Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Aug. 31, 2013 | Oct. 01, 2013 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | FALSE | |
Document Period End Date | 31-Aug-13 | |
Document Fiscal Year Focus | 2014 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | WOR | |
Entity Registrant Name | WORTHINGTON INDUSTRIES INC | |
Entity Central Index Key | 108516 | |
Current Fiscal Year End Date | -26 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 70,631,324 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Aug. 31, 2013 | 31-May-13 |
In Thousands, unless otherwise specified | ||
Current assets: | ||
Cash and cash equivalents | $121,049 | $51,385 |
Receivables, less allowances of $4,379 and $3,408 at August 31, 2013 and May 31, 2013 | 439,365 | 394,327 |
Inventories: | ||
Raw materials | 181,850 | 175,093 |
Work in process | 103,471 | 103,861 |
Finished products | 91,336 | 77,814 |
Total inventories | 376,657 | 356,768 |
Income taxes receivable | 2,378 | 724 |
Assets held for sale | 3,309 | 3,040 |
Deferred income taxes | 23,055 | 21,928 |
Prepaid expenses and other current assets | 44,429 | 38,711 |
Total current assets | 1,010,242 | 866,883 |
Investments in unconsolidated affiliates | 184,449 | 246,125 |
Goodwill | 213,649 | 213,858 |
Other intangible assets, net of accumulated amortization of $26,572 and $26,669 at August 31, 2013 and May 31, 2013 | 163,363 | 147,144 |
Other assets | 17,488 | 17,417 |
Property, plant & equipment: | ||
Property, plant & equipment at cost | 1,106,893 | 1,052,636 |
Less: accumulated depreciation | 603,024 | 593,206 |
Total property, plant and equipment, net | 503,869 | 459,430 |
Total assets | 2,093,060 | 1,950,857 |
Current liabilities: | ||
Accounts payable | 311,204 | 222,696 |
Short-term borrowings | 62,187 | 113,728 |
Accrued compensation, contributions to employee benefit plans and related taxes | 59,552 | 68,043 |
Dividends payable | 11,012 | 551 |
Other accrued items | 38,723 | 36,536 |
Income taxes payable | 20,531 | 6,268 |
Current maturities of long-term debt | 1,099 | 1,092 |
Total current liabilities | 504,308 | 448,914 |
Other liabilities | 65,079 | 70,882 |
Distributions in excess of investment in unconsolidated affiliate | 61,745 | 63,187 |
Long-term debt | 405,948 | 406,236 |
Deferred income taxes | 85,592 | 89,401 |
Total liabilities | 1,122,672 | 1,078,620 |
Shareholders' equity - controlling interest | 857,588 | 830,822 |
Noncontrolling interest | 112,800 | 41,415 |
Total equity | 970,388 | 872,237 |
Total liabilities and equity | $2,093,060 | $1,950,857 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Aug. 31, 2013 | 31-May-13 |
In Thousands, unless otherwise specified | ||
Receivables, allowances | $4,379 | $3,408 |
Other intangible assets, accumulated amortization | $26,572 | $26,669 |
Consolidated_Statements_of_Ear
Consolidated Statements of Earnings (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Aug. 31, 2013 | Aug. 31, 2012 |
Net sales | $692,291 | $666,035 |
Cost of goods sold | 581,327 | 572,384 |
Gross margin | 110,964 | 93,651 |
Selling, general and administrative expense | 71,540 | 59,422 |
Impairment of long-lived assets | 4,641 | 1,570 |
Restructuring and other expense (income) | -3,997 | 403 |
Joint venture transactions | 142 | -1,162 |
Operating income | 38,638 | 33,418 |
Other income (expense): | ||
Miscellaneous income | 10,937 | 165 |
Interest expense | -6,240 | -5,259 |
Equity in net income of unconsolidated affiliates | 26,951 | 22,643 |
Earnings before income taxes | 70,286 | 50,967 |
Income tax expense | 13,933 | 16,102 |
Net earnings | 56,353 | 34,865 |
Net earnings attributable to noncontrolling interest | 1,796 | 903 |
Net earnings attributable to controlling interest | $54,557 | $33,962 |
Basic | ||
Average common shares outstanding | 69,601 | 68,278 |
Earnings per share attributable to controlling interest | $0.78 | $0.50 |
Diluted | ||
Average common shares outstanding | 72,083 | 69,571 |
Earnings per share attributable to controlling interest | $0.76 | $0.49 |
Common shares outstanding at end of period | 69,373 | 68,679 |
Cash dividends declared per share | $0.15 | $0.13 |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Income (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Aug. 31, 2013 | Aug. 31, 2012 |
Net earnings | $56,353 | $34,865 |
Other comprehensive income (loss), net of tax: | ||
Foreign currency translation | -486 | 3,908 |
Pension liability adjustment | -172 | |
Cash flow hedges | 3,351 | 984 |
Other comprehensive income | 2,865 | 4,720 |
Comprehensive income | 59,218 | 39,585 |
Comprehensive income attributable to noncontrolling interest | 779 | 1,014 |
Comprehensive income attributable to controlling interest | $58,439 | $38,571 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Aug. 31, 2013 | Aug. 31, 2012 |
Operating activities | ||
Net earnings | $56,353 | $34,865 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||
Depreciation and amortization | 19,460 | 14,987 |
Impairment of long-lived assets | 4,641 | 1,570 |
Provision for deferred income taxes | -8,424 | 4,679 |
Bad debt expense (income) | -481 | 7 |
Equity in net income of unconsolidated affiliates, net of distributions | -5,915 | -7,358 |
Net loss (gain) on sale of assets | -4,662 | 2,310 |
Stock-based compensation | 3,780 | 3,193 |
Excess tax benefits - stock-based compensation | -4,298 | |
Gain on previously held interest in TWB | -11,000 | |
Changes in assets and liabilities, net of impact of acquisitions: | ||
Receivables | 7,655 | 38,116 |
Inventories | 515 | 17,019 |
Prepaid expenses and other current assets | -2,365 | -145 |
Other assets | 436 | 2,847 |
Accounts payable and accrued expenses | 40,622 | -39,573 |
Other liabilities | -1,853 | -1,519 |
Net cash provided by operating activities | 94,464 | 70,998 |
Investing activities | ||
Investment in property, plant and equipment, net | -13,354 | -16,705 |
Acquisitions, net of cash acquired | 52,957 | |
Distributions from unconsolidated affiliates | 5,555 | |
Proceeds from sale of assets | 7,647 | 6,585 |
Net cash provided (used) by investing activities | 52,805 | -10,120 |
Financing activities | ||
Net payments of short-term borrowings | -51,541 | -223,688 |
Proceeds from long-term debt | 150,000 | |
Principal payments on long-term debt | -284 | -442 |
Proceeds from issuance of common shares | 2,201 | 10,855 |
Excess tax benefits - stock-based compensation | 4,298 | |
Payments to noncontrolling interest | -1,763 | |
Repurchase of common shares | -30,516 | |
Dividends paid | -8,150 | |
Net cash used by financing activities | -77,605 | -71,425 |
Increase (decrease) in cash and cash equivalents | 69,664 | -10,547 |
Cash and cash equivalents at beginning of period | 51,385 | 41,028 |
Cash and cash equivalents at end of period | $121,049 | $30,481 |
Basis_of_Presentation
Basis of Presentation | 3 Months Ended |
Aug. 31, 2013 | |
Basis of Presentation | NOTE A – Basis of Presentation |
The accompanying unaudited consolidated financial statements include the accounts of Worthington Industries, Inc. and consolidated subsidiaries (collectively, “we”, “our”, “Worthington” or the “Company”). Investments in unconsolidated affiliates are accounted for using the equity method. Significant intercompany accounts and transactions are eliminated. | |
Spartan Steel Coating, LLC (“Spartan”), TWB Company, L.L.C. (“TWB”), Worthington Energy Innovations, LLC (“WEI”), and Worthington Nitin Cylinders Limited (“WNCL”) in which we own controlling interests of 52%, 55%, 75%, and 60%, respectively, are consolidated with the equity owned by the other joint venture members shown as noncontrolling interest in our consolidated balance sheets, and the other joint venture members’ portion of net earnings shown as net earnings attributable to noncontrolling interest in our consolidated statements of earnings. As more fully described in “NOTE M – Acquisitions,” on July 31, 2013, we purchased an additional 10% interest in TWB for $17,869,000, increasing our ownership to a 55% controlling interest. As a result, TWB’s results have been consolidated within the Steel Processing operating segment since the acquisition date. | |
These unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, which are of a normal and recurring nature, except those which have been disclosed elsewhere in this Quarterly Report on Form 10-Q, necessary for a fair presentation of the results of operations of these interim periods, have been included. Operating results for the three months ended August 31, 2013 are not necessarily indicative of the results that may be expected for the fiscal year ending May 31, 2014 (“fiscal 2014”). For further information, refer to the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the fiscal year ended May 31, 2013 (“fiscal 2013”) of Worthington Industries, Inc. (the “2013 Form 10-K”). | |
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. | |
Joint Venture Transactions | |
On March 1, 2011, we joined with ClarkWestern Building Systems Inc. to form Clarkwestern Dietrich Building Systems LLC (“ClarkDietrich”), a joint venture that manufactures a full line of drywall studs and accessories, structural studs and joists, metal lath and accessories, and shaft wall studs and track used primarily in residential and commercial construction. We contributed our metal framing business and related working capital in exchange for a 25% ownership interest in ClarkDietrich. As we do not have a controlling interest in ClarkDietrich, our investment in this joint venture is accounted for under the equity method, and the contributed net assets were deconsolidated effective March 1, 2011. | |
We retained and continued to operate the remaining metal framing facilities (the “retained facilities”), on a short-term basis, to support the transition of the business into ClarkDietrich. The buildings and equipment associated with the majority of these facilities were sold during fiscal 2013 and fiscal 2012. The remaining facilities are expected to be sold during fiscal 2014 and actions to locate buyers are ongoing. As the other relevant criteria for classification as assets held for sale have been satisfied, the $3,309,000 carrying value of these asset groups, which consist primarily of property, plant and equipment, is presented separately in our consolidated balance sheet as of August 31, 2013. | |
Recently Issued Accounting Standards | |
In December 2011, new accounting guidance was issued that establishes certain additional disclosure requirements about financial instruments and derivatives instruments that are subject to netting arrangements. The new disclosures are required for annual reporting periods beginning on or after January 1, 2013, and interim periods within those periods. We adopted this new guidance on June 1, 2013, and have provided the required disclosures in “NOTE N – Derivative Instruments and Hedging Activities.” | |
In June 2011, new accounting guidance was issued regarding the presentation of comprehensive income in financial statements prepared in accordance with U.S. GAAP. This new guidance requires entities to present reclassification adjustments included in other comprehensive income on the face of the financial statements and allows entities to present total comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. It also eliminates the option for entities to present the components of other comprehensive income as part of the statement of equity. For public companies, this accounting guidance was effective for fiscal years (and interim periods within those fiscal years) beginning after December 15, 2011, with early adoption permitted. Retrospective application to prior periods is required. We adopted the effective provisions of this new accounting guidance on June 1, 2012 and have provided the required statements of comprehensive income for the three months ended August 31, 2013 and 2012. In December 2011, certain provisions of this new guidance related to the presentation of reclassification adjustments out of accumulated other comprehensive income were temporarily deferred. In February 2013, an effective date was established for the provisions that had been deferred. These provisions are effective prospectively for annual reporting periods, and interim periods within those annual periods, beginning after December 15, 2012. We adopted the deferred provisions, which relate to presentation only, on June 1, 2013 and have provided the required disclosures in “NOTE G – Comprehensive Income.” There was no impact on our financial position or results of operations. | |
In July 2012, amended accounting guidance was issued that simplifies how an entity tests indefinite-lived intangible assets for impairment. The amended guidance allows an entity to first assess qualitative factors to determine whether it is necessary to perform a quantitative impairment test. An entity will no longer be required to calculate the fair value of an indefinite-lived intangible asset and perform the quantitative test unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. The amended guidance is effective for interim and annual indefinite-lived intangible asset impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted. The adoption of this amended accounting guidance on June 1, 2013, did not have a material impact on our financial position or results of operations. | |
In March 2013, amended accounting guidance was issued regarding the accounting for cumulative translation adjustment. The amended guidance specifies that a cumulative translation adjustment should be released from earnings when an entity ceases to have a controlling financial interest in a subsidiary or a group of assets within a consolidated foreign entity and the sale or transfer results in the complete or substantially complete liquidation of the foreign entity. For sales of an equity method investment that is a foreign entity, a pro rata portion of the cumulative translation adjustment attributable to the investment would be recognized in earnings upon sale of the investment. The amended guidance is effective prospectively for annual reporting periods, and interim periods within those annual periods, beginning after December 15, 2013. Early adoption is permitted. We do not expect the adoption of this amended accounting guidance to have a material impact on our financial position or results of operations. |
Investments_in_Unconsolidated_
Investments in Unconsolidated Affiliates | 3 Months Ended | ||||||||
Aug. 31, 2013 | |||||||||
Investments in Unconsolidated Affiliates | NOTE B – Investments in Unconsolidated Affiliates | ||||||||
Our investments in affiliated companies that we do not control, either through majority ownership or otherwise, are accounted for using the equity method. At August 31, 2013, these equity investments and the percentage interests owned consisted of: ArtiFlex Manufacturing, LLC (“ArtiFlex”) (50%), ClarkDietrich (25%), Gestamp Worthington Wind Steel, LLC (the “Gestamp JV”) (50%), Samuel Steel Pickling Company (31.25%), Serviacero Planos, S. de R. L. de C.V. (50%), Worthington Armstrong Venture (“WAVE”) (50%), Worthington Modern Steel Framing Manufacturing Co., Ltd. (“WMSFMCo.”) (40%), and Worthington Specialty Processing (“WSP”) (51%). WSP is considered to be jointly controlled and not consolidated due to substantive participating rights of the minority partner. | |||||||||
