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 September 30, 1994
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 October 29, 1994, the Registrant had 62,048,989 shares of Common
Stock, no par value, outstanding and entitled to vote.<PAGE>
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
<TABLE>
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
____________________________________________________________________________________________________
Reynolds Metals Company
<CAPTION>
Quarter ended Nine months ended
September 30 September 30
____________________________________________________________________________________________________
(In millions, except per share amounts) 1994 1993 1994 1993
____________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Revenues
Net sales $1,531.4 $1,336.2 $4,240.3 $3,922.9
Equity, interest and other income 13.9 6.4 25.9 18.1
Gain on sale of asset 62.6 - 62.6 -
____________________________________________________________________________________________________
1,607.9 1,342.6 4,328.8 3,941.0
____________________________________________________________________________________________________
Costs and expenses
Cost of products sold 1,373.1 1,258.0 3,849.3 3,676.2
Selling, administrative and general expenses 98.2 89.8 283.5 275.9
Interest - principally on long-term obligations 39.9 39.7 114.0 120.6
____________________________________________________________________________________________________
1,511.2 1,387.5 4,246.8 4,072.7
____________________________________________________________________________________________________
Income (loss) before income taxes 96.7 (44.9) 82.0 (131.7)
Taxes on income (credit) 34.7 (16.9) 29.2 (48.2)
____________________________________________________________________________________________________
Net income (loss) 62.0 (28.0) 52.8 (83.5)
Preferred stock dividends 9.1 - 25.0 -
____________________________________________________________________________________________________
Net Income (loss) available
to common shareholders $52.9 $(28.0) $27.8 $(83.5)
====================================================================================================
Income (loss) per common share
Average shares outstanding 62.0 59.8 61.6 59.8
Net income (loss) $0.86 $(0.47) $0.45 $(1.40)
Cash dividends per common share $0.25 $0.25 $0.75 $0.95
____________________________________________________________________________________________________
Depreciation and amortization included in costs
and expenses $73.9 $71.0 $216.9 $213.8
</TABLE>
PAGE
<PAGE>
<TABLE>
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
- ----------------------------------------------------------------------------------------------------
Reynolds Metals Company
<CAPTION>
September 30 December 31
- ----------------------------------------------------------------------------------------------------
(In millions) 1994 1993
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets
Cash and short-term investments $186.6 $19.2
Receivables, less allowances of $19.5
(1993 - $16.7) 908.7 794.2
Inventories 855.2 731.8
Prepaid expenses 45.9 44.8
- ----------------------------------------------------------------------------------------------------
Total current assets 1,996.4 1,590.0
Unincorporated joint ventures and associated companies 778.6 832.5
Property, plant and equipment 6,273.8 6,093.1
Less allowances for depreciation and amortization 3,162.8 3,011.9
- ----------------------------------------------------------------------------------------------------
3,111.0 3,081.2
Deferred taxes and other assets 1,310.7 1,204.9
- ----------------------------------------------------------------------------------------------------
Total assets $7,196.7 $6,708.6
====================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable, accrued and other liabilities $1,105.6 $979.9
Short-term obligations 111.4 158.4
Long-term debt 15.8 42.6
- ----------------------------------------------------------------------------------------------------
Total current liabilities 1,232.8 1,180.9
Long-term debt 1,855.3 1,989.6
Postretirement benefits 1,219.0 1,260.9
Environmental, deferred taxes and other liabilities 693.2 654.3
Stockholders' equity
Preferred stock 505.1 -
Common stock 863.4 784.2
Retained earnings 935.3 953.8
Cumulative currency translation adjustments (42.2) (49.9)
Pension liability adjustment (65.2) (65.2)
- ----------------------------------------------------------------------------------------------------
Total stockholders' equity 2,196.4 1,622.9
- ----------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $7,196.7 $6,708.6
====================================================================================================
</TABLE>
<PAGE>
<PAGE>
<TABLE>
CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)
- ----------------------------------------------------------------------------------------------------
Reynolds Metals Company
<CAPTION>
Nine Months Ended
September 30
- ----------------------------------------------------------------------------------------------------
(In millions) 1994 1993
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Operating activities
Net income (loss) $52.8 $(83.5)
Adjustments to reconcile to net cash provided by
Operating activities:
Depreciation and amortization 216.9 213.8
Changes in operating assets, liabilities and other (84.6) 19.0
- ----------------------------------------------------------------------------------------------------
Net cash provided by operating activities 185.1 149.3
Investing activities
Capital investments (249.0) (218.0)
Purchases of debt securities (138.7) -
Proceeds from sale of assets 130.4 34.0
Other investing activities - net (79.8) 21.3
- ----------------------------------------------------------------------------------------------------
Net cash used in investing activities (337.1) (162.7)
Financing activities
Proceeds from preferred stock issue 505.1 -
Proceeds from long-term obligations - 519.9
Decrease in short-term borrowings (65.6) (21.0)
Reduction of long-term debt and other financing liabilities (137.7) (438.5)
Cash dividends paid (46.7) (41.9)
- ----------------------------------------------------------------------------------------------------
Net cash provided by financing activities 255.1 18.5
Cash
Net increase 103.1 5.1
- ----------------------------------------------------------------------------------------------------
At beginning of period 19.2 80.4
Cash 122.3 85.5
Short-term investments 64.3 -
- ----------------------------------------------------------------------------------------------------
Cash and short-term investments at end of period $186.6 $85.5
====================================================================================================
</TABLE>
PAGE
<PAGE>
REYNOLDS METALS COMPANY AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Quarters and Nine Months Ended September 30, 1994 and 1993
Note A - 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 periods of 1994 are not necessarily indicative of
the results that may be expected for the year ending December 31, 1994.
