SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-1430
REYNOLDS METALS COMPANY
A Delaware Corporation
(I.R.S. Employer Identification No. 54-0355135)
6601 West Broad Street, P. O. Box 27003, Richmond, Virginia 23261-7003
Telephone Number (804) 281-2000
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No ___
As of April 29, 1994, the Registrant had 61,964,371 shares of Common Stock,
no par value, outstanding and entitled to vote.
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
___________________________________________________________________________
Reynolds Metals Company
Quarter Ended March 31
___________________________________________________________________________
(In millions, except per share amounts) 1994 1993
___________________________________________________________________________
Revenues
Net sales $1,253.9 $1,230.7
Equity, interest and other income 7.2 6.2
___________________________________________________________________________
1,261.1 1,236.9
___________________________________________________________________________
Costs and expenses
Cost of products sold 1,166.2 1,156.0
Selling, administrative and general expenses 91.4 91.0
Interest - principally on long-term obligations 36.4 41.0
___________________________________________________________________________
1,294.0 1,288.0
___________________________________________________________________________
Loss before income taxes (32.9) (51.1)
Tax credit on income (11.8) (18.4)
___________________________________________________________________________
Net loss $(21.1) $(32.7)
===========================================================================
Loss per common share
Average shares outstanding 61.0 59.8
Net loss $(0.46) $(0.55)
Cash dividends per common share $0.25 $0.45
___________________________________________________________________________
[/TABLE]
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
____________________________________________________________________________________________________
Reynolds Metals Company
March 31 December 31
____________________________________________________________________________________________________
(In millions) 1994 1993
____________________________________________________________________________________________________
ASSETS
Current assets
Cash and short-term investments $348.9 $19.2
Receivables, less allowances of $16.4
(1993 - $16.7) 866.6 794.2
Inventories 805.2 731.8
Prepaid expenses 48.1 44.8
____________________________________________________________________________________________________
Total current assets 2,068.8 1,590.0
Unincorporated joint ventures and associated companies 821.4 832.5
Property, plant and equipment 6,121.7 6,093.1
Less allowances for depreciation and amortization 3,065.1 3,011.9
____________________________________________________________________________________________________
3,056.6 3,081.2
Deferred taxes and other assets 1,210.0 1,204.9
____________________________________________________________________________________________________
Total assets $7,156.8 $6,708.6
====================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable, accrued and other liabilities $1,050.8 $979.9
Short-term obligations 137.1 158.4
Long-term debt 34.3 42.6
____________________________________________________________________________________________________
Total current liabilities 1,222.2 1,180.9
Long-term debt 1,933.7 1,989.6
Postretirement benefits 1,210.2 1,260.9
Environmental, deferred taxes and other liabilities 644.1 654.3
Stockholders' equity
Preferred stock 505.1 -
Common stock 858.8 784.2
Retained earnings 910.6 953.8
Cumulative currency translation adjustments (62.7) (49.9)
Pension liability adjustment (65.2) (65.2)
____________________________________________________________________________________________________
Total stockholders' equity 2,146.6 1,622.9
____________________________________________________________________________________________________
Total liabilities and stockholders' equity $7,156.8 $6,708.6
====================================================================================================
CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)
____________________________________________________________________________________________________
Reynolds Metals Company
Three Months Ended
March 31
____________________________________________________________________________________________________
(In millions) 1994 1993
____________________________________________________________________________________________________
Operating activities
Net loss $(21.1) $(32.7)
Adjustments to reconcile to net cash used in
operating activities:
Depreciation and amortization 71.4 71.1
Changes in operating assets, liabilities and other (75.7) (116.2)
____________________________________________________________________________________________________
Net cash used in operating activities (25.4) (77.8)
Investing activities
Capital investments (52.3) (67.8)
Other investing activities - net (14.9) 13.2
____________________________________________________________________________________________________
Net cash used in investing activities (67.2) (54.6)
Financing activities
Proceeds from preferred stock issue 505.1 -
Proceeds from long-term obligations - 226.2
Increase (decrease) in short-term borrowings (40.2) 102.0
Reduction of long-term debt and other - net (42.6) (182.9)
____________________________________________________________________________________________________
Net cash provided by financing activities 422.3 145.3
Cash and short-term investments
Net increase 329.7 12.9
At beginning of period 19.2 80.4
____________________________________________________________________________________________________
At end of period $348.9 $93.3
====================================================================================================
REYNOLDS METALS COMPANY AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Quarters Ended March 31, 1994 and 1993
Note A - Basis of presentation
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q
and Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three month period ended March 31, 1994 are not necessarily
indicative of the results that may be expected for the year ending December
31, 1994. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's annual report on
Form 10-K for the year ended December 31, 1993.
Note B - Earnings per share
Earnings per share is based on the average number of common shares
outstanding and, in the first quarter of 1994, is after preferred stock
dividend requirements. Common stock equivalents relating to preferred
stock are not included since their effect would be anti-dilutive.
