UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10 - Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended: November 30, 1995 Commission File No. 0-4016
WORTHINGTON INDUSTRIES, INC.
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(Exact name of Registrant as specified in its Charter)
DELAWARE 31-1189815
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(State of Incorporation) (I.R.S. Employer Identification No.)
1205 DEARBORN DRIVE, COLUMBUS, OHIO 43085
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(Address of Principal Executive Offices) (Zip Code)
(614) 438-3210
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(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 90,779,668
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Class Outstanding December 31, 1995
<PAGE>
WORTHINGTON INDUSTRIES, INC.
INDEX
PAGE
PART I. FINANCIAL INFORMATION
Consolidated Condensed Balance Sheets -
November 30, 1995 and May 31, 1995.................................3
Consolidated Condensed Statements of Earnings -
Three and Six Months Ended November 30, 1995 and 1994 .............4
Consolidated Condensed Statements of Cash Flows -
Six Months Ended November 30, 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)
November 30 May 31
1995 1995
------------- ---------
ASSETS (Unaudited) (Audited)
CURRENT ASSETS
Cash and cash equivalents ...................... $ 14,856 $ 2,003
Accounts receivable - net ...................... 185,223 216,443
Raw materials ................................. 117,230 142,738
Work in process and finished products ......... 57,589 58,140
--------- ---------
Inventories .................................... 174,819 200,878
Prepaid expenses and other current assets ...... 37,183 32,578
--------- ---------
TOTAL CURRENT ASSETS .......................... 412,081 451,902
Investment in Unconsolidated Affiliates .......... 131,966 104,764
Other Assets ..................................... 24,017 25,381
Property, plant and equipment .................... 633,140 589,286
Less accumulated depreciation .................... 271,428 254,369
--------- ---------
Property, Plant and Equipment - net ........... 361,712 334,917
--------- ---------
TOTAL ASSETS .................................. $ 929,776 $ 916,964
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable ............................... $ 81,617 $ 87,329
Notes payable .................................. 38,200
Accrued compensation, contributions to
employee benefit plans and related taxes ...... 26,440 31,741
Dividends payable .............................. 9,980 9,992
Other accrued items ............................ 7,688 8,597
Income taxes ................................... 6,159 2,709
Current maturities of long-term debt ........... 660 660
--------- ---------
TOTAL CURRENT LIABILITIES ..................... 132,544 179,228
Other Liabilities ................................ 17,471 18,055
Long-Term Debt ................................... 83,146 53,476
Deferred Income Taxes ............................ 81,636 75,873
Shareholders' Equity
Common shares, $.01 par value .................. 908 908
Additional paid-in capital ..................... 104,280 102,733
Min. pension liability/
foreign currency translation ................ (1,841) (1,017)
Retained earnings ............................. 511,632 487,708
--------- ---------
Total Shareholders' Equity .................... 614,979 590,332
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY .... $ 929,776 $ 916,964
========= =========
See notes to consolidated condensed financial statements.
<PAGE>
<TABLE>
WORTHINGTON INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(In Thousands Except Per Share)
(Unaudited)
Three Months Ended Six Months Ended
November 30 November 30
------------------ --------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales ................... $ 354,544 $ 363,276 $ 680,280 $ 709,533
Cost of goods sold .......... 301,533 305,268 580,264 599,393
--------- --------- --------- ---------
GROSS MARGIN ............... 53,011 58,008 100,016 110,140
Selling, general &
administrative expense .... 21,499 20,536 41,368 40,027
--------- --------- --------- ---------
OPERATING INCOME ........... 31,512 37,472 58,648 70,113
Other income (expense):
Miscellaneous income
(expense) ............... 139 (138) 386 129
Interest expense ......... (1,234) (1,580) (2,641) (2,774)
Equity in net income of
unconsolidated
affiliates ............ 11,442 9,469 19,878 18,472
--------- --------- --------- ---------
EARNINGS BEFORE INCOME TAXES 41,859 45,223 76,271 85,940
Income taxes ................ 15,671 16,959 28,575 32,228
--------- --------- --------- ---------
NET EARNINGS ............... $ 26,188 $ 28,264 $ 47,696 $ 53,712
========= ========= ========= =========
AVERAGE COMMON SHARES
OUTSTANDING .............. 90,748 90,709 90,817 90,665
EARNINGS PER COMMON SHARE ... $ .29 $ .31 $ .53 $ .59
--------- --------- --------- ---------
CASH DIVIDENDS DECLARED
PER COMMON SHARE ....... $ .11 $ .10 $ .22 $ .20
--------- --------- --------- ---------
</TABLE>
See notes to consolidated condensed financial statements.
