SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-1430
REYNOLDS METALS COMPANY
A Delaware Corporation
(I.R.S. Employer Identification No. 54-0355135)
6601 West Broad Street, P. O. Box 27003, Richmond, Virginia 23261-7003
Telephone Number (804) 281-2000
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes _X_ No ___
As of April 30, 1997, the Registrant had 73,066,714 shares of
Common Stock, no par value, outstanding and entitled to vote.
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
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CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
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Reynolds Metals Company
Quarters ended March 31
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(millions, except per share amounts) 1997 1996
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Revenues
Net sales $1,615 $1,662
Equity, interest and other income 9 13
Gain on sale of assets 38 -
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1,662 1,675
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Costs and expenses
Cost of products sold 1,360 1,369
Selling, administrative and general expenses 102 111
Depreciation and amortization 93 91
Interest 39 42
Operational restructuring costs - 37
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1,594 1,650
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Income before income taxes and cumulative effect of
accounting change 68 25
Taxes on income 25 8
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Income before cumulative effect of accounting change 43 17
Cumulative effect of accounting change - (15)
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Net income 43 2
Preferred stock dividends - 9
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Net income (loss) available to common stockholders $ 43 ($ 7)
============================================================================
Earnings per share
Average shares outstanding 73 64
Income before cumulative effect of accounting change $0.59 $0.12
Cumulative effect of accounting change - (0.24)
- ----------------------------------------------------------------------------
Net income (loss) $0.59 ($0.12)
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Cash dividends per common share $0.35 $0.35
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CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
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Reynolds Metals Company
March 31 December 31
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(millions) 1997 1996
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ASSETS
Current assets
Cash and cash equivalents $ 45 $ 38
Receivables, less allowances of $18 (1996 - $18) 1,028 961
Inventories 751 787
Prepaid expenses and other 94 87
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Total current assets 1,918 1,873
Unincorporated joint ventures and associated companies 1,336 1,337
Property, plant and equipment 6,724 6,813
Less allowances for depreciation and amortization 3,564 3,576
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3,160 3,237
Deferred taxes and other assets 1,054 1,069
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Total assets $7,468 $7,516
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable, accrued and other liabilities $1,023 $1,020
Short-term borrowings 178 217
Long-term debt 254 96
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Total current liabilities 1,455 1,333
Long-term debt 1,619 1,793
Postretirement benefits 1,074 1,087
Environmental, deferred taxes and other liabilities 681 669
Stockholders' equity
Common stock 1,463 1,451
Retained earnings 1,237 1,220
Cumulative currency translation adjustments (61) (37)
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Total stockholders' equity 2,639 2,634
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Total liabilities and stockholders' equity $7,468 $7,516
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CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)
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Reynolds Metals Company
Three Months Ended
March 31
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(millions) 1997 1996
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Operating activities
Net income $ 43 $ 2
Adjustments to reconcile to net cash used in
operating activities:
Depreciation and amortization 93 91
Gain on sale of assets (38) -
Operational restructuring costs - 37
Cumulative effect of accountingchange - 15
Changes in operating assets and liabilities net of
effects of dispositions:
Accounts payable, accrued and other liabilities 18 (56)
Receivables (107) (28)
Inventories (63) (78)
Other (7) (64)
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Net cash used in operating activities (61) (81)
Investing activities
Capital investments:
Operational (23) (45)
Strategic (40) (53)
Proceeds from sale of assets 177 -
Other (3) 7
- ------------------------------------------------------------------------------
Net cash provided by (used in) investing activities 111 (91)
Financing activities
Increase (decrease) in borrowings (principally
short-term) (45) 201
Cash dividends paid (22) (31)
Stock issues and other 24 -
- ------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (43) 170
Cash and cash equivalents
Net increase (decrease) 7 (2)
At beginning of period 38 39
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At end of period $ 45 $ 37
==============================================================================
REYNOLDS METALS COMPANY AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Quarters Ended March 31, 1997 and 1996
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the interim period of
1997 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1997. For further
information, refer to the consolidated financial statements and
footnotes thereto included in the Company's annual report on Form
10-K for the year ended December 31, 1996. Certain amounts have
been reclassified to conform to the 1997 presentation.
