UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 

FORM 8-K

 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported):
 
July 6, 2011 (June 29, 2011)
 
WORTHINGTON INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
 
Ohio
1-8399
31-1189815
(State or other jurisdiction
(Commission
(IRS Employer
of incorporation)
File Number)
Identification No.)
 
200 Old Wilson Bridge Road, Columbus, Ohio
43085
(Address of principal executive offices)
(Zip Code)
 
Registrant’s telephone number, including area code:
 
(614) 438-3210
 
Not Applicable
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

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

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

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

o       Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 
 
 
Item 2.02.
Results of Operations and Financial Condition.
 
Management of Worthington Industries, Inc. (the “Registrant”) conducted a conference call on June 30, 2011 beginning at approximately 1:30 p.m., Eastern Time, to discuss the Registrant’s unaudited financial results for the fourth quarter of fiscal 2011 (the fiscal quarter ended May 31, 2011).  Additionally, the Registrant’s management addressed certain issues related to the outlook for the Registrant and its subsidiaries and their 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 to be “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.
 
 
Base Salary and Short-Term Incentive Compensation for Named Executive Officers .
 
Effective June 29, 2011, the Compensation and Stock Option Committee (the “Compensation Committee”) of the Board of Directors (the “Board”) of the Registrant approved the following base salaries and short-term incentive compensation awards for the twelve-month performance period ending May 31, 2012, for the named executive officers identified below.
 
   
Short-Term Incentive Compensation Awards
for the Period ending May 31, 2012(i):
 
 
Name
 
 
Annual Base Salary ($)
 
Threshold ($)
 
Target($)
 
Maximum($)
John P. McConnell
625,000
430,000
860,000
1,720,000
George P. Stoe
600,000
332,000
665,000
1,330,000
B. Andrew Rose
400,000
220,000
440,000
   880,000
Mark A. Russell
420,000
262,500
525,000
1,050,000
 
 
(i)
The last three columns show the potential payouts which can be earned under short-term cash incentive bonus awards based on achievement of specified levels of performance for the twelve-month period ending May 31, 2012.  Payouts of these awards for corporate executives are generally tied to achieving specified levels (threshold, target and maximum) of corporate economic value added and earnings per share for the twelve-month performance period with each performance measure carrying a 50% weighting. For Mr. Russell, a business unit executive, the corporate earnings per share measure carries a 20% weighting, the steel processing business unit operating income carries a 30% weighting and the steel processing business unit economic value added carries a 50% weighting.  If the performance level falls between threshold and target or between target and maximum, the award is to be prorated.  If threshold levels are not achieved for any performance measure, no payout will be made.
 
 
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Harry A. Goussetis, the other named executive officer of the Registrant for purposes of this Item 5.02, is retiring effective July 31, 2011.  He will receive a $53,333 base salary for the months of June and July, and no short-term incentive awards for the fiscal year ending May 31, 2012.

LTIP Performance Awards to Named Executive Officers .

Effective June 30, 2011, the Compensation Committee made the following long-term cash performance awards and performance share awards to the named executive officers identified below under the Worthington Industries, Inc. Amended and Restated 1997 Long-Term Incentive Plan (the “1997 Long-Term Incentive Plan”) for the three-year performance period ending May 31, 2014.

Cash Performance Awards for the Three-Year Period Ending May 31, 2014 :
 
Name
 
Threshold ($)
 
Target ($)
 
Maximum ($)
 
John P. McConnell
  475,000   950,000   1,900,000  
George P. Stoe
  400,000   800,000   1,600,000  
B. Andrew Rose
  175,000   350,000     700,000  
Mark A. Russell
  175,000   350,000     700,000  

Performance Share Awards for the Three-Year Period Ending May 31, 2014:
 
   
No. of Common Shares
 
Name
 
Threshold
 
Target
 
Maximum
 
John P. McConnell
  12,500   25,000   50,000  
George P. Stoe
    7,500   15,000   30,000  
B. Andrew Rose
    3,500     7,000   14,000  
 
Pay-outs of performance awards are generally tied to achieving specified levels (threshold, target and maximum) of cumulative corporate economic value added for the three-year performance period and earnings per share growth over the performance period, with each performance measure carrying a 50% weighting.  For Mr. Russell, as a steel processing business unit executive, cumulative corporate economic value-added and earnings per share measures together carry a 50% weighting, and business unit operating income targets are weighted 50%.  If the performance level falls between threshold and target or between target and maximum, the award is prorated.  Performance award pay-outs would generally be made no later than three months following the end of the applicable performance period.  Cash performance awards may be paid in cash, common shares of the Registrant, other property, or any combination thereof, at the sole discretion of the Compensation Committee at the time of payment.  Performance share awards will be paid in common shares of the Registrant.  In general, termination of employment results in termination of awards.  However, if termination is due to death, disability or retirement, a pro rata payout will be made if the performance period will end 24 months or less after termination of employment based on the number of months of employment completed by the named executive officer during the performance period before the effective date of termination, provided that the applicable performance goals are achieved.  No payout will be made if the performance period will end more than 24 months after termination of employment.  Unless the Board specifically provides otherwise, in the event of a change in control of the Registrant, performance awards will be considered to be earned, payable in full, and immediately settled or distributed, if the change in control is followed by specified types of termination of employment within two years of the change in control for this provision to apply.
 
 
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For further information about the 1997 Long-Term Incentive Plan, and the performance awards which may be made to executive officers of the Registrant, please refer to the 1997 Long-Term Incentive Plan (which was filed as Exhibit 10.8 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended November 30, 2008 (SEC File No. 1-8399)) and the form of letter evidencing performance awards granted under the 1997 Long-Term Incentive Plan with targets for three-year periods ending on or after May 31, 2011 (which is filed as Exhibit 10.10 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended May 31, 2010 (SEC File No. 1-8399)).

Stock Option Grants to Named Executive Officers.
 
Effective June 30, 2011, the Compensation Committee approved the following stock option grants which were made to the named executive officers identified below, with the exercise price of each stock option equal to the $23.10 closing price of the common shares of the Registrant on June 30, 2011.  All of these stock options were granted as non-qualified stock options pursuant to the Worthington Industries, Inc. 2010 Stock Option Plan (the “2010 Stock Option Plan”) and will expire on June 30, 2121, subject to the terms of the 2010 Stock Option Plan in respect of earlier termination or forfeiture.

Name
No. of Common Shares
Underlying Stock Options Granted
John P. McConnell
80,000
George P. Stoe
72,000
B. Andrew Rose
30,000
Mark A. Russell
30,000

For further information about the 2010 Stock Option Plan and the stock options which may be granted thereunder,  please refer to the 2010 Stock Option Plan (which was filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on October 5, 2010 (SEC File No. 1-8399) and the Non-Qualified Stock Option Award Agreement entered into by the Registrant in order to evidence the grant of non-qualified stock options to the named executive officers effective June 30, 2011 and to be entered into by the Registrant in order to evidence future grants of non-qualified stock options to executive officers of the Registrant pursuant to the 2010 Stock Option Plan (which is included as Exhibit 10.1 to this Current Report on Form 8-K).
 
 
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Each non-qualified stock option granted effective June 30, 2011, has an expiration date of June 30, 2021 and vests in one-third increments each annual anniversary of the grant date, becoming fully vested and exercisable on the third anniversary of the grant date (i.e. June 30, 2014).  If a named executive officer’s employment terminates due to death, disability or retirement, the vested and exercisable portion of the named executive officer’s non-qualified stock option will remain exercisable until the earlier of the expiration date of the non-qualified stock option (June 30, 2021) or the third anniversary of the named executive officer’s termination of employment, and the Compensation Committee may elect, in its sole discretion, to accelerate the vesting of any unvested portion of the non-qualified stock option.  Unless the Compensation Committee otherwise determines, in the event of a change in control (as defined in the 2010 Stock Option Plan), the portion of the non-qualified stock option at that time outstanding will become fully vested and exercisable if the employment of a named executive officer is terminated by the Registrant without cause or by the named executive officer due to an adverse change in his employment terms at any time within the two years following the change in control.  If a named executive officer’s employment terminates other than due to the named executive officer’s death, disability or retirement or following a change in control as described above, any outstanding portion of the non-qualified stock option (whether or not vested) will be forfeited.
 
Restricted Stock Awards.
 
Effective June 30, 2011, the Compensation Committee approved the following restricted stock awards (also referred to as “restricted shares”) made to the named executive officers identified below pursuant to the 1997 Long-Term Incentive Plan:
 
 
 
Name
Number of Common Shares
Underlying Restricted Stock Award
   
John P. McConnell
20,000
B. Andrew Rose   7,000
Mark A. Russell    7,000
 
For further information about these restricted shares, please refer to the 1997 Long-Term Incentive Plan and the Restricted Stock Award Agreement for 2011 entered into by the Registrant in order to evidence the grant of restricted shares to the named executive officers effective June 30, 2011 (which is included as Exhibit 10.2 to this Current Report on Form 8-K).
 
 
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The restricted shares will be held in escrow by the Registrant and may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated until the restrictions thereon have lapsed.  Subject to continued employment of the named executive officer, the restrictions on the restricted shares will lapse and the restricted shares will become fully vested on the third anniversary of the grant date (i.e., on June 30, 2014).  Any unvested restricted shares will become fully vested if the named executive officer dies or becomes disabled, as determined by the Compensation Committee.  Upon a change in control (as defined in the 1997 Long-Term Incentive Plan), the restrictions on the restricted shares will lapse and the restricted shares will become fully vested if the named executive officer’s employment is terminated within two years thereafter by the Registrant without cause or by the named executive officer due to an adverse change in his employment terms.  If the named executive officer retires, the Compensation Committee may elect, in its discretion, to accelerate the vesting of all or a portion of the restricted shares of the named executive officer.  If a named executive officer’s employment with the Registrant terminates for any other reason, the restricted shares will be forfeited.  During the time between the grant date and the vesting date of the restricted shares, a named executive officer may exercise full voting rights in respect of the restricted shares and dividends will be accrued and paid in respect of the restricted shares upon the vesting date, if the underlying restricted shares vest.
 
Other Restricted Stock Awards .

Effective as of June 30, 2011, the Compensation Committee also approved the following restricted stock awards to the named executive officers identified below pursuant to the 1997 Long-Term Incentive Plan.
 
