CONSOLIDATED STATEMENTS OF EARNINGS
In thousands, Year Ended May 31 1995 1994 1993
except per share
------------------------------------------------------------------------------------------------------
SALES Net sales $1,483,569 $1,285,134 $1,113,242
Cost of goods sold 1,244,633 1,093,350 938,342
---------- ---------- ----------
Gross Margin 238,936 191,784 174,900
Selling, general and 85,102 72,372 68,809
administrative expense ---------- ---------- ----------
Operating Income 153,834 119,412 106,091
Other income (expense):
Miscellaneous income 573 389 598
Interest expense (6,036) (3,017) (3,421)
Equity in net income of 38,327 18,851 4,587
unconsolidated affiliates ---------- ---------- ----------
Earnings Before 186,698 135,635 107,855
Income Taxes 70,012 50,782 39,907
---------- ---------- ----------
EARNINGS Net Earnings $116,686 $84,853 $67,948
========== ========== ==========
Average Common 90,730 90,378 89,699
Shares Outstanding
EARNINGS PER SHARE Earnings Per Share $1.29 $.94 $.76
========== ========== ==========
See notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Dollars in thousands, except for per share 1995 1994 1993
------------------------------------------------------------------------------------------
COMMON Balance at beginning of year $906 $601 $595
SHARES Sale of common shares under
stock option plan, (198,444
in 1995; 375,155 in 1994;
909,539 in 1993) 2 4 7
Par value of shares issued - 301 -
in connection with share split
Purchase and retirement of common
shares, (1,436 in 1994;
181,200 in 1993) - - (1)
-------- -------- --------
Balance at May 31 $908 $906 $601
-------- -------- --------
ADDITIONAL Balance at beginning of year $96,427 $81,250 $71,623
PAID-IN Sale of common shares under
CAPITAL stock option plan, (198,144
in 1995; 375,155 in 1994;
909,539 in 1993) 2,569 3,875 8,596
Sale of shares under dividend
reinvestment plan, 1,664 1,471 1,179
(81,102 in 1995; 74,101 in
1994; 76,598 in 1993)
Par value of shares issued
in connection with share
split - (301) -
Transactions of unconsolidated
affiliate 2,073 10,134 -
Purchase and retirement of
common shares, (1,436 in
1994; 181,200 in 1993) - (2) (148)
-------- -------- --------
Balance at May 31 $102,733 $96,427 $81,250
-------- -------- --------
MINIMUM
PENSION Balance at beginning of year ($1,674) ($230) -
LIABILITY Transactions of unconsolidated
affiliate 803 (1,444) ($230)
-------- -------- --------
Balance at May 31 ($871) ($1,674) ($230)
-------- -------- --------
TRANSLATION Balance at beginning of year - - -
ADJUSTMENT Foreign currency translation
adjustment ($146) - -
-------- -------- --------
Balance at May 31 ($146) - -
-------- -------- --------
RETAINED Balance at beginning of year $408,234 $356,567 $320,078
EARNINGS Net earnings 116,686 84,853 67,948
Cash dividends declared:
(per share: $.410 in 1995;
$.367 in 1994; $.327 in
1993) (37,212) (33,161) (29,329)
Purchase and retirement of
common shares, (1,436 in
1994; 181,200 in 1993) - (25) (2,130)
-------- -------- --------
Balance at May 31 $487,708 $408,234 $356,567
-------- -------- --------
See notes to consolidated financial statements.