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, 1993.
Note B - Significant Accounting Policies
Earnings per share
Earnings per share is based on the average number of common shares
outstanding and, in the 1994 periods, is after preferred stock dividend
requirements. Common stock equivalents relating to preferred stock are not
included since their effect would be anti-dilutive.
Note C - Gain on Sale of Asset
In the third quarter of 1994, the Company completed the sale of Reynolds
Australia Metals, Ltd., which held a 40 percent interest in the Boddington
Gold Mine, to a subsidiary of Poseidon Gold Limited.
Note D - Financing arrangements
In the second quarter of 1994, the Company replaced $490 million of
revolving credit facilities with a new $500 million revolving credit
facility which expires in 1999. No amounts were outstanding under the new
facility at September 30, 1994. The Company pays a commitment fee of .20%
per year on the unused portion of the facility. The facility contains
requirements which, among other things, provide for compliance with a
long-term debt-to-equity ratio, as defined. These restrictions do not
inhibit the Company's operations or the use of fixed assets. At September
30, 1994, the Company exceeded all such requirements.
Note E - Preferred stock
In the first quarter of 1994, the Company issued 11,000,000 shares of 7%
PRIDES(SM), Convertible Preferred Stock for $47.25 (stated value) per
share. The PRIDES mature on December 31, 1997, at which time they
mandatorily convert into shares of the Company's common stock on a one for
one basis. Dividends are cumulative from the date of issuance and are
payable quarterly in arrears. Holders may convert each share of PRIDES
into 0.82 shares of common stock (to be adjusted under certain
circumstances) at any time prior to December 31, 1997. The Company has the
option of redeeming the PRIDES at any time on or after December 31, 1996,
for common stock having a fair market value equal to the issue price plus
accrued dividends plus a small premium. The redemption price will in no
event be less than 0.82 shares of common stock per share of PRIDES. The
holders of shares of PRIDES have the right with the holders of common stock
to vote in the election of Directors and upon each other matter coming
before any meeting of the holders of common stock on the basis of 4/5 of a
vote for each share of PRIDES.
Note F - Contingent liabilities
As previously disclosed in the Company's annual report on Form 10-K for the
year ended December 31, 1993, the Company is involved in various worldwide
environmental improvement activities resulting from past operations,
including designation as a potentially responsible party, with others, at
various EPA designated Superfund sites. The Company has recorded amounts
which, in management's best estimate, will be sufficient to satisfy
anticipated costs of known remediation requirements. As a result of
factors such as the continuing evolution of environmental laws and
regulatory requirements, the availability and application of technology,
the identification of presently unknown remediation sites and the
allocation of costs among potentially responsible parties, estimated costs
for future environmental compliance and remediation are necessarily
imprecise. Based upon 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 future quarterly or annual results
of operations.
Note G - Canadian Reynolds Metals Company, Limited
Summarized financial information for Canadian Reynolds Metals Company,
Limited is as follows:
Quarter Ended Nine Months Ended
September 30 September 30
-------------------------------------
1994 1993 1994 1993
-------------------------------------
Net Sales:
Customers $102.1 $74.7 $267.5 $222.9
Parent company 141.0 116.2 371.1 287.0
-------------------------------------
243.1 190.9 638.6 509.9
Cost of products sold
and depreciation 199.8 188.9 568.2 510.3
Net income (loss) $15.0 $(2.4) $21.2 $(22.4)
Note G - Canadian Reynolds Metals Company, Limited (continued)
September 30 December 31
1994 1993
----------------------------------
Current assets $182.1 $146.9
Noncurrent assets 1,024.0 1,056.1
Current liabilities (70.8) (99.8)
Noncurrent liabilities (552.8) (540.7)
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
INTRODUCTION
The following discussion and analysis should be read in conjunction with
the consolidated financial statements and notes thereto included in or
referred to in this report.
RESULTS OF OPERATIONS
The Company reported third-quarter net income of $62 million (86
cents per share) compared to a net loss of $28 million (47 cents per share)
in the third quarter a year ago. For the first nine months of 1994, the
Company reported net income of $53 million (45 cents per share) compared to
a net loss of $84 million ($1.40 per share) in 1993.
Net income for the third quarter and first nine months of 1994
includes an after-tax gain of $41 million (66 cents per share) from the
sale of Reynolds Australia Metals, Ltd., which held a 40 percent interest
in the Boddington Gold Mine. The year-ago results for the same periods
include an after-tax charge of $8 million (13 cents per share) to cover
costs associated with the curtailment of primary aluminum production.
