FORM 8-K/A
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT TO APPLICATION OR REPORT
Filed pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
WORTHINGTON INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
AMENDMENT NO. 1
The undersigned Registrant hereby amends the following items, financial
statements, exhibits or other portions of its Current Report on Form 8-K filed
February 20, 1996, as set forth in the pages attached hereto:
Item 7: (a), (b) and (c)
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this amendment to be signed on its behalf by the
undersigned, hereby duly authorized.
WORTHINGTON INDUSTRIES, INC.,
Registrant
By: /s/Donald G. Barger, Jr.
___________________________________
Donald G. Barger, Jr.
Chief Financial Officer
Dated: 4-19-96
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WORTHINGTON INDUSTRIES, INC.
INDEX
ITEM 7 FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements - Dietrich Industries, Inc. and Subsidiaries...3
Independent Auditors' Report..................................4
Consolidated Balance Sheet as of December 31, 1995............5
Consolidated Statement of Income and Retained
Earnings - Year Ended December 31, 1995.......................6
Consolidated Statement of Cash Flows -
Year Ended December 31, 1995..................................7
Notes to Consolidated Financial Statements....................8
(b) Unaudited Pro Forma Financial Information -
Worthington Industries, Inc.........................................12
Pro Forma Condensed Consolidated
Statement of Earnings - Year Ended May 31, 1995...............13
Pro Forma Condensed Consolidated
Statement of Earnings - Nine months
Ended February 29, 1996.......................................14
Notes to Pro Forma Condensed Consolidated
Financial Statements..........................................15
(c) Exhibits
Exhibit 23 -
Consent of Deloitte & Touche LLP....................................16
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DIETRICH INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Financial Statements for the
Year Ended December 31, 1995, and
Independent Auditors' Report
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INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholder of
Dietrich Industries, Inc.:
We have audited the accompanying consolidated balance sheet of Dietrich
Industries, Inc. and subsidiaries as of December 31, 1995, and the related
consolidated statements of income and retained earnings and cash flows for the
year then ended. 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 audit.
We conducted our audit 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 audit provides a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Dietrich Industries, Inc. and
subsidiaries as of December 31, 1995, and the results of their operations and
their cash flows for the year then ended in conformity with generally accepted
accounting principles.
/s/Deloitte & Touche LLP
Deloitte & Touche LLP
Pittsburgh, Pennsylvania
February 5, 1996
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<TABLE>
DIETRICH INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1995
- ---------------------------------------------------------------------------------------------------------------
ASSETS LIABILITIES AND STOCKHOLDER'S EQUITY
<S> <C> <C> <C>
CURRENT ASSETS: CURRENT LIABILITIES:
Cash and cash equivalents $ 6,545,805 Accounts payable $ 12,186,699
Accounts receivable: Accrued payroll 1,051,805
Trade (less allowance for doubtful Accrued vacation and holiday pay 1,593,143
accounts of $750,000) 21,757,383 Accrued real estate and property taxes 1,712,004
Other 290,952 Accrued workers' compensation 1,984,304
Inventories 20,566,547 Other accrued expenses 2,760,022
Other 206,662 Current portion of long-term debt 875,583
------- -----------
Total current assets 49,367,349 Total current liabilities 22,163,560
---------- -----------
LONG-TERM DEBT - Less current portion
(see Note 5) 37,175,771
LIABILITY UNDER STOCK APPRECIATION
PROPERTY, PLANT AND EQUIPMENT - At cost: RIGHTS PLAN 2,475,541
Land 1,438,176
Buildings and improvements 22,095,916 OTHER LIABILITIES 336,082
Warehouse and factory equipment 103,621,627
Vehicles 3,495,385 COMMITMENTS AND CONTINGENCIES
Office equipment and furniture 2,525,604
---------
STOCKHOLDER'S EQUITY:
133,176,708 Common stock, par value $.25 per share;
Less accumulated depreciation 84,623,645 authorized, 5,000,000 shares; issued
------------ and outstanding, 4,054,016 shares 1,013,504
48,553,063 Retained earnings 34,854,754
------------ ------------
OTHER ASSETS 98,800 35,868,258
------------ ------------
$ 98,019,212 $ 98,019,212
============ ============
</TABLE>
See notes to consolidated financial statements.