 
 
Name
Number of Common Shares
Underlying Restricted Stock Award
   
B. Andrew Rose
  185,000
Mark A. Russell   185,000
 
For further information about the additional restricted stock awards made to Messrs. Rose and Russell, please refer to the form of Restricted Stock Award Agreement entered into by the Registrant in order to evidence such awards, which is included as Exhibit 10.3 to this Current Report on Form 8-K.
 
 
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The restricted shares will be held in escrow by the Registrant and may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated until the restrictions thereon have lapsed.  Subject to continued employment of each named executive officer, restrictions on the restricted shares will lapse and the restricted shares will become fully vested if and when the closing price of the Registrant’s common shares equals or exceeds $30 per share for 30 consecutive calendar days.  Upon a change in control (as defined in the 1997 Long-Term Incentive Plan), the restrictions on the restricted shares will lapse and the restricted shares will become fully vested if the named executive officer’s employment is terminated within two years thereafter by the Registrant without cause or by the named executive officer due to an adverse change in the terms of his employment.  If a named executive officer’s employment with the Registrant terminates for any other reason, the restricted shares will be forfeited provided that if the named executive officer’s employment with the Registrant terminates due to death or disability, the Compensation Committee may, in its sole discretion, elect to have all or a portion of the restricted shares become fully vested.  During the time between the grant date and the vesting date of the restricted shares, the named executive officer may exercise full voting rights in respect of the restricted shares and dividends will be accrued and paid in respect of the restricted shares upon the vesting date, if the underlying restricted shares vest.  The restricted shares will be forfeited five years from the effective date of the award (i.e., on June 30, 2016) to the extent that the restrictions thereon have not lapsed.
 
Compensation of Directors.
 
The Compensation Committee recommended and, on June 29, 2011, the Board approved the following changes to the compensation for non-employee directors of the Registrant, based on market information. The changes take effect September 2011.
 
Changes to Cash Compensation .
 
The following changes were made to cash compensation:
 
     
Prior
   
New
 
 
Annual Retainer:
  $ 45,000     $ 55,000  
 
Compensation Committee Chair:
(Additional Annual Retainer)
  $ 7,500     $ 10,000  
 
Audit Committee Chair:
(Additional Annual Retainer)
  $ 10,000     $ 15,000  

2011 Director Stock Option Awards.
 
Effective as of the date of the 2011 Annual Meeting of Shareholders, each individual then serving as a non-employee director of the Registrant will receive a stock option to purchase 8,000 common shares (12,000 for the Lead Independent Director) subject to the standard annual director stock option terms.

2011 Director Restricted Stock Awards .
 
Effective as of the date of the 2011 Annual Meeting of Shareholders, each individual then serving as a non-employee director of the Registrant  will receive an award of 2,400 restricted shares, (3,600 restricted shares for the  Lead Independent Director), subject to the standard annual director restricted stock award terms.
 
 
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Item 9.01.
Financial Statements and Exhibits.
 
(a)-(c)           Not applicable.
 
(d) Exhibits :
 
The following exhibits are furnished with this Current Report on Form 8-K:
 
Exhibit No.
Description
   
10.1
Form of Non-Qualified Stock Option Award Agreement entered into by the Registrant in order to evidence the grant of non-qualified stock options to executive officers of the Registrant effective as of June 30, 2011 pursuant to the Worthington Industries, Inc. 2010 Stock Option Plan and to be entered into by the Registrant in order to evidence future grants of non-qualified stock options to executive officers pursuant to the Worthington Industries, Inc. 2010 Stock Option Plan.
   
10.2
Form of Restricted Stock Award Agreement entered into by the Registrant in order to evidence the grant for 2011 effective as of June 30, 2011, of restricted common shares, which will vest in three years, pursuant to the Worthington Industries, Inc. Amended and Restated 1997 Long-Term Incentive Plan.
   
10.3
Form of Restricted Stock Award Agreement entered into by the Registrant with each of B. Andrew Rose and Mark A. Russell in order to evidence the grant effective as of June 30, 2011 of 185,000 restricted common shares pursuant to the Worthington Industries, Inc. Amended and Restated 1997 Long-Term Incentive Plan.
   
99.1
Transcript of  Worthington Industries, Inc. Earnings Conference Call for Fourth Quarter of Fiscal 2012 (Fiscal Quarter ended May 31, 2011), held on June 30, 2011.
 
 
 
SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
WORTHINGTON INDUSTRIES, INC.
 
     
     
Date: July 6, 2011
     
 
By:
/s/Dale T. Brinkman
 
   
Dale T. Brinkman, Vice President-
 
   
Administration, General Counsel & Secretary
 
 
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EXHIBIT 10.1
 
WORTHINGTON INDUSTRIES, INC.
2010 STOCK OPTION PLAN

NON-QUALIFIED STOCK OPTION AWARD AGREEMENT

Effective as of the date specified in the attached Notice of Grant (the “Grant Date”), Worthington Industries, Inc. hereby grants the individual identified in the Notice of Grant (the “Optionee”) an award consisting of an option to purchase the number of Common Shares of the Company (the “Option”) at an exercise price per Common Share (“Exercise Price”), all as set forth in the Notice of Grant .   The Option is subject to the terms and conditions described in the Worthington Industries, Inc. 2010 Stock Option Plan (the “Plan”) and this Non-Qualified Stock Option Award Agreement (this “Agreement”).   The Option is not intended to constitute an “incentive stock option” within the meaning of Section 422 of the Code. The “Company” shall mean Worthington Industries, Inc. individually, or together with its Subsidiaries, as the context requires.
 
Section 1.             Vesting

(a)            Normal Vesting .  The Option shall vest as provided in vesting schedule set forth in the Notice of Grant .
 
(b)            Retirement, Death or Disability .  In the event of the Optionee’s Death, Disability or Termination due to Retirement, the Committee, in its sole discretion, may cause all or a portion of the unvested Option to vest as of the date of death, Disability or Termination due to Retirement.
 
(c)            Change in Control .   If the Optionee is Terminated by the Company without “cause” or the Optionee terminates employment due to an “adverse change in employment terms” (each as defined under rules established by the Committee) within two years following a Change in Control, the unvested portion of the Option shall immediately vest and become exercisable.

Section 2.              Exercise
 
(a)     Time .  The Option may not be exercised by the Optionee prior to twelve months from the Grant Date.  Thereafter, the Optionee may exercise the Option as to the number of Common Shares which have vested at any time prior to the tenth anniversary of the Grant Date (the “Expiration Date”).  Notwithstanding the foregoing, the Optionee may not exercise the Option (whether or not vested) after the Employee’s Termination, except as provided below:

(i)     Death; Disability; Retirement .  If the Optionee dies, becomes Disabled or Terminates due to Retirement, the vested portion of the Option may be exercised until the earlier of (A) 36 months after the Optionee’s death, Disability or Termination due to Retirement or (B) the Expiration Date.

 
 
 
 
(ii)     Change in Control .  In the event of the Optionee’s Termination under the circumstances described in Section 1(c), the vested portion of the Option may be exercised until the earlier of (A) 12 months after the date of Termination or (B) the Expiration Date.  After a Change in Control, a Termination by the Company occurs if the Optionee’s employment is terminated by the Company without “cause” or the Optionee terminates employment due to an “adverse change in employment terms” (each as defined under rules established by the Committee).

(b)      Limitations on Exercise .  Except as otherwise provided herein, the Optionee may not exercise any part of the Option unless, at the time of exercise, the Optionee has been in the continuous employment of the Company or a Subsidiary of the Company since the Grant Date.  The Committee has the sole discretion to decide 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 Section 2(b).

(c)      Method of Exercise .  The vested portion of the Option may be exercised, in whole or in part, by giving written notice of exercise to the Company, Attn: General Counsel or Corporate Compensation Manager, 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 for each Common Share with respect to which the Option is being exercised, as described in Section 2(d).

(d)      Payment of Exercise Price .  Payment of the Exercise Price shall be made: (i) in cash or its equivalent; (ii) by tendering Common Shares already owned by the Optionee prior to the exercise date; (iii) by a cashless exercise (including by withholding Common Shares which would otherwise be issued in connection with the exercise of the Option, or through a broker-assisted arrangement to the extent permitted by applicable laws, rules or regulations); or (iv) through any combination of the foregoing.  The Committee shall determine acceptable methods for tendering Common Shares and may impose such conditions on the use of Common Shares as it deems appropriate.

(e)      Delivery of Common Shares .  After payment has been received, the Company will  take the necessary action to deliver appropriate certificates evidencing the Common Shares purchased upon the exercise of the Option with reasonable promptness.  Notwithstanding the foregoing, the issuance and delivery of Common Shares upon the exercise of the Option may, in the Company’s sole discretion, be effected on a non-certificated basis, to the extent not prohibited by applicable law or the rules of any securities exchange, market or quotation system on or through which the Common Shares are then listed or traded.  The Company’s obligation to deliver Common Shares upon exercise of the Option is subject to the satisfaction of the following conditions: (i) the Optionee is not, at the time of exercise, in material breach of any of the Optionee’s obligations under this Agreement; and (ii) the Optionee (or, in the event of the Optionee’s death, the Optionee’s Beneficiary) has confirmed any factual matters or obtained such consents as reasonably requested by the Committee.

 
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Section 3.              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 the  exercise of the Option.  This amount may, as determined by the Company in its sole discretion, be: (a) withheld from other amounts due to the Optionee; (b) withheld from any Common Shares being transferred in connection with the exercise of the Option; (c) withheld from the vested and exercisable portion of the Option (including the Common Shares transferable thereunder), whether or not being exercised or settled at the time the taxable event arises; or (d) collected directly from the Optionee.  Unless otherwise determined by the Committee, the Optionee 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 of exercise 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 Optionee at the time of the withholding and if such Common Shares are not otherwise distributable at the time of the withholding, provided that the Optionee has a vested right to distribution of such Common Shares at such time.  Such election must be made in writing, is irrevocable once made, and shall be subject to any terms and conditions that the Committee, in its sole discretion, deems appropriate.

Section 4.              Adjustment Upon Change in Capitalization
 
In the event of any change in capitalization affecting the Common Shares, 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 number of Common Shares subject to the Option and the Exercise Price per Common Share.