Note C - Preferred stock
In the first quarter of 1994, the Company issued 11,000,000 shares of 7%
PRIDES(SM), Convertible Preferred Stock 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 0.82 shares 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 0.82 shares of common stock per share of PRIDES. The
holders of shares of PRIDES have the right with the holders of common stock
to vote 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.
Note D - Contingent liabilities
As previously disclosed in the Company's annual report on Form 10-K for the
year ended December 31, 1993, the Company is involved in various worldwide
environmental improvement activities resulting from past operations,
including designation as a potentially responsible party, with others, at
various EPA designated Superfund sites. The Company has recorded amounts
which, in management's best estimate, will be sufficient to satisfy
anticipated costs of known remediation requirements. As a result of
factors such as the continuing evolution of environmental laws and
regulatory requirements, the availability and application of technology,
the identification of presently unknown remediation sites and the
allocation of costs among potentially responsible parties, estimated costs
for future environmental compliance and remediation are necessarily
imprecise. Based upon information presently available, such future costs
are not expected to have a material adverse effect on the Company's
competitive or financial position or its ongoing results of operations.
However, such costs could be material to future quarterly or annual results
of operations.
Note E - Canadian Reynolds Metals Company, Limited
Summarized financial information for Canadian Reynolds Metals Company,
Limited is as follows:
Quarter ended March 31
______________________
1994 1993
______________________
Net Sales:
Customers $ 73.1 $ 69.2
Parent company 115.8 95.7
______________________
188.9 164.9
Cost of products sold and depreciation 180.6 164.2
Net income (loss) $5.2 $(14.0)
March 31 December 31
1994 1993
_______________________
Current assets $148.1 $146.9
Noncurrent assets 1,041.2 1,056.1
Current liabilities (94.9) (99.8)
Noncurrent liabilities (531.6) (540.7)
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
INTRODUCTION
The following discussion and analysis should be read in
conjunction with the consolidated financial statements and notes thereto
included in or incorporated by reference in this report.
RESULTS OF OPERATIONS
Shipments and Revenues
Shipments and net sales for the first quarter of 1994 and 1993
were as follows (metric tons in thousands, dollars in millions):
FIRST QUARTER
___________________________________
Net Sales Shipments
1994 1993 1994 1993
___________________________________
Finished products and other sales
Packaging and containers:
Aluminum $337.2 $270.7 75.8 55.5
Nonaluminum 121.3 111.4
Other aluminum 91.6 84.4 33.0 29.0
Other nonaluminum 110.0 93.4
___________________________________
660.1 559.9 108.8 84.5
___________________________________
Production and processing
Primary aluminum 73.9 89.2 55.0 70.6
Flat rolled 216.7 272.3 98.2 112.3
Extruded and drawn 131.3 125.9 51.7 42.9
Other aluminum 74.7 88.6 31.7 41.6
Other nonaluminum 62.6 69.1
Gold 34.6 25.7
___________________________________
593.8 670.8 236.6 267.4
___________________________________
Net sales $1,253.9 $1,230.7 345.4 351.9
===================================
Revenues per pound:
Primary aluminum $0.61 $0.57
Fabricated aluminum products $1.37 $1.46
Shipments and Revenues (continued)
First quarter 1994 shipments declined slightly as the result of
restructuring activities. Shipments of finished products and other sales
were up, especially for aluminum cans, consumer products, and flexible
packaging, both in the U.S. and other parts of the world, reflecting strong
demand for the Company's value-added products. (For more information on
product shipments, see "Segment Analysis".)
Revenues were generated from the following principal markets:
First Quarter
1994 1993
Packaging & Containers 45% 42%
Distributors and Fabricators 13 18
Building and Construction 11 10
Automotive and Transportation 11 12
Electrical 3 3
Other 17 15
_______________
Total 100% 100%
===============
The increase in revenues from the packaging and containers market
principally reflects higher shipments of cans and ends due primarily to the
acquisition of Miller Brewing Company's can plants in the fourth quarter of
1993. The decline in revenues from the distributors and fabricators market
primarily reflects the restructuring of our Illinois sheet and plate
facility initiated in late 1993.
Low aluminum prices continue to weigh heavily on the Company's
results. Prices for most fabricated aluminum products were lower in the
first quarter of 1994 compared to the first quarter of 1993, particularly
for cans and ends and can sheet. Realized prices for primary aluminum were
slightly higher in the first quarter of 1994 due to market price
improvements.
Costs and Expenses
Cost of products sold in the first quarter of 1994 was favorably
impacted by performance improvement programs, including the effects of
restructuring, and lower costs for certain raw materials used in the
production of primary aluminum. These benefits were offset by a shift in
product mix to higher value-added products and the negative effects of
ongoing fixed costs related to the temporary curtailments at primary
aluminum and alumina facilities.
The decline in interest expense in the first quarter of 1994 was due
primarily to lower interest rates.
