UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549
 

 
FORM 8-K
 
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934


 
Date of Report (Date of earliest event reported):                   September 26, 2013                     

          WORTHINGTON INDUSTRIES, INC.          
(Exact name of registrant as specified in its charter)
 
 
                 Ohio                                  001-08399                               31-1189815                
(State or other jurisdiction
of incorporation)
(Commission File Number)
(IRS Employer
Identification No.)
 
 
200 Old Wilson Bridge Road, Columbus, Ohio               43085              
(Address of principal executive offices) (Zip Code)
   
Registrant’s telephone number, including area code:        (614) 438-3210       
 
 
Not Applicable

(Former name or former address, if changed since last report.)
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o       Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o       Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o        Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o        Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 
1

 
 
Item 2.02.  Results of Operations and Financial Condition .
 
Management of Worthington Industries, Inc. (the “Registrant”) conducted a conference call on September 26, 2013, beginning at approximately 10:30 a.m., Eastern Daylight Time, to discuss the Registrant’s unaudited financial results for the first quarter of fiscal 2014 (the fiscal quarter ended August 31, 2013).  Additionally, the Registrant’s management addressed certain issues related to the outlook for the Registrant and its subsidiaries and their respective markets for the coming months.  A copy of the transcript of the conference call is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
 
In the conference call, management referred to adjusted diluted earnings per share.  This represents a non-GAAP financial measure and is used by management as a measure of operating performance.  Adjusted diluted earnings per share is calculated by subtracting the after-tax impact of the gain and favorable tax adjustment related to the acquisition of an additional 10% interest in TWB Company, L.L.C. (“TWB”) and restructuring charges and dividing the result by the average diluted common shares for the period.  The difference between the GAAP-based measure of diluted earnings per share (EPS) attributable to controlling interest of $0.76 and the adjusted diluted earnings per share of $0.58 for the fiscal quarter ended August 31, 2013, as mentioned in the conference call, is outlined below.
 
Diluted EPS attributable to controlling interest
  $ 0.76  
Gain on acquisition of additional 10% interest in TWB (after-tax)
    (0.13 )
Favorable tax adjustment on acquisition of additional 10% interest in TWB (after-tax)
    (0.06 )
Restructuring charges
    0.01  
Adjusted diluted EPS attributable to controlling interest
  $ 0.58  

The information contained in this Item 2.02 and Exhibit 99.1 furnished with this Current Report on Form 8-K, is being furnished pursuant to Item 2.02 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, unless the Registrant specifically states that the information is to be considered “filed” under the Exchange Act or incorporates the information by reference into a filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act.
 
Item 5.02.  Departure of Directors or Certain Officers; Election of Directors;
 
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers .
 
Approval of (i) the Material Terms of the Performance Goals in the First Amendment to the Worthington Industries, Inc. Amended and Restated 1997 Long-Term Incentive Plan and (ii) the Second Amendment to the Worthington Industries, Inc. Amended and Restated 1997 Long-Term Incentive Plan
 
 
 
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At the 2013 Annual Meeting of Shareholders of the Registrant held on September 26, 2013 (the “2013 Annual Meeting”), the Registrant’s shareholders approved two proposals related to the Worthington Industries, Inc. Amended and Restated 1997 Long-Term Incentive Plan.  The first proposal related solely to the approval of the performance goals set forth in the First Amendment to the Amended and Restated 1997 Long-Term Incentive Plan (the “First Amendment”), which performance goals may be selected by the Compensation and Stock Option Committee (the “Compensation Committee”) of the Board of Directors (the “Board”) of the Registrant in granting restricted stock awards, performance awards and other stock unit awards settled in common shares, without par value (“common shares”), of the Registrant intended to be “qualified performance-based compensation” under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), and the Treasury regulations promulgated thereunder (collectively, “Section 162(m)”).  The second proposal related to the approval of the Second Amendment to the Worthington Industries, Inc. Amended and Restated 1997 Long-Term Incentive Plan (the “Second Amendment”) to:  (a) increase the number of common shares available for awards; (b) modify the method for counting common shares subject to options and stock appreciation rights (“SARs”) against the total number of common shares available for awards; (c) clarify the individuals eligible to become participants in the Worthington Industries, Inc. Amended and Restated 1997 Long-Term Incentive Plan; and (d) modify certain provisions applicable to options and SARs to reflect the Registrant’s practices and current standard market practices.
 
The Worthington Industries, Inc. Amended and Restated 1997 Long-Term Incentive Plan, as amended by the First Amendment and the Second Amendment, is referred to in this Current Report on Form 8-K as the “1997 LTIP.”  Set forth below is a brief description of the 1997 LTIP which is qualified in its entirety by reference to the complete terms of the Worthington Industries, Inc. Amended and Restated 1997 Long-Term Incentive Plan (amendment and restatement effective as of November 1, 2008), which is included as Exhibit 10.8 to the Quarterly Report on Form 10-Q of the Registrant for the quarterly period ended November 30, 2008 and incorporated herein by reference; the First Amendment, which is included with this Current Report on Form 8-K as Exhibit 10.2 and incorporated herein by reference; and the Second Amendment, which is included with this Current Report on Form 8-K as Exhibit 10.3 and incorporated herein by reference.  Descriptions of the material terms of the First Amendment and the Second Amendment were included under the captions “PROPOSAL 3:  APPROVAL OF THE MATERIAL TERMS OF THE PERFORMANCE GOALS IN THE FIRST AMENDMENT TO THE WORTHINGTON INDUSTRIES, INC. AMENDED AND RESTATED 1997 LONG-TERM INCENTIVE PLAN” and “PROPOSAL 4:  APPROVAL OF THE SECOND AMENDMENT TO THE WORTHINGTON INDUSTRIES, INC. AMENDED AND RESTATED 1997 LONG-TERM INCENTIVE PLAN,” respectively, in the Registrant’s definitive Proxy Statement for the 2013 Annual Meeting as filed with the Securities and Exchange Commission on August 16, 2013 (the “Registrant’s 2013 Proxy Statement”).
 
Administration
 
The 1997 LTIP is administered by the Compensation Committee.  The Compensation Committee has the authority to select the employees to whom awards are granted, to determine the type of awards granted and the number of common shares covered by such awards, to set the terms, conditions and provisions of such awards and to cancel or suspend awards, in each case in a manner not inconsistent with the 1997 LTIP.  The Compensation Committee is authorized to interpret the 1997 LTIP and to establish, amend and rescind any rules and regulations relating to the 1997 LTIP, to determine the terms and provisions of any agreements entered into with participants in the 1997 LTIP, and to make all other determinations which may be necessary or advisable for the administration of the 1997 LTIP.  Any determination made by the Compensation Committee is final and conclusive.
 
 
 
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Eligibility
 
Prior to the shareholders’ approval of the Second Amendment, any salaried employee of the Registrant or of a 50%-owned subsidiary of the Registrant was eligible to be selected by the Compensation Committee to receive an award under the 1997 LTIP.  Following approval of the Second Amendment, the Compensation Committee may now grant an award under the 1997 LTIP to any common law employee of the Registrant, a 50%-owned direct or indirect subsidiary of the Registrant, or any other entity in which the Registrant has a 20% or greater direct or indirect equity interest and which is designated as a “subsidiary” by the Compensation Committee for purposes of the 1997 LTIP.
 
Types of Awards
 
Under the 1997 LTIP, the Compensation Committee may grant the following types of awards: (a) non-qualified stock options (“NSOs”); (b) SARs, in tandem with NSOs or free-standing; (c) restricted common shares (also referred to as “restricted stock”); (d) performance awards (in the form of performance shares or performance units) subject to the achievement of performance goals during a specified performance period; and (e) other awards of common shares or awards valued in whole or in part by reference to, or otherwise based upon, common shares or other property.  Although the 1997 LTIP permitted the granting of incentive stock options prior to August 7, 2007, no incentive stock options were granted under the 1997 LTIP.
 
NSOs
 
The Compensation Committee may grant NSOs either alone or in addition to other awards.  The exercise price of each NSO is determined by the Compensation Committee, but may not be less than 100% of the fair market value of the common shares on the date of the grant of the NSO.  The term of each NSO is fixed by the Compensation Committee and, pursuant to the provisions of the Second Amendment, may not exceed ten years.  NSOs become exercisable at such time or times as determined by the Compensation Committee and may be exercised by payment in full of the exercise price, either in cash or, at the discretion of the Compensation Committee, in whole or in part, in common shares or other consideration (including, if permitted by applicable law, outstanding awards) having a fair market value on the date the NSO is exercised equal to the exercise price.
 
SARs
 
The Compensation Committee may grant SARs which are either free-standing or granted in tandem with NSOs (either at the time of or after the grant of the related NSO but prior to the exercise, termination or expiration of the related NSO).  No SARs have been granted under the 1997 LTIP to date.  Upon exercise of an SAR, the holder is entitled to receive the excess of the fair market value of the common shares for which the SAR is exercised as of the exercise date over the grant price of the SAR.  The grant price (which may not be less than the fair market value of the common shares on the date of grant) and other terms of the SAR will be determined by the Compensation Committee.  The Second Amendment provides that the term of an SAR may not exceed ten years.  Payment by the Company upon the exercise of an SAR will be made in cash, common shares, other property or any combination thereof, as the Compensation Committee determines.  Any SAR related to an NSO will terminate and no longer be exercisable upon the exercise or termination of the related NSO and any NSO related to an SAR will terminate and no longer be exercisable upon the exercise or termination of the related SAR.
 
 
 
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Restricted Stock
 
The Compensation Committee may grant restricted stock awards either alone or in addition to other awards.  Restricted stock may not be transferred by the recipient until the restrictions established by the Compensation Committee lapse.  Unless otherwise determined by the Compensation Committee, recipients of restricted stock awards are not required to provide consideration other than the rendering of services or the payment of any minimum amount required by law.  Each recipient of a restricted stock award will have all of the rights of a shareholder of the Company, including the right to vote the underlying common shares and the right to receive any cash dividends related to the underlying common shares, unless the Compensation Committee otherwise determines.  If a participant’s employment terminates during the restriction period, the participant will forfeit all restricted stock still subject to restriction, unless otherwise authorized by the Compensation Committee.
 
