rights (SARs) and
other stock options . The option price for outstanding options is the average quoted market
price on the date of grant . Options that lapse
or are cancelled are added back to shares
authorized for future grants .
Under the 1982 Long-Term Incentive Plan,
the maximum number of shares of Common
Stock that may be granted is 12,500,000 . As of
December 31, 1987, there were 615,031 ISOs
(37,201 of which have SARs attached) and
2,253,853 nonqualified options
(1,341,928 of which have SARs attached) outstanding with expiration dates ranging from
July 21, 1988 to June 18, 1996 . The average
exercise price was 534 .18, and such options
were held by 519 participants .
Under the 1977 Stock Option Plan, the
number of shares of Common Stock granted,
net of cancellations, was 5,325,548 . No additional shares may be granted under this plan .
60
As of December 31, 1987, there were 749,105

nonqualified options/SARs outstanding with
expiration dates ranging from September 21,
1988 to June 18, 1996 . The average exercise
price was 524 .65, and such optionsJSARs
were held by 168 participants.
Under the Career Executive Stock Plan, the
total number of shares of Common Stock
granted, net of cancellations, was 2,634,041 .
No additional shares may be granted under
this plan . As of December 31, 1987, there were
10,425 nonqualified options/SARs outstanding
with an expiration date of February 15, 1994 .
The average exercise price was 523 .45, and
such options/SARs were held by 6 participants .
The following table summarizes the changes
in options outstanding and related price
ranges for shares of Common Stock under
options :
1987
1986
1985
Options:
Outstanding at beginning of year
1982 Long Term Incentive Plan :
Granted
Exercised
1977 Stock Option Plan :
Granted
Exercised
Career Executive Stock Plan :
Exercised
Cancelled
Outstanding at end of year
Price Ranges :
Outstanding at beginning of year
Granted under 1982 Long Term Incentive Plan
Granted under 1977 Stock Option Plan
Options/SARs exercised (market prices ranged from
544 .56-70.75 in 1987, $31 .3 i-54 .56 in 1986 and
S25 .25-34 .88 in 1985)
Cancelled
Outstanding at end of year
4,702,295
4,918,294
4,136,785
(588,566)
1,242,900
(959,213)
1,305,278
(396,523)
(210,204)
93,200
(395,612)
459,114
(403,415)
(13,865)
(261,246)
3,628,414
(51,050)
(146,224)
4,702,295
(45,2011
(137,744)
4,918,294
$12 .19-49 .06

-
$11 .81-31 .55

49 .06
35 .38-49 .06
$11 .51-26 .30

26 .19-30 .55
27 .50-31 .55
12 .1949 .06
20 .2349 .06
$12 .19-49 .06
1 1 .81-31 .55
18 .48-49 .06
$12 .19-49 .06
11 .51-26 .30
17 .28-31 .55
$11 .81-31 .55
At December 31, 1987 options were exercisable as to 2,123,746 shares, compared with 2 .172,799 shares at December 31, 1986, and 2,373,437 shares at
December 31, 1985 . As of December 31, 1987 options for 5,310, 591 shares of Common Stock were available for future grants .
Note 14
Cumulative Translation Adjustments
The changes in this account are shown in
the following table :
Balance at beginning
ofyear
Translation and other
adjustments
~
~
t
)
Related income taxes

Sale of businesses
1987
1986
s(761
S ( 14o)
159
6
(3)
34
7
23
$86
S(76)
Note 15
Retirement Benefits
The Company sponsors a number of noncontributory defined benefit pension plans
covering most U.S . employees . Plans covering
regular full-time employees in the tobacco
operations (as well as hourly employees in the
food operations) provide pension benefits that
are based on the employee's length of service
and final average compensation before retirement . Plans covering salaried employees of the
corporate group and food operations were
amended in late 1987 to provide for individual
accounts which offer lump sum or annuity
payment options, with benefits based on
accumulated compensation and interest credits made monthly throughout the career of
each participant, with an initial opening credit
based on the value of retirement benefits

