SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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. [X]
As of February 25, 2000:
(a) the aggregate market value of the voting stock known by the
Registrant to be held by nonaffiliates of the Registrant was
approximately $3.7 billion*.
(b) the Registrant had 63,676,149 shares of Common Stock
outstanding and entitled to vote.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's definitive proxy statement for its
2000 Annual Meeting of Stockholders to be filed pursuant to
Regulation 14A - Part III
_______________
* 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.
<PAGE> i
NOTE
This copy includes only EXHIBIT 21 of those listed on pages 68 - 73.
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 2 149 EXHIBIT 10.15 4
EXHIBIT 3.1 100 EXHIBIT 10.16 12
EXHIBIT 3.2 23 EXHIBIT 10.17 17
EXHIBIT 4.1 100 EXHIBIT 10.18 16
EXHIBIT 4.2 23 EXHIBIT 10.19 5
EXHIBIT 4.3 1 EXHIBIT 10.20 10
EXHIBIT 4.4 165 EXHIBIT 10.21 10
EXHIBIT 4.5 6 EXHIBIT 10.22 6
EXHIBIT 4.6 41 EXHIBIT 10.23 2
EXHIBIT 4.7 9 EXHIBIT 10.24 2
EXHIBIT 4.8 2 EXHIBIT 10.25 1
EXHIBIT 4.9 2 EXHIBIT 10.26 3
EXHIBIT 4.10 10 EXHIBIT 10.27 21
EXHIBIT 4.11 14 EXHIBIT 10.28 2
EXHIBIT 4.12 9 EXHIBIT 10.29 10
EXHIBIT 4.13 36 EXHIBIT 10.30 10
EXHIBIT 4.14 17 EXHIBIT 10.31 5
EXHIBIT 4.15 19 EXHIBIT 10.32 12
EXHIBIT 4.16 18 EXHIBIT 10.33 26
EXHIBIT 4.17 89 EXHIBIT 10.34 37
EXHIBIT 4.18 7 EXHIBIT 10.35 21
EXHIBIT 4.19 12 EXHIBIT 10.36 2
EXHIBIT 10.1 21 EXHIBIT 10.37 2
EXHIBIT 10.2 16 EXHIBIT 21 1
EXHIBIT 10.3 11 EXHIBIT 23 2
EXHIBIT 10.4 6 EXHIBIT 24 17
EXHIBIT 10.5 7 EXHIBIT 27 1
EXHIBIT 10.6 6 EXHIBIT 99 6
EXHIBIT 10.7 10
EXHIBIT 10.8 15
EXHIBIT 10.9 16
EXHIBIT 10.10 7
EXHIBIT 10.11 12
EXHIBIT 10.12 13
EXHIBIT 10.13 2
EXHIBIT 10.14 1
i
<PAGE> ii
TABLE OF CONTENTS
PART I
ITEM PAGE
- ---- ----
1. BUSINESS.................................................... 1
GENERAL
Nature of Operations.................................... 1
Merger.................................................. 1
Restructuring........................................... 2
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.................................. 9
RESEARCH AND DEVELOPMENT.................................. 11
EMPLOYEES................................................. 11
2. PROPERTIES.................................................. 11
3. LEGAL PROCEEDINGS........................................... 15
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS......... 15
4A. EXECUTIVE OFFICERS OF THE REGISTRANT........................ 16
PART II
5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS....................................... 18
6. SELECTED FINANCIAL DATA..................................... 20
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS....................... 21
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK............................................... 35
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA................. 36
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
ii
<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 "the Company"
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 aluminum foil producer. Reynolds serves customers in growing world
markets including the alumina and primary aluminum, packaging and consumer,
commercial construction, distribution, and automotive markets, with a wide
variety of aluminum, plastic and other products. At December 31, 1999,
Reynolds employed approximately 18,900 people. Reynolds has operations or
interests in operations at more than 100 locations in 24 countries.
Reynolds' 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."
MERGER
- ------
On August 18, 1999, Reynolds, Alcoa Inc. (Alcoa) and RLM Acquisition Corp., a
wholly owned subsidiary of Alcoa, entered into an agreement and plan of
merger. Under the merger agreement, each outstanding share of Reynolds
common stock would be converted into 1.06 shares of Alcoa common stock and
Reynolds would become wholly owned by Alcoa. On January 10, 2000, Alcoa
announced that its Board of Directors had declared a two-for-one split of
Alcoa's common stock to Alcoa shareholders of record on May 26, 2000. The
stock split is subject to approval of Alcoa shareholders who must approve an
amendment to Alcoa's articles to increase the authorized shares of common
stock at Alcoa's annual meeting on May 12, 2000. If approved, the stock
split would be distributed on June 9, 2000. Shares of Alcoa stock that are
issued in the merger will be adjusted, as necessary, to reflect the stock
split.
The proposed merger, which was approved by Reynolds' stockholders at a
special meeting held on February 11, 2000, is subject to customary closing
conditions, including antitrust clearances.
The Hart-Scott-Rodino Antitrust Improvements Act of 1976 prohibits Alcoa and
Reynolds from completing the merger until certain information has been
furnished to the Antitrust Division of the Department of Justice and the
Federal Trade Commission, and until certain waiting period requirements have
been satisfied. Alcoa filed a Hart-Scott-Rodino Premerger Notification and
Report Form on August 24, 1999 and Reynolds filed such a Form on August 30,
1999. On September 29, 1999, the Antitrust Division issued a request for
additional information and documentary material (a "second request"). On
February 11, 2000, both Reynolds and Alcoa announced that they believed that
they were in substantial compliance with the second request. They also
advised the Department of Justice that they would not close the merger before
March 31, 2000, in order to provide the Department sufficient time to review
the transaction.
In Europe, certain regulations require that Alcoa file a premerger
notification form with the Commission of the European Communities prior to
consummation of the proposed merger. Alcoa filed such notification on
November 18, 1999. This filing began an initial one-month review period in
which the European Commission was required to determine whether there are
sufficiently "serious doubts" about the proposed merger's compatibility with
the common market to require a more complete review. The initial one-month
period expired on December 20, 1999,
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whereupon the European Commission issued a determination that the proposed
merger did require a more complete review. The European Commission must
complete its investigation and make a final determination with respect to the
proposed merger no later than May 10, 2000.
Reynolds and Alcoa have also made filings under the competition laws of
Canada, Australia and certain other countries where the companies have
significant operations. Alcoa and Reynolds have been advised that the
Canadian Competition Bureau has classified this merger as "very complex."
Its review is expected to be completed no later than May 24, 2000.
The Australian review process is also expected to be completed by the
end of May 2000.
The merger agreement contains certain restrictions on the conduct of
Reynolds' business before completion of the merger. For example, Reynolds
has agreed to operate its business only in the ordinary course, to refrain
from taking certain corporate actions without the consent of Alcoa, and not
to solicit alternative acquisition proposals.
Reference is made to the copy of the merger agreement incorporated by
reference herein as Exhibit 2.
RESTRUCTURING
- -------------
In early 1999, Reynolds finalized the sale of its Alloys can stock complex,
which included a rolling mill, two reclamation plants and a coil coating
facility, located in Alabama to Wise Alloys LLC, an affiliate of Wise Metals
Co., Inc. Also in early 1999, Reynolds sold its aluminum extrusion plant in
Irurzun, Spain, as well as its distribution operations for architectural
systems located in Spain, to an affiliate of Alcoa. Reynolds sold its
investment in a Canadian rolling mill and related assets to Hocan Inc., an
affiliate of CORUS Group PLC, in early January 2000. Finalization of these
transactions marks the substantial completion of Reynolds' portfolio review
process.
FINANCIAL INFORMATION REGARDING GLOBAL BUSINESS UNITS AND OPERATIONS BY
GEOGRAPHIC LOCATION
- -----------------------------------------------------------------------
Financial information for operations and assets attributable to Reynolds'
global business units and information regarding its operations by geographic
location are included in Note 12 to the consolidated financial statements in
Item 8 of this report.
GLOBAL BUSINESS UNITS
BASE MATERIALS
- --------------
Reynolds' 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.
Reynolds refines bauxite into alumina at its Sherwin alumina plant near
Corpus Christi, Texas. Reynolds also is entitled to a share of the
production from two joint ventures in which it has 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, Reynolds has a contract with a
third party to purchase 120,000 metric tons of alumina in 2000.
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<PAGE> 3
Worsley currently has the capacity to produce 1.88 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 Reynolds' Sherwin alumina plant and Reynolds' share
of the Stade joint venture are obtained from the following sources:
AUSTRALIA
Reynolds has a long-term purchase arrangement under which it may buy
from a third party an aggregate of approximately 18,800,000 dry metric
tons of Australian bauxite through 2021.
BRAZIL
Reynolds owns a 5% interest in Mineracao Rio Do Norte S.A. ("MRN"),
which owns the Trombetas bauxite mining project in Brazil. Reynolds has
agreed to purchase approximately 7,000,000 dry metric tons of Brazilian
bauxite from the project for the period 2000 through 2019.
Reynolds also maintains an interest in other, undeveloped bauxite
deposits in Brazil.
GUINEA
Reynolds owns 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. Reynolds
has a bauxite purchase contract with CBG that will provide Reynolds with
a minimum of approximately 6,050,000 dry metric tons of Guinean bauxite
for the period 2000 through 2011.
GUYANA
Reynolds is a 50% partner with the Guyanese government in a bauxite
mining project in the Berbice region of Guyana. Reynolds will buy
approximately 2,000,000 dry metric tons of bauxite from the project in
2000.
JAMAICA
Reynolds has a purchase arrangement under which it will buy from a third
party an aggregate of up to 3,600,000 dry metric tons of Jamaican
bauxite for the period 2000 through 2001.
OTHER
Reynolds has an arrangement with the U.S. government under which it will
buy at a negotiated price during 2000 approximately 600,000 long dry
tons of Jamaican bauxite stored next to the Sherwin alumina plant.
Reynolds' present sources of bauxite and alumina are more than adequate to
meet the forecasted requirements of its primary aluminum production
operations for the foreseeable future.
Reynolds produces primary aluminum at three plants in the United States and
one at Baie Comeau, Quebec, Canada. Reynolds is also entitled to a share of
the primary aluminum produced at three joint ventures in which it
participates: one in Quebec known as the Becancour joint venture
("Becancour"); one in Hamburg, Germany, known as Hamburg Aluminium-Werk GmbH
("Hamburg"); and the third in Ghana, known as Volta Aluminium Company Limited
("Ghana"). See Table 2 under this Item.
3
<PAGE> 4
Reynolds' 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 1999, 80% of Reynolds' primary aluminum
products were sold externally to third parties; the remainder was purchased
by other Reynolds business units.
Production at Reynolds' 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,
Reynolds restarted 162,000 metric tons of previously idled production
capacity. Reynolds will monitor market conditions and its internal needs
before proceeding with further restarts.
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").
The smelter closed indefinitely in 1999 due to lack of working capital. The
closing has no material effect on Reynolds' operations or financial position.
Reynolds also has an 8% equity interest in C.V.G. Aluminio del Caroni, S.A.
("ALCASA"), which produces primary aluminum in Venezuela.
Reynolds owns and operates two carbon products manufacturing facilities
located in Lake Charles and Baton Rouge, Louisiana. These facilities have
the capacity to produce 875,000 metric tons of calcined petroleum coke and
145,000 metric tons of carbon anodes annually. The anodes are produced
principally for consumption at Reynolds' primary aluminum plant in Baie
Comeau, Quebec. The calcined petroleum coke is used by Reynolds' wholly
owned primary aluminum plants. Reynolds also sells calcined petroleum coke
worldwide to the aluminum and titanium dioxide industries.
Reynolds' base materials business also 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. The Gum Springs 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. Reynolds has submitted permit applications to state and federal
environmental authorities to allow it to operate the Gum Springs facility's
landfill as a hazardous waste landfill. The applications were submitted as a
result of the 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 Reynolds refines 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. Reynolds generally expects to meet the energy
requirements for its primary aluminum production for the foreseeable future
under long-term contracts. Under these contracts, however, Reynolds may
experience shortages of interruptible power from time to time at its Massena,
New York plant and at the plant in Ghana in which Reynolds holds a joint-
venture interest. The portion of power supplied to the Massena plant that is
interruptible (approximately 15%) can be offset with power purchased from
other sources at market rates. 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.
Bonneville Power Administration ("BPA") supplies electricity to Reynolds'
smelters at Longview, Washington and Troutdale, Oregon. The current contract
with BPA expires on September 30, 2001. BPA has proposed reducing the amount
of power supplied to the smelters by one-third and pricing the power on a
formula under which charges would vary with world aluminum prices. Assuming
"average" world aluminum prices (with the basis for determining what is
"average" yet to be settled), the rate charged to Reynolds for the period
2001-2006 would
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<PAGE> 5
increase by 13% over what Reynolds currently pays. Reynolds would also have to
find other sources for the balance of its power needs. The BPA proposal is
subject to full consideration in a rate case, in which Reynolds can present
arguments to improve the offered rate, and other parties can challenge both
the quantity of power being provided to the Reynolds smelters and the rates at
which it is to be provided. Reynolds expects to participate actively in the
resolution of this issue and to continue assessing alternate power sources
for the two smelters.
<TABLE>
TABLE 1
ALUMINA PLANTS AND ENERGY SUPPLY
<CAPTION>
Rated
Capacity(a) at Principal
December 31, 1999 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 1,053,000(e) Coal and 2002(d)
Natural Gas
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, 1999 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>
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<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 Capacity(a) Production(f)
- ---- ----------- ---------- ----------- -------------
<S> <C> <C> <C> <C>
1997 2,944,000 2,724,000 1,094,000 893,200
1998 2,944,000 2,868,000 1,094,000 982,900
1999 3,028,000 2,929,000 1,094,000 1,052,700
</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 currently purchases 50% of the natural gas required
to operate the plant on a month-to-month basis. Beginning in June 2000, it
is anticipated that all gas will be supplied under contracts of one year or
longer.
(d) Reynolds has 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 June 2000. Worsley has a similar contract to purchase a
portion of its steam and electricity which began in early 2000.
(e) Reynolds is entitled to 56% of the production of Worsley and 50% of the
production of Stade. Capacity and production figures reflect Reynolds'
share.
(f) Reynolds curtailed 121,000 metric tons of production capacity at its
Troutdale primary aluminum plant in the second half of 1991 and restarted
74,000 metric tons of that capacity in 1998. Reynolds also curtailed an
aggregate of 88,000 metric tons of primary aluminum production capacity at
its Massena (41,000 metric tons) and Longview (47,000 metric tons) plants
effective in 1993. All of the idled capacity at Massena and Longview was
restarted 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) Reynolds is 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 Reynolds' share. Production at Ghana has been
curtailed since September 1994 by drought. At December 31, 1998, Ghana was
operating at 20% of capacity. Ghana began restarting a portion of its
curtailed capacity in 1999. The plant is currently operating at
approximately 80% 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.
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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. Reynolds is the world's leading aluminum foil
producer 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. Reynolds' customers include global
marketers of food, confection, healthcare and tobacco products. Reynolds
also serves 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. Reynolds also produces industrial plastic
film (including Reynolon shrink film) and labels for shrink wrapping and
tamper-evident packaging.
Reynolds manufactures its packaging products at wholly owned facilities in
the U.S., Brazil, Canada and Spain. See Table 4 under the heading
"Packaging and Consumer." Reynolds also has an interest 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 brand name. Products include the well-known Reynolds Wrap
Aluminum Foil, Reynolds Plastic Wrap, Reynolds Oven Bags, Reynolds Freezer
Paper, Reynolds Cut-Rite Wax Paper, Reynolds Baker's Choice Bake Cups,
Reynolds Hot Bags Foil Bags and Reynolds Wrappers Foil Sandwich Sheets.
Reynolds' consumer products are distributed throughout the U.S., which is
Reynolds' largest market for these products, and in more than 65 other
countries.
In April 1999, Reynolds launched a foodservice packaging and consumer
products subsidiary, Reyco Ltda., in Sao Paulo, Brazil. Reyco produces
foodservice packaging and consumer products under the Reynolds brand name.
Through its Presto Products Company subsidiary, Reynolds is 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.
Reynolds' subsidiary, Southern Graphic Systems, Inc., produces rotogravure
printing cylinders, color separations and flexographic plates used in
Reynolds' 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, Southern Graphic acquired London Graphics Inc., a Toronto,
Ontario producer of flexographic separations and plates for the packaging
industry in Canada. It has been integrated with Southern Graphic's Canadian
operations. Southern Graphic also acquired the assets and/or businesses of
four U.S. producers of flexographic separations and plates for the packaging
industry in 1999. In addition, Southern Graphic, through its Mexican
subsidiary, Southern Graphic Systems Mexico S. de R.L. de C. V., began
providing onsite services to its customers at its new Mexico City, Mexico
offices in late 1999.
CONSTRUCTION AND DISTRIBUTION
- -----------------------------
Reynolds' construction and distribution global business unit distributes
aluminum, stainless steel and other specialty metal products under the names
Reynolds Aluminum Supply Company ("RASCO") and RASCO Specialty Metals Inc.
(in Canada). 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 1999, RASCO's sales (not including
RASCO Specialty Metals Inc.) were 58% in aluminum products and 39% in
stainless steel products. RASCO processes and distributes plate, sheet,
extrusions, rod and bar products through 37 facilities across North
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America. RASCO provides metal processing services such as cutting to length,
slitting, shearing, sawing and plasma burning. The metal processing services
offered by RASCO allow it to provide customized products, delivered
just-in-time to customers. RASCO's customers include fabricators and
manufacturers in transportation, equipment, machinery and other markets.
In 1999, RASCO acquired two metal distribution centers in the U.S. and five
in Canada, and opened three new metal distribution centers in the U.S. and
one in Mexico.
Through its construction operations Reynolds produces Reynobond aluminum
composite material that is sold worldwide for architectural and specialty
applications. In 1999, Reynolds increased its capability to serve European
and global demand for composite material with the substantial completion of
an expansion of its plant in Merxheim, France.
Reynolds' construction and distribution business unit also produces Reynolux
painted aluminum sheet and profiled products; designs and markets
architectural systems consisting of curtainwall, window and door units for
residential and commercial applications; and produces and sells polymer-
coated magnet wire for electrical transformers.
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." Reynolds' principal
products are wheels, heat exchanger tubing and automotive structures.
Reynolds markets these products primarily in North America to the "Big
Three" automobile manufacturers, with customers also in Europe and
Venezuela.
Reynolds produces forged and cast aluminum wheels in a variety of sizes,
styles and finishes. In February 1999, Reynolds completed the start-up of a
$32 million expansion of its 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 mid-1999, Reynolds completed
an equipment expansion at its Indiana extrusion facility to begin production
of the industry's first high volume aluminum engine cradle.
OTHER OPERATIONS
Reynolds has certain operations that are not within a global business unit.
These include, principally, its headquarters operations, as well as the
following:
BOHAI ALUMINIUM INDUSTRIES, LTD. - Reynolds owns a 32.48% interest in this
aluminum foil and extrusion operation located in China.
CAN MACHINERY - Reynolds operates a can machinery plant that
manufactures can production machinery used by aluminum can
manufacturers around the world.
EUROPEAN EXTRUSION OPERATIONS - Reynolds' plants in Nachrodt, Germany
and Harderwijk, Netherlands produce extruded aluminum products that are
used internally by Reynolds' construction and distribution and
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 Reynolds' global business units.
