SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 - K
/x/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended May 31,1995 Commission File No. 0-4016
WORTHINGTON INDUSTRIES, INC.
(Exact name of Registrant as specified in its Charter)
DELAWARE 31-1189815
(State of Incorporation) (IRS Employer
Identification No.)
1205 Dearborn Drive, Columbus, Ohio 43085
(Address of principal executive offices) (Zip Code)
(614) 438-3210
(Registrant's telephone number, including area code)
Securities Registered Pursuant To Section 12(b) of the Act: None
Securities Registered Pursuant To Section 12(g) of the Act:
Title of each class:
Common Stock, $.01 par value (90,906,630 shares outstanding at
August 8, 1995)
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of Registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
__X__
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 __
The aggregate market value of the voting stock held by non-
affiliates of the Registrant at August 8, 1995 was $1,505,425,000
(computed by reference to the closing price for such shares on
such date).
Portions of the Registrant's annual report to shareholders
for the fiscal year ended May 31, 1995 are incorporated by
reference into Part I and Part II. Portions of the definitive
proxy statement furnished to shareholders of the Registrant in
connection with the annual meeting of shareholders to be held on
September 21, 1995 are incorporated by reference into Part III.
Exhibit index begins on page 16 of consecutively numbered
original.
PART I
Item 1. - Business.
Worthington Industries, Inc. was initially incorporated in
Ohio in 1955. It reincorporated in Delaware in 1986 through a
statutory merger. Worthington Industries, Inc. and its
subsidiaries are herein referred to as the "Company." The
Company's operations are grouped into three segments: processed
steel products, custom products and cast products.
The processed steel products segment is engaged in the
business of processing flat rolled steel to close tolerances for
sale to industrial customers who require steel of precise
thickness, length, width, shape, surface finish and temper for
their own product fabrication. The Company also makes its own
line of finished processed steel products such as low pressure
cylinders for containing liquefied petroleum, refrigerant and
other gases.
The custom products segment produces injection-molded
plastic and precision metal parts for sale to manufacturers of
automobiles, appliances, lawn equipment, sporting goods and other
items in North America.
The cast products segment produces a broad line of cast
steel products for sale to the freight railcar, mass transit and
industrial markets.
For information regarding the net sales and revenues,
earnings from continuing operations before income taxes, and
identifiable assets attributable to each segment for each of the
last three fiscal years, reference is made to page 22 of the
Company's annual report to shareholders for the year ended
May 31, 1995 which is incorporated herein by reference.
See Note J of the Notes to the Company's Consolidated
Financial Statements, which are included in Item 8 hereof, for
information concerning the Company's investments in
unconsolidated affiliates.
Processed Steel Products.
The Company buys coils of wide, open tolerance sheet steel
from major steel mills, and processes it to the custom order of
more than 1,700 industrial customers in the automotive,
automotive supply, appliance, electrical, communications,
construction, office furniture, office equipment, agricultural,
machinery, leisure time and other industries. The Company does
not process steel for inventory.
Techniques such as slitting, roller leveling, cold reduc
tion, edge rolling, blanking, coating, annealing and pickling are
used to process steel to specified thickness, length, width,
shape, temper and surface quality. One or more processes are
applied to produce steel of specified character and dimension
which the customer can stamp, blank, draw, roll form, fabricate
or otherwise incorporate into component parts or end products.
Slitting is cutting steel to specified widths. Roller leveling
is flattening steel and cutting it to exact lengths. Cold
reduction is rolling steel to close tolerances of thickness and
temper. Edge rolling imparts round, smooth or knurled edges.
Blanking cuts the steel into specific shapes. Coating results in
the production of painted, galvanized or nickel-plated steel.
Annealing is a thermal process which changes the hardness of
steel. Pickling is a chemical process whereby an acidic solution
removes the surface oxide, commonly called "scale", which
develops on steel when it is hot rolled.
Steel processing is highly competitive. The Company
competes with many other intermediate processors. The Company
knows of no other intermediate processor which offers the same
type and extent of technical service support provided by the
Company relating to material testing and application of material
suited to the particular needs of customers (see "Technical
Services"). The Company is unable to gauge, however, the extent
to which its technical service capability has improved its
competitive position.
The Company manufactures steel cylinders having refrigerant
gas capacities of 15 to 1000 pounds, and steel and aluminum
cylinders with liquefied petroleum gas capacities of 4-1/4 to 420
pounds. These cylinders are designed and produced in accordance
with safety requirements prescribed by the U.S. Department of
Transportation which specify materials, design limitations, and
marking, inspection and testing procedures to be used. The
cylinders are produced by precision stamping, deep drawing and
welding of component parts to customer specifications. They are
then tested, painted and packaged as required.
Steel refrigerant cylinders manufactured by the Company are
sold predominantly to major refrigerant gas producers who fill
the cylinders with refrigerant gases and re-sell them to dealers
for use in charging residential, commercial, automotive and other
air conditioning and refrigeration systems. Reusable steel and
aluminum LP gas cylinders are built to contain liquefied
petroleum gas for use as a fuel, and the major buyers are
manufacturers of barbecue grills. Reusable LP gas cylinders are
also sold to propane and gas grill distributors, mass
merchandisers and manufacturers and users of materials-handling,
heating, cooking and camping equipment. The Company also
manufactures other cylinder products such as recapture and
recycling tanks for refrigerant gases, helium tanks and
compressed air tanks. It also sells acetylene cylinders for
welding applications. While a large percentage of sales are made
to major accounts, the Company has over 2,000 cylinder customers.
The Company has two principal competitors in its major
pressure cylinder markets, of which management believes the
Company has the largest share. However, the Company has no
reliable information with respect to the size of any of its
various product markets or its relative position therein for any
segment.
The largest customer of the processed steel products segment
is General Motors Corporation, purchasing through decentralized
divisions and subsidiaries and in different geographical areas.
(See "Marketing and Competition"). The loss of General Motors as
a customer could have an adverse effect on the segment, but the
Company has no reason to believe that the loss of this customer
is likely.
The Company purchases steel in large quantities, at regular
intervals from major primary producers for its steel processing
and pressure cylinder operations. During the fiscal year ended
May 31, 1995 the Company's major suppliers were Rouge Steel
Company (in which the Company holds a minority equity position),
AK Steel Corporation, Bethlehem Steel Corporation, LTV Steel
Corporation, USX Corporation, WCI Steel, Inc., Weirton Steel
Corporation and Wheeling-Pittsburgh Steel Corporation. During the
fiscal year ended May 31, 1995, the Company's major suppliers of
aluminum for pressure cylinders were Alumax Aluminum Sales
Corporation, Aluminum Corporation of America, Cressona Aluminum
Company, Kaiser Aluminum and Specialty Blanks Incorporated.
Management believes that its supplier relationships are good.
Custom Products.
In the custom products segment, the Company manufactures
injection molded plastic and precision metal parts to customer
specifications. The primary customers of this segment are in the
automotive original equipment markets, but sales are also made to
manufacturers of appliances, lawn and garden equipment, audio
equipment, recreational items, hand tools, housewares and other
items. Principal products of the segment are a variety of custom
made injection molded plastic components (both functional and
decorative) which, depending on the customers' needs, can also be
painted, assembled, silk screened, vacuum metalized, hot stamped,
roll foiled, vinyl wrapped, foamed in-place and/or appliqued by
the Company. Precision metal components are made primarily for
power steering, transmission, brake and other mechanical systems.
The custom products segment relies heavily on sales to
General Motors Corporation, The Ford Motor Company and Chrysler
Corporation. The loss of any of these customers could have an
adverse effect on the segment but the Company has no reason to
believe that the loss of any of these customers is likely.
Plastic resins and bar steel, the major raw materials
required by this segment, are available from many sources.
The Company has numerous competitors in the sale of its
custom products. This business competes in its markets by
seeking to provide well-engineered, quality products within
required delivery terms to meet the specific needs of its plastic
parts and precision metal component customers.
Cast Products.
The Company's cast products segment operates a steel
castings business. The steel castings operation manufactures a
diverse line of cast steel products ranging in size from 100
pounds to 30 tons. These products are offered to the railroad,
mass transit, construction and off-highway markets, and are
produced to satisfy customer orders. The Company can also pour
ingots of special alloy steel which are converted to coils,
plates, bars and forgings by outside users.
In general, there are a number of companies involved in the
sale of steel castings. However, there are three major
competitors in the sale of certain railcar castings. The
Company's cast products are generally sold under trademark which
is a stylized "Circle B", and the Company utilizes various other
owned and licensed trademarks and patents in connection with its
cast products. The Company is the leading North American
designer and producer of undercarriages for mass transit cars and
holds numerous patents for them.
Scrap steel, the major raw material required by the cast
products segment, is purchased from several sources, including a
wholly-owned subsidiary of the Company. Supplies of scrap steel
have been adequate, although pricing in the market tends to be
volatile. Other raw materials used by this segment are obtained
from a number of major suppliers.
Technical Services.
The Company employs a staff of engineers and other technical
personnel and maintains fully-equipped, modern laboratories to
support its operations. The facilities enable the Company to
verify, analyze and document the physical, chemical,
metallurgical and mechanical properties of its raw materials and
products. Technical service personnel also work in conjunction
with the sales force to determine the types of flat rolled steel
and steel castings required for the particular needs of the
Company's customers. In order to provide such service, the
Company maintains a continuing program of developmental
engineering with respect to the characteristics and performance
of its products under varying conditions. Laboratory facilities
are also used to perform the quality control and extensive
testing of all low pressure cylinders required by the regulations
of the U. S. Department of Transportation and associated
agencies, as well as varying customer requirements. The Company
also maintains a separate testing facility for its steel castings
operation.
Marketing and Competition.
The Company's products and services are sold primarily by
Company sales personnel.
As a percentage of the Company's consolidated sales and
revenues, sales of steel processing services represented 57% for
fiscal 1995, 59% for fiscal 1994, and 56% for fiscal 1993; sales
of pressure cylinders represented 12% for 1995, 13% for 1994 and
13% for 1993; and sales of custom plastics represented 17% in
1995, 17% in 1994 and 19% in 1993.
During the fiscal year ended May 31, 1995, General Motors
Corporation, purchasing through decentralized divisions and
subsidiaries in different geographical areas, accounted for
approximately 13.8% of the Company's consolidated sales and
revenues.
The principal methods of competition encountered by the
Company are quality of product, ability to meet delivery
requirements of customers, and price. Geographic proximity to
customers has a significant effect upon relative ability to meet
customer delivery schedules and impacts the freight charge
portion of overall product price. See also the information set
forth above as to competition in the various segments.
Environmental Regulation.
The Company's manufacturing facilities, generally in common
with those similar industries making similar products, are
subject to many federal, state and local requirements relating to
the protection of the environment. The Company continually
examines ways to reduce emissions and waste and to effect cost
savings related to environmental compliance. Management does not
anticipate that capital expenditures for environmental control
facilities required in order to meet environmental requirements
will be material when compared with the Company's overall capital
expenditures.
