EXHIBIT 99.2
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 PLAN
FOR HOURLY 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-2
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 PLAN FOR HOURLY EMPLOYEES
By: Henry S. Savedge, Jr.
Henry S. Savedge, Jr., Chairman
Plan Committee for Hourly Savings Plan
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 Plan for Hourly 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 Plan for Hourly Employees
Statement of Net Assets Available for Plan Benefits, with Fund Information
(Dollars in Thousands)
December 31, 1995
----------------------------------------------------------------------
Fund Information
-----------------------------------------------------------
Reynolds Diversified Balanced Interest
Stock Equities Investment Income Loan
Fund Fund Fund Fund Fund Total
----------------------------------------------------------------------
Assets
Investments:
Common stock of Reynolds Metals Company 43,299 shares
(Cost $2,313) $ 2,463 $ 2,463
Master trust:
Diversified Equities (cost $6,252) - $ 7,317 7,317
Balanced (cost $5,067) - - $5,422 5,422
Interest Income - - - $121,449 121,449
Cash equivalents 3 - - - 3
Loans to participants - - - - $ 4,870 4,870
----------------------------------------------------------------------
Total investments 2,466 7,317 5,422 121,449 4,870 141,524
Contributions receivable 10 28 19 426 - 483
Accrued income 15 - - - - 15
----------------------------------------------------------------------
Total assets 2,491 7,345 5,441 121,875 4,870 142,022
Liabilities
Accounts payable and other - - - 5 - 5
----------------------------------------------------------------------
Total liabilities - - - 5 - 5
----------------------------------------------------------------------
Interfund receivable (payable) (82) 477 92 (487) - -
Net assets available for plan benefits $2,409 $7,822 $5,533 $121,383 $4,870 $142,017
======================================================================
See accompanying notes.
/TABLE
Reynolds Metals Company
Savings Plan for Hourly Employees
Statement of Net Assets Available for Plan Benefits, with Fund Information
(Dollars in Thousands)
December 31, 1994
------------------------------------------------------------------------
Fund Information
-----------------------------------------------------------
Reynolds Diversified Balanced Interest
Stock Equities Investment Income Loan
Fund Fund Fund Fund Fund Total
------------------------------------------------------------------------
Assets
Investments:
Common stock of Reynolds Metals Company 28,039 shares $1,374 $ 1,374
(Cost $1,409)
Master trust:
Diversified Equities (cost $2,026) - $2,000 2,000
Balanced (cost $2,668) - - $2,490 2,490
Interest Income - - - $101,124 101,124
Cash equivalents 17 - - - 17
Loans to participants - - - - $3,731 3,731
------------------------------------------------------------------------
Total investments 1,391 2,000 2,490 101,124 3,731 110,736
Contributions receivable 3 5 6 273 - 287
------------------------------------------------------------------------
Total assets 1,394 2,005 2,496 101,397 3,731 111,023
------------------------------------------------------------------------
Liabilities
Accounts payable and other 9 - - 21 - 30
------------------------------------------------------------------------
Total liabilities 9 - - 21 - 30
------------------------------------------------------------------------
Interfund receivable (payable) 66 6 (33) (39) - -
------------------------------------------------------------------------
Net assets available for plan benefits $1,451 $2,011 $2,463 $101,337 $3,731 $110,993
------------------------------------------------------------------------
See accompanying notes.
/TABLE
Reynolds Metals Company
Savings Plan for Hourly Employees
Statement of Changes in Net Assets Available for Plan Benefits, with Fund Information
(Dollars in Thousands)
Year Ended December 31, 1995
----------------------------------------------------------------------
Fund Information
------------------------------------------------------------
Reynolds Diversified Balanced Interest
Stock Equities Investment Income Loan
Fund Fund Fund Fund Fund Total
----------------------------------------------------------------------
Additions to net assets:
Investment income:
Net realized and unrealized appreciation
of investments $ 356 $ 961 $ 659 $ 1,976
Interest and dividends 46 105 158 $ 7,444 $ 415 8,168
-----------------------------------------------------------------------
402 1,066 817 7,444 415 10,144
-----------------------------------------------------------------------
Contributions:
Employer 83 177 149 7,058 - 7,467
Employee 322 589 495 13,223 - 14,629
-----------------------------------------------------------------------
405 766 644 20,281 - 22,096
Assets transferred - 927 574 3,872 - 5,373
-----------------------------------------------------------------------
Total Additions 807 2,759 2,035 31,597 415 37,613
-----------------------------------------------------------------------
Deductions from net assets:
Withdrawals by participants 15 95 106 6,241 - 6,457
Administrative expenses 1 2 2 127 - 132
-----------------------------------------------------------------------
Total Deductions 16 97 108 6,368 - 6,589
-----------------------------------------------------------------------
Interfund transfers 167 3,149 1,143 (5,183) 724 -
Net increase 958 5,811 3,070 20,046 1,139 31,024
Net assets available for plan benefits:
Beginning of year 1,451 2,011 2,463 101,337 3,731 110,993
-----------------------------------------------------------------------
End of year $2,409 $7,822 $5,533 $121,383 $4,870 $142,017
=======================================================================
See accompanying notes.
