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, 1998
Commission File Number 001-01430
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. _______
As of March 22, 1999:
(a) the aggregate market value of the voting stock known by the
Registrant to be held by nonaffiliates of the Registrant was
approximately $2.4 billion<F1>.
(b) the Registrant had 64,457,809 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 20, 1999 - 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 as
reported to the Securities and Exchange Commission.
</FN>
<PAGE> i
NOTE
This copy includes only EXHIBIT 21 of those listed on pages 66 -
72.
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 2 137 EXHIBIT 10.16 4
EXHIBIT 3.1 89 EXHIBIT 10.17 3
EXHIBIT 3.2 23 EXHIBIT 10.18 3
EXHIBIT 4.1 89 EXHIBIT 10.19 2
EXHIBIT 4.2 23 EXHIBIT 10.20 1
EXHIBIT 4.3 165 EXHIBIT 10.21 10
EXHIBIT 4.4 6 EXHIBIT 10.22 10
EXHIBIT 4.5 44 EXHIBIT 10.23 13
EXHIBIT 4.6 2 EXHIBIT 10.24 6
EXHIBIT 4.7 2 EXHIBIT 10.25 2
EXHIBIT 4.8 2 EXHIBIT 10.26 2
EXHIBIT 4.9 10 EXHIBIT 10.27 1
EXHIBIT 4.10 14 EXHIBIT 10.28 3
EXHIBIT 4.11 9 EXHIBIT 10.29 3
EXHIBIT 4.12 36 EXHIBIT 10.30 2
EXHIBIT 4.13 17 EXHIBIT 10.31 10
EXHIBIT 4.14 19 EXHIBIT 10.32 10
EXHIBIT 4.15 18 EXHIBIT 10.33 10
EXHIBIT 4.16 89 EXHIBIT 10.34 10
EXHIBIT 4.17 7 EXHIBIT 10.35 1
EXHIBIT 4.18 12 EXHIBIT 10.36 2
EXHIBIT 10.1 21 EXHIBIT 10.37 5
EXHIBIT 10.2 16 EXHIBIT 10.38 9
EXHIBIT 10.3 19 EXHIBIT 10.39 1
EXHIBIT 10.4 7 EXHIBIT 10.40 1
EXHIBIT 10.5 2 EXHIBIT 10.41 1
EXHIBIT 10.6 7 EXHIBIT 10.42 1
EXHIBIT 10.7 6 EXHIBIT 10.43 21
EXHIBIT 10.8 10 EXHIBIT 10.44 137
EXHIBIT 10.9 15 EXHIBIT 10.45 1
EXHIBIT 10.10 16 EXHIBIT 10.46 1
EXHIBIT 10.11 7 EXHIBIT 21 1
EXHIBIT 10.12 12 EXHIBIT 23 1
EXHIBIT 10.13 13 EXHIBIT 24 19
EXHIBIT 10.14 2 EXHIBIT 27 1
EXHIBIT 10.15 1
<PAGE> ii
TABLE OF CONTENTS
PART I
ITEM PAGE
1. BUSINESS.......................................... 1
GENERAL
Nature of Operations.......................... 1
Portfolio Review.............................. 1
Financial Information Regarding Global
Business Units and Operations by
Geographic Location......................... 2
GLOBAL BUSINESS UNITS
Base Materials................................ 2
Packaging and Consumer........................ 7
Construction and Distribution................. 7
Transportation................................ 8
OTHER OPERATIONS................................ 8
COMPETITION..................................... 9
ENVIRONMENTAL COMPLIANCE....................... 10
RESEARCH AND DEVELOPMENT....................... 11
EMPLOYEES...................................... 11
2. PROPERTIES....................................... 12
3. LEGAL PROCEEDINGS................................ 16
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS........................................ 16
4A. EXECUTIVE OFFICERS OF THE REGISTRANT............. 17
PART II
5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS............................ 19
6. SELECTED FINANCIAL DATA.......................... 21
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS..................................... 22
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK.................................... 36
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA...... 37
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE......... 65
PART III
10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT..................................... 65
11. EXECUTIVE COMPENSATION........................... 65
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT................................. 65
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS... 65
PART IV
14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K............................ 66
<PAGE> 1
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" and "Company" and personal pronouns, such as "we,"
"our" 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 and the
world's leading producer of aluminum foil. We serve customers in
growing world markets including the aluminum fabricating,
packaging and consumer, commercial construction, distribution,
and automotive markets, with a wide variety of aluminum, plastic
and other products. At December 31, 1998, Reynolds employed
approximately 20,000 people. We have operations or interests in
operations at more than 100 locations in 24 countries. Our world
headquarters is in Richmond, Virginia.
Reynolds' operations are organized into four market-based, global
business units: Base Materials; Packaging and Consumer;
Construction and Distribution; and Transportation. For a
description of these units, see the discussion below under the
heading "Global Business Units." For information about certain
operations that are not considered part of a global business
unit, see the discussion below under the heading "Other
Operations."
Portfolio Review
- ----------------
In late 1996, we began a portfolio review of our operations and
businesses. Below is a summary of the portfolio review
transactions that we have completed since the beginning of 1998,
as well as those that are currently pending:
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
primarily in the construction, transportation, electrical,
machinery and equipment, consumer durables and climbing
equipment markets.
In March 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.
In May 1998, we sold our European rolling mill businesses to
VAW aluminium AG. Included in the sale were the aluminum
rolling operations of Reynolds Aluminium Deutschland, Inc.
in Hamburg, Germany (known as RADI); Reynolds Italy Slim,
S.p.A. in Cisterna di Latina, Italy (known as SLIM); and
Industria Navarra del Aluminio, S. A. in Irurzun, Spain
(known as INASA).
In June 1998, we sold our McCook, Illinois sheet and plate
plant to McCook Metals L.L.C. The plant produces aluminum
products for the aircraft and aerospace, transportation and
distribution markets.
In August 1998, we sold our North American beverage can
business to Ball Corporation.
In December 1998, we signed a definitive agreement to sell
our Alloys can stock complex located in Alabama to Wise
Alloys LLC, an affiliate of Wise Metals Co., Inc. Included
in the complex are the Alloys rolling mill, two reclamation
plants, and a coil coating facility. Wise Alloys took title
to the inventory and spare parts associated with the Alloys
complex in December 1998, and until the final closing, we
are operating the facility on behalf of Wise Alloys for a
management fee. The final closing is expected to occur
by the end of the first quarter of 1999 and is subject
to customary closing conditions.
<PAGE> 2
In December 1998, we signed a definitive agreement to sell
our aluminum extrusion plant in Irurzun, Spain, as well as
our distribution operations for architectural systems
located in Spain, to an affiliate of Alcoa Inc. The
transaction is subject to customary closing conditions
and is expected to close by the end of the first quarter
of 1999.
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 are included in Note 11 to the
consolidated financial statements in Item 8 of this report.
GLOBAL BUSINESS UNITS
Base Materials
- --------------
Our base materials global business unit produces metallurgical
alumina, alumina chemicals and primary aluminum. It also
produces carbon products, principally for use in primary aluminum
reduction plants.
Aluminum is one of the most plentiful metals in the earth's
crust. It is 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.
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 contract with a third party to
purchase 120,000 metric tons of alumina annually in 1999 and
2000.
Worsley currently has the capacity to produce 1.7 million metric
tons of alumina per year. Reynolds is entitled to 56% of the
alumina produced by the joint venture. The Worsley refinery is
currently being expanded to increase its annual capacity to 3.1
million metric tons. In addition to increasing capacity, the
expansion project will further reduce operating costs and improve
product quality. Construction is scheduled to be completed in
the second quarter of 2000. 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 of
the refinery's annual capacity.
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.
<PAGE> 3
Brazil
We own a 5% interest in Mineracao Rio Do Norte S.A. (known
as MRN), which owns the Trombetas bauxite mining project in
Brazil. We will buy at least 322,000 dry metric tons of
Brazilian bauxite from the project in 1999.
We also maintain an interest in other, undeveloped bauxite
deposits in Brazil.
Guinea
We own a 6% interest in Halco (Mining), Inc. 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 of approximately 6,550,000 dry metric tons of
Guinean bauxite for the period 1999 through 2011.
Guyana
We are a 50% partner with the Guyanese government in a
bauxite mining project in the Berbice region of Guyana.
During 1999, we will buy between 1,500,000 and 1,800,000 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 5,400,000 dry metric
tons of Jamaican bauxite for the period 1999 through 2001.
Other
We have an arrangement with the U.S. government under which
we will buy at a negotiated price during 1999 approximately
529,000 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 our 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 unalloyed 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 products such as automotive wheels; and
electrical redraw rod, which is used by the electrical cable
industry. During 1998, approximately 65% of our primary aluminum
products was sold externally to third parties; the remainder was
purchased by other Reynolds business units. Our internal demands
for primary aluminum have declined 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, of which 47,000 metric
tons are temporarily idled. During 1998, we restarted 162,000
metric tons of previously idled production capacity. We will
monitor market conditions and our internal needs before
proceeding with further restarts.
<PAGE> 4
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. That line was operating
at the end of 1998 at 41% of its rated capacity of 96,500 metric
tons. We also have an 8% equity interest in C.V.G. Aluminio del
Caroni, S.A. (known as 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 by our wholly owned primary aluminum
plants. We also sell it worldwide to the aluminum and titanium
dioxide industries.
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. Regulations issued by the
U.S. Environmental Protection Agency (the "EPA") require the
treatment of spent potliner to prescribed standards prior to
disposal. Our facility has the capacity to treat 120,000 short
tons of spent potliner annually and is currently operating at
approximately 50% of capacity. In July 1998, the U. S. Court of
Appeals for the District of Columbia struck down the treatment
standards included in the then current EPA regulations. The EPA
subsequently adopted temporary standards, which are expected to
continue in effect until final standards are adopted. Our Gum
Springs facility is the only commercial facility in the U.S.
capable of treating spent potliner to the temporary standards, as
well as to the standards previously in effect. In addition, we
have submitted permit applications to state and federal
environmental authorities to allow us to operate the Gum Springs
facility's landfill as a hazardous waste landfill. The
applications were submitted as a result of EPA's 1997 decision to
classify treated spent potliner as a hazardous waste.
Energy
- ------
Reynolds consumes substantial amounts of energy in the aluminum
production process. Refining alumina from bauxite requires high
temperatures. The facilities where we refine alumina achieve
these temperatures by burning natural gas or coal to produce
direct heat or steam. Natural gas and coal for these facilities
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 our 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, 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. We
are now evaluating the sources of electricity that may be
available to us after the current contract expires.
<PAGE> 5
<TABLE>
Table 1
Alumina Plants and Energy Supply
<CAPTION>
Rated
Capacity(a) at Principal
December 31, 1998 Energy Energy Contract
Plant Metric Tons Purchased(b) Expiration Date
- ----- ----------- ------------ ---------------
<S> <C> <C> <C>
Corpus Christi, Texas 1,600,000 Natural Gas (c),(d)
Worsley, Australia 969,000(e) Coal 2002(d)
Stade, Germany 375,000(e) Natural Gas 2008
</TABLE>
<TABLE>
TABLE 2
Primary Aluminum Production Plants and Energy Supply
<CAPTION>
Rated
Capacity(a) at Principal
December 31, 1998 Energy Energy Contract
Plant Metric Tons Purchased(b) Expiration Date
- ----- ----------- ------------ ---------------
<S> <C> <C> <C>
Baie Comeau, Quebec 400,000 Electricity 2011 and 2014
Longview, Washington 204,000(f) Electricity 2001
Massena, New York 123,000(f) Electricity 2013(g)
Troutdale, Oregon 121,000(f) Electricity 2001
Becancour, Quebec 186,000(h) Electricity 2014
Hamburg, Germany 40,000(h) Electricity 2005
Ghana 20,000(h) Electricity 2017
</TABLE>
<TABLE>
TABLE 3
Alumina and Primary Aluminum Capacity and Production
(Metric Tons)
<CAPTION>
Alumina(e),(i) Primary Aluminum(h),(j)
-------------------------- ----------------------------
Rated Rated
Year Capacity(a) Production(k) Capacity(a) Production(f)
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
1996 2,927,000 2,674,000 1,094,000 893,500
1997 2,944,000 2,724,000 1,094,000 893,200
1998 2,944,000 2,868,000 1,094,000 982,900
</TABLE>
NOTES TO TABLES 1, 2, and 3.
(a) 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.
(b) See "Energy" above.
(c) The Sherwin plant purchases approximately 50% of the natural
gas required to operate the plant under a three-year contract
that is scheduled to expire in October 1999. The remainder is
purchased under short-term contracts. After the base term of the
existing three-year contract expires in 1999, it will continue on
a month-to-month basis until one of the parties terminates the
contract.
<PAGE> 6
(d) We have a long-term agreement to purchase all of Sherwin's
steam and a portion of its electricity from a third-party
cogeneration facility beginning in mid-year 2000. Worsley has a
similar contract to purchase a portion of its steam and
electricity beginning in early 2000.
(e) We are entitled to 56% of the production of Worsley and 50%
of the production of Stade. Capacity and production figures
reflect our share.
(f) We curtailed 121,000 metric tons of production capacity at
our Troutdale primary aluminum plant in the second half of 1991
and restarted 74,000 metric tons of that capacity in 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. We restarted all of the idled capacity at
Massena and Longview during 1998.
(g) 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.
(h) 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 and production 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 and was further reduced to 20% of capacity in the first
half of 1998. In December 1998, Ghana began to restart a portion
of its curtailed capacity. The plant is currently operating at
approximately 60% of capacity.
(i) Production is from the alumina production operations listed
in Table 1.
(j) Production is from the primary aluminum production
operations listed in Table 2.
(k) 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.
<PAGE> 7
Packaging and Consumer
- ----------------------
Reynolds' packaging and consumer global business unit 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 converter
of plastic resins.
Reynolds markets a diverse range of flexible packaging products
including inner and outer wraps, pouches, specialty cartons,
child-resistant blister backing, and plastic containers. Our
customers include global marketers of food, confection,
healthcare and tobacco products. We also serve the foodservice
market (restaurants, delis, supermarket take-out, and fast-food
and catering establishments) with over 1,000 foil, plastic and
paper products including aluminum and plastic film, plastic
containers and lids, foodservice bags, catering trays, sandwich
bags and wraps, baking cups and trays. We also produce
industrial plastic film (including Reynolon shrink film) and
labels for shrink wrapping and tamper-evident packaging.
We manufacture our packaging products at wholly owned facilities
in the U.S., Canada and Spain. See Table 4 under the heading
"Packaging and Consumer." We also have interests in foil
operations in Colombia and Venezuela. The capacity of these
manufacturing facilities depends on the variety and types of
products manufactured.
Reynolds' packaging and consumer global business unit 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. In 1998, we introduced two new products - Reynolds Hot
Bags Foil Bags and Reynolds Wrappers Foil Sandwich Sheets. 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 supplier
of private label consumer products. Presto produces a variety of
plastic food wraps and bags (including trash bags and reclosable
snack, sandwich, storage and freezer bags) that are sold under
private labels.
Our subsidiary, Southern Graphic Systems, Inc., 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 products companies and converters, with a trend toward
consumer products companies. Southern Graphic also provides
graphics management services and manufactures printing
accessories (bases and anilox rolls).
In February 1999, we acquired London Graphics Inc. London
Graphics is based in Toronto, Ontario and produces flexographic
separations and plates for the packaging industry in Canada. It
is being integrated with Southern Graphic's Canadian operations.
Construction and Distribution
- -----------------------------
The Company's construction and distribution global business unit
distributes aluminum, stainless steel and other specialty metal
products under the name Reynolds Aluminum Supply Company
("RASCO"). This business unit also produces and sells
architectural products and systems.
RASCO provides supply chain management services to North American
metal fabricating customers requiring
high-quality aluminum, stainless steel and other specialty metal
products. During 1998, RASCO's sales were 56% in aluminum
products and 44% 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
<PAGE> 8
services offered by RASCO allow it to provide just-in-time
delivery to customers. Its customers include fabricators and
manufacturers in transportation, equipment, machinery and other
markets.
Through our construction operations we produce Reynobond and
other architectural cladding products in the U.S. that are sold
globally. In 1998, we began a $25 million expansion of our plant
in Merxheim, France. The expansion will allow us to produce
Reynobond and other composite architectural products in Europe.
Our construction and distribution business unit also produces
Reynolux painted aluminum sheet and profiled products; designs
and markets architectural systems consisting of curtainwall and
window and door units for residential and commercial applications
in Europe; sells polymer-coated magnet wire for electrical
transformers; and designs and markets highway sound barrier
systems in Europe.
Transportation
- --------------
Reynolds' transportation global business unit operates nine
plants supplying a wide range of fabricated aluminum products to
the transportation industry and has interests in two additional
plants located in Canada and Venezuela. See Table 4 below under
the heading "Transportation." Our principal products are wheels,
heat exchanger tubing and automotive structures. We market these
products primarily in North America to the "Big Three" automobile
manufacturers, with customers also in Europe and Venezuela.
We produce forged and cast aluminum wheels in a variety of sizes,
styles and finishes. In February 1999, we completed the start-up
of a $32 million expansion of our forged aluminum wheel
manufacturing facility in Lebanon, Virginia. The expansion
doubled the plant's production capacity to 1.4 million wheels per
year.
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, steering shafts and steering column brackets, among
other items, for use in automobiles and truck and trailer
systems. In addition, we are currently testing a new engine
cradle program that should be in production in mid-1999.
OTHER OPERATIONS
Reynolds has certain operations that are not within a global
business unit. These include, principally, our headquarters
operations, as well as the following:
Emerging Markets Group - The purpose of the Emerging Markets
Group is to identify and develop new business opportunities
in strategic emerging world markets. The group oversees our
interests in an aluminum foil and extrusion plant in China.
It also provides technical services to rolling operations
owned by third parties in Russia and India.
European Extrusion Operations - Our plants in Nachrodt,
Germany and Harderwijk, Netherlands produce extruded
aluminum products that are used internally by our
construction and distribution and our transportation global
business units. In addition, the plants manufacture
products that are sold directly to third parties. The
portion of these extrusion operations related to products
sold directly to third parties is not included within our
global business units.
Reycan L.P./Reycan S.E.C. - We own a 50% partnership
interest in this Canadian aluminum rolling operation.
Latas de Aluminio. S.A. ("Latasa") - We own a 34.9% interest
in this South American aluminum can operation. Previously,
we disclosed an intent to sell this interest; however, we
now expect to maintain our interest in Latasa.
<PAGE> 9
United Arab Can Manufacturing Company, Ltd. - We own a 27.5%
interest in this aluminum can operation located in Saudi
Arabia.
Can Machinery - We operate a can machinery plant that
manufactures can production machinery used by aluminum can
manufacturers around the world.
Alloys Complex - Our Alloys can stock complex in 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 can bodies, ends and
tabs. We have signed a definitive agreement with Wise
Alloys LLC for the sale of the complex and have transferred
title to certain of the assets of the complex. We are
currently operating the facility on behalf of Wise Alloys.
See "General - Portfolio Review" for additional information.
Certain Spanish Operations - We operate an aluminum
extrusion plant in Irurzun, Spain. We also have warehouses
in several cities in Spain that are part of our distribution
operation for architectural systems. We have signed an
agreement with Alcoa Inc. for the sale of these assets. See
"General - Portfolio Review" for additional information.
COMPETITION
Competition in our industry is based on price, quality and
service. In the sale of our products, we compete primarily with
(i) producers of alumina and primary aluminum and processors of
reclaimed aluminum, (ii) producers of plastic products, (iii)
producers of aluminum and non-aluminum packaging materials, (iv)
metals service center companies engaged in the distribution of
aluminum and other products and (v) fabricators of aluminum and
non-aluminum automotive products. Reynolds' principal
competitors in the manufacture of primary aluminum products in
North America and other global markets are ten U.S. companies, a
Canadian company and other foreign producers. In Europe, our
principal competitors are seven major multinational producers of
extruded aluminum products and a number of smaller European
producers of aluminum semifabricated products. Our consumer
products operations compete primarily with three U.S. companies.
North America is our largest market for our flexible packaging
products. We have a large number of competitors in this area,
ranging from small, local businesses to large, national
companies. 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.
<PAGE> 10
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 $24 million in 1996, $43
million in 1997 and $80 million in 1998. The portion of such
amounts expended in the United States was $16 million in 1996,
$41 million in 1997 and $74 million in 1998. We estimate that
annual capital expenditures for environmental control facilities
will be approximately $55 million in 1999, $17 million in 2000,
and $40 million in 2001. 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 40
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.
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 promoting more efficient cleanup at the
site. At most of the Superfund 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
<PAGE> 11
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, 1998, the accrual for
known remediation requirements was $172 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 12 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 to support its global business units.
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.
Expenditures for Reynolds-sponsored research and development
activities were approximately $31 million in 1998, $41 million in
1997, and $49 million in 1996.
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
licensed, generally concern particular products or manufacturing
techniques. Our business is not, however, materially dependent
on patents.
EMPLOYEES
At December 31, 1998, Reynolds had approximately 20,000
employees. After the completion of the sale of our Alloys can
stock complex, Reynolds will have approximately 18,400 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
4,000 active 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.
<PAGE> 12
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
22, 1999 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 Troutdale and
Ghana primary aluminum production plants and the Arkansas spent
potliner treatment facility, as explained in Item 1, and the
automotive structures plant in Auburn, Indiana, as explained in
Item 7, there is no significant surplus or idle capacity at our
major manufacturing facilities.
<PAGE> 13
<TABLE>
TABLE 4
Wholly Owned Operations
<CAPTION>
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 Carriers:
Hot Springs, Arkansas Atlanta, Georgia<F1>
LaGrange, Georgia<F1>
Packaging and Consumer Products: Elgin, Illinois<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 Armonk, New York<F1>
Bellwood, Virginia Fulton, New York
Grottoes, Virginia Wilmington, North Carolina<F1>
Richmond, Virginia Exton, Pennsylvania<F1>
South Boston, Virginia Dallas, Texas
Appleton, Wisconsin (2) Richmond, Virginia (2)<F1>
Little Chute, Wisconsin Brockville, Ontario<F1>
Weyauwega, Wisconsin Mississauga, Ontario (2)<F1>
Rexdale, Ontario<F1> Toronto, Ontario<F1>
Barcelona, Spain
<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
Lelystadt, Netherlands
Distribution Centers (Europe-8)<F2>
(China-1) <F2>
<PAGE> 14
<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>
Can Machinery and Systems: Reclamation:
Richmond, Virginia Sheffield, Alabama (2)<F5>
Extrusions: Research and Development:
Irurzun, Spain<F4> Sheffield, Alabama
Richmond, Virginia (2)
Mill Products: Corpus Christi, Texas
Sheffield, Alabama<F5>
<PAGE> 15
<CAPTION>
Other Operations
In Which Reynolds Has Interests
<S> <C>
Argentina: Ghana:
Aluminum cans Primary aluminum<F1>
Australia: Guinea:
Bauxite, alumina Bauxite
Brazil: Guyana:
Aluminum cans and ends, bauxite Bauxite
Canada: Italy:
Primary aluminum, electric power Reclamation
generation, aluminum wheels,
mill products, coil coating Nigeria:
Primary aluminum
Chile:
Aluminum cans Saudi Arabia:
Aluminum cans
China:
Foil, extrusions Spain:
Extrusions
Colombia:
Mill products, extrusions, foil Venezuela:
Primary aluminum, mill products,
Egypt: foil, aluminum wheels
Extrusions
Germany:
Alumina, primary aluminum
<FN>
____________________________
<F1> Leased. One of the two packaging graphics and image carrier
operations 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 unit. The plant in
Harderwijk, Netherlands also manufactures heat exchangers
and other extruded products.
<F4> We have entered into a definitive agreement to sell this
extrusion plant. See "General - Portfolio Review."
