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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10 - K
/x/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended May 31,1997 Commission File No. 0-4016
WORTHINGTON INDUSTRIES, INC.
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(Exact name of Registrant as specified in its Charter)
DELAWARE 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)
(614) 438-3210
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(Registrant's telephone number, including area code)
Securities Registered Pursuant To Section 12(b) of the Act: None
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Securities Registered Pursuant To Section 12(g) of the Act:
Title of each class:
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Common Stock, $.01 par value (96,749,759 shares outstanding at August 8, 1997)
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
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Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates
of the Registrant at August 8, 1997 was approximately $1,500,000,000 (computed
by reference to the closing price for such shares on such date).
Portions of the Registrant's Annual Report to Shareholders for the
fiscal year ended May 31, 1997 are incorporated by reference into Part I and
Part II. Portions of the definitive proxy statement furnished to shareholders of
the Registrant in connection with the annual meeting of shareholders to be held
on September 18, 1997 are incorporated by reference into Part III.
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PART I
Item 1. - Business.
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Worthington Industries, Inc. was initially incorporated in Ohio in
1955. It reincorporated in Delaware in 1986 through a statutory merger.
Worthington Industries, Inc. and its subsidiaries are herein referred to as the
"Company." The Company's operations are grouped into three segments: processed
steel products, custom products and cast products. The Company's sales for its
fiscal year ended May 31, 1997 were $1.9 billion.
The Company is the largest independent flat rolled steel processor in
the United States. The Company's steel processing operations do not make steel,
but rather, they purchase it from steel producers and then process it to exact
specifications for approximately 1,700 industrial customers primarily in the
automotive, automotive supply, appliance, electrical, communication,
construction, office furniture, office equipment, agricultural, machinery,
aerospace and leisure time industries. The Company believes it offers the widest
array of steel processing services in the industry. The Company currently
operates eleven steel processing facilities (with its twelfth under
construction) and is a partner in three steel processing joint ventures, with a
concentration in the largest steel consuming region of the United States.
For the year ended May 31, 1997, net sales of the Company's processed
steel products segment were approximately $1.4 billion, representing
approximately 74.1% of the Company's total fiscal year 1997 sales. In addition
to steel processing, this segment also includes (i) the Company's pressure
cylinder business which management believes to be the largest producer of
portable low pressure liquefied petroleum gas cylinders and refrigerant gas
cylinders in North America, (ii) the Company's metal framing products business,
Dietrich Industries, which is the nation's largest producer and supplier of
metal framing products for the commercial and residential construction markets,
and (iii) the recently acquired automotive body panel business of The
Gerstenslager Company ("Gerstenslager").
The Company acquired Gerstenslager on February 21, 1997 in a tax-free,
stock-for-stock exchange valued at approximately $113 million and accounted for
as a pooling of interests. Gerstenslager is a major independent producer of
aftermarket automotive body panels in the United States. Gerstenslager's sales
in fiscal 1997 were approximately $123 million. Gerstenslager's customers
include domestic automobile and truck manufacturers and foreign automotive
transplants. Based in Wooster, Ohio, Gerstenslager employs over 1,000 people and
occupies over 800,000 square feet of manufacturing, warehouse and office space.
Under pooling of interests accounting, Gerstenslager has been included in the
processed steel products segment as if it were always a part of the Company.
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The principal stockholder of Gerstenslager was JDEL, Inc., an
investment vehicle of John H. McConnell, the Company's Chairman Emeritus and
Founder, John P. McConnell, the Company's Chairman and Chief Executive Officer,
and their families. In connection with the transaction, the Company received a
fairness opinion from an independent investment banker and approval of the
transaction by a Special Committee of the Company's Board of Directors comprised
of independent directors.
The Company's custom products segment includes Worthington Custom
Plastics, Inc., one of the ten largest plastic injection molding companies in
the United States, which sells primarily to the automotive, lawn and garden,
recreational, appliance, furniture, business equipment, audio equipment, airline
and medical industries, and Worthington Precision Metals, Inc., which supplies
components primarily for automotive transmission, power steering and brake
applications.
The Company's cast products segment consists primarily of Buckeye Steel
Castings Company, one of the two largest suppliers of large railcar castings in
the United States and the leading North American designer and producer of
undercarriages for mass transit cars.
For information regarding the net sales and revenues, earnings before
income taxes, and identifiable assets attributable to each segment for each of
the last three fiscal years, reference is made to such information appearing on
page I-14 of the Company's 1997 Annual Report to Shareholders, which information
is incorporated herein by reference.
