UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 - Q
QUARTERLY REPORT UNDER SECTION 13 OR
15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended: February 28, 1995 Commission File No. 0-4016
WORTHINGTON INDUSTRIES, INC.
(Exact name of Registrant as specified in its Charter)
DELAWARE 31-1189815
(State of (I.R.S. Employer
Incorporation) Identification No.)
1205 Dearborn Drive, Columbus, Ohio 43085
(Address of Principal Executive (Zip Code)
Offices)
(614) 438-3210
(Registrant's Telephone Number, Including Area Code)
Not Applicable
(Former Name,
Former Address
and Former
Fiscal Year,
If Changed From Last Report)
Indicate by check mark whether the
Registrant (1) has filed all reports
required to be filed by Section 13
or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12
months (or for such shorter period
that the Registrant was required to
file such reports) and (2) has been
subject to such filing requirements
for the past 90 days.
YES__x__ NO
Indicate the number of shares
outstanding of each of the Issuer's
classes of common stock, as of the
latest practicable date.
Common Stock, $.01 par value 90,823,878
Class Outstanding March 31, 1995
<PAGE>
WORTHINGTON INDUSTRIES, INC.
INDEX
Page
PART I. Financial Information
Consolidated Condensed Balance Sheets -
February 28, 1995 and May 31, 1994 3
Consolidated Condensed Statements of Earnings -
Three and Nine Months Ended February 28, 1995 and 1994 4
Consolidated Condensed Statements of Cash Flows -
Nine Months Ended February 28, 1995 and 1994 5
Notes to Consolidated Condensed Financial Statements 6
Management's Discussion and Analysis of
Results of Operations and Financial Condition 7
PART II. Other Information 10
<PAGE>
PART I. FINANCIAL INFORMATION
WORTHINGTON INDUSTRIES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Thousands, Except Per Share)
February 28 May 31
1995 1994
ASSETS (Unaudited)(Audited)
Current Assets
Cash and cash equivalents $7,148 $13,275
Accounts receivable - net 207,673 189,741
Raw materials 149,984 125,243
Work in process and finished products 67,716 59,639
Inventories 217,700 184,882
Prepaid expenses and other current assets 28,026 25,218
Total Current Assets 460,547 413,116
Investment in Unconsolidated Affiliates 84,493 51,961
Other Assets 27,784 25,935
Property, plant and equipment 587,801 531,549
Less accumulated depreciation 249,117 223,988
Property, Plant and Equipment - net 338,684 307,561
Total Assets $911,508 $798,573
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $104,733 $97,699
Notes payable 48,700 10,000
Accrued compensation, contributions to
employee benefit plans and related taxes 38,114 37,578
Dividends payable 9,079 9,056
Other accrued items 10,359 10,089
Income taxes 12,113 14,607
Current maturities of long-term debt 774 1,490
Total Current Liabilities 223,872 180,519
Accrued Pension Cost 571 792
Long-Term Debt 53,081 54,136
Deferred Income Taxes 70,369 59,233
Shareholders' Equity
Common shares, $.01 par value 908 906
Additional paid-in capital 101,317 96,427
Minimum pension liability
of unconsolidated affiliate (1,987) (1,674)
Retained earnings 463,377 408,234
Total Shareholders' Equity 563,615 503,893
Total Liabilities and Shareholders' Equity $911,508 $798,573
See notes to consolidated condensed financial statements.
<PAGE>
WORTHINGTON INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(In Thousands Except Per Share)
(Unaudited)
Three Months Ended Nine Months Ended
February 28 February 28
1995 1994 1995 1994
Net sales $370,117 $323,130 $1,079,650 $908,914
Cost of goods sold 309,725 274,951 909,118 773,615
Gross Margin 60,392 48,179 170,532 135,299
Selling, general and
admin. expense 23,117 18,299 63,144 51,881
Operating Income 37,275 29,880 107,388 83,418
Other income (expense):
Misc. income, net 185 248 314 609
Interest expense (1,530) (697) (4,304) (2,076)
Equity in net income of
un-consolidated affiliates 9,910 1,862 28,382 12,639
Earnings Before
Income Taxes 45,840 31,293 131,780 94,590
Income taxes 17,189 11,553 49,417 35,540
Net Earnings $28,651 $19,740 $82,363 $59,050
Average Common
Shares Outstanding 90,772 90,473 90,700 90,324
Earnings Per
Common Share $.32 $.22 $.91 $.65
Cash Dividends Declared
Per Common Share $.10 $.09 $.30 $.27
See notes to consolidated condensed financial statements.