Employees.
The Company employs approximately 8,200 people.
Investments in Unconsolidated Affiliates.
The Company participates in five joint ventures as follows:
(a) Worthington Armstrong Venture manufactures suspended ceiling
systems for concealed and lay-in panel ceilings from three plants
located in Pennsylvania, Maryland and France; (b) Worthington
Specialty Processing processes wide sheet steel from its plant in
Jackson, Michigan; (c) TWB Company, located in Monroe, Michigan,
produces laser welded steel blanks for the automobile industry;
(d) London Industries, Inc. produces injection molded plastic
products in London, Ohio; and (e) Acerex S.A. de C.V. is a steel
processor in Monterrey, Mexico. The Company also owns a minority
equity interest (28%) in Rouge Steel Company, an integrated steel
mill located near Detroit, Michigan. See Note J of the Notes to
the Company's Consolidated Financial Statements for additional
information on these unconsolidated affiliates of the Company.
Item 2. - Properties.
The Company's principal properties presently consist of 28
owned manufacturing and office facilities. These properties are
located in Ohio (13), Alabama (1), Georgia (2), Indiana (1),
Kentucky (2), Maryland (1), Michigan (4), Oklahoma (1), Ontario
(1), Pennsylvania (1), South Carolina (2) and Tennessee (1).
These plants and offices are used in the processed steel products
(17), custom products (7) and cast products (3) segments and for
general corporate purposes (1). The above facilities, all of
which are well maintained and in good operating condition,
contain in excess of 5,000,000 square feet, and are adequate to
meet the Company's present needs.
See Item 1 under the heading "Investments in Unconsolidated
Affiliates" for the location of the Company's unconsolidated
affiliates.
Item 3. - Legal Proceedings.
The Ohio EPA has threatened to sue the Company's subsidiary,
Buckeye Steel Castings Company, for various alleged air pollution
matters at its foundry in Columbus, Ohio. The primary
allegations concern (a) alleged emissions of fugitive dust from
the facility, mainly related to malfunctions of its dust
collection systems (i.e. baghouses) in 1989; (b) alleged failures
to obtain permits in a timely manner; and (c) alleged failures in
prior years to use reasonably available control measures to
collect dust inside its facility. The Company disputes the
alleged violations, and is currently involved in negotiations in
an attempt to resolve the matter. Any remedy will be discussed
as part of the negotiations.
Item 4. - Submission of Matters to a Vote of Security Holders.
Not applicable.
Executive Officers of the Registrant.
The following table lists the names, positions held, and
ages of all the executive officers of the Company:
Present
Office
Name Age Positions with the Company Held
Since
John H. McConnell 72 Chairman of the Board
and Director 1955
John P. McConnell 41 Vice Chairman, Chief Executive
Officer and Director 1993
Donald G. Barger, Jr. 52 Vice President-Finance and
Chief Financial Officer 1993
Robert J. Borel 52 Vice President-Engineering 1985
Edward A. Ferkany 58 Vice President-Processed Steel 1985
Thomas L. Hockman 51 Vice President-Personnel 1993
Robert J. Klein 58 Executive Vice President-Marketing
and Planning and Director 1985
Pete A. Klisares 59 Executive Vice President
and Director 1993
Donal H. Malenick 56 President, Chief Operating
Officer and Director 1976
Charles D. Minor 68 Secretary and Director 1955
The principal employment of Donal H. Malenick, Robert J. Klein,
Robert J. Borel and Edward A. Ferkany for more than the last
five years has been in their present capacity with the Company.
John H. McConnell was also Chief Executive Officer of the
Company from its founding in 1955 until June 1, 1993 at which time
he retired as CEO and remained Chairman of the Board.
John P. McConnell's principal occupation for more than five
years prior to July 1990 had been in various capacities with the
Company. In July 1990, he resigned his employment with the Company
to become President of JMAC, Inc., a private holding company. John
P. McConnell was elected Vice Chairman of the Company in June 1992
and became Chief Executive Officer as of June 1, 1993.
Donald G. Barger, Jr. was Vice President-Corporate Controller
for B. F. Goodrich Company for more than five years prior to
September 1993, when he became Vice President-Finance and Chief
Financial Officer of the Company.
Thomas L. Hockman was Assistant Treasurer and Manager of
Compensation and Benefits for the Company for more than five years
prior to becoming Vice President-Personnel in January 1993.
Pete A. Klisares was Manufacturing Vice President and General
Manager for AT&T for more than five years prior to May 1991 and
Executive Director of JMAC, Inc. from May 1991 through December
1991. He became Assistant to the Chairman of the Company in
December 1991 and was named Executive Vice President effective
August 1993.
Charles D. Minor was a partner in the law firm of Vorys,
Sater, Seymour and Pease, counsel to the Company, for more than
five years prior to January 1993. In January 1993 he became
counsel to that firm.
Executive officers serve at the pleasure of the directors.
John H. McConnell is the father of John P. McConnell. There are no
other family relationships among the executive officers of the
Company. No arrangements or understandings exist pursuant to which
any person has been, or is to be, selected as an officer.
PART II
Item 5. - Market for Registrant's Common Equity and Related
Stockholder Matters.
The information called for by this Item 5 is incorporated by
reference herein from the information set forth on pages 30 and 31
of the Company's annual report to shareholders for the year ended
May 31, 1995.
Item 6. - Selected Financial Data.
The information called for by this Item 6 is incorporated by
reference herein from the information presented for each of the
Company's five most recent fiscal years under "Eleven Year Selected
Financial Data" set forth on pages 28 and 29 of the Company's
annual report to shareholders for the year ended May 31, 1995.
Item 7. - Management's Discussion and Analysis of Financial
Condition and Results of Operations.
The information called for by this Item 7 is incorporated by
reference herein from "Management's Discussion and Analysis" set
forth on pages 16, 17 and 18 of the Company's annual report to
shareholders for the year ended May 31, 1995.
Item 8. - Financial Statements and Supplementary Data.
The following consolidated financial statements of Worthington
Industries, Inc. and Subsidiaries and Report of Independent
Auditors, included in the Company's annual report to shareholders
for the year ended May 31, 1995, on pages 18 through 27 thereof are
incorporated herein by reference.
Consolidated Balance Sheets--May 31, 1995 and 1994
Consolidated Statements of Earnings--Years ended May 31, 1995,
1994 and 1993
Consolidated Statements of Shareholders' Equity--Years ended
May 31, 1995, 1994 and 1993
Consolidated Statements of Cash Flows--Years ended May 31,
1995, 1994 and 1993
Industry Segment Data
Notes to Consolidated Financial Statements
Report of Independent Auditors
Item 9. - Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
Not applicable.
PART III
Item 10. - Directors and Executive Officers of the Registrant.
In accordance with General Instruction G(3), the information
required by this Item 10 is incorporated by reference herein from
the material under the heading "Election of Directors" contained on
pages 2 through 6 of the Company's definitive proxy statement filed
with the Commission relating to the Company's annual meeting of
shareholders to be held on September 21, 1995. The information
regarding Executive Officers required by Item 401 of Regulation S-K
is included in Part I hereof under an appropriate caption. No
disclosure is required to be made under Item 405 of Regulation S-K.
Item 11. - Executive Compensation.
In accordance with General Instruction G(3), the information
required by this Item 11 is incorporated by reference herein from
the information contained in the Company's definitive proxy
statement filed with the Commission relating to the Company's
annual meeting of shareholders to be held on September 21, 1995
under the heading "Election of Directors - Compensation of
Directors" on page 5 and under the heading "Executive Compensation"
- "Summary of Cash and Certain Other Compensation" on pages 7 and
8, "Option Grants" on page 8, and "Option Exercises and Holdings"
on page 9.
Item 12. - Security Ownership of Certain Beneficial Owners and
Management.
In accordance with General Instruction G(3), the information
required by this Item 12 is incorporated by reference herein from
the material under the headings "Voting Securities and Principal
Holders Thereof - Security Ownership of Certain Beneficial Owners"
contained on page 2 and "Election of Directors" contained on pages
2 through 6 of the Company's definitive proxy statement filed with
the Commission relating to the Company's annual meeting of
shareholders to be held on September 21, 1995.
Item 13. - Certain Relationships and Related Transactions.
In accordance with General Instruction G(3), the information
required by this Item 13 is incorporated by reference herein from
the material under the heading "Election of Directors" contained on
pages 2 through 5 of the Company's definitive proxy statement filed
with the Commission relating to the Company's annual meeting of
shareholders to be held on September 21, 1995.
PART IV
Item 14. - Exhibits, Financial Statement Schedules, and Reports on
Form 8-K.
(a)(1) and (2) The response to this portion of Item 14 is submitted
as a separate section of this report--See List of
Financial Statements and Financial Statement
Schedules on page F-1 of this report - Page 14 of
consecutively numbered original.
(3) Listing of Exhibits--See Index to Exhibits
beginning on page E-1 of this report - Page 16 of
consecutively numbered original. The index to
exhibits specifically identifies each management
contract or compensatory plan required to be filed
as an Exhibit to this Form 10-K.
(b) No report on Form 8-K was filed during the quarter ended
May 31, 1995.
(c) Exhibits filed with this report are attached hereto.
(d) Financial Statement Schedules--The response to this portion of
Item 14 is submitted as a separate section of this report--See
List of Financial Statements and Financial Statement Schedules
on Page F-1 - Page 14 of consecutively numbered original.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: August 28, 1995 By: /s/____________________________
Donal H. Malenick, President
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the date
indicated.
SIGNATURE DATE TITLE
* * Director, Chairman of the Board
John H. McConnell
* * Director, Vice Chairman,
John P. McConnell Chief Executive Officer
8/28/95 Director, President,
Donal H. Malenick Chief Operating Officer
* * Director, Executive Vice
Pete A. Klisares President
* * Director, Executive Vice
Robert J. Klein President-Marketing and Planning
* * Vice President-Finance,
Donald G. Barger, Jr. Chief Financial Officer
* * Director, Secretary
Charles D. Minor
* * Director
Charles R. Carson
* * Director
John E. Fisher
* * Director
John F. Havens
* * Director
Katherine S. LeVeque
* * Director
Robert B. McCurry
* * Director
Gerald B. Mitchell
* * Director
James Petropoulos
*By: __________________________ Date: 8/28/95
Donal H. Malenick
Attorney-In-Fact
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Fiscal 1995 was the third consecutive record year for the
Company. Net sales of $1.484 billion, net earnings of $116.7
million and earnings per share of $1.29 were all records,
increasing 15%, 38% and 37%, respectively. This followed a
strong fiscal 1994 when net sales of $1.285 billion, net
earnings of $84.9 million and earnings per share of $.94 had
increased 15%, 25% and 24%, respectively.
Profitability after taxes continued to improve in 1995.
Return on sales rose to 7.9% in fiscal 1995 from 6.6% in 1994
and 6.1% in 1993. Return on average assets increased to 13.6%
in 1995 from 11.4% in 1994 and 10.3% in 1993. Return on average
shareholder's equity rose to 21.3% from 18.0% in 1994 and 16.4%
in 1993.