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DIETRICH INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
YEAR ENDED DECEMBER 31, 1995
- --------------------------------------------------------------------------------
NET SALES .................................................... $ 281,421,215
COST OF SALES (Exclusive of Depreciation
Shown Separately Below) .................................. 237,500,571
-------------
43,920,644
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ................. 19,515,349
DEPRECIATION EXPENSE ......................................... 10,851,536
-------------
OPERATING INCOME ............................................. 13,553,759
INTEREST EXPENSE ............................................. 1,014,016
-------------
NET INCOME ................................................... 12,539,743
RETAINED EARNINGS, BEGINNING OF YEAR ......................... 62,019,002
STOCKHOLDER DISTRIBUTION ..................................... (39,703,991)
-------------
RETAINED EARNINGS, END OF YEAR ............................... $ 34,854,754
=============
NET INCOME PER SHARE ......................................... $ 3.09
=============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING ................... 4,054,016
=============
See notes to consolidated financial statements.
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DIETRICH INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1995
- --------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ..................................................... $ 12,539,743
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation expense ......................................... 10,851,536
Net loss on disposals of property, plant and equipment ....... 163,469
Decrease in accounts receivable .............................. 1,816,847
Increase in inventories ...................................... (2,077,385)
Increase in other assets ..................................... (18,422)
Decrease in accounts payable ................................. (761,821)
Increase in accrued payroll .................................. 249,039
Decrease in accrued vacation and holiday pay ................. (50,296)
Decrease in accrued real estate and property taxes ........... (26,125)
Increase in accrued workers' compensation .................... 795,897
Decrease in other accrued expenses ........................... (167,262)
Decrease in liability under stock appreciation rights plan ... (173,850)
--------
Net cash provided by operating activities ................. 23,141,370
----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment ................. (10,212,628)
Proceeds from sale of property, plant and equipment .......... 300,000
-------
Net cash used in investing activities ..................... (9,912,628)
----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt ................................. 25,000,000
Repayment of long-term debt .................................. (3,200,718)
Stockholder distribution ..................................... (39,703,991)
-----------
Net cash used in financing activities ..................... (17,904,709)
-----------
NET DECREASE IN CASH AND CASH EQUIVALENTS ...................... (4,675,967)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR ................... 11,221,772
----------
CASH AND CASH EQUIVALENTS, END OF YEAR ......................... $ 6,545,805
============
See notes to consolidated financial statements.
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DIETRICH INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1995
- --------------------------------------------------------------------------------
1. CHANGE IN OWNERSHIP
On January 1, 1996, Dietrich Industries, Inc.'s (the "Company") sole
stockholder transferred ownership of all of the issued and outstanding
common stock of the Company to a charitable remainder annuity trust (the
"Trust").
On February 5, 1996, the Trust sold all issued and outstanding stock
of the Company to Worthington Acquisition Corp. ("WAC"), a wholly-owned
subsidiary of Worthington Industries, Inc. ("Worthington"), for
approximately $146 million.
On February 5, 1996, WAC arranged for a $177.25 million unsecured
note payable to Worthington. WAC used the proceeds to finance the
acquisition and to repay $31.25 million outstanding as of February 5,
1996 under the Company's revolving credit and term loan agreement (see
Note 5).