<F5> We have entered into a definitive agreement to sell the
Alloys can stock complex. See
"General - Portfolio Review."
</FN>
</TABLE>
The titles to our various properties were not examined
specifically for this report.
<PAGE> 16
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 filed a motion seeking
review of the decision by all the judges of the Ninth Circuit.
The motion was denied on May 14, 1998. On August 12, 1998, the
plaintiff filed a petition for a writ of certiorari in the U.S.
Supreme Court. On October 19, 1998, the Supreme Court denied the
petition and declined to review the case. On November 10, 1998,
the plaintiff requested a rehearing but the Supreme Court denied
that request on December 7, 1998.
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, 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 1998.
<PAGE> 17
Item 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Registrant are as follows:
Name Age<F1> Positions Held During Past Five Years
Jeremiah J. Sheehan 60 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> 57 Vice Chairman and Executive Officer
since October 1996. Vice Chairman 1994-
1996. Executive Vice President,
International 1990-1994. Director since
1984.
William E. Leahey, Jr. 49 Executive Vice President and Chief
Financial Officer since July 1998.
Senior Vice President, Global Can, April
1997-1998. Vice President, Can Division
1993-1997.
Thomas P. Christino 59 Senior Vice President, Global
Packaging and Consumer Products, since
April 1997. Vice President, Flexible
Packaging Division 1993-1997.
Donald T. Cowles 52 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 57 Senior Vice President, Global
Transportation, since April 1997. Vice
President 1994-1997.
Allen M. Earehart 56 Senior Vice President and Controller
since July 1998. Vice President,
Controller 1994-1998. Controller 1993-
1994.
D. Michael Jones 45 Senior Vice President and General
Counsel since October 1996. Vice
President, General Counsel and Secretary
1993-1996.
John M. Lowrie 58 Senior Vice President and Executive
Director - Enterprise Systems since
January 1999. Vice President, Consumer
Products 1988-1999.
Paul Ratki 59 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 59 Senior Vice President, Global
Technology and Operational Services,
since May 1997. Vice President, Mill
Products Division 1992-1997.
Donna C. Dabney 51 Secretary and Assistant General
Counsel since October 1996. Associate
General Counsel 1993-1996.
Douglas M. Jerrold 48 Vice President, Tax Affairs, since
April 1990.
John B. Kelzer 62 Vice President since April 1993.
Lou Anne J. Nabhan 44 Vice President, Corporate
Communications, since January 1998.
Director, Corporate Communications 1993-
1998.
<PAGE> 18
F. Robert Newman 55 Vice President, Human Resources,
since October 1995. Corporate Director,
Human Resources 1993-1995.
Edmund H. Polonitza 56 Vice President, Development and
Strategic Planning, since January 1998.
Corporate Director, Development and
Strategic Planning 1987-1998.
William G. Reynolds, Jr.<F2> 60 Vice President, Government
Relations and Public Affairs, since
October 1980.
John F. Rudin 53 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 55 Vice President, Treasurer, since
April 1988.
[FN]
_______________
<F1> As of March 22, 1999
<F2> Randolph N. Reynolds and William G. Reynolds, Jr. are
brothers.
</FN>
<PAGE> 19
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 22, 1999, there were 7,908 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>
High Low Dividends
<CAPTION>
1998
<S> <C> <C> <C>
First Quarter $ 66 $ 54-3/8 $.35
Second Quarter 68-1/8 52-1/4 .35
Third Quarter 56-15/16 46-7/8 .35
Fourth Quarter 60-15/16 49-5/16 .35
<CAPTION>
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
</TABLE>
On February 19, 1999, the Board of Directors declared a dividend
of $.35 per share of Common Stock, payable April 1, 1999 to
stockholders of record on March 3, 1999.
Sale of Unregistered Securities
- -------------------------------
Under the Registrant's Stock Plan for Outside Directors (the
"Stock Plan"), each outside Director serving on the Registrant's
Board of Directors 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. This rate is increased for each outside
Director to 425 shares of phantom stock per year once the
restrictions have expired on all 1,000 shares of restricted stock
awarded to such outside Director under the Registrant's
Restricted Stock Plan for Outside Directors. 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, 113 phantom shares, in the aggregate, were
granted to the Registrant's nine outside Directors on October 1,
1998, based on an average price of $50.375 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, 1998, based on an average price of
$52.375 per share. These phantom shares represent a quarterly
installment of each outside Director's annual grant under the
Stock Plan. During 1998, 2,409 phantom shares were granted under
the Stock Plan.
<PAGE> 20
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> 21
Item 6. SELECTED FINANCIAL DATA
____________________________________________________________________________
<TABLE>
Consolidated Income Statement (millions, except per share amounts)
- ----------------------------------------------------------------------------
<CAPTION>
1998 1997 1996 1995 1994
____________________________________________
<S> <C> <C> <C> <C> <C>
Revenues $5,859 $6,900 $7,016 $7,252 $5,925
Cost of products sold 4,774 5,658 5,856 5,739 4,950
Selling, general and
administrative expenses 378 406 445 449 376
Depreciation and amortization 252 368 365 344 341
Interest 114 153 160 172 156
Operational restructuring
effects - net 144 75 37 -- (88)
____________________________________________
5,662 6,660 6,863 6,704 5,735
____________________________________________
Income before income taxes,
extraordinary loss and
cumulative effects of
accounting changes 197 240 153 548 190
Taxes on income 45 104 49 159 68
____________________________________________
Income before extraordinary
loss and cumulative effects
of accounting changes 152 136 104 389 122
Extraordinary loss (63) -- -- -- --
Cumulative effects of
accounting changes<F1> (23) -- (15) -- --
____________________________________________
Net income $ 66 $ 136 $ 89 $ 389 $ 122
============================================
Earnings per share
Basic:
Income before extraordinary
loss and cumulative effects
of accounting changes $ 2.18 $ 1.86 $ 1.06 $ 5.60 $ 1.42
Extraordinary loss (0.91) -- -- -- --
Cumulative effects of
accounting changes (0.33) -- (0.24) -- --
____________________________________________
Net income $ 0.94 $ 1.86 $ 0.82 $ 5.60 $ 1.42
============================================
Diluted:
Income before extraordinary
loss and cumulative effects
of accounting changes $ 2.18 $ 1.84 $ 1.06 $ 5.25 $ 1.41
Extraordinary loss (0.91) -- -- -- --
Cumulative effects of
accounting changes (0.33) -- (0.24) -- --
____________________________________________
Net income $ 0.94 $ 1.84 $ 0.82 $ 5.25 $ 1.41
============================================
Cash dividends declared
per common share $ 1.40 $ 1.40 $ 1.40 $ 1.20 $ 1.00
============================================
Other items:
Total assets $6,134 $7,226 $7,516 $7,740 $7,461
============================================
Long-term debt $1,035 $1,501 $1,793 $1,853 $1,848
============================================
<FN>
<F1> See Item 8. Financial Statements and Supplementary Data - Note 1 for a
discussion of the 1998 and 1996 changes in accounting principles.
</FN>
</TABLE>
<PAGE> 22
Items 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
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, statements of management's plans,
objectives and strategies for the Company and other forward-
looking statements. Please refer to the "Risk Factors" section
beginning on page 34, 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
- ---------------------
Lower primary aluminum prices had a significant negative impact
on our 1998 results. We were able to completely overcome this
impact with improved sales volumes from our ongoing operations,
significant cost reductions, and lower selling, general and
administrative expenses and interest expenses.
Over the past two years, through our Portfolio Review process, we
have improved our focus and lowered our threshold for
profitability at decreased pricing levels. We increased
earnings per share from operations in 1998 by 19% compared
to 1997, while experiencing a 12% reduction in realized
primary aluminum prices. Comparing 1998 results to our pre-
restructuring base year of 1996, we more than doubled our
earnings per share from operations despite 5% lower realized
primary aluminum prices.
As we enter 1999, we have made significant progress on cost
reduction, debt reduction, share repurchases and effective
management of inventory and capital spending.
<TABLE>
<CAPTION>
1998 1997 1996
__________________________
<S> <C> <C> <C>
Results
Net income before special items $ 242 $ 214 $ 127
Operational restructuring effects -
net (see Note 2) (90) (78) (23)
Extraordinary loss (see Note 3) (63) -- --
Cumulative effects of accounting
changes (see Note 1) (23) -- (15)
__________________________
Net income $ 66 $ 136 $ 89
==========================
Earnings per share - basic
Net income before special items $3.47 $2.91 $1.42
Operational restructuring
effects - net (1.29) (1.05) (0.36)
Extraordinary loss (0.91) -- --
Cumulative effects of accounting
changes (0.33) -- (0.24)
__________________________
Net income $0.94 $1.86 $0.82
==========================
</TABLE>
GLOBAL BUSINESS UNITS
The Company is organized into four market-based, global business
units. 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; printing 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> 23
RESULTS OF OPERATIONS - continued
- ---------------------
GLOBAL BUSINESS UNITS - continued
<TABLE>
Base Materials
<CAPTION>
1998 1997 1996
_____________________________
<S> <C> <C> <C>
Aluminum shipments:
Customer 668 513 458
Internal 354 684 577
_____________________________
Total 1,022 1,197 1,035
=============================
Revenues:
Customer - aluminum $1,058 $ 923 $ 763
- nonaluminum 402 405 373
Internal - aluminum 572 1,187 944
_____________________________
Total $2,032 $2,515 $2,080
=============================
Operating income $ 290 $ 312 $ 242
=============================
</TABLE>
The Base Materials global business unit consists principally of
the following:
Aluminum
- --------
- - 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, of which 47,000 metric tons is temporarily
idled (see below).
- - Electrical rod -- One plant in Canada.
Nonaluminum
- -----------
- - 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 71% of
alumina production is consumed within the Base Materials global
business unit.
- - Carbon products -- Two U.S. plants that produce calcined
petroleum coke (one of which also produces carbon anodes)
principally for use in primary aluminum facilities. Depending on
operating rates of primary aluminum and carbon products
facilities, approximately 45% of carbon products production is
consumed within the Base Materials global business unit.
The increase in customer aluminum shipments in 1998 and 1997
reflects strong demand for our value-added products (foundry and
sheet ingot, billet and rod). Our available supply to meet
customer needs has increased because we no longer need to supply
downstream fabricating operations that have been sold. Our
available supply also increased because of restarting idled
capacity in 1998 (as discussed below).
In addition to reflecting the changes in shipping volume,
aluminum revenues were significantly affected by primary aluminum
prices. Average realized prices for customer shipments were:
<TABLE>
<CAPTION>
Per Pound
<S> <C>
1998 $.72
1997 .82
1996 .76
</TABLE>
Alumina shipments were higher in both 1998 and 1997 because of
significant improvements in production efficiencies and capacity
utilization at our U.S. alumina plant. Nonaluminum revenues were
flat in 1998 as lower prices for alumina and carbon products
offset the effect of higher alumina shipments.
<PAGE> 24
RESULTS OF OPERATIONS - continued
- ---------------------
GLOBAL BUSINESS UNITS - continued
Base Materials - continued
The most significant factor affecting operating profit in 1998
was lower prices for primary aluminum and alumina. Also
contributing to the decline were non-recurring restart costs at
our primary aluminum plants and lower technical services income.
We were able to offset most of the decline with improved capacity
utilization, significant cost reductions, lower costs for certain
raw materials and higher customer shipments of aluminum and
alumina.
In addition to higher prices, 1997 operating income improved due
to increased operating efficiencies and capacity utilization.
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 all three years were negatively impacted by
temporarily curtailed capacity at our U.S. primary aluminum
plants. During 1998, we restarted 162,000 metric tons of
previously idled capacity. We plan to monitor our internal needs
and market conditions before finalizing the schedule to restart
the remaining 47,000 metric tons at our Troutdale, Ore., plant.
In 1999, we expect to continue to benefit from performance
improvements. We also expect approximately 70% of our primary
aluminum shipments to be in the form of value-added products,
enabling us to earn a premium over primary aluminum market
prices.
<TABLE>
Packaging and Consumer
<CAPTION>
1998 1997 1996
_____________________________
<S> <C> <C> <C>
Customer aluminum shipments 141 142 136
Revenues:
Customer -- aluminum $ 787 $ 797 $ 768
-- nonaluminum 605 602 585
_____________________________
Total $1,392 $1,399 $1,353
=============================
Operating income $ 156 $ 141 $ 149
=============================
</TABLE>
The Packaging and Consumer global business unit consists
principally of 17 packaging and consumer products plants in the
U.S., one each in Canada and Spain, and 21 graphics facilities
located in the U.S. and Canada that produce graphics, printing
cylinders and plates.
Shipments and revenues for packaging and consumer products were
essentially flat in 1998. Sales of consumer products increased
because of strong demand for Reynolds Wrap aluminum foil and the
introduction of new products. Sales of packaging products
decreased because of aluminum foil capacity constraints and the
elimination of certain low-margin products.
Operating income increased in 1998 due to higher sales of
consumer products, lower raw material costs and cost reduction
programs. Higher product development and marketing costs for new
consumer products introduced in 1998 partially offset these
benefits.
Shipments and revenues increased for most products in 1997.
Growth was particularly strong for tobacco, pharmaceutical and
lidstock packaging products, consumer foil products and plastic
wraps and bags.
<PAGE> 25
RESULTS OF OPERATIONS - continued
- ---------------------
GLOBAL BUSINESS UNITS - continued
Packaging and Consumer - continued
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>
Construction and Distribution
<CAPTION>
1998 1997 1996
_____________________________
<S> <C> <C> <C>
Customer aluminum shipments 184 166 151
Revenues:
Customer -- aluminum $681 $614 $600
-- nonaluminum 314 328 332
______________________________
Total $995 $942 $932
==============================
Operating income $ 39 $ 41 $ 45
==============================
</TABLE>
The Construction and Distribution global business unit consists
principally of 37 distribution centers in the U.S., Europe and
China and four manufacturing plants, two in the U.S. and two in
Europe.
The increase in aluminum shipments and revenues in 1998 and 1997
resulted from strong demand for most products. All of our major
distribution products (plate, sheet and extrusions) benefited
from market share growth in our major domestic markets.
Construction products benefited from our global expansion
efforts. Composite sheet shipments for architectural
applications were strong in several global markets. Average
realized prices were relatively flat in 1998 after being lower in
1997 due to product mix.
The decline in nonaluminum revenues in 1998 and 1997 resulted
from lower prices for stainless steel distribution products.
Prices for these products continue to be under pressure due to
increased imports and strong competition. Our shipments were up
approximately 8% in 1998 reflecting strong demand for all of our
products.
Operating income in 1998 and 1997 benefited from the higher
shipping volume. This was offset by higher marketing costs to
expand global sales of construction products and to improve
market penetration in existing markets. In addition, operating
income for 1998 decreased because of lower capacity utilization
in construction products plants and poor business conditions for
the construction industry in Asian markets. Operating income in
1997 was also adversely affected by higher aluminum raw material
costs.
Our outlook for 1999 is for growth in shipments in our highly
competitive global markets. The shipment growth is expected to
result from 1998 geographic expansion and product development
initiatives.
<TABLE>
Transportation
<CAPTION>
1998 1997 1996
_____________________________
<S> <C> <C> <C>
Customer aluminum shipments 63 66 58
Customer revenues $337 $353 $326
Operating income (loss) (19) 10 17
_____________________________
<PAGE> 26
RESULTS OF OPERATIONS - continued
- ---------------------
GLOBAL BUSINESS UNITS - continued
Transportation - continued
The Transportation global business unit consists principally of
the following:
- - Aluminum wheels - Two plants in the U.S., one in Italy, and
partial interests in plants in Canada (75% owned) and Venezuela
(41% owned).
- - Automotive extrusions - Two plants in the U.S. and one each
in The Netherlands, Germany, Ireland and Venezuela.
Shipments and revenues in 1998 were negatively impacted by volume
declines in bumpers and cast aluminum wheels.
The decline in bumper shipments resulted from the completion of a
contract in 1997 at our Indiana automotive
structures plant. Cast aluminum wheel shipments were lower
because of decreased demand related to a substantial number of
mid-year wheel program conversions and a strike at a customer
earlier in the year. The lower shipments of cast aluminum wheels
were somewhat offset by higher shipments of forged aluminum
wheels from our Virginia plant.
Shipments of aluminum wheels were strong in 1997 as we were able
to increase market share with new business at cast wheel
facilities, and our new forged wheel plant in Virginia started
production. Shipments of automotive extrusions were also higher
due to growth in European business.
Revenues in 1998 and 1997 also declined due to lower prices for
wheels because of competition for new business.
The principal reasons for the declines in operating income in
1998 and 1997 were as follows:
1998
- - lower shipping volume and its adverse effect on capacity
utilization
- - lower average realized prices
- - operational difficulties at our Wisconsin cast aluminum
wheel plant
1997
- - lower average realized prices
- - higher metal costs
- - higher selling, general and administrative expenses because
of growth in operations
Both periods were also affected by non-recurring start-up costs
relating to the new Virginia forged aluminum wheel plant and an
engine cradle program at our Indiana automotive structures plant.
The wheel plant expansion was completed in February 1999. The
start-up phase of the engine cradle program should be completed in
mid-1999.
We have been working hard to address the issues affecting this
business. In cast aluminum wheels, facilities in Canada, Italy
and Venezuela are operating reasonably well. Our newer plant in
Wisconsin has experienced a variety of operational difficulties
since it began operation. In 1998, we substantially completed
pre-production certification programs for 16 new wheel models at
the plant - a major cost hurdle. This new production volume
should help the plant improve. During the second half of 1998,
the plant showed improvement.
Our automotive structures plant in Indiana has been operating
below capacity for the reasons previously discussed. We are
currently testing a new engine cradle program that should be in
production in mid-1999 and should help improve performance.
In addition, we have entered into a new bumper contract that
is scheduled to begin production in 1999.
Aside from plant-specific initiatives, we are also evaluating
options for our transportation business as a whole, including
strategic alliances.
<PAGE> 27
RESULTS OF OPERATIONS - continued
- ---------------------
GLOBAL BUSINESS UNITS - continued
Restructuring
This category consists of those operations that are not part of
the Company's long-term business focus. In addition to the
Alabama can stock complex that we expect to finalize the sale of
in early 1999, the Restructuring category includes the following,
which have been sold:
- - U.S. recycling operations
- - aluminum extrusion facilities in Canada
- - European rolling mill operations
- - Illinois sheet and plate plant
- - North American aluminum beverage can operations
- - U.S. residential construction products business
- - aluminum reclamation plant in Virginia
- - aluminum extrusion plants in Virginia and Texas
- - coal properties in Kentucky
- - one-half of the Company's wholly owned interest in a rolling
mill and related assets in Canada
- - aluminum powder and paste plant in Kentucky
Financial information for 1998, 1997 and 1996 relating to
operations divested and the Alabama can stock complex is
reflected in the Restructuring category in Note 11. Customer
revenues generated by these entities were $1.4 billion in 1998,
$2.7 billion in 1997 and $3.1 billion in 1996. The decline in
shipments and net sales in 1998 and 1997 was due to the sale of
these operations. In 1998, the absence of operating income from
sold operations was offset by the effect ($65 million) of ceasing
depreciation on assets held for sale. Operating income in 1997
improved because of higher shipping volume and capacity
utilization in can operations.
After finalizing the sale of the Alabama can stock complex, the
Company's restructuring activities will be essentially complete.
As of the end of 1998, the only assets remaining in the
Restructuring category relate to the Company's Alabama can stock
complex. In accordance with the terms of the definitive
agreement to sell this complex, the Company is operating the
facility on behalf of the purchasers for a management fee until
the final closing. As a result, the Company expects no revenues
or operating results to be reflected in the Restructuring
category in 1999.
For additional information concerning the Company's restructuring
activities, see "Portfolio Review" on page 33 and Notes 2 and 11
to the consolidated financial statements.
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 revenues of
which are not included in our consolidated revenues. In
Australia, we participate in an unincorporated joint venture that
mines bauxite and produces alumina.
Revenues were negatively impacted in all geographic areas as a
result of the Company's restructuring activities in 1998 and
1997. Despite the restructuring activities, revenues in Canada
improved in 1997 because of higher average realized primary
aluminum prices. Other foreign revenues also increased in 1997
due to strong demand for our construction and transportation
products.
INTEREST EXPENSE
Interest expense decreased in 1998 and 1997 because we reduced
the amount of debt outstanding.
<PAGE> 28
RESULTS OF OPERATIONS - continued
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 10 to the
consolidated financial statements) 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 1998, credits and other tax benefits
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.
At December 31, 1998, we had $844 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 relating 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, 1998, the accrual was
$172 million. 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 provided by operating activities to provide the funds for
environmental capital, operating and remediation expenditures.
Annual capital expenditures for equipment designed for
environmental control purposes averaged approximately $49 million
over the past three years. Ongoing environmental operating costs
for the same period averaged approximately $81 million per year.
The Company expects operating expenditures for 1999 through 2001
to be approximately $70 million per year. We estimate annual
capital expenditures for environmental control facilities will be
approximately $55 million in 1999, $17 million in 2000 and $40
million in 2001. The majority of these expenditures are for the
capital spending program referred to below at our primary
aluminum plant in New York.
<PAGE> 29
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 previously discussed), principally at our U.S. primary
aluminum plants.
For additional information concerning environmental expenditures,
see Note 12 to the consolidated financial statements.
YEAR 2000 READINESS DISCLOSURE
Issue
The Year 2000 issue results from computer programs and systems
that rely on two digits rather than four to define the applicable
year. Such systems may recognize a date using "00" as the year
1900 rather than the year 2000. As a result, computer systems
could fail to operate or make miscalculations, causing
disruptions of business operations.
Left unrepaired, many of the Company's systems, including
information and computer systems and automated equipment, could
be affected by the Year 2000 issue. Failure to adequately
address the issue could result in, among other things, the
temporary inability to manufacture products, process
transactions, send invoices, and/or engage in normal business
activities. We do not believe the products we sell require
remediation to address the Year 2000 issue since they contain no
embedded micro-chips or similar electronic components that are
date-sensitive.
Goal
The Company has a formal program to address and resolve potential
exposure associated with information and non-information
technology systems arising from the Year 2000 issue. Our goal is
that none of the Company's critical business operations or
computer processes we share with our suppliers and customers will
be substantially impaired by the advent of the year 2000.
Year 2000 Remediation Project
We are preparing our critical, date-sensitive systems, processes
and interfacing software for the year 2000. Our remediation
project is focusing on the following three areas:
- - Information Systems - Computer hardware and software
systems, business application software, end-user computing and
communications infrastructure
- - Non-Information Systems - Manufacturing equipment and the
mechanical systems in our buildings (e.g., HVAC, security and
safety systems)
- - Third Parties - Suppliers and customers
In the first two areas, Information Systems and Non-Information
Systems, the project consists of the following five phases:
- - Inventory - identifying our critical, date-sensitive systems
that are not ready for the year 2000
- - Planning - deciding how to correct those systems
- - Conversion - repairing or replacing computer hardware and
software to make them ready for the year 2000
- - Pre-Installation Testing - testing those aspects of systems
that have been repaired or replaced to ensure that year
entries after 1999 are interpreted properly, date-based
calculations are computed correctly, and date-based control
systems function accurately
- - Installation - bringing corrected systems on-line
<PAGE> 30
RESULTS OF OPERATIONS - continued
- ---------------------
YEAR 2000 READINESS DISCLOSURE - continued
Year 2000 Remediation Project - continued
We measure progress in each phase as a percentage of actual staff
hours expended to staff hours projected for completion of each
phase. Our progress will change as various aspects of the
project are completed and as new issues are encountered, either
as a result of discovering unanticipated problems in our existing
systems or new computer systems or equipment. We also are
monitoring our computer and software vendors' readiness
statements to assure that readiness changes in their products do
not negatively affect our systems.