Every quarter during the fiscal year was a record as the
Company continued to benefit from high demand in its markets.
The economy continued to expand and most product lines stayed
strong throughout the year.
The higher sales for 1995 and 1994 were largely as a result
of higher volume and order levels. Both years included some
selling price increases, as higher raw material prices were
generally passed through to customers.
Cost of goods sold increased 14% in 1995, slightly less
than the sales increase, and 17% in 1994. In both years, higher
raw material costs offset the benefits gained from leveraging
fixed costs, cost reductions and the increased productivity that
resulted from higher volumes.
Gross margin increased 25% in 1995, following a 10%
increase in 1994. As a percentage of sales, gross margin was
16.1% in 1995, 14.9% in 1994 and 15.7% in 1993. Margins
improved in 1995 as the expanding economy provided a more
favorable environment for passing raw material price increases
to customers. In 1994, margins were squeezed as some selling
price increases did not match raw material cost increases and
new job start-up inefficiencies existed in Custom Products.
Selling, general and administrative expense increased 18%
in fiscal 1995 and 5% in 1994 because of the higher sales
volumes and increased profit sharing from the higher profits.
Profit sharing is not a fixed cost and represented 24% of total
selling, general, and administrative expense in 1995 and 1994.
Selling, general and administrative expense as a percentage of
sales was 6.2% in 1993, 5.6% in 1994 and 5.7% in 1995.
Operating income for core businesses increased 29% after a
13% increase in 1994. As a percentage of sales, operating
income was up to 10.4% from 9.3% in 1994 and 9.5% in 1993.
Interest expense increased 100% in 1995 following a 12%
decrease in fiscal 1994. In 1995, both the average debt
outstanding and the average interest rate increased. In 1994,
higher average debt outstanding was offset somewhat by a lower
average interest rate. The increases in average debt
outstanding were due to the Company's aggressive capital
spending program and increasing working capital to support the
sales growth. The average interest rate was 6.2% in 1995, up
from 4.0% in 1994 and 4.7% and 1993.
Equity in net income of unconsolidated affiliates increased
103% in 1995, after a 311% increase in 1994. This followed a
16% decline in 1993. The majority of the increases came from
the equity in Rouge Steel which continued to benefit from the
favorable market environment for integrated steel producers and
higher steel prices. TWB Company is still in a start-up mode,
but its loss was down significantly from 1994. Worthington
Armstrong Venture (WAVE) contributed to the increased equity in
1995 as demand for its products was favorable and the plant in
France became profitable in its first full year of operation.
Income taxes increased in line with earnings for fiscal
1995. The effective tax rate increased slightly to 37.5% from
37.4% in 1994 and 37.0% in 1993. Increases in state tax rates
and a shift in sales to higher state rates was offset by
permanent differences which became a larger percentage of pre-
tax earnings. The increase from 1993 to 1994 resulted from the
higher rates and decreased deductions from the "Omnibus Budget
Reconciliation Act of 1993.
Processed Steel Products
In 1995, sales of processed steel products rose 12% to
$1,028 million and operating income and increased 15% to $112.4
million, both setting records. Return on sales increased to
10.9% from 10.7%. The steel processing operations continued to
gain market share as demand remained strong due to the expanding
economy, increased auto production and strength in the non-
automotive sector. The sales increase was attributable mostly
to higher volume and, to a lesser extent, higher prices as
increases from the steel mills were generally passed through to
customers. In pressure cylinders, high worldwide demand led to
higher volumes in most product lines, particularly the largest
lines, steel portables and non-refillables. The cylinder sales
increase also contained a price factor, as selling prices rose
to reflect the increase in steel prices and the higher cost of
the newly required "quick connect" valve.
In fiscal 1994, sales increased 20% and operating income
rose 24%. Steel processing experienced favorable automotive and
non-automotive markets and pressure cylinders had excellent
growth in its major product lines.
In May the Company announced plans to build a steel
processing facility in Delta, Ohio. This plant will have
pickling, slitting and galvanizing capabilities and will be
supported by a supply agreement with the North Star/BHP mini-
mill located adjacent. This arrangement is expected to
complement the supply/equity relationship with Rouge Steel and
purchases from other mills.
Custom Products
Custom Products posted record results, as sales increased
21% to $302.1 million and operating income increased 29% to
$19.8 million. Return on sales rose to 6.5% from 6.1% in 1994.
The plastics operation benefited from high demand for
automobiles and non-automotive products. The new plastics
facility in St. Matthews, South Carolina became profitable
during the year and the new plant in Lebanon, Kentucky became
profitable in its fourth month of operation. Metals sales and
profits were up due to higher production levels and increased
experience on new contracts started last year.
In fiscal 1994, this segment suffered through the loss of
major jobs due to the phase-out of certain car models and the
normal start-up inefficiencies associated with new jobs.
Efficiencies and profits improved later in the year as the jobs
became more mature.
Cast Products
In the cast products segment, sales increased 33% to a
record $153.8 million, while operating income rose 261% to a
record $21.7 million. Return on sales increased to 14.2% from
5.2% in 1994. This segment was led by strong demand for freight
railcars, which drove volume and productivity gains. Industry
environment is favorable for this segment to take advantage of
its market position for the foreseeable future.
In fiscal 1994 sales of cast products rose 11% and
operating income decreased 8%. Demand for freight railcar
castings suffered temporarily, due primarily to the flooding in
the midwest and shipping problems caused by severe winter
weather.
LIQUIDITY AND CAPITAL RESOURCES
At May 31, 1995, the Company's balance sheet remained
strong and flexible. Working capital increased to $272.7
million, representing 30% of total assets and 18% of sales, in
line with historic trends. The current ratio increased to 2.5
to 1 from 2.3 to 1 at May 31, 1994. Total balance debt stood at
$92 million. Long-term debt was $53.5 million, only 8% of total
capital.
During 1995, the Company used $11.3 million of its
beginning cash position, $66.4 million in cash provided by
operating activities, $4.2 million of proceeds from common
shares and $28.2 million of net short-term borrowings to fund
$61.5 million of capital expenditures, $10.9 million of
investments in unconsolidated affiliates and $36.3 million of
cash dividends.
Dividends paid during 1995 were a record and represented
31% of net earnings. Capital investment in businesses (capital
expenditures and investments in affiliates) increased 55% in
1995. The most significant projects were the Lebanon, Kentucky
plastics plant and a business information system for steel
processing.
Accounts receivable, inventory, and accounts payable and
accrued expenses continued to increase to support the higher
sales level. Inventory turnover decreased to 6.0 times while
days sales in accounts receivable increased to 46 days.
The Company entered into a $150 million long-term revolving
credit agreement with several banks during the fourth quarter,
replacing the $40 million unsecured line of credit. At May 31,
1995, $110 million of the revolver was unused. The Company's
immediate borrowing capacity, plus its cash generated from
operations, should be more than sufficient to fund expected
normal operating costs, dividends, debt payments and capital
expenditures for existing businesses. While there are no
specific needs, the Company regularly considers long-term debt
issuance as an alternative depending on financial market
conditions.
The Company believes that environmental issues will not
have a material effect on capital expenditures, consolidated
financial position or future results of operations.
WORTHINGTON INDUSTRIES, INC. AND SUBSIDIARIES
INDEX TO EXHIBITS
ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED MAY 31, 1995
Exhibit
Number Description Page Number
3(a) Certificate of Incorporated herein by
Incorporation of reference to Exhibit 3 of the
Worthington Industries, Company's Annual Report on Form
Inc. 10-Q for the Quarter ended
August 31, 1994
3(b) Bylaws of Worthington Incorporated herein by
Industries,Inc. reference to Exhibit 3(b) of
the Company's Annual Report on
Form 10-K for the fiscal year
ended May 31, 1992
4 Agreement to furnish Page 19*
instruments defining
rights of holders of
long-term debt
10(a) Amended 1980 Stock Incorporated herein by
Option Plan, as reference to Annex B to the
amended** Prospectus filed as part of
Post-Effective Amendment No. 1
to the Company's Registration
Statement on Form S-8
(Registration No. 2-80094)
10(b) 1990 Stock Option Incorporated herein by
Plan** reference to Exhibit 10(d) of
the Company's Annual Report on
Form 10-K for the fiscal year
ended May 31, 1991.
10(c) Executive Deferred Incorporated herein by
Compensation Plan** reference to Exhibit 10(e) of
the Company's Annual Report on
Form 10-K for the fiscal year
ended May 31, 1984
10(d) Deferred Compensation Incorporated herein by
Plan for Directors** reference to Exhibit 10(f) of
the Company's Annual Report on
Form 10-K for the fiscal year
ended May 31, 1984
13 Portions of 1995 Annual Page 21*
Report to security
holders incorporated
by reference into
Form 10-K
21 Subsidiaries of the Page 54*
Company
23 Consent of Independent Page 57*
Auditors
24 Powers of Attorney Page 59*
27 Financial Data Schedule Page 74*
-------------
*Page number in consecutively numbered original.
**Management compensation plan.
EXHIBIT 4
Agreement to furnish instruments defining rights of holders of long-
term debt
August 28, 1995
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Worthington Industries, Inc. - Form 10-K
Gentlemen:
Worthington Industries, Inc., a Delaware corporation, is
today executing a Form 10-K, Annual Report.
Pursuant to the instructions relating to the Exhibits,
Worthington Industries, Inc. hereby agrees to furnish to the
Commission, upon request, copies of instruments and agreements
defining the rights of holders of its long-term debt and of the
long-term debt of its consolidated subsidiaries.
Very truly yours,
WORTHINGTON INDUSTRIES, INC.
/s/Donal H. Malenick
Donal H. Malenick
President
Enclosures
EXHIBIT 13
PORTIONS OF 1995 ANNUAL REPORT TO SECURITY HOLDERS
INCORPORATED BY REFERENCE INTO FORM 10-K
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Fiscal 1995 was the third consecutive record year for the
Company. Net sales of $1.484 billion, net earnings of $116.7
million and earnings per share of $1.29 were all records,
increasing 15%, 38% and 37%, respectively. This followed a
strong fiscal 1994 when net sales of $1.285 billion, net earnings
of $84.9 million and earnings per share of $.94 had increased
15%, 25% and 24%, respectively.
Profitability after taxes continued to improve in 1995.
Return on sales rose to 7.9% in fiscal 1995 from 6.6% in 1994 and
6.1% in 1993. Return on average assets increased to 13.6% in
1995 from 11.4% in 1994 and 10.3% in 1993. Return on average
shareholder's equity rose to 21.3% from 18.0% in 1994 and 16.4%
in 1993.
Every quarter during the fiscal year was a record as the
Company continued to benefit from high demand in its markets.
The economy continued to expand and most product lines stayed
strong throughout the year.
The higher sales for 1995 and 1994 were largely as a result
of higher volume and order levels. Both years included some
selling price increases, as higher raw material prices were
generally passed through to customers.
