11-K 1 0001.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 11-K ANNUAL REPORT Pursuant to Section 15(d) of the Securities Exchange Act of 1934 [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission File Number 001-01430 A. Full title of the plan: REYNOLDS METALS COMPANY SAVINGS PLAN FOR HOURLY EMPLOYEES B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: REYNOLDS METALS COMPANY 6601 West Broad Street P. O. Box 27003 Richmond, Virginia 23261-7003 2 REQUIRED INFORMATION FINANCIAL STATEMENTS AND EXHIBITS FINANCIAL STATEMENTS Page No. -------- Report of Ernst & Young LLP, Independent Auditors..... F-1 Audited Financial Statements Statements of Net Assets Available for Plan Benefits...................................... F-2 Statement of Changes in Net Assets Available for Plan Benefits.................................. F-3 Notes to Financial Statements........................ F-4 EXHIBITS Exhibit A Consent of Ernst & Young LLP, Independent Auditors - 2 - 3 SIGNATURES The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan Committee for Hourly Savings Plan has duly caused this annual report to be signed on behalf of the Plan by the undersigned hereunto duly authorized. DATE: June 27, 2000 REYNOLDS METALS COMPANY SAVINGS PLAN FOR HOURLY EMPLOYEES By: Plan Committee for Hourly Savings Plan By: RICHARD B. KELSON -------------------------------- Richard B. Kelson, Member By: ROBERT F. SLAGLE -------------------------------- Robert F. Slagle, Member By: WILLIAM J. O'ROURKE, JR. -------------------------------- William J. O'Rourke, Jr., Member - 3 - F-1 Report of Ernst & Young LLP, Independent Auditors Board of Directors Reynolds Metals Company We have audited the accompanying statements of net assets available for plan benefits of the Reynolds Metals Company Savings Plan for Hourly Employees as of December 31, 1999 and 1998, and the related statement of changes in net assets available for plan benefits for the year ended December 31, 1999. These financial statements are the responsibility of the management of Reynolds Metals Company, the Plan's sponsor. 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 net assets available for plan benefits of the Plan at December 31, 1999 and 1998, and the changes in its net assets available for plan benefits for the year ended December 31, 1999, in conformity with accounting principles generally accepted in the United States. Richmond, Virginia June 9, 2000 F-1 F-2 Reynolds Metals Company Savings Plan for Hourly Employees Statements of Net Assets Available for Plan Benefits (Dollars in Thousands)
DECEMBER 31, ------------------------------- 1999 1998 ------------------------------- ASSETS Investment in Master Trust $179,755 $215,363 Accrued income 28 44 Contributions receivable 383 698 ------------------------------- Total assets 180,166 216,105 LIABILITIES Accrued expenses - 189 ------------------------------- Net assets available for plan benefits $180,166 $215,916 See accompanying notes.
F-2 F-3 Reynolds Metals Company Savings Plan for Hourly Employees Statement of Changes in Net Assets Available for Plan Benefits Year ended December 31, 1999 (Dollars in Thousands)
Additions to net assets: Net investment gain from Master Trust $ 20,982 Contributions: Employer 10,991 Employee 13,076 ------------- 24,067 ------------- Total Additions 45,049 Deductions from net assets: Withdrawals by participants 79,879 Assets transferred to other plans 920 ------------- Total Deductions 80,799 ------------- Net decrease (35,750) Net assets available for plan benefits: Beginning of year 215,916 ------------- End of year $180,166 ============= See accompanying notes.