/TABLE
Reynolds Metals Company
Savings Plan for Hourly Employees
Notes to Financial Statements
December 31, 1995
(Dollars in Thousands)
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 Plan for Hourly
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.
2. Summary of Significant Plan Provisions
Reynolds Metals Company (the "Company") established the Plan effective January
1, 1986, covering hourly employees under certain collective bargaining
agreements. 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. A
complete description of the Plan is contained in the Summary Plan Description
and in the Plan document, copies of which are available from the Company.
Hourly employees who are in a bargaining unit covered by a collective
bargaining agreement that incorporates the Plan by reference will become
eligible to participate in the Plan on the later of (a) the date on which they
complete their probationary period or (b) the date on which the collective
bargaining agreement under which they are covered first incorporates the Plan
by reference.
Reynolds Metals Company
Savings Plan for Hourly Employees
Notes to Financial Statements (continued)
2. Summary of Significant Plan Provisions (continued)
Plan participation is voluntary. Participants may elect to make contributions
on a before or after tax basis.
Each collective bargaining agreement that incorporates the Plan by reference
provides that participants may elect to make contributions to the Plan in
specified amounts ranging from 2% to 12% of compensation in 1% increments.
Each such collective bargaining agreement may also provide for the following
types of contributions:
(a) Negotiated Deferral Contributions: At certain bargaining units the
Company makes a contribution to a participant's account based on the
number of hours worked by each active employee participating in the
Plan.
(b) Additional Voluntary Contributions: As of December 31, 1995, if
participants are eligible to receive a profit sharing award, gainsharing
payment or other designated type of lump sum payment, they may elect to
contribute between 10% and 50% of the award and/or payment (in 10%
increments) to the Plan.
(c) Company Matching Contributions: At certain bargaining units the Company
will, subject to certain limitations, contribute to the Plan on behalf
of each eligible participant, a fixed percentage of a portion of the
contributions by such participant.
Participants in the Plan are fully vested in their account balances.
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.
Withdrawals and distributions are handled in accordance with the Plan
provisions and are subject to certain regulatory restrictions. The trustee
holds all of the Plan's investment assets and executes transactions therein.
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 and subject to the terms of any
applicable collective bargaining agreement.
Reynolds Metals Company
Savings Plan for Hourly Employees
Notes to Financial Statements (continued)
2. Description of the Plan (continued)
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. Commingled Master Trust Investments
All of the assets invested in the Interest Income Fund, Diversified Equities
Fund and Balanced Investment Fund as of December 31, 1995 and 1994 were held in
a Master Trust established under a Master Trust Agreement dated as of
December 29, 1989 between Reynolds Metals Company and The Chase Manhattan Bank,
N.A., as trustee, and are commingled with the assets of three other savings
plans of the Company and certain of its subsidiaries.
Substantially all the assets held in the Diversified Equities Fund and the
Balanced Investment Fund were 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. The portion of the
commingled Diversified Equities Fund and commingled Balanced Investment Fund
allocable to the Plan were 96.6% and 97.8%, respectively, at December 31, 1995
and 84.2% and 86.1%, respectively, at December 31, 1994.
The assets of the Interest Income Fund generally are invested in guaranteed
investment contracts ("GICs") at fixed rates 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 high grade investments held in the name of the
Master Trust in conjunction with a corresponding contract with the issuer of
the SIC to provide a fixed or variable rate of return (based on investment
experience and reset quarterly) on the cost of the investment. 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. The annual rate of
return on these contracts during 1995 and 1994 was approximately 7%. The
annual rate of return on these contracts at December 31, 1995 was 6.4% (7% at
December 31, 1994). Interest is credited to participants' accounts on the
dollar-weighted average (blended rate) basis. The portion of the commingled
Interest Income Fund allocable to the Plan is 97.1% and 94.8% at December 31,
1995 and 1994, respectively. The fair value of the Plan's GICs approximates
contract value.
Reynolds Metals Company
Savings Plan for Hourly Employees
Notes to Financial Statements (continued)
3. Commingled Master Trust Investments (continued)
On December 31, 1995 certain assets of two other savings plans of the Company
were transferred into the Plan. There was no effect on any participant's
accounts as a result of the transfer.
