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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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 February 28, 2001
[_] 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. 1-8399
WORTHINGTON INDUSTRIES, INC.
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(Exact name of Registrant as specified in its charter)
Ohio 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)
Registrant's telephone number, including area code (614) 438-3210
--------------------------
Not Applicable
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(Former name, former address and former fiscal year, if changed since
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 March 31, 2001, 85,375,425 of the Registrant's common shares,
without par value, were outstanding.
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WORTHINGTON INDUSTRIES, INC.
INDEX
PAGE
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets -
February 28, 2001 and May 31, 2000...............................................................3
Condensed Consolidated Statements of Earnings -
Three and Nine Months Ended February 28, 2001 and
February 29, 2000 ...............................................................................5
Condensed Consolidated Statements of Cash Flows -
Nine Months Ended February 28, 2001 and February 29, 2000 .......................................6
Notes to Condensed Consolidated Financial Statements.............................................7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.................................................9
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K................................................................15
SIGNATURES....................................................................................................15
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WORTHINGTON INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
ASSETS
February 28, May 31,
2001 2000
---------------------- ---------------------
(Unaudited) (Audited)
CURRENT ASSETS
Cash and cash equivalents $ 786 $ 538
Accounts receivable, less allowances of $5,965 at
February 28, 2001 and $3,879 at May 31, 2000 171,228 301,175
Inventories
Raw materials 114,845 144,903
Work in process 62,188 81,632
Finished products 76,093 64,669
---------------------- ---------------------
Total Inventories 253,126 291,204
Other current assets 33,026 31,312
---------------------- ---------------------
TOTAL CURRENT ASSETS 458,166 624,229
Property, plant and equipment 1,209,634 1,180,622
Less accumulated depreciation 358,552 318,110
---------------------- ---------------------
Property, plant and equipment, net 851,082 862,512
Other Assets 192,813 187,132
---------------------- ---------------------
TOTAL ASSETS $1,502,061 $1,673,873
====================== =====================
See notes to condensed consolidated financial statements.
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WORTHINGTON INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
February 28, May 31,
2001 2000
--------------------- ---------------------
(Unaudited) (Audited)
CURRENT LIABILITIES
Accounts payable $ 179,620 $ 157,998
Notes payable 45,924 160,194
Current maturities of long-term debt 1,838 2,688
Other current liabilities 64,397 112,390
--------------------- ---------------------
TOTAL CURRENT LIABILITIES 291,779 433,270
Long-Term Debt 356,318 362,190
Other Liabilities 72,653 79,117
Deferred Income Taxes 132,223 125,942
Shareholders' Equity 649,088 673,354
--------------------- ---------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,502,061 $1,673,873
===================== =====================
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)
Three Months Ended Nine Months Ended
-------------------------------- ----------------------------------
Feb. 28, Feb. 29, Feb. 28, Feb. 29,
2001 2000 2001 2000
--------------- ---------------- ---------------- -----------------
Net sales $418,717 $486,535 $ 1,360,310 $ 1,422,777
Cost of goods sold 365,134 406,894 1,186,228 1,174,919
--------------- ---------------- ---------------- -----------------
GROSS MARGIN 53,583 79,641 174,082 247,858
Selling, general & administrative expense 41,916 39,385 125,882 123,096
Restructuring expense 6,474 - 6,474 -
--------------- ---------------- ---------------- -----------------
OPERATING INCOME 5,193 40,256 41,726 124,762
Other income (expense):
Miscellaneous income (expense) (353) 947 (700) 1,933
Interest expense (7,300) (10,313) (26,207) (30,607)
Equity in net income of unconsolidated
affiliates 5,261 6,250 18,465 19,426
--------------- ---------------- ---------------- -----------------
EARNINGS BEFORE INCOME TAXES 2,801 37,140 33,284 115,514
Income taxes 1,023 13,928 12,149 43,318
--------------- ---------------- ---------------- -----------------
NET EARNINGS $ 1,778 $ 23,212 $ 21,135 $ 72,196
=============== ================ ================ =================
AVERAGE COMMON SHARES OUTSTANDING
- DILUTED 85,477 88,847 85,662 89,412
--------------- ---------------- ---------------- -----------------
EARNINGS PER COMMON SHARE - BASIC & $ 0.02 $ 0.26 $ 0.25 $ 0.81
DILUTED
=============== ================ ================ =================
CASH DIVIDENDS DECLARED PER COMMON $ 0.16 $ 0.15 $ 0.48 $ 0.45
SHARE =============== ================ ================ =================
See notes to condensed consolidated financial statements.