See Note J of the Company's Notes to Consolidated Financial Statements,
which are incorporated by reference into Item 8 hereof, for information
concerning the Company's investments in unconsolidated affiliates.
Processed Steel Products.
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The Company's processed steel products segment includes its steel
processing businesses, its pressure cylinder business and commencing with its
acquisition in February 1996, the metal framing business. It also includes the
Gerstenslager automotive body panel business. Since Gerstenslager was acquired
in a pooling of interests transaction, its results are included as if it were
always part of the Company. For the fiscal year ended May 31, 1997, sales of the
processed steel products segment were $1.418 billion, approximately 74.1% of the
Company's total sales.
The Company's steel processing operations are conducted through its
Worthington Steel Company operations ("Worthington Steel"). Worthington Steel
occupies a niche in the steel industry by focusing on more specialized products
requiring more exact specifications, which typically cannot be supplied as
efficiently
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by steel mills, metal service centers or steel end users. Worthington Steel is
the largest independent flat rolled steel processor in the United States and
operates eleven processing facilities, with a concentration in the Michigan,
Ohio and Indiana market, the largest flat rolled steel consuming market in the
United States. The Company's newest steel processing facility, located in Delta,
Ohio, started up its slitting and pickling operations late in calendar 1996 and
its hot dipped galvanizing line in April 1997. The Company's twelfth steel
processing facility, located in Decatur, Alabama, is scheduled for start-up in
calendar 1998.
Worthington Steel buys coils of wide, open tolerance steel from major
integrated steel mills and mini-mills and processes it to the precise type,
thickness, length, width, shape, temper and surface quality specified by
approximately 1,700 industrial customers, principally in the automotive,
automotive supply, appliance, electrical, communications, construction, office
furniture, office equipment, agricultural, machinery and leisure time
industries. The Company purchases and supplies steel based on the specific
orders of customers and does not typically process steel for inventory.
Worthington Steel's computer-aided processing capabilities include among others:
pickling, a chemical process using an acidic solution to remove surface oxide
which develops on hot rolled steel; slitting, which cuts steel to specific
widths; cut-to-length, which flattens the steel and cuts it to exact lengths;
roller leveling, a method of applying pressure to achieve precise flatness
tolerances for steel which is cut into exact lengths; cold reduction, which
achieves close tolerances of thickness and temper by rolling; edge rolling,
which conditions the edges of the steel by imparting round, smooth or knurled
edges; blanking, through which steel is cut into specific shapes; painting; hot
dipped galvanizing; nickel plating; and annealing, a thermal process that
changes the hardness and certain metallurgical characteristics of steel.
Worthington Steel also "toll processes" steel for the steel mills and
large end users. Toll processing is similar to Worthington's normal steel
processing, except the mill or end user retains the title to the steel and has
the responsibility for selling the product. Toll processing enables the Company
to participate in the market for wide sheet steel and large standard orders,
which is a market generally served by steel mills, rather than by intermediate
steel processors.
Steel processing is highly competitive. The Company competes with many
other intermediate processors. The Company knows of no other intermediate
processor which offers the same type and extent of technical service support
provided by the Company relating to material testing and application of material
suited to the particular needs of customers (see "Technical Services"). The
Company is unable to gauge, however, the extent to which its technical service
capability has improved its competitive position.
Worthington Cylinder Corporation ("Worthington Cylinders") is the
nation's largest producer of portable low pressure L.P. gas and refrigerant
cylinders.
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Worthington Cylinders' primary products are steel cylinders with refrigerant gas
capacities of 15 to 1,000 lbs. and steel and aluminum cylinders with L.P. gas
capacities of 4-1/4 to 420 lbs. These cylinders are designed and produced in
accordance with safety requirements prescribed by the U.S. Department of
Transportation which specify materials, design limitations, and marking,
inspection and testing procedures. The cylinders are produced by precision
stamping, deep drawing and welding of component parts to customer
specifications. They are then tested, painted and packaged as required.
The Company's refrigerant cylinders are used primarily by major
refrigerant gas producers to contain refrigerant gases for use in charging
residential, commercial, automotive and other air conditioning and refrigeration
systems. Reusable steel and aluminum L.P. gas cylinders are sold to
manufacturers of barbecue grills, propane and gas grill distributors, mass
merchandisers, and manufacturers and users of material handling, heating,
cooking and camping equipment. The Company manufactures other low pressure
cylinder products, including recapture and recycling tanks for refrigerant
gases, helium tanks, and cylinders to hold other gases. The Company also
produces high pressure acetylene, industrial, medical, halon and electronic gas
cylinders. While a large percentage of sales are made to major accounts,
Worthington Cylinders has over 2,000 customers. It operates seven manufacturing
facilities located in Ohio, Oklahoma, Alabama and Ontario, and a joint venture
facility near Sao Paulo, Brazil.