Shipments and Revenues
Shipments, net sales and revenues per pound for the third quarter and
nine months of 1994 and 1993 were as follows (metric tons in thousands and
dollars in millions, except per pound amounts):
Third Quarter Nine Months
1994 1993 1994 1993
-----------------------------------------
Aluminum product shipments 409.7 386.1 1,160.9 1,124.7
Net sales:
Aluminum $1,182.4 $997.0 $3,235.1 $2,955.6
Nonaluminum 349.0 339.2 1,005.2 967.3
------------------------------------------
Total $1,531.4 $1,336.2 $4,240.3 $3,922.9
==========================================
Revenues per pound:
Fabricated aluminum products $1.51 $1.43 $1.45 $1.45
Primary aluminum $0.74 $0.56 $0.67 $0.56
Shipments and Revenues (continued)
The increases in shipments in both 1994 periods reflect the
continuing recovery in major global economies, particularly in the U.S. and
Europe. The increases in shipments were also attributable to acquisitions
partially offset by restructuring activities. Higher shipments of cans and
ends (due principally to acquisitions) were partially offset by lower
shipments of can sheet (due to greater internal consumption to support
higher can production) and other aluminum sheet (due to the restructuring
of the Company's Illinois sheet and plate facility).
The increase in net sales in both 1994 periods primarily reflects
the increase in shipping volume for fabricated aluminum products.
Prices for fabricated aluminum products, particularly cans and can
sheet, continued to adversely affect the Company's results. Increased
demand has begun to favorably impact prices. The overall average realized
price for fabricated aluminum products in the 1994 periods benefitted from
a shift in mix toward higher value-added products. Realized prices for
primary aluminum were higher in the 1994 periods due to improvement in the
world supply/demand balance.
Revenues by principal markets were:
Third Quarter Nine Months
---------------------------------
1994 1993 1994 1993
---------------------------------
Packaging and Containers 45% 44% 45% 44%
Distributors and Fabricators 13 13 13 14
Building and Construction 14 13 13 12
Automotive and Transportation 12 11 11 11
Electrical 3 3 3 3
Other 13 16 15 16
---------------------------------
Total 100% 100% 100% 100 %
=================================
The increase in equity, interest and other income was due primarily
to non-recurring investment gains at a Brazilian affiliate.
In the third quarter of 1994, the Company completed the sale of
Reynolds Australia Metals, Ltd., which held a 40 percent interest in the
Boddington Gold Mine, and recorded a pre-tax gain of $62.6 million. (For
further information, refer to "Liquidity and Capital Resources - Investing
Activities".)
For further information concerning shipments and revenues, see the
discussion under "Segment Analysis".
Costs and Expenses
Cost of products sold in the 1994 periods reflected a shift in
product mix to higher value-added products and the negative effects of
ongoing fixed costs related to the temporary curtailments at primary
aluminum and alumina facilities. These effects were partially offset by the
benefits of performance improvement programs, the effects of restructuring,
lower costs for certain raw materials used in the production of primary
aluminum and higher capacity utilization in aluminum fabricating
operations. Included in cost of products sold in the third quarter of 1993
was a pre-tax charge of $13 million to cover costs associated with the
curtailment of primary aluminum production.
The increases in selling, administrative and general expenses in
the 1994 periods primarily reflect the higher level of business activity.
Interest expense in the nine months of 1994 benefitted from lower
levels of debt outstanding and lower interest rates. In the third quarter
of 1994, the benefit of lower levels of debt outstanding was offset by
rising interest rates.
On a quarterly basis, the Company evaluates the status of all
significant existing or potential environmental issues (including the
proposed listing referred to below), 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 the Company's
competitive or financial position or its ongoing results of operations.
However, it is not possible to predict the amount or timing of future costs
of environmental remediation requirements which may subsequently be
determined. Such costs could be material to future quarterly or annual
results of operations. On August 23, 1994, the Environmental Protection
Agency (the "EPA") published notice that it was proposing that the
Company's Troutdale, Oregon primary aluminum production plant be included
on the National Priorities List of Superfund sites. The Company is working
cooperatively with the EPA in investigating potential environmental
contamination at the Troutdale site.
Operating Outlook
The Company expects major global economies to continue to recover
and demand for the Company's fabricated aluminum products to improve.
Prices for most fabricated aluminum products are improving and should
continue to improve with stronger demand.
<PAGE>
SEGMENT ANALYSIS
Finished Products and Other Sales
Shipments and net sales to customers for this category for the
third quarter and nine months of 1994 and 1993 were as follows (metric tons
in thousands, dollars in millions):
THIRD QUARTER
-------------------------------------------
Net Sales Shipments
1994 1993 1994 1993
-------------------------------------------
Packaging and containers:
Aluminum $421.6 $315.4 95.6 66.2
Nonaluminum 132.3 130.5
Other aluminum 122.0 95.8 41.0 33.0
Other nonaluminum 126.8 105.1
-------------------------------------------
$802.7 $646.8 136.6 99.2
===========================================
NINE MONTHS
-------------------------------------------
Net Sales Shipments
1994 1993 1994 1993
-------------------------------------------
Packaging and containers:
Aluminum $1,184.7 $910.2 268.8 190.5
Nonaluminum 381.3 365.4
Other aluminum 319.7 270.7 110.0 92.8
Other nonaluminum 338.3 297.4
-------------------------------------------
$2,224.0 $1,843.7 378.8 283.3
===========================================
The increases in shipments in both 1994 periods were due primarily to
higher shipments of cans and ends and some improvements in shipments to the
distributor and building and construction markets. Net sales for aluminum
products increased due to the higher shipping volume somewhat offset by
lower realized prices. The increases in nonaluminum net sales were due to
higher sales to the packaging, distributor and building and construction
markets.