NOTE 2. SALE OF ASSETS
The Company is conducting a review of all its operations and
businesses. A number of alternatives are being considered
including, among other things, asset sales, spin-offs, and the
forming of strategic alliances to increase scale. Certain
actions, if taken, could affect the Company's results and ongoing
operating performance.
In the first quarter of 1997, the Company sold its U.S.
residential construction products business. A pre-tax gain of
$38 million was recognized on the sale.
Early in the second quarter of 1997, the Company sold its coal
properties in Kentucky and an aluminum reclamation plant in
Virginia. The Company will recognize a gain in the second
quarter of 1997 related to these sales.
The Company has also announced its intention to sell aluminum
extrusion plants in Virginia and Texas. These transactions are
expected to close in the second quarter of 1997 and the Company
expects to recognize gains on the sales. Proceeds from expected
and completed transactions in the second quarter of 1997 are
expected to be approximately $100 million and will be used to
reduce debt and further strengthen our financial structure.
Also in the second quarter of 1997, the Company announced its
intention to sell its rolling mill in Alabama and related assets
including a coil coating facility and two nearby reclamation
plants that provide input metal to the mill. This transaction is
expected to be completed in the second half of 1997. The Company
expects to realize a loss, after tax, in the range of $225 to
$250 million related to this sale.
The announced pending transactions referred to above are subject
to regulatory and board approvals, negotiation and execution of
definitive agreements, and other customary closing conditions.
The Company announced early in the second quarter of 1997 that it
had signed a letter of intent for the sale of its aluminum sheet
and plate plant in Illinois. Negotiations concerning that sale
have been terminated.
NOTE 3. EARNINGS PER SHARE
In the first quarter of 1997, the Financial Accounting Standards
Board issued Statement No. 128, "Earnings Per Share". Statement
No. 128 requires a change in the method currently used to
calculate earnings per share (EPS). The Company is required to
adopt this statement beginning with its 1997 fourth quarter and
year-end financial statements, at which time all prior period EPS
presentations will be restated. The Company does not expect the
adoption to have a material impact.
NOTE 4. CONTINGENT LIABILITIES
As previously disclosed in the Company's 1996 Form 10-K, 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. The Company has recorded amounts (on an
undiscounted basis) which, in management's best estimate, will be
sufficient to satisfy anticipated costs of known remediation
requirements.
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.
NOTE 5. CANADIAN REYNOLDS METALS COMPANY, LTD. AND REYNOLDS
ALUMINUM COMPANY OF CANADA, LTD.
Financial statements and financial statement schedules 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 footnotes to the financial
statements of Reynolds Metals Company. Summarized financial
information is as follows:
NOTE 5. CANADIAN REYNOLDS METALS COMPANY, LTD. AND REYNOLDS
ALUMINUM COMPANY OF CANADA, LTD. -- continued
Canadian Reynolds Metals Company, Ltd.
Quarters ended March 31
--------------------------
1997 1996
--------------------------
Net Sales:
Customers $ 45 $ 48
Parent and related companies 190 169
--------------------------
$235 $217
Cost of products sold 188 154
Net income $ 29 $ 37
March 31 December 31
1997 1996
----------------------------
Current assets $ 219 $ 189
Noncurrent assets 1,195 1,225
Current liabilities (193) (50)
Noncurrent liabilities (482) (624)
Reynolds Aluminum Company of Canada, Ltd.
Quarters ended March 31
---------------------------
1997 1996
---------------------------
Net Sales:
Customers $119 $117
Parent and related companies 176 143
$295 $260
Cost of products sold 244 199
Net income $ 28 $ 32
March 31 December 31
1997 1996
--------------------------
Current assets $ 258 $ 240
Noncurrent assets 1,347 1,370
Current liabilities (227) (95)
Noncurrent liabilities (522) (656)
Item 2. 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 and related footnotes included
in the Company's 1996 Form 10-K along with the consolidated
financial statements and related footnotes included in and
referred to in 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 12,
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
Shipments were up approximately 2% in the first quarter of 1997
compared to the first quarter of 1996 as demand strengthened for
most fabricated products. Slightly lower net sales primarily
reflect lower fabricated product pricing. The average realized
price for fabricated products was approximately 6% lower in the
first quarter of 1997 ($1.72 per pound) compared to the first
quarter of 1996 ($1.83 per pound). The decline in prices
resulted from the slowdown in economic activity during most of
1996, coupled with reductions of excess inventory by customers.