Performance Awards
 
The Compensation Committee may grant performance awards either alone or in addition to other awards.  The Compensation Committee has selected primarily multiple-year performance periods during which performance goals determined by the Compensation Committee are measured for the purpose of determining the extent to which a performance award has been earned.  The performance periods associated with the performance awards granted under the 1997 LTIP have generally covered three fiscal years although the Compensation Committee has also periodically selected six-month and quarterly performance periods.  The performance levels to be achieved for each performance period and the amount of the performance award to be distributed are conclusively determined by the Compensation Committee.  Performance awards may be paid in cash, common shares or a combination thereof, as the Compensation Committee determines.  The outstanding performance award agreements generally provide that upon termination of employment, a participant’s performance awards are forfeited.  However, if termination of employment is due to death, disability or retirement, a pro rata payout will be made for performance periods ending within 24 months after termination based on the number of months of employment completed by the participant during the performance period before the effective date of termination, provided that the applicable performance goals are achieved.  No payout is to be made for performance periods ending more than 24 months after termination of employment.
 
Other Stock Unit Awards
 
The Compensation Committee is also authorized to grant to participants, either alone or in addition to other awards granted under the 1997 LTIP, awards of common shares and other awards that are valued in whole or in part by reference to, or are otherwise based on, common shares or other property (“other stock unit awards”).  Other stock unit awards may be issued for no cash consideration or for such minimum consideration as may be required by applicable law or for such other consideration as determined by the Compensation Committee and may be settled in common shares, cash or any other form of property in the discretion of the Compensation Committee.  Common shares (including securities convertible into common shares) purchased pursuant to purchase rights granted under other stock unit awards may be purchased for such consideration as the Compensation Committee determines, which price may not be less than the fair market value of such common shares or other securities on the date of grant.
 
 
 
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Performance Goals
 
The 1997 LTIP provides that if the Compensation Committee determines at the time a restricted stock award, a performance award or an other stock unit award is granted to a participant that the participant is or is likely to be a “covered employee” (for purposes of Section 162(m)) at the time the participant recognizes income for federal income tax purposes in connection with the award, then the Compensation Committee may provide as to such award that the lapsing of restrictions thereon and the distribution of cash or common shares pursuant thereto, as applicable, will be subject to the achievement of one or more objective performance goals established by the Compensation Committee.  As amended by the First Amendment, these performance goals may be based on the achievement levels of one or any combination of the following:
 
•  
Income or earnings (before or after interest, taxes, depreciation, amortization and/or other items);
•  
Earnings per common share;
•  
Economic value added;
•  
Sales or revenues;
•  
Growth;
•  
Operating income;
•  
Return measures (including, but not limited to, return on assets, capital, invested capital, equity or revenue);
•  
Cash flow (including, but not limited to, operating cash flow, free cash flow, cash flow return on equity or cash flow return on investment);
•  
Gross, operating or other margins;
•  
Productivity ratios or other productivity measures;
•  
Common share price (including, but not limited to, growth measures and total shareholder return);
•  
Expense reduction, expense targets or cost control;
•  
Operating or other efficiencies;
•  
Market share;
•  
Developing new markets, new products and/or new lines of revenue; or
•  
Identifying and completing acquisitions.
 
 
 
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Such performance goals may be stated in absolute terms or relative to comparison entities, indices or other measures to be achieved during a performance period and may be applied solely with reference to the Registrant or a subsidiary of the Registrant (or an affiliate, business unit or division of the Registrant or a subsidiary of the Registrant) or relatively between the Registrant or a subsidiary of the Registrant (or an affiliate, business unit or division of the Registrant or a subsidiary of the Registrant) and one or more unrelated entities or business units or indices.
 
The Compensation Committee may provide in any performance goal that any evaluation of performance may include or exclude the impact of specific items related to the time period over which performance is evaluated including the following:  (i) asset write-downs; (ii) litigation or claim judgments or settlements; (iii) changes in or the effects of tax laws, accounting principles (or interpretations thereof), accounting methods (including the differences between LIFO and FIFO accounting methods), or other laws or provisions affecting reported results; (iv) any reorganization or restructuring program or restructuring costs; (v) extraordinary or non-recurring items; (vi) acquisitions or divestitures; and (vii) foreign exchange gains and losses.  To the extent such inclusions or exclusions affect an award that is intended to be qualified performance-based compensation under Section 162(m), they must be prescribed in a form that meets the requirements of Section 162(m) for deductibility.
 
The performance goals must be set by the Compensation Committee within the time period prescribed by, and otherwise comply with the requirements of, Section 162(m).
 
Limitations on Number and Amount of Awards
 
Under the 1997 LTIP, no participant may be granted awards in any one calendar year with respect to more than 200,000 common shares.  In addition, the maximum value of the property, including cash, that may be paid or distributed to any participant pursuant to a grant of performance awards valued by reference to a designated amount of property other than common shares (“performance units”) made in any one calendar year is $2,500,000.
 
Common Shares Subject to 1997 LTIP
 
Subject to adjustment as described below, the Second Amendment increased the maximum number of common shares issuable over the life of the 1997 LTIP from 4,500,000 common shares to 6,500,000 common shares.
 
If any common shares subject to any award under the 1997 LTIP are forfeited, any award terminates or expires unexercised or any award is settled for cash or other property or exchanged for other awards, the common shares subject to such award will again be available for grant pursuant to the 1997 LTIP.  The number of common shares available for awards under the 1997 LTIP will also be increased by the number of common shares withheld by or tendered to the Registrant in connection with the payment of the exercise price of an NSO under the 1997 LTIP.  The Second Amendment, however, prohibits common shares which are the subject of NSOs or SARs granted on or after September 26, 2013 from being available for future awards under the 1997 LTIP, even if such NSO or SAR is forfeited, terminated, expires unexercised, settled in cash or property other than common shares or exchanged for another award or the common shares subject to such NSO or SAR can otherwise no longer be issued.
 
 
 
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The common shares deliverable under the 1997 LTIP may consist in whole or in part of either authorized and unissued common shares or issued common shares which have been reacquired by the Registrant.
 
In the event of any stock dividend, stock split, recapitalization, reorganization, merger, consolidation, spin-off, reverse stock split, exchange of shares or similar transaction, or other change in corporate structure or capitalization affecting the common shares or the price thereof, the Compensation Committee will make such substitution or adjustment in the aggregate number or class of shares which may be delivered under the 1997 LTIP, in the aggregate or to any one participant, and in the number, class and option price or exercise price of shares subject to the outstanding awards granted under the 1997 LTIP (including the substitution of similar options to purchase the shares of, or other awards denominated in the shares of, another company) as the Compensation Committee deems to be appropriate to maintain the purpose of the original grant.  Any such adjustment will be made consistent with the requirements of Section 409A of the Internal Revenue Code, to the extent applicable.
 
The Second Amendment prohibits the Compensation Committee, without obtaining shareholder approval and except for the adjustments made as described in the preceding paragraph, from (i) amending the terms of an outstanding award to reduce the option price of an outstanding NSO or the grant price of an outstanding SAR; (ii) cancelling an outstanding NSO or SAR in exchange for NSOs or SARs with an option price or grant price, as applicable, that is less than the option price or grant price of the original NSO or SAR; (iii) cancelling an outstanding NSO or SAR with an option price or grant price, as applicable, which is above the current fair market value of the common shares underlying the NSO or SAR in exchange for another award, cash or other securities; (iv) taking any other action that is treated as a “repricing” under generally accepted accounting principles; or (v) taking any other action that has the effect of “repricing” an award, as defined under the applicable rules of the New York Stock Exchange.
 
The Compensation Committee is authorized to make adjustments in performance award goals or in the terms and conditions of other awards in recognition of unusual or non-recurring events affecting the Registrant or its financial statements or changes in applicable laws, regulations or accounting principles.  However, with respect to any award subject to performance goals intended to comply with Section 162(m), the Compensation Committee may not adjust upwards the amount payable under the award, nor may the Compensation Committee waive the achievement of the applicable performance goals except in the case of the death or disability of the participant.
 
Nonassignability of Awards
 
Unless the Compensation Committee determines otherwise at the time an award is granted, no award granted under the 1997 LTIP may be sold, assigned, transferred, pledged or otherwise encumbered by a participant, otherwise than by will, by designation of a beneficiary to exercise the participant’s rights with respect to the award after the participant’s death, or by the laws of descent and distribution.
 
 
 
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Amendment and Termination
 
The Board may amend, alter or discontinue the 1997 LTIP, provided that no such action may impair the rights of a participant under an outstanding award without the participant’s consent.  In addition, without shareholder approval, no amendment may be made which would (i) increase the total number of common shares reserved for delivery under the 1997 LTIP, (ii) change the employees or class of employees eligible to participate in the 1997 LTIP, or (iii) otherwise require shareholder approval under applicable law or to satisfy the requirements imposed by Section 162(m) or the rules of any securities exchange on which the Registrant’s securities are listed or traded.
 
Change in Control
 
To maintain all of the participants’ rights in the event of a “change in control” of the Registrant, unless the Compensation Committee determines otherwise at the time of grant with respect to a particular award:
 
  
any NSOs and SARs outstanding as of the date the change in control is determined to have occurred, and which are not then exercisable and vested, will become fully exercisable and vested to the full extent of the original grant; however, if an SAR is held by a participant who is subject to Section 16(b) of the Securities Exchange Act of 1934, as amended (a “Section 16(b) participant”), the SAR will not become fully vested and exercisable unless the SAR has been outstanding for at least six months;
 
  
the restrictions applicable to any restricted stock award will lapse, and the underlying common shares will become free of all restrictions and become fully vested and transferable to the full extent of the original grant;
 
  
all performance awards will be considered to be earned and payable in full, and any other restriction will lapse and the performance awards will be immediately settled or distributed; and
 
  
the restrictions and other conditions applicable to any other stock unit awards or any other awards will lapse, and the other stock unit awards or other awards will become free of all restrictions or conditions and become fully vested and transferable to the full extent of the original grant.
 
