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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended May 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from______________ to _____________
Commission File No. 0-4016
WORTHINGTON INDUSTRIES, INC.
(Exact name of Registrant as specified in its Charter)
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OHIO 31-1189815
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(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
1205 Dearborn Drive, Columbus, Ohio 43085
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (614) 438-3210
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Securities Registered Pursuant to Section 12(b) of the Act: None
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Securities Registered Pursuant to Section 12(g) of the Act:
Common Shares, no par value (89,733,956 shares outstanding at August 6, 1999)
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(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the common shares held by non-affiliates
of the Registrant at August 6, 1999 was approximately $1,054,093,361 (computed
by reference to the closing price for such shares on such date).
Portions of the Registrant's Annual Report to Shareholders for the
fiscal year ended May 31, 1999 are incorporated by reference into Part I and
Part II. Portions of the definitive proxy statement furnished to shareholders of
the Registrant in connection with the Annual Meeting of Shareholders to be held
on September 23, 1999 are incorporated by reference into Part III.
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PART I
Certain statements contained in this FORM 10-K, including, without
limitation, the statements incorporated by reference into "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations",
constitute "forward-looking statements" that are based on management's beliefs,
estimates, assumptions and currently available information. Such forward-looking
statements include, without limitation, statements relating to future operating
results, growth, stock appreciation, plant start-ups, capabilities, the impact
of year 2000 and other non-historical information. 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; capacity restraints and efficiencies; conditions
in major product markets; delays in construction or equipment supply; inherent
risks of international development, including foreign currency risks; the
ability to improve processes and business practices to keep pace with the
economic, competitive and technological environment; year 2000 issues; general
economic conditions, business environment and the impact of governmental
regulations, both in the United States and abroad; and other risks described
from time to time in filings with the Securities and Exchange Commission.
ITEM 1. - BUSINESS
- ------------------
Worthington Industries, Inc. is referred to herein individually as the
"Registrant" or "Worthington" or, together with its subsidiaries, as the
"Company". Founded in 1955, the Company is a diversified steel processor that
focuses on steel processing and metals-related businesses. It operates 39
facilities worldwide and its corporate headquarters are located at 1205 Dearborn
Drive, Columbus, Ohio, 43085. The Company also holds equity positions in seven
joint ventures, which operate 14 facilities worldwide.
For the fiscal year ended May 31, 1999 ("fiscal 1999"), the Company's
continuing operations are reported principally in three business segments:
Processed Steel Products, Metal Framing and Pressure Cylinders. The Processed
Steel Products segment includes The Worthington Steel Company business unit and
The Gerstenslager Company business unit. The Metal Framing segment is made up of
Dietrich Industries, Inc. and the Pressure Cylinders segment consists of
Worthington Cylinder Corporation. In addition, the Company holds an equity
position in seven joint ventures as described below. During fiscal 1999, in
keeping with its strategy to focus on steel processing and metals-related
businesses, the Company divested its Worthington Custom Plastics, Inc.,
Worthington Precision Metals, Inc. and Buckeye Steel Castings Company
operations. The divested operations, which previously made
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up the Company's Custom Products and Cast Products segments, have been reported
as discontinued operations for fiscal 1999.
During fiscal 1999, Worthington reincorporated from the State of
Delaware into the State of Ohio. On October 13, 1998, Worthington Industries,
Inc., a Delaware corporation ("Worthington Delaware"), was merged (the "Merger")
with and into Worthington, an Ohio corporation and, at the time, a wholly-owned
subsidiary of Worthington Delaware. Each share of common stock, par value $0.01
per share (the "Worthington Delaware Shares"), of Worthington Delaware was
converted into one common share, without par value, of Worthington. By virtue of
the Merger, Worthington succeeded to all the business, properties, assets and
liabilities of Worthington Delaware and the directors, officers and employees of
Worthington Delaware became directors, officers and employees of Worthington.
PROCESSED STEEL PRODUCTS
- ------------------------
The Processed Steel Products segment consists of two business units,
The Worthington Steel Company ("Worthington Steel") and The Gerstenslager
Company ("Gerstenslager"), which was acquired by the Company in a
pooling-of-interests transaction in February 1997. For fiscal 1999, and the
fiscal years ended May 31, 1998 ("fiscal 1998") and May 31, 1997 ("fiscal
1997"), the percentage of sales from continuing operations generated by the
Processed Steel Products segment was 63.2%, 64.6% and 64.6%, respectively.
As an intermediate processor of flat-rolled steel, the Company's
Processed Steel Products segment focuses on specialized products requiring exact
specifications, which typically cannot be supplied as efficiently by steel
mills, metal service centers or steel end users. The Company believes that
Worthington Steel is the largest independent flat rolled steel processor in the
United States. Gerstenslager is a leading independent supplier of Class A
exterior body panels to the North American automotive original equipment and
service part markets.
