-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, bwUHoQLVNQmhth+7PL+1TOJFDITPKjwf12tIhiqZUrEmfFXETevohI3iNbxd7R/n 137ciCRpIITVcGN09TjbmQ== 0000083604-94-000025.txt : 19941111 0000083604-94-000025.hdr.sgml : 19941111 ACCESSION NUMBER: 0000083604-94-000025 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941110 SROS: MSE SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: REYNOLDS METALS CO CENTRAL INDEX KEY: 0000083604 STANDARD INDUSTRIAL CLASSIFICATION: 3334 IRS NUMBER: 540355135 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-01430 FILM NUMBER: 94558648 BUSINESS ADDRESS: STREET 1: 6601 W BROAD ST STREET 2: PO BOX 27003 CITY: RICHMOND STATE: VA ZIP: 23261 BUSINESS PHONE: 8042812000 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 1994 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-1430 REYNOLDS METALS COMPANY A Delaware Corporation (I.R.S. Employer Identification No. 54-0355135) 6601 West Broad Street, P. O. Box 27003, Richmond, Virginia 23261-7003 Telephone Number (804) 281-2000 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ___ As of October 29, 1994, the Registrant had 62,048,989 shares of Common Stock, no par value, outstanding and entitled to vote. PART I - FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) ____________________________________________________________________________________________________ Reynolds Metals Company
Quarter ended Nine months ended September 30 September 30 ____________________________________________________________________________________________________ (In millions, except per share amounts) 1994 1993 1994 1993 ____________________________________________________________________________________________________ Revenues Net sales $1,531.4 $1,336.2 $4,240.3 $3,922.9 Equity, interest and other income 13.9 6.4 25.9 18.1 Gain on sale of asset 62.6 - 62.6 - ____________________________________________________________________________________________________ 1,607.9 1,342.6 4,328.8 3,941.0 ____________________________________________________________________________________________________ Costs and expenses Cost of products sold 1,373.1 1,258.0 3,849.3 3,676.2 Selling, administrative and general expenses 98.2 89.8 283.5 275.9 Interest - principally on long-term obligations 39.9 39.7 114.0 120.6 ____________________________________________________________________________________________________ 1,511.2 1,387.5 4,246.8 4,072.7 ____________________________________________________________________________________________________ Income (loss) before income taxes 96.7 (44.9) 82.0 (131.7) Taxes on income (credit) 34.7 (16.9) 29.2 (48.2) ____________________________________________________________________________________________________ Net income (loss) 62.0 (28.0) 52.8 (83.5) Preferred stock dividends 9.1 - 25.0 - ____________________________________________________________________________________________________ Net Income (loss) available to common shareholders $52.9 $(28.0) $27.8 $(83.5) ==================================================================================================== Income (loss) per common share Average shares outstanding 62.0 59.8 61.6 59.8 Net income (loss) $0.86 $(0.47) $0.45 $(1.40) Cash dividends per common share $0.25 $0.25 $0.75 $0.95 ____________________________________________________________________________________________________ Depreciation and amortization included in costs and expenses $73.9 $71.0 $216.9 $213.8
PAGE CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) - ---------------------------------------------------------------------------------------------------- Reynolds Metals Company
September 30 December 31 - ---------------------------------------------------------------------------------------------------- (In millions) 1994 1993 - ---------------------------------------------------------------------------------------------------- ASSETS Current assets Cash and short-term investments $186.6 $19.2 Receivables, less allowances of $19.5 (1993 - $16.7) 908.7 794.2 Inventories 855.2 731.8 Prepaid expenses 45.9 44.8 - ---------------------------------------------------------------------------------------------------- Total current assets 1,996.4 1,590.0 Unincorporated joint ventures and associated companies 778.6 832.5 Property, plant and equipment 6,273.8 6,093.1 Less allowances for depreciation and amortization 3,162.8 3,011.9 - ---------------------------------------------------------------------------------------------------- 3,111.0 3,081.2 Deferred taxes and other assets 1,310.7 1,204.9 - ---------------------------------------------------------------------------------------------------- Total assets $7,196.7 $6,708.6 ==================================================================================================== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable, accrued and other liabilities $1,105.6 $979.9 Short-term obligations 111.4 158.4 Long-term debt 15.8 42.6 - ---------------------------------------------------------------------------------------------------- Total current liabilities 1,232.8 1,180.9 Long-term debt 1,855.3 1,989.6 Postretirement benefits 1,219.0 1,260.9 Environmental, deferred taxes and other liabilities 693.2 654.3 Stockholders' equity Preferred stock 505.1 - Common stock 863.4 784.2 Retained earnings 935.3 953.8 Cumulative currency translation adjustments (42.2) (49.9) Pension liability adjustment (65.2) (65.2) - ---------------------------------------------------------------------------------------------------- Total stockholders' equity 2,196.4 1,622.9 - ---------------------------------------------------------------------------------------------------- Total liabilities and stockholders' equity $7,196.7 $6,708.6 ====================================================================================================
CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED) - ---------------------------------------------------------------------------------------------------- Reynolds Metals Company