As of January 31, 1999, our estimated progress with respect to
the five phases of our Year 2000 Remediation Project for
Information and Non-Information Systems was approximately as
follows:
</TABLE>
<TABLE>
<CAPTION>
Information Non-Information
Systems Systems
___________________________________
<S> <C> <C>
Inventory 100% 97%
Planning 99% 96%
Conversion 97% 91%
Pre-Installation Testing 90% 89%
Installation 91% 84%
Overall 98% 92%
</TABLE>
With respect to Information Systems, the Company is substantially
complete, with a small amount of work remaining in the testing
and installation phases. This work is expected to be finished by
the end of the first quarter of 1999. For Non-Information
Systems, we expect to substantially complete each of the phases
by the end of the second quarter of 1999.
The third area of our remediation project, Third Parties, focuses
on assessment of the business impact on the Company resulting
from the possible failure of our suppliers to provide needed
products and services. We are assessing the Year 2000 readiness
of all our suppliers who are deemed to be critical to each of our
operating locations, even though the products or services they
provide may not be material to the Company's business as a whole.
We have surveyed over 2,000 suppliers and rated them low, medium
or high risk in their progress toward being ready for the year
2000. Critical suppliers rated as high risk are receiving our
immediate attention for contingency planning or other measures.
In addition, we are responding to customer inquiries regarding
our Year 2000 program and our progress in addressing the issue.
We expect to evaluate the Year 2000 readiness of certain of our
largest customers as part of our future contingency planning.
As of January 31, 1999, we were on schedule for the Third Party
portion of our remediation project, having completed
approximately 39% of the projected total effort that we currently
estimate will be needed. Early in the fourth quarter of 1999, we
plan to have either ranked our critical suppliers as low risk, or
to have identified additional sources of supply or to have
developed other contingency plans with respect to those critical
suppliers who are not ranked as low risk. We will continue
monitoring these suppliers into the year 2000.
The Company and certain of its customers and suppliers use
Electronic Data Interchange (EDI) to perform business
communications. The Company's EDI system software has been
upgraded to support transactions recorded using a four-digit
year. Migration of EDI transactions to the four-digit year
format will occur as existing EDI transaction formats are
modified by the Company and its trading partners on a case-by-
case basis. Some of the Company's customers have indicated they
will not modify EDI transaction sets but will rely on other
techniques such as date interpretation to achieve Year 2000
capability.
We are also addressing the Year 2000 readiness of our
unconsolidated affiliates.
As of January 31, 1999, we had completed approximately 95% of the
total effort that we currently estimate will be required for our
Year 2000 Remediation Project. This does not include the quality
assurance or contingency planning activities that we expect to
conduct in 1999 with respect to our Information and Non-
Information Systems.
<PAGE> 31
RESULTS OF OPERATIONS - continued
- ---------------------
YEAR 2000 READINESS DISCLOSURE - continued
1999 Activities
Quality Assurance
- -----------------
In addition to completing the five phases of our Year 2000
Remediation Project described above, we expect to validate our
remediation efforts with additional post-installation testing of
certain critical computer systems. We also expect to respond to
and initiate requests to test with certain of our suppliers and
customers and some government agencies after they ready their
systems.
Contingency Planning
- --------------------
Currently, our contingency planning efforts are focused primarily
on working to identify additional sources of supply for critical
materials. We anticipate that 1999 will be a year of further
contingency planning and monitoring to determine realistic Year
2000 issues beyond those already addressed. While it is still
too early to identify a reasonably likely worst case scenario,
our operations, particularly in the Base Materials business,
require significant quantities of energy. Curtailments or
disruptions of energy supplies would result in full or partial
shutdowns of these operations until energy availability could be
restored. In addition, an unanticipated loss of energy supply
could result in damage to production equipment. During 1999, we
will be assessing these and other business disruption risks and
developing contingency plans to mitigate them. We have not
determined the potential costs of business disruptions from
supplier or customer non-performance.
Costs
The total cost of our Year 2000 Remediation Project is currently
expected to be approximately $22 million. As of January 31,
1999, we had incurred approximately $16 million, which includes
labor, equipment and license costs. Our cost projections include
approximate costs for post-installation testing and contingency
planning expected to occur in 1999.
EURO CONVERSION
On January 1, 1999, 11 of the 15 member countries of the European
Union established fixed conversion rates between their former
sovereign currencies and a common currency, the euro. The euro
trades on currency exchanges and is available for non-cash
transactions. Between January 1, 1999 and July 1, 2002, entities
in the participating countries must convert all of their
transactions denominated in the legacy currencies to the new euro
currency. We expect to have our systems ready in time to process
euro denominated transactions. We do not expect any material
adverse effects from the euro conversion on our competitive or
financial position or our ongoing results of operations.
<TABLE>
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
WORKING CAPITAL
<CAPTION>
December 31
_______________
1998 1997
_______________
<S> <C> <C>
Working capital $ 361 $ 711
Ratio of current assets to current liabilities 1.3/1 1.6/1
</TABLE>
Working capital was lower in 1998 principally because of reduced
receivables and inventories resulting from dispositions of assets
as part of our restructuring activities.
<TABLE>
OPERATING ACTIVITIES
<CAPTION>
1998 1997 1996
____________________
<S> <C> <C> <C>
Net cash provided by operating activities $339 $363 $520
</TABLE>
We used the net cash provided by operating activities for the
past three years primarily to fund capital investments. The
decline in net cash provided by operating activities in 1997
resulted principally from increases in receivables and
inventories of ongoing operations.
<PAGE> 32
LIQUIDITY AND CAPITAL RESOURCES - continued
- -------------------------------
INVESTING ACTIVITIES
The following table shows capital expenditures in the following
categories: operational (replacement equipment, environmental
control projects, etc.) and strategic (performance improvement,
acquisitions and investments).
<TABLE>
<CAPTION>
1998 1997 1996
__________________________
<S> <C> <C> <C>
Operational $155 $152 $195
Strategic 186 120 237
__________________________
Total capital investments $341 $272 $432
==========================
</TABLE>
Major strategic projects that have been completed or that are
under way include:
Base Materials
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. Completion is expected in the
year 2000.
Packaging and Consumer
- - the expansion of a U.S. plastic film plant (completed in
1997)
- - the modernization of U.S. foil plants (to be completed in
2000)
- - the acquisition in early 1999 of a producer of flexographic
separations and plates for the packaging industry in Canada
Construction and Distribution
- - the $25-million expansion of a plant in Europe that will
produce composite architectural products (to be completed in
1999)
- - the construction of a new, larger distribution center in
Seattle to replace the current leased facility (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 (completed in 1997) and expansion of a
forged wheel plant in Virginia (completed in early 1999)
- - the expansion and modification of a plant in Indiana that
produces bumpers, engine cradles and other automotive components
(to be completed in early to mid-1999)
Other Investing Activities
In addition to these major projects, capacity expansions,
equipment upgrades, improvement programs and other capital
expenditures have been completed or are currently under way at a
number of other facilities.
Projected 1999
Capital investments planned for 1999 (approximately $450 million)
are primarily for those strategic projects now under way and
continuing operating requirements. We expect to fund these
capital investments primarily with cash provided by operating
activities. While the projected 1999 capital investments do not
include amounts for acquisitions, we will evaluate opportunities
that arise.
<PAGE> 33
LIQUIDITY AND CAPITAL RESOURCES - continued
- -------------------------------
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, 1998, $113
million of our $1.65-billion shelf registration remained
available for the issuance of debt securities. We also have
committed credit facilities of $650 million, of which $335
million was available at December 31, 1998. A summary of
significant financing activities over the past three years
follows:
1996
- - called for redemption all outstanding shares of PRIDESSM
(see Note 8 to the consolidated financial statements), which
reduced annual dividend requirements by approximately $24 million
- - substantially met our goal to fully fund our pension plans
- - amended our $500-million credit facility to extend the term
and lower the cost
1997
- - reduced debt by approximately $400 million with the proceeds
from sales of assets
1998
- - reduced debt by approximately $900 million with part of the
proceeds from sales of assets (including repayment of $100
million borrowed from credit facilities during 1998)
- - repurchased common stock with part of the proceeds from
sales of assets (see the Consolidated Statement of Changes in
Stockholders' Equity)
- - borrowed $415 million from credit facilities
- - terminated a $100-million interest rate swap agreement (see
Note 7 to the consolidated financial statements)
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. We expect
the results of this review to improve earnings in the years ahead
during all parts of the business cycle.
Through December 31, 1998, proceeds from operations divested
totaled approximately $1.5 billion, which has been used primarily
to reduce debt and repurchase common stock. Our goal to complete
a debt reduction of $900 million from the balance at the end of
1996 was accomplished in the third quarter of 1998. Since then,
we made additional borrowings to manage current business
conditions. We also repurchased 9.6 million shares of stock in
1998.
We recognized operational restructuring charges of $144 million
in 1998 and $75 million in 1997 relating to divestitures and
related activities associated with our Portfolio Review (see Note
2 to the consolidated financial statements). Upon finalizing the
sale of the Alabama can stock complex, which is expected in early
1999, our restructuring activities will be essentially complete.
We had liabilities of $48 million at December 31, 1998 resulting
from our restructuring activities. We expect to satisfy these
liabilities in 1999 ($32 million) and 2000 ($16 million) with
cash provided by operating activities. Additional liabilities
for contractual postretirement obligations resulting from
restructuring activities will be satisfied over numerous future
years in conjunction with the Company's funding of its pension
and other postretirment benefit obligations.
We expect to maintain our interest in Latasa, a Latin American
aluminum beverage can manufacturer. Fundamentally, the business
is in good shape. However, we are cautious about the impact of
the current economic situation in Brazil (see "Outlook").
We are proceeding with key internal growth projects, such as the
Worsley alumina expansion, new consumer and packaging products,
geographic expansion of our construction products business in
Europe and Asia, and small acquisitions of packaging operations.
<PAGE> 34
OUTLOOK
- -------
Assuming more favorable pricing for the balance of the year, our
outlook for the full year 1999 remains in the range of 1998
operating results. However, for the first quarter, which is
historically our weakest, extremely low primary aluminum prices
will adversely affect results. While we expect to offset part of
the effect of low prices with improved costs, lower interest
expense and higher value-added primary aluminum sales, operating
earnings for the first quarter of 1999 will be about breakeven.
In addition, our 35%-owned can manufacturing operations in Brazil
have been adversely affected by the devaluation of Brazil's
currency. While it is too early to forecast the final impact on
first-quarter operating results, we believe it could be about $10
million (after taxes).
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, objectives and
strategies 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.
The Company is cautious about the outlook for the aluminum
industry, at least through the first half of 1999. Demand for
primary aluminum products in Asia was 12% lower in 1998 than in
1997, due largely to the economic recession there. The Company
is forecasting an increase in global primary aluminum consumption
for 1999 of only 1% - 2%. This growth rate is approximately
equal to the expected growth rate for the global economy for
1999. If favorable economic conditions resume in Asia, Brazil
and other emerging markets, the Company's long-term outlook for
growth in aluminum consumption is 2.5% - 4% per year.
Economic and/or market conditions other than those forecasted by
the Company in the preceding paragraph 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. The Company's outlook for
1999 and beyond could be jeopardized by a further delay of
economic recovery in Asia and Brazil, as well as in other
emerging markets.
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. Because a significant portion of the Company's
shipments are primary aluminum, changes in aluminum pricing have
a rapid effect on the Company's operating results. 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 price 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, plastics and glass, among others,
for various applications in the Company's key markets. Plastic
products compete with products made of glass, aluminum, steel,
paper, wood and ceramics, among others. 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.
[FN]
_________________________
<F1> Forward-looking statements can be identified generally as those
containing words such as "should," "will," "will likely result,"
"hope," "forecast," "outlook," "project," "estimate," "expect,"
"anticipate," or "plan" and words of similar effect.
</FN>
<PAGE> 35
RISK FACTORS - continued
- ------------
- - 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.
- - A number of the Company's operations are cyclical and can be
influenced by economic conditions.
- - A failure to complete the Company's major capital projects,
such as expansion of the Worsley Alumina Refinery, as scheduled
and within budget could affect the Company's results.
- - The Company's results may be adversely affected if it fails
to timely meet its Year 2000 readiness goals. The Company's
assessments of the effort required to meet its Year 2000
readiness goal and the total cost of its Year 2000 Remediation
Project are based on the Company'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.
Also, there can be no guarantee that other companies with which
the Company does business will be converted on a timely basis or
their failure to be Year 2000 compliant will not have an adverse
effect on the Company.
- - 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.
- - Since late 1996, the Company has been conducting a Portfolio
Review of all its operations. The Company has signed a
definitive agreement for the sale of its can stock complex in
Alabama, which consists of a rolling mill, two reclamation plants
and a coil coating facility. Title to certain of the assets was
transferred to the buyer in December 1998. The final closing for
the remainder of the assets is scheduled to occur by the end of
the first quarter of 1999 and is subject to customary closing
conditions. The Company has also entered into a definitive
agreement for the sale of its aluminum extrusion operations in
Spain, as well as our distribution operations for architectural
systems located in Spain. This transaction is subject to
customary closing conditions and is expected to close by the
end of the first quarter of 1999.
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> 36
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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. Contracts used
to manage risks in these markets are not material.
<PAGE> 37
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
CONSOLIDATED STATEMENT OF INCOME
(millions, except per share amounts)
=======================================================================
<CAPTION>
_______________________________________________________________________
Years ended December 31 1998 1997 1996
_______________________________________________________________________
<S> <C> <C> <C>
REVENUES $ 5,859 $ 6,900 $ 7,016
COSTS AND EXPENSES
Cost of products sold 4,774 5,658 5,856
Selling, general and
administrative expenses 378 406 445
Depreciation and amortization 252 368 365
Interest 114 153 160
Operational restructuring
effects - net 144 75 37
_______________________________________________________________________
5,662 6,660 6,863
_______________________________________________________________________
EARNINGS
Income before income taxes,
extraordinary loss and
cumulative effects of
accounting changes 197 240 153
Taxes on income 45 104 49
_______________________________________________________________________
Income before extraordinary
loss and cumulative effects
of accounting changes 152 136 104
Extraordinary loss (63) -- --
Cumulative effects of
accounting changes (23) -- (15)
_______________________________________________________________________
NET INCOME 66 136 89
Preferred stock dividends -- -- 36
_______________________________________________________________________
NET INCOME AVAILABLE TO
COMMON STOCKHOLDERS $ 66 $ 136 $ 53
=======================================================================
EARNINGS PER SHARE
Basic:
Average shares outstanding 69,709,000 73,412,000 63,730,000
Income before extraordinary
loss and cumulative effects
of accounting changes $ 2.18 $ 1.86 $ 1.06
Extraordinary loss (0.91) -- --
Cumulative effects of
accounting changes (0.33) -- (0.24)
________________________________________________________________________
Net income $ 0.94 $ 1.86 $ 0.82
========================================================================
Diluted:
Average shares outstanding 69,937,000 74,004,000 63,947,000
Income before extraordinary
loss and cumulative effects
of accounting changes $ 2.18 $ 1.84 $ 1.06
Extraordinary loss (0.91) -- --
Cumulative effects of
accounting changes (0.33) -- (0.24)
________________________________________________________________________
Net income $ 0.94 $ 1.84 $ 0.82
========================================================================
CASH DIVIDENDS PER COMMON SHARE $ 1.40 $ 1.40 $ 1.40
========================================================================
The accompanying notes to consolidated financial statements are
an integral part of these statements.
</TABLE>
<PAGE> 38
<TABLE>
CONSOLIDATED BALANCE SHEET
========================================================================
<CAPTION>
December 31 (millions) 1998 1997
________________________________________________________________________
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 94 $ 70
Receivables:
Customers, less allowances
of $14 (1997 - $16) 710 841
Other 184 174
_______________________________________________________________________
Total receivables 894 1,015
Inventories 500 744
Prepaid expenses and other 114 165
_______________________________________________________________________
Total current assets 1,602 1,994
Unincorporated joint ventures and
associated companies 1,478 1,381
Property, plant and equipment - net 2,024 2,954
Deferred taxes 363 249
Other assets 667 648
______________________________________________________________________
Total assets $6,134 $7,226
======================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade payables $ 401 $ 512
Accrued compensation and
related amounts 183 202
Payables to unincorporated
joint ventures and
associated companies 75 81
Commercial paper 82 --
Notes payable to banks 34 67
Long-term debt 196 142
Other liabilities 270 279
_____________________________________________________________________
Total current liabilities 1,241 1,283
Long-term debt 1,035 1,501
Postretirement benefits 1,029 1,043
Environmental 161 158
Deferred taxes 272 269
Other liabilities 202 233
Stockholders' equity:
Common stock 1,533 1,521
Retained earnings 1,222 1,253
Treasury stock, at cost (526) --
Accumulated other
comprehensive income (35) (35)
_____________________________________________________________________
Total stockholders' equity 2,194 2,739
Contingent liabilities and
commitments (Note 12)
_____________________________________________________________________
Total liabilities and stockholders'
equity $6,134 $7,226
=====================================================================
The accompanying notes to consolidated financial statements are
an integral part of these statements.
</TABLE>
<PAGE> 39
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
=====================================================================
<CAPTION>
Years ended December 31 (millions) 1998 1997 1996
_____________________________________________________________________
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 66 $ 136 $ 89
Adjustments to reconcile to net
cash provided by operating
activities:
Depreciation and amortization 252 368 365
Operational restructuring effects 144 75 37
Extraordinary loss 63 -- --
Cumulative effects of accounting
changes 23 -- 15
Other (3) 28 26
Changes in operating assets and
liabilities net of effects from
acquisitions and dispositions:
Accounts payable, accrued and
other liabilities (106) 105 (64)
Receivables (53) (194) 67
Inventories 78 (108) 93
Environmental and restructuring
liabilities (52) (48) (46)
Other (73) 1 (62)
______________________________________________________________________
Net cash provided by operating activities 339 363 520
INVESTING ACTIVITIES
Capital investments:
Operational (155) (152) (195)
Strategic (186) (120) (237)
Sales of assets - operational
restructuring 1,147 367 --
Other (38) (3) (5)
______________________________________________________________________
Net cash provided by (used in)
investing activities 768 92 (437)
FINANCING ACTIVITIES
Proceeds from long-term debt 415 -- 40
Reduction of long-term debt and
other financing liabilities (929) (245) (105)
Increase (decrease) in short-term
borrowings 47 (138) 111
Cash dividends paid (100) (99) (135)
Repurchase of common stock (526) -- --
Stock options exercised 10 59 5
______________________________________________________________________
Net cash used in financing activities (1,083) (423) (84)
CASH AND CASH EQUIVALENTS
Net increase (decrease) 24 32 (1)
At beginning of year 70 38 39
______________________________________________________________________
At end of year $ 94 $ 70 $ 38
======================================================================
Supplemental disclosure of cash
flow information
Cash paid during the year for:
Interest $ 134 $ 164 $ 176
Income taxes 117 21 2
======================================================================
The accompanying notes to consolidated financial statements are
an integral part of these statements.
</TABLE>
<PAGE> 40
<TABLE>
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
======================================================================
<CAPTION>
______________________________________________________________________
Years ended December 31 1998 1997 1996
______________________________________________________________________
<S> <C> <C> <C>
SHARES (thousands)
Common stock
Balance at January 1 73,909 72,719 63,598
Shares issued under employee
benefit plans 196 1,190 101
Shares issued on conversion/
redemption of preferred stock -- -- 9,020
______________________________________________________________________
Balance at December 31 74,105 73,909 72,719
______________________________________________________________________
Treasury stock
Balance at January 1 -- -- --
Purchased and held as treasury
stock (9,648) -- --
______________________________________________________________________
Balance at December 31 (9,648) -- --
______________________________________________________________________
Net common shares outstanding 64,457 73,909 72,719
======================================================================
DOLLARS (millions)
Common stock
Balance at January 1 $1,521 $1,451 $ 941
Shares issued under employee
benefit plans 12 70 5
Shares issued on conversion/
redemption of preferred stock -- -- 505
______________________________________________________________________
Balance at December 31 $1,533 $1,521 $1,451
______________________________________________________________________
Retained earnings
Balance at January 1 $1,253 $1,220 $1,256
Net income 66 136 89
Cash dividends declared:
Preferred stock (PRIDES) -- -- (36)
Common stock (97) (103) (89)
______________________________________________________________________
Balance at December 31 $1,222 $1,253 $1,220
______________________________________________________________________
Treasury stock
Balance at January 1 $ -- $ -- $ --
Purchased and held as
treasury stock (526) -- --
______________________________________________________________________
Balance at December 31 $ (526) $ -- $ --
______________________________________________________________________
Accumulated other comprehensive
income (loss)
Balance at January 1 $ (35) $ (37) $ (85)
Foreign currency translation
adjustments 5 -- (16)
Income taxes (5) 2 1
Pension liability adjustment -- -- 97
Income taxes -- -- (34)
Other comprehensive income -- 2 48
______________________________________________________________________
Balance at December 31 $ (35) $ (35) $ (37)
______________________________________________________________________
Total stockholders' equity $2,194 $2,739 $2,634
======================================================================
COMPREHENSIVE INCOME (millions)
Net income $ 66 $ 136 $ 89
Other comprehensive income -- 2 48
______________________________________________________________________
Comprehensive income $ 66 $ 138 $ 137
======================================================================
The accompanying notes to consolidated financial statements are
an integral part of these statements.
</TABLE>
<PAGE> 41
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 1998 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 Company
accounts for investments in unincorporated joint ventures 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 $178 million at the end of 1998 (1997 -- $270
million). FIFO and average-cost method inventories were $322
million at the end of 1998 (1997 -- $474 million). Inventories
would increase by $221 million at the end of 1998 (1997 -- $425
million) if the FIFO method were applied to LIFO method
inventories.
The favorable impact of the liquidation of certain LIFO layers
that occurred as a result of the Company's divestitures ($184
million in 1998 and $58 million in 1997) is included in
"Operational restructuring effects -- net" in the Consolidated
Statement of Income. 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> 42
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 EFFECTS OF ACCOUNTING CHANGES
In 1998, the Accounting Standards Executive Committee (AcSEC) of
the American Institute of Certified Public Accountants issued
Statement of Position (SOP) 98-5, "Reporting on the Costs of
Start-Up Activities." The SOP requires costs of start-up
activities and organization costs to be expensed as incurred.
The Company adopted the SOP in 1998 and recognized a charge for
the cumulative effect of accounting change of $23 million.
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." The
cumulative effect of adopting the standard was a 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.
STATEMENT OF CASH FLOWS
In preparing the Consolidated 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.
COMPREHENSIVE INCOME
In 1998, the Company adopted the Financial Accounting Standards
Board's (FASB) Statement No. 130, "Reporting Comprehensive
Income." Statement No. 130 establishes new rules for the
reporting and display of comprehensive income and its components;
however, adopting the Statement had no impact on the Company's
net income or stockholders' equity. Statement No. 130 requires
the Company's foreign currency translation adjustments, which
prior to adoption were reported separately in stockholders'
equity, to be included in other comprehensive income. Prior-year
financial statements have been reclassified to conform to the
requirements of Statement No. 130. Comprehensive income is
presented in the Consolidated Statement of Changes in
Stockholders' Equity.
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.
<PAGE> 43
1. ACCOUNTING POLICIES - continued
ACCOUNTING FOR THE COSTS OF DEVELOPING OR OBTAINING INTERNAL-USE
SOFTWARE
In 1998, the AcSEC issued SOP 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use." The
SOP requires qualifying computer software costs incurred in
connection with obtaining or developing software for internal use
to be capitalized. The Company currently capitalizes the costs
of purchased software and expenses the costs of internally
developed software. The Company plans to adopt the SOP in 1999
on a prospective basis when it becomes effective. The Company
has not yet determined the impact this statement will have on its
financial position or results of operations.
