WORTHINGTON INDUSTRIES INC (Form: 8-K, Received: 10/05/2010 16:31:49)

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 5, 2010 (September 30, 2010)

WORTHINGTON INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

Ohio	001-08399	31-1189815
(State or other jurisdiction	(Commission File Number)	(IRS Employer
of incorporation)		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

(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:

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

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

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition .

Management of Worthington Industries, Inc. (the “Registrant”) conducted a conference call on September 30, 2010, beginning at approximately 10:30 a.m., Eastern Daylight Time, to discuss the Registrant’s unaudited financial results for the first quarter of fiscal 2011 (the fiscal quarter ended August 31, 2010). 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.

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 Worthington Industries, Inc. 2010 Stock Option Plan by Shareholders at 2010 Annual Meeting of Shareholders

At the 2010 Annual Meeting of Shareholders of the Registrant (the “2010 Annual Meeting”) held on September 30, 2010, the shareholders of the Registrant approved the Worthington Industries, Inc. 2010 Stock Option Plan (the “2010 Plan”). Under the 2010 Plan, options to purchase common shares, without par value (“Common Shares”), of the Registrant may be granted to employees of the Registrant and its subsidiaries. Options may be granted as either incentive stock options (“ISOs”), as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), or non-qualified stock options (“NSOs”).

Administration of 2010 Plan

The 2010 Plan will be administered by the Compensation and Stock Option Committee (the “Compensation Committee”) of the Registrant’s Board of Directors (the “Board”).

Eligibility to participate in the 2010 Plan is limited to employees of the Registrant and its subsidiaries. No employee may, in any one calendar year, be granted options under the 2010 Plan covering more than 250,000 Common Shares, subject to adjustment for changes in capitalization as described in the 2010 Plan.

Common Shares Subject to 2010 Plan

A total of 6,000,000 Common Shares will be available for issuance under the 2010 Plan, of which no more than 500,000 Common Shares may be subject to ISO awards, subject in each case to adjustment for changes in capitalization as described in the 2010 Plan. Common Shares which had been subject to options will again be available for grant under the conditions prescribed in the 2010 Plan.

Terms and Conditions of Options

The Compensation Committee may grant options at any time during the term of the 2010 Plan in such number, and upon such terms and conditions, as it determines. The exercise price of each option must be at least equal to the fair market value (i.e., the closing price on NYSE) of the Common Shares underlying the option on the grant date.

The Compensation Committee may determine the vesting period applicable to each option grant. Unless otherwise determined by the Compensation Committee, no option may vest earlier than 12 months after the grant date and an option will become exercisable as to 20% of the Common Shares subject to the option after each of the first through the fifth anniversaries of the grant date.

The Compensation Committee will determine the period during which each option will remain exercisable (which may not exceed ten years) and any other terms and conditions of the option, all of which will be reflected in an award agreement. The award agreement will specify whether the option is intended to be an ISO or a NSO.

Effect of Termination of Employment

Generally, unless otherwise determined by the Compensation Committee, no option may be exercised unless, at the time of exercise, the participant has been in the continuous employment of the Registrant or its subsidiaries, except when the participant’s termination is due to retirement, disability or death or follows a “change in control” (as defined in the 2010 Plan).

Unless otherwise determined by the Compensation Committee, if a participant’s employment terminates due to death or disability: (a) any outstanding vested options will remain exercisable until the earlier of (i) the expiration date of the options or (ii) 36 months after the date of termination (12 months in the case of ISOs); and (b) any unvested options will be forfeited.

Unless otherwise determined by the Compensation Committee, if a participant’s employment terminates due to retirement: (a) any outstanding vested options will remain exercisable until the earlier of (i) the expiration date of the options or (ii) 36 months after the date of termination (three months for ISOs); and (b) any unvested options will be forfeited.

Unless otherwise determined by the Compensation Committee, if a participant’s employment terminates other than due to the participant’s death, disability or retirement, any outstanding options (whether or not vested) will be forfeited.

Forfeiture of Options

Unless otherwise determined by the Compensation Committee, options granted under the 2010 Plan are subject to forfeiture if a participant breaches certain restrictive covenants specified in the 2010 Plan.

Restriction on Repricing

No option granted under the 2010 Plan may be repriced without the approval of the Registrant’s shareholders. For purposes of this restriction, “repricing” includes any act that is a “repricing” under applicable NYSE rules.

Term, Amendment and Termination of 2010 Plan

The 2010 Plan became effective upon approval of the 2010 Plan by the Registrant’s shareholders on September 30, 2010 and will remain in effect until terminated by the Board. However, no NSO may be granted under the 2010 Plan later than September 29, 2020 and no ISO may be granted later than June 29, 2020. The Board or the Compensation Committee may amend, terminate or suspend the 2010 Plan at any time except to the extent that approval of the Registrant’s shareholders is required to satisfy applicable requirements imposed by: (a) Rule 16b-3 under the Securities Exchange Act of 1934, as amended; (b) applicable sections of the Internal Revenue Code; or (c) NYSE rules.

At the time an option is granted under the 2010 Plan by the Compensation Committee, the Compensation Committee may provide that the option will become fully vested and exercisable as a result of a change in control, either alone, or in conjunction with some other event, such as termination of employment, whether or not the option is then vested or exercisable. If the Compensation Committee does not provide for some other provision with respect to a change in control, then the option will provide that, subject to the provisions of Section (11) of the 2010 Plan, in the event of a change in control, the portion of the option at that time outstanding will become fully vested and exercisable if the participant’s employment is terminated at any time within the two years following the change in control, as of the date of such termination of employment.

In addition, during the 60-day period from and after a change in control, the Compensation Committee may allow participants to surrender all or any portion of an option (whether or not exercisable and in lieu of payment of the exercise price) to the Registrant and receive cash in an amount equal to the amount by which the change in control price per share exceeds the exercise price of the option. The “change in control price per share” is the price per Common Share (a) paid by the acquiring person in connection with the transaction that results in the change in control; or (b) at any time after the change in control and before the participant elects to surrender all or any portion of an option, the fair market value of the Common Shares.

The provisions described above governing the impact of a change in control will not apply (i) if the Compensation Committee so determines at the time of grant of an option or (ii) to any change in control when expressly provided otherwise by a three-fourths vote of the “whole board” (as defined in the 2010 Plan), but only if a majority of the members of the Board then in office and acting upon such matter are “continuing directors” (as defined in the 2010 Plan).

The foregoing description of the 2010 Plan is qualified in its entirety by reference to the complete terms of the 2010 Plan, which is included with this Current Report on Form 8-K as Exhibit 10.1 and incorporated herein by this reference. A description of the material terms of the 2010 Plan was included under the caption “PROPOSAL 2: APPROVAL OF THE WORTHINGTON INDUSTRIES, INC. STOCK OPTION PLAN” in the Registrant’s definitive Proxy Statement for the 2010 Annual Meeting as filed with the Securities and Exchange Commission on August 18, 2010.

Item 5.07. Submission of Matters to a Vote of Security Holders.

On September 30, 2010, the Registrant held the 2010 Annual Meeting at the Registrant’s executive offices located at 200 Old Wilson Bridge Road, Columbus, Ohio. At the close of business on August 10, 2010, the record date for the 2010 Annual Meeting, there were a total of 76,418,847 Common Shares of the Registrant outstanding and entitled to vote. At the 2010 Annual Meeting, 68,978,907 or 90.26% 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 2010 Annual Meeting was as follows:

Proposal 1 — Election of Directors

	Votes For	Votes Withheld	Broker Non-Votes
Kerrii B. Anderson	53,019,663	7,425,102
John P McConnell	50,790,800	9,635,965
Mary Schiavo	50,664,431	9,780,334
Total Shares Voted	59,748,894	695,871	8,534,142

At the 2010 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 2013 Annual Meeting of Shareholders.

The directors of the Registrant whose terms of office continue until the 2011 Annual Meeting of Shareholders are: Michael J. Endres, Peter Karmanos, Jr. and Carl A. Nelson, Jr.

The directors of the Registrant whose terms of office continue until the 2012 Annual Meeting of Shareholders are: John B. Blystone, John R. Kasich and Sidney A. Ribeau.

Proposal 2 — Approval of the Worthington Industries, Inc. 2010 Stock Option Plan.

	Votes For		Votes Against		Abstain		Broker Non-Votes
Total Shares Voted	41,687,718		15,970,636		2,786,411		8,534,142

At the 2010 Annual Meeting, the Registrant’s shareholders approved the Worthington Industries, Inc. 2010 Stock Option Plan.

Proposal 3 — Ratification of Selection of KPMG LLP as the Independent Registered Public Accounting Firm of the Registrant for the fiscal year ending May 31, 2011.

	Votes For		Votes Against		Abstain
Total Shares Voted	67,798,674		1,035,545		144,688

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, 2011.

