EXHIBIT 99.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number 1-1430
A. Full title of the plan:
REYNOLDS METALS COMPANY
SAVINGS AND INVESTMENT PLAN
FOR SALARIED EMPLOYEES
B. Name of issuer of the securities held
pursuant to the plan and the address of
its principal executive office:
REYNOLDS METALS COMPANY
6601 West Broad Street
P. O. Box 27003
Richmond, Virginia 23261-7003
REQUIRED INFORMATION
FINANCIAL STATEMENTS AND EXHIBITS
FINANCIAL STATEMENTS
Page No.
Report of Independent Auditors........................... F-1
Audited Financial Statements
Statements of Net Assets Available for
Plan Benefits, with Fund Information.................. F-2
Statement of Changes in Net Assets Available
for Plan Benefits, with Fund Information.............. F-4
Notes to Financial Statements........................... F-5
EXHIBITS
Exhibit A Consent of Independent Auditors
SIGNATURES
The Plan. Pursuant to the requirements of the
Securities Exchange Act of 1934, the Plan Committee has duly
caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
REYNOLDS METALS COMPANY
SAVINGS AND INVESTMENT PLAN
FOR SALARIED EMPLOYEES
By: Henry S. Savedge, Jr.
Henry S. Savedge, Jr., Chairman
Savings and Investment
Plan Committee
DATE: June 24, 1997
Report of Ernst & Young LLP, Independent Auditors
Board of Directors
Reynolds Metals Company
We have audited the accompanying statements of net assets
available for plan benefits of the Reynolds Metals Company
Savings and Investment Plan for Salaried Employees as of
December 31, 1996 and 1995, and the related statement of
changes in net assets available for plan benefits for the
year ended December 31, 1996. These financial statements
are the responsibility of the management of Reynolds Metals
Company, the Plan's sponsor. Our responsibility is to
express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the net assets
available for plan benefits of the Plan at December 31, 1996
and 1995, and the changes in its net assets available for
plan benefits for the year ended December 31, 1996, in
conformity with generally accepted accounting principles.
Our audits were performed for the purpose of forming an
opinion on the basic financial statements taken as a whole.
The Fund Information in the statement of net assets
available for plan benefits and the statement of changes in
net assets available for plan benefits is presented for
purposes of additional analysis rather than to present the
net assets available for plan benefits and changes in net
assets available for plan benefits of each fund. The Fund
Information has been subjected to the auditing procedures
applied in our audits of the basic financial statements and,
in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
Richmond, Virginia
June 19, 1997
Reynolds Metals Company
Savings and Investment Plan for Salaried Employees
Statement of Net Assets Available for Plan Benefits, with Fund Information
(Dollars in Thousands)
December 31, 1996
Fund Information
-----------------------------------------------------------------------------------
Non-
Participant
Participant Directed Directed
-----------------------------------------------------------------------------------
Inter- Small
Reynolds Diversified Balanced Interest national Capitalization Reynolds
Stock Equities Investment Income Equities Equities Loan Stock
Fund Fund Fund Fund Fund Fund Fund Fund Total
---------------------------------------------------------------------------------------------
Assets
Investment in Master Trust $55,482 $71,995 $27,906 $98,504 $7,401 $15,271 $11,327 $103,780 $391,666
Accrued income 340 - - - - - - 637 977
Contributions receivable 107 202 177 137 39 95 - 146 903
Receivable from Executive Life
Insurance Company - - - 2,565 - - - - 2,565
---------------------------------------------------------------------------------------------
Total assets 55,929 72,197 28,083 101,206 7,440 15,366 11,327 104,563 396,111
Liabilities
Payable to Reynolds Metals Company - - - 2,565 - - - - 2,565
---------------------------------------------------------------------------------------------
Net assets available for plan benefits $55,929 $72,197 $28,083 $98,641 $7,440 $15,366 $11,327 $104,563 $393,546
=============================================================================================
See accompanying notes.
