Item 1. BUSINESS
Reynolds Metals Company (the "Registrant") was incorporated in 1928 under the laws of the State of Delaware. As used herein, "Reynolds" and "Company" each means the Registrant and its consolidated subsidiaries unless otherwise indicated.
GENERAL
Reynolds serves global markets as a supplier and recycler of aluminum and other products, with its core business being as a vertically integrated producer of a wide variety of value-added aluminum products. Reynolds produces alumina, carbon products and primary and reclaimed aluminum, principally to supply the needs of its fabricating operations. These fabricating operations produce aluminum foil, sheet, plate, cans and extruded products (including heat exchanger tubing, drive shafts, bumpers and window systems), flexible packaging and wheels, among other items. Reynolds also produces a broad range of plastic products, including film, bags, containers and lids, for consumer products, foodservice and packaging uses. The Company markets an extensive line of consumer products under the Reynolds brand name, including the well-known Reynolds Wrap aluminum foil. Reynolds' largest market for its products is the packaging and containers market, which includes consumer products. The Company also is engaged in the distribution of aluminum and stainless steel and other non-aluminum industrial products to a variety of markets. Reynolds operates a one-of-a-kind facility which converts spent potliner from Reynolds' and other producers' North American aluminum smelting operations into an environmentally safe material with potential for recycling. Since 1986, the Company has been a gold producer through operations in Western Australia; however, it sold a portion of those operations in 1994 and is considering the sale of its remaining gold operations. See the discussion below under this Item.
To describe more fully the nature of its operations, Reynolds has separated its vertically integrated operations into two areas -- (1) Finished Products and Other Sales and (2) Production and Processing.
Finished Products and Other Sales includes the manufacture and distribution of various finished aluminum products, such as cans, containers, flexible packaging products, foodservice and household foils (including Reynolds Wrap), laminated and printed foil and aluminum building products. Finished Products and Other Sales also includes the sale of plastic bags and food wraps (for example, Reynolds Plastic Wrap, Reynolds Crystal Color Plastic Wrap, Reynolds Oven Bags and Presto disposer bags), plastic lidding and container products, plastic film packaging, Reynolds Freezer Paper, Reynolds Baker's Choice baking cups, Reynolds Cut-Rite wax paper and wax paper sandwich bags, composite and non-aluminum building products, and printing cylinders and machinery.
Production and Processing includes the refining of bauxite into alumina, calcination of petroleum coke and production of prebaked carbon anodes, all of which are vertically integrated with aluminum production and processing plants. These plants produce and sell primary and reclaimed aluminum and a wide range of semifinished aluminum mill products, including flat rolled products, extruded and drawn products, cast products and other aluminum products. Examples of flat rolled products include aluminum can sheet and machined plate. Examples of extruded and drawn products include heat exchanger tubing, drive shafts and bumpers. Examples of cast products include aluminum wheels. Production and Processing also includes the treatment of spent potliner and the sale of gold and other non-aluminum products, technology, and various licensing, engineering and other services related to the production and processing of aluminum.
In June, 1994, Reynolds acquired Bev-Pak, Inc. and its aluminum beverage can and end manufacturing facility in Monticello, Indiana. The purchase increased Reynolds' U.S. aluminum can- and end-making capacity by approximately 15 and 20 percent, respectively, to approximately 19 billion cans and 21 billion ends annually.
In July, 1994, Reynolds completed the sale of Reynolds Australia Metals, Ltd., which held a 40% interest in the Boddington Gold Mine in Western Australia, to PosGold (BGM) Pty Ltd., a subsidiary of Poseidon Gold Limited. Proceeds have been used to repay debt and for reinvestment in Reynolds' value-added businesses.
Reynolds acquired the metals distribution business of Prime Metals, Inc., in August, 1994. Reynolds is operating the business, which distributes aluminum and stainless steel mill products through six facilities located in Atlanta, Georgia; Dallas, Texas; Cleveland, Ohio; Detroit and Grand Rapids, Michigan; and Kansas City, Missouri, as part of its Reynolds Aluminum Supply Company division.
Also in August, 1994, Reynolds acquired The United States Shoe Corporation's facility in Beloit, Wisconsin. Reynolds is modifying and equipping the facility for the manufacture of aluminum wheels, with production expected to begin in the second quarter of 1995.
Information on shipments and net sales by classes of similar products is shown in Table 1.
Financial information relating to Reynolds' operations and identifiable assets by major operating and geographic areas is presented in Note P to the consolidated financial statements in Item 8 of this report.
Reynolds' products are generally sold to producers and distributors of industrial and consumer products in various markets. Information on sales of products by principal geographic and business markets is shown in Tables 2 and 3.
TABLE 2
Principal Geographic Markets
Approximate Percentage of Sales _______________________________
1994 1993 1992 ____ ____ ____
United States 77% 75% 75%
Canada 6 6 5
Other (Principally Europe) 17 19 20 ____ ____ ____
Total 100% 100% 100%
TABLE 3
Principal Business Markets
Approximate Percentage of Sales _______________________________
1994 1993 1992 ____ ____ ____
Packaging and Containers 45% 45% 45%
Distributors and Fabricators 13 13 15
Building and Construction 13 12 12
Automotive and Transportation 12 11 11
Electrical* 3 3 5
Other 14 16 12
____ ____ ____
Total 100% 100% 100%
_________________ *Reynolds sold its North American electrical cable operations in September, 1992. COMPETITION
Principal Competitors
Reynolds' principal competitors in the sale in North America of products derived from primary aluminum are ten other domestic companies, a Canadian company and other foreign producers. Reynolds and many other companies produce reclaimed aluminum.
In the sale of semifinished and finished products, Reynolds competes with (i) other producers of primary and reclaimed aluminum, which are also engaged in fabrication, (ii) other fabricators of aluminum and other products, (iii) other producers of plastic products and (iv) metals service center companies engaged in the distribution of aluminum and other products. Reynolds' principal competitors in Europe are seven major multinational producers and a number of smaller European producers of aluminum semifabricated products. Aluminum and related products compete with various products, including those made of iron, steel, copper, zinc, tin, titanium, lead, glass, wood, plastic, magnesium and paper. Plastic products compete with products made of glass, aluminum, steel, paper, wood and ceramics, among others. Competition is based upon price, quality and service.
Industry Conditions
A worldwide oversupply of aluminum, caused by high exports beginning in 1990 from the Commonwealth of Independent States ("CIS") (mostly from Russia), start-up of substantial new capacity in the industry and economic weakness, severely depressed the price of aluminum on world commodity markets. This supply-demand imbalance, with its resultant effect on prices, dramatically affected the aluminum industry and the Company. Multilateral government negotiations were commenced in late 1993 to develop strategies to integrate the CIS aluminum industries into the world market. A Memorandum of Understanding relating to primary aluminum supply-demand conditions and international trade in aluminum was agreed to by the governments of six major aluminum producing countries in March, 1994. If the negotiations had not been successful, the likely alternatives would have been unilateral trade sanctions (including, for example, import quotas and anti-dumping actions). Subsequently, European quotas on Russian aluminum imports were permitted to expire and no anti-dumping actions were filed in the United States.
RAW MATERIALS AND PRECIOUS METALS
Bauxite, Alumina and Related Materials
Bauxite, the principal raw material used in the production of aluminum, is refined into alumina, which is then reduced by an electrolytic process into primary aluminum.
Reynolds' bauxite requirements and a portion of its alumina requirements are met from sources outside the United States.
Reynolds has long-term arrangements to obtain bauxite at negotiated prices from sources in Australia, Brazil and Guinea. Reynolds also has a long-term arrangement with the U.S. government under which Reynolds has agreed to purchase at a negotiated price an aggregate of approximately 1,250,000 long dry tons of Jamaican bauxite stored next to Reynolds' Sherwin alumina plant near Corpus Christi, Texas, for the period 1995 through 1998.
Reynolds refines bauxite into alumina at its Sherwin alumina plant. Reynolds also acquires alumina from two joint ventures in which it has interests, one located in Western Australia, known as the Worsley Joint Venture ("Worsley"), and the other located in Stade, Germany, known as Aluminium Oxid Stade ("Stade"). See Table 4 under this Item and the discussion of Worsley under "Australia".
Production and purchases of bauxite and production of alumina are adjusted from time to time in response to changes in demand for primary aluminum and other factors. Reynolds has reduced production at its Sherwin plant in connection with the curtailment of operations at its U.S. primary aluminum production plants. See "Aluminum Production". At December 31, 1994, the Sherwin plant was operating at 65% of capacity.
Australia
In December, 1994, Reynolds acquired from The Shell Company of Australia an additional 6% interest in Worsley, increasing Reynolds' interest in the joint venture to 56%. Worsley has a rated capacity of 1,700,000 metric tons of alumina per year (expandable to 2,700,000 metric tons per year). Worsley has proven bauxite reserves sufficient to operate the alumina plant at its rated capacity (taking into account future expansions to increase rated capacity to up to 2,700,000 metric tons per year) for at least the next 50 years. The joint venture has no specified termination date.
Reynolds has a long-term purchase arrangement under which it may purchase from a third party an aggregate of approximately 18,800,000 dry metric tons of Australian bauxite for the period 1995 through 2021. Of this amount, Reynolds has agreed to purchase 1,000,000 dry metric tons annually through 1996.
Brazil
Reynolds and various other companies are participants in the Trombetas bauxite mining project in Brazil. Reynolds has a 5% equity interest in the project and has agreed to purchase an aggregate of approximately 2,000,000 dry metric tons of Brazilian bauxite from the project for the period 1995 through 1999.
Reynolds is also maintaining an interest in other, undeveloped bauxite deposits in Brazil.
Guinea
Reynolds owns a 6% interest in Halco (Mining), Inc. ("Halco"). Halco owns 51% and the Guinean government owns 49% of Compagnie des Bauxites de Guinee ("CBG"), which has the exclusive right through 2038 to develop and mine bauxite in a 10,000 square-mile area in northwestern Guinea. Reynolds has a bauxite purchase contract with CBG which will provide Reynolds with an aggregate of approximately 8,800,000 dry metric tons of Guinean bauxite for the period 1995 through 2011.
Guyana
Reynolds and the Guyanese government each owns a 50% interest in a bauxite mining project in the Berbice region of Guyana. Reynolds has a bauxite purchase contract under which it has agreed to purchase 800,000 dry metric tons of Guyanese bauxite from the project in 1995.
Jamaica
Reynolds has a purchase arrangement under which it has agreed to purchase from a third party up to 1,500,000 dry metric tons of Jamaican bauxite in 1995.
Reynolds' present sources of bauxite and alumina are more than adequate to meet the forecasted requirements of its primary aluminum production operations for the foreseeable future. To utilize excess alumina capacity, Reynolds enters into third-party sales arrangements. Reynolds also enters into arrangements to sell bauxite in excess of its needs to third parties.
Other materials used in making aluminum are either purchased from others or supplied from Reynolds' carbon products plants in Baton Rouge and Lake Charles, Louisiana.
Precious Metals
In July, 1994, Reynolds completed the sale of Reynolds Australia Metals, Ltd., which held a 40% interest in the Boddington Gold Mine in Western Australia, to PosGold (BGM) Pty Ltd., a subsidiary of Poseidon Gold Limited.
The Company's remaining gold mining assets consist principally of mines in the Marvel Loch and Southern Cross areas and the Mt. Gibson gold project near Dalwallinu, all in Western Australia, and exploration activities underway in Western Australia and the Northern Territory. The operations are managed by Reynolds Australian Gold Operations, Ltd., based in Perth. These operations produced 217,000 ounces of gold in 1994.
ALUMINUM PRODUCTION
Reynolds owns and operates three primary aluminum production plants in the United States and one located at Baie Comeau, Quebec, Canada. Reynolds is also entitled to a share of the primary aluminum produced at three joint ventures in which it participates, one located in Quebec, Canada, known as the Becancour joint venture ("Becancour"), one located in Hamburg, Germany, known as Hamburger Aluminium-Werk GmbH ("Hamburg"), and the third in Ghana, Africa, known as Volta Aluminium Company Limited ("Ghana"). See Table 5 (and related notes) under this Item for information on these primary aluminum production plants. Reynolds also buys primary aluminum on the open market.