The Company's Processed Steel Products segment operates 12 processing
facilities as well as Spartan Steel Coating, L.L.C., the Company's consolidated
joint venture with Rouge Steel Company. These facilities are concentrated in the
Michigan, Ohio and Indiana market, the largest flat rolled steel consuming
market in the United States. The segment serves over 1,000 industrial customers,
principally in the automotive, automotive supply, appliance, electrical,
communications, construction, office furniture, office equipment, agricultural,
machinery and leisure time industries.
The two newest processed steel products facilities are located in
Decatur, Alabama ("Decatur") and Delta, Ohio ("Delta"). Decatur began commercial
slitting and pickling operations in May 1998 and produced its first commercially
saleable cold-rolled coils in August 1998, contributing to the Company's fiscal
1999 increase in sales. Delta completed its first full year of
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operation during fiscal 1998, contributing to the Company's fiscal 1998 increase
in sales. In addition, the Monroe, Ohio facility resumed pickling operations
during fiscal 1999, marking the completion of its recovery from an August 1997
fire that caused extensive damage to the plant.
The Company buys coils of wide, open-tolerance steel from major
integrated steel mills and mini-mills and processes it to the precise type,
thickness, length, width, shape, temper and surface quality customer
specifications. The Company's computer-aided processing capabilities include
among others: pickling, a chemical process using an acidic solution to remove
surface oxide which develops on hot-rolled steel; slitting, which cuts steel to
specific widths; cut-to-length, which flattens the steel and cuts it to exact
lengths; roller leveling, a method of applying pressure to achieve precise
flatness tolerances for steel which is cut into exact lengths; cold reduction,
which achieves close tolerances of thickness and temper by rolling; edge
rolling, which conditions the edges of the steel by imparting round, smooth or
knurled edges; configured blanking, through which steel is cut into specific
shapes; painting; hot dipped galvanizing; nickel and zinc/nickel plating; and
annealing, a thermal process that changes the hardness and certain metallurgical
characteristics of steel. The Company also stamps, assembles, primes and
packages exterior automotive body panels. In addition, the Company "toll
processes" steel for steel mills and large end users. Toll processing is similar
to the Company's normal steel processing, except the mill or end user retains
the title to the steel and has the responsibility for selling the end product.
Toll processing enables the Company to participate in the market for wide sheet
steel and large standard orders, which is a market generally served by steel
mills rather than by intermediate steel processors.
Steel processing is highly competitive and the Company competes with
many other independent intermediate processors. With respect to automotive
stamping, the Company competes with captive processors owned by the automotive
companies, independent tier one suppliers of current model components, who are
generally unwilling to keep tooling for low volume past model service business,
and a number of smaller competitors. The Company believes it is unique in its
ability to handle a very large number of low volume aftermarket automotive body
parts, managing over 3,000 die sets for component parts on past and current
automobile and truck production models. Despite the competitive nature of the
processed steel products industry, the Company knows of no other intermediate
processor offering the same type and extent of technical service support
provided by the Company relating to material testing and application of material
to the particular needs of customers (see "Technical Services"). The Company is
unable to gauge, however, the extent to which its technical service capability
has improved its competitive position.
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METAL FRAMING
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The Metal Framing segment consists of one business unit, Dietrich
Industries, Inc. ("Dietrich"), which was acquired by the Company in February
1996. Dietrich is the largest supplier of metal framing products for the
commercial and residential construction markets in the United States. For fiscal
1999, fiscal 1998 and fiscal 1997, the percentage of sales from continuing
operations generated by Dietrich was 19.1%, 20.7% and 20.9%, respectively.
Dietrich's products include steel studs, floor joists and other metal accessory
products. Dietrich has over 2,000 customers, primarily consisting of building
products distributors, commercial and residential contractors and gypsum
producers.
The Company believes that Dietrich is the only national supplier of
metal framing products and supplies approximately 45% of the metal framing
products sold in the United States. It has five large regional competitors and
numerous small, more localized competitors. Dietrich operates 18 facilities in
thirteen states.
PRESSURE CYLINDERS
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The Pressure Cylinders segment consists of one business unit,
Worthington Cylinder Corporation ("Worthington Cylinders"). For fiscal 1999,
fiscal 1998 and fiscal 1997, the percentage of sales from continuing operations
generated by Worthington Cylinders was 17.3%, 13.8% and 13.9%, respectively.
During fiscal 1999, the Company expanded its Pressure Cylinders segment
by acquiring the cylinder operations of Jos. Heiser vormals J. Winter's Sohn,
GmbH ("Heiser"), based in Kienberg, Austria, in June 1998; Metalurgica Progresso
de Vale de Cambra, Lda., based in Vale de Cambra, Portugal, in May 1999; and a
majority interest in Gastec spol. s.r.o., based in Hustopece, Czech Republic, in
February 1999.
