<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM 10 - Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended November 30,1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from __________________ to __________________
Commission File No. 0-4016
WORTHINGTON INDUSTRIES, INC.
----------------------------
(Exact name of Registrant as specified in its Charter)
OHIO 31-1189815
- --------------------------------------- ---------------------------------
(State of Incorporation) (IRS Employer Identification No.)
1205 Dearborn Drive, Columbus, Ohio 43085
- ---------------------------------------- ---------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (614) 438-3210
------------------------------
NOT APPLICABLE
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed from
last report)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.
As of December 31, 1999, 89,236,703 of the Issuer's common shares,
without par value, were outstanding.
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WORTHINGTON INDUSTRIES, INC.
INDEX
PAGE
----
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets -
November 30, 1999 and May 31, 1999.............................3
Condensed Consolidated Statements of Earnings -
Three and Six Months Ended November 30, 1999 and 1998..........5
Condensed Consolidated Statements of Cash Flows -
Six Months Ended November 30, 1999 and 1998....................6
Notes to Condensed Consolidated Financial Statements...........7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS...............8
PART II. OTHER INFORMATION
ITEM 6. EXHIBIT AND REPORTS ON FORM 8-K...........................14
SIGNATURES.................................................................14
2
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WORTHINGTON INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
ASSETS
November 30, May 31,
1999 1999
---------- ----------
(Unaudited) (Audited)
CURRENT ASSETS
Cash and cash equivalents $ 7,211 $ 7,641
Accounts receivable, net 259,697 281,706
Inventories
Raw materials 200,144 163,277
Work in process 65,893 39,786
Finished products 62,518 53,947
---------- ----------
Total Inventories 328,555 257,010
Investment in Rouge 44,997 52,497
Other current assets 12,477 25,401
---------- ----------
TOTAL CURRENT ASSETS 652,937 624,255
Property, plant and equipment 1,150,658 1,131,761
Less accumulated depreciation 289,310 260,414
---------- ----------
Property, Plant and Equipment, net 861,348 871,347
Other Assets 171,212 191,349
---------- ----------
TOTAL ASSETS $1,685,497 $1,686,951
========== ==========
See notes to condensed consolidated financial statements.
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WORTHINGTON INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
November 30, May 31,
1999 1999
---------- ----------
(Unaudited) (Audited)
CURRENT LIABILITIES
Accounts payable $ 172,442 $ 161,264
Notes payable 105,769 122,277
Current maturities of long-term debt 2,514 5,234
Debt exchangeable for common stock 44,997 52,497
Other current liabilities 113,413 86,453
---------- ----------
TOTAL CURRENT LIABILITIES 439,135 427,725
Long-Term Debt 363,826 365,802
Other Liabilities 80,851 79,331
Deferred Income Taxes 103,303 124,444
Shareholders' Equity 698,382 689,649
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,685,497 $1,686,951
========== ==========
See notes to condensed consolidated financial statements.
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WORTHINGTON INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In Thousands, Except Per Share)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
November 30, November 30,
------------------------ ------------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales $ 473,331 $ 436,428 $ 936,242 $ 845,708
Cost of goods sold 388,289 367,258 768,025 714,860
--------- --------- --------- ---------
GROSS MARGIN 85,042 69,170 168,217 130,848
Selling, general & administrative
expense 41,832 35,320 83,711 67,392
--------- --------- --------- ---------
OPERATING INCOME 43,210 33,850 84,506 63,456
Other income (expense):
Miscellaneous income 24 961 986 3,323
Interest Expense (10,079) (11,743) (20,294) (20,686)
Equity in net income of unconsolidated
affiliates 6,406 6,072 13,176 11,127
--------- --------- --------- ---------
EARNINGS BEFORE INCOME TAXES 39,561 29,140 78,374 57,220
Income Taxes 14,835 10,781 29,390 21,171
--------- --------- --------- ---------
Earnings From Continuing
Operations 24,726 18,359 48,984 36,049
Discontinued Operations, net of
taxes -- 3,948 -- 2,632
