COLUMBUS, Ohio--(BUSINESS WIRE)--May 27, 2004--Worthington
Industries, Inc. (NYSE:WOR) today announced an agreement to sell its
Decatur, Alabama, cold rolling assets to Nucor Corporation (NYSE:NUE)
for $82 million cash. Worthington will retain net working capital,
estimated to be $37 million at the time of closing. After the sale,
Worthington will remain in a portion of its current facility and will
continue to serve its customers requiring steel processing services in
Worthington's core business of slitting and cutting-to-length. Both
companies will work closely to provide a seamless transition for all
of Worthington's current customers requiring an uninterrupted supply
chain. Closing of the transaction is expected to occur within the next
60 days, after receiving the necessary approvals from government
agencies.
"We are excited about the repositioning of our efforts to serve
the growing southeastern market," said John McConnell, Chairman and
CEO of Worthington Industries. "We will now be able to focus on our
core value-added processing strengths supported by a strong supply
relationship with Nucor, one of our country's strongest steel
producers.
"We have made significant changes in Worthington's businesses over
the last several years - divesting non-core assets or those that were
not delivering appropriate returns on capital, like Decatur;
consolidating facilities; and reinvesting in higher growth businesses
such as Dietrich and, more recently, Unimast in our Metal Framing
segment. As the economy and our volumes have improved, these actions
have enhanced our current financial performance and provide a base for
growth in the future," concluded McConnell.
The Decatur assets to be sold include the land and buildings, the
four stand tandem cold mill, the temper mill, the pickle line and the
annealing furnaces. The purchase does not include the hot roll and
cold roll slitting and cut-to-length assets or the net working
capital. Worthington will continue to operate those processing assets
at the current site, under a long term building lease from Nucor.
As a result of the sale agreement, Worthington will take an
estimated $73 million pre-tax charge during its fourth quarter ending
May 31, 2004, primarily for the impairment of assets at the Decatur
facility. All but an estimated $5 million of the pre-tax charge is
non-cash. The after-tax impact of this charge is expected to be
approximately $46 million or $0.52 per diluted share.
Quarterly Forecast
Operating results will be very strong for the fourth quarter. All
three of Worthington's business segments as well as its unconsolidated
joint ventures have experienced normal seasonal strength which, when
combined with improving economic and industry trends, has led to
significantly increased volumes and pricing. The company's results
will be affected by other one time items including favorable
settlements with the Enron bankruptcy estate (approximately $4 million
or $0.03 per share) and of certain tax audits (approximately $6
million or $0.07 per share), offset by an impairment of certain assets
related to the European operations of Pressure Cylinders
(approximately $2 million or $0.02 per share). Collectively, these
three items will have a net positive impact on earnings per share of
approximately $0.08. Together with the $0.52 charge for Decatur, the
net negative effect of all one-time items is expected to be
approximately $0.44 per diluted share. After recognizing these items,
the company expects earnings to be between $0.31 and $0.36 per diluted
share for the fourth quarter ending May 31, 2004.
Decatur Background
Construction of the Decatur, Alabama, steel processing facility
was announced in November 1996 and began in 1997. It was built next
door to the Trico mini-mill, now Nucor-Decatur, with a cold mill
capacity of approximately 1 million annual tons. Operations began in
1998.
The facility currently processes approximately 500,000 tons
annually of hot rolled steel into cold rolled wide sheet at its cold
mill and performs more traditional steel processing services such as
slitting, cutting-to-length and pickling. Annual net sales are
expected to be $220 million in fiscal 2004 compared to $210 million in
fiscal 2003.
Since its 1998 opening, the Decatur facility has struggled with an
inconsistent supply source, increased competition, challenging
economic conditions and severe compression in the commodity price
spreads between hot rolled sheet steel (its raw material) and cold
rolled sheet steel (its product).
As a result of these challenges, Decatur has not been profitable
on a fully allocated operating income basis nor has it earned its cost
of capital.
Conference Call
Worthington will review this transaction and its fourth quarter
and year end results at its regularly scheduled quarterly conference
call on Wednesday, June 23, 2004, at 1:30 p.m. Eastern Daylight Time.
Details on the conference call can be found on the company's web site
at www.WorthingtonIndustries.com.
Corporate Profile
Worthington Industries is a leading diversified metal processing
company with annual sales of more than $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 8,000 people and operates 61 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, estimated or
expected earnings, charges, working capital, sales, operating results,
earnings per share or the earnings impact of certain matters; pricing
trends for raw materials and finished goods; projected timing,
results, costs, charges and expenditures related to asset transfers,
facility transfers, shutdowns and consolidations; new products and
markets; and other non-historical matters 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:
the timing, closing and changes to the terms of the expected sale of
certain assets of the Decatur, Alabama facility; 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 facility closures and the consolidation of
operations; our ability to realize price increases, 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 facility 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 estimates 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 United States
Securities and Exchange Commission.
CONTACT: 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
SOURCE: Worthington Industries, Inc.