Upon consummation of these transactions, WAC merged with and into
the Company with the Company being the surviving corporation.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Business Segment Information - The Company is a manufacturer of
metal framing products used in the United States construction
industry. During 1995, approximately 14 percent of the Company's
gross sales was derived from a single customer.
b. Basis of Consolidation - The consolidated financial statements
include the accounts of the Company and its subsidiaries. All
significant intercompany transactions and balances are eliminated.
c. Inventories - Inventories are valued at the lower of cost,
determined using the last-in, first-out method (LIFO), or market.
d. Depreciation - Depreciation for financial reporting purposes is
computed on a straight-line basis.
e. Tax Status - The Company, at December 31, 1995, was a Subchapter S
corporation for federal income tax purposes. Under Subchapter S of
the Internal Revenue Code the stockholder, rather than the Company,
has the responsibility for federal income taxes and for state income
taxes in those states that recognize Subchapter S status. As a
result of the transfer of the Company's issued and outstanding
common stock to the Trust (see Note 1), the Company's Subchapter S
status was by law terminated effective January 1, 1996. As a result,
on January 1, 1996, the Company has applied the provisions of
Statement of Financial Accounting Standards ("SFAS") No. 109,
"Accounting for Income Taxes," and provided deferred income taxes
for differences in the basis for tax purposes and the basis for
financial accounting purposes of recorded assets and liabilities,
principally, depreciable property, the allowance for bad debts,
inventory, and certain liabilities for employee-related expenses. A
net deferred income tax liability of approximately $3.2 million
would have been recorded at December 31, 1995 had the Company's tax
status changed as of that date.
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f. Statement of Cash Flows - For purposes of the statement of cash
flows, the Company considers tax-exempt bonds with a seven-day put
at par value, and money market investments to be cash equivalents.
g. Recoverability of Long-Lived Assets - The Company assesses the
recoverability of long-lived assets by determining whether the
depreciation of the assets over their remaining lives can be
recovered through undiscounted future operating cash flows of the
Company. The amount of the impairment, if any, is measured based on
discounted projected future operating cash flows using a discount
rate reflecting the Company's average cost of funds.
h. Use of Estimates in the Preparation of Financial Statements - The
preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
3. INVENTORIES
Inventories consist of the following:
Raw materials ................................. $18,823,905
Work-in-process ............................... 16,306,826
Finished goods ................................ 6,993,532
-----------
42,124,263
Less LIFO reserve ............................. 21,557,716
-----------
$20,566,547
============
1995 net income was increased by approximately $430,000 as a result of
liquidations of LIFO inventory layers.
4. PROVISION FOR DEPRECIATION
Depreciation of plant and equipment is computed based on the following
estimated service lives:
Years
-------
Buildings and improvements .................... 15-40
Warehouse and factory equipment ............... 3-10
Vehicles ...................................... 5-7
Office equipment and furniture ................ 5-7
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5. LONG-TERM DEBT
Long-term debt consists of the following:
Revolving credit agreement borrowings, unsecured,
6.70%, due 1999 .......................................... $25,000,000
Unsecured term loan, 6.72%, due 1999 ...................... 11,250,000
Mortgage note, 5.50%, due 1997 ............................ 1,440,000
Other ..................................................... 361,354
-----------
38,051,354
Less current portion ...................................... 875,583
-----------
$37,175,771
===========
On February 5, 1996, the Company repaid $5 million of the unsecured term
loan. Concurrently, the Company used proceeds of a note payable to
Worthington (see Note 1) to repay the remaining balance outstanding of
$31.25 million under the unsecured term loan and revolving credit
agreement. The terms of the note payable to Worthington are based on the
terms of borrowings of a like amount by Worthington from a group of
banks. The entire balance of the borrowings by Worthington is due
November 1, 1996. At Worthington's option, the amount outstanding under
the note bears interest at (i) the greater of the Federal Funds Rate plus
.5% or the prime rate or (ii) LIBOR plus .2% to .325% based on certain
financial ratios. Interest is payable quarterly. Borrowings under the
revolving credit and term loan agreement bore interest, at the Company's
option, at the prime rate, the certificate of deposit rate plus .625% to
1.25%, Euro-Rate plus .5% to 1% or the As Offered Rate. Total interest
paid on all debt during 1995 was approximately $948,000.
The combined aggregate amount of maturities of all long-term borrowings
existing at December 31, 1995 considering the effects of the repayments
in February 1996 discussed above, are as follows: 1996 - $37,125,583 and
1997 - $925,771.
