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: November 30, 1994 Commission File No. 0-4016
WORTHINGTON INDUSTRIES, INC.
(Exact name of Registrant as
specified in its Charter)
DELAWARE 31-1189815
(State of (I.R.S. Employer
Incorporation) Identification No.)
1205 Dearborn Drive, Columbus, Ohio 43085
(Address of Principal Executive (Zip Code)
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 90,774,856
Class Outstanding January 1, 1995
WORTHINGTON INDUSTRIES, INC.
INDEX
Page
PART I. Financial Information
Consolidated Condensed Balance Sheets -
November 30, 1994 and May 31, 1994 3
Consolidated Condensed Statements of Earnings -
Three and Six Months Ended November 30, 1994 and 1993 4
Consolidated Condensed Statements of Cash Flows -
Six Months Ended November 30, 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>
November 30 May 31
1994 1994
ASSETS (Unaudited) (Audited)
<S> <C> <C>
Current Assets
Cash and cash equivalents $4,520 $13,275
Accounts receivable - net 190,776 189,741
Raw materials 149,958 125,243
Work in process and finished products 63,154 59,639
Inventories 213,112 184,882
Prepaid expenses and other current assets 26,909 25,218
Total Current Assets 435,317 413,116
Investment in Unconsolidated Affiliates 74,244 51,961
Other Assets 25,154 25,935
Property, plant and equipment 567,530 531,549
Less accumulated depreciation 240,831 223,988
Property, Plant and Equipment - net 326,699 307,561
Total Assets $861,414 $798,573
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $101,450 $97,699
Notes payable 26,000 10,000
Accrued compensation, contributions to
employee benefit plans and related taxes 36,946 37,578
Dividends payable 9,074 9,056
Other accrued items 8,358 10,089
Income taxes 13,323 14,607
Current maturities of long-term debt 1,482 1,490
Total Current Liabilities 196,633 180,519
Accrued Pension Cost 554 792
Long-Term Debt 53,553 54,136
Deferred Income Taxes 66,996 59,233
Shareholders' Equity
Common shares, $.01 par value 907 906
Additional paid-in capital 100,561 96,427
Minimum pension liability of
unconsolidated affiliate (1,595) (1,674)
Retained earnings 443,805 408,234
Total Shareholders' Equity 543,678 503,893
Total Liabilities and Shareholders' Equity $861,414 $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 Six Months Ended
November 30 November 30
1993 1994 1993 1994
<S> <C> <C> <C> <C>
Net sales $363,276 $295,894 $709,533 $585,784
Cost of goods sold 305,268 252,838 599,393 498,664
Gross Margin 58,008 43,056 110,140 87,120
Selling, general and
administrative expense 20,536 16,543 40,027 33,582
Operating Income 37,472 26,513 70,113 53,538
Other income (expense):
Misc. income (expense) (138) 199 129 361
Interest expense (1,580) (730) (2,774) (1,379)
Equity in net income of
unconsolidated
affiliates 9,469 5,272 18,472 10,777
Earnings Before
Income Taxes 45,223 31,254 85,940 63,297
Income taxes 16,959 11,842 32,228 23,987
Net Earnings $28,264 $19,412 $53,712 $39,310
Average Common
Shares Outstanding 90,709 90,317 90,665 90,251
Earnings Per
Common Share $.31 $.21 $.59 $.43
Cash Dividends Declared
Per Common Share $.10 $.09 $.20 $.18
See notes to consolidated condensed financial statements.
</TABLE>
<TABLE>
WORTHINGTON INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In Thousands, Unaudited)
Six Months Ended
November 30
1994 1993
<S> <C> <C>
Operating Activities
Net earnings $53,712 $39,310
Adjustments to reconcile net earnings to
net cash provided (used) by operating activities:
Depreciation 17,259 15,974
Equity in undistributed net income of
unconsolidated affiliates (18,232) (10,905)
Provision for deferred income taxes 6,621 6,508
Changes in assets and liabilities:
Decrease (increase) in:
Short-term investments -- 41
Accounts receivable (1,035) 17,276
Inventories (28,230) (13,595)
Prepaid expenses and other currents assets (1,691) (8,429)
Other assets 280 (2,783)
Increase (decrease) in:
Accounts payable and accrued expenses (103) (27,478)
Accrued pension cost (238) 29
Net Cash Provided By Operating Activities 28,343 15,948
Investing Activities
Net Cash Invested in Property, Plant and
Equipment (36,397) (24,495)
Financing Activities
Net proceeds from short-term borrowings 16,000 15,000
Principal payments on long-term debt (591) (228)
Proceeds from issuance of common shares 2,013 2,706
Repurchase of common shares -- (27)
Dividends paid (18,123) (15,960)
Net Cash Provided (Used) By Financing Activities (701) 1,491
Decrease in cash and cash equivalents (8,755) (7,056)
Cash and cash equivalents at beginning of period 13,275 16,691
Cash and cash equivalents at end of period $4,520 $9,635
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 November 30, 1994 and May 31, 1994; the
results of operations for the three and six months ended
November 30, 1994 and 1993; and the cash flows for the six
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 three and six
months ended November 30, 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 and six months
ended November 30, 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
The Company achieved record sales and earnings for the
three and six month periods ended November 30, 1994.