Section 5.              Restrictions on Exercise
 
Notwithstanding anything contained in this Agreement or elsewhere to the contrary, the issuance of Common Shares 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 unless the Company is satisfied that the issuance of those Common Shares will comply with applicable federal and state securities laws. Transfers of the Common Shares issued upon exercise of the Option 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 the certificates, if any, delivered to evidence Common Shares issued upon exercise of the Option to make appropriate reference to restrictions within the scope of this Section 5 and the Plan.  Nothing contained in this Agreement or elsewhere shall be construed to require the Company to take any action whatsoever to eliminate the restrictions imposed by this Section 5 upon the exercise of the Option or upon the transfer of Common Shares purchased upon the exercise of the Option.
 
 
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Section 6.              Forfeiture
 
(a)    If the Optionee violates the provisions of Section 8(a) of the Plan, the outstanding portion of the Option will be forfeited.  The prohibitions contained in Section 8(a) of the Plan include violation of any non-competition covenant, employee non-solicitation covenant or similar agreement or covenant of the Optionee in favor of the Company; deliberately engaging in any action which causes or may cause harm to the interest of the Company; disclosure of confidentiality or proprietary information relating to the Company’s business affairs; and failure return to property of the Company when appropriate.
 
(b)    In addition to the foregoing, if the Optionee violates any non-competition covenant, employee non-solicitation covenant, or any similar agreement or covenant in favor of the Company, the Committee may, in its sole discretion, require the Optionee to return to the Company the economic value of the Option which is or has been realized or obtained (measured at the date of exercise) by the Optionee at any time during the period beginning on the date which is six months prior to the earlier of (i) the date of the Optionee’s Termination; or (ii) the date any such violation occurs.
 
(c)     The Committee shall have full power and authority to determine whether, to what extent, and under what circumstances, the Option (or any portion thereof) shall be canceled or suspended.  In particular, but without limitation, the Option shall be canceled if the Optionee, without the consent of the Committee, while employed by the Company or a Subsidiary, or after Termination of such employment, becomes associated with, employed by, renders services to, or owns any interest in (other than any non-substantial interest, as determined by the Committee), any business that is in competition with the Company or with any of its affiliated companies as determined by the Committee.

Section 7.               Miscellaneous
 
(a)    Non-Assignability of the Option .  The Option is not assignable or otherwise transferable by the Optionee except by will or by the laws of descent and distribution.  The Option may not be exercised during the lifetime of the Optionee except by the Optionee.  Notwithstanding the foregoing, the Optionee may designate a Beneficiary to exercise the Option in the event of the Optionee’s death.
 
(b)      Rights of Optionee; No Guarantee of Employment .  The Optionee shall have none of the rights of a shareholder with respect to Common Shares subject to the Option unless and until the Optionee becomes the record holder of such Common Shares.  This Agreement shall not be construed as: (i) interfering with or limiting the right of the Company to Terminate the Optionee’s employment at any time, with or without cause; or (ii) conferring on the Optionee any right to continue as an employee of the Company.

 
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(c)      Plan as Controlling .  All terms and conditions of the Plan applicable to non-qualified stock options which are not set forth in this Agreement shall be deemed incorporated herein by reference.  In the event that any term or condition of this Agreement is inconsistent with the terms and conditions of the Plan, the Plan shall be deemed controlling, except as otherwise specifically provided in this Agreement.  Capitalized terms not defined herein shall have the meaning given to them in the Plan.

(d)     Governing Law . This Agreement shall be governed by and construed in accordance with the laws (other than laws governing conflicts of laws) of the State of Ohio.
 
(e)      Rights and Remedies Cumulative .  All rights and remedies of the Company and of the Optionee enumerated in this Agreement shall be cumulative and, except as expressly provided otherwise in this Agreement, none shall exclude any other rights or remedies allowed at law or in equity, and each of said rights or remedies may be exercised and enforced concurrently.
 
(f)            Captions .  The captions contained in this Agreement are included only for convenience of reference and do not define, limit, explain or modify this Agreement or its interpretation, construction or meaning and are in no way to be construed as a part of this Agreement.

(g)     Severability .  If any provision of this Agreement or the application of any provision hereof to any person or any circumstance shall be determined to be invalid or unenforceable, then such determination shall not affect any other provision of this Agreement or the application of said provision to any other person or circumstance, all of which other provisions shall remain in full force and in effect.

(h)     Entire Agreement .  This Agreement, together with the Plan and the Notice of Grant , which are incorporated herein by reference, constitutes the entire agreement between the Company and the Optionee in respect of the subject matter of this Agreement, and this Agreement supersedes all prior and contemporaneous agreements between the parties hereto in connection with the subject matter of this Agreement.  No officer, director, employee or other servant or agent of the Company, and no servant or agent of the Optionee, is authorized to make any representation, warranty or other promise not contained in this Agreement.  No change, termination or attempted waiver of any of the provisions of this Agreement shall be binding upon any party hereto unless contained in a writing signed by the party to be charged.
 
Section 8.               Application of Section 280G of the Code.
 
If the company determines that any payment or benefit, including any accelerated vesting, due to the Optionee under this Agreement in connection with a Change in Control, when combined with any other payment or benefit due to the Optionee from the Company or any other entity in connection with such Change in Control, would be considered a "parachute payment" within the meaning of Section 280G of the Code, the payments and benefits due to the Participant under this Agreement may be reduced by the Company to $1.00 less than the amount that would otherwise be considered a "parachute payment" within the meaning of Section 280G of the Code, in accordance with rules and procedures which may be established by the Committee.
 
 
5
EXHIBIT 10.2
 
WORTHINGTON INDUSTRIES, INC.
AMENDED AND RESTATED 1997 LONG-TERM INCENTIVE PLAN

RESTRICTED STOCK AWARD AGREEMENT FOR 2011

Effective as of the date specified in the attached Notice of Grant (the “Grant Date”), Worthington Industries, Inc. hereby grants to the individual identified in the Notice of Grant (the “Participant”) an award consisting of the number of restricted common shares of the Company (“Restricted Stock”) set forth in the Notice of Grant .  The Restricted Stock is subject to the terms and conditions described in the Worthington Industries, Inc. Amended and Restated 1997 Long-Term Incentive Plan (the “Plan”) and this Restricted Stock Award Agreement (this “Agreement”). The “Company”  shall mean Worthington Industries, Inc. individually, or together with its subsidiaries, as the context requires.
 
Section 1.              Vesting
 
Except as provided in Section 2, the Restricted Stock will vest on the third anniversary of the Grant Date, provided that the Participant has continuously remained an employee of the Company though such date.
 
Section 2.               Accelerated Vesting
 
(a)            Death or Disability .  Any unvested Restricted Stock shall become fully vested if the Participant dies or becomes disabled, as determined by the Committee.
 
(b)            Retirement .   Any unvested Restricted Stock generally is forfeited if the Participant terminates employment due to on retirement, but the Committee, in its sole discretion, may cause all or a portion of the Restricted Stock to vest as of the date of retirement, as determined by the Committee.
 
(c)            Change in Control .  If there is a Change of Control and within two years thereafter the Participant’s employment is terminated by the Company without “cause” or by the Participant “due to an adverse change in the terms of the Participant’s employment” (as those terms are defined in rules adopted by the Committee), any unvested Restricted Stock shall become fully vested on the date employment is terminated.  The provisions of this Section 2(c)  shall apply in lieu of the provisions of Section 10 of the Plan.
 
Section 3.              Transferability
 
Until the Restricted Stock becomes vested as described in Sections 1 or 2, the Restricted Stock may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated.

 
 
 
 
Section 4.               Rights Before Vesting.
 
Before the Restricted Stock vests, (a) the Restricted Stock will be held in escrow by the Company; (b) the Participant may exercise full voting rights associated with the Restricted Stock; and (c) the Participant shall be entitled to all dividends and other distributions paid with respect to the Restricted Stock, but such dividends and other distributions will be held in escrow by the Company and shall be subject to the same restrictions, terms and conditions as the Restricted Stock to which they relate.
 
Section 5.              Settlement
 
If the applicable terms and conditions of this Agreement are satisfied, the Restricted Stock will be released from any transfer restrictions or delivered to the Participant with reasonable promptness after all applicable restrictions have lapsed.  Any fractional shares of Restricted Stock shall be settled in cash based upon the Fair Market Value of a Common Share on the settlement date.
 
The issuance of Shares shall be subject to the satisfaction of the Company’s counsel that such issuance shall be in compliance with applicable Federal and state securities laws.  Any Shares delivered under the Plan shall be subject to such stock-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Shares are then listed and any applicable Federal or state securities law, and the Committee may cause a legend or legends to be put on any certificates evidencing such Shares to make appropriate reference to such restrictions.
 
Section 6.              Withholding
 
The Company is authorized to withhold in respect of the Restricted Stock, the amount of withholding taxes due in respect of vesting of such Restricted Stock and to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for the payment of such taxes.  The Committee may establish procedures for election by the Participant to satisfy such withholding taxes by delivery of, or directing the Company to retain, Shares that would otherwise be deliverable upon vesting of the Restricted Stock.
 
Section 7.              Forfeiture
 
In the event that the Participant terminates employment with the Company for any reason whatsoever, and within 18 months after the date thereof becomes associated with, employed by, renders services to, or owns any interest in (other than any nonsubstantial interest, as determined by the Committee), any business that is in competition with the Company or with any business in which the Company has a substantial interest as determined by the Committee, the Committee, in its sole discretion, may require the Participant to return to the Company the economic value of the Restricted Stock which is realized or obtained (measured as of the date on which the Restricted Stock vested) by the Participant at any time during the period beginning on that date which is six months prior to the date of the Participant’s termination of employment with the Company.
 
 
2
 
 
Section 8.                Other Terms and Conditions.
 
(a)            Beneficiaries .  The Participant may designate a beneficiary to receive any Restricted Stock that is unsettled in the event of the Participant’s death.  If no beneficiary is designated, the Participant’s beneficiary shall be the Participant’s surviving spouse and, if there is no surviving spouse, the Participant’s estate.
 
(b)            No Guarantee of Employment .  The granting of Restricted Stock shall not confer upon the Participant any right to continued employment with the Company, nor shall it interfere in any way with the right of the Company to terminate the employment of the Participant at any time, with or without cause.
 
(c)            Governing Law . This Agreement shall be governed by and construed in accordance with the laws (other than laws governing conflicts of laws) of the State of Ohio.
 
(d)            Rights and Remedies Cumulative .  All rights and remedies of the Company and of the Participant enumerated in this Agreement shall be cumulative and, except as expressly provided otherwise in this Agreement, none shall exclude any other rights or remedies allowed at law or in equity, and each of said rights or remedies may be exercised and enforced concurrently.
 