Due to the volatile political environment in the United States, particularly in regards to the Federal Production Tax Credit, the Company is in the process of dissolving the Gestamp JV. | |||||||||
We received distributions from unconsolidated affiliates totaling $26,591,000 during the three months ended August 31, 2013. We have received cumulative distributions from WAVE in excess of our investment balance totaling $61,745,000 and $63,187,000 at August 31, 2013 and May 31, 2013, respectively. In accordance with the applicable accounting guidance, these excess distributions are reclassified to the liabilities section of our consolidated balance sheet. We will continue to record our equity in the net income of WAVE as a debit to the investment account, and if it becomes positive, it will again be shown as an asset on our consolidated balance sheet. If it becomes obvious that any excess distribution may not be returned (upon joint venture liquidation or otherwise), we will recognize any balance classified as a liability as income immediately. | |||||||||
We use the “cumulative earnings” approach for determining cash flow presentation of distributions from our unconsolidated joint ventures. Distributions received are included in our consolidated statements of cash flows as operating activities, unless the cumulative distributions exceed our portion of the cumulative equity in the net earnings of the joint venture, in which case the excess distributions are deemed to be returns of the investment and are classified as investing activities in our consolidated statements of cash flows. During the three months ended August 31, 2013, we received excess distributions from ClarkDietrich of $5,555,000. | |||||||||
Combined financial information for our unconsolidated affiliates is summarized as follows: | |||||||||
(in thousands) | August 31, | May 31, | |||||||
2013 | 2013 | ||||||||
Cash | $ | 55,310 | $ | 70,380 | |||||
Receivable from partner (1) | 4,069 | 69,706 | |||||||
Other current assets | 426,039 | 518,262 | |||||||
Noncurrent assets | 302,187 | 350,681 | |||||||
Total assets | $ | 787,605 | $ | 1,009,029 | |||||
Current liabilities | $ | 113,229 | $ | 181,111 | |||||
Short-term borrowings | 14,293 | 21,369 | |||||||
Current maturities of long-term debt | 5,265 | 5,442 | |||||||
Long-term debt | 272,574 | 274,750 | |||||||
Other noncurrent liabilities | 18,613 | 18,345 | |||||||
Equity | 363,631 | 508,012 | |||||||
Total liabilities and equity | $ | 787,605 | $ | 1,009,029 | |||||
Three Months Ended | |||||||||
August 31, | |||||||||
(in thousands) | 2013 | 2012 | |||||||
Net sales | $ | 423,481 | $ | 446,853 | |||||
Gross margin | 89,814 | 74,513 | |||||||
Operating income | 64,540 | 51,711 | |||||||
Depreciation and amortization | 10,337 | 8,990 | |||||||
Interest expense | 2,223 | 2,261 | |||||||
Income tax expense | 3,030 | 3,469 | |||||||
Net earnings | 59,634 | 46,284 | |||||||
-1 | Represents cash owed from a joint venture partner as a result of centralized cash management. |
Restructuring_and_Other_Expens
Restructuring and Other Expense (Income) | 3 Months Ended | ||||||||||||||||||||
Aug. 31, 2013 | |||||||||||||||||||||
Restructuring and Other Expense (Income) | NOTE C – Restructuring and Other Expense (Income) | ||||||||||||||||||||
In fiscal 2008, we initiated a Transformation Plan (the “Transformation Plan”) with the overall goal to improve our sustainable earnings potential, asset utilization and operational performance. The Transformation Plan focuses on cost reduction, margin expansion and organizational capability improvements and, in the process, seeks to drive excellence in three core competencies: sales; operations; and supply chain management. The Transformation Plan is comprehensive in scope and includes aggressive diagnostic and implementation phases. When this process began, we retained a consulting firm to assist in the development and implementation of the Transformation Plan. As the Transformation Plan progressed, we formed internal teams dedicated to this effort, and they ultimately assumed full responsibility for executing the Transformation Plan. Although the consulting firm was again engaged as we rolled out the Transformation Plan in our Pressure Cylinders operating segment, most of the work is now being done by our internal teams. These internal teams are now an integral part of our business and constitute what we refer to as the Centers of Excellence (“COE”). The COE will continue to monitor the performance metrics and new processes instituted across our transformed operations and drive continuous improvements in all areas of our operations. The majority of the expenses related to the COE will be included in selling, general and administrative (“SG&A”) expense going forward, except where they relate to a first time diagnostics phase of the Transformation Plan. | |||||||||||||||||||||
To date, we have completed the transformation phases in each of the core facilities within our Steel Processing operating segment, including the facilities of our Mexican joint venture. We also substantially completed the transformation phases at our metal framing facilities prior to their contribution to ClarkDietrich. Transformation efforts within our Pressure Cylinders and Engineered Cabs operating segments, which began during the first quarter of fiscal 2012 and the first quarter of fiscal 2013, respectively, are ongoing. | |||||||||||||||||||||
A progression of the liabilities associated with our restructuring activities, combined with a reconciliation to the restructuring and other expense (income) financial statement caption in our consolidated statement of earnings for the three months ended August 31, 2013 is summarized as follows: | |||||||||||||||||||||
(in thousands) | Beginning | Expense | Payments | Adjustments | Ending | ||||||||||||||||
Balance | Balance | ||||||||||||||||||||
Early retirement and severance | $ | 5,029 | $ | 402 | $ | (441 | ) | $ | - | $ | 4,990 | ||||||||||
Facility exit and other costs | 1,200 | 505 | (380 | ) | - | 1,325 | |||||||||||||||
$ | 6,229 | 907 | $ | (821 | ) | $ | - | $ | 6,315 | ||||||||||||
Gain on asset disposal | (4,762 | ) | |||||||||||||||||||
Less: joint venture transactions | (142 | ) | |||||||||||||||||||
Restructuring and other expense (income) | $ | (3,997 | ) | ||||||||||||||||||
The following discussion summarizes the restructuring activities that occurred during the three months ended August 31, 2013: | |||||||||||||||||||||
• | In connection with the wind-down of our former Metal Framing operating segment, we recognized $142,000 of facility exit and other costs. These costs were recognized within the joint venture transactions financial statement caption in our consolidated statements of earnings to correspond with amounts previously recognized in connection with the formation of ClarkDietrich and the subsequent wind-down of our former Metal Framing operating segment. | ||||||||||||||||||||
• | In connection with the closure of our commercial stairs business, we incurred facility exit charges of approximately $363,000. | ||||||||||||||||||||
• | In connection with the consolidation of the BernzOmatic hand torch manufacturing operation in Medina, New York into the existing Pressure Cylinders’ facility in Chilton, Wisconsin, we recognized an additional $402,000 accrual for expected employee severance costs. During the fourth quarter of fiscal 2013, we recognized a $2,488,000 accrual for expected severance costs related to this matter. | ||||||||||||||||||||
• | On June 30, 2013, the Company completed the sale of Integrated Terminals, its warehouse facility in Detroit, Michigan, for cash proceeds of $7,457,000, resulting in a gain of approximately $4,762,000. | ||||||||||||||||||||
Approximately $4,794,000 of the total liability is expected to be paid in the next twelve months. The remaining liability, which consists of lease termination costs and certain severance benefits, will be paid through September 2016. |
Contingent_Liabilities
Contingent Liabilities | 3 Months Ended |
Aug. 31, 2013 | |
Contingent Liabilities | NOTE D – Contingent Liabilities |
On August 5, 2013, we tendered to our excess loss carrier, who accepted the tender, a wrongful death claim against the Company involving a MAPP gas cylinder. Pursuant to the tender and its acceptance, our overall exposure related to this matter is limited to $2,000,000. As a result, a pre-tax charge of $2,000,000 was recorded within SG&A expense during the three months ended August 31, 2013. | |
We are defendants in certain legal actions. In the opinion of management, the outcome of these actions, which is not clearly determinable at the present time, would not significantly affect our consolidated financial position or future results of operations. We believe that environmental issues will not have a material effect on our capital expenditures, consolidated financial position or future results of operations. | |
Insurance Recoveries | |
On August 19, 2013, a fire occurred at our Pressure Cylinders facility in Kienberg, Austria, in the building that houses the massing process in the production of acetylene cylinders. The other portions of the Austrian facility were not damaged; however, the massing building sustained extensive damage and was rendered inoperable. We have incurred losses related to the destruction of assets caused by the fire and expect to incur incremental business interruption costs in future periods. The Company has business interruption and property damage insurance. During the three months ended August 31, 2013, the Company recognized charges of $358,000 for the impairment of fixed assets destroyed in the fire. We have determined that the receipt of reimbursement for these costs is probable and in accordance with our insurance policies and, therefore, have recorded a receivable for the recovery of this amount. |
Guarantees
Guarantees | 3 Months Ended |
Aug. 31, 2013 | |
Guarantees | NOTE E – Guarantees |
We do not have guarantees that we believe are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. However, as of August 31, 2013, we were party to an operating lease for an aircraft in which we have guaranteed a residual value at the termination of the lease. The maximum obligation under the terms of this guarantee was approximately $13,715,000 at August 31, 2013. We have also guaranteed the repayment of a $4,583,000 term loan entered into by one of our unconsolidated affiliates, ArtiFlex. Based on current facts and circumstances, we have estimated the likelihood of payment pursuant to these guarantees, and determined that the fair value of our obligation under each guarantee based on those likely outcomes is not material and therefore no amounts have been recognized in our consolidated financial statements. | |
We also had in place $11,732,000 of outstanding stand-by letters of credit for third-party beneficiaries as of August 31, 2013. These letters of credit were issued to third-party service providers and had no amounts drawn against them at August 31, 2013. The fair value of these guarantee instruments, based on premiums paid, was not material, and therefore no amounts have been recognized in our consolidated financial statements. |
Debt_and_Receivables_Securitiz
Debt and Receivables Securitization | 3 Months Ended |
Aug. 31, 2013 | |
Debt and Receivables Securitization | NOTE F – Debt and Receivables Securitization |
We have a $425,000,000 multi-year revolving credit facility (the “Credit Facility”) with a group of lenders that matures in May 2017. Borrowings outstanding under the Credit Facility were $18,000,000 at August 31, 2013. Additionally, as discussed in “NOTE E – Guarantees,” we provided $11,732,000 in stand-by letters of credit for third-party beneficiaries as of August 31, 2013. While not drawn against, these letters of credit are issued against availability under the Credit Facility, leaving $395,268,000 available at August 31, 2013. | |
Current borrowings under this revolving Credit Facility have maturities of less than one year, and given that we intend to repay them within the next year, they have been classified as short-term borrowings in our consolidated balance sheet. However, we can extend the term of amounts borrowed by renewing these borrowings for the term of the Credit Facility. We have the option to borrow at rates equal to an applicable margin over the LIBOR, Prime or Fed Funds rates. The applicable margin is determined by our credit rating. At August 31, 2013, the applicable variable rate, based on LIBOR, was 1.23%. | |
We also maintain a $100,000,000 revolving trade accounts receivable securitization facility (the “AR Facility”), which expires in January 2015. The AR Facility has been available throughout fiscal 2014 to date, and was available throughout fiscal 2013. Pursuant to the terms of the AR Facility, certain of our subsidiaries sell their accounts receivable without recourse, on a revolving basis, to Worthington Receivables Corporation (“WRC”), a wholly-owned, consolidated, bankruptcy-remote subsidiary. In turn, WRC may sell without recourse, on a revolving basis, up to $100,000,000 of undivided ownership interests in this pool of accounts receivable to a multi-seller, asset-backed commercial paper conduit (the “Conduit”). Purchases by the Conduit are financed with the sale of A1/P1 commercial paper. We retain an undivided interest in this pool and are subject to risk of loss based on the collectability of the receivables from this retained interest. Because the amount eligible to be sold excludes receivables more than 90 days past due, receivables offset by an allowance for doubtful accounts due to bankruptcy or other cause, concentrations over certain limits with specific customers and certain reserve amounts, we believe additional risk of loss is minimal. The book value of the retained portion of the pool of accounts receivable approximates fair value. As of August 31, 2013, the pool of eligible accounts receivable exceeded the $100,000,000 limit, and $40,000,000 of undivided ownership interests in this pool of accounts receivable had been sold. | |
The remaining balance of short-term borrowings at August 31, 2013 consisted of $4,187,000 outstanding under a $9,500,000 credit facility maintained by our consolidated affiliate, WNCL. This credit facility matures in November 2013 and bears interest at a variable rate. The applicable variable rate was 2.25% at August 31, 2013. We plan to renew this credit facility prior to its expiration. |
Comprehensive_Income
Comprehensive Income | 3 Months Ended | ||||||||||||
Aug. 31, 2013 | |||||||||||||
Comprehensive Income | NOTE G – Comprehensive Income | ||||||||||||
The following table summarizes each component of other comprehensive income for the three months ended August 31, 2013: | |||||||||||||
(in thousands) | Before-Tax | Tax Expense | Net-of-Tax | ||||||||||
Amount | Amount | ||||||||||||
Foreign currency translation | $ | (486 | ) | $ | - | $ | (486 | ) | |||||
Pension liability adjustment | - | - | - | ||||||||||