Cumulative Effect of Accounting
Change, net of taxes -- -- -- (7,836)
--------- --------- --------- ---------
NET EARNINGS $ 24,726 $ 22,307 $ 48,984 $ 30,845
========= ========= ========= =========
AVERAGE COMMON SHARES
OUTSTANDING - DILUTED 89,483 92,566 89,796 94,227
EARNINGS PER COMMON SHARE - BASIC
& DILUTED
Earnings From Continuing
Operations $ 0.28 $ 0.20 $ 0.55 $ 0.38
Discontinued Operations, net of
taxes -- 0.04 -- 0.03
Cumulative Effect of Accounting
Change, net of taxes -- -- -- (0.08)
--------- --------- --------- ---------
NET EARNINGS $ 0.28 $ 0.24 $ 0.55 $ 0.33
========= ========= ========= =========
CASH DIVIDENDS DECLARED PER
COMMON SHARE $ 0.15 $ 0.14 $ 0.30 $ 0.28
========= ========= ========= =========
</TABLE>
See notes to condensed consolidated financial statements
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WORTHINGTON INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
November 30,
----------------------
1999 1998
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net Earnings $ 48,984 $ 30,845
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 35,285 39,054
Other adjustments 26,482 49
Changes in current assets and liabilities (19,521) 12,282
-------- --------
Net Cash Provided By Operating Activities 91,230 82,230
INVESTING ACTIVITIES
Investment in property, plant and equipment, net (31,946) (84,980)
Acquisitions, net of cash acquired -- (26,718)
Proceeds from sale of assets 519 46,802
-------- --------
Net Cash Used By Investing Activities (31,427) (64,896)
FINANCING ACTIVITIES
Proceeds from (payments on) short-term borrowings (16,508) 85,121
Proceeds from long-term debt 86 2,600
Principal payments on long-term debt (4,633) (4,122)
Repurchase of common shares (12,902) (59,422)
Dividends paid (26,858) (26,478)
Other 582 3,967
-------- --------
Net Cash Provided (Used) By Financing Activities (60,233) 1,666
-------- --------
Increase (decrease) in cash and cash equivalents (430) 19,000
Cash and cash equivalents at beginning of period 7,641 3,788
-------- --------
Cash and cash equivalents at end of period $ 7,211 $ 22,788
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
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WORTHINGTON INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A - BASIS OF PRESENTATION
---------------------
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three and six months
ended November 30, 1999 are not necessarily indicative of the results that may
be expected for the year ended May 31, 2000. For further information, refer to
the consolidated financial statements and footnotes thereto included in
Worthington Industries, Inc.'s Annual Report to Shareholders and incorporated by
reference in its 1999 Form 10-K.
NOTE B - INDUSTRY SEGMENT DATA
---------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
November 30, November 30,
------------------------ ------------------------
($000) 1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
NET SALES:
Processed Steel Products $ 316,012 $ 289,079 $ 616,416 $ 542,181
Metal Framing 84,315 84,513 172,802 176,020
Pressure Cylinders 71,443 61,569 144,483 124,617
Other 1,561 1,267 2,541 2,890
--------- --------- --------- ---------
$ 473,331 $ 436,428 $ 936,242 $ 845,708
========= ========= ========= =========
OPERATING INCOME:
Processed Steel Products $ 27,491 $ 21,626 $ 51,252 $ 36,733
Metal Framing 10,306 5,192 20,908 11,888
Pressure Cylinders 6,929 7,075 15,131 14,993
Other (1,516) (43) (2,785) (158)
--------- --------- --------- ---------
$ 43,210 $ 33,850 $ 84,506 $ 63,456
========= ========= ========= =========
</TABLE>
NOTE C - COMPREHENSIVE INCOME
--------------------
Total comprehensive income was $25,386 and $22,884 for the three months ended
November 30, 1999 and 1998, respectively. Total comprehensive income was $47,784
and $31,166 for the six months ended November 30, 1999 and 1998, respectively.
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WORTHINGTON INDUSTRIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Certain statements contained in this Form 10-Q, as filed with the SEC,
including, without limitation, the Management's Discussion and Analysis that
follows, constitute "forward looking statements" that are based on management's
beliefs, estimates, assumptions and currently available information. Such
forward looking statements include, without limitation, statements relating to
future operating results, growth, stock appreciation, plant start-ups,
capabilities, the impact of year 2000 and other non-historical information.