accrued prior to the date of such amendment .
The Company's policy is to fund the cost of
current service benefits and past service cost
over periods not exceeding 30 years to the
extent that such costs are currently tax deductible . Additionally, the Company participates in
several multi-employer plans, which provide
defined benefits to certain of the Company s
union employees .
Employees in foreign countries who are not
U .S. citizens are covered by various postemployment benefit arrangements, some of
which are considered to be defined benefit
plans for accounting purposes .
The Company elected early adoption of
FASB Statement No . 87, "Employers' Accounting for Pensions;' for its United States pension
plans in 1986 and for its Canadian pension
plans in 1987. The effect of the 1987 adoption
in Canada was not significant, while the 1986
adoption for U.S. plans reduced pension
expense for that year by S21 million . Pension
expense and related information presented for
prior periods have not been retroactively
restated . The Company intends to apply FASB
Statement No . 87 to its other foreign plans in
1988, the effect of which is expected to be
immaterial .
61
A summary of the components of net periodic pension cost for Company sponsored
plans follows :
1987
1986
82
69
195
167
(89)
(281)
(132)
96
Total U.S. and

Canadian plans
56
51
$60
Foreign plans
18
15
14
Net pension cost of

defined benefit plans
74
66
74
Muititmpia)er plans
29
23
17
$ 103
$ 89
591
Defined benefit plans :

Service costbenefits earned
during tfie period
Interest cost on projected

benefit obligation
Actual return on
plan assets
Net amortization
and deferral
Total pension expense
1985
The following table sets forth the funded

status and amounts recognized in the Consolidated Balance Sheets at December 31,1987
and 1986 for the Company's United States and
Canadian defined benefit pension plans, using
the following assumptions :
Weighted-average discount rate
Rate of increase in compensation levels
Expected long-term rate of
return on assets
Plans Whose
Assets
Exceeded
Accumulated
December 31, 1987 Benefits
Present value
of benefit obligations :
Vested benefit obligation t 1 .050
Accumulated
benefit obligation
Plan assets at
fair market value
Projected benefit obligation

Pr 'ected benefit obligation
m excess of) or less
n plan assets
Unrecognized net loss
Prior service cost not yet
recognized in periodic
pensron cost
.
Unrecognized net assets at
January 1,1987,
1987
8.5%
1986
8.0%
6.596
6 .5%
9.0%
9 .0%
Plans Whose
Accumulated
Benerits
Exceeded
Assets
$744
S 1,247
$804
S 1,707
$676
(1,683)
(914J
24
(R 38)
11
16
11
24
The projected benefit obligation includes

S 79 million related to the 1987 Voluntary Separation Incentive Program of R .J . Reynolds
Tobacco Co.
At December 31, 1987, 82 percent of the
plan assets were invested in listed stocks and
bonds . The balance consisted of various
income producing investments .
The actuarial present value of accumulated
plan benefits for the United States defined benefit pension plans at December 31, 1986 was
$1 .8 billion, including vested benefits of 51 .5 billion . The net assets available for benefits were
$2 .1 billion .
In addition to providing pension benefits,
the Company provides certain health care and
life insurance benefits for retired employees .
Substantially all of its regular full-time emplayees, including certain employees in foreign
countries, may become eligible for those benefits if they reach retirement age while working
for the Company. The cost of retiree health
care and life insurance benefits is generally recognized as expense when claims are paid .
Claim payments and insurance premiums for
retirees amounted to S28 million in 1987 5$26
million in 1986 and $17 million in 1985 .
Note 16
Acqulsitlon
The Company purchased 50 .2 percent of
the outstanding shares of Nabisco Brands, Inc .
Common Stock on July 2,1985, for $85 per
share . The acquisition was completed on
September 10,1985 upon the conversion of the
remaining shares of Nabisco Brands, Inc .
Common Stock into a combination of the
Company's Series C Cumulative Preferred
Stock and 11 .2 % Notes . (See Notes 10 and 12 to
the Financial Statements .)
The total cost of the acquisition, which was
accounted for as a purchase, was S4 .9 billion .
Excluding working capital acquired of $295
million, the investment was primarily for
intangibles of S 3 .9 billion, properry, plant
and equipment of $1 .8 billion, and long-term

debt of $685 million.
If the acquisition had taken place as of the
beginning of 1985, pro forma net sales, income
from continuing operations and the related per
share amount for 1985 would have been $14 .5
billion, $899 million and S2 .90, respectivety .
net of amortization (171) (1 t 1)
Net pension liability

recognized in the
balance sheet
f (125)
Net pension liability
recognized in the balance
sheet at December 31,1986
S
(u.S, plans oniy)
28)
6Z
$(309)
(329)
V,
m
a
OD
N
~
u,
m
Responsibility for Financial

