EXHIBIT 99.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number 1-1430
A. Full title of the plan:
REYNOLDS METALS COMPANY
SAVINGS AND INVESTMENT PLAN
FOR SALARIED EMPLOYEES
B. Name of issuer of the securities held
pursuant to the plan and the address of
its principal executive office:
REYNOLDS METALS COMPANY
6601 West Broad Street
P. O. Box 27003
Richmond, Virginia 23261-7003
REQUIRED INFORMATION
FINANCIAL STATEMENTS AND EXHIBITS
FINANCIAL STATEMENTS
Page No.
Report of Independent Auditors.......................... F-1
Statements of Net Assets Available for
Plan Benefits, with Fund Information.................. F-2
Statement of Changes in Net Assets Available
for Plan Benefits, with Fund Information.............. F-4
Notes to Financial Statements........................... F-5
Schedules:
Assets Held for Investment Purposes.................... S-1
Reportable Transactions................................ S-3
EXHIBITS
Exhibit A Consent of Independent Auditors
SIGNATURES
The Plan. Pursuant to the requirements of the
Securities Exchange Act of 1934, the Plan Committee has duly
caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
REYNOLDS METALS COMPANY
SAVINGS AND INVESTMENT PLAN
FOR SALARIED EMPLOYEES
By: Henry S. Savedge, Jr.
Henry S. Savedge, Jr., Chairman
Savings and Investment
Plan Committee
DATE: June 26, 1996
Report of Ernst & Young LLP, Independent Auditors
Board of Directors
Reynolds Metals Company
We have audited the accompanying statements of net assets available for plan
benefits of the Reynolds Metals Company Savings and Investment Plan for
Salaried Employees as of December 31, 1995 and 1994, and the related statement
of changes in net assets available for plan benefits for the year ended
December 31, 1995. These financial statements are the responsibility of
management of Reynolds Metals Company (the Plan's Sponsor). 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 net assets available for plan benefits of the Plan
at December 31, 1995 and 1994, and the changes in its net assets available for
plan benefits for the year ended December 31, 1995, in conformity with
generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
of assets held for investment purposes as of December 31, 1995 and reportable
transactions for the year ended December 31, 1995, are presented for purposes
of complying with the Department of Labor's Rules and Regulations for Reporting
and Disclosure under the Employee Retirement Income Security Act of 1974, and
are not a required part of the basic financial statements. The Fund
Information in the statement of net assets available for plan benefits and the
statement of changes in net assets available for plan benefits is presented for
purposes of additional analysis rather than to present the net assets available
for plan benefits and changes in net assets available for plan benefits of each
fund. The supplemental schedules and Fund Information have been subjected to
the auditing procedures applied in our audits of the basic financial statements
and, in our opinion, are fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
Richmond, Virginia
June 21, 1996
Reynolds Metals Company
Savings and Investment Plan for Salaried Employees
Statement of Net Assets Available for Plan Benefits, with Fund Information
(Dollars in Thousands)
December 31, 1995
Fund Information
-----------------------------------------------------------------------------------
Non-
Participant
Participant Directed Directed
-----------------------------------------------------------------------------------
Small
Inter- Capitali-
Reynolds Diversified Balanced Interest national zation Reynolds
Stock Equities Investment Income Equities Equities Loan Stock
Fund Fund Fund Fund Fund Fund Fund Fund Total
-------------------------------------------------------------------------------------------
Assets
Investments:
Common stock of Reynolds Metals
Company
2,742,237 shares (Cost $90,858) $55,667 $ 99,612 $155,279
Mutual funds: - -
Diversified Equities (Cost $37,532) - $51,994 - 51,994
Balanced (Cost $18,260) - - $20,230 - 20,230
International Equities (Cost $2,563) - - - $2,680 - 2,680
Small Capitalization (Cost $5,999) - - - - $6,358 - 6,358
Investment contracts - - - $82,223 - - - 82,223
Cash equivalents 772 280 112 13,193 25 34 1,335 15,751
Loans to participants - - - - - - $10,602 - 10,602
--------------------------------------------------------------------------------------------
Total investments 56,439 52,274 20,342 95,416 2,705 6,392 10,602 $100,947 345,117
Accrued income 348 - - - 66 297 - 622 1,333
Receivable from Executive Life
Insurance Company - - - 3,066 - - - - 3,066
-------------------------------------------------------------------------------------------
Total assets 56,787 52,274 20,342 98,482 2,771 6,689 10,602 $101,569 349,516
-------------------------------------------------------------------------------------------
Liabilities
Payable to Reynolds Metals Company - - - 3,066 - - - - 3,066
Accounts payable and other - - - - - - - - -
-------------------------------------------------------------------------------------------
Total liabilities - - - 3,066 - - - - 3,066
-------------------------------------------------------------------------------------------
Interfund receivable (payable) - - - - - - - - -
Net assets available for plan benefits $56,787 $52,274 $20,342 $95,416 $2,771 $6,689 $10,602 $101,569 $346,450
===========================================================================================
See accompanying notes.