CONSOLIDATED BALANCE SHEETS
Dollars in thousands May 31 1995 1994
------------------------------------------------------------------------------
ASSETS Current Assets
Cash and cash equivalents $ 2,003 $ 13,275
Accounts receivable, less allowances
of $2,397 and $2,535 at May 31,
1995 and 1994 216,443 189,741
Inventories
Raw materials 142,738 125,243
Work in process and finished products 58,140 59,639
--------- ---------
200,878 184,882
Prepaid expenses and other current
assets 32,578 25,218
--------- ---------
Total Current Assets 451,902 413,116
Investment in Unconsolidated Affiliates 104,764 51,961
Other Assets 25,381 25,935
Property, Plant and Equipment
Land 11,383 9,765
Buildings 122,073 109,724
Machinery and equipment 427,927 390,685
Construction in progress 27,903 21,375
--------- ---------
589,286 531,549
Less accumulated depreciation 254,369 223,988
--------- ---------
334,917 307,561
--------- ---------
Total Assets $ 916,964 $ 798,573
========= =========
LIABILITIES
Current Liabilities
Accounts payable $ 87,329 $ 97,699
Notes payable 38,200 10,000
Accrued compensation, contributions to
employee benefit plans and related
taxes 31,741 29,280
Dividends payable 9,992 9,056
Other accrued items 8,597 8,135
Income taxes 2,709 6,206
Current maturities of long-term debt 660 1,490
--------- ---------
Total Current Liabilities 179,228 161,866
Other Liabilities 18,055 19,445
Long-Term Debt 53,476 54,136
Deferred Income Taxes 75,873 59,233
Contingent Liabilities -- Note G
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 -- 1995 -- 90,840,328
shares; 1994 -- 90,561,082 shares 908 906
Additional paid-in capital 102,733 96,427
Minimum pension liability of
unconsolidated affiliate (871) (1,674)
Foreign currency translation adjustment (146) -
Retained earnings 487,708 408,234
--------- ---------
590,332 503,893
Total Liabilities and --------- ---------
Shareholders' Equity $ 916,964 $ 798,573
========= =========
See notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands Year Ended May 31 1995 1994 1993
------------------------------------------------------------------------------
OPERATING ACTIVITIES
Net earnings $116,686 $84,853 $67,948
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation 34,129 32,385 29,204
Gain on sale of short-term investments - (911) -
Provision for deferred income taxes 15,541 7,911 5,995
Equity in undistributed net income of
unconsolidated affiliates (37,847) (19,345) (4,587)
Changes in assets and liabilities:
Short-term investments - - 129
Accounts receivable (26,702) (20,886) (18,684)
Inventories (15,996) (25,895) (21,326)
Prepaid expenses and other current assets (7,418) (6,460) (563)
Other assets 554 (6,576) (14,618)
Accounts payable and accrued expenses (11,156) 4,001 25,755
Other liabilities (1,390) 11,777 (3,443)
Long-term deferred income taxes - - 114
-------- -------- --------
Net Cash Provided By Operating
Activities 66,401 60,854 65,924
INVESTING ACTIVITIES
Investment in property, plant and equipment,
net (61,485) (46,554) (29,140)
Investments in unconsolidated affiliates (10,857) - -
Other, net - 1,287 -
-------- -------- --------
Net Cash Used By Investing
Activities (72,342) (45,267) (29,140)
FINANCING ACTIVITIES
Proceeds from short-term borrowings 28,200 10,000 -
Proceeds from long-term debt 27,000 - -
Principal payments on long-term debt (28,490) (1,165) (3,263)
Proceeds from issuance of common shares 4,235 5,350 9,782
Repurchase of common shares - (27) (2,279)
Dividends paid (36,276) (33,161) (29,329)
Net Cash Used By Financing -------- -------- --------
Activities (5,331) (19,003) (25,089)
Increase (decrease) in cash and cash -------- -------- --------
equivalents (11,272) (3,416) 11,695
Cash and cash equivalents at beginning of year 13,275 16,691 4,996
Cash and Cash Equivalents at -------- -------- --------
End of Year $2,003 $13,275 $16,691
======== ======== ========
See notes to consolidated financial statements.
