-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QebV8wvuVscao1/O4CQjX/O92VipQxXnmPcSnNL8Zw6od7w+w4Ka0zZG1JbVwxeK X/CPCFOkTYTpZGRO5mJ9SQ== 0000083604-98-000022.txt : 19980812 0000083604-98-000022.hdr.sgml : 19980812 ACCESSION NUMBER: 0000083604-98-000022 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980810 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980811 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: REYNOLDS METALS CO CENTRAL INDEX KEY: 0000083604 STANDARD INDUSTRIAL CLASSIFICATION: PRIMARY PRODUCTION OF ALUMINUM [3334] IRS NUMBER: 540355135 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-01430 FILM NUMBER: 98681785 BUSINESS ADDRESS: STREET 1: 6601 W BROAD ST STREET 2: PO BOX 27003 CITY: RICHMOND STATE: VA ZIP: 23261 BUSINESS PHONE: 8042812000 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _______________ FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): August 10, 1998 REYNOLDS METALS COMPANY ----------------------- (Exact name of registrant as specified in its charter) Delaware 1-1430 54-0355135 -------- ------ ---------- (State of Incorporation) (Commission (IRS Employer File Number) Identification Number) 6601 West Broad Street P.O. Box 27003 Richmond, Virginia 23261-7003 ----------------------------- (Address of Principal Executive Offices, including zip code) (804) 281-2000 -------------- (Registrant's Telephone Number, including area code) 2 Item 2. ACQUISITION OR DISPOSITION OF ASSETS On August 10, 1998, the Registrant completed the sale of its North American aluminum beverage can operations to Ball Corporation ("Ball") for $746 million in cash. The disposition was made pursuant to the Asset Purchase Agreement, dated as of April 22, 1998, by and among Ball, Ball Metal Beverage Container Corp. and the Registrant. The purchase price was determined by arms-length negotiation between the Registrant and Ball. The Registrant realized an after-tax gain of $200 million on the sale. The sale included 14 can plants, two end plants and a headquarters building located as follows: Can Plants ---------- San Francisco, California Torrance, California Tampa, Florida Moultrie, Georgia Honolulu, Hawaii Monticello, Indiana (cans and ends) Kansas City, Missouri Middletown, New York Reidsville, North Carolina (cans and ends) Salisbury, North Carolina Forth Worth, Texas Seattle, Washington Milwaukee, Wisconsin Guayama, Puerto Rico End Plants ---------- Rocklin, California Bristol, Virginia Can Operations Headquarters Building ------------------------------------ Richmond, Virginia The sale did not include the Registrant's 34.9% interest in Latas de Aluminio S.A., which operates can facilities in Brazil, Chile and Argentina; the Registrant's can machinery business; or the Registrant's 27.5% interest in United Arab Can Manufacturing Company, Ltd., which operates a can plant in Saudi Arabia. 3 Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (b) Pro Forma Financial Information PRO FORMA CONDENSED BALANCE SHEET (UNAUDITED) (millions)
Less: North American Pro Reynolds Can Forma Metals Operations Adjust- As of June 30, 1998 Company (A) ments Pro Forma - ------------------------------------------------------------------------------------- ASSETS Current assets: Cash and cash equivalents $ 200 $ - $ - $ 200 Receivables, less allowances of $14 895 90 - 805 Inventories 551 23 - 528 Prepaid expenses and other 167 2 - 165 - ------------------------------------------------------------------------------------- Total current assets 1,813 115 - 1,698 Unincorporated joint ventures and associated companies 1,390 - - 1,390 Property, plant and equipment 5,873 740 - 5,133 Less allowances for depreciation and amortization 3,366 396 - 2,970 - ------------------------------------------------------------------------------------- 2,507 344 - 2,163 Deferred taxes and other assets 1,023 10 ( 104) (C) 909 - ------------------------------------------------------------------------------------- Total assets $6,733 $469 ($104) $6,160 ===================================================================================== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable, accrued and other liabilities $ 897 $ 53 $ - $ 844 Short-term borrowings 61 - - 61 Long-term debt 223 - - 223 - ------------------------------------------------------------------------------------- Total current liabilities 1,181 53 - 1,128 Long-term debt 1,465 - ( 470) (B) 995 Postretirement benefits 1,022 - - 1,022 Environmental, deferred taxes and other liabilities 597 - - 597 Stockholders' equity: Common stock 1,533 - - 1,533 Retained earnings 1,111 - 158 (C) 1,269 Treasury stock, at cost (126) - ( 208) (B) (334) Accumulated other comprehensive income (50) - - (50) - ------------------------------------------------------------------------------------- Total stockholders' equity 2,468 - ( 50) 2,418 - ------------------------------------------------------------------------------------- Total liabilities and stockholders' equity $6,733 $ 53 ($520) $6,160 ===================================================================================== The accompanying notes to unaudited pro forma financial information are an integral part of these statements.
