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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10 - K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended May 31,1998 Commission File No. 0-4016
WORTHINGTON INDUSTRIES, INC.
----------------------------
(Exact name of Registrant as specified in its Charter)
DELAWARE 31-1189815
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(State of Incorporation) (IRS 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)
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:
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Common Stock, $.01 par value (95,692,509 shares outstanding at August 3, 1998)
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 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]
The aggregate market value of the voting stock held by non-affiliates of
the Registrant at August 3, 1998 was approximately $1,053,000,000 (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, 1998 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 24, 1998 are incorporated by reference into Part III.
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PART I
ITEM 1. - BUSINESS.
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Worthington Industries, Inc. was initially incorporated in 1955.
Worthington Industries, Inc., together with its subsidiaries, is referred to
herein as the "Company." The Company's corporate headquarters are located at
1205 Dearborn Drive, Columbus, Ohio 43085.
During the fiscal year ended May 31, 1998, the Company operated three
business segments: Processed Steel Products, Custom Products and Cast Products.
In the fourth quarter of fiscal 1998, the Company completed a strategic review
to explore options to maximize the value of its subsidiaries, Worthington Custom
Plastics, Inc. and Worthington Precision Metals, Inc., which comprise the Custom
Products segment, and Buckeye Steel Castings Company which represents the
majority of the Cast Products segment. The strategic review resulted in
decisions to divest those businesses and continue to focus on the Company's
steel processing and metal fabricating businesses, in order to maximize the
Company's strengths and opportunities. As a result of the decision to divest
these three businesses, the Custom Products and Cast Products segments of the
Company have been restated in the Company's Consolidated Financial Statements as
Discontinued Operations. Accordingly, the Company's Continuing Operations
consist of only the Processed Steel Products segment and its equity in the joint
ventures discussed below.
PROCESSED STEEL PRODUCTS.
- -------------------------
The Processed Steel Products segment is made up of four lines of business.
For the years ended May 31, 1998, 1997 and 1996, the percentage of sales from
continuing operations generated by these four businesses was as follows: Steel
Processing 56%, 56% and 68%; Pressure Cylinders 14%, 14% and 15%; Metal Framing
21%, 21% and 8%; and Aftermarket Body Panels 9%, 9% and 9%. (The percentage for
1996 for the Metal Framing business includes its sales only from February 5,
1996, the date of its acquisition.)
STEEL PROCESSING.
- -----------------
The Company's steel processing operations are conducted through its
Worthington Steel Company operations ("Worthington Steel"). Worthington Steel
occupies a niche in the steel industry by focusing on specialized products
requiring exact specifications, which typically cannot be supplied as
efficiently by steel mills, metal service centers or steel end users.
Worthington Steel is the largest independent flat rolled steel processor in the
United States and operates eleven processing facilities, with a concentration in
the Michigan, Ohio and Indiana market, the largest flat rolled steel consuming
market in the United States. In fiscal 1997, the Company started-up its Delta,
Ohio, steel processing facility with slitting, pickling and
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hot dipped galvanizing capabilities. The Company's newest steel processing
facility, located in Decatur, Alabama, started-up slitting and pickling
operations in May 1998. It is expected to start-up its cold rolling mill and its
temper mill later in calendar 1998.
Worthington Steel buys coils of wide, open tolerance steel from major
integrated steel mills and mini-mills and processes it to the precise type,
thickness, length, width, shape, temper and surface quality specified by
approximately 1,700 industrial customers, principally in the automotive,
automotive supply, appliance, electrical, communications, construction, office
furniture, office equipment, agricultural, machinery and leisure time
industries. The Company purchases and supplies steel based on the specific
orders of customers and does not typically process steel for inventory.
Worthington Steel's computer-aided processing capabilities include among others:
pickling, a chemical process using an acidic solution to remove surface oxide
which develops on hot rolled steel; slitting, which cuts steel to specific
widths; cut-to-length, which flattens the steel and cuts it to exact lengths;
roller leveling, a method of applying pressure to achieve precise flatness
tolerances for steel which is cut into exact lengths; cold reduction, which
achieves close tolerances of thickness and temper by rolling; edge rolling,
which conditions the edges of the steel by imparting round, smooth or knurled
edges; blanking, through which steel is cut into specific shapes; painting; hot
dipped galvanizing; nickel plating; nickel-zinc plating; and annealing, a
thermal process that changes the hardness and certain metallurgical
characteristics of steel.
Worthington Steel also "toll processes" steel for the steel mills and large
end users. Toll processing is similar to Worthington Steel's normal steel
processing, except the mill or end user retains the title to the steel and has
the responsibility for selling the end product. Toll processing enables the
Company to participate in the market for wide sheet steel and large standard
orders, which is a market generally served by steel mills, rather than by
intermediate steel processors.
Steel processing is highly competitive. The Company competes with many
other intermediate processors. The Company knows of no other intermediate
processor offering the same type and extent of technical service support
provided by the Company relating to material testing and application of material
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.
PRESSURE CYLINDERS.
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Worthington Cylinder Corporation ("Worthington Cylinders") is the nation's
largest producer of portable low pressure (L.P.) gas and refrigerant cylinders,
and is a global leader in the production of portable high pressure cylinders.
Worthington Cylinders' primary low pressure cylinder products are steel
cylinders with refrigerant gas capacities of 15 to 1,000 lbs. and steel and
aluminum cylinders with L.P. gas
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capacities of 4-1/4 to 420 lbs. 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. Low pressure 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.
The Company's refrigerant cylinders are used primarily by major refrigerant
gas producers to contain refrigerant gases for use in charging residential,
commercial, automotive and other air conditioning and refrigeration systems.
Reusable steel and aluminum L.P. gas cylinders are sold to manufacturers of
barbecue grills, propane and gas grill distributors, mass merchandisers, and
manufacturers and users of material handling, heating, cooking and camping
equipment. The Company manufactures other low pressure cylinder products,
including recapture and recycling tanks for refrigerant gases, helium tanks, and
cylinders to hold other gases.
In June 1998, the Company acquired Jos. Heiser vormals J. Winter's Sohn,
Gmbh (Heiser), of Gaming, Austria, Europe's leading producer of high pressure
industrial gas cylinders. Combining Heiser with the Company's other high
pressure cylinders capabilities positions the Company as a leading global
producer of those products.
The Company's high pressure cylinders are manufactured by deep drawing,
billet piercing and hot spinning. The Company's high pressure cylinders are used
as containers for acetylene, medical, industrial, halon and electronics gases.
They are sold primarily to gas suppliers and fillers.
While a large percentage of cylinder sales are made to major accounts,
Worthington Cylinders has over 2,000 customers. It operates eight manufacturing
facilities located in Ohio, Oklahoma, Alabama, Ontario and Austria, including a
joint venture facility near Sao Paulo, Brazil.
The Company has two principal domestic competitors in its major low
pressure cylinder markets, of which management believes the Company has the
largest domestic share. The Company also has two principal domestic competitors
in its high pressure cylinder markets, both of which have a larger domestic
share than the Company. The Company believes that Heiser has the largest share
of the European industrial gas cylinder market. However, the Company otherwise
has no reliable information with respect to the size of any of its various
product markets or its relative position therein.
METAL FRAMING
- -------------
The Company's metal framing business is conducted by Dietrich Industries,
Inc. ("Dietrich") which was acquired on February 5, 1996. Dietrich is the
largest supplier of metal framing products for the commercial and residential
construction
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markets in the United States. Dietrich's products include items such as steel
studs, floor joists and other metal accessory products. Its major customers
include building products distributors, commercial and residential contractors
and gypsum producers.
The Company believes that Dietrich is the only national supplier of metal
framing products and supplies approximately 35% of the metal framing products
sold in the United States. It has five large regional competitors and numerous
small, more localized competitors. Dietrich operates eighteen facilities in
thirteen states.
AUTOMOTIVE BODY PANELS.
- -----------------------
The Company's automotive body panel business is conducted by The
Gerstenslager Company ("Gerstenslager"), acquired in a pooling-of-interests
transaction in February 1997. Gerstenslager is a leading independent supplier of
Class A exterior body panels to the North American automotive original equipment
and service part markets. The Company believes Gerstenslager to be the largest
independent supplier of exposed sheet metal products for the North American
automotive aftermarket. Gerstenslager is unique in its ability to handle a very
large number of low volume aftermarket parts managing over 3,000 die sets for
component parts on past and current automobile and truck production models. The
Company's largest customers are the domestic automobile manufacturers. It also
serves transplant automobile manufacturers, heavy duty truck manufacturers and
suppliers to the automotive industry.
Gerstenslager competes with captive stamping plants owned by the automotive
companies and independent tier one suppliers of current model components;
however these stampers are generally unwilling to keep tooling for past model
service business which is low volume business. The Company has a number of
smaller competitors in this market, but believes that, excluding captive plants,
Gerstenslager has the largest share of the automotive aftermarket for exterior
body panels.
CUSTOMERS AND SUPPLIERS
- -----------------------
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 been doing business with General Motors for many years and 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, pressure cylinder, metal
framing and automotive body panel operations. During the fiscal year ended May
31, 1998, the Company's major suppliers were Rouge Industries (in which the
Company holds a minority equity position), Bethlehem Steel Corporation, Inland
Steel Company, LTV
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Steel Corporation, Northstar BHP Steel, TRICO Steel, USX Corporation, WCI Steel,
Inc. and Weirton Steel Corporation. During the fiscal year ended May 31, 1998,
the Company's major suppliers of aluminum for pressure cylinders were Alumax
Aluminum Sales Corporation and Specialty Blanks Incorporated. Management
believes that its supplier relationships are good.
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 required for the particular
needs of the Company's customers. In order to provide such services, 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.
MARKETING AND COMPETITION.
- --------------------------
The Company's products and services are sold primarily by Company sales
personnel.
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 lines of business.
EMPLOYEES.
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The Company employs approximately 6,500 people in its continuing
operations, excluding unconsolidated Joint Ventures.
JOINT VENTURES
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The Company is a member in one consolidated and five unconsolidated joint
ventures.
- - Spartan Steel Coating, L.L.C., a 52% owned consolidated joint venture
with Rouge Industries, operates a cold rolled hot dipped galvanizing
facility near Monroe, Michigan. Production testing and trials began in
May 1998.
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- - Worthington/Armstrong Venture ("WAVE"), a 50% owned joint venture
with Armstrong World Industries, is one of the three leading United
States manufacturers of suspended ceiling systems for concealed and
lay-in panel ceilings. WAVE operates facilities in Pennsylvania,
Maryland, Michigan, Nevada, Spain, France, China and England.
- - Worthington Specialty Processing, a 50% owned joint venture with USX
Corporation, operates a steel processing plant in Jackson, Michigan,
which primarily toll processes for USX Corporation.
- - Acerex S.A. de C.V., a 50% owned joint venture with Hylsa S.A. de
C.V., is a steel processing company located in Monterrey, Mexico.
- - TWB Company, L.L.C., a 33.3%-owned joint venture with Thyssen Inc.,
Rouge Industries, LTV Steel and Bethlehem Steel, is located in Monroe,
Michigan. It produces laser welded blanks for use in the auto industry
for products such as inner door frames.
- - Worthington S.A., a 52%-owned joint venture with three Brazilian
propane producers, operates a cylinder manufacturing facility near Sao
Paulo, Brazil.
See Note J of the Company's Notes to Consolidated Financial Statements for
additional information on these joint ventures.
INVESTMENT IN ROUGE INDUSTRIES, INC.
- ------------------------------------
The Company also owns a minority interest (27%) in Rouge Industries, Inc.
("Rouge"), which operates an integrated steel mill located in Dearborn,
Michigan. Since Worthington acquired its equity position in 1990, Rouge has been
the Company's largest steel supplier.
In the first quarter of fiscal 1996, the Company converted certain of its
Class B common stock of Rouge into Class A common stock of Rouge, which reduced
its voting percentage in Rouge below 20% and it resigned from its two seats on
the Rouge Board of Directors. As a result, the Company's investment in Rouge no
longer qualified for the equity method of accounting and was changed to the cost
method. Under the equity method, Rouge had contributed $21.7 million to the
Company's pre-tax earnings during fiscal 1996. Under the cost method of
accounting, only dividends received by Worthington from its Rouge Common Stock
are credited to pre-tax earnings.
In March 1997, the Company issued 5,999,600 DECS SM (Debt Exchangeable for
Common Stock SM). Under the DECS, the Company issued $93 million principal
amount of 7-1/4% exchangeable notes due March 1, 2000. At maturity of the Notes,
the principal amount of each DECS will be mandatorily exchanged by
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Worthington into shares of Rouge Class A Common Stock at the Company's option,
cash equivalent for all or part thereof. The Company's current Rouge
stockholdings are sufficient to settle the DECS liability and the Company
intends to settle the liability with those holdings.
DISCONTINUED OPERATIONS.
- ------------------------
CUSTOM PLASTICS. Worthington Custom Plastics manufactures and supplies
injection molded plastic parts to automobile manufacturers and their suppliers,
and to manufacturers of appliances, lawn and garden products, recreational
products, business equipment, audio equipment, furniture and other items.
Worthington Custom Plastics operates nine plants located in Ohio, Kentucky,
North Carolina and South Carolina.
PRECISION METALS. Worthington Precision Metals produces extremely close
tolerance metal components for use by automobile manufacturers and their
suppliers in power steering, transmission, anti-lock brake and other automotive
mechanical systems. This business operates two facilities located in Ohio and
Tennessee.
STEEL CASTINGS. Buckeye Steel Castings designs, produces and machines a
broad line of railcar and industrial steel castings. Buckeye is also North
America's leading designer and producer of undercarriages for mass transit cars.
Buckeye's facility in Columbus, Ohio is the largest single site steel foundry in
the United States.
ENVIRONMENTAL REGULATION.
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The Company's manufacturing facilities, generally in common with those of
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.
ITEM 2. - PROPERTIES.
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The Company's corporate offices are located in Columbus, Ohio. Its
principal properties for continuing operations consist of 38 manufacturing
facilities, excluding those of unconsolidated joint ventures. These facilities
are well maintained and in good operating condition. These facilities contain in
excess of 9,000,000 sq. ft. in the aggregate and are adequate to meet the
Company's present needs.
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The locations of these facilities are set forth on page 29 of the Company's
Annual Report to Shareholders for the year ended May 31, 1998, which information
is incorporated herein by reference.
See Item 1 under the heading "Joint Ventures" for the location of the
Company's joint venture facilities.
ITEM 3. - LEGAL PROCEEDINGS.
- ----------------------------
Not Applicable.
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:
<TABLE>
<CAPTION>
PRESENT OFFICE
NAME AGE POSITIONS WITH THE COMPANY HELD SINCE
---- --- --------------------------- ----------
<S> <C> <C> <C>
John H. McConnell 75 Chairman Emeritus, Founder 1996
John P. McConnell 44 Chairman, Chief Executive 1996
Officer
Donal H. Malenick 59 President, Chief Operating 1976
Officer
Charles D. Minor 71 Secretary 1955
William S. Dietrich 60 Chairman - Dietrich Industries 1998
Inc., a subsidiary of the
Company
Edward A. Ferkany 61 Executive Vice President 1998
Ralph V. Roberts 51 Group President-Steel 1998
Processing
Robert J. Borel 55 Vice President-Engineering 1985
Mark H. Stier 51 Vice President-Human Resources 1997
Thomas L. Hockman 53 Vice President-Personnel 1993
Dale T. Brinkman 45 General Counsel & Asst. 1982
Secretary
John T. Baldwin 41 Treasurer 1997
Michael R. Sayre 41 Corporate Controller 1993
</TABLE>
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The principal employment of Donal H. Malenick, Robert J. Borel, Dale T.
Brinkman and Thomas L. Hockman for more than the last five years has been in
their present capacity with the Company.
John H. McConnell was Chairman of the Board and Chief Executive Officer of
the Company from its founding in 1955 until he retired from the position of
Chief Executive Officer in 1993 and as Chairman in 1996, when he assumed the
title of Chairman Emeritus and Founder.
John P. McConnell was elected Vice Chairman of the Company in June 1992,
Chief Executive Officer as of June, 1993, and Chairman of the Board in September
1996. Previously, Mr. McConnell held various positions with the Company.
Charles D. Minor was a partner in the law firm of Vorys, Sater, Seymour and
Pease LLP, counsel to the Company, for more than five years prior to January
1993. In January 1993, he became counsel to that firm.
William S. Dietrich was President of Dietrich for more than five years
prior to January 1998 when he was named Chairman of Dietrich.
Edward A. Ferkany was named Executive Vice President in June 1998. For more
than five years prior to June 1998, he was Vice President-Steel Processing.
Ralph V. Roberts served as President of WAVE from its formation in June
1992 until he became Vice President - Corporate Development in June 1997. He was
named Group President - Steel Processing in June 1998. Prior to 1992 he served
in various positions with the Company including Vice President-General Manager
of two of the Company's steel processing facilities.