On a quarterly basis, the Company evaluates the status of all
significant existing or potential environmental issues, develops or revises
estimates of costs to satisfy known remediation requirements and adjusts
its accruals accordingly. Based upon information presently available, such
future costs are not expected to have a material adverse effect on the
Company's competitive or financial position or its ongoing results of
operations. However, it is not possible to predict the amount or timing of
future costs of environmental remediation requirements which may
subsequently be determined. Such costs could be material to future
quarterly or annual results of operations.
Operating Outlook
The Company is beginning to see benefits from improved primary
aluminum prices. It will take time for price improvements to spread to
fabricated products, particularly in the case of cans and ends and can
sheet, where prices for most of the Company's products are already set for
the remainder of 1994. Sustained price improvements should follow,
however, if the global economy continues to strengthen, excess aluminum
inventories are reduced and worldwide demand for aluminum products remains
strong. This, combined with our aggressive performance improvement
programs, should provide improved financial performance.
SEGMENT ANALYSIS
Finished Products and Other Sales
Shipments of finished products rose strongly in the 1994 quarter, led
by increased shipments of cans and ends resulting from the acquisition of
Miller's can plants. Shipments of consumer products and flexible packaging
were also higher. While net sales increased due to the higher shipping
levels of aluminum products and strong sales of non-aluminum products,
lower prices for most fabricated aluminum products had an unfavorable
effect on the Company's operating results.
Production and Processing
The decline in shipments in the first quarter of 1994 was principally
the result of a shift in product mix and restructuring activities.
Shipments of primary aluminum declined due to increased internal
consumption to support sales of more value-added products. Shipments of
flat rolled products were lower due to the restructuring of our Illinois
sheet and plate facility and to increased internal consumption of can sheet
to support higher sales of cans and ends. Shipments of extruded and drawn
products rose due mainly to increased sales of electrical rod. Shipments
of other aluminum products were lower due to the divestiture of an aluminum
reclamation facility in the second quarter of 1993. The decline in
shipments, as well as lower prices for most fabricated aluminum products,
had a negative impact on net sales. Realized prices for primary aluminum
were slightly higher in the first quarter of 1994 due to market price
improvements.
LIQUIDITY AND CAPITAL RESOURCES
Working Capital
Working capital totalled $847 million at March 31, 1994, compared to
$409 million at December 31, 1993. The ratio of current assets to current
liabilities was 1.7/1 at March 31, 1994, compared to 1.3/1 at December 31,
1993. The increase in working capital was due primarily to the short term
investment of a portion of the proceeds from the issuance of preferred
stock in early 1994 (see below).
Operating Activities
Cash generated from operations in the first quarter of 1994 was
supplemented with funds from financing activities to increase inventories
in anticipation of higher shipping levels in the second quarter.
Investing Activities
Capital investments in the first quarter of 1994 consisted of
continuing improvements at our Alabama sheet facility, modernization and
expansion at our can manufacturing facilities and various equipment
upgrades.
Financing Activities
In the first quarter of 1994 the Company issued 11 million shares of
7% PRIDES, Convertible Preferred Stock for $47.25 (stated value) per share.
The Company received net proceeds of $505 million. A portion of the
proceeds was used to fund capital investments and operating activities in
the first quarter of 1994 and to repay obligations incurred in the fourth
quarter of 1993 in connection with the acquisition of Miller's can plants.
The remainder of the proceeds is being temporarily invested pending its
future use for capital expenditures, strategic investments and general
corporate purposes.
In the first quarter of 1994 the Company contributed 1.4 million
shares of its common stock, valued at approximately $72 million, to its
pension plans.
Financial Outlook
Capital investments in 1994 are expected to be approximately $425
million to $450 million. They will consist of strategic acquisitions and
investments (including the pending acquisition of Bev-Pak, Inc. and the
construction of a can plant in Argentina, as discussed below), continuing
improvements at our Alabama sheet facility, modernization and expansion of
our can manufacturing plants, and equipment upgrades at a number of other
facilities. These investments will be funded primarily with cash generated
from operations, proceeds from the sale of non-core assets, and part of the
proceeds from our preferred stock issue.
The Company has reached agreement in principle to acquire Bev-Pak,
Inc., a midwestern U.S. manufacturer of aluminum cans and ends, and expects
to close the transaction in the second quarter of 1994. The acquisition
would increase the Company's U.S. aluminum can- and end-making capacity
from 16 billion to more than 18 billion cans and ends annually. This
addition would strengthen the Company's can manufacturing position in the
Midwest and complement its current capabilities.
Early in the second quarter of 1994 the Company announced plans by an
affiliate for an aluminum beverage can plant in Buenos Aires, Argentina.
The plant, which is scheduled to begin operations by the end of 1995, will
have an annual capacity of 750 million cans and will increase the combined
annual capacity of the Company's affiliates and their partners in Latin
America to more than 5 billion cans and ends. When the new plant is
completed, Reynolds affiliates will serve the Latin American market from
four plants in three countries.
