SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
August 10, 1998
REYNOLDS METALS COMPANY
-----------------------
(Exact name of registrant as specified in its charter)
Delaware 1-1430 54-0355135
-------- ------ ----------
(State of Incorporation) (Commission (IRS Employer
File Number) Identification Number)
6601 West Broad Street
P.O. Box 27003
Richmond, Virginia 23261-7003
-----------------------------
(Address of Principal Executive Offices,
including zip code)
(804) 281-2000
--------------
(Registrant's Telephone Number, including area code)
<PAGE> 2
Item 2. ACQUISITION OR DISPOSITION OF ASSETS
On August 10, 1998, the Registrant completed the sale of its
North American aluminum beverage can operations to Ball
Corporation ("Ball") for $746 million in cash. The disposition
was made pursuant to the Asset Purchase Agreement, dated as of
April 22, 1998, by and among Ball, Ball Metal Beverage Container
Corp. and the Registrant. The purchase price was determined by
arms-length negotiation between the Registrant and Ball. The
Registrant realized an after-tax gain of $200 million on the
sale.
The sale included 14 can plants, two end plants and a
headquarters building located as follows:
Can Plants
----------
San Francisco, California
Torrance, California
Tampa, Florida
Moultrie, Georgia
Honolulu, Hawaii
Monticello, Indiana (cans and ends)
Kansas City, Missouri
Middletown, New York
Reidsville, North Carolina (cans and ends)
Salisbury, North Carolina
Forth Worth, Texas
Seattle, Washington
Milwaukee, Wisconsin
Guayama, Puerto Rico
End Plants
----------
Rocklin, California
Bristol, Virginia
Can Operations Headquarters Building
------------------------------------
Richmond, Virginia
The sale did not include the Registrant's 34.9% interest in
Latas de Aluminio S.A., which operates can facilities in Brazil,
Chile and Argentina; the Registrant's can machinery business; or
the Registrant's 27.5% interest in United Arab Can Manufacturing
Company, Ltd., which operates a can plant in Saudi Arabia.
<PAGE> 3
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
(b) Pro Forma Financial Information
<TABLE>
PRO FORMA CONDENSED BALANCE SHEET (UNAUDITED) (millions)
<CAPTION>
Less:
North
American Pro
Reynolds Can Forma
Metals Operations Adjust-
As of June 30, 1998 Company (A) ments Pro Forma
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 200 $ - $ - $ 200
Receivables, less allowances of $14 895 90 - 805
Inventories 551 23 - 528
Prepaid expenses and other 167 2 - 165
- -------------------------------------------------------------------------------------
Total current assets 1,813 115 - 1,698
Unincorporated joint ventures and associated
companies 1,390 - - 1,390
Property, plant and equipment 5,873 740 - 5,133
Less allowances for depreciation and
amortization 3,366 396 - 2,970
- -------------------------------------------------------------------------------------
2,507 344 - 2,163
Deferred taxes and other assets 1,023 10 ( 104) (C) 909
- -------------------------------------------------------------------------------------
Total assets $6,733 $469 ($104) $6,160
=====================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, accrued and other
liabilities $ 897 $ 53 $ - $ 844
Short-term borrowings 61 - - 61
Long-term debt 223 - - 223
- -------------------------------------------------------------------------------------
Total current liabilities 1,181 53 - 1,128
Long-term debt 1,465 - ( 470) (B) 995
Postretirement benefits 1,022 - - 1,022
Environmental, deferred taxes and other
liabilities 597 - - 597
Stockholders' equity:
Common stock 1,533 - - 1,533
Retained earnings 1,111 - 158 (C) 1,269
Treasury stock, at cost (126) - ( 208) (B) (334)
Accumulated other comprehensive income (50) - - (50)
- -------------------------------------------------------------------------------------
Total stockholders' equity 2,468 - ( 50) 2,418
- -------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $6,733 $ 53 ($520) $6,160
=====================================================================================
The accompanying notes to unaudited pro forma financial information are an
integral part of these statements.
</TABLE>
<PAGE> 4
<TABLE>
PRO FORMA STATEMENT OF INCOME (UNAUDITED) (millions, except per share amounts)
=======================================================================================
<CAPTION>
Less:
North
American Pro
Reynolds Can Forma
Metals Operations Adjust-
For the six months ended June 30, 1998 Company (D) ments Pro Forma
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES $3,111 $630 $ - $2,481
COSTS AND EXPENSES
Cost of products sold 2,526 554 - 1,972
Selling, administrative and general expenses 189 9 - 180
Depreciation and amortization 136 - - 136
Interest 67 - (21) (E) 46
Operational restructuring effects - net 304 - - 304
- --------------------------------------------------------------------------------------
3,222 563 (21) 2,638
- --------------------------------------------------------------------------------------
EARNINGS
Income (loss) before income taxes,
extraordinary loss and cumulative
effect of accounting change (111) 67 21 (157)
Taxes on income (credit) (46) 25 8 (F) (63)
- --------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE EXTRAORDINARY
LOSS AND CUMULATIVE EFFECT OF
ACCOUNTING CHANGE ($ 65) $ 42 $ 13 ($ 94)
======================================================================================
EARNINGS PER SHARE (G)
Basic:
Average shares outstanding 72,612,000 - - 68,922,000
Income (loss) before extraordinary loss
and cumulative effect of accounting
change ($0.89) - - ($1.36)
======================================================================================
Diluted:
Average shares outstanding 72,612,000 - - 68,922,000
Income (loss) before extraordinary loss
and cumulative effect of accounting
change ($0.89) - - ($1.36)
======================================================================================
The accompanying notes to unaudited pro forma financial information are an
integral part of these statements.