(e)            Captions .  The captions contained in this Agreement are included only for convenience of reference and do not define, limit, explain or modify this Agreement or its interpretation, construction or meaning and are in no way to be construed as a part of this Agreement.
 
(f)            Severability .  If any provision of this Agreement or the application of any provision hereof to any person or any circumstance shall be determined to be invalid or unenforceable, then such determination shall not affect any other provision of this Agreement or the application of said provision to any other person or circumstance, all of which other provisions shall remain in full force and in effect.
 
(g)            Entire Agreement .  This Agreement, together with the Notice of Grant and the Plan, which are incorporated herein by reference, constitutes the entire agreement between the Company and the Participant in respect of the subject matter of this Agreement, and this Agreement supersedes all prior and contemporaneous agreements between the parties hereto in connection with the subject matter of this Agreement.  No officer, director, employee or other servant or agent of the Company, and no servant or agent of the Participant, is authorized to make any representation, warranty or other promise not contained in this Agreement.  No change, termination or attempted waiver of any of the provisions of this Agreement shall be binding upon any party hereto unless contained in a writing signed by the party to be charged.
 
(h)            Restricted Stock Subject to the Plan.   The Restricted Stock is subject to the terms and conditions described in this Agreement and the Plan, which is incorporated by reference into and made a part of this Agreement.  In the event of a conflict between the terms of the Plan and the terms of this Agreement, the terms of the Plan will govern except as specifically provided in this Agreement.  The Committee has the sole responsibility for interpreting the Plan and this Agreement, and the Committee’s determination of the meaning of any provision in the Plan or this Agreement will be binding on the Participant.  Capitalized terms that are not defined in this Agreement have the same meaning as in the Plan.

 
3
 
 
(i)            Section 83(b) Election . The Participant may file an election pursuant to Section 83(b) of the Code to be taxed currently on the Fair Market Value of the Restricted Stock (less any purchase price paid for the Restricted Stock).  The election will be made on a form provided by the Company and must be filed with the Internal Revenue Service no later than 30 days after the Grant Date. The Participant must seek the advice of the Participant’s own tax advisors as to the advisability of making such an election, the potential consequences of making such an election, the requirements for making such an election, and the other tax consequences of the Restricted Stock under federal, state, and any other laws, rules and regulations that may be applicable. The Company and its agents have not and are not providing any tax advice to the Participant.
 
Section 9.               Application of Section 280G of the Code.
 
If the company determines that any payment or benefit, including any accelerated vesting, due to the Participant under this Agreement in connection with a Change in Control, when combined with any other payment or benefit due to the Participant from the Company or any other entity in connection with such Change in Control, would be considered a "parachute payment" within the meaning of Section 280G of the Code, the payments and benefits due to the Participant under this Agreement may be reduced by the Company to $1.00 less than the amount that would otherwise be considered a "parachute payment" within the meaning of Section 280G of the Code, in accordance with rules and procedures which may be established by the Committee.
 
 
4
EXHIBIT 10.3
 
WORTHINGTON INDUSTRIES, INC.
AMENDED AND RESTATED 1997 LONG-TERM INCENTIVE PLAN

RESTRICTED STOCK AWARD AGREEMENT
185,000 SHARES

This Restricted Stock Award Agreement (this “Agreement”) is made effective as of June 30, 2011 (the “Grant Date”) by and between Worthington Industries, Inc. (the “Company”) and the undersigned participant (the “Participant”).
 
Section 1.               Award of Restricted Stock.
 
The Company hereby grants the Participant an award of 185,000 restricted common shares of the Company (the “Restricted Stock”).  The Restricted Stock is subject to the terms and conditions described in the Worthington Industries, Inc. Amended and Restated 1997 Long-Term Incentive Plan (the “Plan”) and this Agreement, and is granted pursuant to Section 11 of the Plan.
 
Section 2.
Vesting .
 
Subject to Section 3, the Restricted Stock will vest if, during any 30-consecutive-calander-day period falling with the Vesting Period (as defined below), the reported closing price of the Company’s Shares equals or exceeds $30.00 per Share, provided that the Participant remains continuously employed by the Company or a subsidiary of the Company during the portion of the Vesting Period occurring prior to the date on which the Restricted Stock becomes fully vested.  Vesting of the Restricted Stock is subject to certification by the Committee that the foregoing performance criteria have been established and the Restricted Stock will vest on the date that such certification is made.
 
The Restricted Stock will be forfeited if the conditions for vesting set forth in Section 2 or Section 3 are not met by the end of the Vesting Period.
 
The “Vesting Period” is the period beginning on the Grant Date and ending on the fifth anniversary of the Grant Date.
 
Section 3 .
Accelerated Vesting .
 
(a)            Death or Disability .  Any unvested Restricted Stock generally is forfeited if the Participant terminates employment due to death or disability as determined by the Committee, but the Committee, in its sole discretion, may cause all or a portion of the Restricted Stock to vest as of the date of termination due to death or disability, as determined by the Committee.
 
(b)            Change in Control .  If there is a Change in Control and within two years thereafter the Participant’s employment is terminated by the Company without “cause” or by the Participant “due to an adverse change in the terms of the Participant’s employment” (as those terms are defined in rules adopted by the Committee), any unvested Restricted Stock (to the extent not then forfeited) will become fully vested on the date employment is terminated.  The provisions of this Section 3(b) will apply in lieu of the provisions of Section 10 of the Plan.  For purposes of clarity, no unvested Restricted Stock will vest if the Participant’s termination occurs after the end of the Vesting Period.
 
 
 
 
 
Section 4.              Restrictions on Transferability.
 
(a)           Until the Restricted Stock becomes vested as described in Section 2 or Section 3, the Restricted Stock may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated. 

(b)           After the Restricted Stock becomes vested as described in Section 2, the Restricted Stock may not be transferred for a period of five years after the date of such vesting.  Notwithstanding the foregoing, the Committee will adopt rules and procedures to permit  a portion of the vested Restricted Stock to be delivered to or retained by the Company (or which is otherwise necessary to be sold) to satisfy any withholding obligations pursuant to Section 7 (or other income tax obligations) which may arise upon vesting of the Restricted Stock.  The restrictions on transfer of vested Restricted Stock contained in this Section 4(b) will not apply following the death or disability of the Participant or a Change in Control.  The Committee may, in its sole discretion, eliminate the restrictions on transfer contained in this Section 4(b) as to all or any portion of the Restricted Stock in cases of hardship or for such other reasons the Committee deems appropriate.

Section 5.                Rights Before Vesting.
 
Before the Restricted Stock vests, (a) the Restricted Stock will be held in escrow by the Company; (b) the Participant may exercise full voting rights associated with the Restricted Stock; and (c) the Participant will be entitled to all dividends and other distributions paid with respect to the Restricted Stock, but such dividends and other distributions will be held in escrow by the Company and will be subject to the same restrictions, terms and conditions as the Restricted Stock to which they relate.
 
Section 6.
Settlement.
 
If the applicable terms and conditions of this Agreement are satisfied, the Restricted Stock will be released from any transfer restrictions or delivered to the Participant with reasonable promptness after all applicable restrictions have lapsed.  Any fractional shares of Restricted Stock will be settled in cash based upon the Fair Market Value of a Common Share on the settlement date.
 
The issuance of Shares will be subject to the satisfaction of the Company’s counsel that such issuance will be in compliance with applicable Federal and state securities laws.  Any Shares delivered under the Plan will be subject to such stock-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Shares are then listed and any applicable Federal or state securities law, and the Committee may cause a legend or legends to be put on any certificates evidencing such Shares to make appropriate reference to such restrictions.
 
 
2
 
 
Section 7.
Withholding.
 
The Company is authorized to withhold in respect of the Restricted Stock, the amount of withholding taxes due in respect of vesting of such Restricted Stock and to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for the payment of such taxes.  The Committee may establish procedures for election by the Participant to satisfy such withholding taxes by delivery of, or directing the Company to retain, Shares that would otherwise be deliverable upon vesting of the Restricted Stock.
 
Section 8.
Forfeiture.
 
In the event that the Participant terminates employment with the Company for any reason whatsoever, and within 18 months after the date thereof becomes associated with, employed by, renders services to, or owns any interest in (other than any nonsubstantial interest, as determined by the Committee), any business that is in competition with the Company or any subsidiary of the Company or with any business in which the Company or any subsidiary of the Company has a substantial interest as determined by the Committee, the Committee, in its sole discretion, may require the Participant to return to the Company the economic value of the Restricted Stock which is realized or obtained (measured as of the date on which the Restricted Stock vested) by the Participant at any time during the period beginning on that date which is six months prior to the date of the Participant’s termination of employment with the Company.
 
Section 9.                Other Terms and Conditions.
 
(a)            Beneficiaries .  The Participant may designate a beneficiary to receive any Restricted Stock that is unsettled in the event of the Participant’s death.  If no beneficiary is designated, the Participant’s beneficiary will be the Participant’s surviving spouse and, if there is no surviving spouse, the Participant’s estate.
 
(b)            No Guarantee of Employment .  The granting of Restricted Stock will not confer upon the Participant any right to continued employment with the Company, nor will it interfere in any way with the right of the Company to terminate the employment of the Participant at any time, with or without cause.
 
(c)            Governing Law . This Agreement will be governed by and construed in accordance with the laws (other than laws governing conflicts of laws) of the State of Ohio.
 
(d)            Rights and Remedies Cumulative .  All rights and remedies of the Company and of the Participant enumerated in this Agreement will be cumulative and, except as expressly provided otherwise in this Agreement, none will exclude any other rights or remedies allowed at law or in equity, and each of said rights or remedies may be exercised and enforced concurrently.
 
(e)            Captions .  The captions contained in this Agreement are included only for convenience of reference and do not define, limit, explain or modify this Agreement or its interpretation, construction or meaning and are in no way to be construed as a part of this Agreement.
 
 
3
 
 
(f)            Severability .  If any provision of this Agreement or the application of any provision hereof to any person or any circumstance will be determined to be invalid or unenforceable, then such determination will not affect any other provision of this Agreement or the application of said provision to any other person or circumstance, all of which other provisions will remain in full force and in effect.
 