Item 8.01 Other Events

Worthington Cylinders Wisconsin, LLC (the “Company”), a subsidiary of Worthington Industries, Inc. (the "Registrant"), has been involved in a dispute with a customer, Irwin Industrial Tool Company (d/b/a BernzOmatic), a subsidiary of Newell Rubbermaid, Inc. ("BernzOmatic"), relating to a three-year supply contract (the “Contract”) effective January 1, 2006, which the Company terminated as of March 1, 2007. The dispute relates primarily to the Company’s early termination of the Contract as a result of certain actions of BernzOmatic which the Company believed breached the Contract, and the resulting price increases charged to BernzOmatic during 2007 and 2008 after such early termination.

The dispute was litigated in Federal District Court in Charlotte, North Carolina, and on February 26, 2010, the jury awarded contract damages relating to the price increases and other items to BernzOmatic, of approximately $13,002,000. As of May 31, 2010, the Company had recorded a reserve of $13,002,000 related to this matter.

On October 1, 2010, the trial judge ruled on various post-trial motions that had been filed by the parties, and awarded BernzOmatic pre-judgment interest of $1,828,000 and attorneys’ fees and costs of $970,000. This additional award exceeded the amount anticipated by the Company by approximately $1,400,000.

As a result of the post-trial rulings, the Company increased its reserves related to this matter by $1,400,000 to $14,402,000. The $1,400,000 increase was recorded as a charge against the Company’s operating income for its first quarter ended August 31, 2010. Accordingly, first quarter results in the Registrant’s Quarterly Report on Form 10-Q, expected to be filed on October 12, 2010, will reflect a $1,400,000 decrease in pre-tax income and a $944,000 decrease in net earnings ($0.01 per share) from that reported in the Registrant’s earnings release dated September 29, 2010.

The Company believes that it has numerous grounds to appeal the verdict in this matter and intends to pursue such an appeal.

Item 9.01. Financial Statements and Exhibits .

(a) through (c): Not applicable.

The following exhibits are included with this Current Report on Form 8-K:

Exhibit No.		Description

10.1		Worthington Industries, Inc. 2010 Stock Option Plan (approved by shareholders on September 30, 2010)

99.1		Transcript of Worthington Industries, Inc. Earnings Conference Call for First Quarter of Fiscal 2011 (Fiscal Quarter ended August 31, 2010), held on September 30, 2010.

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 5, 2010	By:	/s/ Dale T. Brinkman
		Dale T. Brinkman, Vice President –
		Administration, General Counsel and Secretary

WORTHINGTON INDUSTRIES, INC.

2010 STOCK OPTION PLAN

This Plan is intended to promote and advance the long-term interests of Worthington and its shareholders by enabling the Company to attract, retain and reward Employees and to strengthen the mutuality of interest between Employees and Worthington’s shareholders. This Plan is designed to accomplish this purpose by granting Stock Options to selected Employees thereby providing a financial incentive to pursue the long-term growth, profitability and financial success of the Company.

When used in this Plan, the following terms have the meanings given to them in this section unless another meaning is expressly provided elsewhere in this Plan or clearly required by the context. When applying these definitions, the form of any term or word will include any of its other forms.

(a) “Act” shall mean the Securities Exchange Act of 1934, as amended.

(b) “Award” or “Awards” shall mean a grant of a Stock Option made to a Participant under Section 6 of this Plan.

(c) “Award Agreement” shall mean the written agreement between Worthington and each Participant that describes the terms and conditions of each Award.

(d) “Beneficiary” shall mean the person designated by a Participant pursuant to Section 13(b). Neither the Company nor the Committee is required to infer a Beneficiary from any other source.

(e) “Board” shall mean the Board of Directors of Worthington.

(f) “Code” shall mean the Internal Revenue Code of 1986, as amended, and any applicable regulations or rulings issued under the Code.

(g) “Committee” shall mean the Board’s Compensation and Stock Option Committee (or the Board committee which succeeds to the appropriate duties of such Compensation and Stock Option Committee) which also constitutes a “compensation committee” within the meaning of Treasury Regulation §1.162-27(c)(4). The Committee will be comprised of at least three individuals who meet the following qualifications: (i) such individual is “independent” for purposes of the rules of any securities exchange, market or other quotation system on or through which the Common Shares are then listed or traded; and (ii) such individual may not receive remuneration from the Company in any capacity other than as a director, except as permitted under applicable laws, rules and regulations. In addition, at least two members of the Committee must each qualify as (A) an “outside director,” as defined in Treasury Regulation §1.162-27(e)(3)(i) and (B) a “non-employee director” within the meaning of Rule 16b-3 under the Act. Any member of the Committee who does not qualify as an outside director or is not a non-employee director shall be deemed to abstain on all matters as to which such qualification would be relevant.

(h) “Common Shares” shall mean the Common Shares, without par value, of Worthington or any security of Worthington issued in substitution, in exchange or in lieu thereof.

(i) “Company” shall mean Worthington and its Subsidiaries, collectively.

(j) “Disability” shall mean, unless otherwise specified by the Committee and reflected in the Award Agreement:

(i) With respect to a Non-Qualified Stock Option, the Participant’s inability to perform his or her normal duties for a period of at least six months due to a physical or mental infirmity; or

(ii) With respect to an Incentive Stock Option, as defined in Section 22(e)(3) of the Code.

(k) “Effective Date” shall mean the date this Plan is approved by Worthington’s shareholders.

(l) “Employee” shall mean any individual who, on an applicable Grant Date, is a common law employee of the Company. An individual who is classified as other than a common law employee of the Company but who is subsequently reclassified as a common law employee of the Company for any reason and on any basis will be treated as a common law employee of the Company only from the date of that determination and will not retroactively be reclassified as an Employee for any purpose under this Plan.

(m) “Exercise Price” shall mean the price at which a Participant may exercise a Stock Option.

(n) “Fair Market Value” shall mean the value of one Common Share on any relevant date, determined under the following rules:

(i) If the Common Shares are traded on a securities exchange, market or other quotation system on or through which “closing prices” are reported, the reported “closing price” on the relevant date if it is a trading day, otherwise on the next trading day;

(ii) If the Common Shares are traded over-the-counter with no reported closing price, the mean between the lowest bid and the highest asked prices on that quotation system on the relevant date if it is a trading day, otherwise on the next trading day; or

(iii) If neither (i) nor (ii) applies, the fair market value as determined by the Committee in good faith with respect to Incentive Stock Options and the fair market value as determined through the reasonable application of a reasonable valuation method, taking into account all information material to the value of Worthington, that satisfies the requirements of Section 409A of the Code, with respect to Non-Qualified Stock Options.

(o) “Grant Date” shall mean the date as of which an Award is granted to a Participant.

(p) “Incentive Stock Option” shall mean any Stock Option granted pursuant to the provisions of Section 6 of this Plan that is intended to be and is specifically designated as an “incentive stock option” within the meaning of Section 422 of the Code.

(q) “Non-Qualified Stock Option” shall mean any Stock Option granted under Section 6 of this Plan that is not an Incentive Stock Option.

(r) “Participant” shall mean an Employee or former Employee of the Company who has been granted an Award under this Plan and who has an Award still outstanding.

(s) “Plan” shall mean this Worthington Industries, Inc. 2010 Stock Option Plan, as set forth herein and as it may hereafter be amended.

(t) “Retirement” shall mean, unless the Committee specifies otherwise in the Award Agreement, the retirement of the Employee under the Company’s normal policies.

(u) “Stock Option” shall mean an Award to purchase Common Shares granted pursuant to the provisions of Section 6 of this Plan.

(v) “Subsidiary” shall mean any corporation, partnership, limited liability company or other form of 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; or 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:

(i) No Employee of a Subsidiary may be granted an Incentive Stock Option unless the Subsidiary is also a “subsidiary”, as defined in Section 424 of the Code; and

(ii) No Employee of a Subsidiary may be granted a Non-Qualified Stock Option unless the Subsidiary and Worthington would be considered a single employer under Sections 414(b) and 414(c) of the Code, but modified as permitted by Treasury Regulation §1.409A-1(b)(5)(iii)(E)(1).

(w) “Ten-Percent Owner” shall mean any Employee who, at the time an Incentive Stock Option is granted, owns more than 10% of the outstanding voting shares of Worthington or any Subsidiary. For purposes of determining ownership of voting shares, an Employee shall be deemed to own all shares which are attributable to such Employee under Section 424(d) of the Code, including, but not limited to, shares owned, directly or indirectly, by or for the Employee’s brothers and sisters (whether by whole or half blood), spouse, ancestors and lineal descendants.

(x) “Termination” or “Terminated” shall mean, unless otherwise specified by the Committee and reflected in the Award Agreement, cessation of the employee-employer relationship between an Employee and the Company for any reason.