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
In 1998, the FASB issued Statement No. 133, "Accounting for
Derivative Instruments and Hedging Activities." This statement
establishes new accounting and reporting standards for derivative
instruments and hedging activities. The Company must adopt this
statement by January 1, 2000. The Company has not determined the
impact this statement will have on its financial position or
results of operations.
2. OPERATIONAL RESTRUCTURING
In 1998, the Company sold the following:
- - U.S. recycling operations
- - aluminum extrusion facilities in Canada
- - European rolling mill operations
- - Illinois sheet and plate plant
- - North American aluminum beverage can operations
In 1997, the Company sold the following:
- - U.S. residential construction products business
- - aluminum reclamation plant in Virginia
- - aluminum extrusion plants in Virginia and Texas
- - coal properties in Kentucky
- - one-half of its wholly owned interest in a rolling mill and
related assets in Canada
- - aluminum powder and paste plant in Kentucky
In 1996, operational restructuring costs resulted from the
closing of a can plant in Texas.
In early 1999, the Company expects to finalize the sale of its
Alabama can stock complex. The carrying amount of the related
net assets was $216 million at December 31, 1998.
Financial information for 1998, 1997 and 1996 relating to
operations divested and the Alabama can stock complex is
reflected in the Restructuring category in Note 11. Customer
revenues generated by these entities were $1.4 billion in 1998,
$2.7 billion in 1997 and $3.1 billion in 1996. Depreciation
expense in 1998 was reduced $65 million as a result of ceasing
depreciation on assets held for sale relating to the
divestitures.
After finalizing the sale of the Alabama can stock complex, the
Company's restructuring activities will be essentially complete.
As of the end of 1998, the only assets remaining in the
Restructuring category relate to the Alabama can stock complex.
In accordance with the terms of the definitive agreement to sell
this complex, the Company is operating the facility on behalf of
the purchasers for a management fee until the final closing. As
a result, the Company expects no revenues or operating results to
be reflected in the Restructuring category in 1999.
<PAGE> 44
2. OPERATIONAL RESTRUCTURING - continued
The Company recognized the following operational restructuring
charges:
<TABLE>
<CAPTION>
1998 1997 1996
_________________________
<S> <C> <C> <C>
Employee terminations $ 39 $49 $12
Additional postretirement benefits 105 -- 19
(Gain) loss on asset dispositions (12) 21 5
Other 12 5 1
_________________________
$144 $75 $37
=========================
</TABLE>
The charges for employee terminations recorded in 1998, 1997 and
1996 were principally for severance and related costs for
approximately 2,000 salaried and hourly employees. The employees
worked principally at domestic plants. Approximately 600
employees worked at corporate headquarters.
An analysis of the accrual for restructuring liabilities follows:
<TABLE>
<CAPTION>
1998 1997 1996
____________________________
<S> <C> <C> <C>
Balance at January 1 $ 44 $ 12 $ --
Accruals 44 54 13
Payments (40) (22) (1)
____________________________
Balance at December 31 $ 48 $ 44 $ 12
============================
</TABLE>
Liabilities at December 31, 1998 relating to the Company's
restructuring activities are expected to be satisfied in 1999
($32 million) and 2000 ($16 million) with cash provided by
operating activities. Additional liabilities relating to
contractual postretirement obligations are reflected in
postretirement benefits on the balance sheet and will be settled
over numerous future years in conjunction with the Company's
funding of its pension and other postretirement benefit
obligations.
The Company used proceeds from completed divestitures for debt
repayments and repurchases of common stock (see Notes 3 and 8).
3. EXTRAORDINARY LOSSES
The Company had extraordinary losses from debt extinguishments in
1998 of $63 million (net of income tax benefit of $39 million).
The debt extinguished at a loss consisted of $500 million of
medium-term notes and $79 million of 9% debentures.
<PAGE> 45
4. EARNINGS PER SHARE
The following reconciles income and average shares for the basic
and diluted earnings per share computations for "Income before
extraordinary loss and cumulative effects of accounting changes."
<TABLE>
<CAPTION>
1998 1997 1996
___________________________________
<S> <C> <C> <C>
Income (numerator):
Income before extraordinary
loss and cumulative effects
of accounting changes $ 152 $ 136 $ 104
Less convertible preferred stock
(PRIDES) dividend -- -- 36
___________________________________
Basic and diluted income $ 152 $ 136 $ 68
===================================
Average shares (denominator):
Basic 69,709,000 73,412,000 63,730,000
Effect of dilutive securities:
Stock options 228,000 592,000 217,000
___________________________________
Diluted 69,937,000 74,004,000 63,947,000
===================================
Per share amounts for income
before extraordinary loss and
cumulative effects of
accounting changes:
Basic earnings per share $ 2.18 $ 1.86 $ 1.06
Diluted earnings per share 2.18 1.84 1.06
Antidilutive securities excluded:
Convertible preferred
stock (PRIDES) -- -- 8,950,000
Stock options 2,452,000 505,000 2,665,000
</TABLE>
5. 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
____________________
1998 1997
____________________
<S> <C> <C>
Current assets $ 52 42
Current liabilities (89) (66)
Property, plant and equipment
and other assets 1,203 1,078
____________________
Net investment $1,166 $1,054
====================
</TABLE>
Property, plant and equipment and other assets in 1998 includes
$150 million of construction in progress for the expansion of the
joint-venture Worsley Alumina Refinery.
<PAGE> 46
5. 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 $312 million at
the end of 1998 (1997 -- $327 million), including advances of $59
million (1997 -- $50 million). Summarized financial information
related to these entities follows:
<TABLE>
<CAPTION>
Years ended December 31
__________________________
1998 1997 1996
__________________________
<S> <C> <C> <C>
Net sales $1,195 $ 999 $950
Cost of products sold 1,115 910 814
Net income (loss) (27) (14) 31
</TABLE>
<TABLE>
<CAPTION>
December 31
______________________
1998 1997
______________________
<S> <C> <C>
Current assets $810 $ 891
Noncurrent assets 977 1,015
Current liabilities 690 733
Noncurrent liabilities 456 470
Stockholders' equity 641 703
</TABLE>
6. PROPERTY, PLANT AND EQUIPMENT (At Cost)
<TABLE>
<CAPTION>
December 31
____________________
1998 1997
____________________
<S> <C> <C>
Land, land improvements and
mineral properties $ 244 $ 289
Buildings and leasehold
improvements 781 1,045
Machinery and equipment 3,087 5,044
Construction in progress 170 155
____________________
4,282 6,533
Less allowances for
depreciation and
amortization 2,258 3,579
____________________
Net property, plant and
equipment $2,024 $2,954
====================
</TABLE>
<PAGE> 47
7. FINANCING ARRANGEMENTS
<TABLE>
<CAPTION>
December 31
_________________________
1998 1997
_________________________
<S> <C> <C>
Public debt securities:
Medium-term notes $ 329 $ 902
9-3/8% debentures due 1999 100 100
9% debentures due 2003 21 100
6-5/8% amortizing notes 228 285
Industrial and environmental
control revenue bonds 227 237
Other arrangements:
Credit facilities 315 --
Mortgages and other notes payable 11 19
_________________________
1,231 1,643
Amounts due within one year 196 142
_________________________
Long-term debt $1,035 $1,501
=========================
</TABLE>
Long-term debt at December 31, 1998 matures as follows:
<TABLE>
<CAPTION>
<S> <C>
1999 $196
2000 153
2001 484
2002 70
2003 58
2004 - 2025 270
</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 1999 to 2013. At December 31, 1998, $113
million of debt securities remained unissued under the shelf
registration. A portion of this fixed-rate debt has been
effectively converted to a variable rate through the use of a
$100-million interest rate swap that matures in 2001. Under the
swap, payments are received based on a fixed rate (6%) and made
based on a variable rate (5.7% at December 31, 1998). The
variable rate is 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 value of this agreement and its effect on interest expense
was not material. The Company terminated a $100-million interest
rate swap in 1998. The small gain realized will be recognized
over the remainder of the designated hedge period ending 2001.
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 1999 and 2002.
Industrial and environmental control revenue bonds consist of
variable-rate debt with interest rates averaging 4.2% at December
31, 1998. These bonds require principal repayments in lump sums
periodically between 1999 and 2025. Letters of credit issued by
banks support these bonds.
The credit facilities have variable interest rates (6.7% at
December 31, 1998) and mature in 2001. The Company can borrow up
to $650 million under these facilities and pays an annual
commitment fee of .1% on the unused portion.
<PAGE> 48
7. FINANCING ARRANGEMENTS - continued
Mortgages and other notes payable consist of fixed-rate debt with
an average interest rate of 5%. They require principal repayment
between 1999 and 2008.
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, 1998, the Company exceeded all
such requirements.
The fair value of long-term debt was approximately $1.2 billion
at the end of 1998 (1997 -- $1.8 billion). This value was
determined by using discounted cash flow analysis.
Interest capitalized was $12 million during 1998 (1997 -- $8
million, 1996 -- $13 million).
The weighted-average interest rate on short-term borrowings was:
<TABLE>
<CAPTION>
December 31
____________________
1998 1997
____________________
<S> <C> <C>
Notes payable to banks 4.2% 4.5%
Commercial paper 5.9 --
</TABLE>
8. 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 all 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.
COMMON STOCK
The Company has 200,000,000 shares of common stock (without par
value) authorized.
The Company has authorization to repurchase up to 18 million
shares of common stock of which approximately 9.6 million shares
have been repurchased through December 31, 1998. (See the
Consolidated Statement of Changes in Stockholders' Equity for
additional share repurchase information.)
<PAGE> 49
8. STOCKHOLDERS' EQUITY - continued
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
outstanding at December 31, 1998 vest in one year and are
exercisable between one year and ten years from the date of
grant. The range of exercise prices for the stock options
outstanding at December 31, 1998 was $45 to $64 and their
weighted-average remaining contractual life was 6 years. A
summary of stock option activity and related information follows
(options are in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
________________________________
<S> <C> <C> <C>
Outstanding at January 1 4,828 5,318 4,680
Granted 633 711 750
Exercised (192) (1,190) (103)
Canceled (15) (11) (9)
________________________________
Outstanding at December 315,254 4,828 5,318
Exercisable at December 314,621 4,121 4,569
Available for grant 304 923 1,630
Weighted-average prices:
Outstanding at January 1 $ 55 $ 52 $ 52
Granted 62 64 55
Exercised 47 50 39
Canceled 62 56 52
Outstanding at December 31 56 55 52
Exercisable at December 31 55 53 52
</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 1998, 1997 and 1996. 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>
Performance-
Based
Stock Options Options
___________________________ _________
<CAPTION>
1998 1997 1996 1996
___________________________ _________
<S> <C> <C> <C> <C>
Risk-free interest rate 5.5% 6.4% 6.9% 6.5%
Dividend yield 2.2% 2.2% 2.6% 2.1%
Volatility factor of the expected
market price of the Company's
common stock .256 .265 .278 .262
Expected life of the option 6 years 6 years 6 years 3 years
Estimated fair value of each
stock option granted $17.53 $19.53 $16.97 $11.73
</TABLE>
<PAGE> 50
8. STOCKHOLDERS' EQUITY - continued
STOCK OPTIONS - continued
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.
The pro forma information follows:
<TABLE>
<CAPTION>
1998 1997 1996
________________________
<S> <C> <C> <C>
Pro forma net income $ 59 $ 127 $ 79
Pro forma earnings per share: Basic 0.84 1.73 0.67
Diluted 0.84 1.72 0.67
</TABLE>
SHAREHOLDER RIGHTS PLAN
In 1997, the Company adopted a new shareholder rights plan that
replaced an existing, similar plan that was adopted in 1987 and
expired in 1997, in accordance with its terms. Under the new
plan, as subsequently amended, 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 15% or more
of the Company's common stock, or announces a tender offer for
15% 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 a person or group acquires 15% or more of the common stock of
the Company, 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.
In addition, 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.
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> 51
9. PENSIONS AND OTHER POSTRETIREMENT BENEFITS
The following information is disclosed in accordance with the
requirements of Statement of Financial Accounting Standards No.
132, "Employers' Disclosures about Pensions and Other
Postretirement Benefits," which the Company adopted in 1998.
<TABLE>
Pension Benefits Other Benefits
<CAPTION>
__________________ ___________________
1998 1997 1998 1997
__________________ ___________________
<S> <C> <C> <C> <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at
beginning of year $2,081 $1,916 $ 899 $ 852
Service cost 36 37 7 7
Interest cost 151 147 62 64
Amendments 9 (5) -- 1
Actuarial losses 166 148 60 41
Restructuring 39 (43) 5 (5)
Benefits paid (133) (119) (69) (61)
___________________ ___________________
Benefit obligation at
end of year $2,349 $2,081 $ 964 $ 899
___________________ ___________________
CHANGE IN PLAN ASSETS
Fair value of plan
assets at beginning
of year $2,099 $1,876 $ -- $ --
Actual return on
plan assets 295 315 -- --
Company contributions 43 80 69 61
Restructuring (27) (53) -- --
Benefits paid (133) (119) (69) (61)
____________________ ___________________
Fair value of plan
assets at end of year $2,277 $2,099 $ -- $ --
____________________ ___________________
Funded status of the plans $ (72) $ 18 $ (964) $ (899)
Unrecognized net
actuarial loss (gain) 101 76 27 (31)
Unrecognized prior
service cost 66 117 (67) (109)
____________________ ___________________
Prepaid (accrued) benefit
cost $ 95 $ 211 $(1,004) $(1,039)
==================== ===================
AMOUNTS RECOGNIZED IN THE
CONSOLIDATED BALANCE SHEET
Prepaid benefit cost $ 111 $ 217 $ -- $ --
Accrued benefit liability (68) (12) (1,004) (1,039)
Intangible asset 52 6 -- --
____________________ ___________________
Net amount recognized $ 95 $ 211 $(1,004) $(1,039)
==================== ===================
WEIGHTED-AVERAGE ASSUMPTIONS
AS OF DECEMBER 31
Discount rate 6.75% 7.25% 6.75% 7.25%
Expected return on
plan assets 9.25 9.25 -- --
Rate of compensation
increase 4.50 4.50 -- --
</TABLE>
For measurement purposes, a 5.75% annual rate of increase in the
per capita cost of covered health care benefits was assumed for
1999. The rate was assumed to decrease gradually to 5% in 2002
and remain at that level thereafter.
<PAGE> 52
9. PENSIONS AND OTHER POSTRETIREMENT BENEFITS - continued
<TABLE>
<CAPTION>
Pension Benefits Other Benefits
____________________ ____________________
1998 1997 1996 1998 1997 1996
____________________ ____________________
<S> <C> <C> <C> <C> <C> <C>
COMPONENTS OF NET PERIODIC
BENEFIT COST
Service cost $ 36 $ 37 $ 38 $ 7 $ 7 $ 8
Interest cost 151 147 138 62 64 62
Expected return on plan
assets (175) (158) (151) -- -- --
Amortization of prior
service cost 14 19 17 (13) (17) (19)
Recognized net actuarial
loss (gain) 13 11 16 -- (1) --
____________________ ____________________
Benefit cost $ 39 $ 56 $ 58 $ 56 $ 53 $ 51
==================== ====================
</TABLE>
The assumed health care cost trend rate has a significant effect
on the amounts reported. A one-percentage-point change in the
assumed health care cost trend rate would have the following
effects:
<TABLE>
<CAPTION>
1% 1%
Increase Decrease
________ ________
<S> <C> <C>
Effect on total of service and
interest cost components in 1998 $ 4 $ (3)
Effect on postretirement benefit
obligation as of December 31, 1998 $51 $(46)
</TABLE>
10. TAXES ON INCOME
The significant components of the provision for income taxes
were:
<TABLE>
<CAPTION>
1998 1997 1996
_______________________
<S> <C> <C> <C>
Current:
Federal $ 6 $ 13 $ 3
Foreign 57 71 3
State 1 1 1
_______________________
Total current 64 85 7
_______________________
Deferred:
Federal (31) (7) 2
Foreign 23 21 28
State (12) (2) (2)
_______________________
Total deferred (20) 12 28
_______________________
Equity income 1 7 14
_______________________
Total $ 45 $104 $49
=======================
</TABLE>
The deferred tax provision includes domestic carryforward
benefits of $8 million (1997 - $2 million, 1996 - $28 million).
<PAGE> 53
10. TAXES ON INCOME - continued
The effective income tax rate varied from the U.S. statutory rate
as follows:
<TABLE>
<CAPTION>
1998 1997 1996
---------------------
<S> <C> <C> <C>
U.S. rate 35% 35% 35%
Income taxed at other than the U.S. rate (4) 9 2
Percentage depletion (3) (2) (3)
Credits and other tax benefits (6) -- --
State income taxes and other 1 1 (2)
Effective rate 23% 43% 32%
=====================
</TABLE>
Income taxed at other than the U.S. rate includes a 10% adverse
effect in 1997 from basis differences on asset dispositions.
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, 1998, the Company had
$844 million (1997 -- $897 million) of deferred tax assets and
$694 million (1997 -- $827 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>
1998 1997
--------------------------------------
Asset Liability Asset Liability
--------------------------------------
<S> <C> <C> <C> <C>
Retiree health benefits $ 381 $ -- $ 392 $ --
Tax carryforward benefits 141 -- 170 --
Environmental and restructuring
costs 116 (2) 109 (2)
Other 39 78 63 70
Tax over book depreciation (235) 196 (376) 201
Valuation reserve relating to
tax carryforward benefits (20) -- (19) --
--------------------------------------
Total deferred tax assets and
liabilities 422 272 339 269
Amount included as current in
balance sheet 59 -- 90 --
--------------------------------------
Noncurrent deferred tax assets
and liabilities $ 363 $272 $ 249 $269
======================================
</TABLE>
The tax carryforward benefits can be carried forward indefinitely
except for $67 million that will expire primarily between 2003
and 2013. A valuation reserve of $20 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.
Income taxes have not been provided on the undistributed earnings
($973 million) of foreign subsidiaries. The Company uses these
earnings to finance foreign expansion, reduce foreign debt or
support foreign operating requirements.
The geographic components of income (loss) before income taxes,
extraordinary loss and the cumulative effects of accounting
changes were as follows:
<TABLE>
<CAPTION>
1998 1997 1996
______________________
<S> <C> <C> <C>
Domestic $(86) $ 21 $ 4
Foreign 283 219 149
______________________
$197 $240 $153
======================
</TABLE>
<PAGE> 54
11. COMPANY OPERATIONS
The Company is organized into four market-based, global business
units. The global business units and their principal products
are:
- - Base Materials - alumina, carbon products, primary aluminum
ingot and billet, and electrical rod
- - Packaging and Consumer - aluminum and plastic packaging and
consumer products; printing 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 Restructuring category includes operations sold and the
Company's Alabama can stock complex that we expect to finalize
the sale of in early 1999. (See Note 2 for a discussion of the
Company's restructuring activities.)
The Other category consists principally of the corporate
headquarters (and related selling, general and administrative
expenses), operations in emerging markets, European extrusion
operations and investments in Canada, Latin America and Saudi
Arabia.