The full impact of lower pricing was partially offset by
performance improvement programs.
First Quarter
1997 1996
-----------------
Net income $43 $ 2
Special items included in net income:
Gain on sale of assets 23 -
Operational restructuring costs - (23)
Cumulative effect of accounting change - (15)
Earnings per share $0.59 $(0.12)
Special items included in earnings per share:
Gain on sale of assets 0.32 -
Operational restructuring costs - (0.36)
Cumulative effect of accounting change - (0.24)
The gain on sale of assets in 1997 resulted from the sale of our
U.S. residential construction products business. Operational
restructuring costs in 1996 related principally to employee
termination costs associated with the closing of a can plant in
Houston, Texas. The accounting change resulted from adopting a
new accounting standard that required us to recognize a loss for
impaired assets held for sale, principally undeveloped land.
RESULTS OF OPERATIONS -- continued
SHIPMENTS AND NET SALES
First Quarter 1997 First Quarter 1996
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Shipments Net Sales Shipments Net Sales
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Finished Products and Other Sales
Packaging and containers
Aluminum 85 $ 435 83 $ 438
Nonaluminum 132 130
Other aluminum 34 108 38 133
Other nonaluminum 92 127
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119 767 121 828
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Production and Processing
Primary aluminum 83 146 81 142
Sheet and plate 95 277 91 292
Extrusions 52 169 51 178
Other aluminum 41 124 39 113
Other nonaluminum 132 109
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271 848 262 834
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Total 390 $1,615 383 $1,662
==============================================
Average realized price per pound:
Fabricated aluminum products $1.72 $1.83
Primary aluminum $0.80 $0.80
Finished Products and Other Sales
Shipments of cans, aluminum foil products and aluminum
distribution products were higher due to strong demand. Cans
also benefited from new soft drink and other business.
Distribution products also benefited from milder weather
conditions in 1997 compared to the severe winter conditions in
1996. Other aluminum reflects lower shipments of construction
products.
The decline in net sales was due to lower prices for cans,
aluminum foil products and aluminum and stainless steel
distribution products and lower sales of nonaluminum construction
products.
Production and Processing
Primary aluminum shipments fluctuate from period to period
because of variations in internal requirements and changes in
customer demand for value-added foundry ingot and billet. The
average realized price for primary aluminum rebounded in the
first quarter of 1997 to the level experienced in the first
quarter of 1996 because of improved demand.
Higher shipments were realized for most fabricated products due
to improved demand, particularly in Europe. Shipments of
aluminum wheels, both domestic and foreign, were particularly
strong, increasing 38% over the first quarter of 1996.
In addition to higher shipments, net sales were favorably
impacted by higher sales of alumina and technology. Prices for
most fabricated aluminum products were lower.
RESULTS OF OPERATIONS -- continued
COSTS AND EXPENSES
Cost of products sold decreased in the first quarter of 1997
because of:
- - lower costs for certain purchased materials
- - improved capacity utilization at fabricating facilities
- - performance improvement programs
These benefits were somewhat offset by higher costs for labor and
natural gas.
The decrease in selling, administrative and general expenses
primarily reflects lower advertising expenses.
On a quarterly basis, the Company updates the status of all
significant existing or potential environmental issues, develops
or revises estimates of costs to satisfy known remediation
requirements and adjusts its accruals accordingly. Based upon
information presently available, such future costs are not
expected to have a material adverse effect on our competitive or
financial position or our ongoing results of operations.
However, it is not possible to predict the amount or timing of
future costs of environmental requirements that may subsequently
be determined. Such costs could be material to future quarterly
or annual results of operations.
Various suits and claims are pending against the Company. In the
opinion of management, after consultation with counsel,
disposition of these suits and claims, either individually or in
the aggregate, will not have a material adverse effect on our
competitive or financial position or our ongoing results of
operations. No assurance can be given, however, that the
disposition of one or more of such suits or claims in a
particular reporting period will not be material in relation to
the reported results for such period.