INDUSTRY SEGMENT DATA
In thousands May 31 1995 1994 1993
------------------------------------------------------------------------------
SALES
Net Sales
Processed steel products $ 1,028,326 $ 920,199 $ 767,682
Custom products 302,096 249,459 241,916
Cast products 153,147 115,476 103,644
----------- ----------- -----------
$ 1,483,569 $ 1,285,134 $ 1,113,242
=========== =========== ===========
EARNINGS
Operating Income
Processed steel products $ 112,390 $ 98,062 $ 79,187
Custom products 19,754 15,334 20,360
Cast products 21,690 6,016 6,544
----------- ----------- -----------
153,834 119,412 106,091
Miscellaneous income 573 389 598
Interest expense (6,036) (3,017) (3,421)
Equity in net income of unconsolidated
affiliates 38,327 18,851 4,587
----------- ----------- -----------
$ 186,698 $ 135,635 $ 107,855
=========== =========== ===========
ASSETS
Identifiable Assets
Processed steel products $ 507,073 $ 471,458 $ 428,891
Custom products 165,619 138,015 117,856
Cast products 78,099 75,733 69,843
Corporate 61,409 61,406 59,674
----------- ----------- -----------
812,200 746,612 676,264
Investment in unconsolidated affiliates 104,764 51,961 17,945
----------- ----------- -----------
$ 916,964 $ 798,573 $ 694,209
=========== =========== ===========
DEPRECIATION
Depreciation Expense
Processed steel products $ 19,041 $ 19,075 $ 17,745
Custom products 8,710 7,047 5,598
Cast products 4,362 4,095 3,900
Corporate 2,016 2,168 1,961
----------- ----------- -----------
$ 34,129 $ 32,385 $ 29,204
=========== =========== ===========
EXPENDITURES
Capital Expenditures
Processed steel products $ 31,869 $ 14,693 $ 9,876
Custom products 22,254 19,086 12,640
Cast products 4,041 6,787 5,283
Corporate 3,321 5,988 1,341
----------- ----------- -----------
$ 61,485 $ 46,554 $ 29,140
=========== =========== ===========
() Indicates deduction
Corporate expenses are allocated on a consistent basis among industry
segments over the five-year period. Earnings are before income taxes
and cumulative effect of accounting changes. "Capital expenditures"
are net of normal disposals and exclude amounts in connection with
acquisitions and divestitures.
See notes to consolidated financial statements.
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").
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 1995 presentation.
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.
Property and Depreciation: Property, plant and equipment are carried
at cost and depreciated using the straight-line method 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, interest of $529,000
was capitalized in 1995.
Post Retirement Benefits Other Than Pensions: The Company adopted
Financial Accounting Standards Board issued Statement No. 106, "Employer's
Accounting for Post Retirement Benefits Other Than Pensions," effective
June 1, 1993. The adoption of this Statement did not have a material
impact on the Company's operating results or financial position. As
permitted by Statement 106, the Company elected not to restate the
financial statements of prior years.
Statements of Cash Flows: With respect to non-cash activities in
fiscal 1994, the Company recorded its increased equity from the Rouge Steel
Company's initial public offering as an increase in investments in
unconsolidated affiliates of $3,215,000 in 1995 and $15,451,000 in 1994 and
additional paid-in-capital (net of deferred taxes) of $2,073,000 in 1995
and $10,134,000 in 1994. During fiscal 1993, $6,282,000 of inventory and
$3,421,000 of fixed assets were reclassified to investments in
unconsolidated affiliates as the initial investment in Worthington
Armstrong Venture.
Supplemental cash flow information for the years ended May 31, is as
follows:
In thousands 1995 1994 1993
-------------------------------------------------------------------------
Interest paid $6,688 $ 2,973 $ 3,957
Income taxes paid 60,520 39,957 35,548
Fair Value of Financial Instruments: The following methods and
assumptions were used by the Company in estimating the fair value of its
financial instruments:
Cash and cash equivalents, other assets, and long-term debt - The
carrying amounts reported in the balance sheets approximate fair value.
The concentration of credit risks from financial instruments, related to
the markets discussed in Review of Operations starting on page 5 is not expected
to have a material effect on the Company's consolidated financial position, cash
flow or future results of operations.
NOTE B - Shareholders' Equity
On September 16, 1993, the Company's Board of Directors authorized a three-
for-two split of the common shares, with distribution of the additional
shares on October 22, 1993, to holders of record on October 1, 1993. Also
on September 16, 1993, the shareholders adopted an amendment to the
Certificate of Incorporation of the Company to increase the authorized
number of common shares from 100,000,000 shares to 150,000,000 shares.
References in this annual report to per share amounts and to the number of
common shares have been adjusted, where appropriate, to give retroactive
effect to the share split.
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.