Cash flow hedges | 4,820 | (1,469 | ) | 3,351 | |||||||||
Other comprehensive income | $ | 4,334 | $ | (1,469 | ) | $ | 2,865 | ||||||
The following table summarizes the tax effects of each component of other comprehensive income for the three months ended August 31, 2012: | |||||||||||||
(in thousands) | Before-Tax | Tax Expense | Net-of-Tax | ||||||||||
Amount | Amount | ||||||||||||
Foreign currency translation | $ | 3,908 | $ | - | $ | 3,908 | |||||||
Pension liability adjustment | (255 | ) | 83 | (172 | ) | ||||||||
Cash flow hedges | 1,224 | (240 | ) | 984 | |||||||||
Other comprehensive income | $ | 4,877 | $ | (157 | ) | $ | 4,720 | ||||||
Changes_in_Equity
Changes in Equity | 3 Months Ended | ||||||||||||||||||||||||
Aug. 31, 2013 | |||||||||||||||||||||||||
Changes in Equity | NOTE H – Changes in Equity | ||||||||||||||||||||||||
The following table provides a summary of the changes in total equity, shareholders’ equity attributable to controlling interest, and equity attributable to noncontrolling interest for the three months ended August 31, 2013: | |||||||||||||||||||||||||
Controlling Interest | |||||||||||||||||||||||||
(in thousands) | Additional | Cumulative | Retained | Total | Non- | Total | |||||||||||||||||||
Paid-in | Other | Earnings | controlling | ||||||||||||||||||||||
Capital | Comprehensive | Interest | |||||||||||||||||||||||
Income (Loss), | |||||||||||||||||||||||||
Net of Tax | |||||||||||||||||||||||||
Balance at May 31, 2013 | $ | 244,864 | $ | (12,036 | ) | $ | 597,994 | $ | 830,822 | $ | 41,415 | $ | 872,237 | ||||||||||||
Net earnings | - | - | 54,557 | 54,557 | 1,796 | 56,353 | |||||||||||||||||||
Other comprehensive income (loss) | - | 3,882 | - | 3,882 | (1,017 | ) | 2,865 | ||||||||||||||||||
Common shares issued | 2,201 | - | - | 2,201 | - | 2,201 | |||||||||||||||||||
Stock-based compensation | 7,230 | - | - | 7,230 | - | 7,230 | |||||||||||||||||||
Purchases and retirement of common shares | (3,104 | ) | - | (27,412 | ) | (30,516 | ) | - | (30,516 | ) | |||||||||||||||
Cash dividends declared | - | - | (10,588 | ) | (10,588 | ) | - | (10,588 | ) | ||||||||||||||||
Dividend paid to noncontrolling interest | - | - | - | - | (1,763 | ) | (1,763 | ) | |||||||||||||||||
Acquisition of TWB | - | - | - | - | 72,369 | 72,369 | |||||||||||||||||||
Balance at August 31, 2013 | $ | 251,191 | $ | (8,154 | ) | $ | 614,551 | $ | 857,588 | $ | 112,800 | $ | 970,388 | ||||||||||||
The components of the changes in other comprehensive income (loss) were as follows: | |||||||||||||||||||||||||
(in thousands) | Foreign | Pension | Cash | Accumulated | |||||||||||||||||||||
Currency | Liability | Flow | Other | ||||||||||||||||||||||
Translation | Adjustment | Hedges | Comprehensive | ||||||||||||||||||||||
Loss | |||||||||||||||||||||||||
Balance as of May 31, 2013 | $ | 4,025 | $ | (10,221 | ) | $ | (5,840 | ) | $ | (12,036 | ) | ||||||||||||||
Other comprehensive income before reclassifications | 531 | - | 3,441 | 3,972 | |||||||||||||||||||||
Reclassification adjustments to income (a) | - | - | 1,379 | 1,379 | |||||||||||||||||||||
Income taxes | - | - | (1,469 | ) | (1,469 | ) | |||||||||||||||||||
Balance as of August 31, 2013 | $ | 4,556 | $ | (10,221 | ) | $ | (2,489 | ) | $ | (8,154 | ) | ||||||||||||||
(a) | The income statement classification of amounts reclassified to income for cash flow hedges is disclosed in “NOTE N – Derivative Instruments and Hedging Activities.” |
StockBased_Compensation
Stock-Based Compensation | 3 Months Ended | ||||
Aug. 31, 2013 | |||||
Stock-Based Compensation | NOTE I – Stock-Based Compensation | ||||
Non-Qualified Stock Options | |||||
During the three months ended August 31, 2013, we granted non-qualified stock options covering a total of 121,200 common shares under our stock-based compensation plans. The weighted average option price of $31.71 per share was equal to the market price of the underlying common shares at the grant date. The fair value of these stock options, based on the Black-Scholes option-pricing model, calculated at the grant date, was $12.92 per share. The calculated pre-tax stock-based compensation expense for these stock options, after an estimate for forfeitures, is $1,435,000 and will be recognized on a straight-line basis over the three-year vesting period. The following assumptions were used to value these stock options: | |||||
Dividend yield | 2.28 | % | |||
Expected volatility | 52.23 | % | |||
Risk-free interest rate | 1.69 | % | |||
Expected term (years) | 6 | ||||
Expected volatility is based on the historical volatility of our common shares and the risk-free interest rate is based on the United States Treasury strip rate for the expected term of the stock options. The expected term was developed using historical exercise experience. | |||||
Restricted Common Shares | |||||
During the three months ended August 31, 2013, we granted 111,000 restricted common shares under our stock-based compensation plans. The fair values of these restricted common shares were equal to the closing market prices of the underlying common shares on the date of grant, or $31.71 per share. The calculated pre-tax stock-based compensation expense for these restricted common shares is $3,150,000 and will be recognized on a straight-line basis over the three-year vesting period. | |||||
Market-Based Restricted Common Shares | |||||
During the three months ended August 31, 2013, we granted 360,000 restricted common shares to certain key employees under our stock-based compensation plans. Vesting of these restricted common share awards is contingent upon the price of our common shares reaching $50.00 per share and remaining at or above that price for 30 consecutive days and the completion of a three-year service vesting period. The grant-date fair value of these restricted common shares, as determined by a Monte Carlo simulation model, was $24.19 per share. The Monte Carlo simulation model is a statistical technique that incorporates multiple assumptions to determine the probability that the market condition will be achieved. The following assumptions were used to determine the grant-date fair value and the derived service period for these restricted common shares: | |||||
Dividend yield | 2.28 | % | |||
Expected volatility | 53.4 | % | |||
Risk-free interest rate | 1.41 | % | |||
The calculated pre-tax stock-based compensation expense for these restricted common shares was determined to be $8,708,000 and will be recognized on a straight-line basis over the three-year service vesting period. |
Income_Taxes
Income Taxes | 3 Months Ended |
Aug. 31, 2013 | |
Income Taxes | NOTE J – Income Taxes |
Income tax expense for the three months ended August 31, 2013 and August 31, 2012 reflected estimated annual effective income tax rates of 28.9% and 32.6%, respectively. The annual effective income tax rates exclude any impact from the inclusion of net earnings attributable to noncontrolling interests in our consolidated statements of earnings. Net earnings attributable to noncontrolling interest is primarily a result of our Spartan and TWB consolidated joint ventures. The earnings attributable to the noncontrolling interest in Spartan and TWB’s U.S. operations do not generate tax expense to Worthington since the investors in Spartan and TWB’s U.S. operations are taxed directly based on the earnings attributable to them. For financial reporting purposes, as a result of consolidating TWB beginning in the first quarter of fiscal 2014 (see “NOTE M – Acquisitions”), 100% of the tax expense of TWB’s foreign operations is included in the Company’s reported income tax expense, and is therefore included in the estimated annual effective income tax rate. Management is required to estimate the annual effective income tax rate based upon its forecast of annual pre-tax income for domestic and foreign operations. Our actual effective income tax rate for fiscal 2014 could be materially different from the forecasted rate as of August 31, 2013. |
Earnings_Per_Share
Earnings Per Share | 3 Months Ended | ||||||||
Aug. 31, 2013 | |||||||||
Earnings Per Share | NOTE K – Earnings Per Share | ||||||||
The following table sets forth the computation of basic and diluted earnings per share for the three months ended August 31, 2013 and 2012: | |||||||||
Three Months Ended | |||||||||
August 31, | |||||||||
(in thousands, except per share amounts) | 2013 | 2012 | |||||||
Numerator (basic & diluted): | |||||||||
Net earnings attributable to controlling interest – income available to common shareholders | $ | 54,557 | $ | 33,962 | |||||
Denominator: | |||||||||
Denominator for basic earnings per share attributable to controlling interest – weighted average common shares | 69,601 | 68,278 | |||||||
Effect of dilutive securities | 2,482 | 1,293 | |||||||
Denominator for diluted earnings per share attributable to controlling interest – adjusted weighted average common shares | 72,083 | 69,571 | |||||||
Basic earnings per share attributable to controlling interest | $ | 0.78 | $ | 0.5 | |||||
Diluted earnings per share attributable to controlling interest | $ | 0.76 | $ | 0.49 | |||||
Stock options covering 2,671,180 common shares have been excluded from the computation of diluted earnings per share for the three months ended August 31, 2012, because the effect would have been anti-dilutive, as the exercise price of the stock options was greater than the average market price of the common shares during the period. |
Segment_Operations
Segment Operations | 3 Months Ended | ||||||||
Aug. 31, 2013 | |||||||||
Segment Operations | NOTE L – Segment Operations | ||||||||
During the first quarter of fiscal 2014, we made certain organizational changes impacting the internal reporting and management structure of our Steel Packaging operating segment. As a result of these organizational changes, management responsibilities and internal reporting were realigned under our Steel Processing operating segment. Segment information reported in previous periods has been restated to conform to this new presentation. | |||||||||
Summarized financial information for our reportable segments is shown in the following table: | |||||||||
Three Months Ended | |||||||||
August 31, | |||||||||
(in thousands) | 2013 | 2012 | |||||||
Net sales | |||||||||
Steel Processing | $ | 402,441 | $ | 385,013 | |||||
Pressure Cylinders | 216,900 | 194,236 | |||||||
Engineered Cabs | 48,461 | 64,495 | |||||||
Other | 24,489 | 22,291 | |||||||
Consolidated net sales | $ | 692,291 | $ | 666,035 | |||||
Operating income (loss) | |||||||||
Steel Processing | $ | 22,663 | $ | 16,659 | |||||
Pressure Cylinders | 19,454 | 15,026 | |||||||
Engineered Cabs | (304 | ) | 4,694 | ||||||
Other | (3,175 | ) | (2,961 | ) | |||||
Consolidated operating income | $ | 38,638 | $ | 33,418 | |||||
Restructuring and other expense (income) | |||||||||
Steel Processing | $ | (4,762 | ) | $ | - | ||||
Pressure Cylinders | 402 | 6 | |||||||
Engineered Cabs | - | - | |||||||
Other | 363 | 397 | |||||||
Consolidated restructuring and other expense (income) | $ | (3,997 | ) | $ | 403 | ||||
Impairment of long-lived assets | |||||||||
Steel Processing | $ | 4,641 | $ | - | |||||
Pressure Cylinders | - | 1,570 | |||||||
Engineered Cabs | - | - | |||||||
Other | - | - | |||||||
Consolidated impairment of long-lived assets | $ | 4,641 | $ | 1,570 | |||||
Joint venture transactions | |||||||||
Steel Processing | $ | - | $ | - | |||||
Pressure Cylinders | - | - | |||||||
Engineered Cabs | - | - | |||||||
Other | 142 | (1,162 | ) | ||||||
Consolidated joint venture transactions | $ | 142 | $ | (1,162 | ) | ||||
August 31, | May 31, | ||||||||
(in thousands) | 2013 | 2013 | |||||||
Total assets | |||||||||
Steel Processing | $ | 843,385 | $ | 610,464 | |||||
Pressure Cylinders | 718,791 | 742,686 | |||||||
Engineered Cabs | 200,815 | 201,048 | |||||||
Other | 330,069 | 396,659 | |||||||
Consolidated total assets | $ | 2,093,060 | $ | 1,950,857 | |||||
Acquisitions
Acquisitions | 3 Months Ended | ||||||||
Aug. 31, 2013 | |||||||||
Acquisitions | NOTE M – Acquisitions | ||||||||
On July 31, 2013, we purchased an additional 10% interest in our laser welded blanks joint venture, TWB, for $17,869,000, increasing our ownership to a 55% controlling interest. This transaction was accounted for as a step acquisition, which required that we re-measure our previously held 45% ownership interest to fair value and record the difference between fair value and carrying value as a gain in our consolidated statement of earnings. The re-measurement to fair value resulted in a non-cash pre-tax gain of $11,000,000, which is included in miscellaneous income in our consolidated statement of earnings for the three months ended August 31, 2013. The acquired net assets became part of our Steel Processing operating segment upon closing. | |||||||||
The assets acquired and liabilities assumed were recognized at their acquisition-date fair values. In connection with the acquisition of TWB, we identified and valued the following identifiable intangible assets: | |||||||||
(in thousands) | Useful Life | ||||||||
Category | Amount | (Years) | |||||||
Customer relationships | $ | 17,438 | 6-May | ||||||
Trade names | 4,120 | Indefinite | |||||||
Non-compete agreement | 470 | Indefinite | |||||||
Total acquired identifiable intangible assets | $ | 22,028 | |||||||
The purchase price includes the fair values of other assets that were not identifiable, not separately recognizable under accounting rules (e.g., assembled workforce) or of immaterial value. The estimated fair value of the assets acquired and liabilities assumed approximated the purchase price and therefore no goodwill was recognized. | |||||||||
The following table summarizes the consideration transferred for our 55% controlling interest in TWB and the fair value assigned to the assets acquired and liabilities assumed at the acquisition date: | |||||||||
(in thousands) | |||||||||
Consideration Transferred: | |||||||||
Cash consideration | $ | 17,869 | |||||||
Fair value of previously held interest in TWB | 72,369 | ||||||||
Total consideration | $ | 90,238 | |||||||
Estimated Fair Value of Assets Acquired and Liabilities Assumed: | |||||||||
Cash and cash equivalents | $ | 70,826 | |||||||
Accounts receivable | 52,012 | ||||||||
Inventories | 20,403 | ||||||||
Prepaid expenses and other current assets | 4,027 | ||||||||
Intangible assets | 22,028 | ||||||||
Other noncurrent assets | 103 | ||||||||
Property, plant and equipment | 52,390 | ||||||||
Total identifiable assets | 221,789 | ||||||||
Accounts payable | (50,642 | ) | |||||||
Accrued liabilities | (6,431 | ) | |||||||
Deferred taxes | (2,109 | ) | |||||||
Net assets | 162,607 | ||||||||
Noncontrolling interest | (72,369 | ) | |||||||
Total consideration | $ | 90,238 | |||||||
The fair value of our previously held equity interest and the noncontrolling interest was derived using a market approach, and included a minority discount of 10% to reflect management’s estimate of the control premium. | |||||||||