(y) “Treasury Regulations” shall mean any regulations issued by the Department of Treasury and/or the Internal Revenue Service under the Code.

(z) “Worthington” shall mean Worthington Industries, Inc.

To become a Participant, each Employee receiving an Award must: (a) sign and return an Award Agreement to Worthington; and (b) comply with any other terms and conditions as may be imposed by the Committee.

(a) Committee Duties. The Committee shall administer this Plan and shall have all powers appropriate and necessary to that purpose, including the authority to: (i) interpret this Plan and any Award Agreement; (ii) adopt, amend and rescind rules and regulations relating to this Plan; (iii) make all other decisions (including whether a Participant has incurred a Disability) and take or authorize actions necessary or advisable for the administration and interpretation of this Plan; (iv) correct any defect, supply any omission or reconcile any inconsistency in this Plan or in any Award Agreement; (v) consistent with the terms of this Plan, decide which Employees will be granted Awards; and (vi) consistent with the terms of this Plan, specify the type of Award to be granted and the terms, not inconsistent with this Plan, upon which an Award will be granted, including the dates on which Awards may vest and be exercised, the acceleration of any such dates and the expiration date of any Award. Any action by the Committee will be final, binding and conclusive for all purposes and upon all persons.

(b) Delegation. The Committee may designate individuals other than members of the Committee to carry out its responsibilities (including, without limitation, the granting of Awards) under such conditions and limitations as the Committee may prescribe; provided, however, that the Committee may not delegate its authority: (i) with regard to selection for participation of, and the granting of Awards to, individuals subject to Sections 16(a) and 16(b) of the Act or Section 162(m) of the Code; or (ii) when otherwise prohibited by any equity award granting policy of Worthington that may be in effect from time to time.

(c) Award Agreement. At the time any Award is made, Worthington will prepare and deliver an Award Agreement to each affected Participant. The Award Agreement will describe: (i) the type of Award and when and how it may be exercised; (ii) the effect of exercising the Award; and (iii) any other applicable terms and conditions affecting the Award.

(d) Restriction on Repricing. Regardless of any other provision of this Plan, neither the Company nor the Committee may “reprice” (as defined under rules issued by the securities exchange, market or other quotation system on or through which the Common Shares are then listed or traded) any Stock Option without the prior approval of the shareholders of Worthington.

5. Duration of, and Common Shares Subject to, Plan

(a) Term of Plan. This Plan will become effective upon the Effective Date and shall remain in effect until terminated by the Board; provided, however, that no Stock Option may be granted under this Plan more than ten years after the Effective Date and no Incentive Stock Option may be granted later than June 29, 2020.

(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 6,000,000 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.

(c) Common Share Usage. For the purpose of computing the total number of Common Shares available for Awards under this Plan, there shall be counted against the foregoing limitations the number of Common Shares subject to issuance upon exercise or settlement of Awards as of the dates on which such Awards are granted. The following Common Shares which were previously subject to Awards shall again be available for Awards under the Plan: (i) Common Shares subject to the portion of an Award that is forfeited, terminated or unexercised before expiration; (ii) Common Shares subject to the portion of an Award that is settled in cash or other than through the issuance of Common Shares; (iii) Common Shares granted through the assumption of, or in substitution for, outstanding awards granted by a company to individuals who become Employees as a result of a merger, consolidation, acquisition or other corporate transaction involving such company and the Company. Common Shares which may be issued under this Plan may be either authorized and unissued Common Shares or previously issued Common Shares which have been reacquired by Worthington. No fractional Common Shares shall be issued under this Plan.

6. Grant of Stock Options

(a) Eligibility. Individuals eligible for Awards under this Plan shall consist of all Employees of the Company.

(b) Stock Options. Stock Options may be granted under this Plan by the Committee in the form of Incentive Stock Options or Non-Qualified Stock Options, and such Stock Options shall be subject to the following terms and conditions and such additional terms and conditions, not inconsistent with the express provisions of this Plan, as the Committee shall deem desirable, whether at the date of grant or thereafter:

(i) Exercise Price. The Exercise Price per Common Share purchasable upon exercise of a Stock Option shall be determined by the Committee at the time of grant, but in no event shall the Exercise Price of a Stock Option be less than 100% of the Fair Market Value of the Common Shares on the Grant Date of such Stock Option; provided, however, that the Exercise Price shall not be less than 110% of the Fair Market Value of the Common Shares on such Grant Date with respect to any Incentive Stock Option granted to a Ten-Percent Owner.

(ii) Vesting. Unless otherwise specified by the Committee, the right of a Participant to exercise a Stock Option granted under this Plan shall not vest prior to that date which is 12 months after the Grant Date. Unless otherwise determined by the Committee, a Participant may exercise a vested Stock Option as follows:

(A)		At any time after 12 months from the Date of Grant, as to 20% of the Common Shares originally subject to the Stock Option;

(B)		At any time after 24 months from the Date of Grant, as to 40% of the Common Shares originally subject to the Stock Option;

(C)		At any time after 36 months from the Date of Grant, as to 60% of the Common Shares originally subject to the Stock Option;

(D)		At any time after 48 months from the Date of Grant, as to 80% of the Common Shares originally subject to the Stock Option; and

(E)		At any time after 60 months from the Date of Grant, as to 100% of the Common Shares originally subject to the Stock Option.

Subject to the other provisions of this Plan, the portion of any Stock Option which becomes exercisable shall remain exercisable until the date of expiration of the term of the Stock Option.

(iii) Stock Option Term. Unless otherwise specified by the Committee, each Stock Option shall expire on the tenth anniversary of the Grant Date; provided that any Incentive Stock Option granted to a Ten-Percent Owner shall expire no later than the fifth anniversary of the Grant Date.

(iv) Continuous Employment. Subject to the provisions of Section 7 of this Plan, a Participant may not exercise any portion of a Stock Option granted under this Plan unless, at the time of such exercise, the Participant has been in the continuous employment of the Company since the date such Stock Option was granted. The Committee may decide in each case when service as an Employee shall be considered Terminated and whether leaves of absence for government or military service, illness, temporary disability or other reasons shall be deemed not to interrupt continuous employment for purposes of this paragraph.

(c) $100,000 Limit for Incentive Stock Options. With respect to an Incentive Stock Option granted under this Plan, the aggregate Fair Market Value (determined as of the Grant Date of the Incentive Stock Option) of the number of Common Shares with respect to which all Incentive Stock Options held by the Participant are exercisable for the first time by the Participant during any calendar year (under all option plans of the Company) shall not exceed $100,000 or such other limit as may be required by the Code.

7. Effect of Termination

(a) Retirement. Unless otherwise specified by the Committee, all vested and exercisable Awards that are outstanding upon the Retirement of a Participant, may be exercised at any time before the earlier of: (i) the expiration date specified in the Award Agreement; or (ii) 36 months (three months in the case of Incentive Stock Options) beginning on the Retirement date. All unvested and unexercisable portions of Awards outstanding upon the Retirement of a Participant shall be forfeited; provided, however, that the Committee may, in its sole discretion, elect to make any unvested and unexercisable portion of an Award exercisable as of the Retirement date of the Participant.

(b) Death or Disability. Unless otherwise specified by the Committee, all vested and exercisable Awards that are outstanding when a Participant is Terminated because of death or Disability, may be exercised by the Participant or the Participant’s Beneficiary at any time before the earlier of: (i) the expiration date specified in the Award Agreement; or (ii) 36 months (12 months in the case of an Incentive Stock Option) beginning on the date of death or Termination because of Disability. All unvested and unexercisable portions of Awards outstanding upon the death or Termination for Disability of a Participant shall be forfeited; provided, however, that the Committee may, in its sole discretion, elect to make any unvested and unexercisable portion of an Award exercisable as of the date of death or Termination for Disability.

(c) Termination. Unless otherwise specified by the Committee, any Awards that are outstanding (whether or not vested and exercisable) when a Participant is Terminated for any reason not described in Section 7(a), Section 7(b) or Section 7(d) of this Plan will be forfeited.

(d) Termination after Change in Control. Unless otherwise specified by the Committee, all vested and exercisable Awards that are outstanding when a Participant is Terminated within the two years following a Change in Control (as defined in Section 11(b) of this Plan), or which become vested and exercisable upon such Termination, may be exercised by the Participant at any time before the earlier of: (i) the expiration date specified in the Award Agreement; or (ii) 12 months (three months in the case of Incentive Stock Options) after the date of Termination.

