UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 - Q
QUARTERLY REPORT UNDER SECTION 13 OR
15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended: August 31, 1994 Commission File No. 0-4016
WORTHINGTON INDUSTRIES, INC.
(Exact name of Registrant as specified in its Charter)
DELAWARE 31-1189815
(State of Incorporation) (I.R.S. Employer Identification No.)
1205 Dearborn Drive, Columbus, Ohio 43085
(Address of Principal (Zip Code)
Executive Offices)
(614) 438-3210
(Registrant's Telephone Number, Including Area Code)
Not Applicable
(Former Name, Former Address and Former Fiscal Year,
If Changed From Last Report)
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
Indicate the number of shares
outstanding of each of the Issuer's
classes of common stock, as of the
latest practicable date.
Common Stock, $.01 par value 90,706,650
Class Outstanding September 30, 1994
WORTHINGTON INDUSTRIES, INC.
INDEX
Page
PART I. Financial Information
Consolidated Condensed Balance Sheets -
August 31, 1994 and May 31, 1994 3
Consolidated Condensed Statements of Earnings -
Three Months Ended August 31, 1994 and 1993 4
Consolidated Condensed Statements of Cash Flows -
Three Months Ended August 31, 1994 and 1993 5
Notes to Consolidated Condensed Financial Statements 6
Management's Discussion and Analysis of
Results of Operations and Financial Condition 7
PART II. Other Information 9
<TABLE>
PART I. FINANCIAL INFORMATION
WORTHINGTON INDUSTRIES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Thousands, Except Per Share)
<CAPTION>
August 31 May 31
1994 1994
ASSETS (Unaudited) (Audited)
<S> <C> <C>
Current Assets
Cash and cash equivalents $1,165 $13,275
Accounts receivable - net 176,994 189,741
Raw materials 152,447 125,243
Work in process and finished products 61,062 59,639
Inventories 213,509 184,882
Prepaid expenses and other current assets 28,887 25,218
Total Current Assets 420,555 413,116
Investment in Unconsolidated Affiliates 64,252 51,961
Other Assets 25,397 25,935
Property, plant and equipment 549,588 531,549
Less accumulated depreciation 231,962 223,988
Property, Plant and Equipment - net 317,626 307,561
Total Assets $827,830 $798,573
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $80,636 $97,699
Notes payable 30,000 10,000
Accrued compensation, contributions to
employee benefit plans and related taxes 32,235 37,578
Dividends payable 9,067 9,056
Other accrued items 10,531 10,089
Income taxes 22,435 14,607
Current maturities of long-term debt 1,482 1,490
Total Current Liabilities 186,386 180,519
Accrued Pension Cost 538 792
Long-Term Debt 53,553 54,136
Deferred Income Taxes 63,713 59,233
Shareholders' Equity
Common shares, $.01 par value 907 906
Additional paid-in capital 99,746 96,427
Minimum pension liability of unconsolidated
affiliate (1,628) (1,674)
Retained earnings 424,615 408,234
Total Shareholders' Equity 523,640 503,893
Total Liabilities and Shareholders' Equity $827,830 $798,573
See notes to consolidated condensed financial statements.
</TABLE>
<TABLE>
WORTHINGTON INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(In Thousands Except Per Share)
(Unaudited)
<CAPTION>
Three Months Ended
August 31
1994 1993
<S> <C> <C>
Net sales $346,257 $289,890
Cost of goods sold 294,125 245,826
Gross Margin 52,132 44,064
Selling, general and administrative expense 19,491 17,039
Operating Income 32,641 27,025
Other income (expense):
Miscellaneous income 267 162
Interest expense (1,194) (649)
Equity in net income of unconsolidated affiliates 9,003 5,505
Earnings Before Income Taxes 40,717 32,043
Income taxes 15,269 12,145
Net Earnings $25,448 $19,898
Average Common Shares Outstanding 90,621 90,186
Earnings Per Common Share $0.28 $0.22
Cash Dividends Declared Per Common Share $0.10 $0.09
See notes to consolidated condensed financial statements.