F-3 F-4 Reynolds Metals Company Savings Plan for Hourly Employees Notes to Financial Statements (Dollars in Thousands) 1. SIGNIFICANT ACCOUNTING POLICIES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. The accounting records of the Reynolds Metals Company Savings Plan for Hourly Employees ("Plan") are maintained on the accrual basis. All securities transactions are recorded as of the trade date. Investments in Reynolds Metals Company Common Stock (stated at fair value) are valued at the last reported sales price on the last business day of the year. Investments in mutual funds are measured by quoted market prices and are reported at aggregate fair value at year-end. Guaranteed investment contracts with insurance companies are reported at "contract value," which equals cost plus accrued income. Structured investment contracts are reported at fair value, which in the case of such contracts equals contract value. Participant loans are valued at their outstanding balances, which approximates fair value. Certain amounts in the 1998 financial statements have been reclassified to conform to the 1999 presentation. 2. SUMMARY OF SIGNIFICANT PLAN PROVISIONS Reynolds Metals Company (the "Company") established the Plan effective January 1, 1986, covering hourly employees of the Company and certain of its subsidiaries (each an "Employer") who are in a bargaining unit covered by a labor agreement that incorporates the Plan by reference. The Plan is a defined contribution plan under the Employee Retirement Income Security Act of 1974 ("ERISA") and qualifies as a "cash or deferred" arrangement under Section 401(k) of the Internal Revenue Code. A complete description of the Plan is contained in the Summary Plan Description and in the Plan document, copies of which are available from the Company. F-4 F-5 Reynolds Metals Company Savings Plan for Hourly Employees Notes to Financial Statements (continued) 2. SUMMARY OF SIGNIFICANT PLAN PROVISIONS (CONTINUED) Hourly employees who are in a bargaining unit covered by a collective bargaining agreement that incorporates the Plan will become eligible to participate in the Plan on the later of (a) 30 days after beginning their employment with an Employer, or (b) the date on which the collective bargaining agreement under which they are covered first incorporates the Plan by reference. Plan participation is voluntary. Each collective bargaining agreement that incorporates the Plan by reference provides that participants may elect to make payroll contributions to the Plan in specified amounts ranging from 1% to 12% of compensation in 1% increments. Each such collective bargaining agreement may also provide for the following types of contributions: (a) COMPANY MATCHING CONTRIBUTIONS: At certain bargaining units, the applicable Employer will, subject to certain limitations, contribute to the Plan on behalf of each eligible participant, a fixed percentage of a portion of the payroll contributions by the participant. (b) NEGOTIATED DEFERRAL CONTRIBUTIONS: At certain bargaining units, the applicable Employer will make a contribution to a participant's account based on the number of hours worked by each active employee participating in the Plan. (c) ADDITIONAL VOLUNTARY CONTRIBUTIONS: Eligible employees who receive a profit sharing award, gainsharing payment or other designated type of lump sum payment may contribute between 10% and 50% of the award and/or payment (in 10% increments) to the Plan. Such contributions are not matched by the Company or any other Employer. Participants may elect to make their contributions on a before or after tax basis or a combination thereof. Employer contributions (matching and negotiated deferral) are made on a "pretax" basis. Highly compensated participants may be required to reduce the amount of "pretax" contributions made to or held by the Plan on their behalf to permit the Plan to satisfy the nondiscrimination requirements of Section 401(k) of the Internal Revenue Code. Upon enrollment, a participant may direct contributions to any of the Plan's fund options. F-5 F-6 Reynolds Metals Company Savings Plan for Hourly Employees Notes to Financial Statements (continued) 2. SUMMARY OF SIGNIFICANT PLAN PROVISIONS (CONTINUED) Participants are fully vested in their account balances. Withdrawals and distributions are handled in accordance with the Plan provisions and are subject to certain regulatory restrictions. The trustee holds all of the Plan's investment assets and executes transactions therein. Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA and subject to the terms of any applicable collective bargaining agreement. The Company is the Plan administrator and bears the related costs, except for investment-related and trustee fees, which are paid by the Plan. 3. COMMINGLED MASTER TRUST INVESTMENTS All of the investments of the Plan as of December 31, 1999 and 1998 were held in a Master Trust under a Master Trust Agreement between Reynolds Metals Company and The Northern Trust Company, as trustee, and are commingled with the assets of three other savings plans of the Company and one of its subsidiaries. Net assets and net investment gains (losses) from the Master Trust are allocated to participating plans based on the aggregate account balances of individual participants in each plan. Non-participant directed investments of the Master Trust represent employer contributions provided by another savings plan of the Master Trust. The assets of the Interest Income Fund generally are invested in guaranteed investment contracts ("GICs") at fixed rates of return and structured investment contracts ("SICs") with various insurance companies and banks. SICs represent a diversified portfolio of