(g)            Entire Agreement .  This Agreement, together with the Notice of Grant and the Plan, which are incorporated herein by reference, constitutes the entire agreement between the Company and the Participant in respect of the subject matter of this Agreement, and this Agreement supersedes all prior and contemporaneous agreements between the parties hereto in connection with the subject matter of this Agreement.  No officer, director, employee or other servant or agent of the Company, and no servant or agent of the Participant, is authorized to make any representation, warranty or other promise not contained in this Agreement.  No change, termination or attempted waiver of any of the provisions of this Agreement will be binding upon any party hereto unless contained in a writing signed by the party to be charged.
 
(h)            Restricted Stock Subject to the Plan.   The Restricted Stock is subject to the terms and conditions described in this Agreement and the Plan, which is incorporated by reference into and made a part of this Agreement.  In the event of a conflict between the terms of the Plan and the terms of this Agreement, the terms of the Plan will govern except as specifically provided in this Agreement.  The Committee has the sole responsibility for interpreting the Plan and this Agreement, and the Committee’s determination of the meaning of any provision in the Plan or this Agreement will be binding on the Participant.  Capitalized terms that are not defined in this Agreement have the same meaning as in the Plan.

(i)            Section 83(b) Election . The Participant may file an election pursuant to Section 83(b) of the Code to be taxed currently on the Fair Market Value of the Restricted Stock (less any purchase price paid for the Restricted Stock).  The election will be made on a form provided by the Company and must be filed with the Internal Revenue Service no later than 30 days after the Grant Date. The Participant must seek the advice of the Participant’s own tax advisors as to the advisability of making such an election, the potential consequences of making such an election, the requirements for making such an election, and the other tax consequences of the Restricted Stock under federal, state, and any other laws, rules and regulations that may be applicable. The Company and its agents have not and are not providing any tax advice to the Participant.
 
Section 10.             Application of Section 280G of the Code.
 
If the Company determines that any payment or benefit, including any accelerated vesting, due to the Participant under this Agreement in connection with a Change in Control, when combined with any other payment or benefit due to the Participant from the Company or any other entity in connection with such Change in Control, would be considered a “parachute payment” within the meaning of Section 280G of the Code, the payments and benefits due to the Participant under this Agreement may be reduced by the Company to $1.00 less than the amount that would otherwise be considered a “parachute payment” within the meaning of Section 280G of the Code, in accordance with rules and procedures which may be established by the Committee.
 
 
4
 
 
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed effective as of the Grant Date set forth above.
 
PARTICIPANT
 
WORTHINGTON INDUSTRIES, INC.
______________________________
 
By: ______________________________
Signature
   
     
______________________________
 
Its: ______________________________
Printed Name
   
     
Dated: ____________________, 2011
 
Dated: ____________________, 2011
 
5
Exhibit 99.1
 
GRAPHIC
 
 
 
 
 
Final Transcript
Jun 30, 2011 / 05:30PM  GMT, WOR - Q4 2011 Worthington Industries Inc Earnings Conference Call
 
C O R P O R A T E  P A R T I C I P A N T S
 
Cathy Lyttle
Worthington Industries, Inc. - VP of Corporate Communications and IR
 
John McConnell
Worthington Industries, Inc. - Chairman and CEO
 
Andy Rose
Worthington Industries, Inc. - VP and CFO
 
George Stoe
Worthington Industries, Inc. - President and COO
 
Richard Welch
Worthington Industries, Inc. - Controller
 
 
C O N F E R E N C E  C A L L  P A R T I C I P A N T S
 
Luke Folta
Jefferies & Co. - Analyst
 
Mark Parr
KeyBank Capital Markets - Analyst
 
Michelle Applebaum
Steel Market Intellegence - Analyst
 
Charles Bradford
Bradford Research - Analyst
 
Leo Larkin
Standard & Poor's - Analyst
 
Richard Garchitorena
Credit Suisse - Analyst
 
Sal Tharani
Goldman Sachs - Analyst
 
Chris Olin
Cleveland Research Company - Analyst
 

 
P R E S E N T A T I O N
 

Operator
 
Ladies and gentlemen, thank you for standing by and good afternoon and welcome to the Worthington Industries fourth-quarter earnings results conference call. All participants will be able to listen only until the question-and-answer session of the call. This conference is being recorded at the request of Worthington Industries. (Operator Instructions).
 
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, Inc. - VP of Corporate Communications and IR
 
Good afternoon, everyone, and welcome to our fourth-quarter earnings conference call. As a reminder, certain statements made on this call are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to risk and uncertainties and could cause actual results to differ from those suggested. Please refer to the Company's fourth-quarter results news release that we issued this morning for more details on those factors that could cause actual results to differ.
 
 
 
2
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Final Transcript
Jun 30, 2011 / 05:30PM  GMT, WOR - Q4 2011 Worthington Industries Inc Earnings Conference Call
 
For anyone interested in listening to this call again, a replay will be made available on our website, Worthington Industries.com.

On the call today 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 Adviser; and Richard Welch, Controller. John McConnell will provide some opening comments.
 
John McConnell - Worthington Industries, Inc. - Chairman and CEO
 
Cathy, thank you. Welcome and thank you for joining us today. Before I turn the call over to Andy and George for more details on the results, I want to thank all of our employees who have worked so hard over the past three years to make us better through our transformation. And not just incrementally better, significantly better in many ways. I am very proud of everyone here and all that we have accomplished. Thank you. Andy?
 
Andy Rose - Worthington Industries, Inc. - VP and CFO
 
Thanks, John. Good afternoon, everyone. The Company's performance in the fourth quarter of fiscal 2011 was very good aided by volume increases in cylinders and steel and rising steel prices. Inventory holding gains resulting from the rise in steel prices contributed to our steel processing results. Management's estimate of these gains for the quarter was $0.20 per share and $0.19 per share for the full year. Gains in the prior year quarter were comparable but also included a portion attributable to the metal framing business.

Sales for the quarter were up 8% and after stripping out impairment and restructuring charges, earnings per share were up 56% compared to the prior year. For the year, sales were up 26% and earnings per share were up 74%.

Volumes were solid in the fourth quarter. Cylinder volumes were up 10% for the quarter and 6% for the year. Volumes were up 9% domestically and 20% in Europe for the quarter, reflecting a continued recovery in European manufacturing.

In steel processing, volumes during the quarter were up 20% and are up 26% for the year. Excluding the impact of acquisitions, volumes were up 6% for the quarter and 15% for the year, driven by strong toll processing business.

Equity income from our joint ventures was up 33% over last year to $25 million and all of our major joint ventures operated at a profit during the quarter. We received dividends of $12.5 million. Our latest estimate of the annual effective tax rate is 33.7%.

Net cash provided by operating activities for the quarter was $16.6 million, driven by higher earnings and partially offset by working capital requirements as steel prices rose. The Company dispersed $6.1 million for capital projects, invested $6.2 million in unconsolidated affiliates, and distributed $7.4 million in dividends to shareholders.

Capital expenditures for the year were $22 million, which was below our original estimate. CapEx is forecast to rise in 2012 to $35 million.

Higher working capital needs and the repurchase of 2.7 million shares at $21.35 earlier in the quarter increased our debt by $52 million. Our balance sheet remains strong with total debt of $383 million, cash of $56 million, and over $350 million in available debt capacity.

As you know, on March 1 we closed the transaction that resulted in the formation of ClarkDietrich, a joint venture for our metal framing business, and the acquisition of the non-automotive steel processing business of MISA Metals. As a result, our share of the income from the new metal framing joint venture is now reflected in the equity income line. This business is off to a good start, posting $2.1 million for our 25% share of quarterly earnings.

The JV is well capitalized with no debt and a cash balance of approximately $29.7 million as of May 31. The modest revenue and income reflected from metal framing this quarter is related to tolling revenue from our retained facilities to support the transition of the business to the new joint venture, and it also includes the Vinyl Corp. business that we retained and currently have for sale.

The wind down of the seven Dietrich facilities not contributed to the joint venture is proceeding ahead of schedule. On May 9, Gerstenslager was contributed to the newly formed ArtiFlex joint venture with International Tooling Solutions. From this contribution, we received a 50% ownership in the new joint venture and $25 million in cash.
 
3
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Final Transcript
Jun 30, 2011 / 05:30PM  GMT, WOR - Q4 2011 Worthington Industries Inc Earnings Conference Call
 
For the quarter, we realized a net gain of $4.8 million driven primarily by the transition of Dietrich and Gerstenslager to the new joint ventures. The $4.8 million includes accounting gains resulting from the contribution of the Dietrich and Gerstenslager operations, reduced by impairment charges, severance expenses, and operating losses from the wind down of the retained assets. It also includes $4.4 million of impairment charges related to our Steelpac and stairs operations.

Despite the modest accounting gain, we expect to generate significant cash from these transactions. We have already realized $40 million from the liquidation of MISA Metals working capital. We expect an additional $5 million to $10 million from the sale of fixed assets and working capital.

At least $20 million is expected from the liquidation of the retained Dietrich assets, which includes real estate and equipment. The real estate market is proving to be more active than we anticipated.

Based on our current expectations, we will end up with at least $55 million to $60 million of cash net of severance and other cash expenses, a profitable steel processing operation with locations in Tennessee and Ohio, and a 25% interest in a leading metal framing manufacturer. We continue to feel strongly that this transaction is an excellent outcome for the shareholders of Worthington Industries.

As we have mentioned previously, our goal is to improve our Company's long-term earnings potential. We continue to evaluate and take action to optimize our portfolio of businesses by divesting assets that did not meet our goals for margin and return on capital while investing more aggressively in those that do. We believe that the combination of a better performing portfolio of businesses and a transformation capability that allows us to continually improve our performance provides a solid foundation for higher earnings as the economy continues its slow but steady recovery.

I will now pass the call on the George Stoe, who will discuss operations.
 
George Stoe - Worthington Industries, Inc. - President and COO
 
Thank you, Andy. We finished fiscal 2011 on a strong note. Demand is spotty but steady. During our fiscal fourth quarter, we transitioned from the ownership of the metal framing business to a 25% stake in the newly formed ClarkDietrich joint venture. Although demand in this segment remains weak, we had strong results for the first quarter of operations for the new joint venture.

Our plan for the consolidation of facilities is ahead of schedule and we are realizing many of the efficiencies we envisioned when we embarked on the plan to combine these two businesses. Make no mistake, commercial construction remains challenged, but we are confident that our 25% ownership in this joint venture with its significantly reduced cost structure will produce more earnings and stability.