The Company has two principal competitors in its major low pressure
cylinder markets, of which management believes the Company has the largest
share. The Company also has two principal competitors in its high pressure
cylinder markets, both of which have a larger share than the Company. However,
the Company otherwise has no reliable information with respect to the size of
any of its various product markets or its relative position therein.
The Company's metal framing business is carried on by Dietrich
Industries, which was acquired on February 5, 1996. Dietrich is the largest
supplier of metal framing products for the commercial and residential
construction markets in the United States. The Company believes that Dietrich is
the only national supplier of metal framing products and supplies approximately
35% of the metal framing products sold in the United States. It has five large
regional competitors and numerous small, more localized competitors. Dietrich
operates eighteen facilities in thirteen states.
On February 21, 1997 the Company acquired The Gerstenslager Company, a
leading independent supplier of Class A exterior body panels to the North
American automotive original equipment and service part markets. The Company
believes Gerstenslager to be the largest independent supplier of exposed sheet
metal products for the North American automotive aftermarket. Gerstenslager is
unique in its ability to handle the very large number of low volume parts
managing over
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3,000 die sets for component parts on past and current automobile and truck
production models. The Company's largest customers are the domestic automobile
manufacturers. It also serves transplant automobile manufacturers, heavy duty
truck manufacturers, and suppliers to the automotive industry.
Gerstenslager competes with captive stamping plants owned by the
automotive companies and independent tier one suppliers of current model
components, however these stampers are generally unwilling to keep tooling for
past model service business which has a low volume nature. The Company has a
number of smaller competitors in this market, but believes that Gerstenslager
has the largest share of the automotive aftermarket for exterior body panels.
The largest customer of the processed steel products segment is General
Motors Corporation, purchasing through decentralized divisions and subsidiaries
and in different geographical areas. (See "Marketing and Competition"). The loss
of General Motors as a customer could have an adverse effect on the segment, but
the Company has no reason to believe that the loss of this customer is likely.
The Company purchases steel in large quantities, at regular intervals
from major primary producers for its steel processing, pressure cylinder, metal
framing and automotive body panel operations. During the fiscal year ended May
31, 1997 the Company's major suppliers were Rouge Steel Company (in which the
Company holds a minority equity position), AK Steel Corporation, Bethlehem Steel
Corporation, LTV Steel Corporation, USX Corporation, WCI Steel, Inc. and Weirton
Steel Corporation. During the fiscal year ended May 31, 1997, the Company's
major suppliers of aluminum for pressure cylinders were Alumax Aluminum Sales
Corporation and Specialty Blanks Incorporated. Management believes that its
supplier relationships are good.
Custom Products.
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The Company's custom products segment includes its custom plastics
business and its precision metal business. Sales by the custom products segment
totaled $380 million for the year ended May 31, 1997, representing approximately
19.9% of the Company's net sales. The Company's custom plastics business
represents the major portion of these sales.
The Company's custom plastics business is conducted through Worthington
Custom Plastics, Inc., one of the ten largest producers of injection molded
plastic products in the United States. Historically, sales to the automotive
market had dominated the customs plastic business. In recent years the Company
has increased sales to manufacturers of appliances, lawn and garden equipment,
audio equipment, business equipment, furniture, recreational products, and other
items.
On December 3, 1996, the Company acquired substantially all of the
assets of Plastics Manufacturing, Inc. ("PMI") of Harrisburg, North Carolina,
one of the
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largest manufacturers of plastic injection molded and thermoformed parts in the
southeastern United States. With annualized revenues of approximately $80
million, PMI primarily serves the business equipment, commercial airline and
medical industries. The Company believes that Worthington Custom Plastics is one
of the two largest suppliers of injection molded plastic parts for
non-automotive uses.
Principal custom products are a variety of custom made injection molded
plastic components (both functional and decorative) which, depending on the
customers' needs, can also be painted, assembled, silk screened, vacuum
metalized, hot stamped, roll foiled, vinyl wrapped, foamed in-place and/or
appliqued by the Company. Worthington Custom Plastics operates nine plants
located in Ohio, Kentucky, North Carolina and South Carolina.
The Company's precision metals business is conducted through
Worthington Precision Metals, Inc. which supplies metal components requiring
extremely precise tolerances for use primarily in the automotive industry for
transmission, power steering and brake applications. This business operates two
facilities located in Ohio and Tennessee.