<PAGE>
WORTHINGTON INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In Thousands, Unaudited)
Six Months Ended
November 30
----------------
1995 1994
---- ----
OPERATING ACTIVITIES
Net earnings ......................................... $ 47,696 $ 53,712
Adjustments to reconcile net
earnings to net cash provided
(used) by operating activities:
Depreciation ....................................... 18,482 17,259
Provision for deferred income taxes ................ 5,763 6,621
Equity in undistributed net income of
unconsolidated affiliates ........................ (19,576) (18,232)
Changes in assets and liabilities:
Accounts receivable ............................ 31,220 (1,035)
Inventories .................................... 26,059 (28,230)
Prepaid expenses and other current assets ...... (4,604) (1,691)
Other assets ................................... 1,364 280
Accounts payable and accrued expenses .......... (8,472) (103)
Other liabilities .............................. (584) (238)
-------- --------
Net Cash Provided (Used) By Operating Activities ... 97,348 28,343
INVESTING ACTIVITIES
Investment in property, plant and equipment, net ..... (45,277) (36,397)
Investment in unconsolidated affiliates .............. (8,290) --
-------- --------
Net Cash Used By Investing Activities .............. (53,567) (36,397)
FINANCING ACTIVITIES
Proceeds from (payments on) short-term borrowings .... (38,200) 16,000
Proceeds from long-term debt ......................... 43,000 --
Principal payments on long-term debt ................. (13,330) (591)
Proceeds from issuance of common shares .............. 1,618 2,013
Repurchase of common shares .......................... (4,024) --
Dividends paid ....................................... (19,992) (18,123)
-------- --------
Net Cash Provided (Used) By Financing Activities ... (30,928) (701)
-------- --------
Increase (decrease) in cash and cash equivalents ....... 12,853 (8,755)
Cash and cash equivalents at beginning of period ....... 2,003 13,275
-------- --------
Cash and cash equivalents at end of period ............. $ 14,856 $ 4,520
======== ========
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 November 30,
1995 and May 31, 1995; the results of operations for the three and six months
ended November 30, 1995 and 1994; and the cash flows for the six months then
ended.
The accounting policies followed by the Company are set forth in Note A
to the consolidated financial statements in the 1995 Worthington Industries,
Inc. Annual Report to Shareholders which is incorporated by reference in the
Company's 1995 Form 10-K.
NOTE B - INCOME TAXES
The income tax rate is based on statutory federal and state rates, and an
estimate of annual earnings adjusted for the permanent differences between
reported earnings and taxable income.
NOTE C - EARNINGS PER SHARE
Earnings per common share for the three and six months ended November 30,
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 six months ended November 30,
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
For the three months ended November 30, 1995, net sales of $354.5 million
were 2% lower and net earnings of $26.2 million and earnings per share of $.29
were 7% and 6%, respectively, lower than the results from last year's second
quarter.
For the first six months of fiscal 1996, net sales were $680.3 million,
4% below those of the same period last year. Net earnings of $47.7 million and
earnings per share of $.53 were off 11% and 10%, respectively, from the first
half of last year.
Demand in most of the Company's markets softened this year from a strong
fiscal 1995. The Company started to see improved market demand for its
products in the second quarter, but results still reflect lower volume and
prices from last year. Results for the second quarter and first six months of
fiscal 1995 were driven principally by volume and selling price increases.
Gross margin was down 9% for both the quarter and the six months. This
was greater than the sales shortfall, primarily due to the soft selling price
environment and the working down of more expensive inventory. Last year's
gross margin outpaced the growth in sales due to higher operating efficiencies
and selling price increases. Gross margin as a percentage of sales for the
quarter was 15.0% compared to 16.0% last year and for the six months, 14.7%
compared to 15.5%.
Selling, general and administrative expense increased 5% for the quarter
and 3% for the six months due to the inclusion of expenses for new operations
offset by lower profit-sharing. Last year's expense was driven by higher
profit sharing. As a percent of sales, this expense for the quarter was 6.1%
compared to 5.7% last year and for the six months was 6.1% compared to 5.6%.
Operating income was 16% lower for the quarter and six month periods. As a
percentage of sales, operating income decreased to 8.9% from 10.3% for the
quarter and to 8.6% from 9.9% for the six months.
Interest expense decreased 22% for the three months and 5% for the six
months. The average interest rate rose to 6.7% from 5.6% and average debt
outstanding increased offset by $1,010,000 of capitalized interest for the six
months. Average debt rose because of increased borrowings to support capital
expenditures.
Equity in net income of unconsolidated affiliates was up 21% for the
quarter. Equity from Rouge Steel was up as a one time gain more than offset
decreased operating earnings caused by lower industry demand and selling
prices. Equity from Worthington Armstrong Venture was up significantly on
increased volume in both the U.S. and Europe. This venture's French facility
is expanding to meet demand and the new Las Vegas plant is in startup. The
Acerex joint venture in Mexico started production in October and is shipping
within Mexico and into the southwest U.S.
