<PAGE> 1
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, 1998 Commission File No. 0-4016
WORTHINGTON INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its Charter)
DELAWARE 31-1189815
------------------------------------- -------------------------------------
(State of Incorporation) (I.R.S. 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)
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 96,724,122
------------------------------------- -------------------------------------
Class Outstanding March 31, 1998
Page 1 of 15
<PAGE> 2
WORTHINGTON INDUSTRIES, INC.
INDEX
PAGE
----
PART I. FINANCIAL INFORMATION
Consolidated Condensed Balance Sheets -
February 28, 1998 and May 31, 1997...........................3
Consolidated Condensed Statements of Earnings -
Three and Nine Months Ended February 28, 1998 and 1997.......5
Consolidated Condensed Statements of Cash Flows
Nine Months Ended February 28, 1998 and 1997.................6
Notes to Consolidated Condensed Financial Statements.........7
Management's Discussion and Analysis of
Results of Operations and Financial Condition...............10
PART II. OTHER INFORMATION...............................................15
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
WORTHINGTON INDUSTRIES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Thousands, Except Per Share)
February 28 May 31
1998 1997
----------- ------
(Unaudited) (Audited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 7,147 $ 7,212
Accounts receivable - net 304,466 266,836
Inventories
Raw materials 167,945 187,572
Work in process and finished products 112,854 109,316
---------- ----------
Total Inventories 280,799 296,888
Prepaid expenses and other current assets 31,055 23,192
---------- ----------
TOTAL CURRENT ASSETS 623,467 594,128
Investment in Unconsolidated Affiliates 62,196 57,040
Intangible Assets 96,055 98,132
Other Assets 34,878 32,365
Investment in Rouge 88,494 88,494
Property, plant and equipment 1,229,913 1,036,621
Less accumulated depreciation 371,324 345,594
---------- ----------
Property, Plant and Equipment - net 858,589 691,027
---------- ----------
TOTAL ASSETS $1,763,679 $1,561,186
========== ==========
3
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WORTHINGTON INDUSTRIES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Thousands, Except Per Share)
February 28 May 31
1998 1997
----------- ------
(Unaudited) (Audited)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 159,684 $ 117,910
Notes payable 55,700 50,000
Accrued compensation, contributions to
employee benefit plans and related taxes 38,359 38,058
Dividends payable 12,574 12,572
Other accrued items 23,114 20,244
Income taxes 15,051 2,026
Current maturities of long-term debt 2,038 5,984
---------- ----------
TOTAL CURRENT LIABILITIES 306,520 246,794
Other Liabilities 17,217 18,839
Long-Term Debt:
Conventional long-term debt 422,124 361,899
Debt exchangeable for common stock 88,494 88,494
---------- ----------
Total Long-Term Debt 510,618 450,393
Deferred Income Taxes 131,627 120,765
Minority Interest 35,171 8,877
Shareholders' Equity
Common shares, $.01 par value 968 968
Additional paid-in capital 115,661 114,052
Unrealized loss on investment (5,556) (5,563)
Foreign currency translation (2,497) (1,861)
Retained earnings 653,950 607,922
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 762,526 715,518
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,763,679 $1,561,186
========== ==========
See notes to consolidated condensed financial statements.