8
<PAGE> 9
LATAS DE ALUMINIO. S.A. ("Latasa") - Reynolds owns a 36.6% interest in
this South American aluminum can operation.
REAL ESTATE - Reynolds has real estate holdings consisting principally
of undeveloped land and commercial buildings.
UNITED ARAB CAN MANUFACTURING COMPANY, LTD. - Reynolds owns a 27.5%
interest in this aluminum can operation located in Saudi Arabia.
COMPETITION
Competition in Reynolds' industries is based on price, quality and service.
In the sale of its products, Reynolds competes 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 competes with many companies
around the world in the manufacture of primary aluminum products. In
Europe, Reynolds' principal competitors are seven major multinational
producers of extruded aluminum products and a number of smaller European
producers of aluminum semifabricated products. Reynolds' consumer products
operations compete primarily with a number of U.S. companies. North America
is Reynolds' largest market for its flexible packaging products. Reynolds
has 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.
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 Reynolds to predict accurately the
total expenditures necessary to meet all future environmental requirements.
Reynolds expects, however, to add or modify environmental control facilities
at a number of its 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, Reynolds estimates that compliance
with the Clean Air Act's hazardous air pollutant standards would require in
excess of $200 million of capital expenditures (including a portion of the
expenditures at the Massena plant referred to below), primarily at its U.S.
primary aluminum production plants. The ultimate effect of the Clean Air
Act on such plants and on Reynolds' 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 its Massena, New York primary
aluminum production plant, Reynolds has undertaken a capital spending
program (planned for completion in 2002) of an estimated $175 million to
modernize the Massena plant and significantly reduce air emissions from the
plant. Pursuant to the memorandum of understanding, Reynolds is
accelerating certain expenditures believed necessary to achieve compliance
with the Clean Air Act's Maximum Achievable Control Technology standards.
Reynolds' capital expenditures for equipment designed for environmental
control purposes were approximately $43 million in 1997, $80 million in 1998
and $48 million in 1999. The portion of such amounts expended in the United
States was $41 million in 1997, $74 million in 1998 and $41 million in 1999.
Reynolds estimates that annual capital expenditures for environmental
control facilities will be approximately $24 million in 2000, $30 million in
2001 and $21 million in 2002. The majority of these estimated expenditures
are associated with the capital spending program
9
<PAGE> 10
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, Reynolds is investigating possible environmental contamination,
which may also require remedial action, at certain of its present and former
U. S. manufacturing facilities. The following discussion provides
information about the current status of two individually significant sites.
MASSENA, NEW YORK SITE. In 1988, Reynolds discovered that soils in the
area of the heat transfer medium system at Reynolds' primary aluminum
production plant in Massena, New York were contaminated with
polychlorinated biphenyls ("PCBs") and other contaminants. Remediation
of the contaminated soils and other contaminated areas of the plant was
substantially completed in 1998. Portions of the St. Lawrence River
system adjacent to the plant are also contaminated with PCBs. Since
1989, Reynolds has been conducting investigations and studies of the
river system under order from the EPA issued under Superfund. Reynolds
is in the process of working with the EPA to better define the scope of
the dredging program which is planned for 2001. Reynolds is also aware
of a natural resource damage claim arising out of the discharge of PCBs
and other contaminants into the river system that may be asserted by
potential claimants, including federal, state and tribal natural
resource trustees.
TROUTDALE, OREGON SITE. In 1994, the EPA added Reynolds' Troutdale,
Oregon primary aluminum production plant to the National Priorities
List of Superfund sites. Reynolds is cooperating with the EPA and,
under a September 1995 consent order, is 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, Reynolds is one of many PRPs, and its share of the
anticipated cleanup costs is expected to be small. With respect to certain
other sites (not included in the 40 sites discussed above) where Reynolds
has been identified as a PRP, Reynolds has either fully or substantially
settled or resolved actions related to such sites at minimal cost or
believes that it has no responsibility with regard to them. Reynolds has
been notified that it 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, Reynolds evaluates the status of all
sites, develops or revises estimates of costs to satisfy known remediation
requirements and adjusts its accruals accordingly. At December 31, 1999,
the accrual for known remediation requirements was $162 million. This
amount reflects management's best estimate of Reynolds' 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. However, such costs could be material to future
quarterly or annual results of operations.
10
<PAGE> 11
See the discussion under "Environmental" in Item 7, and under Note 13 to the
consolidated financial statements in Item 8 of this report regarding
Reynolds' 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
Reynolds' research and development activities.
Expenditures for Reynolds-sponsored research and development activities were
approximately $25 million in 1999, $31 million in 1998, and $41 million in
1997.
Reynolds owns numerous patents relating to its products and processes based
predominantly on its in-house research and development activities. The
patents owned by Reynolds, or under which it is licensed, generally concern
particular products or manufacturing techniques. Reynolds' business is not,
however, materially dependent on patents.
EMPLOYEES
At December 31, 1999, Reynolds had approximately 18,900 employees.
In 1996, Reynolds 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 3,700 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.
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 Reynolds'
principal domestic and foreign properties, see Item 1 of this report. Table
4 lists as of February 25, 2000 Reynolds' wholly owned domestic and foreign
operations and shows the domestic and foreign locations of operations in
which Reynolds has 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 Reynolds'
operations and the arrangements under which such properties are held are not
expected to limit their use. Reynolds believes that its facilities are
suitable and adequate for its operations. With the exception of the
Troutdale, Ghana and Nigerian primary aluminum production plants and the
Arkansas spent potliner treatment facility, as explained in Item 1, there is
no significant surplus or idle capacity at Reynolds' major manufacturing
facilities.
11
<PAGE> 12
TABLE 4
WHOLLY OWNED OPERATIONS
BASE MATERIALS
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
PACKAGING AND CONSUMER
FOIL FEED STOCK: PACKAGING GRAPHICS AND IMAGE CARRIERS:
Hot Springs, Arkansas Bridgeport, Connecticut*
Atlanta, Georgia*
PACKAGING AND CONSUMER PRODUCTS: LaGrange, Georgia*
Beacon Falls, Connecticut Elgin, Illinois*
Louisville, Kentucky (2) Clarksville, Indiana*
Mt. Vernon, Kentucky Dayton, Kentucky*
Sparks, Nevada* Louisville, Kentucky (2)
Boyertown, Pennsylvania Newport, Kentucky*
Downingtown, Pennsylvania West Monroe, Louisiana
Lewiston, Utah Battle Creek, Michigan*
Rutland, Vermont St. Louis, Missouri *
Bellwood, Virginia Armonk, New York*
Grottoes, Virginia Fulton, New York
Richmond, Virginia Wilmington, North Carolina*
South Boston, Virginia Exton, Pennsylvania*
Appleton, Wisconsin (2) Dallas, Texas
Little Chute, Wisconsin Richmond, Virginia (2)**
Weyauwega, Wisconsin Mexico City, Mexico*
Sao Paulo, Brazil* Brockville, Ontario*
Rexdale, Ontario* Mississauga, Ontario (2)*
Barcelona, Spain Toronto, Ontario*
CONSTRUCTION AND DISTRIBUTION
CONSTRUCTION: DISTRIBUTION:
Eastman, Georgia Service Centers (U.S.) (27)**
Ashland, Virginia (Canada) (5)**
Merxheim, France (Mexico) (1)*
Lelystadt, Netherlands Processing Centers (U.S.) (4)**
Distribution Centers (Europe) (9)**
(China) (1)*
(U.S.) (1)*
12
<PAGE> 13
TRANSPORTATION
HEAT EXCHANGERS: WHEELS:
Louisville, Kentucky Lebanon, Virginia
Wexford, Ireland Beloit, Wisconsin
Ferrara, Italy
STRUCTURES:
Auburn, Indiana
Maracay, Venezuela
Nachrodt, Germany***
Harderwijk, Netherlands***
OTHER
CAN MACHINERY AND SYSTEMS: RESEARCH AND DEVELOPMENT:
Richmond, Virginia Muscle Shoals, Alabama
Bauxite, Arkansas
Corpus Christi, Texas
Richmond, Virginia (2)
13
<PAGE> 14
OTHER OPERATIONS
IN WHICH REYNOLDS HAS INTERESTS
Argentina: Ghana:
Aluminum cans Primary aluminum
Australia: Guinea:
Bauxite, alumina Bauxite, alumina
Brazil: Guyana:
Aluminum cans and ends, bauxite Bauxite
Canada: Italy:
Primary aluminum, electric power Reclamation
generation, aluminum wheels
Nigeria:
Chile: Primary aluminum
Aluminum cans
Saudi Arabia:
China: Aluminum cans
Foil, extrusions
Venezuela:
Colombia: Primary aluminum, mill products,
Mill products, extrusions, foil foil, aluminum wheels
Egypt:
Extrusions
Germany:
Alumina, primary aluminum
____________________________
* Leased.
** Richmond, Virginia Packaging Graphics and Image Carriers - 1 leased.
European Distribution Centers - 5 leased.
U.S. Service Centers - 17 leased.
Canadian Service Centers - 3 leased.
U.S. Processing Centers - 2 leased.
*** These plants also produce extruded products for Reynolds' construction and
distribution business unit. The plant in Harderwijk, Netherlands also
manufactures heat exchangers and other extruded products.
+ This plant manufactures chemical grade alumina and does not manufacture
alumina for use in the aluminum production process.
The titles to Reynolds' various properties were not examined specifically for
this report.
14
<PAGE> 15
ITEM 3. LEGAL PROCEEDINGS
On August 11, 1999, eight class action complaints on behalf of stockholders
of Reynolds were filed in the Delaware Court of Chancery against Reynolds
and certain present and former members of its board of directors. These
actions are styled Tozour Energy Systems Retirement Plan v. Sheehan, et al.;
Lisa v. Reynolds Metals Company, et al.; Yassin v. Reynolds Metals Company,
et al.; Weinfeld v. Sheehan, et al.; Bader & Yakaitis Profit Sharing Plan
and Trust v. Sheehan, et al.; Rand v. Sheehan, et al.; Grill v. Sheehan, et
al.; and Randolph Capital Management, Inc. v. Sheehan, et al. The
complaints were filed after Alcoa announced its proposal to acquire
Reynolds. The plaintiff in each action alleged, among other things, that
the directors of Reynolds failed to negotiate with Alcoa before Alcoa's
announcement; that they were breaching their fiduciary duties by failing to
explore offers for the purchase of Reynolds or to engage in meaningful
discussions with interested parties such as Alcoa; that they were attempting
to entrench themselves in their positions at Reynolds through misuse of
Reynolds' shareholder rights plan; and that they were attempting to deprive
the plaintiffs of the true value of their investment in Reynolds. The
plaintiff in each action sought injunctive relief requiring the directors of
Reynolds to give due consideration to any proposed business combination, to
resolve any conflicts in favor of Reynolds' public stockholders, and to
refrain from consummating any business combination without conducting an
auction or other process to obtain the highest possible price for Reynolds.
The complaints also sought unspecified damages and awards of fees and costs.
On February 11, 2000, Reynolds' stockholders approved the merger agreement
between Reynolds and Alcoa. Counsel for the plaintiffs in the Lisa, Yassin,
Weinfeld, Bader & Yakaitis Profit Sharing Plan and Trust, Rand and Grill
actions recently informed the Delaware Court of Chancery that the plaintiffs
in those actions intend to file promptly with the Court a notice dismissing
such actions without prejudice.
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 Reynolds' competitive or financial
position. 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 1999.
A special meeting of Reynolds stockholders was held on February 11, 2000.
The stockholders approved and adopted the Agreement and Plan of Merger, dated
as of August 18, 1999, among Alcoa Inc., RLM Acquisition Corp. and Reynolds
Metals Company, and approved the transactions contemplated thereby. At
December 29, 1999, the record date for the special meeting, 63,463,257
shares of common stock were outstanding and entitled to vote. The number
of votes cast for and against, and the number of abstentions, as applicable,
were as set forth below. No other matter was voted upon at the meeting.
Number of Votes Cast "For" 41,335,471
Number of Votes Cast "Against" 457,861
Number of Abstentions 5,609,245
15
<PAGE> 16
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Registrant are as follows:
Name Age* Positions Held During Past Five Years
- ---- ---- -------------------------------------
Jeremiah J. Sheehan 61 Chairman of the Board and Chief Executive
Officer since October 1996. President and
Chief Operating Officer 1994-1996. Director
since 1994.
Randolph N. Reynolds** 58 Vice Chairman and Executive Officer since
October 1996. Vice Chairman 1994-1996.
Director since 1984.
William E. Leahey, Jr. 50 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 60 Senior Vice President, Global Packaging and
Consumer Products, since April 1997. Vice
President, Flexible Packaging Division
1993-1997.
Donald T. Cowles 53 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 58 Senior Vice President, Diversified
Investments, since July 1999. Senior Vice
President, Global Transportation, April 1997
- 1999. Vice President 1994-1997.
Allen M. Earehart 57 Senior Vice President and Controller since
July 1998. Vice President, Controller
1994-1998.
D. Michael Jones 46 Senior Vice President and General Counsel
since October 1996. Vice President, General
Counsel and Secretary 1993-1996.
John M. Lowrie 59 Senior Vice President and Executive
Director - Enterprise Systems since January
1999. Vice President, Consumer Products
1988-1999.
Paul Ratki 60 Senior Vice President, Global Metals and
Carbon Products, since April 1997. Vice
President, Metals Division 1994-1997.
C. Stephen Thomas 60 Senior Vice President, Global Technology
and Operational Services, since May 1997.
Vice President, Mill Products Division
1992-1997.
Donna C. Dabney 52 Secretary and Assistant General Counsel
since October 1996. Associate General
Counsel 1993-1996.
Douglas M. Jerrold 49 Vice President, Tax Affairs, since April
1990.
Ruth J. Mack 45 Vice President, Consumer Products, since
April 1999. Executive Vice President, Sales
and Marketing, Wampler Foods 1997-1999.
Executive Vice President, Marketing and
Sales, Just Born 1994-1997.
Lou Anne J. Nabhan 45 Vice President, Corporate Communications,
since January 1998. Director, Corporate
Communications 1993-1998.
16
<PAGE> 17
F. Robert Newman 56 Vice President, Human Resources, since
October 1995. Corporate Director, Human
Resources 1993-1995.
Edmund H. Polonitza 57 Vice President, Development and Strategic
Planning, since January 1998. Corporate
Director, Development and Strategic Planning
1987-1998.
William G. Reynolds, Jr.** 60 Vice President, Government Relations
and Public Affairs, since October 1980.
John F. Rudin 54 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 56 Vice President, Treasurer, since April
1988.
_______________
* As of February 25, 2000.
** Randolph N. Reynolds and William G. Reynolds, Jr. are brothers.
17
<PAGE> 18
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
February 25, 2000, there were 7,161 holders of record of the Registrant's
Common Stock.
The high and low sales prices for shares of the Registrant's Common Stock as
reported on the New York Stock Exchange Composite Transactions Tape and the
dividends declared per share during the periods indicated are set forth
below:
<TABLE>
<CAPTION>
High Low Dividends
---- --- ---------
<S> <C> <C> <C>
1999
First Quarter $57-5/8 $38-3/4 $.35
Second Quarter 68 48-3/16 .35
Third Quarter 71 55 .35
Fourth Quarter 77-3/4 57-1/2 .35
1998
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
</TABLE>
On February 18, 2000, the Board of Directors declared a dividend of $.35 per
share of Common Stock, payable April 3, 2000 to stockholders of record on
March 3, 2000.
RECENT SALES 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 receives 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 is
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.
Information regarding grants of phantom shares under the Stock Plan during
the period January 1 - September 30, 1999 is included in the Registrant's
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999, June
30, 1999 and September 30, 1999. On October 1, 1999, 112 phantom shares, in
the aggregate, were granted to the Registrant's nine outside Directors,
based on an average price of $59.437 per share. These phantom shares
represent dividend equivalents paid on phantom shares previously granted
under the Stock Plan. On December 31, 1999, 756 phantom shares, in the
aggregate, were granted to the nine outside Directors, based on an average
price of $76.531 per share. These phantom shares represent a quarterly
installment of each outside Director's annual grant under the Stock Plan.
During 1999, 3,233 phantom shares were granted under the Stock Plan.
18
<PAGE> 19
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.
19
<PAGE> 20
ITEM 6. SELECTED FINANCIAL DATA
- -----------------------------------------------------------------------
<TABLE>
<CAPTION>
Consolidated Income Statement (millions, except per share amounts)
- ------------------------------------------------------------------------
1999 1998 1997 1996 1995
----------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues $4,796 $5,859 $6,900 $7,016 $7,252
Cost of products sold 3,928 4,774 5,658 5,856 5,739
Selling, general and
administrative expenses 361 378 406 445 449
Depreciation and
amortization 242 252 368 365 344
Interest 75 114 153 160 172
Merger-related expenses 19 - - - -
Operational restructuring
effects - net (1) - 144 75 37 -
----------------------------------------------
4,625 5,662 6,660 6,863 6,704
----------------------------------------------
Income before income
taxes, extraordinary
loss and cumulative
effects of accounting
changes 171 197 240 153 548
Taxes on income 47 45 104 49 159
----------------------------------------------
Income before
extraordinary loss and
cumulative effects of
accounting changes 124 152 136 104 389
Extraordinary loss - (63) - - -
Cumulative effects of
accounting changes (1) - (23) - (15) -
----------------------------------------------
Net income $ 124 $ 66 $ 136 $ 89 $ 389
==============================================
Earnings per share
Basic:
Income before
extraordinary loss
and cumulative effects
of accounting changes $1.95 $2.18 $1.86 $1.06 $5.60
Extraordinary loss - (0.91) - - -
Cumulative effects of
accounting changes - (0.33) - (0.24) -
----------------------------------------------
Net income $1.95 $0.94 $1.86 $0.82 $5.60
==============================================
Diluted:
Income before
extraordinary loss
and cumulative effects
of accounting changes $1.94 $2.18 $1.84 $1.06 $5.25
Extraordinary loss - (0.91) - - -
Cumulative effects of
accounting changes - (0.33) - (0.24) -
----------------------------------------------
Net income $1.94 $0.94 $1.84 $0.82 $5.25
==============================================
Cash dividends declared
per common share $1.40 $1.40 $1.40 $1.40 $1.20
==============================================
Other items:
- ------------
Total assets $5,950 $6,134 $7,226 $7,516 $7,740
==============================================
Long-term debt $1,067 $1,035 $1,501 $1,793 $1,853
==============================================
(1) See Item 8. Financial Statements and Supplementary Data - Note 1 for a
discussion of the 1998 change in accounting principle and Note 3 for a
discussion of operational restructuring.
</TABLE>
20
<PAGE> 21
ITEM 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 32 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.
PROPOSED MERGER
- ---------------
On August 18, 1999, Reynolds, Alcoa Inc. (Alcoa) and RLM Acquisition Corp.,
a wholly owned subsidiary of Alcoa, entered into an agreement and plan of
merger. Under the merger agreement, each outstanding share of Reynolds
common stock would be converted into 1.06 shares of Alcoa common stock and
Reynolds would become wholly owned by Alcoa. On January 10, 2000, Alcoa
announced that its Board of Directors had declared a two-for-one split of
Alcoa's common stock to Alcoa shareholders of record on May 26, 2000. The
stock split is subject to approval of Alcoa shareholders who must approve an
amendment to Alcoa's articles to increase the authorized shares of common
stock at Alcoa's annual meeting on May 12, 2000. If approved, the stock
split would be distributed on June 9, 2000. Shares of Alcoa stock that are
issued in the merger will be adjusted, as necessary, to reflect the stock
split.