The Company believes its available financial resources, 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. At March 31,
1994, $222 million of the Company's $1.65 billion shelf registration
remained available for the issuance of debt securities.
PART II - OTHER INFORMATION
Item 2. CHANGES IN SECURITIES
(a) The Registrant's Restated Certificate of Incorporation was
amended by the filing on January 20, 1994, of a Certificate of
Designations, Preferences, Rights and Limitations relating to its 7%
PRIDES, Convertible Preferred Stock, 11,000,000 shares of which were issued
on January 25, 1994. The effects of such amendment and the related
issuance of such shares of Convertible Preferred Stock on the rights of
holders of the Registrant's Common Stock, without par value, are described
in the description of the Registrant's Common Stock set forth in Item 5
hereof.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Stockholders of the Company was held on April
20, 1994. The stockholders (i) elected the fourteen nominees named in the
Company's proxy statement to serve as Directors, (ii) approved a Restricted
Stock Plan for Outside Directors and (iii) ratified the selection of Ernst
& Young as independent auditors of the Company for 1994. The number of
votes cast for, against or withheld, and the number of abstentions, as
applicable, with respect to each of the foregoing matters were as set forth
below; there were no broker nonvotes with respect to any of the foregoing
matters. No other matters were voted upon at the meeting.
(i) Election of Directors
Name Number Of Shares Number of Votes
Voted "For" Withheld
William O. Bourke 58,680,838 480,861
Yale M. Brandt 58,735,615 426,084
Thomas A. Graves, Jr. 58,658,948 502,751
Gerald Greenwald 58,656,201 505,498
John R. Hall 58,755,787 405,912
Robert L. Hintz 58,685,601 476,098
Richard G. Holder 58,763,009 398,690
David P. Reynolds 58,711,715 449,984
Randolph N. Reynolds 58,728,243 433,456
Charles A. Sanders, M.D. 58,767,081 394,618
Henry S. Savedge, Jr. 58,765,178 396,521
Jeremiah J. Sheehan 58,756,290 405,409
Robert J. Vlasic 58,767,178 394,521
Joe B. Wyatt 58,685,058 476,641
(ii) Approval of Restricted Stock Plan for Outside Directors
Number of Votes Cast "For" 49,465,185
Number of Votes Cast "Against" 9,198,340
Number of Abstentions 498,174
(iii) Ratification of Selection of Ernst & Young as Independent
Auditors
Number of Votes Cast "For" 58,616,950
Number of Votes Cast "Against" 201,871
Number of Abstentions 342,878
Item 5. OTHER INFORMATION
The following description of the Registrant's Common Stock, without
par value, shall be incorporated by reference into the Registrant's
registration statements on: (i) Form S-8 No. 2-76789 relating to the
Reynolds Metals Company 1982 Nonqualified Stock Option Plan; (ii) Form S-8
No. 33-13822 relating to the Reynolds Metals Company 1987 Nonqualified
Stock Option Plan; (iii) Form S-8 No. 33-44400 relating to the Reynolds
Metals Company 1992 Nonqualified Stock Option Plan; (iv) Form S-8 No.
33-20498 relating to the Reynolds Metals Company Savings and Investment
Plan for Salaried Employees; (v) Form S-8 No. 33-66032 relating to the
Reynolds Metals Company Savings Plan for Hourly Employees; and (vi) Form
S-3 No. 33-51153 relating to the offer and resale from time to time of
shares of Common Stock by the Trustee of the Reynolds Metals Company
Pension Plans Master Trust:
DESCRIPTION OF COMMON STOCK
GENERAL
The Registrant is authorized to issue 200,000,000 shares of Common
Stock, without par value ("Common Stock"), 20,000,000 shares of Preferred
Stock, without par value ("Preferred Stock"), and 1,000,000 shares of
Second Preferred Stock, $100 par value ("Second Preferred Stock"). Shares
of Preferred Stock and Second Preferred Stock are issuable in series, with
such designations, preferences, rights, qualifications, limitations and
restrictions as the Registrant's Board of Directors may determine in
resolutions providing for their issuance. The Board of Directors and the
1993 Preferred Stock Committee thereof have adopted resolutions authorizing
the issuance of 11,000,000 shares of Preferred Stock of a series designated
as "7% PRIDES, Convertible Preferred Stock" ("PRIDES"), each share of
PRIDES having a stated value of $47.25 per share. As of April 29, 1994,
there were issued, outstanding and entitled to vote 61,964,371 shares of
Common Stock and 11,000,000 shares of PRIDES. No shares of Second
Preferred Stock are outstanding.
The Board of Directors has adopted resolutions providing for the
issuance of a Series A Junior Participating Preferred Stock, without par
value (the "Series A Preferred Stock"), issuable upon the occurrence of
certain events, as described below under "Preferred Stock Purchase Rights".