SEGMENT ANALYSIS (continued)
Production and Processing
Shipments and net sales to customers for this category for the
third quarter and nine months of 1994 and 1993 were as follows (metric tons
in thousands, dollars in millions):
THIRD QUARTER
-------------------------------------
Net Sales Shipments
1994 1993 1994 1993
-------------------------------------
Primary aluminum $127.0 $109.4 78.4 88.4
Flat rolled 257.1 255.1 101.7 112.2
Extruded and drawn 157.2 134.7 51.4 47.8
Other aluminum 97.5 86.6 41.6 38.5
Other nonaluminum 68.5 69.0
Gold 21.4 34.6
-------------------------------------
$728.7 $689.4 273.1 286.9
=====================================
NINE MONTHS
---------------------------------------
Net Sales Shipments
1994 1993 1994 1993
---------------------------------------
Primary aluminum $304.1 $288.6 204.6 232.6
Flat rolled 714.3 813.5 304.7 344.4
Extruded and drawn 442.2 398.1 158.6 137.5
Other aluminum 270.1 274.5 114.2 126.9
Other nonaluminum 192.5 212.0
Gold 93.1 92.5
---------------------------------------
$2,016.3 $2,079.2 782.1 841.4
=======================================
The declines in shipments in both 1994 periods were due to lower shipments
of primary aluminum and flat rolled products (due to greater internal
consumption to support higher production of fabricated products and the
restructuring of the Company's Illinois sheet and plate facility), somewhat
offset by higher fabricated shipments by European subsidiaries. Shipments
of other aluminum products in the nine month period were lower due to the
divestiture of an aluminum reclamation facility in the second quarter of
1993. The increase in net sales in the third quarter was due to higher
prices for certain aluminum products, principally primary and recycled
aluminum, slightly offset by the lower shipping volume. The decline in net
sales in the nine month period reflects the lower shipping volume and lower
realized prices for fabricated aluminum products, somewhat offset by higher
realized prices for primary and recycled aluminum. The decline in
nonaluminum net sales in the nine month period was due to lower sales of
alumina.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Working Capital
Working capital totalled $764 million at September 30, 1994,
compared to $409 million at December 31, 1993. The ratio of current assets
to current liabilities was 1.6/1 at September 30, 1994, compared to 1.3/1
at December 31, 1993. The increase in working capital was due to increases
in cash and short-term investments, receivables and inventories, partially
offset by an increase in accounts payable, accrued and other liabilities.
The increases in receivables, inventories and payables reflect the higher
level of business activity. Investments have risen due to the investment
of a portion of the proceeds from the issuance of preferred stock in early
1994 (see "Financing Activities"). In addition to the amount in cash and
short-term investments included in current assets, the Company has $75.4
million of noncurrent investments in corporate debt securities.
Operating Activities
A portion of the cash provided by operating activities was used to
partially fund the increases in receivables and inventories. Net cash
provided by operating activities was used for investing activities.
Investing Activities
Capital investments of $249 million in the first nine months of
1994 consisted of the acquisition of Bev-Pak, Inc. (a midwestern U.S.
manufacturer of aluminum cans and ends), which increases the Company's U.S.
aluminum can-making capacity to approximately 19 billion annually; the
acquisition of a small metals distribution business; the acquisition and
renovation phase of a facility in Beloit, Wisconsin for the production of
aluminum wheels (expected to be completed in the second quarter of 1995);
continuing modernization and expansion at can manufacturing facilities; and
various equipment upgrades.
In the third quarter of 1994, the Company completed the sale of
Reynolds Australia Metals, Ltd., which held a 40 percent interest in the
Boddington Gold Mine, to a subsidiary of Poseidon Gold Limited. A portion
of the proceeds from the transaction, which included a closing payment of
$115 million and delivery of a total of 30,000 ounces of gold over seven
years, was used to extinguish the Company's term loan agreement ($82
million), with the remainder being invested pending its future use for
capital expenditures, strategic investments and general corporate purposes.
The Company plans to reinvest the proceeds from the sale in value-added
businesses and expects the reinvestment to offset any short-term effect
this divestiture may have on the Company's results.
Financing Activities
In the first quarter of 1994, the Company issued 11 million shares
of 7% PRIDES, Convertible Preferred Stock for $47.25 (stated value) per
share. The Company received net proceeds of $505 million. A portion of
the proceeds was used to fund capital investments in the first nine months
of 1994 and to repay obligations incurred in the fourth quarter of 1993 in
connection with the acquisition of Miller Brewing Company's can plants.