Cost of goods sold increased 14% in 1995, slightly less than
the sales increase, and 17% in 1994. In both years, higher raw
material costs offset the benefits gained from leveraging fixed
costs, cost reductions and the increased productivity that
resulted from higher volumes.
Gross margin increased 25% in 1995, following a 10% increase
in 1994. As a percentage of sales, gross margin was 16.1% in
1995, 14.9% in 1994 and 15.7% in 1993. Margins improved in 1995
as the expanding economy provided a more favorable environment
for passing raw material price increases to customers. In 1994,
margins were squeezed as some selling price increases did not
match raw material cost increases and new job start-up
inefficiencies existed in Custom Products.
Selling, general and administrative expense increased 18% in
fiscal 1995 and 5% in 1994 because of the higher sales volumes
and increased profit sharing from the higher profits. Profit
sharing is not a fixed cost and represented 24% of total selling,
general, and administrative expense in 1995 and 1994. Selling,
general and administrative expense as a percentage of sales was
6.2% in 1993, 5.6% in 1994 and 5.7% in 1995.
Operating income for core businesses increased 29% after a
13% increase in 1994. As a percentage of sales, operating income
was up to 10.4% from 9.3% in 1994 and 9.5% in 1993.
Interest expense increased 100% in 1995 following a 12%
decrease in fiscal 1994. In 1995, both the average debt
outstanding and the average interest rate increased. In 1994,
higher average debt outstanding was offset somewhat by a lower
average interest rate. The increases in average debt outstanding
were due to the Company's aggressive capital spending program and
increasing working capital to support the sales growth. The
average interest rate was 6.2% in 1995, up from 4.0% in 1994 and
4.7% and 1993.
Equity in net income of unconsolidated affiliates increased
103% in 1995, after a 311% increase in 1994. This followed a 16%
decline in 1993. The majority of the increases came from the
equity in Rouge Steel which continued to benefit from the
favorable market environment for integrated steel producers and
higher steel prices. TWB Company is still in a start-up mode,
but its loss was down significantly from 1994. Worthington
Armstrong Venture (WAVE) contributed to the increased equity in
1995 as demand for its products was favorable and the plant in
France became profitable in its first full year of operation.
Income taxes increased in line with earnings for fiscal
1995. The effective tax rate increased slightly to 37.5% from
37.4% in 1994 and 37.0% in 1993. Increases in state tax rates
and a shift in sales to higher state rates was offset by
permanent differences which became a larger percentage of pre-tax
earnings. The increase from 1993 to 1994 resulted from the
higher rates and decreased deductions from the "Omnibus Budget
Reconciliation Act of 1993.
Processed Steel Products
In 1995, sales of processed steel products rose 12% to
$1,028 million and operating income and increased 15% to $112.4
million, both setting records. Return on sales increased to 10.9%
from 10.7%. The steel processing operations continued to gain
market share as demand remained strong due to the expanding
economy, increased auto production and strength in the non-
automotive sector. The sales increase was attributable mostly to
higher volume and, to a lesser extent, higher prices as increases
from the steel mills were generally passed through to customers.
In pressure cylinders, high worldwide demand led to higher
volumes in most product lines, particularly the largest lines,
steel portables and non-refillables. The cylinder sales increase
also contained a price factor, as selling prices rose to reflect
the increase in steel prices and the higher cost of the newly
required "quick connect" valve.
In fiscal 1994, sales increased 20% and operating income
rose 24%. Steel processing experienced favorable automotive and
non-automotive markets and pressure cylinders had excellent
growth in its major product lines.
In May the Company announced plans to build a steel
processing facility in Delta, Ohio. This plant will have
pickling, slitting and galvanizing capabilities and will be
supported by a supply agreement with the North Star/BHP mini-mill
located adjacent. This arrangement is expected to complement the
supply/equity relationship with Rouge Steel and purchases from
other mills.
Custom Products
Custom Products posted record results, as sales increased
21% to $302.1 million and operating income increased 29% to $19.8
million. Return on sales rose to 6.5% from 6.1% in 1994. The
plastics operation benefited from high demand for automobiles and
non-automotive products. The new plastics facility in St.
Matthews, South Carolina became profitable during the year and
the new plant in Lebanon, Kentucky became profitable in its
fourth month of operation. Metals sales and profits were up due
to higher production levels and increased experience on new
contracts started last year.
In fiscal 1994, this segment suffered through the loss of
major jobs due to the phase-out of certain car models and the
normal start-up inefficiencies associated with new jobs.
Efficiencies and profits improved later in the year as the jobs
became more mature.
Cast Products
In the cast products segment, sales increased 33% to a
record $153.8 million, while operating income rose 261% to a
record $21.7 million. Return on sales increased to 14.2% from
5.2% in 1994. This segment was led by strong demand for freight
railcars, which drove volume and productivity gains. Industry
environment is favorable for this segment to take advantage of
its market position for the foreseeable future.
In fiscal 1994 sales of cast products rose 11% and operating
income decreased 8%. Demand for freight railcar castings
suffered temporarily, due primarily to the flooding in the
midwest and shipping problems caused by severe winter weather.
LIQUIDITY AND CAPITAL RESOURCES
At May 31, 1995, the Company's balance sheet remained strong
and flexible. Working capital increased to $272.7 million,
representing 30% of total assets and 18% of sales, in line with
historic trends. The current ratio increased to 2.5 to 1 from
2.3 to 1 at May 31, 1994. Total balance debt stood at $92
million. Long-term debt was $53.5 million, only 8% of total
capital.
During 1995, the Company used $11.3 million of its beginning
cash position, $66.4 million in cash provided by operating
activities, $4.2 million of proceeds from common shares and $28.2
million of net short-term borrowings to fund $61.5 million of
capital expenditures, $10.9 million of investments in
unconsolidated affiliates and $36.3 million of cash dividends.
Dividends paid during 1995 were a record and represented 31%
of net earnings. Capital investment in businesses (capital
expenditures and investments in affiliates) increased 55% in
1995. The most significant projects were the Lebanon, Kentucky
plastics plant and a business information system for steel
processing.
Accounts receivable, inventory, and accounts payable and
accrued expenses continued to increase to support the higher
sales level. Inventory turnover decreased to 6.0 times while
days sales in accounts receivable increased to 46 days.
The Company entered into a $150 million long-term revolving
credit agreement with several banks during the fourth quarter,
replacing the $40 million unsecured line of credit. At May 31,
1995, $110 million of the revolver was unused. The Company's
immediate borrowing capacity, plus its cash generated from
operations, should be more than sufficient to fund expected
normal operating costs, dividends, debt payments and capital
expenditures for existing businesses. While there are no
specific needs, the Company regularly considers long-term debt
issuance as an alternative depending on financial market
conditions.
The Company believes that environmental issues will not have
a material effect on capital expenditures, consolidated financial
position or future results of operations.
EXHIBIT 21
SUBSIDIARIES OF THE COMPANY
SUBSIDIARIES OF WORTHINGTON INDUSTRIES, INC.
Jurisdiction of
Subsidiary (1) Incorporation
WI Investments, Inc. Delaware
Subsidiaries of WI Investments, Inc.
Worthington Industries, Incorporated Ohio
Worthington Cylinder Corporation Ohio
Worthington Cylinders Ontario
of Canada, Inc.(2)
North American Cylinders, Inc. (2) Alabama
The Worthington Steel Company Indiana
The Worthington Steel Company Kentucky
The Worthington Steel Company Maryland
The Worthington Steel Company Michigan
The Worthington Steel Company N. Carolina
Worthington Steel of Michigan, Inc. Michigan
I. H. Schlezinger, Inc. Ohio
Buckeye Steel Castings Company Ohio
B-I Sales, Inc. (3) Michigan
Worthington Custom Plastics,
Inc. (3) Ohio
Worthington Precision
Metals, Inc. (4) Tennessee
Buckeye Energy Company, Inc. (3) Ohio
Buckeye International Develop-
ment, Inc. (3) Ohio
GSI Engineering, Inc. (3) Delaware
The Worthington Steel Company Pennsylvania
NRM Trucking Co. (5) Delaware
Worthington Ventures, Inc. (5) Delaware
Joint Ventures
Worthington Specialty Processing (6) Michigan
London Industries, Inc. (7) Ohio
TWB Company (8) Michigan
Worthington Armstrong Venture (9) Delaware
Acerex, S.A. de C.V. (10) Mexico
* * * * *
(1) All subsidiaries are wholly-owned unless otherwise indicated.
Some insignificant or shell corporations are not listed.
(2) Wholly-owned subsidiary of Worthington Cylinder Corporation
(3) Wholly-owned subsidiary of Buckeye Steel Castings Company
(4) Wholly-owned subsidiary of Worthington Custom Plastics, Inc.
(5) Wholly-owned subsidiary of The Worthington Steel Company
(Pennsylvania)
(6) Joint Venture with USX Corp.
(7) Joint Venture with Nissen Chemical Industry Co., Ltd. and
Sumitomo Corporation of America
(8) Joint Venture with Thyssen, Inc.
(9) Joint Venture with Armstrong World Industries, Inc.
(10) Joint Venture with Hylsa, S.A. de C.V.
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual
Report (Form 10-K) of Worthington Industries, Inc. of our report
dated June 15, 1995, included in the 1995 Annual Report to
Shareholders of Worthington Industries, Inc.
Our audits also included the financial statement schedule of
Worthington Industries, Inc. listed in Item 14(a). This schedule
is the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits. In
our opinion, the financial statement schedule referred to above,
when considered in relation to the basic financial statements
taken as a whole, present fairly in all material respects the
information set forth therein.
We also consent to the incorporation by reference in the
Registration Statements (Form S-8 No. 2-80094) pertaining to the
Worthington Industries, Inc. Amended 1980 Stock Option Plan;
(Form S-3 No. 33-46470) pertaining to the Worthington Industries,
Inc. Dividend Reinvestment and Stock Purchase Plan; (Form S-8 No.
33-38486) pertaining to the Worthington Industries, Inc. 1990
Stock Option Plan; and (Form S-8 No. 33-57981) pertaining to the
Worthington Industries, Inc. Deferred Profit Sharing Plan of our
report dated June 15, 1995, with respect to the consolidated
financial statements incorporated herein by reference, and our
report included in the preceding paragraph with respect to the
financial statement schedules included in this Annual Report
(Form 10-K) of Worthington Industries, Inc.
/s/Ernst & Young LLP
Columbus, Ohio
August 25, 1995
EXHIBIT 24
POWERS OF ATTORNEY
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer
and/or director of Worthington Industries, Inc., a Delaware
corporation, which is about to file with the Securities and
Exchange Commission, Washington, D.C., under the provisions of
the Securities Act of 1934, its Annual Report on Form 10-K for
the year ended May 31, 1995 constitutes and appoints Donal H.
