SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 1996

Commission File Number 1-1430

REYNOLDS METALS COMPANY
A Delaware Corporation
(IRS Employer Identification No. 54-0355135)
6601 West Broad Street, P. O. Box 27003, Richmond, Virginia 23261-7003
Telephone: (804) 281-2000

Securities registered pursuant to Section 12(b) of the Act:

Name of Each Exchange
Title of Each Class on Which Registered
- - ------------------- -----------------------

Common Stock, no par value New York Stock Exchange
Chicago Stock Exchange

Preferred Stock Purchase Rights New York Stock Exchange
Chicago Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months,
and (2) has been subject to such filing requirements for the past
90 days. Yes _X_ No ___

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of the Registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.

As of February 25, 1997:

(a) the aggregate market value of the voting stock held by
nonaffiliates of the Registrant was approximately $3.9
billion*.

(b) the Registrant had 72,901,274 shares of Common Stock
outstanding and entitled to vote.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the Annual Meeting of
Stockholders to be held on April 16, 1997 - Part III

__________________
* For this purpose, "nonaffiliates" are deemed to be persons
other than directors, officers and persons owning
beneficially more than five percent of the voting stock.

NOTE

In accordance with the Securities and Exchange Commission's
requirements, we will furnish copies of the remaining exhibits
listed below upon payment of a fee of 10 cents per page. Please
remit the proper amount with your request to:

Secretary
Reynolds Metals Company
P.O. Box 27003
Richmond, Virginia 23261-7003

Exhibits have the following number of pages:

EXHIBIT 3.1 87 EXHIBIT 10.14 2
EXHIBIT 3.2 21 EXHIBIT 10.15 1
EXHIBIT 4.1 71 EXHIBIT 10.16 1
EXHIBIT 4.2 16 EXHIBIT 10.17 4
EXHIBIT 4.3 165 EXHIBIT 10.18 3
EXHIBIT 4.4 6 EXHIBIT 10.19 3
EXHIBIT 4.5 74 EXHIBIT 10.20 3
EXHIBIT 4.6 2 EXHIBIT 10.21 3
EXHIBIT 4.7 2 EXHIBIT 10.22 2
EXHIBIT 4.8 2 EXHIBIT 10.23 1
EXHIBIT 4.9 2 EXHIBIT 10.24 10
EXHIBIT 4.10 10 EXHIBIT 10.25 10
EXHIBIT 4.11 14 EXHIBIT 10.26 13
EXHIBIT 4.12 9 EXHIBIT 10.27 6
EXHIBIT 4.13 36 EXHIBIT 10.28 2
EXHIBIT 4.14 24 EXHIBIT 10.29 2
EXHIBIT 4.15 18 EXHIBIT 10.30 1
EXHIBIT 4.16 24 EXHIBIT 10.31 3
EXHIBIT 4.17 89 EXHIBIT 10.32 3
EXHIBIT 4.18 7 EXHIBIT 10.33 2
EXHIBIT 4.19 12 EXHIBIT 10.34 10
EXHIBIT 10.1 21 EXHIBIT 10.35 10
EXHIBIT 10.2 16 EXHIBIT 10.35 10
EXHIBIT 10.3 19 EXHIBIT 10.37 10
EXHIBIT 10.4 7 EXHIBIT 10.38 1
EXHIBIT 10.5 2 EXHIBIT 10.39 2
EXHIBIT 10.6 7 EXHIBIT 10.40 5
EXHIBIT 10.7 6 EXHIBIT 10.41 9
EXHIBIT 10.8 10 EXHIBIT 10.42 1
EXHIBIT 10.9 14 EXHIBIT 10.43 1
EXHIBIT 10.10 7 EXHIBIT 21 1
EXHIBIT 10.11 7 EXHIBIT 23 1
EXHIBIT 10.12 12 EXHIBIT 24 31
EXHIBIT 10.13 13 EXHIBIT 27 1

TABLE OF CONTENTS

PART I
ITEM PAGE

1. BUSINESS................................................ 1
GENERAL............................................... 1
COMPETITION........................................... 5
RAW MATERIALS......................................... 5
ALUMINUM PRODUCTION................................... 6
FABRICATING OPERATIONS................................ 7
ENERGY................................................ 9
ENVIRONMENTAL COMPLIANCE.............................. 10
RESEARCH AND DEVELOPMENT.............................. 11
EMPLOYEES............................................. 12
2. PROPERTIES.............................................. 15
3. LEGAL PROCEEDINGS....................................... 18
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..... 18
4A. EXECUTIVE OFFICERS OF THE REGISTRANT.................... 19

PART II

5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS..................................... 21
6. SELECTED FINANCIAL DATA................................. 22
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS..................... 23
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA............. 35
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE.................. 56

PART III

10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT...... 56
11. EXECUTIVE COMPENSATION.................................. 56
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT.......................................... 56
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.......... 56

PART IV

14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K............................................. 57

PART I

Item 1. BUSINESS

Reynolds Metals Company (the "Registrant") was incorporated in
1928 under the laws of the State of Delaware. In this report,
"Reynolds" and "Company" each means the Registrant and its
consolidated subsidiaries unless otherwise indicated.

GENERAL

Nature of Operations
- - --------------------

Reynolds is a leading global aluminum and packaging company.
Reynolds serves global markets as a supplier and recycler of
aluminum and other products, with its core business being as a
vertically integrated producer of a wide variety of value-added
aluminum products. Reynolds produces alumina, carbon products
and primary and reclaimed aluminum, principally to supply the
needs of its fabricating operations. These fabricating
operations produce aluminum foil, sheet, plate, beverage cans,
extruded products (including heat exchanger tubing, drive shafts,
bumpers and window systems), flexible packaging and wheels, among
other items. Reynolds also produces a broad range of plastic
products, including film, bags, containers and lids, for consumer
products, foodservice and packaging uses. The Company markets an
extensive line of consumer products under the Reynolds brand
name, including the well-known Reynolds Wrap aluminum foil.
Reynolds' largest market for its products is the packaging and
containers market, which includes consumer products. The Company
also is engaged in the distribution of aluminum and stainless
steel and other non-aluminum industrial products to a variety of
markets.

To better describe the nature of its operations, Reynolds has
separated its vertically integrated operations into two groups --
(1) Finished Products and Other Sales and (2) Production and
Processing.

Finished Products and Other Sales includes:

- - - the manufacture and distribution of various finished
aluminum products, such as beverage cans; containers; flexible
packaging products; foodservice and household foils (including
Reynolds Wrap); laminated and printed foil; and aluminum building
products;

- - - the distribution of aluminum and stainless steel and other
non-aluminum industrial products; and

- - - the manufacture and sale of plastic bags and food wraps (for
example, Reynolds Plastic Wrap, Reynolds Crystal Color Plastic
Wrap, Reynolds Oven Bags and Presto disposer bags); plastic
lidding and container products; plastic film packaging; Reynolds
Freezer Paper; Reynolds baking cups; Reynolds Cut-Rite wax paper
and wax paper sandwich bags; composite building products;
printing cylinders; plates and engravings for the rotogravure,
flexographic and lithographic printing industries; and
flexographic printed film and film laminations.

Production and Processing includes:

- - - the refining of bauxite into alumina, calcination of
petroleum coke and production of prebaked carbon anodes (all of
such activities being vertically integrated with aluminum
production and processing plants);

- - - the production and sale of primary and reclaimed aluminum;

- - - the production and sale of a wide range of semifinished
aluminum mill products, including flat rolled products (e.g.,
aluminum can sheet and machined plate); extruded and drawn
products (such as heat exchanger tubing, drive shafts and
bumpers); cast products (wheels, for example); and other
products; and

- - - the sale of non-aluminum products, technology and various
licensing, engineering and other services related to the
production and processing of aluminum.

Recent Developments
- - -------------------

In April 1996, Reynolds acquired an interest in an operation in
China that produces aluminum foil and extrusions. The operation,
Bohai Aluminium Industries, Ltd., runs a fabricating facility 180
miles east of Beijing. The facility manufactures aluminum foil
primarily for the food, pharmaceutical and tobacco industries,
and extrusions for the automotive and construction products
markets.

In June 1996, Reynolds announced plans to build a $34 million
facility in Lebanon, Virginia to manufacture aluminum wheels.
The new facility, Reynolds' second U.S. wheel plant, features a
manufacturing process that combines Reynolds' computer-
controlled, flow-formed casting technology with forging to
produce lightweight wheels with added styling flexibility. The
Company expects to start production at the 55,000-square-foot
facility in the second quarter of 1997.

Reynolds closed its aluminum beverage can manufacturing plant in
Houston, Texas in December 1996. Continued operations at the
Houston plant would have been uneconomical because of its high
costs, lack of a local customer base and modernizations and
productivity improvements at other Reynolds facilities.

In February 1997, Reynolds and Philip Environmental, Inc.
announced they have signed a letter of intent for the purchase by
Philip of Reynolds' aluminum reclamation plant in Chesterfield
County, Virginia. The plant is a secondary recycling plant that
processes scrap aluminum into a deoxidizing agent used by the
steel industry. The transaction, which is subject to certain
conditions, is expected to close in the second quarter of 1997.

Reynolds announced in March 1997 that it has signed a letter of
intent for the William L. Bonnell subsidiary of Tredegar
Industries to buy Reynolds' aluminum extrusion plant in El Campo,
Texas. The plant produces standard and specialty extrusions for
various markets and performs fabricating operations required by
customers. The transaction, which is subject to certain
conditions, is expected to close in the second quarter of 1997.

Also in March 1997, Reynolds concluded the sale of its
residential construction products operations in the U.S. to
AmeriMark Building Products, Inc. Included in the sale were
Reynolds' construction products plants located in Ashville, Ohio,
Bourbon, Indiana and Lynchburg, Virginia; the manufactured
housing operations at its Eastman, Georgia, facility; a plant in
Chesterfield County, Virginia that supplies aluminum building
sheet to the construction industry; and 54 service centers.
Reynolds has retained the Reynobond aluminum composite operations
at its Eastman facility.

Net Sales and Shipments; Principal Markets
- - ------------------------------------------

Table 1 shows information on shipments and net sales by classes
of similar products. Net sales are in millions of dollars;
shipments are in thousands of metric tons.

TABLE 1

Net Sales and Shipments

1996 1995 1994
------------------------------------------------------------------
Net Net Net
Shipments Sales Shipments Sales Shipments Sales
--------- ----- --------- ------ --------- -----

Production and Processing
- - -------------------------
Primary aluminum 386 634 346 684 277 440
Sheet and plate 381 1,168 409 1,350 418 1,003
Extrusions 204 706 200 765 211 627
Other aluminum 164 481 179 494 157 391
Other nonaluminum 445 385 378
------------------------------------------------------------------
1,135 3,434 1,134 3,678 1,063 2,839
------------------------------------------------------------------
Total 1,653 $6,972 1,665 $7,213 1,573 $5,879
==================================================================
Average realized price per pound:
- - ---------------------------------
Fabricated aluminum products $1.79 $1.84 $1.48
Primary aluminum 0.74 0.90 0.72

Financial information relating to Reynolds' operations and
identifiable assets by major operating and geographic areas is
presented in Note 12 to the consolidated financial statements in
Item 8 of this report.

Reynolds generally sells its products to producers and
distributors of industrial and consumer products in various
markets. Tables 2 and 3 show information on sales of products by
principal geographic and business markets.

TABLE 2

Principal Geographic Markets

Approximate
Percentage of Sales
----------------------

1996 1995 1994
---- ---- ----

United States 78% 77% 77%

Canada 7 7 6

Other (Principally Europe) 15 16 17
---- ---- ----

Total 100% 100% 100%

TABLE 3

Principal Business Markets

Approximate
Percentage of Sales
---------------------

1996 1995 1994
---- ---- ----

Packaging and Containers 44% 44% 45%

Automotive and Transportation 13 13 12

Building and Construction* 13 13 13

Distributors and Fabricators 12 13 13

Other 18 17 17
---- ---- ----

Total 100% 100% 100%

_______________________

*Reynolds sold its residential construction products operations
in the U.S. in March 1997. See "General-Recent Developments".

COMPETITION

Reynolds' principal competitors in North American and worldwide
sales of products derived from primary aluminum are ten other
domestic companies, a Canadian company and other foreign
producers. Reynolds and many other companies produce reclaimed
aluminum.

In the sale of semifinished and finished products, Reynolds
competes with (i) other producers of primary and reclaimed
aluminum, which are also engaged in fabrication, (ii) other
fabricators of aluminum and other products, (iii) other producers
of plastic products and (iv) metals service center companies
engaged in the distribution of aluminum and other products.
Reynolds' principal competitors in Europe are seven major
multinational producers and a number of smaller European
producers of aluminum semifabricated products. In the aluminum
beverage can business, Reynolds competes worldwide with four
major producers and a number of smaller ones. Aluminum and
related products compete with various products, including those
made of iron, steel, copper, zinc, tin, titanium, lead, glass,
wood, plastic, magnesium and paper. Plastic products compete
with products made of glass, aluminum, steel, paper, wood and
ceramics, among others. Competition is based upon price, quality
and service.

RAW MATERIALS

Bauxite, the principal raw material used in the production of
aluminum, is refined into alumina, which is then reduced by an
electrolytic process into primary aluminum.

Most of Reynolds' bauxite requirements and a portion of its
alumina requirements are met from sources outside the United
States.

Reynolds has long-term arrangements to obtain bauxite at
negotiated prices from sources in Australia, Brazil, Guinea,
Guyana and Jamaica. Reynolds also has an arrangement with the
U.S. government under which Reynolds has agreed to buy at a
negotiated price an aggregate of approximately 600,000 long dry
tons of Jamaican bauxite stored next to Reynolds' Sherwin alumina
plant near Corpus Christi, Texas, for the period 1997 through
1998.

Reynolds refines bauxite into alumina at its Sherwin alumina
plant. Reynolds also acquires alumina from two joint ventures in
which it has interests, one located in Western Australia, known
as the Worsley Joint Venture ("Worsley"), and the other located
in Stade, Germany, known as Aluminium Oxid Stade ("Stade"). See
Table 4 under this Item and the discussion of Worsley under
"Australia". In addition, Reynolds has a long-term third-party
arrangement to obtain Australian alumina at a negotiated price
and another third-party arrangement under which it will buy
approximately 120,000 metric tons of alumina at a negotiated
price through 1998.

The Company adjusts purchases of bauxite and production of
alumina from time to time in response to changes in demand for
primary aluminum and other factors. Reynolds has reduced
production at its Sherwin plant in connection with the
curtailment of operations at its U.S. primary aluminum production
plants. See "Aluminum Production". Reynolds restarted the idle
alumina capacity at the Sherwin plant late in 1995 due to strong
demand in the alumina market, but again temporarily curtailed 15%
of the plant's capacity in the third quarter of 1996 due to
deteriorating market conditions.

Australia

Worsley has a rated capacity of 1,700,000 metric tons of
alumina per year (expandable to 3,200,000 metric tons per
year). Worsley has proven bauxite reserves sufficient to
operate the alumina plant at its rated capacity (taking into
account future expansions to increase rated capacity to up
to 3,200,000 metric tons per year) for at least the next 35
years. The joint venture has no specified termination date.

Australia -- continued

Reynolds has a long-term purchase arrangement under which it
may buy from a third party an aggregate of approximately
18,800,000 dry metric tons of Australian bauxite through
2021.

Reynolds has a long-term purchase arrangement under which it
will buy from a third party an aggregate of approximately
480,000 metric tons of Australian alumina through 2000.

Brazil

Reynolds and various other companies are participants in the
Trombetas bauxite mining project in Brazil. Reynolds has a
5% equity interest in the project and has agreed to buy an
aggregate of approximately 1,000,000 dry metric tons of
Brazilian bauxite from the project for the period 1997
through 1999.

Reynolds also maintains an interest in other, undeveloped
bauxite deposits in Brazil.

Guinea

Reynolds owns a 6% interest in Halco (Mining), Inc.
("Halco"). Halco owns 51% and the Guinean government owns
49% of Compagnie des Bauxites de Guinee ("CBG"), which has
the exclusive right through 2038 to develop and mine bauxite
in a 10,000 square-mile area in northwestern Guinea.
Reynolds has a bauxite purchase contract with CBG which will
provide Reynolds with an aggregate of approximately
7,550,000 dry metric tons of Guinean bauxite for the period
1997 through 2011.

Guyana

Reynolds and the Guyanese government each owns a 50%
interest in a bauxite mining project in the Berbice region
of Guyana. Reynolds has a bauxite purchase contract running
through 1998 under which it will buy approximately 1,200,000
dry metric tons of Guyanese bauxite from the project in
1997. The parties will agree upon quantities to be
purchased in 1998 at the beginning of the contract year.

Jamaica

Reynolds has a purchase arrangement under which it will buy
from a third party an aggregate of up to 9,000,000 dry
metric tons of Jamaican bauxite for the period 1997 through
2001.

Reynolds' present sources of bauxite and alumina are more than
adequate to meet the forecasted requirements of its primary
aluminum production operations for the foreseeable future. To
utilize excess alumina capacity, Reynolds enters into third-party
sales arrangements. Reynolds also enters into arrangements to
sell bauxite in excess of its needs to third parties.

Other materials used in making aluminum are either purchased from
others or supplied from Reynolds' carbon products plants in Baton
Rouge and Lake Charles, Louisiana.

ALUMINUM PRODUCTION

Reynolds owns and operates three primary aluminum production
plants in the United States and one located at Baie Comeau,
Quebec, Canada. Reynolds is also entitled to a share of the
primary aluminum produced at three joint ventures in which it
participates, one located in Quebec, Canada, known as the
Becancour joint venture ("Becancour"), one located in Hamburg,
Germany, known as Hamburger Aluminium-Werk GmbH ("Hamburg"), and
the third in Ghana, Africa, known as Volta Aluminium Company
Limited ("Ghana"). See Table 5 (and related notes) under this
Item for information on these primary aluminum production plants.
Reynolds also buys primary aluminum on the open market.

Production at the primary aluminum plants listed in Table 5 can
vary due to a number of factors, including changes in worldwide
supply and demand. Due to the worldwide aluminum supply-demand
imbalance, Reynolds has idled a total of 209,000 metric tons, or
19%, of its 1,094,000 metric tons of primary aluminum production
capacity. Reynolds temporarily shut down 88,000 metric tons of
primary aluminum production capacity at its Massena, New York
(41,000 metric tons) and Longview, Washington (47,000 metric
tons) plants, effective in the fourth quarter of 1993, and its
Troutdale, Oregon plant, with a capacity of 121,000 metric tons,
has been idle since 1991. At December 31, 1996, the U.S. plants
listed in Table 5 were operating collectively at a rate of 53% of
capacity; Ghana (in which Reynolds has a 10% equity interest),
where production has been curtailed by drought (see "Energy")
since September 1994, was operating at 70% of capacity; and all
other plants listed in Table 5 were operating at full capacity.
See Table 6 under this Item. In order to balance its alumina
supply system, Reynolds has temporarily reduced production at its
Sherwin alumina plant in Texas in connection with the
curtailments. See "Raw Materials".

