SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
Commission File Number 1-1430
REYNOLDS METALS COMPANY
A Delaware Corporation
(IRS Employer Identification No. 54-0355135)
6601 West Broad Street, P. O. Box 27003, Richmond, Virginia 23261-7003
Telephone: (804) 281-2000
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
- ------------------- -----------------------
Common Stock, no par value New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes _X_ No ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. _X_
As of March 16, 1998:
(a) the aggregate market value of the voting stock held by nonaffiliates of
the Registrant was approximately $3.5 billion<F1>.
(b) the Registrant had 72,549,288 shares of Common Stock outstanding and
entitled to vote.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the Annual Meeting of Stockholders to be
held on May 14, 1998 - Part III
[FN]
________________
<F1> For this purpose, "nonaffiliates" are deemed to be persons other than
directors, officers and persons owning beneficially more than five percent
of the voting stock.
</FN>
<PAGE>
NOTE
This copy includes only EXHIBIT 21 of those listed on pages 69 - 75.
In accordance with the Securities and Exchange Commission's requirements, we
will furnish copies of the remaining exhibits listed below upon payment of a
fee of 10 cents per page. Please remit the proper amount with your request to:
Secretary
Reynolds Metals Company
P.O. Box 27003
Richmond, Virginia 23261-7003
Exhibits have the following number of pages:
EXHIBIT 3.1 87 EXHIBIT 10.15 1
EXHIBIT 3.2 22 EXHIBIT 10.16 4
EXHIBIT 4.1 87 EXHIBIT 10.17 3
EXHIBIT 4.2 22 EXHIBIT 10.18 3
EXHIBIT 4.3 165 EXHIBIT 10.19 2
EXHIBIT 4.4 6 EXHIBIT 10.20 1
EXHIBIT 4.5 72 EXHIBIT 10.21 10
EXHIBIT 4.6 2 EXHIBIT 10.22 10
EXHIBIT 4.7 2 EXHIBIT 10.23 13
EXHIBIT 4.8 2 EXHIBIT 10.24 6
EXHIBIT 4.9 10 EXHIBIT 10.25 2
EXHIBIT 4.10 14 EXHIBIT 10.26 2
EXHIBIT 4.11 9 EXHIBIT 10.27 1
EXHIBIT 4.12 36 EXHIBIT 10.28 3
EXHIBIT 4.13 17 EXHIBIT 10.29 3
EXHIBIT 4.14 19 EXHIBIT 10.30 2
EXHIBIT 4.15 18 EXHIBIT 10.31 10
EXHIBIT 4.16 89 EXHIBIT 10.32 10
EXHIBIT 4.17 7 EXHIBIT 10.33 10
EXHIBIT 4.18 12 EXHIBIT 10.34 10
EXHIBIT 10.1 21 EXHIBIT 10.35 1
EXHIBIT 10.2 16 EXHIBIT 10.36 2
EXHIBIT 10.3 19 EXHIBIT 10.37 5
EXHIBIT 10.4 7 EXHIBIT 10.38 9
EXHIBIT 10.5 2 EXHIBIT 10.39 1
EXHIBIT 10.6 7 EXHIBIT 10.40 1
EXHIBIT 10.7 6 EXHIBIT 10.41 1
EXHIBIT 10.8 10 EXHIBIT 10.42 1
EXHIBIT 10.9 14 EXHIBIT 21 1
EXHIBIT 10.10 16 EXHIBIT 23 1
EXHIBIT 10.11 7 EXHIBIT 24 19
EXHIBIT 10.12 12 EXHIBIT 27 1
EXHIBIT 10.13 13
EXHIBIT 10.14 2
<PAGE>
TABLE OF CONTENTS
PART I
ITEM PAGE
1. BUSINESS............................................................. 1
GENERAL
Nature of Operations.............................................. 1
Recent Developments............................................... 1
Financial Information Regarding Global Business Units and
Operations by Geographic Location................................ 3
GLOBAL BUSINESS UNITS
Base Materials.................................................... 4
Packaging and Consumer............................................ 9
Construction and Distribution..................................... 9
Transportation.................................................... 10
OTHER OPERATIONS
General........................................................... 11
Assets Held for Sale.............................................. 11
COMPETITION........................................................ 12
ENVIRONMENTAL COMPLIANCE........................................... 12
RESEARCH AND DEVELOPMENT........................................... 13
EMPLOYEES.......................................................... 14
2. PROPERTIES........................................................... 14
3. LEGAL PROCEEDINGS.................................................... 18
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.................. 18
4A. EXECUTIVE OFFICERS OF THE REGISTRANT................................. 19
PART II
5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS................................................. 21
6. SELECTED FINANCIAL DATA.............................................. 23
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS................................. 24
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.......................... 40
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE.............................. 68
PART III
10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT................... 68
11. EXECUTIVE COMPENSATION............................................... 68
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT...................................................... 68
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS....................... 68
PART IV
14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K......................................................... 69
<PAGE>
PART I
Item 1. BUSINESS
Reynolds Metals Company (the "Registrant") was incorporated in 1928 under the
laws of the State of Delaware. In this report, "Reynolds," "Company" and "our"
and personal pronouns, such as "we" and "us," mean the Registrant and its
consolidated subsidiaries unless otherwise indicated.
GENERAL
Nature of Operations
- --------------------
Reynolds is the world's third-largest aluminum producer. We serve customers in
established and growing world markets, such as the packaging and consumer,
construction, distribution, and automotive markets, with a wide variety of
aluminum, plastic and other products. We also are expanding into emerging
economies such as Russia, China and India. At December 31, 1997, Reynolds
employed approximately 25,500 people at more than 100 operating locations in 24
countries. Our world headquarters is in Richmond, Virginia.
As a result of a portfolio review of our operations and businesses, we have
reorganized into four market-based, global business units - Base Materials,
Packaging and Consumer, Construction and Distribution, and Transportation. For
a description of these units' operations, see the discussion below under the
heading "Global Business Units." For a discussion of certain operations that
are not considered part of a global business unit, see the discussion below
under the heading "Other Operations."
Recent Developments
- -------------------
Portfolio Review
- ----------------
In late 1996, we began a portfolio review which has led to the following
transactions:
Completed Portfolio Review Transactions
In March 1997, we sold our U.S. residential construction products
operations to AmeriMark Building Products, Inc. The sale included
construction products plants located in Ashville, Ohio, Bourbon, Indiana
and Lynchburg, Virginia; our manufactured housing operations in Eastman,
Georgia; a plant in Chesterfield County, Virginia that supplies aluminum
building sheet to the construction industry; and 54 service centers. We
retained the Reynobond aluminum composite manufacturing operations at the
Eastman facility. In October 1997, we sold the remaining assets of our
North American residential construction products distribution operations
to Royal Group Technologies Limited ("Royal"). In connection with the
transaction, Royal assumed operation of seven distribution warehouses
located across Canada.
In May 1997, we sold our Bellwood, Virginia aluminum reclamation plant to
Philip Metals Recovery (USA), Inc. The plant is a secondary recycling
plant that processes scrap aluminum into a deoxidizing agent used by the
steel industry.
Also in May 1997, we sold our aluminum extrusion plant in El Campo, Texas
to the William L. Bonnell subsidiary of Tredegar Industries, Inc. The
plant produces standard and specialty extrusions and performs fabricating
operations required by customers.
The sale of our western Kentucky coal properties also was completed in May
1997. We sold those properties to Kentucky Emerald Land Company, L.L.C.,
an affiliate of Henderson Farm & Coal Property, L.L.C.
<PAGE>
In June 1997, we sold our Bellwood, Virginia aluminum extrusion plant to
Kaiser Bellwood Corporation, a subsidiary of Kaiser Aluminum & Chemical
Corp. The plant produces standard and specialty extrusions.
In October 1997, we formed a joint venture with Societe Generale de
Financement du Quebec ("SGF") to operate the Cap-de-la-Madeleine, Quebec,
rolling mill and the Weston Road, Toronto, Ontario, coil coating facility
that were previously owned by Reynolds. Reynolds and SGF each have a 50%
interest in the joint venture. The focus of the alliance is to continue
the existing operation, implement an expansion of the rolling mill, and
develop opportunities for profitable growth in value-added markets. The
joint venture is independently managed, with Reynolds and SGF having equal
representation on its board.
In November 1997, we sold our aluminum powder and paste plant in
Louisville, Kentucky to Eckart Aluminum L.P., an affiliate of Eckart
America of Painesville, Ohio. The plant produces a variety of aluminum
powder and paste products.
In February 1998, we sold our Canadian aluminum extrusion plants located
in Richmond Hill, Ontario and Ste. Therese, Quebec to the William L.
Bonnell subsidiary of Tredegar Industries, Inc. The plants manufacture
products used in the building and construction, transportation,
electrical, machinery and equipment, and consumer durables markets.
In February 1998, we sold our U.S. recycling operations to Wise Recycling,
LLC, an affiliate of Wise Metals Co., Inc. In a related transaction,
TOMRA Pacific, Inc., an affiliate of TOMRA Systems, ASA, acquired the
western region of our U.S. recycling operations.
Pending Portfolio Review Transactions
In November 1997, we announced the signing of a letter of intent to sell
our McCook, Illinois sheet and plate plant to Michigan Avenue Partners,
Inc. The McCook plant produces aluminum sheet and plate products for the
aircraft, aerospace and distribution markets and aluminum body sheet for
the transportation market. The transaction is subject to customary
closing conditions.
We also announced in November 1997 that we had signed a memorandum of
understanding to sell our European rolling operations to VAW aluminium AG.
Included in the pending sale are plants located in Hamburg, Germany;
Cisterna di Latina, Italy; and Irurzun, Spain. The transaction is subject
to regulatory approval and other customary closing conditions.
In December 1997, we announced that we are actively discussing a potential
agreement with Ball Corporation ("Ball") under which Ball would acquire
substantially all of our global can business. The details of the
discussions will be announced when an agreement is signed. See "Other
Operations - Assets Held for Sale" for a description of our can
operations.
Other Matters
In April 1997, we announced the signing of a letter of intent to sell our
rolling mill and certain related assets at our Alloys complex in North
Alabama to Aluminum Company of America ("Alcoa"). The sale was subject to
regulatory approval by the U.S. Department of Justice, in addition to
other customary closing conditions. In December 1997, the Justice
Department filed suit in Alabama federal court to block the proposed sale,
and, as a result of the suit, Alcoa withdrew from the transaction. We are
currently evaluating a number of alternatives for the plant, including
selling it. Any such sale may result in a loss.
<PAGE>
Other Recent Developments Affecting the Global Business Units
- -------------------------------------------------------------
Base Materials
We are investing U.S.$350 million in a U.S.$600 million expansion of the
Worsley Alumina Refinery in Western Australia. The expansion will
increase annual capacity at the refinery to 3.1 million metric tons. In
addition to increasing capacity, the new project will further reduce
operating costs and improve product quality. Completion is scheduled for
the second quarter of 2000. Reynolds holds a 56% interest in the Worsley
refinery.
In anticipation of increased demand for primary aluminum, we restarted
limited production at our Troutdale, Oregon primary aluminum production
plant in February 1998 at an annual rate of 27,000 metric tons. The
Troutdale plant, which has an installed annual capacity of 121,000 metric
tons, had been idle since December 1991. In late February 1998, we also
began the process of restarting 47,000 metric tons of production at our
Longview, Washington primary aluminum production plant. The restart will
be completed early in the second quarter of 1998. Upon completion of the
Troutdale and Longview restarts, we will have 135,000 metric tons of
temporarily idled primary aluminum capacity.
Transportation
In June 1997, we began production at a new $34 million aluminum wheel
manufacturing facility in Lebanon, Virginia. The 55,000-square-foot
facility, Reynolds' second U.S. wheel plant, features a manufacturing
process that combines our computer-controlled, flow forming spinning
technology with a newly developed forging process to produce lightweight
wheels with added styling flexibility. Reynolds Metals Company's Board of
Directors approved a $26 million expansion of the Lebanon wheel plant in
January 1998. The expansion will double the plant's production capacity
to 1.4 million wheels per year.
Financial Information Regarding Global Business Units and Operations by
Geographic Location
- -----------------------------------------------------------------------
Financial information for operations and assets attributable to our global
business units and information regarding our operations by geographic location
is included in Note 10 to the consolidated financial statements in Item 8 of
this report.
<PAGE>
GLOBAL BUSINESS UNITS
Base Materials
- --------------
Aluminum is one of the most plentiful metals in the earth's crust. It is always
found chemically combined with other elements. Aluminum silicates are in
almost every handful of clay, but aluminum is produced primarily from bauxite,
an ore containing aluminum in the form of aluminum oxide, commonly referred to
as alumina.
Aluminum is made by extracting alumina from bauxite and then removing oxygen
from the alumina through an electrolytic process known as "reduction." The
result is molten primary aluminum which is cast into various forms for shipment
to fabricating plants. It takes about four tons of bauxite to make two tons of
alumina, which in turn yield about a ton of primary aluminum.
Our base materials business produces metallurgical alumina, alumina chemicals,
and primary aluminum. It also produces carbon products principally for use in
the Company's primary aluminum reduction plants.
We refine bauxite into alumina at our Sherwin alumina plant near Corpus
Christi, Texas. We also are entitled to a share of the production from two
joint ventures in which we have interests, one located in Western Australia,
known as the Worsley Joint Venture ("Worsley"), and the other located in Stade,
Germany, known as Aluminium Oxid Stade ("Stade"). See Table 1 under this Item.
In addition, we have a third-party arrangement to buy 60,000 metric tons of
Australian alumina during 1998 at a negotiated price and another third-party
arrangement under which we will buy 120,000 metric tons of alumina per year at
a negotiated price for the period 1998 through 2000.
Worsley currently has the capacity to produce 1,730,000 metric tons of alumina
per year. Reynolds is entitled to 56% of the alumina produced by the joint
venture. Worsley has proven bauxite reserves sufficient to operate the plant
at capacity for at least the next 35 years, even after taking into account the
ongoing expansion to increase the plant's annual capacity to 3,100,000 metric
tons. See "Recent Developments" for a discussion of the Worsley expansion.
Bauxite requirements for our Sherwin alumina plant and our share of the Stade
joint venture are obtained from the following sources:
Australia
We have a long-term purchase arrangement under which we may buy from a
third party an aggregate of approximately 18,800,000 dry metric tons of
Australian bauxite through 2021.
Brazil
We own a 5% interest in Mineracao Rio Do Norte S.A. ("MRN") which owns the
Trombetas bauxite mining project in Brazil. We have agreed to buy an
aggregate of approximately 900,000 dry metric tons of Brazilian bauxite
from the project through 1999.
We also maintain an interest in other, undeveloped bauxite deposits in
Brazil.
Guinea
We own a 6% interest in Halco (Mining), Inc. ("Halco"). Halco owns 51%
and the Guinean government owns 49% of Compagnie des Bauxites de Guinee
("CBG"), which has the exclusive right through 2038 to develop and mine
bauxite in a 10,000 square-mile area in northwestern Guinea. We have a
bauxite purchase contract with CBG that will provide us with a minimum
aggregate of approximately 7,050,000 dry metric tons of Guinean bauxite
for the period 1998 through 2011.
<PAGE>
Guyana
We are a 50% partner with the Guyanese government in a bauxite mining
project in the Berbice region of Guyana. During 1998, we will buy
approximately 1,300,000 dry metric tons of bauxite from the project.
Jamaica
We have a purchase arrangement under which we will buy from a third party
an aggregate of up to 7,200,000 dry metric tons of Jamaican bauxite for
the period 1998 through 2001.
Other
We have an arrangement with the U.S. government under which we have agreed
to buy at a negotiated price during 1998 approximately 300,000 long dry
tons of Jamaican bauxite stored next to our Sherwin alumina plant.
Our present sources of bauxite and alumina are more than adequate to meet the
forecasted requirements of the Company's primary aluminum production operations
for the foreseeable future.
We produce primary aluminum at three plants in the United States and one at
Baie Comeau, Quebec, Canada. We also are entitled to a share of the primary
aluminum produced at three joint ventures in which we participate: one in
Quebec known as the Becancour joint venture ("Becancour"); one in Hamburg,
Germany, known as Hamburger Aluminium-Werk GmbH ("Hamburg"); and the third in
Ghana, known as Volta Aluminium Company Limited ("Ghana"). See Table 2 under
this item.
Our primary aluminum products include aluminum ingot; billet, which is used by
extrusion plants; sheet ingot, which is supplied to rolling facilities; foundry
ingot, which is the base material for cast automotive products, such as wheels;
and electrical redraw rod, which is used by the electrical cable industry.
During 1997, approximately 57% of the unit's primary aluminum products were
purchased by other Reynolds business units; we sold the remainder externally.
Our internal demands for primary aluminum currently are declining as a result
of actions taken in connection with our portfolio review. Consequently, we
expect that a larger percentage of our future primary aluminum sales will be to
external customers.
Production at our primary aluminum plants can vary due to a number of factors,
including changes in worldwide supply and demand. Reynolds currently has the
annual capacity to produce 1,094,000 metric tons of primary aluminum; however,
production has been reduced by 19%, or 209,000 metric tons, since 1993 due to
worldwide aluminum supply-demand conditions. See "Recent Developments" for a
discussion of announced restarts totaling 74,000 metric tons of production in
1998.
In addition to the primary aluminum plants listed in Table 2, Reynolds has a
10% equity interest in the Aluminum Smelter Company of Nigeria ("ALSCON"),
which is currently under construction. When ALSCON is operating at capacity,
we expect to buy at market-related prices approximately 153,000 metric tons of
primary aluminum annually from the 193,000 metric ton smelter. Startup of one
line began in late 1997, and it was operating at 16% of its 96,500 metric ton
capacity at year end. We also have an 8% equity interest in C.V.G. Aluminio
del Caroni, S.A. ("ALCASA"), which produces primary aluminum in Venezuela.
Reynolds owns and operates two carbon products manufacturing facilities located
in Lake Charles and Baton Rouge, Louisiana. These facilities produce 855,000
metric tons of calcined petroleum coke and 136,000 metric tons of carbon anodes
annually. The anodes are produced principally for consumption at our primary
aluminum plant in Baie Comeau, Quebec. The calcined petroleum coke is used at
all of our wholly owned primary aluminum plants. We also sell it worldwide to
the aluminum and titanium dioxide industries.
<PAGE>
In addition to producing aluminum and carbon products, our base materials
business operates a commercial hazardous waste treatment facility in Gum
Springs, Arkansas for the treatment of spent potliner resulting from Reynolds'
and other producers' North American aluminum reduction operations. In October
1997, the U.S. Environmental Protection Agency (the "EPA") finalized a
regulation requiring the treatment of spent potliner to prescribed standards
prior to disposal. Our Gum Springs facility is the only commercial facility in
the U.S. capable of treating spent potliner to the EPA's prescribed standards.
The facility has the capacity to treat an estimated 120,000 short tons of spent
potliner annually and is currently operating at 33% of capacity. Legal
proceedings have been brought by other aluminum producers challenging the
treatment requirement of the new regulation. In addition, these aluminum
producers have asked Arkansas officials to reconsider Reynolds' authority to
operate the Gum Springs facility's landfill as a hazardous waste landfill
following the EPA's recent decision to classify treated spent potliner as a
hazardous waste. We are defending these challenges to our operations at the
Gum Springs facility.
Energy
- ------
Reynolds consumes substantial amounts of energy in the aluminum production
process. Refining alumina from bauxite requires high temperatures. These
temperatures are achieved by burning natural gas or coal. Natural gas and coal
are purchased under long- and short-term contracts. See Table 1 under this
Item.
The electrolytic process for reducing alumina to primary aluminum requires
large amounts of electricity. We generally expect to meet the energy
requirements for primary aluminum production for the foreseeable future under
long-term contracts. Under these contracts, however, we may experience
shortages of interruptible power from time to time at our Massena, New York
plant and at the plant in Ghana in which we hold a joint venture interest. The
portion of power supplied to the Massena plant that is interruptible
(approximately 15%) can be offset with purchased power. Production at Ghana is
dependent on hydroelectric power. The Ghana plant is currently operating at
reduced capacity due to drought conditions that have existed since 1994. See
Table 2 under this Item.
Rates for electricity charged by the Bonneville Power Administration ("BPA"),
which serves the Company's Troutdale, Oregon and Longview, Washington primary
aluminum plants, are established under a five-year contract that runs through
September 2001. The contract establishes a fixed rate that is 16% less than
rates previously in effect. These rates have been approved by federal
regulatory authorities but are being challenged by third parties in the U.S.
Court of Appeals for the Ninth Circuit. Should the contract rates be set
aside, we could renegotiate with BPA or seek service from third parties.
<PAGE>
<TABLE>
<CAPTION>
Table 1
Alumina Plants and Energy Supply
Principal
Rated Energy
Capacity<F1> at Contract
December 31, 1997 Energy Expiration
Plant Metric Tons Purchased<F2> Date
- ----- ----------- ------------- ----------
<S> <C> <C> <C>
Corpus Christi, Texas 1,600,000<F3> Natural Gas <F4>
Worsley, Australia 969,000<F5> Coal 2002
Stade, Germany 375,000<F5> Natural Gas 2008
<CAPTION>
TABLE 2
Primary Aluminum Production Plants and Energy Supply
Rated Principal
Capacity<F1> at Energy
December 31, Contract
1997 Energy Expiration
Plant Metric Tons Purchased<F2> Date
- ----- ----------- ------------- ----------
<S> <C> <C> <C>
Baie Comeau, Quebec 400,000 Electricity 2011 and 2014
Longview, Washington 204,000<F6> Electricity 2001
Massena, New York 123,000<F6> Electricity 2013<F7>
Troutdale, Oregon 121,000<F6> Electricity 2001
Becancour, Quebec 186,000<F8> Electricity 2014
Hamburg, Germany 40,000<F8> Electricity 2005
Ghana 20,000<F8> Electricity 2017
<CAPTION>
TABLE 3
Aluminum and Alumina Capacity and Production
(Metric Tons)
Primary Aluminum<F8>,<F9> Alumina<F5>,<F10>
------------------------- -----------------
Rated Rated
Year Capacity<F1> Production<F6> Capacity<F1> Production<F3>
- ---- ------------ -------------- ------------ --------------
<S> <C> <C> <C> <C>
1995 1,094,000 814,500 2,927,000 2,530,000
1996 1,094,000 893,500 2,927,000 2,674,000
1997 1,094,000 893,200 2,944,000 2,724,000
<FN>
NOTES TO TABLES 1, 2, and 3.
<F1> Ratings are estimates at the end of the period based on designed capacity
and normal operating efficiencies and do not necessarily represent maximum
possible production.
<F2> See "Energy" above.
<PAGE>
<F3> We reduced production at our Sherwin alumina plant near Corpus Christi,
Texas during the third quarter of 1996. We restarted the idle alumina capacity
at the Sherwin plant late in 1997.
<F4> The Sherwin plant purchases approximately 25% of the natural gas required
to operate the plant under a two-year contract, with another 25% being
purchased under a three-year contract and the remainder being purchased under
short-term contracts. The base terms of the two-year contract and three-year
contract expire in October 1998 and October 1999, respectively, but will extend
from month to month unless one of the parties terminates the contract.
<F5> We are entitled to 56% of the production of Worsley and 50% of the
production of Stade. Capacity figures reflect our share.
<F6> We curtailed 121,000 metric tons of production capacity at our Troutdale
primary aluminum plant in the second half of 1991. We restarted 27,000 metric
tons of primary aluminum production capacity at Troutdale in February 1998. We
also curtailed an aggregate of 88,000 metric tons of primary aluminum
production capacity at our Massena (41,000 metric tons) and Longview (47,000
metric tons) plants effective in the fourth quarter of 1993. In late February
1998, we began the process of restarting the 47,000 metric tons of idle
capacity at Longview. The Longview restart will be completed early in the
second quarter of 1998.
<F7> The power contract terminates in 2013, subject to earlier termination by
the supplier in 2003 if its federal license for its hydroelectric project is
not renewed.
<F8> We are entitled to 50% of the production of Becancour, 33-1/3% of the
production of Hamburg, and 10% of the production of Ghana. Capacity figures
reflect our share. Production at Ghana has been curtailed since September 1994
by drought. At December 31, 1997, Ghana was operating at 77% of capacity, but
operations have been further reduced to 60% of capacity, due to continuing
drought conditions.
<F9> Production is from the primary aluminum production operations listed in
Table 2.
<F10> Production is from the alumina production operations listed in Table 1.
</FN>
</TABLE>
<PAGE>
Packaging and Consumer
- ----------------------
Reynolds' packaging and consumer business provides a variety of foil, plastic
and other products and related services to the packaging and consumer products
markets. We are the world's leading producer of aluminum foil and a major
manufacturer and converter of plastic products.
Reynolds markets a broad range of aluminum foil, plastic and paper packaging
products for the food, pharmaceutical, confectionery, tobacco and other
markets. Products include laminated and printed aluminum foil and film; paper,
foil and film laminations; folding paper cartons and foil specialty cartons;
pouch stock; blister packaging; and cigarette liner foil stock. We manufacture
over 1,000 foil, plastic and paper foodservice products (including aluminum and
plastic film; plastic containers and lids; foodservice bags; catering trays;
sandwich bags and wraps; baking cups; and trays) for restaurants, delis,
supermarket take-out, and fast-food and catering establishments. We also
produce industrial plastic film (including Reynolon shrink film) for shrink
wrapping and tamper-evident packaging.
Our packaging products are manufactured at wholly owned facilities in the U.S.
and Canada. See Table 4 under the heading "Packaging and Consumer." We also
have interests in foil operations in Colombia, Spain and Venezuela. The
capacity of these manufacturing facilities depends on the variety and types of
products manufactured.
Reynolds' packaging and consumer business also manufactures and markets an
extensive line of foil, plastic and paper consumer products under the Reynolds
name. Products include the well-known Reynolds Wrap Aluminum Foil, Reynolds
Plastic Wrap, Reynolds Oven Bags, Reynolds Freezer Paper, Reynolds Cut-Rite Wax
Paper and Reynolds Baker's Choice Bake Cups. Our consumer products are
distributed throughout the U.S., which is our largest market for these
products, and in more than 65 other countries.
Through our Presto Products Company subsidiary, we are a major supplier of
private label consumer products. Presto produces a variety of plastic food
wraps and bags (including trash bags and reclosable vegetable, snack, storage
and freezer bags) that are sold under private labels.
Our Southern Graphic Systems, Inc. subsidiary produces rotogravure printing
cylinders, color separations and flexographic plates used in our packaging
printing operations and for the consumer and industrial packaging industry.
Southern Graphic's major customers, in addition to Reynolds, are other consumer
product companies and converters, with a trend toward consumer product
companies. Southern Graphic also provides graphics management services and
manufactures printing accessories (bases and anilox rolls).
Construction and Distribution
- -----------------------------
The Company's construction and distribution business produces and sells
construction products. It also distributes aluminum, stainless steel and other
specialty metal products under the name Reynolds Aluminum Supply Company
("RASCO").
Reynolds designs and markets architectural systems which consist primarily of
curtainwall and window and door units for residential and commercial
applications in Western Europe. Aluminum extrusions for the architectural
systems are obtained from Company facilities in the Netherlands and Germany;
non-aluminum components are purchased from third parties. See Table 4 below.
We then sell the system components to various fabricators serving the local
construction markets for assembly.
In addition to architectural systems, our construction and distribution
business produces exterior cladding and interior building products, such as
Reynobond aluminum composite material. Reynobond and other cladding products
are manufactured in the U.S. Reynobond is sold throughout the world. A plant
in France produces coil coated products that are primarily sold to the European
construction and sign markets.
<PAGE>
We also produce and sell polymer-coated magnet wire for electrical transformers
and steel composite material for tractor-trailer panels. In addition, we sell
various infrastructure technologies related to highway sound barriers and
bridge decks.
RASCO provides supply chain management services to North American metal
fabricating customers requiring high-quality aluminum, stainless steel and
other specialty metal products. During 1997, RASCO's sales were 56% in
aluminum products and 43% in stainless steel products. RASCO processes and
distributes plate, sheet, extrusions, rod and bar products through 28
facilities across North America. RASCO provides metal processing services such
as cutting to length, slitting, shearing, sawing and plasma burning. The
customized metal processing services offered by RASCO allow it to provide just-
in-time delivery to its customers. Its customers include fabricators and
manufacturers in transportation, equipment, machinery and other markets.
Transportation
- --------------
Reynolds' transportation business operates 11 plants worldwide supplying a wide
range of fabricated aluminum parts to the transportation industry. See Table 4
below. Our principal products are wheels, heat exchangers and automotive
structures. These products are marketed primarily in North America to the "Big
Three" automobile manufacturers. They are also marketed in Europe and
Venezuela.
We produce forged and cast aluminum wheels in a variety of sizes, styles and
finishes. See "Recent Developments" for a discussion of our expansion of our
wheel production capacity and use of new production technology.
Heat exchanger tubing products include extruded and drawn round tube, micro
multivoid tube and oval tube made of aluminum and long-life alloys. These
products are used in applications such as automotive air conditioning systems
and radiators.
Automotive structures include bumpers, car and truck door frames, convertible
roof brackets, sunroof frames, antilock brake system housings, engine cradles,
steering shafts, steering column brackets and shock absorbers, among other
items, for use in automobiles and truck and trailer systems.
<PAGE>
OTHER OPERATIONS
General
- -------
Reynolds has certain operations that are not within a global business unit.
These include our headquarters operations, as well as the following:
Alloys Complex - Our Alloys complex in North Alabama consists of a rolling
mill, two reclamation plants that provide input metal to the mill, and a
coil coating facility. The principal product of the rolling mill is
aluminum sheet used to produce beverage cans and ends, primarily for use
by our can plants. In April 1997, we announced that we had signed a
letter of intent to sell the rolling mill and certain related assets at
the Alloys complex to Alcoa. In December 1997, the U.S. Department of
Justice filed suit in federal court to block the proposed sale and, as a
result of the suit, Alcoa withdrew from the transaction. We are currently
evaluating a number of alternatives for the plant, including selling it.
Any such sale may result in a loss. In December 1997, we temporarily shut
down operations at Southern Reclamation, the smaller reclamation plant at
the complex, and took other actions to reduce the number of employees at
the complex from approximately 2,000 to 1,500. The shutdown and employee
reductions were undertaken to align manpower resources with production
requirements.
Emerging Markets Group - In 1997, Reynolds established an Emerging Markets
Group to identify and develop new business opportunities in strategic
emerging world markets. The group oversees our interests in a foil and
extrusion plant in China and a foil plant in Russia. It also provides
technical services to rolling operations owned by third parties in Russia
and India.
Assets Held for Sale
- --------------------
The following operations are the subject of pending sales transactions and are
not included within any of the Company's global business units. See "Recent
Developments - Pending Portfolio Review Transactions" for a discussion of
pending sales transactions.
Can - In the U.S., we operate 14 can plants, two end plants and a can
machinery plant that manufactures can-making equipment, and have the
capacity to make approximately 18 billion cans per year. See Table 4
below for the locations of our wholly owned aluminum beverage can and end
facilities. Since introducing the aluminum beverage can to Brazil in
1990, we have focused on developing new markets and expanding our can
capacity throughout Latin America. Brazil, Argentina and Chile are among
the soft drink industry's top growth markets. We have a 34.9% equity
interest in Latas de Aluminio S.A., which operates four can plants and one
reclamation plant in Brazil, one can plant in Argentina and one can plant
in Chile. In addition, we have a 27.5% interest in United Arab Can
Manufacturing Company Ltd., which operates a can plant in Saudi Arabia.
Our customers include soft drink, beer, juice, tea and other specialty
beverage companies that use aluminum cans and ends to meet consumer demand
for beverage packaging in sizes ranging from 5.5 ounces to 32 ounces.
We announced in December 1997 that we are actively discussing a potential
agreement with Ball Corporation under which Ball would acquire
substantially all of our global can operations.
McCook Plant - Our sheet and plate plant located in McCook, Illinois
produces aluminum sheet and plate products for the aircraft, aerospace and
distribution markets and aluminum body sheet for the transportation
market. We are negotiating to sell the McCook plant to Michigan Avenue
Partners, Inc.
<PAGE>
European Rolling Operations - We operate three rolling mills in Europe
located in Hamburg, Germany; Cisterna di Latina, Italy; and Irurzun,
Spain. We announced in November 1997 that we had signed a memorandum of
understanding to sell our European rolling operations to VAW aluminium AG.
COMPETITION
Reynolds' principal competitors in the manufacturing of primary aluminum
products in North America and other global markets are 11 U.S. companies, a
Canadian company and other foreign producers. In the sale of our products, we
compete with (i) producers of primary aluminum and processors of reclaimed
aluminum, (ii) fabricators of aluminum and other products, (iii) producers of
plastic products, (iv) producers of packaging materials (aluminum and non-
aluminum), and (v) metals service center companies engaged in the distribution
of aluminum and other products. Reynolds' principal competitors in Europe are
seven major multinational producers and a number of smaller European producers
of aluminum semifabricated products. Aluminum and related products compete
with various products, including those made of iron, steel, copper, zinc, tin,
titanium, lead, glass, wood, plastic, magnesium and paper. Plastic products
compete with products made of glass, aluminum, steel, paper, wood and ceramics,
among others. Competition is based upon price, quality and service.
ENVIRONMENTAL COMPLIANCE
Reynolds has spent and will spend substantial capital and operating amounts
relating to ongoing compliance with environmental laws. The area of
environmental management, including environmental controls, continues to be in
a state of scientific, technological and regulatory evolution. Consequently,
it is not possible for us to predict accurately the total expenditures
necessary to meet all future environmental requirements. We expect, however,
to add or modify environmental control facilities at a number of our worldwide
locations to meet existing and certain anticipated regulatory requirements,
including regulations to be implemented under the Clean Air Act Amendments of
1990 (the "Clean Air Act").
Based on information currently available, we estimate that compliance with the
Clean Air Act's hazardous air pollutant standards would require in excess of
$250 million of capital expenditures (including a portion of the expenditures
at the Massena plant referred to below), primarily at our U.S. primary aluminum
production plants. The ultimate effect of the Clean Air Act on such plants and
on our other operations (and the actual amount of any such capital
expenditures) will depend on how the Clean Air Act is interpreted and
implemented pursuant to regulations that are currently being developed and on
such additional factors as the evolution of environmental control technologies
and the economic viability of such operations at the time. Based on an August
1995 memorandum of understanding with the State of New York to resolve
environmental issues at our Massena, New York primary aluminum production
plant, we have undertaken a five-year capital spending program (planned for
completion in 2001) of an estimated $200 million to modernize the Massena plant
and significantly reduce air emissions from the plant. Pursuant to the
memorandum of understanding, we are accelerating certain expenditures believed
necessary to achieve compliance with the Clean Air Act's Maximum Achievable
Control Technology standards.
Our capital expenditures for equipment designed for environmental control
purposes were approximately $39 million in 1995, $24 million in 1996 and $43
million in 1997. The portion of such amounts expended in the United States was
$18 million in 1995, $16 million in 1996 and $41 million in 1997. We estimate
that annual capital expenditures for environmental control facilities will be
approximately $95 million in 1998, $55 million in 1999 and $41 million in 2000.
The majority of these estimated expenditures are associated with the capital
spending program referred to above at the Massena plant. Future capital
expenditures for environmental control facilities cannot be predicted with
accuracy for the reasons cited above; however, it is reasonable to expect that
environmental control standards will become increasingly stringent and that the
expenditures necessary to comply with them could increase substantially.
Reynolds has been identified as a potentially responsible party ("PRP") and is
involved in remedial investigations and remedial actions under the
Comprehensive Environmental Response, Compensation and Liability Act
("Superfund") and similar state laws regarding the past disposal of wastes
at approximately 41 sites in the United States. Such statutes may impose
joint and several liability for the costs of such remedial investigations
and actions on the entities that arranged for disposal of the wastes, the
waste transporters that selected the disposal sites, and the owners
and operators of such sites.
<PAGE>
Responsible parties (or any one of them) may be required to bear all of such
costs regardless of fault, legality of the original disposal or ownership of
the disposal site. In addition, we are investigating possible environmental
contamination, which may also require remedial action, at certain of our
present and former United States manufacturing facilities, including
contamination by polychlorinated biphenyls ("PCBs") at our Massena, New York
primary aluminum production plant which requires remediation. In 1994, the EPA
added our Troutdale, Oregon primary aluminum production plant to the National
Priorities List of Superfund sites. We are cooperating with the EPA and, under
a September 1995 consent order, are working with the EPA in investigating
potential environmental contamination at the Troutdale site and to promote more
efficient cleanup at the site. At most of the 41 sites referred to above where
Reynolds has been identified as a PRP, we are one of many PRPs, and our share
of the anticipated cleanup costs is expected to be small. With respect to
certain other sites (not included in the foregoing number) where Reynolds has
been identified as a PRP, we have either fully or substantially settled or
resolved actions related to such sites at minimal cost or believe that we have
no responsibility with regard to them. We have been notified that Reynolds may
be a PRP at certain sites in addition to those already referred to in this
paragraph.
Reynolds' policy is to accrue remediation costs when it is probable that
remedial efforts will be required and the related costs can be reasonably
estimated. On a quarterly basis, we evaluate the status of all sites, develop
or revise estimates of costs to satisfy known remediation requirements and
adjust our accruals accordingly. At December 31, 1997, the accrual for known
remediation requirements was $171 million. This amount reflects management's
best estimate of our ultimate liability for such costs. Potential insurance
recoveries are uncertain and therefore have not been considered. As a result
of factors such as the developing nature of administrative standards
promulgated under Superfund and other environmental laws; the unavailability of
information regarding the condition of potential sites; the lack of standards
and information for use in the apportionment of remedial responsibilities; the
numerous choices and costs associated with diverse technologies that may be
used in remedial actions at such sites; the availability of insurance coverage;
the ability to recover indemnification or contribution from third parties; and
the time periods over which eventual remediation may occur, estimated costs for
future environmental compliance and remediation are necessarily imprecise. It
is not possible to predict the amount or timing of future costs of
environmental remediation that may subsequently be determined. Based on
information currently available, it is management's opinion that such future
costs are not likely to have a material adverse effect on Reynolds' competitive
or financial position or our ongoing results of operations. However, such
costs could be material to future quarterly or annual results of operations.
See the discussion under "Environmental" in Item 7, and under Note 11 to the
consolidated financial statements in Item 8, of this report regarding the
Company's anticipated costs of environmental compliance.
RESEARCH AND DEVELOPMENT
Reynolds engages in a continuous program of basic and applied research and
development. This program deals with new and improved materials, products,
processes and related environmental compliance technologies. It includes
development and expansion of products and markets that benefit from aluminum's
light weight, strength, resistance to corrosion, ease of fabrication, high heat
and electrical conductivity, recyclability and other properties. Materials and
core competencies involving aluminum, ceramics, composites and various polymers
and their processing, fabrication and applications are also included in the
scope of our research and development activities. Our research and development
program was restructured in 1997 to focus on supporting our global business
units.
Expenditures for Reynolds-sponsored research and development activities were
approximately $41 million in 1997, $49 million in 1996 and $43 million in 1995.
Reynolds-sponsored research and development activities related to businesses
that are sold as part of our portfolio review process will be discontinued as
those businesses are sold. We expect that expenditures for Reynolds-sponsored
research and development activities will decline in 1998.
We own numerous patents relating to our products and processes based
predominantly on our in-house research and development activities. The
patents owned by Reynolds, or under which we are
<PAGE>
licensed, generally concern particular products or manufacturing techniques.
Our business is not, however, materially dependent on patents.
EMPLOYEES
At December 31, 1997, Reynolds had approximately 25,500 employees.
In 1996, we entered into new six-year labor contracts with the United
Steelworkers of America and the Aluminum, Brick and Glass Workers International
Union. The contracts involve approximately 4,600 employees. At the end of the
fifth year, the economic provisions of the contracts will be reopened. If
agreement cannot be reached, the economic provisions applicable to the sixth
year will be submitted to arbitration.
Item 2. PROPERTIES
Reynolds' products are produced at numerous domestic and foreign plants wholly
or partly owned by Reynolds. The annual capacity of many of these plants
depends upon the variety and type of products manufactured. For information on
the location and general nature of certain of our principal domestic and
foreign properties, see Item 1 of this report. Table 4 lists as of March 16,
1998 our wholly owned domestic and foreign operations and shows the domestic
and foreign locations of operations in which we have interests. Facilities
that are under construction or for other reasons have not begun production are
not listed. The properties listed are held in fee except as otherwise
indicated. Properties held other than in fee are not, individually or in the
aggregate, material to our operations and the arrangements under which such
properties are held are not expected to limit their use. We believe that our
facilities are suitable and adequate for our operations. With the exception of
the Longview, Massena, Troutdale and Ghana primary aluminum production plants
and the Arkansas spent potliner treatment facility, as explained in Item 1,
there is no significant surplus or idle capacity at our major manufacturing
facilities.
<PAGE>
<TABLE>
<CAPTION>
TABLE 4
Wholly Owned Operations
Base Materials
<S> <C>
Alumina: Primary Aluminum:
Corpus Christi, Texas Massena, New York
Malakoff, Texas Troutdale, Oregon
Longview, Washington
Calcined Coke: Baie Comeau, Quebec
Baton Rouge, Louisiana
Lake Charles, Louisiana Spent Potliner Treatment:
Gum Springs, Arkansas
Carbon Anodes:
Lake Charles, Louisiana
Electrical Redraw Rod:
Becancour, Quebec
<CAPTION>
Packaging and Consumer
<S> <C>
Foil Feed Stock: Packaging Graphics and Image
Hot Springs, Arkansas Carriers:
Atlanta, Georgia<F1>
Packaging and Consumer Products: LaGrange, Georgia<F1>
Beacon Falls, Connecticut Clarksville, Indiana<F1>
Louisville, Kentucky (2) Louisville, Kentucky (2)
Mt. Vernon, Kentucky Newport, Kentucky<F1>
Sparks, Nevada<F1> West Monroe, Louisiana
Boyertown, Pennsylvania Battle Creek, Michigan<F1>
Downingtown, Pennsylvania St. Louis, Missouri
Lewiston, Utah Fulton, New York
Bellwood, Virginia Wilmington, North Carolina<F1>
Grottoes, Virginia Exton, Pennsylvania<F1>
Richmond, Virginia Dallas, Texas
South Boston, Virginia Richmond, Virginia (2)<F1>
Appleton, Wisconsin (2) Brockville, Ontario<F1>
Little Chute, Wisconsin Mississauga, Ontario (2)<F1>
Weyauwega, Wisconsin London, United Kingdom<F1>
Rexdale, Ontario<F1>
<CAPTION>
Construction and Distribution
<S> <C>
Construction: Distribution:
Eastman, Georgia Service Centers (U.S.)(24)<F2>
Ashland, Virginia Processing Centers (U.S.)(4)<F2>
Merxheim, France
Distribution Centers (Europe)(9)<F2>
<PAGE>
<CAPTION>
Transportation
<S> <C>
Heat Exchangers: Wheels:
Louisville, Kentucky Lebanon, Virginia
Wexford, Ireland Beloit, Wisconsin
Ferrara, Italy
Structures:
Auburn, Indiana
Maracay, Venezuela
Nachrodt, Germany<F3>
Harderwijk, Netherlands<F3>
<CAPTION>
Other
<S> <C>
Aluminum Beverage Cans:<F4> Can Machinery and Systems:
San Francisco, California Richmond, Virginia
Torrance, California
Tampa, Florida Mill Products
Moultrie, Georgia Sheffield, Alabama
Honolulu, Hawaii McCook, Illinois<F5>
Monticello, Indiana Hamburg, Germany<F1><F6>
(cans and ends) Cisterna di Latina, Italy<F6>
Kansas City, Missouri
Middletown, New York Reclamation:
Reidsville, North Carolina Sheffield, Alabama (2)<F7>
(cans and ends)
Salisbury, North Carolina
Fort Worth, Texas Research and Development
Seattle, Washington Sheffield, Alabama
Milwaukee, Wisconsin Richmond, Virginia (3)<F4>
Rocklin, California (ends) Corpus Christi, Texas
Bristol, Virginia (ends)
Guayama, Puerto Rico
<PAGE>
<CAPTION>
Other Operations
In Which Reynolds Has Interests
<S> <C>
Argentina: Ghana:
Aluminum cans<F4> Primary aluminum<F1>
Australia: Guinea:
Bauxite, alumina Bauxite
Brazil: Guyana:
Aluminum cans and ends<F4>, bauxite Bauxite
Canada: Italy:
Primary aluminum, electric power Reclamation
generation, aluminum wheels, mill
products, coil coating Nigeria:
Primary aluminum
Chile:
Aluminum cans<F4> Russia:
Foil
China:
Foil, extrusions Saudi Arabia:
Aluminum cans
Colombia:
Mill products, extrusions, foil Spain:
Mill products<F6>,
Egypt: foil, packaging, printing cylinders,
Extrusions extrusions
Venezuela:
Germany: Aluminum cans and ends<F4>,
Alumina, primary aluminum<F1> primary aluminum, mill products,
foil, aluminum wheels
<FN>
_______________________
<F1> Leased. One of the two packaging graphics and image carrier opertions
located in Richmond, Virginia is leased.
<F2> European Distribution Centers - 5 leased.
U.S. Service Centers - 16 leased.
U.S. Processing Centers - 2 leased.
<F3> These plants also produce extruded products for our construction and
distribution business. The plant in Harderwijk, Netherlands also
manufactures heat exchangers and other extruded products.
<F4> In December 1997, we announced that we are actively discussing a
potential agreement to sell substantially all of our global can business,
including a research and development facility in Richmond, Virginia. See
"Recent Developments - Pending Portfolio Review Transactions."
<F5> We are negotiating to sell the McCook, Illinois sheet and plate plant.
See "Recent Developments - Pending Portfolio Review Transactions."
<F6> In November 1997, we announced that we had signed a memorandum of
understanding to sell our European rolling operations. See "Recent
Developments - Pending Portfolio Review Transactions."
<F7> In 1997, we temporarily shut down Southern Reclamation, one of the
reclamation facilities located at the Sheffield site.
</FN>
</TABLE>
The titles to our various properties were not examined specifically for this
report.
<PAGE>
Item 3. LEGAL PROCEEDINGS
A private antitrust lawsuit styled Hammons v. Alcan Aluminum Corp. et al., was
filed in the Superior Court of California for the County of Los Angeles on
March 5, 1996 against the Registrant and other aluminum producers. The lawsuit
alleged a conspiracy to reduce worldwide and U.S. aluminum production.
Estimated damages of approximately $26 billion were sought in the lawsuit,
which claimed class action status. Defendants removed the case to the U.S.
District Court for the Central District of California (the "District Court").
The District Court granted summary judgment for defendants. On December 11,
1997, the U.S. Court of Appeals for the Ninth Circuit sustained the District
Court's dismissal of the case. The plaintiff has filed a motion seeking review
of the decision by all the judges of the Ninth Circuit.
Various other suits, claims and actions are pending against Reynolds. In the
opinion of Reynolds' management, after consultation with legal counsel,
disposition of these proceedings and that referred to in the preceding
paragraph, either individually or in the aggregate, will not have a material
adverse effect on our competitive or financial position or our ongoing results
of operations. No assurance can be given, however, that the disposition of one
or more of such suits, claims or actions in a particular reporting period will
not be material in relation to the reported results for such period.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Registrant's security holders during
the fourth quarter of 1997.
<PAGE>
Item 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Registrant are as follows:
<TABLE>
<CAPTION>
Name Age<F1> Positions Held During Past Five Years
- ---- ------- -------------------------------------
<S> <C> <C>
Jeremiah J. Sheehan 59 Chairman of the Board and Chief
Executive Officer since October 1996.
President and Chief Operating Officer 1994-
1996. Executive Vice President,
Fabricated Products 1993-1994. Director
since 1994.
Randolph N. Reynolds<F2> 56 Vice Chairman and Executive Officer
since October 1996. Vice Chairman 1994-
1996. Executive Vice President,
International 1990-1994. Director since
1984.
Henry S. Savedge, Jr. 64 Executive Vice President and Chief
Financial Officer since May 1992.
Director since 1992.
Thomas P. Christino 58 Senior Vice President, Global
Packaging and Consumer Products, since
April 1997. Vice President, Flexible
Packaging Division 1993-1997.
Donald T. Cowles 50 Senior Vice President, Global
Construction and Distribution, since April
1997. Vice President and Reynolds
Aluminum Supply Company Division General
Manager August 1995-1997. Executive Vice
President, Human Resources and External
Affairs 1993-1995.
Eugene M. Desvernine 56 Senior Vice President, Global
Transportation, since April 1997. Vice
President 1994-1997. Vice President,
Latin America of Reynolds International,
Inc. 1982-1993.
D. Michael Jones 44 Senior Vice President and General
Counsel since October 1996. Vice
President, General Counsel and Secretary
1993-1996.
William E. Leahey, Jr. 48 Senior Vice President, Global Can,
since April 1997. Vice President, Can
Division 1993-1997.
Paul Ratki 58 Senior Vice President, Global Metals
and Carbon Products, since April 1997.
Vice President, Metals Division 1994-1997.
Reduction and Reclamation Division General
Manager 1993-1994.
C. Stephen Thomas 58 Senior Vice President, Global
Technology and Operational Services, since
May 1997. Vice President, Mill Products
Division 1992-1997.
Allen M. Earehart 55 Vice President, Controller, since
April 1994. Controller 1993-1994.
Douglas M. Jerrold 47 Vice President, Tax Affairs, since
April 1990.
John B. Kelzer 61 Vice President since April 1993.
Extrusion Division General Manager 1990-
1993.
John M. Lowrie 57 Vice President, Consumer Products,
since October 1988.
Lou Anne J. Nabhan 43 Vice President, Corporate
Communications, since January 1998.
Director, Corporate Communications 1993-
1998.
<PAGE>
F. Robert Newman 54 Vice President, Human Resources,
since October 1995. Corporate Director,
Human Resources 1993-1995.
John M. Noonan 64 Vice President, Properties Division,
since January 1984.
Edmund H. Polonitza 54 Vice President, Development and
Strategic Planning, since January 1998.
Corporate Director, Development and
Strategic Planning 1987-1998.
William G. Reynolds, Jr.<F2> 58 Vice President, Government
Relations and Public Affairs, since
October 1980.