Operating results of TWB have been included in our consolidated statements of earnings from the acquisition date, forward. For periods prior to the acquisition date, our portion of the equity in the net income of TWB was included within equity in net income of unconsolidated affiliates in our consolidated statements of earnings. Pro forma results, including the acquired business since the beginning of fiscal 2013, would not be materially different than reported results. |
Derivative_Instruments_and_Hed
Derivative Instruments and Hedging Activities | 3 Months Ended | ||||||||||||||||
Aug. 31, 2013 | |||||||||||||||||
Derivative Instruments and Hedging Activities | NOTE N – Derivative Instruments and Hedging Activities | ||||||||||||||||
We utilize derivative financial instruments to manage exposure to certain risks related to our ongoing operations. The primary risks managed through the use of derivative instruments include interest rate risk, currency exchange risk and commodity price risk. While certain of our derivative instruments are designated as hedging instruments, we also enter into derivative instruments that are designed to hedge a risk, but are not designated as hedging instruments and therefore do not qualify for hedge accounting. These derivative instruments are adjusted to current fair value through earnings at the end of each period. | |||||||||||||||||
Interest Rate Risk Management – We are exposed to the impact of interest rate changes. Our objective is to manage the impact of interest rate changes on cash flows and the market value of our borrowings. We utilize a mix of debt maturities along with both fixed-rate and variable-rate debt to manage changes in interest rates. In addition, we enter into interest rate swaps to further manage our exposure to interest rate variations related to our borrowings and to lower our overall borrowing costs. | |||||||||||||||||
Currency Exchange Risk Management – We conduct business in several major international currencies and are therefore subject to risks associated with changing foreign exchange rates. We enter into various contracts that change in value as foreign exchange rates change to manage this exposure. Such contracts limit exposure to both favorable and unfavorable currency fluctuations. The translation of foreign currencies into United States dollars also subjects us to exposure related to fluctuating exchange rates; however, derivative instruments are not used to manage this risk. | |||||||||||||||||
Commodity Price Risk Management – We are exposed to changes in the price of certain commodities, including steel, natural gas, zinc and other raw materials, and our utility requirements. Our objective is to reduce earnings and cash flow volatility associated with forecasted purchases and sales of these commodities to allow management to focus its attention on business operations. Accordingly, we enter into derivative instruments to manage the associated price risk. | |||||||||||||||||
We are exposed to counterparty credit risk on all of our derivative instruments. Accordingly, we have established and maintain strict counterparty credit guidelines and enter into derivative instruments only with major financial institutions. We do not have significant exposure to any one counterparty and management believes the risk of loss is remote and, in any event, would not be material. | |||||||||||||||||
Refer to “Note O – Fair Value” for additional information regarding the accounting treatment for our derivative instruments, as well as how fair value is determined. | |||||||||||||||||
The following table summarizes the fair value of our derivative instruments and the respective financial statement caption in which they were recorded in our consolidated balance sheet at August 31, 2013: | |||||||||||||||||
Asset Derivatives | Liability Derivatives | ||||||||||||||||
Balance | Balance | ||||||||||||||||
Sheet | Fair | Sheet | Fair | ||||||||||||||
(in thousands) | Location | Value | Location | Value | |||||||||||||
Derivatives designated as hedging instruments: | |||||||||||||||||
Interest rate contracts | Receivables | $ | - | Accounts payable | $ | 4,113 | |||||||||||
Other assets | - | Other liabilities | 1,916 | ||||||||||||||
- | 6,029 | ||||||||||||||||
Commodity contracts | Receivables | 2,305 | Accounts payable | - | |||||||||||||
2,305 | - | ||||||||||||||||
Totals | $ | 2,305 | $ | 6,029 | |||||||||||||
Derivatives not designated as hedging instruments: | |||||||||||||||||
Commodity contracts | Receivables | $ | 878 | Accounts payable | $ | 284 | |||||||||||
Totals | $ | 878 | $ | 284 | |||||||||||||
Total Derivative Instruments | $ | 3,183 | $ | 6,313 | |||||||||||||
The amounts in the table above reflect the fair value of the Company’s derivative contracts on a net basis. Had these amounts been recognized on a gross basis, the impact would have been a $240,000 increase in receivables with a corresponding increase in accounts payable. | |||||||||||||||||
The following table summarizes the fair value of our derivative instruments and the respective line in which they were recorded in the consolidated balance sheet at May 31, 2013: | |||||||||||||||||
Asset Derivatives | Liability Derivatives | ||||||||||||||||
Balance | Balance | ||||||||||||||||
Sheet | Fair | Sheet | Fair | ||||||||||||||
(in thousands) | Location | Value | Location | Value | |||||||||||||
Derivatives designated as hedging instruments: | |||||||||||||||||
Interest rate contracts | Receivables | $ | - | Accounts payable | $ | 4,032 | |||||||||||
Other assets | - | Other liabilities | 3,863 | ||||||||||||||
- | 7,895 | ||||||||||||||||
Commodity contracts | Receivables | 425 | Accounts payable | 1,352 | |||||||||||||
425 | 1,352 | ||||||||||||||||
Totals | $ | 425 | $ | 9,247 | |||||||||||||
Derivatives not designated as hedging instruments: | |||||||||||||||||
Commodity contracts | Receivables | $ | 331 | Accounts payable | $ | 527 | |||||||||||
331 | 527 | ||||||||||||||||
Foreign exchange contracts | Receivables | 5 | Accounts payable | - | |||||||||||||
5 | - | ||||||||||||||||
Totals | $ | 336 | $ | 527 | |||||||||||||
Total Derivative Instruments | $ | 761 | $ | 9,774 | |||||||||||||
The amounts in the table above reflect the fair value of the Company’s derivative contracts on a net basis. Had these amounts been recognized on a gross basis, the impact would have been a $740,000 increase in receivables with a corresponding increase in accounts payable. | |||||||||||||||||
Cash Flow Hedges | |||||||||||||||||
We enter into derivative instruments to hedge our exposure to changes in cash flows attributable to interest rate and commodity price fluctuations associated with certain forecasted transactions. These derivative instruments are designated and qualify as cash flow hedges. Accordingly, the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income (“OCI”) and reclassified into earnings in the same financial statement caption associated with the forecasted transaction and in the same period during which the hedged transaction affects earnings. The ineffective portion of the gain or loss on the derivative instrument is recognized in earnings immediately. | |||||||||||||||||
The following table summarizes our cash flow hedges outstanding at August 31, 2013: | |||||||||||||||||
(in thousands) | Notional | Maturity Date | |||||||||||||||
Amount | |||||||||||||||||
Commodity contracts | $ | 37,040 | September 2013 - December 2014 | ||||||||||||||
Interest rate contracts | 100,000 | Dec-14 | |||||||||||||||
The following table summarizes the gain (loss) recognized in OCI and the gain (loss) reclassified from accumulated OCI into earnings for derivative instruments designated as cash flow hedges during the three months ended August 31, 2013 and 2012: | |||||||||||||||||
(in thousands) | Gain (Loss) | Location of | Gain (Loss) | Location of | Gain (Loss) | ||||||||||||
Recognized | Gain (Loss) | Reclassified | Gain (Loss) | (Ineffective | |||||||||||||
in OCI | Reclassified | from | (Ineffective | Portion) | |||||||||||||
(Effective | from | Accumulated | Portion) | and Excluded | |||||||||||||
Portion) | Accumulated | OCI | and Excluded | from | |||||||||||||
OCI | (Effective | from | Effectiveness | ||||||||||||||
(Effective | Portion) | Effectiveness | Testing | ||||||||||||||
Portion) | Testing | ||||||||||||||||
For the three months ended August 31, 2013: | |||||||||||||||||
Interest rate contracts | $ | (203 | ) | Interest expense | $ | (1,063 | ) | Interest expense | $ | - | |||||||
Commodity contracts | 3,644 | Cost of goods sold | (316 | ) | Cost of goods sold | - | |||||||||||
Totals | $ | 3,441 | $ | (1,379 | ) | $ | - | ||||||||||
For the three months ended August 31, 2012: | |||||||||||||||||
Interest rate contracts | $ | (606 | ) | Interest expense | $ | (983 | ) | Interest expense | $ | - | |||||||
Commodity contracts | 428 | Cost of goods sold | (419 | ) | Cost of goods sold | - | |||||||||||
Totals | $ | (178 | ) | $ | (1,402 | ) | $ | - | |||||||||
The estimated net amount of the losses recognized in accumulated OCI at August 31, 2013 expected to be reclassified into net earnings within the succeeding twelve months is $2,558,000 (net of tax of $1,554,000). This amount was computed using the fair value of the cash flow hedges at August 31, 2013, and will change before actual reclassification from OCI to net earnings during the fiscal years ended May 31, 2014 and 2015. | |||||||||||||||||
Economic (Non-designated) Hedges | |||||||||||||||||
We enter into foreign currency contracts to manage our foreign exchange exposure related to inter-company and financing transactions that do not meet the requirements for hedge accounting treatment. We also enter into certain commodity contracts that do not qualify for hedge accounting treatment. Accordingly, these derivative instruments are adjusted to current market value at the end of each period through earnings. | |||||||||||||||||
The following table summarizes our economic (non-designated) derivative instruments outstanding at August 31, 2013: | |||||||||||||||||
(in thousands) | Notional | Maturity Date(s) | |||||||||||||||
Amount | |||||||||||||||||
Commodity contracts | $ | 28,830 | September 2013 - December 2014 | ||||||||||||||
The following table summarizes the gain (loss) recognized in earnings for economic (non-designated) derivative financial instruments during the three months ended August 31, 2013 and 2012: | |||||||||||||||||
Location of Gain (Loss) | Gain (Loss) Recognized | ||||||||||||||||
Recognized in Earnings | in Earnings for the | ||||||||||||||||
Three Months Ended | |||||||||||||||||
August 31, | |||||||||||||||||
(in thousands) | 2013 | 2012 | |||||||||||||||
Commodity contracts | Cost of goods sold | $ | 676 | $ | 1,813 | ||||||||||||
Foreign exchange contracts | Miscellaneous income (expense) | (5 | ) | (863 | ) | ||||||||||||
Total | $ | 671 | $ | 950 | |||||||||||||
The gain (loss) on the foreign currency derivatives significantly offsets the gain (loss) on the hedged item. |
Fair_Value
Fair Value | 3 Months Ended | ||||||||||||||||
Aug. 31, 2013 | |||||||||||||||||
Fair Value | NOTE O – Fair Value | ||||||||||||||||
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is an exit price concept that assumes an orderly transaction between willing market participants and is required to be based on assumptions that market participants would use in pricing an asset or a liability. Current accounting guidance establishes a three-tier fair value hierarchy as a basis for considering such assumptions and for classifying the inputs used in the valuation methodologies. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair values are as follows: | |||||||||||||||||
Level 1 | – | Observable prices in active markets for identical assets and liabilities. | |||||||||||||||
Level 2 | – | Observable inputs other than quoted prices in active markets for identical assets and liabilities. | |||||||||||||||
Level 3 | – | Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. | |||||||||||||||
Recurring Fair Value Measurements | |||||||||||||||||
At August 31, 2013, our financial assets and liabilities measured at fair value on a recurring basis were as follows: | |||||||||||||||||
(in thousands) | Quoted Prices | Significant | Significant | Totals | |||||||||||||
in Active | Other | Unobservable | |||||||||||||||
Markets | Observable | Inputs | |||||||||||||||
(Level 1) | Inputs | (Level 3) | |||||||||||||||
(Level 2) | |||||||||||||||||
Assets | |||||||||||||||||
Derivative contracts | $ | - | $ | 3,183 | $ | - | $ | 3,183 | |||||||||
Total assets | $ | - | $ | 3,183 | $ | - | $ | 3,183 | |||||||||
Liabilities | |||||||||||||||||
Derivative contracts | $ | - | $ | 6,313 | $ | - | $ | 6,313 | |||||||||
Total liabilities | $ | - | $ | 6,313 | $ | - | $ | 6,313 | |||||||||
At May 31, 2013, our financial assets and liabilities measured at fair value on a recurring basis were as follows: | |||||||||||||||||
(in thousands) | Quoted Prices | Significant | Significant | Totals | |||||||||||||
in Active | Other | Unobservable | |||||||||||||||
Markets | Observable | Inputs | |||||||||||||||
(Level 1) | Inputs | (Level 3) | |||||||||||||||
(Level 2) | |||||||||||||||||
Assets | |||||||||||||||||
Derivative contracts | $ | - | $ | 761 | $ | - | $ | 761 | |||||||||
Total assets | $ | - | $ | 761 | $ | - | $ | 761 | |||||||||
Liabilities | |||||||||||||||||
Derivative contracts | $ | - | $ | 9,774 | $ | - | $ | 9,774 | |||||||||
Total liabilities | $ | - | $ | 9,774 | $ | - | $ | 9,774 | |||||||||
Non-Recurring Fair Value Measurements | |||||||||||||||||
At August 31, 2013, our financial assets and liabilities measured at fair value on a non-recurring basis were as follows: | |||||||||||||||||
(in thousands) | Quoted Prices | Significant | Significant | Totals | |||||||||||||
in Active | Other | Unobservable | |||||||||||||||
Markets | Observable | Inputs | |||||||||||||||
(Level 1) | Inputs | (Level 3) | |||||||||||||||
(Level 2) | |||||||||||||||||
Assets | |||||||||||||||||
Long-lived assets held and used (1) | $ | - | $ | 11,827 | $ | - | $ | 11,827 | |||||||||
Total assets | $ | - | $ | 11,827 | $ | - | $ | 11,827 | |||||||||
-1 | During the first quarter of fiscal 2014, we determined that certain indicators of impairment were present with regard to certain non-core Steel Processing assets. Recoverability of the identified asset group was tested using future cash flow projections based on management’s estimate of market conditions. The sum of these undiscounted future cash flows was less than the net book value of the asset group. The net book value was also determined to be in excess of fair value and, accordingly, the asset group was written down to its fair value of $11,827,000, resulting in an impairment charge of $4,641,000. This impairment charge was recorded within impairment of long-lived assets in our consolidated statement of earnings. Fair value was determined based on market prices for similar assets. | ||||||||||||||||
At May 31, 2013, our assets measured at fair value on a non-recurring basis were categorized as follows: | |||||||||||||||||
(in thousands) | Quoted Prices | Significant | Significant | Totals | |||||||||||||
in Active | Other | Unobservable | |||||||||||||||
Markets | Observable | Inputs | |||||||||||||||
(Level 1) | Inputs | (Level 3) | |||||||||||||||
(Level 2) | |||||||||||||||||
