Exhibit 99.1
NEWS RELEASE
[WORTHINGTON INDUSTRIES LETTERHEAD]
[WORTHINGTON INDUSTRIES LOGO]
For Immediate Release
WORTHINGTON REPORTS RECORD FOURTH QUARTER AND FISCAL YEAR RESULTS
Sets Records for Quarterly and Annual Sales, Quarterly Earnings
COLUMBUS, OHIO, JUNE 23, 2004 - Worthington Industries, Inc. (NYSE: WOR) today
reported record results for the three and twelve month periods ended May 31,
2004. For the quarter, sales were a record $782.9 million, surpassing last
year's record $589.9 million by 33%. For the year, record sales of $2,379.1
million represent a 7% increase from $2,219.9 million last year.
Fourth quarter net earnings were $39.4 million and earnings per diluted share
were $0.45 compared to net earnings of $15.6 million, or $0.18 per diluted
share, for the same period last year. Net earnings for the fourth quarter of
fiscal 2004 included four special items which collectively had a negative impact
on diluted earnings per share of $0.39, but still set a company record.
Excluding the special items, earnings per share would have been $0.84, more than
double the prior record for earnings.
"I am proud of the accomplishments of the entire Worthington team which resulted
in record sales and earnings," said John McConnell, Chairman and CEO of
Worthington Industries. "We have done much over the last several years to
improve returns on capital and, ultimately, shareholder returns by investing in
growth markets and products, consolidating facilities, and divesting
non-strategic assets. These efforts, combined with an improving economy and
heightened productivity, accounted for roughly half of this quarter's results,
excluding special items, and produced a record performance on their own. Rapidly
rising steel prices and lower priced inventory accounted for the remainder of
this quarter's excellent results," McConnell continued. "While future earnings
could be impacted by a reversal of steel pricing trends, we have yet to realize
the full benefit of our acquisition of Unimast or a recovery in the commercial
construction market," concluded McConnell.
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Worthington Industries
June 23, 2004
Page 2
SPECIAL ITEMS
Fourth quarter special items include:
A $67.4 million pre-tax charge for the impairment of certain assets and
other related costs at the Decatur, Alabama, steel processing facility.
On May 27, 2004, the company announced an agreement to sell that
facility and its cold rolling assets to Nucor Corporation (NYSE:NUE)
for $82.0 million cash while retaining its slitting and cut-to-length
assets. At that time, the estimated pre-tax charge of $73.1 million
included $5.7 million for certain costs which cannot be recognized
until the closing of the sale, which is anticipated during
Worthington's first quarter of fiscal 2005. The after-tax impact of the
charge taken this quarter is $41.8 million or $0.48 per share.
A $2.0 million pre-tax charge for the impairment of certain assets
related to the European operations of Pressure Cylinders. The earnings
impact of this asset writedown is $0.01 per share.
A $3.6 million pre-tax gain due to the settlement of a hedge position
with the Enron bankruptcy estate. The earnings impact of this gain is
$0.03 per share.
A $6.3 million credit to income tax expense for the favorable
resolution of certain tax audits. The earnings impact of this credit is
$0.07 per share.
The following table reconciles the reported earnings as required by generally
accepted accounting principles to earnings excluding the special items noted
above. Management believes these adjustments are appropriate to present a more
comparable view of earnings.
- -------------------------------------------------------------------------------------------------------------------------------
Earnings Reconciliation
May 31, 2004
($ millions, except per share) Quarter-to-Date Year-to-Date
----------------------------------- -----------------------------------
Per Per
Pre-Tax After-Tax Share Pre-Tax After-Tax Share
------- --------- ----- ------- --------- -----
Reported earnings $ 54.5 $ 39.4 $ 0.45 $ 127.5 $ 86.8 $ 1.00
Less amounts included in earnings:
Impairment of Decatur assets 67.4 41.8 0.48 67.4 41.8 0.48
Impairment of Pressure Cylinder assets 2.0 1.2 0.01 2.0 1.2 0.01
Enron settlement (3.6) (2.3) (0.03) (3.6) (2.3) (0.03)
-------- --------
Adjusted pre-tax earnings $ 120.3 $ 193.3
======== ========
Tax liability adjustments (6.3) (0.07) (7.7) (0.08)
-------- ------ ------- ---------
Adjusted after-tax earnings $ 73.8 $ 0.84 $ 119.8 $ 1.38
======== ====== ======= =========
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Worthington Industries
June 23, 2004
Page 3
FULL YEAR EARNINGS HIGHLIGHTS
Net earnings for the year, including the special items detailed previously, were
$86.8 million, and earnings per diluted share were $1.00, compared to $75.2
million and $0.87, respectively, for the same period last year.
