-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UpSgj21X1dfB2ZujycS1/oEFxM0FAEM79fZLOu1vrjsachyyBG2QxqTVFgQW1Qby Qtt7K/0aiqetUHvfXSTjTA== 0000896463-96-000053.txt : 19960416 0000896463-96-000053.hdr.sgml : 19960416 ACCESSION NUMBER: 0000896463-96-000053 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960229 FILED AS OF DATE: 19960412 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: WORTHINGTON INDUSTRIES INC CENTRAL INDEX KEY: 0000108516 STANDARD INDUSTRIAL CLASSIFICATION: STEEL WORKS, BLAST FURNACES & ROLLING & FINISHING MILLS [3310] IRS NUMBER: 311189815 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-04016 FILM NUMBER: 96546800 BUSINESS ADDRESS: STREET 1: 1205 DEARBORN DR CITY: COLUMBUS STATE: OH ZIP: 43085 BUSINESS PHONE: 6144383210 MAIL ADDRESS: STREET 1: 1205 DEARBORN DR CITY: COLUMBUS STATE: OH ZIP: 43085 FORMER COMPANY: FORMER CONFORMED NAME: WORTHINGTON STEEL CO DATE OF NAME CHANGE: 19720123 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10 - Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended: February 29, 1996 Commission File No. 0-4016 WORTHINGTON INDUSTRIES, INC. -------------------------------------------------------------- (Exact name of Registrant as specified in its Charter) DELAWARE 31-1189815 --------------------------------- ------------------------------------- (State of Incorporation) (I.R.S. Employer Identification No.) 1205 Dearborn Drive, Columbus, Ohio 43085 (Address of Principal Executive Offices) --------------------- (Zip Code) (614) 438-3210 ---------------------------------------------------------------- (Registrant's Telephone Number, Including Area Code) Not Applicable ---------------------------------------------------------------- (Former Name, Former Address and Former Fiscal Year, If Changed From Last Report) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. YES_X_ NO___ Indicate the number of shares outstanding of each of the Issuer's classes of common stock, as of the latest practicable date. Common Stock, $.01 par value 90,819,040 -------------------------------------- ----------------------------- Class Outstanding March 31, 1996 WORTHINGTON INDUSTRIES, INC. INDEX Page PART I. Financial Information Consolidated Condensed Balance Sheets - February 29, 1996 and May 31, 1995.................................3 Consolidated Condensed Statements of Earnings - Three and Nine Months Ended February 29, 1996 and February 28, 1995..................................................4 Consolidated Condensed Statements of Cash Flows - Nine Months Ended February 29, 1996 and February 28, 1995..........5 Notes to Consolidated Condensed Financial Statements...............6 Management's Discussion and Analysis of Results of Operations and Financial Condition......................8 PART II. Other Information.................................................11 -2- PART I. FINANCIAL INFORMATION WORTHINGTON INDUSTRIES, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (In Thousands, Except Per Share) February 29 May 31 1996 1995 ----------- --------- ASSETS (Unaudited) (Audited) Current Assets Cash and cash equivalents $7,536 $2,003 Accounts receivable - net 217,304 216,443 Raw materials 136,068 142,738 Work in process and finished products 80,850 58,140 ------- ------ Inventories 216,918 200,878 Prepaid expenses and other current assets 32,829 32,578 ------- ------- Total Current Assets 474,587 451,902 Investment in Unconsolidated Affiliates 134,327 104,764 Intangible Assets 86,729 Other Assets 25,687 25,381 Property, plant and equipment 741,854 589,286 Less accumulated depreciation 280,711 254,369 -------- -------- Property, Plant and Equipment - net 461,143 334,917 -------- -------- Total Assets $1,182,473 $916,964 ========== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts payable $97,814 $87,329 Notes payable 193,800 38,200 Accrued compensation, contributions to employee benefit plans and related taxes 28,966 31,741 Dividends payable 9,988 9,992 Other accrued items 20,897 8,597 Income taxes 8,310 2,709 Current maturities of long-term debt 1,514 660 ------------ -------- Total Current Liabilities 361,289 179,228 Other Liabilities 21,329 18,055 Long-Term Debt 78,742 53,476 Deferred Income Taxes 94,150 75,873 Shareholders' Equity Common shares, $.01 par value 908 908 Additional paid-in capital 104,937 102,733 Min. pension liability / foreign currency translation (1,419) (1,017) Retained earnings 522,537 487,708 ------- ------- Total Shareholders' Equity 626,963 590,332 ------- ------- Total Liabilities and Shareholders' Equity $1,182,473 $916,964 ========== ======== See notes to consolidated condensed financial statements. -3- WORTHINGTON INDUSTRIES, INC. CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (In Thousands, Except Per Share) (Unaudited) Three Months Ended Nine Months Ended Feb. 