The comparative periods of 1997 and 1996 have been restated for
the following changes:
- - the Alabama can stock operation was reclassified from the
Other category to the Restructuring category as we expect to
finalize the sale in early 1999
- - the investment in Latin American can operations was
reclassified from the Restructuring category to the Other
category as the Company expects to maintain its interest in these
operations
ACCOUNTING POLICIES
Operating income for each global business unit is calculated as
revenues plus equity income less cost of products sold,
depreciation and the unit's selling, general and administrative
expenses. The sales between units are made at market-related
prices. Cost of products sold reflects 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> 55
11. COMPANY OPERATIONS - continued
<TABLE>
<CAPTION>
Packaging Construction
Base and and
1998 Materials Consumer Distribution
__________________________________________________________________
<S> <C> <C> <C>
Customer aluminum shipments 668 141 184
Customer revenues:
Aluminum $1,058 $ 787 $681
Nonaluminum 402 605 314
Intersegment revenues -
aluminum 572 -- --
__________________________________________________________________
Total revenues $2,032 $1,392 $995
==================================================================
Operating income (loss) $ 290 $ 156 $ 39
Interest expense
__________________________________________________________________
Income before income taxes,
extraordinary loss and
cumulative effects of
accounting changes
==================================================================
Equity income (loss) $ -- $ -- $ --
Depreciation and amortization 138 44 7
Assets $3,000 $ 625 $375
Current liabilities
(excluding debt) 305 110 86
__________________________________________________________________
Net operating investment $2,695 $ 515 $289
==================================================================
Unincorporated joint
ventures and associated
companies $1,299 $ -- $ --
Capital expenditures 228 38 10
==================================================================
1997
__________________________________________________________________
Customer aluminum shipments 513 142 166
Customer revenues:
Aluminum $ 923 $ 797 $614
Nonaluminum 405 602 328
Intersegment revenues -
aluminum 1,187 -- --
__________________________________________________________________
Total revenues $2,515 $1,399 $942
==================================================================
Operating income (loss) $ 312 $ 141 $ 41
Interest expense
__________________________________________________________________
Income before income taxes,
extraordinary loss and
cumulative effects of
accounting changes
==================================================================
Equity income (loss) $ (2) $ -- $ --
Depreciation and amortization 135 47 5
Assets $3,154 $ 663 $381
Current liabilities
(excluding debt) 289 114 102
__________________________________________________________________
Net operating investment $2,865 $ 549 $279
==================================================================
Unincorporated joint ventures
and associated companies $1,177 $ -- $ --
Capital expenditures 105 41 9
==================================================================
</TABLE>
<PAGE> 56
<TABLE>
<CAPTION>
1998 Transportation Restructuring Other
_____________________________________________________________________
<S> <C> <C> <C>
Customer aluminum shipments 63 391 37
Customer revenues:
Aluminum $337 $1,434 $ 127
Nonaluminum -- 12 102
Intersegment revenues -
aluminum -- 12 --
_____________________________________________________________________
Total revenues $337 $1,458 $ 229
=====================================================================
Operating income (loss) $(19) $ 124 $ (140)
Interest expense
_____________________________________________________________________
Income before income taxes,
extraordinary loss and
cumulative effects of
accounting changes
=====================================================================
Equity income (loss) $ -- $ -- $ (14)
Depreciation and amortization 25 26 12
Assets $352 $ 282 $1,523
Current liabilities
(excluding debt) 53 66 321
_____________________________________________________________________
Net operating investment $299 $ 216 $1,202
=====================================================================
Unincorporated joint ventures
and associated companies $ 7 $ -- $ 172
Capital expenditures 50 -- 15
=====================================================================
1997
_____________________________________________________________________
Customer aluminum shipments 66 737 39
Customer revenues:
Aluminum $353 $2,610 $ 129
Nonaluminum -- 79 60
Intersegment revenues -
aluminum -- 33 --
_____________________________________________________________________
Total revenues $353 $2,722 $ 189
=====================================================================
Operating income (loss) $ 10 $ 102 $ (126)
Interest expense
_____________________________________________________________________
Income before income taxes,
extraordinary loss and
cumulative effects of
accounting changes
=====================================================================
Equity income (loss) $ 1 $ -- $ (4)
Depreciation and amortization 26 143 12
Assets $331 $1,921 $1,359
Current liabilities
(excluding debt) 46 212 415
_____________________________________________________________________
Net operating investment $285 $1,709 $ 944
=====================================================================
Unincorporated joint ventures
and associated companies $ 8 $ 172 $ 24
Capital expenditures 40 33 44
=====================================================================
</TABLE>
<TABLE>
<CAPTION>
Reconciling
1998 Items Consolidated
_____________________________________________________________________
<S> <C> <C>
Customer aluminum shipments -- 1,484
Customer revenues:
Aluminum $ -- $4,424
Nonaluminum -- 1,435
Intersegment revenues - aluminum (584) --
_____________________________________________________________________
Total revenues $ (584) $5,859
=====================================================================
Operating income (loss) $ (139) $ 311
Interest expense 114
_____________________________________________________________________
Income before income taxes,
extraordinary loss and
cumulative effects of
accounting changes $ 197
=====================================================================
Equity income (loss) $ -- $ (14)
Depreciation and amortization -- 252
Assets $ (23) $6,134
Current liabilities (excluding debt) (12) 929
_____________________________________________________________________
Net operating investment $ (11) $5,205
=====================================================================
Unincorporated joint ventures and
associated companies $ -- $1,478
Capital expenditures -- 341
=====================================================================
1997
_____________________________________________________________________
Customer aluminum shipments -- 1,663
Customer revenues:
Aluminum $ -- $5,426
Nonaluminum -- 1,474
Intersegment revenues - aluminum (1,220) --
_____________________________________________________________________
Total revenues $(1,220) $6,900
=====================================================================
Operating income (loss) $ (87) $ 393
Interest expense 153
_____________________________________________________________________
Income before income taxes,
extraordinary loss and
cumulative effects of
accounting changes $ 240
=====================================================================
Equity income (loss) $ -- $ (5)
Depreciation and amortization -- 368
Assets $ (583) $7,226
Current liabilities (excluding debt) (104) 1,074
_____________________________________________________________________
Net operating investment $ (479) $6,152
=====================================================================
Unincorporated joint ventures and
associated companies $ -- $1,381
Capital expenditures -- 272
=====================================================================
</TABLE>
<PAGE> 57
11. COMPANY OPERATIONS - continued
<TABLE>
<CAPTION>
Packaging Construction
Base and and
1996 Materials Consumer Distribution
_____________________________________________________________________
<S> <C> <C> <C>
Customer aluminum shipments 458 136 151
Customer revenues:
Aluminum $ 763 $ 768 $600
Nonaluminum 373 585 332
Intersegment revenues -
aluminum 944 -- --
_____________________________________________________________________
Total revenues $2,080 $1,353 $932
=====================================================================
Operating income (loss) $ 242 $ 149 $ 45
Interest expense
_____________________________________________________________________
Income before income taxes,
extraordinary loss and
cumulative effects of
accounting changes
=====================================================================
Equity income (loss) $ -- $ -- $ --
Depreciation and amortization 131 46 5
Assets $3,207 $ 635 $365
Current liabilities
(excluding debt) 283 124 84
_____________________________________________________________________
Net operating investment $2,924 $ 511 $281
=====================================================================
Unincorporated joint ventures
and associated companies $1,187 $ -- $ --
Capital expenditures 93 59 6
=====================================================================
</TABLE>
<PAGE> 58
<TABLE>
<CAPTION>
1996 Transportation Restructuring Other
_____________________________________________________________________
<S> <C> <C> <C>
Customer aluminum shipments 58 813 37
Customer revenues:
Aluminum $326 $2,802 $ 132
Nonaluminum -- 264 71
Intersegment revenues - aluminum -- 39 --
_____________________________________________________________________
Total revenues $326 $3,105 $ 203
=====================================================================
Operating income (loss) $ 17 $ (38) $ (128)
Interest expense
_____________________________________________________________________
Income before income taxes,
extraordinary loss and
cumulative effects of
accounting changes
=====================================================================
Equity income (loss) $ 3 $ -- $ 18
Depreciation and amortization 23 143 17
Assets $304 $2,149 $1,394
Current liabilities
(excluding debt) 38 256 320
_____________________________________________________________________
Net operating investment $266 $1,893 $1,074
=====================================================================
Unincorporated joint ventures
and associated companies $ 8 $ 107 $ 35
Capital expenditures 47 167 60
=====================================================================
</TABLE>
<TABLE>
<CAPTION>
Reconciling
1996 Items Consolidated
_____________________________________________________________________
<S> <C> <C>
Customer aluminum shipments -- 1,653
Customer revenues:
Aluminum $ -- $5,391
Nonaluminum -- 1,625
Intersegment revenues - aluminum (983) --
_____________________________________________________________________
Total revenues $(983) $7,016
=====================================================================
Operating income (loss) $ 26 $ 313
Interest expense 160
_____________________________________________________________________
Income before income taxes,
extraordinary loss and
cumulative effects of
accounting changes $ 153
=====================================================================
Equity income (loss) $ -- $ 21
Depreciation and amortization -- 365
Assets $(538) $7,516
Current liabilities
(excluding debt) (85) 1,020
_____________________________________________________________________
Net operating investment $(453) $6,496
=====================================================================
Unincorporated joint ventures and
associated companies $ -- $1,337
Capital expenditures -- 432
=====================================================================
</TABLE>
<PAGE> 59
11. COMPANY OPERATIONS - continued
RECONCILING ITEMS
Reconciling items consist of the following:
<TABLE>
<CAPTION>
1998 1997 1996
______________________________
<S> <C> <C> <C>
Operating income (loss):
Inventory accounting adjustments $ 5 $ (12) $ 63
Operational restructuring effects (144) (75) (37)
______________________________
$(139) $ (87) $ 26
==============================
Assets:
Inventory accounting adjustments $(248) $(547) $(530)
Construction in progress 320 155 207
Internal receivables included in
the assets of the global
business units (95) (191) (215)
______________________________
$ (23) $(583) $(538)
==============================
Current liabilities:
Internal liabilities included in
the current liabilities of
the global business units $ (87) $(185) $(182)
Payables to unincorporated
joint ventures and associated
companies 75 81 97
______________________________
$ (12) $(104) $ (85)
==============================
</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. Construction in progress in
1998 includes $150 million related to the expansion of the joint-
venture Worsley Alumina Refinery in Australia.
Research and development expenditures were $31 million in 1998
(1997 -- $41 million, 1996 -- $49 million).
<TABLE>
Geographic
<CAPTION>
Domestic Canada Other Foreign Consolidated
=====================================================================
<S> <C> <C> <C> <C>
1998
Revenues $4,653 $ 452 $ 754 $5,859
Long-lived assets 1,822 1,261 1,086 4,169
=====================================================================
1997
Revenues $5,306 $ 523 $1,071 $6,900
Long-lived assets 2,582 1,321 1,080 4,983
=====================================================================
1996
Revenues $5,461 $ 510 $1,045 $7,016
Long-lived assets 2,810 1,402 1,136 5,348
=====================================================================
</TABLE>
The majority of the Other Foreign category is comprised of
European operations except that long-lived assets include $673
million in 1998 ($569 million in 1997 and $563 million in 1996)
related to the joint-venture Worsley Alumina Refinery located in
Australia.
<PAGE> 60
12. 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 interest in an unincorporated joint
venture. This arrangement includes a minimum commitment of $37
million in 1999. The present value of this commitment at
December 31, 1998 was $36 million, after excluding interest of $1
million. The Company purchased approximately $90 million of
primary aluminum in each of the last three years under this
arrangement.
LEASES
Certain items of property, plant and equipment are leased under
long-term operating leases. Lease expense was $36 million in
1998 ($45 million in 1997 and $50 million in 1996). Lease
commitments at December 31, 1998, were $58 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. The Company has recorded estimated amounts (on
an undiscounted basis), which are expected to be sufficient to
satisfy anticipated costs of known remediation requirements
including such costs relating to sold locations.
An analysis of the accrual for environmental remediation costs
follows:
<TABLE>
<CAPTION>
1998 1997 1996
_____________________________
<S> <C> <C> <C>
Balance at January 1 $177 $203 $248
Accruals 7 -- --
Payments (12) (26) (45)
_____________________________
Balance at December 31 $172 $177 $203
_____________________________
</TABLE>
The balance of the accrual at December 31, 1998 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.
<PAGE> 61
12. CONTINGENT LIABILITIES AND COMMITMENTS - continued
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
Furthermore, 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> 62
13. 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 consolidated financial statements of Reynolds Metals Company.
Summarized financial information is as follows:
<TABLE>
Canadian Reynolds Metals Company, Ltd.
<CAPTION>
Years ended December 31
_____________________________
1998 1997 1996
_____________________________
<S> <C> <C> <C>
Net Sales:
Customers $356 $237 $202
Parent company 466 680 599
_____________________________
822 917 801
Cost of products sold 708 733 677
Net income $ 84 $117 $ 65
</TABLE>
<TABLE>
<CAPTION>
December 31
________________________
1998 1997
________________________
<S> <C> <C>
Current assets $ 155 $ 179
Noncurrent assets 1,206 1,206
Current liabilities (100) (148)
Noncurrent liabilities (379) (415)
</TABLE>
<TABLE>
Reynolds Aluminum Company of Canada, Ltd.
<CAPTION>
Years ended December 31
____________________________
1998 1997 1996
____________________________
<S> <C> <C> <C>
Net Sales:
Customers $447 $ 519 $ 509
Parent company 455 648 517
____________________________
902 1,167 1,026
Cost of products sold 784 956 884
Net income $ 84 $ 117 $ 59
</TABLE>
<TABLE>
<CAPTION>
December 31
________________________
1998 1997
________________________
<S> <C> <C>
Current assets $ 186 $ 208
Noncurrent assets 1,228 1,276
Current liabilities (103) (111)
Noncurrent liabilities (389) (445)
</TABLE>
<PAGE> 63
<TABLE>
Quarterly Results of Operations (Unaudited)
(millions, except per share amounts)
<CAPTION>
1998
_________________________________________________________________
Quarter 1st 2nd 3rd 4th
_________________________________________________________________
<S> <C> <C> <C> <C>
Revenues $1,532 $1,579 $1,368 $1,380
Gross profit<F1> 211 238 202 182
Income (loss) before
extraordinary loss and
cumulative effect of
accounting change 58 (123) 262 (45)
Extraordinary loss -- (3) (60) --
Cumulative effect of
accounting change (23) -- -- --
_________________________________________________________________
Net income (loss) $ 35 $ (126) $ 202 $ (45)
=================================================================
Earnings Per Share
Basic:
Average shares outstanding 73 72 69 64
Income (loss) before
extraordinary loss and
cumulative effect of
accounting change $ 0.78 $(1.70) $ 3.80 $(0.71)
Extraordinary loss -- (0.04) (0.88) --
Cumulative effect of
accounting change (0.32) -- -- --
_________________________________________________________________
Net income (loss) $ 0.46 $(1.74) $ 2.92 $(0.71)
_________________________________________________________________
Diluted:
Average shares outstanding 74 72 69 64
Income (loss) before
extraordinary loss and
cumulative effect of
accounting change $ 0.78 $(1.70) $ 3.80 $(0.71)
Extraordinary loss -- (0.04) (0.88) --
Cumulative effect of
accounting change (0.32) -- -- --
_________________________________________________________________
Net income (loss) $ 0.46 $(1.74) $ 2.92 $(0.71)
=================================================================
Net income (loss) includes
the effect of the following
item:
Operational restructuring
effects -- net<F2> $ -- $ (196) $ 201 $ (95)
_________________________________________________________________
<CAPTION>
1997
_________________________________________________________________
Quarter 1st 2nd 3rd 4th
_________________________________________________________________
Revenues $1,624 $1,786 $1,717 $1,773
Gross profit<F1> 171 231 215 257
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)
_________________________________________________________________
<FN>
<F1>Gross profit equals revenues minus cost of products sold, and
depreciation and amortization
<F2>Operational restructuring effects are shown net of gains on
sales of assets
</FN>
</TABLE>
<PAGE> 64
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, 1998 and 1997, 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, 1998. 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,
1998 and 1997, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted
accounting principles.
As discussed in Note 1 to the consolidated financial
statements, in 1998 the Company changed its method of accounting
for the costs of start-up activities and, in 1996 changed its
method of accounting for the impairment of long-lived assets and
long-lived assets to be disposed of.
/s/ Ernst & Young LLP
Richmond, Virginia
February 19, 1999
<PAGE> 65
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 required by this item, see the information
under the captions "Item 1. Election of Directors -- Nominees"
and "Certain Relationships" and "Stock Ownership Information -
Section 16(a) Beneficial Ownership Reporting Compliance" in
the Registrant's Proxy Statement for the Annual Meeting of
Stockholders to be held on May 20, 1999. 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 - Compensation of
Directors" and "Executive Compensation" in the Registrant's Proxy
Statement for the Annual Meeting of Stockholders to be held on
May 20, 1999. That information (other than that appearing under
the captions "Executive Compensation - Report of the Compensation
Committee on Executive Compensation" and "Executive Compensation
- - Performance Graph") 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 "Stock Ownership Information - Holders of More Than
5%" and "Director and Executive Officer Stock Ownership" in the
Registrant's Proxy Statement for the Annual Meeting of
Stockholders to be held on May 20, 1999. That information
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" and "Executive Compensation - Pension Plan Table"
and "Change in Control and Termination Arrangements" in the
Registrant's Proxy Statement for the Annual Meeting of
Stockholders to be held on May 20, 1999. That information
is incorporated in this report by reference.
<PAGE> 66
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.
(1) Consolidated Financial Statements: Page
----
Consolidated statement of income -
Years ended December 31, 1998, 1997 and 1996. 37
Consolidated balance sheet - December 31, 1998
and 1997. 38
Consolidated statement of cash flows -
Years ended December 31, 1998, 1997 and 1996. 39
Consolidated statement of changes in
stockholders' equity - Years ended December 31,
1998, 1997 and 1996. 40
Notes to consolidated financial statements. 41
Report of Ernst & Young LLP, Independent Auditors. 64
(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, 1998.
This report omits financial statements of all
associated companies (20% to 50% owned) because no
associated company is individually significant.
(3) Exhibits
<F1> EXHIBIT 2 - Asset Purchase Agreement by and among
Ball Corporation, Ball Metal Beverage
Container Corp. and Reynolds Metals
Company dated as of April 22, 1998. The
Registrant agrees to furnish to the
Commission upon request a copy of the
disclosure schedules supplemental to the
Asset Purchase Agreement. (File No. 001-
01430, Form 10-Q Report for the Quarter
Ended June 30, 1998, EXHIBIT 2)
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.
[FN]
_______________________
<F1> Incorporated by reference.
</FN>
<PAGE> 67
<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. 001-01430, Form 10-Q Report
for the Quarter Ended March 31, 1989,
EXHIBIT 4(c))
<F1> EXHIBIT 4.4 - Amendment No. 1 dated as of November 1,
1991 to the Indenture. (File No. 001-
01430, 1991 Form 10-K Report, EXHIBIT
4.4)
<F1> EXHIBIT 4.5 - Rights Agreement dated as of March 8,
1999 between Reynolds Metals Company and
ChaseMellon Shareholder Services, L.L.C.
(File No. 001-01430, Form 8-K Report
dated March 8, 1999, pertaining to
Preferred Stock Purchase Rights, EXHIBIT
4.1)
<F1> EXHIBIT 4.6 - Form of 9-3/8% Debenture due June 15, 1999.
(File No. 001-01430, 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. 001-01430, 1991 Form 10-
K Report, EXHIBIT 4.15)
<F1> EXHIBIT 4.10 - Form of Book-Entry Floating Rate Medium-Term
Note. (File No. 001-01430, 1991 Form 10-
K Report, EXHIBIT 4.16)
<F1> EXHIBIT 4.11 - Form of 9% Debenture due August 15, 2003.
(File No. 001-01430, 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. 001-01430, 1995 Form 10-K Report,
EXHIBIT 4.13)
<F1> EXHIBIT 4.13 - By-Laws of RACC, as amended. (File No. 001-
01430, 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. 001-
01430, 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. 001-
01430, 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. 001-01430, Form 8-K Report dated
July 14, 1993, EXHIBIT 4(a))
<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. 001-01430,
1995 Form 10-K Report, EXHIBIT 4.18)
[FN]
_______________________
<F1> Incorporated by reference.
</FN>
<PAGE> 68
<F1> EXHIBIT 4.18 - Form of 6-5/8% Guaranteed Amortizing Note
due July 15, 2002. (File No. 001-01430,
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.
001-01430, 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. 001-01430, 1987 Form
10-K Report, EXHIBIT 10.9)
<F1><F2> EXHIBIT 10.5 - Supplemental Death Benefit Plan for
Officers. (File No. 001-01430, 1986
Form 10-K Report, EXHIBIT 10.8)
<F1><F2> EXHIBIT 10.6 - Financial Counseling Assistance Plan for
Officers. (File No. 001-01430, 1987
Form 10-K Report, EXHIBIT 10.11)
<F1><F2> EXHIBIT 10.7 - Management Incentive Deferral Plan.
(File No. 001-01430, 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.
001-01430, 1993 Form 10-K Report,
EXHIBIT 10.12)
<F2> EXHIBIT 10.9 - Form of Indemnification Agreement for
Directors and Officers.
<F1><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. (File No. 001-01430,
1997 Form 10-K Report, EXHIBIT 10.10)
<F1><F2> EXHIBIT 10.11 - Amendment to Reynolds Metals Company
1987 Nonqualified Stock Option Plan
effective May 20, 1988. (File No. 001-
01430, 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.
001-01430, 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.
001-01430, 1988 Form 10-K Report,
EXHIBIT 10.22)
[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> 69
<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. 001-01430, 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.
001-01430, 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. 001-01430, 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. 001-
01430, 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. 001-
01430, 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. 001-01430, Form
10-Q Report for the Quarter Ended June
30, 1994, EXHIBIT 10.32)
<F1><F2> EXHIBIT 10.21 - Amendment to Reynolds Metals Company
1987 Nonqualified Stock Option Plan
effective August 19, 1994. (File No.
001-01430, 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.
001-01430, 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.
001-01430, 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. 001-01430, 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. 001-01430, Form 10-Q Report
for the Quarter Ended June 30, 1995,
EXHIBIT 10.35)
[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> 70
<F1><F2> EXHIBIT 10.26 - Form of Split Dollar Life Insurance Agreement
(Employee Owner, Employee Pays Premium).
(File No. 001-01430, 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. 001-01430, 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. 001-01430, 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. 001-01430, Form 10-
Q Report for the Quarter Ended June 30,
1996, EXHIBIT 10.41)
<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. 001-
01430, 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. 001-
01430, 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. 001-01430, 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.
001-01430, 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. 001-01430,
1996 Form 10-K Report, EXHIBIT 10.39)
<F1><F2> EXHIBIT 10.37 - Reynolds Metals Company Supplemental
Incentive Plan. (File No. 001-01430,
1996 Form 10-K Report, EXHIBIT 10.40)
[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> 71
<F1><F2> EXHIBIT 10.38 - Reynolds Metals Company Stock Plan for
Outside Directors. (File No. 001-01430,
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, 1999 (or, if earlier, the date
of completion of employment related
actions related to the Company's
portfolio review process, as designated
by the Company's Chief Executive
Officer), approved by the Compensation
Committee of the Company's Board of
Directors on January 17, 1997 and
extended on May 15, 1998. (File No. 001-
01430, 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. 001-01430, 1996
Form 10-K Report, EXHIBIT 10.43)
<F1><F2> EXHIBIT 10.41 - Amendment to Reynolds Metals Company
1996 Nonqualified Stock Option Plan
effective December 1, 1997. (File No.
001-01430, 1997 Form 10-K Report,
EXHIBIT 10.41)
<F1><F2> EXHIBIT 10.42 - Amendment to Reynolds Metals Company
Restricted Stock Plan for Outside
Directors effective December 1, 1997.
(File No. 001-01430, 1997 Form 10-K
Report, EXHIBIT 10.42)
<F1><F2> EXHIBIT 10.43 - Reynolds Metals Company Long-Term
Performance Share Plan. (File No. 001-
01430, Form 10-Q Report for the Quarter
Ended June 30, 1998, EXHIBIT 10.43)
<F1> EXHIBIT 10.44 - Asset Purchase Agreement by and among Ball
Corporation, Ball Metal Beverage
Container Corp. and Reynolds Metals
Company dated as of April 22, 1998. See
EXHIBIT 2.
<F2> EXHIBIT 10.45 - Amendment to Reynolds Metals Company
Restricted Stock Plan for Outside
Directors effective January 1, 1999
<F2> EXHIBIT 10.46 - Amendment to Reynolds Metals Company
Stock Plan for Outside Directors
effective January 1, 1999
EXHIBIT 11 - Omitted; see Item 8 for computation of
earnings per share
EXHIBIT 12 - Not applicable
EXHIBIT 13 - Not applicable
EXHIBIT 16 - Not applicable
EXHIBIT 18 - None
EXHIBIT 21 - List of Subsidiaries of Reynolds Metals
Company
[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> 72
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 1998, the Registrant filed
three Current Reports on Form 8-K with the Commission,
all of which reported matters under Item 5.
The Registrant reported on the Form 8-K dated
October 16, 1998 that it had advised local union officials at
its Alloys can stock complex in Alabama that the proposed
purchaser of the facility had informed the Registrant that it
is critical that the purchaser and labor unions representing
employees at the complex negotiate new labor agreements with
respect to those employees. The report stated additionally
that the Registrant had advised the labor leaders at the
complex that if (1) the proposed purchaser and the unions are
able to agree on new labor contracts and (2) the Registrant
and the proposed purchaser are able to successfully conclude
negotiations and complete the sale, the Registrant would
treat the transaction as a "plant closing" for purposes of
benefit payments under its existing labor contracts.
The Registrant reported on the Form 8-K dated November 18,
1998 that the Registrant and the other principal
shareholders of Latas de Aluminio S. A. - LATASA had
finalized a review of strategic alternatives for the South
American beverage can manufacturing company. The Registrant
announced that it was not considering a disposition of its
shares at that time.
The Registrant reported on the Form 8-K dated
December 30, 1998 that it had signed a definitive agreement
to sell its Alloys can stock complex in Alabama to Wise
Alloys LLC, an affiliate of Wise Metals Co., Inc.
The Registrant has filed two Current Reports on Form 8-K
with the Commission during the first quarter of 1999,
both of which reported matters under Item 5.
The Registrant filed a Form 8-K dated March 3, 1999
concerning its expected earnings for the first
quarter of 1999.
The Registrant reported on a Form 8-K dated
March 8, 1999 that its Board of Directors had approved
amendments to the Registrant's shareholder rights plan.
<PAGE> 73
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 26, 1999
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/ William E. Leahey, Jr. By /s/ Jeremiah J. Sheehan
---------------------------- ----------------------------
William E. Leahey, Jr. 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 26, 1999 Date March 26, 1999
-------------------------- --------------------------
By <F1> Patricia C. Barron By <F1> John R. Hall
---------------------------- ----------------------------
Patricia C. Barron, Director John R. Hall, Director
Date March 26, 1999 Date March 26, 1999
-------------------------- --------------------------
By <F1> Robert L. Hintz By <F1> William H. Joyce
---------------------------- ----------------------------
Robert L. Hintz, Director William H. Joyce, Director
Date March 26, 1999 Date March 26, 1999
-------------------------- --------------------------
By <F1> Mylle Bell Mangum By <F1> D. Larry Moore
---------------------------- ----------------------------
Mylle Bell Mangum, Director D. Larry Moore, Director
Date March 26, 1999 Date March 26, 1999
-------------------------- --------------------------
<PAGE> 73
By /s/ Randolph N. Reynolds By <F1> James M. Ringler
---------------------------- ----------------------------
Randolph N. Reynolds, Director James M. Ringler, Director
Date March 26, 1999 Date March 26, 1999
-------------------------- --------------------------
By <F1> Samuel C. Scott, III By <F1> Joe B. Wyatt
---------------------------- ----------------------------
Samuel C. Scott, III, Director Joe B. Wyatt, Director
Date March 26, 1999 Date March 26, 1999
-------------------------- --------------------------
By /s/ Allen M. Earehart
----------------------------
Allen M. Earehart,
Senior Vice President and Controller
(Principal Accounting Officer)
Date March 26, 1999
--------------------------
[FN]
<F1> By /s/ D. Michael Jones
----------------------------------
D. Michael Jones, Attorney-in-Fact
Date March 26, 1999
________________________________
</FN>
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM 10-K
For the fiscal year ended December 31, 1998
Commission File No. 001-01430
REYNOLDS METALS COMPANY
Attached herewith are
Exhibits 3.1, 3.2, 10.9, 10.45, 10.46, 21, 23, 24 and 27
INDEX
<F1> EXHIBIT 2 - Asset Purchase Agreement by and among Ball
Corporation, Ball Metal Beverage
Container Corp. and Reynolds Metals
Company dated as of April 22, 1998. The
Registrant agrees to furnish to the
Commission upon request a copy of the
disclosure schedules supplemental to the
Asset Purchase Agreement. (File No. 001-
01430, Form 10-Q Report for the Quarter
Ended June 30, 1998, EXHIBIT 2)
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. 001-01430, Form 10-Q Report
for the Quarter Ended March 31, 1989,
EXHIBIT 4(c))
<F1> EXHIBIT 4.4 - Amendment No. 1 dated as of November 1,
1991 to the Indenture. (File No. 001-
01430, 1991 Form 10-K Report, EXHIBIT
4.4)
<F1> EXHIBIT 4.5 - Amended and Restated Rights Agreement
dated as of March 8, 1999 between
Reynolds Metals Company and ChaseMellon
Shareholder Services, L.L.C. (File No.