The custom products segment relies heavily on sales to General Motors
Corporation, The Ford Motor Company and Chrysler Corporation. The loss of any of
these customers could have an adverse effect on the segment but the Company has
no reason to believe that the loss of any of these customers is likely.
Plastic resins and bar steel, the major raw materials required by this
segment, are available from many sources.
The Company has numerous competitors in the sale of its custom
products. This business competes in its markets by seeking to provide
well-engineered, quality products within required delivery terms to meet the
specific needs of its plastic parts and precision metal component customers.
Cast Products.
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The Company's cast products segment consists primarily of Buckeye Steel
Castings Company ("Buckeye Steel") which operates the largest single site steel
foundry in the United States. Buckeye Steel manufactures a diverse line of cast
steel products ranging in size from 100 lbs. to 30 tons. These products are
offered to the railroad, mass transit, construction and off highway equipment
markets. The Company believes Buckeye Steel is one of the two largest suppliers
of large railcar castings in the United States and is the leading North American
designer and producer of undercarriages for mass transit cars. The cast products
segment had sales of $114 million for the year ended May 31, 1997, representing
approximately 6.0% of total Company sales.
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In general, there are a number of companies involved in the sale of
steel castings; however, there are three major competitors in the sale of
certain railcar castings. The Company's cast products are generally sold under
trademark which is a stylized "Circle B", and the Company utilizes various other
owned and licensed trademarks and patents in connection with its cast products.
Scrap steel, the major raw material required by the cast products
segment, is purchased from several sources. Supplies of scrap steel have been
adequate, although pricing in the market tends to be volatile. Other raw
materials used by this segment are obtained from a number of major suppliers.
Joint Ventures
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The Company is a member in one consolidated and six unconsolidated
joint ventures.
- Spartan Steel Coating, L.L.C., a 52% owned consolidated joint
venture with Rouge Steel, is constructing a cold rolled hot
dipped galvanizing facility near Monroe, Michigan. This
facility is expected to begin operations in mid-1998.
- Worthington/Armstrong Venture ("WAVE"), a 50% owned joint
venture with Armstrong World Industries, is one of the three
leading United States manufacturers of suspended ceiling
systems for concealed and lay-in panel ceilings. WAVE operates
facilities in Pennsylvania, Maryland, Nevada, Spain, China,
and France and expects to open facilities in England and
Michigan.
- Worthington Specialty Processing, a 50% owned joint venture
with USX Corporation, operates a plant in Jackson, Michigan
which primarily toll processes for USX Corporation.
- Acerex S.A. de C.V., a 50% owned joint venture with Hylsa S.A.
de C.V., is a steel processing company located in Monterrey,
Mexico.
- TWB Company, a 33.3% owned joint venture with Thyssen Steel,
Rouge Steel, LTV Steel and Bethlehem Steel, is located in
Monroe, Michigan. It produces laser welded blanks for use in
the auto industry for products such as inner door frames.
- Worthington S.A., a 52% owned joint venture with three
Brazilian propane producers, operates a cylinder manufacturing
facility near Sao Paulo, Brazil.
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- London Industries, Inc., a 60% owned London, Ohio joint
venture with Sumitomo and Nissen Chemitech of Japan, produces
injection molded plastics parts, concentrating on sales to
foreign transplant automakers.
See Note J of the Company's Notes to Consolidated Financial Statements
for additional information on these joint ventures.
Investment In Rouge Steel
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The Company also owns a minority interest (27%) in Rouge Steel Company,
an integrated steel mill located in Dearborn, Michigan. This relationship, along
with a long term steel supply agreement, have assured the Company a steady
supply of high quality steel at competitive prices in all market conditions.
Since Worthington acquired its equity position in 1990, Rouge Steel has been the
Company's largest steel supplier.
In the first quarter of fiscal 1997, the Company converted certain of
its Class B common stock of Rouge Steel into Class A common stock of Rouge
Steel, which reduced its voting percentage in Rouge Steel below 20%, and it
resigned from its two seats on the Rouge Steel Board of Directors. As a result,
the Company's investment in Rouge no longer qualified for the equity method of
accounting and was changed to the cost method for the 1997 fiscal year. Under
the equity method, Rouge Steel had contributed $21.7 million and $32.1 million
to the Company's pre-tax earnings during fiscal 1996 and 1995, respectively.
Under the cost method of accounting, only dividends received by Worthington from
its Rouge Common Stock are credited to pre-tax earnings.