Production at the primary aluminum plants listed in Table 5 can vary due to a number of factors, including changes in worldwide supply and demand. Due to the worldwide aluminum supply-demand imbalance, Reynolds has idled a total of 209,000 metric tons, or 21%, of its 998,000 metric tons of primary aluminum capacity. Reynolds temporarily shut down 88,000 metric tons of primary aluminum production capacity at its Massena, New York (41,000 metric tons) and Longview, Washington (47,000 metric tons) plants, effective in the fourth quarter of 1993, and its Troutdale, Oregon plant, with a capacity of 121,000 metric tons, has been idle since 1991. At December 31, 1994, the U.S. plants listed in Table 5 were operating collectively at a rate of 53% of capacity; Ghana (in which Reynolds has a 10% equity interest), where production has been curtailed by drought (see "Energy") since September, 1994, was operating at 70% of capacity; and all other plants listed in Table 5 were operating at full capacity. See Table 6 under this Item. In order to balance its alumina supply system, Reynolds has temporarily reduced production at its Sherwin alumina plant in Texas in connection with the curtailments. See "Raw Materials and Precious Metals - Bauxite, Alumina and Related Materials".
Reynolds has an 8% equity interest in C.V.G. Aluminio del Caroni, S.A., which produces primary aluminum in Venezuela.
Reynolds has agreed to acquire a 10% equity interest in the Aluminum Smelter Company of Nigeria (ALSCON), with the Nigerian government and private interests holding the remaining equity. As part of the arrangement, Reynolds will purchase at market-related prices 140,000 metric tons of primary aluminum annually from a 180,000 metric ton smelter being constructed by ALSCON in Nigeria.
Reynolds produces reclaimed aluminum from aluminum scrap at its facilities located in Bellwood, Virginia and Sheffield, Alabama, and at a facility in which it has a 99.5% equity interest located in Isernia, Italy. See Table 6 under this Item. Scrap for the U.S. facilities is obtained through Reynolds' nationwide recycling network and other scrap purchases and from Reynolds' manufacturing operations. Scrap for the Italian facility is obtained through scrap purchases. In 1994, Reynolds obtained approximately 303,600 metric tons of recycled aluminum from its recycling network and other scrap purchases.
FABRICATING OPERATIONS
Reynolds' semifinished and finished aluminum products and non-aluminum products are produced at numerous domestic and foreign plants wholly or partly owned by Reynolds. These plants are included in Table 7 under Item 2
Item 2. PROPERTIES
For information on the location and general nature of Reynolds' principal domestic and foreign properties, see Item 1, BUSINESS. Table 7 lists as of February 15, 1995 Reynolds' wholly-owned domestic and foreign operations and shows the domestic and foreign locations of operations in which Reynolds has interests. Facilities that are under construction or for other reasons have not begun production are not listed. The properties listed are held in fee except as otherwise indicated. Properties held other than in fee are not, individually or in the aggregate, material to Reynolds' operations and the arrangements under which such properties are held are not expected to limit their use. Reynolds believes that its facilities are suitable and adequate for its operations. With the exception of the Longview, Massena, Troutdale and Ghana primary aluminum production plants and the Sherwin alumina plant, as explained above, there is no significant surplus or idle capacity at any of Reynolds' major manufacturing facilities.
TABLE 7
Wholly-Owned Domestic and Foreign Operations
Manufacturing, Mining and Distribution
Alumina: Recycling: Corpus Christi, Texas Recycling Plants and Malakoff, Texas Centers (U.S.)(662)**
Calcined Coke: Reclamation: Baton Rouge, Louisiana Sheffield, Alabama (2) Lake Charles, Louisiana Bellwood, Virginia
Carbon Anodes: Mill Products: Lake Charles, Louisiana Sheffield, Alabama McCook, Illinois Primary Aluminum: Bellwood, Virginia Massena, New York Cap-de-la-Madeleine, Troutdale, Oregon Quebec, Canada Longview, Washington Hamburg, Germany*** Baie Comeau, Quebec, Canada Latina, Italy
Aluminum Cans: Spent Potliner Treatment: San Francisco, California Gum Springs, Arkansas Torrance, California Tampa, Florida Extruded Products: Moultrie, Georgia Auburn, Indiana Honolulu, Hawaii Louisville, Kentucky Monticello, Indiana (cans and ends) El Campo, Texas Kansas City, Missouri Ashland, Virginia* Fulton, New York Bellwood, Virginia Middletown, New York Richmond Hill, Ontario, Canada Reidsville, North Carolina (cans and ends) Ste. Therese, Quebec, Canada Salisbury, North Carolina Nachrodt, Germany* Fort Worth, Texas Harderwijk, Netherlands Houston, Texas Lelystad, Netherlands Seattle, Washington Maracay, Venezuela Milwaukee, Wisconsin Rocklin, California (ends) Bristol, Virginia (ends) Guayama, Puerto Rico
Powder and Paste: Printing Cylinders: Louisville, Kentucky Longmont, Colorado* Atlanta, Georgia* Electrical Rod: Clarksville, Indiana* Becancour, Quebec, Canada Louisville, Kentucky (2) Newport, Kentucky* Foil Feed Stock: Battle Creek, Michigan* Hot Springs, Arkansas St. Louis, Missouri Fulton, New York* Packaging and Consumer Wilmington, North Carolina* Products: Exton, Pennsylvania* Beacon Falls, Connecticut Franklin, Tennessee* Louisville, Kentucky Richmond, Virginia (2) Mt. Vernon, Kentucky Toronto, Ontario, Canada Sparks, Nevada* Downingtown, Pennsylvania Reynolds Aluminum Supply Lewiston, Utah Company: Bellwood, Virginia Service Centers (U.S.)(27)** Grottoes, Virginia Processing Centers (U.S.)(3)** Richmond, Virginia South Boston, Virginia Gold: Appleton, Wisconsin (2) Marvel Loch, Southern Cross Little Chute, Wisconsin and Mt. Gibson, Western Weyauwega, Wisconsin Australia, Australia Rexdale, Ontario, Canada* Cap-de-la-Madeleine, Research and Development Quebec, Canada Latina, Italy Richmond, Virginia: Can Division Headquarters Building and Construction Corporate Research Products: and Development Eastman, Georgia* Central Laboratories Bourbon, Indiana Packaging Technology Ashville, Ohio Lynchburg, Virginia Corpus Christi, Texas: Weston, Ontario, Canada Alumina Technology Merxheim, France* Nachrodt, Germany Sheffield, Alabama: Dublin, Ireland* Manufacturing Technology Harderwijk, Netherlands Laboratory Lisburn, Northern Ireland* Service Centers (U.S.)(47)** Service Centers (Canada) (11)**
Wheels: Ferrara, Italy
Can Machinery and Systems: Richmond, Virginia
Other Operations In Which Reynolds Has Interests
Australia: Guinea: Bauxite, alumina Bauxite
Belgium: Guyana: Building products, extrusions Bauxite*
Brazil: Italy: Bauxite, aluminum cans Reclamation and ends, recycling Russia: Canada: Foil feed stock Primary aluminum, electric power generation, aluminum Spain: wheels Mill products, extrusions, foil, packaging and consumer products, Colombia: printing cylinders Mill products, extrusions, foil Venezuela: Primary aluminum, mill products, Egypt: foil, aluminum cans and ends, Extrusions recycling, aluminum wheels
Germany: Alumina, primary aluminum*
Ghana: Primary aluminum*
____________________________ * Leased. ** Recycling Plants and Centers - 653 leased. Building and Construction Products Service Centers - 56 leased. Reynolds Aluminum Supply Company Service Centers - 19 leased. Reynolds Aluminum Supply Company Processing Centers - 1 leased. *** Held under an installment purchase arrangement.
The titles to Reynolds' various properties were not examined specifically for this report.
Item 3.
Item 3. LEGAL PROCEEDINGS
On July 29, 1992, the U.S. Environmental Protection Agency (the "EPA") filed an administrative complaint against the Registrant alleging paperwork violations and failure to determine whether certain materials in storage constituted hazardous wastes under the federal Resource Conservation and Recovery Act and state hazardous waste regulations at the Registrant's Longview, Washington primary aluminum production plant. The EPA sought $296,000 in civil penalties. Based on the Registrant's response to the complaint, the EPA dropped certain claims and amended others. The parties agreed to a settlement of the matter under which the Registrant has paid a penalty of $11,250 and has installed certain parts washing stations at the Longview plant.
On June 10, 1988, the Atlantic States Legal Foundation ("Atlantic States") filed suit against the Registrant in the U.S. District Court for the Western District of New York (the "Court") under the "citizen suit" provision of the federal Clean Water Act. The State of New York intervened in the case on December 1, 1989. The suit involved the discharge of substances from the Registrant's Massena, New York primary aluminum production plant. An agreement of the parties to settle the suit for payments by the Registrant aggregating $515,000, resolving claims for penalties and other costs, was approved by the Court on May 12, 1992; however, the Court retained jurisdiction of the matter. In a letter dated April 12, 1993, Atlantic States informed the Registrant that it has withdrawn its waiver of enforcement, citing violations at the Massena plant of interim effluent limits contained in the settlement agreement and other effluent limit violations. Atlantic States has stated that it would be providing the Registrant a settlement offer concerning such violations, which the Registrant to date has not received.
On November 9, 1993, counsel for the St. Regis Mohawk Tribe served the Registrant with a notice of intent to file a citizen suit for alleged violations of the federal Clean Air Act and certain New York state air emission standards at the Registrant's Massena, New York primary aluminum production plant. Subsequently, the State of New York alleged that the Registrant's emissions were causing a violation of certain state air emission standards. In October, 1994, based on an agreement in principle with the State to resolve environmental issues at the plant, the Registrant approved a five-year capital spending program of an estimated $150 million to $200 million to modernize the Massena plant and significantly reduce air emissions from the plant. The Registrant will accelerate certain expenditures believed necessary to achieve compliance with the MACT standards, although the EPA is not expected to establish such standards until 1996 or 1997. See the discussion of Clean Air Act compliance costs in Item 1 under the caption "Environmental Compliance".
On August 29, 1994, the Registrant received a civil investigative demand from the U.S. Department of Justice relating to production of primary aluminum. The Registrant is cooperating with the inquiry and is confident that its conduct has been in compliance with U.S. antitrust laws.
Various other suits and claims are pending against Reynolds. In the opinion of Reynolds' management, after consultation with counsel, disposition of these suits and claims and the actions referred to in the preceding paragraphs, either individually or in the aggregate, will not have a material adverse effect on Reynolds' competitive or financial position or its ongoing results of operations. No assurance can be given, however, that the disposition of one or more of such suits, claims or actions in a particular reporting period will not be material in relation to the reported results for such period.
Item 4.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Registrant's security holders during the fourth quarter of 1994.
Item 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Registrant are as follows:
Name Age* Positions Held During Past Five Years
Richard G. Holder 63 Chairman of the Board and Chief Executive Officer since May 1992. President and Chief Operating Officer 1988-1992. Director since 1984.
Yale M. Brandt 64 Vice Chairman since May 1992. Executive Vice President, Fabricated Industrial Products 1990-1992. Director since 1988.
Randolph N. Reynolds 53 Vice Chairman since January 1994. Executive Vice President, International 1990-1994. President, Reynolds International, Inc. ("RII"), a subsidiary of the Company, since November 1980, and Chief Executive Officer of RII since November 1981. Director since 1984.
Jeremiah J. Sheehan 56 President and Chief Operating Officer since January 1994. Executive Vice President, Fabricated Products 1993-1994. Executive Vice President, Consumer and Packaging Products 1990-1993. Director since January 1994.
Henry S. Savedge, Jr. 61 Executive Vice President and Chief Financial Officer since May 1992. Vice President, Finance 1990-1992. Director since 1992.
Donald T. Cowles 47 Executive Vice President, Human Resources and External Affairs since February 1993. Vice President, General Counsel and Secretary 1989-1993.
J. Wilt Wagner 53 Executive Vice President, Raw Materials, Metals and Industrial Products since March 1993. Executive Vice President, Fabricated Industrial Products 1992-1993. Vice President, Mill Products Division 1990-1992.
James R. Aitken 60 Vice President since April 1994. Executive Vice President, RII since March 1993. Vice President Europe of RII and President, Reynolds (Europe) Ltd., a subsidiary of RII, 1987-1993.