Worthington Cylinders is the nation's largest producer of portable low
pressure liquid propane and refrigerant gas cylinders, and is a global leader in
the production of portable high pressure cylinders. Worthington Cylinders'
primary low pressure cylinder products are steel cylinders with refrigerant gas
capacities of 15 to 1,000 lbs. and steel and aluminum cylinders with liquid
propane gas capacities of 4-1/4 to 420 lbs. These cylinders are designed and
produced in accordance with safety requirements prescribed by the U.S.
Department of Transportation which specify materials, design limitations, and
marking, inspection and testing procedures. Low pressure cylinders are produced
by precision stamping, drawing and welding of component parts to customer
specifications. They are then tested, painted and packaged as required.
The Company's refrigerant gas cylinders are used primarily by major
refrigerant gas producers to contain refrigerant gases for use in charging
residential, commercial, automotive and other air conditioning and refrigeration
systems. Reusable steel and aluminum liquid propane gas cylinders are sold to
manufacturers and distributors of
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barbecue grills and propane, mass merchandisers and manufacturers and users of
material handling, heating, cooking and camping equipment. The Company
manufactures other low pressure cylinder products, including recapture and
recycling tanks for refrigerant gases, helium tanks, and cylinders to hold other
gases.
Worthington Cylinders' high pressure cylinders are manufactured by deep
drawing, billet piercing and hot spinning. They are sold primarily to gas
suppliers and fillers as containers for acetylene, medical, industrial, halon
and electronics gases.
While a large percentage of cylinder sales are made to major accounts,
Worthington Cylinders has over 3,000 customers. It operates eight wholly-owned
manufacturing facilities throughout the United States, Austria, Canada and
Portugal; and two joint venture facilities, Worthington S.A. in Itu, Brazil and
Worthington Gastec a.s. in the Czech Republic.
The Company has two principal domestic competitors in its major low
pressure cylinder markets, of which management believes the Company has the
largest domestic share. The Company also has two principal domestic competitors
in its high pressure cylinder markets, both of which have a larger domestic
share than the Company. The Company believes that Heiser has the largest share
of the European industrial gas cylinder market. However, the Company otherwise
has no reliable information with respect to the size of any of its various
product markets or its relative position therein.
SEGMENT DATA
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For financial information about the Company's segments, see "Note H -
Industry Segment Data" of the Company's Notes to Consolidated Financial
Statements included in Worthington's 1999 Annual Report to Shareholders, which
is incorporated herein by reference.
CUSTOMERS
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During fiscal 1999, the Company's Processed Steel Products, Metal
Framing and Pressure Cylinders segments served over 1,000, 2,000 and 3,000
customers, respectively. The Company's customers are located primarily in the
United States, Canada and Europe and operate in a variety of industries,
including without limitation, the automotive, automotive supply, appliance,
electrical, building products distribution, communications, commercial and
residential construction, office furniture and equipment, agricultural,
machinery and leisure industries. See "Item 1 - Business - Processed Steel
Products," "--Metal Framing," and "--Pressure Cylinders" for a discussioN
regarding customers within the Company's segments.
Only one customer, General Motors Corporation ("General Motors"),
accounted for over 10% of the Company's consolidated net sales. Fiscal 1999
sales from continuing operations in the Processed Steel Products segment include
$112 million
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to General Motors, which purchases through decentralized divisions and
subsidiaries in different geographic areas. Fiscal 1999 sales from discontinued
operations also include $107 million to General Motors. The General Motors'
strike in the first quarter of fiscal 1999 contributed to the decrease in
operating income for the Processed Steel Products segment for the year. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Processed Steel Products" included in Worthington's 1999 Annual
Report to Shareholders, which is incorporated herein by reference. The loss of
General Motors as a customer could have an adverse effect on the Processed Steel
Products segment, but, given the Company's long-standing relationship with
General Motors, the Company has no reason to believe that the loss of this
customer is likely.
SUPPLIERS
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In fiscal 1999, the Company purchased in excess of three million tons
of steel for use as raw material for its Processed Steel Products, Pressure
Cylinders and Metal Framing segments. It purchases steel in large quantities at
regular intervals from major primary producers, both domestically and globally.
The Company primarily purchases and supplies steel based on the specific orders
of customers and does not typically process steel for inventory. The Company
purchases the majority of its raw materials in the open market at prevailing
market prices, but, occasionally, will enter into long-term fixed-price
contracts. During fiscal 1999, the Company's major suppliers of steel were
Bethlehem Steel Corporation, Inland Steel Company, LTV Steel Corporation,
Northstar BHP Steel, Rouge Industries, Inc. (in which the Company holds a
minority equity position), TRICO Steel, USX Corporation and WCI Steel, Inc. In
addition, the Company's primary aluminum suppliers in fiscal 1999 for its
Pressure Cylinders segment were Alcoa, Inc. and Specialty Blanks Incorporated.
Management believes that its supplier relationships are good.