29 Feb. 28 Feb. 29 Feb. 28 ------- ------- ------- ------- 1996 1995 1996 1995 Net sales $360,224 $370,117 $1,040,504 $1,079,650 Cost of goods sold 305,935 309,725 886,199 909,118 ------- ------- ------- ------- Gross Margin 54,289 60,392 154,305 170,532 Selling, general & administrative expense 23,939 23,117 65,307 63,144 ------ ------ ------ ------ Operating Income 30,350 37,275 88,998 107,388 Other income (expense): Miscellaneous income 468 185 854 314 Interest expense (2,025) (1,530) (4,666) (4,304) Equity in net income of unconsolidated affiliates 4,683 9,910 24,561 28,382 Earnings Before Income Taxes 33,476 45,840 109,747 131,780 Income taxes 12,580 17,189 41,155 49,417 ------ ------ ------ ------- Net Earnings $20,896 $28,651 $68,592 $82,363 ======= ======= ======= ======= Average Common Shares Outstanding 90,777 90,772 90,810 90,700 Earnings Per Common Share $.23 $.32 $.76 $.91 ---- ---- ---- ---- Cash Dividends Declared Per Common Share $.11 $.10 $.33 $.30 ---- ---- ---- ---- -4-
See notes to consolidated condensed financial statements. WORTHINGTON INDUSTRIES, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (In Thousands, Unaudited) Nine Months Ended Feb. 29 Feb. 28 ------- ------- 1996 1995 ------- ------- Operating Activities Net earnings ........................................ $ 68,592 $ 82,363 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation ...................................... 28,614 25,998 Provision for deferred income taxes ............... 6,728 9,539 Equity in undistributed net income of unconsolidated affiliates ....................... (21,477) (28,022) Changes in assets and liabilities: Accounts receivable ........................... 21,108 (17,932) Inventories ....................................... 25,499 (32,818) Prepaid expenses and other current assets ..... (4,372) (2,484) Other assets .................................. (160) (1,849) Accounts payable and accrued expenses ......... (9,983) 5,075 Other liabilities .......................... (191) (221) --------- -------- Net Cash Provided By Operating Activities ......... 114,358 39,649 Investing Activities Investment in property, plant and equipment, net .... (79,340) (57,121) Purchase of Dietrich Industries, Inc., net of cash acquired .............................. (169,391) -- Investment in unconsolidated affiliates ............. (8,310) (1,157) --------- -------- Net Cash Used By Investing Activities ............. (257,041) (58,278) Financing Activities Net proceeds from short-term borrowings ............. 155,600 38,700 Proceeds from long-term debt ........................ 43,000 -- Principal payments on long-term debt ................ (18,660) (1,771) Proceeds from issuance of common shares ............. 2,275 2,770 Repurchase of common shares ........................ (4,024) -- Dividends paid ...................................... (29,975) (27,197) --------- -------- Net Cash Provided By Financing Activities ......... 148,216 12,502 --------- -------- Increase (decrease) in cash and cash equivalents ...... 5,533 (6,127) Cash and cash equivalents at beginning of period ...... 2,003 13,275 --------- -------- Cash and cash equivalents at end of period ............ $ 7,536 $ 7,148 ========= ========
See notes to consolidated condensed financial statements. -5- WORTHINGTON INDUSTRIES, INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) Note A - Management's Opinion In the opinion of management, the accompanying unaudited consolidated condensed financial statements contain all adjustments (consisting of a normal recurring nature) necessary to present fairly the financial position of Worthington Industries, Inc. and Subsidiaries (the Company) as of February 29, 1996 and May 31, 1995; the results of operations for the three and nine months ended February 29, 1996 and February 28, 1995; and the cash flows for the nine months then ended. The accounting policies followed by the Company are set forth in Note A to the consolidated financial statements in the 1995 Worthington Industries, Inc. Annual Report to Shareholders which is incorporated by reference in the Company's 1995 Form 10-K. Note B - Income Taxes The income tax rate is based on statutory federal and state rates, and an estimate of annual earnings adjusted for the permanent differences between reported earnings and taxable income. Note C - Earnings Per Share Earnings per common share for the three and nine months ended February 29, 1996 and February 28, 1995 are based on the weighted average common shares outstanding during each of the respective periods. Note D - Results of Operations The results of operations for the three and nine months ended February 29, 1996 and February 28 1995 are not necessarily indicative of the results to be expected for the full year. -6- Note E - Acquisition On February 5, 