However, for NSOs, restricted stock awards and performance awards granted in Fiscal 2012 and later, a double trigger provision has been added by the Compensation Committee and the change in control must be followed by an actual or constructive termination of employment for the foregoing provisions to apply.
 
In addition, the Compensation Committee may allow participants holding NSOs to elect, during the 60-day period following the change in control, to surrender the NSOs (or any portion thereof) which have not been exercised in exchange for a cash payment equal to the change in control price per share (as defined in the 1997 LTIP) over the exercise price per share.
 
 
 
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For purposes of the 1997 LTIP, a change in control of the Registrant will be deemed to have occurred when any person, alone or together with its affiliates or associates, has acquired or obtained the right to acquire the beneficial ownership of 25% or more of the Registrant’s outstanding common shares, unless such person is:
 
  
the Registrant;
 
  
any employee benefit plan of the Registrant or a trustee of or fiduciary with respect to any such plan when acting in that capacity; or
 
  
any person who, on September 18, 1997, was an affiliate of the Registrant owning in excess of 10% of the Registrant’s outstanding common shares and the respective successors, executors, legal representatives, heirs and legal assigns of such person.
 

Approval of the First Amendment to and the Material Terms of the Performance
Criteria under the Worthington Industries, Inc. Annual Incentive Plan for Executives
 
At the 2013 Annual Meeting, the Registrant’s shareholders approved the First Amendment to the Worthington Industries, Inc. Annual Incentive Plan for Executives and also approved the performance criteria set forth in the Worthington Industries, Inc. Annual Incentive Plan for Executives, as amended by the First Amendment (as so amended, the “Executive Incentive Plan”).  The Executive Incentive Plan provides for the payment of cash incentive compensation to participants if specified performance objectives are achieved.  The Executive Incentive Plan is intended to provide compensation which qualifies as “qualified performance-based compensation” within the meaning of Section 162(m).
 
Administration
 
The Executive Incentive Plan is administered by the Compensation Committee.  The Compensation Committee is authorized to: (1) designate participants who may be granted performance awards under the Executive Incentive Plan; (2) identify performance objectives that must be achieved during a performance period specified by the Compensation Committee as a condition to the payment of incentive compensation; and (3) specify the amount of incentive compensation to be paid if those performance objectives are achieved.
 
Eligibility
 
The Executive Incentive Plan authorizes the Compensation Committee to grant performance awards subject to the satisfaction of performance criteria to officers and other key employees of the Registrant and its 50%-owned subsidiaries.
 
 
 
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Performance Awards
 
The amount of a performance award may be stated as a specific dollar amount, a percentage of a participant’s base salary, a percentage (the sum of which may not be greater than 100%) of an aggregate amount allocable to all or specified groups of participants or in any other objectively determinable matter as determined by the Compensation Committee.  Additionally, the amount of the performance award payable under the Executive Incentive Plan may be stated as a target amount due if applicable performance objectives are satisfied and in larger or smaller increments if the applicable performance objectives are exceeded or only partially satisfied.  During any fiscal year of the Registrant, no participant may receive more than $3,000,000 through the Executive Incentive Plan with respect to any single performance award.
 
The performance objectives that participants must achieve to be paid incentive compensation under the Executive Incentive Plan will be derived from one or more of the performance criteria listed in the First Amendment to the Executive Incentive Plan (or a combination thereof), which include:
 
  
Income or earnings (before or after interest, taxes, depreciation, amortization and/or other items);
  
Earnings per common share;
  
Economic value added;
  
Sales or revenues;
  
Growth;
  
Operating income;
  
Return measures (including, but not limited to, return on assets, capital, invested capital, equity or revenue);
  
Cash flow (including, but not limited to, operating cash flow, free cash flow, cash flow return on equity or cash flow return on investment);
  
Gross, operating or other margins;
  
Productivity ratios or other productivity measures;
  
Common share price (including, but not limited to, growth measures and total shareholder return);
  
Expense reduction, expense targets or cost control;
  
Operating or other efficiencies;
  
Market share;
  
Developing new markets, new products and/or new lines of revenue; or
  
Identifying and completing acquisitions.
 
Different performance criteria may be used for performance awards granted to individual participants or to groups of participants.  Additionally, the Compensation Committee may apply performance criteria solely with reference to the Registrant or a subsidiary of the Registrant (or an affiliate, business unit or division of the Registrant or a subsidiary of the Registrant) or relatively between the Registrant or a subsidiary of the Registrant (or an affiliate, business unit or division of the Registrant or a subsidiary of the Registrant) and one or more unrelated entities, business units or indices and may state performance objectives in absolute terms or relative to comparison entities, indices or other measures to be achieved during a performance period.
 
 
 
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The Compensation Committee may provide in any performance award that any evaluation of performance may include or exclude the impact of specific items related to the performance period including:
 
  
asset write-downs;
  
litigation or claim judgments or settlements;
  
changes in or the effects of tax laws, accounting principles (or interpretations thereof), accounting methods (including the differences between LIFO and FIFO accounting methods), or other laws or provisions affecting reported results;
  
any reorganization or restructuring program or restructuring costs;
  
extraordinary or non-recurring items;
  
acquisitions or divestitures; and
  
foreign exchange gains and losses.
 
To the extent inclusions or exclusions affect performance awards to Section 162(m) covered employees, they will be prescribed in a manner that meets the requirements of Section 162(m).  Additionally, the Compensation Committee will, to the extent permitted under Section 162(m), make appropriate adjustments to the performance criteria and/or performance objectives to reflect any stock dividend, stock split, recapitalization, merger, consolidation, combination, spin-off, distribution of assets to shareholders, exchange of shares or similar corporate change.
 
The Compensation Committee must establish performance objectives for each performance award in writing before the outcome of those performance objectives is substantially certain but in no event later than 90 days after the beginning of the applicable performance period or, if earlier, the expiration of 25% of the applicable performance period.
 
Certification and Payment of Performance Awards
 
At the end of each performance period, the Compensation Committee will determine whether each participant achieved the applicable performance objectives with respect to the participant’s performance award and certify those results to the Board along with a statement of the amount (if any) of any incentive compensation earned under the performance award and whether any other material terms were satisfied.  If a participant has not achieved any of the applicable performance objectives, the participant will not receive incentive compensation related to the performance award for that performance period and no substitute amount will be paid under any other arrangement.
 
Unless a participant makes a valid election under a deferred compensation plan maintained by the Registrant or one of its subsidiaries, if the participant achieves the applicable performance objectives, the stipulated incentive compensation will be paid in a single lump sum cash payment no later than the 15 th day of the third month following the end of the participant’s first taxable year in which such incentive compensation is no longer subject to a substantial risk of forfeiture or, if later, the 15 th day of the third month following the end of the first taxable year of the Registrant in which such incentive compensation is no longer subject to a substantial risk of forfeiture.  The Registrant will withhold from the incentive compensation to be paid an amount sufficient to satisfy federal, state and local withholding tax requirements.
 
 
 
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Termination of Employment
 
A participant whose employment terminates for any reason other than death, disability (as defined in the Executive Incentive Plan) or retirement (as defined in the Executive Incentive Plan) before the end of a performance period will forfeit any right to receive any incentive compensation under a performance award for that performance period.  However, a participant whose employment terminates because of death, disability or retirement will receive a prorated amount of incentive compensation for the performance period, but only if the applicable performance objectives are achieved at the end of that performance period.  The amount paid in these circumstances is the product of (a) the incentive compensation the deceased, disabled or retired participant would have received at the end of the performance period, multiplied by (b) the quotient of (i) the number of whole calendar months in which the deceased, disabled or retired participant was employed by the Registrant or one of its subsidiaries and was a participant in the Executive Incentive Plan during the performance period, divided by (ii) the total number of whole calendar months in the performance period.  If a participant’s employment terminates for any reason except cause (as defined in the Executive Incentive Plan) after the end of the performance period but prior to the payment of any incentive compensation earned with respect to that performance period, the participant will be entitled to payment of the incentive compensation in accordance with the terms of the Executive Incentive Plan.
 
Change in Control
 
In general, unless otherwise determined by the Compensation Committee or specified in a written agreement between a participant and the Registrant or one of its subsidiaries, if, during a performance period, (a) a change in control (as defined in the Executive Incentive Plan) occurs and (b) on or after the date of the change in control, the participant’s employment terminates for any reason, the performance award of such participant will be considered earned and payable as of the date of the participant’s termination of employment in the amount designated as “target” for such performance award and, unless the participant has made a valid election under a deferred compensation plan maintained by the Registrant or one of its subsidiaries, will be paid within 30 days following the date of the participant’s termination of employment.
 
Amendment and Termination
 
The Compensation Committee may at any time, and without the consent of any participant, amend, revise, suspend or discontinue the Executive Incentive Plan, in whole or in part, subject to any shareholder approval requirement of applicable law, rules or regulations.  However, the Compensation Committee may not amend the Executive Incentive Plan to change the method for determining incentive compensation which may be paid or the performance criteria without the approval of the majority of votes cast by the shareholders of the Registrant in a separate vote to the extent required by Section 162(m).
 
 
 
-13-

 
 
Transferability
 
Performance awards granted under the Executive Incentive Plan may not be alienated, assigned, pledged, encumbered, transferred, sold or otherwise disposed of prior to actual receipt and any attempt to alienate, assign, pledge, encumber, transfer, sell or otherwise make a disposition prior to such receipt, or any levy, attachment, execution or similar process upon any such rights or benefits, will be null and void.
 
The foregoing description of the Executive Incentive Plan is qualified in its entirety by reference to the complete terms of the Worthington Industries, Inc. Annual Incentive Plan for Executives, which is included as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, dated September 30, 2008 and filed with the SEC on that same date, and incorporated herein by this reference, and the First Amendment to the Worthington Industries, Inc. Annual Incentive Plan for Executives, which is included with this Current Report on Form 8-K as Exhibit 10.5 and incorporated herein by this reference.  A description of the material terms of the Worthington Industries, Inc. Annual Incentive Plan for Executives, as amended by the First Amendment thereto, was included under the caption “PROPOSAL 5: APPROVAL OF THE FIRST AMENDMENT TO AND THE MATERIAL TERMS OF THE PERFORMANCE CRITERIA UNDER THE WORTHINGTON INDUSTRIES, INC. ANNUAL INCENTIVE PLAN FOR EXECUTIVES” in the Registrant’s 2013 Proxy Statement.
 