001-01430, Form 8-K Report dated March
8, 1999, pertaining to Preferred Stock
Purchase Rights, EXHIBIT 4.1)
<F1> EXHIBIT 4.6 - Form of 9-3/8% Debenture due June 15, 1999.
(File No. 001-01430, 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)
[FN]
_______________________
<F1> Incorporated by reference.
</FN>
<PAGE>
<F1> EXHIBIT 4.9 - Form of Book-Entry Fixed Rate Medium-Term
Note. (File No. 001-01430, 1991 Form 10-
K Report, EXHIBIT 4.15)
<F1> EXHIBIT 4.10 - Form of Book-Entry Floating Rate Medium-Term
Note. (File No. 001-01430, 1991 Form 10-
K Report, EXHIBIT 4.16)
<F1> EXHIBIT 4.11 - Form of 9% Debenture due August 15, 2003.
(File No. 001-01430, 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. 001-01430, 1995 Form 10-K Report,
EXHIBIT 4.13)
<F1> EXHIBIT 4.13 - By-Laws of RACC, as amended. (File No. 001-
01430, 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. 001-
01430, 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. 001-
01430, 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. 001-01430, Form 8-K Report dated
July 14, 1993, EXHIBIT 4(a))
<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. 001-01430,
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. 001-01430,
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.
001-01430, 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. 001-01430, 1987 Form
10-K Report, EXHIBIT 10.9)
[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 10.5 - Supplemental Death Benefit Plan for
Officers. (File No. 001-01430, 1986
Form 10-K Report, EXHIBIT 10.8)
<F1><F2> EXHIBIT 10.6 - Financial Counseling Assistance Plan for
Officers. (File No. 001-01430, 1987
Form 10-K Report, EXHIBIT 10.11)
<F1><F2> EXHIBIT 10.7 - Management Incentive Deferral Plan.
(File No. 001-01430, 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.
001-01430, 1993 Form 10-K Report,
EXHIBIT 10.12)
<F2> EXHIBIT 10.9 - Form of Indemnification Agreement for
Directors and Officers.
<F1><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. (File No. 001-01430,
1997 Form 10-K Report, EXHIBIT 10.10)
<F1><F2> EXHIBIT 10.11 - Amendment to Reynolds Metals Company
1987 Nonqualified Stock Option Plan
effective May 20, 1988. (File No. 001-
01430, 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.
001-01430, 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.
001-01430, 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. 001-01430, 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.
001-01430, 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. 001-01430, 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. 001-
01430, Form 10-Q Report for the Quarter
Ended June 30, 1994, EXHIBIT 10.30)
[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 10.19 - Reynolds Metals Company Salary Deferral
Plan for Executives. (File No. 001-
01430, 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. 001-01430, Form
10-Q Report for the Quarter Ended June
30, 1994, EXHIBIT 10.32)
<F1><F2> EXHIBIT 10.21 - Amendment to Reynolds Metals Company
1987 Nonqualified Stock Option Plan
effective August 19, 1994. (File No.
001-01430, 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.
001-01430, 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.
001-01430, 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. 001-01430, 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. 001-01430, 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. 001-01430, 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. 001-01430, 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. 001-01430, 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. 001-01430, 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. 001-
01430, 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. 001-
01430, 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. 001-01430, 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.
001-01430, 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. 001-01430,
1996 Form 10-K Report, EXHIBIT 10.39)
<F1><F2> EXHIBIT 10.37 - Reynolds Metals Company Supplemental
Incentive Plan. (File No. 001-01430,
1996 Form 10-K Report, EXHIBIT 10.40)
<F1><F2> EXHIBIT 10.38 - Reynolds Metals Company Stock Plan for
Outside Directors. (File No. 001-01430,
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, 1999 (or, if earlier, the date
of completion of employment related
actions related to the Company's
portfolio review process, as designated
by the Company's Chief Executive
Officer), approved by the Compensation
Committee of the Company's Board of
Directors on January 17, 1997 and
extended on May 15, 1998. (File No. 001-
01430, 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. 001-01430, 1996
Form 10-K Report, EXHIBIT 10.43)
<F1><F2> EXHIBIT 10.41 - Amendment to Reynolds Metals Company
1996 Nonqualified Stock Option Plan
effective December 1, 1997. (File No.
001-01430, 1997 Form 10-K Report,
EXHIBIT 10.41)
<F1><F2> EXHIBIT 10.42 - Amendment to Reynolds Metals Company
Restricted Stock Plan for Outside
Directors effective December 1, 1997.
(File No. 001-01430, 1997 Form 10-K
Report, EXHIBIT 10.42)
<F1><F2> EXHIBIT 10.43 - Reynolds Metals Company Long-Term
Performance Share Plan. (File No. 001-
01430, Form 10-Q Report for the Quarter
Ended June 30, 1998, EXHIBIT 10.43)
[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> EXHIBIT 10.44 - Asset Purchase Agreement by and among Ball
Corporation, Ball Metal Beverage
Container Corp. and Reynolds Metals
Company dated as of April 22, 1998. See
EXHIBIT 2.
<F2> EXHIBIT 10.45 - Amendment to Reynolds Metals Company
Restricted Stock Plan for Outside
Directors effective January 1, 1999
<F2> EXHIBIT 10.46 - Amendment to Reynolds Metals Company
Stock Plan for Outside Directors
effective January 1, 1999
EXHIBIT 11 - Omitted; see Item 8 for computation of
earnings per share
EXHIBIT 12 - Not applicable
EXHIBIT 13 - Not applicable
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
[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>
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
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 12/17/1998
981488133 - 0244011
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
RMC SAINT GEORGE, 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
SAINT GEORGE, 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
November, 1998, determined to merge into itself RMC SAINT GEORGE,
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 SAINT GEORGE, INC., merge into itself RMC
SAINT GEORGE, INC. and assume all of its liabilities
and obligations effective as of 12:01 a.m. E.S.T. on
January 4, 1999; 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
<PAGE>
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 4, 1999.
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, 1998.
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 Meeting 2
Section 3. Special Meetings 2
Section 4. Notice of Stockholder Business
and Nominations 2-6
Section 5. Notice of Meetings 6
Section 6. Quorum 6
Section 7. Adjournment of Meetings 6-7
Section 8. Inspectors of Election 7
Section 9. List of Stockholders 7
Section 10. Voting 7-8
Section 11. Consents in Writing 8
Section 12. Conduct of Meetings 8-9
ARTICLE III - Board of Directors
Section 1. Number; Term of Office; Powers 9
Section 2. Resignations 9
Section 3. Vacancies 9
Section 4. Annual Meeting 9
Section 5. Regular Meetings 9
Section 6. Special Meetings 9-10
Section 7. Notice of Meetings 10
Section 8. Quorum; Adjourned Meetings; Required Vote 10
Section 9. Committees 10
Section 10. Compensation 11
Section 11. Consents in Writing 11
Section 12. Participation by Conference Telephone 11
<PAGE>
Table of Contents, Continued
ARTICLE IV - Officers
Section 1. Officers 11-12
Section 2. Chairman of the Board 12
Section 3. Vice Chairmen of the Board 12
Section 4. President 12
Section 5. Vice Presidents 12
Section 6. General Counsel 12
Section 7. Secretary 12
Section 8. Treasurer 12
Section 9. Controller 12
Section 10. Other Officers and Assistant Officers 13
Section 11. Term of Office; Vacancies 13
Section 12. Removal 13
ARTICLE V - Dividends and Finance
Section 1. Dividends 13
Section 2. Deposits; Withdrawals; Notes and Other
Instruments 13
Section 3. Fiscal Year 13
ARTICLE VI - Books and Records; Record Date
Section 1. Books and Records 13
Section 2. Record Date 14
ARTICLE VII - Notices
Section 1. Notices 15
Section 2. Waivers of Notice 15
ARTICLE VIII - Contracts
Section 1. Interested Directors or Officers 15-16
ARTICLE IX - Seal
Section 1. Seal 16
ARTICLE X - Indemnification
Section 1. Indemnification in Third Party
Actions 16
Section 2. Indemnification in an Action by or in
the Right of the Corporation 16-17
Section 3. Indemnification as of Right 17
Section 4. Determination of Indemnification 17
Section 5. Advance for Expenses 17
Section 6. General Provisions 18
ARTICLE XI - Amendments
Section 1. Amendments 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
Assistant Secretary, or the Treasurer or an Assistant Treasurer,
and sealed with the corporate seal; provided, that where any
Certificate 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.
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.
<PAGE> 2
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 purpose of electing directors and for
the transaction of such other business as may properly be brought
before the meeting shall be held on such date and at such time as
may be designated from time to time by the Board of Directors.
3. Special Meetings. Special meetings of the stockholders
may be called by the Chairman of the Board of Directors, the
Chief Executive Officer of the corporation 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. A demand by stockholders to hold a special meeting
shall be signed, dated and delivered to the Secretary, and shall
set forth the information required by Article II, Section 4 of
these By-Laws. The Board of Directors of the corporation shall
have the sole power to determine the place, time and date for any
special meeting of stockholders, and to set a record date for the
determination of stockholders entitled to vote at such meeting in
the manner set forth in Article VI, Section 2 hereof. Following
such determination, it shall be the duty of the Secretary to
cause notice to be given to the stockholders entitled to vote at
such meeting, in the manner set forth in Article II, Section 5
hereof, that a meeting will be held.
4. Notice of Stockholder Business and Nominations:
(a) Annual Meetings of Stockholders.
(1) Nominations of persons for election to
the Board of Directors of the corporation and the
proposal of business to be considered by the
stockholders may be made at an annual meeting of
stockholders only (i) pursuant to the
corporation's notice of meeting delivered pursuant
to Article II, Section 5, of these By-Laws (or any
supplement thereto), (ii) by or at the direction
of the Board of Directors or the Chairman of the
Board or (iii) by any stockholder of the
corporation who was a stockholder of record of the
corporation at the time the notice provided for in
this Section 4 is delivered to the Secretary of
the corporation, who is entitled to vote at the
meeting and who complies with the notice
procedures set forth in subparagraphs (2) and (3)
of this paragraph (a) in this Section 4.
(2) For nominations or other business to be
properly brought before an annual meeting by a
stockholder pursuant to
<PAGE> 3
clause (iii) of paragraph (a)(1) of this Section 4,
the stockholder must have given timely notice
thereof in writing to the Secretary of the
corporation and such other business must otherwise
be a proper matter for stockholder action as
determined by the Board of Directors. To be timely,
a stockholder's notice shall be delivered to the
Secretary at the principal executive offices of
the corporation not less than thirty (30) days
prior to the first anniversary date of the
written notice of the meeting given to
stockholders of record on the record
date for such meeting by or at the
direction of the Board of Directors of the
previous year's annual meeting provided, however,
that such notice shall not be required to be given
more than ninety (90) days prior to an annual
meeting of stockholders. In no event shall the
public announcement of an adjournment or
postponement of an annual meeting of stockholders
commence a new time period (or extend any time
period) for the giving of a stockholder's notice
as described above. Such stockholder's notice
shall set forth: (i) as to each person whom the
stockholder proposes to nominate for election or
reelection as a director all information relating
to such person that is required to be disclosed in
solicitations of proxies for election of directors
in an election contest, or is otherwise required,
in each case pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (the
"Exchange Act") and Rule 14a-11 thereunder (and
such person's written consent to being named in
the proxy statement as a nominee and to serving as
a director if elected); (ii) as to any other
business that the stockholder proposes to bring
before the annual meeting, a brief description of
the business desired to be brought before the
annual meeting, the text of the proposal or
business (including the text of any resolutions
proposed for consideration and in the event that
such business includes a proposal to amend the By-
Laws of the corporation, the language of the
proposed amendment), the reasons for conducting
such business at the annual meeting and any
material interest in such business of such
stockholder and the beneficial owner, if
<PAGE> 4
any, on whose behalf the proposal is made; and
(iii) as to the stockholder giving the notice and the
beneficial owner, if any, on whose behalf the
nomination or proposal is made (A) the name and
address of such stockholder, as they appear on the
corporation's books, and of such beneficial owner,
(B) the class and number of shares of capital
stock of the corporation which are owned
beneficially and of record by such stockholder and
such beneficial owner, (C) a representation that
the stockholder is a holder of record of stock of
the corporation entitled to vote at such annual
meeting and intends to appear in person or by
proxy at the annual meeting to propose such
business or nomination, and (D) a representation
whether the stockholder or the beneficial owner,
if any, intends or is part of a group which
intends to (1) deliver a proxy statement and/or
form of proxy to holders of at least the
percentage of the corporation's outstanding
capital stock required to approve or adopt the
proposal or elect the nominee and/or (2) otherwise
solicit proxies from stockholders in support of
such proposal or nomination. The corporation may
require any proposed nominee to furnish such other
information as it may reasonably require to
determine the eligibility of such proposed nominee
to serve as a director of the corporation.
(3) Notwithstanding anything in the second
sentence of paragraph (a)(2) of this Section 4 to
the contrary, in the event that the number of
directors to be elected to the Board of Directors
of the corporation at an annual meeting is
increased and there is no public announcement by
the corporation naming all of the nominees for
director or specifying the size of the increased
Board of Directors at least one hundred (100) days
prior to the first anniversary of the preceding
year's annual meeting, a stockholder's notice
required by this Section 4 shall also be
considered timely, but only with respect to
nominees for any new positions created by such
increase, if it shall be delivered to the
Secretary at the principal executive offices of
the corporation not later than the close of
business on the tenth day following the day on
which such public announcement is first made by
the corporation.
(b) Special Meetings of Stockholders.
(1) Only such business shall be conducted at
a special meeting of stockholders as shall have
been described in the corporation's notice of
meeting given pursuant to Article II, Section 5 of
these By-Laws. Nominations of persons for
election to the Board of Directors may be made at
a special meeting of stockholders only (i) by or
at the direction of the Board of Directors or the
Chairman of the Board, or (ii) by any stockholder
of the corporation who is a stockholder of record
at the time the notice provided for in this
Section 4(b) is delivered to the Secretary of the
corporation, who is entitled to vote at the
special meeting and who complies with the notice
procedures set forth in paragraph (b)(2) of this
Section 4. In the event a special meeting of
stockholders is called for the purpose of electing
one or more directors to the Board of Directors,
any such stockholder entitled to vote in such
election of directors may nominate a person or
persons (as the case may be) for election to such
position(s) as specified in the corporation's
notice of meeting, if the stockholder's notice
containing the information and as otherwise
required by paragraph (b)(2) of this Section 4
shall be delivered to the Secretary at the
<PAGE> 5
principal executive offices of the corporation not
later than the close of business on the tenth day
following the day on which public announcement is
first made of the date of the special meeting and
of the nominees proposed by the Board of Directors
to be elected at such meeting. In no event shall
the public announcement of an adjournment or
postponement of a special meeting commence a new
time period (or extend any time period) for the
giving of a stockholder's notice as described
above.
(2) For nominations to be properly brought
before a special meeting by a stockholder pursuant
to clause (ii) of paragraph (b)(1) of this Section
4, the stockholder's notice must contain the
information required by this paragraph. For any
other business to be properly brought before a
special meeting by a stockholder, such other
business must be a proper matter for stockholder
action and the stockholder's demand for the
special meeting pursuant to Article II, Section 3
of these By-Laws must contain the information
required by this paragraph. Such stockholder's
notice or demand shall set forth: (i) as to each
person whom the stockholder proposes to nominate
for election or reelection as a director all
information relating to such person that is
required to be disclosed in solicitations of
proxies for election of directors in an election
contest, or is otherwise required, in each case
pursuant to Regulation 14A under the Exchange Act
and Rule 14a-11 thereunder (and such person's
written consent to being named in the proxy
statement as a nominee and to serving as a
director if elected); (ii) as to any other
business that the stockholder proposes to bring
before the special meeting, a brief description of
the business desired to be brought before the
special meeting, the text of the proposal or
business (including the text of any resolutions
proposed for consideration and in the event that
such business includes a proposal to amend the By-
Laws of the corporation, the language of the
proposed amendment), the reasons for conducting
such business at the special meeting and any
material interest in such business of such
stockholder and the beneficial owner, if any, on
whose behalf the proposal is made; and (iii) as to
the stockholder giving the notice and the
beneficial owner, if any, on whose behalf the
nomination or proposal is made (A) the name and
address of such stockholder, as they appear on the
corporation's books, and of such beneficial owner,
(B) the class and number of shares of capital
stock of the corporation which are owned
beneficially and of record by such stockholder and
such beneficial owner, (C) a representation that
the stockholder is a holder of record of stock of
the corporation entitled to vote at such special
meeting and intends to appear in person or by
proxy at the special meeting to propose such
business or nomination, and (D) a
<PAGE> 6
representation whether the stockholder or the
beneficial owner, if any, intends or is part of a
group which intends to (1) deliver a proxy statement
and/or form of proxy to holders of at least the
percentage of the corporation's outstanding
capital stock required to approve or adopt the
proposal or elect the nominee and/or (2) otherwise
solicit proxies from stockholders in support of
such proposal or nomination. The corporation may
require any proposed nominee to furnish such other
information as it may reasonably require to
determine the eligibility of such proposed nominee
to serve as a director of the corporation.
(c) General.
(1) Only such persons who are nominated in
accordance with the procedures set forth in this
Section 4 shall be eligible to be elected at an
annual or special meeting of stockholders of the
corporation to serve as directors and only such
business shall be conducted at a meeting of
stockholders as shall have been brought before the
meeting in accordance with the procedures set
forth in this Section 4. Except as otherwise
provided by law, the chairman of the meeting shall
have the power and duty to (i) determine whether a
nomination or any business proposed to be brought
before an annual or special meeting was made or
proposed, as the case may be, in accordance with
the procedures set forth in this Section 4 and
(ii) if any proposed nomination or business is not
in compliance with this Section 4 (including
whether the stockholder or beneficial owner, if
any, on whose behalf the nomination or proposal is
made solicits (or is part of a group which
solicits), or fails to so solicit (as the case may
be), proxies in support of such stockholder's
nominee or proposal in compliance with such
stockholder's representation as required by clause
(iii)(D) of Section (a)(2) or clause (iii)(D) of
Section (b)(2) of this Section 4), to declare that
such nomination shall be disregarded or that such
proposed business shall not be transacted.
(2) For purposes of this Section 4, "public
announcement" shall mean disclosure in a press
release reported by the Dow Jones News Service,
Associated Press or comparable
<PAGE> 7
national news service or in a document publicly
filed by the corporation with the Securities and
Exchange Commission pursuant to Section 13, 14 or
15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions
of this Section 4, a stockholder shall also comply
with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with
respect to the matters set forth in this Section
4. Nothing in this Section 4 shall be deemed to
affect any rights of stockholders to request
inclusion of proposals in the corporation's proxy
statement pursuant to Rule 14a-8 under the
Exchange Act.
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.
Any previously scheduled annual or special meeting of the
stockholders may be postponed, and any previously scheduled
annual or special meeting of the stockholders called by the Board
of Directors may be cancelled, by resolution of the Board of
Directors upon public notice given prior to the time previously
scheduled for such meeting of stockholders.
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. Adjournment of Meetings. Any meeting of stockholders,
annual or special, may be adjourned solely by the chairman of the
meeting from time to time to reconvene at the same or some other
time, date and place, and notice need not be given of any such
adjourned meeting if the time, date and place thereof are
announced at the meeting at which the adjournment is taken. The
stockholders present at a meeting shall not have authority to
adjourn the meeting. At the adjourned meeting at which a quorum
is present, the stockholders may transact any business which
might have been transacted at the original meeting. If after the
adjournment a new record date is fixed for the adjourned meeting,
notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
Once a share is represented for any purpose at a
meeting, it shall be present for quorum purposes for the
remainder of the meeting and for any adjournment of that meeting
unless a new record date is or must be set for the adjourned
meeting. A new record date must be set if the meeting is
adjourned to a date more than 120 days after the original date
fixed for the meeting.
<PAGE> 8
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
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
<PAGE> 9
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.
12. Conduct of Meetings. Meetings of stockholders shall be
presided over by the Chairman of the Board or by another chairman
designated by the Board of Directors. The date and time of the
opening and the closing of the polls for each matter upon which
the stockholders will vote at a meeting shall be determined by
the chairman of the meeting and announced at the meeting. The
Board of Directors may adopt by resolution such rules and
regulations for the conduct of the meeting of stockholders as it
shall deem appropriate. Except to the extent inconsistent with
such rules and regulations as adopted by the Board of Directors,
the chairman of any meeting of stockholders shall have the
exclusive right and authority to prescribe such rules,
regulations and procedures and to do all such acts as, in the
judgment of such chairman, are appropriate for the proper conduct
of the meeting. Such rules, regulations or procedures, whether
adopted by the Board of Directors or prescribed by the chairman
of the meeting, may include, without limitation, the following:
(i) the establishment of an agenda or order of business for the
meeting; (ii) rules and procedures for maintaining order at the
meeting and the safety of those present; (iii) limitations on
attendance at or participation in the meeting to stockholders of
record of the corporation, their duly authorized and constituted
proxies or such other persons as the chairman of the meeting
shall determine; (iv) restrictions on entry to the meeting after
the time fixed for the commencement thereof; and (v) limitations
on the time allotted to questions or comments by participants.
Unless and to the extent determined
by the Board of Directors or the chairman of the meeting,
meetings of stockholders shall not be required to be held in
accordance with the rules of parliamentary procedure.
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 eleven (11) persons. Directors
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
<PAGE> 10
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
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,
<PAGE> 11
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;
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
<PAGE> 12
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,
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
<PAGE> 13
handling of all such 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.
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.
<PAGE> 14
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 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 stockholders 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 stockholders shall not be
less than ten (10) days before the date of such
meeting.
(b) In order that the corporation may determine
the stockholders 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
<PAGE> 15
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 stockholder of record seeking to have the
stockholders authorize or take corporate action by
written consent shall, by written notice to the Secre
tary, 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
applicable 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.
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
<PAGE> 16
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
transaction are disclosed or are known to the Board of
Directors or the committee thereof, and the Board of
Directors or committee 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
transaction 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
<PAGE> 17
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
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.
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.
<PAGE> 18
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 procedure set forth in this Article X, not to
be
<PAGE> 19
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 corporation" 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 provided by, or granted pursuant to, this
Article X shall not be deemed exclusive of any other
rights to which those seeking indemnification 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> 20
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.
EXHIBIT 10.9
INDEMNITY AGREEMENT
THIS AGREEMENT is made as of March 8, 1999 by and between
Reynolds Metals Company, a Delaware corporation ("Company"), and
(Name) ("Indemnitee"), (OffDir) of the Company.