1996, the Company acquired all of the outstanding capital stock of Dietrich Industries, Inc. for approximately $146 million in cash and $23 million in assumed liabilities, net of cash acquired. Dietrich, based in Pittsburgh, Pa., 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 $87 million which is being amortized over 40 years. The following pro forma data summarizes the results of operations of the Company for the nine months ended February 29, 1996 and February 28, 1995, assuming Dietrich was acquired at the beginning of each period presented. In preparing the pro forma 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: Nine Months Nine Months Ended Ended Feb. 29, 1996 Feb. 28, 1995 ------------- ------------- Net Sales .................... $1,223,481 $1,292,666 ========== ========== Net Earnings ................. $69,753 $86,427 ========== ========== Earnings Per Common Share .... $.77 $.95 ===== ==== The pro forma 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 F - Debt The funds to purchase Dietrich Industries, Inc. and to refinance $31 million of Dietrich debt, were obtained through a $180 million acquisition bridge loan credit facility with several banks. The facility expires on October 28, 1996. The Company intends to refinance the facility with permanent long-term financing before the expiration date. The interest rate is variable based on LIBOR plus a fixed percentage and was 5.7% at February 29, 1996. Also during the quarter, the commitment for the $150,000,000 revolving credit agreement was extended one year to April 2001. -7- WORTHINGTON INDUSTRIES, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS For the three months ended February 29, 1996, net sales of $360.2 million were 3% lower and net earnings of $20.9 million and earnings per share of $.23 were down 27% and 28%, respectively, from last year's third quarter. For the first nine months of fiscal 1996, net sales were $1.041 billion, 4% below those of the same period last year. Net earnings of $68.6 million and earnings per share of $.76 were off 17% and 16%, respectively. On February 5, 1996, the Company acquired all of the outstanding capital stock of Dietrich Industries, Inc. for approximately $146 million in cash and $23 million in assumed liabilities, net of cash acquired. Dietrich, based in Pittsburgh, Pa., is involved primarily in the manufacture and sale of metal framing products for the commercial and residential construction markets. Demand in most of the Company's markets remained behind last year. Results for the quarter continue to reflect lower volume and prices from last year's periods. The record results for the third quarter and first nine months of fiscal 1995 in all business segments had been driven by both volume and selling price increases. Gross margin was down 10% for both the quarter and the nine months. This was greater than the sales shortfall, primarily due to a softer selling price environment, the working down of more expensive inventory and product mix changes. Last year's gross margin increase outpaced the growth in sales due to higher operating efficiencies and selling price increases. Gross margin as a percentage of sales for the quarter was 15.1% compared to 16.3% last year and for the nine months 14.8% compared to 15.8%. Selling, general and administrative expense increased 4% for the quarter and 3% for the nine months due to the inclusion of expenses for new operations and for Dietrich, offset by lower profit-sharing. The increase in this expense last year was driven mostly by higher profit sharing. As a percent of sales, this expense for the quarter was 6.6% compared to 6.2% last year and for the nine months was 6.3% compared to 5.8%. Operating income was 19% lower for the quarter and 17% lower for the nine months. As a percentage of sales, operating income decreased to 8.4% from 10.1% for the quarter and to 8.6% from 9.9% for the nine months. -8- Interest expense in 1996 increased 32% for the three months and 8% for the nine months. The average interest rate rose to 6.3% from 5.9%. Average debt outstanding increased to support capital expenditures and to fund the purchase of Dietrich Industries. Interest of $1,420,000 was capitalized for the nine months ended February 29, 1996. Equity in net income of unconsolidated affiliates was down 53% for the quarter and 13% year-to-date, primarily due to lower equity from Rouge Steel resulting from slow industry demand and selling price pressure. Equity in net income from affiliates excluding Rouge increased over the prior year. Equity in net income from Worthington Armstrong Venture was up significantly on increased volume in both the U.S. and Europe. This venture's French facility is expanding to meet demand and the new Las Vegas plant is in operation. The Acerex joint venture in Mexico started