In March 1997, the Company issued 5,999,600 DECS SM (Debt Exchangeable
for Common Stock SM). Under the DECS the Company issued $93 million principal
amount of 7-1/4% exchangeable notes due March 1, 2000. At maturity of the Notes,
the principal amount of each DECS will be mandatorily exchanged by Worthington
into shares of Rouge Class A Common Stock (or at the Company's option cash
equivalent for all or part thereof) at a defined exchange rate. The Company's
current Rouge stockholdings are sufficient to settle the DECS liability.
Technical Services.
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The Company employs a staff of engineers and other technical personnel
and maintains fully-equipped, modern laboratories to support its operations. The
facilities enable the Company to verify, analyze and document the physical,
chemical, metallurgical and mechanical properties of its raw materials and
products. Technical service personnel also work in conjunction with the sales
force to determine the types of flat rolled steel and steel castings required
for the particular needs of the Company's customers. In order to provide such
service, the Company maintains a continuing program of developmental engineering
with respect to the
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characteristics and performance of its products under varying conditions.
Laboratory facilities are also used to perform the quality control and extensive
testing of all low pressure cylinders required by the regulations of the U. S.
Department of Transportation and associated agencies, as well as varying
customer requirements. The Company also maintains a separate testing facility
for its steel castings operation.
Marketing and Competition.
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The Company's products and services are sold primarily by Company sales
personnel.
As a percentage of the Company's consolidated sales and revenues, sales
of steel processing services represented 42% for fiscal 1997, 48% for fiscal
1996, and 54% for fiscal 1995; sales of metal framing products represented 15.6%
for fiscal 1997 and less than 10% in fiscal 1996 and 1995 since it was acquired
in February 1996; sales of pressure cylinders represented 10% for fiscal 1997,
11% for fiscal 1996, and 12% for 1995; sales of custom plastics represented 17%
for fiscal 1997, 17% in 1996, and 16% in 1995.
During fiscal year ended May 31, 1997, General Motors Corporation,
purchasing through decentralized divisions and subsidiaries in different
geographical areas, accounted for approximately 14.0% of the Company's
consolidated sales and revenues.
The principal methods of competition encountered by the Company are
quality of product, ability to meet delivery requirements of customers, and
price. Geographic proximity to customers has a significant effect upon relative
ability to meet customer delivery schedules and impacts the freight charge
portion of overall product price. See also the information set forth above as to
competition in the various segments.
Environmental Regulation.
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The Company's manufacturing facilities, generally in common with those
of similar industries making similar products, are subject to many federal,
state and local requirements relating to the protection of the environment. The
Company continually examines ways to reduce emissions and waste and to effect
cost savings related to environmental compliance. Management does not anticipate
that capital expenditures for environmental control facilities required in order
to meet environmental requirements will be material when compared with the
Company's overall capital expenditures.
Employees.
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The Company employs approximately 12,000 people.
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Subsequent Event
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On August 14, 1997, the Company experienced a fire at its steel
processing facility in Monroe, Ohio. The fire significantly damaged the pickling
area of the facility and caused less extensive damage to the remainder of the
plant. The Company has shifted as much business as possible to its other
locations, with the remainder being sent to third party processors. Although the
Company has not yet been able to fully evaluate the damages and the time for
repairs or replacement of the facilities and its equipment, the Company
anticipates that operations will return in stages, with blanking to return
first, slitting second, and pickling over a longer period.
The Company carries both property damage and business interruption
insurance and as a result, the Company does not expect the fire to have a
material adverse impact on the Company's financial results.
Item 2. - Properties.
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The Company's corporate offices are located in Columbus, Ohio. Its
principal properties consist of 52 manufacturing facilities, excluding those of
unconsolidated affiliates. These facilities are well maintained and in good
operating condition, excluding the Monroe, Ohio steel processing facility which
was recently damaged by a fire - see Item 1 under "Subsequent Events." These
facilities contain in excess of 9,000,000 sq. ft. in the aggregate and are
adequate to meet the Company's present needs.
The locations of these facilities are set forth on page I-28 of the
Company's Annual Report to Shareholders for the year ended May 31, 1997, which
information is incorporated herein by reference.
See Item 1 under the heading "Joint Ventures" for the location of the
Company's unconsolidated affiliates.
Item 3. - Legal Proceedings.
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Not Applicable.
Item 4. - Submission of Matters to a Vote of Security Holders.
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Not Applicable.
Executive Officers of the Registrant.
