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Worthington Industries Reports Second Quarter Results

12/17/2003

COLUMBUS, Ohio, Dec 17, 2003 (BUSINESS WIRE) -- Worthington Industries, Inc. (NYSE:WOR) today reported results for the three and six-month periods ended November 30, 2003.

Results

Net sales for the second quarter of fiscal 2004 were $540.1 million, a decrease of 5% from last year's record $567.9 million. Earnings were $16.9 million and earnings per diluted share were $0.20, compared to second quarter earnings of $20.7 million, or $0.24 per diluted share, for the same period last year.

For the six-month period, net sales declined 5% to $1,038.1 million from $1,093.4 million last year. Earnings were $22.8 million and earnings per diluted share were $0.26, compared to $48.2 million and $0.56, respectively, for the same period last year.

CEO Comments

"This quarter was much improved from our first quarter," said John P. McConnell, Chairman and CEO of Worthington Industries, "as all three business segments had stronger sales and operating income. Worthington's unbroken record of profitability has been helped by both our Pressure Cylinders business segment and our unconsolidated joint ventures, which consistently and significantly contribute to revenues and earnings.

"I am encouraged by our performance this quarter. Although the results for the Processed Steel Products and Metal Framing segments remained below last year's levels, Processed Steel Products strengthened throughout the quarter," said McConnell.

"Metal Framing experienced higher than anticipated costs associated with the integration of Unimast. These added costs, related primarily to equipment and facilities upgrades, concluded during the quarter.

"We expect both segments to show improvement coinciding with a generally stronger economy and higher steel prices," stated McConnell.

Detailed Results

Within the Processed Steel Products segment, quarterly net sales fell 9%, or $31.3 million, to $321.4 million from $352.7 million in the comparable quarter of fiscal 2003. The decrease in net sales was due to a decline in tolling volume from a year ago and reduced direct selling prices. Excluding the benefit of an $8.7 million restructuring credit recognized in the same quarter last year, operating income declined as a result of spread compression between selling prices and material costs.

Within the Metal Framing segment, net sales decreased 1%, or $1.7 million, to $142.4 million from $144.1 million in the comparable quarter of fiscal 2003. Despite continued weakness in the commercial construction market, volumes were up 9%, but prices were lower than the year ago quarter. Excluding the impact of a $1.6 million restructuring charge taken last year, operating income declined due to spread compression between selling prices and material costs. However, pricing was up 4% from the first quarter, due to price increases initiated September 1st.

Within the Pressure Cylinders segment, net sales increased 7%, or $4.9 million, to $72.4 million from $67.5 million in the comparable quarter of fiscal 2003. North American volumes of propane and refrigerant cylinders were each up more than 20%. European revenues, however, were flat on significantly lower volumes as the weakened dollar boosted reported revenues in dollars by $3.5 million. Excluding the impact of a $1.4 million restructuring charge taken in the year ago quarter, operating income decreased $1.2 million due primarily to the reduced European volumes.

Worthington's unconsolidated joint ventures contributed positively to second quarter results. Equity in net income of six unconsolidated affiliates totaled $8.4 million, up 17% from $7.2 million in the year ago quarter. The improvement was due to strong results from Worthington Armstrong Venture (WAVE), increased ownership in TWB, and better results at Aegis Metal Framing.

Income tax expense in the current quarter was favorably impacted by a $1.4 million adjustment resulting from a change in the estimate for deferred taxes. This favorable impact was partially offset by an increase in the effective tax rate for fiscal 2004 from 36.5% to 37.0%.

Outlook

The third quarter is typically Worthington's softest as all three business segments are impacted by reduced demand due to weather and holiday related slowdowns. Although economic and industry conditions are improving, conditions in major customer segments - automotive and commercial construction - may continue to be challenging.

"Big 3" vehicle production is projected to be down 2% for the coming fiscal quarter relative to last year and down 9% from this quarter. Additionally, the U.S. Census Bureau's index of private construction spending confirms that commercial construction activity remains near five-year lows.

