Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Aug. 31, 2015 | Oct. 01, 2015 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Aug. 31, 2015 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | WOR | |
Entity Registrant Name | WORTHINGTON INDUSTRIES INC | |
Entity Central Index Key | 108,516 | |
Current Fiscal Year End Date | --05-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 64,248,529 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Aug. 31, 2015 | May. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 18,772 | $ 31,067 |
Receivables, less allowances of $2,909 and $3,085 at August 31, 2015 and May 31, 2015, respectively | 431,586 | 474,292 |
Inventories: | ||
Raw materials | 195,695 | 181,975 |
Work in process | 104,775 | 107,069 |
Finished products | 82,329 | 85,931 |
Total inventories | 382,799 | 374,975 |
Income taxes receivable | 2,868 | 12,119 |
Assets held for sale | 23,450 | 23,412 |
Deferred income taxes | 21,731 | 22,034 |
Prepaid expenses and other current assets | 53,630 | 54,294 |
Total current assets | 934,836 | 992,193 |
Investments in unconsolidated affiliates | 201,383 | 196,776 |
Goodwill | 239,632 | 238,999 |
Other intangible assets, net of accumulated amortization of $51,831 and $47,547 at August 31, 2015 and May 31, 2015, respectively | 114,799 | 119,117 |
Other assets | 24,500 | 24,867 |
Property, plant & equipment: | ||
Land | 15,842 | 16,017 |
Buildings and improvements | 218,809 | 218,182 |
Machinery and equipment | 889,290 | 872,986 |
Construction in progress | 59,061 | 40,753 |
Total property, plant & equipment | 1,183,002 | 1,147,938 |
Less: accumulated depreciation | 652,242 | 634,748 |
Property, plant and equipment, net | 530,760 | 513,190 |
Total assets | 2,045,910 | 2,085,142 |
Current liabilities: | ||
Accounts payable | 317,552 | 294,129 |
Short-term borrowings | 22,039 | 90,550 |
Accrued compensation, contributions to employee benefit plans and related taxes | 63,823 | 66,252 |
Dividends payable | 12,712 | 12,862 |
Other accrued items | 67,250 | 56,913 |
Income taxes payable | 11,217 | 2,845 |
Current maturities of long-term debt | 846 | 841 |
Total current liabilities | 495,439 | 524,392 |
Other liabilities | 56,575 | 58,269 |
Distributions in excess of investment in unconsolidated affiliate | 58,728 | 61,585 |
Long-term debt | 580,901 | 579,352 |
Deferred income taxes | 15,376 | 21,495 |
Total liabilities | 1,207,019 | 1,245,093 |
Shareholders' equity - controlling interest | 749,884 | 749,112 |
Noncontrolling interests | 89,007 | 90,937 |
Total equity | 838,891 | 840,049 |
Total liabilities and equity | $ 2,045,910 | $ 2,085,142 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Aug. 31, 2015 | May. 31, 2015 |
Receivables, allowances | $ 2,909 | $ 3,085 |
Other intangible assets, accumulated amortization | $ 51,831 | $ 47,547 |
Consolidated Statements of Earn
Consolidated Statements of Earnings - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Aug. 31, 2015 | Aug. 31, 2014 | |
Net sales | $ 758,147 | $ 862,414 |
Cost of goods sold | 645,131 | 732,907 |
Gross margin | 113,016 | 129,507 |
Selling, general and administrative expense | 75,951 | 75,255 |
Impairment of long-lived assets | 3,000 | 1,950 |
Restructuring and other expense | 3,069 | 100 |
Operating income | 30,996 | 52,202 |
Other income (expense): | ||
Miscellaneous income (expense) | (578) | 323 |
Interest expense | (7,854) | (9,516) |
Equity in net income of unconsolidated affiliates | 26,581 | 27,924 |
Earnings before income taxes | 49,145 | 70,933 |
Income tax expense | 14,708 | 22,113 |
Net earnings | 34,437 | 48,820 |
Net earnings attributable to noncontrolling interests | 3,027 | 4,652 |
Net earnings attributable to controlling interest | $ 31,410 | $ 44,168 |
Basic | ||
Average common shares outstanding | 63,993 | 67,567 |
Earnings per share attributable to controlling interest | $ 0.49 | $ 0.65 |
Diluted | ||
Average common shares outstanding | 65,729 | 69,738 |
Earnings per share attributable to controlling interest | $ 0.48 | $ 0.63 |
Common shares outstanding at end of period | 63,343 | 67,424 |
Cash dividends declared per share | $ 0.19 | $ 0.18 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Aug. 31, 2015 | Aug. 31, 2014 | |
Net earnings | $ 34,437 | $ 48,820 |
Other comprehensive income (loss): | ||
Foreign currency translation | 1,823 | (9,592) |
Pension liability adjustment, net of tax | (8) | |
Cash flow hedges, net of tax | 630 | 961 |
Other comprehensive income (loss) | 2,445 | (8,631) |
Comprehensive income | 36,882 | 40,189 |
Comprehensive income attributable to noncontrolling interests | 2,971 | 3,472 |
Comprehensive income attributable to controlling interest | $ 33,911 | $ 36,717 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Aug. 31, 2015 | Aug. 31, 2014 | |
Operating activities | ||
Net earnings | $ 34,437 | $ 48,820 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||
Depreciation and amortization | 21,440 | 20,367 |
Impairment of long-lived assets | 3,000 | 1,950 |
Provision for deferred income taxes | (5,540) | (535) |
Bad debt expense (income) | 10 | (203) |
Equity in net income of unconsolidated affiliates, net of distributions | (5,513) | (6,990) |
Net loss (gain) on sale of assets | 1,606 | (2,830) |
Stock-based compensation | 3,777 | 4,355 |
Excess tax benefits - stock-based compensation | (824) | (5,132) |
Changes in assets and liabilities, net of impact of acquisitions: | ||
Receivables | 42,629 | 12,752 |
Inventories | (7,824) | (51,217) |
Prepaid expenses and other current assets | 11,166 | (2,872) |
Other assets | 442 | 121 |
Accounts payable and accrued expenses | 42,184 | 41,890 |
Other liabilities | (3,187) | (5,991) |
Net cash provided by operating activities | 137,803 | 54,485 |
Investing activities | ||
Investment in property, plant and equipment | (38,497) | (23,873) |
Investment in notes receivable | (5,000) | |
Acquisitions, net of cash acquired | (36,550) | |
Investments in unconsolidated affiliates | (1,687) | (3,800) |
Proceeds from sale of assets and insurance | 131 | 265 |
Net cash used by investing activities | (40,053) | (68,958) |
Financing activities | ||
Net proceeds from (repayments of) short-term borrowings | (68,511) | 555 |
Proceeds from long-term debt | 921 | |
Principal payments on long-term debt | (208) | (302) |
Payments for issuance of common shares | (602) | (1,020) |
Excess tax benefits - stock-based compensation | 824 | 5,132 |
Payments to noncontrolling interest | (3,336) | (2,867) |
Repurchase of common shares | (27,582) | (20,071) |
Dividends paid | (11,551) | (10,112) |
Net cash used by financing activities | (110,045) | (28,685) |
Decrease in cash and cash equivalents | (12,295) | (43,158) |
Cash and cash equivalents at beginning of period | 31,067 | 190,079 |
Cash and cash equivalents at end of period | $ 18,772 | $ 146,921 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Aug. 31, 2015 | |
Basis of Presentation | NOTE A – Basis of Presentation The 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. dHybrid Systems, LLC (“dHybrid”), Spartan Steel Coating, LLC (“Spartan”), TWB Company, L.L.C. (“TWB”), Worthington Arıtaş Basınçlı Kaplar Sanayi (“Worthington Aritas”), Worthington Energy Innovations, LLC (“WEI”), and Worthington Nitin Cylinders Limited (“Worthington Nitin Cylinders”) in which we own controlling interests of 79.59%, 52%, 55%, 75%, 75%, and 60%, respectively, are consolidated with the equity owned by the other joint venture members shown as noncontrolling interests in our consolidated balance sheets, and the other joint venture members’ portions of net earnings and other comprehensive income shown as net earnings or comprehensive income attributable to noncontrolling interests in our consolidated statements of earnings and consolidated statements of comprehensive income, respectively. 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 consolidated financial statements for these interim periods, have been included. Operating results for the three months ended August 31, 2015 are not necessarily indicative of the results that may be expected for the fiscal year ending May 31, 2016 (“fiscal 2016”). 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, 2015 (“fiscal 2015”) of Worthington Industries, Inc. (the “2015 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 consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Recently Issued Accounting Standards In May 2014, amended accounting guidance was issued that replaces most existing revenue recognition guidance under U.S. GAAP. The amended guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The amended guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early application is not permitted. We are in the process of evaluating the effect this guidance will have on our consolidated financial position and results of operations. The amended guidance permits the use of either the retrospective or cumulative effect transition method. We have not selected a transition method nor have we determined the effect of the amended guidance on our ongoing financial reporting. In July 2015, amended accounting guidance was issued regarding the measurement of inventory. The amended guidance requires that inventory accounted for under the first-in, first-out (FIFO) or average cost methods be measured at the lower of cost and net realizable value, where net realizable value represents the estimated selling price of inventory in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The amended guidance has no impact on inventory accounted for under the last-in, first-out (LIFO) or retail inventory methods. For public business entities, the amended guidance is effective prospectively for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early application is permitted as of the beginning of an interim or annual reporting period. We are in the process of evaluating the effect this guidance will have on our consolidated financial position and results of operations, and we have not determined the effect of the amended guidance on our ongoing financial reporting. |
Investments in Unconsolidated A
Investments in Unconsolidated Affiliates | 3 Months Ended |
Aug. 31, 2015 | |