A total of 2,000,000 shares of Series A Junior Participating Preferred
Stock have been authorized, designated and reserved for issuance.
Each outstanding share of Common Stock has attached one Preferred
Stock Purchase Right, which entitles the record holder to purchase from the
Registrant upon the occurrence of certain events, as described below under
"Preferred Stock Purchase Rights", one one-hundredth of a share of the
Series A Preferred Stock, subject to adjustment in certain circumstances.
COMMON STOCK
Dividend Rights and Restrictions on Payment of Dividends
Holders of Common Stock are entitled to receive dividends, when and as
declared by the Board of Directors, subject to restrictions which may be
imposed by (i) resolutions providing for the issuance of series of
Preferred Stock (including the PRIDES) or Second Preferred Stock; and
(ii) certain credit agreements of the Registrant, as described below.
Dividends on Preferred Stock and Second Preferred Stock may be cumulative,
and no payments or distributions (except in Common Stock or other junior
stock) may be made on Common Stock, nor may any Common Stock be acquired by
the Registrant, unless all past and current dividends on Preferred Stock
and Second Preferred Stock have been paid or provided for. Under certain
of the Registrant's credit agreements, the Registrant may not declare or
pay dividends on, make any payment on account of, or set apart assets for a
sinking or other analogous fund for the purchase, redemption, defeasance,
retirement or other acquisition of, any shares of capital stock of the
Registrant, nor may the Registrant make any other distribution in respect
thereof, if specified events of default (including payment defaults and
events relating to bankruptcy, insolvency or reorganization) have occurred
and are continuing. No such events of default have occurred.
Voting Rights
The Registrant's By-Laws provide that, except where, and to the extent
that, a different percentage of votes and/or a different exercise of voting
power is prescribed by law, the Registrant's Certificate of Incorporation
or its By-Laws, all elections and other questions shall be decided by the
vote of stockholders, present in person or by proxy and entitled to vote,
representing a majority of the votes cast. Holders of Common Stock are
entitled to one vote for each share held of record and are not entitled to
cumulate votes for the election of directors. Holders of Common Stock have
voting powers on all matters requiring approval of stockholders, other than
certain matters subject to the voting rights of holders of Preferred Stock
and Second Preferred Stock to the extent provided in the applicable
resolutions authorizing their issuance or otherwise under Delaware law.
Liquidation Rights
In the event of liquidation, dissolution or winding up of the
Registrant, holders of Common Stock are entitled to share ratably in the
assets of the Registrant remaining after payment or provision for payment
of all the Registrant's debts and other liabilities and after the holders
of any outstanding series of Preferred Stock (including the PRIDES) and
Second Preferred Stock have been paid the full preferential amounts due
them. Any preferential rights to be accorded holders of Preferred Stock
and Second Preferred Stock will be set forth in resolutions of the Board of
Directors authorizing issuance of the applicable series.
Preemptive Rights; Assessability
Holders of Common Stock have no preemptive or conversion rights and
there are no redemption or sinking fund provisions applicable thereto. The
outstanding shares of Common Stock are fully paid and non-assessable.
Transfer Agent and Registrar
The transfer agent and registrar for the Common Stock is Mellon
Securities Trust Company, 85 Challenger Road, Overpeck Centre, Ridgefield
Park, New Jersey 07660.
PRIDES
On January 25, 1994, the Registrant issued 11,000,000 shares of
PRIDES, which rank prior to the Common Stock as to payment of dividends and
distribution of assets upon liquidation. The designation, powers,
preferences and relative participating, optional or other special rights,
and the qualifications, limitations or restrictions thereof, in addition to
those otherwise set forth in the Registrant's Restated Certificate of
Incorporation, are set forth in a Certificate of Designations, Preferences,
Rights and Limitations dated January 20, 1994 which is included in the
Registrant's Restated Certificate of Incorporation.
Holders of shares of PRIDES are entitled to receive annual cumulative
dividends at a rate per annum of 7% of the stated value payable quarterly
in arrears on each April 1, July 1, October 1 and December 31, commencing
April 1, 1994. No payments or distributions (except in Common Stock or
other junior stock) may be made on Common Stock, nor may any Common Stock
be acquired by the Registrant, unless all past and current dividends on the
PRIDES have been paid or provided for.
Unless previously either redeemed or converted, as described below,
each outstanding share of PRIDES will mandatorily convert into one share of
Common Stock, subject to adjustment in certain events, on December 31, 1997
(the "Mandatory Conversion Date").
At any time on or after December 31, 1996 until immediately before the
Mandatory Conversion Date, the Registrant may redeem any or all of the
outstanding shares of PRIDES. Upon any such redemption, each holder will
receive, in exchange for each share of PRIDES, the number of shares of
Common Stock equal to the sum of (i) $48.077, declining after December 31,
1996 to $47.25 until the Mandatory Conversion Date, and (ii) all accrued
and unpaid dividends thereon (the "Call Price") divided by the current
market price of the Common Stock on the applicable date of determination,
but in no event less than .82 of a share of Common Stock. The Registrant
may be expected to redeem shares of PRIDES if, among other circumstances,
the current market price of the Common Stock exceeds the Call Price.