MARKETING AND COMPETITION
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The Company believes that it has established and maintains customer
relationships primarily because of its tradition of leadership in value-added
steel processing and metals-related industries. The Company's products and
services are sold primarily by Company sales personnel, who receive orders on
both an order-by-order basis and through long-term program commitments. Foreign
operations and exports represent less than 10% of the Company's production,
sales and assets.
The Company competes primarily on the basis of quality of product,
ability to meet delivery requirements and price. Geographic proximity to
customers has a significant effect upon relative ability to meet customer
delivery schedules and impacts the freight charge portion of overall product
price.
See "Item 1 - Business - Processed Steel Products," "--Metal Framing,"
and "--Pressure Cylinders" for a discussion regarding marketing and competition
within the Company's segments.
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TECHNICAL SERVICES
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The Company employs a staff of engineers and other technical personnel
and maintains fully-equipped, modern laboratories to support its operations. The
facilities enable the Company to verify, analyze and document the physical,
chemical, metallurgical and mechanical properties of its raw materials and
products. Technical service personnel also work in conjunction with the sales
force to determine the types of flat rolled steel required for the particular
needs of the Company's customers. In order to provide such services, the Company
maintains a continuing program of developmental engineering with respect to the
characteristics and performance of its products under varying conditions.
Laboratory facilities are also used to perform the quality control and extensive
testing of all low pressure cylinders required by the regulations of the U. S.
Department of Transportation and associated agencies, as well as varying
customer requirements.
EMPLOYEES
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As of May 31, 1999, the Company employed approximately 7,500 employees
in its continuing operations, excluding unconsolidated joint ventures.
Approximately 20% of the Company's labor force is covered by collective
bargaining agreements. The Company believes that it has good relationships with
its employees.
JOINT VENTURES
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As part of its strategy to selectively develop new products, markets
and technological capabilities, and to expand its international presence while
mitigating the risks and costs associated with such activities, the Company
participates in three consolidated and four unconsolidated joint ventures.
Worthington Armstrong Venture ("WAVE"), a 50%-owned joint venture with
Armstrong World Industries, Inc., is one of the three leading global
manufacturers of suspended ceiling systems for concealed and lay-in panel
ceilings. WAVE operates facilities in Pennsylvania, Maryland, Michigan, Nevada,
England, France, Spain and China.
TWB Company, L.L.C., a 33%-owned joint venture with Thyssen Krupp,
Rouge Steel, LTV Steel and Bethlehem Steel, is located in Monroe, Michigan. It
produces laser welded blanks for use in the auto industry for products such as
inner door frames.
Acerex S.A. de C.V., a 50%-owned joint venture with Hylsa S.A. de C.V.,
is a steel processing company located in Monterrey, Mexico.
Worthington Specialty Processing, a 50%-owned joint venture with USX
Corporation in Jackson, Michigan, operates primarily as a toll processor for USX
Corporation.
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Worthington Gastec a.s., a 51%-owned consolidated joint venture with a
local Czech Republic entrepreneur, operates a pressure cylinder manufacturing
facility in Hustopece, Czech Republic.
Spartan Steel Coating, L.L.C., a 52%-owned consolidated joint venture
with Rouge Steel Company, operates a cold rolled hot dipped galvanizing facility
near Monroe, Michigan.
Worthington S.A., a 52%-owned consolidated joint venture with three
Brazilian propane producers, operates a cylinder manufacturing facility in Itu,
Brazil.
See "Note J - Investment in Unconsolidated Affiliates" of the Company's
Notes to Consolidated Financial Statements included in Worthington's 1999 Annual
Report to Shareholders for additional information on the Company's
unconsolidated joint ventures.
INVESTMENT IN ROUGE INDUSTRIES, INC.
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The Company also owns a minority interest (27%) in Rouge Industries,
Inc. ("Rouge"), which operates an integrated steel mill located in Dearborn,
Michigan.
In March 1997, the Company issued 5,999,600 DECS SM (Debt Exchangeable
for Common Stock SM). Under the DECS, the Company issued $93 million principal
amount of 7-1/4% exchangeable notes due March 1, 2000. At maturity of the Notes,
the principal amount of each DECS will be mandatorily exchanged by Worthington
into shares of Rouge Class A Common Stock or, at the Company's option, cash
equivalent for all or part thereof. Worthington's current Rouge stockholdings
are sufficient to settle the DECS liability and the Company intends to settle
the liability with those holdings.
DISCONTINUED OPERATIONS
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CUSTOM PLASTICS. The Company completed the divestiture of its
Worthington Custom Plastics businesses in the fourth quarter of fiscal 1999.
While operated by the Company, Worthington Custom Plastics manufactured and
supplied injection molded plastic parts to automobile manufacturers and their
suppliers, and to manufacturers of appliances, lawn and garden products,
recreational products, business equipment, audio equipment, furniture and other
items. Worthington Custom Plastics operated six manufacturing facilities in
Ohio, Kentucky, North Carolina and South Carolina.