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WORTHINGTON INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
Nine Months Ended
-----------------------------------------
Feb. 28, Feb. 29,
2001 2000
------------------ ------------------
OPERATING ACTIVITIES
Net Earnings $ 21,135 $ 72,196
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 53,931 53,983
Restructuring expense 6,474 -
Other adjustments (7,075) 23,648
Changes in current assets and liabilities 144,662 (81,580)
------------------ ------------------
Net Cash Provided By Operating Activities 219,127 68,247
INVESTING ACTIVITIES
Investment in property, plant and equipment, net (46,885) (56,882)
Acquisitions, net of cash acquired (2,043) -
Proceeds from sale of assets 818 2,403
------------------ ------------------
Net Cash Used By Investing Activities (48,110) (54,479)
FINANCING ACTIVITIES
Proceeds from (payments on) short-term borrowings (120,916) 86,377
Proceeds from long-term debt 2,210 86
Principal payments on long-term debt (2,215) (5,429)
Repurchase of common shares (3,406) (51,239)
Dividends paid (41,162) (40,231)
Other (5,280) 7,104
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Net Cash Used By Financing Activities (170,769) (3,332)
------------------ ------------------
Increase in cash and cash equivalents 248 10,436
Cash and cash equivalents at beginning of period 538 7,641
------------------ ------------------
Cash and cash equivalents at end of period $ 786 $ 18,077
================== ==================
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 nine months
ended February 28, 2001 are not necessarily indicative of the results that may
be expected for the year ended May 31, 2001. For further information, refer to
the consolidated financial statements and footnotes thereto included in the
Worthington Industries, Inc. 2000 Annual Report to Shareholders and incorporated
by reference in the Form 10-K for the fiscal year ended May 31, 2000 of
Worthington Industries, Inc.
NOTE B - INDUSTRY SEGMENT DATA
Three Months Ended Nine Months Ended
-------------------------------- ----------------------------------
Feb. 28, Feb. 29, Feb. 28, Feb. 29,
($000) 2001 2000 2001 2000
--------------- --------------- ----------------- ----------------
NET SALES:
Processed Steel Products $266,211 $313,090 $ 890,902 $ 929,506
Metal Framing 78,080 85,201 262,305 258,003
Pressure Cylinders 72,707 86,640 202,498 231,123
Other 1,719 1,604 4,605 4,145
--------------- --------------- ----------------- ----------------
$418,717 $486,535 $1,360,310 $1,422,777
=============== =============== ================= ================
OPERATING INCOME:
Processed Steel Products $ (239) $21,163 $ 14,154 $ 72,415
Metal Framing 3,703 10,772 20,144 31,680
Pressure Cylinders 2,920 9,426 11,405 24,557
Other (1,191) (1,105) (3,977) (3,890)
--------------- --------------- ----------------- ----------------
$ 5,193 $40,256 $ 41,726 $ 124,762
=============== =============== ================= ================
Feb. 28, May 31,
2001 2000
----------------- ----------------
TOTAL ASSETS:
Processed Steel Products $849,277 $ 1,049,579
Metal Framing 247,006 256,505
Pressure Cylinders 210,524 215,873
Other 195,254 151,916
----------------- ----------------
$ 1,502,061 $ 1,673,873
================= ================
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NOTE C - COMPREHENSIVE INCOME
Total comprehensive income was $1.3 million and $22.2 million for the
three months ended February 28, 2001 and February 29, 2000, respectively. Total
comprehensive income was $19.5 million and $70.0 million for the nine months
ended February 28, 2001 and February 29, 2000, respectively.