4
<PAGE> 5
<TABLE>
WORTHINGTON INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(In Thousands Except Per Share)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
February 28 February 28
----------- -----------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $518,520 $486,551 $1,539,267 $1,375,192
Cost of goods sold 446,557 418,312 1,323,182 1,177,910
-------- -------- ---------- ----------
GROSS MARGIN 71,963 68,239 216,085 197,282
Selling, general & administrative expense 35,748 33,166 105,188 89,723
-------- -------- ---------- ----------
OPERATING INCOME 36,215 35,073 110,897 107,559
Other income (expense):
Miscellaneous income 242 354 719 1,083
Interest expense (5,816) (4,386) (19,470) (11,623)
Equity in net income of unconsolidated
affiliates 4,832 3,525 14,207 9,293
-------- -------- ---------- ----------
EARNINGS BEFORE INCOME TAXES 35,473 34,566 106,353 106,312
Income taxes 13,125 12,749 39,351 39,867
-------- -------- ---------- ----------
EARNINGS BEFORE EXTRAORDINARY ITEM 22,348 21,817 67,002 66,445
EXTRAORDINARY ITEM, NET OF TAXES 18,771 18,771 --
-------- -------- ---------- ----------
NET EARNINGS $ 41,119 $ 21,817 $ 85,773 $ 66,445
======== ======== ========== ==========
AVERAGE COMMON SHARES OUTSTANDING 96,781 96,570 96,768 96,530
EARNINGS PER COMMON SHARE - BASIC & DILUTED
- -------------------------------------------
EARNINGS BEFORE EXTRAORDINARY ITEM $ .23 $ .23 $ .69 $ .69
EXTRAORDINARY ITEM, NET OF TAXES .19 -- .19 --
-------- -------- ---------- ----------
NET EARNINGS $ .42 $ .23 $ .88 $ .69
======== ======== ========== ==========
CASH DIVIDENDS DECLARED
PER COMMON SHARE $ .13 $ .12 $ .39 $ .36
-------- -------- ---------- ----------
</TABLE>
See notes to consolidated condensed financial statements.
5
<PAGE> 6
<TABLE>
WORTHINGTON INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In Thousands, Unaudited)
<CAPTION>
Nine Months Ended
February 28
-----------
1998 1997
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 85,773 $ 66,445
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 45,513 40,209
Deferred income taxes 10,862 (312)
Equity in undistributed net income of unconsolidated affiliates (5,755) (5,141)
Minority interest in net loss of consolidated subsidiary (106)
Extraordinary Gain (29,795)
Changes in assets and liabilities:
Current assets (29,492) (64,696)
Other assets (2,664) (647)
Current liabilities 57,970 (6,348)
Other liabilities (1,622) 1,232
--------- ---------
Net Cash Provided By Operating Activities 130,684 30,742
INVESTING ACTIVITIES
Investment in property, plant and equipment, net (219,728) (124,679)
Acquisitions, net of cash acquired (69,942)
Investment in unconsolidated affiliates (5,424)
Proceeds from property insurance 38,683
--------- ---------
Net Cash Used By Investing Activities (181,045) (200,045)
FINANCING ACTIVITIES
Proceeds from (payments on) short-term borrowings 5,700 142,100
Proceeds from long-term debt 152,829 63,469
Principal payments on long-term debt (96,550) (19,326)
Proceeds from issuance of common shares 1,846 2,156
Proceeds from minority interest 26,400
Repurchase of common shares (2,192) (1,211)
Dividends paid (37,737) (32,702)
--------- ---------
Net Cash Provided By Financing Activities 50,296 154,486
--------- ---------
Decrease in cash and cash equivalents (65) (14,817)
Cash and cash equivalents at beginning of period 7,212 17,580
--------- ---------
Cash and cash equivalents at end of period $ 7,147 $ 2,763
========= =========
</TABLE>
See notes to consolidated condensed financial statements.
6
<PAGE> 7
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, 1998 and May 31, 1997; the results of
operations for the three and nine months ended February 28, 1998 and
1997, and cash flows for the nine months ended February 28, 1998 and
1997.
The accounting policies followed by the Company are set forth
in Note A to the consolidated financial statements in the 1997
Worthington Industries, Inc. Annual Report to Shareholders which is
included in the Company's 1997 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 - RESULTS OF OPERATIONS
---------------------
The results of operations for the three and nine months ended
February 28, 1998 are not necessarily indicative of the results to be
expected for the full year.
NOTE D - ACCOUNTING CHANGE - START-UP COSTS
----------------------------------
During December 1997, the Accounting Standards Executive
Committee (AcSEC) cleared for issuance a proposed Statement of Position
(SOP), "Reporting on the Costs of Start-Up Activities." This SOP, when
issued, would be effective for fiscal 2000, and require that start-up
costs be expensed as incurred and that such costs capitalized
previously be expensed as a cumulative effect of change in accounting
principle. As of February 28, 1998, the Company has capitalized (net of
amortization) $9,665,000 of start-up costs. The Company will continue
to capitalize these costs until June 1, 1999 and estimates that the
total unamortized costs at that time will be approximately $12,000,000.