</TABLE>
<TABLE>
WORTHINGTON INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In Thousands, Unaudited)
<CAPTION>
Three Months Ended
August 31
1994 1993
<S> <C> <C>
Operating Activities
Net earnings $25,448 $19,898
Adjustments to reconcile net earnings to
net cash provided (used) by operating activities:
Depreciation 8,453 7,694
Equity in undistributed net income of
unconsolidated affiliates (8,883) (5,505)
Provision for deferred income taxes 3,338 3,252
Changes in assets and liabilities:
Decrease (increase) in:
Short-term investments -- 35
Accounts receivable 12,747 24,026
Inventories (28,627) (15,009)
Other currents assets (3,669) (4,386)
Other assets 440 (1,529)
Increase (decrease) in:
Accounts payable and accrued expenses (14,136) (14,666)
Accrued pension cost (254) 14
Net Cash Provided (Used) By Operating Activities (5,143) 13,824
Investing Activities
Net Cash Invested in Property, Plant and Equipment (18,518) (11,167)
Financing Activities
Net proceeds from short-term borrowings 20,000 --
Principal payments on long-term debt (591) (115)
Proceeds from issuance of common shares 1,198 1,076
Dividends paid (9,056) (7,820)
Net Cash Provided (Used) By Financing Activities 11,551 (6,859)
Decrease in cash and cash equivalents (12,110) (4,202)
Cash and cash equivalents at beginning of period 13,275 16,691
Cash and cash equivalents at end of period $1,165 $12,489
See notes to consolidated condensed financial statements.
</TABLE>
WORTHINGTON INDUSTRIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note A - Management's Opinion
In the opinion of management, the accompanying
unaudited consolidated condensed financial statements
contain all adjustments (consisting of a normal recurring
nature) necessary to present fairly the financial position
of Worthington Industries, Inc. and Subsidiaries (the
Company) as of August 31, 1994 and May 31, 1994; the results
of operations for the three months ended August 31, 1994 and
1993; and the cash flows for the three months then ended.
The accounting policies followed by the Company are set
forth in Note A to the consolidated financial statements in
the 1994 Worthington Industries, Inc. Annual Report to
Shareholders which is incorporated by reference in the
Company's 1994 Form 10-K.
Note B - Income Taxes
The income tax rate is based on statutory federal and
state rates, and an estimate of annual earnings adjusted for
the permanent differences between reported earnings and
taxable income.
Note C - Earnings Per Share
Earnings per common share for the quarter ended
August 31, 1994 and 1993 are based on the weighted average
common shares outstanding during each of the respective
periods, after giving effect to the three-for-two share
split which was distributed on October 22, 1993.
Note D - Results of Operations
The results of operations for the three months ended
August 31, 1994 and 1993 are not necessarily indicative of
the results to be expected for the full year.
WORTHINGTON INDUSTRIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
For the three months ended August 31, 1994, net sales
reached a first quarter record of $346.3 million, 19% higher than
the previous record set last year. Net earnings of $25.4 million
and earnings per share of $.28 were also records, increasing 28%
and 27%, respectively. This was the Company's sixth consecutive
record quarter.
All business lines showed improved results with strong
increases in sales and earnings above the prior year's first
quarter. Higher volumes and increased selling prices contributed
to the rise in sales. Gross margin improved 18% for the quarter,
less than the growth in sales, as profit margins were squeezed
somewhat due to a lag in selling price increases. Margins will
improve since some contracts were repriced late in the quarter.
Gross margin as a percentage of sales decreased slightly to 15.1%
from 15.2%. Operating income improved 21% for the quarter,
greater than the sales increase, as selling, general and
administrative expenses increased only 14%. As a percentage of
sales, operating income improved to 9.4% from 9.3%.
Interest expense increased 84% for the quarter as the
average interest rate rose to 5.3% from 3.6% and average debt
outstanding increased . Average debt rose because of increased
short-term borrowings to support the higher levels of working
capital and capital expenditures.