Mark H. Stier was Vice President - General Manager of the Company's
subsidiary, The Worthington Steel Company, Porter, Indiana, for more than ten
years prior to August 1997, when he became Vice President-Corporate Human
Resources of the Company. Prior to that time, he had served in various
capacities with the Company.
John T. Baldwin became Treasurer of the Company in September 1997. For more
than five years prior thereto, he was Assistant Treasurer of Tenneco, Inc.
Michael R. Sayre became Corporate Controller of the Company in February
1996. For more than three years prior to 1996, he had served in various
financial and accounting positions with the Company.
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.
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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 under the caption "Stock Trading, Price
and Dividend Information" on page 3 of the Company's 1998 Annual Report to
Shareholders.
ITEM 6. - SELECTED FINANCIAL DATA.
- ----------------------------------
The information called for by this Item 6 is incorporated by reference
herein from the information on page 4 of the Company's 1998 Annual Report to
Shareholders under the caption "Five Year Selected Financial Data" under the
headings "Financial Results" and "Financial Position."
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 the information set forth under the caption "Management's Discussion
and Analysis of Financial Condition and Results of Operations" on pages 5
through 9 of the Company's 1998
Annual Report to Shareholders.
ITEM 7A. - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
- ----------------------------------------------------------------------
Not applicable.
ITEM 8. - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
- ------------------------------------------------------
The consolidated financial statements of Worthington Industries, Inc. and
Subsidiaries and Report of Independent Auditors, set forth on pages 10 through
28 of the Company's 1998 Annual Report to Shareholders are incorporated herein
by reference.
Consolidated Balance Sheets--May 31, 1998 and 1997
Consolidated Statements of Earnings--Years ended May 31, 1998, 1997 and
1996.
Consolidated Statements of Shareholders' Equity--Years ended May 31, 1998,
1997 and 1996.
Consolidated Statements of Cash Flows--Years ended May 31, 1998, 1997 and
1996.
Notes to Consolidated Financial Statements
Report of Independent Auditors
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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 5 of the Company's
Proxy Statement for its 1998 Annual Meeting of Shareholders to be held on
September 24, 1998. 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 Proxy Statement for its 1998 Annual Meeting of Shareholders
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 35 and 36, "Option Grants" on page 36, "Option
Exercises and Holdings" on page 36 and Long-Term Incentive Plan Awards on page
37.
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 3 and 4 of the Company's Proxy Statement for its 1998 Annual
Meeting of Shareholders.
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 second paragraph after
footnote 7 to the table under the heading "Election of Directors" contained on
page 4 of the Company's Proxy Statement for its 1998 Annual Meeting of
Shareholders.
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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.
(3) Listing of Exhibits--See Index to Exhibits beginning on page E-1
of this report. 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) None.
(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.
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 27, 1998 By:/s/ Donal H. Malenick
----------------------
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 and
- ------------------------- Chief Executive Officer
John P. McConnell
* * Director, Chairman Emeritus
- ------------------------- and Founder
John H. McConnell
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/s/Donal H. Malenick * Director, President and
- -------------------------- Chief Operating Officer
Donal H. Malenick
* * Treasurer
- --------------------------
John T. Baldwin
* * Corporate Controller
- --------------------------
Michael R. Sayre
* * Director, Secretary
- --------------------------
Charles D. Minor
* * Director
- --------------------------
William S. Dietrich
* * Director
- --------------------------
John B. Blystone
* * Director
- --------------------------
Charles R. Carson
* * Director
- -------------------------
John F. Havens
* * Director
- --------------------------
Peter Karmanos, Jr.
* * Director
- --------------------------
Pete A. Klisares
* * Director
- --------------------------
Katherine S. LeVeque
* * Director
- --------------------------
Robert B. McCurry
* * Director
- --------------------------
Gerald B. Mitchell
* * Director
- --------------------------
James Petropoulos
*By: /s/Donal H. Malenick Date: 8/27/98
-----------------------
Donal H. Malenick
Attorney-In-Fact
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ANNUAL REPORT ON FORM 10-K
ITEM 14 (a) (1) AND (2) AND ITEM 14 (d)
WORTHINGTON INDUSTRIES, INC. AND SUBSIDIARIES
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT
SCHEDULES
The following consolidated financial statements of Worthington Industries,
Inc., and Subsidiaries, which are set forth on pages 10 through 27 of the
Company's 1998 Annual Report to Shareholders, are incorporated by reference
in Item 8:
Consolidated Balance Sheets -- May 31, 1998 and 1997
Consolidated Statements of Earnings -- Years ended May 31, 1998, 1997 and
1996
Consolidated Statements of Shareholders' Equity -- Years ended May 31, 1998,
1997 and 1996
Consolidated Statements of Cash Flows -- Years ended May 31, 1998, 1997 and 1996
Notes to Consolidated Financial Statements
Report of Independent Auditors
The following consolidated financial statement schedules of Worthington
Industries, Inc. and Subsidiaries are included in Item 14 (d):
Schedule II - Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.
F-1
<PAGE> 16
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
WORTHINGTON INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
COL. A COL.B COL.C COL.D COL.E
- ------------------------------------------------------------------------------------------------------------------------------
Additions
-----------------------------------
Balance (1) (2) Balance at
DESCRIPTION at Beginning Charged to Cost Charged to Other Deductions End of
of Period and Expenses Accounts - Describe -Describe Period
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year Ended May 31, 1998:
Deducted from asset accounts:
Allowance for possible
losses on trade accounts
receivable $3,900,000 $1,098,713 $0 $868,713 (A) $4,130,000
========== ========== ========== ========== ==========
Year Ended May 31, 1997:
Deducted from asset accounts:
Allowance for possible
losses on trade accounts
receivable $2,792,000 $947,368 $300,000 (C) $139,368 (A) $3,900,000
========== ========== ========== ========== ==========
Year Ended May 31, 1996:
Deducted from asset accounts:
Allowance for possible
losses on trade accounts
receivable $2,411,000 $355,199 $750,000 (B) $724,199 (A) $2,792,000
========== ========== ========== ========== ==========
</TABLE>
Note A - Uncollectible accounts charged to the allowance.
Note B - Amount from Dietrich acquisition.
Note C - Amount from PMI acquisition.
<PAGE> 17
INDEX TO EXHIBITS
<TABLE>
<S> <C>
3(a) Certificate of Incorporation of Incorporated herein by reference to
Worthington Industries, Inc. Exhibit 3 of the Registrant's
Quarterly Report on Form 10-Q for
the Quarter ended August 31, 1993
3(b) Bylaws of Worthington Industries, Incorporated herein by reference to
Inc. Exhibit 3(b) of the Registrant's
Annual Report on Form 10-K for the
fiscal year ended May 31, 1992
4(a) Form of Indenture dated as of May Incorporated herein by reference to
15, 1996 between the Company and Exhibit 4(a) of the Registrant's
PNC Bank, Ohio, National Annual Report on Form 10-K for
Association, as Trustee, relating fiscal year ended May 31, 1997
to up to $450,000,000 of debt
securities
4(b) Form of 7-1/8% Notes due 2007 Incorporated herein by reference to
Exhibit 4(b) of the Registrant's
Annual Report on Form 10-K for
fiscal year ended May 31, 1997
4(c) First Supplemental Indenture dated Incorporated herein by reference to
as of February 27, 1997 between Exhibit 4(c) of Annual Report on
the Company and PNC Bank as Form 10-K for fiscal year ended
Trustee May 31, 1997
4(d) 7-1/4% Exchangable Note Due March Incorporated herein by reference to
1, 2000 Exhibit 4(d) of the Registrant's
Annual Report on Form 10-K for
fiscal year ended May 31, 1997
4(e) Revolving Credit Agreement dated Incorporated herein by reference to
as of May 30, 1997 between the Exhibit 4(e) of Annual Report on
Company and The Bank of Nova Form 10-K for fiscal year ended
Scotia, PNC Bank, Ohio, National May 31, 1997
Association, NationsBank, NA,
Wachovia Bank of Georgia, N.A.,
ABN Amro Bank NV and Bank One, NA
</TABLE>
E-1
<PAGE> 18
<TABLE>
<S> <C>
4(f) Form of 6.7% Notes due 2009
4(g) Second Supplemental Indenture
dated as of December 12,1997
between Worthington Industries,
Inc. and PNC Bank, Ohio, National
Association, as Trustee
4(h) Agreement to furnish instruments
defining rights of holders of
long-term debt
10(a) Amended 1980 Stock Option Plan, as Incorporated herein by reference to
amended* Annex B to the 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 Plan* Incorporated herein by reference to
Exhibit 10(d) of the Company's
Annual Report on Form 10-K for the
fiscal year ended May 31, 1991
10(b) 1990 Stock Option Plan* Incorporated herein by 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 Compensation Incorporated herein by reference to
Plan* 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 Plan for Incorporated herein by reference to
Directors* Exhibit 10(f) of the Company's
Annual Report on Form 10-K for the
fiscal year ended May 31, 1984
10(e) 1997 Long-Term Incentive Plan* Incorporated herein by reference to
Exhibit 10(e) of the Company's
Annual Report on Form 10-K for the
fiscal year ended May 31, 1997
13 Annual Report to
Shareholders
21 Subsidiaries of the Company
</TABLE>
E-2
<PAGE> 19
23 Consent of Ernst & Young LLP
24 Powers of Attorney
27 Financial Data Schedule
*Management Compensation Plan
E-3
<PAGE> 1
EXHIBIT 4(f)
NOTE
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL DEBT
SECURITIES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A
NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY
OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE
OF SUCH SUCCESSOR DEPOSITARY
Unless this certificate is presented by an authorized representative of the
Depository Trust Company, a New York corporation ("DTC"), to the Issuer or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
WORTHINGTON INDUSTRIES, INC.
6.70% Note Due December 1, 2009
CUSIP No. 981811AC6 $150,000,000
No. 0001
Worthington Industries, Inc., a corporation duly organized and existing
under the laws of the State of Delaware (herein called the "Issuer", which term
includes any successor Person under the Indenture hereinafter referred to) as
obligor, for value received, hereby promises to pay to CEDE & CO., or registered
assigns, the principal sum of ONE HUNDRED FIFTY MILLION and 00/100 DOLLARS on
December 1, 2009, and to pay interest thereon from December 12, 1997, or from
the most recent interest payment date to which interest has been paid or duly
provided for, semi-annually on June 1 and December 1 in each year, commencing
June 1, 1998, at the rate of 6.70% per annum, until the principal hereof is paid
or made available for payment. The Issuer shall also pay interest on overdue
principal or installments of interest at such rate. The interest so payable, and
punctually paid or duly provided for, on any interest payment date will, as
provided in such Indenture, be paid to the Person in whose name this Debt
Security is registered at the close of business on the record date for such
interest, which shall be May 15 or November 15 (whether or not a business day),
as the case may be, next preceding such interest payment date. Any interest on
this Debt Security which is payable, but is not punctually paid or duly provided
for, on the dates and in the manner provided in the Debt Security and such
Indenture shall forthwith cease to be payable to the Registered Holder hereof on
the relevant record date, and such Defaulted Interest may be paid by the Issuer
to the Person in whose name this Debt Security is registered at the close of
business on a special record date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to the Holder hereof not
less than 10 days prior to such special record date, or may be paid by the
<PAGE> 2
Issuer on this Debt Security in any other lawful manner not inconsistent with
the requirements of any securities exchange on which this Debt Security may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in said Indenture.
As provided in the Indenture and subject to certain limitations
therein set forth payment of interest on this Debt Security shall be made at the
corporate trust office of the Trustee, or at the option of the Issuer, by check
mailed to the address of the Person entitled hereto as such address shall appear
in the Debt Security Register or, at the option of the Registered Holder by wire
transfer to an account designated by the Registered Holder, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
This Debt Security is one of a duly authorized issue of securities of
the Issuer (herein called the "Debt Securities"), issued and to be issued in one
or more series under an Indenture, dated as of May 15, 1996 as supplemented by
the First Supplemental Indenture dated February 27, 1997 and the Second
Supplemental Indenture dated December 12, 1997 (herein called the "Indenture",
which term shall have the meaning assigned to it in such instrument), between
the Issuer and PNC Bank, Ohio, National Association as Trustee (herein called
the "Trustee", which term includes any successor trustee under the Indenture),
and reference is hereby made to the Indenture for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Issuer,
the Trustee and the Registered Holders of the Debt Securities and of the terms
upon which the Debt Securities are, and are to be, authenticated and delivered.
This Debt Security is one of the series designated on the face hereof
This Debt Security is subject to redemption upon notice mailed at
least 30 days but not more than 60 days prior to the redemption date to each
Registered Holder. This Debt Security may be redeemed, as a whole or in part, at
the option of the Company at a redemption price equal to the greater of (a) 100%
of the principal amount to be redeemed and (b) the sum of the present values of
the Remaining Scheduled Payments (as defined in the Second Supplemental
Indenture dated December 12, 1997 to the Indenture) thereon discounted to the
redemption date on a semiannual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Treasury Rate plus 15 basis points, plus, in either
case, accrued interest on the principal amount being redeemed to the date of
redemption. Unless the Company defaults in payment of the redemption price, on
and after the applicable redemption date, interest will cease to accrue on the
Debt Securities or portions thereof called for redemption..
The Indenture contains provisions for defeasance at any time of the
entire indebtedness of this Debt Security or certain restrictive covenants and
Events of Default with respect to this Debt Security, in each case upon
compliance with certain conditions set forth in the Indenture. Such provisions
shall be applicable to this Debt Security.
If an Event of Default with respect to this Debt Security shall occur
and be continuing, the principal of and interest on this Debt Security may be
declared due and payable in the manner and with the effect provided in the
Indenture.
The Indenture permits, with certain exceptions as therein provided,
without notice to any Holder but with the consent of Holders of not less than a
majority in aggregate principal amount of the Outstanding Debt Securities of
each series affected by such supplemental Indenture, the Company
<PAGE> 3
and the Trustee at any time to enter into an Indenture or supplemental Indenture
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or of any supplemental
Indenture or of modifying in any manner the rights of the Holders of the Debt
Securities of such series. The Indenture also permits, with certain exceptions
as therein provided, prior to the acceleration of the maturity of the Debt
Securities of any series, the Holders of specified percentages in aggregate
principal amount of the Debt Securities of that series at the time Outstanding
may on behalf of the Holders of all the Debt Securities of that series waive any
past Default or Event of Default and its consequences for that series specified
in the terms thereof. Any such consent or waiver by the Holder of this Debt
Security shall be conclusive and binding upon such Holder and upon all future
Holders of this Debt Security and of any Debt Security issued upon the
registration of transfer hereof or in lieu hereof, whether or not notation of
such consent or waiver is made upon this Debt Security.
As provided in and subject to the provisions of the Indenture, the
Holder of this Debt Security shall not have the right to institute any action or
proceeding at law or in equity or in bankruptcy or otherwise, upon or under or
with respect to the Indenture, or for the appointment of a receiver or trustee,
or for any other remedy thereunder, unless such Holder previously shall have
given to the Trustee written notice of an Event of Default with respect to the
Debt Securities of this series and of the continuance thereof and unless the
Holders of not less than 25% in aggregate principal amount of the Outstanding
Debt Securities of this series shall have made written request upon the Trustee
to institute such action or proceedings in respect of such Event of Default in
its own name as Trustee thereunder and shall have offered to the Trustee such
reasonable indemnity, and the Trustee, for 60 days after its receipt of such
notice, request and offer of indemnity shall have failed to institute any such
action or proceedings and no direction inconsistent with such written request
shall have been given to the Trustee by the Holders of a majority in aggregate
principal amount of the Debt Securities of this series at the time Outstanding.
The foregoing shall not apply to any suit instituted by the Holder of this Debt
Security for the enforcement of any payment of principal hereof or interest
hereon on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Debt
Security or of the Indenture shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of and interest on
this Debt Security at the times, place and rate, and in the coin or currency,
herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Debt Security is registrable in the Debt
Security Register, upon surrender of this Debt Security for registration of
transfer at the office or agency of the Issuer in any Place of Payment, duly
endorsed or accompanied by a written instrument or instruments of transfer, in
form satisfactory to the Issuer, the Trustee and the Registrar duly executed by
the Registered Holder or his attorney duly authorized in writing, and thereupon
the Issuer shall execute and the Trustee shall authenticate and deliver in the
name of the transferee or transferees a new Debt Security or Debt Securities of
authorized denominations for a like aggregate principal amount.
The Debt Securities of this series are issuable only in registered
form without coupons in denominations of $1,000 and any integral multiple
thereof. As provided in the Indenture and subject to certain limitations therein
set forth, Debt Securities of this series are exchangeable in whole or in
<PAGE> 4
part for a like aggregate principal amount of Debt Securities of this series and
of like tenor and terms of a different authorized denomination, as requested by
the Holder surrendering the same.
