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Worthington Industries Reports Third Quarter and Nine Month Results

03/20/2002

As a result of these charges, the reported loss for the third quarter was $45.9 million or $0.53 per diluted share. This compares to reported earnings of $1.8 million or $0.02 per diluted share for the same quarter last year. Excluding the impact of the restructuring charge and the reserve, third quarter adjusted earnings were $8.6 million or $0.10 per diluted share. This compares to earnings of $5.9 million or $0.07 per diluted share for the same quarter last year, adjusted to exclude the impact of the $6.5 million pre-tax restructuring charge related to the partial closure of the Malvern, Pennsylvania, facility recorded in the prior year quarter.

The reported loss for the nine-month period was $20.3 million or $0.24 per diluted share. This compares to reported earnings of $21.1 million or $0.25 per diluted share for the nine-month period last year. Excluding the impact of the restructuring charge and asset impairment reserve mentioned above, adjusted earnings for the nine-month period were $34.2 million or $0.40 per diluted share. This compares to earnings of $25.2 million or $0.29 per diluted share, adjusted to exclude the impact of the Malvern restructuring charge recorded last year.

The $64.6 million pre-tax restructuring charge is related to a consolidation plan involving eight locations and more than 500 employees. In an unrelated event, a $21.2 million pre-tax reserve was also established for the potential impairment of assets, consisting of preferred stock and notes receivable, that were received as partial payment from the fiscal 1999 sale of discontinued operations. Of the combined pre-tax charges, all but $11.8 million are non-cash charges. The cash portion of the restructuring charge relates to severance and employee related costs. Both the restructuring charge and the asset impairment reserve were discussed in more detail in a press release and conference call on January 24, 2002.

"The one time charges that we took this quarter are the result of a rigorous and thorough review of all of our businesses with a view towards maximizing profitability, asset utilization, efficiency and customer service," said John P. McConnell, Chairman and CEO of Worthington Industries. "While only a few of the facilities that we are closing have been unprofitable, the closures will improve overall company profitability. The consolidation plan along with other efforts to control costs, attack new markets, and streamline operations and staff functions have put us in a good position as economy moves upward.

"During this economic downturn we have maintained our financial flexibility and stability. We have retained an investment grade credit rating, continued consistent dividend payments and contained debt even after investing $21.0 million in the newly formed Aegis Metal Framing joint venture. We have also been recognized in two different Fortune magazine surveys as one of America's Most Admired Companies and one of the 100 Best Companies to Work For in America. Despite the short term challenges, we remain committed to, and confident of, our strategy to create long term growth and increase the value of our shareholders' investment," concluded McConnell.

Third quarter sales were $405.7 million, a 3% decrease from $418.7 million last year. Sales for the nine-month period were $1,225.7 million, a 10% decrease from $1,360.3 million last year. During the quarter, each of the company's three business segments experienced reduced revenues: Processed Steel and Metal Framing, as a result of lower average selling prices, and Pressure Cylinders, as a result of reduced volumes.

Within the Processed Steel business segment, net sales decreased 1% or $3.4 million to $262.8 million from $266.2 million in the comparable quarter of fiscal 2001. For the first time in several quarters, both direct and tolling volumes were up over the prior year even though selling prices were down.

Within the Metal Framing business segment, net sales decreased 12% or $9.6 million to $68.5 million from $78.1 million in the comparable quarter of fiscal 2001. Despite increased volumes, revenues have declined as a slowing commercial construction market has contributed to increased price competition. Average selling prices for core building products have deteriorated nearly 15% in the last year. Dietrich Metal Framing put into effect price increases effective March 15, 2002.

Within the Pressure Cylinders business segment, net sales decreased 3% or $2.0 million to $70.7 million from $72.7 million in the comparable quarter of fiscal 2001. Volume decreases reduced sales by $3.0 million reflecting reduced requirements at certain major customers. Improved sales at the European locations helped offset domestic weakness. Higher average selling prices increased sales by $1.0 million, partially offsetting the overall decrease.

Selling, general and administrative expense decreased 12% or $5.2 million to $36.8 million for the third quarter of fiscal 2002 from $41.9 million in the comparable quarter of fiscal 2001. This decrease resulted from a variety of factors including $0.9 million lower depreciation and amortization expense resulting from lower capital spending and the elimination of goodwill amortization due to the adoption of Statement of Financial Accounting Standards No. 142.

For the quarter, an operating loss of $50.5 million was reported. Excluding the effect of third quarter restructuring charges, discussed above, in both the current and prior year periods, operating income increased $2.4 million or 21% to $14.1 million. In addition, reduced interest and miscellaneous expense as well as increased equity in net income of unconsolidated affiliates contributed to the improved financial results, excluding the one-time charges.

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 7,500 people and operates 59 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.