Thomas P. Christino 55 Vice President, Flexible Packaging Division since November 1993. Flexible Packaging Division General Manager 1992-1993. Flexible Packaging Products National Sales and Marketing Manager 1987- 1992.
Eugene M. Desvernine 53 Vice President since April 1994. Executive Vice President, RII since March 1993. Vice President Latin America of RII 1982-1993.
Allen M. Earehart 52 Vice President, Controller since April 1994. Controller 1993-1994. Director, Corporate Accounting 1982-1993.
E. Jack Gates 53 Vice President, Raw Materials and Precious Metals Division since April 1993. Raw Materials and Precious Metals Division General Manager 1993. Reduction Division General Manager 1990-1993.
Rodney E. Hanneman 58 Vice President, Quality Assurance and Technology Operations since March 1985.
Douglas M. Jerrold 44 Vice President, Tax Affairs since April 1990.
D. Michael Jones 41 Vice President, General Counsel and Secretary since February 1993. Associate General Counsel and Assistant Secretary 1990-1993.
John B. Kelzer 58 Vice President, Extrusion Division since April 1993. Extrusion Division General Manager 1990-1993.
William E. Leahey, Jr. 45 Vice President, Can Division since April 1993. Can Division General Manager 1992-1993. Can Division Sales and Marketing Director 1990-1992.
John M. Lowrie 54 Vice President, Consumer Products Division since October 1988.
John M. Noonan 61 Vice President, Construction Products and Properties Divisions since January 1984.
Paul Ratki 55 Vice President, Metals Division since April 1994. Reduction and Reclamation Division General Manager 1993-1994. Reduction and Reclamation Division Operations Manager 1991-1993. Executive Vice President, Canadian Reynolds Metals Company, Limited, a subsidiary of the Company, since April 1987.
William G. Reynolds, Jr. 55 Vice President, Government Relations and Public Affairs since 1980.
Julian H. Taylor 51 Vice President, Treasurer since April 1988.
C. Stephen Thomas 55 Vice President, Mill Products Division since May 1992. Vice President, Can Division 1990-1992. Vice President, Operations, Can Division July-December 1990. Vice President, Extrusion Division 1987-1990.
Nicholas D. Triano 63 Vice President, Materials Management since April 1989.
_______________ * As of February 17, 1995
PART II
Item 5.
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Registrant's Common Stock is listed on the New York Stock Exchange and the Chicago Stock Exchange. At February 21, 1995, there were 10,306 holders of record of the Registrant's Common Stock.
The high and low sales prices for shares of the Registrant's Common Stock as reported on the New York Stock Exchange Composite Transactions Tape and the dividends declared per share during the periods indicated are set forth below:
High Low Dividends
First Quarter $54-5/8 $44-7/8 $.25 Second Quarter 50-5/8 40-3/8 .25 Third Quarter 58 47-1/4 .25 Fourth Quarter 59-3/8 44-3/4 .25
First Quarter $58-7/8 $48-5/8 $.45 Second Quarter 49 42 .25 Third Quarter 52-3/4 41-5/8 .25 Fourth Quarter 48-7/8 41-1/8 .25
On February 17, 1995, the Board of Directors declared a dividend of $0.25 per share of Common Stock, payable April 3, 1995 to stockholders of record on March 3, 1995.
Special items recorded in these periods were:
1994 - gains of $41 million, or 66 cents per share, from the sale of Reynolds Australia Metals, Ltd. (which held a 40% interest in the Boddington Gold Mine), and $16 million, or 26 cents per share, from the sale of timberland in the Pacific Northwest.
1993 - charges of $228 million, or $3.80 per share, principally to cover the costs associated with temporarily curtailing primary aluminum production and restructuring certain aluminum sheet, plate and extrusion operations.
1992 - special items of $793 million, or $13.31 per share, principally charges relating to the adoption of new accounting standards.
For additional information on results and special items, see Notes J, K, N, and O to the consolidated financial statements and the quarterly results of operations following the consolidated financial statements.
Shipments and Net Sales
___________________________________________________________________________
Aluminum (metric tons in thousands and dollars in millions, except per pound amounts) ___________________________________________________________________________
1994 1993 1992 _____________________________
Product shipments (metric tons) 1,573 1,494 1,474
Net sales $4,493 $3,943 $4,331
Per pound: Fabricated $1.48 $1.45 $1.61 Primary $0.72 $0.56 $0.60
___________________________________________________________________________
Shipments increased for the ninth consecutive year and helped revenues rebound in 1994 after a four-year decline. The increase in 1994 shipments reflects the continuing recovery in major global economies, particularly in the United States and Europe, as well as the net effect of strategic acquisitions and recent restructuring activities.
Higher shipments were realized for most value-added fabricated aluminum products in 1994 and 1993, particularly for beverage cans and ends in 1994 as a result of the Company's acquisition of can manufacturing facilities in late 1993 and mid-1994. The increase in can shipments also represents a rebound in the beverage industry, which had been hampered in the previous two years by weather-related factors that lessened demand for beer and soft drinks, and is particularly noteworthy in light of the continuing advancements that are being made to produce thinner gauges of can body and end stock, which reduces overall tonnage volume. Shipments of other aluminum sheet products were lower in 1994 due to the restructuring of the Company's Illinois sheet and plate facility.
Aluminum product prices benefited in 1994 from an improvement in demand, as well as a shift in mix toward higher value-added products. Fabricated aluminum prices stabilized in 1994, with the exception of can and can sheet prices, due to higher demand for the Company's value-added fabricated products. The decline in net sales in 1993 was attributable almost entirely to a decline in prices for aluminum products.
Higher sales were realized for most non-aluminum products in 1994, particularly stainless steel, building products and packaging.
___________________________________________________________________________
Non-aluminum products (in millions) 1994 1993 1992 _________________________
Net sales $1,386 $1,326 $1,262 ___________________________________________________________________________
Gold sales were lower in 1994 due to the divestiture of an Australian gold mining operation. The increase in net sales of non-aluminum products in 1993 was due to higher gold production and higher sales of stainless steel and building products, which were partially offset by lower packaging sales.
The increase in equity, interest and other income in 1994 was due principally to improved and expanded South American can operations and higher interest income due to an increase in the amount of funds invested.
Costs and Expenses
Cost of products sold increased in 1994 due principally to higher raw material costs, higher shipments and a shift in product mix to higher value-added aluminum products. Costs were unfavorably impacted in 1994 and favorably impacted in 1993 by energy and outside purchases of aluminum scrap and other aluminum products that are related to the price of primary aluminum. In 1994 and 1993, the Company experienced lower costs for certain raw materials used in primary aluminum production.
Costs were also adversely affected in 1994 and 1993 by lower capacity utilization at primary aluminum and alumina production facilities resulting from curtailments made in response to the oversupply of aluminum on world markets. The Company temporarily curtailed U.S. primary aluminum production by 88,000 metric tons in 1993 and 121,000 metric tons in 1991. These curtailments total 21% of its 998,000 metric ton worldwide capacity. To balance the Company's alumina system, production at the Texas alumina refinery has been reduced. In 1994, the Company benefited from higher capacity utilization at its aluminum fabrication operations.
Partially offsetting the increases in costs are performance improvements that have been made across all operations and include reducing costs, improving processes and exiting uneconomic operations. These performance improvements are expected to continue providing benefits in the future.
Restructuring actions for which charges were taken in 1993 and 1992 reduced 1994 operating costs. Most significant was the restructuring of the Company's sheet and plate facility in Illinois, where the production of various common alloy aluminum sheet products was discontinued by mid-1994. The plant has been streamlined to manufacture sheet and plate products for the automotive, aircraft and aerospace markets. Extrusion operations also were restructured in 1993 to increase competitiveness and focus on markets with the greatest growth potential. As a result, production of irrigation tubing was discontinued at a California facility and a Kentucky operation was converted to manufacture products for the automotive industry. (See Note O to the consolidated financial statements.)
The increase in selling, administrative and general expenses in 1994 was due principally to the higher level of business activity and related promotional and selling expenses and higher employment costs. The decline in these expenses in 1993 was due to benefits resulting from an early retirement program and other cost reductions.
Interest expense declined in 1994 due to lower amounts of debt outstanding and in 1993 due to lower rates. The Company uses interest rate swap agreements to manage its exposure to interest rate fluctuations after considering market conditions and levels of variable-rate and fixed-rate debt outstanding. These arrangements caused interest expense to be slightly lower in 1994 and 1993, and slightly higher in 1992. The intent is to provide for lower interest expense during economic downturns, with the potential for higher interest cost during periods of economic growth. (See Note H to the consolidated financial statements.)
Annual capital expenditures for equipment designed for environmental control purposes, excluding the cost of a new spent potliner treatment facility in Arkansas, averaged approximately $33 million over the last three years. Ongoing environmental operating costs for the same period averaged approximately $70 million per year. The Company estimates that operating expenditures for 1995 through 1997 will remain at approximately these same levels; annual capital expenditures for environmental control facilities are estimated at approximately $55 million in 1995, $57 million in 1996 and $95 million in 1997, the majority of such expenditures being associated with the capital spending program referred to below at the Company's New York primary aluminum production plant.
The Company's spending on environmental compliance will be influenced by future environmental regulations, including those to be issued under the Clean Air Act Amendments of 1990. In 1994, plans were announced for a $150 million to $200 million, five-year capital spending program at the Company's primary aluminum production plant in New York. The project includes new air emissions controls and a phased modernization of the plant's production lines. The Company will accelerate certain expenditures believed necessary to achieve compliance with the Clean Air Act's Maximum Achievable Control Technology standards, although the U.S. Environmental Protection Agency (the "EPA") is not expected to establish such standards until 1996 or 1997. Based on current information, it is estimated that compliance with the Clean Air Act's hazardous air pollutant standards will require at least $250 million of capital expenditures (including a portion of the expenditures at the New York plant referred to above) beginning in the latter half of this decade, principally at the Company's U.S. primary aluminum plants.
Reynolds is involved in remedial investigations and actions at various locations, including EPA Superfund sites where the Company and, in most cases, others have been designated as potentially responsible parties.
The Company accrues remediation costs when it establishes the probability that such efforts will be required and the costs can be estimated. In 1992 and 1990, the Company recorded pretax environmental charges of $164 million and $150 million, respectively. The Company evaluates the status of all significant existing or potential environmental issues quarterly, develops or revises cost estimates to satisfy known remediation requirements, and adjusts the accrual accordingly. At December 31, 1994, the accrual was $272 million ($298 million at December 31, 1993) and reflects management's best estimate of the Company's ultimate liability for known remediation costs.
In estimating anticipated costs, the Company considers the extent of its involvement at each site, joint and several liability provisions under applicable law, and the likelihood of obtaining contributions from other potentially responsible parties. Potential insurance recoveries are not expected to be material and therefore have not been considered. Based on information currently available, remediation expenditures relating to costs currently accrued are expected to be made over the next 15 to 20 years with the majority spent by the year 2000. Cash flows from operations are expected to provide most of the funds for capital, operating and remediation expenditures.
Estimating future environmental compliance and remediation costs is imprecise due to the continuing evolution of environmental laws and regulatory requirements, the availability and application of technology, the identification of currently unknown remediation sites, and the allocation of costs among potentially responsible parties. Future costs are not expected to have a material adverse effect on the Company's competitive or financial position or ongoing operating results. However, future costs of environmental remediation requirements that may subsequently be determined could be material to future quarterly or annual results of operations.
Taxes on Income
The Company pays U.S. federal and state taxes and foreign taxes based on the laws of the various jurisdictions in which it operates. The effective tax rates reflected in the income statement differ from the U.S. federal statutory rate principally because of state and foreign taxes and the effects of percentage depletion allowances. In 1993, the effect of changes in rates in the U.S. and Quebec, Canada, generally offset one another in terms of the impact on the Company's results. A reconciliation of the effective rates is included in Note K to the consolidated financial statements.