As provided in the Indenture and subject to certain limitations
therein set forth no service charge shall be made for any such registration of
transfer of Debt Securities, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto.
Prior to due presentation for registration of transfer of this Debt
Security, the Issuer, the Trustee, any paying agent or any Registrar may deem
and treat the Person in whose name this Debt Security is registered as the
absolute owner hereof for all purposes, whether or not this Debt Security be
overdue, and none of the Issuer, the Trustee, any paying agent or Registrar
shall be affected by notice to the contrary.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to herein by manual signature, this Security shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed under its corporate seal.
Dated: December 12, 1997 WORTHINGTON INDUSTRIES, INC.
By:
---------------------------------------
Donald G. Barger, Jr., Vice President and
Chief Financial Officer
By:
---------------------------------------
Dale T. Brinkman, Assistant Secretary
<PAGE> 5
----------------------------------------------
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Debt Securities of the series designated therein
referred to in the within-mentioned Indenture.
PNC Bank, Ohio, National Association
As Trustee
By:
-----------------------------------
Authorized Signature
<PAGE> 1
EXHIBIT 4(g)
---------------------------------------------------------------------
WORTHINGTON INDUSTRIES, INC.,
Issuer
and
PNC BANK, OHIO, NATIONAL ASSOCIATION,
Trustee
---------------------------------------
SECOND SUPPLEMENTAL INDENTURE
Dated as of December 12, 1997
Supplemental to Indenture dated as of May 15, 1996
----------------------------------------------------------------------
<PAGE> 2
SECOND SUPPLEMENTAL INDENTURE dated as of December 12,1997 (this
"Supplemental Indenture"), made and entered into by and between Worthington
Industries, Inc., a corporation organized and existing under the laws of the
State of Delaware having its principal office at 1205 Dearborn Drive, Columbus,
Ohio 43085 (the "Company"), and PNC Bank, Ohio, National Association, a national
banking association duly organized and existing under the laws of the United
States, as Trustee (the "Trustee") under the indenture of the Company (the
"Indenture") dated as of May 15, 1996.
WHEREAS, the Company and the Trustee have heretofore executed and
delivered a First Supplemental Indenture dated as of February 27, 1997; the
Indenture and the First Supplemental Indenture being hereinafter collectively
referred to as the "Indenture"); and
WHEREAS, the Indenture provides for the issuance from time to time of
Debt Securities, issuable for the purposes and subject to the limitations
contained in the Indenture; and
WHEREAS, Section 9.01(j) of the Indenture also provides that the
Company and Trustee may enter into one or more indentures supplemental to the
Indenture without the consent of any Holder (a) to add to, change or eliminate
any of the provisions of the Indenture with respect to any series of Debt
Securities if such action becomes effective when no such Debt Security is
outstanding and (b) to provide for the form or terms of Debt Securities of any
series as permitted by Sections 2.01 and 2.03 thereof; and
WHEREAS, the Company has duly authorized the creation of a series of
its Debt Securities denominated its "6.70% Notes Due 2009" in the principal
amount of $150,000,000 (such Debt Securities being referred to herein as the
"Notes"); and
WHEREAS, the entry into this Supplemental Indenture by the parties
hereto is in all respects authorized by the provisions of the Indenture; and
WHEREAS, the Company has duly authorized the execution and delivery of
this Supplemental Indenture, and all things necessary have been done to make the
Notes, when executed by the Company and authenticated and delivered hereunder
and duly issued by the Company, the valid obligations of the Company, and to
make this Supplemental Indenture a valid agreement of the Company, in accordance
with their and its terms:
<PAGE> 3
NOW, THEREFORE:
For and in consideration of the premises and purchase of the Debt
Securities of any series issued on or after the date hereof by the Holders
thereof, it is mutually covenanted and agreed, for the equal and proportionate
benefit of all Holders of the securities of any such series, as follows:
ARTICLE I
Certain Provisions of General Application
SECTION 101. Definitions.
------------
For all purposes of the Indenture and this Supplemental Indenture,
except as otherwise expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article;
(2) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to the Indenture and this Supplemental Indenture as a whole
and not to any particular Article, Section or other subdivision; and
(3) capitalized terms used but not defined herein are used as they are
defined in the Indenture.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the Notes to be redeemed that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such Notes.
"Comparable Treasury Price" means, with respect to any redemption
date, (a) the average of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) on the
third Business Day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (b) if such release (or any successor release) is not
published or does not contain such prices on such Business Day, (i) the average
of the Reference Treasury Dealer Quotations, or (ii) if the Trustee obtains
fewer than four such Reference Treasury Dealer Quotations, the average of all
such Quotations.
"Independent Investment Banker" means one of the Reference Treasury
Dealers appointed by the Trustee after consultation with the Company.
<PAGE> 4
"Reference Treasury Dealer" means each of Salomon Brothers Inc.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, NationsBanc Montgomery
Securities, Inc. and their respective successors; provided, however, that if any
of the foregoing shall cease to be a primary U.S. Government securities dealer
in New York City (a "Primary Treasury Dealer"), the Company shall substitute
therefor another Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the
third Business Day preceding such redemption date.
"Remaining Scheduled Payments" means, with respect to any Note, the
remaining scheduled payments of the principal thereof to be redeemed and
interest thereon that would be due after the related redemption date but for
such redemption; provided, however, that, if such redemption date is not an
interest payment date with respect to such Notes, the amount of the next
succeeding scheduled interest payment thereon will be reduced by the amount of
interest accrued thereon to such redemption date.
"Treasury Rate" means, with respect to any redemption date, the rate
per annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.
SECTION 102. Effect of Headings.
-------------------
The Article and Section headings herein are for convenience only and
shall not affect the construction hereof.
<PAGE> 5
SECTION 103. Successors and Assigns.
-----------------------
All covenants and agreements in this Supplemental Indenture by the
Company shall bind its successors and assigns, whether so expressed or not.
SECTION 104. Separability.
-------------
In case any provision in this Supplemental Indenture or the Notes
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 105. Conflict with Trust Indenture Act.
----------------------------------
If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Supplemental Indenture
by any of the provisions of the Trust Indenture Act, such required provision
shall control.
SECTION 106. Benefits of Supplemental Indenture.
------------------------------------
Nothing in this Supplemental Indenture, expressed or implied, shall
give to any person, other than the parties hereto and their successors
hereunder, and the Holders of the Notes any benefit or any legal or equitable
right, remedy or claim under this Supplemental Indenture.
SECTION 107. Governing Law.
---------------
THIS SUPPLEMENTAL INDENTURE AND THE NOTES SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND THIS SUPPLEMENTAL
INDENTURE AND EACH SUCH NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
ARTICLE II
The Notes
SECTION 201. Title and Terms.
-----------------
There is hereby created under the Indenture a series of Debt
Securities known and designated as the "6.70% Notes Due 2009" of the Company.
The aggregate principal amount of Notes that may be authenticated and delivered
under this Indenture is limited to $150,000,000, except for Notes authenticated
and delivered upon reregistration of, transfer, of, or in exchange for, or in
lieu of, other Notes pursuant to Section 2.07, 2.08, 2.09 or 9.04 of the
Indenture.
<PAGE> 6
The Stated Maturity for payment of principal of the Notes shall be
December 1, 2009, and the Notes shall bear interest at the rate of 6.70% per
annum, from December 12, 1997, or the most recent interest payment date to which
interest has been paid or duly provided for, payable semi-annually in arrears on
June 1 and December 1 of each year (commencing June 1, 1998, to the persons in
whose names the Notes (or any predecessor securities) are registered at the
close of business on May 15 or November 15, as the case may be, next preceding
such interest payment date, until principal thereof is paid or made available
for payment.
The Notes shall be initially issued in the form of a Global Security
and the depositary for the Notes shall be the Depository Trust Company, New
York, New York (the "Depositary").
The Notes shall not be subject to any sinking fund.
The Notes shall be in registered form without coupons and shall be
issuable in denominations of $1,000 and any integral multiple thereof.
The Notes are subject to redemption upon notice mailed at least 30
days but not more than 60 days prior to the redemption date to each Registered
Holder. The Notes may be redeemed, as a whole or in part, at the option of the
Company at a redemption price equal to the greater of (a) 100% of the principal
amount to be redeemed and (b) the sum of the present values of the Remaining
Scheduled Payments thereon discounted to the redemption date on a semi-annual
basis (assuming a 360-day year consisting of twelve 30-day months) at the
Treasury Rate plus 15 basis points, plus, in either case, accrued interest on
the principal amount being redeemed to the date of redemption. Unless the
Company defaults in payment of the redemption price, on and after the applicable
redemption date, interest will cease to accrue on the Notes or portions thereof
called for redemption.
The form of Note attached hereto as Exhibit A is hereby adopted,
pursuant to section 9.01(j) of the Indenture, as a form of Debt Securities of a
series that consists of the Notes.
<PAGE> 7
ARTICLE III
Miscellaneous
SECTION 301. Discharge
----------
The Notes and the security provided by this Supplemental Indenture
shall be subject to defeasance in accordance with Article XI of the Indenture .
SECTION 302. Confirmation of Indenture.
--------------------------
The Indenture, as supplemented and amended by this Supplemental
Indenture and all other indentures supplemental thereto, is in all respects
ratified and confirmed, and the Indenture, this Supplemental Indenture and all
indentures supplemental thereto shall be read, taken and construed as one and
the same instrument.
SECTION 303. Concerning the Trustee.
-----------------------
The Trustee assumes no duties, responsibilities or liabilities by
reason of this Supplemental Indenture other than as set forth in the Indenture.
----------------
This Supplemental Indenture may be executed in any number of
counterparts, each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
WORTHINGTON INDUSTRIES, INC.
By:____________________________
Name:
Attest:_________________________
Name:
PNC BANK, OHIO, NATIONAL
ASSOCIATION, as Trustee
By:____________________________
Name:
Attest:_________________________
Name:
<PAGE> 8
STATE OF )
) SS:
COUNTY OF )
On the day of December, 1997, before me personally came
_______________________, to me known, who, being by me duly sworn, did depose
and say that she/he is the ______________ of WORTHINGTON INDUSTRIES, INC., one
of the corporations described in and which executed the foregoing instrument;
that she/he knows the seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by authority of the
Board of Directors of said corporation, and that she/he signed her/his name
thereto by like authority.
----------------------------------
Notary Public
STATE OF )
) SS:
COUNTY OF )
On the day of December, 1997, before me personally came
______________________, to me known, who, being by me duly sworn, did depose and
say that she/he is the ______________ of PNC BANK, OHIO, NATIONAL ASSOCIATION,
one of the corporations described in and which executed the foregoing
instrument; that she/he knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was so affixed by
authority of the Board of Directors of said corporation, and that she/he signed
her/his name thereto by like authority.
----------------------------------
Notary Public
<PAGE> 1
EXHIBIT 4(h)
Agreement to furnish instruments defining rights of holders
of long-term debt
<PAGE> 2
August 27, 1998
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Worthington Industries, Inc. - Form 10-K for the
fiscal year ended May 31, 1998
Gentlemen:
Worthington Industries, Inc., a Delaware corporation, is today executing
and filing a Form 10-K, Annual Report for the fiscal year ended May 31, 1998.
Pursuant to the instructions relating to the Exhibits in Item 601 of
Regulation S-K, 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. Such long-term debt does not exceed 10% of the total
assets of Worthington Industries, Inc. and its subsidiaries on a consolidated
basis.
Very truly yours,
WORTHINGTON INDUSTRIES, INC.
/s/ Donal H. Malenick
Donal H. Malenick
President
Enclosures
<PAGE> 1
EXHIBIT 13
ANNUAL REPORT TO SHAREHOLDERS
<PAGE> 2
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WORTHINGTON
INDUSTRIES, INC.
1998 ANNUAL REPORT TO
SHAREHOLDERS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 3
WORTHINGTON INDUSTRIES, INC.
1998 ANNUAL REPORT
CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
A Message to Our Shareholders............................... 1
The Company................................................. 1
Stock Trading, Price and Dividend Information............... 3
Five Year Selected Financial Data........................... 4
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 5
Consolidated Financial Statements
Consolidated Balance Sheets -- May 31, 1998 and 1997...... 10
Consolidated Statements of Earnings -- Years ended May 31,
1998, 1997 and 1996.................................... 11
Consolidated Statements of Shareholders' Equity -- Years
ended May 31, 1998, 1997 and 1996...................... 12
Consolidated Statements of Cash Flows -- Years ended May
31, 1998, 1997 and 1996................................ 13
Notes to Consolidated Financial Statements.................. 14
Report of Management........................................ 27
Report of Independent Auditors.............................. 28
Company Locations........................................... 29
Officers & Directors........................................ 30
</TABLE>
i
<PAGE> 4
A MESSAGE TO OUR SHAREHOLDERS
This 1998 Annual Report contains the Worthington Industries, Inc. audited
financial statements and all of the information that regulations of the
Securities and Exchange Commission (the "SEC") require to be presented in an
Annual Report to Shareholders. For legal purposes, this is the Worthington
Industries, Inc. 1998 Annual Report to Shareholders. This Annual Report is not
part of the Proxy Statement, is not deemed to be soliciting material and is not
deemed to be filed with the SEC, except to the extent that it is expressly
incorporated by reference in a document filed with the SEC.
We invite our shareholders to also consider our 1998 Summary Annual Report,
which accompanies the Proxy Statement. That Report presents information
concerning the business and financial results of the Company in a format of
detail we believe most of our shareholders will find useful and informative.
Shareholders who would like to receive more detailed information may request our
Annual Report on Form 10-K.
THE WORTHINGTON INDUSTRIES, INC. ANNUAL REPORT ON FORM 10-K, AS FILED WITH
THE SEC, WILL BE PROVIDED TO ANY SHAREHOLDER, WITHOUT CHARGE, UPON WRITTEN
REQUEST TO THE WORTHINGTON INDUSTRIES, INC. INVESTOR RELATIONS DEPARTMENT, 1205
DEARBORN DRIVE, COLUMBUS, OHIO 43085.
THE COMPANY
Worthington Industries, Inc., together with its subsidiaries, is referred
to herein as the "Company." The Company's corporate headquarters are located at
1205 Dearborn Drive, Columbus, Ohio 43085.
During the fiscal year ended May 31, 1998, the Company operated three
business segments: Processed Steel Products, Custom Products and Cast Products.
In the fourth quarter of fiscal 1998, the Company completed a strategic review
to explore options to maximize the value of its subsidiaries, Worthington Custom
Plastics and Worthington Precision Metals, which comprise the Custom Products
segment, and Buckeye Steel Castings Company which represents the bulk of the
Cast Products segment. The strategic review resulted in decisions to divest
those businesses and continue to focus on the Company's steel processing and
metal-fabricating businesses, in order to maximize the Company's strengths and
opportunities. As a result of the decision to divest these three businesses, the
Custom Products and Cast Products segments of the Company have been restated as
Discontinued Operations. Accordingly, the Company's Continuing Operations
consist of only the Processed Steel Products segment and its equity in the joint
ventures discussed below.
PROCESSED STEEL PRODUCTS
The Processed Steel Products segment is made up of four lines of business.
For the years ended May 31, 1998, 1997 and 1996, the percentage of sales from
continuing operations generated by these four businesses was as follows: Steel
Processing was 56%, 56%, and 68%; Pressure Cylinders was 14%, 14%, and 15%;
Metal Framing was 21%, 21%, and 8%; and Aftermarket Body Panels were 9%, 9%, and
9%. (The percentage for 1996 for the Metal Framing business includes its sales
only from February 5, 1996, the date of its acquisition.)
Steel Processing. Worthington Steel is an intermediate processor of flat
rolled steel. Its processing capabilities include pickling, slitting, rolling,
annealing, edging, tension leveling, cut-to-length, configured blanking,
painting, nickel plating, and hot dipped galvanizing. Worthington Steel has
approximately 1,700 customers, principally in the automotive, automotive supply,
appliance, electrical, communications, construction, office furniture, office
equipment, agricultural, machinery and leisure time industries.
Pressure Cylinders. Worthington Cylinders produces portable low pressure
liquid propane and refrigerant gas cylinders and portable high pressure
cylinders. Refrigerant gas cylinders are used primarily by major refrigerant gas
producers to contain refrigerant gases for use in charging residential,
commercial, automotive and other air conditioning and refrigeration systems.
Reusable steel and aluminum liquid propane gas cylinders are sold to
manufacturers and distributors of barbecue grills and propane, mass
merchandisers, and manufacturers and users of material handling, heating,
cooking and camping equipment. High pressure cylinders are sold primarily to gas
fillers and suppliers as containers for acetylene, medical, industrial, halon
and electronic gases.