At any time before the Mandatory Conversion Date, unless previously
redeemed, each share of PRIDES is convertible at the option of the holder
thereof into .82 of a share of Common Stock, equivalent to a conversion
price of $57.622 per share of Common Stock, subject to certain adjustments.
The holders of shares of PRIDES will have the right with the holders
of Common Stock to vote 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. On such matters, the
holders of shares of PRIDES and the holders of Common Stock will vote
together as one class except as otherwise provided by law or the
Registrant's Restated Certificate of Incorporation. In addition, (i) in
the event that dividends on the shares of PRIDES or any other series of
Preferred Stock with like voting rights are in arrears and unpaid for six
quarterly dividend periods, and in certain other circumstances, the holders
of shares of PRIDES (voting separately as a class with holders of all other
series of outstanding Preferred Stock upon which like voting rights have
been conferred and are exercisable) will be entitled to vote, on the basis
of one vote for each share of PRIDES, for the election of two Directors of
the Registrant, such Directors to be in addition to the number of Directors
constituting the Board of Directors immediately before the accrual of such
right, and (ii) the holders of the shares of PRIDES will have voting rights
with respect to certain alterations of the Registrant's Restated
Certificate of Incorporation and certain other matters, voting on the same
basis or separately as a series.
The liquidation preference of each share of PRIDES is an amount equal
to the sum of (i) $47.25 and (ii) all accrued and unpaid dividends thereon.
Preferred Stock Purchase Rights
On November 20, 1987, the Board of Directors of the Registrant
declared a dividend distribution of one Preferred Stock Purchase Right (a
"Right") for each outstanding share of Common Stock to stockholders of
record at the close of business on December 1, 1987, and one Right has been
delivered with each share of Common Stock issued since December 1, 1987.
The Rights are attached to, and trade with, the Common Stock.
The description and terms of the Rights are set forth in a Rights
Agreement, dated as of November 23, 1987 (the "Rights Agreement"), between
the Registrant and The Chase Manhattan Bank, N.A. ("Chase"), as amended.
Mellon Securities Trust Company succeeded Chase as Rights Agent under the
Rights Agreement effective January 1, 1992.
Each Right entitles the record holder to purchase from the Registrant,
from and after the Distribution Date (as defined below), one one-hundredth
of a share of Series A Preferred Stock, at a price of $125 (the "Purchase
Price"), subject to adjustment in certain circumstances.
The Distribution Date will occur upon the earlier of (i) 15 days
following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired, or obtained the
right to acquire, beneficial ownership of 20% or more of the outstanding
shares of Common Stock (the "Stock Acquisition Date"), or (ii) 10 business
days following the commencement of a tender offer or exchange offer if,
upon consummation thereof, the person or group making such offer would be
the beneficial owner of 30% or more of the outstanding shares of Common
Stock. Until the Distribution Date, (i) the Rights will be evidenced by
Common Stock certificates and will be transferred only with such Common
Stock certificates, (ii) new Common Stock certificates issued after
December 1, 1987 will contain a notation incorporating the Rights Agreement
by reference and (iii) the surrender for transfer of any Common Stock
certificate will also constitute the transfer of the Rights associated with
the Common Stock represented by such certificate.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on December 1, 1997, unless earlier
exercised or redeemed.
If, at any time following the Distribution Date, (i) the Registrant is
the surviving corporation in a merger with an Acquiring Person and the
Common Stock is not changed or exchanged, (ii) an Acquiring Person becomes
the beneficial owner of 30% or more of the outstanding shares of Common
Stock (other than by an offer for all outstanding shares of Common Stock at
a price and on terms which the majority of the independent directors of the
Registrant determine to be fair to, and otherwise in the best interests of,
stockholders), or (iii) an Acquiring Person receives equity securities
(other than by a pro rata distribution) from the Registrant, acquires from
or transfers to the Registrant assets with a fair market value exceeding
$10,000,000 or engages in certain other "self-dealing" transactions
specified in the Rights Agreement, each holder of a Right will have the
right to receive, upon the exercise thereof, Common Stock (or, in certain
circumstances, cash, property or other securities of the Registrant) having
a value equal to two times the exercise price of the Right. However,
Rights are not so exercisable following the occurrence of such events until
they are no longer redeemable. In any such event, any Rights that are, or
(under certain circumstances specified in the Rights Agreement) were,
beneficially owned by an Acquiring Person will be null and void.
At any time following the Stock Acquisition Date, if (i) the
Registrant engages in a merger or consolidation in which it is not the
surviving corporation or in which it is the surviving corporation, but all
or part of the Common Stock is changed or exchanged, or (ii) 50% or more of
the Registrant's assets or earning power is transferred, each holder of a
Right will have the right to receive, upon the exercise thereof, common
stock of the acquiring company having a value equal to two times the
exercise price of the Right. The Rights may not be so exercised in the
case of a merger or consolidation (a) which follows an offer described in
clause (ii) of the preceding paragraph and (b) in which the form of
consideration is the same as was paid in such offer.