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. These include ArtiFlex Manufacturing, LLC (“ArtiFlex”) (50%), Clarkwestern Dietrich Building Systems LLC (“ClarkDietrich”) (25%), Samuel Steel Pickling Company (31.25%), Serviacero Planos, S. de R. L. de C.V. (“Serviacero”) (50%), Worthington Armstrong Venture (“WAVE”) (50%), Worthington Specialty Processing (“WSP”) (51%), and Zhejiang Nisshin Worthington Precision Specialty Steel Co., Ltd. (10%). WSP is considered to be jointly controlled and not consolidated due to substantive participating rights of the minority partner. We received distributions from unconsolidated affiliates totaling $21,068,000 during the three months ended August 31, 2015. We have received cumulative distributions from WAVE in excess of our investment balance totaling $58,728,000 at August 31, 2015. 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. Combined financial information for our unconsolidated affiliates is summarized as follows: (in thousands) August 31, 2015 May 31, 2015 Cash $ 96,400 $ 101,011 Receivable from member (1) 10,213 11,092 Other current assets 477,072 491,507 Noncurrent assets 331,811 318,939 Total assets $ 915,496 $ 922,549 Current liabilities $ 141,720 $ 184,028 Short-term borrowings 25,483 - Current maturities of long-term debt 4,460 4,489 Long-term debt 270,771 272,861 Other noncurrent liabilities 20,205 20,471 Equity 452,857 440,700 Total liabilities and equity $ 915,496 $ 922,549 Three Months Ended August 31, (in thousands) 2015 2014 Net sales $ 404,463 $ 392,550 Gross margin 89,018 88,751 Operating income 61,246 63,479 Depreciation and amortization 8,097 9,122 Interest expense 2,159 2,162 Income tax expense 2,560 2,753 Net earnings 62,926 59,440 (1) Represents cash owed from a joint venture partner as a result of centralized cash management. |
Impairment of Long-Lived Assets
Impairment of Long-Lived Assets | 3 Months Ended |
Aug. 31, 2015 | |
Impairment of Long-Lived Assets | NOTE C – Impairment of Long-Lived Assets We review the carrying value of our long-lived assets, including intangible assets with finite useful lives, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable. Impairment testing involves a comparison of the sum of the undiscounted future cash flows of the asset or asset group to its respective carrying amount. If the sum of the undiscounted future cash flows exceeds the carrying amount, then no impairment exists. If the carrying amount exceeds the sum of the undiscounted future cash flows, then a second step is performed to determine the amount of impairment, which would be recorded as an impairment charge in our consolidated statements of earnings. On March 24, 2015, the Company announced its decision to close its Engineered Cabs facility in Florence, South Carolina. During the first quarter of fiscal 2016, management finalized its plan to close the facility and transfer the majority of the business to its Engineered Cabs facility in Greeneville, Tennessee. Certain machinery and equipment will be transferred to the Greeneville facility to support higher volume and the remaining long-lived assets will be liquidated. For the assets to be liquidated, this represents a change in intended use. As a result, management evaluated the recoverability of these assets and determined that long-lived assets with a carrying value of $4,059,000 were no longer recoverable and were in fact impaired. As a result, these long-lived assets were written down to their estimated fair value of $1,059,000 resulting in an impairment charge of $3,000,000 during the three months ended August 31, 2015. The Company ceased production at the Florence facility on September 30, 2015. As a result of the substantial fall in oil prices, management determined that the long-lived assets related to its oil and gas equipment business in Pressure Cylinders might be impaired. However, the Company’s estimate of the undiscounted future cash flows for each of its five oil and gas equipment facilities indicated that the carrying amounts were expected to be recovered. The estimated undiscounted future cash flows for each plant were significantly higher than their respective carrying values except for the Garden City, Kansas, location, which had total long-lived assets of $36,687,000 at August 31, 2015. The estimated undiscounted future cash flows for this location exceeded book value by less than 5%. It is possible that in the future the estimate of undiscounted cash flows may change resulting in the need to write down these assets to fair value. |
Restructuring and Other Expense
Restructuring and Other Expense | 3 Months Ended |
Aug. 31, 2015 | |
Restructuring and Other Expense | NOTE D – Restructuring and Other Expense We consider restructuring activities to be programs whereby we fundamentally change our operations such as closing and consolidating manufacturing facilities, moving manufacturing of a product to another location, and employee severance (including rationalizing headcount or other significant changes in personnel). A progression of the liabilities associated with our restructuring activities, combined with a reconciliation to the restructuring and other expense financial statement caption in our consolidated statement of earnings for the three months ended August 31, 2015 is summarized as follows: (in thousands) Beginning Balance Expense Payments Adjustments Ending Balance Early retirement and severance $ 2,170 $ 3,030 $ (686 ) $ (15 ) $ 4,499 Facility exit and other costs 371 39 (53 ) - 357 Restructuring and other expense $ 2,541 $ 3,069 $ (739 ) $ (15 ) $ 4,856 Severance expense in the current year consisted primarily of $1,891,000 related to the pending closure of the Engineered Cabs facility in Florence, South Carolina, and $690,000 related to workforce reductions in our oil and gas equipment business within Pressure Cylinders announced on September 22, 2015. The total liability as of August 31, 2015 is expected to be paid in the next twelve months. |
Contingent Liabilities and Comm
Contingent Liabilities and Commitments | 3 Months Ended |
Aug. 31, 2015 | |
Contingent Liabilities and Commitments | NOTE E – Contingent Liabilities and Commitments 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. |
Guarantees
Guarantees | 3 Months Ended |
Aug. 31, 2015 | |
Guarantees | NOTE F – Guarantees We do not have guarantees that we believe are reasonably likely to have a material current or future effect on our consolidated financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. However, as of August 31, 2015, 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 $11,433,000 at August 31, 2015. We have also guaranteed the repayment of a term loan entered into by our unconsolidated affiliate, ArtiFlex, which had $1,250,000 outstanding at August 31, 2015. We also have in place approximately $16,189,000 of outstanding letters of credit. These letters of credit are issued to third-party service providers and had no amounts drawn against them at August 31, 2015. 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. |
Debt and Receivables Securitiza
Debt and Receivables Securitization | 3 Months Ended |
Aug. 31, 2015 | |
Debt and Receivables Securitization | NOTE G – Debt and Receivables Securitization We maintain a $500,000,000 multi-year revolving credit facility (the “Credit Facility”) with a group of lenders that matures in April 2020. Borrowings under the Credit Facility have maturities of less than one year. 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. The applicable interest rate at August 31, 2015 was 1.257%. Borrowings outstanding under the Credit Facility totaled $18,694,000 at August 31, 2015, leaving $481,306,000 available for future use. We also maintain a $100,000,000 revolving trade accounts receivable securitization facility (the “AR Facility”) which expires in January 2018. The AR Facility has been available throughout fiscal 2016 to date, and was available throughout fiscal 2015. 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, 2015, no undivided ownership interests in this pool of accounts receivable had been sold. The remaining balance of short-term borrowings at August 31, 2015 consisted of $1,249,000 outstanding under various credit facilities maintained by our consolidated affiliate, Worthington Aritas, and $2,096,000 outstanding under a $9,500,000 credit facility maintained by our consolidated affiliate, Worthington Nitin Cylinders. Borrowings outstanding under the Nitin credit facility are currently in default; however, the lender has not called the note and the Company has settled its portion of the obligation. |
Comprehensive Income
Comprehensive Income | 3 Months Ended |
Aug. 31, 2015 | |
Comprehensive Income | NOTE H – Comprehensive Income The following table summarizes the tax effects on each component of other comprehensive income (loss) for the three months ended August 31: 2015 2014 Before-Tax Tax Net-of-Tax Before-Tax Tax Net-of-Tax (in thousands) Foreign currency translation $ 1,823 $ - $ 1,823 $ (9,592 ) $ - $ (9,592 ) Pension liability adjustment (8 ) - (8 ) - - - Cash flow hedges 1,238 (608 ) 630 1,543 (582 ) 961 Other comprehensive income (loss ) $ 3,053 $ (608 ) $ 2,445 $ (8,049 ) $ (582 ) $ (8,631 ) |
Changes in Equity
Changes in Equity | 3 Months Ended |
Aug. 31, 2015 | |
Changes in Equity | NOTE I – 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 interests for the three months ended August 31, 2015: Controlling Interest (in thousands) Additional Cumulative Other Comprehensive Income (Loss), Net of Tax Retained Total Non- Total Balance at May 31, 2015 $ 289,078 $ (50,704 ) $ 510,738 $ 749,112 $ 90,937 $ 840,049 Net earnings - - 31,410 31,410 3,027 34,437 Other comprehensive income (loss) - 2,501 - 2,501 (56 ) 2,445 Common shares issued, net of withholding tax (602 ) - - (602 ) - (602 ) Common shares in NQ plans 550 - - 550 - 550 Stock-based compensation 5,965 - - 5,965 - 5,965 Purchases and retirement of common shares (4,680 ) - (22,902 ) (27,582 ) - (27,582 ) Cash dividends declared - - (11,470 ) (11,470 ) - (11,470 ) Payments to noncontrolling interest - - - - (4,901 ) (4,901 ) Balance at August 31, 2015 $ 290,311 $ (48,203 ) $ 507,776 $ 749,884 $ 89,007 $ 838,891 The components of the changes in other comprehensive loss were as follows: Foreign Pension Cash Accumulated (in thousands) Balance as of May 31, 2015 $ (20,717 ) $ (15,003 ) $ (14,984 ) $ (50,704 ) Other comprehensive income (loss) before reclassifications 1,879 (8 ) (8,092 ) (6,221 ) Reclassification adjustments to income (a) - - 9,330 9,330 Income taxes - - (608 ) (608 ) Balance as of August 31, 2015 $ (18,838 ) $ (15,011 ) $ (14,354 ) $ (48,203 ) (a) The statement of earnings classification of amounts reclassified to income for cash flow hedges is disclosed in “NOTE N – Derivative Instruments and Hedging Activities.” |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Aug. 31, 2015 | |