Reynolds has an 8% equity interest in C.V.G. Aluminio del Caroni,
S.A., which produces primary aluminum in Venezuela.

Reynolds has agreed to acquire a 10% equity interest in the
Aluminum Smelter Company of Nigeria (ALSCON), with the Nigerian
government and private interests holding the remaining equity.
As part of the arrangement, Reynolds will buy at market-related
prices 140,000 metric tons of primary aluminum annually from a
180,000 metric ton smelter ALSCON is building in Nigeria.

Reynolds produces reclaimed aluminum from aluminum scrap at its
facilities located in Bellwood, Virginia and Sheffield, Alabama,
and at a facility in which it has a 99.8% equity interest located
in Isernia, Italy. See Table 6 under this Item. Reynolds
obtains scrap for the U.S. facilities through its nationwide
recycling network, other scrap purchases and its manufacturing
operations. Scrap for the Italian facility is obtained through
scrap purchases. In 1996, Reynolds obtained approximately
308,010 metric tons of recycled aluminum from its recycling
network and other scrap purchases.

In response to a regulation proposed by the U.S. Environmental
Protection Agency (the "EPA") that would require treatment of
spent potliner to reduce its hazardous properties, Reynolds built
a new facility in Arkansas to convert spent potliner from
Reynolds' and other producers' North American aluminum smelting
operations into an environmentally safe material with potential
for recycling. The facility began operations in 1993 and has the
capacity to treat an estimated 120,000 short tons of spent
potliner annually. The EPA has delayed implementing a final
regulation requiring treatment of spent potliner pending its
resolution of questions concerning the effectiveness of the
process Reynolds uses at the facility. Reynolds is currently
developing process modifications and analytical procedures that
are intended to address EPA's concerns. The facility currently
is operating at 50% of capacity.

FABRICATING OPERATIONS

Reynolds' semifinished and finished aluminum products and non-
aluminum products are produced at numerous domestic and foreign
plants wholly or partly owned by Reynolds. These plants are
included in Table 7 under Item 2 of this report. The annual
capacity of these plants depends upon the variety and type of
products manufactured.

With a view to better serving its principal business markets,
Reynolds has over the past three years continued to upgrade and
modernize its manufacturing facilities, particularly facilities
for production of such value-added products as cans, can sheet,
packaging, household foil and components for the transportation
industry. Specific actions the Company has taken include the
following:

Packaging and Containers
- - ------------------------

- - - acquired in 1994 assets to expand its printing cylinder and
engraving business and, in 1995, acquired Wilson Engraving
Company Inc., strengthening the Company's ability to meet the
needs of flexographic and lithographic printers and extending the
Company's geographic reach by adding plants in Louisiana and
Texas;

- - - began in 1995 an expansion at its Grottoes, Virginia
plastics manufacturing plant that will increase capacity by
approximately 20%;

- - - began in 1995 a major, multi-year capital program to build a
new aluminum foil rolling mill at its Louisville, Kentucky plant
that will increase annual plant capacity by about 25%;

- - - acquired in 1995 a laminated foil plant in Louisville,
Kentucky, strengthening the Company's ability to serve the
flexible packaging needs of the tobacco and pharmaceutical
industries;

- - - acquired in 1995 the flexible packaging manufacturing
operations of Hargro Flexible Packaging Corp. in Boyertown,
Pennsylvania, establishing a major position in flexographic
printing and increasing the Company's capacity to produce printed
film and film laminations;

- - - developed new types of, and applications for, aluminum cans;

- - - acquired in 1994 Bev-Pak, Inc. and its aluminum can and end
manufacturing facility in Monticello, Indiana, increasing the
Company's U.S. aluminum can- and end-making capacity by
approximately 15% and 20%, respectively;

- - - completed in 1994 a 70% expansion of its Tampa can plant;

- - - participated in a number of jointly-owned aluminum can
facilities, (i) completing in 1995 an expansion of a can plant in
Brazil and beginning operations at another can plant in Brazil
and one in Chile; (ii) beginning operations in 1996 at can plants
in Brazil (the third in that country) and Argentina and, in the
same year, putting into operation two production lines at a new
can end plant in Brazil and beginning construction of a fourth
can plant in that country; and (iii) starting up in 1997 a can
plant in Saudi Arabia;

- - - substantially completed in 1996 modernization of its
Torrance can plant, replacing six slow-speed production lines
with three high-speed lines with a marginal increase in capacity;

- - - commercialized in 1996 large-opening ends in various
diameters for the enhanced and expanded use of aluminum can
packaging;

- - - substantially increased marketing support behind its
Reynolds Wrap aluminum foil and Reynolds Plastic Wrap brands;

- - - acquired in 1995 the Canadian Cut-Rite brand from Scott
Paper Company, and other wax paper brands from Scott Paper
Company's Canadian affiliate, Scott Paper Limited, enabling the
Company to market Cut-Rite wax paper throughout Canada, a key
market for Reynolds consumer products;

- - - introduced in 1995 a 50-foot Heavy Duty line extension of
its Reynolds Wrap brand, two printed plastic wrap products and
several new Reynolds baking cup products;

- - - in 1995 expanded its consumer products business in Latin
America, the Middle East and the Far East; and

Packaging and Containers -- continued
- - ------------------------

- - - acquired in 1996 (i) selected assets of a Canadian company
engaged in spooling and packaging aluminum foil products and
paper products and (ii) James River Paper Company, Inc.'s retail
Paper Maid and 20 Below product lines, consisting of bake cup,
freezer paper and kitchen parchment businesses.

Automotive and Transportation
- - -----------------------------

- - - restructured in 1994 its McCook plant in Illinois, exiting
common alloy sheet products and emphasizing plate and automotive
sheet;

- - - began production in 1994 of aluminum automotive extruded
components at a new fabricating plant in Auburn, Indiana and
completed an expansion of the plant in 1996;

- - - commercialized in 1995, for aerospace applications, aluminum-
lithium plate products manufactured at its McCook plant in
Illinois and aluminum-lithium extrusions manufactured by its
Extrusion Division;

- - - began manufacturing in 1995 aluminum wheels at a facility in
Beloit, Wisconsin, which it purchased in 1994 and modified and
equipped for that purpose;

- - - purchased in 1995 the aluminum extrusion operations of AMAG
Austria's wholly owned subsidiary, Wexal International Ltd., in
Ireland; and

- - - began construction in 1996 of a facility in Lebanon,
Virginia to manufacture aluminum wheels using a manufacturing
process that combines Reynolds' computer-controlled, flow-formed
casting technology with forging to produce lightweight wheels
with added styling flexibility.

Distributors and Fabricators
- - ----------------------------

- - - acquired in 1994 the metals distribution business of Prime
Metals, Inc., allowing the Company to broaden the geographic
processing and service capabilities of its Reynolds Aluminum
Supply Company metals distribution business.

ENERGY

Reynolds consumes substantial amounts of energy in refining
bauxite into alumina and in reducing alumina to aluminum.

Alumina is produced by a process requiring high temperatures at
various stages. These temperatures are achieved by burning
natural gas or coal at the alumina plants. Natural gas and coal
are purchased under long- and short-term contracts. See Table 4
under this Item.

Primary aluminum is produced from alumina by an electrolytic
process requiring large amounts of electric power. Electricity
required for Reynolds' primary aluminum production plants
generally is purchased under long-term contracts. See Table 5
under this Item.

Reynolds expects generally to meet its energy requirements for
primary aluminum production for the foreseeable future under long-
term contracts. Under these contracts, however, Reynolds may
experience shortages of interruptible power from time to time at
its New York and Ghana reduction plants. That portion of power
supplied to the New York plant that is interruptible
(approximately 15%) can be offset with purchased power.
Production at Ghana is dependent on hydroelectric power and has
from time to time been curtailed by drought.

Rates for electricity charged by the Bonneville Power
Administration ("BPA"), which serves the Company's Troutdale,
Oregon and Longview, Washington primary aluminum production
plants, are established under a new five-year contract that runs
through September 2001. The new contract establishes a fixed
rate which is 16% less than rates previously in effect. These
rates are, however, subject to review and approval in a process
being conducted by the Federal Energy Regulatory Commission
("FERC"). Third parties are challenging the contract in the U.S.
Court of Appeals for the Ninth Circuit, and the contract's rates
are subject to further appeal in the courts by third parties
following FERC review. Should the new contract be rejected in
any of these processes, the Company could renegotiate with BPA or
seek service from third parties.

ENVIRONMENTAL COMPLIANCE

Reynolds has spent and will spend substantial capital and
operating amounts relating to ongoing compliance with
environmental laws. The area of environmental management,
including environmental controls, continues to be in a state of
scientific, technological and regulatory evolution.
Consequently, it is not possible for Reynolds to predict
accurately the total expenditures necessary to meet all future
environmental requirements. Reynolds expects, however, to add or
modify environmental control facilities at a number of its
worldwide locations to meet existing and certain anticipated
regulatory requirements, including regulations to be implemented
under the Clean Air Act Amendments of 1990 (the "Clean Air Act").

Based on information currently available, Reynolds estimates that
compliance with the Clean Air Act's hazardous air pollutant
standards would require in excess of $250 million of capital
expenditures (including a portion of the expenditures at
Reynolds' Massena plant referred to below), primarily at
Reynolds' U.S. primary aluminum production plants. The ultimate
effect of the Clean Air Act on such plants and Reynolds' other
operations (and the actual amount of any such capital
expenditures) will depend on how the Clean Air Act is interpreted
and implemented pursuant to regulations that are currently being
developed and on such additional factors as the evolution of
environmental control technologies and the economic viability of
such operations at the time. Based on an August 1995 memorandum
of understanding with the State of New York to resolve
environmental issues at its Massena, New York primary aluminum
production plant, Reynolds has undertaken a five-year capital
spending program of an estimated $185 million to modernize the
Massena plant and significantly reduce air emissions from the
plant. Pursuant to the memorandum of understanding, Reynolds is
accelerating certain expenditures believed necessary to achieve
compliance with the Clean Air Act's proposed Maximum Achievable
Control Technology standards.

Capital expenditures for equipment designed for environmental
control purposes were approximately $34 million in 1994, $39
million in 1995 and $24 million in 1996. The portion of such
amounts expended in the United States was $15 million in 1994,
$18 million in 1995 and $16 million in 1996. Reynolds estimates
that annual capital expenditures for environmental control
facilities will be approximately $65 million in 1997, $105
million in 1998 and $70 million in 1999. The majority of these
estimated expenditures are associated with the capital spending
program referred to above at Reynolds' Massena plant. Future
capital expenditures for environmental control facilities cannot
be predicted with accuracy for the reasons cited above; however,
one may expect that environmental control standards will become
increasingly stringent and that the expenditures necessary to
comply with them could increase substantially.

Reynolds has been identified as a potentially responsible party
("PRP") and is involved in remedial investigations and remedial
actions under the Comprehensive Environmental Response,
Compensation and Liability Act ("Superfund") and similar state
laws regarding the past disposal of wastes at approximately 44
sites in the United States. Such statutes may impose joint and
several liability for the costs of such remedial investigations
and actions on the entities that arranged for disposal of the
wastes, the waste transporters that selected the disposal sites
and the owners and operators of such sites.

Responsible parties (or any one of them) may be required to bear
all of such costs regardless of fault, legality of the original
disposal or ownership of the disposal site. In addition,
Reynolds is investigating possible environmental contamination,
which may also require remedial action, at certain of its present
and former United States manufacturing facilities, including
contamination by polychlorinated biphenyls ("PCBs") at its
Massena, New York primary aluminum production plant which
requires remediation. In 1994, the U.S. Environmental Protection
Agency (the "EPA") added Reynolds' Troutdale, Oregon primary
aluminum production plant to the National Priorities List of
Superfund sites. The Company is cooperating with the EPA and,
under a September 1995 consent order, is working with the EPA in
investigating potential environmental contamination at the
Troutdale site and to promote more efficient cleanup at the site.
At most of the 44 sites referred to above where Reynolds has been
identified as a PRP, it is one of many PRPs, and its share of the
anticipated cleanup costs is expected to be small. With respect
to certain other sites (not included in the foregoing number)
where Reynolds has been identified as a PRP, Reynolds has either
fully or substantially settled or resolved actions related to
such sites at minimal cost or believes that it has no
responsibility with regard to them. Reynolds has been notified
that it may be a PRP at certain sites in addition to those
already referred to in this paragraph.

Reynolds' policy is to accrue remediation costs when it is
probable that remedial efforts will be required and the related
costs can be reasonably estimated. On a quarterly basis,
Reynolds evaluates the status of all sites, develops or revises
estimates of costs to satisfy known remediation requirements and
adjusts its accruals accordingly. At December 31, 1996, the
accrual for known remediation requirements was $197 million.
This amount reflects management's best estimate of Reynolds'
ultimate liability for such costs. Potential insurance
recoveries are uncertain and therefore have not been considered.
As a result of such factors as the developing nature of
administrative standards promulgated under Superfund and other
environmental laws; the unavailability of information regarding
the condition of potential sites; the lack of standards and
information for use in the apportionment of remedial
responsibilities; the numerous choices and costs associated with
diverse technologies that may be used in remedial actions at such
sites; the availability of insurance coverage; the ability to
recover indemnification or contribution from third parties; and
the time periods over which eventual remediation may occur,
estimated costs for future environmental compliance and
remediation are necessarily imprecise. It is not possible to
predict the amount or timing of future costs of environmental
remediation which may subsequently be determined. Based on
information currently available, it is management's opinion that
such future costs are not likely to have a material adverse
effect on Reynolds' competitive or financial position or its
ongoing results of operations. However, such costs could be
material to future quarterly or annual results of operations.

See the discussion under "Environmental" in Item 7, and under
Note 11 to the consolidated financial statements in Item 8, of
this report regarding the Company's anticipated costs of
environmental compliance.

RESEARCH AND DEVELOPMENT

Reynolds engages in a continuous program of basic and applied
research and development. This program deals with new and
improved materials, products, processes and related environmental
compliance technologies. It includes development and expansion
of products and markets that benefit from aluminum's light
weight, strength, resistance to corrosion, ease of fabrication,
high heat and electrical conductivity, recyclability and other
properties. Materials and core competencies involving aluminum,
ceramics, composites and various polymers and their processing,
fabrication and applications are also included in the scope of
Reynolds' research and development activity. Expenditures for
Reynolds-sponsored research and development activities were
approximately $38 million in 1994, $43 million in 1995, and $49
million in 1996.

In January 1996, Reynolds completed the purchase of Brown &
Williamson Tobacco Corp.'s administrative and research and
development facilities in Enon, Virginia, near the Company's
headquarters in Richmond, Virginia. Reynolds is consolidating
four Richmond-area research and development facilities and its
corporate engineering group at the complex. The new Corporate
Technology Center consists of two buildings that Reynolds has
modified to meet its needs for developing and testing new and
improved materials, products and processes and for providing
the full array of corporate engineering services, and a new
building Reynolds built to house an experimental casting operation.

Reynolds owns numerous patents relating to its products and
processes based predominantly on its in-house research and
development activities. The patents owned by Reynolds, or under
which it is licensed, generally concern particular products or
manufacturing techniques. Reynolds' business is not, however,
materially dependent on patents.

EMPLOYEES

At December 31, 1996, Reynolds had approximately 29,000
employees.

In the second quarter of 1996, Reynolds and the United
Steelworkers of America and the Aluminum, Brick and Glass Workers
International Union agreed to new six-year labor contracts. The
contracts involve approximately 7,000 employees. Major
provisions of the new contracts include wage increases of $1.15
an hour over the first five years (plus incremental increases in
1997 and 1999) and enhanced pension and other benefits. At the
end of the fifth year, the economic provisions of the contracts
will be reopened. If agreement cannot be reached, the economic
provisions will be submitted to arbitration for one additional
year. Reynolds and the unions also agreed to work cooperatively
on customer requirements, business objectives and shareholder and
union interests. In addition, the contracts contain broad, new
provisions for employee safety, job security and employee
participation in the work environment.

In January 1997, the Aluminum, Brick and Glass Workers
International Union merged with the United Steelworkers of
America. Reynolds does not expect the merger to have a material
impact on the Company.

TABLE 4
Alumina Plants and Energy Supply

Rated
Capacity(a) at Principal
December 31, 1996 Energy Energy Contract
Plant Metric Tons Purchased(b) Expiration Date
- - ----- ----------------- ------------ ---------------

Corpus Christi, Texas 1,600,000(c) Natural Gas (d)

Worsley, Australia 952,000(e) Coal 2002

Stade, Germany 375,000(e) Natural Gas 2008

TABLE 5
Primary Aluminum Production Plants and Energy Supply

Rated
Capacity(a) at Principal
December 31, 1996 Energy Energy Contract
Plant Metric Tons Purchased(b) Expiration Date
- - ----- ----------------- ------------ ---------------

Baie Comeau, Canada 400,000 Electricity 2011 and 2014

Longview, Washington 204,000(f) Electricity 2001

Massena, New York 123,000(f) Electricity 2013(g)

Troutdale, Oregon 121,000(f) Electricity 2001

Becancour, Canada 186,000(h) Electricity 2014

Hamburg, Germany 40,000(h) Electricity 2000

Ghana, Africa 20,000(h) Electricity 1997(i)

TABLE 6
Aluminum Capacity and Production

(Metric Tons)

Primary Aluminum(j) Reclaimed Aluminum(k)
------------------------------- -------------------------
Rated Rated
Year Capacity(a),(f) Production(f) Capacity(a) Production
- - ---- --------------- ------------- ----------- ----------

1994 998,000 792,000 491,000 409,000

1995 1,094,000(h) 814,500 485,500 396,500

1996 1,094,000(h) 893,500 492,600 401,500

NOTES TO TABLES 4, 5, and 6.

(a) Ratings are estimates at the end of the period based on
designed capacity and normal operating efficiencies and do
not necessarily represent maximum possible production.

(b) See "Energy".