At any time until fifteen days following the Stock Acquisition Date,
the Board of Directors of the Registrant may redeem the Rights in whole,
but not in part, at a price of $.05 per Right, payable in cash or
securities or both. Thereafter, this right of redemption may be reinstated
if an Acquiring Person reduces his beneficial ownership to 10% or less of
the outstanding shares of Common Stock in a transaction or series of
transactions not involving the Company and there are no other Acquiring
Persons.
Until a Right is exercised, the holder thereof will have no rights as
a stockholder of the Registrant, including, without limitation, the right
to vote or to receive dividends.
Shares of Series A Preferred Stock purchasable upon exercise of the
Rights will not be redeemable. Each one one-hundredth of a share of
Series A Preferred Stock will be entitled to (i) an aggregate quarterly
dividend equal to the greater of (a) the quarterly dividend declared per
share of Common Stock or (b) $.10, (ii) upon liquidation, a minimum
preferential liquidation payment of $1.00 and an aggregate liquidation
payment equal to the liquidation payment made per share of Common Stock,
(iii) one vote, voting together with the shares of Common Stock and (iv) in
the event of any merger, consolidation or other transaction in which shares
of Common Stock are exchanged, the same amount received per share of Common
Stock. These rights are protected by customary anti-dilution provisions.
Because of the nature of the Series A Preferred Stock's dividend,
liquidation and voting rights, the value of each one one-hundredth of a
share of Series A Preferred Stock purchasable upon exercise of a Right
should approximate the value of one share of Common Stock.
DELAWARE GENERAL CORPORATION LAW SECTION 203
The Registrant is subject to the provisions of Section 203 of the
General Corporation Law of the State of Delaware ("DGCL Section 203"), the
"business combination" statute. In general, the statute prohibits a public
Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless
(i) prior to such date, the board of directors of the corporation approved
either the business combination or the transaction that resulted in the
stockholder becoming an interested stockholder, (ii) upon consummation of
the transaction that resulted in the stockholder becoming an interested
stockholder, the interested stockholder owned at least 85% of the voting
stock of the corporation outstanding at the time the transaction commenced
(excluding certain shares described in DGCL Section 203), or (iii) on or
after such date, the business combination is approved by the board of
directors of the corporation and authorized at an annual or special meeting
of stockholders and by the affirmative vote of at least two-thirds of the
outstanding voting stock that is not owned by the "interested stockholder".
"Business combination" is defined to include mergers, asset sales and
certain other transactions resulting in a financial benefit to a
stockholder. An "interested stockholder" is defined generally as a person
who, together with affiliates and associates, owns (or, within the prior
three years, did own) 15% or more of a corporation's voting stock. The
Registrant's Restated Certificate of Incorporation does not exclude the
Registrant from the restrictions imposed under DGCL Section 203. Thus,
such statute could prohibit or delay the accomplishment of mergers or other
takeover or change in control attempts with respect to the Registrant and,
accordingly, may discourage attempts to acquire the Registrant.
ADVANCE NOTICE REQUIREMENTS
The Registrant's By-Laws require advance written notice of any
business to be conducted at an annual or special meeting of the
stockholders (other than business included in the proxy materials or
brought before the meeting by or at the direction of the Board of Directors
or of the officer presiding over the meeting). For such business to be
properly before the meeting, the notice must contain certain information
concerning the item of business and the proposing stockholder. The notice
must be received by the Secretary of the Registrant (i) in the case of a
special meeting, not more than 10 days after the date of the Registrant's
written notice of the meeting and (ii) in the case of an annual meeting,
not less than 30 days before the anniversary date of the Registrant's
written notice of the previous year's annual meeting. These requirements
could have the effect of preventing a stockholder who had not furnished the
necessary notice from attempting to nominate directors or conduct business
from the floor during the course of the meeting and could therefore impair
such stockholder's ability to use such methods in connection with a
proposed takeover of the Registrant.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
See Index to Exhibits.
(b) Reports on Form 8-K
During the first quarter of 1994, the Registrant filed with the
Commission a Current Report on Form 8-K dated January 18, 1994 reporting
under Item 5 the sale of 11,000,000 shares of its 7% PRIDES, Convertible
Preferred Stock.
SIGNATURES
Pursuant to the requirements 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 Allen M. Earehart
Allen M. Earehart
Vice President, Controller
(Principal Accounting Officer)
DATE: May 13, 1994
INDEX TO EXHIBITS
EXHIBIT SEQUENTIAL
NO. DESCRIPTION OF EXHIBIT PAGE NO.