Stock-Based Compensation | NOTE J – Stock-Based Compensation Non-Qualified Stock Options During the three months ended August 31, 2015, we granted non-qualified stock options covering a total of 153,500 common shares under our stock-based compensation plans. The option price of $30.92 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 $9.55 per share. The calculated pre-tax stock-based compensation expense for these stock options, after an estimate for forfeitures, is $1,305,000 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 2.33 % Expected volatility 38.40 % Risk-free interest rate 1.98 % Expected term (years) 6.0 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. Service-Based Restricted Common Shares During the three months ended August 31, 2015, we granted an aggregate of 148,850 service-based restricted common shares under our stock-based compensation plans. The fair value of these restricted common shares was equal to the closing market price of the underlying common shares on the date of grant, or $30.92 per share. The calculated pre-tax stock-based compensation expense for these restricted common shares, after an estimate for forfeitures, is $4,096,000 and will be recognized on a straight-line basis over the three-year service-based vesting period. Performance Share Awards We have awarded performance shares to certain key employees that are earned based on the level of achievement with respect to corporate targets for cumulative corporate economic value added, earnings per share growth and, in the case of business unit executives, business unit operating income targets for the three-year periods ending May 31, 2016, 2017 and 2018. These performance share awards will be paid, to the extent earned, in common shares of the Company in the fiscal quarter following the end of the applicable three-year performance period. The fair values of our performance shares are determined by the closing market prices of the underlying common shares at their respective grant dates and the pre-tax stock-based compensation expense is based on our periodic assessment of the probability of the targets being achieved and our estimate of the number of common shares that will ultimately be issued. During the three months ended August 31, 2015, we granted performance share awards covering an aggregate of 94,700 common shares (at target levels). The calculated pre-tax stock-based compensation expense for these performance shares is $2,852,000 and will be recognized over the three-year performance period. |
Income Taxes
Income Taxes | 3 Months Ended |
Aug. 31, 2015 | |
Income Taxes | NOTE K – Income Taxes Income tax expense for the three months ended August 31, 2015 and August 31, 2014 reflected estimated annual effective income tax rates of 31.8% and 32.8%, 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 interests are primarily a result of our Spartan, Worthington Nitin Cylinders, Worthington Aritas, and TWB consolidated joint ventures. The earnings attributable to the noncontrolling interests 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. The tax expense of Worthington Aritas and Worthington Nitin Cylinders, both foreign corporations, and TWB’s wholly-owned foreign corporations, is reported in our consolidated tax expense. 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 2016 could be materially different from the forecasted rate as of August 31, 2015. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Aug. 31, 2015 | |
Earnings Per Share | NOTE L – Earnings Per Share The following table sets forth the computation of basic and diluted earnings per share for the three months ended August 31, 2015 and 2014: Three Months Ended (in thousands, except per share amounts) 2015 2014 Numerator (basic & diluted): Net earnings attributable to controlling interest – income available to common shareholders $ 31,410 $ 44,168 Denominator: Denominator for basic earnings per share attributable to controlling interest – weighted average common shares 63,993 67,567 Effect of dilutive securities 1,736 2,171 Denominator for diluted earnings per share attributable to controlling interest – adjusted weighted average common shares 65,729 69,738 Basic earnings per share attributable to controlling interest $ 0.49 $ 0.65 Diluted earnings per share attributable to controlling interest $ 0.48 $ 0.63 Stock options covering 318,904 and 87,976 common shares have been excluded from the computation of diluted earnings per share for the three months ended August 31, 2015 and August 31, 2014, respectively, 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, 2015 | |
Segment Operations | NOTE M – Segment Operations Summarized financial information for our reportable segments is shown in the following table: Three Months Ended (in thousands) 2015 2014 Net sales Steel Processing $ 490,800 $ 552,331 Pressure Cylinders 224,394 248,959 Engineered Cabs 38,617 49,554 Other 4,336 11,570 Total net sales $ 758,147 $ 862,414 Operating income (loss) Steel Processing $ 23,638 $ 35,869 Pressure Cylinders 16,819 19,606 Engineered Cabs (9,291 ) (2,145 ) Other (170 ) (1,128 ) Total operating income $ 30,996 $ 52,202 Impairment of long-lived assets Steel Processing $ - $ 1,950 Pressure Cylinders - - Engineered Cabs 3,000 - Other - - Total impairment of long-lived assets $ 3,000 $ 1,950 Restructuring and other expense (income) Steel Processing $ 462 $ (30 ) Pressure Cylinders 731 23 Engineered Cabs 1,878 - Other (2 ) 107 Total restructuring and other expense $ 3,069 $ 100 (in thousands) August 31, May 31, Total assets Steel Processing $ 818,834 $ 829,116 Pressure Cylinders 791,752 804,799 Engineered Cabs 89,018 94,506 Other 346,306 356,721 Total assets $ 2,045,910 $ 2,085,142 |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities | 3 Months Ended |
Aug. 31, 2015 | |
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 contracts 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 have credit support agreements in place with certain counterparties to limit our credit exposure. These agreements require either party to post cash collateral if its cumulative market position exceeds a predefined liability threshold. At August 31, 2015, we had posted total cash collateral of $2,711,000 to our margin accounts. Amounts posted to the margin accounts accrue interest at market rates and are required to be refunded in the period in which the cumulative market position falls below the required threshold. 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, 2015: Asset Derivatives Liability Derivatives (in thousands) Balance Sheet Location Fair Balance Sheet Location Fair Value Derivatives designated as hedging instruments: Commodity contracts Receivables $ - Accounts payable $ 16,557 Other assets - Other liabilities 424 - 16,981 Interest rate contracts Receivables - Accounts payable 81 Other assets - Other liabilities 79 - 160 Totals $ - $ 17,141 Derivatives not designated as hedging instruments: Commodity contracts Receivables $ - Accounts payable $ 4,852 Other assets - Other liabilities 119 - 4,971 Foreign exchange contracts Receivables 11 Accounts payable - 11 - Totals $ 11 $ 4,971 Total Derivative Instruments $ 11 $ 22,112 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 $310,000 decrease in receivables with a corresponding decrease 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, 2015: Asset Derivatives Liability Derivatives (in thousands) Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivatives designated as hedging instruments: Commodity contracts Receivables $ - Accounts payable $ 17,241 Other assets - Other liabilities 592 - 17,833 Interest rate contracts Receivables - Accounts payable 81 Other assets - Other liabilities 113 - 194 Foreign exchange contracts Receivables 75 Accounts payable Totals $ 75 $ 18,027 Derivatives not designated as hedging instruments: Commodity contracts Receivables $ 96 Accounts payable $ 4,104 Other assets - Other liabilities - Totals $ 96 $ 4,104 Total Derivative Instruments $ 171 $ 22,131 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 $500,000 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 rates, foreign exchange rates, 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 (loss) (“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, 2015: (in thousands) Notional Amount Maturity Date Commodity contracts $ 78,081 September 2015 - December 2016 Interest rate contracts 17,153 September 2019 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, 2015 and 2014: (in thousands) Gain (Loss) in OCI (Effective Location of Gain (Loss) from Accumulated OCI (Effective Portion) Gain (Loss) Location of Gain (Loss) Portion) and Excluded from Effectiveness Testing Gain (Loss) (Ineffective and Excluded For the three months ended August 31, 2015: Commodity contracts $ (8,126 ) Cost of goods sold $ (9,187 ) Cost of goods sold $ - Interest rate contracts 34 Interest expense (139 ) Interest expense - Foreign currency contracts - Miscellaneous income (4 ) Miscellaneous income - Totals $ (8,092 ) $ (9,330 ) $ - For the three months ended August 31, 2014: Commodity contracts $ (413 ) Cost of goods sold $ (796 ) Cost of goods sold $ - Interest rate contracts - Interest expense (1,148 ) Interest expense - Totals $ (413 ) $ (1,944 ) $ - The estimated net amount of the losses recognized in accumulated OCI at August 31, 2015 expected to be reclassified into net earnings within the succeeding twelve months is $12,131,000 (net of tax of $7,029,000). This amount was computed using the fair value of the cash flow hedges at August 31, 2015, and will change before actual reclassification from OCI to net earnings during the fiscal years ending May 31, 2016 and 2017. 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, 2015: (in thousands) Notional Maturity Date(s) Commodity contracts $ 31,275 September 2015 - February 2017 Foreign currency contracts 774 November 2015 The following table summarizes the gain (loss) recognized in earnings for economic (non-designated) derivative financial instruments during the three months ended August 31, 2015 and 2014: Location of Gain (Loss) Gain (Loss) Recognized (in thousands) Recognized in Earnings 2015 2014 Commodity contracts Cost of goods sold $ (2,755 ) $ (57 ) Foreign exchange contracts Miscellaneous income (expense) - 261 Total $ (2,755 ) $ 204 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, 2015 | |