John F. Rudin 52 Vice President, Chief Information
Officer, since August 1995. Vice
President since April 1995. Reynolds
Aluminum Supply Company Division General
Manager 1989-1995.
Julian H. Taylor 54 Vice President, Treasurer, since
April 1988.
Donna C. Dabney 50 Secretary and Assistant General
Counsel since October 1996. Associate
General Counsel 1993-1996.
<FN>
_______________
<F1> As of February 15, 1998
<F2> Randolph N. Reynolds and William G. Reynolds, Jr. are brothers.
</FN>
</TABLE>
<PAGE>
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Registrant's Common Stock is listed on the New York Stock Exchange. At
March 16, 1998, there were 8,492 holders of record of the Registrant's Common
Stock.
The high and low sales prices for shares of the Registrant's Common Stock as
reported on the New York Stock Exchange Composite Transactions Tape and the
dividends declared per share during the periods indicated are set forth below:
<TABLE>
<CAPTION>
High Low Dividends
---- --- ---------
1997
<S> <C> <C> <C>
First Quarter $ 65-7/8 $ 56-3/4 $.35
Second Quarter 73-7/8 61-3/8 .35
Third Quarter 79-3/4 67-1/16 .35
Fourth Quarter 72-7/16 56-3/16 .35
<CAPTION>
1996
<S> <C> <C> <C>
First Quarter $ 61-3/8 $ 49 $.35
Second Quarter 61-5/8 51-3/4 .35
Third Quarter 55-1/2 48-3/4 .35
Fourth Quarter 60-1/2 50-3/8 .35
</TABLE>
On February 20, 1998, the Board of Directors declared a dividend of $.35 per
share of Common Stock, payable April 1, 1998 to stockholders of record on March
3, 1998.
Sale of Unregistered Securities
- -------------------------------
Effective January 1, 1997, the Registrant terminated its retirement and death
benefit plans for its then current outside Directors and adopted a Stock Plan
for Outside Directors (the "Stock Plan").
Under the Stock Plan, outside Directors serving on or after January 1, 1997
will receive an annual grant of 225 shares of phantom stock of the Registrant,
plus dividend equivalents based on the dividends that would have been paid on
the phantom stock if the outside Director had actually owned shares of the
Registrant's Common Stock. The annual grant will be made in quarterly
installments at the end of each calendar quarter. In addition, the accounts of
outside Directors who (i) were covered by the terminated retirement and death
benefit plans described above and (ii) were actively serving as Directors of
the Registrant on January 1, 1997, were credited as of that date with shares of
phantom stock equivalent in value to their benefits earned under the terminated
plans through December 31, 1996. Payments under the Stock Plan will be made
upon the outside Director's retirement, resignation or death in shares of
Common Stock of the Registrant, with fractional shares paid in cash.
Under the Stock Plan, 69 phantom shares, in the aggregate, were granted to the
Registrant's nine outside Directors on October 1, 1997, based on an average
price of $71.375 per share. These phantom shares represent dividend
equivalents paid on phantom shares previously granted under the Stock Plan.
506 phantom shares, in the aggregate, were granted to the nine outside
Directors on December 31, 1997, based on an average price of $59.8125 per
share. These phantom shares represent a quarterly installment of each outside
Director's annual grant under the Stock Plan. During 1997, 15,045 phantom
shares, in the aggregate, were granted under the Stock Plan.
<PAGE>
To the extent that these grants constitute sales of equity securities, the
Registrant issued these phantom shares in reliance on the exemption provided by
Section 4(2) of the Securities Act of 1933, as amended, taking into account the
nature of the Stock Plan, the number of outside Directors participating in the
Stock Plan, the sophistication of the outside Directors and their access to the
kind of information that a registration statement would provide.
<PAGE>
<PAGE>
Item 6. SELECTED FINANCIAL DATA
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Consolidated Income Statement (millions, except per share amounts)
- ------------------------------------------------------------------
1997 1996 1995 1994 1993
-----------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $6,881 $6,972 $7,213 $5,879 $5,269
Equity, interest and other income 19 44 39 46 25
Gains on sales of assets - - - 88 -
-----------------------------------------------
6,900 7,016 7,252 6,013 5,294
-----------------------------------------------
Cost of products sold 5,658 5,856 5,739 4,950 4,604
Selling, administrative and
general expenses 406 445 449 376 358
Depreciation and amortization 368 365 344 341 340
Interest 153 160 172 156 159
Operational restructuring effects - net 75 37 - - 348
-----------------------------------------------
6,660 6,863 6,704 5,823 5,809
-----------------------------------------------
Income (loss) before income taxes
and cumulative effects of
accounting changes 240 153 548 190 (515)
Taxes on income (credit) 104 49 159 68 (193)
-----------------------------------------------
Income (loss) before cumulative
effects of accounting changes 136 104 389 122 (322)
Cumulative effects of accounting
changes<F1> - (15) - - -
-----------------------------------------------
Net income (loss) $ 136 $ 89 $ 389 $ 122 ($322)
===============================================
Earnings per share
Basic
Income (loss) before cumulative effects
of accounting changes $1.86 $1.06 $5.60 $1.42 $(5.38)
Cumulative effects of accounting changes - (0.24) - - -
-----------------------------------------------
Net income (loss) $1.86 $0.82 $5.60 $1.42 $(5.38)
===============================================
Diluted
Income (loss) before cumulative effects
of accounting changes $1.84 $1.06 $5.25 $1.41 $(5.38)
Cumulative effects of accounting changes - (0.24) - - -
-----------------------------------------------
Net income (loss) $1.84 $0.82 $5.25 $1.41 $(5.38)
===============================================
Cash dividends declared
per common share $1.40 $1.40 $1.20 $1.00 $1.20
===============================================
Other items:
- ------------
Total assets $7,226 $7,516 $7,740 $7,461 $6,709
===============================================
Long-term debt $1,501 $1,793 $1,853 $1,848 $1,990
===============================================
<FN>
<F1> See Item 8. Financial Statements and Supplementary Data - Note 1 for a
discussion of the 1996 change in accounting principle.
</FN>
</TABLE>
<PAGE>
<PAGE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
The following information should be read in conjunction with the consolidated
financial statements, related notes and other sections of this report. In the
tables, dollars are in millions, except per share and per pound amounts, and
shipments are in thousands of metric tons. A metric ton is equivalent to 2,205
pounds.
Management's Discussion and Analysis contains forecasts, projections, estimates
and statements of management's plans and objectives for the Company and other
forward-looking statements. Please refer to the "Risk Factors" section
beginning on page 37, where we have summarized factors that could cause actual
results to differ materially from those projected in a forward-looking
statement or affect the extent to which a particular projection is realized.
RESULTS OF OPERATIONS
- ---------------------
The most significant contributor to profit improvement in 1997 was $150 million
in savings from our performance improvement program, primarily conversion costs
and selling, administrative and general expenses. Improved prices for primary
aluminum and increased sales volumes in our ongoing operations added to the
profit improvement in 1997. These benefits were partially offset by weaker
fabricated aluminum product pricing. In addition, the Company restructured
operations and completed several asset sales in 1997 as described under
"Portfolio Review."
<PAGE>
<TABLE>
<CAPTION>
1997 1996 1995
--------------------------------
<S> <C> <C> <C>
Net income $ 136 $ 89 $ 389
Special items included in net income:
Operational restructuring effects -- net (see Note 2) (78) (23) -
Cumulative effect of accounting change (see Note 1) - (15) -
Earnings per share -- basic $1.86 $0.82 $5.60
Special items included in earnings per share:
Operational restructuring effects -- net (1.05) (0.36) -
Cumulative effect of accounting change - (0.24) -
Average realized prices per pound:
Fabricated aluminum products $1.76 $1.79 $1.84
Primary aluminum .81 .74 .90
</TABLE>
<PAGE>
GLOBAL BUSINESS UNITS -- 1997 Compared to 1996
The Company reorganized into four market-based, global business units (GBUs) in
1997. The four global business units and their principal products are as
follows:
* Base Materials - alumina, carbon products, primary aluminum ingot and
billet, and electrical rod
* Packaging and Consumer - aluminum and plastic packaging and consumer
products
* Construction and Distribution - architectural construction products and the
distribution of a wide variety of aluminum and stainless steel products
* Transportation - aluminum wheels, heat exchangers and automotive structures
<PAGE>
RESULTS OF OPERATIONS -- continued
- ---------------------
GLOBAL BUSINESS UNITS -- 1997 Compared to 1996 -- continued
<TABLE>
<CAPTION>
Base Materials
1997 1996
---------------------------------
<S> <C> <C>
Aluminum shipments:
Customer 513 458
Internal 684 577
---------------------------------
Total 1,197 1,035
=================================
Net sales:
Customer -- aluminum $ 923 $ 763
-- nonaluminum 405 373
Internal -- aluminum 1,187 944
---------------------------------
Total $2,515 $2,080
=================================
Operating income $ 312 $ 242
=================================
</TABLE>
The Base Materials global business unit consists principally of the following:
* Alumina -- One plant in the U.S. and partial interests in plants in
Australia (56% owned) and Germany (50% owned). Our rated annual production
capacity including our share of partial interests is 2,944,000 metric tons.
Depending on operating rates of primary aluminum and alumina facilities,
approximately 75% of alumina production is consumed internally.
* Carbon products -- Two U.S. plants that produce calcined petroleum coke and
carbon anodes principally for use in primary aluminum facilities.
* Primary aluminum -- Three plants in the U.S., one in Canada and partial
interests in plants in Canada (50% owned), Germany (33-1/3% owned) and Ghana
(10% owned). Our rated annual production capacity including our share of
partial interests is 1,094,000 metric tons.
* Electrical rod -- One plant in Canada.
The increase in net sales in 1997 was due to higher prices for primary aluminum
and alumina because of improved worldwide supply/demand conditions. Average
realized prices for the Company's primary aluminum products increased 9% over
1996. The increase in nonaluminum sales resulted from higher alumina selling
prices and increased production at our U.S. alumina plant.
In addition to higher prices, 1997 operating income improved due to increased
operating efficiencies in our alumina and primary aluminum facilities and the
increase in capacity utilization from restarting idle production capacity at
our U.S. alumina plant. Somewhat offsetting these improvements were non-
recurring maintenance costs in our alumina operations and higher costs for raw
materials in carbon products operations.
Results in both years were negatively affected by temporarily curtailed
capacity (209,000 metric tons) at our U.S. primary aluminum plants. In late
1997 and early 1998, we began preparations to restart idle capacity at plants
in Troutdale, Oregon (27,000 metric tons) and Longview, Washington (47,000
metric tons). We are taking these actions anticipating an increase in aluminum
consumption during 1998 coupled with our view of a favorable worldwide
supply/demand balance.
<PAGE>
RESULTS OF OPERATIONS -- continued
- ---------------------
GLOBAL BUSINESS UNITS -- 1997 Compared to 1996 -- continued
<TABLE>
<CAPTION>
Packaging and Consumer
1997 1996
------------------------------
<S> <C> <C>
Customer aluminum shipments 142 136
Net sales:
Customer -- aluminum $ 797 $ 768
-- nonaluminum 602 585
------------------------------
Total $1,399 $1,353
==============================
Operating income $ 141 $ 149
==============================
</TABLE>
The Packaging and Consumer global business unit consists principally of 16
packaging and consumer products plants in the U.S., one each in Canada and
Spain, and 19 graphics facilities located in the U.S., Canada and the United
Kingdom that produce printing cylinders and plates.
Shipments increased over 4% in 1997. Volumes increased for most products.
Growth was particularly strong for tobacco, pharmaceutical and lidstock
packaging products and consumer foil products.
Higher net sales in 1997 resulted from the increase in shipping volume of
aluminum products and nonaluminum products. Nonaluminum shipments were
especially strong for plastic wraps and bags because of increased demand.
Operating income declined in 1997 due to higher costs for aluminum and other
raw materials. These costs were mostly offset by higher shipping volume,
improved capacity utilization, lower advertising costs, cost reduction programs
and some price increases.
<TABLE>
<CAPTION>
Construction and Distribution
1997 1996
--------------------------------
<S> <C> <C>
Customer aluminum shipments 166 151
Net sales:
Customer -- aluminum $614 $600
-- nonaluminum 328 332
--------------------------------
Total $942 $932
================================
Operating income $ 41 $ 45
================================
</TABLE>
The Construction and Distribution global business unit consists principally of
39 distribution centers in the U.S. and Europe and three manufacturing plants,
two in the U.S. and one in France.
The increase in aluminum shipments in 1997 resulted from strong demand for
distribution and construction products. Record shipments were realized for
aluminum sheet and extrusions. Composite sheet shipments for architectural
applications were strong in several global markets.
Higher aluminum net sales for 1997 reflect the increased shipments. Average
realized prices for aluminum products were lower due to product mix.
<PAGE>
RESULTS OF OPERATIONS -- continued
- ---------------------
GLOBAL BUSINESS UNITS -- 1997 Compared to 1996 -- continued
Construction and Distribution -- continued
The decline in nonaluminum sales resulted from lower prices for stainless steel
distribution products. These lower prices were due to higher imports, new mill
capacity in the industry and an oversupply of flat rolled stainless steel.
Shipments of stainless steel products were very strong with record levels set
for plate, sheet and pipe/tube.
Operating income in 1997 declined in part because of higher aluminum raw
material costs. In addition, higher marketing costs were incurred due to
expansions into new European construction markets.
<TABLE>
<CAPTION>
Transportation
1997 1996
-------------------------------------
<S> <C> <C>
Customer aluminum shipments 66 58
Customer net sales $353 $326
Operating income 10 17
=====================================
</TABLE>
The Transportation global business unit consists principally of the following:
* Aluminum wheel plants -- Three wholly owned, including two in the U.S. (one
of these will be expanded in 1998, see "Investing Activities" on page 33)
and one in Italy, and partial interests in plants in Canada (75% owned) and
Venezuela (41% owned).
* Automotive extrusion plants -- Two in the U.S. and one each in The
Netherlands, Germany, Ireland and Venezuela.
Shipping volume for our transportation products was up in 1997, as automakers
continued to increase their use of aluminum in cars and light trucks.
Shipments of aluminum wheels were especially strong in 1997 as we were able to
increase market share with new business at cast wheel facilities and because of
the start-up of our new forged wheel plant in Virginia. Shipments of
automotive extrusions were also higher due to growth in European business.
Higher net sales in 1997 reflect the increased shipping volume. Prices were
lower in 1997 primarily because of competition for new business.
<PAGE>
RESULTS OF OPERATIONS -- continued
- ---------------------
GLOBAL BUSINESS UNITS -- 1997 Compared to 1996 -- continued
Transportation -- continued
Operating income was lower in 1997 because of:
* lower average realized prices
* non-recurring start-up costs relating to the new Virginia wheel plant and a
major automotive extrusion program
* higher metal costs
* higher selling, administrative and general expenses because of the growth in
operations
The decline in operating income was partially offset by:
* higher shipping volumes
* higher capacity utilization
* improved efficiency and productivity, especially for labor utilization
Restructuring
This category consists of those operations that are not part of the Company's
long-term business focus. It includes assets sold in 1997 and in early 1998
and assets expected to be sold in 1998. For information concerning the
Company's restructuring activities, see "Portfolio Review" on page 35 and Note
2 to the consolidated financial statements.
The decline in shipments and net sales in 1997 was due principally to the sale
of operations during 1997.
Operating income improved in 1997 because of higher shipping volume and
capacity utilization in can operations.
Other
This category consists of corporate headquarters, operations in emerging
markets and other operations of the Company.
Net sales and operating income improved in 1997 because of higher aluminum
prices. Operating income also improved because of lower corporate selling,
administrative and general expenses and higher capacity utilization.
Included in operating income for the "Restructuring" and "Other" categories,
respectively, are the equity earnings from the Company's interests in Latin
American can operations and a Chinese foil and extrusion operation. In 1997,
equity earnings from these operations declined due to increased competition for
can operations in Latin America and losses from the start-up of operations in
China. These were the principal reasons for the decline in the equity,
interest and other income category of revenue for the Company.
For additional information concerning the global business units, see Note 10 to
the consolidated financial statements.
<PAGE>
RESULTS OF OPERATIONS -- continued
- ---------------------
1996 COMPARED to 1995
Aluminum Shipments
Shipments were lower in 1996 (1,653,000 metric tons compared to 1,665,000 in
1995) because of the following:
* Lower demand because of weakness in U.S., European and other economies and
the reduction of excess inventories by end users.
* Can shipments were lower because of reduced beer volumes and lower export
sales to Latin America as our partially owned can operations there increased
capacity.
* Sheet and plate shipments decreased in 1996 due mainly to lower demand for
can sheet.
* Severe winter weather conditions in early 1996 adversely affected our
distribution and construction products operations. Lower activity in the
transportation market, especially for trucks and trailers, also negatively
affected our distribution operations.
The impact of these lower shipments was somewhat offset by:
* higher shipments of aluminum wheels due to strong demand and the additional
capacity at our new plant in Wisconsin
* higher shipments of aluminum packaging because of the acquisition of a
laminated aluminum products plant in mid-1995
Net Sales
The Company had lower net sales in 1996 ($7.0 billion compared to $7.2 billion
in 1995) because of the lower shipping volumes and lower prices for aluminum
products. This decline was partially offset by higher nonaluminum sales.
Average realized prices per pound in 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Fabricated aluminum products $1.79 $1.84
Primary aluminum .74 .90
</TABLE>
Prices were lower in 1996 because of the following factors:
* lower demand for aluminum
* increased worldwide production of aluminum
* higher aluminum exports from Russia
We realized higher nonaluminum sales for a broad range of products including
alumina, carbon products, plastic packaging, printing cylinders, construction
products and can machinery.
<PAGE>
RESULTS OF OPERATIONS -- continued
- ---------------------
1996 COMPARED to 1995 -- continued
Operating Income
Operating income was lower in 1996 because of the following:
* lower aluminum prices
* weaker shipping volumes
* lower capacity utilization in fabricating operations
* higher labor costs due to new union contracts
The decline in operating income in 1996 was partially offset by:
* favorable effects of LIFO liquidations ($30 million)
* benefits from a reduction in primary aluminum purchases (due to our 1995
purchase of an additional interest in a Canadian primary aluminum plant)
GEOGRAPHIC AREA ANALYSIS
The Company has worldwide operations in the U.S., Canada and other foreign
areas including Europe and Australia. Certain of these consist of equity
interests in entities, the net sales of which are not included in our
consolidated net sales. In Australia, we participate in an unincorporated
joint venture that mines bauxite and produces alumina.
Net sales in Canada improved in 1997 due to higher average realized primary
aluminum prices. Other foreign net sales increased due to strong demand for
the Company's construction and transportation products. Net sales were
negatively impacted in all geographic areas as a result of the Company's
restructuring activities in 1997.
INTEREST EXPENSE
Interest expense decreased in 1997 because we reduced the amount of debt
outstanding. Interest expense declined in 1996 because of lower interest rates
and higher amounts of capitalized interest. These benefits in 1996 were
partially offset by an increase in the amount of debt outstanding.
TAXES ON INCOME
The Company pays U.S. federal, state and foreign taxes based on the laws of the
various jurisdictions in which it operates. The effective tax rates (see
reconciliation in Note 9) reflected in the income statement differ from the
U.S. federal statutory rate principally because of the following:
* foreign taxes at different rates
* the effects of percentage depletion allowances
* additionally in 1997, the adverse effect of permanent basis differences on
asset dispositions
* additionally in 1995, the effect of a non-recurring foreign tax benefit
We have worldwide operations in many tax jurisdictions that generate deferred
tax assets and/or liabilities. Deferred tax assets and liabilities have been
netted by jurisdiction. This results in both a deferred tax asset and a
deferred tax liability on the balance sheet.
<PAGE>
RESULTS OF OPERATIONS -- continued
- ---------------------
TAXES ON INCOME -- continued
At December 31, 1997, we had $897 million of deferred tax assets that relate
primarily to U.S. tax positions. The most significant portions of these assets
relate to tax carryforward benefits and accrued costs for employee health care,
environmental and restructuring costs. We expect to realize a major portion of
these assets in the future through the reversal of temporary differences,
principally depreciation. To the extent that these assets are not covered by
reversals of depreciation, we expect the remainder to be realized through U.S.
income earned in future periods.
The Company has a strong history of sustainable earnings. However, even
without considering projections of income, certain tax planning strategies
(such as changing the method of valuing inventories from LIFO to FIFO and/or
entering into sale-leaseback transactions) would generate sufficient taxable
income to realize the portion of the deferred tax asset related to U.S.
operations. In addition, the majority of our U.S. tax carryforward benefits
may be carried forward indefinitely.
Based on our evaluation of these matters, we expect to realize these deferred
tax assets. We are not aware of any events or uncertainties that could
significantly affect our conclusions regarding realization. We reassess the
realization of deferred tax assets quarterly and, if necessary, adjust the
valuation allowance accordingly.
ENVIRONMENTAL
The Company is involved in remedial investigations and actions at various
locations, including Environmental Protection Agency-designated Superfund sites
where we and, in most cases, others have been designated as potentially
responsible parties (PRPs). We accrue remediation costs when it becomes
probable that such efforts will be required and the costs can be reasonably
estimated. We evaluate the status of all significant existing or potential
environmental issues quarterly, develop or revise cost estimates to satisfy
known remediation requirements, and adjust the accrual accordingly. At
December 31, 1997, the accrual was $171 million ($197 million at December 31,
1996). The accrual reflects our best estimate of the ultimate liability for
known remediation costs.
In estimating anticipated costs, we consider the extent of our involvement at
each site, joint and several liability provisions under applicable law, and the
likelihood of obtaining contributions from other PRPs. Potential insurance
recoveries are uncertain and therefore have not been considered. Based on
information currently available, we expect to make remediation expenditures
relating to costs currently accrued over the next 15 to 20 years with the
majority spent by the year 2002. We expect cash flows from operations to
provide the funds for environmental capital, operating and remediation
expenditures.
Annual capital expenditures for equipment designed for environmental control
purposes averaged approximately $35 million over the past three years. Ongoing
environmental operating costs for the same period averaged approximately $82
million per year. The Company expects operating expenditures for 1998 through
2000 will remain at approximately these same levels. We estimate annual
capital expenditures for environmental control facilities will be approximately
$95 million in 1998, $55 million in 1999 and $41 million in 2000. The majority
of these expenditures are for the capital spending program referred to below at
our primary aluminum plant in New York.
<PAGE>
RESULTS OF OPERATIONS -- continued
ENVIRONMENTAL -- continued
Our spending on environmental compliance will be influenced by future
environmental regulations, including those issued and to be issued under the
Clean Air Act Amendments of 1990. We are spending an estimated $200 million at
our primary aluminum plant in New York for new air emissions controls and a
phased modernization of the plant's production lines. We expect to complete
this project in the year 2000. We are accelerating certain expenditures
believed necessary to achieve compliance with the Clean Air Act's proposed
Maximum Achievable Control Technology standards. Based on current information,
we estimate that compliance with the Clean Air Act's hazardous air pollutant
standards will require in excess of $250 million of capital expenditures
(including a portion of the expenditures at the New York plant referred to
above), principally at our U.S. primary aluminum plants.
For additional information concerning environmental expenditures, see Note 11.
IMPACT OF YEAR 2000
Many of the Company's computer programs rely on two digits rather than four to
define the applicable year. As a result, those computer programs recognize a
date using "00" as the year 1900 rather than the year 2000. This could cause a
system failure or miscalculations causing disruptions of operations, including,
among other things, a temporary inability to manufacture products, process
transactions, send invoices or engage in normal business activities.
The Company has completed an assessment of its current software programs. As a
result of this review, the Company has begun modifying or replacing portions of
its program codes so that its computer systems will function properly with
respect to dates in the year 2000 and thereafter. The Company expects to incur
expenses of approximately $11 million in 1998 for the modifications. In
addition, the Company is evaluating the extent to which the Company's interface
systems may be vulnerable to customers and suppliers who have failed to
remediate their own year 2000 issues. There can be no guarantee that the
systems of other companies with which the Company's systems interface will be
timely converted and would not have an adverse effect on the Company's systems.
The Company has determined it has no exposure to contingencies related to the
year 2000 issue for the products it has sold.
We expect the project to be completed not later than December 31, 1998, which
is prior to any anticipated impact on our automated systems. The Company
believes that with modifications to existing software and conversions to new
software, the year 2000 issue will not pose significant operational problems
for its computer systems.
The costs of the project and the date on which the Company believes it will
complete the year 2000 modifications are based on management's best estimates.
These were derived using numerous assumptions of future events, including the
continued availability of certain resources and other factors. However, we
cannot guarantee these estimates are accurate and actual results could differ
materially from those anticipated. Specific factors that might cause such
material differences include, but are not limited to, the availability and cost
of personnel trained in this area, the ability to locate and correct all
relevant computer codes and similar uncertainties.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
<TABLE>
<CAPTION>
WORKING CAPITAL
December 31
-----------------------
1997 1996
---- ----
<S> <C> <C>
Working capital $711 $540
Ratio of current assets to current liabilities 1.6/1 1.4/1
</TABLE>
The increase in working capital in 1997 resulted principally from reductions in
short-term borrowings.
The increases in prepaid expenses and other current liabilities in 1997 were
for income taxes.
<TABLE>
<CAPTION>
OPERATING ACTIVITIES
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Cash provided from operations $363 $520 $489
</TABLE>
Cash provided from operating activities for the past three years was used
primarily to fund investing activities. The decline in cash from operations in
1997 resulted principally from increases in receivables and inventories of
ongoing operations. The increase in receivables reflects higher sales
activity. Inventories of ongoing operations increased in anticipation of
continuing strong shipping volumes.
INVESTING ACTIVITIES
The following table shows actual and projected capital expenditures in the
following categories: operational (replacement equipment, environmental
control projects, etc.) and strategic (performance improvement, acquisitions
and investments).
<TABLE>
<CAPTION>
Projected
1998 1997 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operational $138 $152 $195 $219
Strategic 212 120 237 626
---------------------------------------
Total capital investments $350 $272 $432 $845
=======================================
</TABLE>
Strategic projects that have been completed or that are underway include:
Base Materials
* the acquisition of an additional interest (25%) in a Canadian primary
aluminum facility in 1995 (our total interest is now 50%)
* the expansion of the Worsley Alumina Refinery in Australia
In 1997, we began the expansion of the joint-venture Worsley Alumina Refinery
in Australia in which we hold a 56% interest. The expansion will increase the
annual capacity of the facility by 65% to 3.1 million metric tons.
Construction began in the fourth quarter of 1997, and completion is expected in
the year 2000. We expect to fund our share of the project costs (approximately
$350 million) with cash generated from operations.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES -- continued
- -------------------------------
INVESTING ACTIVITIES -- continued
Packaging and Consumer
* the acquisitions in 1995 of a printing cylinder engraving business, a foil
laminating plant and a flexible packaging operation
* the expansion of a U.S. plastic film plant (completed in 1997)
* the modernization of U.S. foil plants (to be completed in 1999)
Transportation
* the modification and equipping of a purchased facility in Wisconsin to
produce aluminum wheels (completed in 1996)
* the construction of a forged wheel plant in Virginia (completed in 1997)
* the expansion and modification of a plant in Indiana that produces bumpers
and other automotive components (to be completed in 1998)
Due to continuing strength in demand for aluminum wheels, we plan to expand the
new forged wheel plant in Virginia. The expansion will begin in 1998 and cost
approximately $26 million.
Other Investing Activities
In addition to these major projects, capacity expansions, equipment upgrades
and/or improvement programs have been completed or are currently underway at a
number of other facilities. Those completed include:
* the acquisition in 1996 of a partial interest in a foil and extrusion plant
in China
* the expansions and modernizations of U.S. can plants and the participation
in the construction of can plants in Brazil, Argentina, Chile and Saudi
Arabia (all completed in 1997 or before)
* a quality improvement program and equipment upgrades at a can sheet
operation in Alabama (completed in 1997)
FINANCING ACTIVITIES
We believe our available financial resources, together with internally
generated funds, are sufficient to meet our present and future business needs.
We continue to exceed the financial ratio requirements contained in our
financing arrangements and expect to do so in the future. At December 31,
1997, $113 million of our $1.65 billion shelf registration remained available
for the issuance of debt securities. We also have committed revolving credit
facilities of $650 million, which were undrawn at December 31, 1997. A summary
of significant financing activities over the past three years follows:
1995:
* borrowed $22 million through the issuance of tax-exempt bonds that require a
single repayment in 2025 and bear interest at a variable rate
* issued $72 million of medium-term notes (which matured in 1996 and 1997)
that had an average interest rate of 6%
* contributed 0.9 million shares (valued at $45 million) of the Company's
common stock to pension plans
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES -- continued
- -------------------------------
FINANCING ACTIVITIES -- continued
1995 -- continued:
We used proceeds from the tax-exempt bonds to finance a portion of the costs of
acquiring, constructing and installing environmental control facilities at our
primary aluminum plant in New York. Proceeds from the medium-term notes were
supplemented with cash on hand and cash generated from operations to acquire an
additional interest in a Canadian primary aluminum plant for approximately $390
million, plus associated working capital.
1996:
* called for redemption all outstanding shares of PRIDES(SM) (see Note 7),
which reduced annual dividend requirements by approximately $24 million
* substantially met our goal to fully fund our pension plans
* amended a $500 million revolving credit facility to extend the term and
lower the cost
1997:
* reduced debt by approximately $400 million with the proceeds from sales of
assets
PORTFOLIO REVIEW
- ----------------
We have reviewed all of our operations with the goals of improving focus and
profitability, strengthening our financial position, and thereby increasing
shareholder value. The results of this review are expected to improve earnings
in the years ahead during all parts of the business cycle. Major elements of
the review are as follows:
RESTRUCTURE
The Company will retain its base materials business because of our competitive
cost structure. We plan to keep and grow our packaging and consumer,
construction and distribution and transportation products businesses. We have
determined that certain operations do not meet our strategic focus or would not
earn an adequate return through the aluminum business cycle and therefore have
taken the following actions:
* We have exited North American residential construction products operations.
* We have completed the sale of two U.S. extrusion plants and our U.S. powder
and paste plant. In early 1998, we sold our two extrusion plants in Canada
and our U.S. aluminum recycling operations. We also are evaluating
alternatives for our extrusion operations in Spain.
* With respect to our rolling operations, we have signed a memorandum of
understanding to sell our European rolling operations, and we are
negotiating to sell our Illinois sheet and plate plant.
* We formed a 50-50 joint venture to operate and expand our rolling mill in
Quebec, Canada and to operate our coil coating facility in Ontario, Canada.
The rolling mill is a supplier of finstock to the automotive market and foil
to the packaging market.
* We have sold an aluminum reclamation plant in Virginia and our coal
properties in Kentucky.
* We are actively discussing the possible sale of substantially all of our
global can operations.
<PAGE>
PORTFOLIO REVIEW -- continued
- ----------------
STRENGTHEN BALANCE SHEET
In addition to improving our future earnings potential, our actions have
enabled us to strengthen our balance sheet. We used most of the proceeds from
asset sales in 1997 to repay approximately $400 million of debt. Annualized
interest cost attributed to the debt repaid is approximately $25 million. Our
debt-to-equity ratio has improved to 38/62 at the end of 1997 compared to 44/56
at the end of 1996.
We expect to use proceeds from planned asset sales in 1998 to repurchase shares
of common stock and to repay debt. Initially, the Company has authorization to
repurchase up to five million shares of common stock. There may be further
share repurchases depending on the successful conclusion of asset sales and our
plan to further reduce debt by approximately $500 million. We estimate annual
interest cost attributed to expected 1998 debt repayments at $45 million.
In early 1998, the Company repurchased one million shares of common stock at
market prices. The cost of the repurchase was $63 million.
REORGANIZE
We have reorganized the Company to streamline our business to focus on global
markets that hold the most promising opportunities for profitable growth. The
result of these changes was the formation of the following market-based,
global businesses:
* Base Materials
* Packaging and Consumer
* Construction and Distribution
* Transportation
In addition, we also have an operation that will focus on emerging markets such
as China, Russia and India.
Our reorganization has resulted in personnel reductions in various operational
and staff functions at our corporate headquarters. We have eliminated
approximately 600 positions. As a result, we expect to reduce corporate
overhead costs by approximately $40 million annually.
GROW
We are conducting a strategic planning process designed to establish future
growth programs. To date, we have identified the following investment
opportunities:
* the significant expansion program that began in the fourth quarter of 1997
at our joint-venture alumina refinery in Australia
* additional investment in our wheel operations
* several projects in our packaging operations
While we have no current plans to invest in any major expansions of our
smelting operations, we expect that there will be opportunities for high-return
cost-reduction projects.
In addition to these internal opportunities, we will be looking for high-return
acquisitions in several of our operations. One focus will be to participate in
the ongoing consolidation of the metals distribution industry. Additionally,
we will look for opportunities to grow our packaging operations through U.S.
and foreign acquisitions.
CONCLUSION AND OUTLOOK
It will take part of 1998 to complete the divestitures involved in our
restructuring. The sale of our Alabama can stock complex was not approved by
the U.S. government. We are currently evaluating a number of alternatives for
the plant, including selling it. Any such sale may result in a loss. After
our restructuring is
<PAGE>
PORTFOLIO REVIEW -- continued
CONCLUSION AND OUTLOOK -- continued
complete, we should be positioned to deliver higher earnings throughout the
cycle and thereby significantly enhance shareholder value.
We anticipate a healthy aluminum market in 1998 and project Western World
consumption will grow 2.5-3.5%. We also expect the alumina market to remain
tight in 1998. Our results should benefit from the restart of a portion of our
primary aluminum capacity in 1998 and the restart of our idle alumina capacity
in late 1997.
Our packaging and consumer business continues strong, and our expectations for
1998 are positive. The outlook for our construction and distribution business
is excellent based on expected strength for construction products in Europe,
Latin America and China (with continued softness in other areas of the Pacific
Rim) and the positive outlook of our domestic distribution customers. In our
transportation business, overall volume is good and increasing, as automakers
continue to increase their use of aluminum in cars and light trucks.
RISK FACTORS
- ------------
This section should be read in conjunction with Items 1 and 3 of this report
and the preceding portions of this Item.
This report contains (and oral communications made by or on behalf of the
Company may contain) forecasts, projections, estimates, statements of
management's plans and objectives for the Company and other forward-looking
statements<F1>. The Company's expectations for the future and related forward-
looking statements are based on a number of assumptions and forecasts as to
world economic growth and other economic indicators (including rates of
inflation, industrial production, housing starts and light vehicle sales),
trends in the Company's key markets, global aluminum supply and demand
conditions, and aluminum ingot prices, among other items. By their nature,
forward-looking statements involve risk and uncertainty, and various factors
could cause the Company's actual results to differ materially from those
projected in a forward-looking statement or affect the extent to which a
particular projection is realized.
Consensus expectations for 1998 indicate global economic growth of 2.5-3%. The
Company is forecasting an increase in Western World aluminum consumption for
1998 of approximately 2.5-3.5%. Barring a recession in any major world
economy, the Company expects favorable conditions in aluminum industry
supply/demand fundamentals to continue for the next several years. The
Company's outlook for 1998 and beyond could be jeopardized by repercussions
stemming from recent economic problems in Southeast Asia. The Company's
outlook for growth in aluminum consumption for the next several years is
between 2.5-4% per year. The Company expects greater use of aluminum around
the world in cars and light trucks.
Economic and/or market conditions other than those forecasted by the Company in
the preceding paragraph, particularly in the U.S., Asia and Western Europe,
could cause the Company's actual results to differ materially from those
projected in a forward-looking statement or affect the extent to which a
particular projection is realized.
[FN]
________________________
<F1>Forward-looking statements can be identified generally as those containing
words such as "should," "hope," "forecast," "project," "estimate," "expect,"
"anticipate," or "plan" and words of similar effect.
</FN>
<PAGE>
RISK FACTORS -- continued
- ------------
The following factors also could affect the Company's results:
* Primary aluminum is an internationally traded commodity. The price of
primary aluminum is subject to worldwide market forces of supply and demand
and other influences. Prices can be volatile. The Company's use of
contractual arrangements, including fixed-price sales contracts, fixed-price
supply contracts, and forward, futures and option contracts, reduces its
exposure to this volatility but does not eliminate it.
* The markets for most aluminum products are highly competitive. Certain of
the Company's competitors are larger than the Company in terms of total
assets and operations and have greater financial resources. Certain foreign
governments are involved in the operation and/or ownership of certain
competitors and may be motivated by political as well as economic
considerations. In addition, aluminum competes with other materials, such
as steel, vinyl, plastics and glass, among others, for various applications
in the Company's key markets. Unanticipated actions or developments by or
affecting the Company's competitors and/or the willingness of customers to
accept substitutions for the products sold by the Company could affect
results.
* The Company spends substantial capital and operating amounts relating to
ongoing compliance with environmental laws. In addition, the Company is
involved in remedial investigations and actions in connection with past
disposal of wastes. Estimating future environmental compliance and
remediation costs is imprecise due to the continuing evolution of
environmental laws and regulatory requirements and uncertainties about their
application to the Company's operations, the availability and application of
technology, the identification of currently unknown remediation sites, and
the allocation of costs among potentially responsible parties.
* Unanticipated material legal proceedings or investigations, or the
disposition of those currently pending against the Company other than as
anticipated by management and counsel, could affect the Company's results.
* Changes in the costs of power, resins, caustic soda, green coke and other
raw materials can affect results. The Company's contract with the
Bonneville Power Administration for the period October 1996 to September
2001 provides fixed rates for electrical power provided to the Company's
Washington and Oregon primary aluminum plants. These rates have been
approved by federal regulatory authorities but have been appealed in court
by a third party. If the appeal is successful, it is possible that higher
electricity costs might result.
* The Company's transportation market is cyclical, and sales to that market in
particular can be influenced by economic conditions.
* A strike at a customer facility or a significant downturn in the business of
a key customer supplied by the Company could affect the Company's results.
<PAGE>
RISK FACTORS -- continued
- ------------
* Since late 1996, the Company has been conducting a Portfolio Review of all
its operations. In connection with the Portfolio Review, the Company has
signed a memorandum of understanding to sell our European rolling mill
operations, and we are negotiating to sell our Illinois sheet and plate
plant. These transactions are subject to certain conditions, including due
diligence reviews by the purchasers, negotiation of definitive agreements
and obtaining regulatory approvals and third-party consents. As a result,
these transactions may or may not be completed as contemplated. In
addition, the Company has announced that it is discussing a potential
agreement for the sale of substantially all of its global can operations,
although no agreement has been reached and the details of the transaction
have not been determined. Whether and when this transaction will be
completed is not certain. The Company is also reviewing its options with
respect to its Alloys complex in North Alabama, which consists of a rolling
mill, two reclamation plants and a coil coating facility, and its extrusion
operations in Spain.
In addition to the factors referred to above, the Company is exposed to general
financial, political, economic and business risks in connection with its
worldwide operations. The Company continues to evaluate and manage its
operations in a manner to mitigate the effects from exposure to such risks. In
general, the Company's expectations for the future are based on the assumption
that conditions relating to costs, currency values, competition and the legal,
regulatory, financial, political and business environments in the worldwide
economies and markets in which the Company operates will not change
significantly overall.
<PAGE>
<PAGE>
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF INCOME (millions, except per share amounts)
============================================================================================
- --------------------------------------------------------------------------------------------
Years ended December 31 1997 1996 1995
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Net sales $6,881 $6,972 $7,213
Equity, interest and other income 19 44 39
- --------------------------------------------------------------------------------------------
6,900 7,016 7,252
- --------------------------------------------------------------------------------------------
COSTS AND EXPENSES
Cost of products sold 5,658 5,856 5,739
Selling, administrative and general expenses 406 445 449
Depreciation and amortization 368 365 344
Interest 153 160 172
Operational restructuring effects - net 75 37 -
- --------------------------------------------------------------------------------------------
6,660 6,863 6,704
- --------------------------------------------------------------------------------------------
EARNINGS
Income before income taxes and cumulative effect
of accounting change 240 153 548
Taxes on income 104 49 159
- --------------------------------------------------------------------------------------------
Income before cumulative effect of accounting change 136 104 389
Cumulative effect of accounting change - (15) -
- --------------------------------------------------------------------------------------------
NET INCOME 136 89 389
Preferred stock dividends - 36 36
- --------------------------------------------------------------------------------------------
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 136 $ 53 $ 353
============================================================================================
EARNINGS PER SHARE
Basic:
Average shares outstanding 73,412,000 63,730,000 63,051,000
Income before cumulative effect of accounting change $1.86 $1.06 $5.60
Cumulative effect of accounting change - (0.24) -
- --------------------------------------------------------------------------------------------
Net income $1.86 $0.82 $5.60
============================================================================================
Diluted:
Average shares outstanding 74,004,000 63,947,000 74,268,000
Income before cumulative effect of accounting change $1.84 $1.06 $5.25
Cumulative effect of accounting change - (0.24) -
- --------------------------------------------------------------------------------------------
Net income $1.84 $0.82 $5.25
============================================================================================
CASH DIVIDENDS PER COMMON SHARE $1.40 $1.40 $1.20
============================================================================================
See notes beginning on page 44.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET (millions)
=============================================================================
December 31 1997 1996
- -----------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 70 $ 38
Receivables:
Customers, less allowances of $16 (1996 - $18) 841 811
Other 174 150
- -----------------------------------------------------------------------------
Total receivables 1,015 961
Inventories 744 787
Prepaid expenses and other 165 87
- -----------------------------------------------------------------------------
Total current assets 1,994 1,873
Unincorporated joint ventures and associated companies 1,381 1,337
Property, plant and equipment - net 2,954 3,237
Deferred taxes 249 296
Other assets 648 773
- -----------------------------------------------------------------------------
Total assets $7,226 $7,516
=============================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade payables $ 512 $ 499
Accrued compensation and related amounts 202 209
Payables to unincorporated joint ventures and
associated companies 81 97
Commercial paper - 79
Notes payable to banks 67 138
Long-term debt 142 96
Other liabilities 279 215
- -----------------------------------------------------------------------------
Total current liabilities 1,283 1,333
Long-term debt 1,501 1,793
Postretirement benefits 1,043 1,087
Environmental 158 179
Deferred taxes 269 262
Other liabilities 233 228
Stockholders' equity:
Common stock 1,521 1,451
Retained earnings 1,253 1,220
Cumulative currency translation adjustments (35) (37)
- -----------------------------------------------------------------------------
Total stockholders' equity 2,739 2,634
Contingent liabilities and commitments (Note 11)
- -----------------------------------------------------------------------------
Total liabilities and stockholders' equity $7,226 $7,516
=============================================================================
See notes beginning on page 44.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CASH FLOWS (millions)
===========================================================================================
Years ended December 31 1997 1996 1995
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $136 $ 89 $389
Adjustments to reconcile to net cash provided by
operating activities:
Depreciation and amortization 368 365 344
Operational restructuring effects 58 37 -
Cumulative effect of accounting change - 15 -
Other 28 26 18
Changes in operating assets and liabilities net of
effects from acquisitions and dispositions:
Accounts payable, accrued and other liabilities 74 (110) (173)
Receivables (194) 67 (59)
Inventories (108) 93 17
Other 1 (62) (47)
- -------------------------------------------------------------------------------------------
Net cash provided by operating activities 363 520 489
INVESTING ACTIVITIES
Capital investments:
Operational (152) (195) (219)
Strategic (120) (237) (626)
Maturities of investments in debt securities - - 125
Sales of assets - operational restructuring 367 - -
Other (3) (5) (20)
- -------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities 92 (437) (740)
FINANCING ACTIVITIES
Proceeds from long-term debt - 40 106
Reduction of long-term debt and other financing liabilities (245) (105) (22)
Increase (decrease) in short-term borrowings (138) 111 (18)
Cash dividends paid (99) (135) (106)
Stock options exercised 59 5 22
- -------------------------------------------------------------------------------------------
Net cash used in financing activities (423) (84) (18)
CASH AND CASH EQUIVALENTS
Net increase (decrease) 32 (1) (269)
At beginning of year 38 39 308
- -------------------------------------------------------------------------------------------
At end of year $ 70 $ 38 $ 39
===========================================================================================
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest $164 $176 $179
Income taxes 21 2 56
See notes beginning on page 44.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
============================================================================================
Years ended December 31 1997 1996 1995
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHARES (thousands):
Preferred stock (PRIDES)
Balance at January 1 - 11,000 11,000
Shares converted/redeemed for common stock - (11,000) -
- --------------------------------------------------------------------------------------------
Balance at December 31 - - 11,000
- --------------------------------------------------------------------------------------------
Common stock
Balance at January 1 72,719 63,598 62,169
Shares issued under employee benefit plans 1,190 101 1,429
Shares issued on conversion/redemption of preferred stock - 9,020 -
- --------------------------------------------------------------------------------------------
Balance at December 31 73,909 72,719 63,598
============================================================================================
DOLLARS (millions):
Preferred stock (PRIDES)
Balance at January 1 $ - $ 505 $ 505
Shares converted/redeemed for common stock - (505) -
- --------------------------------------------------------------------------------------------
Balance at December 31 $ - $ - $ 505
- --------------------------------------------------------------------------------------------
Common stock
Balance at January 1 $1,451 $ 941 $ 870
Shares issued under employee benefit plans 70 5 71
Shares issued on conversion/redemption of preferred stock - 505 -
- --------------------------------------------------------------------------------------------
Balance at December 31 $1,521 $1,451 $ 941
- --------------------------------------------------------------------------------------------
Retained earnings
Balance at January 1 $1,220 $1,256 $ 980
Net income 136 89 389
Cash dividends declared:
Preferred stock (PRIDES) - (36) (36)
Common stock (103) (89) (77)
- --------------------------------------------------------------------------------------------
Balance at December 31 $1,253 $1,220 $1,256
- --------------------------------------------------------------------------------------------
Cumulative currency translation adjustments
Balance at January 1 $ (37) $ (22) $ (43)
Adjustments - (16) 23
Income taxes 2 1 (2)
- --------------------------------------------------------------------------------------------
Balance at December 31 $ (35) $ (37) $ (22)
- --------------------------------------------------------------------------------------------
Pension liability adjustment
Balance at January 1 $ - $ (63) $ (40)
Adjustment - 97 (35)
Income taxes - (34) 12
- --------------------------------------------------------------------------------------------
Balance at December 31 $ - $ - $ (63)
- --------------------------------------------------------------------------------------------
Total stockholders' equity $2,739 $2,634 $2,617
============================================================================================
See notes beginning on page 44.
</TABLE>
<PAGE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In the tables, dollars are in millions, except per share amounts. Certain
amounts have been reclassified to conform to the 1997 presentation.)
- ------------------------------------------------------------------------------
1. ACCOUNTING POLICIES
GENERAL
The consolidated financial statements are prepared in conformity with generally
accepted accounting principles. As a result, management makes estimates and
assumptions that affect the following:
* reported amounts of revenues and expenses during the reporting period
* reported amounts of assets and liabilities at the date of the financial
statements
* disclosure of contingent liabilities at the date of the financial
statements
Actual results could differ from those estimates.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its majority-owned subsidiaries after eliminating inter-company transactions,
profits and losses. The investments in unincorporated joint ventures are
accounted for on an investment cost basis adjusted for the Company's share of
the non-cash production charges of the operation. Unincorporated joint
ventures are production facilities without marketing or sales activities.
Investments in associated companies (20-50% owned) are carried at cost adjusted
for the Company's equity in undistributed net income.
REVENUE RECOGNITION
Revenues are recognized when products are shipped and ownership risk and title
pass to the customer.
INVENTORIES
Inventories are stated at the lower of cost or market. Inventory costs were
determined by the last-in, first-out (LIFO), first-in, first-out (FIFO) and
average-cost methods. LIFO method inventories were $270 million at the end of
1997 (1996 -- $279 million). FIFO and average-cost method inventories were
$474 million at the end of 1997 (1996 -- $508 million). Inventories would
increase by $467 million at the end of 1997 (1996 -- $470 million) if the FIFO
method were applied to LIFO method inventories.
In 1996, the liquidation of certain LIFO layers decreased cost of products sold
by $30 million. The inventories in these LIFO layers were acquired at lower
costs in prior years.
Since inventories are sold at various stages of processing, there is no
practical distinction between finished products, in-process products and other
materials. Inventories are therefore presented as a single classification.
DEPRECIATION AND AMORTIZATION
The straight-line method is used to depreciate plant and equipment over their
estimated useful lives (buildings and leasehold improvements -- 10 to 40 years,
machinery and equipment -- 5 to 20 years). Improvements to leased properties
are generally amortized over the shorter of the terms of the respective leases
or the estimated useful life of the improvement.
ENVIRONMENTAL EXPENDITURES
Remediation costs are accrued when it is probable that such efforts will be
required and the related costs can be reasonably estimated.
POSTEMPLOYMENT BENEFITS
The expected cost of postemployment benefits is accrued when it becomes
probable that such benefits will be paid.
<PAGE>
1. ACCOUNTING POLICIES -- continued
HEDGING
Forward, futures, option and swap contracts are designated to manage market
risks resulting from fluctuations in the aluminum, natural gas, foreign
currency and debt markets. These instruments, which are not held for trading
purposes, are effective in minimizing such risks by creating equal and
offsetting exposures. Unrealized gains and losses are deferred and recorded as
a component of the underlying hedged transaction when it occurs. Realized
gains or losses from matured and terminated hedge contracts are recorded in
other assets or liabilities until the underlying hedged transactions are
consummated. Realized and unrealized gains or losses on hedge contracts
relating to transactions that are subsequently not expected to occur are
recognized in results currently. None of these instruments contains multiplier
or leverage features. There is exposure to credit risk if the other parties to
these instruments do not meet their obligations. Creditworthiness of the other
parties is closely monitored, and they are expected to fulfill their
obligations. Contracts used to manage risks in these markets are not material.
CUMULATIVE EFFECT OF ACCOUNTING CHANGE
In 1996, Statement of Financial Accounting Standards No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of," was adopted. The cumulative effect of adopting the standard was an after-
tax loss of $15 million. The loss was for the impairment of certain real
estate held for sale at the beginning of 1996, principally undeveloped land.