TAXES ON INCOME
The effective tax rates reflected in the income statement differ
from the U.S. federal statutory rate because of state and foreign
taxes and the effects of percentage depletion allowances.
LIQUIDITY AND CAPITAL RESOURCES
WORKING CAPITAL
March 31 December 31
1997 1996
-------------------------
Working capital $463 $540
Ratio of current assets to current liabilities 1.3/1 1.4/1
OPERATING ACTIVITIES
Cash from operations was supplemented with cash provided by
investing activities to fund receivables and inventories in the
first quarter of 1997. The increase in receivables reflects
higher sales activity towards the end of the first quarter of
1997. Total inventories decreased because of the sale of our
U.S. residential construction products business. This decrease
was partially offset by increases in inventories of ongoing
operations in anticipation of higher shipping volumes in the
second quarter of 1997.
LIQUIDITY AND CAPITAL RESOURCES -- continued
INVESTING ACTIVITIES
Cash provided by investing activities resulted primarily from the
sale of our U.S. residential construction products business.
Capital investments totaled $63 million in the first quarter
1997. This amount includes $23 million for operating
requirements (replacement equipment, environmental control
projects, etc.). The remainder was for strategic projects
carried forward from 1996, including:
- - the construction of a forged wheel plant in Virginia
- - the expansion and modernization of can, foil and plastic
film plants
- - the modernization of a primary aluminum plant in New York
FINANCING ACTIVITIES
Debt was reduced with part of the proceeds from the sale of our
U.S. residential construction products business.
PORTFOLIO REVIEW
We are conducting a review of all our operations and businesses
with the goals of improving corporate performance and
strengthening our financial position. Late in the first quarter
of 1997, we announced organizational and management changes to
streamline our business to focus on global aluminum markets that
hold the most promising opportunities for profitable growth.
These changes reorganized the structure of the Company into the
following six worldwide, market-focused businesses:
- - Bauxite and Alumina
- - Metals and Carbon Products
- - Construction and Distribution
- - Transportation
- - Cans
- - Packaging and Consumer
In addition, we have formed a new unit that will focus on
emerging markets, such as China, Russia and India. The potential
number of job eliminations and possible cost resulting from the
reorganization cannot be reasonably estimated at this time. We
anticipate announcing an overview of our plans when we announce
results for the second quarter of 1997. (See Note 2)
OUTLOOK
As the result of our portfolio review and the implementation of
the resulting plan, we expect to improve our operations, growth
prospects and the quality of our earnings, as well as strengthen
our financial position. As the year progresses, we also expect
to realize the full benefit of improving aluminum industry
fundamentals and improvements in our packaging and consumer
products businesses.
OUTLOOK -- continued
In 1997, we plan to spend between $300 to $325 million on capital
investments. Approximately 65% of this amount will be used for
operating requirements. The remainder will be used for
continuing expenditures for those performance improvement and
strategic investment projects already underway. We expect to
fund capital investments in 1997 with cash generated from
operations.
The Company intends to extend to the year 2001 the term of its
$150 million bank credit agreement that matures in the first
quarter of 1998. We expect to complete this extension in the
second quarter of 1997.
The Company believes its available financial resources, together
with internally generated funds, are sufficient to meet its
business needs at the present time and for the foreseeable
future. The Company continues to exceed the financial ratio
requirements contained in its financing arrangements and expects
to do so in the future. At March 31, 1997, $113 million of the
Company's $1.65-billion shelf registration remained available for
the issuance of debt securities.
RISK FACTORS
This section should be read in conjunction with Part I, Items 1
(Business), 3 (Legal Proceedings) and 7 (Management's Discussion
and Analysis of Financial Condition and Results of Operations) of
the Company's 1996 Form 10-K; Part II, Item 1 (Legal Proceedings)
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(1). 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. The Company is forecasting
the worldwide supply of aluminum to grow 3-3.5% in 1997. Barring
a recession in any major world economy, the Company expects these
improved conditions in aluminum industry supply/demand
fundamentals 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
(2-3% in 1997) 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
_______________________________
(1) Forward-looking statements can be identified generally as those
containing verbs such as "forecast", "project", "estimate",
"expect", "anticipate" or "plan" and words of similar effect.
RISK FACTORS -- continued
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 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.