1
<PAGE> 5
The Company also produces recycle and recovery tanks for refrigerant gases and
helium balloon kits. Worthington Cylinders has over 2,000 customers.
Metal Framing. Dietrich Industries is the nation's leading producer of
metal framing products for the commercial and residential building industries.
Major customers include building products distributors, commercial and
residential contractors and gypsum producers.
Aftermarket Body Panels. The Gerstenslager Company is a leading independent
supplier of automotive aftermarket body panels in the United States. Major
customers include domestic and transplant automotive and heavy duty truck
manufacturers.
JOINT VENTURES
As part of its strategy to selectively develop new products, markets and
technological capabilities, and to expand its international presence while
mitigating the risks and costs associated with such activities, the Company
participates in one consolidated and five unconsolidated joint ventures.
Spartan Steel Coating, L.L.C. ("Spartan Steel"), a 52% owned consolidated
joint venture with Rouge Industries, operates a cold rolled hot dipped
galvanizing facility near Monroe, Michigan. Production testing and trials began
in May 1998.
Worthington/Armstrong Venture ("WAVE"), a 50% owned joint venture with
Armstrong World Industries, is one of the three leading United States
manufacturers of suspended ceiling systems for concealed and lay-in panel
ceilings. WAVE operates facilities in Pennsylvania, Maryland, Michigan, Nevada,
England, France, Spain and China.
Worthington Specialty Processing ("WSP"), a 50% owned joint venture with
USX Corporation in Jackson, Michigan, operates primarily as a toll processor for
USX Corporation.
Acerex S.A. de C.V., a 50% owned joint venture with Hylsa S.A. de C.V., is
a steel processing company located in Monterrey, Mexico.
TWB Company, L.L.C., a 33% owned joint venture with Thyssen Steel, Rouge
Industries, LTV Steel and Bethlehem Steel, produces laser welded blanks for use
in the auto industry for products such as inner door frames.
Worthington S.A., a 52% owned joint venture with three Brazilian propane
producers, operates a cylinder manufacturing facility near Sao Paolo, Brazil.
DISCONTINUED OPERATIONS
Custom Plastics. Worthington Custom Plastics manufactures and supplies
injection molded plastic parts to automobile manufacturers and their suppliers,
and to manufacturers of appliances, lawn and garden products, recreational
products, business equipment, audio equipment, furniture and other items.
Precision Metals. Worthington Precision Metals produces extremely close
tolerance metal components for use by automobile manufacturers and their
suppliers in power steering, transmission, anti-lock brake and other automotive
mechanical systems.
Steel Castings. Buckeye Steel Castings designs, produces and machines a
broad line of railcar and industrial steel castings. Buckeye is also North
America's leading designer and producer of undercarriages for mass transit cars.
2
<PAGE> 6
STOCK TRADING, PRICE AND DIVIDEND INFORMATION
Worthington Industries, Inc. common stock trades on the Nasdaq Stock Market
under the symbol "WTHG" and is listed in most newspapers as "WorthInd." As of
May 31, 1998, Worthington Industries, Inc. had approximately 11,149 shareholders
of record.
<TABLE>
<CAPTION>
AVERAGE NASDAQ PRICES
FISCAL 1997 SHARES DAILY ---------------- CASH
QUARTER ENDED TRADED VOLUME LOW HIGH DIVIDENDS
- ------------- ---------- ------- ------ ------ ---------
<S> <C> <C> <C> <C> <C>
August 31...................... 14,306,400 223,538 $17.50 $21.63 $.12
November 30.................... 20,569,800 326,505 $19.00 $22.25 $.12
February 28.................... 18,142,300 292,618 $18.13 $22.00 $.12
May 31......................... 14,394,800 228,489 $17.38 $21.00 $.13
FISCAL 1998
QUARTER ENDED
- -------------
August 31...................... 24,208,081 387,251 $17.50 $20.25 $.13
November 30.................... 26,772,131 424,954 $17.38 $20.88 $.13
February 28.................... 18,689,119 306,379 $15.13 $18.38 $.13
May 31......................... 24,414,343 403,402 $16.94 $19.56 $.14
</TABLE>
3
<PAGE> 7
WORTHINGTON INDUSTRIES, INC. AND SUBSIDIARIES
FIVE YEAR SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
MAY 31 1998 1997 1996 1995 1994
------ ---------- ---------- ---------- ---------- --------
IN THOUSANDS, EXCEPT PER SHARE
<S> <C> <C> <C> <C> <C>
FINANCIAL RESULTS
Net Sales.............................................. $1,624,449 $1,428,346 $1,126,492 $1,125,495 $996,329
Cost of Goods Sold..................................... 1,371,841 1,221,078 948,505 942,672 840,639
---------- ---------- ---------- ---------- --------
Gross Margin........................................... 252,608 207,268 177,987 182,823 155,690
Selling, General & Administrative Expense.............. 117,101 96,252 78,852 67,657 57,696
---------- ---------- ---------- ---------- --------
Operating Income....................................... 135,507 111,016 99,135 115,166 97,994
Miscellaneous Income................................... 1,396 906 1,013 648 955
Interest Expense....................................... (25,577) (18,427) (8,687) (6,673) (3,460)
Equity in Net Income of Unconsolidated
Affiliates -- Joint Ventures......................... 19,316 13,959 6,981 5,284 (1,315)
Equity in Net Income of Unconsolidated
Affiliate -- Rouge................................... -- -- 21,729 32,111 19,406
---------- ---------- ---------- ---------- --------
Earnings From Continuing Operations Before Income
Taxes................................................ 130,642 107,454 120,171 146,536 113,580
Income Taxes........................................... 48,338 40,844 46,130 55,190 42,678
---------- ---------- ---------- ---------- --------
Earnings From Continuing Operations.................... 82,304 66,610 74,041 91,346 70,902
Discontinued Operations, Net of Taxes.................. 17,337 26,708 26,932 31,783 17,996
Extraordinary Item, Net of Taxes....................... 18,771 -- -- -- --
---------- ---------- ---------- ---------- --------
Net Earnings........................................... 118,412 93,318 100,973 123,129 88,898
Earnings Per Share (Diluted) --
Continuing Operations................................ 0.85 0.69 0.76 0.94 0.73
Discontinued Operations, Net of Taxes................ 0.18 0.27 0.28 0.33 0.19
Extraordinary Item, Net of Taxes..................... 0.19 -- -- -- --
---------- ---------- ---------- ---------- --------
Net Earnings......................................... 1.22 0.96 1.04 1.27 0.92
Continuing Operations(Without Rouge Equity).......... 0.85 0.69 0.62 0.73 0.60
Depreciation and Amortization.......................... 61,459 51,388 41,458 36,384 34,468
Cash Provided By Operating Activities.................. 200,903 78,363 146,193 78,313 66,058
Cash Dividends Declared................................ 51,271 45,965 40,872 37,212 33,161
Per Share............................................ 0.5299 0.4900 0.4501 0.4101 0.3669
Capital Expenditures................................... $ 309,412 $172,605 $119,286 $71,314 $49,386
Average Shares Outstanding............................. 96,751 96,557 96,487 96,405 96,053
FINANCIAL POSITION
Current Assets......................................... $ 642,995 $594,128 $505,104 $474,853 $435,465
Current Liabilities.................................... 410,031 246,794 167,585 191,672 171,991
---------- ---------- ---------- ---------- --------
Working Capital........................................ 232,964 347,334 337,519 283,181 263,474
Net Fixed Assets....................................... 933,158 691,027 544,052 358,579 323,649
Total Assets........................................... 1,842,342 1,561,186 1,282,424 964,299 837,707
Total Debt*............................................ 501,950 417,883 317,997 108,916 73,306
Shareholders' Equity................................... 780,273 715,518 667,318 608,142 525,137
Per Share............................................ 8.07 7.40 6.91 6.30 5.46
Total Committed Capital*............................... $1,282,223 $1,133,401 $985,315 $717,058 $598,443
Shares Outstanding..................................... 96,657 96,711 96,505 96,515 96,236
PERFORMANCE COMPARISON
PROFITABILITY (after taxes, excluding extraordinary
item)
Continuing Return on Net Sales......................... 5.1% 4.7% 6.6% 8.1% 7.1%
Return on Average Total Assets......................... 5.9% 6.6% 9.0% 13.7% 11.3%
Return on Average Total Committed Capital.............. 8.2% 8.8% 11.9% 18.7% 15.9%
Return on Average Shareholders' Equity................. 13.3% 13.5% 15.8% 21.7% 18.1%
FINANCIAL CONDITION
Current Ratio.......................................... 1.6X 2.4X 3.0X 2.5X 2.5X
Total Debt*/Total Committed Capital*................... 39% 37% 32% 15% 12%
ASSET USE
Inventory Turnover..................................... 6.2X 6.4X 6.5X 6.0X 6.4X
Accounts Receivable/Days Sales......................... 48 44 43 46 43
GROWTH
Net Sales.............................................. 13.7% 26.8% 0.1% 13.0% 19.7%
Earnings From Continuing Operations.................... 23.6% -10.0% -18.9% 28.8% 42.1%
Earnings Per Share From Continuing Operations.......... 23.2% -9.2% -19.1% 28.8% 40.4%
Cash Dividends Declared Per Share...................... 8.1% 8.9% 9.7% 11.8% 12.2%
</TABLE>
- ---------------
All financial data except cash dividends declared include the results of The
Gerstenslager Company which was acquired in February 1997 through a pooling of
interests.
* Excludes Debt Exchangable for Common Stock of $75,745 and $88,494 at May 31,
1998 and 1997, respectively.
4
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
DISCONTINUED OPERATIONS
During the fiscal year ended May 31, 1998, Worthington Industries operated
three business segments: Processed Steel Products, Custom Products, and Cast
Products. In the fourth quarter of fiscal 1998, the Company completed a
strategic review to explore options to maximize the value of its subsidiaries,
Worthington Custom Plastics, Worthington Precision Metals and Buckeye Steel
Castings Company. Worthington Custom Plastics and Worthington Precision Metals
comprise the Custom Products segment. Buckeye Steel Castings represents the bulk
of the Cast Products segment. The strategic review resulted in decisions to
divest those businesses and continue to focus on the Company's steel processing
and metal fabricating businesses, in order to maximize the Company's strengths
and opportunities. Proceeds from the sale of the divestitures will be used to
finance the Company's steel and metals related businesses through capital
spending or acquisition, to repurchase common stock, to pay down debt, or some
combination of these alternatives. As a result of the decisions to divest these
three businesses, the Custom Products and Cast Products segments of Worthington
Industries have been restated as Discontinued Operations. Accordingly, the
Company's Continuing Operations consist of only the Processed Steel Products
segment and its equity in joint ventures.
RESULTS
Fiscal 1998 was the most profitable year for the Company's Continuing
Operations in its 43 year history, excluding equity earnings from Rouge
Industries (Rouge). Annual sales of $1.6 billion were up 14% over the prior
year, reflecting the ramp-up of the new Delta, Ohio hot dipped galvanizing
operation, and overall revenue improvement. These sales increases contributed to
increased earnings from Continuing Operations of $82 million, a 24% improvement
over the prior year. Combining these earnings with earnings from Discontinued
Operations of $17 million, and an Extraordinary Item of $19 million resulted in
total net earnings of $118 million. Total earnings per share were $1.22.
The Extraordinary Item, due to a fire at the Monroe, Ohio facility in
August 1997, reflects the settled property portion of the insurance claim. The
property settlement of $39 million represents replacement value of the assets,
significantly in excess of the remaining book value of $9 million. After
adjusting for taxes, the resulting gain was $19 million.
Sales from Continuing Operations in fiscal 1997 of $1.4 billion were up 27%
over fiscal 1996, while earnings from Continuing Operations of $67 million were
up 11% from $60 million in fiscal 1996, excluding Rouge Equity earnings. Fiscal
1997 net income from Discontinued Operations was $27 million, essentially even
with fiscal 1996.
<TABLE>
<CAPTION>
% GROWTH
RATES
------------
1998 1997 1996 1998 1997
($ IN MILLIONS EXCEPT PER SHARE) -------- -------- -------- ---- ----
<S> <C> <C> <C> <C> <C>
Sales......................................... $1,624.4 $1,428.3 $1,126.5 14% 27%
Earnings:
Continuing Operations....................... 82.3 66.6 74.0 24% -10%
Continuing Operations (excluding Rouge
Equity).................................. 82.3 66.6 59.9 24% 11%
Discontinued Operations..................... 17.3 26.7 26.9 -35% -1%
Extraordinary Item.......................... 18.8
Earnings per Share (Diluted):
Continuing Operations....................... 0.85 0.69 0.76 23% -9%
Continuing Operations (excluding Rouge
Equity).................................. 0.85 0.69 0.62 23% 11%
Discontinued Operations..................... 0.18 $ 0.27 $ 0.28 -33% -4%
Extraordinary Item.......................... $ 0.19
</TABLE>
5
<PAGE> 9
RESULTS FROM CONTINUING OPERATIONS
Overall, demand in most of the Company's continuing product lines was
stronger in fiscal 1998 than in fiscal 1997, reflecting new non-automotive
business, gains in traditional markets, and the overall strength of the economy.
Profit margins from Continuing Operations improved as a result of volume
improvements, the ramp-up of the Delta operation, product mix shifts in the
cylinders and automotive panels businesses, and moderate price increases in some
product lines. These improvements were partially offset by start-up costs at the
Decatur and Spartan facilities. The impact of the start-up costs will continue
to be felt throughout fiscal 1999. As a percentage of sales, gross margin was
15.6% in fiscal 1998, 14.5% in 1997 and 15.8% in 1996. Operating income as a
percent of sales increased to 8.3% in fiscal 1998 from 7.8% in fiscal 1997. The
Monroe fire did not materially impact margins due to business interruption
insurance coverage approximating the lost operating income which would have
resulted had the fire not occurred. Through May 31, 1998, $8.5 million of
business interruption insurance recovery was included in net sales.
Steel processing sales were up over fiscal 1997 primarily due to increased
volume at most plants and additional sales generated by the Delta ramp-up.
Operating income in steel processing was up due to volume improvement and the
profit contributions from the Delta plant; however, operating income as a
percent of sales lagged due to the ramp-up and start-up costs at new locations
(Delta, Decatur and Spartan) and poor results at the Malvern plant. Pressure
cylinders sales and operating income were up over fiscal 1997 due to increased
volume in most product lines and a favorable product mix shift. In addition,
selling prices increased for cylinders due to a more expensive valve with a new
overfill protection device. In fiscal 1998, both sales and operating income
increased for the metal framing operation reflecting greater volume and better
margins due to cost improvements. Sales and operating income were up in fiscal
1998 from the automotive body panel business reflecting additional volume, a
favorable shift in product mix and operating efficiencies.
In fiscal 1998, the new steel processing facility in Delta, Ohio, completed
its first full year of operation. This facility added hot dipped galvanizing to
the Company's capabilities and increased its pickling and slitting capacities.
In March 1997, the Company broke ground for its new steel processing plant in
Decatur, Alabama. Pickling and slitting operations began in March 1998, with
cold rolling operations expected to begin within the next few months. This plant
will have the capacity to process one million tons of steel per year.
Fiscal 1997 sales of $1.4 billion and operating income of $111 million were
up 27% and 12%, respectively, from 1996. Sales and operating margins were higher
in fiscal 1997 due to higher volumes and a full year of the metal framing
operation, which was acquired in February 1996. Delta start-up costs eroded the
margin percentages in fiscal 1997. Pressure cylinders 1997 sales and earnings
were up over fiscal 1996 due to increased demand for liquid petroleum gas and
refrigerant cylinders. A favorable shift in product mix also enhanced margins.
The Company continued its aggressive investment program during fiscal 1998.
A significant portion of the Company's Decatur, Alabama steel processing plant
was completed. In addition, construction of the Spartan Steel Coating hot dipped
galvanizing facility, a joint venture with Rouge, was completed, and production
testing and trials were in process at fiscal year end.
On August 14, 1997 the Company experienced a fire at the Monroe, Ohio
facility. The fire destroyed the pickling area of the facility and caused
extensive damage to other parts of the plant. The Company shifted a significant
amount of the business to other locations, with the remainder sent to third
party processors. Blanking returned to operation in September 1997, and slitting
returned in March 1998. Pickling is expected to resume by late summer. The
Company is making additional investments at this facility to increase both
pickling and storage capacity beyond its pre-fire capabilities.