Reduction in Authorized Number of Common Shares to be Available for Issuance Under the Worthington Industries, Inc. Amended and Restated 2003 Stock Option Plan
 
On June 26, 2013, the Board adopted an amendment to the Worthington Industries, Inc. Amended and Restated 2003 Stock Option Plan (the “A&R 2003 Plan”) which would reduce the authorized number of common shares available for issuance under the A&R 2003 Plan by 600,000 common shares if the Second Amendment to the 1997 LTIP were approved by the Registrant’s shareholders at the 2013 Annual Meeting.  The amendment to the A&R 2003 Plan became effective on September 26, 2013, upon the approval of the Second Amendment to the 1997 LTIP.  As a result, the maximum number of common shares authorized for issuance under the A&R 2003 Plan has been reduced from 7,000,000 common shares to 6,400,000 common shares.  The First Amendment to the Worthington Industries, Inc. Amended and Restated 2003 Stock Option Plan, reflecting this reduction in the authorized number of common shares available for issuance, is included with this Current Report on Form 8-K as Exhibit 10.6 and incorporated herein by this reference.
 
Reduction in Authorized Number of Common Shares to be Available for Issuance Under the Worthington Industries, Inc. 2010 Stock Option Plan
 
On June 26, 2013, the Board adopted an amendment to the Worthington Industries, Inc. 2010 Stock Option Plan (the “2010 Plan”) which would reduce the authorized number of common shares available for issuance under the 2010 Plan by 2,500,000 common shares if the Second Amendment to the 1997 LTIP were approved by the Registrant’s shareholders at the 2013 Annual Meeting.  The amendment to the 2010 Plan became effective on September 26, 2013, upon the approval of the Second Amendment to the 1997 LTIP.  As a result, the maximum number of common shares authorized for issuance under the 2010 Plan has been reduced from 6,000,000 common shares to 3,500,000 common shares.  The First Amendment to the Worthington Industries, Inc. 2010 Stock Option Plan, reflecting this reduction in the authorized number of common shares available for issuance,  is included with this Current Report on Form 8-K as Exhibit 10.7 and incorporated herein by this reference.
 
 
 
-14-

 
 
Item 5.07. Submission of Matters to a Vote of Security Holders.
 
On September 26, 2013, the Registrant held the 2013 Annual Meeting at the Registrant’s executive offices located at 200 Old Wilson Bridge Road, Columbus, Ohio. At the close of business on August 6, 2013, the record date for the 2013 Annual Meeting, there were a total of 70,461,782 common shares of the Registrant outstanding and entitled to vote. At the 2013 Annual Meeting, 63,111,059 or 89.57% of the common shares outstanding and entitled to vote, were represented by proxy or in person and, therefore, a quorum was present.
 
The vote on proposals presented for shareholder vote at the 2013 Annual Meeting was as follows:
 
Proposal 1 — Election of Directors:
 
 
Votes For
Votes Withheld
Abstain
Broker Non-Votes
Kerrii B. Anderson
45,257,322
11,673,983
55,524
6,124,230
John P. McConnell
53,725,897
3,214,997
45,935
6,124,230
Mary Schiavo
45,236,142
11,687,273
63,414
6,124,230
         

At the 2013 Annual Meeting, each of Kerrii B. Anderson, John P. McConnell and Mary Schiavo was elected as a director of the Registrant for a three-year term, expiring at the 2016 Annual Meeting of Shareholders.
 
The directors of the Registrant whose terms of office continue until the 2014 Annual Meeting of Shareholders are: Michael J. Endres, Ozey K. Horton, Jr., Peter Karmanos, Jr. and Carl A. Nelson, Jr.
 
The directors of the Registrant whose terms of office continue until the 2015 Annual Meeting of Shareholders are: John B. Blystone, Mark C. Davis and Sidney A. Ribeau.
 
Proposal 2 — Approval of the Advisory Resolution on Executive Compensation:
 
   
Votes For
 
Votes Against
 
 
Abstain
 
Broker
Non-Votes
   
54,445,556
 
2,238,620
 
302,653
 
6,124,230

At the 2013 Annual Meeting, the Registrant’s shareholders approved the advisory resolution on executive compensation.
 
 
 
 
-15-

 
 
Proposal 3 — Approval of the Material Terms of the Performance Goals in the First Amendment to the Worthington Industries, Inc. Amended and Restated 1997 Long-Term Incentive Plan:
 
   
Votes For
 
Votes Against
 
 
Abstain
 
Broker
Non-Votes
   
55,706,856
 
993,741
 
286,232
 
6,124,230

At the 2013 Annual Meeting, the Registrant’s shareholders approved the material terms of the performance goals in the First Amendment to the Worthington Industries, Inc. Amended and Restated 1997 Long-Term Incentive Plan.
 
Proposal 4 — Approval of the Second Amendment to the Worthington Industries, Inc. Amended and Restated 1997 Long-Term Incentive Plan:
 
   
Votes For
 
Votes Against
 
 
Abstain
 
Broker
Non-Votes
   
44,361,819
 
12,319,515
 
305,495
 
6,124,230

At the 2013 Annual Meeting, the Registrant’s shareholders approved the Second Amendment to the Worthington Industries, Inc. Amended and Restated 1997 Long-Term Incentive Plan .
 
Proposal 5 — Approval of the First Amendment to and the Material Terms of the Performance Criteria under the Worthington Industries, Inc. Annual Incentive Plan for Executives:
 
   
Votes For
 
Votes Against
 
 
Abstain
 
Broker
Non-Votes
   
55,752,261
 
922,077
 
312,491
 
6,124,230

At the 2013 Annual Meeting, the Registrant’s shareholders approved the First Amendment to and the material terms of the performance criteria under the Worthington Industries, Inc. Annual Incentive Plan for Executives, as amended by the First Amendment thereto.
 
Proposal 6 — Ratification of the Selection of KPMG LLP as the Independent Registered Public Accounting Firm of the Registrant for the Fiscal Year ending May 31, 2014:
 
 
Votes For
 
Votes Against
 
Abstain
 
62,518,979
 
517,708
 
74,372

The shareholders of the Registrant ratified the appointment of KPMG LLP as the Registrant’s independent registered public accounting firm for the fiscal year ending May 31, 2014.
 

 
-16-

 
 
Item 9.01 .         Financial Statements and Exhibits .
 
(a) through (c):  Not applicable.
 
(d) Exhibits :
 
The following exhibits are incorporated by reference into or are included with this Current Report on Form 8-K:
 
Exhibit No.
Description
 
10.1
Worthington Industries, Inc. Amended and Restated 1997 Long-Term Incentive Plan (amendment and restatement effective as of November 1, 2008) (incorporated herein by reference to Exhibit 10.8 to the Quarterly Report on Form 10-Q of Worthington Industries, Inc. for the quarterly period ended November 30, 2008 (SEC File No. 001-08399))
10.2
First Amendment to the Worthington Industries, Inc. Amended and Restated 1997 Long-Term Incentive Plan (First Amendment effective as of June 26, 2013; performance goals approved by shareholders on September 26, 2013) (filed herewith)
10.3
Second Amendment to the Worthington Industries, Inc. Amended and Restated 1997 Long-Term Incentive Plan (Second Amendment approved by shareholders and effective September 26, 2013) (filed herewith)
10.4
Worthington Industries, Inc. Annual Incentive Plan for Executives (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of Worthington Industries, Inc. dated September 30, 2008 and filed with the SEC on the same date (SEC File No. 001-08399))
10.5
First Amendment to the Worthington Industries, Inc. Annual Incentive Plan for Executives (First Amendment approved by shareholders and effective on September 26, 2013) (filed herewith)
10.6
First Amendment to the Worthington Industries, Inc. Amended and Restated 2003 Stock Option Plan (First Amendment effective September 26, 2013) (filed herewith)
10.7
First Amendment to the Worthington Industries, Inc. 2010 Stock Option Plan (First Amendment effective September 26, 2013) (filed herewith)
99.1
Transcript of Worthington Industries, Inc. Earnings Conference Call for First Quarter of Fiscal 2014 (Fiscal Quarter ended August 31, 2013), held on September 26, 2013

 
 
-17-

 
 
SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
       WORTHINGTON INDUSTRIES, INC.
   
   
Date:  October 1, 2013 By:        /s/ Dale T. Brinkman                                                        
  Dale T. Brinkman, Vice President –  
  Administration, General Counsel and Secretary
 
 

-18-




Exhibit 10.2
 
FIRST AMENDMENT TO THE
WORTHINGTON INDUSTRIES, INC.
AMENDED AND RESTATED 1997 LONG-TERM INCENTIVE PLAN
 
 
This First Amendment (this “First Amendment”) to the Worthington Industries, Inc. Amended and Restated 1997 Long-Term Incentive Plan (the “Plan”) is effective as of June 26, 2013.
 