Malenick, Donald G. Barger, Jr. and Dale T. Brinkman, his true
and lawful attorneys-in-fact and agents, with full power to act
without the other, for him and in his name, place and stead, in
any and all capacities, to sign such Annual Report and any or all
amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-
in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and
agents or any of them or their or his substitute or substitutes
may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his
hand this 17th day of August, 1995.
/s/Robert J. Borel
Robert J. Borel
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer
and/or director of Worthington Industries, Inc., a Delaware
corporation, which is about to file with the Securities and
Exchange Commission, Washington, D.C., under the provisions of the
Securities Act of 1934, its Annual Report on Form 10-K for the
year ended May 31, 1995 constitutes and appoints Donal H. Malenick,
Donald G. Barger, Jr. and Dale T. Brinkman, his true and lawful
attorneys-in-fact and agents, with full power to act without the
other, for him and in his name, place and stead, in any and all
capacities, to sign such Annual Report and any or all amendments
thereto, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about
the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agents or any of them or their or his
substitute or substitutes may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand
this 17th day of August, 1995.
/s/Charles R. Carson
Charles R. Carson
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer
and/or director of Worthington Industries, Inc., a Delaware
corporation, which is about to file with the Securities and
Exchange Commission, Washington, D.C., under the provisions of the
Securities Act of 1934, its Annual Report on Form 10-K for the
year ended May 31, 1995 constitutes and appoints Donal H. Malenick,
Donald G. Barger, Jr. and Dale T. Brinkman, his true and lawful
attorneys-in-fact and agents, with full power to act without the
other, for him and in his name, place and stead, in any and all
capacities, to sign such Annual Report and any or all amendments
thereto, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about
the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agents or any of them or their or his
substitute or substitutes may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand
this 17th day of August, 1995.
/s/ Edward A. Ferkany
Edward A. Ferkany
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer
and/or director of Worthington Industries, Inc., a Delaware
corporation, which is about to file with the Securities and
Exchange Commission, Washington, D.C., under the provisions of the
Securities Act of 1934, its Annual Report on Form 10-K for the
year ended May 31, 1995 constitutes and appoints Donal H. Malenick,
Donald G. Barger, Jr. and Dale T. Brinkman, his true and lawful
attorneys-in-fact and agents, with full power to act without the
other, for him and in his name, place and stead, in any and all
capacities, to sign such Annual Report and any or all amendments
thereto, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about
the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agents or any of them or their or his
substitute or substitutes may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand
this 17th day of August, 1995.
/s/ John E. Fisher
John E. Fisher
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer
and/or director of Worthington Industries, Inc., a Delaware
corporation, which is about to file with the Securities and
Exchange Commission, Washington, D.C., under the provisions of the
Securities Act of 1934, its Annual Report on Form 10-K for the
year ended May 31, 1995 constitutes and appoints Donal H. Malenick,
Donald G. Barger, Jr. and Dale T. Brinkman, his true and lawful
attorneys-in-fact and agents, with full power to act without the
other, for him and in his name, place and stead, in any and all
capacities, to sign such Annual Report and any or all amendments
thereto, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about
the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agents or any of them or their or his
substitute or substitutes may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand
this 17th day of August, 1995.
/s/ John F. Havens
John F. Havens
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer
and/or director of Worthington Industries, Inc., a Delaware
corporation, which is about to file with the Securities and
Exchange Commission, Washington, D.C., under the provisions of the
Securities Act of 1934, its Annual Report on Form 10-K for the
year ended May 31, 1995 constitutes and appoints Donal H. Malenick,
Donald G. Barger, Jr. and Dale T. Brinkman, his true and lawful
attorneys-in-fact and agents, with full power to act without the
other, for him and in his name, place and stead, in any and all
capacities, to sign such Annual Report and any or all amendments
thereto, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about
the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agents or any of them or their or his
substitute or substitutes may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand
this 19th day of August, 1995.
/s/ Robert J. Klein
Robert J. Klein
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer
and/or director of Worthington Industries, Inc., a Delaware
corporation, which is about to file with the Securities and
Exchange Commission, Washington, D.C., under the provisions of the
Securities Act of 1934, its Annual Report on Form 10-K for the
year ended May 31, 1995 constitutes and appoints Donal H. Malenick,
Donald G. Barger, Jr. and Dale T. Brinkman, his true and lawful
attorneys-in-fact and agents, with full power to act without the
other, for him and in his name, place and stead, in any and all
capacities, to sign such Annual Report and any or all amendments
thereto, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about
the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agents or any of them or their or his
substitute or substitutes may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand
this 17th day of August, 1995.
/s/ Pete A. Klisares
Pete A. Klisares
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer
and/or director of Worthington Industries, Inc., a Delaware
corporation, which is about to file with the Securities and
Exchange Commission, Washington, D.C., under the provisions of the
Securities Act of 1934, its Annual Report on Form 10-K for the
year ended May 31, 1995 constitutes and appoints Donal H. Malenick,
Donald G. Barger, Jr. and Dale T. Brinkman, his true and lawful
attorneys-in-fact and agents, with full power to act without the
other, for him and in his name, place and stead, in any and all
capacities, to sign such Annual Report and any or all amendments
thereto, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about
the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agents or any of them or their or his
substitute or substitutes may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand
this 17th day of August, 1995.
/s/ Katherine S. LeVeque
Katherine S. LeVeque
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer
and/or director of Worthington Industries, Inc., a Delaware
corporation, which is about to file with the Securities and
Exchange Commission, Washington, D.C., under the provisions of the
Securities Act of 1934, its Annual Report on Form 10-K for the
year ended May 31, 1995 constitutes and appoints Donal H. Malenick,
Donald G. Barger, Jr. and Dale T. Brinkman, his true and lawful
attorneys-in-fact and agents, with full power to act without the
other, for him and in his name, place and stead, in any and all
capacities, to sign such Annual Report and any or all amendments
thereto, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about
the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agents or any of them or their or his
substitute or substitutes may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand
this 17th day of August, 1995.
/s/ Donal H. Malenick
Donal H. Malenick
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer
and/or director of Worthington Industries, Inc., a Delaware
corporation, which is about to file with the Securities and
Exchange Commission, Washington, D.C., under the provisions of the
Securities Act of 1934, its Annual Report on Form 10-K for the
year ended May 31, 1995 constitutes and appoints Donal H. Malenick,
Donald G. Barger, Jr. and Dale T. Brinkman, his true and lawful
attorneys-in-fact and agents, with full power to act without the
other, for him and in his name, place and stead, in any and all
capacities, to sign such Annual Report and any or all amendments
thereto, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about
the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agents or any of them or their or his
substitute or substitutes may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand
this 17th day of August, 1995.
/s/ John H. McConnell
John H. McConnell
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer
and/or director of Worthington Industries, Inc., a Delaware
corporation, which is about to file with the Securities and
Exchange Commission, Washington, D.C., under the provisions of the
Securities Act of 1934, its Annual Report on Form 10-K for the
year ended May 31, 1995 constitutes and appoints Donal H. Malenick,
Donald G. Barger, Jr. and Dale T. Brinkman, his true and lawful
attorneys-in-fact and agents, with full power to act without the
other, for him and in his name, place and stead, in any and all
capacities, to sign such Annual Report and any or all amendments
thereto, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about
the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agents or any of them or their or his
substitute or substitutes may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand
this 17th day of August, 1995.
/s/ John P. McConnell
John P. McConnell
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer
and/or director of Worthington Industries, Inc., a Delaware
corporation, which is about to file with the Securities and
Exchange Commission, Washington, D.C., under the provisions of the
Securities Act of 1934, its Annual Report on Form 10-K for the
year ended May 31, 1995 constitutes and appoints Donal H. Malenick,
Donald G. Barger, Jr. and Dale T. Brinkman, his true and lawful
attorneys-in-fact and agents, with full power to act without the
other, for him and in his name, place and stead, in any and all
capacities, to sign such Annual Report and any or all amendments
thereto, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about
the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agents or any of them or their or his
substitute or substitutes may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand
this 17th day of August, 1995.
/s/ Robert B. McCurry
Robert B. McCurry
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer
and/or director of Worthington Industries, Inc., a Delaware
corporation, which is about to file with the Securities and
Exchange Commission, Washington, D.C., under the provisions of the
Securities Act of 1934, its Annual Report on Form 10-K for the
year ended May 31, 1995 constitutes and appoints Donal H. Malenick,
Donald G. Barger, Jr. and Dale T. Brinkman, his true and lawful
attorneys-in-fact and agents, with full power to act without the
other, for him and in his name, place and stead, in any and all
capacities, to sign such Annual Report and any or all amendments
thereto, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about
the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agents or any of them or their or his
substitute or substitutes may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand
this 17th day of August, 1995.
/s/ Charles D. Minor
Charles D. Minor
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer
and/or director of Worthington Industries, Inc., a Delaware
corporation, which is about to file with the Securities and
Exchange Commission, Washington, D.C., under the provisions of the
Securities Act of 1934, its Annual Report on Form 10-K for the
year ended May 31, 1995 constitutes and appoints Donal H. Malenick,
Donald G. Barger, Jr. and Dale T. Brinkman, his true and lawful
attorneys-in-fact and agents, with full power to act without the
other, for him and in his name, place and stead, in any and all
capacities, to sign such Annual Report and any or all amendments
thereto, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about
the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agents or any of them or their or his
substitute or substitutes may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand
this 17th day of August, 1995.
/s/ Gerald B. Mitchell
Gerald B. Mitchell
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer
and/or director of Worthington Industries, Inc., a Delaware
corporation, which is about to file with the Securities and
Exchange Commission, Washington, D.C., under the provisions of the
Securities Act of 1934, its Annual Report on Form 10-K for the
year ended May 31, 1995 constitutes and appoints Donal H. Malenick,
Donald G. Barger, Jr. and Dale T. Brinkman, his true and lawful
attorneys-in-fact and agents, with full power to act without the
other, for him and in his name, place and stead, in any and all
capacities, to sign such Annual Report and any or all amendments
thereto, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about
the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agents or any of them or their or his
substitute or substitutes may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand
this 17th day of August, 1995.