The remainder of the proceeds is being invested pending its future use for
capital expenditures, strategic investments and general corporate purposes.
In the first quarter of 1994, the Company contributed 1.4 million
shares of its common stock, valued at approximately $72 million, to its
pension plans.
In the second quarter of 1994, the Company replaced $490 million of
revolving credit facilities with a new $500 million revolving credit
facility which expires in 1999. The new facility will be used to support
the Company's commercial paper program and will be available for other
general corporate purposes.
Financial Outlook
Capital investments for the remainder of 1994 are expected to be
approximately $175 million. They will consist of modernization and
expansion of can manufacturing operations (including participation in the
construction of can plants, as discussed below); expenditures related to
the renovation of a facility in Beloit, Wisconsin for the production of
aluminum wheels; the anticipated acquisition of a small amount of
additional alumina capacity; expenditures related to the modernization of
the Company's Massena primary aluminum production plant (see below); and
equipment upgrades at a number of other facilities. These investments will
be funded with cash generated from operations, proceeds from the sale of
non-core assets, and part of the proceeds from the preferred stock issue.
In the second quarter of 1994, the Company announced plans to
participate in the construction of can plants in Argentina and Saudi
Arabia. An affiliate (in which the Company owns 42.5%) will own the
Argentinean can plant, which will have an annual capacity of 750 million
cans and is expected to start production in late 1995. The Company will
own 27.5% of the Saudi Arabian can plant, which will have an annual
capacity of 1.2 billion cans and is expected to start production in early
1996.
In the third quarter of 1994, the Company announced that it has
retained Chemical Securities, Inc. to assist with the possible divestment
of its remaining gold mining assets in Australia. The assets consist of
three mines in Western Australia and exploration activities underway in
Western Australia and the Northern Territory. The mines produced
approximately 210,000 ounces of gold for the Company in 1993 and 158,000
ounces in the first nine months of 1994. The Company plans to reinvest the
proceeds from any such sale in value-added businesses and would expect the
reinvestment to offset any short-term effect this divestiture may have on
the Company's results.
Financial Outlook (continued)
In the third quarter of 1994, the Company announced plans for a $12
million expansion that will increase annual production capacity at its
plastic film manufacturing plant in Grottoes, Virginia by approximately 20
percent. Site preparation work has already begun, and construction of the
addition is scheduled to begin next spring with start-up of the additional
capacity scheduled for the summer of 1996.
Early in the fourth quarter of 1994, the Company announced plans to
modernize its 123,000 metric ton primary aluminum production plant in
Massena, N.Y. The Company plans to spend an estimated $150 to $200 million
over five years to modernize production lines and environmental control
facilities at the plant.
Also early in the fourth quarter of 1994, the Company announced a
major, multi-year capital program to build a new aluminum foil rolling mill
at the Company's Louisville, Kentucky plant which will increase annual
capacity at the operation by about 25 percent. The new Louisville mill is
part of a modernization, reengineering and expansion program for rolling
facilities which fabricate foil for consumer and foodservice foodwrap
products. The engineering phase of the Louisville mill construction will
begin before the end of 1994 with completion of the project scheduled for
1997.
The Company believes its available financial resources (including
cash and investments of over $250 million), 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 for the foreseeable future. At September 30, 1994, $222
million of the Company's $1.65 billion shelf registration remained
available for the issuance of debt securities.
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
On August 29, 1994, the Registrant received a civil investigative
demand from the U.S. Department of Justice relating to production of
primary aluminum. The Registrant is cooperating with the inquiry and is
confident that its conduct has been in compliance with U.S. antitrust laws.
As previously reported in the Registrant's Report on Form 10-K for the
Year ended December 31, 1993, the State of New York alleged in December,
1993 that the Registrant's emissions at its Massena, New York primary
aluminum production plant were causing a violation of ambient air standards
for benzo-a-pyrene. The Registrant responded that it did not believe it
was causing such a violation, but entered into a series of meetings with
the State to discuss environmental issues at the Massena plant. In
October, 1994, based on an agreement in principle with the State to resolve
environmental issues at the plant, the Registrant approved a five-year
capital spending program of an estimated $150 to $200 million to modernize
the Massena plant and significantly reduce air emissions from the plant.
The Registrant will accelerate installation of equipment believed necessary
to achieve compliance with the federal Clean Air Act's Maximum Achievable
Control Technology standards, although the U.S. Environmental Protection
Agency is not expected to establish such standards until 1996 or 1997.
(For additional information, see the discussion under "Liquidity and
Capital Resources - Financial Outlook" in Part I, Item 2 of this report.)
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
See Index to Exhibits.
(b) Reports on Form 8-K
During the third quarter of 1994, the Registrant filed with the
Commission a Current Report on Form 8-K dated August 26, 1994 reporting
under Item 5 that it had (i) retained Chemical Securities, Inc. to assist
with the possible divestment of its remaining gold mining assets in
Australia, (ii) completed the purchase of the metals distribution business
of Alumax Inc.'s wholly owned subsidiary, Prime Metals, Inc. and (iii) been
notified it would receive a civil investigative demand from the U.S.