- - 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. The Company's
contract with the Bonneville Power Administration for the period
October 1996 - September 2001 provides fixed rates for electrical
power that are 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.
RISK FACTORS -- continued
- - 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. In connection with
the portfolio review, the Company has announced the signing of
letters of intent for the sale of its El Campo, Texas aluminum
extrusion plant; its Bellwood, Virginia extrusion plant; and its
Sheffield, Alabama rolling mill and related assets. These
pending transactions are subject to certain conditions, including
due diligence reviews by purchasers, negotiation of definitive
agreements and obtaining regulatory approvals and third party
consents. As a result, the transactions may or may not be
completed as contemplated. The timing, nature and magnitude of
additional actions, if any, that will be taken are not certain.
Such additional 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.
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
As previously reported in the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1996, 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 Justice Department advised the Registrant on April
3, 1997 that this civil investigation had been concluded and
closed.
Item 2. CHANGES IN SECURITIES
(a) Amendment to Restated Certificate of Incorporation
The Registrant's Restated Certificate of Incorporation
was amended by the filing on January 21, 1997 of a
Certificate of Designation (the "January 21, 1997
Amendment") relating to its 7% PRIDES(SM), Convertible
Preferred Stock, Stated Value $47.25 Per Share (the
"PRIDES"). The Registrant issued 11,000,000 shares of
PRIDES on January 25, 1994 under a Certificate of
Designations, Preferences, Rights and Limitations (the
"PRIDES Certificate of Designations") it filed on January
20, 1994. The PRIDES shares ranked prior to the
Registrant's Common Stock as to payment of dividends and
distribution of assets upon liquidation and had certain
voting rights separate from the Common Stock. The Registrant
redeemed all outstanding shares of the PRIDES on December
31, 1996. The January 21, 1997 Amendment eliminated from
the Registrant's Restated Certificate of Incorporation all
matters set forth in the PRIDES Certificate of Designations.
______________
(SM) "PRIDES" is a service mark of Merrill Lynch & Co., Inc.
(b) Recent Sales of Unregistered Securities
Effective January 1, 1997, the Registrant terminated
its retirement and death benefit plans for current outside
Directors and adopted a Stock Plan for Outside Directors
(the "Stock Plan").
Under the Stock Plan, outside Directors serving on or
after January 1, 1997 will receive an annual grant of 225
shares of phantom stock of the Registrant, plus dividend
equivalents based on the dividends that would have been paid
on the phantom stock if the outside Director had actually
owned shares of the Registrant's Common Stock. The annual
grant will be made in quarterly installments at the end of
each calendar quarter. In addition, the accounts of current
outside Directors who were covered by the terminated
retirement and death benefit plans described above were
credited as of that date with shares of phantom stock
equivalent in value to their benefits earned under the
terminated plans through December 31, 1996. Payments under
the Stock Plan to outside Directors will be made upon the
outside Director's retirement, resignation or death in
shares of Common Stock of the Registrant, with fractional
shares paid in cash.
12,813.811 phantom shares, in the aggregate, were
granted to eight of the Registrant's nine outside Directors
on January 1, 1997, based on an average price of $56.813 per
share. 506.25 phantom shares, in the aggregate, were
granted to the nine outside Directors on March 31, 1997,
based on an average price of $62.6875 per share. To the
extent that such grants constitute sales of equity
securities, the Registrant issued such phantom shares in
reliance on the exemption provided by Section 4(2) of the
Securities Act of 1933, as amended, taking into account the
nature of the Stock Plan, the number of outside Directors
participating in the Stock Plan, the sophistication of the
outside Directors and their access to the kind of
information that a registration statement would provide.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Stockholders of the Registrant was
held on April 16, 1997. The stockholders (i) elected the
thirteen nominees named in the Registrant's proxy statement to
serve as Directors and (ii) ratified the selection of Ernst &
Young LLP as independent auditors of the Registrant for 1997.
The number of votes cast for, against or withheld, and the number
of abstentions, as applicable, with respect to each matter were
as set forth below. There were no broker nonvotes. No other
matters were voted upon at the meeting.