6. OPERATING LEASES
The Company leases certain manufacturing facilities and office space
under noncancelable lease agreements. The lease periods range from 5 to
10 years and all leases contain renewal options. Total expense under
these lease agreements was $1,164,545 in 1995.
The future minimum lease payments for all noncancelable operating leases
are as follows: 1996 - $1,077,824; 1997 - $1,033,961; 1998 - $833,242;
1999 - $567,629; 2000 - $389,436; thereafter - $1,380,659.
7. STOCK APPRECIATION RIGHTS PLAN
The Company maintains a Stock Appreciation Rights Plan which provides
deferred compensation benefits to certain key employees. On December 31,
1995, the stock appreciation rights were held by 63 employees. The values
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assigned to the rights at the dates of grant ranged from $3.85 to $20.797
per share. During 1995, 9,800 rights were granted, 3,500 rights were
canceled, and 51,100 rights were exercised at $20.797 per share. At
December 31, 1995 the number of stock appreciation rights vested was
102,332.
Under the provisions of APB No. 25, the Company expenses the increase in
the value of the stock appreciation rights resulting from changes in the
Adjusted Book Value (as defined in the plan document) of its common
stock. Total expense for the year ended December 31, 1995 was not
material.
As a result of the sale of the Company's stock discussed in Note 1, all
rights became fully vested and all holders, to receive cash for their
rights, must exercise their rights within 90 days of the date of the sale
by notifying the Company. At the date of the sale there were 153,132
stock appreciation rights outstanding with a fair value of $48.86 per
right. The estimated total cash payment that would be due to holders of
rights upon their exercise is approximately $6,000,000.
8. DEFINED CONTRIBUTION RETIREMENT PLANS
The Company maintains purchased money retirement plans for various
employee groups represented by collective bargaining agreements. Total
expense for the year ended December 31, 1995 was approximately $363,200.
The Company maintains a profit-sharing retirement plan for all of its
salaried employees. Annual contributions to the plan are determined at
the discretion of the Board of Directors. Total expense for the year
ended December 31, 1995 was approximately $743,800.
9. OTHER COMMITMENTS
The Company is required to maintain letters of credit in the aggregate
amount of approximately $4 million under the terms of its workers'
compensation insurance policies. At December 31, 1995, there were no
amounts drawn under these facilities.
* * * * *
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WORTHINGTON INDUSTRIES, INC.
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The following unaudited pro forma condensed consolidated statements of income
for the twelve months ended May 31, 1995 and the nine months ended February
29, 1996 give effect to the purchase by Worthington Industries, Inc. of the
stock of Dietrich Industries, Inc. as if the transaction occurred at the
beginning of each period presented. The pro forma adjustments to the pro forma
condensed consolidated statements of income for the twelve months ended May
31, 1995 and the nine months ended February 29, 1996, assume the transaction
occurred on June 1, 1994 and June 1, 1995, respectively. Actual closing
occurred on February 5, 1996.
The pro forma financial information is based on the historical consolidated
financial statements of Worthington Industries, Inc. and the historical
financial information of Dietrich Industries, Inc. and should be read in
conjunction with such financial statements and accompanying notes. The
purchase method of accounting was used to prepare the pro forma financial
statements using the purchase price established in the stock purchase
agreement and estimated fair values of the net assets. The actual purchase
accounting adjustments to reflect the fair values of the net assets will be
based on management's evaluation, therefore the adjustments that have been
used in the pro forma condensed consolidated financial information are subject
to change pending the final allocation of the purchase price.
In accordance with Regulation S-X Rule 11-02(c)(1), a pro forma condensed
consolidated balance sheet giving effect to the acquisition of the stock of
Dietrich has not been included in this filing, since the transaction has been
reflected in the condensed consolidated balance sheet of Worthington
Industries, Inc. in the Company's quarterly report on Form 10Q for the quarter
ended February 29, 1996.
The pro forma financial information does not purport to be indicative of the
results of operations which would have actually been obtained if the
acquisition had occurred on the dates indicated nor the results of operations
which will be reported in the future.