PRECISION METALS. The Company completed the divestiture of its
Worthington Precision Metals operations in the second quarter of fiscal 1999.
While operated by the Company, Worthington Precision Metals produced extremely
close tolerance metal components for use by automobile manufacturers and their
suppliers in power steering, transmission, anti-lock brake and other automotive
mechanical systems. This business operated two facilities located in Ohio and
Tennessee.
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STEEL CASTINGS. The Company completed the divestiture of its Buckeye
Steel Castings operations in the third quarter of fiscal 1999. While operated by
the Company, Buckeye Steel Castings designed, produced and machined a broad line
of railcar and industrial steel castings. The Company believes Buckeye is North
America's leading designer and producer of undercarriages for mass transit cars.
Buckeye's facility in Columbus, Ohio is the largest single site steel foundry in
the United States.
ENVIRONMENTAL REGULATION
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The Company's manufacturing facilities, generally in common with those
of similar industries making similar products, are subject to many federal,
state and local requirements relating to the protection of the environment. The
Company continually examines ways to reduce emissions and waste and to effect
cost savings related to environmental compliance. Management does not anticipate
that capital expenditures for environmental control facilities required in order
to meet environmental requirements will be material when compared with the
Company's overall capital expenditures and, accordingly, will not be material to
its financial position or results of operations.
ITEM 2. - PROPERTIES
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The Company's corporate offices are located in Columbus, Ohio. Its
principal properties consist of 41 manufacturing facilities, excluding those of
unconsolidated joint ventures. These facilities are well maintained and in good
operating condition. The Company's manufacturing facilities contain in excess of
9,000,000 sq. ft. in the aggregate and are adequate to meet the Company's
present needs.
The locations of these facilities, as well as the Company's joint
ventures, are set forth on page 36 of the Company's 1999 Annual Report to
Shareholders, which information is incorporated herein by reference.
See "Item 1 - Business - Processed Steel Products," "- Metal Framing,"
and "- Pressure Cylinders" for further discussion on properties owned within
particular segments.
ITEM 3. - LEGAL PROCEEDINGS
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Various legal actions arising in the ordinary course of business are
pending against the Company. None of the litigation pending against the Company,
individually or collectively, is expected to have a material adverse effect on
the Company.
ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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None.
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EXECUTIVE OFFICERS OF THE COMPANY
The following table lists the names, positions held, and ages of all
executive officers of the Company:
PRESENT OFFICE HELD
NAME AGE POSITIONS WITH THE COMPANY SINCE
---- --- -------------------------- -----
John H. McConnell 76 Chairman Emeritus & Founder 1996
John P. McConnell 45 Chairman & Chief Executive Officer 1996
John S. Christie 49 President & Chief Operating Officer 1999
Edward A. Ferkany 62 Executive Vice President 1998
Ralph V. Roberts 52 President, The Worthington Steel Company 1998
John T. Baldwin 42 Vice President & Chief Financial Officer 1998
Dale T. Brinkman 46 Vice President-Administration, General Counsel & 1998
Assistant Secretary
Mark H. Stier 52 Vice President-Human Resources 1997
Michael R. Sayre 42 Controller 1996
Gregory P. Youngblood 40 Treasurer 1999
John H. McConnell founded the Company in 1955 and served as its Chief
Executive Officer and Chairman of the Board of Directors until May 1993. Mr.
McConnell retired from the position of Chief Executive Officer in May 1993 and
as Chairman of the Board in September 1996, when he assumed the title of
Chairman Emeritus and Founder.
John P. McConnell has served as Chief Executive Officer of the Company
since June 1993 and Chairman of the Board of Directors since September 1996. Mr.
McConnell served on the Board of Directors of the Company since 1990 and as Vice
Chairman of the Company from 1992 through 1996.
John S. Christie succeeded Donal H. Malenick as President and Chief
Operating Officer of the Company in June 1999. Prior to joining the Company, Mr.
Christie served as President of JMAC, Inc., a private investment company, from
1995 through 1999. From 1988 through 1995, Mr. Christie served as Senior Vice
President, Corporate Development for Battelle Memorial Institute, a non-profit
research and development institute.
Edward A. Ferkany has served as Executive Vice President of the Company
since June 1998. Prior to June 1998, Mr. Ferkany served as Group Vice President-
Processed Steel for the Company since 1985.
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Ralph V. Roberts has served as President, The Worthington Steel Company
since June 1998. Prior thereto, Mr. Roberts served as Vice President-Corporate
Development from June 1997 through May 1998, and as President of the Company's
WAVE joint venture from its formation in June 1992 through June 1997.
John T. Baldwin has served as Vice President and Chief Financial
Officer of the Company since December 1998. Prior to that time, Mr. Baldwin
served as Treasurer of the Company since September 1997. Before joining the
Company, Mr. Baldwin served as Assistant Treasurer of Tenneco, Inc. from 1994
through September 1997.
