EXHIBIT 99.3
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:
EMPLOYEES SAVINGS PLAN
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
Statement 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, Reynolds Metals Company, which
administers the Plan, has duly caused this annual report to be
signed on its behalf by the undersigned hereunto duly authorized.
EMPLOYEES SAVINGS PLAN
By: Henry S. Savedge, Jr.
Henry S. Savedge, Jr.
Executive Vice President and
Chief Financial Officer
Reynolds Metals Company
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 Employees Savings Plan 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.
Ernst & Young LLP
Richmond, Virginia
June 19, 1997
Employees Savings Plan
Statement of Net Assets Available for Plan Benefits, with Fund Information
(Dollars in Thousands)
December 31, 1996
----------------------------------------------------------------------------------------
Fund Information
------------------------------------------------------------------------------
Inter- Small
Reynolds Diversified Balanced Interest national Capitalization
Stock Equities Investment Income Equities Equities Loan
Fund Fund Fund Fund Fund Fund Fund Total
----------------------------------------------------------------------------------------
Assets
Investment in Master Trust $242 $642 $342 $3,875 $70 $150 $255 $5,576
Accrued income 1 - - - - - - 1
Contributions receivable - 7 3 6 1 2 - 19
----------------------------------------------------------------------------------------
Net assets available for
plan benefits $243 $649 $345 $3,881 $71 $152 $255 $5,596
========================================================================================
See accompanying notes.
Employees Savings Plan
Statement of Net Assets Available for Plan Benefits, with Fund Information
(Dollars in Thousands)
December 31, 1995
----------------------------------------------------------------
Fund Information
-----------------------------------------------------
Reynolds Diversified Balanced Interest
Stock Equities Investment Income Loan
Fund Fund Fund Fund Fund Total
----------------------------------------------------------------
Assets
Investments:
Common stock of Reynolds
Metals Company $ 94 $ 94
Master trust:
Diversified Equities - $256 256
Balanced - - $125 125
Interest Income - - - $3,544 3,544
Loans to participants - - - - $71 71
----------------------------------------------------------------
Total investments 94 256 125 3,544 71 4,090
Contributions receivable 3 3 3 22 - 31
----------------------------------------------------------------
Total assets 97 259 128 3,566 71 4,121
Interfund receivable (payable) (11) 2 (2) 11 - -
----------------------------------------------------------------
Net assets available for
plan benefits $ 86 $261 $126 $3,577 $71 $4,121
================================================================
See accompanying notes.
Employees Savings Plan
Statement of Changes in Net Assets Available for Plan Benefits, with Fund
Information
(Dollars in Thousands)
Year ended December 31, 1996
----------------------------------------------------------------------------------------
Fund Information
------------------------------------------------------------------------------
Inter- Small
Reynolds Diversified Balanced Interest national Capitalization
Stock Equities Investment Income Equities Equities Loan
Fund Fund Fund Fund Fund Fund Fund Total
----------------------------------------------------------------------------------------
Additions to net assets:
Net investment gain from
Master Trust (Note 3) $ 7 $ 99 $ 35 $ 223 $ 3 $ 14 $ 11 $ 392
Contributions:
Employer 26 55 33 166 4 7 - 291
Employee 99 354 141 636 17 52 - 1,299
---------------------------------------------------------------------------------------------
125 409 174 802 21 59 - 1,590
---------------------------------------------------------------------------------------------
Total Additions 132 508 209 1,025 24 73 11 1,982
Deductions from net assets:
Withdrawals by participants 13 16 13 235 - - 31 308
Assets transferred to
other plans 17 40 14 82 9 16 20 198
Administrative expenses - - - 1 - - - 1
---------------------------------------------------------------------------------------------
Total Deductions 30 56 27 318 9 16 51 507
Interfund transfers 55 (64) 37 (403) 56 95 224 -
---------------------------------------------------------------------------------------------
Net increase 157 388 219 304 71 152 184 1,475
Net assets available for
plan benefits:
Beginning of year 86 261 126 3,577 - - 71 4,121
---------------------------------------------------------------------------------------------
End of year $243 $649 $345 $3,881 $71 $152 $255 $5,596
=============================================================================================
See accompanying notes.
Employees Savings Plan
Notes to Financial Statements
December 31, 1996
(Dollars in Thousands)
1. Significant Accounting Policies
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could
differ from those estimates.
The accounting records of the Employees Savings Plan
("Plan") are maintained on the accrual basis. All
securities transactions are recorded as of the trade date.
Investments in Reynolds Metals Company 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.
2. Summary of Significant Plan Provisions
Reynolds Metals Company ("the Company") established the Plan
effective January 1, 1990, covering all eligible employees
of the Company and designated subsidiaries (each an
"Employer") who elect to contribute. 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 on the
later of (a) 30 days after beginning their employment with an
Employer, or (b) the date at which their Employer adopts the
Plan. Plan participation is voluntary.