6
<PAGE> 10
<TABLE>
<CAPTION>
1998 1997 1996
($ IN MILLIONS) ---- ---- ----
<S> <C> <C> <C>
Investing Activities:
Investment in Property, Plant and Equipment (Net)...... $309 $173 $119
Acquisitions, Net of Cash Acquired..................... 70 169
Investments in Unconsolidated Affiliates............... 5 8
Proceeds from Property Insurance....................... (38)
---- ---- ----
Net Cash Used by Investing Activities................ $271 $248 $297
==== ==== ====
</TABLE>
Although not reflected in the fiscal 1998 financial statements, in June,
1998 the Company purchased Jos. Heiser vormals J. Winter's Sohn, Gmbh (Heiser)
for approximately $35 million. Based in Gaming, Austria, Heiser is Europe's
leading producer of high pressure industrial gas cylinders.
Selling, general and administrative (SG&A) expense as a percentage of sales
was 7.2% in fiscal 1998, 6.7% in 1997 and 7.0% in 1996. The SG&A percentage
increased in 1998 because of the overhead costs incurred at the Delta, Decatur,
and Spartan facilities without corresponding sales levels. All corporate
overhead costs have been reflected in the results from Continuing Operations.
<TABLE>
<CAPTION>
1998 1997 1996
($ IN MILLIONS) ---- ---- ----
<S> <C> <C> <C>
SG&A........................................................ $117 $ 96 $ 79
% Sales..................................................... 7.2% 6.7% 7.0%
</TABLE>
Interest expense of $26 million increased 39% over fiscal 1997 as a result
of higher debt levels and higher average interest rates. Average debt
outstanding was $556 million in fiscal 1998, $420 million in 1997 and $178
million in 1996. Debt levels rose in fiscal 1998 to fund capital spending,
including the construction of the Decatur and the Spartan facilities. Debt
levels rose in fiscal 1997 to fund capital spending, including the Delta
facility and the SCM and PMI acquisitions. The average interest rate was 6.64%
in fiscal 1998, 5.96% in 1997 and 6.49% in 1996. The Company's higher average
interest rate in fiscal 1998 was the result of converting more of its debt from
floating rates to fixed rates, primarily by unwinding interest rate swaps. At
year end, approximately 53% of the Company's total debt (excluding DECS) was at
fixed rates of interest. Capitalized interest totaled $11 million in fiscal
1998, $7 million in 1997 and $3 million in 1996.
<TABLE>
<CAPTION>
1998 1997 1996
($ IN MILLIONS) ----- ----- ----
<S> <C> <C> <C>
Interest Expense............................................ $25.6 $18.4 $8.7
Capitalized Interest........................................ $11.3 $ 6.6 $2.9
</TABLE>
Equity in net income of unconsolidated affiliates increased 38% in fiscal
1998. The WAVE joint venture posted solid increases in sales and earnings and
continued to expand its business. During the year, it purchased Peytesa, SA, a
privately held Spanish ceiling grid manufacturer, and built new plants in Team
Valley, UK and Benton Harbor, Michigan. The TWB joint venture made significant
progress, substantially improving its operating income on increased production
volume. The Acerex joint venture in Monterrey, Mexico performed well as volume
continued to be strong. Worthington Specialty Processing (WSP) enjoyed another
profitable year. Cylinder's Brazilian joint venture contributed earnings in its
first full fiscal year.
In fiscal 1997, equity in net income of unconsolidated affiliates,
excluding the investment in Rouge, doubled from fiscal 1996 as WAVE and TWB both
posted significant improvements.
The effective tax rate decreased in fiscal 1998 due to lower state taxes.
The effective rate was 37.0% in fiscal 1998, 38.0% in 1997, and 38.4% in 1996.
7
<PAGE> 11
RESULTS FROM DISCONTINUED OPERATIONS
Fiscal 1998 sales from Discontinued Operations of $494 million were up $11
million over 1997, primarily due to an increase in sales at Cast Products,
partially offset by sales decreases at Custom Products. The Cast Products
increase was due to significant rail car volume improvement, while Custom
Products experienced a phase out of a few key contracts. Fiscal 1998 net income
decreased to $17 million from the previous year's $27 million, due to the Custom
Products volume decline.
Fiscal 1997 sales for Discontinued Operations of $483 million were $32
million higher than in the previous year due to the PMI acquisition in fiscal
1997, partially offset by reduced Cast Products volume. Net income was
essentially even with 1996 due to lower earnings from Cast Products.
LIQUIDITY AND CAPITAL RESOURCES
At May 31, 1998, the Company's balance sheet remained strong.
During fiscal 1998, total assets increased 18% to $1.8 billion, primarily
reflecting the Company's increased investment in property, plant and equipment
and a $49 million increase in current assets. Capital investments totaled $309
million in fiscal 1998. The joint venture partners contributed $34 million of
the funds required for capital investments, which has been reflected as a source
of funds. The most significant projects were the Decatur, Alabama steel
processing plant, the Spartan Steel Coating venture and the rebuild of the
Monroe, Ohio facility. Accounts receivable increased by $43 million, in line
with the Company's sales increase, particularly at the end of the year.
Inventory was reduced by $8 million from the previous year's level which had
been inflated by higher than normal steel purchases late in 1997.
Current liabilities increased by $163 million during the year to $410
million, primarily due to a $59 million increase in accounts payable and an $87
million increase in notes payable. Accordingly, the current ratio at May 31,
1998 was 1.6 to 1 versus 2.4 to 1 at May 31, 1997. Accounts payable increased in
line with the Company's business operations and in connection with the ongoing
capital projects.
The Company uses short-term uncommitted lines of credit extended by various
commercial banks to finance its business operations. Maturities on these
borrowings typically range from one to ninety days. To ensure liquidity, the
Company maintains a $190 million revolving credit facility with a group of
commercial banks. At May 31, 1998, there were no outstanding borrowings under
this facility. Commitments by the banks under the revolving credit facility
expire in May 2003, having been extended by one year.
In March 1997, $93 million in Debt Exchangeable for Common Stock (DECS),
payable in Rouge stock, was issued by the Company. In the opinion of the
Company, it is appropriate to examine the Company's debt without the DECS, since
the Company may satisfy the DECS with currently owned Rouge stock. The DECS
value as of May 31, 1998 was $75.7 million due to a decrease in the value of the
Rouge common stock.
At May 31, 1998, the Company's total debt (excluding the DECS) was $502
million compared to $418 million (excluding the DECS) at the end of fiscal 1997.
As a result, total debt to committed capital increased to 39% (excluding the
DECS) from the previous year's 37% (excluding the DECS). Debt was incurred
primarily to finance the Company's capital investments in property, plant and
equipment.
Cash provided by operating activities of $201 million was up from $78
million in fiscal 1997, primarily due to increased earnings and working capital
management. The Company declared record dividends of $51 million in fiscal 1998,
the 30th consecutive year of annual dividend increases.
On December 9, 1997, the Company issued $150 million of 6.7% notes due 2009
off of the $450 million "shelf" registration established in May 1996,
substantially depleting the shelf. As there were no plans to issue any of the
remainder of this "shelf" registration, it was deregistered by post-effective
amendment in June 1998.
The Company's immediate borrowing capacity, in addition to 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 at this time, the Company
regularly considers long-term debt issuance an alternative depending on
financial market conditions.
8
<PAGE> 12
ENVIRONMENTAL
The Company believes environmental issues will not have a material effect
on capital expenditures, consolidated financial position, future results or
operations.
IMPACT OF YEAR 2000
The Company is currently conducting a detailed assessment of all
information technology (IT) and non-information technology (non-IT) hardware and
software with regard to year 2000 issues. Non-IT components include embedded
technology in the manufacturing plants in equipment-related hardware and
software, as well as communication systems.
The Company is not materially reliant on third party systems (e.g.
electronic data interchange) to conduct business. In addition, the Company
initiated communications with significant vendors and customers to confirm their
plans to become year 2000 ready and assess any possible risk to or effects on
the Company's operations. The vendor and customer responses are being evaluated
and incorporated into the current detailed assessment.
Over the last two years, the Company has utilized both internal and
external resources to modify, replace, and test mainframe software to make it
year 2000 ready. These year 2000 projects are at varying stages of completion.
Some systems have been, or are currently being, replaced with year 2000 ready
systems for business reasons and some mainframe code updates have been, or are
currently being, implemented. A comprehensive review of these projects is also
being performed as part of the detailed assessment in progress. In fiscal 1998,
approximately $1 million was expended to remediate year 2000 issues. This amount
excludes the cost of year 2000 ready hardware and software recently implemented
by the Company.
Since this assessment is in progress, the estimated total cost to remediate
all year 2000 issues is not readily determinable. Preliminary estimates to
update mainframe code were approximately $2 million. This figure will be revised
as a result of the current assessment. The assessment is expected to be complete
in November 1998. Year 2000 projects to date have inspected approximately 50% of
the software and hardware potentially not ready for the year 2000; those systems
not recently replaced with year 2000 ready systems.
In summary, while the Company continues its efforts to evaluate and
remediate year 2000 issues, the final assessment is not complete. The Company
expects no material impact to its results from operations or financial condition
as a result of year 2000 issues. The scope of contingency planning will hinge
upon the results of the current assessment.
EURO-CURRENCY
The European Union's new common currency is scheduled to be introduced on
January 1, 1999. The Company expects no material impact to its results from
operations or financial condition as a result of this change, due to the
Company's limited overseas operations.
SAFE HARBOR STATEMENT
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 growth, stock appreciation, plant
start-ups, capabilities, the impact of year 2000 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; year
2000 issues; and other risks described from time to time in the Company's
filings with the Securities and Exchange Commission.
9
<PAGE> 13
WORTHINGTON INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MAY 31
------------------------
1998 1997
DOLLARS IN THOUSANDS ---------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 3,788 $ 7,212
Accounts receivable, less allowances of $4,130 and $3,900
at May 31, 1998 and 1997................................ 310,155 266,836
Inventories
Raw materials........................................... 172,920 187,572
Work in process and finished products................... 115,991 109,316
---------- ----------
288,911 296,888
Income taxes receivable................................... 5,429 --
Prepaid expenses and other current assets................. 34,712 23,192
---------- ----------
Total Current Assets............................... 642,995 594,128
Investment in Unconsolidated Affiliates..................... 61,694 57,040
Intangible Assets........................................... 95,725 98,132
Other Assets................................................ 33,025 32,365
Investment in Rouge......................................... 75,745 88,494
Property, Plant and Equipment:
Land...................................................... 32,508 30,531
Buildings................................................. 243,514 212,848
Machinery and equipment................................... 767,165 683,155
Construction in progress.................................. 272,481 110,087
---------- ----------
1,315,668 1,036,621
Less accumulated depreciation............................. 382,510 345,594
---------- ----------
933,158 691,027
---------- ----------
Total Assets....................................... $1,842,342 $1,561,186
========== ==========
LIABILITIES
CURRENT LIABILITIES:
Accounts payable.......................................... $ 176,752 $ 117,910
Notes payable............................................. 136,600 50,000
Accrued compensation, contributions to employee benefit
plans and related taxes................................. 43,867 38,058
Dividends payable......................................... 13,532 12,572
Other accrued items....................................... 37,800 20,244
Income taxes.............................................. -- 2,026
Current maturities of long-term debt...................... 1,480 5,984
---------- ----------
Total Current Liabilities.......................... 410,031 246,794
Other Liabilities........................................... 24,788 18,839
Long-Term Debt:
Conventional long-term debt............................... 363,870 361,899
Debt exchangeable for common stock........................ 75,745 88,494
---------- ----------
439,615 450,393
Deferred Income Taxes....................................... 145,230 120,765
Contingent Liabilities--Note G.............................. -- --
Minority Interest........................................... 42,405 8,877
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 -- 1998 -- 96,656,759
shares; 1997 -- 96,711,235 shares....................... 968 968
Additional paid-in capital................................ 116,696 114,052
Unrealized loss on investment............................. (5,563) (5,563)
Foreign currency translation adjustment................... (2,812) (1,861)
Retained earnings......................................... 670,984 607,922
---------- ----------
780,273 715,518
---------- ----------
Total Liabilities and Shareholders' Equity......... $1,842,342 $1,561,186
========== ==========
</TABLE>
See notes to consolidated financial statements.
10
<PAGE> 14
WORTHINGTON INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
YEAR ENDED MAY 31
--------------------------------------
1998 1997 1996
IN THOUSANDS, EXCEPT PER SHARE ---------- ---------- ----------
<S> <C> <C> <C>
Net sales.............................................. $1,624,449 $1,428,346 $1,126,492
Cost of goods sold..................................... 1,371,841 1,221,078 948,505
---------- ---------- ----------
Gross Margin................................. 252,608 207,268 177,987
Selling, general and administrative expense............ 117,101 96,252 78,852
---------- ---------- ----------
Operating Income............................. 135,507 111,016 99,135
Other income (expense):
Miscellaneous income................................. 1,396 906 1,013
Interest expense..................................... (25,577) (18,427) (8,687)
Equity in net income of unconsolidated
affiliates -- Joint Ventures...................... 19,316 13,959 6,981
Equity in net income of unconsolidated
affiliate -- Rouge................................ -- -- 21,729
---------- ---------- ----------
Earnings Before Income Taxes................. 130,642 107,454 120,171
Income taxes........................................... 48,338 40,844 46,130
---------- ---------- ----------
Earnings From Continuing Operations.......... 82,304 66,610 74,041
Discontinued Operations:
Income from operations, net of taxes......... 17,337 26,708 26,932
Extraordinary Item, net of taxes....................... 18,771 -- --
---------- ---------- ----------
Net Earnings................................. $ 118,412 $ 93,318 $ 100,973
========== ========== ==========
Average Common Shares Outstanding...................... 96,751 96,557 96,487
Earnings Per Share (Basic):
Continuing Operations........................ $ 0.85 $ 0.69 $ 0.77
Discontinued Operations, net of taxes........ 0.18 0.28 0.28
Extraordinary Item, net of taxes............. 0.19 -- --
---------- ---------- ----------
Net Earnings................................. $ 1.22 $ 0.97 $ 1.05
========== ========== ==========
Earnings Per Share (Diluted):
Continuing Operations........................ $ 0.85 $ 0.69 $ 0.76
Discontinued Operations, net of taxes........ 0.18 0.27 0.28
Extraordinary Item, net of taxes............. 0.19 -- --
---------- ---------- ----------
Net Earnings................................. $ 1.22 $ 0.96 $ 1.04
========== ========== ==========
</TABLE>
Results have been restated to reflect the Custom Products and Cast Products
business segments as discontinued operations.
See notes to consolidated financial statements.