NOTE D - SALE OF ACCOUNTS RECEIVABLE
On November 30, 2000, Worthington Industries, Inc. (the "Company") and
certain of its subsidiaries entered into a $120.0 million revolving trade
receivables securitization facility. Pursuant to the terms of the facility,
these subsidiaries sell their accounts receivable, on a revolving basis, to a
wholly-owned, bankruptcy-remote subsidiary of the Company, Worthington
Receivables Corporation ("WRC"). In turn, WRC sells, on a revolving basis, up to
$120.0 million undivided ownership interest in the purchased accounts receivable
to independent third parties. The Company continues to service the accounts
receivable. No servicing asset or liability has been recognized, as the
Company's cost to service the accounts receivable is expected to approximate the
servicing income.
As of February 28, 2001, WRC had sold a $94.5 million undivided
ownership interest in accounts receivable. The proceeds from the sale were
reflected as a reduction of accounts receivable on the condensed consolidated
balance sheet and as operating cash flows in the condensed consolidated
statement of cash flows. The sale proceeds were used to pay down short-term
debt.
NOTE E - RESTRUCTURING
On February 1, 2001, the Company announced the shutdown of a portion of
its Malvern, Pennsylvania, facility, which is included in the Processed Steel
Products segment. Certain assets, including two rolling mills, a cleaning line,
a tension leveler, a pickle line and a slitter, will be idled. As a result, 160
hourly and salaried positions will be eliminated through retirement, normal
attrition and termination. Of this total, 146 employees will be terminated and
their estimated severance has been accrued as part of the restructuring expense.
The business affected by the shutdown will be transferred to other Company
facilities. During the quarter ended February 28, 2001, the Company recorded a
pre-tax restructuring expense of $6.5 million. The restructuring expense
consists of $2.0 million of severance and employee related costs and $4.5
million of asset write-downs associated with the planned sale of the idled
assets. No cash payments were made against the restructuring reserve during the
quarter. At February 28, 2001, the estimated net realizable value of the
equipment being idled of $2.7 million was reclassified to other current assets
as equipment held for sale. The Company anticipates that the termination of
employees and the sale of the idled equipment will be completed by the end of
the first quarter of fiscal 2002.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Selected statements contained in this Quarterly Report on Form 10-Q, as
filed with the Securities and Exchange Commission (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, projected capacity levels, pricing trends,
anticipated capital expenditures, plant start-ups and capabilities 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; 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; 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. is a diversified steel processor that
focuses on value-added steel processing and metals-related businesses. We
operate 42 facilities worldwide, principally in three reportable business
segments: Processed Steel Products, Metal Framing and Pressure Cylinders. We
also hold equity positions in seven joint ventures, which operate 15 facilities
worldwide.
RESULTS FROM OPERATIONS
The following discussion and analysis of financial condition and
results of operations should be read in conjunction with our Condensed
Consolidated Financial Statements included elsewhere in this report. Our Annual
Report on Form 10-K for the fiscal year ended May 31, 2000, includes additional
information about Worthington, our operations and our financial position, and
should be read in conjunction with this Quarterly Report on Form 10-Q.
THIRD QUARTER - FISCAL 2001 COMPARED TO FISCAL 2000
For the third quarter ended February 28, 2001 (the "third quarter") of
the fiscal year ending May 31, 2001 ("fiscal 2001"), net sales decreased 14% to
$418.7 million, down $67.8 million from the comparable quarter of the fiscal
year ended May 31, 2000 ("fiscal 2000"). The overall decrease in net sales was
due to weaker demand within the Processed Steel Products and Pressure Cylinders
segments in conjunction with
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competitive pricing pressure in the Processed Steel Products and Metal Framing
segments. The following provides further information on net sales by segment:
- Processed Steel Products. Net sales decreased 15% to $266.2
million for the third quarter of fiscal 2001 from $313.1 million
in the comparable quarter of fiscal 2000. The general slowing of
the economy, particularly in the automotive industry, was the
primary factor in the decline. Every plant, except Monroe, Ohio,
shipped fewer tons. Furthermore, toll processing shipments dropped
as integrated steel mills experienced reduced demand and retained
a large portion of this business. The dry lube line at our Monroe
facility continued to provide volume increases.
- Metal Framing. Net sales of $78.1 million for the third quarter of
fiscal 2001 decreased 8% from $85.2 million in the comparable
quarter of fiscal 2000. The decrease in net sales primarily was
due to pricing pressures in the highly competitive building
products market, which led to lower selling prices. However, the
pricing pressure was partially offset by an increase in volumes.