/s/ James Petropoulos
James Petropoulos
<TABLE>
CONSOLIDATED STATEMENTS OF EARNINGS
<CAPTION>
In thousands, Year Ended May 31 1995 1994 1993
except per share
------------------------------------------------------------------------------------------------------
<S> <S> <C> <C> <C>
SALES Net sales $1,483,569 $1,285,134 $1,113,242
Cost of goods sold 1,244,633 1,093,350 938,342
---------- ---------- ----------
Gross Margin 238,936 191,784 174,900
Selling, general and 85,102 72,372 68,809
administrative expense ---------- ---------- ----------
Operating Income 153,834 119,412 106,091
Other income (expense):
Miscellaneous income 573 389 598
Interest expense (6,036) (3,017) (3,421)
Equity in net income of 38,327 18,851 4,587
unconsolidated affiliates ---------- ---------- ----------
Earnings Before 186,698 135,635 107,855
Income Taxes 70,012 50,782 39,907
---------- ---------- ----------
EARNINGS Net Earnings $116,686 $84,853 $67,948
========== ========== ==========
Average Common 90,730 90,378 89,699
Shares Outstanding
EARNINGS PER SHARE Earnings Per Share $1.29 $.94 $.76
========== ========== ==========
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<CAPTION>
Dollars in thousands, except for per share 1995 1994 1993
------------------------------------------------------------------------------------------
<S> <S> <C> <C> <C>
COMMON Balance at beginning of year $906 $601 $595
SHARES Sale of common shares under
stock option plan, (198,444
in 1995; 375,155 in 1994;
909,539 in 1993) 2 4 7
Par value of shares issued - 301 -
in connection with share split
Purchase and retirement of common
shares, (1,436 in 1994;
181,200 in 1993) - - (1)
-------- -------- --------
Balance at May 31 $908 $906 $601
-------- -------- --------
ADDITIONAL Balance at beginning of year $96,427 $81,250 $71,623
PAID-IN Sale of common shares under
CAPITAL stock option plan, (198,144
in 1995; 375,155 in 1994;
909,539 in 1993) 2,569 3,875 8,596
Sale of shares under dividend
reinvestment plan, 1,664 1,471 1,179
(81,102 in 1995; 74,101 in
1994; 76,598 in 1993)
Par value of shares issued
in connection with share
split - (301) -
Transactions of unconsolidated
affiliate 2,073 10,134 -
Purchase and retirement of
common shares, (1,436 in
1994; 181,200 in 1993) - (2) (148)
-------- -------- --------
Balance at May 31 $102,733 $96,427 $81,250
-------- -------- --------
MINIMUM
PENSION Balance at beginning of year ($1,674) ($230) -
LIABILITY Transactions of unconsolidated
affiliate 803 (1,444) ($230)
-------- -------- --------
Balance at May 31 ($871) ($1,674) ($230)
-------- -------- --------
TRANSLATION Balance at beginning of year - - -
ADJUSTMENT Foreign currency translation
adjustment ($146) - -
-------- -------- --------
Balance at May 31 ($146) - -
-------- -------- --------
RETAINED Balance at beginning of year $408,234 $356,567 $320,078
EARNINGS Net earnings 116,686 84,853 67,948
Cash dividends declared:
(per share: $.410 in 1995;
$.367 in 1994; $.327 in
1993) (37,212) (33,161) (29,329)
Purchase and retirement of
common shares, (1,436 in
1994; 181,200 in 1993) - (25) (2,130)
-------- -------- --------
Balance at May 31 $487,708 $408,234 $356,567
-------- -------- --------
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
<CAPTION>
Dollars in thousands May 31 1995 1994
------------------------------------------------------------------------------
<S> <S> <C> <C>
ASSETS Current Assets
Cash and cash equivalents $ 2,003 $ 13,275
Accounts receivable, less allowances
of $2,397 and $2,535 at May 31,
1995 and 1994 216,443 189,741
Inventories
Raw materials 142,738 125,243
Work in process and finished products 58,140 59,639
--------- ---------
200,878 184,882
Prepaid expenses and other current
assets 32,578 25,218
--------- ---------
Total Current Assets 451,902 413,116
Investment in Unconsolidated Affiliates 104,764 51,961
Other Assets 25,381 25,935
Property, Plant and Equipment
Land 11,383 9,765
Buildings 122,073 109,724
Machinery and equipment 427,927 390,685
Construction in progress 27,903 21,375
--------- ---------
589,286 531,549
Less accumulated depreciation 254,369 223,988
--------- ---------
334,917 307,561
--------- ---------
Total Assets $ 916,964 $ 798,573
========= =========
LIABILITIES
Current Liabilities
Accounts payable $ 87,329 $ 97,699
Notes payable 38,200 10,000
Accrued compensation, contributions to
employee benefit plans and related
taxes 31,741 29,280
Dividends payable 9,992 9,056
Other accrued items 8,597 8,135
Income taxes 2,709 6,206
Current maturities of long-term debt 660 1,490
--------- ---------
Total Current Liabilities 179,228 161,866
Other Liabilities 18,055 19,445
Long-Term Debt 53,476 54,136
Deferred Income Taxes 75,873 59,233
Contingent Liabilities -- Note G
EQUITY Shareholders' Equity
Preferred shares, $1.00 par value,
authorized -- 1,000,000 shares, issued
and outstanding -- none - -
Common shares, $.01 par value, authorized
-- 150,000,000 shares, issued and
outstanding -- 1995 -- 90,840,328
shares; 1994 -- 90,561,082 shares 908 906
Additional paid-in capital 102,733 96,427
Minimum pension liability of
unconsolidated affiliate (871) (1,674)
Foreign currency translation adjustment (146) -
Retained earnings 487,708 408,234
--------- ---------
590,332 503,893
Total Liabilities and --------- ---------
Shareholders' Equity $ 916,964 $ 798,573
========= =========
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
In thousands Year Ended May 31 1995 1994 1993
------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net earnings $116,686 $84,853 $67,948
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation 34,129 32,385 29,204
Gain on sale of short-term investments - (911) -
Provision for deferred income taxes 15,541 7,911 5,995
Equity in undistributed net income of
unconsolidated affiliates (37,847) (19,345) (4,587)
Changes in assets and liabilities:
Short-term investments - - 129
Accounts receivable (26,702) (20,886) (18,684)
Inventories (15,996) (25,895) (21,326)
Prepaid expenses and other current assets (7,418) (6,460) (563)
Other assets 554 (6,576) (14,618)
Accounts payable and accrued expenses (11,156) 4,001 25,755
Other liabilities (1,390) 11,777 (3,443)
Long-term deferred income taxes - - 114
-------- -------- --------
Net Cash Provided By Operating
Activities 66,401 60,854 65,924
INVESTING ACTIVITIES
Investment in property, plant and equipment,
net (61,485) (46,554) (29,140)
Investments in unconsolidated affiliates (10,857) - -
Other, net - 1,287 -
-------- -------- --------
Net Cash Used By Investing
Activities (72,342) (45,267) (29,140)
FINANCING ACTIVITIES
Proceeds from short-term borrowings 28,200 10,000 -
Proceeds from long-term debt 27,000 - -
Principal payments on long-term debt (28,490) (1,165) (3,263)
Proceeds from issuance of common shares 4,235 5,350 9,782
Repurchase of common shares - (27) (2,279)
Dividends paid (36,276) (33,161) (29,329)
Net Cash Used By Financing -------- -------- --------
Activities (5,331) (19,003) (25,089)
Increase (decrease) in cash and cash -------- -------- --------
equivalents (11,272) (3,416) 11,695
Cash and cash equivalents at beginning of year 13,275 16,691 4,996
Cash and Cash Equivalents at -------- -------- --------
End of Year $2,003 $13,275 $16,691
======== ======== ========
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
INDUSTRY SEGMENT DATA
<CAPTION>
In thousands May 31 1995 1994 1993
------------------------------------------------------------------------------
<S> <C> <C> <C>
SALES
Net Sales
Processed steel products $ 1,028,326 $ 920,199 $ 767,682
Custom products 302,096 249,459 241,916
Cast products 153,147 115,476 103,644
----------- ----------- -----------
$ 1,483,569 $ 1,285,134 $ 1,113,242
=========== =========== ===========
EARNINGS
Operating Income
Processed steel products $ 112,390 $ 98,062 $ 79,187
Custom products 19,754 15,334 20,360
Cast products 21,690 6,016 6,544
----------- ----------- -----------
153,834 119,412 106,091
Miscellaneous income 573 389 598
Interest expense (6,036) (3,017) (3,421)
Equity in net income of unconsolidated
affiliates 38,327 18,851 4,587
----------- ----------- -----------
$ 186,698 $ 135,635 $ 107,855
=========== =========== ===========
ASSETS
Identifiable Assets
Processed steel products $ 507,073 $ 471,458 $ 428,891
Custom products 165,619 138,015 117,856
Cast products 78,099 75,733 69,843
Corporate 61,409 61,406 59,674
----------- ----------- -----------
812,200 746,612 676,264
Investment in unconsolidated affiliates 104,764 51,961 17,945
----------- ----------- -----------
$ 916,964 $ 798,573 $ 694,209
=========== =========== ===========
DEPRECIATION
Depreciation Expense
Processed steel products $ 19,041 $ 19,075 $ 17,745
Custom products 8,710 7,047 5,598
Cast products 4,362 4,095 3,900
Corporate 2,016 2,168 1,961
----------- ----------- -----------
$ 34,129 $ 32,385 $ 29,204
=========== =========== ===========
EXPENDITURES
Capital Expenditures
Processed steel products $ 31,869 $ 14,693 $ 9,876
Custom products 22,254 19,086 12,640
Cast products 4,041 6,787 5,283
Corporate 3,321 5,988 1,341
----------- ----------- -----------
$ 61,485 $ 46,554 $ 29,140
=========== =========== ===========
() Indicates deduction
Corporate expenses are allocated on a consistent basis among industry
segments over the five-year period. Earnings are before income taxes
and cumulative effect of accounting changes. "Capital expenditures"
are net of normal disposals and exclude amounts in connection with
acquisitions and divestitures.
See notes to consolidated financial statements.
</TABLE>
<PAGE>
Notes To Consolidated Financial Statements
NOTE A - Summary of Significant Accounting Policies
Consolidation: The consolidated financial statements include the accounts
of Worthington Industries, Inc. and Subsidiaries (the "Company").
Investments in unconsolidated affiliates are accounted for using the equity
method. Significant intercompany accounts and transactions are eliminated.
Certain reclassifications were made to prior years' amounts to conform with
the 1995 presentation.
Cash and Cash Equivalents: The Company considers all highly liquid
investments purchased with a maturity of three months or less to be cash
equivalents.
Inventories: Inventories are valued at the lower of cost or market.
Cost is determined using the specific identification method for steel
processing and the first-in, first-out method for all other businesses.
Property and Depreciation: Property, plant and equipment are carried
at cost and depreciated using the straight-line method over the estimated
useful lives of the assets. Accelerated depreciation methods are used for
income tax purposes.
Capitalized Interest: Interest is capitalized in connection with
construction of qualified assets. Under this policy, interest of $529,000
was capitalized in 1995.
Post Retirement Benefits Other Than Pensions: The Company adopted
Financial Accounting Standards Board issued Statement No. 106, "Employer's
Accounting for Post Retirement Benefits Other Than Pensions," effective
June 1, 1993. The adoption of this Statement did not have a material
impact on the Company's operating results or financial position. As
permitted by Statement 106, the Company elected not to restate the
financial statements of prior years.
Statements of Cash Flows: With respect to non-cash activities in
fiscal 1994, the Company recorded its increased equity from the Rouge Steel
Company's initial public offering as an increase in investments in
unconsolidated affiliates of $3,215,000 in 1995 and $15,451,000 in 1994 and
additional paid-in-capital (net of deferred taxes) of $2,073,000 in 1995
and $10,134,000 in 1994. During fiscal 1993, $6,282,000 of inventory and
$3,421,000 of fixed assets were reclassified to investments in
unconsolidated affiliates as the initial investment in Worthington
Armstrong Venture.