Reynolds Metals Company
Savings and Investment Plan for Salaried Employees
Statement of Net Assets Available for Plan Benefits, with Fund Information
(Dollars in Thousands)
December 31, 1995
Fund Information
-----------------------------------------------------------------------------------
Non-
Participant
Participant Directed Directed
-----------------------------------------------------------------------------------
Inter- Small
Reynolds Diversified Balanced Interest national Capitalization Reynolds
Stock Equities Investment Income Equities Equities Loan Stock
Fund Fund Fund Fund Fund Fund Fund Fund Total
---------------------------------------------------------------------------------------------
Assets
Investments:
Common stock of Reynolds Metals
Company $55,667 $99,612 $155,279
Mutual funds:
Diversified Equities - $51,994 - 51,994
Balanced - - $20,230 - 20,230
International Equities - - - $2,680 - 2,680
Small Capitalization - - - - $6,358 - 6,358
Investment contracts - - - $82,223 - - - 82,223
Cash equivalents 772 280 112 13,193 25 34 1,335 15,751
Loans to participants - - - - - - $10,602 - 10,602
---------------------------------------------------------------------------------------------
Total investments 56,439 52,274 20,342 95,416 2,705 6,392 10,602 100,947 345,117
Accrued income 348 - - - 66 297 - 622 1,333
Receivable from Executive Life
Insurance Company - - - 3,066 - - - - 3,066
---------------------------------------------------------------------------------------------
Total assets 56,787 52,274 20,342 98,482 2,771 6,689 10,602 101,569 349,516
Liabilities
Payable to Reynolds Metals Company - - - 3,066 - - - - 3,066
---------------------------------------------------------------------------------------------
Net assets available for plan
benefits $56,787 $52,274 $20,342 $95,416 $2,771 $6,689 $10,602 $101,569 $346,450
=============================================================================================
See accompanying notes
Reynolds Metals Company
Savings and Investment Plan for Salaried Employees
Statement of Changes in Net Assets Available for Plan Benefits, with Fund Information
(Dollars in Thousands)
Year Ended December 31, 1996
Fund Information
-----------------------------------------------------------------------------------
Non-
Participant
Participant Directed Directed
-----------------------------------------------------------------------------------
Inter- Small
Reynolds Diversified Balanced Interest national Capitalization Reynolds
Stock Equities Investment Income Equities Equities Loan Stock
Fund Fund Fund Fund Fund Fund Fund Fund Total
---------------------------------------------------------------------------------------------
Additions to net assets:
Net Investment gain from
Master Trust $ 2,519 $12,900 $ 3,663 $ 5,682 $ 701 $ 2,347 $ 946 $ 2,301 $ 31,059
(Note 3):
Contributions:
Employer - - - - - - - 7,260 7,260
Employee 4,401 6,125 3,414 5,707 998 1,971 - - 22,616
---------------------------------------------------------------------------------------------
4,401 6,125 3,414 5,707 998 1,971 - 7,260 29,876
Assets transferred from
other plans 92 184 129 2,166 27 29 28 - 2,655
---------------------------------------------------------------------------------------------
Total Additions 7,012 19,209 7,206 13,555 1,726 4,347 974 9,561 63,590
Deductions from net assets:
Withdrawals by participants 1,991 2,568 1,056 5,416 148 272 332 4,689 16,472
Administrative expenses - - - 22 - - - - 22
---------------------------------------------------------------------------------------------
Total Deductions 1,991 2,568 1,056 5,438 148 272 332 4,689 16,494
Interfund transfers (5,879) 3,282 1,591 (4,892) 3,091 4,602 83 (1,878) -
---------------------------------------------------------------------------------------------
Net increase (decrease) (858) 19,923 7,741 3,225 4,669 8,677 725 2,994 47,096
Net assets available for plan benefits:
Beginning of year 56,787 52,274 20,342 95,416 2,771 6,689 10,602 101,569 346,450
---------------------------------------------------------------------------------------------
End of year $55,929 $72,197 $28,083 $98,641 $7,440 $15,366 $11,327 $104,563 $393,546
=============================================================================================
See accompanying notes.
Reynolds Metals Company
Savings and Investment Plan for Salaried Employees
Notes to Financial Statements
(Dollars in Thousands)
December 31, 1996
1. Significant Accounting Policies
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could
differ from those estimates.