Department of Justice relating to production of primary aluminum.
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
(Principal Accounting Officer)
DATE: November 10, 1994
<PAGE>
INDEX TO EXHIBITS
EXHIBIT SEQUENTIAL
NO. DESCRIPTION OF EXHIBIT PAGE NO.
2 None
*4.1 Restated Certificate of Incorporation of Reynolds
Metals Company, as amended to the date hereof.
(File No. 1-1430, Registration Statement on Form
8-A dated February 23, 1994, pertaining to Common
Stock and Preferred Stock Purchase Rights,
EXHIBIT 1)
*4.2 By-Laws of Reynolds Metals Company, as amended to
the date hereof. (File No. 1-1430, Form 10-Q
Report for the Quarter Ended June 30, 1994,
EXHIBIT 4.2)
*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))
*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)
*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)
*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)
*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)
*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)
*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)
*4.10 Form of Book-Entry Fixed Rate Medium-Term Note.
(File No. 1-1430, 1991 Form 10-K Report, EXHIBIT
4.15)
*4.11 Form of Book-Entry Floating Rate Medium-Term Note.
(File No. 1-1430, 1991 Form 10-K Report, EXHIBIT
4.16)
*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))
*4.13 Articles of Continuance of Canadian Reynolds
Metals Company, Limited -- Societe Canadienne de
Metaux Reynolds, Limitee ("CRM"), as amended to
the date hereof. (Registration Statement No.
33-59168 on Form S-3, dated March 5, 1993, EXHIBIT
4.1)
*4.14 By-Laws of CRM, as amended to the date hereof.
(File No. 1-1430, Form 10-Q Report for the Quarter
Ended September 30, 1993, EXHIBIT 4.19)
*4.15 Indenture dated as of April 1, 1993 among CRM,
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))
*4.16 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))
*10.1 Reynolds Metals Company 1982 Nonqualified Stock
Option Plan, as amended through May 17, 1985.
(File No. 1-1430, 1985 Form 10-K Report, EXHIBIT
10.2)
*10.2 Reynolds Metals Company 1987 Nonqualified Stock
Option Plan. (Registration Statement No. 33-13822
on Form S-8, dated April 28, 1987, EXHIBIT 28.1)
*10.3 Reynolds Metals Company 1992 Nonqualified Stock
Option Plan. (Registration Statement No. 33-44400
on Form S-8, dated December 9, 1991, EXHIBIT 28.1)
*10.4 Reynolds Metals Company Performance Incentive
Plan, as amended and restated effective January 1,
1985. (File No. 1-1430, 1985 Form 10-K Report,
EXHIBIT 10.3)
*10.5 Consulting Agreement dated April 16, 1986 between
Reynolds Metals Company and David P. Reynolds.
(File No. 1-1430, Form 10-Q Report for the Quarter
Ended March 31, 1986, EXHIBIT 19)
*10.6 Form of Deferred Compensation Agreement dated
February 17, 1984 between Reynolds Metals Company
and David P. Reynolds. (File No. 1-1430,
Form 10-Q Report for the Quarter Ended March 31,
1994, EXHIBIT 10.6)
*10.7 Deferred Compensation Agreement dated May 16, 1986
between Reynolds Metals Company and David P.
Reynolds. (File No. 1-1430, Form 10-Q Report for
the Quarter Ended June 30, 1986, EXHIBIT 19)
*10.8 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)
*10.9 Supplemental Death Benefit Plan for Officers.
(File No. 1-1430, 1986 Form 10-K Report, EXHIBIT
10.8)
*10.10 Financial Counseling Assistance Plan for Officers.
(File No. 1-1430, 1987 Form 10-K Report, EXHIBIT
10.11)
*10.11 Management Incentive Deferral Plan. (File No.
1-1430, 1987 Form 10-K Report, EXHIBIT 10.12)
*10.12 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)
*10.13 Retirement Plan for Outside Directors. (File No.
1-1430, 1986 Form 10-K Report, EXHIBIT 10.10)
*10.14 Death Benefit Plan for Outside Directors. (File
No. 1-1430, 1986 Form 10-K Report, EXHIBIT 10.11)
*10.15 Form of Indemnification Agreement for Directors
and Officers. (File No. 1-1430, Form 8-K Report
dated April 29, 1987, EXHIBIT 28.3)
*10.16 Form of Executive Severance Agreement between
Reynolds Metals Company and key executive
personnel, including each of the individuals
listed in Item 4A of the Reynolds Metals Company
1993 Form 10-K Report (other than Messrs.
Christino, Earehart, Jones and Leahey). (File No.
1-1430, 1987 Form 10-K Report, EXHIBIT 10.18)
*10.17 Renewal dated February 21, 1992 of Consulting
Agreement dated April 16, 1986 between Reynolds
Metals Company and David P. Reynolds. (File No.