(a) Limits on Exercisability. Regardless of any other provision of this Plan and unless the otherwise specified by the Committee, a Participant will forfeit all outstanding Awards if the Participant:

(i) Without the Committee’s written consent, which may be withheld for any reason or for no reason, violates any non-competition covenant, any employee non-solicitation covenant, or any similar agreement or covenant of the Participant in favor of the Company;

(ii) Deliberately engages in any action that the Committee concludes has caused or may cause harm to the interests of the Company;

(iii) Without the Company’s written consent, which may be withheld for any reason or for no reason, and other than as permitted by Company policy, discloses confidential and proprietary information relating to the Company’s business affairs (“Trade Secrets”), including technical information, product information and formulae, processes, business and marketing plans, strategies, customer information and other information concerning the Company’s products, promotions, developments, financing, expansion plans, business policies and practices, salaries and benefits and other forms of information considered by the Company to be proprietary and confidential and in the nature of Trade Secrets; or

(iv) When requested by the Company, fails to return all property (other than personal property owned by the Participant), including keys, notes, memoranda, writings, lists, files, reports, customer lists, correspondence, tapes, disks, cards, surveys, maps, logs, machines, technical data, formulae or any other tangible property or document and any and all copies, duplicates or reproductions that have been produced by, received by or otherwise been submitted to the Participant in the course of the Participant’s employment with the Company.

(b) Forfeiture of Exercised Awards. In the event a Participant or former Participant violates any non-competition covenant, any employee non-solicitation covenant, or any similar agreement or covenant of the Participant or former Participant in favor of the Company, the Committee, in its sole discretion, may require such Participant or former Participant, to return to the Company the economic value of any Award which is realized or obtained (measured at the date of exercise) by such Participant or former Participant at any time during the period: (i) beginning on that date which is six months prior to the earlier of (A) the date of such Participant’s or former Participant’s Termination, or (B) the date any such violation occurs.

9. Method of Exercise

The vested and exercisable portion(s) of a Stock Option may be exercised, in whole or in part, by giving written notice of exercise to Worthington specifying the number of Common Shares to be purchased, which, if required by the Committee, shall be in a form specified by the Committee. Such notice shall be accompanied by payment in full of the Exercise Price. Unless otherwise specified by the Committee and reflected in the Award Agreement, the Exercise Price may be paid: (a) in cash or its equivalent; (b) by tendering Common Shares already owned by the Participant prior to the exercise date; (c) by a cashless exercise (including by delivering or surrendering outstanding vested and exercisable Awards, by withholding Common Shares which would otherwise be issued in connection with the exercise of a vested and exercisable Stock Option, or through a broker-assisted arrangement to the extent permitted by applicable laws, rules or regulations); or (d) through any combination of the methods described in subparagraphs (a), (b) and (c) (in each case, valuing Common Shares at Fair Market Value on the date of exercise). The Committee shall determine acceptable methods for tendering Common Shares (including by attestation if permitted by applicable laws, rules or regulations) and delivering or surrendering outstanding vested and exercisable Awards and may impose such conditions on the use of Common Shares or outstanding Awards to exercise Stock Options as it deems appropriate.

10. Adjustments Upon Changes In Capitalization, Etc.

(a) The existence of this Plan and the Awards granted hereunder shall not affect or restrict in any way the right or power of the Board or the shareholders of Worthington to make or authorize any adjustment, recapitalization, reorganization or other change in Worthington’s Common Shares, its capital structure or its business, any merger or consolidation of Worthington, any issue of bonds, debentures, preferred or prior preference shares ahead of or affecting Worthington’s capital stock or the rights thereof, the dissolution or liquidation of Worthington or any sale or transfer of all or any part of Worthington’s assets or business, or any other corporate act or proceeding.

(b) In the event of any change in capitalization affecting the Common Shares of Worthington, such as a stock dividend, stock split, recapitalization (including payment of an extraordinary dividend), merger, consolidation, spin-off, split-up, distribution of assets to shareholders, combination or exchange of shares or other form of reorganization, or any other change affecting the Common Shares or the price thereof, such proportionate adjustments, if any, as the Board in its discretion may deem appropriate to reflect such change shall be made with respect to the aggregate number of Common Shares for which Awards in respect thereof may be granted under this Plan, the maximum number of Common Shares which may be subject to Awards granted to any Participant in any one calendar year, the number of Common Shares covered by each outstanding Award, and the Exercise Price in respect of each outstanding Awards. Any such adjustments shall comply with the requirements of Section 409A of the Code, to the extent applicable.

11. Change in Control Provisions

(a) Effects of Change in Control. At the time a Stock Option is granted under the Plan by the Committee, the Committee may include in the Award Agreement for such Stock Option a provision pursuant to which such Stock Option shall become fully vested and exercisable as a result of a Change in Control (as defined in Section 11(b) below), either alone, or in conjunction with some other event, such as a Termination, whether or not the Stock Option is then vested or exercisable. If the Committee does not include in the Award Agreement for a Stock Option any other provision with respect to the result of a Change in Control, then the Award Agreement shall be deemed to provide that, subject to the provisions of this Section 11, if a Change in Control occurs and a Participant is Terminated at any time within the two years following the Change in Control, the portion of the Stock Option outstanding and unexercised as of the date of such Termination shall immediately become fully vested and exercisable.

(i) A “Change in Control” of Worthington shall have occurred when any Acquiring Person (other than (A) the Company, (B) any employee benefit plan of the Company or any trustee of or fiduciary with respect to any such employee benefit plan when acting in such capacity, or (C) any person who, on the Effective Date of this Plan, was an Affiliate of Worthington beneficially owning in excess of 10% of the outstanding Common Shares of Worthington and the respective successors, executors, legal representatives, heirs and legal assigns of such person), alone or together with the Acquiring Person’s Affiliates and Associates, has acquired or obtained the right to acquire, in each case directly or indirectly, the beneficial ownership of 25% or more of the Common Shares then outstanding); or the Continuing Directors no longer constitute a majority of the Board.

(ii) “Acquiring Person” means any person (any individual, firm, corporation or other entity) who or which, together with all Affiliates and Associates of such person, has acquired or obtained the right to acquire, in each case directly or indirectly, the beneficial ownership of 25% or more of the Common Shares then outstanding.

(iii) “Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Act.

(iv) “Change in Control Price Per Share” shall mean the price per Common Share (A) paid by the Acquiring Person in connection with the transaction that results in the Change in Control; or (B) at any time after the Change in Control and before the Participant exercises his or her election under Section 11(c), the Fair Market Value of the Common Shares.

(v) “Continuing Director” means any individual who was a member of the Board on the Effective Date of this Plan or thereafter elected by the shareholders of Worthington or appointed by the Board prior to the date as of which the Acquiring Person became an Acquiring Person or an individual designated (before his or her initial election or appointment as a director) as a Continuing Director by three-fourths of the Whole Board, but only if a majority of the Whole Board shall then consist of Continuing Directors.

(vi) “Whole Board” means the total number of directors which Worthington would have if there were no vacancies in respect of the Board.

(c) Change in Control Cash-Out. Notwithstanding any other provision of this Plan, during the 60-day period from and after a Change in Control (the “Exercise Period”), if the Committee shall determine at, or at any time after, the time of grant of a Stock Option, a Participant holding a Stock Option shall have the right, whether or not the Stock Option is fully exercisable and in lieu of the payment of the Exercise Price for the Common Shares being purchased under the Stock Option and by giving notice to Worthington, to elect (within the Exercise Period) to surrender all or any portion of the Stock Option to Worthington and to receive cash, within 30 days of such notice, in an amount equal to the amount by which the Change in Control Price per Share on the date of such election shall exceed the Exercise Price per Common Share under the Stock Option multiplied by the number of Common Shares granted under the Stock Option as to which the right granted under this Section 11(c) shall have been exercised.

(d) Alternative Awards. Section 11(a) of this Plan will not apply to the extent that the Committee reasonably concludes in good faith before the Change in Control occurs that Awards will be honored or assumed or new rights substituted for the Awards (collectively, “Alternative Awards”) by the Participant’s employer (or the parent or a subsidiary of that employer) immediately after the Change in Control, provided that any Alternative Award must:

(i) Be based on stock that is (or, within 60 days of the Change in Control, will be) traded on an established securities exchange, market or other quotation system;

(ii) Provide the Participant rights and entitlements substantially equivalent to or better than the rights, terms and conditions of the Award for which it is substituted, including an identical or better exercise or vesting schedule and identical or better timing and methods of payment; and

(iii) Have substantially equivalent economic value to the Award (determined at the time of the Change in Control) for which it is substituted.

(e) Provisions Not Applicable. The provisions of this Section 11 shall not apply (i) if the Committee determines at the time of grant of an Award that such Section shall not apply in respect of such Award or (ii) to any Change in Control when expressly provided otherwise by a three-fourths vote of the Whole Board, but only if a majority of the members of the Board then in office and acting upon such matter shall be Continuing Directors.