(c) In order to balance its alumina supply system, Reynolds has
reduced production at its Sherwin alumina plant near Corpus
Christi, Texas in connection with the curtailment of
operations at its U.S. primary aluminum plants. See
"Aluminum Production". Reynolds restarted the idle alumina
capacity at the Sherwin plant late in 1995 due to strong
demand in the alumina market, but again temporarily
curtailed 15% of the plant's capacity in the third quarter
of 1996 due to deteriorating market conditions.

(d) Approximately 25% of the plant's natural gas requirements is
purchased under a two-year contract, 25% is purchased under
a three-year contract and the remainder is purchased under
short-term contracts. The base term of the two-year
contract and three-year contract expires in October 1998 and
October 1999, respectively, but will extend from month to
month unless one of the parties terminates it.

(e) Reynolds is entitled to 56% of the production of Worsley and
50% of the production of Stade. Capacity figures reflect
Reynolds' share.

(f) Reynolds curtailed 70,500 metric tons of production at its
Troutdale primary aluminum plant in the third quarter of
1991 and the remainder of the plant's capacity in the fourth
quarter of 1991. The Troutdale plant remains idle.
Reynolds curtailed an aggregate of 88,000 metric tons of
primary aluminum production capacity at its Massena (41,000
metric tons) and Longview (47,000 metric tons) plants
effective in the fourth quarter of 1993. In October 1995,
Reynolds acquired an additional 24.95% interest in
Becancour, increasing Reynolds' share to 50%. At current
production levels, the acquisition provides Reynolds an
additional 93,000 metric tons of Becancour's annual primary
aluminum output for a total of 186,000 metric tons, and
increases its worldwide primary aluminum capacity to
1,094,000 metric tons per year. See "Aluminum Production".

(g) The power contract terminates in 2013, subject to earlier
termination by the supplier in 2003 if its federal license
for its hydroelectric project is not renewed.

(h) Reynolds is entitled to 50% of the production of Becancour,
33-1/3% of the production of Hamburg, and 10% of the
production of Ghana. Capacity figures reflect Reynolds'
share. Production at Ghana has been curtailed since
September 1994 by drought. See "Aluminum Production" and
"Energy". At December 31, 1996, Ghana was operating at 70%
of capacity.

(i) The power contract provides for a 20-year extension at the
option of the smelter owners.

(j) Production is from Reynolds' primary aluminum production
operations listed in Table 5.

(k) Production is from Reynolds' Bellwood, Virginia and
Sheffield, Alabama reclamation facilities, and the Isernia,
Italy reclamation facility, in which Reynolds has a 99.8%
equity interest.

Item 2. PROPERTIES

For information on the location and general nature of Reynolds'
principal domestic and foreign properties, see Item 1 of this
report. Table 7 lists as of February 15, 1997 Reynolds' wholly
owned domestic and foreign operations and shows the domestic and
foreign locations of operations in which Reynolds has interests.
Facilities that are under construction or for other reasons have
not begun production are not listed. The properties listed are
held in fee except as otherwise indicated. Properties held other
than in fee are not, individually or in the aggregate, material
to Reynolds' operations and the arrangements under which such
properties are held are not expected to limit their use.
Reynolds believes that its facilities are suitable and adequate
for its operations. With the exception of the Longview, Massena,
Troutdale and Ghana primary aluminum production plants, the
Sherwin alumina plant and the Arkansas spent potliner treatment
facility, as explained in Item 1, there is no significant surplus
or idle capacity at any of Reynolds' major manufacturing
facilities.

TABLE 7

Wholly Owned Operations

Manufacturing, Mining and Distribution

Alumina: Recycling:
------- ---------
Corpus Christi, Texas Recycling Plants and Centers (U.S.)(565)**
Malakoff, Texas

Calcined Coke: Reclamation:
------------- -----------
Baton Rouge, Louisiana Sheffield, Alabama (2)
Lake Charles, Louisiana Bellwood, Virginia#

Carbon Anodes: Mill Products***:
------------- ----------------
Lake Charles, Louisiana Sheffield, Alabama
McCook, Illinois
Primary Aluminum: Cap-de-la-Madeleine, Quebec, Canada
---------------- Hamburg, Germany##
Massena, New York Latina, Italy
Troutdale, Oregon
Longview, Washington
Baie Comeau, Quebec, Canada

Spent Potliner Treatment: Aluminum Beverage Cans:
------------------------ ----------------------
Gum Springs, Arkansas San Francisco, California
Torrance, California
Extruded Products: Tampa, Florida
----------------- Moultrie, Georgia
Auburn, Indiana Honolulu, Hawaii
Louisville, Kentucky Monticello, Indiana (cans and ends)
El Campo, Texas# Kansas City, Missouri
Ashland, Virginia* Middletown, New York
Bellwood, Virginia Reidsville, North Carolina (cans and ends)
Richmond Hill, Ontario, Canada Salisbury, North Carolina
Ste. Therese, Quebec, Canada Fort Worth, Texas
Nachrodt, Germany Seattle, Washington
Wexford, Ireland Milwaukee, Wisconsin
Harderwijk, Netherlands Rocklin, California (ends)
Lelystad, Netherlands Bristol, Virginia (ends)
Maracay, Venezuela Guayama, Puerto Rico

Powder and Paste: Printing Cylinders:
---------------- ------------------
Louisville, Kentucky Longmont, Colorado*
Atlanta, Georgia*
Electrical Rod: Clarksville, Indiana*
-------------- Louisville, Kentucky (2)
Becancour, Quebec, Canada Newport, Kentucky*
West Monroe, Louisiana
Foil Feed Stock: Battle Creek, Michigan*
--------------- St. Louis, Missouri
Hot Springs, Arkansas Fulton, New York*
Wilmington, North Carolina*
Packaging and Consumer Exton, Pennsylvania*
Products: Franklin, Tennessee*
---------------------- Dallas, Texas
Beacon Falls, Connecticut Richmond, Virginia (2)
Louisville, Kentucky (2) Ontario, Canada (2)
Mt. Vernon, Kentucky
Sparks, Nevada*
Boyertown, Pennsylvania
Downingtown, Pennsylvania Reynolds Aluminum Supply
Lewiston, Utah Company:
Bellwood, Virginia ------------------------
Grottoes, Virginia Service Centers (U.S.)(24)**
Richmond, Virginia Processing Centers (U.S.)(3)**
South Boston, Virginia
Appleton, Wisconsin (2) Research and Development
Little Chute, Wisconsin
Weyauwega, Wisconsin Richmond, Virginia:
Rexdale, Ontario, Canada* ------------------
Cap-de-la-Madeleine, Can Division Headquarters
Quebec, Canada Corporate Technology Center
Latina, Italy Packaging Technology

Building and Construction Corpus Christi, Texas:
Products***: ---------------------
------------------------- Alumina Technology
Eastman, Georgia
Weston, Ontario, Canada Sheffield, Alabama:
Merxheim, France* ------------------
Nachrodt, Germany Manufacturing Technology
Dublin, Ireland* Laboratory
Wexford, Ireland
Harderwijk, Netherlands
Lisburn, Northern Ireland*
Service Centers (Canada)(10)*

Wheels:
------
Beloit, Wisconsin
Ferrara, Italy

Can Machinery and Systems:
-------------------------
Richmond, Virginia

Other Operations
In Which Reynolds Has Interests

Argentina: Germany:
Aluminum cans, recycling Alumina, primary aluminum*

Australia: Ghana:
Bauxite, alumina Primary aluminum*

Belgium: Guinea:
Building products, extrusions Bauxite

Brazil: Guyana:
Bauxite, aluminum cans Bauxite*
and ends, recycling, reclamation
India:
Canada: Extrusions
Primary aluminum, electric
power generation, aluminum Italy:
wheels Reclamation

Chile: Russia:
Aluminum cans, recycling Foil

China: Spain:
Foil, extrusions Mill products, extrusions, foil,
packaging, printing cylinders
Colombia:
Mill products, extrusions, Venezuela:
foil Primary aluminum, mill products,
foil, aluminum cans and ends,
Egypt: recycling, aluminum wheels
Extrusions

____________________________
* Leased.
** Recycling Plants and Centers - 565 leased.
Reynolds Aluminum Supply Company Service Centers - 18 leased.
Reynolds Aluminum Supply Company Processing Centers - 1 leased.
*** In March 1997, Reynolds concluded the sale of its
residential construction products operations in the U.S. to
AmeriMark Building Products, Inc. Included in the sale were
Reynolds' construction products plants located in Ashville,
Ohio, Bourbon, Indiana and Lynchburg, Virginia; the
manufactured housing operations at its Eastman, Georgia,
facility; a Mill Products Division plant in Chesterfield
County, Virginia that supplies aluminum building sheet to
the construction industry; and 54 service centers.
# In February 1997, Reynolds and Philip Environmental, Inc.
announced they have signed a letter of intent for the purchase by
Philip of Reynolds' Bellwood aluminum reclamation plant.
Reynolds announced in March 1997 that it has signed a letter of
intent for the William L. Bonnell subsidiary of Tredegar
Industries to buy Reynolds' El Campo aluminum extrusion plant.
Both transactions, which are subject to certain conditions, are
expected to close in the second quarter of 1997.
## Held under an installment purchase arrangement.

The titles to Reynolds' various properties were not examined
specifically for this report.

Item 3. LEGAL PROCEEDINGS

On June 10, 1988, the Atlantic States Legal Foundation ("Atlantic
States") filed suit against the Registrant in the U.S. District
Court for the Western District of New York (the "Court") under
the "citizen suit" provision of the federal Clean Water Act. The
State of New York intervened in the case on December 1, 1989.
The suit involved the discharge of substances from the
Registrant's Massena, New York primary aluminum production plant.
An agreement of the parties to settle the suit for payments by
the Registrant aggregating $515,000, resolving claims for
penalties and other costs, was approved by the Court on May 12,
1992; however, the Court retained jurisdiction of the matter. In
a letter dated April 12, 1993, Atlantic States informed the
Registrant that it has withdrawn its waiver of enforcement,
citing violations at the Massena plant of interim effluent limits
contained in the settlement agreement and other effluent limit
violations.

The Registrant received from the U.S. Department of Justice on
August 29, 1994 a civil investigative demand relating to
production of primary aluminum. The Registrant is cooperating
with this inquiry and is confident that its conduct has been in
compliance with U.S. antitrust laws.

The Registrant received from the U.S. Department of Justice on
March 30, 1995 a civil investigative demand relating to the
pricing of aluminum can stock. The Justice Department advised
the Registrant on November 25, 1996 that this civil investigation
had been concluded and closed.

A private antitrust lawsuit styled Hammons v. Alcan Aluminum
Corp. et al., was filed in the Superior Court of California for
the County of Los Angeles on March 5, 1996 against the Registrant
and other aluminum producers. The lawsuit alleges a conspiracy
to reduce worldwide and U.S. aluminum production. Estimated
damages of approximately $26 billion were sought in the lawsuit,
which claims class action status. Defendants removed the case to
the U.S. District Court for the Central District of California
(the "District Court"). On July 1, 1996, the District Court
granted summary judgment for defendants. Plaintiff filed a
motion for reconsideration with the District Court, which was
denied on July 16, 1996. On July 18, 1996, plaintiff filed a
notice of appeal to the U.S. Court of Appeals for the Ninth
Circuit. As noted above, the Registrant is confident that its
conduct has been in compliance with the antitrust laws. The
Registrant has made, and will make, its decisions regarding
production levels independently.

In December 1995, an oil tank failed at the Registrant's Massena,
New York primary aluminum production plant, resulting in an oil
spill at the plant. The Registrant promptly reported the matter
to the New York Department of Environmental Conservation (the
"NYDEC"). On January 8, 1997, NYDEC notified the Registrant that
it is seeking a civil penalty of $120,000 in connection with the
matter for the Registrant's failure to comply with State tank
management regulations. The Registrant has responded to the
demand, stating that it believes the proposed penalty is
excessive under the circumstances.

Various other suits, claims and actions are pending against
Reynolds. In the opinion of Reynolds' management, after
consultation with legal counsel, disposition of these proceedings
and those referred to in the preceding paragraphs, either
individually or in the aggregate, will not have a material
adverse effect on Reynolds' competitive or financial position or
its ongoing results of operations. No assurance can be given,
however, that the disposition of one or more of such suits,
claims or actions in a particular reporting period will not be
material in relation to the reported results for such period.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of the Registrant's security
holders during the fourth quarter of 1996.

Item 4A. EXECUTIVE OFFICERS OF THE REGISTRANT

The executive officers of the Registrant are as follows:

Name Age* Positions Held During Past Five Years
- - ---- ---- -------------------------------------

Jeremiah J. Sheehan 58 Chairman of the Board and Chief
Executive Officer since October 1996.
President and Chief Operating Officer
1994-1996. Executive Vice President,
Fabricated Products 1993-1994. Executive
Vice President, Consumer and Packaging
Products 1990-1993. Director since 1994.

Randolph N. Reynolds** 55 Vice Chairman and Executive Officer
since October 1996. Vice Chairman 1994-
1996. Executive Vice President,
International 1990-1994. President,
Reynolds International, Inc. ("RII"), a
subsidiary of the Company, since November
1980, and Chief Executive Officer of RII
since November 1981. Director since
1984.

J. Wilt Wagner 55 Vice Chairman and Executive Officer
since October 1996. Executive Vice
President, Raw Materials, Metals and
Industrial Products 1993-1996. Executive
Vice President, Fabricated Industrial
Products 1992-1993. Director since 1996.

Henry S. Savedge, Jr. 63 Executive Vice President and Chief
Financial Officer since May 1992. Vice
President, Finance 1990-1992. Director
since 1992.

D. Michael Jones 43 Senior Vice President and General
Counsel since October 1996. Vice
President, General Counsel and Secretary
1993-1996. Associate General Counsel and
Assistant Secretary 1990-1993.

James R. Aitken 62 Vice President since April 1994.
Executive Vice President, RII since March
1993. Vice President, Europe of RII and
President, Reynolds (Europe) Ltd., a
subsidiary of RII, 1987-1993.

Thomas P. Christino 57 Vice President, Flexible Packaging
Division since November 1993. Flexible
Packaging Division General Manager 1992-
1993.

Donald T. Cowles 49 Vice President and Reynolds Aluminum
Supply Company Division General Manager
since August 1995. Executive Vice
President, Human Resources and External
Affairs 1993-1995. Vice President,
General Counsel and Secretary 1989-1993.

Eugene M. Desvernine 55 Vice President since April 1994.
Executive Vice President, RII since March
1993. Vice President, Latin America of
RII 1982-1993.

Allen M. Earehart 54 Vice President, Controller since
April 1994. Controller 1993-1994.
Director, Corporate Accounting 1982-1993.

E. Jack Gates 55 Vice President, Raw Materials and
Carbon Products Division since April
1993. Raw Materials and Precious Metals
Division General Manager 1993. Reduction
Division General Manager 1990-1993.

Rodney E. Hanneman 60 Vice President, Quality Assurance
and Technology Operations since March
1985.

Paul S. Hayden 54 Vice President, Recycling Division
since April 1995. Recycling Division
General Manager 1991-1995.

Douglas M. Jerrold 46 Vice President, Tax Affairs since
April 1990.

John B. Kelzer 60 Vice President, Extrusion Division
since April 1993. Extrusion Division
General Manager 1990-1993.

William E. Leahey, Jr. 47 Vice President, Can Division since
April 1993. Can Division General Manager
1992-1993.

John M. Lowrie 56 Vice President, Consumer Products
Division since October 1988.

F. Robert Newman 53 Vice President, Human Resources
since October 1995. Corporate Director,
Human Resources 1993-1995. Corporate
Director, Industrial Relations 1992-1993.

John M. Noonan 63 Vice President, Construction
Products and Properties Divisions since
January 1984.

Paul Ratki 57 Vice President, Metals Division
since April 1994. Reduction and
Reclamation Division General Manager 1993-
1994. Reduction and Reclamation Division
Operations Manager 1991-1993.

William G. Reynolds, Jr.** 57 Vice President, Government
Relations and Public Affairs since
October 1980.

John F. Rudin 51 Vice President, Chief Information
Officer since August 1995. Vice
President since April 1995. Reynolds
Aluminum Supply Company Division General
Manager 1989-1995.

Julian H. Taylor 53 Vice President, Treasurer since
April 1988.

C. Stephen Thomas 57 Vice President, Mill Products
Division since May 1992. Vice President,
Can Division 1990-1992.

Donna C. Dabney 49 Secretary and Assistant General
Counsel since October 1996. Associate
General Counsel 1993-1996. Chief Real
Estate Counsel 1990-1993. Assistant
Secretary 1987-1996.

_______________
* As of February 15, 1997
** Randolph N. Reynolds and William G. Reynolds, Jr. are brothers.

PART II

Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS

The Registrant's Common Stock is listed on the New York Stock
Exchange and the Chicago Stock Exchange. At February 25, 1997,
there were 9,126 holders of record of the Registrant's Common
Stock.

The high and low sales prices for shares of the Registrant's
Common Stock as reported on the New York Stock Exchange Composite
Transactions Tape and the dividends declared per share during the
periods indicated are set forth below:

High Low Dividends
---- --- ---------
1996

First Quarter $ 61-3/8 $ 49 $.35
Second Quarter 61-5/8 51-3/4 .35
Third Quarter 55-1/2 48-3/4 .35
Fourth Quarter 60-1/2 50-3/8 .35

1995

First Quarter $ 56-1/2 $ 46-1/4 $.25
Second Quarter 52-3/8 46-3/4 .30
Third Quarter 64-3/4 51-5/8 .30
Fourth Quarter 58-5/8 48-1/2 .35

On February 21, 1997, the Board of Directors declared a dividend
of $.35 per share of Common Stock, payable April 1, 1997 to
stockholders of record on March 3, 1997.