Dale T. Brinkman has served as Vice President-Administration, General
Counsel and Assistant Secretary of the Company since December 1998. Prior to
that time, Mr. Brinkman served as General Counsel and Assistant Secretary for
the Company.
Mark H. Stier has served as Vice President-Human Resources of the
Company since August 1997. Prior to that time, Mr. Stier served for more than
ten years as General Manager of The Worthington Steel Company, Porter, Indiana.
Michael R. Sayre has served as Controller of the Company since February
1996. Prior to 1996, Mr. Sayre served as Controller of The Worthington Steel
Company, Columbus, Ohio since November 1993.
Gregory P. Youngblood has served as Treasurer of the Company since he
joined the Company in January 1999. Prior thereto, Mr. Youngblood served in
various Treasury capacities, including as Assistant Treasurer, for Cardinal
Health, Inc., a healthcare products company from October 1995 through January
1999. Prior to October 1995, Mr. Youngblood served in various capacities for
Lyondell Petrochemical Co., a chemical company, including Treasury Management
Consultant, from 1994 through 1995.
Executive officers serve at the pleasure of the directors. John H.
McConnell is the father of John P. McConnell. There are no other family
relationships among the executive officers of the Company. No arrangements or
understandings exist pursuant to which any person has been, or is to be,
selected as an officer.
PART II
ITEM 5. - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
- -------------------------------------------------------------------------------
The information called for by this Item 5 is incorporated herein by
reference to the information set forth under the caption "Stock Trading, Price
and Dividend Information" on page 3 of the Worthington Industries, Inc.
1999 Annual Report to Shareholders (the "1999 Annual Report").
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ITEM 6. - SELECTED FINANCIAL DATA
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The information called for by this Item 6 is incorporated herein by
reference to the information set forth under the caption "Five Year Selected
Financial Data" on page 4 of the 1999 Annual Report.
ITEM 7. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- -------------------------------------------------------------------------
RESULTS OF OPERATIONS
- ---------------------
The information called for by this Item 7 is incorporated herein by
reference to the information set forth under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations" on
pages 5 through 13 of the 1999 Annual Report and should be read in conjunction
with the information incorporated by reference into Item 8 of this Form 10-K.
ITEM 7A. - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- ---------------------------------------------------------------------
Because the Company's exposures to market risk are not material, no
response to this item is required.
ITEM 8. - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- -----------------------------------------------------
The following Consolidated Financial Statements of Worthington
Industries, Inc. and Subsidiaries, Notes to Consolidated Financial Statements
and Report of Independent Auditors, set forth on pages 14 through 19, 20 through
33 and 35, respectively, of the 1999 Annual Report are incorporated herein by
reference:
Consolidated Balance Sheets--May 31, 1999 and 1998
Consolidated Statements of Earnings--Years ended May 31, 1999, 1998 and
1997.
Consolidated Statements of Shareholders' Equity--Years ended May 31,
1999, 1998 and 1997.
Consolidated Statements of Cash Flows--Years ended May 31, 1999, 1998
and 1997.
Notes to Consolidated Financial Statements
Report of Independent Auditors
ITEM 9. - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- -------------------------------------------------------------------------
FINANCIAL DISCLOSURE
- --------------------
None.
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PART III
ITEM 10. - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- -------------------------------------------------------------
In accordance with General Instruction G(3) of Form 10-K, the
information required by this Item 10 with respect to the identification of
directors is incorporated herein by reference to the material under the heading
"Election of Directors" contained on pages 2 through 6 of the Worthington
Industries, Inc. definitive Proxy Statement (the "Proxy Statement") for the 1999
Annual Meeting of Shareholders to be held on September 23, 1999, a copy of which
was filed with the Securities and Exchange Commission on August 16, 1999. The
information regarding executive officers required by Item 401 of Regulation S-K
is included in Part I hereof under the heading "Executive Officers of the
Company." The information required by Item 405 of Regulation S-K is incorporated
herein by reference to the material under the heading "Section 16(a) Beneficial
Ownership Reporting Compliance" contained on page 6 of the Proxy Statement.
ITEM 11. - EXECUTIVE COMPENSATION
- ---------------------------------
In accordance with General Instruction G(3) of Form 10-K, the
information required by this Item 11 is incorporated herein by reference to the
information contained in the Proxy Statement under the headings "Election of
Directors --Compensation of Directors" on page 5, "Executive Compensation --
Summary of Cash and Certain OtheR Compensation" on pages 7 and 8, "--Option
Grants" on page 8, "--Option Exercises and Holdings" on pages 8 and 9, anD
"--Long-Term Incentive Plan Awards" on page 9.
ITEM 12. - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- -------------------------------------------------------------------------
In accordance with General Instruction G(3) of Form 10-K, the
information required by this Item 12 is incorporated herein by reference to the
material contained in the Proxy Statement under the headings "Voting Securities
and Principal Holders Thereof - Security Ownership of Certain Beneficial Owners"
on page 2 and "Election of Directors" contained on pages 2 through 5.