4 PRO FORMA STATEMENT OF INCOME (UNAUDITED) (millions, except per share amounts) =======================================================================================
Less: North American Pro Reynolds Can Forma Metals Operations Adjust- For the six months ended June 30, 1998 Company (D) ments Pro Forma - --------------------------------------------------------------------------------------- REVENUES $3,111 $630 $ - $2,481 COSTS AND EXPENSES Cost of products sold 2,526 554 - 1,972 Selling, administrative and general expenses 189 9 - 180 Depreciation and amortization 136 - - 136 Interest 67 - (21) (E) 46 Operational restructuring effects - net 304 - - 304 - -------------------------------------------------------------------------------------- 3,222 563 (21) 2,638 - -------------------------------------------------------------------------------------- EARNINGS Income (loss) before income taxes, extraordinary loss and cumulative effect of accounting change (111) 67 21 (157) Taxes on income (credit) (46) 25 8 (F) (63) - -------------------------------------------------------------------------------------- INCOME (LOSS) BEFORE EXTRAORDINARY LOSS AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE ($ 65) $ 42 $ 13 ($ 94) ====================================================================================== EARNINGS PER SHARE (G) Basic: Average shares outstanding 72,612,000 - - 68,922,000 Income (loss) before extraordinary loss and cumulative effect of accounting change ($0.89) - - ($1.36) ====================================================================================== Diluted: Average shares outstanding 72,612,000 - - 68,922,000 Income (loss) before extraordinary loss and cumulative effect of accounting change ($0.89) - - ($1.36) ====================================================================================== The accompanying notes to unaudited pro forma financial information are an integral part of these statements.
5 PRO FORMA STATEMENT OF INCOME (UNAUDITED) (millions, except per share amounts) ======================================================================================
Less: North American Pro Reynolds Can Forma Metals Operations Adjust- For the year ended December 31, 1997 Company (D) ments Pro Forma - -------------------------------------------------------------------------------------- REVENUES $6,900 $1,193 $ - $5,707 COSTS AND EXPENSES Cost of products sold 5,658 1,053 - 4,605 Selling, administrative and general expenses 406 18 - 388 Depreciation and amortization 368 57 - 311 Interest 153 - (42) (E) 111 Operational restructuring effects - net 75 - - 75 - -------------------------------------------------------------------------------------- 6,660 1,128 (42) 5,490 - -------------------------------------------------------------------------------------- EARNINGS Income before income taxes and cumulative effect of accounting change 240 65 42 217 Taxes on income 104 25 16 (F) 95 - -------------------------------------------------------------------------------------- INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE $136 $ 40 $ 26 $ 122 ====================================================================================== EARNINGS PER SHARE (G) Basic: Average shares outstanding 73,412,000 - - 69,722,000 Income before cumulative effect of accounting change $1.86 - - $1.75 ====================================================================================== Diluted: Average shares outstanding 74,004,000 - - 70,314,000 Income before cumulative effect of accounting change $1.84 - - $1.74 ====================================================================================== The accompanying notes to unaudited pro forma financial information are an integral part of these statements.