The accounting records of the Reynolds Metals Company
Savings and Investment Plan for Salaried Employees ("Plan")
are maintained on the accrual basis. All securities
transactions are recorded as of the trade date.
Investments in Reynolds Metals Company Common Stock (stated
at fair value) are valued at the last reported sales price
on the last business day of the year. Investments in mutual
funds are measured by quoted market prices and are reported
at aggregate fair value at year-end. Guaranteed Investment
contracts with insurance companies are reported at "contract
value," which equals cost plus accrued income. Structured
investment contracts are reported at fair value, which in
the case of structured investment contracts equals contract
value.
Reynolds Metals Company
Savings and Investment Plan for Salaried Employees
Notes to Financial Statements (continued)
2. Summary of Significant Plan Provisions
Reynolds Metals Company (the "Company") established the Plan
effective July 1, 1978, covering salaried employees of the
Company and certain of its subsidiaries and affiliates. The
Plan is a defined contribution plan under the Employee
Retirement Income Security Act of 1974 ("ERISA") and
qualifies as a "cash or deferred" arrangement under Section
401(k) of the Internal Revenue Code. A complete description
of the Plan is contained in the Summary Plan Description and
in the Plan document, copies of which are available from the
Company.
Plan participation is available to eligible employees who
have completed 30 days of service and is voluntary. Prior
to January 1, 1997, a participant was entitled to make
payroll contributions to the Plan in specified amounts
ranging from 1% to 12% of compensation in 1% increments. On
January 1, 1997, the maximum amount that a participant is
entitled to contribute increased to 16% of compensation.
Reynolds Metals Company
Savings and Investment Plan for Salaried Employees
Notes to Financial Statements (continued)
2. Summary of Significant Plan Provisions (continued)
The Company contributes an amount equal to 50% of each
participating employee's payroll contributions up to 6% of
compensation. The Company may also contribute up to an
additional 50% of each participating employee's payroll
contributions up to 6% of compensation. The Company did not
elect to make an additional matching contribution for 1996
or 1995.
Eligible employees who received a cash award under the
Reynolds Metals Company Profit Sharing Program for Salaried
Employees or a gainsharing payment during 1996 were allowed
to contribute between 10% and 50% of any such award (in 10%
increments) to the Plan. Participants may contribute 1% to
16% (in 1% increments) of any profit sharing award or
gainsharing payment received after January 1, 1997. Such
contributions are not matched by the Company.
Participants may elect to make their contributions on a
before or after tax basis or a combination thereof. Company
matching contributions are made on a "pretax" basis. Highly
compensated participants may be required to reduce the
amount of "pretax" contributions made to or held by the Plan
on their behalf to permit the Plan to satisfy the
nondiscrimination requirements of Section 401(k) of the
Internal Revenue Code.
Participants in the Plan are fully vested in their account
balances. Withdrawals and distributions are handled in
accordance with the Plan provisions and are subject to
certain regulatory restrictions. The trustee holds all of
the Plan's investment assets and executes transactions
therein.
Although it has not expressed any intent to do so, the
Company has the right under the Plan to discontinue its
contributions at any time and to terminate the Plan subject
to the provisions of ERISA.
The Company is the Plan adminstrator and bears the related
costs, except for investment-related and trustee fees, which
are paid by the Plan.
3. Commingled Master Trust Investments
As of January 1, 1996, all of the assets of the Plan were
transferred into a Master Trust under a Master Trust
Agreement between Reynolds Metals Company and The Northern
Trust Company, as trustee, and are commingled with the
assets of three other savings plans of the Company and one
of its subsidiaries. All the investments of the Plan were
held in the Master Trust as of December 31, 1996.
Reynolds Metals Company
Savings and Investment Plan for Salaried Employees
Notes to Financial Statements (continued)
3. Commingled Master Trust Investments (continued)
Substantially all of the assets held in the Diversified
Equities Fund and the Balanced Investment Fund generally are
invested in the Vanguard Institutional Index Fund and the
Vanguard STAR Fund, respectively, no-load mutual funds held
and managed by The Vanguard Group of Investment Companies.