Our steel processing segment achieved outstanding results in spite of softness in some of the market segments. The addition of the former MISA steel processing assets into Worthington Steel led to positive results during its first full quarter of our ownership. Overall, we would report that order levels remained steady.

Our steel processing transformational efforts continue to pay solid dividends. Clearly we are producing more material with fewer people, more timely deliveries, and better quality. Our recent announcement of a new pickle line in Mexico is further evidence of strength in our business and confidence that our joint venture in Mexico is performing well, with bright prospects for the future.

Our cylinders business continues to perform remarkably well. Buoyed by returning strength in the European market and continued intensity here in North America, the cylinders business had a very solid fourth fiscal quarter.

We announced last week that Harry Goussetis chose to retire after a very successful 27-year career with Worthington Industries. Harry's career with the Company started as an in-house attorney for the cylinders business, followed by a long stint as VP of Human Resources for the corporation. For the last 6 1/2 years, he has been an able steward of our cylinders business and led them to a number of successful acquisitions and strong growth in existing as well as new market segments.

Harry's contributions have been significant and his talent, instincts, intellect, and integrity will be greatly missed. We have an extraordinary stable of seasoned professionals to choose from as we look to replace Harry in the role of President of the Cylinders Business. We are confident that Harry's successor will continue with the tremendous success this business has enjoyed under Harry's tutelage.
 
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Final Transcript
Jun 30, 2011 / 05:30PM  GMT, WOR - Q4 2011 Worthington Industries Inc Earnings Conference Call
 
Over the past several years, we have told you that one of our goals is to grow and expand the cylinders business. The strong combination of our market position coupled with less cyclicality and attractive margins are a perfect complement to the strategy we put in place the past several years. We continue to scan the globe in search of additional opportunities to leverage our operational excellence, market knowledge, and superior reputation to add to our portfolio in this market segment.

We currently have several active reviews under way, with one in particular that is imminent. Our joint ventures continue to be solid contributors to our overall success. Despite some weakness in demand for North America in April and May, WAVE continues to perform at a very high level. Our newest JV, ArtiFlex, combines our former Gerstenslager segment with ITS to perform a strong entity with varied capabilities in die making with large blanking expertise.

Our new cylinder JV in India is off to a good start as we look to grow and expand our presence in the alternative energy arena. We continue to focus our energies on operational excellence, improving our margins, decreasing volatility, and profitable worldwide growth.

I will now turn the call back to John McConnell for his closing comments.
 
John McConnell - Worthington Industries, Inc. - Chairman and CEO
 
Thank you, George, and thank you, Andy. Yesterday, our Board moved to increase our shareholders value by increasing our dividend and replenishing the number of shares available for repurchasing. Both actions are indicative of our confidence in the future and our commitment to our shareholders.

I have been telling you that that I was proud of our employees and our performance. While we have come a very long way in improving our performance in virtually every aspect, we are far from finished.

To open fiscal 2012, we have transitioned our transformation, which was largely embedded in steel processing, and shifted those resources and accumulated knowledge into our newly formed corporate centers of excellence. It is through the centers that we will lock in our gains and continue to drive the organization forward. The centers will establish common key performance indicators between steel, cylinders and WAVE from which the best practices will be identified, shared, implemented, and evolved.

As our transformation team proved to be very effective in the integration of Gibraltar and MISA acquisitions, the centers will continue to play a critical role in acquisitions going forward. In the process, the centers will identify areas in which we can learn from an acquired company and where the new company -- newly acquired company can be improved by our established library of best practices.

While we are proud of our work, but we are not satisfied. We know our work is never done. There is no finish line to cross. It is continual thoughtful improvement.

At this point, we will be happy to take any questions that you may have.
 
 
Q U E S T I O N  A N D  A N S W E R
 
 
Operator
 
(Operator Instructions) Luke Folta, Jefferies & Co.
 
Luke Folta - Jefferies & Co. - Analyst
 
Good afternoon, guys. Congratulations on all the improvement over the last few years. We just wanted to ask a couple of questions here. Andy, I think did you say that you had about $0.20 in inventory holding gains in the quarter?
 
Andy Rose - Worthington Industries, Inc. - VP and CFO
 
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Final Transcript
Jun 30, 2011 / 05:30PM  GMT, WOR - Q4 2011 Worthington Industries Inc Earnings Conference Call
 
That's correct. It is all related to (multiple speakers)

Luke Folta - Jefferies & Co. - Analyst
 
I had a couple -- when I try to reconcile that into your reported results, if I strip that inventory holding gain out of the steel segment, I gets to it looks like it was about just over $22 million impact which would bring your EBIT per ton in that segment down to roughly $21. Given the increase that we've seen in volumes here, I'm having trouble reconciling why we might see an adjusted decline sequentially.

Andy Rose - Worthington Industries, Inc. - VP and CFO
 
One of the drivers inside of that is likely to be an increase in toll volumes, which are lower margins, but I'd have to go back and look at it, Luke, to give you an exact answer. I'm sorry -- just George pointed out, which I think is another good point, the impact of the MISA Metals transaction, which is lower margin business, would also drive down that margin number.

Luke Folta - Jefferies & Co. - Analyst
 
Okay, just on the Pressure Cylinders segment, can you give us a sense of what utilization rates look within the major product categories in that business?

John McConnell - Worthington Industries, Inc. - Chairman and CEO
 
When you say utilization rates, are you talking about capacity utilization or do you mean where we are with market penetration or what --?

Luke Folta - Jefferies & Co. - Analyst
 
I guess I'm trying to get a sense of -- I know your results in the US versus Europe have differed materially over the last years or so and I just wanted to get a sense of how far recovered we are in those various businesses?
 
John McConnell - Worthington Industries, Inc. - Chairman and CEO
 
North America has remained strong for the last couple of years and continues to be very strong. Europe as you know went down sharply particularly -- mainly in the high-pressure arena, which is the largest European segment. But has definitely been recovering throughout the last 12 months. George, if you want to put any more color on that.

George Stoe - Worthington Industries, Inc. - President and COO
 
Yes, Luke, it's still not back to where it was pre-recession, but certainly as the results indicate, we have greatly improved the European operations particularly in the high-pressure business in Austria.

Luke Folta - Jefferies & Co. - Analyst
 
And when we think about margins longer term in that business, it looks like we've seen a nice improvement here in the fourth quarter. Do you think we get back to the 12% to 15% EBIT margins that we saw in the last cycle? If so, is this really driven more by volume or price recovery?
 
John McConnell - Worthington Industries, Inc. - Chairman and CEO

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Final Transcript
Jun 30, 2011 / 05:30PM  GMT, WOR - Q4 2011 Worthington Industries Inc Earnings Conference Call
 
I would answer that by saying it's largely driven by mix and which products are moving at any given time, some are higher margin than others. So you get back into -- I'm not sure exact timeframe you're looking back to when you referenced 15% margins, but I would assume that that was back when our European cylinder high-pressure operation was running at peak.

Since then, a number of other -- capacity has been expanded. We were able to increase our margins because there was a shortage of cylinders and we were able to deliver very quickly to people relative to what other people were doing and that situation has changed.

Also going forward it's going to depend on what additions we make to the cylinder company and I think we have some very attractive opportunities from a margin standpoint.

Luke Folta - Jefferies & Co. - Analyst
 
Thanks and just lastly on WAVE, can you give us a sense of what your backlog looks like there and what you are expecting volumes to be over the next few quarters?
 
John McConnell - Worthington Industries, Inc. - Chairman and CEO
 
I can't answer what their current backlog is. I know that there's some softness on the construction market right now. George is probably more familiar with -- do you know what the backlog is at the moment?

George Stoe - Worthington Industries, Inc. - President and COO
 
Not the exact backlog. Certainly John is correct, Luke, that as I mentioned in my comments in April and May, their volume dropped off some, but I think one of the encouraging things is historically they have been about 65% remodeling and about 35% on new construction. And during the current period, the remodeling percentage has inched its way up closer to 75% to 80%. That has helped their volumes as commercial construction has weakened somewhat.

Luke Folta - Jefferies & Co. - Analyst
 
Great, guys. Thank you very much.

Operator
 
Mark Parr, KeyBanc.

Mark Parr - KeyBank Capital Markets - Analyst
 
Thanks very much. Good afternoon. I had a couple of questions. One, John, you had talked about your -- the new plan to expand the sharing of best practices throughout the organization. I'm --- you've have been through this process for a number of years and I would just like to get your assessment of how far along in the process are you as far as really getting or maximizing --? I guess maximizing is not the right word, but how far along in the process are we? How much incremental cost reduction or improvement should we be looking for out of Worthington in next year or two?

John McConnell - Worthington Industries, Inc. - Chairman and CEO
 
Well, I am certainly not going to try to quantify the latter part of that for you. This is really something we just started. It's going to evolve over time. Let me try and answer this way. In the steel company, where again the transformation was really embedded and focused, I would say it's a fairly mature process. It's deeply embedded and that is it is just going to keep running on its own looking for ways to improve.

As we move this over, we will start a diagnostic at Cylinders for instance in July. It will be the first one there. And WAVE, as they come in and we start really examining how they are running their safety programs, what the results are, how are we getting productivity there, what's their OEE, and comparing it with steel and getting all three of those companies working together, I am confident we're going to find a lot of good things there.
 
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Final Transcript
Jun 30, 2011 / 05:30PM  GMT, WOR - Q4 2011 Worthington Industries Inc Earnings Conference Call
 
So bringing in two well performing companies into the mix and comparing how we're getting things done and looking for new ideas because around the centers, we will be bringing in the head of safety from all three organizations and walking through what they do. So there will also be a lot of conversation and exchange going on and let them participate in building what the KPIs look like and how they are going to measure different things so that they are fully vested when we start to get this really going.

It may be up to two years until this really binds the kind of rhythm that will be very effective. It will have -- it will be effective acquisition integrations, and other things immediately, and as volume returns, that will also help them keep their eye on the ball in driving things forward.

So we are very excited about it. It's just beginning and therefore that's why it's kind of hard to quantify what the economic expectations are here.

Mark Parr - KeyBank Capital Markets - Analyst
 
All right, if I could ask another question, typically the May quarter represents a strong seasonal outcome for you. And a lot of the reason the August quarter goes down again historically has to do with the July vacation shutdowns for the automotive marketplace. I'd just like to get your assessment of how that process is unfolding and how much of a seasonal impact would you expect relative to the May quarter?