production in October and is shipping within Mexico and into the southwest U.S. Income taxes decreased in line with pre-tax earnings for both the three and nine month periods as the effective tax rate for both years was 37.5%. The processed steel products segment saw decreases in sales and earnings for the third quarter and the first nine months. Steel processing shipments continue below those of last year mainly due to lower automotive demand. Operating margins also remain lower due to the reduced volume and lower selling prices. Last year's results included volume and selling price increases. Dietrich's operations, which were included from the date of acquisition only, faced selling price and material cost pressures, and suffered from the slow commercial construction season. Pressure cylinders' sales and earnings were down for both periods as increased demand for heating tanks did not fully offset lower shipments of refrigerant cylinders. A shift in product mix also affected margins. Pressure cylinders had realized growth in most product lines in the prior year. Sales for the custom products segment were up for both the third quarter and nine months. Earnings for the quarter were higher, but remained lower for the nine months. The plastics operation increased sales and earnings for both periods as it continued to perform well, despite overall lower industry automotive demand, due to new automotive and appliance contracts. Last year's periods were supported by high automotive demand and operating efficiencies. Volume from new jobs increased sales for precision metals above last year for both periods, but profits were lower due to inefficiencies caused by startups and specification changes on certain parts. The cast products segment had lower sales and earnings for the quarter and nine months as railcar demand was down from earlier quarters. Last year's results benefited from very strong railcar demand and high production levels. -9- LIQUIDITY AND CAPITAL RESOURCES At February 29, 1996, the Company's current ratio was 1.3:1, down from 2.5:1 at May 31, 1995, as $180 million of short-term bridge loan financing was used to purchase Dietrich. This debt, which matures October 28, 1996, is expected to be refinanced long-term before the expiration date. Long-term debt increased to 9.8% (26% including the bridge loan) from 7.4% of total capital (defined as long-term debt, deferred taxes and shareholders' equity). Working capital was $113.3 million ($293.3 million without the bridge loan), 18% of the Company's total net worth(47% without the bridge loan), compared to 46% at May 31, 1995. During the nine months ended February 29, 1996, the Company's cash position increased by $5.5 million. Cash provided by operating activities was $114.4 million, aided by a $25.5 million decrease in inventories and a $21.1 million decrease in accounts receivable, which occurred in part because of lower raw material costs and lower sales volume and prices. Days sales in accounts receivable was down 1 day from fiscal year-end and days of inventory was down 10 days. Capital expenditures and investments in affiliates totaled $87.7 million and dividends paid were $30 million. The funds to purchase Dietrich for a net cash price of $169 million were obtained through the $180 million acquisition bridge loan credit facility. The Company intends to refinance this facility before the expiration date into long-term permanent financing. The Company expects to continue to generate cash from operations to significantly fund capital expenditures and dividends; however, borrowings may be needed to partially support these expenditures. The Company has a $150 million committed, revolving credit agreement, of which $85 million was unused at February 29, 1996. -10- PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. A. Exhibits - Exhibit 27 Financial Data Schedule B. Reports on Form 8-K. A Current Report on Form 8-K dated February 5, 1996 was filed to report the acquisition of the capital stock of Dietrich Industries, Inc. Financial statements of the business acquired and pro forma financial information of the Registrant will be filed by amendment to that report. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. WORTHINGTON INDUSTRIES, INC. Date: April 12, 1996 By: /s/Donald G. Barger, Jr. ______________________________________ Donald G. Barger, Jr. Vice President-Chief Financial Officer By: /s/Michael R. Sayre ______________________________________ Michael R. Sayre Controller -11- EX-27 2
5 1000 U.S. DOLLARS 9-MOS MAY-31-1996 JUN-01-1995 FEB-29-1996 1 7,536 0 220,854 3,550 216,918 474,587 741,854 280,711 1,182,473 361,289 78,742 0 0 908 626,055 1,182,473 1,040,504 1,040,504 886,199 886,199 0 0 4,666 109,747 41,155 68,592 0 0 0 68,592 .76 .76
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