The proposed merger, which was approved by Reynolds' stockholders at a
special meeting held on February 11, 2000, is subject to customary closing
conditions, including antitrust clearances.
The Hart-Scott-Rodino Antitrust Improvements Act of 1976 prohibits Alcoa and
Reynolds from completing the merger until certain information has been
furnished to the Antitrust Division of the Department of Justice and the
Federal Trade Commission, and until certain waiting period requirements have
been satisfied. Alcoa filed a Hart-Scott-Rodino Premerger Notification and
Report Form on August 24, 1999 and Reynolds filed such a Form on August 30,
1999. On September 29, 1999, the Antitrust Division issued a request for
additional information and documentary material (a "second request"). On
February 11, 2000, both Reynolds and Alcoa announced that they believed that
they were in substantial compliance with the second request. They also
advised the Department of Justice that they would not close the merger
before March 31, 2000, in order to provide the Department sufficient time to
review the transaction.
In Europe, certain regulations require that Alcoa file a premerger
notification form with the Commission of the European Communities prior to
consummation of the proposed merger. Alcoa filed such notification on
November 18, 1999. This filing began an initial one-month review period in
which the European Commission was required to determine whether there are
sufficiently "serious doubts" about the proposed merger's compatibility with
the common market to require a more complete review. The initial one-month
period expired on December 20, 1999, whereupon the European Commission
issued a determination that the proposed merger did require a more complete
review. The European Commission must complete its investigation and make a
final determination with respect to the proposed merger no later than May
10, 2000.
Reynolds and Alcoa have also made filings under the competition laws of
Canada, Australia and certain other countries where the companies have
significant operations. Alcoa and Reynolds have been advised that the
Canadian Competition Bureau has classified this merger as "very complex."
Its review is expected to be completed no later than May 24, 2000. The
Australian review process is also expected to be completed by the end of
May 2000.
21
<PAGE> 22
PROPOSED MERGER - continued
- ---------------
The merger agreement contains certain restrictions on the conduct of
Reynolds' business before completion of the merger. For example, Reynolds
has agreed to operate its business only in the ordinary course, to refrain
from taking certain corporate actions without the consent of Alcoa, and not
to solicit alternative acquisition proposals.
In 1999, the Company recognized $19 million of merger-related expenses.
Merger-related expenses are principally for investment banking and legal
services and an increase in the expense accrual for a long-term compensation
plan, which varies based principally on appreciation of the Company's stock
price as compared to the S&P Basic Materials Index. The Company expects
total merger-related expenses to be at least $35 million.
<TABLE>
<CAPTION>
RESULTS OF OPERATIONS
- ---------------------
1999 1998 1997
------------------------------------
<S> <C> <C> <C>
RESULTS
Income before extraordinary
loss and cumulative effect
of accounting change $124 $152 $136
Extraordinary loss (see Note 4) - (63) -
Cumulative effect of accounting
change (see Note 1) - (23) -
------------------------------------
Net income $124 $ 66 $136
====================================
EARNINGS PER SHARE - BASIC
Income before extraordinary
loss and cumulative effect
of accounting change $1.95 $2.18 $1.86
Extraordinary loss - (0.91) -
Cumulative effect of
accounting change - (0.33) -
------------------------------------
Net income $1.95 $0.94 $1.86
====================================
AVERAGE REALIZED PRICE PER POUND
Primary aluminum $0.69 $0.72 $0.82
</TABLE>
Income before extraordinary loss and cumulative effect of accounting change
includes after tax charges for:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Merger-related expenses
(see Note 2) $16 $ - $ -
Operational restructuring
(see Note 3) - 90 78
</TABLE>
Our results increased (decreased) compared to the prior year due principally to
the following (all amounts are pre-tax):
<TABLE>
<CAPTION>
1999 1998
---------------------
<S> <C> <C>
Lower prices $(121) $(134)
Loss of income on sold operations (124) -
Non-cash charges resulting from foreign currency
translation (35) -
Lower conversion costs 40 21
Lower interest expense 39 39
Higher sales volume and lower material costs and expenses 67 100
</TABLE>
22
<PAGE> 23
RESULTS OF OPERATIONS - continued
- ---------------------
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; foodservice
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
<TABLE>
<CAPTION>
BASE MATERIALS
1999 1998 1997
------------------------------------------
<S> <C> <C> <C>
Aluminum shipments:
Customer 867 668 513
Internal 211 354 684
------------------------------------------
Total 1,078 1,022 1,197
==========================================
Revenues:
Customer - aluminum $1,325 $1,055 $ 923
- nonaluminum 368 402 405
Internal - aluminum 306 572 1,187
------------------------------------------
Total $1,999 $2,029 $2,515
==========================================
Operating income $ 250 $ 290 $ 312
==========================================
</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 3,028,000 metric tons.
Depending on operating rates of primary aluminum and alumina facilities,
approximately 70% 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 1999 and 1998 reflects strong
demand for our value-added products (foundry, high purity and sheet ingot,
billet and rod), which made up 75% of our primary aluminum shipments in
1999. 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 lower primary aluminum prices in 1999 and
1998.
23
<PAGE> 24
RESULTS OF OPERATIONS - continued
- ---------------------
GLOBAL BUSINESS UNITS - continued
BASE MATERIALS - continued
Nonaluminum revenues were lower in 1999 because of lower prices and shipping
volume for carbon products. Alumina shipments were higher in 1998 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.
The most significant factor affecting operating profit in 1999 and 1998 was
lower prices for primary aluminum. Also contributing to the decline in 1998
were non-recurring restart costs at our primary aluminum plants, lower
technical services income and lower alumina prices. We were able to offset
most of the declines with improved capacity utilization, significant cost
reductions, lower costs for certain raw materials, higher customer shipments
and, in 1999, higher alumina prices.
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.
Bonneville Power Administration ("BPA") supplies electricity to our smelters
at Longview, Washington and Troutdale, Oregon. The current contract with
BPA expires on September 30, 2001. BPA has proposed reducing the amount of
power supplied to the smelters by one-third and pricing the power on a
formula under which charges would vary with world aluminum prices. Assuming
"average" world aluminum prices (with the basis for determining what is
"average" yet to be settled), the rate charged to Reynolds for the period
2001-2006 would increase by 13% over what we currently pay. We would also
have to find other sources for the balance of our power needs. The BPA
proposal is subject to full consideration in a rate case, in which we can
present arguments to improve the offered rate, and other parties can
challenge both the quantity of power being provided to the Reynolds smelters
and the rates at which it is to be provided. We expect to participate
actively in the resolution of this issue and to continue assessing alternate
power sources for the two smelters.
The outlook for this business unit in the first quarter of 2000 is very
good. Aluminum and alumina prices are rebounding and demand is strong.
<TABLE>
<CAPTION>
PACKAGING AND CONSUMER
1999 1998 1997
-----------------------------------
<S> <C> <C> <C>
Customer aluminum shipments 152 141 142
Revenues:
Customer - aluminum $ 817 $ 787 $ 797
- nonaluminum 632 605 602
-----------------------------------
Total $1,449 $1,392 $1,399
===================================
Operating income $ 159 $ 156 $ 141
===================================
</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,
Spain and Brazil, and 23 graphics facilities located in the U.S., Canada and
Mexico that produce graphics, printing cylinders and plates.
Aluminum shipments and revenues increased in 1999 and 1998 because of strong
demand for Reynolds Wrap aluminum foil and the introduction of new products.
The volume effect on revenues in 1999 was partially offset by lower prices.
In 1998, the gains from sales of Reynolds Wrap aluminum foil and new
products were offset by lower sales of packaging products with the
elimination of certain low-margin products.
24
<PAGE> 25
RESULTS OF OPERATIONS - continued
- ---------------------
GLOBAL BUSINESS UNITS - continued
Packaging and Consumer - continued
The increase in nonaluminum sales in 1999 resulted from higher sales of
foodservice, graphics and plastic consumer products. The volume increase
was partially offset by lower prices.
Operating income increased in 1999 because of the higher sales volume and
lower costs for conversion and aluminum raw materials. These benefits
were mostly offset by lower prices and higher costs for other raw
materials. 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.
Looking forward, this business unit expects to enjoy sales growth from
acquisitions completed in 1999, the benefits of expansions at plastic and
printing plants, and new product introductions.
<TABLE>
<CAPTION>
CONSTRUCTION AND DISTRIBUTION
1999 1998 1997
----------------------------------
<S> <C> <C> <C>
Customer aluminum shipments 202 184 166
Revenues:
Customer - aluminum $ 679 $681 $614
- nonaluminum 346 314 328
----------------------------------
Total $1,025 $995 $942
==================================
Operating income $ 42 $ 39 $ 41
==================================
</TABLE>
The Construction and Distribution global business unit consists
principally of 48 distribution centers in the U.S., Europe, Canada and
Mexico and four manufacturing plants, two in the U.S. and two in Europe.
The increase in aluminum shipments in 1999 and 1998 resulted from strong
demand for distribution products. All of our major distribution products
(plate, sheet and extrusions) benefited from market share growth in our
major domestic markets. Construction products shipments were lower in
1999 after growing in 1998. Shipments in 1999 were adversely affected by
weak market conditions in Germany, the China/Pacific Rim area and Latin
America. Shipments were higher in 1998 because of our global expansion
efforts and strong demand for aluminum composite material.
The effect of the shipping volume increase on aluminum revenues in 1999
was totally offset by lower prices. The decline in prices reflected lower
material costs. The increase in aluminum revenues in 1998 was the result
of the shipping volume increase while prices remained relatively flat.
Shipments of stainless steel distribution products increased 17% in 1999
(including the effect of acquisitions) and 8% in 1998. The effect of
these volume increases on nonaluminum revenues was offset by lower prices,
especially in 1998. Prices for these products, under pressure due to
lower material costs resulting from global supply/demand imbalances, began
to improve in late 1999.
Operating income in 1999 and 1998 benefited from the higher shipping
volumes. This was somewhat offset by lower capacity utilization in
construction products plants resulting from weak business conditions in
certain foreign markets. In 1998, we incurred higher marketing costs to
expand construction products' global sales and distribution infrastructure
to enhance customer service.
Customers in our major distribution markets continue to experience a
strong business climate, and our outlook for the first quarter of 2000 is
strong. For construction products, we expect to see improvement as
economies around the world improve. With the expansion of our Merxheim,
France plant to produce aluminum composite material, we have improved our
ability to meet European and global demand for Reynobond aluminum
composite material from this plant and our U.S. plant.
25
<PAGE> 26
RESULTS OF OPERATIONS - continued
- ---------------------
GLOBAL BUSINESS UNITS - continued
TRANSPORTATION
<TABLE>
<CAPTION>
1999 1998 1997
--------------------------------
<S> <C> <C> <C>
Customer aluminum shipments 73 63 66
Customer revenues $398 $336 $353
Operating income (loss) (28) (19) 10
================================
</TABLE>
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 were higher in 1999 because of strong demand for
cast and forged aluminum wheels. Our available supply increased due to
improved capacity utilization and the completion of the expansion of our
Virginia forged aluminum wheel plant in early 1999. The volume impact on
revenues was partially offset by lower prices.
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 in 1998 were somewhat offset by higher
shipments of forged aluminum wheels from our Virginia plant. Revenues in
1998 also declined due to lower prices for wheels because of competition
for new business.
The increased losses in 1999 and 1998 were due to start-up costs relating
to an engine cradle program at our Indiana automotive structures plant,
higher conversion costs resulting from manufacturing difficulties in wheel
operations and lower selling prices.
Despite significant effort, this business unit was not able to return to
profitability because of two major challenges. The first was in the
forged wheels business. We built a new plant in Lebanon, Virginia that
uses a new technology. We have now constructed two lines at the plant.
In 1999, the capability of the plant fell short of the projections on
which sales commitments had been made. In order to meet promised
deliveries to customers - and in some instances to keep customer
operations running - we incurred significantly higher costs. This
situation has been improving, and our wheel business overall realized
important year-over-year improvement in 1999. We expect the wheel
business to become profitable in 2000.
The second major challenge is in our structures operations. Together with
General Motors, we have pioneered a new aluminum automotive component -
the engine cradle. We underestimated the technological and operational
requirements of producing this new product, and we have incurred
significantly higher spending and resource allocation to meet promised
deliveries. This situation is also improving, and we expect better
results in 2000.
Evaluating opportunities for strategic alliances in this business unit has
been part of our plan for performance improvement. During 1999, we looked
at a number of options and progressed to serious discussions. All of this
activity, however, was suspended once our merger with Alcoa was announced.
26
<PAGE> 27
RESULTS OF OPERATIONS - continued
- ---------------------
GLOBAL BUSINESS UNITS - continued
RESTRUCTURING
No revenues or operating results are included in the Restructuring
category in 1999. Prior to 1999, this category consisted of the following
operations that 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
. Alabama can stock complex
. 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
Customer revenues generated by these operations were $1.4 billion in 1998
and $2.7 billion in 1997. 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.
For additional information concerning the Company's restructuring
activities, see Notes 3 and 12 to the consolidated financial statements.
OTHER
This category consists principally of European extrusion operations and
investments in Canada, China, Latin America and Saudi Arabia, and real
estate.
The increase in shipments and revenues in 1999 resulted from improved
demand at European extrusion operations.
Operating income was higher in 1999 because of improved operations in
emerging markets and higher equity income in our Latin American can
operations. The increased operating loss in 1998 was due to lower equity
income in our Latin American can operations.
In early 2000, we sold our remaining investment in a Canadian rolling mill
and related assets that was included in this category. This transaction
will not have a material impact on our operating results or financial
position.
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 1999 and 1998 due to lower primary
aluminum prices and the Company's restructuring activities in 1998 and
1997. Revenues in Canada increased in 1999 as primary aluminum previously
sold internally became available for customer shipments because we no
longer need to supply downstream fabricating operations that have been
sold.
INTEREST EXPENSE
Interest expense decreased in 1999 because of:
. lower amounts of debt outstanding
. lower average interest rates due to extinguishing higher cost debt
. higher amounts of capitalized interest
Interest expense decreased in 1998 because of lower amounts of debt
outstanding.
27
<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 11 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 1999 and 1998, credits and other tax benefits
. additionally in 1997, the adverse effect of permanent basis
differences on asset dispositions
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, 1999, we had $822 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, 1999, the accrual was $162 million.
The accrual reflects our best estimate of the ultimate liability for known
remediation costs.
Amounts accrued for two sites - our Massena, New York and Troutdale,
Oregon primary aluminum plants - represent individually material portions
of the accrual at December 31, 1999. For information about the current
status of these two sites, see the discussion in Item 1 under
"Environmental Compliance." At most of the other Superfund sites where
the Company has been identified as a PRP, the Company is one of many PRPs,
and our share of the anticipated cleanup costs is expected to be small.
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 contribution 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 2005. We expect cash provided by
operating activities to provide the funds for environmental capital,
operating and remediation expenditures.
28
<PAGE> 29
RESULTS OF OPERATIONS - continued
- ---------------------
ENVIRONMENTAL - continued
Annual capital expenditures for equipment designed for environmental
control purposes averaged approximately $57 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 2000 through 2002 to be approximately $80 million per
year. We estimate annual capital expenditures for environmental control
facilities will be approximately $24 million in 2000, $30 million in 2001
and $21 million in 2002. The majority of these expenditures are for the
capital spending program referred to below at our primary aluminum plant
in Massena, New York.
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 $175
million at our primary aluminum plant in Massena, 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 2002. 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 $200 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
13 to the consolidated financial statements.
YEAR 2000 READINESS DISCLOSURE
In 1999, we completed a formal program to address and resolve potential
exposure associated with information and non-information technology
systems arising from the Year 2000 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 treat 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 disruption
of business operations.
Our goal was that none of our critical business operations or computer
processes that are shared with suppliers and customers would be
substantially impaired by the advent of the year 2000. We accomplished
this goal and experienced no business interruptions as a result of Year
2000 problems. The minor Year 2000 problems encountered (e.g., incorrect
invoice dates) were solved in a timely manner. We do not anticipate the
need for additional contingency planning. However, we will continue
monitoring for Year 2000 issues beyond those already addressed and
anticipate that any additional problems will be resolved using resources
normally available to the Company.
The total cost of our Year 2000 remediation project was approximately $22
million, which included labor, equipment and license costs.
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.
29
<PAGE> 30
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
WORKING CAPITAL
<TABLE>
<CAPTION>
December 31
-------------------------
1999 1998
-------------------------
<S> <C> <C>
Working capital $137 $361
Ratio of current assets to current liabilities 1.1/1 1.3/1
</TABLE>
The decline in working capital was due in part to the sale of $128 million
of accounts receivable under a non-recourse facility. We are able to
operate with lower levels of working capital as a result of our
restructuring activities.
OPERATING ACTIVITIES
<TABLE>
<CAPTION>
1999 1998 1997
----------------------------
<S> <C> <C> <C>
Net cash provided by operating activities $406 $339 $363
</TABLE>
We used the net cash provided by operating activities for the past three
years primarily to fund capital investments.
INVESTING ACTIVITIES
The following table shows capital investments in the following categories:
operational (replacement equipment, environmental control projects, etc.)
and strategic (performance improvement, acquisitions and investments).
<TABLE>
<CAPTION>
1999 1998 1997
------------------------------
<S> <C> <C> <C>
Operational $116 $155 $152
Strategic 410 186 120
------------------------------
Total capital investments $526 $341 $272
==============================
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 2000.
PACKAGING AND CONSUMER
. expanded a U.S. plastic film plant (completed in 1997)
. modernizing U.S. foil plants (to be completed in 2000)
. acquired in 1999 four producers of flexographic separations and
plates for the packaging industry in the U.S. and one in Canada and a U.S.
manufacturer of microwaveable containers for the foodservice industry
CONSTRUCTION AND DISTRIBUTION
. expanded a plant in Europe that will produce composite architectural
products (substantially completed in 1999)
. acquired and opened new metals distribution centers in the U.S. and
Canada in 1999
TRANSPORTATION
. constructed (completed in 1997) and expanded (completed in 1999) a
forged wheel plant in Virginia
. expanded and modified a plant in Indiana that produces bumpers,
engine cradles and other automotive components (completed in 1999)
30
<PAGE> 31
LIQUIDITY AND CAPITAL RESOURCES - continued
- -------------------------------
INVESTING ACTIVITIES - continued
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 2000
Capital investments planned for 2000 (approximately $265 million excluding
acquisitions) are primarily for those strategic projects now under way and
continuing operating requirements. We expect to fund these capital
investments with cash provided by operating activities.
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, 1999, $13 million of our shelf registration remained
available for the issuance of debt securities. We also have committed
credit facilities of $835 million, of which $685 million was available at
December 31, 1999. A summary of significant financing activities over the
past three years follows:
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 under
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 under credit facilities
. terminated a $100-million interest rate swap agreement
1999
. increased short-term borrowings by $313 million
. increased available revolving credit facilities by $185 million (see
Note 8)
. issued $100 million of medium-term notes (see Note 8)
. increased the authorization to issue commercial paper from $350
million to $500 million
. repurchased common stock with part of the proceeds from sales of
assets (see the Consolidated Statement of Changes in Stockholders' Equity)
We used the proceeds from the borrowings in 1999 to repay at maturity $100
million of 9 3/8% debentures, to reduce borrowings under our revolving
credit facilities and to make other scheduled debt payments.