Item 6. SELECTED FINANCIAL DATA
- - ------------------------------------------------------------------------

Consolidated Income Statement (In millions, except per share amounts)
- - ----------------------------------------------------------------------

1996 1995 1994 1993 1992
---------------------------------------------

Net sales $6,972 $7,213 $5,879 $5,269 $5,593
Equity, interest and other income 44 39 46 25 28
Gains on sales of assets - - 88 - 36
---------------------------------------------
7,016 7,252 6,013 5,294 5,657
---------------------------------------------

Cost of products sold 5,856 5,739 4,950 4,604 4,716
Selling, administrative and
general expenses 445 449 376 358 369
Depreciation and amortization 365 344 341 340 330
Interest 160 172 156 159 167
Operational restructuring and asset
revaluation costs 37 - - 348 106
Provision for estimated
environmental costs - - - - 164
---------------------------------------------
6,863 6,704 5,823 5,809 5,852
---------------------------------------------

Income (loss) before income taxes
and cumulative effects of
accounting changes 153 548 190 (515) (195)
Taxes on income (credit) 49 159 68 (193) (86)
---------------------------------------------
Income (loss) before cumulative
effects of accounting changes 104 389 122 (322) (109)
Cumulative effects of accounting
changes <F1> (15) - - - (640)
---------------------------------------------
Net income (loss) $ 89 $ 389 $ 122 ($322) ($749)
=============================================
Earnings per share
Income (loss) before cumulative
effects of accounting changes $1.06 $5.35 $1.42 $(5.38) $(1.83)
Cumulative effects of accounting
changes (0.24) - - - (10.73)
---------------------------------------------
Net income (loss) $0.82 $5.35 $1.42 $(5.38) $(12.56)
=============================================

Cash dividends declared =============================================
per common share $1.40 $1.20 $1.00 $1.20 $1.80
=============================================
Other items:
- - -----------
Total assets $7,516 $7,740 $7,461 $6,709 $6,897
=============================================

Long-term debt $1,793 $1,853 $1,848 $1,990 $1,798
=============================================
<FN>
<F1> See Item 8. Financial Statements and Supplementary Data -
Note 1 for a discussion of the 1996 change in accounting
principle. In 1992, the Company adopted FAS No. 106,
requiring accrual accounting for postretirement benefits other
than pensions, and FAS No. 109, which requires use of the
liability method of determining deferred income taxes.
Charges of $610 million (FAS No. 106) and $30 million (FAS No.
109) were recognized in 1992 for the cumulative effects of
these accounting changes. The adoption of FAS No. 109 enabled
the Company to fully recognize the deferred tax benefits
associated with the adoption of FAS No. 106.
</FN>

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The following information should be read in conjunction with the
consolidated financial statements, related notes and other
sections of this report. In the tables, dollars are in millions,
except per share and per pound amounts, and shipments are in
thousands of metric tons. A metric ton is equivalent to 2,205
pounds.

Management's Discussion and Analysis contains forecasts,
projections, estimates, statements of management's plans and
objectives for the Company and other forward-looking statements.
Please refer to the "Risk Factors" section beginning on page 33,
where we have summarized factors that could cause actual results
to differ materially from those projected in a forward-looking
statement or affect the extent to which a particular projection
is realized.

RESULTS OF OPERATIONS

The Company's results in 1996 were adversely affected by lower
realized prices for primary aluminum (approximately 18% lower
than 1995), as well as price declines for a number of our
fabricated aluminum products. The results reflect softness in
the overall global aluminum market, primarily attributable to
slower economic growth that has caused end users to liquidate
excess inventories. Other factors affecting results include
higher costs for certain raw materials, reduced shipping and
manufacturing levels in the can and can sheet businesses due to
weaker demand, and severe winter weather conditions early in the
year that resulted in facility curtailments and lower volumes.

1996 1995 1994
----------------------

Net income $89 $389 $122
Special items included in net income:
LIFO inventory liquidations (see Note 1) 19 - -
Operational restructuring costs (see Note 3) (23) - -
Cumulative effect of accounting change (see Note 1) (15) - -
Gains on sales of assets (see Note 2) - - 57

Earnings per share $0.82 $5.35 $1.42
Special items included in earnings per share:
LIFO inventory liquidations 0.29 - -
Operational restructuring costs (0.36) - -
Cumulative effect of accounting change (0.24) - -
Gains on sales of assets - - 0.92

ALUMINUM INDUSTRY

The aluminum industry entered 1996 facing carryover effects of
the prior year and weakness in key economies. The aluminum
industry had a strong performance in 1995, particularly in the
first half of the year, because of improved aluminum
supply/demand fundamentals. Prices for both primary and
fabricated aluminum products improved significantly. Industry
shipments increased in late 1994 and early 1995, largely as a
result of hedge buying by end users who were anticipating price
increases. This created a customer inventory buildup, which
resulted in lower shipments in the latter part of 1995 and in
1996 as end users reduced their excess inventories. Demand for
aluminum products was further weakened by the soft landing of the
U.S. economy and weakness in European and other

ALUMINUM INDUSTRY -- continued

economies in late 1995 and 1996. In addition, higher worldwide
production and higher exports from Russia affected aluminum
industry fundamentals in 1996.

SHIPMENTS AND NET SALES

1996 1995 1994
----------------------------------------------------------------
Net Net Net
Shipments Sales Shipments Sales Shipments Sales
--------- ----- --------- ----- --------- -----

Finished Products and Other Sales
- - ---------------------------------
Packaging and containers
Aluminum 355 $1,850 368 $1,871 359 $1,583
Nonaluminum 603 556 529
Other aluminum 163 552 163 580 151 449
Other nonaluminum 533 528 479
----------------------------------------------------------------
518 3,538 531 3,535 510 3,040
----------------------------------------------------------------
Production and Processing
- - -------------------------
Primary aluminum 386 634 346 684 277 440
Sheet and plate 381 1,168 409 1,350 418 1,003
Extrusions 204 706 200 765 211 627
Other aluminum 164 481 179 494 157 391
Other nonaluminum 445 385 378
----------------------------------------------------------------
1,135 3,434 1,134 3,678 1,063 2,839
----------------------------------------------------------------
Total 1,653 $6,972 1,665 $7,213 1,573 $5,879
================================================================

Average realized price per pound:
- - --------------------------------
Fabricated aluminum products $1.79 $1.84 $1.48
Primary aluminum 0.74 0.90 0.72

Finished Products and Other Sales
- - ---------------------------------

Aluminum packaging and container shipments decreased in 1996 due
to lower can shipments. Can shipments decreased because of
reduced beer can volumes and lower export sales to Latin America
as our partially owned can operations there added capacity. We
realized higher shipments of laminated aluminum foil in 1996 as a
result of acquiring a laminated aluminum products plant in mid-
1995. Higher aluminum packaging and container shipments in 1995
resulted primarily from our acquisition of a can operation in mid-
1994.

Shipments of other aluminum products were relatively flat in 1996
after increasing in 1995. Severe winter weather conditions in
early 1996 adversely affected our distribution and construction
products businesses. Lower activity in the transportation
market, especially for trucks and trailers, also negatively
affected our distribution business. Both of these businesses
continually strengthened during the year as weather and business
conditions improved. Other aluminum shipments increased in 1995
due to our acquisition of a metals distribution company in the
third quarter of 1994.

Net sales were slightly higher in 1996, with higher nonaluminum
sales offsetting the effect of lower aluminum shipments.
Nonaluminum sales increased for a broad range of products
including plastic packaging, printing cylinders, construction
products and can machinery. The effect of slightly higher prices
for cans was offset by lower prices for aluminum distribution
products. Higher net sales in 1995 as compared to 1994 reflected
higher aluminum shipments, higher nonaluminum sales (principally
stainless steel) and improved prices for aluminum products.

Production and Processing

Primary aluminum shipments fluctuate from year to year because of
variations in internal requirements and changes in customer
demand for value-added foundry ingot and billet. Our 1995
acquisition of an
additional interest in a Canadian primary aluminum plant
contributed to the higher shipments in 1995 and 1996.

Sheet and plate shipments decreased in 1996 due mainly to lower
demand for can sheet. Can sheet shipments in 1995 were higher
because of strong demand and higher shipments to the Latin
American operations. The increase in can sheet shipments in 1995
was more than offset by a decrease in shipments of other sheet
products resulting from a conversion of a portion of the other
sheet business to tolling.

The increase in other aluminum shipments in 1995 reflected strong
demand for deoxidization products used in the steel industry.
Wheel shipments were up sharply in both years due to strong
demand and the additional capacity in 1996 at our new plant in
Wisconsin.

Year-to-year changes in net sales primarily reflect changes in
demand for aluminum products over the past two years as explained
earlier under "Aluminum Industry". The increases in nonaluminum
sales in both years resulted from strong demand for alumina and
carbon products, although the alumina market slowed later in
1996.

OPERATING PROFIT

1996 1995 1994
--------------------------

Finished Products and Other Sales $185 $232 $256
Production and Processing 86 492 2

Operating results generally reflect the contrast in the aluminum
industry during the past two years. Lower aluminum prices,
weaker volumes and lower capacity utilization in fabricating
operations affected 1996 results. Generally, the opposite was
true for 1995 with higher prices and volumes. The year 1996 was
also impacted by lower shipping levels in our can and can sheet
businesses, higher labor costs (as discussed below), the
favorable effects of LIFO liquidations and benefits from a
reduction in primary aluminum purchases (due to our 1995 purchase
of an additional interest in a Canadian primary aluminum plant).
Both years also were affected by higher costs for materials used
to produce alumina and the favorable effects of continuous
improvement efforts. Selling, administrative and general
expenses increased in 1995 primarily due to the higher level of
business activity.

Results for all three periods were negatively affected by unused
capacity at our primary aluminum plants. U.S. production
capacity of 209,000 metric tons remains temporarily curtailed.

In response to strong demand in the alumina market in 1995, we
returned our Texas alumina refinery to full production. In 1996,
because of slowing market conditions, we temporarily curtailed
15% of the capacity at this refinery. We do not expect this
temporary curtailment to have a material impact on future
operating results or affect our ability to meet the requirements
of our primary aluminum operations.

In 1996, we entered into new six-year labor contracts with the
unions that represent a majority of our domestic hourly
employees. Major provisions of the new agreements include wage
increases of $1.15 an hour over the first five years (plus
incremental increases in 1997 and 1999) and enhanced pension

OPERATING PROFIT -- continued

and other benefits. At the end of the fifth year, the economic
provisions of the contracts will be reopened. If agreement
cannot be reached, the economic provisions will be submitted to
arbitration for one additional year. The Company and the unions
also agreed to work cooperatively on customer requirements,
business objectives and shareholder and union interests. In
addition, the agreements contain broad, new provisions for
employee safety, job security and employee participation in the
work environment.

In 1996, we closed a can plant in Texas. Operational
restructuring costs of $37 million (pre-tax) were recognized.
These costs related principally to employee termination costs at
the Texas plant (see Note 3 to the consolidated financial
statements). In 1995, we closed a can plant in New York. Costs
of $25 million were recognized in 1995 for the closing of the New
York plant and for asset revaluations at certain foreign
entities. This amount was offset by the reversal of existing
reserves in 1995 resulting from changes in estimated requirements
for previously restructured operations. Our current strategy for
the U.S. can business is to aggressively reduce costs and
increase production efficiencies through modernization programs
and new technologies.

GEOGRAPHIC AREA ANALYSIS

The Company has operations in the U.S., Canada and other foreign
areas including Europe, Latin America and Australia. Certain of
these operations, especially in Latin America, consist of equity
interests, whose sales are not included in our consolidated net
sales. We also participate in an unincorporated joint venture
that mines bauxite and produces alumina in Australia.

Year-to-year changes in net sales and operating profits in our
three geographic areas (domestic, Canada and other foreign)
primarily reflect the previously discussed changes in aluminum
industry fundamentals.

INTEREST EXPENSE

Interest expense declined in 1996 because of lower effective
interest rates and higher amounts of capitalized interest. These
benefits were partially offset by an increase in the amount of
debt outstanding. Interest expense increased in 1995 due to
higher rates.

We use interest rate swap agreements to manage exposure to
interest rate fluctuations after considering market conditions
and levels of variable-rate and fixed-rate debt outstanding (see
Note 6). Our strategy is to provide for lower interest expense
during economic downturns, with the potential for higher interest
expense during periods of economic growth.

TAXES ON INCOME

The Company pays U.S. federal, state and foreign taxes based on
the laws of the various jurisdictions in which it operates. The
effective tax rates reflected in the income statement differ from
the U.S. federal statutory rate principally because of foreign
taxes at different rates, the effects of percentage depletion
allowances and, in 1995, the effect of a non-recurring foreign
tax benefit. A reconciliation of the effective rates is included
in Note 9.

TAXES ON INCOME -- continued

The Company has worldwide operations in many tax jurisdictions
that generate deferred tax assets and/or liabilities. Deferred
tax assets and liabilities have been netted by jurisdiction,
resulting in both a deferred tax asset and a deferred tax
liability on the balance sheet.

At December 31, 1996, we had $890 million of deferred tax assets
that relate primarily to U.S. tax positions. The most
significant portions of these assets relate to tax carryforward
benefits and accrued costs for employee health care,
environmental and restructuring costs. A major portion of these
assets will be realized in the future through the reversal of
temporary differences, principally depreciation. To the extent
that these assets are not covered by reversals of depreciation,
we expect the remainder to be realized through U.S. income earned
in future periods.

The Company has a strong history of sustainable earnings.
However, even without considering projections of income, certain
tax planning strategies, such as changing the method of valuing
inventories from LIFO to FIFO and/or entering into sale-leaseback
transactions, would generate sufficient taxable income to realize
the portion of the deferred tax asset related to U.S. operations.
In addition, we can indefinitely carry forward the majority of
our U.S. tax carryforward benefits.

Based on our evaluation of these matters, we expect that the
deferred tax assets will be realized. We are not aware of any
events or uncertainties that could significantly affect our
conclusions regarding realization. We reassess the realization
of deferred tax assets quarterly and, if necessary, adjust the
valuation allowance accordingly.

ENVIRONMENTAL

The Company is involved in remedial investigations and actions at
various locations, including Environmental Protection Agency
Superfund sites where we and, in most cases, others have been
designated as potentially responsible parties (PRPs). We accrue
remediation costs when it becomes probable that such efforts will
be required and the costs can be reasonably estimated. We
evaluate the status of all significant existing or potential
environmental issues quarterly, develop or revise cost estimates
to satisfy known remediation requirements, and adjust the accrual
accordingly. At December 31, 1996, the accrual was $197 million
($242 million at December 31, 1995). The accrual reflects our
best estimate of the ultimate liability for known remediation
costs.

In estimating anticipated costs, we consider the extent of our
involvement at each site, joint and several liability provisions
under applicable law, and the likelihood of obtaining
contributions from other PRPs. Potential insurance recoveries
are uncertain and therefore have not been considered. Based on
information currently available, we expect to make remediation
expenditures relating to costs currently accrued over the next 15
to 20 years with the majority spent by the year 2002. We expect
cash flows from operations to provide the funds for environmental
capital, operating and remediation expenditures.

Annual capital expenditures for equipment designed for
environmental control purposes averaged approximately $32 million
over the past three years. Ongoing environmental operating costs
for the same period averaged approximately $78 million per year.
We estimate that operating expenditures for 1997 through 1999
will remain at approximately these same levels. We estimate that
annual capital expenditures for environmental control facilities
will be approximately $65 million in 1997, $105 million in 1998
and $70 million in 1999. The majority of these expenditures are
for the capital spending program referred to below at our primary
aluminum plant in New York.

ENVIRONMENTAL -- continued

Our spending on environmental compliance will be influenced by
future environmental regulations, including those issued and to
be issued under the Clean Air Act Amendments of 1990. We have
begun a five-year capital spending program of an estimated $185
million at our primary aluminum plant in New York. The project
includes new air emissions controls and a phased modernization of
the plant's production lines. We are accelerating certain
expenditures believed necessary to achieve compliance with the
Clean Air Act's proposed Maximum Achievable Control Technology
standards. Based on current information, we estimate that
compliance with the Clean Air Act's hazardous air pollutant
standards will require in excess of $250 million of capital
expenditures (including a portion of the expenditures at the New
York plant referred to above), principally at our U.S. primary
aluminum plants.

For additional information concerning environmental expenditures,
see Note 11.

OTHER INFORMATION

Rates for electricity charged by the Bonneville Power
Administration (BPA), which serves our primary aluminum plants in
Oregon and Washington, are established under a new contract that
expires in 2001. The new contract establishes fixed rates which
are 16% less than rates previously in effect. These rates,
however, are subject to review and approval in a process being
conducted by the Federal Energy Regulatory Commission (FERC).
Third parties are challenging the contract in the U.S. Court of
Appeals for the Ninth Circuit, and the contract's rates are
subject to further appeal in the courts by third parties
following FERC review. Should the new contract be rejected in
any of these processes, we could renegotiate with BPA or seek
service from third parties.

In December 1996, the Aluminum, Brick and Glass Workers
International Union voted to merge with the United Steelworkers
of America. This merger was completed in January 1997. We do
not expect the merger to have a material impact on the Company.

LIQUIDITY AND CAPITAL RESOURCES

WORKING CAPITAL

December 31
----------------
1996 1995
---- ----

Working capital $540 $647
Ratio of current assets to current liabilities 1.4/1 1.5/1

The decrease in working capital resulted primarily from the
success of our inventory management program.

OPERATING ACTIVITIES

1996 1995 1994
---- ---- ----

Cash provided from operations $520 $489 $493

Cash provided from operating activities over the past three years
was used mainly to fund investing activities.

INVESTING ACTIVITIES

Substantial investments have been aimed at providing us with low-
cost operations in most of our raw materials, industrial and
finished products businesses. We have also focused on strategic
areas for expansion and on further quality and efficiency
enhancements. The following table shows actual and projected
capital expenditures in the following categories: operational
(replacement equipment, environmental control projects, etc.) and
strategic (performance improvement, acquisitions and
investments).

Projected
1997 1996 1995 1994
---- ---- ---- ----

Operational $222 $195 $219 $151
Strategic 128 237 626 253
-----------------------------------------
Total capital investments $350 $432 $845 $404
=========================================

In Finished Products and Other Sales, strategic projects that
have been completed in the past three years or that are underway
include:

- - - expansions and modernizations of can, foil and plastic film
plants
- - - the participation in the construction of can plants in
Argentina, Brazil, Chile and Saudi Arabia
- - - the acquisitions of a can plant and a metals distribution
business in 1994; and a printing cylinder engraving company, foil
laminating plant, and flexible packaging operation in 1995

In Production and Processing, strategic projects that have been
completed in the past three years or that are underway include:

- - - the acquisitions of additional interests in an Australian
alumina refinery (6%) in 1994 and a Canadian primary aluminum
plant (24.95%) in 1995
- - - the expansion of a plant in Indiana to produce bumpers and
other automotive components (completed in 1996)

INVESTING ACTIVITIES - continued

- - - the modification and equipping of a purchased facility in
Wisconsin to produce aluminum wheels (completed in 1996)
- - - a quality improvement program and equipment upgrades at a
can sheet operation in Alabama
- - - the modernization of a primary aluminum plant in New York
- - - the construction of a forged wheel plant in Virginia (as
discussed below)
- - - the participation in a foil and extrusion plant in China (as
discussed below)

In addition to these major projects, capacity expansions,
equipment upgrades and/or improvement programs have been
completed or are currently underway at a number of other
facilities.