NOTE C - Debt
Debt at May 31, is summarized as follows:
In thousands 1995 1994
---------------------------------------------------------------
Short-term notes payable to bank - $38,200 $10,000
unsecured
Industrial development revenue
bonds and notes 14,136 14,909
Notes payable to banks - unsecured 13,000 40,000
Revolver 27,000
Other 717
------- -------
92,336 65,626
Less current maturities 38,860 11,490
------- -------
$53,476 $54,136
======= =======
The Company had short-term notes payable to bank totaling $38,200,000,
at May 31, 1995. The rate for these borrowings, which was 6.4% at May 31,
1995, is based on the bank's cost of funds plus a fixed percent.
The industrial development revenue bonds and notes (IRBs) represent
loans to purchase or obligations to lease facilities and equipment costing
$24,601,000. The leases are accounted for as lease purchases with
ownership passing to the Company at the expiration dates for nominal
amounts. The IRBs mature serially through 2011 and may be retired in whole
or in part at any time. At May 31, 1995, the IRBs have fixed interest
rates; $10,605,000 at 5.9% and the remainder at 8.0%.
During the year ended May 31, 1995, the Company entered into a
$150,000,000 revolving credit agreement with five banks. It is a five year
commitment with two annual extension options. The rate of interest is
determined at the time of borrowing, based upon a choice of options as
specified in the agreement, and was 6.2% at May 31, 1995. This agreement,
of which $123,000,000 was unused at May 31, 1995, replaced the $40,000,000
committed, unsecured line of credit available during fiscal 1995. During
fiscal 1995, the $27,000,000 evergreen note payable to bank outstanding at
May 31, 1994, was paid off by using the revolver. During June 1995, the
$13,000,000 unsecured bank note payable was also paid off by using the
revolver.
Various debt agreements place restrictions on financial conditions and
require maintenance of certain ratios. One of these restrictions limits
cash dividends and certain other payments to $3,000,000 plus 75% of net
earnings, as defined, subsequent to May 31, 1976. Retained earnings of
$319,699,000 were unrestricted at May 31, 1995.
Principal payments on long-term debt, including lease purchase
obligations, in the next five fiscal years are as follows: 1996 --
$660,000; 1997 -- $660,000; 1998 -- $4,191,000; 1999 -- $660,000; 2000 --
$660,000; and thereafter -- $47,305,000.
The Company is guarantor on bank loans for four separate joint
ventures. The guarantees totaled $37,562,000 at May 31, 1995, and relate
to debt with varying maturities. The Company believes the guarantees will
not significantly affect the consolidated financial position or future
results of operations.
NOTE D - Income Taxes
Income taxes for the years ended May 31, were as follows:
In thousands 1995 1994 1993
--------------------------------------------------------------
Current: Federal $45,559 $36,907 $29,329
State and local 8,912 5,964 4,583
Deferred: Federal 14,382 7,627 5,145
State 1,159 284 850
------- ------- -------
$70,012 $50,782 $39,907
======= ======= =======
Under Statement of Financial Accounting Standards Board number 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. Prior to the adoption of Statement 109, during fiscal 1993 income
tax expense was determined using the deferred method. Deferred tax expense
was based on items of income and expense reported in different years in the
financial statements and tax returns and measured at the tax rate in effect
in the year the difference originated.
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:
In thousands 1995 1994
-----------------------------------------------------------------------
Deferred tax assets:
Allowance for doubtful accounts $1,284 $1,332
Inventory 1,375 939
Accrued expenses 3,888 4,393
Income taxes 2,460 1,665
Other 388 360
------ ------
9,395 8,689
Deferred tax liabilities:
Property, plant and equipment 45,426 42,680
Undistributed earnings of unconsolidated
affiliates 30,447 16,553
------- -------
75,873 59,233
------- -------
Net deferred tax liability $66,478 $50,544
======= =======
The components of deferred income tax expense resulted from the use of the
following:
In thousands 1993
-----------------------------------------------------------
Accelerated depreciation $4,379
Undistributed earnings of unconsolidated equity 1,026
affiliates
Other items 590
------
$5,995
======
The reasons for the difference between the effective income tax rate
and the statutory federal income tax rate were as follows:
1995 1994 1993
------------------------------------------------------------
Federal statutory rate 35.0% 35.0% 34.0%
State and local income taxes,
net of federal tax benefit 3.6 3.0 3.3
Other (1.1) (.6) (.3)
---- ---- ----
37.5% 37.4% 37.0%
==== ==== ====
NOTE E - Employee Benefit Plans
Nonunion employees of the Company participate in a current cash profit
sharing plan and a deferred profit sharing plan. Contributions to and
costs of these plans are determined as a percentge of the Company's
operating income.