high grade investments held in the name of the Master Trust in conjunction with a corresponding contract with the issuer of the SIC to provide a fixed or variable rate of return (based on investment experience and reset quarterly) on the cost of the investment. GICs and SICs generally provide for the full repayment of principal and interest. Upon the occurrence of certain events (including layoffs by the Company or its applicable affiliates), however, market value of the GIC or SIC, if lower than its book value, may be repaid (a "Market Value Adjustment"). Currently, in the opinion of the Company, the likelihood of a material loss to the Plan as a result of such a Market Value Adjustment is F-6 F-7 Reynolds Metals Company Savings Plan for Hourly Employees Notes to Financial Statements (continued) 3. COMMINGLED MASTER TRUST INVESTMENTS (CONTINUED) remote. The annual rate of return on these contracts during 1999 was approximately 6.2%. The current yield on these contracts at December 31, 1999 was 6.3% (6.3% at December 31, 1998). Interest is credited to participants' accounts on the dollar-weighted average (blended rate) basis. The fair value of the Plan's GICs approximates contract value. Cash and cash equivalents of the Master Trust are invested in a short-term investment fund managed by The Northern Trust Company. During 1999 and 1998, certain assets of the Plan were transferred into other plans and from other plans of the Company as a result of employee transfers. There was no effect on any participant's accounts as a result of the transfers. Summarized financial information of the commingled accounts within the Master Trust is presented below:
NON- PARTICIPANT PARTICIPANT DIRECTED DIRECTED TOTAL ------------------------------------------ MASTER TRUST NET ASSETS- 1999 ASSETS Accrued income $ 386 $ 505 $ 891 Cash and cash equivalents 38,624 1,456 40,080 Contributions receivable 395 - 395 Investments at quoted fair value: Mutual funds 258,980 - 258,980 Common stock 81,598 107,293 188,891 Investments at contract value: Investment contracts 143,770 - 143,770 Investments at estimated fair value: Loans to participants 15,382 - 15,382 ----------------------------------------- Total assets 539,135 109,254 648,389 Interfund receivable (payable)-net 20 (20) - ----------------------------------------- Master Trust net assets $539,155 $109,234 $648,389 ========================================= Portion of Master Trust allocable to the Plan $180,166 $ - $180,166 Percent 33% -% 27%
F-7 F-8 Reynolds Metals Company Savings Plan for Hourly Employees Notes to Financial Statements (continued) 3. COMMINGLED MASTER TRUST INVESTMENTS (CONTINUED)
NON- PARTICIPANT PARTICIPANT DIRECTED DIRECTED TOTAL ------------------------------------------- MASTER TRUST NET ASSETS- 1998 ASSETS Accrued income $ 286 $ 568 $ 854 Cash and cash equivalents 60,962 1,342 62,304 Contributions receivable 1,651 473 2,124 Investments at quoted fair value: Mutual funds 250,975 - 250,975 Common stock 67,151 85,342 152,493 Investments at contract value: Investment contracts 168,462 - 168,462 Investments at estimated fair value: Loans to participants 16,812 - 16,812 ------------------------------------------- Total assets 566,299 87,725 654,024 LIABILITIES Accrued expenses 326 - 326 ------------------------------------------- Master Trust net assets $565,973 $87,725 $653,698 =========================================== Portion of Master Trust allocable to the Plan $215,916 $ - $215,916 Percent 38% -% 33%
F-8 F-9 REYNOLDS METALS COMPANY SAVINGS PLAN FOR HOURLY EMPLOYEES NOTES TO FINANCIAL STATEMENTS (CONTINUED) 3. COMMINGLED MASTER TRUST INVESTMENTS (CONTINUED)
NON- PARTICIPANT PARTICIPANT DIRECTED DIRECTED TOTAL ------------------------------------------ NET INVESTMENT GAIN FROM MASTER TRUST-1999 Net realized and unrealized appreciation of investments at quoted fair value: Mutual funds $35,879 $ - $ 35,879 Common stock 29,959 35,176 65,135 Interest and dividends 18,799 2,091 20,890 ------------------------------------------ $84,637 $37,267 $121,904 ==========================================
4. INCOME TAX STATUS The Plan has received a determination letter from the Internal Revenue Service dated February 20, 1996, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (the "Code") and, therefore, the related trust is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The Company has indicated that it will take the necessary steps, if any, to maintain the Plan's qualified status. 5. SUBSEQUENT EVENT On May 3, 2000, the Company became a wholly owned subsidiary of Alcoa Inc. ("Alcoa") in accordance with the terms of a merger agreement between the two companies. On the effective date of the merger, each outstanding share of Company common stock was converted into 1.06 shares of Alcoa common stock. Company common stock held under the Plan was so converted and participant accounts adjusted accordingly. Due to this conversion, the Plan was amended so that the Reynolds Stock Fund was changed to the Alcoa Stock Fund which will invest in Alcoa common stock; otherwise, the fund will continue to operate as it did before the merger. The Company will continue to act as the Plan administrator. F-9 INDEX TO EXHIBITS Exhibit A Consent of Ernst & Young LLP, Independent Auditors EXHIBIT A CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-36214) pertaining to the Reynolds Metals Company Savings Plan for Hourly Employees and in the related Prospectus of our report dated June 9, 2000, with respect to the financial statements of the Reynolds Metals Company Savings Plan for Hourly Employees included in this Annual Report (Form 11-K) for the year ended December 31, 1999. ERNST & YOUNG LLP Richmond, Virginia June 22, 2000