In 1996, we began construction of a $34-million facility in
Virginia to manufacture aluminum wheels. Production is expected
to start in 1997. The facility will use a manufacturing process
that combines our computer-controlled, flow-formed casting
technology with forging to produce lightweight wheels with added
styling flexibility.

Also in 1996, we acquired a partial interest in an operation in
China that produces aluminum foil and extrusions. The operation
includes a large aluminum fabricating facility that was built in
the mid-1980s and expanded later that decade. The facility
manufactures aluminum foil, primarily for the food,
pharmaceutical and tobacco industries, and extrusions for the
automotive and construction products markets.

Capital investments planned for 1997 include amounts for those
projects now underway and continuing operating requirements. We
expect to fund these capital investments with internally
generated funds. While the planned 1997 capital investments do
not include amounts for acquisitions, we will evaluate any
opportunities that arise.

A part of our strategy is to sell non-core assets and use the
proceeds in our strategic businesses. Sales over the past three
years included:

1996
- - - real estate (principally, developed commercial investment
properties)

1995
- - - remaining gold mining assets in Australia
- - - real estate (principally, developed commercial investment
properties)

1994
- - - Austrian can plant
- - - a subsidiary that held a 40% investment in an Australian
gold mine
- - - timberland in the Pacific Northwest

FINANCING ACTIVITIES

We believe our available financial resources, together with
internally generated funds, are sufficient to meet our present
and future business needs. We continue to exceed the financial
ratio requirements contained in our financing arrangements and
expect to do so in the future. At December 31, 1996, $113
million of our $1.65-billion shelf registration remained
available for the issuance of debt securities. We also have a
$500-million revolving credit facility. A summary of significant
financing activities over the past three years follows:

FINANCING ACTIVITIES -- continued

1994:

- - - Issued 11 million shares of 7% PRIDES(SM), Convertible
Preferred Stock (PRIDES) for $47.25 (stated value) per share,
generating $505 million of net proceeds
- - - Voluntarily prepaid the remaining balance ($72 million) of a
term-loan agreement
- - - Repaid the balance ($50 million) of commercial paper
outstanding
- - - Contributed 1.5 million shares (valued at $77 million) of
the Company's common stock to pension plans

We used proceeds from the PRIDES issue for capital investments in
1994 and 1995 and to repay obligations incurred in the fourth
quarter of 1993 to acquire Miller Brewing Company's can plants.

1995:

- - - Borrowed $22 million through the issuance of tax-exempt
bonds that require a single repayment in 2025 and bear interest
at a variable rate
- - - Issued $72 million of medium-term notes, which bear
interest at an average rate of 6% and mature in 1996 and 1997
- - - Contributed 0.9 million shares (valued at $45 million) of
the Company's common stock to pension plans

We used proceeds from the tax-exempt bonds to finance a portion
of the costs of acquiring, constructing and installing
environmental control facilities at our primary aluminum plant in
New York. Proceeds from the medium-term notes were supplemented
with cash on hand and cash generated from operations to acquire
the additional interest in the Canadian primary aluminum plant
for approximately $390 million, plus associated working capital.

1996:

- - - Called for redemption of all outstanding shares of PRIDES
(see Note 7), which will reduce annual dividend requirements by
approximately $24 million based on the current common stock
dividend
- - - Substantially met our goal to fully fund our pension plans
- - - Entered into $400 million of interest rate swap agreements
(see Note 6)
- - - Amended the $500-million revolving credit facility arranged
in 1994 to extend the term and lower the cost (see Note 6)

OUTLOOK

In 1997, we expect to show improvement over 1996 operating
results. This expectation is based primarily on our performance
improvement program discussed below. We also anticipate
improvements in aluminum industry fundamentals and are encouraged
by increases in primary aluminum prices in early 1997.

Looking forward, we believe the outlook for aluminum is strong.
We are forecasting a 4-5% increase in U.S. industry shipments and
a 5-6% increase in global aluminum consumption for 1997, with
especially strong transportation and packaging markets.
Generally, order rates are increasing in all of our businesses.

OUTLOOK -- continued

Programs are in place to improve operating performance in 1997 by
at least $100 million pre-tax, exclusive of price changes and in
excess of inflation. These programs include:

- - - significant cost reductions in our U.S. can business,
including the closing of our Houston, Texas can plant (completed
at the end of 1996) and the start-up of our modernized and more
efficient Torrance, California can plant
- - - aggressive cost reductions at our Alabama rolling mill
(including reducing the workforce, principally through attrition)
- - - benefits from a new power contract for our primary aluminum
plants in the Pacific Northwest (approximately $12 million
annually at our current production levels)

We also expect the following factors to contribute to improved
results in 1997:

- - - additional soft drink can business
- - - improved results from partially owned can operations in
Latin America and Saudi Arabia
- - - stronger can sheet volume
- - - improved demand for alumina
- - - anticipated lower costs for natural gas and caustic soda
(used in the production of alumina)

We expect to strengthen our balance sheet in 1997 by:

- - - managing our capital expenditures to $350 million
- - - continuing to lower our inventory days of supply
- - - realizing cash savings from our PRIDES redemption
- - - reducing debt by more than $200 million
- - - selling non-core assets

PORTFOLIO REVIEW

We are conducting a review of all our operations and businesses.
We are considering a number of alternatives that include, among
other things, asset sales, spin-offs and the forming of strategic
alliances to increase scale. No decisions will be made until
later in 1997.

In March 1997 we concluded the sale of our residential
construction products business in the U.S. Included in the sale
were four plants that make various aluminum and vinyl
construction products, a mini-mill in Virginia that makes
building sheet from recycled aluminum, and 54 service
centers. We have retained our non-residential building
operations in Georgia that produce Reynobond aluminum composite
panels. The disposition of this portion of our construction
products business will not materially affect the Company.

We continue to negotiate the sale of our coal properties in
western Kentucky. The properties include surface and mineral
rights on about 16,000 acres, mineral rights on an additional
32,000 acres (approximately) and varying percentages of oil and
gas rights on about 6,700 acres.

We have also signed letters of intent for the sale of an aluminum
reclamation plant in Virginia and an aluminum extrusion plant in
Texas. We expect both of these transactions, which are subject
to certain conditions, to close in the second quarter of 1997.

Proceeds from these transactions, together with proceeds from the
sale of certain real estate assets scheduled to close through mid-
April 1997, are expected to total approximately $240 million. We
will use these proceeds to reduce current debt. We expect the sale of
our U.S. residential construction products business to result in a
modest gain which we will announce with our first quarter 1997 results.

RISK FACTORS

This section should be read in conjunction with Items 1 and 3 of
this report and the preceding portions of this Item.

This report contains (and oral communications made by or on
behalf of the Company may contain) forecasts, projections,
estimates, statements of management's plans and objectives for
the Company and other forward-looking statements. The Company's
expectations for the future and related forward-looking
statements are based on a number of assumptions and forecasts as
to world economic growth and other economic indicators (including
rates of inflation, industrial production, housing starts and
light vehicle sales), trends in the Company's key markets, global
aluminum supply and demand conditions, and aluminum ingot prices,
among other items. By their nature, forward-looking statements
involve risk and uncertainty, and various factors could cause the
Company's actual results to differ materially from those
projected in a forward-looking statement or affect the extent to
which a particular projection is realized.

Consensus expectations for 1997 indicate global economic growth
of 3%. The Company is forecasting a 4-5% increase in U.S.
aluminum industry shipments and a 5-6% increase in global
aluminum consumption for the year, with especially strong
transportation and packaging markets. Barring a recession in any
major world economy, the Company expects the improved conditions
in aluminum industry supply/demand fundamentals that are becoming
evident at the beginning of 1997 to continue for the next several
years. The Company's outlook for growth in aluminum consumption
for the remainder of this decade is an average of 4% per year.
The Company expects greater use of aluminum around the world in
automobiles and other light vehicles. The Company also expects
U.S. aluminum beverage can shipments to grow at about 2% per year
and global shipments to grow 5% annually, with rapid growth of
the aluminum beverage can market in Latin America, Asia, the
Middle East and other developing economies.

Economic and/or market conditions other than as forecast by the
Company in the preceding paragraph, particularly in the U.S.,
Japan and Germany (which are large consumers of aluminum) and in
Latin America, could cause the Company's actual results to differ
materially from those projected in a forward-looking statement or
affect the extent to which a particular projection is realized.

The following factors also could affect the Company's results:

- - - Primary aluminum is an internationally traded commodity.
The price of primary aluminum is subject to worldwide market
forces of supply and demand and other influences. Prices can be
volatile. The Company's current strategy of being a vertically
integrated producer of value-added aluminum products, and its use
of contractual arrangements including fixed-price sales
contracts, fixed-price supply contracts, and forward, futures and
option contracts, reduces its exposure to this volatility but
does not eliminate it.

RISK FACTORS -- continued

- - - The markets for most aluminum products are highly
competitive. Certain of the Company's competitors are larger
than the Company in terms of total assets and operations and have
greater financial resources. Certain foreign governments are
involved in the operation and/or ownership of certain competitors
and may be motivated by political, as well as economic
considerations. In addition, aluminum competes with other
materials, such as steel, vinyl, plastics and glass, among
others, for various applications in the Company's key markets.
Unanticipated actions or developments by or affecting the
Company's competitors and/or the willingness of customers to
accept substitutions for the products sold by the Company could
affect results.

- - - The Company spends substantial capital and operating amounts
relating to ongoing compliance with environmental laws. In
addition, the Company is involved in remedial investigations and
actions in connection with past disposal of wastes. Estimating
future environmental compliance and remediation costs is
imprecise due to the continuing evolution of environmental laws
and regulatory requirements and uncertainties about their
application to the Company's operations, the availability and
application of technology, the identification of currently
unknown remediation sites, and the allocation of costs among
potentially responsible parties.

- - - Unanticipated material legal proceedings or investigations,
or the disposition of those currently pending against the Company
other than as anticipated by management and counsel, could affect
the Company's results.

- - - Changes in the costs of power, resins, caustic soda, green
coke and other raw materials can affect results. A new five-year
contract with the Bonneville Power Administration for the period
October 1996 - September 2001 will provide a fixed rate for
electrical power that is 16% less than rates previously in effect
for the Company's Washington and Oregon primary aluminum
production plants. These rates are subject to regulatory review
and approval. In addition, third parties are challenging the
contract in court, and the rates are subject to further appeal in
the courts by third parties following regulatory review.

- - - The Company's key transportation market is cyclical, and
sales to that market in particular can be influenced by economic
conditions.

- - - A strike at a customer facility or a significant downturn in
the business of a key customer supplied by the Company could
affect the Company's results.

- - - The Company is conducting a portfolio review of all its
operations and businesses. The Company is considering
alternatives that include, among other things, asset sales, spin-
offs and formation of strategic alliances. The timing, nature
and magnitude of the actions, if any, that will be taken are not
certain. Such actions, if taken, could affect the Company's
results and ongoing operating performance.

In addition to the factors referred to above, the Company is
exposed to general financial, political, economic and business
risks in connection with its worldwide operations. The Company
continues to evaluate and manage its operations in a manner to
mitigate the effects from exposure to such risks. In general,
the Company's expectations for the future are based on the
assumption that conditions relating to costs, currency values,
competition and the legal, regulatory, financial, political and
business environments in the economies and markets in which the
Company operates will not change significantly overall.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS (millions, except
per share amounts)
=============================================================================

- - -----------------------------------------------------------------------------
Years ended December 31 1996 1995 1994
- - -----------------------------------------------------------------------------

REVENUES
Net sales $6,972 $7,213 $5,879
Equity, interest and other income 44 39 46
Gains on sales of assets - - 88
- - -----------------------------------------------------------------------------
7,016 7,252 6,013
- - -----------------------------------------------------------------------------

COSTS AND EXPENSES
Cost of products sold 5,856 5,739 4,950
Selling, administrative and general expenses 445 449 376
Depreciation and amortization 365 344 341
Interest 160 172 156
Operational restructuring costs 37 - -
- - -----------------------------------------------------------------------------
6,863 6,704 5,823
- - -----------------------------------------------------------------------------

EARNINGS
Income before income taxes and cumulative effect
of accounting change 153 548 190
Taxes on income 49 159 68
- - -----------------------------------------------------------------------------
Income before cumulative effect of accounting change 104 389 122
Cumulative effect of accounting change (15) - -
- - -----------------------------------------------------------------------------

NET INCOME 89 389 122
Preferred stock dividends 36 36 34
- - -----------------------------------------------------------------------------

NET INCOME AVAILABLE TO COMMON STOCKHOLDERS 53 353 88

RETAINED EARNINGS
Balance at beginning of year 1,256 980 954
Cash dividends on common stock 89 77 62
- - -----------------------------------------------------------------------------
Retained earnings at end of year $1,220 $1,256 $ 980
=============================================================================

EARNINGS PER SHARE
Average shares outstanding 64 73 62
Income before cumulative effect of accounting
change $1.06 $5.35 $1.42
Cumulative effect of accounting change (0.24) - -
- - -----------------------------------------------------------------------------
Net income $0.82 $5.35 $1.42
=============================================================================

CASH DIVIDENDS PER COMMON SHARE $1.40 $1.20 $1.00
=============================================================================

See notes beginning on page 38.

CONSOLIDATED BALANCE SHEET (millions)
=============================================================================

December 31 1996 1995
- - -----------------------------------------------------------------------------

ASSETS
Current assets
Cash and cash equivalents $ 38 $ 39
Receivables
Customers, less allowances of $18 (1995 - $20) 811 889
Other 150 154
- - -----------------------------------------------------------------------------
Total receivables 961 1,043
Inventories 787 891
Prepaid expenses and other 87 41
- - -----------------------------------------------------------------------------
Total current assets 1,873 2,014
Unincorporated joint ventures and associated companies 1,337 1,286
Property, plant and equipment - net 3,237 3,223
Deferred taxes 296 376
Other assets 773 841
- - -----------------------------------------------------------------------------

Total assets $7,516 $7,740
=============================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Trade payables $ 499 $ 527
Accrued compensation and related amounts 209 252
Payables to unincorporated joint ventures and
associated companies 97 102
Commercial paper 79 -
Notes payable to banks 138 111
Long-term debt 96 101
Other liabilities 215 274
- - -----------------------------------------------------------------------------
Total current liabilities 1,333 1,367
Long-term debt 1,793 1,853
Postretirement benefits 1,087 1,213
Environmental 179 178
Deferred taxes 262 236
Other liabilities 228 276
Stockholders' equity
Preferred stock - 505
Common stock 1,451 941
Retained earnings 1,220 1,256
Cumulative currency translation adjustments (37) (22)
Pension liability adjustment - (63)
- - -----------------------------------------------------------------------------
Total stockholders' equity 2,634 2,617
Contingent liabilities and commitments (Notes 10 and 11)
- - -----------------------------------------------------------------------------

Total liabilities and stockholders' equity $7,516 $7,740
=============================================================================

See notes beginning on page 38.

CONSOLIDATED STATEMENT OF CASH FLOWS (millions)
=============================================================================

Years ended December 31 1996 1995 1994
- - -----------------------------------------------------------------------------

OPERATING ACTIVITIES
Net income $ 89 $ 389 $ 122
Adjustments to reconcile to net cash provided by
operating activities:
Depreciation and amortization 365 344 341
Gains on sales of assets - - (88)
Operational restructuring costs 37 - -
Cumulative effect of accounting change 15 - -
Other 26 18 3
Changes in operating assets and liabilities net of
effects from acquisitions and dispositions:
Accounts payable, accrued and other liabilities (110) (173) 272
Receivables 67 (59) (173)
Inventories 93 17 (106)
Other (62) (47) 122
- - -----------------------------------------------------------------------------
Net cash provided by operating activities 520 489 493

INVESTING ACTIVITIES
Capital investments
Operational (195) (219) (151)
Strategic (237) (626) (253)
Purchases of debt securities - - (139)
Maturities of investments in debt securities - 125 14
Proceeds from sales of assets 12 28 162
Other (17) (48) (71)
- - -----------------------------------------------------------------------------
Net cash used in investing activities (437) (740) (438)

FINANCING ACTIVITIES
Proceeds from long-term debt 40 106 -
Proceeds from preferred stock issue - - 505
Reduction of long-term debt and other financing
liabilities (105) (22) (165)
Increase (decrease) in short-term borrowings 111 (18) (37)
Cash dividends paid (135) (106) (71)
Other 5 22 2
- - -----------------------------------------------------------------------------
Net cash provided by (used in) financing activities (84) (18) 234

CASH AND CASH EQUIVALENTS
Net increase (decrease) (1) (269) 289
At beginning of year 39 308 19
- - -----------------------------------------------------------------------------
At end of year $ 38 $ 39 $ 308
=============================================================================

Supplemental disclosure of cash flow information:
Cash paid (received) during the year for:
Income taxes $ 2 $ 56 $ (17)
Interest (net of capitalized interest) 163 172 152

See notes beginning on page 38.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - ------------------------------------------

(In the tables, dollars are in millions, except per share
amounts. Certain amounts have been reclassified to conform to
the 1996 presentation.)

1. ACCOUNTING POLICIES
- - -----------------------

General
- - -------
The consolidated financial statements are prepared in conformity
with generally accepted accounting principles. As a result,
management is required to make estimates and assumptions that
affect the following:

- - - reported amounts of revenues and expenses during the
reporting period
- - - reported amounts of assets and liabilities at the date of
the financial statements
- - - disclosure of contingent assets and liabilities at the date
of the financial statements

Actual results could differ from those estimates.

Principles of Consolidation
- - ---------------------------
The consolidated financial statements include the accounts of the
Company and its majority-owned subsidiaries after eliminating
inter-company transactions, profits and losses. The investments
in unincorporated joint ventures are accounted for on an
investment cost basis adjusted for the Company's share of the non-
cash production charges of the operation. Unincorporated joint
ventures are production facilities without marketing or sales
activities. Investments in associated companies (20-to-50%
owned) are carried at cost, which is adjusted for the Company's
equity in undistributed net income.

Revenue Recognition
- - -------------------
Revenues are recognized when products are shipped and ownership
risk and title pass to the customer.

Inventories
- - -----------
Inventories are stated at the lower of cost or market. Inventory
costs were determined by the last-in, first-out (LIFO), first-in,
first-out (FIFO) and average-cost methods. LIFO method
inventories were $279 million at the end of 1996 (1995 - $312
million). FIFO and average-cost method inventories were $508
million at the end of 1996 (1995 - $579 million). Inventories
would increase by $470 million at the end of 1996 (1995 - $508
million), if the FIFO method were applied to LIFO method
inventories.