WHEREAS , pursuant to Section 12 of the Plan, the Board of Directors (the “Board”) of Worthington Industries, Inc. (the “Company”) may amend the Plan without participant consent provided that the amendment does not impair the rights of a participant under an award granted under the Plan and without the approval of the shareholders except to increase the total number of common shares of the Company available for issuance under the Plan or to change the employees or class of employees eligible to participate in the Plan; and
 
WHEREAS , the Board desires to amend the Plan to align the performance goals upon which the grant or vesting of awards under the Plan may be based with the performance criteria which may be used in establishing the conditions of a performance award under the Worthington Industries, Inc. Annual Incentive Plan for Executives;
 
NOW, THEREFORE, the Board hereby amends the Plan as follows:
 
1.   Section 11(b) of the Plan is hereby deleted in its entirety and the following is substituted therefor:
 
 (b)   Performance Goals.   If an Award is subject to this Section 11, then the lapsing of restrictions thereon and the distribution of cash or Shares pursuant thereto, as applicable, shall be subject to the achievement of one or more objective performance goals established by the Committee, which shall be based on the attainment of one or any combination of the following:
 
  (i)    Income or earnings (before or after interest, taxes, depreciation, amortization and/or other items);
  (ii)    Earnings per Share;
  (iii)    Economic value added;
  (iv)    Sales or revenues;
  (v)    Growth;
  (vi)    Operating income;
  (vii)     Return measures (including, but not limited to, return on assets, capital, invested capital, equity or revenue);
  (viii)    Cash flow (including, but not limited to, operating cash flow, free cash flow, cash flow return on equity or cash flow return on investment);
  (ix)    Gross, operating or other margins;
  (x)    Productivity ratios or other productivity measures;
  (xi)     Share price (including, but not limited to, growth measures and total shareholder return);
  (xii)    Expense reduction, expense targets or cost control;
  (xiii)    Operating or other efficiencies;
  (xiv)    Market share;
  (xv)    Developing new markets, new products and/or new lines of revenue; or
  (xvi)    Identifying and completing acquisitions.
 
Such performance goals may be stated in absolute terms or relative to comparison entities, indices or other measures to be achieved during a Performance Period and may be applied solely with reference to the Company or an affiliate, business unit or division of the Company or relatively between the Company or an affiliate, business unit or division of the Company and one or more unrelated entities or business units or indices.
 
 
 

 
 
The Committee may provide in any performance goal that any evaluation of performance may include or exclude the impact of specific items related to the time period over which performance is evaluated including the following:  (i) asset write-downs; (ii) litigation or claim judgments or settlements; (iii) changes in or the effects of tax laws, accounting principles (or interpretations thereof), accounting methods (including the differences between LIFO and FIFO accounting methods), or other laws or provisions affecting reported results; (iv) any reorganization or restructuring program or restructuring costs; (v) extraordinary or non-recurring items; (vi) acquisitions or divestitures; and (vii) foreign exchange gains and losses.  To the extent such inclusions or exclusions affect an Award subject to this Section 11, they shall be prescribed in a form that meets the requirements of Section 162(m) of the Code and the Treasury Regulations promulgated thereunder for deductibility.
 
Such performance goals shall be set by the Committee within the time period prescribed by, and shall otherwise comply with the requirements of, Section 162(m) of the Code and the Treasury Regulations promulgated thereunder.
 
IN WITNESS WHEREOF , the Company has caused this First Amendment to the Plan to be executed by the Company’s duly authorized officer effective as of the date first set forth above.
 
 
WORTHINGTON INDUSTRIES, INC.
 
 
By:             /s/Dale T. Brinkman                                                             
Name:         Dale T. Brinkman                                                                 
Title:           Vice President-Administration and General Counsel   
 
 
 
 
2




EXHIBIT 10.3
 
SECOND AMENDMENT TO THE
WORTHINGTON INDUSTRIES, INC.
AMENDED AND RESTATED 1997 LONG-TERM INCENTIVE PLAN
 
This Second Amendment (this “Second Amendment”) to the Worthington Industries, Inc. Amended and Restated 1997 Long-Term Incentive Plan (the “Plan”) is adopted on June 26, 2013.
 
WHEREAS , pursuant to Section 12 of the Plan, the Board of Directors (the “Board”) of Worthington Industries, Inc. (the “Company”) may amend the Plan, with the approval of the shareholders of the Company, in order to increase the total number of common shares available for issuance under the Plan or to change the employees or class of employees eligible to participate in the Plan but without participant consent provided that the amendment does not impair the rights of a participant under an award granted under the Plan; and
 
WHEREAS , the Board desires to amend the Plan to increase the total number of common shares available for issuance under the Plan, to change the class of employees eligible to participate in the Plan, and to make other administrative changes to reflect current Company practices;
 
NOW, THEREFORE , the Board hereby amends the Plan, subject to and effective upon approval by the shareholders of the Company, as follows:
 
1.  
The first and second paragraphs of Section 3(b) of the Plan are hereby deleted in their entirety and the following two paragraphs are substituted therefor:
 
The maximum number of Shares in respect of which Awards may be granted under the Plan, subject to adjustment as provided in Section 3(c) of the Plan, shall be 6,500,000.  Notwithstanding the foregoing, in no event shall more than 1,000,000 Shares be cumulatively available for Awards of Incentive Stock Options under the Plan and provided further that no Participant may be granted Awards in any one calendar year with respect to more than 200,000 Shares.
 
For the purpose of computing the total number of Shares available for Awards under the Plan, there shall be counted against the foregoing limitations the number of Shares subject to issuance upon exercise or settlement of Awards as of the dates on which such Awards are granted.  Subject to the following sentence, (a) any Shares which are used as full or partial payment to Worthington by a Participant of the option price of Shares upon exercise of an Option shall again be available for Awards under the Plan; and (b) shares which were previously subject to Awards shall again be available for Awards under the Plan if any such Awards are forfeited, terminated, expire unexercised, settled in cash or property other than Shares or exchanged for other Awards (to the extent of such forfeiture, termination or expiration of such Awards), or if the Shares subject thereto can otherwise no longer be issued.  The above notwithstanding, any Shares which are the subject of Options or of Stock Appreciation Rights granted on or after September 26, 2013, shall not again be available for Awards under the Plan, even if such Option or Stock Appreciation Right is forfeited, terminated, expires unexercised, settled in cash or property other than Shares or exchanged for another Award or the Shares subject to such Option or Stock Appreciation Right can otherwise no longer be issued.
 
2.  
Section 3 of the Plan is hereby amended by adding the following subsection (d) to the end thereof:
 
(d)  
Prohibition on Repricing.   Except for adjustments made pursuant to Section 3(c) of the Plan, in no event may the Committee, without obtaining shareholder approval:  (i) amend the terms of an outstanding Award to reduce the option price of an outstanding Option or the grant price of an outstanding Stock Appreciation Right; (ii) cancel an outstanding Option or Stock Appreciation Right in exchange for Options or Stock Appreciation Rights with an option price or grant price, as applicable, that is less than the option price or grant price of the original Option or Stock Appreciation Right; (iii) cancel an outstanding Option or Stock Appreciation Right with an option price or grant price, as applicable, which is above the current Fair Market Value of the Shares underlying the Option or Stock Appreciation Right in exchange for another Award, cash or other securities; (iv) take any other action that is treated as a “repricing” under generally accepted accounting principles; or (v) take any other action that has the effect of “repricing” an Award, as defined under the rules of the securities exchange or other recognized market or quotation system on which the Shares are then listed or traded.
 
 
 

 
 
3.  
Section 13(b) of the Plan is hereby deleted in its entirety and the following shall be substituted therefor:
 
 
(b)
Terms of Awards.   The term of each Award shall be for such period of months or years from the date of its grant as may be determined by the Committee; provided that in no event shall the term of any Option or Stock Appreciation Right exceed a period of 10 years from the date of its grant.
 
4.  
Section 14 of the Plan is hereby amended by deleting the second sentence thereof in its entirety.
 
5.  
Section 15(j) of the Plan is hereby deleted in its entirety and the following is substituted therefor:
 
(j)       “Company” shall mean Worthington and its subsidiaries, direct and indirect.  Subsidiaries of Worthington shall include (i) any entity of which Worthington owns, directly or indirectly, 50% or more of the total combined voting power of all classes of stock, if the entity is a corporation, or of the capital or profits interests, if the entity is a partnership or another form of entity and (ii) any other entity in which Worthington has a 20% or greater direct or indirect equity interest and which is designated as a “Subsidiary” by the Committee for purposes of this Plan; provided, however, that with respect to any Award that is subject to Section 409A of the Code, “Company” shall mean Worthington and its subsidiaries with whom Worthington would be considered a single employer under Sections 414(b) and (c) of the Code, but modified as permitted by Treasury Regulation §1.409A-1(b)(5)(iii)(E)(1).
 
6.  
The first sentence of Section 15(n) of the Plan is hereby deleted in its entirety and the following is substituted therefor:
 
(n) “Employee” shall mean any common law employee of the Company
 
IN WITNESS WHEREOF, the Company has caused this Second Amendment to the Plan to be executed by the Company’s duly authorized officer on June 26, 2013.
 
 
 
WORTHINGTON INDUSTRIES, INC.
 
 
By:             /s/Dale T. Brinkman                                                             
Name:         Dale T. Brinkman                                                                 
Title:           Vice President-Administration                                        
 
 
1




EXHIBIT 10.5
 
FIRST AMENDMENT TO THE
WORTHINGTON INDUSTRIES, INC.
ANNUAL INCENTIVE PLAN FOR EXECUTIVES

 
This First Amendment (this “First Amendment”) to the Worthington Industries, Inc. Annual Incentive Plan for Executives (the “Plan”) is adopted on June 26, 2013.
 
WHEREAS , pursuant to Section 8 of the Plan, the Compensation and Stock Option Committee (the “Committee”) of the Board of Directors (the “Board”) of Worthington Industries, Inc. (the “Company”) may amend the Plan, with the approval of the shareholders of the Company, in order to change the “Performance Criteria” (as defined in the Plan); and
 
WHEREAS , the Committee desires to amend the Plan to align the Performance Criteria which may be used in establishing the conditions of a Performance Award (as defined in the Plan) under the Plan with the performance goals upon which the grant or vesting of awards under the Worthington Industries, Inc. Amended and Restated 1997 Long-Term Incentive Plan may be based;
 
NOW, THEREFORE, the Committee hereby amends the Plan, subject to and effective upon approval by the shareholders of the Company, as follows:
 
 1.
Section 3.4 of the Plan is hereby deleted in its entirety and the following is substituted therefor:
 
3.4   Performance Objectives.   For each Performance Period, the Committee will establish for each Participant the performance objectives that will be applied to determine the amount of Incentive Compensation payable to such Participant under the Plan with respect to a Performance Award.
 