Supplemental cash flow information for the years ended May 31, is as
follows:
In thousands 1995 1994 1993
-------------------------------------------------------------------------
Interest paid $6,688 $ 2,973 $ 3,957
Income taxes paid 60,520 39,957 35,548
Fair Value of Financial Instruments: The following methods and
assumptions were used by the Company in estimating the fair value of its
financial instruments:
Cash and cash equivalents, other assets, and long-term debt - The
carrying amounts reported in the balance sheets approximate fair value.
The concentration of credit risks from financial instruments, related to
the markets discussed in Review of Operations starting on page 5 is not expected
to have a material effect on the Company's consolidated financial position, cash
flow or future results of operations.
<PAGE>
NOTE B - Shareholders' Equity
On September 16, 1993, the Company's Board of Directors authorized a three-
for-two split of the common shares, with distribution of the additional
shares on October 22, 1993, to holders of record on October 1, 1993. Also
on September 16, 1993, the shareholders adopted an amendment to the
Certificate of Incorporation of the Company to increase the authorized
number of common shares from 100,000,000 shares to 150,000,000 shares.
References in this annual report to per share amounts and to the number of
common shares have been adjusted, where appropriate, to give retroactive
effect to the share split.
The Board of Directors is empowered to determine the issue prices,
dividend rates, amounts payable upon liquidation, voting rights and other
terms of the preferred shares when issued.
<PAGE>
NOTE C - Debt
Debt at May 31, is summarized as follows:
In thousands 1995 1994
---------------------------------------------------------------
Short-term notes payable to bank - $38,200 $10,000
unsecured
Industrial development revenue
bonds and notes 14,136 14,909
Notes payable to banks - unsecured 13,000 40,000
Revolver 27,000
Other 717
------- -------
92,336 65,626
Less current maturities 38,860 11,490
------- -------
$53,476 $54,136
======= =======
The Company had short-term notes payable to bank totaling $38,200,000,
at May 31, 1995. The rate for these borrowings, which was 6.4% at May 31,
1995, is based on the bank's cost of funds plus a fixed percent.
The industrial development revenue bonds and notes (IRBs) represent
loans to purchase or obligations to lease facilities and equipment costing
$24,601,000. The leases are accounted for as lease purchases with
ownership passing to the Company at the expiration dates for nominal
amounts. The IRBs mature serially through 2011 and may be retired in whole
or in part at any time. At May 31, 1995, the IRBs have fixed interest
rates; $10,605,000 at 5.9% and the remainder at 8.0%.
During the year ended May 31, 1995, the Company entered into a
$150,000,000 revolving credit agreement with five banks. It is a five year
commitment with two annual extension options. The rate of interest is
determined at the time of borrowing, based upon a choice of options as
specified in the agreement, and was 6.2% at May 31, 1995. This agreement,
of which $123,000,000 was unused at May 31, 1995, replaced the $40,000,000
committed, unsecured line of credit available during fiscal 1995. During
fiscal 1995, the $27,000,000 evergreen note payable to bank outstanding at
May 31, 1994, was paid off by using the revolver. During June 1995, the
$13,000,000 unsecured bank note payable was also paid off by using the
revolver.
Various debt agreements place restrictions on financial conditions and
require maintenance of certain ratios. One of these restrictions limits
cash dividends and certain other payments to $3,000,000 plus 75% of net
earnings, as defined, subsequent to May 31, 1976. Retained earnings of
$319,699,000 were unrestricted at May 31, 1995.
Principal payments on long-term debt, including lease purchase
obligations, in the next five fiscal years are as follows: 1996 --
$660,000; 1997 -- $660,000; 1998 -- $4,191,000; 1999 -- $660,000; 2000 --
$660,000; and thereafter -- $47,305,000.
The Company is guarantor on bank loans for four separate joint
ventures. The guarantees totaled $37,562,000 at May 31, 1995, and relate
to debt with varying maturities. The Company believes the guarantees will
not significantly affect the consolidated financial position or future
results of operations.
<PAGE>
NOTE D - Income Taxes
Income taxes for the years ended May 31, were as follows:
In thousands 1995 1994 1993
--------------------------------------------------------------
Current: Federal $45,559 $36,907 $29,329
State and local 8,912 5,964 4,583
Deferred: Federal 14,382 7,627 5,145
State 1,159 284 850
------- ------- -------
$70,012 $50,782 $39,907
======= ======= =======
Under Statement of Financial Accounting Standards Board number 109,
"Accounting for Income Taxes," the liability method is used in accounting
for income taxes. Under this method, deferred tax assets and liabilities
are determined based on differences between financial reporting and tax
bases of assets and liabilities, and are measured using enacted tax rates
and laws that will be in effect when the differences are expected to
reverse. Prior to the adoption of Statement 109, during fiscal 1993 income
tax expense was determined using the deferred method. Deferred tax expense
was based on items of income and expense reported in different years in the
financial statements and tax returns and measured at the tax rate in effect
in the year the difference originated.
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting and the amounts used for income tax purposes. The
components of the Company's deferred tax liabilities and assets as of May
31 are as follows:
In thousands 1995 1994
-----------------------------------------------------------------------
Deferred tax assets:
Allowance for doubtful accounts $1,284 $1,332
Inventory 1,375 939
Accrued expenses 3,888 4,393
Income taxes 2,460 1,665
Other 388 360
------ ------
9,395 8,689
Deferred tax liabilities:
Property, plant and equipment 45,426 42,680
Undistributed earnings of unconsolidated
affiliates 30,447 16,553
------- -------
75,873 59,233
------- -------
Net deferred tax liability $66,478 $50,544
======= =======
<PAGE>
The components of deferred income tax expense resulted from the use of the
following:
In thousands 1993
-----------------------------------------------------------
Accelerated depreciation $4,379
Undistributed earnings of unconsolidated equity 1,026
affiliates
Other items 590
------
$5,995
======
The reasons for the difference between the effective income tax rate
and the statutory federal income tax rate were as follows:
1995 1994 1993
------------------------------------------------------------
Federal statutory rate 35.0% 35.0% 34.0%
State and local income taxes,
net of federal tax benefit 3.6 3.0 3.3
Other (1.1) (.6) (.3)
---- ---- ----
37.5% 37.4% 37.0%
==== ==== ====
<PAGE>
NOTE E - Employee Benefit Plans
Nonunion employees of the Company participate in a current cash profit
sharing plan and a deferred profit sharing plan. Contributions to and
costs of these plans are determined as a percentge of the Company's
operating income.
Certain operations have non-contributory defined benefit pension plans
covering a majority of their employees qualified by age and service.
Company contributions to these plans comply with ERISA's minimum funding
requirements.
A summary of the components of net periodic pension cost for the
defined benefit plans in 1995, 1994 and 1993, and the contributions charged
to pension expense for the defined contribution plans follows:
In thousands 1995 1994 1993
--------------------------------------------------------------------------
Defined benefit plans:
Service cost (benefits earned during
the period) $1,078 $1,089 $1,115
Interest cost on projected benefit
obligation 3,091 2,875 2,806
Actual return on plan assets (3,884) (1,222) (5,666)
Net amortization and deferral 283 (2,544) 1,990
Net pension cost on defined benefit ------ ------ ------
plans 568 198 245
Defined contribution plans 4,985 3,935 3,387
------ ------ ------
Total pension expense $5,553 $4,133 $3,632
====== ====== ======
Pension expense was calculated assuming a weighted average discount
rate and an expected long-term rate of return on plan assets of 8%. Plan
assets consist principally of listed equity securities and fixed income
instruments. The following table sets forth the funded status and amounts
recognized in the Company's consolidated balance sheet for defined benefit
pension plans at May 31:
Plans Whose Plans Whose
Assets Exceed Accumulated
Accumulated Benefits
Benefits Exceed Assets
------------------------------------
In thousands 1995 1994 1995 1994
-------------------------------------------------------------------
Actuarial present value of
benefit obligations:
Vested $35,546 $34,640 $6,361 $5,260
======= ======= ====== ======
Accumulated $35,945 $35,327 $6,590 $5,497
======= ======= ====== ======
Projected benefit obligation $35,945 $35,327 $6,590 $5,497
Plan assets at fair value 43,922 40,935 5,022 4,607
Projected benefit obligation ------- ------- ------ ------
less than (in excess of)
plan assets $ 7,977 $ 5,608 $(1,568) $ (890)
======= ======= ======= ======
Comprised of:
Accrued pension cost $ - $ - $(1,361) $ (718)
Prepaid pension cost 2,030 1,334 - -
Unrecognized:
Net gain 10,905 9,575 60 (31)
Prior service cost (6,950) (7,568) (1,393) (631)
Unrecorded net asset
(obligation) at transition,
net of amortization 1,992 2,267 (45) (41)
Adjustment to recognize
minimum liability - - 1,171 531
------- ------- ------- ------
$ 7,977 $ 5,608 $(1,568) $ (890)
======= ======= ======= ======
<PAGE>
NOTE F -- Stock Options
Under its employee stock option plans, the Company may grant employees
incentive stock options to purchase shares at not less than 100% of market
value at date of grant or non-qualified stock options at a price determined
by the Stock Option Committee. Generally, options are exercisable at the
rate of 20% a year beginning one year from date of grant and expire ten
years thereafter.
The following table summarizes the option plans:
In thousands,
except per share Price Range Number of Options
Per Share 1995 1994 1993
---------------------------------------------------------------------------
Exercised $2.62-$9.50 198 375 909
At May 31,
Granted $19.25 882
Outstanding $4.68-$19.25 1,821 1,164 1,541
Exercisable 1,115 933 1,143
Available for grants 3,618 4,500 4,500
The options outstanding at May 31, 1995, were held by 306 persons, had an
average exercise price of $13.97 per share and had expiration dates ranging
from May 1997 to June 2004.
<PAGE>
NOTE G -- Contingent Liabilities
The Company is a defendant in certain legal actions. In the opinion
of management, the outcome of these actions, which is not clearly
determinable at the present time, would not significantly affect the
Company's consolidated financial position or future results of operations.
<PAGE>
NOTE H - Industry Segment Data
Industry segment descriptions on page 1, Company locations on page 32,
and segment data on page 22 of the annual report are an integral part of
these financial statements.
Sales for processed steel products and custom products include
$204,338,000 in 1995, $161,602,000 in 1994 and $130,483,000 in 1993 to a
major automobile manufacturer purchasing through decentralized divisions
and subsidiaries in different geographical areas.
<PAGE>
NOTE I -- Related Party Transactions
The Company purchases from and sells to affiliated companies, certain raw
materials and services at prevailing market prices. Sales for fiscal 1995,
1994 and 1993, totaled $61 million, $62 million and $55 million,
respectively. Accounts receivable related to these transactions were $12
million and $9 million at May 31, 1995 and 1994, respectively. Purchases
for fiscal 1995, 1994 and 1993, totaled $194 million, $168 million and $157
million, respectively. Accounts payable related to these transactions
included $27 million and $22 million at May 31, 1995 and 1994,
respectively.