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, 2015, our financial assets and liabilities measured at fair value on a recurring basis were as follows: (in thousands) Quoted Prices Significant Significant (Level 3) Totals Assets Derivative contracts (1) $ - $ 11 $ - $ 11 Total assets $ - $ 11 $ - $ 11 Liabilities Derivative contracts (1) $ - $ 22,112 $ - $ 22,112 Contingent consideration obligations (2) - - 3,979 3,979 Total liabilities $ - $ 22,112 $ 3,979 $ 26,091 At May 31, 2015, our financial assets and liabilities measured at fair value on a recurring basis were as follows: (in thousands) Quoted Prices Significant Significant Totals Assets Derivative contracts (1) $ - $ 171 $ - $ 171 Total assets $ - $ 171 $ - $ 171 Liabilities Derivative contracts (1) $ - $ 22,131 $ - $ 22,131 Contingent consideration obligation (2) - - 3,979 3,979 Total liabilities $ - $ 22,131 $ 3,979 $ 26,110 (1) The fair value of our derivative 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. (2) The fair value of the contingent consideration obligation is determined using a probability weighted cash flow approach based on management’s projections of future cash flows of the acquired business. The fair value measurement was based on Level 3 inputs not observable in the market. Non-Recurring Fair Value Measurements At August 31, 2015, our financial assets and liabilities measured at fair value on a non-recurring basis were as follows: (in thousands) Quoted Prices Significant Significant Totals Assets Long-lived assets held and used (1) $ - $ 1,059 $ - $ 1,059 Total assets $ - $ 1,059 $ - $ 1,059 (1) During the first quarter of fiscal 2016, management reviewed certain long-lived assets of its Engineered Cabs facility in Florence, South Carolina, for impairment. In accordance with the applicable accounting guidance, long-lived assets with a carrying value of $4,059,000 were written down to their estimated fair value of $1,059,000 resulting in an impairment charge of $3,000,000 during the three months ended August 31, 2015. Comparable market transactions were used to measure fair value. Refer to “NOTE C – Impairment of Long-Lived Assets” for additional information. At May 31, 2015, our assets measured at fair value on a non-recurring basis were categorized as follows: (in thousands) Quoted Prices Significant Significant Totals Assets Long-lived assets held and used (1) $ - $ - $ 12,403 $ 12,403 Total assets $ - $ - $ 12,403 $ 12,403 (1) During the fourth quarter of fiscal 2015, management reviewed certain intangible assets related to our CNG fuel systems joint venture, dHybrid, for impairment. In accordance with the applicable accounting guidance, the intangible assets were written down to their fair value of $600,000, resulting in an impairment charge of $2,344,000. The key assumptions that drove the fair value calculation were projected cash flows and the discount rate. During the third quarter of fiscal 2015, the Company concluded that an interim impairment test of the goodwill of its Engineered Cabs operating segment was necessary. Prior to conducting the goodwill impairment test, the Company first evaluated the other long-lived assets of the Engineered Cabs operating segment for recoverability. Recoverability was tested using future cash flow projections based on management’s long-range estimates of market conditions. The sum of the undiscounted future cash flows for the customer relationship intangible asset and the property, plant and equipment of the Florence, South Carolina facility were less than their respective carrying values. As a result, these assets were written down to their respective fair values of $2,000,000 and $9,803,000. The fair value measurements were based on Level 3 inputs not observable in the market. The key assumptions that drove the fair value calculations were projected cash flows and the discount rate. The fair value of non-derivative financial instruments included in the carrying amounts of cash and cash equivalents, receivables, notes receivable, income taxes receivable, other assets, 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 $596,651,000 and $610,028,000 at August 31, 2015 and May 31, 2015, respectively. The carrying amount of long-term debt, including current maturities, was $581,747,000 and $580,193,000 at August 31, 2015 and May 31, 2015, respectively. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Aug. 31, 2015 | |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In May 2014, amended accounting guidance was issued that replaces most existing revenue recognition guidance under U.S. GAAP. The amended guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The amended guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early application is not permitted. We are in the process of evaluating the effect this guidance will have on our consolidated financial position and results of operations. The amended guidance permits the use of either the retrospective or cumulative effect transition method. We have not selected a transition method nor have we determined the effect of the amended guidance on our ongoing financial reporting. In July 2015, amended accounting guidance was issued regarding the measurement of inventory. The amended guidance requires that inventory accounted for under the first-in, first-out (FIFO) or average cost methods be measured at the lower of cost and net realizable value, where net realizable value represents the estimated selling price of inventory in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The amended guidance has no impact on inventory accounted for under the last-in, first-out (LIFO) or retail inventory methods. For public business entities, the amended guidance is effective prospectively for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early application is permitted as of the beginning of an interim or annual reporting period. We are in the process of evaluating the effect this guidance will have on our consolidated financial position and results of operations, and we have not determined the effect of the amended guidance on our ongoing financial reporting. |
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. |
Cash Flow Hedges | |
Cash Flow Hedges | Cash Flow Hedges We enter into derivative instruments to hedge our exposure to changes in cash flows attributable to interest rates, foreign exchange rates, 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 (loss) (“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. |
Investments in Unconsolidated23
Investments in Unconsolidated Affiliates (Tables) | 3 Months Ended |
Aug. 31, 2015 | |
Balance Sheet | |
Financial Information | Combined financial information for our unconsolidated affiliates is summarized as follows: (in thousands) August 31, 2015 May 31, 2015 Cash $ 96,400 $ 101,011 Receivable from member (1) 10,213 11,092 Other current assets 477,072 491,507 Noncurrent assets 331,811 318,939 Total assets $ 915,496 $ 922,549 Current liabilities $ 141,720 $ 184,028 Short-term borrowings 25,483 - Current maturities of long-term debt 4,460 4,489 Long-term debt 270,771 272,861 Other noncurrent liabilities 20,205 20,471 Equity 452,857 440,700 Total liabilities and equity $ 915,496 $ 922,549 (1) Represents cash owed from a joint venture partner as a result of centralized cash management. |
Income Statement | |
Financial Information | Three Months Ended August 31, (in thousands) 2015 2014 Net sales $ 404,463 $ 392,550 Gross margin 89,018 88,751 Operating income 61,246 63,479 Depreciation and amortization 8,097 9,122 Interest expense 2,159 2,162 Income tax expense 2,560 2,753 Net earnings 62,926 59,440 |
Restructuring and Other Expen24
Restructuring and Other Expense (Tables) | 3 Months Ended |
Aug. 31, 2015 | |
Schedule of Progression of Liabilities Associated with Restructuring Activities, Combined with Reconciliation to Restructuring and Other Expense | A progression of the liabilities associated with our restructuring activities, combined with a reconciliation to the restructuring and other expense financial statement caption in our consolidated statement of earnings for the three months ended August 31, 2015 is summarized as follows: (in thousands) Beginning Balance Expense Payments Adjustments Ending Balance Early retirement and severance $ 2,170 $ 3,030 $ (686 ) $ (15 ) $ 4,499 Facility exit and other costs 371 39 (53 ) - 357 Restructuring and other expense $ 2,541 $ 3,069 $ (739 ) $ (15 ) $ 4,856 |
Comprehensive Income (Tables)
Comprehensive Income (Tables) | 3 Months Ended |
Aug. 31, 2015 | |
Summary of Tax Effects of Each Component of Other Comprehensive Income (Loss) | The following table summarizes the tax effects on each component of other comprehensive income (loss) for the three months ended August 31: 2015 2014 Before-Tax Tax Net-of-Tax Before-Tax Tax Net-of-Tax (in thousands) Foreign currency translation $ 1,823 $ - $ 1,823 $ (9,592 ) $ - $ (9,592 ) Pension liability adjustment (8 ) - (8 ) - - - Cash flow hedges 1,238 (608 ) 630 1,543 (582 ) 961 Other comprehensive income (loss ) $ 3,053 $ (608 ) $ 2,445 $ (8,049 ) $ (582 ) $ (8,631 ) |
Changes in Equity (Tables)
Changes in Equity (Tables) | 3 Months Ended |
Aug. 31, 2015 | |
Summary of Changes in Total Equity, Shareholders' Equity Attributable to Controlling Interest, and Equity Attributable to Noncontrolling Interests | The following table provides a summary of the changes in total equity, shareholders’ equity attributable to controlling interest, and equity attributable to noncontrolling interests for the three months ended August 31, 2015: Controlling Interest (in thousands) Additional Cumulative Other Comprehensive Income (Loss), Net of Tax Retained Total Non- Total Balance at May 31, 2015 $ 289,078 $ (50,704 ) $ 510,738 $ 749,112 $ 90,937 $ 840,049 Net earnings - - 31,410 31,410 3,027 34,437 Other comprehensive income (loss) - 2,501 - 2,501 (56 ) 2,445 Common shares issued, net of withholding tax (602 ) - - (602 ) - (602 ) Common shares in NQ plans 550 - - 550 - 550 Stock-based compensation 5,965 - - 5,965 - 5,965 Purchases and retirement of common shares (4,680 ) - (22,902 ) (27,582 ) - (27,582 ) Cash dividends declared - - (11,470 ) (11,470 ) - (11,470 ) Payments to noncontrolling interest - - - - (4,901 ) (4,901 ) Balance at August 31, 2015 $ 290,311 $ (48,203 ) $ 507,776 $ 749,884 $ 89,007 $ 838,891 |