1-1430, 1991 Form 10-K Report, EXHIBIT 10.19)
*10.18 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))
*10.19 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))
*10.20 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)
*10.21 Amendment to Reynolds Metals Company Performance
Incentive Plan effective January 1, 1989. (File
No. 1-1430, Form 10-Q Report for the Quarter Ended
June 30, 1989, EXHIBIT 19)
*10.22 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)
*10.23 Amendment to Reynolds Metals Company 1982
Nonqualified Stock Option Plan effective
January 18, 1991. (File No. 1-1430, 1990 Form
10-K Report, EXHIBIT 10.25)
*10.24 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)
*10.25 Letter Agreement dated January 18, 1991 between
Reynolds Metals Company and William O. Bourke.
(File No. 1-1430, 1990 Form 10-K Report, EXHIBIT
10.29)
*10.26 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))
*10.27 Consulting Agreement dated May 1, 1992 between
Reynolds Metals Company and William O. Bourke.
(File No. 1-1430, Form 10-Q Report for the Quarter
Ended March 31, 1992, EXHIBIT 28(b))
*10.28 Renewal dated February 18, 1994 of Consulting
Agreement dated May 1, 1992 between Reynolds
Metals Company and William O. Bourke. (File No.
1-1430, 1993 Form 10-K Report, EXHIBIT 10.28)
*10.29 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)
*10.30 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)
*10.31 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)
*10.32 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)
10.33 Amendment to Reynolds Metals Company 1982
Nonqualified Stock Option Plan effective
August 19, 1994
10.34 Amendment to Reynolds Metals Company 1987
Nonqualified Stock Option Plan effective
August 19, 1994
10.35 Amendment to Reynolds Metals Company 1992
Nonqualified Stock Option Plan effective
August 19, 1994
11 Computation of Earnings Per Share
15 None
18 None
19 None
22 Not applicable
23 None
24 None
27 Financial Data Schedule
___________________
*Incorporated by reference.
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.
F:\BFH\SEC\10Q\FORM10Q.394
EXHIBIT 10.33
AMENDMENT TO
REYNOLDS METALS COMPANY
1982 NONQUALIFIED STOCK OPTION PLAN
Sections 3.1, 4.1, and 7.5 of the Reynolds Metals
Company 1982 Nonqualified Stock Option Plan are each amended
as follows by deleting the language in brackets and adding
the language that is underscored:
3.1 Administration. The Plan shall be
administered by a Committee of at least three persons,
all of whom shall be members of the Board, appointed
from time to time by the Board. The Board shall
appoint one member of the Committee to act as Chairman.
Vacancies shall be filled in the same manner as
original appointments. The Committee shall hold
meetings upon such notice and at such place or places,
and at such time or times as it may from time to time
determine. A majority of the members of the Committee
at the time in office shall constitute a quorum for the
transaction of business, and the acts of a majority of
the members participating in any meeting at which a
quorum is present shall be the acts of the Committee.
The Committee may act without a meeting if a consent in
writing setting forth the action so taken shall be
signed by all members of the Committee and filed with
the minutes of the Committee. As of the time that the
Committee exercises its discretion in administering the
Plan, all of the members of the Committee shall be
"disinterested persons" as contemplated by Rule 16b-3,
as in effect at such time, under the Securities
Exchange Act of 1934, as amended [none of the members
of the Committee shall be, or within one year prior
thereto shall have been, eligible for selection as a
person to whom stock may be allocated or to whom stock
options or stock appreciation rights may be granted
pursuant to the Plan or any other plan of the Company
or any of its Subsidiaries entitling participants
therein to acquire stock, stock options or stock
appreciation rights of the Company or any of its
Subsidiaries].
4.1 General. Grants of options shall be made
without the payment of a purchase price by any Grantee.
Each option granted under the Plan shall be evidenced
by a stock option agreement between the Company and the
Grantee which shall contain the terms and conditions
required by this Article IV, and such other terms and
conditions, not inconsistent herewith, as the Committee
may deem appropriate in each case.
7.5 Amendments. The Board may from time to time
amend, modify, suspend or terminate the Plan; provided,
however, that no such action shall (a) impair without
the Grantee's consent any option or stock appreciation
right theretofore granted under the Plan or deprive any
Grantee of any shares of Company Stock which he or she
may have acquired through or as a result of the Plan or
(b) be made without Stockholder Approval where such
change would (i) increase the total number of shares
that may be issued under the Plan (other than as
provided in Section 6.2), (ii) decrease the percentage
relationship which must exist between the option price
and the Fair Market Value of the Company Stock as
optioned under Section 4.2, or (iii) alter the class of
employees who are eligible to be granted options
pursuant to the provisions of Section 2.2.
Notwithstanding the foregoing, the Board may, in any
circumstance where it deems such approval necessary or
desirable, require Stockholder Approval as a condition
to the effectiveness of any amendment or modification
of the Plan.
EXHIBIT 10.34
AMENDMENT TO
REYNOLDS METALS COMPANY
1987 NONQUALIFIED STOCK OPTION PLAN
Sections 3.01, 4.01, and 7.05 of the Reynolds Metals
Company 1987 Nonqualified Stock Option Plan are each amended
as follows by deleting the language in brackets and adding
the language that is underscored:
3.01 Administration. The Plan shall be
administered by a Committee of at least three (3)
persons, all of whom shall be members of the Board,
appointed from time to time by the Board. The Board
shall appoint one member of the Committee to act as
Chairman. Vacancies shall be filled in the same manner
as original appointments. The Committee shall hold
meetings upon such notice and at such place or places,
and at such time or times as it may from time to time
determine. A majority of the members of the Committee
at the time in office shall constitute a quorum for the
transaction of business, and the acts of a majority of
the members participating in any meeting at which a
quorum is present shall be the acts of the Committee.