RECITALS
WHEREAS, highly competent persons have become more reluctant
to serve publicly-held corporations as directors or in other
capacities unless they are provided with adequate protection
through insurance or adequate indemnification against inordinate
risks of claims and actions against them arising out of their
service to and activities on behalf of the Company; and
WHEREAS, the Board of Directors of the Company (the "Board")
has determined that, in order to attract and retain qualified
individuals, the Company will attempt to maintain on an ongoing
basis, at its sole expense, liability insurance to protect
persons serving the Company and its subsidiaries from certain
liabilities. Although the furnishing of such insurance has been
a customary and widespread practice among United States-based
corporations and other business enterprises, the Company believes
that, given current market conditions and trends, such insurance
may be available to it in the future only at higher premiums and
with more exclusions. At the same time, directors, officers, and
other persons in service to corporations or business enterprises
are being increasingly subjected to expensive and time-consuming
litigation relating to, among other things, matters that
traditionally would have been brought only against the Company or
business enterprise itself. The By-laws of the Company require
indemnification of the officers and directors of the Company.
Indemnitee may also be entitled to indemnification pursuant to
the Delaware General Corporation Law ("DGCL"). The By-laws and
the DGCL expressly provide that the indemnification provisions
set forth therein are not exclusive, and thereby contemplate that
contracts may be entered into between the Company and members of
the board of directors and officers with respect to
indemnification of directors and officers.
WHEREAS, the uncertainties relating to such insurance and to
indemnification have increased the difficulty of attracting and
retaining such persons; and
WHEREAS, the Board has determined that the increased
difficulty in attracting and retaining such persons is
detrimental to the best interests of the Company's stockholders
and that the Company should act to assure such persons that there
will be increased certainty of such protection in the future; and
WHEREAS, it is reasonable, prudent and necessary for the
Company contractually to obligate itself to indemnify, and to
advance expenses on behalf of, such persons to the fullest extent
permitted by applicable law so that they will serve or continue
to serve the Company free from undue concern that they will not
be so indemnified; and
<PAGE> 2
WHEREAS, this Agreement is a supplement to and in
furtherance of the By-laws of the Company and any resolutions
adopted pursuant thereto, and shall not be deemed a substitute
therefor, nor to diminish or abrogate any rights of Indemnitee
thereunder; and
WHEREAS, Indemnitee does not regard the protection available
under the Company's By-laws and insurance adequate in the present
circumstances, and may not be willing to serve as an officer or
director without adequate protection, and the Company desires
Indemnitee to serve in such capacity. Indemnitee is willing to
serve, continue to serve and to take on additional service for or
on behalf of the Company on the condition that Indemnitee be so
indemnified;
NOW, THEREFORE, in consideration of the premises and the
covenants contained herein, the Company and Indemnitee do hereby
covenant and agree as follows:
1. Services to the Company. Indemnitee will serve or
continue to serve, at the will of the Company, as an officer or
director of the Company for so long as Indemnitee is duly elected
or appointed or until Indemnitee tenders Indemnitee's resignation
in writing.
2. Definitions. As used in this Agreement:
(a) A "Change in Control" shall be deemed to occur
upon the earliest to occur after the date of this Agreement of
any of the following events:
(i) Acquisition of Stock by Third Party. Any
Person (as defined below) is or becomes the Beneficial Owner (as
defined below), directly or indirectly, of securities of the
Company representing fifteen percent (15%) or more of the
combined voting power of the Company's then outstanding
securities;
(ii) Change in Board of Directors. During any
period of two (2) consecutive years (not including any period
prior to the execution of this Agreement), individuals who at the
beginning of such period constitute the Board, and any new
director (other than a director designated by a person who has
entered into an agreement with the Company to effect a
transaction described in Sections 2(a)(i), 2(a)(iii) or 2(a)(iv))
whose election by the Board or nomination for election by the
Company's shareholders was approved by a vote of at least two-
thirds of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute a least a majority of the members of the
Board;
(iii) Corporate Transactions. The effective date
of a merger or consolidation of the Company with any other
entity, other than a merger or consolidation which would result
in the voting securities of the Company outstanding immediately
prior to such merger or consolidation continuing to represent
(either by remaining outstanding or by being converted into
voting securities of the surviving entity) more than 51% of the
combined voting power of the voting securities of the surviving
entity outstanding immediately after such merger or consolidation
and with the power to elect at least a majority of the board of
directors or other governing body of such surviving entity;
<PAGE> 3
(iv) Liquidation. The approval by the
shareholders of the Company of a complete liquidation of the
Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets; and
(v) Other Events. There occurs any other event
of a nature that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A (or a response to any
similar item on any similar schedule or form) promulgated under
the Exchange Act (as defined below), whether or not the Company
is then subject to such reporting requirement.
(vi) Certain Definitions. For purposes of this
Section 2(a), the following terms shall have the following
meanings:
(A) "Exchange Act" shall mean
the Securities Exchange Act of
1934, as amended.
(B) "Person" shall have the
meaning as set forth in Sections
13(d) and 14(d) of the Exchange
Act; provided, however, that Person
shall exclude (i) the Company, (ii)
any trustee or other fiduciary
holding securities under an
employee benefit plan of the
Company, and (iii) any corporation
owned, directly or indirectly, by
the shareholders of the Company in
substantially the same proportions
as their ownership of stock of the
Company.
(C) "Beneficial Owner" shall
have the meaning given to such term
in Rule 13d-3 under the Exchange
Act; provided, however, that
Beneficial Owner shall exclude any
Person otherwise becoming a
Beneficial Owner by reason of the
shareholders of the Company
approving a merger of the Company
with another entity.
(b) "Corporate Status" describes the status of a
person who is or was a director, officer, employee or agent of
the Company or of any other corporation, partnership or joint
venture, trust, employee benefit plan or other enterprise which
such person is or was serving at the request of the Company.
(c) "Disinterested Director" means a director of the
Company who is not and was not a party to the Proceeding in
respect of which indemnification is sought by Indemnitee.
<PAGE> 4
(d) "Enterprise" shall mean the Company and any other
corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise of which Indemnitee is or was serving at
the request of the Company as a director, officer, employee,
agent or fiduciary.
(e) "Expenses" shall include all reasonable attorneys'
fees, retainers, court costs, transcript costs, fees of experts,
witness fees, travel expenses, duplicating costs, printing and
binding costs, telephone charges, postage, delivery service fees,
and all other disbursements or expenses of the types customarily
incurred in connection with prosecuting, defending, preparing to
prosecute or defend, investigating, being or preparing to be a
witness in, or otherwise participating in, a Proceeding.
Expenses, however, shall not include amounts paid in settlement
by Indemnitee or the amount of judgments or fines against
Indemnitee.
(f) As to the Indemnitee, "good faith" shall mean
Indemnitee having acted in good faith and in a manner Indemnitee
reasonably believed to be in or not opposed to the best interests
of the Company, and, with respect to any criminal Proceeding,
having had no reasonable cause to believe Indemnitee's conduct
was unlawful.
(g) Reference to "other enterprise" shall include
employee benefit plans; references to "fines" shall include any
excise tax assessed with respect to any employee benefit plan;
references to "serving at the request of the Company" shall
include any service as a director, officer, employee or agent of
the Company which imposes duties on, or involves services by,
such director, officer, employee or agent with respect to an
employee benefit plan, its participants or beneficiaries; and a
person who acted in good faith and in a manner Indemnitee
reasonably believed to be in the best interests of the
participants and beneficiaries of an employee benefit plan shall
be deemed to have acted in manner "not opposed to the best
interests of the Company" as referred to in this Agreement.
(h) The term "Proceeding" shall include any
threatened, pending or completed action, suit, arbitration,
alternate dispute resolution mechanism, investigation, inquiry,
administrative hearing or any other actual, threatened or
completed proceeding, whether brought in the right of the Company
or otherwise and whether of a civil, criminal, administrative or
investigative nature, in which Indemnitee was, is or will be
involved as a party or otherwise by reason of the fact that
Indemnitee is or was a director or officer of the Company, by
reason of any action taken by Indemnitee or of any action on
Indemnitee's part while acting as director or officer of the
Company, or by reason of the fact that Indemnitee is or was
serving at the request of the Company as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, in each case whether or not
serving in such capacity at the time any liability or expense is
incurred for which indemnification, reimbursement, or advancement
of expenses can be provided under this Agreement.
(i) "Independent Counsel" means a law firm, or a
member of a law firm, that is experienced in matters of
corporation law and neither presently is, nor in the past five
years has been, retained to represent: (i) the Company or
Indemnitee in any matter material to either such party (other
than with respect to matters concerning the Indemnitee under this
Agreement, or of other indemnitees under similar indemnification
agreements), or (ii) any other party to the
<PAGE> 5
Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term "Independent Counsel"
shall not include any person who, under the applicable standards
of professional conduct then prevailing, would have a conflict
of interest in representing either the Company or Indemnitee in
an action to determine Indemnitee's rights under this Agreement.
The Company agrees to pay the reasonable fees and expenses of
the Independent Counsel referred to above and to fully indemnify
such counsel against any and all Expenses, claims, liabilities
and damages arising out of or relating to this Agreement or its
engagement pursuant hereto.
3. Indemnity in Third-Party Proceedings. The Company
shall indemnify Indemnitee in accordance with the provisions of
this Section 3 if Indemnitee is, or is threatened to be made, a
party to or a participant in any Proceeding, other than a
Proceeding by or in the right of the Company to procure a
judgment in its favor. Pursuant to this Section 3, Indemnitee
shall be indemnified against all Expenses, judgments, fines and
amounts paid in settlement actually and reasonably incurred by
Indemnitee or on Indemnitee's behalf in connection with such
Proceeding or any claim, issue or matter therein, if Indemnitee
acted in good faith and in a manner Indemnitee reasonably
believed to be in or not opposed to the best interests of the
Company and, in the case of a criminal proceeding had no
reasonable cause to believe that Indemnitee's conduct was
unlawful.
4. Indemnity in Proceedings by or in the Right of the
Company. The Company shall indemnify Indemnitee in accordance
with the provisions of this Section 4 if Indemnitee is, or is
threatened to be made, a party to or a participant in any
Proceeding by or in the right of the Company to procure a
judgment in its favor. Pursuant to this Section 4, Indemnitee
shall be indemnified against all Expenses actually and reasonably
incurred by Indemnitee or on Indemnitee's behalf in connection
with such Proceeding or any claim, issue or matter therein, if
Indemnitee acted in good faith and in a manner Indemnitee
reasonably believed to be in or not opposed to the best interests
of the Company. No indemnification for Expenses shall be made
under this Section 4 in respect of any claim, issue or matter as
to which Indemnitee shall have been finally adjudged by a court
to be liable to the Company, unless and only to the extent that
any court in which the Proceeding was brought shall determine
upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, Indemnitee is
fairly and reasonably entitled to indemnification.
5. Indemnification for Expenses of a Party Who is Wholly
or Partly Successful. Notwithstanding any other provisions of
this Agreement, to the extent that Indemnitee is a party to (or a
participant in) and is successful, on the merits or otherwise, in
any Proceeding or in defense of any claim, issue or matter
therein, in whole or in part, the Company shall indemnify
Indemnitee against all Expenses actually and reasonably incurred
by Indemnitee in connection therewith. If Indemnitee is not
wholly successful in such Proceeding but is successful, on the
merits or otherwise, as to one or more but less than all claims,
issues or matters in such Proceeding, the Company shall indemnify
Indemnitee against all Expenses actually and reasonably incurred
by Indemnitee or on Indemnitee's behalf in connection with each
successfully resolved claim, issue or matter. If the Indemnitee
is not wholly successful in such Proceeding, the Company also
shall indemnify Indemnitee against all Expenses reasonably
<PAGE> 6
incurred in connection with a claim, issue or matter related to
any claim, issue, or matter on which the Indemnitee was
successful. For purposes of this Section and without limitation,
the termination of any claim, issue or matter in such a
Proceeding by dismissal, with or without prejudice, shall be
deemed to be a successful result as to such claim, issue or
matter.
6. Indemnification For Expenses of a Witness.
Notwithstanding any other provision of this Agreement, to the
extent that Indemnitee is, by reason of Indemnitee's Corporate
Status, a witness in any Proceeding to which Indemnitee is not a
party, Indemnitee shall be indemnified against all Expenses
actually and reasonably incurred by Indemnitee or on Indemnitee's
behalf in connection therewith.
7. Additional Indemnification.
(a) Notwithstanding any limitation in Sections 3, 4,
or 5, the Company shall indemnify Indemnitee to the fullest
extent permitted by law if Indemnitee is a party to or threatened
to be made a party to any Proceeding (including a Proceeding by
or in the right of the Company to procure a judgment in its
favor) against all Expenses, judgments, fines and amounts paid in
settlement actually and reasonably incurred by Indemnitee in
connection with the Proceeding. No indemnity shall be made under
this Section 7(a) on account of Indemnitee's conduct which
constitutes a breach of Indemnitee's duty of loyalty to the
Company or its shareholders or is an act or omission not in good
faith or which involves intentional misconduct or a knowing
violation of the law.
(b) Notwithstanding any limitation in Sections 3, 4, 5
or 7(a), the Company shall indemnify Indemnitee to the fullest
extent permitted by law if Indemnitee is a party to or threatened
to be made a party to any Proceeding (including a Proceeding by
or in the right of the Company to procure a judgement in its
favor) against all Expenses, judgments, fines and amounts paid in
settlement actually and reasonably incurred by Indemnitee in
connection with the Proceeding.
(c) For purposes of Sections 7(a) and 7(b), the
meaning of the phrase "to the fullest extent permitted by law"
shall include, but not be limited to:
(i) to the fullest extent permitted by the
provision of the Act that authorizes or contemplates additional
indemnification by agreement, or the corresponding provision of
any amendment to or replacement of the Act, and
(ii) to the fullest extent authorized or permitted
by any amendments to or replacements of the Act adopted after the
date of this Agreement that increase the extent to which a
corporation may indemnify its officers and directors.
8. Exclusions. Notwithstanding any provision in this
Agreement, the Company shall not be obligated under this
Agreement to make any indemnity in connection with any claim made
against Indemnitee:
<PAGE> 7
(a) for which payment has actually been made to or on
behalf of Indemnitee under any insurance policy or other
indemnity provision, except with respect to any excess beyond the
amount paid under any insurance policy or other indemnity
provision;
(b) for an accounting of profits made from the
purchase and sale (or sale and purchase) by Indemnitee of
securities of the Company within the meaning of Section 16(b) of
the Securities Exchange Act of 1934, as amended, or similar
provisions of state statutory law or common law; or
(c) in connection with any Proceeding (or part of any
Proceeding) initiated by Indemnitee prior to a Change in Control,
or any Proceeding initiated by Indemnitee against the Company or
its directors, officers, employees or other indemnitees prior to
a Change in Control, unless (i) the Company is expressly required
by law to make the indemnification, (ii) the Company provides the
indemnification, in its sole discretion, pursuant to the powers
vested in the Company under applicable law, (iii) Indemnitee
initiated the Proceeding pursuant to Section 13 of this Agreement
and Indemnitee is successful in whole or in part in the
Proceeding, or (iv) the Proceeding was authorized by the Board of
Directors of the Company.
9. Advances of Expenses. Notwithstanding any provision
of this Agreement to the contrary, the Company shall advance the
expenses incurred by Indemnitee in connection with any Proceeding
within 30 days after the receipt by the Company of a statement or
statements requesting such advances from time to time, whether
prior to or after final disposition of any Proceeding. Advances
shall be unsecured and interest free. Advances shall be made
without regard to Indemnitee's ability to repay the expenses and
without regard to Indemnitee's ultimate entitlement to
indemnification under the other provisions of this Agreement.
Advances shall include any and all reasonable Expenses incurred
pursuing an action to enforce this right of advancement,
including Expenses incurred preparing and forwarding statements
to the Company to support the advances claimed. The Indemnitee
shall qualify for advances solely upon the execution and delivery
to the Company of an undertaking providing that the Indemnitee
undertakes to repay the advance to the extent that it is
ultimately determined that Indemnitee is not entitled to be
indemnified by the Company.
10. Procedure for Notification and Defense of Claim.
(a) To obtain indemnification under this Agreement,
Indemnitee shall submit to the Company a written request,
including therein or therewith such documentation and information
as is reasonably available to Indemnitee and is reasonably
necessary to determine whether and to what extent Indemnitee is
entitled to indemnification, not later than thirty (30) days
after receipt by Indemnitee of notice of the commencement of any
Proceeding. The omission to notify the Company will not relieve
the Company from any liability which it may have to Indemnitee
otherwise than under this Agreement. The Secretary of the
Company shall, promptly upon receipt of such a request for
indemnification, advise the Board in writing that Indemnitee has
requested indemnification.
<PAGE> 8
(b) The Company will be entitled to participate in the
Proceeding at its own expense.
11. Procedure Upon Application for Indemnification.
(a) Upon written request by Indemnitee for
indemnification pursuant to the first sentence of Section 10(a),
a determination, if required by applicable law, with respect to
Indemnitee's entitlement thereto shall be made in the specific
case: (i) if a Change in Control shall have occurred, by
Independent Counsel in a written opinion to the Board of
Directors, a copy of which shall be delivered to Indemnitee; or
(ii) if a Change in Control shall not have occurred, (A) by a
majority vote of the Disinterested Directors, even though less
than a quorum of the Board, or (B) if there are no such
Disinterested Directors or, if such Disinterested Directors so
direct, by Independent Counsel in a written opinion to the Board,
a copy of which shall be delivered to Indemnitee or (C) if so
directed by the Board, by the stockholders of the Company; and,
if it is so determined that Indemnitee is entitled to
indemnification, payment to Indemnitee shall be made within ten
(10) days after such determination. Indemnitee shall cooperate
with the person, persons or entity making such determination with
respect to Indemnitee's entitlement to indemnification, including
providing to such person, persons or entity upon reasonable
advance request any documentation or information which is not
privileged or otherwise protected from disclosure and which is
reasonably available to Indemnitee and reasonably necessary to
such determination. Any costs or expenses (including attorneys'
fees and disbursements) incurred by Indemnitee in so cooperating
with the person, persons or entity making such determination
shall be borne by the Company (irrespective of the determination
as to Indemnitee's entitlement to indemnification) and the
Company hereby indemnifies and agrees to hold Indemnitee harmless
therefrom.
(b) In the event the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to
Section 11(a) hereof, the Independent Counsel shall be selected
as provided in this Section 11(b). If a Change in Control shall
not have occurred, the Independent Counsel shall be selected by
the Board of Directors, and the Company shall give written notice
to Indemnitee advising Indemnitee of the identity of the
Independent Counsel so selected. If a Change in Control shall
have occurred, the Independent Counsel shall be selected by
Indemnitee (unless Indemnitee shall request that such selection
be made by the Board of Directors, in which event the preceding
sentence shall apply), and Indemnitee shall give written notice
to the Company advising it of the identity of the Independent
Counsel so selected. In either event, Indemnitee or the Company,
as the case may be, may, within 10 days after such written notice
of selection shall have been given, deliver to the Company or to
Indemnitee, as the case may be, a written objection to such
selection; provided, however, that such objection may be asserted
only on the ground that the Independent Counsel so selected does
not meet the requirements of "Independent Counsel" as defined in
Section 2 of this Agreement, and the objection shall set forth
with particularity the factual basis of such assertion. Absent a
proper and timely objection, the person so selected shall act as
Independent Counsel. If such written objection is so made and
substantiated, the Independent Counsel so selected may not serve
as Independent Counsel unless and until such objection is
withdrawn or a court has determined that such objection is
without merit. If, within 20 days after submission by Indemnitee
of a written
<PAGE> 9
request for indemnification pursuant to Section 10(a) hereof,
no Independent Counsel shall have been selected and not objected
to, either the Company or Indemnitee may petition a court of
competent jurisdiction for resolution of any objection which
shall have been made by the Company or Indemnitee to the other's
selection of Independent Counsel and/or for the appointment as
Independent Counsel of a person selected by the Court or by
such other person as the Court shall designate, and the person
with respect to whom all objections are so resolved or the
person so appointed shall act as Independent Counsel under
Section 11(a) hereof. Upon the due commencement of
any judicial proceeding or arbitration pursuant to Section 13(a)
of this Agreement, Independent Counsel shall be discharged and
relieved of any further responsibility in such capacity (subject
to the applicable standards of professional conduct then
prevailing).
12. Presumptions and Effect of Certain Proceedings.
(a) In making a determination with respect to
entitlement to indemnification hereunder, the person or persons
or entity making such determination shall presume that Indemnitee
is entitled to indemnification under this Agreement if Indemnitee
has submitted a request for indemnification in accordance with
Section 10(a) of this Agreement, and the Company shall have the
burden of proof to overcome that presumption in connection with
the making by any person, persons or entity of any determination
contrary to that presumption. Neither the failure of the Company
(including by its directors or independent legal counsel) to have
made a determination prior to the commencement of any action
pursuant to this Agreement that indemnification is proper in the
circumstances because Indemnitee has met the applicable standard
of conduct, nor an actual determination by the Company (including
by its directors or independent legal counsel) that Indemnitee
has not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that Indemnitee has
not met the applicable standard of conduct.
(b) If the person, persons or entity empowered or
selected under Section 11 of this Agreement to determine whether
Indemnitee is entitled to indemnification shall not have made a
determination within sixty (60) days after receipt by the Company
of the request therefor, the requisite determination of
entitlement to indemnification shall be deemed to have been made
and Indemnitee shall be entitled to such indemnification, absent
(i) a misstatement by Indemnitee of a material fact, or an
omission of a material fact necessary to make Indemnitee's
statement not materially misleading, in connection with the
request for indemnification, or (ii) a prohibition of such
indemnification under applicable law; provided, however, that
such 60-day period may be extended for a reasonable time, not to
exceed an additional thirty (30) days, if the person, persons or
entity making the determination with respect to entitlement to
indemnification in good faith requires such additional time for
the obtaining or evaluating of documentation and/or information
relating thereto; and provided, further, that the foregoing
provisions of this Section 12(b) shall not apply (i) if the
determination of entitlement to indemnification is to be made by
the stockholders pursuant to Section 11(a) of this Agreement and
if (A) within fifteen (15) days after receipt by the Company of
the request for such determination the Board of Directors has
resolved to submit such determination to the stockholders for
their consideration at an annual meeting thereof to be held
within seventy five (75) days after such receipt and such
determination is made thereat, or (B) a special meeting of
stockholders is called within fifteen (15) days after such
<PAGE> 10
receipt for the purpose of making such determination, such
meeting is held for such purpose within sixty (60) days after
having been so called and such determination is made thereat, or
(ii) if the determination of entitlement to indemnification is to
be made by Independent Counsel pursuant to Section 11(a) of this
Agreement.
(c) The termination of any Proceeding or of any claim,
issue or matter therein, by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent,
shall not (except as otherwise expressly provided in this
Agreement) of itself adversely affect the right of Indemnitee to
indemnification or create a presumption that Indemnitee did not
act in good faith and in a manner which Indemnitee reasonably
believed to be in or not opposed to the best interests of the
Company or, with respect to any criminal Proceeding, that
Indemnitee had reasonable cause to believe that Indemnitee's
conduct was unlawful.
(d) For purposes of any determination of good faith,
Indemnitee shall be deemed to have acted in good faith if
Indemnitee's action is based on the records or books of account
of the Enterprise, including financial statements, or on
information supplied to Indemnitee by the officers or managers of
the Enterprise in the course of their duties, or on the advice of
legal counsel for the Enterprise or on information or records
given or reports made to the Enterprise by an independent
certified public accountant or by an appraiser or other expert
selected with the reasonable care by the Enterprise. The
provisions of this Section 12(d) shall not be deemed to be
exclusive or to limit in any way the other circumstances in which
the Indemnitee may be deemed to have met the applicable standard
of conduct set forth in this Agreement.
(e) The knowledge and/or actions, or failure to act,
of any director, officer, agent or employee of the Enterprise
shall not be imputed to Indemnitee for purposes of determining
the right to indemnification under this Agreement.