Last year's results were impacted by nearly offsetting special items recorded in
the second quarter of fiscal 2003. Together, these charges had an immaterial
impact on reported earnings per share.
Excluding the impact of special items in both fiscal years, net earnings were
$119.8 million and earnings per diluted share were $1.38 for fiscal 2004 (see
chart for reconciliation), compared to $75.0 million and $0.87, respectively,
for fiscal 2003. On this basis, fiscal 2004 results were an all-time record.
QUARTERLY SEGMENT RESULTS
Within the Processed Steel Products segment, quarterly net sales rose 25%, or
$88.9 million, to $438.8 million from $349.9 million in the comparable quarter
of fiscal 2003. The increase in net sales was due to both increased volumes (6%)
and pricing (18%). Excluding the impact of the $67.4 million impairment charge
taken this quarter for the Decatur assets, operating income was much improved
due to higher volumes and a wider spread between selling prices and material
costs.
Within the Metal Framing segment, net sales increased 66%, or $92.0 million, to
$231.5 million from $139.5 million in the comparable quarter of fiscal 2003.
Despite continued weakness in the commercial construction market, volumes were
up 11% and pricing was up 49% over the year ago quarter. The wider spread
between selling prices and material costs was primarily responsible for the
significant improvement in operating income.
Within the Pressure Cylinders segment, net sales increased 12%, or $11.8
million, to $108.3 million from $96.5 million in the comparable quarter of
fiscal 2003. Unit volumes were up 7% overall as strength in the domestic market
was partially offset by weaker European demand. European revenues rose despite
much lower volumes as the weakened dollar boosted reported revenues in dollars
by $2.3 million. Excluding the impact of the $2.0 million charge taken this
quarter for the impairment of certain European assets, operating income
increased as a result of stronger domestic volumes and a shift in mix to higher
margin products.
Worthington's joint ventures contributed positively to fourth quarter results.
Equity in net income of the six unconsolidated affiliates totaled $16.5 million
for the quarter, up 120% from $7.5 million in the year ago quarter. All six
affiliates had stronger earnings including records at Worthington Armstrong
Venture (WAVE), TWB Company, Acerex and Aegis Metal Framing.
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Worthington Industries
June 23, 2004
Page 4
OUTLOOK
The first quarter is typically weaker than Worthington's fourth, which
represents a seasonal peak for the company.
Economic and industry conditions appear to be improving across all customer
segments. In automotive, Processed Steel's largest customer segment, "Big 3"
vehicle production is projected to be up 1% for the coming fiscal quarter
relative to last year but down 19% from this quarter. In commercial
construction, Metal Framing's primary market, the U.S. Census Bureau's index of
private construction spending confirms that commercial construction activity
remains near five-year lows, but office construction showed some year-over-year
improvement during Worthington's fourth quarter.
OTHER
Dividends declared
On May 22, 2004, the board of directors declared a quarterly cash dividend of
$0.16 per share payable June 29, 2004, to shareholders of record June 15, 2004.
Corporate Profile
Worthington Industries is a leading diversified metal processing company with
annual sales of more than $2 billion. The Columbus, Ohio, based company is North
America's premier value-added steel processor and a leader in manufactured metal
products such as automotive past model service stampings, pressure cylinders,
metal framing, metal ceiling grid systems and laser welded blanks. Worthington
employs more than 8,000 people and operates 61 facilities in 10 countries.
Founded in 1955, the company operates under a long-standing corporate philosophy
rooted in the golden rule, with earning money for its shareholders as the first
corporate goal. This philosophy, an unwavering commitment to the customer, and
one of the strongest employee/employer partnerships in American industry serve
as the company's foundation.
Conference Call
Worthington will review its fourth quarter results during its quarterly
conference call today, June 23, 2004, at 1:30 p.m. Eastern Daylight Time.