The Committee may act without a meeting if a consent in
writing setting forth the action so taken shall be
signed by all members of the Committee and filed with
the minutes of the Committee. As of the time that the
Committee exercises its discretion in administering the
Plan, all of the members of the Committee shall be
"disinterested persons" as contemplated by Rule 16b-3,
as in effect at such time, under the Securities
Exchange Act of 1934, as amended [none of the members
of the Committee shall be, or within one year prior
thereto shall have been, eligible for selection as a
person to whom stock may be allocated or to whom stock
options or stock appreciation rights may be granted
pursuant to the Plan or any other plan of the Company
or any of its Subsidiaries entitling participants
therein to acquire stock, stock options or stock
appreciation rights of the Company or any of its
Subsidiaries].
4.01 General. Grants of options shall be made
without the payment of a purchase price by any Grantee.
Each option granted under the Plan shall be evidenced
by a stock option agreement between the Company and the
Grantee which shall contain the terms and conditions
required by this Article IV, and such other terms and
conditions, not inconsistent herewith, as the Committee
may deem appropriate in each case.
7.05 Amendments. The Board may from time to time
amend, modify, suspend or terminate the Plan; provided,
however, that no such action shall (a) impair without
the Grantee's consent any option or stock appreciation
right theretofore granted under the Plan or deprive any
Grantee of any shares of Company Stock which he or she
may have acquired through or as a result of the Plan or
(b) be made without Stockholder Approval where such
change would (i) increase the total number of shares
that may be issued under the Plan (other than as
provided in Section 6.02), (ii) decrease the percentage
relationship which must exist between the option price
and the Fair Market Value of the Company Stock as
optioned under Section 4.02, or (iii) alter the class
of employees who are eligible to be granted options
pursuant to the provisions of Section 2.02.
Notwithstanding the foregoing, the Board may, in any
circumstance where it deems such approval necessary or
desirable, require Stockholder Approval as a condition
to the effectiveness of any amendment or modification
of the Plan.
EXHIBIT 10.35
AMENDMENT TO
REYNOLDS METALS COMPANY
1992 NONQUALIFIED STOCK OPTION PLAN
Section 4.01 of the Reynolds Metals Company 1992
Nonqualified Stock Option Plan is amended as follows by
adding the language that is underscored:
4.01 General. Grants of options shall be made
without the payment of a purchase price by any Grantee.
Each option granted under the Plan shall be evidenced
by a stock option agreement between the Company and the
Grantee which shall contain the terms and conditions
required by this Article IV, and such other terms and
conditions, not inconsistent herewith, as the Committee
may deem appropriate in each case.
<TABLE>
EXHIBIT 11
<CAPTION>
Computation of Earnings Per Share
REYNOLDS METALS COMPANY AND CONSOLIDATED SUBSIDIARIES
(In millions, except share data)
Quarter Ended Nine Months Ended
September 30 September 30
1994 1993 1994 1993
_______________________________________________________
<S> <C> <C> <C> <C>
Average shares outstanding 62,017,545 59,842,476 61,649,836 59,811,025
=======================================================
Net income (loss) $62.0 $(28.0) $52.8 $(83.5)
Less preferred stock dividends 9.1 - 25.0 -
_______________________________________________________
Net income (loss) applicable
to common stock $52.9 $(28.0) $27.8 $(83.5)
=======================================================
Net income (loss) per share $0.86 $(0.47) $0.45 $(1.40)
=======================================================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Reynolds Metals Company Condensed Consolidated Balance Sheet (Unaudited)
for September 30, 1994 and Consolidated Statement of Income (Unaudited)
for the Quarter and Nine Months Ended September 30, 1994, and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 187
<SECURITIES> 0
<RECEIVABLES> 909<F1>
<ALLOWANCES> 0
<INVENTORY> 855
<CURRENT-ASSETS> 1996
<PP&E> 6274
<DEPRECIATION> 3163
<TOTAL-ASSETS> 7197
<CURRENT-LIABILITIES> 1233
<BONDS> 1855
<COMMON> 863
0
505
<OTHER-SE> 828
<TOTAL-LIABILITY-AND-EQUITY> 7197
<SALES> 4240
<TOTAL-REVENUES> 4329
<CGS> 3849
<TOTAL-COSTS> 3849
<OTHER-EXPENSES> 284
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 114
<INCOME-PRETAX> 82
<INCOME-TAX> 29
<INCOME-CONTINUING> 53
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 53
<EPS-PRIMARY> .45
<EPS-DILUTED> 0
<FN>
<F1>This amount represents total receivables, since trade receivables are not
broken out separately at interim dates, in accordance with S-X 10-01(2).
</FN>
</TABLE>