7
<PAGE> 8
WORTHINGTON INDUSTRIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE E- EARNINGS PER SHARE
------------------
During February 1997, the Financial Accounting Standards Board
(FASB) issued Statement No. 128, "Earnings Per Share," effective for
the Company's third quarter ended February 28, 1998. Statement 128
replaced the previously reported primary and fully diluted earnings per
share with basic and diluted earnings per share. Unlike primary
earnings per share, basic earnings per share excludes any dilutive
effects of options, warrants, and convertible securities. Diluted
earnings per share is very similar to the previously reported fully
diluted earnings per share. All earnings per share amounts for all
periods have been presented, and where necessary, restated to conform
to the Statement 128 requirements. The following table sets forth the
computation of basic and diluted earnings per share:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
February 28 February 28
----------- -----------
1998 1997 1998 1997
---- ---- ---- ----
($000)
<S> <C> <C> <C> <C>
Numerator(Basic & Diluted):
---------------------------
Earnings Before Extraordinary
Item-income available to common
shareholders $ 22,348 $ 21,817 $ 67,002 $ 66,445
=========== =========== =========== ===========
Denominator:
------------
Denominator for basic earnings per
share - weighted-average shares 96,780,972 96,569,575 96,767,931 96,530,461
Effect of dilutive securities -
employee stock options 169,371 272,381 206,293 298,047
----------- ----------- ----------- -----------
Denominator for diluted earnings per
share - adjusted weighted-average shares 96,950,343 96,841,956 96,974,224 96,828,508
=========== =========== =========== ===========
Basic earnings per share - before
extraordinary item $ .23 $ .23 $ .69 $ .69
=========== =========== =========== ===========
Diluted earnings per share - before
extraordinary item $ .23 $ .23 $ .69 $ .69
=========== =========== =========== ===========
Antidilutive securities (a) 2,004,396 730,311 1,510,631 433,654
=========== =========== =========== ===========
</TABLE>
(a) Securities that could potentially dilute basic EPS not included in
the computation of diluted EPS because to do so would have been
antidilutive for the period(s) presented.
8
<PAGE> 9
WORTHINGTON INDUSTRIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE F - EXTRAORDINARY ITEM - INVOLUNTARY CONVERSION OF ASSETS
-----------------------------------------------------
On August 14, 1997, the Company experienced a fire at its steel
processing facility in Monroe, Ohio. The fire significantly damaged the
pickling area of the facility and caused less extensive damage to the
remainder of the plant. The Company has shifted as much business as
possible to its other locations, with the remainder being sent to third
party processors. Blanking and slitting operations have resumed and
pickling is expected to resume by first quarter of fiscal 1999.
The Company carries both property damage and business
interruption insurance and as a result, management does not expect the
fire to have a material adverse impact on the Company's financial
results. The total loss from business interruption, extra expenses and
property damage is expected to be in excess of $75 million.
Insurance proceeds received to February 28, 1998 were as
follows:
($000)
------
Property and equipment $38,683
Inventory 2,500
Business interruption 12,800
Other expenses 7,917
-------
$61,900
=======
The proceeds related to damaged inventory approximated cost.
The proceeds related to business interruption represent $6,060,000 for
lost operating income which is included in net sales, and $6,740,000
for costs incurred to mitigate the loss which have been reflected as an
offsetting reduction of the related expense. The proceeds for other
expenses represent reimbursement for non-recurring expenses related to
the fire and were reflected as an offsetting reduction of manufacturing
costs.
During the quarter, the Company settled the property portion
of the insurance claim and the business interruption portion through
February 28, 1998. The property settlement, $38,683,000, resulted in an
extraordinary gain as these proceeds were for "replacement value",
which was significantly in excess of the remaining book value. The
breakdown of the extraordinary item shown on the consolidated condensed
statements of earnings is as follows:
($000)
------
Proceeds $38,683
Less book value 8,888
Gain on involuntary conversion 29,795
Income tax provision 11,024
-------
$18,771
=======
9
<PAGE> 10
WORTHINGTON INDUSTRIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
For the three months ended February 28, 1998, net sales of $518.5
million were 7% higher than in last year's third quarter. Earnings before
extraordinary item of $22.3 million, were up 2% from last year. Earnings per
share before extraordinary item of $.23, were even with the previous year.