In 1996, the liquidation of certain LIFO layers decreased cost of
products sold by $30 million. The inventories in these LIFO
layers were acquired at lower costs in prior years.

Since inventories are sold at various stages of processing, there
is no practical distinction between finished products, in-process
products and other materials. Inventories are therefore
presented as a single classification.

Depreciation and Amortization
- - -----------------------------
The straight-line method is used to depreciate plant and
equipment over their estimated useful lives (buildings and
leasehold improvements - 10 to 40 years, machinery and equipment
- - - 5 to 20 years). Improvements to leased properties are
generally amortized over the shorter of the terms of the
respective leases or the estimated useful life of the
improvement.

Environmental Expenditures
- - --------------------------
Remediation costs are accrued when it is probable that such
efforts will be required and the related costs can be reasonably
estimated.

1. ACCOUNTING POLICIES -- continued
- - ------------------------------------

Postemployment Benefits
- - -----------------------
The expected cost of postemployment benefits is accrued when it
becomes probable that such benefits will be paid.

Hedging
- - -------
Forward, futures, option and swap contracts are designated to
manage market risks resulting from fluctuations in the aluminum,
natural gas, foreign currency and debt markets. These
instruments, which are not held for trading purposes, are
effective in minimizing such risks by creating equal and
offsetting exposures. Unrealized gains and losses are deferred
and recorded as a component of the underlying hedged transaction
when it occurs. Realized gains or losses from matured and
terminated hedge contracts are recorded in other assets or
liabilities until the underlying hedged transaction is
consummated. Realized and unrealized gains or losses on hedge
contracts relating to transactions that are subsequently not
expected to occur are recognized in results currently. None of
these instruments contains multiplier or leverage features.
There is exposure to credit risk if the other parties to these
instruments do not meet their obligations. Creditworthiness of
the other parties is closely monitored, and they are expected to
fulfill their obligations. Contracts used to manage risks in
these markets are not material.

Cumulative Effect of Accounting Change
- - --------------------------------------
In 1996, Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed Of," was adopted. The cumulative
effect of adopting the standard was an after-tax loss of $15
million. The loss was for the impairment of assets held for
sale, principally undeveloped land.

Earnings Per Share
- - ------------------
For 1996 and 1994, earnings per share equals net income, minus
dividends on the Company's 7% PRIDES(SM), Convertible Preferred
Stock (PRIDES), divided by the weighted-average number of common
shares outstanding during the year. For 1995, earnings per share
equals net income divided by the weighted-average number of
common shares and common share equivalents outstanding during the
year. The number of common share equivalents outstanding for
1995 was based on the assumed conversion of the PRIDES. For the
purpose of this computation, the conversion rate (0.88 per share)
of common stock for each share of PRIDES was based on the average
market value of common stock during 1995 ($53.56 per share).
Common share equivalents relating to the PRIDES were not included
in 1996 and 1994 since their effect would have been anti-
dilutive. All of the outstanding shares of PRIDES were redeemed
for or converted into shares of common stock in late 1996 (see
Note 7). If this exchange had occurred on January 1, 1996,
earnings per share (net income) would have been $1.22 for 1996.

Stock Options
- - -------------
Stock options are accounted for using the intrinsic value method.
Compensation expense is not recognized because the exercise price
of the stock options equals the market price of the underlying
stock on the date of grant.

Compensation expense is recognized for performance-based stock
options if and when the performance condition is satisfied.
Compensation expense is the difference between the market price
of the common stock when the performance condition is satisfied
and the exercise price of the stock options.

Statement of Cash Flows
- - -----------------------
In preparing the Statement of Cash Flows, all highly liquid,
short-term investments purchased with an original maturity of
three months or less are considered to be cash equivalents.

2. GAINS ON SALES OF ASSETS
- - ----------------------------

In 1994, a pre-tax gain of $63 million was recognized on the sale
of a subsidiary that held a 40% interest in an Australian gold
mine. Also in 1994, a pre-tax gain of $25 million was recognized
on the sale of timberland.

3. OPERATIONAL RESTRUCTURING COSTS
- - -----------------------------------

Operational restructuring costs of $37 million (pre-tax) were
recognized in 1996. These costs consisted principally of
employee termination benefits relating to the closing of a can
plant in Texas. The plant's annual capacity of 1.4-billion cans
was in excess of the Company's domestic customer needs.
Productivity gains within the Company's can-making system and
slower overall growth in the domestic can market permitted this
rationalization of operations. Certain equipment at the plant
will be transferred to the Company's other domestic and
international operations. The plant and property are expected to
be sold.

Approximately one-half of the cash requirements relating to these
costs was paid in 1996. Most of the remainder is expected to be
paid in 1997.

4. UNINCORPORATED JOINT VENTURES AND ASSOCIATED COMPANIES
- - ----------------------------------------------------------

Investments in unincorporated joint ventures that produce alumina
and primary aluminum consist of the following:

December 31
------------------
1996 1995
------------------

Current assets $63 $67
Current liabilities (55) (54)
Property, plant and equipment and other assets 1,047 1,032
------------------
Net investment $1,055 $1,045
==================

Foreign-based associated companies produce bauxite, alumina,
primary aluminum, hydroelectric power and fabricated aluminum
products. Investments in these companies were $282 million at
the end of 1996 (1995 - $241 million), including advances of $46
million (1995 - $46 million). Equity income (pre-tax) of $21
million was recognized during 1996 (1995 - $17 million, 1994 -
$24 million). Summarized financial information related to these
entities follows:

Years ended December 31
----------------------------
1996 1995 1994
----------------------------

Net sales $950 $709 $476
Cost of products sold 814 602 410
Net income 31 37 33

December 31
------------------
1996 1995
------------------

Current assets $599 $533
Noncurrent assets 917 575
Current liabilities 458 384
Noncurrent liabilities 469 265
Stockholders' equity 589 459

5. PROPERTY, PLANT AND EQUIPMENT (AT COST)
- - -------------------------------------------

December 31
-------------------
1996 1995
-------------------

Land, land improvements and mineral properties $303 $302
Buildings and leasehold improvements 1,092 1,057
Machinery and equipment 5,211 4,972
Construction in progress 207 269
-------------------
$6,813 $6,600
Less allowances for depreciation and amortization 3,576 3,377
-------------------
Net property, plant and equipment $3,237 $3,223
===================

6. FINANCING ARRANGEMENTS
- - --------------------------

December 31
------------------
1996 1995
------------------

Public debt securities:
Medium-term notes $997 $1,046
9% debentures due 2003 100 100
9-3/8% debentures due 1999 100 100
6-5/8% amortizing notes 284 284
Industrial and environmental control revenue bonds 237 242
Other arrangements:
Bank credit agreement 150 150
Mortgages and other notes payable 21 32
------------------
1,889 1,954
Amounts due within one year 96 101
------------------
Long-term debt $1,793 $1,853
==================

Long-term debt at December 31, 1996 matures as follows:

1997 $96
1998 291
1999 197
2000 154
2001 169
2002-2025 982

The medium-term notes, 9% debentures and 9-3/8% debentures were
issued under a $1.65-billion shelf registration. The medium-term
notes bear interest at an average fixed rate of 8.8% and have
maturities ranging from 1997 to 2013. At December 31, 1996, $113
million of debt securities remained unissued under the shelf
registration.

The 6-5/8% amortizing notes were issued at a discount (99.48%)
and have an effective interest rate of 6.7%. The notes require
annual principal repayments of $57 million between 1998 and 2002.

Industrial and environmental control revenue bonds consist of
variable-rate debt with interest rates averaging approximately
3.6% at December 31, 1996. These bonds require principal
repayment periodically or in a lump sum through 2025. Letters of
credit issued by banks support these bonds.

The bank credit agreement has a variable interest rate (5.9% at
December 31, 1996) and matures in 1998.

6. FINANCING ARRANGEMENTS -- continued
- - ---------------------------------------

Mortgages and other notes payable consist of fixed-rate debt with
an average rate of 6.4%. They require principal repayment
through 2009.

The Company has a $500-million revolving credit facility that
expires in 2001. No amounts were outstanding under the facility
at December 31, 1996. The annual commitment fee on the facility
is .10%.

Certain financing arrangements contain restrictions that
primarily consist of requirements to maintain specified financial
ratios. These restrictions do not inhibit operations or the use
of fixed assets. At December 31, 1996, the Company exceeded all
such requirements.

The fair value of long-term debt was approximately $2.0 billion
at the end of 1996 (1995 - $2.1 billion). The fair value was
determined by using discounted cash flow analysis.

Interest rate swap agreements are designated to manage a portion
of the exposure to interest rate fluctuations after considering
outstanding levels of variable-rate and fixed-rate debt. The
differential to be paid or received as interest rates change is
accrued and recognized as an adjustment of interest expense. The
fair values of these agreements (which at the end of 1996 and
1995 were not material) are not recognized in the financial
statements. At December 31, 1996, the Company had $625 million
of these agreements (1995 - $742 million), which effectively
convert a portion of its debt (principally medium-term notes)
from fixed-rate to variable-rate. Payments are received based on
a fixed rate (5.9%) and made based on a variable rate (5.7% at
December 31, 1996). These agreements mature in 1997 ($125
million), 1998 ($100 million) and 2001 ($400 million). The
Company also had $175 million of agreements (1995 - $175
million), which effectively convert a portion of its debt
(principally the bank credit agreement and industrial and
environmental control revenue bonds) from variable-rate
to fixed-rate. Payments are received based on a variable rate
(5.9% at December 31, 1996) and made based on a fixed rate
(6.0%). These agreements mature in 1998. The variable rates in
these agreements are based on the London Interbank Offer Rate.

Interest capitalized was $13 million during 1996 (1995 - $7
million, 1994 - $5 million).

The weighted-average interest rate on commercial paper was 5.9%
at the end of 1996. The weighted-average interest rate on other
short-term borrowings was 4.6% at the end of 1996 (1995 - 7.0%).

7. STOCKHOLDERS' EQUITY
- - ------------------------

Preferred stock
- - ---------------
The Company has 21,000,000 shares of preferred stock authorized.
Two million shares have been designated Series A Junior
Participating Preferred.

On December 31, 1996, the Company called for redemption of all
its outstanding PRIDES. As a result of the call, the Company
issued a total of 9,019,990 shares of common stock upon the
redemption or conversion of all of the PRIDES. A total of
4,673,800 shares of common stock were issued in redemption of
5,699,756 shares of PRIDES. The redemption rate of .82 of a
share of common stock for each share of PRIDES was based on a
call price of $48.077 per share and a common stock market price
of $58.79 per share (determined as provided in the PRIDES
governing documents). In lieu of redemption, holders of
5,300,244 shares of PRIDES elected to convert their shares of
PRIDES (on or before the redemption date) into 4,346,190 shares
of common stock (at a conversion rate of .82 of a share of common
stock for each share of PRIDES). Dividends declared on each
share of PRIDES were $3.31 in 1996 (1995 - $3.31).

7. STOCKHOLDERS' EQUITY -- continued
- - -------------------------------------

Common stock
- - ------------
Shares Amount
-----------------------

Authorized, without par value 200,000,000
Outstanding:
At beginning of 1994 60,488,863 $784
Shares issued under employee benefit plans:
1994 1,679,792 86
1995 1,429,822 71
1996 100,132 5
Shares issued for the redemption or
conversion of PRIDES in 1996 9,019,990 505
-----------------------
At end of 1996 72,718,599 $1,451
=======================

Cash dividends declared
1996 1995 1994
------------------------

PRIDES $36 $36 $34
Common stock 89 77 62
------------------------
$125 $113 $96
========================

Stock options
- - -------------
The Company has a non-qualified stock option plan under which key
employees may be granted stock options at a price equal to the
fair market value at the date of grant. Other than the
performance-based options discussed below, the stock options
currently outstanding vest in one year and are exercisable
between one year and 10 years from the date of grant. A summary
of stock option activity and related information follows
(options are in thousands):

1996 1995 1994
---- ---- ----

Outstanding at January 1 4,680 4,404 3,756
Granted 750 755 728
Exercised (103) (453) (55)
Canceled (9) (26) (25)
------------------------------
Outstanding at December 31 5,318 4,680 4,404
Exercisable at December 31 4,569 3,931 3,681
Available for grant (increased on
January 1, 1996 by 2 million shares) 1,630 520 1,260

Weighted-average prices:
Outstanding at January 1 $52 $51 $52
Granted 55 52 45
Exercised 39 43 31
Canceled 52 53 56
Outstanding at December 31 52 52 51
Exercisable at December 31 52 52 52

7. STOCKHOLDERS' EQUITY -- continued
- - -------------------------------------

Stock options-continued
- - -----------------------
The following table summarizes information about stock options
outstanding at December 31, 1996 (options are in thousands and
remaining contractual life and exercise prices are weighted-
averages):

Options Outstanding Options Exercisable
-------------------------------- -------------------
Range of Remaining
Exercise Contractual Exercise Exercise
Prices Options Life Price Options Price
------ ------- ---- ----- ------- -----

$35 to $49 1,518 6 Years $44 1,518 $44
$52 to $60 3,800 6 Years 56 3,051 56
------- -------
$35 to $60 5,318 6 Years 52 4,569 52
======= =======

In 1996, the Company also granted 150,000 performance-based stock
options at an exercise price of $53.50 per share. The stock
options will not be exercisable unless, on or before September
30, 1999, the closing price of the common stock equals or exceeds
$80.25 per share for 30 consecutive days. If this condition is
satisfied, the options may be exercised any time between August
30, 1997 and March 31, 2000.

Pro forma net income and earnings per share have been prepared
based on expensing (after tax) the estimated fair value of stock
options granted during 1996 and 1995. The estimated fair value
of the stock options was determined by using a Black-Scholes
option pricing model. The estimated fair values and the weighted-
average assumptions used to estimate those values follow:

Performance-
Stock Options Based Options
----------------- -------------
1996 1995 1996
---- ---- ----

Risk-free interest rate 6.9% 6.5% 6.5%
Dividend yield 2.6% 3.0% 2.1%
Volatility factor of the expected
market price of the Company's
common stock .278 .270 .262
Expected life of the option 6 years 6 years 3 years

Estimated fair value of each
stock option granted $16.97 $14.30 $11.73

The Black-Scholes option pricing model was not developed for use
in valuing employee stock options. This model was developed for
use in estimating the fair value of traded options that have no
vesting restrictions and are fully transferable. In addition, it
requires the input of highly subjective assumptions including
expectations of future dividends and stock price volatility. The
assumptions are only used for making the required fair value
estimate and should not be considered as indicators of future
dividend policy or stock price appreciation. Because changes in
the subjective input assumptions can materially affect the fair
value estimate and because the employee stock options have
characteristics significantly different from those of traded
options, the use of the Black-Scholes option pricing model may
not provide a reliable single measure of the employee stock
options.

The pro forma information follows:

1996 1995
---- ----

Pro forma net income $79 $ 382
Pro forma earnings per share $0.67 $5.25

7. STOCKHOLDERS' EQUITY -- continued
- - -------------------------------------

Shareholder rights plan
- - -----------------------
Each share of common stock has one right attached and the rights
trade with the common stock. The rights are exercisable only if
a person or group buys 20% or more of the Company's common stock,
or announces a tender offer for 30% or more of the outstanding
common stock. Each right will entitle a holder to buy one-
hundredth of one share of the Company's Series A Junior
Participating Preferred Stock at an exercise price of $125.

If at any time after the rights become exercisable, the Company
is acquired in a merger or other business combination, or if
there is a sale or transfer of 50% of its assets or earning
power, each right would enable its holder to buy common stock of
the acquiring company at a 50% discount. In addition, if a
person or group acquires 30% or more of the common stock, or if
certain other events occur, each right would enable its holder to
buy common stock of the Company at a 50% discount. The rights,
which do not have voting privileges, expire in late 1997. The
Board of Directors may redeem the rights before
expiration, under certain circumstances, for $0.05 per right.
Until the rights become exercisable, they have no dilutive effect
on earnings per share.

These rights should not interfere with a business combination
approved by the Board of Directors. However, they will cause
substantial dilution to a person or group that attempts to
acquire the Company without conditioning the offer on redemption
of the rights or acquiring a substantial number of the rights.

Cumulative currency translation adjustments
- - -------------------------------------------
1996 1995 1994
-----------------------

At beginning of year $(22) $(43) $(50)
Currency translation adjustments (16) 23 7
Income taxes 1 (2) -
-----------------------
At end of year $(37) $(22) $(43)
=======================

8. POSTRETIREMENT BENEFITS
- - ---------------------------

Pensions
- - --------
The Company has several noncontributory defined benefit pension
plans that cover substantially all employees. Plans covering
salaried employees provide pension benefits based on a formula.
The formula considers length of service and earnings during years
of service. Plans covering hourly employees generally provide a
specific amount of benefits for each year of service.

Net pension costs were:

1996 1995 1994
------------------------

Service cost $38 $27 $32
Interest cost 138 133 127
Actual return on plan assets -- (gain) loss (212) (308) 3
Net amortization and deferrals 94 192 (92)
Other 14 12 12
------------------------
Total $72 $56 $82
========================

8. POSTRETIREMENT BENEFITS -- continued
- - ----------------------------------------

Pensions-continued
- - ------------------
The following table sets forth information on the principal
pension plans:

December 31
-------------------
1996 1995
-------------------

Actuarial present value of pension benefit obligation:
Vested $1,593 $1,546
Nonvested 192 177
-------------------
Accumulated $1,785 $1,723
===================
Projected $1,916 $1,858
Plan assets at fair value 1,876 1,692
-------------------

Plan assets less than projected benefit obligation (40) (166)

Items not yet recognized:
Unrecognized net loss 95 271
Unamortized plan change benefits 156 98
Recognition of minimum liability (18) (151)
-------------------
Net pension asset $193 $52
===================

Assumptions used in accounting for the principal pension plans
were:

1996 1995 1994
-------------------------

Discount rate 7.75% 7.25% 8.75%
Approximate weighted-average rate of increase
in compensation levels (salaried plan only) 4.5% 4.5% 4.5%
Expected long-term rate of return on assets 9.25% 9.25% 9.25%

At December 31, 1996, the accumulated benefit obligations of the
pension plans were substantially fully funded. In the future,
the Company expects to keep the plans fully funded absent
significant plan changes and/or deviations in actuarial
assumptions. Absent these changes and/or deviations, funding
levels will approximate pension costs in future years. Cash for
the contributions is expected to be generated from operations.
Contributions totaled $87 million in 1996 and $127 million
(including 0.9 million shares of common stock of the Company
valued at $45 million) in 1995.