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The following table lists the names, positions held, and ages of all
the executive officers of the Company:
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PRESENT
OFFICE
NAME AGE POSITIONS WITH THE COMPANY HELD SINCE
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John H. McConnell 74 Chairman Emeritus, Founder 1996
John P. McConnell 43 Vice Chairman, Chief Executive
Officer 1996
Donald G. Barger, Jr. 54 Vice President, Chief Financial
Officer 1993
Robert J. Borel 54 Vice President-Engineering 1985
William S. Dietrich 59 President - Dietrich Industries
Inc., a subsidiary of the Company 1997
Edward A. Ferkany 60 Vice President-Processed Steel 1985
Thomas L. Hockman 53 Vice President-Administration 1997
Pete A. Klisares 61 Assistant to the Chairman 1993
Donal H. Malenick 58 President, Chief Operating Officer 1976
Charles D. Minor 70 Secretary 1955
Ralph V. Roberts 50 Vice President-Corporate Development 1997
Mark H. Stier 50 Vice President-Human Resources 1997
The principal employment of Donal H. Malenick, Robert J. Borel and
Edward A. Ferkany for more than the last five years has been in their present
capacity with the Company. William S. Dietrich has been President of Dietrich
Industries for more than the last five years.
John P. McConnell's principal occupation for more than five years prior
to July 1990 had been in various capacities with the Company. In July 1990, he
resigned his employment with the Company to become President of JMAC, Inc., a
private holding company. John P. McConnell was elected Vice Chairman of the
Company in June 1992, Chief Executive Officer as of June 1, 1993, and Chairman
of the Board in September 1996.
John H. McConnell was Chairman and Chief Executive Officer of the
Company from its founding in 1955 until he retired from the position of Chief
Executive Officer in 1993 and as Chairman in 1996.
Donald G. Barger, Jr. was Vice President-Corporate Controller for B. F.
Goodrich Company for more than five years prior to September 1993, when he
became Vice President, Chief Financial Officer of the Company.
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Thomas L. Hockman was Assistant Treasurer and Manager of Compensation
and Benefits for the Company for more than five years prior to becoming Vice
President-Personnel in January 1993. He became Vice President-Administration in
1997.
Pete A. Klisares was Manufacturing Vice President and General Manager
for AT&T for more than five years prior to May 1991 and Executive Director of
JMAC, Inc. from May 1991 through December 1991. He became Assistant to the
Chairman of the Company in December 1991. He was named Executive Vice President
effective August 1993 and maintained that position until August 1997 when he
again assumed the position of Assistant to the Chairman.
Charles D. Minor was a partner in the law firm of Vorys, Sater, Seymour
and Pease, counsel to the Company, for more than five years prior to January
1993. In January 1993 he became counsel to that firm.
Ralph V. Roberts served as President of Worthington Armstrong Venture,
a joint venture between the Company and Armstrong World Industries, Inc. from
its formation in June 1992 until he became Vice President Corporate Development
in June 1997. Prior to that time, he served in various positions with the
Company including as Vice President-General Manager of two of the Company's
steel processing facilities.
Mark H. Stier was Vice President - General Manager of the Company's
subsidiary, The Worthington Steel Company, Porter, Indiana, for more than ten
years prior to August 1997, when he became Vice President-Corporate Human
Resources of the Company. Prior to that time he had served in various capacities
with the Company.
Executive officers serve at the pleasure of the directors. John H.
McConnell is the father of John P. McConnell. There are no other family
relationships among the executive officers of the Company. No arrangements or
understandings exist pursuant to which any person has been, or is to be,
selected as an officer.
PART II
Item 5. - Market for Registrant's Common Equity and Related Stockholder Matters.
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The information called for by this Item 5 is incorporated by reference
herein from the information set forth under the caption "Stock Trading, Price
and Dividend Information" on page I-4 of the Company's 1997 Annual Report to
Shareholders.
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Item 6. - Selected Financial Data.
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The information called for by this Item 6 is incorporated by reference
herein from the information on page I-5 under the caption "Five Year Selected
Financial Data" under the headings "Financial Results" and "Financial Position."
Item 7. - Management's Discussion and Analysis of Financial Condition and
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Results of Operations.
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The information called for by this Item 7 is incorporated by reference
herein from the information set forth under the caption "Management's Discussion
and Analysis" on pages I-6 through I-9 of the Company's 1997 Annual Report to
Shareholders.
Item 7A. - Quantitative and Qualitative Disclosures about Market Risk.
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Not applicable.
Item 8. - Financial Statements and Supplementary Data.
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The following consolidated financial statements of Worthington
Industries, Inc. and Subsidiaries and Report of Independent Auditors, set forth
on pages I-10 through I-27 of the Company's 1997 Annual Report to Shareholders
are incorporated herein by reference.
Consolidated Balance Sheets--May 31, 1997 and 1996
Consolidated Statements of Earnings--Years ended May 31, 1997, 1996 and
1995.