Components of Changes in Other Comprehensive Loss | The components of the changes in other comprehensive loss were as follows: Foreign Pension Cash Accumulated (in thousands) Balance as of May 31, 2015 $ (20,717 ) $ (15,003 ) $ (14,984 ) $ (50,704 ) Other comprehensive income (loss) before reclassifications 1,879 (8 ) (8,092 ) (6,221 ) Reclassification adjustments to income (a) - - 9,330 9,330 Income taxes - - (608 ) (608 ) Balance as of August 31, 2015 $ (18,838 ) $ (15,011 ) $ (14,354 ) $ (48,203 ) (a) The statement of earnings classification of amounts reclassified to income for cash flow hedges is disclosed in “NOTE N – Derivative Instruments and Hedging Activities.” |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Aug. 31, 2015 | |
Non-Qualified Stock Options | |
Assumptions to Value Stock Options | The following assumptions were used to value these stock options: Dividend yield 2.33 % Expected volatility 38.40 % Risk-free interest rate 1.98 % Expected term (years) 6.0 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Aug. 31, 2015 | |
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, 2015 and 2014: Three Months Ended (in thousands, except per share amounts) 2015 2014 Numerator (basic & diluted): Net earnings attributable to controlling interest – income available to common shareholders $ 31,410 $ 44,168 Denominator: Denominator for basic earnings per share attributable to controlling interest – weighted average common shares 63,993 67,567 Effect of dilutive securities 1,736 2,171 Denominator for diluted earnings per share attributable to controlling interest – adjusted weighted average common shares 65,729 69,738 Basic earnings per share attributable to controlling interest $ 0.49 $ 0.65 Diluted earnings per share attributable to controlling interest $ 0.48 $ 0.63 |
Segment Operations (Tables)
Segment Operations (Tables) | 3 Months Ended |
Aug. 31, 2015 | |
Financial Information for Reportable Segments | Summarized financial information for our reportable segments is shown in the following table: Three Months Ended (in thousands) 2015 2014 Net sales Steel Processing $ 490,800 $ 552,331 Pressure Cylinders 224,394 248,959 Engineered Cabs 38,617 49,554 Other 4,336 11,570 Total net sales $ 758,147 $ 862,414 Operating income (loss) Steel Processing $ 23,638 $ 35,869 Pressure Cylinders 16,819 19,606 Engineered Cabs (9,291 ) (2,145 ) Other (170 ) (1,128 ) Total operating income $ 30,996 $ 52,202 Impairment of long-lived assets Steel Processing $ - $ 1,950 Pressure Cylinders - - Engineered Cabs 3,000 - Other - - Total impairment of long-lived assets $ 3,000 $ 1,950 Restructuring and other expense (income) Steel Processing $ 462 $ (30 ) Pressure Cylinders 731 23 Engineered Cabs 1,878 - Other (2 ) 107 Total restructuring and other expense $ 3,069 $ 100 (in thousands) August 31, May 31, Total assets Steel Processing $ 818,834 $ 829,116 Pressure Cylinders 791,752 804,799 Engineered Cabs 89,018 94,506 Other 346,306 356,721 Total assets $ 2,045,910 $ 2,085,142 |
Derivative Instruments and He30
Derivative Instruments and Hedging Activities (Tables) | 3 Months Ended |
Aug. 31, 2015 | |
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, 2015: Asset Derivatives Liability Derivatives (in thousands) Balance Sheet Location Fair Balance Sheet Location Fair Value Derivatives designated as hedging instruments: Commodity contracts Receivables $ - Accounts payable $ 16,557 Other assets - Other liabilities 424 - 16,981 Interest rate contracts Receivables - Accounts payable 81 Other assets - Other liabilities 79 - 160 Totals $ - $ 17,141 Derivatives not designated as hedging instruments: Commodity contracts Receivables $ - Accounts payable $ 4,852 Other assets - Other liabilities 119 - 4,971 Foreign exchange contracts Receivables 11 Accounts payable - 11 - Totals $ 11 $ 4,971 Total Derivative Instruments $ 11 $ 22,112 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, 2015: Asset Derivatives Liability Derivatives (in thousands) Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivatives designated as hedging instruments: Commodity contracts Receivables $ - Accounts payable $ 17,241 Other assets - Other liabilities 592 - 17,833 Interest rate contracts Receivables - Accounts payable 81 Other assets - Other liabilities 113 - 194 Foreign exchange contracts Receivables 75 Accounts payable Totals $ 75 $ 18,027 Derivatives not designated as hedging instruments: Commodity contracts Receivables $ 96 Accounts payable $ 4,104 Other assets - Other liabilities - Totals $ 96 $ 4,104 Total Derivative Instruments $ 171 $ 22,131 |
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, 2015 and 2014: (in thousands) Gain (Loss) in OCI (Effective Location of Gain (Loss) from Accumulated OCI (Effective Portion) Gain (Loss) Location of Gain (Loss) Portion) and Excluded from Effectiveness Testing Gain (Loss) (Ineffective and Excluded For the three months ended August 31, 2015: Commodity contracts $ (8,126 ) Cost of goods sold $ (9,187 ) Cost of goods sold $ - Interest rate contracts 34 Interest expense (139 ) Interest expense - Foreign currency contracts - Miscellaneous income (4 ) Miscellaneous income - Totals $ (8,092 ) $ (9,330 ) $ - For the three months ended August 31, 2014: Commodity contracts $ (413 ) Cost of goods sold $ (796 ) Cost of goods sold $ - Interest rate contracts - Interest expense (1,148 ) Interest expense - Totals $ (413 ) $ (1,944 ) $ - |
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, 2015 and 2014: Location of Gain (Loss) Gain (Loss) Recognized (in thousands) Recognized in Earnings 2015 2014 Commodity contracts Cost of goods sold $ (2,755 ) $ (57 ) Foreign exchange contracts Miscellaneous income (expense) - 261 Total $ (2,755 ) $ 204 |
Cash Flow Hedges | |
Schedule of Summary of Derivative Hedges | The following table summarizes our cash flow hedges outstanding at August 31, 2015: (in thousands) Notional Amount Maturity Date Commodity contracts $ 78,081 September 2015 - December 2016 Interest rate contracts 17,153 September 2019 |
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, 2015: (in thousands) Notional Maturity Date(s) Commodity contracts $ 31,275 September 2015 - February 2017 Foreign currency contracts 774 November 2015 |
Fair Value (Tables)
Fair Value (Tables) | 3 Months Ended |
Aug. 31, 2015 | |
Schedule of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis | At August 31, 2015, our financial assets and liabilities measured at fair value on a recurring basis were as follows: (in thousands) Quoted Prices Significant Significant (Level 3) Totals Assets Derivative contracts (1) $ - $ 11 $ - $ 11 Total assets $ - $ 11 $ - $ 11 Liabilities Derivative contracts (1) $ - $ 22,112 $ - $ 22,112 Contingent consideration obligations (2) - - 3,979 3,979 Total liabilities $ - $ 22,112 $ 3,979 $ 26,091 At May 31, 2015, our financial assets and liabilities measured at fair value on a recurring basis were as follows: (in thousands) Quoted Prices Significant Significant Totals Assets Derivative contracts (1) $ - $ 171 $ - $ 171 Total assets $ - $ 171 $ - $ 171 Liabilities Derivative contracts (1) $ - $ 22,131 $ - $ 22,131 Contingent consideration obligation (2) - - 3,979 3,979 Total liabilities $ - $ 22,131 $ 3,979 $ 26,110 (1) The fair value of our derivative 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. (2) The fair value of the contingent consideration obligation is determined using a probability weighted cash flow approach based on management’s projections of future cash flows of the acquired business. The fair value measurement was based on Level 3 inputs not observable in the market. |
Assets Measured at Fair Value on Non-recurring Basis | At August 31, 2015, our financial assets and liabilities measured at fair value on a non-recurring basis were as follows: (in thousands) Quoted Prices Significant Significant Totals Assets Long-lived assets held and used (1) $ - $ 1,059 $ - $ 1,059 Total assets $ - $ 1,059 $ - $ 1,059 (1) During the first quarter of fiscal 2016, management reviewed certain long-lived assets of its Engineered Cabs facility in Florence, South Carolina, for impairment. In accordance with the applicable accounting guidance, long-lived assets with a carrying value of $4,059,000 were written down to their estimated fair value of $1,059,000 resulting in an impairment charge of $3,000,000 during the three months ended August 31, 2015. Comparable market transactions were used to measure fair value. Refer to “NOTE C – Impairment of Long-Lived Assets” for additional information. At May 31, 2015, our assets measured at fair value on a non-recurring basis were categorized as follows: (in thousands) Quoted Prices Significant Significant Totals Assets Long-lived assets held and used (1) $ - $ - $ 12,403 $ 12,403 Total assets $ - $ - $ 12,403 $ 12,403 (1) During the fourth quarter of fiscal 2015, management reviewed certain intangible assets related to our CNG fuel systems joint venture, dHybrid, for impairment. In accordance with the applicable accounting guidance, the intangible assets were written down to their fair value of $600,000, resulting in an impairment charge of $2,344,000. The key assumptions that drove the fair value calculation were projected cash flows and the discount rate. |
Basis of Presentation - Additio
Basis of Presentation - Additional Information (Detail) - Joint Venture Transactions | Aug. 31, 2015 |
DHybrid Systems Llc | |
Significant Accounting Policies [Line Items] | |
Percent of controlling interest by the Company | 79.59% |
Spartan | |
Significant Accounting Policies [Line Items] | |
Percent of controlling interest by the Company | 52.00% |
TWB | |
Significant Accounting Policies [Line Items] | |
Percent of controlling interest by the Company | 55.00% |
Worthington Aritas | |
Significant Accounting Policies [Line Items] | |
Percent of controlling interest by the Company | 75.00% |
WEI | |
Significant Accounting Policies [Line Items] | |