Substantially all of the assets held in the International
Equities Fund and the Small Capitalization Equities Fund are
invested in the T. Rowe Price Foreign Equity Fund and the T.
Rowe Price Small-Cap Value Fund, respectively, no-load
mutual funds held and managed by T. Rowe Price Associates,
Inc.
The assets held in the Interest Income Fund generally are
invested in guaranteed investment contracts ("GICs") at a
fixed rate of return and structured investment contracts
("SICs") with various insurance companies and banks. SICs
represent a diversified portfolio of high grade
investments held in the name of the Plan in conjunction
with a corresponding contract with the issuer of
the SIC to provide a fixed or variable rate of
return (based on the investment experience and reset
quarterly) on the cost of the portfolio. GICs and SICs
generally provide for the full repayment of principal and
interest. Upon the occurrence of certain events (including
layoffs by the Company or its applicable affiliates),
however, market value of the GIC or SIC, if lower than its
book value, may be repaid (a "Market Value Adjustment").
Currently, in the opinion of the Company, the likelihood of
a material loss to the Plan as a result of such a Market
Value Adjustment is remote. Interest is credited to
participants' accounts on the dollar-weighted average
(blended rate) basis. The annual rate of return on these
contracts during 1996 and 1995 was approximately 6.4% and
6.8%, respectively. The current yield on December 31, 1996
was 6.4% (6.8% on December 31, 1995). The fair value of the
Plan's GICs approximates contract value.
In April 1991, Executive Life Insurance Company ("Executive
Life"), the issuer of one of the guaranteed investment
contracts then held by the Plan, was placed into
conservatorship. The Company and the Plan entered into an
agreement on August 1, 1991, whereby the Company was
obligated to provide interest-free loans to the Plan for any
amounts due under the guaranteed investment contract which
Executive Life failed to pay. As of December 31, 1996, the
Company had advanced to the Plan $12,335, which represents
all amounts due under this contract. The Plan is obligated
to repay the loans to the extent amounts are subsequently
recovered from, or on behalf of, Executive Life, and any
remaining balance will be forgiven by the Company. As of
December 31, 1996, the Plan has repaid $9,770 of the
advanced amounts and has outstanding advances of $2,565.
Reynolds Metals Company
Savings and Investment Plan for Salaried Employees
Notes to Financial Statements (continued)
3. Commingled Master Trust Investments (continued)
On August 11, 1994, insurance regulators took control of
Confederation Life Insurance Company ("Confederation Life"),
the issuer of a guaranteed investment contract held at the
time by the Interest Income Fund with a contract value of
$5,198. As of August 11, 1994, interest accruals with
respect to the contract ceased, and funds represented by the
contract were frozen.
As of May 31, 1997, the Plan had received payments totaling
$6,146 from Confederation Life with respect to the frozen
contract amount. These payments were allocated pro rata
among the accounts of participants who were invested in the
Plan's Interest Income Fund on August 11, 1994, based on
their percentage interest in the Confederation Life
contract.