At December 31, 1994, the Company had recorded $976 million of deferred tax assets, which relate primarily to its U.S. and Canadian tax positions. The significant portions of these assets relate to accrued costs for employee health care, restructuring and other special charges. A major portion of these assets will be realized in the future through the reversal of temporary differences, principally depreciation. To the extent that these assets are not covered by reversals of depreciation, the remainder is expected to be realized through U.S. and Canadian income earned in future periods. The Company has worldwide operations in many tax jurisdictions, which generate deferred tax assets and/or liabilities. Deferred tax assets and liabilities have been netted by jurisdiction and this results in both a deferred tax asset and a deferred tax liability on the balance sheet.
The Company has a strong history of sustainable earnings despite losses in 1993 and 1992, which included a number of significant special charges. However, even without considering projections of income, certain tax planning strategies, such as changing the method of valuing inventories from LIFO to FIFO and/or entering into sale-leaseback transactions, would generate sufficient taxable income to realize the portion of the asset related to U.S. operations. Also, the majority of the U.S. tax carryforward benefits, which are included as part of the deferred tax asset, can be carried forward indefinitely. Tax planning strategies related to the Company's Canadian operations could be used, if necessary, to realize the Canadian deferred tax assets. Such strategies include the flexibility provided in the Canadian tax laws for tax depreciation claimed and the ability to generate income on advance sales of products to the U.S. parent.
Based on its evaluation of these matters, the Company is confident that its deferred tax assets will be realized and is not aware of any events or uncertainties that could significantly affect its conclusions regarding realization. The Company reassesses the realization of deferred tax assets quarterly and, if necessary, adjusts its valuation allowance accordingly. (See Note K to the consolidated financial statements.)
Cumulative Effects of Accounting Changes
In 1992, the Company adopted FAS No. 106, requiring accrual accounting for postretirement benefits other than pensions, and FAS No. 109, which requires use of the liability method of determining deferred income taxes. Charges of $610 million (FAS No. 106) and $30 million (FAS No. 109) were recognized in 1992 for the cumulative effects of these accounting changes. The adoption of FAS No. 109 enabled the Company to fully recognize the deferred tax benefits associated with the adoption of FAS No. 106. Additional information is included in the discussions of postretirement benefits and deferred taxes. (See Notes J and K to the consolidated financial statements.) OPERATING AREA ANALYSIS
Additional financial information relative to Reynolds operations and identifiable assets by geographic and operating areas is presented in Note P to the consolidated financial statements.
FINISHED PRODUCTS AND OTHER SALES: Shipments increased 30% in 1994 after a 3% increase in 1993. The 1994 increase was due primarily to higher shipments of cans and ends and some improvements in shipments to the distributor and building and construction markets. Shipments in 1993 increased due to higher shipments of consumer products, building and construction products, and distributor sheet and extrusions. The increase in net sales and operating profit in 1994 was due to the higher shipping volume. Higher sales of non-aluminum products in 1994, principally to the distributor and building and construction markets, were offset by lower realized aluminum prices, principally for cans and ends. The decline in net sales in 1993 was due to lower aluminum prices. Operating profit declined in 1993 primarily because of lower aluminum prices, which were partially offset by lower aluminum raw material costs.
PRODUCTION AND PROCESSING: After remaining relatively stable in 1993, aluminum shipments dipped slightly in 1994. Declines in shipments of can sheet and primary aluminum in 1994 were mostly offset by higher shipments of other sheet products and extrusions by foreign subsidiaries. In 1993, a decline in shipments of can sheet was offset by an increase in shipments of other sheet products. Shipments of can sheet to external customers were lower in 1994 due to greater internal consumption by the Company's growing can manufacturing operations, and in 1993 due to lessened demand in the beverage industry. Net sales and operating profit in 1994 increased due to higher prices for primary and recycled aluminum, partially offset by lower volume and non-aluminum product sales. In 1993, net sales and operating profit declined primarily due to lower aluminum prices. This effect on operating profit was partially offset by lower raw material costs. Gold production was approximately 300,000 ounces in 1994, 360,000 ounces in 1993 and 271,000 ounces in 1992.
GEOGRAPHIC: Increases in 1994 revenues and operating profits in the domestic, Canadian and European operating areas were principally due to a shift in mix toward higher value-added products and higher prices for primary and recycled aluminum. In addition, 1994 domestic operations benefited from higher shipments, primarily of cans and ends. Declines in 1993 revenues and operating profits in the domestic, Canadian and European operating areas were due primarily to lower aluminum prices.
LIQUIDITY AND CAPITAL RESOURCES
Working Capital
Greater amounts of working capital were needed in 1994 to support a higher level of business activity. Working capital also increased as a result of short-term investments of a portion of the proceeds from the Company's preferred stock issued in early 1994. Working capital totaled $898 million at the end of 1994 compared to $409 million at the end of 1993. The ratio of current assets to current liabilities was 1.6/1 at the end of 1994 compared to 1.3/1 at the end of 1993. The Company continues its emphasis on capital resource management.
Operating Activities
Cash provided from operations in 1994, 1993 and 1992 amounted to $493 million, $259 million and $301 million, respectively. These funds were used for investing activities during this period and financing activities in 1993 and 1992. Cash on hand was used in 1993 to supplement the funds generated from operations.
Investing Activities
Substantial investments have been made to provide the Company with low-cost operations in most of its raw materials, industrial and finished products businesses. With this foundation in place, the Company is now focusing its capital investing on strategic areas for expansion and on further quality and efficiency enhancements. Capital investments over the past three years include amounts for acquisitions, construction of new facilities, capacity expansions and equipment upgrades. Acquisitions in 1994 and 1993 included a metals distribution business, additional alumina capacity and can manufacturing facilities that increased the Company's U.S. can-making capacity by 70%. In addition to the acquisitions, the Company has expanded capacity and modernized production at other can manufacturing facilities and is a joint venture participant in the construction of can manufacturing facilities in Argentina, Brazil, Chile and Saudi Arabia. In connection with the Company's strategy to expand its can manufacturing capability, a capacity expansion and quality improvement program is continuing at a can sheet operation in Alabama. To better serve the growing transportation market, equipment was upgraded at an Illinois sheet and plate facility and construction was completed in 1994 of a facility in Indiana to produce bumpers and other automotive components. In addition, aluminum wheel production was expanded and a purchased facility in Wisconsin is being modified and equipped to produce aluminum wheels beginning in 1995. Constructed facilities also include an electrical rod plant in Canada, an aluminum recycling plant in Italy and a plant in Arkansas that processes spent potliner into an environmentally acceptable material with potential for recycling. Capacity expansions, equipment upgrades and/or improvement programs have been completed at a number of other facilities.
Capital investments in 1995 are expected to total approximately $575 million. Major projects include the modernization and expansion of can manufacturing facilities (including participation in construction of the overseas can plants referred to previously); continuing improvements at the can sheet facility in Alabama; modification and equipping of the wheel facility in Wisconsin; modernization of the Company's primary aluminum production plant in New York; expansion of foil rolling capacity at a plant in Kentucky; capacity expansion at a plastic film plant in Virginia; equipment upgrades at a number of other facilities; and strategic investments. These capital investments will be funded primarily with cash generated from operations, proceeds from the sale of non-core assets and a portion of the remaining proceeds from the Company's preferred stock issue completed in early 1994.
The Company continues its strategy of selling non-core assets and redeploying the proceeds into value-added businesses. In 1994, the Company sold a can manufacturing facility in Austria, a subsidiary that held a 40% investment in an Australian gold mine and timberland in the Pacific Northwest. An aluminum reclamation plant in Michigan was sold in 1993 and the Company sold its North American wire and cable operations and its investment in Eskimo Pie Corporation in 1992. The proceeds from these divestitures have been used to either repay debt or to invest in value-added businesses targeted for future growth. A portion of the proceeds has been invested pending its future use for capital expenditures, strategic investments and general corporate purposes.
Financing Activities
The Company believes its available financial resources (including cash and investments of over $400 million), together with internally generated funds, are sufficient to meet its business needs at the present time and for the foreseeable future. The Company continues to exceed the financial ratio requirements contained in its financing arrangements and expects to do so for the foreseeable future. Following is a summary of significant financing activities over the past three years:
1992:
- -- Issued $97 million of medium-term notes at an average rate of 8.3% that mature in 1999 to 2007 - -- Issued $43 million of variable rate tax-exempt bonds that mature in - -- Increased net short-term borrowings by approximately $200 million made primarily under a $285 million short-term credit facility ($230 million was outstanding at December 31, 1992, at a variable rate of 4.1%), of which $173 million was reclassified to long-term
Proceeds from these activities were used for voluntary prepayments of higher-cost debt, scheduled debt payments and other financing activities. Proceeds from the tax-exempt bonds were used to fund a portion of the costs to construct the spent potliner treatment plant in Arkansas.
1993:
- -- Issued $78 million of medium-term notes at an average rate of 7.5% that mature in 2004 to 2013 - -- Issued $285 million of 6-5/8% amortizing notes due between 1998 and - -- Borrowed $150 million under a bank credit agreement that requires a single repayment in 1998 and bears interest at a variable rate
Proceeds from these activities were used for voluntary prepayment of $143 million of a term loan agreement, refinancing approximately $200 million of short-term obligations, scheduled payments on long-term obligations of approximately $100 million and for general corporate purposes.
1994:
- -- Issued 11 million shares of 7% PRIDES, convertible preferred stock for $47.25 (stated value) per share, which generated $505 million of net proceeds - -- Replaced $490 million of revolving credit facilities with a new $500 million credit facility that expires in 1999 - -- Voluntarily prepaid the remaining balance ($72 million) of a term loan agreement and repaid the balance ($50 million) of commercial paper outstanding
Proceeds from the PRIDES issue were used for capital investments in 1994 and to repay obligations incurred in the fourth quarter of 1993 in connection with the acquisition of Miller Brewing Company's can manufacturing operations. The remainder of the proceeds is being invested pending its future use for capital expenditures, strategic investments and general corporate purposes.
In 1993, the Company filed a registration statement relating to the contribution, through December 31, 1995, of up to 3 million shares of common stock to its pension plans. The Company contributed to its pension plans 600,000 shares (valued at approximately $28 million) in 1993, and 1.5 million shares (valued at approximately $77 million) in 1994.
At December 31, 1994, $222 million of the Company's $1.65 billion shelf registration remained available for the issuance of debt securities.
STRATEGY AND OUTLOOK
The Company believes the long-term fundamentals for the aluminum industry are sound, and that prospects are excellent for continued growth of global aluminum demand over the next several years. Economic recoveries in Europe and Japan, plus rapid growth in the developing world, are expected to propel Western World aluminum consumption up almost 5% in 1995. Worldwide industry shipments to the transportation market are expected to rise significantly due to a combination of factors that includes continuing incremental gains in aluminum-pounds-per-car and strong truck and trailer activity. The rate of growth in the domestic aluminum can market is expected to decline slightly, but this should be largely offset by the aluminum can's continued expansion into international markets. Some weakness may occur in the construction market as an anticipated decline in housing starts is only partially offset by rising remodeling and nonresidential construction.
Reynolds strategy is to continue improving its competitive position as a vertically integrated producer of value-added aluminum products, with emphasis on growth opportunities in its core downstream fabricating operations serving the packaging, consumer products, can, transportation, building and construction, and infrastructure markets. To improve its competitiveness, Reynolds has undertaken continuing intensive cost reduction and performance improvement programs that include work force reductions, permanent closures of higher cost facilities, disposal of uneconomic and non-core assets, and operational and organizational restructuring. The Company's restructuring efforts and performance improvements of the past few years, along with improving economic conditions which are expected to create a strong demand for aluminum, should contribute significantly to Reynolds operating results.
Primary aluminum is an internationally traded commodity. The price of primary aluminum is subject to worldwide market forces of supply and demand. Prices can be volatile and fluctuations influence the Company's financial results. The world market is still recovering from a serious supply-demand imbalance that began in the early 1990's, and there may be periods of marked short-term price volatility. The Company's strategy of being a vertically integrated producer of value-added aluminum products reduces its exposure to these fluctuations, but does not eliminate the risk. The Company manages its exposure to these fluctuations, after giving consideration to market conditions, sale and purchase transactions, overall business strategies and other factors that affect the Company's risk profile, with contractual arrangements including fixed price sales contracts, fixed price supply contracts, and forward and futures contracts. Through these activities the Company balances its risk profile consistent with management's operational strategies.