Percent of controlling interest by the Company | 75.00% |
Worthington Nitin Cylinders | |
Significant Accounting Policies [Line Items] | |
Percent of controlling interest by the Company | 60.00% |
Investments in Unconsolidated33
Investments in Unconsolidated Affiliates - Additional Information (Detail) | 3 Months Ended |
Aug. 31, 2015USD ($) | |
Investments in and Advances to Affiliates [Line Items] | |
Distributions from unconsolidated affiliates | $ 21,068,000 |
WAVE | |
Investments in and Advances to Affiliates [Line Items] | |
Cumulative distributions in excess of investment | $ 58,728,000 |
Joint Venture Transactions | ArtiFlex | |
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 | 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 | Worthington Specialty Processing | |
Investments in and Advances to Affiliates [Line Items] | |
Percent of interest by unconsolidated affiliates | 51.00% |
Joint Venture Transactions | Zhejiang Nisshin Worthington Precision Specialty Steel Co | |
Investments in and Advances to Affiliates [Line Items] | |
Percent of interest by unconsolidated affiliates | 10.00% |
Schedule of Combined Financial
Schedule of Combined Financial Information for Unconsolidated Affiliates (Detail) - USD ($) $ in Thousands | 3 Months Ended | |||
Aug. 31, 2015 | Aug. 31, 2014 | May. 31, 2015 | ||
Investments in and Advances to Affiliates [Line Items] | ||||
Cash | $ 96,400 | $ 101,011 | ||
Receivable from member | [1] | 10,213 | 11,092 | |
Other current assets | 477,072 | 491,507 | ||
Noncurrent assets | 331,811 | 318,939 | ||
Total assets | 915,496 | 922,549 | ||
Current liabilities | 141,720 | 184,028 | ||
Short-term borrowings | 25,483 | |||
Current maturities of long-term debt | 4,460 | 4,489 | ||
Long-term debt | 270,771 | 272,861 | ||
Other noncurrent liabilities | 20,205 | 20,471 | ||
Equity | 452,857 | 440,700 | ||
Total liabilities and equity | 915,496 | $ 922,549 | ||
Net sales | 404,463 | $ 392,550 | ||
Gross margin | 89,018 | 88,751 | ||
Operating income | 61,246 | 63,479 | ||
Depreciation and amortization | 8,097 | 9,122 | ||
Interest expense | 2,159 | 2,162 | ||
Income tax expense | 2,560 | 2,753 | ||
Net earnings | $ 62,926 | $ 59,440 | ||
[1] | Represents cash owed from a joint venture partner as a result of centralized cash management. |
Impairment of Long-Lived Asse35
Impairment of Long-Lived Assets - Additional Information (Detail) | 3 Months Ended | ||||
Aug. 31, 2015USD ($)Facility | Aug. 31, 2014USD ($) | May. 31, 2015USD ($) | |||
Impaired Long-Lived Assets Held and Used [Line Items] | |||||
Asset measured at fair value on nonrecurring basis | $ 1,059,000 | $ 12,403,000 | |||
Impairment of long-lived assets | $ 3,000,000 | $ 1,950,000 | |||
Number of equipment facilities | Facility | 5 | ||||
Long-lived assets total | $ 36,687,000 | ||||
Maximum | |||||
Impaired Long-Lived Assets Held and Used [Line Items] | |||||
Estimated undiscounted future cash flows over book value | 0.05 | ||||
Long-lived Assets Held and Used | |||||
Impaired Long-Lived Assets Held and Used [Line Items] | |||||
Carrying value long-lived assets | 4,059,000 | ||||
Asset measured at fair value on nonrecurring basis | $ 1,059,000 | [1] | $ 12,403,000 | [2] | |
[1] | During the first quarter of fiscal 2016, management reviewed certain long-lived assets of its Engineered Cabs facility in Florence, South Carolina, for impairment. In accordance with the applicable accounting guidance, long-lived assets with a carrying value of $4,059,000 were written down to their estimated fair value of $1,059,000 resulting in an impairment charge of $3,000,000 during the three months ended August 31, 2015. Comparable market transactions were used to measure fair value. Refer to "NOTE C - Impairment of Long-Lived Assets" for additional information. | ||||
[2] | During the fourth quarter of fiscal 2015, management reviewed certain intangible assets related to our CNG fuel systems joint venture, dHybrid, for impairment. In accordance with the applicable accounting guidance, the intangible assets were written down to their fair value of $600,000, resulting in an impairment charge of $2,344,000. The key assumptions that drove the fair value calculation were projected cash flows and the discount rate. During the third quarter of fiscal 2015, the Company concluded that an interim impairment test of the goodwill of its Engineered Cabs operating segment was necessary. Prior to conducting the goodwill impairment test, the Company first evaluated the other long-lived assets of the Engineered Cabs operating segment for recoverability. Recoverability was tested using future cash flow projections based on management's long-range estimates of market conditions. The sum of the undiscounted future cash flows for the customer relationship intangible asset and the property, plant and equipment of the Florence, South Carolina facility were less than their respective carrying values. As a result, these assets were written down to their respective fair values of $2,000,000 and $9,803,000. The fair value measurements were based on Level 3 inputs not observable in the market. The key assumptions that drove the fair value calculations were projected cash flows and the discount rate. |
Schedule of Progression of Liab
Schedule of Progression of Liabilities Associated with Restructuring Activities, Combined with Reconciliation to Restructuring and Other Expense (Detail) $ in Thousands | 3 Months Ended |
Aug. 31, 2015USD ($) | |
Restructuring Cost and Reserve [Line Items] | |
Beginning Balance | $ 2,541 |
Expense | 3,069 |
Payments | (739) |
Adjustments | (15) |
Ending Balance | 4,856 |
Early Retirement And Severance | |
Restructuring Cost and Reserve [Line Items] | |
Beginning Balance | 2,170 |
Expense | 3,030 |
Payments | (686) |
Adjustments | (15) |
Ending Balance | 4,499 |
Facility Exit And Other Costs | |
Restructuring Cost and Reserve [Line Items] | |
Beginning Balance | 371 |
Expense | 39 |
Payments | (53) |
Ending Balance | $ 357 |
Restructuring and Other Expen37
Restructuring and Other Expense - Additional Information (Detail) | 3 Months Ended |
Aug. 31, 2015USD ($) | |
Engineered Cabs | |
Restructuring Cost and Reserve [Line Items] | |
Severance expense | $ 1,891,000 |
Aluminum High Pressure Cylinder Business | |
Restructuring Cost and Reserve [Line Items] | |
Severance expense | $ 690,000 |
Production ceased date | Sep. 22, 2015 |
Guarantees - Additional Informa
Guarantees - Additional Information (Detail) | Aug. 31, 2015USD ($) |
Loss Contingencies [Line Items] | |
Letter of credit amount outstanding | $ 16,189,000 |
Letter of credit amount drawn | 0 |
Operating Lease of Aircraft | |
Loss Contingencies [Line Items] | |
Maximum potential obligation | 11,433,000 |
Term Loan | |
Loss Contingencies [Line Items] | |
Maximum potential obligation | $ 1,250,000 |
Debt and Receivables Securiti39
Debt and Receivables Securitization - Additional Information (Detail) - USD ($) | 3 Months Ended | |
Aug. 31, 2015 | May. 31, 2015 | |
Debt And Receivables Securitization [Line Items] | ||
Short-term borrowings | $ 22,039,000 | $ 90,550,000 |
Securities Sold under Agreements to Repurchase | ||
Debt And Receivables Securitization [Line Items] | ||
Maximum borrowing capacity | $ 100,000,000 | |
Maturity date | 2018-01 | |
Borrowings outstanding | $ 0 | |
Number of days past due trade accounts receivables are ineligible for securitization | 90 days | |
Worthington Aritas | ||
Debt And Receivables Securitization [Line Items] | ||
Short-term borrowings | $ 1,249,000 | |
Worthington Nitin Cylinders | ||
Debt And Receivables Securitization [Line Items] | ||
Maximum borrowing capacity | 9,500,000 | |
Short-term borrowings | 2,096,000 | |
Unsecured Revolving Credit Facility | ||
Debt And Receivables Securitization [Line Items] | ||
Maximum borrowing capacity | $ 500,000,000 | |
Maturity date | 2020-04 | |
Line of credit, variable rate | 1.257% | |
Borrowings outstanding | $ 18,694,000 | |
Remaining borrowing capacity | $ 481,306,000 | |
Unsecured Revolving Credit Facility | Maximum | ||
Debt And Receivables Securitization [Line Items] | ||
Debt maturity period | 1 year |
Summary of Tax Effects of Each
Summary of Tax Effects of Each Component of Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Aug. 31, 2015 | Aug. 31, 2014 | |
Before-Tax | ||
Foreign currency translation, before tax | $ 1,823 | $ (9,592) |
Pension liability adjustment, before tax | (8) | |
Cash flow hedges, before tax | 1,238 | 1,543 |
Other comprehensive income (loss), before tax | 3,053 | (8,049) |
Tax | ||
Foreign currency translation, tax | 0 | 0 |
Pension liability adjustment, tax | 0 | 0 |
Cash flow hedges, tax | (608) | (582) |
Other comprehensive income (loss), tax | (608) | (582) |
Net-of-tax | ||
Foreign currency translation, net-of-tax | 1,823 | (9,592) |
Pension liability adjustment, net-of-tax | (8) | |
Cash flow hedges, net-of-tax | 630 | 961 |
Other comprehensive income (loss), net-of-tax | $ 2,445 | $ (8,631) |
Summary of Changes in Total Equ
Summary of Changes in Total Equity, Shareholders' Equity Attributable to Controlling Interest, and Equity Attributable to Noncontrolling Interests (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Aug. 31, 2015 | Aug. 31, 2014 | |
Beginning Balance | $ 840,049 | |
Net earnings | 34,437 | $ 48,820 |
Other comprehensive income (loss) | 2,445 | $ (8,631) |
Common shares issued, net of withholding tax | (602) | |
Common shares in NQ plans | 550 | |
Stock-based compensation | 5,965 | |
Purchases and retirement of common shares | (27,582) | |
Cash dividends declared | (11,470) | |
Payments to noncontrolling interest | (4,901) | |
Ending Balance | 838,891 | |
Additional Paid-in Capital | ||
Beginning Balance | 289,078 | |
Common shares issued, net of withholding tax | (602) | |
Common shares in NQ plans | 550 | |
Stock-based compensation | 5,965 | |
Purchases and retirement of common shares | (4,680) | |
Ending Balance | 290,311 | |
Cumulative Other Comprehensive Income (Loss), Net of Tax | ||
Beginning Balance | (50,704) | |
Other comprehensive income (loss) | 2,501 | |
Ending Balance | (48,203) | |
Retained Earnings | ||
Beginning Balance | 510,738 | |
Net earnings | 31,410 | |
Purchases and retirement of common shares | (22,902) | |
Cash dividends declared | (11,470) | |
Ending Balance | 507,776 | |
Parent | ||
Beginning Balance | 749,112 | |
Net earnings | 31,410 | |