Statements
RJR Nabisco, Inc . is responsible for the preparation and accuracy of the financial statements and other information included in this
report . The financial statements have been
prepared in accordance with generally
accepted accounting principles using, where
appropriate, management's best estimates and
judgment .
The Company's independent auditors,
Ernst & Whinney, have examined the financial
statements in accordance with generally
accepted auditing standards and their report
appears herein .
In meeting its responsibility for the reliability
of the financial statements, the Company
depends on its system of internal accounting
controls . The system is designed to provide
reasonable assurance that assets are safeguarded and transactions are executed as
authorized and properly recorded . The system
is augmented by written policies and procedures and an extensive internal audit program .
The Board of Directors of the Company has
an Audit Committee which is composed
entirely of directors who are neither officers
nor employees of the Company . The Audit
Committee meets regularly with management, the internal auditors and the independent auditors to discuss audit scope and results
and to address internal control and financial
reporting matters . Both independent and
internal auditors have unrestricted access to
the Audit Committee .
Report of Ernst & Whtnney,

independent Auditors
RJR Nabisco, Inc .
Its Directors and Stockholders
We have examined the consolidated balance sheets of RJR Nabisco, Inc . and subsidiaries as of December 31,1987 and 1986, and
the related consolidated statements of income
and retained earnings and changes in financial
position for each of the three years in the
period ended December 31,1987 . Our examinations were made in accordance with
generally accepted auditing standards and,
accordingly included such tests of the
accounting records and such other auditing procedures as we considered necessary
in the circumstances .
In our opinion, the financial statements
referred to above present fairly the consolidated financial position of RJR Nabisco, Inc .
and subsidiaries at December 31,1987 and
1986, and the consolidated results of their
operations and the changes in their consolidated financial position for each of the three
years in the period ended December 31,1987,
in conformity with generally accepted
accounting principles applied on a consistent basis.
441c. vC lT/
Atlanta, Georgia
February 1,1988
President and
Executive Vice President,

Finance, and Chief
Financial Officer
February 1, 1988
63
RJR Nabisco, Inc .
Eieven Year Financial Summary

1987
(Oollars in Millans fxcept Pershare Data/
Net
sales
Operating income
Interest and debt expense
Income before provision for income taxes

Net income
Preferred dividends
Net income applicable to Common Stock
1985
15,766
1986
$15 .102
$11,622
1984
$8,200
2,304
2,340
1,949
1,412
489
565
337
166
1,816
1,782
1,663
1,353
1,081
1,209
30
1,179
1,025
1,064
102
962
917
1,001
91
910
747
1,210
56
1,154
5 3 .68
3 .83
1 .51
21 .21
S 3 .27
3 .60
1 .41
19 .14
S 2 .46
4 .11
1 .30
17 .33
S 1,329
1,022
402
$ 1,617
946
258
52,780
642
151
Per share of Common Stock :

Continuing operations S 4.19
4 .70
Net income
1 .76
Dividends
24
.41
Book value
Workingcapital
S 1,717
936
Capital expenditures
450
Depreciation expense
5,847
5,343
4,678
2,193
16,861
Total assets
604
Short-term debt
3,884
Long-term debt
173
Preferred stock
6,038
Common stockholders' equity
Average common shares outstanding (in thousands) 250,612
Number of employees at year end 120,334
Effective income tax rate 40 .596
Current
ratio
1 .4
16,701
941
4,833
291
5,312
16,414
804
4,824
1,587
4,796
8,805
218
1,225
499
4,478
251,073
122,395
252,941
127,404
280,938
79,234
42 .5%
1 .3
44 .9%
1 .4
44 .8%
2 .5
Property plant and equipment, net
Prior years have been restated to report the Company's former spirits and wines business as discontinued operations (see Note 3 to the Financial Statements) .
The 1985 amounts include the operations of Nabisco Brands from July 2, 1985(see Note 16 to the Financial Statements) .
6f
S9
0'
%8'6b
'
5'Z
%L'6fr %8'9b
'Z
%b'Sb
b'Z
Z'Z
'
%6'Stp %8'Stl %9'b
106'SZ Lf, l'9Z 860'69 SLL"ZL 608'SL 95b'SL 99Z"8L