Because they are based on beliefs, estimates and assumptions, forward looking
statements are inherently subject to risks and uncertainties that could cause
actual results to differ materially from those projected. Any number of factors
could affect actual results, including, without limitation, product demand,
changes in product mix and market acceptance of products; changes in pricing or
availability of raw materials, particularly steel; capacity restraints and
efficiencies; conditions in major product markets; delays in construction or
equipment supply; inherent risks of international development, including foreign
currency risks; the ability to improve processes and business practices to keep
pace with the economic, competitive and technological environment; year 2000
issues; general economic conditions, business environment and the impact of
governmental regulations, both in the United States and abroad; and other risks
described from time to time in filings with the SEC.
OVERVIEW
Worthington Industries, Inc. (the "Company") is a diversified steel
processor that focuses on value-added steel processing and metals related
businesses. It operates 39 wholly-owned facilities worldwide, principally in
three reportable business segments: Processed Steel Products, Metal Framing, and
Pressure Cylinders. The Company also holds equity positions in seven joint
ventures, which operate 14 facilities worldwide.
RESULTS FROM CONTINUING OPERATIONS
The following discussion and analysis of financial condition and
results of operations of the Company should be read in conjunction with the
Condensed Consolidated Financial Statements of the Company included elsewhere in
this report. The Company's Form 10-K, as filed with the SEC for the fiscal year
ended May 31, 1999, includes additional information about the Company, its
operations and its financial position, and should be read in conjunction with
this Quarterly Report on Form 10-Q.
For the second quarter ended November 30, 1999 (the "second quarter")
of the fiscal year ending May 31, 2000 ("fiscal 2000"), sales increased 8% to
$473.3 million, up $36.9 million from the comparable quarter of the fiscal year
ended May 31, 1999 ("fiscal
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1999"). For the first six months of fiscal 2000 net sales of $936.2 million were
$90.5 million, or 11% higher than the same period of fiscal 1999. The overall
increase in sales was due to higher volumes primarily from growth in the Steel
Processing Products start-up facilities and the recent acquisitions by Pressure
Cylinders.
Gross margin on sales increased to 18.0% for the second quarter of
fiscal 2000 from 15.8% in the comparable quarter of fiscal 1999. For the first
six months of fiscal 2000 the gross margin of 18.0% was up 2.5 percentage points
over the comparable period in fiscal 1999. This improvement was primarily due to
favorable material costs reflected across all segments. A gross margin summary
follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
NOVEMBER 30, NOVEMBER 30, % CHANGE
-------------------- -------------------- --------------------
DOLLARS IN MILLIONS 1999 1998 1999 1998 3 MONTHS 6 MONTHS
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net Sales $ 473.3 $ 436.4 $ 936.2 $ 845.7 8% 11%
Gross Margin 85.0 69.2 168.2 130.8 23% 29%
% of Sales 18.0% 15.8% 18.0% 15.5%
</TABLE>
For the second quarter of fiscal 2000 selling, general, and
administrative ("SG&A") costs of $41.8 million increased 18% over the comparable
quarter of fiscal 1999. For the first six months of fiscal 2000 SG&A expenses
increased 24% to $83.7 million over the comparable period of fiscal 1999. Year
2000 testing and remediation costs of $4.0 million and $8.0 million for the
quarter and the first six months of fiscal 2000, respectively, combined with
increased overhead attributable to the start-ups in the Steel Processing
Products segment and recent acquisitions in Pressure Cylinders segment are the
main reasons for the increase.
Operating income increased 28% to $43.2 million for the second quarter
of fiscal 2000 from $33.9 million in the comparable quarter of fiscal 1999. For
the first six months of fiscal 2000 operating income increased 33% to $84.5
million over the comparable period of fiscal 1999. Stronger sales and favorable
material costs more than offset the increase in SG&A expenses resulting in an
increase to operating income. A summary of SG&A and operating income follows:
<TABLE>
<CAPTION>
NOVEMBER 30, NOVEMBER 30, % CHANGE
------------------ ------------------ ------------------
DOLLARS IN MILLIONS 1999 1998 1999 1998 3 MONTHS 6 MONTHS
------- ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
SG&A $ 41.8 $ 35.3 $ 83.7 $ 67.3 18% 24%
% of Sales 8.8% 8.1% 8.9% 8.0%
Operating Income $ 43.2 $ 33.9 $ 84.5 $ 63.5 28% 33%
% of Sales 9.1% 7.8% 9.0% 7.5%
</TABLE>
Interest expense decreased 14% to $10.1 million for the second quarter
of fiscal 2000 from $11.7 million in the comparable quarter of fiscal 1999.