Details on the conference call can be found on the company's web site at
www.WorthingtonIndustries.com
Safe Harbor Statement
The company wishes to take advantage of the Safe Harbor provisions included in
the Private Securities Litigation Reform Act of 1995 (the "Act"). Statements by
the company
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Worthington Industries
June 23, 2004
Page 5
relating to future sales, operating results and earnings per share; projected
capacity and working capital needs; pricing trends for raw materials and
finished goods; anticipated capital expenditures and asset sales; projected
timing, results, costs, charges and expenditures related to facility
dispositions, shutdowns and consolidations; new products and markets;
expectations for the economy and markets; and other non-historical matters
constitute "forward looking statements" within the meaning of the Act. 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 and
pricing, changes in product mix and market acceptance of products; fluctuations
in pricing, quality or availability of raw materials (particularly steel),
supplies, utilities and other items required by our operations; effects of
facility closures and the consolidation of operations; our ability to realize
price increases, cost savings and operational efficiencies on a timely basis;
our ability to integrate newly acquired businesses and achieve synergies
therefrom; our ability to close the asset sale to Nucor; capacity levels and
efficiencies within our facilities and within the industry as a whole; financial
difficulties of customers, suppliers, joint venture partners and others with
whom we do business; the effect of national, regional and worldwide economic
conditions generally and within our major product markets, including a prolonged
or substantial economic downturn; the effect of adverse weather on facility and
shipping operations; changes in customer spending patterns and supplier choices
and risks associated with doing business internationally, including economic,
political and social instability and foreign currency exposure; acts of war and
terrorist activities; the ability to improve processes and business practices to
keep pace with the economic, competitive and technological environment;
deviation of actual results from estimates and/or assumptions used by the
company in the application of its significant accounting policies; level of
imports and import prices in the company's markets; the impact of governmental
regulations, both in the United States and abroad; and other risks described
from time to time in our filings with the United States Securities and Exchange
Commission.
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Worthington Industries
June 23, 2004
Page 6
WORTHINGTON INDUSTRIES, INC.
EARNINGS HIGHLIGHTS
(In Thousands, Except Per Share)
Three Months Ended Twelve Months Ended
May 31, May 31,
------------------------------- -------------------------------
2004 2003 2004 2003
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Audited)
Net sales $ 782,924 $ 589,946 $ 2,379,104 $ 2,219,891
Cost of goods sold 610,312 522,322 2,003,734 1,916,990
----------- ----------- ----------- -----------
Gross margin 172,612 67,624 375,370 302,901
Selling, general & administrative expense 59,876 42,884 195,785 182,692
Impairment charges and other 69,398 -- 69,398 (5,622)
----------- ----------- ----------- -----------
Operating income 43,338 24,740 110,187 125,831
Other income (expense):
Miscellaneous income (expense) 172 (1,604) (1,589) (7,240)
Nonrecurring loss -- -- -- (5,400)
Interest expense (5,461) (6,006) (22,198) (24,766)
Equity in net income of unconsolidated
affiliates 16,449 7,461 41,064 29,973
----------- ----------- ----------- -----------
Earnings before income taxes 54,498 24,591 127,464 118,398
Income tax expense 15,075 8,976 40,712 43,215
----------- ----------- ----------- -----------
Net earnings $ 39,423 $ 15,615 $ 86,752 $ 75,183
=========== =========== =========== ===========
Average common shares outstanding - diluted 87,587 86,285 86,950 86,537
----------- ----------- ----------- -----------
Earnings per share - diluted $ 0.45 $ 0.18 $ 1.00 $ 0.87
=========== =========== =========== ===========
Common shares outstanding at end of period 86,856 85,949 86,856 85,949
Cash dividends declared per common share $ 0.16 $ 0.16 $ 0.64 $ 0.64
Worthington Industries
June 23, 2004
Page 7
WORTHINGTON INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
May 31, May 31,
2004 2003
---------- ----------
(Unaudited) (Audited)