Reynolds Metals Company
Savings and Investment Plan for Salaried Employees
Statement of Net Assets Available for Plan Benefits, with Fund Information (continued)
(Dollars in Thousands)
December 31, 1994
Fund Information
--------------------------------------------------------------
Non-
Participant
Participant Directed Directed
--------------------------------------------------------------
Reynolds Diversified Balanced Interest Reynolds
Stock Equities Investment Income Loan Stock
Fund Fund Fund Fund Fund Fund Total
-----------------------------------------------------------------------
Assets
Investments:
Common stock of Reynolds Metals
Company
2,623,523 shares (Cost $82,114) $45,253 $83,300 $128,553
Mutual funds:
Diversified Equities (Cost $30,557) - $33,997 - 33,997
Balanced (Cost $13,226) - - $12,888 - 12,888
Investment contracts - - - $81,537 - 81,537
Cash equivalents 973 171 95 12,282 1,438 14,959
Loans to participants - - - - $9,926 - 9,926
--------------------------------------------------------------------------
Total investments 46,226 34,168 12,983 93,819 9,926 84,738 281,860
Accrued income 232 - - - - 428 660
Employer contributions receivable - - - - - 256 256
Receivable from Executive Life
Insurance Company - - - 5,795 - - 5,795
--------------------------------------------------------------------------
Total assets 46,458 34,168 12,983 99,614 9,926 85,422 288,571
--------------------------------------------------------------------------
Liabilities
Payable to Reynolds Metals Company - - - 5,795 - - 5,795
Accounts payable and other 1 - - 4 - 2 7
--------------------------------------------------------------------------
Total liabilities 1 - - 5,799 - 2 5,802
--------------------------------------------------------------------------
Interfund receivable (payable) 142 26 12 (180) - - -
Net assets available for plan benefits $46,599 $34,194 $12,995 $93,635 $9,926 $85,420 $282,769
==========================================================================
See accompanying notes.
Reynolds Metals Company
Savings and Investment Plan for Salaried Employees
Statement of Changes in Net Assets Available for Plan Benefits, with Fund Information
(Dollars in Thousands)
December 31, 1995
Fund Information
-----------------------------------------------------------------------------------
Non-
Participant
Participant Directed Directed
-----------------------------------------------------------------------------------
Small
Inter- Capitali-
Reynolds Diversified Balanced Interest national zation Reynolds
Stock Equities Investment Income Equities Equities Loan Stock
Fund Fund Fund Fund Fund Fund Fund Fund Total
-------------------------------------------------------------------------------------------
Additions to net assets
Investment income:
Net realized and unrealized
appreciation of investments $ 8,598 $12,010 $ 3,218 $ - $ 139 $ 472 $ 13,238 $37,675
Interest and dividends 1,216 1,070 693 5,959 66 297 $ 836 2,175 12,312
-------------------------------------------------------------------------------------------
9,814 13,080 3,911 5,959 205 769 836 15,413 49,987
-------------------------------------------------------------------------------------------
Contributions:
Employer:
Stock - - - - - - - 3,834 3,834
Cash - - - - - - - 2,887 2,887
Employee 4,926 5,093 2,856 5,976 622 1,029 - - 20,502
-------------------------------------------------------------------------------------------
4,926 5,093 2,856 5,976 622 1,029 - 6,721 27,223
Assets transferred 371 143 120 816 23 72 59 - 1,604
-------------------------------------------------------------------------------------------
Total Additions 15,111 18,316 6,887 12,751 850 1,870 895 22,134 78,814
-------------------------------------------------------------------------------------------
Deductions from net assets:
Withdrawals by participants 2,199 2,107 544 4,703 5 24 238 4,918 14,738
Administrative expenses 50 56 19 175 2 3 - 90 395
-------------------------------------------------------------------------------------------
Total Deductions 2,249 2,163 563 4,878 7 27 238 5,008 15,133
-------------------------------------------------------------------------------------------
Interfund transfers (2,674) 1,927 1,023 (6,092) 1,928 4,846 19 (977) -
Net increase 10,188 18,080 7,347 1,781 2,771 6,689 676 16,149 63,681
Net assets available for plan benefits:
Beginning of year 46,599 34,194 12,995 93,635 - - 9,926 85,420 282,769
-------------------------------------------------------------------------------------------
End of year $56,787 $52,274 $20,342 $95,416 $ 2,771 $ 6,689 $10,602 $101,569 $346,450
===========================================================================================
See accompanying notes.