EARNINGS PER SHARE
In the fourth quarter of 1997, the Company adopted Statement of Financial
Accounting Standards No. 128, "Earnings Per Share." Statement No. 128 requires
a change in the method used to calculate earnings per share (EPS). The change
eliminates the presentation of primary EPS and requires the presentation of
basic EPS. The principal difference between these methods is that common stock
equivalents are not considered in the computation of basic EPS. The statement
also requires the presentation of diluted EPS. Diluted EPS reflects the
potential dilution that would occur if securities, or other contracts to issue
common stock, were exercised or converted into common stock or resulted in the
issuance of common stock that then shared in the earnings of the Company. All
prior-period EPS presentations have been restated.
STATEMENT OF CASH FLOWS
In preparing the Statement of Cash Flows, all highly liquid, short-term
investments purchased with an original maturity of three months or less are
considered to be cash equivalents.
STOCK OPTIONS
Stock options are accounted for using the intrinsic value method. Except as
discussed below, compensation expense is not recognized because the exercise
price of the stock options equals the market price of the underlying stock on
the date of grant.
Compensation expense is recognized for performance-based stock options if it
becomes probable that the performance condition will be satisfied.
Compensation expense is the difference between the market price of the common
stock when the performance condition is satisfied and the exercise price of the
stock options.
COMPREHENSIVE INCOME
In 1997, the Financial Accounting Standards Board issued Statement No. 130,
"Reporting Comprehensive Income," which will be adopted in the first quarter of
1998. This statement establishes standards for reporting and displaying
comprehensive income and its components in the financial statements.
Comprehensive income includes net income and items of other comprehensive
income. For the Company, other comprehensive income will consist of period-to-
period changes in the balances of the cumulative currency translation
adjustments.
<PAGE>
2. OPERATIONAL RESTRUCTURING
All of the Company's operations have been reviewed with the goals of improving
focus and profitability, strengthening the Company's financial position, and
thereby increasing shareholder value. The results of this review are expected
to improve earnings in the years ahead during all parts of the business cycle.
It was determined that certain operations do not meet our strategic focus or
would not earn an adequate return through the business cycle and therefore the
following actions have been taken.
In 1997, the Company sold the following assets:
* North American residential construction products operations
* an aluminum reclamation plant in Virginia
* aluminum extrusion plants in Virginia and Texas
* coal properties in Kentucky
* one-half of its interest in a rolling mill and related assets in Canada
* an aluminum powder and paste plant in Kentucky
The proceeds from these sales ($367 million) were used to reduce debt during
1997.
In early 1998, the Company sold its two extrusion plants in Canada and its U.S.
recycling operations.
The Company is negotiating to sell its sheet and plate plant in Illinois. The
Company has also signed a memorandum of understanding to sell its aluminum
rolling operations in Germany, Italy and Spain. These transactions are subject
to regulatory approvals, negotiation and execution of definitive agreements,
and other customary closing conditions. The Company currently expects to
complete these sales after the first quarter of 1998.
The Company is actively discussing the sale of substantially all of its global
can operations.
The carrying amount for assets expected to be sold was approximately $1.0
billion at December 31, 1997. The operating income related to the assets
expected to be sold was approximately $100 million for the year 1997.
Proceeds from expected asset sales in 1998 will be used to repurchase shares of
common stock and to repay debt. The Company has authorization to repurchase up
to five million shares of common stock.
The Company recorded a pre-tax charge of $75 million in 1997 relating to asset
disposals and other restructuring activities. The charge was principally for
pension, health care and other severance costs for approximately 1,000
employees. The positions affected were at the Company's corporate headquarters
and certain domestic plants. Most of the cash requirements for the employee
termination benefits are expected to be paid in 1998.
The planned sale of the Company's Alabama can stock complex was not approved by
the U.S. government. The Company is currently evaluating a number of
alternatives for the plant, including selling it. Any such sale may result in
a loss.
Operational restructuring costs recognized in 1996 consisted principally of
employee termination benefits relating to the closing of a can plant in Texas.
Most of the cash requirements relating to these costs were paid in 1996 and
1997.
<PAGE>
3. EARNINGS PER SHARE
The following is a reconciliation of income and average shares for the basic
and diluted earnings per share computations for "Income before cumulative
effect of accounting change."
<TABLE>
<CAPTION>
1997 1996 1995
-------------------------------------
<S> <C> <C> <C>
Income (numerator):
Income before cumulative effect of
accounting change $136 $104 $389
Less convertible preferred stock
(PRIDES) dividend - 36 36
-------------------------------------
Basic 136 68 353
Effect of dilutive securities:
Add convertible preferred stock
(PRIDES) dividend - - 36
-------------------------------------
Diluted $136 $ 68 $389
=====================================
Average shares (denominator):
Basic 73,412,000 63,730,000 63,051,000
Effect of dilutive securities:
Convertible preferred stock (PRIDES) - - 11,000,000
Stock options 592,000 217,000 217,000
-------------------------------------
Diluted 74,004,000 63,947,000 74,268,000
=====================================
Per share amount for income before
cumulative effect of accounting change:
Basic earnings per share $1.86 $1.06 $5.60
Diluted earnings per share 1.84 1.06 5.25
Antidilutive securities excluded:
Convertible preferred stock (PRIDES) - 8,950,000 -
Stock options 505,000 2,665,000 2,327,000
</TABLE>
4. UNINCORPORATED JOINT VENTURES AND ASSOCIATED COMPANIES
Investments in unincorporated joint ventures that produce alumina and primary
aluminum consist of the following:
<TABLE>
<CAPTION>
December 31
------------------
1997 1996
------------------
<S> <C> <C>
Current assets $ 42 $ 63
Current liabilities (66) (55)
Property, plant and equipment and other assets 1,078 1,047
------------------
Net investment $1,054 $1,055
==================
</TABLE>
<PAGE>
4. UNINCORPORATED JOINT VENTURES AND ASSOCIATED COMPANIES -- continued
Foreign-based associated companies produce bauxite, alumina, primary aluminum,
hydroelectric power and fabricated aluminum products. Investments in these
companies were $327 million at the end of 1997 (1996 - $282 million), including
advances of $50 million (1996 - $46 million). An equity loss (pre-tax) of $5
million was recognized during 1997. In 1996, equity income (pre-tax) was $21
million (1995 - $17 million). Summarized financial information related to
these entities follows:
<TABLE>
<CAPTION>
Years ended December 31
--------------------------
1997 1996 1995
--------------------------
<S> <C> <C> <C>
Net sales $999 $950 $709
Cost of products sold 910 814 602
Net income (loss) (14) 31 37
</TABLE>
<TABLE>
<CAPTION> December 31
------------------
1997 1996
------------------
<S> <C> <C>
Current assets $ 891 $599
Noncurrent assets 1,015 917
Current liabilities 733 458
Noncurrent liabilities 470 469
Stockholders' equity 703 589
</TABLE>
5. PROPERTY, PLANT AND EQUIPMENT (AT COST)
<TABLE>
<CAPTION>
December 31
----------------------
1997 1996
----------------------
<S> <C> <C>
Land, land improvements and mineral properties $ 289 $ 303
Buildings and leasehold improvements 1,045 1,092
Machinery and equipment 5,044 5,211
Construction in progress 155 207
----------------------
6,533 6,813
Less allowances for depreciation and amortization 3,579 3,576
----------------------
Net property, plant and equipment $2,954 $3,237
======================
</TABLE>
6. FINANCING ARRANGEMENTS
<TABLE>
<CAPTION>
December 31
---------------------
1997 1996
---------------------
<S> <C> <C>
Public debt securities:
Medium-term notes $ 902 $ 997
9% debentures due 2003 100 100
9-3/8% debentures due 1999 100 100
6-5/8% amortizing notes 285 284
Industrial and environmental control revenue bonds 237 237
Other arrangements:
Canadian bank credit agreement - 150
Mortgages and other notes payable 19 21
---------------------
1,643 1,889
Amounts due within one year 142 96
---------------------
Long-term debt $1,501 $1,793
=====================
</TABLE>
<PAGE>
6. FINANCING ARRANGEMENTS -- continued
<TABLE>
<CAPTION>
Long-term debt at December 31, 1997 matures as follows:
<S> <C>
1998 $142
1999 197
2000 154
2001 169
2002 156
2003-2025 825
</TABLE>
The medium-term notes, 9% debentures and 9-3/8% debentures were issued under a
$1.65 billion shelf registration. The medium-term notes bear interest at an
average fixed rate of 9% and have maturities ranging from 1998 to 2013. At
December 31, 1997, $113 million of debt securities remained unissued under the
shelf registration. A portion of this fixed-rate debt has been effectively
converted to variable rates through the use of interest rate swap agreements.
The Company has approximately $275 million of these agreements. Payments are
received based on a fixed rate (5.6%) and made based on a variable rate (5.9%
at December 31, 1997). These agreements mature in 1998 ($75 million) and 2001
($200 million). The variable rates in these agreements are based on the London
Interbank Offer Rate. The differential to be paid or received as interest
rates change is accrued and recognized as an adjustment of interest expense.
The fair values of these agreements and their effect on interest expense were
not material.
The 6-5/8% amortizing notes were issued at a discount (99.48%) and have an
effective interest rate of 6.7%. The notes require annual principal repayments
of $57 million between 1998 and 2002.
Industrial and environmental control revenue bonds consist of variable-rate
debt with interest rates averaging 4.2% at December 31, 1997. These bonds
require principal repayments in lump sums periodically between 1998 and 2025.
Letters of credit issued by banks support these bonds.
Mortgages and other notes payable consist of fixed-rate debt with an average
rate of 6.5%. They require principal repayment through 2009.
The Company has $650 million of committed revolving credit facilities that
expire in 2001. No amounts were outstanding under the facilities at December
31, 1997. The annual commitment fees on the facilities are .10%.
Certain financing arrangements contain restrictions that primarily consist of
requirements to maintain specified financial ratios. These restrictions do not
inhibit operations or the use of fixed assets. At December 31, 1997, the
Company exceeded all such requirements.
The fair value of long-term debt was approximately $1.8 billion at the end of
1997 (1996 - $2.0 billion). This value was determined by using discounted cash
flow analysis.
Interest capitalized was $8 million during 1997 (1996 - $13 million, 1995 - $7
million).
The weighted-average interest rate on short-term borrowings was 4.5% at the end
of 1997 (1996 - 4.6%). The weighted-average interest rate on commercial paper
was 5.9% at the end of 1996.
<PAGE>
7. STOCKHOLDERS' EQUITY
PREFERRED STOCK
The Company has 21,000,000 shares of preferred stock authorized. Two million
shares have been designated Series A Junior Participating Preferred.
On December 31, 1996, the Company called for redemption of all of its
outstanding PRIDES. As a result of the call, the Company issued a total of
9,019,990 shares of common stock upon the redemption or conversion of all of
the PRIDES. A total of 4,673,800 shares of common stock were issued in
redemption of 5,699,756 shares of PRIDES. The redemption rate of .82 of a
share of common stock for each share of PRIDES was based on a call price of
$48.077 per share and a common stock market price of $58.79 per share
(determined as provided in the PRIDES governing documents). In lieu of
redemption, holders of 5,300,244 shares of PRIDES elected to convert their
shares of PRIDES (on or before the redemption date) into 4,346,190 shares of
common stock (at a conversion rate of .82 of a share of common stock for each
share of PRIDES). Dividends declared on each share of PRIDES were $3.31 in
1996 (1995 - $3.31).
COMMON STOCK
The Company has 200,000,000 shares of common stock (without par value)
authorized.
The Company has authorization to repurchase up to five million shares of common
stock. In early 1998, the Company repurchased one million shares at market
prices. The cost of the repurchase was $63 million.
STOCK OPTIONS
The Company has a non-qualified stock option plan under which key employees may
be granted stock options at a price equal to the fair market value at the date
of grant. Other than the performance-based options discussed below, the stock
options currently outstanding vest in one year and are exercisable between one
year and ten years from the date of grant. A summary of stock option activity
and related information follows (options are in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Outstanding at January 1 5,318 4,680 4,404
Granted 711 750 755
Exercised (1,190) (103) (453)
Canceled (11) (9) (26)
----------------------------
Outstanding at December 31 4,828 5,318 4,680
Exercisable at December 31 4,121 4,569 3,931
Available for grant (increased on January 1, 1996
by 2 million shares) 923 1,630 520
Weighted-average prices:
Outstanding at January 1 $52 $52 $51
Granted 64 55 52
Exercised 50 39 43
Canceled 56 52 53
Outstanding at December 31 55 52 52
Exercisable at December 31 53 52 52
</TABLE>
<PAGE>
7. STOCKHOLDERS' EQUITY -- continued
STOCK OPTIONS -- continued
The following table summarizes information about stock options outstanding at
December 31, 1997 (options are in thousands and remaining contractual life and
exercise prices are weighted-averages):
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
--------------------------------- ---------------------
Range of Remaining
Exercise Contractual Exercise Exercise
Prices Options Life Price Options Price
------ ------- ---- ----- ------- -----
<S> <C> <C> <C> <C> <C>
$35 to $49 1,003 6 Years $45 1,003 $45
52 to 64 3,825 6 Years 57 3,118 56
- ---------------------------------------------------------------------
$35 to $64 4,828 6 Years $55 4,121 $53
=====================================================================
</TABLE>
In 1996, the Company also granted 150,000 performance-based stock options at an
exercise price of $53.50 per share. The stock options will not be exercisable
unless, on or before September 30, 1999, the closing price of the common stock
equals or exceeds $80.25 per share for 30 consecutive days. If this condition
is satisfied, the options may be exercised any time before March 31, 2000.
Pro forma net income and earnings per share have been prepared based on
expensing (after tax) the estimated fair value of stock options granted during
1997, 1996 and 1995. The estimated fair value of the stock options was
determined by using a Black-Scholes option-pricing model. The estimated fair
values and the weighted-average assumptions used to estimate those values
follow:
<TABLE>
<CAPTION>
Performance-
Based
Stock Options Options
------------------------------ ------------
1997 1996 1995 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Risk-free interest rate 6.4% 6.9% 6.5% 6.5%
Dividend yield 2.2% 2.6% 3.0% 2.1%
Volatility factor of the expected
market price of the Company's
common stock .265 .278 .270 .262
Expected life of the option 6 years 6 years 6 years 3 years
Estimated fair value of each stock
option granted $19.53 $16.97 $14.30 $11.73
</TABLE>
The Black-Scholes option-pricing model was not developed for use in valuing
employee stock options. This model was developed for use in estimating the
fair value of traded options that have no vesting restrictions and are fully
transferable. In addition, it requires the input of highly subjective
assumptions including expectations of future dividends and stock price
volatility. The assumptions are only used for making the required fair value
estimate and should not be considered as indicators of future dividend policy
or stock price appreciation. Because changes in the subjective input
assumptions can materially affect the fair value estimate and because the
employee stock options have characteristics significantly different from those
of traded options, the use of the Black-Scholes option-pricing model may not
provide a reliable single measure of the employee stock options.
<PAGE>
7. STOCKHOLDERS' EQUITY -- continued
STOCK OPTIONS -- continued
The pro forma information follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------------------------
<S> <C> <C> <C>
Pro forma net income $ 127 $ 79 $ 382
Pro forma earnings per share: Basic $1.73 $0.67 $5.48
Diluted $1.72 $0.67 $5.15
</TABLE>
SHAREHOLDER RIGHTS PLAN
In November 1997, the Company adopted a new shareholder rights plan that
replaced an existing, similar plan that was adopted in 1987 and expired on
December 1, 1997, in accordance with its terms. Under the new plan, each share
of common stock has one right attached and the rights trade with the common
stock. The rights are exercisable only if a person or group buys 20% or more
of the Company's common stock, or announces a tender offer for 20% or more of
the outstanding common stock. Each right will entitle a holder to buy one-
hundredth of a share of the Company's Series A Junior Participating Preferred
Stock at an exercise price of $300.
If at any time after the rights become exercisable, the Company is acquired in
a merger, or if there is a sale or transfer of 50% or more of its assets or
earning power, each right would permit its holder to buy common stock of the
acquiring company having a market value equal to two times the exercise price
of the right. In addition, if a person or group acquires 25% or more of the
common stock of the Company, or if certain other events occur, each right would
permit its holder to buy common stock of the Company having a market value
equal to two times the exercise price of the right.
The rights, which do not have voting privileges, expire in 2007. The Board of
Directors may redeem the rights before expiration, under certain circumstances,
for $0.01 per right. Until the rights become exercisable, they have no effect
on earnings per share.
These rights should not interfere with a business combination approved by the
Board of Directors. However, they will cause substantial dilution to a person
or group that attempts to acquire the Company without conditioning the offer on
redemption of the rights or acquiring a substantial number of the rights.
<PAGE>
8. POSTRETIREMENT BENEFITS
PENSIONS
The Company has several noncontributory defined benefit pension plans that
cover substantially all employees. Plans covering salaried employees provide
pension benefits based on a formula. The formula considers length of service
and earnings during years of service. Plans covering hourly employees
generally provide a specific amount of benefits for each year of service.
Net pension costs were:
<TABLE>
<CAPTION>
1997 1996 1995
----------------------------
<S> <C> <C> <C>
Service cost $ 37 $ 38 $ 27
Interest cost 147 138 133
Actual return on plan assets -- gain (315) (212) (308)
Net amortization and deferrals 187 94 192
Other 10 14 12
----------------------------
Total $ 66 $ 72 $ 56
============================
</TABLE>
The following table sets forth information on the principal pension plans:
<TABLE>
<CAPTION>
December 31
-------------------
1997 1996
-------------------
<S> <C> <C>
Actuarial present value of pension benefit obligation:
Vested $1,780 $1,593
Nonvested 176 192
-------------------
Accumulated 1,956 $1,785
===================
Projected $2,081 $1,916
Plan assets at fair value 2,099 1,876
-------------------
Plan assets in excess of (less than) projected
benefit obligation 18 (40)
Items not yet recognized:
Unrecognized net loss 76 95
Unamortized plan change benefits 117 156
Recognition of minimum liability (6) (18)
-------------------
Net pension asset $ 205 193
===================
</TABLE>
Assumptions used in accounting for the principal pension plans were:
<TABLE>
<CAPTION>
1997 1996 1995
---------------------------
<S> <C> <C> <C>
Discount rate 7.25% 7.75% 7.25%
Approximate weighted-average rate of increase in
compensation levels (salaried plan only) 4.5% 4.5% 4.5%
Expected long-term rate of return on assets 9.25% 9.25% 9.25%
</TABLE>
<PAGE>
8. POSTRETIREMENT BENEFITS -- continued
PENSIONS -- continued
At December 31, 1997, the accumulated benefit obligations of substantially all
of the pension plans were over funded. In the future, the Company expects to
keep the plans fully funded absent significant plan changes and/or significant
deviations in actuarial assumptions. Absent these changes and/or deviations,
funding levels are expected to approximate pension costs in future years. Cash
for the contributions is expected to be generated from operations.
Contributions totaled $80 million in 1997, $87 million in 1996 and $127 million
(including 0.9 million shares of common stock of the Company valued at $45
million) in 1995.
<TABLE>
<CAPTION>
At December 31, 1997, the plans' assets consisted of the following:
<S> <C>
Corporate equity securities 63%
Corporate bonds 27
Government debt securities and cash equivalents 6
Real estate 4
</TABLE>
Corporate equity securities include 0.6 million shares of the Company's common
stock. These shares had a market value of $37 million at the end of 1997.
Dividends paid on the Company's common stock held by the plans during 1997
totaled $2 million.
OTHER POSTRETIREMENT BENEFITS
The Company provides most domestic retired employees with health care and life
insurance benefits. Substantially all domestic employees may become eligible
for these benefits if they work for the Company until retirement age. The cost
of these benefits is funded when actual expenses are incurred.
Net periodic postretirement benefit cost was:
<TABLE>
<CAPTION>
1997 1996 1995
----------------------------
<S> <C> <C> <C>
Service cost $ 7 $ 8 $ 6
Interest cost 64 62 74
Net amortization (18) (19) (19)
----------------------------
Total $ 53 $ 51 $ 61
============================
</TABLE>
The accumulated postretirement benefit obligation consists of the following:
<TABLE>
<CAPTION>
December 31
-------------------
1997 1996
-------------------
<S> <C> <C>
Retirees $ 664 $ 625
Active employees fully eligible 83 81
Active employees not fully eligible 152 146
Unamortized plan change benefits 109 145
Unrecognized net gain 31 75
-------------------
Total $1,039 $1,072
===================
</TABLE>
<PAGE>
8. POSTRETIREMENT BENEFITS -- continued
OTHER POSTRETIREMENT BENEFITS -- continued
The health care cost trend rate has a significant effect on the amounts
reported. The annual assumed rate of increase for the principal plans is 6%
for 1998 (6.5% in 1997 and 7% in 1996) and is assumed to decrease gradually to
5% for 2002 and beyond. Each 1% change in the rate would change the
accumulated postretirement benefit obligation by $52 million at December 31,
1997 and net periodic postretirement benefit cost for 1997 by $4 million.
The discount rate used in determining the accumulated postretirement benefit
obligation for the principal plans was 7.25% at December 31, 1997 (1996 -
7.75%).
9. TAXES ON INCOME
The significant components of the provision for income taxes were:
<TABLE>
<CAPTION>
1997 1996 1995
--------------------------
<S> <C> <C> <C>
Current:
Federal $ 13 $ 3 $ 10
Foreign 71 3 10
State 1 1 3
--------------------------
Total current 85 7 23
--------------------------
Deferred:
Federal (7) 2 66
Foreign 21 28 62
State (2) (2) -
--------------------------
Total deferred 12 28 128
--------------------------
Equity income 7 14 8
--------------------------
Total $104 $49 $159
==========================
</TABLE>
The deferred tax provision includes domestic carryforward benefits of $2
million (1996 - $28 million, 1995 - $9 million).
The effective income tax rate varied from the U.S. statutory rate as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------------------------
<S> <C> <C> <C>
U.S. rate 35% 35% 35%
Income taxed at other than the U.S. rate 9 2 (5)
Percentage depletion (2) (3) (1)
State income taxes and other 1 (2) -
------------------------
Effective rate 43% 32% 29%
========================
</TABLE>
Income taxed at other than the U.S. rate includes a 10% adverse effect in 1997
from basis differences on asset dispositions and a non-recurring foreign tax
benefit of 3% in 1995.
<PAGE>
9. TAXES ON INCOME -- continued
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. At December 31, 1997,
the Company had $897 million (1996 - $890 million) of deferred tax assets and
$827 million (1996 - $826 million) of deferred tax liabilities that have been
netted with respect to tax jurisdictions for presentation purposes. The
significant components of these amounts were:
<TABLE>
<CAPTION>
1997 1996
----------------------------------------
Asset Liability Asset Liability
----------------------------------------
<S> <C> <C> <C> <C>
Retiree health benefits $392 $ - $ 412 $ -
Tax carryforward benefits 170 - 225 -
Environmental and restructuring costs 109 (2) 110 (2)
Other 63 70 5 54
Tax over book depreciation (376) 201 (380) 210
Valuation reserve relating to tax
carryforward benefits (19) - (46) -
----------------------------------------
Total deferred tax assets and
liabilities 339 269 326 262
Amount included as current in
balance sheet 90 - 30 -
----------------------------------------
Noncurrent deferred tax assets
and liabilities $249 $269 $296 $262
========================================
</TABLE>
The tax carryforward benefits can be carried forward indefinitely except for
$65 million that will expire primarily between 2002 and 2012. A valuation
reserve of $19 million relating to certain of these benefits has been recorded.
Alternatives continue to be evaluated that may result in the ultimate
realization of a portion of these reserved assets. The reduction in the
valuation reserve had no effect on earnings in 1997 as it relates to deferred
tax assets of operations divested.
Income taxes have not been provided on the undistributed earnings ($932
million) of foreign subsidiaries. The Company intends to use these earnings to
finance foreign expansion, reduce foreign debt or support foreign operating
requirements.
The geographic components of income before income taxes and the cumulative
effects of accounting changes were as follows:
<TABLE>
<CAPTION>
1997 1996 1995
--------------------------
<S> <C> <C> <C>
Domestic $ 21 $ 4 $122
Foreign 219 149 426
--------------------------
$240 $153 $548
==========================
</TABLE>
10. COMPANY OPERATIONS
In 1997, the Financial Accounting Standards Board issued Statement No. 131,
"Disclosures about Segments of an Enterprise and Related Information." This
statement replaces Statement No. 14, "Financial Reporting for Segments of a
Business Enterprise," and establishes new standards for defining the Company's
segments and disclosing information about them. It requires that the segments
be based on the internal structure and reporting of the Company's operations.
Because of restructuring activities and the realignment of the Company into
four market-based, global business units during 1997, the Company has
determined that it is not practicable to present the new segment information
for the year 1995 because it is not available and the cost to develop it is
excessive. Therefore, the information for 1995 and also the comparative
information for 1996 has been prepared in accordance with Statement No. 14.
<PAGE>
10. COMPANY OPERATIONS -- continued
1997 and 1996
The Company is organized into four market-based, global business units. The
global business units and their principal products are as follows:
* Base Materials - alumina, carbon products, primary aluminum ingot and
billet, and electrical rod
* Packaging and Consumer- aluminum and plastic packaging and consumer products
* Construction and Distribution - architectural construction products and the
distribution of a wide variety of aluminum and stainless steel products
* Transportation - aluminum wheels, heat exchangers and automotive structures
The category "Restructuring" includes the results of operations that the
Company has already sold and those that were held for sale at December 31,
1997. See Note 2 for a discussion of the Company's restructuring activities.
The category "Other" consists of corporate headquarters (including corporate
selling, administrative and general expenses of $130 million in 1997 and $140
million in 1996), operations in emerging markets, and other operations.
ACCOUNTING POLICIES
Operating income for each global business unit is calculated as net sales plus
equity income less cost of products sold, depreciation and the unit's selling,
administrative and general expenses. The sales between units are made at
market-related prices. Cost of products sold reflect current costs.
Assets for each global business unit include:
* receivables (including internal receivables from other units)
* inventories (based on the FIFO method)
* property, plant and equipment (excluding construction in progress)
* investments in unincorporated joint ventures and associated companies
* other assets directly associated with the unit's operations
Current liabilities for each global business unit include:
* trade payables
* accrued compensation and related amounts
* other current liabilities
* internal liabilities from other units
For the geographic presentation, revenues are attributed to specific countries
based on the location of the operation generating the revenue. Long-lived
assets consist of all noncurrent assets such as property, plant and equipment
and investments in joint ventures and associated companies.
<PAGE>
10. COMPANY OPERATIONS -- continued
<PAGE>
<TABLE>
<CAPTION>
Packaging Construction Recon-
Base and and Transpor- Restruc- ciling Consoli-
1997 Materials Consumer Distribution tation turing Other Items dated
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Customer aluminum shipments 513 142 166 66 571 205 - 1,663
Customer net sales:
Aluminum $ 923 $ 797 $614 $353 $2,140 $ 599 $ - $5,426
Nonaluminum 405 602 328 - 72 48 - 1,455
Intersegment net sales - aluminum 1,187 - - - 33 493 (1,713) -
- --------------------------------------------------------------------------------------------------------------------------------
Total net sales $2,515 $1,399 $942 $353 $2,245 $1,140 $(1,713) $6,881
================================================================================================================================
Operating income (loss) $ 312 $ 141 $ 41 $ 10 $ 96 $ (120) $ (87) $ 393
Interest expense 153
- --------------------------------------------------------------------------------------------------------------------------------
Income before income taxes and
cumulative effect of accounting change $ 240
================================================================================================================================
Equity income (loss) $ (2) $ - $ - $ 1 $ 8 $ (12) $ - $ (5)
Depreciation and amortization 135 47 5 26 99 56 - 368
Assets $3,154 $ 663 $381 $331 $1,181 $2,099 $ (583) $7,226
Current liabilities 289 114 102 46 193 477 (228) 993
- --------------------------------------------------------------------------------------------------------------------------------
Net operating investment $2,865 $ 549 $279 $285 $ 988 $1,622 $ (355) $6,233
================================================================================================================================
Unincorporated joint ventures and
associated companies $1,177 $ - $ - $ 8 $ 172 $ 24 $ - $1,381
Capital expenditures 105 41 9 40 24 53 $ - 272
================================================================================================================================
1996
- --------------------------------------------------------------------------------------------------------------------------------
Customer aluminum shipments 458 136 151 58 651 199 - 1,653
Customer net sales:
Aluminum $ 763 $ 768 $600 $326 $2,355 $ 579 $ - $5,391
Nonaluminum 373 585 332 - 243 48 - 1,581
Intersegment net sales - aluminum 944 - - - 39 471 (1,454) -
- --------------------------------------------------------------------------------------------------------------------------------
Total net sales $2,080 $1,353 $932 $326 $2,637 $1,098 $(1,454) $6,972
================================================================================================================================
Operating income (loss) $ 242 $ 149 $ 45 $ 17 $ 30 $ (196) $ 26 $ 313
Interest expense 160
- --------------------------------------------------------------------------------------------------------------------------------
Income before income taxes and
cumulative effect of accounting change $ 153
================================================================================================================================
Equity income (loss) $ - $ - $ - $ 3 $ 20 $ (2) $ - $ 21
Depreciation and amortization 131 46 5 23 102 58 - 365
Assets $3,207 $ 635 $365 $304 $1,457 $2,086 $ (538) $7,516
Current liabilities 283 124 84 38 232 381 (219) 923
- --------------------------------------------------------------------------------------------------------------------------------
Net operating investment $2,924 $ 511 $281 $266 $1,225 $1,705 $ (319) $6,593
================================================================================================================================
Unincorporated joint ventures and
associated companies $1,187 $ - $ - $ 8 $ 107 $ 35 $ - $1,337
Capital expenditures 93 59 6 47 116 111 - 432
================================================================================================================================
</TABLE>
<PAGE>
<PAGE>
10. COMPANY OPERATIONS -- continued
RECONCILING ITEMS
Reconciling items consist of the following:
<TABLE>
<CAPTION>
1997 1996
-----------------------
<S> <C> <C>
Operating income (loss):
Inventory accounting adjustments $ (12) $ 63
Operational restructuring effects (75) (37)
-----------------------
$ (87) $ 26
=======================
Assets:
Inventory accounting adjustments $(547) $(530)
Construction in progress 155 207
Internal receivables included in the
assets of the global business units (191) (215)
-----------------------
$(583) $(538)
=======================
Current liabilities:
Internal liabilities included in the
current liabilities of the
global business units $(228) $(219)
=======================
</TABLE>
Inventory accounting adjustments include elimination of unrealized profits on
sales between global business units and LIFO inventory adjustments, including a
LIFO inventory liquidation of $30 million in 1996.
Research and development expenditures were $41 million in 1997 (1996 -- $49
million, 1995 -- $43 million).
<TABLE>
<CAPTION>
Geographic - 1997, 1996 and 1995
Domestic Canada Other Foreign Consolidated
==========================================================================
<S> <C> <C> <C> <C>
1997
Customer net sales $5,298 $ 519 $1,064 $6,881
Long-lived assets 2,582 1,321 1,080 4,983
- --------------------------------------------------------------------------
1996
Customer net sales $5,450 $ 509 $1,013 $6,972
Long-lived assets 2,810 1,402 1,136 5,348
==========================================================================
1995
Customer net sales $5,524 $ 529 $1,160 $7,213
Long-lived assets 2,800 1,432 1,118 5,350
==========================================================================
</TABLE>
<PAGE>
10. COMPANY OPERATIONS -- continued
1996 AND 1995
In 1996 and 1995, the Company separated its vertically integrated operations
into two groups referred to as "Finished Products and Other Sales", and
"Production and Processing". Summarized financial information relating to the
Company's operations and investments is as follows:
<TABLE>
<CAPTION>
Finished Production Elimi-
Products and and nations,
1996 Other Sales Processing etc. Consolidated
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales to customers $3,538 $3,434 $ - $6,972
Internal transfers 6 785 (791) -
- -------------------------------------------------------------------------------
Total sales $3,544 $4,219 $(791) $6,972
- -------------------------------------------------------------------------------
Operating income $ 185 $ 86 $ (2) $ 269
Equity income 19 9 (7) 21
Interest and other income 23
Interest expense (160)
----------
Income before income taxes
and cumulative effect of
accounting change $ 153
- -------------------------------------------------------------------------------
Depreciation and amortization $ 102 $ 263 $ - $ 365
Identifiable assets 1,546 3,966 (51) 5,461
Capital investments 131 301 - 432
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
1995
- -------------------------------------------------------------------------------
Sales to customers $3,535 $3,678 $ - $7,213
Internal transfers 9 809 (818) -
- -------------------------------------------------------------------------------
Total sales $3,544 $4,487 $(818) $7,213
- -------------------------------------------------------------------------------
Operating income $ 232 $ 492 $ (43) $ 681
Equity income 14 11 (8) 17
Interest and other income 22
Interest expense (172)
---------
Income before income taxes and
cumulative effect of
accounting change $ 548
- -------------------------------------------------------------------------------
Depreciation and amortization $ 99 $ 245 $ - $ 344
Identifiable assets 1,558 4,121 (83) 5,596
Capital investments 157 688 - 845
</TABLE>
Approximately 30% of products transferred between operating groups is reflected
at cost-related prices. The remaining transfers between operating areas and
transfers among Canada, other foreign and domestic areas are reflected at
market-related prices.
Operating profit is after allocation of selling, administrative and general
expenses. It does not reflect interest expense or other items of income or
expense considered to be general corporate in nature.
Investments in and advances to unincorporated joint ventures and associated
companies not consolidated totaled $1,337 million at the end of 1996 (1995 -
$1,286 million). These investments and advances relate principally to
Australian and Canadian entities in the Production and Processing group.
Corporate assets of $718 million at the end of 1996 (1995 - $858 million)
consist principally of cash, investments, deferred taxes and other assets.
<PAGE>
11. CONTINGENT LIABILITIES AND COMMITMENTS
LEGAL
Various suits, claims and actions are pending against the Company. In the
opinion of management, after consultation with legal counsel, disposition of
these suits, claims and actions, either individually or in the aggregate, will
not have a material adverse effect on the Company's competitive or financial
position or its ongoing results of operations. No assurance can be given,
however, that the disposition of one or more of such suits, claims or actions
in a particular reporting period will not be material in relation to the
reported results for such period.
UNCONDITIONAL PURCHASE OBLIGATIONS
The Company has committed to pay its proportionate share of annual primary
aluminum production charges (including debt service) relating to its interests
in an unincorporated joint venture and an associated company. These
arrangements include minimum commitments of $45 million in 1998 and $38 million
in 1999. The present value of these commitments at December 31, 1997 was $77
million, after excluding interest of $6 million. The Company purchased
approximately $152 million of primary aluminum in each of the last three years
under these arrangements.
LEASES
Certain items of property, plant and equipment are leased under long-term
operating leases. Lease expense was approximately $48 million per year for the
years 1995 to 1997. Lease commitments at December 31, 1997, were approximately
$70 million. Leases covering major items contain renewal and/or purchase
options that may be exercised.
ENVIRONMENTAL
The Company is involved in various worldwide environmental improvement
activities resulting from past operations, including designation as a
potentially responsible party (PRP), with others, at various Environmental
Protection Agency-designated Superfund sites. Amounts have been recorded (on
an undiscounted basis) which, in management's best estimate, will be sufficient
to satisfy anticipated costs of known remediation requirements. At December
31, 1997, the accrual for environmental remediation costs was $171 million
($197 million at December 31, 1996). This amount is expected to be spent over
the next 15 to 20 years with the majority to be spent by the year 2002.
Estimated environmental remediation costs are developed after considering,
among other things, the following:
* currently available technological solutions
* alternative cleanup methods
* risk-based assessments of the contamination
* estimated proportionate share of remediation costs (if applicable)
The Company may also use external consultants, and consider, when available,
estimates by other PRPs and governmental agencies and information regarding the
financial viability of other PRPs. Based on information currently available,
the Company believes it is unlikely that it will incur substantial additional
costs as a result of failure by other PRPs to satisfy their responsibilities
for remediation costs.
Estimated costs for future environmental compliance and remediation are
necessarily imprecise because of factors such as:
* continuing evolution of environmental laws and regulatory requirements
* availability and application of technology
* identification of presently unknown remediation requirements
* cost allocations among PRPs
Further, it is not possible to predict the amount or timing of future costs of
environmental remediation that may subsequently be determined. Based on
information presently available, such future costs are not expected to have a
material adverse effect on the Company's competitive or financial position or
its ongoing results of operations. However, such costs could be material to
results of operations in a future interim or annual reporting period.
<PAGE>
12. CANADIAN REYNOLDS METALS COMPANY, LTD. AND REYNOLDS ALUMINUM COMPANY OF
CANADA, LTD.
Financial statements for Canadian Reynolds Metals Company, Ltd. and Reynolds
Aluminum Company of Canada, Ltd. have been omitted because certain securities
registered under the Securities Act of 1933, of which these entities are
obligors (thus subjecting them to reporting requirements under Section 13 or
15(d) of the Securities Exchange Act of 1934), are fully and unconditionally
guaranteed by Reynolds Metals Company. Financial information relating to these
companies is presented herein in accordance with Staff Accounting Bulletin 53
as an addition to the notes to the financial statements of Reynolds Metals
Company. Summarized financial information is as follows:
<TABLE>
<CAPTION>
Canadian Reynolds Metals Company, Ltd.
Years ended December 31
------------------------------
1997 1996 1995
------------------------------
<S> <C> <C> <C>
Net Sales:
Customers $ 237 $ 202 $ 226
Parent company 680 599 690
------------------------------
917 801 916
Cost of products sold 733 677 651
Net income (loss) $ 117 $ 65 $ 176
<CAPTION>
December 31
-------------------
1997 1996
-------------------
<S> <C> <C>
Current assets $ 179 $ 189
Noncurrent assets 1,206 1,225
Current liabilities (148) (50)
Noncurrent liabilities (415) (624)
<CAPTION>
Reynolds Aluminum Company of Canada, Ltd.
Years ended December 31
------------------------------
1997 1996 1995
------------------------------
<S> <C> <C> <C>
Net Sales:
Customers $ 519 $ 509 $ 522
Parent company 648 517 619
------------------------------
1,167 1,026 1,141
Cost of products sold 956 884 849
Net income (loss) $ 117 $ 59 $ 188
<CAPTION>
December 31
-------------------
1997 1996
-------------------
Current assets $ 208 $ 240
Noncurrent assets 1,276 1,370
Current liabilities (111) (95)
Noncurrent liabilities (445) (656)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Quarterly Results of Operations (Unaudited)
(millions, except per share amounts)
1997
- ------------------------------------------------------------------------------
Quarter 1st 2nd 3rd 4th
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $1,615 $1,783 $1,716 $1,767
Gross profit<F1> 165 231 217 255
Net income (loss) $ 43 $ 55 $ 55 $ (17)
==============================================================================
Earnings per share
Basic:
Average shares outstanding 73 73 74 74
- ------------------------------------------------------------------------------
Net income (loss) $ 0.59 $ 0.76 $ 0.74 $(0.23)
- ------------------------------------------------------------------------------
Diluted:
Average shares outstanding 73 74 75 74
- ------------------------------------------------------------------------------
Net income (loss) $ 0.59 $ 0.75 $ 0.73 $(0.23)
==============================================================================
Net income (loss) includes the
effect of the following item:
Operational restructuring
effects - net<F2> $ 23 $ (4) $ - $ (97)
- ------------------------------------------------------------------------------
<CAPTION>
1996
- ------------------------------------------------------------------------------
Quarter 1st 2nd 3rd 4th
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $1,662 $1,823 $1,751 $1,736
Gross profit<F1> 205 227 180 151
Income before cumulative effect of
accounting change 17 60 26 1
Cumulative effect of accounting change (15) - - -
- ------------------------------------------------------------------------------
Net income $ 2 $ 60 $ 26 $ 1
==============================================================================
Earnings per share
Basic:
Average shares outstanding 64 64 64 64
Income (loss) before cumulative
effect of accounting change $ 0.12 $ 0.81 $ 0.26 $(0.13)
Cumulative effect of accounting change (0.24) - - -
- ------------------------------------------------------------------------------
Net income (loss) $(0.12) $ 0.81 $ 0.26 $(0.13)
- ------------------------------------------------------------------------------
Diluted:
Average shares outstanding 64 75 64 64
Income (loss) before cumulative
effect of accounting change $ 0.12 $ 0.80 $ 0.26 $(0.13)
Cumulative effect of accounting change (0.24) - - -
- ------------------------------------------------------------------------------
Net income (loss) $(0.12) $ 0.80 $ 0.26 $(0.13)
==============================================================================
Net income (loss) includes the effect
of the following items:
Operational restructuring
effects - net<F2> $ (23) $ - $ - $ -
LIFO inventory liquidations - 3 6 10
- ------------------------------------------------------------------------------
<FN>
<F1> Gross profit equals net sales minus cost of products sold (including
manufacturing depreciation and amortization).
<F2> Operational restructuring effects are shown net of gains on sales of
assets.
</FN>
</TABLE>
<PAGE>
<TABLE>
Quarterly Results of Operations for Global Business Units (Unaudited)
(Shipments in thousands of metric tons, dollars in millions)
<CAPTION>
Base Materials 1997
- -------------- =============================================
1st 2nd 3rd 4th Total
---------------------------------------------
<S> <C> <C> <C> <C> <C>
Aluminum shipments:
Customer 102 121 144 146 513
Internal 185 194 166 139 684
---------------------------------------------
Total 287 315 310 285 1,197
---------------------------------------------
Net sales:
Customer -- aluminum $179 $220 $262 $262 $ 923
-- nonaluminum 112 87 82 124 405
Internal -- aluminum 311 342 290 244 1,187
---------------------------------------------
Total $602 $649 $634 $630 $2,515
---------------------------------------------
Operating income $ 66 $ 76 $ 68 $102 $ 312
=============================================
<CAPTION>
1996
=============================================
1st 2nd 3rd 4th Total
---------------------------------------------
<S> <C> <C> <C> <C> <C>
Aluminum shipments:
Customer 101 118 125 114 458
Internal 158 138 138 143 577
---------------------------------------------
Total 259 256 263 257 1,035
---------------------------------------------
Net sales:
Customer -- aluminum $179 $204 $202 $178 $ 763
-- nonaluminum 91 92 101 89 373
Internal -- aluminum 273 233 218 220 944
---------------------------------------------
Total $543 $529 $521 $487 $2,080
---------------------------------------------
Operating income $ 89 $ 70 $ 51 $ 32 $ 242
=============================================
=============================================================================
<CAPTION>
Packaging and Consumer 1997
- ---------------------- =============================================
1st 2nd 3rd 4th Total
---------------------------------------------
<S> <C> <C> <C> <C> <C>
Customer aluminum shipments 31 36 33 42 142
Net sales:
Customer -- aluminum $170 $201 $194 $232 $ 797
-- nonaluminum 134 145 152 171 602
---------------------------------------------
Total $304 $346 $346 $403 $1,399
---------------------------------------------
Operating income $ 21 $ 34 $ 33 $ 53 $ 141
=============================================
<CAPTION>
1996
=============================================
1st 2nd 3rd 4th Total
---------------------------------------------
<S> <C> <C> <C> <C> <C>
Customer aluminum shipments 29 35 32 40 136
Net sales:
Customer -- aluminum $170 $197 $183 $218 $ 768
-- nonaluminum 128 139 146 172 585
---------------------------------------------
Total $298 $336 $329 $390 $1,353
---------------------------------------------
Operating income $ 18 $ 39 $ 36 $ 56 $ 149
=============================================
</TABLE>
<PAGE>
<TABLE>
Quarterly Results of Operations for Global Business Units (Unaudited)
(Shipments in thousands of metric tons, dollars in millions)
<CAPTION>
Construction and Distribution 1997
- ----------------------------- =============================================
1st 2nd 3rd 4th Total
---------------------------------------------
<S> <C> <C> <C> <C> <C>
Customer aluminum shipments 40 42 42 42 166
Net sales:
Customer -- aluminum $144 $155 $158 $157 $614
-- nonaluminum 83 85 83 77 328
---------------------------------------------
Total $227 $240 $241 $234 $942
---------------------------------------------
Operating income $ 8 $ 14 $ 12 $ 7 $ 41
=============================================
<CAPTION>
1996
=============================================
1st 2nd 3rd 4th Total
---------------------------------------------
<S> <C> <C> <C> <C> <C>
Customer aluminum shipments 36 38 39 38 151
Net sales:
Customer -- aluminum $145 $150 $154 $151 $600
-- nonaluminum 91 87 79 75 332
---------------------------------------------
Total $236 $237 $233 $226 $932
---------------------------------------------
Operating income $ 9 $ 11 $ 13 $ 12 $ 45
=============================================
=============================================================================
<CAPTION>
Transportation 1997
- -------------- =============================================
1st 2nd 3rd 4th Total
---------------------------------------------
<S> <C> <C> <C> <C> <C>
Customer aluminum shipments 17 17 15 17 66
Customer net sales $ 89 $ 95 $ 78 $ 91 $353
Operating income (loss) 4 7 - (1) 10
=============================================
<CAPTION>
1996
=============================================
1st 2nd 3rd 4th Total
---------------------------------------------
<S> <C> <C> <C> <C> <C>
Customer aluminum shipments 13 15 14 16 58
Customer net sales $ 75 $ 86 $ 80 $ 85 $326
Operating income 5 5 3 4 17
=============================================
</TABLE>
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Stockholders and Board of Directors
Reynolds Metals Company
We have audited the accompanying consolidated balance sheets of Reynolds Metals
Company as of December 31, 1997 and 1996, and the related consolidated
statements of income, changes in stockholders' equity, and cash flows for each
of the three years in the period ended December 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Reynolds Metals
Company at December 31, 1997 and 1996, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1997, in conformity with generally accepted accounting principles.
As discussed in Note 1 to the consolidated financial statements, in 1996 the
Company adopted Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of."
/s/ Ernst & Young LLP
Richmond, Virginia
February 20, 1998
<PAGE>
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
For information concerning the directors and nominees for directorship, see the
information under the caption "Item 1. Election of Directors" in the
Registrant's Proxy Statement for the Annual Meeting of Stockholders to be held
on May 14, 1998. That information is incorporated in this report by reference.
Information concerning executive officers of the Registrant is shown in Part
I - Item 4A of this report.
Item 11. EXECUTIVE COMPENSATION
For information required by this item, see the information under the captions
"Item 1. Election of Directors - Board Compensation and Benefits", "Item 1.
Election of Directors - Other Compensation", and "Executive Compensation" in
the Registrant's Proxy Statement for the Annual Meeting of Stockholders to be
held on May 14, 1998. That information is incorporated in this report by
reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
For information required by this item, see the information under the caption
"Beneficial Ownership of Securities" in the Registrant's Proxy Statement for
the Annual Meeting of Stockholders to be held on May 14, 1998. That
information (other than that appearing under the caption "Beneficial Ownership
of Securities - Stock Ownership Guidelines") is incorporated in this report by
reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
For information required by this item, see the information under the captions
"Item 1. Election of Directors - Certain Relationships", "Item 1. Election of
Directors - Other Compensation", "Executive Compensation - Pension Plan Table"
and "Executive Compensation - Certain Arrangements" in the Registrant's Proxy
Statement for the Annual Meeting of Stockholders to be held on May 14, 1998.
That information is incorporated in this report by reference.
<PAGE>
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The consolidated financial statements and exhibits listed below are filed
as a part of this report.
<TABLE>
<CAPTION>
(1) Consolidated Financial Statements: Page
----
<S> <C>
Consolidated statement of income -
Years ended December 31, 1997, 1996 and 1995. 40
Consolidated balance sheet - December 31, 1997 and 1996. 41
Consolidated statement of cash flows -
Years ended December 31, 1997, 1996 and 1995. 42
Consolidated statement of changes in stockholders' equity -
Years ended December 31, 1997, 1996 and 1995. 43
Notes to consolidated financial statements. 44
Report of Ernst & Young LLP, Independent Auditors. 67
</TABLE>
(2) Financial Statement Schedules
This report omits all schedules for which provision is made in the
applicable accounting regulations of the Securities and Exchange
Commission because they are not required, are inapplicable or the
required information has otherwise been given.
This report omits individual financial statements of Reynolds Metals
Company because the restricted net assets (as defined in Accounting
Series Release 302) of all subsidiaries included in the consolidated
financial statements filed, in the aggregate, do not exceed 25% of
the consolidated net assets shown in the consolidated balance sheet
as of December 31, 1997.
This report omits financial statements of all associated companies
(20% to 50% owned) because no associated company is individually
significant.
(3) Exhibits
EXHIBIT 2 - None.
EXHIBIT 3.1 - Restated Certificate of Incorporation, as
amended.
EXHIBIT 3.2 - By-laws, as amended.
EXHIBIT 4.1 - Restated Certificate of Incorporation. See
EXHIBIT 3.1.
EXHIBIT 4.2 - By-Laws. See EXHIBIT 3.2.
<F1> EXHIBIT 4.3 - Indenture dated as of April 1, 1989 (the
"Indenture") between Reynolds Metals Company and
The Bank of New York, as Trustee, relating to
Debt Securities. (File No. 1-1430, Form 10-Q
Report for the Quarter Ended March 31, 1989,
EXHIBIT 4(c))
[FN]
_______________________
<F1> Incorporated by reference.
</FN>
<PAGE>
<F1> EXHIBIT 4.4 - Amendment No. 1 dated as of November 1, 1991 to
the Indenture. (File No. 1-1430, 1991 Form 10-K
Report, EXHIBIT 4.4)
<F1> EXHIBIT 4.5 - Rights Agreement dated as of December 1, 1997
(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 December 1, 1997, pertaining to
Preferred Stock Purchase Rights, EXHIBIT 1)
<F1> EXHIBIT 4.6 - Form of 9-3/8% Debenture due June 15, 1999.
(File No. 1-1430, Form 8-K Report dated June 6,
1989, EXHIBIT 4)
<F1> EXHIBIT 4.7 - Form of Fixed Rate Medium-Term Note.
(Registration Statement No. 33-30882 on Form
S-3, dated August 31, 1989, EXHIBIT 4.3)
<F1> EXHIBIT 4.8 - Form of Floating Rate Medium-Term Note.
(Registration Statement No. 33-30882 on Form
S-3, dated August 31, 1989, EXHIBIT 4.4)
<F1> EXHIBIT 4.9 - Form of Book-Entry Fixed Rate Medium-Term Note.
