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Worthington Industries Reports Record First Quarter Results First Quarter Net Income Up 92%; EPS Up 88%

09/18/2002

Sales for the fiscal 2003 first quarter were $525.5 million, an increase of 28% from $409.6 million last year, and exceeded the previous first quarter record of $500.4 million generated in 1998. Earnings were $27.5 million and earnings per diluted share were $0.32 compared to earnings of $14.3 million, or $0.17 per diluted share, for the same period last year. The increase in earnings and diluted earnings per share was 92% and 88%, respectively, for the comparable first quarters. Record net income for the period exceeded the previous record of $25.4 million earned in the first quarter of fiscal 1995.

First quarter results included one month of operations for Unimast Incorporated, Worthington's second largest acquisition. Unimast generated $22.0 million in sales and $2.5 million in operating income during the month of August. Its operating income more than covered financing costs, and thus the transaction was immediately accretive to earnings per share by approximately $0.01.

"Fiscal 2003 is off to a great start. Record sales and earnings, strong cash flow and a sizeable, immediately accretive acquisition all occurred in this first quarter, even as economic data offered conflicting indications about the state of the economic recovery," said John P. McConnell, Chairman and CEO of Worthington Industries.

"Solid operating improvements occurred in all three business segments. The drivers we saw last quarter continued: increased automotive demand in processed steel, stronger pricing in metal framing and record demand for propane cylinders, propelled by the mandated overfill prevention device. Assuming stability in the markets we serve in the coming months, we are optimistic that realization of the benefits of our consolidation plan and growth opportunities offered by the combination of Dietrich Metal Framing and Unimast will add up to an improved fiscal 2003," concluded McConnell.

Record first quarter revenues were a result of both increased volumes and pricing improvements in all three business segments.

Within the Processed Steel Products business segment, net sales increased 20% or $53.3 million to $318.9 million from $265.6 million in the comparable quarter of fiscal 2002. Sales to the automotive sector, the largest market for this business segment, were up. Several other customer sectors were up significantly including furniture and office equipment, lawn and garden, appliance and metal framing. Direct and tolling volumes were up over the prior year offsetting a decline in the spread between selling prices and material costs. Although much improved from the prior year, the segment operating margin of 7.0% is still well below the margins that Processed Steel Products has generated historically.

Within the Metal Framing business segment, net sales increased 52% or $41.3 million to $120.8 million from $79.5 million in the comparable quarter of fiscal 2002. The increase in metal framing revenues is due both to the Unimast acquisition in the month of August and to higher selling prices, driven by raw material increases. Excluding Unimast, units shipped were relatively flat indicating weakness in the commercial construction market. Excluding the one-month impact of the Unimast acquisition, sales increased $19.3 million or 24%.

Within the Pressure Cylinders business segment, net sales increased 33% or $20.5 million to $82.1 million from $61.6 million in the comparable quarter of fiscal 2002. The increase is due to significantly greater demand for propane cylinders as a result of certain regulatory requirements mandating that all propane cylinders have overfill prevention devices.

Operating income of $42.3 million was generated in the first quarter, an 87% improvement over the same quarter last year. The overall operating margin of 8.1% reflects improved operating margins in each of the three primary business segments, reflecting the leveraging of the sales increases, and compares favorably to last year's 5.5% operating margin.

Worthington's joint ventures also contributed to first quarter results. Equity in net income of five unconsolidated affiliates totaled $8.4 million, up 72% from $4.9 million in the year ago quarter.

Worthington Industries, Inc. is a leading diversified metal processing company with annual sales of approximately $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 aftermarket stampings, pressure cylinders, metal framing, metal ceiling grid systems and laser welded blanks. The company employs more than 8,000 people and operates 66 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. Worthington Industries is listed as one of the 100 Best Companies to Work For in America by Fortune magazine.

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 relating to future sales and operating results; projected capacity levels; anticipated capital expenditures; projected timing, results, costs, charges and expenditures related to plant closures and consolidations; and other non-historical information 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, changes in product mix and market acceptance of products; changes in pricing or availability of raw materials, particularly steel; effects of plant closures and the consolidation of operations; capacity restraints and efficiencies; conditions in major product markets; delays in construction or equipment supply; financial difficulties of customers, suppliers and others with whom we do business; the effect of national, regional and worldwide economic conditions; risks associated with doing business internationally, including economical, 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; the business environment and impact of governmental regulations, both in the United States and abroad; and other risks described from time to time in filings with the SEC.