Nine Months Ended September 30 - ---------------------------------------------------------------------------------------------------- (In millions) 1994 1993 - ---------------------------------------------------------------------------------------------------- Operating activities Net income (loss) $52.8 $(83.5) Adjustments to reconcile to net cash provided by Operating activities: Depreciation and amortization 216.9 213.8 Changes in operating assets, liabilities and other (84.6) 19.0 - ---------------------------------------------------------------------------------------------------- Net cash provided by operating activities 185.1 149.3 Investing activities Capital investments (249.0) (218.0) Purchases of debt securities (138.7) - Proceeds from sale of assets 130.4 34.0 Other investing activities - net (79.8) 21.3 - ---------------------------------------------------------------------------------------------------- Net cash used in investing activities (337.1) (162.7) Financing activities Proceeds from preferred stock issue 505.1 - Proceeds from long-term obligations - 519.9 Decrease in short-term borrowings (65.6) (21.0) Reduction of long-term debt and other financing liabilities (137.7) (438.5) Cash dividends paid (46.7) (41.9) - ---------------------------------------------------------------------------------------------------- Net cash provided by financing activities 255.1 18.5 Cash Net increase 103.1 5.1 - ---------------------------------------------------------------------------------------------------- At beginning of period 19.2 80.4 Cash 122.3 85.5 Short-term investments 64.3 - - ---------------------------------------------------------------------------------------------------- Cash and short-term investments at end of period $186.6 $85.5 ====================================================================================================
PAGE REYNOLDS METALS COMPANY AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Quarters and Nine Months Ended September 30, 1994 and 1993 Note A - Basis of presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the interim periods of 1994 are not necessarily indicative of the results that may be expected for the year ending December 31, 1994. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1993. Note B - Significant Accounting Policies Earnings per share Earnings per share is based on the average number of common shares outstanding and, in the 1994 periods, is after preferred stock dividend requirements. Common stock equivalents relating to preferred stock are not included since their effect would be anti-dilutive. Note C - Gain on Sale of Asset In the third quarter of 1994, the Company completed the sale of Reynolds Australia Metals, Ltd., which held a 40 percent interest in the Boddington Gold Mine, to a subsidiary of Poseidon Gold Limited. Note D - Financing arrangements In the second quarter of 1994, the Company replaced $490 million of revolving credit facilities with a new $500 million revolving credit facility which expires in 1999. No amounts were outstanding under the new facility at September 30, 1994. The Company pays a commitment fee of .20% per year on the unused portion of the facility. The facility contains requirements which, among other things, provide for compliance with a long-term debt-to-equity ratio, as defined. These restrictions do not inhibit the Company's operations or the use of fixed assets. At September 30, 1994, the Company exceeded all such requirements. Note E - Preferred stock In the first quarter of 1994, the Company issued 11,000,000 shares of 7% PRIDES(SM), Convertible Preferred Stock for $47.25 (stated value) per share. The PRIDES mature on December 31, 1997, at which time they mandatorily convert into shares of the Company's common stock on a one for one basis. Dividends are cumulative from the date of issuance and are payable quarterly in arrears. Holders may convert each share of PRIDES into 0.82 shares of common stock (to be adjusted under certain circumstances) at any time prior to December 31, 1997. The Company has the option of redeeming the PRIDES at any time on or after December 31, 1996, for common stock having a fair market value equal to the issue price plus accrued dividends plus a small premium. The redemption price will in no event be less than 0.82 shares of common stock per share of PRIDES. The holders of shares of PRIDES have the right with the holders of common stock to vote in the election of Directors and upon each other matter coming before any meeting of the holders of common stock on the basis of 4/5 of a vote for each share of PRIDES. Note F - Contingent liabilities As previously disclosed in the Company's annual report on Form 10-K for the year ended December 31, 1993, the Company is involved in various worldwide environmental improvement activities resulting from past operations, including designation as a potentially responsible party, with others, at various EPA designated Superfund sites. The Company has recorded amounts which, in management's best estimate, will be sufficient to satisfy anticipated costs of known remediation requirements. As a result of factors such as the continuing evolution of environmental laws and regulatory requirements, the availability and application of technology, the identification of presently unknown remediation sites and the allocation of costs among potentially responsible parties, estimated costs for future environmental compliance and remediation are necessarily imprecise. Based upon information presently available, such future costs are not expected to have a material adverse effect on the Company's competitive or financial position or its ongoing results of operations. However, such costs could be material to future quarterly or annual results of operations. Note G - Canadian Reynolds Metals Company, Limited Summarized financial information for Canadian Reynolds Metals Company, Limited is as follows: Quarter Ended Nine Months Ended September 30 September 30 ------------------------------------- 1994 1993 1994 1993 ------------------------------------- Net Sales: Customers $102.1 $74.7 $267.5 $222.9 Parent company 141.0 116.2 371.1 287.0 ------------------------------------- 243.1 190.9 638.6 509.9 Cost of products sold and depreciation 199.8 188.9 568.2 510.3 Net income (loss) $15.0 $(2.4) $21.2 $(22.4) Note G - Canadian Reynolds Metals Company, Limited (continued) September 30 December 31 1994 1993 ---------------------------------- Current assets $182.1 $146.9 Noncurrent assets 1,024.0 