- Pressure Cylinders. Net sales decreased 16% to $72.7 million for
the third quarter of fiscal 2001 from $86.6 million in the
comparable quarter of fiscal 2000. The decrease mainly was
attributable to softening domestic demand for liquefied petroleum
gas ("LPG") and industrial gas cylinders, especially in comparison
to the strong demand we experienced in the prior year. Strong
competition in Europe also impacted net sales.
Gross margin on sales decreased to 12.8% for the third quarter of
fiscal 2001 from 16.4% in the comparable quarter of fiscal 2000. The majority of
the decline occurred in the Processed Steel Products segment due to lower
volumes and higher utility costs, particularly natural gas.
Selling, general and administrative ("SG&A") expense increased 6% to
$41.9 million for the third quarter of fiscal 2001 from $39.4 million in the
comparable quarter of fiscal 2000 primarily due to higher bad debt expense in
Processed Steel Products and marketing costs in Metal Framing related to new
products.
Operating income decreased 87% to $5.2 million for the third quarter of
fiscal 2001 from $40.3 million in the comparable quarter of fiscal 2000. The
decrease in operating income principally was due to lower sales volumes in the
Processed Steel Products and Pressure Cylinder segments and reduced margins in
the Metal Framing segment. In addition, as was announced at the beginning of
February, we recorded a $6.5 million restructuring charge for the partial
shutdown of our Malvern, Pennsylvania facility (see Note E to the condensed
consolidated financial statements). The following provides further information
on operating income by segment:
- Processed Steel Products. The operating loss of $0.2 million for
the third quarter of fiscal 2001 was down from the operating
income of $21.2 million in the comparable quarter of fiscal 2000.
Reductions in direct and toll processing
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volumes and a shift to lower margin products led to the operating
loss for the quarter. In addition, a $6.5 million restructuring
charge related to the partial shutdown of the Malvern facility was
recorded during the quarter.
- Metal Framing. Operating income decreased 66% to $3.7 million for
the third quarter of fiscal 2001 from $10.8 million in the
comparable quarter of fiscal 2000. While sales volumes increased
and raw material costs decreased, lower selling prices
overshadowed these positives resulting in a decline in operating
income.
- Pressure Cylinders. Operating income decreased 69% to $2.9 million
for the third quarter of fiscal 2001 from $9.4 million in the
comparable quarter of fiscal 2000 due to lower sales volumes in
most product lines, but particularly in LPG and industrial gas
cylinders.
Interest expense decreased 29% to $7.3 million for the third quarter of
fiscal 2001 from $10.3 million in the comparable quarter of fiscal 2000. The
DECS liability was paid off during the fourth quarter of fiscal 2000 resulting
in no comparable interest expense during fiscal 2001. Additionally, short-term
debt was reduced due to the trade receivables securitization facility (see
description in "Liquidity and Capital Resources"). However, higher average
short-term interest rates have partially negated these factors. The third
quarter average interest rate on short-term unsecured notes payable was 6.62%
for fiscal 2001 compared to 6.23% in the third quarter of fiscal 2000. At
February 28, 2001, approximately 90% of our $404.1 million of consolidated debt
was at fixed rates of interest.
Equity in net income of unconsolidated affiliates decreased 16% to
$5.3 million for the third quarter of fiscal 2001 from $6.3 million in the
comparable quarter of fiscal 2000. Most of the decrease related to lower margins
at the TWB joint venture due to higher raw material costs and the startup of its
Mexico operation. Increases in sales and operating income at the Acerex joint
venture partially offset the 16% decline.
The effective tax rate for the third quarter of fiscal 2001 was 36.5%,
down from 37.5% in fiscal 2000, due to ongoing tax planning initiatives,
primarily in the state and local tax areas.
YEAR-TO-DATE - FISCAL 2001 COMPARED TO FISCAL 2000
For the first nine months of fiscal 2001, net sales decreased 4% to
$1,360.3 million, down $62.5 million from the comparable period of fiscal 2000.