8. POSTRETIREMENT BENEFITS -- continued
- - ----------------------------------------

At December 31, 1996, the plans' assets consisted of the
following:

Corporate equity securities 59%
Corporate bonds 26
Government debt securities and cash equivalents 10
Real estate 5

Corporate equity securities include 1.5 million shares of the
Company's common stock. These shares had a market value of $85
million at the end of 1996. Dividends paid on the Company's
common stock held by the plans during 1996 totaled $2 million.

Other postretirement benefits
- - -----------------------------
The Company provides most domestic retired employees with health
care and life insurance benefits. Substantially all domestic
employees may become eligible for these benefits if they work for
the Company until retirement age. The cost of these benefits is
funded when actual expenses are incurred.

Net periodic postretirement benefit cost was:

1996 1995 1994
----------------------------

Service cost $8 $6 $8
Interest cost 62 74 74
Net amortization (19) (19) (16)
----------------------------
Total $51 $61 $66
============================

The accumulated postretirement benefit obligation consists of the
following:

December 31
-------------------
1996 1995
-------------------

Retirees $625 $694
Active employees fully eligible 81 71
Active employees not fully eligible 146 165
Unamortized plan change benefits 145 178
Unrecognized net gain (loss) 75 (46)
-------------------
Total $1,072 $1,062
===================

The health care cost trend rate has a significant effect on the
amounts reported. The annual assumed rate of increase for the
principal plans is 6.5% for 1997 (7% in 1996 and 10% in 1995) and
is assumed to decrease gradually to 5% for 2002 and beyond. Each
1% change in the rate would change the accumulated postretirement
benefit obligation by $52 million at December 31, 1996 and net
periodic postretirement benefit cost for 1996 by $4 million.

The discount rate used in determining the accumulated
postretirement benefit obligation for the principal plans was
7.75% at December 31, 1996 (1995 - 7.25%).

9. TAXES ON INCOME
- - -------------------

The significant components of the provision for income taxes
were:

1996 1995 1994
----------------------

Current:
Federal $3 $10 $30
Foreign 3 10 15
State 1 3 1
----------------------
Total current 7 23 46
----------------------
Deferred:
Federal 2 66 (13)
Foreign 28 62 32
State (2) - (8)
----------------------
Total deferred 28 128 11
----------------------
Equity income 14 8 11
----------------------
Total $49 $159 $68
======================

The deferred tax provision includes domestic carryforward
benefits of $28 million (1995 - $9 million, 1994 -$14 million).

The effective income tax rate varied from the U.S. statutory rate
as follows:

1996 1995 1994
----------------------

U.S. rate 35% 35% 35%
Income taxed at other than the U.S. rate 2 (5) 2
Percentage depletion (3) (1) (3)
State income taxes and other (2) - 2
----------------------
Effective rate 32% 29% 36%
======================

Income taxed at other than the U.S. rate includes a non-recurring
foreign tax benefit of 3% in 1995.

Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used
for income tax purposes. At December 31, 1996, the Company had
$890 million (1995 - $902 million) of deferred tax assets and
$826 million (1995 - $759 million) of deferred tax liabilities
that have been netted with respect to tax jurisdictions for
presentation purposes. The significant components of these
amounts were:

1996 1995
------------------------------------
Asset Liability Asset Liability
------------------------------------

Retiree health benefits $ 412 $- $415 $-
Tax carryforward benefits 225 - 213 (1)
Environmental and restructuring costs 110 (2) 121 (2)
Other 5 54 44 39
Tax over book depreciation (380) 210 (369) 200
Valuation reserve relating to tax
carryforward benefits (46) - (45) -
------------------------------------
Total deferred tax assets and liabilities 326 262 379 236

Amount included as current in
balance sheet 30 - 3 -
------------------------------------
Noncurrent deferred tax assets and
liabilities $296 $262 $376 $236
====================================

9. TAXES ON INCOME -- continued
- - --------------------------------

The tax carryforward benefits can be carried forward indefinitely
except for $61 million that will expire primarily between 2001
and 2011. A valuation reserve of $46 million relating to certain
of these benefits has been recorded. Alternatives continue to be
evaluated that may result in the ultimate realization of a
portion of these reserved assets.

Income taxes have not been provided on the undistributed earnings
($1,015 million) of foreign subsidiaries. The Company intends to
use such earnings to finance foreign expansion, reduce foreign
debt or support foreign operating requirements.

10. CONTINGENT LIABILITIES AND COMMITMENTS
- - -------------------------------------------

Various suits, claims and actions are pending against the
Company. In the opinion of management, after consultation with
legal counsel, disposition of these suits, claims and actions,
either individually or in the aggregate, will not have a material
adverse effect on the Company's competitive or financial position
or its ongoing results of operations. No assurance can be given,
however, that the disposition of one or more of such suits,
claims or actions in a particular reporting period will not be
material in relation to the reported results for such period.

The Company is committed to paying its proportionate share of
annual primary aluminum production charges (including debt
service) relating to its interests in an unincorporated joint
venture and an associated company. These arrangements include
minimum commitments of approximately $45 million annually through
1999. The present value of these commitments at December 31,
1996 was $122 million, after excluding interest of $13 million.
The Company purchased approximately $150 million of primary
aluminum in each of the last three years under these
arrangements.

Certain items of property, plant and equipment are leased under
long-term operating leases. Lease expense was approximately $48
million per year for the years 1994 to 1996. Lease commitments
at December 31, 1996, were approximately $80 million. Leases
covering major items contain renewal and/or purchase options that
may be exercised.

11. ENVIRONMENTAL EXPENDITURES
- - -------------------------------

The Company is involved in various worldwide environmental
improvement activities resulting from past operations, including
designation as a potentially responsible party (PRP), with
others, at various Environmental Protection Agency-designated
Superfund sites. Amounts have been recorded (on an undiscounted
basis) which, in management's best estimate, will be sufficient
to satisfy anticipated costs of known remediation requirements.
At December 31, 1996, the accrual for environmental remediation
costs was $197 million. This amount is expected to be spent over
the next 15 to 20 years with the majority to be spent by the year
2002.

Estimated environmental remediation costs are developed after
considering, among other things, the following:

- - - currently available technological solutions
- - - alternative cleanup methods
- - - risk-based assessments of the contamination
- - - estimated proportionate share of remediation costs (if applicable)

11. ENVIRONMENTAL EXPENDITURES -- continued
- - --------------------------------------------

The Company may also use external consultants, and consider, when
available, estimates by other PRPs and governmental agencies and
information regarding the financial viability of other PRPs.
Based on information currently available, the Company believes it
is unlikely that it will incur substantial additional costs as a
result of failure by other PRPs to satisfy their responsibilities
for remediation costs.

Estimated costs for future environmental compliance and
remediation are necessarily imprecise because of factors such as:

- - - continuing evolution of environmental laws and regulatory
requirements
- - - availability and application of technology
- - - identification of presently unknown remediation requirements
- - - cost allocations among PRPs

Further, it is not possible to predict the amount or timing of
future costs of environmental remediation that may subsequently
be determined. Based on 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
results of operations in a future interim or annual reporting
period.

12. COMPANY OPERATIONS
- - -----------------------

The Company serves global markets as a supplier and recycler of
aluminum and other products, with its core business being as a
vertically integrated producer of a wide variety of value-added
aluminum products. The Company produces alumina, carbon products
and primary and reclaimed aluminum, principally to supply the
needs of its fabricating operations. These fabricating
operations produce aluminum foil, sheet, plate, cans, extruded
products (including heat exchanger tubing, drive shafts, bumpers
and window systems), flexible packaging and wheels, among other
items. The Company also produces a broad range of plastic
products, including film, bags, containers and lids, for consumer
products, foodservice and packaging uses. The Company markets an
extensive line of consumer products under the Reynolds brand
name, including the well-known Reynolds Wrap aluminum foil. The
Company's principal markets for its products are the aluminum
beverage can, packaging, consumer products, transportation, and
building and construction markets. The Company also is engaged
in the distribution of aluminum and stainless steel and other
nonaluminum industrial products to a variety of markets.

Primary aluminum is an internationally traded commodity. The
price of primary aluminum is subject to worldwide market forces
of supply and demand and other influences. Prices can be
volatile and fluctuations influence the Company's operating
results. The Company's current strategy of being a vertically
integrated producer of value-added aluminum products and its use
of contractual arrangements including fixed-price sales
contracts, fixed-price supply contracts, and forward, futures and
option contracts, reduces its exposure to this volatility but
does not eliminate it. Through these activities, the Company's
risk profile is managed in a manner consistent with management's
operational strategies. The Company continues to manage its
global operations in order to mitigate its exposure to general
financial, political, economic and business risks.

In order to more fully describe the nature of its operations and
to supplement the foregoing, the Company has separated its
vertically integrated operations into two groups referred to as
Finished Products and Other Sales, and Production and Processing.
Summarized financial information relating to the Company's
operations and investments is as follows:

12. COMPANY OPERATIONS -- continued
- - ------------------------------------

Operating Data

Finished Production
Products and and Eliminations,
1996 Other Sales Processing etc. Consolidated
- - --------------------------------------------------------------------------------------------------

Sales to customers $3,538 $3,434 $- $6,972
Internal transfers 6 785 (791) -
- - --------------------------------------------------------------------------------------------------
Total sales $3,544 $4,219 $(791) $6,972
- - --------------------------------------------------------------------------------------------------
Operating income $185 $86 $(2) $269
Equity income 19 9 (7) 21
Interest and other income 23
Interest expense (160)
-------------
Income before income taxes and
cumulative effect of accounting change $153
- - --------------------------------------------------------------------------------------------------
Depreciation and amortization 102 263 365
Identifiable assets 1,546 3,966 (51) 5,461
Capital investments 131 301 432
- - --------------------------------------------------------------------------------------------------

1995
- - --------------------------------------------------------------------------------------------------
Sales to customers $3,535 $3,678 $- $7,213
Internal transfers 9 809 (818) -
- - --------------------------------------------------------------------------------------------------
Total sales $3,544 $4,487 $(818) $7,213
- - --------------------------------------------------------------------------------------------------
Operating income $232 $492 $(43) $681
Equity income 14 11 (8) 17
Interest and other income 22
Interest expense (172)
-------------
Income before income taxes $548
- - --------------------------------------------------------------------------------------------------
Depreciation and amortization 99 245 344
Identifiable assets 1,558 4,121 (83) 5,596
Capital investments $157 $688 845
- - --------------------------------------------------------------------------------------------------

1994
- - --------------------------------------------------------------------------------------------------
Sales to customers $3,040 $2,839 $- $5,879
Internal transfers 4 706 (710) -
- - --------------------------------------------------------------------------------------------------
Total sales $3,044 $3,545 $(710) $5,879
- - --------------------------------------------------------------------------------------------------
Operating income $256 $2 $(46) $212
Equity income 23 10 (9) 24
Interest and other income 110
Interest expense (156)
-------------
Income before income taxes $190
- - --------------------------------------------------------------------------------------------------
Depreciation and amortization 91 250 341
Identifiable assets 1,452 3,963 (84) 5,331
Capital investments $183 $221 404
- - --------------------------------------------------------------------------------------------------

12. COMPANY OPERATIONS -- continued
- - ------------------------------------

Geographic Data

Other
Foreign
(Principally
1996 Domestic Canada Europe) Eliminations Consolidated
- - -----------------------------------------------------------------------------------------

Sales to customers $5,450 $509 $1,013 $6,972
Transfers between areas 380 677 203 $(1,260) -
- - -----------------------------------------------------------------------------------------
Total sales $5,830 $1,186 $1,216 $(1,260) $6,972
- - -----------------------------------------------------------------------------------------
Operating income (loss) $148 $154 $(18) $(15) $269
Identifiable assets $4,220 $1,332 $798 $(171) $6,179
- - -----------------------------------------------------------------------------------------

1995
- - -----------------------------------------------------------------------------------------
Sales to customers $5,524 $529 $1,160 $7,213
Transfers between areas 484 726 176 (1,386) -
- - -----------------------------------------------------------------------------------------
Total sales $6,008 $1,255 $1,336 $(1,386) $7,213
- - -----------------------------------------------------------------------------------------
Operating income $230 $351 $87 $13 $681
Identifiable assets $4,360 $1,326 $981 $(213) $6,454
- - -----------------------------------------------------------------------------------------

1994
- - -----------------------------------------------------------------------------------------
Sales to customers $4,506 $375 $998 $5,879
Transfers between areas 404 576 178 (1,158) -
- - -----------------------------------------------------------------------------------------
Total sales $4,910 $951 $1,176 $(1,158) $5,879
- - -----------------------------------------------------------------------------------------
Operating income $27 $133 $63 $(11) $212
Identifiable assets $4,578 $1,288 $975 $(236) $6,605
- - -----------------------------------------------------------------------------------------

Approximately 30% of products transferred between operating
groups is reflected at cost-related prices. The remaining
transfers between operating areas and transfers among Canada,
other foreign and domestic areas are reflected at market-related
prices.

Operating profit is after allocation of selling, administrative
and general expenses. It does not reflect interest expense or
other items of income or expense considered to be general
corporate in nature.

Investments in and advances to associated companies and
unincorporated joint ventures not consolidated totaled $1,337
million at the end of 1996 (1995 - $1,286 million, 1994 - $856
million). These investments and advances relate principally to
Australian and Canadian entities in the Production and Processing
group. Corporate assets of $718 million at the end of 1996 (1995
- - - $858 million, 1994 - $1,274 million) consist principally of
cash, investments, deferred taxes and other assets.

Research and development expenditures were $49 million in 1996
(1995 - $43 million, 1994 - $38 million).

We are conducting a review of all our operations and businesses.
We are considering a number of alternatives that include, among
other things, asset sales, spin-offs, and the forming of
strategic alliances to increase scale. Such actions, if taken,
could affect the Company's results and ongoing operating
performance. No decisions will be made until later in 1997.

13. CANADIAN REYNOLDS METALS COMPANY, LTD. AND REYNOLDS ALUMINUM
COMPANY OF CANADA, LTD.
- - -----------------------------------------------------------------

Financial statements for Canadian Reynolds Metals Company, Ltd.
and Reynolds Aluminum Company of Canada, Ltd. have been omitted
because certain securities registered under the Securities Act of
1933, of which these entities are obligors (thus subjecting them
to reporting requirements under Section 13 or 15(d) of the
Securities Exchange Act of 1934), are fully and unconditionally
guaranteed by Reynolds Metals Company. Financial information
relating to these companies is presented herein in accordance
with Staff Accounting Bulletin 53 as an addition to the notes to
the financial statements of Reynolds Metals Company. Summarized
financial information is as follows:

Canadian Reynolds Metals Company, Ltd.

Years ended December 31
--------------------------
1996 1995 1994
--------------------------

Net Sales:
Customers $202 $226 $111
Parent company 599 690 576
--------------------------
801 916 687

Cost of products sold 677 651 603

Net income (loss) $65 $176 $38

December 31
----------------
1996 1995
----------------

Current assets $189 $112
Noncurrent assets 1,225 1,266
Current liabilities (50) (91)
Noncurrent liabilities (624) (617)

Reynolds Aluminum Company of Canada, Ltd.

Years ended December 31
-------------------------
1996 1995 1994
-------------------------

Net Sales:
Customers $509 $522 $373
Parent company 517 619 498
-------------------------
1,026 1,141 871

Cost of products sold 884 849 755

Net income (loss) $59 $188 $50

December 31
------------------
1996 1995
------------------

Current assets $240 $221
Noncurrent assets 1,370 1,407
Current liabilities (95) (199)
Noncurrent liabilities (656) (632)

Quarterly Results of Operations (Unaudited)
(millions, except per share amounts)

- - --------------------------------------------------------------------------------------------------------
1996 1995
- - --------------------------------------------------------------------------------------------------------
Quarter 1st 2nd 3rd 4th 1st 2nd 3rd 4th
- - --------------------------------------------------------------------------------------------------------

Net sales $1,662 $1,823 $1,751 $1,736 $1,651 $1,864 $1,841 $1,857

Gross profit 205 227 180 151 259 304 307 272

Income before cumulative effect of
accounting change 17 60 26 1 82 111 112 84

Cumulative effect of accounting
change (See Note 1) (15) - - - - - - -
- - --------------------------------------------------------------------------------------------------------
Net income $2 $60 $26 $1 $82 $111 $112 $84
========================================================================================================

Earnings per common share
Income (loss) before cumulative
effect of accounting change $0.12 $0.81 $0.26 $(0.13) $1.13 $1.51 $1.56 $1.15
Cumulative effect of accounting change (0.24) - - - - - - -
- - --------------------------------------------------------------------------------------------------------
Net income (loss) $(0.12) $0.81 $0.26 $(0.13) $1.13 $1.51 $1.56 $1.15
========================================================================================================

Gross profit equals net sales minus cost of products sold (including
manufacturing depreciation). Included in income before cumulative
effect of accounting change for 1996 is a charge for restructuring costs of $23
million ($0.36 per share) in the first quarter of 1996 and favorable effects
from LIFO inventory liquidations of $3 million ($0.05 per share), $6 million
($0.10 per share) and $10 million ($0.14 per share) in the second, third and
fourth quarters, respectively.

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

Stockholders and Board of Directors
Reynolds Metals Company

We have audited the accompanying consolidated balance sheets of
Reynolds Metals Company as of December 31, 1996 and 1995, and
the related consolidated statements of income and retained
earnings, and cash flows for each of the three years in the
period ended December 31, 1996. These financial statements are
the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Reynolds Metals Company at December 31,
1996 and 1995, and the consolidated results of its operations
and its cash flows for each of the three years in the period
ended December 31, 1996, in conformity with generally accepted
accounting principles.

As discussed in Note 1 to the Consolidated Financial Statements,
in 1996 the Company adopted Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of."

Ernst & Young LLP

Richmond, Virginia
February 21, 1997

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

None.

PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

For information concerning the directors and nominees for
directorship and compliance with Section 16(a) of the Exchange
Act of 1934, see the information under the captions "Item 1.
Election of Directors" and "General Information - Section 16(a)
Beneficial Ownership Reporting Compliance" in the Registrant's
Proxy Statement for the Annual Meeting of Stockholders to be held
on April 16, 1997. That information is incorporated in this
report by reference.

Information concerning executive officers of the Registrant is
shown in Part I - Item 4A of this report.