In addition to the price risk referred to above, Reynolds is exposed to general financial, political, economic and business risks in connection with its worldwide operations. The Company continues to evaluate and manage its operations in a manner to mitigate the effects from exposure to such risks.
NOTE G - CURRENT LIABILITIES 1994 1993 ____________________ Trade payables $657.7 $386.7 Accrued compensation and related amounts 263.0 218.7 Payables to associated companies 84.4 71.8 Other liabilities 281.1 302.7 ____________________ Accounts payable, accrued and other liabilities 1,286.2 979.9 Notes payable to banks 120.5 158.4 Long-term obligations 17.8 42.6 ____________________ Indebtedness 138.3 201.0 ____________________ Total current liabilities $1,424.5 $1,180.9 ====================
The weighted-average interest rate for notes payable to banks was 7.6% and 7.1% at December 31, 1994 and 1993, respectively.
NOTE H - FINANCING ARRANGEMENTS
Long-term debt outstanding at December 31:
1994 1993 ____________________ Public debt securities: Medium-term notes $976.5 $976.5 6-5/8% amortizing notes 283.8 283.6 9% debentures due 2003 100.0 100.0 9-3/8% debentures due 1999 99.9 99.9 Industrial and environmental control revenue bonds 220.0 227.7 Commercial paper - 50.0 Other issues: Bank credit agreement 150.0 150.0 Mortgages and other notes payable 36.0 52.7 Term loan agreement - 91.8 ____________________ 1,866.2 2,032.2 Amounts due within one year 17.8 42.6 ____________________ Long-term debt $1,848.4 $1,989.6 ====================
Maturities of long-term debt are $57.9 million in 1996, $41.9 million in 1997, $290.9 million in 1998, $196.3 million in 1999 and $1,261.4 million from 2000 to 2022. Interest paid amounted to $152.2 million, $159.0 million and $169.6 million during 1994, 1993 and 1992, respectively, net of interest capitalized of $5.1 million, $8.0 million and $13.6 million.
NOTE H - FINANCIAL ARRANGEMENTS - continued
The Company has on file a shelf registration to issue up to $1.65 billion of debt securities. The medium-term notes, 9% debentures and 9-3/8% debentures were issued under the shelf registration. The medium-term notes bear interest at an average rate of 9% and have maturities ranging from 1995 to 2013. At December 31, 1994, $222 million of debt securities remained unissued under the shelf registration.
The 6-5/8% amortizing notes were issued at a discount (99.48%) and have an effective interest rate of 6.7%. The notes require annual principal repayments of $57 million each year between 1998 and 2002.
Industrial and environmental control revenue bonds consist principally of variable rate debt averaging approximately 4% at December 31, 1994. These bonds require principal repayment periodically or in a lump sum through 2022. $215 million of these bonds are supported by bank letters of credit.
The bank credit agreement bears interest at a variable rate (6.5% at December 31, 1994) and requires a single repayment in 1998.
Mortgages and other notes payable consist of fixed-rate debt at an average rate of 7.2% and require principal repayment through 2009.
The Company has a $500 million revolving credit facility that expires in 1999. No amounts were outstanding under the facility at December 31, 1994. A commitment fee of .20% per year is paid on the unused portion of the facility.
The Company uses interest rate swap agreements to manage a portion of its exposure to interest rate fluctuations after considering outstanding levels of variable-rate and fixed-rate debt. At December 31, 1994, the Company had $742 million of interest rate swap agreements (1993 - $742 million) which effectively convert a portion of its debt from fixed-rate to variable-rate. Under these agreements payments are received based on a fixed rate (5.0%) and made based on a variable rate (6.4% at December 31, 1994). These agreements expire in 1996 ($517 million), 1997 ($125 million) and 1998 ($100 million). The Company also had $175 million of interest rate swap agreements (1993 - $230 million) which effectively convert a portion of its debt from variable-rate to fixed-rate. Under these agreements payments are received based on a variable rate (6.4% at December 31, 1994) and made based on a fixed rate (6.0%). These agreements expire in 1998. The variable rates in the Company's interest rate swap agreements are based on the London Interbank Offer Rate. The effects of these transactions are recognized in interest expense.
Certain of the Company's financing arrangements contain restrictions which, among other things, require maintenance of specified financial ratios. These restrictions do not inhibit operations or the use of fixed assets. At December 31, 1994, all such requirements were exceeded.
NOTE I - STOCKHOLDERS' EQUITY
Preferred stock The Company has 21,000,000 shares of preferred stock authorized of which 2,000,000 shares have been designated Series A Junior Participating Preferred Stock and 11,000,000 have been designated 7% PRIDES, Convertible Preferred Stock.
The Company has 11,000,000 shares of 7% PRIDES outstanding, which were issued early in 1994 for $47.25 (stated value) per share. The PRIDES mature on December 31, 1997, at which time they mandatorily convert into shares of the Company's common stock on a one for one basis. Dividends are cumulative from the date of issuance and are payable quarterly in arrears. Holders may convert each share of PRIDES into .82 of a share of common stock (to be adjusted under certain circumstances) at any time prior to December 31, 1997. The Company has the option of redeeming the PRIDES at any time on or after December 31, 1996, for common stock having a fair market value equal to the issue price plus accrued dividends plus a small premium. The redemption price will in no event be less than .82 of a share of common stock per share of PRIDES. The holders of shares of PRIDES have the right to vote with the holders of common stock in the election of Directors and upon each other matter coming before any meeting of the holders of common stock on the basis of 4/5 of a vote for each share of PRIDES. Dividends declared in 1994 were $3.10 per share.
Common stock
Shares Amount _________________________
Authorized, without par value 200,000,000 Outstanding: At beginning of 1992 59,606,960 $742.0 Shares issued under employee benefit plans: 1992 153,259 8.2 1993 728,644 34.0 1994 1,679,792 85.5 _________________________ At end of 1994 62,168,655 $869.7 =========================
The Company filed a registration statement in late 1993 relating to the contribution, through December 31, 1995, of up to 3.0 million shares of common stock to one or more of its pension plans. Contributions were made totaling 600,000 shares (valued at $28 million) in 1993 and 1.5 million shares (valued at $77 million) in 1994.
NOTE I - STOCKHOLDERS' EQUITY - continued
Cash dividends declared 1994 1993 1992 _________________________ 7% PRIDES $34.1 - - Common stock 61.9 $71.9 $107.3 _________________________ $96.0 $71.9 $107.3 =========================
Stock option plan The Company has a non-qualified stock option plan under which stock options may be granted to key employees at a price equal to the fair market value at the date of grant. Transactions involving the plan are summarized as follows:
1994 1993 1992 ____________________________________ Outstanding January 1 3,755,806 3,138,856 2,609,856 Granted 727,950 673,100 620,700 Cancelled (24,650) (33,250) (26,550) Exercised (55,052) (22,900) (65,150) ____________________________________ Outstanding at December 31 4,404,054 3,755,806 3,138,856 ==================================== Exercisable at December 31 3,681,204 3,084,356 2,531,056 ==================================== Options available for grant 1,312,700 2,016,000 2,655,850 ====================================
Weighted-average prices: Granted $45.38 $45.50 $57.25 Exercised 31.00 35.25 36.50 Outstanding at December 31 50.75 51.50 52.75 Exercisable at December 31 51.75 52.75 51.50
NOTE I - STOCKHOLDERS' EQUITY - continued
Shareholder rights plan Each share of the Company's common stock has one right attached. The rights trade with the common stock and are exercisable only if a person or group buys 20% or more of the Company's common stock, or announces a tender offer for 30% or more of the outstanding common stock. When exercisable, each right will entitle a holder to buy one-hundredth of one share of the Company's Series A Junior Participating Preferred Stock at an exercise price of $125.
If at any time after the rights become exercisable, the Company is acquired in a merger or other business combination or if 50% of its assets or earning power is sold or transferred, each right would enable its holder to buy common stock of the acquiring company at a 50% discount. In addition, if a person or group acquires 30% or more of the common stock or if certain other events occur, each right would enable its holder to buy common stock of the Company at a 50% discount. The rights, which do not have voting privileges, expire in 1997, but may be redeemed by action of the Board of Directors before then, under certain circumstances, for $0.05 per right. Until the rights become exercisable, they have no dilutive effect on earnings per share.
Although these rights should not interfere with a business combination approved by the Board of Directors, they will cause substantial dilution to a person or group that attempts to acquire the Company without conditioning the offer on redemption of the rights or acquiring a substantial number of the rights.
Cumulative currency translation adjustments
1994 1993 1992 _______________________________ At beginning of year $(49.9) $(1.7) $14.2 Currency translation adjustments 7.0 (49.1) (15.0) Income taxes - .9 (.9) _______________________________ At end of year $(42.9) $(49.9) $(1.7) ===============================
NOTE J - POSTRETIREMENT BENEFITS
Pensions The Company has several noncontributory defined benefit pension plans covering substantially all employees. Plans covering salaried employees provide pension benefits that are based on a formula which considers length of service and earnings during years of service. Plans covering hourly employees generally provide a specific amount of benefits for each year of service.
Net pension costs were as follows:
1994 1993 1992 ___________________________ Service cost $32.0 $26.8 $27.1 Interest cost 126.4 116.8 107.7 Actual return on plan assets 2.8 (162.8) (43.5) Net amortization and deferrals (91.9) 83.9 (27.1) Other 12.3 9.8 12.8 ___________________________ Total $81.6 $74.5 $77.0 ===========================
Assumptions used in accounting for the principal pension plans are as follows:
1994 1993 1992 __________________________ Weighted-average discount rate 8.75% 7.5% 8.5% Approximate weighted-average rate of increase in compensation levels (salaried plan only) 4.5% 4.5% 4.5% Expected long-term rate of return on assets 9.25% 9.25% 9.25%
NOTE J - POSTRETIREMENT BENEFITS - continued
The following table sets forth information on the principal pension plans at December 31:
1994 1993 ___________________ Actuarial present value of pension benefit obligation: Vested $1,285.8 $1,375.7 Nonvested 160.2 168.2 ___________________ Accumulated $1,446.0 $1,543.9 =================== Projected $1,539.6 $1,660.7 Plan assets at fair value 1,346.4 1,329.2 ___________________ Plan assets less than pension benefit obligation 193.2 331.5
Items not yet recognized: Unrecognized net loss (181.4) (253.7) Unamortized plan change benefits (95.7) (104.5) Recognition of minimum liability 103.5 153.0 ___________________ Net pension liability $19.6 $126.3 ===================
Reflected in the Company's balance sheet is the additional minimum liability relative to its underfunded plans in the amount of $103.5 million in 1994 ($153.0 million in 1993). A corresponding amount is recognized as an intangible asset, to the extent it does not exceed unamortized plan change benefits, while the excess, net of tax, has been charged to stockholders' equity.
From 1995 to 1998, the Company plans to make contributions totaling approximately $200 million to its pension plans. The timing of the contributions will depend upon conditions in the securities markets and the overall business environment. Cash for the fundings is expected to be generated from operations. If there are no significant plan changes and/or deviations in actuarial assumptions, this funding level will provide for a fully funded accumulated benefit obligation by 1998. The Company contributed $122 million (including 1.5 million shares of common stock valued at $77 million) in 1994 and $150 million (including 600,000 shares of common stock valued at $28 million) in 1993.
At December 31, 1994, approximately 58% of the plans' assets were invested in corporate equity securities (including 1.9 million shares of common stock of the Company), 26% in corporate bonds, 11% in government debt securities and cash equivalents and 5% in real estate. The market value of the common stock of the Company held by the plans at December 31, 1994 was $91 million. Dividends paid on these shares in 1994 were $1.7 million.
NOTE J - POSTRETIREMENT BENEFITS - continued
Other postretirement benefits IN 1992, THE COMPANY ELECTED EARLY ADOPTION OF FAS NO. 106 - EMPLOYERS' ACCOUNTING FOR POSTRETIREMENT BENEFITS OTHER THAN PENSIONS. FAS NO. 106 GENERALLY REQUIRES THE ACCRUAL OF THE EXPECTED COST OF POSTRETIREMENT BENEFITS (HEALTH CARE AND LIFE INSURANCE) BY THE DATE EMPLOYEES ATTAIN FULL ELIGIBILITY FOR BENEFITS TO BE RECEIVED. PREVIOUSLY, THE EXPENSE FOR THESE BENEFITS WAS RECOGNIZED WHEN COSTS WERE INCURRED OR CLAIMS WERE RECEIVED.