In early 2000, we increased the amount of debt securities we can issue
under our shelf registration to $163 million.
31
<PAGE> 32
RISK FACTORS
- ------------
This section should be read in conjunction with Items 1 and 3 of this
report and with the preceding portions of this Item.
This report contains (and oral communications made by or on behalf of
Reynolds may contain) forecasts, projections, estimates, statements of
management's plans, objectives and strategies for Reynolds and other
forward-looking statements<FN1>. Reynolds' expectations for the future and
related forward-looking statements are based on a number of assumptions
and forecasts, including:
. world economic growth and other economic indicators (including rates
of inflation, industrial production, housing starts and light vehicle
sales)
. trends in Reynolds' key markets
. global aluminum supply and demand conditions
. primary aluminum prices
By their nature, forward-looking statements involve risk and uncertainty,
and various factors could cause Reynolds' 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 remains optimistic about the demand for aluminum for 2000.
The continuing economic expansion in North America along with strong
recoveries in both Western Europe and Asia (excluding Japan) has resulted
in accelerating consumption growth, especially in the fourth quarter of
1999. Early estimates suggest that aluminum consumption grew by more than
5% in 1999, exceeding our earlier forecasts. We expect that consumption
of aluminum will continue to grow at a rate of 4% to 6% per year for 2000
and 2001.
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 following factors also could affect Reynolds' 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 primary
aluminum makes up a significant portion of Reynolds' shipments, changes in
aluminum pricing have a rapid effect on its operating results. Reynolds'
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 Reynolds' competitors are larger than Reynolds 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
Reynolds' key markets. Plastic products compete with similar products
made by Reynolds' competitors, as well as with products made of glass,
aluminum, steel, paper, wood and ceramics, among others. Unanticipated
actions or developments by or affecting Reynolds' competitors and/or the
willingness of customers to accept substitutions for the products sold by
Reynolds could affect results.
________________________
<FN>
<FN1>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,"
"scheduled," or "plan" and words of similar effect.
</FN>
32
<PAGE> 33
RISK FACTORS - continued
- ------------
. As discussed in Part I, Item 1, Reynolds spends substantial capital
and operating amounts relating to ongoing compliance with environmental
laws. In addition, Reynolds is involved in remedial investigations and
actions in connection with past disposal of wastes. The identification of
additional material remediation sites in the future (that are presently
unknown) at which Reynolds may be named as a potentially responsible party
could have a material adverse effect on its results of operations in a
future interim or annual reporting period. Moreover, estimating future
environmental compliance and remediation costs is imprecise due to:
- continuing evolution of environmental laws and regulatory
requirements and uncertainties about their application to Reynolds'
operations
- availability and application of technology
- allocation of costs among potentially responsible parties
. Reynolds has investments and activities in various emerging markets,
including China, India and Brazil. While emerging markets offer strong
growth potential, they also present a higher degree of risk than more
developed markets. In addition to the business risks inherent in
developing and servicing new markets, economic conditions may be more
volatile, legal systems less developed and predictable, and the
possibility of various types of adverse government action more pronounced.
. Unanticipated material legal proceedings or investigations, or the
disposition of those currently pending against Reynolds other than as
anticipated by management and counsel, could have a material adverse
effect on its results of operations for a particular reporting period.
. Changes in the costs or availability of supply of power, resins,
caustic soda, green coke and other raw materials can materially affect
results. Substantial increases in power costs, particularly in the
Pacific Northwest, may adversely affect Reynolds' primary aluminum
production plants which require reliable, low-cost power.
. Changes in laws and regulations, both U.S. and foreign, or their
interpretation and application, including changes in tax laws and their
interpretation and application, could affect Reynolds' results.
. A number of Reynolds' operations are cyclical and can be influenced
by economic conditions.
. A failure to complete major capital projects, such as expansion of
the Worsley Alumina Refinery (by reason of construction delays or
disputes, labor unrest or otherwise), as scheduled and within budget or a
failure to successfully launch new growth or strategic business programs,
such as the engine cradle program where we are experiencing higher than
anticipated costs, could affect Reynolds' results.
. A strike at a customer facility or a significant downturn in the
business of a key customer supplied by Reynolds could affect its results.
The proposed merger with Alcoa Inc. is subject to certain conditions,
including antitrust clearance. As discussed under "Merger" in Part I,
Item 1, on September 29, 1999, the Antitrust Division issued a request for
additional information and documentary material (a "second request").
On February 11, 2000, both Reynolds and Alcoa announced that they believed
that they were in substantial compliance with the second request. They
also advised the Department of Justice that they would not close the merger
before March 31, 2000, in order to provide the Department sufficient time
to review the transaction. In addition, the European Commission
has until no later than May 10, 2000 to complete its investigation and to
make a final determination with respect to the merger. Reynolds and Alcoa
have also made filings under the competition laws of Canada, Australia and
certain other countries where the companies have significant operations.
Reynolds and Alcoa have been advised that the Canadian Competition Bureau
has classified this merger as "very complex." Its review is expected to
be completed by May 24, 2000. The Australian review process is also
expected to be completed by the end of May 2000. It is possible that
regulatory authorities may impose conditions on the combined operations
or require divestitures as a condition to approving the merger. While
Reynolds is working promptly toward completion of the merger, no assurances
can be given as to whether regulatory delays will be encountered or regulatory
conditions to the merger imposed, or the possible effects of such delays or
conditions.
33
<PAGE> 34
RISK FACTORS - continued
- ------------
In addition to the factors referred to above, Reynolds is exposed to
general financial, political, economic and business risks in connection
with its worldwide operations. Reynolds continues to evaluate and manage
its operations in a manner to mitigate the effects from exposure to such
risks. In general, Reynolds' 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 Reynolds operates will not
change significantly overall.
34
<PAGE> 35
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.
35
<PAGE> 36
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF INCOME
(millions, except per share amounts)
==============================================================================
Years ended December 31 1999 1998 1997
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES $4,796 $5,859 $6,900
COSTS AND EXPENSES
Cost of products sold 3,928 4,774 5,658
Selling, general and administrative expenses 361 378 406
Depreciation and amortization 242 252 368
Interest 75 114 153
Merger-related expenses 19 - -
Operational restructuring effects - net - 144 75
- ------------------------------------------------------------------------------
4,625 5,662 6,660
- ------------------------------------------------------------------------------
EARNINGS
Income before income taxes, extraordinary
loss and cumulative effect of accounting
change 171 197 240
Taxes on income 47 45 104
- ------------------------------------------------------------------------------
Income before extraordinary loss and
cumulative effect of accounting change 124 152 136
Extraordinary loss - (63) -
Cumulative effect of accounting change - (23) -
- ------------------------------------------------------------------------------
NET INCOME $ 124 $ 66 $ 136
==============================================================================
EARNINGS PER SHARE
Basic:
Average shares outstanding 63,739,000 69,709,000 73,412,000
Income before extraordinary loss and
cumulative effect of accounting change $1.95 $2.18 $1.86
Extraordinary loss - (0.91) -
Cumulative effect of accounting change - (0.33) -
- ------------------------------------------------------------------------------
Net income $1.95 $0.94 $1.86
==============================================================================
Diluted:
Average shares outstanding 64,043,000 69,937,000 74,004,000
Income before extraordinary loss and
cumulative effect of accounting change $1.94 $2.18 $1.84
Extraordinary loss - (0.91) -
Cumulative effect of accounting change - (0.33) -
- ------------------------------------------------------------------------------
Net income $1.94 $0.94 $1.84
==============================================================================
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>
36
<PAGE> 37
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET
==============================================================================
December 31 (millions) 1999 1998
- ------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 55 $ 94
Receivables:
Customers, less allowances of $10 (1998 - $14) 561 710
Other 93 184
- ------------------------------------------------------------------------------
Total receivables 654 894
Inventories 519 500
Prepaid expenses and other 61 114
- ------------------------------------------------------------------------------
Total current assets 1,289 1,602
Unincorporated joint ventures and associated companies 1,692 1,478
Property, plant and equipment - net 2,016 2,024
Deferred taxes 419 363
Other assets 534 667
- ------------------------------------------------------------------------------
Total assets $5,950 $6,134
==============================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade payables $ 405 $ 401
Accrued compensation and related amounts 172 183
Payables to unincorporated joint ventures and
associated companies 48 75
Commercial paper 75 82
Notes payable to banks 105 34
Long-term debt 153 196
Other liabilities 194 270
- ------------------------------------------------------------------------------
Total current liabilities 1,152 1,241
Long-term debt 1,067 1,035
Postretirement benefits 962 1,029
Environmental 138 161
Deferred taxes 287 272
Other liabilities 198 202
Stockholders' equity:
Common stock 1,575 1,533
Retained earnings 1,257 1,222
Treasury stock, at cost (626) (526)
Accumulated other comprehensive income (60) (35)
- ------------------------------------------------------------------------------
Total stockholders' equity 2,146 2,194
Contingent liabilities and commitments (Note 13)
- ------------------------------------------------------------------------------
Total liabilities and stockholders' equity $5,950 $6,134
==============================================================================
The accompanying notes to consolidated financial statements are an integral
part of these statements.
</TABLE>
37
<PAGE> 38
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CASH FLOWS
==============================================================================
Years ended December 31 (millions) 1999 1998 1997
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 124 $ 66 $ 136
Adjustments to reconcile to net cash
provided by operating activities:
Depreciation and amortization 242 252 368
Merger-related expenses 17 - -
Operational restructuring effects - 144 75
Extraordinary loss - 63 -
Cumulative effect of
accounting change - 23 -
Other 16 (3) 28
Changes in operating assets
and liabilities net of
effects from acquisitions
and dispositions:
Accounts payable, accrued
and other liabilities (18) (106) 105
Receivables 107 (53) (194)
Inventories (5) 78 (108)
Environmental and restructuring
liabilities (43) (52) (48)
Other (34) (73) 1
- ------------------------------------------------------------------------------
Net cash provided by operating
activities 406 339 363
INVESTING ACTIVITIES
Capital investments:
Operational (116) (155) (152)
Strategic (410) (186) (120)
Sales of assets - operational
restructuring 204 1,147 367
Other (23) (38) (3)
- ------------------------------------------------------------------------------
Net cash provided by (used in)
investing activities (345) 768 92
FINANCING ACTIVITIES
Proceeds from long-term debt 250 415 -
Reduction of long-term debt and
other financing liabilities (515) (929) (245)
Increase (decrease) in short-term
borrowings 313 47 (138)
Cash dividends paid (90) (100) (99)
Repurchase of common stock (100) (526) -
Stock options exercised 42 10 59
- ------------------------------------------------------------------------------
Net cash used in financing activities (100) (1,083) (423)
CASH AND CASH EQUIVALENTS
Net increase (decrease) (39) 24 32
At beginning of year 94 70 38
- ------------------------------------------------------------------------------
At end of year $ 55 $ 94 $ 70
==============================================================================
Supplemental disclosure of cash
flow information
Cash paid during the year for:
Interest $ 101 $ 134 $ 164
Income taxes 40 117 21
==============================================================================
The accompanying notes to consolidated financial statements are an integral
part of these statements.
</TABLE>
38
<PAGE> 39
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
===========================================================================
- ---------------------------------------------------------------------------
Years ended December 31 1999 1998 1997
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
SHARES (thousands)
Common stock
Balance at January 1 74,105 73,909 72,719
Shares issued under employee
benefit plans 721 196 1,190
- ---------------------------------------------------------------------------
Balance at December 31 74,826 74,105 73,909
- ---------------------------------------------------------------------------
Treasury stock
Balance at January 1 (9,648) - -
Purchased and held as
treasury stock (1,696) (9,648) -
- ---------------------------------------------------------------------------
Balance at December 31 (11,344) (9,648) -
- ---------------------------------------------------------------------------
Net common shares outstanding 63,482 64,457 73,909
===========================================================================
DOLLARS (millions)
Common stock
Balance at January 1 $1,533 $1,521 $1,451
Shares issued under
employee benefit plans 42 12 70
- ---------------------------------------------------------------------------
Balance at December 31 $1,575 $1,533 $1,521
- ---------------------------------------------------------------------------
Retained earnings
Balance at January 1 $1,222 $1,253 $1,220
Net income 124 66 136
Cash dividends declared:
Common stock (89) (97) (103)
- ---------------------------------------------------------------------------
Balance at December 31 $1,257 $1,222 $1,253
- ---------------------------------------------------------------------------
Treasury stock
Balance at January 1 $ (526) $ - $ -
Purchased and held as
treasury stock (100) (526) -
- ---------------------------------------------------------------------------
Balance at December 31 $ (626) $ (526) $ -
- ---------------------------------------------------------------------------
Accumulated other comprehensive
income (loss)
Balance at January 1 $ (35) $ (35) $ (37)
Foreign currency translation
adjustments (27) 5 -
Income taxes 2 (5) 2
--------------------------------------
Other comprehensive income (loss) (25) - 2
- ---------------------------------------------------------------------------
Balance at December 31 $ (60) $ (35) $ (35)
- ---------------------------------------------------------------------------
Total stockholders' equity $2,146 $2,194 $2,739
===========================================================================
COMPREHENSIVE INCOME (millions)
Net income $ 124 $ 66 $ 136
Other comprehensive income (loss) (25) - 2
- ---------------------------------------------------------------------------
Comprehensive income $ 99 $ 66 $ 138
===========================================================================
The accompanying notes to consolidated financial statements are an
integral part of these statements.
</TABLE>
39
<PAGE> 40
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 1999 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. Products produced are distributed in kind and cash
production costs are allocated to the joint venturers based upon their
respective percentage interests in the facilities. Our operating results
include our share of cash production costs and non-cash production charges
(principally depreciation) as well as revenues from the ultimate sale by us
of our share of the products. 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 $171 million at the end
of 1999 (1998 - $178 million). FIFO and average-cost method inventories
were $348 million at the end of 1999 (1998 - $322 million). Inventories
would increase by $233 million at the end of 1999 (1998 - $221 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.
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.
40
<PAGE> 41
1. ACCOUNTING POLICIES - continued
POSTEMPLOYMENT BENEFITS
The expected cost of postemployment benefits is accrued when it becomes
probable that such benefits will be paid.
HEDGING
Forward, futures, option and swap contracts are designated to manage market
risks resulting from fluctuations in the aluminum, natural gas, foreign
currency and debt markets. These instruments, which are not held for
trading purposes, are effective in minimizing such risks by creating equal
and offsetting exposures. Unrealized gains and losses are deferred and
recorded as a component of the underlying hedged transaction when it occurs.
Realized gains or losses from matured and terminated hedge contracts are
recorded in other assets or liabilities until the underlying hedged
transactions are consummated. Realized and unrealized gains or losses on
hedge contracts relating to transactions that are subsequently not expected
to occur are recognized in results currently. None of these instruments
contains multiplier or leverage features. There is exposure to credit risk
if the other parties to these instruments do not meet their obligations.
Creditworthiness of the other parties is closely monitored, and they are
expected to fulfill their obligations. Contracts used to manage risks in
these markets are not material.
CUMULATIVE EFFECT OF ACCOUNTING CHANGE
In 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 an
after-tax charge for the cumulative effect of accounting change of $23
million.
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.
STOCK OPTIONS
Stock options are accounted for using the intrinsic value method.
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.
ACCOUNTING FOR THE COSTS OF DEVELOPING OR OBTAINING INTERNAL-USE SOFTWARE
In 1999, the Company adopted the AcSEC's Statement of Position (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. In prior years, the Company capitalized costs of purchased
software and expensed internal costs of developing software. The effect of
adopting this SOP was not material to 1999 results.
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, 2001. The
Company has not determined the impact this statement will have on its
financial position or results of operations.
2. PROPOSED MERGER
On August 18, 1999, Reynolds, Alcoa Inc. (Alcoa) and RLM Acquisition Corp.,
a wholly owned subsidiary of Alcoa, entered into an agreement and plan of
merger. Under the merger agreement, each outstanding share of Reynolds
common stock would be converted into 1.06 shares of Alcoa common stock and
Reynolds would become wholly owned by Alcoa. On January 10, 2000, Alcoa
announced that its Board of Directors had declared a two-for-one split of
Alcoa's common stock to Alcoa shareholders of record on May 26, 2000. The
stock split is subject to approval of Alcoa shareholders who must approve an
amendment to Alcoa's articles to increase the authorized shares of common
stock at Alcoa's annual meeting on May 12, 2000. If approved, the stock
split would be distributed on June 9, 2000. Shares of Alcoa stock that are
issued in the merger will be adjusted, as necessary, to reflect the stock
split.
41
<PAGE> 42
2. PROPOSED MERGER - continued
The proposed merger, which was approved by Reynolds' stockholders at a
special meeting held on February 11, 2000, is subject to customary closing
conditions, including antitrust clearances.
The Hart-Scott-Rodino Antitrust Improvements Act of 1976 prohibits Alcoa and
Reynolds from completing the merger until certain information has been
furnished to the Antitrust Division of the Department of Justice and the
Federal Trade Commission, and until certain waiting period requirements have
been satisfied. Alcoa filed a Hart-Scott-Rodino Premerger Notification and
Report Form on August 24, 1999 and Reynolds filed such a Form on August 30,
1999. On September 29, 1999, the Antitrust Division issued a request for
additional information and documentary material (a "second request"). On
February 11, 2000, both Reynolds and Alcoa announced that they believed that
they were in substantial compliance with the second request. They also
advised the Department of Justice that they would not close the merger
before March 31, 2000, in order to provide the Department sufficient time to
review the transaction.
In Europe, certain regulations require that Alcoa file a premerger
notification form with the Commission of the European Communities prior to
consummation of the proposed merger. Alcoa filed such notification on
November 18, 1999. This filing began an initial one-month review period in
which the European Commission was required to determine whether there are
sufficiently "serious doubts" about the proposed merger's compatibility with
the common market to require a more complete review. The initial one-month
period expired on December 20, 1999, whereupon the European Commission
issued a determination that the proposed merger did require a more complete
review. The European Commission must complete its investigation and make a
final determination with respect to the proposed merger no later than May
10, 2000.
Reynolds and Alcoa have also made filings under the competition laws of
Canada, Australia and certain other countries where the companies have
significant operations. Alcoa and Reynolds have been advised that the
Canadian Competition Bureau has classified this merger as "very complex."
Its review is expected to be completed by May 24, 2000. The Australian
review process is also expected to be completed by the end of May 2000.
The merger agreement contains certain restrictions on the conduct of
Reynolds' business before completion of the merger. For example, Reynolds
has agreed to operate its business only in the ordinary course, to refrain
from taking certain corporate actions without the consent of Alcoa, and not
to solicit alternative acquisition proposals.
In 1999, the Company recognized $19 million of merger-related expenses.
Merger-related expenses are principally for investment banking and legal
services and an increase in the expense accrual for a long-term compensation
plan, which varies based principally on appreciation of the Company's stock
price as compared to the S&P Basic Materials Index. The Company expects
total merger-related expenses to be at least $35 million.
3. OPERATIONAL RESTRUCTURING
In the first quarter of 1999, the final closing of the sale of the Company's
Alabama can stock complex occurred. 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
. Alabama can stock complex (with final closing in early 1999)
42
<PAGE> 43
3. OPERATIONAL RESTRUCTURING - continued
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
Financial information for 1998 and 1997 relating to operations divested is
reflected in the Restructuring category in Note 12. Customer revenues
generated by these operations were $1.4 billion in 1998 and $2.7 billion in
1997. Depreciation expense in 1998 was reduced $65 million as a result of
ceasing depreciation on assets held for sale relating to the divestitures.