Year-to-date interest expense decreased 2% to $20.3 million from the comparable
period of fiscal 1999. The
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decrease was due to lower average debt levels and interest rates, partially
offset by higher capitalized interest in fiscal 1999. The year-to-date average
rate of 5.39% for fiscal 2000 is lower than the 5.71% experienced in the
comparable period in fiscal 1999. The higher capitalized interest in fiscal 1999
was mainly due to financing the construction of the Decatur, Alabama plant and
rebuild of the Monroe, Ohio facility. At November 30, 1999, approximately 78% of
the Company's $472.1 million of total debt (excluding debt exchangeable for
common stock (the "DECS")) was at fixed rates of interest. A summary of interest
cost follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
NOVEMBER 30, NOVEMBER 30, % CHANGE
------------------ ----------------- -------------------
DOLLARS IN MILLIONS 1999 1998 1999 1998 3 MONTHS 6 MONTHS
------- ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Interest Expense $ 10.1 $ 11.7 $ 20.3 $ 20.7 -14% -2%
Capitalized Interest 0.1 3.0 0.3 3.7
------- ------- ------- -------
Total Interest Cost $ 10.2 $ 14.7 $ 20.6 $ 24.4 -31% -16%
</TABLE>
Equity in net income of unconsolidated affiliates increased 6% to $6.4
million for the second quarter of fiscal 2000 from $6.1 million in the
comparable quarter of fiscal 1999. Year-to-date equity in net income of
unconsolidated affiliates increased 18% to $13.2 million from $11.1 million in
the comparable period of fiscal 1999. The TWB and Acerex joint ventures
accounted for the majority of the increase as they continued to post increases
in sales and earnings. The Company's Worthington Armstrong Venture ("WAVE") also
posted higher profits for the period.
The effective tax rate for fiscal 2000 is 37.5%, up from 37.0% in
fiscal 1999 due to increased business in higher-taxed foreign and domestic
locations, the result of divestiture and acquisition activity concluded in
fiscal 1999.
PROCESSED STEEL PRODUCTS
Processed Steel Products sales increased 9% to $316.0 million for the
quarter ended November 30, 1999 from $289.1 million in the comparable quarter of
fiscal 1999. For the first six months of fiscal 2000 sales increased 14% to
$616.4 million from $542.2 million in the comparable period of fiscal 1999. The
increase in sales is due to the continued ramp up in the new facilities in
Delta, Ohio, in Decatur, Alabama and at Spartan Steel, combined with the
recovery of prior period sales missed by other facilities during the General
Motors strike in the first quarter of fiscal 1999. The increase occurred despite
lower steel selling prices compared to the prior fiscal year. Operating income
increased 27% to $27.5 million for the quarter ended November 30, 1999 from
$21.6 million in the same quarter of fiscal 1999. For the first six months of
fiscal 2000 operating income increased 40% to $51.3 million from $36.7 million
in the comparable period of fiscal 1999. This was due to higher sales volumes
and lower material costs, partially offset by increased SG&A expenses due to
year 2000 costs and the continued ramp up in the new facilities. The following
table sets forth the Processed Steel Products segment's sales and operating
income:
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<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
NOVEMBER 30, NOVEMBER 30, % CHANGE
-------------------- -------------------- -------------------
DOLLARS IN MILLIONS 1999 1998 1999 1998 3 MONTHS 6 MONTHS
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Sales $ 316.0 $ 289.1 $ 616.4 $ 542.2 9% 14%
Operating Income $ 27.5 $ 21.6 $ 51.3 $ 36.7 27% 40%
% of Sales 8.7% 7.5% 8.3% 6.8%
</TABLE>
METAL FRAMING
Metal Framing sales of $84.3 million for the second quarter of fiscal
2000 remained fairly constant compared to $84.5 million in the comparable
quarter of fiscal 1999. For the first six months of fiscal 2000 sales decreased
2% to $172.8 million from $176.0 million in the comparable period of fiscal
1999, due to the sale of the garage door operations in November 1998. A strong
commercial building products market continued to drive higher sales volumes,
partially offset by lower market pricing. Initial shipments of the new roof
truss and floor joist product lines have begun in the residential construction
market. Operating income increased 98% to $10.3 million for the second quarter
of fiscal 2000 from $5.2 million in the comparable quarter of fiscal 1999. For
the first six months of fiscal 2000 operating income increased 76% to $20.9
million from $11.9 million in the comparable period of fiscal 1999. Operating
income increased due to higher volumes at an improved operating margin resulting
from lower material costs and increased manufacturing efficiencies, partially