A charge of $610 million ($975 million before tax) was recognized in 1992 for the cumulative effects of this accounting change.
The Company provides health care and life insurance benefits to most domestic retired employees. Substantially all of the Company's domestic employees may become eligible for these benefits if they reach retirement age while working for the Company. In late 1992 and in 1993 the Company changed the plans to provide for additional cost-sharing features with future retirees. These include the elimination of certain reimbursements and requiring retiree contributions based upon age and service criteria and at specified cost levels. These changes reduced the cost of providing these benefits by approximately $39 million in 1993. The Company's policy is to fund the cost of these benefits when actual expenses are incurred.
The Company's accumulated postretirement benefit obligation is comprised of the following at December 31:
1994 1993 ___________________ Retirees $716.6 $748.0 Active employees fully eligible 54.8 57.2 Active employees not fully eligible 140.0 176.4 Unamortized plan change benefits 188.7 207.4 Unrecognized net loss (20.5) (115.9) ___________________ Total $1,079.6 $1,073.1 ===================
Net periodic postretirement benefit cost was:
1994 1993 1992 ____________________________ Service cost $8.0 $9.4 $16.6 Interest cost 73.5 73.7 84.7 Net amortization (16.0) (14.5) - ____________________________ Total $65.5 $68.6 $101.3 ============================
The annual assumed rate of increase in the per capita cost of covered benefits (i.e., health care cost trend rate) is 10% for 1995 (11% in 1994 and 12.5% in 1993) and is assumed to decrease gradually to 6% for 2002 and remain at that level thereafter. The health care cost trend rate assumption has a significant effect on the amounts reported. For example, each one percentage point change in the assumed health care cost trend rate would change the accumulated postretirement benefit obligation as of December 31, 1994, by approximately $57 million and the aggregate of the service and interest cost components of net periodic postretirement benefit cost for 1994 by approximately $5 million.
NOTE J - POSTRETIREMENT BENEFITS - continued
The weighted-average discount rate used in determining the accumulated postretirement benefit obligation was 8.75% at December 31, 1994, and 7.5% at December 31, 1993.
NOTE K - TAXES ON INCOME
IN 1992 THE COMPANY CHANGED ITS METHOD OF ACCOUNTING FOR INCOME TAXES FROM THE DEFERRED METHOD TO THE LIABILITY METHOD AS REQUIRED BY FAS NO. 109 - ACCOUNTING FOR INCOME TAXES. AS PERMITTED UNDER THE NEW RULES, PRIOR YEARS' FINANCIAL STATEMENTS HAVE NOT BEEN RESTATED.
A charge of $30 million was recognized in 1992 for the cumulative effects of this accounting change. Adoption of FAS No. 109 enabled full recognition of the deferred tax benefits associated with the adoption of FAS No. 106.
At December 31, 1994, the Company had various U.S., Canadian and German income tax carryforward benefits of $98 million that expire primarily between 1998 and 2009 and $121 million that can be carried forward indefinitely. The Company has deferred tax assets primarily relating to certain foreign entities of approximately $49 million against which a full valuation reserve has been recorded. The Company is continuing to evaluate alternatives which may result in the ultimate realization of a portion of these assets.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. At December 31, 1994, the Company had $976 million (1993 - $925 million) of deferred tax assets and $717 million (1993 - $656 million) of deferred tax liabilities which have been netted with respect to tax jurisdictions for presentation purposes. The significant components of these amounts as shown on the balance sheet are as follows:
NOTE P - COMPANY OPERATIONS - continued
Approximately 27% of products transferred between operating areas and all transfers from other foreign areas are reflected at cost-related prices. Other transfers between operating areas and transfers between Canada and domestic areas are reflected at market-related prices.
Operating profit is after allocation of selling, administrative and general expenses. It does not reflect interest expense or other items of income or expense considered to be general corporate in nature.
The Company has investments in and advances to associated companies and unincorporated joint ventures not consolidated amounting to $856.1 million in 1994, $832.5 million in 1993 and $849.8 million in 1992. Such investments and advances relate principally to Australian and Canadian entities in the production and processing area. Corporate assets associated with operating data of $1,274.5 million in 1994, $952.1 million in 1993 and $788.0 million in 1992 consist principally of cash, investments, deferred taxes and other assets.
Research and development expenditures were $38.2 million in 1994, $36.1 million in 1993 and $37.7 million in 1992.
NOTE Q - CANADIAN REYNOLDS METALS COMPANY, LIMITED
Financial statements and financial statement schedules for Canadian Reynolds Metals Company, Limited have been omitted because the securities it has registered under the Securities Act of 1933 (thus subjecting it to reporting requirements under Section 13 or 15(d) of the Securities Exchange Act of 1934) are fully and unconditionally guaranteed by Reynolds Metals Company. Financial information relating to Canadian Reynolds Metals Company, Limited is presented herein in accordance with Staff Accounting Bulletin 53 as an addition to the footnotes to the financial statements of Reynolds Metals Company. Summarized financial information is as follows:
Year ended December 31 __________________________ 1994 1993 1992 __________________________
Net Sales: Customers $372.9 $293.5 $276.8 Parent company 498.2 377.5 425.5 __________________________ 871.1 671.0 702.3 Cost of products sold 754.7 666.4 683.5 Income (loss) before cumulative effect of accounting change 49.7 (35.7) 22.2 Net income (loss) $49.7 $(35.7) $28.6 [CAPTION] December 31 _____________________ 1994 1993 _____________________
Current assets $237.7 $146.9 Noncurrent assets 1,014.9 1,056.1 Current liabilities (83.3) (99.8) Noncurrent liabilities (563.7) (540.7)
Gross profit is net sales minus cost of products sold. Net income (loss) for 1994 includes a gain of $41 million in the third quarter from the sale of Reynolds Australia Metals, Ltd. and a gain of $16 million in the fourth quarter from the sale of timberland in the Pacific Northwest. Net income (loss) for 1993 includes a charge of $8 million in the third quarter to cover the costs of the temporary curtailment of primary aluminum production and a charge of $220 million in the fourth quarter for operational restructuring and asset revaluation costs.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Stockholders and Board of Directors Reynolds Metals Company
We have audited the accompanying consolidated balance sheets of Reynolds Metals Company as of December 31, 1994 and 1993, and the related consolidated statements of income and retained earnings, and cash flows for each of the three years in the period ended December 31, 1994. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Reynolds Metals Company at December 31, 1994 and 1993, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 1994, in conformity with generally accepted accounting principles.
As discussed in the notes to the consolidated financial statements, the Company changed its methods of accounting for postretirement benefits other than pensions (Note J) and income taxes (Note K) in 1992.
Ernst & Young LLP
Richmond, Virginia February 17, 1995
Item 9.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
Item 10.
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
For information concerning the directors and nominees for directorship, see the information under the caption "Item 1. Election of Directors" in the Registrant's Proxy Statement for the Annual Meeting of Stockholders to be held on April 19, 1995, which information is incorporated herein by reference.
Information concerning executive officers of the Registrant is shown in Part I - Item 4A of this report.
Item 11.
Item 11. EXECUTIVE COMPENSATION
For information required by this item, see the information under the captions "Item 1. Election of Directors - Board Compensation and Benefits", "Item 1. Election of Directors - Other Compensation", and "Executive Compensation" in the Registrant's Proxy Statement for the Annual Meeting of Stockholders to be held on April 19, 1995, which information is incorporated herein by reference.
Item 12.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
For information required by this item, see the information under the caption "Beneficial Ownership of Securities" in the Registrant's Proxy Statement for the Annual Meeting of Stockholders to be held on April 19, 1995, which information (other than that appearing under the caption "Beneficial Ownership of Securities - Stock Ownership Guidelines") is incorporated herein by reference.
Item 13.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
For information required by this item, see the information under the captions "Item 1. Election of Directors - Other Compensation" and "Executive Compensation - Pension Plan Table" in the Registrant's Proxy Statement for the Annual Meeting of Stockholders to be held on April 19, 1995, which information is incorporated herein by reference.
PART IV
Item 14.
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The consolidated financial statements and exhibits listed below are filed as a part of this report.
(1) Consolidated Financial Statements: Page
Consolidated statement of income and retained earnings - Years ended December 31, 1994, 1993 and 1992. 32
Consolidated balance sheet - December 31, 1994 and 1993. 33
Consolidated statement of cash flows - Years ended December 31, 1994, 1993 and 1992. 34
Notes to consolidated financial statements. 35
Report of Ernst & Young LLP, Independent Auditors. 54
(2) Financial Statement Schedules
All schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission have been omitted because they are not required, are inapplicable or the required information has otherwise been given.
Individual financial statements of Reynolds Metals Company have been omitted because the restricted net assets (as defined in Accounting Series Release 302) of all subsidiaries included in the consolidated financial statements filed, in the aggregate, do not exceed 25% of the consolidated net assets shown in the consolidated balance sheet as of December 31, 1994.
Financial statements of all associated companies (20% to 50% owned) have been omitted because no associated company is individually significant.
(3) Exhibits
EXHIBIT 2 - None
EXHIBIT 3.1 - Restated Certificate of Incorporation, as amended to the date hereof
EXHIBIT 3.2 - By-Laws, as amended to the date hereof
EXHIBIT 4.1 - Restated Certificate of Incorporation. See EXHIBIT 3.1.
EXHIBIT 4.2 - By-Laws. See EXHIBIT 3.2.