The following Performance Criteria may be used by the Committee in setting performance objectives with respect to the Plan:
 
  (i)    Income or earnings (before or after interest, taxes, depreciation, amortization and/or other items);
  (ii)    Earnings per Common Share;
  (iii)    Economic value added;
  (iv)    Sales or revenues;
  (v)    Growth;
  (vi)    Operating income;
  (vii)     Return measures (including, but not limited to, return on assets, capital, invested capital, equity or revenue);
  (viii)    Cash flow (including, but not limited to, operating cash flow, free cash flow, cash flow return on equity or cash flow return on investment);
  (ix)    Gross, operating or other margins;
  (x)    Productivity ratios or other productivity measures;
  (xi)     Common Share price (including, but not limited to, growth measures and total shareholder return);
  (xii)    Expense reduction, expense targets or cost control;
  (xiii)    Operating or other efficiencies;
  (xiv)    Market share;
  (xv)    Developing new markets, new products and/or new lines of revenue; or
  (xvi)    Identifying and completing acquisitions.
 
Performance Criteria may be stated in absolute terms or relative to comparison entities, indices or other measures to be achieved during a Performance Period.  Performance Criteria may be applied solely with reference to the Company (or any affiliate, Business Unit or division) or relatively between the Company (or any affiliate, Business Unit or division) and one or more unrelated entities or business units or indices.
 
 
 

 
 
The Committee shall establish performance objectives based on one or more Performance Criteria for each Performance Award to a Participant. The terms of the stated performance objectives for each applicable Performance Award must preclude the Committee’s discretion to increase the amount payable to any Section 162(m) Employee that would otherwise be due upon attainment of the performance objectives. The performance objectives specified need not be applicable to all Performance Awards, and may be particular or unique to an individual Participant’s function, duties or Business Unit.
 
The Committee may provide in any Performance Award that any evaluation of performance may include or exclude the impact of specific items related to the Performance Period including the following:  (i) asset write-downs; (ii) litigation or claim judgments or settlements; (iii) changes in or the effects of tax laws, accounting principles (or interpretations thereof), accounting methods (including the differences between LIFO and FIFO accounting methods), or other laws or provisions affecting reported results; (iv) any reorganization or restructuring program or restructuring costs; (v) extraordinary or non-recurring items; (vi) acquisitions or divestitures; and (vii) foreign exchange gains and losses.  To the extent such inclusions or exclusions affect Performance Awards to Section 162(m) Employees, they shall be prescribed in a form that meets the requirements of Section 162(m) of the Code for deductibility.
 
IN WITNESS WHEREOF , the Company has caused this First Amendment to the Plan to be executed by the Company’s duly authorized officer on June 26, 2013.
 
 
 
WORTHINGTON INDUSTRIES, INC.
 
 
By:             /s/Dale T. Brinkman                                                             
Name:         Dale T. Brinkman                                                                 
Title:           Vice President-Administration                                        
 
 
 
1




EXHIBIT 10.6

 
FIRST AMENDMENT TO THE
WORTHINGTON INDUSTRIES, INC.
AMENDED AND RESTATED
2003 STOCK OPTION PLAN


This First Amendment (this “Amendment”) to the Worthington Industries, Inc. Amended and Restated 2003 Stock Option Plan (the “Plan”) is adopted on June 26, 2013.
 
WHEREAS, Worthington Industries, Inc. (“Worthington”) sponsors the Plan; and
 
WHEREAS, Worthington also sponsors the Worthington Industries, Inc. Amended and Restated 1997 Long-Term Incentive Plan (the “A&R 1997 LTIP”); and
 
WHEREAS, on June 26, 2013, the Board of Directors of Worthington (the “Board”) adopted the Second Amendment to the A&R 1997 LTIP, subject to and effective upon shareholder approval at Worthington’s 2013 Annual Meeting of Shareholders, pursuant to which the maximum number of common shares, without par value (the “Common Shares”), of Worthington available for issuance under the A&R 1997 LTIP would be increased from 4,500,000 Common Shares to 6,500,000 Common Shares; and
 
WHEREAS, Worthington desires to amend the Plan to decrease the maximum number of Common Shares of Worthington in respect of which awards may be granted under the Plan from 7,000,000 Common Shares to 6,400,000 Common Shares, with such amendment to become effective upon the approval of the Second Amendment to the A&R 1997 LTIP by Worthington’s shareholders; and
 
WHEREAS, Section 13 of the Plan permits the Board to amend the Plan at any time without shareholder approval, unless shareholder approval is required to satisfy applicable requirements imposed by (a) Rule 16b-3 under the Securities Exchange Act of 1934, as amended (or any successor rule or regulation), (b) applicable requirements of the Internal Revenue Code of 1986, as amended, or (c) the rules of the securities exchange on which Worthington’s securities are listed or traded; and
 
WHEREAS, shareholder approval is not required to decrease the number of Common Shares in respect of which awards may be granted under the Plan;
 
NOW, THEREFORE, the Plan is hereby amended as follows, subject to and effective upon shareholder approval of the Second Amendment to the A&R 1997 LTIP:
 
1.           The first paragraph of Section 5(b) of the Plan is hereby deleted in its entirety and the following is substituted therefor:
 
 
 

 
 
(b)            Common Shares Subject to Plan .  The maximum number of Common Shares in respect of which Awards may be granted under the Plan, subject to adjustment as provided in Section 11 of the Plan, is 6,400,000 Common Shares.  Notwith­standing the foregoing, in no event shall more than 1,000,000 Common Shares be cumulatively available for Awards of Incentive Stock Options under the Plan.  No Participant may be granted Awards under the Plan in any one calendar year with respect to more than 250,000 Common Shares.
 
IN WITNESS WHEREOF, Worthington has caused this Amendment to be executed by its duly authorized officer as of the date first set forth above.
 
 
WORTHINGTON INDUSTRIES, INC.


By: /s/ Dale T. Brinkma n                                         
       Dale T. Brinkman,
       Vice President – Administration,
       General Counsel and Secretary
 
 
 
 
2




EXHIBIT 10.7
 
FIRST AMENDMENT TO THE
WORTHINGTON INDUSTRIES, INC.
2010 STOCK OPTION PLAN


This First Amendment (this “Amendment”) to the Worthington Industries, Inc. 2010 Stock Option Plan (the “Plan”) is adopted on June 26, 2013.
 
WHEREAS, Worthington Industries, Inc. (“Worthington”) sponsors the Plan; and
 
WHEREAS, Worthington also sponsors the Worthington Industries, Inc. Amended and Restated 1997 Long-Term Incentive Plan (the “A&R 1997 LTIP”); and
 
WHEREAS, on June 26, 2013, the Board of Directors of Worthington (the “Board”) adopted the Second Amendment to the A&R 1997 LTIP, subject to and effective upon shareholder approval at Worthington’s 2013 Annual Meeting of Shareholders, pursuant to which the maximum number of common shares, without par value (the “Common Shares”), of Worthington available for issuance under the A&R 1997 LTIP would be increased from 4,500,000 Common Shares to 6,500,000 Common Shares; and
 
WHEREAS, Worthington desires to amend the Plan to decrease the maximum number of Common Shares of Worthington in respect of which awards may be granted under the Plan from 6,000,000 Common Shares to 3,500,000 Common Shares, with such amendment to become effective upon the approval of the Second Amendment to the A&R 1997 LTIP by Worthington’s shareholders; and
 
WHEREAS, Section 12 of the Plan permits the Board to amend the Plan at any time without shareholder approval, unless shareholder approval is required to satisfy applicable requirements imposed by (a) Rule 16b-3 under the Securities Exchange Act of 1934, as amended (or any successor rule or regulation), (b) applicable requirements of the Internal Revenue Code of 1986, as amended, or (c) the rules of the securities exchange on which Worthington’s securities are listed or traded; and
 
WHEREAS, shareholder approval is not required to decrease the number of Common Shares in respect of which awards may be granted under the Plan;
 
NOW, THEREFORE, the Plan is hereby amended as follows, subject to and effective upon shareholder approval of the Second Amendment to the A&R 1997 LTIP:
 
1.           Section 5(b) of the Plan is hereby deleted in its entirety and the following is substituted therefor:
 
(b)            Common Shares Subject to Plan .  The maximum number of Common Shares in respect of which Awards may be granted under this Plan, subject to adjustment as provided in Section 10 of this Plan, is 3,500,000 Common Shares.  Notwith­standing the foregoing, in no event shall more than 500,000 Common Shares be cumulatively available for Awards of Incentive Stock Options under this Plan.  No Participant may be granted Awards under this Plan in any one calendar year with respect to more than 250,000 Common Shares.  Termination of the Plan shall not preclude the Company from complying with the terms of Awards outstanding on the date of termination.
 
 
 

 
 
IN WITNESS WHEREOF, Worthington has caused this Amendment to be executed by its duly authorized officer as of the date first set forth above.
 
 
WORTHINGTON INDUSTRIES, INC.


By:          /s/Dale T. Brinkman               
       Dale T. Brinkman,
       Vice President – Administration,
       General Counsel and Secretary
 
 
2


 


Exhibit 99.1
 
IMAGE
 
 
 
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3

 
SEPTEMBER 26, 2013 / 02:30PM GMT, WOR - Q1 2014 Worthington Industries Earnings Conference Call
 
 
CORPORATE PARTICIPANTS
 
 Cathy Lyttle Worthington Industries - VP of Corporate Communications and IR
 
 John McConnell Worthington Industries - Chairman and CEO
 
 Andy Rose Worthington Industries - VP and CFO
 
 Mark Russell Worthington Industries - President and COO
 

 
CONFERENCE CALL PARTICIPANTS
 
 Martin Englert Jefferies & Co. - Analyst
 
 Curt Siegmeyer Cleveland Research - Analyst
 
 Aldo Mazzaferro Macquarie Securities - Analyst
 

 
 PRESENTATION
 



 

Operator
 
 Good morning, ladies and gentlemen, and welcome to the Worthington Industries first-quarter 2014 earnings call. All participants will be able to listen only until the question-and-answer session of the call. This conference is being recorded at the request of Worthington Industries. If anyone objects, you may disconnect at this time.