12. Amendment, Modification and Termination of Plan

The Board or the Committee may terminate, suspend or amend this Plan at any time without shareholder approval except to the extent that shareholder approval is required to satisfy applicable requirements imposed by: (a) Rule 16b-3 under the Act, or any successor rule or regulation; (b) applicable requirements of the Code; or (c) the rules of any securities exchange, market or other quotation system on or through which the Company’s securities are then listed or traded. Also, no Plan amendment may: (i) result in the loss of a Committee member’s status as a “non-employee director” as defined in Rule 16b-3 under the Act, or any successor rule or regulation, with respect to any employee benefit plan of the Company; (ii) cause this Plan to fail to meet requirements imposed by Rule 16b-3; or (iii) without the consent of the affected Participant, adversely affect any Award granted before the amendment. Nothing in this Section 12 will restrict the Committee’s right to exercise the discretion retained in the various provisions of this Plan.

(a) Assignability. Except as described in this Section 13(a) and Section 13(b) of this Plan, an Award may not be transferred except by will or the laws of descent and distribution and, during the Participant’s lifetime, may be exercised only by the Participant, the Participant’s guardian or legal representative.

(b) Beneficiary Designation. Each Participant may name a Beneficiary or Beneficiaries (who may be named contingently or successively) to receive or to exercise any vested and exercisable Award that is unexercised at the Participant’s death. Each designation made will revoke all prior designations made by the same Participant, must be made on a form prescribed by the Committee and will be effective only when filed in writing with the Committee. If a Participant has not made an effective Beneficiary designation, the deceased Participant’s Beneficiary will be the deceased Participant’s estate. The identity of a Participant’s designated Beneficiary will be based only on the information included in the latest beneficiary designation form completed and filed by the Participant with the Committee and will not be inferred from any other evidence.

(c) No Guarantee of Employment or Participation. Nothing in this Plan may be construed as: (i) interfering with or limiting the right of the Company to Terminate any Employee’s employment at any time, with or without cause; (ii) conferring on any Employee any right to continue as an employee of the Company; or (iii) guaranteeing that any Employee will receive any Awards.

(d) Withholding. The Company shall have the power and the right to deduct, withhold or collect any amount required by law, rule or regulation to be withheld with respect to any taxable event arising with respect to an Award granted under this Plan. This amount may, as determined by the Company in its sole discretion, be: (i) withheld from other amounts due to the Participant; (ii) withheld from the value of any Award being settled or any Common Shares being transferred in connection with the exercise or settlement of an Award; (iii) withheld from the vested and exercisable portion of any Award (including the Common Shares transferable thereunder), whether or not being exercised or settled at the time the taxable event arises; or (iv) collected directly from the Participant. Unless otherwise determined by the Committee, a Participant may elect to satisfy the withholding requirement, in whole or in part, by having the Company withhold Common Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax that could be imposed on the transaction; provided that such Common Shares would otherwise be distributable to the Participant at the time of the withholding and if such Common Shares are not otherwise distributable at the time of the withholding, provided that the Participant has a vested right to distribution of such Common Shares at such time. All such elections shall be irrevocable and made in writing and shall be subject to any terms and conditions that the Committee, in its sole discretion, deems appropriate.

(e) Indemnification. Each individual who is or was a member of the Committee or of the Board will be indemnified and held harmless by Worthington against and from any loss, cost, liability or expense that may be imposed upon or reasonably incurred by such individual in connection with or resulting from any claim, action, suit or proceeding to which such individual may be made a party or in which such individual may be involved by reason of any action taken or failure to take action under this Plan against such individual as a Committee member and against and from any and all amounts paid, with Worthington’s approval, by such individual in settlement of any matter related to or arising from this Plan as a Committee member or paid by such individual in satisfaction of any judgment in any action, suit or proceeding relating to or arising from this Plan against such individual as a Committee member, but only if such individual gives Worthington an opportunity, at its own expense, to handle and defend the matter before such individual undertakes to handle and defend it in his or her own behalf. The right of indemnification described in this Section 13(e) is not exclusive and is independent of any other rights of indemnification to which the individual may be entitled under Worthington’s organizational documents, by contract, as a matter of law or otherwise.

(f) Requirements of Law. The grant of Awards and the issuance of Common Shares under this Plan will be subject to all applicable laws, rules and regulations and to all required approvals of any governmental agencies or any securities exchange, market or other quotation system on or through which the Common Shares are then listed or traded. Also, no Common Shares will be issued under this Plan unless Worthington is satisfied that the issuance of those Common Shares will comply with applicable federal and state securities laws. Certificates for Common Shares delivered under this Plan may be subject to any stock transfer orders and other restrictions that the Committee believes to be advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any securities exchange, market or other quotation system on or through which the Common Shares are then listed or traded, or any other applicable federal or state securities law. The Committee may cause a legend or legends to be placed on any certificates issued under this Plan to make appropriate reference to restrictions within the scope of this Section 13(f).

(g) Other Company Benefit and Compensation Programs. Payments and other benefits received by a Participant under an Award made pursuant to this Plan shall not be deemed a part of a Participant’s regular, recurring compensation for purposes of the termination indemnity or severance pay law of any state or country and shall not be included in, nor have any effect on, the determination of benefits under any other employee benefit plan or similar arrangement provided by the Company unless expressly so provided by such other plan or arrangement, or except where the Committee expressly determines that an Award or portion of an Award should be included to accurately reflect competitive compensation practices or to recognize that an Award has been made in lieu of a portion of competitive annual cash compensation. This Plan notwithstanding, the Company may adopt such other compensation programs and additional compensation arrangements as it deems necessary to attract, retain and reward Employees for their service with the Company.

(h) Cost of Plan. The costs and expenses of administering this Plan shall be borne by the Company.

(i) Governing Law. The validity, construction and effect of this Plan and all rules, regulations and actions hereunder shall be governed by and construed in accordance with the laws (other than laws governing conflicts of laws) of the State of Ohio and applicable federal laws.

(j) Section 409A of the Code. This Plan is intended to be exempt from the requirements of Section 409A of the Code and the Treasury Regulations promulgated thereunder and shall be interpreted, administered and operated accordingly. Nothing in this Plan should be construed as a guarantee or entitlement of any particular tax treatment to a Participant. None of the Board, the Committee, the Company or any other person shall have any liability with respect to a Participant in the event that this Plan fails to comply with the requirements of Section 409A of the Code.

(k) Requirements of Law. The grant of Awards and the issuance of Common Shares shall be subject to all applicable laws, rules and regulations (including applicable federal and state securities laws) and to all required approvals of any governmental agencies or any securities exchange, market or other quotation system. Without limiting the foregoing, the Company shall have no obligation to issue Common Shares under the Plan prior to: (i) receipt of any approvals from any governmental agencies or any securities exchange, market or quotation system that the Committee deems necessary; and (ii) completion of registration or other qualification of the Common Shares under any applicable federal or state law or ruling of any governmental agency that the Committee deems necessary.

(l) Legends. Certificates for Common Shares delivered under this Plan may be subject to such stock transfer orders and other restrictions that the Committee deems advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any securities exchange, market or quotation system on or through which the Common Shares are then listed or traded, or any other applicable federal or state securities law. The Committee may cause a legend or legends to be placed on any certificates issued under this Plan to make appropriate reference to restrictions within the scope of this Section 13(l).

(m) Uncertificated Common Shares. To the extent that this Plan provides for the issuance of certificates to reflect the transfer of Common Shares, the transfer of Common Shares may be effected on a noncertificated basis, to the extent not prohibited by applicable law or the applicable rules of any securities exchange, market or quotation system on or through which the Common Shares are then listed or traded.

(n) Rights as a Shareholder. Except as otherwise provided in this Plan or in a related Award Agreement, a Participant shall have none of the rights of a shareholder with respect to Common Shares covered by an Award unless and until the Participant becomes the record holder of such Common Shares.

(o) Successors and Assigns. This Plan shall be binding on all successors and assigns of the Company and each Participant, including without limitation, the estate of such Participant and the executor, administrator or trustee of such estate, or any receiver or trustee in bankruptcy or representative of the Participant’s creditors.

(p) Savings Clause. In the event that any provision of this Plan shall be held illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining provisions of this Plan, and this Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

(q) Foreign Nationals. Awards may be granted to Employees who are foreign nationals or employed outside the United States, or both, on such terms and conditions different from those specified in the Plan as may, in the judgment of the Committee, be necessary or desirable in order to recognize differences in local law or tax policy. The Committee also may impose conditions on the exercise or vesting of Awards in order to minimize the Company’s obligation with respect to tax equalization for Employees on assignments outside their home country.