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.
The Company recognized the following operational restructuring charges:
<TABLE>
<CAPTION>
1998 1997
----------------------
<S> <C> <C>
Employee terminations $ 39 $49
Additional postretirement benefits 105 -
Asset dispositions: Losses 337 85
(Gains) (349) (64)
Other 12 5
----------------------
$ 144 $75
======================
</TABLE>
The charges for employee terminations recorded in 1998 and 1997 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. Employees
terminated in each period were 1,385 in 1998 and 498 in 1997.
An analysis of the accrual for restructuring liabilities follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------------------------
<S> <C> <C> <C>
Balance at January 1 $ 48 $ 44 $ 12
Accruals - 44 54
Payments (33) (40) (22)
------------------------------
Balance at December 31 $ 15 $ 48 $ 44
==============================
</TABLE>
Liabilities at December 31, 1999 relating to the Company's restructuring
activities are expected to be substantially satisfied in 2000 with cash
provided by operating activities. 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 4 and 9).
Early in the first quarter of 2000, the Company sold its investment in a
Canadian rolling mill and related assets. This transaction will not have a
material impact on our operating results or financial position.
43
<PAGE> 44
4. EXTRAORDINARY LOSS
The Company had an extraordinary loss 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.
5. 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 effect of accounting change."
<TABLE>
<CAPTION>
1999 1998 1997
---------------------------------------------
<S> <C> <C> <C>
Income (numerator):
Income before extraordinary
loss and cumulative effect
of accounting change $124 $152 $136
Average shares (denominator):
Basic 63,739,000 69,709,000 73,412,000
Effect of dilutive securities 304,000 228,000 592,000
---------------------------------------------
Diluted 64,043,000 69,937,000 74,004,000
=============================================
Per share amounts for income
before extraordinary loss
and cumulative effect of
accounting change:
Basic earnings per share $1.95 $2.18 $1.86
Diluted earnings per share 1.94 2.18 1.84
Antidilutive securities excluded:
Stock options 1,899,000 2,452,000 505,000
</TABLE>
6. UNINCORPORATED JOINT VENTURES AND ASSOCIATED COMPANIES
The Company has interests in unincorporated joint ventures which produce
alumina and primary aluminum. It also has interests in foreign-based
associated companies which produce bauxite, alumina, primary aluminum,
hydroelectric power and fabricated aluminum products. At December 31, the
Company's investment in these activities consisted of the following:
<TABLE>
<CAPTION>
1999 1998
----------------------
<S> <C> <C>
Unincorporated joint ventures
Current assets $ 50 $ 52
Current liabilities (56) (89)
Property, plant and equipment and other assets 1,402 1,203
----------------------
Net investment 1,396 1,166
----------------------
Associated companies
Investments 236 253
Advances 60 59
----------------------
Net investment 296 312
----------------------
Total $1,692 $1,478
======================
</TABLE>
Property, plant and equipment and other assets for the unincorporated joint
ventures in 1999 includes $359 million (1998 - $150 million) of construction
in progress for the expansion of the Worsley Alumina Refinery joint venture.
44
<PAGE> 45
7. PROPERTY, PLANT AND EQUIPMENT (AT COST)
<TABLE>
<CAPTION>
December 31
--------------------
1999 1998
--------------------
<S> <C> <C>
Land, land improvements and mineral properties $ 252 $ 244
Buildings and leasehold improvements 803 781
Machinery and equipment 3,148 3,087
Construction in progress 133 170
--------------------
4,336 4,282
Less allowances for depreciation and amortization 2,320 2,258
--------------------
Net property, plant and equipment $2,016 $2,024
====================
</TABLE>
8. FINANCING ARRANGEMENTS
<TABLE>
<CAPTION>
December 31
-------------------
1999 1998
-------------------
<S> <C> <C>
Public debt securities:
Medium-term notes $ 418 $ 329
9-3/8% debentures due 1999 - 100
9% debentures due 2003 21 21
6-5/8% amortizing notes 171 228
Industrial and environmental
control revenue bonds 201 227
Commercial paper 250 -
Other arrangements:
Long-term credit facilities 150 315
Mortgages and other notes payable 9 11
-------------------
1,220 1,231
Amounts due within one year 153 196
-------------------
Long-term debt $1,067 $1,035
===================
</TABLE>
Long-term debt at December 31, 1999 matures as follows:
2000 $153
2001 569
2002 70
2003 58
2004 35
2005 - 2025 335
The medium-term notes and 9% debentures were issued under a shelf
registration. The medium-term notes bear interest at an average fixed rate
of 8.5% and have maturities ranging from 2000 to 2013. At December 31,
1999, $13 million of debt securities remained unissued under the shelf
registration. In early 2000, the Company increased the amount of debt
securities it can issue under the shelf registration to $163 million. 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 (5.9% at December 31, 1999). The variable
rate is based on the London Interbank Offer Rate (LIBOR). 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 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 2000 and 2002.
45
<PAGE> 46
8. FINANCING ARRANGEMENTS - continued
Industrial and environmental control revenue bonds consist principally of
variable-rate debt with interest rates averaging 4.8% at December 31, 1999.
The variable rates are based on market interest rates. These bonds require
principal repayments in lump sums periodically between 2000 and 2025.
Letters of credit issued by banks support most of these bonds.
The Company has classified $250 million of commercial paper as long-term
debt because the Company intends to refinance the debt on a long-term basis
and the commercial paper is supported by a $500 million long-term credit
facility. The Company also has a $150 million long-term credit facility.
These long-term credit facilities have variable interest rates (6.4% at
December 31, 1999) and mature in 2001. The variable rates are based on
LIBOR. The Company pays an annual commitment fee of .1% on the unused
portion of these facilities. In addition to the long-term credit
facilities, the Company has a short-term credit facility of $185 million
that was unutilized and available at December 31, 1999. This credit
facility has a variable interest rate that is based on LIBOR. The Company
pays an annual commitment fee of .125% on the unused portion.
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, 1999,
the Company exceeded all such requirements.
The fair value of long-term debt was approximately equal to book value at
the end of 1999 and 1998. The fair value was determined by using discounted
cash flow analysis.
Interest capitalized was $24 million during 1999 (1998 - $12 million, 1997 -
$8 million).
Interest rates on short-term borrowings are based on market rates. The
weighted-average interest rates were:
<TABLE>
<CAPTION>
December 31
----------------------
1999 1998
----------------------
<S> <C> <C>
Notes payable to banks 6.5% 4.2%
Commercial paper 6.5 5.9
</TABLE>
9. 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.
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 11.3 million shares have been repurchased through
December 31, 1999. (See the Consolidated Statement of Changes in Stockholders'
Equity for additional share repurchase information.) Under the merger
agreement with Alcoa, the Company has agreed to refrain from purchasing
additional shares without the consent of Alcoa. (See Note 2.)
46
<PAGE> 47
9. 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. The stock options outstanding at December 31, 1999 vest
in one year and are exercisable between one year and ten years from the
date of grant. Upon a change in control of the Company, all outstanding
options would become immediately exercisable. The range of exercise prices
for the stock options outstanding at December 31, 1999 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>
1999 1998 1997
----------------------------------------
<S> <C> <C> <C>
Outstanding at January 1 5,254 4,828 5,318
Granted 713 633 711
Exercised (721) (192) (1,190)
Expired/canceled (444) (15) (11)
----------------------------------------
Outstanding at December 31 4,802 5,254 4,828
Exercisable at December 31 4,092 4,621 4,121
Available for grant 2,007 304 923
Weighted-average prices:
Outstanding at January 1 $56 $55 $52
Granted 61 62 64
Exercised 54 47 50
Expired/canceled 60 62 56
Outstanding at December 31 57 56 55
Exercisable at December 31 56 55 53
</TABLE>
In addition to the above, 150,000 performance-based stock options expired in
1999.
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 1999, 1998 and 1997. The estimated fair value of the stock options
was determined by using the Black-Scholes option-pricing model. The
estimated fair values and the weighted-average assumptions used to estimate
those values follow:
<TABLE>
<CAPTION>
Stock Options
-----------------------------------
1999 1998 1997
-----------------------------------
<S> <C> <C> <C>
Risk-free interest rate 5.6% 5.5% 6.4%
Dividend yield 2.1% 2.2% 2.2%
Volatility factor of the expected
market price of the Company's
common stock .270 .256 .265
Expected life of the option 6 years 6 years 6 years
Estimated fair value of each stock
option granted $18.04 $17.53 $19.53
</TABLE>
47
<PAGE> 48
9. 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' value.
The pro forma information follows:
<TABLE>
<CAPTION>
1999 1998 1997
-------------------------
<S> <C> <C> <C>
Pro forma net income $ 117 $ 59 $ 127
Pro forma earnings per share: Basic 1.83 0.84 1.73
Diluted 1.82 0.84 1.72
</TABLE>
SHAREHOLDER RIGHTS PLAN
Under the shareholder rights plan each share of common stock has one right
attached and the rights trade with the common stock. The rights are
exercisable only if a person or group buys 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.
In connection with the merger agreement with Alcoa (see Note 2), the
Company amended the shareholder rights plan to render the plan inapplicable
to this transaction.
48
<PAGE> 49
10. PENSIONS AND OTHER POSTRETIREMENT BENEFITS
<TABLE>
<CAPTION>
Pension Benefits Other Benefits
-------------------- ----------------------
1999 1998 1999 1998
-------------------- ----------------------
<S> <C> <C> <C> <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at
beginning of year $2,349 $2,081 $ 964 $ 899
Service cost 31 36 6 7
Interest cost 162 151 62 62
Amendments 1 9 1 -
Actuarial losses (gains) (87) 166 (70) 60
Restructuring - 39 - 5
Benefits paid (161) (133) (79) (69)
-------------------- ----------------------
Benefit obligation at
end of year $2,295 $2,349 $ 884 $ 964
-------------------- ----------------------
CHANGE IN PLAN ASSETS
Fair value of plan assets
at beginning of year $2,277 $2,099 $ - $ -
Actual return on plan assets 383 295 - -
Company contributions 46 43 79 69
Restructuring - (27) - -
Benefits paid (161) (133) (79) (69)
-------------------- ----------------------
Fair value of plan assets
at end of year $2,545 $2,277 $ - $ -
-------------------- ----------------------
Funded status of the plans $ 250 $ (72) $ (884) $ (964)
Unrecognized net actuarial
loss (gain) (222) 101 (42) 27
Unrecognized prior service cost 59 66 (56) (67)
-------------------- ----------------------
Prepaid (accrued) benefit cost $ 87 $ 95 $ (982) $(1,004)
==================== ======================
AMOUNTS RECOGNIZED IN THE
CONSOLIDATED BALANCE SHEET
Prepaid benefit cost $ 111 $ 111 $ - $ -
Accrued benefit liability (37) (68) (982) (1,004)
Intangible asset 13 52 - -
-------------------- ----------------------
Net amount recognized $ 87 $ 95 $ (982) $(1,004)
==================== ======================
WEIGHTED-AVERAGE ASSUMPTIONS
AS OF DECEMBER 31
Discount rate 7.50% 6.75% 7.50% 6.75%
Expected return on plan assets 9.25 9.25 - -
Rate of compensation increase 4.50 4.50 - -
</TABLE>
49
<PAGE> 50
10. PENSIONS AND OTHER POSTRETIREMENT BENEFITS - continued
For measurement purposes, a 5.5% annual rate of increase in the per capita
cost of covered health care benefits was assumed for 2000. The rate was
assumed to decrease gradually to 5.0% in 2002 and remain at that level
thereafter.
<TABLE>
<CAPTION>
Pension Benefits Other Benefits
---------------------- -----------------------
1999 1998 1997 1999 1998 1997
---------------------- -----------------------
<S> <C> <C> <C> <C> <C> <C>
COMPONENTS OF
NET PERIODIC
BENEFIT COST
Service cost $ 31 $ 36 $ 37 $ 6 $ 7 $ 7
Interest cost 162 151 147 62 62 64
Expected return
on plan assets (189) (175) (158) - - -
Amortization of
prior service cost 11 14 19 (10) (13) (17)
Recognized net
actuarial loss (gain) 16 13 11 - - (1)
---------------------- -----------------------
Benefit cost $ 31 $ 39 $ 56 $58 $56 $ 53
====================== =======================
</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 1999 $ 3 $ (3)
Effect on postretirement
benefit obligation
as of December 31, 1999 $ 39 $(35)
</TABLE>
11. TAXES ON INCOME
The significant components of the provision for income taxes were:
<TABLE>
<CAPTION>
1999 1998 1997
-------------------------------
<S> <C> <C> <C>
Current:
Federal $ 7 $ 6 $ 13
Foreign 41 57 71
State 1 1 1
-------------------------------
Total current 49 64 85
-------------------------------
Deferred:
Federal 8 (31) (7)
Foreign 5 23 21
State (14) (12) (2)
-------------------------------
Total deferred (1) (20) 12
-------------------------------
Equity income (1) 1 7
-------------------------------
Total $47 $45 $104
===============================
</TABLE>
The deferred tax provision includes domestic carryforward
benefits of $11 million (1998 - $8 million, 1997 - $2 million).
50
<PAGE> 51
11. TAXES ON INCOME - continued
The effective income tax rate varied from the U.S. statutory rate as
follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------------------
<S> <C> <C> <C>
U.S. rate 35% 35% 35%
Income taxed at other
than the U.S. rate 1 (4) 9
Percentage depletion (2) (3) (2)
Credits and other tax
benefits (5) (6) -
State income taxes
and other (1) 1 1
------------------------
Effective rate 28% 23% 43%
========================
</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, 1999, the Company had $822 million (1998 - $844 million) of
deferred tax assets and $675 million (1998 - $694 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>
1999 1998
---------------------------------------------
Asset Liability Asset Liability
---------------------------------------------
<S> <C> <C> <C> <C>
Retiree health benefits 374 $ - $381 $ -
Tax carryforward benefits 170 - 141 -
Environmental and
restructuring costs 86 (2) 116 (2)
Other 60 95 39 78
Tax over book depreciation (236) 194 (235) 196
Valuation reserve relating
to tax carryforward benefits (20) - (20) -
---------------------------------------------
Total deferred tax assets
and liabilities 434 287 422 272
Amount included as current
in balance sheet 15 - 59 -
---------------------------------------------
Noncurrent deferred tax
assets and liabilities $419 $287 $363 $272
=============================================
</TABLE>
The tax carryforward benefits can be carried forward indefinitely except for
$68 million that will expire primarily between 2004 and 2014. 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 ($904
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 effect of accounting change was as
follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------------------------------
<S> <C> <C> <C>
Domestic $(67) $(86) $ 21
Foreign 238 283 219
------------------------------------
$171 $197 $240
====================================
</TABLE>
51
<PAGE> 52
12. 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, foodservice
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. (See Note 3 for a
discussion of the Company's restructuring activities.)
The Other category consists principally of European extrusion operations,
investments in Canada, China, Latin America and Saudi Arabia and real
estate. Part of the real estate, principally undeveloped land, is held for
sale and is expected to be sold over the next few years. The carrying
amount for these held-for-sale assets was $36 million at December 31, 1999.
Expenses relating to holding these assets, principally real estate taxes,
were approximately $1 million per year in each of the last three years.
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.
52
<PAGE> 53
12. COMPANY OPERATIONS - continued
Certain amounts for the years 1998 and 1997 have been reclassified to
conform to the 1999 presentation. The principal reclassification was to
move corporate amounts from the Other category to Reconciling Items.
