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 AND INVESTMENT PLAN FOR SALARIED 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-4 Notes to Financial Statements......................... F-5 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 Savings and Investment Plan Committee 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 AND INVESTMENT PLAN FOR SALARIED EMPLOYEES By: Savings and Investment Plan Committee 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 and Investment Plan for Salaried 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 and Investment Plan for Salaried Employees Statement of Net Assets Available for Plan Benefits December 31, 1999 (Dollars in Thousands)
NON- PARTICIPANT PARTICIPANT DIRECTED DIRECTED TOTAL ------------------------------------------- ASSETS Investment in Master Trust $347,146 $108,749 $455,895 Accrued income 354 505 859 ------------------------------------------- Total assets 347,500 109,254 456,754 Interfund receivable (payable) - net 20 (20) - ------------------------------------------- Net assets available for plan benefits $347,520 $109,234 $456,754 =========================================== See accompanying notes.
F-2 F-3 Reynolds Metals Company Savings and Investment Plan for Salaried Employees Statement of Net Assets Available for Plan Benefits December 31, 1998 (Dollars in Thousands)
NON- PARTICIPANT PARTICIPANT DIRECTED DIRECTED TOTAL ----------------------------------------------- ASSETS Investment in Master Trust $338,871 $86,684 $425,555 Accrued income 236 568 804 Contributions receivable 927 473 1,400 ----------------------------------------------- Total assets 340,034 87,725 427,759 LIABILITIES Accrued expenses 130 - 130 ----------------------------------------------- Net assets available for plan benefits $339,904 $87,725 $427,629 =============================================== See accompanying notes.
F-3 F-4 Reynolds Metals Company Savings and Investment Plan for Salaried Employees Statement of Changes in Net Assets Available for Plan Benefits Year Ended December 31, 1999 (Dollars in Thousands)
NON- PARTICIPANT PARTICIPANT DIRECTED DIRECTED TOTAL ------------------------------------------- Additions to net assets: Net investment gain from Master Trust $ 62,313 $ 37,267 $ 99,580 Assets received from other plans 894 - 894 Contributions: Employer - 5,197 5,197 Employee 16,958 - 16,958 ------------------------------------------- 16,958 5,197 22,155 ------------------------------------------- Total Additions 80,165 42,464 122,629 Deductions from net assets: Withdrawals by participants 71,871 21,626 93,497 Assets transferred to other plans - 7 7 ------------------------------------------- Total Deductions 71,871 21,633 93,504 Interfund transfers - net (678) 678 - ------------------------------------------- Net increase 7,616 21,509 29,125 Net assets available for plan benefits: Beginning of year 339,904 87,725 427,629 ------------------------------------------- End of year $347,520 $109,234 $456,754 =========================================== See accompanying notes.
F-4 F-5 Reynolds Metals Company Savings and Investment Plan for Salaried 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 and Investment Plan for Salaried 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 July 1, 1978, covering salaried employees of the Company and certain of its subsidiaries and affiliates. 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. Plan participation is available to eligible employees who have completed 30 days of service and is voluntary. A participant is entitled to make payroll contributions to the Plan in specified amounts ranging from 1% to 16% of compensation in 1% increments. F-5 F-6 Reynolds Metals Company Savings and Investment Plan for Salaried Employees Notes to Financial Statements (continued) 2. SUMMARY OF SIGNIFICANT PLAN PROVISIONS (CONTINUED) The Company contributes an amount equal to 50% of each participating employee's payroll contributions up to 6% of compensation. The Company may also contribute up to an additional 50% of each participating employee's payroll contributions up to 6% of compensation. The Company did not elect to make an additional matching contribution for 1999 or 1998. Participants may contribute 1% to 16% (in 1% increments) of any profit sharing award or gainsharing payment received. Such contributions are not matched by the Company. Participants may elect to make their contributions on a before or after tax basis or a combination thereof. Company matching contributions 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 employee contributions to any of the Plan's fund options. Employer contributions are invested in Reynolds Metals Company Common Stock. Employee contributions are participant directed investments and employer contributions are non-participant directed investments. Participants in the Plan 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. The Company is the Plan administrator and bears the related costs, except for investment related and trustee fees, which are paid by the Plan. F-6 F-7 Reynolds Metals Company Savings and Investment Plan for Salaried Employees Notes to Financial Statements (continued) 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 investments of the Master Trust represent employer contributions provided by the Plan. The assets held in the Interest Income Fund generally are invested in guaranteed investment contracts ("GICs") at a fixed rate 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 the 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 remote. Interest is credited to participants' accounts on the dollar- weighted average (blended rate) basis. The annual rate of return on these contracts during 1999 was approximately 6.2%. The current yield on December 31, 1999 was 6.3% (6.3% on December 31, 1998). 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. F-7 F-8 Reynolds Metals Company Savings and Investment Plan for Salaried Employees Notes to Financial Statements (continued) 3. COMMINGLED MASTER TRUST INVESTMENTS (CONTINUED) 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 $347,520 $109,234 $456,754 Percent 64% 100% 70%
F-8 F-9 Reynolds Metals Company Savings and Investment Plan for Salaried 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 $339,904 $87,725 $427,629 Percent 60% 100% 65%
F-9 F-10 Reynolds Metals Company Savings and Investment Plan for Salaried 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-10 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 and Investment Plan for Salaried 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 and Investment Plan for Salaried Employees included in this Annual Report (Form 11-K) for the year ended December 31, 1999. ERNST & YOUNG LLP Richmond, Virginia June 22, 2000