Again, I know you won't quantify, but could you give us some hints and maybe say we expect it to be in line, less than, more than what would be a normal seasonal effect?

John McConnell - Worthington Industries, Inc. - Chairman and CEO
 
Clearly, and you have all talked about and heard and read about the disruption from Japan as far as the supply chain goes and effects from the tsunami, clearly having an impact over and above the shutdowns and the normal cycle.

I can't exactly -- again, I can't tell you how much more but clearly somewhat more. We remain optimistic that most of the automotive forecasts are saying that they will recover the lost volumes as a result of that going into the latter half of the calendar year. So --

Mark Parr - KeyBank Capital Markets - Analyst
 
John, do you have any sense of how much this tsunami impacted the May quarter? Was there a measurable impact that you could see?
 
John McConnell - Worthington Industries, Inc. - Chairman and CEO
 
I don't believe so.

Mark Parr - KeyBank Capital Markets - Analyst
 
Okay.

John McConnell - Worthington Industries, Inc. - Chairman and CEO
 
I think it's -- really didn't start maybe sometime in May but we couldn't feel it that much. You know, the effects are going to be in July and August.

Mark Parr - KeyBank Capital Markets - Analyst
 
All right, so you would look -- if there was going to be a negative impact on the business, are you talking about a positive impact for (multiple speakers)?
 
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Final Transcript
Jun 30, 2011 / 05:30PM  GMT, WOR - Q4 2011 Worthington Industries Inc Earnings Conference Call
 
John McConnell - Worthington Industries, Inc. - Chairman and CEO
 
I'm talking about a negative impact.

Mark Parr - KeyBank Capital Markets - Analyst
 
So you would expect to see it in July and August as opposed to April and May?

John McConnell - Worthington Industries, Inc. - Chairman and CEO
 
That most of it is already gone, yes. I think the worst of it is in front of us and we will see what happens. Again, we remain very optimistic though over the course of the year on how that plays out.

Mark Parr - KeyBank Capital Markets - Analyst
 
Okay, all right.

John McConnell - Worthington Industries, Inc. - Chairman and CEO
 
I think overall the impact was probably less than everyone was concerned about to begin with. I would throw that in.

Mark Parr - KeyBank Capital Markets - Analyst
 
Okay, terrific. Thanks. I will get back into, but thanks for that color.

Operator
 
Michelle Applebaum, The Steel Market.

Michelle Applebaum - Steel Market Intellegence - Analyst
 
Steel Market Intelligence. Great quarter and all the strategic initiatives, buybacks and dividends and global and Mexico, it's just all fabulous stuff. I love to have a chance to be writing about corporate initiatives instead of talking about the industry operating rate. So congratulations on everything. I know I've told you I never say congratulations, but I am saying it here, so you know how much that means, John, more than anyone.

So I wanted to ask one question about Mexico. That's a really big 500,000 tons, that's a really big facility and obviously things are moving fast there. I'm curious, do you expect that region to become more steel short as we move forward? Because I know at one point Hylsa or Ternium was going to put in another Hylsa mill.

And then the second part of that question is they are doing the finishing end of that with Nippon and do you think there's meaningfulness of Nippon coming into that market now? Do you think that there's going to be a new steel mill coming in that market or do you think that's going to be an opportunity for the US to export, etc., etc.?

John McConnell - Worthington Industries, Inc. - Chairman and CEO
 
I'm not sure. I'm going to let George address what we may know about the future mill capacity, but we are very confident is that independent pickling is very short in Mexico, which is why we were very confident in making this move. But George?
 
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Final Transcript
Jun 30, 2011 / 05:30PM  GMT, WOR - Q4 2011 Worthington Industries Inc Earnings Conference Call
 
George Stoe - Worthington Industries, Inc. - President and COO
 
Michele, I think we have heard the same rumors that you have regarding Ternium and their plans down there. Obviously nothing specific has been decided yet, but I think we're just going to have to watch that carefully. But obviously the business down there is growing and expanding at a fairly rapid pace. Lots of companies are locating there and we see great opportunities for the future down there.

As you know, we had two facilities before that we -- when we JV'd with the Serviacero folks and built the new facility in Monterrey just a couple of years ago, and that has been operating at a great way for us. We brought it in under budget and ahead of schedule and they have operated since the day they opened without having a safety incident of any kind and their volumes are continuing to grow and expand.

Michelle Applebaum - Steel Market Intellegence - Analyst
 
So any new capacity that comes in would potentially be even a customer for your pickling, but obviously there's a dearth of that high quality value add in today's market there, right?

George Stoe - Worthington Industries, Inc. - President and COO
 
Yes.

Michelle Applebaum - Steel Market Intellegence - Analyst
 
Okay, all right, so no -- nothing definitive on the front-end of the Ternium thing. So then my next question is, the $0.20, you confused me and I'm glad you put it up front so then I had to do the math. You said that $0.20 a share was due to inventory holding gains.

Andy Rose - Worthington Industries, Inc. - VP and CFO
 
Correct.

Michelle Applebaum - Steel Market Intellegence - Analyst
 
Okay. So that is after-tax, right?

Andy Rose - Worthington Industries, Inc. - VP and CFO
 
Yes.

Michelle Applebaum - Steel Market Intellegence - Analyst
 
So if I gross it up, it comes out to about $20 million for the quarter.

Andy Rose - Worthington Industries, Inc. - VP and CFO
 
Yes, slightly more.

Michelle Applebaum - Steel Market Intellegence - Analyst
 
Okay, so I am assuming you put that in the beginning of your release for a reason. You don't give guidance and I know steel prices stopped going up somewhere around April, right? So the holding gains will be minimized going into the summer months. So if I take that out, I get about a 4% EBIT margin in your steel business. So are you kind of saying that's a normalized number if it weren't for the run-up in steel prices, that's where you would have been?
 
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Final Transcript
Jun 30, 2011 / 05:30PM  GMT, WOR - Q4 2011 Worthington Industries Inc Earnings Conference Call
 
Andy Rose - Worthington Industries, Inc. - VP and CFO
 
That's -- what we are really trying to show is what sort of the core earnings are excluding the benefit or negative impact if there would be one in terms of the movement in steel prices. We have a lot of initiatives in our company where we are trying to minimize that impact, but at the same time, we also believe that because of the transformation and the good work that has been done over the last couple of years that we do have the ability to expand our core margins in the steel processing business. But that's hard to see when you've got FIFO going quarter to quarter up and down.

John McConnell - Worthington Industries, Inc. - Chairman and CEO
 
And again, Andy pointed this out earlier, but I think it's -- I can't quantify its overall impact, but I wouldn't say MISA as a steel processing business, the contracts we inherited there were very, very low. So it clearly had some influence over what the overall margins appeared to be for the quarter.

Michelle Applebaum - Steel Market Intellegence - Analyst
 
And now that MISA is part of Worthington, they don't have to write contracts like that anymore.

John McConnell - Worthington Industries, Inc. - Chairman and CEO
 
That would be correct.

Michelle Applebaum - Steel Market Intellegence - Analyst
 
Looking into the next quarter -- I almost said fourth -- I meant first. If I was thinking flat steel prices, that normalized 4% number for EBIT margins is a good number? I'm sorry for doing this.

John McConnell - Worthington Industries, Inc. - Chairman and CEO
 
That's fine. Andy?

Andy Rose - Worthington Industries, Inc. - VP and CFO
 
I don't know exactly how to answer that question. We don't give guidance in terms of what margins would be. So (Inaudible - microphone inaccessible) for passing on that one.

Michelle Applebaum - Steel Market Intellegence - Analyst
 
Okay, then can I ask one more? On the -- so you sell a lot of automotive and there's two different things I want to know about that. One is, one of the mills who doesn't have much iron ore is saying that they are successfully getting passed through contracts and all new contracts that they are writing with their customers, but they are not saying if they are getting $1 of the iron ore increase or the full increase.

So I am wondering if and how that's impacting you? And then the second part to that same question was, there's all this noise in government issues and politics and environment with the Thyssen slab mill in Brazil and threats to shut it down. I'm wondering if you are a customer with TK Alabama I imagine already and if that concerns you or if you are having any issues there?
 
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Final Transcript
Jun 30, 2011 / 05:30PM  GMT, WOR - Q4 2011 Worthington Industries Inc Earnings Conference Call
 
John McConnell - Worthington Industries, Inc. - Chairman and CEO
 
I can't obviously speak for the mill side of that and what percentage of their increases or decreases they are giving or passing along either way. I would answer to say that it is having no impact that I am aware of with our purchasing of steel.

We have bought material from TK, found it to be very good, continue to test and do trials with them, and I am not aware of any concern we have with that operation, whether here or in Brazil. George, have you heard anything to the contrary?

George Stoe - Worthington Industries, Inc. - President and COO
 
No, there's been talk about problems down in Brazil, but the mill here continues to go through the process of ramping up to get to full capacity eventually. As John says, we got some material in from them over probably the last nine months and we found it to be good material of high quality and continuing to improve every time we see it.

Michelle Applebaum - Steel Market Intellegence - Analyst
 
Great, great. I would expect that of them. Thanks so much and congratulations again.

Operator
 
Charles Bradford, Bradford Research.

Charles Bradford - Bradford Research - Analyst
 
Good afternoon. I would like to speak a little bit or talk a little bit more about the automotive side. We are hearing that some of the automobile companies might be reducing their forecasts, if you will, for the current quarter beyond what they had expected and some of the mills are now taking their forecasts down. What are you hearing?

John McConnell - Worthington Industries, Inc. - Chairman and CEO
 
I kind of -- I think that's what said earlier, that I expect the next couple of months ahead of us to be a little weaker than the ones we have just finished.

Charles Bradford - Bradford Research - Analyst
 
Okay, I thought you were referring more to maybe the transplants.
 
John McConnell - Worthington Industries, Inc. - Chairman and CEO
 
No, the parts -- you find them in almost every automobile made in one form or another. The parts coming out of Japan are supplying all three of the Detroit domestics.

Charles Bradford - Bradford Research - Analyst
 
In looking at some of the other restarts and new capacity that has come online, have you seen anything yet from Sparrows Point? Maybe I understand too early to see product, but are you seeing offers? Are they being reasonable in pricing?