offset by the Company's year 2000 costs. The following table sets forth the
Metal Framing segment's sales and operating income:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
NOVEMBER 30, NOVEMBER 30, % CHANGE
------------------ -------------------- ------------------
DOLLARS IN MILLIONS 1999 1998 1999 1998 3 MONTHS 6 MONTHS
------- ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Sales $ 84.3 $ 84.5 $ 172.8 $ 176.0 0% -2%
Operating Income $ 10.3 $ 5.2 $ 20.9 $ 11.9 98% 76%
% of Sales 12.2% 6.2% 12.1% 6.8%
</TABLE>
PRESSURE CYLINDERS
Pressure Cylinders sales increased 16% to $71.4 million for the second
quarter of fiscal 2000 from $61.6 million in the comparable quarter of fiscal
1999. For the first six months of fiscal 2000 sales also increased 16% to $144.5
million from $124.6 million in the comparable period of fiscal 1999. This
increase was due to the recent acquisitions in Europe and higher sales volumes
in steel portables, high-pressure and refrigerant product lines, partially
offset by lower pricing due to competition in domestic markets. Operating income
decreased 2% to $6.9 million for the second quarter of fiscal 2000 from $7.1
million in the comparable quarter of fiscal 1999 due to year 2000 costs. For the
first six months of fiscal 2000 operating income increased 1% to $15.1 million
from $15.0 million in the comparable period of fiscal 1999. Year-to-date
operating margins declined from the comparable quarter of fiscal 1999 to 10.5%
due to increased SG&A expenses related to year 2000 costs and recent
acquisitions. The following table sets forth the Pressure Cylinders segment's
sales and operating income:
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<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
NOVEMBER 30, NOVEMBER 30, % CHANGE
------------------ -------------------- --------------------
DOLLARS IN MILLIONS 1999 1998 1999 1998 3 MONTHS 6 MONTHS
------- ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Sales $ 71.4 $ 61.6 $ 144.5 $ 124.6 16% 16%
Operating Income $ 6.9 $ 7.1 $ 15.1 $ 15.0 -2% 1%
% of Sales 9.7% 11.5% 10.5% 12.0%
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents were $7.2 million at November
30, 1999, a decrease of $0.4 million from May 31, 1999. For the first six months
of fiscal 2000, the Company generated $91.2 million in cash from operating
activities, a $9.0 million increase from the comparable period of fiscal 1999.
The higher operating cash flow in fiscal 2000 is due to improved operating
results and a non-recurring $25 million dividend from WAVE, partially offset by
an increase in net working capital requirements for the Company's continuing
operations.
The $91.2 million of net cash from operating activities for the first
six months of fiscal 2000 provided the resources needed to invest $31.9 million
in capital projects, pay shareholders $26.9 million in dividends, repurchase
$12.9 million of the Company's common stock and fund the Company's working
capital requirements. Capital investments during the first six months included
amounts for expanding the Processed Steel Products segment's annealing capacity
at the Decatur, Alabama plant and adding the ability to apply a dry film
lubricant at the Monroe, Ohio facility. The expenditures also provided for
continuing implementation of the Pressure Cylinders segment's new business
information system, and for the further development of the Metal Framing
segment's structural design software.
Net working capital increased $17.2 million from May 31, 1999 to $213.8
million on November 30, 1999. Accounts receivable decreased due to lower than
year-end sales levels in the Pressure Cylinders segment. Inventories and
accounts payable both increased due to the growth in the Processed Steel
Products segment and their anticipation of increased sales in the next quarter.
Other current liabilities increased due to second quarter taxes payable and a
reclassification of deferred taxes related to the DECS liability (described
below), maturing in March 2000. Current notes payable declined by $16.5 million
during the first six months to $105.8 million.
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 $300 million revolving credit facility with a group of
commercial banks. The $300 million revolving credit facility includes a $190
million tranche expiring May 2003 and a $110 million, 364 day facility expiring
September 2000. At November 30, 1999, there were no outstanding borrowings under
the revolving credit facility.
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<PAGE> 13
In March 1997, debt exchangeable for common stock ("DECS"), payable in
Rouge stock, was issued by the Company. In management's opinion, 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 liability as of
November 30, 1999 was $45.0 million, as compared to $52.5 million at May
31,1999, the result of a decrease in the value of the Rouge common stock.