Reynolds Metals Company
Savings and Investment Plan for Salaried Employees
Notes to Financial Statements
(Dollars in Thousands)
December 31, 1995
1. Significant Accounting Policies
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period.
Actual results could differ from those estimates.
The accounting records of the Reynolds Metals Company Savings and Investment
Plan for Salaried Employees ("Plan") are maintained on the accrual basis. All
securities transactions are recorded as of the trade date.
Investments in Reynolds Metals Company Common Stock (stated at fair value) are
valued at the last reported sales price on the last business day of the year.
Investments in mutual funds are measured by quoted market prices and are
reported at aggregate fair value at year-end. Investment contracts with
insurance companies are reported at "contract value," which equals cost plus
accrued income. Structured investment contracts are reported at fair value,
which in the case of structured investment contracts equals contract value.
Certain amounts in the 1994 financial statements have been reclassified to
conform to the 1995 presentation.
2. Summary of Significant Plan Provisions
The Plan is a defined contribution plan under the Employee Retirement Income
Security Act of 1974 ("ERISA") and qualifies as a "cash or deferred"
arrangement under Section 401(k) of the Internal Revenue Code. Plan
participation is voluntary and, as of December 31, 1995, was limited to
certain salaried employees who had completed 60 days of service.
A participant may contribute from 1% to 12% of compensation in any combination
on a before or after tax basis. Highly compensated participants may be
required to reduce the amount of "pretax" contributions in order to permit the
Plan to satisfy the nondiscrimination requirements of Section 401(k) of the
Internal Revenue Code.
Reynolds Metals Company
Savings and Investment Plan for Salaried Employees
Notes to Financial Statements (continued)
2. Summary of Significant Plan Provisions (continued)
As of December 31, 1995, participants who receive a cash award under the
Reynolds Metals Company Profit Sharing Program for Salaried Employees are also
allowed to elect to contribute from 10% to 50% of any such award. In addition,
participants eligible to receive gainsharing awards may elect to contribute
from 10% to 50% of the award. Such contributions are not matched by Reynolds
Metals Company (the "Company").
The Company contributes an amount equal to 50% of each participating
employee's contribution up to 6% of compensation. The Company may also
contribute up to an additional 50% of each participating employee's
contribution up to 6% of compensation. The Company elected not to make an
additional contribution for 1995 or 1994.
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate
the Plan subject to the provisions of ERISA. In the event of Plan termination,
all participants will be fully vested in their account balances.
A complete description of Plan provisions including those relating to vesting,
withdrawals, loans and distributions is contained in the Summary Plan
Description and the Plan document, copies of which are available from the
Company.
The Company is the Plan administrator and bears the related costs, except for
investment-related and trustee fees which are paid by the Plan.
3. Investments
Mutual Funds
Substantially all of the assets held in the Diversified Equities Fund and the
Balanced Investment Fund generally are invested in the Vanguard Institutional
Index Fund and the Vanguard STAR Fund, respectively, no-load mutual funds held
and managed by The Vanguard Group of Investment Companies. Substantially all
of the assets held in the International Equities Fund and the Small
Capitalization Equities Fund are invested in the T. Rowe Price Foreign Equity
Fund and the T. Rowe Price Small-Cap Value Fund, respectively, no-load
mutual funds held and managed by T. Rowe Price Associates, Inc.