* EXHIBIT 4.3 - Indenture dated as of April 1, 1989 (the "Indenture") between Reynolds Metals Company and The Bank of New York, as Trustee, relating to Debt Securities. (File No. 1-1430, Form 10-Q Report for the Quarter Ended March 31, 1989, EXHIBIT 4(c))
* EXHIBIT 4.4 - Amendment No. 1 dated as of November 1, 1991 to the Indenture. (File No. 1-1430, 1991 Form 10-K Report, EXHIBIT 4.4)
* EXHIBIT 4.5 - Rights Agreement dated as of November 23, 1987 (the "Rights Agreement") between Reynolds Metals Company and The Chase Manhattan Bank, N.A. (File No. 1-1430, Registration Statement on Form 8-A dated November 23, 1987, pertaining to Preferred Stock Purchase Rights, EXHIBIT 1)
* EXHIBIT 4.6 - Amendment No. 1 dated as of December 19, 1991 to the Rights Agreement. (File No. 1-1430, 1991 Form 10-K Report, EXHIBIT 4.11)
* EXHIBIT 4.7 - Form of 9-3/8% Debenture due June 15, 1999. (File No. 1-1430, Form 8-K Report dated June 6, 1989, EXHIBIT 4)
* EXHIBIT 4.8 - Form of Fixed Rate Medium-Term Note. (Registration Statement No. 33-30882 on Form S-3, dated August 31, 1989, EXHIBIT 4.3)
* EXHIBIT 4.9 - Form of Floating Rate Medium-Term Note. (Registration Statement No. 33-30882 on Form S-3, dated August 31, 1989, EXHIBIT 4.4)
* EXHIBIT 4.10 - Form of Book-Entry Fixed Rate Medium-Term Note. (File No. 1-1430, 1991 Form 10-K Report, EXHIBIT 4.15)
* EXHIBIT 4.11 - Form of Book-Entry Floating Rate Medium-Term Note. (File No. 1-1430, 1991 Form 10-K Report, EXHIBIT 4.16)
* EXHIBIT 4.12 - Form of 9% Debenture due August 15, 2003. (File No. 1-1430, Form 8-K Report dated August 16, 1991, Exhibit 4(a))
* EXHIBIT 4.13 - Articles of Continuance of Canadian Reynolds Metals Company, Limited -- Societe Canadienne de Metaux Reynolds, Limitee ("CRM"), as amended to the date hereof. (Registration Statement No. 33-59168 on Form S-3, dated March 5, 1993, EXHIBIT 4.1)
* EXHIBIT 4.14 - By-Laws of CRM, as amended to the date hereof. (File No. 1-1430, Form 10-Q Report for the Quarter Ended September 30, 1993, EXHIBIT 4.19)
* EXHIBIT 4.15 - Indenture dated as of April 1, 1993 among CRM, Reynolds Metals Company and The Bank of New York, as Trustee. (File No. 1-1430, Form 8-K Report dated July 14, 1993, EXHIBIT 4(a))
* EXHIBIT 4.16 - Form of 6-5/8% Guaranteed Amortizing Note due July 15, 2002. (File No. 1-1430, Form 8-K Report dated July 14, 1993, EXHIBIT 4(d))
EXHIBIT 9 - None
#* EXHIBIT 10.1 - Reynolds Metals Company 1982 Nonqualified Stock Option Plan, as amended through May 17, 1985. (File No. 1-1430, 1985 Form 10-K Report, EXHIBIT 10.2)
#* EXHIBIT 10.2 - Reynolds Metals Company 1987 Nonqualified Stock Option Plan. (Registration Statement No. 33-13822 on Form S-8, dated April 28, 1987, EXHIBIT 28.1)
#* EXHIBIT 10.3 - Reynolds Metals Company 1992 Nonqualified Stock Option Plan. (Registration Statement No. 33-44400 on Form S-8, dated December 9, 1991, EXHIBIT 28.1)
#* EXHIBIT 10.4 - Reynolds Metals Company Performance Incentive Plan, as amended and restated effective January 1, 1985. (File No. 1-1430, 1985 Form 10-K Report, EXHIBIT 10.3)
#* EXHIBIT 10.5 - Consulting Agreement dated April 16, 1986 between Reynolds Metals Company and David P. Reynolds. (File No. 1-1430, Form 10-Q Report for the Quarter Ended March 31, 1986, EXHIBIT 19)
#* EXHIBIT 10.6 - Form of Deferred Compensation Agreement dated February 17, 1984 between Reynolds Metals Company and David P. Reynolds. (File No. 1-1430, Form 10-Q Report for the Quarter Ended March 31, 1994, EXHIBIT 10.6)
#* EXHIBIT 10.7 - Deferred Compensation Agreement dated May 16, 1986 between Reynolds Metals Company and David P. Reynolds. (File No. 1-1430, Form 10-Q Report for the Quarter Ended June 30, 1986, EXHIBIT 19)
#* EXHIBIT 10.8 - Agreement dated December 9, 1987 between Reynolds Metals Company and Jeremiah J. Sheehan. (File No. 1-1430, 1987 Form 10-K Report, EXHIBIT 10.9)
#* EXHIBIT 10.9 - Supplemental Death Benefit Plan for Officers. (File No. 1-1430, 1986 Form 10-K Report, EXHIBIT 10.8)
#* EXHIBIT 10.10 - Financial Counseling Assistance Plan for Officers. (File No. 1-1430, 1987 Form 10-K Report, EXHIBIT 10.11)
#* EXHIBIT 10.11 - Management Incentive Deferral Plan. (File No. 1-1430, 1987 Form 10-K Report, EXHIBIT 10.12)
#* EXHIBIT 10.12 - Deferred Compensation Plan for Outside Directors as Amended and Restated Effective December 1, 1993. (File No. 1-1430, 1993 Form 10-K Report, EXHIBIT 10.12)
#* EXHIBIT 10.13 - Retirement Plan for Outside Directors. (File No. 1-1430, 1986 Form 10-K Report, EXHIBIT 10.10)
#* EXHIBIT 10.14 - Death Benefit Plan for Outside Directors. (File No. 1-1430, 1986 Form 10-K Report, EXHIBIT 10.11)
#* EXHIBIT 10.15 - Form of Indemnification Agreement for Directors and Officers. (File No. 1-1430, Form 8-K Report dated April 29, 1987, EXHIBIT 28.3)
#* EXHIBIT 10.16 - Form of Executive Severance Agreement between Reynolds Metals Company and key executive personnel, including each of the individuals listed in Item 4A hereof. (File No. 1-1430, 1987 Form 10-K Report, EXHIBIT 10.18)
#* EXHIBIT 10.17 - Renewal dated February 21, 1992 of Consulting Agreement dated April 16, 1986 between Reynolds Metals Company and David P. Reynolds. (File No. 1-1430, 1991 Form 10-K Report, EXHIBIT 10.19)
#* EXHIBIT 10.18 - Amendment to Reynolds Metals Company 1987 Nonqualified Stock Option Plan effective May 20, 1988. (File No. 1-1430, Form 10-Q Report for the Quarter Ended June 30, 1988, EXHIBIT 19(a))
#* EXHIBIT 10.19 - Amendment to Reynolds Metals Company 1987 Nonqualified Stock Option Plan effective October 21, 1988. (File No. 1-1430, Form 10-Q Report for the Quarter Ended September 30, 1988, EXHIBIT 19(a))
#* EXHIBIT 10.20 - Amendment to Reynolds Metals Company 1987 Nonqualified Stock Option Plan effective January 1, 1987. (File No. 1-1430, 1988 Form 10-K Report, EXHIBIT 10.22)
#* EXHIBIT 10.21 - Amendment to Reynolds Metals Company Performance Incentive Plan effective January 1, 1989. (File No. 1-1430, Form 10-Q Report for the Quarter Ended June 30, 1989, EXHIBIT 19)
#* EXHIBIT 10.22 - Form of Stock Option and Stock Appreciation Right Agreement, as approved February 16, 1990 by the Compensation Committee of the Company's Board of Directors. (File No. 1-1430, 1989 Form 10-K Report, EXHIBIT 10.24)
#* EXHIBIT 10.23 - Amendment to Reynolds Metals Company 1982 Nonqualified Stock Option Plan effective January 18, 1991. (File No. 1-1430, 1990 Form 10-K Report, EXHIBIT 10.25)
#* EXHIBIT 10.24 - Amendment to Reynolds Metals Company 1987 Nonqualified Stock Option Plan effective January 18, 1991. (File No. 1-1430, 1990 Form 10-K Report, EXHIBIT 10.26)
#* EXHIBIT 10.25 - Letter Agreement dated January 18, 1991 between Reynolds Metals Company and William O. Bourke. (File No. 1-1430, 1990 Form 10-K Report, EXHIBIT 10.29)
#* EXHIBIT 10.26 - Form of Stock Option Agreement, as approved April 22, 1992 by the Compensation Committee of the Company's Board of Directors. (File No. 1-1430, Form 10-Q Report for the Quarter Ended March 31, 1992, EXHIBIT 28(a))
#* EXHIBIT 10.27 - Consulting Agreement dated May 1, 1992 between Reynolds Metals Company and William O. Bourke. (File No. 1-1430, Form 10-Q Report for the Quarter Ended March 31, 1992, EXHIBIT 28(b))
#* EXHIBIT 10.28 - Renewal dated February 18, 1994 of Consulting Agreement dated May 1, 1992 between Reynolds Metals Company and William O. Bourke. (File No. 1-1430, 1993 Form 10-K Report, EXHIBIT 10.28)
#* EXHIBIT 10.29 - Reynolds Metals Company Restricted Stock Plan for Outside Directors. (Registration Statement No. 33-53851 on Form S-8, dated May 27, 1994, EXHIBIT 4.6)
#* EXHIBIT 10.30 - Reynolds Metals Company New Management Incentive Deferral Plan. (File No. 1-1430, Form 10-Q Report for the Quarter Ended June 30, 1994, EXHIBIT 10.30)
#* EXHIBIT 10.31 - Reynolds Metals Company Salary Deferral Plan for Executives. (File No. 1-1430, Form 10-Q Report for the Quarter Ended June 30, 1994, EXHIBIT 10.31)
#* EXHIBIT 10.32 - Reynolds Metals Company Supplemental Long Term Disability Plan for Executives. (File No. 1-1430, Form 10-Q Report for the Quarter Ended June 30, 1994, EXHIBIT 10.32)
#* EXHIBIT 10.33 - Amendment to Reynolds Metals Company 1982 Nonqualified Stock Option Plan effective August 19, 1994. (File No. 1-1430, Form 10-Q Report for the Quarter Ended September 30, 1994, EXHIBIT 10.33)
#* EXHIBIT 10.34 - Amendment to Reynolds Metals Company 1987 Nonqualified Stock Option Plan effective August 19, 1994. (File No. 1-1430, Form 10-Q Report for the Quarter Ended September 30, 1994, EXHIBIT 10.34)
#* EXHIBIT 10.35 - Amendment to Reynolds Metals Company 1992 Nonqualified Stock Option Plan effective August 19, 1994. (File No. 1-1430, Form 10-Q Report for the Quarter Ended September 30, 1994, EXHIBIT 10.35)
# EXHIBIT 10.36 - Amendment to Reynolds Metals Company New Management Incentive Deferral Plan effective January 1, 1995
# EXHIBIT 10.37 - Amendment to Reynolds Metals Company New Management Incentive Deferral Plan effective January 1, 1995 through December 31, 1996
# EXHIBIT 10.38 - Amendment to Reynolds Metals Company Salary Deferral Plan for Executives effective January 1, 1995 through December 31, 1996
EXHIBIT 11 - Computation of Earnings Per Share
EXHIBIT 12 - Not applicable
EXHIBIT 13 - Not applicable
EXHIBIT 16 - Not applicable
EXHIBIT 18 - None
EXHIBIT 21 - List of Subsidiaries of Reynolds Metals Company
EXHIBIT 22 - None
EXHIBIT 23 - Consent of Independent Auditors
EXHIBIT 24 - Powers of Attorney
EXHIBIT 27 - Financial Data Schedule
EXHIBIT 28 - Not applicable
____________________________ * Incorporated by reference. # Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to Item 601 of Regulation S-K.
Pursuant to Item 601 of Regulation S-K, certain instruments with respect to long-term debt of the Company are omitted because such debt does not exceed 10 percent of the total assets of the Company and its subsidiaries on a consolidated basis. The Company agrees to furnish a copy of any such instrument to the Commission upon request.
(b) Reports on Form 8-K
The Registrant filed no reports on Form 8-K during the fourth quarter of 1994.
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.
REYNOLDS METALS COMPANY
By Richard G. Holder Richard G. Holder, Chairman of the Board and Chief Executive Officer
Date March 6, 1995
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 and on the dates indicated.
By Henry S. Savedge, Jr. By Richard G. Holder Henry S. Savedge, Jr., Director, Richard G. Holder, Director Executive Vice President and Chairman of the Board and Chief Chief Financial Officer Executive Officer
Date March 6, 1995 Date March 6, 1995
By *Patricia C. Barron By *William O. Bourke Patricia C. Barron, Director William O. Bourke, Director
Date March 6, 1995 Date March 6, 1995
By Yale M. Brandt By *Thomas A. Graves, Jr. Yale M. Brandt, Director Thomas A. Graves, Jr., Director
Date March 6, 1995 Date March 6, 1995
By *John R. Hall By *Robert L. Hintz John R. Hall, Director Robert L. Hintz, Director
Date March 6, 1995 Date March 6, 1995
By *William H. Joyce By *David P. Reynolds William H. Joyce, Director David P. Reynolds, Director
Date March 6, 1995 Date March 6, 1995
By Randolph N. Reynolds By *James M. Ringler Randolph N. Reynolds, Director James M. Ringler, Director
Date March 6, 1995 Date March 6, 1995
By *Charles A. Sanders By Jeremiah J. Sheehan Charles A. Sanders, Director Jeremiah J. Sheehan, Director
Date March 6, 1995 Date March 6, 1995
By *Robert J. Vlasic By *Joe B. Wyatt Robert J. Vlasic, Director Joe B. Wyatt, Director
Date March 6, 1995 Date March 6, 1995
By Allen M. Earehart Allen M. Earehart, Vice President, Controller
Date March 6, 1995
*By D. Michael Jones D. Michael Jones, Attorney-in-Fact
Date March 6, 1995
SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM 10-K
For the fiscal year ended December 31, 1994
Commission File No. 1-1430
REYNOLDS METALS COMPANY
Attached herewith are Exhibits 3.1, 3.2, 10.36, 10.37, 10.38, 11, 21, 23, 24 and 27
INDEX
EXHIBIT 2 - None
EXHIBIT 3.1 - Restated Certificate of Incorporation, as amended to the date hereof
EXHIBIT 3.2 - By-Laws, as amended to the date hereof
EXHIBIT 4.1 - Restated Certificate of Incorporation. See EXHIBIT 3.1.