1,056.1 Current liabilities (70.8) (99.8) Noncurrent liabilities (552.8) (540.7) Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS INTRODUCTION The following discussion and analysis should be read in conjunction with the consolidated financial statements and notes thereto included in or referred to in this report. RESULTS OF OPERATIONS The Company reported third-quarter net income of $62 million (86 cents per share) compared to a net loss of $28 million (47 cents per share) in the third quarter a year ago. For the first nine months of 1994, the Company reported net income of $53 million (45 cents per share) compared to a net loss of $84 million ($1.40 per share) in 1993. Net income for the third quarter and first nine months of 1994 includes an after-tax gain of $41 million (66 cents per share) from the sale of Reynolds Australia Metals, Ltd., which held a 40 percent interest in the Boddington Gold Mine. The year-ago results for the same periods include an after-tax charge of $8 million (13 cents per share) to cover costs associated with the curtailment of primary aluminum production. Shipments and Revenues Shipments, net sales and revenues per pound for the third quarter and nine months of 1994 and 1993 were as follows (metric tons in thousands and dollars in millions, except per pound amounts): Third Quarter Nine Months 1994 1993 1994 1993 ----------------------------------------- Aluminum product shipments 409.7 386.1 1,160.9 1,124.7 Net sales: Aluminum $1,182.4 $997.0 $3,235.1 $2,955.6 Nonaluminum 349.0 339.2 1,005.2 967.3 ------------------------------------------ Total $1,531.4 $1,336.2 $4,240.3 $3,922.9 ========================================== Revenues per pound: Fabricated aluminum products $1.51 $1.43 $1.45 $1.45 Primary aluminum $0.74 $0.56 $0.67 $0.56 Shipments and Revenues (continued) The increases in shipments in both 1994 periods reflect the continuing recovery in major global economies, particularly in the U.S. and Europe. The increases in shipments were also attributable to acquisitions partially offset by restructuring activities. Higher shipments of cans and ends (due principally to acquisitions) were partially offset by lower shipments of can sheet (due to greater internal consumption to support higher can production) and other aluminum sheet (due to the restructuring of the Company's Illinois sheet and plate facility). The increase in net sales in both 1994 periods primarily reflects the increase in shipping volume for fabricated aluminum products. Prices for fabricated aluminum products, particularly cans and can sheet, continued to adversely affect the Company's results. Increased demand has begun to favorably impact prices. The overall average realized price for fabricated aluminum products in the 1994 periods benefitted from a shift in mix toward higher value-added products. Realized prices for primary aluminum were higher in the 1994 periods due to improvement in the world supply/demand balance. Revenues by principal markets were: Third Quarter Nine Months --------------------------------- 1994 1993 1994 1993 --------------------------------- Packaging and Containers 45% 44% 45% 44% Distributors and Fabricators 13 13 13 14 Building and Construction 14 13 13 12 Automotive and Transportation 12 11 11 11 Electrical 3 3 3 3 Other 13 16 15 16 --------------------------------- Total 100% 100% 100% 100 % ================================= The increase in equity, interest and other income was due primarily to non-recurring investment gains at a Brazilian affiliate. In the third quarter of 1994, the Company completed the sale of Reynolds Australia Metals, Ltd., which held a 40 percent interest in the Boddington Gold Mine, and recorded a pre-tax gain of $62.6 million. (For further information, refer to "Liquidity and Capital Resources - Investing Activities".) For further information concerning shipments and revenues, see the discussion under "Segment Analysis". Costs and Expenses Cost of products sold in the 1994 periods reflected a shift in product mix to higher value-added products and the negative effects of ongoing fixed costs related to the temporary curtailments at primary aluminum and alumina facilities. These effects were partially offset by the benefits of performance improvement programs, the effects of restructuring, lower costs for certain raw materials used in the production of primary aluminum and higher capacity utilization in aluminum fabricating operations. Included in cost of products sold in the third quarter of 1993 was a pre-tax charge of $13 million to cover costs associated with the curtailment of primary aluminum production. The increases in selling, administrative and general expenses in the 1994 periods primarily reflect the higher level of business activity. Interest expense in the nine months of 1994 benefitted from lower levels of debt outstanding and lower interest rates. In the third quarter of 1994, the benefit of lower levels of debt outstanding was offset by rising interest rates. On a quarterly basis, the Company evaluates the status of all significant existing or potential environmental issues (including the proposed listing referred to below), develops or revises estimates of costs to satisfy known remediation requirements and adjusts its accruals accordingly. Based upon information presently available, such future costs are not expected to have a material adverse effect on the Company's competitive or financial position or its ongoing results of operations. However, it is not possible to predict the amount or timing of future costs of environmental remediation requirements which may subsequently be determined. Such costs could be material to future quarterly or annual results of operations. On August 23, 1994, the Environmental Protection Agency (the "EPA") published notice that it was proposing that the Company's Troutdale, Oregon primary aluminum production plant be included on the National Priorities List of Superfund sites. The Company is working cooperatively with the EPA in investigating potential environmental contamination at the Troutdale site. Operating Outlook The Company expects major global economies to continue to recover and demand for the Company's fabricated aluminum products to improve. Prices for most fabricated aluminum products