Item 11. EXECUTIVE COMPENSATION

For information required by this item, see the information under
the captions "Item 1. Election of Directors - Board Compensation
and Benefits", "Item 1. Election of Directors - Other
Compensation", and "Executive Compensation" in the Registrant's
Proxy Statement for the Annual Meeting of Stockholders to be held
on April 16, 1997. That information is incorporated in this
report by reference.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

For information required by this item, see the information under
the caption "Beneficial Ownership of Securities" in the
Registrant's Proxy Statement for the Annual Meeting of
Stockholders to be held on April 16, 1997. That information
(other than that appearing under the caption "Beneficial
Ownership of Securities - Stock Ownership Guidelines") is
incorporated in this report by reference.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

For information required by this item, see the information under
the captions "Item 1. Election of Directors - Certain
Relationships", "Item 1. Election of Directors - Other
Compensation", "Executive Compensation - Pension Plan Table" and
"Executive Compensation - Certain Arrangements" in the
Registrant's Proxy Statement for the Annual Meeting of
Stockholders to be held on April 16, 1997. That information is
incorporated in this report by reference.

PART IV

Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) The consolidated financial statements and exhibits listed
below are filed as a part of this report.

(1) Consolidated Financial Statements: Page
----
Consolidated statement of income and retained earnings -
Years ended December 31, 1996, 1995 and 1994. 35

Consolidated balance sheet - December 31, 1996 and 1995. 36

Consolidated statement of cash flows - Years ended
December 31, 1996, 1995 and 1994. 37

Notes to consolidated financial statements. 38

Report of Ernst & Young LLP, Independent Auditors. 55

(2) Financial Statement Schedules

This report omits all schedules for which provision is
made in the applicable accounting regulations of the
Securities and Exchange Commission because they are not
required, are inapplicable or the required information
has otherwise been given.

This report omits individual financial statements of
Reynolds Metals Company because the restricted net
assets (as defined in Accounting Series Release 302) of
all subsidiaries included in the consolidated financial
statements filed, in the aggregate, do not exceed 25%
of the consolidated net assets shown in the
consolidated balance sheet as of December 31, 1996.

This report omits financial statements of all
associated companies (20% to 50% owned) because no
associated company is individually significant.

(3) Exhibits

EXHIBIT 2 - None

EXHIBIT 3.1 - Restated Certificate of Incorporation,
as amended

EXHIBIT 3.2 - By-Laws, as amended

EXHIBIT 4.1 - Restated Certificate of Incorporation.
See EXHIBIT 3.1.

EXHIBIT 4.2 - By-Laws. See EXHIBIT 3.2.

* EXHIBIT 4.3 - Indenture dated as of April 1, 1989 (the
"Indenture") between Reynolds Metals
Company and The Bank of New York, as
Trustee, relating to Debt Securities.
(File No. 1-1430, Form 10-Q Report for
the Quarter Ended March 31, 1989,
EXHIBIT 4(c))

_______________________
*Incorporated by reference.
* EXHIBIT 4.4 - Amendment No. 1 dated as of November 1,
1991 to the Indenture. (File No. 1-
1430, 1991 Form 10-K Report, EXHIBIT
4.4)

* EXHIBIT 4.5 - Rights Agreement dated as of November
23, 1987 (the "Rights Agreement")
between Reynolds Metals Company and The
Chase Manhattan Bank, N.A. (File No. 1-
1430, Registration Statement on Form 8-A
dated November 23, 1987, pertaining to
Preferred Stock Purchase Rights, EXHIBIT
1)

* EXHIBIT 4.6 - Amendment No. 1 dated as of December 19,
1991 to the Rights Agreement. (File No.
1-1430, 1991 Form 10-K Report, EXHIBIT
4.11)

* EXHIBIT 4.7 - Form of 9-3/8% Debenture due June 15, 1999.
(File No. 1-1430, Form 8-K Report dated
June 6, 1989, EXHIBIT 4)

* EXHIBIT 4.8 - Form of Fixed Rate Medium-Term Note.
(Registration Statement No. 33-30882 on
Form S-3, dated August 31, 1989, EXHIBIT
4.3)

* EXHIBIT 4.9 - Form of Floating Rate Medium-Term Note.
(Registration Statement No. 33-30882 on
Form S-3, dated August 31, 1989, EXHIBIT
4.4)

* EXHIBIT 4.10 - Form of Book-Entry Fixed Rate Medium-Term
Note. (File No. 1-1430, 1991 Form 10-K
Report, EXHIBIT 4.15)

* EXHIBIT 4.11 - Form of Book-Entry Floating Rate Medium-Term
Note. (File No. 1-1430, 1991 Form 10-K
Report, EXHIBIT 4.16)

* EXHIBIT 4.12 - Form of 9% Debenture due August 15, 2003.
(File No. 1-1430, Form 8-K Report dated
August 16, 1991, Exhibit 4(a))

* EXHIBIT 4.13 - Articles of Continuance of Societe
d'Aluminium Reynolds du Canada,
Ltee/Reynolds Aluminum Company of
Canada, Ltd. (formerly known as Canadian
Reynolds Metals Company, Limited --
Societe Canadienne de Metaux Reynolds,
Limitee) ("REYCAN"), as amended. (File
No. 1-1430, 1995 Form 10-K Report,
EXHIBIT 4.13)

* EXHIBIT 4.14 - By-Laws of REYCAN, as amended. (File No. 1-
1430, 1995 Form 10-K Report, EXHIBIT
4.14)

* EXHIBIT 4.15 - Articles of Incorporation of Societe
Canadienne de Metaux Reynolds,
Ltee/Canadian Reynolds Metals Company,
Ltd. ("CRM"), as amended. (File No. 1-
1430, 1995 Form 10-K Report, EXHIBIT
4.15)

* EXHIBIT 4.16 - By-Laws of CRM, as amended. (File No. 1-
1430, 1995 Form 10-K Report, EXHIBIT
4.16)

_______________________
*Incorporated by reference.

* EXHIBIT 4.17 - Indenture dated as of April 1, 1993
among REYCAN, Reynolds Metals Company
and The Bank of New York, as Trustee.
(File No. 1-1430, Form 8-K Report dated
July 14, 1993, EXHIBIT 4(a))

* EXHIBIT 4.18 - First Supplemental Indenture, dated as of
December 18, 1995 among REYCAN, Reynolds
Metals Company, CRM and The Bank of New
York, as Trustee. (File No. 1-1430,
1995 Form 10-K Report, EXHIBIT 4.18)

* EXHIBIT 4.19 - Form of 6-5/8% Guaranteed Amortizing Note due
July 15, 2002. (File No. 1-1430, Form 8-
K Report dated July 14, 1993, EXHIBIT
4(d))

EXHIBIT 9 - None

=* EXHIBIT 10.1 - Reynolds Metals Company 1987
Nonqualified Stock Option Plan.
(Registration Statement No. 33-13822 on
Form S-8, dated April 28, 1987, EXHIBIT
28.1)

=* EXHIBIT 10.2 - Reynolds Metals Company 1992
Nonqualified Stock Option Plan.
(Registration Statement No. 33-44400 on
Form S-8, dated December 9, 1991,
EXHIBIT 28.1)

=* EXHIBIT 10.3 - Reynolds Metals Company Performance
Incentive Plan, as amended and restated
effective January 1, 1996. (File No. 1-
1430, Form 10-Q Report for the Quarter
Ended March 31, 1995, EXHIBIT 10.4)

=* EXHIBIT 10.4 - Agreement dated December 9, 1987 between
Reynolds Metals Company and Jeremiah J.
Sheehan. (File No. 1-1430, 1987 Form 10-
K Report, EXHIBIT 10.9)

=* EXHIBIT 10.5 - Supplemental Death Benefit Plan for
Officers. (File No. 1-1430, 1986 Form
10-K Report, EXHIBIT 10.8)

=* EXHIBIT 10.6 - Financial Counseling Assistance Plan for
Officers. (File No. 1-1430, 1987 Form
10-K Report, EXHIBIT 10.11)

=* EXHIBIT 10.7 - Management Incentive Deferral Plan.
(File No. 1-1430, 1987 Form 10-K Report,
EXHIBIT 10.12)

=* EXHIBIT 10.8 - Deferred Compensation Plan for Outside
Directors as Amended and Restated
Effective December 1, 1993. (File No. 1-
1430, 1993 Form 10-K Report, EXHIBIT
10.12)

=* EXHIBIT 10.9 - Form of Indemnification Agreement for
Directors and Officers. (File No. 1-
1430, Form 8-K Report dated April 29,
1987, EXHIBIT 28.3)

____________________________
* Incorporated by reference.
= Management contract or compensatory plan or arrangement required
to be filed as an exhibit pursuant to Item 601 of Regulation S-K.

=* EXHIBIT 10.10 - Form of Executive Severance Agreement between
Reynolds Metals Company and key
executive personnel, including each of
the individuals (other than Donna C.
Dabney) listed in Item 4A of this
report. (File No. 1-1430, 1987 Form 10-
K Report, EXHIBIT 10.18)

=* EXHIBIT 10.11 - Amendment to Reynolds Metals Company
1987 Nonqualified Stock Option Plan
effective May 20, 1988. (File No. 1-
1430, Form 10-Q Report for the Quarter
Ended June 30, 1988, EXHIBIT 19(a))

=* EXHIBIT 10.12 - Amendment to Reynolds Metals Company
1987 Nonqualified Stock Option Plan
effective October 21, 1988. (File No. 1-
1430, Form 10-Q Report for the Quarter
Ended September 30, 1988, EXHIBIT 19(a))

=* EXHIBIT 10.13 - Amendment to Reynolds Metals Company
1987 Nonqualified Stock Option Plan
effective January 1, 1987. (File No. 1-
1430, 1988 Form 10-K Report, EXHIBIT
10.22)

=* EXHIBIT 10.14 - Form of Stock Option and Stock Appreciation
Right Agreement, as approved February
16, 1990 by the Compensation Committee
of the Company's Board of Directors.
(File No. 1-1430, 1989 Form 10-K Report,
EXHIBIT 10.24)

=* EXHIBIT 10.15 - Amendment to Reynolds Metals Company
1987 Nonqualified Stock Option Plan
effective January 18, 1991. (File No. 1-
1430, 1990 Form 10-K Report, EXHIBIT
10.26)

=* EXHIBIT 10.16 - Letter Agreement dated January 18, 1991
between Reynolds Metals Company and
William O. Bourke. (File No. 1-1430,
1990 Form 10-K Report, EXHIBIT 10.27)

=* EXHIBIT 10.17 - Form of Stock Option Agreement, as approved
April 22, 1992 by the Compensation
Committee of the Company's Board of
Directors. (File No. 1-1430, Form 10-Q
Report for the Quarter Ended March 31,
1992, EXHIBIT 28(a))

=* EXHIBIT 10.18 - Consulting Agreement dated May 1, 1992
between Reynolds Metals Company and
William O. Bourke. (File No. 1-1430,
Form 10-Q Report for the Quarter Ended
March 31, 1992, EXHIBIT 28(b))

=* EXHIBIT 10.19 - 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)

____________________________
* Incorporated by reference.
= Management contract or compensatory plan or arrangement
required to be filed as an exhibit pursuant to
Item 601 of Regulation S-K.

=* EXHIBIT 10.20 - Reynolds Metals Company Restricted Stock
Plan for Outside Directors.
(Registration Statement No. 33-53851 on
Form S-8, dated May 27, 1994, EXHIBIT
4.6)

=* EXHIBIT 10.21 - Reynolds Metals Company New Management
Incentive Deferral Plan. (File No. 1-
1430, Form 10-Q Report for the Quarter
Ended June 30, 1994, EXHIBIT 10.30)

=* EXHIBIT 10.22 - Reynolds Metals Company Salary Deferral
Plan for Executives. (File No. 1-1430,
Form 10-Q Report for the Quarter Ended
June 30, 1994, EXHIBIT 10.31)

=* EXHIBIT 10.23 - Reynolds Metals Company Supplemental
Long Term Disability Plan for
Executives. (File No. 1-1430, Form 10-Q
Report for the Quarter Ended June 30,
1994, EXHIBIT 10.32)

=* EXHIBIT 10.24 - Amendment to Reynolds Metals Company
1987 Nonqualified Stock Option Plan
effective August 19, 1994. (File No. 1-
1430, Form 10-Q Report for the Quarter
Ended September 30, 1994, EXHIBIT 10.34)

=* EXHIBIT 10.25 - Amendment to Reynolds Metals Company
1992 Nonqualified Stock Option Plan
effective August 19, 1994. (File No. 1-
1430, Form 10-Q Report for the Quarter
Ended September 30, 1994, EXHIBIT 10.35)

=* EXHIBIT 10.26 - Amendment to Reynolds Metals Company New
Management Incentive Deferral Plan
effective January 1, 1995. (File No. 1-
1430, 1994 Form 10-K Report, EXHIBIT
10.36)

=* EXHIBIT 10.27 - Form of Split Dollar Life Insurance Agreement
(Trustee Owner, Trustee Pays Premiums).
(File No. 1-1430, Form 10-Q Report for
the Quarter Ended June 30, 1995, EXHIBIT
10.34)

=* EXHIBIT 10.28 - Form of Split Dollar Life Insurance Agreement
(Trustee Owner, Employee Pays Premium).
(File No. 1-1430, Form 10-Q Report for
the Quarter Ended June 30, 1995, EXHIBIT
10.35)

=* EXHIBIT 10.29 - Form of Split Dollar Life Insurance Agreement
(Employee Owner, Employee Pays Premium).
(File No. 1-1430, Form 10-Q Report for
the Quarter Ended June 30, 1995, EXHIBIT
10.36)

=* EXHIBIT 10.30 - Form of Split Dollar Life Insurance Agreement
(Third Party Owner, Third Party Pays
Premiums). (File No. 1-1430, Form 10-Q
Report for the Quarter Ended June 30,
1995, EXHIBIT 10.37)

____________________________
* Incorporated by reference.
= Management contract or compensatory plan or arrangement
required to be filed as an exhibit pursuant to
Item 601 of Regulation S-K.

=* EXHIBIT 10.31 - Form of Split Dollar Life Insurance Agreement
(Third Party Owner, Employee Pays
Premiums). (File No. 1-1430, Form 10-Q
Report for the Quarter Ended June 30,
1995, EXHIBIT 10.38)

=* EXHIBIT 10.32 - Reynolds Metals Company 1996
Nonqualified Stock Option Plan.
(Registration Statement No. 333-03947 on
Form S-8, dated May 17, 1996, EXHIBIT
4.6)

=* EXHIBIT 10.33 - Amendment to Reynolds Metals Company
1992 Nonqualified Stock Option Plan
effective January 1, 1993.
(Registration Statement No. 333-03947 on
Form S-8, dated May 17, 1996, EXHIBIT
99)

=* EXHIBIT 10.34 - Form of Stock Option Agreement, as approved
May 17, 1996 by the Compensation
Committee of the Company's Board of
Directors. (File No. 1-1430, Form 10-Q
Report for the Quarter Ended June 30,
1996, EXHIBIT 10.41)

=* EXHIBIT 10.35 - Form of Three Party Stock Option Agreement,
as approved May 17, 1996 by the
Compensation Committee of the Company's
Board of Directors. (File No. 1-1430,
Form 10-Q Report for the Quarter Ended
June 30, 1996, EXHIBIT 10.42)

=* EXHIBIT 10.36 - Stock Option Agreement dated August 30, 1996
between Reynolds Metals Company and
Jeremiah J. Sheehan. (File No. 1-1430,
Form 10-Q Report for the Quarter Ended
September 30, 1996, EXHIBIT 10.43)

=* EXHIBIT 10.37 - Amendment to Deferred Compensation Plan
for Outside Directors effective August
15, 1996. (File No. 1-1430, Form 10-Q
Report for the Quarter Ended September
30, 1996, EXHIBIT 10.44)

= EXHIBIT 10.38 - Amendment to Reynolds Metals Company
New Management Incentive Deferral Plan
effective January 1, 1996

= EXHIBIT 10.39 - Amendment to Reynolds Metals Company
Performance Incentive Plan effective
January 1, 1996

= EXHIBIT 10.40 - Reynolds Metals Company Supplemental
Incentive Plan

= EXHIBIT 10.41 - Reynolds Metals Company Stock Plan for
Outside Directors

= EXHIBIT 10.42 - Special Executive Severance Package for
Certain Employees who Terminate
Employment between January 1, 1997 and
June 30, 1998, as approved by the
Compensation Committee of the Company's
Board of Directors on January 17, 1997

____________________________
* Incorporated by reference.
= Management contract or compensatory plan or arrangement
required to be filed as an exhibit pursuant to
Item 601 of Regulation S-K.

= EXHIBIT 10.43 - Special Award Program for Certain
Executives or Key Employees, as approved
by the Compensation Committee of the
Company's Board of Directors on January
17, 1997

EXHIBIT 11 - Computation of Earnings Per Share

EXHIBIT 12 - Not applicable

EXHIBIT 13 - Not applicable

EXHIBIT 16 - Not applicable

EXHIBIT 18 - None

EXHIBIT 21 - List of Subsidiaries of Reynolds Metals
Company

EXHIBIT 22 - None

EXHIBIT 23 - Consent of Independent Auditors

EXHIBIT 24 - Powers of Attorney

EXHIBIT 27 - Financial Data Schedule

____________________________
= Management contract or compensatory plan or arrangement
required to be filed as an exhibit pursuant to
Item 601 of Regulation S-K.

Pursuant to Item 601 of Regulation S-K, certain instruments
with respect to long-term debt of the Company are omitted
because such debt does not exceed 10 percent of the total
assets of the Company and its subsidiaries on a consolidated
basis. The Company agrees to furnish a copy of any such
instrument to the Commission upon request.

(b) Reports on Form 8-K

During the fourth quarter of 1996, the
Registrant filed with the Commission a Current Report on Form
8-K dated December 2, 1996 reporting under Item 5 that it
would redeem on December 31, 1996 all of its outstanding 7%
PRIDES(SM), Convertible Preferred Stock, stated value $47.25
per share.
_______________________
(SM) "PRIDES" is a service mark of Merrill Lynch & Co., Inc.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

REYNOLDS METALS COMPANY

By Jeremiah J. Sheehan
Jeremiah J. Sheehan, Chairman of
the Board and Chief Executive
Officer

Date March 21, 1997

Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the
dates indicated.

By Henry S. Savedge, Jr. By Jeremiah J. Sheehan
Henry S. Savedge, Jr., Director Jeremiah J. Sheehan, Director
Executive Vice President and Chairman of the Board and
Chief Financial Officer Chief Executive Officer
(Principal Financial Officer) (Principal Executive Officer)