ITEM 13. - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- ---------------------------------------------------------
In accordance with General Instruction G(3) of Form 10-K, the
information required by this Item 13 is incorporated herein by reference to
footnote (3) and the second paragraph after footnote (7) to the table under the
heading "Election of Directors," both contained on page 4 of the Proxy
Statement.
14
15
PART IV
ITEM 14. - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
- ----------------------------------------------------------------------------
(a) (1) and (2) The response to this portion of Item 14 is submitted as a
separate section of this report--See "List of Financial Statements and
Financial Statement Schedules" on page F-1 of this report.
(3) Listing of Exhibits--See "Index to Exhibits" beginning on page E-1
of this report. The index to exhibits specifically identifies each
management contract or compensatory plan required to be filed as an
Exhibit to this Form 10-K.
(b) None.
(c) Exhibits filed with this report are attached hereto.
(d) Financial Statement Schedules--The response to this portion of Item 14
is submitted as a separate section of this report--See "List of
Financial Statements and Financial Statement Schedules" on Page F-1.
15
16
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
WORTHINGTON INDUSTRIES, INC.
Date: August 27, 1999 By: /s/John S. Christie
-------------------------
John S. Christie
President & Chief Operating Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
SIGNATURE DATE TITLE
--------- ---- -----
* * Director, Chairman &
- --------------------- Chief Executive Officer
John P. McConnell
* * Director, Chairman Emeritus
- --------------------- & Founder
John H. McConnell
/s/John S. Christie August 27, 1999 Director, President &
- --------------------- Chief Operating Officer
John S. Christie
s/John T. Baldwin August 27, 1999 Vice President & Chief
- --------------------- Financial Officer
John T. Baldwin
/s/Michael R. Sayre August 27, 1999 Controller
- ---------------------
Michael R. Sayre
* * Director, Secretary
- ---------------------
Charles D. Minor
* * Director
- ---------------------
John B. Blystone
* * Director
- ---------------------
Charles R. Carson
16
17
* * Director
- ---------------------
William S. Dietrich
* * Director
- ---------------------
John F. Havens
* * Director
- ---------------------
Peter Karmanos, Jr.
* * Director
- ---------------------
Pete A. Klisares
* * Director
- ---------------------
Donal H. Malenick
* * Director
- ---------------------
Robert B. McCurry
* * Director
- ---------------------
Gerald B. Mitchell
* * Director
- ---------------------
James Petropoulos
* * Director
- ---------------------
Mary Fackler Schiavo
*By: /s/John S. Christie Date: August 27, 1999
-------------------------- -----------------
John S. Christie
Attorney-In-Fact
17
18
F-1
ANNUAL REPORT ON FORM 10-K
ITEM 14 (a) (1) AND (2) AND ITEM 14 (d)
WORTHINGTON INDUSTRIES, INC. AND SUBSIDIARIES
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT
SCHEDULES
The following Consolidated Financial Statements of Worthington Industries, Inc.,
and Subsidiaries, Notes to Consolidated Financial Statements and Report of
Independent Auditors, are set forth on pages 14 through 19, 20 through 33 and
page 35, respectively, of Worthington Industries, Inc.'s 1999 Annual Report to
Shareholders, are incorporated by reference in Item 8:
Consolidated Balance Sheets -- May 31, 1999 and 1998
Consolidated Statements of Earnings -- Years ended May 31, 1999, 1998 and 1997
Consolidated Statements of Shareholders' Equity -- Years ended May 31, 1999,
1998 and 1997
Consolidated Statements of Cash Flows -- Years ended May 31, 1999, 1998 and 1997
Notes to Consolidated Financial Statements
Report of Independent Auditors
The following consolidated financial statement schedules of Worthington
Industries, Inc. and Subsidiaries are included in Item 14 (d):
Schedule II - Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted, or
the required information is provided in the Consolidated Financial Statements of
Worthington Industries, Inc. and its Subsidiaries or the Notes thereto.
F-1
19
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
WORTHINGTON INDUSTRIES, INC. AND SUBSIDIARIES
- ---------------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E
Additions
--------------------------------------
Balance (1) (2) Balance at
DESCRIPTION at beginning Charged to Cost Charged to Other Deductions End of
of Period and Expenses Accounts - Describe -Describe Period
- ---------------------------------------------------------------------------------------------------------------------------
You Ended May 31, 1999:
Deducted from asset accounts: $ 140,927
Allowance for possible (269,467)(C)
losses on trade accounts 307,705(D)
---------
receivable $4,130,000 $ 290,365 $ 179,210 $390,575(A) $4,209,000
========== ========== ========= ======== ==========
You Ended May 31, 1998:
Deducted from asset accounts:
Allowance for possible
losses on trade accounts
receivable $3,900,000 $1,098,713 $ 0 $868,713(A) $4,130,000
========== ========== ========= ======== ==========
You Ended May 31, 1997:
Deducted from asset accounts:
Allowance for possible
losses on trade accounts
receivable $2,792,000 $ 947,368 $ 300,000(E) $139,368(A) $3,900,000
========== ========== ========= ======== ==========
Note A - Uncollectible accounts charged to the allowance.