I would like to introduce, Ms. Cathy Lyttle, Vice President of Corporate Communications and Investor Relations. Ms. Lyttle, you may begin.

 

 Cathy Lyttle - Worthington Industries - VP of Corporate Communications and IR
 
 Thank you, John. Good morning, everyone. Thanks for joining us on our first-quarter conference call.

Certain statements made on this call are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties and could cause actual results to differ from those suggested. Please refer to our first-quarter earnings release we issued yesterday afternoon for more detail on those factors that could cause actual results to differ materially.

For anyone interested in listening to this call again, a replay will be made available on our Company website.

On the call today are John McConnell, Chairman and Chief Executive Officer; Mark Russell, President and Chief Operating Officer; and Andy Rose, Vice President and Chief Financial Officer. John will begin.

 

 John McConnell - Worthington Industries - Chairman and CEO
 
 Thank you, Cathy. We had a strong quarter and I want to get right to the presentations from Mark and Andy so, Mr. Rose.

 

 Andy Rose - Worthington Industries - VP and CFO
 
 Thank you, John, and good morning, everyone. The Company's performance in the first quarter of fiscal 2013 was once again solid, driven by strong performances at steel, cylinders and several of our joint ventures. Engineered Cabs earnings improved modestly from the prior quarter but were off significantly as compared to last year when earnings peaked.
 
 
 
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4

 
SEPTEMBER 26, 2013 / 02:30PM GMT, WOR - Q1 2014 Worthington Industries Earnings Conference Call
 
Quarterly earnings per share of $0.76 were up $0.27 from the prior year but benefited from a one-time gain and a one-time tax benefit offset by modest restructuring charges. Adjusted for these three items, we earned $0.58 per share.

Inventory holding losses were $0.01 per share loss during the quarter as steel prices remained relatively stable. The unique items during the quarter were as follows. First, miscellaneous income of $11 million related to a non-cash gain on the write-up of our investment in tailor welded blanks, our laser welding business, that plays an important role in vehicle light weighting.

We acquired an additional 10% in the venture and now control 55% of the business.

Second, a one-time tax benefit of $4.5 million related to acquiring control of TWB and the resulting change in our Mexico operation's tax liability.

Third, $2.5 million in SG&A expense accruals for litigation in a cylinders case in a fire involving a small isolated facility at our Austrian cylinder operation.

And finally, net restructuring charges of $0.8 million for the quarter but contained in there was a $4.8 million gain from the sale of our integrated terminal steel warehouse and a $4.6 million impairment on Precision Specialty Metals, our stainless business.

SG&A did increase $12 million this quarter but half of that was due to acquisitions and another $2.5 million was one-time items outlined above. The balance was compensation and benefits.

Cylinders operating income was up almost 30% from $15 million to $19.5 million driven by strong contributions from the energy, retail and heating tank product lines. Double-digit year-over-year volume increases in hand torches and heating tanks appear to be driven by an improving residential construction market.

Effective August 1, 2013, earnings from majority-owned TWB were consolidated in the Steel Processing segment and added $1.5 million in operating income, 45% of which is our partner share and is eliminated in the noncontrolling interest line.

Steel Processing direct volumes were up 5% excluding volumes from TWB while toll volumes declined 6%. Steel saw strength in automotive and agriculture offset by weakness early in the quarter in our coatings business at Delta and Spartan. Volumes at these two facilities have been steadily improving more recently.

Volumes in Engineered Cabs appear to have stabilized while operating income rose a modest $900,000 from the prior quarter due to cost reductions. Operating income was down $5 million from the prior year quarter as earnings were peaking prior to the recent downturn in the sector. The business generated $4.5 million of EBITDA during the quarter before corporate allocations.

Equity income from our joint ventures during the quarter was up $4.3 million led by increases at ClarkDietrich, WAVE and ArtiFlex. Commercial construction activity does appear to be improving helping our construction related businesses. We received dividends of $26.6 million during the quarter including another $8.3 million earnings distribution from ClarkDietrich.

Free cash flow for the quarter was very good at $81 million after capital expenditures of $13 million. In June, the Board of Directors approved a $0.02 per share dividend increase to $0.15 per share payable tomorrow, September 27. Yesterday the Board declared a $0.15 per share dividend for the second quarter payable on December 2013. We also repurchased 880,500 shares for $30.5 million during the quarter at an average price of $34.66.

Our business has been performing well and generating an increasing amount of free cash flow. We will continue to pursue a balanced approach to deploying this capital into acquisitions, capital investment, dividends and share repurchases as opportunities arise.

Debt decreased by $52 million during the quarter. Our balance sheet continues to have modest leverage and significant available capital. At quarter end, we had total funded debt of $469 million and $455 million available under our revolving credit facilities.

The integration of our energy businesses, Palmer Tank and Westerman, continues. Financially and operationally, they are performing well and we have invested in new production capacity at both facilities to meet demand from our customers. We are also pursuing several new opportunities to expand our cylinder manufacturing business while meeting our objectives of higher margins and higher growth markets.

We are pleased with our performance in the first quarter. Our Centers of Excellence continues to improve the performance of our businesses particularly in cylinders and Engineered Cabs where we were fully engaged in identifying and implementing improvement opportunities. Our acquisition team continues to maintain a full pipeline of deals that will enable us to introduce new products to our customers and enter new markets.
 
 
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5

 
SEPTEMBER 26, 2013 / 02:30PM GMT, WOR - Q1 2014 Worthington Industries Earnings Conference Call
 
Finally, there is momentum building with our effort to become more innovative and develop our own proprietary products. We have a strong team of people leading us forward and we are excited about the progress we are making towards increasing the value of our shareholders investment.

I will now pass the call to Mark Russell, who will talk about operations.
 

 Mark Russell - Worthington Industries - President and COO
 
 Thanks, Andy. Let's look first at the joint ventures. As Andy mentioned, we purchased a controlling interest in TWB and the remaining 45% interest was sold to our new partner, Wuhan Iron and Steel Company, or WISCO. We are looking for to working with WISCO to grow this business in North America, as WISCO now takes the leading role formerly held by ThyssenKrupp in the welded blanks market in the rest of the world.

TWB has seven locations in the US and Mexico and we are committed to being a leading provider of welded blanks in the North American market. This is a strong market niche where we can help reduce the weight of cars and trucks in a very cost-effective way.

WAVE continued its string of outstanding profit and operating performance. WAVE continues to find ways to grow both their top and bottom line. One notable example of this is their sales growth in drywall grid which is up over 30% over last year's quarter. WAVE is finding success in drywall grid with the same focus on quality, installation ease and expertise, and solution selling that has for many years driven their outstanding record of growth in the ceiling grid market.

And as we have said, the eventual recovery in commercial construction should also drive a significant increase in WAVE's performance.

Our ClarkDietrich venture with Marubeni-Itochu Steel had a strong quarter and like WAVE, is also well-positioned to capitalize on the eventual recovery in the North American commercial construction market.

Our 11 joint ventures are a very important part of our earnings engine and represent some of our highest margins as well as several outstanding growth opportunities. We will continue to use joint ventures where we find opportunities that may not make sense for us to pursue alone but where with a partner we can see a bright future and strong returns on capital.

Turning to the wholly-owned businesses. Engineered Cabs saw continued flat demand for their products though the supply chain is definitely more balanced now that the major customer inventories have generally been worked off.

The diagnostic stage of our transformation process just concluded at our third facility, which is the flagship operation in South Dakota. We are now moving into the mobilization and implementation stage there and continue to expect transformational improvements that are at least equal to those we have seen previously in the steel business and now in parts of cylinders.

Overall, we are still confident in the long-term prospects for the Cab business and with John Lamprinakos leading an invigorated management team with several new and very capable people.

Customer volume in the steel business for the quarter was fairly consistent with the most recent data published by the Metal Service Center Institute. Our coated products business continues to strengthen with both our Delta, Ohio and Monroe, Michigan galvanizing lines running at higher levels in the quarter.

Demand in automotive remains strong and demand in other key markets is fairly steady.

Cylinders had an impressive quarter that was driven by transformational improvements and of course the strong results from our newly acquired energy businesses. The former Westerman and Palmer businesses have been integrated into a single business unit and we're seeing immediate results from our early work to plug them into our nationwide commercial selling network which has already significantly expanded their customer base and is prompting us to add production capacity there in the form of additional shifts.

On the alternative fuels front, we're working with a number of OEMs in developing and in several cases gearing up to produce new alternative and bi-fuel vehicles including new compressed natural gas and propane, car and truck platforms being introduced by General Motors and Ford.
 
 
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6

 
SEPTEMBER 26, 2013 / 02:30PM GMT, WOR - Q1 2014 Worthington Industries Earnings Conference Call
 
We also saw continued progress in the introduction of our new liquid cryogenic cylinders with several new products in the development pipeline. And commercial scale production of our introductory cryogenic cylinder commencing in our Westerville, Ohio facility this quarter.

Energy, alternative fuels, and cryogenics continue to be among our best growth ideas going forward and we will keep you updated on the fast pace of our progress in these markets in future quarters.

John, back to you.



 John McConnell - Worthington Industries - Chairman and CEO
 
 Thank you, Mark, thank you, Andy. It was a good quarter and we are proud of all members of the Worthington family for their hard work and the results we produced. Looking forward, we remain confident in our ability to deliver a strong performance.

You have consistently heard us speak to the strong contributions from our joint ventures. Because most are not consolidated, we know it can be easy to lose sight of their impact and we want to continue to keep you aware of their significant cash and earnings contributions.

Of course our confidence is derived from much more than the strength of our current joint ventures. It comes from our strategic pillars which were also speak to on a regular basis. At the center of our strategy is our Centers of Excellence, or COE, which is a direct descendent of our successful transformation. We currently have COE teams embedded in each primary business. The mission of our Centers of Excellence teams is to drive innovation, consistently pushing us to improve. They are critical in driving internal, organic improvement.