(File No. 1-1430, 1991 Form 10-K Report, EXHIBIT
4.15)
<F1> EXHIBIT 4.10 - Form of Book-Entry Floating Rate Medium-Term
Note. (File No. 1-1430, 1991 Form 10-K Report,
EXHIBIT 4.16)
<F1> EXHIBIT 4.11 - Form of 9% Debenture due August 15, 2003. (File
No. 1-1430, Form 8-K Report dated August 16,
1991, Exhibit 4(a))
<F1> EXHIBIT 4.12 - Articles of Continuance of Societe d'Aluminium
Reynolds du Canada, Ltee/Reynolds Aluminum
Company of Canada, Ltd. (formerly known as
Canadian Reynolds Metals Company, Limited --
Societe Canadienne de Metaux Reynolds, Limitee)
("RACC"), as amended. (File No. 1-1430, 1995
Form 10-K Report, EXHIBIT 4.13)
<F1> EXHIBIT 4.13 - By-Laws of RACC, as amended. (File No. 1-1430,
Form 10-Q Report for the Quarter Ended March 31,
1997, EXHIBIT 4.14)
<F1> EXHIBIT 4.14 - Articles of Incorporation of Societe Canadienne
de Metaux Reynolds, Ltee/Canadian Reynolds
Metals Company, Ltd. ("CRM"), as amended. (File
No. 1-1430, Form 10-Q Report for the Quarter
Ended September 30, 1997, EXHIBIT 4.15)
<F1> EXHIBIT 4.15 - By-Laws of CRM, as amended. (File No. 1-1430,
Form 10-Q Report for the Quarter Ended September
30, 1997, EXHIBIT 4.16)
<F1> EXHIBIT 4.16 - Indenture dated as of April 1, 1993 among RACC,
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))
[FN]
_______________________
<F1> Incorporated by reference.
</FN>
<PAGE>
<F1> EXHIBIT 4.17 - First Supplemental Indenture, dated as of
December 18, 1995 among RACC, Reynolds Metals
Company, CRM and The Bank of New York, as
Trustee. (File No. 1-1430, 1995 Form 10-K
Report, EXHIBIT 4.18)
<F1> EXHIBIT 4.18 - Form of 6-5/8% Guaranteed Amortizing Note due
July 15, 2002. (File No. 1-1430, Form 8-K
Report dated July 14, 1993, EXHIBIT 4(d))
EXHIBIT 9 - None.
<F1><F2> EXHIBIT 10.1 - Reynolds Metals Company 1987 Nonqualified Stock
Option Plan. (Registration Statement No.
33-13822 on Form S-8, dated April 28, 1987,
EXHIBIT 28.1)
<F1><F2> EXHIBIT 10.2 - Reynolds Metals Company 1992 Nonqualified Stock
Option Plan. (Registration Statement No.
33-44400 on Form S-8, dated December 9, 1991,
EXHIBIT 28.1)
<F1><F2> EXHIBIT 10.3 - Reynolds Metals Company Performance Incentive
Plan, as amended and restated effective January
1, 1996. (File No. 1-1430, Form 10-Q Report for
the Quarter Ended March 31, 1995, EXHIBIT 10.4)
<F1><F2> EXHIBIT 10.4 - Agreement dated December 9, 1987 between
Reynolds Metals Company and Jeremiah J. Sheehan.
(File No. 1-1430, 1987 Form 10-K Report, EXHIBIT
10.9)
<F1><F2> EXHIBIT 10.5 - Supplemental Death Benefit Plan for Officers.
(File No. 1-1430, 1986 Form 10-K Report, EXHIBIT
10.8)
<F1><F2> EXHIBIT 10.6 - Financial Counseling Assistance Plan for
Officers. (File No. 1-1430, 1987 Form 10-K
Report, EXHIBIT 10.11)
<F1><F2> EXHIBIT 10.7 - Management Incentive Deferral Plan. (File No.
1-1430, 1987 Form 10-K Report, EXHIBIT 10.12)
<F1><F2> EXHIBIT 10.8 - Deferred Compensation Plan for Outside Directors
as Amended and Restated Effective December 1,
1993. (File No. 1-1430, 1993 Form 10-K Report,
EXHIBIT 10.12)
<F1><F2> EXHIBIT 10.9 - Form of Indemnification Agreement for Directors
and Officers. (File No. 1-1430, Form 8-K Report
dated April 29, 1987, EXHIBIT 28.3)
[FN]
____________________________
<F1> Incorporated by reference.
<F2> Management contract or compensatory plan or arrangement required to be
filed as an exhibit pursuant to Item 601 of Regulation S-K.
</FN>
<PAGE>
<F2> EXHIBIT 10.10 - Form of Executive Severance Agreement as amended
between Reynolds Metals Company and key
executive personnel, including each of the
individuals listed in Item 4A of this report.
<F1><F2> EXHIBIT 10.11 - Amendment to Reynolds Metals Company 1987
Nonqualified Stock Option Plan effective May 20,
1988. (File No. 1-1430, Form 10-Q Report for
the Quarter Ended June 30, 1988, EXHIBIT 19(a))
<F1><F2> EXHIBIT 10.12 - Amendment to Reynolds Metals Company 1987
Nonqualified Stock Option Plan effective October
21, 1988. (File No. 1-1430, Form 10-Q Report
for the Quarter Ended September 30, 1988,
EXHIBIT 19(a))
<F1><F2> EXHIBIT 10.13 - Amendment to Reynolds Metals Company 1987
Nonqualified Stock Option Plan effective January
1, 1987. (File No. 1-1430, 1988 Form 10-K
Report, EXHIBIT 10.22)
<F1><F2> EXHIBIT 10.14 - Form of Stock Option and Stock Appreciation
Right Agreement, as approved February 16, 1990
by the Compensation Committee of the Company's
Board of Directors. (File No. 1-1430, 1989 Form
10-K Report, EXHIBIT 10.24)
<F1><F2> EXHIBIT 10.15 - Amendment to Reynolds Metals Company 1987
Nonqualified Stock Option Plan effective January
18, 1991. (File No. 1-1430, 1990 Form 10-K
Report, EXHIBIT 10.26)
<F1><F2> EXHIBIT 10.16 - Form of Stock Option Agreement, as approved
April 22, 1992 by the Compensation Committee of
the Company's Board of Directors. (File No.
1-1430, Form 10-Q Report for the Quarter Ended
March 31, 1992, EXHIBIT 28(a))
<F1><F2> EXHIBIT 10.17 - Reynolds Metals Company Restricted Stock Plan
for Outside Directors. (Registration Statement
No. 33-53851 on Form S-8, dated May 27, 1994,
EXHIBIT 4.6)
<F1><F2> EXHIBIT 10.18 - Reynolds Metals Company New Management Incentive
Deferral Plan. (File No. 1-1430, Form 10-Q
Report for the Quarter Ended June 30, 1994,
EXHIBIT 10.30)
<F1><F2> EXHIBIT 10.19 - Reynolds Metals Company Salary Deferral Plan for
Executives. (File No. 1-1430, Form 10-Q Report
for the Quarter Ended June 30, 1994, EXHIBIT
10.31)
<F1><F2> EXHIBIT 10.20 - Reynolds Metals Company Supplemental Long Term
Disability Plan for Executives. (File No.
1-1430, Form 10-Q Report for the Quarter Ended
June 30, 1994, EXHIBIT 10.32)
[FN]
____________________________
<F1> Incorporated by reference.
<F2> Management contract or compensatory plan or arrangement required to be
filed as an exhibit pursuant to Item 601 of Regulation S-K.
</FN>
<PAGE>
<F1><F2> EXHIBIT 10.21 - Amendment to Reynolds Metals Company 1987
Nonqualified Stock Option Plan effective August
19, 1994. (File No. 1-1430, Form 10-Q Report
for the Quarter Ended September 30, 1994,
EXHIBIT 10.34)
<F1><F2> EXHIBIT 10.22 - Amendment to Reynolds Metals Company 1992
Nonqualified Stock Option Plan effective August
19, 1994. (File No. 1-1430, Form 10-Q Report
for the Quarter Ended September 30, 1994,
EXHIBIT 10.35)
<F1><F2> EXHIBIT 10.23 - Amendment to Reynolds Metals Company New
Management Incentive Deferral Plan effective
January 1, 1995. (File No. 1-1430, 1994 Form
10-K Report, EXHIBIT 10.36)
<F1><F2> EXHIBIT 10.24 - Form of Split Dollar Life Insurance Agreement
(Trustee Owner, Trustee Pays Premiums). (File
No. 1-1430, Form 10-Q Report for the Quarter
Ended June 30, 1995, EXHIBIT 10.34)
<F1><F2> EXHIBIT 10.25 - Form of Split Dollar Life Insurance Agreement
(Trustee Owner, Employee Pays Premium). (File
No. 1-1430, Form 10-Q Report for the Quarter
Ended June 30, 1995, EXHIBIT 10.35)
<F1><F2> EXHIBIT 10.26 - Form of Split Dollar Life Insurance Agreement
(Employee Owner, Employee Pays Premium). (File
No. 1-1430, Form 10-Q Report for the Quarter
Ended June 30, 1995, EXHIBIT 10.36)
<F1><F2> EXHIBIT 10.27 - Form of Split Dollar Life Insurance Agreement
(Third Party Owner, Third Party Pays Premiums).
(File No. 1-1430, Form 10-Q Report for the
Quarter Ended June 30, 1995, EXHIBIT 10.37)
<F1><F2> EXHIBIT 10.28 - Form of Split Dollar Life Insurance Agreement
(Third Party Owner, Employee Pays Premiums).
(File No. 1-1430, Form 10-Q Report for the
Quarter Ended June 30, 1995, EXHIBIT 10.38)
<F1><F2> EXHIBIT 10.29 - Reynolds Metals Company 1996 Nonqualified Stock
Option Plan. (Registration Statement No.
333-03947 on Form S-8, dated May 17, 1996,
EXHIBIT 4.6)
<F1><F2> EXHIBIT 10.30 - Amendment to Reynolds Metals Company 1992
Nonqualified Stock Option Plan effective January
1, 1993. (Registration Statement No. 333-03947
on Form S-8, dated May 17, 1996, EXHIBIT 99)
<F1><F2> EXHIBIT 10.31 - Form of Stock Option Agreement, as approved May
17, 1996 by the Compensation Committee of the
Company's Board of Directors. (File No. 1-1430,
Form 10-Q Report for the Quarter Ended June 30,
1996, EXHIBIT 10.41)
[FN]
____________________________
<F1> Incorporated by reference.
<F2> Management contract or compensatory plan or arrangement required to be
filed as an exhibit pursuant to Item 601 of Regulation S-K.
</FN>
<PAGE>
<F1><F2> EXHIBIT 10.32 - Form of Three Party Stock Option Agreement, as
approved May 17, 1996 by the Compensation
Committee of the Company's Board of Directors.
(File No. 1-1430, Form 10-Q Report for the
Quarter Ended June 30, 1996, EXHIBIT 10.42)
<F1><F2> EXHIBIT 10.33 - Stock Option Agreement dated August 30, 1996
between Reynolds Metals Company and Jeremiah J.
Sheehan. (File No. 1-1430, Form 10-Q Report for
the Quarter Ended September 30, 1996, EXHIBIT
10.43)
<F1><F2> EXHIBIT 10.34 - Amendment to Deferred Compensation Plan for
Outside Directors effective August 15, 1996.
(File No. 1-1430, Form 10-Q Report for the
Quarter Ended September 30, 1996, EXHIBIT 10.44)
<F1><F2> EXHIBIT 10.35 - Amendment to Reynolds Metals Company New
Management Incentive Deferral Plan effective
January 1, 1996. (File No. 1-1430, 1996 Form
10-K Report, EXHIBIT 10.38)
<F1><F2> EXHIBIT 10.36 - Amendment to Reynolds Metals Company Performance
Incentive Plan effective January 1, 1996. (File
No. 1-1430, 1996 Form 10-K Report, EXHIBIT
10.39)
<F1><F2> EXHIBIT 10.37 - Reynolds Metals Company Supplemental Incentive
Plan. (File No. 1-1430, 1996 Form 10-K Report,
EXHIBIT 10.40)
<F1><F2> EXHIBIT 10.38 - Reynolds Metals Company Stock Plan for Outside
Directors. (File No. 1-1430, 1996 Form 10-K
Report, EXHIBIT 10.41)
<F1><F2> EXHIBIT 10.39 - Special Executive Severance Package for Certain
Employees who Terminate Employment between
January 1, 1997 and June 30, 1998, as approved
by the Compensation Committee of the Company's
Board of Directors on January 17, 1997. (File
No. 1-1430, 1996 Form 10-K Report, EXHIBIT
10.42)
<F1><F2> EXHIBIT 10.40 - Special Award Program for Certain Executives or
Key Employees, as approved by the Compensation
Committee of the Company's Board of Directors on
January 17, 1997. (File No. 1-1430, 1996 Form
10-K Report, EXHIBIT 10.43)
<F2> EXHIBIT 10.41 - Amendment to Reynolds Metals Company 1996
Nonqualified Stock Option Plan effective
December 1, 1997.
<F2> EXHIBIT 10.42 - Amendment to Reynolds Metals Company Restricted
Stock Plan for Outside Directors effective
December 1, 1997.
EXHIBIT 11 - Omitted; see Item 8 for computation of earnings
per share
EXHIBIT 12 - Not applicable
EXHIBIT 13 - Not applicable
[FN]
____________________________
<F1> Incorporated by reference.
<F2> Management contract or compensatory plan or arrangement required to be
filed as an exhibit pursuant to Item 601 of Regulation S-K.
</FN>
<PAGE>
EXHIBIT 16 - Not applicable
EXHIBIT 18 - None
EXHIBIT 21 - List of Subsidiaries of Reynolds Metals Company
EXHIBIT 22 - None
EXHIBIT 23 - Consent of Independent Auditors
EXHIBIT 24 - Powers of Attorney
EXHIBIT 27 - Financial Data Schedule
Pursuant to Item 601 of Regulation S-K, certain instruments with respect
to long-term debt of the Company are omitted because such debt does not
exceed 10 percent of the total assets of the Company and its subsidiaries
on a consolidated basis. The Company agrees to furnish a copy of any such
instrument to the Commission upon request.
(b) Reports on Form 8-K
During the fourth quarter of 1997, the Registrant filed three Current
Reports on Form 8-K with the Commission. The Registrant reported on the
Form 8-K dated December 15, 1997 that (i) it had determined to keep and
grow its packaging and consumer products business, (ii) it was discussing
a potential agreement with Ball Corporation for the sale of substantially
all of Reynolds' global can business, and (iii) if the sale of the can
business is completed, the Registrant expects to apply a substantial
portion of the proceeds to a stock repurchase program. The Registrant
reported on the Form 8-K dated December 29, 1997 that the U.S. Justice
Department had filed suit to block the proposed sale of the Registrant's
Alloys complex in North Alabama to Alcoa. The Registrant reported on the
Form 8-K dated December 30, 1997, that Alcoa had withdrawn from the Alloys
complex transaction. All of the foregoing matters were reported under
Item 5.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
REYNOLDS METALS COMPANY
By /s/ Jeremiah J. Sheehan
----------------------------------
Jeremiah J. Sheehan, Chairman of
the Board and Chief Executive Officer
Date March 25, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
By /s/ Henry S. Savedge, Jr. By /s/ Jeremiah J. Sheehan
----------------------------------- ---------------------------------
Henry S. Savedge, Jr., Director Jeremiah J. Sheehan, Director
Executive Vice President and Chairman of the Board and
Chief Financial Officer Chief Executive Officer
(Principal Financial Officer) (Principal Executive Officer)
Date March 27, 1998 Date March 27, 1998
By <F1>Patricia C. Barron By <F1>John R. Hall
----------------------------------- ---------------------------------
Patricia C. Barron, Director John R. Hall, Director
Date March 27, 1998 Date March 27, 1998
By <F1>Robert L. Hintz By <F1>William H. Joyce
----------------------------------- ---------------------------------
Robert L. Hintz, Director William H. Joyce, Director
Date March 27, 1998 Date March 27, 1998
By <F1>Mylle Bell Mangum By <F1>D. Larry Moore
----------------------------------- ---------------------------------
Mylle Bell Mangum, Director D. Larry Moore, Director
Date March 27, 1998 Date March 27, 1998
<PAGE>
By /s/ Randolph N. Reynolds By <F1>James M. Ringler
----------------------------------- ---------------------------------
Randolph N. Reynolds, Director James M. Ringler, Director
Date March 27, 1998 Date March 27, 1998
By <F1>Samuel C. Scott, III By <F1>Joe B. Wyatt
----------------------------------- ---------------------------------
Samuel C. Scott, III, Director Joe B. Wyatt, Director
Date March 27, 1998 Date March 27, 1998
By /s/ Allen M. Earehart
----------------------------------
Allen M. Earehart,
Vice President, Controller
(Principal Accounting Officer)
Date March 27, 1998
[FN]
<F1> By /s/ D. Michael Jones
_____________________________________
D. Michael Jones, Attorney-in-Fact
Date March 27, 1998
</FN>
EXHIBIT 3.1
RESTATED
CERTIFICATE OF INCORPORATION
of
REYNOLDS METALS COMPANY
___________
INTRODUCTION
This Restated Certificate of Incorporation has been duly adopted by
the Board of Directors of Reynolds Metals Company in accordance with
Section 245 of the General Corporation Law of the State of Delaware. It
only restates and integrates, and does not further amend, the provisions of
the corporation's Certificate of Incorporation as heretofore amended or
supplemented, and there is no discrepancy between those provisions and this
Restated Certificate of Incorporation. The corporation's original
Certificate of Incorporation was filed with the Delaware Secretary of State
on July 18, 1928.
ARTICLE I
The name of the corporation is
REYNOLDS METALS COMPANY
ARTICLE II
Its registered office in the State of Delaware is located at 1013
Centre Road, in the City of Wilmington, County of New Castle, Delaware.
The name and address of its registered agent is CORPORATION SERVICE
COMPANY, a corporation of the State of Delaware, located at 1013 Centre
Road, Wilmington, New Castle County, Delaware.
ARTICLE III
The nature of the business and the objects and purposes proposed to
be transacted, promoted or carried on are:
1. To manufacture, purchase, or otherwise acquire, hold, own,
mortgage, pledge, sell, lease, assign and transfer, or otherwise dispose
of, to invest, trade, deal in and deal with, goods, wares and merchandise
and real and personal property of every class and description.
<PAGE>
2. To erect, or cause to be erected, on any lands owned, held, and
occupied by the corporation, buildings or other structures with their
appurtenances and to rebuild, enlarge, alter, or improve any buildings or
other structures now, or hereafter erected, on any lands so owned, held, or
occupied.
3. To enter into, make and perform contracts of every kind for any
lawful purpose with any person, firm, association or corporation,
municipality, body politic, country, territory, State, government or colony
or dependency thereof.
4. To acquire the goodwill, rights and property and the whole or
any part of the assets, tangible or intangible, and to undertake or in any
way assume the liabilities of any person, firm, association or corporation;
to pay for the said goodwill, rights, property, and assets in cash, the
stock of this company, bonds or otherwise, or by undertaking the whole or
any part of the liabilities of the transferor; to hold or in any manner to
dispose of the whole or any part of the property so purchased; to conduct
in any lawful manner the whole or any part of any business so acquired, and
to exercise all the powers necessary or convenient in and about the conduct
and management of such business.
5. To apply for, purchase, register or in any manner to acquire,
and to hold, own, use, operate and introduce, and to sell, lease, assign,
pledge, or in any manner dispose of, and in any manner deal with patents,
patent rights, licenses, copyrights, trademarks, trade names, and to
acquire, own, use or in any manner dispose of any and all inventions,
improvements and processes, labels, designs, brands, or other rights, and
to work, operate, or develop the same, and to carry on any business,
manufacturing or otherwise, which may directly or indirectly effectuate
these objects or any of them.
6. To guarantee, purchase, receive, hold, own, sell, assign,
transfer, mortgage, pledge or otherwise dispose of shares of capital stock,
bonds, mortgages, debentures, notes or other securities, obligations,
contracts or evidences of indebtedness of any corporation, company or
association (organized under the laws of this State or any other State,
country, nation or government) or of any state, country, nation,
municipality, government or a body politic; to receive, collect and dispose
of interest, dividends and income upon, of and from any of the bonds,
mortgages, debentures, notes, shares of capital stock, securities,
obligations, contracts, evidences of indebtedness and other property held
or owned by it and to exercise in respect of all such bonds, mortgages,
debentures, notes, shares of capital stock, securities, obligations,
contracts, evidences of indebtedness and other property any and all rights,
powers and privileges of individual ownership thereof, including the right
to vote thereon.
7. Without limit as to amount to draw, make, accept, endorse,
discount, execute and issue promissory notes, drafts, bills of exchange,
warrants, bonds, debentures, and other negotiable or
<PAGE>
transferable instruments and evidences of indebtedness whether secured by
mortgage or otherwise, as well as to secure the same by mortgage or otherwise,
so far as may be permitted by the laws of the State of Delaware.
8. To purchase, in so far as the same may be done without impairing
the capital of the corporation, and to hold, pledge and reissue shares of
its own capital stock; but such stock, so acquired and held, shall not be
entitled to vote nor to receive dividends.
9. To have one or more offices, conduct its business and promote
its objects within and without the State of Delaware, in other States, the
District of Columbia, the territories, colonies and dependencies of the
United States, and in foreign countries, without restriction as to place or
amount, but subject to the laws of such State, District, territory, colony,
dependency or country.
10. To do any or all of the things herein set forth to the same
extent as natural persons might or could do and in any part of the world,
as principals, agents, contractors, trustees, or otherwise, and either
alone or in company with others.
11. In general to carry on any other business in connection
therewith, whether manufacturing or otherwise, not forbidden by the laws of
the State of Delaware, and with all the powers conferred upon corporations
by the laws of the State of Delaware.
But if this corporation shall undertake to do any of the things
hereinabove set forth in any State other than Delaware, in the District of
Columbia, in any territory, colony, or dependency of the United States, or
in any foreign country or in any colony or dependency thereof, then as to
such jurisdictions and each of them this corporation shall be deemed to
have such powers in so far only as such jurisdictions respectively permit
corporations within their several respective jurisdictions to be organized
for or to execute such powers.
It is the intention that each of the objects, purposes and powers
specified in each of the paragraphs of this third article of this
Certificate of Incorporation shall, except where otherwise specified, be
nowise limited or restricted by reference to or inference from the terms of
any other paragraph or of any other article in this Certificate of
Incorporation, but that the objects, purposes and powers specified in this
article and in each of the articles or paragraphs of this Certificate shall
be regarded as independent objects, purposes and powers, and the
enumeration of specific purposes and powers shall not be construed to
restrict in any manner the general terms and powers of this corporation,
nor shall the expression of one thing be deemed to exclude another,
although it be of like nature.
<PAGE>
ARTICLE IV
The total number of shares of stock of all classes that may be issued
by the Corporation is Two Hundred Twenty-one Million (221,000,000) shares,
of which Twenty Million (20,000,000) shares shall be preferred stock
without par value and shall be designated "Preferred Stock", One Million
(1,000,000) shares shall be second preferred stock of the par value of One
Hundred Dollars ($100.00) each and shall be designated "Second Preferred
Stock" and Two Hundred Million (200,000,000) shares shall be common stock
without par value and shall be designated "Common Stock".
I. PREFERRED STOCK
1. The Preferred Stock may be issued in one or more series, from
time to time, with each such series to have such designation, powers,
preferences and relative, participating, optional or other special rights,
and qualifications, limitations or restrictions thereof, as shall be stated
and expressed in the resolution or resolutions providing for the issue of
such series adopted by the Board of Directors of the Corporation (referred
to herein as the "Issuing Resolution" for such series), subject to the
limitations prescribed by law and in accordance with the provisions hereof,
the Board of Directors being hereby expressly vested with authority to
adopt any such resolution or resolutions.
2. The authority of the Board of Directors with respect to each
series of the Preferred Stock shall include, but not be limited to, the
determination or fixing of the following:
(a) The distinctive designation and number of shares comprising
such series, which number may (except where otherwise provided by the
Board of Directors in creating such series) be increased or decreased
(but not below the number of shares then outstanding) from time to
time by like action of the Board of Directors;
(b) The dividend rate of such series, the conditions upon which
and times at which such dividends shall be payable, the relation
which such dividends shall bear to the dividends payable on any other
series of the Preferred Stock, and whether such dividends shall be
cumulative or noncumulative;
(c) The conditions, if any, upon which the shares of such
series shall be subject to redemption by the Corporation and the
times, prices and other terms and provisions upon which the shares of
the series may be redeemed;
(d) Whether or not the shares of the series shall be subject to
the operation of a retirement or sinking fund to be applied to the
purchase or redemption of such shares and, if such retirement or
sinking fund be established, the annual
<PAGE>
amount thereof and the terms and provisions governing the operation of
such retirement or sinking fund;
(e) Whether or not the shares of the series shall be
convertible into or exchangeable for shares of any other class or
classes, with or without par value, or of any other series of the
same class, and, if provision is made for conversion or exchange, the
times, prices, rates, adjustments, and other terms and conditions of
such conversion or exchange;
(f) Whether or not the shares of the series shall have voting
rights, in addition to the voting rights provided by law, and, if so,
the terms of such voting rights;
(g) The rights of the shares of the series in the event of
voluntary or involuntary liquidation, dissolution or winding up of
the Corporation;
(h) The relative seniority, parity or junior rank of such
series with respect to any other series of the Preferred Stock; and
(i) Any other powers, preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions thereof, of the shares of such series, as the Board of
Directors may deem advisable and as shall not be inconsistent with
the provisions of this Certificate of Incorporation.
3. No holder of shares of any series of the Preferred Stock shall
have any preemptive or preferential right of subscription to any stock of
any class of the Corporation, or to any obligations convertible into stock
of any class, or to any warrant or option for the purchase of stock of any
class, except to the extent granted in the Issuing Resolution creating such
series.
4. The Board of Directors of the Corporation shall be empowered to
provide in any Issuing Resolution with respect to any series of the
Preferred Stock that any of the voting powers, designations, preferences,
rights and qualifications, limitations or restrictions of such series may
be made dependent upon facts ascertainable outside this Certificate of
Incorporation or any amendment hereto, or the Issuing Resolution with
respect to such series, so long as the manner in which such facts shall
operate upon the voting powers, designations, preferences, rights and
qualifications, limitations or restrictions of such series is clearly and
expressly set forth in this Certification of Incorporation, as amended, or
in the Issuing Resolution for such series.
5. The holders of shares of the Preferred Stock of each series
shall be entitled to receive, when and as declared by the Board of
Directors, out of funds legally available for the payment
<PAGE>
of dividends, dividends at the rate fixed by the Board of Directors in the
Issuing Resolution for such series, and no more, before
(i) any dividends (other than dividends payable in Second
Preferred Stock or in Common Stock or in any other class of stock ranking
junior to the Preferred Stock both as to dividends and upon liquidation,
dissolution or winding up) shall be declared and paid, or set apart for
payment, on, or
(ii) any moneys or other consideration (other than shares of
Second Preferred Stock or Common Stock or any other class of stock ranking
junior to the Preferred Stock both as to dividends and upon liquidation,
dissolution or winding up) is set aside for or applied to the purchase or
redemption of,
shares of the Second Preferred Stock or the Common Stock or any other class
of stock ranking junior to the Preferred Stock as to dividends or upon
liquidation, dissolution or winding up.
6. The holders of shares of the Preferred Stock of each series
shall be entitled upon liquidation, dissolution or winding up of the
Corporation, whether involuntary or voluntary, to such preferences as are
provided in the Issuing Resolution creating such series of the Preferred
Stock, and no more, before any distribution of the assets of the
Corporation shall be made to or set apart for the holders of shares of the
Second Preferred Stock or the Common Stock or any other class of stock
ranking junior to the Preferred Stock upon liquidation, dissolution or
winding up. For the purposes of this paragraph 6, a consolidation or
merger of the Corporation with or into one or more other corporations
(whether or not the Corporation is the corporation surviving such
consolidation or merger), or a sale, lease or exchange of all or
substantially all of the assets of the Corporation, shall not be deemed to
be a liquidation, dissolution or winding up, voluntary or involuntary.
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
Section 1. Designation and Amount. The distinctive designation of
the series shall be "Series A Junior Participating Preferred Stock." The
shares constituting such series shall be without par value. The number of
shares constituting such series shall be 2,000,000, subject to increase or
decrease by action of the Board of Directors as evidenced by a certificate
of designations.
Section 2. Dividends and Distributions. (A) Subject to the prior
rights of the holders of any shares of any series of Preferred Stock
ranking prior to the shares of Series A Junior Participating Preferred
Stock with respect to dividends, the holders of shares of Series A Junior
Participating Preferred Stock shall be entitled to receive, when and as
declared by the Board of
<PAGE>
Directors out of funds legally available for the payment of dividends,
quarterly dividends payable in cash on the first day of January, April, July
and October in each year or such other days on which dividends are declared
with respect to the Common Stock (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of
Series A Junior Participating Preferred Stock, in an amount per share (rounded
to the nearest cent) equal to the greater of (a) $10 or (b) subject to the
provision for adjustment hereinafter set forth, 100 times the aggregate per
share amount of all cash dividends, and 100 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions
(other than a dividend payable in shares of Common Stock or a subdivision of
the outstanding shares of Common Stock (by reclassification or otherwise)),
declared on the Common Stock since the immediately preceding Quarterly Dividend
Payment Date, or, with respect to the first Quarterly Dividend Payment Date,
since the first issuance of any share or fraction of a share of Series A Junior
Participating Preferred Stock. If the Corporation shall at any time after
November 20, 1987 (the "Rights Declaration Date") (i) declare any dividend
payable in shares of Common Stock, (ii) subdivide the outstanding Common
Stock, or (iii) combine the outstanding Common Stock into a smaller number
of shares, then in each such case the amount to which holders of shares of
Series A Junior Participating Preferred Stock were entitled immediately
prior to such event under clause (b) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Junior Participating Preferred Stock as provided in paragraph (A)
above immediately after it declares a dividend or distribution on the
Common Stock (other than a dividend payable in shares of Common Stock);
provided that, if no dividend or distribution shall have been declared on
the Common Stock during the period between any Quarterly Dividend Payment
Date and the next subsequent Quarterly Dividend Payment Date, a dividend of
$10 per share on the Series A Junior Participating Preferred Stock shall
nevertheless be payable on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Junior Participating Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares,
unless (i) such date of issue is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares
shall begin to accrue from the date of issue of such shares, or (ii) such
date of issue is either a Quarterly Dividend Payment Date or a date after
the record date for the determination of holders of shares of Series A
<PAGE>
Junior Participating Preferred Stock entitled to receive a quarterly
dividend and before such Quarterly Dividend Payment Date, in either of
which events such dividends shall begin to accrue and be cumulative from
such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Series A Junior
Participating Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the
time outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of Series A Junior Participating
Preferred Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be no more than 60 days prior to
the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Junior
Participating Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Junior Participating Preferred Stock shall entitle
the holder thereof to 100 votes on all matters submitted to a vote of the
stockholders of the Corporation. In the event the Corporation shall at any
time after the Rights Declaration Date (i) declare any dividend payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or
(iii) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the number of votes per share to which
holders of shares of Series A Junior Participating Preferred Stock were
entitled immediately prior to such event shall be adjusted by multiplying
such number by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series A Junior Participating Preferred Stock and the holders of
shares of Common Stock shall vote together as one class on all matters
submitted to a vote of stockholders of the Corporation.
(C) (i) If and whenever at any time or times dividends payable on
shares of any Series A Junior Participating Preferred Stock shall have been
in arrears and unpaid in an aggregate amount equal to or exceeding the
amount of dividends payable thereon for six quarterly dividend periods,
then the holders of shares of any Series A Junior Participating Preferred
Stock, together with the holders of any other series of Preferred Stock as
to which dividends are in arrears and unpaid in an aggregate amount equal
to or exceeding the amount of dividends payable thereon for six quarterly
dividend periods, shall have the exclusive right, voting separately as a
class with such other series, to elect two
<PAGE>
directors of the Corporation, such directors to be in addition to the number of
directors constituting the Board of Directors immediately prior to the accrual
of such right, the remaining directors to be elected by the other class or
classes of stock entitled to vote therefor at each meeting of stockholders held
for the purpose of electing directors.
(ii) Such voting right may be exercised initially either at a
special meeting of the holders of the Preferred Stock having such voting
right, called as hereinafter provided, or at any annual meeting of
stockholders held for the purpose of electing directors, and thereafter at
each such annual meeting until such time as all cumulative dividends
accumulated and payable on the shares of Series A Junior Participating
Preferred Stock shall have been paid in full, at which time such voting
right shall terminate, subject to revesting on the basis set forth in
paragraph (C)(i).
(iii) At any time when such voting right shall have vested in
holders of the Preferred Stock, and if such right shall not already have
been initially exercised, a proper officer of the Corporation shall, upon
the written request of the record holders of 10% in number of shares of
Preferred Stock having such voting right then outstanding, addressed to the
Secretary of the Corporation, call a special meeting of the holders of
Preferred Stock having such voting right and of any other class or classes
of stock having voting power with respect to the election of such
directors. Such meeting shall be held at the earliest practicable date
upon the notice required for annual meetings of stockholders at the place
for holding annual meetings of stockholders of the Corporation or, if none,
at a place designated by the Board of Directors. If such meeting is not
called by the proper officers of the Corporation within 30 days after the
personal service of such written request upon the Secretary of the
Corporation, or within 30 days after mailing the same within the United
States of America, by registered mail, addressed to the Secretary of the
Corporation at its principal office (such mailing to be evidenced by the
registry receipt issued by the postal authorities), then the record holders
of 10% in number of shares of the Preferred Stock then outstanding which
would be entitled to vote at such meeting may designate in writing one of
their number to call such meeting at the expense of the Corporation, and
such meeting may be called by such person so designated upon the notice
required for annual meetings of stockholders and shall be held at the same
place as is elsewhere provided for in this paragraph (C)(iii) or such other
place as is selected by such designated stockholder. Any holder of the
Preferred Stock who would be entitled to vote at such meeting shall have
access to the stock books of the Corporation for the purpose of causing a
meeting of stockholders to be called pursuant to the provisions of this
paragraph (C). Notwithstanding the provisions of this paragraph (C), no
such special meeting shall be called during a period within 90 days
immediately preceding the date fixed for the next annual meeting of
stockholders.
<PAGE>
(iv) At any meeting held for the purpose of electing directors at
which the holders of the Preferred Stock shall have the right to elect two
directors in addition to the number of directors constituting the Board of
Directors immediately prior to accrual of such right as provided herein,
the presence in person or by proxy of the holders of 40% of the then
outstanding shares of Preferred Stock having such right shall be required
and shall be sufficient to constitute a quorum of such class of the
election of directors by such class. At any such meeting or adjournment
thereof (i) the absence of a quorum of the holders of the Preferred Stock
having such right shall not prevent the election of directors other than
those to be elected by the holders of the Preferred Stock, and the absence
of a quorum or quorums of the holders of capital stock entitled to elect
such other directors shall not prevent the election of directors to be
elected by the holders of the Preferred Stock entitled to elect such
directors and (ii) except as otherwise required by law, in the absence of a
quorum of the holders of any class of stock entitled to vote for the
election of directors, a majority of the holders present in person or by
proxy of such class shall have the power to adjourn the meeting for the
election of directors which the holders of such class are entitled to
elect, from time to time, without notice other than announcement at the
meeting, until a quorum is present.
(v) Any vacancy in the Board of Directors in respect of a director
elected by holders of Preferred Stock pursuant to the voting right created
under this paragraph (C) shall be filled by vote of the remaining director
so elected, or if there be no such remaining director, by the holders of
Preferred Stock entitled to elect such director or directors at a special
meeting called in accordance with the procedures set forth in paragraph
(C)(iii), or, if no such special meeting is called, at the next annual
meeting of stockholders. Upon any termination of such voting right,
subject to the requirements of the General Corporation Law of Delaware, the
term of office of all directors elected by holders of Preferred Stock
voting separately as a class shall terminate.
(D) Except as set forth herein, or as required by law, holders of
Series A Junior Participating Preferred Stock shall have no special voting
rights and their consent shall not be required (except to the extent they
are entitled to vote with holders of Common Stock as set forth herein) for
taking any corporate action.
Section 4. Certain Restrictions. (A) Whenever quarterly dividends
or other dividends or distributions payable on the Series A Junior
Participating Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions,
whether or not declared, on shares of Series A Junior Participating
Preferred Stock outstanding shall have been paid in full, the Corporation
shall not:
<PAGE>
(i) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Junior
Participating Preferred Stock, except dividends paid ratably on the Series
A Junior Participating Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total amounts to
which the holders of all such shares are then entitled;
(ii) purchase or otherwise acquire for consideration any shares of
Series A Junior Participating Preferred Stock, or any shares of stock
ranking on a parity with the Series A Junior Participating Preferred Stock,
except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders of
such shares upon such terms as the Board of Directors, after consideration
of the respective annual dividend rates and other relative rights and
preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective
series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares
of stock of the Corporation unless the Corporation could, under Article IV,
Section I of its Certificate of Incorporation or paragraph (A) of this
Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series A Junior
Participating Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and cancelled
promptly after the acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued shares of Preferred Stock and
may be reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors, subject to the
conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up. (A) Upon any
liquidation (voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior Participating Preferred
Stock unless, prior thereto, the holders of shares of Series A Junior
Participating Preferred Stock shall have received $100 per share, plus an
amount equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment (the "Series A
Liquidation Preference"). Following the payment of the full amount of the
Series A Liquidation Preference, no additional distributions shall be made
to the holders of shares of Series A Junior Participating Preferred Stock
unless, prior thereto, the holders of shares of Common Stock shall have
received an amount per share (the "Common Adjustment") equal to
<PAGE>
the quotient obtained by dividing (i) the Series A Liquidation Preference by
(ii) 100 (as appropriately adjusted as set forth in paragraph C below to
reflect such events as stock splits, stock dividends and recapitalizations
with respect to the Common Stock) (such number in clause (ii), the
"Adjustment Number"). Following the payment of the full amount of the
Series A Liquidation Preference and the Common Adjustment in respect of all
outstanding shares of Series A Junior Participating Preferred Stock and
Common Stock, respectively, holders of Series A Junior Participating
Preferred Stock and holders of shares of Common Stock shall receive their
ratable and proportionate share of the remaining assets to be distributed
in the ratio of the Adjustment Number to 1 with respect to such Preferred
Stock and Common Stock, on a per share basis, respectively.
(B) (i) If there are not sufficient assets available to permit
payment in full of the Series A Liquidation Preference and the liquidation
preferences of all other series of preferred stock, if any, which rank on a
parity with the Series A Junior Participating Preferred Stock, then such
assets as are available shall be distributed ratably to the holders of such
parity shares in proportion to their respective liquidation preferences.
(ii) If there are not sufficient assets available to permit payment in
full of the Common Adjustment, then such assets as are available shall be
distributed ratably to the holders of Common Stock.
(C) If the Corporation shall at any time after November 20, 1987 (i)
declare any dividend payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock
into a smaller number of shares, then in each such case the Adjustment
Number in effect immediately prior to such event shall be adjusted by
multiplying such Adjustment Number by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for or
changed into other stock or securities, cash and/or any other property,
then in any such case the shares of Series A Junior Participating Preferred
Stock shall at the same time be similarly exchanged or changed in an amount
per share (subject to the provision for adjustment hereinafter set forth)
equal to 100 times the aggregate amount of stock, securities, cash and/or
any other property (payable in kind), as the case may be, into which or for
which each share of Common Stock is changed or exchanged. If the
Corporation shall at any time after the Rights Declaration Date (i) declare
any dividend payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock
into a smaller number of shares, then in each such case the amount set
<PAGE>
forth in the preceding sentence with respect to the exchange or change of
shares of Series A Junior Participating Preferred Stock shall be adjusted
by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Junior
Participating Preferred Stock shall not be redeemable.
Section 9. Ranking. The Series A Junior Participating Preferred
Stock shall rank junior to all other series of the Corporation's Preferred
Stock as to the payment of dividends and the distribution of assets, unless
the Issuing Resolution with respect to any such series shall provide
otherwise.
Section 10. Fractional Shares. Series A Junior Participating
Preferred Stock may be issued in fractions of a share which shall entitle
the holder, in proportion to such holder's fractional shares, to exercise
voting rights, receive dividends, participate in distributions and to have
the benefit of all other rights of holders of Series A Junior Participating
Preferred Stock.
II. SECOND PREFERRED STOCK
1. The Second Preferred Stock may be issued, from time to time, in
one or more series, in any manner now or hereafter permitted by law.
2. The shares of each series shall have the designations,
preferences and relative, participating, optional or other special rights,
and the qualifications, limitations or restrictions thereof, which are
stated and expressed in this section II, and those which are stated and
expressed in the resolution or resolutions providing for the issue of such
series, adopted by the Board of Directors under the authority granted to
the Board of Directors by the provisions of paragraph 3 of this section II.
3. Authority is hereby expressly granted to and vested in the Board
of Directors of the Corporation to provide for the issue of the Second
Preferred Stock in one or more series, and with respect to each such series
to fix, by resolution or resolutions, the following:
(a) The maximum number of shares to constitute the series and
the distinctive designation of the shares;
(b) The annual dividend rate on the shares of the series and
the date or dates from which dividends shall accumulate;
<PAGE>
(c) The amount which the holders of shares of the series shall
be entitled to receive upon the voluntary liquidation, dissolution or
winding up of the Corporation, which shall not be less than the par
value plus an amount equal to all accumulated and unpaid dividends to
the date of final distribution to such holders;
(d) Whether or not the shares of the series shall be subject to
redemption at the option of the Corporation and if so, the price
which holders of shares so redeemed shall be entitled to receive,
which price may vary at different redemption dates but shall in no
event be less than the par value per share plus an amount equal to
all accumulated and unpaid dividends to the date of redemption, and
if such price varies, the period during which each such variation in
price shall be applicable;
(e) Whether or not the shares of the series shall be subject to
redemption through the operation of a sinking fund and, if so, the
terms and provisions of such sinking fund and the extent to which and
the manner in which such fund shall be applied to the purchase,
redemption or other acquisition of shares of the series and the
redemption price for shares redeemed through the sinking fund, which
price may vary at different redemption dates but shall in no event be
less than the par value per share plus an amount equal to all
accumulated and unpaid dividends to the date of redemption, and if
such price varies, the period during which each such variation in
price shall be applicable;
(f) Whether or not there shall be a purchase fund to acquire
shares of the series and, if so, the terms and provisions of the
purchase fund and the extent to which and the manner in which such
purchase fund shall be applied to the acquisition of shares of the
series;
(g) The limitations and restrictions, if any, in addition to,
but not in derogation of, the limitations and restrictions set forth
in paragraph 5 of this section II, which are to be effective while
any shares of the series are outstanding, upon payment of dividends
on, or making of other distributions on, and upon the purchase,
redemption or other acquisition by the Corporation or any subsidiary
of, shares of Common Stock or any other class of stock ranking junior
to the Second Preferred Stock as to dividends or upon liquidation;
(h) The conditions or restrictions, if any, which are to be
effective while any shares of the series are outstanding, upon the
creation of indebtedness of the Corporation or upon the issuance of
shares of stock of the Corporation;
<PAGE>
(i) Any voting rights of the shares of the series, other than
the voting rights for the election of Directors provided by paragraph
13 of this section II, in addition to and not inconsistent with those
granted by this Article IV to the holders of the Second Preferred
Stock;
(j) The right, if any, to exchange or convert the shares of the
series into shares of any other series of the Second Preferred Stock
or into shares of any other class of stock of the Corporation and the
rate or basis, time, manner and conditions of exchange or conversion
or the method by which the same shall be determined;
(k) Any other designations, preferences and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, of the series, which are now or
hereafter permitted by the laws of Delaware, and which are not
inconsistent with the provisions of paragraphs 4 to 17, inclusive, of
this section II.
The resolution or resolutions providing for the issue of shares of
any series are herein referred to as the "Issuing Resolution" for that
series.
4. All series of the Second Preferred Stock shall be senior to the
Common Stock and each series of the Second Preferred Stock shall rank
equally with every other series. Each share of any one series shall be
identical with every other share of that series except as to the date or
dates from which dividends shall accumulate.
5. Subject to the provisions of paragraph 5 of section I of this
Article IV and to any limitation or restriction contained in the Issuing
Resolution for any series of Preferred Stock, the holders of shares of each
series of the Second Preferred Stock shall be entitled to receive cash
dividends, when and as declared by the Board of Directors out of any funds
legally available therefor, at the annual rate fixed in the Issuing
Resolution for that particular series and no more. Such dividends on each
series of the Second Preferred Stock shall be payable quarterly on the
first day of February, May, August and November in each year to holders of
record on a date, not more than fifty (50) days before each such dividend
payment date, to be determined by the Board of Directors in advance of the
payment of each particular dividend. Dividends on each series of the
Second Preferred Stock shall be cumulative and preferential so that in no
event shall any dividend or other distribution (other than dividends
payable in Common Stock or in any other class of stock ranking junior to
the Second Preferred Stock as to
<PAGE>
dividends and upon liquidation) be declared or paid upon or set apart for the
Common Stock or any other class of stock ranking junior to the Second Preferred
Stock as to dividends or upon liquidation nor shall any moneys or other
consideration (other than shares of Common Stock or any other class of stock
ranking junior to the Second Preferred Stock as to dividends and upon
liquidation) be set aside for or applied to the purchase or redemption of
shares of Common Stock or any other class of stock ranking junior to the Second
Preferred Stock as to dividends or upon liquidation, unless all dividends on
each then outstanding series of the Second Preferred Stock for all past
quarter-yearly dividend periods shall have been paid, or declared and a sum
sufficient for the payment thereof set apart, and the full dividend thereon
for the then quarterly dividend period shall have been or concurrently
shall be paid or declared. With respect to each series of the Second
Preferred Stock, such dividends shall accumulate from the date or dates
fixed in the Issuing Resolution for such series which date or dates shall
in no instance be more than ninety days before or after the date of the
issuance of those shares for which the date is being set. No dividends
shall be declared on any series of the Second Preferred Stock in respect of
any dividend period unless the same proportion of the annual dividend rate
respectively applicable to the shares of every series of the Second
Preferred Stock at the time outstanding shall likewise be declared as a
dividend in respect of such dividend period.
The term "accumulated and unpaid dividends" means, in respect of each
share of the Second Preferred Stock of any series, that amount which shall
be equal to simple interest upon the par value of such share at the
dividend rate for such series from the date from which dividends on such
share commenced to accumulate to the date as of which the computation is to
be made, less the aggregate amount (without interest thereon) of all
dividends theretofore paid or declared and set aside for payment in respect
thereof.
6. (a) In the event of any involuntary liquidation, dissolution or
winding up of the Corporation, the holders of the shares of every series of
the Second Preferred Stock shall, subject to the provisions of paragraph 6
of section I of this Article IV, be entitled to receive payment at the rate
of $100 per share, plus an amount equal to all accumulated and unpaid
dividends to the date of final distribution to such holders, and no more,
before any payment or distribution of the assets of the Corporation shall
be made to or set apart for the holders of the Common Stock or any other
class of stock ranking junior to the Second Preferred Stock upon
liquidation.
(b) In the event of any voluntary liquidation, dissolution or
winding up of the Corporation, the holders of the shares of each series of
the Second Preferred Stock shall, subject to the provisions of paragraph 6
of section I of this Article IV, be entitled to receive the amount set
forth for such payment in the Issuing Resolution for that particular
series, which amount shall in no case be less than $100 per share, plus an
amount equal to all accumulated and unpaid dividends to the date of final
distribution to such holders, and no more, before any payment or
distribution of the assets of the Corporation shall be made to or set apart
for the holders of the Common Stock or any other class of
<PAGE>
stock ranking junior to the Second Preferred Stock upon liquidation.
(c) If, upon any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the assets of the
Corporation, or proceeds thereof, distributable among the holders of the
Second Preferred Stock shall be insufficient to pay in full the
preferential amount for every series of the Second Preferred Stock, then
such assets or the proceeds thereof shall be distributed among the holders
of the shares of all series of the Second Preferred Stock in proportion to
the respective amounts to which they would be entitled if all amounts
payable thereon were paid in full.
(d) For the purposes of this paragraph 6, a consolidation or merger
of the Corporation with or into one or more other corporations (whether or
not the Corporation is the corporation surviving such consolidation or
merger), or a sale, lease or exchange of all or substantially all of the
assets of the Corporation, shall not be deemed to be a liquidation,
dissolution or winding up, voluntary or involuntary.
7. (a) If the Issuing Resolution for any series of the Second
Preferred Stock provides that the Corporation, at the option of the Board
of Directors, may redeem at any time all, or from time to time any part, of
the shares of the Second Preferred Stock of such series at the time
outstanding or if the Issuing Resolution for any series of the Second
Preferred Stock provides for the creation of a sinking fund to redeem
outstanding shares of that series of the Second Preferred Stock, the shares
of the series to be redeemed at the option of the Board of Directors or to
be redeemed through operation of the sinking fund shall be redeemed in the
manner set forth in this paragraph 7.
(b) Notice of every such redemption shall be mailed at least 30 days
in advance of the date designated for such redemption (herein called the
"redemption date") to the holders of record of the shares of the Second
Preferred Stock so to be redeemed at their respective addresses as the same
shall appear on the books of the Corporation. In order to facilitate the
redemption of any shares of the Second Preferred Stock that may be chosen
for redemption as provided in this paragraph 7, the Board of Directors
shall be authorized to cause the transfer books of the Corporation to be
closed as to such shares as of a date within fifteen (15) days prior to the
redemption date. In case of the redemption of a part only of any series of
the Second Preferred Stock at the time outstanding, the shares of such
series so to be redeemed shall be selected by lot or by such other
equitable method as the Board of Directors may determine.
(c) If said notice of redemption shall have been given as aforesaid,
and if on or before the redemption date, the funds necessary for such
redemption shall have been set aside by the Corporation, separate and apart
from its other funds, in trust for
<PAGE>
the pro rata benefit of the holders of the shares so called for redemption,
then, from and after the redemption date, notwithstanding that any certificate
for shares of the Second Preferred Stock so called for redemption shall not
have been surrendered for cancellation, the shares represented thereby shall
not be deemed outstanding, and all rights of the holders of the shares of the
Second Preferred Stock so called for redemption shall forthwith, from and after
the redemption date, cease and terminate, excepting only the right to
receive the redemption price therefor but without interest. Any moneys so
set aside by the Corporation and unclaimed at the end of six years from the
date fixed for such redemption shall revert to the general funds of the
Corporation after which reversion any holder of such shares so called for
redemption shall have only such rights, if any, as he may possess under
applicable law to receive from the Corporation payment of the redemption
price.