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 1995, 1994 and 1993, and the contributions charged
to pension expense for the defined contribution plans follows:
In thousands 1995 1994 1993
--------------------------------------------------------------------------
Defined benefit plans:
Service cost (benefits earned during
the period) $1,078 $1,089 $1,115
Interest cost on projected benefit
obligation 3,091 2,875 2,806
Actual return on plan assets (3,884) (1,222) (5,666)
Net amortization and deferral 283 (2,544) 1,990
Net pension cost on defined benefit ------ ------ ------
plans 568 198 245
Defined contribution plans 4,985 3,935 3,387
------ ------ ------
Total pension expense $5,553 $4,133 $3,632
====== ====== ======
Pension expense was calculated assuming a weighted average discount
rate and an expected long-term rate of return on plan assets of 8%. 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:
Plans Whose Plans Whose
Assets Exceed Accumulated
Accumulated Benefits
Benefits Exceed Assets
------------------------------------
In thousands 1995 1994 1995 1994
-------------------------------------------------------------------
Actuarial present value of
benefit obligations:
Vested $35,546 $34,640 $6,361 $5,260
======= ======= ====== ======
Accumulated $35,945 $35,327 $6,590 $5,497
======= ======= ====== ======
Projected benefit obligation $35,945 $35,327 $6,590 $5,497
Plan assets at fair value 43,922 40,935 5,022 4,607
Projected benefit obligation ------- ------- ------ ------
less than (in excess of)
plan assets $ 7,977 $ 5,608 $(1,568) $ (890)
======= ======= ======= ======
Comprised of:
Accrued pension cost $ - $ - $(1,361) $ (718)
Prepaid pension cost 2,030 1,334 - -
Unrecognized:
Net gain 10,905 9,575 60 (31)
Prior service cost (6,950) (7,568) (1,393) (631)
Unrecorded net asset
(obligation) at transition,
net of amortization 1,992 2,267 (45) (41)
Adjustment to recognize
minimum liability - - 1,171 531
------- ------- ------- ------
$ 7,977 $ 5,608 $(1,568) $ (890)
======= ======= ======= ======
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 Stock Option Committee. Generally, options are exercisable at the
rate of 20% a year beginning one year from date of grant and expire ten
years thereafter.
The following table summarizes the option plans:
In thousands,
except per share Price Range Number of Options
Per Share 1995 1994 1993
---------------------------------------------------------------------------
Exercised $2.62-$9.50 198 375 909
At May 31,
Granted $19.25 882
Outstanding $4.68-$19.25 1,821 1,164 1,541
Exercisable 1,115 933 1,143
Available for grants 3,618 4,500 4,500
The options outstanding at May 31, 1995, were held by 306 persons, had an
average exercise price of $13.97 per share and had expiration dates ranging
from May 1997 to June 2004.
NOTE G -- Contingent Liabilities
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.
NOTE H - Industry Segment Data
Industry segment descriptions on page 1, Company locations on page 32,
and segment data on page 22 of the annual report are an integral part of
these financial statements.
Sales for processed steel products and custom products include
$204,338,000 in 1995, $161,602,000 in 1994 and $130,483,000 in 1993 to a
major automobile manufacturer purchasing through decentralized divisions
and subsidiaries in different geographical areas.
NOTE I -- Related Party Transactions
The Company purchases from and sells to affiliated companies, certain raw
materials and services at prevailing market prices. Sales for fiscal 1995,
1994 and 1993, totaled $61 million, $62 million and $55 million,
respectively. Accounts receivable related to these transactions were $12
million and $9 million at May 31, 1995 and 1994, respectively. Purchases
for fiscal 1995, 1994 and 1993, totaled $194 million, $168 million and $157
million, respectively. Accounts payable related to these transactions
included $27 million and $22 million at May 31, 1995 and 1994,
respectively.