Income taxes increased slightly less than earnings for the
three month period. The effective tax rate decreased to 37.5%
from 37.9% for the same period of the prior year.
The processed steel products segment increased sales and
earnings above last year's first quarter and continued to benefit
from the higher demand in the auto, appliance and other consumer
durables markets. The improved sales and earnings for the steel
processing operations resulted from higher volume and increased
selling prices. Results for the pressure cylinder business were
also up for the quarter. This operation realized growth in most
product lines, although demand for refrigerant tanks softened due
to the relatively cool summer weather.
The custom products segment increased sales and earnings
dramatically, setting a record for the quarter. These results
evidence this operation's success in replacing a major portion of
business phased out in last year's first quarter and the improved
operating efficiencies on this new business. The new plant in
St. Matthews, South Carolina is increasing production and should
start contributing to operating income this coming quarter.
Results for precision metals improved significantly, thanks to
strong automotive production and continuation of productivity
gains on new and existing jobs.
Sales and earnings for the cast products segment also
increased significantly. Demand for freight railcars continues
to be strong and the order backlog remains at a high level.
Productivity has improved at the high volume levels.
Equity in net income of unconsolidated affiliates was up
solidly for the quarter. Equity from Rouge Steel was the largest
contributor as industry demand for steel remains at high levels.
London Industries and Worthington Specialty Processing also had
good quarters and contributed nicely to this income. Worthington
Armstrong Venture suffered from lackluster domestic demand for
its products but has already started to see a contribution from
its plant in France and overall made a modest contribution.
Startup problems have been largely overcome at TWB Company, but,
volume was less than expected due to lackluster demand for
certain car models .
LIQUIDITY AND CAPITAL RESOURCES
The Company's financial position has strengthened since
fiscal year-end. At August 31, 1994, working capital was $234.2
million and the current ratio was 2.3:1. Long-term debt was 9%
of total capital.
During the three months, the Company's cash position was
decreased by $12.1 million. Short-term borrowings of $20 million
were used to help fund its cash needs. Despite record profits,
cash used by operations was $5.1 million, due largely to a
$28.6 million increase in inventories. This increase occurred
largely in the processed steel products segment, to support the
higher sales volumes, anticipated price increases, and also
reflects the higher cost of raw material. Capital expenditures
were $18.5 million and dividends paid were $9.1 million.
Accounts payable and accrued expenses have decreased $14.1
million since fiscal year-end despite the higher inventory
levels, but this is consistent with experience in prior years.
The Company anticipates a rise in the level of investment in
accounts receivable due to the recent selling price increases,
however, days sales outstanding should remain constant.
The Company expects its operating results and cash from
normal operating activities to improve during the year. The
Company also has $40 million in committed, unsecured, short-term
lines of credit available at attractive rates, of which $35
million was unused at August 31, 1994. Immediate borrowing
capacity plus cash generated from operations should be more than
sufficient to fund expected normal operating costs, dividends,
debt payments and capital expenditures for existing businesses.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
A. Exhibits - Included is Exhibit 27.
B. Reports on Form 8-K. There were no reports on Form 8-K
during the three months ended August 31, 1994.
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.
WORTHINGTON INDUSTRIES, INC.
Date: October 13, 1994 By: /s/Donald G. Barger, Jr.
Donald G. Barger, Jr.
Vice President-Chief Financial Officer
<TABLE> <S> <C>
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<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> QTR-1
<FISCAL-YEAR-END> MAY-31-1995
<PERIOD-START> JUN-01-1994
<PERIOD-END> AUG-31-1994
<EXCHANGE-RATE> 1
<CASH> 1,165
<SECURITIES> 0
<RECEIVABLES> 178,822
<ALLOWANCES> 1,828
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<TOTAL-ASSETS> 827,830
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<BONDS> 53,553
<COMMON> 907
0
0
<OTHER-SE> 522,733
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<SALES> 346,257
<TOTAL-REVENUES> 346,257
<CGS> 294,125
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<INTEREST-EXPENSE> 1,194
<INCOME-PRETAX> 40,717
<INCOME-TAX> 15,269
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