Income taxes decreased in line with pre-tax earnings for both the three
and six month periods as the effective tax rate for both years was 37.5%.
The processed steel products segment saw decreases in sales and earnings
for the second quarter and the first six months. Steel processing shipments,
although improved from the first quarter, were below those of last year
mainly due to lower automotive demand. Operating margins also remain lower due
to the reduced volume and lower selling prices. Pressure cylinder's sales for
the quarter were up, but results for the six months were below last year as
increased demand for heating tanks did not fully offset lower shipments of
refrigerant cylinders. Pressure cylinders had realized growth in most product
lines in the prior year.
Sales for the custom products segment were up for both the second quarter
and six months; however, earnings were lower for both periods. The plastics
operation increased sales and earnings as it continued to perform well despite
overall lower industry automotive demand due to new automotive and appliance
contracts. Volume from new jobs increased sales for precision metals above
last year for both periods, but profits are lower due to inefficiencies caused
by startups and specification changes on certain parts.
The cast products segment results were down slightly for the quarter as
demand has leveled somewhat from last year. This segment continues to perform
well as sales and earnings remain above last year's strong six month numbers.
Last year's results benefited from very strong railcar demand and high
production levels.
LIQUIDITY AND CAPITAL RESOURCES
At November 30, 1995, the Company's current ratio was 3.1:1, up from
2.5:1 at May 31, 1995, as $30 million of short-term debt was replaced with
long-term debt. Long-term debt increased to 10.7% from 7.4% of total capital
(defined as long-term debt, deferred taxes and shareholders' equity.) Working
capital was $279.5 million, 45% of the Company's total net worth, down from
46% at May 31, 1995.
During the six months, the Company's cash position increased by $12.9
million. Cash provided by operating activities was $97.3 million, aided by a
$26.1 million decrease in inventories and a $31.2 million decrease in accounts
receivable, which occurred in part because of lower raw material costs and
lower sales volume and prices. Days sales in accounts receivable was down 3
days from fiscal year-end and days of inventory was down modestly. Capital
expenditures and investments in affiliates totaled $53.6 million and dividends
paid were $20 million.
The Company expects its operating results to improve during the year;
however, borrowings may be needed to support anticipated capital expenditures.
The Company has a $150 million committed, revolving credit agreement, of which
$80 million was unused at November 30, 1995. Immediate borrowing capacity plus
cash generated from operations should be more than sufficient to fund expected
normal operating cash needs, dividends, debt payments and capital expenditures
for existing businesses.
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Registrant's Annual Meeting of Shareholders was held on September 21,
1995. In connection with the meeting, proxies were solicited. Following are
the voting results on proposals considered and voted upon.
1. All nominees for Class of Directors whose term expires in 1998 were
elected by the stockholders who were present or represented by proxy.
Votes for Votes
the Election Withholding Shares
of Director Authority to Vote Not Voted
____________ _________________ _________
Robert J. Klein 76,152,495 65,984 -0-
Katherine LeVeque 76,092,427 126,052 -0-
John P. McConnell 76,155,495 62,984 -0-
Robert B. McCurry 76,114,912 103,567 -0-
Gerald B. Mitchell 76,133,988 84,491 -0-
2. The appointment of Ernst & Young LLP as the Registrant's independent
auditors for the year ending May 31, 1996 was ratified by a majority of
the votes entitled to be cast by the stockholders who were present or
represented by proxy.
FOR: 75,978,256 AGAINST: 65,520 ABSTAIN: 174,703 NOT VOTED: -0-
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
A. Exhibits - Exhibit 27 Financial Data Schedule
B. Reports on Form 8-K. There were no reports on Form 8-K during the three
months ended November 30, 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: January 12, 1996 By: /S/DONALD G. BARGER, JR.
______________________________
Donald G. Barger, Jr.
Vice President-Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> JUN-01-1995
<PERIOD-END> NOV-30-1995
<EXCHANGE-RATE> 1
<CASH> 14,856
<SECURITIES> 0
<RECEIVABLES> 187,927
<ALLOWANCES> 2,704
<INVENTORY> 174,819
<CURRENT-ASSETS> 412,081
<PP&E> 633,140
<DEPRECIATION> 271,428
<TOTAL-ASSETS> 929,776
<CURRENT-LIABILITIES> 132,544
<BONDS> 83,146
<COMMON> 908
0
0
<OTHER-SE> 614,071
<TOTAL-LIABILITY-AND-EQUITY> 929,776
<SALES> 680,280
<TOTAL-REVENUES> 680,280
<CGS> 580,264
<TOTAL-COSTS> 580,264
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,641
<INCOME-PRETAX> 76,271
<INCOME-TAX> 28,575
<INCOME-CONTINUING> 47,696
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 47,696
<EPS-PRIMARY> .53
<EPS-DILUTED> .53
</TABLE>