Assets | |||||||||||||||||
Long-lived assets held and used (1) | $ | - | $ | 6,856 | $ | - | $ | 6,856 | |||||||||
Total assets | $ | - | $ | 6,856 | $ | - | $ | 6,856 | |||||||||
-1 | During the fourth quarter of fiscal 2013, the long-lived assets of our 60%-owned consolidated joint venture in India, WNCL, were written down to their fair value of $6,856,000, resulting in an impairment charge of $4,968,000. This impairment loss was recorded within impairment of long-lived assets in our consolidated statement of earnings. The portion of this impairment loss attributable to the noncontrolling interest, or $1,987,000, is recorded within net earnings attributable to noncontrolling interest in our consolidated statement of earnings. Fair value was determined based on market prices for similar assets. | ||||||||||||||||
The fair value of our foreign currency contracts, commodity contracts and interest rate contracts is based on the present value of the expected future cash flows considering the risks involved, including non-performance risk, and using discount rates appropriate for the respective maturities. Market observable, Level 2 inputs are used to determine the present value of the expected future cash flows. Refer to “NOTE N – Derivative Instruments and Hedging Activities” for additional information regarding our use of derivative instruments. | |||||||||||||||||
The fair value of non-derivative financial instruments included in the carrying amounts of cash and cash equivalents, receivables, income taxes receivable, other assets, deferred income taxes, accounts payable, short-term borrowings, accrued compensation, contributions to employee benefit plans and related taxes, other accrued items, income taxes payable and other liabilities approximate carrying value due to their short-term nature. The fair value of long-term debt, including current maturities, based upon models utilizing market observable (Level 2) inputs and credit risk, was $411,492,000 and $421,056,000 at August 31, 2013 and May 31, 2013, respectively. The carrying amount of long-term debt, including current maturities, was $407,047,000 and $407,328,000 at August 31, 2013 and May 31, 2013, respectively. |
Accounting_Policies_Policies
Accounting Policies (Policies) | 3 Months Ended |
Aug. 31, 2013 | |
Recently Issued Accounting Standards | Recently Issued Accounting Standards |
In December 2011, new accounting guidance was issued that establishes certain additional disclosure requirements about financial instruments and derivatives instruments that are subject to netting arrangements. The new disclosures are required for annual reporting periods beginning on or after January 1, 2013, and interim periods within those periods. We adopted this new guidance on June 1, 2013, and have provided the required disclosures in “NOTE N – Derivative Instruments and Hedging Activities.” | |
In June 2011, new accounting guidance was issued regarding the presentation of comprehensive income in financial statements prepared in accordance with U.S. GAAP. This new guidance requires entities to present reclassification adjustments included in other comprehensive income on the face of the financial statements and allows entities to present total comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. It also eliminates the option for entities to present the components of other comprehensive income as part of the statement of equity. For public companies, this accounting guidance was effective for fiscal years (and interim periods within those fiscal years) beginning after December 15, 2011, with early adoption permitted. Retrospective application to prior periods is required. We adopted the effective provisions of this new accounting guidance on June 1, 2012 and have provided the required statements of comprehensive income for the three months ended August 31, 2013 and 2012. In December 2011, certain provisions of this new guidance related to the presentation of reclassification adjustments out of accumulated other comprehensive income were temporarily deferred. In February 2013, an effective date was established for the provisions that had been deferred. These provisions are effective prospectively for annual reporting periods, and interim periods within those annual periods, beginning after December 15, 2012. We adopted the deferred provisions, which relate to presentation only, on June 1, 2013 and have provided the required disclosures in “NOTE G – Comprehensive Income.” There was no impact on our financial position or results of operations. | |
In July 2012, amended accounting guidance was issued that simplifies how an entity tests indefinite-lived intangible assets for impairment. The amended guidance allows an entity to first assess qualitative factors to determine whether it is necessary to perform a quantitative impairment test. An entity will no longer be required to calculate the fair value of an indefinite-lived intangible asset and perform the quantitative test unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. The amended guidance is effective for interim and annual indefinite-lived intangible asset impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted. The adoption of this amended accounting guidance on June 1, 2013, did not have a material impact on our financial position or results of operations. | |
In March 2013, amended accounting guidance was issued regarding the accounting for cumulative translation adjustment. The amended guidance specifies that a cumulative translation adjustment should be released from earnings when an entity ceases to have a controlling financial interest in a subsidiary or a group of assets within a consolidated foreign entity and the sale or transfer results in the complete or substantially complete liquidation of the foreign entity. For sales of an equity method investment that is a foreign entity, a pro rata portion of the cumulative translation adjustment attributable to the investment would be recognized in earnings upon sale of the investment. The amended guidance is effective prospectively for annual reporting periods, and interim periods within those annual periods, beginning after December 15, 2013. Early adoption is permitted. We do not expect the adoption of this amended accounting guidance to have a material impact on our financial position or results of operations. | |
Cash Flow Hedges | Cash Flow Hedges |
We enter into derivative instruments to hedge our exposure to changes in cash flows attributable to interest rate and commodity price fluctuations associated with certain forecasted transactions. These derivative instruments are designated and qualify as cash flow hedges. Accordingly, the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income (“OCI”) and reclassified into earnings in the same financial statement caption associated with the forecasted transaction and in the same period during which the hedged transaction affects earnings. The ineffective portion of the gain or loss on the derivative instrument is recognized in earnings immediately. | |
Economic (Non-designated) Hedges | Economic (Non-designated) Hedges |
We enter into foreign currency contracts to manage our foreign exchange exposure related to inter-company and financing transactions that do not meet the requirements for hedge accounting treatment. We also enter into certain commodity contracts that do not qualify for hedge accounting treatment. Accordingly, these derivative instruments are adjusted to current market value at the end of each period through earnings. |
Investments_in_Unconsolidated_1
Investments in Unconsolidated Affiliates (Tables) | 3 Months Ended | ||||||||
Aug. 31, 2013 | |||||||||
Balance Sheet | |||||||||
Financial Information | Combined financial information for our unconsolidated affiliates is summarized as follows: | ||||||||
(in thousands) | August 31, | May 31, | |||||||
2013 | 2013 | ||||||||
Cash | $ | 55,310 | $ | 70,380 | |||||
Receivable from partner (1) | 4,069 | 69,706 | |||||||
Other current assets | 426,039 | 518,262 | |||||||
Noncurrent assets | 302,187 | 350,681 | |||||||
Total assets | $ | 787,605 | $ | 1,009,029 | |||||
Current liabilities | $ | 113,229 | $ | 181,111 | |||||
Short-term borrowings | 14,293 | 21,369 | |||||||
Current maturities of long-term debt | 5,265 | 5,442 | |||||||
Long-term debt | 272,574 | 274,750 | |||||||
Other noncurrent liabilities | 18,613 | 18,345 | |||||||
Equity | 363,631 | 508,012 | |||||||
Total liabilities and equity | $ | 787,605 | $ | 1,009,029 | |||||
Income Statement | |||||||||
Financial Information | Three Months Ended | ||||||||
August 31, | |||||||||
(in thousands) | 2013 | 2012 | |||||||
Net sales | $ | 423,481 | $ | 446,853 | |||||
Gross margin | 89,814 | 74,513 | |||||||
Operating income | 64,540 | 51,711 | |||||||
Depreciation and amortization | 10,337 | 8,990 | |||||||
Interest expense | 2,223 | 2,261 | |||||||
Income tax expense | 3,030 | 3,469 | |||||||
Net earnings | 59,634 | 46,284 | |||||||
-1 | Represents cash owed from a joint venture partner as a result of centralized cash management. |
Restructuring_and_Other_Expens1
Restructuring and Other Expense (Income) (Tables) | 3 Months Ended | ||||||||||||||||||||
Aug. 31, 2013 | |||||||||||||||||||||
Schedule of Progression of Liabilities Associated with Restructuring Activities, Combined with Reconciliation to Restructuring and Other Expense (Income) | A progression of the liabilities associated with our restructuring activities, combined with a reconciliation to the restructuring and other expense (income) financial statement caption in our consolidated statement of earnings for the three months ended August 31, 2013 is summarized as follows: | ||||||||||||||||||||
(in thousands) | Beginning | Expense | Payments | Adjustments | Ending | ||||||||||||||||
Balance | Balance | ||||||||||||||||||||
Early retirement and severance | $ | 5,029 | $ | 402 | $ | (441 | ) | $ | - | $ | 4,990 | ||||||||||
Facility exit and other costs | 1,200 | 505 | (380 | ) | - | 1,325 | |||||||||||||||
$ | 6,229 | 907 | $ | (821 | ) | $ | - | $ | 6,315 | ||||||||||||
Gain on asset disposal | (4,762 | ) | |||||||||||||||||||
Less: joint venture transactions | (142 | ) | |||||||||||||||||||
Restructuring and other expense (income) | $ | (3,997 | ) | ||||||||||||||||||
Comprehensive_Income_Tables
Comprehensive Income (Tables) | 3 Months Ended | ||||||||||||
Aug. 31, 2013 | |||||||||||||
Summary of Each Component of Other Comprehensive Income or Loss | The following table summarizes each component of other comprehensive income for the three months ended August 31, 2013: | ||||||||||||
(in thousands) | Before-Tax | Tax Expense | Net-of-Tax | ||||||||||
Amount | Amount | ||||||||||||
Foreign currency translation | $ | (486 | ) | $ | - | $ | (486 | ) | |||||
Pension liability adjustment | - | - | - | ||||||||||
Cash flow hedges | 4,820 | (1,469 | ) | 3,351 | |||||||||
Other comprehensive income | $ | 4,334 | $ | (1,469 | ) | $ | 2,865 | ||||||
The following table summarizes the tax effects of each component of other comprehensive income for the three months ended August 31, 2012: | |||||||||||||
(in thousands) | Before-Tax | Tax Expense | Net-of-Tax | ||||||||||
Amount | Amount | ||||||||||||
Foreign currency translation | $ | 3,908 | $ | - | $ | 3,908 | |||||||
Pension liability adjustment | (255 | ) | 83 | (172 | ) | ||||||||
Cash flow hedges | 1,224 | (240 | ) | 984 | |||||||||
Other comprehensive income | $ | 4,877 | $ | (157 | ) | $ | 4,720 | ||||||
Changes_in_Equity_Tables
Changes in Equity (Tables) | 3 Months Ended | ||||||||||||||||||||||||
Aug. 31, 2013 | |||||||||||||||||||||||||
Summary of the Changes in Total Equity, Shareholders' Equity Attributable to Controlling Interest, and Equity Attributable to Noncontrolling Interest | The following table provides a summary of the changes in total equity, shareholders’ equity attributable to controlling interest, and equity attributable to noncontrolling interest for the three months ended August 31, 2013: | ||||||||||||||||||||||||
Controlling Interest | |||||||||||||||||||||||||
(in thousands) | Additional | Cumulative | Retained | Total | Non- | Total | |||||||||||||||||||
Paid-in | Other | Earnings | controlling | ||||||||||||||||||||||
Capital | Comprehensive | Interest | |||||||||||||||||||||||
Income (Loss), | |||||||||||||||||||||||||
Net of Tax | |||||||||||||||||||||||||
Balance at May 31, 2013 | $ | 244,864 | $ | (12,036 | ) | $ | 597,994 | $ | 830,822 | $ | 41,415 | $ | 872,237 | ||||||||||||
Net earnings | - | - | 54,557 | 54,557 | 1,796 | 56,353 | |||||||||||||||||||
Other comprehensive income (loss) | - | 3,882 | - | 3,882 | (1,017 | ) | 2,865 | ||||||||||||||||||
Common shares issued | 2,201 | - | - | 2,201 | - | 2,201 | |||||||||||||||||||
Stock-based compensation | 7,230 | - | - | 7,230 | - | 7,230 | |||||||||||||||||||
Purchases and retirement of common shares | (3,104 | ) | - | (27,412 | ) | (30,516 | ) | - | (30,516 | ) | |||||||||||||||
Cash dividends declared | - | - | (10,588 | ) | (10,588 | ) | - | (10,588 | ) | ||||||||||||||||
Dividend paid to noncontrolling interest | - | - | - | - | (1,763 | ) | (1,763 | ) | |||||||||||||||||
Acquisition of TWB | - | - | - | - | 72,369 | 72,369 | |||||||||||||||||||
Balance at August 31, 2013 | $ | 251,191 | $ | (8,154 | ) | $ | 614,551 | $ | 857,588 | $ | 112,800 | $ | 970,388 | ||||||||||||
Components of Changes in Other Comprehensive Income (Loss) | The components of the changes in other comprehensive income (loss) were as follows: | ||||||||||||||||||||||||
(in thousands) | Foreign | Pension | Cash | Accumulated | |||||||||||||||||||||
Currency | Liability | Flow | Other | ||||||||||||||||||||||
Translation | Adjustment | Hedges | Comprehensive | ||||||||||||||||||||||
Loss | |||||||||||||||||||||||||
Balance as of May 31, 2013 | $ | 4,025 | $ | (10,221 | ) | $ | (5,840 | ) | $ | (12,036 | ) | ||||||||||||||
Other comprehensive income before reclassifications | 531 | - | 3,441 | 3,972 | |||||||||||||||||||||
Reclassification adjustments to income (a) | - | - | 1,379 | 1,379 | |||||||||||||||||||||
Income taxes | - | - | (1,469 | ) | (1,469 | ) | |||||||||||||||||||
Balance as of August 31, 2013 | $ | 4,556 | $ | (10,221 | ) | $ | (2,489 | ) | $ | (8,154 | ) | ||||||||||||||
(a) | The income statement classification of amounts reclassified to income for cash flow hedges is disclosed in “NOTE N – Derivative Instruments and Hedging Activities.” |
StockBased_Compensation_Tables
Stock-Based Compensation (Tables) | 3 Months Ended | ||||
Aug. 31, 2013 | |||||
Non-Qualified Stock Options | |||||
Assumptions to Value Stock Options | The following assumptions were used to value these stock options: | ||||
Dividend yield | 2.28 | % | |||
Expected volatility | 52.23 | % | |||
Risk-free interest rate | 1.69 | % | |||
Expected term (years) | 6 | ||||
Market-Based Restricted Common Shares | |||||
Assumptions to Value Stock Options | The following assumptions were used to determine the grant-date fair value and the derived service period for these restricted common shares: | ||||
Dividend yield | 2.28 | % | |||
Expected volatility | 53.4 | % | |||
Risk-free interest rate | 1.41 | % |
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 3 Months Ended | ||||||||