<PAGE>
WORTHINGTON INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In Thousands, Unaudited)
Nine Months Ended
February 28
1995 1994
Operating Activities
Net earnings $82,363 $59,050
Adjustments to reconcile net earnings to
net cash provided (used) by operating activities:
Depreciation 25,998 24,568
Equity in undistributed net income of
unconsolidated affiliates (28,022) (12,639)
Provision for deferred income taxes 9,539 8,788
Changes in assets and liabilities:
Decrease (increase) in:
Short-term investments -- 766
Accounts receivable (17,932) (1,949)
Inventories (32,818) (7,770)
Prepaid expenses and other currents assets (2,484) (6,066)
Other assets (1,849) (4,352)
Increase (decrease) in:
Accounts payable and accrued expenses 5,075 (3,851)
Accrued pension cost (221) 40
Net Cash Provided By Operating Activities 39,649 56,585
Investing Activities
Investment in property, plant and equipment, net (57,121) (36,647)
Investment in unconsolidated affiliates (1,157) --
Net Cash Used By Investing Activities (58,278) (36,647)
Financing Activities
Net proceeds from short-term borrowings 38,700 6,000
Principal payments on long-term debt (1,771) (1,051)
Proceeds from issuance of common shares 2,770 3,531
Repurchase of common shares -- (27)
Dividends paid (27,197) (24,105)
Net Cash Provided (Used) By Financing Activities 12,502 (15,652)
Increase (decrease) in cash and cash equivalents (6,127) 4,286
Cash and cash equivalents at beginning of period 13,275 16,691
Cash and cash equivalents at end of period $7,148 $20,977
See notes to consolidated condensed financial statements.
<PAGE>
WORTHINGTON INDUSTRIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note A - Management's Opinion
In the opinion of management, the accompanying
unaudited consolidated condensed financial statements
contain all adjustments (consisting of a normal recurring
nature) necessary to present fairly the financial position
of Worthington Industries, Inc. and Subsidiaries (the
Company) as of February 28, 1995 and May 31, 1994; the
results of operations for the three and nine months ended
February 28, 1995 and 1994; and the cash flows for the nine
months then ended.
The accounting policies followed by the Company are set
forth in Note A to the consolidated financial statements in
the 1994 Worthington Industries, Inc. Annual Report to
Shareholders which is incorporated by reference in the
Company's 1994 Form 10-K.
Note B - Income Taxes
The income tax rate is based on statutory federal and
state rates, and an estimate of annual earnings adjusted for
the permanent differences between reported earnings and
taxable income.
Note C - Earnings Per Share
Earnings per common share for the three and nine
months ended February 28, 1995 and 1994 are based on the
weighted average common shares outstanding during each of
the respective periods.
Note D - Results of Operations
The results of operations for the three and nine months
ended February 28, 1995 and 1994 are not necessarily
indicative of the results to be expected for the full year.
<PAGE>
WORTHINGTON INDUSTRIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
The Company achieved record sales and earnings for the
three and nine month periods ended February 28, 1995,
marking its eighth consecutive quarter for record results.
Net sales of $370.1 million were 15% better than last
year's third quarter. Net earnings of $28.7 million and
earnings per share of $.32 increased 45%. This was the most
profitable quarter in the Company's history.
For the nine months, net sales reached $1.08 billion,
19% higher than in the previous year. Net earnings of $82.4
million and earnings per share of $.91 were 39% and 40%
higher, respectively. Net earnings are within 3% of full
year 1994 earnings.
All business segments contributed to the record results
with each posting historical bests. The sales increase
includes both higher volumes, due to continued strong demand
and order activity, and higher selling prices. Gross
margin has improved 25% for the quarter and 26% for the nine
months, outpacing the growth in sales, as operating
efficiencies continue to improve and selling prices have
increased more than costs. Last year's gross margin was
hurt by start-up inefficiencies on several new jobs in
custom plastics and a lag in the time raw material cost
increases were passed on to customers. Gross margin as a
percentage of sales for the quarter was 16.3% and has
increased every quarter since November 1993. Selling,
general and administrative expense increased 26% for the
quarter and 22% year-to-date. These percentages exceeded the
percentage sales increase because of higher profit sharing
expense from the record profits. Operating income improved
25% for the quarter and 29% year-to-date. As a percentage
of sales, operating income rose to 10.1% from 9.2% for the
quarter and to 9.9% from 9.2% for the nine months.
Interest expense increased $2.2 million for the nine
months as the average interest rate rose to 5.9% from 3.6%
and average debt outstanding has increased. Average debt
<PAGE>
rose because of increased short-term borrowings to support
higher levels of working capital and capital expenditures.
