Response to Automotive Shutdowns: Reducing Dividend and Other Cost
Reductions
The board of directors of Worthington Industries, Inc. (NYSE:WOR) has
declared a quarterly dividend of $0.10 per share, a 41% reduction from
the previous quarter. The dividend is payable on June 29, 2009, to
shareholders of record June 15, 2009. This marks the 166th
consecutive quarter that Worthington has paid a dividend since it became
a public company in 1968.
While the company’s financial condition and free cash flow remain solid,
it has reduced the dividend as part of a broad cost reduction initiative
aimed at offsetting declines in the automotive and construction end
markets, exacerbated by the summer shutdowns at GM and Chrysler.
These actions effective during the fiscal first quarter (June – August)
include: a one week shut-down of four steel processing facilities;
suspension of holiday pay for eligible employees; a sliding scale
pay-reduction ranging from 3% to 20% for salaried employees with a 25%
reduction for the CEO; a 20% reduction in meeting fees for the board of
directors; and a suspension of the company’s 401-K match for all
employees.
The goal of these temporary actions is to mitigate the impact of the
extended summer shutdowns and maintain the company’s strong balance
sheet and financial flexibility.
John P. McConnell, Chairman and CEO stated, “Our employees have done an
excellent job of cutting costs and maintaining our business since the
recession began. The extended summer shutdowns announced by General
Motors and Chrysler have pulled volume down deeply in our steel
processing business. Maintaining a strong balance sheet and flexible
credit facilities remain a priority. These additional steps will help
ensure that we preserve this advantage into economic recovery. We expect
our volumes to improve as Chrysler and GM return to regular production
schedules, and their future becomes more clear.”
Worthington Industries is a leading diversified metal processing company
with annual sales of approximately $3 billion. The Columbus, Ohio, based
company is North America’s premier value-added steel processor and a
leader in manufactured metal products such as metal framing, metal
ceiling grid systems, pressure cylinders, automotive past model service
stampings and laser welded blanks.