11
<PAGE> 15
WORTHINGTON INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
1998 1997 1996
DOLLARS IN THOUSANDS, EXCEPT PER SHARE -------- -------- --------
<S> <C> <C> <C>
COMMON SHARES:
Balance at beginning of year............................. $ 968 $ 965 $ 965
Sale of common shares under stock option plan, (142,902
in 1998; 173,026 in 1997; 116,051 in 1996)............ 1 2 1
Sale of shares under dividend reinvestment plan, (56,222
in 1998; 95,438 in 1997; 90,561 in 1996).............. 1 1 --
Purchase and retirement of common shares, (253,600 in
1998; 62,500 in 1997; 216,500 in 1996)................ (2) -- (1)
-------- -------- --------
Balance at May 31................................ $ 968 $ 968 $ 965
======== ======== ========
ADDITIONAL PAID-IN CAPITAL:
Balance at beginning of year............................. $114,052 $106,079 $102,943
Sale of common shares under stock option plan, (142,902
in 1998; 173,026 in 1997; 116,051 in 1996)............ 1,750 2,114 1,549
Sale of shares under dividend reinvestment plan, (56,222
in 1998; 95,438 in 1997; 90,561 in 1996).............. 1,155 1,895 1,820
Transactions of unconsolidated affiliates................ -- 4,033 10
Purchase and retirement of common shares, (253,600 in
1998; 62,500 in 1997; 216,500 in 1996)................ (261) (69) (243)
-------- -------- --------
Balance at May 31................................ $116,696 $114,052 $106,079
======== ======== ========
UNREALIZED LOSS ON INVESTMENT:
Balance at beginning of year............................. $ (5,563) $ -- $ --
Valuation adjustment..................................... -- (5,563) --
-------- -------- --------
Balance at May 31................................ $ (5,563) $ (5,563) $ --
======== ======== ========
MINIMUM PENSION LIABILITY:
Balance at beginning of year............................. $ -- $ (189) $ (1,210)
Minimum pension liability adjustment..................... -- 189 339
Transactions of unconsolidated affiliate................. -- -- 682
-------- -------- --------
Balance at May 31................................ $ -- $ -- $ (189)
======== ======== ========
TRANSLATION ADJUSTMENT:
Balance at beginning of year............................. $ (1,861) $ (1,248) $ (146)
Foreign currency translation adjustment.................. (951) (613) (1,102)
-------- -------- --------
Balance at May 31................................ $ (2,812) $ (1,861) $ (1,248)
======== ======== ========
RETAINED EARNINGS:
Balance at beginning of year............................. $607,922 $561,711 $505,588
Net earnings............................................. 118,412 93,318 100,973
Cash dividends declared:
(per share: $.53 in 1998; $.49 in 1997; $.45 in
1996)............................................ (51,271) (45,965) (40,872)
Purchase and retirement of common shares, (253,600 in
1998; 62,500 in 1997; 216,500 in 1996)................ (4,079) (1,142) (3,978)
-------- -------- --------
Balance at May 31................................ $670,984 $607,922 $561,711
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
12
<PAGE> 16
WORTHINGTON INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED MAY 31
---------------------------------
1998 1997 1996
DOLLARS IN THOUSANDS -------- --------- --------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net earnings............................................. $118,412 $ 93,318 $100,973
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization......................... 61,459 51,388 41,458
Provision for deferred income taxes................... 22,104 3,326 9,884
Equity in undistributed net income of unconsolidated
affiliates.......................................... (5,729) (9,625) (25,153)
Minority interest..................................... (553) (27) --
Extraordinary gain.................................... (29,795) -- --
Changes in assets and liabilities:
Accounts receivable................................. (43,319) (8,005) 8,573
Inventories......................................... 7,977 (70,322) 32,713
Prepaid expenses and other current assets........... (10,920) 8,331 2,732
Other assets........................................ (1,319) (2,801) (2,412)
Accounts payable and accrued expenses............... 76,637 11,658 (22,118)
Other liabilities................................... 5,949 1,122 (457)
-------- --------- --------
Net Cash Provided By Operating Activities........ 200,903 78,363 146,193
INVESTING ACTIVITIES:
Investment in property, plant and equipment, net......... (309,412) (172,905) (119,286)
Acquisitions, net of cash acquired....................... -- (69,942) (169,391)
Investments in unconsolidated affiliates................. -- (5,420) (8,315)
Proceeds from property insurance......................... 38,683 -- --
-------- --------- --------
Net Cash Used By Investing Activities............ (270,729) (248,267) (296,992)
FINANCING ACTIVITIES:
Proceeds from (payments on) short-term borrowings........ 86,600 50,000 (38,200)
Proceeds from long-term debt............................. 152,868 165,715 425,974
Principal payments on long-term debt..................... (155,401) (23,589) (180,473)
Proceeds from issuance of common shares.................. 2,955 4,011 3,370
Proceeds from minority interest.......................... 34,081 8,904 --
Repurchase of common shares.............................. (4,390) (1,211) (4,222)
Dividends paid........................................... (50,311) (44,294) (39,963)
-------- --------- --------
Net Cash Provided By Financing Activities........ 66,402 159,536 166,486
-------- --------- --------
Increase (decrease) in cash and cash equivalents......... (3,424) (10,368) 15,687
Cash and cash equivalents at beginning of year........... 7,212 17,580 1,893
-------- --------- --------
Cash and Cash Equivalents at End of Year......... $ 3,788 $ 7,212 $ 17,580
======== ========= ========
</TABLE>
See notes to consolidated financial statements.
13
<PAGE> 17
WORTHINGTON INDUSTRIES, INC. AND SUBSIDIARIES
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"). Spartan Steel
Coating, L.L.C.(owned 52%) is fully consolidated with the equity owned by Rouge
Industries, Inc. (48%) shown as minority interest on the balance sheet and their
portion of net income or loss included in miscellaneous income or expense.
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
1998 presentation.
Use of Estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
Investment in Rouge: In the first quarter of 1997, the Company irrevocably
converted Class B shares (2.5 votes per share) of Rouge Industries, Inc. (Rouge)
common stock for Class A shares (1 vote per share) of Rouge common stock which
reduced its voting interest in Rouge to below 20%. In addition, the Company's
seats on the Board of Directors of Rouge, and its future right to those seats,
were relinquished. As a result of these two steps, the Company has no ability to
exercise significant influence over Rouge. Therefore, the Company's investment
in Rouge no longer qualified for the equity method of accounting and was changed
to the cost method. As a result, after May 31, 1996, the Company's equity share
of Rouge earnings is no longer included in reported earnings or earnings per
share. In addition, the investment in Rouge common stock was transferred from
investment in unconsolidated affiliates and is shown separately. This investment
is adjusted to market value as an "available-for-sale" security with a net of
tax adjustment to shareholder's equity.
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.
Deferred Start-up Costs: The Company capitalizes costs of starting up new
plants and facilities and amortizes these costs over periods up to five years.
In April 1998, the Accounting Standards Executive Committee (AcSEC) issued
Statement of Position (SOP) 98-5, "Reporting on the Costs of Start-Up
Activities." This SOP is effective for fiscal 2000 and requires 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 May 31,
1998, the Company has capitalized (net of amortization) $13,663,000 of start-up
costs. The Company expects to 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.
Intangible Assets: Intangible Assets include goodwill which is being
amortized on the straight-line method over periods ranging from 30 to 40 years.
Unamortized goodwill was $95,665,000 at May 31, 1998 and $97,728,000 at May 31,
1997. Amortization expense was $3,066,000 in 1998, $2,409,000 in 1997 and
$548,000 in 1996.
Property and Depreciation: Property, plant and equipment are carried at
cost and depreciated using the straight-line and units-of-production methods
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, the Company capitalized
interest of $11,306,000 in 1998, $6,559,000 in 1997 and $2,880,000 in 1996.
Revenue Recognition: The Company recognizes revenue at the time of
shipment.
14
<PAGE> 18
Environmental Costs: Environmental costs are capitalized if the costs
extend the life of the property, increase its capacity, and/or mitigate or
prevent contamination from future operations. Costs related to environmental
contamination treatment and clean-up are charged to expense.
Recently Issued FASB Statements: The FASB recently issued Statements No.
129, "Disclosure of Information about Capital Structure," No. 130, "Reporting
Comprehensive Income," and Statement No. 131, "Disclosures about Segments of an
Enterprise and Related Information." Statement No. 129 deals with items already
disclosed by the Company. Statement No. 130, effective for fiscal 1999, will
require separate reporting of certain items affecting shareholders' equity
outside of those included in arriving at net earnings. Statement No. 131,
effective for fiscal 1999, establishes requirements for reporting information
about operating segments in annual reports and interim statements. This
statement will require a change in the way the Company's segments are presently
reported; however, the extent of the change has not been determined.
Statements of Cash Flows: Supplemental cash flow information for the years
ended May 31 is as follows:
<TABLE>
<CAPTION>
1998 1997 1996
IN THOUSANDS ------- ------- -------
<S> <C> <C> <C>
Interest paid......................................... $32,414 $26,587 $11,273
Income taxes paid..................................... $48,470 $58,912 $51,346
</TABLE>
Derivatives and Financial Instruments: The carrying amounts of cash and
cash equivalents, other assets, and long-term debt are reported in the balance
sheets at their approximate fair value.
The Company does not engage in currency or commodity speculation and
generally enters into forward contracts only to hedge specific foreign currency
or commodity transactions. The amount of these contracts outstanding and the
adjustments to market at any time are immaterial. Gains or losses from these
contracts offset gains or losses of the assets, liabilities or transactions
being hedged.
Risks and Uncertainties: The Company, including unconsolidated affiliates,
operates 51 production facilities in 20 states and nine countries (see "Company
Locations" on page 29) and does business in the markets described under "The
Company" beginning on page 1. The Company's largest markets are the automotive
and automotive supply markets. Foreign operations and exports represent less
than 10% of the Company's production and sales. The Company's largest supplier
is Rouge Industries, from whom it purchases steel at a slight discount under a
purchase contract expiring in 2003. Less than 30% of the Company's labor force
is covered by collective bargaining agreements. All material labor contracts
expire over one year from May 31, 1998. See Note H for significant business
transacted with a major customer. The concentration of credit risks from
financial instruments related to the markets served by the Company is not
expected to have a material adverse effect on the Company's consolidated
financial position, cash flow or future results of operations.
NOTE B -- SHAREHOLDERS' EQUITY
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.
15
<PAGE> 19
NOTE C -- DEBT
Debt at May 31 is summarized as follows:
<TABLE>
<CAPTION>
1998 1997
IN THOUSANDS -------- --------
<S> <C> <C>
Short-term unsecured notes payable.......................... $136,600 $ 50,000
Revolver -- unsecured....................................... -- 140,000
7.125% unsecured senior notes due May 15, 2006.............. 200,000 200,000
6.7% unsecured senior notes due December 1, 2009............ 150,000 --
Other....................................................... 15,350 27,883
-------- --------
Total conventional debt................................... 501,950 417,883
Debt exchangeable for common stock.......................... 75,745 88,494
-------- --------
Total debt................................................ 577,695 506,377
Less current maturities and short-term notes payable........ 138,080 55,984
-------- --------
Total long-term debt...................................... $439,615 $450,393
======== ========
</TABLE>
The short-term notes payable were borrowed against uncommitted lines of
credit and at May 31, 1998 had a weighted average interest rate of 5.8%. In the
previous year, short-term notes payable had a weighted average interest rate of
5.9%.
The Company maintains a $190,000,000 revolving credit facility with a group
of banks. As of May 31, 1998, there were no borrowings under this facility. The
credit agreement permits two one-year extensions with the consent of the
parties. The agreement has been extended to expire on May 30, 2003. The Company
pays a commitment fee of nine basis points per annum on the unused credit
amount. The rate of interest is determined at the time of borrowing, based upon
a choice of options as specified in the agreement. To maintain compliance with
the agreement, the Company must preserve a ratio of debt to total
capitalization, excluding the Debt Exchangeable for Common Stock (SM)(DECS), of
less than 50%. At May 31, 1998, the Company's ratio of debt to total
capitalization, calculated in accordance with the agreement, was 40.8%.
During the year ended May 31, 1998, the Company issued $150,000,000 of 6.7%
Notes due December 1, 2009. The proceeds were used (a) to repay short-term debt
incurred to fund capital expenditures, primarily for the Decatur, Alabama and
Spartan Steel projects, and working capital; (b) to repay debt outstanding under
its Revolver, and (c) for general corporate purposes.
The Company had "Other" debt that primarily included industrial development
revenue bonds with variable interest rates up to 4.0% at May 31, 1998. In the
previous year, "Other" debt primarily includes industrial development revenue
bonds and a Canadian dollar revolving term credit facility.
Principal payments due on long-term debt, including lease purchase
obligations, in the next five fiscal years are as follows: 1999 -- $1,480,000;
2000 -- $77,420,506; 2001 -- $1,667,484; 2002 -- $1,555,181; 2003 -- $1,557,009;
and thereafter -- $357,415,399.
During March 1997, the Company issued approximately $93 million of three
year notes exchangeable into Class A Common Stock of Rouge in the form of DECS.
The DECS have an interest rate of 7.25% and are due March 1, 2000. At maturity,
holders of the DECS will receive in exchange for the principal amount of the
notes, shares of common stock of Rouge (Rouge shares) held by the Company (or at
the Company's option, cash in lieu of the shares). It is the Company's intention
to settle the majority of the DECS using Rouge shares. The number of Rouge
shares (or the amount of cash to be paid) will be based upon the price of Rouge
Class A Common Stock shortly before the maturity of the DECS. If the value of
Rouge shares increases to a certain point the DECS liability would increase,
partially offsetting the market value increase in the stock. Because the stock
is considered an "available for sale" security, a net of tax adjustment to
shareholders' equity is made for the net change both in stock value and the
carrying amount of the DECS liability. The Company used the net proceeds from
the DECS offering to pay down short-term notes payable and to partially fund the
Spartan Steel project.
16
<PAGE> 20
The Company enters into interest rate swap agreements to manage interest
costs and exposure to changing interest rates. At May 31, 1998, agreements were
in place that effectively converted $100,000,000 of the 7.125% Notes due 2006
from fixed rate debt to floating. The interest rate swap agreements are
accounted for by recording interest expense at the variable rate (5.8% at May
31, 1998). No gains or losses are explicitly deferred. These agreements expire
on May 15, 2001. The counterparts to these agreements are major financial
institutions.
The Company guaranteed obligations of unconsolidated entities totaling
$35,836,000 at May 31, 1998, which relate to debt with varying maturities. The
Company believes the guarantees will not significantly affect its consolidated
financial position or future results of operations.
NOTE D -- INCOME TAXES
Income taxes for the years ended May 31 were as follows:
<TABLE>
<CAPTION>
1998 1997 1996
IN THOUSANDS ------- ------- -------
<S> <C> <C> <C>
Current:
Federal............................................. $35,340 $33,852 $32,526
State and local..................................... 4,160 4,618 6,357
Deferred:
Federal............................................. 8,259 2,719 7,270
State............................................... 579 (345) (23)
------- ------- -------
48,338 40,844 46,130
Discontinued Operations............................... 10,182 16,370 16,789
------- ------- -------
$58,520 $57,214 $62,919
======= ======= =======
</TABLE>
Under Statement of Financial Accounting Standards Board No. 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.
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:
<TABLE>
<CAPTION>
1998 1997
IN THOUSANDS -------- --------
<S> <C> <C>
Deferred tax assets:
Allowance for doubtful accounts....................... $ 569 $ 1,395
Inventory............................................. (1,440) (1,896)
Accrued expenses...................................... 4,806 4,422
Income taxes.......................................... 3,949 3,686
Other................................................. 651 620
-------- --------
8,535 8,227
Deferred tax liabilities:
Property, plant and equipment......................... 104,573 80,923
Undistributed earnings of unconsolidated affiliates... 40,657 39,842
-------- --------
145,230 120,765
-------- --------
Net deferred tax liability............................ $136,695 $112,538
======== ========
</TABLE>
17
<PAGE> 21
The reasons for the difference between the effective income tax rate and
the statutory federal income tax rate were as follows:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Federal statutory rate..................................... 35.0% 35.0% 35.0%
State and local income taxes, net of federal tax benefit... 2.2 2.6 3.5
Other...................................................... (.2) .4 (.1)
---- ---- ----
37.0% 38.0% 38.4%
==== ==== ====
</TABLE>
NOTE E -- EMPLOYEE BENEFIT PLANS
In February 1998, the FASB issued Statement of Financial Accounting
Standards No. 132, "Employers' Disclosures about Pensions and Other
Postretirement Benefits" which changed the required disclosures for employee
benefit plans. The Company adopted the Statement early as allowed with those
disclosures shown below.
Certain employees of the Company participate in a current cash profit
sharing plan and a deferred profit sharing plan. Contributions to and costs for
these plans are determined as a percentage of the Company's pre-tax income
before profit sharing.
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 1998, 1997 and 1996, and the contributions charged to pension
expense for the defined contribution plans follows:
<TABLE>
<CAPTION>
1998 1997 1996
IN THOUSANDS ------- ------ -------
<S> <C> <C> <C>
Defined benefit plans:
Service cost (benefits earned during the
period)..................................... $ 917 $ 656 $ 650
Interest cost on projected benefit
obligation.................................. 964 711 722
Actual return on plan assets................... (2,997) (622) (1,114)
Net amortization and deferral.................. 2,409 97 726
------- ------ -------
Net pension cost on defined benefit plans...... 1,293 842 984
Defined contribution plans....................... 5,720 5,206 4,111
------- ------ -------
Total pension expense -- Continuing
Operations........................... 7,013 6,048 5,095
Discontinued Operations.......................... 1,339 907 1,320
------- ------ -------
Total pension expense.................. $ 8,352 $6,955 $ 6,415
======= ====== =======
</TABLE>
18
<PAGE> 22
Pension expense was calculated assuming a weighted average discount rate of
7.9% and a weighted average expected long-term rate of 8.0%. 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:
<TABLE>
<CAPTION>
PENSION BENEFITS PENSION BENEFITS
CONTINUING DISCONTINUED
OPERATIONS OPERATIONS
------------------ ------------------
1998 1997 1998 1997
IN THOUSANDS ------- ------- ------- -------
<S> <C> <C> <C> <C>
Change in Benefit Obligation
Benefit Obligation -- Beginning of year........... $10,469 $ 9,551 $45,945 $38,201
Service Cost...................................... 917 656 1,501 1,136
Interest Cost..................................... 964 711 3,374 3,024
Amendments........................................ 978 -- -- 4,726
Actuarial Gain.................................... (177) 68 (2,779) 648
Benefits Paid..................................... (1,010) (517) (1,971) (1,790)
------- ------- ------- -------
Benefit obligation -- End of year................. $12,141 $10,469 $46,070 $45,945
======= ======= ======= =======
Change in Plan Assets
Fair Value of Plan Assets -- Beginning of year.... $ 8,206 $ 7,587 $55,861 $52,199
Actual Return on Plan Assets...................... 2,997 622 15,913 5,301
Employer Contribution............................. -- 514 -- 151
Plan Participants' contributions.................. 1,516 -- 177 --
Benefits Paid..................................... (1,010) (517) (1,971) (1,790)
------- ------- ------- -------
Fair Value of Plan Assets -- End of year.......... $11,709 $ 8,206 $69,980 $55,861
------- ------- ------- -------
Funded Status....................................... $ (432) $(2,263) $23,910 $ 9,916
Unrecognized net actuarial loss..................... (3,136) (803) (28,998) (15,397)
Unrecognized prior service cost..................... 2,614 2,018 8,511 9,159
------- ------- ------- -------
Prepaid (accrued) benefit cost...................... $ (954) $(1,048) $ 3,423 $ 3,678
======= ======= ======= =======
Plans With Benefit Obligations in Excess of Fair
Value of Plan Assets
Projected benefit obligation........................ $ 5,797 $10,469 $ -- $ --
Fair value of plan assets........................... 4,351 8,207 -- --
------- ------- ------- -------
Funded Status....................................... $(1,446) $(2,262) $ -- $ --
======= ======= ======= =======
</TABLE>
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
Compensation and Stock Option Committee. Generally, options are exercisable at
the rate of 20% per year beginning one year from date of grant and expire ten
years thereafter.