Consolidated Statements of Shareholders' Equity--Years ended May 31,
1997, 1996 and 1995.
Consolidated Statements of Cash Flows--Years ended May 31, 1997, 1996
and 1995.
Notes to Consolidated Financial Statements
Report of Independent Auditors
Item 9. - Changes in and Disagreements with Accountants on Accounting and
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Financial Disclosure.
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Not applicable.
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PART III
Item 10. - Directors and Executive Officers of the Registrant.
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In accordance with General Instruction G(3), the information required
by this Item 10 is incorporated by reference herein from the material under the
heading "Election of Directors" contained on pages 2 through 5 of the Company's
Proxy Statement for its 1997 Annual Meeting of Shareholders to be held on
September 18, 1997. The information regarding Executive Officers required by
Item 401 of Regulation S-K is included in Part I hereof under an appropriate
caption. Disclosure required under Item 405 of Regulation S-K is included on
page 5 of the Proxy Statement.
Item 11. - Executive Compensation.
- ----------------------------------
In accordance with General Instruction G(3), the information required
by this Item 11 is incorporated by reference herein from the information
contained in the Company's Proxy Statement for its 1997 Annual Meeting of
Shareholders under the heading "Election of Directors - Compensation of
Directors" on pages 4 and 5, and under the heading "Executive Compensation" -
"Summary of Cash and Certain Other Compensation" on page 12, "Option Grants" on
page 13, and "Option Exercises and Holdings" on pages 13 and 14.
Item 12. - Security Ownership of Certain Beneficial Owners and Management.
- --------------------------------------------------------------------------
In accordance with General Instruction G(3), the information required
by this Item 12 is incorporated by reference herein from the material under the
headings "Voting Securities and Principal Holders Thereof - Security Ownership
of Certain Beneficial Owners" contained on page 2 and "Election of Directors"
contained on pages 3 and 4 of the Company's Proxy Statement for its 1997 Annual
Meeting of Shareholders.
Item 13. - Certain Relationships and Related Transactions.
- ----------------------------------------------------------
In accordance with General Instruction G(3), the information required
by this Item 13 is incorporated by reference herein from footnote 2 to the table
under the heading "Election of Directors" contained on page 3 and the material
under the heading "Gerstenslager Transaction" on page 13 of the Company's Proxy
Statement for its 1997 Annual Meeting of Shareholders.
PART IV
Item 14. - Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
- ----------------------------------------------------------------------------
(a)(1) and (2) The response to this portion of Item 14 is submitted as a
separate section of this report--See List of Financial
Statements and Financial Statement Schedules on page F-1 of
this report.
15
16
(3) Listing of Exhibits--See Index to Exhibits beginning on page E-1 of
this report. The index to exhibits specifically identifies each
management contract or compensatory plan required to be filed as an
Exhibit to this Form 10-K.
(b) None.
(c) Exhibits filed with this report are attached hereto.
(d) Financial Statement Schedules--The response to this portion of Item 14
is submitted as a separate section of this report--See List of
Financial Statements and Financial Statement Schedules on Page F-1.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: August 27, 1997 By: /s/Donald G. Barger
--------------------
Donald G. Barger, Jr.
Vice President-Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
SIGNATURE DATE TITLE
--------- ---- -----
* * Director, Chairman and
- ----------------------- Chief Executive Officer
John P. McConnell
* * Director, Chairman Emeritus
- ----------------------- and Founder
John H. McConnell
* * Director, President and
- ----------------------- Chief Operating Officer
Donal H. Malenick
* * Director, Assistant to the
- ----------------------- Chairman
Pete A. Klisares
16
17
/s/Donald G. Barger * Vice President,
- ----------------------- Chief Financial Officer
Donald G. Barger, Jr.
* * Director, Secretary
- -----------------------
Charles D. Minor
* * Director
- -----------------------
William S. Dietrich
* * Director
- -----------------------
Charles R. Carson
* * Director
- -----------------------
John E. Fisher
* * Director
- -----------------------
John F. Havens
* * Director
- -----------------------
Katherine S. LeVeque
* * Director
- -----------------------
Robert B. McCurry
* * Director
- -----------------------
Gerald B. Mitchell
* * Director
- -----------------------
James Petropoulos
*By:/s/Donald G. Barger, Jr. Date: 8/27/97
------------------------- -------
Donald G. Barger, Jr.