Reynolds Metals Company
Savings and Investment Plan for Salaried Employees
Notes to Financial Statements (continued)
3. Investments (continued)
Investment Contracts
The assets held in the Interest Income Fund generally are invested in
guaranteed investment contracts ("GICs") at a fixed rate of return and
structured investment contracts ("SICs") with various insurance companies and
banks. These contracts generally provide for the full repayment of
principal and interest. SIC's represent a diversified portfolio of high grade
investments held in the name of the Plan in conjunction with a corresponding
contract with the issuer of the SIC to provide a fixed or variable rate of
return (based on the investment experience and reset quarterly) on the cost of
the portfolio. Upon the occurrence of certain events (none of which are
currently known to have occurred, nor are any such events contemplated),
however, market value of the GIC or SIC, if lower than its book value, may be
repaid. Interest is credited to participants' accounts on the dollar-weighted
average (blended rate) basis. The annual rate of return on these contracts
during 1995 and at December 31, 1995 was approximately 6.8% (7% in 1994). The
fair value of the Plan's GICs approximates contract value.
In April 1991, Executive Life Insurance Company ("Executive Life"), the issuer
of one of the guaranteed investment contracts then held by the Plan, was
placed into conservatorship. The Company and the Plan entered into an
agreement on August 1, 1991, whereby the Company was obligated to provide
interest free loans to the Plan for any amounts due under the guaranteed
investment contract which Executive Life failed to pay. As of December 31,
1995, the Company had advanced to the Plan $12,335, which represents all
amounts due under this contract. The Plan is obligated to repay the loans to
the extent amounts are subsequently recovered from or on behalf of Executive
Life, and any remaining balance will be forgiven by the Company. As of
December 31, 1995, the Plan has repaid $9,269 of the advanced amounts and has
outstanding advances of $3,066.
On August 11, 1994, insurance regulators took control of Confederation Life
Insurance Company ("Confederation Life"), the issuer of a guaranteed investment
contract held at the time by the Interest Income Fund with a contract value of
$5,198. As of August 11, 1994, interest accruals with respect to the contract
ceased, and funds represented by the contract were frozen. Contributions made
or transferred to the Interest Income Fund after August 11, 1994 are being
invested in the remaining assets of the Interest Income Fund.
Reynolds Metals Company
Savings and Investment Plan for Salaried Employees
Notes to Financial Statements (continued)
3. Investments (continued)
Until further notice, no distribution or withdrawal made from the Plan will
include amounts attributable to a participant's interest in the Confederation
Life contract. There is no indication from the regulators when a final
resolution of this matter might be announced and it is not possible to estimate
how much of the contract value of this investment may be lost, if any, upon
final resolution.
The SIC with Commonwealth Life Insurance Company for $23,765 held by the Plan
constitutes the only individual investment contract in excess of five percent
of net assets available for plan benefits on December 31, 1995.
During 1995 the Company acquired a manufacturing facility from Alcan Aluminum
Corporation ("Alcan"). Former Alcan employees, who are now employed by the
Company, transferred their account balances from Alcan's savings plan to the
Plan. There was no effect on any participant's account balances as a result of
the transfer.
4. Differences Between Financial Statements and Form 5500
The following is a reconciliation of net assets available for benefits per the
financial statements to the Form 5500:
December 31,
1995 1994
-----------------------
Net assets available for benefits per
the financial statements $346,450 $282,769
Amounts allocated to withdrawn
participants 280 1,277
-----------------------
Net assets available for benefits per
the Form 5500 $346,170 $281,492
=======================
Reynolds Metals Company
Savings and Investment Plan for Salaried Employees
Notes to Financial Statements (continued)
4. Differences Between Financial Statements and Form 5500
(continued)
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500:
Year Ended
December 31,
1995
--------------
Benefits paid to participants per the financial statements $14,738
Add: Amounts allocated on Form 5500 to withdrawn
participants in the current year 280
Less: Amounts allocated on Form 5500 to withdrawn
participants in the prior year (1,277)
--------------
Benefits paid to participants per the Form 5500 $13,741
==============
5. Income Taxes
The Internal Revenue Service has determined that the Plan qualifies under
Section 401(a) of the Internal Revenue Code (the "Code"). As long as the Plan
continues to be qualified, under present Federal income tax laws and
regulations participants will not be taxed on employer contributions or
investment earnings allocated to their account. Participants will normally be
subject to tax thereon at such time as they receive distributions from the
Plan. As long as the Plan continues to be qualified, the Plan will not be
taxed on its dividend and interest income or on any capital gains realized by
it or on any unrealized appreciation of investments.