Employees Savings Plan
Notes to Financial Statements (continued)
2. Summary of Significant Plan Provisions (continued)
A participant may elect to make payroll contributions to the
Plan in specified amounts ranging from 1% to 12% of
compensation in 1% increments. At certain locations, the
Employer will contribute to the Plan on behalf of each
participant a fixed percentage of a portion of the payroll
contributions made by the participant.
Eligible employees who receive a profit- sharing
award, gainsharing payment or other designated
type of lump sum payment are also allowed
to contribute between 10% and 50% of the award
and/or payment (in 10% increments) to the Plan. Such
contributions are not matched by the Company or any other
Employer.
Participants may elect to make their contributions on a
before or after tax basis, or a combination thereof.
Employer 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 in order to permit the Plan to satisfy the
nondiscrimination requirements of Section 401(k) of the
Internal Revenue Code.
Participants 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 an intent to do so, the
Company has the right under the Plan document to discontinue
contributions at any time and to terminate the Plan subject
to the provisions of ERISA.
The Company is the Plan administrator and bears the related
costs, except for investment-related and trustee fees, which
are paid by the Plan.
Employees Savings Plan
Notes to Financial Statements (continued)
3. Commingled Master Trust Investments
All of the investments of the Plan as of December 31, 1996
were held in 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 of the assets held in the Interest Income Fund,
Diversified Equities Fund and Balanced Investment Fund as of
December 31, 1995 were held in a Master Trust established
under a Master Trust Agreement between Reynolds Metals
Company and The Chase Manhattan Bank, N.A., as trustee, and
were commingled with the assets of three other savings plans
of the Company and certain of its subsidiaries.
Substantially all the assets held in the Balanced Investment
Fund and the Diversified Equities Fund are invested in the
Vanguard STAR Fund and the Vanguard Institutional Index 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 of the Interest Income Fund generally are invested
in guaranteed investment contracts ("GICs") at a fixed rate
of return and structured investment contracts ("OSICs") with
various insurance companies and banks. SICs represent
high grade investments held in the name of the
Master Trust in conjunction with a corresponding
contract with the issuer of the SIC to provide a fixed or
variable rate of return (based on investment experience and
reset quarterly) on the cost of the investment. 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 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. The annual rate of
return on these contracts during 1996 and 1995 was 6.3% and
6.9%, respectively. The current yield on these contracts at
December 31, 1996 was 6.4% (6.4% at December 31, 1995).
Interest is credited to participants' accounts on the dollar-
weighted average (blended rate) basis. The fair value of the
Plan's GICs approximates contract value.
During 1996, certain assets of the Plan were transferred into
other plans of the Company as a result of employee transfers.
There was no effect on any participantOs accounts as a result
of the transfer.
Employee Savings Plan
Notes to Financial Statements (continued)
3. Commingled Master Trust Investments (continued)
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 $ 243 $ 649 $ 345 $ 3,881 $ 71 $ 152 $ 255 $ 5,596
Percent 1% 1% 1% 2% 1% 1% 1% 1%
Employee Savings Plan
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
----------------------------------------------------------------------------------------
MASTER TRUST NET
ASSETS-1995
Assets
Cash and cash equivalents - - - $ 23,907 - - - $ 23,907
Contributions receivable - $ 510 $ 112 448 - - - 1,070
Investments:
Investment contracts - - - 101,160 - - - 101,160
Mutual funds - 7,572 5,547 - - - - 13,119
Total assets - 8,082 5,659 125,515 - - - 139,256
Liabilities
Accounts payable - - - 480 - - - 480
Master Trust net assets - $8,082 $5,659 $125,035 - - - $138,776
Portion of Master Trust
allocable to the Plan - $ 261 $ 126 $ 3,577 - - - $ 3,964
Percent - 3% 2% 3% - - - 3%
Employee Savings Plan
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 1,200 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
========================================================================================
Employee Savings Plan
Notes to Financial Statements (continued)
4. Differences Between Financial Statements and Form 5500
The following is a reconciliation of net assets available
for benefits per the financial statements to the Form 5500:
December 31,
1996 1995
------------------
Net assets available for benefits per the
financial statements $5,596 $4,121
Amounts allocated to withdrawn participants 11 41
------------------
Net assets available for benefits per the Form 5500 $5,585 $4,080
==================
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 $ 308
Add: Amounts allocated on Form 5500 to
withdrawn participants in the current year 11
Less: Amounts allocated on Form 5500 to
withdrawn participants in the prior year (41)
-------------
Benefits paid to participants per the Form 5500 $ 278
=============
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 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. 33-53847) pertaining to the Employees
Savings Plan and in the related Prospectus of our report dated
June 19, 1997, with respect to the financial statements of the
Employees Savings Plan included in this Annual Report (Form 11-K)
for the year ended December 31, 1996.
Ernst & Young LLP
Richmond, Virginia
June 19, 1997