The overall decrease in net sales was volume driven within the Processed Steel
Products and Pressure Cylinders segments and was impacted by lower selling
prices in Processed Steel Products and Metal Framing. Higher volumes in Metal
Framing partially offset these factors. The following provides further
information on net sales by segment:
- Processed Steel Products. Net sales decreased 4% to $890.9 million
for the first nine months of fiscal 2001 from $929.5 million in
the comparable period of fiscal 2000. The decrease in net sales
was primarily due to fewer
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shipments from a majority of the plants and a decrease in toll
processing volume. However, the Decatur and Monroe plants
continued to increase volumes due to expanded annealing capacity
and the new dry lube line, respectively.
- Metal Framing. Net sales of $262.3 million for the first nine
months of fiscal 2001 increased 2% from $258.0 million in the
comparable period of fiscal 2000. The increase in net sales was
volume driven partially offset by decreases in sales prices
brought on by stiff competition.
- Pressure Cylinders. Net sales decreased 12% to $202.5 million for
the first nine months of fiscal 2001 from $231.1 million in the
comparable period of fiscal 2000. The decrease was due to
weakening global demand for the LPG, refrigerant and industrial
gas cylinders resulting from the slowing economy and lower volumes
in the competitive European market.
Gross margin on sales decreased to 12.8% for the first nine months of
fiscal 2001 from 17.4% in the comparable period of fiscal 2000. The majority of
the decline occurred in the Processed Steel Products segment due to lower direct
and toll processing volumes and the smaller spread between selling prices and
raw material costs on direct sales, which occurred earlier in the year.
SG&A expenses increased 2% to $125.9 million for the first nine months
of fiscal 2001 from $123.1 million in the comparable period of fiscal 2000.
Increased salary, health care and moving expenses were offset by the lack of Y2K
consulting expenses in fiscal 2001.
Operating income decreased 67% to $41.7 million for the first nine
months of fiscal 2001 from $124.8 million in the comparable period of fiscal
2000. The decline in operating income was driven by lower demand in the
Processed Steel Products and Pressure Cylinders segments and the inability to
pass through higher raw material costs earlier in the year to customers in the
Processed Steel Products and Metal Framing segments. The following provides
further information on operating income by segment:
- Processed Steel Products. Operating income decreased 80% to $14.2
million for the first nine months of fiscal 2001 from $72.4
million in the comparable period of fiscal 2000 due to higher
average raw material prices earlier in the year, changes in sales
mix to lower margin products and reduced direct and toll
processing volumes. In addition, operating income was impacted by
the previously mentioned restructuring expense of $6.5 million.
- Metal Framing. Operating income decreased 36% to $20.1 million for
the first nine months of fiscal 2001 from $31.7 million in the
comparable period of fiscal 2000. Despite increases in sales
volumes, lower selling prices and higher raw material costs
resulted in lower operating income.
- Pressure Cylinders. Operating income decreased 54% to $11.4
million for the first nine months of fiscal 2001 from $24.6
million in the comparable
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period of fiscal 2000. The decrease was primarily due to
reductions in sales volumes and unfavorable overall product mix.
Interest expense decreased 14% to $26.2 million for the first nine
months of fiscal 2001 from $30.6 million in the comparable period of fiscal
2000. The DECS liability was paid off in the fourth quarter of fiscal 2000
resulting in no comparable interest expense during fiscal 2001. In addition,
short-term debt was reduced due to the trade receivables securitization facility
(see description in "Liquidity and Capital Resources"). Nevertheless, higher
average short-term interest rates have partially offset these factors. The
average interest rate on short-term unsecured notes payable for the first nine
months of fiscal 2001 was 6.76% compared to 5.67% for the first nine months of
fiscal 2000.
Equity in net income of unconsolidated affiliates decreased 5% to
$18.5 million for the first nine months of fiscal 2001 from $19.4 million in the
comparable period of fiscal 2000. Higher raw material costs at TWB and lower
sales at WSP resulted in shrinking margins at those joint ventures. Increases in
sales and operating income at the WAVE and Acerex joint ventures partially
offset the overall decrease.
The effective tax rate for the first nine months of fiscal 2001 was
36.5%, down from 37.5% in fiscal 2000, primarily due to ongoing state and local
tax planning initiatives.
LIQUIDITY AND CAPITAL RESOURCES
For the first nine months of fiscal 2001, we generated $219.1 million
in cash from operating activities, representing a $150.9 million increase from
the comparable period of fiscal 2000. The increase primarily was due to $94.5
million in proceeds from the sale of accounts receivable and a reduction in
inventories. Lower net income and a $31.0 million tax payment relating to the
tax gain from the disposition of our investment in the common shares of Rouge
Industries (which occurred in the fourth quarter of fiscal 2000) partially
offset these factors.