Ztb l'85Z L9'LSZ 698'65Z 88' l9Z S l9'Z9Z 99L'99Z Z6b'Z8Z
09'Z 09'Z 866'Z SW LZ6'E 99L'ti ZZ'S
Z
8Z
95
%
Sb
09
l9
SSb
855
8
916
56
E9b'
t
MZ'
l
081
901
8b
bL5
65
b5
05l
5ti" bl8' SLb'S l8Z'9 56'9 9bL"8 9LL"8
8b bLb Zb8 696 SL l't l9' l 889' l
Lb
lS
LL
98
66
811
ll
901
06
ZLl
8EZ
86Z
8EE
Z6b
LZl'lS 8LZ'lS llL'lS 56L'lS Z0l"ZS 800'ZS 58"ZS
6L'6 8'0l b8' l l bZ' l 50'S l 6'9l bb'8l
L9'0 ZL'0 8L'0 L8'0 00' I ti l' l ZZ' l
b9' t ZL' l Z0'Z Sb'Z 187 l' 067
LZ' l S 9b' l S 6L' t S b6' I S bZ'Z S Z6' l S 007 S
9lb
9b
0Z5
0ti9
8L
b8
618
L
9
lE
0
0
9E
Z9
Zb
Zbb
l55
0L9
89L
0L8
188
6ZE
SL
l6b
95
919
8b5
9Z9
559
SbL
EZ6
186
6l'l
Zl0'l
0Il'l
6b
95
0l
0l
Sbl
081
LLl
llL ILL 96 IZ0"I b5l'l Zbl'l S0Z"l
086'ZS 05Z'S 66Z'SS l90'9S b8L"9S Z'LS 595'LS
LL6l
8L61
6L61
0861
1861
Z861
E861
RJR Nabisco, Inc .
Lines of Business Data

The Company classifies its continuing operations into two principal lines of business which are described in Management's
Discussion and Analysis, beginning on page 45 of this report. Summarized financial information for these operations for each of
the past three years is shown in the following tables . The 1985 amounts include the operations of Nabisco Brands from July 2,
1985 (see Note 16 to the Financial Statements) .
1987 1986 1985
fDoUars in Millionsj
Net sales:
Tobacco
Food
S 6,346
9,420
$ 5,866
9,236
S 5,422
6,200
Consolidated net sales

Operating Income :
$15,766
S 15,102
511,622
Tobacco
Food
Restructuring expense (i)
Corporate
Consolidated operating Income
S 1,821
915
(250)
(182)
S 2,304
5 1,659
820
(139)
S 2,340
S 1,483
549
(83)
S 1,949
Assets:
Tobacco
Food
Corporate (2)
$ 5,208
10,117
1,536
S 4,882
9,822
1,281
S 4,496
9,598
863
16,861
15,985
14,957
$16,861
716
1,457
$16,701
$16,414
433
445
58
613
344
65
647
279
20
936
$ 1,022
946
244
380
28
205
376
24
146
195
13
652
605
354
~`
Net assets of
discontinued operations
Consolidated assets
Capital expenditures :
Tobacco
Food
Corporate
Consolidated capital expenditures
Depreciation and amortization expense :
Tobacco
Food
Corporate
Consoiiidated depreciation and
amortization expense
(1) Restructuring expense for 1987 includes S(2611 mitlion, S 18 million and S(7) million for Tobacco . Food and Corporate, respectively (see Note I to the
Financial Statements) .
(2) All cash and shortterm investments are included in Corporate assets .
RJR Nabisco, Inc .
Geographic Data
The following table shows certain financial information relating to the Company's continuing operations in various geographic
areas .
/Dollars in Millrons/
Net sales :
United States
Canada
Europe
Other geographic areas
Less transfers between geographic areas (l)
Consolidated net sales
Operating Income:
United States
Canada
Europe