(i) Election of Directors
Number Of Votes Number Of Votes
Name Cast "For" Withheld
Patricia C. Barron 65,336,941 551,111
John R. Hall 65,322,245 565,807
Robert L. Hintz 65,315,791 572,261
William H. Joyce 65,343,532 544,520
Mylle Bell Mangum 65,344,301 543,751
D. Larry Moore 65,346,894 541,158
Randolph N. Reynolds 65,315,699 572,353
James M. Ringler 65,342,483 545,569
Henry S. Savedge, Jr. 65,326,131 561,921
Samuel C. Scott, III 65,346,224 541,828
Jeremiah J. Sheehan 65,260,081 627,971
J. Wilt Wagner 65,283,047 605,005
Joe B. Wyatt 65,322,124 565,928
(ii) Ratification of Selection of Ernst & Young
LLP as Independent Auditors
Number of Votes Cast "For" 65,518,107
Number of Votes Cast "Against" 169,059
Number of Abstentions 200,887
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
See Index to Exhibits.
(b) Reports on Form 8-K
The Registrant filed no reports on Form 8-K during the
first quarter of 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
REYNOLDS METALS COMPANY
By Allen M. Earehart
Allen M. Earehart
Vice President, Controller
(Chief Accounting Officer)
DATE: May 14, 1997
INDEX TO EXHIBITS
EXHIBIT 2 - None
* EXHIBIT 3.1 - Restated Certificate of Incorporation,
as amended. (File No. 1-1430, 1996 Form
10-K Report, EXHIBIT 3.1)
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))
* 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))
_______________________
*Incorporated by reference.
* 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
* 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
* 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 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)
_______________________
*Incorporated by reference.
* 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)
* EXHIBIT 10.10 - Form of Executive Severance Agreement between
Reynolds Metals Company and key
executive personnel, including each of
the current executive officers (other
than Donna C. Dabney) listed in Item 4A
of the Reynolds Metals Company 1996 Form
10-K 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 - 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 10.17 - 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 10.18 - 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)
____________________________
* Incorporated by reference.
* EXHIBIT 10.19 - 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 10.20 - 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 10.21 - 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 10.22 - 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 10.23 - 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 10.24 - 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 10.25 - 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 10.26 - 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 10.27 - 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)
* EXHIBIT 10.28 - 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 10.29 - 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 10.30 - 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)
____________________________
* Incorporated by reference.
* EXHIBIT 10.31 - 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 10.32 - 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 10.33 - 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 10.34 - 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 10.35 - Amendment to Reynolds Metals Company New
Management Incentive Deferral Plan
effective January 1, 1996. (File No. 1-
1430, 1996 Form 10-K Report, EXHIBIT
10.38)
* EXHIBIT 10.36 - Amendment to Reynolds Metals Company
Performance Incentive Plan effective
January 1, 1996. (File No. 1-1430, 1996
Form 10-K Report, EXHIBIT 10.39)
* EXHIBIT 10.37 - Reynolds Metals Company Supplemental
Incentive Plan. (File No. 1-1430, 1996
Form 10-K Report, EXHIBIT 10.40)
* EXHIBIT 10.38 - Reynolds Metals Company Stock Plan for
Outside Directors. (File No. 1-1430,
1996 Form 10-K Report, EXHIBIT 10.41)
* EXHIBIT 10.39 - 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.
(File No. 1-1430, 1996 Form 10-K Report,
EXHIBIT 10.42)
* EXHIBIT 10.40 - 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. (File No. 1-1430, 1996 Form
10-K Report, EXHIBIT 10.43)
EXHIBIT 11 - Omitted. See Part I, Item 1 for
computation of earnings per share
EXHIBIT 15 - None
EXHIBIT 18 - None
EXHIBIT 19 - None
____________________________
* Incorporated by reference.
EXHIBIT 22 - None
EXHIBIT 23 - None
EXHIBIT 24 - None
EXHIBIT 27 - Financial Data Schedule
Pursuant to Item 601 of Regulation S-K, certain instruments
with respect to long-term debt of Reynolds Metals Company (the
"Registrant") and its consolidated subsidiaries are omitted
because such debt does not exceed 10 percent of the total assets
of the Registrant and its subsidiaries on a consolidated basis.
The Registrant agrees to furnish a copy of any such instrument to
the Commission upon request.
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