Aug. 31, 2013 | |||||||||
Computation of Basic and Diluted Earnings Per Share | The following table sets forth the computation of basic and diluted earnings per share for the three months ended August 31, 2013 and 2012: | ||||||||
Three Months Ended | |||||||||
August 31, | |||||||||
(in thousands, except per share amounts) | 2013 | 2012 | |||||||
Numerator (basic & diluted): | |||||||||
Net earnings attributable to controlling interest – income available to common shareholders | $ | 54,557 | $ | 33,962 | |||||
Denominator: | |||||||||
Denominator for basic earnings per share attributable to controlling interest – weighted average common shares | 69,601 | 68,278 | |||||||
Effect of dilutive securities | 2,482 | 1,293 | |||||||
Denominator for diluted earnings per share attributable to controlling interest – adjusted weighted average common shares | 72,083 | 69,571 | |||||||
Basic earnings per share attributable to controlling interest | $ | 0.78 | $ | 0.5 | |||||
Diluted earnings per share attributable to controlling interest | $ | 0.76 | $ | 0.49 |
Segment_Operations_Tables
Segment Operations (Tables) | 3 Months Ended | ||||||||
Aug. 31, 2013 | |||||||||
Financial Information for Reportable Segments | Summarized financial information for our reportable segments is shown in the following table: | ||||||||
Three Months Ended | |||||||||
August 31, | |||||||||
(in thousands) | 2013 | 2012 | |||||||
Net sales | |||||||||
Steel Processing | $ | 402,441 | $ | 385,013 | |||||
Pressure Cylinders | 216,900 | 194,236 | |||||||
Engineered Cabs | 48,461 | 64,495 | |||||||
Other | 24,489 | 22,291 | |||||||
Consolidated net sales | $ | 692,291 | $ | 666,035 | |||||
Operating income (loss) | |||||||||
Steel Processing | $ | 22,663 | $ | 16,659 | |||||
Pressure Cylinders | 19,454 | 15,026 | |||||||
Engineered Cabs | (304 | ) | 4,694 | ||||||
Other | (3,175 | ) | (2,961 | ) | |||||
Consolidated operating income | $ | 38,638 | $ | 33,418 | |||||
Restructuring and other expense (income) | |||||||||
Steel Processing | $ | (4,762 | ) | $ | - | ||||
Pressure Cylinders | 402 | 6 | |||||||
Engineered Cabs | - | - | |||||||
Other | 363 | 397 | |||||||
Consolidated restructuring and other expense (income) | $ | (3,997 | ) | $ | 403 | ||||
Impairment of long-lived assets | |||||||||
Steel Processing | $ | 4,641 | $ | - | |||||
Pressure Cylinders | - | 1,570 | |||||||
Engineered Cabs | - | - | |||||||
Other | - | - | |||||||
Consolidated impairment of long-lived assets | $ | 4,641 | $ | 1,570 | |||||
Joint venture transactions | |||||||||
Steel Processing | $ | - | $ | - | |||||
Pressure Cylinders | - | - | |||||||
Engineered Cabs | - | - | |||||||
Other | 142 | (1,162 | ) | ||||||
Consolidated joint venture transactions | $ | 142 | $ | (1,162 | ) | ||||
August 31, | May 31, | ||||||||
(in thousands) | 2013 | 2013 | |||||||
Total assets | |||||||||
Steel Processing | $ | 843,385 | $ | 610,464 | |||||
Pressure Cylinders | 718,791 | 742,686 | |||||||
Engineered Cabs | 200,815 | 201,048 | |||||||
Other | 330,069 | 396,659 | |||||||
Consolidated total assets | $ | 2,093,060 | $ | 1,950,857 | |||||
Acquisitions_Tables
Acquisitions (Tables) (TWB) | 3 Months Ended | ||||||||
Aug. 31, 2013 | |||||||||
TWB | |||||||||
Schedule of Acquisition of Intangible Assets | In connection with the acquisition of TWB, we identified and valued the following identifiable intangible assets: | ||||||||
(in thousands) | Useful Life | ||||||||
Category | Amount | (Years) | |||||||
Customer relationships | $ | 17,438 | 6-May | ||||||
Trade names | 4,120 | Indefinite | |||||||
Non-compete agreement | 470 | Indefinite | |||||||
Total acquired identifiable intangible assets | $ | 22,028 | |||||||
Schedule of Consideration Transferred and Fair Value Assigned to Assets Acquired And Liabilities Assumed | The following table summarizes the consideration transferred for our 55% controlling interest in TWB and the fair value assigned to the assets acquired and liabilities assumed at the acquisition date: | ||||||||
(in thousands) | |||||||||
Consideration Transferred: | |||||||||
Cash consideration | $ | 17,869 | |||||||
Fair value of previously held interest in TWB | 72,369 | ||||||||
Total consideration | $ | 90,238 | |||||||
Estimated Fair Value of Assets Acquired and Liabilities Assumed: | |||||||||
Cash and cash equivalents | $ | 70,826 | |||||||
Accounts receivable | 52,012 | ||||||||
Inventories | 20,403 | ||||||||
Prepaid expenses and other current assets | 4,027 | ||||||||
Intangible assets | 22,028 | ||||||||
Other noncurrent assets | 103 | ||||||||
Property, plant and equipment | 52,390 | ||||||||
Total identifiable assets | 221,789 | ||||||||
Accounts payable | (50,642 | ) | |||||||
Accrued liabilities | (6,431 | ) | |||||||
Deferred taxes | (2,109 | ) | |||||||
Net assets | 162,607 | ||||||||
Noncontrolling interest | (72,369 | ) | |||||||
Total consideration | $ | 90,238 | |||||||
Derivative_Instruments_and_Hed1
Derivative Instruments and Hedging Activities (Tables) | 3 Months Ended | ||||||||||||||||
Aug. 31, 2013 | |||||||||||||||||
Schedule of Fair Value of Derivative Instruments | The following table summarizes the fair value of our derivative instruments and the respective financial statement caption in which they were recorded in our consolidated balance sheet at August 31, 2013: | ||||||||||||||||
Asset Derivatives | Liability Derivatives | ||||||||||||||||
Balance | Balance | ||||||||||||||||
Sheet | Fair | Sheet | Fair | ||||||||||||||
(in thousands) | Location | Value | Location | Value | |||||||||||||
Derivatives designated as hedging instruments: | |||||||||||||||||
Interest rate contracts | Receivables | $ | - | Accounts payable | $ | 4,113 | |||||||||||
Other assets | - | Other liabilities | 1,916 | ||||||||||||||
- | 6,029 | ||||||||||||||||
Commodity contracts | Receivables | 2,305 | Accounts payable | - | |||||||||||||
2,305 | - | ||||||||||||||||
Totals | $ | 2,305 | $ | 6,029 | |||||||||||||
Derivatives not designated as hedging instruments: | |||||||||||||||||
Commodity contracts | Receivables | $ | 878 | Accounts payable | $ | 284 | |||||||||||
Totals | $ | 878 | $ | 284 | |||||||||||||
Total Derivative Instruments | $ | 3,183 | $ | 6,313 | |||||||||||||
The amounts in the table above reflect the fair value of the Company’s derivative contracts on a net basis. Had these amounts been recognized on a gross basis, the impact would have been a $240,000 increase in receivables with a corresponding increase in accounts payable. | |||||||||||||||||
The following table summarizes the fair value of our derivative instruments and the respective line in which they were recorded in the consolidated balance sheet at May 31, 2013: | |||||||||||||||||
Asset Derivatives | Liability Derivatives | ||||||||||||||||
Balance | Balance | ||||||||||||||||
Sheet | Fair | Sheet | Fair | ||||||||||||||
(in thousands) | Location | Value | Location | Value | |||||||||||||
Derivatives designated as hedging instruments: | |||||||||||||||||
Interest rate contracts | Receivables | $ | - | Accounts payable | $ | 4,032 | |||||||||||
Other assets | - | Other liabilities | 3,863 | ||||||||||||||
- | 7,895 | ||||||||||||||||
Commodity contracts | Receivables | 425 | Accounts payable | 1,352 | |||||||||||||
425 | 1,352 | ||||||||||||||||
Totals | $ | 425 | $ | 9,247 | |||||||||||||
Derivatives not designated as hedging instruments: | |||||||||||||||||
Commodity contracts | Receivables | $ | 331 | Accounts payable | $ | 527 | |||||||||||
331 | 527 | ||||||||||||||||
Foreign exchange contracts | Receivables | 5 | Accounts payable | - | |||||||||||||
5 | - | ||||||||||||||||
Totals | $ | 336 | $ | 527 | |||||||||||||
Total Derivative Instruments | $ | 761 | $ | 9,774 | |||||||||||||
Schedule of Derivatives Designated as Cash Flow Hedging Instruments | The following table summarizes the gain (loss) recognized in OCI and the gain (loss) reclassified from accumulated OCI into earnings for derivative instruments designated as cash flow hedges during the three months ended August 31, 2013 and 2012: | ||||||||||||||||
(in thousands) | Gain (Loss) | Location of | Gain (Loss) | Location of | Gain (Loss) | ||||||||||||
Recognized | Gain (Loss) | Reclassified | Gain (Loss) | (Ineffective | |||||||||||||
in OCI | Reclassified | from | (Ineffective | Portion) | |||||||||||||
(Effective | from | Accumulated | Portion) | and Excluded | |||||||||||||
Portion) | Accumulated | OCI | and Excluded | from | |||||||||||||
OCI | (Effective | from | Effectiveness | ||||||||||||||
(Effective | Portion) | Effectiveness | Testing | ||||||||||||||
Portion) | Testing | ||||||||||||||||
For the three months ended August 31, 2013: | |||||||||||||||||
Interest rate contracts | $ | (203 | ) | Interest expense | $ | (1,063 | ) | Interest expense | $ | - | |||||||
Commodity contracts | 3,644 | Cost of goods sold | (316 | ) | Cost of goods sold | - | |||||||||||
Totals | $ | 3,441 | $ | (1,379 | ) | $ | - | ||||||||||
For the three months ended August 31, 2012: | |||||||||||||||||
Interest rate contracts | $ | (606 | ) | Interest expense | $ | (983 | ) | Interest expense | $ | - | |||||||
Commodity contracts | 428 | Cost of goods sold | (419 | ) | Cost of goods sold | - | |||||||||||
Totals | $ | (178 | ) | $ | (1,402 | ) | $ | - | |||||||||
Schedule of Gain (Loss) Recognized in Earnings for Economic (Non-Designated) Derivative Financial Instruments | The following table summarizes the gain (loss) recognized in earnings for economic (non-designated) derivative financial instruments during the three months ended August 31, 2013 and 2012: | ||||||||||||||||
Location of Gain (Loss) | Gain (Loss) Recognized | ||||||||||||||||
Recognized in Earnings | in Earnings for the | ||||||||||||||||
Three Months Ended | |||||||||||||||||
August 31, | |||||||||||||||||
(in thousands) | 2013 | 2012 | |||||||||||||||
Commodity contracts | Cost of goods sold | $ | 676 | $ | 1,813 | ||||||||||||
Foreign exchange contracts | Miscellaneous income (expense) | (5 | ) | (863 | ) | ||||||||||||
Total | $ | 671 | $ | 950 | |||||||||||||
Cash Flow Hedges | |||||||||||||||||
Schedule of Summary of Derivative Hedges | The following table summarizes our cash flow hedges outstanding at August 31, 2013: | ||||||||||||||||
(in thousands) | Notional | Maturity Date | |||||||||||||||
Amount | |||||||||||||||||
Commodity contracts | $ | 37,040 | September 2013 - December 2014 | ||||||||||||||
Interest rate contracts | 100,000 | Dec-14 | |||||||||||||||
Derivatives Not Designated As Hedging Instruments | |||||||||||||||||
Schedule of Summary of Derivative Hedges | The following table summarizes our economic (non-designated) derivative instruments outstanding at August 31, 2013: | ||||||||||||||||
(in thousands) | Notional | Maturity Date(s) | |||||||||||||||
Amount | |||||||||||||||||
Commodity contracts | $ | 28,830 | September 2013 - December 2014 |
Fair_Value_Tables
Fair Value (Tables) | 3 Months Ended | ||||||||||||||||
Aug. 31, 2013 | |||||||||||||||||
Schedule of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis | At August 31, 2013, our financial assets and liabilities measured at fair value on a recurring basis were as follows: | ||||||||||||||||
(in thousands) | Quoted Prices | Significant | Significant | Totals | |||||||||||||
in Active | Other | Unobservable | |||||||||||||||
Markets | Observable | Inputs | |||||||||||||||
(Level 1) | Inputs | (Level 3) | |||||||||||||||
(Level 2) | |||||||||||||||||
Assets | |||||||||||||||||
Derivative contracts | $ | - | $ | 3,183 | $ | - | $ | 3,183 | |||||||||
Total assets | $ | - | $ | 3,183 | $ | - | $ | 3,183 | |||||||||
Liabilities | |||||||||||||||||
Derivative contracts | $ | - | $ | 6,313 | $ | - | $ | 6,313 | |||||||||
Total liabilities | $ | - | $ | 6,313 | $ | - | $ | 6,313 | |||||||||
At May 31, 2013, our financial assets and liabilities measured at fair value on a recurring basis were as follows: | |||||||||||||||||
(in thousands) | Quoted Prices | Significant | Significant | Totals | |||||||||||||
in Active | Other | Unobservable | |||||||||||||||
Markets | Observable | Inputs | |||||||||||||||
(Level 1) | Inputs | (Level 3) | |||||||||||||||
(Level 2) | |||||||||||||||||
Assets | |||||||||||||||||
Derivative contracts | $ | - | $ | 761 | $ | - | $ | 761 | |||||||||
Total assets | $ | - | $ | 761 | $ | - | $ | 761 | |||||||||
Liabilities | |||||||||||||||||
Derivative contracts | $ | - | $ | 9,774 | $ | - | $ | 9,774 | |||||||||
Total liabilities | $ | - | $ | 9,774 | $ | - | $ | 9,774 | |||||||||
Assets Measured at Fair Value on Non-recurring Basis | At August 31, 2013, our financial assets and liabilities measured at fair value on a non-recurring basis were as follows: | ||||||||||||||||
(in thousands) | Quoted Prices | Significant | Significant | Totals | |||||||||||||
in Active | Other | Unobservable | |||||||||||||||
Markets | Observable | Inputs | |||||||||||||||
(Level 1) | Inputs | (Level 3) | |||||||||||||||
(Level 2) | |||||||||||||||||
Assets | |||||||||||||||||
Long-lived assets held and used (1) | $ | - | $ | 11,827 | $ | - | $ | 11,827 | |||||||||
Total assets | $ | - | $ | 11,827 | $ | - | $ | 11,827 | |||||||||
-1 | During the first quarter of fiscal 2014, we determined that certain indicators of impairment were present with regard to certain non-core Steel Processing assets. Recoverability of the identified asset group was tested using future cash flow projections based on management’s estimate of market conditions. The sum of these undiscounted future cash flows was less than the net book value of the asset group. The net book value was also determined to be in excess of fair value and, accordingly, the asset group was written down to its fair value of $11,827,000, resulting in an impairment charge of $4,641,000. This impairment charge was recorded within impairment of long-lived assets in our consolidated statement of earnings. Fair value was determined based on market prices for similar assets. | ||||||||||||||||
At May 31, 2013, our assets measured at fair value on a non-recurring basis were categorized as follows: | |||||||||||||||||
(in thousands) | Quoted Prices | Significant | Significant | Totals | |||||||||||||
in Active | Other | Unobservable | |||||||||||||||
Markets | Observable | Inputs | |||||||||||||||
(Level 1) | Inputs | (Level 3) | |||||||||||||||
(Level 2) | |||||||||||||||||
Assets | |||||||||||||||||
Long-lived assets held and used (1) | $ | - | $ | 6,856 | $ | - | $ | 6,856 | |||||||||
Total assets | $ | - | $ | 6,856 | $ | - | $ | 6,856 | |||||||||
-1 | During the fourth quarter of fiscal 2013, the long-lived assets of our 60%-owned consolidated joint venture in India, WNCL, were written down to their fair value of $6,856,000, resulting in an impairment charge of $4,968,000. This impairment loss was recorded within impairment of long-lived assets in our consolidated statement of earnings. The portion of this impairment loss attributable to the noncontrolling interest, or $1,987,000, is recorded within net earnings attributable to noncontrolling interest in our consolidated statement of earnings. Fair value was determined based on market prices for similar assets. |
Basis_of_Presentation_Addition