Restructuring expense (2)
Corporate
1987
1986
1985
$11,721
850
2,361
1,387
(553)
$11,338
1,060
2,055
1,217
(568)
515,102
S 9,095
830
1,125
996
(424)
S 2,026
85
180
188
S 1,694
106
90
142
(83)
S 15,766
S 2,162
112
241
221
(250)
(182)
$11,622
Consolidated operating Income
$ 2,304
(139)
S 2,340
Assets :
United States
Canada
Europe
Corporate
S 10,881
700
2,293
1,451
1,536
S 10,982
896
1,660
1,166
1,281
S 10,115
1,048
16,861
-
15,985
716
14,957
1,457
Consolidated assets
$16,861
S 16,701
$16,414
Liabilities of the Company s continuing

operations located In foreign countries
S 1,831
S 1,578
S 1,523
Net assets of discontinued operations
S 1,949
1,552
1,379
863
(1) Transfers between geographic areas (which consist principally of fresh and canned fruit from Latin America, Africa and the Philippines transferred to
the United States and Europe) are generally made at fair market value.
(2) Restructuring expense for 1987 includes S(428) million and S178 million for the United States and Canada, respectively (see Note 1 to the Financial
Statements) .
.
67
RJR Nabisco, Inc .
Ouarterly Results of Operations (Unaudited)

The following is a summary of the quarterly results of operations for the years ended December 31 :
(Dollars in Mildons Except PerShare Amounts/
1987
Net sales
Operating Income (t1
First
Second
Third
Fourth
$3,489
277
$4,023
632
$3,835
6S0
$4,419
745
92
299
320
370
Net income (2(

per common share
220
299 '
320
370
0 .33
0 .84
1 .16
1 .16
1 .24
1 .24
1 .46
1 .46
53,397
461
53,832
591
53,656
609
54,217
679
195
253
267
310
Net income
per common share
206
276
268
314
0 .61
0 .66
0 .91
0 .99
0 .96
0 .97
1 .20
1 .21
1986(3)
Net sales
Operating income
Previously published quarterly financial data have been restated to report the Company's former spirits and wines business as discontinued operations
(see Note 3 to the Financial statements) .
(1) Operating income for the first, second and third quarters of 1987 included $219 million, $12 million and S19 million, respectively for net restructuring
expense (see Note 1 to the Financial Statements) .
(2) Net income in the first quarter of 1987 included the net gain on the sale of the Company s discontinued operations of $215 million or 86 cents per
share and an extraordinary loss from the early extinguishment of debt of 580 million or 32 cents per share . (See Notes 3 and 4 to the Financial Statements) .
(3) The 1986 fourth quarter operations vvere adversely affected by charges related to the early retirement of high-cost debt and a one-time corporate
streamlining program .
68
9
RJR Nabisco, Inc .
Shareholder Information
Corporate Headquarters
RJR Nabisco, Inc .
300 Galleria Parkway
Atlanta, Georgia 30339
Shareholder Inquiries
Communications concerning dividends,
change of address, transfer requirements and
lost certificates should be directed to the company's transfer agent .
Other shareholder inquiries may be directed to

Shareholder Services, RJR Nabisco, Inc ., Reynolds Boulevard, Winston-Salem, North Carolina 27102 . Telephone : 919-741-2347
Transfer Agent and Registrar
Wachovia Bank and Trust Company, N .A .
Corporate Trust Department
P.O. Box 3001

Winston-Salem, North Carolina 27102
Telephone : 919-7 70-5 790
Independent Auditors
Ernst & Whinney
787 Seventh Avenue

New York, New York 10019
1800 Peachtree Center
South Tower
225 Peachtree Street, N .E .

Atlanta, Georgia 30303
Common Stock
The company's Common Stock is listed on the
New Ybrk, London, Tokyo, Zurich, Geneva,
Basel, Amsterdam, Frankfurt, West Berlin,
Dusseldorf, Paris, Brussels and Antwerp stock
exchanges .
Trading symbol on New York Stock Exchange :
RJR .
Notice of Meeting
The Annual Meeting of the company's shareholders will be held at the Waverly Hotel, 2450
Galleria Parkway, Atlanta, Georgia, at 10 a .m .
on Wednesday, May 4,1988 . Notice of the
Annual Meeting, together with a Proxy Statement and Proxy, will be mailed in March to
shareholders of record as of the close of business March 7,1988 .
Availability of Form 10-K