6 REYNOLDS METALS COMPANY AND CONSOLIDATED SUBSIDIARIES NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION FOR THE PERIODS ENDED JUNE 30, 1998 AND DECEMBER 31, 1997 The following unaudited pro forma financial information should be read in conjunction with the consolidated financial statements and related footnotes included in the Company's Annual Report on Form 10-K for the year ended December 31, 1997 and Quarterly Report on Form 10-Q for the quarter ended June 30, 1998. The following pro forma information is presented for illustrative purposes only and is not necessarily indicative of future operating results or financial position. Basis of Presentation The unaudited pro forma condensed balance sheet presents the consolidated financial position of the Company assuming that the disposition of the Company's North American Can Operations (the "Operation") had occurred on June 30, 1998. The unaudited pro forma income statements for the year ended December 31, 1997, and the six months ended June 30, 1998, present the consolidated results of operations of the Company assuming that the disposition had occurred as of January 1, 1997. The Operation consists of 14 can plants, two end plants and a headquarters building. Pro Forma Adjustments The following notes describe the adjustments found on the accompanying financial statements: Balance Sheet (A) The amounts included in the North American Can Operations' column reflect the assets and liabilities of the Operation involved in the disposition. (B) These pro forma adjustments reflect the estimated use of the pretax proceeds of $746 million from the disposition. The Company expects to use approximately $538 million of the proceeds to extinguish long-term debt (including extinguishment costs of approximately $68 million) and $208 million to repurchase its common stock. The purchase of common stock is a part of the Company's share repurchase program that was announced earlier this year. (C) These pro forma adjustments reflect the after-tax gain ($200 million after excluding taxes of $130 million) in retained earnings on the sale of the Operation, the estimated after- tax loss ($42 million after excluding taxes of $26 million) on debt extinguishment and the associated tax effects. These adjustments are not included in the pro forma income statements. Income Statements (D) The amounts included in the North American Can Operations' column on the income statements reflect the direct activity of the Operation involved in the disposition. Depreciation expense was included in the Operation's expenses for the year 1997, but not the interim periods of 1998. In 1998, the Operation was accounted for as an asset held for sale and, as required by current accounting rules, depreciation was stopped. Pretax income has been tax effected at the Company's statutory rate (38%). (E) These pro forma adjustments represent the estimated reduction in interest expense as a result of long-term debt being reduced by $470 million. Interest expense was calculated using the weighted average interest rate (approximately 9%) on the long-term debt expected to be extinguished. (F) Pretax income has been tax effected at the Company's statutory rate (38%). (G) The shares used for pro forma earnings per share reflect $208 million of proceeds being used to repurchase approximately 3,690,000 shares of the Company's common stock. 7 Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS -- continued (c) Exhibits EXHIBIT 2 Asset Purchase Agreement, dated as of April 22, 1998, by and among Ball Corporation, Ball Metal Beverage Container Corp. and Reynolds Metals Company. (File No. 1-1430, Form 10-Q Report for the Quarter Ended June 30, 1998, EXHIBIT 2). Pursuant to Item 601 of Regulation S- K, the Registrant agrees to furnish to the Commission upon request a copy of the disclosure schedules supplemental to the Asset Purchase Agreement. [FN] ___________________ Incorporated by reference. 8 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. REYNOLDS METALS COMPANY By: /s/ Allen M. Earehart --------------------------------- Allen M. Earehart Senior Vice President, Controller Dated: August 11, 1998 9 INDEX TO EXHIBITS EXHIBIT 2 - Asset Purchase Agreement, dated as of April 22, 1998, by and among Ball Corporation, Ball Metal Beverage Container Corp. and Reynolds Metals Company. (File No. 1-1430, Form 10-Q Report for the Quarter Ended June 30, 1998, EXHIBIT 2). Pursuant to Item 601 of Regulation S- K, the Registrant agrees to furnish to the Commission upon request a copy of the disclosure schedules supplemental to the Asset Purchase Agreement. [FN] ___________________ Incorporated by reference. -----END PRIVACY-ENHANCED MESSAGE-----