For the nine months ended February 28, 1998, net sales of $1.5 billion
were 12% higher than in last year's first nine months. Earnings before
extraordinary item of $67.0 million, were up 1% from last year. Earnings per
share before extraordinary item of $.69, were even with the previous year.
During the quarter, the Company settled the property portion of the
insurance claim and the business interruption portion (through February 28,
1998) arising from the August 1997 fire at its Monroe, Ohio steel processing
facility. The property settlement resulted in an after-tax gain of $18.8 million
and represents the difference between the book value of the destroyed assets and
the settlement. With the extraordinary gain, third quarter earnings were $41.1
million versus the prior year's $21.8 million. Earnings during the nine month
period with the extraordinary gain were $85.8 million compared to last year's
$66.4 million.
Sales increases for the quarter were achieved for the Processed Steel
Products and Cast Products segments, driven mostly by volume. All segments'
sales remain ahead of last year's first nine months. Earnings increased for the
quarter and nine months due to increased results for processed steel products
and joint ventures which were offset by lower results for custom products and
cast products. Last year's third quarter sales increase was driven by volume
increases in steel processing, automotive body panels and cylinders, and the
acquisitions of the metal framing business, PMI and SCM Technologies. Fiscal
1997's nine month sales increase reflected the inclusion of the metal framing
business, PMI and SCM, and volume increases in automotive body panels and
cylinders. Earnings for last year's third quarter were impacted by weaker than
expected results for the metal framing business and the Malvern steel processing
facility offset by increases in cylinders and plastics. Last year's nine months
earnings increases were in automotive body panels, cylinders and plastics offset
by lower results from cast products.
Gross margin was up 5% for the quarter and 10% for the nine months, and
as a percentage of sales was 13.9% for the quarter (14.0% last year) and 14.0%
for the nine months (14.3% last year). Material, labor and overhead costs were
higher for the quarter and nine months due to the inclusion of acquired
10
<PAGE> 11
operations in the current year amounts and the startup of the Delta steel
processing plant. The material cost component of cost of goods sold, primarily
in steel processing, contributed to most of the increase in costs.
Selling, general and administrative expense increased 8% for the
quarter and 17% for the nine months due mostly to the startup of the Delta and
Decatur steel processing plants and the inclusion of expenses for acquired
operations in the current year. As a percent of sales, this expense was 6.9% for
the quarter (6.8% last year) and 6.8% for the nine months (6.5% last year).
Operating income was 3% higher for the quarter and nine months. As a percentage
of sales, operating income was 7.0% for the quarter (7.2% last year) and 7.2%
for the nine months (7.8% last year).
Interest expense increased 33% for the three months and 68% year to
date. Average debt outstanding increased due to the high level of capital
expenditures and the average interest rate increased from 5.7% last year to 6.5%
this year. The Company capitalized interest of $3,877,000 ($2,027,000 last year)
during the quarter and $7,131,000 ($4,924,000 last year) for the nine months.
Equity in net income of unconsolidated affiliates was up 37% for the
quarter and 53% for the nine months. Equity from Worthington Armstrong Venture
(WAVE), TWB and Acerex continue to contribute earnings increases. During the
quarter, WAVE opened a ceiling grid plant in Benton Harbor, Michigan, its sixth
new plant in four years.
Income taxes increased 3% for the three month period and decreased 1%
for the nine months as the effective tax rate of 37.0% was slightly higher for
the quarter (36.9% last year) and lower year-to-date (37.5% last year) due to
lower state taxes.