Other

Dividend declared

On November 20, 2003, the board of directors declared a quarterly cash dividend of $0.16 per share payable December 29, 2003, to shareholders of record December 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 past model service 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 second quarter results during its quarterly conference call today, December 17, 2003, at 1:30 p.m. Eastern Standard Time. Details on the conference call can be found on the company's web site at www.WorthingtonIndustries.com

Safe Harbor Statement

The company wishes to take advantage of the Safe Harbor provisions included in the Private Securities Litigation Reform Act of 1995 (the "Act"). Statements by the company relating to future sales, operating results and earnings per share; projected capacity and working capital needs; pricing trends for raw materials and finished goods; anticipated capital expenditures; projected timing, results, costs, charges and expenditures related to plant shutdowns and consolidations; new products and markets; and other non-historical trends constitute "forward looking statements" within the meaning of the Act. Because they are based on beliefs, estimates and assumptions, forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from those projected. Any number of factors could affect actual results, including, without limitation, product demand and pricing, changes in product mix and market acceptance of products; fluctuations in pricing, quality or availability of raw materials (particularly steel), supplies, utilities and other items required by our operations; effects of plant closures and the consolidation of operations and our ability to realize expected cost savings and operational efficiencies on a timely basis; our ability to integrate newly acquired businesses with current businesses; capacity levels and efficiencies within our facilities and within the industry as a whole; financial difficulties of customers, suppliers, joint venture partners and others with whom we do business; the effect of national, regional and worldwide economic conditions generally and within our major product markets, including a prolonged or substantial economic downturn; the effect of adverse weather on plant and shipping operations; changes in customer spending patterns and supplier choices and risks associated with doing business internationally, including economic, political and social instability and foreign currency exposure; acts of war and terrorist activities; the ability to improve processes and business practices to keep pace with the economic, competitive and technological environment; deviation of actual results from estimated and/or assumptions used by the company in the application of its significant accounting policies; level of imports and import prices in the company's markets; the impact of governmental regulations, both in the United States and abroad; and other risks described from time to time in our filings with the Securities and Exchange Commission.

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

                         Three Months Ended       Six Months Ended
                             November 30,            November 30,
                       ----------------------- -----------------------
                          2003        2002        2003        2002
                       ----------- ----------- ----------- -----------
                       (Unaudited) (Unaudited) (Unaudited) (Unaudited)

Net sales              $  540,078  $  567,897  $1,038,113  $1,093,361
Cost of goods sold        472,836     487,527     921,888     923,567
                        ----------  ----------  ----------  ----------
       Gross margin        67,242      80,370     116,225     169,794

Selling, general &
 administrative
 expense                   45,243      46,452      86,863      93,555
Restructuring credit          -        (5,622)        -        (5,622)
                        ----------  ----------  ----------  ----------

       Operating
        income             21,999      39,540      29,362      81,861

Other income
 (expense):
   Miscellaneous
    expense                  (114)     (2,316)       (503)     (3,657)
   Nonrecurring loss          -        (5,400)        -        (5,400)
   Interest expense        (5,565)     (6,340)    (11,156)    (12,443)
   Equity in net
    income of
    unconsolidated
    affiliates              8,391       7,187      16,327      15,602
                        ----------  ----------  ----------  ----------
       Earnings before
        income taxes       24,711      32,671      34,030      75,963
Income tax expense          7,828      11,924      11,230      27,726
                        ----------  ----------  ----------  ----------

       Net earnings    $   16,883  $   20,747  $   22,800  $   48,237
                        ==========  ==========  ==========  ==========


Average common shares
 outstanding - diluted     86,503      86,834      86,510      86,666
                        ----------  ----------  ----------  ----------

       Earnings
        per share -
        diluted        $     0.20  $     0.24  $     0.26  $     0.56
                        ==========  ==========  ==========  ==========


Common shares
 outstanding at
 end of period             86,134      85,838      86,134      85,838

Cash dividends
 declared per
 common share          $     0.16  $     0.16  $     0.32  $     0.32



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

                                            November 30,    May 31,
                                               2003          2003
                                           ------------- -------------
                                            (Unaudited)    (Audited)
                                ASSETS

Current assets
   Cash and cash equivalents               $      2,008  $      1,139
   Accounts receivable, net                     204,228       169,967
   Inventories                                  262,701       268,983
   Income taxes receivable                          -          11,304
   Deferred income taxes                         20,643        20,783
   Other current assets                          30,942        34,070
                                            ------------  ------------

        Total current assets                    520,522       506,246

Investments in unconsolidated affiliates         87,997        81,221
Goodwill                                        117,249       116,781
Other assets                                     31,591        30,777
Property, plant and equipment, net              722,548       743,044
                                            ------------  ------------

        Total assets                       $  1,479,907  $  1,478,069
                                            ============  ============


                 LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
   Accounts payable                        $    234,422  $    222,987
   Notes payable                                    249         1,145
   Current maturities of long-term debt           1,215         1,194
   Other current liabilities                     84,113        92,845
                                            ------------  ------------

        Total current liabilities               319,999       318,171

Other liabilities                                94,306        90,471
Long-term debt                                  289,122       289,689
Deferred income taxes                           141,010       143,444

Shareholders' equity                            635,470       636,294
                                            ------------  ------------

        Total liabilities and
         shareholders' equity              $  1,479,907  $  1,478,069
                                            ============  ============