Our COE teams are a central element in another strategic pillar, the acquisition of companies that meet our criteria for improving our margins while decreasing the volatility of our earnings.

We continue to have a strong acquisition pipeline marginally but not exclusively focused on energy within the cylinder company. Our COE teams play a crucial role in due diligence, integration if an acquisition is completed, and by transferring best practices of an acquired company back to our core businesses.

Lastly, and stealing a phrase from my father, because we believe we have just scratched the surface on what we can accomplish, we remain committed to repurchasing our shares. Combined with our commitment to maintaining an attractive dividend we believe it is an important element in returning value to our shareholders.

At this point we are happy to take any questions you may have.


  QUESTION AND ANSWER
 
 

Operator
 
 (Operator Instructions). Martin Englert, Jefferies.



 Martin Englert - Jefferies & Co. - Analyst
 
 I'm trying to think through the impact of TWB now consolidated within steel. Any detail on a go-forward basis for modeling purposes how we should think about the volumes, EBIT contribution, and also D&A for the overall Company?

 

 Andy Rose - Worthington Industries - VP and CFO
 
 I guess I would point you to the 10-K, Martin, where we list out some of the annual performance measures for the JVs. TWB is listed in there with revenue and operating income. So I would use that as the basis.

 
 
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7

 
SEPTEMBER 26, 2013 / 02:30PM GMT, WOR - Q1 2014 Worthington Industries Earnings Conference Call
 
 

 Martin Englert - Jefferies & Co. - Analyst
 
 Is there any kind of base that you can give us for the volume contribution maybe on a trailing 12 month basis or prior year there?
 
 

 Andy Rose - Worthington Industries - VP and CFO
 
 Off the top of my head, I don't, we will work on that one.



 Mark Russell - Worthington Industries - President and COO
 
 Let us check.
 
 

 Andy Rose - Worthington Industries - VP and CFO
 
 Maybe by the end of the call we can give you a number.



 Martin Englert - Jefferies & Co. - Analyst
 
 Okay. And within WAVE there, what are you seeing regarding the commercial trends? Is there any more of a shift towards new projects and private work as opposed to the refurbishment type work?
 
 

 Mark Russell - Worthington Industries - President and COO
 
 No, the mix of business there is pretty much unchanged and still is dominated by remodel work. Remodel and refurbish is a dominant part of their business. That is one of the reasons we are very bullish on commercial construction recovery because we think they will still have a good book of remodel business. And then they will get the new build as well on top of that.
 
 

 Martin Englert - Jefferies & Co. - Analyst
 
 Okay, excellent, thank you.
 
 

Operator
 
 (Operator Instructions) Chris Olin, Cleveland Research.

 

 Curt Siegmeyer - Cleveland Research - Analyst
 
 Hi, good morning, this is Curt Siegmeyer in for Chris. Just maybe digging into the commercial construction market a little bit more, there is a lot of mixed signals out there right now. So I was just wondering if you guys could maybe just give a few more details on what is driving your confidence in that market, maybe some specific examples of where you have seen some incremental demand pull and kind of what you are expecting as you move forward into next year?

 
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8

 
SEPTEMBER 26, 2013 / 02:30PM GMT, WOR - Q1 2014 Worthington Industries Earnings Conference Call
 
 
 

 Mark Russell - Worthington Industries - President and COO
 
 Well, don't misunderstand us, we are not projecting the recovery at this point, we don't see it yet. Where we see some strength, obviously residential everybody sees the strength there. Where we see some strength on the commercial side, which is encouraging, is in some of the pre-build infrastructure. We picked up a lot of culvert business in the steel business which culverts are usually a leading -- can be a leading indicator for subdivision development, etc., and things like that.

But we don't -- I wouldn't say we have any definite signs of a commercial construction recovery in our numbers. But we certainly believe that it will happen in eventually. And when it does, we think we have several businesses that are very well-positioned to take advantage of it.



 Curt Siegmeyer - Cleveland Research - Analyst
 
 Okay. And then just maybe as a follow-up. Are you able to quantify how much of an impact weather might have had on the quarter, if any, on the cylinder segment?



 Mark Russell - Worthington Industries - President and COO
 
 We don't see a real big weather impact to what the results are for the quarter. Where we do sometimes see a weather impact in some of the business lines we didn't see. I think it is fairly consistent for the quarter.



 Curt Siegmeyer - Cleveland Research - Analyst
 
 Got it. Thanks, guys.



Operator
 
 Aldo Mazzaferro, Macquarie.



 Aldo Mazzaferro - Macquarie Securities - Analyst
 
 A couple of questions on the TWB business, you know, the tailor welded blanks generally, is there a lot of tailor welded blanks operated in China, for example? And I am wondering whether the fact you consolidated now with WISCO as your partner, does that give you a -- open some doors possibly for new facilities in China?

 

 Mark Russell - Worthington Industries - President and COO
 
 They definitely have business in China. That's the fastest growing market for welded blanks in the world right now. And that of course is probably one of the reasons that WISCO wanted to pick up the ThyssenKrupp interest in that business. So that is growing very fast in China. We look forward to working with WISCO on the tailor welded blanks business and any other ideas we can come up with with them.
 
 

 Aldo Mazzaferro - Macquarie Securities - Analyst
 
 So in your agreement with WISCO, would you be able to establish a TWB business in China or is WISCO kind of controlling that market themselves?

 
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9

 
SEPTEMBER 26, 2013 / 02:30PM GMT, WOR - Q1 2014 Worthington Industries Earnings Conference Call
 
 

 Mark Russell - Worthington Industries - President and COO
 
 No, WISCO -- WISCO controls the China market. So we have North America, they have the rest of the world.

 

 Aldo Mazzaferro - Macquarie Securities - Analyst
 
 Great. Okay. And then in your Dietrich business I was talking to our buildings products guy the other day. He's seeing a lot better demand trends in drywall. Is that what you are seeing in the studs business as well?



 Mark Russell - Worthington Industries - President and COO
 
 No, I wouldn't interpret that as an increase in the drywall market. I would interpret that as us was picking up share for drywall grid. Remember that is an alternative way to hang drywall. And they are very successfully filling that product. The same way we have sold ceiling grid for decades, so.



 Aldo Mazzaferro - Macquarie Securities - Analyst
 
 Got it. And then, Mark, could you just briefly tell us in the shale gas sector, what types of products are in the tanks that you are supplying? Is it stuff to be injected or is it stuff that comes out of the well? What exactly goes into the tank at a site?
 
 

 Mark Russell - Worthington Industries - President and COO
 
 Well, all of our products go into well completion. So we -- the well is completely drilled and finished by the time our products come on the site. So we have production tanks, which store liquids that come out of the well. We have separators which separate the gas from the liquids and then we have very sophisticated gas processing units which handle complex streams that come up that might involve water or gas and oil and might have -- be at extremely high pressure and/or considered and be acidic, for example.

You need a gas processing unit on the surface to handle that. And those are pretty sophisticated pieces of equipment. They involve a code pressure vessel and then a lot of ancillary equipment. And for example, the most expensive version of that we sell is well over $100,000 per piece.

So every well that is completed is a business opportunity for us.

 

 Aldo Mazzaferro - Macquarie Securities - Analyst
 
 Great, well, thanks very much. Good luck.

 

 John McConnell - Worthington Industries - Chairman and CEO
 
 Are there any other people on the call right now?



Operator
 
 No further questions.

 
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10

 
SEPTEMBER 26, 2013 / 02:30PM GMT, WOR - Q1 2014 Worthington Industries Earnings Conference Call
 

 John McConnell - Worthington Industries - Chairman and CEO
 
 No further questions. I've got two points I would like to make. One in Mark's response to the drywall, you were talking about Dietrich distributors and he answered with drywall grid and WAVE. But we have seen some pick up in Dietrich's business, I think that is true.



 Andy Rose - Worthington Industries - VP and CFO
 
 Yes. Their volumes were up 5%.



 John McConnell - Worthington Industries - Chairman and CEO
 
 Yes, so -- that's --.
 
 

 Mark Russell - Worthington Industries - President and COO
 
 I thought the question was about the drywall market.



 John McConnell - Worthington Industries - Chairman and CEO
 
 It was but he referenced the Dietrich (multiple speakers) I think. So anyway just to clarify that. And secondly, we saw a number of you speak to weakness in cylinders referencing volumes. And I asked Andy to put together kind of a statement around understanding the volumes a little better.
 
 

 Andy Rose - Worthington Industries - VP and CFO
 
 Yes. We have talked a little bit about this but I think it is a point worth emphasizing from previous quarters is as we have moved into some of the newer cylinder businesses related to alternative fuels and then specifically the energy businesses that we bought last year, the cylinder volume metric becomes much less relevant as an indicator of activity and profit in that business.

Just as an example, we sell camping cylinders 40 million a year that are sort of $2.00 to $2.50 apiece versus contrast that with the energy business you just heard Mark mention, we sell very large tanks that range anywhere from $10,000 apiece all the way up to $100,000 and we may sell those number in the hundreds in a year.

So it is hard to look at a total volume metric in cylinders as a real true indication of how that business is performing. And one of the things we are continuing to contemplate is how we can give you a better indication of some of the subsectors there. So we will continue to work on that and hopefully come up with something that will be more relevant.
 
 

 John McConnell - Worthington Industries - Chairman and CEO
 
 You were going through the numbers, for instance, retail was up.



 Andy Rose - Worthington Industries - VP and CFO
 
 Correct.



 John McConnell - Worthington Industries - Chairman and CEO
 
 This quarter. Excellent. Well thank you all for joining us. It was a good performance and we look forward to talking to you next quarter.

 
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11

 
SEPTEMBER 26, 2013 / 02:30PM GMT, WOR - Q1 2014 Worthington Industries Earnings Conference Call
 

Operator
 
 Ladies and gentlemen, this conference is available for replay. It starts today at 12.30 PM Eastern time, will last until October 3 at midnight. You may access the replay at any time by dialing 800-475-6701 or 320-365-3844 and the access code is 302295. (Operator Instructions).

That does conclude your conference. Thank you for your participation. You may now disconnect.



 
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 12