Basis of Presentation - Additional Information (Detail) (USD $) | Aug. 31, 2013 | 31-May-13 | Aug. 31, 2013 | Aug. 31, 2013 | Aug. 31, 2013 | Aug. 31, 2013 | Aug. 31, 2013 | 31-May-13 | Mar. 01, 2011 |
Metal Framing | Joint Venture Transactions | Joint Venture Transactions | Joint Venture Transactions | Joint Venture Transactions | Joint Venture Transactions | Joint Venture Transactions | |||
Spartan Steel Coating, LLC | TWB | Worthington Energy Innovations, LLC | Worthington Nitin Cylinders Limited | Worthington Nitin Cylinders Limited | ClarkDietrich | ||||
Basis of Presentation [Line Items] | |||||||||
Percent of controlling interest by the company | 52.00% | 55.00% | 75.00% | 60.00% | 60.00% | ||||
Percentage of additional interest acquired by the company | 10.00% | ||||||||
Purchase of additional interest | $17,869,000 | ||||||||
Percent of interest by unconsolidated affiliates | 25.00% | ||||||||
Assets held for sale | $3,309,000 | $3,040,000 | $3,309,000 |
Investments_in_Unconsolidated_2
Investments in Unconsolidated Affiliates - Additional Information (Detail) (USD $) | 3 Months Ended | 12 Months Ended |
Aug. 31, 2013 | 31-May-13 | |
Investments in and Advances to Affiliates [Line Items] | ||
Distributions from unconsolidated affiliates | $26,591,000 | |
Excess distributions from unconsolidated affiliates | 5,555,000 | |
WAVE | ||
Investments in and Advances to Affiliates [Line Items] | ||
Cumulative distributions in excess of investment | 61,745,000 | 63,187,000 |
ClarkDietrich | ||
Investments in and Advances to Affiliates [Line Items] | ||
Excess distributions from unconsolidated affiliates | $5,555,000 | |
Joint Venture Transactions | ArtiFlex | ||
Investments in and Advances to Affiliates [Line Items] | ||
Percent of interest by unconsolidated affiliates | 50.00% | |
Joint Venture Transactions | Gestamp Worthington Wind Steel, LLC | ||
Investments in and Advances to Affiliates [Line Items] | ||
Percent of interest by unconsolidated affiliates | 50.00% | |
Joint Venture Transactions | Samuel Steel Pickling Company | ||
Investments in and Advances to Affiliates [Line Items] | ||
Percent of interest by unconsolidated affiliates | 31.25% | |
Joint Venture Transactions | Seviacero | ||
Investments in and Advances to Affiliates [Line Items] | ||
Percent of interest by unconsolidated affiliates | 50.00% | |
Joint Venture Transactions | WAVE | ||
Investments in and Advances to Affiliates [Line Items] | ||
Percent of interest by unconsolidated affiliates | 50.00% | |
Joint Venture Transactions | ClarkDietrich | ||
Investments in and Advances to Affiliates [Line Items] | ||
Percent of interest by unconsolidated affiliates | 25.00% | |
Joint Venture Transactions | Worthington Modern Steel Framing Manufacturing Co., Ltd. | ||
Investments in and Advances to Affiliates [Line Items] | ||
Percent of interest by unconsolidated affiliates | 40.00% | |
Joint Venture Transactions | Worthington Specialty Processing | ||
Investments in and Advances to Affiliates [Line Items] | ||
Percent of interest by unconsolidated affiliates | 51.00% |
Schedule_of_Combined_Financial
Schedule of Combined Financial Information for Unconsolidated Affiliates (Detail) (USD $) | 3 Months Ended | ||||
In Thousands, unless otherwise specified | Aug. 31, 2013 | Aug. 31, 2012 | 31-May-13 | ||
Investments in and Advances to Affiliates [Line Items] | |||||
Cash | $55,310 | $70,380 | |||
Receivable from partner | 4,069 | [1] | 69,706 | [1] | |
Other current assets | 426,039 | 518,262 | |||
Noncurrent assets | 302,187 | 350,681 | |||
Total assets | 787,605 | 1,009,029 | |||
Current liabilities | 113,229 | 181,111 | |||
Short-term borrowings | 14,293 | 21,369 | |||
Current maturities of long-term debt | 5,265 | 5,442 | |||
Long-term debt | 272,574 | 274,750 | |||
Other noncurrent liabilities | 18,613 | 18,345 | |||
Equity | 363,631 | 508,012 | |||
Total liabilities and equity | 787,605 | 1,009,029 | |||
Net sales | 423,481 | 446,853 | |||
Gross margin | 89,814 | 74,513 | |||
Operating income | 64,540 | 51,711 | |||
Depreciation and amortization | 10,337 | 8,990 | |||
Interest expense | 2,223 | 2,261 | |||
Income tax expense | 3,030 | 3,469 | |||
Net earnings | $59,634 | $46,284 | |||
[1] | Represents cash owed from a joint venture partner as a result of centralized cash management. |
Schedule_of_Progression_of_Lia
Schedule of Progression of Liabilities Associated with Restructuring Activities, Combined with Reconciliation to Restructuring and Other Expense (Income) (Detail) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Aug. 31, 2013 | Aug. 31, 2012 |
Restructuring Cost and Reserve [Line Items] | ||
Beginning Balance | $6,229 | |
Expense/ (Income) | 907 | |
Payments | -821 | |
Adjustments | ||
Ending Balance | 6,315 | |
Less: joint venture transactions | -142 | 1,162 |
Restructuring and other expense (income) | -3,997 | 403 |
ITS | ||
Restructuring Cost and Reserve [Line Items] | ||
Gain on asset disposal | -4,762 | |
Early Retirement And Severance | ||
Restructuring Cost and Reserve [Line Items] | ||
Beginning Balance | 5,029 | |
Expense/ (Income) | 402 | |
Payments | -441 | |
Adjustments | ||
Ending Balance | 4,990 | |
Facility Exit And Other Costs | ||
Restructuring Cost and Reserve [Line Items] | ||
Beginning Balance | 1,200 | |
Expense/ (Income) | 505 | |
Payments | -380 | |
Adjustments | ||
Ending Balance | $1,325 |
Restructuring_and_Other_Expens2
Restructuring and Other Expense (Income) - Additional Information (Detail) (USD $) | 3 Months Ended | |
Aug. 31, 2013 | 31-May-13 | |
Restructuring Cost and Reserve [Line Items] | ||
Future payments for restructuring | $4,794,000 | |
ITS | ||
Restructuring Cost and Reserve [Line Items] | ||
Cash proceeds from sale of assets for sale assets | 7,457,000 | |
Gain on asset disposals | 4,762,000 | |
Metal Framing | ||
Restructuring Cost and Reserve [Line Items] | ||
Facility exit and other costs incurred | 142,000 | |
Commercial Stairs | ||
Restructuring Cost and Reserve [Line Items] | ||
Facility exit and other costs incurred | 363,000 | |
Pressure Cylinders | ||
Restructuring Cost and Reserve [Line Items] | ||
Severance accrual adjustment | $402,000 | $2,488,000 |
Contingent_Liabilities_Additio
Contingent Liabilities - Additional Information (Detail) (USD $) | 3 Months Ended |
Aug. 31, 2013 | |
Loss Contingencies [Line Items] | |
Exposure Related to Legal Matter | $2,000,000 |
Loss related to litigation settlement | 2,000,000 |
Impairment of fixed assets destroyed in fire | 4,641,000 |
Pressure Cylinders | AUSTRIA | |
Loss Contingencies [Line Items] | |
Impairment of fixed assets destroyed in fire | $358,000 |
Guarantees_Additional_Informat
Guarantees - Additional Information (Detail) (USD $) | Aug. 31, 2013 |
Residual Value Guarantee | |
Loss Contingencies [Line Items] | |
Maximum potential obligation | $13,715,000 |
Guarantee Repayment | |
Loss Contingencies [Line Items] | |
Maximum potential obligation | 4,583,000 |
Financial Stand-By Letters Of Credit | |
Loss Contingencies [Line Items] | |
Borrowings outstanding | $11,732,000 |
Debt_and_Receivables_Securitiz1
Debt and Receivables Securitization - Additional Information (Detail) (USD $) | 3 Months Ended |
Aug. 31, 2013 | |
Worthington Nitin Cylinders Limited | |
Debt And Receivables Securitization [Line Items] | |
Maximum borrowing capacity | 9,500,000 |
Maturity date | 2013-11 |
Borrowings outstanding | 4,187,000 |
Applicable variable rate | 2.25% |
Unsecured Revolving Credit Facility | |
Debt And Receivables Securitization [Line Items] | |
Maximum borrowing capacity | 425,000,000 |
Maturity date | 2017-05 |
Borrowings outstanding | 18,000,000 |
Applicable variable rate | 1.23% |
Line of Credit | |
Debt And Receivables Securitization [Line Items] | |
Remaining borrowing capacity | 395,268,000 |
Line of Credit | Maximum | |
Debt And Receivables Securitization [Line Items] | |
Debt maturity period | 1 year |
Accounts Receivable Facilities | |
Debt And Receivables Securitization [Line Items] | |
Maximum borrowing capacity | 100,000,000 |
Maturity date | 2015-01 |
Borrowings outstanding | 40,000,000 |
Number of days past due trade accounts receivables are ineligible for securitization | 90 |
Financial Stand-By Letters Of Credit | |
Debt And Receivables Securitization [Line Items] | |
Outstanding stand-by letters of credit amount for third-party beneficiaries | 11,732,000 |
Summary_of_Each_Component_of_O
Summary of Each Component of Other Comprehensive Income or Loss (Detail) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Aug. 31, 2013 | Aug. 31, 2012 |
Before-Tax | ||
Foreign currency translation, before tax | ($486) | $3,908 |
Pension liability adjustment, before tax | -255 | |
Cash flow hedges, before tax | 4,820 | 1,224 |
Other comprehensive income, before tax | 4,334 | 4,877 |
Tax | ||
Foreign currency translation, tax | ||
Pension liability adjustment, tax | 83 | |
Cash flow hedges, tax | -1,469 | -240 |
Other comprehensive income, tax | -1,469 | -157 |
Net-of-tax | ||
Foreign currency translation, net-of-tax | -486 | 3,908 |
Pension liability adjustment, net-of-tax | -172 | |
Cash flow hedges, net-of-tax | 3,351 | 984 |
Other comprehensive income, net-of-tax | $2,865 | $4,720 |
Changes_in_Equity_Detail
Changes in Equity (Detail) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Aug. 31, 2013 | Aug. 31, 2012 |
Beginning Balance | $872,237 | |
Net earnings | 56,353 | 34,865 |
Other comprehensive income (loss) | 2,865 | 4,720 |
Common shares issued | 2,201 | |
Stock-based compensation | 7,230 | |
Purchases and retirement of common shares | -30,516 | |
Cash dividends declared | -10,588 | |
Dividend paid to noncontrolling interest | -1,763 | |
Acquisition of TWB | 72,369 | |
Ending Balance | 970,388 | |
Additional Paid-in Capital | ||
Beginning Balance | 244,864 | |
Common shares issued | 2,201 | |
Stock-based compensation | 7,230 | |
Purchases and retirement of common shares | -3,104 | |
Ending Balance | 251,191 | |
Accumulated Other Comprehensive Income (Loss) | ||
Beginning Balance | -12,036 | |
Other comprehensive income (loss) | 3,882 | |
Ending Balance | -8,154 | |
Retained Earnings | ||
Beginning Balance | 597,994 | |
Net earnings | 54,557 | |
Purchases and retirement of common shares | -27,412 | |
Cash dividends declared | -10,588 | |
Ending Balance | 614,551 | |
Parent | ||
Beginning Balance | 830,822 | |
Net earnings | 54,557 | |
Other comprehensive income (loss) | 3,882 | |
Common shares issued | 2,201 | |
Stock-based compensation | 7,230 | |
Purchases and retirement of common shares | -30,516 | |
Cash dividends declared | -10,588 | |
Ending Balance | 857,588 | |
Noncontrolling Interest | ||
Beginning Balance | 41,415 | |
Net earnings | 1,796 | |
Other comprehensive income (loss) | -1,017 | |
Dividend paid to noncontrolling interest | -1,763 | |
Acquisition of TWB | 72,369 | |
Ending Balance | $112,800 |
Components_of_Changes_in_Other
Components of Changes in Other Comprehensive Income (Loss) (Detail) (USD $) | 3 Months Ended | 3 Months Ended | ||||||
In Thousands, unless otherwise specified | Aug. 31, 2013 | Aug. 31, 2012 | Aug. 31, 2013 | Aug. 31, 2013 | 31-May-13 | Aug. 31, 2013 | ||
Foreign Currency Translation | Pension Liability Adjustment | Pension Liability Adjustment | Cash Flow Hedges | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||
Accumulated other comprehensive loss, beginning balance | ($12,036) | $4,025 | ($10,221) | ($10,221) | ($5,840) | |||
Other comprehensive income before reclassifications | 3,972 | 531 | 3,441 | |||||
Reclassification adjustments to income | 1,379 | [1] | 1,379 | [1] | ||||
Income taxes | -1,469 | -157 | -1,469 | |||||
Accumulated other comprehensive loss, ending balance | ($8,154) | $4,556 | ($10,221) | ($10,221) | ($2,489) | |||
[1] | The income statement classification of amounts reclassified to income for cash flow hedges is disclosed in "NOTE N - Derivative Instruments and Hedging Activities." |
StockBased_Compensation_Additi
Stock-Based Compensation - Additional Information (Detail) (USD $) | 3 Months Ended |
Aug. 31, 2013 | |
Non-Qualified Stock Options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Non-qualified stock option, granted | 121,200 |
Non-qualified stock option, per share price | $31.71 |
Non-qualified stock option, fair value, per share price | $12.92 |
Pre-tax stock-based compensation | $1,435,000 |
Pre-tax stock-based compensation, period of recognition | 3 years |
Restricted Common Shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Pre-tax stock-based compensation, period of recognition | 3 years |
Restricted common shares, granted | 111,000 |
Restricted common shares, fair value per share | $31.71 |
Pre-tax stock-based compensation | 3,150,000 |
Market-Based Restricted Common Shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Restricted common shares, granted | 360,000 |
Restricted common shares, fair value per share | $24.19 |
Pre-tax stock-based compensation | $8,708,000 |
Common share awards vesting, minimum price per share | $50 |
Common share awards vesting, minimum consecutive days at stated price | 30 |
Service-based vesting condition period, years | 3 years |
Assumptions_To_Value_Stock_Opt
Assumptions To Value Stock Options (Detail) | 3 Months Ended |
Aug. 31, 2013 | |
Non-Qualified Stock Options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Dividend yield | 2.28% |
Expected volatility | 52.23% |
Risk-free interest rate | 1.69% |
Expected term (years) | 6 years |
Market-Based Restricted Common Shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Dividend yield | 2.28% |
Expected volatility | 53.40% |
Risk-free interest rate | 1.41% |
Income_Taxes_Additional_Inform
Income Taxes - Additional Information (Detail) | 3 Months Ended | |
Aug. 31, 2013 | Aug. 31, 2012 | |
Income Taxes [Line Items] | ||
Estimated annual effective income tax rate | 28.90% | 32.60% |
Computation_of_Basic_and_Dilut
Computation of Basic and Diluted Earnings Per Share (Detail) (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Aug. 31, 2013 | Aug. 31, 2012 |
Numerator (basic & diluted): | ||
Net earnings attributable to controlling interest - income available to common shareholders | $54,557 | $33,962 |
Denominator: | ||
Denominator for basic earnings per share attributable to controlling interest - weighted average common shares | 69,601 | 68,278 |
Effect of dilutive securities | 2,482 | 1,293 |
Denominator for diluted earnings per share attributable to controlling interest - adjusted weighted average common shares | 72,083 | 69,571 |
Basic earnings per share attributable to controlling interest | $0.78 | $0.50 |
Diluted earnings per share attributable to controlling interest | $0.76 | $0.49 |
Earning_Per_Share_Additional_I
Earning Per Share - Additional Information (Detail) | 3 Months Ended |
Aug. 31, 2012 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Stock options excluded from computation of diluted earnings per share | 2,671,180 |
Financial_Information_for_Repo
Financial Information for Reportable Segments (Detail) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Aug. 31, 2013 | Aug. 31, 2012 | 31-May-13 |
Segment Reporting Information [Line Items] | |||
Net sales | $692,291 | $666,035 | |
Operating income (loss) | 38,638 | 33,418 | |
Restructuring and other expense (income) | -3,997 | 403 | |