The following table summarizes the option plans' activity for the years
ended May 31:
<TABLE>
<CAPTION>
1998 1997 1996
------------------- ------------------- -------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE
IN THOUSANDS, EXCEPT PER SHARE ------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Outstanding -- beginning of
year............................ 2,370 $16.85 2,174 $15.57 1,821 $13.97
Granted........................... 465 18.71 434 20.44 501 20.20
Exercised......................... (143) 8.80 (173) 8.92 (116) 9.48
Forfeited......................... (252) 19.47 (65) 18.92 (32) 19.46
------ ----- -----
Outstanding -- end of year........ 2,440 $17.39 2,370 $16.85 2,174 $15.57
====== ===== =====
</TABLE>
19
<PAGE> 23
<TABLE>
<CAPTION>
1998 1997 1996
------------------- ------------------- -------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE
IN THOUSANDS, EXCEPT PER SHARE ------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Exercisable at end of year........ 1,273 $17.39 1,081 $13.14 996 $10.73
Weighted-average fair value of
options granted during the
year............................ $ 3.91 $ 4.96 $4.51
Assumptions used:
Dividend yield............... 3.00% 2.53% 2.53%
Expected volatility.......... 23.00% 23.00% 23.00%
Risk-free interest rate...... 5.06% 5.12% 5.12%
Expected lives (years)....... 5 5 5
</TABLE>
Options outstanding at May 31, 1998 had exercise prices ranging from $9.22
to $21.375 and expiration dates ranging from May 1999 to November 2007.
The Company has adopted the disclosure-only provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation." Accordingly, no compensation cost has been recognized for the
stock option plans. Had compensation cost for the Company's stock option plans
been determined based on the fair value at the grant date for awards in 1998,
1997 and 1996 consistent with the provisions of SFAS No. 123, the Company's net
earnings and earnings per share would not have been materially affected.
The fair value of each option grant was estimated on the date of grant
using the Black-Scholes option-pricing model with the above weighted-average
assumptions used for grants. Because the Company's employee stock options have
characteristics significantly different from those of traded options, and
because changes in the subjective input assumptions can materially affect the
fair value estimate, in the Company's opinion, the existing models do not
necessarily provide a reliable single measure of the fair value of its employee
stock options.
NOTE G -- CONTINGENT LIABILITIES AND COMMITMENTS
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. The Company believes that
environmental issues will not have a material effect on capital expenditures,
consolidated financial position or future results of operations.
In connection with various construction projects, the Company had purchase
commitments approximating $50 million as of May 31, 1998.
To secure access to facilities used to regenerate acid used in certain
steel processing locations, the Company has entered into an unconditional
purchase obligation with a third party which requires the Company to deliver
certain quantities of acid for processing annually through the year 2018. In
addition, the Company is required to pay for freight and utilities used in
processing its acid. The aggregate amount of required payments at May 31, 1998
is as follows (in thousands):
<TABLE>
<S> <C>
1999.................................. $ 0
2000.................................. 2,367
2001.................................. 2,367
2002.................................. 2,367
2003.................................. 2,367
Thereafter............................ 37,877
-------
Total....................... $47,345
=======
</TABLE>
The Company may not terminate the unconditional purchase obligation without
assuming or otherwise repaying certain debt of the supplier, based on the fair
market value of the facility. At May 31, 1998, no such debt was outstanding.
20
<PAGE> 24
NOTE H -- INDUSTRY SEGMENT DATA
Sales for continuing operations, comprised of the Processed Steel Products
segment, include $124,304,000 in 1998, $95,169,000 in 1997 and $60,772,000 in
1996 to a major automobile manufacturer purchasing through decentralized
divisions and subsidiaries in different geographical areas. Sales for
discontinued operations, comprised of the Custom Products and Cast Products
segments, for the same customer were $152,545,000 in 1998, $171,957,000 in 1997,
and $159,770,000 in 1996. Certain segment disclosures for the continuing segment
are shown below and for the discontinued segments are shown in Note N.
<TABLE>
<CAPTION>
1998 1997 1996
IN THOUSANDS ---------- ---------- ----------
<S> <C> <C> <C>
Identifiable assets.......................... $1,556,547 $1,264,432 $1,038,210
Depreciation and amortization expense........ 41,589 34,091 26,915
Capital expenditures......................... $ 297,612 $ 160,846 $ 97,346
</TABLE>
Industry segment descriptions on pages 1 and 2, and company locations on
page 29 of the Annual Report are an integral part of these financial statements.
NOTE I -- RELATED PARTY TRANSACTIONS
The Company purchases from and sells to affiliated companies, certain raw
materials and services at prevailing market prices. Sales to affiliated
companies for fiscal 1998, 1997 and 1996, totaled $33 million, $25 million and
$51 million, respectively. Accounts receivable related to these transactions
were $14 million and $16 million at May 31, 1998 and 1997, respectively.
Purchases for fiscal 1998, 1997 and 1996, totaled $1 million, $1 million and
$167 million, respectively. Accounts payable to related parties were $4 million
and $5 million at May 31, 1998 and 1997, respectively.
NOTE J -- INVESTMENT IN UNCONSOLIDATED AFFILIATES
During the quarter ended August 31, 1996, the Company took certain steps
relative to its investment in Rouge Industries which resulted in the Company
accounting for this investment on the cost method instead of the equity method
(see Note A). As a result, after May 31, 1996, Rouge's results are no longer
included in the table below.
The Company's investments in affiliated companies which are not
"majority-owned" and controlled are accounted for using the equity method.
Investments carried at equity and the percentage interest owned consist of
Worthington Specialty Processing, partnership (50%), Worthington Armstrong
Venture, partnership (50%), TWB Company (33%), Acerex, S.A. de C.V. (50%) and
Worthington S.A. (52%).
During April 1997, TWB Company sold new shares for $19.5 million to three
different owners giving them a total ownership interest of 33%. As a result, the
Company's share of ownership was reduced from 50% to 33%. An increase in
additional paid-in capital of $3,798,000 (net of deferred taxes of $2,328,000)
was recorded from the transaction. The proceeds were used by TWB to repay
advances to the Company.
During February 1997, the Company formed Worthington S.A., a joint venture
with three major gas distributors in Brazil. At May 31, 1998, the Company's
share of the underlying net assets of Worthington S.A. was less than the
carrying amount included in investment in unconsolidated affiliates by
$2,187,000. This difference is being amortized by decreasing equity in net
income of unconsolidated affiliates using the straight-line method over 40
years.
21
<PAGE> 25
Financial information for affiliated companies accounted for by the equity
method is as follows:
<TABLE>
<CAPTION>
1998 1997 1996
IN THOUSANDS -------- -------- ----------
<S> <C> <C> <C>
Current assets...................................... $ 90,535 $ 85,234 $ 542,047
Noncurrent assets................................... 135,688 117,250 277,784
Current liabilities................................. 34,979 31,236 231,931
Noncurrent liabilities.............................. 67,869 57,996 161,968
Minority interests.................................. -- -- 6,404
Net sales........................................... 282,616 214,914 1,357,581
Gross margin........................................ 73,510 54,088 118,972
Net income.......................................... $ 38,251 $ 25,116 $ 88,058
</TABLE>
Prior year data has been restated to exclude London Industries, Inc.
included as part of discontinued operations.
The Company's share of undistributed earnings of unconsolidated affiliates
included in consolidated retained earnings was $83,362,000 at May 31, 1998.
NOTE K -- ACQUISITIONS
During February 1998, the Company signed a definitive agreement to purchase
the stock of Jos. Heiser vormals J. Winter's Sohn, Gmbh located in Austria. The
transaction valued at approximately $35 million was closed in June 1998,
recorded as a purchase in fiscal 1999 and financed by short-term debt.
On February 21, 1997, the Company acquired The Gerstenslager Company
(Gerstenslager) in a business combination accounted for as a pooling of
interests. Gerstenslager, located in Ohio, is a producer of aftermarket
automotive body panels. Gerstenslager was primarily owned by a subsidiary of
JMAC, Inc., an investment company which is owned by John P. McConnell, Chairman
and CEO of the Company and a partnership involving John P. McConnell, John H.
McConnell, Chairman Emeritus, and a trust for the benefit of their families. All
of the stock of Gerstenslager was exchanged for 5,675,000 Common Shares of the
Company which had a value of $113 million based on an average share price prior
to the closing date. The Board of Directors of the Company received an opinion
from an independent investment banking firm attesting to the fairness of this
consideration.
On December 3, 1996, the Company acquired the net assets of Plastics
Manufacturing, Inc. (PMI), located in North Carolina, for $61.6 million in a
business combination accounted for as a purchase. PMI is a manufacturer of
plastic injection molded and thermoformed parts. The results of operations for
PMI are included in the financial statements of the Company since the date of
acquisition. Goodwill in the amount of $30.6 million resulting from the purchase
is being amortized using the straight-line method over 30 years.
During June 1996, the Company acquired the stock of SCM Technologies (SCM)
for $8.4 million. SCM designs, engineers and manufactures high pressure
industrial, medical, halon and electronic gas cylinders and is located near
Windsor, Ontario. The transaction was accounted for as a purchase. The results
of operations for SCM are included in the financial statements of the Company
since the date of acquisition. Goodwill in the amount of $3.8 million resulting
from the purchase is being amortized using the straight-line method over 40
years.
Proforma results including SCM and PMI since the beginning of the earliest
period presented would not be materially different than actual results.
On February 5, 1996, the Company acquired all of the outstanding capital
stock of Dietrich Industries, Inc. (Dietrich) for approximately $146 million in
cash and $23 million in assumed liabilities, net of cash acquired. Dietrich,
based in Pittsburgh, Pennsylvania, is involved primarily in the manufacture and
sale of metal framing products for the commercial and residential construction
markets. The acquisition was accounted for using purchase accounting with
results for Dietrich included since the purchase date. The purchase price
exceeded the fair value of the net assets acquired by approximately $66 million
which is being amortized over 40 years.
22
<PAGE> 26
The following proforma data summarizes the results of operations of the
Company for the twelve months ended May 31, 1996 assuming Dietrich was acquired
at June 1, 1995. In preparing the proforma data, adjustments have been made to
conform Dietrich's accounting policies to those of the Company and to reflect
purchase accounting adjustments and interest expense:
<TABLE>
<CAPTION>
TWELVE MONTHS
ENDED MAY 31, 1996
IN THOUSANDS, EXCEPT PER SHARE (UNAUDITED) ------------------
<S> <C>
Net sales............................................... $1,309,469
==========
Earnings from Continuing Operations..................... $ 75,202
==========
Earnings per share (diluted) -- Continuing Operations... $ .78
==========
</TABLE>
The proforma 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 or the results of operations which will be
reported in the future.
NOTE L -- 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 from continuing operations:
<TABLE>
<CAPTION>
YEAR ENDED MAY 31
-----------------------------------------
1998 1997 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE) ----------- ----------- -----------
<S> <C> <C> <C>
NUMERATOR (BASIC & DILUTED):
Earnings From Continuing
Operations -- income available to common
shareholders............................ $ 82,304 $ 66,610 $ 74,041
=========== =========== ===========
DENOMINATOR:
Denominator for basic earnings per share-
weighted-average shares................. 96,751,260 96,557,453 96,487,226
Effect of dilutive securities -- employee
stock options........................... 197,405 283,817 335,158
----------- ----------- -----------
Denominator for diluted earnings per
share -- adjusted weighted-average
shares.................................. 96,948,665 96,841,270 96,822,384
=========== =========== ===========
Basic earnings from continuing operations
per share............................... $ 0.85 $ 0.69 $ 0.77
=========== =========== ===========
Diluted earnings from continuing
operations per share.................... $ 0.85 $ 0.69 $ 0.76
=========== =========== ===========
Antidilutive securities (a)............... 1,617,237 746,787 340,853
=========== =========== ===========
</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.
23
<PAGE> 27
NOTE M -- 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 shifted as much business as possible to its other locations, with the
remainder being sent to third party processors. Blanking and slitting operations
resumed in fiscal 1998 and pickling is expected to resume by the first half 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.
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
statements of earnings is as follows:
<TABLE>
(IN THOUSANDS)
<S> <C>
Proceeds.................................................... $38,683
Less book value............................................. 8,888
-------
Gain on involuntary conversion.............................. 29,795
Income tax provision........................................ 11,024
-------
$18,771
=======
</TABLE>
Insurance proceeds received in the settlement were as follows:
<TABLE>
(IN THOUSANDS)
<S> <C>
Property and equipment...................................... $38,683
Inventory................................................... 2,500
Business interruption....................................... 12,800
Other expenses.............................................. 7,917
-------
$61,900
=======
</TABLE>
The proceeds related to damaged inventory approximated cost. The proceeds
related to business interruption are $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 recorded as a reduction of the related expense. The proceeds for
other expenses represent reimbursement for non-recurring expenses related to the
fire and were recorded as a reduction of manufacturing costs.
The Company has continued to incur business interruption losses subsequent
to February 28, 1998. At May 31, 1998, the Company has accrued $4,632,000 as a
receivable for lost operating income ($2,400,000 included in net sales) and
mitigating expenses ($2,232,000 reflected as a reduction of the related
expense). Advances since February 28, 1998 of $10,000,000 have been received
from the Company's insurer toward these losses and advances are included in
Other Accrued Items at May 31, 1998.
NOTE N -- DISCONTINUED OPERATIONS
As a result of a strategic review, the Company adopted a plan to sell its
subsidiaries Worthington Custom Plastics, Worthington Precision Metals, and
Buckeye Steel Castings. Accordingly, the company has reported the results of
these businesses, which make up the Company's Custom Products and Cast Products
business segments, as discontinued operations. The Company expects to sell the
segments for cash amounts greater than book value within the next 12 months.