On or after March 31,1988, a copy of the company's annual report to the Securities and
Exchange Commission on Form 10-K for the
year ending December 31,1987, will be provided to shareholders upon written request to :
Shareholder Services, RJR Nabisco, Inc .,
Reynolds Boulevard, Winston-Salem, North
Carolina 27102
Supplemental Information
RJR Nabisco shareholders and other interested
investors may write to request reprints of
financial community presentations, corporate
responsibility information and speeches delivered by senior management . Requests should
be directed to Corporate Public Affairs, RJR
Nabisco, Inc ., 300 Galleria Parkway, Atlanta,
Georgia 30339 . Telephone : 404-852-3078
Security analysts and other investment professionals should direct their inquiries to Huntley
R . Whitacre, Vice President, Investor Relations,
RJR Nabisco, Inc ., 300 Galleria Parkway,
Atlanta, Georgia 30339 .
Telephone : 404-852-4706
Throughout this annual report, product references in all capital

ktters and initial capital letters represent trade names or brand
names owned by or associated with RJR Nabisco . Inc .
1989 RJR Nabisco . Inc .
Dividend Reinvestment Plan

All registered holders of RJR Nabisco, Inc .
Common Stock are eligible to participate in a
convenient and economical method for automatically reinvesting their dividends towards
the purchase of additional shares of the company's Common Stock . A booklet describing
the Plan, together with an enrollment form,
can be obtained by writing the transfer agent
or calling 919-770-6000 .
69
RNA
NABISCO

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SCHEDULE X

RJR NABISCO, INC . AND SUBSIDIARIES

1988 1987 1986

3(a)(i) -Restated Certificate of Incorporation of RJR Nabisco, Inc ., as amended

10(d)(ii) --Special Addendum to Form of Employment Agreement filed as Exhibit

July 21, 1988 . (Exhibit 17 to Schedule 14D-9 filed on November 8, 1988*) .

SECURITIES AND EXCHANGE COMMISSION

RJR Nabisco Inc.

(State or other jurisdiction of incorporation (I .R .S. Employer Identification No.)

300 GALLERIA PARKWAY

Name of each exchange on

NABISCO BRANDS, INC .-

(b) Financial Information about Industry Segments

believes that for 1987, four of its cigarette brands,

RITZ, SALEM, VANTAGE and WINSTON . Reynolds

WINSTON, SALEM, CAMEL and VANTAGE ,

Tobacco International's three primary cigarette brands are

and S ALEM . Local

Del Monte Tropical Fruit

Andrew S . Barrett . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Senior Vice President, Corporate Personnel (1986) ; NBI

Board (1987) ; Senior Executive Vice

John H . Clarke . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Senior Vice President, Technology (1987 ) ; NBI-Executive

David G . Marshall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Vice President, Personnel, Employee Benefits (1987) ; Staff

John D . Martin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Executive Vice President (1988) ; Ohlmeyer Communications

George A . Midwood . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Vice President and Treasurer (1987 ) ; American Cyanamid

Item 11 . Executive Compensation

Executive Compensation (page 9)

See Index to Exhibits .

Date : March 22, 1988

Principal Executive Officer :

.... .. . .. . . . . . . . . . . . . .. . ......... ...... .. . . . . . . . . . . . . .. . .. ... ... . . .. . . . . . . . . . . . . . . . .. ... ............. ... ... .

(Vernon E . Jordan, Jr.)

Director l, March 22, 1988

(John G . Medlin, Jr. )

(Andrew G . C. Sage lI)

(Leo C . Wilkerson, Attorney-in-Fact)

INDEX TO FINANCIAL STATEMENTS

Financial Statement Schedules:

three years ended December 31, 1987 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2

RJR NABISCO, INC.

REPORT OF INDEPENDENT ACCOUNTANTS

ERNST & WHINNEY

Year ended December 31, 1987 :

Machinery and equipment . . . . . . . . . . . . . . . .

Year ended December 31, 1986 :

Buildings and leasehold

Machinery and equipment . . . . . . . . . . . . . . . .

Land and land improvements . . . . . . . . . . .

Buildings and leasehold

Machinery and equipment . . . . . . . . . . . . . . . .

Year ended December 31, 1985 :

Year ended December 31, 1986 :

Buildings and leasehold

Year ended December 31, 1987 :

Machinery and equipment . . . . . . . . . . . . . . . .

Year ended December 31, 1985 :

(A) Reclassifications, foreign currency translation effects and/or miscellaneous adjustments .

Column B Column C Column D Column E

Year ended December 31, 1987 :

Year ended December 31, 1986 :

Year ended December 31, 1985 :

(A) Charges against the accounts .

Years Ended December 31, 1987, 1986 and 1985