In November 2000, we entered into a $120.0 million revolving trade
receivables securitization ("TRS") facility with a commercial bank. Under the
TRS facility, certain of our subsidiaries sell their accounts receivable, on a
revolving basis, to Worthington Receivables Corporation ("WRC"), a wholly-owned,
bankruptcy-remote subsidiary. WRC then sells undivided ownership interests in
those accounts receivable to independent third parties. As of February 28, 2001,
$94.5 million of accounts receivable had been sold. The proceeds from this sale
were used to reduce short-term borrowings.
During the first nine months of fiscal 2001, we invested $46.9 million
in capital projects, paid our shareholders $41.2 million in dividends and
provided for our working capital requirements. These transactions were funded by
cash flow from operations.
Capital investments during the first nine months included continued
construction on Gerstenslager's Clyde facility, expanding the annealing capacity
at Decatur and adding the ability to apply a dry film lubricant at Monroe, all
within the Processed Steel
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Products segment. Expenditures were made in the Metal Framing segment for plant
startups in Seattle and Hawaii, in the Pressure Cylinders segment for a new
low-pressure cylinder line in Portugal, and in the Other segment for additional
weld cells for our steel pallet business.
Net working capital decreased $24.6 million from May 31, 2000 to $166.4
million at February 28, 2001. The decrease was due to the following: a reduction
in accounts receivable due to the impact of the TRS and lower sales; a decrease
in inventory levels reflecting lower levels of business; an increase in accounts
payable; a decrease in notes payable due to the impact of the TRS; and the
previously mentioned tax payment.
During the first nine months of fiscal 2001, we repurchased 379,100 of
our common shares for $2.7 million. In addition, we disbursed $0.7 million in
cash for common shares that were purchased in the fourth quarter of fiscal 2000.
As of February 28, 2001, approximately 2.5 million common shares remain
available for repurchase under programs authorized by our Board of Directors.
The timing and amount of any future repurchases will be at our discretion and
will depend upon market conditions and our operating performance and liquidity.
Any repurchase will also be subject to the covenants contained in our credit
facilities and our other debt instruments.
We maintain a $190.0 million revolving credit facility (the "Revolver")
with a group of commercial banks, which expires in May 2003, to finance the cash
requirements of our business operations. Outstanding borrowings under the
Revolver at February 28, 2001 were $30.0 million. We also have short-term
uncommitted lines of credit extended by various commercial banks available as
needed. There were no outstanding borrowings under these uncommitted lines at
February 28, 2001.
At February 28, 2001, our total debt was $404.1 million compared to
$525.1 million at the end of fiscal 2000 due to the previously mentioned use of
proceeds from the TRS to reduce short-term debt. As a result, the debt to
capital ratio fell to 38.7% from 43.8% at the end of fiscal 2000.
From time to time, we engage in discussions with respect to selected
acquisitions, and we expect to continue to assess acquisition opportunities as
they arise. Additional financing may be required if we decide to make additional
acquisitions. There can be no assurance, however, that any such opportunities
will arise, that any such acquisitions will be consummated or that any needed
additional financing will be available on satisfactory terms when required.
Absent any acquisitions, we anticipate that cash flows from operations, working
capital and unused short-term borrowing capacity should be more than sufficient
to fund expected normal operating costs, dividends, and capital expenditures for
our existing businesses.
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
Exhibits:
4 Second Amendment to Second Amended and Restated Loan Agreement
and Waiver Agreement, dated as of November 21, 2000 between
Worthington Industries, Inc., The Bank of Nova Scotia, PNC Bank,
National Association, Bank of America, N.A., Wachovia Bank, N.A.,
Bank One, Michigan, Bank One, N.A. and National City Bank.
Reports on Form 8-K:
No reports on Form 8-K were filed during the fiscal quarter ended
February 28, 2001.
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 16, 2001 By: /s/John T. Baldwin
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John T. Baldwin
Vice President & Chief Financial Officer
(On behalf of the Registrant and as
Principal Financial Officer)
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