2 None
*4.1 Restated Certificate of Incorporation of Reynolds
Metals Company, as amended to the date hereof. (File
No. 1-1430, Registration Statement on Form 8-A dated
February 23, 1994, pertaining to Common Stock and
Preferred Stock Purchase Rights, EXHIBIT 1)
4.2 By-Laws of Reynolds Metals Company, as amended to the
date hereof
*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))
*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)
*4.5 $1,100,000,000 Credit Agreement (the "Credit
Agreement") dated as of November 24, 1987 among
Reynolds Metals Company, Canadian Reynolds Metals
Company, Limited - Societe Canadienne de Metaux
Reynolds, Limitee, the several banks parties thereto,
Manufacturers Hanover Bank (Delaware), The Bank of
Nova Scotia, Manufacturers Hanover Trust Company, and
Manufacturers Hanover Agent Bank Services Corporation.
(Registration Statement No. 33-20498 on Form S-8,
dated March 7, 1988, EXHIBIT 4.4)
*4.6 Amendment No. 1 dated as of July 1, 1988 to the Credit
Agreement. (File No. 1-1430, Form 10-Q Report for the
Quarter Ended June 30, 1988, EXHIBIT 4(e))
*4.7 Amendment No. 2 dated as of February 8, 1989 to the
Credit Agreement. (File No. 1-1430, 1988 Form 10-K
Report, EXHIBIT 4.6)
*4.8 Amendment No. 3 dated as of August 4, 1989 to the
Credit Agreement. (File No. 1-1430, Form 10-Q Report
for the Quarter Ended June 30, 1989, EXHIBIT 4(g))
*4.9 Amendment No. 4 dated as of November 1, 1990 to the
Credit Agreement. (Registration Statement No.
33-38020 on Form S-3, dated
November 30, 1990, EXHIBIT 4.12)
*4.10 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)
*4.11 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)
*4.12 Form of 9-3/8% Debenture due June 15, 1999. (File No.
1-1430, Form 8-K Report dated June 6, 1989, EXHIBIT 4)
*4.13 Form of Fixed Rate Medium-Term Note. (Registration
Statement No. 33-30882 on Form S-3, dated August 31,
1989, EXHIBIT 4.3)
*4.14 Form of Floating Rate Medium-Term Note. (Registration
Statement No. 33-30882 on Form S-3, dated August 31,
1989, EXHIBIT 4.4)
*4.15 Form of Book-Entry Fixed Rate Medium-Term Note. (File
No. 1-1430, 1991 Form 10-K Report, EXHIBIT 4.15)
*4.16 Form of Book-Entry Floating Rate Medium-Term Note.
(File No. 1-1430, 1991 Form 10-K Report, EXHIBIT 4.16)
*4.17 Form of 9% Debenture due August 15, 2003. (File No.
1-1430, Form 8-K Report dated August 16, 1991, EXHIBIT
4(a))
*4.18 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)
*4.19 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)
*4.20 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))
*4.21 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))
*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)
*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)
*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)
*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)
*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)
10.6 Form of Deferred Compensation Agreement dated February
17, 1984 between Reynolds Metals Company and David P.
Reynolds
*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)
*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)
*10.9 Supplemental Death Benefit Plan for Officers. (File
No. 1-1430, 1986 Form 10-K Report, EXHIBIT 10.8)
*10.10 Financial Counseling Assistance Plan for Officers.
(File No. 1-1430, 1987 Form 10-K Report, EXHIBIT
10.11)
*10.11 Management Incentive Deferral Plan. (File No. 1-1430,
1987 Form 10-K Report, EXHIBIT 10.12)
*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)
*10.13 Retirement Plan for Outside Directors. (File No.
1-1430, 1986 Form 10-K Report, EXHIBIT 10.10)
*10.14 Death Benefit Plan for Outside Directors. (File No.
1-1430, 1986 Form 10-K Report, EXHIBIT 10.11)
*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)
*10.16 Form of Executive Severance Agreement between Reynolds
Metals Company and key executive personnel, including
each of the individuals listed in Item 4A of the
Reynolds Metals Company 1993 Form 10-K Report (other
than Messrs. Christino, Earehart, Jones and Leahey).
(File No. 1-1430, 1987 Form 10-K Report, EXHIBIT
10.18)
*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)
*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))
*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))
*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)
*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)
*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)
*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)
*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)
*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)
*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))
*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))
*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)
10.29 Form of Reynolds Metals Company Restricted Stock Plan
for Outside Directors
11 Computation of Earnings Per Share
15 None
18 None
19 None
22 Not applicable
23 None
24 None
27 Not applicable
*Incorporated by reference.
Pursuant to Item 601 of Regulation S-K, certain
instruments with respect to long-term debt of Reynolds Metals
Company (the "Registrant") and its consolidated subsidiaries are
omitted because such debt does not exceed 10 percent of the total
assets of the Registrant and its subsidiaries on a consolidated
basis. The Registrant agrees to furnish a copy of any such
instrument to the Commission upon request.