<PAGE>
NOTE J - Investment in Unconsolidated Affiliates
The Company's investments in affiliated companies which are not majority owned
or controlled are accounted for using the equity method. Investments carried at
equity and the percentage interest owned consist of Worthington Specialty
Processing, partnership (50%), London Industries, Inc. (60%), Worthington
Armstrong Venture, partnership (50%), TWB Company, partnership (50%), Acerex,
S.A. de C.V. (50%) and Rouge Steel Company (28%).
The market value of the Company's investment in the class A common stock of
Rouge at May 31 1995, ($23.00 per share) was approximately $108 million. In
addition the Company owns 1,300,000 shares of class B common stock. At May 31,
1995, the Company's share of the underlying net assets of Rouge exceeded the
carrying amount included in investment in unconsolidated affiliates of
$79,369,000 by $9,886,000. The excess is being amortized into income by
increasing equity in net income of unconsolidated affiliates using the straight-
line method over 14 years.
Financial information for affiliated companies accounted for by the equity
method is as follows:
In thousands 1995 1994 1993
---------------------------------------------------------------------
Current assets $569,447 $514,407
Noncurrent assets 227,315 153,937
Current liabilities 240,044 267,372
Noncurrent liabilities 167,915 166,862
Minority interests 21,404 21,199
Net sales 1,386,824 $1,189,470 $1,070,560
Gross margin 170,234 106,309 58,700
Net income $ 122,116 $ 64,152 $ 15,887
The Company's share of undistributed earnings of unconsolidated affiliates
included in consolidated retained earnings was $49,265,000 at May 31, 1995.
<PAGE>
NOTE K - Quarterly Results of Operations (Unaudited)
The following is a summary of the unaudited quarterly results of operations
for the years ended May 31, 1995 and 1994:
In thousands,
except per share Three Months Ended
-----------------------------------------
Aug. Nov. Feb. May
-------------------------------------------------------------
1995
Net sales $346,257 $363,276 $370,117 $403,919
Gross margin 52,132 58,008 60,392 68,404
Net earnings 25,448 28,264 28,651 34,323
Earnings per share $.28 $.31 $.32 $.38
1994
Net sales $289,890 $295,894 $323,130 $376,220
Gross margin 44,064 43,056 48,179 56,485
Net earnings 19,898 19,412 19,740 25,803
Earnings per share $.22 $.21 $.22 $.29
<PAGE>
Report of Management
The management of Worthington Industries is responsible for the preparation
of the accompanying consolidated financial statements in conformity with
generally accepted accounting principles appropriate in the circumstances.
Management is also responsible for the determination of estimates and judgments
used in the financial statements, and the preparation of other financial
information included in this annual report to shareholders. The financial
statements have been audited by Ernst & Young LLP, independent auditors.
The management of the Company has established and maintains an accounting
system and related internal controls that it believes are sufficient to provide
reasonable assurance that assets are safeguarded against unauthorized
acquisition, use or disposition, that transactions are executed and recorded in
accordance with management's authorization and that the financial records are
reliable for preparing financial statements. The concept of reasonable
assurance is based on the recognition that the cost of a system of internal
control must be related to the benefits derived and that the balancing of
the factors requires estimates and judgments. Management considers the
recommendations of the internal auditors and independent certified public
accountants concerning the Company's system of internal control and takes
appropriate actions which are cost effective in the circumstances.
The Board of Directors has an Audit Committee of Directors who are not
members of management. The Audit Committee meets periodically with the
Company's management, internal auditors and independent certified public
accountants to review matters relating to financial reporting, auditing and
internal control. To ensure auditor independence, both the internal auditors
and independent certified public accountants have full and free access to the
Audit Committee.
/s/ John H. McConnell
John H. McConnell, Chairman & Founder
/s/ John P. McConnell
John P. McConnell, Vice Chairman & CEO
/s/ Donald G. Barger, Jr.
Donald G. Barger, Jr., Vice President-CFO
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
Worthington Industries, Inc.
We have audited the accompanying consolidated balance sheets of Worthington
Industries, Inc. and Subsidiaries as of May 31, 1995 and 1994, and the related
consolidated statements of earnings, shareholders' equity and cash flows for
each of the three years in the period ended May 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 consolidated financial position of Worthington
Industries, Inc. and Subsidiaries at May 31, 1995 and 1994, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended May 31, 1995, in conformity with generally accepted accounting
principles.
/s/ Ernst & Young
ERNST & YOUNG
Columbus, Ohio
June 15, 1995
<PAGE>
<TABLE>
SELECTED FINANCIAL DATA
<CAPTION>
In thousands, except per share May 31 1995 1994 1993 1992 1991
----------------------------------------------------------------------------------------------------------------------
FINANCIAL RESULTS
<S> <C> <C> <C> <C> <C>
Net Sales $1,483,569 $1,285,134 $1,113,242 $971,346 $871,528
Cost of Goods Sold 1,244,633 1,093,350 938,342 820,587 742,601
---------- ---------- ---------- -------- --------
Gross Margin 238,936 191,784 174,900 150,759 128,927
Selling, General & Administrative Expense 85,102 72,372 68,809 62,402 57,507
---------- ---------- ---------- -------- --------
Operating Income 153,834 119,412 106,091 88,357 71,420
Miscellaneous Income 573 389 598 1,289 1,039
Interest Expense (6,036) (3,017) (3,421) (3,986) (4,807)
Equity in Net Income of Unconsolidated Affiliates 38,327 18,851 4,587 5,440 7,416
---------- ---------- ---------- -------- --------
Earnings From Continuing Operations Before Taxes
and Accounting Changes 186,698 135,635 107,855 91,100 75,068
Income Taxes 70,012 50,782 39,907 33,069 27,264
Earnings From Continuing Operations Before ---------- ---------- ---------- -------- --------
Accounting Changes 116,686 84,853 67,948 58,031 47,804
Per Share 1.29 0.94 0.76 0.65 0.54
Depreciation 34,129 32,385 29,204 26,887 23,843
Cash Provided By Operating Activities 66,401 60,854 65,924 72,905 35,039
Cash Dividends Declared 37,212 33,161 29,329 27,127 24,054
Per Share 0.4101 0.3669 0.3270 0.3048 0.2706
Capital Expenditures $61,485 $46,554 $29,140 $45,120 $63,319
Average Shares Outstanding 90,730 90,378 89,699 88,990 88,877
----------------------------------------------------------------------------------------------------------------------
FINANCIAL POSITION
Current Assets $451,902 $413,116 $363,513 $311,247 $275,724
Current Liabilities 179,228 161,866 139,791 121,008 107,382
--------- --------- -------- -------- --------
Working Capital 272,674 251,250 223,722 190,239 168,342
Net Fixed Assets 334,917 307,561 293,392 293,456 275,223
Total Assets 916,964 798,573 694,209 627,960 570,225
Long-Term Debt 53,476 54,136 55,626 57,345 59,032
Shareholders' Equity 590,332 503,893 438,188 392,295 359,053
Per Share 6.50 5.56 4.86 4.39 4.05
Total Capital $643,808 $558,029 $493,814 $449,640 $418,085
Shares Outstanding 90,840 90,561 90,113 89,308 88,702
----------------------------------------------------------------------------------------------------------------------
PERFORMANCE COMPARISON
Profitability (After Taxes)
Return on Net Sales 7.9% 6.6% 6.1% 6.0% 5.5%
Return on Average Total Assets 13.6% 11.4% 10.3% 9.7% 8.4%
Return on Average Total Capital 19.4% 16.1% 14.4% 13.4% 11.9%
Return on Average Shareholders' Equity 21.3% 18.0% 16.4% 15.4% 13.6%
Financial Condition
Current Ratio 2.5 X 2.6 X 2.6 X 2.6 X 2.6
Long-Term Debt/Total Capital 8% 10% 11% 13% 14%
Asset Use
Inventory Turnover 6.0 X 6.4 X 6.4 X 6.1 X 5.0
Accounts Receivable/Days Sales 46 43 45 47 45
Growth
Net Sales 15.4% 15.4% 14.6% 11.5% -4.7%
Earnings From Continuing Operations
Before Accounting Changes 37.5% 24.9% 17.1% 21.4% -14.6%
Earnings Per Share From Continuing Operations
Before Accounting Changes 37.2% 23.7% 16.9% 20.4% -12.9%
Cash Dividends Declared Per Share 11.8% 12.2% 7.3% 12.6% 6.7%
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
SHAREHOLDER INFORMATION
<CAPTION>
Quarterly Volume, Price and Dividend Information
NASDAQ
Fiscal 1994 Shares Average Price Earnings Prices Cash
Quarter Ended Traded Daily Volume Ratio Range Low High Dividends
------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
August 31 12,384,658 190,533 25-29 $18.50 $21.67 $0.087
November 30 19,720,615 313,026 21-27 $16.75 $21.00 $0.090
February 28 10,159,228 163,859 22-27 $17.25 $21.00 $0.090
May 31 8,686,601 137,883 22-24 $18.25 $20.50 $0.100
Fiscal 1995
Quarter Ended
------------------------------------------------------------------------------------------
August 31 9,542,161 146,802 19-24 $17.50 $22.00 $0.100
November 30 15,776,732 250,424 19-23 $19.25 $23.50 $0.100
February 28 12,795,463 209,762 17-20 $18.75 $21.75 $0.100
May 31 14,825,214 231,643 15-19 $18.13 $22.38 $0.110
At May 31, 1995 (10,087 Shareholders)
</TABLE>
<PAGE>
Share Trading
Shares of Worthington Industries common stock are traded in the over-the-
counter market as part of the NASDAQ National Market System. The Company
is identified by the NASDAQ symbol "WTHG" and in most newspaper listings
as "WorthtnInd."
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAY-31-1995
<PERIOD-START> JUN-01-1994
<PERIOD-END> MAY-31-1995
<CASH> 2,003
<SECURITIES> 0
<RECEIVABLES> 218,840
<ALLOWANCES> 2,397
<INVENTORY> 200,878
<CURRENT-ASSETS> 451,902
<PP&E> 589,286
<DEPRECIATION> 254,369
<TOTAL-ASSETS> 916,964
<CURRENT-LIABILITIES> 179,228
<BONDS> 53,476
<COMMON> 908
0
0
<OTHER-SE> 589,424
<TOTAL-LIABILITY-AND-EQUITY> 916,964
<SALES> 1,483,569
<TOTAL-REVENUES> 1,483,569
<CGS> 1,244,633
<TOTAL-COSTS> 1,244,633
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,036
<INCOME-PRETAX> 186,698
<INCOME-TAX> 70,012
<INCOME-CONTINUING> 116,686
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 116,686
<EPS-PRIMARY> 1.29
<EPS-DILUTED> 1.29
</TABLE>