At November 30, 1999, the Company's total debt (excluding the DECS) was
$472.1 million compared to $493.3 million at the end of fiscal 1999. Total debt
to committed capital (excluding the DECS) decreased to 40.3% from 41.7% at the
prior fiscal year end.
During the first six months of fiscal 2000, the Company repurchased
approximately 870,700 common shares. Approximately 6.6 million shares remain
available for repurchase under the Board of Directors' authorization. The timing
and amount of any future repurchases will be at the Company's discretion and
will depend upon market conditions and the Company's operating performance and
liquidity. Any repurchase will also be subject to the covenants contained in the
Company's credit facilities.
The Company's immediate borrowing capacity, in addition to cash
generated from operations, should be sufficient to fund expected normal
operating costs, dividends, 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.
IMPACT OF YEAR 2000
As planned, prior to December 31, 1999 the Company completed all
remediation and testing procedures for identified year 2000 issues that could
have materially impacted the results of operations. This concluded the Company's
effort to identify and correct any issues that may have an adverse impact due to
computer technology which used two-digit years. As of January 13, 2000, the
Company has not experienced any year 2000 problems with its systems. While the
Company doesn't believe there will be any future impact to its operations, it
will continue to monitor its systems to ensure that no problems arise.
Cumulative expenditures for year 2000 issues of approximately $21.2
million have been spent over the life of this project. During fiscal 2000,
amounts charged to operations amounted to $4.0 million and $8.0 million for the
second quarter and year-to-date periods, respectively. Of the $21.2 million,
$3.1 million was for capital expenditures, $2.4 million of which occurred in the
first six months of fiscal 2000. The Company does not expect to have any
significant additional expenditures.
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THE YEAR 2000 STATEMENTS CONTAINED HEREIN ARE YEAR 2000 READINESS
DISCLOSURES (AS DEFINED UNDER THE YEAR 2000 INFORMATION AND READINESS DISCLOSURE
ACT) AND SHALL BE TREATED AS SUCH FOR ALL PURPOSES PERMISSIBLE UNDER SUCH ACT.
THESE STATEMENTS ARE BASED ON AVAILABLE INFORMATION OBTAINED TO DATE AND USE
WHAT MANAGEMENT BELIEVES TO BE REASONABLE ASSUMPTIONS RELATIVE TO THE OCCURRENCE
OF FUTURE EVENTS. THERE CAN BE NO ASSURANCE THAT ALL POSSIBLE YEAR 2000 ISSUES
HAVE BEEN RESOLVED OR THAT THERE WILL BE NO FUTURE ADVERSE IMPACT ON THE COMPANY
DUE TO SYSTEM FAILURES CAUSED BY EITHER INTERNAL OR EXTERNAL YEAR 2000 ISSUES.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
Exhibits:
27 Financial Data Schedule
Reports on Form 8-K:
There were no reports on Form 8-K during the three months ended
November 30, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WORTHINGTON INDUSTRIES, INC.
Date: January 13, 2000 By: /s/John T. Baldwin
---------------- ---------------------------------------
John T. Baldwin
Vice President & Chief Financial Officer
(On behalf of the Registrant and as
Principal Financial Officer)
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE SIX MONTH PERIOD
ENDED NOVEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-2000
<PERIOD-START> JUN-01-1999
<PERIOD-END> NOV-30-1999
<EXCHANGE-RATE> 1
<CASH> 7,211
<SECURITIES> 0
<RECEIVABLES> 264,790
<ALLOWANCES> 5,093
<INVENTORY> 328,555
<CURRENT-ASSETS> 652,937
<PP&E> 1,150,658
<DEPRECIATION> 289,310
<TOTAL-ASSETS> 1,685,497
<CURRENT-LIABILITIES> 439,135
<BONDS> 363,826
0
0
<COMMON> 0
<OTHER-SE> 698,382
<TOTAL-LIABILITY-AND-EQUITY> 1,685,497
<SALES> 936,242
<TOTAL-REVENUES> 936,242
<CGS> 768,025
<TOTAL-COSTS> 768,025
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,294
<INCOME-PRETAX> 78,374
<INCOME-TAX> 29,390
<INCOME-CONTINUING> 48,984
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 48,984
<EPS-BASIC> .55
<EPS-DILUTED> .55
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