13. Remedies of Indemnitee.
(a) In the event that (i) a determination is made
pursuant to Section 11 of this Agreement that Indemnitee is not
entitled to indemnification under this Agreement, (ii)
advancement of Expenses is not timely made pursuant to Section 9
of this Agreement, (iii) no determination of entitlement to
indemnification shall have been made pursuant to Section 11(a) of
this Agreement within 90 days after receipt by the Company of the
request for indemnification, (iv) payment of indemnification is
not made pursuant to Section 5, 6, 7 or the last sentence of
Section 11(a) of this Agreement within ten (10) days after
receipt by the Company of a written request therefor, or (v)
payment of indemnification pursuant to Section 3 or 4 of this
Agreement is not made within ten (10) days after a determination
has been made that Indemnitee is entitled to indemnification,
Indemnitee shall be entitled to an adjudication by a court of
Indemnitee's entitlement to such indemnification or advancement
of Expenses. Alternatively, Indemnitee, at Indemnitee's option,
may seek an award in arbitration to be conducted by a single
arbitrator pursuant to the Commercial Arbitration Rules of the
American Arbitration Association. The Company shall not oppose
Indemnitee's right to seek any such adjudication or award in
arbitration.
<PAGE> 11
(b) In the event that a determination shall have been
made pursuant to Section 11(a) of this Agreement that Indemnitee
is not entitled to indemnification, any judicial proceeding or
arbitration commenced pursuant to this Section 13 shall be
conducted in all respects as a de novo trial, or arbitration, on
the merits and Indemnitee shall not be prejudiced by reason of
that adverse determination. In any judicial proceeding or
arbitration commenced pursuant to this Section 13 the Company
shall have the burden of proving Indemnitee is not entitled to
indemnification or advancement of Expenses, as the case may be.
(c) If a determination shall have been made pursuant
to Section 11(a) of this Agreement that Indemnitee is entitled to
indemnification, the Company shall be bound by such determination
in any judicial proceeding or arbitration commenced pursuant to
this Section 13, absent (i) a misstatement by Indemnitee of a
material fact, or an omission of a material fact necessary to
make Indemnitee's statement not materially misleading, in
connection with the request for indemnification, or (ii) a
prohibition of such indemnification under applicable law.
(d) In the event that Indemnitee, pursuant to this
Section 13, seeks a judicial adjudication of or an award in
arbitration to enforce Indemnitee's rights under, or to recover
damages for breach of, this Agreement, Indemnitee shall be
entitled to recover from the Company, and shall be indemnified by
the Company against, any and all Expenses actually and reasonably
incurred by Indemnitee in such judicial adjudication or
arbitration. If it shall be determined in said judicial
adjudication or arbitration that Indemnitee is entitled to
receive part but not all of the indemnification or advancement of
Expenses sought, the Indemnitee shall be entitled to recover from
the Company, and shall be indemnified by the Company against, any
and all Expenses reasonably incurred by Indemnitee in connection
with such judicial adjudication or arbitration.
(e) The Company shall be precluded from asserting in
any judicial proceeding or arbitration commenced pursuant to this
Section 13 that the procedures and presumptions of this Agreement
are not valid, binding and enforceable and shall stipulate in any
such court or before any such arbitrator that the Company is
bound by all the provisions of this Agreement. The Company shall
indemnify Indemnitee against any and all Expenses and, if
requested by Indemnitee, shall (within ten (10) days after
receipt by the Company of a written request therefore) advance
such expenses to Indemnitee, which are incurred by Indemnitee in
connection with any action brought by Indemnitee for
indemnification or advance of Expenses from the Company under
this Agreement or under any directors' and officers' liability
insurance policies maintained by the Company, regardless of
whether Indemnitee ultimately is determined to be entitled to
such indemnification, advancement of Expenses or insurance
recovery, as the case may be.
<PAGE> 12
14. Non-exclusivity; Survival of Rights; Insurance;
Subrogation.
(a) The rights of indemnification and to receive
advancement of Expenses as provided by this Agreement shall not
be deemed exclusive of any other rights to which Indemnitee may
at any time be entitled under applicable law, the Company's
Articles of Incorporation, the Company's By-laws, any agreement,
a vote of stockholders or a resolution of directors, or
otherwise. No amendment, alteration or repeal of this Agreement
or of any provision hereof shall limit or restrict any right of
Indemnitee under this Agreement in respect of any action taken or
omitted by such Indemnitee in Indemnitee's Corporate Status prior
to such amendment, alteration or repeal. To the extent that a
change in Delaware law, whether by statute or judicial decision,
permits greater indemnification or advancement of Expenses than
would be afforded currently under the Company's By-laws and this
Agreement, it is the intent of the parties hereto that Indemnitee
shall enjoy by this Agreement the greater benefits so afforded by
such change. No right or remedy herein conferred is intended to
be exclusive of any other right or remedy, and every other right
and remedy shall be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at
law or in equity or otherwise. The assertion or employment of
any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other right or
remedy.
(b) To the extent that the Company maintains an
insurance policy or policies providing liability insurance for
directors, officers, employees, or agents of the Company or of
any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise which such person
serves at the request of the Company, Indemnitee shall be covered
by such policy or policies in accordance with its or their terms
to the maximum extent of the coverage available for any such
director, officer, employee or agent under such policy or
policies. Notwithstanding any other provisions of this
Agreement, if a Change in Control shall have occurred, the
Company shall furnish Indemnitee with directors' and officers'
liability insurance insuring Indemnitee against insurable events
which occur or have occurred while Indemnitee was a director or
officer of the Company, such insurance to have policy limits
aggregating not less than the amount in effect immediately prior
to the Change in Control and otherwise to be in substantially the
same form and to contain substantially the same terms, conditions
and exceptions as the liability insurance policies provided for
officers and directors of the Company in force from time to time,
provided, however, that (i) such terms, conditions and exceptions
shall not be, in the aggregate, materially less favorable to
Indemnitee than those in effect on the date hereof and (ii) if
the aggregate annual premiums for such insurance at any time
during such period exceed two hundred percent (200%) of the per
annum rate of premium currently paid by the Company for such
insurance, then the Company shall provide the maximum coverage
that will then be available at an annual premium equal to two
hundred percent (200%) of such rate;
(c) In the event of any payment under this Agreement,
the Company shall be subrogated to the extent of such payment to
all of the rights of recovery of Indemnitee, who shall execute
all papers required and take all action necessary to secure such
rights, including execution of such documents as are necessary to
enable the Company to bring suit to enforce such rights.
<PAGE> 13
(d) The Company shall not be liable under this
Agreement to make any payment of amounts otherwise indemnifiable
(or for which advancement is provided hereunder) hereunder if and
to the extent that Indemnitee has otherwise actually received
such payment under any insurance policy, contract, agreement or
otherwise.
(e) The Company's obligation to indemnify or advance
Expenses hereunder to Indemnitee who is or was serving at the
request of the Company as a director, officer, employee or agent
of any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise shall be reduced by any
amount Indemnitee has actually received as indemnification or
advancement of expenses from such other corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise.
15. Duration of Agreement. This Agreement shall continue
until and terminate upon the later of: (a) 10 years after the
date that Indemnitee shall have ceased to serve as a director or
officer of the Company or as a director, officer, employee or
agent of any other corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise which Indemnitee
served at the request of the Company; or (b) 1 year after the
final termination of any Proceeding then pending in respect of
which Indemnitee is granted rights of indemnification or advance
ment of Expenses hereunder and of any proceeding commenced by
Indemnitee pursuant to Section 13 of this Agreement relating
thereto. This Agreement shall be binding upon the Company and
its successors and assigns and shall inure to the benefit of
Indemnitee and Indemnitee's heirs, executors and administrators.
16. Severability. If any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable
for any reason whatsoever: (a) the validity, legality and
enforceability of the remaining provisions of this Agreement
(including without limitation, each portion of any Section of
this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that is not itself invalid, illegal or
unenforceable) shall not in any way be affected or impaired
thereby and shall remain enforceable to the fullest extent
permitted by law; (b) such provision or provisions shall be
deemed reformed to the extent necessary to conform to applicable
law and to give the maximum effect to the intent of the parties
hereto; and (c) to the fullest extent possible, the provisions of
this Agreement (including, without limitation, each portion of
any Section of this Agreement containing any such provision held
to be invalid, illegal or unenforceable, that is not itself
invalid, illegal or unenforceable) shall be construed so as to
give effect to the intent manifested thereby.
17. Enforcement.
(a) The Company expressly confirms and agrees that it
has entered into this Agreement and assumed the obligations
imposed on it hereby in order to induce Indemnitee to serve as a
director or officer of the Company, and the Company acknowledges
that Indemnitee is relying upon this Agreement in serving as a
director or officer of the Company.
(b) This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and
<PAGE> 14
understandings, oral, written and implied, between the parties
hereto with respect to the subject matter hereof.
18. Modification and Waiver. No supplement, modification
or amendment of this Agreement shall be binding unless executed
in writing by the parties thereto. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute
a waiver of any other provisions of this Agreement nor shall any
waiver constitute a continuing waiver.
19. Notice by Indemnitee. Indemnitee agrees promptly to
notify the Company in writing upon being served with any summons,
citation, subpoena, complaint, indictment, information or other
document relating to any Proceeding or matter which may be
subject to indemnification or advancement of Expenses covered
hereunder. The failure of Indemnitee to so notify the Company
shall not relieve the Company of any obligation which it may have
to the Indemnitee under this Agreement or otherwise.
20. Notices. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall
be deemed to have been duly given (a) if delivered by hand and
receipted for by the party to whom said notice or other
communication shall have been directed, or (b) mailed by
certified or registered mail with postage prepaid, on the third
business day after the date on which it is so mailed:
(a) If to Indemnitee, at the address indicated on the
signature page of this Agreement, or such other address as
Indemnitee shall provide to the Company.
(b) If to the Company to
Reynolds Metals Company
6601 W. Broad Street
Richmond, VA 23230
Attention: General Counsel
or to any other address as may have been furnished to Indemnitee
by the Company.
21. Contribution. To the fullest extent permissible under
applicable law, if the indemnification provided for in this
Agreement is unavailable to Indemnitee for any reason whatsoever,
the Company, in lieu of indemnifying Indemnitee, shall contribute
to the amount incurred by Indemnitee, whether for judgments,
fines, penalties, excise taxes, amounts paid or to be paid in
settlement and/or for Expenses, in connection with any claim
relating to an indemnifiable event under this Agreement, in such
proportion as is deemed fair and reasonable in light of all of
the circumstances of such Proceeding in order to reflect (i) the
relative benefits received by the Company and Indemnitee as a
result of the event(s) and/or transaction(s) giving cause to such
Proceeding; and/or (ii) the relative fault of the Company (and
its directors, officers, employees and agents) and Indemnitee in
connection with such event(s) and/or transaction(s).
<PAGE> 15
22. Applicable Law. This Agreement and the legal relations
among the parties shall be governed by, and construed and
enforced in accordance with, the laws of the State of Delaware,
without regard to its conflict of laws rules. Except with respect
to any arbitration commenced by Indemnitee pursuant to Section
10(a) of this Agreement, the Company and Indemnitee hereby
irrevocably and unconditionally (i) agree that any action or
proceeding arising out of or in connection with this Agreement
shall be brought only in the Chancery Court of the State of
Delaware (the "Delaware Court"), and not in any other state or
federal court in the United States of America or any court in any
other country, (ii) consent to submit to the exclusive
jurisdiction of the Delaware Court for purposes of any action or
proceeding arising out of or in connection with this Agreement,
(iii) appoint, to the extent such party is not a resident of the
State of Delaware, irrevocably RL&F Service Corp., One Rodney
Square, 10th Floor, 10th and King Streets, Wilmington, Delaware
19801 as its agent in the State of Delaware as such party's agent
for acceptance of legal process in connection with any such
action or proceeding against such party with the same legal force
and validity as if served upon such party personally within the
State of Delaware, (iv) waive any objection to the laying of
venue of any such action or proceeding in the Delaware Court, and
(v) waive, and agree not to plead or to make, any claim that any
such action or proceeding brought in the Delaware Court has been
brought in an improper or inconvenient forum.
23. Identical Counterparts. This Agreement may be executed
in one or more counterparts, each of which shall for all purposes
be deemed to be an original but all of which together shall
constitute one and the same Agreement. Only one such counterpart
signed by the party against whom enforceability is sought needs
to be produced to evidence the existence of this Agreement.
24. Miscellaneous. Use of the masculine pronoun shall be
deemed to include usage of the feminine pronoun where
appropriate. The headings of the paragraphs of this Agreement
are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction
thereof.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be signed as of the day and year first above written.
REYNOLDS METALS COMPANY INDEMNITEE
By: ______________________ _______________________________
Chairman of the Board and Name: (Name)
Chief Executive Officer Address: (Address1)
(Address2)
EXHIBIT 10.45
I, CAROL L. DILLON, an Assistant Secretary of REYNOLDS
METALS COMPANY, a Delaware corporation, do hereby certify that
the following is a true and complete copy of a resolution which
approves an amendment to the corporation's Restricted Stock Plan
for Outside Directors, duly adopted by the Committee on Directors
of the Board of Directors of said corporation at its meeting on
November 20, 1998, and that said resolutions are now in full
force and effect:
RESOLVED, that the Reynolds Metals Company
Restricted Stock Plan for Outside Directors is hereby
amended effective January 1, 1999 by deleting Section
3.03 thereof.
IN WITNESS WHEREOF, I have subscribed my name and
affixed the corporate seal of said corporation to this
certificate this 20th day of November, 1998.
/s/ Carol L. Dillon
_________________________
Carol L. Dillon
Assistant Secretary
SEAL
EXHIBIT 10.46
I, CAROL L. DILLON, an Assistant Secretary of REYNOLDS
METALS COMPANY, a Delaware corporation, do hereby certify that
the following is a true and complete copy of a resolution which
approves an amendment to the corporation's Stock Plan for Outside
Directors, duly adopted by the Committee on Directors of the
Board of Directors of said corporation at its meeting on November
20, 1998, and that said resolutions are now in full force and
effect:
RESOLVED, that the Reynolds Metals Company Stock
Plan for Outside Directors is hereby amended effective
January 1, 1999 by the addition of the following
language at the end of the first sentence of Section
3.01: "provided, however, that beginning April 1 in the
year in which all restrictions on shares granted to a
Director under the Reynolds Metals Company Restricted
Stock Plan for Outside Directors have lapsed, such
Director shall be granted shares of Phantom Stock under
the Plan at an annual rate of 425 shares per year.
IN WITNESS WHEREOF, I have subscribed my name and
affixed the corporate seal of said corporation to this
certificate this 20th day of November, 1998.
/s/ Carol L. Dillon
_________________________
Carol L. Dillon
Assistant Secretary
SEAL
PARENTS AND SUBSIDIARIES EXHIBIT 21
(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
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-Lemmerz Industries Ontario
* Reynolds Wheels-Holding, S.p.A. Italy
* Reywest Development Corporation Arizona
* RMC Delaware, Inc. Delaware
* RMC Properties, Ltd. Delaware
* RMC Saint George, Inc. 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
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 19,
1999, 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, 1998.
/s/ Ernst & Young LLP
Richmond, Virginia
March 24, 1999
EXHIBIT 24
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, 1998 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 Registration Statements on Form S-
8, or on such other form as may be appropriate, for
registration of shares of the Company's common stock,
without par value ("Common Stock"), to be offered and sold
under the Reynolds Metals Company 1999 Nonqualified Stock
Option Plan, and any and all post-effective amendments to
such Registration Statements, and to file the same, with all
exhibits thereto and documents in connection therewith, with
the SEC; and
(iii) 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 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
<PAGE>
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
(iv) 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
(v) 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 29th day of
February, 2000.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Power of Attorney on the 19th day of February,
1999.
/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, 1998 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 Registration Statements on Form S-
8, or on such other form as may be appropriate, for
registration of shares of the Company's common stock,
without par value ("Common Stock"), to be offered and sold
under the Reynolds Metals Company 1999 Nonqualified Stock
Option Plan, and any and all post-effective amendments to
such Registration Statements, and to file the same, with all
exhibits thereto and documents in connection therewith, with
the SEC; and
(iii) 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 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
<PAGE>
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
(iv) 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
(v) 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 29th day of
February, 2000.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Power of Attorney on the 19th day of February,
1999.
/s/ Allen M. Earehart
---------------------------
Allen M. Earehart
<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, 1998 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 Registration Statements on Form S-
8, or on such other form as may be appropriate, for
registration of shares of the Company's common stock,
without par value ("Common Stock"), to be offered and sold
under the Reynolds Metals Company 1999 Nonqualified Stock
Option Plan, and any and all post-effective amendments to
such Registration Statements, and to file the same, with all
exhibits thereto and documents in connection therewith, with
the SEC; and
(iii) 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 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
(iv) 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
(v) 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 29th day of
February, 2000.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Power of Attorney on the 19th day of February,
1999.
/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, 1998 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 Registration Statements on Form S-
8, or on such other form as may be appropriate, for
registration of shares of the Company's common stock,
without par value ("Common Stock"), to be offered and sold
under the Reynolds Metals Company 1999 Nonqualified Stock
Option Plan, and any and all post-effective amendments to
such Registration Statements, and to file the same, with all
exhibits thereto and documents in connection therewith, with
the SEC; and
(iii) 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 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
<PAGE>
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
(iv) 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
(v) 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 29th day of
February, 2000.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Power of Attorney on the 19th day of February,
1999.
/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, 1998 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 Registration Statements on Form S-
8, or on such other form as may be appropriate, for
registration of shares of the Company's common stock,
without par value ("Common Stock"), to be offered and sold
under the Reynolds Metals Company 1999 Nonqualified Stock
Option Plan, and any and all post-effective amendments to
such Registration Statements, and to file the same, with all
exhibits thereto and documents in connection therewith, with
the SEC; and
(iii) 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 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
<PAGE>
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
(iv) 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
(v) 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 29th day of
February, 2000.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Power of Attorney on the 19th day of February,
1999.
/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, 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, 1998 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 Registration Statements on Form S-
8, or on such other form as may be appropriate, for
registration of shares of the Company's common stock,
without par value ("Common Stock"), to be offered and sold
under the Reynolds Metals Company 1999 Nonqualified Stock
Option Plan, and any and all post-effective amendments to
such Registration Statements, and to file the same, with all
exhibits thereto and documents in connection therewith, with
the SEC; and
(iii) 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 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
<PAGE>
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
(iv) 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
(v) 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 29th day of
February, 2000.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Power of Attorney on the 17th day of March,
1999.
/s/ William E. Leahey, Jr.
---------------------------
William E. Leahey, Jr.
<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, 1998 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 Registration Statements on Form S-
8, or on such other form as may be appropriate, for
registration of shares of the Company's common stock,
without par value ("Common Stock"), to be offered and sold
under the Reynolds Metals Company 1999 Nonqualified Stock
Option Plan, and any and all post-effective amendments to
such Registration Statements, and to file the same, with all
exhibits thereto and documents in connection therewith, with
the SEC; and
(iii) 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 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
<PAGE>
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
(iv) 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
(v) 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 29th day of
February, 2000.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Power of Attorney on the 19th day of February,
1999.
/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, 1998 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 Registration Statements on Form S-
8, or on such other form as may be appropriate, for
registration of shares of the Company's common stock,
without par value ("Common Stock"), to be offered and sold
under the Reynolds Metals Company 1999 Nonqualified Stock
Option Plan, and any and all post-effective amendments to
such Registration Statements, and to file the same, with all
exhibits thereto and documents in connection therewith, with
the SEC; and
(iii) 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 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
<PAGE>
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
(iv) 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
(v) 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 29th day of
February, 2000.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Power of Attorney on the 19th day of February,
1999.
/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, 1998 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 Registration Statements on Form S-
8, or on such other form as may be appropriate, for
registration of shares of the Company's common stock,
without par value ("Common Stock"), to be offered and sold
under the Reynolds Metals Company 1999 Nonqualified Stock
Option Plan, and any and all post-effective amendments to
such Registration Statements, and to file the same, with all
exhibits thereto and documents in connection therewith, with
the SEC; and
(iii) 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 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
<PAGE>
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
(iv) 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
(v) 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 29th day of
February, 2000.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Power of Attorney on the 19th day of February,
1999.
/s/ Randolph N. Reynolds
---------------------------
Randolph N. Reynolds
<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, 1998 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 Registration Statements on Form S-
8, or on such other form as may be appropriate, for
registration of shares of the Company's common stock,
without par value ("Common Stock"), to be offered and sold
under the Reynolds Metals Company 1999 Nonqualified Stock
Option Plan, and any and all post-effective amendments to
such Registration Statements, and to file the same, with all
exhibits thereto and documents in connection therewith, with
the SEC; and
(iii) 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 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
<PAGE>
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
(iv) 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
(v) 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 29th day of
February, 2000.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Power of Attorney on the 19th day of February,
1999.
/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, 1998 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 Registration Statements on Form S-
8, or on such other form as may be appropriate, for
registration of shares of the Company's common stock,
without par value ("Common Stock"), to be offered and sold
under the Reynolds Metals Company 1999 Nonqualified Stock
Option Plan, and any and all post-effective amendments to
such Registration Statements, and to file the same, with all
exhibits thereto and documents in connection therewith, with
the SEC; and
(iii) 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 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
<PAGE>
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
(iv) 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
(v) 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 29th day of
February, 2000.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Power of Attorney on the 19th day of February,
1999.
/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, 1998 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 Registration Statements on Form S-
8, or on such other form as may be appropriate, for
registration of shares of the Company's common stock,
without par value ("Common Stock"), to be offered and sold
under the Reynolds Metals Company 1999 Nonqualified Stock
Option Plan, and any and all post-effective amendments to
such Registration Statements, and to file the same, with all
exhibits thereto and documents in connection therewith, with
the SEC; and
(iii) 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 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
<PAGE>
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
(iv) 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
(v) 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 29th day of
February, 2000.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Power of Attorney on the 19th day of February,
1999.
/s/ Jeremiah J. Sheehan
---------------------------
Jeremiah J. Sheehan
<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, 1998 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 Registration Statements on Form S-
8, or on such other form as may be appropriate, for
registration of shares of the Company's common stock,
without par value ("Common Stock"), to be offered and sold
under the Reynolds Metals Company 1999 Nonqualified Stock
Option Plan, and any and all post-effective amendments to
such Registration Statements, and to file the same, with all
exhibits thereto and documents in connection therewith, with
the SEC; and
(iii) 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 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
<PAGE>
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
(iv) 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
(v) 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 29th day of
February, 2000.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Power of Attorney on the 19th day of February,
1999.
/s/ Joe B. Wyatt
---------------------------
Joe B. Wyatt
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from the Reynolds Metals
Company Condensed Balance Sheet (Unaudited) for December 31, 1998 and
Consolidated Statement of Income (Unaudited) for the Year ended December 31,
1998 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 94
<SECURITIES> 0
<RECEIVABLES> 728
<ALLOWANCES> 14
<INVENTORY> 500
<CURRENT-ASSETS> 1602
<PP&E> 4282
<DEPRECIATION> 2258
<TOTAL-ASSETS> 6134
<CURRENT-LIABILITIES> 1241
<BONDS> 1035
0
0
<COMMON> 1533
<OTHER-SE> 661
<TOTAL-LIABILITY-AND-EQUITY> 6134
<SALES> 5859
<TOTAL-REVENUES> 5859
<CGS> 4774
<TOTAL-COSTS> 4774
<OTHER-EXPENSES> 396
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 114
<INCOME-PRETAX> 197
<INCOME-TAX> 45
<INCOME-CONTINUING> 152
<DISCONTINUED> 0
<EXTRAORDINARY> (63)
<CHANGES> (23)
<NET-INCOME> 66
<EPS-PRIMARY> .94
<EPS-DILUTED> .94
</TABLE>