(d) If, on or before the redemption date, the Corporation shall
deposit in trust, with a bank or trust company in the Borough of Manhattan,
in the City of New York, having a capital and surplus of at least
$5,000,000, the funds necessary for the redemption of the shares of the
Second Preferred Stock so to be redeemed, to be applied to the redemption
of such shares, and if the Corporation shall have given notice of
redemption as aforesaid or given irrevocable written authorization to such
bank or trust company, in form satisfactory to it, for the timely giving of
such notice, then from and after the time when such deposit is made all
shares of the Second Preferred Stock so called for redemption shall not be
deemed to be outstanding, and all rights of the holders of such shares of
the Second Preferred Stock so called for redemption shall cease and
terminate, excepting only the right to receive the redemption price
therefor, but without interest.
In case such deposit is made with a bank or trust company and any
holder of shares of the Second Preferred Stock which shall have been called
for redemption shall not, within one year after the redemption date, claim
the amount deposited with respect to the redemption thereof, such bank or
trust company shall, upon demand, pay over to the Corporation such
unclaimed amount and thereupon such bank or trust company shall be relieved
of all responsibility in respect thereof to such holder and such holder
thereafter shall have only such rights, if any, as he may possess under
applicable law to receive from the Corporation payment thereof. Any
interest accrued on funds so deposited shall be paid to the Corporation
from time to time. Any such unclaimed amounts paid over by any such bank
or trust company to the Corporation shall, for a period terminating six
years after the date fixed for redemption, be set aside and held by the
Corporation in the same manner as if such unclaimed amounts had been set
aside under the preceding paragraph 7(c).
8. Whether or not the Issuing Resolution for any series of the
Second Preferred Stock provides for optional redemption of shares, or for a
sinking fund or a purchase fund for the redemption
<PAGE>
or purchase of shares of such series, the Corporation shall have the right,
subject to the provisions of paragraph 5 of section I of this Article IV and
subject to any limitation thereon in any Issuing Resolution for any series of
Preferred Stock or Second Preferred Stock, at any time to purchase
privately or in the public markets, and to solicit tenders of, any portion
or the whole of the shares of any or all series at prices which are not in
excess of the respective redemption prices of such shares.
9. (a) All shares of any series of the Second Preferred Stock
which have been acquired through the operation of a purchase fund or of a
sinking fund or by redemption or have been credited against any purchase
fund or sinking fund or have been surrendered to the Corporation on the
conversion or exchange thereof into or for other shares of the Corporation
shall, upon compliance with any applicable provisions of the General
Corporation Law of the State of Delaware, have the status of authorized and
unissued shares of the Second Preferred Stock, but shall be reissued only
as, or as part of, a new series of the Second Preferred Stock to be created
by an Issuing Resolution of the Board of Directors or as part of any other
series of the Second Preferred Stock the terms of which do not prohibit
such reissue as a part thereof, and shall not be reissued as a part of the
series of which they were originally a part.
(b) All shares of any series of the Second Preferred Stock which
have been acquired otherwise than through the operation of a purchase fund
or of a sinking fund or by redemption and which have not been credited
against any purchase fund or sinking fund, and which have not been
surrendered to the Corporation on the conversion or exchange thereof into
or for other shares of the Corporation, shall have the status of treasury
stock and may be disposed of as permitted by law.
10. So long as any of the Second Preferred Stock is outstanding, the
Corporation will not, without the affirmative vote or consent of the
holders of at least 66-2/3% of all of the Second Preferred Stock at the
time outstanding, voting as a class regardless of series, given in person
or by proxy, either in writing or by resolution adopted at a special
meeting called for the purpose:
(a) Amend, alter or repeal any of the provisions of this
Article IV so as to affect adversely the designations, preferences
and relative, participating, optional or other special rights, or the
qualifications, limitations or restrictions thereof, of all of the
series of the Second Preferred Stock;
(b) (i) increase the authorized amount of the Preferred Stock,
(ii) create any other class or classes of stock ranking senior to the
Second Preferred Stock either as to dividends or upon liquidation,
(iii) create any class or classes of stock which have any right to be
converted into
<PAGE>
any class or classes of stock ranking senior to the
Second Preferred Stock as to dividends or upon liquidation or grant
any rights to any class of stock to be so converted, or (iv) merge or
consolidate with or into any other corporation, if such merger or
consolidation would affect adversely the designations, preferences
and relative, participating, optional or other special rights, or the
qualifications, limitations or restrictions thereof, of all of the
series of the Second Preferred Stock.
11. The Corporation will not amend, alter or repeal any of the
provisions of this Article IV or of any Issuing Resolution for series of
Second Preferred Stock so as to affect adversely the designations,
preferences and relative, participating, optional or other special rights,
or the qualifications, limitations or restrictions thereof, of one or more,
but not all, series of the Second Preferred Stock, or merge or consolidate
with or into any other corporation if such merger or consolidation would
affect adversely the designations, preferences and relative, participating,
optional or other special rights, or the qualifications, limitations or
restrictions thereof, of one or more, but not all, series of the Second
Preferred Stock, without the affirmative vote or consent of the holders of
at least 66-2/3% of each series so adversely affected at the time
outstanding, voting as a class, in person or by proxy, either in writing or
by resolution adopted at a special meeting called for the purpose, but the
other series of the Second Preferred Stock not affected thereby shall not
have the right to vote thereon.
12. The Corporation will not, without the affirmative vote or
consent of the holders of at least a majority of all of the Second
Preferred Stock at the time outstanding, voting as a class regardless of
series, given in person or by proxy, either in writing or by resolution
adopted at a special meeting called for the purpose, (a) increase the
authorized amount of the Second Preferred Stock, (b) create any class or
classes of stock ranking on a parity with the Second Preferred Stock either
as to dividends or upon liquidation, or (c) create any class or classes of
stock which have any right to be converted into any class or classes of
stock ranking on a parity with the Second Preferred Stock as to dividends
or upon liquidation or grant any rights to any class of stock to be so
converted.
13. (a) If, and whenever, at any time or times, there shall remain
unpaid, on any series of the Second Preferred Stock, the dividends which
were payable for four full quarterly dividend periods, or if any arrearage
or default in any sinking fund provided for in any Issuing Resolution shall
occur under such conditions and continue for such period of time as, under
the provisions of such Issuing Resolution, to entitle the holders of the
outstanding shares of the Second Preferred Stock to the voting rights
provided by this paragraph 13, the outstanding Second Preferred Stock of
all series, voting separately as a class, shall have the right to elect two
Directors and the remaining Directors
<PAGE>
shall be elected by the holders of shares of the Common Stock (subject to the
voting rights of the holders of the Preferred Stock).
(b) Whenever such right of the holders of the Second Preferred Stock
shall have vested, such right may be exercised initially either at a
special meeting of such holders of the Second Preferred Stock called as
provided in this paragraph, or at any annual meeting of stockholders, and
thereafter at annual meetings of stockholders. If the date upon which such
right of the holders of the Second Preferred Stock shall become vested
shall be more than sixty days preceding the date of the next ensuing annual
meeting of stockholders as fixed by the By-Laws of the Corporation, the
President of the Corporation shall call promptly a special meeting of the
holders of the Second Preferred Stock and the Common Stock to be held
within thirty days for the purpose of electing a new Board of Directors
(exclusive of any Directors elected to represent the Preferred Stock
pursuant to the provisions of section I of this Article IV) to serve until
the next annual meeting and until their successors shall be elected and
shall qualify. Notice of such meeting shall be mailed to each holder of
Second Preferred Stock and each holder of Common Stock not less than ten
days prior to the date of such meeting. If at any such meeting any
Director (other than a Director elected to represent the Preferred Stock)
shall not be re-elected, his term of office shall end upon the election of
his successor, notwithstanding that the term for which he was originally
elected shall not then have expired. In the event that at any such meeting
at which holders of the Second Preferred Stock shall be entitled to elect
Directors, a quorum of the holders of the Second Preferred Stock shall not
be present in person or by proxy, the holders of the Common Stock, if a
quorum thereof be present, may elect the Directors whom the holders of the
Second Preferred Stock were entitled, but failed, to elect. Such Directors
shall be designated as having been so elected to represent the Second
Preferred Stock and their successors shall be elected by the holders of the
Second Preferred Stock at the next annual meeting.
(c) Whenever the holders of the Second Preferred Stock shall be
entitled to elect Directors as provided in paragraph 13(a) of this section
II, any holder of Second Preferred Stock shall have the right, during
regular business hours, in person or by a duly authorized representative,
to examine and to make transcripts of the stock records of the Corporation
for the Second Preferred Stock for the purpose of communicating with other
holders of Second Preferred Stock with respect to the exercise of such
right of election.
(d) At any election of members of the Board of Directors by the
Second Preferred Stock, each holder of Second Preferred Stock shall have
one vote for each share of such stock standing in his name on the books of
the Corporation on any record date fixed for such purpose, or, if no such
date be fixed, on the date on which the election is held.
<PAGE>
(e) The right of the holders of the Second Preferred Stock, voting
separately as a class, to elect members of the Board of Directors of the
Corporation as aforesaid shall continue until such time as any and all
unpaid dividends shall have been paid and any and all sinking fund
arrearages and defaults shall have been fully cured, at which time the
right of the holders of the Second Preferred Stock to elect members of the
Board of Directors shall terminate, subject to revesting.
(f) Whenever the holders of the Second Preferred Stock shall be
divested of the right to elect members of the Board of Directors, the
President of the Corporation shall, within ten days after delivery to the
Corporation at its principal office of a request to such effect signed by
any holder of Common Stock, call a special meeting of the holders of the
Common Stock to be held within forty days after the delivery of such
request for the purpose of electing a new Board of Directors (exclusive of
any Directors elected to represent the Preferred Stock pursuant to the
provisions of section I of this Article IV) to serve until the next annual
meeting or until their respective successors shall be elected and shall
qualify. If, at any such special meeting, any Director (other than a
Director elected to represent the
<PAGE>
Preferred Stock) shall not be re-elected, his term of office shall terminate
upon the election and qualification of his successor, notwithstanding that the
term for which such Director was originally elected shall not then have
expired.
14. At any annual or special meeting of stockholders held for the
purpose of electing Directors when the holders of the Second Preferred
Stock shall be entitled to elect members of the Board of Directors as
provided in paragraph 13 of this section II, the presence in person or by
proxy of the holders of one-third of all of the outstanding shares of the
Second Preferred Stock regardless of series shall be required to constitute
a quorum for the election by the Second Preferred Stock of such Directors,
and the presence in person or by proxy of the holders of a majority of the
outstanding shares of the Common Stock shall be required to constitute a
quorum for the election by the Common Stock of the remaining Directors
(other than Directors elected to represent the Preferred Stock pursuant to
the provisions of section I of this Article IV); provided, however, that
absence of a quorum of the Common Stock shall not prevent the Second
Preferred Stock if it has a quorum present from electing the number of
Directors such class shall be entitled to elect and the Directors so
elected by the Second Preferred Stock shall replace an equal number of
Directors then in office. The Directors to be replaced by those elected by
the holders of the Second Preferred Stock shall be designated by the Board
of Directors of the Corporation; and, if the Board of Directors shall fail
to make such designation within 15 days following such meeting, then such
designation shall be made by the Directors elected by the holders of the
Second Preferred Stock. The absence of a quorum of the Second Preferred
Stock shall not prevent the Common Stock from electing the entire Board of
Directors (other than Directors elected to represent the Preferred Stock)
which shall include the proper number of members to represent the Second
Preferred Stock.
15. If, during any interval between annual meetings of stockholders
for the election of Directors and while the holders of the Second Preferred
Stock shall be entitled to elect Directors, one of the Directors in office
elected by the holders of the Second Preferred Stock shall resign or die or
be removed, the vacancy shall be filled by a majority vote of all of the
remaining Directors then in office, although less than a quorum, who shall
elect a nominee designated by the remaining Director elected by the holders
of the Second Preferred Stock or his successor and if not so filled within
forty days after the creation thereof, the President of the Corporation
shall call a special meeting in the manner provided in paragraph 13 of this
section II but limited to the holders of shares of the Second Preferred
Stock and such vacancy shall be filled at such special meeting, to be held
within forty days after the delivery of such request.
16. If the Corporation is unable to meet the requirements of all
sinking fund and of all purchase fund provisions of all Issuing Resolutions
for series of Second Preferred Stock containing such provisions, the number
of shares of the respective series to be redeemed or purchased, as the case
may be, shall be in proportion to the respective amounts which would be
redeemed or purchased if all such provisions were complied with in full.
17. No holder of shares of any series of the Second Preferred Stock
shall have any preemptive or preferential right of subscription to any
stock of any class of the Corporation, or to any obligations convertible
into stock of any class, or to any warrant or option for the purchase of
stock of any class but the Board of Directors of the Corporation, in the
Issuing Resolution creating any series of the Second Preferred Stock, may
confer on that series the right to subscribe to additional shares of that
series or to shares of any series of the Second Preferred Stock which may
be created thereafter.
III. COMMON STOCK
1. All rights shall be held and possessed by the Common Stock
except for the designations, preferences and relative, participating,
optional or other special rights, and the qualifications, limitations or
restrictions thereof, conferred on the Preferred Stock and the Second
Preferred Stock by applicable law, by the provisions of sections I and II
of this Article IV or by the provisions of any Issuing Resolutions for
series of the Preferred Stock or the Second Preferred Stock.
2. Holders of the shares of Common Stock without par value shall
have no right to subscribe for or purchase any part of any new or
additional issue of stock of any class whatsoever or of
<PAGE>
securities convertible into stock of any class whatsoever whether now or
hereafter authorized.
ARTICLE V
The number of shares with which this corporation will commence
business is ten (10) shares of common stock, which shares are without
nominal or par value.
ARTICLE VI
This corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner
now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
ARTICLE VII
This corporation is to have perpetual existence.
ARTICLE VIII
The private property of the stockholders shall not be subject to the
payment of corporate debts to any extent whatever.
ARTICLE IX
In furtherance, and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized:
1. To make, alter, amend and rescind the by-laws of this
corporation, without any action on the part of the stockholders.
2. To authorize and cause to be executed mortgages and liens upon
the real and personal property of this corporation.
3. To fix, determine and vary the amount to be maintained as
surplus and, subject to the other provisions and requirements of this
Certificate of Incorporation, the amount or amounts to be set apart or
reserved as working capital or for any other lawful purposes. If so
determined by the Board of Directors, the corporation may from time to time
receive money and/or other property and credit the amount or value thereof
to reserve or surplus, and such money or other property may be an undivided
part of money or other property for another part of which stock, bonds,
debentures and/or other obligations of the corporation are issued. Against
any reserve or surplus so established there may be charged losses at any
time incurred by the corporation, also dividends or
<PAGE>
other distributions upon stock. Such reserve or surplus may be reduced from
time to time by the Board of Directors for the purposes above specified or by
transfer from such reserve or surplus to capital account.
4. From time to time to determine whether and to what extent, and
at what times and places, and under what conditions and regulations, the
accounts and books of this corporation (other than the stock ledger), or
any of them, shall be open to inspection of stockholders; and no
stockholder shall have any right of inspecting any account, book or
document of this corporation except as conferred by statute, unless
authorized by a resolution of stockholders or directors.
5. If the by-laws so provide, to designate two or more of its
number to constitute an executive committee, which committee shall for the
time being, as provided in said resolution or in the by-laws of this
corporation, have and exercise any or all of the powers of the Board of
Directors in the management of the business and affairs of this
corporation, and have power to authorize the seal of this corporation to be
affixed to all papers which may require it.
6. Pursuant to the affirmative vote of the holders of at least a
majority of the stock issued and outstanding having voting power, given at
a stockholders' meeting duly called for that purpose, or when authorized by
the written consent of the holders of a majority of the voting stock issued
and outstanding, the Board of Directors shall have power and authority at
any meeting to sell, lease or exchange all of the property and assets of
this corporation, including its goodwill and its corporate franchises, upon
such terms and conditions as its Board of Directors deem expedient and for
the best interests of the corporation.
7. Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application
in a summary way of this corporation or of any creditor or stockholder
thereof, or on the application of any receiver or receivers appointed for
this corporation under the provisions of Section 3883 of the Revised Code
of 1915 of said State, or on the application of trustees in dissolution or
of any receiver or receivers appointed for this corporation under the
provisions of Section 43 of this Chapter, order a meeting of the creditors
or class of creditors, and/or of the stockholders or class of stockholders
of this corporation, as the case may be, to be summoned in such manner as
the said court directs. If a majority in number representing three-fourths
in value of the creditors or class of creditors, and/or of the stockholders
or class of stockholders of this corporation, as the case may be, agree to
any compromise or arrangement and to any reorganization of this corporation
as a consequence of such compromise or arrangement, the said compromise or
arrangement and the said
<PAGE>
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the stockholders or class of stockholders, of this corporation, as the case
may be, and also on this corporation.
8. This corporation may in its by-laws confer powers upon its
directors in addition to the foregoing and in addition to the powers and
authorities expressly conferred upon them by the statute.
9. Both stockholders and directors shall have power, if the by-laws
so provide, to hold their meetings, and to have one or more offices within
or without the State of Delaware and to keep the books of this corporation
(subject to the provisions of the statutes), outside of the State of
Delaware at such places as may be from time to time designated by the Board
of Directors.
ARTICLE X
The number of directors of this corporation shall be such number, not
less than three, as shall from time to time be fixed by the by-laws of the
corporation. In case of any vacancy in the Board of Directors through
death, resignation, disqualification or other cause, the remaining
directors, by affirmative vote of a majority thereof, may elect a successor
to office for the unexpired portion of the term of the director whose place
shall be vacant and until the election of a successor.
ARTICLE XI
A director of this corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except that nothing contained in this Article
XI shall eliminate or limit the liability of a director (1) for any breach
of the director's duty of loyalty to the corporation or its stockholders,
(2) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (3) under Section 174 of the
Delaware General Corporation Law, or (4) for any transaction from which the
director derived an improper personal benefit. No amendment to or repeal
of this Article XI shall apply to or have any effect on the liability or
alleged liability of any director of the corporation for or with respect to
any acts or omissions of such director occurring prior to such amendment or
repeal.
ARTICLE XII
In the absence of fraud, no contract or transaction between this
corporation and any other association or corporation shall be affected by
the fact that any of the Directors or officers of this
<PAGE>
corporation are interested in or are directors or officers of such other
association or corporation, and any director or officer of this corporation
individually may be a party to or may be interested in any such contract or
transaction of this corporation; and no such contract or transaction of this
corporation with any person or persons, firm, association or corporation
shall be affected by the fact that any director or officer of this
corporation is a party to or interested in such contract or transaction or
in any way connected with such person or persons, firm, association or
corporation; and each and every person who may become a director or officer
of this corporation is hereby relieved from any liability that might
otherwise exist from thus contracting with this corporation for the benefit
of himself or any person, firm, association or corporation in which he may
be in any wise interested.
IN WITNESS WHEREOF, the corporation has caused its corporate seal to
be affixed and this Restated Certificate of Incorporation to be signed by
its Senior Vice President and General Counsel and attested by its Secretary
this 21st day of October, 1988.
REYNOLDS METALS COMPANY
By /s/ John H. Galea
John H. Galea
Senior Vice President and
General Counsel
ATTEST:
/s/ Donald T. Cowles
Donald T. Cowles
Secretary
<PAGE>
CERTIFICATE OF OWNERSHIP
AND MERGER
MERGING
FOIL DISTRIBUTING COMPANY
INTO
REYNOLDS METALS COMPANY
___________________________________
Pursuant to Section 253 of the
Delaware General Corporation Law
___________________________________
REYNOLDS METALS COMPANY, a corporation incorporated on the 18th
day of July, 1928, pursuant to the provisions of the General Corporation
Law of the State of Delaware (the "Corporation"), does hereby certify that
the Corporation owns all of the outstanding stock of FOIL DISTRIBUTING
COMPANY, a corporation incorporated on the 4th day of April, 1983, pursuant
to the provisions of the general corporation Law of the State of Delaware,
and that the Corporation by resolutions of its Board of Directors duly
adopted at a meeting held on the 17th day of April, 1991, determined to and
did merge into itself said FOIL DISTRIBUTING COMPANY, which resolutions are
as follows:
RESOLVED, that this corporation, as owner of all the
outstanding capital stock of Foil Distributing Company, merge
into itself Foil Distributing Company and assume all of its
liabilities and obligations effective as of 12:01 a.m. on April
30, 1991; and
FURTHER RESOLVED, that the Chairman of the Board, the
President, any Vice President, the Secretary and any Assistant
Secretary are each hereby authorized to take all such other
action, including, without limitation, incurrence and payment
of all fees, expenses and other charges, and to execute and
deliver all such agreements, instruments and documents, which
in the opinion of any of them may be necessary or desirable to
achieve the purposes of or effect the transactions contemplated
by the preceding resolution, the taking of such action or the
execution of any such agreements, instruments or documents to
be conclusive evidence of the authority to take or execute the
same.
This Certificate of Ownership and Merger shall be effective as
of 12:01 A.M. on April 30, 1991.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate
to be executed and attested by its officers thereunto duly authorized this
22nd day of April, 1991.
REYNOLDS METALS COMPANY
By /s/ Donald T. Cowles
-----------------------------------
Vice President, General Counsel
and Secretary
ATTEST:
/s/ Donna C. Dabney
- -----------------------
Assistant Secretary
<PAGE>
State of Delaware PAGE 1
Office of the Secretary of State
--------------------------------
I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT
COPY OF THE CERTIFICATE OF OWNERSHIP & MERGER OF "REYNOLDS METALS
COMPANY" FILED IN THIS OFFICE ON THE TWENTY-THIRD DAY OF APRIL,
A.D. 1991, AT 9 O'CLOCK A.M.
* * * * * * * *
William T. Quillen
-----------------------------
William T. Quillen, Secretary of State
AUTHENTICATION: *4114707
DATE: 10/25/1993
932985004
<PAGE>
CERTIFICATE OF OWNERSHIP
AND MERGER
MERGING
REYNOLDS OF HAWAII, INC.
INTO
REYNOLDS METALS COMPANY
___________________________________
Pursuant to Section 253 of the
Delaware General Corporation Law
___________________________________
REYNOLDS METALS COMPANY, a corporation incorporated on the 18th
day of July, 1928, pursuant to the provisions of the General Corporation
Law of the State of Delaware (the "Corporation"), does hereby certify that
the Corporation owns all of the outstanding stock of REYNOLDS OF HAWAII,
INC., a corporation incorporated on the 4th day of May, 1979, pursuant to
the provisions of the general corporation Law of the State of Delaware, and
that the Corporation by resolutions of its Board of Directors duly adopted
at a meeting held on the 17th day of April, 1991, determined to and did
merge into itself said REYNOLDS OF HAWAII, INC., which resolutions are as
follows:
RESOLVED, that this corporation, as owner of all the
outstanding capital stock of Reynolds of Hawaii, Inc., merge
into itself Reynolds of Hawaii, Inc. and assume all of its
liabilities and obligations effective as of 12:01 a.m. on April
30, 1991; and
FURTHER RESOLVED, that the Chairman of the Board, the
President, any Vice President, the Secretary and any Assistant
Secretary are each hereby authorized to take all such other
action, including, without limitation, incurrence and payment
of all fees, expenses and other charges, and to execute and
deliver all such agreements, instruments and documents, which
in the opinion of any of them may be necessary or desirable to
achieve the purposes of or effect the transactions contemplated
by the preceding resolution, the taking of such action or the
execution of any such agreements, instruments or documents to
be conclusive evidence of the authority to take or execute the
same.
This Certificate of Ownership and Merger shall be effective as
of 12:01 A.M. on April 30, 1991.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate
to be executed and attested by its officers thereunto duly authorized this
22nd day of April, 1991.
REYNOLDS METALS COMPANY
By /s/ Donald T. Cowles
-------------------------------
Vice President, General Counsel
and Secretary
ATTEST:
/s/ Donna C. Dabney
- ------------------------
Assistant Secretary
<PAGE>
CERTIFICATE OF OWNERSHIP
AND MERGER
MERGING
BROAD ST. ROAD CORPORATION
INTO
REYNOLDS METALS COMPANY
___________________________________
Pursuant to Section 253 of the
Delaware General Corporation Law
___________________________________
REYNOLDS METALS COMPANY, a Delaware corporation (the
"Corporation"), does hereby certify that the Corporation owns all the
outstanding stock of BROAD ST. ROAD CORPORATION, a Delaware corporation,
and that the Corporation by resolutions of its Board of Directors duly
adopted at a meeting held on the 15th day of November, 1991, determined to
and did merge into itself BROAD ST. ROAD CORPORATION, which resolutions are
as follows:
RESOLVED, that this corporation, as owner of all the
outstanding capital stock of Broad St. Road Corporation, merge
into itself Broad St. Road Corporation and assume all of its
liabilities and obligations effective as of 5:00 p.m. on
December 31, 1991; and
FURTHER RESOLVED, that the Chairman of the Board, the
President, any Vice President, the Secretary and any Assistant
Secretary are each hereby authorized to take all such other
action, including, without limitation, incurrence and payment
of all fees, expenses and other charges, and to execute and
deliver all such agreements, instruments and documents, which
in the opinion of any of them may be necessary or desirable to
achieve the purposes of or effect the transactions contemplated
by the preceding resolution, the taking of such action or the
execution of any such agreements, instruments or documents to
be conclusive evidence of the authority to take or execute the
same.
This Certificate of Ownership and Merger shall be effective as
of 5:00 p.m. on December 31, 1991.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate
to be executed and attested by its officers thereunto duly authorized this
26th day of November, 1991.
REYNOLDS METALS COMPANY
By /s/ Donald T. Cowles
----------------------------------
Vice President, General Counsel
and Secretary
ATTEST:
/s/ D. Michael Jones
- -------------------------
Assistant Secretary
<PAGE>
CERTIFICATE OF OWNERSHIP
AND MERGER
MERGING
REYNOLDS ALUMINUM RECYCLING COMPANY
INTO
REYNOLDS METALS COMPANY
____________________________________
Pursuant to Section 253 of the
Delaware General Corporation Law
____________________________________
REYNOLDS METALS COMPANY, a Delaware corporation (the
"Corporation"), does hereby certify that the Corporation owns all the
outstanding stock of REYNOLDS ALUMINUM RECYCLING COMPANY, a Missouri
corporation, and that the Corporation by resolutions of its Board of
Directors duly adopted by unanimous written consent on December 16, 1991
pursuant to Section 141(f) of the Delaware General Corporation Law
determined to and did merge into itself REYNOLDS ALUMINUM RECYCLING
COMPANY, which resolutions are as follows:
RESOLVED, that this corporation, as owner of all the
outstanding capital stock of Reynolds Aluminum Recycling
Company, merge into itself Reynolds Aluminum Recycling Company
and assume all of its liabilities and obligations effective as
of 5:00 p.m. on December 31, 1991 pursuant to the following
Plan of Merger:
1. Reynolds Metals Company of Delaware is the
survivor.
2. All of the property, rights, privileges, leases
and patents of Reynolds Aluminum Recycling Company, a
Missouri corporation, are to be transferred to and
become the property of Reynolds Metals Company, the
survivor. The officers and board of directors of the
above named corporations are authorized to execute
all deeds, assignments, and documents of every nature
which may be needed to effectuate a full and complete
transfer of ownership.
3. The officers and board of directors of Reynolds
Metals Company shall continue in office until their
successors are duly elected and qualified under the
provisions of the by-laws of the surviving
corporation.
4. It is agreed that, upon and after the issuance
of a certificate of merger by the Secretary of State
of the State of Missouri:
<PAGE>
a. The surviving corporation may be served
with process in the State of Missouri in
any proceeding for the enforcement of any
obligation of any corporation organized
under the laws of the State of Missouri
which is a party to the merger and in any
proceeding for the enforcement of the
rights of a dissenting shareholder of any
such corporation organized under the laws
of the State of Missouri against the
surviving corporation;
b. The Secretary of State of the State of
Missouri shall be and hereby is irrevocably
appointed as the agent of the surviving
corporation to accept service of process in
any such proceeding; the address to which
the service of process in any such
proceeding shall be mailed is: Secretary,
Reynolds Metals Company, 6601 West Broad
Street, Richmond, Virginia 23230; and
c. The surviving corporation will promptly pay
to the dissenting shareholders of any
corporation organized under the laws of the
State of Missouri which is a party to the merger
the amount, if any, to which they shall be
entitled under the provisions of "The General
and Business Corporation Law of Missouri" with
respect to the rights of dissenting
shareholders.
5. The articles of incorporation of the survivor
are not amended.
provided that, at any time prior to the filing with the
Delaware Secretary of State of a Certificate of Ownership and
Merger merging Reynolds Aluminum Recycling Company into this
corporation, the Board of Directors of this corporation may
terminate this resolution and abandon the merger contemplated
hereby; and
FURTHER RESOLVED, that the Chairman of the Board, the
President, any Vice President, the Secretary and any Assistant
Secretary are each hereby authorized to take all such action,
including, without limitation, incurrence and payment of all
fees, expenses and other charges, and to execute and deliver
all such agreements,
<PAGE>
instruments and documents, which in the opinion of any of them
may be necessary or desirable to achieve the purposes of
or effect the transactions contemplated by the preceding
resolution, the taking of such action or the execution of
any such agreements, instruments or documents to the
conclusive evidence of the authority to take or execute the
same.
This Certificate of Ownership and Merger shall be effective as
of 5:00 p.m. on December 31, 1991.
IN WITNESS WHEREOF, the Corporation has caused this Certificate
to be executed and attested by its officers thereunto duly authorized this
20th day of December, 1991.
REYNOLDS METALS COMPANY
By /s/ Donald T. Cowles
----------------------------------
Vice President, General Counsel
and Secretary
ATTEST:
/s/ D. Michael Jones
- -----------------------
Assistant Secretary
<PAGE>
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
REYNOLDS SEATTLE CAN COMPANY
INTO
REYNOLDS METALS COMPANY
_____________________________________________
Pursuant to Section 253 of the
General Corporation Law of Delaware
_____________________________________________
REYNOLDS METALS COMPANY, a Delaware corporation (the
"Corporation"), does hereby certify:
FIRST: That the Corporation is incorporated pursuant to the
General Corporation Law of the State of Delaware.
SECOND: That the Corporation owns all of the outstanding shares
of each class of the capital stock of REYNOLDS SEATTLE CAN COMPANY, a
Delaware corporation.
THIRD: That the Corporation, by the following resolutions of
its Board of Directors, duly adopted at a meeting held on the 19th day of
June, 1992, determined to merge into itself REYNOLDS SEATTLE CAN COMPANY on
the conditions set forth in such resolutions:
RESOLVED, that this corporation, as owner of all of
the outstanding shares of each class of the capital stock
of Reynolds Seattle Can Company, merge into itself
Reynolds Seattle Can Company and assume all of its
liabilities and obligations effective as of 5:00 p.m.
E.D.T. on June 30, 1992; and
FURTHER RESOLVED, that the Chief Executive Officer,
the Chief Operating Officer, the Chief Financial Officer,
any Vice Chairman, any
<PAGE>
Executive Vice President, any Vice President, the Secretary
and any Assistant Secretary are each hereby authorized
to take all such action, including, without limitation,
incurrence and payment of all fees, expenses and other
charges, and to execute and deliver all such agreements,
instruments and documents (including, without limitation,
a certificate of ownership and merger) which in the
opinion of any of them may be necessary or desirable to
achieve the purposes of or effect the transactions
contemplated by the preceding resolution, the
taking of any such action or the execution of any such
agreements, instruments or documents to be conclusive
evidence of the authority to take or execute the same.
This Certificate of Ownership and Merger shall be effective as
of 5:00 p.m. E.D.T. on June 30, 1992.
IN WITNESS WHEREOF, the Corporation has caused its corporate
seal to be affixed and this Certificate to be executed and attested by its
officers thereunto duly authorized this 19th day of June, 1992.
REYNOLDS METALS COMPANY
By /s/ Donald T. Cowles
----------------------------------
Vice President, General Counsel
and Secretary
[SEAL]
ATTEST:
By: /s/ D. Michael Jones
---------------------
Assistant Secretary
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 12/29/1993
933635393 - 240111
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
REYNOLDS ALUMINUM CREDIT CORPORATION
INTO
REYNOLDS METALS COMPANY
Pursuant to Section 253 of the
General Corporation Law of Delaware
REYNOLDS METALS COMPANY, a Delaware corporation (the
"Corporation"), does hereby certify:
FIRST: That the Corporation is incorporated pursuant to the
General Corporation Law of the State of Delaware.
SECOND: That the Corporations owns all of the outstanding shares
of the capital stock of REYNOLDS ALUMINUM CREDIT CORPORATION, a Delaware
corporation.
THIRD: That the Corporation, by the following resolutions of
its Board of Directors, duly adopted by unanimous written consent dated
December 16, 1993, determined to merge into itself REYNOLDS ALUMINUM CREDIT
CORPORATION on the conditions set forth in such resolutions:
RESOLVED, that this corporation, as owner of all of the
outstanding shares of the capital stock of Reynolds Aluminum
Credit Corporation, merge into itself Reynolds Aluminum Credit
Corporation and assume all of its liabilities and obligations
effective as of 5:00 p.m. E.S.T. on December 31, 1993;
FURTHER RESOLVED, that the Chief Executive Officer, the
Chief Financial Officer, any Vice Chairman, any Executive Vice
President, any Vice President, the Secretary and any Assistant
Secretary are each hereby authorized to take all such action,
including, without limitation, incurrence and payment of all
fees, expenses and other charges, and to execute and deliver all
such agreements, instruments and
<PAGE>
documents (including, without limitation, a certificate of
ownership and merger) which in the opinion of any of them may
be necessary or desirable to achieve the purposes of or
effect the transactions contemplated by the preceding resolution,
the taking of any such action or the execution of any such
agreements, instruments or documents to be conclusive evidence
of the authority to take or execute the same.
This Certificate of Ownership and Merger shall be effective as
of 5:00 p.m. E.S.T. on December 31, 1993.
IN WITNESS WHEREOF, the Corporation has caused its corporate
seal to be affixed and this Certificate to be executed and attested by its
officers thereunto duly authorized this 29th day of December, 1993.
REYNOLDS METALS COMPANY
By: /s/ D. Michael Jones
---------------------------------
Vice President, General Counsel
and Secretary
[SEAL]
ATTEST:
By:/s/ Carol L. Dillon
---------------------
Assistant Secretary
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:01 AM 12/29/1993
933635394 - 240111
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
REYNOLDS KANSAS CITY CAN COMPANY
INTO
REYNOLDS METALS COMPANY
Pursuant to Section 253 of the
General Corporation Law of Delaware
REYNOLDS METALS COMPANY, a Delaware corporation (the
"Corporation"), does hereby certify:
FIRST: That the Corporation is incorporated pursuant to the
General Corporation Law of the State of Delaware.
SECOND: That the Corporations owns all of the outstanding shares
of each class of the capital stock of REYNOLDS KANSAS CITY CAN COMPANY, a
Delaware corporation.
THIRD: That the Corporation, by the following resolutions of
its Board of Directors, duly adopted by unanimous written consent dated
December 16, 1993, determined to merge into itself REYNOLDS KANSAS CITY CAN
COMPANY on the conditions set forth in such resolutions:
RESOLVED, that this corporation, as owner of all of the
outstanding shares of each class of the capital stock of
Reynolds Kansas City Can Company, merge into itself Reynolds
Kansas City Can Company and assume all of its liabilities and
obligations effective as of 5:00 p.m. E.S.T. on December 31,
1993;
FURTHER RESOLVED, that the Chief Executive Officer, the
Chief Financial Officer, any Vice Chairman, any Executive Vice
President, any Vice President, the Secretary and any Assistant
Secretary are each hereby authorized to take all such action,
including, without limitation, incurrence and payment of all
fees, expenses and other charges, and to execute and deliver all
such agreements, instruments and
<PAGE>
documents (including, without limitation, a certificate of
ownership and merger) which in the opinion of any of them may
be necessary or desirable to achieve the purposes of or effect
the transactions contemplated by the preceding resolution, the
taking of any such action or the execution of any such agreements,
instruments or documents to be conclusive evidence of the authority
to take or execute the same.
This Certificate of Ownership and Merger shall be effective as
of 5:00 p.m. E.S.T. on December 31, 1993.
IN WITNESS WHEREOF, the Corporation has caused its corporate
seal to be affixed and this Certificate to be executed and attested by its
officers thereunto duly authorized this 29th day of December, 1993.
REYNOLDS METALS COMPANY
By: /s/ D. Michael Jones
-----------------------------------
Vice President, General Counsel
and Secretary
[SEAL]
ATTEST:
By: /s/ Carol L. Dillon
----------------------
Assistant Secretary
<PAGE>
State of Delaware PAGE 1
Office of the Secretary of State
--------------------------------
I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT
COPY OF THE CERTIFICATE OF DESIGNATION OF "REYNOLDS METALS
COMPANY" FILED IN THIS OFFICE ON THE TWENTIETH DAY OF JANUARY,
A.D. 1994, AT 9 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO
THE NEW CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING.
/s/ William T. Quillen
-----------------------------
William T. Quillen, Secretary of State
AUTHENTICATION: 7005454
DATE: 01-21-94
0240111 8100
944002852
<PAGE>
CERTIFICATE OF DESIGNATIONS,
PREFERENCES, RIGHTS AND LIMITATIONS OF
7% PRIDES, Convertible Preferred Stock
of
REYNOLDS METALS COMPANY
______________________
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
______________________
Reynolds Metals Company, a corporation organized and existing
under the laws of the State of Delaware (the "Corporation"), hereby
certifies that, under (i) authority conferred upon the Board of Directors
by the Restated Certificate of Incorporation of the Corporation, as amended
to date, (ii) the provisions of Sections 141(c) and 151 of the General
Corporation Law of the State of Delaware, and (iii) resolutions adopted by
the Board of Directors at its meeting on December 17, 1993, the 1993
Preferred Stock Committee of the Board of Directors at its meeting on
January 18, 1994 duly adopted the following resolution:
RESOLVED, that under (i) authority conferred upon the 1993
Preferred Stock Committee by the Board of Directors and (ii)
authority conferred upon the Board of Directors by the Restated
Certificate of Incorporation, as amended to date (the "Restated
Certificate of Incorporation"), the 1993 Preferred Stock Committee
hereby authorizes the issuance of 11,000,000 shares of authorized and
unissued preferred stock, without par value, of the Corporation, and
hereby fixes the designation, powers, preferences and relative,
participating, optional or other special rights, and the
qualifications, limitations or restrictions thereof, of such shares,
in addition to those set forth in the Restated Certificate of
Incorporation, as follows, to be set forth in a certificate of
designations (the "Certificate of Designations"):
<PAGE>
Section 1. Designation and Size of Issue; Ranking. (a)
The distinctive designation of the series of preferred stock shall be
"7% PRIDES, Convertible Preferred Stock" (the "PRIDES"). The shares
are Preferred Redeemable Increased Dividend Equity Securities. The
number of shares constituting the PRIDES shall be 11,000,000 shares.
Each share of PRIDES shall have a stated value of $47.25.
(b) Any shares of the PRIDES which at any time have been
redeemed for, or converted into, Common Stock, without par value, of
the Corporation (the "Common Stock") or otherwise reacquired by the
Corporation shall, after such redemption, conversion or other
acquisition, resume the status of authorized and unissued shares of
preferred stock, without par value, of the Corporation (the
"Preferred Stock"), without designation as to series until such
shares are once more designated as part of a particular series by the
Board of Directors.
(c) The shares of PRIDES shall rank on a parity, both as
to payment of dividends and distribution of assets upon liquidation,
with any Preferred Stock issued by the Corporation after the date of
this Certificate of Designations that by its terms ranks pari passu
with the PRIDES.
Section 2. Dividends. (a) The holders of record of the
shares of PRIDES shall be entitled to receive, when and as declared
by the Board of Directors out of funds legally available therefor,
cash dividends ("Preferred Dividends") from the date of the issuance
of the shares of PRIDES at the rate per annum of 7 percent of the
stated value per share (equivalent to $3.31 per annum or $0.8275 per
quarter for each share of PRIDES), payable quarterly in arrears, on
each April 1, July 1, October 1 and December 31 (each a "Dividend
Payment Date") or, if any such date is not
<PAGE>
a business day (as defined herein), the Preferred Dividend due on
such Dividend Payment Date shall be paid on the next succeeding
business day; provided, however, that, with respect to any dividend
period during which a redemption occurs, the Corporation may, at its
option, declare accrued Preferred Dividends to, and pay such Preferred
Dividends on, the date fixed for redemption, in which case such
Preferred Dividends shall be payable to the holders of shares of
PRIDES as of the record date for such dividend payment and shall not
be included in the calculation of the related PRIDES Call Price (as
defined herein). The first dividend period shall be from the date of
initial issuance of the shares of PRIDES to but excluding April 1,
1994 and the first Preferred Dividend shall be payable on April 1,
1994. Preferred Dividends on shares of PRIDES shall be cumulative
and shall accumulate from the date of original issuance. Preferred
Dividends on shares of PRIDES shall cease to accrue on and after the
Mandatory Conversion Date (as defined herein) or on and after the date
of their earlier conversion or redemption, as the case may be.
Preferred Dividends shall be payable to holders of record as they
appear on the stock register of the Corporation on such record dates,
not less than 15 nor more than 60 days preceding the payment date
thereof, as shall be fixed by the Board of Directors. Preferred
Dividends payable on shares of PRIDES for any period less than a
full quarterly dividend period (or, in the case of the first
Preferred Dividend, from the date of initial issuance of the shares
of PRIDES to but excluding the first Dividend Payment Date) shall
be computed on the basis of a 360-day year of twelve 30-day months
and the actual number of days elapsed in any period less than one month.
Preferred Dividends shall accrue on a daily basis whether or not there
are funds of the Corporation legally available for the payment of such
dividends and whether or not such Preferred Dividends are declared.
Accrued but unpaid Preferred Dividends shall
<PAGE>
cumulate as of the Dividend Payment Date on which
they first become payable, but no interest shall accrue on
accumulated but unpaid Preferred Dividends.
(b) As long as shares of PRIDES are outstanding, no
dividends (other than dividends payable in shares of, or warrants,
rights or options exercisable for or convertible into shares of,
Second Preferred Stock, $100 par value, of the Corporation (the
"Second Preferred Stock"), Common Stock or any other capital stock of
the Corporation ranking junior to the shares of PRIDES as to the
payment of dividends and the distribution of assets upon liquidation
(collectively, the "Junior Stock") and cash in lieu of fractional
shares in connection with any such dividend) shall be paid or
declared in cash or otherwise, nor shall any other distribution be
made (other than a distribution payable in Junior Stock and cash in
lieu of fractional shares in connection with any such distribution),
on any Junior Stock unless (i) full dividends on Preferred Stock
(including the shares of PRIDES) that does not constitute Junior
Stock ("Parity Preferred Stock") have been paid, or declared and set
aside for payment, for all dividend periods terminating at or before
the date of such Junior Stock dividend or distribution payment to the
extent such dividends are cumulative; (ii) dividends in full for the
current quarterly dividend period have been paid, or declared and set
aside for payment, on all Parity Preferred Stock to the extent such
dividends are cumulative; (iii) the Corporation has paid or set aside
all amounts, if any, then or theretofore required to be paid or set
aside for all purchase, retirement, and sinking funds, if any, for
any Parity Preferred Stock; and (iv) the Corporation is not in
default on any of its obligations to redeem any Parity Preferred
Stock.
<PAGE>
(c) As long as any shares of PRIDES are outstanding, no
shares of any Junior Stock may be purchased, redeemed, or otherwise
acquired by the Corporation or any of its subsidiaries (except in
connection with a reclassification or exchange of any Junior Stock
through the issuance of other Junior Stock (and cash in lieu of
fractional shares in connection therewith) or the purchase,
redemption or other acquisition of any Junior Stock with any Junior
Stock (and cash in lieu of fractional shares in connection
therewith)) nor may any funds be set aside or made available for any
sinking fund for the purchase or redemption of any Junior Stock
unless: (i) full dividends on Parity Preferred Stock have been paid,
or declared and set aside for payment, for all dividend periods
terminating at or before the date of such purchase, redemption or
other acquisition to the extent such dividends are cumulative; (ii)
dividends in full for the current quarterly dividend period have been
paid, or declared and set aside for payment, on all Parity Preferred
Stock to the extent such dividends are cumulative; (iii) the
Corporation has paid or set aside all amounts, if any, then or
theretofore required to be paid or set aside for all purchase,
retirement, and sinking funds, if any, for any Parity Preferred
Stock; and (iv) the Corporation is not in default on any of its
obligations to redeem any Parity Preferred Stock.
(d) As long as any shares of PRIDES are outstanding,
dividends or other distributions may not be declared or paid on any
Parity Preferred Stock (other than dividends or other distributions
payable in Junior Stock and cash in lieu of fractional shares in
connection therewith), and the Corporation may not purchase, redeem
or otherwise acquire any Parity Preferred Stock (except with any
Junior Stock and cash in lieu of fractional shares in connection
therewith), unless either: (a)(i) full dividends on Parity Preferred
Stock have been paid, or declared and set aside
<PAGE>
for payment, for all dividend periods terminating at or before the
date of such Parity Preferred Stock dividend, distribution, purchase,
redemption or other acquisition payment to the extent such dividends
are cumulative; (ii) dividends in full for the current quarterly
dividend period have been paid, or declared and set aside for payment,
on all Parity Preferred Stock to the extent such dividends are
cumulative; (iii) the Corporation has paid or set aside all amounts,
if any, then or theretofore required to be paid or set aside for all
purchase, retirement, and sinking funds, if any, for any Parity Preferred
Stock; and (iv) the Corporation is not in default on any of its
obligations to redeem any Parity Preferred Stock; or (b) with respect
to the payment of dividends only, any such dividends shall be
declared and paid pro rata so that the amounts of any dividends
declared and paid per share of PRIDES and each other share of Parity
Preferred Stock shall in all cases bear to each other the same ratio
that accrued dividends (including any accumulation with respect to
unpaid dividends for prior dividend periods, if such dividends are
cumulative) per share of PRIDES and such other shares of Parity
Preferred Stock bear to each other.
Section 3. Conversion or Redemption. (a) Unless
previously either redeemed or converted at the option of the holder
in accordance with the provisions of Section 3(c), on December 31,
1997 (the "Mandatory Conversion Date"), each outstanding share of
PRIDES shall mandatorily convert ("Mandatory Conversion") into (i)
shares of authorized Common Stock at the PRIDES Common Equivalent
Rate (as defined herein) in effect on the Mandatory Conversion Date
and (ii) the right to receive cash in an amount equal to all accrued
and unpaid Preferred Dividends on such share of PRIDES (other than
previously declared dividends payable to a holder of record as of a
prior date) to but excluding the Mandatory Conversion Date, whether
or not declared, out of
<PAGE>
funds legally available for the payment of Preferred Dividends,
subject to the right of the Corporation to redeem the shares of
PRIDES on or after December 31, 1996 (the "Initial Redemption Date")
and before the Mandatory Conversion Date and subject to the
conversion of the shares of PRIDES at the option of the holder at
any time before the Mandatory Conversion Date. The "PRIDES Common
Equivalent Rate" shall initially be one share of Common Stock for
each share of PRIDES and shall be subject to adjustment as set forth
in Sections 3(d) and 3(e). Shares of PRIDES shall cease to be
outstanding on the Mandatory Conversion Date. The Corporation shall
make such arrangements as it deems appropriate for the issuance of
certificates representing shares of Common Stock and
for the payment of cash in respect of such accrued and unpaid
dividends, if any, or cash in lieu of fractional shares, if any, in
exchange for and contingent upon surrender of certificates
representing the shares of PRIDES, and the Corporation may defer the
payment of dividends on such shares of Common Stock and the voting
thereof until, and make such payment and voting contingent upon, the
surrender of certificates representing the shares of PRIDES;
provided, that the Corporation shall give the holders of the shares
of PRIDES such notice of any such actions as the Corporation deems
appropriate and upon surrender such holders shall be entitled to
receive such dividends declared and paid, if any, on such shares of
Common Stock subsequent to the Mandatory Conversion Date.
(b)(i) Shares of PRIDES are not redeemable by the
Corporation before the Initial Redemption Date. At any time and from
time to time on or after that date until immediately before the
Mandatory Conversion Date, the Corporation shall have the right to
redeem, in whole or in part, the outstanding shares of PRIDES
(subject to the notice provisions set forth in Section 3(b)(iii)).
Upon any such redemption, the Corporation shall deliver to each
<PAGE>
holder thereof, in exchange for each such share of PRIDES subject to
redemption, the greater of:
(A) the number of shares of Common Stock equal to the
applicable PRIDES Call Price (as defined herein) in effect on
the redemption date divided by the Current Market Price (as
defined herein) of the Common Stock, determined as of the second
Trading Day (as defined herein) immediately preceding the Notice
Date (as defined herein); or
(B) .82 of a share of Common Stock (subject to adjustment
in the same manner as the PRIDES Optional Conversion Rate (as
defined herein) is adjusted).
Preferred Dividends on the shares of PRIDES shall cease to accrue on
and after the date fixed for their redemption.
The "PRIDES Call Price" of each share of PRIDES shall be
the sum of (x) $48.077 on and after the Initial Redemption Date, to
and including March 31, 1997; $47.870 on and after April 1, 1997, to
and including June 30, 1997; $47.663 on and after July 1, 1997, to
and including September 30, 1997; $47.457 on and after October 1,
1997, to and including November 30, 1997; and $47.25 on and after
December 1, 1997, to and including December 31, 1997; and (y) all
accrued and unpaid Preferred Dividends thereon to but not including
the date fixed for redemption (other than previously declared
Preferred Dividends payable to a holder of record as of a prior
date). If fewer than all the outstanding shares of PRIDES are to be
called for redemption, shares of PRIDES to be called shall be
selected by the Corporation from outstanding shares of PRIDES not
previously called by lot or pro rata (as nearly as may be) or by any
other method determined by the Board of Directors in its sole
discretion to be equitable.