Equity in net income of unconsolidated affiliates was
up $8.0 million for the quarter and $15.7 million for the
nine months. Equity from Rouge Steel remains the largest
contributor as industry demand and selling prices for steel
continued to be very favorable.
Income taxes increased in line with pre-tax earnings
for the nine month periods as the effective tax rate for
both periods was approximately 37.5%.
The processed steel products segment posted increases
in sales and earnings for the quarter and year-to-date
periods. Operating margins remained at high levels and
compared favorably to last year's third quarter which
suffered somewhat due to weather related problems. Sales
and earnings for the steel processing operations continued
to rise due to higher volume from increased demand and new
customers, and increased selling prices. Pressure cylinder's
results were also up for both periods as growth continued in
most product lines. Demand remained above last year and
selling prices increased to reflect higher material costs.
The custom products segment increased sales and
earnings for both periods. The plastics operation
benefited from new business and from high demand for the
many car models in which it participates. In addition,
operating efficiencies have improved on newer jobs which
were in the start-up phase during last year's first nine
months. Results for this year include non-automotive sales
from the new plant in St. Matthews, South Carolina which was
in the start-up mode last year. The new facility in
Lebanon, Kentucky was opened during the quarter. Precision
metals, despite experiencing some production problems during
the quarter, has increased sales and earnings significantly
for the nine months, due to strong automotive production and
productivity improvements.
The cast products segment continued its strong
performance, setting sales and earnings records for both
periods. Strong demand for freight railcars continued and
<PAGE>
order backlogs are expected to remain high for the
foreseeable future. Last year's nine months was impacted by
a temporary decrease in demand for railcars due to the
Midwest flooding.
LIQUIDITY AND CAPITAL RESOURCES
At February 28, 1995, the Company's current ratio was
2.1:1, down from 2.3:1 at May 31, 1994 because of increased
short-term debt. Long-term debt remained low at 9% of
total capital. Working capital was $236.7 million , 42% of
the Company's total net worth, down from 46% at fiscal 1994
year-end.
During the nine months, the Company's cash position
decreased by $6.1 million and short-term borrowings of $38.7
million were used to help fund cash needs. Record profits
led to cash provided by operations of $39.6 million, despite
a $32.8 million increase in inventories and a $17.9 million
increase in accounts receivable. The inventory increase
occurred largely in the processed steel products segment,
reflecting higher steel costs and increased tonnage to
support the higher sales and to hedge anticipated mill price
increases. Forecasted days sales in inventory for the
Company has decreased since fiscal year-end. The increase
in accounts receivable reflects the sales increase and the
Company anticipates further investment in accounts
receivable due to the recent selling price increases and the
upcoming fourth quarter sales volume; however, days sales
outstanding should remain constant. Capital expenditures
were $57.1 million and dividends paid were $27.2 million.
The Company expects its operating results and cash from
normal operating activities to improve during the remainder
of the year. However, as in the first nine months of the
year, borrowings may be needed to support the increasing
sales volume and anticipated capital expenditures. The
Company has $40 million in committed, unsecured, short-term
lines of credit available at rates below the prime rate, of
which $35 million was unused at February 28, 1995. Immediate
borrowing capacity plus cash generated from operations
should be more than sufficient to fund expected normal
<PAGE>
operating cash needs, dividends, debt payments and capital
expenditures for existing businesses.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
A. Exhibits - None
B. Reports on Form 8-K. There were no reports on Form 8-K
during the three months ended February 28, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
WORTHINGTON INDUSTRIES, INC.
Date: April 12, 1995 By:/s/Donald G. Barger, Jr.
Donald G. Barger, Jr.
Vice President-
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE QUARTERLY REPORT UNDER SECTION 13 OR
15(d) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
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<FISCAL-YEAR-END> MAY-31-1995
<PERIOD-START> JUN-01-1994
<PERIOD-END> FEB-28-1995
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<RECEIVABLES> 210,204
<ALLOWANCES> 2,531
<INVENTORY> 217,700
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<PP&E> 587,801
<DEPRECIATION> 249,117
<TOTAL-ASSETS> 911,508
<CURRENT-LIABILITIES> 223,872
<BONDS> 53,081
<COMMON> 908
0
0
<OTHER-SE> 562,707
<TOTAL-LIABILITY-AND-EQUITY> 911,508
<SALES> 1,079,650
<TOTAL-REVENUES> 1,079,650
<CGS> 909,118
<TOTAL-COSTS> 909,118
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