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Final Transcript

Sep 30, 2010 / 02:30PM GMT, WOR - Q1 2011 Worthington Industries Earnings Conference Call

CORPORATE PARTICIPANTS

Cathy Lyttle

Worthington Industries - VP Corporate Communications, IR

John McConnell

Worthington Industries - Chairman and CEO

Andy Rose

Worthington Industries - VP and CFO

George Stoe

Worthington Industries - President and COO

CONFERENCE CALL PARTICIPANTS

John Tumazos

John Tumazos Independent Research - Analyst

Martin Englert

Longbow Research - Analyst

Richard Garchitorena

Credit Suisse - Analyst

Chris Olin

Cleveland Research - Analyst

Phil Gibbs

KeyBanc - Analyst

PRESENTATION

Operator

Good morning and welcome to the Worthington Industries first quarter earnings results conference call. All participants will be able to listen-only until the Q&A 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 Corporate Communications, IR

Thank you Lexi. Good morning everyone. Welcome to our quarterly earnings conference call. Before we get started, I want to remind you that certain statements made in this conference call are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ from those suggested. Please refer to the news release for more detail on factors that could cause actual results to differ materially. For those who are interested in listening to the call again you can listen on the replay on our website. On the call are John McConnell, Chairman and Chief Executive Officer, George Stoe, President and Chief Operating Officer, Andy Rose, Vice President and Chief Financial Officer, Bob McMaster, Senior Financial Advisor and Richard Welch, Controller. John McConnell will begin. John?

John McConnell - Worthington Industries - Chairman and CEO

Thank you Cathy and welcome everyone. We continue to see strong year-over-year gains in our first quarter both in volume and in our results. Given the environment, all of our businesses delivered strong results this quarter with the exception of metal framing, where as you know, the end market remains extremely weak. Metal framing did, however, do a good job in reducing their costs and remaining cash neutral. Steel processing continues to demonstrate strong results on 60% of pre-recession volumes. And in our pressure cylinders business some of the results in North America were at record levels and Europe showed improvement while WAVE, in particular, once again produced stellar results. I'm going to turn the call over to Andy and George now to provide you some detail on the quarter. Andy?

Final Transcript

Sep 30, 2010 / 02:30PM GMT, WOR - Q1 2011 Worthington Industries Earnings Conference Call

Andy Rose - Worthington Industries - VP and CFO

Thanks John and good morning. As you saw in the release we started fiscal 2011 with strong earnings in most of our businesses despite continued weakness in the economy. The first quarter had very few unique items impacting our results and unlike the previous quarter, had much lower FIFO inventory holding gains. The hard work from our transformation initiative, market share gains and acquisitions are all helping drive solid results. Below normal volumes continues to be a theme across our businesses. One bright spot was the automotive market which had a stronger than anticipated summer of vehicle production, favorably impacting steel processing, automotive body panels, and some of our joint ventures.

In steel processing, volumes were down 4% quarter-over-quarter but were up 54% over the year-ago period when volumes were at historic lows due to the bankruptcy of Chrysler and GM. Despite the improvement and the addition of Gibraltar, steel processing continues to operate in the range of 60 to 65% of pre-recession volume levels. In pressure cylinders, a record first quarter in North America combined with improved volumes and a modest profit in Europe drove results. Metal framing volumes were down 23% from last year and 6% quarter-over-quarter but the business continues to work hard taking costs out in its effort to remain cash neutral.

WAVE, TWB, and Serviacero all contributed meaningfully to our results and all of the remaining joint ventures operated at close to breakeven or better during the quarter. The $18.3 million of income from JVs was an increase of $2.2 million over the year-ago quarter with $2.4 million of that increase from TWB. We received dividends of $16.6 million during the quarter. Our latest estimate of the annual effective tax rate is 32.5% for the quarter below our original projection driven primarily by improved results in Europe.

During the quarter, we successfully executed on several capital investments. The largest was continuing to repurchase stock under our 2007 repurchase authorization. Including activity from July into early September, the Company repurchased 5.25 million shares at an average price of $14.27 per share. This effectively reduces our outstanding share base by over 6.5%. The Company still has close to 3.2 million shares authorized for repurchase under its existing authorization. We also closed the acquisition of Hy-Mark Cylinders in June. Hy-Mark is a profitable manufacturer of aluminum cylinders for medical oxygen, scuba, beverage service and industrial applications. The $12 million transaction is small but is representative of our ideal target where we can buy at an attractive multiple, realize meaningful synergies, drive higher margins and diversify our end markets. We continue to review domestic and international acquisition opportunities and believe the market remains attractive.

As a result of these investments and higher working capital needs in the quarter, we increased our total debt balance by $100 million. Our balance sheet remains strong, with over $325 million in available debt capacity in addition to $65 million in cash. In closing, there continues to be significant uncertainty surrounding the economy, the political environment, and the tax structure facing our country. Despite this uncertainty, we are proving the efficiency of our existing operations via transformation, reducing the volatility of our earnings streams where we can and actively searching for attractive acquisition candidates, all with the objective of improving the overall margins and earnings potential of our Company. I will now pass the call on to George Stoe who will discuss operations.

George Stoe - Worthington Industries - President and COO

Thank you, Andy. Our first fiscal quarter saw a continuation of the stronger market conditions that we enjoyed the last half of fiscal 2010. While demand has not returned to pre-downturn levels, we have seen significant improvement in most markets with the notable exception of commercial construction. Our steel processing business had a very strong first quarter. The transformation initiatives that we outlined over the past few quarters continued to provide us with significant structural improvements, which have favorably impacted our results. The sustained improvements in our results are directly related to the operational improvements, market share gains, and overall excellent management of the business.

During last quarter's call we mentioned that we expected to see some traditional summer downturn in demand, and that we were going to monitor it carefully to see if it was a trend. The downturn we experienced was less than we normally see during the summer months. The last few months of calendar 2010 will be interesting, as the mills attempt to raise prices in the face of uncertain demand. We're hopeful that the mills will maintain their discipline and support consistent prices. Obviously, a significant part of our demand picture is directly tied to automotive. Our automotive business has held up reasonably well, and we remain hopeful that the build rates will continue to improve.

Final Transcript

Sep 30, 2010 / 02:30PM GMT, WOR - Q1 2011 Worthington Industries Earnings Conference Call

Our acquisition of the Gibraltar facility in Cleveland has helped diversify our participation in the automotive sector by adding to our customer base. The combination of the two companies has broadened our reach and positively impacted our participation in this important part of our business. The integration of the Cleveland assets into our steel processing business has been remarkable in its seamlessness. This acquisition has been profitable and EVA positive every month since we acquired it. It is a real tribute to our employees and how well they have transitioned into the new Company. On that note, we had a UAW contract that was set to expire at the end of August. I'm pleased to report that a majority of our Cleveland employees chose to no longer be represented by a labor organization. We greatly appreciate the confidence and trust they have shown in our Company in the six months since we acquired them.

Our European cylinders business continues to see modest improvement in volume and overall activity. All three facilities are seeing increased demand for their products. We continue with our diversification strategy in Europe, with our plan in Portugal, expanding into helium cylinders, solar water heaters, and refillable refrigerant cylinders to complement their largest product line of non-refillable refrigerant cylinders. In the Czech Republic, we have seen increased order activity in air brake tanks as the truck market in Europe continues to improve. Austria is also enjoying increased demand for their industrial gas cylinders and alternative energy components.

Here in North America, our cylinders business continues to enjoy strong activity in most product lines. Our composite cylinder facility in California had a strong quarter and although our aluminum facility in Mississippi has not yet realized the benefits of the integration of the Hy-Mark assets into our facility, as that work is still underway, we're very encouraged by their progress to date. Our market shares remain strong and the volume levels in most product lines continue to strengthen.

Our metal framing business continues to suffer from lack of volume. The Commercial construction market is anemic at best and we do not see anything in the near term that will change that reality. However, we have done an excellent job of reducing costs while maintaining share. Our goal for the past several quarters has been to remain cash flow neutral, while weathering the market place turmoil. We have accomplished that objective in a very challenging market.

Our WAVE joint venture continues to post impressive results while maintaining their market leadership position. They continue to develop new products, and enhance the design features of their existing products to promote ease of installation and a lower overall cost option for the contractors and installers. Their volume has certainly been impacted by the downturn in commercial construction. However 60 to 70% of their products are used in renovation work and therefore, the downturn in volume has been less severe than those companies that rely primarily on new construction.

Each quarter, we mention our safety performance and we continue to excel in that area. During our first fiscal quarter, we had 40 of 48 facilities in our three major businesses operate without a lost time incident. This continues our uninterrupted string of seven consecutive years of safety performance improvement. We're extremely proud of our employees and how earnestly they have embraced our Safe Work philosophy. I will now turn the call back over to John McConnell for his closing comments.