Summarized financial fund information of the commingled accounts within the
Master Trust is presented below:
December 31, 1995 December 31, 1994
---------------------------------------- --------------------------------------
Diversified Balanced Interest Diversified Balanced Interest
Equities Investment Income Equities Investment Income
Fund Fund Fund Fund Fund Fund
---------------------------------------- --------------------------------------
MASTER TRUST NET ASSETS
Assets
Cash and cash equivalents $ 23,907 $ 8,654
Contributions receivable $ 510 $ 112 448 $ 9 $ 8 286
Investments:
Investment contracts - - 101,160 - - 98,062
Mutual funds 7,572 5,547 - 2,375 2,893 -
---------------------------------------- --------------------------------------
Total assets 8,082 5,659 125,515 2,384 2,901 107,002
Liabilities
Accounts payable - - 480 - 36 55
---------------------------------------- --------------------------------------
Master Trust net assets $8,082 $5,659 $125,035 $2,384 $2,865 $106,947
======================================== ======================================
CHANGES IN MASTER TRUST NET ASSETS
Additions:
Contributions from plans $1,022 $ 783 $21,800
Net realized and unrealized appreciation
(depreciation) of investments 1,156 765 -
Interest and dividends 126 182 7,868
Assets transferred into Master Trust 162 - 890
--------------------------------------
2,466 1,730 30,558
--------------------------------------
Deductions:
Distributions to plans 114 143 6,865
Administrative expenses 2 3 138
--------------------------------------
116 146 7,003
Interfund transfers-net 3,348 1,210 (5,467)
---------------------------------------
Net additions 5,698 2,794 18,088
--------------------------------------
Master Trust net assets at beginning of period 2,384 2,865 106,947
----------------------------------------
Master Trust net assets at end of period $8,082 $5,659 $125,035
======================================
Reynolds Metals Company
Savings Plan for Hourly Employees
Notes to Financial Statements (continued)
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 $142,017 $110,993
Amounts allocated to withdrawn participants 930 547
----------------------
Net assets available for benefits per the Form 5500 $141,087 $110,446
======================
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500:
December 31
1995
------------
Benefits paid to participants per the financial statements $6,457
Add: Amounts allocated on Form 5500 to withdrawn
participants in the current year 930
Less: Amounts allocated on form 5500 to withdrawn
participants in the prior year (547)
------------
Benefits paid to participants per the Form 5500 $6,840
============
5. Income Tax Status
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 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 any capital gains realized by it or any unrealized
appreciation of investments.
Schedules
Reynolds Metals Company
Savings Plan for Hourly Employees
Schedule of Assets Held For Investment Purposes
December 31, 1995
(Dollars in Thousands)
Fair
Issuer Description Cost Value
- -------------------------------------------------------------------------------------
Common stock
Reynolds Metals Company* 43,299 shares $2,313 $2,463
Cash equivalents
Chase Temporary Investment Funds Short-term investments $3 $3
Loans
Loans to participants* Generally payable in
5 years, prime plus 1% $4,870 $4,870
*Indicates party-in-interest to the Plan.
Reynolds Metals Company
Savings Plan for Hourly Employees
Schedule of Reportable Transactions
Year ended December 31, 1995
Category (i) - Individual Transactions in Excess of 5% of Plan Assets
- ---------------------------------------------------------------------------------------------------
Number of Net Gain
Description of Assets Shares Transaction Cost Proceeds (Loss)
- ---------------------------------------------------------------------------------------------------
Chase Bank Domestic Liquidity 102,321 Purchase $102,321
Chase Bank Domestic Liquidity 111,389 Sale 111,389 $ 111,389 $ 0
Chase Bank Domestic Liquidity 84,673 Sale 84,673 84,673 0
Chase Bank Domestic Liquidity 126,314 Purchase 126,314
Chase Bank Domestic Liquidity 135,068 Sale 135,068 135,068 0
Chase Bank Domestic Liquidity 97,705 Purchase 97,705
Chase Bank Domestic Liquidity 95,466 Sale 95,466 95,466 0
Chase Bank Domestic Liquidity 155,293 Purchase 155,293
Chase Bank Domestic Liquidity 164,977 Sale 164,977 164,977 0
RMC Common Stock 5,565 Sale 280,367 346,855 66,488
RMC Common Stock 3,158 Purchase 164,977
RMC Common Stock 2,200 Purchase 116,424
RMC Common Stock 1,800 Purchase 89,631
RMC Common Stock 2,740 Purchase 135,068
RMC Common Stock 2,100 Purchase 101,420
RMC Common Stock 6,507 Sale 323,707 406,691 82,984
RMC Common Stock 6,507 Purchase 406,691
Category (iii) - Series of Transactions in Excess of 5% of Plan Assets
- ---------------------------------------------------------------------------------------------------
Number of Number of Net Gain
Description of Assets Purchases Cost Sales Proceeds (Loss)
- ---------------------------------------------------------------------------------------------------
Chase Bank Domestic Liquidity 77 1,061,403 50 $1,075,992 -
RMC Common Stock 80 1,879,601 41 1,146,976 $171,018
There were no category (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. 33-66032) pertaining to the Reynolds Metals Company Savings Plan
for Hourly 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 Plan for Hourly Employees included in this
Annual Report (Form 11-K) for the year ended December 31, 1995.
Ernst & Young LLP
Richmond, Virginia
June 21, 1996