<TABLE>
<CAPTION>
Packaging Construction
Base and and
1999 Materials Consumer Distribution
==============================================================================
<S> <C> <C> <C>
Customer aluminum shipments 867 152 202
Intersegment aluminum shipments 211 - -
- ------------------------------------------------------------------------------
Total aluminum shipments 1,078 152 202
==============================================================================
Revenues:
Aluminum $1,325 $ 817 $ 679
Nonaluminum 368 632 346
Intersegment revenues - aluminum 306 - -
- ------------------------------------------------------------------------------
Total revenues $1,999 $1,449 $1,025
==============================================================================
Segment operating income (loss) $ 250 $ 159 $ 42
Inventory accounting adjustments
Corporate amounts
Operational restructuring effects - net
Merger-related expenses
- ------------------------------------------------------------------------------
Corporate operating income
Interest expense
Taxes on income
Extraordinary loss
Cumulative effect of accounting change
- ------------------------------------------------------------------------------
Net income
==============================================================================
Pre-tax equity income (loss) included
in revenues $ - $ - $ -
Depreciation and amortization 146 45 8
Assets $3,085 $ 665 $ 463
Current liabilities (excluding debt) 276 137 126
- ------------------------------------------------------------------------------
Net operating investment $2,809 $ 528 $ 337
==============================================================================
Unincorporated joint ventures and
associated companies $1,516 $ - $ -
Capital investments 309 84 84
==============================================================================
</TABLE>
53
<PAGE> 54
<TABLE>
<CAPTION>
1999 Transportation Restructuring Other
==============================================================================
<S> <C> <C> <C>
Customer aluminum shipments 73 - 59
Intersegment aluminum shipments - - -
- ------------------------------------------------------------------------------
Total aluminum shipments 73 - 59
==============================================================================
Revenues:
Aluminum $398 $ - $145
Nonaluminum - - 42
Intersegment revenues - aluminum - - -
- ------------------------------------------------------------------------------
Total revenues $398 $ - $187
==============================================================================
Segment operating income (loss) $(28) $ - $ 5
Inventory accounting adjustments
Corporate amounts
Operational restructuring effects - net
Merger-related expenses
- ------------------------------------------------------------------------------
Corporate operating income
Interest expense
Taxes on income
Extraordinary loss
Cumulative effect of accounting change
- ------------------------------------------------------------------------------
Net income
==============================================================================
Pre-tax equity income (loss) included
in revenues $ - $ - $(14)
Depreciation and amortization 29 - 7
Assets $377 $ - $395
Current liabilities (excluding debt) 60 - 12
- ------------------------------------------------------------------------------
Net operating investment $317 $ - $383
==============================================================================
Unincorporated joint ventures and
associated companies $ 8 $ - $168
Capital investments 26 - 2
==============================================================================
</TABLE>
<TABLE>
<CAPTION>
Total Reconciling
1999 Segments Items Consolidated
==============================================================================
<S> <C> <C> <C>
Customer aluminum shipments 1,353 - 1,353
Intersegment aluminum shipments 211 (211) -
- ------------------------------------------------------------------------------
Total aluminum shipments 1,564 (211) 1,353
==============================================================================
Revenues:
Aluminum $3,364 $ - $3,364
Nonaluminum 1,388 44 1,432
Intersegment revenues - aluminum 306 (306) -
- ------------------------------------------------------------------------------
Total revenues $5,058 $ (262) $4,796
==============================================================================
Segment operating income (loss) $ 428 $ - $ 428
Inventory accounting adjustments (4)
Corporate amounts (159)
Operational restructuring effects - net -
Merger-related expenses (19)
- ------------------------------------------------------------------------------
Corporate operating income 246
Interest expense (75)
Taxes on income (47)
Extraordinary loss -
Cumulative effect of accounting change -
- ------------------------------------------------------------------------------
Net income $ 124
==============================================================================
Pre-tax equity income (loss) included
in revenues $ (14) $ - $ (14)
Depreciation and amortization 235 7 242
Assets $4,985 $ 965 $5,950
Current liabilities (excluding debt) 611 208 819
- ------------------------------------------------------------------------------
Net operating investment $4,374 $ 757 $5,131
==============================================================================
Unincorporated joint ventures and
associated companies $1,692 $ - $1,692
Capital investments 505 21 526
==============================================================================
</TABLE>
54
<PAGE> 55
12. COMPANY OPERATIONS - continued
<TABLE>
<CAPTION>
Packaging Construction
Base and and
1998 Materials Consumer Distribution
==============================================================================
<S> <C> <C> <C>
Customer aluminum shipments 668 141 184
Intersegment aluminum shipments 354 - -
- ------------------------------------------------------------------------------
Total aluminum shipments 1,022 141 184
==============================================================================
Revenues:
Aluminum $1,055 $ 787 $681
Nonaluminum 402 605 314
Intersegment revenues - aluminum 572 - -
- ------------------------------------------------------------------------------
Total revenues $2,029 $1,392 $995
==============================================================================
Segment operating income (loss) $ 290 $ 156 $ 39
Inventory accounting adjustments
Corporate amounts
Operational restructuring effects - net
- ------------------------------------------------------------------------------
Corporate operating income
Interest expense
Taxes on income
Extraordinary loss
Cumulative effect of accounting change
- ------------------------------------------------------------------------------
Net income
==============================================================================
Pre-tax equity income (loss) included
in revenues $ (3) $ - $ -
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 investments 228 38 10
==============================================================================
</TABLE>
55
<PAGE> 56
<TABLE>
<CAPTION>
1998 Transportation Restructuring Other
==============================================================================
<S> <C> <C> <C>
Customer aluminum shipments 63 391 37
Intersegment aluminum shipments - 4 -
- ------------------------------------------------------------------------------
Total aluminum shipments 63 395 37
==============================================================================
Revenues:
Aluminum $336 $1,434 $117
Nonaluminum - 17 47
Intersegment revenues - aluminum - 12 -
- ------------------------------------------------------------------------------
Total revenues $336 $1,463 $164
==============================================================================
Segment operating income (loss) $(19) $ 124 $ -
Inventory accounting adjustments
Corporate amounts
Operational restructuring effects - net
- ------------------------------------------------------------------------------
Corporate operating income
Interest expense
Taxes on income
Extraordinary loss
Cumulative effect of accounting change
- ------------------------------------------------------------------------------
Net income
==============================================================================
Pre-tax equity income (loss) included
in revenues $ (1) $ - $(10)
Depreciation and amortization 25 26 4
Assets $352 $ 282 $417
Current liabilities (excluding debt) 53 66 34
- ------------------------------------------------------------------------------
Net operating investment $299 $ 216 $383
==============================================================================
Unincorporated joint ventures and
associated companies $ 7 $ - $172
Capital investments 50 - 4
==============================================================================
</TABLE>
<TABLE>
<CAPTION>
Total Reconciling
1998 Segments Items Consolidated
==============================================================================
<S> <C> <C> <C>
Customer aluminum shipments 1,484 - 1,484
Intersegment aluminum shipments 358 (358) -
- ------------------------------------------------------------------------------
Total aluminum shipments 1,842 (358) 1,484
==============================================================================
Revenues:
Aluminum $4,410 $ - $4,410
Nonaluminum 1,385 64 1,449
Intersegment revenues - aluminum 584 (584) -
- ------------------------------------------------------------------------------
Total revenues $6,379 $ (520) $5,859
==============================================================================
Segment operating income (loss) $ 590 $ 590
Inventory accounting adjustments 5
Corporate amounts (140)
Operational restructuring effects - net (144)
- ------------------------------------------------------------------------------
Corporate operating income 311
Interest expense (114)
Taxes on income (45)
Extraordinary loss (63)
Cumulative effect of accounting change (23)
- ------------------------------------------------------------------------------
Net income $ 66
==============================================================================
Pre-tax equity income (loss) included
in revenues $ (14) $ - $ (14)
Depreciation and amortization 244 8 252
Assets $5,051 $1,083 $6,134
Current liabilities (excluding debt) 654 275 929
- ------------------------------------------------------------------------------
Net operating investment $4,397 $ 808 $5,205
==============================================================================
Unincorporated joint ventures and
associated companies $1,478 $ - $1,478
Capital investments 330 11 341
==============================================================================
</TABLE>
56
<PAGE> 57
12. COMPANY OPERATIONS - continued
<TABLE>
<CAPTION>
Packaging Construction
Base and and
1997 Materials Consumer Distribution
==============================================================================
<S> <C> <C> <C>
Customer aluminum shipments 513 142 166
Intersegment aluminum shipments 684 - -
- ------------------------------------------------------------------------------
Total aluminum shipments 1,197 142 166
==============================================================================
Revenues:
Aluminum $ 923 $ 797 $614
Nonaluminum 405 602 328
Intersegment revenues - aluminum 1,187 - -
- ------------------------------------------------------------------------------
Total revenues $2,515 $1,399 $942
==============================================================================
Segment operating income $ 312 $ 141 $ 41
Inventory accounting adjustments
Corporate amounts
Operational restructuring effects - net
- ------------------------------------------------------------------------------
Corporate operating income
Interest expense
Taxes on income
Extraordinary loss
Cumulative effect of accounting change
- ------------------------------------------------------------------------------
Net income
==============================================================================
Pre-tax equity income (loss) included
in revenues $ (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 investments 105 41 9
==============================================================================
</TABLE>
57
<PAGE> 58
<TABLE>
<CAPTION>
1997 Transportation Restructuring Other
==============================================================================
<S> <C> <C> <C>
Customer aluminum shipments 66 737 39
Intersegment aluminum shipments - 10 -
- ------------------------------------------------------------------------------
Total aluminum shipments 66 747 39
==============================================================================
Revenues:
Aluminum $353 $2,610 $126
Nonaluminum - 72 28
Intersegment revenues - aluminum - 33 -
- ------------------------------------------------------------------------------
Total revenues $353 $2,715 $154
==============================================================================
Segment operating income $ 10 $ 102 $ 5
Inventory accounting adjustments
Corporate amounts
Operational restructuring effects - net
- ------------------------------------------------------------------------------
Corporate operating income
Interest expense
Taxes on income
Extraordinary loss
Cumulative effect of accounting change
- ------------------------------------------------------------------------------
Net income
==============================================================================
Pre-tax equity income (loss) included
in revenues $ 1 $ - $ (4)
Depreciation and amortization 26 143 4
Assets $331 $1,921 $442
Current liabilities (excluding debt) 46 212 17
- ------------------------------------------------------------------------------
Net operating investment $285 $1,709 $425
==============================================================================
Unincorporated joint ventures and
associated companies $ 8 $ - $196
Capital investments 40 33 30
==============================================================================
</TABLE>
<TABLE>
<CAPTION>
Total Reconciling
1997 Segments Items Consolidated
==============================================================================
<S> <C> <C> <C>
Customer aluminum shipments 1,663 - 1,663
Intersegment aluminum shipments 694 (694) -
- ------------------------------------------------------------------------------
Total aluminum shipments 2,357 (694) 1,663
==============================================================================
Revenues:
Aluminum $5,423 $ - $5,423
Nonaluminum 1,435 42 1,477
Intersegment revenues - aluminum 1,220 (1,220) -
- ------------------------------------------------------------------------------
Total revenues $8,078 $(1,178) $6,900
==============================================================================
Segment operating income $ 611 $ 611
Inventory accounting adjustments (12)
Corporate amounts (131)
Operational restructuring effects - net (75)
- ------------------------------------------------------------------------------
Corporate operating income 393
Interest expense (153)
Taxes on income (104)
Extraordinary loss -
Cumulative effect of accounting change -
- ------------------------------------------------------------------------------
Net income $ 136
==============================================================================
Pre-tax equity income (loss) included
in revenues $ (5) $ - $ (5)
Depreciation and amortization 360 8 368
Assets $6,892 $ 334 $7,226
Current liabilities (excluding debt) 780 294 1,074
- ------------------------------------------------------------------------------
Net operating investment $6,112 $ 40 $6,152
==============================================================================
Unincorporated joint ventures and
associated companies $1,381 $ - $1,381
Capital investments 258 14 272
==============================================================================
</TABLE>
58
<PAGE> 59
12. COMPANY OPERATIONS - continued
RECONCILING ITEMS
Reconciling items consist of the following:
<TABLE>
<CAPTION>
1999 1998 1997
--------------------------------
<S> <C> <C> <C>
Assets:
Corporate assets $ 830 $1,106 $ 917
Construction in progress 492 320 155
Inventory accounting adjustments (266) (248) (547)
Internal receivables included in
the assets of the global
business units (91) (95) (191)
--------------------------------
$ 965 $1,083 $334
================================
Current liabilities:
Corporate liabilities $ 261 $ 287 $398
Payables to unincorporated joint
ventures and associated companies 48 75 81
Internal liabilities included in
the current liabilities of the
global business units (101) (87) (185)
--------------------------------
$ 208 $ 275 $294
================================
</TABLE>
The reconciling amounts for nonaluminum revenues, depreciation and
amortization and capital investments relate to corporate activities.
Inventory accounting adjustments include elimination of unrealized profits
on sales between global business units and LIFO inventory adjustments.
Construction in progress in 1999 includes $359 million (1998 - $150 million)
related to the expansion of the Worsley Alumina Refinery joint venture in
Australia.
Research and development expenditures were $25 million in 1999 (1998 - $31
million, 1997 - $41 million).
<TABLE>
<CAPTION>
GEOGRAPHIC
Domestic Canada Other Foreign Consolidated
============================================================================
<S> <C> <C> <C> <C>
1999
Revenues $3,640 $ 558 $ 598 $4,796
Long-lived assets 1,735 1,226 1,281 4,242
============================================================================
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
============================================================================
</TABLE>
The majority of the Other Foreign category is comprised of European
operations except that long-lived assets include $891 million in 1999 ($673
million in 1998 and $569 million in 1997) related to the Worsley Alumina
Refinery joint venture located in Australia.
59
<PAGE> 60
13. 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,
are not expected to have a material adverse effect on the Company's
competitive or financial position. 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.
LEASES
Certain items of property, plant and equipment are leased under long-term
operating leases. Lease expense was $35 million in 1999 ($36 million in
1998 and $45 million in 1997). Lease commitments at December 31, 1999 were
$57 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>
1999 1998 1997
----------------------------------
<S> <C> <C> <C>
Balance at January 1 $172 $177 $203
Accruals - 7 -
Payments (10) (12) (26)
----------------------------------
Balance at December 31 $162 $172 $177
==================================
</TABLE>
The balance of the accrual at December 31, 1999 is expected to be spent over
the next 15 to 20 years with the majority to be spent by the year 2005.
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.
60
<PAGE> 61
13. 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. However, such costs could be material to results of operations in
a future interim or annual reporting period.
14. 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
wholly owned subsidiaries of Reynolds Metals Company (Reynolds) 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. 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>
<CAPTION>
Canadian Reynolds Metals Company, Ltd.
Years ended December 31
---------------------------------
1999 1998 1997
---------------------------------
<S> <C> <C> <C>
Net Sales:
Customers $474 $356 $237
Parent company 452 466 680
---------------------------------
926 822 917
Cost of products sold 783 708 733
Net income $ 73 $ 84 $117
</TABLE>
<TABLE>
<CAPTION>
December 31
------------------------
1999 1998
------------------------
<S> <C> <C>
Current assets $ 176 $ 155
Noncurrent assets 1,184 1,206
Current liabilities (148) (100)
Noncurrent liabilities (345) (379)
</TABLE>
<TABLE>
<CAPTION>
Reynolds Aluminum Company of Canada, Ltd.
Years ended December 31
------------------------------------
1999 1998 1997
------------------------------------
<S> <C> <C> <C>
Net Sales:
Customers $474 $447 $ 519
Parent company 453 455 648
------------------------------------
927 902 1,167
Cost of products sold 784 784 956
Net income $ 73 $ 84 $ 117
</TABLE>
61
<PAGE> 62
14. CANADIAN REYNOLDS METALS COMPANY, LTD. AND REYNOLDS ALUMINUM COMPANY
OF CANADA, LTD. - continued
Reynolds Aluminum Company of Canada, Ltd. - continued
<TABLE>
<CAPTION>
December 31
---------------------
1999 1998
---------------------
<S> <C> <C>
Current assets $ 224 $ 186
Noncurrent assets 1,192 1,228
Current liabilities (129) (103)
Noncurrent liabilities (347) (389)
</TABLE>
62
<PAGE> 63
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
(Millions, except per share amounts)
<TABLE>
<CAPTION>
1999
- -----------------------------------------------------------------------------
Quarter 1st 2nd 3rd 4th
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $ 1,068 $1,161 $1,209 $ 1,358
Gross profit<FN1> 86 153 164 223
Net income (loss) $ (10) $ 35 $ 36 $ 63
=============================================================================
Earnings Per Share
Basic:
Average shares outstanding 64 64 63 63
- -----------------------------------------------------------------------------
Net income (loss) $ (0.15) $ 0.55 $ 0.56 $ 1.00
- -----------------------------------------------------------------------------
Diluted:
Average shares outstanding 64 64 63 64
- -----------------------------------------------------------------------------
Net income (loss) $ (0.15) $ 0.55 $ 0.56 $ 0.99
=============================================================================
Net income (loss) includes the
effect of the following item:
Merger-related expenses $ - $ - $ 9 $ 7
- -----------------------------------------------------------------------------
1998
- -----------------------------------------------------------------------------
Quarter 1st 2nd 3rd 4th
- -----------------------------------------------------------------------------
Revenues $1,532 $1,579 $1,368 $1,380
Gross profit<FN1> 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<FN2> $ - $ (196) $ 201 $ (95)
- -----------------------------------------------------------------------------
<FN>
<FN1>Gross profit equals revenues minus cost of products sold and
depreciation and amortization.
<FN2>Operational restructuring effects are shown net of gains on
sales of assets.
</TABLE>
63
<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, 1999 and 1998, 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, 1999. 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 auditing standards generally
accepted in the United States. 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, 1999 and 1998, and the consolidated results
of its operations and its cash flows for each of the three years in the
period ended December 31, 1999, in conformity with accounting principles
generally accepted in the United States.
As discussed in Note 1 to the consolidated financial statements, the Company
changed its method of accounting for the costs of start-up activities in
1998.
ERNST & YOUNG LLP
Richmond, Virginia
February 18, 2000
64
<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 definitive proxy
statement for its 2000 Annual Meeting of Stockholders. 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 definitive proxy statement for
its 2000 Annual Meeting of Stockholders. 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 definitive proxy
statement for its 2000 Annual Meeting of Stockholders. 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
"Change in Control and Termination Arrangements" in the Registrant's
definitive proxy statement for its 2000 Annual Meeting of Stockholders.
That information is incorporated in this report by reference.
65
<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, 1999, 1998 and 1997. 36
Consolidated balance sheet - December 31, 1999 and 1998. 37
Consolidated statement of cash flows -
Years ended December 31, 1999, 1998 and 1997. 38
Consolidated statement of changes in stockholders' equity -
Years ended December 31, 1999, 1998 and 1997. 39
Notes to consolidated financial statements. 40
Report of Ernst & Young LLP, Independent Auditors. 64
(2) Financial Statement Schedules
Schedule II - Valuation and Qualifying Accounts -
Years Ended December 31, 1999, 1998 and 1997. 67
This report omits all other 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, 1999.
This report omits financial statements of all associated companies
(20% to 50% owned) because no associated company is individually
significant. Summarized financial information of all associated
companies has been omitted because the associated companies in the
aggregate are not significant.
66
<PAGE> 67
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
- ------------------------------------------------------------------------------
Additions
----------------------
Balance at Charged to Charged to Balance at
beginning costs and other end of
Description of period expenses accounts Deductions period
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Allowance for
doubtful accounts:
1999 $14 $4 $ - $ (8) (B) $10
1998 16 7 - (9) (B) 14
1997 18 5 - (7) (B) 16
Allowance for
deferred income taxes:
1999 20 - - - 20
1998 19 - 1 (A) - 20
1997 46 - 3 (A) (30) (C) 19
</TABLE>
(A) Allowance for deferred income taxes is charged to provision for taxes on
income.
(B) Deductions consist of the following:
<TABLE>
<CAPTION>
1999 1998 1997
------------------------------
<S> <C> <C> <C>
Receivable write-offs $(3) $(6) $(5)
Divestitures (4) (3) (1)
Foreign currency translation effect (1) - (1)
------------------------------
$(8) $(9) $(7)
</TABLE>
(C) Deductions were due to divestitures.
67
<PAGE> 68
(3) Exhibits
* EXHIBIT 2 - Agreement and Plan of Merger among Alcoa Inc.,
RLM Acquisition Corp. and Reynolds Metals Company
dated as of August 18, 1999. (File No. 001-01430,
Form 8-K dated August 19, 1999, EXHIBIT 99.1)
EXHIBIT 3.1 - Restated Certificate of Incorporation, as amended.
* EXHIBIT 3.2 - By-laws, as amended. (File No. 001-01430, 1998
Form 10-K Report, EXHIBIT 3.2)
EXHIBIT 4.1 - Restated Certificate of Incorporation. See
EXHIBIT 3.1.
* EXHIBIT 4.2 - By-laws. See EXHIBIT 3.2.
* EXHIBIT 4.3 - Form of Common Stock Certificate. (Registration
Statement No. 333-79203 on Form S-8, dated
May 24, 1999, EXHIBIT 4.2)
* EXHIBIT 4.4 - 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))
* EXHIBIT 4.5 - Amendment No. 1 dated as of November 1, 1991 to
the Indenture. (File No. 001-01430, 1991
Form 10-K Report, EXHIBIT 4.4)
* EXHIBIT 4.6 - Amended and Restated Rights Agreement dated as
of March 8, 1999 (the "Rights Agreement") between
Reynolds Metals Company and ChaseMellon
Shareholder Services, L.L.C. (File No. 001-01430,
Form 8-K Report dated March 8, 1999, EXHIBIT 4.1)
* EXHIBIT 4.7 - First Amendment dated August 20, 1999 to the
Rights Agreement. (File No. 001-01430, Form 8-A/A
(Amendment No. 2 to Registration Statement on
Form 8-A, pertaining to Preferred Stock Purchase
Rights) dated August 19, 1999, EXHIBIT 1)
* EXHIBIT 4.8 - Form of Fixed Rate Medium-Term Note. (Registration
Statement No. 33-30882 on Form S-3, dated August 31,
1989, EXHIBIT 4.3)
* EXHIBIT 4.9 - Form of Floating Rate Medium-Term Note. (Registration
Statement No. 33-30882 on Form S-3, dated August 31,
1989, EXHIBIT 4.4)
* EXHIBIT 4.10 - Form of Book-Entry Fixed Rate Medium-Term Note.
(File No. 001-01430, 1991 Form 10-K Report, EXHIBIT
4.15)
* EXHIBIT 4.11 - Form of Book-Entry Floating Rate Medium-Term Note.
(File No. 001-01430, 1991 Form 10-K Report, EXHIBIT
4.16)
* EXHIBIT 4.12 - Form of 9% Debenture due August 15, 2003. (File
No. 001-01430, Form 8-K Report dated August 16, 1991,
EXHIBIT 4(a))
_______________________
* Incorporated by reference.