<PAGE>
(ii) The term "Current Market Price" per share of the
Common Stock on any date of determination means the lesser of (x) the
average of the Closing Prices (as defined herein) of the Common Stock
for the 15 consecutive Trading Days ending on and including such date
of determination, or (y) the Closing Price of the Common Stock for
such date of determination; provided, however, that, with respect to
any redemption of shares of PRIDES, if any event resulting in an
adjustment of the PRIDES Common Equivalent Rate occurs during the
period beginning on the first day of such 15-day period and ending on
the applicable redemption date, the Current Market Price as
determined pursuant to the foregoing shall be appropriately adjusted
to reflect the occurrence of such event.
(iii) The Corporation shall provide notice of any
redemption of the shares of PRIDES to holders of record of the shares
of PRIDES to be called for redemption not less than 15 nor more than
60 days before the date fixed for redemption. Any such notice shall
be provided by mail, sent to the holders of record of the shares of
PRIDES to be called at each such holder's address as it appears on
the stock register of the Corporation, first class postage prepaid;
provided, however, that failure to give such notice or any defect
therein shall not affect the validity of the proceeding for
redemption of any shares of PRIDES to be redeemed except as to the
holder to whom the Corporation has failed to give such notice or
whose notice was defective. A public announcement of any call for
redemption shall be made by the Corporation before, or at the time
of, the mailing of such notice of redemption. The term "Notice Date"
with respect to any notice given by the Corporation in connection
with a redemption of the shares of PRIDES means the date on which
first occurs either the public announcement of such redemption or the
commencement of mailing of the notice to
<PAGE>
the holders of shares of PRIDES, in each case pursuant to this
Section 3(b)(iii).
Each such notice shall state, as appropriate, the following
and may contain such other information as the Corporation deems
advisable:
(A) the redemption date;
(B) that all outstanding shares of PRIDES are to be
redeemed or, in the case of a redemption of fewer than all
outstanding shares of PRIDES, the number of such shares held by
such holder to be redeemed;
(C) the PRIDES Call Price, the number of shares of Common
Stock deliverable upon redemption of each share of PRIDES to be
redeemed and the Current Market Price used to calculate such
number of shares of Common Stock;
(D) the place or places where certificates for such shares
are to be surrendered for redemption; and
(E) that dividends on the shares of PRIDES to be redeemed
shall cease to accrue on and after such redemption date (except
as otherwise provided herein).
(iv) The Corporation's obligation to deliver shares of
Common Stock and provide funds upon redemption in accordance with
this Section 3(b) shall be deemed fulfilled if, on or before a
redemption date, the Corporation shall deposit with a bank or trust
company, or an affiliate of a bank or trust company, having an office
or agency in New York, New York and having (or such affiliate having)
a combined capital and surplus of at least $50,000,000 according to
its last published statement of condition, or
<PAGE>
shall set aside or make other reasonable provision for the issuance of,
such number of shares of Common Stock as are required to be delivered
by the Corporation pursuant to this Section 3(b) upon the occurrence of
the related redemption of shares of PRIDES and for the payment of cash
in lieu of the issuance of fractional share amounts and accrued and
unpaid dividends payable in cash on the shares of PRIDES to be redeemed
as required by this Section 3(b), in trust for the account of the
holders of such shares of PRIDES to be redeemed (and so as to be and
continue to be available therefor), with irrevocable instructions and
authority to such bank or trust company that such shares and funds be
delivered upon redemption of the shares of PRIDES so called for
redemption. Any interest accrued on such funds shall be paid to the
Corporation from time to time. Any shares of Common Stock or funds
so deposited and unclaimed at the end of three years from such
redemption date shall be repaid and released to the Corporation,
after which the holder or holders of such shares of PRIDES so called
for redemption shall look only to the Corporation for delivery of
shares of Common Stock and the payment of any other funds due in
connection with the redemption of the shares of PRIDES.
(v) Each holder of shares of PRIDES called for redemption
must surrender the certificates evidencing such shares (properly
endorsed or assigned for transfer, if the Board of Directors shall so
require and the notice shall so state) to the Corporation at the
place designated in the notice of such redemption and shall thereupon
be entitled to receive certificates evidencing shares of Common Stock
and to receive any funds payable pursuant to this Section 3(b)
following such surrender and following the date of such redemption.
In case fewer than all the shares represented by any such surrendered
certificate are called for redemption, a new certificate shall be
issued at the expense of the Corporation representing the unredeemed
shares. If
<PAGE>
such notice of redemption shall have been given, and if
on the date fixed for redemption shares of Common Stock and funds
necessary for the redemption shall have been irrevocably either set
aside by the Corporation separate and apart from its other funds or
assets in trust for the account of the holders of the shares to be
redeemed (and so as to be and continue to be available therefor) or
deposited with a bank or trust company or an affiliate thereof as
provided herein or the Corporation shall have made other reasonable
provision therefor, then notwithstanding that the certificates
evidencing any shares of PRIDES so called for redemption shall not
have been surrendered, the shares represented thereby so called for
redemption shall be deemed no longer outstanding and Preferred
Dividends with respect to the shares so called for redemption and all
rights with respect to the shares so called for redemption shall
forthwith on and after such date cease and terminate (unless the
Corporation defaults on the payment of the redemption price), except
for (i) the rights of the holders to receive the shares of Common
Stock and funds, if any, payable pursuant to this Section 3(b)
without interest upon surrender of their certificates therefor and
(ii) the right of the holders, pursuant to Section 3(c) to convert
the shares of PRIDES called for redemption until immediately before
the close of business on any redemption date; provided, however, that
holders of shares of PRIDES at the close of business on a record date
for any payment of Preferred Dividends shall be entitled to receive
the Preferred Dividend payable on such shares on the corresponding
Dividend Payment Date notwithstanding the redemption of such shares
following such record date and before the Dividend Payment Date.
Holders of shares of PRIDES that are redeemed shall not be entitled
to receive dividends declared and paid on such shares of Common
Stock, and such shares of Common Stock shall not be entitled to vote,
until such shares of Common Stock are issued upon the
<PAGE>
surrender of the certificates representing such shares of PRIDES and
upon such surrender such holders shall be entitled to receive such
dividends declared and paid on such shares of Common Stock subsequent
to such redemption date.
(c) Shares of PRIDES are convertible, in whole or in part,
at the option of the holders thereof ("Optional Conversion"), at any
time before the Mandatory Conversion Date, unless previously
redeemed, into shares of Common Stock at a rate of .82 of a share of
Common Stock for each share of PRIDES (the "PRIDES Optional
Conversion Rate"), subject to adjustment as set forth below. The
right of Optional Conversion of shares of PRIDES called for
redemption shall terminate immediately before the close of business
on any redemption date with respect to such shares.
Optional Conversion of shares of PRIDES may be effected by
delivering certificates evidencing such shares of PRIDES, together
with written notice of conversion and a proper assignment of such
certificates to the Corporation or in blank (and, if applicable, cash
payment of an amount equal to the Preferred Dividend attributable to
the current quarterly dividend period payable on such shares), to the
office of the transfer agent for the shares of PRIDES or to any other
office or agency maintained by the Corporation for that purpose and
otherwise in accordance with Optional Conversion procedures
established by the Corporation. Each Optional Conversion shall be
deemed to have been effected immediately before the close of business
on the date on which the foregoing requirements shall have been
satisfied. The Optional Conversion shall be at the PRIDES Optional
Conversion Rate in effect at such time and on such date.
Holders of shares of PRIDES at the close of business on a
record date for any payment of declared Preferred Dividends shall be
entitled to receive the
<PAGE>
Preferred Dividend payable on such shares of PRIDES on the
corresponding Dividend Payment Date notwithstanding the
Optional Conversion of such shares of PRIDES following such record
date and before such Dividend Payment Date. However, shares of
PRIDES surrendered for Optional Conversion after the close of
business on a record date for any payment of declared Preferred
Dividends and before the opening of business on the next succeeding
Dividend Payment Date must be accompanied by payment in cash of an
amount equal to the Preferred Dividends attributable to the current
quarterly dividend period payable on such date (unless such shares of
PRIDES are subject to redemption on a redemption date between such
record date established for such Dividend Payment Date and such
Dividend Payment Date). Except as provided above, upon any Optional
Conversion of shares of PRIDES, the Corporation shall make no payment
of or allowance for unpaid Preferred Dividends, whether or not in
arrears, on such shares of PRIDES as to which Optional Conversion has
been effected or for previously declared dividends or distributions
on the shares of Common Stock issued upon Optional Conversion.
(d) The PRIDES Common Equivalent Rate and the PRIDES
Optional Conversion Rate are each subject to adjustment from time to
time as provided below in this paragraph (d).
(i) If the Corporation shall pay a stock dividend or make
a distribution with respect to its Common Stock in shares of
Common Stock (including by way of reclassification of any shares
of its Common Stock), the PRIDES Common Equivalent Rate and the
PRIDES Optional Conversion Rate in effect at the opening of
business on the day following the date fixed for the
determination by stockholders entitled to receive such dividend
or other distribution shall each be increased
<PAGE>
by multiplying such PRIDES Common Equivalent Rate and PRIDES
Optional Conversion Rate by a fraction of which the numerator
shall be the sum of the number of shares of Common Stock
outstanding at the close of business on the date fixed for such
determination, immediately before such dividend or distribution,
plus the total number of shares of Common Stock constituting such
dividend or other distribution, and of which the denominator shall
be the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination, immediately
before such dividend or distribution, such increase to become
effective immediately after the opening of business on the day
following the date fixed for such determination. For the
purposes of this clause (i), the number of shares of Common
Stock at any time outstanding shall not include shares held in
the treasury of the Corporation but shall include shares
issuable in respect of certificates issued in lieu of fractions
of shares of Common Stock.
(ii) In case outstanding shares of Common Stock shall be
subdivided or split into a greater number of shares of Common
Stock, the PRIDES Common Equivalent Rate and the PRIDES Optional
Conversion Rate in effect at the opening of business on the day
following the day upon which such subdivision becomes effective
shall each be proportionately increased, and, conversely, in
case outstanding shares of Common Stock shall be combined into a
smaller number of shares of Common Stock, the PRIDES Common
Equivalent Rate and the PRIDES Optional Conversion Rate in
effect at the opening of business on the day following the day
upon which such combination becomes effective shall each be
proportionately reduced, such increases or reductions, as the
case may be, to become effective immediately
<PAGE>
after the opening of business on the day following the day upon
which such subdivision or combination becomes effective.
(iii) If the Corporation shall, after the date of this
Certificate of Designations, issue rights or warrants to all
holders of its Common Stock entitling them (for a period not
exceeding 45 days from the date of such issuance) to subscribe
for or purchase shares of Common Stock at a price per share less
than the Current Market Price of the Common Stock (determined
pursuant to Section 3(b)(ii)) on the record date for the
determination of stockholders entitled to receive such rights or
warrants, then in each case the PRIDES Common Equivalent Rate
and the PRIDES Optional Conversion Rate shall each be adjusted
by multiplying the PRIDES Common Equivalent Rate and the PRIDES
Optional Conversion Rate in effect on such record date by a
fraction of which the numerator shall be the number of shares of
Common Stock outstanding on the date of issuance of such rights
or warrants, immediately before such issuance, plus the number
of additional shares of Common Stock offered for subscription or
purchase pursuant to such rights or warrants, and of which the
denominator shall be the number of shares of Common Stock
outstanding on the date of issuance of such rights or warrants,
immediately before such issuance, plus the number of shares of
Common Stock which the aggregate offering price of the total
number of shares of Common Stock so offered for subscription or
purchase pursuant to such rights or warrants would purchase at
such Current Market Price (determined by multiplying such total
number of shares by the exercise price of such rights or
warrants and dividing the product so obtained by such Current
Market Price). Shares of Common Stock
<PAGE>
held by the Corporation or by another corporation of which a
majority of the shares entitled to vote in the election of
directors are held, directly or indirectly, by the Corporation
shall not be deemed to be outstanding for purposes of such
computation. Such adjustment shall become effective at the
opening of business on the business day next following the
record date for the determination of stockholders entitled to
receive such rights or warrants. To the extent that shares of
Common Stock are not delivered after the expiration of such rights
or warrants, the PRIDES Common Equivalent Rate and the PRIDES
Optional Conversion Rate shall each be readjusted to the PRIDES
Common Equivalent Rate and the PRIDES Optional Conversion Rate
which would then be in effect had the adjustments made after the
issuance of such rights or warrants been made upon the basis of
issuance of rights or warrants in respect of only the number of
shares of Common Stock actually delivered.
(iv) If the Corporation shall pay a dividend or make a
distribution to all holders of its Common Stock consisting of
evidences of its indebtedness, cash or other assets (including
shares of capital stock of the Corporation other than Common
Stock but excluding any cash dividends or distributions, other
than Extraordinary Cash Distributions (as defined herein) and
dividends referred to in clauses (i) and (ii) above), or shall
issue to all holders of its Common Stock rights or warrants to
subscribe for or purchase any of its securities (other than
those referred to in clause (iii) above), then in each such
case, the PRIDES Common Equivalent Rate and the PRIDES Optional
Conversion Rate shall each be adjusted by multiplying the PRIDES
Common Equivalent Rate and the PRIDES Optional Conversation Rate
in effect on the record date
<PAGE>
for such dividend or distribution or for the determination of
stockholders entitled to receive such rights or warrants, as the
case may be, by a fraction of which the numerator shall be the
Current Market Price per share of the Common Stock (determined
pursuant to Section 3(b)(ii) on such record date), and of which
the denominator shall be such Current Market Price per share of
Common Stock less either (i) the fair market value (as determined
by the Board of Directors, whose determination shall be conclusive)
on such record date of the portion of the assets or evidences of
indebtedness so distributed, or of such subscription rights or
warrants, applicable to one share of Common Stock, or (ii) if
applicable, the amount of the Extraordinary Cash Distributions.
Such adjustment shall become effective on the opening of business
on the business day next following the record date for such
dividend or distribution or for the determination of holders
entitled to receive such rights or warrants, as the case may be.
(v) Any shares of Common Stock issuable in payment of a
dividend or other distribution shall be deemed to have been
issued immediately before the close of business on the record
date for such dividend or other distribution for purposes of
calculating the number of outstanding shares of Common Stock
under this Section 3.
(vi) Anything in this Section 3 notwithstanding, the
Corporation shall be entitled (but shall not be required) to
make such upward adjustments in the PRIDES Common Equivalent
Rate, the PRIDES Optional Conversion Rate and the PRIDES Call
Price in addition to those set forth by this Section 3, as the
Corporation, in its sole discretion, shall determine to be
advisable, in
<PAGE>
order that any stock dividends, subdivision of stock,
distribution of rights to purchase stock or securities,
or distribution of securities convertible into or exchangeable
for stock (or any transaction that could be treated as any of
the foregoing transactions pursuant to Section 305 of the
Internal Revenue Code of 1986, as amended) hereafter made by the
Corporation to its stockholders shall not be taxable. The term
"Extraordinary Cash Distribution" means, with respect to any
consecutive 12-month period, all cash dividends and cash
distributions on the Common Stock during such period (other than
cash dividends and cash distributions for which a prior
adjustment to the PRIDES Common Equivalent Rate and PRIDES
Optional Conversion Rate was previously made) to the extent such
dividends and distributions exceed, on a per share of Common
Stock basis, 10% of the average daily Closing Price of the
Common Stock over such period.
(vii) In any case in which this Section 3(d) shall require
that an adjustment as a result of any event become effective at
the opening of business on the business day next following a
record date and the date fixed for conversion pursuant to
Section 3(a) or redemption pursuant to Section 3(b) on and after
such record date, but before the occurrence of such event, the
Corporation may, in its sole discretion, elect to defer the
following until after the occurrence of such event: (A) issuing
to the holder of any shares of PRIDES surrendered for conversion
or redemption the fractional shares of Common Stock issuable
before giving effect to such adjustment; and (B) paying to such
holder any amount in cash in lieu of a fractional share of
Common Stock pursuant to Section 4.
<PAGE>
(viii) All adjustments to the PRIDES Common Equivalent
Rate and the PRIDES Optional Conversion Rate shall be calculated
to the nearest 1/100th of a share of Common Stock. No
adjustment in the PRIDES Common Equivalent Rate or in the PRIDES
Optional Conversion Rate shall be required unless such
adjustment would require an increase or decrease of at least one
percent therein; provided, however, that any adjustments which
by reason of this Section 3(d) are not required to be made shall
be carried forward and taken into account in any subsequent
adjustment. All adjustments to the PRIDES Common Equivalent
Rate and PRIDES Optional Conversion Rate shall be made
successively.
(ix) At least 10 business days before taking any action
that could result in an adjustment affecting the PRIDES Common
Equivalent Rate or the PRIDES Optional Conversion Rate such that
the conversion price (for purposes of this section, an amount
equal to the PRIDES Call Price divided by the PRIDES Common
Equivalent Rate or the PRIDES Optional Conversion Rate,
respectively, as in effect from time to time) would be below the
then par value of the Common Stock, the Corporation shall take
any corporate action which may, in the opinion of its counsel,
be necessary in order that the Corporation may validly and
legally issue fully paid and nonassessable shares of Common
Stock at the PRIDES Common Equivalent Rate or the PRIDES
Optional Conversion Rate as so adjusted.
(x) Before redeeming any shares of PRIDES, the Corporation
shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Corporation may validly
and legally issue fully paid and nonassessable shares of Common
Stock upon such redemption.
<PAGE>
(e) In case of any consolidation or merger to which the
Corporation is a party (other than a consolidation or merger in which
the Corporation is the surviving or continuing corporation and in
which the shares of Common Stock outstanding immediately before the
merger or consolidation remain unchanged), or in the case of any sale
or transfer to another corporation of the property of the Corporation
as an entirety or substantially as an entirety, or in the case of a
statutory exchange of securities with another corporation (other than
in connection with a merger or acquisition), each share of PRIDES
shall, after consummation of such transaction, be subject to (i)
conversion at the option of the holder into the kind and amount of
securities, cash, or other property receivable upon consummation of
such transaction by a holder of the number of shares of Common Stock
into which such share of PRIDES might have been converted immediately
before consummation of such transaction, (ii) conversion on the
Mandatory Conversion Date into the kind and amount of securities,
cash, or other property receivable upon consummation of such
transaction by a holder of the number of shares of Common Stock into
which such share of PRIDES would have been converted if the
conversion on the Mandatory Conversion Date had occurred immediately
before the date of consummation of such transaction, plus the right
to receive cash in an amount equal to all accrued and unpaid
dividends on such share of PRIDES (other than previously declared
dividends payable to a holder of record as of a prior date), and
(iii) redemption on any redemption date in exchange for the kind and
amount of securities, cash, or other property receivable upon
consummation of such transaction by a holder of the number of shares
of Common Stock that would have been issuable at the PRIDES Call
Price in effect on such redemption date upon a redemption of such
share of PRIDES immediately before consummation of such transaction,
assuming that, if the Notice Date for such redemption is not
<PAGE>
before such transaction, the Notice Date had been the date of such
transaction; and assuming in each case that such holder of shares of
Common Stock failed to exercise rights of election, if any, as to the
kind or amount of securities, cash, or other property receivable upon
consummation of such transaction (provided that, if the kind or
amount of securities, cash, or other property receivable upon
consummation of such transaction is not the same for each
non-electing share, then the kind and amount of securities, cash, or
other property receivable upon consummation of such transaction for
each non-electing share shall be deemed to be the kind and amount so
receivable per share by a plurality of the non-electing shares). The
kind and amount of securities into or for which the shares of PRIDES
shall be convertible or redeemable after consummation of such
transaction shall be subject to adjustment as described in Section
3(d) following the date of consummation of such transaction. The
Corporation may not become a party to any such transaction unless the
terms thereof are consistent with the foregoing.
(f) Whenever the PRIDES Common Equivalent Rate and PRIDES
Optional Conversion Rate are adjusted as provided in Section 3(d),
the Corporation shall:
(i) forthwith compute the adjusted PRIDES Common
Equivalent Rate and PRIDES Optional Conversion Rate in
accordance with this Section 3 and prepare a certificate signed
by the Chief Financial Officer, any Vice President, the
Treasurer or the Controller of the Corporation setting forth the
adjusted PRIDES Common Equivalent Rate and the PRIDES Optional
Conversion Rate, the method of calculation thereof in reasonable
detail and the facts requiring such adjustment and upon which
such adjustment is based, which certificate shall be conclusive,
final and binding evidence of the
<PAGE>
correctness of the adjustment, and shall file such certificate
forthwith with the transfer agent for the shares of the PRIDES
and the Common Stock;
(ii) make a prompt public announcement stating that the
PRIDES Common Equivalent Rate and PRIDES Optional Conversion
Rate have been adjusted and setting forth the adjusted PRIDES
Common Equivalent Rate and PRIDES Optional Conversion Rate;
(iii) mail a notice stating that the PRIDES Common
Equivalent Rate and the PRIDES Optional Conversion Rate have
been adjusted, the facts requiring such adjustment and upon
which such adjustment is based and setting forth the adjusted
PRIDES Common Equivalent Rate and PRIDES Optional Conversion
Rate, to the holders of record of the outstanding shares of
PRIDES, at or prior to the time the Corporation mails an interim
statement, if any, to its stockholders covering the fiscal
quarter period during which the facts requiring such adjustment
occurred, but in any event within 45 days of the end of such
fiscal quarter period.
(g) In case, at any time while any of the shares of PRIDES
are outstanding,
(i) the Corporation shall declare a dividend (or any other
distribution) on the Common Stock, excluding any cash dividends
other than Extraordinary Cash Distributions; or
(ii) the Corporation shall authorize the issuance to all
holders of the Common Stock of rights or warrants to subscribe
for or purchase shares of the
<PAGE>
Common Stock or of any other subscription rights or warrants; or
(iii) the Corporation shall authorize any reclassification
of the Common Stock (other than a subdivision or combination
thereof) or any consolidation or merger to which the Corporation
is a party and for which approval of any stockholders of the
Corporation is required (except for a merger of the Corporation
into one of its subsidiaries solely for the purpose of changing
the corporate domicile of the Corporation to another state of
the United States and in connection with which there is no
substantive change in the rights or privileges of any securities
of the Corporation other than changes resulting from differences
in the corporate statutes of the state the Corporation was then
domiciled in and the new state of domicile), or the sale or
transfer of all or substantially all of the assets of the
Corporation;
then the Corporation shall cause to be filed at each office or agency
maintained for the purpose of conversion of the shares of PRIDES, and
shall cause to be mailed to the holders of shares of PRIDES at their
last addresses as they shall appear on the stock register of the
Corporation, at least 10 business days before the date hereinafter
specified in clause (A) or (B) below (or the earlier of the dates
hereinafter specified, in the event that more than one date is
specified), a notice stating (A) the date on which a record is to be
taken for the purpose of such dividend, distribution, rights or
warrants, or, if a record is not to be taken, the date as of which
the holders of Common Stock of record to be entitled to such
dividend, distribution, rights or warrants are to be determined, or
(B) the date on which any such reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation or winding up is
<PAGE>
expected to become effective, and the date as of which it is expected
that holders of Common Stock of record shall be entitled to exchange
their Common Stock for securities or other property (including cash),
if any, deliverable upon such reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation or winding up. The
failure to give or receive the notice required by this paragraph (g)
or any defect therein shall not affect the legality or validity of
any such dividend, distribution, right or warrant or other action.
Section 4. No Fractional Shares. No fractional shares of
Common Stock shall be issued upon redemption or conversion of any
shares of the PRIDES. In lieu of any fractional share otherwise
issuable in respect of the aggregate number of shares of the PRIDES
of any holder that are redeemed or converted on any redemption date
or upon Mandatory Conversion or Optional Conversion, such holder
shall be entitled to receive an amount in cash (computed to the
nearest cent) equal to the same fraction of the (i) Current Market
Price of the Common Stock (determined as of the second Trading Day
immediately preceding the Notice Date) in the case of redemption, or
(ii) Closing Price of the Common Stock determined (A) as of the fifth
Trading Day immediately preceding the Mandatory Conversion Date, in
the case of Mandatory Conversion, or (B) as of the second Trading Day
immediately preceding the effective date of conversion, in the case
of an Optional Conversion by a holder. If more than one share of
PRIDES shall be surrendered for conversion or redemption at one time
by or for the same holder, the number of full shares of Common Stock
issuable upon conversion thereof shall be computed on the basis of
the aggregate number of shares of the PRIDES so surrendered or
redeemed.
<PAGE>
Section 5. Reservation of Common Stock. The Corporation
shall at all times reserve and keep available out of its authorized
and unissued Common Stock, solely for issuance upon the conversion or
redemption of shares of PRIDES, as herein provided, free from
preemptive rights, such maximum number of shares of Common Stock as
shall from time to time be issuable upon the Mandatory Conversion or
Optional Conversion or redemption of all the shares of PRIDES then
outstanding.
Section 6. Definitions. As used in this Certificate of
Designations:
(i) the term "business day" shall mean any day other than
a Saturday, Sunday, or a day on which banking institutions in
the State of New York are authorized or obligated by law or
executive order to close;
(ii) the term "Closing Price", on any day, shall mean the
last sale price as shown on the New York Stock Exchange
Composite Tape on such day, or, in case no such sale takes place
on such day, the average of the reported closing bid and asked
prices regular way on the New York Stock Exchange, or, if the
Common Stock is not listed or admitted to trading on such
Exchange, on the principal national securities exchange on which
the Common Stock is listed or admitted to trading, or, if not
listed or admitted to trading on any national securities
exchange, the average of the closing bid and asked prices of the
Common Stock on the over-the-counter market on the day in
question as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System, or a similar generally
accepted reporting service, or if not so available in such
manner, as furnished by any New York
<PAGE>
Stock Exchange member firm selected from time to time by the Board
of Directors for that purpose;
(iii) the term "record date" shall be such date as from
time to time fixed by the Board of Directors with respect to the
receipt of dividends, the receipt of a redemption price upon
redemption or the taking of any action or exercise of any voting
rights permitted hereby; and
(iv) the term "Trading Day" shall mean a date on which the
New York Stock Exchange (or any successor to such Exchange) is
open for the transaction of business.
Section 7. Payment of Taxes. The Corporation shall pay
any and all documentary, stamp or similar issue or transfer taxes
payable in respect of the issue or delivery of shares of Common Stock
on the redemption or conversion of shares of PRIDES pursuant to
Section 3; provided, however, that the Corporation shall not be
required to pay any tax which may be payable in respect of any
registration of transfer involved in the issue or delivery of shares
of Common Stock in a name other than that of the registered holder of
shares of PRIDES redeemed or converted or to be redeemed or
converted, and no such issue or delivery shall be made unless and
until the person requesting such issue has paid to the Corporation
the amount of any such tax or has established, to the satisfaction of
the Corporation, that such tax has been paid.
Section 8. Liquidation Rights. In the event of any
voluntary or involuntary liquidation, dissolution, or winding up of
the Corporation, and subject to the rights of holders of any other
series of Preferred Stock, the holders of outstanding shares of
PRIDES are entitled to receive the sum of $47.25 per share, plus an
amount equal to any accrued
<PAGE>
and unpaid Preferred Dividends thereon, out of the assets of the
Corporation available for distribution to stockholders, before any
distribution of assets is made to holders of Second Preferred Stock,
Common Stock or any other capital stock ranking junior to the shares
of PRIDES upon liquidation, dissolution, or winding up. If upon any
voluntary or involuntary liquidation, dissolution, or winding up of the
Corporation, the assets of the Corporation are insufficient to permit
the payment of the full preferential amounts payable with respect to
the shares of PRIDES and all other series of Parity Preferred Stock,
the holders of shares of PRIDES and of all other series of Parity
Preferred Stock shall share ratably in any distribution of assets of
the Corporation in proportion to the full respective preferential
amounts to which they are entitled. After payment of the full amount
of the liquidating distribution to which they are entitled, the holders
of shares of PRIDES shall not be entitled to any further participation
in any distribution of assets by the Corporation. A consolidation or
merger of the Corporation with or into one or more other corporations
(whether or not the Corporation is the corporation surviving such
consolidation or merger), or a sale, lease or exchange of all or
substantially all of the assets of the Corporation shall not be
deemed to be a voluntary or involuntary liquidation, dissolution, or
winding up of the Corporation.
Section 9. Voting Rights. (a) The holders of shares of
PRIDES shall 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 held. The holders of shares of PRIDES
and the holders of Common Stock shall vote together as one class on
such matters except as otherwise provided by law or by the Restated
Certificate of Incorporation.
<PAGE>
(b) In the event that dividends on the shares of PRIDES or
any other series of Preferred Stock shall be in arrears and unpaid
for six quarterly dividend periods, or if any series of Preferred
Stock (other than the PRIDES) shall be entitled for any other reason
to exercise voting rights, separate from the Common Stock, to elect
any directors of the Corporation ("Preferred Stock Directors"), the
holders of the shares of PRIDES (voting separately as a class with
holders of all other series of Preferred Stock upon which like voting
rights have been conferred and are exercisable), with each share of
PRIDES entitled to one vote on this and other matters in which
Preferred Stock votes as a group, shall be entitled to vote for the
election of two directors of the Corporation, such directors to be in
addition to the number of directors constituting the Board of
Directors immediately before the accrual of such right. Such right,
when vested, shall continue until all cumulative dividends
accumulated and payable on the shares of PRIDES and such other series
of Preferred Stock shall have been paid in full and the right of any
other series of Preferred Stock to exercise voting rights, separate
from the Common Stock, to elect Preferred Stock Directors shall
terminate or have terminated, and, when so paid and any such
termination occurs or has occurred, such right of the holders of the
shares of PRIDES shall cease. The term of office of any director
elected by the holders of the shares of PRIDES and such other series
shall terminate on the earlier of (i) the next annual meeting of
stockholders at which a successor shall have been elected and
qualified or (ii) the termination of the right of holders of the
shares of PRIDES and such other series to vote for such directors.
(c) The Corporation shall not, without the approval of the
holders of at least 66-2/3 percent of the shares of PRIDES then
outstanding: (i) amend, alter, or repeal any of the provisions of
the Restated Certificate of
<PAGE
Incorporation or By-Laws of the Corporation so as to affect adversely
the powers, preferences or rights of the holders of the shares of
PRIDES then outstanding or reduce the minimum time for any required
notice to which the holders of the shares of PRIDES then outstanding
may be entitled (an amendment of the Restated Certificate of
Incorporation to authorize or create, or to increase the authorized
amount of, Junior Stock or any stock of any class ranking on a parity
with the PRIDES being deemed not to affect adversely the powers,
preferences, or rights of the holders of the shares of PRIDES);
(ii) authorize or create, or increase the authorized amount of, any
capital stock, or any security convertible into capital stock of any
class, ranking prior to the shares of PRIDES either as to the payment
of dividends or the distribution of assets upon liquidation,
dissolution or winding up of the Corporation; or (iii) merge or
consolidate with or into any other corporation, unless each holder of
shares of PRIDES immediately preceding such merger or consolidation
shall receive or continue to hold in the resulting corporation the
same number of shares, with substantially the same rights and
preferences, as correspond to the shares of PRIDES so held.
(d) The Corporation shall not, without the approval of the
holders of at least a majority of the shares of PRIDES then
outstanding: (i) increase the authorized number of shares of
Preferred Stock; or (ii) create any other class or classes of capital
stock of the Corporation ranking on a parity with the Preferred
Stock, either as to payment of dividends or the distribution of
assets upon liquidation, dissolution or winding up of the
Corporation, or create any stock or other security convertible into
or exchangeable for or evidencing the right to purchase any stock of
such other class ranking on a parity with the Preferred Stock, or
increase the authorized number of shares
<PAGE>
of any such other class or amount of such other stock or security.
(e) Notwithstanding the provisions set forth in Sections
9(c) and 9(d), no such approval described therein of the holders of
the shares of PRIDES shall be required if, at or before the time when
such amendment, alteration, or repeal is to take effect or when the
authorization, creation, increase or issuance of any such prior or
parity stock or convertible security is to be made, or when such
consolidation or merger, voluntary liquidation, dissolution, or
winding up, sale, lease, conveyance, purchase, or redemption is to
take effect, as the case may be, provision is made for the redemption
of all shares of PRIDES at the time outstanding.
IN WITNESS WHEREOF, Reynolds Metals Company has caused this
certificate to be signed and attested this 20th day of January, 1994.
REYNOLDS METALS COMPANY
By: /s/ Henry S. Savedge, Jr.
-----------------------------
Name: Henry S. Savedge, Jr.
Title: Executive Vice President
and Chief Financial Officer
Attest:
/s/ D. Michael Jones
- --------------------------------
Name: D. Michael Jones
Title: Vice President, General
Counsel and Secretary
<PAGE>
State of Delaware PAGE 1
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT
COPY OF THE CERTIFICATE OF OWNERSHIP, WHICH MERGES:
"BEV-PAK, INC.", A DELAWARE CORPORATION,
"R/M CAN COMPANY", A DELAWARE CORPORATION,
WITH AND INTO "REYNOLDS METALS COMPANY" UNDER THE NAME OF
"REYNOLDS METALS COMPANY", A CORPORATION ORGANIZED AND EXISTING
UNDER THE LAWS OF THE STATE OF DELAWARE, AS RECEIVED AND FILED
IN THIS OFFICE THE TWELFTH DAY OF DECEMBER, A.D. 1994, AT 9
O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO
THE NEW CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING.
/s/ Edward J. Freel
------------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 7334005
DATE: 12-12-94
0240111 8100M
944241228
<PAGE>
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
R/M CAN COMPANY
AND
BEV-PAK, INC.
INTO
REYNOLDS METALS COMPANY
_____________________________________________
Pursuant to Section 253 of the
General Corporation Law of Delaware
_____________________________________________
REYNOLDS METALS COMPANY, a Delaware corporation (the
"Corporation"), does hereby certify:
FIRST: That the Corporation is incorporated pursuant to the
General Corporation Law of the State of Delaware.
SECOND: That the Corporation owns all of the outstanding shares
of each class of the capital stock of R/M CAN COMPANY and BEV-PAK, INC.,
each a Delaware corporation.
THIRD: That the Corporation, by the following resolutions of
its Board of Directors, duly adopted at a meeting held on the 21st day of
October, 1994, determined to merge into itself R/M CAN COMPANY and BEV-PAK,
INC. on the conditions set forth in such resolutions:
RESOLVED, that the corporation, as owner of all of the
outstanding shares of each class of the capital stock of
R/M Can Company and Bev-Pak, Inc., merge into itself R/M
Can Company and Bev-Pak, Inc. and assume all of their
respective liabilities and obligations effective as of
11:59 p.m. E.S.T. on December 31, 1994; and
FURTHER RESOLVED, that the Chief Executive Officer,
the Chief Operating Officer, the Chief Financial Officer,
any Vice Chairman of the Board, any Executive Vice
President, any Vice President, the Secretary and any
Assistant Secretary are each hereby authorized on behalf of
the corporation to take all such action, including, without
limitation, incurrence and payment of all fees,
<PAGE>
expenses and other charges, and to execute and deliver all such
agreements, instruments and documents (including, without
limitation, a certificate of ownership and merger and
documents relating to employee benefit plans maintained for
employees of Bev-Pak, Inc.) which in the opinion of any of
them may be necessary or desirable to achieve the purposes
of or effect the transactions contemplated by the preceding
resolution, the taking of any such action or the execution
and delivery of any such agreements, instruments or
documents to be conclusive evidence of the authority to
take, execute or deliver the same.
This Certificate of Ownership and Merger shall be effective as
of 11:59 p.m. E.S.T. on December 31, 1994.
IN WITNESS WHEREOF, the Corporation has caused its corporate
seal to be affixed and this Certificate to be executed and attested by its
officers thereunto duly authorized this 29th day of November, 1994.
REYNOLDS METALS COMPANY
By /s/ D. Michael Jones
----------------------------------
Vice President, General Counsel
and Secretary
[SEAL]
ATTEST:
By: /s/ Brenda A. Hart
-----------------------
Assistant Secretary
<PAGE>
State of Delaware PAGE 1
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT
COPY OF THE CERTIFICATE OF OWNERSHIP, WHICH MERGES:
"RMC HOLDING, INC.", A DELAWARE CORPORATION,
WITH AND INTO "REYNOLDS METALS COMPANY" UNDER THE NAME OF
"REYNOLDS METALS COMPANY", A CORPORATION ORGANIZED AND EXISTING
UNDER THE LAWS OF THE STATE OF DELAWARE, AS RECEIVED AND FILED
IN THIS OFFICE THE THIRTEENTH DAY OF DECEMBER, A.D. 1995, AT 9
O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO
THE NEW CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING.
/s/ Edward J. Freel
------------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 7752105
DATE: 12-15-95
0240111 8100M
950294013
<PAGE>
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
RMC HOLDINGS, INC.
INTO
REYNOLDS METALS COMPANY
Pursuant to Section 253 of the
General Corporation Law of Delaware
REYNOLDS METALS COMPANY, a Delaware corporation (the
"Corporation"), does hereby certify:
FIRST: That the Corporation is incorporated pursuant
to the General Corporation Law of the State of Delaware.
SECOND: That the Corporation owns all of the
outstanding shares of each class of the capital stock of
RMC HOLDINGS, Inc., a Delaware corporation.
THIRD: That the Corporation, by the following
resolutions of its Board of Directors, duly adopted at a meeting
held on the 17th day of November, 1995, determined to merge into
itself RMC HOLDINGS, INC. on the conditions set forth in such
resolutions:
RESOLVED, that the corporation, as owner of all of
the outstanding shares of each class of the capital stock of
RMC Holdings, Inc., merge into itself RMC Holdings, Inc. and
assume all of its liabilities and obligations effective as
of 11:59 p.m. E.S.T. on December 15, 1995; provided, that at
any time prior to the filing of a certificate of ownership
and merger with the Delaware Secretary of State with respect
to such merger, this resolution may be rescinded by the
Board of Directors of the corporation or by the Executive
Committee thereof; and
FURTHER RESOLVED, that the Chief Executive
Officer, the Chief Operating Officer, the Chief Financial
Officer, the Vice Chairman of the Board, any Executive Vice
President, any Vice President, the Secretary and any
Assistant Secretary are each hereby authorized on behalf of
the corporation to take all such action, including, without
<PAGE>
limitation, incurrence and payment of all fees, expenses and
other charges, and to execute and deliver all such
agreements, instruments and documents (including, without
limitation, a certificate of ownership and merger) which in
the opinion of any of them may be necessary or desirable to
achieve the purposes of or effect the transactions
contemplated by the preceding resolution, the taking of any
such action or the execution and delivery of any such
agreements, instruments or documents to be conclusive
evidence of the authority to take, execute or deliver the
same.
FOURTH: That the foregoing resolutions of the
Corporation's Board of Directors have not been rescinded by the
Board of Directors or the Executive Committee thereof.
This Certificate of Ownership and Merger shall be
effective as of 11:59 p.m. E.S.T. on December 15, 1995.
IN WITNESS WHEREOF, the Corporation has caused its
corporate seal to be affixed and this Certificate to be executed
and attested by its officers thereunto duly authorized this 11th
day of December, 1995.
REYNOLDS METALS COMPANY
By /s/ D. Michael Jones
-----------------------------
Vice President, General
Counsel and Secretary
[SEAL]
ATTEST:
/s/ Brenda A. Hart
By: -----------------------------
Assistant Secretary
<PAGE>
State of Delaware PAGE 1
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT
COPY OF THE CERTIFICATE OF OWNERSHIP, WHICH MERGES:
"RMC ACCEPTANCE, INC.", A DELAWARE CORPORATION,
WITH AND INTO "REYNOLDS METALS COMPANY" UNDER THE NAME OF
"REYNOLDS METALS COMPANY", A CORPORATION ORGANIZED AND EXISTING
UNDER THE LAWS OF THE STATE OF DELAWARE, AS RECEIVED AND FILED
IN THIS OFFICE THE TWENTY-THIRD DAY OF DECEMBER, A.D. 1996, AT 9
O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO
THE NEW CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING.
/s/ Edward J. Freel
-----------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION:
DATE: 12-24-96
024011100 8100
96036137
<PAGE>
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
RMC ACCEPTANCE, INC.
INTO
REYNOLDS METALS COMPANY
_____________________________________________
Pursuant to Section 253 of the
General Corporation Law of Delaware
_____________________________________________
REYNOLDS METALS COMPANY, a Delaware corporation (the
"Corporation"), does hereby certify:
FIRST: That the Corporation is incorporated pursuant
to the General Corporation Law of the State of Delaware.
SECOND: That the Corporation owns all of the
outstanding shares of each class of the capital stock of RMC
ACCEPTANCE, INC., a Delaware corporation.
THIRD: That the Corporation, by the following
resolutions of the Executive Committee of its Board of Directors,
duly adopted by unanimous written consent as of the 20th day of
December, 1996, determined to merge into itself RMC ACCEPTANCE,
INC. on the conditions set forth in such resolutions:
RESOLVED, that the corporation, as owner of all of
the outstanding shares of each class of the capital
stock of RMC ACCEPTANCE, INC., merge into itself RMC
ACCEPTANCE, INC. and assume all of its liabilities and
obligations effective as of 12:01 a.m. E.S.T. on
January 2, 1997; and
FURTHER RESOLVED, that the Chief Executive
Officer, any Vice Chairman and Executive Officer, the
Chief Financial Officer, any Senior Vice President, any
Vice President, the Secretary and any Assistant
Secretary are each authorized on behalf of the
corporation to take all such action, including, without
limitation, incurrence and payment of all fees,
expenses and other charges, and to execute and deliver
all such agreements, instruments and documents
<PAGE>
(including, without limitation, a certificate of
ownership and merger) which in the opinion of any of
them may be necessary or desirable to achieve the
purposes of or effect the transactions contemplated by
the preceding resolution, the taking of any such action
or the execution and delivery of any such agreements,
instruments or documents to be conclusive evidence of
the authority to take, execute or deliver the same.
This Certificate of Ownership and Merger shall be
effective as of 12:01 a.m. E.S.T. on January 2, 1997.
IN WITNESS WHEREOF, the Corporation has caused its
corporate seal to be affixed and this Certificate to be executed
and attested by its officers thereunto duly authorized this 20th
day of December, 1996.
REYNOLDS METALS COMPANY
By /s/ D. Michael Jones
-----------------------------
Senior Vice President and
General Counsel
[SEAL]
ATTEST:
By: /s/ Donna C. Dabney
------------------------
Secretary
<PAGE>
State of Delaware PAGE 1
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT
COPY OF THE CERTIFICATE OF DESIGNATION OF "REYNOLDS METALS
COMPANY", FILED IN THIS OFFICE ON THE TWENTY-FIRST DAY OF
JANUARY, A.D. 1997, AT 9 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO
THE NEW CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING.
/s/ Edward J. Freel
-----------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 8294419
DATE: 01-22-97
0240111 8100
971020822
<PAGE>
CERTIFICATE OF ELIMINATION OF
7% PRIDES, Convertible Preferred Stock
of
REYNOLDS METALS COMPANY
________________________
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
________________________
REYNOLDS METALS COMPANY, a corporation organized and
existing under the laws of the State of Delaware (the
"Corporation"), hereby certifies that:
1. The Corporation has heretofore authorized and issued
11,000,000 shares of 7% PRIDES, Convertible Preferred Stock,
Stated Value $47.25 Per Share (the "PRIDES"), pursuant to
its Certificate of Designations, Preferences, Rights and
Limitations under Section 151 of the General Corporation Law
of the State of Delaware (the "PRIDES Certificate of
Designations") filed in the Office of Secretary of State of
the State of Delaware on January 20, 1994.
2. Pursuant to Section 3 of the PRIDES Certificate of
Designations, on December 2, 1996 the Corporation called all
of the outstanding shares of PRIDES for redemption on
December 31, 1996.
3. The Board of Directors of the Corporation duly adopted the
following resolutions at a meeting held on January 17, 1997,
acknowledging that as a result of the redemption of all of
the outstanding shares of the PRIDES on December 31, 1996,
none of the authorized shares of the PRIDES are outstanding,
and none will be issued subject to the PRIDES Certificate of
Designations:
RESOLVED, that as a result of the
redemption on December 31, 1996 of all of the
outstanding shares of 7% PRIDES(SM), Convertible
Preferred Stock, Stated Value $47.25 Per Share
(the "PRIDES"), of the corporation, none of the
authorized shares of the PRIDES are outstanding
and none will be issued subject to the Certificate
of Designations, Preferences, Rights and
Limitations relating to the PRIDES (the "PRIDES
Certificate of Designations") previously filed in
the Office of Secretary of State of the State of
Delaware; and
<PAGE>
FURTHER RESOLVED, that the Restated
Certificate of Incorporation of the corporation be
amended to eliminate all matters set forth in the
PRIDES Certificate of Designations; and
FURTHER RESOLVED, that the Chief Executive
Officer, any Vice Chairman and Executive Officer,
the Chief Financial Officer, the Senior Vice
President and General Counsel and the Secretary of
the corporation are each hereby authorized on
behalf of the corporation to take any and all such
action, including, without limitation, the filing
and recording of one or more certificates in the
appropriate offices in the State of Delaware, and
the incurrence and payment of all fees, expenses
and other charges, and to execute and deliver all
such agreements, instruments and documents which
in the opinion of any of them may be necessary or
desirable to achieve the purposes of, or to effect
the transactions contemplated by, the preceding
resolutions, the taking of any such action or the
execution and delivery of any such agreements,
instruments or documents to be conclusive evidence
of the authority to take, execute or deliver the
same.
IN WITNESS WHEREOF, the Corporation has caused its corporate
seal to be affixed and this Certificate to be executed and
attested by its officers thereunto duly authorized this 17th day
of January, 1997.
REYNOLDS METALS COMPANY
By /s/ D. Michael Jones
--------------------------
D. Michael Jones
Senior Vice President
and General Counsel
[SEAL]
ATTEST:
By /s/ Donna C. Dabney
------------------
Donna C. Dabney
Secretary
<PAGE>
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
ALUMINA TRANSPORT CORPORATION
INTO
REYNOLDS METALS COMPANY
_____________________________________________
Pursuant to Section 253 of the
General Corporation Law of Delaware
_____________________________________________
REYNOLDS METALS COMPANY, a Delaware corporation (the
"Corporation"), does hereby certify:
FIRST: That the Corporation is incorporated pursuant
to the General Corporation Law of the State of Delaware.
SECOND: That the Corporation owns all of the
outstanding shares of each class of the capital stock of ALUMINA
TRANSPORT CORPORATION, a Delaware corporation.
THIRD: That the Corporation, by the following
resolutions of the Executive Committee of its Board of Directors,
duly adopted by unanimous written consent as of the 20th day of
June, 1997, determined to merge into itself ALUMINA TRANSPORT
CORPORATION on the conditions set forth in such resolutions:
RESOLVED, that the corporation, as owner of all of
the outstanding shares of each class of the capital
stock of ALUMINA TRANSPORT CORPORATION, merge into
itself ALUMINA TRANSPORT CORPORATION and assume all of
its liabilities and obligations effective as of 12:01
a.m., E.D.T., on July 1, 1997; and
FURTHER RESOLVED, that the Chief Executive
Officer, any Vice Chairman and Executive Officer, the
Chief Financial Officer, any Senior Vice President, any
Vice President, the Secretary and any Assistant
Secretary are each authorized on behalf of the
corporation to take all such action, including, without
limitation, incurrence and payment of all fees,
expenses and other charges, and to execute and deliver
all such agreements, instruments and documents
<PAGE>
(including, without limitation, a certificate of
ownership and merger) which in the opinion of any of
them may be necessary or desirable to achieve the
purposes of or effect the transactions contemplated by
the preceding resolution, the taking of any such action
or the execution and delivery of any such agreements,
instruments or documents to be conclusive evidence of
the authority to take, execute or deliver the same.
This Certificate of Ownership and Merger shall be
effective as of 12:01 a.m., E.D.T., on July 1, 1997.
IN WITNESS WHEREOF, the Corporation has caused its
corporate seal to be affixed and this Certificate to be executed
and attested by its officers thereunto duly authorized this 23rd
day of June, 1997.
REYNOLDS METALS COMPANY
By /s/ D. Michael Jones
------------------------------
Senior Vice President and
General Counsel
[SEAL]
ATTEST:
By: /s/ Donna C. Dabney
------------------
Secretary
<PAGE>
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
RMC MICHIGAN, INC.
INTO
REYNOLDS METALS COMPANY
_____________________________________________
Pursuant to Section 253 of the
General Corporation Law of Delaware
_____________________________________________
REYNOLDS METALS COMPANY, a Delaware corporation (the
"Corporation"), does hereby certify:
FIRST: That the Corporation is incorporated pursuant
to the General Corporation Law of the State of Delaware.
SECOND: That the Corporation owns all of the
outstanding shares of each class of the capital stock of RMC
MICHIGAN, INC., a Delaware corporation.
THIRD: That the Corporation, by the following
resolutions of the Executive Committee of its Board of Directors,
duly adopted by unanimous written consent as of the 12th day of
December, 1997, determined to merge into itself RMC MICHIGAN,
INC. on the conditions set forth in such resolutions:
RESOLVED, that the corporation, as owner of all of
the outstanding shares of each class of the capital
stock of RMC MICHIGAN, INC., merge into itself RMC
MICHIGAN, INC. and assume all of its liabilities and
obligations effective as of 11:59 p.m. E.S.T. on
December 31, 1997; and
FURTHER RESOLVED, that the Chief Executive
Officer, the Vice Chairman and Executive Officer, the
Chief Financial Officer, any Senior Vice President, any
Vice President, the Secretary and any Assistant
Secretary are each authorized on behalf of the
corporation to take all such action, including, without
limitation, incurrence and payment of all fees,
expenses and other charges, and to execute and deliver
all such agreements, instruments and documents
<PAGE>
(including, without limitation, a certificate of
ownership and merger) which in the opinion of any of
them may be necessary or desirable to achieve the
purposes of or effect the transactions contemplated by
the preceding resolution, the taking of any such action
or the execution and delivery of any such agreements,
instruments or documents to be conclusive evidence of
the authority to take, execute or deliver the same.
This Certificate of Ownership and Merger shall be
effective as of 11:59 p.m. E.S.T. on December 31, 1997.