John McConnell - Worthington Industries - Chairman and CEO

George and Andy, thank you both. We're very pleased with our Company's performance and our progress. I want to thank all of our employees for their efforts in driving improvements across the board. We continue to pursue and assess the large number of growth opportunities, both organic and potential acquisitions that fit our objectives of expanding our margins and decrease in the volatility of our earnings. I'm happy to say several of them are firming up nicely. Now looking forward, we believe the economy will continue to recover slowly but it may remain a bit choppy. At this point, we're happy to take your questions.

QUESTION AND ANSWER

Operator

(Operator Instructions). Our first question is from John Tumazos with John Tumazos Independent Research. Your line is open.

John Tumazos - John Tumazos Independent Research - Analyst

Good morning. I have 26,000 shares of your stock, and I just want to say I love you, I love you. You guys are my heroes.

Final Transcript

Sep 30, 2010 / 02:30PM GMT, WOR - Q1 2011 Worthington Industries Earnings Conference Call

John McConnell - Worthington Industries - Chairman and CEO

Well, John, good morning, thank you very much. It is a nice start to the Q&A session.

John Tumazos - John Tumazos Independent Research - Analyst

And I think that 6% share repurchase is wonderful, and decertifying a union in Cleveland is almost as good.

John McConnell - Worthington Industries - Chairman and CEO

Thank you very much, and I am right with you with my holdings, so -- .

John Tumazos - John Tumazos Independent Research - Analyst

We like owner-operated companies. On April 1, John, you made a steel price projection that was a little high $825, $850, something like that for hot roll. And I was worried that you might have a bad quarter with some high raw material costs, and you know how those margins can get squeezed, and inventory write-downs occurred at the worst point of the recession, and -- maybe even some wise guy shorted your stock and didn't know you well.

John McConnell - Worthington Industries - Chairman and CEO

That could be.

John Tumazos - John Tumazos Independent Research - Analyst

And here it is, you just had a great quarter. You still have FIFO inventory profits but they are smaller. The margins in steel processing were wonderful. So, without divulging any proprietary information, could you just say how you dodged the bullet of the spot prices dipping from $725 in April to $575. I don't believe the most hysterical American metal market article is about $550 hot roll, but it is $585 on the Exchange in New York this week so -- .

John McConnell - Worthington Industries - Chairman and CEO

George is going to answer that and -- .

John Tumazos - John Tumazos Independent Research - Analyst

And I love you guys.

John McConnell - Worthington Industries - Chairman and CEO

This -- the steel price projection came up it seems to me last quarter. And when we researched it, I don't think that I said it was going to go to $800, though I don't have that with me right now. But, either way, George will address that.

George Stoe - Worthington Industries - President and COO

John, I think there are several things that weigh into this. I think the transformation efforts -- part of that has been working on inventory management and forecasting. I think that those things are both much more robust and accurate today than they have ever been. I think that our steel Company has done a much better job through these transformation efforts of understanding the needs of their customers, what kind of products they were going to have to have, and having the right kinds of material in inventory. I think we have done a very good job of managing the inventories as a part of that. And -- .

Final Transcript

Sep 30, 2010 / 02:30PM GMT, WOR - Q1 2011 Worthington Industries Earnings Conference Call

John McConnell - Worthington Industries - Chairman and CEO

The other thing, just to reiterate what we said last quarter, but about 50% of our inventory is this -- is locked down from a pricing standpoint, so we only have about 0.5 of the inventory exposed to fluctuations in the stock market, and many of those transactions are getting matched up during that quarter on a pricing basis so -- if that helps, John?

John Tumazos - John Tumazos Independent Research - Analyst

Super. And I can't be happier with how you guys are doing, and congratulations.

John McConnell - Worthington Industries - Chairman and CEO

Thank you, sir.

Operator

Our next question is from Martin Englert with Longbow Research. Your line is open.

Martin Englert - Longbow Research - Analyst

Good morning.

John McConnell - Worthington Industries - Chairman and CEO

Good morning.

Martin Englert - Longbow Research - Analyst

Looking at the average selling prices within steel processing and metal framing, and just given the volatility recently in spot steel prices, what should we expect in the fiscal second quarter for 2011 as far as average pricing trends?

John McConnell - Worthington Industries - Chairman and CEO

Right now they appear to be fairly stable where they are. I think the mills desire to have them higher as they exhibited last quarter, it didn't move much, and perhaps that was an objective, was to help keep pricing about where it was. Given their desires, I would not think it will fall much, but that -- the pricing side of this is certainly out of our control, and we will see how they balance market forces and raw material inputs as they go forward, and we will just have to keep an eye on it.

Martin Englert - Longbow Research - Analyst

So at this point, you're expecting relatively stable average selling prices within those two segments, at least from what you see today?

John McConnell - Worthington Industries - Chairman and CEO

Again, we try not to forecast steel pricing, but right now, I would say I don't see anything that should move the needle too much in the next three months.

Final Transcript

Sep 30, 2010 / 02:30PM GMT, WOR - Q1 2011 Worthington Industries Earnings Conference Call

Martin Englert - Longbow Research - Analyst

Okay. And one quick follow-up question for you. Looking at the metal spreads in the metal framing segment, it looks like there was a little bit of a mismatch in this quarter. Do you expect that to correct or revert back to more average levels, historically, in the upcoming quarter?

John McConnell - Worthington Industries - Chairman and CEO

I will let, George works very closely with metal framing and -- .

George Stoe - Worthington Industries - President and COO

Well, Martin, I would say to you that the lack of volume is certainly having an impact on the business. It is more competitive out there, and we're constantly seeing pressure on the prices, but we haven't seen any big drops in the pricing levels. I think everybody is out chasing the volume that is available. But we think that we have maintained and even improved our share a bit. But I don't know if that answers your question or not.

Martin Englert - Longbow Research - Analyst

Looking more so at just the cost of steel relative to the average selling prices, I guess, would you expect that spread to maintain in the upcoming quarter?

George Stoe - Worthington Industries - President and COO

I think it will be relatively consistent.

Martin Englert - Longbow Research - Analyst

Okay. Thanks, I appreciate your help and guidance.

Operator

The next question is from Richard Garchitorena with Credit Suisse.

Richard Garchitorena - Credit Suisse - Analyst

Great, good morning, guys.

John McConnell - Worthington Industries - Chairman and CEO

Good morning.

Richard Garchitorena - Credit Suisse - Analyst

So my first question, on the steel business, you said that, you mentioned the auto demand in Q2 was better than anticipated. Do you think this is sustainable, and also, what are your order books looking at right now, because we have heard from some of the steel producers that their order books are fairly short at this point?

Final Transcript

Sep 30, 2010 / 02:30PM GMT, WOR - Q1 2011 Worthington Industries Earnings Conference Call

John McConnell - Worthington Industries - Chairman and CEO

Our forward bookings have perhaps trailed off a little bit. But, overall remain fairly good. So we're seeing good things out there, some -- again, as George went through the Gibraltar acquisitions, which really broadened our -- the number of companies we serve in the automotive sector. So it broadened our base of supply, and clearly increased our share in that market. So that could be helping us on a relative year-over-year basis when you do comparisons.

We do follow, of course, production, auto production versus auto sales. There is somewhat of a gap developing there, again, and we will see what happens to that over time. I am sure they're going to be watching their inventory levels, and hopefully, when you go back to the economic uncertainty and the tax uncertainty that is hanging in there, as some of that gets clear I think we're hopeful we will see people engaged in larger purchases on a more active basis.

Richard Garchitorena - Credit Suisse - Analyst

Great. Thanks. And then similar question on commercial construction, obviously you mentioned it is still weak. Are you seeing any sign that it's getting worse, or are we just still bouncing off a low trough here?

John McConnell - Worthington Industries - Chairman and CEO

We feel we're -- if we're not at bottom, we're pretty darn close to it. Things have been pretty stable. Don't see any dramatic changes probably for, until the second half of 2011, but there -- you can also point to little signs that some jobs are getting released and financed differently than through banks. So, I think we're pretty well at the bottom. But no big upturns in the short term horizon.

Richard Garchitorena - Credit Suisse - Analyst

Great. And a related question, in terms of the JVs and WAVE, the increase in equity income quarter-over-quarter, was that largely the other joint ventures? WAVE is basically still same levels?

John McConnell - Worthington Industries - Chairman and CEO

As Andy pointed out, TWB was the largest contributor to the increase there, and again, going back to your previous question, we always view their work as directionally informative of what is going on in automotive because they are very early in the process. So, if they are strong, that's a good indication that things aren't going to go backwards anyway at least in the short term.

Andy Rose - Worthington Industries - VP and CFO

Serviacero also had a good quarter compared to last year.

Richard Garchitorena - Credit Suisse - Analyst

Great, sorry, and just one more question. On CapEx last quarter, you said you expected roughly $50 million in CapEx for this fiscal year. This quarter was much lower, can we assume that's going to ramp up in the coming quarters, and can you elaborate which projects that might be in the pipeline?