NOTE J - Investment in Unconsolidated Affiliates
The Company's investments in affiliated companies which are not majority owned
or controlled are accounted for using the equity method. Investments carried at
equity and the percentage interest owned consist of Worthington Specialty
Processing, partnership (50%), London Industries, Inc. (60%), Worthington
Armstrong Venture, partnership (50%), TWB Company, partnership (50%), Acerex,
S.A. de C.V. (50%) and Rouge Steel Company (28%).
The market value of the Company's investment in the class A common stock of
Rouge at May 31 1995, ($23.00 per share) was approximately $108 million. In
addition the Company owns 1,300,000 shares of class B common stock. At May 31,
1995, the Company's share of the underlying net assets of Rouge exceeded the
carrying amount included in investment in unconsolidated affiliates of
$79,369,000 by $9,886,000. The excess is being amortized into income by
increasing equity in net income of unconsolidated affiliates using the straight-
line method over 14 years.
Financial information for affiliated companies accounted for by the equity
method is as follows:
In thousands 1995 1994 1993
---------------------------------------------------------------------
Current assets $569,447 $514,407
Noncurrent assets 227,315 153,937
Current liabilities 240,044 267,372
Noncurrent liabilities 167,915 166,862
Minority interests 21,404 21,199
Net sales 1,386,824 $1,189,470 $1,070,560
Gross margin 170,234 106,309 58,700
Net income $ 122,116 $ 64,152 $ 15,887
The Company's share of undistributed earnings of unconsolidated affiliates
included in consolidated retained earnings was $49,265,000 at May 31, 1995.
NOTE K - Quarterly Results of Operations (Unaudited)
The following is a summary of the unaudited quarterly results of operations
for the years ended May 31, 1995 and 1994:
In thousands,
except per share Three Months Ended
-----------------------------------------
Aug. Nov. Feb. May
-------------------------------------------------------------
1995
Net sales $346,257 $363,276 $370,117 $403,919
Gross margin 52,132 58,008 60,392 68,404
Net earnings 25,448 28,264 28,651 34,323
Earnings per share $.28 $.31 $.32 $.38
1994
Net sales $289,890 $295,894 $323,130 $376,220
Gross margin 44,064 43,056 48,179 56,485
Net earnings 19,898 19,412 19,740 25,803
Earnings per share $.22 $.21 $.22 $.29
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 H. McConnell
John H. McConnell, Chairman & Founder
/s/ John P. McConnell
John P. McConnell, Vice Chairman & CEO
/s/ Donald G. Barger, Jr.
Donald G. Barger, Jr., Vice President-CFO
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, 1995 and 1994, and the related
consolidated statements of earnings, shareholders' equity and cash flows for
each of the three years in the period ended May 31, 1995. 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, 1995 and 1994, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended May 31, 1995, in conformity with generally accepted accounting
principles.