Impairment of long-lived assets | 4,641 | 1,570 | |
Joint venture transactions | 142 | -1,162 | |
Total assets | 2,093,060 | 1,950,857 | 1,950,857 |
Steel Processing | |||
Segment Reporting Information [Line Items] | |||
Net sales | 402,441 | 385,013 | |
Operating income (loss) | 22,663 | 16,659 | |
Restructuring and other expense (income) | -4,762 | ||
Impairment of long-lived assets | 4,641 | ||
Total assets | 843,385 | 610,464 | |
Pressure Cylinders | |||
Segment Reporting Information [Line Items] | |||
Net sales | 216,900 | 194,236 | |
Operating income (loss) | 19,454 | 15,026 | |
Restructuring and other expense (income) | 402 | 6 | |
Impairment of long-lived assets | 1,570 | ||
Total assets | 718,791 | 742,686 | |
Engineered Cabs | |||
Segment Reporting Information [Line Items] | |||
Net sales | 48,461 | 64,495 | |
Operating income (loss) | -304 | 4,694 | |
Total assets | 200,815 | 201,048 | |
Other | |||
Segment Reporting Information [Line Items] | |||
Net sales | 24,489 | 22,291 | |
Operating income (loss) | -3,175 | -2,961 | |
Restructuring and other expense (income) | 363 | 397 | |
Joint venture transactions | 142 | -1,162 | |
Total assets | $330,069 | $396,659 |
Acquisitions_Additional_Inform
Acquisitions - Additional Information (Detail) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Aug. 31, 2013 |
Business Acquisition [Line Items] | |
Recognized gain from previously held equity interest | $11,000 |
Fair value inputs, control premium | 10.00% |
Joint Venture Transactions | TWB | |
Business Acquisition [Line Items] | |
Percentage of additional interest acquired by the company | 10.00% |
Purchase of additional interest | 17,869 |
Percent of controlling interest by the company | 55.00% |
Recognized gain from previously held equity interest | $11,000 |
Schedule_of_Acquisition_of_Int
Schedule of Acquisition of Intangible Assets (Detail) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Aug. 31, 2013 |
TWB | |
Business Acquisition [Line Items] | |
Total acquired identifiable intangible assets | $22,028 |
TWB | Trade Names | |
Business Acquisition [Line Items] | |
Acquired indefinite lived intangible assets | 4,120 |
TWB | Non-compete Agreements | |
Business Acquisition [Line Items] | |
Acquired indefinite lived intangible assets | 470 |
Customer Relationships | TWB | |
Business Acquisition [Line Items] | |
Acquired finite lived intangible assets | $17,438 |
Customer Relationships | Minimum | |
Business Acquisition [Line Items] | |
Useful Life (Years) | 5 years |
Customer Relationships | Maximum | |
Business Acquisition [Line Items] | |
Useful Life (Years) | 6 years |
Schedule_of_Consideration_Tran
Schedule of Consideration Transferred and Fair Value Assigned to Assets Acquired And Liabilities Assumed (Detail) (TWB, USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Aug. 31, 2013 |
TWB | |
Consideration Transferred: | |
Cash consideration | $17,869 |
Fair value of previously held interest in TWB | 72,369 |
Total consideration | 90,238 |
Estimated Fair Value of Assets Acquired and Liabilities Assumed: | |
Cash and cash equivalents | 70,826 |
Accounts receivable | 52,012 |
Inventories | 20,403 |
Prepaid expenses and other current assets | 4,027 |
Intangible assets | 22,028 |
Other noncurrent assets | 103 |
Property, plant and equipment | 52,390 |
Total identifiable assets | 221,789 |
Accounts payable | -50,642 |
Accrued liabilities | -6,431 |
Deferred taxes | -2,109 |
Net assets | 162,607 |
Noncontrolling interest | -72,369 |
Total consideration | $90,238 |
Schedule_of_Fair_Value_of_Deri
Schedule of Fair Value of Derivative Instruments (Detail) (USD $) | Aug. 31, 2013 | 31-May-13 |
In Thousands, unless otherwise specified | ||
Derivative [Line Items] | ||
Asset Derivatives at Fair Value | $3,183 | $761 |
Liability Derivatives at Fair Value | 6,313 | 9,774 |
Derivatives Designated As Hedging Instruments | ||
Derivative [Line Items] | ||
Asset Derivatives at Fair Value | 2,305 | 425 |
Liability Derivatives at Fair Value | 6,029 | 9,247 |
Derivatives Designated As Hedging Instruments | Interest Rate Contracts | ||
Derivative [Line Items] | ||
Liability Derivatives at Fair Value | 6,029 | 7,895 |
Derivatives Designated As Hedging Instruments | Interest Rate Contracts | Other Liabilities | ||
Derivative [Line Items] | ||
Liability Derivatives at Fair Value | 1,916 | 3,863 |
Derivatives Designated As Hedging Instruments | Interest Rate Contracts | Accounts Payable | ||
Derivative [Line Items] | ||
Liability Derivatives at Fair Value | 4,113 | 4,032 |
Derivatives Designated As Hedging Instruments | Commodity Contracts | ||
Derivative [Line Items] | ||
Asset Derivatives at Fair Value | 2,305 | 425 |
Liability Derivatives at Fair Value | 1,352 | |
Derivatives Designated As Hedging Instruments | Commodity Contracts | Receivables | ||
Derivative [Line Items] | ||
Asset Derivatives at Fair Value | 2,305 | 425 |
Derivatives Designated As Hedging Instruments | Commodity Contracts | Accounts Payable | ||
Derivative [Line Items] | ||
Liability Derivatives at Fair Value | 1,352 | |
Derivatives Not Designated As Hedging Instruments | ||
Derivative [Line Items] | ||
Asset Derivatives at Fair Value | 336 | |
Liability Derivatives at Fair Value | 527 | |
Derivatives Not Designated As Hedging Instruments | Commodity Contracts | ||
Derivative [Line Items] | ||
Asset Derivatives at Fair Value | 878 | 331 |
Liability Derivatives at Fair Value | 284 | 527 |
Derivatives Not Designated As Hedging Instruments | Commodity Contracts | Receivables | ||
Derivative [Line Items] | ||
Asset Derivatives at Fair Value | 878 | 331 |
Derivatives Not Designated As Hedging Instruments | Commodity Contracts | Accounts Payable | ||
Derivative [Line Items] | ||
Liability Derivatives at Fair Value | 284 | 527 |
Derivatives Not Designated As Hedging Instruments | Foreign Exchange Contracts | ||
Derivative [Line Items] | ||
Asset Derivatives at Fair Value | 5 | |
Derivatives Not Designated As Hedging Instruments | Foreign Exchange Contracts | Receivables | ||
Derivative [Line Items] | ||
Asset Derivatives at Fair Value | $5 |
Derivative_Instruments_and_Hed2
Derivative Instruments and Hedging Activities - Additional Information (Detail) (USD $) | 3 Months Ended | 12 Months Ended |
Aug. 31, 2013 | 31-May-13 | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Impact to fair value of derivative assets and liabilities as a result of recognition on a net basis | $240,000 | $740,000 |
Losses in accumulated other comprehensive income expected to be reclassified into net earnings | -2,558,000 | |
Losses in accumulated other comprehensive income expected to be reclassified into net earnings, tax | $1,554,000 |
Schedule_of_Summary_of_Derivat
Schedule of Summary of Derivative Hedges (Detail) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Aug. 31, 2013 |
Derivatives Not Designated As Hedging Instruments | Commodity Contracts | |
Derivative [Line Items] | |
Notional Amount | 28,830 |
Derivatives Not Designated As Hedging Instruments | Commodity Contracts | Minimum | |
Derivative [Line Items] | |
Maturity Date(s) | 2013-09 |
Derivatives Not Designated As Hedging Instruments | Commodity Contracts | Maximum | |
Derivative [Line Items] | |
Maturity Date(s) | 2014-12 |
Cash Flow Hedges | Commodity Contracts | |
Derivative [Line Items] | |
Notional Amount | 37,040 |
Cash Flow Hedges | Commodity Contracts | Minimum | |
Derivative [Line Items] | |
Maturity Date(s) | 2013-09 |
Cash Flow Hedges | Commodity Contracts | Maximum | |
Derivative [Line Items] | |
Maturity Date(s) | 2014-12 |
Cash Flow Hedges | Interest Rate Contracts | |
Derivative [Line Items] | |
Notional Amount | 100,000 |
Maturity Date(s) | 2014-12 |
Schedule_of_Derivatives_Design
Schedule of Derivatives Designated as Cash Flow Hedging Instruments (Detail) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Aug. 31, 2013 | Aug. 31, 2012 |
Derivative [Line Items] | ||
Gain (Loss) Recognized in OCI (Effective Portion) | $3,441 | ($178) |
Gain (Loss) Reclassified from Accumulated OCI (Effective Portion) | -1,379 | -1,402 |
Gain (Loss) (Ineffective Portion) and Excluded from Effectiveness Testing | ||
Interest Rate Contracts | ||
Derivative [Line Items] | ||
Gain (Loss) Recognized in OCI (Effective Portion) | -203 | -606 |
Interest Rate Contracts | Interest Expense | ||
Derivative [Line Items] | ||
Gain (Loss) Reclassified from Accumulated OCI (Effective Portion) | -1,063 | -983 |
Gain (Loss) (Ineffective Portion) and Excluded from Effectiveness Testing | ||
Commodity Contracts | ||
Derivative [Line Items] | ||
Gain (Loss) Recognized in OCI (Effective Portion) | 3,644 | 428 |
Commodity Contracts | Cost Of Goods Sold | ||
Derivative [Line Items] | ||
Gain (Loss) Reclassified from Accumulated OCI (Effective Portion) | -316 | -419 |
Gain (Loss) (Ineffective Portion) and Excluded from Effectiveness Testing |
Schedule_of_Gain_Loss_Recogniz
Schedule of Gain (Loss) Recognized in Earnings for Economic (Non-Designated) Derivative Financial Instruments (Detail) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Aug. 31, 2013 | Aug. 31, 2012 |
Derivative [Line Items] | ||
Gain (Loss) Recognized in Earnings | $671 | $950 |
Commodity Contracts | Cost Of Goods Sold | ||
Derivative [Line Items] | ||
Gain (Loss) Recognized in Earnings | 676 | 1,813 |
Foreign Exchange Contracts | Miscellaneous Income (Expense) | ||
Derivative [Line Items] | ||
Gain (Loss) Recognized in Earnings | ($5) | ($863) |
Schedule_of_Financial_Assets_A
Schedule of Financial Assets And Liabilities Measured at Fair Value on Recurring Basis (Detail) (USD $) | Aug. 31, 2013 | 31-May-13 |
In Thousands, unless otherwise specified | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | $3,183 | $761 |
Liabilities | 6,313 | 9,774 |
Derivative Contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 3,183 | 761 |
Liabilities | 6,313 | 9,774 |
Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 3,183 | 761 |
Liabilities | 6,313 | 9,774 |
Significant Other Observable Inputs (Level 2) | Derivative Contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 3,183 | 761 |
Liabilities | $6,313 | $9,774 |
Assets_Measured_at_Fair_Value_
Assets Measured at Fair Value on Non-recurring Basis (Detail) (USD $) | Aug. 31, 2013 | 31-May-13 | ||
In Thousands, unless otherwise specified | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Asset measured at fair value on nonrecurring basis | $11,827 | $6,856 | ||
Long-lived assets held and used | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Asset measured at fair value on nonrecurring basis | 11,827 | [1] | 6,856 | [2] |
Significant Other Observable Inputs (Level 2) | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Asset measured at fair value on nonrecurring basis | 11,827 | 6,856 | ||
Significant Other Observable Inputs (Level 2) | Long-lived assets held and used | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Asset measured at fair value on nonrecurring basis | $11,827 | [1] | $6,856 | [2] |
[1] | During the first quarter of fiscal 2014, we determined that certain indicators of impairment were present with regard to certain non-core Steel Processing assets. Recoverability of the identified asset group was tested using future cash flow projections based on management's estimate of market conditions. The sum of these undiscounted future cash flows was less than the net book value of the asset group. The net book value was also determined to be in excess of fair value and, accordingly, the asset group was written down to its fair value of $11,827,000, resulting in an impairment charge of $4,641,000. This impairment charge was recorded within impairment of long-lived assets in our consolidated statement of earnings. Fair value was determined based on market prices for similar assets. | |||
[2] | During the fourth quarter of fiscal 2013, the long-lived assets of our 60%-owned consolidated joint venture in India, WNCL, were written down to their fair value of $6,856,000, resulting in an impairment charge of $4,968,000. This impairment loss was recorded within impairment of long-lived assets in our consolidated statement of earnings. The portion of this impairment loss attributable to the noncontrolling interest, or $1,987,000, is recorded within net earnings attributable to noncontrolling interest in our consolidated statement of earnings. Fair value was determined based on market prices for similar assets. |
Assets_Measured_at_Fair_Value_1
Assets Measured at Fair Value on Non-recurring Basis (Parenthetical) (Detail) (USD $) | 3 Months Ended | 3 Months Ended | 3 Months Ended | ||||||||
Aug. 31, 2013 | 31-May-13 | 31-May-13 | Aug. 31, 2013 | 31-May-13 | 31-May-13 | 31-May-13 | Aug. 31, 2013 | 31-May-13 | |||
Worthington Nitin Cylinders Limited | Long-lived assets held and used | Long-lived assets held and used | Long-lived assets held and used | Noncontrolling Interest | Joint Venture Transactions | Joint Venture Transactions | |||||
Worthington Nitin Cylinders Limited | Worthington Nitin Cylinders Limited | Worthington Nitin Cylinders Limited | Worthington Nitin Cylinders Limited | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||
Asset measured at fair value on nonrecurring basis | $11,827,000 | $6,856,000 | $11,827,000 | [1] | $6,856,000 | [2] | $6,856,000 | ||||
Impairment of long-lived assets | $4,641,000 | $4,968,000 | $1,987,000 | ||||||||
Percent of controlling interest by the company | 60.00% | 60.00% | |||||||||
[1] | During the first quarter of fiscal 2014, we determined that certain indicators of impairment were present with regard to certain non-core Steel Processing assets. Recoverability of the identified asset group was tested using future cash flow projections based on management's estimate of market conditions. The sum of these undiscounted future cash flows was less than the net book value of the asset group. The net book value was also determined to be in excess of fair value and, accordingly, the asset group was written down to its fair value of $11,827,000, resulting in an impairment charge of $4,641,000. This impairment charge was recorded within impairment of long-lived assets in our consolidated statement of earnings. Fair value was determined based on market prices for similar assets. | ||||||||||
[2] | During the fourth quarter of fiscal 2013, the long-lived assets of our 60%-owned consolidated joint venture in India, WNCL, were written down to their fair value of $6,856,000, resulting in an impairment charge of $4,968,000. This impairment loss was recorded within impairment of long-lived assets in our consolidated statement of earnings. The portion of this impairment loss attributable to the noncontrolling interest, or $1,987,000, is recorded within net earnings attributable to noncontrolling interest in our consolidated statement of earnings. Fair value was determined based on market prices for similar assets. |
Fair_Value_Additional_Informat
Fair Value - Additional Information (Detail) (USD $) | Aug. 31, 2013 | 31-May-13 |
Fair Value Measurements [Line Items] | ||
Long-term debt at fair value including current maturities | $411,492,000 | $421,056,000 |
Long-term debt at carrying amount including current maturities | $407,047,000 | $407,328,000 |