are improving and should continue to improve with stronger demand. SEGMENT ANALYSIS Finished Products and Other Sales Shipments and net sales to customers for this category for the third quarter and nine months of 1994 and 1993 were as follows (metric tons in thousands, dollars in millions): THIRD QUARTER ------------------------------------------- Net Sales Shipments 1994 1993 1994 1993 ------------------------------------------- Packaging and containers: Aluminum $421.6 $315.4 95.6 66.2 Nonaluminum 132.3 130.5 Other aluminum 122.0 95.8 41.0 33.0 Other nonaluminum 126.8 105.1 ------------------------------------------- $802.7 $646.8 136.6 99.2 =========================================== NINE MONTHS ------------------------------------------- Net Sales Shipments 1994 1993 1994 1993 ------------------------------------------- Packaging and containers: Aluminum $1,184.7 $910.2 268.8 190.5 Nonaluminum 381.3 365.4 Other aluminum 319.7 270.7 110.0 92.8 Other nonaluminum 338.3 297.4 ------------------------------------------- $2,224.0 $1,843.7 378.8 283.3 =========================================== The increases in shipments in both 1994 periods were due primarily to higher shipments of cans and ends and some improvements in shipments to the distributor and building and construction markets. Net sales for aluminum products increased due to the higher shipping volume somewhat offset by lower realized prices. The increases in nonaluminum net sales were due to higher sales to the packaging, distributor and building and construction markets. SEGMENT ANALYSIS (continued) Production and Processing Shipments and net sales to customers for this category for the third quarter and nine months of 1994 and 1993 were as follows (metric tons in thousands, dollars in millions): THIRD QUARTER ------------------------------------- Net Sales Shipments 1994 1993 1994 1993 ------------------------------------- Primary aluminum $127.0 $109.4 78.4 88.4 Flat rolled 257.1 255.1 101.7 112.2 Extruded and drawn 157.2 134.7 51.4 47.8 Other aluminum 97.5 86.6 41.6 38.5 Other nonaluminum 68.5 69.0 Gold 21.4 34.6 ------------------------------------- $728.7 $689.4 273.1 286.9 ===================================== NINE MONTHS --------------------------------------- Net Sales Shipments 1994 1993 1994 1993 --------------------------------------- Primary aluminum $304.1 $288.6 204.6 232.6 Flat rolled 714.3 813.5 304.7 344.4 Extruded and drawn 442.2 398.1 158.6 137.5 Other aluminum 270.1 274.5 114.2 126.9 Other nonaluminum 192.5 212.0 Gold 93.1 92.5 --------------------------------------- $2,016.3 $2,079.2 782.1 841.4 ======================================= The declines in shipments in both 1994 periods were due to lower shipments of primary aluminum and flat rolled products (due to greater internal consumption to support higher production of fabricated products and the restructuring of the Company's Illinois sheet and plate facility), somewhat offset by higher fabricated shipments by European subsidiaries. Shipments of other aluminum products in the nine month period were lower due to the divestiture of an aluminum reclamation facility in the second quarter of 1993. The increase in net sales in the third quarter was due to higher prices for certain aluminum products, principally primary and recycled aluminum, slightly offset by the lower shipping volume. The decline in net sales in the nine month period reflects the lower shipping volume and lower realized prices for fabricated aluminum products, somewhat offset by higher realized prices for primary and recycled aluminum. The decline in nonaluminum net sales in the nine month period was due to lower sales of alumina. LIQUIDITY AND CAPITAL RESOURCES Working Capital Working capital totalled $764 million at September 30, 1994, compared to $409 million at December 31, 1993. The ratio of current assets to current liabilities was 1.6/1 at September 30, 1994, compared to 1.3/1 at December 31, 1993. The increase in working capital was due to increases in cash and short-term investments, receivables and inventories, partially offset by an increase in accounts payable, accrued and other liabilities. The increases in receivables, inventories and payables reflect the higher level of business activity. Investments have risen due to the investment of a portion of the proceeds from the issuance of preferred stock in early 1994 (see "Financing Activities"). In addition to the amount in cash and short-term investments included in current assets, the Company has $75.4 million of noncurrent investments in corporate debt securities. Operating Activities A portion of the cash provided by operating activities was used to partially fund the increases in receivables and inventories. Net cash provided by operating activities was used for investing activities. Investing Activities Capital investments of $249 million in the first nine months of 1994 consisted of the acquisition of Bev-Pak, Inc. (a midwestern U.S. manufacturer of aluminum cans and ends), which increases the Company's U.S. aluminum can-making capacity to approximately 19 billion annually; the acquisition of a small metals distribution business; the acquisition and renovation phase of a facility in Beloit, Wisconsin for the production of aluminum wheels (expected to be completed in the second quarter of 1995); continuing modernization and expansion at can manufacturing facilities; and various equipment upgrades. In the third quarter of 1994, the Company completed the sale of Reynolds Australia Metals, Ltd., which held a 40 percent interest in the Boddington Gold Mine, to a subsidiary of Poseidon Gold Limited. A portion of the proceeds from the transaction, which included a closing payment of $115 million and delivery of a total of 30,000 ounces of gold over seven years, was used to extinguish the Company's term loan agreement ($82 million), with the remainder being invested pending its future use for capital expenditures, strategic investments and general corporate purposes. The Company plans to reinvest the proceeds from the sale in value-added businesses and expects the reinvestment to offset any short-term effect this divestiture may have on the Company's results. Financing Activities In the first quarter of 1994, the Company issued 11 million