68
<PAGE> 69
* EXHIBIT 4.13 - 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)
* EXHIBIT 4.14 - By-Laws of RACC, as amended. (File No. 001-01430,
Form 10-Q Report for the Quarter ended March 31,
1997, EXHIBIT 4.14)
* EXHIBIT 4.15 - 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)
* EXHIBIT 4.16 - By-Laws of CRM, as amended. (File No. 001-01430,
Form 10-Q Report for the Quarter ended September 30,
1997, EXHIBIT 4.16)
* EXHIBIT 4.17 - 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))
* EXHIBIT 4.18 - 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)
* EXHIBIT 4.19 - 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.
=* 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)
=* 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)
=* EXHIBIT 10.3 - Amendment and Restatement of Reynolds Metals Company
Performance Incentive Plan, as adopted and executed
May 21, 1999. (File No. 001-01430, Form 10-Q Report
for the Quarter ended June 30, 1999, EXHIBIT 10.3)
=* EXHIBIT 10.4 - Amendment and Restatement of Supplemental Death
Benefit Plan for Officers, as adopted and executed
April 26, 1999. (File No. 001-01430, Form 10-Q Report
for the Quarter ended June 30, 1999, EXHIBIT 10.5)
_______________________
* Incorporated by reference.
= Management contract or compensatory plan or arrangement required to be
filed as an exhibit pursuant to Item 601 of Regulation S-K.
69
<PAGE> 70
=* EXHIBIT 10.5 - Financial Counseling Assistance Plan for Officers.
(File No. 001-01430, 1987 Form 10-K Report,
EXHIBIT 10.11)
=* EXHIBIT 10.6 - Management Incentive Deferral Plan. (File No.
001-01430, 1987 Form 10-K Report, EXHIBIT 10.12)
=* EXHIBIT 10.7 - Amendment and Restatement of Deferred Compensation
Plan for Outside Directors, as adopted and executed
April 28, 1999. (File No. 001-01430, Form 10-Q Report
for the Quarter ended June 30, 1999, EXHIBIT 10.8)
=* EXHIBIT 10.8 - Form of Indemnification Agreement for Directors and
Officers. (File No. 001-01430, 1998 Form 10-K
Report, EXHIBIT 10.9)
=* EXHIBIT 10.9 - 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,
Form 10-Q Report for the Quarter ended September
30, 1999, EXHIBIT 10.9)
=* EXHIBIT 10.10 - 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))
=* EXHIBIT 10.11 - 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))
=* EXHIBIT 10.12 - 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)
=* EXHIBIT 10.13 - 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)
=* EXHIBIT 10.14 - 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)
=* EXHIBIT 10.15 - 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))
=* EXHIBIT 10.16 - Amendment and Restatement of Reynolds Metals
Company Restricted Stock Plan for Outside Directors,
as adopted and executed April 28, 1999 (File No.
001-01430, Form 10-Q Report for the Quarter ended
June 30, 1999, EXHIBIT 10.17)
_______________________
* Incorporated by reference.
= Management contract or compensatory plan or arrangement required to be
filed as an exhibit pursuant to Item 601 of Regulation S-K.
70
<PAGE> 71
=* EXHIBIT 10.17 - Amendment and Restatement of Reynolds Metals
Company New Management Incentive Deferral Plan,
as adopted and executed April 28, 1999 (File No.
001-01430, Form 10-Q Report for the Quarter
ended June 30, 1999, EXHIBIT 10.18)
=* EXHIBIT 10.18 - Amendment and Restatement of Reynolds Metals
Company Salary Deferral Plan for Executives, as
adopted and executed April 28, 1999. (File No.
001-01430, Form 10-Q Report for the Quarter ended
June 30, 1999, EXHIBIT 10.19)
=* EXHIBIT 10.19 - Amendment and Restatement of Reynolds Metals
Company Supplemental Long-Term Disability Plan
for Executives, as adopted and executed April 26,
1999. (File No. 001-01430, Form 10-Q Report
for the Quarter ended June 30, 1999, EXHIBIT 10.20)
=* EXHIBIT 10.20 - 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)
=* EXHIBIT 10.21 - 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)
=* EXHIBIT 10.22 - 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)
=* EXHIBIT 10.23 - 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)
=* EXHIBIT 10.24 - 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)
=* EXHIBIT 10.25 - 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)
=* EXHIBIT 10.26 - 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)
=* EXHIBIT 10.27 - Amendment and Restatement of Reynolds Metals
Company 1996 Nonqualified Stock Option Plan, as
adopted and executed April 15, 1999. (File No.
001-01430, Form 10-Q Report for the Quarter
ended June 30, 1999, EXHIBIT 10.28)
=* EXHIBIT 10.28 - 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)
- ------------------
* Incorporated by reference.
= Management contract or compensatory plan or arrangement required to be
filed as an exhibit pursuant to Item 601 of Regulation S-K.
71
<PAGE> 72
=* EXHIBIT 10.29 - 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)
=* EXHIBIT 10.30 - 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)
=* EXHIBIT 10.31 - Reynolds Metals Company Supplemental Incentive
Plan. (File No. 001-01430, 1996 Form 10-K Report,
EXHIBIT 10.40)
=* EXHIBIT 10.32 - Amendment and Restatement of Reynolds Metals
Company Stock Plan for Outside Directors, as
adopted and executed April 28, 1999. (File No.
001-01430, Form 10-Q Report for the Quarter ended
June 30, 1999, EXHIBIT 10.34)
=* EXHIBIT 10.33 - Amendment and Restatement of Reynolds Metals
Company Long-Term Performance Share Plan, as
adopted and executed April 26, 1999. (File No.
001-01430, Form 10-Q Report for the Quarter ended
June 30, 1999, EXHIBIT 10.37)
* EXHIBIT 10.34 - Asset Purchase Agreement by and among Ball
Corporation, Ball Metal Beverage Container Corp.
and Reynolds Metals Company dated as of April 22,
1998. (File No. 001-01430, Form 10-Q Report for
the Quarter ended June 30, 1998, EXHIBIT 2)
=* EXHIBIT 10.35 - Reynolds Metals Company 1999 Nonqualified Stock
Option Plan (Registration Statement No. 333-79203
on Form S-8, dated May 24, 1999, EXHIBIT 4.5)
=* EXHIBIT 10.36 - Form of Stock Option Agreement, as approved
May 21, 1999 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, 1999,
EXHIBIT 10.40)
=* EXHIBIT 10.37 - Form of Three Party Stock Option Agreement, as
approved May 21, 1999 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, 1999, EXHIBIT 10.41)
EXHIBIT 11 - Omitted; see Item 8 for computation of earnings
per share
EXHIBIT 12 - Not applicable
EXHIBIT 13 - Not applicable
EXHIBIT 16 - Not applicable
- ----------------
* Incorporated by reference.
= Management contract or compensatory plan or arrangement required to be
filed as an exhibit pursuant to Item 601 of Regulation S-K.
72
<PAGE> 73
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
* EXHIBIT 99 - Description of Reynolds Metals Company Capital
Stock. (File No. 001-01430, Form 10-Q Report for
the Quarter ended March 31, 1999, EXHIBIT 99)
- ----------------
* Incorporated by reference.
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.
73
<PAGE> 74
(b) Reports on Form 8-K
During the fourth quarter of 1999, the Registrant filed with the
Commission a Current Report on Form 8-K dated October 20, 1999
reporting under Item 5 that it was filing with the report an unaudited
pro forma statement of income for the year ended December 31, 1998
relating to the Registrant's sale of its North American aluminum
beverage can operations.
During the first quarter of 2000 (through the date hereof), the
Registrant has filed three Current Reports on Form 8-K with
the Commission, all of which reported matters under Item 5:
. a Form 8-K dated January 18, 2000, containing unaudited, pro forma
condensed consolidated financial statements relating to the
proposed merger of the Registrant with Alcoa Inc.
. a Form 8-K dated January 19, 2000, containing information regarding
the Registrant's 1999 Fourth Quarter and Year-End Results.
. a Form 8-K dated February 14, 2000, containing copies of press
releases issued on February 11, 2000 by the Registrant and Alcoa
Inc. concerning their proposed merger.
74
<PAGE> 75
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 JEREMIAH J. SHEEHAN
------------------------------------
Jeremiah J. Sheehan, Chairman of
the Board and Chief Executive
Officer
Date March 3, 2000
--------------------------------
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 WILLIAM E. LEAHEY, JR. By 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 3, 2000 Date March 3, 2000
------------------------------ ----------------------------
By * Patricia C. Barron By * John R. Hall
-------------------------------- ------------------------------
Patricia C. Barron, Director John R. Hall, Director
Date March 3, 2000 Date March 3, 2000
------------------------------ ----------------------------
By * Robert L. Hintz By * William H. Joyce
-------------------------------- ------------------------------
Robert L. Hintz, Director William H. Joyce, Director
Date March 3, 2000 Date March 3, 2000
------------------------------ ----------------------------
By * Mylle Bell Mangum By * D. Larry Moore
-------------------------------- ------------------------------
Mylle Bell Mangum, Director D. Larry Moore, Director
Date March 3, 2000 Date March 3, 2000
------------------------------ ----------------------------
75
<PAGE> 76
By RANDOLPH N. REYNOLDS By
-------------------------------- ------------------------------
Randolph N. Reynolds, Director James M. Ringler, Director
Date March 3, 2000 Date
------------------------------ ----------------------------
By * Samuel C. Scott, III By * Joe B. Wyatt
-------------------------------- ------------------------------
Samuel C. Scott, III, Director Joe B. Wyatt, Director
Date March 3, 2000 Date March 3, 2000
------------------------------ ----------------------------
By ALLEN M. EAREHART
-------------------------------------
Allen M. Earehart,
Senior Vice President and Controller
(Principal Accounting Officer)
Date March 3, 2000
-----------------------------------
*By D. MICHAEL JONES
-------------------------------------
D. Michael Jones, Attorney-in-Fact
Date March 3, 2000
------------------------------------
76
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 JOHN H. GALEA
-------------------------
John H. Galea
Senior Vice President and
General Counsel
ATTEST:
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 DONALD T. COWLES
-----------------------------------
Vice President, General Counsel
and Secretary
ATTEST:
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 DONALD T. COWLES
-------------------------------
Vice President, General Counsel
and Secretary
ATTEST:
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 DONALD T. COWLES
----------------------------------
Vice President, General Counsel
and Secretary
ATTEST:
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 DONALD T. COWLES
----------------------------------
Vice President, General Counsel
and Secretary
ATTEST:
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 DONALD T. COWLES
----------------------------------
Vice President, General Counsel
and Secretary
[SEAL]
ATTEST:
By: 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: D. MICHAEL JONES
---------------------------------
Vice President, General Counsel
and Secretary
[SEAL]
ATTEST:
By: 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: D. MICHAEL JONES
-----------------------------------
Vice President, General Counsel
and Secretary
[SEAL]
ATTEST:
By: 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.
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: HENRY S. SAVEDGE, JR.
-----------------------------
Name: Henry S. Savedge, Jr.
Title: Executive Vice President
and Chief Financial Officer
Attest:
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.
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 D. MICHAEL JONES
----------------------------------
Vice President, General Counsel
and Secretary
[SEAL]
ATTEST:
By: 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.
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 D. MICHAEL JONES
-----------------------------
Vice President, General
Counsel and Secretary
[SEAL]
ATTEST:
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.
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 D. MICHAEL JONES
-----------------------------
Senior Vice President and
General Counsel
[SEAL]
ATTEST:
By: 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.
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 D. MICHAEL JONES
--------------------------
D. Michael Jones
Senior Vice President
and General Counsel
[SEAL]
ATTEST:
By 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 D. MICHAEL JONES
------------------------------
Senior Vice President and
General Counsel
[SEAL]
ATTEST:
By: 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 D. MICHAEL JONES
------------------------------
Senior Vice President and
General Counsel
[SEAL]
ATTEST:
By: 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 D. MICHAEL JONES
-----------------------------
Senior Vice President and
General Counsel
[SEAL]
ATTEST:
By: 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 D. MICHAEL JONES
_______________________________
Senior Vice President and
General Counsel
[SEAL]
ATTEST:
By: 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 OWNERSHIP, WHICH MERGES:
"SOUTHERN RECLAMATION COMPANY, INC.", A ALABAMA 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-FIFTH DAY OF JUNE, A.D. 1999, AT 9
O'CLOCK A.M.
AND I DO HEREBY FURTHER CERTIFY THAT THE EFFECTIVE DATE OF
THE AFORESAID CERTIFICATE OF OWNERSHIP IS THE SECOND DAY OF
JULY, A.D. 1999.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO
THE NEW CASTLE COUNTY RECORDER OF DEEDS.
EDWARD J. FREEL
------------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 9831161
DATE: 06-25-99
0240111 8100M
991260089
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 06/25/1999
991260089 - 0240111
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
SOUTHERN RECLAMATION COMPANY, 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 SOUTHERN
RECLAMATION COMPANY, INC., an Alabama corporation.
THIRD: That the Corporation, by the following
resolutions of its Board of Directors, duly adopted at a meeting
held on the 18th day of June, 1999, determined to merge into
itself SOUTHERN RECLAMATION COMPANY, INC. on the conditions set
forth in such resolutions:
RESOLVED, that the corporation, as owner of all of
the outstanding shares of the capital stock of SOUTHERN
RECLAMATION COMPANY, INC., merge into itself SOUTHERN
RECLAMATION COMPANY, INC. and assume all of its liabilities and
obligations in accordance with the following Plan of
Merger, which Plan of Merger is hereby adopted:
PLAN OF MERGER
1. Merger of Subsidiary into Parent. On the
Effective Date (as hereinafter defined), REYNOLDS
METALS COMPANY, a Delaware corporation
("Reynolds"), shall merge SOUTHERN
<PAGE>
RECLAMATION COMPANY, INC., an Alabama corporation
("Southern Reclamation"), into itself. The separate
corporate existence of Southern Reclamation shall
cease, and Reynolds shall be the surviving
corporation. Reynolds is the parent of Southern
Reclamation and the owner of all of the
outstanding capital stock of Southern Reclamation.
Southern Reclamation is a wholly owned subsidiary
of Reynolds.
2. Conversion of Shares.
(a) Upon the Effective Date, all issued
and outstanding shares of capital stock of
Reynolds shall remain issued and outstanding.
(b) Upon the Effective Date, each issued and
outstanding share of capital stock of Southern
Reclamation shall be canceled.
3. Effective Date. The merger shall be
effective as of 5:00 p.m. EDT on July 2, 1999 (the
"Effective Date").
; 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 and articles of 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 5:00 p.m. EDT on July 2, 1999.
2
<PAGE>
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 24th
day of June, 1999.
REYNOLDS METALS COMPANY
By D. MICHAEL JONES
------------------------------
Senior Vice President and
General Counsel
[SEAL]
ATTEST:
By: BRENDA A. HART
--------------------------
Assistant Secretary
3
<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 RICHMOND, 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 THIRD DAY OF DECEMBER, A.D. 1999, AT 9
O'CLOCK A.M.
AND I DO HEREBY FURTHER CERTIFY THAT THE EFFECTIVE DATE OF
THE AFORESAID CERTIFICATE OF OWNERSHIP IS THE THIRD DAY OF
JANUARY, A.D. 2000.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO
THE NEW CASTLE COUNTY RECORDER OF DEEDS.
EDWARD J. FREEL
------------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 0118054
DATE: 12-06-99
0240111 8100M
991517302
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 12/03/1999
991517302 - 0240111
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
RMC RICHMOND, 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
RICHMOND, 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 19th day of
November, 1999, determined to merge into itself RMC RICHMOND,
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 RICHMOND, INC., merge into itself RMC
RICHMOND, INC. and assume all of its liabilities and
obligations effective as of 12:01 a.m. E.S.T. on
January 3, 2000; 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 3, 2000.
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 2nd
day of December, 1999.
REYNOLDS METALS COMPANY
By D. MICHAEL JONES
-------------------------------
Senior Vice President and
General Counsel
[SEAL]
ATTEST:
By: DONNA DABNEY
---------------------------
Secretary
EXHIBIT 21
PARENTS AND SUBSIDIARIES
(A) Reynolds Metals Company has no parents.
(B) Set forth below is a list of certain of the subsidiaries and
associated companies of Reynolds Metals Company:
Place of
Incorporation Or
Organization
------------
Aluminerie de Becancour Inc. Quebec
* Aluminio Reynolds de Venezuela, S. A. Venezuela
Aluminium Oxid Stade Gesellschaft mit beschrankter Haftung Germany
* Bakers Choice Products, Inc. Delaware
Bohai Aluminium Industries, Ltd. China
* Canadian Reynolds Metals Company, Ltd./Societe Canadienne de
Metaux Reynolds, Ltee Quebec
Hamburger Aluminium-Werk Gesellschaft mit beschrankter
Haftung Germany
* Hanover Manufacturing Corporation Delaware
Latas de Aluminio, S.A. Brazil
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 (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 use of our report dated February 18, 2000,
included in the Annual Report on Form 10-K of Reynolds Metals
Company for the year ended December 31, 1999, with respect to the
consolidated financial statements included in this Form 10-K.
Our audits also included the financial statement schedule of
Reynolds Metals Company listed in Item 14(a). This schedule is
the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits. In
our opinion, the financial statement schedule referred to above,
when considered in relation to the basic financial statements
taken as a whole, presents fairly in all material respects the
information set forth therein.
We also consent to the incorporation by reference in the:
. Registration Statement (Form S-8 No. 33-13822) pertaining
to the Reynolds Metals Company 1987 Nonqualified Stock
Option Plan,
. Registration Statement (Form S-8 No. 33-44400) pertaining
to the Reynolds Metals Company 1992 Nonqualified Stock
Option Plan,
. Registration Statement (Form S-8 No. 33-20498) pertaining
to the Reynolds Metals Company Savings and Investment
Plan for Salaried Employees,
. Registration Statement (Form S-3 No. 33-43443) pertaining
to the shelf registration of debt securities of Reynolds
Metals Company,
. Registration Statement (Form S-8 No. 33-66032) pertaining
to the Reynolds Metals Company Savings Plan for Hourly
Employees,
. Registration Statement (Form S-8 No. 33-53847) pertaining
to the Employees Savings Plan,
. Registration Statement (Form S-8 No. 33-53851) pertaining
to the Reynolds Metals Company Restricted Stock Plan for
Outside Directors,
. 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),
. Registration Statement (Form S-8 No. 333-00929)
pertaining to the Reynolds Metals Company Performance
Incentive Plan,
<PAGE>
. Registration Statement (Form S-8 No. 333-03947)
pertaining to the Reynolds Metals Company 1996
Nonqualified Stock Option Plan,
. Registration Statement (Form S-8 No. 333-79203)
pertaining to the Reynolds Metals Company 1999
Nonqualified Stock Option Plan, and
. Registration Statement (Form S-3 No. 333-79563)
pertaining to the shelf registration of debt securities
of Reynolds Metals Company,
and in the related prospectuses of our report dated February 18,
2000, and included herein, with respect to the consolidated
financial statements and schedule of Reynolds Metals Company
included in the Annual Report (Form 10-K) for the year ended
December 31, 1999.