IN WITNESS WHEREOF, the Corporation has caused its
corporate seal to be affixed and this Certificate to be executed
and attested by its officers thereunto duly authorized this 15th
day of December, 1997.
REYNOLDS METALS COMPANY
By /s/ D. Michael Jones
------------------------------
Senior Vice President and
General Counsel
[SEAL]
ATTEST:
By: /s/ Donna C. Dabney
-------------------
Secretary
<PAGE>
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
RMC ACCEPTANCE, INC.
INTO
REYNOLDS METALS COMPANY
_____________________________________________
Pursuant to Section 253 of the
General Corporation Law of Delaware
_____________________________________________
REYNOLDS METALS COMPANY, a Delaware corporation (the
"Corporation"), does hereby certify:
FIRST: That the Corporation is incorporated pursuant
to the General Corporation Law of the State of Delaware.
SECOND: That the Corporation owns all of the
outstanding shares of each class of the capital stock of RMC
ACCEPTANCE, INC., a Delaware corporation.
THIRD: That the Corporation, by the following
resolutions of the Executive Committee of its Board of Directors,
duly adopted by unanimous written consent as of the 12th day of
December, 1997, determined to merge into itself RMC ACCEPTANCE,
INC. on the conditions set forth in such resolutions:
RESOLVED, that the corporation, as owner of all of
the outstanding shares of each class of the capital
stock of RMC ACCEPTANCE, INC., merge into itself RMC
ACCEPTANCE, INC. and assume all of its liabilities and
obligations effective as of 12:01 a.m. E.S.T. on
January 2, 1998; and
FURTHER RESOLVED, that the Chief Executive
Officer, the Vice Chairman and Executive Officer, the
Chief Financial Officer, any Senior Vice President, any
Vice President, the Secretary and any Assistant
Secretary are each authorized on behalf of the
corporation to take all such action, including, without
limitation, incurrence and payment of all fees,
expenses and other charges, and to execute and deliver
all such agreements, instruments and documents
(including, without limitation, a certificate of
ownership and merger) which in the opinion of any of
them may be necessary or desirable to achieve the
purposes of or effect the transactions contemplated by
the preceding resolution, the taking of any such action
or the execution and delivery of any such agreements,
instruments or documents to be conclusive evidence of
the authority to take, execute or deliver the same.
This Certificate of Ownership and Merger shall be
effective as of 12:01 a.m. E.S.T. on January 2, 1998.
IN WITNESS WHEREOF, the Corporation has caused its
corporate seal to be affixed and this Certificate to be executed
and attested by its officers thereunto duly authorized this 15th
day of December, 1997.
REYNOLDS METALS COMPANY
By /s/ D. Michael Jones
-----------------------------
Senior Vice President and
General Counsel
[SEAL]
ATTEST:
By: /s/ Donna C. Dabney
--------------------
Secretary
EXHIBIT 3.2
By-Laws
of
REYNOLDS METALS COMPANY
(Incorporated under the Laws of Delaware)
<PAGE>
By-Laws
of
REYNOLDS METALS COMPANY
Table of Contents
Page
ARTICLE I - Stock
Section 1. Certificates for Stock . . . . . . . . . 1
Section 2. Transfers of Stock . . . . . . . . . . . 1
Section 3. Holders of Record . . . . . . . . . . . 1
Section 4. Lost or Destroyed Certificates . . . . . 2
ARTICLE II - Stockholders' Meetings
Section 1. Place of Meetings . . . . . . . . . . . 2
Section 2. Annual Meetings . . . . . . . . . . . . 2
Section 3. Special Meetings . . . . . . . . . . . . 2
Section 4. Matters to be Brought Before
Stockholders Meetings . . . . . . . . . 2-4
Section 5. Notice of Meetings . . . . . . . . . . . 4
Section 6. Quorum . . . . . . . . . . . . . . . . . 4
Section 7. Adjourned Meetings . . . . . . . . . . . 4-5
Section 8. Inspectors of Election . . . . . . . . . 5
Section 9. List of Stockholders . . . . . . . . . . 5
Section 10. Voting . . . . . . . . . . . . . . . . . 5-6
Section 11. Consents in Writing . . . . . . . . . . 6
ARTICLE III - Board of Directors
Section 1. Number; Term of Office; Powers . . . . . 6-7
Section 2. Resignations . . . . . . . . . . . . . . 7
Section 3. Vacancies . . . . . . . . . . . . . . . 7
Section 4. Annual Meeting . . . . . . . . . . . . . 7
Section 5. Regular Meetings . . . . . . . . . . . . 7
Section 6. Special Meetings . . . . . . . . . . . . 7-8
Section 7. Notice of Meetings . . . . . . . . . . . 8
Section 8. Quorum; Adjourned Meetings;
Required Vote . . . . . . . . . . . . . 8
Section 9. Committees . . . . . . . . . . . . . . . 8-9
Section 10. Compensation . . . . . . . . . . . . . . 9
Section 11. Consents in Writing . . . . . . . . . . 9
Section 12. Participation by Conference Telephone . 9
<PAGE>
Table of Contents, Continued
ARTICLE IV - Officers
Section 1. Officers . . . . . . . . . . . . . . . . 9-10
Section 2. Chairman of the Board . . . . . . . . . 10
Section 3. Vice Chairmen of the Board . . . . . . . 10
Section 4. President . . . . . . . . . . . . . . . 10
Section 5. Vice Presidents . . . . . . . . . . . . 10
Section 6. General Counsel . . . . . . . . . . . . 10-11
Section 7. Secretary . . . . . . . . . . . . . . . 11
Section 8. Treasurer . . . . . . . . . . . . . . . 11
Section 9. Controller . . . . . . . . . . . . . . . 11
Section 10. Other Officers and Assistant Officers . 11
Section 11. Term of Office; Vacancies . . . . . . . 11
Section 12. Removal . . . . . . . . . . . . . . . 12
ARTICLE V - Dividends and Finance
Section 1. Dividends . . . . . . . . . . . . . . . 12
Section 2. Deposits; Withdrawals; Notes and Other
Instruments . . . . . . . . . . . . . . 12
Section 3. Fiscal Year . . . . . . . . . . . . . . 12
ARTICLE VI - Books and Records; Record Date
Section 1. Books and Records . . . . . . . . . . . 12
Section 2. Record Date . . . . . . . . . . . . . . 12-13
ARTICLE VII - Notices
Section 1. Notices . . . . . . . . . . . . . . . . 14
Section 2. Waivers of Notice . . . . . . . . . . . 14
ARTICLE VIII - Contracts
Section 1. Interested Directors or Officers . . . . 14-15
ARTICLE IX - Seal
Section 1. Seal . . . . . . . . . . . . . . . . . . 15
ARTICLE X - Indemnification
Section 1. Indemnification in Third Party
Actions . . . . . . . . . . . . . . . . 15-16
Section 2. Indemnification in an Action by or in
the Right of the Corporation . . . . . . 16
Section 3. Indemnification as of Right . . . . . . 17
Section 4. Determination of Indemnification . . . . 17
Section 5. Advance for Expenses . . . . . . . . . . 17
Section 6. General Provisions . . . . . . . . . . . 17-18
ARTICLE XI - Amendments
Section 1. Amendments . . . . . . . . . . . . . . . 18-19
<PAGE>
By-Laws
of
REYNOLDS METALS COMPANY
(Incorporated under the Laws of Delaware)
ARTICLE I - Stock
1. Certificates for Stock. Certificates of Stock shall be
issued in numerical order, be signed by the Chairman of the Board
of Directors, a Vice Chairman of the Board of Directors, the
President or a Vice President, and by the Secretary or an Assis-
tant Secretary, or the Treasurer or an Assistant Treasurer, and
sealed with the corporate seal; provided, that where any Certifi-
cate of Stock is signed by a duly appointed and authorized
Transfer Agent or Registrar the signatures of the Chairman of the
Board of Directors, Vice Chairman of the Board of Directors, the
President, Vice President, Secretary, Assistant Secretary,
Treasurer or Assistant Treasurer may be facsimile, engraved or
printed, and the seal of the corporation on any such Certificate
of Stock may be facsimile, engraved or printed. In case any
officer, transfer agent or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall have
ceased to be such officer, transfer agent or registrar before
such certificate is issued, it may be issued by the corporation
with the same effect as if he or she were such officer, transfer
agent or registrar at the date of issue.
2. Transfers of Stock. Transfers of stock shall be made
only upon the books of the corporation, and only by the person
named in the certificate or by attorney, lawfully constituted in
writing, and only upon surrender of the certificate therefor.
The directors may by resolution make reasonable regulations for
the transfers of stock.
3. Holders of Record. Registered stockholders only shall
be entitled to be treated by the corporation as the holders in
fact of the stock standing in their respective names and the
corporation shall not be bound to recognize any equitable or
other claim to or interest in any share on the part of any other
person, whether or not it shall have express or other notice
thereof, except as expressly provided by the laws of Delaware.
<PAGE>
4. Lost or Destroyed Certificates. In case of loss or
destruction of any certificate of stock another may be issued in
its place upon satisfactory proof of such loss or destruction and
upon the giving of a satisfactory bond of indemnity to the
corporation, all as determined either expressly by the directors
or pursuant to general authority granted by them.
ARTICLE II - Stockholders' Meetings
1. Place of Meetings. Meetings of the stockholders shall
be held at such place, within or outside the State of Delaware,
as the Board of Directors may determine.
2. Annual Meeting. The annual meeting of the stockholders
of the corporation, for the election of directors to succeed
those whose terms expire, and for the transaction of such other
business as may come before the meeting, shall be held on the
Thursday preceding the third Friday of the month of May of each
year, if not a legal holiday, and if a legal holiday, then on the
first business day following, at 4:00 p.m., or on such other date
and at such other time as may be fixed by the Board of Directors.
The annual meeting of the stockholders may be postponed by the
Board of Directors upon public notice given before the date
previously scheduled for such meeting. If the annual meeting of
the stockholders be not held as herein prescribed, the election
of directors may be held at any meeting thereafter called
pursuant to these By-Laws.
3. Special Meetings. Special meetings of the stockholders
may be called by the Chairman of the Board of Directors, or a
Vice Chairman of the Board of Directors, or the President or by
the Board of Directors, and shall be called at any time by the
Board of Directors upon the request in writing of stockholders
entitled to cast a majority of the votes which all stockholders
are entitled to cast. Such request must state the purpose of the
meeting.
4. Matters to be Brought Before Stockholders Meetings.
Except as otherwise provided by law, at any annual or special
meeting of stockholders only such business shall be conducted as
shall have been properly brought before the meeting in accordance
with this Section.
<PAGE>
In order to be properly brought before the meeting,
such business must have either been (i) specified in the written
notice of the meeting (or any supplement thereto) given to
stockholders of record on the record date for such meeting by or
at the direction of the Board of Directors, (ii) brought before
the meeting at the direction of the Board of Directors or the
officer presiding over the meeting, or (iii) specified in a
written notice given by or on behalf of a stockholder of record
on the record date for such meeting entitled to vote thereat or a
duly authorized proxy for such stockholder, in accordance with
all of the following requirements.
A notice referred to in clause (iii) hereof must be
delivered personally to, or mailed to and received at, the
principal executive office of the corporation, addressed to the
attention of the Secretary, not more than ten (10) days after the
date of the initial notice referred to in clause (i) hereof, in
the case of business to be brought before a special meeting of
stockholders, and not less than thirty (30) days prior to the
first anniversary date of the initial notice referred to in
clause (i) hereof of the previous year's annual meeting, in the
case of business to be brought before an annual meeting of
stockholders, provided, however, that such notice shall not be
required to be given more than ninety (90) days prior to an
annual meeting of stockholders. Such notice referred to in
clause (iii) hereof shall set forth:
(a) a full description of each such item of business
proposed to be brought before the meeting;
(b) the name and address of the person proposing to bring
such business before the meeting;
(c) the class and number of shares held of record, held
beneficially and represented by proxy by such person as of the
record date for the meeting (if such date has then been made
publicly available) and as of the date of such notice;
(d) if any item of such business involves a nomination for
director, all information regarding each such nominee that would
be required to be set forth in a definitive proxy statement filed
with the Securities and Exchange Commission pursuant to Section
14 of the Securities Exchange Act of 1934, as amended, or any
successor thereto and the written consent of each such nominee to
serve if elected; and
<PAGE>
(e) all other information that would be required to be
filed with the Securities and Exchange Commission if, with
respect to the business proposed to be brought before the meet-
ing, the person proposing such business was a participant in a
solicitation subject to Section 14 of the Securities Exchange Act
of 1934, as amended, or any successor thereto.
No business shall be brought before any meeting of
stockholders of the corporation otherwise than as provided in
this Section.
5. Notice of Meetings. Written notice of the place, date
and hour of the annual and of all special meetings of the stock-
holders and, in the case of special meetings, of the purpose or
purposes for which such special meeting is called, shall be given
in the manner specified in Section l of Article VII of these By-
Laws not less than ten (10) nor more than sixty (60) days prior
to the meeting, to each stockholder of record of the corporation
entitled to vote thereat. Business transacted at all special
meetings shall be confined to the purposes stated in the notice.
6. Quorum. A quorum at any annual or special meeting of
the stockholders shall consist of the presence, in person or by
proxy, of stockholders entitled to cast a majority of the votes
which all stockholders are entitled to cast, except as otherwise
specifically provided by law or in the Certificate of Incorpora-
tion.
7. Adjourned Meetings. Whether or not a quorum is present
at a properly called stockholders' meeting, the meeting may be
adjourned from time to time by the Chairman of the meeting or by
a majority in interest of those present in person or by proxy and
entitled to vote thereat. At any such adjourned meeting at which
a quorum shall be present, any business may be transacted which
might have been transacted at the meeting as originally notified.
If the adjournment is for more than thirty (30) days, or if after
the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting; otherwise,
no notice of such adjourned meeting need be given if the time and
place thereof are announced at the meeting at which the
adjournment is taken. The absence from any meeting of
stockholders holding the number of shares of stock of the corpora-
tion required by law, the Certificate of Incorporation or these
By-Laws for action upon any given matter shall not prevent
<PAGE>
action at such meeting upon any other matter or matters which may
properly come before the meeting, if there shall be present
thereat in person or by proxy stockholders holding the number of
shares of stock of the corporation required in respect of such
other matter or matters.
8. Inspectors of Election. In advance of any meeting of
stockholders or any corporate action to be taken by the stock
holders in writing without a meeting, the Chief Executive Offi-
cer, Chief Operating Officer, Chief Financial Officer or Secre-
tary of the corporation shall appoint one or more inspectors of
election to serve at such meeting or to examine such written
consents and to make a written report with respect thereto. In
addition, any such officer may, but shall not be required to,
designate one or more persons as alternate inspectors to replace
any inspector who fails to act. If no inspector or alternate is
able to act at a meeting of stockholders, the presiding officer
at such meeting shall appoint one or more inspectors to act at
the meeting. Each inspector shall discharge his or her duties in
accordance with applicable law and shall, before entering upon
the discharge of his or her duties, take and sign an oath faith-
fully to execute the duties of inspector with strict impartiality
and according to the best of his or her ability.
9. List of Stockholders. A complete list of the stock-
holders entitled to vote at each annual or special meeting of the
stockholders of the corporation, arranged in alphabetical order,
showing the address of record of each and the number of voting
shares held by each, shall be prepared by the Secretary, who
shall have charge of the stock ledger, and filed in the City (or,
if such meeting is to be held at a place not within any city,
then in the county) where the meeting is to be held, at a loca-
tion specified in the Notice of Meeting, or if no such location
is specified in such notice, at the place where the meeting is to
be held, at least ten (10) days before every such meeting, and
shall, during the usual hours for business, be open to the
examination of any stockholder for any purpose germane to the
meeting, and during the whole time of said meeting be open to the
examination of any stockholder.
10. Voting. Subject to the provisions of Article VI,
Section 2 of these By-Laws, and except where a different vote per
share is prescribed by the Certificate of Incorporation for a
class of stock, each holder of stock of a class which is entitled
to vote in any election or on any other questions at any annual
or special meeting of the stockholders shall be entitled to one
<PAGE>
vote, in person or by written proxy, for each share of such class
held of record. Except where, and to the extent that, a differ-
ent percentage of votes and/or a different exercise of voting
power is prescribed by law, the Certificate of Incorporation or
these By-Laws, all elections and other questions shall be decided
by the vote of stockholders, present in person or by proxy and
entitled to vote, representing a majority of the votes cast.
Abstentions shall be counted in the tabulation of the votes cast.
The votes for directors, and, upon demand of any stockholder, or
where required by law, the votes upon any question before the
meeting, shall be by ballot; otherwise, the election shall be
held as the presiding officer prescribes.
11. Consents in Writing. Any action which might have been
taken under these By-Laws by a vote of the stockholders at a
meeting thereof may be taken by them without a meeting, without
prior notice and without a vote, if a consent in writing setting
forth the action so taken shall be signed by the holders of
outstanding shares of stock of the corporation having not less
than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted and shall be
delivered to the corporation by delivery to its registered office
in the State of Delaware, its principal place of business, or the
Secretary. Delivery made to the corporation's registered office
shall be by hand or by certified or registered mail, return
receipt requested. Prompt notice of the taking of such corporate
action shall be given to those stockholders who have not
consented thereto if less than unanimous written consent is
obtained. Every written consent shall bear the date of signature
of each stockholder who signs the consent. No written consent
shall be effective to take the corporate action referred to
therein unless, within sixty (60) days of the date the earliest
dated written consent (executed and delivered in accordance with
this Section) was received by the corporation, written consents
signed by a sufficient number of holders (determined in
accordance with this Section) to take such action are delivered
to the corporation in the manner specified in this Section.
ARTICLE III - Board of Directors
1. Number; Term of Office; Powers. The business and
affairs of the corporation shall be under the direction of a
Board of Directors, consisting of twelve (12) persons. Directors
<PAGE>
shall be elected for one year, and shall hold office until their
successors are elected and qualified. Directors need not be
stockholders. In addition to the power and authority expressly
conferred upon them by the By-Laws and the Certificate of
Incorporation, the Board of Directors may exercise all such
powers of the corporation and do all such lawful acts and things
as are not by law or by the Certificate of Incorporation or by
these By-Laws directed or required to be exercised or done by the
stockholders.
2. Resignations. Any director may resign at any time by
giving written notice of resignation to the Board of Directors,
to the Chief Executive Officer or to the Secretary of the corpo-
ration. Any such resignation shall take effect at the time
specified therein, or if the time be not specified therein, then
upon receipt thereof. The acceptance of such resignation shall
not be necessary to make it effective.
3. Vacancies. Except as otherwise specifically provided
by law, the Certificate of Incorporation or these By-Laws, all
vacancies in the Board of Directors, whether caused by resigna-
tion, death, increase in the number of authorized directors or
otherwise, may be filled by a majority of the Board of Directors
then in office, even though less than a quorum, or by the stock-
holders at a special meeting. A director thus elected to fill
any vacancy shall hold office until the next annual meeting of
stockholders and until a successor is elected and qualified.
4. Annual Meeting. The annual meeting of the Board of
Directors, for the election of officers and the transaction of
other business, shall be held on the same day and at the same
place as, and as soon as practicable following, the annual
meeting of stockholders, or at such other date, time or place as
the directors may by resolution designate.
5. Regular Meetings. Regular meetings of the Board of
Directors shall be held at such times, and at such place within
or outside the State of Delaware, as the Board of Directors may
from time to time by resolution designate.
6. Special Meetings. Special meetings of the directors
may be called at any time by the Chairman of the Board of Direc-
tors, a Vice Chairman of the Board of Directors, the President or
an Executive Vice President, or by the Secretary upon written
request of one-third of the directors, such request stating the
<PAGE>
purpose for which the meeting is to be called. Special meetings
shall be held at the principal office of the corporation or at
such office within or outside the State of Delaware as the
directors may from time to time designate.
7. Notice of Meetings. Except as otherwise required by
law, notice of special meetings of the Board of Directors or of
any committee of the Board of Directors shall be given to each
director or to each committee member, as the case may be, by mail
at least two days before the day on which the meeting is to be
held or by personal delivery, word-of-mouth, telephone, tele-
graph, radio, cable or other comparable means at least six hours
before the time at which the meeting is to be held. Such notice
shall state the time and place of such meeting, but need not
state the purposes thereof unless otherwise required by law. No
notice need be given of the annual meeting of directors or of
regular meetings of directors or of committees of the Board of
Directors, provided that, whenever the time or place of such
meetings shall be fixed or changed, notice of such action shall
be given promptly to each director or to each committee member,
as the case may be, who shall not have been present at the
meeting at which such action was taken.
8. Quorum; Adjourned Meetings; Required Vote. A majority
of the Board of Directors as constituted from time to time shall
be necessary and sufficient at all meetings to constitute a
quorum for the transaction of business. In the absence of a
quorum, a majority of those present may adjourn the meeting from
time to time and the meeting may be held as adjourned without
further notice provided a quorum be present at such adjourned
meeting. Unless otherwise specifically provided by the Certifi-
cate of Incorporation or statute, the act of a majority of the
directors present at any properly convened meeting at which there
is a quorum, but in no case less than one-third of all of the
directors then in office, shall be the act of the Board of
Directors.
9. Committees. Standing or Temporary Committees may be
appointed from their own number by the Board of Directors from
time to time, and the directors may from time to time vest such
committees with such powers as the directors may see fit, subject
to such conditions as the directors may prescribe or as may be
prescribed by law. All committees shall consist of two or more
directors. The term of office of the members of each committee
shall be as fixed from time to time by the Board of Directors;
<PAGE>
provided, however, that any committee member who ceases to be a
director shall ipso facto cease to be a committee member. Any
member of any committee may be removed at any time with or
without cause by the Board of Directors, and any vacancy in any
committee may be filled by the Board of Directors. All commit-
tees shall keep regular minutes of their transactions and shall
cause them to be recorded in books kept for that purpose in the
office of the corporation, and shall report the same to the Board
of Directors at their regular meetings. Subject to this Section
9 and except as otherwise determined by the Board of Directors,
each committee may make rules for the conduct of its business.
10. Compensation. Directors, as such, may receive, pursu-
ant to resolution of the Board of Directors, fixed fees, other
compensation and expenses for their services as directors,
including, without limitation, services as chairmen or as members
of committees of the directors; provided, however, that nothing
herein contained shall be construed to preclude any director from
serving the corporation in any other capacity and receiving
compensation therefor.
11. Consents in Writing. Any action required or permitted
to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if all members
of the Board of Directors or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the Board of Directors or
committee.
12. Participation by Conference Telephone. Members of the
Board of Directors or of any committee may participate in a
meeting of such Board of Directors or committee, as the case may
be, by means of conference telephone or similar communications
equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting by
such means shall constitute presence in person at the meeting.
ARTICLE IV - Officers
1. Officers. The corporation may have a Chairman of the
Board of Directors, one or more Vice Chairmen of the Board of
Directors, a President, one or more Vice Presidents, which may
include Executive and Senior Vice Presidents, a General Counsel,
<PAGE>
a Secretary, a Treasurer, a Controller and such other officers
and assistant officers as the Board of Directors shall deem
appropriate; provided, that the corporation shall have such
officers as are required by applicable law. Officers shall be
elected annually by the Board of Directors. One person may hold
more than one office.
The Board of Directors shall designate a Chief Execu-
tive Officer, and may designate a Chief Operating Officer and a
Chief Financial Officer from among the officers of the corpora-
tion.
The Chief Executive Officer shall have general supervi-
sion and management of the business and affairs of the corpora-
tion, subject to the control of the Board of Directors, and may
prescribe the duties to be performed by the officers of the
corporation in addition to the duties prescribed by these By-Laws
or by the Board of Directors. In the absence or disability of
the Chairman of the Board of Directors, the Chief Executive
Officer shall preside at all meetings of stockholders and direc-
tors. In the absence or disability of the Chief Executive
Officer, such officer of the corporation as the Chief Executive
Officer shall have designated in writing to the Board of Direc-
tors or to the Secretary of the corporation shall, subject to
further action by the Board of Directors, have the powers and
perform the duties of the Chief Executive Officer.
2. Chairman of the Board. The Chairman of the Board of
Directors shall preside at all meetings of stockholders and
directors.
3. Vice Chairmen of the Board. A Vice Chairman shall
perform such duties as are properly required by the Board of
Directors or the Chief Executive Officer.
4. President. The President shall perform such duties as
are properly required by the Board of Directors or the Chief
Executive Officer.
5. Vice Presidents. Each of the Executive Vice presi-
dents, Senior Vice Presidents and other Vice Presidents shall
perform such duties as are properly required by the Board of
Directors or the Chief Executive Officer.
6. General Counsel. The General Counsel shall advise the
corporation on legal matters affecting the corporation and its
activities, shall supervise and direct the handling of all such
<PAGE>
legal matters and shall perform all such other duties as are
incident to the office of General Counsel.
7. Secretary. The Secretary shall keep the minutes of the
meetings of the stockholders and of the Board of Directors, and,
when required, the minutes of the meetings of the committees, and
shall be responsible for the custody of all such minutes. The
Secretary shall be responsible for the custody of the stock
ledger and documents of the corporation. The Secretary shall
have custody of the corporate seal and may affix and attest such
seal to any instrument whose execution shall have been duly
authorized and shall perform all other duties incident to the
office of Secretary.
8. Treasurer. The Treasurer shall have the custody of all
moneys and securities of the corporation and shall keep or cause
to be kept accurate accounts of all money received or payments
made in books kept for that purpose. The Treasurer shall deposit
or cause to be deposited funds of the corporation in accordance
with Article V, Section 2 of these By-Laws and shall disburse the
funds of the corporation by checks or vouchers as authorized by
the Board of Directors. The Treasurer shall also perform all
other duties incident to the office of Treasurer.
9. Controller. The Controller shall be the chief account-
ing officer of the corporation. The Controller shall keep or
cause to be kept all books of accounts and accounting records of
the corporation and shall keep and maintain, or cause to be kept
and maintained, adequate and correct accounts of the properties
and business transactions of the corporation. The Controller
shall prepare or cause to be prepared appropriate financial
statements for the corporation and shall perform such other
duties as may be incident to the office of Controller.
10. Other Officers and Assistant Officers. All other
officers and assistant officers shall exercise such powers and
perform such duties as shall be determined from time to time by
the Board of Directors or the Chief Executive Officer.
11. Term of Office; Vacancies. Each officer shall hold
office until the annual meeting of the Board of Directors follow-
ing the end of the term of the Board by which such officer is
elected, except in the case of earlier death, resignation or
removal. Vacancies in any office arising from any cause may be
filled by the directors at any regular or special meeting.
<PAGE>
12. Removal. Any officer elected or appointed by the Board
of Directors may be removed at any time, with or without cause,
by the Board of Directors.
ARTICLE V - Dividends and Finance
1. Dividends. Dividends may be declared to the full
extent permitted by law at such times as the Board of Directors
shall direct.
2. Deposits; Withdrawals; Notes and Other Instruments.
The moneys of the corporation shall be deposited in the name of
the corporation in such banks or trust companies as shall be
designated by the Board of Directors, and shall be drawn out only
by persons designated from time to time by the Board of Directors
or by an officer of this corporation to whom the Board of
Directors has delegated such authority. All notes and other
instruments for the payment of money shall be signed or endorsed
by officers or other persons authorized from time to time by the
Board of Directors or by an officer of this corporation to whom
the Board of Directors has delegated such authority.
3. Fiscal Year. The fiscal year of the corporation shall
date from the first day of January in each year.
ARTICLE VI - Books and Records; Record Date
1. Books and Records. The books, accounts and records of
the corporation, except as may be otherwise required by the laws
of the State of Delaware, may be kept within or outside of the
said State at such places as the Board of Directors may from time
to time appoint.
2. Record Date.
(a) The Board of Directors is authorized to fix in advance
a date, not exceeding sixty (60) days preceding the date of any
meeting of stockholders, or the date for the payment of any
dividend, or other distribution or allotment of any rights, or
<PAGE>
the date when any change, conversion or exchange of capital stock
shall go into effect, as a record date for the determination of
the stockholders entitled to notice of, and to vote at, any such
meeting and any adjournment thereof, or entitled to receive
payment of any such dividend or other distribution or allotment
of rights, or to exercise any rights in respect of any such
change, conversion or exchange of capital stock. Such stockhold-
ers and only such stockholders as shall be stockholders of record
on the record date so fixed shall be entitled to such notice of,
and to vote at, such meeting and any adjournment thereof, or to
receive payment of such dividend or other distribution or allot-
ment of rights, or to exercise such rights, as the case may be,
notwithstanding any transfer of any stock on the books of the
corporation after any such record date fixed as aforesaid. Any
such record date fixed in connection with a meeting of stockhold-
ers shall not be less than ten (10) days before the date of such
meeting.
(b) In order that the corporation may determine the stock
holders entitled to consent to corporate action in writing
without a meeting, the Board of Directors is authorized to fix in
advance a record date, which record date shall not be more than
ten (10) days after the date upon which the resolution fixing the
record date is adopted by the Board of Directors. Any stockhold-
er of record seeking to have the stockholders authorize or take
corporate action by written consent shall, by written notice to
the Secretary, request the Board of Directors to fix a record
date. If no record date has been fixed by the Board of Directors
within ten (10) days of the date on which such a request is
received, the record date for determining stockholders entitled
to consent to corporate action in writing without a meeting, when
no prior action by the Board of Directors is required by applica-
ble law, shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is
delivered to the corporation by delivery to its registered office
in the State of Delaware, its principal place of business, or the
Secretary. If no record date has been fixed by the Board of
Directors and prior action by the Board of Directors is required
by applicable law, the record date for determining stockholders
entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the date on which
the Board of Directors adopts the resolution taking such prior
action. Such stockholders and only such stockholders as shall be
stockholders of record on the record date so fixed shall be
entitled to give such consent, notwithstanding any transfer of
any stock on the books of the corporation after any such record
date fixed as aforesaid.
<PAGE>
ARTICLE VII - Notices
1. Notices. Whenever any provision of law or these By-
Laws requires notice to be given to any director, officer or
stockholder, such notice may be given in writing by mailing the
same to such director, officer or stockholder at his or her
address as the same appears in the books of the corporation,
unless such stockholder shall have filed with the Secretary a
written request that notices intended for him or her be mailed to
some other address, in which case it shall be mailed to the
address designated in such request. The time when the same shall
be mailed shall be deemed to be the time of the giving of such
notice. This section shall not be deemed to preclude the giving
of notice by other means if permitted by the applicable provision
of law or these By-Laws.
2. Waivers of Notice. A waiver of any notice in writing,
signed by a stockholder, director or officer, whether before or
after the time stated in said waiver for holding a meeting, shall
be deemed equivalent to a notice required to be given to any
stockholder, director or officer.
ARTICLE VIII - Contracts
1. Interested Directors or Officers. No contract or
transaction between the corporation and one or more of its
directors or officers, or between the corporation and any other
corporation, partnership, association or other organization in
which one or more of the directors or officers of the corporation
are directors or officers, or have a financial interest, shall be
void or voidable solely for this reason, or solely because the
director or officer of the corporation is present at or partici-
pates in the meeting of the Board of Directors or committee
thereof which authorizes the contract or transaction, or solely
because his, her or their votes are counted for such purpose, if:
(i) The material facts as to the relationship or
interest of such person and as to the contract or transac
tion are disclosed or are known to the Board of Directors or
the committee thereof, and the Board of Directors or commit-
tee in good faith authorizes the contract or transaction by
a vote sufficient for such purpose without counting the vote of
the interested director or directors of the corporation;
provided, however, that common or interested directors may
be counted in determining the presence of a quorum at a
meeting of the Board of Directors or committee; or
(ii) The material facts as to the relationship or
interest of such person and as to the contract or transac-
tion are disclosed or are known to the stockholders of the
corporation entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote
of the stockholders of the corporation; or
(iii) The contract or transaction is fair as to the
corporation as of the time it is authorized, approved or
ratified by the Board of Directors, a committee thereof or
the stockholders of the corporation.
ARTICLE IX - Seal
1. Seal. The corporate seal of the corporation shall
consist of two concentric circles, between which is the name of
the corporation, and in the center shall be inscribed the year of
its incorporation and the words, "Corporate Seal, Delaware."
ARTICLE X - Indemnification
1. Indemnification in Third Party Actions. The corpora-
tion shall indemnify each person who was or is a party or is
threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in
the right of the corporation) by reason of the fact that such
person is or was a director, officer or employee of the
corporation, or is or was serving at the request of the corpora-
tion as a director, officer, employee or agent of another corpo-
ration, partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, against
all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties, and amounts
<PAGE>
paid or to be paid in settlement) actually and reasonably in-
curred by such person in connection with such action, suit or
proceeding if he or she acted in good faith and in a manner he or
she reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his or
her conduct was unlawful, except that no indemnification shall be
made in respect of any proceeding (or part thereof) initiated by
such person unless such proceeding (or part thereof) was autho-
rized by the Board of Directors of the corporation. The termina-
tion of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the
person did not act in good faith and in a manner which the person
reasonably believed to be in or not opposed to the best interests
of the corporation, and with respect to any criminal action or
proceeding, had reasonable cause to believe that his or her
conduct was unlawful.
2. Indemnification in an Action by or in the Right of the
Corporation. The corporation shall indemnify each person who was
or is a party or is threatened to be made a party to any threat-
ened, pending or completed action or suit by or in the right of
the corporation to procure a judgment in its favor by reason of
the fact that such person is or was a director, officer or
employee of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit
plans, against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection with the defense
or settlement of such action or suit if the person acted in good
faith and in a manner the person reasonably believed to be in or
not opposed to the best interests of the corporation and except
that no indemnification shall be made in respect of (a) any
claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the
extent that the Court of Chancery of the State of Delaware or the
court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses
which such Court of Chancery or such other court shall deem
proper, or (b) any proceeding (or part thereof) initiated by such
person unless such proceeding (or part thereof) was authorized by
the Board of Directors of the corporation.
<PAGE>
3. Indemnification as of Right. To the extent that a
director, officer or employee of the corporation has been
successful on the merits or otherwise in defense of any action,
suit or proceeding referred to in Sections l and 2 of this
Article X, or in defense of any claim, issue or matter therein,
such person shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by such person
in connection therewith.
4. Determination of Indemnification. Any indemnification
under Sections 1 and 2 of this Article X (unless ordered by a
court) shall be made by the corporation only as authorized in the
specific case upon a determination that indemnification of the
director, officer or employee is proper in the circumstances
because the person has met the applicable standard of conduct set
forth in such Sections l and 2. Such determination shall be
made, with respect to a person who is a director or officer at
the time of such determination, (a) by a majority vote of the
directors who are not parties to such action, suit or proceeding,
even though less than a quorum, or (b) by a committee of such
directors designated by majority vote of such directors, even
though less than a quorum, or (c) if there are no such directors,
or if such directors so direct, by independent legal counsel in a
written opinion, or (d) by the stockholders.
5. Advance for Expenses. Expenses (including attorneys'
fees) incurred in defending any civil, criminal, administrative
or investigative action, suit or proceeding shall be paid by the
corporation in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf
of the director, officer or employee to repay such amount if it
shall ultimately be determined that he or she is not entitled to
be indemnified by the corporation as authorized in this Article
X, except that no advancement of expenses shall be made in
respect of any proceeding (or part thereof) initiated by such
person unless such proceeding (or part thereof) was authorized by
the Board of Directors of the corporation.
6. General Provisions.
(a) All expenses (including attorneys' fees) incurred in
defending any civil, criminal, administrative or investigative
action, suit or proceeding which are advanced by the corporation
under Section 5 of this Article X shall be repaid (i) in case the
person receiving such advance is ultimately found, under the
<PAGE>
procedure set forth in this Article X, not to be entitled to
indemnification, or (ii) where indemnification is granted, to the
extent that the expenses so advanced by the corporation exceed
the indemnification to which such person is entitled.
(b) The corporation may indemnify each person, though he or
she is not or was not a director, officer or employee of the
corporation, who served at the request of the corporation on a
committee created by the Board of Directors to consider and
report to it in respect of any matter. Any such indemnification
may be made under the preceding provisions of this Article X and
shall be subject to the limitations thereof except that (as
indicated) any such committee member need not be nor have been a
director, officer or employee of the corporation.
(c) The provisions of this Article X shall be applicable to
appeals. References to "serving at the request of the corpora-
tion" shall include without limitation any service as a director,
officer or employee of the corporation which imposes duties on,
or involves services by, such director, officer or employee with
respect to an employee benefit plan, its participants or
beneficiaries. A person who acted in good faith and in a manner
he or she reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall
be deemed to have acted in a manner "not opposed to the best
interests of the corporation."
(d) If any section, subsection, paragraph, sentence,
clause, phrase or word in this Article X shall be adjudicated
invalid or unenforceable, such adjudication shall not be deemed
to invalidate or otherwise affect any other section, subsection,
paragraph, sentence, clause, phrase or word of this Article.
(e) The indemnification and advancement of expenses provid-
ed by, or granted pursuant to, this Article X shall not be deemed
exclusive of any other rights to which those seeking indemnifica-
tion or advancement of expenses may be entitled under any By-Law,
agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in their official capacities and as
to action in another capacity while holding such office, and
shall continue as to a person who has ceased to be a director,
officer or employee and shall inure to the benefit of the heirs,
executors and administrators of such a person.
<PAGE>
ARTICLE XI - Amendments
1. Amendments. Alterations or amendments of these By-Laws
may be made by the stockholders at any annual or special meeting
if the notice of such meeting contains a statement of the
proposed alteration or amendment, or by the Board of Directors at
any annual, regular or special meeting, provided notice of such
alteration or amendment has been given to each director in
writing at least five (5) days prior to said meeting or has been
waived by all the directors.
112197
bylaws\rmet
EXHIBIT 10.10
EXECUTIVE SEVERANCE AGREEMENT
This Agreement ("Agreement") is entered into on February 20, 1998 between
REYNOLDS METALS COMPANY, a Delaware corporation ("Reynolds"), and
______________________ ("Executive").
WHEREAS, the maintenance of a strong and experienced management is
essential in protecting and enhancing the best interests of Reynolds and its
stockholders, and in this connection Reynolds recognizes that, as is the case
with many publicly held corporations, the possibility of a change in control
may arise and may result in the departure or distraction of management
personnel to the detriment of Reynolds and its stockholders; and
WHEREAS, the Compensation Committee and the Board of Directors of Reynolds
have each determined that appropriate steps should be taken to reinforce and
encourage the continued attention and dedication of members of management to
their regular duties without distraction arising from a possible change in
control or a proposed or threatened change in control of Reynolds; and
WHEREAS, should Reynolds become subject to any proposed or threatened
change in control, it is imperative that the Board be able to call upon
management to advise the Board as to whether such change in control would be in
the best interests of Reynolds and its stockholders, and to take such other
actions as the Board might determine to be appropriate, without concern that
management would be distracted by the personal uncertainties and risks created
by such a proposed or threatened change in control; and
WHEREAS, the Compensation Committee and the Board have received from
independent consultants information concerning the adoption of executive
severance agreements by other corporations and from management the estimated
cost to Reynolds of adoption of each of the material provisions of the form of
executive severance agreement presented at the meeting; and
WHEREAS, the Compensation Committee and the Board have each carefully
reviewed the information presented to them and have determined that the
anticipated benefits to Reynolds from entering into such agreements with key
executives designated by the Compensation Committee, thereby encouraging their
continued attention and dedication to their duties, exceed the anticipated
costs to Reynolds of entering into such agreements; and
WHEREAS, the Compensation Committee and the Board have each concluded that
such agreements are in the best interests of Reynolds and its stockholders; and
<PAGE>
WHEREAS, Executive is a key executive of Reynolds and has been selected by
the Compensation Committee to enter into such an agreement with Reynolds;
NOW, THEREFORE, to assure Reynolds that it will have the continued
dedication of Executive and the availability of his advice and counsel
notwithstanding the possibility, threat or occurrence of a change in control of
Reynolds, and to induce Executive to remain in the employ of Reynolds, and for
other good and valuable consideration, Reynolds and Executive agree as follows:
1. Services During Certain Events. If a third person begins a tender or
exchange offer, circulates a proxy to stockholders, or takes other steps to
effect a Change in Control (as defined in Section 2), Executive agrees that he
will not voluntarily leave the employ of Reynolds and will render the services
contemplated in the recitals to this Agreement, until the third person has
abandoned or terminated his efforts to effect a Change in Control or until a
Change in Control has occurred.
2. Termination Following Change in Control. Except as provided in
Section 4, Reynolds will provide or cause to be provided to Executive the
rights and benefits described in Section 3 if Executive's employment by
Reynolds is terminated at any time within two years following a Change in
Control:
(a) By Reynolds for reasons other than
(i) for Cause (as defined in Section 4); or
(ii) as a result of Executive's death, permanent disability, or
retirement at or after the normal retirement date specified in
Reynolds' New Retirement Program for Salaried Employees ("New
Retirement Program") as in effect immediately preceding the date
of Executive's termination ("Normal Retirement Date");
or
(b) By Executive following the occurrence of any of the following events
without Executive's written consent:
(i) the assignment of Executive to any duties or responsibilities
that are inconsistent with his position, duties,
responsibilities or status immediately preceding such Change in
<PAGE>
Control, or a change in his reporting responsibilities or titles
in effect at such time resulting in a reduction of his
responsibilities or position at Reynolds;
(ii) the reduction of Executive's annual base salary (including any
deferred portions thereof), or the failure to increase
Executive's annual base salary at least once in each 15 month
period, any such increase to be at substantially the same level
as the increases received by other executives with similar
titles and duties;
(iii) the failure to continue in effect the incentive plans, employee
benefit plans, and other compensation policies, practices and
arrangements in which Executive participated immediately before
the Change in Control, or the failure to continue Executive's
participation on substantially the same basis, both in terms of
the amount of benefit provided and the level of participation
relative to other participants;
(iv) the transfer of Executive to a location more than 50 miles from
his location at the time of the Change in Control, or a material
increase in the amount of travel normally required of Executive
in connection with his employment by Reynolds;
(v) the good faith determination by Executive that due to the Change
in Control (including any changes in circumstances at Reynolds
that directly or indirectly affect Executive's position, duties,
responsibilities or status as in effect immediately preceding
such Change in Control) he is no longer able effectively to
discharge his duties and responsibilities;
(vi) any material breach by Reynolds of any provision of this
Agreement; or
(vii) any failure by Reynolds to obtain the assumption of this
Agreement by any successor to Reynolds.
<PAGE>
For purposes of this Agreement, a "Change in Control" shall mean the
occurrence of any of the following events:
(x) a Triggering Event (as defined below);
(y) Continuing Directors (as defined below) ceasing to be a majority of
the Board of Directors of Reynolds; or
(z) any other event which a disinterested majority of the Continuing
Directors determines to be a Change in Control for purposes of this
Agreement.
"Triggering Event" and "Continuing Directors" shall have the meanings given
them in the Rights Agreement dated December 1, 1997 between Reynolds and The
Chase Manhattan Bank, N.A., as initially executed.
3. Rights and Benefits upon Termination. If Executive's employment is
terminated under any of the circumstances set forth in Section 2
("Termination"), Reynolds agrees to provide or cause to be provided to
Executive the following rights and benefits:
(a) Salary and Incentive. Executive shall receive within five
business days of Termination a lump sum payment in cash in an amount equal
to three times Executive's Earnings (as defined in this Section 3(a));
provided, however, that if there are fewer than 36 months remaining from
the date of Termination to Executive's Normal Retirement Date, the amount
calculated pursuant to this Section 3(a) shall be reduced by multiplying
such amount by a fraction, the numerator of which is the number of months
(including any fraction of a month) remaining to Executive's Normal
Retirement Date and the denominator of which is 36.
For purposes of this Section 3(a), "Earnings" shall mean the sum of
(i) Executive's annual base salary (at the rate in effect at the date of
Termination, or, if greater, at the rate in effect immediately preceding
the Change in Control), plus (ii) an amount equal to the highest cash
target incentive opportunity established for Executive for 1998 or any
future calendar year (without regard to any possible deferred portions
thereof). Earnings shall not include any income attributable to options
granted and dividends on shares acquired pursuant to any stock option plan
maintained by Reynolds for its employees.
<PAGE>
(b) Stock Options. If at the date of Termination Executive has an
outstanding option ("Option") to purchase shares of common stock of
Reynolds ("Option Shares") under any nonqualified stock option plan
maintained by Reynolds for its employees, and if under the terms of that
nonqualified stock option plan the Option is not exercisable at the date
of Termination and will not thereafter become exercisable, Executive shall
receive within five business days of Termination a lump sum payment in
cash in an amount equal to the product of (i) the excess, if any, of the
closing price of such Option Shares as reported on New York Stock
Exchange-Composite Transactions on the date of Termination over the per
share exercise price of such Option, times (ii) the number of Option
Shares covered by such Option; and in addition to the cash payment
required by this Section 3(b), if Executive has any outstanding options
that will remain exercisable after Termination to the extent the
Compensation Committee approves, then approval shall be deemed to be
granted as of Executive's Termination;
(c) Retirement Benefits. Executive shall receive within five
business days of Termination a lump sum payment in cash in an amount equal
to the actuarial value of the excess of (i) what would be Executive's
accrued benefit calculated pursuant to the applicable formula in the New
Retirement Program (as in effect at the date of Termination or, if more
favorable to Executive, as in effect immediately preceding the Change in
Control), if Executive were given additional credited service for a period
of 36 months following Termination (or such lesser period as shall remain
until Executive's Normal Retirement Date), with annual earnings during
each full or partial year of the additional period equal to his annual
earnings in effect for purposes of the New Retirement Program at his date
of Termination, and computed without regard to statutory restrictions on
benefits accrued or payable under qualified plans, over (ii) Executive's
accrued benefit, if any, payable under the New Retirement Program,
including any benefit payable under Reynolds' Benefit Restoration Plan for
New Retirement Program. For purposes of this Section 3(c), actuarial
equivalents shall be determined using the same methods and assumptions
used under the New Retirement Program at the date of Termination.
<PAGE>
(d) Welfare Benefit Plans. To the extent Executive is eligible
thereunder, Executive shall continue to be covered by (i) any group term,
supplemental and/or split dollar life insurance plan in effect for
Executive at Termination and (ii) the medical, dental, vision, accident
and disability benefit plans of Reynolds in effect at Termination for
employees in the same class or category as Executive, subject in each case
to the terms of such plans and to Executive's making any required
contributions thereto, to the extent contributions are required of active
employees. If Executive is not eligible to continue to be so covered
under the terms of any such benefit plan or program, or if Executive is
eligible but the benefits applicable to Executive are not substantially
equivalent to the benefits applicable to Executive immediately prior to
Termination, then, for a period of 36 months following Termination (or
until Executive's Normal Retirement Date, if sooner), Reynolds shall
provide such substantially equivalent benefits, or such additional
benefits as may be necessary to make the benefits applicable to Executive
substantially equivalent to those in effect before Termination, through
other sources; provided, however, that if during such period Executive
should enter into the employ of another company or firm which provides
substantially similar benefit coverage, Executive's participation in the
comparable benefit provided by Reynolds either directly or through other
sources shall cease. Nothing contained in this Section 3(d) shall be
deemed to require or permit termination or restriction of Executive's
coverage under any plan or program of Reynolds or any successor plan or
program thereto to which Executive is entitled under the terms of such
plan or program, whether at the end of the aforementioned 36-month period
or at any other time.
(e) Automobile. Within five business days of Termination, Reynolds
shall transfer to Executive, free and clear of any liens or encumbrances,
the ownership of the automobile, if any, provided by Reynolds to
Executive at the date of Termination. After transfer of ownership,
Executive shall be solely responsible for maintaining the automobile.
(f) Other Benefit Plans and Perquisites. The specific arrangements
referred to in this Section 3 are not intended to exclude Executive's
participation in other benefit plans or enjoyment of other perquisites
which are available to executive personnel generally in
<PAGE>
the class or category of Executive or to preclude such other compensation
or benefits as may be authorized from time to time by the Board of
Directors of Reynolds or by its Compensation Committee; provided, however,
that any payments hereunder shall be in lieu of, and not in addition to,
any amounts that would otherwise be payable to Executive upon termination
of employment pursuant to Reynolds' Termination Allowance Policy or any
successor severance pay plan.
(g) Excise Taxes. If Executive becomes entitled to payments under
this Section 3 ("Severance Payments"), and if any of the Severance
Payments will be subject to the tax ("Excise Tax") imposed by Section 4999
of the Internal Revenue Code of 1986, as amended (the "Code"), Executive
shall receive at the time specified below an additional amount ("Gross-Up
Payment") such that the net amount retained by Executive, after deduction
of any Excise Tax on the Severance Payments and any federal, state and
local income tax and Excise Tax upon the payment provided for by this
Section 3(g), shall be equal to the Severance Payments. For purposes of
determining whether any of the Severance Payments will be subject to the
Excise Tax and the amount of such Excise Tax, (i) any other payments or
benefits received or to be received by Executive in connection with a
Change in Control or Executive's Termination (whether pursuant to the
terms of this Agreement or with any other plan, arrangement or agreement
with Reynolds, with any person whose actions result in a Change in
Control, or with any person affiliated with Reynolds or such person) shall
be treated as "parachute payments" within the meaning of Section
280G(b)(2) of the Code, and all "excess parachute payments" within the
meaning of Section 280G(b)(1) shall be treated as subject to the Excise
Tax, unless in the opinion of tax counsel selected by Reynolds'
independent auditors and acceptable to Executive such other payments or
benefits (in whole or in part) do not constitute parachute payments, or
such excess parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered within the meaning of Section
280G(b)(4) of the Code in excess of the base amount within the meaning of
Section 280G(b)(3) of the Code, or are otherwise not subject to the Excise
Tax, (ii) the amount of the Severance Payments which shall be treated as
subject to the Excise Tax shall be equal to the lesser of (A) the total
amount of the Severance Payments or (B) the amount of excess parachute
payments
<PAGE>
within the meaning of Section 280G(b)(1) (after applying clause
(i) above), and (iii) the value of any non-cash benefits or any deferred
payment or benefit shall be determined by Reynolds' independent auditors
in accordance with the principles of Sections 280G(d)(3) and (4) of the
Code. For purposes of determining the amount of the Gross-Up Payment,
Executive shall be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at the
highest marginal rate of taxation in the state and locality of Executive's
residence on the date of Termination, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state
and local taxes.