The processed steel products segment posted record sales for both
periods as all lines of business increased sales. Both operating income and
margin percentages increased for the quarter and nine month periods. Last year's
results for both periods were up from fiscal 1996 due to the inclusion of the
metal framing business and increased volume for automotive body panels and
cylinders. Steel processing sales improved from last year at a majority of the
plants due to volume increases despite the fire at the Monroe, Ohio plant. New
sales from the start-up of the Delta, Ohio plant contributed the largest
increase. Steel processing operating income was up for the quarter because of
increased volume and higher gross margin, and for the nine month period due to
increased volume. The gains were offset somewhat by poor performance at the
Malvern, Pennsylvania plant.
On August 14, 1997, the Company experienced a fire at its steel
processing facility in Monroe. The fire significantly damaged the pickling area
of
11
<PAGE> 12
the facility and caused less extensive damage to the remainder of the plant. The
Company has shifted as much business as possible to its other locations, with
the remainder being sent to third party processors. Blanking returned to
operation in September 1997, and slitting in March 1998. Pickling is expected to
startup in the first quarter of fiscal 1999. The estimated net benefit from the
business interruption insurance, which approximates the lost operating income
which would have resulted had the fire not occurred through February 28, 1998
was $6,060,000 and was included in net sales.
Pressure cylinders' sales were up for the quarter and nine months
primarily due to higher volume in most product lines and from higher selling
prices due to a more expensive valve with a new overfill protection device. The
metal framing business increased sales for the quarter and nine months with
higher volume and selling prices. Operating income was slightly lower for the
quarter because of higher material costs. The automotive body panel business
contributed to the segment's increased operating income and sales for the
quarter and nine month periods. Increased volume continued due to strong demand
for its automotive replacement parts. On February 23, 1998, the Company
announced the signing of a definitive agreement to purchase Jos. Heiser vormals
J. Winter's Sohn, Gmbh. (Heiser). Based in Gaming, Austria, Heiser is Europe's
leading producer of high pressure industrial gas cylinders.
Sales and operating income for the custom products segment were down
for the third quarter and nine months. Last year's results for each period
improved over fiscal 1996 due to higher volume on certain automotive contracts
and the acquisition of PMI. The Plastics operations increased sales for the nine
months due to the acquisition of PMI which was not included until the third
quarter of fiscal 1997. Sales for the quarter were down; however, because of
decreased volume. Operating income was lower for both periods because of the
summer strikes and shutdowns in the automotive and appliance sectors, the end of
a major automotive contract and lower volume at PMI. In August 1998, the
plastics operation formed a strategic alliance with a German plastics company,
Troester Systeme und Komponenten, opening up opportunities for global growth
without additional capital investment. Precision Metals profits increased above
last year's third quarter and nine months on sales that were flat for both
periods from the prior year.
Sales for the cast products segment were higher than in last year's
third quarter and first nine months because of increased volume; however,
operating income was lower due to lower selling prices and higher material
costs. Last year's results were lower than in fiscal 1997 because of lower
volume and the resulting decreases in production efficiencies and coverage of
fixed costs.
12
<PAGE> 13
SUBSEQUENT EVENT
On April 1, 1998, the Company announced its intention to explore
strategic options to maximize the value of its subsidiaries, Worthington Custom
Plastics, Worthington Precision Metals, and Buckeye Steel Castings. The combined
companies, which make up the Company's Custom Products and Cast Products
business segments, accounted for 26% of fiscal 1997 revenues. The review will
involve an examination of strategic alternatives available to the Company,
including the possible sale or spin off of one or more of the three business
units. No target date has been set for the completion of the review. Any
proceeds from the sale, if that is the outcome of the strategic review, would be
used to finance the Company's steel and steel related businesses through capital
spending or acquisition, repurchase of common stock, pay down debt, or some
combination of these alternatives. More than 80% of the Company's capital
spending over the last six years has been concentrated in the largest business
segment, processed steel products. The focus has been on enhancing the Company's
position in value-added steel processing and steel-related niche markets.
LIQUIDITY AND CAPITAL RESOURCES
At February 28, 1998, the Company's current ratio was 2.0:1, down from
2.4:1 at May 31, 1997, mostly due to an increase in accounts payable. Total debt
as a percentage of total committed capital (total debt and shareholder's
equity), both excluding DECS, increased to 39% from 37% at May 31, 1997. Working
capital was $316.9 million, 42% of the Company's total net worth, down from 49%
at May 31, 1997. As a percentage of annualized sales, average working capital
was 16.2%, down from 16.7% for last year's first nine months.