shares of 7% PRIDES, Convertible Preferred Stock for $47.25 (stated value) per share. The Company received net proceeds of $505 million. A portion of the proceeds was used to fund capital investments in the first nine months of 1994 and to repay obligations incurred in the fourth quarter of 1993 in connection with the acquisition of Miller Brewing Company's can plants. The remainder of the proceeds is being invested pending its future use for capital expenditures, strategic investments and general corporate purposes. In the first quarter of 1994, the Company contributed 1.4 million shares of its common stock, valued at approximately $72 million, to its pension plans. In the second quarter of 1994, the Company replaced $490 million of revolving credit facilities with a new $500 million revolving credit facility which expires in 1999. The new facility will be used to support the Company's commercial paper program and will be available for other general corporate purposes. Financial Outlook Capital investments for the remainder of 1994 are expected to be approximately $175 million. They will consist of modernization and expansion of can manufacturing operations (including participation in the construction of can plants, as discussed below); expenditures related to the renovation of a facility in Beloit, Wisconsin for the production of aluminum wheels; the anticipated acquisition of a small amount of additional alumina capacity; expenditures related to the modernization of the Company's Massena primary aluminum production plant (see below); and equipment upgrades at a number of other facilities. These investments will be funded with cash generated from operations, proceeds from the sale of non-core assets, and part of the proceeds from the preferred stock issue. In the second quarter of 1994, the Company announced plans to participate in the construction of can plants in Argentina and Saudi Arabia. An affiliate (in which the Company owns 42.5%) will own the Argentinean can plant, which will have an annual capacity of 750 million cans and is expected to start production in late 1995. The Company will own 27.5% of the Saudi Arabian can plant, which will have an annual capacity of 1.2 billion cans and is expected to start production in early 1996. In the third quarter of 1994, the Company announced that it has retained Chemical Securities, Inc. to assist with the possible divestment of its remaining gold mining assets in Australia. The assets consist of three mines in Western Australia and exploration activities underway in Western Australia and the Northern Territory. The mines produced approximately 210,000 ounces of gold for the Company in 1993 and 158,000 ounces in the first nine months of 1994. The Company plans to reinvest the proceeds from any such sale in value-added businesses and would expect the reinvestment to offset any short-term effect this divestiture may have on the Company's results. Financial Outlook (continued) In the third quarter of 1994, the Company announced plans for a $12 million expansion that will increase annual production capacity at its plastic film manufacturing plant in Grottoes, Virginia by approximately 20 percent. Site preparation work has already begun, and construction of the addition is scheduled to begin next spring with start-up of the additional capacity scheduled for the summer of 1996. Early in the fourth quarter of 1994, the Company announced plans to modernize its 123,000 metric ton primary aluminum production plant in Massena, N.Y. The Company plans to spend an estimated $150 to $200 million over five years to modernize production lines and environmental control facilities at the plant. Also early in the fourth quarter of 1994, the Company announced a major, multi-year capital program to build a new aluminum foil rolling mill at the Company's Louisville, Kentucky plant which will increase annual capacity at the operation by about 25 percent. The new Louisville mill is part of a modernization, reengineering and expansion program for rolling facilities which fabricate foil for consumer and foodservice foodwrap products. The engineering phase of the Louisville mill construction will begin before the end of 1994 with completion of the project scheduled for 1997. The Company believes its available financial resources (including cash and investments of over $250 million), together with internally generated funds, are sufficient to meet its business needs at the present time and for the foreseeable future. The Company continues to exceed the financial ratio requirements contained in its financing arrangements and expects to do so for the foreseeable future. At September 30, 1994, $222 million of the Company's $1.65 billion shelf registration remained available for the issuance of debt securities. PART II - OTHER INFORMATION Item 1. LEGAL PROCEEDINGS On August 29, 1994, the Registrant received a civil investigative demand from the U.S. Department of Justice relating to production of primary aluminum. The Registrant is cooperating with the inquiry and is confident that its conduct has been in compliance with U.S. antitrust laws. As previously reported in the Registrant's Report on Form 10-K for the Year ended December 31, 1993, the State of New York alleged in December, 1993 that the Registrant's emissions at its Massena, New York primary aluminum production plant were causing a violation of ambient air standards for benzo-a-pyrene. The Registrant responded that it did not believe it was causing such a violation, but entered into a series of meetings with the State to discuss environmental issues at the Massena plant. In October, 1994, based on an agreement in principle with the State to resolve environmental issues at the plant, the Registrant approved a five-year capital spending program of an estimated $150 to $200 million to modernize the Massena plant and significantly reduce air emissions from the plant. The Registrant will accelerate installation of equipment believed necessary to achieve compliance with the federal Clean Air Act's Maximum Achievable Control Technology standards, although the U.S. Environmental Protection Agency is not expected to establish such standards until 1996 or 1997. (For additional information, see the discussion under "Liquidity and Capital Resources - Financial Outlook" in Part I, Item 2 of this report.) Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits See Index to Exhibits. (b) Reports on Form 8-K During the third quarter of 1994, the Registrant filed with the Commission a Current Report on Form 8-K dated August 26, 1994 reporting under Item 5 that it had (i) retained Chemical Securities, Inc. to assist with the possible divestment of its remaining gold mining assets in Australia, (ii) completed the purchase of the metals distribution business of Alumax Inc.'s wholly owned subsidiary, Prime Metals, Inc. and (iii) been notified it would receive a civil investigative demand from the U.S. Department of Justice relating to production of primary aluminum. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. REYNOLDS METALS COMPANY By Allen M. Earehart Allen M. Earehart Vice President, Controller (Principal Accounting Officer) DATE: November 10, 1994 INDEX TO EXHIBITS EXHIBIT SEQUENTIAL NO. DESCRIPTION OF EXHIBIT PAGE NO. 2 None *4.1 Restated Certificate of Incorporation of Reynolds Metals Company, as amended to the date hereof. (File No. 1-1430, Registration Statement on Form 8-A dated February 23, 1994, pertaining to Common Stock and Preferred Stock Purchase Rights, EXHIBIT 1) *4.2 By-Laws of Reynolds Metals Company, as amended to the date hereof. (File No. 1-1430, Form 10-Q Report for the Quarter Ended June 30, 1994, EXHIBIT 4.2) *4.3 Indenture dated as of April 1, 1989 (the "Indenture") between Reynolds Metals Company and The Bank of New York, as Trustee, relating to Debt Securities. (File No. 1-1430, Form 10-Q Report for the Quarter Ended March 31, 1989, EXHIBIT 4(c)) *4.4 Amendment No. 1 dated as of November 1, 1991 to the Indenture. (File No. 1-1430, 1991 Form 10-K Report, EXHIBIT 4.4) *4.5 Rights Agreement dated as of November 23, 1987 (the "Rights Agreement") between Reynolds Metals Company and The Chase Manhattan Bank, N.A. (File No. 1-1430, Registration Statement on Form 8-A dated November 23, 1987, pertaining to Preferred Stock Purchase Rights, EXHIBIT 1) *4.6 Amendment No. 1 dated as of December 19, 1991 to the Rights Agreement. (File No. 1-1430, 1991 Form 10-K Report, EXHIBIT 4.11) *4.7 Form of 9-3/8% Debenture due June 15, 1999. (File No. 1-1430, Form 8-K Report dated June 6, 1989, EXHIBIT 4) *4.8 Form of Fixed Rate Medium-Term Note. (Registration Statement No. 33-30882 on Form S-3, dated August 31, 1989, EXHIBIT 4.3) *4.9 Form of Floating Rate Medium-Term Note. (Registration Statement No. 33-30882 on Form S-3, dated August 31, 1989, EXHIBIT 4.4) *4.10 Form of Book-Entry Fixed Rate Medium-Term Note. (File No. 1-1430, 1991 Form 10-K Report, EXHIBIT 4.15) *4.11 Form of Book-Entry Floating Rate Medium-Term Note. (File No. 1-1430, 1991 Form 10-K Report, EXHIBIT 4.16) *4.12 Form of 9% Debenture due August 15, 2003. (File No. 1-1430, Form 8-K Report dated August 16, 1991, EXHIBIT 4(a)) *4.13 Articles of Continuance of Canadian Reynolds Metals Company, Limited -- Societe Canadienne de Metaux Reynolds, Limitee ("CRM"), as amended to the date hereof. (Registration Statement No. 33-59168 on Form S-3, dated March 5, 1993, EXHIBIT 4.1) *4.14 By-Laws of CRM, as amended to the date hereof. (File No. 1-1430, Form 10-Q Report for the Quarter Ended September 30, 1993, EXHIBIT 4.19) *4.15 Indenture dated as of April 1, 1993 among CRM, Reynolds Metals Company and The Bank of New York, as Trustee. (File No. 1-1430, Form 8-K Report dated July 14, 1993, EXHIBIT 4(a)) *4.16 Form of 6-5/8% Guaranteed Amortizing Note due July 15, 2002. (File No. 1-1430, Form 8-K Report dated July 14, 1993, EXHIBIT 4(d)) *10.1 Reynolds Metals Company 1982 Nonqualified Stock Option Plan, as amended through May 17, 1985. (File No. 1-1430, 1985 Form 10-K Report, EXHIBIT 10.2) *10.2 Reynolds Metals Company 1987 Nonqualified Stock Option Plan. (Registration Statement No. 33-13822 on Form S-8, dated April 28, 1987, EXHIBIT 28.1) *10.3 Reynolds Metals Company 1992 Nonqualified Stock Option Plan. (Registration Statement No. 33-44400 on Form S-8, dated December 9, 1991, EXHIBIT 28.1) *10.4 Reynolds Metals Company Performance Incentive Plan, as amended and restated effective January 1, 1985. (File No. 1-1430, 1985 Form 10-K Report, EXHIBIT 10.3) *10.5 Consulting Agreement dated April 16, 1986 between Reynolds Metals Company and David P. Reynolds. (File No. 1-1430, Form 10-Q Report for the Quarter Ended March 31, 1986, EXHIBIT 19) *10.6 Form of Deferred Compensation Agreement dated February 17, 1984 between Reynolds Metals Company and David P. Reynolds. (File No. 1-1430, Form 10-Q Report for the Quarter Ended March 31, 1994, EXHIBIT 10.6) *10.7 Deferred Compensation Agreement dated May 16, 1986 between Reynolds Metals Company and David P. Reynolds. (File No. 1-1430, Form 10-Q Report for the Quarter Ended June 30, 1986, EXHIBIT 19) *10.8 Agreement dated December 9, 1987 between Reynolds Metals Company and Jeremiah J. Sheehan. (File No. 1-1430, 1987 Form 10-K Report, EXHIBIT 10.9) *10.9 Supplemental Death Benefit Plan for Officers. (File No. 1-1430, 1986 Form 10-K Report, EXHIBIT 10.8) *10.10 Financial Counseling Assistance Plan for Officers. (File No. 1-1430, 1987 Form 10-K Report, EXHIBIT 10.11) *10.11 Management Incentive Deferral Plan. (File No. 1-1430, 1987 Form 10-K Report, EXHIBIT 10.12) *10.12 Deferred Compensation Plan for Outside Directors as Amended and Restated Effective December 1, 1993. (File No. 1-1430, 1993 Form 10-K Report, EXHIBIT 10.12) *10.13 Retirement Plan for Outside Directors. (File No. 1-1430, 1986 Form 10-K Report, EXHIBIT 10.10) *10.14 Death Benefit Plan for Outside Directors. (File No. 1-1430, 1986 Form 10-K Report, EXHIBIT 10.11) *10.15 Form of Indemnification Agreement for Directors and Officers. (File No. 1-1430, Form 8-K Report dated April 29, 1987, EXHIBIT 28.3) *10.16 Form of Executive Severance Agreement between Reynolds Metals Company and key executive personnel, including each of the individuals listed in Item 4A of the Reynolds Metals Company 1993 Form 10-K Report (other than Messrs. Christino, Earehart, Jones and Leahey). (File No. 1-1430, 1987 Form 10-K Report, EXHIBIT 10.18) *10.17 Renewal dated February 21, 1992 of Consulting Agreement dated April 16, 1986 between Reynolds Metals Company and David P. Reynolds. (File No. 1-1430, 1991 