EXHIBIT 4.2 - By-Laws. See EXHIBIT 3.2.
* EXHIBIT 4.3 - Indenture dated as of April 1, 1989 (the "Indenture") between Reynolds Metals Company and The Bank of New York, as Trustee, relating to Debt Securities. (File No. 1-1430, Form 10-Q Report for the Quarter Ended March 31, 1989, EXHIBIT 4(c))
* EXHIBIT 4.4 - Amendment No. 1 dated as of November 1, 1991 to the Indenture. (File No. 1-1430, 1991 Form 10-K Report, EXHIBIT 4.4)
* EXHIBIT 4.5 - Rights Agreement dated as of November 23, 1987 (the "Rights Agreement") between Reynolds Metals Company and The Chase Manhattan Bank, N.A. (File No. 1-1430, Registration Statement on Form 8-A dated November 23, 1987, pertaining to Preferred Stock Purchase Rights, EXHIBIT 1)
* EXHIBIT 4.6 - Amendment No. 1 dated as of December 19, 1991 to the Rights Agreement. (File No. 1-1430, 1991 Form 10-K Report, EXHIBIT 4.11)
* EXHIBIT 4.7 - Form of 9-3/8% Debenture due June 15, 1999. (File No. 1-1430, Form 8-K Report dated June 6, 1989, EXHIBIT 4)
* EXHIBIT 4.8 - Form of Fixed Rate Medium-Term Note. (Registration Statement No. 33-30882 on Form S-3, dated August 31, 1989, EXHIBIT 4.3)
* EXHIBIT 4.9 - Form of Floating Rate Medium-Term Note. (Registration Statement No. 33-30882 on Form S-3, dated August 31, 1989, EXHIBIT 4.4)
* EXHIBIT 4.10 - Form of Book-Entry Fixed Rate Medium-Term Note. (File No. 1-1430, 1991 Form 10-K Report, EXHIBIT 4.15)
* EXHIBIT 4.11 - Form of Book-Entry Floating Rate Medium-Term Note. (File No. 1-1430, 1991 Form 10-K Report, EXHIBIT 4.16)
* EXHIBIT 4.12 - Form of 9% Debenture due August 15, 2003. (File No. 1-1430, Form 8-K Report dated August 16, 1991, Exhibit 4(a))
* EXHIBIT 4.13 - Articles of Continuance of Canadian Reynolds Metals Company, Limited -- Societe Canadienne de Metaux Reynolds, Limitee ("CRM"), as amended to the date hereof. (Registration Statement No. 33- 59168 on Form S-3, dated March 5, 1993, EXHIBIT 4.1)
* EXHIBIT 4.14 - By-Laws of CRM, as amended to the date hereof. (File No. 1-1430, Form 10-Q Report for the Quarter Ended September 30, 1993, EXHIBIT 4.19)
* EXHIBIT 4.15 - Indenture dated as of April 1, 1993 among CRM, Reynolds Metals Company and The Bank of New York, as Trustee. (File No. 1-1430, Form 8-K Report dated July 14, 1993, EXHIBIT 4(a))
* EXHIBIT 4.16 - Form of 6-5/8% Guaranteed Amortizing Note due July 15, 2002. (File No. 1-1430, Form 8-K Report dated July 14, 1993, EXHIBIT 4(d))
EXHIBIT 9 - None
* EXHIBIT 10.1 - Reynolds Metals Company 1982 Nonqualified Stock Option Plan, as amended through May 17, 1985. (File No. 1-1430, 1985 Form 10-K Report, EXHIBIT 10.2)
* EXHIBIT 10.2 - Reynolds Metals Company 1987 Nonqualified Stock Option Plan. (Registration Statement No. 33-13822 on Form S-8, dated April 28, 1987, EXHIBIT 28.1)
* EXHIBIT 10.3 - Reynolds Metals Company 1992 Nonqualified Stock Option Plan. (Registration Statement No. 33-44400 on Form S-8, dated December 9, 1991, EXHIBIT 28.1)
* EXHIBIT 10.4 - Reynolds Metals Company Performance Incentive Plan, as amended and restated effective January 1, 1985. (File No. 1-1430, 1985 Form 10-K Report, EXHIBIT 10.3)
* EXHIBIT 10.5 - Consulting Agreement dated April 16, 1986 between Reynolds Metals Company and David P. Reynolds. (File No. 1-1430, Form 10-Q Report for the Quarter Ended March 31, 1986, EXHIBIT 19)
* EXHIBIT 10.6 - Form of Deferred Compensation Agreement dated February 17, 1984 between Reynolds Metals Company and David P. Reynolds. (File No. 1-1430, Form 10-Q Report for the Quarter Ended March 31, 1994, EXHIBIT 10.6)
* EXHIBIT 10.7 - Deferred Compensation Agreement dated May 16, 1986 between Reynolds Metals Company and David P. Reynolds. (File No. 1-1430, Form 10-Q Report for the Quarter Ended June 30, 1986, EXHIBIT 19)
* EXHIBIT 10.8 - Agreement dated December 9, 1987 between Reynolds Metals Company and Jeremiah J. Sheehan. (File No. 1-1430, 1987 Form 10-K Report, EXHIBIT 10.9)
* EXHIBIT 10.9 - Supplemental Death Benefit Plan for Officers. (File No. 1-1430, 1986 Form 10-K Report, EXHIBIT 10.8)
* EXHIBIT 10.10 - Financial Counseling Assistance Plan for Officers. (File No. 1-1430, 1987 Form 10-K Report, EXHIBIT 10.11)
* EXHIBIT 10.11 - Management Incentive Deferral Plan. (File No. 1-1430, 1987 Form 10-K Report, EXHIBIT 10.12)
* EXHIBIT 10.12 - Deferred Compensation Plan for Outside Directors as Amended and Restated Effective December 1, 1993. (File No. 1-1430, 1993 Form 10-K Report, EXHIBIT 10.12)
* EXHIBIT 10.13 - Retirement Plan for Outside Directors. (File No. 1-1430, 1986 Form 10-K Report, EXHIBIT 10.10)
* EXHIBIT 10.14 - Death Benefit Plan for Outside Directors. (File No. 1-1430, 1986 Form 10-K Report, EXHIBIT 10.11)
* EXHIBIT 10.15 - Form of Indemnification Agreement for Directors and Officers. (File No. 1-1430, Form 8-K Report dated April 29, 1987, EXHIBIT 28.3)
* EXHIBIT 10.16 - Form of Executive Severance Agreement between Reynolds Metals Company and key executive personnel, including each of the individuals listed in Item 4A hereof. (File No. 1-1430, 1987 Form 10-K Report, EXHIBIT 10.18)
* EXHIBIT 10.17 - Renewal dated February 21, 1992 of Consulting Agreement dated April 16, 1986 between Reynolds Metals Company and David P. Reynolds. (File No. 1- 1430, 1991 Form 10-K Report, EXHIBIT 10.19)
* EXHIBIT 10.18 - Amendment to Reynolds Metals Company 1987 Nonqualified Stock Option Plan effective May 20, 1988. (File No. 1-1430, Form 10-Q Report for the Quarter Ended June 30, 1988, EXHIBIT 19(a))
* EXHIBIT 10.19 - Amendment to Reynolds Metals Company 1987 Nonqualified Stock Option Plan effective October 21, 1988. (File No. 1-1430, Form 10-Q Report for the Quarter Ended September 30, 1988, EXHIBIT 19(a))
* EXHIBIT 10.20 - Amendment to Reynolds Metals Company 1987 Nonqualified Stock Option Plan effective January 1, 1987. (File No. 1-1430, 1988 Form 10-K Report, EXHIBIT 10.22)
* EXHIBIT 10.21 - Amendment to Reynolds Metals Company Performance Incentive Plan effective January 1, 1989. (File No. 1-1430, Form 10-Q Report for the Quarter Ended June 30, 1989, EXHIBIT 19)
* EXHIBIT 10.22 - Form of Stock Option and Stock Appreciation Right Agreement, as approved February 16, 1990 by the Compensation Committee of the Company's Board of Directors. (File No. 1-1430, 1989 Form 10-K Report, EXHIBIT 10.24)
* EXHIBIT 10.23 - Amendment to Reynolds Metals Company 1982 Nonqualified Stock Option Plan effective January 18, 1991. (File No. 1-1430, 1990 Form 10-K Report, EXHIBIT 10.25)
* EXHIBIT 10.24 - Amendment to Reynolds Metals Company 1987 Nonqualified Stock Option Plan effective January 18, 1991. (File No. 1-1430, 1990 Form 10-K Report, EXHIBIT 10.26)
* EXHIBIT 10.25 - Letter Agreement dated January 18, 1991 between Reynolds Metals Company and William O. Bourke. (File No. 1-1430, 1990 Form 10-K Report, EXHIBIT 10.29)
* EXHIBIT 10.26 - Form of Stock Option Agreement, as approved April 22, 1992 by the Compensation Committee of the Company's Board of Directors. (File No. 1- 1430, Form 10-Q Report for the Quarter Ended March 31, 1992, EXHIBIT 28(a))
* EXHIBIT 10.27 - Consulting Agreement dated May 1, 1992 between Reynolds Metals Company and William O. Bourke. (File No. 1-1430, Form 10-Q Report for the Quarter Ended March 31, 1992, EXHIBIT 28(b))
* EXHIBIT 10.28 - Renewal dated February 18, 1994 of Consulting Agreement dated May 1, 1992 between Reynolds Metals Company and William O. Bourke. (File No. 1-1430, 1993 Form 10-K Report, EXHIBIT 10.28)
* EXHIBIT 10.29 - Reynolds Metals Company Restricted Stock Plan for Outside Directors. (Registration Statement No. 33-53851 on Form S-8, dated May 27, 1994, EXHIBIT 4.6)
* EXHIBIT 10.30 - Reynolds Metals Company New Management Incentive Deferral Plan. (File No. 1-1430, Form 10-Q Report for the Quarter Ended June 30, 1994, EXHIBIT 10.30)
* EXHIBIT 10.31 - Reynolds Metals Company Salary Deferral Plan for Executives. (File No. 1-1430, Form 10-Q Report for the Quarter Ended June 30, 1994, EXHIBIT 10.31)
* EXHIBIT 10.32 - Reynolds Metals Company Supplemental Long Term Disability Plan for Executives. (File No. 1-1430, Form 10-Q Report for the Quarter Ended June 30, 1994, EXHIBIT 10.32)
* EXHIBIT 10.33 - Amendment to Reynolds Metals Company 1982 Nonqualified Stock Option Plan effective August 19, 1994. (File No. 1-1430, Form 10-Q Report for the Quarter Ended September 30, 1994, EXHIBIT 10.33)
* EXHIBIT 10.34 - Amendment to Reynolds Metals Company 1987 Nonqualified Stock Option Plan effective August 19, 1994. (File No. 1-1430, Form 10-Q Report for the Quarter Ended September 30, 1994, EXHIBIT 10.34)
* EXHIBIT 10.35 - Amendment to Reynolds Metals Company 1992 Nonqualified Stock Option Plan effective August 19, 1994. (File No. 1-1430, Form 10-Q Report for the Quarter Ended September 30, 1994, EXHIBIT 10.35)
EXHIBIT 10.36 - Amendment to Reynolds Metals Company New Management Incentive Deferral Plan effective January 1, 1995
EXHIBIT 10.37 - Amendment to Reynolds Metals Company New Management Incentive Deferral Plan effective January 1, 1995 through December 31, 1996
EXHIBIT 10.38 - Amendment to Reynolds Metals Company Salary Deferral Plan for Executives effective January 1, 1995 through December 31, 1996
EXHIBIT 11 - Computation of Earnings Per Share
EXHIBIT 12 - Not applicable
EXHIBIT 13 - Not applicable
EXHIBIT 16 - Not applicable
EXHIBIT 18 - None
EXHIBIT 21 - List of Subsidiaries of Reynolds Metals Company
EXHIBIT 22 - None
EXHIBIT 23 - Consent of Independent Auditors
EXHIBIT 24 - Powers of Attorney
EXHIBIT 27 - Financial Data Schedule
EXHIBIT 28 - Not applicable
____________________________ * Incorporated by reference.