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

                                                  Six Months Ended
                                                     November 30,
                                               -----------------------
                                                  2003        2002
                                               ----------- -----------
                                               (Unaudited) (Unaudited)
Operating activities
  Net earnings                                 $   22,800  $   48,237
  Adjustments to reconcile net earnings
   to net cash provided by
   operating activities:
      Depreciation and amortization                33,706      35,705
      Restructuring credit                            -        (5,622)
      Nonrecurring loss                               -         5,400
      Other adjustments                            (3,775)     17,191
      Changes in current assets
       and liabilities                             (8,823)     31,654
                                                ----------  ----------
      Net cash provided by
       operating activities                        43,908     132,565

Investing activities
  Investment in property, plant
   and equipment, net                             (14,268)    (13,657)
  Acquisitions, net of cash acquired                  -      (113,740)
  Investment in unconsolidated affiliate             (490)        -
  Proceeds from sale of assets                      2,937      12,956
                                                ----------  ----------
      Net cash used by investing activities       (11,821)   (114,441)

Financing activities
  Proceeds from (payments on)
   short-term borrowings                             (896)      9,258
  Principal payments on long-term debt               (608)       (464)
  Dividends paid                                  (27,525)    (27,366)
  Other                                            (2,189)        666
                                                ----------  ----------
      Net cash used by financing activities       (31,218)    (17,906)
                                                ----------  ----------

Increase in cash and cash equivalents                 869         218
Cash and cash equivalents at
 beginning of period                                1,139         496
                                                ----------  ----------

Cash and cash equivalents at end of period     $    2,008  $      714
                                                ==========  ==========



                     WORTHINGTON INDUSTRIES, INC.
                          SUPPLEMENTAL DATA
                            (In Thousands)

This supplemental information is provided to assist in the analysis of
 the results of operations.

                         Three Months Ended       Six Months Ended
                             November 30,            November 30,
                       ----------------------- -----------------------
                          2003        2002        2003        2002
                       ----------- ----------- ----------- -----------
                       (Unaudited) (Unaudited) (Unaudited) (Unaudited)

Volume:
  Processed Steel
   Products (tons)
     Direct                   593         592       1,111       1,149
     Toll                     373         416         705         831
  Metal Framing (tons)        192         176         390         334
  Pressure Cylinders
   (units)                  2,718       2,844       5,841       6,877

Net sales:
  Processed Steel
   Products
     Direct            $  302,151  $  332,452  $  574,043  $  631,337
     Toll                  19,227      20,228      34,533      40,264
  Metal Framing           142,417     144,078     283,481     264,916
  Pressure Cylinders       72,434      67,449     138,969     149,585
  Other                     3,849       3,690       7,087       7,259
                        ----------  ----------  ----------  ----------
     Total net sales   $  540,078  $  567,897  $1,038,113  $1,093,361
                        ==========  ==========  ==========  ==========

Material cost:
  Processed Steel
   Products
     Direct            $  212,841  $  231,041  $  401,826  $  425,523
     Toll                       -           -           -           -
  Metal Framing            86,225      87,296     179,179     147,568
  Pressure Cylinders       30,094      28,276      59,114      65,777

Operating income:
  Processed Steel
   Products            $   13,762  $   32,000  $   21,931  $   54,317
  Metal Framing               871       1,908      (2,783)     18,272
  Pressure Cylinders        6,855       6,633      10,393      13,827
  Other                       511      (1,001)       (179)     (4,555)
                        ----------  ----------  ----------  ----------
     Total operating
      income           $   21,999  $   39,540  $   29,362  $   81,861
                        ==========  ==========  ==========  ==========


The following provides detail of the restructuring credit included in
 the operating income by segment presented above.

                         Three Months Ended       Six Months Ended
                             November 30,            November 30,
                       ----------------------- -----------------------
                          2003        2002        2003        2002
                       ----------- ----------- ----------- -----------
                       (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Pre-tax restructuring
 (credit) expense by
 segment
  Processed Steel
   Products            $      -    $   (8,717) $      -    $   (8,717)
  Metal Framing               -         1,574         -         1,574
  Pressure Cylinders          -         1,420         -         1,420
  Other                       -           101         -           101
                        ----------  ----------  ----------  ----------

     Total
      restructuring
      credit           $      -    $   (5,622) $      -    $   (5,622)
                        ==========  ==========  ==========  ==========

SOURCE: Worthington Industries, Inc.

Worthington Industries, Inc.
Corporate Communications:
Cathy Mayne Lyttle, 614-438-3077
cmlyttle@worthingtonindustries.com
or
Investor Relations:
Allison McFerren Sanders, 614-840-3133
asanders@worthingtonindustries.com

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