24
<PAGE> 28
A summary of the assets and liabilities of the discontinued segments
follows:
<TABLE>
<CAPTION>
AT MAY 31, 1998
--------------------------------
CUSTOM CAST
PRODUCTS PRODUCTS TOTAL
IN THOUSANDS -------- -------- --------
<S> <C> <C> <C>
ASSETS
Current Assets..................................... $ 88,420 $33,109 $121,529
Noncurrent Assets.................................. 130,840 33,426 164,266
-------- ------- --------
Total Assets............................. 219,260 66,535 285,795
LIABILITIES
Current Liabilities................................ 26,680 14,342 41,022
Noncurrent Liabilities............................. 443 420 863
-------- ------- --------
Total Liabilities........................ 27,123 14,762 41,885
-------- ------- --------
Net Assets of Discontinued Operations.............. $192,137 $51,773 $243,910
======== ======= ========
</TABLE>
<TABLE>
<CAPTION>
AT MAY 31, 1997
--------------------------------
CUSTOM CAST
PRODUCTS PRODUCTS TOTAL
IN THOUSANDS -------- -------- --------
<S> <C> <C> <C>
ASSETS
Current Assets..................................... $ 94,488 $29,508 $123,996
Noncurrent Assets.................................. 139,154 33,604 172,758
-------- ------- --------
Total Assets............................. 233,642 63,112 296,754
LIABILITIES
Current Liabilities................................ 29,268 10,478 39,746
Noncurrent Liabilities............................. 520 576 1,096
-------- ------- --------
Total Liabilities........................ 29,788 11,054 40,842
-------- ------- --------
Net Assets of Discontinued Operations.............. $203,854 $52,058 $255,912
======== ======= ========
</TABLE>
Summarized operating results of Discontinued Operations follow:
<TABLE>
<CAPTION>
CUSTOM CAST
PRODUCTS PRODUCTS TOTAL
IN THOUSANDS -------- -------- --------
<S> <C> <C> <C>
FOR THE YEAR ENDED MAY 31, 1998
Net Sales......................................... $372,822 $121,026 $493,848
Earnings Before Income Taxes...................... 21,508 6,011 27,519
Income Taxes...................................... 7,958 2,224 10,182
-------- -------- --------
Net Earnings...................................... $ 13,550 $ 3,787 $ 17,337
======== ======== ========
FOR THE YEAR ENDED MAY 31, 1997
Net Sales......................................... $380,048 $103,326 $483,374
Earnings Before Income Taxes...................... 31,272 11,806 43,078
Income Taxes...................................... 11,884 4,486 16,370
-------- -------- --------
Net Earnings...................................... $ 19,388 $ 7,320 $ 26,708
======== ======== ========
FOR THE YEAR ENDED MAY 31, 1996
Net Sales......................................... $321,013 $130,585 $451,598
Earnings Before Income Taxes...................... 25,293 18,428 43,720
Income Taxes...................................... 9,712 7,076 16,788
-------- -------- --------
Net Earnings...................................... $ 15,581 $ 11,352 $ 26,932
======== ======== ========
</TABLE>
25
<PAGE> 29
Other items of Discontinued Operations follow:
<TABLE>
<CAPTION>
CUSTOM CAST
PRODUCTS PRODUCTS TOTAL
IN THOUSANDS -------- -------- --------
<S> <C> <C> <C>
FOR THE YEAR ENDED MAY 31, 1998
Depreciation and Amortization Expense.............. $ 15,229 $ 4,641 $ 19,870
Capital Expenditures............................... 6,999 4,801 11,800
FOR THE YEAR ENDED MAY 31, 1997
Depreciation and Amortization Expense.............. 12,843 4,454 17,297
Capital Expenditures............................... 9,083 2,976 12,059
FOR THE YEAR ENDED MAY 31, 1996
Depreciation and Amortization Expense.............. 10,330 4,213 14,543
Capital Expenditures............................... $ 17,423 $ 4,517 $ 21,940
</TABLE>
NOTE O -- QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following is a summary of the unaudited quarterly results of operations
for the years ended May 31, 1998 and 1997:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------------------
AUGUST NOVEMBER FEBRUARY MAY
IN THOUSANDS, EXCEPT PER SHARE -------- -------- -------- --------
<S> <C> <C> <C> <C>
1998
Net sales....................................... $387,561 $392,690 $397,529 $446,669
Gross margin.................................... 61,175 57,723 59,353 74,357
Earnings from continuing operations............. 20,971 17,046 18,821 25,466
Earnings from discontinued operations, net of
tax........................................... 1,783 4,854 3,527 7,173
Extraordinary item, net of tax.................. -- -- 18,771 --
-------- -------- -------- --------
Net earnings.................................... $ 22,754 $ 21,900 $ 41,119 $ 32,639
======== ======== ======== ========
Earnings per share (Diluted):
Continuing operations.................... $ .22 $ .18 $ .19 $ .26
Discontinued operations.................. .02 .05 .04 .08
Extraordinary item....................... -- -- .19 --
-------- -------- -------- --------
Net Earnings............................. $ .24 $ .23 $ .42 $ .34
======== ======== ======== ========
1997
Net sales....................................... $327,788 $343,978 $352,054 $404,526
Gross margin.................................... 49,293 48,532 49,943 59,500
Earnings from continuing operations............. 16,792 15,608 14,712 19,498
Earnings from discontinued operations, net of
tax........................................... 5,169 7,059 7,105 7,375
-------- -------- -------- --------
Net earnings.................................... $ 21,961 $ 22,667 $ 21,817 $ 26,873
======== ======== ======== ========
Earnings per share (Diluted):
Continuing operations.................... $ .18 $ .16 $ .15 $ .20
Discontinued operations.................. .05 .07 .08 .08
-------- -------- -------- --------
Net Earnings............................. $ .23 $ .23 $ .23 $ .28
======== ======== ======== ========
</TABLE>
Results have been restated to reflect the Custom Products and Cast Products
business segments as discontinued operations.
26
<PAGE> 30
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 P. MCCONNELL
------------------------------------
John P. McConnell, Chairman & CEO
/s/ MICHAEL R. SAYRE
------------------------------------
Michael R. Sayre, Corporate
Controller
27
<PAGE> 31
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, 1998 and 1997, and the related
consolidated statements of earnings, shareholders' equity, and cash flows for
each of the three years in the period ended May 31, 1998. 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, 1998 and 1997, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended May 31, 1998 in conformity with generally accepted accounting
principles.
/s/ ERNST & YOUNG LLP
------------------------------------
Ernst & Young LLP
Columbus, Ohio
June 18, 1998
28
<PAGE> 32
COMPANY LOCATIONS
CONTINUING OPERATIONS
PROCESSED STEEL PRODUCTS
THE WORTHINGTON STEEL COMPANY
Columbus, Monroe & Delta, Ohio
Louisville, Kentucky
Rock Hill, South Carolina
Baltimore, Maryland
Jackson & Taylor, Michigan
Malvern, Pennsylvania
Porter, Indiana
Decatur, Alabama
WORTHINGTON CYLINDER CORPORATION
Columbus, Jefferson & Westerville, Ohio
Claremore, Oklahoma
Citronelle, Alabama
Gaming, Austria
Tilbury, Ontario, Canada
DIETRICH INDUSTRIES, INC.
Hammond & LaPorte, Indiana
Hicksville, Warren & Aurora, Ohio
Atlanta, Georgia
Baltimore, Maryland
Lunenburg, Massachusetts
Colton & Stockton, California
Phoenix, Arizona
Wildwood & Miami, Florida
East Brunswick, New Jersey
Hutchins, Texas
Fredericksburg, Virginia
Denver, Colorado
Lenexa, Kansas
THE GERSTENSLAGER COMPANY
Wooster, Ohio
WORTHINGTON MACHINE TECHNOLOGY
Columbus, Ohio
JOINT VENTURES
WORTHINGTON SPECIALTY PROCESSING (WSP)
Steel Processing
Jackson, Michigan
ACEREX S.A. DE C.V.
Steel Processing
Monterrey, Mexico
SPARTAN STEEL COATING, L.L.C.
Steel Processing
Monroe, Michigan
TWB COMPANY, L.L.C.
Laser Welded Blanks
Monroe, Michigan
WORTHINGTON ARMSTRONG VENTURE (WAVE)
Suspended Ceilings
Malvern, Pennsylvania
Sparrows Point, Maryland
Valenciennes, France
North Las Vegas, Nevada
Shanghai, China
Madrid, Spain
Team Valley, England
Benton Harbor, Michigan
WORTHINGTON S.A.
Pressure Cylinders
Sao Paulo, Brazil
29
<PAGE> 33
OFFICERS & DIRECTORS
CORPORATE OFFICERS
John H. McConnell*
Chairman Emeritus & Founder
Director, 1955
John P. McConnell*
Chairman & Chief Executive Officer
Director, 1975
Donal H. Malenick*
President & Chief Operating Officer
Director, 1959
William S. Dietrich
Chairman-Dietrich Industries
Director, 1996
Edward A. Ferkany
Executive Vice President, 1974
Robert J. Borel
Vice President-Engineering, 1973
Mark H. Stier
Vice President-Human Resources, 1975
Thomas L. Hockman
Vice President-Personnel, 1973
Dale T. Brinkman
General Counsel & Asst. Secretary, 1982
Michael R. Sayre
Corporate Controller, 1993
John T. Baldwin
Treasurer, 1997
OUTSIDE DIRECTORS
John B. Blystone++
Chairman, President & CEO
SPX Corporation
Director, 1997
Charles R. Carson+
Retired Senior Vice President
General Electric Company
Director, 1986
John F. Havens++*
Retired Chairman
Banc One Corporation
Director, 1988
Peter Karmanos, Jr.+
Chairman, CEO & Co-Founder
Compuware Corporation
Director, 1997
Pete A. Klisares*
President & Chief Operating Officer
Karrington Health, Inc.
Director, 1991
Katherine S. LeVeque+
Chief Executive Officer
LeVeque Enterprises
Director, 1992
Robert B. McCurry++
Senior Advisor to President
Toyota Motor Sales, U.S.A. Inc.
Director, 1972
Charles D. Minor+
Counsel
Vorys, Sater, Seymour and Pease,
Secretary-Director, 1962
Gerald B. Mitchell++
Retired Chairman
Dana Corporation
Director, 1986
James Petropoulos+
Owner
James Petropoulos & Company
Director, 1976
SUBSIDIARY OFFICERS
Ralph V. Roberts
Group President, 1973
The Worthington Steel Company
Virgil L. Winland
Group President, 1971
Worthington Cylinder Corporation
Richard F. Berdik
President, 1996
Dietrich Industries, Inc.
Jay D. Wisner
President, 1997
The Gerstenslager Company
- ---------------
* Member of Executive Committee
+ Member of Audit Committee
++ Member of Compensation and Stock Option Committee
Note: Year indicates initial year of affiliation with Worthington Industries
30
<PAGE> 1
EXHIBIT 21
WORTHINGTON INDUSTRIES, INC.
A DELAWARE CORPORATION
JURISDICTION OF
SUBSIDIARY (1) INCORPORATION
- --------------------------------------------------------------------------------
Worthington Industries Incorporated Ohio
Worthington Foreign Sales Corporation Barbados
Worthington Steel of Michigan, Inc. Michigan
d/b/a The Worthington Steel Company
SUBSIDIARIES OF WORTHINGTON STEEL OF MICHIGAN, INC.
- ---------------------------------------------------
Dietrich Industries, Inc. Pennsylvania
Dietrich Design Group, Inc. (2) Pennsylvania
The Gerstenslager Company Michigan
The Worthington Steel Company Delaware
NRM Trucking Company (3) Delaware
The Worthington Steel Company North Carolina
The Worthington Steel Company of Alabama, Inc. Michigan
The Worthington Steel Company of Decatur, Inc. Michigan
The Worthington Steel Company Ohio
Worthington Cylinder Corporation Ohio
Worthington Acetylene Cylinders, Inc. (4) Alabama
(d/b/a North American Cylinders, Inc.)
Buckeye Steel Castings Company Ohio
Buckeye Energy Company, Inc. (5) Ohio
Buckeye International Development, Inc. (5) Ohio
GSI Engineering, Inc. (5) Delaware
Worthington Custom Plastics, Inc. (5) Ohio
Worthington Precision Metals, Inc. (6) Tennessee
LIMITED LIABILITY COMPANY SUBSIDIARIES
- --------------------------------------
Worthington Steel Company of Decatur, L.L.C. (7) Alabama
Worthington Steel Company of Kentucky, L.L.C. (8) Kentucky
JOINT VENTURES
- --------------
Worthington Specialty Processing, Inc. (9) Michigan
Worthington S.A. (10) Brazil
Spartan Steel Coating, L.L.C. (11) Michigan
TWB Company, L.L.C. (12) Michigan
Worthington Armstrong Venture (13) Delaware
Acerex, S.A. de C.V. (14) Mexico
<PAGE> 2
FOREIGN SUBSIDIARIES
- ---------------------
Worthington Cylinders of Canada, Inc. (4) Ontario, Canada
Steel Cylinder Manufacturing, Inc. (15) Ontario, Canada
Industrias Worthington Do Brasil Ltda (16) Brazil
Worthington Industries Mexico, S.A. de C.V. (17) Mexico
Worthington Armstrong Venture Europe, S.A. (18) France
Worthington Heiser (19) Austria
Worthington Steel Company of Alabama, Inc. & Co. OEG (20) Austria
* * * * *
1. All subsidiaries are 100% owned by the listed parent unless otherwise
noted. Some minor or non-functioning corporations are not listed.
2. Wholly-owned subsidiary of Dietrich Industries, Inc. (PA)
3. Wholly-owned subsidiary of The Worthington Steel Company (DE)
4. Wholly-owned subsidiary of Worthington Cylinder Corporation (OH)
5. Wholly-owned subsidiary of Buckeye Steel Castings Company (OH)
6. Wholly-owned subsidiary of Worthington Custom Plastics, Inc. (OH)
7. Owned by The Worthington Steel Company of Alabama, Inc.(MI) and The
Worthington Steel Company of Decatur, Inc.
8. Owned by The Worthington Steel Company (OH) and by Worthington Steel of
Michigan, Inc. (MI)
9. 50% Joint Venture w/USX Corporation - owned by Worthington Steel
of Michigan, Inc.
10. Joint Venture - owned 52% by Industrias Worthington do Brasil
Ltda. and 48% by Metalplus
11. Joint Venture among QS Steel Inc. (48%) and Worthington Steel of Michigan,
Inc. (MI) (52%)
12. Joint Venture among Thyssen Inc. (33.33%); Worthington Steel of Michigan,
Inc. (33.33%); QS Steel Inc., Bethlehem Blank Welding, Inc. and LTV Steel
ea own 11.11%
13. 50% Joint Venture w/Armstrong Ventures, Inc. - Owned by The
Worthington Steel Company (DE)
14. 50% Joint Venture with Hylsa S.A. de C.V. Owned by Worthington
Industries Mexico, S.A. de C.V.
15. Wholly-owned subsidiary of Worthington Cylinders of Canada, Inc.
(Ontario)
16. Owned by Worthington Steel of Michigan, Inc. (MI) and Worthington Cylinder
Corporation (OH)
17. Subsidiary of Worthington Steel of Michigan, Inc. (MI)
18. Subsidiary of Worthington Armstrong Venture (DE)
19. Subsidiary of Worthington Cylinder Corporation (OH)
20. Owned by The Worthington Steel Company of Alabama, Inc. (MI) and The
Worthington Steel Company of Decatur, Inc. (MI)
E-16
<PAGE> 1
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 18, 1998, included in
the 1998 Annual Report to Shareholders of Worthington Industries, Inc.
Our audits also included the financial statement schedule of Worthington
Industries, Inc. listed in Items 14(a)(2) and 14(d). 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, presents 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. 33-57981) pertaining to the Worthington Industries, Inc. Deferred
Profit Sharing Plan; (Form S-8 No. 2-80094) pertaining to the Worthington
Industries, Inc. Amended 1980 Stock Option Plan; (Form S-3 No. 33-46470 and Form
S-3 No. 333-48627) 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; (Form S-8 No. 333-18099)
pertaining to the Worthington Steel Company (Malvern) Union Retirement Savings
Plan; and (Form S-8 No. 333-42849) pertaining to the Worthington Industries,
Inc. 1997 Long-Term Incentive Plan, of our report dated June 18, 1998, 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 schedule included in this Annual Report (Form 10-K) of
Worthington Industries, Inc.
/s/Ernst & Young LLP
Columbus, Ohio
August 27, 1998
<PAGE> 1
EXHIBIT 24
POWERS OF ATTORNEY
------------------
<PAGE> 2
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, on Form 10-K 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 21st
day of May, 1998.
/s/John T. Baldwin
-------------------------------
<PAGE> 3
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, on Form 10-K 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 21st
day of May, 1998.
/s/John B. Blystone
-------------------------------
<PAGE> 4
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, on Form 10-K 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 21st
day of May, 1998.
/s/Charles R. Carson
-------------------------------
<PAGE> 5
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, on Form 10-K 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 21st
day of May, 1998.
/s/William S. Dietrich, II
-------------------------------
<PAGE> 6
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, on Form 10-K 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 21st
day of May, 1998.
/s/Edward A. Ferkany
-------------------------------
<PAGE> 7
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, on Form 10-K 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 21st
day of May, 1998.
/s/John F. Havens
-------------------------------
<PAGE> 8
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, on Form 10-K 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 21st
day of May, 1998.
/s/Peter Karmanos, Jr.
-------------------------------
<PAGE> 9
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, on Form 10-K 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 21st
day of May, 1998.
/s/Pete A. Klisares
-------------------------------
<PAGE> 10
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, on Form 10-K 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 21st
day of May, 1998.
/s/Katherine S. LeVeque
-------------------------------
<PAGE> 11
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, on Form 10-K 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 21st
day of May, 1998.
/s/Donal H. Malenick
-------------------------------
<PAGE> 12
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, on Form 10-K 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 21st
day of May, 1998.
/s/John H. McConnell
-------------------------------
<PAGE> 13
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, on Form 10-K 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 21st
day of May, 1998.
/s/John P. McConnell
-------------------------------
<PAGE> 14
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, on Form 10-K 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 21st
day of May, 1998.
/s/Robert B. McCurry
-------------------------------
<PAGE> 15
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, on Form 10-K 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 21st
day of May, 1998.
/s/Charles D. Minor
-------------------------------
<PAGE> 16
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, on Form 10-K 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 21st
day of May, 1998.
/s/Gerald B. Mitchell
-------------------------------
<PAGE> 17
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, on Form 10-K 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 21st
day of May, 1998.
/s/James Petropoulos
-------------------------------
<PAGE> 18
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, on Form 10-K 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 21st
day of May, 1998.
/s/Ralph V. Roberts
-------------------------------
<PAGE> 19
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, on Form 10-K 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 21st
day of May, 1998.
/s/Michael R. Sayre
-------------------------------
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0
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