/s/ Ernst & Young
ERNST & YOUNG
Columbus, Ohio
June 15, 1995
SELECTED FINANCIAL DATA
In thousands, except per share May 31 1995 1994 1993 1992 1991
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FINANCIAL RESULTS
Net Sales $1,483,569 $1,285,134 $1,113,242 $971,346 $871,528
Cost of Goods Sold 1,244,633 1,093,350 938,342 820,587 742,601
---------- ---------- ---------- -------- --------
Gross Margin 238,936 191,784 174,900 150,759 128,927
Selling, General & Administrative Expense 85,102 72,372 68,809 62,402 57,507
---------- ---------- ---------- -------- --------
Operating Income 153,834 119,412 106,091 88,357 71,420
Miscellaneous Income 573 389 598 1,289 1,039
Interest Expense (6,036) (3,017) (3,421) (3,986) (4,807)
Equity in Net Income of Unconsolidated Affiliates 38,327 18,851 4,587 5,440 7,416
---------- ---------- ---------- -------- --------
Earnings From Continuing Operations Before Taxes
and Accounting Changes 186,698 135,635 107,855 91,100 75,068
Income Taxes 70,012 50,782 39,907 33,069 27,264
Earnings From Continuing Operations Before ---------- ---------- ---------- -------- --------
Accounting Changes 116,686 84,853 67,948 58,031 47,804
Per Share 1.29 0.94 0.76 0.65 0.54
Depreciation 34,129 32,385 29,204 26,887 23,843
Cash Provided By Operating Activities 66,401 60,854 65,924 72,905 35,039
Cash Dividends Declared 37,212 33,161 29,329 27,127 24,054
Per Share 0.4101 0.3669 0.3270 0.3048 0.2706
Capital Expenditures $61,485 $46,554 $29,140 $45,120 $63,319
Average Shares Outstanding 90,730 90,378 89,699 88,990 88,877
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FINANCIAL POSITION
Current Assets $451,902 $413,116 $363,513 $311,247 $275,724
Current Liabilities 179,228 161,866 139,791 121,008 107,382
--------- --------- -------- -------- --------
Working Capital 272,674 251,250 223,722 190,239 168,342
Net Fixed Assets 334,917 307,561 293,392 293,456 275,223
Total Assets 916,964 798,573 694,209 627,960 570,225
Long-Term Debt 53,476 54,136 55,626 57,345 59,032
Shareholders' Equity 590,332 503,893 438,188 392,295 359,053
Per Share 6.50 5.56 4.86 4.39 4.05
Total Capital $643,808 $558,029 $493,814 $449,640 $418,085
Shares Outstanding 90,840 90,561 90,113 89,308 88,702
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PERFORMANCE COMPARISON
Profitability (After Taxes)
Return on Net Sales 7.9% 6.6% 6.1% 6.0% 5.5%
Return on Average Total Assets 13.6% 11.4% 10.3% 9.7% 8.4%
Return on Average Total Capital 19.4% 16.1% 14.4% 13.4% 11.9%
Return on Average Shareholders' Equity 21.3% 18.0% 16.4% 15.4% 13.6%
Financial Condition
Current Ratio 2.5 X 2.6 X 2.6 X 2.6 X 2.6
Long-Term Debt/Total Capital 8% 10% 11% 13% 14%
Asset Use
Inventory Turnover 6.0 X 6.4 X 6.4 X 6.1 X 5.0
Accounts Receivable/Days Sales 46 43 45 47 45
Growth
Net Sales 15.4% 15.4% 14.6% 11.5% -4.7%
Earnings From Continuing Operations
Before Accounting Changes 37.5% 24.9% 17.1% 21.4% -14.6%
Earnings Per Share From Continuing Operations
Before Accounting Changes 37.2% 23.7% 16.9% 20.4% -12.9%
Cash Dividends Declared Per Share 11.8% 12.2% 7.3% 12.6% 6.7%
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SHAREHOLDER INFORMATION
Quarterly Volume, Price and Dividend Information
NASDAQ
Fiscal 1994 Shares Average Price Earnings Prices Cash
Quarter Ended Traded Daily Volume Ratio Range Low High Dividends
------------------------------------------------------------------------------------------
August 31 12,384,658 190,533 25-29 $18.50 $21.67 $0.087
November 30 19,720,615 313,026 21-27 $16.75 $21.00 $0.090
February 28 10,159,228 163,859 22-27 $17.25 $21.00 $0.090
May 31 8,686,601 137,883 22-24 $18.25 $20.50 $0.100
Fiscal 1995
Quarter Ended
------------------------------------------------------------------------------------------
August 31 9,542,161 146,802 19-24 $17.50 $22.00 $0.100
November 30 15,776,732 250,424 19-23 $19.25 $23.50 $0.100
February 28 12,795,463 209,762 17-20 $18.75 $21.75 $0.100
May 31 14,825,214 231,643 15-19 $18.13 $22.38 $0.110
At May 31, 1995 (10,087 Shareholders)
Share Trading
Shares of Worthington Industries common stock are traded in the over-the-
counter market as part of the NASDAQ National Market System. The Company
is identified by the NASDAQ symbol "WTHG" and in most newspaper listings
as "WorthtnInd."