ASSETS
Current assets
Cash and cash equivalents $ 1,977 $ 1,139
Accounts receivable, net 348,833 169,967
Inventories 362,906 268,983
Income taxes receivable -- 11,304
Deferred income taxes 3,963 20,783
Other current assets 115,431 34,070
---------- ----------
Total current assets 833,110 506,246
Investments in unconsolidated affiliates 109,040 81,221
Goodwill 117,769 116,781
Other assets 27,826 30,777
Property, plant and equipment, net 555,394 743,044
---------- ----------
Total assets $1,643,139 $1,478,069
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 313,909 $ 222,987
Notes payable -- 1,145
Current maturities of long-term debt 1,346 1,194
Other current liabilities 159,805 92,845
---------- ----------
Total current liabilities 475,060 318,171
Other liabilities 95,067 90,471
Long-term debt 288,422 289,689
Deferred income taxes 104,216 143,444
Shareholders' equity 680,374 636,294
---------- ----------
Total liabilities and shareholders' equity $1,643,139 $1,478,069
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Worthington Industries
June 23, 2004
Page 8
WORTHINGTON INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Twelve Months Ended
May 31,
---------------------------------
2004 2003
--------- ---------
(Unaudited) (Audited)
OPERATING ACTIVITIES
Net earnings $ 86,752 $ 75,183
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 67,302 69,419
Impairment charges and other 69,398 (5,622)
Nonrecurring loss -- 5,400
Other adjustments (49,945) 41,326
Changes in current assets and liabilities (94,140) (4,985)
--------- ---------
Net cash provided by operating activities 79,367 180,721
INVESTING ACTIVITIES
Investment in property, plant and equipment, net (29,598) (24,970)
Acquisitions, net of cash acquired -- (114,703)
Investment in unconsolidated affiliate (490) --
Proceeds from sale of assets 5,661 27,814
--------- ---------
Net cash used by investing activities (24,427) (111,859)
FINANCING ACTIVITIES
Proceeds from short-term borrowings (1,145) (7,340)
Proceeds from long-term debt -- 735
Principal payments on long-term debt (1,235) (6,883)
Dividends paid (55,167) (54,869)
Other 3,445 138
--------- ---------
Net cash used by financing activities (54,102) (68,219)
Increase in cash and cash equivalents 838 643
Cash and cash equivalents at beginning of period 1,139 496
--------- ---------
Cash and cash equivalents at end of period $ 1,977 $ 1,139
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Worthington Industries
June 23, 2004
Page 9
WORTHINGTON INDUSTRIES, INC.
SUPPLEMENTAL DATA
(In Thousands)
This supplemental information is provided to assist in the analysis of the
results of operations.
Three Months Ended Twelve Months Ended
May 31, May 31,
------------------------------- -------------------------------
2004 2003 2004 2003
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Volume:
Processed Steel Products (tons) 1,030 969 3,806 3,890
Metal Framing (tons) 208 187 781 694
Pressure Cylinders (units) 5,257 4,895 14,670 15,235
Net sales:
Processed Steel Products $ 438,801 $ 349,916 $ 1,373,145 $ 1,343,397
Metal Framing 231,519 139,450 661,999 539,358
Pressure Cylinders 108,279 96,466 328,692 321,790
Other 4,325 4,114 15,268 15,346
----------- ----------- ----------- -----------
Total net sales $ 782,924 $ 589,946 $ 2,379,104 $ 2,219,891
=========== =========== =========== ===========
Material cost:
Processed Steel Products $ 281,857 $ 239,218 $ 893,743 $ 883,532
Metal Framing 105,121 90,031 364,643 315,472
Pressure Cylinders 49,173 43,409 142,601 142,008
Operating income:
Processed Steel Products $ (21,757) $ 17,687 $ 18,036 $ 80,998
Metal Framing 53,605 253 63,778 22,537
Pressure Cylinders 11,019 11,257 29,376 32,273
Other 471 (4,457) (1,003) (9,977)
----------- ----------- ----------- -----------
Total operating income $ 43,338 $ 24,740 $ 110,187 $ 125,831
=========== =========== =========== ===========
The following provides detail of the impairment charges and other included in
the operating income by segment presented above.
Three Months Ended Twelve Months Ended
May 31, May 31,
----------------------- ----------------------
2004 2003 2004 2003
------- -------- ------- -------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Pre-tax impairment charges and other by
segment
Processed Steel Products $67,400 $ -- $67,400 $(8,717)
Metal Framing -- -- -- 1,574
Pressure Cylinders 1,998 -- 1,998 1,420
Other -- -- -- 101
------- -------- ------- -------
Total impairment charges and other $69,398 $ -- $69,398 $(5,622)
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