Note B - Amount from Heiser acquisition.
Note C - Amount from discontinued operations.
Note D - Miscellaneous amounts
Note E - Amount from PMI acquisition
20
INDEX TO EXHIBITS
2 Agreement of Merger, dated as Incorporated herein by reference to
of August 20, 1998, between Exhibit 2 of the Registrant's Quarterly
Worthington Industries, Inc., Report on Form 10-Q for the quarter
the Delaware corporation, and ended August 31, 1998
Worthington Industries, Inc.,
the Ohio corporation.
3(a) Amended Articles of Incorporated herein by reference to
Incorporation of Worthington Exhibit 3(a) of the Registrant's
Industries, Inc. Quarterly Report on Form 10-Q for the
quarter ended August 31, 1998
3(b) Code of Regulations of Incorporated herein by reference to
Worthington Industries, Inc. Exhibit 3(b) of the Registrant's
Quarterly Report on Form 10-Q for the
quarter ended August 31, 1998
4(a) Form of Indenture dated as of May 15, Incorporated herein by reference to
1996 between the Exhibit 4(a) of the Registrant's Annual
Company and PNC Bank, Report on Form 10-K for fiscal year
Ohio, National Association, as ended May 31, 1997
Trustee, relating to up to
$450,000,000 of debt securities
4(b) Form of 7-1/8% Notes due Incorporated herein by reference to
2006 Exhibit 4(b) of the Registrant's Annual
Report on Form 10-K for fiscal year
ended May 31, 1997
4(c) First Supplemental Indenture, Incorporated herein by reference to
dated as of February 27, 1997 Exhibit 4(c) of the Registrant's Annual
between the Company and Report on Form 10-K for fiscal year
PNC Bank, Ohio, National ended May 31, 1997
Association, as Trustee
E-1
21
4(d) Form of 7-1/4% Exchangeable Incorporated herein by reference to
Note Due March 1, 2000 Exhibit 4(d) of the Registrant's Annual
Report on Form 10-K for fiscal year ended
May 31, 1997
4(e) Second Amended and Restated Loan
Agreement, dated as of October 14, 1998,
between Worthington Industries, Inc., The
Bank of Nova Scotia, PNC Bank, National
Association, NationsBank, N.A., Wachovia
Bank of Georgia, N.A., NBD Bank, Bank
One, N.A. and National City Bank
4(f) Form of 6.7% Notes due 2009 Incorporated herein by reference to Exhibit 4(f)
of the Registrant's Annual Report on Form 10-K for
the fiscal year ended May 31, 1998.
4(g) Second Supplemental Indenture, dated as Incorporated herein by reference to Exhibit 4(g) the
of December 12,1997, between Worthington Registrant's Annual Report on Form 10-K for of the
Industries, Inc. and PNC Bank, Ohio, fiscal year ended May 31, 1998
National Association, as Trustee
4(h) Third Supplemental Indenture, dated as of
October 13, 1998, between Worthington
Industries, Inc., a Delaware corporation,
Worthington Industries, Inc., an Ohio
corporation, and PNC Bank, National
Association, as Trustee
E-2
22
4(i) Assignment and Assumption Agreement, dated
as of October 14, 1998, between
Worthington Industries, Inc., a Delaware
corporation, Worthington Industries, Inc.,
an Ohio corporation, The Bank of Nova
Scotia and PNC Bank, Ohio, National
Association, as Agents.
4(j) Agreement to furnish instruments defining
rights of holders of long-term debt
10(a) Amended 1980 Stock Option Plan, as Incorporated herein by reference to Annex B to the
amended* Prospectus filed as part of Post-Effective
Amendment No. 1 to the Registrant's Registration
Statement on Form S-8 (Registration No. 2-80094)
10(b) 1990 Stock Option Plan, as amended*
10(c) Executive Deferred Compensation Plan* Incorporated herein by reference to Exhibit
10(e) of the Registrant's Annual Report on
Form 10-K for the fiscal year ended May 31, 1984
10(d) Deferred Compensation Plan for Incorporated herein by reference to Exhibit
Directors* 10(f) of the Registrant's Annual Report on Form 10-K
for the fiscal year ended May 31, 1984
10(e) 1997 Long-Term Incentive Plan* Incorporated herein by reference to Exhibit 10(e)
of the Registrant's Annual Report on Form 10-K for
the fiscal year ended May 31, 1997
13 1999 Annual Report to Shareholders
21 Subsidiaries of the Registrant
E-3
23
23 Consent of Ernst & Young LLP
24 Powers of Attorney
27 Financial Data Schedule
*Management Compensation Plan
E-4