ERNST & YOUNG LLP
Richmond, Virginia
March 1, 2000
EXHIBIT 24
Powers of attorney from the following persons are attached:
Patricia C. Barron
John R. Hall
Robert L. Hintz
William H. Joyce
Mylle Bell Mangum
D. Larry Moore
Samuel C. Scott, III
Joe B. Wyatt
<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, 1999 and any and
all amendments thereto, and to file the same, with all
exhibits thereto, and all documents in connection
therewith, if any, with the Securities and Exchange
Commission (the "SEC"), and to take all such other action
which they or either of them may consider necessary or
desirable in connection therewith, all in accordance with
the Securities Exchange Act of 1934, as amended; and
(ii) Sign any and all post-effective amendments to the
Company's Registration Statements relating to:
(a) the offer and sale of interests in the
Reynolds Metals Company Savings and Investment
Plan for Salaried Employees and an indefinite
number of shares of 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 2,250,000 shares
of Common Stock under the Reynolds Metals Company
1999 Nonqualified Stock Option Plan;
<PAGE>
(h) the offer and sale of up to 100,000
shares of Common Stock under the Reynolds Metals
Company Performance Incentive Plan; and
(i) 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
(iii) Sign any and all Registration Statements on
Form S-3, or on such other form as may be appropriate, for
registration of the shares of Common Stock and Series A
Junior Participating Preferred Stock (without par value) of
the Company, issuable upon exercise of Rights (as defined
in the Amended and Restated Rights Agreement dated as of
March 8, 1999 between the Company and ChaseMellon
Shareholder Services, L.L.C., as amended from time to time)
and any and all amendments (including post-effective
amendments) to such Registration Statements, and to file
the same, with all exhibits thereto, and all preliminary
prospectuses, prospectuses, prospectus supplements and
documents in connection therewith, with the SEC; and
(iv) Sign any and all post-effective amendments to the
Company's Registration Statements relating to the offer and
sale of up to $1,800,000,000 principal amount of unsecured
debt securities of the Company, including without
limitation Registration Statements Nos. 33-43443 and 333-
79563 on Form S-3, and to file the same, with all exhibits
thereto, and all prospectuses, prospectus supplements,
pricing supplements and documents in connection therewith,
with the SEC;
granting unto each of said attorneys-in-fact and agents full
power and authority to do and perform each and every act and
thing requisite and necessary to be done, as fully to all
intents and purposes as the undersigned might or could do in
person, hereby ratifying and confirming all that each of said
attorneys-in-fact and agents, or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue
hereof.
This Power of Attorney shall expire on the 28th day of
February, 2001.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Power of Attorney on the 18th day of February,
2000.
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, 1999 and any and
all amendments thereto, and to file the same, with all
exhibits thereto, and all documents in connection
therewith, if any, with the Securities and Exchange
Commission (the "SEC"), and to take all such other action
which they or either of them may consider necessary or
desirable in connection therewith, all in accordance with
the Securities Exchange Act of 1934, as amended; and
(ii) Sign any and all post-effective amendments to the
Company's Registration Statements relating to:
(a) the offer and sale of interests in the
Reynolds Metals Company Savings and Investment
Plan for Salaried Employees and an indefinite
number of shares of 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 2,250,000 shares
of Common Stock under the Reynolds Metals Company
1999 Nonqualified Stock Option Plan;
<PAGE>
(h) the offer and sale of up to 100,000
shares of Common Stock under the Reynolds Metals
Company Performance Incentive Plan; and
(i) 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
(iii) Sign any and all Registration Statements on
Form S-3, or on such other form as may be appropriate, for
registration of the shares of Common Stock and Series A
Junior Participating Preferred Stock (without par value) of
the Company, issuable upon exercise of Rights (as defined
in the Amended and Restated Rights Agreement dated as of
March 8, 1999 between the Company and ChaseMellon
Shareholder Services, L.L.C., as amended from time to time)
and any and all amendments (including post-effective
amendments) to such Registration Statements, and to file
the same, with all exhibits thereto, and all preliminary
prospectuses, prospectuses, prospectus supplements and
documents in connection therewith, with the SEC; and
(iv) Sign any and all post-effective amendments to the
Company's Registration Statements relating to the offer and
sale of up to $1,800,000,000 principal amount of unsecured
debt securities of the Company, including without
limitation Registration Statements Nos. 33-43443 and 333-
79563 on Form S-3, and to file the same, with all exhibits
thereto, and all prospectuses, prospectus supplements,
pricing supplements and documents in connection therewith,
with the SEC;
granting unto each of said attorneys-in-fact and agents full
power and authority to do and perform each and every act and
thing requisite and necessary to be done, as fully to all
intents and purposes as the undersigned might or could do in
person, hereby ratifying and confirming all that each of said
attorneys-in-fact and agents, or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue
hereof.
This Power of Attorney shall expire on the 28th day of
February, 2001.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Power of Attorney on the 18th day of February,
2000.
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, 1999 and any and
all amendments thereto, and to file the same, with all
exhibits thereto, and all documents in connection
therewith, if any, with the Securities and Exchange
Commission (the "SEC"), and to take all such other action
which they or either of them may consider necessary or
desirable in connection therewith, all in accordance with
the Securities Exchange Act of 1934, as amended; and
(ii) Sign any and all post-effective amendments to the
Company's Registration Statements relating to:
(a) the offer and sale of interests in the
Reynolds Metals Company Savings and Investment
Plan for Salaried Employees and an indefinite
number of shares of 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 2,250,000 shares
of Common Stock under the Reynolds Metals Company
1999 Nonqualified Stock Option Plan;
<PAGE>
(h) the offer and sale of up to 100,000
shares of Common Stock under the Reynolds Metals
Company Performance Incentive Plan; and
(i) 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
(iii) Sign any and all Registration Statements on
Form S-3, or on such other form as may be appropriate, for
registration of the shares of Common Stock and Series A
Junior Participating Preferred Stock (without par value) of
the Company, issuable upon exercise of Rights (as defined
in the Amended and Restated Rights Agreement dated as of
March 8, 1999 between the Company and ChaseMellon
Shareholder Services, L.L.C., as amended from time to time)
and any and all amendments (including post-effective
amendments) to such Registration Statements, and to file
the same, with all exhibits thereto, and all preliminary
prospectuses, prospectuses, prospectus supplements and
documents in connection therewith, with the SEC; and
(iv) Sign any and all post-effective amendments to the
Company's Registration Statements relating to the offer and
sale of up to $1,800,000,000 principal amount of unsecured
debt securities of the Company, including without
limitation Registration Statements Nos. 33-43443 and 333-
79563 on Form S-3, and to file the same, with all exhibits
thereto, and all prospectuses, prospectus supplements,
pricing supplements and documents in connection therewith,
with the SEC;
granting unto each of said attorneys-in-fact and agents full
power and authority to do and perform each and every act and
thing requisite and necessary to be done, as fully to all
intents and purposes as the undersigned might or could do in
person, hereby ratifying and confirming all that each of said
attorneys-in-fact and agents, or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue
hereof.
This Power of Attorney shall expire on the 28th day of
February, 2001.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Power of Attorney on the 18th day of February,
2000.
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, 1999 and any and
all amendments thereto, and to file the same, with all
exhibits thereto, and all documents in connection
therewith, if any, with the Securities and Exchange
Commission (the "SEC"), and to take all such other action
which they or either of them may consider necessary or
desirable in connection therewith, all in accordance with
the Securities Exchange Act of 1934, as amended; and
(ii) Sign any and all post-effective amendments to the
Company's Registration Statements relating to:
(a) the offer and sale of interests in the
Reynolds Metals Company Savings and Investment
Plan for Salaried Employees and an indefinite
number of shares of 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 2,250,000 shares
of Common Stock under the Reynolds Metals Company
1999 Nonqualified Stock Option Plan;
<PAGE>
(h) the offer and sale of up to 100,000
shares of Common Stock under the Reynolds Metals
Company Performance Incentive Plan; and
(i) 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
(iii) Sign any and all Registration Statements on
Form S-3, or on such other form as may be appropriate, for
registration of the shares of Common Stock and Series A
Junior Participating Preferred Stock (without par value) of
the Company, issuable upon exercise of Rights (as defined
in the Amended and Restated Rights Agreement dated as of
March 8, 1999 between the Company and ChaseMellon
Shareholder Services, L.L.C., as amended from time to time)
and any and all amendments (including post-effective
amendments) to such Registration Statements, and to file
the same, with all exhibits thereto, and all preliminary
prospectuses, prospectuses, prospectus supplements and
documents in connection therewith, with the SEC; and
(iv) Sign any and all post-effective amendments to the
Company's Registration Statements relating to the offer and
sale of up to $1,800,000,000 principal amount of unsecured
debt securities of the Company, including without
limitation Registration Statements Nos. 33-43443 and 333-
79563 on Form S-3, and to file the same, with all exhibits
thereto, and all prospectuses, prospectus supplements,
pricing supplements and documents in connection therewith,
with the SEC;
granting unto each of said attorneys-in-fact and agents full
power and authority to do and perform each and every act and
thing requisite and necessary to be done, as fully to all
intents and purposes as the undersigned might or could do in
person, hereby ratifying and confirming all that each of said
attorneys-in-fact and agents, or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue
hereof.
This Power of Attorney shall expire on the 28th day of
February, 2001.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Power of Attorney on the 18th day of February,
2000.
WILLIAM H. JOYCE
---------------------------
William H. Joyce
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
hereby constitutes and appoints D. Michael Jones and Brenda A.
Hart, or either of them, her true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution,
for her and in her name, place and stead, in any and all
capacities (including without limitation in any capacity on
behalf of Reynolds Metals Company (the "Company")), to
(i) Sign the Annual Report on Form 10-K of the
Company for the year ended December 31, 1999 and any and
all amendments thereto, and to file the same, with all
exhibits thereto, and all documents in connection
therewith, if any, with the Securities and Exchange
Commission (the "SEC"), and to take all such other action
which they or either of them may consider necessary or
desirable in connection therewith, all in accordance with
the Securities Exchange Act of 1934, as amended; and
(ii) Sign any and all post-effective amendments to the
Company's Registration Statements relating to:
(a) the offer and sale of interests in the
Reynolds Metals Company Savings and Investment
Plan for Salaried Employees and an indefinite
number of shares of 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 2,250,000 shares
of Common Stock under the Reynolds Metals Company
1999 Nonqualified Stock Option Plan;
<PAGE>
(h) the offer and sale of up to 100,000
shares of Common Stock under the Reynolds Metals
Company Performance Incentive Plan; and
(i) 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
(iii) Sign any and all Registration Statements on
Form S-3, or on such other form as may be appropriate, for
registration of the shares of Common Stock and Series A
Junior Participating Preferred Stock (without par value) of
the Company, issuable upon exercise of Rights (as defined
in the Amended and Restated Rights Agreement dated as of
March 8, 1999 between the Company and ChaseMellon
Shareholder Services, L.L.C., as amended from time to time)
and any and all amendments (including post-effective
amendments) to such Registration Statements, and to file
the same, with all exhibits thereto, and all preliminary
prospectuses, prospectuses, prospectus supplements and
documents in connection therewith, with the SEC; and
(iv) Sign any and all post-effective amendments to the
Company's Registration Statements relating to the offer and
sale of up to $1,800,000,000 principal amount of unsecured
debt securities of the Company, including without
limitation Registration Statements Nos. 33-43443 and 333-
79563 on Form S-3, and to file the same, with all exhibits
thereto, and all prospectuses, prospectus supplements,
pricing supplements and documents in connection therewith,
with the SEC;
granting unto each of said attorneys-in-fact and agents full
power and authority to do and perform each and every act and
thing requisite and necessary to be done, as fully to all
intents and purposes as the undersigned might or could do in
person, hereby ratifying and confirming all that each of said
attorneys-in-fact and agents, or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue
hereof.
This Power of Attorney shall expire on the 28th day of
February, 2001.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Power of Attorney on the 18th day of February,
2000.
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, 1999 and any and
all amendments thereto, and to file the same, with all
exhibits thereto, and all documents in connection
therewith, if any, with the Securities and Exchange
Commission (the "SEC"), and to take all such other action
which they or either of them may consider necessary or
desirable in connection therewith, all in accordance with
the Securities Exchange Act of 1934, as amended; and
(ii) Sign any and all post-effective amendments to the
Company's Registration Statements relating to:
(a) the offer and sale of interests in the
Reynolds Metals Company Savings and Investment
Plan for Salaried Employees and an indefinite
number of shares of 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 2,250,000 shares
of Common Stock under the Reynolds Metals Company
1999 Nonqualified Stock Option Plan;
<PAGE>
(h) the offer and sale of up to 100,000
shares of Common Stock under the Reynolds Metals
Company Performance Incentive Plan; and
(i) 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
(iii) Sign any and all Registration Statements on
Form S-3, or on such other form as may be appropriate, for
registration of the shares of Common Stock and Series A
Junior Participating Preferred Stock (without par value) of
the Company, issuable upon exercise of Rights (as defined
in the Amended and Restated Rights Agreement dated as of
March 8, 1999 between the Company and ChaseMellon
Shareholder Services, L.L.C., as amended from time to time)
and any and all amendments (including post-effective
amendments) to such Registration Statements, and to file
the same, with all exhibits thereto, and all preliminary
prospectuses, prospectuses, prospectus supplements and
documents in connection therewith, with the SEC; and
(iv) Sign any and all post-effective amendments to the
Company's Registration Statements relating to the offer and
sale of up to $1,800,000,000 principal amount of unsecured
debt securities of the Company, including without
limitation Registration Statements Nos. 33-43443 and 333-
79563 on Form S-3, and to file the same, with all exhibits
thereto, and all prospectuses, prospectus supplements,
pricing supplements and documents in connection therewith,
with the SEC;
granting unto each of said attorneys-in-fact and agents full
power and authority to do and perform each and every act and
thing requisite and necessary to be done, as fully to all
intents and purposes as the undersigned might or could do in
person, hereby ratifying and confirming all that each of said
attorneys-in-fact and agents, or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue
hereof.
This Power of Attorney shall expire on the 28th day of
February, 2001.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Power of Attorney on the 18th day of February,
2000.
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, 1999 and any and
all amendments thereto, and to file the same, with all
exhibits thereto, and all documents in connection
therewith, if any, with the Securities and Exchange
Commission (the "SEC"), and to take all such other action
which they or either of them may consider necessary or
desirable in connection therewith, all in accordance with
the Securities Exchange Act of 1934, as amended; and
(ii) Sign any and all post-effective amendments to the
Company's Registration Statements relating to:
(a) the offer and sale of interests in the
Reynolds Metals Company Savings and Investment
Plan for Salaried Employees and an indefinite
number of shares of 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 2,250,000 shares
of Common Stock under the Reynolds Metals Company
1999 Nonqualified Stock Option Plan;
<PAGE>
(h) the offer and sale of up to 100,000
shares of Common Stock under the Reynolds Metals
Company Performance Incentive Plan; and
(i) 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
(iii) Sign any and all Registration Statements on
Form S-3, or on such other form as may be appropriate, for
registration of the shares of Common Stock and Series A
Junior Participating Preferred Stock (without par value) of
the Company, issuable upon exercise of Rights (as defined
in the Amended and Restated Rights Agreement dated as of
March 8, 1999 between the Company and ChaseMellon
Shareholder Services, L.L.C., as amended from time to time)
and any and all amendments (including post-effective
amendments) to such Registration Statements, and to file
the same, with all exhibits thereto, and all preliminary
prospectuses, prospectuses, prospectus supplements and
documents in connection therewith, with the SEC; and
(iv) Sign any and all post-effective amendments to the
Company's Registration Statements relating to the offer and
sale of up to $1,800,000,000 principal amount of unsecured
debt securities of the Company, including without
limitation Registration Statements Nos. 33-43443 and 333-
79563 on Form S-3, and to file the same, with all exhibits
thereto, and all prospectuses, prospectus supplements,
pricing supplements and documents in connection therewith,
with the SEC;
granting unto each of said attorneys-in-fact and agents full
power and authority to do and perform each and every act and
thing requisite and necessary to be done, as fully to all
intents and purposes as the undersigned might or could do in
person, hereby ratifying and confirming all that each of said
attorneys-in-fact and agents, or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue
hereof.
This Power of Attorney shall expire on the 28th day of
February, 2001.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Power of Attorney on the 18th day of February,
2000.
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, 1999 and any and
all amendments thereto, and to file the same, with all
exhibits thereto, and all documents in connection
therewith, if any, with the Securities and Exchange
Commission (the "SEC"), and to take all such other action
which they or either of them may consider necessary or
desirable in connection therewith, all in accordance with
the Securities Exchange Act of 1934, as amended; and
(ii) Sign any and all post-effective amendments to the
Company's Registration Statements relating to:
(a) the offer and sale of interests in the
Reynolds Metals Company Savings and Investment
Plan for Salaried Employees and an indefinite
number of shares of 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;
<PAGE>
(g) the offer and sale of up 2,250,000 shares
of Common Stock under the Reynolds Metals Company
1999 Nonqualified Stock Option Plan;
(h) the offer and sale of up to 100,000
shares of Common Stock under the Reynolds Metals
Company Performance Incentive Plan; and
(i) 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
(iii) Sign any and all Registration Statements on
Form S-3, or on such other form as may be appropriate, for
registration of the shares of Common Stock and Series A
Junior Participating Preferred Stock (without par value) of
the Company, issuable upon exercise of Rights (as defined
in the Amended and Restated Rights Agreement dated as of
March 8, 1999 between the Company and ChaseMellon
Shareholder Services, L.L.C., as amended from time to time)
and any and all amendments (including post-effective
amendments) to such Registration Statements, and to file
the same, with all exhibits thereto, and all preliminary
prospectuses, prospectuses, prospectus supplements and
documents in connection therewith, with the SEC; and
(iv) Sign any and all post-effective amendments to the
Company's Registration Statements relating to the offer and
sale of up to $1,800,000,000 principal amount of unsecured
debt securities of the Company, including without
limitation Registration Statements Nos. 33-43443 and 333-
79563 on Form S-3, and to file the same, with all exhibits
thereto, and all prospectuses, prospectus supplements,
pricing supplements and documents in connection therewith,
with the SEC;
granting unto each of said attorneys-in-fact and agents full
power and authority to do and perform each and every act and
thing requisite and necessary to be done, as fully to all
intents and purposes as the undersigned might or could do in
person, hereby ratifying and confirming all that each of said
attorneys-in-fact and agents, or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue
hereof.
This Power of Attorney shall expire on the 28th day of
February, 2001.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Power of Attorney on the 18th day of February,
2000.
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 for December 31, 1999 and Consolidated
Statement of Income for the twelve months ended December 31, 1999 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-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 55
<SECURITIES> 0
<RECEIVABLES> 654
<ALLOWANCES> 10
<INVENTORY> 519
<CURRENT-ASSETS> 1289
<PP&E> 4336
<DEPRECIATION> 2320
<TOTAL-ASSETS> 5950
<CURRENT-LIABILITIES> 1152
<BONDS> 1067
0
0
<COMMON> 1575
<OTHER-SE> 571
<TOTAL-LIABILITY-AND-EQUITY> 5950
<SALES> 4796
<TOTAL-REVENUES> 4796
<CGS> 3928
<TOTAL-COSTS> 3928
<OTHER-EXPENSES> 242
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 75
<INCOME-PRETAX> 171
<INCOME-TAX> 47
<INCOME-CONTINUING> 124
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 124
<EPS-BASIC> 1.95
<EPS-DILUTED> 1.94
</TABLE>