If the Excise Tax is subsequently determined to be less than the
amount taken into account hereunder at the time of Termination, Executive
shall repay to Reynolds at the time that the amount of such reduction in
Excise Tax is finally determined the portion of the Gross-up Payment
attributable to such reduction (plus the portion of the Gross-up Payment
attributable to the Excise Tax and federal and state and local income tax
imposed on the Gross-Up Payment being repaid by Executive if such
repayment results in a reduction in Excise Tax and/or a federal and state
and local income tax reduction) plus interest received by Executive
attributable to any excise tax refund. If the Excise Tax is determined to
exceed the amount taken into account hereunder at the date of Termination
(including by reason of any payment the existence or amount of which
cannot be determined at the time of the Gross-Up Payment), Reynolds shall
make an additional gross-up payment in respect of such excess (plus any
interest payable with respect to such excess) at the time that the amount
of such excess is finally determined.
The Gross-Up Payment shall be made not later than the fifth business
day following Termination; provided, however, that if the amount of such
payment cannot be finally determined on or before such day, Reynolds shall
pay Executive on such day an estimate as determined in good faith by
Reynolds of the minimum amount of such payment and shall pay the remainder
of such payment (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined
but in no event later than the thirtieth day after Termination. If the
<PAGE>
amount of the estimated payments exceeds the amount subsequently
determined to have been due, such excess shall constitute a loan by
Reynolds to Executive payable on the fifth business day after demand by
Reynolds (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code).
(h) No Duty to Mitigate. Except as provided in Section 3(d),
Executive's entitlement to benefits hereunder shall not be governed by any
duty to mitigate his damages by seeking further employment nor offset by
any compensation which he may receive from future employment.
(i) Payment Obligations Absolute. Reynolds' obligation to pay or
cause to be paid to Executive the benefits and to make the arrangements
provided in this Section 3 shall be absolute and unconditional and shall
not be affected by any circumstances, including without limitation any
breach or alleged breach of Section 5, any setoff, counterclaim,
recoupment, defense or any other right which Reynolds may have against him
or anyone else. All amounts payable by or on behalf of Reynolds hereunder
shall be paid without notice or demand. Each and every payment made
hereunder by or on behalf of Reynolds shall be final and Reynolds and its
subsidiaries shall not, for any reason whatsoever, seek to recover all or
any part of such payment from Executive or from whoever shall be entitled
thereto.
4. Conditions to the Obligations of Reynolds. Reynolds shall have no
obligation to provide or cause to be provided to Executive the rights and
benefits described in Section 3 hereof if either of the following events shall
occur:
(a) Termination for Cause. Reynolds shall terminate Executive's
employment for Cause. For purposes of this Agreement, termination of
employment for "Cause" shall mean termination solely for dishonesty,
conviction of a felony, or willful unauthorized disclosure of confidential
information of Reynolds.
(b) Resignation as Director and/or Officer. Executive shall not,
promptly after Termination and upon receiving a written request to do so,
resign as a director and/or officer of Reynolds and of each subsidiary and
affiliate of Reynolds for which he is then serving as a director and/or
officer.
<PAGE>
5. Confidentiality; Non-Solicitation; Cooperation; Consultancy.
(a) Confidentiality. Executive agrees that at all times following
Termination, he will not, without the prior written consent of Reynolds,
disclose to any person, firm or corporation any confidential information of
Reynolds or its subsidiaries which is now known to him or which hereafter may
become known to him as a result of his employment or association with Reynolds
and which could be helpful to a competitor; provided, however, that the
foregoing shall not apply to confidential information which becomes publicly
disseminated by means other than a breach of this Agreement.
(b) Non-Solicitation. Executive agrees that for a period of three
years following the date of Termination (or until Executive's Normal Retirement
Date, whichever is sooner) he will not induce or attempt to induce, either
directly or indirectly, any management or executive employee of Reynolds or of
any of its subsidiaries to terminate his or her employment.
(c) Cooperation. Executive agrees that, at all times following
Termination, he will furnish such information and render such assistance and
cooperation as may reasonably be requested in connection with any litigation or
legal proceedings concerning Reynolds or any of its subsidiaries (other than
any legal proceedings concerning Executive's employment). In connection with
such cooperation, Reynolds will pay or reimburse Executive for reasonable
expenses actually incurred.
(d) Consultation. Executive agrees that for a period of 36 months
following Termination (or until Executive's Normal Retirement Date, if sooner),
he will make himself available to Reynolds and its subsidiaries for
consultation with senior officers of Reynolds and of its subsidiaries;
provided, however, that Executive shall not be required to perform such
consulting services (i) for more than five days in any month and (ii) for more
than 30 hours in any month. It is expressly agreed that Executive's consulting
services will be required at such time and such places as will result in the
least inconvenience to Executive, taking into consideration Executive's other
business commitments during such period which may obligate Executive to honor
such other commitments prior to his rendering services hereunder. It is
further agreed that Executive's consulting services shall be rendered by
personal consultation at Executive's principal residence or office, wherever
maintained, or by correspondence through mail, telephone or telegraph or other
similar modes of communication at times, including weekends and evenings, most
convenient to Executive. Reynolds and Executive agree that if during such
period Executive should engage in
<PAGE>
full-time employment, Executive shall not be required to consult at times that
will conflict with his responsibilities with respect to such employment. In
connection with such consulting services, Reynolds will pay or reimburse
Executive for reasonable expenses actually incurred.
(e) Remedies for Breach. It is recognized that damages in the event
of breach of this Section 5 by Executive would be difficult, if not impossible,
to ascertain, and it is therefore agreed that Reynolds, in addition to and
without limiting any other remedy or right it may have, shall have the right to
an injunction or other equitable relief in any court of competent jurisdiction,
enjoining any such breach. The existence of this right shall not preclude
Reynolds from pursuing any other rights and remedies at law or in equity which
Reynolds may have.
6. Term of Agreement. This Agreement shall commence on the date hereof
and shall remain in force until December 31, 1999; provided, however, that
commencing on January 1, 1999, and each January 1 thereafter, the term of this
Agreement shall automatically be extended for one additional year unless, not
later than November 1 of the preceding year, Reynolds shall have given notice
to Executive that Reynolds does not wish to extend this Agreement; and provided
further that if a Change in Control occurs during the original or extended term
of this Agreement, this Agreement shall continue in effect for a period of 24
months beyond the month in which the Change in Control occurred.
Notwithstanding the foregoing, this Agreement shall terminate if either
Reynolds or Executive terminates the employment of Executive before a Change in
Control occurs. Except as otherwise provided in Section 8(b), this Agreement
shall also terminate upon the Executive's death or disability or his Normal
Retirement Date.
7. Adjudication and Expenses.
(a) If a dispute or controversy arises under or in connection with this
Agreement, Executive shall be entitled to an adjudication in an appropriate
court of the State of Delaware, or in any other court of competent
jurisdiction. Alternatively, Executive, at Executive's option, may seek an
award in arbitration to be conducted by a single arbitrator under the
Commercial Arbitration Rules of the American Arbitration Association.
(b) Reynolds shall pay or reimburse Executive for all costs and expenses,
including without limitation court costs and attorneys' fees, incurred by
Executive as a result of any claim, action or proceeding (including without
limitation a claim, action or proceeding by Executive against Reynolds) arising
out of, or
<PAGE>
challenging the validity or enforceability of, this Agreement or any provision
hereof.
8. Successors; Binding Agreement.
(a) This Agreement shall inure to the benefit of and be binding upon
Reynolds and its successors and assigns.
(b) This Agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Executive should
die while any amount would still be payable hereunder if Executive had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to Executive's devisee,
legatee or other designee or, if there is no such designee, Executive's estate.
9. Miscellaneous.
(a) Assignment. No right, benefit or interest hereunder shall be subject
in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge, except by will or the laws of descent and distribution,
and any attempt thereat shall be void; and no right, benefit or interest
hereunder shall, prior to receipt of payment, be in any manner liable for or
subject to the recipient's debts, contracts, liabilities, engagements or torts;
provided, however, that Executive may assign any right, benefit or interest
hereunder if such assignment is permitted under the terms of any plan or policy
of insurance or annuity contract governing such right, benefit or interest.
(b) Construction of Agreement. Nothing in this Agreement shall be
construed to amend any provision of any plan or policy of Reynolds. This
Agreement is not, and nothing herein shall be deemed to create, a commitment of
continued employment of Executive by Reynolds or by any of its subsidiaries.
(c) Statutory References. Any reference in this Agreement to a specific
statutory provision shall include that provision and any comparable provision
or provisions of future legislation amending, modifying, supplementing or
superseding the referenced provision.
(d) Amendment. Except as otherwise provided in Section 6, this Agreement
may not be amended, modified or terminated except by written agreement of both
parties.
<PAGE>
(e) Waiver. No provision of this Agreement may be waived except by a
writing signed by the party to be bound thereby.
Executive may at any time or from time to time waive any or all of the
rights and benefits provided for herein which have not been received by
Executive at the time of such waiver. In addition, prior to the last day of
the calendar year in which Executive's Termination occurs, Executive may waive
any or all rights and benefits provided for herein which have been received by
Executive; provided that Executive repays to Reynolds (or, if the benefit was
received from an employee benefit plan, to such plan) the amount of the benefit
received (together with interest at the rate provided in Section 1274(b)(2)(B)
of the Code). Any waiver of benefits pursuant to this section shall be
irrevocable.
(f) Severability. If any provision or portion of this Agreement shall be
determined to be invalid or unenforceable for any reason, the remaining
provisions of this Agreement shall remain in full force and effect to the
fullest extent permitted by law.
(g) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be considered an original and all of which
together shall constitute one agreement.
(h) Number and Gender. All words used in this Agreement shall be
construed to be of such number or gender as the circumstances require.
(i) Taxes. Any payment or delivery required under this Agreement shall
be subject to all requirements of the law with regard to withholding of taxes,
filing, making of reports and the like, and Reynolds shall use its best efforts
to satisfy promptly all such requirements.
(j) Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware.
(k) Entire Agreement. This Agreement sets forth the entire agreement and
understanding of the parties hereto with respect to the matters covered hereby.
<PAGE>
Each of the parties has therefore caused this Agreement to be executed on
its or his behalf as of the 20th day of February, 1998.
REYNOLDS METALS COMPANY
By_______________________________
Title: Chairman of the Board and
Chief Executive Officer
EXECUTIVE
_________________________________
<PAGE>
March 18, 1998
Mr. ____
Richmond, Virginia
RE: Amendment to Executive Severance Agreement
Dear Mr._____:
The Executive Severance Agreement between you and Reynolds Metals Company
("Reynolds") dated _____ (the "Agreement") provides in Section 9(d) that the
Agreement can be amended by written agreement of both parties. Reynolds
therefore proposes the following amendments to the Agreement effective December
1, 1997:
1. Section 2(b) shall be amended by substituting the words "the
Rights Agreement dated December 1, 1997" for the reference to "the Rights
Agreement dated November 23, 1987."
2. The second paragraph of Section 3(a) shall be amended to read in
its entirety as follows:
For purposes of this Section 3(a), "Earnings" shall mean the sum
of (i) Executive's annual base salary (at the rate in effect at the
date of Termination, or, if greater, at the rate in effect
immediately preceding the Change in Control), plus (ii) an amount
equal to the highest cash target incentive opportunity established
for Executive for 1998 or any future calendar year (without regard to
any possible deferred portions thereof). Earnings shall not include
any income attributable to options granted and dividends on shares
acquired pursuant to any stock option plan maintained by Reynolds for
its Employees.
3. The first sentence of Section 3(d) shall be amended to read in
its entirety as follows:
<PAGE>
To the extent Executive is eligible thereunder, Executive shall
continue to be covered by (i) any group term, supplemental and/or
split dollar life insurance plan in effect for Executive at
Termination and (ii) the medical, dental, vision, accident and
disability benefit plans of Reynolds in effect at Termination for
employees in the same class or category as Executive, subject in each
case to the terms of such plans and to Executive's making any
required contributions thereto, to the extent contributions are
required of active employees.
If the amendment of the Agreement as set forth in this letter is
acceptable to you, please sign and return the enclosed copy of this letter.
Very truly yours,
Jeremiah J. Sheehan
ACCEPTED:
_________________________
Date:____________________
Exhibit 10.41
Amendment to
Reynolds Metals Company
1996 Nonqualified Stock Option Plan
At a meeting held on November 21, 1997, the board of
directors of Reynolds Metals Company adopted the following
resolution:
RESOLVED, that Section 7.07(b) of the Reynolds
Metals Company 1996 Nonqualified Stock Option Plan is
hereby amended effective December 1, 1997, by deleting
the reference to "the Rights Agreement dated November
23, 1987" and inserting in its place a reference to
"the Rights Agreement dated December 1, 1997."
Exhibit 10.42
Amendment to
Reynolds Metals Company
Restricted Stock Plan for Outside Directors
At a meeting held on November 21, 1997, the board of
directors of Reynolds Metals Company adopted the following
resolution:
RESOLVED, that Section 4.04(b) of the Reynolds
Metals Company 1996 Nonqualified Stock Option Plan is
hereby amended effective December 1, 1997, by deleting
the reference to "the Rights Agreement dated November
23, 1987" and inserting in its place a reference to
"the Rights Agreement dated December 1, 1997."
EXHIBIT 21
PARENTS AND SUBSIDIARIES
(A) Reynolds Metals Company has no parents.
(B) Set forth below is a list of certain of the subsidiaries and associated
companies of Reynolds Metals Company:
Place of
Incorporation Or
Organization
------------
Aluminerie de Becancour Inc. Quebec
* Aluminio Reynolds de Venezuela, S. A. Venezuela
Aluminium Oxid Stade Gesellschaft mit beschrankter Haftung Germany
* Bakers Choice Products, Inc. Delaware
Bohai Aluminium Industries, Ltd. China
* Canadian Reynolds Metals Company, Ltd./Societe Canadienne
de Metaux Reynolds, Ltee Quebec
Hamburger Aluminium-Werk Gesellschaft mit beschrankter
Haftung Germany
* Hanover Manufacturing Corporation Delaware
* Industria Navarra del Aluminio, S. A. Spain
Manicouagan Power Company - La Compagnie Hydroelectrique
Manicouagan Quebec
* Malakoff Industries, Inc. Texas
* Mt. Vernon Plastics Corporation Delaware
Pechiney Reynolds Quebec, Inc. Nebraska
* Presidential Development Corporation New York
* RAMCO Manufacturing Company Delaware
* RB Sales Company, Ltd. Delaware
* Reynolds Aluminum China (Inc.) Delaware
* Reynolds Aluminium Deutschland, Inc. Delaware
* Reynolds Aluminium Deutschland Internationale
Vertriebsgesellschaft mbH Germany
* Reynolds Aluminium France, S.A. France
* Reynolds Aluminum Company of Canada, Ltd./Societe
D'Aluminium Reynolds Du Canada, Ltee Quebec
* Reynolds Australia Alumina, Ltd. Delaware
* Reynolds Becancour, Inc. Delaware
* Reynolds Consumer Products, Inc. Delaware
* Reynolds Extrusion Europe (Holding) B.V. The Netherlands
* Reynolds International Holdings, Inc. Delaware
* Reynolds International, Inc. Delaware
* Reynolds International (China), Ltd. Bermuda
* Reynolds International Latin America, S.A. Panama
* Reynolds International (Panama) Inc. Panama
* Reynolds Italy Holding, S.p.A Italy
* Reynolds-Lemmerz Industries Ontario
* Reynolds Wheels-Holding, S.p.A. Italy
* Reywest Development Corporation Arizona
* RMC Delaware, Inc. Delaware
* RMC Properties, Ltd. Delaware
* RMCC Company Delaware
* Reynolds Metals Development Company Delaware
* Reynolds Metals Foreign Sales Corporation Barbados
* Saint George Insurance Company Vermont
* Southern Graphic Systems - Canada, Ltd./Systemes
Graphiques Southern - Canada, Ltee Quebec
* Southern Graphic Systems, Inc. Kentucky
* Southwestern Graphics Systems, Inc. Texas
The names of a number of subsidiaries and associated companies
have been omitted because considered in the aggregate they would not
constitute a significant subsidiary.
* Consolidated subsidiaries
EXHIBIT 23
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the:
1. Registration Statement (Form S-8 No. 33-13822) pertaining to the Reynolds
Metals Company 1987 Nonqualified Stock Option Plan;
2. Registration Statement (Form S-8 No. 33-44400) pertaining to the Reynolds
Metals Company 1992 Nonqualified Stock Option Plan;
3. Registration Statement (Form S-8 No. 33-20498) pertaining to the Reynolds
Metals Company Savings and Investment Plan for Salaried Employees;
4. Registration Statement (Form S-3 No. 33-43443) pertaining to the shelf
registration of debt securities of Reynolds Metals Company;
5. Registration Statement (Form S-8 No. 33-66032) pertaining to the Reynolds
Metals Company Savings Plan for Hourly Employees;
6. Registration Statement (Form S-3 No. 33-51153) pertaining to the offer and
resale of shares of Reynolds Metals Company Common Stock by the Trustee of
the Reynolds Metals Company Pension Plans Master Trust;
7. Registration Statement (Form S-8 No. 33-53847) pertaining to the Employees
Savings Plan;
8. Registration Statement (Form S-8 No. 33-53851) pertaining to the Reynolds
Metals Company Restricted Stock Plan for Outside Directors;
9. Registration Statement (Form S-3 No. 33-59168) pertaining to the
registration of debt securities of Reynolds Aluminum Company of Canada,
Ltd. (formerly known as Canadian Reynolds Metals Company Limited);
10. Registration Statement (Form S-8 No. 333-00929) pertaining to the Reynolds
Metals Company Performance Incentive Plan;
11. Registration Statement (Form S-8 No. 333-03947) pertaining to the Reynolds
Metals Company 1996 Nonqualified Stock Option Plan;
and in the related prospectuses of our report dated February 20, 1998, with
respect to the consolidated financial statements of Reynolds Metals Company
included in this Annual Report (Form 10-K) for the year ended December 31,
1997.
/s/ Ernst & Young LLP
Richmond, Virginia
March 25, 1998
EXHIBIT 24
1. Powers of Attorney from the following persons are attached:
Patricia C. Barron
John R. Hall
Robert L. Hintz
William H. Joyce
Mylle Bell Mangum
D. Larry Moore
James M. Ringler
Samuel C. Scott, III
Joe B. Wyatt
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
hereby constitutes and appoints D. Michael Jones and Brenda A.
Hart, or either of them, her true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution,
for her and in her name, place and stead, in any and all
capacities (including without limitation in any capacity on
behalf of Reynolds Metals Company (the "Company")), to
(i) Sign the Annual Report on Form 10-K of the Company
for the year ended December 31, 1997 and any and all
amendments thereto, and to file the same, with all exhibits
thereto, and all documents in connection therewith, if any,
with the Securities and Exchange Commission (the "SEC"), and
to take all such other action which they or either of them
may consider necessary or desirable in connection therewith,
all in accordance with the Securities Exchange Act of 1934,
as amended; and
(ii) Sign any and all post-effective amendments to the
Company's Registration Statements relating to (a) the offer
and sale of interests in the Reynolds Metals Company Savings
and Investment Plan for Salaried Employees and an indefinite
number of shares of the Company's common stock, without par
value (the "Common Stock") in connection therewith; (b) the
offer and sale of up to 900,000 shares of Common Stock
together with an indeterminate amount of interests to be
offered and sold in connection therewith under the Reynolds
Metals Company Savings Plan for Hourly Employees; (c) the
offer and sale of up to 50,000 shares of Common Stock
together with an indeterminate amount of interests to be
offered and sold in connection therewith under the Employees
Savings Plan; (d) the offer and sale of up to 3,000,000
shares of Common Stock under the Reynolds Metals Company
1987 Nonqualified Stock Option Plan; (e) the offer and sale
of up to 3,250,000 shares of Common Stock under the Reynolds
Metals Company 1992 Nonqualified Stock Option Plan; (f) the
offer and sale of up to 2,000,000 shares of Common Stock
under the Reynolds Metals Company 1996 Nonqualified Stock
Option Plan; (g) the offer and sale of up to 100,000 shares
of Common Stock under the Reynolds Metals Company
Performance Incentive Plan; and (h) the offer and sale of up
to 30,000 shares of Common Stock under the Reynolds Metals
Company Restricted Stock Plan for Outside Directors; and to
file the same, with all exhibits thereto, and all documents
in connection therewith, with the SEC; and
<PAGE>
(iii) Sign any and all Registration Statements on Form S-
3, or on such other form as may be appropriate, for
registration of the shares of Common Stock and Series A
Junior Participating Preferred Stock (without par value) of
the Company, issuable upon exercise of Rights (as defined in
the Rights Agreement between the Company and The Chase
Manhattan Bank, N.A., dated as of December 1, 1997, as
amended from time to time) and any and all amendments
(including post-effective amendments) to such Registration
Statements, and to file the same, with all exhibits thereto,
and all preliminary prospectuses, prospectuses, prospectus
supplements and documents in connection therewith, with the
SEC; and
(iv) Sign any and all post-effective amendments to the
Company's Registration Statements relating to the offer and
sale of up to $1,650,000,000 principal amount of unsecured
debt securities of the Company, and to file the same, with
all exhibits thereto, and all prospectuses, prospectus
supplements, pricing supplements and documents in connection
therewith, with the SEC;
granting unto each of said attorneys-in-fact and agents full
power and authority to do and perform each and every act and
thing requisite and necessary to be done, as fully to all intents
and purposes as the undersigned might or could do in person,
hereby ratifying and confirming all that each of said attorneys-
in-fact and agents, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
This Power of Attorney shall expire on the 28th day of
February, 1999.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Power of Attorney on the 20th day of February,
1998.
/s/ Patricia C. Barron
-----------------------
Patricia C. Barron
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
hereby constitutes and appoints D. Michael Jones and Brenda A.
Hart, or either of them, his true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all
capacities (including without limitation in any capacity on
behalf of Reynolds Metals Company (the "Company")), to
(i) Sign the Annual Report on Form 10-K of the Company
for the year ended December 31, 1997 and any and all
amendments thereto, and to file the same, with all exhibits
thereto, and all documents in connection therewith, if any,
with the Securities and Exchange Commission (the "SEC"), and
to take all such other action which they or either of them
may consider necessary or desirable in connection therewith,
all in accordance with the Securities Exchange Act of 1934,
as amended; and
(ii) Sign any and all post-effective amendments to the
Company's Registration Statements relating to (a) the offer
and sale of interests in the Reynolds Metals Company Savings
and Investment Plan for Salaried Employees and an indefinite
number of shares of the Company's common stock, without par
value (the "Common Stock") in connection therewith; (b) the
offer and sale of up to 900,000 shares of Common Stock
together with an indeterminate amount of interests to be
offered and sold in connection therewith under the Reynolds
Metals Company Savings Plan for Hourly Employees; (c) the
offer and sale of up to 50,000 shares of Common Stock
together with an indeterminate amount of interests to be
offered and sold in connection therewith under the Employees
Savings Plan; (d) the offer and sale of up to 3,000,000
shares of Common Stock under the Reynolds Metals Company
1987 Nonqualified Stock Option Plan; (e) the offer and sale
of up to 3,250,000 shares of Common Stock under the Reynolds
Metals Company 1992 Nonqualified Stock Option Plan; (f) the
offer and sale of up to 2,000,000 shares of Common Stock
under the Reynolds Metals Company 1996 Nonqualified Stock
Option Plan; (g) the offer and sale of up to 100,000 shares
of Common Stock under the Reynolds Metals Company
Performance Incentive Plan; and (h) the offer and sale of up
to 30,000 shares of Common Stock under the Reynolds Metals
Company Restricted Stock Plan for Outside Directors; and to
file the same, with all exhibits thereto, and all documents
in connection therewith, with the SEC; and
<PAGE>
(iii) Sign any and all Registration Statements on Form S-
3, or on such other form as may be appropriate, for
registration of the shares of Common Stock and Series A
Junior Participating Preferred Stock (without par value) of
the Company, issuable upon exercise of Rights (as defined in
the Rights Agreement between the Company and The Chase
Manhattan Bank, N.A., dated as of December 1, 1997, as
amended from time to time) and any and all amendments
(including post-effective amendments) to such Registration
Statements, and to file the same, with all exhibits thereto,
and all preliminary prospectuses, prospectuses, prospectus
supplements and documents in connection therewith, with the
SEC; and
(iv) Sign any and all post-effective amendments to the
Company's Registration Statements relating to the offer and
sale of up to $1,650,000,000 principal amount of unsecured
debt securities of the Company, and to file the same, with
all exhibits thereto, and all prospectuses, prospectus
supplements, pricing supplements and documents in connection
therewith, with the SEC;
granting unto each of said attorneys-in-fact and agents full
power and authority to do and perform each and every act and
thing requisite and necessary to be done, as fully to all intents
and purposes as the undersigned might or could do in person,
hereby ratifying and confirming all that each of said attorneys-
in-fact and agents, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
This Power of Attorney shall expire on the 28th day of
February, 1999.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Power of Attorney on the 20th day of February,
1998.
/s/ John R. Hall
______________________________
John R. Hall
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
hereby constitutes and appoints D. Michael Jones and Brenda A.
Hart, or either of them, his true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all
capacities (including without limitation in any capacity on
behalf of Reynolds Metals Company (the "Company")), to
(i) Sign the Annual Report on Form 10-K of the Company
for the year ended December 31, 1997 and any and all
amendments thereto, and to file the same, with all exhibits
thereto, and all documents in connection therewith, if any,
with the Securities and Exchange Commission (the "SEC"), and
to take all such other action which they or either of them
may consider necessary or desirable in connection therewith,
all in accordance with the Securities Exchange Act of 1934,
as amended; and
(ii) Sign any and all post-effective amendments to the
Company's Registration Statements relating to (a) the offer
and sale of interests in the Reynolds Metals Company Savings
and Investment Plan for Salaried Employees and an indefinite
number of shares of the Company's common stock, without par
value (the "Common Stock") in connection therewith; (b) the
offer and sale of up to 900,000 shares of Common Stock
together with an indeterminate amount of interests to be
offered and sold in connection therewith under the Reynolds
Metals Company Savings Plan for Hourly Employees; (c) the
offer and sale of up to 50,000 shares of Common Stock
together with an indeterminate amount of interests to be
offered and sold in connection therewith under the Employees
Savings Plan; (d) the offer and sale of up to 3,000,000
shares of Common Stock under the Reynolds Metals Company
1987 Nonqualified Stock Option Plan; (e) the offer and sale
of up to 3,250,000 shares of Common Stock under the Reynolds
Metals Company 1992 Nonqualified Stock Option Plan; (f) the
offer and sale of up to 2,000,000 shares of Common Stock
under the Reynolds Metals Company 1996 Nonqualified Stock
Option Plan; (g) the offer and sale of up to 100,000 shares
of Common Stock under the Reynolds Metals Company
Performance Incentive Plan; and (h) the offer and sale of up
to 30,000 shares of Common Stock under the Reynolds Metals
Company Restricted Stock Plan for Outside Directors; and to
file the same, with all exhibits thereto, and all documents
in connection therewith, with the SEC; and
<PAGE>
(iii) Sign any and all Registration Statements on Form S-
3, or on such other form as may be appropriate, for
registration of the shares of Common Stock and Series A
Junior Participating Preferred Stock (without par value) of
the Company, issuable upon exercise of Rights (as defined in
the Rights Agreement between the Company and The Chase
Manhattan Bank, N.A., dated as of December 1, 1997, as
amended from time to time) and any and all amendments
(including post-effective amendments) to such Registration
Statements, and to file the same, with all exhibits thereto,
and all preliminary prospectuses, prospectuses, prospectus
supplements and documents in connection therewith, with the
SEC; and
(iv) Sign any and all post-effective amendments to the
Company's Registration Statements relating to the offer and
sale of up to $1,650,000,000 principal amount of unsecured
debt securities of the Company, and to file the same, with
all exhibits thereto, and all prospectuses, prospectus
supplements, pricing supplements and documents in connection
therewith, with the SEC;
granting unto each of said attorneys-in-fact and agents full
power and authority to do and perform each and every act and
thing requisite and necessary to be done, as fully to all intents
and purposes as the undersigned might or could do in person,
hereby ratifying and confirming all that each of said attorneys-
in-fact and agents, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
This Power of Attorney shall expire on the 28th day of
February, 1999.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Power of Attorney on the 20th day of February,
1998.
/s/ Robert L. Hintz
______________________________
Robert L. Hintz
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
hereby constitutes and appoints D. Michael Jones and Brenda A.
Hart, or either of them, his true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all
capacities (including without limitation in any capacity on
behalf of Reynolds Metals Company (the "Company")), to
(i) Sign the Annual Report on Form 10-K of the Company
for the year ended December 31, 1997 and any and all
amendments thereto, and to file the same, with all exhibits
thereto, and all documents in connection therewith, if any,
with the Securities and Exchange Commission (the "SEC"), and
to take all such other action which they or either of them
may consider necessary or desirable in connection therewith,
all in accordance with the Securities Exchange Act of 1934,
as amended; and
(ii) Sign any and all post-effective amendments to the
Company's Registration Statements relating to (a) the offer
and sale of interests in the Reynolds Metals Company Savings
and Investment Plan for Salaried Employees and an indefinite
number of shares of the Company's common stock, without par
value (the "Common Stock") in connection therewith; (b) the
offer and sale of up to 900,000 shares of Common Stock
together with an indeterminate amount of interests to be
offered and sold in connection therewith under the Reynolds
Metals Company Savings Plan for Hourly Employees; (c) the
offer and sale of up to 50,000 shares of Common Stock
together with an indeterminate amount of interests to be
offered and sold in connection therewith under the Employees
Savings Plan; (d) the offer and sale of up to 3,000,000
shares of Common Stock under the Reynolds Metals Company
1987 Nonqualified Stock Option Plan; (e) the offer and sale
of up to 3,250,000 shares of Common Stock under the Reynolds
Metals Company 1992 Nonqualified Stock Option Plan; (f) the
offer and sale of up to 2,000,000 shares of Common Stock
under the Reynolds Metals Company 1996 Nonqualified Stock
Option Plan; (g) the offer and sale of up to 100,000 shares
of Common Stock under the Reynolds Metals Company
Performance Incentive Plan; and (h) the offer and sale of up
to 30,000 shares of Common Stock under the Reynolds Metals
Company Restricted Stock Plan for Outside Directors; and to
file the same, with all exhibits thereto, and all documents
in connection therewith, with the SEC; and
<PAGE>
(iii) Sign any and all Registration Statements on Form S-
3, or on such other form as may be appropriate, for
registration of the shares of Common Stock and Series A
Junior Participating Preferred Stock (without par value) of
the Company, issuable upon exercise of Rights (as defined in
the Rights Agreement between the Company and The Chase
Manhattan Bank, N.A., dated as of December 1, 1997, as
amended from time to time) and any and all amendments
(including post-effective amendments) to such Registration
Statements, and to file the same, with all exhibits thereto,
and all preliminary prospectuses, prospectuses, prospectus
supplements and documents in connection therewith, with the
SEC; and
(iv) Sign any and all post-effective amendments to the
Company's Registration Statements relating to the offer and
sale of up to $1,650,000,000 principal amount of unsecured
debt securities of the Company, and to file the same, with
all exhibits thereto, and all prospectuses, prospectus
supplements, pricing supplements and documents in connection
therewith, with the SEC;
granting unto each of said attorneys-in-fact and agents full
power and authority to do and perform each and every act and
thing requisite and necessary to be done, as fully to all intents
and purposes as the undersigned might or could do in person,
hereby ratifying and confirming all that each of said attorneys-
in-fact and agents, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
This Power of Attorney shall expire on the 28th day of
February, 1999.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Power of Attorney on the 20th day of February,
1998.
/s/ William H. Joyce
______________________________
William H. Joyce
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
hereby constitutes and appoints D. Michael Jones and Brenda A.
Hart, or either of them, her true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution,
for her and in her name, place and stead, in any and all
capacities (including without limitation in any capacity on
behalf of Reynolds Metals Company (the "Company")), to
(i) Sign the Annual Report on Form 10-K of the Company
for the year ended December 31, 1997 and any and all
amendments thereto, and to file the same, with all exhibits
thereto, and all documents in connection therewith, if any,
with the Securities and Exchange Commission (the "SEC"), and
to take all such other action which they or either of them
may consider necessary or desirable in connection therewith,
all in accordance with the Securities Exchange Act of 1934,
as amended; and
(ii) Sign any and all post-effective amendments to the
Company's Registration Statements relating to (a) the offer
and sale of interests in the Reynolds Metals Company Savings
and Investment Plan for Salaried Employees and an indefinite
number of shares of the Company's common stock, without par
value (the "Common Stock") in connection therewith; (b) the
offer and sale of up to 900,000 shares of Common Stock
together with an indeterminate amount of interests to be
offered and sold in connection therewith under the Reynolds
Metals Company Savings Plan for Hourly Employees; (c) the
offer and sale of up to 50,000 shares of Common Stock
together with an indeterminate amount of interests to be
offered and sold in connection therewith under the Employees
Savings Plan; (d) the offer and sale of up to 3,000,000
shares of Common Stock under the Reynolds Metals Company
1987 Nonqualified Stock Option Plan; (e) the offer and sale
of up to 3,250,000 shares of Common Stock under the Reynolds
Metals Company 1992 Nonqualified Stock Option Plan; (f) the
offer and sale of up to 2,000,000 shares of Common Stock
under the Reynolds Metals Company 1996 Nonqualified Stock
Option Plan; (g) the offer and sale of up to 100,000 shares
of Common Stock under the Reynolds Metals Company
Performance Incentive Plan; and (h) the offer and sale of up
to 30,000 shares of Common Stock under the Reynolds Metals
Company Restricted Stock Plan for Outside Directors; and to
file the same, with all exhibits thereto, and all documents
in connection therewith, with the SEC; and
<PAGE>
(iii) Sign any and all Registration Statements on Form S-
3, or on such other form as may be appropriate, for
registration of the shares of Common Stock and Series A
Junior Participating Preferred Stock (without par value) of
the Company, issuable upon exercise of Rights (as defined in
the Rights Agreement between the Company and The Chase
Manhattan Bank, N.A., dated as of December 1, 1997, as
amended from time to time) and any and all amendments
(including post-effective amendments) to such Registration
Statements, and to file the same, with all exhibits thereto,
and all preliminary prospectuses, prospectuses, prospectus
supplements and documents in connection therewith, with the
SEC; and
(iv) Sign any and all post-effective amendments to the
Company's Registration Statements relating to the offer and
sale of up to $1,650,000,000 principal amount of unsecured
debt securities of the Company, and to file the same, with
all exhibits thereto, and all prospectuses, prospectus
supplements, pricing supplements and documents in connection
therewith, with the SEC;
granting unto each of said attorneys-in-fact and agents full
power and authority to do and perform each and every act and
thing requisite and necessary to be done, as fully to all intents
and purposes as the undersigned might or could do in person,
hereby ratifying and confirming all that each of said attorneys-
in-fact and agents, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
This Power of Attorney shall expire on the 28th day of
February, 1999.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Power of Attorney on the 20th day of February,
1998.
/s/ Mylle Bell Mangum
______________________________
Mylle Bell Mangum
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
hereby constitutes and appoints D. Michael Jones and Brenda A.
Hart, or either of them, his true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all
capacities (including without limitation in any capacity on
behalf of Reynolds Metals Company (the "Company")), to
(i) Sign the Annual Report on Form 10-K of the Company
for the year ended December 31, 1997 and any and all
amendments thereto, and to file the same, with all exhibits
thereto, and all documents in connection therewith, if any,
with the Securities and Exchange Commission (the "SEC"), and
to take all such other action which they or either of them
may consider necessary or desirable in connection therewith,
all in accordance with the Securities Exchange Act of 1934,
as amended; and
(ii) Sign any and all post-effective amendments to the
Company's Registration Statements relating to (a) the offer
and sale of interests in the Reynolds Metals Company Savings
and Investment Plan for Salaried Employees and an indefinite
number of shares of the Company's common stock, without par
value (the "Common Stock") in connection therewith; (b) the
offer and sale of up to 900,000 shares of Common Stock
together with an indeterminate amount of interests to be
offered and sold in connection therewith under the Reynolds
Metals Company Savings Plan for Hourly Employees; (c) the
offer and sale of up to 50,000 shares of Common Stock
together with an indeterminate amount of interests to be
offered and sold in connection therewith under the Employees
Savings Plan; (d) the offer and sale of up to 3,000,000
shares of Common Stock under the Reynolds Metals Company
1987 Nonqualified Stock Option Plan; (e) the offer and sale
of up to 3,250,000 shares of Common Stock under the Reynolds
Metals Company 1992 Nonqualified Stock Option Plan; (f) the
offer and sale of up to 2,000,000 shares of Common Stock
under the Reynolds Metals Company 1996 Nonqualified Stock
Option Plan; (g) the offer and sale of up to 100,000 shares
of Common Stock under the Reynolds Metals Company
Performance Incentive Plan; and (h) the offer and sale of up
to 30,000 shares of Common Stock under the Reynolds Metals
Company Restricted Stock Plan for Outside Directors; and to
file the same, with all exhibits thereto, and all documents
in connection therewith, with the SEC; and
<PAGE>
(iii) Sign any and all Registration Statements on Form S-
3, or on such other form as may be appropriate, for
registration of the shares of Common Stock and Series A
Junior Participating Preferred Stock (without par value) of
the Company, issuable upon exercise of Rights (as defined in
the Rights Agreement between the Company and The Chase
Manhattan Bank, N.A., dated as of December 1, 1997, as
amended from time to time) and any and all amendments
(including post-effective amendments) to such Registration
Statements, and to file the same, with all exhibits thereto,
and all preliminary prospectuses, prospectuses, prospectus
supplements and documents in connection therewith, with the
SEC; and
(iv) Sign any and all post-effective amendments to the
Company's Registration Statements relating to the offer and
sale of up to $1,650,000,000 principal amount of unsecured
debt securities of the Company, and to file the same, with
all exhibits thereto, and all prospectuses, prospectus
supplements, pricing supplements and documents in connection
therewith, with the SEC;
granting unto each of said attorneys-in-fact and agents full
power and authority to do and perform each and every act and
thing requisite and necessary to be done, as fully to all intents
and purposes as the undersigned might or could do in person,
hereby ratifying and confirming all that each of said attorneys-
in-fact and agents, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
This Power of Attorney shall expire on the 28th day of
February, 1999.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Power of Attorney on the 20th day of February,
1998.
/s/ D. Larry Moore
______________________________
D. Larry Moore
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
hereby constitutes and appoints D. Michael Jones and Brenda A.
Hart, or either of them, his true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all
capacities (including without limitation in any capacity on
behalf of Reynolds Metals Company (the "Company")), to
(i) Sign the Annual Report on Form 10-K of the Company
for the year ended December 31, 1997 and any and all
amendments thereto, and to file the same, with all exhibits
thereto, and all documents in connection therewith, if any,
with the Securities and Exchange Commission (the "SEC"), and
to take all such other action which they or either of them
may consider necessary or desirable in connection therewith,
all in accordance with the Securities Exchange Act of 1934,
as amended; and
(ii) Sign any and all post-effective amendments to the
Company's Registration Statements relating to (a) the offer
and sale of interests in the Reynolds Metals Company Savings
and Investment Plan for Salaried Employees and an indefinite
number of shares of the Company's common stock, without par
value (the "Common Stock") in connection therewith; (b) the
offer and sale of up to 900,000 shares of Common Stock
together with an indeterminate amount of interests to be
offered and sold in connection therewith under the Reynolds
Metals Company Savings Plan for Hourly Employees; (c) the
offer and sale of up to 50,000 shares of Common Stock
together with an indeterminate amount of interests to be
offered and sold in connection therewith under the Employees
Savings Plan; (d) the offer and sale of up to 3,000,000
shares of Common Stock under the Reynolds Metals Company
1987 Nonqualified Stock Option Plan; (e) the offer and sale
of up to 3,250,000 shares of Common Stock under the Reynolds
Metals Company 1992 Nonqualified Stock Option Plan; (f) the
offer and sale of up to 2,000,000 shares of Common Stock
under the Reynolds Metals Company 1996 Nonqualified Stock
Option Plan; (g) the offer and sale of up to 100,000 shares
of Common Stock under the Reynolds Metals Company
Performance Incentive Plan; and (h) the offer and sale of up
to 30,000 shares of Common Stock under the Reynolds Metals
Company Restricted Stock Plan for Outside Directors; and to
file the same, with all exhibits thereto, and all documents
in connection therewith, with the SEC; and
<PAGE>
(iii) Sign any and all Registration Statements on Form S-
3, or on such other form as may be appropriate, for
registration of the shares of Common Stock and Series A
Junior Participating Preferred Stock (without par value) of
the Company, issuable upon exercise of Rights (as defined in
the Rights Agreement between the Company and The Chase
Manhattan Bank, N.A., dated as of December 1, 1997, as
amended from time to time) and any and all amendments
(including post-effective amendments) to such Registration
Statements, and to file the same, with all exhibits thereto,
and all preliminary prospectuses, prospectuses, prospectus
supplements and documents in connection therewith, with the
SEC; and
(iv) Sign any and all post-effective amendments to the
Company's Registration Statements relating to the offer and
sale of up to $1,650,000,000 principal amount of unsecured
debt securities of the Company, and to file the same, with
all exhibits thereto, and all prospectuses, prospectus
supplements, pricing supplements and documents in connection
therewith, with the SEC;
granting unto each of said attorneys-in-fact and agents full
power and authority to do and perform each and every act and
thing requisite and necessary to be done, as fully to all intents
and purposes as the undersigned might or could do in person,
hereby ratifying and confirming all that each of said attorneys-
in-fact and agents, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
This Power of Attorney shall expire on the 28th day of
February, 1999.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Power of Attorney on the 20th day of February,
1998.
/s/ James M. Ringler
______________________________
James M. Ringler
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
hereby constitutes and appoints D. Michael Jones and Brenda A.
Hart, or either of them, his true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all
capacities (including without limitation in any capacity on
behalf of Reynolds Metals Company (the "Company")), to
(i) Sign the Annual Report on Form 10-K of the Company
for the year ended December 31, 1997 and any and all
amendments thereto, and to file the same, with all exhibits
thereto, and all documents in connection therewith, if any,
with the Securities and Exchange Commission (the "SEC"), and
to take all such other action which they or either of them
may consider necessary or desirable in connection therewith,
all in accordance with the Securities Exchange Act of 1934,
as amended; and
(ii) Sign any and all post-effective amendments to the
Company's Registration Statements relating to (a) the offer
and sale of interests in the Reynolds Metals Company Savings
and Investment Plan for Salaried Employees and an indefinite
number of shares of the Company's common stock, without par
value (the "Common Stock") in connection therewith; (b) the
offer and sale of up to 900,000 shares of Common Stock
together with an indeterminate amount of interests to be
offered and sold in connection therewith under the Reynolds
Metals Company Savings Plan for Hourly Employees; (c) the
offer and sale of up to 50,000 shares of Common Stock
together with an indeterminate amount of interests to be
offered and sold in connection therewith under the Employees
Savings Plan; (d) the offer and sale of up to 3,000,000
shares of Common Stock under the Reynolds Metals Company
1987 Nonqualified Stock Option Plan; (e) the offer and sale
of up to 3,250,000 shares of Common Stock under the Reynolds
Metals Company 1992 Nonqualified Stock Option Plan; (f) the
offer and sale of up to 2,000,000 shares of Common Stock
under the Reynolds Metals Company 1996 Nonqualified Stock
Option Plan; (g) the offer and sale of up to 100,000 shares
of Common Stock under the Reynolds Metals Company
Performance Incentive Plan; and (h) the offer and sale of up
to 30,000 shares of Common Stock under the Reynolds Metals
Company Restricted Stock Plan for Outside Directors; and to
file the same, with all exhibits thereto, and all documents
in connection therewith, with the SEC; and
<PAGE>
(iii) Sign any and all Registration Statements on Form S-
3, or on such other form as may be appropriate, for
registration of the shares of Common Stock and Series A
Junior Participating Preferred Stock (without par value) of
the Company, issuable upon exercise of Rights (as defined in
the Rights Agreement between the Company and The Chase
Manhattan Bank, N.A., dated as of December 1, 1997, as
amended from time to time) and any and all amendments
(including post-effective amendments) to such Registration
Statements, and to file the same, with all exhibits thereto,
and all preliminary prospectuses, prospectuses, prospectus
supplements and documents in connection therewith, with the
SEC; and
(iv) Sign any and all post-effective amendments to the
Company's Registration Statements relating to the offer and
sale of up to $1,650,000,000 principal amount of unsecured
debt securities of the Company, and to file the same, with
all exhibits thereto, and all prospectuses, prospectus
supplements, pricing supplements and documents in connection
therewith, with the SEC;
granting unto each of said attorneys-in-fact and agents full
power and authority to do and perform each and every act and
thing requisite and necessary to be done, as fully to all intents
and purposes as the undersigned might or could do in person,
hereby ratifying and confirming all that each of said attorneys-
in-fact and agents, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
This Power of Attorney shall expire on the 28th day of
February, 1999.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Power of Attorney on the 20th day of February,
1998.
/s/ Samuel C. Scott, III
______________________________
Samuel C. Scott, III
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
hereby constitutes and appoints D. Michael Jones and Brenda A.
Hart, or either of them, his true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all
capacities (including without limitation in any capacity on
behalf of Reynolds Metals Company (the "Company")), to
(i) Sign the Annual Report on Form 10-K of the Company
for the year ended December 31, 1997 and any and all
amendments thereto, and to file the same, with all exhibits
thereto, and all documents in connection therewith, if any,
with the Securities and Exchange Commission (the "SEC"), and
to take all such other action which they or either of them
may consider necessary or desirable in connection therewith,
all in accordance with the Securities Exchange Act of 1934,
as amended; and
(ii) Sign any and all post-effective amendments to the
Company's Registration Statements relating to (a) the offer
and sale of interests in the Reynolds Metals Company Savings
and Investment Plan for Salaried Employees and an indefinite
number of shares of the Company's common stock, without par
value (the "Common Stock") in connection therewith; (b) the
offer and sale of up to 900,000 shares of Common Stock
together with an indeterminate amount of interests to be
offered and sold in connection therewith under the Reynolds
Metals Company Savings Plan for Hourly Employees; (c) the
offer and sale of up to 50,000 shares of Common Stock
together with an indeterminate amount of interests to be
offered and sold in connection therewith under the Employees
Savings Plan; (d) the offer and sale of up to 3,000,000
shares of Common Stock under the Reynolds Metals Company
1987 Nonqualified Stock Option Plan; (e) the offer and sale
of up to 3,250,000 shares of Common Stock under the Reynolds
Metals Company 1992 Nonqualified Stock Option Plan; (f) the
offer and sale of up to 2,000,000 shares of Common Stock
under the Reynolds Metals Company 1996 Nonqualified Stock
Option Plan; (g) the offer and sale of up to 100,000 shares
of Common Stock under the Reynolds Metals Company
Performance Incentive Plan; and (h) the offer and sale of up
to 30,000 shares of Common Stock under the Reynolds Metals
Company Restricted Stock Plan for Outside Directors; and to
file the same, with all exhibits thereto, and all documents
in connection therewith, with the SEC; and
<PAGE>
(iii) Sign any and all Registration Statements on Form S-
3, or on such other form as may be appropriate, for
registration of the shares of Common Stock and Series A
Junior Participating Preferred Stock (without par value) of
the Company, issuable upon exercise of Rights (as defined in
the Rights Agreement between the Company and The Chase
Manhattan Bank, N.A., dated as of December 1, 1997, as
amended from time to time) and any and all amendments
(including post-effective amendments) to such Registration
Statements, and to file the same, with all exhibits thereto,
and all preliminary prospectuses, prospectuses, prospectus
supplements and documents in connection therewith, with the
SEC; and
(iv) Sign any and all post-effective amendments to the
Company's Registration Statements relating to the offer and
sale of up to $1,650,000,000 principal amount of unsecured
debt securities of the Company, and to file the same, with
all exhibits thereto, and all prospectuses, prospectus
supplements, pricing supplements and documents in connection
therewith, with the SEC;
granting unto each of said attorneys-in-fact and agents full
power and authority to do and perform each and every act and
thing requisite and necessary to be done, as fully to all intents
and purposes as the undersigned might or could do in person,
hereby ratifying and confirming all that each of said attorneys-
in-fact and agents, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
This Power of Attorney shall expire on the 28th day of
February, 1999.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Power of Attorney on the 20th day of February,
1998.
/s/ Joe B. Wyatt
______________________________
Joe B. Wyatt
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Reynolds
Metals Company Consolidated Balance Sheets for December 31, 1997, December 31,
1996 and December 31, 1995 and Statements of Income and Retained Earnings for
the Years Ended December 31, 1997, December 31, 1996 and December 31, 1995 and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000000
<S> <C> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996 DEC-31-1995
<PERIOD-END> DEC-31-1997 DEC-31-1996 DEC-31-1995
<CASH> 70 38 39
<SECURITIES> 0 0 0
<RECEIVABLES> 857 829 909
<ALLOWANCES> 16 18 20
<INVENTORY> 744 787 891
<CURRENT-ASSETS> 1994 1873 2014
<PP&E> 6533 6813 6600
<DEPRECIATION> 3579 3576 3377
<TOTAL-ASSETS> 7226 7516 7740
<CURRENT-LIABILITIES> 1283 1333 1367
<BONDS> 1501 1793 1853
0 0 0
0 0 505
<COMMON> 1521 1451 941
<OTHER-SE> 1218 1183 1171
<TOTAL-LIABILITY-AND-EQUITY> 7226 7516 7740
<SALES> 6881 6972 7213
<TOTAL-REVENUES> 6900 7016 7252
<CGS> 5658 5856 5772
<TOTAL-COSTS> 6026 6221 6083
<OTHER-EXPENSES> 75 37 0
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 153 160 172
<INCOME-PRETAX> 240 153 548
<INCOME-TAX> 104 49 159
<INCOME-CONTINUING> 136 104 389
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 (15) 0
<NET-INCOME> 136 89 389
<EPS-PRIMARY> 1.86 .82 5.60
<EPS-DILUTED> 1.84 .82 5.25
</TABLE>