For second quarter, net sales of $363.3 million surpassed
those for last year's second quarter by 23%. Net earnings of
$28.3 million and earnings per share of $.31 increased 46% and
48%, respectively. This was the most profitable quarter in the
Company's history.
For the six months, net sales reached $709.5 million, 21%
higher than in the previous year. Net earnings of $53.7 million
and earnings per share of $.59 were 37% higher.
All business lines continue to show strong increases in
sales and operating income. The overall sales increase resulted
from both higher volumes, due to strong demand and market share
gains, and higher selling prices. The gross margin improvement,
35% for the quarter and 26% for the six months, outpaced the
growth in sales due to higher operating efficiencies and selling
price increases. Gross margin as a percentage of sales
increased to 15.9% from 14.6% for the quarter and to 15.5% from
14.9% for the six months. Selling, general and administrative
expense increased 24% for the quarter and 19% year-to-date but
remained constant as a percentage of sales. The majority of
both increases was due to increased profit sharing expense.
Operating income improved 41% for the quarter and 31% year-to-
date due to the sales increase and improved gross margins. As a
percentage of sales, operating income rose to 10.3% from 9.0%
for the quarter and to 9.9% from 9.1% for the six months.
Interest expense increased 101% for the six months as the
average interest rate rose to 5.6% from 3.6% and average debt
outstanding increased. Average debt rose because of increased
short-term borrowings to support higher levels of working
capital and capital expenditures.
Equity in net income of unconsolidated affiliates was up
80% for the quarter and 71% for the six months. Equity from
Rouge Steel remains the largest contributor as industry demand
for steel remained at a high level and steel prices continued to
increase. London Industries(plastics), Worthington Specialty
Processing(steel) and Worthington Armstrong Venture(ceiling
grid) all posted increased sales and operating income. TWB
Company's volume increased as the laser welding operation
continues to ramp-up and is booking additional business for the
future.
Income taxes increased slightly less than earnings for the
three and six month periods as the effective tax rate decreased
to 37.5% from 37.9%.
The processed steel products segment posted increases in
sales and earnings. Sales and earnings for the steel processing
operations rose due to higher volume and increased selling
prices. Results for the pressure cylinder business were also up
for both periods as this operation realized growth in most
product lines, although demand for non-refillable tanks has been
lower than expected.
The custom products segment also posted increased sales and
earnings. The plastics operation experienced strong automotive
demand particularly in certain car models in which it
participates and improved operating efficiencies on the newer
jobs. Results for precision metals improved significantly, also
due to strong automotive production and continued productivity
improvements.
The cast products segment had dramatic increases in sales
and earnings for both periods. Strong demand for freight
railcars continued and the order backlog remains at a high
level. The comparison is also helped as last year's second
quarter was impacted by a temporary decrease in demand for
railcars due to the Midwest flooding.
LIQUIDITY AND CAPITAL RESOURCES
The Company's financial position remains very strong. At
November 30, 1994, working capital was $238.7 million and the
current ratio was 2.2:1. Long-term debt was 9% of total
capital.
During the six months, the Company's cash position
decreased by $8.8 million and short-term borrowings of $16
million were used to help fund cash needs. Record profits led
to cash provided by operations of $28.3 million, despite a $28.2
million increase in inventories. The inventory increase
occurred largely in the processed steel products segment,
reflecting higher steel costs and increased tonnage to support
the higher sales. Forecasted days sales in inventory for the
Company has increased only slightly since fiscal year-end.
Capital expenditures were $36.4 million, continuing on a record
pace for the fiscal year, and dividends paid were $18.1 million.
The Company anticipates an increase 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.
However, as in the first half of the year, borrowings may be
needed to support the increasing sales volume and anticipated
capital expenditures. The Company has $40 million in committed,
unsecured, short-term lines of credit available at rates below
the prime rate, of which $35 million was unused at November 30,
1994. Immediate borrowing capacity plus cash generated from
operations should be more than sufficient to fund expected
normal operating cash needs, dividends, debt payments and
capital expenditures for existing businesses.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
A. Exhibits - None
B. Reports on Form 8-K. There were no reports on Form 8-K
during the three months ended November 30, 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: January 12, 1995 By:/s/Donald G. Barger, Jr.
Donald G. Barger, Jr.
Vice President-Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> QTR-2
<FISCAL-YEAR-END> MAY-31-1995
<PERIOD-END> NOV-30-1994
<CASH> 4,520
<SECURITIES> 0
<RECEIVABLES> 192,791
<ALLOWANCES> 2,015
<INVENTORY> 213,112
<CURRENT-ASSETS> 435,317
<PP&E> 567,530
<DEPRECIATION> 240,831
<TOTAL-ASSETS> 861,414
<CURRENT-LIABILITIES> 196,633
<BONDS> 53,553
<COMMON> 907
0
0
<OTHER-SE> 542,771
<TOTAL-LIABILITY-AND-EQUITY> 861,414
<SALES> 709,533
<TOTAL-REVENUES> 709,533
<CGS> 599,393
<TOTAL-COSTS> 599,393
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,774
<INCOME-PRETAX> 85,940
<INCOME-TAX> 32,228
<INCOME-CONTINUING> 53,712
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 53,712
<EPS-PRIMARY> .59
<EPS-DILUTED> .59
</TABLE>
