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Worthington Industries Reports First Quarter Results


COLUMBUS, Ohio--(BUSINESS WIRE)--Sept. 17, 2003--Worthington Industries, Inc. (NYSE:WOR) today reported results for the three months ended August 31, 2003.


Sales for the first quarter of fiscal 2004 were $498.0 million, a decrease of 5% from last year's record $525.5 million. Earnings were $5.9 million and earnings per diluted share were $0.07 compared to record first quarter earnings of $27.5 million, or $0.32 per diluted share, for the same period last year.

First quarter results for fiscal 2003 included just one month of operations for Unimast Incorporated which was acquired on July 31, 2002. Unimast generated $47.6 million of sales and $5.0 million in earnings during June and July 2002, prior to Worthington's ownership.

"This was a particularly difficult quarter for our two largest business segments, Processed Steel Products and Metal Framing," said John P. McConnell, Chairman and CEO of Worthington Industries. "Overall volume in Processed Steel Products declined by 13% largely tied to an estimated 14% production decrease among the 'Big 3' auto producers. While our direct tons were off only 7%, we saw a 20% decline in our tolling tons." McConnell explained, "Although we believe we maintained our market share during the quarter, weak overall demand, a significant mix change between our direct and tolled tons and rising steel costs, all contributed to weaker earnings in Processed Steel Products."

"Our Metal Framing business suffered a modest loss as several adverse factors converged during this quarter," McConnell continued. "The commercial construction market and, in particular, commercial office space construction, continue to be very soft. As a result, competitive pricing pressures have been mounting throughout the past six months at a time when we continued to carry additional expenses associated with the acquisition of Unimast. During the quarter, we also continued to incur the additional costs of our increasingly successful efforts to broaden our base of business into several niche markets ranging from single and multi-family residential, midrise commercial and mixed use facilities to kit packages and emergency shelter designs. Although we expect the commercial construction market to remain soft for some time, other issues that negatively affected this quarter are subsiding, and we expect a better second quarter in Metal Framing," McConnell said.

During the quarter, the company generated enough cash to reduce the utilization of its accounts receivable securitization facility by $70 million and fund the quarterly dividend. "I am proud of our unbroken record of profitability and dividend payments," concluded McConnell.

Segment Results

Within the Processed Steel Products segment, quarterly net sales fell 10%, or $31.7 million, to $287.2 million from $318.9 million in the comparable quarter of fiscal 2003. The decrease in net sales was due to declines in both direct and tolling volumes. Lower volumes and a reduction in the spread between selling prices and material costs resulted in a depressed operating margin.

Within the Metal Framing segment, net sales increased 17%, or $20.2 million, to $141.0 million from $120.8 million in the comparable quarter of fiscal 2003 due to the Unimast acquisition. However, weakness in the commercial construction market contributed to a 9% decline in the combined tons shipped during the quarter on a proforma basis. The volume decline, coupled with higher material costs and severe pricing pressure, led to an operating loss. Dietrich Metal Framing initiated product price increases effective September 1, 2003.

Within the Pressure Cylinders segment, net sales decreased 19%, or $15.6 million, to $66.5 million from $82.1 million in the comparable quarter of fiscal 2003. Sales of propane cylinders in North America fell from last year's record levels due to the diminishing impact of the April 2002 regulations that require overfill prevention devices on certain propane cylinders. The volume decline resulted in a reduced operating margin.

Worthington's joint ventures contributed positively to first quarter results. Equity in net income of six unconsolidated affiliates totaled $7.9 million, in line with the year ago quarter.


Although the economy appears to have reached a bottom and there are indications that the deterioration in demand and end customer pricing have stabilized, there are no indications of meaningful improvement. In fact, conditions in automotive and commercial construction - two of the company's major markets - will continue to be challenging.

"Big 3" vehicle production is projected to be down at least 8% for the coming fiscal quarter relative to last year, but up 18% over this quarter. Additionally, the U.S. Census Bureau's index of private construction spending confirms that commercial construction activity remains near five-year lows.


    Dividends declared

On August 21, 2003, the board of directors declared a quarterly cash dividend of $0.16 per share payable September 29, 2003, to shareholders of record September 15, 2003.

Corporate Profile

Worthington Industries 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. Worthington employs more than 7,500 people and operates 62 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 first quarter results during its quarterly conference call today, September 17, 2003, at 1:30 p.m. Eastern Daylight Time. Details on the conference call can be found on the company's web site at

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 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; 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
                                                      August 31,
                                                  2003        2002
                                               ----------- -----------
                                               (Unaudited) (Unaudited)

Net sales:
   Processed Steel Products                      $287,198    $318,921
   Metal Framing                                  141,064     120,838
   Pressure Cylinders                              66,535      82,136
   Other                                            3,238       3,569
                                                  --------    --------
        Total net sales                           498,035     525,464

Cost of goods sold                                449,052     436,040
                                                  --------    --------
        Gross margin                               48,983      89,424

Selling, general & administrative expense          41,620      47,103
                                                  --------    --------