Summarized financial fund information of the commingled
accounts within the Master Trust is presented below:
Inter- Small
Reynolds Diversified Balanced Interest national Capitalization
Stock Equities Investment Income Equities Equities Loan
Fund Fund Fund Fund Fund Fund Fund Total
-----------------------------------------------------------------------------------------
MASTER TRUST NET
ASSETS-1996
Assets
Accrued income $ 997 $ 997
Cash and cash equivalents 2,213 $ 48 $ 3 $17,070 $ 4 $ 3 - 19,341
Contributions receivable 259 209 183 143 56 166 - 1,016
Investments:
Common stock 160,346 - - - - - 160,346
Investment contracts - - - 220,145 - - 220,145
Mutual funds - 88,863 36,576 - 8,640 19,993 154,072
Loans to participants - - - - - - $19,326 19,326
-----------------------------------------------------------------------------------------
Total assets 163,815 89,120 36,762 237,358 8,700 20,162 19,326 575,243
Liabilities
Accounts payable 1 - - 12 - - - 13
-----------------------------------------------------------------------------------------
Master Trust net assets $163,814 $89,120 $36,762 $237,346 $8,700 $20,162 $19,326 $575,230
Portion of Master Trust
allocable to the Plan $160,492 $72,197 $28,083 $ 98,641 $7,440 $15,366 $11,327 $393,546
Percent 98% 81% 76% 42% 86% 76% 59% 68%
Reynolds Metals Company
Savings and Investment Plan for Salaried Employees
Notes to Financial Statements (continued)
3. Commingled Master Trust Investments (continued)
Inter- Small
Reynolds Diversified Balanced Interest national Capitalization
Stock Equities Investment Income Equities Equities Loan
Fund Fund Fund Fund Fund Fund Fund Total
------------------------------------------------------------------------------------------
CHANGES IN MASTER TRUST
ASSETS -1996
Additions:
Contributions from plans $ 12,532 $ 9,542 $ 5,183 $ 31,537 $1,255 $ 2,654 - $ 62,703
Net realized and unrealized
appreciation (depreciation)
of investments 893 13,648 3,493 - 593 1,973 20,600
Interest and dividends 4,022 1,636 1,203 13,662 172 754 $1,451 22,900
Assets transferred into
Master Trust 160,852 52,275 20,342 95,414 2,771 6,689 15,543 353,886
------------------------------------------------------------------------------------------
178,299 77,101 30,221 140,613 4,791 12,070 16,994 460,089
Deductions:
Distributions to plans 6,753 2,885 1,246 11,722 165 301 514 23,586
Administrative expenses - - - 49 - - - 49
------------------------------------------------------------------------------------------
6,753 2,885 1,246 11,771 165 301 514 23,635
Interfund transfers-net (7,732) 6,822 2,128 (16,531) 4,074 8,393 2,846 -
------------------------------------------------------------------------------------------
Net additions 163,814 81,038 31,103 112,311 8,700 20,162 19,326 436,454
Master Trust net assets at
beginning of period - 8,082 5,659 125,035 - - - 138,776
------------------------------------------------------------------------------------------
Master Trust net assets
at end of period $163,814 $89,120 $36,762 $237,346 $8,700 $20,162 $19,326 $575,230
==========================================================================================
4. Differences Between Financial Statements and Form 5500
The following is a reconciliation of net assets available
for benefits per the financial statements to the Form 5500:
December 31,
1996 1995
------------------------
Net assets available for benefits per the
financial statements $393,546 $346,450
Amounts allocated to withdrawn participants 329 280
------------------------
Net assets available for benefits per the
Form 5500 $393,217 $346,170
========================
Reynolds Metals Company
Savings and Investment Plan for Salaried Employees
Notes to Financial Statements (continued)
4. Differences Between Financial Statements and Form 5500 (continued)
The following is a reconciliation of benefits paid to
participants per the financial statements to the Form 5500:
Year ended
December 31,
1996
------------
Benefits paid to participants per the
financial statements $16,472
Add: Amounts allocated on Form 5500 to
withdrawn participants in the current year 329
Less: Amounts allocated on Form 5500 to
withdrawn participants in the prior year (280)
------------
Benefits paid to participants per the Form 5500 $16,521
============
5. Income Taxes
The Internal Revenue Service has determined that the Plan
qualifies under Section 401(a) of the Internal Revenue Code
(the "Code"). As long as the Plan continues to be
qualified, under present Federal income tax laws and
regulations participants will not be taxed on employer
contributions or investment earnings allocated to their
account. Participants will normally be subject to tax
thereon at such time as they receive distributions from the
Plan. As long as the Plan continues to be qualified, the
Plan will not be taxed on its dividend and interest income
or on any capital gains realized by it or on any unrealized
appreciation of investments.
INDEX TO EXHIBITS
Exhibit A Consent of Independent Auditors
EXHIBIT A
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 33-20498) pertaining to the Reynolds
Metals Company Savings and Investment Plan for Salaried Employees
and in the related Prospectus of our report dated June 19, 1997,
with respect to the financial statements of the Reynolds Metals
Company Savings and Investment Plan for Salaried Employees
included in this Annual Report (Form 11-K) for the year ended
December 31, 1996.
Ernst & Young LLP
Richmond, Virginia
June 19, 1997