 
                          WORTHINGTON INDUSTRIES, INC.
                               EARNINGS HIGHLIGHTS
                         (In Thousands, Except Per Share)

                                                     Three Months Ended
                                                           Aug. 31,
                                                   2002               2001
                                                (Unaudited)        (Unaudited)
    Net sales:
       Processed Steel Products                   $318,921           $265,571
       Metal Framing                               120,838             79,546
       Pressure Cylinders                           82,136             61,602
       Other                                         3,569              2,839
          Total net sales                          525,464            409,558

    Cost of goods sold                             436,040            349,561
          Gross margin                              89,424             59,997

    Selling, general & administrative expense       47,103             37,411

    Operating income:
       Processed Steel Products                     22,317             13,538
       Metal Framing                                16,364              6,566
       Pressure Cylinders                            7,194              1,817
       Other                                        (3,554)               665
          Total operating income                    42,321             22,586

    Other income (expense):
       Miscellaneous income (expense)               (1,341)               527
       Interest expense                             (6,103)            (5,497)
       Equity in net income of unconsolidated
         affiliates                                  8,415              4,880
          Earnings before taxes                     43,292             22,496
    Income taxes                                    15,802              8,211

          Net earnings                             $27,490            $14,285

    Average common shares outstanding -
     diluted                                        86,499             85,799

          Earnings per share - diluted               $0.32              $0.17

    Common shares outstanding at end of
     period                                         85,624             85,391

    Cash dividends declared per common
     share                                           $0.16              $0.16


                           WORTHINGTON INDUSTRIES, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                  (In Thousands)

                                                  Aug. 31,            May 31,
                                                    2002               2002
                                                 (Unaudited)         (Audited)
                                      ASSETS

    Current assets
      Cash and cash equivalents                     $2,455               $496
      Accounts receivable, net                     138,251            197,240
      Inventories                                  316,303            219,950
      Deferred income taxes                         44,499             43,538
      Other current assets                          36,085             29,116

        Total current assets                       537,593            490,340

    Investments in unconsolidated
     affiliates                                     90,857             91,759
    Goodwill                                       102,039             75,400
    Other assets                                    34,166             33,219
    Property, plant and equipment, net             795,331            766,596

        Total assets                            $1,559,986         $1,457,314

                       LIABILITIES AND SHAREHOLDERS' EQUITY

    Current liabilities
      Accounts payable                            $293,531           $233,181
      Notes payable                                 14,152              5,281
      Current maturities of long-term debt           1,002              1,082
      Other current liabilities                    112,348             99,807

        Total current liabilities                  421,033            339,351

    Other liabilities                               72,673             73,731
    Long-term debt                                 295,247            289,250
    Deferred income taxes                          148,019            148,726

    Shareholders' equity                           623,014            606,256

        Total liabilities and
         shareholders' equity                   $1,559,986         $1,457,314


                           WORTHINGTON INDUSTRIES, INC.
                  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (In Thousands)

                                                     Three Months Ended
                                                           Aug. 31,
                                                    2002               2001
                                                 (Unaudited)       (Unaudited)
    Operating activities
      Net earnings                                  $27,490           $14,285
      Adjustments to reconcile net
       earnings to net cash provided by
       operating activities:
          Depreciation and amortization              17,510            16,988
          Other adjustments                           9,626              (327)
          Changes in current assets and
           liabilities                               75,785             9,493
          Net cash provided by operating
           activities                               130,411            40,439

    Investing activities
      Investment in property, plant and
       equipment, net                                (6,421)          (12,748)
      Acquisitions, net of cash acquired           (113,740)              -
      Proceeds from sale of assets                      175             7,882
          Net cash used by investing
           activities                              (119,986)           (4,866)

    Financing activities
      Proceeds from (payments on) short-
       term borrowings                                5,667            (4,266)
      Principal payments on long-term debt             (241)          (17,219)
      Dividends paid                                (13,683)          (13,660)
      Other                                            (209)              194
          Net cash used by financing
           activities                                (8,466)          (34,951)

    Increase in cash and cash equivalents             1,959               622
    Cash and cash equivalents at
     beginning of period                                496               194

    Cash and cash equivalents at end of period       $2,455              $816

SOURCE Worthington Industries, Inc.

CONTACT:
Cathy Mayne Lyttle, VP, Corporate Communications, +1-614-438-3077, or cmlyttle@WorthingtonIndustries.com, or Allison McFerren Sanders, Director, Investor Relations, +1-614-840-3133, or asanders@WorthingtonIndustries.com, both of Worthington Industries

URL: http://www.worthingtonindustries.com Copyright (C) 2002 PR Newswire. All rights reserved.

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