During the nine months, the Company's cash position decreased by $.7
million. Cash provided by operating activities was $130.7 million, up from $30.7
million last year. Capital expenditures of $219.7 million and dividends paid of
$37.7 million were funded mostly from cash provided from operations of $130.7
million, net long-term borrowings of $56.3 million, proceeds from minority
interest investment of $26.4 million and the property insurance settlement of
$38.7 million. Capital expenditures were up 76% over last year and will continue
at high levels throughout the fiscal year with the construction of the Decatur,
Alabama steel processing plant and funding of the Spartan Steel joint venture.
At February 28, 1998, $140 million of the Company's $190 million
revolving credit facility was unused. On December 9, 1997, the Company issued
$150 million of 6.7% notes due 2009 against the $450 million "shelf"
registration established in May 1996. The proceeds from this issuance were used
to pay down existing debt. The Company expects its operating results and cash
from normal operating activities to improve during the remainder of the fiscal
year. Additional borrowings may be needed to support anticipated capital
expenditures. Immediate borrowing capacity plus cash generated from operations
should be more than sufficient to fund expected normal operating
13
<PAGE> 14
cash needs, dividends, debt payments and capital expenditures for existing
businesses. The Company will continue to consider long-term debt issuance as an
alternative depending on financial market conditions.
IMPACT OF YEAR 2000
The Company has completed an assessment regarding modifications of its
software so that its computer systems will function properly with respect to
dates in the year 2000 and thereafter. The total Year 2000 project cost is
estimated at approximately $1.8 million. Approximately $.7 million has been
incurred to date and the remaining amount will be evenly expensed between now
and the estimated completion date in the fourth calendar quarter of 1998. The
Company believes that, with the modifications to existing software, the Year
2000 Issue will not pose significant operational problems. The Company has
initiated communications with significant vendors and customers to confirm their
plans to become Year 2000 compliant and assess any possible risk or effects to
the Company's operations. The Company believes their systems will be properly
converted and sufficiently compliant as to not materially affect operations.
FORWARD-LOOKING INFORMATION
The Company wishes to take advantage of the Safe Harbor provisions
included in the Private Securities Litigation Reform Act of 1995 (the "Act").
Statements by the Company relating to future revenues and cash, growth, or plant
start-ups or capabilities and other statements which are not historical
information constitute "forward looking statements" within the meaning of the
Act. All forward looking statements are subject to risks and uncertainties which
could cause actual results to differ from those projected. Factors that could
cause actual results to differ materially include, but are not limited to, the
following: general economic conditions; conditions in the Company's major
markets; competitive factors and pricing pressures; product demand and changes
in product mix; changes in pricing or availability of raw material, particularly
steel; delays in construction or equipment supply; and other risks described
from time to time in the Company's filings with the Securities and Exchange
Commission.
14
<PAGE> 15
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
On April 1, 1998, the Company announced its intention to explore
strategic options to maximize the value of its subsidiaries, Worthington Custom
Plastics, Worthington Precision Metals, and Buckeye Steel Castings, and that it
had engaged investment bankers to assist in its strategic review. The review
will involve an examination of the strategic alternatives available to the
Company, including the possible sale or spin off of one or more of the three
business units. These three businesses, which make up the Company's custom
products and cast products business segments, accounted for approximately 26% of
the Company's revenues for fiscal year 1997. No target date has been set for the
completion of the review.
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 February 28, 1998.
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 14, 1998 By: /s/Donal H. Malenick
-------------- -------------------------------------
Donal H. Malenick
President and Chief Operating Officer
Date: April 14, 1998 By: /s/Michael R. Sayre
-------------- -------------------------------------
Michael R. Sayre
Controller
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS ON FORM 10Q AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-START> JUN-01-1997
<PERIOD-END> FEB-28-1998
<CASH> 7,147
<SECURITIES> 0
<RECEIVABLES> 308,001
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0
0
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</TABLE>