Andy Rose - Worthington Industries - VP and CFO

Yes, our forecast is down from that number, Richard, to right around $42 million on an annual basis for fiscal 2011. The biggest portion of that drop is, we had a large CapEx program outlined for the Mississippi cylinders facility. And in lieu of that, we acquired Hy-Mark Cylinders, which gave us the same capability, so that's the biggest change there.

Final Transcript

Sep 30, 2010 / 02:30PM GMT, WOR - Q1 2011 Worthington Industries Earnings Conference Call

Richard Garchitorena - Credit Suisse - Analyst

Great, thanks a lot.

Operator

(Operator Instructions). The next question is from Chris Olin with Cleveland Research.

Chris Olin - Cleveland Research - Analyst

How are we doing?

John McConnell - Worthington Industries - Chairman and CEO

Good, Chris. How are you this morning?

Chris Olin - Cleveland Research - Analyst

Good, good. I want to dig into a little bit on this market share. I know George touched on a little bit on metal framing, but I'm just curious, if you look at the automotive strength, was any of that related to new accounts, or on the other non-auto businesses, have you ever tried to gauge what your market share looks like now versus maybe a year ago or two?

John McConnell - Worthington Industries - Chairman and CEO

I think some of that is definitely on new accounts, and some of the accounts we have recently acquired haven't started yet. Probably a bigger share on the Ag side, as well as in automotive. George, I don't know if you have any additional comments down that road.

George Stoe - Worthington Industries - President and COO

I think the biggest thing, Chris, as I tried to touch on in my comments, Gibraltar had a much stronger position at Ford than we did. We were stronger at Chrysler and GM, and that just broadened our base and gave us a better opportunity to expand our participation in the automotive, and I think that's the result of all that.

Chris Olin - Cleveland Research - Analyst

Do you get the sense of (inaudible) could hold onto a lot of that business post-contract revisions coming up here?

George Stoe - Worthington Industries - President and COO

I think when we put our original model together, Chris, we thought that we would probably lose about 10% of the business because people would be uncomfortable with us having that much of a share, and I'm obviously happy to report we haven't lost any yet. I think the real test is coming. As we get into the negotiating time right now, going into 2011. But we feel very confident that we're going to maintain the majority of that. Our guys are really doing a great job with quality, reliability and deliveries, and I think that will speak for itself with the customers.

Chris Olin - Cleveland Research - Analyst

Is there any reason in particular why you have been successful on the Ag side?

Final Transcript

Sep 30, 2010 / 02:30PM GMT, WOR - Q1 2011 Worthington Industries Earnings Conference Call

John McConnell - Worthington Industries - Chairman and CEO

It became a focus of ours, going back a couple of years.

Chris Olin - Cleveland Research - Analyst

Okay. Metal framing really quick. I hear you on commercial construction, residential maybe slightly better, I get a little bit worried when I look at some of the public construction data coming out. And I'm curious how much exposure metal framing would have to projects like schools and government buildings and whatnot, have you tried to look at that?

John McConnell - Worthington Industries - Chairman and CEO

We do look at that, and not a lot particularly in schools. Most of that stuff lends itself to block and concrete construction. So, not a lot of exposure down that road. We do try to participate in the hospital sector and other places, dorms on campuses, so from an education standpoint, those type of construction projects we target and watch closely.

Chris Olin - Cleveland Research - Analyst

When you look at potential rebound in the second half of 2011, are you accounting for public already getting worse in growth elsewhere?

John McConnell - Worthington Industries - Chairman and CEO

Yes. In the -- this is not directly -- it does impact Dietrich but not a -- it's not a one-to-one relationship, but as we mentioned before, we took our mid-rise product out with the global reach, into areas that are really focused on their infrastructure, and fulfilling housing needs, so a lot of the developing world, India, China, Africa. And finding some success in what our products bring to those areas, both in cost and speed of construction. Those are some of the projects that we mention when we say we're looking at a large number of different things that we think will help expand our business, and increase our margins, and we found some success there that we will be talking more about as it all firms up.

Chris Olin - Cleveland Research - Analyst

There is some new supply set to hit the marketplace. You guys buy an awful lot of sheet. I'm just trying to figure out, if a new competitor comes into the market with a lot of volume, is that good for Worthington over the next years, or just the lower prices in general would be seen as a negative?

John McConnell - Worthington Industries - Chairman and CEO

When you first started talking, I assumed you were talking about Thyssen and some other people on the melt side, and you ended up with expansion in our space, so help me with -- .

Chris Olin - Cleveland Research - Analyst

I'm thinking more on the Thyssen side.

John McConnell - Worthington Industries - Chairman and CEO

Okay. So there is not any new capacity on -- in our areas, from the Thyssen side. We obviously have a very good relationship with Thyssen, due to the TWB joint venture, and have worked with them for many years there, and have a great relationship. So, we will see. Obviously, they are in the south. It is one of the areas we have been looking at, that we need to strengthen our presence, and we will see how all that unfolds. I think from our standpoint it is good.

Final Transcript

Sep 30, 2010 / 02:30PM GMT, WOR - Q1 2011 Worthington Industries Earnings Conference Call

Chris Olin - Cleveland Research - Analyst

Okay, thanks.

Operator

Next question is from Phil Gibbs with KeyBanc. Your line is open.

Phil Gibbs - KeyBanc - Analyst

Hi, gentlemen. Good morning.

John McConnell - Worthington Industries - Chairman and CEO

Good morning.

Phil Gibbs - KeyBanc - Analyst

Just had a question on the steel processing business. Are you expecting to see seasonal volume recovery in the November quarter relative to the first quarter here?

John McConnell - Worthington Industries - Chairman and CEO

In which space? Oh, steel processing? And say it again, do I think it's going to get stronger in the second quarter versus the first? Is that what you're saying?

Phil Gibbs - KeyBanc - Analyst

Season -- no, just on the volume side, do you expect to see seasonal volume recovery there, because typically the second quarter is stronger than the first from a volume perspective.

John McConnell - Worthington Industries - Chairman and CEO

Actually, it's typically not, if you look on a historic basis. The second quarter volume is down slightly. It sometimes is about the same, but typically it is down in the steel business. So it is usually first -- second strongest, second quarter, third strongest, third quarter, the weakest, fourth quarter the strongest, in steel -- that's a historic rhythm that -- in this time is very hard to say that's going to hold exactly. With the economy slowly recovering, the second quarter could be better than the first, yes, better than the first. And like I said, in our order books in steel, we certainly see nothing outstripping the first quarter as far as bookings. Perhaps a tad weaker, but we have a ways to go here. We have a couple more months in here to see where it all settles out.

Phil Gibbs - KeyBanc - Analyst

Okay, that helps. And just looking for a little bit more color on the European pressure cylinders business, and what you're seeing in your order books, and where you're seeing a particular strength or pick-up in that business. Just looking for a little bit more granularity.

John McConnell - Worthington Industries - Chairman and CEO

I think there are two parts to that. I think that we certainly -- our largest business over there is the high pressure business in Austria. We have seen a significant increase in the volume of business coming in there. We had a couple of quarters that were very weak over there. I think the other thing is in our facility in Portugal, the diversification of getting new products in there has certainly helped that situation as well. We're now making solar water heaters for a company in Germany out of there. A while ago, we started making the helium cylinder tanks in Portugal, and that business has continued to grow, so that's helped their business. And as I mentioned in my comments, just the improvement in the truck business in Europe is helping the air brake tanks out of the Czech Republic, so it is really across the board.

Final Transcript

Sep 30, 2010 / 02:30PM GMT, WOR - Q1 2011 Worthington Industries Earnings Conference Call

Phil Gibbs - KeyBanc - Analyst

Okay. That's helpful. Do you expect to see an ongoing sequential pick-up in volume in that business, or some seasonal tick-down in the next quarter here?

John McConnell - Worthington Industries - Chairman and CEO

I think that we certainly today would say to you that we feel reasonably good about the prospects for the next three to six months in Europe. It seems like that there is better activity, and things are stronger than they have been.

Phil Gibbs - KeyBanc - Analyst

That's -- yes, I was just going to say that jives with what I have been hearing from those -- their industrial markets. Thanks a lot, guys.

John McConnell - Worthington Industries - Chairman and CEO

You're welcome.

Operator

There are no further questions.

John McConnell - Worthington Industries - Chairman and CEO

Well, again, thank you all for joining us. We feel very good about our results, and continue to demonstrate to ourselves that we have made systemic changes here that are solidifying, and continued improvement is on the horizon. Our people remain hungry, and continue to look for new opportunities out there to improve our business and our model here, so we expect to continue on this path. Thank you very much.

Operator

This concludes today's call. You may disconnect at this time.

Final Transcript

Sep 30, 2010 / 02:30PM GMT, WOR - Q1 2011 Worthington Industries Earnings Conference Call

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