Other comprehensive income (loss) | 2,501 | |
Common shares issued, net of withholding tax | (602) | |
Common shares in NQ plans | 550 | |
Stock-based compensation | 5,965 | |
Purchases and retirement of common shares | (27,582) | |
Cash dividends declared | (11,470) | |
Ending Balance | 749,884 | |
Noncontrolling Interest | ||
Beginning Balance | 90,937 | |
Net earnings | 3,027 | |
Other comprehensive income (loss) | (56) | |
Payments to noncontrolling interest | (4,901) | |
Ending Balance | $ 89,007 |
Components of Changes in Other
Components of Changes in Other Comprehensive Loss (Detail) - USD ($) $ in Thousands | 3 Months Ended | ||
Aug. 31, 2015 | Aug. 31, 2014 | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Accumulated other comprehensive loss, beginning balance | $ (50,704) | ||
Other comprehensive income (loss) before reclassifications | (6,221) | ||
Reclassification adjustments to income | [1] | 9,330 | |
Income taxes | (608) | $ (582) | |
Accumulated other comprehensive loss, ending balance | (48,203) | ||
Foreign Currency Translation | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Accumulated other comprehensive loss, beginning balance | (20,717) | ||
Other comprehensive income (loss) before reclassifications | 1,879 | ||
Accumulated other comprehensive loss, ending balance | (18,838) | ||
Pension Liability Adjustment | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Accumulated other comprehensive loss, beginning balance | (15,003) | ||
Other comprehensive income (loss) before reclassifications | (8) | ||
Accumulated other comprehensive loss, ending balance | (15,011) | ||
Cash Flow Hedges | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Accumulated other comprehensive loss, beginning balance | (14,984) | ||
Other comprehensive income (loss) before reclassifications | (8,092) | ||
Reclassification adjustments to income | [1] | 9,330 | |
Income taxes | (608) | ||
Accumulated other comprehensive loss, ending balance | $ (14,354) | ||
[1] | The statement of earnings classification of amounts reclassified to income for cash flow hedges is disclosed in "NOTE N - Derivative Instruments and Hedging Activities." |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Detail) | 3 Months Ended |
Aug. 31, 2015USD ($)$ / sharesshares | |
Non-Qualified Stock Options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Non-qualified stock options, granted | shares | 153,500 |
Non-qualified stock option, per share price | $ 30.92 |
Non-qualified stock option, fair value, per share price | $ 9.55 |
Pre-tax stock-based compensation | $ | $ 1,305,000 |
Pre-tax stock-based compensation, period of recognition | 3 years |
Service-Based Restricted Common Shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Pre-tax stock-based compensation, period of recognition | 3 years |
Performance share awards granted | shares | 148,850 |
Restricted common shares, fair value per share | $ 30.92 |
Pre-tax stock-based compensation | $ | $ 4,096,000 |
Performance Shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Pre-tax stock-based compensation, period of recognition | 3 years |
Performance share awards granted | shares | 94,700 |
Pre-tax stock-based compensation | $ | $ 2,852,000 |
Assumptions To Value Stock Opti
Assumptions To Value Stock Options (Detail) - Non-Qualified Stock Options | 3 Months Ended |
Aug. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Dividend yield | 2.33% |
Expected volatility | 38.40% |
Risk-free interest rate | 1.98% |
Expected term (years) | 6 years |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) | 3 Months Ended | |
Aug. 31, 2015 | Aug. 31, 2014 | |
Income Taxes [Line Items] | ||
Estimated annual effective income tax rate | 31.80% | 32.80% |
Computation of Basic and Dilute
Computation of Basic and Diluted Earnings (Loss) per Share Attributable to Controlling Interest (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Aug. 31, 2015 | Aug. 31, 2014 | |
Numerator (basic & diluted): | ||
Net earnings attributable to controlling interest - income available to common shareholders | $ 31,410 | $ 44,168 |
Denominator: | ||
Denominator for basic earnings per share attributable to controlling interest - weighted average common shares | 63,993 | 67,567 |
Effect of dilutive securities | 1,736 | 2,171 |
Denominator for diluted earnings per share attributable to controlling interest - adjusted weighted average common shares | 65,729 | 69,738 |
Basic earnings per share attributable to controlling interest | $ 0.49 | $ 0.65 |
Diluted earnings per share attributable to controlling interest | $ 0.48 | $ 0.63 |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Detail) - shares | 3 Months Ended | |
Aug. 31, 2015 | Aug. 31, 2014 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Stock options excluded from computation of diluted earnings per share | 318,904 | 87,976 |
Financial Information for Repor
Financial Information for Reportable Segments (Detail) - USD ($) $ in Thousands | 3 Months Ended | ||
Aug. 31, 2015 | Aug. 31, 2014 | May. 31, 2015 | |
Segment Reporting Information [Line Items] | |||
Net sales | $ 758,147 | $ 862,414 | |
Operating income (loss) | 30,996 | 52,202 | |
Impairment of long-lived assets | 3,000 | 1,950 | |
Restructuring and other expense (income) | 3,069 | 100 | |
Total assets | 2,045,910 | $ 2,085,142 | |
Steel Processing | |||
Segment Reporting Information [Line Items] | |||
Net sales | 490,800 | 552,331 | |
Operating income (loss) | 23,638 | 35,869 | |
Impairment of long-lived assets | 1,950 | ||
Restructuring and other expense (income) | 462 | (30) | |
Total assets | 818,834 | 829,116 | |
Pressure Cylinders | |||
Segment Reporting Information [Line Items] | |||
Net sales | 224,394 | 248,959 | |
Operating income (loss) | 16,819 | 19,606 | |
Restructuring and other expense (income) | 731 | 23 | |
Total assets | 791,752 | 804,799 | |
Engineered Cabs | |||
Segment Reporting Information [Line Items] | |||
Net sales | 38,617 | 49,554 | |
Operating income (loss) | (9,291) | (2,145) | |
Impairment of long-lived assets | 3,000 | ||
Restructuring and other expense (income) | 1,878 | ||
Total assets | 89,018 | 94,506 | |
Other | |||
Segment Reporting Information [Line Items] | |||
Net sales | 4,336 | 11,570 | |
Operating income (loss) | (170) | (1,128) | |
Restructuring and other expense (income) | (2) | $ 107 | |
Total assets | $ 346,306 | $ 356,721 |
Derivative Instruments and He49
Derivative Instruments and Hedging Activities - Additional Information (Detail) - USD ($) | 3 Months Ended | 12 Months Ended |
Aug. 31, 2015 | May. 31, 2015 | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Total cash collateral | $ 2,711,000 | |
Impact to fair value of derivative assets and liabilities as a result of recognition on a net basis | (310,000) | $ 500,000 |
Losses in accumulated other comprehensive income expected to be reclassified into net earnings | (12,131,000) | |
Losses in accumulated other comprehensive income expected to be reclassified into net earnings, tax | $ 7,029,000 |
Schedule of Fair Value of Deriv
Schedule of Fair Value of Derivative Instruments (Detail) - USD ($) $ in Thousands | Aug. 31, 2015 | May. 31, 2015 |
Derivative [Line Items] | ||
Asset Derivatives at Fair Value | $ 11 | $ 171 |
Liability Derivatives at Fair Value | 22,112 | 22,131 |
Derivatives Designated As Hedging Instruments | ||
Derivative [Line Items] | ||
Asset Derivatives at Fair Value | 75 | |
Liability Derivatives at Fair Value | 17,141 | 18,027 |
Derivatives Designated As Hedging Instruments | Commodity Contracts | ||
Derivative [Line Items] | ||
Liability Derivatives at Fair Value | 16,981 | 17,833 |
Derivatives Designated As Hedging Instruments | Commodity Contracts | Other Liabilities | ||
Derivative [Line Items] | ||
Liability Derivatives at Fair Value | 424 | 592 |
Derivatives Designated As Hedging Instruments | Commodity Contracts | Accounts Payable | ||
Derivative [Line Items] | ||
Liability Derivatives at Fair Value | 16,557 | 17,241 |
Derivatives Designated As Hedging Instruments | Interest Rate Contracts | ||
Derivative [Line Items] | ||
Liability Derivatives at Fair Value | 160 | 194 |
Derivatives Designated As Hedging Instruments | Interest Rate Contracts | Other Liabilities | ||
Derivative [Line Items] | ||
Liability Derivatives at Fair Value | 79 | 113 |
Derivatives Designated As Hedging Instruments | Interest Rate Contracts | Accounts Payable | ||
Derivative [Line Items] | ||
Liability Derivatives at Fair Value | 81 | 81 |
Derivatives Designated As Hedging Instruments | Foreign Exchange Contracts | Receivables | ||
Derivative [Line Items] | ||
Asset Derivatives at Fair Value | 75 | |
Derivatives Not Designated As Hedging Instruments | ||
Derivative [Line Items] | ||
Asset Derivatives at Fair Value | 11 | 96 |
Liability Derivatives at Fair Value | 4,971 | 4,104 |
Derivatives Not Designated As Hedging Instruments | Commodity Contracts | ||
Derivative [Line Items] | ||
Liability Derivatives at Fair Value | 4,971 | |
Derivatives Not Designated As Hedging Instruments | Commodity Contracts | Other Liabilities | ||
Derivative [Line Items] | ||
Liability Derivatives at Fair Value | 119 | |
Derivatives Not Designated As Hedging Instruments | Commodity Contracts | Receivables | ||
Derivative [Line Items] | ||
Asset Derivatives at Fair Value | 96 | |
Derivatives Not Designated As Hedging Instruments | Commodity Contracts | Accounts Payable | ||
Derivative [Line Items] | ||
Liability Derivatives at Fair Value | 4,852 | $ 4,104 |
Derivatives Not Designated As Hedging Instruments | Foreign Exchange Contracts | ||
Derivative [Line Items] | ||
Asset Derivatives at Fair Value | 11 | |
Derivatives Not Designated As Hedging Instruments | Foreign Exchange Contracts | Receivables | ||
Derivative [Line Items] | ||
Asset Derivatives at Fair Value | $ 11 |
Schedule of Summary of Derivati
Schedule of Summary of Derivative Hedges (Detail) $ in Thousands | 3 Months Ended |
Aug. 31, 2015USD ($) | |
Commodity Contracts | Derivatives Not Designated As Hedging Instruments | |
Derivative [Line Items] | |
Notional Amount | $ 31,275 |
Commodity Contracts | Derivatives Not Designated As Hedging Instruments | Minimum | |
Derivative [Line Items] | |
Maturity Date | 2015-09 |
Commodity Contracts | Derivatives Not Designated As Hedging Instruments | Maximum | |
Derivative [Line Items] | |
Maturity Date | 2017-02 |