Schedules
Reynolds Metals Company
Savings and Investment Plan for Salaried Employees
Schedule of Assets Held for Investment Purposes
December 31, 1995
(Dollars in Thousands)
Issuer Description Cost Fair Value
- ---------------------------------------- -------------------------- --------------- ------------
Common Stock
Reynolds Metals Company* 2,742,237 shares $90,858 $155,279
Mutual Funds
Vanguard Institutional Index Fund 897,574 shares 37,532 51,994
Vanguard STAR Fund 1,346,938 shares 18,260 20,230
T. Rowe Price Foreign Equity Fund 188,654 shares 2,563 2,680
T. Rowe Price Small-Cap Value Fund 384,673 shares 5,999 6,358
Cash Equivalents
Northern Trust Collective Short Term Short-term Investments 15,751 15,751
Investment Fund
Structured Investment Contracts
Commonwealth Life Insurance Company ADA00019TR Structured
Investment Contract,
6.53%
Investment Portfolio 23,765 24,009
Wrap Contract - (244)
Bankers Trust Company 92-340 Structured
Investment Contract,
7.88%, 1/15/96
Investment Portfolio 166 166
Wrap Contract - -
Bankers Trust Company 92-389 Structured
Investment Contract,
5.82%, 4/15/98
Investment Portfolio 6,048 6,025
Wrap Contract - 23
National Westminster Bank Plc SAM 129 Structured
Investment Contract,
7.17%, 11/20/98
Investment Portfolio 10,110 10,354
Wrap Contract - (244)
National Westminster Bank Plc SAM 129B Structured
Investment Contract,
5.65%, 7/15/99
Investment Portfolio 6,941 6,882
Wrap Contract - 59
Loans
Loans to participants* Generally repayable in
5 years, prime rate plus 1% 10,602 10,602
* Indicates party-in-interest to the Plan.
Reynolds Metals Company
Savings and Investment Plan for Salaried Employees
Schedule of Assets Held for Investment Purposes (continued)
(Dollars in Thousands)
Contract
Issuer Description Cost Value
- ---------------------------------------- -------------------------- --------------- ------------
Investment Contracts - Insurance Companies
Business Men's Assurance Company 1136 Guaranteed
Investment Contract,
5.20%, 1/22/97 5,048 5,048
The Prudential Insurance Company of America GIC-5925 Guaranteed
Investment Contract,
8.75%, 1/2/96 2,059 2,059
Life of Virginia Insurance Company GS-2786 Guaranteed
Investment Contract,
6.38%, 7/31/97 6,228 6,228
Commonwealth Life Insurance Company ADA00307FR Guaranteed
Investment Contract,
9.91%, 7/15/96 8,401 8,401
Confederation Life Insurance Company 62447 Guaranteed
Investment Contract,
8.55%, 4/10/96 5,198 5,198
Protective Life Insurance Company GA-1022 Guaranteed
Investment Contract,
6.84%, 10/30/97 2,023 2,023
Ohio National Life Insurance Company GA-5143 Guaranteed
Investment Contract,
9.16%, 3/21/96 4,847 4,847
Commonwealth Life Insurance Company ADA00292ST Group
Annuity Contract, 5.98% 1,389 1,389
--------------- -------------
263,788 345,117
=============== =============
Reynolds Metals Company
Savings and Investment Plan for Salaried Employees
Schedule of Reportable Transactions
Year ended December 31, 1995
(Dollars in Thousands)
Number of Number of Net Gain
Description of Assets Purchases Cost Sales Proceeds (Loss)
- ------------------------------ ----------- --------- --------- ---------- ----------
Category (iii) - Series of Transactions in Excess of 5% of Plan Assets
- ----------------------------------------------------------------------
Northern Trust Collective Short 327 $87,744 410 $87,108 $ 0
Term Investment Fund
Reynolds Metals Company 12 10,827 6 8,563 3,853
Common Stock
MFO Vanguard Institutional 142 10,564 115 4,419 830
Index Fund
There were no Category (i), (ii), or (iv) reportable transactions during 1995.
INDEX TO EXHIBITS
Exhibit A Consent of Independent Auditors
EXHIBIT A
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 33-20498) pertaining to the Reynolds Metals Company
Savings and Investment Plan for Salaried Employees and in the related
Prospectus of our report dated June 21, 1996, with respect to the financial
statements and schedules of the Reynolds Metals Company Savings and Investment
Plan for Salaried Employees included in this Annual Report (Form 11-K) for the
year ended December 31, 1995.
Ernst & Young LLP
Richmond, Virginia
June 21, 1996