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<TABLE>
WORTHINGTON INDUSTRIES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
YEAR ENDED MAY 31, 1995
(Unaudited)
(In Thousands, Except Per Share)
Worthington Dietrich Pro Forma
Industries, Inc. Industries, Inc. Adjustment Combined
(A)
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $1,483,569 $285,362 $1,768,931
Cost of goods sold 1,244,633 250,923 $(7,053)(1) 1,488,503
--------- ------- -------- ---------
Gross Margin 238,936 34,439 7,053 280,428
Selling, general &
administrative expense 85,102 19,540 2,149(2) 106,791
------ ------ ----- -------
Operating Income 153,834 14,899 4,904 173,637
Other income (expense):
Miscellaneous income 573 433 1,006
Interest expense (6,036) (995) (10,705)(3) (17,736)
Equity in net income
of unconsolidated
affiliates 38,327 38,327
------ ---------- --------- ------
Earnings Before Income Taxes 186,698 14,337 (5,801) 195,234
Income taxes 70,012 4,763(4) 74,775
------ ---------- -------- -------
Net Earnings $116,686 $14,337 $(10,564) $120,459
======== ========== ========= ========
Average Common Shares Outstanding 90,730 90,730
Earnings Per Common Share $1.29 $1.33
----- -----
</TABLE>
(A) These statements have been adjusted to conform accounting policies
(inventory costing from LIFO to FIFO) and the fiscal year of Dietrich to
that of Worthington.
See accompanying notes to the pro forma condensed consolidated financial
statements.
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WORTHINGTON INDUSTRIES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
NINE MONTHS ENDED FEBRUARY 29, 1996
(Unaudited)
(In Thousands, Except Per Share)
Worthington Dietrich Pro Forma
Industries, Inc. Industries, Inc. Adjustment Combined
(A)
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $1,040,504 $182,977 $1,223,481
Cost of goods sold 886,199 163,274 $(4,089)(1) 1,045,384
------- ------- ------- ----------
Gross Margin 154,305 19,703 4,089 178,097
Selling, general &
administrative expense 65,307 11,034 1,433(2) 77,774
------ ------ ----- ------
Operating Income 88,998 8,669 2,656 100,323
Other income (expense):
Miscellaneous income (expense) 854 (220) 634
Interest expense (4,666) (774) (7,026)(3) (12,466)
Equity in net income of
unconsolidated
affiliates 24,561 24,561
------ ---------- --------- ------
Earnings Before Income Taxes 109,747 7,675 (4,370) 113,052
Income taxes 41,155 2,144(4) 43,299
------ ---------- --------- -------
Net Earnings $68,592 $7,675 $(6,514) $69,753
======= ====== ======== =======
Average Common Shares Outstanding 90,810 90,810
Earnings Per Common Share $.76 $.77
---- ----
</TABLE>
(A) These statements have been adjusted to conform accounting policies
(inventory costing from LIFO to FIFO) and the fiscal year of Dietrich to
that of Worthington.
See accompanying notes to the pro forma condensed consolidated financial
statements.
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WORTHINGTON INDUSTRIES, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) To eliminate historic depreciation expense of Dietrich and record
depreciation on the estimated fair market value of the fixed assets over
extended remaining lives.
(2) To record goodwill amortization on a straight line basis over an
estimated useful life of 40 years.
(3) To eliminate Dietrich's interest expense for debt to be repaid and to
record interest expense at 6.5% on the $180 million borrowed by
Worthington to purchase Dietrich.
(4) To adjust the estimated consolidated effective tax rate.
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EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Worthington Industries, Inc.'s
Registration Statement Nos. 2-80094, 33-38486 and 33-57981 on Forms S-8 and
Registration Statement No. 33-46470 on Form S-3 of our report dated February
5, 1996 on the consolidated financial statements of Dietrich Industries, Inc.
and subsidiaries as of December 31, 1995 and for the year then ended,
appearing in this Amendment No. 1 of our Current Report on Form 8-K/A of
Worthington Industries, Inc.
/s/Deloitte & Touche LLP
Deloitte & Touche LLP
Pittsburgh, Pennsylvania
April 18, 1996
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