Attorney-In-Fact
17
18
ANNUAL REPORT ON FORM 10-K
ITEM 14 (a) (1) AND (2) AND ITEM 14 (d)
WORTHINGTON INDUSTRIES, INC. AND SUBSIDIARIES
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statements of Worthington Industries, Inc.,
and Subsidiaries, set forth on pages I-10 through I-27 of the Company's 1997
Annual Report to Shareholders, are incorporated by reference in Item 8:
Consolidated Balance Sheets -- May 31, 1997 and 1996
Consolidated Statements of Earnings -- Years ended May 31, 1997, 1996 and 1995
Consolidated Statements of Shareholders' Equity -- Years ended May 31, 1997,
1996 and 1995
Consolidated Statements of Cash Flows -- Years ended May 31, 1997, 1996 and 1995
Notes to Consolidated Financial Statements
Report of Independent Auditors
The following consolidated financial statement schedules of Worthington
Industries, Inc. and Subsidiaries are included in Item 14 (d):
Schedule II - Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.
F-1
19
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
WORTHINGTON INDUSTRIES, INC. AND SUBSIDIARIES
- ---------------------------------------------------------------------------------------------------------------------
COL. A COL.B COL.C COL.D COL.E
- ---------------------------------------------------------------------------------------------------------------------
Additions
------------------------------------
Balance (1) (2) Balance at
DESCRIPTION at Beginning Charged to Cost Charged to Other Deductions End of
of Period and Expenses Accounts - Describe -Describe Period
- ---------------------------------------------------------------------------------------------------------------------
Year Ended May 31, 1997:
Deducted from asset accounts:
Allowance for possible
losses on trade accounts
receivable $2,792,000 $947,368 $300,000 (C) $139,368 (A) $3,900,000
========== ======== ======== ========== ==========
Year Ended May 31, 1996:
Deducted from asset accounts:
Allowance for possible
losses on trade accounts
receivable $2,411,000 $355,199 $750,000 (B) $724,199 (A) $2,792,000
========== ======== ========= ========== ==========
Year Ended May 31, 1995:
Deducted from asset accounts:
Allowance for possible
losses on trade accounts
receivable $2,549,000 $881,866 $152 $1,020,018 (A) $2,411,000
========== ======== ========= ========== ==========
Note A - Uncollectible accounts charged to the allowance.
Note B - Amount from Dietrich acquisition.
Note C - Amount from PMI acquisition.
20
EXHIBIT INDEX
-------------
3(a) Certificate of Incorporation of Incorporation herein by reference
Worthington Industries, Inc. to Exhibit 3 of the Company's
Quarterly Report on Form 10-Q for
the Quarter ended August 31, 1994
3(b) Bylaws of Worthington Industries, Incorporated herein by reference
Inc. to Exhibit 3(b) of the Company's
Annual Report on Form 10-K for the
fiscal year ended May 31, 1992
4(a) Form of Indenture dated as of May
15, 1996 between the Company and
PNC Bank, Ohio, National Association,
as Trustee, relating to up to
$450,000,000 of debt securities
4(b) Form of 7-1/8% Notes due 2006
4(c) First Supplemental Indenture dated
as of February 27, 1997 between the
Company and PNC Bank as Trustee
4(d) 7-1/4% Exchangeable Note Due March 1,
2000
4(e) Revolving Credit Agreement dated
as of May 30, 1997 between the Company
and The Bank of Nova Scotia, PNC Bank,
Ohio, National Association,
Nationsbank, N.A., Wachovia Bank of
Georgia, N.A., ABN Amro Bank N.V. and
Bank One, N.A.
4(f) Agreement to furnish instruments
defining rights of holders of long-
term debt
21
10(a) Amended 1980 Stock Option Plan, Incorporated herein by reference
as amended* to Annex B to the Prospectus filed
as part of Post-Effective Amendment
No. 1 to the Company's Registration
Statement on Form S-8 (Registration
No. 2-80094)
10(b) 1990 Stock Option Plan* Incorporated herein by reference to
Exhibit 10(d) of the Company's
Annual Report on Form 10-K for the
fiscal year ended May 31, 1991
10(c) Executive Deferred Compensation Incorporated herein by reference
Plan* to Exhibit 10(e) of the Company's
Annual Report on Form 10-K for the
fiscal year ended May 31, 1984
10(d) Deferred Compensation Plan for Incorporated herein by reference to
Directors* Exhibit 10(f) of the Company's
Annual Report on Form 10-K for the
fiscal year ended May 31, 1984
10(e) 1997 Long-Term Incentive Plan
13 Annual Report to Shareholders
21 Subsidiaries of the Company
23 Consent of Ernst & Young, LLP
24 Powers of Attorney
27 Financial Data Schedule
*Management Compensation Plan