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   Nine Months Ended
                                          Feb. 28,             Feb. 28,
                                       2002      2001      2002       2001
                                  (Unaudited)(Unaudited)(Unaudited)(Unaudited)

    Net Sales:
      Processed Steel Products       $262,840  $266,211   $803,946   $890,902
      Metal Framing                    68,515    78,080    223,752    262,305
      Pressure Cylinders               70,710    72,707    188,375    202,498
      Other                             3,675     1,719      9,604      4,605
        Total Net Sales               405,740   418,717  1,225,677  1,360,310

    Cost of Goods Sold                354,889   365,134  1,053,532  1,186,228
        Gross Margin                   50,851    53,583    172,145    174,082

    Selling, General &
     Administrative Expense            36,753    41,916    115,367    125,882
    Restructuring Expense              64,575     6,474     64,575      6,474

    Operating Income (Loss):
      Processed Steel Products         10,366     6,235     38,807     20,628
      Metal Framing                       403     3,703     10,230     20,144
      Pressure Cylinders                4,882     2,920      9,220     11,405
      Other                            (1,553)   (1,191)    (1,479)    (3,977)
      Restructuring Expense           (64,575)   (6,474)   (64,575)    (6,474)
        Total Operating Income
         (Loss)                       (50,477)    5,193     (7,797)    41,726

    Other Income (Expense):
      Miscellaneous Expense              (117)     (353)    (1,245)      (700)
      Nonrecurring Loss               (21,223)        -    (21,223)         -
      Interest Expense                 (5,815)   (7,300)   (17,000)   (26,207)
      Equity in Net Income of
       Unconsolidated Affiliates        5,404     5,261     15,365     18,465
        Earnings (Loss) Before Taxes  (72,228)    2,801    (31,900)    33,284
    Income Tax Expense (Benefit)      (26,363)    1,023    (11,643)    12,149

        Net Earnings (Loss)          $(45,865)   $1,778   $(20,257)   $21,135

    Average Common Shares
     Outstanding - Diluted             85,985    85,477     85,853     85,662

        Earnings (Loss) Per Share -
         Diluted                       $(0.53)    $0.02     $(0.24)     $0.25

    Common Shares Outstanding at End
     of Period                         85,418    85,375     85,418     85,375

    Net Earnings Excluding
     Restructuring Expense and
     Nonrecurring Loss
      Reported Net Earnings (Loss)   $(45,865)   $1,778   $(20,257)   $21,135
      Add back:
        Restructuring Expense, net
         of tax                        41,005     4,111     41,005      4,111
        Nonrecurring Loss, net of
         tax                           13,477         -     13,477          -
      Net Earnings Excluding
       Restructuring Expense and
       Nonrecurring Loss               $8,617    $5,889    $34,225    $25,246


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

                                                  Feb. 28,            May 31,
                                                    2002               2001
                                                (Unaudited)         (Audited)
        ASSETS

    Current Assets
      Cash and cash equivalents                       $610               $194
      Accounts receivable, net                     144,610            169,330
      Inventories                                  225,897            227,506
      Other current assets                          47,601             52,689

        Total Current Assets                       418,718            449,719

    Investments in Unconsolidated
     Affiliates                                     89,420             58,638
    Goodwill                                        75,679             76,439
    Other Assets                                    35,845             54,317
    Property, Plant and Equipment, net             783,173            836,749

        Total Assets                            $1,402,835         $1,475,862


        LIABILITIES AND SHAREHOLDERS' EQUITY

    Current Liabilities
      Accounts payable                            $209,644           $207,568
      Notes payable                                 29,039             13,794
      Current maturities of long-term
       debt                                          1,622              1,748
      Other current liabilities                     92,146             83,509

        Total Current Liabilities                  332,451            306,619

    Other Liabilities                               74,255             69,396
    Long-Term Debt                                 291,430            309,208
    Deferred Income Taxes                          116,306            140,974

    Shareholders' Equity                           588,393            649,665

        Total Liabilities and
         Shareholders' Equity                   $1,402,835         $1,475,862


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

                                                      Nine Months Ended
                                                           Feb. 28,
                                                    2002              2001
                                                (Unaudited)       (Unaudited)
    Operating Activities
      Net earnings (loss)                         $(20,257)          $21,135
      Adjustments to reconcile net
       earnings (loss) to
       net cash provided by operating
        activities:
          Depreciation and amortization             51,413            53,931
          Restructuring expense                     64,575             6,474
          Nonrecurring loss                         21,223                 -
          Other adjustments                        (32,680)           (7,075)
          Changes in current assets and
           liabilities                               3,564           144,662
          Net Cash Provided By Operating
           Activities                               87,838           219,127

    Investing Activities
      Investment in property, plant and
       equipment, net                              (33,119)          (46,885)
      Acquisitions, net of cash acquired                 -            (2,043)
      Investment in equity affiliates              (21,000)                -
      Proceeds from sale of assets                  10,037               818
          Net Cash Used By Investing
           Activities                              (44,082)          (48,110)

    Financing Activities
      Proceeds from (payments on) short-
       term borrowings                              15,246          (120,916)
      Proceeds from long-term debt                       -             2,210
      Principal payments on long-term
       debt                                        (18,004)           (2,215)
      Repurchase of common shares                        -            (3,406)
      Dividends paid                               (40,986)          (41,162)
      Other                                            404            (5,280)
          Net Cash Used By Financing
           Activities                              (43,340)         (170,769)

    Increase in cash and cash equivalents              416               248
    Cash and cash equivalents at
     beginning of period                               194               538

    Cash and cash equivalents at end of
     period                                           $610              $786

                     

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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