Form 10-K Report, EXHIBIT 10.19) *10.18 Amendment to Reynolds Metals Company 1987 Nonqualified Stock Option Plan effective May 20, 1988. (File No. 1-1430, Form 10-Q Report for the Quarter Ended June 30, 1988, EXHIBIT 19(a)) *10.19 Amendment to Reynolds Metals Company 1987 Nonqualified Stock Option Plan effective October 21, 1988. (File No. 1-1430, Form 10-Q Report for the Quarter Ended September 30, 1988, EXHIBIT 19(a)) *10.20 Amendment to Reynolds Metals Company 1987 Nonqualified Stock Option Plan effective January 1, 1987. (File No. 1-1430, 1988 Form 10-K Report, EXHIBIT 10.22) *10.21 Amendment to Reynolds Metals Company Performance Incentive Plan effective January 1, 1989. (File No. 1-1430, Form 10-Q Report for the Quarter Ended June 30, 1989, EXHIBIT 19) *10.22 Form of Stock Option and Stock Appreciation Right Agreement, as approved February 16, 1990 by the Compensation Committee of the Company's Board of Directors. (File No. 1-1430, 1989 Form 10-K Report, EXHIBIT 10.24) *10.23 Amendment to Reynolds Metals Company 1982 Nonqualified Stock Option Plan effective January 18, 1991. (File No. 1-1430, 1990 Form 10-K Report, EXHIBIT 10.25) *10.24 Amendment to Reynolds Metals Company 1987 Nonqualified Stock Option Plan effective January 18, 1991. (File No. 1-1430, 1990 Form 10-K Report, EXHIBIT 10.26) *10.25 Letter Agreement dated January 18, 1991 between Reynolds Metals Company and William O. Bourke. (File No. 1-1430, 1990 Form 10-K Report, EXHIBIT 10.29) *10.26 Form of Stock Option Agreement, as approved April 22, 1992 by the Compensation Committee of the Company's Board of Directors. (File No. 1-1430, Form 10-Q Report for the Quarter Ended March 31, 1992, EXHIBIT 28(a)) *10.27 Consulting Agreement dated May 1, 1992 between Reynolds Metals Company and William O. Bourke. (File No. 1-1430, Form 10-Q Report for the Quarter Ended March 31, 1992, EXHIBIT 28(b)) *10.28 Renewal dated February 18, 1994 of Consulting Agreement dated May 1, 1992 between Reynolds Metals Company and William O. Bourke. (File No. 1-1430, 1993 Form 10-K Report, EXHIBIT 10.28) *10.29 Reynolds Metals Company Restricted Stock Plan for Outside Directors. (Registration Statement No. 33-53851 on Form S-8, dated May 27, 1994, EXHIBIT 4.6) *10.30 Reynolds Metals Company New Management Incentive Deferral Plan. (File No. 1-1430, Form 10-Q Report for the Quarter Ended June 30, 1994, EXHIBIT 10.30) *10.31 Reynolds Metals Company Salary Deferral Plan for Executives. (File No. 1-1430, Form 10-Q Report for the Quarter Ended June 30, 1994, EXHIBIT 10.31) *10.32 Reynolds Metals Company Supplemental Long Term Disability Plan for Executives. (File No. 1-1430, Form 10-Q Report for the Quarter Ended June 30, 1994, EXHIBIT 10.32) 10.33 Amendment to Reynolds Metals Company 1982 Nonqualified Stock Option Plan effective August 19, 1994 10.34 Amendment to Reynolds Metals Company 1987 Nonqualified Stock Option Plan effective August 19, 1994 10.35 Amendment to Reynolds Metals Company 1992 Nonqualified Stock Option Plan effective August 19, 1994 11 Computation of Earnings Per Share 15 None 18 None 19 None 22 Not applicable 23 None 24 None 27 Financial Data Schedule ___________________ *Incorporated by reference. Pursuant to Item 601 of Regulation S-K, certain instruments with respect to long-term debt of Reynolds Metals Company (the "Registrant") and its consolidated subsidiaries are omitted because such debt does not exceed 10 percent of the total assets of the Registrant and its subsidiaries on a consolidated basis. The Registrant agrees to furnish a copy of any such instrument to the Commission upon request. F:\BFH\SEC\10Q\FORM10Q.394 EX-10 2 EXHIBIT 10.33 AMENDMENT TO REYNOLDS METALS COMPANY 1982 NONQUALIFIED STOCK OPTION PLAN Sections 3.1, 4.1, and 7.5 of the Reynolds Metals Company 1982 Nonqualified Stock Option Plan are each amended as follows by deleting the language in brackets and adding the language that is underscored: 3.1 Administration. The Plan shall be administered by a Committee of at least three persons, all of whom shall be members of the Board, appointed from time to time by the Board. The Board shall appoint one member of the Committee to act as Chairman. Vacancies shall be filled in the same manner as original appointments. The Committee shall hold meetings upon such notice and at such place or places, and at such time or times as it may from time to time determine. A majority of the members of the Committee at the time in office shall constitute a quorum for the transaction of business, and the acts of a majority of the members participating in any meeting at which a quorum is present shall be the acts of the Committee. The Committee may act without a meeting if a consent in writing setting forth the action so taken shall be signed by all members of the Committee and filed with the minutes of the Committee. As of the time that the Committee exercises its discretion in administering the Plan, all of the members of the Committee shall be "disinterested persons" as contemplated by Rule 16b-3, as in effect at such time, under the Securities Exchange Act of 1934, as amended [none of the members of the Committee shall be, or within one year prior thereto shall have been, eligible for selection as a person to whom stock may be allocated or to whom stock options or stock appreciation rights may be granted pursuant to the Plan or any other plan of the Company or any of its Subsidiaries entitling participants therein to acquire stock, stock options or stock appreciation rights of the Company or any of its Subsidiaries]. 