John McConnell - Worthington Industries, Inc. - Chairman and CEO
 
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Final Transcript
Jun 30, 2011 / 05:30PM  GMT, WOR - Q4 2011 Worthington Industries Inc Earnings Conference Call
 
Again, I am certainly not going to discuss Mill's pricing strategies or what they are doing. I can tell you with a facility in Baltimore, Ohio -- excuse me, there is a Baltimore, Ohio, by the way -- but Baltimore, Maryland, we are thrilled to see that back up and moving forward, as it was and will be a key supplier to our Baltimore facility.

Charles Bradford - Bradford Research - Analyst
 
Thank you.

Operator
 
Leo Larkin, Standard & Poor's.

Leo Larkin - Standard & Poor's - Analyst
 
Good afternoon. Could you give us guidance for depreciation and also interest expense?

Andy Rose - Worthington Industries, Inc. - VP and CFO
 
Yes, interest expense should stay pretty constant relative to the current run rate next year, moving up and down modestly based on what our revolver does. But as you know, we have said historically our revolver rates are very low. So not a big change. The biggest bulk of our interest expense comes from the two fixed rate, the longer-term issues.

And then depreciation should be pretty similar as well. I think we are running about $60 million right now, though.

Charles Bradford - Bradford Research - Analyst
 
Thank you.

Operator
 
Richard Garchitorena, Credit Suisse.
 
Richard Garchitorena - Credit Suisse - Analyst
 
Great, thanks, and congratulations on a good quarter. Most of my questions have been answered, but just a couple of things I wanted to touch on. On the Pressure Cylinders, I noticed that operating margins were up sequentially to 10% and metal margins were higher. Is a lot of that -- part of it related to the cost of the transformation plan initiatives potentially?

John McConnell - Worthington Industries, Inc. - Chairman and CEO
 
There certainly are parts of it. We have certainly approached -- we price our products differently. We buy our products differently, and all of those things have an accumulative positive impact. I won't tell you that some of it is not market conditions and as we improve in delivery and other aspects of customer service, I think we earn the right in some customers' mind to maintain and grow their volumes.

Leo Larkin - Standard & Poor's - Analyst
 
Great. And then you also talked about the next few months being a little weaker. That was primarily on the steel processing. Can you talk a little bit about Pressure Cylinders? I know there is seasonality there, but what do you see in that generally speaking in terms of the marketplace there?
 
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Final Transcript
Jun 30, 2011 / 05:30PM  GMT, WOR - Q4 2011 Worthington Industries Inc Earnings Conference Call
 
John McConnell - Worthington Industries, Inc. - Chairman and CEO
 
You're correct in my mind, we are speaking mainly of steel processing. George, do you want to put any color on this?

George Stoe - Worthington Industries, Inc. - President and COO
 
Richard, we don't really see much change in the cylinders business. As John mentioned earlier, we have really been on a very good run in that business for the last three years. We have added some new products into the portfolio in there and we are looking again to continue to try to grow and expand that business. It has been strong and we expect it to continue to stay strong.

Richard Garchitorena - Credit Suisse - Analyst
 
Great. Is the improvement in Europe or in the US or is it across the board?
 
George Stoe - Worthington Industries, Inc. - President and COO
 
Certainly the biggest improvement has been year-over-year in Europe because of the significant downturn we had in the high-pressure business in Austria, and that has come back in a strong way, not back to the pre-recession levels, but certainly much better than it had been for the last probably 18 months.

Richard Garchitorena - Credit Suisse - Analyst
 
Okay, great. Thank you.

Operator
 
Sal Tharani, Goldman Sachs.

Sal Tharani - Goldman Sachs - Analyst
 
Thank you very much. You sell some of the stuff on the contracts also. Is it safe to assume that you will actually get a -- despite the spot market prices going down, you will actually see some uptick in part of your business?

John McConnell - Worthington Industries, Inc. - Chairman and CEO
 
Andy or George?

Andy Rose - Worthington Industries, Inc. - VP and CFO
 
I'm not sure I followed you there, Sal.

Sal Tharani - Goldman Sachs - Analyst
 
You sell some of the stuff which are indexed to like CRU I believe, so you had mentioned in the past and I was wondering if even despite the spot market prices coming down, would part of your business actually get a higher price going into the fourth -- into the first fiscal quarter?

Andy Rose - Worthington Industries, Inc. - VP and CFO
 
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Final Transcript
Jun 30, 2011 / 05:30PM  GMT, WOR - Q4 2011 Worthington Industries Inc Earnings Conference Call
 
I see what you're saying, yes. So we sell spot. We sell monthly. We sell quarterly, and so --

George Stoe - Worthington Industries, Inc. - President and COO
 
Some of those, Sal, are based on previous quarter prices for the next quarter, so some of that business going into the next quarter will be at the higher levels that were in the previous quarter.

Sal Tharani - Goldman Sachs - Analyst
 
And how much was your tolling in this quarter? What percentage was tolling?

John McConnell - Worthington Industries, Inc. - Chairman and CEO
 
We will probably have to look. We are talking a few single-digit percentage points would be my guess.

Sal Tharani - Goldman Sachs - Analyst
 
Okay, and I have a couple of questions on (multiple speakers) -- sorry, I have a couple of questions on the cash flow statement. You have a joint venture transaction of $21.7 million of outflow while your joint venture benefit in the P&L was about $10.5 million. Can you reconcile what is the difference here?

Andy Rose - Worthington Industries, Inc. - VP and CFO
 
The joint venture benefit --?

Sal Tharani - Goldman Sachs - Analyst
 
I mean you have a P&L income of $10.5 million about in the income statement? (multiple speakers) 10.363436 is a joint venture transaction in the P&L in your income statement, I mean.

Richard Welch - Worthington Industries, Inc. - Controller
 
You're talking about that on the P&L there's a $10 million gain in there for joint venture transactions, correct?

Sal Tharani - Goldman Sachs - Analyst
 
Yes, but if I look at the cash flow statement, there's an outflow of $21.7 million, similar headline, similar item you mentioned, joint venture transactions. I just wanted to understand what is the difference between the two?

Richard Welch - Worthington Industries, Inc. - Controller
 
It is a non-cash transaction related -- we are backing those back out in the cash flow statement.

Sal Tharani - Goldman Sachs - Analyst
 
You are backing out a lot more than what you got in the income statement. I just want to understand what was the reason for that?

Richard Welch - Worthington Industries, Inc. - Controller
 
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Final Transcript
Jun 30, 2011 / 05:30PM  GMT, WOR - Q4 2011 Worthington Industries Inc Earnings Conference Call
 
Included in -- in the cash flow statement what we are reflecting is we are backing out what the non-cash impact is. So the difference is the non-cash impact.

Sal Tharani - Goldman Sachs - Analyst
 
Okay, and the last thing is that you made about $25 million you report for the equity income line in your income statement. Distribution was much less; it looks like you're backing out only $12.3 million. Is it the joint ventures are holding back more money or you think you will receive in the future or are they spending something on their own CapEx or something?

Andy Rose - Worthington Industries, Inc. - VP and CFO
 
Yes, it could be a combination of any of those. Most of our dividend income on a consistent basis comes from WAVE and they are the largest of the contributors from the JVs. Some of our other joint ventures are earlier in their development or keep some of that cash on their balance sheet. So at some point in the future, we would expect distributions but it's less predictable than with WAVE.

Sal Tharani - Goldman Sachs - Analyst
 
Okay, great. Thank you very much.

Operator
 
Mark Parr, KeyBanc.

Mark Parr - KeyBank Capital Markets - Analyst
 
Thanks very much. Again, I don't want to beat this point to death but I guess a couple of the previous questions had talked about the gain on inventory carrying in the May quarter of a little more than $20 million. And I just -- did you -- I'm just kind of curious, did you answer that you expect the August quarter to have no gains or that there would be $20 million less or did you not answer that question that way?

John McConnell - Worthington Industries, Inc. - Chairman and CEO
 
I did not answer that question. I'm not even sure it was asked. No, we did not.

Mark Parr - KeyBank Capital Markets - Analyst

All right, thank you.

Operator
 
Chris Olin, Cleveland Research.

Chris Olin - Cleveland Research Company - Analyst
 
Good afternoon. I just have two maintenance questions. Most of mine have been asked. The first was back to that inventory gain question. Was there anything realized within the joint ventures in terms of a gain?

Andy Rose - Worthington Industries, Inc. - VP and CFO
 
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Final Transcript
Jun 30, 2011 / 05:30PM  GMT, WOR - Q4 2011 Worthington Industries Inc Earnings Conference Call
 
There's nothing that we have included in that number that we gave you related to the joint ventures. So I would tell you on the metal framing side in the numbers that we produced there, there's no gain embedded there. So if there were, it would be only at WAVE. I shouldn't say only at WAVE, but most likely WAVE and potentially Serviacero.

Chris Olin - Cleveland Research Company - Analyst
 
Okay, and given all the changes to the steel processing portfolio, what is your leverage to auto now in terms of like a percentage of volumes or anything like that?

George Stoe - Worthington Industries, Inc. - President and COO
 
It's still, Chris, close to 50%, a little bit less than that now.

John McConnell - Worthington Industries, Inc. - Chairman and CEO
 
In the steel business.

Chris Olin - Cleveland Research Company - Analyst
 
And that's mostly big three type of business, right?

John McConnell - Worthington Industries, Inc. - Chairman and CEO
 
Correct.

Chris Olin - Cleveland Research Company - Analyst
 
That's all I got. Thanks a lot, guys.
 
Operator
 
(Operator Instructions). With no further questions coming in, I will turn it back to the presenters for any closing comments.

John McConnell - Worthington Industries, Inc. - Chairman and CEO
 
Well, thank you all again very much for joining us. We will continue to keep our head down and plow here and we have a good acquisition pipeline out in front of us. As George said, we have one that is close, so we continue to expect good things. We continue to think the economy as we have said before will grow. It could be somewhat uneven but it is going to show continued growth as we go forward.

Thank you again for joining us. Have a good day.

Operator
 
Ladies and gentlemen, this conference is available for replay. It starts today at 3.30 p.m. Eastern time and will last until July 7 at midnight. You may access the replay at any time by dialing 800-475-6701 or 320-365-3844. The access code is 206338. (Operator Instructions).

That does conclude your conference for today. Thank you for your participation. You may now disconnect.
 
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Final Transcript
Jun 30, 2011 / 05:30PM  GMT, WOR - Q4 2011 Worthington Industries Inc Earnings Conference Call
 
 
 
 
 
 
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