Operating income:
   Processed Steel Products                         8,169      22,317
   Metal Framing                                   (3,654)     16,364
   Pressure Cylinders                               3,538       7,194
   Other                                             (690)     (3,554)
                                                  --------    --------
        Total operating income                      7,363      42,321

Other income (expense):
   Miscellaneous expense                             (389)     (1,341)
   Interest expense                                (5,591)     (6,103)
   Equity in net income of unconsolidated
     affiliates                                     7,936       8,415
                                                  --------    --------
        Earnings before taxes                       9,319      43,292
Income tax expense                                  3,402      15,802
                                                  --------    --------

        Net earnings                             $  5,917    $ 27,490
                                                  ========    ========

Average common shares outstanding - diluted        86,517      86,499
                                                  --------    --------

        Earnings per share - diluted             $   0.07    $   0.32
                                                  ========    ========

Common shares outstanding at end of period         86,054      85,624

Cash dividends declared per common share         $   0.16    $   0.16
                     WORTHINGTON INDUSTRIES, INC.
                            (In Thousands)

                                               August 31,    May 31,
                                                 2003        2003
                                               ----------  ----------
                                              (Unaudited)  (Audited)

Current assets
   Cash and cash equivalents                  $      598  $    1,139
   Accounts receivable, net                      172,934     169,967
   Inventories                                   256,217     268,983
   Income taxes receivable                             -      11,304
   Deferred income taxes                          20,714      20,783
   Other current assets                           32,678      34,070
                                               ----------  ----------

      Total current assets                       483,141     506,246

Investments in unconsolidated affiliates          83,256      81,221
Goodwill                                         115,433     116,781
Other assets                                      30,591      30,777
Property, plant and equipment, net               728,802     743,044
                                               ----------  ----------

      Total assets                            $1,441,223  $1,478,069
                                               ==========  ==========


Current liabilities
   Accounts payable                           $  207,963  $  222,987
   Notes payable                                      68       1,145
   Current maturities of long-term debt            1,113       1,194
   Other current liabilities                      83,996      92,845
                                               ----------  ----------

      Total current liabilities                  293,140     318,171

Other liabilities                                 91,497      90,471
Long-term debt                                   288,978     289,689
Deferred income taxes                            140,251     143,444

Shareholders' equity                             627,357     636,294
                                               ----------  ----------

      Total liabilities and shareholders'
       equity                                 $1,441,223  $1,478,069
                                               ==========  ==========
                     WORTHINGTON INDUSTRIES, INC.
                            (In Thousands)

                                                 Three Months Ended
                                                      August 31,
                                                  2003        2002
                                               ----------- -----------
                                               (Unaudited) (Unaudited)
Operating activities
  Net earnings                                   $  5,917   $  27,490
  Adjustments to reconcile net earnings to
   net cash provided by operating activities:
      Depreciation and amortization                16,952      17,510
      Other adjustments                            (4,485)      9,626
      Changes in current assets and
       liabilities                                 (1,348)     75,785
                                                  --------   ---------
      Net cash provided by operating
       activities                                  17,036     130,411

Investing activities
  Investment in property, plant and equipment,
   net                                             (5,816)     (6,421)
  Acquisitions, net of cash acquired                    -    (113,740)
  Investment in unconsolidated affiliate             (490)          -
  Proceeds from sale of assets                      2,880         175
                                                  --------   ---------
      Net cash used by investing activities        (3,426)   (119,986)

Financing activities
  Proceeds from (payments on) short-term
   borrowings                                      (1,077)      5,667
  Principal payments on long-term debt               (556)       (241)
  Dividends paid                                  (13,754)    (13,683)
  Other                                             1,236        (209)
                                                  --------   ---------
      Net cash used by financing activities       (14,151)     (8,466)
                                                  --------   ---------

Increase (decrease) in cash and cash
 equivalents                                         (541)      1,959
Cash and cash equivalents at beginning of
 period                                             1,139         496
                                                  --------   ---------

Cash and cash equivalents at end of period       $    598   $   2,455
                                                  ========   =========
                     WORTHINGTON INDUSTRIES, INC.
                           SUPPLEMENTAL DATA
                            (In Thousands)

The information in the table is being provided to assist in the
analysis of the results of operations and is based on the best
information available to management.

                                                Three Months Ended
                                                     August 31,
                                                 2003        2002
                                              ----------- -----------
                                              (Unaudited) (Unaudited)
 Processed Steel Products
   Tons shipped
       Direct                                        518         558
       Toll                                          332         415
   Net sales
       Direct                                   $271,892    $298,885
       Toll                                     $ 15,306    $ 20,036
   Material cost
       Direct                                   $188,985    $194,482
       Toll                                          n/a         n/a

 Metal Framing
   Tons shipped                                      198         158
   Net sales                                    $141,064    $120,838
   Material cost                                $ 92,954    $ 60,272

 Pressure Cylinders
   Units shipped                                   3,123       4,033
   Net sales                                    $ 66,535    $ 82,136
   Material cost                                $ 29,020    $ 37,502

   n/a - not applicable

SOURCE: Worthington Industries, Inc.

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