</TABLE>
<PAGE> 5
<TABLE>
PRO FORMA STATEMENT OF INCOME (UNAUDITED) (millions, except per share amounts)
======================================================================================
<CAPTION>
Less:
North
American Pro
Reynolds Can Forma
Metals Operations Adjust-
For the year ended December 31, 1997 Company (D) ments Pro Forma
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES $6,900 $1,193 $ - $5,707
COSTS AND EXPENSES
Cost of products sold 5,658 1,053 - 4,605
Selling, administrative and general expenses 406 18 - 388
Depreciation and amortization 368 57 - 311
Interest 153 - (42) (E) 111
Operational restructuring effects - net 75 - - 75
- --------------------------------------------------------------------------------------
6,660 1,128 (42) 5,490
- --------------------------------------------------------------------------------------
EARNINGS
Income before income taxes and cumulative
effect of accounting change 240 65 42 217
Taxes on income 104 25 16 (F) 95
- --------------------------------------------------------------------------------------
INCOME BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGE $136 $ 40 $ 26 $ 122
======================================================================================
EARNINGS PER SHARE (G)
Basic:
Average shares outstanding 73,412,000 - - 69,722,000
Income before cumulative effect of
accounting change $1.86 - - $1.75
======================================================================================
Diluted:
Average shares outstanding 74,004,000 - - 70,314,000
Income before cumulative effect of
accounting change $1.84 - - $1.74
======================================================================================
The accompanying notes to unaudited pro forma financial information are an
integral part of these statements.
</TABLE>
<PAGE> 6
REYNOLDS METALS COMPANY AND CONSOLIDATED SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
FOR THE PERIODS ENDED JUNE 30, 1998 AND DECEMBER 31, 1997
The following unaudited pro forma financial information should be
read in conjunction with the consolidated financial statements
and related footnotes included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1997 and Quarterly
Report on Form 10-Q for the quarter ended June 30, 1998. The
following pro forma information is presented for illustrative
purposes only and is not necessarily indicative of future
operating results or financial position.
Basis of Presentation
The unaudited pro forma condensed balance sheet presents the
consolidated financial position of the Company assuming that the
disposition of the Company's North American Can Operations (the
"Operation") had occurred on June 30, 1998. The unaudited pro
forma income statements for the year ended December 31, 1997, and
the six months ended June 30, 1998, present the consolidated
results of operations of the Company assuming that the
disposition had occurred as of January 1, 1997. The Operation
consists of 14 can plants, two end plants and a headquarters
building.
Pro Forma Adjustments
The following notes describe the adjustments found on the
accompanying financial statements:
Balance Sheet
(A) The amounts included in the North American Can Operations'
column reflect the assets and liabilities of the Operation
involved in the disposition.
(B) These pro forma adjustments reflect the estimated use of the
pretax proceeds of $746 million from the disposition. The
Company expects to use approximately $538 million of the
proceeds to extinguish long-term debt (including
extinguishment costs of approximately $68 million) and $208
million to repurchase its common stock. The purchase of
common stock is a part of the Company's share repurchase
program that was announced earlier this year.
(C) These pro forma adjustments reflect the after-tax gain ($200
million after excluding taxes of $130 million) in retained
earnings on the sale of the Operation, the estimated after-
tax loss ($42 million after excluding taxes of $26 million)
on debt extinguishment and the associated tax effects.
These adjustments are not included in the pro forma income
statements.
Income Statements
(D) The amounts included in the North American Can Operations'
column on the income statements reflect the direct activity
of the Operation involved in the disposition. Depreciation
expense was included in the Operation's expenses for the
year 1997, but not the interim periods of 1998. In 1998,
the Operation was accounted for as an asset held for sale
and, as required by current accounting rules, depreciation
was stopped. Pretax income has been tax effected at the
Company's statutory rate (38%).
(E) These pro forma adjustments represent the estimated
reduction in interest expense as a result of long-term debt
being reduced by $470 million. Interest expense was
calculated using the weighted average interest rate
(approximately 9%) on the long-term debt expected to be
extinguished.
(F) Pretax income has been tax effected at the Company's
statutory rate (38%).
(G) The shares used for pro forma earnings per share reflect
$208 million of proceeds being used to repurchase
approximately 3,690,000 shares of the Company's common
stock.
<PAGE> 7
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS -- continued
(c) Exhibits
<F1>EXHIBIT 2 Asset Purchase Agreement, dated as
of April 22, 1998, by and among Ball Corporation,
Ball Metal Beverage Container Corp. and Reynolds
Metals Company. (File No. 1-1430, Form 10-Q
Report for the Quarter Ended June 30, 1998,
EXHIBIT 2). Pursuant to Item 601 of Regulation S-
K, the Registrant agrees to furnish to the
Commission upon request a copy of the disclosure
schedules supplemental to the Asset Purchase
Agreement.
[FN]
___________________
<F1> Incorporated by reference.
</FN>
<PAGE> 8
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
REYNOLDS METALS COMPANY
By: /s/ Allen M. Earehart
---------------------------------
Allen M. Earehart
Senior Vice President, Controller
Dated: August 11, 1998
<PAGE> 9
INDEX TO EXHIBITS
<F1> EXHIBIT 2 - Asset Purchase Agreement, dated as
of April 22, 1998, by and among Ball Corporation,
Ball Metal Beverage Container Corp. and Reynolds
Metals Company. (File No. 1-1430, Form 10-Q
Report for the Quarter Ended June 30, 1998,
EXHIBIT 2). Pursuant to Item 601 of Regulation S-
K, the Registrant agrees to furnish to the
Commission upon request a copy of the disclosure
schedules supplemental to the Asset Purchase
Agreement.
[FN]
___________________
<F1> Incorporated by reference.
</FN>