Foreign Currency Contracts | Derivatives Not Designated As Hedging Instruments | |
Derivative [Line Items] | |
Notional Amount | $ 774 |
Maturity Date | 2015-11 |
Cash Flow Hedges | Commodity Contracts | |
Derivative [Line Items] | |
Notional Amount | $ 78,081 |
Cash Flow Hedges | Commodity Contracts | Minimum | |
Derivative [Line Items] | |
Maturity Date | 2015-09 |
Cash Flow Hedges | Commodity Contracts | Maximum | |
Derivative [Line Items] | |
Maturity Date | 2016-12 |
Cash Flow Hedges | Interest Rate Contracts | |
Derivative [Line Items] | |
Notional Amount | $ 17,153 |
Maturity Date | 2019-09 |
Schedule of Derivatives Designa
Schedule of Derivatives Designated as Cash Flow Hedging Instruments (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Aug. 31, 2015 | Aug. 31, 2014 | |
Derivative [Line Items] | ||
Gain (Loss) Recognized in OCI (Effective Portion) | $ (8,092) | $ (413) |
Gain (Loss) Reclassified from Accumulated OCI (Effective Portion) | (9,330) | (1,944) |
Interest Rate Contracts | ||
Derivative [Line Items] | ||
Gain (Loss) Recognized in OCI (Effective Portion) | 34 | |
Interest Rate Contracts | Interest Expense | ||
Derivative [Line Items] | ||
Gain (Loss) Reclassified from Accumulated OCI (Effective Portion) | (139) | (1,148) |
Commodity Contracts | ||
Derivative [Line Items] | ||
Gain (Loss) Recognized in OCI (Effective Portion) | (8,126) | (413) |
Commodity Contracts | Cost Of Goods Sold | ||
Derivative [Line Items] | ||
Gain (Loss) Reclassified from Accumulated OCI (Effective Portion) | (9,187) | $ (796) |
Foreign Currency Contracts | ||
Derivative [Line Items] | ||
Gain (Loss) Reclassified from Accumulated OCI (Effective Portion) | $ (4) |
Schedule of Gain (Loss) Recogni
Schedule of Gain (Loss) Recognized in Earnings for Economic (Non-Designated) Derivative Financial Instruments (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Aug. 31, 2015 | Aug. 31, 2014 | |
Derivative [Line Items] | ||
Gain (Loss) Recognized in Earnings | $ (2,755) | $ 204 |
Commodity Contracts | Cost Of Goods Sold | ||
Derivative [Line Items] | ||
Gain (Loss) Recognized in Earnings | $ (2,755) | (57) |
Foreign Exchange Contracts | Miscellaneous Income (Expense) | ||
Derivative [Line Items] | ||
Gain (Loss) Recognized in Earnings | $ 261 |
Schedule of Financial Assets An
Schedule of Financial Assets And Liabilities Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands | Aug. 31, 2015 | May. 31, 2015 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets | $ 11 | $ 171 | |
Liabilities | 26,091 | 26,110 | |
Derivative Contracts | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets | [1] | 11 | 171 |
Liabilities | [1] | 22,112 | 22,131 |
Contingent consideration obligation | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities | [2] | 3,979 | 3,979 |
Significant Other Observable Inputs (Level 2) | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets | 11 | 171 | |
Liabilities | 22,112 | 22,131 | |
Significant Other Observable Inputs (Level 2) | Derivative Contracts | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets | [1] | 11 | 171 |
Liabilities | [1] | 22,112 | 22,131 |
Significant Unobservable Inputs (Level 3) | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities | 3,979 | 3,979 | |
Significant Unobservable Inputs (Level 3) | Contingent consideration obligation | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities | [2] | $ 3,979 | $ 3,979 |
[1] | The fair value of our derivative 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. | ||
[2] | The fair value of the contingent consideration obligation is determined using a probability weighted cash flow approach based on management's projections of future cash flows of the acquired business. The fair value measurement was based on Level 3 inputs not observable in the market. |
Assets Measured at Fair Value o
Assets Measured at Fair Value on Non-recurring Basis (Detail) - USD ($) $ in Thousands | Aug. 31, 2015 | May. 31, 2015 | |||
Fair Value [Line Items] | |||||
Asset measured at fair value on nonrecurring basis | $ 1,059 | $ 12,403 | |||
Long-lived Assets Held and Used | |||||
Fair Value [Line Items] | |||||
Asset measured at fair value on nonrecurring basis | 1,059 | [1] | 12,403 | [2] | |
Significant Other Observable Inputs (Level 2) | |||||
Fair Value [Line Items] | |||||
Asset measured at fair value on nonrecurring basis | 1,059 | ||||
Significant Other Observable Inputs (Level 2) | Long-lived Assets Held and Used | |||||
Fair Value [Line Items] | |||||
Asset measured at fair value on nonrecurring basis | [1] | $ 1,059 | |||
Significant Unobservable Inputs (Level 3) | |||||
Fair Value [Line Items] | |||||
Asset measured at fair value on nonrecurring basis | 12,403 | ||||
Significant Unobservable Inputs (Level 3) | Long-lived Assets Held and Used | |||||
Fair Value [Line Items] | |||||
Asset measured at fair value on nonrecurring basis | [2] | $ 12,403 | |||
[1] | During the first quarter of fiscal 2016, management reviewed certain long-lived assets of its Engineered Cabs facility in Florence, South Carolina, for impairment. In accordance with the applicable accounting guidance, long-lived assets with a carrying value of $4,059,000 were written down to their estimated fair value of $1,059,000 resulting in an impairment charge of $3,000,000 during the three months ended August 31, 2015. Comparable market transactions were used to measure fair value. Refer to "NOTE C - Impairment of Long-Lived Assets" for additional information. | ||||
[2] | During the fourth quarter of fiscal 2015, management reviewed certain intangible assets related to our CNG fuel systems joint venture, dHybrid, for impairment. In accordance with the applicable accounting guidance, the intangible assets were written down to their fair value of $600,000, resulting in an impairment charge of $2,344,000. The key assumptions that drove the fair value calculation were projected cash flows and the discount rate. During the third quarter of fiscal 2015, the Company concluded that an interim impairment test of the goodwill of its Engineered Cabs operating segment was necessary. Prior to conducting the goodwill impairment test, the Company first evaluated the other long-lived assets of the Engineered Cabs operating segment for recoverability. Recoverability was tested using future cash flow projections based on management's long-range estimates of market conditions. The sum of the undiscounted future cash flows for the customer relationship intangible asset and the property, plant and equipment of the Florence, South Carolina facility were less than their respective carrying values. As a result, these assets were written down to their respective fair values of $2,000,000 and $9,803,000. The fair value measurements were based on Level 3 inputs not observable in the market. The key assumptions that drove the fair value calculations were projected cash flows and the discount rate. |
Assets Measured at Fair Value56
Assets Measured at Fair Value on Non-recurring Basis (Parenthetical) (Detail) - USD ($) | 3 Months Ended | |||||
Aug. 31, 2015 | May. 31, 2015 | Aug. 31, 2014 | Feb. 28, 2015 | |||
Fair Value [Line Items] | ||||||
Asset measured at fair value on nonrecurring basis | $ 1,059,000 | $ 12,403,000 | ||||
Impairment of long-lived assets | 3,000,000 | $ 1,950,000 | ||||
DHybrid Systems Llc | ||||||
Fair Value [Line Items] | ||||||
Asset measured at fair value on nonrecurring basis | 600,000 | |||||
Impairment of long-lived assets | 2,344,000 | |||||
Long-lived Assets Held and Used | ||||||
Fair Value [Line Items] | ||||||
Carrying value long-lived assets | 4,059,000 | |||||
Asset measured at fair value on nonrecurring basis | $ 1,059,000 | [1] | $ 12,403,000 | [2] | ||
Engineered Cabs | Customer relationships | ||||||
Fair Value [Line Items] | ||||||
Asset measured at fair value on nonrecurring basis | $ 2,000,000 | |||||
Engineered Cabs | Florence Facility | ||||||
Fair Value [Line Items] | ||||||
Asset measured at fair value on nonrecurring basis | $ 9,803,000 | |||||
[1] | During the first quarter of fiscal 2016, management reviewed certain long-lived assets of its Engineered Cabs facility in Florence, South Carolina, for impairment. In accordance with the applicable accounting guidance, long-lived assets with a carrying value of $4,059,000 were written down to their estimated fair value of $1,059,000 resulting in an impairment charge of $3,000,000 during the three months ended August 31, 2015. Comparable market transactions were used to measure fair value. Refer to "NOTE C - Impairment of Long-Lived Assets" for additional information. | |||||
[2] | During the fourth quarter of fiscal 2015, management reviewed certain intangible assets related to our CNG fuel systems joint venture, dHybrid, for impairment. In accordance with the applicable accounting guidance, the intangible assets were written down to their fair value of $600,000, resulting in an impairment charge of $2,344,000. The key assumptions that drove the fair value calculation were projected cash flows and the discount rate. During the third quarter of fiscal 2015, the Company concluded that an interim impairment test of the goodwill of its Engineered Cabs operating segment was necessary. Prior to conducting the goodwill impairment test, the Company first evaluated the other long-lived assets of the Engineered Cabs operating segment for recoverability. Recoverability was tested using future cash flow projections based on management's long-range estimates of market conditions. The sum of the undiscounted future cash flows for the customer relationship intangible asset and the property, plant and equipment of the Florence, South Carolina facility were less than their respective carrying values. As a result, these assets were written down to their respective fair values of $2,000,000 and $9,803,000. The fair value measurements were based on Level 3 inputs not observable in the market. The key assumptions that drove the fair value calculations were projected cash flows and the discount rate. |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Detail) - USD ($) | Aug. 31, 2015 | May. 31, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt at fair value including current maturities | $ 596,651,000 | $ 610,028,000 |
Long-term debt at carrying amount including current maturities | $ 581,747,000 | $ 580,193,000 |