4.1 General. Grants of options shall be made without the payment of a purchase price by any Grantee. Each option granted under the Plan shall be evidenced by a stock option agreement between the Company and the Grantee which shall contain the terms and conditions required by this Article IV, and such other terms and conditions, not inconsistent herewith, as the Committee may deem appropriate in each case. 7.5 Amendments. The Board may from time to time amend, modify, suspend or terminate the Plan; provided, however, that no such action shall (a) impair without the Grantee's consent any option or stock appreciation right theretofore granted under the Plan or deprive any Grantee of any shares of Company Stock which he or she may have acquired through or as a result of the Plan or (b) be made without Stockholder Approval where such change would (i) increase the total number of shares that may be issued under the Plan (other than as provided in Section 6.2), (ii) decrease the percentage relationship which must exist between the option price and the Fair Market Value of the Company Stock as optioned under Section 4.2, or (iii) alter the class of employees who are eligible to be granted options pursuant to the provisions of Section 2.2. Notwithstanding the foregoing, the Board may, in any circumstance where it deems such approval necessary or desirable, require Stockholder Approval as a condition to the effectiveness of any amendment or modification of the Plan. EX-10 3 EXHIBIT 10.34 AMENDMENT TO REYNOLDS METALS COMPANY 1987 NONQUALIFIED STOCK OPTION PLAN Sections 3.01, 4.01, and 7.05 of the Reynolds Metals Company 1987 Nonqualified Stock Option Plan are each amended as follows by deleting the language in brackets and adding the language that is underscored: 3.01 Administration. The Plan shall be administered by a Committee of at least three (3) persons, all of whom shall be members of the Board, appointed from time to time by the Board. The Board shall appoint one member of the Committee to act as Chairman. Vacancies shall be filled in the same manner as original appointments. The Committee shall hold meetings upon such notice and at such place or places, and at such time or times as it may from time to time determine. A majority of the members of the Committee at the time in office shall constitute a quorum for the transaction of business, and the acts of a majority of the members participating in any meeting at which a quorum is present shall be the acts of the Committee. The Committee may act without a meeting if a consent in writing setting forth the action so taken shall be signed by all members of the Committee and filed with the minutes of the Committee. As of the time that the Committee exercises its discretion in administering the Plan, all of the members of the Committee shall be "disinterested persons" as contemplated by Rule 16b-3, as in effect at such time, under the Securities Exchange Act of 1934, as amended [none of the members of the Committee shall be, or within one year prior thereto shall have been, eligible for selection as a person to whom stock may be allocated or to whom stock options or stock appreciation rights may be granted pursuant to the Plan or any other plan of the Company or any of its Subsidiaries entitling participants therein to acquire stock, stock options or stock appreciation rights of the Company or any of its Subsidiaries]. 4.01 General. Grants of options shall be made without the payment of a purchase price by any Grantee. Each option granted under the Plan shall be evidenced by a stock option agreement between the Company and the Grantee which shall contain the terms and conditions required by this Article IV, and such other terms and conditions, not inconsistent herewith, as the Committee may deem appropriate in each case. 7.05 Amendments. The Board may from time to time amend, modify, suspend or terminate the Plan; provided, however, that no such action shall (a) impair without the Grantee's consent any option or stock appreciation right theretofore granted under the Plan or deprive any Grantee of any shares of Company Stock which he or she may have acquired through or as a result of the Plan or (b) be made without Stockholder Approval where such change would (i) increase the total number of shares that may be issued under the Plan (other than as provided in Section 6.02), (ii) decrease the percentage relationship which must exist between the option price and the Fair Market Value of the Company Stock as optioned under Section 4.02, or (iii) alter the class of employees who are eligible to be granted options pursuant to the provisions of Section 2.02. Notwithstanding the foregoing, the Board may, in any circumstance where it deems such approval necessary or desirable, require Stockholder Approval as a condition to the effectiveness of any amendment or modification of the Plan. EX-10 4 EXHIBIT 10.35 AMENDMENT TO REYNOLDS METALS COMPANY 1992 NONQUALIFIED STOCK OPTION PLAN Section 4.01 of the Reynolds Metals Company 1992 Nonqualified Stock Option Plan is amended as follows by adding the language that is underscored: 4.01 General. Grants of options shall be made without the payment of a purchase price by any Grantee. Each option granted under the Plan shall be evidenced by a stock option agreement between the Company and the Grantee which shall contain the terms and conditions required by this Article IV, and such other terms and conditions, not inconsistent herewith, as the Committee may deem appropriate in each case. EX-11 5 EXHIBIT 11
Computation of Earnings Per Share REYNOLDS METALS COMPANY AND CONSOLIDATED SUBSIDIARIES (In millions, except share data) Quarter Ended Nine Months Ended September 30 September 30 1994 1993 1994 1993 _______________________________________________________ Average shares outstanding 62,017,545 59,842,476 61,649,836 59,811,025 ======================================================= Net income (loss) $62.0 $(28.0) $52.8 $(83.5) Less preferred stock dividends 9.1 - 25.0 - _______________________________________________________ Net income (loss) applicable to common stock $52.9 $(28.0) $27.8 $(83.5) ======================================================= Net income (loss) per share $0.86 $(0.47) $0.45 $(1.40) =======================================================
EX-27 6
5 This schedule contains summary financial information extracted from the Reynolds Metals Company Condensed Consolidated Balance Sheet (Unaudited) for September 30, 1994 and Consolidated Statement of Income (Unaudited) for the Quarter and Nine Months Ended September 30, 1994, and is qualified in its entirety by reference to such financial statements. 1,000,000 9-MOS DEC-31-1994 SEP-30-1994 187 0 909 0 855 1996 6274 3163 7197 1233 1855 863 0 505 828 7197 4240 4329 3849 3849 284 0 114 82 29 53 0 0 0 53 .45 0 This amount represents total receivables, since trade receivables are not broken out separately at interim dates, in accordance with S-X 10-01(2).
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